00:41:36 · David Senra, Kenn Ricci
[00:41:36] S0: Why do you hate mergers? [00:41:38] S1: I hate them for me because for me, I think they're a sign of weakness because you can't build your business on your own. You can't, whatever this company is offering you in terms of, let's say it's market share. Let's say they have a part of the market and you have a part of the market and you say, gosh, we'll capture the market. Well, do you really need to spend 12, 10 times cashflow to gab the market? Would you invest that money yourself and get grab the market share? Or do you not have a good enough product to do it? So I think we don't analyze enough what it costs for whatever your logic is for bringing that in. Give me the logic for why you're doing that. And I would tell you 90% of the time, you could probably do this yourself without the acquisition. Now, once you do the acquisition culturally, if you have a business built on culture, which is essential for me, it's essential for us, it's impossible. You can integrate a culture if 10% of the workforce is being added. Adding 30%, 40%, culturally impossible. And then you're going to destroy your culture. So you probably had, you probably overpaid. I don't know if your business, if the business of me reasoning is sound, and you really put your culture at risk. So that's why I don't like them. [00:42:49] S0: Okay. Yeah. So, but you were, this was I'm in trouble. [00:42:52] S1: I'm in trouble financially. [00:42:53] S0: So you have to.
00:42:53 · David Senra, Kenn Ricci
[00:42:53] S0: So you have to. [00:42:54] S1: Yeah, I haven't figured this out yet. You're asking me, this was, this is twenty six years ago. I have knowledge that's accumulated since then. So we merged with a company that's also in trouble called Travel Air. It's a division of Raytheon. And we do the, we slap it together fiftyfifty. Are they in [00:43:09] S0: the same business? What are [00:43:10] S1: they doing? Yes, they have a company called Travel Air that has a brand new product line, but also fractional ownership. And Raytheon owned Beechjet at the time, Beechcraft, Beech Aircraft. And they had merged it with Hawker Beechcraft. It became Hawker Beechcraft. And so they were trying to see, they had Travel Air as a distribution channel for their aircraft. So it's not making money. It's losing $30,000,000 a year. They slap it together with Flight Options, which was marginally breaking even. We were making money, but not free cash flow. So we put these to the company, consolidate, get rid of the back office. Raytheon wants to focus on missiles and submarines. And in the concept of putting these two together fiftyfifty, we come up with shareholders roulette, are you familiar with that term? [00:43:55] S0: Yeah, where you have to- [00:43:56] S1: You have to make an offer Either to you buy [00:43:57] S0: or sell it.
00:43:57 · David Senra, Kenn Ricci
[00:43:57] S0: or sell it. [00:43:58] S1: At the same price. Yes. So I had eighteen months to underwrite the transaction. I go to Warburg Pincus. Need an investment partner to do this. They see the model. They value the business at $360,000,000. I go running up to Lexington, Massachusetts to go into Raytheon to tell them I'm here with your $180,000,000 This company was a piece of shit. And now I'm here, I figure, where are you putting the Kenn Ricci statue that I found, like I found all this money for you? And they looked at me and they thought I was stealing the business and they bought me out. Oh. And I'm gone. 2002, I've lost my throne. It was the worst day of my life. I had, I was passionate. I love this business. My friends were in the business. Hold on, [00:44:39] S0: we gotta pause here because it's How very much of the $180 goes to you personally? [00:44:44] S1: You hit the nail on the head. You a knack for asking the exact right question. I own 16% of the company. Okay. Fast forward today, the punchline is going to be, I bought this company back and now I have a controlling interest. So who thought the worst day of my life?
00:44:44 · Kenn Ricci, David Senra
[00:44:44] S1: You hit the nail on the head. You a knack for asking the exact right question. I own 16% of the company. Okay. Fast forward today, the punchline is going to be, I bought this company back and now I have a controlling interest. So who thought the worst day of my life? [00:44:57] S0: But still, like you thought, let's go back to like you were... You learned how to be a pilot when you were in college. You grew up, you know, middle class in Ohio. Yep. And you have millions of dollars. And you just said it's the worst day of your life. This is really, really important because the whole point of this show is like I usually talk to people that do things for a very long time. And there's like this new industrial, like entrepreneur ecosystem, and it's driven by investors. And they tell, they give the worst advice to founders ever. They're like, start a scale sell. Yeah. It's like, I've talked to all these investors, or excuse me, these entrepreneurs are sold. Yeah. They all talk about like this. No, no, no. If you sold something you loved, they're like, Yeah, but your Travis from Uber was in that chair. And he made billions of dollars and lost Uber. Ask him how he felt when he had 4 or $5,000,000,000 dropped in his head. He didn't give a shit. [00:45:42] S1: Didn't give a shit about it. Absolutely didn't give a shit about it. Start scale, get a new investor. [00:45:47] S0: It's crazy. So, okay. So worst day of your life, let's take me to that. You were like, I thought I was gonna have this company. They bought you out.
00:45:47 · David Senra, Kenn Ricci
[00:45:47] S0: It's crazy. So, okay. So worst day of your life, let's take me to that. You were like, I thought I was gonna have this company. They bought you out. [00:45:54] S1: First of all, no one was gonna be more passionate about building that business than me. I don't care who Raytheon put in there. It was never gonna, you know, these businesses are small margins. They're highly technical. It's a, there's not an MBA program at Harvard on how to run private aviation. At least there wasn't at that time. It's become a lot more popular now. [00:46:12] S0: You're in your forties at this point? [00:46:13] S1: Yeah, 42. Married with children? Yes, at the time. [00:46:17] S0: How many kids? [00:46:17] S1: Two children at the time. [00:46:18] S0: Okay, yeah. So you got a couple of tens of million dollars, whatever the number What's your thought process? Well, first
00:46:18 · David Senra, Kenn Ricci
[00:46:18] S0: Okay, yeah. So you got a couple of tens of million dollars, whatever the number What's your thought process? Well, first [00:46:26] S1: of all, I always say it was the worst day of my life. I lost my throne. I lost my passion for living. I lost the vision. I didn't have any vision. Like what am I doing now? And then, you know, when you do this, it's horribly conflicting because you don't want the company to succeed without you, right? You had to be the binding force. So you really don't want it to succeed. But on the other hand, you don't want it, you don't want it not to succeed. You built this baby. Your friends are there. If it doesn't succeed, then your whole idea was for shit. So it's very conflicting. And I got so tired like of being in Cleveland and at a restaurant. What happened? People wanted to hear this story because at the time, you know, there's 800 employees. So all in, mostly in Cleveland. So I decided I was going to move. [00:47:09] S0: This is what we were talking about before. I was like, where do you live? You're like, Arizona. Was like, [00:47:12] S1: how the hell [00:47:12] S0: did you wind up in Arizona?