First Acquisition in March, $200m by Year End | Jordan Dubin Interview

Jordan Duban: Welcome to Acquiring Minds. Thanks for having me. It's uh, it's fun being a longtime fan and now finally being able to be on an episode.

Well, that that's great to hear. It's always fun for me too to have a listener on.

Well, Jordan, you and your two partners are building a large business in the garage door repair industry. And by large, I mean getting to 200 million in revenue, 30 in EBITDA by the end of this year. In your first acquisition, closed only in March of this year—that is an incredible pace. Let's hear about it, Jordan. How did this hypergrowth rollup begin?

Yeah, um, well, thank you again for having me on. So, uh, you know, I think like a lot of the the stories and and the entrepreneurs you have on your show, um, it's a long, long path getting kind of to today. Uh, certainly not linear. Um, but I guess I'll start with my own background, um, which then will coincide with Shawn and Joe's background when we do eventually meet uh in the narrative of Guild. But I grew up in New York City, uh, went to school up in Boston, played football in college, um, and I think where you could probably say for me this journey really started was sophomore year of college. Um, kind of the first year I was thinking about potentially doing some sort of business internship. Um, at the time I had no idea what I wanted to do. I grew up with a father who worked in finance for a hedge fund. Um, I didn't think I wanted to do that, but kind of my knowledge of, hey, what are the other parts of the finance ecosystem, was not very broad. Uh, and I was lucky enough to get introduced to two guys, um, by the names of Matt Pearlman and Alex Sloan, who at the time had just graduated from Harvard Business School and were building out a portfolio of Burger King franchises across the southeast United States. Um, and so I became effectively their first ever intern, uh, before they probably even needed an intern. Uh, and they they've they've grown their business, Garnet Station Partners, today to be one of the truly premier lower middle market private equity firms in the US. But at the time, their office was literally one of their dad's townhouses.

So Patrick O’Shaughnessy just had them on, I think.

Like the best, yeah, exactly. They're a big deal. It's a great, it's a great entrepreneurial story, like you said, they very modest start. I guess and I guess you were there. I guess you you were part of that money.

Yeah, that's that's that's my claim to fame, as being their first ever intern. Um, but I I I learned a ton from them that summer, um, and I think the bigger thing was, you know, I was 19 years old, very impressionable, um, and these two guys who were 30, 31 at the time, I mean, they were they were like gods in my eyes. They were so cool, they were so smart, and I just loved being a part of what they were building. And I think, you know, to the extent I really understood uh the the actual financial engineering that goes on behind the scenes, um, I think I I found that interesting, but it was more just the dynamic, the energy, the relationships they were forming with all these underlying sellers of Burger King franchises. And I think that was the first time I had kind of had a light go off in my head where I was like, I I could see myself doing this down the road. I don't know if it's, you know, doing it as a part of a franchise system or doing it in QSR, but you know, I love this idea of meeting with sellers all across the US, forming relationships, forming bonds, and then building something together, uh, and taking disparate parts and and creating something much larger.

Jordan, let let me jump in with that because I have to say, to to your credit, you thought that was cool and you and you could see their vision because I would imagine that when they were starting, EBITDA wasn't a thing. I mean, PE people have been buying businesses forever, etc., etc., but EBITDA as we understand it, with its own name and label and courses, wasn't a thing. Franchises still aren't a thing, or even less so then. So I would imagine two guys working out of working out of a house, working out of their house, your parents' house or whatever, um, buying un- unsexy fast food uh franchises was and there and there was no precedent for this. Like now they are the precedent, so people doing this today will point at them and be like, see, these guys did this really cool thing. So that gives me, you know, 25-year-old, 35-year-old coverage to go do it, but they were they were real trailblazers with this model. So anyway, I I just would imagine it would be very easy to to to scratch your head, roll your eyes, dismiss it, and yet you were taken with it. You saw the vision. So say more.

Yeah, I think you hit the nail on the head. I think, you know, spending a summer with them, again, when you're when you're 19 years old and and here come these two kind of 30-year-old guys, um, who have their together, they're confident, they're smart. I mean, I think it would be hard not to leave that summer being like, I want to be Matt Pearlman and Alex Sloan. And that's exactly what I did. Um, but I think, you know, to to more specifically answer your question, um, it wasn't about the sophistication, it wasn't about the financial engineering, uh, the sexiness or unsexiness of what we were doing. It was I just so much appreciated and loved how they formed these real relationships and bonds with all these different families and owner-operators across the US, and they knew them not even on a first-name basis, by their nicknames, and they had funny inside jokes, and they, you know, knew exactly, hey, when we go to Memphis, we go to this restaurant, 'cause that's the restaurant they love. And that's what I was drawn to, um, and and you know, fast forward to today, and you know, we'll go through the whole story, and there are many more kind of things that went into starting Guild, but to this day, that's my favorite part about Guild is, you know, the the different relationships and bonds that I've been able to form with all the different owners that have joined Guild, and and really just having almost like families in different states that I consider like second families to me, um, and having traditions with them, having inside jokes with them. Um, so yeah, so I think I think that answers your question.

It does, it does. That's great. And and it is such a good precursor because from what I know from the pre-roll uh and from the videos, you you really are—um, the connections that you're making with the owners are a key part of your of your playbook, for lack of a better word. I don't want to make it sound clinical. Go ahead.

Yeah, I think, uh, you know, we have uh 14 deals closed today, and of those 14, I think five of the owner's kids call me Uncle Jordan. So I'd like to believe that's a testament to uh the connections we form.

Although how old are you, Jordan? That does make you that does make you seem old. And you're like, what 20—

What? I'm 27.

Um, yeah, I'm 27 years old. Young Uncle, young Uncle Jordan.

All right, young Uncle Jordan. Um, so yeah, so I think, you know, that was kind of the spark that started the fire, spending that summer with Alex and Matt. And you know, I think I I point-blank said to them at the end of the summer, what do I do? How do I become you two? I I want to be you two. And you know, our relationship, my relationship with with Matt and Alex has grown immensely over the last, I guess, decade, um, and they have been two of the most influential people in my life. Uh, I think, you know, I I never grew up with a brother. They're probably the two closest things I have to brothers. And so they really laid out the road map for me, um, and they said, look, you got to start with investment banking, and then you know, go to a great private equity firm, and then take it from there. See, see where things go. You'll probably change your mind. This is not what you want to do, but start with banking and then and then do private equity. And so I did just that. So ended up working in investment banking, um, like many people do in the finance world, right out of college. Spent two years at Goldman Sachs, um, and then after Goldman Sachs, I went to a private equity firm called L Catterton. My first day on the job at L Catterton, I met Joe Delaney and Sean Slazak. So they had both done three years of investment banking at different banks, at Citi and Barclays, um, and I'd done two years at Goldman, um, but we were a part of the same associate class. So I think there were eight associates in our class, but we all came in together, and and that's where I met my two partners, uh, Joe and Shawn. And then while we were at Catterton, uh, we spent about two and a half years there. You know, the beautiful thing about our experience was we basically exclusively focused on buy and build and testing. And so, you know, we saw under-rot and then worked on platforms across veterinary clinics, collision repair, optometry clinics, med spa, HVAC, electrical, plumbing. And so our two and a half years there was truly like a a learning grounds where we found out the playbook and learned the playbook firsthand from brilliant partners at L Catterton. I think, you know, one of the things we got to experience at L Catterton, which makes it such a unique place to work, is when you're at the associate level, your work on the deal is not limited to just the underwriting process. You know, you of course do the three-month sprint where you don't sleep and get the IC memo across, um, but that's just the beginning. Then you basically work hand-in-hand with your portfolio company and and serve a role almost as like the VP of Finance for that company through the hold period. And so especially for Joe and Johan who had portfolio companies at the time that were rollups, so Alliance Animal Health, which was a vet clinic rollup, and L the Plumber, which was an HVAC and plumbing rollup, um, every day they got to do the exact things uh we do at Guild, uh, and every day they were charged with putting out the same fires that we have to put out at Guild. And so, you know, I I think that all of us uh felt very, very confident in this playbook, uh, and and then this investing style. And so when we ultimately made the decision, hey, this is something we'd like to do on our own and and take this leap and take this massive risk, um, we felt confident in it.

