Latest / Big Talk About Small Business / Ep. 5 - The Journey to Becoming an Entrepreneur

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Ep. 5 - The Journey to Becoming an Entrepreneur · Big Talk About Small Business

• 0:05
  SPEAKER_04: Hey everybody, we're back here again with big talk about small business.
• 0:11
  SPEAKER_04: And uh I'm Mark Zweig, and uh here in the studio today, we have my friend Ryan Malone.
• 0:20
  SPEAKER_04: Um, those of you who are in Northwest Arkansas might know of Ryan.
• 0:25
  SPEAKER_04: He's he's kind of a uh a known figure in the small business community here, very entrepreneurial fellow.
• 0:32
  SPEAKER_04: Um, those of you outside of Northwest Arkansas um will hopefully get to learn a little bit more about him.
• 0:39
  SPEAKER_04: But um, Ryan's had a number of business uh ventures.
• 0:43
  SPEAKER_04: He's got several currently, and he's always looking for new opportunities.
• 0:48
  SPEAKER_04: So, Ryan, how are you doing today, bud?
• 0:50
  SPEAKER_03: I'm good.
• 0:51
  SPEAKER_03: I'm excited about this.
• 0:52
  SPEAKER_03: First podcast that I have ever shot.
• 0:54
  SPEAKER_03: So really a learning experience for me.
• 0:56
  SPEAKER_03: It's gonna be fun.
• 0:57
  SPEAKER_04: That's surprising knowing you.
• 0:59
  SPEAKER_04: I'm I I can't believe more people wouldn't want you on their podcasts.
• 1:03
  SPEAKER_04: Usually I turn them down, but uh hey, we're honored.
• 1:06
  unknown: Okay.
• 1:07
  SPEAKER_04: We're honored to have you here today.
• 1:09
  SPEAKER_04: So why don't you tell these people a little bit about yourself?
• 1:12
  SPEAKER_04: I think you've got a really cool story and and your education and and how you got started in this business and and and basically what you thought you were gonna do when you were a kid.
• 1:23
  SPEAKER_03: Absolutely nothing of what I'm currently doing.
• 1:26
  SPEAKER_03: Uh my life path growing up was more go to school for four years than you know, go into a program law at the time was what my held my held my interest the most.
• 1:38
  SPEAKER_03: I thought I was gonna be a lawyer.
• 1:39
  SPEAKER_04: Um like rating contracts and stuff.
• 1:42
  SPEAKER_03: That's what I thought.
• 1:42
  SPEAKER_03: You know, it seemed to be a stable career.
• 1:44
  SPEAKER_03: I didn't know too many broke lawyers, so be able to live comfortably.
• 1:49
  SPEAKER_03: Uh so the idea was to graduate school from the very small town that I graduated from and you know, go to college for four years and then go get my doctorate in law, so another three or four years there, and then live in a basement for 10 or 15 years, you know, doing the underwriting for an actual lawyer, and then maybe progress to partner one day, I thought would be the life path.
• 2:07
  SPEAKER_03: So at this point in time, I'd still be in the basement somewhere.
• 2:10
  SPEAKER_03: Uh thank God I did not pursue that.
• 2:13
  SPEAKER_03: Uh, but we're much, much more happy now.
• 2:16
  SPEAKER_04: So uh you went to um U of A.
• 2:20
  SPEAKER_04: Yeah.
• 2:21
  SPEAKER_03: Started actually at U of A Fort Smith and then transitioned to the University of Arkansas um a semester or two into it.
• 2:29
  SPEAKER_04: I see.
• 2:29
  SPEAKER_04: And you got your business degree, or what did you do there?
• 2:32
  SPEAKER_03: I started out with a psychology degree.
• 2:35
  SPEAKER_04: Business education, I should say.
• 2:37
  SPEAKER_03: More more educated and a whole bunch of stuff at college, but not much.
• 2:41
  SPEAKER_04: What were you gonna do with the psychology degree?
• 2:42
  SPEAKER_03: I thought I was gonna go to law school with it until I took an econ class, and the professor at the time said, Hey, stay after class one day.
• 2:49
  SPEAKER_03: Asked me what I wanted to do, said I want to be a lawyer.
• 2:51
  SPEAKER_03: You really should consider economics.
• 2:52
  SPEAKER_03: I think it would fit you know your personality more.
• 2:54
  SPEAKER_03: It's really good as a prereq for law.
• 2:57
  SPEAKER_03: All right, whatever.
• 2:58
  SPEAKER_03: So switch my major six weeks into class or something.
• 3:01
  SPEAKER_03: Um, very grateful that I did that.
• 3:03
  SPEAKER_03: I thoroughly enjoyed the econ route and double-mined in marketing and finance, and then did not actually graduate.
• 3:09
  SPEAKER_04: So you came though pretty close.
• 3:12
  SPEAKER_04: Yeah, what was the story?
• 3:13
  SPEAKER_03: I mean, you fulfilled all your requirements, but your honors thesis?
• 3:17
  SPEAKER_03: I went to every single class, took every single test.
• 3:21
  SPEAKER_03: Um at the end of my undergrad, the businesses were starting to take off.
• 3:27
  SPEAKER_03: We were we're pretty busy, and the requirement for the senior thesis was like 40 pages, and you had to do all this research or whatnot.
• 3:34
  SPEAKER_03: I didn't get around to doing it by the time that I walked.
• 3:38
  SPEAKER_03: So I do have the picture of me like holding the little diploma thing, but it's completely blank on the inside.
• 3:44
  SPEAKER_03: My mom still has it displayed.
• 3:46
  SPEAKER_03: She's pissed.
• 3:46
  SPEAKER_03: She's like, should have wrote the damn paper.
• 3:49
  SPEAKER_03: Um never got it.
• 3:51
  SPEAKER_04: But you didn't do it even though you had a chance to complete it later because you wanted to make a statement, right?
• 3:57
  SPEAKER_03: One of my very nice professors, um, I ran into him at Walmart probably three years after I had finished the program.
• 4:04
  SPEAKER_03: And he said, Hey, you're still in RQ as you didn't write your senior thesis.
• 4:09
  SPEAKER_03: Like you've completed everything under like a 3.8 or something when I walked.
• 4:12
  SPEAKER_03: And he's like, if you write a one-page paper, I'll give you your diploma.
• 4:17
  SPEAKER_03: And I said, Thank you very much, sir, but I'm okay.
• 4:19
  SPEAKER_03: That was, you know, young and hot-headed and cocky.
• 4:22
  SPEAKER_03: Oh, you were should have taken that man up on his offer.
• 4:26
  SPEAKER_03: He was being very generous.
• 4:28
  SPEAKER_03: That's that's very brave.
• 4:30
  SPEAKER_03: Here we are today.
• 4:30
  SPEAKER_04: So yeah, I mean, it didn't really matter in your case, but so so you started some businesses when you were in college.
• 4:38
  SPEAKER_03: We were actually in college at the time.
• 4:39
  SPEAKER_03: The entrepreneurial route was not even brought up through my entire high school period.
• 4:46
  SPEAKER_03: You know, we always in the yearbook were most likely to succeed, and all my teachers would say, You're gonna run or work for a large company one day, and like you're gonna get hired somewhere and you know, climb the ladder and do create like no one at that time, and this is 2009 to 2011-ish, right?
• 5:00
  SPEAKER_03: said, you know, you're gonna start your own thing.
• 5:02
  SPEAKER_03: What about creating something?
• 5:04
  SPEAKER_03: Um, until I met a friend in college actually, and he was working at a mall kiosk, and he's like, My boss is making so much money, I think we could start one of these things.
• 5:14
  SPEAKER_03: You know, what do you want to do with your life?
• 5:15
  SPEAKER_03: And he asked me a question that I'll never forget.
• 5:18
  SPEAKER_03: He goes, What do you want to do?
• 5:20
  SPEAKER_03: I want to be a lawyer.
• 5:21
  SPEAKER_03: He said, Why do you want to be a lawyer?
• 5:23
  SPEAKER_03: And I said, Because make good money, you know, you'll be comfortable in a lifestyle.
• 5:26
  SPEAKER_03: And he said, if you're gonna make the business is gonna pay you good money, how much money are you making for the business?
• 5:32
  SPEAKER_03: Because if you're not making money for the business, you know, you become a negative asset to them.
• 5:36
  SPEAKER_03: You know, you're a liability, you gotta go, they're gonna fire you.
• 5:38
  SPEAKER_03: Right.
• 5:39
  SPEAKER_03: And he said, So what we need to do is become the business, and then we'll make all the money and we'll never have to work, and we can travel the world, and our employees will do all of it.
• 5:48
  SPEAKER_03: And I'm like, man, maybe this guy's on to something.
• 5:51
  SPEAKER_03: This sounds fantastic.
• 5:53
  SPEAKER_03: So off we go.
• 5:54
  SPEAKER_03: We uh switched to universities, come back to Fayetteville.
• 5:57
  SPEAKER_03: Right.
• 5:57
  SPEAKER_03: At this time, I was actually headed to uh Malibu.
• 6:01
  SPEAKER_03: Or no, this Malibu is where I wanted in my undergrad.
• 6:03
  SPEAKER_03: I was headed to uh Honolulu.
• 6:05
  SPEAKER_03: I was gonna finish out my last few years laying on the beach.
• 6:08
  SPEAKER_03: It was gonna be great for college.
• 6:09
  SPEAKER_04: But have you ever been to Honolulu?
• 6:11
  SPEAKER_04: Yeah, it's weird.
• 6:12
  SPEAKER_04: It is a little weird.
• 6:13
  SPEAKER_04: I used to go there several times.
• 6:15
  SPEAKER_04: Well, I I every other month I had to fly over there for a board I was on, and I always felt like I was half in Japan and half in the United States.
• 6:23
  SPEAKER_04: I really liked it.
• 6:24
  SPEAKER_04: It's a strange feeling.
• 6:25
  SPEAKER_03: But at that point in my life, at like 19 to 21, I was dead set on just laying on a beach and you know, surfing every day and drinking everything I could find.
• 6:33
  SPEAKER_03: So it sounded like a good plan.
• 6:34
  SPEAKER_03: That's nice, yeah.
• 6:35
  SPEAKER_04: Does sound like a good plan, but anyway, you end up in Fayetteville.
• 6:38
  SPEAKER_03: We end back up.
• 6:39
  SPEAKER_03: We start in Fayetteville.
• 6:40
  SPEAKER_03: Um, we start a kiosk um and under the the guise of we're going to be insanely rich within 30 days.
• 6:47
  SPEAKER_03: With with a kiosk, and we're not going to work at all because our employees are going to do it.
• 6:52
  SPEAKER_03: We're like, we've found the fountain of youth and the secret to life.
• 6:55
  SPEAKER_03: So win a win.
• 6:56
  SPEAKER_03: What were you selling?
• 6:57
  SPEAKER_03: Hair extensions or what?
• 6:59
  SPEAKER_03: My first kiosk was actually body jewelry.
• 7:01
  SPEAKER_03: Okay.
• 7:01
  SPEAKER_03: So Lord help my poor mother.
• 7:03
  SPEAKER_03: She's like, You're doing what?
• 7:04
  SPEAKER_03: Like we were talking about a law degree, and now we're selling belly button rings.
• 7:08
  SPEAKER_03: There's been a very quick change of plan here.
• 7:11
  SPEAKER_03: I'm like, don't worry, mom.
• 7:12
  SPEAKER_03: It'll be okay.
• 7:14
  SPEAKER_04: You know, you're not the first guy that's told me, I mean, I teach entrepreneurship there at Walton College, been there for 19 years.
• 7:21
  SPEAKER_04: And that is a problem that we have in some cases with some very entrepreneurial students, is their parents don't support it.
• 7:29
  SPEAKER_04: They're like, we're not sending you to for a to get a four-year degree so you can go, you know, clean uh porta potties or whatever the business is, you know.
• 7:39
  SPEAKER_04: They think that, you know, they should go to work in corporate America and have a quote secure job, unquote.
• 7:46
  SPEAKER_04: And uh very common to hear this, though.
• 7:50
  SPEAKER_03: My my mom came from the generation of you know, the baby boomers.
• 7:54
  SPEAKER_03: Yeah.
• 7:54
  SPEAKER_03: And so if you did not have a college degree, you weren't even interviewed for a physician.
• 7:59
  SPEAKER_03: And so in her eyes, you know, a college degree was the only way to have any sort of stable life.
• 8:06
  SPEAKER_03: And obviously, she wanted what's best for her son.
