Latest / The Turn: Blue Collar to Billions / $500k in Profit. His Dad Said Stop. But He Kept Going.

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$500k in Profit. His Dad Said Stop. But He Kept Going. · The Turn: Blue Collar to Billions

• 0:00
  SPEAKER_01: Welcome to the turf.
• 0:01
  SPEAKER_01: I'm Corey Mitchell of Iconic Founders.
• 0:04
  SPEAKER_01: Today we interview Corey Bremer.
• 0:06
  SPEAKER_01: He's got an amazing story.
• 0:08
  SPEAKER_01: One of the things he brought up is that finding the right representative to take him to market when he sold his company was one of the crucial mistakes he made.
• 0:18
  SPEAKER_01: He just picked some random broker who sent him an email.
• 0:22
  SPEAKER_01: And so I thought it made sense to plug the fact that we at Iconic Founders are we helped support businesses in the built environment, the construction industry, we help take them to market.
• 0:33
  SPEAKER_01: We help support them on the growth plan that gets them to the highest value at exit.
• 0:38
  SPEAKER_01: So if we can ever be a resource, reach out to us or at info at iconic founders.com.
• 0:44
  SPEAKER_01: Welcome back to the turn.
• 0:46
  SPEAKER_01: I'm Corey Mitchell of Iconic Founders.
• 0:48
  SPEAKER_01: The Turn is where blue-collar founders talk about the businesses they've built, the value they've created, and what comes next after after they sell.
• 0:57
  SPEAKER_01: Corey Bremer, welcome to The Turn.
• 1:00
  SPEAKER_01: Glad to be here.
• 1:02
  SPEAKER_01: You and I had a chance to meet recently and I loved your story.
• 1:06
  SPEAKER_01: And so maybe what you can do is just tell our audience a little bit about, you know, your background.
• 1:13
  SPEAKER_01: How did you end up getting into business?
• 1:16
  SPEAKER_01: Um ultimately what what inspired you to be an entrepreneur?
• 1:20
  SPEAKER_00: Every time I tell somebody my story, whether it's a friend or a neighbor, it's it that they find it intriguing, but I feel like I don't tell enough.
• 1:27
  SPEAKER_00: I didn't grow up knowing from the beginning I wanted to be in Austria, or I kind of just discovered it by happen chance.
• 1:34
  SPEAKER_00: Looking back now, knowing what I know, it's like, oh yeah, all the signs were there.
• 1:38
  SPEAKER_00: Uh I just didn't realize it myself, whether you know, starting, you know, mowing lawns when I was, you know, 10 years old because I just wanted to put dollars in a bank account that I had control over.
• 1:50
  SPEAKER_00: Um all those different signs was uh yeah, I wanted to be independent.
• 1:55
  SPEAKER_00: I wanted to have my own uh have my own wealth, so to speak, even at a young age.
• 2:00
  SPEAKER_00: I was fortunate that uh my my dad was a part owner of a business and a group of business was it?
• 2:08
  SPEAKER_00: Tech technology infrastructure.
• 2:10
  SPEAKER_00: I mean, what we were talking in 1990 at this time, so 1989, so uh there was a release the term technology is a lot different than it is today.
• 2:20
  SPEAKER_00: But it at that time it was uh cable TV service.
• 2:23
  SPEAKER_00: So putting up uh uh what what we would call coax lines and running cable TV so that homes could you know get TV service that morphed into many other things uh since that time, you know, the development of fiber optics and networks and all the other things.
• 2:40
  SPEAKER_00: And the business followed that trend as well.
• 2:42
  SPEAKER_00: My aunt and my my dad, when fiber optics was just coming about like a cutting-edge technology, there was a big project here in Austin that uh was leading and was like, hey, you know, new technology, we want to put it in the state-of-the-art stuff, you know.
• 2:55
  SPEAKER_00: The story I heard, I was young at this time, was and it makes sense, was that they they wanted somebody who obviously was competent in this new technology, could could get it done, do it right.
• 3:06
  SPEAKER_00: So if they have uh the it was the Austin Convention Center.
• 3:09
  SPEAKER_00: My parents' company had never touched fiber optics.
• 3:12
  SPEAKER_00: I don't even know they barely probably knew how to spell fiber optics, but they told them that they were experts in it.
• 3:17
  SPEAKER_00: So yeah, that's what you do, right?
• 3:19
  SPEAKER_00: You say yes and uh you figure it out.
• 3:21
  SPEAKER_00: Flew down experts from around the country, taught themselves, you know, for a year, um, learned the hard way, probably lost a ton of money on the project, would be my guess, but learned a ton and and and became the local experts in fiber optics through the process.
• 3:37
  SPEAKER_00: And that is what kind of catapulted that business um because they now did have the actual expertise could go, and as that obviously took off from a trend as well, um became successful.
