Do You Have the Stomach for This? 2025 in Review, Part 2
Introduction:
This week, we take another look back at some of our happiest, smartest, funniest, and most difficult exchanges of the year, including Laura Zander on how she got the price she wanted to sell her business, Liz Picarazzi on her confrontation with a grizzly bear named Seeley, Jay Goltz on why he just might be a surprisingly good candidate to turn his business into a worker cooperative, Mel Gravely on why he spent years getting his facilities management business profitable only to shut it down, and Jaci Russo on how she figured out how to train a series of AI agents to deliver 10 fully vetted client leads first thing every morning.
There aren’t many places where you can hear entrepreneurs talk about the real-life problems they are confronting right now, today, as they happen—with no guarantee of a happy ending. But those are the conversations I have every week with David Barnett of Business Buyer Advantage, Shawn Busse of Kinesis, Paul Downs of Paul Downs Cabinetmakers, Jay Goltz of Artists Frame Service, Mel Gravely of Triversity Construction, Channon Kennedy of The Morgan Square, Jennifer Kerhin of SB Expos & Events, Lena McGuire of Spóca Kitchen & Bath, Kate Morgan of Boston Human Capital Partners, Liz Picarazzi of Citibin, Jaci Russo of BrandRusso, Sarah Segal of Segal Communications, William Vanderbloemen of Vanderbloemen Search Group, Ted Wolf of Guidewise, and Laura Zander of Jimmy Beans Wool. We also highlight several special guests who stopped by in 2025, including John Abrams of South Mountain Company, Kris Maynard and Justin Jordan of Cathedral Holdings, and Rich Jordan of High Ground Service Pros.
— Loren Feldman
Producer:
Jess Thoubboron is founder of Blank Word.
Full Episode Transcript:
In the first highlight, from Episode 258, which is titled, “Laura Zander Named Her Exit Price,” Laura tells us that she spent years taking steps to prepare her business to be sold. She wasn’t necessarily looking to sell, but she wanted to be ready if the opportunity came along.
Jennifer Kerhin:
Laura, were you actively going out and trying to find buyers? Or did the buyers come to you? Walk us through that story a little bit.
Laura Zander:
No, I was not actively going out trying to find buyers. But for the last 10-ish years, if I met somebody who either had the money, or I knew somebody who had the money, or I thought it could be a good strategic fit, I mean, I was never shy with, “Oh, hey, Bob, it’s really nice to meet you. Do you want to buy my business?” [Laughter] Literally, like literally, and Loren knows me. He knows that I’m not exaggerating.
Jennifer Kerhin:
How many times did people say yes?
Laura Zander:
A couple. You know, a couple, “We should talk about it.” I mean, there were a couple where we got a little teeny bit farther down the road. A lot of times, even, let’s say, 10 years ago, I’d say—even in this case—“We’re not worth what we want to be worth. But I want to put myself on your radar so that when we are worth it, or when you are ready to buy something, or add something to your portfolio, you think of me.”
So it was never a short-term play. It was always a, “Hey, I’m here. Hey, I’m here. Don’t forget about me.” And I just figured when the time was right, the time would be right. So, yeah, I mean, the company that ended up buying us, we’ve been on their radar for years. Years and years. And they’ve been on our radar for years and years.
Jennifer Kerhin:
Did you have a valuation? Did you know the number you wanted before you talked to them?
Laura Zander:
Yeah, but I’ve known for years. I’ve actively thought about—I mean, every year I value us. I know what I’m driving towards. I know what Ebitda I want. I know what percentage we want for this and that. I know intuitively, I guess, where our synergies would be found. So if I’m thinking about this company, before I say, “Hey, do you want to buy me?” I’ve got some kind of thought behind why it would work, and why it would be a good fit for somebody, and where we add value. So, I didn’t go get a formal valuation. I didn’t need to. I’ve been looking at this long enough.
Loren Feldman:
Why do you say that, Laura? Why didn’t you need a valuation? And the buyer didn’t want a valuation?
Laura Zander:
Because we said, “We are not looking to sell it right this second. If you would like to buy us, this is how much we need.” And they could take it or leave it, and that’s where we ended up.
Jennifer Kerhin:
Did you end up with that number?
Laura Zander:
Yeah, we did.
Loren Feldman:
Laura, did you want to stay on?
Laura Zander:
I could have gone either way. I’m like: If you find me useful and you think it would be helpful for me to stay on, then I’m happy to stay on. If you don’t want me to stay on, and you think it’d be cleaner and the business would be more successful if, as the founder, I stepped away, then I’m happy to step away. We’re still kind of in that phase, right? It’s been three or four months.
I took a role as an employee. I’m in the C suite. There are three of us, and at this point, I think I’m being useful. And I think that the business is benefiting from my experience, and I am learning a ton from these other two women who went to business school, and they know what they’re doing. So for me, while it was unbelievably, incredibly stressful for the first couple months, it’s starting to level out. And I’m getting to the point where I’m getting to start to read business books again. I’m getting to start to think about things at a slightly more strategic and higher level than I have in a long time. And that’s super, super exciting.
Loren Feldman:
Did you get your price all now, or is there a period of time before you get the rest of the deal?
Laura Zander:
We structured the deal so that if everything in the world collapsed tomorrow—I don’t know, there’s some crazy thing like a pandemic, and the economy completely collapsed—we’re happy. So, yeah, we got the deal that we were looking for. So, we were very lucky that way, and they were very honorable that way. And we were lucky that we’re, like, “Look, again, we don’t have to sell. I know the business isn’t as big and isn’t where I want it to be someday.” That said, I had been shooting for a certain value. I wanted our business to get to a certain value, and we weren’t there yet. So I was willing to take what it was valued at at the time.
Jennifer Kerhin:
Laura, how long were the phases? The phase where you’re negotiating, and then you agree on something. And then the phase of all the documentation. Can you walk us through that timeline?
