00:08:14 · Ramsey Sahyoun
[00:08:14] S1: Yeah. Yeah. Let's see. So so we had the inspiration after after the Berkshire meeting is when we really had this inspiration to start a holding company. And Jeff actually wrote Graham Weaver, the kind of pitch for Evergreen when we're on the flight back from from Omaha to San Francisco. And then one thing kinda led to another, and and we kinda made this pitch to aggregate service companies under a holding company, we didn't specify an industry. And then one of one of the... That the main piece of guidance that Alpine gave at that time was, hey, pick an industry that you like and focus on it, and get really good at buying and operating companies in that industry. So I remember, you know, we had a... We we We pursued a number of different industries. We actually had an opportunity in the MSP space, and we had an opportunity in another industry. And I remember, you know, it was probably around December 2017, we made the decision to kind of go pencils down that other industry and focus on MSPs and get really good at that. So that was kind of how it came about. But yeah, I think I... It never, like, felt like we were leaving Alpine necessarily. Like, we were we were leaving, like, working at the head office of the private equity firm, and we were essentially going out into the portfolio, but we were doing it with their their full kind of backing and support, and we were aligned on the thesis and everything. So, you know, it it really felt like they were backing us to go do something versus us leaving and they happen to raise... Like, give us capital, like it was... We were kind of aligned, you know, the the whole way through.
00:10:21 · Mikk
[00:10:21] S0: Thanks to this accountant podcast. A lot of... I have a lot of conversations with people who work in a B firms, thinking of leaving, they have the experience, they've seen how to put together the deals, they've seen how to raise capital. Some have done it, they've left, but still twelve months, eighteen months in, they still haven't been able to close a deal because it's it's it's very hard, and it's... There's a lot of pressure financially. So you were just 25 and 27 with Jeff. Like, where were you financially where where you decide... When you decided to leave?
00:10:57 · Ramsey Sahyoun, Mikk
[00:10:57] S1: I mean, probably where a lot of people 25 and 26 were. Let's see. Yeah. I mean, I I was living in a apartment in San Francisco. I had roommates, like, you know, all the all all the stuff. But but I also didn't have any... You know, I don't... Didn't have a family or kids or anyone relying on me except myself. So that was good. Yeah, I mean, I think we were in a good... We didn't have a bunch of money saved up or anything. At least I didn't. But, you know, I think we were in a good place to start the company because we had no other responsibilities, and you can just kind of be very single-minded and running towards building the company. I think about that a decent amount because now I have a wife and I have a young daughter at home and you wanna spend time with them and that takes a lot of time. So I don't know if we would have been as, I don't know, maybe we would have been as successful if we started the company at the current stage of our lives. But I think it was kind of a blessing to start it that early when you could just run super hard at building the business. Okay. [00:12:19] S0: Now tell me about how was the first maybe six, twelve, eighteen months post close, because you've seen it all in Alpine and now you're, we can say independent doing it for yourself. So how was it Like, how many acquisitions did you do? What were the lessons? How did it feel? I mean, the pressure must be must be serious, like, when when you own own own own a company versus just representing another firm.
00:12:44 · Ramsey Sahyoun
[00:12:44] S1: So the first acquisition we did was company, Wolfe Consulting. It's a company we bought on 12/31/2017. That has been a just incredibly successful acquisition. I mean, I think we've grown earnings of the business four times or something like that. And we bought it at a reasonable price. And it's just been like, you can't draw a better first acquisition. We also made some mistakes in the early years, like we a mistake we made in the first year is we tried to roll up a few smaller MSPs under a single platform in a certain region. That was kind of in the middle of twenty eighteen, I think is when we started that. So on one hand, we did this amazing deal with Wolfe Consulting. It was off to a good start. We'd done a few other deals in kind of the decentralized model that went well, but we tried this kind of more of roll up, what people kind of traditionally do, where they integrate these companies under a single brand. But it just went horribly. And we can kind of get into what... You know, why that was. But it it really reinforced our belief in decentralization. We always believed in decentralization, but we got kind of excited by this opportunity to roll up small MSPs under under a bigger platform. And it didn't go well. And that really reinforced, hey. It's interesting. Like, when you see one business going super well and another business in the exact same industry going not well, like it it does, you can draw a lot of conclusions from that. I think we did. Thankfully, we we kept buying companies aggressively in the in in the MSP industry. Like, we didn't let the challenges with that one business, you know, keep us from believing in the industry and believing in the in in the thesis, and we could have at the time. So I'm I'm grateful that we didn't. Perhaps that was a benefit of being twenty twenty five or 26 years old is you just kinda stubbornly keep going. But... Yeah.
00:15:12 · Mikk
[00:15:12] S0: So what went wrong if if you compare those? You had this decentralized model working working extremely well, and now you're trying to do a roll up. Like, can you share more details? Because I think that's that's a big one for for folks listening.
00:15:25 · Ramsey Sahyoun
[00:15:25] S1: Let's see. So I I think the the main... Like, the overarching thing that that went wrong is, and this applies generally I think when you roll up companies at least in the MSP industry, is you lose customer intimacy and service quality degrades because you go from if you're a customer of a small business, you go from being serviced in a way that you like with that small business to your relationship changes to someone at corp... The corporate office who doesn't know you, who doesn't know your business, who's less responsive because they've got a lot of things on their plate, and who oftentimes is more is more junior in the in the organization. So you kinda lose that customer intimacy, that high level of service. You know, MSPs are trusted technology advisors for small businesses, so they're helping them with what tools should I be adopting? How do I keep myself secure from cyber threats. When something's broken, I need it fixed quickly. So you just lose a lot of that when you centralize certain functions in a single corporate office that isn't as close to the customer, so that's what happened there. One kind of interesting thing we observed is that all the branch offices thought they were doing great. Like, the numbers were good, like profitability is good, but the corporate office, this one corporate HQ, was doing terribly. Like it was just absorbing all the cost. And so you had this crazy thing where the business wasn't doing well, but all the people at the branch offices thought they were doing well because it was just you know, they they were doing their jobs, but there was a bunch of costs that they couldn't even see, no visibility into that were being absorbed by corporate. So, yeah, I mean, these these are just classic things. We see a lot of roll ups in in our industry, and and by and large, they they struggle to grow organically. And sometimes they shrink organically pretty meaningfully. And it's it's always due to that loss of customer intimacy, which drives up churn. And and then there's there's all these kinda costs that corporate absorbs, and then there's bureaucracy, and you're just less responsive to the customer. And and it doesn't work. So we we learned that lesson in 2018 and have thankfully taken it to heart.