How I Bought a $3.4M Business For $200K

How I Bought a $3.4M Business For $200K Shaan Puri: If you've ever thought about buying a business, then this episode is going to be for you. Because on the internet, there are a lot of people telling you about how amazing it could be to just go buy a business that's already working. You just take out a loan. You put very little money down and boom, you're cash flowing and you're working passively. But those are also people that are kind of selling you the dream. Now, my buddy Dan is one of my best friends from college. Just actually did this. A couple of years ago, he bought a business, a very random, unsexy business that he had no experience in. He didn't have a lot of money coming in. He had never bought a business before, but he did it. And it's actually worked out pretty well. And I asked him to come on and tell the real story. So tell us like, what was it like? What'd you do the first hundred days? How did you actually find buying the business? How much money did you have to put down? How much money did it make? What are the downsides? What are the traps? All the real stuff. And I love it because Dan was very honest. He was very open about all those things. And then at the end, he actually brainstormed a couple of business ideas that he saw because when you buy a business, you look at hundreds of businesses. He actually has a couple of his favorite spaces that he thinks people could go into. And we brainstormed that at the end. So this episode, I think, is going to be a lot of value for anyone who's ever thought about buying a business. And then we have a fun brainstorm also at the end for other businesses that people could check out. All right. Enjoy this episode with my buddy Dan. Unknown Speaker: I feel like I can rule the world. I know I could be what I want to. All right. Shaan Puri: This is a special one. My buddy Dan from college is here. And me and Dan, we've started a sushi restaurant together. We've owned a pet mouse together. We've tried to bring down the house at a casino together. We have gone through many schemes and dreams. And then Dan called me a couple of years ago. And I convinced him to try to buy a business and then he's done it now. He bought the business and he's here to tell the story of that whole journey of going from a guy who never thought that he would ever buy a business to now owning one of the most random businesses that you'll ever hear about. And then I got Sam here, who doesn't know Dan. So it's me and my college buddy, and then Sam, you're sort of the third wheel on this date. Are you ready for this? Sam Parr: Yeah, sign me up. This isn't the first time it's happened, but I'm going to ask questions that usually what I think is what the audience thinks. So I'll ask some questions. Shaan Puri: Yeah, exactly. All right. So, Sam, where do you want to start? Just maybe first question is like, who the hell is this guy? Who are you? Sam Parr: Yeah. Who are you? Dan Certner: Certner. Dan Certner. So I wasn't his roommate in college. I was like the next door neighbor. So for the Seinfeld references, I was like the Kramer. I'd show up from time to time unannounced. Lived with this guy for four years. So I go way back with Shaan. Shaan Puri: And by the way, Sam, the funniest part of meeting Dan the first day of college, I walk in and Dan, the way he looks now, he looked exactly the same at age 18. So Dan is standing there and he used to wear a visor because he's like, I don't know, Cool guy from New Jersey. I thought he was someone's dad. I saw him from the back and he knew everything. He was like, laundry's down there. Yeah, you have to do this. Your meal plan's not going to work until you activate it. He knew everything about the campus and I was totally clueless. I didn't know anything about going to college. He was like one of the smart guys who requested having a single room, didn't have to have a random roommate. So Dan's been ahead of the game for a long time. Sam Parr: What business did you end up buying, by the way? Dan Certner: I bought a company called Fleet Packaging. It's a packaging distributor. Effectively, we work with large retailers in the U.S. who need any sort of packaging. If you go to a mall, you leave with one of those to-go bags, we help companies buy those. Then we help with warehousing distribution. We make it easy to buy bags overseas. Shaan Puri: So he is Dan the Bag Man now, which is all you really need to remember. Dan the Bag Man. But to get there, I think it's a fun kind of journey, right? So we're going to skip the part about me and Dan in college and then the company we tried to start together. We're going to skip that for now. We can go back there later. I think the buying a business story starts in actually kind of a funny way. So after we kind of try and fail in our first business, we go off and do different things. I go move to Australia. Dan moves to San Francisco and he goes and gets a job at Facebook. A few months later, Dan calls me and he's like, oh yeah, sorry. I don't know what he said, but he was like, yeah, I was just quickly just fixing a bug. And I was like, fixing a bug? What are you talking about? And he's like, yeah, I'm coding now. He was like our finance guy. Why is our finance guy, what are you doing in code? And basically what he did was, I don't know if you know this, Sam, but I guess at Facebook, They have just like a coding academy internally at Facebook. Dan, is that how you describe it? Like a boot camp? Any non-engineer could go like become an engineer just while on the job. Is that how it works? Dan Certner: It's not explicitly. So it's actually for the engineers when they show up. So when you show up, and I actually think they just got rid of this like a few weeks ago. So this might be old news, but you know, for the first 20 years of Facebook's existence, you know, when you get a job as an engineer at Facebook, you go to this eight week crash course on how to be an awesome Facebook engineer. And it's not typically open to non-engineers, but why accept the status quo? So I was actually one of the few people who early on was able to take classes there. So I started in fraud. Shaan Puri: Do you have a good FarmVille fraud story? What does an average person like us not know about like fraud on a farm? Like Farmville sounds like the stupidest thing in the world. The fact that there's even fraud going on. It's like, you know, am I stealing crops from Sam's farm? Dan Certner: You are stealing crops. Well, what you're doing is you're probably, you're wanting to make a better farm than Sam, but you don't have time. Sam Parr: Is this for pride or money? Dan Certner: Well, the fraudsters are doing it for money, so the buyer is doing it for pride. They're like, I want a bigger farm than Shaan, but I don't have time to actually spend my time playing the game, so I'm gonna go online to the black market, wherever that is, and someone's gonna sell me, whatever, 200 mushroom seeds to plant in my farm, and they've procured those illegally because they've stolen someone's credit card, and there's this whole world of Facebook games fraud that existed. Shaan Puri: So Farmville was basically like, I don't know. Is that the laundering part? Basically, the guy steals the credit card, uses it in FarmVille, sells the FarmVille stuff to me, which looks harmless, and he gets cash out the other side. Dan Certner: Precisely. Sam Parr: This is like a much less cooler version of The Wire. Dan Certner: Pretty much. Well, there was also like real money laundering, too, where people would make their own app. And then Launder Money through that. That one was a little more intense. Shaan Puri: Dude, Sam, one time I was like, Dan, what are you even doing at Facebook, dude? What do you mean fraud? What is the Facebook fraud? And he goes, have you ever opened up your timeline on Facebook and just seen a dick? I go, no. He goes, You're welcome. Dan Certner: That was the later iteration. I moved on to community tooling, but effectively preventing porn on Facebook. That was my go-to line. Sam Parr: What did you do after Facebook? Dan Certner: After Facebook, I all of a sudden had transitioned into engineering. I went to a startup called Namely. It was a payroll company. I joined as an engineering manager, eventually worked my way up to be CTO of that company. Shaan Puri: Dan's actually a marketer at heart. He just never worked in marketing for some reason. Dan framed himself in the job market was amazing. So he's at Facebook. He becomes an engineer there, right? So it's not like he's like MIT computer scientist, right? Dan Certner: Like when you think about like- I'm a Duke Spanish major. Shaan Puri: He's a Duke Spanish major. When he was at Duke, he kept taking this class called lemurs where he was going to the zoo and looking at lemurs all day. Like Dan was, that's what Dan was doing at Duke. But then he trains himself to be an engineer. And then when he goes into the job market, he has this brilliant way of framing. Dan Certner: So I leave Facebook. As you will see, most of these things are schemes that Shaan and I have done in our lives that slowly elevated to good ideas. But I left Facebook, basically the best of the best at the time. It still is one of the best technology companies. I joined Facebook, there were 3,000 people. I left when there were 60,000 people. So I saw a lot of things. Old school Facebook rich. I miss that. And I wasn't an engineer in the beginning. So just want to clarify that. But I left and I had, you know, kind of this weird amount of experience. Like I had whatever, four or five years of coding experience, which is cool. Maybe enough to make me like an Eng 1 or Eng 2 at a normal company. But, you know, I had moved into management while I was at Facebook and the way that I positioned it was, you know, I am a Facebook manager. I know how things work at Facebook. Let me come into your startup and let me whip your team in shape. Let me help your team run like a Facebook engineering team. Sam Parr: Alright, so I've built a few companies that have made a few million dollars a year and I've built two companies that have made tens of millions of dollars a year. And so I have a little bit of experience launching, building, creating new things. I actually don't come up with a lot of original ideas. Instead, what I'm really, really good at, what my skillset is, is researching different ideas, different gaps in the market in reverse engineering companies. And I didn't invent this, by the way. We had this guy, Brad Jacobs, we talked about him on the podcast. He started like four or five different publicly traded companies worth tens of billions of dollars each. He actually is the one who I learned how to do this from. And so with the team at Hubspot, we put together all of my research tactics, frameworks, techniques, On spotting different opportunities in the market, reverse engineering companies and figuring out exactly where opportunities are versus just coming up with a random silly idea and throwing it against the wall and hoping that it sticks. And so if you want to see my framework, you can check it out. The link is below in the YouTube description. Shaan Puri: But Sam, isn't that great to just be like how to re how to rebrand yourself to be like, I'll make your engineering team run like a Facebook engineering team. And if you're a startup founder who's, you know, sitting like Nameless in New