Latest / Exit Algorithms / How Private Equity Actually Values Your Business and Team | Scott Estill (#56)
Transcript
- speaker-0: Welcome to exit algorithms, the podcast where we decode what it really takes to unlock growth, streamline operations, and prepare your business for a high value exit. I'm your host Pete Vera. And today I'm joined by Scott Estill. He's the managing partner at Lanker and was named one of ⁓ &A advisors 40 under 40 in North America, co-founded a 30 person boutique investment bank, and has spent over 20 years at the intersection of private equity, ⁓ &A, and executive talent with clients including Blackstone, Bain, and Apex. Scott, so excited to have you here. Welcome to the podcast. speaker-1: Yeah, thanks for having me. I'm looking forward to it. speaker-0: Yeah, I can't wait to dive in here. Yeah, do you mind starting off? Can you share a bit about your background and business journey? speaker-1: Yeah, sure. So I mean, you hit a little bit of it. started most, I spent most of my life as an investment banker, right? ⁓ I always say it's one of my many shortcomings in life broadly defined, but I did that for a long time because I was just interested in how do you value companies? ⁓ obviously you don't know when you start out and if you didn't, I didn't have family that grew up in the world of finance or ⁓ and a or banking or whatever. I just found it interesting from reading books and whatnot. I know it started as a banker. and did it for a long time, right? 17 years. But my frustration was I would take two companies in the same industry in the same size. And four years later, one was a five times your money and one was a zero. And I'm like, wait a minute, everyone at the investment bank told me life's answers were found somewhere in the Excel model. So why is one company so much more successful if the reality is they're penciling out the same, but one is so much more successful. And if you do the regression, on that question, it's almost always about the management teams, surprise, surprise, and their ability to pivot and transition during an ownership period to generate truly differentiated alpha as opposed to just financially engineering your way to return. So I'm sure you and your listeners will say, yeah, no kidding, because they're running businesses, but like it takes the bankers a little while longer sometimes to figure out the obvious, right? So that's one pillar of the model for us at LandCorp. Where does real value reside? Operational insight. And then the other pillar of the firm has to do with the bad math in traditional search. So I see these calls from this guy, Kevin Kelly, who was the CEO of Hydric and Struggles. And they would call trying to get me to change jobs. And I would say no. And at the end of one of these conversations, they say, listen, Scott, get it. You don't want this job that I'm trying to get you to take, but you should join us at Hydric. And I said, no. You know, that's a worse idea than the first one you had. That's like that. That's not what I do. But what I heard him say, and this will quickly come full circle is the problem that have is if Apex or Adventure Warburg or GTC or Carla, whoever is looking for a new executive, you reach out to 100 people, more than half the people you speak to don't want the job. They're just curious about what's going on in the market. And I said, yeah, that's consistent with my experience. And of the remaining half. Half our movement in New York, New Jersey, California, Cleveland, Texas, London, picky location around the world. So, you know, the pool of people that are both good and actionable on a regular way search, it's about 5%. And so I said, that's what I said. was like, listen, a bad math equation. Here's what I would do if I were you. Why don't you reach out to these same folks and say, listen, on the one hand, I'm calling it because I'm looking for a new CEO or whatever it is. And if you want the job, lovely. But if you don't, why don't you A, keep your current job the same? Because whatever you're doing at the moment, you're doing it well. That's how I got your name in the first place. Two, let me introduce you to these private equity firms, not when you're looking for a job, but when you're not looking, because you have more leverage. Third, you can co-invest in these deals, if that's of interest. Fourth, you get free equity. That's how you make real money anyway. Fifth, you can join the board, while keeping your job the same. And you know, sixth, maybe you do want to be a buy-in executive. Okay, but... You don't have to change your job to create an awful lot of value. And so they're like, listen, I don't know what any of that means, Scott, actually, it sounds interesting. You should come build that. So the old joke, careful what you wish for. left traditional banking and built what I call this executive led merchant bank within Hydro. And then long story short, the folks at LandCorp call up and say, Hey, we keep hearing about this model, Scott, that you built from all these PE folks. Like stop being a W2 guy. Come be a K1 guy. Come be an owner. You can look after search for us globally cause we have offices all over the world, but you can also build and run this advisory practice. in a nutshell, Pete, like think of all what we're doing is like