Jon Matzner is the CEO of Garage Excell, a garage remodeling and organization company, based out of Southern California.
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[00:00:00] Colin Keeley: , hello and welcome back. This is Colin Keeley here, and, , this is indie acquisitions where we talk to people buying and building a wonderful companies. So today we actually have a guest, uh, John, matzner so welcome, John, , you want to give a little intro.
[00:00:11] Jon Matzner: Sure. Yeah. So my name is John Matzner. I'm currently based in Southern California. Um, had a bit of a varied, , lead up to where I currently am, um, was kind of within the national security community for. Better part of a decade was living in Africa in the middle east, and then kind of decided I want to move back to the states and read Walker DBLs book by them billed and was like, that sounds fun.
Uh, and just kind of started, started chipping away at that and ended up, um, But a couple kind of brick and mortar main street type companies, but most successfully this one now in Southern California that,uh, called garage Excel, which I actually no longer run as of a couple of weeks ago, which is wonderful, um, which we could talk about and doing all sorts of interesting stuff, uh, after that.
So that's a nice summary, I guess.
[00:00:51] Colin Keeley: Cool. Yeah. How'd you get into the acquisition space, like how'd you hear about it? How'd you do your first.
[00:00:55] Jon Matzner: Um, . I think I just like red. Uh, by then build, or like one of, one of the HBS books, like by a company, I'm sure you've seen it. Cause I know you have your course, so just kind of, I tripped across it And just kind of like went down the rabbit hole, like I'm sure a lot of kind of smart, younger, ambitious men and women do.
They're just like, this sounds fun. This sounds more fun than, you know, working at a nameless, faceless, faceless kind of company.
[00:01:20] Colin Keeley: And like for your first one, how'd you narrow in and what you want to do.
[00:01:23] Jon Matzner: Um, I knew that I wanted to move back to Southern California. Um, just cause I knew, I, I say I knew I had high confidence that I could. Be fairly successful across kind of industries or whatever. I'm like, I'm going to figure that stuff out broadly speaking. Um, and I wanted to just live in a great place because I've lived in really crappy places.
And so I figured San Diego is as good of a place as anywhere in the U S. And so then I just kind of, you know, put a pin down and looked within 90 minutes of San Diego. And so it was really. Um, you know, there's advantages and disadvantages to that strategy, let's say. But, um, certainly the fact that I get to live on the beach and surf in the morning is an advantage.
Um, so Yeah, that's kinda how I got started this geography.
[00:01:59] Colin Keeley: San Diego is like paradise. I was out there for wedding like three weeks ago. It's awesome. I sit in Chicago.
[00:02:05] Jon Matzner: Yeah.
[00:02:06] Colin Keeley: Um, so yeah. What was the first business you bought? You know, how'd you find it? Um,
[00:02:08] Jon Matzner: So, uh, we bought a, I bought a couple randomly with some partners it's not even worth mentioning. I won't even call it like really buying them some stuff in Florida. Um, some automotive stuff, which we've, I don't now don't own anymore. But, Um,
so those were like, technically my first ones, but my first real one, I would say was this company called garage Excel in Southern California.
Um, kind of classic 75 year old baby boomer, you know, million bucks a year. Made a good living, you know, was fast and loose with his books. Let's say, you know, just like the normal kind of profile of these businesses. Um, and this company called garage excels 15 years old, um, you know, good margins. I liked the sector, uh, for a variety of reasons.
Mostly the work at home work from home thing, um, and could buy it at a really, really good. Uh, and so kind of swept in and, and bought it and since then have grown pretty aggressively. Um, and now we're looking at kind of some more scalable moves within the garage upgrade space rather than just the kind of brick and mortar version of it, which I think we're probably going to talk about today, so
[00:03:01] Colin Keeley: Yeah. I want to talk about your like anti franchise stuff, but you know, back to that business, like after you bought it, you know, it looks great from the outside. Like what were the issues and growing it, you know, once you actually got in there.
[00:03:11] Jon Matzner: Yeah. How much time have you got,
[00:03:12] Colin Keeley: Yeah.
[00:03:13] Jon Matzner: Um,
you know, a ton. I mean, Um,
it wasn't, we didn't really buy a company. I mean, we bought, we bought a sector, we bought a crew, we brought, uh, kind of, uh, It's an experience so to speak, but it wasn't a company, you know, so all the, all the challenges associated with that, but I mean, we bought it at such a, such a price that it was essentially worth it.
And it was, it was nice. I didn't want to do the SBA seven, eight thing that kind of scared me. Um, especially given that this business doesn't have recurrent or reoccurring revenue, so I didn't want to have this. Debt every month that is going to make me lose my hair. So, I mean, all sorts of different things from kind of professional, he was doing all the sales himself.
So I had, we had a professionalized sales process had to professionalize our customer acquisition process. Um, in terms of, you know, big digital these days is it's kind of what we do. I know, you know, a lot about that as well. And then, you know, we had some cashflow stuff that almost buried us cause they were taking 10% upfront and 90% upon completion.
And when you grow really fast, That is not how you want your working capital to have to work, uh,take that from experience. So we've, we've now fixed that, but those are all things that we, um, kind of wrestled with in the beginning, turnover, drunk employees. I mean, all the stuff you deal with when you, when you buy a small business,
[00:04:17] Colin Keeley: Yeah. It's a little different with the online businesses. We don't have that quite as often, or at least we don't know about it. Um, how did you structure the deal? If not like how'd you finance it without a seven, eight. People are always interested in, Hey, actually, you do it.
[00:04:29] Jon Matzner: Sure. So, uh, I went to a, um, essentially friends and family, I mean, not family, but, um, it wasn't that much money. Uh, and then we did a big seller financing note, um, with all sorts of reps and warranties and stuff like that. Um, uh, so yeah, we did seller financing and a little bit of cash from just kind of a network.
Um, uh, yeah, so, so that's kinda how we did it.
[00:04:45] Colin Keeley: And then how about on the growth end? Like what have you guys done for growth? What's worked.
[00:04:49] Jon Matzner: Um, what's worked, has been, you know, and before we acquired, you know, one of the ways that we like the sector was the paid traffic was pretty under-priced given the average gross margin per sale. And so we looked at that before we even bought it. And we're like, man, these clicks are only three bucks. I'm in right.
