In this episode of the M&A Launchpad Podcast, hosts Casey Minshew and Feras Moussa interview Rob Carpenter – an accomplished entrepreneur who got his start in AI before AI was popular and eventually exited to begin his own family office focused on home service acquisitions. Rob was born in an Eskimo village in Alaska and moved to Colorado where he launched his first software development company. After buying firms in India and London, Rob sold the business after seven years. Soon after, Rob started Valyant AI, which sought to build holographic employees. Although Valyant was exciting and innovative, it was too early for adapters of AI. Rob exited and after a few ventures, decided to launch the family office to acquire and invest in other established businesses.
Throughout the episode, Rob emphasizes the importance of operational efficiencies, cash flow management, and digitization in acquired businesses, particularly in traditional industries. The discussion also explores the impact of AI and robotics on various sectors, the role of Google reviews in business growth, and the strategic decisions involved in acquisitions. Rob underscores the value of problem-solving in entrepreneurship and the lessons learned from past mistakes, offering key insights for those looking to navigate the world of business acquisitions.
In this podcast episode, we discuss:
- How AI is Re-Shaping the World
- Too Early in AI
- Running a Family Office
You can connect with Rob by email: rob@frostrivercapital.com
Additional Resources:
- Access our archive of video interviews on YouTube
- Get in touch with show hosts Casey Minshew and Feras Moussa at – info@equitylaunchpad.com
- Looking to invest in M&A opportunities or partner with an advisor to acquire, scale or sell your business? Visit Equity Launchpad
🎧 Podcast on Spotify: https://open.spotify.com/episode/3hLj2TakMUWqOkH7jyIXNP?si=f6a2d6f8ec4a482e
🎧 Podcast on Apple: https://podcasts.apple.com/us/podcast/pioneering-ai-and-acquisitions-with-rob-carpenter/id1740382586?i=1000689734375
🎟️ Attend Upcoming M&A Launchpad Conference: http://malaunchpad.com/
Transcript
00:00 all right on today’s episode we
00:01 interviewed Rob Carpenter where we
00:03 talked about what it looks like to move
00:05 from basically starting a software AI
00:07 startup and moving into m&a right and
00:09 buying a more traditional m&a business
00:11 and in this scenario we specifically
00:12 talked about buying a Molly maid’s house
00:15 cleaning business and some of the kind
00:17 of mistakes made upfront and then really
00:19 how you kind of solve those and then
00:21 really buying at second one and starting
00:22 to get some of those economies of scales
00:24 so Casey what were some of your
00:25 takeaways yeah and you you’ll kind of
00:27 get this uh going from an a software
00:29 developer startup kind of mentality
00:32 right there’s there’s just man it’s it’s
00:34 moving fast it’s going quick and so you
00:36 can see that Rob you know is very much
00:37 of a technici right he he’s knows these
00:40 kpis he knows where it’s got to be and I
00:42 think it’s extremely important when
00:44 you’re in business that you are looking
00:45 at it like you’re a scientist You’ got
00:47 to dive into the details you got to know
00:49 the stuff but then he was also very
00:51 self-aware on his second acquisition to
00:53 learn from trying to move too quick and
00:56 not be too ppus and to focus on cash
00:58 flow in those first six nine months
01:00 pretty impressive Story I mean even
01:02 though the franchise side it’s buying a
01:04 company it’s doing a lot of different
01:06 things to grow your cash flow and your
01:08 portfolio yeah know and like we talked
01:09 about I being an entrepreneur it’s about
01:10 solving problems managing projects and
01:13 the third one he said is just kind of
01:14 knowing people so that’s some we’ll get
01:16 in on this
01:20 episode hey Rob welcome to the show hey
01:22 thanks so much for having me I
01:23 appreciate it excited to have you today
01:26 and hear your story yeah well thank you
01:28 I’m excited to chat with you guys all
01:29 right so let’s let’s get right in so you
01:31 know really for those listeners right
01:33 our story today is about going from a
01:35 software AI company to going off and
01:38 buying your own business and so Rob
01:39 maybe give the listeners a little bit of
01:41 a just background on your story and kind
01:43 of you know how you got into the
01:44 software space and then how you made
01:46 that transition into the m&a side yeah
01:48 I’d be happy to I know for me personally
01:50 when I’m listening to podcasts I can get
01:51 a little uh bored listening to you know
01:54 the thousandth background so I think
01:56 I’ll move through this a little quick
01:57 but I have a very eclectic background I
01:59 was uh born and raised raed in a upic
02:01 Eskimo Village uh right on the west
02:03 coast of Alaska on the baring sea
02:05 despite what you might have heard from
02:07 other people I could not see Russia from
02:09 my back doorstep no matter how hard that
02:11 I tried I spent all 18 years born and
02:14 raised up there did uh undergrad down at
02:17 Northern Michigan University because I
02:18 had family down there got a degree in
02:21 entrepreneurship actually I’m sure like
02:23 a lot of people I read Rich Dad Poor Dad
02:25 Millionaire Next Door and it just
02:27 totally changed my perspective on life I
02:30 got out to Colorado where I live now
02:31 with my family in
