(replay)Art of the Roll-Up: 40 Businesses in 4 Years

um so you know those were the two opportunities we saw was was you know save some operational time using some you know using 200 a month worth of software reinvest that in marketing and you know deploy a marketing budget and you mentioned earlier that the starting starting margin profile the business was not very high but the incremental margin is very good because your you know your gross margin…

So every dollar you add, you know, minus a little bit of, you know, kind of additional operating costs or variable costs below the COGS line is coming in, you know, at 45, 50%. And so there's opportunity as you do marketing and you grow the business to actually grow margins significantly. So that was kind of an opportunity that we saw tied to that digital marketing opportunity.

Especially if it has a high lifetime value. I mean, I think that's the other side of the seller that was attractive. But yes. Yeah. And, you know, like just to make the point, which I'm sure will be intuitive to many people that are listening.

I mean, this was this thesis is pretty similar to folks that rolled up veterinary medicine and dental clinics and, you know, all sorts of places where you have a specialized service provider that, you know, is sort of forced into business ownership in order to provide their service.

And it has been a lot of success of sort of divorcing those two things and having somebody operate the business and letting the vet, letting the dentist, letting the music teacher, letting the dance teacher just focus on teaching lessons. And both parties are happier in that arrangement for the most part. And the business is much more successful.

And I think that's, again, sort of looking at searching on Google to find, you know, things to, you know, industries to focus on, you know, this was sort of something that rhymed with a thesis that was pretty well tried and true at that point, just sort of hadn't found its way to this market in particular.

And to your point about kind of bringing in a pro-business attitude to just running the business as opposed to kind of it just being artists who are in business because they have to be. That just happens to be the way they deliver services. You got to have some sort of business entity there.

Was there any cultural friction there? You business guy coming in and making things more efficient and more operationalized? Or is it like, no, fine.

Help me do my job better. I'm now speaking both the owner reacting to you this way as well as the teachers.

Yeah. It's a great and very insightful question because there is absolutely a... negative predisposition to all kind of business or commercial activities for many artists, right? So growth is not intrinsically good.

Lots of the things that we want to be doing are subject to immediate suspicion and sort of guilty until proven innocent from an implementation perspective. So I had to do two things to be successful. One, I had to really sand down the elements of my personality that were like Harvard, New York finance.