The Family Office Playbook for Lower Middle Market Acquisitions — Erik Billet

Joshua Wilson: 0:31

Good day, everybody. Welcome to The Deal Podcast. We are so grateful that you're tuning in and, um, enjoying these stories of people who have taken the leap into entrepreneurship and have bought, built, sold companies and, and shared their successes, but also shared some of their learned failures with you. The mission and purpose of this, the team here at FA Mergers, Jude, Chase, Scott, have put this together because they believe in the future of entrepreneurship, and they wanna inspire future generations of entrepreneurs to take that leap or at least explore it and maybe see if it's a good fit for them. Um, so we're grateful for that. We always encourage you to head over to The Deal Podcast and, uh, ask questions of our guests and o- of ourselves and, and, um, we'd love to answer those on the show. Uh, today's conversation is, uh, it's gonna be fun because, uh, Jude knows this guy very well. So Jude, why don't you set an intro for today?

Jude David: 1:26

Thanks, Josh. Yeah, this is an exciting one. Um, Erik is my business partner in Kin Capital Partners. Um, like Josh said, we-we've got, you know, a mission to try to encourage and inspire the next generation of entrepreneurs. But, you know, many different shapes and sizes, uh, you know, come for entrepreneurs. You, you have some that start very early, and they always wanted to be an entrepreneur, always wanted to be a business owner. You got other guys that are a little bit of late bloomers, kinda like I was and like Erik was. And I think some of those stories are the most inspiring ones. You know, folks who, um, you know, entered a safer career in life, you know, had some kind of, uh, you know, well-thought-out, well-planned career where they got degrees and, you know, became a CPA or a banker or a lawyer or whatever the case may be. Uh, and if you want some more of those stories, go back, you know, listen to several of our guests. You know, some of the ones that come to mind, Brandon Robinson, uh, who came from the medical field, Brady Comeau, who came from, uh, banking. You got myself, I came out of practicing law. Um, you got Erik Billet today, who came out of the accounting world. Uh, Erik, uh, is a CPA by trade, was an auditor for Ernst & Young, and, uh, you know, like a lot of entrepreneurs, felt the heat of the daily grind sitting at a desk every day and, you know, working for somebody else. Um, had a few careers along the way, you know, trying to, trying to fill that gap, but eventually realized what a lot of us do. You know, the true fulfillment is finding your purpose for yourself, forging your own way and building something. So, uh, really excited to have Erik on the podcast, and welcome, Erik.

Erik Billet: 3:12

Glad to be here.

Joshua Wilson: 3:14

Yeah.

Erik Billet: 3:14

I love answering questions and asking questions, so I'm ready for this.

Joshua Wilson: 3:17

Yeah, let's go for it. Yeah. Uh, so you'll hear people listening in, you'll hear a few different voices. I'm sitting across from Erik, and sitting next to Jude. Um, Erik, why don't we start out with this. You know, who are you and what do you do?

Erik Billet: 3:32

Well, um- I guess philosophically, um, I am just trying to figure out what matters. What matters and what's important in life. Um, a bit of an armchair philosopher. Um, I am a dad, a husband, typical answers you'd expect, and I can rattle off my CV pretty quick. Uh, but at the end of the day, I'm-- what I spend most of my time doing is trying to figure out what in life matters, uh, what in my family matters, what's important at work, and focus on those things. Uh, and so I'm kind of always looking… someone who's always looking for those kinds of answers, uh I find work. So professionally, I'm one of the three principals in a small family office. Uh, I act currently as our CFO. I've held the CEO title for all of our subsidiaries, uh, over the past maybe five or six different companies. I've had the marketing hat, I've had the HR hat, and over time, um, decided to step back and focus on where I like to be, which is kind of behind the scenes, uh, playing the finance structure accounting role, uh, and leading that function across all the companies and let someone closer to our customers, closer to our employees lead, lead the companies that we own. So, um That's how I'd kind of classify myself.

Joshua Wilson: 5:13

Yeah. Well, I'm glad you're here. Um, we started out our, our conversation yesterday-

Erik Billet: 5:19

We did… Joshua Wilson: where you shook my hand,"Yeah, that guy was probably a wrestler." That did happen. That did happen. Uh, I haven't been… I've, I've been asked if I was a cop before whenever I shake someone's hand. But yeah, so, um, I think that a strong handshake's important.

Joshua Wilson: 5:36

Yeah,

Erik Billet: 5:36

I do too. And, uh, and I guess I kinda came at you in some kinda like aggressive way to shake your hand.

Joshua Wilson: 5:42

Yeah.

Erik Billet: 5:43

And, uh, that's me forcing myself to be approachable and extroverted-

Joshua Wilson: 5:48

Yeah… Erik Billet: which I'm not. I'm an introvert by nature. Ah.

Erik Billet: 5:51

Um, but I play extrovert pretty well.

Joshua Wilson: 5:53

Yeah.

Erik Billet: 5:53

Uh, and especially whenever I'm in an office building.

Joshua Wilson: 5:55

Yeah, very intentional the way you… I, I, I observed you in a business meeting, and I'm not spying on you, but like I obs- I observed you walking around and interacting with people, and when you shook your hand, you know, shook my hand, you like, you kinda like leaned into it like we were on a, a wrestling mat, and, you know, I was a wrestler too, so like it… I, I was like, "Ah, that g- I know exactly how that guy operates." Let, let's talk about this introversion- Yeah … extroversion piece because you said, "I s- I sat in the role of, in the, in the family office o- as one of the principals, as CEO for the portfolio companies, CFO, CMO, HR."

Jude David: 6:29

Mm-hmm.

Joshua Wilson: 6:30

Three of those roles, CEO, CMO, and HR, are very people interactive, very much geared towards like front, you know, front- Yeah facing, a lot of that stuff, where the CFO can sometimes play more in the back role. What was it, you know, stepping into those different roles where it's not your natural nature, but you said, "I could force myself to do these things"?

Erik Billet: 6:53

Yeah.

Joshua Wilson: 6:53

Talk to me about like what did you learn in those things, and what was… What, what, what were some of those challenges?

Erik Billet: 6:59

That there's… I learned that there's no shame in acting if you actually believe in the end goal. I was in sales for, you know, Jude mentioned that I had a series of c- careers.

Jude David: 7:11

Mm-hmm.

Erik Billet: 7:12

Ernst & Young, uh, opened an o- Started in New Orleans, opened an office in Lafayette for 'em, um, and then went into the oil field, spent time in banking, ended up in software sales, uh, selling software to small banks across the US, and that was a sales role, which was very outside of my, my repertoire of skills and experience, but it was acting. I could just turn it on and act.

Joshua Wilson: 7:37

Mm-hmm.

Erik Billet: 7:38

And I kinda made peace with that's fine as long as I really do believe that what I'm selling is gonna help this bank. Same thing with CEO, HR, um, marketing roles, very customer-facing, employee-facing, rah-rah cheerleader, um, head of all the quarterly meetings for the company and stuff. I can turn that on, and I can act, and just because I'm acting doesn't mean I care less about the people or the message. I believe it. A split extroversion, introversion Not in what I like to do or can do. It's what charges me up versus what drains me.

