E166: CEO Andrew Swiler Shares His Experience Acquiring and Turning Around Lanteria

[00:00:00] Ronald Skelton: Hello and welcome to the How2Exit podcast. Today I'm here with Andrew Swiler. He is the CEO of Lanteria. And i'm excited to have you here. You're coming in from Barcelona, Spain and I'm sitting in the redwood forest of Northern California. i'm old enough to know when this like this wasn't possible, right? So,two different worlds, but on the same call. Thank you for being here today.

[00:00:20] Andrew Swiler: Two beautiful places to live. We're fortunate to live in the places where we do.

[00:00:23] Ronald Skelton: Yeah, absolutely. It's absolutely, insanely beautiful here.

Let's get in with your, let's start with your intro. Like, kind of who you are? What is your company? What do you acquire? How did you get into the space? The ongoing joke if you listen to the show is always, Hey, you were born and now you ended up on a show about merging and acquisitions. How in the hell did you end up here?

[00:00:41] Andrew Swiler: We won't get into all of it, but I grew up in Minneapolis. Went to school in Ohio and then after school, I actually did work in private equity. Big deals. We worked a lot of turnaround deals, especially in retail. I'd say our most famous thing was we closed like 15, 000 Starbucks. So we like bought up their leases, bought up all their assets and sold them off and did sort of a typical private equity. Made a bunch of money on things that didn't work anymore.

After that, I got super burned out and traveled for about six months. And during that period, I met my current wife. I was on a kayaking trip in Croatia, pulled up on a beach and met this beautiful woman next to me and ended up traveling with her for another month. And after that, I convinced her to move with me to San Francisco.

And we spent a couple of years in San Francisco. And then one day, as I told you before, my wife said to me, I really don't like it here. I'm going to move back to Barcelona. And you can come with me or you can stay here. So we moved back to Barcelona. Out of sort of necessity. I became an entrepreneur.

There really was no work for me. I didn't speak the language. I didn't know what else to do. So my wife and I started an e commerce company and we sold that back in 2019. And after that I was kind of like, what am I going to do? What's my next step? And I had known about search funds for a long time.

And obviously I'd worked in private equity. And search funds for me are not, I would say they're not risky enough. I think there's too much risk taken off the table. But I was interested in getting back into private equity, not in my previous type of lifestyle, but, and I knew I wanted to work remotely, still.

I mean, my previous company was remote. And so I knew basically software was really the only way I could get back into that. So I dove in, spent about a year searching, looking for the right business. I knew I needed to find a business that we could put some debt on. So I could have, some skin in the game.

Cause I didn't have tons of capital ring and that I could easily raise money. Just dialing for dollars. Found Lanteria at the end of 2021. Very quickly, it was just a, it was a great deal. The owners were motivated. There were two Ukrainian founders, obviously because of the war, there was some very big issues with clients, employees, everyone was worried what's going to happen to this company and they needed to sell. 

And I went out to the market and basically just picked up the phone and started calling investors, angel investors. And the investors that we ended up closing, I probably called 300 people. The six investors that ended up putting money I probably talked to them for 15 minutes each. That was it. They were like, I get the deal. I get the terms. I get that this is a great price.

I get this is a great deal. Send me over the high level due diligence and let's close. So close that part pretty quickly on the equity side. The harder part was we also used an SBA loan. And I'm in Barcelona, obviously European. An American, but living in Barcelona. The founders of this company were Ukrainian.

The company was an LLC based in the US, but the founders were Ukrainian. And, it was definitely difficult to find. We talked to a lot of SBA lenders until we finally found, one that was willing to, willing to sort of take on this risk and willing to work with us, because I have no assets in the U S my assets are in Spain. And they just liked the deal.

They liked our motivation. They liked the deal and we were able to close, actually the week we started closing was the week the war started. And they gave us a call and so I was like, what's the plan now? And I said, we got a bunch of guys in India that can step in any time. We kind of bluffed our way through it, got to the other side and closed the deal.

