How to Structure Around Risk in a $250k SDE Acquisition

Right. And so this was ground zero. And they were doing their first experiment there. And you were among the leaders or the leader of that effort.

And so this was like a, you know, a very large company doing a new venture, trying to break into a new industry. And you were instrumental in that. Ultimately, the numbers didn't get where they needed them to get to continue the effort, but it was, it was a big deal.

It was, and that was part of what attracted me to it because I thought, you know, I was interested, interested in entrepreneurship way since before that time. But when Kohler called me and said, you know, we want to start a new line of business, San Diego was the third location. They had other, two other locations.

And it's a field based business, it's trades it's fleet, it's safety, it's all the stuff that you've done. But we want to do it in residential construction, shower remodeling. It was basically a startup.

And so they recruited me to be employee number one in San Diego and then take it and grow it from the ground up. And so that is what I did. Yeah, over the, over about two and two and a half years.

And Kohler has a shower product, shower wall systems product basically that they've been selling for quite some time in the range of 10 to 20 years with distributors across the country. And so, and those distributors are major dealers, distributors, depending on how you, how you look at it, they call them. Dealers are major targets for acquisition.

There's a couple of private equity roll up groups that have been super, super active in the space. And that was part of why Kohler was interested potentially in trying to figure out how to do it in house, so that these private equity groups didn't just go and purchase every single one of their dealers. And then the, the power dynamic in the relationship flips entirely.

And so they had this model from their dealers that they had worked with, so they knew how to, in theory, knew how to do marketing and lead generation and installation and all those things. That was all in theory. And then when you put that together and actually you're installing actual showers in the state of California, the city of San Diego, that was all what I was tasked with working out.

And like you said, we grew pretty significantly. And so we were, you know, installing somewhere between 25 and 35 showers a month. And so somewhere between maybe 600 and $800,000 a month of, of revenue at our peak.

But we never made it across the line of profitability for a couple of different reasons. And so that was certainly what part of what played into Kohler's decision to, to shut it down. Not just my location, but actually eventually the other two, the other, one of the other locations was shut down prior to mine.

And then the other one, the one that was remaining, actually just sold to private equity themselves.