Jude David: 8:15

Mm-hmm.

Erik Billet: 8:16

I can do a two or three-hour meeting and kick ass. I can, I can do a pretty good job speaking. I'm a decent speaker. Um, but I'm done for the day. Whereas if I'm alone in my office with Excel and my new best friend Claude, and we're just in a quiet space with music playing, I'm good for 12 hours. Yeah. I'm good to go. And I finish that ready to do more. So- Yeah it's, um… And so I kind of split that.

Joshua Wilson: 8:44

Yeah. The what fuels, what fuels you, right? Mm-hmm. And I've, I've heard that, uh… Yeah, what, what fuels you. As an extrovert, what fuels you is being around people. Mm-hmm. Right? So, like, I come in to record here in Lafayette with the boys, and we'll do, you know, two to three days of recording back to back to back, and I'm in, in the studio for 12 hours at a time.

Erik Billet: 9:05

That would kill me.

Joshua Wilson: 9:06

Right.

Erik Billet: 9:06

That would, that would kill me.

Joshua Wilson: 9:08

But if you had me, you know, do the, do your job, sit in front of Excel spreadsheet or, or any of that nature- You would kill

Erik Billet: 9:15

yourself.

Joshua Wilson: 9:15

Yeah. Oh, yeah.

Erik Billet: 9:16

Yeah.

Joshua Wilson: 9:16

So, like, I think that's where when Jude kicked off this as an inter- uh, intro, he mentioned when you find out your purpose, when you find out your calling, when you find out, like, how you're wired, how God created you, and then you apply it to add value to others, I think that's, like, that's where I think you find flow in life.

Jude David: 9:36

Mm-hmm.

Joshua Wilson: 9:36

You know, um, talk to me about, you know… Y- you said you were stepping in those roles, but you're, you guys are starting to take more of a, you know, CFO role- Yeah … and you're finding more of your flow within the family office. Talk to us about, like, finding that journey, and then what, what's changing because of that?

Erik Billet: 9:54

Yeah. I think that we started out- So roll it back a little bit. We're in a multifamily office right now.

Jude David: 10:04

Mm-hmm.

Erik Billet: 10:05

It would have been very presumptuous to call it that in twenty twenty. It was me and Jude and Jude's brother. We scraped some money together and bought two companies. And then we did it again and again and again and again, nine, ten more times. And so it turned into a family office. And initially, I had to be the CEO. That was a necessity. The companies we bought, the founders, the sellers, they moved on.

Jude David: 10:40

Mm-hmm.

Erik Billet: 10:41

I had to be the CEO. We-- it wouldn't have made financial sense for us to hire a CEO at that point. And if you imagine Jude actually running day-to-day the operations of a company, you can just imagine the plane crashing into the ground, right? So that was obviously not the right answer. Um-

Jude David: 10:57

But

Erik Billet: 10:57

man, we'd have like the most beautiful equipment. We would have-

Jude David: 11:01

We would have the most ambitious plans that you have ever heard. Mm-hmm. And we would like so crash into the ground- We

Erik Billet: 11:07

would have no employees… Jude David: to the earth's We would have no employees left. Jude is extremely intelligent and, you know, very similar to me, he can turn it on whenever he has to communicate with mere mortals, but, but that's not his default setting. Um, it's a different level of, of, of strategy and an aversion to the weeds to the point where his face will tell you that what you're talking about is weed. So, so that is-- there's an important role that I play still, and it's like the Jude whisperer. Like, Jude said this, I'm gonna go say it in a way that won't make our employees quit. So, so, um, so yeah, it was, it was a bit of a necessity. Um, and it was fun. It, it's-- I like learning by doing, so jumping in and figuring that stuff out, even if it was just for three or four years, I feel like now I have more respect for all those roles, for what's needed in those positions. I feel like I could manage someone better who's in that role. But over time I became more and more interested in actually making the family office side of the family office work. Um, I've studied investing. I'm an armchair everything, right? I don't have any formal training in anything but accounting. The only thing that I can say I'm not an armchair is I'm not an armchair accountant. I'm a real one. Everything else, I'm an armchair philosopher, investor, fitness addict, whatever you want. Like, armchair everything. I'm an armchair investor, and I have been for, like, 20 or 30 years, um, since-- Well, I guess I'm 38, so call it 25 years. Um, reading every Warren Buffett thing, every value investing book, Seth Klarman, Howard Marks, Joel Greenblatt, like ev- a wide range of investing, a wide corpus of investing, if I wanna use a fancy word. Hmm. And I've always loved that. And after stepping back from running the companies, I realized that I can l-look at this the same way. It's just a control investment that we can physically help. Like, you have your guys like David Einhorn and, and, uh, whoever else, um, that do active in-- like the activist investors- Mm-hmm that go and buy in, then write a letter to the board and tr- We're doing the same thing here, but we're just buying 100% of the company, and then we are the board-

Joshua Wilson: 13:42

Yeah… Erik Billet: and trying to help figure And so it's, um… it lets me scratch that itch. And so stepping back to, to the family office side of things-

Jude David: 13:52

Mm-hmm

Erik Billet: 13:54

took me out of what was a drain on me and put me into all day, every day what pumps me up.

Jude David: 14:01

Super key word that you said there was control. Like, control investment. Um, we get approached all the time to invest in companies or put up- Loan

Erik Billet: 14:11

money… Jude David: put up capital in companies know, you know, take a 20% equity position and give us some preferred debt," or what-whatever it is. My son wants to buy my company. Would you mind giving him the loan to do it?

Jude David: 14:24

You know, we've had that one. Oh my gosh. Um, yeah, we've had every different version of it, but maybe talk to why control investments are so important for what we do. You know, why, why is it that that matters?

Erik Billet: 14:36

So control is a Double-edged sword that I think you have to go down. You have to go down that path if you wanna… At least in, for the way that you and I operate and think, we have to go down that path. The double-edged sword is it's the Peter Parker principle, right? Great power, great responsibility. Whenever you can control everything, whenever you can walk in and c- and control things, that in itself, in my mind, is a reason to not. Hmm. You need to temper that, that ability to go in there and change stuff. Control's important because there's things that we know that we're good at. It's a very small list of things, honestly, but it's something that almost all small businesses… I won't say all. That many, many small businesses and almost all the ones that we look at are not good at. So there's some things that we have to take off of a business' plate. We have to. And if we don't have that control, we end up just being a bank, and that's not what we want to be. We don't want to just be a source of, "Hey, I'm still running the show the way that I want. I'm gonna tell you when I want money, and you can tell me when you want dividends." That's, that's not… We're not adding any value there. There's a need, you know, th- there's a need to add value. I think Jude's spent his whole life identifying value in companies, at least the investment banking part of your life. Identifying value in companies, turning that into a pitch deck, convincing someone else of the value, and hoping that everyone leaves happy. Me, philoso- philosophically, if I want to be in a business where I'm buying and likely eventually selling companies, that's a space that's very, it's rife with vultures, right?

