00:18:07 · Mikk, Ramsey Sahyoun
[00:18:07] S0: And how quickly were you able to pivot, change the strategy? [00:18:11] S1: It wasn't really like a pivot. It was more like, Okay, we'll never do that again. For the most part, we were doing what we've always done, which is buy companies, operate them independently in this decentralized strategy. We tried this other thing over here of rolling up these companies, and it didn't go well. So it was more like just don't do the... Don't do, like, the typical roll up and just focus on the the decentralized strategy. So it it was more of, just don't do that again and less of, like, we have to pivot our our whole strategy. So that was good. [00:18:50] S0: Now let's talk about sourcing because I was posting on Twitter that you're coming on, and I I received quite a few direct messages. People wanting to know the sourcing part. Yes, now you have the San Francisco HQ of 40 plus people mostly focused on sourcing and deal execution. But how was it when it was 2018, 'nineteen, 'twenty in early days based on your background?
00:19:16 · Ramsey Sahyoun
[00:19:16] S1: Yeah, yeah. Really was just me until kind of the tail end of 2019, which is when Sidney Hathaway came on board, who's now a VP here. But yeah, it was just me. And yeah, we had some interns that would support in like the research and identification. I think now a lot of this stuff you could automate with AI and, like, web scraping tools and stuff like that. But back then, we did, I think, more old school, like, Googling, like, managed IT services you know, Los Angeles, and you you kinda build your list that way, you try to find who the owner is. And we had goals every week as far as how many companies are we adding to the database, how many qualified companies are we adding to the database? How many outreaches are we doing? How many introductory calls are we having? And I I... It was just all me doing that. And then, yeah, I mean, I would talk to, you know, 10 business owners a day. It's gotten harder to get in touch with business owners now as as as the space has gotten more competitive. But back then, you could kinda send just massive amounts of emails and get pretty good responses and and and talk to people. So that was what we did, and and we've kinda scaled it from there. But I think because that was really the core of my job for the first couple years at Evergreen, and I I still do a lot of sourcing today. Like, I I I think that's that's shaped that's shaped us and that we just value sourcing tremendously because it's the thing that gives us the opportunity set to choose from, which is how we're gonna make good investment decisions. And I think a lot of people just don't do the dirty work to find opportunities. It's hard. You have to, like, know, beg people to talk to you. You have to you know, it's just scrappy. And it's a lot easier. I think a lot of people think it's a lot easier to, like, you know, just get a nice prepared book from an investment banker talking about a company like, that company is ready to sell and like all the numbers are cleaned up for you and everything like that. Well, it's like if that's your sourcing strategy, like, you're gonna pay for that. Like everybody else is looking at the exact same information, so you're not really getting a differentiated opportunity. And we've always believed that you can hustle. And if you roll up your sleeves, you can get opportunities that, yeah, that other people don't see.
00:22:04 · Ramsey Sahyoun, Mikk
And today, I think 80% of our deals are are proprietary. So, you we're we're just getting... Yeah. We're we're we're seeing opportunities that that other people aren't aren't seeing, and we're doing that because, you know, we were... We work to do that, and we we don't just kinda sit and and let deals come to us. [00:22:27] S0: Do you still do some of those calls yourself today just to make sure you're not forgetting the the skills? [00:22:32] S1: Oh, yeah. Definitely. Definitely. Yeah. There there... There's a lot there's a lot of people that I talked to, you know, years ago, 2017, 2018, that, you know, they still haven't sold us our business, but I've developed a relationship with them. So a lot of that... I I I do a lot of that. It's a good chunk good chunk of my time. And, yeah, I I love it. I love talking to business owners even on that first initial call when they might not be ready to sell. So, yeah, it's it's a significant portion of my time today, and I I think it always will be. [00:23:07] S0: What is your take on... You've said something previously when... Like now you have this database of 15,000 MSPs on your like the list of companies. And you've said something like not people are not giving themselves an option, which now you have this huge list. What I'm trying to understand is how has it grown over the years and what you see people why they may be making these mistakes of not giving them enough database to choose from when it comes to great companies, and how has it changed over over the years for you?
