[00:00:04] Speaker A: Hello and welcome everyone. I'm Peter Lehrman and this is Master's in Small Business M and A. This show is an ongoing exploration into the vast and undercovered world of small business M and A, where we interview both the proven and the emerging owners, operators, investors and advisors whose strategies and methods for transaction success have been put to the test. The show aims to surface the nuanced intricacies, the gift key ingredients, and the important factors that can improve your decision making in your own journey in the world of small business. MA this podcast is produced by Axial, an online platform that makes it easier for business owners and their M and A advisors to find, research and privately connect with a diverse mix of professional buyers of small businesses. In addition to learning more about Axial, you can find this podcast, show notes, edited transcripts and many other related resources, all for free at Axial.
[00:00:59] Speaker B: Hey everybody. Welcome to Masters in Small Business M and A. I'm your host, Peter Lehrman. It's great to be back. I've got Nick Huber finally on the podcast. We have been hoping to do this for a really long time. Nick's book, Sweaty Startup is now almost out the door and that was sort of the final precipitating event where I just insisted, Nick, you got to come on. So Nick, great to have you. Thanks for making time. Congratulations on the book. Why don't you quickly just tell us a little bit about it and then we're going to jump into some other things.
[00:01:28] Speaker C: Thanks for having me Peter. It's called the Sweaty Startup and it's a book that I wish I had in my hands before I started my first business.
My goal is to give people a real dose of what business is like how to manage, how to fire, how to hire, how to delegate, how to market, and the mindset it takes to run a business. So it's a book I'm proud of. It came out a couple weeks ago and it's been a great journey, so I'm excited about getting it in the hands of folks. But yeah, the Sweaty Startup.
[00:01:54] Speaker B: Congrats man. And in particular, it's not really focused on glamorous tech company formation and founding.
[00:01:59] Speaker C: Right.
[00:01:59] Speaker B: It's focused elsewhere for the most part.
[00:02:01] Speaker C: It's not about the idea, it's about execution. That's what I believe about business. All the wealthy people I know started normal or acquired normal old fashioned boring businesses and operated them a little bit better. So it's about operating a company. Why people should trust me is I have three main big businesses. Bolt, Storage, Recost, SEG, Someware.com, about 325 employees across those three companies. It's been a heck of a journey. I've learned a lot.
[00:02:26] Speaker B: Well, we're going to get into it. And since this is largely a podcast focused on acquiring businesses, exiting businesses, building more valuable businesses once you've acquired them, I want to tell the story largely through the lens of acquisitions and transactions, which will sort of mix operating with acquisitions.
So let's just get right into it. I'm interested to just have you take us through, like, some of the more formative M and A experiences that you've had. This doesn't have to be huge, transformative acquisitions for any of your companies. I really want to understand what are the acquisitions that you look back on and say, okay, I really, really learned a lot as a result of this. Or it really developed and, like, informed my point of view and my perspective on X, Y and Z. So we'll go through a couple of them. I'm going to spend a lot of time on somewhere.com because I think it's one of the more interesting ones to really pick apart. But we can start elsewhere if that traces the chronology a little bit better.
[00:03:19] Speaker C: So, 2011, I started my first business. Founded a company called Storage Squad Pickup and Delivery, Student Storage. It was a brutal business. Ran that for five years. By late 2015, I had enough cash to build a self storage facility from the ground up with my partner, which we did. That deal was a transformative deal for me. We built a building for 2.9 million bucks. It's worth 10 million or so today. Then we went on to acquire 62 additional self storage facilities from 2016 through to 2023, 2024, and even this year we're buying a couple. So it's been a journey to build a real estate private equity company. Started a business called Re Cost Seg in 2022 that's growing really fast and on pace to be a fairly large company.
And then I acquired someware.com on May 1st last year. So a little over a year ago. And that was a $52 million acquisition. I raised $20 million from 38 investors. Learned a lot over the last year, for sure.
[00:04:14] Speaker B: You said 62 acquisitions in the self storage business, right?
[00:04:18] Speaker C: Yeah, we built our first one, tried to build another one, got turned down by zoning, tried to build another one after that, tried to build another one. And then we realized that, hey, these things aren't too expensive to buy.
Some of these early deals that we bought, so I didn't have any Access to capital and real estate's the most capital intensive business in the world. So we strung together some of our own cash in 2018 to acquire a little three property portfolio in Erie, Pennsylvania that we bought. That was severely mismanaged. We bought it for 500k at public auction. It's worth $2 million today. My partner and I bought it without any investors. That's been a game changing acquisition for us.
[00:04:53] Speaker B: Was that your first acquisition after the self storage facility that you built?
[00:04:57] Speaker C: It was, yes. It was going to public auction and we convinced them to, hey, we can wire a half million bucks today, like see if the guy will take it. And he did. We went to Erie, Pennsylvania. There was 140 units in this portfolio and there were maybe 20 paying customers, but the rest of the units were locked and forgotten about or squatted in. So we had to go in and turn around operations and lease that building up. It was doing two to three grand a month of revenue when we bought it. Did $22,000 last month of revenue and it's worth two to two and a half million dollars. So that was a game changer and kind of set us on the track of, hey, buying these operating companies and disguised as real estate in a very tax efficient way and turning them around and operating them very well. That can be a really good business. And so it's mini PE, right. We've only raised about $45 million to buy real estate, but it's been great and we're kind of primed to really grow that business over the next couple years.
[00:05:47] Speaker B: How did you find out about this Erie business? Do you remember, like, how the mindset shift occurred in terms of thinking about just building these self storage units versus moving to like an acquisition centric model?
[00:05:58] Speaker C: Yeah, we put about 200 grand into permitting and planning and engineering and architecture work to try to get two big developments permitted to build. One in Marcy, New York and one in Cortland, New York. Both of which the town at the finish line turned us down and said, hey, you cannot actually do that on this site. So, man, we were really rubbed the wrong way. We had wasted a lot of money, a lot of time in these town meetings. And we started looking at LoopNet and we found a little bitty business in Erie, Pennsylvania, listed on LoopNet that was going to go to auction two weeks later. And we moved quick and drove over there and analyzed the properties and we said, hey, we can't go wrong buying this for $20 a foot. We need to go make this happen. And if we Operate this thing. Well, good things will happen in terms.