Jude David: 16:35

Mm-hmm.

Erik Billet: 16:36

Churn and burn, pri- private equity. If, if I want to come out of this feeling like I've actually done some good in the world, I need to add value. I need to find some way to add value to where it's as close to a win-win-win as I can get. We win, seller wins, buyer wins, employee wins, customers win, vendors win. And I feel like if we have no control, we can't do that. Now, on the other side, if you, if you use that control poorly and think you have all the, all the right answers… You talked about, uh, you said people share failure stories. Mm-hmm. Many of our failures are where we thought we knew the right answer and thought we knew better than an industry or a 40-year veteran or things like that. Um, so that control can cut both ways.

Joshua Wilson: 17:27

Yeah. Jude, um, how did you meet Erik? So a few back-to-back questions. How did you meet Erik? What's the origin of the name Kin Capital?

Jude David: 17:39

So we met in high school.

Joshua Wilson: 17:41

Oh, you guys went to high school together?

Jude David: 17:42

Went to high school together. He was younger than I was. Okay. We didn't really know each other well in high school, but whenever I was a senior, I took a film study class, and Erik happened to be taking the same elective.

Erik Billet: 17:55

Scott Johnstone.

Jude David: 17:57

Scott Johnstone. Yep, yep. We'll leave it there. Um, Erik and I got partnered on the same team, making the best junior gangster film you have ever seen- Wow … in your life. Like- What was it

Joshua Wilson: 18:12

called?

Jude David: 18:13

I don't know. What was it called?

Erik Billet: 18:14

I don't know what it was called.

Jude David: 18:16

I don't know. It was, it was something cheeky, I'm sure. But, uh

Erik Billet: 18:19

Our… The only thing that I r- So I remember we used your brother's office And then, um, which Robertson was it that lived down the road from you? Sam? Uh, Sam. So, uh, uh, has Amy's family been on the show thus far? I feel like-

Jude David: 18:36

I don't think so.

Erik Billet: 18:37

So all I remember from that is I, I had the original footage. I was an armchair video editor back then, uh, with my bootlegged Adobe Premiere Pro. Nice. Uh, and I remember there was some scene where, I don't know if it was you or Mark or me or… Someone was lying in a bush, and we're filming it, and then you heard Sam Robertson pull up in his car and go, "What you boys doing in the bushes?" It was like, like, "Cut. Hey, Mr. Robertson." We- So that's all I remember from that. But, uh, yeah, we, we filmed this mafia gangster movie. I think I was an assassin.

Jude David: 19:15

Yeah, something like that. Uh, my wife was in it. Shout out to Ashley. Love you, honey. Um-

Erik Billet: 19:20

Dame- dames in distress, I think.

Jude David: 19:22

She was. Yeah. And, uh, she's a former podcast guest, so go back and listen to Ashley's, uh, Ashley's podcast as well.

Erik Billet: 19:28

Pink Salt Rite.

Jude David: 19:29

And, uh, Pink Salt Rite. Yep, pinksaltrite.com. Go buy some jewelry. That's it. Um, and, uh, Mark Como was our, uh, our fourth team member. Yeah. So that was, that was pretty great. Uh, we had a lot of fun doing that. Got to know Erik a little bit, but we reconnected a little bit later in life whenever he started the Lafayette office for Ernst & Young. Was trying to, you know, network and get to know the, the professional community in Lafayette. Said, "Hey, let's get back together," and, you know, I think we had a few lunches and whatnot. And Erik ended up moving to Dallas. Um, but he just randomly called one day because, uh, you know, COVID was starting, and it seemed like the world might end, at least the business world as we knew it. Yep. And he was selling software to little regional banks who were probably the most risk-averse people in the entire world. So, like, when you're talking about a large six-figure capital investment for the most risk-averse people in the world who think the world might be ending and their, you know, banking days might be over, like, the chances of that being successful were pretty small. And

Erik Billet: 20:35

so- It was literally walking into a boardroom and trying to sell software to 10 70 to 90-year-old white men. Mm. That's basically what it was. Mm-hmm. And it was just… It was not… It worked well enough when it worked, and with the, the pay, the way it worked, four or five sales a year made you, but four or five's pretty close to zero, man. So, like, if you had zero, it broke you

Jude David: 21:01

Yep. And so Erik was looking for the next thing. He called me one day and said,"Hey, do you happen to know any- anybody looking for a CFO or, or something along those lines?" Um, I said, "Well, send, send your resume. I'll, I'll take a look and kinda look at your background." And, and I did, and like I called him back and said, "Man, you have had so many jobs." Like so many. And it's a, an eclectic background. He did a lot of different things, but like all good jobs, all professional jobs, and like it seems like… seemed like he excelled just about everywhere he went, but it was, it was like never exciting enough to be like, "Let me grow in this role." It was always like, "Okay, mastered that. Let me move on and find the next thing." So I just told him, "Look, I, I think you're never gonna be satisfied until you figure out how to step out of the working world and be your own boss and do your own thing." Um, it was a little bit self-serving 'cause I also happened to have a company for sale in Dallas. I was like, "Man, you would be so great at this." And uh, and Erik said, "Oh, yeah, I'm not doing that." "Don't, don't try to- Nope … don't try to sell me something. I did not call you so that you could sell me something." And, uh-

Erik Billet: 22:11

Snake oil.

Jude David: 22:12

Yeah. But I thought about it for a couple of days, and I called him back and said,"Look, I really like this opportunity. I wanna buy it, and I'd love it if you came along with me and ran the thing for me." Um, and then, you know, he got on board with that and said, "Yeah, and I kinda wanna co-invest too." And so we said, "Okay, let's partner together and do it together." And then, uh, my brother came on board, and the rest is history. Um, to your second question, why do we call it Kin Capital Partners? Um, I wanted to put in an offer on this business, and it was like, "What am I gonna put on the letterhead?" The- Jude and Erik. Jude and Erik wanna buy a business. Two guys buying a business. And I was like, "Well, they'll never take us seriously, so we need a name." And then, uh, you know, my brother has just been dying to invest with me, you know, forever because he is like the coolest dude and has a lot of trust. Um, and I was like, "You know what? We should call it Kin Capital. You know, we'll just… We're kin. Why, why not call it Kin Capital? Erik's like kin." Ah."You know, we'll just be Kin Capital." Yeah. And, uh, it was kind of a joke at first. It was like, we just need something to put on top of this piece of paper and put it in front of somebody for an offer, and then like we did another one, and it's like, "Well, we'll, we'll still be Kin Capital and-"

Erik Billet: 23:29

Yeah"… Jude David: we'll keep doing it." Literally went to 99designs.com and had a little, one of those little contests where they make a logo, and it was… I, I got the Kin Capital logo, and we threw it on some letterhead and, and it hasn't changed since.