00:23:45 · Ramsey Sahyoun
[00:23:45] S1: Yeah. Yeah. I think what I was talking about there was, like, usually when I hit... This is specifically in like the MSP industry. There there are a lot of business owners will will will come to me and they'll say, hey, you know, I wanna buy I wanna buy companies. And they will, you know, they'll meet a company at a peer group or something, and they'll explore that as an acquisition opportunity. And, you know, it might work, it might not, but it's like you've seen one company. Like, that you're not gonna make a good investment decision if you're just looking at one one company. You're gonna make a much better investment decision if you're looking at 100 companies. You can pick the best one, or you can pick the ones that sort of meet your bar and you can pursue them. And then also you can be rational in the deal process if you know you have other opportunities and if you have negative findings in due diligence, like you find that, you know, customer satisfaction isn't isn't great and some customers are about to leave, you can you can pass on an acquisition opportunity and and know that, you know, you still got other other opportunities behind that. So I think it just has all these... Giving yourself options as far as acquisitions to do is just so so critical, and there there are just so many effects downstream that... Yeah. I I I think it's important. So I think it's just valuable to have a system that generates a substantial amount of investment opportunities so that, yeah, you can you can really... You know, so that there's a real opportunity cost. So, that... That's kind of what I think what I meant by that.
00:25:52 · Mikk, Ramsey Sahyoun
[00:25:52] S0: Now there are different phases when it comes to buying those businesses. There is finding, there is closing, there is operating and very obvious and you've said that as well is like when you simply do a good deal, you're just de risking other components. So trying to get maybe a bit more practical here. You've seen a lot, you've talked to a lot of business owners. Going down to the very basic level, what have you seen is the best ways to break the ice to build a rapport, Like something I posted the other day, I I've talked to hundreds of business owners myself as well is I always do the the research trying to find an article or interview about them where there's something personal. There was a guy who was really into watches, so I brought it up in the intro call and it really helped. [00:26:36] S1: Yeah. [00:26:36] S0: So what's what's maybe something which you can share, which is like the secret sauce, which which works well when it comes to breaking the ice, building the rapport with a business owner?
00:26:46 · Ramsey Sahyoun
[00:26:46] S1: Yeah. Yeah. I I think doing doing your research and and coming up... Finding some... Something that, you can talk to them about, I think, is great. Think talking about we pay a lot of attention to what's going on in the MSP industry with new technologies or vendors and kind of what the key topics are, you can really come and kind of talk shop with a business owner. I think just being like open, willing to share what you're doing that's working, also like sharing your challenges. So make making a business owner feel like, hey, you know, I don't have to like put up this facade of everything is great. We all know that there are challenges in business. So I think just being open about that. I've always felt like being willing to say things that are not self serving, think can build trust and make people feel like, hey, this guy's not trying to like sell me or spin anything. So, yeah, I'll I'll tell people all the time, you know, hey, I don't I don't think you should sell the business right now because, you know, you're probably not gonna... You know, because it might grow a lot and you could sell it for a lot more in the future. Like, that's that's a very not self serving thing to say. Like, I'm trying to buy the the business, but if it's like what I really believe, then, you know, I should I should tell somebody that. So yeah, I think it's just a lot of little things that build trust and build credibility over time. And then the last thing I'll say is a increasing number of our acquisitions are coming through referrals, like from either people that have sold their business to us or people that have, you know, vendors in the industry that have seen what we're doing and and kinda like what we have to offer to business owners. So that's been really cool. And that's helped a little bit with you're not coming into a relationship totally cold. You have sort of a mutual connection that can start the conversation. So that would be the other thing I would say that has started to work well as we've developed our reputation.