02:33 2010 I got my Master’s Degree uh with a
02:36 specialization in Enterprise technology
02:38 management my first company that I
02:40 launched was a custom software
02:42 development company I bought a firm in
02:44 India bought a firm in London ran that
02:47 business for about seven and a half
02:48 years and then sold that company and uh
02:51 around 2017 I came up with the idea for
02:54 Valiant AI it originally started out as
02:57 we were trying to build straight up
02:59 holographic employees and so we used a
03:02 transparent OLED display so think of
03:05 flat screen TV merged with a gaming
03:09 engine and so we used unity and we’d
03:11 render a full-on five and a half foot
03:13 tall fully animated person we used the
03:16 Intel real sense camera and so we could
03:18 have facial recognition and we could
03:19 greet You by name the initial idea is
03:22 think of a hologram that could give you
03:23 directions around Home Depot help you
03:25 with a home loan could sell you a
03:27 cheeseburger could rent you a car any
03:30 one of a number of industries that are
03:32 struggling from a labor perspective we
03:34 found very quickly in that company that
03:36 it was rather easy to build the
03:38 holographic element it was
03:41 excruciatingly hard to build the actual
03:44 conversational interface So within about
03:46 a year we pivoted we doubled down we
03:48 really focused on building our own
03:50 conversational AI platform so this was
03:52 2018 2019 I think I can truly say few
03:56 years too early almost I was doing it
03:58 before it was cool and I would say
03:60 ultimate lesson from valion is we were
04:01 just way too early I think there’s a
04:03 huge huge Qui were you doing neural
04:05 engines or what exactly were you using
04:08 kind of were we doing it very brute
04:10 forced so I mean it was just everything
04:12 in the kitchen sink so it depends on
04:14 what element you’re looking at in the
04:15 conversational AI interface but if you
04:17 specifically dial in on speech to text
04:19 for example we built our own proprietary
04:22 speech to text engine on top of an open
04:24 source framework that existed at the
04:26 time we then ran two other speech detex
04:29 programs in parallel and we would run
04:32 audio through all three and then we
04:34 would have then sub ml modules that
04:36 would look at the outputs and try to
04:38 correlate and pick the best one
04:40 originally and then eventually
04:42 amalgamate them together to arrive at a
04:45 higher accuracy and that was one node of
04:48 10 that exists within the flow of a
04:51 conversational AI platform so extremely
04:54 complicated uh very exciting uh and too
04:57 early so ran that company you money
05:00 around the idea you had to raise some
05:02 Capital right yeah so you done the whole
05:04 thing start the idea raise capital and
05:07 and and it it led to an exit right yep
05:09 yeah and so we ultimately ended up
05:11 selling that to one of our competitors
05:13 who was doing a rollup in the space
05:15 along the way I personally closed deals
05:17 we were targeting Quick Serve
05:18 restaurants or fast food so I personally
05:21 closed deals with most of the largest
05:23 companies uh in that space so raised 18
05:26 million for that company we won a tech
05:29 crunch AI and Robotics event got a bunch
05:32 of front page press on a lot of national
05:34 and international Publications so it was
05:37 a wild ride it was it was fun and
05:39 stressful and everything that a high
05:40 growth Tech startup is so I exited that
05:43 company about a year and a half ago took
05:45 about nine months off and then basically
05:48 I’ve launched a very very small family
05:50 office and just doing some rollups in
05:53 the Home Services space here in Denver
05:55 and I probably average about 10 to 15
05:57 hours a week worth of work so it’s it’s
05:60 not a bad place to be right now it’s a
06:02 great story and one of the things that
06:03 we lead a lot of uh the people that are
06:05 probably listening to the people we talk
06:06 to you know I did startup for three
06:09 different startups in my career over 15
06:11 years of starting a company from zero
06:12 growing it you know raising capital and
06:15 doing those things yeah then I got into
06:17 acquisition entrepreneurship in 2019 you
06:20 know and I’ll tell you even though that
06:21 it’s it’s easier to buy the revenue and
06:23 all that stuff I would say the journey
06:24 isn’t easier um I feel I find I found it
06:28 all very hard to
06:30 you got love what you do what’s your
06:32 experience now you’ve done the startup
06:34 raise of capital now you’ve bought a
06:36 company what’s kind of been your story I
06:39 would from my perspective it’s
06:42 monumentally easier to buy an existing
06:45 business and I would say that the
06:47 fundamental difference and this is very
06:49 specific to trying to build Cutting Edge
06:51 technology is being on the other side of
06:54 the chasm for product Market fit um when
06:57 you’re truly trying to invent new
06:59 technology you’re also inventing new
07:01 markets uh and that’s a very difficult
07:03 prospect it’s a very timec consuming and
07:05 a very Capital intensive uh Prospect to
07:08 pull off if you buy an existing business
07:11 they’ve already figured everything out I
07:13 think in some ways it’s like bringing a
07:15 gun to a knif fight I think a lot of
07:17 these people especially that that I’m
07:19 interacting with and I’m buying
07:20 businesses from a lot of them grew up in