Joshua Wilson: 23:41

No kidding. Yeah. I like it. So- In our, in our conversation, you know, you mentioned you've had a lot of jobs.

Erik Billet: 23:48

Yeah.

Joshua Wilson: 23:49

Jude took a look at your resume and said, "Wow, you've had a lot of jobs."

Erik Billet: 23:53

Yeah.

Joshua Wilson: 23:53

Um, talk to us about the… I, I think this will be helpful too for the people out there who are trying to find their fit in life. Mm-hmm. And I think that what I'm, what I'm coming around to as a theme of this conversation is kind of like finding your path, finding your purpose, finding your place, finding the, the right bus to be on- Yeah and the right seat on that bus.

Erik Billet: 24:12

Yeah.

Joshua Wilson: 24:12

Like, how do you know when you're, uh, like heading towards the right bus, and how do you know how to find that first?

Erik Billet: 24:20

I… So a couple ways to think about that. I… Whenever I give advice to people, and I very seldomly do it because I don't like giving advice, um, I think it's very presumptuous. But I don't think anyone can know that they're heading, that they're going to the right bus. Some do. Some are born and they know they want to be a concert cellist from the time they're three. Fantastic. That's amazing. Lucky you. Most folks don't fit that. Right. So what I always say is,"Look, if I can just… If I think about my life as a compass, if I can take Cardinal directions and X them out as I know that's the wrong answer. I know that's the wrong answer. I know that's not for me. And you get there by trying stuff and hating it.

Joshua Wilson: 25:13

Yeah.

Erik Billet: 25:14

Trying stuff, and it's a grind, and it's work. If you- if I can X off enough of my directions, what I'm left with is that segment of that circle, and I know I'm at least going in, in a right enough direction to where I'm not moving away from the goal. Eventually, I'll figure it out through bouncing around Monte Carlo kind of style. So there's- it's figuring out what you don't like, and then on the how do you know you've gotten there? I… Jude was right. I had good jobs. Um, I've never been fired. Every job I left on good terms. Everyone was like, "We're all…" Everyone understood. They're like, "Yeah, I know what you're doing next makes sense. What you're doing next makes sense."

Jude David: 25:58

Mm-hmm.

Erik Billet: 25:58

Um, but through all those good jobs, I was always looking for what's the next good fit? What's the next step? Like, kind of like just the inner, I want the next step. This is a stepping stone.

Jude David: 26:14

Mm-hmm.

Erik Billet: 26:14

From the day we started this, it wasn't an intentional choice. I just haven't looked. I haven't touched a resume in six, seven years. I haven't thought about going on LinkedIn. I haven't looked at open jobs. It doesn't matter anymore. None of that matters. You

Joshua Wilson: 26:28

found it. You found it.

Erik Billet: 26:29

Yeah. None of the… Like, jobs don't matter anymore because that's a thing that I don't need. I have this

Jude David: 26:37

Yeah, we, we are constantly identifying the right bus though. You know, it, it's not like we're in a static environment where we started a company and we're running it at a stage of maturity. Like, we're constantly acquiring new things, and then we're trying to fit those new things together with our existing things, or we're treating those new things as a new platform, and then we're trying to add things into that, and we're trying to grow all those pieces at the same time. So it is a very dynamic environment. There's nothing static- Yeah … about what we do.

Erik Billet: 27:08

I didn't pick a bus, I picked a highway, and everything on that hi- highway that we're working on is an open option, and we're trying stuff out to figure out what works.

Jude David: 27:18

But I constantly have people talking, talking to me about M&A and saying… Like, maybe they're a business owner and they go, "Oh yeah, I'd love to grow my business by M&A." Or they're a professional and they say, "Oh, I'd love to, you know, try my hand at that, leave my professional job and go do it." And I go, "Well It's not as easy as it looks. Like, you only hear about the success stories in this. And so, like, you see companies that grew by M&A, and you're like, "Wow, that was easy. Those guys did that so beautifully." Or you see a company like ours, and you're like, "Oh, wow, look, they've had some good exits, and they've-" Yeah."They've done really well with it." I'm not gonna say it's like you get a baseball batting average doing this. Like, you do a little better than that, but the chances that you're gonna go do a dozen deals in five years and have 12 home runs, it's like 0% chance. Zero. There's, there's no chance that's gonna happen. You know, you're gonna have, uh, out of a dozen deals, two or three that you knocked out of the park. You're gonna have four or five that you did reasonably well, and then a few of them where you go, "Gosh, what were we thinking?" Like, that was, that was not the right pick. And on the ones where you think,"Man, we, we shouldn't have done that," you're trying to find an exit path that works for everybody. You… We're not the, the vulture kind of folks that go like, "Let's scrap it for parts and figure out how to, you know, deconstruct things and get value out of it." You know, we're, we're looking for ways to preserve jobs and, and keep people working. Um, and so that might be selling a company, but just, you know, at breakeven or maybe even at a loss, but in a way that keeps people actively working. Um, but if you do it really well, those home runs, like, that's really the only part that you need out of the whole thing because those things more than cover the cost of everything else. Um, but we're constantly, constantly evaluating. And to be successful at M&A, um, it's, it's not just being a good operator, and I think a lot of people fancy themselves as good operators, and they think,"Because I'm a good operator, I'd be good at M&A and growing a business." If you pick the wrong company to buy, you will never get out of that hole.

Erik Billet: 29:24

That'll sink you.

Jude David: 29:25

If, if you don't have a vision for, "This is the company I'm gonna buy. This is how I can scale it. This is the add-on strategy, and this is the eventual exit strategy," you're going to fail. Um, and that's where most people go wrong. For every one deal that we buy, I probably evaluate 1,000. We probably have 20 site visits, meeting with 20 different owners of businesses before we finally say, "Okay, now this is the one we wanna buy."

Joshua Wilson: 29:51

All right. W- well, hold on a second. This is- Yeah. You, you just mentioned… All right, so if we're looking at professional baseball player stats, right? Three, 300 is a decent baseball player, right? When we're looking at in terms of, like, the due diligence platform and process, you're looking at 1,000 companies before you buy one, right?

Jude David: 30:13

Yep.

Joshua Wilson: 30:13

Like, that, that makes you a great deal maker, right? Like, that's, that's the batting practice, right? Is taking a look at 1,000 companies to see the one. This goes into the business model of private equity versus family office. I think private equity, uh, I think they all have their place, but, you know, talk to us about the different business model of private equity and family office and how you're able to look at a thousand and only say yes to one because of the different structure and business model.

