Buyers and Builders
00:08:44 · Nathan Lindley
[00:08:44] S1: did you do? Yeah. Exactly. And so remember too, like, you know, I'm I'm in a new city because I'm I'm from Portland, and now I'm living in Dallas. And I'm in a new industry. And so I don't know I don't know what normal looks like. And and then we have COVID going on. So there's there's zero baseline for anything. And so, you know, it's the middle of February and the phone's not ringing. Because I I closed on my deal in in February, like February 12 or something like that. And the phone's not ringing. Is that normal? Should it be ringing? Should it not be ringing? And I'm calling, you know, all these these guys that I know and they're like, oh, yeah. It's normal. Just kinda wait around for the phone to ring and eventually it'll ring. Like, okay. So you're kinda, you know, sitting there toiling your thumbs waiting for something to happen. You know? And then finally, March, April rolls around and it kinda starts to ring a little bit. But again, you don't know if this is if this is normal or if, you know, if it's if it's high, if it's low, if, you know, COVID has, you know, killed your company or if if everyone found out that the new owner's in town and they've gone elsewhere, you know, so it was it was impossible to know what to expect. And so you don't know if you're doing well or not doing well because you have no no baseline for your expectation. It took about two years to realize how badly things were going. I think the other thing too that I had assumed was that if I was angering customers and they were going away that I'd be seeing that coming up on Google. Like, I'd be seeing all these one star reviews showing up on on my Google profile and they weren't. And that kind of made me think that things this must just be normal otherwise I'd be hearing about it. And what I found out much later on is that customers will leave you and not say anything. And so that was, you know, another eye opener. So but along the way, so we closed in February and it... You don't know, you don't know. And so I I was falsely confident and around November, we had this deal come up down in Austin. I we had a location in Dallas. This deal came up in Austin that looked really attractive. So I got my dad to invest his retirement into this Austin deal. And it was a great deal, actually. I mean, even in retrospect, like that was a tremendous blessing.
00:10:53 · Nathan Lindley
But it was also the thing that it scaled us from... You know, the the first company we bought was doing around 1,000,000. The second company we bought was doing about 2.5 to three. As we scale, that's when all of the leaks in the bucket got really big. You know, you all of a sudden, all of them that you started to scale all of your mistakes. And that's when things really got crazy, like super scary, super quickly. And and that was when when the bleeding really accelerated. And so we ended up running out of cash. Boy, I can't remember exactly when. It was like sometime around that summer. I was just like like out... Completely out of money. And, so a friend of mine back in Oregon, he... I've been kinda keeping him in the loop and and, again, kinda falsely confident thinking that things were gonna turn around and this is just kinda part of the industry or whatever, not really realizing how how bad a shape I was in. So he had he had been wanting to invest. And so finally, I was I was actually out of money. Was like, Actually, I... You know, now would be a great time to to get some of that money. And so he had he had invested a $100,000 of his wife's inheritance from her grandfather into into our company. And and so that that kept the lights on for us for a little while longer. Well, as I was kinda talking to the team and saying, hey, guys, we're not we're not making that. We need to do better. We need more more revenue coming in, all this kind of stuff. And then, oh, yeah. Yeah. Yeah. We got you. You know? And then they go back out in the field and we just do terribly. And and finally, I I ran out of this $100,000 that my buddy had given me from his wife's inheritance. So this was, you know, kind of very sacred money. And so for the second time in less than a year, I was out, out, out of money. And I had an $800,000 SBA loan that I was a personal guarantor on. And that was when things really like hit the fan super hard. And part of the issue had been I'd I'd be sitting down. I'm watching this money just like leaving our bank account every single day. I'm trying to figure out what to do about it. And I'm sitting down trying to make an Excel spreadsheet for how to solve this. And the thing that I realized was it was impossible for me to predict my cost of goods because all of my employees were on hourly.
00:13:02 · Nathan Lindley
One guy was making like $40 an hour and he'd go out and he'd have a, you know, dollars 400 day or or sometimes even less. And and then... But then we'd have the other days where we would, you know, bring in $20,000 and that was that was tremendous. Right? But it was just impossible for me to create some sort of formula where I could kinda see how I could work myself out of the situation. And I had done this experiment, in my book publishing company where I had put everyone on a on a piece pay pay rate in our... We had a print shop, and and it was this experiment that I was trying, and, we ended up not not really going forward with it because just documenting all the work that everyone did was just arduous. But the thing that stood out to me was within an hour of implementing this pay experiment, they started coming to me with all of these efficiency improvements. I'm like, well, why? It's too much detail to get into. But they started thinking differently. Literally within an hour, they were thinking differently about how to optimize their pay. And that had always stood out to me like one of those little things that you file away in your mind. And as we were trying to figure out how to right this ship, I I I kept coming back to this idea of we need to get our... We need to put our our technicians on performance pay, on commission. And I would come to them with a suggestion like, one would ever work for commission. It would never work. You would never be able to hire anyone. We wouldn't work for you on commission. And so it just kind of kept getting shot down and kept getting shot down. Well, finally, I'm out of money this for the second time. And I I go into the office. I drive down to Austin to meet with these guys and say, guys, I literally... I can't pay you again. I just made payroll. I have, 2,000 left in the bank, and our credit card was maxed out. I'm like, I... This is the end of the road. Like, we're we're done. And I said, so the the only way that I can pay you now is if you bring in the money for me to pay you. So effective immediately, we're all going on commission because there's just no other way. The physics don't allow this thing to survive any other way. And they all quit on me that day. And so it was was it was kind of one of those things that I knew was going to happen but also hurt way more than I expected it to when it actually happened.