• 8:08
  SPEAKER_03: So I get it, but there's different ways and different paths.
• 8:12
  SPEAKER_03: What I scared the living daylights out of her.
• 8:14
  SPEAKER_03: Do you have siblings?
• 8:16
  SPEAKER_03: I have a younger brother.
• 8:17
  SPEAKER_03: Uh-huh.
• 8:17
  SPEAKER_03: What's he doing?
• 8:18
  SPEAKER_03: He went to school for undergrad of four years and then went and got his doctorate in psychology.
• 8:22
  SPEAKER_03: And so he's actually a practicing psychologist or psychiatrist.
• 8:26
  SPEAKER_03: I always get to tell me psychologist.
• 8:28
  SPEAKER_04: Yeah.
• 8:28
  SPEAKER_04: MDs are the psych psychiatrist, but you can he's doing that and loves it.
• 8:33
  SPEAKER_03: He is trying to start uh an online version of this, but there's a lot of legality and red tape within you know that practice.
• 8:40
  SPEAKER_03: So his idea is to do, you know, some form of telehealth within that industry uh to make it a little bit more privatized.
• 8:48
  SPEAKER_04: So you were the oldest though, and normally in birth order, they tend to be the ones who are the most risk averse.
• 8:53
  SPEAKER_04: That didn't happen to you then.
• 8:55
  SPEAKER_03: No, we jumped right off the cliff and then figured out where the parachute was later.
• 8:58
  SPEAKER_03: I there's a lot to be said starting early though.
• 9:02
  SPEAKER_03: Yeah.
• 9:02
  SPEAKER_03: I had nothing to lose.
• 9:03
  SPEAKER_03: Exactly.
• 9:04
  SPEAKER_03: My buddy and I moved into a duplex that was like$600 a month and we were splitting it.
• 9:10
  SPEAKER_03: So I had$300 a month of liabilities.
• 9:14
  SPEAKER_03: Yeah, I was living on Chef Boy RD and ramen noodles.
• 9:17
  SPEAKER_03: Like life was great.
• 9:18
  SPEAKER_03: So if it didn't work out, like I was out$700, maybe a month as far as my liabilities I needed to live.
• 9:25
  SPEAKER_04: That's funny.
• 9:26
  SPEAKER_04: So the the um body jewelry, what happened?
• 9:30
  SPEAKER_03: Oh, it didn't it.
• 9:32
  SPEAKER_03: I mean, we went down the river, you know, we floated along a little bit, kept our head above water.
• 9:37
  SPEAKER_03: But one thing led to another.
• 9:39
  SPEAKER_03: And um, by the time we both were done, I mean, I think we had eight kiosks in total between the two of us.
• 9:46
  SPEAKER_04: Were they all at Northwest Arkansas Mall?
• 9:48
  SPEAKER_03: All at Northwest Arkansas Mall.
• 9:49
  SPEAKER_03: Wow.
• 9:50
  SPEAKER_03: It was it was interesting.
• 9:51
  SPEAKER_03: We did a lot of different ones.
• 9:53
  SPEAKER_03: We learned a lot on different products.
• 9:55
  SPEAKER_03: We've you know sent money off to China trying to save a little bit and didn't get any product back.
• 10:00
  SPEAKER_03: And what are you gonna do?
• 10:02
  SPEAKER_03: Like fly to China and find that guy?
• 10:04
  SPEAKER_03: No.
• 10:04
  SPEAKER_04: There's a different sense of ethics um in doing business.
• 10:08
  SPEAKER_03: Well, and I think we had, you know, I'm a sucker wrote on our forehead at 19 years old trying to start a business.
• 10:14
  SPEAKER_03: So that might have might have been part of it too.
• 10:17
  SPEAKER_04: So A kiosk, what all products were you selling?
• 10:21
  SPEAKER_03: Uh, between the two of us, we had body jewelry.
• 10:24
  SPEAKER_03: Um, we did what's the Dead Sea stuff, the hair straighteners.
• 10:30
  SPEAKER_03: Um, we also had Pillow Pels or something.
• 10:35
  SPEAKER_03: And there's this little product that, oh, it was the worst out of all of them.
• 10:38
  SPEAKER_03: You like clicked it, uh-huh, and I'm forgetting what the name was.
• 10:41
  SPEAKER_03: It was like a little heating pad that was gel, and then you could put it in the microwave and it would go back to like a liquidy solution, and you could snap something on the inside.
• 10:48
  SPEAKER_03: Body comfort, that's what it was.
• 10:49
  SPEAKER_03: Body comfort.
• 10:50
  SPEAKER_02: Uh-huh.
• 10:51
  SPEAKER_03: And oh my gosh, it was it was not a good product.
• 10:55
  SPEAKER_03: No, we learned a ton though, just being in the trenches.
• 11:00
  SPEAKER_04: And Northwest Arkansas Mall, I mean, honestly, it's felt like it's been on its deathbed for years.
• 11:06
  SPEAKER_04: It's just slow erosion.
• 11:09
  SPEAKER_03: Most malls I think are now are for elderly people who walk every day.
• 11:13
  SPEAKER_03: Uh-huh.
• 11:14
  SPEAKER_03: Oh, the mall is really busy at you know, eight in the morning when they open the doors until 10 when actually the stores open up from all your mall walkers.
• 11:21
  SPEAKER_03: Yeah.
• 11:21
  SPEAKER_03: Uh, and they never spend a dollar, but we tried.
• 11:24
  SPEAKER_03: And then it's basically a free babysitter service.
• 11:27
  SPEAKER_03: After school would get let out.
• 11:28
  SPEAKER_03: I mean, kids would just show up.
• 11:30
  SPEAKER_04: And you know, they might spend 10 bucks or something a day, but I thought the best thing that happened out there was the ride on stuffed animals.
• 11:36
  SPEAKER_04: That seemed like it really full-blown adults on them.
• 11:39
  SPEAKER_04: I was I've ridden them before with my kids, and uh they seem to do very well.
• 11:43
  SPEAKER_04: Passing by people I know waving at them.
• 11:46
  SPEAKER_03: Can you imagine running that kiosk like the end of the mall or the end of the day?
• 11:50
  SPEAKER_03: You know, you're like, where are all these things?
• 11:52
  SPEAKER_03: Like you have to walk the entire mall and push them back.
• 11:55
  SPEAKER_03: That's hysterical.
• 11:57
  SPEAKER_03: I'm sure putting up at the end of the day on that kiosk is fun.
• 11:59
  SPEAKER_04: So so you had those eight kiosks.
• 12:02
  SPEAKER_04: Yeah, and and do you still you don't have any of those now?
• 12:05
  SPEAKER_03: I think both of us would never, if we lost all of it, I I don't think either one of us would ever go back to do that business again.
• 12:10
  SPEAKER_03: So, so how many years did you do that?
• 12:12
  SPEAKER_03: One year.
• 12:13
  SPEAKER_03: Oh, in and out.
• 12:14
  SPEAKER_03: We learned how bad you jumped out.
• 12:16
  SPEAKER_03: Did you make any money on it?
• 12:17
  SPEAKER_03: Um, yes, enough to like keep our head above water.
• 12:21
  SPEAKER_03: And it was a fantastic learning experience because when you start something that simple, I mean, you have to learn your basics of accounting.
• 12:28
  SPEAKER_03: You have to learn, you know, how to sales tax inventory-wise.
• 12:31
  SPEAKER_03: Yeah, where to order, how to market.
• 12:33
  SPEAKER_03: I mean, there was a ton of stuff that was learned on the fly.
• 12:37
  SPEAKER_03: Yeah.
• 12:37
  SPEAKER_03: Um, how to collect sales tax and bill sales tax.
• 12:40
  SPEAKER_03: Like we uh got a lot of letters in the mail and actually had someone show up one time and uh basically was getting ready to take us to jail because I had filed a paper wrong for something.
• 12:49
  SPEAKER_03: And I had this very stern-looking gentleman in front of us.
• 12:53
  SPEAKER_03: And you know, it all blew over.
• 12:55
  SPEAKER_03: I think when he saw our age, that helped us more than anything.
• 12:57
  SPEAKER_03: When you're young, you can say, hey man, I'm sorry.
• 12:59
  SPEAKER_03: Yeah.
• 13:00
  SPEAKER_03: And they'll say, All right, well, maybe this kid just didn't know what he was doing.
• 13:02
  SPEAKER_03: You know, at 32 now, I can't say, yeah, I literally had no I literally filled it out wrong and had no idea.
• 13:08
  SPEAKER_03: But now I don't think that works anymore.
• 13:10
  SPEAKER_03: So I have to call my attorney.
• 13:12
  SPEAKER_03: So so after after the kiosk, then then what?
• 13:16
  SPEAKER_03: We opened a brick and mortar store um inside Fiesta Square that was involved in the jewelry space.
• 13:22
  SPEAKER_03: Okay.
• 13:22
  SPEAKER_03: Um more so on the buying side, uh-huh, is how we broke into that in industry.
• 13:27
  SPEAKER_03: He had opened um a couple different businesses too along the way that we had kind of got feedback on and were able to see what was working and what wasn't working at that time.
• 13:37
  SPEAKER_03: Um we got involved in this coin shop where we both started buying gold and silver coins, which was 2012.
• 13:46
  SPEAKER_04: What possessed you to do that?
• 13:48
  SPEAKER_03: I mean so at this time precious metals were running.
• 13:51
  SPEAKER_03: There was still a lot of instability and insecurity within you know the US markets and US dollars from 08 and 11 was our little double dip, let's call it.
• 13:59
  SPEAKER_03: And so people were still looking for safe haven assets.
• 14:02
  SPEAKER_03: And we thought, well, if it's going up, we can buy it as an expense on one of our books and then have that as a parent company, and then all the profits from the other companies would roll into the parent company who was just buying something we were never selling.
• 14:16
  SPEAKER_03: We were really inventory heavy in our parent company.
• 14:19
  SPEAKER_03: Um and then the kiosk that I had at the time was just bundled all the profits into the gold and silver coins.
• 14:25
  SPEAKER_04: That's interesting.
• 14:25
  SPEAKER_03: So it was fun as a collectible, and one thing led to another.
• 14:29
  SPEAKER_04: How did that do?
• 14:30
  SPEAKER_03: That business did really well, minus the fact that we didn't really sell a lot of stuff.
• 14:35
  SPEAKER_03: Uh I think I still have some inventories from that time frame of I just kept the product we were.
• 14:39
  SPEAKER_04: So it just went up in value though over time, right?
• 14:42
  SPEAKER_04: Yeah.
• 14:43
  SPEAKER_04: That's a big investment at that time.
• 14:45
  SPEAKER_03: Yeah, it worked out well.
• 14:46
  SPEAKER_04: Uh-huh.
• 14:47
  SPEAKER_03: Well, what happened was as we talked about it to our friends, or you know, even my mom, I got into Golden Silver at that time.
• 14:53
  SPEAKER_03: Like, I gotta buy this.
• 14:54
  SPEAKER_03: She's like, you know, gold coins and body jewelry, like, what are you doing with your life?
• 14:57
  SPEAKER_03: Like, you really need to focus more on people.
• 15:00
  SPEAKER_03: But we started having friends due to the age that we were interested in getting engaged or interested in appearing to connect with it.
• 15:08
  SPEAKER_03: Hey, if you ever see stuff like this, which we weren't even looking for, let us know.
• 15:14
  SPEAKER_03: And so that's when it led us into scrap buying, let us into diamonds, let us into watches, uh store inside the guess is where that was more on the buying side than that transition to the jewelry store what you're familiar with today.
• 15:28
  SPEAKER_04: Right.
• 15:28
  SPEAKER_04: So tell us about the jewelry store.
• 15:30
  SPEAKER_03: The jewelry store is awesome.
• 15:33
  SPEAKER_03: I never would have guessed I would have ended up into that industry at all.
• 15:38
  SPEAKER_03: You're at a really positive point in people's lives, if not one of the happiest.
• 15:42
  SPEAKER_03: They're getting ready to get engaged, they're celebrating you know, personal wins or personal growth within a business transaction, or they've just taken a new job or anniversaries.
• 15:54
  SPEAKER_03: It's a really cool inter industry to be in.
• 15:57
  SPEAKER_03: And just usually when people find their jeweler, they stay with their jeweler because it's such a powerful experience for them when they get engaged and those feelings are attached to that person.
• 16:06
  SPEAKER_03: And so you can be with them for life when they have their first kid, when they have their big wins, you know, they're calling you one for pieces and then two to you know celebrate with.
