I Raised $30M Without Giving Up Control (How I Bought a Massive Business)

Speaker A: If you go to venture capital, you go to Silicon Valley. 50% of the dollars they raise are spent on acquiring customers. And another word for acquiring customers is distribution. You went and sort of built the distribution and then decided, hey, these are the things I'm going to bet on. Was that purposeful from the beginning or was it something where you're like a year in thinking, oh, uh, I guess I kind of have this audience, I should figure out how to leverage the distribution.

Speaker B: So nothing in my life has been purposeful. I didn't, I didn't study entrepreneurship or watch Shark Tank right before I started my company. If I would have, I probably would have a different business and I wouldn't have succeeded. I would have went and got a job. Um, but yeah, I started. I started with a podcast called the Sweaty Startup. First episode in December of 2018. Um, and I had nowhere to promote it, so I started writing on Reddit. They're mean as hell on Reddit. I honed my, hone my, you know, honed my skills. Um, Moses Kagan talked me into getting on Twitter late 2019, about a year later. And, uh, you know, that's where I found kind of what I'm good at, which is writing. And I, luckily this, the step that everybody tries to skip. I had luckily, you know, cut my chops and actually done some things in business leading up to that. So I could, you know, share and talk about it. But, um, it's not the same growing an audience today. So if anybody says, I want to get on Twitter and grow an audience, I'll say, good luck, because it's not, not for that anymore.

Speaker A: But why? Tell me why. Tell me why.

Speaker B: Yeah, I mean, look, the algorithm is not the same. Um, you can't write a thread and get it seen by a bunch of people. You, you can't post links. Um, it's just a different platform now and it's really hard to grow. Really, really hard to grow.

Speaker A: Your kind of growth philosophy, which pissed a lot of people off, was just all eyeballs are good eyeballs, right? I'm just, I'm a huge funnel. And then even if I bring somebody in because I tweet about the blue haired people that I hate, um, eventually they're going to see something of mine where they're like, oh, this guy has some substance behind it. And then they'll move down the funnel and eventually they'll kind of make a purchasing decision. That's my synopsis taken from things I've heard you say and just my own observations. Um, would you Say that's fair.

Speaker B: I think I'm just a goofball, man. I got a weird sense of humor. I'm a pick. I like goofing off with my friends. And so when I can make. It just blows my mind that I can make a tweet sitting here in Athens, Georgia, on my couch, on the toilet, wherever. And somebody somewhere, somebody somewhere gets so angry at, uh, what I tweeted in 240 characters or whatever the limit is now that they get fired up and pissed off about what I tweeted, that just blows my mind. I've never read a tweet and gotten fired up enough to really get upset. If somebody has the mental instability to actually be able to read a tweet and not get fired up, I'm just going to poke that bear because it's funny, it's fun. The other half of that is that, look, I have, I have some unique values and unique beliefs. Um, I have a lot of liberal views. I love living in a little college town with weird people and craft beer and live music. I think everybody should be able to do whatever the heck they want. Um, but I also have some conservative views about business and hard work and discipline and raising a family. And I'm not afraid if people hate that. Um, um, in, ah, in my opinion, you can. If you try to be loved by everybody, then you're. Nobody's going to give a shit about you.

Speaker A: You've said that a lot. I mean, you definitely take sort of a Donald Trump esque playbook to it, where it's like, okay, cool, I get eyeballs. But eventually people are gonna get to know me and they're actually gonna see me for what I am. They're not just gonna take this one tweet. And the people who do take the one tweet and have a perception of me, like, screw them, I don't. It's not like I care about them. Yeah, um, I have to tell you this story. So I've got four boys under 11, and a couple of years ago I read a tweet of yours that I started to roll my eyes at, and then I actually implemented it with my family. So you were talking about your boys fighting or something like that. And you're like, whenever my boys are fighting, I pull them aside. And it was like, oh, cool, we got paragraphs from what team are you on? Yeah, what team are you on? And so you, you said to them, guys, guys, what team are we on? They're like, uh, team Hubert. And at first I kind of rolled my eyes because I'm like, okay, cool. Parenting advice from the guy who's got a kid who's 6 years old. But then I have implemented it with my family. I've got four boys, and, like, every time they fight now, I'm like, guys, what team are we on? We're Team Halluci. Like, yeah, we're Team Halluski. It's such a powerful way to shift the thinking, like, even in your kids. And with boys, right? Like, boys are hyper competitive. Like, they're gonna fight, they're gonna have issues, but at the end of the day, you want them to be on the same team.

