00:35:27 · Kenn Ricci, David Senra
So in 1996, put together this is my first time really starting to look at a business. It's the first time I kind of understand the depth that I have to present the presentation, you know, looking at cash flow and projections. And I go out to different banks, probably 35 or 40 of them with this idea of fund me the amount of money I need to start the business. I think I needed 30 or $40,000,000 of borrow. Wanted to borrow it. And they look at me and the banks are like, we don't get it. Like, where's our collateral? We have the tail of the airplane you're selling out. Like, how do I have a quarter of a plane? None of them were a buyer. I think at the end of twelve months or fifteen months of being on the road, I had maybe 7,000,000 of opportunities if I put up assets equivalent to 7,000,000. It was the worst financing ever. In June 1998, Warren Buffett buys NetJets for $750,000,000 and he christens the industry. And I just happened to be the guy who saw the banks last. And that summer I got almost $300,000,000 of debt financing. So again, accidentally wealthy. [00:36:31] S0: Because they're like, well, is doing [00:36:33] S1: what It's he's [00:36:34] S0: a good idea if It's Warren is [00:36:35] S1: good idea. Yep. And all of a sudden Bombardier Capital, Boeing Capital Fleet Bank, all 50,000,000 here, 50,000,000 there, gave me these lines of credit. That had allowed me to buy the initial fleet, which I went active 10/13/1998. [00:36:50] S0: But what is the company? Is it still Corporate Wings? [00:36:52] S1: No, I phoned a company. I branded that product Flight Options.
00:36:52 · Kenn Ricci, David Senra
[00:36:52] S1: No, I phoned a company. I branded that product Flight Options. [00:36:56] S0: Okay. [00:36:56] S1: That was the brand. Deal is how [00:36:59] S0: the best founders turn the world into their talent pool. I've been studying how history's greatest founders operate for a decade. And one thing they all have in common is they understand that recruiting and hiring the very best talent is your most important priority. A players recognize other a players, which is why top companies like Ramp, Shopify, Eleven Labs, Uber, and DoorDash all use Deal. Many of the top founders I know have personally invested in Deal after using their product. And what they discovered is that Deal is the best company in the world at building infrastructure for global hiring. Deal will help your business hire, pay, and manage any worker anywhere in the world so you can retain the best talent anywhere and spend the rest of your time focusing on what you do best, delivering value to your customers. The founder of Eleven Labs has a great description of the value Deal can give your company. He said, we built Eleven Labs to break down language and communication barriers. With Deal enabling us to hire and support exceptional talent anywhere, we can accelerate our innovation and bring more voices, stories, and ideas to every corner of the world. Deal is trusted by over 40,000 companies and growing fast. Learn how they can help your business by going to deal.com/senra. That is deal.com/senra. So that's flight options. You start with how many planes with flight options? Two.
00:36:59 · David Senra, Kenn Ricci
[00:36:59] S0: the best founders turn the world into their talent pool. I've been studying how history's greatest founders operate for a decade. And one thing they all have in common is they understand that recruiting and hiring the very best talent is your most important priority. A players recognize other a players, which is why top companies like Ramp, Shopify, Eleven Labs, Uber, and DoorDash all use Deal. Many of the top founders I know have personally invested in Deal after using their product. And what they discovered is that Deal is the best company in the world at building infrastructure for global hiring. Deal will help your business hire, pay, and manage any worker anywhere in the world so you can retain the best talent anywhere and spend the rest of your time focusing on what you do best, delivering value to your customers. The founder of Eleven Labs has a great description of the value Deal can give your company. He said, we built Eleven Labs to break down language and communication barriers. With Deal enabling us to hire and support exceptional talent anywhere, we can accelerate our innovation and bring more voices, stories, and ideas to every corner of the world. Deal is trusted by over 40,000 companies and growing fast. Learn how they can help your business by going to deal.com/senra. That is deal.com/senra. So that's flight options. You start with how many planes with flight options? Two. [00:38:14] S1: Once I get the financing, probably 25. [00:38:17] S0: Okay. Why'd you pick
00:38:17 · David Senra, Kenn Ricci
[00:38:17] S0: Okay. Why'd you pick [00:38:17] S1: a number like that? There were three different fleets. Okay. Two light jets and medium jet. And you need about eight aircraft to be your core fleet. In other words, if you and me are both going to buy a share of an aircraft, we recognize there can only be one. Because if you and I want to fly the same day, who gets the plane? So you had to show the potential prospect that you had a fleet. And eight was about the number that people, oh, have eight citations, I'll buy one. And then you have, you can service us. So if you [00:38:47] S0: had 25 planes to start out, how many customers, like what, when do you hit your limit? Like a 100 people's too much? Like what's the... No, because remember these are core fleet. [00:38:56] S1: These planes never get sold. What I do from this point on is if four people buy the citation, I buy another citation. So these 24 aircraft were off. So you [00:39:06] S0: don't stay with 24, 25 for very [00:39:07] S1: And you know what, that kind of, that's still a model we use today. If we look at our fleet of three sixty five aircraft, we would tell you that about 70 of them are core fleet. They don't get sold. They're just there to support your, our customer's ownership and a share of [00:39:20] S0: a jet. Okay. [00:39:21] S1: Yeah. Because we need that because on peak travel days, we're gonna have more demand than there's just not enough airplanes to go around. So we still have that core fleet model. Okay. So, but [00:39:29] S0: this is called Flight Options. Yes.
00:39:29 · David Senra, Kenn Ricci
[00:39:29] S0: this is called Flight Options. Yes. [00:39:31] S1: How do we get from Flight Options to Flexjet? Okay. So it's a little longer than you probably hope, but a $100,000,000 in sales between October and December. [00:39:41] S0: 400. Four, wait, first three months of?
00:39:43 · Kenn Ricci
[00:39:43] S1: David, this was the most amazing thing I've ever seen in my life. People thought it was such a great bargain that they would send me a check I think the buy in at that time was like $800,000 People would send a check for $800,000 and say, send me the paperwork, I want to fly tomorrow. In other words, they loved it so much. They knew they couldn't fly till I had the money. They'd send me the checks and they'd go, send me the paperwork, we'll get to that stuff later. Just let me fly. Yeah. So a 100,000,000 in the first three months, 400,000,000 in the next year. And now all of a sudden I've got a tiger by the tail and no clue, right? Because a business that grows that fast is immensely complicated, particularly for cashflow. And I think at that time, didn't really realize that, you know, in capital intensive industries, particularly aviation, the balance sheet is the whole game. It's not the income statement, it's the balance sheet. You know, forget income, forget EBITDA, it's free cash flow. And how strong is your balance sheet? That's what drives that business. I didn't know that in 1998. I hadn't figured that all out yet. I'm in my early 40s when this is happening. And so then I bring in an equity partner. So now I have some equity partners around the table. 2,000, we have the .com bomb. So I've been through four recessions. That was number three. So now the business is struggling a little bit, cashflow struggling, not volume struggling. And we decide, you know, when a business is in trouble, there's two things you can really do. Well, three things, I guess you could close it down. Two is that you can sell it for a song or three, strategically change direction. So you go to the bankers because your problem is always the credit markets. It's always who's out there for you. And you say, I have a new strategy. I'm going to merge with this company. Here's the projections. And you buy yourself time to see if you can put these companies together. Acquisitions, mergers are incredibly difficult. I hate them. I don't do them very often. I think they're immensely culturally, they're damaging.