• 3:48
  SPEAKER_00: So I was not following along as close as I'm speaking now.
• 3:52
  SPEAKER_00: Um, but you know, seeing the trajectory, the fast growth, really the sacrifices, the hard work, all that stuff that was put in place at that time to grow was you know just an insurmountable firsthand knowledge of um what it takes.
• 4:06
  SPEAKER_00: I I was absorbing it, not no, not intentionally.
• 4:10
  SPEAKER_00: Um and you know, still having that, I was still trying to find my own way.
• 4:15
  SPEAKER_00: I have more than enough hours to have a degree uh in college without anything hanging on the wall.
• 4:20
  SPEAKER_00: And so um I've got I've got a bunch of those uh those educational stories as well.
• 4:25
  SPEAKER_01: I I I I remember losing a million dollars on a contract one time, and I was like, yeah, I could have bought you know four Ferraris on this this education or four Harvard degrees.
• 4:36
  SPEAKER_01: Um but instead it that sticks with you for the rest of your life, and you you you never, never make those mistakes again.
• 4:43
  SPEAKER_01: And they're some of the most hard-won educational lessons in business.
• 4:48
  SPEAKER_00: Like you said, four Ferraris, right?
• 4:50
  SPEAKER_00: That would have been nice to have, but what you learned for that value, you can probably you'll probably be able to buy 20 in the future.
• 4:56
  SPEAKER_00: My last year in college, I was a project manager, so I was managing projects and going to class.
• 5:01
  SPEAKER_00: Um, I remember it was I was actually finally learning the business side of the business.
• 5:07
  SPEAKER_00: And I'm in the uh I was taking a business ethics course, and I remember I kept getting in arguments with the professor because I was just like, you what you're teaching is like just wrong.
• 5:19
  SPEAKER_00: That's not what the real world is out there.
• 5:21
  SPEAKER_00: I get that, like this is what you know what you what you're supposed to do, but like you'll finish last every single time.
• 5:26
  SPEAKER_00: So long I thought I was like, I've had enough.
• 5:28
  SPEAKER_00: I had enough money to where um, if I ever had to go back to college and finish, I saved up to do that.
• 5:33
  SPEAKER_00: So I had my little safety net, and I was like, I'm gonna go take advantage of this opportunity I have at the company and um learn as much as I can.
• 5:40
  SPEAKER_00: I think it was at that point where I kind of figured out I really kind of like this kind of problem-solving, critical thinking, strategic aspect of what the business was providing.
• 5:51
  SPEAKER_00: Did that for four years, uh, learned a lot um until the biggest lesson of my life came when uh the company basically went bankrupt.
• 5:59
  SPEAKER_00: The majority owner, uh, which was a family member, not my my parents uh mishandling funds, or at least accused of that.
• 6:06
  SPEAKER_00: I watched my my dad kind of had an inclining that you know something wasn't right, even though he wasn't the one managing the funds.
• 6:13
  SPEAKER_00: Um he had started trying to diversify, take you know, money, invest in real estate.
• 6:17
  SPEAKER_00: Actually did a really, really good job through 2000 here in Austin in 2004.
• 6:23
  SPEAKER_00: He got a good deal on some lakefront property, built a house.
• 6:26
  SPEAKER_00: Uh within four years, it had like more than doubled in value.
• 6:30
  SPEAKER_00: And he was like, This is this is our investment, this is our nest egg.
• 6:33
  SPEAKER_00: Um, you know, if anything happens, you know, this is where you know we're gonna make our money.
• 6:37
  SPEAKER_00: And the unfortunate part is is the company went bankrupt in 2008, and by the time that writing was on the wall, we were in the financial crisis, and his investment uh went down the tube uh just along with the company.
• 6:51
  SPEAKER_01: So that was that must have been really like intense, like watching a family member go through that experience and that roller coaster ride.
• 7:00
  SPEAKER_01: So you you you know, you s you go back and you watch the experience, right?
• 7:04
  SPEAKER_01: He's you see the the sacrifice, what he learned in business, then you see this you know betrayal from a family member.
• 7:13
  SPEAKER_01: He starts to diversify his assets, then the financial crisis.
• 7:17
  SPEAKER_01: So you've got like some really, really tough lessons, and you're watching firsthand your family go through this.
• 7:24
  SPEAKER_01: Um, it must have had a huge impact on you.
• 7:26
  SPEAKER_00: Just talking about it, just bringing back those emotions.
• 7:29
  SPEAKER_00: Um, it was devastating.
• 7:32
  SPEAKER_00: They lost everything, personal bankruptcy.
• 7:34
  SPEAKER_00: They really impacted me to your point, and it inspired me.
• 7:38
  SPEAKER_00: I mean, that's what pushed me.