07:22 these businesses a lot of them might
07:24 have been techs uh in my case cleaners
07:27 uh that became owners and and they’re
07:31 they’re operationally very good but
07:33 maybe not the most aggressive or
07:35 strategic kind of minded and so I do
07:38 think there is a lot of opportunity for
07:39 Acquisitions and rollups in this space
07:42 um while also learning I mean there is
07:45 uh more that the people I interact with
07:48 have forgotten than I have learned about
07:50 this space and so I think one of my key
07:52 learnings so far is is being uh
07:54 respectful and understanding that
07:55 there’s reasons they do things the way
07:57 they do from an operational standpoint
07:59 and you be thoughtful uh about that as
08:02 you’re going into a new
08:03 business yeah so I want to unpack that a
08:05 little bit right and it’s funny because
08:06 I was listening to a podcast the other
08:08 day and they were talking about how you
08:10 know Searchers are just NBA people and
08:12 most of them don’t succeed etc etc but
08:15 the key thing really is you know it’s
08:17 about first being an entrepreneur at
08:19 heart right whether you’re doing a
08:21 startup or you’re buying a business and
08:22 operating it you know you have to
08:24 understand the mechanics of a business
08:26 right in both scenarios and then you
08:28 know going from startup to something
08:30 that’s already you know more what’s the
08:32 word more mature yeah right and you have
08:34 to almost stop yourself from wanting to
08:35 reinvent the wheel right because it’s
08:36 really not about hey you know we’re
08:38 going to completely revolutionize this
08:40 industry it’s actually more about
08:41 applying a lot more of the things that
08:43 come from Tech you know into that
08:45 industry to just oper get operational
08:47 efficiencies right and I mean whenever I
08:48 was at Microsoft I left Microsoft with
08:50 the thought process of hey let me go
08:51 into some of these industries and build
08:53 custom software to revolutionalize them
08:56 and ultimately what I ended up doing
08:57 right was actually just using the stuff
08:59 that is normal
09:00 in software and apply them to just give
09:03 us more efficiencies right and it could
09:04 be as simple as kpis like that you know
09:06 you don’t have a software company
09:07 without kpis right there it’s it’s a
09:10 one-on-one kind of thing but all the
09:12 businesses we’ve bought you know they
09:14 don’t know their kpis most of them can’t
09:16 even tell you what their true profits
09:18 are right and so it’s these kinds of
09:20 things at least from my experience that
09:22 really you know guys like us go into
09:25 right and it’s focus on those versus
09:27 like hey I’m going to completely change
09:28 what this industry is doing revamp it so
09:31 yeah I would agree with you on that I
09:32 mean I think my big lesson so now I
09:35 bought two right is the first one I
09:37 acquired I was excited right I went in I
09:40 had my pile of working capital and I
09:42 started changing things and I don’t
09:45 think I had a really great understanding
09:48 of the operational finances of the
09:50 business and I very quickly got beyond
09:52 my skis and I had to then spend several
09:54 months pulling things back so I would
09:57 say one of my like absolutely critical
09:59 takeway when I was listening to these
10:01 podcasts people would always say like
10:03 hey run the business for two to six
10:05 months before you change anything and I
10:06 was like ah I don’t know I’m an NBA I
10:08 can go and start changing things I’m
10:10 like I was wrong I was like really wrong
10:12 so I definitely encourage people that
10:14 are listening to this like that is
10:16 actually legitimate wisdom of like give
10:17 the business some time and really
10:19 understand and like just run it
10:21 profitably after you’ve taken it over
10:23 for several months before you start
10:25 impacting that profit by investing in
10:27 new initiatives now I am happy to say
10:29 that like I did touch the burner you
10:31 know I burned my hand a little bit but
10:33 now I’ve learned my lesson and so the
10:34 second company that I bought in November
10:36 of 2024 I really didn’t change anything
10:39 and it’s continuing to run really well
10:41 and so I’m kind of I think happy with
10:44 that and as I move forward with other
10:46 Acquisitions with bigger Acquisitions
10:48 that’ll be an important life lesson for
10:50 me and sometimes you just got to go
10:51 through the pain to kind of get to that
10:53 point the last thing I’ll say on this um
10:56 the one thing that I have changed in
10:57 both offices that has not been negative
10:60 really in any meaningful way is just
11:02 digitization you know I’m buying from
11:04 owners that are 68 to
11:07 75 and whether it’s dispatch or reports
11:11 or payroll I mean almost everything is
11:14 still manual in paper you know there’s
11:16 huge filing cabinets filled with paper
11:19 data going back 20 years with customers
11:21 literally like customers credit card
11:22 information written down on paper right
11:25 um and so very quickly we started number
11:27 one shredding all of that stuff and to
11:30 digitizing everything there’s really
11:32 been no major negativity or push back
11:35 from that those were good decisions to
11:37 make uh and I’ve now even the second
11:39 office mostly digitized all of our
11:41 operations and there’s been no no
11:43 negative sort of repercussions for that