Speaker B: Yeah, man. You can't stop it. My boys drive me nuts because they are not happy unless the other one's upset. Um, it's just the way it is.

Speaker A: Quickly, just give a broad overview. What is somewhere. How big is it? What's your core offering?

Speaker B: Yeah, we have 160 management recruiters, account managers all over the world. Um, we structure our business like teams. So as a customer, you go into your account manager, she or he has, um, six to eight recruiters on their team, and they recruit all over the world for all different needs that your business has. One's a technical recruiter, one's an exec recruiter, One's a South African sales and customer service and finance specialist. One's in Latam on ops, marketing, graphic design, whatever it might be. And, um, we are the growth partner of a business. So we went. We've kind of transformed over the last year from being, hey, we'll find you an executive assistant in the Philippines to, hey, we're going to build you a worldwide team. Whether it be a financial analyst in Egypt to a, you know, head of finance in South Africa to a, um, engineer in Colombia, or a draftsman, autocad specialist, whatever it might be. Um, so the, the. Our core offering is to build worldwide teams for companies. That's our core offering because it's really hard to hire Americans, and you can hire phenomenal talent for 1500amonth at. In other areas of the world, I

Speaker A: mean, I think it's just really hard to hire. In general. The biggest value prop is like the ROI that you can get. If I hire for a comparable position, 50 grand a year, and I can get it for 20. All of a sudden, I've got more to invest in the business for the same quality at a much lower price. Um, you said it was a career defining decision for you. Like, why? You're young, like, why is this a career defining decision?

Speaker B: I think there's a, um. I mean, there's this theme throughout my life that anything I've done, I have not been qualified to do. I didn't have permission to start a real estate private equity company. If I'd have tried to go get a job from Sam Zell, he would have said, no, you can't work for me, Nick. But I still went out and raised $40 million and bought $100 million worth of self storage. I didn't know what I was doing. Um, it worked. We made some good decisions. The business is in a really good spot when I'm 34 years old and my partner comes to me and says, hey, Nick, I'm thinking about selling 51% of my business to Andrew Wilkinson at a $47 million valuation. You want to sell half your shares and make almost $4 million cash? And I'm like, okay, well, I can get out of the best business I've ever been in. I can divest some of my shares and take a win. That can build me a big house and get me a sports car, whatever, or I can try to get more of it. And so I came back to Marshall and said, hey, man, I want to. I don't want to sell half, and I actually want to be the one to buy your shares instead of Andrew Wilkinson. Let's make a deal.

Speaker A: Okay, so this is the thing I'm the most interested about. Um, I'm not going to say I was in the same situation, but, you know, I had multiple companies. I ran them in 2022, 2020, I can't remember the year. Combined, we did about $30 million in top line revenue. Call it $3 million in bottom line.

Speaker B: That's really similar. That's really similar to my portfolio size. Yeah.

Speaker A: Yeah. So. But at that point, I was like, I grew up exceptionally poor, and I had some opportunities. Right before rates started going in, I kind of freaked myself out. And I was like, rates are going to rise. Asset value is going to come down. I better sell while the selling is good. And so I sold my medical billing company and I selling my home health and hospice company. And, um, I'm super grateful for it because I quote, unquote, secured the bag. And like you said, generations of Helluskis will be grateful for that opportunity. But I've gotten to this place now where I'm like, okay, well, now what? And I'm thinking a lot about what's my next big swing going to be? Because I'm still. I'm almost 40, but. But I'm still young, I can do a lot. And I think there are a lot of entrepreneurs who are even listening to this and thinking, yeah, how do, what is my next swing going to be? How did you decide? Like, what were you seeing within somewhere that you were like, okay, cool, I got a nice, nice lifestyle business. I'm making maybe call it a million dollars a year. I'm going to risk it all, pushing it all on black, and I'm going to go all in on somewhere.

Speaker B: I know that somewhere has the potential, if well managed to be a, not a $52 million valuation company, but, uh, a, but a massive company. I'm talking hundreds of millions of revenue. It's that kind of potential, that kind of market.