Laura Zander:
Sure. So we semi-formally signed a non-disclosure, I think, in maybe October or so. And then, I think it was Thanksgiving.
Jennifer Kerhin:
Wait, October of 2024? Not that long ago?
Laura Zander:
Yeah.
Jennifer Kerhin:
Oh, that doesn’t seem that long. I thought you were going to tell me a year and a half ago. Okay, all right.
Mel Gravely:
That’s a long time!
Jennifer Kerhin:
Is it Mel? I have no idea.
Mel Gravely:
Because it’s brutal. I mean, you just described—it’s brutal, the due diligence, the back-and-forth negotiations.
Laura Zander:
Yeah, I mean, the process took five months, from the time we put it down on paper that, yes, we were interested in formally moving forward. You know, the dating process, if you want to call it that. I mean, we had been chatting casually and flirting a little bit, I guess, for about six months. But I was also, you know, polygamous,
Mel Gravely:
Dating others, yes. [Laughter]
Laura Zander:
Yes, I was also in other conversations just coincidentally at the same time. And I had gone down the path with some others. I mean, we started the due diligence around Thanksgiving, and I remember that, because that was our Thanksgiving—with the 155 items that were on the due diligence list.
And then we originally had planned to close the deal in January. But, to your point, the negotiations back and forth, and just the communication of their lawyer and our lawyer, and then me and the CEO would chat about some stuff, and then some of the stuff would go back and forth, and all the paperwork just ended up taking—and then with the election. So not only did we do this over the holidays and a Shopify migration—so, a complete platform migration that we had worked 11 months on. We changed the entire platform that we’ve had for 20-some years.
Loren Feldman:
That your husband built.
Laura Zander:
That my husband built. So he’s driving that. Election, Christmas—or, I shouldn’t say election, but inauguration—election and post-election. And Doug’s parents, his dad is not doing well. He’s got Alzheimer’s now, and blah, blah, blah. I mean, it was just brutal,
Mel Gravely:
You know, there’s so many things, Loren, that I would tease out of this that just are so unusual. Just to begin with, the intentionality of building it to sell it is rare. The patience to keep building the value of it so that it gets to a place where it is more valuable to someone to buy, which means keeping your books clean and all of that. There’s so much that goes into it, prior to dating and flirting and then finding a proper mate. I hear people say they want to sell their business, and they decided today, and they think it’s ready to sell tomorrow. The truth is, most of them just aren’t ready for that.
Laura Zander:
No, I mean, you got to go to the gym for a while. [Laughter]
Jennifer Kerhin:
To get bikini ready?
Laura Zander:
Yes! I mean, you just do. And again, at least my thought process was—and I think it was like The E-Myth, or something that I read, like, 15 years ago that was like—“Build your business as if you’re going to franchise it,” in terms of systems and processes and everything else. And mine was, and there was a book Built to Sell or something. But this was just best practices, even if we keep the business for the rest of our lives. And we always had that open. I mean, again, we didn’t need to sell. We weren’t actively looking to sell it. But I always wanted my legs to look good if the right person came along. I wanted to be attractive.
In Episode 259, “When Your Biggest Hire Ever Is a Bust,” Jaci Russo talks about how thrilled she was when a recruiting firm helped her hire her first big-time salesperson and how devastating it was when the person didn’t work out. At the time of the hire, Jaci told us that she’d found precisely the person she needed: someone who hit the ground running and was already lining up opportunities in her first three weeks. She had already revamped Jaci’s CRM system and had just been a delight.
Jaci Russo:
So that is a very accurate recitation of exactly what I said four months ago, and I stand by all of it. I tell you that the firm was reputable. She came highly recommended. I had all those thoughts. I felt all those things. I really thought that this was a game-changer. She made all those changes. They were very expensive, but I supported them. And it has become an expensive lesson in a list of the expensive lessons of entrepreneurship. So, here we are starting over again.
Loren Feldman:
Where did it go wrong?
Jaci Russo:
So, the end unfolded in an odd way. Fast forward from the quotes you just gave. Fast forward three months, and nothing has developed. We met daily for two weeks so that I could really download everything I thought she needed to know. I made sure she had all the right resources, access to the library of all of our documents, all the things. She wanted to make some big changes, move us away from kind of what I would think of as a baby, small business CRM and move us into Salesforce, hired an integration firm, brought in Zoominfo. I mean, all the things.
So right there, I would say, is thinking about us maybe as a bigger company than we are. She had previously worked for much bigger companies, but some startups. She had some startup background, so that didn’t raise any red flags. She did walk in with somebody that she thought would be a great client. They were not in our target market. They weren’t the kind of company that we typically do business with, but she had a relationship with them. That fizzled out. But, I mean, you know, those things happen, so I’m not too worried.
Loren Feldman:
Were they not right for the same reason—because they were too big for your business?
Jaci Russo:
No, they were actually smaller than our typical client, but not a good fit, in terms of matching up our industry expertise and process. They would have benefited from us, but I realized later they were never going to get approved, budget-wise. They wanted a $500-a-month solution, and we’re not that. But no big deal.
So, first month goes by, there’s no big opportunities, but I’m still all in because it takes time. Like, who pulls this off in four weeks, right? Second month goes by, and I’m starting to think, I’m surprised. I think I would have had some meetings by now, just based on the people that I know and pulling in some relationships. I mean, the agency at this point, in two months, has probably had 10 discovery meetings and signed a new client. And so, I’m starting to wonder.
Now we’re in month three, and I’m definitely starting to say things like, “What can I do to support you? This isn’t moving as quickly as you predicted.” She wrote out a go-to-market strategy that had a very clear path forward, and we are well off that path. And so I’m starting to say: What if? And I actually was heading to London and arrived, and so she’d sent an email while I was on the plane that said, “Hey, I want to do some things differently.” And I’m thinking, “Okay.” I mean, she sees the same thing I’m saying: What’s happening up to now is not working. We’re going to make some changes. And that was this odd, like, almost fall off the cliff for the next three weeks. It was just a rapid downhill descent. It was like she lost her confidence. She was no longer organized and on top of it like she had been for three months. I honestly, at one point, was concerned that maybe something was going on with her personally. But she said no.