11:44 so I think people are kind of you know
11:46 you’re okay moving forward with that
11:47 type of stuff it’s pretty amazing when
11:49 you take it from from paper yeah and you
11:52 move it completely to technology we just
11:54 did that it took us about nine months
11:56 yeah um over at H&M and it it was
11:60 significant because you got thousands of
12:01 invoices that go out a month and now you
12:03 put it automated and it’s it’s
12:05 unbelievable the amount of efficiency
12:07 that’s gained yeah and then being able
12:09 to see the data and dive in because you
12:11 know I mean that’s one of those things
12:12 and I agree with you when you go into a
12:14 company it’s it’s very important I think
12:17 that first six to nine months to just
12:20 learn yeah like do like make your list
12:22 build your business plan all of those
12:25 things right and uh you know what I mean
12:27 because that’s a big part of it it’s
12:29 just the take over the transfer you’re
12:30 buying something that works so don’t
12:33 like and then you find those
12:34 efficiencies and I always like to start
12:36 with kind of like HR payroll benefits
12:39 low-lying things that you could try to
12:41 impact in a way maybe getting into the
12:43 the the the the insurance and and and
12:46 and trying to address some of those
12:47 things maybe that the owner just didn’t
12:49 overlooked didn’t know and then maybe
12:52 look at the accounting stuff those are
12:53 things that you can touch that no one
12:55 really cares about but when you start
12:57 messing with the operations oh man well
12:60 it can be it can be
13:02 severe less yeah yeah it’s about clear
13:06 value props right I mean you know if
13:07 you’re going in and improving benefits
13:09 there’s a clear value prop hey if we
13:10 switch to this system you’re going to
13:11 get much better Healthcare great people
13:13 understand that you know if you’re going
13:14 to go in and basically we’re going to go
13:17 into digital this or that people can
13:20 understand that right it’s really
13:21 operationally is a lot more difficult
13:23 because a there’s probably more bad
13:25 habits to retrain and b sometimes they
13:27 don’t see the value prop because it’s
13:29 it’s one smaller piece of a bigger Cog
13:30 right and so um and maybe Rob do you
13:33 mind maybe diving into the businesses
13:35 you bought right kind of what did the
13:37 story look like what kind of businesses
13:38 were they what kind of multiples
13:40 anything kind of around that you can
13:41 share and how you found them yeah so we
13:42 must throw the whole story in there sure
13:44 yeah absolutely so I um I’m part of a
13:47 group called entrepreneurs organization
13:49 EO and put you in forums there’s a group
13:52 of eight of us uh it’s an amazing group
13:54 of humans and multiple people in that
13:57 group had bought companies uh as I
13:59 talked about with both my custom
13:60 software company and the AI company
14:02 those were zero to one startups um
14:04 having gone through that experience and
14:06 frankly being a little burned out uh
14:08 after the tech roller coaster I was
14:10 leaning towards buying a company and so
14:12 I was able to sit down with some friends
14:14 get some advice from them and I launched
14:16 my kind of search fund on January 1st of
14:20 2024 um I’m self-funded I wasn’t raising
14:23 capital I wasn’t going the traditional
14:24 route um but because of that I basically
14:27 was sitting on the pile of cash that I
14:29 had to use for my acquisition January 1
14:32 um I also have a very lovely wife and uh
14:35 two young daughters so it’s like I’m
14:37 also raising a family right and so for
14:39 me time was really critical in that
14:42 acquisition process because in my mind I
14:45 almost basically saw a line graph right
14:47 that over time month over month the
14:49 longer it took me to buy a business the
14:51 less money I would have to buy the
14:52 business because I would also need that
14:54 money for you know running our family
14:56 lifestyle while no income was coming in
14:58 so I was very very motivated to get a
15:00 deal done quickly so I launched my my
15:03 search January 1 um within six weeks I
15:07 had made four full offers the fourth one
15:10 was accepted uh uh you know at the end
15:13 of the the six weeks and that was for
15:15 residential cleaning company so I bought
15:17 a merrymaids
15:19 franchise um my Loi my offer was for a
15:23 6we close and I managed you know my
15:25 banker my finance I managed the seller I
15:28 managed the broker I managed the
15:30 franchisor who had to approve it and had
15:32 to manage the process and we closed the
15:34 transaction six weeks on the dot so from
15:37 launch to owning a business took me 90
15:40 days so took over that business uh April
15:43 1 um there was definitely a lot of
15:45 learning that was going on from the
15:47 prior owner interestingly the guy who
15:50 sold me the business his name was Brian
15:52 Peterson his dad D founded the entire
15:56 marry Maids brand and he was like yeah
15:58 my dad started Ed it and I thought he
16:00 was talking about this location and he
16:02 was like no like he started the whole
16:04 thing uh and then eventually sold it to
16:05 service master service master uh has now
16:08 been acquired by roor Capital which is
16:10 the biggest player in the franchise
16:11 space um but it’s sort of kind of cool
16:13 lineage you know if nothing else
16:15 interesting story to tell uh of getting
16:17 into it I had already mentioned I kind