York, right? That's kind of aspirational to have somebody say that versus just I have five years of experience, right? Sam Parr: Yeah, man, that's great. Dan Certner: Yeah, it's all about storytelling. Shaan Puri: So the story is so far is like, you know, whatever, pretty good. You're stumbling into things. Sam Parr: Just say that name smart guy, a smart guy with a smart guy with a dream and a little bit of scheme. Shaan Puri: And now you're in a position where you're like, I'm at the startup. We just raised a bunch of money at a good valuation. I'm the CTO. I got these shares. I'm going to be rich, going to be rich. What happens? Dan Certner: Long story short, we found ourselves in a place where in order to do what we needed to do, we needed to sell the company. Or in order for the company to do what it needed to do next, we needed to sell the company. And it became very clear that this wasn't going to be kind of this massive windfall that I had been expecting. Long story short, the company sells. I find myself out of a job because as part of the transition, the acquiring company was like, we have a CTO, so we don't need you. So it's like five years of hard work and kind of that dream of like, hey, we're going to take something and turn it into something else kind of goes away pretty quickly. And that's kind of where things start to get interesting because, you know, I have Shaan on speed dial. So I had a fortuitous conversation with him that day. Sam Parr: Was he the one who inspired you to do this or did you listen to the MFM or how did that insight come to be? Because like it's not normal for a Facebook, a Duke Facebook unicorn startup guy to buy business. Dan Certner: Correct. So no, it was it wasn't even like a, hey, Shaan, I need advice. It was just like a random like, let's catch up, catch up call. Yeah, let's just catch up. It's been a while. Sam Parr: Wait, so Shaan, did you say like, I use this bad company? Shaan Puri: No, no, no. We're on this college catch up call. What's going on with you? What's going on with you? Dan tells us We got acquired. There can only be one CTO. They already have one. He was just saying, if you know any cool companies, let me know. I'm going to be looking. Then I just mentioned to him, I was like, dude, Dan, ever since I've known you, you've been entrepreneurial. Naval said this once, he goes, you know, other people sometimes see your gifts easier than you can see them. So he was saying for Naval, he also used to think, I'm going to be a scientist. And his mom was like, no, no, no, you're going to be a business person. He's like, what? Oh, science, right? And she's like, oh, like every time we walk by a pizza shop, you're telling me all the three different things that they should be doing to run their business better. Like you're always doing that. You're naturally, you're a natural fit for a business person. Like that's what you're good at. And so Dan, same thing. Dan was always somebody who was like shooting a shot. Like when our freshman year at Duke, All of a sudden there's like this huge package and Dan has like a lifetime supply of stride gum. And I'm like, damn, why did you buy this much gum? He said, I didn't buy it. I want it. And he would always be entering contests. I went one day with Dan, I go to I go to work and Dan goes, hey, I got to get off early. I got an audition. I'm like, what? What are you doing? He's like, I'm going to try to get on Wheel of Fortune right now. And so I went with him and we both got casted on the Wheel of Fortune. Dan Certner: Well, yeah, you leave out the point. We like we came we were doing the sushi restaurant at the time. So we like we're both like been working all day. We have the bright green headbands like we have not like we came in with knives like we had our sushi knives on our belt. We come into this interview like no wonder we got cast. It was like this is good TV, man. Shaan Puri: These clowns, but he was always doing this. He was always like early on, he started recording like product review videos for like, I don't know, two cents a pop or something like that. Like he was just doing random shit all the time. So it just seems strange to me that he was like going to get a corporate job. Like this didn't it's not like the vision I had. So I was like, Dan, you ever thought about starting a business? He's like, I don't really have like a killer idea. I feel like I need like a killer idea if I'm going to like put my whole life on the line for something. I go, oh, that's fair. I've been doing this podcast, and it's not something I was doing a lot of, but I've met a few people who go and buy businesses. It honestly seems like a little bit of a cheat code. If you find a business that's already working, You don't have to come up with a genius idea. It's already validated. It's already working. It's got years of profitable history. You can buy it at a fair price. And then if you're good at executing, you can grow it over time. And there's retiring business owners. There's reasons these are up for sale. And so I just planted that seed. Consider that. And Dan, I don't know what your first reaction was, but I bet it was probably just like lukewarm, I don't know. Dan Certner: It was lukewarm. I mean, it was two part. One, you know, in the beginning I said, Shaan, you know, always knows what he's talking about, seems to have his life figured out. My first response was like, Shaan has no idea what he's talking about. He's never bought a business before. To this day, that is still my, you know, my main thing. It's like, you don't know, man. But the second one was like, but Shaan is a pretty smart dude. Like, and he, you know, if he's saying this is a good idea, it's a good idea. My second reaction after that was, with what money am I buying this business? Because let's recall, missed the boat on the Facebook riches, missed the boat on the Namely Riches. But it actually turned out, and I'll get into this more later, you don't need that much money to buy the business. That's the crazy part. And I think it took a little bit of digging initially to figure that out. And I'll talk more about that in a minute. Shaan Puri: So let's do a quick Tarantino. So let's give the ending first. So let's say, You ended up buying a bag business as in like literally if you go to a shopping store and you buy something and they have a custom branded bag when they check out. Dan Certner: There's a decent chance I made that bag. Sam Parr: So it's that big? Dan Certner: It's that big. I'm under confidentiality agreements with most of my clients. But if you go to a mall, there's a pretty decent shot that you're going to touch one of my bags. Sam Parr: We're going to get it out of you somehow. We're going to get it out of you. Dan Certner: I'll tell you after. Shaan Puri: I'm not bound by any confidentiality. Maybe I can say some things. Dan, let's give the headline. You buy a business. We're going to work backwards because it's going to sound cool and then we're going to be like, here's the crazy journey of how I got there. How much did you buy that business for? Dan Certner: I bought the business for $3.4 million. Shaan Puri: So he buys a bag business for $3.4 million. That business had been around for how long and about how much money was it making when you bought it? Dan Certner: Yep. So it was about 15 years old. The business had been making anywhere from, and it was right after COVID, so it was a weird few years, but it had been making anywhere from $8 to $11 million a year. Sam Parr: In revenue. Dan Certner: In revenue. And it was doing, on average, about $800,000 in profit. Sam Parr: And what's the URL? Dan Certner: Fleetpackaging.com. Shaan Puri: Best bags in the business. Dan Certner: Best bags in the business. Shaan Puri: Do you have like a slogan yet? A jingle? Dan Certner: Oh, maybe we could come up with it later on the brainstorm later. No, we're working on a rethink your packaging partner or rethink packaging partnership because what we're trying to do is, you know, there's a lot of people that sell packaging, but what we're trying to do is just do it better than everybody. Just kind of go that extra level of like let's make your life Easy as a packaging buyer. Shaan Puri: So Dan, explain. So you said you bought this business, this is about 18 months ago. It was doing 11 million in revenue, about 800,000 in profit that the seller, that the guy who owned it was able to, that was his living. He was making, you know, his inner grand a year. And now, last year, how much revenue did it do? You grew the business. Dan Certner: Last year, we had a record year. I think we did, we did about 13.8 million. Shaan Puri: We're going to talk a little bit about how to get started with a business. Dan Certner: 1.7 million dollar profit last year. Sam Parr: So you've creamed it. Dan Certner: I mean, you've crushed it. You've killed it. Yeah, last year was amazing. Shaan Puri: Suck on that Zuckerberg. I don't need you anymore. Sam Parr: There you go. Alright, got it. So you've bought a business that made 800k in profit to, you've more than doubled it. Dan Certner: And there were lots of things that I did that doubled it. Certainly, that was part of it. A lot of it was getting out of COVID and figuring out how we position it. And it turned out the business had not reached its potential yet. Sam Parr: And back to what Shaan said, you bought it for $3 million or so. Where did the money come from? Dan Certner: $3.4 million. So we did it through an SBA loan. We ended up putting $200,000 down. I say we because I say me and my wife because we put our house on the line. We went all in on this business. We spent $150,000 from our savings and then my wife took a loan off her 401k for the other $50,000. So that was the, again, house on the line, 401k on the line, like this is it. Shaan Puri: Was she just down from day one to do this or did it take a lot of persuasion? How did you position this with the wife to make that happen? Dan Certner: She was down. I mean, she has a similar Kind of philosophy on, you know, we should do something that's going to be kind of a step change in where we're at, you know, if we're going to bet on someone, we should bet on us. And, you know, she knows, Shaan, she knows what we've been up to for the past, you know, however long. Shaan Puri: She knows she married a stallion who just needed to run. Dan Certner: So this wasn't like, oh my goodness, where did this idea come from? This guy's crazy. It's like, no, that sounds about right, that this is what you're doing. Sam Parr: How much of the loan have you paid back now? Shaan Puri: But Sam, so he put down 200K, he got an SBA loan, and then he had a seller note also, which I think is a key part of this. So do you want to explain where the rest of the money came from? So 200,000 from you, where'd the other 3.2 come from? Dan Certner: Sure. So 1.8 came from the bank, 200,000 came from me, and then the other 1.4 came from the seller. Which effectively we said, hey, like. We're not gonna pay this up front. Over the next five years, assuming the business continues to do well, we'll pay the second part of the debt. So it's a forgivable seller note, which means, effectively, if the business doesn't do what it's supposed to do, that debt's forgiven on any given year. So that was part of what made me feel better about the deal. Because you run all these scenarios when you first buy it. It's like, all right, we're