And I reached out to the placement person and said, “Hey, this isn’t going well. I don’t know how to fix it. I’d like your advice. Here’s what I’m seeing.” And I sent reports, some email correspondence, some thoughts. “Wow, yeah, that’s surprising. Give me a couple days to think about it.” I said, “Okay.” She came back with an incredibly thorough breakdown, step by step: “I think this needs to be different. I think maybe, try that.” I thought, “Oh, it’s great advice. Yeah, I’ve done three, four, and five, but six and seven? That’s really good advice. Okay, great. I’m gonna start working on that with her.” And then I get a two-sentence email that says, “This isn’t working out. I tender my resignation effective immediately.” And I was like, “Where did that come from?” And so here we are.
Loren Feldman:
So first of all, Kate, you run a recruiting firm. Any immediate reactions to that?
Kate Morgan:
Yeah, was it a contingency search?
Jaci Russo:
Yes, I paid a finder’s fee.
Kate Morgan:
And you had three months to make it work? Because usually there’s a 90-day guarantee. Did she leave before the 90 days?
Jaci Russo:
Well, we started to realize it wasn’t going well before the 90 days. There wasn’t a time limit put on it. I didn’t go back and look at the document to see. I reached out, though, to the firm, and they were like, “This is shocking. We’ve placed her before, and it’s been a great success. We are stunned. If you will trust us, we would love to right this situation and do that work again and find somebody who’s a better fit. No charge.” So, I have no grievance with the firm. I feel like they are absolutely handling it at the level that I would if it was me.
Kate Morgan:
Yeah, no, that’s fantastic.
Jaci Russo:
My takeaway, after many, many nights of thinking about it, is that she’s maybe been a part of a bigger team, and had the luxury of being in a crowd—you know, like that high school group project thing. And all of a sudden she’s a unicorn, and there’s only one, and all attention is on her.
And I think the pressure, I think she cracked under the pressure—not pressure I put, because I think I’m pretty laid back. And I checked with my team. I went back and re-watched all of our meeting videos, plugged them into ChatGPT. I was like, “What could I have done differently?” And ChatGPT and I think that she isn’t used to carrying the weight on her own, and it broke her.
Kate Morgan:
Yeah, we see that a lot, particularly because we’re focused on a lot of the work that we do around sales: It’s the first sales person into a company. And yeah, you’re actually looking for a very different person than most larger companies that are looking for just another account executive or sales rep.
David Barnett:
Jaci, how were you paying her?
Jaci Russo:
Salary plus commission.
David Barnett:
And what kind of salary was it? Would you say it was a low, medium, or high salary?
Jaci Russo:
I would say it was high. It took my breath away.
David Barnett:
So somebody who took on the role could have presumably lived on the salary without actually making any sales?
Jaci Russo:
Yes, unfortunately, and I did think about that at the time—and quite a while thereafter. But it was not as high as they originally wanted it to be. So my theory was, when we talked it all out, that the salary plus commission was going to be really awesome, but just the salary wasn’t quite as much. It was more than I wanted, but not as much as they wanted. And so I thought that still left enough—because I think salespeople, they’re competitive by nature. And so they need a little drive and a little push. And so I felt like we left room for that, but now I think maybe it was too big.
In Episode 260, “It’s a Bear Market for Citibin,” Liz Picarazzi explains why, despite the advice of some very smart people who encouraged her to conquer her first market—urban areas plagued by rats—before expanding into additional markets, she decided to invest a lot of time and energy trying to position Citibin to serve towns, parks, and resorts that need trash bins strong enough to withstand bears. For that investment to pay off, Liz would have to outsmart her nemesis, an especially ferocious competitor that goes by the name of Seeley.
Liz Picarazzi:
So to give a little bit more context with the enclosure, Citibin trash enclosures have always primarily been to keep rats out—New York City rats, that’s what we’re built for. We’ve been known that way, and for several years we were getting requests from people in mountain areas, where bears are an issue, if we had a bear-resistant version of our Citibin. And so for a few years, we said no.
But we got enough requests that we realized this is something we should really look into. Why don’t we basically trick out and make a bear-resistant version? It’s made out of steel instead of out of aluminum. It has all the bear-relevant hardware that you may think of if you go to a national park. It’s sort of a paddle-handle latch to open the doors. So we made all those modifications, and part of the reason we did it was that we wanted to get a certificate from the IGBC, which is the Interagency Grizzly Bear Committee. You guys can laugh. [Laughter]
Loren Feldman:
Is it made up of grizzly bears?
Liz Picarazzi:
No, it’s made up of some really lovely people, actually, but they weren’t easy on us. We went through all of the modifications to our product so that it met the qualification for IGBC, and then we set out to get it tested, to be certified. So there’s a testing lab for IGBC in East Yellowstone, Montana, and that is where they do product-testing for all different types of bear-resistant products: trash cans, coolers, trash enclosures. And so we started our testing in 2023 and failed. Very surprising. I don’t like that. We failed.
Loren Feldman:
Why did you fail?
Liz Picarazzi:
So it had to do with the mounting mechanism. And I don’t want to go into great detail, but it sort of had to do with alignment of expectations about how the product would be mounted, and it ended up not being mounted at all. And so the bear pushed it over in four minutes—four minutes out of basically a six-hour test with revolving bears. Every 45 minutes, new bears come in and test the product. So that was 2023. We made a bunch of revisions. We went in there in 2024, last summer, and the bear legitimately got through. The bin was totally mounted, and it got in the front door. So we videotaped.
Loren Feldman:
How did it get in?