They should be 50 bucks. Um, and so, uh, we looked at that and so we kind of professionalized our customer acquisition, a lot of Google, a lot of Facebook, um, some SEO stuff, kind of basics, um, sales we've kind of built And professionalized our, um, our sales reps, our design folks, which has been kind of a process.
I mean, when we bought the company, he didn't even have a definitive list of what. Cause he was a one man show. He's like, I sell it if I think I can make money. Right. And so it was like a skew for every product that we sell. We had to develop and commission packages and things like that. So, um, did a lot of that and then a lot of backend stuff.
So we do a lot of, uh, kind of overseas support. And a lot of no-code stuff. So things like checklists and we built an inventory, uh, process on the back of air table. That's been pretty successful for us. So we just had to develop a lot of the stuff you do when you go from a one man show to a company that does, you know, a couple million bucks a quarter.
So.
[00:05:56] Colin Keeley: And then, so we could get into it. How do you think about growth beyond? It sounds like you're not opening more businesses. You're going this, you know, non-franchise franchise.
[00:06:04] Jon Matzner: Yep. So, uh, the way we're thinking about growth is in really two different ways. Um, well the first was we kind of tried to grow kind of corporately. I would call it. And what we found was that when you get beyond say a hour and a half from your central facility, your problems and challenges and costs increase exponentially, just the nature of a radius around a certain central hub.
There, there might be a way to. Crack that code, but it's difficult and expensive and not really that worth it. Right. So, um, what we did was, you know, kind of looked at it's a wonderful business. If you're operating within 90 minutes of a center point, wonderful business, but the minute that you go to farther than that, it just, the wheels fall off.
Right. Um, so. So we looked at exploring what growth models that weren't relying on that look like. And we've basically landed on two that were, uh, currently pursuing one, a little bit more energetically than the other, but one is a online-based direct to consumer thing that we can talk about. Um, and then the other is this, this affiliate model, um, which again, we can talk about, but yeah, we, the reason why I'm not running garage Excel anymore, I'm not the CEO I want.
Uh, one of my team is, um, because it's a lovely business, but it's not going to continue to grow like it did in. 12 to 18 months. It's just, it's just, it's hit its right size. Let's say. And if I try to make it it's wrong size, it would just, it would just, uh, be more trouble than it's worth, frankly.
[00:07:24] Colin Keeley: Yeah. So that's always like the holy grail, right. Everyone wants to hire an operator and remove themselves from the business. Like how'd you find this person? How do you incentivize.
[00:07:33] Jon Matzner: Yep. So we, um, I knew I played rugby with this guy's dad and. Six or seven years ago, a medicine, him and I, he, he was like a real estate agent at the time. And over the last five or six years, I brought him into a variety of ventures. And eventually we moved him to the U S specifically to take over this company.
So it wasn't like an indeed post. And two weeks later, I'm sick, sipping a margarita. It's a, it's a five or six year pipeline, but I've got absolute confidence in this dude because he's been kind of like a part of the family for five or six years. And he's great. I mean, he can drive a forklift and, you know, mess around with Java, which is incredible.
He's a, just a really bright guy and he's 29 or 30. And so this is a great opportunity for him. So we give them some base salary, some incentives, and then we're giving him basically Phantom shares, uh,based on any sort of liquidity event at the end. So.
[00:08:25] Colin Keeley: Yeah.
[00:08:26] Jon Matzner: Yeah, nothing fancy. I mean, get rid of the stuff, you know, I mean, it's, it's, child's play compared to what, what you guys do, but for us it works so,
[00:08:32] Colin Keeley: that's good. Um, yeah. So the growth, I guess let's talk about the e-commerce thing first. Like what is, what does that look like?
[00:08:37] Jon Matzner: Sure. So the e-commerce thing it's actually built it's on organized garage.com. We're kind of been, we built it. We haven't really bought any traffic or done the stuff yet, but I'm in the kitchen space. There's three major players. There's the retailers like home Depot and Costco who just sell you the kitchen cabinets.
Then there's the vertically integrated franchisees where they sell you the cabinets and they install them. But in the kitchen space specifically, there's this middle player, which is an online kitchen design. Where they design your kitchen online, they ship the cabinets to you, and then a local contractor who you pay directly installs them.
And it sits between the vertically integrated folks and just the retailers. There is no specific player in the garage face. So essentially that's, that's replicating a model. That's worked very effectively in the kitchen and closet space, which is kind of online customer acquisition, online design and sale, ship them everything.
And then a local contractor essentially hangs them. Uh, which is nice because it gets you out of the really, really execution intensive. Contracting end of the business and pushes that down to the customer and you pass along some of those savings to the customer. So, um, that's the kind of e-com, you know, and obviously we have great economies of scale.
Right. I have the manufacturers, I have the facility, I have the products, I have the software to design them. So it's, uh, it seems like?
a very nice add on, so,
[00:09:50] Colin Keeley: And how's it going?
[00:09:51] Jon Matzner: uh, we're in the process of launching it now. So I don't know. I'll let you know
[00:09:54] Colin Keeley: early it is,
[00:09:55] Jon Matzner: I was doing, I was doing the proforma this morning, so.
[00:09:58] Colin Keeley: nice. I then, so you'd probably vote best known on Twitter for this like anti franchise franchise thing. Uh, you know, unexplained.
[00:10:05] Jon Matzner: Sure. So, um, the other way to grow a business like ours, when you've got these kinds of really nice tight geographic, um, unit economics, but they don't necessarily lend themselves to corporate ownership, let's say is the franchise. Um, and so we looked pretty closely at the franchise model and I don't know how closely you've ever looked at it, Colin, but it, it, um, it kind of gives me the willies.
You know, um, it's super, super regulated. It's very kind of top down, you know, it's kind of rules and territories and no, you can't feature that product because we have brand equity and, and those kinds of things. And it works really, really well in certain sectors. Like, you know, H and R block, I think is a franchise or McDonald's or Starbucks.