Well, that's a great background, Jordan, and I have to say, um, you know, one of the things about this podcast is that I try to show that EBITDA is not just for people with a certain pedigree, um, because a lot of people with that pedigree, that that pedigree is over-represented in the EBITDA world because the top business schools are among the first places that have taught EBITDA explicitly. Um, private equity basically is EBITDA at an institutional level. And so a lot of people come down here from private equity. So so those people like you are um over-represented in this world, but I try to show enough examples, uh, just a lot of examples of people who don't have that background, um, to show that this is open to all. With your story, however, I'm getting the impression that really the your ability to move as fast as you've moved, quite frankly, I let's just not beat around the bush, it probably is not something that somebody who—I mean, you just said you guys had cumulatively, cumulatively a lot of experience doing precisely what you are now doing, um, and further that you, Jordan at least, have had your eye on doing something like this since you were 19. So you have been plotting, maybe maybe you had distractions in there or whatever, but at least you know this is this is something. It feels like this is a a vision years in the in the making. Is that overstating it?

Uh, that's the Disney version of it. Uh, I think, you know, at 19, I I thought I wanted to do this, and and as you correctly pointed out, will there were certainly distractions along the way, um, but then, you know, I came back to it, um, and I think Catterton, Catterton was a really good experience for all of us. CU, you know, we learned so much about this investing style, um, and that that was really where we learned kind of the the financial engineering side of it versus what I got exposure to at 19 years old, which was the relationship side of it, the camaraderie side of it, the team-building side of it. Um, but I think that for us, what we saw and and one of the reasons we had the confidence to go out is—um, there are all these lower and middle-market private equity firms who are paying uh these high premiums for residential and commercial services platforms when they eclipse 20 million of EBITDA, um, but they're not the ones going and starting them from scratch. They're not the ones willing to go stack pennies uh and fly around the country to create that scale, um, because at the end of the day, when you're a private equity firm, whether you're the smallest lower middle-market private equity firm or you're a large middle-market private equity firm like L Catterton, uh, you have so much money to deploy that constantly, time and time again, I I would hear the partners at Catterton during the IC discussions ask, is the juice worth the squeeze? And so there is always going to be a threshold of a deal, of a company that is too small to warrant the attention and time of a lower middle-market private equity firm, even if that business is growing 20%, 25%, even if that business has best-in-class management. And so I think we saw that niche and that gap as, hey, here's where we can put our thumb on the scale. Here's a niche we can own in play in where we're not trying to be someone. We're not we're not trying to be heroes and and go head to head with every single private equity firm, every single well-capitalized private equity firm with a deep team of operating partners. Um, this is the part of the ecosystem where 32-year-olds can actually be uniquely advantaged uh and create something very special. And so three 20-year-olds—

Yeah.

Yep. Yeah, actually, let me let me let me pause you, Jordan, because I want I want to get into the thesis in some detail, but first of all, for those who don't know the private equity world, L Catterton is a name that anybody in private equity would know. This is—

Yeah, I mean, L Catterton's a great firm. They're they're—I wouldn't say it's as well known as a a Blackstone or a KKR, but but they're pretty well known in the consumer space, um, and as you can probably tell, I think the world of L Catterton and the partners there, um, they they're we we, myself, Joe, and Sean, would not be where we are today without them. And you said that you saw how private equity firms like L Catterton don't go, you know, is the juice worth the squeeze? They don't below go below a certain threshold of EBITDA. Yet here uh in the lower, lower middle market of EBITDA, we always hear that things have gotten so competitive that private equity is dipping below uh $2 million in EBITDA. And so if you—so the the needle to thread is to find that business that's 750,000 of EBITDA or EBITDA up to a million and a half. Below that, it's too small, of course, there are countless of Acquired Minds guests who are counter-examples, but the conventional wisdom below 750 is too small; above a million and a half of EBITDA or EBITDA, you're going to start competing with private equity. But I'm hearing you say, say that private equity doesn't go that low. So so square that circle for me.

Well, I'll actually I I think it I'll take a step back and kind of challenge something you said. Well, I I think one of the things I get frustrated with when I hear people kind of talk about the threshold and all that is, I think the worst thing you can do is box yourself in and say, hey, here here's my spreadsheet, here's my criteria; if it doesn't check these boxes, it it doesn't work for me. If it's below 750, it's too small; if it's above 1.5 million of EBITDA, it's too big. I think that you have to stay flexible. You have to stay nimble. Most of most of the private equity firms I've seen, yeah, they they're usually looking for $1 million plus EBITDA businesses, um, however, that doesn't mean you can't compete in that one to three, one to four million dollar EBITDA range. Uh, similarly, uh, I guess the rule of thumb, as you pointed out, is, hey, don't go below 750k of EBITDA for all the reasons I I acknowledge and understand, um, but we've acquired now two businesses that do between 400,000 and 500,000 of EBITDA that in the hold period we've owned them have all reached 750,000 plus EBITDA. And had we kind of said to ourselves, hey, we're never going to dip below 500, we're never going to dip below 700, we may have now partnered with two of the fastest-growing companies we have. And so I think that in this world of lower, lower, lower middle-market EBITDA rollups, private equity, whatever you want to call it, there are so many other things you have to look at, so many other intangibles, non-financial metrics you have to look at to really see, okay, this is a company primed for growth, um, and I think that's where we've been really successful is our willingness to be creative, our willingness to evolve, and we're ever-evolving, um, to best position Guild for growth. I mean, not including tuck-ins because those obviously get very small, our smallest partner company has $400,000 of EBITDA, our largest partner company has seven and a half million of EBITDA. You know, there's no private equity firm platform that would ever tell you our EBITDA range is 400,000 to 7 and a half million. Like, yeah, someone would laugh at you, um, but that's exactly what we've done.

Well, I I want to return to the 400k, Jordan, and and and and talk about some of the intangibles that you saw in that particular business that that enticed you to go that low. Back to the thesis formation. So there you guys are at L Catterton, thinking we can do something like this for ourselves. We see that there's a gap in the market because private equity isn't going to go, as we're we're willing to stack pennies, as you put it, um, and we feel like we have a lot of experience with the playbook here. Tell tell tell me more about how this with this thesis looked like and how it took shape.

Yeah, so it's funny because in many ways it feels like just yesterday, but in other ways it feels like a lifetime ago. Um, myself, Joe, and Sean, we used to stay late at the office. We're talking one, two, three a.m. and talk about this, and for so long it felt like one of those things, yeah, we'll talk about it, we'll pretend we're going to do it, and then it's never going to happen, um, because it's so scary, there's so much risk. And I think one day we were just like, it's time to put up or shut up. You know, every single person in finance talks about doing this, but you know, we got to burn the ships, we got to do it. And so I think we came to the conclusion that, you know, we just got to commit to this, and talking about it, strategizing, trying to source on the side when you have a full-time job, you're just never going to get it anywhere. And so so that that was kind of us getting started. But in terms of the thesis generation, you know, we had spent a lot of time looking into the residential and commercial services categories in our last year at L Catterton. Um, ultimately, we ended up settling on residential services as kind of the category uh that we wanted to create a platform in and ended up acquiring L the Plumber, which was an HVAC, plumbing, and electrical platform, uh, and going into the HVAC market along with what seemed like every private equity firm at the time and and still to this day. And it it's been, to my understanding, a phenomenal investment uh for L Catterton. But one of the things we saw about the residential services category more broadly that was really enticing was there was real industrial logic that supported consolidation, uh, you know, you had all the underlying attractive part about

The industry and the companies you know, things being non-discretionary, um, you know, having very good free cash flow conversion, all, all kind of the line items you check when you're like, hey, if I'm going to do a rollup, what are the five things that matter? Um, but aside from just those five things, you know what you saw with HVAC was when you take four businesses and bring them together, if you really do have strong intentional integration, you can rightsize those P&Ls so quickly, and you know, whether it be procurement savings, go to the manufacturers, eliminating duplicative back-office functions. Again, there is real industrial logic that supports consolidation; you're not just shoving things together for the sake of gaining scale.

And so our thesis, which isn't a novel one, uh, was this: does not just apply for HVAC, plumbing, and electrical, but in fact, this is more, this speaks more broadly to the residential services category as a whole. Um, so what is the next Frontier in residential services that doesn't have every single private equity firm in it already? Um, but has at least one precedent transaction that we can point to and hold on to, uh, to give us comfort that this is a category that institutional capital likes, uh, and has interest in? And what's a precedent transaction, or what was it in your case for us? It was A1.