• 7:39
  SPEAKER_00: I want to go do something big so that I could take care of my parents or at least return something that they had worked so hard for and lost.
• 7:45
  SPEAKER_00: And so it was a huge, huge motivator, too, at the same time to really focus and lean in hard on what I had already learned.
• 7:53
  SPEAKER_00: And for I was fortunate, right?
• 7:54
  SPEAKER_00: I got to I had to experience a very painful, painful lesson, but it wasn't my lesson.
• 7:59
  SPEAKER_00: I got to, it was somebody else's lesson that I got to see.
• 8:02
  SPEAKER_00: So I got to reap the benefits of um experiencing it without it having as significant of a personal impact, you know, on my financial uh well-being or future that I would have to dig out of at the same time.
• 8:14
  SPEAKER_00: And so through that process, you know, but another company bought the assets of that company and I went and worked for them for three years.
• 8:20
  SPEAKER_00: It was a totally different company, managed completely opposite, successful in its own right, and unsuccessful in its own right.
• 8:27
  SPEAKER_00: And so after having these two different companies that were very good in different ways and very bad in different ways, I decided to start my own company.
• 8:36
  SPEAKER_00: It was a good timing for me.
• 8:38
  SPEAKER_00: Um 2011.
• 8:40
  SPEAKER_00: It's still coming out of the financial crisis.
• 8:42
  SPEAKER_00: I had a lot of people questioning what I was doing, you know, taking such a big risk.
• 8:47
  SPEAKER_00: But I was, you know, didn't have a family.
• 8:49
  SPEAKER_00: Um single, so I was like, I had all the time in the world to dedicate to something like this.
• 8:54
  SPEAKER_00: And uh, and then looking back in retrospect, you know, doubling down in you know, our area in central Texas, and certainly in the technology and construction industry, obviously was a was a great move.
• 9:07
  SPEAKER_00: And you know, as you could attest, it's there's there's the the definition of success definitely is built on a lot of hard work, a lot of risk, a lot of sacrifice, but there's usually some some luck sprinkled in in there too, and capitalizing on the right timing as well.
• 9:21
  SPEAKER_00: And uh, I think that's that's definitely what happened um in my story is I I built the same company, so I did basically the same thing.
• 9:29
  SPEAKER_00: I just did what I knew.
• 9:30
  SPEAKER_00: I built relationships in the in the industry already.
• 9:33
  SPEAKER_00: I didn't burn bridges, I made sure to keep my name clean as much as I can.
• 9:38
  SPEAKER_00: Um, kind of even before I knew I wanted to have my own company, was kind of like laying the groundwork for that to happen.
• 9:45
  SPEAKER_00: And so um when that time came, we were able to grow really, really, really fast just from building on those relationships with customers and vendors and partners and you know employees and whatnot.
• 9:58
  SPEAKER_01: You started this thing basically from scratch.
• 10:00
  SPEAKER_01: You had all this knowledge, you had relationships, but you didn't have it, you didn't have a bank role, I don't think, right?
• 10:08
  SPEAKER_01: So, like how how the heck did you do this?
• 10:10
  SPEAKER_01: How did you start a business from nothing and start start funding it?
• 10:14
  SPEAKER_01: And you know, those are it's one thing to say it, it's another thing to actually go through it and do it.
• 10:19
  SPEAKER_00: I look back at it now, and it was you're right, completely bootstrapped.
• 10:22
  SPEAKER_00: I paid myself minimum wage for the first four years, which was like sixteen thousand, and I just lived on basic needs and just reinvested every dollar back into the organization, mainly because I had to, because I wanted to grow, and I didn't have you know any sort of financial backing.
• 10:38
  SPEAKER_00: The the one of the contracts I was able to get, which was uh a big contract with a school district, they required us to have a payment performance bond.
• 10:46
  SPEAKER_00: And and I had some relationships, you know, and I don't have a line of credit, so I went to the bank and I was like, hey, I need a hundred thousand dollar line of credit.
• 10:53
  SPEAKER_00: They're like, Oh, well, your your credit's not good and you don't have enough credit.
• 10:56
  SPEAKER_00: And I was like, Well, how do I get one?
• 10:57
  SPEAKER_00: Well, like, we'll give you a hundred thousand dollar line of credit if you put in a hundred thousand dollar CD in our bank.
• 11:03
  SPEAKER_00: And I'm like, hold on a second.
• 11:04
  SPEAKER_00: You want me to give you a hundred thousand dollars cash just so you can loan it back to me and charge me interest on it?
• 11:09
  SPEAKER_00: Pretty much, yeah.
• 11:10
  SPEAKER_01: So well, no, it's so funny you say that because, like, you know, I it these banks are hilarious because of course they only lend people money that really don't need the loan.