• 16:15
  SPEAKER_03: So you get intimately involved with a lot of people really quick, which is cool.
• 16:22
  SPEAKER_03: The model itself, um I like a lot too.
• 16:25
  SPEAKER_03: You usually repeat customers, you know, like once somebody purchases an engagement ring with it, you usually have them for you know the foreseeable future.
• 16:32
  SPEAKER_04: Sure.
• 16:32
  SPEAKER_03: And they just come back to you, you're their guys.
• 16:34
  SPEAKER_04: How do you compete?
• 16:35
  SPEAKER_04: Like at the mall, we've got like one intersection with three jewelry stores on three of the four corners.
• 16:42
  SPEAKER_03: You know, no question in that.
• 16:43
  SPEAKER_04: How do you compete with that?
• 16:44
  SPEAKER_04: And it seems like their stuff is always on sale.
• 16:47
  SPEAKER_04: It is, it's always half off, it's never full price.
• 16:50
  SPEAKER_03: It blows my mind when people say, like, oh, this is 70% off, you know, like we need to get it.
• 16:54
  SPEAKER_03: I'm like, it's it's always 70% off.
• 16:57
  SPEAKER_03: There's a reason it's 70% off.
• 16:58
  SPEAKER_03: They're still making money.
• 16:59
  SPEAKER_03: I don't know any business that's in business selling stuff at a loss.
• 17:02
  SPEAKER_03: Me neither.
• 17:03
  SPEAKER_03: So we when we started out, we didn't have any money still.
• 17:06
  SPEAKER_03: Like we had a little bit from the kiosk wins.
• 17:08
  SPEAKER_03: Okay.
• 17:08
  SPEAKER_03: Opened this store.
• 17:10
  SPEAKER_03: And when you have no money and you have an idea, you get very resourceful.
• 17:14
  SPEAKER_03: So we're talking about how do we sell jewelry without having five to seven million dollars in the display?
• 17:20
  SPEAKER_03: Because that's what our competitors have.
• 17:22
  SPEAKER_04: That's so funny you say that because I've seen the financials and six million dollars in inventory on one with eight million in sales.
• 17:30
  SPEAKER_04: I thought, holy cow, that's horrible.
• 17:32
  SPEAKER_04: It's really bad.
• 17:33
  SPEAKER_04: You know, I mean, that's a tremendous amount of cash.
• 17:36
  SPEAKER_03: At the same time, the the model traditionally for jewelry stores, and it's changed some in the last decade, has been sell out of the case.
• 17:42
  SPEAKER_03: You know, if you come in and you want to get a present or you want to get engaged, you know, the sales associates are incentivized to sell what's in the display because you have to turn that inventory.
• 17:51
  SPEAKER_03: And if you have six million dollars there, that can be real estate, that can be in other investments that are going to be generating some form of ROI.
• 17:58
  SPEAKER_03: That case has to sell.
• 17:59
  SPEAKER_03: Yeah.
• 18:00
  SPEAKER_03: We looked at it as let's build it for you.
• 18:03
  SPEAKER_03: CAD was had really progressed, you know, by 2012, 2013 to the point that we could computer animate design engagement rings, show the client, use material that they already have.
• 18:14
  SPEAKER_03: And we didn't have the overhead of carrying six million dollars in the display.
• 18:18
  SPEAKER_03: So we were able to really compete on price and give the customer a completely bespoke experience for designing something that's arguably one of the top five most important things in their entire life the day they get engaged.
• 18:29
  SPEAKER_04: Sure.
• 18:30
  SPEAKER_04: So, how did you design that?
• 18:32
  SPEAKER_04: I mean, did you learn how to use the CAD software?
• 18:34
  SPEAKER_04: Do you sit there with them and do it together?
• 18:36
  SPEAKER_04: Or what do you do?
• 18:38
  SPEAKER_03: In the beginning, back to we have no money and we're not real smart, uh, we outsourced a lot of it.
• 18:43
  SPEAKER_03: And it would take more time, you know, we couldn't afford the equipment to get it started.
• 18:46
  SPEAKER_03: Um, and so we would literally ask for Instagram pictures or Pinterest pictures or whatever they had for design inspiration.
• 18:53
  SPEAKER_03: Uh, we would outsource that to wholesalers or other jewelry connects that we had made from the buying side of the industry.
• 19:00
  SPEAKER_03: Yeah.
• 19:00
  SPEAKER_03: And then slowly and surely we brought almost all of that in-house now.
• 19:05
  SPEAKER_03: Just growth phase over the last five years.
• 19:07
  SPEAKER_04: So you would get a picture of this and then show it to the person physically or email it to them, or how were you doing it?
• 19:14
  SPEAKER_03: Uh, we'd have 3D so you could sit and rotate and see, you know, all sides, all angles of the piece.
• 19:19
  SPEAKER_03: No, it's still digital, it's not in here.
• 19:21
  SPEAKER_04: Sure, I understand.
• 19:22
  SPEAKER_03: Once they gave us the green light of like, hey, we don't need any more revisions, this is exactly what we're looking for.
• 19:27
  SPEAKER_03: We would cast it uh in either 3D mold now, back in the day, it used to be hand-carved wax.
• 19:32
  SPEAKER_03: And so we would be able to actually get somebody to do that, um, as overseas a little bit, and then third party it out as well, and we would just, you know, pay for the cost for these larger warehouses to build it.
• 19:44
  SPEAKER_03: We could usually have a piece within two weeks and then you know have the customer come back in for another consultation and say, Hey, you know, this is the mold of what you like.
• 19:52
  SPEAKER_03: Right.
• 19:53
  SPEAKER_03: Is it still a green light?
• 19:54
  SPEAKER_03: And you know, the customer would get all excited, you know, it's completely bespoke, it's made for them.
• 19:59
  SPEAKER_03: You know, they were designed in the complete build, so it's truly like what they want instead of a mass-produced piece that you just walk in and grab out of the display.
• 20:09
  SPEAKER_03: And that worked, that model worked for it.
• 20:11
  SPEAKER_03: Not only did it work, it resulted in a ton of referrals.
• 20:14
  SPEAKER_03: Because when you have this piece that you're so passionate about, your engagement ring, you're gonna show your friends, you're gonna show your family, and you're gonna talk to them about the experience.
• 20:23
  SPEAKER_03: You're gonna go get the little piece of wax or plastic and say, like, this is what I built.
• 20:28
  SPEAKER_03: You know, this is what we designed, my partner and I.
• 20:30
  SPEAKER_02: Yeah.
• 20:31
  SPEAKER_03: And that led to a lot of referrals.
• 20:32
  SPEAKER_03: So before we know it, we're we enter the growth phase, you know, and we're looking for a 2.0 and we're looking on how to scale, and we're looking on bringing the equipment in-house.
• 20:41
  SPEAKER_03: It's been a really fun, fun wave drive.
• 20:43
  SPEAKER_03: So now you do all this in-house?
• 20:45
  SPEAKER_03: Well, you have the majority of it in-house.
• 20:48
  SPEAKER_03: We've recently explained our our footprint of how large our store is right now.
• 20:52
  SPEAKER_03: We have a whole jewelry bench built out in the back.
• 20:54
  SPEAKER_03: We can do simple set-size polish in-store now.
• 20:57
  SPEAKER_03: Um, my guy's still finishing up some school in order to be able to do the more intricate stuff, like stone-on-stone setting, invisible edge.
• 21:06
  SPEAKER_03: That's very technical within our industry.
• 21:08
  SPEAKER_03: Not a lot of places can do it.
• 21:09
  SPEAKER_03: Not a lot of places want to mess with it.
• 21:10
  SPEAKER_03: Like it's a pain in the butt and takes a lot of time.
• 21:12
  SPEAKER_03: But artwork, it's beautiful.
• 21:16
  SPEAKER_03: It's a work of art.
• 21:16
  SPEAKER_03: You literally take a diamond edge and you're setting it on a diamond edge, and it's just all tension setting.
• 21:21
  SPEAKER_04: Cool.
• 21:21
  SPEAKER_03: Beautiful work of art, but complex.
• 21:24
  SPEAKER_04: Sounds like it.
• 21:24
  SPEAKER_04: So you got that business rocking and rolling.
• 21:27
  SPEAKER_03: Yep.
• 21:28
  SPEAKER_04: You moved out of the Fiesta Square under your own retail location on North College, I know.
• 21:33
  SPEAKER_03: Yeah.
• 21:34
  SPEAKER_04: And then you also have the gold and silver exchange, right?
• 21:38
  SPEAKER_04: Which is it's a totally separate entity.
• 21:40
  SPEAKER_04: And what does that do exactly?
• 21:42
  SPEAKER_03: The gold and silver side is really interesting because all of the materials that we need in order to produce any form of jewelry, we can get by buying the gold coins and silver coins.
• 21:53
  SPEAKER_03: There's also a very large demand right now with macroeconomic events and the whole banking and Instability.
• 22:00
  SPEAKER_03: Sure.
• 22:01
  SPEAKER_03: You know.
• 22:02
  SPEAKER_03: Everybody's buying gold.
• 22:03
  SPEAKER_03: Everybody's buying gold right now.
• 22:05
  SPEAKER_03: Yeah.
• 22:06
  SPEAKER_03: In times of you know instability or insecurity, people revert back to what they know is comfortable or safe.
• 22:12
  SPEAKER_03: Sure.
• 22:12
  SPEAKER_03: And for the last 2,000 years, that's been gold.
• 22:15
  SPEAKER_03: You know, whether that's institutional buyers being countries, or whether that's individuals just saying, Man, I don't know what's going to go on, but I want to suck the money in my mattress or I can buy gold, right?
• 22:25
  SPEAKER_03: Exactly.
• 22:26
  SPEAKER_03: So that business in the last 60 days has gone parabolic.
• 22:31
  SPEAKER_03: We have a lot of first-time customers, a lot of new faces, a lot of people that just don't know, and neither do we.
• 22:39
  SPEAKER_03: But the idea is to pull together and you know.
• 22:42
  SPEAKER_03: Is that a retail business?
• 22:44
  SPEAKER_03: It is a retail business.
• 22:46
  SPEAKER_03: We will buy that located.
• 22:47
  SPEAKER_03: Um, we actually have it next door to the jewelry store, in all honesty, because a lot of the stuff when it comes back in the door, we're able to turn into shot and meltdown and use it to fix jewelry repair, you know, resolder rings, size rings, and whatnot.
• 22:59
  SPEAKER_03: Sure.
• 23:00
  SPEAKER_03: So it's the same material, it's just in a completely different form.
• 23:03
  SPEAKER_03: It's not a shiny engagement ring, it's you know a solid gold coin.
• 23:06
  SPEAKER_04: Uh-huh.
• 23:06
  SPEAKER_04: So you melt coins down?
• 23:08
  SPEAKER_03: Uh, we can if need be.
• 23:09
  SPEAKER_03: Some coins, some are pure, and the pure gold is what we can then either dilute down into, you know, 22, 18, 14 or whatnot.
• 23:16
  SPEAKER_04: But it's worth more as a material than it is as a coin in some cases.
• 23:20
  SPEAKER_03: To a certain extent, yes.
• 23:21
  SPEAKER_03: Um, the material value of it will always be attached to a spot price.
• 23:27
  SPEAKER_03: Right.
• 23:27
  SPEAKER_04: Where it goes up and down.
• 23:29
  SPEAKER_03: Exactly.
• 23:30
  SPEAKER_03: And you can turn that material into an engagement ring and charge a premium for that material.
• 23:35
  SPEAKER_03: I see.
• 23:35
  SPEAKER_03: And so it's the same use, different premiums.
• 23:38
  SPEAKER_03: We would love to sell engagement rings, you know, all day long, every single day, but that's not feasible.
• 23:43
  SPEAKER_03: There's going to be buyers for the material in the raw just as much as there's in buyers for material in the ring form.
• 23:48
  SPEAKER_04: Interesting.
• 23:49
  SPEAKER_03: Fun business on both sides.
• 23:51
  SPEAKER_04: How do you make sure that you don't get on the wrong side of the equation, i.e., paying too much and then seeing stuff go down in value.
• 24:00
  SPEAKER_03: It can happen.
• 24:01
  SPEAKER_03: Um, and there's definitely been points throughout you know the decade I've been in this industry where it falls quickly and you're you're caught with it.
• 24:10
  SPEAKER_03: The saving grace is you're not the only one.