Speaker A: Why? Like what, what about it? Were you seeing that? You're like, oh, uh, it's currently 52, like what, what revenue was it doing at the time you said it did? A million dollars in the month of May?

Speaker B: About a million. About a million a month of revenue. When I acquired it, when I made.

Speaker A: So it was a $12 million top line business. Let's say it was really profitable and you're doing $5 million bottom line. I don't know, I'm just guessing. Yeah, it's a 10x multiple, $50 million business. Right. Is kind of the ballpark that we're playing in. Um, was, was it because it was growing so quickly, were you like, oh, we're experiencing 20% month over month growth or was it just you were seeing this massive trend in outsourcing talent? Like, what was it exactly? That for you is the.

Speaker B: It was a, it was a three and a half year old business that was doing a million a month of revenue is growing exceptionally fast. Um, and I just saw what it did to my business. I went from a mindset as an entrepreneur in 2020 of hey, everybody on my team is in America. Every single person. To hire somebody new and to grow my business takes $50,000 a year. That's for an entry level person to hire an executive. God forbid, if I can afford them. It's $150,000 a year. I went from that to being able to make five hires who are specialists for the same money. And when you can do that, the growth, it changes. It just changes everything about how you think about business. If you can manage these people, like, look, there's difficulties if you can manage them, if you can keep track of everything, if you can really make sure that everybody's productive inside your business, um, it's a total game changer. And I know it's not going to get easier to hire Americans. I know that.

Speaker A: Why do you think no one's built $100 million Overseas Talent Company yet?

Speaker B: They have. Absolutely.

Speaker A: They have.

Speaker B: Oh hell yeah. Athena. Athena is doing 60 million ARR. Probably worth a half a billion if they, if they went public. They just do executive. Only executive assistance Philippines.

Speaker A: Only executive assistance in the Philippines.

Speaker B: They're not doing any team building, they're not doing any corporate accounts. I mean we have shifted our focus over the last year to literally helping companies build their entire teams. And we're going to do with five different clients this year. We're going to do more than 30 hires. 30 hires for them. We're gonna help them build their entire company. That only goes up as you start building teams. So yeah, there's, there's many, many BPOs. Um, you know, you know, we're going to build a full team for you. We're going to put them in an office business. Uh, business, business process, outsourcing means like we're going to take a function of function of our company and put it in an office in the Philippines. If you go to Manila, there are high rises full of BPO organizations that are the middlemen between Visa, MasterCard, Apple and these call centers. And many of them, many of them are worth $100 million plus.

Speaker A: The most money I've ever raised. Uh, how much did I raise? Let's just call it mid seven figures. Five million, six million. Somewhere in that ballpark, um, from investors you had to go. And you probably raised more than that because you were buying these large real estate deals and that just takes more capital. But for um, an enterprise like a business, 5 or 6 million is the most I ever raised. You had to raise $20 million for this?

Speaker B: Mhm.

Speaker A: And then you had to take out, sounds like about $10 million of debt. From what I've done in the bit

Speaker B: of research I've done, I borrowed 9.38 million from Marshall as a seller. Note directly to me. 18% of the company I borrowed from Marshall to me. Um, and it's backed by the business itself. So um, it's not like a personal guaranteed loan. He didn't give me any cash. He gave me the equity. And he holds that equity as collateral to the loan itself.

Speaker A: Did you go to Andrew, uh, Wilkinson and be like, hey, look man, I know you're going to buy it, but would you rather just help me fund it?

Speaker B: Yeah, I tried, I, I tried to get him to invest and at that point he thought that AI was going to kill the business. And he had no interest in investing.

Speaker A: Wow. Okay, so you go, you raise 20 million and then you do this seller note. Did you sign any personal guarantee?