gonna put our life savings and house on the line. What happens if things go bad? And it's like, all right, at least half of this debt, if things go bad, will go away. Sam Parr: He just wanted out. Dan Certner: He wanted out and that's kind of what I loved about kind of this world once Shaan kind of turned me on to it is like the baby boomers are retiring. Like the past few years, the next 10 years, I forget what the window is, but like a lot of them don't have kids or they have kids that don't want it. This guy had three kids. None of the kids wanted the business. Shaan Puri: Dan had told me, he goes, anytime I ran into a business that looked really cool and the guy who owned it was 26, he's like, I don't want to buy this off a 26-year-old. Why are you selling this business? I want to buy from a boomer. That is my goal. Dan Certner: I want to buy from a guy that wants to move to Florida and play golf. This business has been great to me, and now I'm done. I've made my money. I'm ready to go. That's the type of business I want. Sam Parr: He would probably still answer your phone calls when you had questions. Dan Certner: Exactly. Spoiler alert, I found the nicest buyer in the history of the world. I got incredibly lucky. Sam Parr: Cutting your sales cycle in half sounds pretty impossible, but that's exactly what Sandler Training did with Hubspot. They used Breeze, Hubspot's AI tools, to tailor every customer interaction without losing their personal touch. And the results were incredible. Click-through rates jumped 25%. Qualified leads quadrupled. And people spent three times longer on their landing pages. Go to Hubspot.com to see how Breeze can help your business grow. Shaan Puri: So to me, there's two kind of good things out of this episode. One, I get to hang out with my best bud. All right. The second would be for other people who are listening to this. Today, I want to talk to you about the real life take of this because Dan's not selling courses. He's not telling you, you should do this. He's not like a business buying guru. He's got a book and a mastermind. None of that. I think he's got good opinions and like a real story of like, all right, where do you start? So to me, this episode would be interesting because if I'm interested in buying a business, I kind of want to know what is it like from a person who's smart but came in with no experience. No money and no like kind of clue where to start because even though I was like, hey, you should do this. It's not like I was there helping you every day or, you know, you were wandering around figuring this out, you know, by yourself. So he told me this. I called them like last week to be like, all right, what do you want to talk about? He had said something great. He goes, He goes, all right, I started and I was high excitement and low knowledge. So I bought the book. Dan Certner: Oh, you ever heard this framework? No. Like D1 through 4. It's like you start high excitement, low knowledge, and then you become, you know, you kind of go up in knowledge and down in excitement. You kind of enter into the pit of despair, which is low knowledge, low excitement. And then you learn more and you slowly kind of get out of this pit. Shaan Puri: His quote was, This is great. It's going to be great. It's going to be easy. I'm going to be rich. And then he goes, then I started and I realized this is not easy. This is not going great. And I might not be rich. And so do you want to talk about like how you actually like, what'd you do your first maybe 100 days? What'd you do? Sam Parr: Well, first, how'd you find the company? Dan Certner: So I ended up finding the company through a broker. So a lot of what I started to do, and I'll go back to the beginning in a second, but there's a ton of business marketplaces out there. Acquire.com, probably the most known for tech. BizBuySell for kind of more of those main street businesses. But there are these brokers that effectively represent buyers and kind of put together these packets of like, hey, I have this bag business, here's what it does. And most brokers, I was telling this to Shaan, I hate searchers because they just assume like, you know, people are, you know, they just saw Cody Sanchez video. They're about to buy a business. Like they're pumped, you know, this morning they saw the video and now they're ready to buy the business. So they reach out to the broker. This one broker actually understood. He's like, I get it. I understand this jump from tech to this. And then several months later, he calls me back, which is rare. Most people didn't. He's like, I got this business. Check this guy out. So it ended up happening through a broker. Sam Parr: And to go back to Shaan's thing, the first 100 days. Dan Certner: So the first thing, hit Google, started reading books, started watching videos, started to just learn What is a search fund? That was something that Shaan didn't use that word but eventually I found it where effectively there's kind of a few models to do this. One of them is kind of a search fund where someone will actually... Get someone to finance you looking for a business and then you take a small piece of it and they effectively own most of it. Like there's lots of courses now in business schools, you know, teaching entrepreneurship through acquisition. It's kind of the fancy way of talking about it. And then there's kind of like this other model of, you know, you just do it yourself. You know, you effectively bootstrap it, find the money yourself, do it through an SBA loan. So first it was kind of like educating myself on the different models. You know, I, Thought a little bit about getting the funding, but at the end of the day, it's like, no, if I'm going to do this, like, it's going to be me. I don't want to answer to anybody. And then it was really like finding this community. And there's a really cool community in search. It's been growing pretty steadily over the past, you know, call it five years, I think. But there's a there's a there's a website called SearchFunder.com. Like those were my people during the time because search is like it's a very lonely process. Sam Parr: When you guys say, look at a hundred, what does that mean? Does that mean browse a website with a hundred or does that mean actually do diligence on a hundred? Dan Certner: So it's something in the middle. So you basically see kind of like the headline on the website. It's like laundromat for sale, you know, $4 million. Like usually you'll get like the flashy headline and not much more information. Then you kind of got to double click in and request information. And so you usually sign kind of an NDA and you'll get something called a SIM or a confidential information memorandum. So it's kind of look at like a hundred of those because that's really going to show you like here's the finance of the business, like here's kind of the story that they're putting together. Shaan Puri: It's like a summary of the business today. And so that's the one where it's like, you know, I think a mistake is people think you fall in love with the first few businesses you see. Oh, this is great. Yeah, I could buy this. You kind of really like, Hey, Abby, you're just like a teenager that has just went through puberty and you just fall in love with the first set you see. And you're like, well, no, that's probably not the right way to do this. Let me actually just plan that it's probably going to take me over 100 to even find one good one. And let me have that mental expectation. And let me start counting how many I'm looking at and not just like Being desperate to find, you know, the one right away. And Dan, you're saying like, you know, you're looking at an HVAC company. You're like, I don't know what HVAC is. You're looking at the financials. You're like, I don't know which number to look at. Dan Certner: It's overwhelming, but you've got, you kind of got to go through those reps and figure it out before you even have any idea of what you're looking at. I kind of liken it to looking for a house because I think that's, that's a pro, you know, or an apartment even, because that's something that, that most everyone goes through, even if they're renting. Usually the first time you see it, you have nothing to compare it to. So you end up kind of getting to a place where you can spot the winners from the losers faster. But like Shaan said, When I first started, it was like super exciting because it's like the ultimate career fair. It's like, oh, cool. I'm gonna be a landscaper. I'm gonna be, you know, I'm gonna own, you know, a scrap metal recycling center. It's like, you just get so excited. And again, the business brokers, especially, like, they make these things sound amazing. It's like, of course, I want to buy this business. Shaan Puri: So what were some of the cool businesses you saw? Give us an example of one that you kind of like, but you didn't end up pulling the trigger. Dan Certner: So my favorite example is I got pretty close to buying a sausage company. It did about like $10 million a year in sausage. My favorite anecdote on this... Shaan Puri: Sam is also a fellow sausage man, actually. Dan Certner: I know that. Shaan Puri: If we held an event, it might also be a sausage fest. We don't know. Sam Parr: You're almost a purveyor of fine wieners. Dan Certner: I could have been and still may be. Shaan Puri: You didn't just read the sim. You're like touring. Dan Certner: No, I went there. I went to this hostel. I'm like walking through, like pretending to know what I'm talking about. Like, you know, how hot does this oven get? That's the big thing. You gotta figure out what questions to ask. Sam Parr: This is a really common, have you guys heard of the secretary problem? Shaan Puri: Yeah. Explain this. Somebody told us that on the pod. Sam Parr: So I used it when I was looking for an apartment the other day and it was actually pretty magical. And so the thing is, is that, so I'm repeating from memory, so I might get it wrong, but basically if you have, it started with the secretary. If you're hiring a secretary, you'd want to interview, let's say you had, 10 interviews lined up. You wouldn't want to pick who to hire until you saw at least 37% of the applicant pool. So for example, if you saw 10, If you had 10 to see, 10 interviews, you'd want to go through the first four and then after the first four, you would select the first person who you met that was of equal value to or close to the highest person you saw in the first four. Does that make sense? So if you see an apartment, let's say you go and see 100 of them, the first 37 you don't do. But the next one after the first 37 that you see that is as good as the best one that you Previously saw that's the one you select and that's called the secretary problem. Dan Certner: So you can't go back and buy that first one? Sam Parr: You can't go back. You cannot go back. But you need to like, you need to spend time like exploring the first third to see what all is out there. Dan Certner: That's fair. I bought the house that I found on the first day of touring. So I just want to make sure I didn't like violate the secretary problem. But I did. Shaan Puri: Yeah, you did. Sam Parr: But you didn't with the business. And so you wouldn't with the business. And so of the hundred or so that you saw, were there any that looking back, you're like, that was a winner? Dan Certner: No, it wasn't until we saw and you know, there