The Iferia Techcast
00:00:57 · Adam Sand, Ezekiel Iferia
[00:00:57] S1: Thank you so much. I'm excited to be here. I did some did some background on you, and it sounds like you've done some interesting things. I like your your project that you did with the C clamp, and you've had some interesting people So on your I I was honored to be here. And I'm, yeah, I'm excited to still share a little bit about our journey and and where we see technology going and what has historically been a very boring, non techie industry. It's it's not something that you would normally think of when you think of innovation in tech. [00:01:23] S0: Alright. It's great to have you here, Adam. So, you know, you've spent over a decade working with hundreds of roofing companies. You've said most of them... Most roofing owners build a job, not a company. So what what do you mean by that? You know, what's the difference between running a job and running a business?
00:01:43 · Adam Sand
[00:01:43] S1: Yeah. You know, roofing is one of those businesses where you can get in with no experience. Like, there's no trade requirements. You don't have to go to school. So, most people end up most people end up in roofing. They don't choose roofing. They either sold in another industry, and then when that industry took a bad turn, they end up selling in roofing because it's something that everybody needs. Everybody lives under a roof. Or they started out in the trade. They were on the roof doing the roofing and they worked their way up to understanding the process of putting a roof on. And then they go start a company. But nowhere in there does anybody learn how to run and grow a business. And so what happens is they end up gradually taking on more and more responsibilities, and I call them fictitious savings. So they don't pay themselves a commission. They discount the roof because they don't have to pay commission. So then they end up taking on four jobs in the company, and their entire financial model is built around a self employed entrepreneur, which owns a job, and they never really build the business. And so in many cases, we have helped companies that do end up getting to say 2, even $3,000,000 in revenue, but then they are just completely wound up and they can't they can't grow. And we show them how to go from a a $3,000,000 business to an $8,000,000 business in a year. And that seems impossible to them, but that's just the distance between what you don't know, you don't know. And becoming a person who knows what you didn't know to the point where you now know what you know, and then eventually you don't know how much you know. You start to forget the things that you've learned because you just start to grow and elevate as a person and a business owner. And so I guess to answer your question more completely, a business owner understands how to create value, how to create opportunity, and how to align the personal, professional, and financial goals of the people in their organization to the needs of the business so that the people take on elements in that division of labor to create a little mini economy, and that is what a business is. It's a little mini economy.
00:03:52 · Ezekiel Iferia
[00:03:52] S0: Okay. Really insightful. So, you know, what... What's one thing, you know, that actually destroys roofing company's value before an exit? You know? What do owners do wrong that they don't even realize?
00:04:06 · Adam Sand
[00:04:06] S1: That list is quite extensive, but it's so that it's hard to pinpoint one thing. But if I had to put them in one category, it would be that they have not they have not transferred the the responsibilities of the owner to the leaders in the business. Because when you're buying a business, and I had to learn all this myself. I didn't know... I I didn't... I wasn't born this way. I had to learn this through going through my own journey. And a a business's value is essentially a discount on the future earnings of a business. So, you know, to make it into something everybody would understand, if you sell cigarettes, right, which is just cheap and sticky, right, it's addicting, and it's got a very proven repeatable cycle. You got placement on shelves inside of stores. So if you're selling cigarettes, right, there is a realistic predictability that people will continue to buy cigarettes and you... And so therefore, you would say, okay, well, this business does a million dollars in profit, if we do nothing, it's gonna continue to make a million dollars in net profit every year for the next thirty years. Right? Because like, let's say the next generation doesn't like smoking. Right? So at least for this generation who's addicted to cigarettes, they're gonna continue buying cigarettes for thirty years. So we would buy this business for ten years of its net profit. So we would pay $10,000,000 for a business that's gonna make a million dollars profit for thirty years because we're buying it for a discount on what realistically it would make. So the level of certainty that you can communicate in your offering that this business will continue to do what it is doing forever or for a long period of time, a buyer is going to offer you to purchase your business for a set number of years of net profit based on the realistic predictability that that net profit will will continue to to happen for an extended period of time. If they think ten years, they'll give you three. If they think twenty years, maybe they give you seven. If they think thirty years, maybe they give you ten. And so one of the most necessary components to selling a roofing company is that it's a people and service based business. You're selling people doing things as a service to others.
00:06:30 · Adam Sand, Ezekiel Iferia
So the people in your business have to completely operate without you, the owner, because the only thing that happens when you buy a business is a change of the owner's shares. So the owner cannot be a necessary component in the business. [00:06:46] S0: Absolutely. Absolutely. So, Adam, I'd like you to walk us through the Foundation Project. You know, you are the co founder of the the Foundation Project. So walk us through it in plain English. What are you actually building?
00:06:59 · Adam Sand
[00:06:59] S1: Yeah. So I've been... Spent the last ten years growing roofing companies, and the most... Like, most of that is kinda centered around providing the tools and the training and the frameworks to make a roofing company successful. So it's like a three legged stool. If you have the tool, right, but you don't have... If you if you have the tool, that's great. But you need the framework in which that tool is meant to be used. So like plain speak, if you have a hammer, but you don't have anybody to hold it and you don't know how to swing it, the the... How... It doesn't matter how good the hammer is. Now, if you have a hammer, right, and you have an operating manual for how to use the hammer, that's great. But then you need to train people to use the hammer in accordance with the operating manual of the hammer. Any one of those legs falls off the stool, the stool tips over. So our business has really been around saying, okay, we will be the complete solution. We have the tools, we have the operating frameworks, and we can provide the training and the change management, right, to get your your team to use the operating frameworks on the provided tools that are good. So in doing that, we didn't own the tools, right? We're building on HubSpot. We're building on Zooper. Right? We're building on CompanyCam. We're building on JustCall. These are all software companies that we don't own. And our roofers that we do this for, they don't own that software either. And we're building roofing companies that we don't own. Right? We don't... We get these companies to go from 3,000,000 to 8,000,000 or from 6,000,000 to 60,000,000 in six years. We don't own the software. We don't own the roofing company. And that's fine. Right? Like, we we we have greatly appreciated the partnerships that we've had with software, and we appreciate the partnerships we've had with roofers. But I realized that that I could have a larger impact because some percentage of my customers don't listen. Some percentage of the tools that I work with end up selling or getting acquired by another software company, and then we're left scrambling. And so I really thought, how could we have the biggest impact? And I also see in roofing, there's this big consolidation effort. So private equity is buying up a lot of roofing companies.