Speaker B: No, I put, uh, so I, I needed almost 30 million to buy 57.25% of the business from Marshall and, and Jomer, the two founders. I was trying to organize and orchestrate a system where it was worth it for me. And the carrot at the end, meaning I get all my investors paid back, the business grows. I own as much as possible at this company. I already own 12.75%. My private equity tranche, meaning the 20 million in cash that I gave Jomer and Marshall was 39.25% of the business. Um, I needed to raise that in private equity and I could only get a promote on that. Meaning I get everybody their money back. I'm going to get 20% of the ups, basically. So I raised, I raised all that money giving. There's no pref, there's no fee. It's just they get every bit of cash flow from that 39.25% of the business until they're made whole. And then above that, if they invested less than a million bucks, I get 30% ups. If they invested a million or more, I get 20% ups. So I raised from 39 people an average of over 500k per person. Um, a couple of big fish came in to invest. I was, it was super stressful. I went out and pitched them all on how to do this. I had no investment bank working with me. I hired my own attorneys to put all the documents together to orchestrate this deal. Um, and I set up a deal where if this business grows, I'm going to own about 34% of the company if I get everybody paid back.

Speaker A: Okay. So you've got 12 and a half percent at the time you need to raise the 7 5. Okay. And then you need to raise another 20 million to buy the 39 out. I'm just rounding here.

Speaker B: Mhm.

Speaker A: And the way that it currently works is that $20 million, every bit of cash flow that you distribute goes to those investors first until they get their money back. And then there's like a pro rata split of depending on how much they put in, either 30% or 20% to you and then the rest to them.

Speaker B: Yep. Yep.

Speaker A: Okay. I've been thinking about a lot this, I've been thinking a lot about this because I'm kind of toying with the idea of raising some money and, and going bigger, um, in the healthcare Space, buying a larger acquisition. And one of the things that I like, constantly think about is anytime you're raising money, you're giving up control. Um, and for me, uh, that's what's always freaked me out about raising money is like expectations go up and you lose control. Are you able to.

Speaker B: I didn't lose any control. I uh, control everything.

Speaker A: So there's like decision making control. Right. But well, I guess, let me ask, there's these two.

Speaker B: They're both, they're both llc. They both have different promotes. Right. That bought in, under, under million dollar investors. The, uh, the over a million dollar investors with the different promotes. I own all the common shares of those. They own the preferred shares. The preferred shares get the cash flow first until they're made whole, and then most of the cash flow after they're made whole. But the common shares vote. I own those. So I.

Speaker A: They have no recourse.

Speaker B: They have no voting rights. They have no recourse. They just get all the cash flow into their hole from that entire tranche.

Speaker A: Wow, man. How did you orchestrate that? Most investors are going to be like, nah, I want some type of recourse. I want a board seat or I want, you know, something to say like, if Nick's royally screwing this up, I can get him out of there.

Speaker B: Yeah, that's the, that's the good thing about having the network that I had from raising, you know, 40 million across all my real estate, you know, investments, and knowing how to do it and having a really good plan when I bought the company. So that when I got on these meetings, I'm like, hey, look, we're going to grow this business. It's going well. Here's what I think we can do. Obviously nothing here is guaranteed. And you're going to get all the cash flow and 80% of the upside, but you're going to have no say. And I'm going to control this thing. And you're riding along with me.

Speaker A: Um, with those. You said it was super stressful as you were talking to people trying to close this deal. Was it ever stressful because of social media? Like, was it ever stressful because you were, I don't know, were they saying, hey, I'm not interested because you tweet too much or you're too open or I'm worried about some key man risk because if you do something really stupid because you're so closely associated with it, the value of the business goes down. Like, was. Has that been a part of those conversations at all?

Speaker B: Look, a lot of people said no. Like, I approached 500 people to ask about this investment and 39 said yes. So, um, yeah, look, there were a lot of things people didn't like about the business. People said, you're just a contingency based recruiting firm. People said, you're paying too much. People said, um, I don't have a board seat. People said, you're not putting in enough of your own cash. You're not making a big enough investment. At the beginning, other people said that didn't matter. But I found 39 people who trusted me and the vision and raised the money. And I'll warn you that once you go out and raise that capital to make a deal like this, the stress is just on a different level. The pressure is on a different level. If it was all my money, if it was all my money, it was all my own money, I'd feel one way about it and I'd be like, okay, let's see what happens here when other people's cash is on the line. Uh, for me, it's more scary. I don't know. People say, oh, it's just other people's money. We don't care. For me, for me, I would rather go bankrupt myself. I'd rather go Nick Huber, go bankrupt, go get a job, start over, build from scratch. Than this deal go sour and me lose $20 million of other people money.