It's a great business. It's definitely a turnaround. It's a business that's been stagnant for, five years, salesman flat. The previous owners are very comfortable, lived a nice life in Kyiv. Didn't need to push it too hard. Employees, same thing. We're living through a turnaround and, changing culture, changing the thought process, changing the mindset, shifting everything and bringing in new people.

[00:04:18] Ronald Skelton: Interesting. So the trifecta, you were living in one country, the company owners are in another, the LLC's in the United States. So there's one trifecta, right? Now you're looking at, there's a war going on, it's a flat company and you may have to switch the, the employees out and, if the employees lose technology or can't get online, cause they're in the middle of a war zone. So you got a double trifecta. What is that as a six plex or whatever? A lot of people would have avoided the deal. What made you keep moving forward? 

[00:04:53] Andrew Swiler: I would say I, I looked at, I probably looked at 2000 deals over a two year period. I knew this deal just from a, the conditions, the terms, the situation, the upside was an outlier.

It was a total outlier from everything else that was in the market for software. And so I knew, you're gonna eat crap if you're gonna take on a deal at a low multiple. You've gotta be ready for that and you gotta be willing to take on certain risks. But this was a company, it had been making money, it had been profitable for seven years. 

So we knew that there was definitely a margin of safety built into the business. So we knew no matter what came up, there was a margin of error here that we wouldn't have to deal with too many issues. I mean, I meet other searchers or people that take on deals. They're 90, 90 percent LTV, they're leveraged to the hilt.

We brought in investors, we were basically 50, 50 debt and equity. So we had some margin and we still do. It's a business that we've made a lot of mistakes, but it continues to be, give us the margin of error to, to reinvest into the business and make those mistakes, try new things.

So we knew there was going to be issues, but we gave ourselves a pretty decent cushion with the capital we raised to, to make those issues, those errors.

[00:06:01] Ronald Skelton: So, it's Lanteria, right? What do they do? What's the actual business? 

[00:06:07] Andrew Swiler: Yeah, sorry. I just kind of blushed over that. So Lanteria, I would say that the easiest analogy is we're like workday.

We're in the same market as workday. We pretty much have the same type of product. We're probably 50 percent cheaper than workday. And our focus is on the Microsoft ecosystem. So our product is built with all the integrations into Microsoft. So if you're a mid market company, a hundred to 5, 000 employees, you're invested into the Microsoft ecosystem.

You're using, SharePoint, one drive, all this stuff. Our product is heavily integrated into teams, SharePoint, Viva, all these parts of the Microsoft system. So that's sort of our niche is, if you're looking at an HR management system, you want hire to retire. The core HR, you need all the employee data, time and attendance, employee engagement. All this stuff that if you work at like a big company, which I've never done, are things that you see. That's sort of what our system does.

[00:06:57] Ronald Skelton: Where were the customers at the time? The owners were in the Ukraine. The LLC was in the United States. Where were the majority of your customers? Like how were the customers distributed in the world? 

[00:07:07] Andrew Swiler: It's 70% North American. So that was one of the reasons too, for the SBA that we were able to get it is, yeah, they wanted to see. There was a pretty heavy local base, but the SBA, for some reason, I don't know if they're still doing this, but a year ago they were heavily focused on exporting. Which included, software. So if you're developing software and exporting it to other countries, they were very interested in funding that.

I guess it's just part of like the build back better type of thing. I don't know what's going on, but they were interested in that. So it's 70 percent North America, and then we've got a really good channel partner in Australia and South Africa, that bring in another 20 percent and the rest is just spread out around Middle East and Western Europe.

[00:07:45] Ronald Skelton: That reason I was asking, I wanted to be clear on where the customer was. It wasn't like you had a buying a Ukrainian company where all the H, all the companies are in the Ukraine and now the country's in war. The employees were there, the software engineers were there, right? So 

[00:07:59] Andrew Swiler: Yeah, the software was there. But even like the servers we use Azure servers in the U S and in Ireland. it really was just, the employees that were there, the owners were there, but we even have, we have employees in the U S and in other countries. It really was just Ukraine because of the owners.