It's a great model for those, but in the home service sector, um, people would rather buy from a local company than a national. Um, and so a national brand does not offer any advantage. And that is largely what you're paying for. When you buy a home service franchise is to be able to call yourself a, you know, California closets or whatever it happens to be.
But what we've seen in our business is that somebody would rather buy from Toronto garage upgrade company, then garage dreams headquartered in Austin, Texas, because they liked that kind of local. Accountability, let's call it. Um, and so when you don't have to do co-branding, it opens up a world of possibility in terms of association with these affiliates is what we're calling them, not franchisees, which is our first one is in Connecticut.
It's called the garage experience. And the engine under the hood is all us, but the brand is him. So he gets all of the support of a franchise. If you go to the garage experience.com, I think the websites in the process of launching, um,
[00:11:35] Colin Keeley: That's what I was trying to do.
[00:11:36] Jon Matzner: Yeah. Uh, the garage students, I think it's. He gets all of the support of a franchise without any of the rules and restrictions, because there's no brand equity that I have to prevent.
So I don't have to do.
territories. I don't have to tell him what he can and can't sell. I don't have to tell him he's not allowed to do M and a, uh, uh, you know, um, but the engine under the hood is all lost. So he's, he's been able to de-risk it because we can tell him. Where, where are the best customer acquisition channels are, you know, how to compensate a salespeople, how to pay crews, what software to use, all that stuff we gave him.
And so he's been able to kind of shortcut the line in a franchise style, but without some of the franchise kind of, um, you know, uh, wrappings or restrictions, maybe that's a better way to say.
[00:12:14] Colin Keeley: You know, what is the definition of a franchise legally that makes you not a franchise,
[00:12:18] Jon Matzner: Yep. So there's a generally speaking outside of New York state. There's a three-part. Um, and you know, a franchise lawyer, you know, if you paid a lawyer, they'd give you a hundred thousand dollars and they read your paper. I can give you the kind of business persons
[00:12:28] Colin Keeley: legal advice.
[00:12:29] Jon Matzner: Yeah, yeah. Not late. Yeah. There you go. not legal advice.
Um, the big it's a three-part test and all three have to be true. The first one is COVID. So, uh, and then I think the second one is like, you have to make money within six months. And then the third, I think is, um, you're giving guidance as to the operations of the business. Like you're, you're, you're telling them like how and what they're allowed to do.
So under our model, we, we meet two and three, but we don't meet. And so, um, it's really the co-branding that, that creates that kind of linkage. Um, so on his site, he can't even say, for example, in affiliate of garage itself, there's no brand link at all. Or else you start to create, like what, what feels like a franchise.
[00:13:06] Colin Keeley: And it's, it's effectively a playbook. Are you like very involved, you know, weekly calls or something?
[00:13:11] Jon Matzner: Yep. So it's kind of a mix. So the way we make money, three ways, um, and upfront, which is essentially, we have a list here that I can share my screen and show you, but it's a bunch of one-time stuff. So it's like access to all of our content library that we've developed, you know, Um,
contracts, employment, you know, just kind of almost like, um, online courses.
Right. Like, it's just like this really big ass, you know? Uh, we give them our, uh, top converting landing pages, our top converting keywords, our top converting creative, like all the stuff you need to be pretty close. So that's the first way. And we charged like 20 GS for that. Um, then we have a bunch of voluntary shared service.
That are all like back office so they can hire us to do their bookkeeping. They can hire us to answer their phone kind of economies of scale stuff that, that we're well positioned to do that. Maybe some guy, when he's first getting started, doesn't want to do himself. Uh, I suggest that they don't do it themselves.
Right. Um, they can lease the software from us, things like that. And then the third is we take 5% of the top. For life. Um, and, uh, you know, we kind of, we're very involved in these first couple cause we want them to be successful and over time, you know, we're doing things like we're cohorting them. So we're putting five affiliates in the same slack channel and they're all talking.
Um, and we're kind of help helping to guide and shape. And here's what we suggest and those kinds of things, but it's, it's like, It's like a e-course on steroids rather than, you know, it's, it's, it's, it's almost like a mastermind. Not, not quite there. The reason why like positioning it against the franchise is because franchises cost a quarter of a million dollars.
Whereas online courses cost two GS. So I'd rather say I'd rather price condition at franchise and go down then price condition at course, and go up. Um,
[00:14:45] Colin Keeley: There's yeah, they, there was like a old marketing tactic of like always pick a villain and, you know, franchisees or franchisors or, and I still in for sure. Um,
[00:14:53] Jon Matzner: And I think it also, it also lets you hang it against something. So it's like the Uber for planes. So it's like, it's like the franchises, but without the rules, you know,
So I think it allows a nice mental shortcut, um, from all sorts of, you know, they, they understand that it's their business, not mine when I describe it like that, for example, you
[00:15:09] Colin Keeley: How did you, like you could have taken this knowledge that you have and gone in all different directions. Like you could have done an asynchronous course. You could have sold it ad hoc. You could have gone franchise. I mean, like how did or cohort-based course I think is probably a common one that people do here or a mastermind.
Like how did you arrive at this one?
[00:15:25] Jon Matzner: Um,
[00:15:25] Colin Keeley: this.
[00:15:26] Jon Matzner: Yeah, it's, it's an interesting question. You know, we can talk about it extensively. I have a couple of really bright partners who, you know, we debated this exactly like, Hey, should we just package it up and sell it for five grand? Or, you know, so we, you know, we had a couple of different things, which was, we wanted to create enough value upfront that we can get a big lump of cash up, or it's not a big lump, I mean, a nice chunk of cash let's say upfront.
Um, We wanted to have exposure to royalties because of how lovely of a revenue stream that is, you know, it, it compounds and it's valued extremely well in any sort of subsequent fundraising or sales type scenarios. I mean, it's, it is a wonderful, wonderful, wonderful revenue source. Um, and then the services we're doing mostly to protect.
We do make some money on them, but we're doing it mostly to protect our investment because we do want these guys to be successful, not stressing out about their bookkeeping. I want them going out and growing their business so that they can pay me royalties for 50 years. Um, so that's kinda how we landed on it.