were a few close ones where like I think I was under LOI maybe three or four times. Shaan Puri: For example, that sausage company had like one huge client. Dan Certner: They had one huge client. Shaan Puri: And no contract. Dan Certner: No contract. Sam Parr: But you thought they were amazing. That's kind of my point is you thought of some were so good that you're under LOI. Dan Certner: Yeah, but then you get, you know, you're under LOI and then you get, you know, the full amount of information and then you very quickly see like. Shaan Puri: LOIs are also in this business is like a very, it's kind of like agreeing to a first date more than it is an engagement. People make LOIs. They'll have three LOIs out at the same time. And it just says, it's an agreement. We agree to look more, right? We agree to take this seriously, to show you some interest here. But it's not like, it's not binding in the way that you would, that you think when you first go into this, or if you're the seller, you're like, oh, we got an LOI. It's like, well, hang on, I bet the LOI to close ratio is probably, I have no idea, but I would guess it's like under 20%, you know, in terms of just LOIs received during a process. Dan Certner: Yeah, because, you know, you're not giving the, a lot of the information you're not even getting until that point anyway. So, you know, you're checking all the boxes up until they're like, this seems good. I think this is going to be good. And then, you know, you get their financials or you go toward and you find kind of that, oh, this is why, you know, you're selling it or this is why it hasn't been bought yet. That's another thing. Shaan Puri: One thing you did that, that was great. I think, I think I kind of was like, The one piece of advice I think I was pushing on you was like, hey, write a memo for every one of these deals that you like. Basically, he would write me like a one-page notion memo that was basically like, what is the business? What is the current state of it? Just speak in numbers only, right? Why is the seller selling? What's the one reason that you would buy this business? What's the one reason you would not buy this business? And you would just go there and you would write these memos. And I feel like that was key because I remember you would call, you were like excited about, let's say, I don't know, what was an example of one you were excited about that then after the memo, we talked it, we beat it up and then we were like, no, this is not worth doing? Dan Certner: It was a Clover app, I remember the conversation. So basically, like, so the Clover point of sale system, like when you're like checking out of a restaurant, it's like, you know, they flip it and you're like, what's your tip? This guy made different apps for it. So like, you know, like when you round up for charity, for instance, I think that was one of his apps. So it was actually pretty interesting. It was like, hey, Clover's a growing super niche. Yeah, very niche. But he owned 20 of these things. It was, you know, more up my alley in terms of tech. But, you know, when I actually hashed it out with Shaan, you know, it was kind of like at the end of the day, it was very niche, very small, and there wasn't necessarily a good path to grow that business. It was just something that, like, was interesting now, but probably didn't have the longevity of, hey, you're about to swing. You know, this is going to... That's another thing you said to me, Shaan. You were like, this is going to be... Don't listen to all those blogs out there of, yeah, you're going to buy this, flip it, and the next year you're going to buy two more businesses. No, you're probably going to be working in this business for a little bit of time. Make sure it's good. Make sure it's lasting. I think that first one was an example of, sure, if I was going to buy 10 businesses, maybe that was one of them, but that's not the game we're playing right now. Shaan Puri: A couple other, I thought, key points. Don't buy a job. So I think early on when you go to search, you see big price tags and you get scared a little bit because it's like, how am I going to afford this? And this is too risky. And so you gravitate towards things that feel like kind of safer and more achievable, but it's actually a bit of a trap because it's like, Yeah, this is Safer, More Achievable. It nets $100,000 a year of profit. I can buy it for only, you know, he only wants $180,000 or something like that. And so you get excited because it seems cheap. But the problem is, it's still going to take all of your time to own, to buy this business, to run this business. And you basically bought a job versus the thing you bought, which was like $11 million in revenue, doing a million dollars of real profit. Dan Certner: Yeah, real dollars. Shaan Puri: Yeah, that's not a job anymore. Now that's like an asset. That's like a real business. And yes, it took more risk and it took more time to find a good one of those, but it was like well worth it. So I feel like that was another kind of like key learning I think we both had during this process, like became blatantly obvious. Dan Certner: Yeah, not resting the search. And you want to, trust me. Call it like five months in, you know, when you really hit this pit of despair of like, I am never going to find anything. Everything under five million dollars is trash. You know, private equity, scooping up, scooping up all the good stuff and anything that's left, you know, under this point, like there's a reason it's there. You kind of just get to this place like you're never going to find it. It's easy to want to just grab one and say, like, those things are fine. Like, we'll kind of ignore those, those holes in the business. Sam Parr: I've made so many bad decisions. Like, most all bad decisions that I've made, it was, I could like, It's like I had principles leading into this and I got fatigued and I didn't stick to my principles. Shaan Puri: Fatigue, yeah. Exactly. There was one that was like an SEO business. It was actually like a good business, but what was the situation with that one? Dan Certner: Yeah, so that one was like a competitor for like SEM Rush. It was a solid business. I think it did like a million. It was like half a million to a million a year in profit. It was a nice business. But this was right as, you know, AI was really starting to becoming kind of the center point of the conversation, especially as it relates to search. Sam Parr: I helped a friend buy a company that was in the SEO space and anytime an SEO company What's the cell it's sort of like a big time do you guys remember bitcoin miners like the it's like so if these are so good why are you selling a money printer is sort of the same way it's like wait so if you're just getting like a fountain of traffic and customers why would you want to get rid of this well that's the same thing it's like when you meet a thirty year old selling a business it's like. Dan Certner: You know, why? And that was exactly that. And I think going into, you know, let's call it the AI headwinds. It was like, there's a lot of reasons this business might be completely different. And I think Shaan said, like, unless you feel like you're the best suited to take this SEO company into the, you know, the next five years, there's more risk than upside. And it's like, that is not my background. You know, that's not the game I want to play. And funny enough, I was actually in LOI with this SEO company when I found Fleet. I almost wrote off Fleet. It seemed really interesting and there was some part of me that didn't have me rejected even though I was in very late stages with this other company. Thank goodness I made that pivot. Shaan Puri: Let's tell the story. The broker calls you, says, check out this business. What happens from there? Dan Certner: So from there, I think this was before I was under LOI, but you know, effectively Fleet looked very different than a lot of these other companies, like the finances at first glance, like we're super clean. The story made a lot of sense. A lot of these sims and a lot of these brokers, yes, they're padding things and trying to make things sellable, but there was always a blatant gotcha in a lot of these. Let's take the sausage example. They're like, oh yeah, this makes half a million a year. Oh, and by the way, he also makes another 400,000 in cash, but we don't pay tax on that, so you can't see that anywhere. Part of me is like, that's kind of cool. Also sounds a little dangerous, like selling $400,000 worth of sausage on the side of the road. But there's always something like that with a lot of these businesses. But Fleet was very clean. Everything was kind of buttoned up. The story was really tight. And it kind of checked all the boxes of like, this is a recurring business. People are rebuying the bags several times a year. They have these amazing clients. They have these amazing factories. It looked very different than these other companies. Sam Parr: It sort of sounds like Denner Mifflin of bags. Dan Certner: Yeah, exactly. I am Michael Scott. It's a necessity that these companies need. Sam Parr: So what'd you do? Shaan Puri: You go, you meet the guy? Dan Certner: I was actually going to say no to the broker because again, this SEO thing was heating up. I hadn't had my, you know, come to terms talk with Shaan yet. He's like, hey, the seller wants to meet you. Let's all go out for lunch. Free lunch, that's cool. We meet for lunch. My goal was to entertain this business, but at the end of the day, I'm under LOI, so I really shouldn't. I should break up with him after this lunch, but we start talking. You know just had this instant connection with this guy like he was the most stand-up guy I had met in in the past few months, especially when it comes to like the business ownership, you know, he wasn't trying to You know pull something over my eyes like he wasn't trying to spin the story He's like this is the story like a lot of people like, you know put lipstick on a pig this guy was like selling a rabbit or selling a different animal like it wasn't like a He kind of said it as it is, and it was very refreshing. In that moment, I kind of abandoned the, I'm going to break up with you. We kind of went the other way. We started talking about, okay, well, how are we going to work together in the transition? How are we going to grow this? And then my favorite part is they asked if we wanted any dessert. And he's like, oh, do you want to share a tartufo? And I was like, yes, and we shared a Tartufo. I don't think I've shared dessert with my wife ever, but I shared a Tartufo with this guy. And like, I remember calling my wife after and I was like, you know, I didn't do what I was supposed to do. Like I was supposed to break up with this company, but like we shared a Tartufo. I'm like, I think we're going to buy a bag business now. And it was just like this, like complete 180. But in literal Michael Scott, right? Shaan Puri: Has anyone ever seen a Chili's that's like exactly this? Dan Certner: Yeah, exactly. It would be like a lava cake or something like that. Sam Parr: A tartufo. Dan Certner: A tartufo. I don't think that was my first tartufo I've ever had, too. Sam Parr: Who knows what a tartufo is? I had to Google it. You're my type of people, Dan. Dan Certner: I'll tell you that. There we go. And then, you know, from there, you know, I broke it off with the SEO guy. You know, we