Jude David: 30:43

Yeah. I-I'll start with a little anecdote. So, you know, the Secret Service, everybody knows the Secret Service is responsible for protecting the president and members of Congress and that sort of stuff. Uh, but the bigger part of their job is dealing with counterfeit money. Um, that's the, the biggest function of the Secret Service. And to be trained as a Secret Service worker, you go through this very rigorous training process to be able to spot counterfeit money. And as you're going through this process They're showing you day after day after day, thousands and thousands and thousands of bills to get you to spot the counterfeits. But for like the first two months of the training, they show you nothing but real bills, and you're like under a microscope examining all these real bills and like all the little intricacies, and you're going like, "Where's the fake? Where's the fake? Where's the fake?" And then finally you get like two months into this training and they put a fake one in front of you and you go, "Oh, yeah, that one's fake. Oh my gosh, that one's a fake one." And that's because you're so good at like knowing what's the real thing that whenever it gets to the fake one, you just like immediately knew it. And that's just a matter of repetition because you had so much repetition with looking for the right thing, looking for the right thing, looking for the right thing. You just knew it wasn't right whenever you, you looked at it. What we do is kind of the opposite. It's like I see a thousand fakes before I get the one that I go, "That's the one," and I know it like in my gut. I look at it and I go, "This is the one. We're going hard on this one." And you know, you have to be willing to go through all that effort. If you just like step up that first time and look at a fake bill and a real bill and you go like, "I, I bet I could be good at this. I could pick the fake," y-you're probably gonna pick wrong. Um, so that's the first step in being able to be good at this. You've got to be willing to put in the work, understand financials, understand metrics, and like read all the decks. You can't just like skim the first page and go, "That one's interesting and that one's not."

Joshua Wilson: 32:46

Throw it into Claude and tell me like

Jude David: 32:47

Yeah, throw it into Claude and get a summary. No, no. Like I do that though, like Claude's pretty good at, at helping me to parse deals and like go online and find all their Google reviews and their Facebook ads and their everything else and compile stuff, so you can use it as a good tool to compile, but you have to do the work of actually reviewing the information and understanding it. Uh, one of the things that, you know, makes our structure work better, you know, as a small family office is we have no pressure to get a deal done on a certain timeline or to exit a deal on a certain timeline. And so I've got the flexibility and the time, since it's our own capital, we don't have to deploy it tomorrow, we don't have to deploy it six months from now, we don't have to deploy it a year from now. I want to. I really wanna go find the right deal and put the, put the money to work, but we don't have any timeline that I need to get into a deal. And so I will look at a thousand fakes looking for that one real one. And then whenever it finally comes, I go, "Okay, now we got it. Let's, let's get to work." Um- Mm. The, the challenge with most private equity is they have investors behind them. So they've got institutions. You got insurance companies, and they've got pension funds, and they got, you know, all these different big financial players that are putting billions of dollars to work, and they're sprinkling it around on all these private equity groups. And they have very strict parameters. You know, "This is the kind of opportunity you can invest it in. This is the duration. You have to put that money to work within six months after I give it to you, and then I have to get that money back six years later." And usually the fund duration is somewhere between three and seven years. Um, but if you think about that, like three years is an instant. Like if, if you are part of a private equity fund where you have to put the money to work and then return that money three years later, well, you're going through all the effort of buying the company, and like before the dust even settles, you're trying to implement new plans of how to change that company, 'cause like we gotta, we gotta really move fast. Gotta

Erik Billet: 34:43

double it quick.

Jude David: 34:44

We gotta double this thing super quick. And then by the time two years have passed by, you're going, "Okay, now we gotta exit. Like we gotta, we gotta list this thing for sale and, and try to find a buyer for it." That's no time. And so you end up making really bad decisions like, "Well, there's no way we can double revenue in three years." But

Erik Billet: 35:01

I cut the cost in half.

Jude David: 35:02

Yeah, we can cut the cost in half. We can lay half the team off. We can, we can start salvaging different parts of this thing. We can say, "Hey, that division is a failed division, so we're gonna sell the assets of that division, and we're gonna, you know, grow this and, and double down on this piece here," and you end up making a lot of really bad decisions.

Erik Billet: 35:17

Um- And then you end up trying to maximize the value of this thing that you've kneecapped-

Jude David: 35:23

Mm-hmm… Erik Billet: through great dump something onto someone who is gonna overpay for it at that point. And that's just… That's garbage. That's not adding value. It's extracting value. It's different. What's funny is, you know, Erik and I made one of the best investments of our life, and we held it for a little less than three years. Um- That was one of the no-brainers. Look, quick story there. Jude likes family time, and so do I. Mine, my work family time bleeds together a bit more than Jude's does, but I feel like you have a pretty solid cutoff at like the end of the day, dinner and stuff. And one day I'm sitting at dinner, one night, it's like 6:30. I've got young kids, so we're eating dinner pretty early.

And my phone rings at like 6: 36:09

45 And I pick it up, I'm like, "Jude's calling." And then Kim, my wife goes, "Jude's calling you this late?" I was like, "Yeah. Hope everything's okay." Answer the phone. He goes, "Okay. So there's a company for sale. It's for sale for six million dollars. I think it's worth three times that. I think the broker just messed the whole thing up, and we need to put an offer on this today to get it off the market and then figure it out." I'm like All right, that makes sense. I wanna offer a million over asking price. Okay, still sounds fair, so go for it. And that deal, we took it off the market the next day, closed on it a year later. An effing year later.

Jude David: 37:03

Yeah.

Erik Billet: 37:03

And that was the one.

Jude David: 37:04

Yeah, their financials were pretty screwed up, so quality of earnings was not a fast thing on that deal. It, it took us a little bit of time to get their financials ironed out.

Erik Billet: 37:12

And we got shystered by a bank as well.

Jude David: 37:14

Yeah. Yeah, we had, we had several different, uh, challenges to work through. But, you know, the difference between good deal makers and bad deal makers, good deal makers are presented with challenges and they figure out how to work through them. Mm-hmm. You know, bad deal makers are presented with a challenge and they say, "Well, I guess this one wasn't meant to be."

Erik Billet: 37:29

We had eight opportunities, very rational, reasonable opportunities to stop putting the work in, in that diligence process.

Jude David: 37:39

Yeah. And look, we didn't go into that deal with a plan to exit in three years. We went into that deal with a plan to hold that thing forever-

Erik Billet: 37:47

Mm-hmm… Jude David: and to knock it out of we're gonna own it day after day after day and pass it down to our kids. Um, but the right opportunity presented itself, you know, along the way, and I think that's what made us so successful in that one, is because we were building it like we wanted to own it forever. We were building it to be the right kind of business. You have to.

Jude David: 38:07

Um, it's such a challenge whenever you have to hit a certain return and you have that three-year timeline in advance because we wouldn't have made the same decisions that we did- No had we done that. But, you know, I, I forget what it was. I, I calculated at one point, but it was like some multi-thousand percent IRR that we had on that deal. So it, uh, it ended up working out okay.

Joshua Wilson: 38:27

Yeah. There's a, um, there's a saying, built to sell, right? I think a lot of people get into… Like when they're doing mergers, acquisitions, they, they build it or they buy it to, you know, to sell one day. But there's kind of like a, a leading philosophy behind it. Yeah, sure, systems, processes, scale operations, you gotta have that so it's able to be sold, but hold it, like, like run it like you're gonna hold it forever. Kids, generational pass down, right? Walk us through, you know, as you're seeing, you guys have done a dozen deals, you know, uh, uh, from an aspiration to be a family office-

Jude David: 39:07

Mm-hmm

Joshua Wilson: 39:07

to multifamily and now successful. Um, you know, walk us through when looking at a company, Erik, what, what are some of the things that you see That, you know, like Jude's looked through thousands. You're, you're gaining the knowledge and the wisdom of how to do that. So now when you're looking at deals as a CFO, what are you looking for? What are some red flags? How do you know when to just like go,"Oh, hell no. That's definitely not one."