proactive and reactive. The reactive stuff is search. do 120 searches a year for private equity firms, find me a CEO, CFO, et cetera. And it's reactive cause they say, come solve this problem please. And then the proactive side is those same firms call them and say, we're thinking about buying company A or B or C. or we're carving this asset out or we're taking this asset private, should we do it? And the answer is, you know, maybe. we introduce them to two or three people that, you know, used to run that exact asset or compete against it or, you know, know what deeply and say, you want to keep a job, co-invest, get equity, join boards. Of course you do. Here's an asset where you can punch above your weight and you're no longer conflicted. Like, what do you think the two to three pillars are in the investment thesis? What do you wish you knew then, you know, now? And most of the time that insight helps us not buy the asset for all the reasons you don't buy a company. But every once in a while you say, oh, there's some good levers to pull outside of just market share gain or cost cutting or things that are certainly important, but not like very unique. We all know we need to do that during our ownership period. So anyway, that was a bit of a long speech, but that's the overview of what we're doing. And it's relevant to, I think the audience is to your point of. How does a business owner make the right decision? Like they've spent all their life and there maybe it was their parents too, or whoever building a business. And if you're looking to effort and exit, you got to find the right shop, not just the most dollars. Like, of course you want to sell for the most dollars. Like, like you have people that work with you and for you and it can be generations and like, and maybe you want to keep a piece and roll it and you make more money on the second bite. So part of it is understanding what the business owner wants and then helping them understand why PE firm A versus PE firm B or whatever is a better fit. Not just, you know, you have one chance to make this decision and make the right choice. How do you really feel comfortable that you're, are making that right choice? speaker-0: Yeah. ⁓ awesome. And I think we'll talk more in depth too about that and the sale process, how to prep choose the right buyer. But first I'd love to double click little more on talent management and the right person, a management team that's the right fit for the organization. What's your process behind that? speaker-1: Yeah. So I think if you're a business owner and you say, I mean, you know, when you have a growing business on the smaller end, the lower middle market, you know, maybe a lot of family members are in the business. Maybe they're not maybe, uh, you know, what is good at, um, five million, $10 million of revenue may or may not be, uh, the right team as you grow from 10 to 20 or 30 or, know, whatever, even one to two, right? So different horses for different courses or whatever. So I think the most underutilized arrow in the quiver of business owners is independent board directors. Like before you think about changing out something, listen, if you're CFO, can't get to the numbers, you're not ticking and tying, I get it, right? You need to make a change to keep going. But in the interim, thinking about where you want to go and finding someone who's done that, because independent board directors are inexpensive, right? They're not making a lot of money, cash. They like the opportunity to get equity, right? And that's in theory, what they should be focused on. So it's a relatively inexpensive way to get smarter and get good advice. Cause the CEO is a lonely job. Cause you, you know, you have friends and family, but you know, how do you get someone else who's like, listen, I've stubbed my toe a few times in my life. Like how, would I help you do less of that? And so to me, that's a good first step is thinking about, all right, I want to go to here. How do I get someone who's been there that I know that can help me sort of along that journey? And then I think that then can inform you to make maybe changes in your management team or people that weren't there already. Like the most, classic one is chief transformation officer. Everyone thinks that's, my gosh, our business is in trouble. I need to fix it. Actually, like probably 80 % of the work we do, we put people in the chief transformation officer. is helping companies continue to grow when they're already doing well. So transformation doesn't need to be fix it necessarily. can be smarter about growth. So there's just a lot of ways to add to teams, not just replace people that causes less friction. speaker-0: Hmm. Smart. Yeah. I think a lot of people, a lot of small business owners don't really think about that as an option. That's valuable. Yeah. And then the other part of, of Lanker is finding, finding deals also, right? Business owners are, our audience is likely looking to grow also through sometimes through acquisition. How do you, what's your, you know, What do you look for to determine the right deal for a particular business? speaker-1: Yeah, I think for your audience, I'm gonna give you a full, answer, but like, but for your audience, there's more tuck-ins, I think, right? Cause they have the, the per se, ⁓ and they're trying to be thoughtful about, ⁓ I product extension? Am I doing geography extension? Am I thinking about, know, how, am I trying to do with the ⁓ and a, what we're doing is we're saying, how do we find that platform? Right. ⁓ because sometimes that platform, So I'll give you a quick example. we're working on a, let's see, a logistics element to it. It was in the facility services. And so there's a P firm looking at a business and we introduced a couple of people and the answer, which it usually is, is no, don't buy it. It's not worth, the juice isn't worth the squeeze. It's not worth whatever, picking over 15 times EBITDA. So what we then do is we talk to those executives and we say, what would you do? You're so smart in this sub sector, what would you do? And in this example, one of the folks said, Hey, listen, Scott, you know, what's a cool business? got a buddy. He's running this business. It's in the, ⁓ it's coming out of an ESOP. So, ⁓ employees, ⁓ own. So it's sort of like they had sold at one point to the employees and now the ESOP owned it aware, but it's been old long enough and they wanted money that the family that was running the business still wanted a hundred million bucks to go buy a couple of companies and grow. So this executive introduced me to the owner and said, listen, Scott, can you help us find someone to grow someone to come by us? But ⁓ by the way, before you do that, I'm going to need a different CFO because the P firm is going to be more excited. If there's a P savvy CFO can think about KPIs and think about structure and do the not just rear view mirror looking like debits and credits controller side. but also understanding the FP &A or the windshield approach of where you want to go. we put in new CFO at the same time we were looking for a private equity firm, the private equity firm bought And so now they're off to the races. But the point is there's so many different ways for ⁓ the business that you connect with to think about growth. I think it has to be you making sure that that company is another puzzle piece in the overall strategy. Uh, and, then making sure that that person has the same values, like, uh, the old joke, like, you know, sort of culture and values each, you know, the sort of the execution for breakfast, like you need to make sure that they're thinking about the same way. And maybe they're not there for the long haul because they're at a certain age zone to retire. Okay. Maybe they're, they do want to stay. Okay. One's not better or worse. There's just different horses for different courses. Like what's the right fit and how do you make sure you're doing that? Cause You know, not all revenue dollars are created equal, you know, like the profit associated with certain, you know, the EBITDA, the cashflow, the profitability is important. So you need to ask some of those questions before you get so excited about, I'm to put another 10 or $20 million of top line in my business. Well, they may not be the same margin profile that you're used to. So a lot of those questions play into finding the right partners going. speaker-0: Yeah, that makes a lot of sense. that'll of course dictate successful the integration will be post close too. Have you seen any go sideways in that regard? speaker-1: Yeah, I know you know this because of what you do the day job, like integration is ⁓ most, that's you get trapped the most. Everyone thinks it's going to look at the model. It's a creative, it's amazing. It'll be perfect integrations hard. And that's really where you ⁓ lose often. So you need to have that plan on integration, you know, day negative 40 before you buy a company ⁓ because the is the hard part. And that's where most, that is, ⁓ as you know, I teach adjunct professor up at Columbia business school the, the math is two thirds plus or minus of ⁓ and a transactions destroy value two thirds. So what are we doing? Like there's ⁓ and a business is a huge business, generally speaking. if two thirds of those businesses are destroying value, what are we doing? Right. And the point is it's often integration that is causing that value to degrade. Right? So it's, couldn't be more important. speaker-0: Yeah, destroys value over what time. speaker-1: Well, I so like the idea in a model, it's easy because you just make assumptions and like I have company A has this amount of revenue. Company B has that amount of revenue. And, you know, like, then obviously one plus one is equaling some number of two or greater. It's going to be amazing. We're going to cross sell all this stuff's going to happen. It's hard to do that if you're not really integrating. So ⁓ in one actually can become one point six pretty quickly. So you're losing the value that you otherwise would have just simply had. by running them separately. Now the problem is if you want to get to some number north of two, you can't run them separately, right? They gotta be on the same systems. They gotta have integrate the data. You can't use technology or AI or all things that people are excited about unless the data is clean. Data can't be clean unless you're making sure you're integrating. So it's like sometimes people call it a J curve. dip profitability will dip a little bit, right? In the short run, in the first month or two or three during that