ended up, like, diligence took a while. That's like the second part was like, OK, like now you're committed to buying a business. How are we gonna do this now and like it actually took. It's been four months, because again, I'm signing my house away, signing my life savings away. I needed to be damn sure that this thing was going to be solid before I did that. And then the world of search took on that next chapter of, all right, well, how do you actually figure out, are the assumptions you've made in this quick few week period of dating, are they correct? And we kind of transitioned to that phase of the process. Sam Parr: What was wrong and what was right for your assumptions and what was the difference in his asking versus the paying? Dan Certner: We actually negotiated the price of it pretty early. That part actually happened during the LOI for the most part, or like 99% of it. And there were actually five bidders, which I thought was a lie. I kind of assumed this was them bluffing because they were like, yeah, we got four people in the packaging industry that want to buy, and then there's you. So, you know, it's going to be competitive, blah, blah, blah. But again, I just figured that was a tactic to try to drive the price up. But to this day, the, you know, the seller maintains that that was the case. So at this point, I have no reason not to believe it. We ended up taking, I think they wanted 3.5 or 3.6 for the company. So we ended up agreeing to 3.4. The part that took the most negotiation was that forgivable seller note. So the biggest kind of Red Flag in the business was that one client was over 50% of their revenue. So my biggest fear, rightfully so, is everything's great today. They've been a client for 15 years. What happens if next year they leave? All of a sudden, it's a very different business. So what we did was kind of ran the numbers of the bank and said, hey, in order for us to finance this, this is the number that we'd have to have if, for whatever reason, we lost that client. So that part was probably the most intense of the negotiations. But for better or worse, most of what he said ended up being true. There weren't any of these. And he said that in the sim. That wasn't news. Shaan Puri: What was surprising to you or what was different than the dream that gets sold on social media? So if you watch the videos and you see Cody Sanchez telling you to just buy a laundromat, you'll be rich, whatever, that type of shit. Was it in line with that? Was it different than that? What was the difference if there was one? Dan Certner: Yeah, it's not nearly as easy as Cody Sanchez makes it seem. And I probably went a little more overboard. I think like when I think about the amount of time I spent in diligence, the amount of money I spent in diligence, you know, I like I'm a risk taker for sure, but I'm a calculated risk taker. So it's like before I make this gigantic gamble on the rest of my life, I want to make sure I've done everything humanly possible. And I think when you watch a lot of these videos about buying the business, they make it seem like you can just find one and then kind of transition right away and the whole process is really easy. The process of getting the loan, some people liken it. Actually, I think Cody Sanchez likens it to this. So maybe she actually isn't setting unrealistic expectations, but it's a financial colonoscopy. They want to know everything about you. And like that part's tough. And then you give the company a colonoscopy to try to figure out everything about it, quality of earnings, that sort of thing. And one of the things that I did, I think that I'm happiest that I did, because it got me the most comfortable outside of paying for accountants and lawyers to scour things, was I shadowed the guy. Sam Parr: So every week- Because he happened to live in New York City too? Dan Certner: The whole thing was serendipitous. He lived 20 minutes from my house. Wow. Before I signed the SIM, it was like packaging distributor in the Northeast. Could have been in Boston, could have been wherever. This guy lived 20 minutes from me. That's how the Tartufo was so accessible. But I literally went to, I went to the office every week, sat with the guy for several hours and just, he walked me through packaging. He walked me through his day-to-day and it just gave me, you know, it started my training of like, okay, well, how am I gonna run this business? But it allowed me to really kind of take what was on that paper and figure out, you know, okay, this is, these are the skills that I will need to run this business. This is how I might be able to grow it. This is where I might need more help. It made it more real. And I think I was lucky in that I was able to do that because I've talked to other searchers. I was like, you know, let's go back to the laundromat. You know, you buy a laundromat. I would imagine day one, you kind of walk in and the machine breaks and you're like, oh, crap. Like, what do I do? I know nothing about these machines. Now I need to find a mechanic. Everything is a little more complicated and nuanced with regards to even how laundromats are. I went down the laundromat path. I spent a while thinking that was going to be my destiny. I was like, well, no, valuing a laundromat actually has a number of facets and you need to really get into the weeds there. I'd say the biggest takeaway is it is hard and it takes time. It's not something that you can just do. You know for a few minutes a day Like you really got to invest in making this happen if that's what you want to do or you're gonna end up You know with some surprise down the road I think that's probably my biggest relief is like I've been waiting for You know the shoe to drop somewhere and like this is what I missed and like, you know, knock on wood haven't had that yet How many hours a week are you working on it now? Sam Parr: And how many hours a week was he working on it? Dan Certner: He was probably working Let's call it 25 to 40. I think he definitely was working less. He kind of had it on autopilot. I think he had started to kind of tune out a little bit, but not in a way that he neglected the business. It was just like he'd been in packaging all his life. He could run it in his sleep. He wasn't as focused on doing the growing or renegotiating things with suppliers, building the supplier base. I'm probably working on 50 to 60 hours. I spend a bunch of time on this. Sam Parr: How much were you able to take home? Dan Certner: So that's the million-dollar question. It's like, okay, cool, your business is making all this money. At the end of the day, two years in, I'm still only making $150 a year. I take the minimum amount that I need to for IRS compliance because I'm saving the rest and able to finance growth. I've made enough to pay back the loan, but I'm not paying back the loan because I need that cash to fuel the growth. It's a very cash-intensive business, and I'm not in a place quite yet where I can Take as much off the table. Although Shaan has been giving me some other framework saying like, hey, you actually should be doing this. Sam Parr: What's that framework? Which is like? If you want to replace yourself, you have to pay yourself the replacement costs. Shaan Puri: No, not that. But basically, I did this in one of my businesses. It's not right for everybody, but I think it's easy to go into rainy day mode as a business owner when you play like two conservatives. You know, several of our businesses right now have just like, like one of our businesses has just like two, three million dollars just sitting in the bank account. And the bank, like it goes up every month. It's not like we have this like wild swings where you need this big cash reserve buffer. It's not like a heavy inventory business. It's like you know all of your operating expenses as salary and you know your salaries. So there's no surprises coming next month. And even if there was, like one of my friends, our buddy told me this. I was like, how much do you keep in there? Like three months of working capital, six months, 12 months? Like, I think I have like 12 months of working capital sitting in the bank right now. He's like, no, I just take it all out. I'm like, zero months? He goes, yeah. He goes, I own this business myself. So if I ever need the money, I just lend it back into the business. Like I just, I can always write the check back. Sam Parr: It forces you to make a profit as well. Shaan Puri: Yeah, and so Andrew Wilkinson came on this podcast and had this book. He was talking about profit first. I really like the philosophy of it, which is basically with normal business, you have your revenue, then you have all your expenses, and then it's like, surprise, here's how much profit's left over after all that. And usually what actually happens is there's less profit than you would have guessed. And it's why? Because expenses were a little higher, blah, blah, blah. And you're always in this profit comes last. Profit first was basically you decide up front, you say, okay, I want to have a 20% profit margin. So you take your revenue, you set aside money for taxes, which you know is going to be, you take your revenue, you take your profits, you do set aside amount for taxes. What's left is your expenses budget. So instead of making profit the thing that comes last, you make the expenses come last. And then you have to say, all right, cool. Then my marketing budget can only be this much because I've decided to take this much as a set profit margin out of my business. And I don't adhere to it 100%. I don't think it's right for every business. But I do think that, you know, Dan in this case, I think he's being a little overly conservative as to how much cash he's leaving in the business. I did that too. And the longer I delayed it, I took away one very valuable thing, which is if you pay yourself every month out of the business and one month that's light or another month that's heavy, the body just reacts to it. If it's light, you're like, yo, what the hell? And you will go fix a part of your business that was broken. If you just leave it in and it's just like a P&L, it's just numbers on a spreadsheet. It's not money you actually receive. You'll wait 15 months before you end up correcting that problem because it's all fictitious money anyways. It's not money you're actually getting. And so I think that actually getting that check every month creates this feedback loop that's actually quite valuable to a business owner. It'll cause you to scrutinize unnecessary expenses or go after it because once you taste a big month, like, Sam, we have this with MFM. If we have a big month, And the next month, I'm kind of like, well, I kind of like the feeling of that one. Sam Parr: Let's do that again. Shaan Puri: What do we need? One extra episode, too? Should we go get a guest? What's Monish doing today? Let me see what's going on over there. Right. Like you start to think about what you could do to go to go drive it back up. And I think there's an unhealthy version of that, but there's some healthy components to that. Dan Certner: So I think that's a lesson learned for me. I think I'm still in the very conservative, what if I need this money? And I do have high working capital costs, especially around now, kind of pre-holiday, I'm about to have to write a bunch of checks. But very soon I should get to a place where I can take more out and or start paying