Erik Billet: 39:37

So Jude and I have a good working rhythm. Jude looks at a thousand companies. He probably kicks me the information on fifty to a hundred of them in a year.

Jude David: 39:49

Mm-hmm.

Erik Billet: 39:49

Um, usually with a sentence or two of his thoughts, and we'll agree together to either take a call or not, and we'll end up calling thirty of them, site visits for ten, twenty of them, and then we might close on one or two. So what Jude's really good at that I'm not is he's got a very high level perspective on the economics of that business, where the market's going, what strategically is a good spot to be in for the future. I don't have to think about any of that stuff. That's awesome. If Jude's putting a business in front of me, then I know that that's already in an industry that is not going to zero in the next decade. I don't have to worry about that. So then I'm able to do all the things that Jude doesn't wanna do. I'm gonna dig into their finances, working ca-capital. Um, what are things that I also-- what are things that I look at? What are red flags? In the size business that we are working with Call it f- fifty million revenue and down right now. Ten to fifty million dollars in revenue, where I expect the financials to be some shade of jacked, and I have to be okay with that.

Joshua Wilson: 41:09

Say that again.

Erik Billet: 41:10

Some shade of jacked, as in jacked up.

Joshua Wilson: 41:13

Got it. Okay. So- I thought that was a, a CPA term that I've never heard

Erik Billet: 41:17

before. No. Oh, no. No, that isn't a CPA term. That's a bro term.

Joshua Wilson: 41:19

Yeah, I like it. Okay.

Erik Billet: 41:20

So, so- The CPA term is pencils down. Yeah, yeah. We're gonna go pencils down until you bring in a fractional and fix that. Yeah. You know, uh, so their financials are gonna be some shade of gross. It's gonna happen to every single one of them. Um, and I have to be okay with that, but I have to work around that to figure out what the economic truth is that's under it. So we'll talk… I can talk about that forever, and I'll hit on a few things there. But the most-- What I've learned from my time in the CEO role running these things,

my biggest questions are: 41:50

Who's running this business whenever you sell it to us? Because it sure as hell isn't Jude and me. Who's running this business? Is the next generation of leadership in your company right now, or do I have to go out and hire someone? That's immediately a red flag. You wanna take a transition and make it tough on everyone, bring in some outside talent immediately and say,"Hey, the person that you've been working for for thirty years, for, for three decades, is leaving, and I'm putting someone into your business that has no idea what they're doing."

Jude David: 42:22

Wow.

Erik Billet: 42:23

So that's… You can't do

Jude David: 42:23

that. It's, it's not a deal killer for us per se, but it's probably gonna cut the value by half.

Erik Billet: 42:28

Yeah. It just, it just, it's makes things so hard. I don't want leadership transition issues. This is gonna sound… I'm not anti-family in the business. We have to come across that a lot, but we do have to have the talk right up front where I look you in the eye and say, "Look, I know that your son and both your daughters and your nieces all work in the business. I'm sure they do a great job. I have to talk to them before this so to make sure that they understand that as much as I want to be, I'm not gonna be you, and they're not gonna get a free ride." So it, it's gonna change the dynamic a little bit. And most of the time, owners are cool with that. Sometimes it causes some problems. Um- If son's working in the business,

Jude David: 43:16

and, like, he's been working in the business for twenty years, like,

we always have the natural question: 43:19

Well, why isn't son buying the business? Or why isn't son taking the business over? And we usually get some version of,"Oh, he couldn't handle it." And it's like, "Well, who's gonna, who's gonna take your place when you step… Oh, he is." Yeah, he's… Well,

Joshua Wilson: 43:33

wait

Jude David: 43:33

a

Joshua Wilson: 43:33

second

Jude David: 43:33

here. Yeah. Well, wait

Joshua Wilson: 43:35

a second.

Erik Billet: 43:35

Yeah. So there's, there's the family dyna-dynamic is tough. Another thing that Jude and I have- There's-- We've talked about this a good bit recently. There's two broad philosophies to buying or investing in a business. You've got Warren Buffett, and you've got the Koch brothers. That was… I'll take the Warren Buffett side, and Jude gets credit for the Koch brothers example, where Buffett finds a great business, buys it, holds it forever, and says, "You're a superstar. Keep running this thing. I'll take the capital concerns the bank can offer you. Just run the business." I like that. That's easy. I don't wanna buy a business that we have to change for it to work. We don't buy turnarounds. We buy good businesses that have hit some kind of ceiling that we think we're qualified to remove. The Koch brothers go in and clean house. They change everything. I think Danaher does a similar thing where, where they go in and convert you to the, to the Danaher way. Fantastic. It's awesome. They kick ass at it. That's really hard, and I don't know if I'm that smart. I don't. And even if I was, I don't know if I wanna, wanna work that hard. A lot of risk in that. There's a lot of execution risk in that. So if we're buying a business that has leadership, a… Some kind of transition plan, it's not family-dependent, and it's already doing well, at least well enough to comfortably cover debt service, financial returns, whatever we have, have to have without changing anything. We've taken so much execution risk off the table that at that point it's like, okay, all we have to do now is make sure that in our quest to grow it, we don't screw anything up. That makes it so much easier.

Jude David: 45:32

Mm-hmm. I think there's a change in how you evaluate those opportunities too,'cause the, the Buffett model is, let me find an exceptional company that's operating extremely well. I want the best in their industry, and I'm gonna buy it and scale it and continue to manage it well.

Erik Billet: 45:46

We aren't in that universe.

Jude David: 45:47

Yeah. The Koch brothers, on the other hand, look at a company and go, "Wow, that company is really not reaching its potential, and we're gonna come in and break all the things that aren't working, and we're gonna put new stuff in place." And I think the big challenge, and, and we've been there before, is finding a company that is performing well, and there's a lot of things we like about it, and it's like, "Oh, but we're gonna change a lot of things anyway." Um, it's a lot simpler in my mind to find something that works extremely well and figure out how you can scale that. And, and I think we've figured out that's what we're good at. We're not as good at coming in and just breaking a lot of things and putting the pieces back together.

Erik Billet: 46:25

We… In the, in the handful of businesses that we've tried to come in and say, "Look, they have an inferior business model. I have a better plan." Mm-hmm. Because that guy's only been in the business for forty years, and I've been in the business for two, and so I know the right answer here, right? Of… Just without naming any names, there's one business in particular that we bought for, I don't know, one point three five million dollars exactly, and it probably cost us, I don't know, twelve point three five million dollars over the subsequent three years.