16:19 of made my mistake right getting ahead
16:21 of my skis
16:28 overinvestigation have proven methods
16:30 and a lot of rails and so was were was
16:34 there not a lot of rails or were you
16:35 just really blowing and going and just
16:37 kind of you know overly
16:39 confident exactly happened a little too
16:41 confident a little too too sure of the
16:43 things that I wanted to change I mean I
16:45 think it was a very paper business it
16:46 was very manual business uh it was very
16:49 analog business um which I’m surprised
16:51 right you have thought the franchise
16:52 would have streamline that more so for
16:54 them okay yeah you would have thought
16:56 and now almost a year in you would think
16:59 that they would be doing that but they
17:01 are not they’re working on it they’re
17:02 trying no so I would say probably two of
17:05 the biggest areas where I kind of got
17:06 ahead of myself one I brought in more
17:08 expensive accounting than I needed
17:10 because I knew early on my plan was
17:13 scale was to buy more locations
17:15 obviously I want to grow organically I
17:17 want to run a good business but I was
17:18 very focused pretty early on that for me
17:21 this is a multiple Arbitrage play so
17:24 that if I eventually sell this business
17:26 my goal is to buy things you know 2.2 to
17:29 2.8 times evida bundle them together
17:32 into a much bigger Company still small
17:34 but a bigger company and then sell for
17:37 four to five times evida and so I wanted
17:40 to have professional support so I had an
17:42 expensive accounting team and then I
17:44 also brought in basically a fractional
17:46 Chief marketing officer um because I did
17:49 want to do my best to try to or you know
17:51 grow the business organically out of the
17:53 gate and this was an example of me just
17:56 not fully comprehending the finance of
17:59 the business yet Beyond kind of the
18:01 preliminary stuff that I had done prior
18:03 to the acquisition but it is different
18:05 once you’re in the dayto day finances do
18:07 change once you buy the business and I
18:09 knew these things right but they still
18:11 impact stuff I’ve got rent you know the
18:14 prior owner owned the business they
18:15 didn’t have rent I’ve got debt prior
18:17 owner didn’t have debt right you need to
18:19 look at probably some bonuses for some
18:20 of the staff I’m a big believer you know
18:23 even if you’re setting it up in advance
18:25 take a little out of working capital
18:26 make some investments in the business so
18:28 people see some sort of immediate
18:29 improvements in their life and so I just
18:31 I don’t yeah I was I was going to say
18:34 like on this point here it’s that cash
18:36 flow management that’s why they say and
18:39 I’m kind of bringing it to light what
18:40 you were talking about because we’ve
18:41 experienced it twice in Acquisitions is
18:44 you know we want to grow we want to go
18:46 but the first thing you need to do as an
18:48 entrepreneur is sit in manage the cash
18:51 flow yeah like so we built the thing
18:53 called a 13 weeks and then we brot out
18:55 broke out every single payable that you
18:57 could possibly have every week but that
18:60 took months before we got into that
19:01 because we were burning cash yeah now I
19:03 have interest you have all these things
19:05 it just catches you so I didn’t mean to
19:07 interrupt but it’s so important you buy
19:09 a business that’s what you’re doing in
19:11 those first six to nine months you’re
19:13 managing cash flow yeah and I mean in
19:16 retrospect I am glad that I bought a
19:18 smaller business because I’m glad I’m
19:20 making these mistakes on a smaller scale
19:23 right so you would asked her previously
19:25 for some numbers for the first business
19:27 I bought was about a half a million
19:28 dollars in Revenue so it’s a small
19:30 business um or no excuse me sorry that’s
19:32 wrong it was a half million dollar
19:33 purchase price about a million dollars
19:35 in Revenue about $20,000 in evida and
19:39 that’s basically duplicated the second
19:41 business now that I’ve bought and what
19:42 I’m looking to do is buy five get to a
19:44 million plus in evida where I think I
19:46 can get a bit of that that multiple bump
19:48 if I decide to sell the that’s a pretty
19:50 good size franchise that’s a good that’s
19:53 a good number I
19:55 me yeah I’m learning now that I’m in
19:58 that these are in the top cortile for
20:01 merrymaids at least in terms of Revenue
20:03 size there’s probably four or five other
20:05 owners across the country that have
20:07 assembled multiple offices but even
20:09 within merrymaids there’s not a lot of
20:11 them uh so my goal would be to put
20:14 together at least five locations roughly
20:16 around a million dollars a piece um for
20:19 this kind of and you’re buying them at
20:20 two and a half to 3 ex which is actually
20:22 pretty attractive too right given again
20:24 that it’s a franchise and um and did you
20:27 do traditional SBA on that one
20:29 not the first one um so I did sort of uh
20:32 non-traditional financing I have a real
20:35 estate investment with some buddies I
20:38 personally guaranteed the debt on those
20:40 Investments and so I had left when I was
20:43 CEO of my AI company and I was making a
20:45 bunch of money it was no big deal to
20:46 personally guarantee this debt on these
20:48 real estate Investments well once I had
20:50 left my AI company but I hadn’t yet