[00:08:13] Ronald Skelton: I've had some engineers or software engineers out of the Ukraine before there was some really good talent pool there. Many years ago, I actually, I don't want to get into it on this pod, but I started an online company that didn't work too well. I very, very valuable and very expensive lessons learned.

I tried to create an online dating service. Built it, funded it myself, got a few people involved, got a few people on the site, but couldn't get the next round of funding to launch it. And then some family things happen and I ended up shutting it down. But I learned some very valuable lessons in. I had employees all over the world. This is like during, this is a ways ago. This is during like September 11th. So I had so many employees and was sending money so far around the world. That, when that, that happened, I actually, I got interviewed as to why I'm sending money to all these different locations.

Now, part of that was, is, I work for Excite. com and Excite's email servers were one of those email servers that the messages were, that the September 11th people using that email system to send messages. So I was the director of operations for Excite at the time.

And all of a sudden they, then they look at me, I'm sending money for all these places around the world. Cause on the side, I'm building an online dating site. So yeah, there was a conversation that was there. There was a little awkward and I just, I had to show them. Like, no, I'm building this.

Here's these engineers. And, I had a personal assistant out of Ghana, Africa. I had people all over the world, right?

[00:09:29] Andrew Swiler: Interesting. Wow. That had to have a lot of friction. I mean, now, we pay people through chase or through Brex and it's super easy.

[00:09:35] Ronald Skelton: So most of your people are remote, right? You actually manage people from all around the world in this business. How's that going for you? 

[00:09:41] Andrew Swiler: I've been remote for whatever, 10, 12 years. It's challenging. So the biggest challenge here is because a lot of our teams in Ukraine. We have the core team that, that has been around for, six, seven, eight years.

A lot of those guys are in Ukraine. We've hired people in India. We have people in the U S we have people all over. The typical playbook for remote work is, you're working online, you kind of engage, but then quarterly or semi annually you get together in person and you work through, the real challenging stuff and the big stuff.

Obviously in this case, we have half our team can't leave the country. And we're not flying to Ukraine to do offsite. So obviously that's not going to be happening. So we're, it's very challenging. What I think is that, we obviously didn't get to do this. We didn't hire these people, but you need to have people that have a lot of agency and a lot of ownership and what they do.

And I see that as the key to hiring anything remotely. I think anyone that's expecting that they're going to join, and we've had people join remote. If they haven't work remotely before, we usually don't hire them. Even if it was just, if it was just the period of COVID, we still don't hire them.

We need people that this is, they do it because they want to have a sort of a work life balance. They want to own their time. They want to own their work. And if that's the type of person there's people that want to go to work because they want to meet people. They want to have friendships.

They want to build relationships. Remote work is not going to be that type of setting for you. The key is just finding the right team and finding the right people first, and then giving them, key strategic direction and KPIs they have to hit. And then beyond that over communicating. Like my thing with our team is like, if you think it needs to be said, just say it. Cause if you don't communicate it, that just compounds, like it, I was thinking this two weeks ago and we didn't say it, we didn't discuss it.

Having daily standups or having, every other day, having weekly meetings that kind of dive deep into problems that are going on. And over communicating on Slack is sort of like the key pieces for me that, that make remote work, work. 

[00:11:34] Ronald Skelton: I have members that have worked for me for more than two years.

I've never met in person. And, I have members who work for me, who are brilliant and we probably, as far as seeing each other on zoom, probably every three to four months. We just, everything on Slack. They just get stuff done. It's always open if they want to work, work, work me, if they want to chat with me, they want to see me.

They know how to, like, they have my calendar, right? They can put their time on it and jump in. Yeah. They know they can jump in. Occasionally we do when stuff, but 90 percent of our stuff, our inner interchanges are just on, on Slack. 