• 11:20
  SPEAKER_01: Um, and you know, and and bonding is generally the same thing.
• 11:24
  SPEAKER_01: These are institutions that are not in the habit of taking risks.
• 11:27
  SPEAKER_01: And so, how do you get through that?
• 11:29
  SPEAKER_01: I mean, you you you got no cash, you don't have good credit.
• 11:32
  SPEAKER_01: How the heck did you get the line of credit to get the bond?
• 11:34
  SPEAKER_00: Yeah, so I think my dad had he surprised me and he he had saved out of all the things he had done, he had saved some cash around that.
• 11:43
  SPEAKER_00: But when I say cash, like it was literally cash.
• 11:45
  SPEAKER_00: Like and so it wasn't quite enough, but it you know, I was able to put it together with some other one, uh, some friends and family and put it in the bank at the city, and so we got the contract, so I knew how to provide a really, really good service and and get paid.
• 12:01
  SPEAKER_00: And I mean that I it was like our only our second or third year in, and I want to say we made 800 to a million dollars at total revenue, and I mean, I I think we cleared$500,000 in net profit.
• 12:15
  SPEAKER_00: Amazing.
• 12:16
  SPEAKER_00: Hey, it was fantastic.
• 12:17
  SPEAKER_00: And I remember I was I was sitting in a hot tub with my dad one night and and I'll just ask him, telling him about this, really proud, like this is what I did.
• 12:24
  SPEAKER_00: And and I was like, Do you think you know, should I just keep going?
• 12:27
  SPEAKER_00: Like, this feels good.
• 12:28
  SPEAKER_00: I feel like it's working.
• 12:29
  SPEAKER_00: And he, like, without a shout-out, said, No, stay your size, keep he was like, You made it, you you put half a million dollars in the bank, just keep doing that.
• 12:38
  SPEAKER_00: Like, you don't need to take on more risk.
• 12:40
  SPEAKER_00: Like, he was, and and I and I heard him and I was like, Yeah, no, I'm gonna keep going.
• 12:45
  SPEAKER_00: And so I did, and and I just kept applying the same kind of thought process to you know doing that and then building the company.
• 12:54
  SPEAKER_00: I would say up to about$10 million in revenue, I was using a lot of lessons I learned from the previous two companies, which really helped me make the right decision first or at least faster, without having you know, a partner or a peer network like in the same industry, or I start making my own mistakes and learning from those at the same time.
• 13:12
  SPEAKER_00: And to tell us some of those.
• 13:14
  SPEAKER_00: One of one of the big ones that if I could do it over again, and I didn't have the capital for this, that's the reason.
• 13:19
  SPEAKER_00: But even if I did, I don't think I would have done it because I was such like a penny pincher.
• 13:23
  SPEAKER_00: Really like invest in like a good ERP or a software platform at the very beginning that you could scale into.
• 13:28
  SPEAKER_00: If that's your goal is to scale, do that because going through any sort of ERP transition is just incredibly painful.
• 13:36
  SPEAKER_00: And you'll need it.
• 13:37
  SPEAKER_00: I mean, if you we started at QuickBooks, like half probably 95% of the companies do, and just that first move was painful.
• 13:44
  SPEAKER_01: You know, you were uh a young entrepreneur, uh, and I've thought about this myself, you know, because I still invest and buy businesses now, and sometimes I think, well, maybe I should just start with the big boy ERP.
• 13:56
  SPEAKER_01: In your mind, if you have that vision of getting to a 20, 30, 40, 100 million dollar revenue business, and you've got, you know, the 100k or whatever the heck it's gonna take to start with, you would invest on day one in that in that system so you don't have to go through the pain of conversion.
• 14:13
  SPEAKER_01: 100%.
• 14:14
  SPEAKER_00: Um, or at least some some version of it that you can easily transition into a bigger one.
• 14:19
  SPEAKER_00: You know that nowadays they have like, you know, if it's Timberline owns 20 different companies, you can start small and migrate into them, but something to where you can build those processes into the ERP from the very beginning.
• 14:31
  SPEAKER_00: Because otherwise you're building processes outside of that, and getting that to integrate is painful.
• 14:36
  SPEAKER_00: Um, now again, I'm talking about a time when AI didn't exist either.
• 14:40
  SPEAKER_00: Um and so you know, I think that's a that's a whole new whole new tool that you know everybody has at their disposal, which I think can aid to all these different things as well.
• 14:50
  SPEAKER_00: But yeah, it would definitely be that.
• 14:52
  SPEAKER_01: Corey brings up some amazing points, and these are some things I thought it was worth highlighting.
• 14:56
  SPEAKER_01: First of all, he talks about putting a more serious ERP system in place.
• 15:03
  SPEAKER_01: What does that mean?
• 15:04
  SPEAKER_01: So many businesses they just start with QuickBooks and they get in so deep that it's hard to really turn back.
