How to Lose Sleep, Make Money, and Still Love Owning a Business I AO 14

Ever thought about buying a small business? James Jackson Leach has bought more than a few—and learned some hard lessons along the way.

In this episode of The American Operator Podcast, James shares the unfiltered reality of owning and operating small businesses, from a neighborhood butcher shop to a downtown bar. He opens up about the challenges no one talks about—like managing unpredictable employees, dealing with government regulations, and knowing when it’s time to pull the plug on a failing business.

🔹 How he bought his first business with an SBA loan
🔹 The hardest lessons from running a meat market, brewery, and bar
🔹 What most first-time owners get wrong about leadership
🔹 Why culture and people make or break your business
🔹 How grit (and a little ruthlessness) keep you in the game

💡 If you're thinking about buying a small business, this is the real story you need to hear.

📢 Subscribe for more real stories from operators building America’s backbone.
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Transcript

Speaker 1
All right, team, I'm here with James Jackson Leach in Austin, Texas in studio. Man, you done a lot in your life, man. I'm stoked to be able to dive in and talk the good, bad and ugly on small business. But, how the heck are you, man?

00:00:15:13 - 00:00:34:00
Speaker 2
I'm good man. Thanks for having me. I've been thinking about being on your podcast for a while, and that's, you've been very good at being like, hey, I know you got small kids. I know, I know, you're busy. Like, make time, get in here. And because of those three reach outs, I was like, oh, okay, cool. And actually, I was born, like about a mile from your office right here.

00:00:34:01 - 00:00:35:12
Speaker 2
Oh. Were you really? Yeah.

00:00:35:13 - 00:00:36:07
Speaker 1
Down here before?

00:00:36:10 - 00:00:57:21
Speaker 2
Well, mile and a half, I was Martin Springs. Yeah, man. Grew up there my whole life. Until I was 24, I lived in Martin Hills, and, I live with my grandparents. Graham Pennell, because my grandma had passed away. And then, Yeah, just, you know, the pristine off the numbering and living off, speaking out and going to Barton Springs at 3:00 in the morning before they put up a fence when I was a kid.

00:00:58:02 - 00:00:59:01
Speaker 1
You just jump right in.

00:00:59:01 - 00:01:09:01
Speaker 2
Yeah. You know, it's a pity that I can't like, replicate that kind of upbringing because Austin's so different now. When I was born, it was 300,000 people and now it's not even know what it is.

00:01:09:01 - 00:01:10:16
Speaker 1
Now it's got a million in it, right?

00:01:10:18 - 00:01:11:06
Speaker 2
No more than that.

00:01:11:06 - 00:01:16:12
Speaker 1
Yeah. What? You still love the town?

00:01:16:14 - 00:01:39:11
Speaker 2
I do. I love the town, but I love it in the way that you have relationships with people you're not with anymore. You still love them, but you can't. But you're not in love with them anymore. Austin is. You know, I was born here, and it's natural for anybody to kind of want to leave. So I'm right now I'm trying to convince my wife to leave and go somewhere else for a while.

00:01:39:11 - 00:01:43:03
Speaker 2
I don't care if it's for one year. Yeah, like, oh, I was born.

00:01:43:03 - 00:01:44:23
Speaker 1
Here. What's on the top of the list? I'm just curious.

00:01:44:23 - 00:02:09:07
Speaker 2
Well, so there's there's the fantasy top of the list, and then there's the realistic top of the list. Yeah, fantasy top of the list would be like move to Brussels or something like that for. Yeah, yeah. Moved to New Zealand for a while. I've, I love New Zealand. I've been there a couple of times. Realizing on top of the list is Raleigh, North Carolina or upstate New York, because those are the only campuses that she could relocate to with IBM is one of those things.

00:02:09:09 - 00:02:24:12
Speaker 2
She loves, and she loves her job, so it's like she likes her team. She wants to keep building with them. So that's those are the those are the options. And those aren't exciting to me. So I think we're going to stay in Austin. So I gotta stay in Austin till you know something else. Good. Yeah.

00:02:24:13 - 00:02:44:08
Speaker 1
Well man, like you've had quite the quite the start. Me everything from beer to butcher shops and then beyond that. But before we dive into that, I'm just curious, me and I would think, would folks who meet you and know you would say, oh yeah, entrepreneur business operator that's what they would think of you. First off, too bad.

00:02:44:08 - 00:02:48:03
Speaker 1
Where'd that come from? You grow up that way. How did you get into it?

00:02:48:06 - 00:03:09:16
Speaker 2
My grandpa. So I live with my grandparents. Well, I live with my parents. And then when my grandma passed away, I was 13, and we lived very, very close, you know, within minutes from my grandpa. So that I said to my parents, hey, I want to move in with grandpa, always by himself because she passed away. Yeah.

00:03:09:16 - 00:03:20:16
Speaker 2
1314. So I'm moving my grandpa. And he started the first cable television company in Austin, Texas, and he was two and three of the diehard entrepreneur.

00:03:20:18 - 00:03:22:15
Speaker 1
Was that his background? He just was like, I'm going to do this.

00:03:22:15 - 00:03:53:14
Speaker 2
Well, he he the war ended and he went to UT for electrical engineering. And then before he graduated from UT, the city of Austin hired him to set up some electrical grids for them. And he was part of clearing out Town Lake to help do some power stuff for the dam and some other things. So then he started a cable television company after that, and it was called, CTS, which had been acquired, and he bought back once and then sold again and that kind of thing.

00:03:53:14 - 00:04:00:23
Speaker 2
And so he just went around to different towns all across Texas and setting up the first cable television, you know, seven channels was a big deal.

00:04:00:23 - 00:04:01:19
Speaker 1
Wow, man.

00:04:02:00 - 00:04:08:18
Speaker 2
That was his thing. And, you know, we would just fine live with him until he passed away when I was 24, when he. When I was 84. And he died.

00:04:08:20 - 00:04:10:13
Speaker 1
How were you when you moved in?

00:04:10:15 - 00:04:11:12
Speaker 2
14.

00:04:11:14 - 00:04:13:00
Speaker 1
You folks are like. That sounds good.

00:04:13:05 - 00:04:37:12
Speaker 2
Well, my mom there. Well, I'm middle child, for one thing, so you're kind of always came through, but the, I mean, when I say minutes, I mean, it was literally like, my mom could leave her house and their house, and they'd be there in three minutes. I mean, we're all live in the same area. Yeah. But just so it wasn't just him and the dog, and they were they were excited about it because I both my parents, in one of them being alone and I just had I also was just over there every weekend.

00:04:37:12 - 00:04:51:19
Speaker 2
Anyway, we spent a lot of time together. My home, my brother and sister, you know, there's a pool and a hot tub. In my mind, I was like, grandpa's lonely. He's got a hot tub, he's got a pool. He lives across the street from the greenbelt entrance. This is a great deal. And it was it was a great deal for me.

00:04:51:19 - 00:05:05:18
Speaker 2
And then, as in then, you don't think about it when you're young. With in later years. Goodbye. And you, you become a caretaker. You know, you're all the doctors appointments, all that kind of stuff. Grocery shopping. He was obsessed with going to play bingo with his new girlfriend. That was, you know, also.

00:05:05:18 - 00:05:13:17
Speaker 1
And did you get any insight on why that that age that they become obsessed with? Bingo. Like, I am curious what that is. I mean, there's such a weird thing and yeah.

00:05:13:17 - 00:05:31:20
Speaker 2
I think it's, he also loved for work, traveled to Vegas. I think he just kind of liked gambling. Anyway, I don't know, it's a social thing, you know, you go there and you've got people in your age group, you're all chain smoking, and, you know, it's one of the places that got grandfathered in to being able to chain smoking.

00:05:32:01 - 00:05:56:21
Speaker 2
He smoked. But he. So as an entrepreneur, he, I was so fortunate in that I could go try something. I try all sorts of crazy ideas. When I was starting very, very young, like writing theater plays, submitting theater plays into different playhouses, then starting my own little marketing, branding, operation and then eventually starting my own theater company.

00:05:56:21 - 00:06:18:10
Speaker 2
And him just I'd come home with stories about, oh, this didn't happen. Or, you know, I'm hiring these actors and he would tell me what's going on, and he would just tell me stories about what he went through and some things that somehow correlated. It was never like step one. Step two. Here's how you do this. And then in early 22 one 2223, it got to a point where I was doing like pretty big productions.