back some of the debt a little faster. Shaan Puri: All right, listen up. Turn the volume up because it's your boy, Shaan, and I got a little message for you. I talk to hundreds of founders a week, and when I talk to founders, everyone says the same thing, that the one thing they need the most is not funding. It's not more resources. It's just having more time. The goal here is to win, and the way you win is you get yourself free time to do stuff that's high impact. How do you do that? Well, I'll tell you my solution. The answer is Gabby. Well, you might be wondering, who is Gabby? Gabby is my assistant. She is my wonderful assistant. Gabby lives in Latin America and she helps me save about 20 hours a week. So what she's doing for me is every morning, my inbox is sorted and triaged. And the most important stuff is right at the top with draft replies ready for me. So I'm never behind on email. And then as I'm on the go, I'll just send her voice notes saying, hey, could you find my kids a soccer class? Hey, could you take care of this car registration thing for me? All these little tedious BS things that would take up time in my day, she takes care of for me. And so that's free time I'm getting back. So if you are a CEO who's serious about growing your company, You need to get yourself an assistant. The best place to go is somewhere.com. Somewhere sources the best assistants from low cost areas for you. So you can get an amazing executive assistant who's got business experience and has supported other CEOs for seven, eight, nine, $10 an hour. And so go ahead, go to somewhere.com, tell them I sent you, they'll hook you up with a good deal and get yourself an assistant and you can thank me later. All right, back to this episode. So Sam, I'm curious, what's your reaction to this whole thing? Sam Parr: So I think that for people who have your personality type, which is you, you're a very serious person, I think like, like you're a person, like if I was a broker and I met you, I would not think you were kicking tires. I'd be like, Oh, this guy's for real. Like it's, you have the very obvious for real energy. And if you have that very obvious for real energy, we're like, no, I'm going to do this. This makes sense. I think that the path that you're taking is so wonderful. And I, my assumption is that you're going to be wildly successful. And so I think it's very wise to do. I think that if you are an unserious person where you are not willing to put your house up or something like that, that's kind of like one of the tells. So if you are not serious like that and you are not willing to do the diligence and say, I'm willing to look at 100 things, I would say do not do this. Shaan Puri: Yeah, I think there's also one. I think you said it perfectly. There is one more thing to it, which is what situations do you shine the most? And so like for Dan, I think he always had an entrepreneurial streak that was used as like random side quests in life. We would go try to win the McDonald's Monopoly game every year. We tried to actually win it, not just hoping. Dan Certner: We thought we were going to win it. Shaan Puri: We were dumpster diving trying to win this stupid thing. We started a blackjack club on campus and we're running simulations to see how much money we can make if we started a blackjack club. We were always trying to come up with ideas. It was more fun to come up with our own idea versus just go get a job and do the thing. I feel like if you know that you actually turn up the most, you're the most version of you when you're doing this type of shit, when you're like in control of your own fate and you have your own project. As arbitrary as like, you know, bags are, doesn't matter. It's like, I'll take bags super seriously. I took, he took gum seriously, blackjack seriously, sushi seriously, like all those things. I think that that's the other part, which is not only the part you said, but then also if you really are like at your core more entrepreneurial and you're more switched on doing that, then you're going to have a better result doing this than you are if you, you know, stay in a more traditional job. Dan Certner: That's my thing. I think people, you know, when I tell them about, you know, first it's always like the unbelievable, wait, you do what? But then the second, like their mind goes like, oh, I should do that because, you know, it sounds great in hindsight, right? Like when everything works out, it's like, cool. Of course, this is easy. Of course, anyone can do it. But I think people miss the point that There's a lot of ways that this doesn't go like that and it's not necessarily the most glamorous. Sam Parr: I also think most people shouldn't do this. No, I agree. I agree. This does not fall within my skill set. If I had to guess, when you were buying the company, you guys were negotiating over $10, $20, $30, $40,000 things. If I had to guess, you were incredibly anal about the paperwork. You were asking, you're like, what's this $3,000 charge? What's this? That is not what I do. I do not do that. That kills me. That does not fit my personality type. So I have bought and invested and done a bunch of real estate stuff in my time and I lose on all of it because you make your money when you're buying it and when you sweat the details up front, which is not, that is not what I do. I don't think necessarily that is what Shaan likes to do and I think that if you are the type of person who plays a board game and you memorize all the rules and you like sweat the details, And you have that attribute, then buying a company could potentially work well for you. Dan Certner: I'm the guy that takes the rule book out of the box and reads it to explain to everybody. Sam Parr: Exactly. If you have that trait, this could be awesome. Life-changing. Dan Certner: Yeah. Shaan Puri: So Dan, one of the other cool things about doing a search for business is you realize how big the universe of businesses is. And I asked you, I said, you know, usually we try to brainstorm business ideas with people like, what opportunities do you see? You said you would come up with a couple ideas. Give us a couple of your ideas of what you think other people could go do. This is just like the sort of random section. Dan Certner: Yeah, I think the biggest takeaway from buying a business, before I get into the ideas, everything's a business, right? Go look at any store. Every little piece of that business is something that someone sells. That display that says for sale, someone sells that. The holder for the gum on the store, that's a business. I don't think I really appreciated how random and how basic some of these businesses can be and people make really good money doing it. Even packaging, you don't really think about that. Sam Parr: By the way, I'm pretty sure Robert Kraft, the owner of the Patriots, he owns the Kraft Group. I think that's a packaging company. Dan Certner: It could be. There are so many packages. Sam Parr: They make corrugated cardboard, I believe. Shaan Puri: One of our best episodes ever, if you want to go listen to a great episode, is the Sarah Moore episode on this podcast. And she's the, I think it's called the Egg Carton Queen. And her thing was, she did the same thing you did, basically. She went and found a retiring guy who owned a business that sold egg cartons. Like, not the eggs, the carton they come in. And you don't even think that's a business. When you go look at, you're like, eggs, yeah, okay. There's a farm that sells eggs. You don't even realize that the farm has to then buy egg cartons and there's somebody whose job is to make egg cartons and they sell it at the best price and the best value, blah, blah, blah. And so her episode I think is amazing and you see that. The other example, Sam, that I always give when I explain what this podcast is to people is I talk about like, Everything you see is there because someone sold it. Nothing gets there by accident. And so I was like, you know, even in the workplace, if you go to your break room and there's a poster on the wall that's like the labor code, there's a guy in Minnesota that sells that. He makes a million dollars a year selling you the poster every year. Once I heard that, I was like, oh, shit. It's like a physicist when he learns about string theory or some shit. It's like, oh, it's everywhere. I get it. Unknown Speaker: Oh, the waves are particles. Shaan Puri: You see the world as a component. Yeah, all the components themselves are businesses too. And then you realize, If you're not making it in business, it's mostly because of a lack of creativity and effort. It's not because of a lack of opportunity, because literally every item everywhere is itself a business that somebody is running to get it there. And so there's no lack of opportunities in that sense. Dan Certner: So now I'm like hardcore in the event of the spectrum of like as unsexy as possible. I want to do that. I want to be the guy that has the most random thing. Packaging is pretty random. In a future world, if and when I'm done with this, I want to go even further. Sam Parr: By the way, when you're laying in bed at night, what do you think, in 10, 20 years, we could be this? Do you think this could be a $100 million company? Do you think you could sell it for a certain amount? What's your North Star that excites you? Dan Certner: At this point, I don't have any plans to sell it. I do think it could be $100 million in sales company easily. Some of these big packaging players are huge, and we're able to compete with them. We're small in the scheme of things. It's a nice-sized business, but we're small in the scheme of things. But what I'm finding is as we work with these brands, we actually do have a pretty differentiated offering because we are small. We're scrappy. And people love that. And as we've been able to kind of add clients, I'm like, oh, this thing can really take, we can really scale this up and start to gain more traction with these large brands. And the crazy thing is people spend, these big companies spend tens of millions of dollars on their packaging. So you could easily get five clients to get you to 100 million, like that, if it's the right five. So my goal is to grow it. I do think in a few years I'll hire an operator to run it. One of my biggest pieces of advice to people searching is don't assume you're gonna hire the operator day one, especially if you're putting your house on the line, because there is not a single person that I trust to run this business. When I'm gonna get kicked out on the street if it fails. When I get to the place that I feel better about that, only then will I then decide, okay, well maybe I'll hire someone and just do more strategic work. I'm loving doing what I'm doing now. I think it's eventually scaling my time. I'm very involved in all the processes right now. I designed it that way because that's how I learned. I'd love to be able to go away and not have to take a call because the blue isn't blue enough. I do a lot of color matching. Shaan Puri: When we were doing the sushi restaurant, Dan was not only sweating the details on the finance side, but we were like, We don't really know how a restaurant works. None of us have ever worked at a restaurant. So Dan went and got a job at Noodles and Company. Oh yeah. And he studied them from the inside and we treated it like it was like Ocean's 11. Like every day he'd come home and we were like, what