Um, cause I didn't want to just sell a course because. You know, and I know this from the garage business, I'm looking for, for, you know, sell once, make money more like soft, you know, versions of software. Right. Which is, um, I'm looking for something that has some sort of avalanche effect, network effects, you know, all those things that you look for in a business and without exposure to any sort of ongoing, um, revenue Or profit sharing or ownership, it's just kinda like look, I sell these things until people aren't interested.
And then what the hell do I do? Whereas in this.
scenario, and I didn't want to own equity because equity in a small business like this brick and mortar businesses kind of Blair, you know, it's like I got to get involved in governance and as a man, just give me a couple of points. So, And I know the margins, so I know it's not gonna put them out of business by giving me five points.
So
[00:17:06] Colin Keeley: And like, how are you finding these people are who are these people that are signing up?
[00:17:10] Jon Matzner: Yeah.
So it's pretty much been, it's a great. Pitch, um, you know, it's, it's, I think I heard you talking about buying traffic for your course. I think it's the exact same thing, which is I've had people come on and they're like, I'm sold now. Let's just talk about details because I don't think I could do that.
If I was buying Facebook traffic saying, you know, launch a garage, you know, there'd be this long drip campaign sequence and building value on webinars. Whereas, because. You know, I'm, I don't post a ton, but I post enough that kind of people know who I am. So when I kind of throw something up, there's a high degree of trust.
And so, you know, it's hard to kind of it's, I think it would be hard to do it with cold traffic without a really serious commitment to converting that cold traffic to hot traffic. But right now it's just kinda, I tweet about it every couple of weeks. And that's that's enough for now.
[00:17:59] Colin Keeley: Yeah. I mean, that was exactly the issue. When I was trying to buy cold traffic to the course, it's like people trust me, which is why they buy it. And this guy selling an ad is just like, that sounds scammy. I don't know. I'm not going to convert.
[00:18:10] Jon Matzner: Yeah.
[00:18:13] Colin Keeley: have you looked at what Alex has done with his gym?
[00:18:17] Jon Matzner: I've read a bit about it. And he actually was the one who helped me clarify the way that I speak about this. I've read all of this stuff and hormones. He reminds me a bit of, um, the same Taleb, which is, I really like his ideas. I don't know if I'd want to get a beer with the guy. You know, like, but I like his ideas.
[00:18:34] Colin Keeley: I love, uh, know Tolo I loved all his books and everything, but he's just become such an asshole. Like just non-stop negative.
[00:18:40] Jon Matzner: I have that suspicion about hormone Z, which is I read this stuff and I'm like, this is a really good way to say this. This is really novel, but I don't know if I'd want to play around a golf with him, you know? Like, so, um, yeah, I've read a lot of this stuff and what he really got me thinking about a lot when.
He gave this analogy in his book, which I thought was so profound was if you want somebody to shop better at a grocery store list, all the ways that Colin could help somebody shop better, it's like he could fly there and do it with him. He could order from my mind, he could write an ebook about how to shop better at the grocery store.
Those are all solutions to the same problem. And so structure your solutions in a way that lend itself to repeatability and high leverage rather than. You know, calling flying to 50 people to go grocery shopping with them every week, you know? So he really got me thinking more about that. There's lots of ways to solve the same problem, which is how to grocery shop better, you know?
Um, so it's the same thing with, with us, for example, and this is not straight from our mosey, but, um,our cabinets you can make in a lot of different places. And when we first looked at this, we're like, well, shit, We'll sell them wholesale. They'll buy them, you know, buying from us also. But what we realized was that was a pain in a button.
It's not a business that we want to be in. So what we did instead was we came up with a manufacturing and specifications packet that says, this is how you find a local manufacturer of our cabinets. Here's every single thing you need. You had Ford on this email and now you can get a cabinet shop, 15 minutes away.
And so I've solved the problem of where they're going to get the stuff to sell, but I don't have to build a shipping and logistics. Business, which is not a fun business that I don't really want to build anyway, but I've solved the problem of where the heck these affiliates get their, their cabinets from.
So that's a very foremost kind of concept. So Yeah.
I'm a big fan.
[00:20:21] Colin Keeley: Yeah. I, I think he's obviously very good at marketing, but I don't think all his tips are like applicable to all businesses. Like, uh, I think one of the things he does really good is like guarantees for all these gym owners. Like you're gonna make more money if you're like selling shoes. I can't guarantee you're going to run like 50% faster or something, but for your business in particular, it sounds remarkably similar
[00:20:40] Jon Matzner: I liked his structure, his guaranteed, even just thinking about the different types of guarantees I thought was really interesting, right? Like, uh, if you, you know, he, he had that whole chapter right. Where he had like 10 different types of guarantees, even that is kind of like a guy who writes a lot of landing pages or whatever I was, it was cool to see.
Oh yeah. I guess there's more than just the money back guarantee. There could be a X guarantee or a partial guarantee or, you know, I, I really liked that section as well. Yeah.
[00:21:06] Colin Keeley: The other thing it sounds like you guys do really well is like scaling up your overseas teams. Uh, you know, how are you finding these folks? You know, what are they doing?
[00:21:13] Jon Matzner: Yep. So, um, Upwork for sure. And then a lot of more recently online jobs at pH for short, um, big, big fan. Um, I
[00:21:21] Colin Keeley: Is it mostly Filipinos that you guys hiring? Yeah.
[00:21:24] Jon Matzner: I've had really, really good success. There are at times. Cultural challenges and other geographies and the Philippines, I'm fairly, I feel like I can do, I, it's a known quantity at this point.
Cause I've done it enough, but it's not exclusively exclusively that. Um, but, um, Yeah.
I think, I think that people, you know, I really kind of want to build, I think you were talking about this. Can we go on a little bit of a tangent?
[00:21:45] Colin Keeley: Yeah. Oh yeah. Feel free to ask me questions too, is I'm just like grilling you.
[00:21:49] Jon Matzner: Yeah.
no, it's okay. Um, so I know you have your automated. Stuff.
And you mentioned a concept about a company that goes in for 10 grand for three weeks, and it does like a blitz on automation and it's because people won't buy automation off the shelf. You kind of have to do some consulting along with the automation kind of thing.
[00:22:05] Colin Keeley: Yeah.
