The Exchanges

Q like, they're like, yeah, we're a small fund, a billion and a half under management, and I'm like, that was the story all day. I was like, how much money do you guys have, and what the hell do you guys actually do? So, can you give me the simple, what the hell do you guys actually do? Are you guys buying, like, HVAC companies? Are you buying software companies?

A So, um, I mean, private equity is a very broad Classification. There's lots of different strategies. So I'll tell you specifically what we do. I know, um, there's a lot of talk around AI buy and builds if we can dive into in a little bit, but we do primarily buy and build. So we'll, we'll take a, we'll find a really amazing CEO that a lot of times has worked with us in a smaller capacity, maybe they were the CFO of a company we had, or they came through our training program and then we'll back them. We'll go find an industry that we think is really interesting. We like the prosaic industries, like the ones you mentioned, plumbing HVAC. We also do software too, because, uh, there's a number of strategies where rollups and software can be really attractive. So we, it's a small part of what we do though, smaller than the services stuff. And, but a lot of these really prosaic industries are massive. You know, the plumbing and HVAC industry mentions like, it's like a hundred and seventy billion dollar industry. So it's, so if you get it right and you actually figure it out, you know, you can, you can grow You know, almost forever, because you just don't run out of, run out of TAM, which is why we like the buy and builds, because we'll get it right once, and then we'll stamp it out a number of times. The other thing that's really cool about buy and builds is it really is, plays to ou…

AI assessment note: “we do primarily buy and build... We like the prosaic industries, like the ones you mentioned”

Q What was going on? Was it that, uh, you just, you guys just went on an acquisition spree and picked up all the mom and pops? Or was it that they weren't doing any sale? They didn't know, they didn't have a good website? Like what was, what was missing that you guys added?

A We got, we got fortunate that the third deal that we bought, we partnered with this guy. So the CEO is our name, uh, AJ Brown and Will Madison. And then the, the third deal we did, we partnered with this guy named Ira Pruitt, who was like the, the grizzled HVAC veteran and just this wonderful guy. He had seven of his kids in the business and like, and he gave us a lot of the playbook levers. And then the next deals after that, we were adding to that playbook. So eventually We just ended up with this amazing playbook about how to run those businesses. And then we began that talent program we were talking about earlier, where we started attracting a lot of incredible leaders, a lot of the, not all of them, but a lot of them veterans. And, and then that allows us to go buy businesses that other people can't buy because like really the line of people that wants to go buy a twelve million dollar revenue plumbing business in the middle of Louisiana, that requires a management change. Is short.

AI assessment note: “he gave us a lot of the playbook levers... we just ended up with this amazing playbook”

Q let's put some AI in the front door. Is there a back? Let's put some AI back there. Let's lift the, shove some AI under there, right? It's like, you know, it's like me with a Thanksgiving plate. I'm just trying to put mac and cheese everywhere. They're just like, we're gonna buy a company. We're gonna throw AI in it. It's gonna be awesome. Is that a good strategy?

A I think the reason that people are approaching the strategy is because they're probably seeing a little bit of what I was describing about The app layer and saying, gosh, I'd rather be the person using the AI than someone, you know, developing it. So I think that's why they land in these AI rollups. I think you gotta be careful. I mean, we've been doing rollups for 15 years and AI is a huge thing. It's important. Depends on the industry. Of course, some industries are AI is a much bigger factor than others, but the other basics of like getting the talent right, getting the companies right, integrating Doing the transition management, having your workforce stay on, you know, doing training, recruiting. Those are really the core elements. The technology, I mean, here's probably a hot take. I think the technology in many, many industries is going to be, is going to be commoditized. You know, like, like I'll give you an example. I'll give you a real example in property management. We happen to be in property management. I know there's been a bunch of AI native rollups launched by venture firms in property management. What tech, like what's their real advantage? Like, are they gonna have technology that's better than anyone else? I, I would say the answer is no.

AI assessment note: “I think you gotta be careful... Those are really the core elements. The technology... is going to be commoditized.”

Q Like, how do I go and run either lightweight experiments, or brainstorm, or just not feel like I needed to commit right away, but like go try to see where the energy is. How do you advise people to, if they don't have the answer of, Oh, this is the thing that would light me up. Like, maybe you don't even know. Where do you go to figure that out?

A Yeah, I love that. Well, here's an, here's one idea is maybe don't have one thing. Make a list of like nine things that would light you up, you know. Okay, I, I think I'd like to go to India. I also think I'd like to start a podcast. Maybe I really want to, I don't know, become a DJ. You know, I don't know. Write down your things, and then like you said, you know, keep your day job and devote X number of hours a week to testing those things out. Maybe you're going to do some work on it, take some classes. You're going to start hanging out with people that do it. Maybe you're going to get trained. Maybe you're going to do podcasts in nights and weekends and see if it's as fun as you thought it was. And you're not looking there for, this is what I think is really important. You gotta, you gotta be careful that you're not gonna get a false negative on the outcome. So like a student who says, okay, I wanna start a company. So I'm gonna spend five hours a week this quarter. And if I get traction, I'm gonna do it. Like, no, no, no, no, no. You, you're gonna get no traction, like five hours a week. If, if you could build a business in five hours a week, like it wouldn't be worth building, you know? So it's not that you're looking for, like, does it light you up in that five hours a week? Was that the five hours you were looking forward to that all week? Or was that five hours where yo…

AI assessment note: “Make a list of like nine things... devote X number of hours a week to testing”

Q the story, And he's like, that changed my life. And so like, you know, I almost secondhand got the benefit of going to that seminar, just understanding that principle, then, you know, then taking it and doing it myself. Um, I'm curious, were there any kind of breakthrough, really important kind of realizations or exercises or questions or conversations you had anywhere along the way that we would benefit from?

A Yeah, a hundred percent. And I'll give you a couple things that I learned, um, So one is almost all your battles that you have are you against you. Well, I think it's true. It seems like this whole thing is happening out there and you're, you know, you're winning this or you're doing this and like, but you're remember all that stuff that happens goes through this filter, which is called like the story you're writing about it. Then it goes internal and like, you can, you can change it. The easiest part of changing your life is to change that filter. You know, it's, it's way easier than changing what's going on out there. It's a lot easier to change how you're interpreting it. And so you can either be your own worst enemy, or you can actually be your own best friend. And I can tell you that I was my own worst enemy. Like I, it did, it almost didn't matter what was going on out there. I would look for what was wrong. I would have a bad story about it. I would Beat the crap out of myself. And then I would tell myself another story, which is me beating the crap out of myself is why I'm successful. Total bullshit. Um, it was just what made me miserable. It's like running through life with your foot on the brakes. So one is just that awareness, like that, wow, I'm, I'm having more to do with my peace of mind, meaning success, uh, happiness than anything that's happening external. I th…

AI assessment note: “So one is almost all your battles that you have are you against you.”