• 24:13
  SPEAKER_03: You know, every metal dealer in the United States, if gold swings, you know, 50, 75, 100, uh-huh, their cost basis is the same.
• 24:22
  SPEAKER_03: And as long as you can move the product within a timely manner, you're all usually okay because I mean the big boys aren't taking a loss, the small guys aren't taking a loss.
• 24:29
  SPEAKER_03: It's just, you know, make sure that inventory comes as fast as it's going.
• 24:34
  SPEAKER_04: So now you're you had a partner originally.
• 24:38
  SPEAKER_04: Yep.
• 24:38
  SPEAKER_04: What's the story now with these two?
• 24:40
  SPEAKER_03: We were partners um almost for 10 years, if not at 10 years, within the jewelry division.
• 24:48
  SPEAKER_03: Um great guy, super smart.
• 24:50
  SPEAKER_03: He's started a different business in the apparel industry uh and also just had his second child and kind of reached a point where he was very, very happy at spending, you know, a little bit more time with his family.
• 25:03
  SPEAKER_03: I think if anything, he's found ultimate happiness, and I'm still trying to kind of look and build.
• 25:08
  SPEAKER_03: Uh I wanted to take Evermore a little bit larger and you know assume the larger footprint that we had talked about recently.
• 25:14
  SPEAKER_03: And you know, he didn't necessarily feel that same way.
• 25:17
  SPEAKER_03: So we were able to, you know, chop the stores up amicably and still talk to him from time to time.
• 25:22
  SPEAKER_03: Like we still have good relationship there.
• 25:24
  SPEAKER_03: And I think he's the happiest guy that I know, and we're trying to turn Evermore into a powerhouse.
• 25:28
  SPEAKER_03: So it's a win-win.
• 25:30
  SPEAKER_04: So you had to buy him out, I assume, to get this deal done.
• 25:34
  SPEAKER_03: Yeah, and luckily that was a very amicable experience on my part.
• 25:38
  SPEAKER_03: We've watched some friends, you know, dissect businesses and it gets ugly quick.
• 25:43
  SPEAKER_03: Oh, yeah.
• 25:43
  SPEAKER_03: Um, fortunately in this instance, you know, both of us had a strong relationship and we both felt pretty confident in you know what he wanted and what I wanted, and we agreed that the division was best.
• 25:54
  SPEAKER_03: So it it went very smoothly.
• 25:56
  SPEAKER_03: Uh, I had actually bought him out of a different business earlier, the scooter franchise.
• 26:01
  SPEAKER_04: You know, we had started another one we need to talk about.
• 26:04
  SPEAKER_04: Yeah.
• 26:04
  SPEAKER_03: And he was in that for about a year and then wanted to divest that into some real estate.
• 26:08
  SPEAKER_03: And you know, that was a very amicable transition as well.
• 26:12
  SPEAKER_04: So how did you determine the valuation?
• 26:15
  SPEAKER_03: That was difficult because we didn't we didn't bring in third parties on either one.
• 26:21
  SPEAKER_03: Like we both just sat down and kind of hammered it out.
• 26:24
  SPEAKER_04: And you know, fortunately for the relationship, it wasn't you know, lawyers and sure, you know, a bunch of cuss words and lot of disputes when that stuff's not documented early on.
• 26:35
  SPEAKER_04: I mean, it's obviously it's a big problem with a lot of companies.
• 26:38
  SPEAKER_03: Buy sell agreements, um, you know, in place if one of us wanted an exit, but we honestly didn't lean on them too much.
• 26:45
  SPEAKER_03: I think there was just respect, fortunately, for you know, our relationship that it didn't get ugly and it it didn't get too sticky.
• 26:52
  SPEAKER_03: So I got very lucky on that, having heard stories from my other friends.
• 26:56
  SPEAKER_04: Yeah.
• 26:57
  SPEAKER_03: Um, it can get ugly quick.
• 26:59
  SPEAKER_04: Well, I'm glad that you got through that successfully.
• 27:02
  SPEAKER_04: So let's talk about the scooter business.
• 27:04
  SPEAKER_04: I mean, you got all these different things going.
• 27:05
  SPEAKER_04: What about that?
• 27:07
  SPEAKER_03: We uh 2012.
• 27:10
  SPEAKER_03: Back at the University of Arkansas, starting kiosks and whatnot, the university was taking away auto parking at this time and adding scooter parking.
• 27:18
  SPEAKER_03: You know, their target was more enrollment, more students on campus.
• 27:22
  SPEAKER_03: We need more mobility.
• 27:23
  SPEAKER_03: We have to get them to be able to get to class on time and move around quicker.
• 27:26
  SPEAKER_03: Sure.
• 27:26
  SPEAKER_03: What can we do?
• 27:27
  SPEAKER_03: Yep.
• 27:27
  SPEAKER_03: Well, here come these little scooters.
• 27:29
  SPEAKER_03: Yep.
• 27:29
  SPEAKER_03: Uh I show up and I'm a motorcycle guy.
• 27:33
  SPEAKER_03: I'm like, I need to take my motorcycle to campus.
• 27:35
  SPEAKER_03: And all these scooters are running around everywhere and they're hitting each other.
• 27:38
  SPEAKER_03: And there's, you know, 20 scooters and two parking spots.
• 27:41
  SPEAKER_03: And I'm like, my motorcycle's gonna get hit.
• 27:43
  SPEAKER_03: And my buddies are like, buy a scooter.
• 27:45
  SPEAKER_03: I'm like, oh, that's stupid.
• 27:46
  SPEAKER_03: I never want to buy a scooter.
• 27:47
  SPEAKER_03: So I bought a scooter.
• 27:48
  SPEAKER_03: Day one, this girl flags me down.
• 27:50
  SPEAKER_03: And she's like, Hey, can I get a ride to class?
• 27:52
  SPEAKER_03: And I'm like, I love scooters.
• 27:53
  SPEAKER_03: I should have bought one on day one.
• 27:54
  SPEAKER_03: Like, this is where it's at.
• 27:56
  SPEAKER_03: So that was this the start of me dipping my toe into scooter land.
• 28:01
  SPEAKER_03: Um, by the time I graduated, the university had scooter parking at almost every single building on campus.
• 28:09
  SPEAKER_03: And at this point in time, it was free.
• 28:11
  SPEAKER_03: You had to get a little scooter decal or whatnot to register the bike in case you parked somewhere you weren't supposed to.
• 28:16
  SPEAKER_03: But the actual scooter parking was free.
• 28:18
  SPEAKER_03: Yep.
• 28:19
  SPEAKER_03: We looked at options of having the kiosk experience, you know, importing products from China.
• 28:25
  SPEAKER_03: What can we get at a lower price that is similar to what a Honda or Yamaha would be?
• 28:31
  SPEAKER_03: Sure.
• 28:31
  SPEAKER_03: Honda and Yamaha at this time or 2,500, 3 grand a pot.
• 28:35
  SPEAKER_04: Yeah.
• 28:35
  SPEAKER_04: Yeah.
• 28:35
  SPEAKER_03: And three miles, four miles from campus was the Yamaha dealer, and Honda, I think, was like 12.
• 28:41
  SPEAKER_03: And that's a long way to go on a scooter for service needs or if you're needing something.
• 28:45
  SPEAKER_04: Um it'd be hard to ride down the highway to get over there to Hartman.
• 28:50
  SPEAKER_03: You're 20 miles an hour the whole way.
• 28:52
  SPEAKER_03: So we started looking around, uh, found the top five brands that were not Honda in Yamaha, and uh were fortunate enough to find a location that was actually home to one of those brands, but they had closed at this point in time.
• 29:07
  SPEAKER_03: They were they were trying a 2.0 location out of Iowa, didn't work out, and so they'd closed down.
• 29:12
  SPEAKER_03: So we walked in and were able to buy all of their inventory, um, buy all of their assets at a discount and restart that business.
• 29:18
  SPEAKER_04: Now, was that the one that was over there by Subway?
• 29:22
  SPEAKER_03: No, I asked you that before.
• 29:24
  SPEAKER_03: Yep.
• 29:24
  SPEAKER_03: You're thinking, I don't remember the name of that store, but I remember what you're talking about.
• 29:29
  SPEAKER_03: This was the Wolf brand dealer franchise, which was actually called Gorilla Motorworks, I think, at the time that we bought it.
• 29:35
  SPEAKER_04: Where was that located?
• 29:36
  SPEAKER_03: Um, they were located in the old building that we used to be at.
• 29:39
  SPEAKER_03: Okay, and then we were there by Clardy's.
• 29:41
  SPEAKER_03: Yep.
• 29:41
  SPEAKER_03: And we've moved a couple doors down to that park corner.
• 29:44
  SPEAKER_04: Yeah.
• 29:44
  SPEAKER_04: Um so did you ever operate in the building when we operated there.
• 29:48
  SPEAKER_03: Um, Jonathan and I took that down in 14, bought him out in 15, and I think I was there till 17.
• 29:57
  SPEAKER_04: See, maybe 18.
• 29:59
  SPEAKER_04: So you got everything cheap to start out.
• 30:01
  SPEAKER_04: Yeah.
• 30:02
  SPEAKER_04: That was a good start.
• 30:03
  SPEAKER_04: That I mean, tools and who owned it?
• 30:05
  SPEAKER_03: Who so a group out of uh Iowa City had initially they called Wolf Brand Scooters and they're like, we're ready to do 2.0.
• 30:12
  SPEAKER_03: Where do we need to go?
• 30:13
  SPEAKER_03: And they said, Have you been to Arkansas?
• 30:14
  SPEAKER_03: And they go, No.
• 30:15
  SPEAKER_03: They go, There's a ton of hills.
• 30:16
  SPEAKER_03: You should do one in Arkansas.
• 30:17
  SPEAKER_03: No one wants to walk up those hills.
• 30:19
  SPEAKER_03: Yeah.
• 30:19
  SPEAKER_03: So they come down to Arkansas, it's like eight and a half hours, and they're like, perfect.
• 30:23
  SPEAKER_03: Everyone here needs a scooter.
• 30:24
  SPEAKER_03: Uh-huh.
• 30:25
  SPEAKER_03: But it was eight and a half hours away.
• 30:26
  SPEAKER_03: They were trying to micromanage, you know, the tar out of it.
• 30:29
  SPEAKER_03: Sure.
• 30:30
  SPEAKER_03: Hired a guy to handle it, and then just, you know, things didn't work out necessarily for them.
• 30:36
  SPEAKER_03: And they were at the point in their lives, two of them had just gotten married.
• 30:38
  SPEAKER_03: One of them had a, I think, a kid on the way or already had a kid, and they wanted to be home more in these eight and a half hour trips to Arkansas that they were taking turns on every week, just wasn't worth what they were getting out of it.
• 30:48
  SPEAKER_04: Fortunate that you got that deal.
• 30:50
  SPEAKER_04: So you got that from the Wolf representative um dealer rep.
• 30:54
  SPEAKER_04: Is that it?
• 30:54
  SPEAKER_03: Well, we targeted um the Wolf brand scooters at this point in time was like number one on college campuses.
• 31:01
  SPEAKER_03: Okay.
• 31:01
  SPEAKER_03: Uh, and so that was the group that we had looked for, and sim, I think, was another one at that time, uh, and genuine scooters.
• 31:08
  SPEAKER_04: Yep.
• 31:09
  SPEAKER_04: And so those three genuine had those two strokes.
• 31:11
  SPEAKER_03: Oh, genuine and they ripped up the hills.
• 31:13
  SPEAKER_04: They were faster.
• 31:14
  SPEAKER_03: Plenty of power.
• 31:15
  SPEAKER_04: I always liked those.
• 31:16
  SPEAKER_03: Students loved them.
• 31:16
  SPEAKER_03: We sold a ton of those bikes, and they were a good bike to put a kid on because they didn't have any issues.
• 31:20
  SPEAKER_03: The two strokes have no maintenance, you're not doing valve adjustments.
• 31:23
  SPEAKER_04: Exactly.
• 31:23
  SPEAKER_04: Yeah.
• 31:24
  SPEAKER_03: Minus a couple of the students running them out of oil completely.
• 31:26
  SPEAKER_04: Yeah, it's like, man, I gotta put oil in there.
• 31:28
  SPEAKER_03: Uh-huh.
• 31:29
  SPEAKER_03: We would get a couple every year.
• 31:30
  SPEAKER_04: I'm sure you did.
• 31:32
  SPEAKER_04: But um, you probably just unsease them and and you know, throw a new top end.
• 31:37
  SPEAKER_04: Yeah.