• 15:12
  SPEAKER_01: And one of the things I find with more sophisticated businesses as they grow is they need better access to data, job costing, and all sorts of things from an integration standpoint.
• 15:23
  SPEAKER_01: And so I thought it was worth mentioning that here's a guy who built a$50 million business from scratch, and one of the things he would change is starting with better technology up front.
• 15:34
  SPEAKER_00: And and it would be, you know, I spent so much time squeezing every painting.
• 15:40
  SPEAKER_00: And it paid off.
• 15:41
  SPEAKER_00: Don't get me wrong, but you know, time is the more valuable currency that I realize now than anything.
• 15:46
  SPEAKER_00: And so there's certain things of paying somebody a dollar more, right?
• 15:49
  SPEAKER_00: So I don't have turnover.
• 15:50
  SPEAKER_00: I mean, I can't tell you like how many initial office managers I went through because, you know, I was just, you know, trying to pinch everything and the time it took me, and I did it, right?
• 16:00
  SPEAKER_00: I was working 14-hour days, and so like, you know, I would jump in and do it, but that time could have been spent scaling the company even faster.
• 16:07
  SPEAKER_00: And so I literally thought my time was worth what I was paying myself.
• 16:10
  SPEAKER_00: I didn't realize what I could turn it into later, you know, and and and I've put a I put a value on my time, you know, 10 years later when we were actually kicking off good profits, which I would advise anybody who hasn't done that to value their time.
• 16:24
  SPEAKER_00: It helps you make so many different decisions in life, professionally and personally, um, on what you should do yourself versus you know, outsource.
• 16:34
  SPEAKER_00: It's a it's a great tool if you haven't done it.
• 16:36
  SPEAKER_01: Yeah, I mean, look, you just named three great lessons there.
• 16:39
  SPEAKER_01: And God, I see this so often.
• 16:42
  SPEAKER_01: You know, I work with businesses, you know, of all sizes, but I worked with a lot of businesses that are in this kind of you know,$20,$30 million range, and they've hit this wad.
• 16:53
  SPEAKER_01: One of the craziest things that I still see, even businesses that are spending off three, four, five million dollars in profit, they still think the way they did when they were a one or two million dollar revenue business, and they still are penny pinching on talent.
• 17:09
  SPEAKER_01: And I could not agree with you more.
• 17:11
  SPEAKER_01: Uh that's one thing I learned as as I focused on building, you know, m businesses that could scale, is you have to surround yourself with talent, and talent knows what it's worth, especially in today's day and age.
• 17:24
  SPEAKER_01: And I want them to win.
• 17:25
  SPEAKER_01: I want them to make money alongside.
• 17:28
  SPEAKER_01: And if you do that, you're gonna get talent and you're gonna keep talent.
• 17:32
  SPEAKER_01: But you know, I it's funny, I looked at a compensation plan of a guy the other day.
• 17:35
  SPEAKER_01: He's got a$20 million revenue business, and he sent me this thing and he said, Hey, Corey, I'm trying to hire this best in class sales guy.
• 17:41
  SPEAKER_01: And the way he had it structured was the more the guy sold, the smaller his percentage got.
• 17:48
  SPEAKER_01: Because in his mind, he was like, I don't want to have this like unlimited cap on how much this guy's got.
• 17:53
  SPEAKER_01: I'm gonna pay this guy.
• 17:54
  SPEAKER_01: And I'm going, dude, you're thinking like you're literally thinking about it in the exact opposite way.
• 18:00
  SPEAKER_01: You want to pay this guy to run hard and you want to pay him to win, and every incremental dollar he puts in your pocket actually is worth more to you, not less, as you cover more of your overhead.
• 18:11
  SPEAKER_01: So you you learn these lessons as you grow businesses, especially if you're lucky enough or smart enough to break through a certain size barrier.
• 18:21
  SPEAKER_01: There's something about people that can break through that barrier.
• 18:23
  SPEAKER_01: It's those lessons that that you just talked about.
• 18:26
  SPEAKER_01: So I I I love those.
• 18:27
  SPEAKER_01: So those are those are great ones.
• 18:28
  SPEAKER_01: I could do a whole episode on on each of those three.
• 18:31
  SPEAKER_01: Another thing that Corey talks about in this episode, and I thought this was so dead on.
• 18:37
  SPEAKER_01: He was late to learn that you need to pay for top talent.
• 18:41
  SPEAKER_01: You know, so many entrepreneurs they get used to running on this super tight budget when they're bootstrapping their companies, and they never can make that pivot.
• 18:50
  SPEAKER_01: It is so difficult to run your business when you're constantly turning over key employees.
• 18:56
  SPEAKER_01: And the other piece is it's okay for your employees to make really good money as your business grows.