But I think, I think that point is a really important one. Um, you know, when I have people kind of ask me about the Guild story and they were thinking about doing something similar or just want to understand how I made the decision, you know, one of the things I told them, I tell people, which is, is very true, is, you know, it's all great and good to say, hey, we're going to go into this category where no private equity firm is, um, and find the next Frontier, but I think you have to be very intentional that you know the next Frontier has to have some sort of proof point. If you're going to play a role in the ecosystem, a role in the food chain, you don't want to go into a category where nobody has established any type of platform, no one has built out the proof points for the industrial logic that supports consolidation, no one has kind of put up a, a, a benchmark, a watermark for, hey, this is what a scaled platform trades for. Um, you just don't want to do that. And so you want to find a category that doesn't have a million private equity firms running around, but yet there's one precedent transaction. And on the precedent transaction, sure, it's good to know where a scaled platform trades, but more importantly, hey, this is a best-in-class scaled business; let's reverse engineer what they do to understand what the tech stack is in the category, how you have best-in-class employee retention, how digital marketing plays a role in the category. And so the ability to learn from someone else is critical, and I've always thought what's made Guild so successful is we're not the first mover; we're the second mover. And we'll probably talk about A1 a lot over the next several minutes. I have so much respect for that organization, uh, and their founder, Tommy Melo. I mean, he, he's a visionary; he truly is, and he redefined this category, and so much of what we do at Guild today is modeled after A1, not because we're trying to rip them off of their ideas or practices, but because they're a best-in-class business and they've shown how to be hyper-successful in the garage door category, uh, and they've really lifted this entire industry.

Jordan, let's give a little context, so A1 is an organically grown, or inorg—give us 60 seconds on A1.

Yeah, sure. Tom—and Tommy Melo, and and let me apologize in advance; I, I find myself doing this a lot where I talk about the garage door category as if everyone knows as much as I do. I get yelled at a lot by my, my friends and family about this, but what you don't know, who Tommy Melo is, friends and family, you, you don't know, post Tommy Melo in your bedroom. Um, so Tommy Melo, um, he's an entrepreneur who founded this garage door company, A1 Garage Door, uh, I think it was like in 2008 or 2009, and he organically grew it to be about a hundred million of revenue, and I think 20 million of EBITDA, and then sold it to a private equity firm in November of 2022, uh, private equity firm by the name of The Cortech Group. Um, and then the CoreTech Group, their whole thesis was, hey, you have this unbelievable best-in-class business that's growing 20 to 25% a year organically; let's supplement this growth with M&A and create a best-in-class organic growth engine with an M&A platform, which would have been amazing, uh, and so they weren't like Guild in the sense that they got their start through M&A; their heritage, their start was all organic growth, and then when the Cortech Group came in, they tried to introduce M&A. Um, you know, I think they've continued to be very successful on the organic growth front, uh, less successful with M&A, um, but it's still, it's still an amazing business, and it's grown incredibly over the last 2 to 3 years, but um, yeah, I think that answers your question.

Yeah, it does. And Tommy's still the CEO; he, he, you know, sold majority stake, but he's actually still the CEO. And Tommy Melo is an influencer, uh, I mean, he's very online; he's, he's a personality. Um, so anybody can Google him and see lots of, lots of Tommy Melo. Um, but to be, be clear, what you said, he built $100 million in revenue organic?

Yeah, over 10 or 12 years.

Um, wow. Yeah, very, very impressive; very, very impressive. Yeah, we don't, we don't hear that number very often, and when we do, it's almost certainly involves acquisition, being the nature of this podcast, but so anyway, great. And I think to give him, to give him credit, to you know, he introduced a lot of things into the industry, um, that he saw in HVAC and plumbing and landscaping, uh, that previously no one in the industry had been doing, you know, ServiceTitan, which we think is the best digital CRM system to use in the residential services space, he brought that to the garage door industry; you know, he brought the concept of branding and wrapping your trucks to the garage door industry. Um, so you know, he grew A1 a ton, but he also like really helped reinvent the industry. And so again, I, I try to give credit where credit's due, and uh, I sometimes feel sad about the fact that we're competitors, but uh, he, he's built an amazing business.

Great, great background. Okay, so, so now we're turning to, um, your thesis. So one of the, the things that you just articulated is you're, you know, you use this phrase, Last Frontier or New Frontier or next Frontier. So I guess in private equity land, there's always, you know, looking for the next category where there's opportunity. Yeah, and HVAC is long since picked over; it's, it's the poster child for private equity being hyperactive in the category. Um, and so you were looking for other res—other residential services, home services categories, and one of your criteria was that there at least be a precedent transaction, which you just described, Tommy Melo selling to Cortech. Um, what other criteria are there? How else, what else did you use to zero in on garage doors?

Well, I'll just kind of set the stage for you and what we saw, and it, you know, you, you can do all, you can do all this desktop research, desktop diligence, and you can gather all these facts. Um, but as I tell Joe and Sean all the time, and I, I think they're ready to punch me in the face now after I say it for the 100th time, but you know, this is not taking a final exam in your college fin class; it's, yeah, you can gather all the research you want; you can have all the expert calls you want. Um, but how you win and how you create is getting out there, getting in the game, convincing owners to join your vision. And so, but obviously the research is important, um, and understanding what you're walking into is important. So here were the facts that got us so excited: you had a category that was 92% fragmented, had roughly 15,000 independent garage door repair companies, uh, on the residential side, had a total addressable market of around 13 billion, uh, on the commercial side, 20 billion. Um, the category was set to grow 7 to 9% over the next five years because it had historically been in the Stone Age; you know, digitalization was just starting to be rolled out; owners were leaning into branding best practices. And so you had this category that was about to hit its breakout point, um, similar to, honestly, HVAC 10 years ago, um, and it kind of set the stage perfectly where, hey, I mean, you know, do you want to go in and, and be the acquirer of choice, of course, but just getting exposure to this category would make for a great investment. Um, so that, that's kind of what we saw. Um, and then, you know, as I alluded to earlier, and I don't mean to sound like a broken record here, there was real industrial logic that supported consolidation in the same way that in the HVAC industry, as you built scale, you could go to the manufacturers, you could go to different people in your ecosystem and realize procurement savings; you could do the same thing here where as you scaled up, as you had more volume coming through, you could go to the manufacturers that provided the doors for you, the manufacturers that provided the motors for you, you could go to the people in your ecosystem, even like the ServiceTitans of the world or the insurance providers or even the providers of fleet management. You know, I think today we have like 600 vans on the road; you're telling me that person buying 600 vans can't get better pricing than the person buying 10. Uh, so you know, all the same things that again made HVAC so successful existed here; the only difference was there weren't 25 PE-backed platforms doing it.

But Jordan, let me push back on that; the, the what you call the industrial logic of, of, of, of consolidation, or—

Yeah, the industrial logic of consolidation, where, you know, the kind of the centralizing procurement is the classic example, buy more stuff for larger enterprise, and you get better pricing; that doesn't seem—you're saying that as if in other rollups that doesn't happen. I thought that was one of the reasons to do a rollup anytime, anywhere, any category.

You know, you'd be surprised.

Okay, I mean, you'd be surprised, and I think yes, all of them to an extent have kind of some aspect of this, but it comes down to the quantum, you know, how much of your cost can you really reduce when you have scale? How powerful are the economies of scale? So like the example I, I'll give, and I can't speak to this industry intelligently at all, but you think about some of these like doggy overnight boarding rollups that you see everywhere, you know, if I own 20 of those, where am I really cutting cost? Like maybe I can buy more food in bulk; maybe I can buy more shampoo in bulk if I'm shampooing the dogs, but like, is that a needle mover? No, because like the shampoo and the food is not a real cost line item in my P&L. Go to the garage door category; you know, the doors, what you're buying from the manufacturers, the motors, like the LiftMasters of the world, what you're buying to operate those doors, I mean, we're talking, we're talking hundreds of thousands of dollars per company in savings. And so I think you're right that there's some flavor of it in most rollups; it's just a question of how powerful is it, and, and, and can you extract those savings?

Great illustration, thank you. Okay, and um, are there, are there more criteria? I mean, there's one I remember from the pre-call that I really want you to talk about; do you recall, uh, lack of a platform size?