Liz Picarazzi:
Basically, if you’ve ever seen bear testing, you’ll see that they perform CPR on whatever vessel they’re trying to get into. So they’re just repeatedly pushing it over and over and over. The other thing they do is that the food—it’s usually sardines and peanut butter, honey, dog biscuits—that’s rubbed all over the exterior, particularly the hinges and around all the hardware door edges, so they’re smelling that food. That’s incredibly motivating.
So they’re trying to get in there, and they can detect the weak points. The good thing about testing, I will admit, is that it really shows you where the weak areas are. To improve it, there’s no way I would have known that that door wasn’t bear-resistant without getting a grizzly bear to test it. So for the sake of human beings and the sake of the bears, it’s really good that we knew that, because then we looked at the bin after the 2024 test and determined a few key areas where we wanted to make improvements. So that’s the background going into 2025.
Jay Goltz:
Did you pay the grizzly bears? Or are you just exploiting their free labor?
Liz Picarazzi:
We pay for certain tests. You know, these bears are somewhat lucky, because they would have been euthanized. There are only about 10 bears at this center, and that is over the years. So these are bears that all became habituated to human food, and therefore, became not safe to themselves or humans because they would repeatedly go back to the same food sources. And that can become dangerous, and many, many bears every year are euthanized because of that. So we’re not paying the bears, but the bears basically have a lifetime home.
Jay Goltz:
You’re just saving their lives. You are really going right to heaven, no question about it.
Liz Picarazzi:
Okay, so should I move on to 2025?
Loren Feldman:
Yeah, tell us.
Liz Picarazzi:
So, 2025, we take a year to make the changes. We set the date up, and we went to East Yellowstone mid-July to test not one but two products, because you can test them at the same time, like different days. And the same bear that got into the bin the first two tests—her name is Seeley—was the first bear in the lineup. And there’s a lineup of an entire day of bear tests with six different bears testing throughout the day in shifts of 45 minutes. This bear, Seeley, I found out, was going to be the first one. And I found that out before I went to bed the night before the test. And I did not sleep, because I have seen this bear in slow motion—because we videotape it—get in there. She’s very ferocious. She’s very motivated. And also, she has a lot of experience touching and smelling and being all around this bin. So she’s got two years of familiarity going into it.
So this bear and her sister, Condi, come out, and they’re both really aggressive with the bins at first. But soon after, they started to give up, and they started to go swimming. They were trying to knock over trees. They were playing with each other, obviously looking for food around the habitat and other spaces where the people in the habitat center leave the food. So, long story short, the two module passed after multiple rounds. And so we were totally elated, not entirely surprised, but we were like, “Wow, this took over three years of work. We’ve passed.” Then the next day was the next product that we were going to test and that we kind of added last minute. But basically, it’s a smaller version of the one we were testing, and that one passed. So we passed not one but two products in the session, and we got our official certification last Thursday.
Loren Feldman:
And the certification says exactly what?
Liz Picarazzi:
It says it’s certified by the IGBC as bear-resistant, and that is per the test protocol that we followed.
Loren Feldman:
Congratulations.
Jay Goltz:
Did you get a certificate? Wait, did you get a certificate that’s suitable for framing?
Liz Picarazzi:
I did, Jay. I really did. That was exciting, and I’m gonna send that to you.
Jay Goltz:
What about a T-shirt? Did you get a T-shirt with the picture of the bear on it, or anything? Can we get some of those?
Liz Picarazzi:
Actually, I already have, basically, like stationary and towels and pins with this bear, Seeley. They have all different gear in their gift shop for every bear, and because she was the fiercest competitor that I was most concerned about, I have a soft spot in my heart for her now. Because she failed, and I know how that feels from the previous two years.
Jay Goltz:
Do we get to vote now on whether you made this entire story up? Because it’s quite entertaining, and I feel like I’m on NPR or something, and we’re supposed to decide: truth or fiction? It’s a great story. [Laughter]
Liz Picarazzi:
Thank you.
In Episode 261, “Would a True Capitalist Consider a Worker Co-Op?” Jay Goltz acknowledged that, against all odds and with a few reservations, he’d begun to think that the worker co-operative ownership model could possibly offer a solution to his succession challenge. So we asked John Abrams, who turned his own construction business into a worker co-op and who wrote a book about employee ownership, to come back on the podcast to help Jay dig a little deeper.
Jay Goltz:
I’m struggling with—I’ll just throw it out there. I read your book. There are three things: Each one of them, instead of inspiring me, put me off tremendously to where I think, “God, I don’t know…” The first one is this democracy thing. I think running a business is not a democracy. Someone has to make a decision, and if everybody gets one share, the guy who works on the loading dock is going to have a vote as to whether we open another store. Really? And he has no risk in it. I believe in capitalism, and capitalism is being rewarded for risks you take and sleepless nights and stress. And I just don’t know how you mix those two things together. So, democracy—
John Abrams:
What were the other two?
Jay Goltz:
Okay, the other two is the comment in the book about the whole thing with the income inequality in the country. Like, that’s not my fault. That’s not my problem. I’m not going to own that. That’s a bigger picture thing. And then lastly, that CEOs now are making hundreds of times more. Again, that’s a Fortune 100 company thing. My argument is—correct me if I’m wrong—well, no, I’ll ask you this question: Doing what you’re doing, do you believe that you’re an activist, or do you believe you’re an advocate? Which one of those two?
John Abrams:
I’m an advocate.
Jay Goltz:
Very good. That’s what I thought. And my argument is, those three words sound like they’re coming from activists—from people who’ve never owned a business, have never signed a note, have never put their house up, have never maxed out credit cards. So it’s very easy for those people to sit on the side: “Oh, you should be sharing your”—really? Do you want to share the losses I had? When I come up short for cash—do you want to give me $50,000 and borrow against your house?
John Abrams:
That is so true, but I have done all those things in spades.
Jay Goltz:
I’m sure you have. I’m just suggesting that the messaging is—
John Abrams:
And I have found something, Jay, that is counterintuitive, in a way. But when you engage the employees in that way and that deeply, what you get is, you get all the wood behind the single arrow going in the direction, on the course, that you’ve charted.