• 19:03
  SPEAKER_01: And so Corey points out the fact that he made that turn at some point.
• 19:08
  SPEAKER_01: The turn was he learned he needed to pay his team because he wanted to keep the best talent in the business.
• 19:15
  SPEAKER_00: Yeah, no, I mean, and to your point, like bootstrapping it, I had to get very creative.
• 19:19
  SPEAKER_00: I didn't have uh a huge bankroll to throw big salaries, right?
• 19:22
  SPEAKER_00: So I had to get creative and you know, do those comp plans, like you said, like, hey, I'm gonna pay you as much as what do you it was one of those conversations every time.
• 19:31
  SPEAKER_00: What do you need?
• 19:31
  SPEAKER_00: Like, what do you need to get by?
• 19:33
  SPEAKER_00: And like, here's the comp plan that I'm gonna give you without a ceiling.
• 19:36
  SPEAKER_00: So there were a few years um I remember where I had you know six-figure salaries that were taking home total comp and but and the bonus was two or three X their salary.
• 19:46
  SPEAKER_00: And I mean, those were huge.
• 19:48
  SPEAKER_00: I was just like, holy, this is and and as a as an owner, offshore, you're like, you you don't even get to take that home yourself because we gotta I gotta pay all the taxes, I gotta reinvest.
• 19:57
  SPEAKER_00: So you're cutting checks more than you even you've even brought home to yourself, but it's all doubling down and putting it forward, and you know, that the the value is going into the business, and it keeps those people motivated, keeps the talent in your business.
• 20:10
  SPEAKER_00: I will I will say one of the one of my biggest challenges was, and I think this is with any business, but certainly in a successful business, we were definitely the fastest growing.
• 20:21
  SPEAKER_00: There was a lot of new companies coming to town that wanted to plant a flag here.
• 20:25
  SPEAKER_00: And the first thing, and some of these are really big, big companies with huge bankrolls, and and when they'd ask an industry partner, hey, where's the talent at?
• 20:33
  SPEAKER_00: They would say, my company, and you know, so I felt like for the last five to eight years of business, my biggest challenge was figuring out how to retain that talent because I had just constant competition coming in trying to pluck that talent for no other reason than they just worked here.
• 20:51
  SPEAKER_00: They they they may not even have been.
• 20:53
  SPEAKER_00: It's it's funny, like because every business you have great employees, you have you know average employees, you have not great employees.
• 20:59
  SPEAKER_00: And I remember, you know, that it didn't matter if you worked at if you worked at our company, you had this badge of like you must be amazing.
• 21:08
  SPEAKER_00: And so they would get these just incredible offers and terribly great.
• 21:12
  SPEAKER_00: I was like, I can't, I can't do anything.
• 21:13
  SPEAKER_00: If you want to take it, you go for it, right?
• 21:15
  SPEAKER_00: And the other ones I really had to get creative and fight hard and figure out how to sell them on that long-term vision.
• 21:20
  SPEAKER_01: Yeah, one of the things that you know, I've talked about this on other podcasts that for me got exhausting before I I left the company eventually was this constant struggle to retain talent, right?
• 21:32
  SPEAKER_01: It's it you got for me.
• 21:33
  SPEAKER_01: I had offices all over the country.
• 21:35
  SPEAKER_01: I'm flying around.
• 21:36
  SPEAKER_01: We'd bought a number of companies, so these guys had a lot of money in the bank.
• 21:40
  SPEAKER_01: And so it was really hard to you know incentivize people to stay with us and grow.
• 21:46
  SPEAKER_01: I'm curious, any tips or tricks you had that you used as a way to to retain talent?
• 21:52
  SPEAKER_00: I I did actually give away actual equity early on, but I bought it back.
• 21:56
  SPEAKER_00: Um, I feel like if you can structure it right and you're You gotta identify, you gotta figure out who you're talking to and what's important to them.
• 22:05
  SPEAKER_00: Um, everybody.
• 22:07
  SPEAKER_00: Um, you know, and so I we did phantom stock plans basically with some of the top-tier execs where you know it was obviously there's a big carrot there, you know.
• 22:17
  SPEAKER_00: Hey, if there's a transaction, you get a piece of that.
• 22:19
  SPEAKER_00: You also get we also bonus relative to that percentage on profits every year.
• 22:24
  SPEAKER_00: Um, and so that was a good way to kind of keep that uh talent there.
• 22:29
  SPEAKER_00: Um it's sort of like a commission, you know, that salespeople get when it's like if you leave, you're leaving a lot of potential money on the table.
• 22:37
  SPEAKER_00: You also have to, those same talented people, right?
• 22:39
  SPEAKER_00: It's not just about getting paid.
• 22:41
  SPEAKER_00: They want to they want to grow too, they want to be challenged.