[00:06:39] Speaker B: Of like operating that business once you'd acquired it. Who was doing that? Was it you? Was it your partner?
[00:06:44] Speaker C: It was me. I mean, there's videos of me literally grinding locks in the eerie winter to turn that building around. I answered the customer service calls at that company until 2019, 2018, when we hired our first international employees. But yeah, today we have head of sales, head of finance, head of underwriting, head of acquisition. We have 55 employees at our real estate company. So it's evolved into a business that I'm still very involved in, but I don't answer the phones anymore for sure.
[00:07:12] Speaker B: Could you talk a little bit more about like just how it went from acquisition number one to now where it is today? It sounds a lot like any other roll up of an operating company. Even though it's real estate centric in terms of being storage business, it doesn't really sound like it's really that different from doing a significant amount of roll up activity in any operating company category as well. So what are the seasons of maturity of Bolt storage from Erie, Pennsylvania to today? You have 55 people at the company today. Can you look back on that and lay out maybe the big milestones of how it went from what it was then to what it is today and how you got there?
[00:07:49] Speaker C: Super scrappy at the beginning because we didn't have the one thing we needed, which was a pile of cash behind us, to go roll these things up. So our second acquisition was a old glove factory in Gloversville, New York, which we still own today. 45,000 square feet of storage. We bought it for 1.2 million with a $900,000 bank loan and 300k of seller financing. So no cash in. We bought the building.
Our next One was a $470,000 acquisition in Pittsburgh, Pennsylvania. One little 11,000 square foot property. The one after that was a little deal in Shipponville, Pennsylvania, then one in Troy, New York.
By 2020, I started to get in the room with some investors through my social media work and some of the other stuff, and started to raise a little bit of money. We raised 15 million bucks in 2020 to buy, I'd say 15, 16 properties.
2021 things really rocked and we got access to capital. We raised $23 million and bought $50 million worth of storage in 2021. And that's when the company started to really explode.
[00:08:50] Speaker B: Can you talk about the evolution of the team behind the business separate from just the capital raising milestones?
[00:08:56] Speaker C: It was unique because we were running really three businesses. We had the acquisitions arm which gets paid acquisition fees on what we buy. Where we had a cold caller, we had a head of acquisitions, we had underwriters. Then we had a PE arm where we had to send investor relations. We had to make sure all the tax documents were in order. We had to do the reporting, run the capital, raised part of the business on the back of Juniper Square. And then we had the management company and these were the folks in charge of keeping our properties clean, answering phones, renting units, running marketing, updating our website. So we were really running three businesses at a time. But it was all a ragtag team of me and my partner wearing a lot of hats and us building out that business. Today, they're separate entities and they have management at each company. But it was an evolution to get there for sure. So today we have a head of customer service and sales team in South Africa. Just converting our call center from Philippines to South Africa and hiring a head of sales in South Africa increased our conversion rate from 30% to 42% when customers call us to rent units. That has been a total game changer for us. We're learning a lot about building out the team. But our finance, we have an underwriter, two underwriters in Colombia, Latin America. We have head of finance in Johannesburg, South Africa. We have another analyst underwriter in Egypt. It's a worldwide team for sure.
[00:10:12] Speaker B: Did it start that way or is that something that's been changing?
[00:10:15] Speaker C: It's been changing the last three years as I've gotten more comfortable building worldwide teams through somewhere.com we're going to come.
[00:10:21] Speaker B: Back to that one. That's a big topic, is underwriting core to making good acquisitions of storage businesses. Is that the core role there?
[00:10:29] Speaker C: When we identify a potential seller anywhere in the country really east of the Mississippi river is where we're buying. We run a full 5, 7 year cash flow projection model on what we think we can do with the property. We look at the unit mix, we look at where rates are today, we look at where we think rates are going to go. We look at all of our expenses, build out our own expenses based on our portfolio, add in our management fees, add in revenue management and growth, add in leasing trends of move ins, move outs, and we build effectively a 15 tab Excel model that tells us what we think we can do with this building and therefore what we can pay for it. Then we make an offer. We send an LOI to the seller. It goes under contract as soon as it goes under contract.
That's when it shifts over to our due diligence team. And then closing day is when it transfers over to our management team. So all three companies touch each asset. It's a wild thing.
[00:11:14] Speaker B: Where are you in that process today? Obviously you were like the tip of the spear for a long, long time and your partner was too. How involved are you in that whole deal? Sourcing deal, diligence, LOI late 2022 is.
[00:11:28] Speaker C: When we acquired a portfolio in Abingdon, Virginia. It was a $9 million deal and it's the first one that I didn't find. I didn't talk to an investor, I didn't talk to a banker, I didn't talk to any attorneys, I didn't talk to the seller and I didn't visit the property. Now our team was on site. Our team built the om. Our team took meetings with investors, our team raised the money from bankers. But that's the first one where the only thing I did was on our weekly acquisitions call, they're like, hey, we're really close on this deal in Abingdon. I looked at it and said, oh yeah, this is a great deal. We analyze it together and I approved the 9 million purchase price.
[00:12:04] Speaker B: That's amazing. That's an incredibly high level of delegation running any business.
[00:12:08] Speaker C: Things happen and you get pulled back in for sure. But I have some super talented people.
[00:12:12] Speaker B: Can you talk more about that? Like where does the team need to be really talented in order for you to have the role that you just laid out for the 9 months dollar acquisition? What do you need to have in the organization that's great at what they do so that it's not bottlenecking with you?
[00:12:27] Speaker C: It's a South African cold caller that calls the storage owner and sets the appointment with my head of acquisitions who lives in Augusta, Georgia and he builds rapport with that owner. He presents the loi. He gathers documents needed for the due diligence. He's a sales guy at trade.
[00:12:42] Speaker B: You're head of acquisitions.