did you learn? Dan Certner: Read a report. Yeah. Shaan Puri: How long did you work there for? Dan Certner: He'd like draw the workflows or he'd like write down- Yeah, what did you learn and what did you bring me? Give me the pesto cavatappi. Shaan Puri: Yeah, then he'd bring the pesto cavatappi and he'd be like, Trust me, do not eat the tomato basil soup. We're like, why? It seems just tomato soup. He's like, don't eat the tomato basil soup, guys. And so he was like, went undercover. And he was like, willing to go. Dan Certner: And then I had like the big reveal, like the big undercover boss reveal at the end when I quit. Shaan Puri: By the way, were they blown away by the fact that you're like, I am creating a sushi chain? Dan Certner: I think I tried to hire the GM and she's like, all right, that sounds better than what I'm doing here at Noodles & Company. She was like, I thought you'd be like, you betrayed me. It's like, cool. You're like, oh, you're trying to move next door? Great, we can trade food at lunch. Shaan Puri: So Dan, let's do, actually, do you have that, the business plan that we made? Do you still have that binder? Dan Certner: Yeah, one sec, let's find it. Shaan Puri: So the story here is that not only did Dan work undercover at Noodles & Company, at some point... Dan Certner: Also, this was not a... I didn't just put that there. Like, that's lived there behind me. Shaan Puri: You just keep that there? Dan Certner: I don't have one. Shaan Puri: I need to get a copy of this. Dan Certner: I have this. I also, like, our Sabi Sushi hat is right there. Shaan Puri: Oh, nice. Yeah. So basically, the first business we me and Dan and our buddy Trevor had out of college was to create a brand called Sabi Sushi. The idea was to create the Chipotle for sushi. So go get go get sushi the way you eat Chipotle, where you just walk down the line, you pick your ingredients and you get the thing. This is our big idea. Not only did Dan work undercover at Noodles & Company, we then go and, I don't know how, we get a meeting with the founder of Noodles & Company and we show up to this meeting with this binder. This binder is our business plan. We had been working on this for months while we were searching for a location. And can you just hold up the thickness of this binder so people see it? Dan Certner: Oh, yeah, it's thick. Let's see. Shaan Puri: Yeah, like this is probably a couple hundred pages of a business plan in there. And there was stupid things. So part of it is what you would expect, like here's the startup cost. But part of it was dumb stuff like the uniforms and how we're going to like progress people from entry level to manager and what their values are and all. We had not sold a single role to a single customer and we're worried about all this other shit. But what we think, we're tricking ourselves into thinking that planning equals productivity and, you know, spoiler, planning did not equal productivity. We're basically doing a very fancy form of procrastination. And so we get to this meeting with this guy from Noodles & Company. I think his name's Aaron, if I remember correctly. Dan Certner: I forgot that guy's name. Shaan Puri: He's like, all right, so what's the plan? And we think we're about to wow this guy. And we're like, plan? Oh, funny you should ask. Whip out that binder. Slam it on the table and it's basically like, here's our plan. Look how great this is. And I remember he looks at it and first of all, it looks like a kid's project. Even the cover is like we inserted this colorful thing in the front plastic thing. And then he flips through and he's like, realizes pretty quickly, oh, these idiots wrote a 250 page business plan for their sushi restaurant. And they don't even have a location. They don't have any customers. They're starting on, you know, from scratch. And I remember the look on his face. And then I remember like the moment that was rock bottom for me in the whole sushi journey, which was that he should have just ripped us and been like, guys, what the hell are you doing? This is so ass backwards. Like, why don't you get out there, start testing your concept, see if people actually want this. And then like, you know, you'll learn by doing. And instead, he kind of took pity on us and didn't say that. I could tell he wanted to say something. And then he was like, And then he just tried to be nice about it. And I was like, oh, my God, we're so bad that he feels like he needs to be polite about this. That means we're even worse than just being bad. And I just remember realizing, like, well, I don't know what the right answer is, but whatever we're doing is dead wrong. I could tell you that right now after that meeting. Dan Certner: Years later, someone did tell us that, though, in Boston. We were about to sign a 10-year lease. We literally just met this guy like 10 minutes ago. It was a guy, he owned a bunch of Boston markets. I don't know if you remember that. Shaan Puri: Yeah, John Prendergast. Prendergast, is that how you say it? Dan Certner: Nice call. Shaan Puri: That's his name. He was doing a tech company now, but he was like, early in my career, I owned 20 or 30 Boston markets. He's like, so I know a little bit about the quick service industry. Let me be your mentor. Dan Certner: But he basically just tore the whole thing to shreds within five minutes. It was like, this is wrong. Don't sign that lease. And Trevor wasn't in Massachusetts with us when we were doing this. He was about to sign the lease. We called him. We're like, wait, no. Shaan Puri: Well, this guy was great because he asked us a question and we gave him the answer we'd been giving everybody else. I think he was something like, so what makes you think that there's demand for this? And we were like, well, sushi's been on the rise. We gave him this spiel. Alright, so is this going to work or what? And he basically cut through the nonsense and he's like, how do you know? Are you testing this? You're just going to sign a 10-year lease with a personal guarantee with no clue if the market actually even wants this? Doesn't that seem insane to you guys? And he gave us real talk and I'll forever be grateful for him for giving us that real talk because he saved our ass from signing that lease. And he gave us a different plan and he was like, why don't you test this? Rent out a commissary kitchen like bakers and caterers use. It turned out they were like $20 an hour. It was like super cheap and no long-term commitments. And he's like, rent those out. Do a delivery only. Validate the demand. See if people like your recipes. See if people like the price points. You'll learn so much by doing that and then you'll know what you need out of your first location if you're going to go there. And that saved our ass. That advice saved us. Whenever somebody asks me for any advice or help, I just remember, like, can I give them one-tenth of the value John gave us is the new, like, North Star for that situation. Dan Certner: Yeah, I remember he introduced us to, like, Lean Startup and, you know, actually figuring out, you know, we used to poll people. We're like, you know, would you eat sushi? How many times a week would you eat sushi? Which is a badly phrased question, anyway. In hindsight, it's like, oh, I'd come two to three times a week. And it's like, we did this proof of concept on the cheap as quickly as we could. And the answer was, not even once a month. Night and day. Shaan Puri: Right. Outside of LA, SF, New York, the answer is, if I eat sushi at all. To make a concept like this work, it needs to work in Texas, Colorado. It needs to work everywhere. And the answer was if I eat sushi at all, I eat it about once a month and I'm happy with that. I'm not trying to eat it three times a week. Dan Certner: And I'm going to go to the nice restaurant to do it. Shaan Puri: Right. And we were looking for like the three people who validated us rather than ignoring the 97 people who were saying no. We were like, yeah, see, those three. He also did one other amazing thing that as an entrepreneur, I now see like this pattern over and over again. So he suggested to us, he's like, do it delivery only. And we were like, ah, but he like saw the look on our face. He's like, what? And we're like, delivery just sucks. And we started, you know, he's like, why? So we're like, delivery, I mean, you order food, you don't even know when it's going to come. This is before DoorDash, by the way. Dan Certner: I think the biggest thing is we probably invented DoorDash and didn't know it. And we were fixated on the sushi, but we really, you know, came up with a better model. Shaan Puri: Exactly. So before all those, we were like, you call in an order. You don't know when it's going to come. It shows up an hour later. The packaging is all shitty. The food is cold. It's leaking out the bottom. It just feels cheap. And we're like, that's why it sucks. And our takeaway was, therefore, no. And his was, wow, looks like you found all the things to improve to make this a 10x better experience. And since then, now I see this all the time. If you talk to entrepreneurs, it's like, You think about a space and you're like, oh, that's horrible. That's horrible for these reasons. The customer response is, it's horrible. The entrepreneur response is, wow, what an opportunity. Because if I just change those four things, I now have created this huge level up in the customer experience. And so we ended up doing it where our delivery times were sub 30 minutes. You knew exactly when it was going to come. We stamped on the food when we made it. So you knew it was fresh. We put a webcam in our kitchen so you could see us working on your order. We did like all these other things to try to make delivery actually a cool experience. And the bar was so low by basic delivery standards that that kind of actually worked. And so I thought that was the other like really brilliant thing that John did for us. Dan Certner: Rethinking what everyone kind of assumed we would make with a restaurant and kind of flipping it on its head. And it allowed us to fail faster. Shaan Puri: So, back to the business ideas. You had a few here. Are there any that you think are cool or interesting that you think somebody could go do? Dan Certner: Yeah, I am very into what I'm calling fun-to-run businesses. So, I actually looked at a few of these towards the end. I think I found fleet when I saw some of these. Like, laser tag, bowling alleys, like kind of these family entertainment businesses. And I have kind of two hypotheses around them. One is like, I think I saw like one or two P&L. Again, do your own research. Don't just blindly accept that this is a good space. The one or two I saw like wildly profitable, very low cost. There's probably a high startup cost in the beginning, but like climbing gym or something like that. It's like once you get it set up, they have like these autonomous ones now too. You don't even need that much labor. But also as a dad, I have two kids, like I'm always spending money on these things. Like my son had a laser tag birthday party. There's like one person working at this laser tag thing. They like own the laser tag game in town. They charge you for the adult standing at the birthday party. And I'm like, wow, like I could do this better. Shaan Puri: I want, you know, they, and they have you hostage. Dan Certner: All the arcade games, you got to buy their food. Kind of these