• 31:38
  SPEAKER_04: Yeah.
• 31:39
  SPEAKER_04: So, so that got you going in the scooter business, and then you you grew that.
• 31:44
  SPEAKER_03: We, and by this point in time, it was just I, but it was my team and I had no idea how large the youth power sports market was.
• 31:53
  SPEAKER_03: So the same concept that I was looking for in 1314 of an off-brand provider that can fill the role of what Honda Yamaha does, but for youth off-road, yep, is you know, five times the market of what scooter drivers are.
• 32:09
  SPEAKER_03: So in 19, I think it was 18, 19, we brought on some ATVs for riders like three years old to 12 years old, sold out.
• 32:19
  SPEAKER_03: Then we brought on dirt bikes and sold out, and then we brought on go-kart, and then they sold out.
• 32:23
  SPEAKER_03: We couldn't keep them in.
• 32:24
  SPEAKER_03: Well, then COVID hit, and everybody, instead of taking a family vacation, everything went insane, right?
• 32:28
  SPEAKER_03: Well, and then you wanted to be outside.
• 32:31
  SPEAKER_03: Everyone was terrified to be inside.
• 32:32
  SPEAKER_03: Sure.
• 32:33
  SPEAKER_03: So not only did they not travel, so they had a little bit of extra money, they got PP or stimulus checks.
• 32:39
  SPEAKER_03: Right.
• 32:39
  SPEAKER_03: And then they kicked their kids outside in order to breathe fresh air.
• 32:43
  SPEAKER_03: So everybody needed a go-kart ATV or four-wheeler.
• 32:45
  SPEAKER_03: And we flew up.
• 32:48
  SPEAKER_04: Could you get product during that time?
• 32:50
  SPEAKER_04: Because that was a problem for a lot of people.
• 32:52
  SPEAKER_03: Story of our life so far is we just got lucky.
• 32:55
  SPEAKER_03: Um, in January of 2020, we have this saying at Moped: you're like, parts don't go bad sitting on a shelf, units don't go bad sitting on a floor, like it's not milk and bread and eggs.
• 33:06
  SPEAKER_03: I don't mind running a little inventory heavy because it will sell in enough time, and I would rather have it than not.
• 33:12
  SPEAKER_03: We did not know.
• 33:13
  SPEAKER_04: You clearly have more inventory than your competitors in town.
• 33:17
  SPEAKER_04: I mean, that it just looks like the place is alive.
• 33:19
  SPEAKER_04: You've done such a good job with that.
• 33:21
  SPEAKER_03: I I appreciate that, but a lot of times when your buyer is a 10-year-old, if you don't have green, they don't want it.
• 33:28
  SPEAKER_03: Sure.
• 33:28
  SPEAKER_03: And so I I try to keep a full inventory of sizing and colors.
• 33:32
  SPEAKER_04: By the way, Ron, that is um, you're known for that.
• 33:35
  SPEAKER_04: I love green too.
• 33:36
  SPEAKER_04: It's a fun color.
• 33:38
  SPEAKER_03: You know, life short, have fun, enjoy it.
• 33:40
  SPEAKER_04: That's why I bought that last rolls.
• 33:42
  SPEAKER_04: I had it with British rice and green.
• 33:44
  SPEAKER_04: Absolutely beautiful.
• 33:46
  SPEAKER_03: I know you lost your butt on that one.
• 33:48
  SPEAKER_04: I I mean, it just the green just makes me irrational.
• 33:51
  SPEAKER_04: Every so often it happens.
• 33:52
  SPEAKER_04: But green's a good color.
• 33:54
  SPEAKER_03: We back to what we're talking about.
• 33:55
  SPEAKER_03: We got lucky in January.
• 33:57
  SPEAKER_03: We went very heavy on inventory in anticipation for tax season and whatnot.
• 34:02
  SPEAKER_03: And you know, at this point in time, manufacturers are not having a lot of the purchasing, you know, from their dealers is what they usually do in early summer and fall.
• 34:10
  SPEAKER_03: Right.
• 34:11
  SPEAKER_03: Um they run slight discounts.
• 34:12
  SPEAKER_03: So we loaded up not only on the discount, we loaded up, you know, to have the inventory there if need be.
• 34:17
  SPEAKER_03: Well, then everybody shut down.
• 34:18
  SPEAKER_03: And when they opened back up, they said, we're going to allocate based off previous inventories, you know, at the end of the year and the first of the year.
• 34:28
  SPEAKER_03: So I look great on paper, and we were fortunate enough to be able to get a lot of stuff in um just based off being lucky.
• 34:36
  SPEAKER_04: Now you never got any outside investors in your businesses.
• 34:39
  SPEAKER_03: No.
• 34:40
  SPEAKER_03: Um, when we started, it was just Jonathan and I.
• 34:42
  SPEAKER_03: And you know, we were able to bootstrap those and and grow those up.
• 34:46
  SPEAKER_03: Um, we never took outside money on any of the operational businesses that we had.
• 34:52
  SPEAKER_03: There's a real estate project that I brought in a partner on.
• 34:54
  SPEAKER_04: Okay.
• 34:55
  SPEAKER_03: And we'll get into that, I'm sure, at some point.
• 34:57
  SPEAKER_04: But so back on the on the bootstrapping, I mean, how did you pull that off?
• 35:01
  SPEAKER_04: And what advice do you have for other people who want to get into business?
• 35:07
  SPEAKER_04: It's into their own thing.
• 35:09
  SPEAKER_03: Easier to start sooner than later.
• 35:11
  SPEAKER_03: You know, at this point in time when I started, I didn't have a wife and three kids.
• 35:15
  SPEAKER_03: I didn't even have a car payment.
• 35:17
  SPEAKER_04: Well, you still don't have three kids.
• 35:18
  SPEAKER_04: No.
• 35:19
  SPEAKER_04: I don't think you have car payments if I know you either.
• 35:22
  SPEAKER_03: So we have a wife.
• 35:24
  SPEAKER_03: At this point in time, we're we're paying cash for most of the toys.
• 35:27
  SPEAKER_03: Do have a perfect beautiful wife, so she keeps me keeps me going and in line.
• 35:32
  SPEAKER_03: Um at this point in time, our liabilities were next to nothing.
• 35:36
  SPEAKER_03: And so, you know, we just used what we had and grew it at the rate we could afford to grow it.
• 35:43
  SPEAKER_03: So to get vendor credit, like no, really, yeah.
• 35:47
  SPEAKER_03: Whenever the jewelry businesses were starting off, like we didn't have the money to buy it, we just didn't buy it.
• 35:51
  SPEAKER_03: And then we would save up until we did.
• 35:53
  SPEAKER_03: And we continued to build the bankroll on months that were profitable to be able to buy more things and push more into inventory.
• 36:00
  SPEAKER_04: Didn't suck the money out of the business.
• 36:02
  SPEAKER_04: Didn't suck the money out of it.
• 36:07
  SPEAKER_04: The first year is take too much out.
• 36:08
  SPEAKER_04: You got to put it into the machine that feeds you.
• 36:11
  SPEAKER_04: If you want more, you have to give it more to grow with.
• 36:13
  SPEAKER_04: Exactly.
• 36:14
  SPEAKER_03: The first year that you know we made good money, we didn't run off and buy cars or buy boxes.
• 36:20
  SPEAKER_03: I mean, we were in the$300 a month duplex.
• 36:22
  SPEAKER_03: You know, I mean, it was it was well worth it to just wait a little bit because it allowed us to build a nest egg that we could afford to take the risk.
• 36:30
  SPEAKER_03: And so if something came along that we felt was an opportunity, live cheap, we had a little dry powder to fire at that opportunity.
• 36:37
  SPEAKER_03: Exactly.
• 36:37
  SPEAKER_03: And it didn't change, you know, our lifestyle.
• 36:39
  SPEAKER_03: We weren't worried about if we were eating our Chef Boy RD or not that night.
• 36:42
  SPEAKER_04: So yeah, we were big on uh like Swanson TV dinners or and banquet pot pies.
• 36:48
  SPEAKER_04: They were they were cheap when I was could you go back to it?
• 36:51
  SPEAKER_04: I think that's the biggest question.
• 36:52
  SPEAKER_03: I don't know if I could.
• 36:54
  SPEAKER_04: I don't know either.
• 36:55
  SPEAKER_03: That's the hard part.
• 36:56
  SPEAKER_03: Yeah.
• 36:56
  SPEAKER_03: Why I tell people to start sooner than later, it's very hard to slow down.
• 37:00
  SPEAKER_04: Having having sold businesses and and made a lot of money, and now I don't, um now I'm on kind of a fixed income.
• 37:07
  SPEAKER_04: Man, it's hard to stop spending.
• 37:09
  SPEAKER_04: You know?
• 37:09
  SPEAKER_03: Yeah.
• 37:10
  SPEAKER_04: But um, so anyway, got that business going.
• 37:13
  SPEAKER_04: Now you got three things going.
• 37:15
  SPEAKER_04: Yep.
• 37:15
  SPEAKER_04: How do you manage all that?
• 37:16
  SPEAKER_04: Just run around with my head cut off.
• 37:18
  SPEAKER_03: No.
• 37:19
  SPEAKER_04: But it seemed like you're stressed out or at all, from what I can see.
• 37:22
  SPEAKER_03: Two things.
• 37:23
  SPEAKER_03: One, the job of an entrepreneur is not to be the smartest guy in the room at all.
• 37:27
  SPEAKER_03: Right.
• 37:28
  SPEAKER_03: It's to recognize who is and put those people around you.
• 37:31
  SPEAKER_03: So the teams that we have in place, I think are phenomenal.
• 37:35
  SPEAKER_03: And we definitely fire quicker than what we hire.
• 37:38
  SPEAKER_03: You know, we if we're gonna spend time around people, and this is the whole team.
• 37:41
  SPEAKER_03: If any part of the team doesn't like them, we don't bring them on.
• 37:43
  SPEAKER_03: Like right, you have to be in this space day in, day out with these people.
• 37:46
  SPEAKER_03: You need to like them.
• 37:47
  SPEAKER_03: Sure.
• 37:48
  SPEAKER_03: And they need to do their job well.
• 37:50
  SPEAKER_03: And you know, the second part is letting those people do their actual job.
• 37:54
  SPEAKER_03: You know, if you get in and micromanage them or, oh, hey, no, I want to do it this way.
• 37:58
  SPEAKER_03: Oh, hey, that person's never gonna be able to grow into a role and make it their own.
• 38:02
  SPEAKER_03: Like they're trying to grow and build for themselves just as much as you are.
• 38:06
  SPEAKER_03: And you and I are gonna look at every picture a little differently, but doesn't mean it's still not, you know, a beautiful picture, or we get to the same end goal.
• 38:14
  SPEAKER_03: We just may take a different route.
• 38:15
  SPEAKER_04: Yeah, so many small business owners practice what I call single person management, i.e., every single decision goes to them.
• 38:23
  SPEAKER_04: And of course, then they become a bottleneck, or if they ever get sick or they lose interest or they're doing something else.
• 38:30
  SPEAKER_04: Business is then stop.
• 38:31
  SPEAKER_04: Yeah.
• 38:32
  SPEAKER_04: Yeah, it kills the value of the business and kills the growth.
• 38:35
  SPEAKER_04: Create a business and then let it do its thing.
• 38:37
  SPEAKER_04: Yeah.
• 38:37
  SPEAKER_04: And you leave.
• 38:38
  SPEAKER_04: Like that's like you still can't leave completely.
• 38:42
  SPEAKER_04: Like a belly.
• 38:42
  SPEAKER_04: Yeah.
• 38:43
  SPEAKER_04: You know, there's at least that's my experience.
• 38:46
  SPEAKER_04: I can spin a lot of plates at once, but yeah, you still got to have some involvement in it, I think.
• 38:52
  SPEAKER_03: When you do that, we're in stores most days in direct point of contact, you know, if anybody needs anything, but I stand behind them.
• 39:00
  SPEAKER_03: And there's times too, there's been wrong decisions made.
• 39:02
  SPEAKER_03: You still have to stand behind them, you know, and educate after the fact.
• 39:07
  SPEAKER_03: You have to build the people around you up because if you're tearing them down, one, they're not going to stay, and two, they're not going to do anything.
• 39:12
  SPEAKER_04: It's so critical.
• 39:14
  SPEAKER_04: I I don't understand why small business owners don't get that idea.
• 39:18
  SPEAKER_03: We've been very fortunate to find like a good team.
• 39:21
  SPEAKER_04: Yeah.