[00:12:43] Speaker C: Head of acquisitions. His name's Wes. And then Kevin is in Boston. Came from a banking background. Good friend of mine, he's my head of finance and he's the one who basically dealt with the bankers, took the investor meetings, approved the offering memorandum. Because when you buy a deal, you have to come up with all the cash. You got to raise 30, 40, 50% of the purchase price in cash. Then you have to talk to the bankers and get them to fund the rest. There is a ton to coordinate throughout that process. Kevin runs point with his team. He's got two Colombians, a Filipino and an Egyptian and a South African on his finance team, basically to help him with that entire function. And then, yeah, once it's rolled into our ownership group, on closing day, we wire the money. We own the building. Our property management team has already done the work so that the sign is changed that day. Letters go out to all the tenants, phone calls and texts go out to all the tenants. We roll them into our software and it's off to the races. As far as a new vendor, maybe it's the same vendor to do gravel pavement repairs, door repairs, fence repairs, weed control, fertilization, lawn care, snow removal, pest control, all the vendors that we need at each property that we own.
[00:13:48] Speaker B: It's really amazing from the public auction to get to that level and to get to that scale. What are the returns that you're trying to target for the overall portfolio when you're underwriting and making an offer? What are you trying to shoot for in the way of returns? Obviously, this is not a solicitation or anything like that. I'm just trying to get a sense for. What are you hoping for.
[00:14:07] Speaker C: This is where I tell the not fun part of the story.
We bought $50 million in 2021. We bought $25 million in 2022. We bought $6 million in 2023. We bought $3 million in 2024, and we haven't closed on a deal in 2025 yet. The market ran away from us. What sellers wanted was 2021 prices when interest rates were 3.75% and now they're 7%. We like to buy to a 10% unlevered yield on cost.
When we stabilize a building, whether that's three years down the road, five years down the road, maybe we stabilize it at 8% unlevered cost if it's in a really great market and it's a really high quality asset. But the deals to buy were really good in 2017-2018-2019-2020 2021. Even the real estate market has gone into chaos with interest rates doubling. A lot of people who did what I did and bought a lot of storage in 2021 are not going to make it. They're not going to get through their refinances. They're calling capital from their investors. It's a total nightmare. I'm proud to say that all of our acquisitions in 20, 20, 21 and 22, we refinanced without a single dollar cash in from our investors, which I'm really proud of.
[00:15:13] Speaker B: How are some Able to pull that off and others not.
[00:15:16] Speaker C: We were very disciplined about what we paid. We could have bought a lot more, just paid more money. We used 50% debt starting at about beginning of 2022. So we put 50% cash, 50% debt into a deal instead of levering it up to 70%.
And we ran the properties well. I mean, Q1, 2025, public storage and Extra space storage. They reported same store revenue dropping across their portfolio, meaning the Same property revenue 2024 to 2025 in Q1 dropped about 1%.
Our revenue Q1 versus Q1 last year is up 14.1%. My management team is good. We were able to add enough value to these properties to put debt on it, to replace all the debt at double the interest rate, which I'm proud of. Now. Are we missing pro forma? Is it still stressful? Absolutely. All real estate is in chaos today, but we are poised to weather the storm well and also grow on the other end of it.
[00:16:11] Speaker B: Is it reasonable to say that part of the reason that the Somewhere acquisition which we're going to get into and go through that one in detail top to bottom, was it because you guys were kind of like pencils down and not really doing anything in real estate that you began to sort of explore other opportunities? It sounds like you've been much less active in the new interest rate environment on the real estate side, because I was going to ask you, how did somewhere come onto your radar? Why didn't you just continue to take Bolt Storage from, you know, 62 acquisitions to 620 acquisitions? Right. Why not just continue to just reinvest in what you've clearly developed a real expertise in. I'm just curious, sort of how the fork in the road emerged.
[00:16:46] Speaker C: Building worldwide teams is another one of the reasons why we've been able to weather this storm. I have 55 to 60 employees at Bolt Storage. I have five Americans. My overhead annually at my real estate PE companies. Under 1.5 million a year. Under 1.5 million a Year. A similar size management company, PE ARM in acquisitions team in the United States.
Five, six million dollars a year of overhead. We were able to turn off management fees on a lot of our deals and not hemorrhage cash. Like that's a massive, massive advantage. And it allowed us to weather the storm. Transfer that over to RA Cost Seg. That is a financial services firm for real estate investors that does cost segregation studies. We have two Americans on that team. It's growing very, very fast. Upwards of 750 on its way to a million dollars a month of revenue. Again, our competitive advantage is super talented people all over the world. So I was very comfortable with Somewhere's offering because somewhere finds these people. Because I became an affiliate customer back in 2021.
I became a minority investor, 15% equity in 2022, and then I acquired the entire company. When we can talk about that deal. But the crazy thing is everybody wants to run a holding company. It's the sexy thing to do. But I'm going to speak out of two sides of my mouth here, is that the majority of the people get really rich by doing one thing. So me focusing on storage was probably the smart idea. There's a lot of similarities and cohesion when you run more than one company because you figure out something that works at one, like building a sales team in South Africa that we
[email protected] and you put it over to your storage business and build your sales team and customer service team in South Africa and your conversion rates go up massively. And then you build your sales team at Ari Cost Seg in South Africa as well. And it's just the synergy of learning some of these things that really can impact multiple businesses. So the distraction was partly because real estate was slow and partly because I have a lot of ambition and I'm. At times I think things are going to be a lot easier than they.
[00:18:38] Speaker B: Are with Someware.com, just to make sure the audience is totally clear. Somewhere.com is a business that helps you hire remote talent from around the world for a whole range of positions. And the primary customer base that it serves are growing American headquartered companies, if I'm not mistaken. Right?
[00:18:57] Speaker C: Correct.
[00:18:57] Speaker B: You started out as a hardcore customer of them, looking for cost advantage and trying to just sort of solve a differentiated level of overhead in your real estate private equity business. You pulled that off to a certain extent as a customer, and then one day you became an investor in the business, and then one day you decided to become the control investor in the business. Right?
[00:19:18] Speaker C: Yeah. So November 2023, Marshall Haas, who owned 75% of Someware, he called me and said, hey, look, I have an offer on the table. It's not in writing. I have been in conversations with a PE group here in the states to acquire majority interest, 51% of Someware.at a $47 million enterprise value. It's like, what do you think you own a little bit of this business. Would you want to sell half your shares? And I ran some math in my head and it was 3 million bucks. Maybe 2 million after tax. And I was like, okay, that's not generational wealth, but that's a big money from a guy from Southern Indiana. I don't know. It's one of the best businesses that I've been a part of, and it's changed the way I do business.
