HEDGE WITH SERVICES

“Gallup runs a poll every year on the top institutions that Americans trust. Small business has been number one since the poll started. It is 44% higher, than Congress, obviously. It's also 22% higher than the healthcare system. And it has remained number one. And it's because no matter what the political slogan is behind the counter, you're treated with respect. They want to deliver value to you. They care how you're experienced.”

“instead of going to law school, for example, like, should I or instead of, like, you know, a master's degree in sociology, I don't know. Like, should more more young people just be saying, I'm gonna, like, go take over and try to learn how to run a small business? Yes. I I think it's really important for them to have, time in the trenches working with humans. And I would say the owners are very discerning of someone who's full of shit. If you if you don't know what you're talking about, if you don't have, grit, if if you haven't gotten dirt under your fingernails, they're gonna sniff that out very quickly.”

“one one of the transactions that that we can talk about that that's been highlighted is one called Greenway. And so the operator that we backed there is a guy named Anthony. He's a former combat controller, in the air force. He, you know, had double majored in undergrad at the University of Arizona. He, before partnering with us, was running a smaller painting contractor in Arizona. Made about 300, 400 top line, so he was taking home around 75. We've now parachuted it in as the operator for Greenway Painting, which is based in Jackson, Wyoming. The really cool part there is he's drawing around a 100 k base salary today, and he has 10% ownership in a business that's worth $2,000,000 Over time, we're working with him to grow that business. And as he goes from 10% to 70%, assuming the business doesn't grow at all, all of a sudden he has $1,400,000 of equity in a cash flowing business that's been around for decades”

“the second thing is we make them personally guarantee the debt. We don't do that for the collateral coverage. Oftentimes these people don't have a lot of assets, but we want to have a filter for someone who is going to take this as seriously as we are. And, and as part that, personal guarantee, you need to have a conversation with your spouse. It has to be a family all in, decision.”

“I know one guy who, was was previously working at Bird. He then, left. He has started a pool cleaning business. He, cleans pools throughout Los Angeles. He has some of the coolest AI automations. One of them just to kinda tease is he has this AI that joins all the local neighborhood Facebook groups and, posts a post from him that says, hi. Me and my wife just moved into your neighborhood. I'm a local small business owner. If you have a pool, I would love to clean it. Thank you for allowing me to to make ends meet and and build a happy family here.”

“we're the perfect AI hedge, but we also have a ton of upside from AI. And what I mean by that is that if you look at kind of the the the anthropic spider chart, these service businesses are the last businesses to be impacted. Optimus Prime is not is not running around inside your home fixing your toilet just yet. And so so we're at a very interesting time where, these businesses will only go up in value.”

“if if you kinda think broad picture, you have 33,000,000 businesses in The US. You shrink that into 6,000,000 have employees. So those are the businesses that we focus on. Of those 6,000,000, roughly 2.1 are owned by baby boomers. And and and the problem is if you go around, there's a lot of survey data on this, around 48% actually have a plan for what they're gonna do with the business. And so that's a huge amount of businesses that are at risk.”

“a lot of people think of AI and they think of cost cutting. And they're like, oh, we can really optimize our p and l. We can use AI, automate all these jobs, cut costs. That's not the right lens to look at small businesses. If Susie does payroll, route planning, HR, and you automate one of those jobs, you're not coming to Susie and saying, congrats. You just got a 33% discount on your payroll. She's gonna walk out the door and tell you you're crazy. So what what really it is is it's a revenue growth story.”

“There's a lot of doom and gloom on the Internet, on some of the legacy media outlets as well that there's no jobs. AI is taking all the jobs. That may be true in corporate America. It's completely false on Main Street. 32% of current owners have openings today. That's up two points from last month. The number one problem is not actually the cost of labor. It's the quality of labor.”

“one one of the kind of smart ass quips that we hear often from retiring owners is part of the reason I've been married for forty years is I work forty hours a week. They're very afraid of what comes next as well. This has been their identity. They've been Joe the plumber or Joe the auto shop guy. When they pass the torch or shut down the business, who am I?”