ownership period, to allow it to take the other end of that J or the hockey stick. But everyone thinks it's going to be hockey stick. But it's often more J curve. speaker-0: Yeah, ignore the initial trough. speaker-1: Yeah. And then if you don't have a plan, that trough becomes, you know, a moat or whatever the analogy is. So you need to make sure that there's a plan and everyone's comfortable with the fact that that's the way it's, you everything's going to be fine. speaker-0: Yeah, it makes sense. Yeah, and then going forward, eventually a business will get ready to exit and we talked about this briefly at the beginning. What are some things business owners can do to prep their company for successful exits? Say they want to sell to a PE firm, what's a PE buyer look for? speaker-1: Well, so some words of caution and some answers specifically. So pains me because they become your friends when you get to know them. So oftentimes business owners aren't successful. They'll chase the rabbit down the rabbit hole ⁓ ⁓ out a sponsor, a partner, and it doesn't close. And often the business, because this is not the first or second or a hundredth time that a PE firm has tried to buy a business, but it's sometimes... ⁓ the first or second time, seconds a lot better, but if it's the first time that someone's actually tried to do this, they take the eye off the operations the business. And guess what? Revenue dips, EBITDA dips, the business starts getting a little worse. And they come out of the process unsuccessfully because the PE firm's like, well, listen, you were at five or 10 of revenue. Now you're at four or eight or whatever the number is. Jesus, going the wrong way. And the business owner was like, I know because you. You had all these crazy requests and we had to put it together a data room and like I can't run the business and, and, and be at your beck and call. Like that happens all the time, especially in the smaller end of the middle market, lower middle market, these size companies. So knowing in, in, how deal with it, super, super, super important because you know, the math around ⁓ and a stinks. Like 95 % of the things that a PE firm looks at, they don't close. Right? So we all think we're special and we're going to be the one that closes and it's going to be amazing. Just, it just, they don't often close. So you want to make sure you're covering your backside and making sure you're not letting your business, uh, you know, lose some value, lose some revenue, lose some EBITDA, lose some people, whatever, because you were chasing that shiny object of a sponsor. So. Just, you know, there's ways to avoid it, which we can dig into or ways to minimize it, but just know it's, it's, and maybe whoever's listening is the special one, the lucky one that it works perfectly. It's just, it's just the math would suggest that's not the case. Doesn't mean the business isn't good. Plenty of really good businesses this happens to. Right. And by the one, but P firms are usually looking at the best businesses. So it's not like I'm better than the other ones that I'm gonna be more successful. It's just that eye off the ball thing is dangerous. speaker-0: Yeah, that's great. That's gold right there. Yeah, really important to keep that in mind going into the sale process. What you say are some common ⁓ reasons they why businesses don't don't close during the diligence? Yeah. speaker-1: Yeah, there's so many, right? Cause I said 90 plus percent, 95 plus don't close. So it can be simple as customer concentration. They'll say, Hey, listen, you're a look at this business. You're the five, 10 pick a number of $15 million business, but four to 30, 20 % of your customer base is, this one. And the answer is who cares? They're awesome. They've grown every year. I mean, I'm doing good things with them. Why do you care? The answer is they're afraid of. the risk if you lose that customer. And then the business owner says, I'm not losing that customer. They've been a customer for 50 years or whatever. I pick a number. But that's, ⁓ have a tough time with that, right? Another one is managing expectations, right? Again, we all have like every kid plays sports. I got three kids, play all play sports. Everyone thinks, I think they don't think this, but many kids think they're going to play professionally or whatever, playing college. Most kids don't, but everyone knows the, pick your athlete. ⁓ and they have the success story, just like your buddy down the streets sold their business. and geez, I'm smarter than Steve or Bob or Mary. Like I, my business should sell for a higher multiple. Cause look, cause I'm me, maybe it depends on the industry. It depends on so many things. So getting advice on from ⁓ third welcome back to that independent board director thing. Right. Someone who's gone through lots of these ⁓ and A transactions. Like a precise way it works, whether you like, or don't like the process or the outcome, you actually don't have to take it. But how do you, how you not get too far down the road? You're like, ⁓ man, I'm just going to, I guess I'll just take it. I'm so I've spent so much time. My business is already eroded, whatever. Like just do it at that. That's a, that's a huge, misfortune. ⁓ So let's, how we just see around? corners a little better by having independent