00:06:18:10 - 00:06:26:23
Speaker 2
I had like, you know, 80 people on my cast and crew. We were doing big theater things, and I then I was that's how I got into film two started writing for screenplays as well.

00:06:27:01 - 00:06:29:00
Speaker 1
Self-taught writer.

00:06:29:02 - 00:06:46:21
Speaker 2
Yeah, yeah. So just I mean, from a young age, from the age of, like I remember when my grandma died, like, I didn't know how to, like, express the sorrow. So that's when I really started writing poetry. Yeah. When she passed away. So my grandma was telling me this great stories. And at one point I'd be like, man, these people aren't showing up on time.

00:06:46:21 - 00:07:13:08
Speaker 2
This is happening. Like there's money on the line. It got more and more advanced over the years, and his stories became much more advanced. With linemen and, you know, out drinking late. And then what do you do to discipline and all these stories come up and you just learn a little bit about operating and just you don't learn the technical one and two, but you learn the temperament through stories mostly, in my opinion, those kinds of stories.

00:07:13:08 - 00:07:27:18
Speaker 2
Like, obviously if he said, well, they show up late one more time, fire him on the spot and do this and then that. And, you know, there was a little bit of that, but mostly it was it was narratives on things he went through. And that can make you go to bed at nine. You wake up inspired to keep going.

00:07:27:20 - 00:07:50:09
Speaker 1
Do you find that when you were listening and tell stories, you talk about temperament? Do you think that did or was it almost a deep dive into like, that's how humans work and that's kind of interesting? Or was it more like the building part that got you excited at, like from one story to story 72, you're like, wow, we're in a whole different world now because what he's built.

00:07:50:11 - 00:08:14:08
Speaker 2
It's both, the the building part, it sounds whimsical, but the building part for me and in like, that's just inherent in the individual, like wanting to build. Some have it more than others. Everybody has it to some degree, I think. I, you know, I was reading a lot of literature when I was young and I was really into certain authors.

00:08:14:08 - 00:08:35:16
Speaker 2
And then even before I considered myself an entrepreneur, there was the, you know, Charles Bukowski was an author that I followed. And in the 70s, he's got he was at this university giving a speech in the student literary student stands up and says, Mr. Bukowski would you choose writing as a career? And his responses, son, you don't choose writing.

00:08:35:16 - 00:08:56:13
Speaker 2
Writing chooses you. And I've always thought, I never consider myself an entrepreneur because it was kind of like during the phase where you were like, not cool, or everyone knew you were broke. If you said that word out loud. Now it's kind of cool with certain influencers, but so through inheritance of building. But what his stories helped me do is with human nature.

00:08:56:15 - 00:09:20:10
Speaker 2
I didn't know that I was being trained for this, but the stories trained tolerance on you human nature, because the stories were like people in the linemen that are setting up these poles that are working in this kind of job. They're some of the roughest people around, and they want to stay out late. They get up early, they get the job done, and they get that paycheck, and you want to pay them in cash every Friday kind of kind of thing.

00:09:20:10 - 00:09:43:23
Speaker 2
And so then when I was operating and I had different types of personalities around me at various times, I had this decades old narrative in my mind about how these people can how you should help form, you know, relationships with them and how you can help them regardless of their personality types. So I got that from my grandpa.

00:09:44:05 - 00:10:18:09
Speaker 1
Yeah. Imagine that. Now that you say that they're James, it's like, I imagine that there's a lot of similarities in like, the actor group of folks and things of like the personalities and the characters that show up. One of the the conversations we were having with some of these aspiring owner operators the other day, which I think, like our former military guys, kind of get it, but the other folks who don't, and they're like, completely impressed with this idea and scared is this idea that, like, you're going to have someone who is like your lead field supervisor show up drunk two days in a row and you're going to want to fire them, but then

00:10:18:09 - 00:10:34:02
Speaker 1
you are going to know that you're ravenous. Your next three months is directly tied to them. I what do. Yeah. I mean, I guess when you think about it, is it the Wild West? Do you like a lot of this stuff? When you think about small business, is there a lot of similarities in the way you thought about the days of.

00:10:34:04 - 00:10:55:22
Speaker 2
It's hilarious. The stories that I was told from my grandpa, they're actually still very relevant to today. You buy a you buy a brick and mortar, you know, installation business or food company or anything like that. I mean, it's it's there's a little bit of class dependency on it and on which economic tier your staff might be in based on the style of business that you're buying.

00:10:56:00 - 00:11:09:14
Speaker 2
I mean, but it's it's still it's still true. You got people form into policies at certain size of companies, and those people end up showing up late together because, you know, that they hung out the night before and you realize that if you pay people on Friday and you're open on Saturdays, they might not show up on time on Saturday.

00:11:09:15 - 00:11:27:00
Speaker 2
So you stop paying people on Friday because they might be late on Saturday. Pay them on Thursday. Like you, you have to really start maneuvering into that kind of stuff. And I did that actually. That's a real examples. Like I'm not paying people on Friday anymore. And that was what the first business I bought. And it's just like, that's clearly a story that my grandpa told me at some point.

00:11:27:00 - 00:11:39:01
Speaker 2
Like I'm not showing up on Saturdays when they're agreed to work overtime to, you know, install some systems or something. So he's like, all right, I'm not paying on my paying on Friday anymore. And I was like, oh shit, it's happening to me right now.

00:11:39:03 - 00:11:42:13
Speaker 1
What business was that? The first one you bought?

00:11:42:14 - 00:12:11:01
Speaker 2
The first one that I acquired through that, like an SBA loan, was, Longhorn meat market. Okay. And I was with, I don't mind talking about any of those numbers. Was like $800,000 acquisitions or an SBA loan. And it was a good deal because at the time, if the seller deferred 10% of the sale price, I don't know if they still do it, then you're willing to put 10% down so you can really, you know, 10% a grand plus closing costs.

00:12:11:01 - 00:12:35:16
Speaker 2
You have yourself a business and hopefully you have some extra cash for operating capital. And you go in there and a million miles an hour. But as soon as you go in, you realize all the cultural things that you can't do through due diligence, which is why I would in the future say, I have a I'm going to work here for free, like, don't pay me and I'm actually going to work here like a free employee for 90 days, like I would do something like that now with an industry like that.

00:12:35:21 - 00:12:38:00
Speaker 2
Yeah, not all industries, but in an industry like that.

00:12:38:05 - 00:12:46:20
Speaker 1
What's a personality that you wish you would? What's the trade about it you wish you would have known ahead of time whether it made it makes you different or not. What's something you wish you would have known about it?

00:12:46:22 - 00:13:14:09
Speaker 2
I wish I would have known why? A trait that I wish I had, going into that one in particular. I'm. It's grown as I hate to say, but a little more ruthlessness. Like, go in to a business and you want everyone to believe in you and like you, and all these things are an acquisition, and, you know, you're afraid that you might lose them because you're you still, you're so naive about how to run it that you don't want to have to learn something.

00:13:14:09 - 00:13:31:07
Speaker 2
You don't know how to learn when you're already navigating so much. A lot of buyers are first time and only time buyers too, so I wish I had been a little bit more like, you know what? I'll be fine. Like, I wish I had a little bit more of that. Like, if you're going to do this, you can just leave right now, but instead you when you really like, what do you need?

00:13:31:07 - 00:13:47:13
Speaker 2
Like you want to talk to everyone. You're to lead with empathy and you got to do that. You got to it's got to be a combination of of all those things. But I wish I had been a little bit more like, it's going to suck, I'm going to suffer. So instead of suffering like mildly over the next six months, I'm just going to suffer really hard for the next three weeks and get it over with.

00:13:47:15 - 00:14:06:23
Speaker 2
Is weed out some of that stuff. But I don't know if I answered your question, because now you sure did rant. But yeah, I know it's but the traits about the business you have to you. There's just no way to learn the behavior of your customers. There's no way to learn what it also means on the edge of the business.

00:14:06:23 - 00:14:31:15
Speaker 2
A lot of people are retiring out of their their businesses and they're selling them. And I would look for a business that doesn't have an online presence at all that doesn't have reviews like online, where you can actively go and investigate and see what people are thinking and feeling about the business. Those can be exciting, but also dangerous, because then you you're the first person to build the digital presence for that company, which is what I did.

00:14:31:17 - 00:14:42:10
Speaker 2
And then you have a platform where everyone who has all these pent up feelings over the entire history of that company can now go talk about that company. And you're like, oh, wow, I should not have started the Facebook page for this company.