20:52 bought another company now I was
20:54 suddenly in this Catch 22 where I had no
20:56 income coming in and I had a very high
20:58 DTI with these real estate Investments
21:00 that I basically pged so I kind of put
21:03 myself into a bit of a bind my wife and
21:05 I we were fortunate enough we had paid
21:07 off our house uh and so what I did is I
21:09 used some debt on our primary residence
21:11 to do the acquisition and then we have a
21:14 bunch of money in the market and you can
21:15 take out margin loans against your
21:17 Equity that you have in the market not a
21:19 great long-term strategy but to get an
21:21 acquisition done kind of get through
21:23 that hurdle and then get to that point
21:24 where I had some income coming in felt
21:26 like a worthwhile tradeoff with the
21:28 second acquisition that I did I did use
21:30 SBA for that purchase so kind of all
21:32 over no fear I love it it’s like go
21:34 after it make it happen figure it out I
21:36 mean that’s Tru what entrepreneurship is
21:39 it is at the end of the day because we
21:41 talked to so many people that you know
21:42 they’re still thinking about it or
21:43 they’re trying to figure out well oh my
21:45 God I got a personally guarantee and
21:46 you’re like of course you do like I mean
21:49 you know of course I mean it’s not GNA
21:50 be a free ride but when you start
21:52 thinking about it man like hey I’m
21:53 willing to take on debt on my I believe
21:55 in myself and I believe in my ability to
21:56 run a company make that bet yeah that’s
21:60 exactly not even that it’s entrepreneurs
22:02 aren’t the smartest people in the room
22:03 but they’re the ones that will slog it
22:05 out I mean Casey comes by the office and
22:06 he sees just the kind of the the crap
22:09 that me and my partner will put up with
22:10 and deal with and work through some days
22:12 but it’s about constantly working
22:13 through the challenges having Solutions
22:15 having good partners and ideating and
22:17 moving forward yeah all entrepreneurship
22:20 is at the end of the day is problem
22:21 solving and then management I say it’s
22:23 those two I always say it’s project
22:25 management and problem solving right
22:26 that’s why tech people naturally gravit
22:27 to because it’s just about being
22:29 organized and keeping things moving and
22:31 then problem solving and I’d also say
22:33 maybe a third one too is knowing people
22:35 right because if you really want to grow
22:37 businesses at the end of the day or
22:38 people right and you’re always making
22:40 gut calls on people and I know enough
22:43 entrepreneurs that when you make the
22:44 wrong call on people you really get
22:46 burned and when you make the right call
22:48 on people your business you know doubles
22:50 or triples and so I think you have to
22:52 get really good from a gut perspective
22:54 and an interaction perspective of being
22:56 able to work with other people and find
22:58 the right people help you get to your
22:59 vision completely agree and really quick
23:01 was that second business that you bought
23:03 also a mer made franchise yeah it was
23:06 right now I’m leaning towards all the
23:09 same franchise because I think that
23:11 makes the portfolio slightly more
23:13 valuable if I decide to sell although
23:16 just within the past few weeks now I’m
23:17 kind of waffling I’m not even a year in
23:19 and I had a fiveyear Time Horizon and
23:20 now I’m like me maybe I’ll just put like
23:22 a district manager in place to run it
23:24 and just hold on to the thing because if
23:25 you can get that kind of cash flow in
23:27 place for your and you just have that
23:30 passive cash flow coming in with
23:31 somebody running the portfolio like
23:32 that’s a pretty beautiful place to be in
23:34 life so I’ve got you know four years
23:36 left to sort of figure it out on my
23:37 initial time Horizon if I really start
23:40 to lean into like no this is just going
23:41 to be a hold Co for the family then I
23:44 think I’ll be a lot more strategic in
23:46 terms of going after the best deal not
23:49 just trying to make everything the same
23:51 because then I can start to look at
23:53 maybe getting into some like need to
23:55 have Services versus I would say
23:57 residential cleaning is a nice to have
23:59 so need to have is HVAC yes HVAC is
24:02 picked over from a PE standpoint but if
24:05 I’m buying a similar siiz business of a
24:07 million in Revenue you know 150 to
24:09 300,000 in evida I don’t need to appease
24:12 anybody as long as that’s a
24:13 self-sufficient viable business that
24:15 becomes a great part of our holdal right
24:17 if you’re you know if your HVAC system
24:19 goes out you need somebody right so
24:21 might be nice to have some of that
24:22 balance in the portfolio so I’m just
24:24 kind of ideating in real time as I sort
24:27 of work through all of this
24:29 it’s excit it’s a great place to be man
24:31 that’s the the exciting part of
24:32 acquisition entrepreneurship there’s a
24:33 lot of businesses out there and you
24:35 don’t have to go come you don’t have to
24:37 come up with the idea you don’t have to
24:39 do all that that iteration of uh you
24:41 know that lean lean model canvas you can
24:44 take on go and roll and I think what
24:45 you’re doing in the franchise side is
24:46 going to be great and I think you’ll
24:47 find that you’ll probably want to retain
24:49 that cash flow yeah I think I probably
24:51 will as well and at some point I can