• 39:22
  SPEAKER_04: Well, you're you're the reason why, though.
• 39:24
  unknown: Yeah.
• 39:25
  SPEAKER_04: I mean, if they like you and they trust you and you're an ethical guy and you treat people well and you create opportunities for them, then you can find good people, you know?
• 39:36
  SPEAKER_03: And then they stay too.
• 39:37
  SPEAKER_03: I mean, you build together.
• 39:38
  SPEAKER_03: You know, the idea is like as you grow, you you take those people with you.
• 39:41
  SPEAKER_03: Sure.
• 39:42
  SPEAKER_03: We see a lot of times in other roles and other companies, like we like to learn from your peers all the time.
• 39:48
  SPEAKER_04: Oh, and they're like, I like interviewing anybody who works for a competitor.
• 39:51
  SPEAKER_03: You know, you can you can take these and replace it for a role that does less.
• 39:55
  SPEAKER_03: You know, you can save so many dollars by hiring someone for two dollars less.
• 39:58
  SPEAKER_03: Like, I just don't see that mentality in small business working.
• 40:01
  SPEAKER_03: Now, if you're replacing that role for two dollars less and you're 500 people, okay, maybe then.
• 40:06
  SPEAKER_03: But small business, no, you're there with them.
• 40:09
  SPEAKER_04: Yeah, you're right.
• 40:11
  SPEAKER_04: So now you got these three businesses.
• 40:13
  SPEAKER_04: You also got into real estate.
• 40:15
  SPEAKER_04: What was your your uh foray into real estate all about?
• 40:19
  SPEAKER_03: Real estate, you know, everyone says that's the end game, and 1000% I agree.
• 40:24
  SPEAKER_03: Interest rates now terrify me, but me too, brother.
• 40:27
  SPEAKER_03: It doesn't in my experience, which is what all your decisions are based off of, I've not seen interest rates this high.
• 40:35
  SPEAKER_03: Like if you're 35, maybe even 40 or less, and they've shown you an interest rate that's like higher than three, you're like, well, bro, what are we doing right now?
• 40:43
  SPEAKER_03: You know, 4% maybe if your DTI is high or income's not quite there.
• 40:48
  SPEAKER_03: Now we're looking at eight.
• 40:50
  SPEAKER_03: That nine doesn't make sense to me because I've not experienced it.
• 40:54
  SPEAKER_03: So all of my past data points are screaming like red flags, ships burning, you know.
• 40:59
  SPEAKER_03: Right.
• 40:59
  SPEAKER_03: What's going on?
• 41:00
  SPEAKER_03: Um, foray into real estate, successful real estate started with self-storage facilities.
• 41:07
  SPEAKER_03: Uh-huh.
• 41:07
  SPEAKER_03: Uh, I've only played soccer once my entire life.
• 41:10
  SPEAKER_03: I think it was actually Omar that you had on not too long ago.
• 41:15
  SPEAKER_03: Yeah.
• 41:15
  SPEAKER_03: Uh invited me to like Gully Park or something to play soccer.
• 41:19
  SPEAKER_03: Never played soccer in my entire life.
• 41:21
  SPEAKER_03: We show up and we meet this kid.
• 41:22
  SPEAKER_03: You weren't a Catholic schoolboy then.
• 41:24
  SPEAKER_03: No.
• 41:25
  SPEAKER_04: Yeah.
• 41:25
  SPEAKER_03: I I I played some soccer.
• 41:27
  SPEAKER_03: I wasn't Catholic either, but we grew up in the middle of nowhere, farming country too.
• 41:31
  SPEAKER_03: So, like soccer wasn't a thing.
• 41:33
  SPEAKER_03: You had football, baseball, basketball, that was it.
• 41:35
  SPEAKER_03: Sure.
• 41:36
  SPEAKER_03: So we show up to play soccer.
• 41:37
  SPEAKER_03: It was it was a fun time.
• 41:38
  SPEAKER_03: And this younger kid that was also there just started in commercial real estate.
• 41:43
  SPEAKER_02: Uh-huh.
• 41:43
  SPEAKER_03: And we had tried some other stuff that didn't work out.
• 41:46
  SPEAKER_03: We had flipped some single-family homes that were not successful, and I didn't have a contractor's license, and I didn't know how to fix that stuff.
• 41:53
  SPEAKER_03: And the duplex stuff didn't work out for us because you know, somebody's calling, parked in my spot, somebody's smoking, I can smell their cigarettes, someone's dog's barking.
• 42:02
  SPEAKER_03: Like, what do you want me to do at two o'clock in the morning?
• 42:04
  SPEAKER_04: Like, the biggest problem with duplexes is they're around other duplexes.
• 42:08
  SPEAKER_04: Yes.
• 42:09
  SPEAKER_04: And duplex only neighborhoods are not usually great.
• 42:12
  SPEAKER_04: They usually they got the garage full of stuff to the brim, and then like five cars in the driveway.
• 42:18
  SPEAKER_04: And it's just it's always a problem.
• 42:21
  SPEAKER_04: And they don't take care of their yards.
• 42:24
  SPEAKER_04: They got dogs barking and pooping all over.
• 42:26
  SPEAKER_03: Factors that are outside of your control, shared wall.
• 42:30
  SPEAKER_03: As you know, the landlord or as the actual owner for the property.
• 42:35
  SPEAKER_03: Uh-huh.
• 42:36
  SPEAKER_03: And so my experience in real estate just wasn't profitable or enjoyable up into this soccer game.
• 42:42
  SPEAKER_03: Right.
• 42:43
  SPEAKER_03: Well, told the kid, my last ditch effort, I have a little bit of money I want to put into self-storage facilities.
• 42:47
  SPEAKER_02: Uh-huh.
• 42:48
  SPEAKER_03: Calls me back like two days later or something.
• 42:51
  SPEAKER_03: Hey, I found one.
• 42:52
  SPEAKER_03: It's an older gentleman, he's got a property that's being managed by someone else.
• 42:56
  SPEAKER_03: He's he wants it out.
• 42:57
  SPEAKER_03: Okay.
• 42:57
  SPEAKER_03: So we sit down, go over the numbers with the guy, throw out an offer on it, and he takes it.
• 43:03
  SPEAKER_03: Was that cash flowing right out of the bat?
• 43:06
  SPEAKER_03: It was.
• 43:06
  SPEAKER_03: Okay.
• 43:07
  SPEAKER_03: Which I think was very intrical.
• 43:10
  SPEAKER_03: Not only was it cash flowing, rental rates were very suppressed, and the owner was only getting 50% of the income from the property because he was paying a management company 50% to seems like a lot.
• 43:22
  SPEAKER_03: And this was it was a good old boy deal.
• 43:24
  SPEAKER_03: I think they were kind of you know friends at the time, but he also bought it, I think, in like 06, and they hadn't really done anything with it.
• 43:31
  SPEAKER_03: And now this is like 2017.
• 43:33
  SPEAKER_03: Yeah, it needs some maintenance, obviously.
• 43:40
  SPEAKER_03: Need to go 2006 rates.
• 43:42
  SPEAKER_04: Yeah.
• 43:42
  SPEAKER_03: So there was a lot of opportunity on the bone.
• 43:45
  SPEAKER_03: And since he was only getting half the income, like he took a, in my opinion, below market offer on this property because it was washer's hands of it, and he takes his one and leaves.
• 43:54
  SPEAKER_02: Sure.
• 43:54
  SPEAKER_03: Well, that facility ends up turning into three facilities, referred out to another.
• 44:00
  SPEAKER_03: That had owned one, and then he ended up having another one that he let go, you know, relatively shortly.
• 44:04
  SPEAKER_03: Right.
• 44:04
  SPEAKER_03: Um, and so I ended up with three facilities relatively quickly.
• 44:08
  SPEAKER_03: How were you managing those?
• 44:10
  SPEAKER_03: So there was a lady that was managing it before.
• 44:13
  SPEAKER_03: I still talk to her to this day.
• 44:15
  SPEAKER_03: Um, she's 75 cancer survivor, and she was works like three, four hours a day.
• 44:21
  SPEAKER_03: And she handled all three of them.
• 44:22
  SPEAKER_03: She handled every single one of those doors.
• 44:24
  SPEAKER_03: And very cool.
• 44:25
  SPEAKER_03: At 77 or 75, she's the sweetest lady in the entire world.
• 44:29
  SPEAKER_03: Uh-huh.
• 44:30
  SPEAKER_03: And in all honesty, and I even told her this, when I bought the place, my goal was to let her go.
• 44:35
  SPEAKER_03: You know, they weren't being ran right.
• 44:37
  SPEAKER_03: You know, we were very delinquent high, like our delinquency rate was like 40% or something at the time that I bought it.
• 44:42
  SPEAKER_03: It was really high.
• 44:43
  SPEAKER_03: And in self-storage, you're usually running 15%.
• 44:45
  SPEAKER_04: Don't you want to just automatically debit people's accounts?
• 44:48
  SPEAKER_04: That's how ours work.
• 44:49
  SPEAKER_04: And we don't send checks or anything.
• 44:51
  SPEAKER_04: They just delebo.
• 44:52
  SPEAKER_03: It's harder.
• 44:53
  SPEAKER_03: Okay.
• 44:54
  SPEAKER_03: A lot of these people don't have bank accounts.
• 44:56
  SPEAKER_03: Um, and a lot of these people, you know, cash in, cash out, off the book sort of thing.
• 45:00
  SPEAKER_03: Right.
• 45:01
  SPEAKER_03: But back to firing Claudia, you know, like my goal is to just let her go immediately.
• 45:05
  SPEAKER_03: And I went in the day after I bought it and we sit down and talk with her.
• 45:08
  SPEAKER_03: And the more I talk, like she knows all of it.
• 45:12
  SPEAKER_03: Like she knows everybody.
• 45:13
  SPEAKER_03: She has a personal relationship with every single tenant and can tell me what every single tenant's going on.
• 45:18
  SPEAKER_03: And so we came to an agreement.
• 45:19
  SPEAKER_03: And I said, Claudia, you can be good cop, I'll be bad cop.
• 45:22
  SPEAKER_03: If somebody doesn't pay, you call me.
• 45:24
  SPEAKER_03: I owe the bank a lot of money, more money than I've ever owed anyone in my entire life right now.
• 45:28
  SPEAKER_03: I need to be paid.
• 45:29
  SPEAKER_03: So I will call them personally.
• 45:31
  SPEAKER_04: And that worked for playing that game with my wife and myself where I'm the bad cop.
• 45:36
  SPEAKER_04: And I'm usually what's the good cop and let her be the bad cop.
• 45:38
  SPEAKER_04: But now we've switched switched roles.
• 45:40
  SPEAKER_04: It makes it more fun.
• 45:41
  SPEAKER_04: You change it up later in life.
• 45:42
  SPEAKER_04: Exactly.
• 45:43
  SPEAKER_04: These people don't pay their rent.
• 45:45
  SPEAKER_04: I'm like, you know, give me the their phone number and I'll find out why I'll collect.
• 45:50
  SPEAKER_03: Yeah.
• 45:51
  SPEAKER_03: Okay.
• 45:51
  SPEAKER_03: And what I this is my first dabble in self-storage.
• 45:55
  SPEAKER_03: Like, I didn't know how the business worked.
• 45:57
  SPEAKER_03: I didn't know what to expect.
• 45:59
  SPEAKER_03: Sure.
• 46:00
  SPEAKER_03: Uh I'd watch some YouTube videos on it, and then and here we are.
• 46:04
  SPEAKER_04: Um I was always scared of of people leaving s uh some kind of hazardous waste and in 55 gallon drums in these things.
• 46:13
  SPEAKER_04: That's what I've heard as horror stories.
• 46:15
  SPEAKER_04: It's like, oh my God, it's like PCB laden oil, and you know, there's 165-gallon drums.
• 46:22
  SPEAKER_04: What what the heck do we do with that?
• 46:23
  SPEAKER_03: You know, lucky and didn't have anything horribly.
• 46:26
  SPEAKER_03: We oh, another story we'll get back to.
• 46:29
  SPEAKER_03: I did have 18 police officers show up at the Rogers one.
• 46:32
  SPEAKER_03: We were the largest distributor of meth in northwest Arkansas at one point in time.
• 46:35
  SPEAKER_03: Oh, nice.
• 46:36
  SPEAKER_03: Yeah.
• 46:37
  SPEAKER_03: Um, that's a completely different story.
• 46:39
  SPEAKER_03: So Claudia and I got off on the right foot once we sat down and had a conversation.