00:14:42:12 - 00:14:45:21
Speaker 1
You didn't realize you're going to get 21 stars immediately. Yeah.

00:14:45:22 - 00:15:04:22
Speaker 2
And and they don't know it's a new owner. They're like, they'll be like, oh, my delivery, you know, or my product was late. And I'm like, when was this? And they're like, it was six years ago. And you're like, oh my God, I can't delete this now. Like, how did this happen? So you have to like, make sure everyone knows it's new and really set up this foundation stuff for you before you do that.

00:15:04:22 - 00:15:08:19
Speaker 2
But if there's already a presence, then you can really audit a lot of that stuff.

00:15:08:21 - 00:15:14:18
Speaker 1
What got you interested in the meat business to begin with? Why was that a good first start?

00:15:14:20 - 00:15:33:16
Speaker 2
Well, my parents raised cattle in Bastrop. I kind of been in and out of that world a little bit for a lot of my life. And then this is where excitement can really get the better of you. You know, you look at a you look at a PNL and you're like, this is a good deal. I'm going to I'm going to triple down on this.

00:15:33:18 - 00:15:53:20
Speaker 2
So it was mostly I'm Texas kid on the on the bar. Might as well on a meat company. And I had people who were a degree to the left of me that I knew that we're going to want to be involved financially. And they were excited about that industry as well, because of their upbringing in Texas and outskirts of, cities here.

00:15:53:22 - 00:16:11:20
Speaker 2
And you just it was going to be a faster package than trying to buy some other type of company, and it was already making a fair amount of profit. So you kind of just that's what you get excited. It's like the, you know, the richest man in Babylon is, you know, good money. The person who knows how to pick out good diamonds.

00:16:11:20 - 00:16:23:02
Speaker 2
And I'm, I probably should have worked there 90 days for some robot to go. But just to go back to that one. But yeah, that was, that was a that was a big learning one.

00:16:23:04 - 00:16:25:23
Speaker 1
Was it for sale or did you had to go meet the owner? Like, I didn't get it.

00:16:25:23 - 00:16:48:01
Speaker 2
It was not for sale. It was, through the grapevine hearing about the owner might be retiring and then just being persistent over, like, a two year period and saying, like, yeah, I want this, I want this. And eventually they go, okay, you can have it. But we got to get it appraised. And whatever the appraisal says, we both ordered an appraisal and we just met at the meeting in the middle of it.

00:16:48:03 - 00:17:10:22
Speaker 2
And then appraisal came in and it was kind of stern. The there was no negotiation. The person was very like, this is the price. And then after a back and forth for a little, it was like, okay, well, will you sell or finance the 10%? So then I can get 10%. And that took a while. And then eventually the seller agreed to that and we had a deal.

00:17:11:00 - 00:17:12:02
Speaker 1
And off to the races.

00:17:12:02 - 00:17:13:01
Speaker 2
Off to the races.

00:17:13:03 - 00:17:19:06
Speaker 1
It was day one. Like I'm just curious. Like the official day one. I'm sure you'd been in there before.

00:17:19:08 - 00:17:27:04
Speaker 2
The seller, for some reason, I agreed to a three month hang around.

00:17:27:05 - 00:17:29:06
Speaker 1
By the year face. It does not look like a good idea.

00:17:29:06 - 00:17:56:12
Speaker 2
It should have been like three year stay around oh three. No, it should have been about. It should be about six months. And the second acquisition, I had made it longer, and then I even made it, like on call on demand, part time, like scaled down kind of thing. Thought I had learned my lesson, but I learned another one during that one to, it was very casual because I had poked in a couple times, a dozen times already before, where the staff could see me.

00:17:56:12 - 00:18:12:15
Speaker 2
I'd been there a lot of times when before and after closing, just measuring stuff and checking the equipment and having contractors look at things. Tell me how fast this was going to break, because Murphy's Law is as soon as you buy it, it's going to break. And you don't know how these employees have kept this thing from breaking.

00:18:12:15 - 00:18:36:20
Speaker 2
But as soon as you buy it, it's going to break and magically, no one's going to be able to fix. But it was real casual because I tried to transition very slowly for the first seven days, go in just say hi. And they everyone already knew what was happening because the owners had already kind of made some.

00:18:37:01 - 00:18:53:18
Speaker 2
I don't know if I don't know what kind of announcement, but everyone already knew. So you just kind of go in there, you walk around, you help out a little ways here and there, and you make sure you put on a butcher coat and move things around with them a little bit and just kind of ask questions and just slowly transition in.

00:18:53:18 - 00:19:13:22
Speaker 2
And then really important over the first in years to really like, I mean literally get get blood on your hands to like cut in the meat and helping deliver and doing everything. I mean, you need them to respect you like big time from day one. And then most people who work in that industry, you know, they're a little rough around the edges, too.

00:19:14:00 - 00:19:23:12
Speaker 2
And they'll really respect someone that's, you know, blown their back out with them kind of attitude, even though everyone's wearing a safety, back brace. But you get it.

00:19:23:16 - 00:19:35:21
Speaker 1
No, I totally mean okay, give me maybe before we get in the weeds on the business, give me, like, kind of paint the picture of what, like day to day operations there looks like again, animals coming in. You got things being, like, just kind of paint a picture for me.

00:19:35:21 - 00:20:02:10
Speaker 2
So it's a very analog business in the beginning. So as a as a new owner, you're thinking and this is advice for the $0.02 it's worth to people listening. Don't change anything for at minimum 3 or 4 months. Like even if it's in a downward spiral and you think you have to do some super drastic things super quickly to pull it out, you shouldn't buy the business.

00:20:02:10 - 00:20:15:08
Speaker 2
If that's the case in the first place. But I went in so excited about digitizing, getting it out of it's analog and everything was on handwritten invoices. Everything was on paper.

00:20:15:10 - 00:20:19:01
Speaker 1
It's like the yellow thing was like carbon copy sticking a needle and so on.

00:20:19:03 - 00:20:41:23
Speaker 2
And so you're like, okay, well, I need to make this better. And I probably spent too much of my emotional bandwidth on that, side of things and modernizing it instead of just saying, I'm going to let this thing run exactly how it's run because it had been around for decades. It's going to let it it's going to run the same way it's been running.

00:20:42:03 - 00:21:16:18
Speaker 2
It's clearly been working. So I screwed it up by trying to change it too fast. And I caused more problems. Not that they weren't good problems that needed to be or things that needed to be solved anyway, but they were problems that I didn't need to make it into problems right then. They could have been a problem a year later, but I put too many problems in the basket at once because I was trying too quickly, too because it was it was, slowly year over year, losing some revenue, you know, from millions and, you know, 100 grand last one grand last hundred.

00:21:16:18 - 00:21:38:06
Speaker 2
It was it was a distress business. It was being neglected. It was still very profitable, but it was clear that in the seller also was very disgruntled about Austin. And I always, you know, just didn't like the world changing kind of kind of seller, which is could be to people's benefit having that kind of person. So it's, again, I've got a question about.

00:21:38:07 - 00:21:46:15
Speaker 1
You know, when you. Yeah, you were like, don't change anything. But like, but if you paint a picture like what? So what was the analog day like, like, just give me an idea of a morning.

00:21:46:16 - 00:22:10:22
Speaker 2
You show up and you had voicemails. So it was it was 75% wholesale, 25% retail restaurant. Okay. Ordering for there. Everything from places that you've that you've heard about and eating about in Austin all the way down to the smallest food truck. And they would all leave voicemails for their order. So you get there at 5 or 6:00 in the morning and just listen to dozens of voicemails.

00:22:11:00 - 00:22:14:04
Speaker 1
Really. Just like, hey Longhorn, I need X number of pieces of steak.

00:22:14:04 - 00:22:40:16
Speaker 2
And these orders would come in all throughout the night. Restaurant, kitchen staff. You know, sometimes these restaurants aren't closed till 10:00 and they don't do inventory at 11:00. And they're calling you at 1130 at night, leaving a voicemail. Those kitchen managers are the, you know, heart and soul that keeping that place alive. Yeah. So you listened to the voicemails, and you hope that you understand enough Spanish or someone there does, because a lot of the orders were coming in for from restaurants, and they were just the holdovers in Spanish.

