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

Yep.

And it required bringing in folks that would be more authentic in dance world than I am. I mean, I took a couple of dance classes as a young boy, but certainly not the same level of personal experience with it that I have with music. And so, yeah, we had to kind of retool our leadership team to make...

Dance was a natural adjacency, but it was just sort of out there and we'd get to it eventually. And they said, no, let's do it now before somebody else does, you know, to your question from a few minutes ago. Yeah. So I think that's, you know, that's the other big change in the business is, you know, we had a really large, high velocity opportunity in front of us in music that was working.

And we actually, you know, sort of stood up a second vertical to kind of mirror that and leverage what we were doing in music and then figuring out the incremental pieces that we needed to do dance well and going out and finding those and setting them up so that we now have...

kind of twice the service opportunity and we're now we're now doing two acquisitions a month um so you know it's kind of helped us from a velocity perspective to have that additional service area but um yeah totally you kind of transformed the business yeah let's compare and contrast a little bit so so starting with what is the

bigger market just crudely are more kids doing dance or more kids I assume are doing musical instruments I assume dance is a smaller market dance is a larger market and in in some ways that's because a lot of what you're thinking of as being music is happening in public schools so it's not part of the TAM so like I can't I can't do school band which is a meaningful portion of like musical…

So private dance is bigger than private music. And the biggest difference in the two business models is dance is primarily taught in a group setting and music is primarily taught in a private lesson setting. And there are big pros and cons there.

So private lessons, really sticky, one-to-one relationship, high customer lifetime value, lower margin. Dance, group lessons, less connection between a student and teacher. um much higher margin but the margins vary you know the incremental and decremental margins are very large right the the ninth student you put in a class is nearly 100 profit um and so you know the the um

coefficient of profit to revenue is really high. And so taking a school from break even to 20% to 25% margins is a matter of growing revenue by 10%, but the reverse is also true. So you have this super high beta product in your portfolio where when times are good, they're really good.

And when times are less good, it can be a bit of a challenge.

And what about the footprint? A dance studio takes a lot of space, whereas as you described it in a music center, it's kind of a honeycomb and you've got basically two chairs and a music stand. That's all you need to deliver a lesson.