Speaker A: I'm playing with operator, deep research. I'm in the weeds with AI right now, and I'm like, oh, man, this some really good technology.

Speaker B: Yeah, I'm following. I'm taking it very seriously. Um, I'll push it aside and talk down to it on Twitter all day. But, um, I would be pretty foolish to like. Andrew Wilkinson is a great friend of mine, a mentor. Him and I are close. I would be foolish not to listen to a guy who's smarter and more experienced than me. I'm not that arrogant.

Speaker A: What are your thoughts on it? Give me some of your, um, thoughts.

Speaker B: My general thoughts are I'm watching it closely. I am afraid of it. It's on my radar closely. But it's nowhere near close enough to actually replace a human being today.

Speaker A: Um.

Speaker B: Um, I'm. I know because I'm trying to implement all these tools into my company. The demos. The demos are amazing. Their wow factor is amazing. You get in and watch it work and you're like, son of a bitch, this is a pain in the ass.

Speaker A: Yeah, it's a really cool efficiency gain. Like, it's. You're able to turn one employee into maybe 1.5 or two employees. And for some specific positions you're able to outsource it. But yeah, M. I'm in the same boat. I don't see it yet getting to the place where it can actually take a full time employee position. I mean, there are some cool things. After hours answering services. That's been really cool. I've seen AI answering calls and then redirecting those calls. But, um, not yet have I seen it actually replace people. Deep Research is the closest I've seen to like, oh, this, this is like an entry level analyst. But I still have to do all of the work in order to produce, uh, the outcome.

Speaker B: I've had friends who say like Nick, you gotta watch this. And they'll pull up their phone, they'll start talking to their AI and at the end of the conversation I'm like, that was the dumbest thing I've ever just listened to. Um, Andrew, like, I love Andrew. He pulled up his phone on Twitter and he started talking to his AI that he built about making a reservation. I'm like, nobody would put up with that. Um, I don't.

Speaker A: I saw that video. I was like, dude, is he in a hostage situation?

Speaker B: Elon is talking to Joe Rogan on February 28 episode and he starts talking to his AI for. And I'm like, guys, the wow factor's here, but ain't nobody wanting to do this. And in my storage business, every phone call is worth 500 bucks. Ain't no way I'm trusting AI to answer the phone. In a roofing business, every phone call is worth 600 bucks. Ain't no way we're trusting AI to answer the phone.

Speaker A: This is the way I think about it right now. I think people are seeing the opportunity of AI right? These things come out and you're like, oh my gosh, AI can answer this question. And quickly you go to the end state where if AI is basically what we hoped Siri would be when it first came out. But if AI can produce this report for me quickly, oh man, I'm going to be able to replace a full time employee. But it's the last like mile that's the hardest to actually implement. And so I think those people get really, really excited about the opportunity where I think people, and I'm not saying like you, I'm not saying you, but potentially like you who are like, call me when it's ready. I do think that when it's adopted, it's going to be adopted very quickly and there's going to be an arbitrage for six months, maybe a year, because people have been up to speed with it. And then once it's finally game time, they can implement it because they've been thinking about how do I put this process into place, where would I actually plug it in, what's the software I would use to track usage, who would I replace, how would I implement the SOP to train the AI? And then everybody's going to catch up, right? But there's going to be this kind of year time where they can still charge old prices with new efficiency until the new prices catch up with the new efficiency.

Speaker B: We're building an AI training module that has an add on somewhere for every new hire. Like at the end you pick somebody and they're like. And we say, hey, for 500 bucks, do you want us to put them through a two week intensive AI training and make them 50% more effective at their job? You're pretty silly to say no to that. Um, so yeah, look, I think the main hesitance of hiring internationally is the language barrier. They can't quite speak and they don't quite understand our culture. Like us. As well as us. South Africa is a game changer when it comes to that, by the way, building literally executive teams at all my companies in South Africa. But AI is going to help these folks with the things that they struggle with most. So in a way, like when the lawnmower was invented, it didn't put the lawn care companies out of business. It actually helped them make more money and be more effective. Um, I'm going to be on the cutting edge of AI, um, and when it's ready, we're nimble, we make decisions quickly. You know, we're good operators. So I'm optimistic. But I don't know what's going to happen, man, I don't know what's going to happen.