00:22:40:18 - 00:23:00:00
Speaker 2
You write it down on a your order template, they'd say how many pieces they want. And you had to go. And after you process that, you'd weigh it. So then everyone had to. Then you hand the order cards to the team in the back. They process everything, whether it's thousand grounds of thousand pounds of ground beef for a pizza joint or, you know, a bunch of filet mignon.

00:23:00:00 - 00:23:29:19
Speaker 2
They weigh it on and right, the weight on the order cards bring the order cards back up to the front person with the invoices, then writes all the weights, checks the what we paid for the for the, for the carcass, and then does their math and totals out the invoices all just back and forth from the front on the back, then tears off the carbon copy and hands them to the driver as the people in the back are loading up the three vehicles for delivery, and just off they go.

00:23:29:19 - 00:23:46:16
Speaker 2
And they come back and they hand the sign copy of the carbon copy back to the office. So we have our original one is the receipt, the restaurant has one, and then we have one that has their signature on it. And those go in a certain box. And at the end of every day, the bookkeeper just punches in a bunch of the books and I can check on my phone and go, oh, there's so much money.

00:23:46:16 - 00:23:48:21
Speaker 2
We made it. That was very.

00:23:48:21 - 00:23:50:18
Speaker 1
They pay instantly to or like.

00:23:50:18 - 00:24:19:03
Speaker 2
No, there's, some restaurants were on, cod cash on delivery and then some were net 30. Like, I think like we still have a deal with the airport and I think they're net 30 and that's a huge carry. I mean, some of those things are, you know, $100,000 a year of, of product for one restaurant. So that was, you know, you start wanting to figure out ways to get.

00:24:19:05 - 00:24:38:06
Speaker 2
You know, you like net terms because then you're then you're competing with Cisco because in Cisco's offering, everyone you know who has a decent profile, net terms. So you're like, okay, well we're gonna compete with that. So now I gotta sort of more in that terms some more businesses. You got to try to take a restaurant like, I mean like, what's the 100 that's on Rancho or something like that?

00:24:38:06 - 00:24:52:17
Speaker 2
You know, they're going to net 30 in a heartbeat because Cisco has been giving them that 30 for a long time. And you're like, let's start with just chicken. I'll give you that 30. I'm just I'm just chicken. And anyway, so that's how it is. But then retail's going on simultaneously. So what would happen is the cutters would cut for wholesale.

00:24:52:19 - 00:25:06:06
Speaker 2
The the walk in retail spot didn't open till 2 or 3 hours later after everyone showed up. So then they process. And since we're USDA regulated, you, the state inspectors, are there every single day of the week.

00:25:06:08 - 00:25:09:16
Speaker 1
Really? Yeah. We're we're giving you a check or like what is going on?

00:25:09:18 - 00:25:19:10
Speaker 2
They have their own office at the spot at Longhorn. So they're they literally they're there every day doing a health inspection every day of the week.

00:25:19:11 - 00:25:22:18
Speaker 1
That's common. Like any butcher shop is going to have someone on site.

00:25:22:18 - 00:25:45:23
Speaker 2
Now if that's because we are doing wholesale. So if you sell for resale, you have to be inspected. A lot of places break the law and like don't they don't have an inspector. They don't claim they're doing wholesale. Like, for example, H-e-b claims they don't sell wholesale meat. But, you know, every food truck in town has around.

00:25:46:01 - 00:26:01:17
Speaker 2
Yeah. And had to go buy ground beef or pork chops or some like that. But that's that's technically illegal. The restaurant or food truck cannot do that. But no one knows that. No one's pushing, no one's going to go. You know, it is too much for the state of Texas to have that crack down on them. So then that's.

00:26:01:17 - 00:26:02:19
Speaker 1
Funny, man. I didn't know that.

00:26:02:19 - 00:26:23:10
Speaker 2
Yeah. No, I actually thought about hiring a lobbyist for a lobbyist firm at one point, because there's a lot of even smaller meat companies that are just retail. But if you go there at 6:00 in the morning, they're not just retail. There's a bunch of businesses picking up and they're not inspected at all. Like we would have like rust on a door hinge and they would say, you got three days to get rid of that or you can't cut.

00:26:23:12 - 00:26:28:04
Speaker 2
And it's like you're you're having a, you know, you got to keep a whole has up program and everything.

00:26:28:10 - 00:26:29:03
Speaker 1
Wow, man.

00:26:29:08 - 00:26:51:13
Speaker 2
So you have to cut wholesale. You can't cut retail until wholesale is done because the state inspectors aren't there to inspect retail. And so you cut all the wholesale and then the wholesale gets cut and then you can cut for retail. Then a lot of the retail case and people start walking in and you've done all your orders for wholesale around the time that you start, that all starts.

00:26:51:13 - 00:27:11:14
Speaker 2
And if a restaurant calls and says, oh, I really need, you know, 50 steaks, can I come pick them up right now? You have to tell them no, because your whole cutting room is now in the retail process of cutting, and you'd have to deep clean it and you'd have to like hope the inspectors hasn't gone on lunch break during that time.

00:27:11:16 - 00:27:16:08
Speaker 1
Why wouldn't they care more about wholesale? Why is retail not a thing that hits the radar?

00:27:16:10 - 00:27:24:16
Speaker 2
Well, because the city is under that's under their jurisdiction. City inspections. So we would get random city inspections at the same frequency. Is like a restaurant does.

00:27:24:16 - 00:27:25:03
Speaker 1
Okay.

00:27:25:04 - 00:27:26:03
Speaker 2
Once or three times a.

00:27:26:03 - 00:27:29:07
Speaker 1
Year, you get inspected on both ends. Just this one's way more often.

00:27:29:09 - 00:27:45:22
Speaker 2
Oh, every every Friday. Oh, yeah. And then huge logs and temperatures forms you got to fill out. And if you don't, if you forget to put the temperature of a test that you did, you have to do e-coli testing every month. All sorts of stuff. Like they have to mail it off and get it, get it tested and get the results back.

00:27:46:00 - 00:28:05:18
Speaker 2
If you don't, you get a write up. If you don't sign a form, you can get a warning for just filling out the paperwork wrong. And it's like, well, this is pretty ridiculous. Like, can't you see I got employees? I'm trying to grow this company. Yeah, leave me alone. And that's a brutal like. So learning more about the regulatory stuff of a of an industry you're buying.

00:28:05:18 - 00:28:23:02
Speaker 2
I mean, every industry, whether it's Hvac or electric, you know, there's compliance stuff you have to abide by and learning a little bit more about that or interning at a place, even if it's not the one you're about to buy. Like Richest Man in Babylon. For those who want to ChatGPT what that summary means.

00:28:23:08 - 00:28:38:13
Speaker 1
Looking at like looking at the why did y'all stay successful? Why do y'all stay successful? In a world where it seems like things are really commoditized and Amazon Prime? Like, what about this independently owned butcher shop seems to keep doing its thing?

00:28:38:14 - 00:29:06:01
Speaker 2
Thankfully, it's because people care about local and quality. Even if even if my steak comes from the same, even if it did come from the same slaughterhouse as a a global or a statewide retailer, there's still this inherent like, you get to go talk to your butcher, you could say there's a specialty cut, I really like it. Or, hey, I've got some big dogs at home.

00:29:06:01 - 00:29:24:07
Speaker 2
Can I have some dog bones? Like there's this different relationship you can get a little more custom with the item. And thankfully we do have more local product. We do know that all of our cattle come from Texas. We have cattle that come from my parents ranch and some other friends of theirs ranches. So there's that inherent closeness about the product.

00:29:24:07 - 00:29:49:23
Speaker 2
But it's also you can just get a larger variety and there's you can come in and say, I just need some butcher shops, like a huge retailers. Now they're they're starting to add more of that vibe, learn. But I think it's really just people want to buy their meat from a local butcher shop as like on Amazon. I mean, if I need if I need some socks, like I'm not like going to go do an outing to go find local socks.

00:29:50:03 - 00:30:08:05
Speaker 2
Like I'm just not it's just unfortunately, I wish that'd be great, but this doesn't exist. But when you think about I want a nice steak for Saturday night, my friends are coming over one of my five steaks. You actually have more of a premeditated thing about it. You're willing to spend some time on it. You're about to spend like $300 on some steaks for half a dozen people.

00:30:08:07 - 00:30:25:02
Speaker 2
So it's, that's why we survived. But the main reason that it's survived and grown is brute force. Like having some intelligence I have to make up for my lack of intelligence with brute force. Time and energy. How do you mean? Oh, I just like I'm not the smartest guy in the world, so I have to make up by working 80 hours a week like.