Oh, yeah. So, so the other thing, so as, as we learn more about it, um, you know, we, we asked a ton of people in the private equity space, you know, why is nobody rolled up garage doors? We have built the spreadsheet; it checks every box; it seems perfect; what are we missing? Are we walking into, you know, a dumpster fire? And you know what people said was, uh, yes, a ton of private equity firms have been circling the category very closely since the A1 deal got announced, but the issue is there's no platform of scale out there; there's no single, digestible asset, not even at a platform scale at $20 million plus EBITDA, uh, scale, but an asset that had five, six, seven, eight million of EBITDA that could serve as the base of the platform, uh, and so you really, really needed to go in and start it from scratch. And I think the other factoid I mentioned to you, Will, on our previous call, which I should have mentioned when I was setting the scene and getting everyone excited about the garage door category, was that, uh, of the 15,000 garage door repair companies in the US, only a 100 have greater than $2 million of EBITDA; 100, and of those 100, less than 20 have less than 10 to 15% new construction exposure. So when you think about your target universe, it's tiny, tiny. And so I'm sure this, this will be your next question, so I'll just start talking about it, the thesis, how, how we evolved our thesis was, okay, this is a great category, but we have to move fast, and we have to move now because there are 10 to 15 prime candidates out there, and only 10 to 15, and we have to get as many off the board as possible before anyone else can take them. But if you do take 10 of those 15, eight of those 15, you create not just a lead versus potential future institutional capital competitors trying to come in and build a platform, you create a moat because now you've created a digestible asset, but there are no other digestible assets out there. And so we got started, and we basically said, okay, um, we need as many of those 15 companies as possible now; how are we going to do that? This is an really an interesting criterion or, or characteristic of an industry that people should think about, that there's no—at least these big categories like a home services category—that there are no platforms of size in the category, not, not a one. So there's no, there's nowhere for a would-be, uh, consolidator to get a toehold.

Doesn't that, but doesn't that say something about the industry, like that these businesses can't be big, um, unless you can make some, do some sort of national play, because otherwise they would be, right, there would be somebody who's has a $10 million, and, and how is there, how is there not, how are there none? If Tommy Melo built to 100 million, he was just so out there, and everybody else was languishing at five million EBITDA at best and below, sort of thing, not even like two million and below.

Um, there, there was, there was one $7 million one who's actually a part of Guild now, um, G Doors, but um, no, I, you're, you're asking all the right questions. So, so first I'll answer the last question, which was, yes, Tommy was just so far ahead of everyone, um, historically that he was the one who was able to achieve this scale. I think two, um, growth in a category where there is no scale is almost exponential, where he was able to realize so much better pricing from the manufacturers, from the different people in the ecosystem that it was almost like A1 was on rocket fuel, and everyone else was on vegetable oil. So I think that answers your question about Tommy. I think your question about, hey, if there are no players of scale, isn't the writing on the wall that scale shouldn't exist here? And I think it's, it's a, it's the correct question to ask, and I think what I really want people to understand is when we had all these amazing facts about the garage door category, um, we were still very skeptical, uh, you know, we asked ourselves constantly, what are we missing? What are we missing? Like we are not smarter than private equity; we, we did not just discover fire. You know, what are we missing? And I'll talk about them a lot more later, but I, I think one of the reasons my partnership works so well with Joe and Sean is, is I'm kind of the eternal optimist; Joe is kind of the eternal pessimist, and so Joe would challenge me always, like, no, there has to be something; the category is too small; the, you know, the, the price that everyone took in 2021 doesn't stand. And I would push back, and Sean would be kind of the, the middle one, weighing both sides. Um, but I think, um, you know, why we got comfort was, one, A1 proved you can get scale, and two, the total addressable market of the category was large enough to where you could create multiple hundred million plus revenue companies and still not have 20% of the market, 10% of the market. I think where you get concerned with, hey, could there be a scaled player here, is if you're looking at a, a billion dollar total addressable market where it's like, hey, if, if we get to 100 million revenue, we'll have 10% of the market share in the US, do I really think I can create a platform that has 10% market share in the US? Probably not. Um, so I think the, the answer is twofold, just to summarize: one, A1 could do it; why can't we do it? And two, the total addressable market was large enough that it had the proof point that you could easily create a 100 plus million dollar revenue business.

Well, those are very comping, uh, points; that's a great analysis. And um, the, the, the thought about what percentage of a total addressable market, an entire market, do I really think we can get to? What is—and you, and you basically, and you said that 10% is too aggressive, too optimistic; somebody shouldn't go into an industry expecting to get 10% of the market. What, what, what should a good target be? 2%? 5%?

I, I don't know if I even think about it that way. Um, I think more so of like the outlandish examples like 10%. I, I have supreme confidence in myself and my partners, but I do not think I can go and get 10% market share in an industry in a year. Um, I, I think, and it's also, you know, actually this is a good point to bring up, it's not just about what you can achieve; it's about what are you going to sell to the next guy, assuming you're reverse engineering this thing where, hey, we want to sell to a private equity firm; they're going to look at your business and say, you're at 100 million of revenue, 20 million of EBITDA, but you're 10% of the market; what am I going to do? I'm going to make a 25% market share player; you've left no meat on the bone for me. And so I think what you have to be very intentional about is thinking not only about the growth that you can realize but putting yourself in the shoes and the mind of the next guy, the next buyer, and deciding what are his value creation levers going to be; how is he going to grow this? And if you're at 10% market share and he has to underwrite 25 to 30% market share, you have an issue. Yeah, because he's gonna do the same thing; he's gonna say, when I sell this to KKR, they have to have 70% market share, like, yeah, you know, it's not gonna happen.

Such a, such a great point, uh, Jordan, and, and not just in the context of the scale at which you're operating, for any PE person in PE considering buying a business, even for those of you who are thinking you'll never sell the business and you're buying it for your career, it's, it's definitely wise to at least consider the exit strategies; you, you never know. And, and so always be—think—one of your, one of your matrices of, of your analysis should be, what does this look like to the, the, when I'm the seller to a future buyer? Such such an important exercise; great reminder.

Yeah, I think that you don't want to be too hyper-focused on this, but I think there's certainly an element of reverse engineering that needs to be consistently present in the mind of everyone as they build and scale a business, because if your ultimate goal is to sell the business, whether it be a single company via PE or you're trying to do a similar rollup to Guild, um, you can really change the trajectory of the exit with two or three small decisions. And so for us, we kind of, we almost made like a fake sheet, a fake one-pager of, of the eventual future sim of Guild and said

What do we want this to look like? And so we said, okay, size we wanted to be at the time we wanted it to be 20 million of EBITDA. So we said 20 million of EBITDA with 20% margin, so 100 million of revenue. We want new construction to be sub 10%. We want all the employees to be W2 employees; no, uh, 1099 subcontracted labor; no union labor. Um, we want everyone to be on the same, uh, CRM; everyone to use the same financial ERP system. So we want everyone to be on ServiceTitan, everyone to use Sage for accounting, everyone to have ADP, uh, for HR. And you know, when you have the little box on the right that says, uh, future growth levers, um, you know, here's how you grow the business when the bankers pull together these sims, we want the growth levers to be, uh, continue to, um, continue to push organic growth, launch a greenfield strategy, which is instead of acquiring a business in a new market, just start from scratch, uh, and three, take the proof points we will have developed around tuck-in acquisitions and really supercharge that. So take these beachhead partners that we've brought together and do three to four small-scale acquisitions per year per partner, um, and and I think that exercise is really helpful for anybody; uh, it was certainly very helpful for us. Um, but again, I I think there's a balance where, um, you want to be flexible and you want to continue to evolve, but you want to remind yourself of what true north is and what are the things that you can't compromise on. And so for us, honestly, the biggest thing is the new construction percentage. You know, as the platform has scaled, obviously the goal no longer is 20 million of EBITDA, um, but we will not go above 10% new construction; that's just a non-negotiable for us. And so having that on the page from Day Zero, uh, has really like served as a reminder. Um, so I think it's a good exercise, a great exercise.