third parties kind of make sure that they're being a river guide for you as a business owner. speaker-0: smart. Yeah, really good tips there. Yeah, the customer concentration thing, I come across that a lot. ⁓ know, say, yeah, we could have diversified, but the rate we get a better rate with this one customer. ⁓ mean, speaker-1: logic makes sense, except for ⁓ people have that issue in terms of diligence. ⁓ speaker-0: Yeah, right. Just know that that's going to be a challenge when you go to sell like also to touch ⁓ on structure too because I think there's a lot of mistrust you could say with sellers. They want lot of them just want all cash at close or I don't want keep any equity in the business. want to my hands clean. I'd love to hear your perspective and just some maybe some educational points on on why they could actually, you know, make up make up for the less cash that close over over a longer period. speaker-1: Yeah. Well, so if, if I'm a buyer, if I put my buyer hat on and you're selling me your business and you say, I want out 100%. And answer in my mind is, you've at this business longer than me. Why do you want out if it's so great? And there may be a reason, right? That may be sort of, want to retire. My kids don't want to run the business. ⁓ you know, I want to. Yeah. You know, sort of play the violin somewhere, like lots of fun reasons, but if I'm buying, like, what do I not know what the cynic will suggest? There's something I don't get. It's cause if I think the business is awesome and it's continuing on the trajectory going forward, like we do this often where let's say, say you have a business and you sell, I don't know, 60 % of it to me. Right. So I control the business. I'm and I run it. You still gave still in 40%. ⁓ but you don't own the business anymore. Fine. When we grow it. And the reason you chose me versus someone else is because I've done these of things for other, and you've done your diligence. You've called my other portfolio companies, CEOs that sold super important to do that. Right. Hey, this got that good of a guy. What did he do for you? He promised sex. What do you deliver? ⁓ have to do that. No doubt about it. So that all being said, once you chose me for those reasons and you want to keep owning 40%, you're going to make three or four times more money on selling your 40 % than you did on selling your 60%. So it's massively in your best interest to not sell everything if you're picking the right partner, because I'm going to take the business with you with the skills that I've had running businesses. And, know, in this fictitious example, maybe it's real too. Jury's out on that. But like, I've seen some movies and we can get to, we can double the EBITDAO, we can do all these things, we can, can open up doors to different customers, we can, all these different things of why you chose to work with me. So in a perfect world, A, you'll make more money, you'll get a better valuation if you roll, quote unquote, roll the equity into the new owner. And the new owner should want you to roll some of the equity because again, you know where the bodies are buried. You know what's going on in the business better than I do. I'm just trying to. get into a data room and figure it out and I'm trusting you the business is good. So, but again, some people like us, I don't want to keep any ⁓ okay. Now, if that's the case, my suggestion would be you sell to a quote strategic, meaning it could be a public traded company or it could be another P back to asset in the same space. Cause then the value add is you're wiping out all these expenses. my salary, my team's salary, because if I merge with another business, I've already got a CEO and a CFO and a CTO and a CMO and CRO and all these different people, right? So that adds to the purchase price. So one's not better. They're just different. So depending on what you want to do in your own personal life as a business owner, your question was about the capital structure. Find the right capital stack that makes sense. I mean, there's another example where I've got a buddy that runs a business that it's an MSP space. And he didn't want to give up any equity because he said, I've got, you know, I'm at, I forget the exact numbers, but he's a couple million of EBITDA. He's like, I'd rather wait till I'm at 20 or 30 EBITDA and then sell for all the obvious reasons. Right. So he found a debt provider, right? Not a, not a bank like, like, you know, a traditional loan, like, think, think about it as like expensive debt, but it's non dilutive, meaning you're not giving away the equity. And so for him, it was super smart. Cause he grew it from, as said, from two to 20 of EBITDA, he still owns all the equity or the vast majority of the equity. And so now when he brings in a private equity firm, he can either do the thing where he keeps 40 and sell 60. He could sell it all like, ⁓ know, you have more options on the table. speaker-0: Yeah, that makes sense. I know. think that's a really good takeaway too, is just to know what you want, what's your dream outcome, and let that dictate the terms. But I realize you could be leaving ⁓ millions on table by choosing ⁓ a certain over the speaker-1: Oh, for sure. Exactly right. You have to know the pluses and minuses of each. Right. And what that looks