00:30:25:07 - 00:30:37:08
Speaker 2
Because if I'm going to make a mistake, it's okay. Is because I'll just make it work longer to make up for that mistake that I just made. Because I clocked out after 40 hours of me. Mistakes that could have been solved an hour 41, but I was like, yeah.

00:30:37:10 - 00:30:38:14
Speaker 1
I'm out. Yeah.

00:30:38:16 - 00:30:59:15
Speaker 2
So just just dude, sheer tenacity. Back to that Charles Bukowski quote like you entrepreneurism. You know, you don't choose entrepreneurs, entrepreneurs them chooses you kind of like just obsession every I so I put everything on Shopify like Covid started and we had no online store because that's the one thing I was waiting to do for buying online. So I was modernizing everything.

00:30:59:15 - 00:31:12:17
Speaker 2
But Covid started. I put I built a Shopify store with all of our SKUs on it like a maniac, and three days launch that sucker. And it was it was huge.

00:31:12:17 - 00:31:14:13
Speaker 1
Was it? I forget, man, was it for pickup.

00:31:14:15 - 00:31:39:05
Speaker 2
Or curbside and delivery? Yeah, man. And it was like, a lot of businesses did did well during Covid. Despite like, we we I got a notice. Hey, restaurants have to shut down at 75% of our revenue because of Covid. I was like, well, I guess I walked into the place. I drove there thinking, I'm laying off like everybody today, like most people, what else am I going to do?

00:31:39:09 - 00:31:40:03
Speaker 1
Yeah.

00:31:40:05 - 00:31:55:16
Speaker 2
And I had, the notice I don't think restaurants had to close for like, I don't know, another like two days or something like, hey, you got a couple days. So I just like woke up in the morning and I was like, how I got to plan this hour? How am I going to do this? This is going to be the hardest thing I've ever done.

00:31:55:17 - 00:32:12:21
Speaker 2
I drove to the market and there was a line of people down the street standing outside to get inside to order are you can know, man, it was wild. So I drove there to lay everyone off and instead I had to hire like 15 more people. Crazy.

00:32:13:01 - 00:32:15:01
Speaker 1
Wild what where they just.

00:32:15:03 - 00:32:21:16
Speaker 2
Because. Because Covid had because H-e-b had also coincidentally put out a notice saying you can only buy two units of meat like per person.

00:32:21:16 - 00:32:22:23
Speaker 1
That's right. I forgot about all this.

00:32:22:23 - 00:32:41:05
Speaker 2
And restrictions and slaughterhouses were claiming prices were going up. And, you know, things couldn't be made in which I a lot of people got investigated because like, there was never a single shortage. Like we never I never placed a wholesale order from a slaughterhouse that they couldn't fulfill. And everyone's saying like, oh, my prices are skyrocketing because there's a huge shortage.

00:32:41:05 - 00:33:11:21
Speaker 2
I don't know if I was being prioritized, but then eventually a big pork company got sued because they were price fixing with another company that didn't have them. So yeah, there was a line out the door and it was like, I guess I'm not hiring everybody because it actually is. Flip 75 retail, 25 wholesale. Once restaurants could open back up, it took a long time for that, and it never went back up to 75% because because of so many new people found out about us during Covid, because they could get meat delivered and they could do curbside.

00:33:11:23 - 00:33:15:08
Speaker 2
We it stated a 5050 split from thereafter.

00:33:15:11 - 00:33:21:00
Speaker 1
You happy with that? Like it was a good that you went up on retail. You think margins got to be better.

00:33:21:02 - 00:33:27:02
Speaker 2
Margins are better. But I would if I had it my way, we would only do wholesale.

00:33:27:04 - 00:33:28:16
Speaker 1
Was that.

00:33:28:18 - 00:33:52:23
Speaker 2
You need so like it's a burden to have to hire people like so customers drive like people say like small business owners or what's in the economy. It's the consumers that are creating the economy. And one restaurant ordering 1,000 pounds is very different than a thousand people ordering 1 pound things meat at a time. And you have to have a lot more people to fulfill that.

00:33:53:01 - 00:34:13:10
Speaker 2
Those thousand 1 pound, you know, packages, a lot of work, a lot of work. I mean, we had 50 pound cases for restaurants ordering. So it's literally one guy standing on a machine just filling up 50 pound boxes at a time. And while he's down there just daydreaming while the box is filling up, instead you got a line out of the door, people hand wrapping like maniacs to just meet the demand.

00:34:13:12 - 00:34:24:03
Speaker 2
You got to pay them all, you know, 20 something bucks an hour. And you, at the end of the day, you made better margin, but you spent a lot more time and you made a little bit more money, but maybe worth it.

00:34:24:08 - 00:34:26:11
Speaker 1
Yeah, it's a lot more work on that front. Yeah.

00:34:26:11 - 00:34:41:15
Speaker 2
Tons more people, tons more people come to you saying they need time off. Tons more people having things happen there live. And, you know, I got such a big heart that I have to I want to listen to all of them and see how I can help. And it's like, damn, I wonder HR departments are in existence because, jeez.

00:34:41:17 - 00:35:00:20
Speaker 1
Do you when you were doing, when when you were getting that kind of when you're kind of getting that rocket ship, I guess during Covid going the year before, did you ever think this is a flash in the pan, like, okay, I needed to capitalize on this growth, but we're probably going to go back to normal at some point.

00:35:00:20 - 00:35:05:04
Speaker 1
Or did you think, now this is the new way of the world?

00:35:05:06 - 00:35:25:00
Speaker 2
Oh, I knew that it wasn't gonna last forever. And one side of me was just pleading for it to end. It was the busiest time and that of my life at that point. As far as, like going to bed super late, waking up super early. I mean, it was not enjoyable. It was strain on the marriage and yeah, all sorts of stuff.

00:35:25:02 - 00:35:45:13
Speaker 2
But I'm also obsessed. Like I'd be lying in the night checking my Shopify, and I was like, holy, you know, I'd wake up in the morning and there'd be like my kid, man, there'd be 20 grand in sales overnight. I'm just people buying me, like, just you're just like, well, I guess I should probably go in early because it's going to be awful today, and it's funny to go in and be stressed out about how much work you have to do.

00:35:45:13 - 00:36:03:05
Speaker 2
Come all the money that you just got, and you're just like, what a weird predicament to be in. But I wanted it in people who are a couple, handful of people who invest in the company. Sure didn't want it to end. Yeah. And it was good that it did. And eventually people, you know, who we hired during, you know, their passion was restaurants.

00:36:03:05 - 00:36:27:03
Speaker 2
And the restaurants open back up and they went back to work in the restaurant industry. A lot of the people who came in for, say, half a year while the restaurant industry was still was and still is kind of recovering from Covid. But yeah, it went it's stabilized now, and now it's back to, you know, the aiming for 10 or 15% year over year growth kind of attitude instead of like sort of doubling in a night.

00:36:27:03 - 00:36:31:18
Speaker 2
You you want that more long term trajectory plan.

00:36:31:20 - 00:36:45:05
Speaker 1
Do you? Speaking of the the folks who work there, is it like a regular trades where there's a certification and you're a journeyman and then you do this, or is it more on the job? And how does that training cycle work for them?

00:36:45:05 - 00:37:21:07
Speaker 2
There are schools that teach it, but there is no place in the world that's going to teach the butcher how to become a wholesale like processor. Yeah, you have to just go in there and just get your hands dirty there are we hired people before who had tons of experience at like Whole Foods meat counter, who knew how to cut nicely, and they cared about esthetics and presentational, and they were some of the not greatest hires because they had been trained over years to go slow.

00:37:21:09 - 00:37:23:12
Speaker 2
Yeah. And you're like, no, man, you got to we.

00:37:23:12 - 00:37:24:00
Speaker 1
Need to move.

00:37:24:01 - 00:37:39:16
Speaker 2
You got to cut. You got to got to wrap that in twine, that thing like five times faster. And, you know, everyone thinks you're a Picasso and they come from trade schools like in Newark to, you know, butcher schools and stuff like that. And my experience, the best hires we ever made were like, just rough around the edge mechanics that are used to just being dirty all the time.

00:37:39:18 - 00:37:58:20
Speaker 2
And those people, you know, you're uncomfortable, like you're in a room that's 50 degrees. You're just constantly like banging your finger on something and you're kind of cold all the time. And the people who are used to having a day where they show up moderately clean and they always guarantee, you know, they're leaving dirty like those are the best people to hire for, for roles like that.