Jude David: 47:00

Yeah, those, those numbers are directionally accurate. I don't know

Erik Billet: 47:03

First one's dead accurate, the second one's directional. It's like it, it cost… We burned so much of our own money trying to change and fix things, and everyone from the employees to the customers was on board with us. They were-- Like, we didn't get any pushback. They were, they were along for the ride, and we tried to do right by everybody, but it's just so freaking hard- Yeah … to change a business that has kinetic energy and momentum in one direction, and there's so many things you can do wrong and tactical slip-ups that, you know, buying a business compared to starting one, you're benefiting from survivorship bias at that point. You're benefiting from, from the fact that this is one of the ones that didn't die. Most of them die.

Jude David: 47:53

Right.

Erik Billet: 47:54

This is one of the ones that made it. They've gotta have something going right. Then to go in there and change it? Ballsy.

Jude David: 48:01

Yeah, there's a-- I forget the exact percentage, but it's a, a small single-digit percentage of businesses that'll ever get to a million dollars in revenue per year. And so, like, if you just buy one that's already over a million dollars in revenue per year, you've gotten into that tiny little percentage to begin with, and you've gotten past all that chance of, of failure.

Joshua Wilson: 48:20

Yeah. So representing, uh, Kin well, we've got a, a note here from Blake- Oh, God … who we interviewed last time.

Jude David: 48:30

Hey, Blake.

Joshua Wilson: 48:31

And he has a, he has a question for you. Uh, I'll let Jude read it, if you can read his handwriting. It's blank. That's right, and you were, you were … Did he ever- Thanks, Blake … follow up with that?

Erik Billet: 48:43

I, I don't think I asked him.

Joshua Wilson: 48:44

Okay.

Erik Billet: 48:44

That's my fault.

Joshua Wilson: 48:45

So I'm gonna make up one that I think Blake would, would ask.

Erik Billet: 48:49

And I'll, and I will rate you on a one to 10 of the Blake scale- Oh … on how Blake your question is.

Joshua Wilson: 48:54

Oh, nice. Okay. So let me think. I think he would ask, like… Because when we interviewed Blake, if you guys haven't heard that episode, man, it was a lot of fun, and normally the guests leave a question behind, but I think we were so caught up in our conversation, and he was getting ready to go to a, a, an, a, a retreat right after the thing, so we, we didn't get the, the question. But w- one of the things that, like, out of all the people I've interviewed, that guy really, really, really loves his job. Like, you can tell. Which

Erik Billet: 49:22

is insane. God bless you, Blake, but that is-

Joshua Wilson: 49:26

Yeah… Erik Billet: his job is something else. He loves his job. He's, he's one of the, the best, you know, um-

Erik Billet: 49:34

Personal injury… Joshua Wilson: personal injury attorney. I, I didn't know the, the correct term. But, like, he, he came in from the moment, and he was smiling, and he loves Jude. He thinks the world of Jude. So I, I think he would, he would s- he would ask a question is, like, what is your favorite part of your, your job and your, your day-to-day thing? I'm gonna give you a, a six and a half- Nice on the Blake question scale.

Joshua Wilson: 49:58

Okay.

Erik Billet: 49:59

Blake is interested in things like that, and he would care and want to know. At the same time, Blake does not ask easy questions. Hm. So, so that's, that's where you lose a few points there. Nice. Um, so what do I like about my job? I like- Bumping into problems and thinking through solutions. You know, I-- whenever I was younger, you know, I mentioned jumping from job to job, um, looking for what, what was the right fit for me, looking for what's next. And I did all the, the self-help guru dream journal- Yeah … stuff. And, um, and so I remember at one point, I had just moved to Dallas, um, and I was writing my, my business dream journal or whatever it was, and, um, like what do I want? And I listed like, I, I want to be married, I want to have kids, I want to make X a year, I want to be worth X, and I want my job to consist solely of thinking about hard questions and getting paid to find answers. And that seemed asinine at the moment-

Joshua Wilson: 51:12

Yeah… Erik Billet: but I'm there. And so what I do all day is I don't-- I had to get to this point. I don't have a problem that a lot of leaders do. I don't have a problem letting go of things. I don't have a problem delegating or handing off. I love doing that. Um, and I-- w-we've worked this in a way, I think, I think Jude's doing what he loves every day. And I've worked it to where I am not integral to any part of our business. I'm not unimportant, but I'm not integral to anything. I can leave for a month on vacation and everything's fine. And that allows me to step back and everyone knows, uh, the people around me, without having to say it out loud, everyone's kind of figured out where I'm useful and where I'm not. And so we have our chief administrative officer, we have our COO, we have all leaders of our, of our subsidiaries. They'll ping me when they need help in an area they know I'm qualified in, when they have a problem they know I can help with. And it's a random grab bag of things they need help with, but they'll also not ask me if they know I'm not helpful in that area, and that's cool. That means that I don't need to-- I'm not holding anyone back at that point. So the coolest part of my job is that partially intentionally, partially by natural evolution and accident, we've evolved into a spot where my job is just to tackle the big problems And importantly for me, most of the problems that I tackle are not urgent. I can work under pressure. It's not when my best work comes out. Yeah.

Erik Billet: 53:00

I c- I, I'm able to think through problems. I'll, I'll, I'll get a big pr- problem and I'll say, "Okay, I've got a month to figure this out. I'm literally gonna go buy three books on it and read the books to understand the lay of the land, then I'll go, go back and think about the business problem." So like just super slow working through stuff.

Joshua Wilson: 53:21

We're gonna, uh, we're gonna go next level deeper. So I'll, I'll… We'll, we'll try to get that six point five up a little bit. Yeah. Let's do it. So next part of that is, uh, when it comes to the team knowing your strengths and weaknesses, right? Yeah. I think that's healthy.

Erik Billet: 53:36

Yeah.

Joshua Wilson: 53:37

So you have to know it yourself before you can share and teach that to the other group, so they know your strengths and- Yeah your weaknesses. One way you approach your weaknesses is, man, you dig in, you read these self-helps, you dig into learning. What is one of your weaknesses that you are-- you really wish you were better at?

Erik Billet: 53:55

Hmm. What's a weakness that I wish I was better at? So I'll list a couple. I am impatient when I know, and I mentioned to you on the f- the, the introductory part here, not when I think I have the right answer, when I know I have the right answer. I want it implemented today And it's a running joke in our c- company. You know, the way that we got to where everyone knows what to ask me for help and what not to, it's not an intentional effort I make, but as part of who I am, I fail so publicly in our company, like crash and burn in flames, and then I make fun of myself for, for the next six months. Everyone knows what I fail at. And so it's very public what I'm good and bad at. I have a long-running joke in the company of if Erik has a good idea on Friday, check your shit on Monday to see if he implemented it over the weekend, so we can damage control. Uh, there was a period when I would decide on something, and by Monday it was implemented and pushed to everyone's computers. And I broke so many things like that, that had to get unbroken by John, our COO, over the subsequent days that, like, that's still a problem and it's not-- I've revoked my own access to a lot of the systems that do that kind of stuff, but I'll still do a version of that where we, we were here for a full day of meetings yesterday, and we came to a few pretty big conclusions on a few of our subsidiaries, a few of the companies we own, like, like sea change kind of moments. And I was like, "So, so we're gonna call them and do we have, do we have time right now to call up? Can we do that right now?" Everyone's like, "Whoa, whoa, whoa." Like they-- like, "There's legal implications. There's HR. We have to, like, run this by this customer to do this." I wanted to make the call that moment-

Jude David: 56:01

Mm-hmm

Erik Billet: 56:02

because I was confident we had gotten to the right answer, and I want to do it now. And so fortunately, we've got two-- our team of four, essentially, our CAO, Thomas, who I think Thomas came on here at some point- Yeah,

Joshua Wilson: 56:17

Thomas… Erik Billet: and John. Shout out to Thomas.