Jay Goltz:
I buy that.
John Abrams:
Now, are you familiar with Jack Stack? Are you familiar with Jack Stack, the Great Game of Business?
Jay Goltz:
Sure, absolutely, I’ve talked to him about it. That’s where I got the first idea about ESOPs, from Jack Stack.
John Abrams:
So, open-book management is a form of democracy. You’re sharing it all. You’re sharing it with everybody, but the reason you’re sharing all that stuff is to give them a way to understand what they need to do and how they can help to make the business successful.
Jay Goltz:
And I would argue, substituting the word democratize with participative would solve the problem. Yeah, they should be participating. Absolutely, no problem. I just think there’s baggage with that word.
John Abrams:
Let’s do that.
Jay Goltz:
Okay, good.
Loren Feldman:
Just to be clear, Jay, I think, created a formulation where he suggested that if the business was deciding whether or not to open a store, somebody on the loading dock would have an equal say to Jay. And I don’t think that’s what you’re envisioning, John.
John Abrams:
That’s a great illustration. So you have 130 employees. If this becomes a worker co-op, you will probably decide—I mean, the way you do this is, you create a small steering committee that you choose who are trusted employees and leaders in the company to figure out the nuts and bolts of this transaction. And that group of people is going to figure out: “Well, how large should our board of directors be?” And maybe that’s going to be seven people. Maybe it’s going to be 10 people. Yes, those seven to 10 people would all have an important voice in whether you opened up that next store. But those people are going to be the people that you would want to be involved in that decision. They’re not going to be just anybody.
Jay Goltz:
Okay, no, like I said, I haven’t given up on the concept. I’m just telling you, reading stuff, and being a business owner, when I start hearing some of those words, I think, “Here we go again.”
John Abrams:
Wait a minute, Jay. In the very beginning of this conversation, you attacked big business: “I would never sell to private equity.”
Jay Goltz:
I don’t want to, but I’m not attacking it. I just don’t want to do it. I’m not attacking it. If somebody wants to do that, go knock yourself out and do it. I couldn’t care less. I’m not attacking it.
John Abrams:
I have a different view, but it doesn’t matter.
Loren Feldman:
Jay, I don’t think you’re arguing in favor of pay inequality. I think you’re arguing that small businesses are not responsible for creating that problem—
Jay Goltz:
Correct.
Loren Feldman:
And shouldn’t be responsible for solving it.
Jay Goltz:
Exactly.
John Abrams:
Jay, what’s the difference between the lowest-paid person in your company and the highest-paid person?
Jay Goltz:
Uhh, five times.
John Abrams:
You are a worker co-op. I’m sorry.
In Episode 264, “You’re Shutting Down a Profitable Business?” Mel Gravely brought closure to a story he’s been sharing in pieces over the past year. You may recall that he bought a facilities maintenance company a couple of years ago that he was convinced he could scale—only to discover that it was hemorrhaging money. Mel dug in, diagnosed the problem, fixed it, bought out his partners, turned the company profitable—and then decided to shut it down. Why close a business that’s making money? Mel explained.
Mel Gravely:
I’ll start with the end of the story. On July 31, I ceased operations of this company that I bought back in March of 2023. And it is a facilities maintenance, facilities management company. Think: everything that a facility needs, but not including the environmental things. So we didn’t do janitorial or things like that, but lawn care, snow removal, gutter cleaning, patch and paints, small refreshes of conference rooms. I am a B-to-B entrepreneur. That is what I know the best. I’m not a business-to-consumer guy. So that’s the context of who I am and what this business was.
So let’s talk about what happened. Almost after day one, I realized that I had partners who weren’t interested in scaling the business. They were having their own internal conflict. They had gone from generation one to generation two. There were four young individuals who were first-time business owners. They had been in the seat for six months prior to me buying in, and they just struggled with themselves. So it made them unavailable to help us scale this.
Number two, by May, we had put together the financial statements that they did not have when we bought them and realized that they lost money in 2022, the year before we bought it, to the tune of close to a million dollars. And year to date, through May, they were on track to lose another million that year. They were at about another half-million-dollar loss through May of 2023, the year we bought it.
And meanwhile, the partners are just really going after it. They’re having different challenges. And so what I did while they were struggling is, I went about trying to get this thing back to profitability. I like to do this. We went to the customer, and we said, “Hey, here’s the open book. Here’s everything that’s going on.” And, by the way, when we got the financials together, Loren, Jay, I saw something I’d never seen before: negative gross margin. I didn’t know that that was possible. It really means that we were paying the customer to do work for them. We were losing close to $2,700 a day, paying the customer to come there and do work.
So how did that happen? Labor costs have gone up 22 percent since Covid. Our bill rate to the customer had gone up 4 percent. The customer had asked us to assign additional management staff and safety staff in various locations for things that they wanted to happen. We did that with no means of recouping it. And it was just a challenge. So we went in front of the customer. It took us months, but we renegotiated a deal, the terms of our contract. They were very willing to do that when they saw the evidence, and by July, we had a business model we thought would work. So we ended 2023 profitable.
We went into 2024, but again, by this time, our partners are really struggling to get along with each other. They decided that the only way out was to sell their business. So they packaged it and put it on the market. I was concerned about being left with a new owner I didn’t know, a new partner I didn’t know, so I put mine on the market next to theirs, and we decided we’d sell them together. So for the next six months, we were trying to sell these businesses. We finally got a buyer and worked on that for a few more months. The deal fell through at the last minute. By this point, it’s just a drain on relationships. It’s a drain emotionally on people. We’ve got a profitable business now, so I decide I’m going to double down, and we’re just going to run it. My partners continue to struggle with each other.