00:37:58:20 - 00:38:26:20
Speaker 2
Industries like that for sure. Yeah. And they, we you you do need 1 or 2 people on staff that are like that are artists because they'll help guide the retail program to be elevated. And you need that in an emerging city, like an emerging part of town, like Longhorn. Because whether you agree with it or not, the demographics change very quickly in East Austin and have changed.

00:38:26:22 - 00:38:41:21
Speaker 2
And there was a time when there was someone in the retail area that was clearly like, I mean, they said it. They were like, I got 20 bucks, what can I get? And the person next to them rolled up in a Tesla and they're picking up their prime grade, you know, prime rib thing for the holidays. And it's $300.

00:38:41:21 - 00:39:07:00
Speaker 2
And they are in and out literally within five minutes buying that thing. Whereas people who are shopping and who are from that neighborhood, they're like coming in and they're spending more time in, they're they're just it's a different culture. And you're like, wow, this neighborhood is in some it's a bit of a pickle. Yeah. And then you're like, I got to pay homage and paid tribute to all the people who've kept this business alive for so long.

00:39:07:02 - 00:39:31:04
Speaker 2
So you keep the same food, the same items that, you know, they've they've been used to, and then you know that you got to slowly add the more high end items. And as you start having, you know, $40,000 property tax bills every year, you're like, oh, we got to start selling Wagyu. So then we started importing, A5 Wagyu from Japan over nine, building that kind of clientele out and trying to keep a little bit for everybody.

00:39:31:05 - 00:39:47:05
Speaker 2
And that's another thing is you care about everyone. You're like, if I really wanted to be like, nope, we're only like, what we're doing. We don't sell anything. When I bought it, there was some select items and lower quality items, and now we we've just set a rule. It's like you got to be choice or higher. We don't sell.

00:39:47:07 - 00:39:48:17
Speaker 2
Yeah. You don't sell the select stuff.

00:39:48:17 - 00:39:50:07
Speaker 1
Can you go to the grocery store for that.

00:39:50:07 - 00:39:51:11
Speaker 2
You can go to HB for the selection.

00:39:51:11 - 00:40:01:19
Speaker 1
Yeah. So what are the other main just to get up I mean I could talk to you about butchering all day long, but the other businesses you've been involved in, just maybe give us a quick inventory of that and we can go down a rabbit hole.

00:40:01:21 - 00:40:24:12
Speaker 2
We bought Uncle Billy's on Barton Springs Road. That was, kind of a nightmare. We it was growing. We were in, like, 900 accounts, gas stations, grocery stores, bars, restaurants. 2 or 3 years into the acquisition, we were up to like 1200 accounts. So I was, like, pretty good, like growing. I think we on all the hubs.

00:40:24:14 - 00:40:49:12
Speaker 2
If you drank beer on uncle Bill at Barton Springs at the brew pub, it was brewed there. If you got it anywhere else. It was contract brewed offsite at a larger brewery. That larger brewery approached us, wanted to acquire Uncle Billy's. We said yes. And then, right before the acquisition, they got sued and filed bankruptcy.

00:40:49:14 - 00:40:50:11
Speaker 1
They have again.

00:40:50:11 - 00:41:10:01
Speaker 2
And the whole thing fell apart because when you contract, Bruce somewhere, you can't just go call another brewery and say, hey, we need you to brew all the beer for all the hubs and 1200 accounts. Like, that's a huge warm up process. Not to mention like a month or two of just getting the permit changed to another brewery from the tabc.

00:41:10:03 - 00:41:14:09
Speaker 2
So the whole thing shut down very quickly. It was a nightmare. It was terrible.

00:41:14:11 - 00:41:21:12
Speaker 1
I didn't so even what you did have on site, that wasn't enough to sustain anything? No, unless you were just going to keep it a small little restaurant.

00:41:21:13 - 00:41:24:22
Speaker 2
It was 25 grand a month for rent right there. You know, our barns, you know.

00:41:25:00 - 00:41:26:10
Speaker 1
Oh, yeah. I mean.

00:41:26:12 - 00:41:27:13
Speaker 2
So that was, you know.

00:41:27:13 - 00:41:28:02
Speaker 1
It could.

00:41:28:02 - 00:41:48:11
Speaker 2
Have it could have gone back to Canning on site and rail. But at that point, so much infrastructure had been built up and, I mean, it would, it was going to burn money for a very long time if we went back to the canning on site model. So it was kind of like, you only want to burn a little.

00:41:48:11 - 00:42:07:08
Speaker 2
Do you want to burn a lot? They're both a lot you want to burn, a lot of you won't burn a whole lot. And we just thought, well, let's just we did. We did, keep it just a brewpub. People could show up and just drink beer on site. And a lot of people never even knew that it was going on, because they're just customers and show up and drink beer at the favorite brewpub, and they have no idea that they can't get an H-e-b anymore.

00:42:07:14 - 00:42:24:14
Speaker 2
Yeah, try to find another brew, contract brewery. You know, you get into one conversation for a month or two, and then they don't agree on a price point. You're like, you told you we needed this price point the very beginning, and then a month and then you're just the next thing you know, you've lost another $200,000 and burn.

00:42:24:16 - 00:42:32:01
Speaker 2
So then you, you know, decide to throw in the towel. That's pretty hard thing to do when like, that's a skill set in itself, knowing when to turn it off.

00:42:32:04 - 00:42:39:03
Speaker 1
How do you know when to turn it off? Like looking back on it now, if you're giving somebody you're giving a younger James an advice. What would you say?

00:42:39:05 - 00:42:57:23
Speaker 2
Well. I don't think there's any moment when, you know, good money after bad sunk cost fallacy, all that stuff. You're just like you always as an eternal optimist, believe I can fix this. You kind of have to have that mentality to when you're growing and buying something you really need to be like, and you know what to do.

00:42:58:01 - 00:43:20:05
Speaker 2
And you could do everything impeccably, and it's still not going to work out because other human beings get in the way. So, I don't have the answer to that other than when your bank can't afford it, like when your bank account can't afford it. I mean, because the people, the people around me and the other partners, I mean, we could bankroll it for a while.

00:43:20:07 - 00:43:40:16
Speaker 2
And we had grown it so much that it was already a popular brand. There was a lot to believe in. So you think like, oh, well, let's just go find another, another place to brew the beer. There's 100 breweries in Texas that are capable from a size capacity to do this. Let's go talk to them. And then you realize it's takes a long time, takes a long time.

00:43:40:16 - 00:43:59:21
Speaker 2
And before you know it, you're like, all right, guys, we needed to each put in another 50. And they were like, oh, I don't have anything like what? And then it all crumbles like really quickly. Yeah. You don't have that. How long are we gonna do it for? What's the burn then? You close the burn because the one location might be doing a little bit better, and then you're like, okay, we're all having to put in less, and everyone sees positive signs because your burns going down.

00:43:59:21 - 00:44:07:04
Speaker 2
And then then go down quickly enough, and people and some weird people run out of money. It's a weird thing. It's a weird thing, isn't it? Just growing trees.

00:44:07:05 - 00:44:13:13
Speaker 1
Yeah, that's what I heard. Definitely made out of trees. What? What is then after that, what was the other.

00:44:13:15 - 00:44:33:02
Speaker 2
You know, I got the bar. The bar was a SBA loan. Actually, the bar was great. The the city of Austin is partly responsible, partly responsible for the creation of more to be downtown because to be, it means sudden death. It should be a rock and roll heavy metal bar. But it's French for sudden death.

00:44:33:02 - 00:44:53:15
Speaker 2
And it's named after a bar in Brussels that I used to go to a lot that gave me permission. The name of the bar of the same name. They, the city I knew. So in the economic development department in Austin and they said, we're starting a new thing, economic development stimulus program, where we're partnering with banks to help businesses launch.

00:44:53:17 - 00:45:15:09
Speaker 2
Do you want to be one of the first businesses and do a test pilot with us so we can figure this out? Sure. So the city of Austin partnered with ABC Bank, and I was able to for a very small down payment, get a loan to go open, march me through the city of Austin. So half, half my loan came it.

00:45:15:14 - 00:45:19:11
Speaker 2
I paid the loan payment to the city of Austin.

00:45:19:13 - 00:45:21:17
Speaker 1
Really is. That's how that's working.