Erik Billet: 56:19

And John, our COO, uh, who you have to have at some point, um- The two of them both rein me in. They, they know very well that their jobs included in their, in their responsibilities is from an administrative and an operational standpoint to pull me back and not let me do the things as, as fast as I want.

Jude David: 56:41

See, they're like the angel on his shoulder, but I'm sitting on the other shoulder going like, "Come on, Erik." We got… You can do it. We can do it.

Erik Billet: 56:47

You can do these big things. We got, we got these big things we wanna do. You gotta break eggs to

Jude David: 56:51

make an

Erik Billet: 56:51

omelet.

Joshua Wilson: 56:53

I… Well, that's, I think that's so cool of how, you know, you guys work together in a team, knowing thy strengths, knowing thy weaknesses, knowing thyself. To thine own self be true is, um, is such a valuable thing, and I think a lot of people miss that introspection part of it. And for the audience listening in, really what I hope you guys get out of these, these interviews is getting to know our guests pretty well, and maybe something they're sharing resonates with you, and you're going, "I'm like that person." And we've put on almost, I think, almost 100 people so far. So I think through these different interviews and these conversations, that you resonate with one of our guests or maybe one of our hosts, and that you start off a conversation 'cause we- we're doing this because we wanna invest our time, energy, effort, and resources into you, our community. So, as always, you know, reach out to our guests and say, "Thanks for being on the show. Thanks for sharing, you know, your, your message, your, your story resonated with me." Follow up with the questions. Maybe you could do better than me and ask a question that's more than a 6.5 out of a 10. I-

Erik Billet: 57:57

Maybe do a seven and a half for the follow-up.

Joshua Wilson: 57:59

Nice. Okay, cool. Good follow-up. Hey, that's good, man. I, I passed. But guys, I, I really hope you've enjoyed these conversations. Let's do this. Um, Jude, any final questions for Erik? Maybe a question that you've always wanted to ask him, and now you can nail him- Ooh … right when he's on the- Anything's open … the recording.

Jude David: 58:14

I wouldn't do that to him. But, uh, we got a lot of listeners who are, you know, the CPAs or the lawyers or the bankers or whatever else who have thought about entrepreneurship, have thought about doing something different. What do you say to those folks?

Erik Billet: 58:27

Damn. Well, if you read The Wall Street Journal, I don't advise reading the news. Don't read the news, guys. It's depressing. But if you read The Wall Street Journal, I check in in the morning, um, it's a weird time for accountants. Um, KPMG is hiring their lowest class of auditors, uh, ever in their history right now, uh, and over half their job ads are for AI professionals right now. The writing's on the wall, like they're literally advertising that we are hiring less of these folks because they'll be replaced by these robots, and that's tough. Um, I think that right now it is no less important to understand accounting and finance I think that those industries are positioned to be disrupted in some way by AI over the next few years. And I don't want to get too heavy and deep into the AI talk. I'm not qualified for it. But one of the best takes that I read, that, that I've read recently is that AI, what it's effectively doing is commoditizing the doing of tasks. And unfortunately, that is what you do as a first, second, third year account held into… You have partners that still crank through Excel at night because you gotta get the work done, right? It's commodit- it's commoditizing the doing of tasks. What it cannot currently do and may never be able to do is decide what tasks are valuable, what tasks give meaning, what tasks, what, what work is aesthetically beautiful in its own right. It can't do that. It doesn't know why it's doing a task. It doesn't know why. It knows how to do, but it doesn't know why. And so understanding accounting and finance as the nuts and bolts of business will always be valuable. I personally would question-- I'd have to think about how do you, how do you minimize the task doing and maximize the thinking in those professions right now? How do you maximize the judgment? What role can you find if you're leaving college or, or you're in a role right now as a CPA or an accountant? Where can you put yourself where the value that you're adding is not copying, pasting cells, is not running math, is not doing that work? It's thinking, making value judgments, making opinion calls that are valued. How can you get into that space? Maybe that's advisory. Maybe it's getting into entrepreneurship. Um, hell, I think that just joining a company that you believe in and being able to do the whole intrapreneurship thing, help them grow from the inside, is probably a better path right now than going into the traditional, um, public.

Jude David: 1:01:53

Yeah. Gr-great advice. Y-you talked about CPAs in particular, but that's any service-based business- Yep … any consulting business. It-- The same advice applies. Not only is that business going to be able to do the same amount of work with a third of the people, um, you know, in the years to come, but also the customers who go to those businesses for that work are a lot less likely to pay by the hour for that work if they can use an AI tool to give them the answers. So we're seeing that right now with, uh, lawyers. You know, lawyers aren't getting the number of clients because they can go in-investigate the law on their own, investigate the best outcome in their sticky situation on their own using an AI tool. Same thing with accounting, same thing with any service or consulting-based business. So we're gonna see that divergence, um, you know, i-in both ways, you know, the, the value of those services going down. And so if you're in one of those industries, you, you can have your who moved my cheese moment a few years from now whenever your industry dries up, or you can be thinking about it now and thinking about, well, what's the next version? Um, if, if you want a thought process on, on what that looks like trying to rethink your industry, go back and listen to Scott Rainey's podcast. You know, Scott runs a, a great safety consulting business. Uh, but he talked on his podcast all about how he loves what he does, and they're the best at it, and his industry's gonna dry up in a few years. And so he's building an AI tool that will revolutionize the way that industry works. Why not be ahead of it, be the one changing it, instead of be the one behind it who says, "Who moved my cheese?" You know, "My, my industry dried up." So always good to be thinking ahead, always good to be thinking in an entrepreneurial way, and, uh, and don't just sit back and wait.

Joshua Wilson: 1:03:45

Cool. Man, super grateful for both your time. Thank you, Jude. Thank you, Erik. Uh, thank you, guests, for listening in. Head over to thedealpodcast.com. You can follow us on Apple, on iHeartRadio, on Spotify, many different places to do that. But I think what's most important is that you, you let us know what questions you have, what thoughts you have, uh, what guests you wanna connect with, 'cause that's why we do this. So guys, we love you, and we'll see you all on the next episode. Cheers.