That's so fascinating. I'd love to get my hands on that one-pager. Can we? Yeah, of course. I'll send it to you. Yeah, great. Please do. And it says 20 million, so you'll laugh when you see it. So, so that that's my question. So this was this was your imagined SIM for when you guys go to market with with your the business that you've built: 20 million of EBITDA. You're going to hit 30 million by the end of this year; you're on track to. So you were imagining getting to 20 million in EBITDA when, uh, 2028? You're kidding. No, I'm not kidding. And I distinctly remember Joe, by the way, I love Joe; Joe's the greatest partner ever. I distinctly remember Joe saying that will never happen; that's not realistic, Jordan. So just to make sure if people are only listening or listening to us on two on 2x, listen: Jordan and his two partners were aiming to get to $20 million in EBITDA in five years from 2024 through 2028, and uh, one of the two three partners said, "Never going to happen." They're on track to hit 30 million EBITDA in at the end of the first year. That is crazy. We're going to hear why, um, but, uh, and and we I got to really keep my eye on time because we're just we're just winding up here; we haven't even done acquisition number one, but this is really this is really rich, Jordan. But before we before we get into what your strategy was going to be, the you know, everybody wants to hear what are the categories that you liked but didn't make the cut, of course, uh, you've got to tell us.

Yeah, yeah, I'll I'll tell you guys. Um, great. Well, we narrowed it down to two: garage and tree servicing. And tree servicing right now is a really hot category, um, for lower middle market private equity. It's a smaller total addressable market than garage; I think it's I think it's like five or six billion, maybe seven max, um, but it's a really attractive category. And at the time, there was only one private equity firm executing a rollup. Fast forward to today, I think there's like 10 or 11. And so I think it's a testament to how quickly the windows of opportunity open and close in these categories. And I think that certainly there's there's a line between being relentless but not reckless, but speed, if you're trying to create scale in these super niche hot categories, is is paramount because the windows just close. And and I've I've always kind of had a fear of being in a category that doesn't have a $1 billion plus total addressable market and duking it out with 15 private equity firms, just because you know what we're capable of, I know where we're strong, and uh, that is not a situation I think we can be strong in, um, and and that is not a situation I ever want to be in. So, um, but yeah, why do you like tree? Why do you tree if it's already getting a lot of activity? It's it's I don't like it anymore. I would never like it a year ago or a year ago. Yeah, yeah, when there was one private firm, I liked it a lot. Uh, I I would never go into tree servicing today. Um, okay, timing, timing is a big part too. But I would distinguish between the strategy we do, which is large-scale rollups, and if you are kind of an acquirer—is that the word, the noun?—I've heard that one. Yeah, ET—ET, if you're an acquirer, you could argue preserving is the perfect category to go into because you'll always be able to find one or two or three great targets that have very reasonable valuation expectations that private equity has missed or just botched the pitch with; they came off as arrogant or rushed them. And you have all these platforms around you that are so desperate for growth and scale that if you can create scale with one asset, uh, you will command a super premium multiple. So I I am not an acquirer, but if I was an acquirer, I would target categories exactly like pre-servicing where there are 5 to 10 private equity platforms duking it out for a finite amount of scaled assets; you'll find one or two—like it might take you a year, it might take you two years—you will find one, uh, and then grow that business, and you will be the most coveted asset in the market.

Yeah, it's so interesting, and it's just one of the patterns that that I had no idea about, but that becomes really clear after doing my job as podcaster here in this world for a while, which is that there you know that there's just this daisy chain: there's tiny little companies, and then if you can consolidate a few of those, then there's maybe some small, maybe there's a somebody who, you know, an acquirer person who wants to buy a slightly bigger business who will buy it from you because they're trying to assemble slightly bigger businesses to sell it to a small private equity shop who they are. And it's just I had no idea that that phenomenon existed in in the market, but it's so it's almost formulaic now. It does seem like you can't just assume there's always going to be buyers; it has to be a category with some—this is exactly what you were saying before, but related to this this idea of a precedent transaction—there has to be some private equity activity; you can have to envision who a buyer might be because I guess in some categories there just aren't buyers, probably in probably a lot of categories.

No, no, totally, totally. And and I think, you know, it's basic, but you want to be in a category that you think will be larger and better, uh, and more sophisticated in three years than it is today. You know, you don't want to enter a dying industry; uh, you don't want to enter an industry that's in the midst of change for the worst; change for the better would be great. I mean, look at garage as an example of that, um, but you want to ensure that you know you have tailwinds and you don't have headwinds. So, um, yeah, I think I think you do have to be intentional. And and one last to your point about the how fast things can happen, I mean your point of tree services is the best example that a year ago there was one and now there's 10 or whatever. Yeah, but just to use the the—going back to HVAC, you know, I've been doing this now for about three years, and HVAC for my time doing acquiring mines, HVAC has been pointed to as like the hot rollup category, and so I just naively assumed that it kind of was always thus. Well, no, I mean, I now know, including my business partner in Minds Capital, Nicholas James and others who bought in the mid-to-late teens, and it was a completely unappealing, nobody-there category. So so I was wrong. I mean, I I I came into it; it was already hot, but sure enough, just a couple years before I started doing acquiring mines, nobody was talking about HVAC. It's just so so so it really does move faster than I realized. Well, look at the broader example too, right now, of residential services rollups were kind of all anyone talked about for the last 3 to 4 years, and everyone was trying to do it, and that's what every banker pitched a private equity firm on; that's what every private equity firm was looking for. Now, all of a sudden, in the last six months, partially as a result of kind of the advent and sophistication of AI, uh, is everyone wants to pile into white-collar services categories now: accounting, um, legal firms, IT services. Why? Because you have similar industrial logic that supports consolidation, especially when you have the potential of AI removing 50% of the workforce and costs improving 50%—not 50% because there's some flow-through, but you get my point. And so, you know, you can look at categories, but it's also just like broader sectors, broader themes, broader investment styles, like it just when things get hot they explode, and it it's a I think it's like a followers' world where if you have kind of one person show success in a category, one person show success with a thesis, you're going to very quickly see 10 other people mimicking it.

Fascinating. Okay, Jordan, so you you've decided on the category; here we are at an hour; you've decided on the category; what is your what is your strategy going to be? And we and we're going to have to pick up the pace a little bit. Uh, sure. Forgive my constant questioning. What what is the strategy? How do you start? Uh, the strategy it was very simple at first, which is, um, get a single owner to answer my phone calls, which was very challenging; took two to three months to get a single person to answer my phone call. Um, and what we did was how I thought about it was I was like, okay, what is every acquirer or what is every private equity firm going to do? They're going to sit behind their computer and they're going to pay for a $15,000 a year ZoomInfo subscription or a ZoomInfo subscription, and they're going to send emails, 50% of which will go to spam, 50% of which will be opened by the owner, and they won't respond. Um, I wanted to do things differently, even if it was harder, even if it required way more sweat equity. So we sourced, uh, in two ways: uh, we would call people until they picked up, uh, and we would write handwritten letters in large craft envelopes. And the envelopes had to be craft because if they were white or yellow, they could be mistaken for like, hey, you know, this is, you know, the IRS; I'm getting subpoenaed. Uh, but if they were craft and you hand-wrote the name and the address on the front, an owner would pick it up and be like, oh, this is my, uh, niece or nephew sending me their, uh, art project from preschool, uh, then they'd open it, and it would be a presentation from, uh, The Guild guys and a handwritten letter. Uh, and we must—do you mean craft like like construction paper? What's a craft en—kind like if you just like Google craft envelopes, it's kind of like a brownish tan. I mean, you definitely know what I'm talking about; you just have never thought, okay, it's craft; it's kind of like this color, like almost like a manila folder. Yeah, yeah, yeah, got them. And um, I mean, we probably sent 700 or 800 of those letters. Wow. And um, like I think the response rate was like 10 to 15%, but when you think about it, I mean, that's 50 plus people, 50 plus targets getting on the phone with you and being willing to talk. And two of our first five deals came that way, from handwritten letters. Three, three of our first five deals came from handwritten letters. And um, you know, when you get the owner on the phone, again, I was like, okay, what would a private equity firm do? Um, they would sit there and they'd be like, okay, let's schedule a Zoom in two weeks, and then let's do a second Zoom and a third Zoom. I would always make up this excuse where I'd get on the phone with the owner and I'd be like, oh, that's so funny that you're based out of Georgia because I'm going to be there tomorrow visiting my great aunt Susie; do you want to get dinner? And they'd be like, uh, yeah, sure, if you're in town, that's fine. Um, and I just booked the first flight to Georgia. And why I did that was I I've always had the, you know, I'm young, but I I'm old school in the way I approach things. Uh, one dinner over a couple beers with with an owner, um, is the equivalent, in my opinion, of 6 to 8 Zooms, uh, both in the information you can extract, but more importantly, the trust you build and the trust you develop. Um, and and I think over those dinners, what I would do is I think people kind of—and I don't mean to generalize—but I think most people approach it one of two ways where they either try to come in and and act overly sophisticated, uh, and and come in and be like, hey, we're this large private equity firm; we have all these resources; we've done this a million times times, um, you know, trust us, uh, and then you have kind of the other side of the spectrum, and again, not trying and generalize where, you know, someone buys a pair of cowboy boots to try to relate to the owner in Texas and makes up some story about their father or mother working in the trades their whole life when in reality they were a lawyer. Uh, that that's what we call the presidential candidate method. Yeah. And so totally fake. For me, I was like, I'm not going to do either of those things. I I am going to be so authentic, so transparent that it's borderline, uh, like jeopardizing to the pitch. And so I would go in there and be like, I'm Jordan Dubin, uh, I'm from New York City, uh, and if you think a, uh, Jew from New York City can come in and run your garage door business in Georgia, you're crazy. Uh, you know, if if I took over your business, if I fired you and took over your business, it would go to zero, uh, and so, uh, how, you know, this is going to be a true partnership is you may think you're reliant on me; I assure you, I'm 10 times more reliant on you. Um, with that being said, I will give you everything I have. You know, you tell me how I can be value-added, and I will give you every last ounce of attention and effort and care that you need, and let's build this thing. And so that was the approach I took, and and it was really successful. And um, just for the sake of speeding this up, deals beget other deals. Um, wait, but Jordan, Jordan, two two follow-ups to that: what first of all is that what you heard? Remind me their names, the Burger King guys, Alex and Matt and Alex. Matt and Alex. Is that—was that based on what they would say?