24:53 pull the levers right like we’ll use
24:55 cash to grow grow grow but then when I
24:57 get to a certain threshold then it might
24:59 be like okay let’s pause now let’s take
25:00 the cash and let’s start paying down
25:02 debt and if you fast forward another
25:04 five years you own this portfolio and
25:06 it’s it’s free and clear and you just
25:08 have all that cash flow coming in like a
25:12 lot of your problems are solved like you
25:13 always have problems right but like you
25:15 know maybe money is a little money
25:16 solves a lot of problems money solves a
25:18 lot of problems yeah yeah it makes yeah
25:20 it just removes a lot of because you
25:21 know it gets rid of the things that are
25:23 the Thorns um and quick question that
25:25 second location you bought was that also
25:26 in Denver it’s in Boulder so it’s it’s
25:28 part of the Denver metro area so ideally
25:31 I want to be within driving distance um
25:33 it’s nicer because it’s only 20 minutes
25:35 from my house the first one’s about 40
25:36 minutes from my house in the opposite
25:38 direction so I generally don’t try to go
25:41 to both offices in a day so I’ll do two
25:43 days in one office two days in the other
25:45 office and then usually work from home
25:46 one day got it so then two one two last
25:48 questions before we move on the reason
25:50 you didn’t consolidate him to look and
25:52 feel like one companies that just based
25:53 on franchise rules and territories that
25:56 plays a little bit of a role in it the
25:57 businesses that I bought they’re all
25:59 locked in uh to leases currently as are
26:01 the ones that I’m looking at um my goal
26:05 probably in the 18month time frame is to
26:07 look at consolidation into sort of a hub
26:09 and spoke model where I have a
26:11 centralized office with all of my office
26:13 staff and then I have something between
26:16 a small office and a storage unit in
26:18 each of the territories but I have to
26:20 work through that not only with the
26:22 franchise or but also with how Google
26:24 looks at what makes an independent
26:26 business versus a single business um
26:28 what also learned in in this sort of
26:30 home business space is that your Google
26:33 reviews are in some situations the end
26:35 all be all for your business and so I’m
26:37 learning I look at them all the time
26:39 does yeah it really does factor into
26:41 these Acquisitions to the point now that
26:43 whenever I look at new acquisitions one
26:45 of the very first things I do if the
26:47 finances kind of pass the the sniff test
26:50 is then go and look at their Google
26:51 reviews and even if you buy the business
26:54 and you’re a new entity unless it’s
26:56 truly going to be rebranded and maybe
26:58 even moved Google doesn’t let you get
26:60 rid of bad reviews even in an
27:02 acquisition and from my perspective what
27:04 I’m learning and what I’ve learned from
27:06 marrys with all the money that they’ve
27:08 invested in consultants and the best
27:10 franchisees that I’ve talked to is that
27:12 the number one driver for growth is your
27:14 Google reviews I would say 4.5 is table
27:17 Stakes it’s um it’s vanilla people
27:20 aren’t going to really think you’re
27:21 great but they’re also not going to hold
27:23 it against you if you’re below a
27:25 4.5 you have a fundamental problem that
27:28 you will have to overcome to be able to
27:29 scale your business you will actively
27:31 lose leads when people are looking for
27:33 you if you’re a 4.4 or below 4.6 I think
27:38 is okay to nice and I think your sweet
27:41 spot is 4.7 to 4.9 and I think if you’re
27:45 at a 5.0 some people might think that
27:47 that’s a little bit fake so I think 4.7
27:49 to 4.9 is a sweet spot for these
27:51 businesses pretty cool I love when you
27:53 find those little kpis right the drivers
27:56 yeah and and then and then last question
27:58 ultimately you’re happy with the
27:59 Acquisitions you’re excited about it you
28:00 feeling good about it yeah I am now so I
28:04 had to kind of unwind some of those
28:05 initiatives I needed to let my
28:07 accounting firm go I transitioned to a
28:10 second person tested them for a while it
28:12 didn’t work out now I’m on my third
28:14 person and I’m really happy with her
28:15 she’s doing a good job so that makes me
28:18 feel a lot better there was also a lot
28:20 of stress and pressure of just having
28:22 one location because that one location
28:24 and its profitability had to not only
28:26 cover everything for the business but it
28:28 had to cover everything for me
28:29 personally having two locations really
28:32 kind of balances it out and now you sort
28:34 of have two things that are kind of
28:36 keeping you up as a portfolio as a hold
28:38 CO as a family right versus everything
28:40 being dependent on one and so what I’m
28:43 looking at moving forward and what I’m
28:45 tracking is that inflation is real with
28:47 all my friends that I know who are
28:49 business owners people that are in the
28:51 discretionary spending space 24
28:54 generally was not great for people and
28:56 that was the case for us and you can
28:58 look any of the national kpis and house
28:60 cleaning kind of across the board was
29:02 down in 2024 I benefited from some of
29:05 that because I was able to buy cheaper
29:07 but then it’s also made the businesses a
29:09 little leaner and so the reason I’m not
29:12 immediately going into a third
29:13 acquisition is I want to give this space