very easy to run, like almost a single person, but you know, let's call it like a teenage business. So you hire teenagers to work there, like anything that they're not going to mess up. Yeah, like a bowling alley. And then how do you find things that like have multiple purposes? Like there's a bowling alley in my town and I, you know, it's, you know, during the day it's for kids. Like they have the kids activities and like after school activities. And then at night it's the bowling league for the adults and they have a bar. So it's the local dive bar. It's like, you know, then there's like five, you know, five vending machines in there. Again, teenager working, like the no frills. But I have to imagine if you can find the right business like this, kind of great to be able to just go bowling at your bowling alley. I can't do much with my paper bags. I go and I check them out. I maybe walk around with them, but not much. Shaan Puri: Why family entertainment? Why this out-of-home entertainment? Why now? Is there anything that's changed in the market? Because these have been around forever. Laser Tag, Puppet Golf, Bowling Alley, whatever. Dan Certner: My hunch is they've been profitable for a while. I think a lot of these are sneaky businesses that you don't think of. You know, I think there's also kind of more of a trend. I was reading about this like, you know, millennials like don't drink as much. They want more like sober events. I think this idea of doing more like games is starting to take on again, you know, small sample size of things in my town. But like, you know, you go to these like unlimited, you know, there's an arcade in my town. It's like you pay like eight bucks for an hour. You can play unlimited arcade games. This place is packed. You know, that sort of thing never really existed. But I think there's like this desire to like leave the house and do things. Maybe it's a post COVID thing. I'm not sure. The thing that I think is really interesting about this is like, and this is probably true across the country. Like, if I think about like, I always drive by like these large commercial real estate, you know, old malls, these big buildings that no one wants to buy anymore. And then when I see one, when I see what people put in them, like, It tends to be kind of like these newer things, you know, more interesting things like pickleball courts. Like I think I read something that's like, oh, they're taking all the old bed baths and turning them into pickleball courts. So it's like you like take something that maybe you can get that's not being used and you know, make a climbing gym, make it a ninja course. I think it's like the most incredible marketing where they like just marketed gymnastics to boys and now all of a sudden they've doubled the amount of like demand for this and then there's like the climbing team and like this place is packed all the time. So that one is one. Shaan Puri: So one of my biggest investments over the past two years has been in my brother-in-law's commercial real estate. So he does what everybody thinks is dying, but is actually thriving. So for example, these kind of like strip mall locations, not like a mall, like an indoor mall, but basically a shopping center. And a shopping center with a grocery store, maybe a So there's got a Trader Joe's, there may be like a Crunch Fitness, there's like whatever, there's a bunch of these types of locations. And then how do you fill up the rest of the boxes? And people think that shopping centers are probably dead because e-commerce or whatever, everything's on Amazon now or whatever. These things have like 97% occupancy. It's higher than multifamily and office. It's a really great category. And even the few concepts that are kind of going out of business, like a Bed Bath & Beyond or like Joanne's Fabric, he's replacing them with trampoline parks and Pickleball and Tesla charging networks. There's just new tenants that are always there. And he's like, the best part of this entire model. Because the returns are bananas for this thing. It is by far like the thing I've been most bullish on in the last 24 months has been investing into this. I basically took all my spare cash, put it over here. And the reason why was A, it's a good operator, but B, there's no supply. So nobody builds any new shopping centers. So even though everything else people build more, they build more condos, they build more stuff, nobody builds new shopping centers. And so it's all just retrofitting existing centers. You buy them usually below the actual build cost of the center themselves. And so I've seen this. My kids go to this thing called Little Kickers. It's in San Ramon, a little town in the Bay Area. And it's exactly what you're describing. A teenager runs it. I asked to speak to the manager, and the manager was 17 years old. He had a chain on and the F-boy haircut. And I was like, what? You're in charge of this? He was great, by the way. He was actually a really good manager. But everybody who works there is young. He's young. He's definitely, I don't know, under 23 years old. And all the coaches, there's two coaches per class and they're all also like just kind of soccer players or high schoolers probably. But this thing is packed and it's just like one large venue for kids soccer. And this thing has to be printing, like I just doing the rough math of it. This thing has to be printing. It's definitely over 1,000 members. It's like $200 to $300 per month. This is a very big business that's basically, like you said, sort of like a fun business that's teenager. Dan Certner: And it's AI-proof. Shaan Puri: So if you're looking for, where do I do business if I know the whole world is changing with AI? Well, AI is probably not going to like do a trampoline park or, you know, do a kid's soccer center. You know, like those are those are pretty safe businesses. Dan Certner: And they're predictable. I mean, like their kids are always going to want to jump. It's not like you're buying a product that, you know, all of a sudden you don't know if it's going to last. Right. Shaan Puri: You put a bullet point on here. The least sexy business is possible. Touch the taboo. What do you what do you mean by that? Dan Certner: So this is I start again in the pit of despair. You start to you start to go crazy with ideas. All right. Well, what are what? You know, I started looking at like medical ambulances, which I still think could have worked. But effectively, you know, the government subsidizes medical transport for disabled and elderly from, you know, nursing homes to their medical appointments. So it's actually government contracts. If you have a fleet of, you know, these special handicap accessible vans, you know, you effectively can immobilize this fleet every day. You kind of fill up your appointments with the people and you just transport them to and from. It's super simple. You don't really think about it, but the demand is there, especially as the population is aging. That's a good example of a non-sexy one. I would love to buy a funeral home, something that's just like, oh man, you work in that. If you want to find a deal that's kind of like punching above your weight, if you will, there's going to be some hair on the deal at the lower end of the market. Like I said, private equity is going to scoop up the easy ones. There's going to be something. If that something can be that is just weird and no one really wants to touch it or think about it, to me that's a great reason to buy it. Shaan Puri: Right, because it might mean that, let's say there's a really sexy business on one side, right? There's a business that's like, Maybe it's like software only. You don't have to run it. It's low operations, blah, blah, blah. It's about whatever, party planning or something fun. The hair on that deal might be, it may be just that the valuation is extremely high, so it's going to take you a long time to get your cash back. Or it might be something else, like, you know, users are very fickle, the competition is very intense, whatever. There's going to be hair in every deal. The good thing about what you're saying is that if you choose the hair, that it's not the most fun thing to run. Dan Certner: Well, yeah, or the hair is going to be like, you got to cremate someone. It's like, I actually, like, I don't actually know if I want to do that, like, now that I'm saying it out loud. Like, that's, I mean, I'll hire a teenager to do it then. That's a better amount of hair. You kind of know what it is. It's like the hair is the thing almost. Shaan Puri: Versus like the P&L has hair or there's a lot of debt on the business. There's other problems in other areas. Dan Certner: Exactly. If 20 people are going to flock to the software, only party planning one, but only two crazy enough people are like, well, let me roll up these funeral homes. I'm sure people do this. I'm not the first one to think about this. But I like that. The other thing I really like right now, Party City just went out of business. Where are you buying balloons? There's a guy, like 20 minutes from me, he had a fireworks store. His fireworks store happened to sell balloons. The day Party City went out of business, he rebranded, man. Now his store is called Balloons. It used to just be called fireworks. Now, it's called balloons. He's taking out all the ads on the street and we went there, you know, for my son's birthday and he's doing awesome. So, it's like how do you like kind of and don't copy Party City. That clearly didn't work. Sam Parr: Right. Shaan Puri: But the demand for balloons still exists and will continue to exist. Dan Certner: Exactly. The supply just shrank like a whole lot. Shaan Puri: Right. Dan Certner: And I imagine as things change like the landscape For better or worse, it's changing very rapidly these days. Maybe something goes out of business because they can't compete because of tariffs or whatever. How do you think about being opportunistic in that sense and doing it? You could start selling balloons. Get a permit and start doing delivery-only balloons. I actually saw Chuck doing that. Shaan Puri: When I went to Monish Pabrai's house, he's a great investor, and on his desk, where you have a name placard, normally you just have your name engraved on it, engraved on it, it just said, Trouble is Opportunity. And he just had it on his desk, because at all times, he's reading the news or he's hearing something, as a reminder, Trouble is Opportunity. I love that. Dan Certner: Yep, that's awesome. Shaan Puri: Cool. Well, Dan, dude, awesome hanging out with you as always. I'm glad you got to tell your story and congrats, man. I'm blown away by what you did with the business that you bought. You are officially Dan the Bag Man. Thanks for telling the story. Dan Certner: Yeah, thanks for having me on. It's exciting to be here. Cool. Sam Parr: All right, my friends, I have a new podcast for you guys to check out. It's called Content is Profit, and it's hosted by Luis and Fonzie Cameo. After years of building content teams and frameworks for companies like Red Bull and Orange Theory Fitness, Luis and Fonzie are on a mission to bridge the gap between content and revenue. In each episode, you're going to hear from top entrepreneurs and creators, and you're going to hear them share their secrets and strategies to turn their content into profit. So you can check out content is profit wherever you get your podcasts.