So I decided to go big and convince Marshall to sell the company to me instead.
[00:19:58] Speaker B: So let's get into that. I was reading some of the notes and some of the manuscript last night and this morning. That all took place in roughly 41 days. Am I right?
[00:20:07] Speaker C: So from the time we went under contract to the time we closed was 41 days. There was a little bit of time before that where Marshall and I were working out the details. So, yeah, he called me first in November and we closed on May 1. So it was still about six months. But from under contract to raising the capital to closing was all very quick. I learned a ton. It was a hell of a whirlwind.
[00:20:25] Speaker B: What were the thoughts going through your mind at this time, and where were things with Bolt Storage and how are you thinking about the competing priorities for your time? As part of this whole decision to.
[00:20:34] Speaker C: Acquire Somewhere, my Bolt Storage team was doing really well. We had a head of finance that I trusted immensely. We had a guy from Columbia who we'd hired a couple years earlier through Somewhere, who is basically running Bolt Storage today at this point, just some phenomenal talent. The business was in a good spot. And I said, hell, let's go after this thing. Little did I know that it would be as much work as it was.
Business will humble you for sure. There's been difficult things and good things about it. I don't know why I decided to do it, but I did.
[00:21:05] Speaker B: So the sourcing story behind this is clear. You were a customer of the business. Because of some of your social media heft, you were able to essentially develop an affiliate relationship with Somewhere, and that led to this minority investment position that you had.
That's the sourcing start of the story in terms of underwriting it and pricing it. Did you guys just work off of the existing offer or did you go through your own work there?
[00:21:29] Speaker C: The business was growing really fast, and the value that we came to was between a 5 and 6 multiple for the company, times annual EBITDA. But I know it needed a lot of work and it needed a lot of tlc. And there are things that I wanted to change about the business, which we can talk about now. But the value was what we considered fair, where I thought I could raise the money to acquire the business and where I thought there was a lot of value upside in the future if we were to really grow it.
[00:21:50] Speaker B: Can you just talk through the broad brushstrokes of capital structure and how Marshall thought about rolling and other considerations?
[00:21:57] Speaker C: Yeah. So at first I thought that I was going to be able to get a 30, 40% carry on the equity and that it was all going to be great. I realized that real estate is not the same as small business and the risk profile is different and therefore the demands of the capital are different. So I realized quick that I was a 20% promote. I guess promotes a real estate word, but a 20% carry when I got investors whole was about all I was going to be able to get. Now, if I'm only buying 51% of the business, doesn't take basic math to understand that if I buy 51%, raise a bunch of cash, I'm going to get another 10% equity when it's all said and done. But I got to raise all this cash. I got to put my name on the line. I have to acquire this business. There's risk associated with that. I already owned 12.75%. I got diluted a little bit more when Sean Perry bought in the business in late 2023. But I had to beat my head against the wall to figure out how I was going to get enough meat on the bone for me to put my name behind this and do this deal.
So I owned 12.75%. And what we settled on was Marshall selling more than 51%, 58.25%. So therefore, I was going to control 70% when it was done, and there was going to be a 39.25% private equity tranche, meaning I'm going to raise a bunch of capital and buy that business. And that was about $20 million, get that cash to Marshall and then have a seller note of 18% on the top of it. That's directly to me, collateralized by the business. So that's kind of my carrot when it's all said and done. So 39% of the business that I did in the seller note blended promote. I had a 30% carry on some small checks, a 20% carry on the large checks. There's basically about 8% upside for me in that carry. If I get everybody made whole, then an 18% seller note, and I already own 12.75. So when it's all said and done, if I get all the investors made whole in the business and the seller note Paid off, I'll own about 39% of the business. That made it worth taking the bet and doing the deal.
[00:23:49] Speaker B: When did the deal close?
[00:23:51] Speaker C: May 1, 2024.
[00:23:53] Speaker B: So we're at the 375 day mark. You want to tell us about the last 375 days?
[00:23:58] Speaker C: It's been wild. So I realized a couple of things. A business that has grown extremely fast. The year before I bought it, it had doubled in revenue and it had hired. Another 40% of its headcount had been added. There was no structure put in place on how to manage the team, how to do all the things that are involved. In a recruiting business which has a lot of moving parts, you have to source talent, you have to place talent, you have to do have sales, you have to have marketing, you have all these different divisions of the business that I had to go in and start to rebuild.
I rebranded the business from supportshepherd.com to somewhere. Com. When we did that, all of our SEO vanished and half of our leads went away. The algorithm that was in place for me to make a provocative tweet on Twitter and drive 3,000 visitors to our website, that ability went away as well after the deal closed. So here we are with half the SEO, a business that needs structural changes and a lot less leads coming in from me and Sean, who are the main lead drivers of the business. That said, revenue in Q1 was up 26%, revenue in March was up 40%. Year over year, the business is healthy, it's growing, and we've actually done a ton of work to make these structural changes. So we're ready to go the next level. But I thought that it was just going to continue to be a hockey stick up and to the right. I didn't realize that when you buy a business and you're trying to take it from worth $50 million to worth $500 million, there's a lot of structural management changes that need to happen and it takes a little bit of time to do those things.
[00:25:25] Speaker B: Why didn't you realize that? Given that you'd learned that lesson already with Bolt Storage in so many ways, like 62 times over.
[00:25:32] Speaker C: Well, a self storage business, it's simpler. You're renting a steel box and we can actually buy a storage facility and increase revenue by 30, 40% year one if we do the right things, if we get our leasing dialed, if we raise prices to market rents, if we do some landscaping, do the right capex and improve the business. A true operating company with nothing but a web domain And a slack channel and 160 employees. It's a boat that is a little bit harder to move and takes more time to move than a self storage facility.
[00:26:01] Speaker B: We could spend some more time on all the work that you've done in the last year beyond just rebranding and the internal work and re gearing the organization in a bunch of ways.
Suffice it to say, if there's anything there you want to cover, let's definitely cover it. But you've been doing a ton of work behind the scenes to build somewhere into a better operating company over the last 365 days. Maybe at a minimum, could you talk about just what you track and what you care about, how you keep score of all this restructuring and rebuilding that you're doing? How are you keeping tabs on the quality of the changes that you've made and the nature of the progress itself?