• 22:44
  SPEAKER_00: And I think you have to continue to do that throughout the company as well.
• 22:48
  SPEAKER_00: Competitive pay aside, they recognized the value that they were getting and what they were just learning and being in part of the organization, which was fulfilling.
• 22:56
  SPEAKER_00: Um, it also weaved a lot of people out that were like, oh man, I thought I could just come here and coast.
• 23:01
  SPEAKER_00: And uh, no, that doesn't that that's not this type of company.
• 23:04
  SPEAKER_00: You guys are a work hard, play art uh organization, and I just came here to play.
• 23:09
  SPEAKER_00: So uh the work part is a little too much, so I'm gonna go somewhere else.
• 23:13
  SPEAKER_00: And so, you know, I was in the the business of technology, but I think that's also what made it harder for employers because you know, no matter what size your organization is, like people can communicate so quickly together because of our you know, technology and what whether it's within the same organization or within the same industry or the same location.
• 23:35
  SPEAKER_00: I mean, so everybody has these tools know exactly to find out what market is for themselves and almost demand it faster than your company can even build up the uh get to that point to where you can start paying it.
• 23:50
  SPEAKER_00: So you're like in this margin squeeze for such a long period of time because you're trying to catch up in order to pay in a growing market.
• 23:59
  SPEAKER_00: You're you're trying to catch up to be able to pay what the market is because you know, construction is you know, it's like you it's a whole process.
• 24:05
  SPEAKER_00: You gotta you gotta hire the employee, you gotta start paying them that wage now, but then you gotta sell work that has that built into it that you're not gonna get paid for for probably three years, right?
• 24:15
  SPEAKER_00: So you're not actually reaping those margins, and so then you gotta create it, get creative on your sell side.
• 24:19
  SPEAKER_00: Like, how do you sell higher margin work to your customers so you can pay for these employees now that you're not gonna get paid for until later?
• 24:26
  SPEAKER_00: So all those all those plum dreams of uh trying to play that game.
• 24:30
  SPEAKER_01: Yeah, you know, one thing you brought up that no one's ever really talked about on the turn before is Phantom Stock.
• 24:36
  SPEAKER_01: Tell our audience a little bit about that.
• 24:38
  SPEAKER_01: Like, what what is Phantom Stock and why is that better than just giving equity in the business?
• 24:43
  SPEAKER_00: First, giving real equity takes a lot of paperwork, right?
• 24:46
  SPEAKER_00: So that it's a lot of I mean, it's it's a process just in itself.
• 24:49
  SPEAKER_00: Um, and it's not always advantageous to the employee.
• 24:52
  SPEAKER_00: I mean, you gotta pay taxes every year.
• 24:55
  SPEAKER_00: I was gonna say big tax consequences.
• 24:57
  SPEAKER_00: Most equities only pay based off distribution.
• 24:59
  SPEAKER_00: So, like if I'm the majority owner and I'm only taking out enough money to pay my taxes, right, then uh the other equity owners are only gonna get the same amount to basically pay their taxes.
• 25:11
  SPEAKER_00: And so they're not really getting a bonus that they get to go put in the bank or cash or use for vacations or whatever it may be.
• 25:17
  SPEAKER_00: Phantom stock was a way for us to treat it, it's basically a bonus treated the same way.
• 25:22
  SPEAKER_00: Um, you know, if someone had two percent Phantom stock and we made, you know, a million dollars that year, uh that was a you know twenty thousand dollar bonus, but it still had the value of what equity would give you, which if there were ever was an exit or a transaction, then you know, if we sold the business for 10 million, that two percent translates into a two hundred thousand dollar uh payment at that time too.
• 25:46
  SPEAKER_00: And so it it's kind of the best of both worlds from a an and I was real nervous about it from you know an owner and employer standpoint.
• 25:54
  SPEAKER_00: I was like, well, geez, man, you're gonna have your cake and eat it too.
• 25:57
  SPEAKER_00: Usually in a phantom stock plan, it's a a smaller percentage than it would be in actual equity because of those reasons.
• 26:03
  SPEAKER_00: When I do when I hire someone or we make a deal right at the beginning, we stick to that no matter what.
• 26:08
  SPEAKER_00: And if whether that plays out for a year or 10 years, and it ends up big in my favor, great, that it worked out for me.
• 26:16
  SPEAKER_00: Or if it ends up big in your favor, great, it works out for you.
• 26:18
  SPEAKER_00: But I would try to over-explain like the spreadsheets I had of showing, hey, here's five years of history on our financials, here's what I project the next five years, or here's five different plan options for you from high risk to low risk of high salary to a high failed stock, A, B, C, and D, here's how they all play out these scenarios.
• 26:37
  SPEAKER_00: You pick.