You know, honestly, it's very similar; like they were very authentic, and, uh, I I think like without even without even thinking what would Matt and Alex do, it just it kind of naturally the, you know, now that you say that, the pitch is probably very similar; like if you were to do a side-by-side cam, it would probably be pretty similar, which makes me feel very good about myself that, uh, I've kind of become like my mentors. Yeah. And the other thing, Jordan, is is what was the pitch? So you've told us very clearly and compellingly, yeah, um, how you demonstrated your transparency, your authenticity, but what was the what were you selling? Come with me; we're going to build a giant freaking organization. And what? Yeah, so what was the value-add pitch there? I think will the the cool thing was my pitch to owners; our pitch to owners was the same pitch to investors. I mean, you know how we viewed it was share with them all the information so they have the information at their kind of disposal and they can analyze it themselves: of here's how big the industry is, here's how fragmented it is, here's what a private equity firm likes and dislikes in a platform; if you create it, we have this unbelievable opportunity to create a first-of-its-kind M&A platform in an industry that has not had one built. Uh, to do that though, we need awesome partners like yourself, um, are you interested? And so I think it, you know, we never wanted to downplay the pitch: one, all these owners are smarter than we are, uh, and two, I think helping people understand this isn't about buying your business; like you're part of this journey; this is a startup; we're all marching towards that same goal is hypercritical because you really like align your motivations with your partners who, again, you're hyper-reliant on. And so I think it was like really just not sugarcoating it, not being around the bush, but treating it like you were pitching an investor who's going to give you $5 million of equity, uh, to start a platform, you know, the same pitch to the owner whose business is going to be the base of the platform, uh, and so that was that was kind of the approach we took. Now, more specifically what we said was, look, we're we're not going to do any type of rebranding; we're going to have uniformity in systems and processes across the board; you know, it's important, you know, that, and there's be kind of no sweetheart deals here where you don't have to go to ServiceTitan or, you know, you don't have to do your payroll this way, um, but we're still going to maintain the localized brand, uh, the localized culture, the localized leadership. And so, um, you know, it's a way to create, uh, a national platform with localized expertise. And so, you know, there as you can probably tell, there are a lot of aspects of the pitch; a lot of it would be fielding questions, but that was that was kind of I would say the overarching message of the pitch was, you know, you're not a seller, uh, you are a buyer, and you are buying into this vision, and you are buying into, uh, being shoulder-to-shoulder with myself, Joe, and Sean in creating a first-of-its-kind platform in an awesome industry.

Great. And so obviously then, unlike many searchers who will be listening, uh, where their pitch to a seller is, I want to carry on your legacy and be the owner of your business for the next generation, you're explicit about the fact that we are building something here; it's going to be a sprint, maybe a long sprint, maybe a five- or seven-year sprint, um, we're going to go fast and hard for a number of years, and then there will be another, uh, exit event where there will be another buyer; everybody gets that. Yeah, everyone gets it. But you know, I think what's I think it's important to be transparent about everything because it's not about getting to a yes. You know how you really have these platforms go off the rails is you just say and lie through your teeth to get people to say yes, and then week one when it's not the reality they were promised, you know, that's when you have things go off the rails. And so for us, it was be again overly transparent, overly honest, just to make sure there was alignment, but I think in doing that it also created so much more trust off the bat, 'cause they're like, wow, like these people aren't being shady with their responses to the questions of like what's going to happen to how we do payroll; they're just being blatantly honest and very detailed in their responses. And so, um, so yeah, but but I think also what I've told every owner, which is 100% true, is, you know, when we do, uh, eventually sell Guild, I'm going to roll as much

Equity as I can because I want a portion of my personal net worth tied to Guild, uh, for the rest of my life because I fully believe in this category and what we're building more than anything. And so I, I hope for every single owner, they get to do the same thing, which is don't cash out all your chips in, in you know, two to three years, three to four years, whatever it is, um, but continue to take chips off the table and roll equity and have this be a vehicle, uh, to create generational wealth for you and your family, the same way I hope it will be for mine, if, if I have a family one day.

Jordan, we, we are not gonna get too much into the mechanics because of time, um, around the, um, industrial logic, uh, and the economies of scale, but I have heard you say a couple of times, broad strokes, your strategy is not to unify the brand; all these owners, all these acquisitions get to retain their local brands. Behind the scenes, the thing that you were insistent about were these—you keep bringing up these three tools: everybody on Sage, the accounting; everybody on, um, ADP for payroll; and everybody on what was the—and service, Titan service Titan.

So, so why were—how did you decide on the line there of what you were, what you were going to insist on that be unified and what was it, yeah, going to be insisted upon?

Well, integration is hypercritical for these platforms, especially when you get to the scale, uh, that we're headed towards. And, uh, the reason integration is so important is, um, that's how you really tap into the economies of scale; that's how you really realize the industrial logic that supports consolidation. And without it, you basically have 20 disparate units, and that is a massive headache because you're running 20 different businesses versus running one business with 20 locations. Um, and so how I think, how we think about kind of the, the level of integration, the level of uniformity is when it comes to the Enterprise-facing nature of the businesses; when it comes to the back office, you want uniformity; you want consistent systems, processes that allows our executive team, our 20-person executive team, uh, to be able to monitor and help every underlying brand.

Now, when it comes to the consumer-facing nature of the business, whether that be the literal brand on the truck, um, the way the technicians greet the consumer, the ways they upsell, cross-sell, um, the way they perform the service, even, um, we allow the owners and the businesses, uh, to continue doing what they've been doing because, put simply, there's a reason they're a part of Guild; they're best in class; what they do is amazing, uh, and why reinvent the wheel? Why change something that doesn't need to be fixed? And I think, you know, one of the things that I've come to realize is, you know, this country is so diverse, and the underlying markets in this country are so different from each other that to assume what would work in Phoenix would work in Minneapolis is crazy. I mean, if you think not just in terms of the end consumer, but, uh, the, the topography, the style of homes, it's all different. And so I think actually where some of the platforms have actually shot themselves in the foot is trying to create this very uniform, homogeneous structure with one brand, one price book, one way to sell, um, and, and trying to do that nationally. I think you can do that in a regional sense, you know, if you do a Southwest platform with San Diego, Phoenix, New Mex, parts of New Mexico, but to assume that you can paint the country one color, um, on the consumer-facing side, I think is naive.