[00:26:38] Speaker C: The main change that I made was I installed a South African management team. Head of finance, head of ops, revenue operations, head of sales and then operations managers, sourcing managers, head of growth. I've put 12 South African executives into the business, all from Johannesburg, Cape Town, Durban. So these are total studs that are amazing. And with that change to South Africa, we've also brought in 35 South African recruiters. Performance managed out a ton of people that were low performers from the company and our placements, what our customers were getting, what went from 80% Philippines and 20% Latin America. When I bought the business, that's where we were placing talent into US businesses. Last month it was 45% South Africa, 40% Latin America and under 15% Philippines. So I rebuilt the entire candidate pipeline of where we're actually finding people and talent. Now it's taking off like there's a phenomenal demand in sales and finance in particularly in South Africa. A salesperson in South Africa can close much higher percentage than a salesperson in the Philippines. So how am I measuring it? Every part of the company for me is a funnel. And I look at leads, they're cohorted by lead source, whether it's a referral, whether it's direct traffic, whether it's organic search, whether it's paid search, branded, whether it's Instagram, whether it's a ChatGPT lead, whether it's Google search, organic, social. I have these 20 buckets of where my customers are coming from and I track them all the way through the business.
When they go to each salesperson, what percent does that salesperson convert from meeting to started search and signed contract and I can watch that change over time by salesperson. So I know every morning when I log into Power Bi, I can see, oh, what's up with this salesperson here? That's closing our referral traffic which Normally closes at 50%. Why is he closing at 32% this week? What's going on here? Performance management, performance management. Right there, the alarms bells start going off. So then that's sales. Then I go into operations, into recruiting, and I look at every recruiter, what their production is. We have an AI tool in their inbox that every time a dissatisfied customer emails one of my recruiters, our management team gets a notification right then and we can dive in and we can help. That's really big for performance management.
And when I bought the business, nobody in the whole company was on commission. Even our salespeople and recruiters, they were just on a monthly salary. So we've converted almost everybody into variable comp so that our high performers get paid really well and are hyper motivated. So I just watch the customers flow through the business, watch them flow from salesperson to account manager to recruiter. And I can see the holes and I can see who's doing their job and who's not.
[00:29:11] Speaker B: I want to get into South Africa. And that decision, how you figure that out at a very high level in order to pull the trigger on buying somewhere.com, what is the implicit bet that you're making?
What needs to be true about the way the world is changing or what is happening in the world in order for somewhere to be somewhere between a good outcome and a spectacular outcome? What is the implicit bet or set of bets that you think you made?
[00:29:34] Speaker C: I made a bet on myself as an operator. Even though I had no business buying a $50 million business, I made a bet on the fact that you can hire remote teams all over the world.
Because I'm doing it. I have several of my companies with zero plans to hire any more Americans.
And I'm making a bet on the fact that the American worker is getting harder and harder and more expensive and more expensive to hire. If two things are true, that the United States worker will be in high demand and will never be short of a job, that's one thing that I believe fundamentally there's enough work to do in the United States that the Americans can't do it all. If that's true, and it's true that you can build a productive business using employees in Bogota, Colombia and Johannesburg, South Africa and Manila, Philippines, that's also true, then the demand for what we do at somewhere will be massive. And I know both of them to be true because I experience it in my other businesses. Now, that third one, can I do it? Can Nick Hubert do it? Am I the operator who can take that business to the next level? That remains to be seen.
[00:30:31] Speaker B: I'd love to just talk a little bit about the sales bets that you've made operationally and how you put your finger on South Africa. How did South Africa get on your radar?
[00:30:39] Speaker C: I had a guy DM me about a year ago, and he said, nick, I'm a growth marketer. I live in Cape Town. I want to work with one of your companies.
And he came in and he started working for my media company and moving a lot of things around. I'm like, wow, this guy is super switched on. He can lead teams. It's like I hired somebody from New York City, but I pay him four grand a month instead of 40 or whatever it would take for somebody at that level.
So then I hired a salesperson through Someware.com into bolt storage, and I started watching that funnel that we're talking about of watching the number of calls, listening to the conversations, looking at the conversions, and all of a sudden, I had one of my reps that was closing new storage calls 45% when everybody else was closing at 28%. Now, when you own $120 million worth of storage and you're leasing 15,000 units, and you're fielding 200 phone calls per day, and you're paying $100 per phone call for the phone to ring, if somebody can close 45% instead of 28, alarm bells start going off in your head. Why? Why? Why? Why? And I started listening to the conversations. I started listening to my South African sales rep talking to rural American clients. I started listening to my Filipino reps talk to rural American clients. And as soon as my Filipino reps said hello and introduced themselves, and they're great, and we still have some. They're amazing on our team. As soon as people heard the Tagalog accent that is in Philippines, many of them, not all of them, many of them got disrespectful. Many of them got a shorter temper. Many of them just knew that they were talking to somebody on the other side of the world. They were used to, like, press 4 on the bank of America call line, right when they were talking to my South African rep with the British accent. It was a lively conversation. They were asking them where in the United States they live and if they're from England. They're asking Them if they were from Australia, there was a different level of respect and regard for my reps. Now what that says about America is a little bit sad, but it was clear that also my South Africans had a culture of sales. They weren't afraid to be pushy. They were not afraid to put themselves out there. They were not afraid of rejection. A slight cultural difference. And now that's not the same for every rep, obviously. But I had somebody who's English as a first language, a smooth British accent or Afrikaans accent, which is also European, and I had higher close rates. So alarm bells are going off in my head. Holy cow. If I do this across my entire organization, we're going to lease more units and my entire portfolio is going to add millions of dollars of value. And so we turned the switch and we hired a head of sales who was a chief revenue officer at a company and had built a sales team of 15 people. Hired him for $4,500 a month base plus commission. Where that hire in the United States is $200,000, $250,000 a year higher. Started hiring high ticket
[email protected]. if you set up a call at somewhere.com, you'll listen to one of my high ticket closers in South Africa talk to you. Two grand a month base. Another thousand to fifteen hundred commission. Where we're looking at two hundred grand a year again for a high ticket salesperson in the United States. A closer, an account executive. So it started to change the way I think about sales. Sales talent is the hardest, most expensive talent to hire in the United States, period. And the second thing I found out about South Africa is that 30,000 South Africans every single year get on airplanes and go to New York City D.C. and work in Fortune 500 companies on tax and audit during the busy season.