Meanwhile, what I haven’t talked about is the emotional roller coaster this is putting myself and my wife in, because we had to put another million dollars into the business. As 60-percent owner, I put in 600 grand. My partners put in four just to get the balance sheet back right. And so we’re hanging out there financially, and I’m not sleeping, and it’s pretty stressful. And my wife just finally says to me, “I don’t care what it costs. Just get out.” And I thought: Man, super clarity. Her point is that, at some point, it’s just time to get out. So I’ve got a profitable business. My wife is done. She’s just like, “I’m finished with this. Get out.” So I pulled our advisors around, tax advisors, lawyers, my team at Triversity Construction, and we came up with a plan.
Loren Feldman:
Mel, remind us, Triversity is your main business that you, in the past year, stepped back from, moving from CEO to chairman. Someone else is running the business, but it’s a much larger business.
Mel Gravely:
It’s a much larger business. The business I’m talking about today is… last year, we did about $8 million. Triversity will do $170 million. So they’re much larger and a very, very talented team. So we pulled all that together, and we came up with a strategy. So I bought my partners out for less money than they had put in in that last tranche. So they put in 400 grand, and I bought them out for less than that. So I’ve got some positive equity from that. We’ve got a profitable business with equity on the balance sheet. And we just decided to bare-bones this thing and run to the finish line and close it in July.
So I announced that to the customer in March to give them time to plan. They asked me for an extra month, because I wanted to go through June, which was my current contract year. We went through July to give them an extra month because they needed a little bit more time. And we just stripped all the cost out of it, ran very lean so we could maximize profitability. They went through an RFP process, picked another supplier. We worked on a transition with that supplier. They hired all of my people, except for two, and now we’re in the cleanup phase. So cleanup phase, meaning making sure all the invoices are right, making sure everyone’s paid. But I think, based on the projections that I’ve got in front of me, that we should be able to come out of this thing, and I still have a shirt. It may not be on my back, but I still have a shirt. [Laughter] So that’s the chronology of it, and we should be done with this by the end of the year, completely, we think.
Loren Feldman:
How did you make the decision to just close it down, as opposed to taking another crack at selling it?
Mel Gravely:
Yeah, I did take a quick drive-by on selling it to people who were familiar with this customer, particularly. You know, when you’ve got one customer, when you’ve got a contract that is, on paper, ending this coming June—which we would have re-signed but I hadn’t re-signed it yet—and you’ve got payment terms that are 120 days, you’re not a very attractive buy target.
In Episode 266, “Your Employees Want a Career Path. Can You Keep Them?” David Barnett, Jay Goltz, and Kate Morgan react to a Reddit post from an owner who is really struggling with managing employees. “Is this just what having employees is like?” the owner asks. “Please tell me I’m not the only one losing my mind.” I started the conversation by reading the post.
Loren Feldman:
“I don’t even know what to do anymore. We went from a small team of three to eight since April. And I thought hiring would solve problems, but really it just created new ones. Like now, instead of being stressed about delivering, I’m stressed about training people to do the work. We had this new guy just joining. Seems smart with a good portfolio, and spoke well during the interview. I put off a complete day to talk with him about everything that we do, tools we use, our process, file, organization. He’s proactive, asking questions and taking notes, which made me think, finally, a good candidate amongst them.
“Next day, he called me over to his desk, and he asked me something about where we keep docs, which I clearly had explained to him yesterday. Are you kidding me? It took him just a day to forget that, and it’s not just him, because someone who’s been here a month still sends email to the wrong person, and there’s many cases like that. My business partner says we need better documentation, but when I’m answering the same question on repeat, being behind on client work, and starting to get sharp with people who are just trying to learn, I know this is an investment and that after six months, they’ll be solid. But right now, this is very time consuming, and I’m not sure it’s worth it.”
David Barnett:
Yeah, I can answer this. He’s investing in the wrong place. Because every business has systems. The problem with his business is that the systems are in his head, and he hasn’t properly documented how they do things. And he doesn’t have some kind of playbook or company wiki, or—you know, these things go by different names.
But you should be able to sit down with a new person and say: Here is the flow of how we handle a client file, or how we manufacture our widget, or whatever it is the business does. We go through these various steps. And here are the different people in our organization, and here are the job descriptions and the roles that they cover. And here are the tools that everybody uses. And this is your role, and this is the stuff you’re going to be doing. And here are the tools that we have established for doing those roles. And it’s all right here, because nobody can drink from the fire hose in one day and learn everything about a business and expect to have it top of mind.
There’s always going to be that need to refer. “But where did they say they did this? Where’d they say they did that?” And if, instead of spending a day trying to teach someone everything, you show them how to use your documentation so that they can find what they need on their own, or know what other people in the company are doing the same tasks, maybe they can go talk to their colleague instead of the boss, right? That’s what’s missing in this organization.
Kate Morgan:
Yeah, I would agree 100 percent. For my team, we are so well-documented. I love it because I have my own specific track that I train new employees in, but then I can push it off to everybody else, so I don’t have to deal with people. Because I’m not the most patient person.
Jay Goltz:
I think that is incredibly valuable and right. There’s another piece of this, I wonder, though, which is: In addition, did he check their references? Where did they come from? Maybe they were just fired from their third job because they can’t remember how to do it. I don’t know.
Loren Feldman:
It’s interesting to me that he said he thinks they’ll be solid in six months, which suggests that maybe he did hire the right person.
Jay Goltz:
Why does that make you think he hired the right person?
Loren Feldman:
He thinks they’re going to be good down the road.
Jay Goltz:
Maybe he’s wrong. I get it. I get it.
Loren Feldman:
He’s frustrated that they’re not picking it all up right away, as Dave said, despite not having the processes in place.
Jay Goltz:
But he emphasized that he spent the whole day with them. And my argument is: That’s part of the process. The other part is to find out: Why did they leave their last job? He didn’t mention they got great references. I didn’t hear that part of it. So I don’t know that that isn’t part of the problem.
In Episode 270, “Welcome to Employee Ownership! (Without the Hype),” special guests Kris Maynard, co-founder, and Justin Jordan, CEO, of Cathedral Holdings, a 100-percent employee-owned ESOP, talk candidly about their ESOP journey. They are big proponents, but they don’t sugarcoat it.