[00:22:06] Jon Matzner: I've really thought a lot about that with off overseas help, which is so many people have the same sequence, which as they read it, They go, I need to use VA's more, they hire one, they don't do it.
Right. Cause they don't have the kind of systems and the process and the kind of ecosystem. Right. And then they're like, well, this. And it's the same thing with automation, I imagine, which is like, they buy the tool and they have no idea how to correctly use it. And then they're just like, ah, this is why I need an office manager.
I'm canceling the contract. Right. And so I thought a lot about that in terms of different ways that I could like come up with hormones, like offers around offshoring where it's like. You know, pay me 10 grand and I'll do the system end to the higher end or, you know, or don't pay me anything, just pay me what I save you.
When I offshore these stabling, pay me half of what I save you. And I'll do all the offshoring and build the system to get them stabilized within your business because you're using a $29 an hour bookkeeper in California. And that. Crazy crazy talk. You should be doing $9 an hour master's degree, Filipino bookkeeper.
And so just pay me, pay me half the spread, nothing upfront. So I've thought a lot about like how to actually, you know, productize the service because just saying hire overseas. Isn't good enough. And just saying. Build a system and document SOP is I'm a big notion SOP guy too, but it's because I'm really lazy.
And I want to be able to just kind of like plug low cost labor against notion and have turnover or whatever it is as I'm figuring out who's good. And who's not without me having to do like a five-hour zoom with every $6 an hour person that we hire, you know? Um, so I don't know what your thoughts are about some of the experiences that you've had, like selling automation.
Uh, not quite ready yet business, even though, you know, there's a wonderful use case for maybe some of your products.
[00:23:59] Colin Keeley: Yes. Okay. Uh, so we spent a lot of time with this and this is like, the goal for this year is getting better at, you know, uh, outsourcing stuff and like bringing on delegation and people like that. So with formulated is our automation company and we stole this actually from Google. Google has like design sprints
[00:24:14] Jon Matzner: Yeah. Yeah. This is what I heard you talking about.
[00:24:16] Colin Keeley: you know, one of their teams or one of their startups.
It'd be. Basically it's a bed with them and show them the value of design and one like small thing. And they would do it effectively at cost or free if it was one of the companies. And so we did the same thing with automation. So it'd be, I can't remember what it was 10, $20,000 for like three weeks, which is basically around our costs
[00:24:33] Jon Matzner: Yeah. You said
[00:24:34] Colin Keeley: paying folks.
Um, and that just proves it out. And then like from there you find like all these other high value activities and you go down and deeper. Um, so as far as. Like, uh, you know, online jobs are hiring Filipinos. The three different buckets I've seen and I've used. Most of them is like online jobs, pH where it's like a marketplace and you've got to go find the person themselves and vet them and teach them and everything like that.
The next step is shepherd. So shepherd Marshall hostas company, where it's like, they'll find you good three people. And then you pay an upfront three months, I think is what. Ends up being like $3,000. And then like on the more managed side is Athena. I don't know if you've seen this Athena go.
[00:25:13] Jon Matzner: Yes. He's the guy who started a TAC. That's his, his company. I haven't really played around too much with.
[00:25:18] Colin Keeley: Uh, so there it's all the same. It's a basically playbooks and hiring someone in the Philippines. And then instead of an upfront cost, they're charging you like $3,000 a month or something. So instead of whatever, the end person makes like a thousand dollars and then they share a playbook and I think they have apps and stuff built on top of it.
[00:25:36] Jon Matzner: I love that.
[00:25:38] Colin Keeley: yeah, I, I haven't done it. Other people have, and they all seem to speak very highly of it.
[00:25:42] Jon Matzner: it seems to me like, and against some, some degree similar with automations with. I think if you just hire this type of labor, without some of the, I kind of like consulting or process development, it's just going to crash and burn and you're going to be like, This is so, you know, you, you really have to know what you're doing to use this tool.
Right. But once you know what you're doing, it's a game changing tool and you're going to use it in every single thing. But if you use it wrong, you're going to be like, ah, this is why we don't use these people. You know? So, uh, I really thought a lot about how I could add value in terms of you know, that, because I'm such a big advocate.
I mean, I, I love it.
you know? Um,
[00:26:21] Colin Keeley: So, like we've had a ton of missteps where we've hired folks and that just didn't work out. Now we have some that are working out great, but like, what is your process from, you know, finding them in online jobs and like vetting them, making them jump through hoops and
[00:26:32] Jon Matzner: Yup. Yup. So the, the big, I mean, at every stage, you know, we could kinda like talk about it, but one of the big things that I found particular with online jobs at pH, um, you have to be really, really organized and upfront on your kind of, um, Uh, kind of funnel, I would call it, um,like I found this tool, w w I built this thing in air table, uh, to manage applications, but I actually liked this other tool more wurk.xyz.
I don't know if you've ever seen it. I, I keep reaching out to the owner because I really want to invest in it or buy it and bring it to SMBs, but he hasn't gotten back to me. Um, but it's, this it's fi it's like five or 10 bucks a month per position. And it's essentially like a low cost applicant CRM. And so I embed that little.
To kind of like a proprietary job board, so to speak. And I stick that on online jobs at pH and I ask all sorts of questions. Um, that I know will let me screen really quickly. So things like, um, do a voice recording of two minutes. Like I found that alone prevents me from having to interview 50 people because I don't know what their background is.
If I don't hear the level of English that I need, I don't even, I just thank you for applying. Thank you for applying. So little tricks like that. I found to be really, really impactful. Um, Test projects, you know, that kind of thing. Um, it's the Navy seal strategy, right? Which is the Navy spent like a billion dollars trying to find.
How to find a Navy seal and they, you know, genetics and sports background or whatever. And at the end of the day, they were just like the best way to find one Navy seal is to find 10 guys and beat the shit out of them and see what's standing up. So it's, it's this it's like get 10 applicants and kind of just see who survives the, the bootcamp, so to speak.
Um, that's really what I found to be best, uh, is to find one person find three. You know, or 10 or
[00:28:14] Colin Keeley: So you ended up just hiring like three to 10 and expecting most of them to turn out.