Chartered accountant is like the doctor and lawyer of South Africa. Every mom wants their son or daughter to grow up to be a chartered accountant and go work for Deloitte or Pricewaterhouse Cooper, whoever else in the United States. There's a massive culture of these people that go back and want to work remote as controllers, as bookkeepers, as accountants for US based businesses for 3 to 5k a month when that same hire in the United States is 150 grand a year.
[00:34:16] Speaker B: I would love to talk about who's following what you're doing here.
What kinds of businesses are you seeing? Obviously you're probably at the bleeding edge of this. You own the business somewhere.com right? You were super early to it. But who's following you quickly. And I don't mean competing with you. I mean, who are the customers that you're
[email protected]. i'm not asking for logos. I'm really just kind of curious what kinds of organizations are blazing this trail alongside you? Because I'm just curious how profound this could be for sales talent in America. I want to talk about that a little bit as well.
What is the future of sales talent in America? What will great salespeople in America look like in 5 years and 10 years? If this kind of worldwide sales capability that you're championing and crusading for and proving out, if that really takes hold, there's some really interesting conversations just around, like, what is the future of sales and sales excellence for Americans? So, yeah, I'd love to just cover both of those. Maybe one after the next.
[00:35:15] Speaker C: It goes beyond sales. It's the construction industry is hiring in Bogota, Colombia, like crazy. They're hiring architects, civil engineers, estimators, billing specialists, project managers, property managers for $1,500 to $2,500 a month. We have an architecture firm in New York city that's hired 20 architects from us in Bogota, totally changing the way that they are doing business and their margins. We have law firms that are hiring paralegals in Brazil, Mexico City, Colombia, South Africa, and these are barred attorneys, and they're still states who type 80 words per minute. We can talk about typing speed because I'm so ate up with that when it comes to hiring. These are paralegals in the United States that are again, 70, 80, 100 grand a year that you're hiring for $1,500 a month in Bogota, Colombia, or Sao Paulo, Brazil. We have Egypt as a finance hub where you can find underwriters who can work magic in Excel or Power BI for 700, 800amonth. You have every position in the Philippines, Pakistan and India at a cheaper rate. You have an insane cost advantage in those countries. And then Eastern Europe is tech, like software developers. We're getting a ton of demand for software developers in both Latin America and Eastern Europe because you just can't afford to find great project managers and tech talent in the United States, where you can get three, four, or five grand a month for all over the world. So we have paving business, we have law firms, we have architecture companies, we have all kinds of home service businesses.
[00:36:37] Speaker B: When you guys think about how do I find the next paving business, how do I find the next architecture business, how do I find these organizations that for whatever reason are ready to Go kind of like full hook, line and sinker on global worldwide work.
Have you distilled the characteristics of these businesses and what the ideal profile is? What's leading to these? Is it a founder's orientation? Is it somewhere else in the organization?
[00:37:02] Speaker C: It's driven by two things. It's driven by an open minded founder who is tech savvy and it's driven by areas where it's extremely hard to hire. So we're doing a lot of work for law firms because it's impossible to find paralegals. We're doing a lot of work for SaaS companies because it's really expensive to hire account executives who can take video calls with high end clients.
It's a mix between open minded founder who either bought a business or took over a business or has a healthy business and somebody who has no choice because they've been looking to hire somebody in the United States for six months and they just haven't been able to make it happen.
[00:37:36] Speaker B: Are you seeing private equity owned American companies in your customer mix? Do you think that the portfolio of American private equity backed companies is going to embrace this kind of post acquisition, sales, team transformation and any indicators there?
[00:37:52] Speaker C: I do. I think that it's a massive competitive advantage to grow in a risk free way and to make a business more efficient and more profitable and improve margins. There is a play that we're seeing across many of our clients of hey, it's an intro from a portfolio owner and it's hey, talk to my CEO. The CFO is always the one who wants to talk to us because we can save the most money.
Intros from holding company owners or private equity firms to pass on cost savings into their portfolio of companies. And look, you don't have to use somewhere. I hope people are taking away where they can hire and who's out there instead of hey, just use someware.com.
[00:38:26] Speaker B: Yeah, for sure. I was also going to just really push us to come up with a bear case argument on this. How does this go horribly wrong?
What do you need to do in order to massively mess up when you hire remote talent?
[00:38:39] Speaker C: Yeah. Where it goes wrong is people hire all the time thinking about the cost savings and then the client guarantee because we do a six month client guarantee on every hire and the people who come back to us are just not remote first companies and they're not empowering the employees to do well. They don't have slack, they don't use video calls for meetings. So the people that they hire just out on an island and it's really hard to make somebody productive. As if you hire any employee and just don't give them any guidance at all. So that's where it goes wrong, is people don't have the right tech stack in place to have a worldwide workforce.
[00:39:11] Speaker B: Are there wifi issues, bandwidth issues? Are there talent and culture issues?
How does management evolve when you never see somebody, you never visit them in person.
You only spend time with them on Zoom. What's your experience of that?
[00:39:25] Speaker C: It's a $1500 flight from Cape Town to Atlanta, straight flight. So my South Africans have been here in Persian with me. My Colombians from Bogota. It's $600 flight, four hours from Bogota, Colombia, maybe six hours from Bogota to Atlanta. You can absolutely get these people in sight. One of my friends and clients.
[00:39:41] Speaker B: And you believe that you should.
[00:39:42] Speaker C: You absolutely should. Yes. Bring them in. Bring them in. I have somebody who hired an executive assistant in Columbia that gets that person on site for their two big events a year that they host and they help manage those events.
Now, some areas have issues, like the Philippines has cyclones that hit all over the Philippines. So during the cyclone season, you'll have folks wiped out of power for two, three days because of massive cyclones in South Africa. Their government is totally corrupt and incompetent to the point where they stole all the money from the people. And there's no power. Like there's load shedding during the hot season because they don't have enough electricity. So all of our people have to have battery packs that can run their computers, lights and everything for 12 hours. Colombia and Brazil are much more stable as far as Internet and electricity. Same with Mexico City. But the acts their English as a second language. So if you don't have people talking to clients and you don't need that level of professional maturity, I almost exclusively recommend latam because they're on your same time zone and the power grid is much more effective. But when it comes to executives, people who build businesses, Johannesburg is just like London. It's just like New York City as far as the work ethic, building businesses, the management people that you can find. But yeah, there's pluses and minuses to every city. Cape Town's six hours. Johannesburg and Cape Town are six hours ahead. That means my folks are working till 11pm at night. Not ideal. Bogota's on Eastern time.