Loren Feldman:
Kris, if I recall correctly, you did have an issue shortly after you sold to the ESOP. And I only know this because you shared it publicly previously. I think your business did suffer for a while. And if I remember correctly, you even had to kick some money back into the business. Am I right about that?
Kris Maynard:
You had to bring that up, didn’t you, Loren?
Loren Feldman:
Yes, I did. [Laughter]
Kris Maynard:
Yeah, we entered, right after the transaction, what we affectionately called Death Valley. And for whatever reason, in the fall of 2011, we hit a bit of a drought in terms of sales and performance. Anyway, for the first time in our lives, we were under bank covenants. We’d taken some level of debt for the transaction. We seller-financed a good amount of it, too.
But I found myself starting to really perform differently and run the company differently than we had previously. One of the reasons we didn’t sell to an outside suitor, a competitor, or a private equity, or anything like that was because I never wanted the numbers to determine how we behaved. But I found myself doing the exact thing that I didn’t want if a private-equity-owned company or a competitor had bought us. I was micromanaging our sales team, nagging them about closing business and orders.
And I remember distinctly sitting in front of our banker one morning. We had a monthly meeting, and we had failed covenants, and he looked across the table at me. He said, “Kris, what keeps you up at night?” I said, “Are you kidding me?” I said, “Every time I close my eyes, I see your face.” [Laughter]
You know, it was this haunting feeling. And you’re right, my partners and I got together, and I just said, “Guys, listen, I can’t live like this. I don’t think it’s good for me. It’s no good for our business. Let’s kick some money back to the bank, get outside of these covenants, and get back to doing business the way we’ve always done it.” And we did that. And once that pressure was off of us, we’re back off to the races again.
Loren Feldman:
Did you think there was any possibility that going ESOP was responsible for the decline in performance, or was that just a coincidence?
Kris Maynard:
I think there a level of, probably, disengagement from us as selling shareholders and senior leadership, in terms of a distraction for six or eight months, nine months, of that year, really being heads down on trying to get a pretty complex transaction done. So there was an element of that, I think, Loren. I think some of it was, there was a bit of bad luck, in terms of timing. But I think the important thing is that we recognized some of our mistakes, I think, and we had the wherewithal to get out from under a rock and get back to doing what we do.
Justin Jordan:
Loren, let me contribute a little bit to that. If you can imagine a business that had run for decades without debt—we had small revolver debt up until 2011, but in essence, no debt—no covenants, no debt. All of a sudden, you leverage 100 percent of your business—100 percent. Everything. It changes the way you think. It changes the way you run the business, how you manage the business, manage people. The pressure that debt brings—it’s no surprise to anybody—will change the way you behave. And that, I think, as much as anything, contributed, along with what Kris shared.
We closed in August, but the month of September and the month of October was one of those odd arrangements where the market was weak. We didn’t have the type of revenue we typically were accustomed to. That just happened to span two quarters, two quarters where we failed covenants. What started with a quarterly review became a monthly review, became a weekly review, to almost a daily: How are we going? How are we going to change this? And that’s where the generosity of the three selling shareholders allowed us to reset. When they brought a portion of their closing assets, which were pledged dollars, back, it allowed us to take leverage, which for us, our senior leverage was four times EBITDA. We dropped that down to three, and all of a sudden we were off to the races. It changed everything. Debt is the issue.
In Episode 272, “I Have to Figure This Sh*t Out,” Jaci Russo told Liz Picarazzi and Ted Wolf about the steps she’s been taking to try to make sure her marketing agency doesn’t get left behind by AI. For example, she took a class that helped her create AI agents that almost immediately started freeing up her time while also producing client leads.
Jaci Russo:
So one of the things that I built during class was a new business tool. I’ve been spending a lot of time completely revamping our new business program here at the agency, and I’m able to save—I’m gonna say, conservatively—30 hours a week now.
Loren Feldman:
Of your own time?
Jaci Russo:
Of my personal time, which, that’s a lot. And so what we have built is a tool that, every day, what it ends up doing is delivering to me an incredibly well-vetted set of new leads in specific industries with an incredibly detailed assessment.
Loren Feldman:
Okay, start at the beginning, Jaci. Thirty hours is a lot of time, and new leads are something that every business cares about. How does this work?
Jaci Russo:
This is what it does—and I’m going to use business banks as an example. It will go out every day and find for me 10 business banks that completely fit the criteria of what the perfect client is for me. And that criteria is very detailed. It will find the person in charge of marketing. It will find their LinkedIn profile. It will find the company website. It will find their competitors. It will compare them into a BANT score: budget, authority, timing, and need, and then we added an F for fit. So it’s a BANTF score. It will rate them, and it will write a first draft email for me identifying specific things we’ve done that are aligned to things that they need, and throw all that into an email for me at 6 a.m.
Liz Picarazzi:
Is that working?
Jaci Russo:
Oh, yeah.
Liz Picarazzi:
Amazing. How is all of that information even publicly available?
Jaci Russo:
Well, I tied a bunch of tools together, Liz. I’m so glad you asked. So I have some scrappers, as one of my classmates called it—a scraper—and four different AI tools of different platforms, all working together in a daisy chain to deliver that information to me.
Loren Feldman:
And then you get 10 leads every day?
Jaci Russo:
Well, I chose that number, Loren. That’s one of the factors. You can just pick whatever number you want. But 10 is a good number for me, because I want to be more focused on quality over quantity.
Loren Feldman:
And what are you doing?
Jaci Russo:
Well, I’m connecting with them on LinkedIn, and I’m starting a relationship. I’m getting to know them. I’m reading what they’re writing. There’s still some human element, I think, to do a good job. I’m not ready to turn my entire life over to the robots.
Loren Feldman:
So you’re not just making a cold call?