00:45:21:19 - 00:45:40:16
Speaker 2
It's paid off now. Yeah. After seven years, which frees up man. We have, like, seven grand an extra a month, and your business crazy miserable for up until then. But I don't know who was underwriting the city. I feel like I don't feel like the. Unless the city and, like, taxpayers were a part of this program.

00:45:40:18 - 00:45:42:04
Speaker 1
Yeah. Who's backing that? Yeah, I don't know.

00:45:42:04 - 00:46:04:07
Speaker 2
The underwriter was on that, but half of it was ABC Bank. Okay. And ABC Bank was I think the city was guaranteeing the other the part of the ABC bank to like, hey, like we're going to choose people kind of like how SBA guarantee guarantees the loan if it flops. So that was cool. So actually, if the city had not been like, hey, do you want this?

00:46:04:07 - 00:46:14:05
Speaker 2
If this certain representative of the city had not said that, I probably would not have opened the bar because I wanted to open it, but that was the catalyst, made me go, well, this is good. I guess I'll open this bar now.

00:46:14:10 - 00:46:16:08
Speaker 1
How's the bar as a business?

00:46:16:10 - 00:46:18:13
Speaker 2
It's, you know, operating it.

00:46:18:15 - 00:46:28:02
Speaker 1
Yeah, all of it. Like, maybe just first like, as a and I know it's probably going to be a big. It depends. But like as a business itself one that you would say yeah you can actually have some success with it or.

00:46:28:02 - 00:46:30:00
Speaker 2
It's way easier to run in the long run.

00:46:30:00 - 00:46:30:16
Speaker 1
Oh is that right.

00:46:30:16 - 00:46:50:17
Speaker 2
Oh yeah. Big time. We got like seven people and versus like the 20 something at Longhorn. And the hours are very different. And so people showing up at 5:00 in the morning, they show up at 1030 in the morning, start setting the bar up. And, you know, they go home, the bartenders second shifts, they go home at midnight.

00:46:50:17 - 00:47:10:11
Speaker 2
And you only Max ever need two people at that place. And it's higher etiquette, higher type of clientele that come in because it's a higher end product and ticket prices higher. And people show up, lawyers and doctors and they're they're just shooting the shit, drinking a beer. Downtown Austin, very different, model and the skew, the the inventory management.

00:47:10:14 - 00:47:29:14
Speaker 2
It's a skew. Bottle in, bottle out, keg in, keg out. Not like way the carcass. What is it? Way. Now? Have you trimmed everything out? What are the bones? Way. How should we throw in the trash? How much do we throw on the bone grinder like you got to? It's just weighing. Cows aren't square. Is as the saying.

00:47:29:16 - 00:47:46:18
Speaker 2
So, yeah, it's just a very different business. But, you know, you can only make as much as you can turn the butts in the seats, like, yeah, the Longhorn has a capacity to still even triple as a business from a square footage standpoint, because instead of ordering from a slaughterhouse every five days, you're gonna order every day like it?

00:47:46:18 - 00:48:03:17
Speaker 2
It's just keep churning through the inventory. And as long as you get enough cold storage to last that, you know, 2 or 3 days cycle, sky's the limit. And if you grew to a even bigger point, then you just get cold storage somewhere else. Or, I mean, you can really that machinery has come a long way to, to expedite things.

00:48:03:17 - 00:48:28:02
Speaker 2
But the bar is more of a lifestyle business. Like you can make profit on those kinds of things, like on a restaurant. We had that pizza restaurant, Lucky's Pooches. It was a pizzeria in West Austin. You make like 8% profit, which you'll see which restaurants like, oh, make making profit your restaurant. But it's, I would never advise anyone to ever acquire a restaurant ever.

00:48:28:04 - 00:48:46:02
Speaker 2
If there's a wholesale component, it's different. Like a like a brewery that can sell off to the rest of the world. But if it can't leave the premise, you know, stay away. Yes, definitely stay away because we were we were growing. We were 8% profit. And then the 5 or 6 year lease option ends and the landlord's going up 5% on rent and you're just like, zapped.

00:48:46:04 - 00:48:48:21
Speaker 2
This is just not worth it anymore. So then you discover the.

00:48:48:23 - 00:48:50:10
Speaker 1
Real estate in Mississippi?

00:48:50:12 - 00:49:10:23
Speaker 2
No. Okay, I've tried to buy it. A couple times, but, every time I throw out a number, the owner squints at me and points his finger to the sky. Seriously? He goes like that? But then later on I found out he wanted $14 million, and I was like, okay, that's, that's ten more than I thought I offered.

00:49:11:01 - 00:49:36:16
Speaker 2
So the bar, but I, you know, the thing is, is retail thing, retail businesses are just I mean, they're they're different. Like, there's operating a retail business and there's operating like a software company. Just a whole different, whole different ball game. Not that I've given up on retail businesses, but my passion with technology and my passion when like blockchain, I raised money for feature films for a while.

00:49:36:16 - 00:50:01:09
Speaker 2
I want to make more movies. So I've really navigated back into, I guess not remote work, but digital work. And once I had children that put a big fire under my ass to like, stop having to go in early and stop having to stay late. If you're fortunate enough to be able to make those decisions, then that's a smart thing to do.

00:50:01:11 - 00:50:16:03
Speaker 2
If you love what you're doing and you love operating. I know people who are restaurant tours that have five kids that and they still shop before everyone else and leave after everyone else. And it's, you know, but they're they're great at it. There's five, you know, there's a restaurant group that they're doing it with. So there's more infrastructure.

00:50:16:03 - 00:50:32:04
Speaker 2
It's more of it has more of a flexibility. If they need to go out of town for two weeks for, a holiday. But you better have a you never have a second hand person if you run out like a restaurant and you want to spend a week doing something on your own, I mean, you're you you gotta have someone who knows how to run that thing.

00:50:32:06 - 00:50:33:15
Speaker 2
Did you two operators on a.

00:50:33:20 - 00:50:52:06
Speaker 1
Yeah. I mean, did you find it? It sounded like hospitality kind of experience. That stuff is. What drew you to it is that James Jackson leads the guy who's kind of loves being intertwined in the fabric of Austin. That drew you that way, or they like being naive, like what was obviously looking back now it's 2020 tech.

00:50:52:06 - 00:51:23:04
Speaker 2
And theater, film tech was my priority from day one, but I wanted to have a spot to go that was mine. And culturally, restaurants and bars are such fun things to own and be a part of because those are the hubs where the the interactions for all the other things to really kick off. I mean, the amount of times I've walked into my bar and seen some younger guy pitching a deal to some older guy, you know, I'm just like, that's awesome.

00:51:23:04 - 00:51:49:14
Speaker 2
Like, that's why these places exist. They don't have to be over a roll call, of course, but, you know, so that's always an exciting thing to own. And that's the lure of it. And if you can nail it and it can, it can be a very the ROI that I have received from that bar in that the non-monetary ROI is a hundred x more valuable than the monetary.

00:51:49:16 - 00:52:12:07
Speaker 2
There are people who are invested in my software company today who I met because they were regulars at my bar. There are I was on the this is like one of the coolest. Like I was on the cover of Brussels times, like because I own a Belgian bar like friends of mine in Belgium, or send me pictures of me on the front cover of their newspaper, I, I was like, that's I don't care if I lose $1 million on this.

00:52:12:07 - 00:52:29:22
Speaker 2
Like, that's the coolest thing ever. And like, social thing, like the princess came to my bar of Belgium like drinking a beer with the Prime minister at my bar. Like, those things are so cool. And if you have, like, a cultural bar like the Italian pizzeria, we had members of the Medici family come eat our Italian pizza place.

00:52:29:22 - 00:52:49:15
Speaker 2
Like things like that culturally can get you excited and it makes things like that worth it. You know, the intertwine and make the suffering a little more tolerable. But I would just never do a restaurant unless I was, unless I was going to be a part of, like, a dynamic restaurant tour group. Yeah. Like if I was going to do, like, three at once or five food trailers at once.

00:52:49:15 - 00:52:52:22
Speaker 2
But a one off is very, very difficult.

00:52:53:00 - 00:53:10:22
Speaker 1
Yeah. No, it, it it's something that you definitely get a lot of it can be very romantic from the outside looking in, but I've learned that the guys and gals that do well in and are pretty hardcore about like understanding what the real brass tacks is to it. And I know bit of, daydreaming is just going to work your way into success.

00:53:10:22 - 00:53:14:17
Speaker 1
I know we're coming up on time, and it made me think of like, probably a cool way to to kind of like.