[00:41:02] Speaker B: How does that work in terms of the time zone with M plus 6? Is that just something that the culture of people who work remotely, like, they.
[00:41:09] Speaker C: Understand that and they really, really, really want to earn us Dollars and they want to work remotely. The economy, it's 40% unemployment in South Africa. It's one of the most corrupt government issues that there is. It's terrible. So if somebody has an opportunity to work in the US they're all over it and they can design their lives around that pretty easily. Philippines is harder. You're working 8pm to 6am the worst. You can't see the sun. That's really, really hard. But then there's also entire office buildings and 20 million Filipinos work not in their time zone. So there's pluses and minuses all over the place. But generally speaking, the desire for the US dollar and the desire for the opportunity that comes with working for a US business is in phenomenally high demand for anybody with ambition throughout the world.
[00:41:54] Speaker B: Can you talk about the point of view that you have on American labor and American highly skilled labor, particularly in these worlds where you're recruiting really effectively for companies in all of these other places with huge cost advantages like you're a husband and father of I think three kids, right?
What is the right way for Americans that are young and early on in their careers to think about skill development if somewhere.com becomes like a trillion dollar company or like you and your whole.
[00:42:20] Speaker C: Category, it's already a trillion dollar industry. There's hundreds of companies with 500 million plus of revenue doing what we're doing.
[00:42:26] Speaker B: What is the right role for somebody who loves sales, who's fantastic at sales, somebody who's fantastic as an architect, somebody who's really interested and is an American? Where do you see the labor market going in America? I know it's a big question and I'm not suggesting you have a crystal ball, but I just think it's an interesting perspective that you probably are developing on this topic.
[00:42:43] Speaker C: I think I kind of know what I'm going to teach my kids to stand out and that is communication and decision making and the ability to look somebody in the eye and enunciate and have a little bit of charisma that can get you anywhere you want to go in the world. And so few people have it. Especially in a world of rising kids being addicted to video games and social media and just looking down at their phone and not knowing how to have a conversation with anybody.
[00:43:08] Speaker B: In the world of sales, do you think that sales in America just becomes the very highest end level of sales for very huge ticket sales and largely in person sales? Do you feel like inside sales and zoom and all of this just kind of moves over time to just sort of the lowest cost, highest skilled optimality point on the globe.
[00:43:28] Speaker C: No, I'm just take my little world. At my country club for example, I have 20 friends who run million dollar revenue businesses, acquaintances that I see around. I'd say two or three of the 20 have any international employees at all.
[00:43:44] Speaker B: And you think it'll stay that way or you think that it won't stay that way.
[00:43:47] Speaker C: It might shift over time, but what it's going to do is raise the quality of life and lower the cost for American consumers. Just like the lawnmower made us have to spend less man hours mowing the lawns. It's a blended worldwide workforce. The world is flat, but there will always be opportunity. And there's so much stuff that has to be done in person. There's so much stuff that has to be done. We have to build, clean, maintain, repair our physical world and all the people and people management that is involved in that. So I just think it's a long way from being a trend that is increasing the unemployment rate in the United States. I'm worried about AI a bit, but only because really smart people are telling me AI is going to crush my business. Not because logically I think AI is going to crush my business.
[00:44:26] Speaker B: Yeah, I mean I remember talking to you about the bear case associated with somewhere and its relationship to AI. I don't know, a year ago, two years ago, when you were looking at the opportunity.
[00:44:37] Speaker C: You and I are in a peer group together, we know each other really well. And I came into this one day and I'm like, guys, help me understand.
Everybody's telling me that AI is going to take over my business and take over all workers and no one's going to have a job. That's what I keep hearing from very smart people. But then when I look at the AI tools and I demo the AI tools and I try to get the AI tools in my business and I listen to the AI agents talk and I chat with AI bots on websites, I want to blow my brains out. It's not good at all. It's almost laughable listening to the AI voice agents talk to you. So I'm radically open minded about AI when it comes to the area where it can actually add a ton of value. If somebody tells me, hey look, you're 325 employees across your portfolio. AI is going to help them do the work of 600 people. I'm going to be the first to sign up. Or if it says AI is going to let you do the work that you need to do with half the workforce. I'm going to be the first to let half my workforce go, but I can't see it anytime in the near future.
[00:45:32] Speaker B: I think that the bull case on AI would probably be something more along the lines of the nature of the Internet. In the late 90s it was dial up. There was very limited content, E commerce was not really happening yet it's not.
[00:45:48] Speaker C: Where people went to get information or learn. There was no YouTube.
[00:45:51] Speaker B: That's right. And so if AI is in somewhat of a similar stage today as dial up Internet, yahoo.com, no Google, no Amazon, no E commerce, no reliable culture of transacting over the platform yet yeah, the Internet back then was not that useful.
[00:46:10] Speaker C: The limiting factor for AI will be electricity. We don't have a nuclear power grid built out and we don't have nuclear power plants that can fuel these AI companies that as a company are using more electricity than major cities in the United States.
I have a hard time wrapping my head around that and the demand and the pull for more electricity as they try to decrease latency is what do you call the correlation where it's squared, it's not linear. I have a hard time wrapping my mind around that argument that it's in such an infant stages that it's going to get phenomenally better over time. I tend to think about it like Elon Musk has been telling us for 20 years that self driving cars are two years away. It's not two years away.
[00:46:48] Speaker B: Maybe we could just wrap by just talking a little bit about how you might see the business evolving and see your own career evolving over the next five to 10 years. You know, if you were to wind back the clock to five to ten years ago, sleeves rolled up every single day, answering the phone call for Bolt Storage yourself, doing acquisitions, wearing every hat in the business by 2019 or 2020, somebody's calling you and saying hey, are we good to go and write a $9 million check on this property in the mid Atlantic? And you're basically like reviewing a 15 page model and then basically signing off with back of the envelope thinking now you're deep with somewhere five years out, 10 years out, what's the next horizon line for you? How do you think about spending your time? Where do you want to spend time over the next five to 10 years? I'd love to hear about that.