• 46:43
  SPEAKER_03: And the people that were delinquent, one just needed a reminder, and two just needed a little bit of help or a little bit of time.
• 46:49
  SPEAKER_03: And over the next six months, we caught most of them up of just making them prioritize it, you know, communicating through what their issues were, and then at the same point raising rates why we did this.
• 47:00
  SPEAKER_04: You expanded Claudia's role to two other units that she didn't have, right?
• 47:04
  SPEAKER_04: Yep.
• 47:04
  SPEAKER_04: We we made better use of her.
• 47:06
  SPEAKER_04: Yep.
• 47:07
  SPEAKER_03: And and we even bought another facility a year later and then pushed that off on Claudia too.
• 47:13
  SPEAKER_03: She didn't even go to the facility.
• 47:14
  SPEAKER_03: We had it so automated, she had a diagram, and at 75 years old, she did fantastic.
• 47:19
  SPEAKER_03: That's awesome.
• 47:20
  SPEAKER_03: You know, we would give her the information that she needed, and then she would work with that.
• 47:24
  SPEAKER_03: Didn't even visit the facility and she ran it.
• 47:26
  SPEAKER_04: Wow.
• 47:27
  SPEAKER_04: And so raise the rates, made raised rates all the way through, make them better, um, clean them up, get them marketed.
• 47:32
  SPEAKER_04: Yeah, improves the value dramatically because it's all based on the income it generates, right?
• 47:37
  SPEAKER_04: The commercial appraisal.
• 47:39
  SPEAKER_03: And at the same time, just got lucky again.
• 47:41
  SPEAKER_03: The space got hot.
• 47:43
  SPEAKER_02: Uh-huh.
• 47:43
  SPEAKER_03: You know, by 2020, 2021, you know, the major players are getting invested.
• 47:48
  SPEAKER_03: Sure.
• 47:48
  SPEAKER_03: The small guys follow, the family offices follow that.
• 47:51
  SPEAKER_03: Um, we built ground up, bought a grass field in Rogers, did a full-scale development.
• 47:57
  SPEAKER_03: This is the one that I brought a partner in on.
• 47:59
  SPEAKER_03: Um, we'll forever be grateful for you know his investment into it.
• 48:04
  SPEAKER_03: I mean, he was a mentor and helped.
• 48:07
  SPEAKER_03: I couldn't have done the deal without him.
• 48:09
  SPEAKER_03: That was a big project, wasn't it?
• 48:10
  SPEAKER_03: Yeah, our build on that was 400-something doors.
• 48:13
  SPEAKER_03: We were like 4.2 million on the build.
• 48:17
  SPEAKER_03: But that's a lot.
• 48:19
  SPEAKER_03: That one did not cash flow out the gate.
• 48:20
  SPEAKER_03: So that was a continued learning lesson.
• 48:23
  SPEAKER_03: Um, we get done with it and we're like, okay, we're ready to go.
• 48:25
  SPEAKER_03: And then the first month we owe like$25,000 and we make like$300.
• 48:29
  SPEAKER_03: Like, this is gonna this cannot get built fast enough.
• 48:32
  SPEAKER_04: Yeah, that's scary when you're in that.
• 48:34
  SPEAKER_04: It's like write a check.
• 48:35
  SPEAKER_04: I've been there, you know, every time.
• 48:36
  SPEAKER_03: You don't know until you experience it.
• 48:39
  SPEAKER_03: You know, like all of your decisions are based off past experiences, and I had not had that past experience yet.
• 48:44
  SPEAKER_03: So my decision on you know the first six months was like, Oh, is this a good one?
• 48:47
  SPEAKER_03: Was this a bad one?
• 48:48
  SPEAKER_03: It was nerve-wracking, but turned out to be a fantastic deal.
• 48:51
  SPEAKER_03: It's a great facility.
• 48:53
  SPEAKER_03: Um, we got very lucky there and onboarded another manager who'd been in self-storage.
• 48:57
  SPEAKER_03: I think she'd been in self-storage like 30 years or 40 years, and she held my hand through that whole entire deal.
• 49:04
  SPEAKER_03: She'd been a part of startup, she'd been a part of new builds and walked me through what to expect and what would what would be next.
• 49:10
  SPEAKER_04: And did she live on site?
• 49:12
  SPEAKER_03: Was there no?
• 49:13
  SPEAKER_03: Um, we had a facility there to live on site, but she didn't want to.
• 49:17
  SPEAKER_03: She didn't want to be, you know, that close to it.
• 49:18
  SPEAKER_03: I don't blame her.
• 49:19
  SPEAKER_03: I mean, yeah, two o'clock in the morning they're gonna be banging on your door.
• 49:22
  SPEAKER_03: Sure.
• 49:22
  SPEAKER_03: But exactly.
• 49:23
  SPEAKER_03: She was also dead.
• 49:26
  SPEAKER_04: I'm I'm working on my Chevy.
• 49:28
  SPEAKER_04: Yeah, exactly.
• 49:29
  SPEAKER_04: Yeah, I know I got some back in there somewhere.
• 49:32
  SPEAKER_03: Uh the model itself in self-storage, I absolutely loved.
• 49:36
  SPEAKER_03: And I would get back into that space.
• 49:39
  SPEAKER_03: The number one driver for it is home sales, and as those started to deteriorate, um, right.
• 49:44
  SPEAKER_03: We we looked at an exit and now I've liquidated.
• 49:47
  SPEAKER_03: We had over a thousand doors and I've sold every one of them.
• 49:49
  SPEAKER_03: Wow, that's a lot of doors, man.
• 49:51
  SPEAKER_03: I do it again in a heart.
• 49:52
  SPEAKER_03: I miss them.
• 49:53
  SPEAKER_03: Really?
• 49:53
  SPEAKER_03: You could do absolutely nothing every month, and it's just mailbox money.
• 49:56
  SPEAKER_03: Well, other than the new one.
• 49:58
  SPEAKER_04: Yeah.
• 49:59
  SPEAKER_04: Yeah.
• 50:00
  SPEAKER_04: So, but you got rid of all that.
• 50:02
  SPEAKER_03: Got rid of all of it.
• 50:03
  SPEAKER_04: So now what comes next?
• 50:04
  SPEAKER_03: I have no idea.
• 50:05
  SPEAKER_04: Yeah.
• 50:06
  SPEAKER_03: I'm looking for it.
• 50:07
  SPEAKER_04: I think Do you only do things?
• 50:10
  SPEAKER_04: Is your plan to only do things where you're the sole owner, or do you consider doing other kinds of investments in small businesses or what?
• 50:20
  SPEAKER_03: I have been very blessed in having positive partnerships.
• 50:25
  SPEAKER_03: You know, the the partnership on the real estate deal, I looked up to him very much.
• 50:31
  SPEAKER_03: And then the partnership on the operational side of stuff, I still look up to that guy as well.
• 50:36
  SPEAKER_03: You know, I think what we created, we couldn't have done without each other.
• 50:40
  SPEAKER_02: Yep.
• 50:41
  SPEAKER_03: But at the same time, we learned a ton from we were such different people.
• 50:45
  SPEAKER_04: And so I that's usually what works out best in my experience, is when you are quite different.
• 50:50
  SPEAKER_03: We were the same.
• 50:55
  SPEAKER_03: I I would do partnerships again.
• 50:56
  SPEAKER_03: I would be slow to get into one just because of the horror stories that I have heard, but I I don't knock them or think, oh no, you have to do this all independently.
• 51:04
  SPEAKER_02: Yeah.
• 51:05
  SPEAKER_03: I would almost welcome older partnerships because that became more of a mentor role.
• 51:09
  SPEAKER_03: Like he didn't do anything at all.
• 51:11
  SPEAKER_03: And we might have had, you know, 10 meetings in total about you know the investment and the facility and what it was doing.
• 51:18
  SPEAKER_03: But he was just so educational from his vantage point, like he saw so much more than me.
• 51:23
  SPEAKER_03: He's lived through a lot of these ups and downs.
• 51:26
  SPEAKER_03: And the decisions that you know he would make came from a lot of experience.
• 51:30
  SPEAKER_03: So I missed those.
• 51:31
  SPEAKER_04: Yeah, sure.
• 51:32
  SPEAKER_04: That's there's something to be said for having a lot of experience.
• 51:36
  SPEAKER_04: There's no question.
• 51:38
  SPEAKER_04: No, you know, you can't learn it real quick.
• 51:40
  SPEAKER_04: But all the young guys don't always appreciate us old farts.
• 51:44
  SPEAKER_03: As you get older, I think you do.
• 51:45
  SPEAKER_03: You know, the whole white write one page paper, and I'll give you things like, no, I'm fine.
• 51:48
  SPEAKER_04: You know, like now, as you get older, you're like, uh, sorry for being an ass, but so even with the three businesses, you're out of the real estate, any particular industries that interests you?
• 52:02
  SPEAKER_03: I feel whatever's next will have some form of operational role attached to it, just with where the current market is on the real estate side.
• 52:12
  SPEAKER_03: I would love to end backup in real estate, but at the current valuations and interest rates, I'm not finding anything that makes sense at all.
• 52:22
  SPEAKER_04: One to two years.
• 52:24
  SPEAKER_04: Everyone keeps telling me it's coming, but I'm ready.
• 52:27
  SPEAKER_04: It's it listen, these loan renewals, I mean, it's gonna be a problem when they go from three to eight or nine percent overnight.
• 52:35
  SPEAKER_02: Yeah.
• 52:35
  SPEAKER_04: How are they gonna qualify for these things?
• 52:37
  SPEAKER_04: How you know?
• 52:38
  SPEAKER_03: My bank keeps gonna have a problem.
• 52:41
  SPEAKER_03: Bank says, you know, you're not wrong, you're early, like wait.
• 52:43
  SPEAKER_03: Yeah, exactly.
• 52:44
  SPEAKER_03: And older people I look towards and respect their opinions to the same thing.
• 52:48
  SPEAKER_03: They're like, you know, it's coming, it just takes time.
• 52:51
  SPEAKER_04: All the properties I've made the most on were all acquired from banks.
• 52:56
  SPEAKER_04: I mean, Ryan's ready to go for a short sale.
• 52:58
  SPEAKER_03: Buy some stuff, banks.
• 52:59
  SPEAKER_03: I'm I'm ready to go.
• 53:00
  SPEAKER_04: Yeah, it it's it I you know, I you and I think came to the same conclusion.
• 53:05
  SPEAKER_04: We were in a different position with our real estate because I never had storage units, but I had houses, apartments, condos, and commercial.
• 53:13
  SPEAKER_04: I just wanted to get rid of everything and then get ready for the big you know, the biggest.
• 53:18
  SPEAKER_03: I remember when you started to liquidate.
• 53:20
  SPEAKER_03: Yeah, you you posted one thing and you posted another thing.
• 53:22
  SPEAKER_03: I'm like, man, what is Mark doing?
• 53:23
  SPEAKER_03: He's selling half of Fayetteville right now.
• 53:25
  SPEAKER_04: I listen, if I had been smart, I would have waited maybe another year.
• 53:29
  SPEAKER_04: But I when COVID first, I mean, we'd already started selling down and when COVID first hit, we were all sitting around going, holy cow, who's gonna rent a retail space?
• 53:39
  SPEAKER_04: Who's gonna rent office space?
• 53:41
  SPEAKER_04: Nobody's gonna have any money.
• 53:43
  SPEAKER_04: It's gonna be awful.
• 53:44
  SPEAKER_04: Of course, none of that happened.
• 53:46
  SPEAKER_04: In reality, everything did really well, and you know, all the commercial space is leased out and everything else around here because we've got this growing bubble of an economy in northwest Arkansas that's just different from most places in the country.
• 54:00
  SPEAKER_04: But doesn't mean we're not gonna pay the price at some point.
• 54:03
  SPEAKER_03: I'm anxious to see.
• 54:04
  SPEAKER_03: Back to the, you know, your experiences are based off or your decisions are based off your experiences.
• 54:09
  SPEAKER_03: Like the data point we have is COVID for me.
• 54:11
  SPEAKER_03: Like 08, I wasn't financially involved.
• 54:13
  SPEAKER_03: Like I heard about it, but I didn't feel it.
• 54:15
  SPEAKER_03: Or oh eight, I thought, or COVID, I thought was going to get bad, and it didn't.
• 54:19
  SPEAKER_03: It turned out great.
• 54:20
  SPEAKER_03: And so now I'm gun shy of sitting here like liquid, yeah, ready for this opportunity.