00:53:14:21 - 00:53:38:21
Speaker 2
I want to add one thing, though, because I know, I know that if there are people who are looking to buy a business or start a business, the a hole in the market that I have seen that I would go do if I had the bandwidth to do would be cold. Warehouse storage is a huge need. There's a huge deficit of cold warehouse storage and cold delivery vehicles.

00:53:38:23 - 00:53:41:02
Speaker 2
Just a freezer truck, refrigerator truck.

00:53:41:08 - 00:53:47:23
Speaker 1
Really. Like you'd own that fleet and then rent it out to people or. Okay, like right now.

00:53:48:01 - 00:54:06:18
Speaker 2
Even Longhorn for like, if we once we have more capital to spend like, I mean like 60 grand a truck. I mean, for a small one, bigger one, way more. There's a huge business out there to have a fleet of ten of those things, and all you do is run them out like a what is it, Penske or whatever that.

00:54:06:19 - 00:54:23:02
Speaker 2
Yeah, just just straight up, just total totally. Man. That's like a huge simple thing. You got to worry about maintenance. You're kind of a distributor thing. You got to worry about the fleet that way. But warehouse storage, that's cold and cold delivery. There's a huge there's a huge deficit in the market for that.

00:54:23:04 - 00:54:45:17
Speaker 1
I imagine. Speaking firsthand, looking back on all the things that you've done and the things you continue to do, any parting like words of wisdom that you'd go, you know, if I was doing it all over again, these are the things that pay attention to. And I'm sure that might be a long list, but anything just come to mind immediately were if you think about folks maybe tuning in to this, going, yeah, yeah, I want to get down this road.

00:54:45:17 - 00:54:50:05
Speaker 1
You'd go, hey, just these are some speed bumps to watch out for.

00:54:50:07 - 00:55:17:03
Speaker 2
Oh, the main thing would be to somehow internalize this is impossible to do most of the time, because when you're looking at the numbers and the project and the plan, if if you're somehow able to to do this, assume the business is going to take all your plans, assume it's going to take twice as long for them to actually unfold, and assume that even if it takes twice as long for them to fold.

00:55:17:04 - 00:55:42:17
Speaker 2
Also assume that it will make half as much money as it's going to make as you projected it will make, and if it still is worth it after that, then it's go for it. But it everything I it's you're not different. No one's different than anyone else has gone through this. Not like you're the one you might be the 1 in 100 that just bought the best business and it cost long, but it's going to take twice as long and it's going to make half as much money, I swear to God.

00:55:42:19 - 00:55:58:15
Speaker 2
I mean, just that's it. It is. And if you want to be like, oh, not me, then that's a sign that you're having a little too. You're a little too naive at how you're analyzing it, like, oh, I'm not. It's not going to happen like that. For me. It's like, well, just just do the exercise because odds are it is going to happen to you.

00:55:58:16 - 00:56:08:22
Speaker 1
And that goes hand in hand. When you were talking about earlier about being able to walk away from something and not getting too romantic about it, it's like pressure test that thing and then do you like it's do are you still in love with this? Yeah.

00:56:08:22 - 00:56:30:13
Speaker 2
And the reason I bring up the cold storage stuff's because a business that has very clear, fixed operating costs that can scale above those fixed operating costs, with those fixed operating costs only going up incrementally as you scale, like a big, big warehouse, it's going to need to be cold. You know what that electricity bill is going to be every month, and then nothing goes up.

00:56:30:13 - 00:56:55:01
Speaker 2
That one forklift operator, he can manage 33% of that whole warehouse. Your job is just go do, sell, sell, sell, sell, sell, sell, get more business then that's a clean, clear, very good business that I will. That's the next thing I'm looking into buying a something that other variables where it's you got to change head count just in fluctuate all those things up and down as the, as it undulates around what the, what the economy's doing.

00:56:55:01 - 00:57:03:15
Speaker 2
Like those things are a headache and your emotional bandwidth will ebb and flow with it. And that's what wipes you out.

00:57:03:17 - 00:57:08:01
Speaker 1
It's being able to keep its sounds like simplicity goes a long way to on this stuff.

00:57:08:03 - 00:57:10:02
Speaker 2
Yeah, yeah.

00:57:10:04 - 00:57:23:15
Speaker 1
How about people? Simplicity. Maybe that's a better way to end this thing off. I know we talked about it on the way to just to the extent you'd like to share, but like when it comes to especially vision and decision making, like how important is it to keep things fairly simple in that realm?

00:57:23:17 - 00:57:29:01
Speaker 2
You mean when you give your, like Saint Crispin's Day speech to the to the staff, like what your vision is for the company?

00:57:29:02 - 00:57:34:07
Speaker 1
No. More like is it a good idea to go buy a business with five people?

00:57:34:09 - 00:57:54:23
Speaker 2
Oh, I mean, if it's a if it's a warehouse that's got cold storage and those five people all are forklift certified and you got 100 customers, and it's a great it's a great thing if you can, if you can. Like, I knew that when I bought, say, Longhorn. I knew that if I got bought ten more restaurants, I would I wouldn't have to hire anyone new until I had like ten new restaurants, because that's the capacity.

00:57:54:23 - 00:58:13:09
Speaker 2
You can look in there and say, okay, well, this the grinder is a machine. If it's only running for an hour, it can run for seven hours, you know? Yeah, that's the that's the fixed cost thing. But on people though, what I have learned is they pay the absolute most you can for the highest quality person very early on.

00:58:13:11 - 00:58:35:01
Speaker 2
Do not try to keep people at the low rate and just wait for them to come asking for more. If they're the most solid person for the job and you believe that they're amazing, give them more money immediately. And if you're if there are people who are asking for more money, or even if they're not, if they're not great like you have got to have the most solid team and you have to overpay.

00:58:35:02 - 00:58:53:06
Speaker 2
Now you're not technically overpaying, but at the time it's going to feel like you're overpaying. Overpay for the best people very early on and just make it. You're burned. You're going to lose money. You're going to burn. You need to burn. Burning on that will make the other thing stop burning faster. And then you've got then your culture is fixed almost immediately.

00:58:53:06 - 00:59:10:18
Speaker 2
Also, if there was a if there was a a bad one to begin with, that's what I should have done. And a couple of these things that just hired this super high caliber people, people that just best of the best showed up on time, give 100% so that I could 100% focus on just growing the business and not worrying about people.

00:59:10:20 - 00:59:14:11
Speaker 1
Worry about like trying to fix all the little holes and leaks and things like that that are going on. Yeah, I.

00:59:14:11 - 00:59:31:00
Speaker 2
Mean, there is literally a hole in leak somewhere, and instead you're thinking about why and Dylan didn't show up when you could have just paid the other guy the $3 more an hour. That. But you were like, trying to skimp out and you're like, mash out the other guy and beat him because he would have been there that day.

00:59:31:00 - 00:59:56:15
Speaker 2
Yeah. You want to be worrying about this problem right now. It's a big world out there. It's very complex. But you know, the Kiss motto, just keep it simple and keep it lean and don't get too married to the financials because you really want this deal to go through because you told all your friends and your wife and your husband and everything that you're going to buy a business, and it's going to work like zoom out and say it's okay to wait another half a year for the right business.

00:59:56:17 - 00:59:57:18
Speaker 2
Yeah, it's okay.

00:59:57:21 - 00:59:59:14
Speaker 1
Especially with cold storage.

00:59:59:16 - 01:00:04:05
Speaker 2
Especially it's cold storage. Hit me up if you open a cold storage facility.

01:00:04:06 - 01:00:22:13
Speaker 1
Man. Brother, thanks for jumping on with this today, man. I could talk to you for a while. We'll probably get you back on me, because I think there's so many nuances that I know that you know, everything from, the way behind the scenes and how you have. I know you're great at talking through, like, how do you structure things and all that stuff, but this stuff here, I think, is the all things that people need to hear.

01:00:22:13 - 01:00:26:17
Speaker 1
And I appreciate your time spending that. It's been a little bit of that brain power with us today.

01:00:26:20 - 01:00:29:08
Speaker 2
Yeah. I'd love to come back in some time. Thanks for having me anytime.

01:00:29:08 - 01:00:30:20
Speaker 1
Me, and especially as an Austin local.

01:00:30:20 - 01:00:36:03
Speaker 2
Yeah, I run two miles down the road. Thanks, buddy. Yeah. Cheers.