[00:47:32] Speaker C: I think first of all, what people need to understand if they've never raised a dollar of outside capital, as soon as you raise a dollar of outside capital, there's a new stress introduced to your life.
I feel different about other people's money than I feel about my own money. I feel more pressure and more sense of responsibility about other people's money than my own. So raising all the money to buy storage, raising all the money to buy the business, it sounds great and sexy and absolutely was necessary to do those deals. But I know friends with significantly less, let's say upside, but they own a lot more, something smaller, and they are sure as hell a lot less stressed than I am. I feel an insane responsibility to drive returns for my investors in both the storage business and somewhere.com so that's why I am so intensely focused on those businesses. And I'm also having a lot of fun learning about how to build because I think building frontline employees I've always been good at. I'm scrappy, I'm an operator at heart. But building teams that manage those people and executives that manage those people is a new skill that I am working on developing.
So I'd like to think that five years from now, somewhere.com is a $250 million revenue business. We have great talent, we have a lot of big customers that we've helped grow their businesses. And then I'm on to buying another company or doing something else. But I'm pretty singularly focused at the moment in my three main businesses, which is ARI Cost, SEG, Bolt Storage and Someware.com for sure, it seems like it's.
[00:49:00] Speaker B: Possible that the story could end similar to the way that it started, where you did it all with your own capital.
Now you're in a phase where you're using other people's capital alongside your own.
And maybe on the other side of the horizon line, you go back to running businesses purely for your own account.
[00:49:16] Speaker C: That's the goal. If I can grow somewhere.com and I can really grow it and it becomes a big business and I own 39% of it, yeah, I sure as hell not going to raise a bunch of capital to buy storage or whatever else or buy businesses. I'll be doing a lot of it with my own money, but I got a lot of work to do before I get there.
[00:49:32] Speaker B: When you think about what we've talked about today and you just contrast it or compare it to what you've laid out in your book, are there any things that you would like to call attention to just in terms of things that the book does a really good job of going into greater detail on or vice versa?
[00:49:46] Speaker C: Yeah, I think the one thing that's Interesting about my book is I wrote it while I was in the throes of all this. I wrote the book from July to November of 2024. Really?
During that period of writing the book, I was continuing to uplevel and upskill and learn a ton about the dynamics of growing a larger company while I was in the weeds on the front lines of many of the businesses. At times, what the book does is it talks about the struggle. It talks about what will humble you. It talks about the problems. It talks about the most stressful moments in my career because it's easy to look at somebody on Twitter or some social media person and say, wow, I've only ever heard that business is easy from that person.
And that's the story with a lot of entrepreneurs. But it's not. Business will humble you. It's really hard. It's hard all the time. And that's what my book does a really good job of telling those stories and talking about what I learned from those events.
[00:50:37] Speaker B: It sounds a little bit like the hard thing about Hard Things, but organized not around the technology world, but around the sort of boring business world. Do you know that book, Hard Thing About Hard Things?
[00:50:46] Speaker C: Yep. It's really good. The book is also written like I tweet. People follow me on Twitter. They'll know that I'm really good at saying in 30 seconds what it takes other people five minutes to say. It's a to the point book.
[00:50:57] Speaker B: How was the experience writing the book?
[00:50:59] Speaker C: Oh, man. Like all things, I thought it was going to be easy. And the funny thing about the timing is that I sold the book to HarperCollins and signed the book deal. Two weeks before Marshall called me about this acquisition with somewhere.com wow.
So I had just committed to writing a full book, and then the deal fell in my lap and I could not turn it down. Another lesson there is that the timing is never right. I went into writing the book thinking it was going to be easy, because when I'm on Twitter, man, it just flows. I cannot stop myself from writing. I have to keep a notepad by my bed. I have to keep a notebook outside of the shower, in the sauna with me, anywhere I am, I have to keep a notepad. Writing a book is totally different, and it did not flow. I think I'm used to a world where I can write something and tweet it, and I get instant feedback on my idea. A book is weird because you're 100 hours into a book, writing it, you're halfway through, you get these doubts and you're like, who am I to write this? Nobody's going to learn anything from this. This is shit. And then other times you get done with a chapter and you're really proud of it and you're like, damn, I wish I read this when I was in the early stages of running a company. But the book was really a bunch of reminders to me and it's healthy to remind yourself of all the things you need to keep an eye on.
[00:52:07] Speaker B: Nick, maybe one last question before we wrap. Who's been the top influence or two on you in your life?
[00:52:13] Speaker C: Oh man, I have so many, but my dad is number one. He raised me around a dinner table of positivity and he built me up to make me think that I could accomplish anything. And he gave me that delusional confidence with a balance between the humility that it takes to actually do this and run a business.
He gave me the energy and the confidence to go out and do a lot of not normal things.
I'm very lucky that he built me up and I'm really going to try to do that to my kids.
[00:52:43] Speaker B: It's an amazing place to leave it. I'm so happy we did this. I am really grateful to get 65 minutes from you in the middle of all that you got going on. Congratulations, Nick. Thanks. This has been awesome. Really enjoyed spending time with you.
[00:52:56] Speaker C: Thanks for having me. I'll see you in a couple days in Florida.
[00:52:59] Speaker B: Sounds good.
[00:53:00] Speaker A: If you enjoyed this episode, check out axial.com there you'll find every episode of this podcast as well as our recorded Axial member roundtables, some downloadable tools for dealmakers, Axial's quarterly league table, rankings of top small business acquirers and investment banks, and lots of other useful content that we've created over the course of time. If you're interested in joining Axial as either an acquirer, an owner connect, considering an exit, or as a sell side M and a advisor. You can get started for
[email protected] as well. Lastly, if you have ideas for podcast show guests, feel free to reach out to me
[email protected] I promise I will respond. Thanks for listening.
[00:53:47] Speaker C: Peter Lerman is the CEO of Axe Axial. All opinions expressed by Peter and podcast guests do not reflect the views or opinions of Axial. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Podcast guests may have ongoing client relationships with Axial.