[00:28:19] Jon Matzner: yep. That's that's what I do is I hire three for one position usually. And then in many cases, given their cost, it's not that impactful. If, if I find more than one, that's really good. I find another role. I always have another role, um, where that rarely happens or I just keep the best one.
[00:28:34] Colin Keeley: And then once you bring them on you, what have you done for onboarding that make them more successful?
[00:28:38] Jon Matzner: Um, usually it's, it's either one of two scenarios either. It's like live meeting with them every day. And that's when it's a more ambiguous set of tasks where you don't have really developed processes or it's written not video. Checklists and walk-throughs, that are really, really intuitive. I found that I think like a lot of people on Twitter talk about like looms and stuff.
I have not seen that those get used at all. Um, I mean, like if it's a five minute loom video showing a task, I don't find them referencing it. Whereas if it's a notion checklist that has nine steps, they go, wow. Two three. Oh, got to go back to, to, whereas I just, I find that you can see watches your loom videos.
I find these folks not watching the loom videos, but I find them opening up notion and clicking the quality control checklist, you know, with frequency or you talk to them every day. Those are the two choices. So if you don't have a stabilized enough process to have a checklist, I just talked to him every day until I have enough as a process.
Uh, but I found that that half way where it's like, you're supposed to be saving me time in the beginning. They're going to cost you more time if you want to process, you know, it sounds like, I know you were talking about this, I think on a recent episode, right?
[00:29:48] Colin Keeley: Yeah. We've been dealing with it. I feel like we've gotten a lot better. So I do the looms for sure. You know, document tasks. And then I try to get them to write out the text version of it and that
[00:29:57] Jon Matzner: yeah. That's a good idea.
[00:29:58] Colin Keeley: I'm meeting with them more often, uh, is really the biggest solution that we found and trying to get them to work our hours, at least initially.
So we could like interact more throughout the day.
[00:30:07] Jon Matzner: Yup. Do you, Uh, do you do notion or train
[00:30:09] Colin Keeley: yeah, yeah. So I do that SLPs like, uh, with loom initially, and then we also cello more so for developers and stuff like that. Yeah, I got most of this from the shepherd has a free course on delegation that Marshall housemaid, like, do you have any good sources?
Like how'd you get up to speed on this stuff?
[00:30:28] Jon Matzner: a lot of trial and error. I
[00:30:30] Colin Keeley: Yeah.
[00:30:31] Jon Matzner: you know, it's, it's. I think that's what it is. I mean, I kind of want to do, to be honest, I kind of want to do a class, like a big class. That's like really in the weeds with like, you know, plug and play template, hiring document, you know, a lot of that kind of stuff. Um, I dunno what Marshall's free courses like, but I imagine to be something kinda similar.
[00:30:52] Colin Keeley: Yeah, it's worth checking out for sure. And if you wanted to go down this like managed service offering, like doing a class, it would be a way to get yourself, like in order and teach one person and then. Can I scale it up from there?
[00:31:02] Jon Matzner: Yeah. Yeah. For sure. Like a little freemium kind of thing
[00:31:04] Colin Keeley: Yeah.
[00:31:04] Jon Matzner: you've done for you. Yeah.
[00:31:08] Colin Keeley: C a C like, you've been pretty active on Twitter as am I, and I'm always like trying to get better. Like, what's your process for using Twitter? Do you have any processes?
[00:31:17] Jon Matzner: I think for me, I'm using Twitter, especially given my prior career is a little bit new for me to be kind of like public and talking about, you know, working in public or whatever. Um, so the way that I've made my peace with it is to think of it. As like the way to get a thousand true fans, like the right thousand people, not a big audience kind of thing.
And so things like this anti franchise offer or other things that I might do don't require a large audience to be successful. And so I think I really tried. Generate and talk about things that might only land with 11 people, but they're the right 11 people, you know, their LPs are there. And so I think about it more as like trying to add value to a very specific part of the world rather than generate likes and, you know, do a controversy post.
So I get more followers, you know, it's it's, you know what I mean? I, I think that that's how I've, that's how I thought about it is it's it's. Sniper rifle thing more than anything else. Um, so I might only have 2000 people, but I know that if I send a DM to one of those people, we're gonna be able to get on a call and if I got a deal or, you know, that kind of thing.
So I don't know. How do you think about it?
[00:32:31] Colin Keeley: It's been like I've dabbled in different things. I tried posting a tweet a day and I didn't see a lot of results from that. Um, what works as seemingly, as. Like telling a story really well, just instantly you get an extra thousand dollars or something. Um, so just spending way more time to write, you know, a few threads I think is probably my intention going forward.
[00:32:50] Jon Matzner: I liked some of your, uh, I read some of your playbooks is what you call them when you break down. Like, uh, those are, those are cool. Those are really
[00:32:56] Colin Keeley: So those I do for myself, um, and they have good SEO and they last for a long time, but they don't blow up on Twitter as often. So like I'm kind of torn on writing more long form stuff like that, or more like thread stuff that gets more eyeballs and brings more people in. Um,but yet the thoughtful people, like the operating manual is more.
[00:33:13] Jon Matzner: The, the, the one thing that I've seen, I remember talking to somebody, I forget who it was, but he was saying, um, the real big way to get organic on Twitter is to have high follower accounts, comment on your stuff. And, and basically it's in the comment section. Like if you can get. So when he started to comment and say, this is dope or whatever people, you know, it's basically saying that that's even more.
important than like a retweet or whatever.
So I thought that was an interesting, I try to comment a lot with value, not just like great job, keep it up, but actually like add value commentary to, to the right kinds of people. I found that that attracts, you know,
[00:33:50] Colin Keeley: Yeah. That's I should do that more. I am trying to like produce more and like consume less, but you got to consume some to
[00:33:57] Jon Matzner: It's it's for me, it's just to demoralize. If I write something that I know is incredibly valuable and then like, it doesn't get any traction, like with that, like I CA you know, you write this like profound operating model where you're like, this is better than like an MBA and like, doesn't get anything.
And then you make a fart joke and it gets like retweeted a thousand times. Like, I don't know if I can deal with living, you know, it's like, I can't deal with the ups and downs.