[00:12:08] Andrew Swiler: Yeah, it works. It works well. I mean, you run into issues like, we hired an account executive for sales out of Vancouver two months ago, or sorry, May. 

And six weeks in, I get a phone call from another CEO of another company. And he says, Hey, is this guy work for you? And I was like, yeah, he's our new account executive. And he's like, well, that's weird. He's our new account executive too. And he's not performing at all.

And I was like, well, he's kind of performing for us, but what do you mean? He's like, well, we just hired him three weeks ago. And I told him, the over-employed movement, argue if you like it or you don't like it. I could go either way. I think if you're open about it and you're transparent and you say, Hey, I'm not making enough money or this job doesn't offer me enough money right now, I need to take a second job.

I would be open to that. I think it's okay. As long as you communicate and you tell people like, Hey, I'm fine working 16 hours a day. But if you don't tell people and you're not transparent about it, then that's when it's a pretty shady thing. And I know there's legal reasons why you can or can't do it, but you run into those types of things in remote settings all the time.

You find people are kind of working side gigs, doing other things and that's complicated. 

[00:13:14] Ronald Skelton: But, that said, managing remote people, there are some unique things you got to deal with.

And a lot of us do that. So a lot of us, listen to the show, we're buying companies that are in, we're in one location, the company is another, you're managing people that are not necessarily there. Are any other tools or lessons learned you have? Especially from somebody that runs a HR software company, right?

Is there anything else you do that's like, okay, this is how I know my team performing. Or besides the daily standups and stuff? 

[00:13:41] Andrew Swiler: I mean, as far as performance, no. One thing that I've seen for us and then for other companies, like we, we do, I interview a lot of HR professionals for like our own podcasts, and then also I do a lot of customer interviews.

One of the key things is employee engagement surveys. Which I had never heard of because I never worked like I said, at a large company. Employee engagement surveys, if done right, like the right questions are being asked, the right cadence, the right time to do it can give you a ton of information about how employees feel.

And if you do it where the employee, it's not anonymous, like if the employee is willing to do it, not anonymously, then you can get a lot of information on each person. And then that information goes back to the one on one. I do one on ones with most of our like top people, at least once a week.

I try and make it where it's about them. They just kind of walk through like their goals, their objectives, how things are going. Half of it can be just a personal chat. Totally fine with that. It's up to them. Some people prefer, to kind of go through and like hit all their stuff, especially the guys like that we work with in India.

They get on the call one on one. They don't want to chat about anything. They just want to hit, what they're working on. I find one on ones to be a good tool. I think it, at the scale we're at, it works. I think if you get bigger, I could see how it would get more complex.

But I would encourage anyone, to do one on ones for themselves. And then also as they scale, like start having other people below them doing one on one. So our, we hired a new CTO and his way of doing things is just, he said, I'm going to do unscalable things right now. We've got a team of seven and I'm going to meet with each one of them, several times a week and talk to them, see how they're doing, get to know them more.

And that builds relationships. That builds trust. That means when he pushes back on them, they know he's doing it from a place of trust and support. Not, I'm thinking about firing this person. So I would say one on ones is the other great tool and employee engagement surveys. Whether they're anonymous or not anonymous are really important tools that I really didn't know about until about a year ago. I really learned this about a year ago. 

[00:15:29] Ronald Skelton: So I've been in and around management for the majority of my career. Got out of the military and worked for Lockheed Martin before I knew it. I was staff, staff system engineer, which is their highest level of system test engineer.

I didn't have any direct reports, but I was always like responsible for testing department of advance computer systems. So the whole test program, getting accredited by stuff. And then I got into management of tech companies. And one of the things, I don't know where I learned it or how I picked it up, but I have a three question management protocol and we're going to play this right now about your latest acquisition.

We'll do it that way. So,have you acquired anything since,the one your first one there? 

[00:16:05] Andrew Swiler: No. 