• 54:27
  SPEAKER_03: And I'm like, am I gonna miss it?
• 54:28
  SPEAKER_03: Or is it are we gonna miss it?
• 54:30
  SPEAKER_03: You know, start stimulating again, and then boom, here we go.
• 54:33
  SPEAKER_04: I I don't think you're gonna miss it.
• 54:35
  SPEAKER_03: I mean, I don't feel that way, but I am definitely nervous.
• 54:37
  SPEAKER_04: So we did well during the last um recession, but we had a very narrow market.
• 54:43
  SPEAKER_04: You know, we were selling houses to people who were very high income, high net worth, and were buying houses for cash or half cash, appraisals weren't an issue.
• 54:54
  SPEAKER_04: That was a huge part of it, is our target buyer group.
• 54:58
  SPEAKER_04: They were 60 years old, they had advanced degrees, they wanted to live and walk to everything locations, and that was the most insulated market there was.
• 55:07
  SPEAKER_04: And then on top of that, we started buying their suburban houses.
• 55:12
  SPEAKER_04: We take them on trade.
• 55:14
  SPEAKER_04: So we took trade ins.
• 55:16
  SPEAKER_04: We had one year, it was like 70% of the transactions we did, we took a trade in.
• 55:19
  SPEAKER_04: How long would it take you to liquidate a trade?
• 55:22
  SPEAKER_04: It in my in some cases we didn't try to liquidate them, we just put them in rentals.
• 55:27
  SPEAKER_03: Okay.
• 55:27
  SPEAKER_04: So if I get your, you know, 3,700 square foot drywall man's out in East Fayetteville, rent that out for$3,500 a month, you know, maybe we paid$400 for it or$350.
• 55:40
  SPEAKER_04: You still had the asset.
• 55:42
  SPEAKER_04: Yeah, we had the asset, we're making money on it every month, and then when the economy turns around, then you turn around, sell it for 20% more than you paid for it.
• 55:50
  SPEAKER_04: Plus genius.
• 55:51
  SPEAKER_04: That that was a really good model.
• 55:52
  SPEAKER_04: I mean, you know, some of those we had for like three to five years.
• 55:56
  SPEAKER_04: And you think about who's gonna rent those?
• 55:58
  SPEAKER_04: Are they gonna destroy them?
• 56:00
  SPEAKER_04: No, they're you know, families that are gonna be here for two years.
• 56:03
  SPEAKER_04: They're buying the neighborhood.
• 56:05
  SPEAKER_04: Yeah, or they their their higher income, you know, maybe they did have an economic, you know, a financial problem, but they're used to living a certain lifestyle.
• 56:15
  SPEAKER_04: They make a lot of money, but their credit's not good.
• 56:18
  SPEAKER_04: And um, so they turned out to be good tenants.
• 56:21
  SPEAKER_04: One exception.
• 56:22
  SPEAKER_04: We took one house on trade in in Bentonville, and uh it was absolutely destroyed by the tenant.
• 56:28
  SPEAKER_04: But but that was the only one.
• 56:30
  SPEAKER_04: Otherwise, that was a good strategy.
• 56:31
  SPEAKER_03: But did you call the tenant back and say, hey?
• 56:34
  SPEAKER_04: Oh, we took the tenant to court and we got a judgment against them, and the next day they declared bankruptcy.
• 56:39
  SPEAKER_04: Wow.
• 56:39
  SPEAKER_04: And so they rewarded us, you know.
• 56:42
  SPEAKER_03: So now not only did you get all the court costs, you still got to clean up the house.
• 56:44
  SPEAKER_04: Yeah, exactly.
• 56:45
  SPEAKER_04: We it costs somewhere around 30 grand of damage.
• 56:49
  SPEAKER_03: So in self-storage when they ruin it, uh, it's uh concrete floors and metal walls, it's not that expensive.
• 56:54
  SPEAKER_04: That's the good thing about self-storage.
• 56:55
  SPEAKER_03: Beautiful, beautiful business.
• 56:57
  SPEAKER_04: There's no bath toilets to clog up and yeah, light bulbs to change and stuff like that.
• 57:03
  SPEAKER_03: Yeah, great business.
• 57:05
  SPEAKER_04: So, well, listen, um, what other advice do you have for current or aspiring young people um start who own a business yesterday?
• 57:17
  SPEAKER_03: You know, you hear all these sayings all the time, like the more overhead you onboard in life are payments, home payment, wife and kids.
• 57:26
  SPEAKER_03: Yeah, you know, it becomes a lot more difficult to take that risk.
• 57:31
  SPEAKER_03: You know, that's so true.
• 57:33
  SPEAKER_03: The younger you are, the earlier you start.
• 57:34
  SPEAKER_03: And that's not telling someone who's you know 35 or 40 not to start.
• 57:37
  SPEAKER_03: I think statistically, like 40 is when most people start a small business.
• 57:41
  SPEAKER_03: It's not saying don't do that.
• 57:43
  SPEAKER_03: It's just saying if you have an inclination or an idea, then you know, test the waters with it.
• 57:48
  SPEAKER_03: It may be a lot more fruitful than what you think.
• 57:50
  SPEAKER_03: And at the same time, you don't have to invent the wheel, you reinvent the wheel.
• 57:54
  SPEAKER_03: Like you don't need the newest, new, never-been thought of a hundred million dollars worth of investment.
• 58:01
  SPEAKER_03: Yes.
• 58:01
  SPEAKER_03: If you're doing something slightly different and everyone tells you, like, oh, that's a way better way to do that.
• 58:06
  SPEAKER_03: There's is there a business behind that?
• 58:08
  SPEAKER_03: Is it something viable?
• 58:09
  SPEAKER_03: Like, make it a little different.
• 58:11
  SPEAKER_04: Everybody knows I love big mature markets where there's proven demand.
• 58:16
  SPEAKER_03: You already have a built-in clientele base.
• 58:18
  SPEAKER_04: Yeah, we don't need we don't need to do a lot of hypothesis testing on whether or not the market's gonna like pizza.
• 58:26
  SPEAKER_04: Exactly.
• 58:27
  SPEAKER_04: You know, now if you just look at the numbers, like if you were in Fayetteville and you said, I want to open up a pizza place, you'd look at the numbers, and if you're uh do what is sort of conventional wisdom in your research, you'd come up with the conclusion, we've got 27 pizza places or whatever it is in Fayetteville.
• 58:44
  SPEAKER_04: The last thing we need is another one, right?
• 58:47
  SPEAKER_04: But if I felt like my pizza was really good, I don't know about you, but it wouldn't stop me from opening up a pizza restaurant in Fayetteville.
• 58:55
  SPEAKER_03: No.
• 58:55
  SPEAKER_03: You know?
• 58:56
  SPEAKER_03: But if your pizza was really bad, yeah, you know, let's just invent the wheel a little differently.
• 59:01
  SPEAKER_04: Exactly.
• 59:02
  SPEAKER_04: You know, there's so many opportunities like that.
• 59:05
  SPEAKER_04: What about buying existing businesses?
• 59:07
  SPEAKER_04: Do you want to do that?
• 59:08
  SPEAKER_03: I would prefer so back to the storage unit conversation.
• 59:10
  SPEAKER_03: The four facilities were purchased already operational, and they just needed elbow grease and updated.
• 59:18
  SPEAKER_03: Sure.
• 59:18
  SPEAKER_03: The ground up one was painful because of the bleed associated and the time it took to get leased up.
• 59:25
  SPEAKER_03: Start-up.
• 59:26
  SPEAKER_03: Yeah.
• 59:27
  SPEAKER_03: And there is obviously a premium paid that I was paying for the other four, then I didn't have to pay for the ground up build.
• 59:35
  SPEAKER_03: It just eliminated so many obstacles and unknowns that we had to go through on the build facility.
• 59:44
  SPEAKER_03: Like, well, you know, is this market good for it?
• 59:46
  SPEAKER_03: Is this location right?
• 59:47
  SPEAKER_04: Like, is there gonna be any issues with the ground itself or neighbors or runoffs or it is nice when you can look at an existing operation and see what the historical cash flow has been.
• 59:58
  SPEAKER_03: You're gonna just have a lot better basis.
• 1:00:01
  SPEAKER_04: Yep.
• 1:00:01
  SPEAKER_03: So I'm a big fan of buying stuff and it doesn't have to be pretty and it doesn't have to be profitable.
• 1:00:08
  SPEAKER_03: Like if you look at a business on paper and it's not profitable, that doesn't mean like, oh my God, you know, run away and this is a good thing.
• 1:00:13
  SPEAKER_03: Oh no, I love turnarounds.
• 1:00:14
  SPEAKER_03: Yeah, like find out why.
• 1:00:16
  SPEAKER_03: Yes.
• 1:00:17
  SPEAKER_03: I'm more in that category now, trying to take something and and tweak it to make it better than you know starting all over again.
• 1:00:25
  SPEAKER_04: Yep, I'm with you on that.
• 1:00:26
  SPEAKER_04: It's just it's I always say it's just like houses, you know.
• 1:00:30
  SPEAKER_04: Some people like to do a a fresh build with a clean sheet of paper.
• 1:00:35
  SPEAKER_04: Others of us like to take something that's there already and make it better.
• 1:00:40
  SPEAKER_04: I always prefer the latter.
• 1:00:41
  SPEAKER_04: It it's like the constraints are helpful in a weird way.
• 1:00:46
  SPEAKER_04: You know, it's gonna it's just like that with a business.
• 1:00:49
  SPEAKER_03: And the business, if you can get some form of cash flow relatively quickly off of it as a new entrepreneur, that's gonna be a lot more.
• 1:00:58
  SPEAKER_04: Yeah, if you look at turnarounds on existing small businesses, they generally seem to have the same problem.
• 1:01:04
  SPEAKER_04: Like they have employees who are related to the owner who are not doing their job.
• 1:01:09
  SPEAKER_04: The owner has retired on the job and lost interest.
• 1:01:13
  SPEAKER_04: Um, you know, they could be going through a divorce, they could just be bored with it, whatever.
• 1:01:18
  SPEAKER_04: They do absolutely no marketing.
• 1:01:21
  SPEAKER_04: Okay.
• 1:01:22
  SPEAKER_04: So, of course, you know, and then if you ever talk about marketing, they tell you that they believe in word of mouth.
• 1:01:28
  SPEAKER_03: Yeah.
• 1:01:28
  SPEAKER_03: I can't afford it.
• 1:01:29
  SPEAKER_04: Yeah, I can't afford it.
• 1:01:31
  SPEAKER_04: And it's a, you know, it's and they do nothing for their employees, and then they wonder why their employees don't seem to have a lot of motivation to take care of their customers or whatever.
• 1:01:41
  SPEAKER_04: So you just add all those things up, and it's like, and then they strip all the working capital out because their personal needs are too high.
• 1:01:49
  SPEAKER_04: Instead of being able to throw it back in, improve technology, get better people, get better location, get better equipment, all the stuff that makes money costs money.
• 1:02:00
  SPEAKER_04: And so it it that's what I see, and I just see it over and over and over and over again.
• 1:02:07
  SPEAKER_04: You can just start handing out your book to everybody and send them an invoice later.
• 1:02:10
  SPEAKER_04: Well, selling books isn't easy.
• 1:02:12
  SPEAKER_04: Maybe you can help me with that sometime.
• 1:02:14
  SPEAKER_03: I don't know anything about selling books.
• 1:02:16
  SPEAKER_04: Nobody reads anymore, they just listen to podcasts.
• 1:02:18
  SPEAKER_04: The Mark Swargs Spark Notes.
• 1:02:22
  SPEAKER_04: Well, listen, it's been great having you here, Ryan.
• 1:02:25
  SPEAKER_04: I really appreciate your taking the time and sharing with our our uh listeners.
• 1:02:30
  SPEAKER_04: And uh I uh I'm just glad that uh you're my friend.
• 1:02:34
  SPEAKER_04: I get energy from young guys like you who are out there making it happen.
• 1:02:39
  SPEAKER_03: It's been fun.
• 1:02:40
  SPEAKER_03: Hopefully more stories later on.
• 1:02:42
  SPEAKER_04: All right, take care.
• 1:02:43
  SPEAKER_04: Thanks, Mark.
• 1:02:44
  SPEAKER_04: Thank you.
• 1:02:51
  SPEAKER_00: Thanks for tuning in to this episode of Big Talk About Small Business.
• 1:02:54
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• 1:03:08
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• 1:03:12
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