[00:34:23] Colin Keeley: Yeah, I think there's just a lot of randomness to it. So I think that's why you have to produce like a thread a week and then some of them take off, you know, two out of 10 or something like that. Uh, I try not to let it bother me too much. I try to meet them pretty quickly. So then you don't know as much like how many likes or retweets things get,
[00:34:37] Jon Matzner: Yeah. That's smart. That's really smart.
[00:34:40] Colin Keeley: Uh, yeah.
Any questions for me? I exhausted most of my questions for you.
[00:34:43] Jon Matzner: Yeah. Okay. Um, so I guess, I guess one of my questions is, is I feel very lucky at this point, which is I have the luxury of time in that I'm not having to get dragged down in operational stuff directly, at least at this.
Broadly speaking. I also like you, I think have access to capital, not just like seven, eight. I have people who want.
to do stuff, you know, through affiliation with me rather than, you know, some sort of financial return, right. They just kind of trust my nose. And so I think the big problem that I'm thinking about these days, that'd be very interested in your perspective on is how do get scared. Around the SMB main street as I call it asset class, even though that's probably the wrong word, but you know, like, are the answers to that question? Like there's lots of different ways to answer. One of the answers is search funds. You back somebody to go find a place to park your money. Right?
That's the classic answer. Another is you don't invest directly in SMBs. You just do picks and shovels stuff. So that's what, like my, I don't know if you know, but Cody and I have a holding company together, uh,
[00:35:56] Colin Keeley: cool. I didn't know that.
[00:35:57] Jon Matzner: Yeah. Yeah. Yeah. Um, and so we buy stuff together and it's all picks and shovels stuff.
It's not necessarily directly because you can only scale so much by holding these things directly. But a CRM for plumbers is scalable in the right kind of ways, you know, or whatever it is. So it's like, I'd be interested in your thoughts as to if I said like, Hey Colin, I'm a family office. I want to put $50 million in play on, in around this mainstream gray title wave.
Where should I be looking? Should I be doing a roll-up pick one sector and just do a roll up? Should I be, you know, like how would you answer that question to get my chips on the table in a real way in, in this gray wave? You know, that's the question I'm thinking a lot about these days.
[00:36:46] Colin Keeley: Yeah. I mean, it's the question. I think we're all thinking about. Um, so we're doing this in software, which is, we're not really taking advantage of the gray wave quite as much. I mean, most of the people we're buying from, they're not seven years old, they're not retiring. Um, so we're scaling that up, but.
I think the other approach is just like, what they're doing venture guys have done is like you pick a few sectors, you buy platform companies, and then you approach roll-ups you like put teams in place on those platforms and then go from there. And that's really how you scale up your, you know, your offering.
And I think that's stolen from Berkshire constellation or any of the aggregators that have done this at a high scale for a number of.
[00:37:24] Jon Matzner: Are there any other, yeah, I think you're right. Do they? And I think I've read a thread that Xavier right?
[00:37:32] Colin Keeley: Xavier and Ava, I liked that the two founders over there, they're moving at a blistering pace. I think they just started like two years ago.
[00:37:38] Jon Matzner: yeah,
[00:37:39] Colin Keeley: yeah, they've done a
[00:37:39] Jon Matzner: Do you like that model, given your background and experience, like, do you like, would you like running that company?
[00:37:45] Colin Keeley: Yes. I don't like being involved in the day-to-day. I really enjoy talking with like founders, um, and hopping from one industry to the next that is fun. Like that is what I enjoy doing, uh, like dealing with customer service or like any of that kind of thing, and just not built for that.
[00:38:02] Jon Matzner: Now do you think, you know, I was talking to somebody with a similar background to you as a couple, a couple of weeks ago and not, do you think that there's an opportunity for, and this is one of the things I've been thinking about a little bit, which is I think the best way to call it would be like a growth equity company in this sector, which is things like providing.
Equity for growth, maybe refinancing out seven a loans. Um, just all sorts of, kind of like Nishi kind of keep the operator in place. Here's some capital, some expertise, maybe some synergies back office stuff, and kind of, you know, hanging out below the lower middle market and maybe with some exit scenarios into the lower middle market.
Do you think that there's an opportunity for that.
in this? Because I feel like I've tripped across a couple, but I don't know if that's actually a good enough strategy. So.
[00:38:49] Colin Keeley: So this is different than backing search.
[00:38:52] Jon Matzner: Yeah, correct. This would be somebody. So for example, um, Bob bought an HVAC company a year ago with a seven, eight. He's got a $29,000 a month, you know, debt service that's covered, but he's got a PG on it and you come in and you say, I'm going to buy that paper. I'm going to take maybe 20% of your company.
I'm going to own the note now. And you get rid of the PG it's a court it's corporate.
[00:39:18] Colin Keeley: Yeah. I wonder if there's just like a negative selection bias there of the people that are going to take you up on that offer at worst terms or cause they're trying to get out of the Keep trying to get out of the personal guarantee.
[00:39:29] Jon Matzner: Yeah, it's interesting. Yeah. I just like existing companies, not the search, so small businesses that need capital and expertise to grow. Like who's investing in those.
[00:39:41] Colin Keeley: Uh, well, Tyler triggers, he is his calm, calm fund. Uh, it's mostly targeting like software companies, but not exclusively where they're effectively offering that they'll buy out. I mean, they'll buy 20% of your company. It's not that different than like, it indie capital indie, indie dot BC tried a similar approach.
Um, that sounded like the returns were actually good. It sounded like their positioning was poor. Um, so this is a venture capitalist launched it and he just, his LPs wanted to invest in venture capital. They didn't like this like hybrid P approach that he was trying to do.
[00:40:13] Jon Matzner: Yeah, I think that that's what I'm moving towards is this hybrid approach, not like the kind of VC return the fund with any one of these kinds of things. Um, like little more boring.
[00:40:23] Colin Keeley: The other kind of interesting one that I've seen, like, uh, if you had 50 million and you're trying to deploy it kind of in this space is you back search funds that are going to take a holding company approach and compound over the next like 50. And so there's some LP groups. I don't know if they want to say their name publicly.
I can send it to you afterwards, but they just back, you know, people coming out of booth or Stanford or whatever that are more than just first search funds, they want to buy one thing and then compound and buy the next thing with that capital.