29:15 probably six months I think there’s a
29:17 tremendous amount of uncertainty with
29:19 the election that just got done um it’s
29:21 what late January 2025 whenever people
29:24 are listening to this and I think that
29:26 that always creates instability when you
29:29 have these big administrative
29:30 changeovers so I think the goal is hey
29:32 by summertime is inflation still high
29:34 maybe tariffs have kicked in and that’s
29:36 creating problems and discretionary
29:38 spending is still down then I’m going to
29:40 make a pivot into the need toab if that
29:43 has really turned around people are
29:44 feeling good they’re feeling excited
29:45 they’re spending more money and the
29:47 discretionary spending is up then I’ll
29:49 probably look forward to move uh to move
29:51 with more Acquisitions in the
29:52 residential cleaning space no I love how
29:54 you look at it man you’ve got to be you
29:55 got to this is a business this is
29:57 science I love that kind of thanks
29:59 awesome great stuff all right well let’s
30:01 go ahead and move on to our rocket round
30:03 where we asked the contestant the same
30:05 three questions so first question Rob
30:08 what do you like to do in free time in
30:10 the summertime uh where I live just
30:12 right outside of Boulder I love mountain
30:13 biking I love getting outside fresh air
30:16 hiking with my daughters in the
30:17 wintertime what I’m working on right now
30:20 is writing a collection of short stories
30:23 science fiction novels and prior to
30:25 having having kids five six years ago
30:28 wrote and and published my first novel
30:31 and so now I’m starting to work finally
30:32 on a second one nice Rob mean you would
30:35 have been best buties had we hung out in
30:37 Denver while I was there last week so
30:38 you’re very Sol I hope you like beer
30:40 because we would have had a lot of fun
30:41 with that yeah so what’s your most
30:44 memorable moment in your business
30:45 Journey so far you know I briefly
30:47 mentioned this but I think with the AI
30:50 company um we got invited to fly out to
30:53 San Francisco for a tech crunch event
30:56 when you are in the tech space I do
30:59 think that Tech crunch carries a lot of
31:01 weight you look at who’s going to those
31:02 absolutely does I used to monitor
31:04 religiously same so did I so we got
31:07 invited out they had an AI and Robotics
31:09 event so there was a kind of basically a
31:11 pitch competition to a panel of EC’s and
31:14 there was you know a dozen or two dozen
31:15 companies on either side and so we went
31:17 through the whole pitch competition and
31:19 we won for artificial intelligence and
31:22 this would have been back in 2019 I want
31:25 to say it was like before before the
31:27 pandemic really hit so you know I kind
31:30 of achieved sort of a little bit of a
31:31 bucket list kind of Life goal there of
31:33 getting written up in that’s a h all
31:35 that kind of stuff yeah so that was a
31:37 that was an awesome accomplishment and
31:39 I’m guessing Michael Arrington wasn’t
31:41 there right I think he he’s he’s kind of
31:43 bowed out from Tech crunch probably like
31:44 2015 I’m guessing yeah I don’t think so
31:48 okay all right cool all right and then
31:50 last question your favorite tool or
31:53 resource I I’ve been asked this question
31:55 before on podcast I always think that I
31:57 have the lame missed answer but it’s the
31:60 true answer and it’s Excel I man I just
32:03 love Excel I can do so much in there
32:05 especially for somebody that likes
32:06 strategy likes thinking about new
32:08 acquisitions new things to do with the
32:10 business like I just 247 and playing in
32:14 Excel I think it’s so much so much fun
32:17 uh and that shows you how much of a
32:18 business nerd that I am uh my wife will
32:21 even give me a hard time of like working
32:22 on like proor spreadsheets in the
32:24 evening and stuff like that because I’m
32:25 just genuinely enjoying myself um I
32:27 would say that’s my my true one the most
32:30 recent one that I’ve been playing with
32:31 is just probably like anybody after the
32:33 first of the year I’ve got a habit
32:35 tracking app that I downloaded and the
32:37 one that I downloaded is great it does
32:39 exactly what I needed to do I can put in
32:41 whatever goals I want whatever time
32:42 periods I want it’s really satisfying
32:45 when you’re when you’re clicking things
32:46 off there it’s got a social component so
32:48 you can you know do it friendly
32:50 competition with friends and things like
32:52 that so I’m enjoying this habit Tracker
32:54 app right now awesome man so Rob this
32:56 has been great great story great
32:58 interview how could people get a hold of
32:60 you yeah uh you can reach me on LinkedIn
33:03 just search Rob Carpenter uh or feel
33:05 free to shoot me an email robf Frost rer
33:09 capital.com Perfect all right well thank
33:12 you very very much good luck on your
33:13 journey man it’s great to know you and
33:15 hopefully we can have you at some of our
33:16 conferences and events as they keep
33:17 coming we’ll keep you posted that would
33:18 be wonderful I’d appreciate it let me
33:20 know and thanks for having me guys you
33:21 bet thank you thank you for listening to
33:23 the m&a Launchpad podcast if you’ve
33:25 enjoyed today’s podcast and would like
33:27 to support us please leave a a rating
33:28 and a review after you listen I’m Casey
33:30 muu and I look forward to talking with
33:32 you next week