00:15:13 · Nathan Lindley
But it was it was kinda... I remember the the exact conversation that I had with my dad on the phone because my, know, my dad is obviously a shareholder, and also he's my best friend. And I'm kinda like... I'm bouncing ideas with him all the time. But I just... I told him, like, I feel like everyone else has been running this company. And they're making these decisions that just don't make any sense. And I kinda know in my gut that they don't make any sense, but I... But these are the guys who've been doing this for twenty years. And so I'm obviously... I'm gonna defer to their expertise. But it just... It didn't... Never passed the gut check. So I remember talking to my dad saying, feel like I have to take the reins on this thing because no one else is doing it. Yeah. I kinda keep waiting for someone else to step in and and show me how this works, and no one's showing me how this works. And so it was... I, you know, I said, think I'm just gonna have to do this the way that I am pretty sure it needs to be done. So I drove down, had that conversation, and everybody quit. But what was interesting was right at that same time, I had had a guy respond to an Indeed ad. And I think the Indeed ad was, like, 28 an hour or something like that. And he's like, you know, actually, I I have worked on commission before. I actually prefer that. Would you be willing to do a commission? And, like, as soon as those words came out of his mouth, I was like, dude, you're hired. Like, because I was so desperate to try this and no one else in my company was willing to even experiment with this, with with me. And so I was like, dude, you're hired. Let's do this. And I I didn't know what to pay him. I I don't know what discretion structure would look like. He's like, how about we do it this way and guess what I've done at this other company? I'm like, sounds great. I'm like, I didn't have anything to compare it to. So, yeah, let's let's go. So everyone in my company quits. Right? And I and I just happen to have this one guy coming on, like, right as everyone else is walking out the door, which, by the way, was great optics for him to be coming in right as everyone else is leaving. Like, you know, he was seriously wondering if he had made a good decision.
00:17:18 · Mikk, Nathan Lindley
[00:17:18] S0: Before we continue, you now had acquired two companies. First company had this owner, one technician. How many employees had the second company, and how many [00:17:26] S1: So, actually, the second company was pretty big. Second company had... I don't even remember now, but it was around 15 to 17 people in the company at one point. And lot of them [00:17:37] S0: in the field, how many in the office? [00:17:39] S1: Three in the office, and I think they have, like, two install crews and four techs or something like that. It was it was not a not a small operation. Even today, was still good, you know, a fairly good sized operation. Yeah. And... But it had just kinda kinda, like, slowly withered. I mean, you know, the just... The revenue was terrible. [00:18:01] S0: And on the lowest moment, it was just you and this Indeed guy?
00:18:01 · Mikk, Nathan Lindley
[00:18:01] S0: And on the lowest moment, it was just you and this Indeed guy? [00:18:05] S1: And... Yeah. And actually, I... Yeah. Yeah. And actually, I would have to drive down to Austin and run calls with him. And then I would and then I would drive back and run calls in Dallas. So I And actually, there was a time where I was even the guy answering the phone. I would be up literally up in an attic taking calls and trying to schedule the appointment for the next day. And I would be driving back and forth from Dallas to Austin, which if you don't know Texas geography, it's about a three hour drive each way. And so I'd get... I'd book a hotel. My wife and kids would be up here in Dallas. I'd just be gone for a day or two running calls in Austin with that other guy and then coming back to Dallas. And I'd, you know, try and, push as many calls for, you know, two days from now as I could and kinda cluster my Dallas calls together, then cluster my house calls together. And basically, we're just like doing that for, you know, a couple of weeks. Was it was How [00:18:59] S0: were the conversations at home with your wife and and kids? Because it's... I have kids at home as well, and it's... You were in a pretty dark place, I guess. Like, what was... What [00:19:12] S1: Every... Everything that you were imagining it being, it was. Mhmm. It was absolutely awful. It was it was the most scared I've ever been in my entire life, and it stayed that way for a while, for about two years. The... So so what ended up happening with this Indeed guy is