like. We had one that someone wanted to sell out completely because they weren't they were actually sick and not doing well and weren't going to you know, they wanted to sell and help the team keep a job. Great. So that makes sense. But the most traditional way to your point is if you can I would rather sell 60 and out of 100 percent. Cause I can, or whatever the numbers are. So I could send roll by remaining amount and let the, the owner, the new owner sort of take advantage of that, but let me ride along that wave. speaker-0: Yeah, yeah, absolutely. Well, yeah, and this podcast also, I to hit on all my points here. Pick your brilliant brain, We have an AI and technology focus on this show as well. I'd love to hear your thoughts on AI. How are you utilizing it in your business and how do you see it affecting the business world from your perspective? speaker-1: Yeah, well, it's sort of, you know, if you're old, like me, like the internet group or whatever it was around in like the ⁓ 99, 2000, and that now the everyone has that then there was the, you know, the AI focus. Well, guess what? That's, that's ubiquitous in every industry. You're bending yellow metal. You're doing, not just SAS or what every industry has an AI component. The issue is it used to be just being a little more efficient. Now, as we know, I mean, it's scary to me. It's it's nonlinear growth. of how much technology and AI is involved in everything we do. There is a day that doesn't go by where we're not ourselves using AI or Claude or Clay or all the different sort of, you know, permutations of that. It's just, it's mind boggling. So what does that mean? That means every day you're not maximizing it and being on the bleeding edge is the day you are losing ground to your competitors at an ⁓ rate. So ⁓ Don't it's not nice to have you, whether you like it or not, or you think you should be in the matrix or how close we are to singularity or all the things that keep you up at night. Like it is here and it is coming faster than even the most concerned folks believe. So that being said, what do you do about it? Like, ⁓ we've, we've got a number of searches right now on the, on the search side where we are working. we do a lot of operating partner work. So. that sort of sits between like you've got a deal professional and then the operating partner is supposed to be like the translator of sorts, like, cause they've been, they've been in operations and they work in a P shop to help the business owners. execute cause deal professionals can be a little bit, well, they're like finance nerds like me, right? They're, they're not ⁓ deep in the traditional operational side of it. So they're sitting in between helping these companies really in a plan. But we've working on a number of head of AI as an operating partner, right? Because they want to deploy that capability across the portfolio. Of course, within the portfolio companies, we're working, you know, sort of the CTO, Chief Technology Officer is doing a lot of, you know, there's can be a Chief AI that sets the new CAIO or whatever, right? So that is real. The question is how do you find someone who can make it not dumbed down? Cause that sounds pejorative, but like letting everyone on to know what that really means. How do you be like the old joke? There's like, there's business lawyers and there's regular lawyers, right? You can't identify yourself against everything. So how do you have a business lawyer help you make better decisions? Right. ⁓ not just sort of come up with every possible way that there could be a problem. Same thing with AI. Like you need to be careful about. How do you get started? How do you make sure that as we said, the data clean, how do we make sure that we're, sort of being thoughtful about the foundation before we worry about all the bells and whistles of things you could do. And so the AI part of it is, mean, it is the Of the everything we talk about every call you're on every day with every P from is always there's an AI element. Even if you're hiring a, I don't know what would be the most CHRO or something like that. ⁓ there's an AI involved there too. So it doesn't matter what you're working on. Everyone is worried about it. So, you know, don't let perfection get in the way of good enough. You just have to get going. have to fail quick, try hard, move on, you know, don't wait for the perfect AI module. or bot or whatever to use. Like you gotta, you gotta give it a go. speaker-0: Yeah, I think that's great advice. Yeah, it takes time and practice also to get good at using AI. speaker-1: You know, the prompts are real, like knowing how to how to use it better. Again, independent board director, find someone who. And by the way, board directors used to be, you know, to be crass like a, you know, 75 year old white guy. And, know, that's how I was back in the day. Now it's what matters most is can someone bring something else to the table? Doesn't matter about age. It doesn't matter about anything. What matters is can someone help? And I think that's kind of great. Because it allows more, I don't know, from an efficacy standpoint, more folks to join boards and earlier in their career than they otherwise would have. You don't have to, you can still have a full-time job as long as it's not, you know, taking, you have to talk to the board, your CEO or whoever is, allows you to join an independent board. But usually it's like 80-20, 80 % of the time people are like, yeah, you can join the board as long as it's not conflicting. 