Jaci Russo:
No, no, that’s not my business. Other people, that would make sense to them. But no, I will get to know them. I’m not just gonna slide into their DMs and say, “What’s up? You up?” There’s no you-up messages here. [Laughter] Now, the ones that make sense, we do invite them to be a part of our podcast, because we’re always looking for B2B marketers. But that’s not everybody. We only release a podcast [episode] a week. Like, how could I possibly keep up? And so it helps put them into different buckets of: They would be a good podcast guest. They have this immediate need right now. They have a long-term thing. Send them this material that you created a while back that would be relevant to where they are right now. It guides me through that process and gives me steps. And then I have another tool that, once the human—me—says yes, it goes into our CRM and there’s a whole bunch of automation that happens after that.
Ted Wolf:
So Jaci, would you say that that’s the equivalent of what your employees would normally be doing, or a person would be doing, but now the agent technology is doing it?
Jaci Russo:
I would tell you: yes, and. Not only am I doing it, but I have two employees who are also doing it, and we’re comparing our notes, because we all have different sets of leads that come to us, and we do different things with them. So we’re doing some ABC testing. And then I would also tell you that as this works, which we’re two projects in already—so, so far so good. So two new clients have come from this effort in a very short amount of time. And so no, now I’m going to have to start hiring to handle the new work that this tool is creating.
In Episode 274, “Three Branches, Three Brands: Anatomy of a Rebranding,” Rich Jordan took us inside a marketing challenge presented by his successful acquisition of home services businesses. In conversation with Shawn Busse and Jay Goltz, Rich explained how he wrestled with his options and ultimately decided to do a total rebrand under a new name. I asked Rich how he picked the name.
Rich Jordan:
So, you know, we talked about culture earlier, and shared mantras and how important this is to us. So, we have 10 core behaviors at Sanford—and across the other branches as well, but certainly most embraced at Sanford. And one of them, which, funny enough, was voted the team’s top core behavior, is: “Seize the high ground. Do the right thing, even when not easy or profitable.” And “Seize the high ground” is a little bit of a throwback to my military background and has a little bit of that flavor to it. And I mean, of the 10 core behaviors, I feel like we lean into that one more than any other one.
Of course, you know, we’re dealing with dozens of customers every day. You know, things go awry occasionally. We have to go back out, fix stuff, do stuff for free, refund money. Where another contractor might argue with you, and try to nickel and dime and split hairs, we really lean into that “Seize the high ground.”
Jay Goltz:
It always surprises me that companies don’t do that, that you don’t lose money once in a while. So, good for you. I’m sure that’s the major reason why you’re successful,
Rich Jordan:
I think so. I mean, I think that that core behavior, and a few other things that go behind it operationally, I think are a huge part of our growth story and our satisfied customer base. And in many ways, it’s one of those things that you want to try to be able to say things that your competition is not willing to say, right? And for us, one of those things has been, “We offer a lifetime workmanship guarantee.” Anything we touch, it’s done right, or we’re going to make it right. And we totally stand behind that.
Jay Goltz:
Whose lifetime, the customer’s are yours? [Laughter]
Rich Jordan:
Yeah, you know, I play pretty fast and loose, Jay, so I don’t know if you want to do it on my lifetime. So, that’s very much tied into the “Seize the high ground” core behavior, and certainly something we lean into every day.
That all said, now that I’ve given a quite lengthy prelude here, our new name is High Ground Service Pros, and it’s been really cool. I did the reveal of that name to the team about a month ago, and just seeing the buy-in from the team around that—the fact that they had been taking that core behavior so seriously, living that, and then now seeing it on the side of the truck. It was very cool, because I was worried not just about our customers, but I was also worried about the team and if they’re gonna like it, if they’re gonna buy into it. And the response was resoundingly positive.
Jay Goltz:
You know, you’ve really tapped into something that I believe my 116 employees buy into, which is: They feel good knowing we’re taking care of customers. I feel great that I took what my grandfather taught my father, who taught me, who I taught them: I feel great about the fact that my employees get it, that they want to take care of customers, and they’ve been trying to take care of customers, and they’re proud of that. And I think that’s what you’ve done. And I can see where they would be proud of that name, because they get it.
Rich Jordan:
I think one of the toughest things as a technician, if you’re working for the wrong company that doesn’t lean into that, is you’re standing in a basement with a homeowner with a broken furnace, and it might have been our fault, or maybe we installed it improperly. And then you’ve got to tell that customer that it’s another $1,500 to fix it.
Loren Feldman:
Rich, how did that name emerge? Did you have a whole long list of names that you considered? Did you test names? What happened?
Rich Jordan:
It’s kind of cool how it happened, actually. So we decided we were going to entertain this idea that we would change the name. And my branding agency came out on site for a full day, and it was the creative ad writer, like the copywriter, and sort of more of the sales and operations focused partner of the two. So they came out, spent the day with us from like 8am to 10pm interviewing me, some of my key leaders, the rest of the team, went out to dinner, really just immersed for a day.
And then they left, and we stayed in loose touch for a few weeks. And really, it was that creative just kind of like stewing on what he saw while he was here, and then he—you know, classic kind of marketing advertising—pitched me on a few names. And actually, I went into that meeting and I was like: “I hope these names suck. I hope he just brings me some names I can just shoot down.” [Laughter] I was like, “Because if we can stick with the Sanford name, that’s gonna save me like 300 grand on the rebrand.” And one of the ones that he put in front of me was High Ground, and it basically just knocked me over.
Jay Goltz:
You had me at hello.
Rich Jordan:
Yeah, basically. I think, verbatim, my response was, “You son of a bitch.” [Laughter]
And that’s it for part two. We’ll be back next week to start the year with a brand new episode. And if you enjoyed this podcast, don’t forget you can meet many of the podcast regulars at the 21 Hats Live event in Cincinnati. You can get more information at 21hats.com—or by emailing me at loren@21hats.com.
My thanks to everyone who contributed to the podcast this year. Happy New Year everybody!