Yeah, well, the other—at least in terms of the brand—you're also, you're also forfeiting all of this accumulated brand equity; if you—it's real brand equity is real, and, um, yeah, so it's not just, you know, hey, we're not going to change the brand because the owner has, you know, an emotional attachment to this logo he created on Microsoft Paint 5 years ago; it's no, there's real brand equity; there's real brand recognition, and that is so important in a direct-to-consumer residential services business. Fascinating, Jordan. Okay, let's see here; oh, we didn't get into—can you share what your—you touched on your pitch to investors—can you share what that looked like? How much you raised to go do this?

Yeah, we raised about $35 million, um, upfront and then put it all to work very quickly, um, and then have since taken on an additional $5 million of equity, so $40 million of equity total. And, um, just put in place an institutional debt facility with a private credit firm based out of New York that gives us roughly an additional $85 million of dry powder, uh, to use.

And will you then—so you don't need to raise any more equity, likely?

That's the plan.

Yeah, that's the plan. But you went, you went through your 40 or your 35, went through the 35, um, yeah, pretty quickly.

Very quickly.

Um, okay, and we're, we're going to get to the—that that quickness here is probably where we'll—how we'll end things. What were you gonna say?

No, I, I'm, I'm ready for the next question.

Great. Um, and so, and, and when you can, can you share with us what it looks like, the, the structure of an acquisition? So when you're pitching an owner, what you're kind of—what you offer—you give them a valuation of their business and then, and then what does the structure of the acquisition look like, or the partnering with you look like?

Yeah, sure. So there are two types of, I guess, acquisitions we do, transactions we do, um, you know, we have our partnership, beachhead transactions, and then we also have the tuck, uh, tuck being, hey, you know, oftentimes we'll, we'll buy a business that has two employees or even one employee, and they're retiring, but you're buying it for the customer list, the sticker base. And so we'll buy 100% of those businesses and just roll them into one of our larger beachhead companies, like for example, RightWay garage doors, uh, run by quite literally one of my closest friends in the world, Jake Wald, um, you know, part of our strategy there is, hey, let's go consolidate and rationalize this hyper-fragmented market in Northern California where we'll buy businesses for $50,000 cash, uh, that spit out—well, you don't really know what the net profit is because it's, you know, it's, it's not a real profit margin because there's one or two employees, but $400,000 worth of revenue annually. And in RightWay, with its sophisticated systems and processes, can take that and, and immediately realize 20% margins on it, uh, with no additional marketing spend. And so it's so goddamn creative, uh, to do the tuck strategy, um, but you need—like I couldn't go, go buy the Twan company on my own, even if it only cost $50,000, because it would go to zero. And so you need your beachhead partners, like Jake and RightWay, to support those tuck, so that's—so that's tuck.

Now, for our actual beachhead partners, again like RightWay, like Jake Wald, or Jeff Sanford, and—tell us the beachhead strategy first; we didn't get—we didn't—it's kind of implied, but give it to us clearly, and then tell us how you—the structure.

Yeah, so, so our strategy is twofold; it's two-part, two phases; we call it our land and expand strategy. So, landing is: partner with 15 to 20 uniquely scaled, uniquely sophisticated partners all across the US, um, and then phase two, expand, is help each of those businesses, each of those brands, uh, grow both organically, um, but also inorganically through tuck-in M&A. And so how we've always kind of conceptualized it in our mind is, you know, we're not creating one platform; we're creating 15 to 20 regional platforms where I think, when this is all said and done, I would love to be able to say, you know, in a category where there was only one business with greater than $5 million of EBITDA, uh, we created another 10. Um, so that's kind of how I think about it. And so 15 to 20 different markets—I mean, I assume you just go down the list from biggest to smallest, uh, cities in the country, sort of thing?

I, I wish it was that easy; it's not. Um, beggars can't be choosers; we've run all kind of the MSA data and figured out, okay, these are the best markets for a garage door company, but this is where it's a unique industry where just because you have a market that, for all of these reasons, all these data points points to the fact that it's a perfect underlying location for a garage door company, doesn't mean there's a scaled player there. And so, you know, you could point to like Omaha, Nebraska, for example; I would love to get into Omaha, but there's no scaled player in Omaha, so there's no beachhead partner to go partner with to execute the land and expand strategy. So, yes, part of it was kind of outside-in, but more of it was like, let's go find those large players and build around them in their markets, 'cause naturally their markets have to be at least somewhat attractive if they've got to this scale. And so, going back to the, the, the overall thesis that there aren't platform companies for larger private equity to buy into—of course, you have your own, your own floor that you won't go below—so you have what you—your beachheads are your own platforms; you're, you're kind of using those, those terms interchangeably?

Yeah, so, so, so somebody listening to this who's, who's, who, who is willing to stack pennies—an opportunity for them would be to go buy a few small, uh, garage door businesses in Omaha, consolidate them, and then call you—sell to us.

Kidding?

Not kidding.

Oh, yeah, I'm not kidding either. If you want to do that, I, I will be the happiest person ever. Okay, join the family.

Um, okay, and so with the—thank you for the beachhead strategy—so basically those 15 to 20, you're just going down the list of size where the, the biggest players are and going after the biggest players, the, the highest-quality players in the industry, um, and okay, so what, what—the Mount Rushmore—the Mount Rushmore categories—how, how I think—so how do you then—what is your offer to them? The structure?

The offer is—the offer is, hey, uh, we're not here to buy you out; uh, we're here to have—we're here to take a majority stake in your business. So I'll use numbers; I'll say, hey, well, you have a great business, um, we want to partner with you; we want to take a majority stake in the business, anywhere between, call it 70 to 80%, uh, and then we want you to roll—we want you to retain 20 to 30%. Now, you'll get the upfront liquidity of that initial buyout at a mid-single-digits multiple because that's what a $1 to $2 million EBITDA business commands. And then we're going to become partners, and over the next three to four years, you're going to grow your business, and you're going to have our help; you're going to continue to realize cash flow from distributions every quarter, your pro rata share. So let's say, will you own 30%? In addition to your W2 salary, you continue to get 30% of the excess cash flow hitting your pocket, hitting your wallet every quarter. And then in four years when we go to sell this thing, you will get a quote-unquote second bite of the apple. Now you may say, yeah, but I only own 30% at that point; however, not only has your EBITDA grown, your company has grown, but also this is where each of the underlying owners get to realize the massive multiple arbitrage because they're selling off of their EBITDA. So let's say you went from one to three; you're selling three, not off the six to eight times that you sold for in the beginning, but now you're selling off of a mid-to-high teens multiple because that is what a—that is what the second-largest garage door repair business in the US would trade for. I mean, A1 traded for 21 times, so, so, you know, come along for this ride; we'll work with you; we'll help you grow the business, but also we'll help you unlock a valuation range in terms of an exit multiple that previously was just completely unfathomable for a standalone mom-and-pop business, even if you did reach 5 to 7 million of EBITDA. And, and you know, in this category, that doesn't exist except for one, and even they didn't get a teens multiple.

I can't do the math in my head, but that 30%, the second bite—so you end up making two to three times as much, even, even though it's 30%.

Uh, wow, that's quite a deal. Now, in that structure, feels like—I'm no expert—but feels like a kind of a typical, a typical structure for a roll-up where you're, where you want the owners to continue to, to, to roll their equity and, and structure it that way.

Yeah, for the most part, um, a lot of private equity firms will just kind of say, hey, we're buying 100% of the business; you know, either you're in or you're out, just because they have the resources to deploy their own regional GMs; they don't need to rely on the existing executive team. And, you know, I think that partnership is, is hypercritical to everything we do. And, you know, when we do our next platform and our next platform and our next platform, we will always use the same model, just because we think it works better than anything. But I guess if you were poking holes in it and you're trying to play devil's advocate, what you could say is, hey, you're doing all this work, but you only get 70% of the proceeds at the end of the tunnel; why not just buy 100% of the business and put in a little extra work because you don't have the owner rolling, and you get 100% of the proceeds at exit? But again, what I would say is, I can't do what the owner does as well as he does, and nobody I can hire would do it as well as he does. That's why we find uniquely scaled, uniquely sophisticated businesses, best-in-class owners because nobody does it better than they do. And let's come together and create a situation where 2 + 2 equals 5 and not 2 + 2 equals 4, and let's all benefit.