[00:40:52] Jon Matzner: Interesting. It's like almost, it's like, it sounds a little fun to Fundy, right? It's like they indirectly are getting involved in the holding company business.
[00:41:01] Colin Keeley: Yeah. So there it's like one LP backing effectively. Uh, um, it's basically set up just as an operating company with committed capital, but with the eye towards compounding that, doing more acquisitions with debt or just cashflow over the next, you know, 50.
[00:41:15] Jon Matzner: Do you think that there's any model where you can directly hold the. But like these main street or I can't, I haven't found one yet. Or you can be more involved. Like, I mean, you'd be, you'd be spending all of your time hiring operators, right? I mean, it's, it's limited by operational expertise, I think.
Right.
[00:41:35] Colin Keeley: Yeah, for sure. I mean, that's the only way scale up is hiring all these operators, which it sounds like if you're friends with Cody, which it sounds like you are like, she's done that, you know, she's hired what 25 operators in a pretty quick
[00:41:47] Jon Matzner: she's, but she's not playing in these kind of, I mean, she's doing things like long laundromats or, you know, not high execution risk type. I mean, you have to be really sector. You have to be really careful in what sectors you run that strategy. And maybe that's the best way to say it. And Cody has been right.
She's not, she, you know, a podcast production studio operator is very different than a plumbing. Company operator who, you know, could Rob you blind and you wouldn't even realize it because so much of their stuff is cash. I mean, just, you know, weird stuff, weird dynamics kind of industry. Plumbing's probably a bad example, but,
[00:42:20] Colin Keeley: Yeah.
[00:42:21] Jon Matzner: Co Yeah.
Cody, Cody does a lot of that for sure. Um, that's, that's interesting. I'm just, yeah. Very interested in your expertise on kind of achieving scale in a sector that doesn't, I think naturally lend itself to scale software does for sure what you do.
[00:42:33] Colin Keeley: Yeah, this is what it looks like. Mark Leonard always studies these like other high performance conglomerates or aggregators. I think half of them are software because it easily lends itself to that. I'm not sure what the other ones are in the past. Another operating manual I'm working on is like cable.
[00:42:50] Jon Matzner: Okay.
[00:42:51] Colin Keeley: like TCI was buying up cable companies and its peak is doing like one acquisition a day, but that's a similar approach of just like roll ups, basically just doing the same deal over and over and over again.
[00:43:02] Jon Matzner: I heard you're talking about this, but maybe you could give like, cause I'd be interested in taking it for sure. But the kind of SAS acquisition strategy that I know you teach in your course. Right. Um, adp.com.
[00:43:14] Colin Keeley: ndp.com. Yeah.
[00:43:15] Jon Matzner: And ge.com. Yeah. Um, What is a profile of a target look. I mean, it seems that space lends itself to when I, when I think about that, I'm like, I saw a tweet once you might've been, you said once you've bought a SAS company, you'll never buy another company again. Like I, that keeps me up at night. Cause I know how hard I work to do what we've done. I work like way too hard, you know?
[00:43:38] Colin Keeley: Uh, it's not as people intensive, but this is basically what John Malone arrived at as well. Like the cable business had a lot of similarities before software existed, where it's like recurring revenue, very low churn, very high margins. And that's kind of the recipe you're looking for, like different variations on that.
Um, No, it's great. Software was probably better like 10 years ago when mark Weiner had started. Whereas like people didn't realize how good of a business software is. Um, and now everyone knows it's great business. So, you know, multiples are creeping up. Things is getting more expensive. It's also easier to launch competitors or like other software companies.
So, uh, another thing someone could do is like, where. Are there similar dynamics at play, but aren't super competitive yet on a bunch of PE firms playing. Um, that would be another way to think
. So I'm looking at other stuff. That's not software, just, you know, as a looking for lower cost stuff. I think the thing you end up sacrificing is you could get that know high recurring revenue, low churn high margins. It often is like geographically locked or something. So it's not going to like growth is generally what you're sacrificing, where you're not so much in software.
So, like what kind of businesses are you looking at?
[00:44:43] Jon Matzner: We're kind of opportunistic right now. I mean, part of the reason why I reached out to you was because I'm kind of thinking about like what, what we should, I mean, W, you know, it's like, we can do whatever we want, you know, it's, it's just, it sounds kind of stupid to say that, but you know what I mean? Which is like, if we got really excited about commercial landscaping, roll-ups, it's like, great, but put the deck together now, go do it.
But I don't know if that's what I want, you know? So, um, I don't know the answer. That's kind of why I reached out. I'm like, I'm thinking about like, is it just taking minority positions? Is it. The training operators and taking a piece of what they bought, you know, is it just B2B services that she can sell to her audience and you never actually buy these assets directly.
Like that's what we're, we're, we're kind of flirting with up to this point. We've been opportunistic,
[00:45:29] Colin Keeley: Yeah. I mean, the easiest way to do is probably just back search funds. Like the terms are always what they are. You can move quickly on deals. You could deploy a reasonable amount of capital.
[00:45:37] Jon Matzner: super interesting. So what's next for you?
[00:45:40] Colin Keeley: we're trying to scale up acquisitions. Um, you know, we have a lot of investor interests, so that's not our biggest issue. I would say it's finding good deals mostly, you know, to just pound on the pavement doing that. We have a few in the pipeline that I think are going to close. We've had a bit of a drought here, um, but kind of goes in leaps and bounds.
, thanks so much for taking the time today, John, if people want us to help you or learn more about you or.
[00:46:02] Jon Matzner: Sure. Uh, so if you want to learn about our, , anti franchise offering, go to franchise disruptor.com. We've got a little bit of a write-up there and then, uh, follow me on Twitter. I actually don't know my Twitter handle. I think it's master John. Um, I'm not sure. Or if you'd just put my last name into Twitter, John Matzner you should find me.
So, um, I've got a great
[00:46:20] Colin Keeley: to all that in the show notes as well. So we get them right.
[00:46:24] Jon Matzner: Sounds good.
[00:46:25] Colin Keeley: thanks so much, John.
[00:46:26] Jon Matzner: Thanks for having me.