• 26:38
  SPEAKER_00: I'm good with any of these, right?
• 26:40
  SPEAKER_00: And and but I was like, you pick and you stick with it.
• 26:43
  SPEAKER_00: There's no coming back and saying two years from now, right?
• 26:46
  SPEAKER_00: I want to change to this one because of this.
• 26:48
  SPEAKER_00: I'd say for the most part, it worked out.
• 26:50
  SPEAKER_00: You know, I'm wired that way, like I said, where it's like, hey, we agreed to it, we agreed to it.
• 26:55
  SPEAKER_00: Sometimes when people pick the wrong one or the the the projections didn't mean what we thought, you know, it created some uncomfortable conversations later down the road.
• 27:05
  SPEAKER_00: But that's how I handle most of those situations.
• 27:07
  SPEAKER_01: First of all, thank you, because I I think a lot of people have heard that term before.
• 27:11
  SPEAKER_01: You were able to kind of touch on it a little bit.
• 27:13
  SPEAKER_01: I want to start digging into the business.
• 27:17
  SPEAKER_01: So, you know, you start this thing in 2011, you had some good customers in place, you talked about bootstrapping it, you know, going through that initial kind of pain of not having cash and needing a line of credit and needing your first bond.
• 27:30
  SPEAKER_01: Where does it go from there?
• 27:31
  SPEAKER_01: Okay, that's that's you know, 15 years ago.
• 27:34
  SPEAKER_01: Tell us kind of how it goes and and and and uh what some of the key points uh of like your turn in business were.
• 27:42
  SPEAKER_00: I think looking back, so obviously there were several of them, um a few stick out.
• 27:46
  SPEAKER_00: The way I would describe it is we were always kind of like outpunching our weight class.
• 27:50
  SPEAKER_00: We were a small, nimble company with a lot of overhead, if you will, maybe, you know, we were still so small compared to some of the other businesses that we were able to compete with.
• 28:00
  SPEAKER_00: And that was kind of like our secret sauce was when these big projects would come out that and really nobody thought we could even qualify for them.
• 28:07
  SPEAKER_00: Like, but you guys don't you don't have the bonding capacity for that, or you don't have the manpower, you don't have this, and you know, you're not gonna be able to insurance, whatever it is.
• 28:15
  SPEAKER_00: There's so many things that you have to have in order for a general contractor or customer to, you know, even look at your price, right?
• 28:22
  SPEAKER_00: But that was kind of our secret too, was like our price was always looked really good because it was very, very competitive.
• 28:28
  SPEAKER_00: Um, and it still had margin for us because we were, you know, uh a smaller company.
• 28:33
  SPEAKER_00: And so it was kind of making sure we gave our customers confidence that we could get the rest of it done.
• 28:38
  SPEAKER_00: And so talking about it now, I would say there were things that I was always doing in the background, like there's a big job in town that we were chasing.
• 28:46
  SPEAKER_00: I wasn't going around boasting to anybody, hey, I just got a meeting with so-and-so, or we're doing this.
• 28:52
  SPEAKER_00: I wanted to fly under the radar as long as I possibly can, right?
• 28:57
  SPEAKER_00: So that because as soon as your competition knows that you're actually real competition, they start building up a strategy to block you.
• 29:03
  SPEAKER_00: And that and and they're very good at it.
• 29:05
  SPEAKER_00: These were companies that have been in business for a long time that have relationships and they know how to block you.
• 29:11
  SPEAKER_00: And so my best thing was to get as far into a project or a big project that I could to where them blocking me would be really, really hard.
• 29:21
  SPEAKER_00: And I did that so many times.
• 29:23
  SPEAKER_00: Um, when one of the bet biggest ones was when Apple announced that they were building their I forget what their campus was here in Austin, but it was the biggest project in Austin at the time.
• 29:34
  SPEAKER_00: No one even thought that we were even looking at it much less I even had a chance.
• 29:38
  SPEAKER_00: And I was making all the moves behind the scenes and ended up pulling it down.
• 29:43
  SPEAKER_00: And I mean it was the stars had to align, there was like 10 different stars that had to align perfectly to do it, but when it happened, oh man, everybody was, especially the competitors.
• 29:52
  SPEAKER_00: Like, I mean, there was there was they were talking about sewing manufacturers because they said you said you would never do this.
• 29:58
  SPEAKER_00: I mean, it was it, it was I loved it because I was like, you know, you're the same guy that two years ago told me I would never make it, and here I am, and I just beat you.
• 30:06
  SPEAKER_00: And so but yeah, you were playing chess while they were playing checkers.
• 30:10
  SPEAKER_01: That's right.
• 30:11
  SPEAKER_01: We had so much to talk about that we broke this episode in two.
• 30:14
  SPEAKER_01: So make sure you tune in next time for the second part of the conversation.