Well, and I suspect that that—making an offer—the more appealing the offer to the owners, the faster you can acquire because you're—the owners are pretty receptive to what you're offering them. So, so there has to be part—part—part of this—totally—the offer that you're making it being compelling to the owners has to be a contributor to how fast you moved. Let's, let's go.

Yeah, but, but honestly, will—I think this is important to call out—like before I did this, I just assumed everyone is transactional; capitalism is capitalism; no one cares about the relationship side; no one cares about kind of the connection; it's—I'm being offered seven times by you, six times by the other guy; yeah, I'm going to take seven times—that is so not the case—at least I can only speak to the garage door industry—but like that is so not the case in this industry. And, and I appreciate that so much because it shows how thoughtful each of the owners are, and they're not just looking at the upfront cash, but they're thinking about the long-term proceeds and the long-term journey. And so, you know, we're obviously in a very fortunate position today where, you know, we have assets who will join Guild over the three or four other private equity firms trying to do the same thing as us. And those private equity firms will offer two to three turns higher than we're offering, and these owners still join Guild because they believe in the vision. And again, they're putting themselves in the shoes of a buyer, not a seller, and they're saying, you know, which platform do I want to be a co-owner of? Which platform do I think will be more successful in the next three to four years when the dust settles? And I think, you know, we, we've created such a lead and built such a behemoth, um, that we've just kind of run away from, from all the other platforms that are trying to do something similar. And the owners get that. And so, um, yes, it's, you know, you can say you guys offer a better deal, um, but it's not like we're offering higher prices; it's, it's if anything, it's the ladder; it's the opposite; um, it's just what we have to offer, um, and you know, that's not easy to create; we certainly didn't have that from day zero, um, but we're in a fortunate position now where we really benefit from it.

Jordan, let's close by hearing what you attribute moving so fast to—faster even than your own boldest—your own boldest goals of 5 to $20 million in EBITDA after five years, and you're going to be $30 million after your first year, um, you, you've said—well, please—what do you attribute all of that to? That's just—in just breathtaking, really.

Uh, two things; it's very simple; 50% of the equation is luck, and 50% of the equation is I have the best partners in the world, um, and when I say partners, it starts with Joe and Shawn; they are the two best partners I could ever ask for, um, and I'm so thankful every day, um, that we're on this journey together, um, and then the other side of the partnership equation is all the owners in Guild, um, you know, I've grown so close to all of them, and I care so deeply about all of them, from Jake to Jeff to Carrie to Travis to Dan, I mean, all of them. And they're the reason we've been able to move so fast, um, not just because they've reached out to their network and reached out to their friends to join Guild, um, but also because of their 110% commitment to growing this platform as a team. And, um, it's really a beautiful thing, man; like I, I, I really think Guild has outgrown me pretty substantially. And now, you know, as it continues to grow, and by the way, I, I have—I have no doubt that this time next year Guild is going to be close to $50 million of EBITDA, um, but it's no longer me kind of pushing this thing; it's our great executive team, but more importantly, it's the owners; you know, it's, it's Jake, it's Jeff, it's Carrie, it's Travis, um, I'm just in such awe of all of them every day because they do such an incredible job, and they're the ones redefining this industry, not, not me; Joe and Shawn—we're just—me, Joe, and Shawn are simply the stewards that kind of connected the dots and brought this vision together, um, the backbone of Guild are the owners, and, and they are what make Guild so special, and they're the reason we've been able to grow so quickly and become so goddamn big.

But Jordan, is that to say that because there—because there's a lot of that growth has been organic growth from your beachheads?

Oh, yeah, organically; we are up, I think 14% year-over-year. And that does—obviously does not factor in any acquisitions. So think about that; you know, we're adding on 10 to $15 million of revenue in acquisitions basically a month at this point, um, but also growing 14% organically. So—but that still doesn't exp—very powerful combination, but that still doesn't explain how you—you've done so many acquisitions; how have you been able to do so many acquisitions in such a short amount of time? Let's, let's leave aside—I'm sure you're—I believe you that your, your beachhead owners are amazing, but still there's pieces to this that is to the credit of the three of you; how are you—how are you—just that pace of acquisition—how are you executing?

So that goes back to the first part: Joe and Shawn; they, they're two of the sharpest individuals I've ever met in my life, and we all have poured everything into this for the last year, and we all play such different roles, um, and that's why the partnership works out so well. Um, I'm on the road probably four to five days a week without fail, um, they are not, but they are in the office most days past midnight, closing all these deals simultaneously, managing, uh, three different legal diligence streams, four different financial diligence streams, um, and you know, we outsource a lot of the work; like we have these great QOV providers, and we have this great law firm that we've worked with for every deal. So it's, it's not like Joe is sitting there or Sean's sitting there, uh, you know, crafting the legal doc by hand, uh, from scratch, um, but to your point, it's still a ton, and, and to do sizable transactions simultaneously is not easy, um, but again, that's, that's why I have the two greatest partners; they've made the impossible—not look possible—be possible, um, and I think it's, you know, that

There's no one person you can point to as the reason Guild has been so successful. It's because of that individual; it's it's truly a group effort, and everyone is exceptional in their own respective lane. Uh, and that's what's made Guild so successful and will continue to make Guild so successful.

You know what I remind people all the time is, yeah, we're going to surpass 200 million of revenue and 30 million of EBITDA by the end of this year, but we're also literally less than a year in from the close of our first acquisition. I think we're nine months in, eight months in. You know, where are we going to be two years in? Where are we going to be three years in? Um, and so I I have very high expectations for what Guild can and will become.

Um, whereas once I thought about it as, hey, let's build something that will play a role in the food chain, um, you know, I think that I think our ultimate goal is to create the single largest garage door company in the United States, uh, and and frankly, one of the largest residential services platforms in the entire country. Well, at this rate, that doesn't seem fanciful, um, but but Jordan, and then let me ask you, you attribute 50% to luck. I don't know if you're being humble, modest. I I suspect you are, but but we heard you speak for an hour about this carefully crafted, very strategic thesis, industry thesis, um, and it sure doesn't feel lucky. It feels like an intelligent thesis come to life. What, where's the luck?

Uh, you know, the luck's in timing. The luck is in the timing. The luck is in, you know, other parties who probably had a similar thesis to us not ultimately deciding to act on it months before us. Um, you know, I think one of the super frustrating parts of what we do is so much is out of your control, and there are so many factors that can derail what you're doing. And so, yes, I think everything we try to do is intentional, and I appreciate you saying the thesis was well thought out, um, but you know, there's all the stuff that goes on outside of what we can control, contr— uh, that either breaks your way or doesn't. And you know, we're lucky to have a good amount of stuff, yeah, break our way.

Well, fair enough. Um, those of us who experience good things, there there's just a lot of good fortune there, but just to distinguish that from, yeah, it's not like you fell into some crazy opportunity—that's luck. I I'm being a little semantic, but but you know, really, this is you're you're getting—there's good fortune going on here that you're able to do this, but um, but there wasn't something unforeseen that dramatically changed this for the better.

Really good. That's correct. That's correct. Well, Jordan, you're busy, so uh, maybe you don't want people reaching out, but indulge me: if people want to, or if that person wants to go buy buy up uh, buy up garage door repair businesses in Omaha—I'm serious—if if if we get three or four people to start building small platforms, that would be the greatest outcome of this of this podcast ever. But no, I mean, I it sounds crazy to think that myself at 27 could give advice to other people far older and wiser than myself, but people want to reach out, if they want to ask about my experience, I'm always happy to talk. Um, I'm pretty damn active on LinkedIn, so just I guess follow me on LinkedIn, message me on LinkedIn, um, and uh, you you know our offices are in New York City, so um, if you find yourself there and you want to get coffee, um, as I alluded to earlier, an in-person interaction is better than a Zoom interaction.

Well, uh, that's very generous of you, Jordan. Uh, I know you are extremely busy because I am going to end our interview and go trick-or-treating with my daughter, and you are going to go back to work. So, on that on that note, sir, thank you very much. Fascinating. Congratulations to you and the partners on what you built so far. Really inspiring, really, um, and and really an education. This is really—we I think we all learned a whole lot about how to approach an, choose, and then approach an industry. So wonderful interview. Thank you, sir.

Thank you for having me on. I hope you enjoyed that interview. Make sure you subscribe to the Acquiring Minds channel below. We are now publishing twice a week, so tons of new interviews and stories to come—stories that will help you along your own path to acquiring a business.