20 % of the time people will say, I don't want you to join a board. I want you to just focus on your day job. Okay. ⁓ but you know, the AI part of that is another example of how to use third party sort of insights by board members or what, or advisory boards, or you don't have to officially be on the board, but you know, incentivizing them on value creation, not just cash on the barrel head. speaker-0: Yeah, I love, yeah, that's a great way to think about it. Yeah, and you mentioned earlier too, kind of a little bit related to the dot com bubble burst. And I was curious comparing the two, gotten to see both take place, are there any similarities or differences with AI? speaker-1: Well, so I mean, you know when I'm when I'm super intelligent I'll let you know but but my take on it is The part that makes me the most nervous is you know, so I listen when I was in banking We got the blackberries if you remember those and you're like, I'm just great Look at this blackberry and all of a sudden you realize like oh my gosh my my boss of with their many in banking They can all get me any time of the day So what seemed cool to have your blackberry because you're so important because you have a blackberry when it first came out, it was actually like, this stinks. There's nowhere safe. They can get me at any time of the day and they expect me to be responsive. So the technology was moving at a rapid pace. That being said, the pace of change that's going on now in the learning that's happening with technology and AI and DI, it is amazing how fast it's all happening. So to me, that's why it's scarier. It's the Moore's law, you know, of every 18 months. is not the case anymore. It's like the changes. It's crazy how fast everything is moving. So that part makes me more nervous, that we need to be continually thinking about it. And again, any company, logistics company, you name it, right? Any company out there needs to be really utilizing this. And if you don't know how to use it, you got to find someone. And again, they can be 20, it ⁓ can I have a kid who's like working on an AI project. He's in high school. respectfully, he's a smart kid. He's not that smart. Like, ⁓ know, there's plenty, but he's, you know, he wanted to do it and the business owner was, he just called him up and said, sure, come help me. So not advocating for child labor, ⁓ you ⁓ it ⁓ finding who can help you out. It doesn't matter really, you know, their background, their age, anything at all. What matters is can they add value and can you get something out of them? Can you benefit from their insight? I think most of the time that's an arrow in your quiver you should really be using. speaker-0: Yeah, absolutely. Thank you for that insight. know we got to start wrapping up here, probably keep on talking all day, But I like leave the floor for you could give one ⁓ practical tip business listening, looking to scale ⁓ with exit in mind, would that be? speaker-1: Yeah, I think it needs to be asked more questions, you know, call everyone you know, and ask them, can you give me, can you give me a buddy that you know that's seen this before? Right? I'm not, I want it can be anyone. It can be your lawyer. It can be your accountant. can be your neighbor. can be a friend. can like, most people are happy to try to be helpful. I think I view the world that way. Maybe I'm being delusional, but Just if you can ask a couple of questions, hey, can I, I just need two minutes of your time. That becomes 30 minutes, whatever, but kind of pick your brain for a couple of minutes. I'm thinking about this. Any of the things you and I discussed getting ourselves ready for this, but don't take one piece of advice as gospel. Like you need to ask multiple questions and then use your own intelligence because everyone who's running a business is pretty smart. Right. And so, you know, use your own business judgment on Maybe you take 20 % of the advice from person A and 15 from person B and 50 from person three, triangulate and ask better questions. Because as I said, if you're a business owner, you don't get to sell your business often again. So make sure you're doing it the right way. And then trying to find good people as your advisors. And that's also, you know, sometimes harder than it expects, but yeah. ask more questions, ask more people. People can always spare two minutes. ⁓ said, two becomes more. So that's my proverbial sage advice. ⁓ speaker-0: Yeah, I appreciate that Scott. Yeah, if listeners found this conversation as interesting as I have, where can they reach out and learn more? speaker-1: Yeah, so, you know, scott.estlalancor.com is, you know, ⁓ So that's I am ⁓ on day job. ⁓ but if I can be helpful to anyone at any level, I'm happy to give those two minutes slash 30 minutes to people if that's relevant. And again, I don't have all the answers, but I leverage what I do have and, ⁓ and, happy to be helpful. I'm a good karma guy. So, you know, again, happy to be helpful. speaker-0: Awesome, Scott. I'll leave that in the show notes. Thanks for your time today. speaker-1: All right, thanks. See you.