[00:16:06] Ronald Skelton: Okay. So in that, you'll like this one because this is how I do this to every single one. At the end of every one of our meetings we do the same thing. So when you purchased Lanteria, what did you do really well?

[00:16:16] Andrew Swiler: What did we do really well? I'm not sure. That's a good question. 

[00:16:20] Ronald Skelton: It's like if you did it again, we're like, okay, we did X, Y, and Z really well, we will do that again. What was that? 

[00:16:25] Andrew Swiler: So we reached out to all, we basically went from like the top clients, like the high, most expensive clients all the way down and reached out to them for, even before day one and introduced ourselves, had phone calls with them.

I met with probably our top 50 clients, in person over a few months. And I would say that helped us, I mean, we basically have a 0% churn. So that, that helped us with that. I would definitely do that again. So that would be one. 

[00:16:47] Ronald Skelton: How about the employees? You do anything really well to keep them on track and keep them from leaving?

[00:16:51] Andrew Swiler: I try to be honest with them from day one. We told them, this was the acquisition. We stepped into a situation where the owner, the previous owners didn't announce the, this what I would do differently. The previous owners did not announce the acquisition until the day we acquired it.

Which we told them, weeks in advance and like, no, no, no. Until we close, we don't want to say anything. So we stepped into a situation where they were highly distrustful of whatever was going on. They thought we were going to just burn everyone. We told them upfront, we want to keep working.

The idea for this is to keep everyone on, work with you guys. We raise salaries for almost everyone, over, not like right away, Hey, let me buy you up. It was over a few months. So we did that with the employees. Try to touch base with each person. Give them the, analyze their current situation, give them a raise, especially like the key players, to show them that we valued them.

[00:17:39] Ronald Skelton: Now, what could you have done better? what are the things, like, if I do this again, I'm going to do X, Y, Z. what could you have improved? 

[00:17:45] Andrew Swiler: I probably would have fired some people right away rather than keeping them on. There were some people that you knew from very early on, this was not going to be a good fit.

You could just see, like, this is not an A player. This is someone that's not going to help us attract A players. This is someone that's not adding value. And I would have pulled the trigger faster. 

[00:18:04] Ronald Skelton: Anything else that you would, we already went, what did you do really well? And this is what could you do better?

What could you improve upon? There's anything else inside of the acquisition process or, and maybe even side. 

[00:18:14] Andrew Swiler: I would have raised more money. That's one of the key things that I made a big mistake on. I miscalculated the market. So we raised enough money, keep in mind, this was, May, June, 2022. We raised enough money to close the deal and have a decent amount of working capital, but being that this was a turnaround type of situation, we should have raised another half a million to a million dollars to really put the, put our foot on the gas.

Because we, where you make money in software acquisitions. This isn't manufacturing business or a landscaping business where we're going to cashflow this. The money's made in the entry and the exit. Did you get a good entry multiple? Are you going to get some multiple arbitrage on the backend when you sell this?

So in order to do that, you've got to grow it. And we did not raise enough capital. We thought let's spend six months. Let's really get to know this business. Let's go up, back out to the market and raise money. And the market cratered and we're still struggling. It made us go out and bootstrap really hard.

Like we've pulled money from customers. Like we've been taking revenue, really pushing customers to work on projects, expand, do bring in new modules. So we have done that, but it's just, it's hard to bootstrap your way to growth. 

[00:19:22] Ronald Skelton: And the last one I was always, you might have, what you just told me might be in this category too.

What did you totally miss? Like, you went through the whole process and at the end of it, we should have done X and we didn't even touch that. Or we should have asked, or during due diligence we should have checked on X and we never even looked, right? Is there anything you totally missed in the process?

[00:19:39] Andrew Swiler: In the transition phase, so I acquired this company, I've two partners as well. I would say in the transition phase, we did not focus enough on the outgoing CTOs importance in the company. We thought we'll hire a new guy. He'll be able to step in. And it took us a year to replace him. And we basically just spun our wheels for a year.

And we did not spend enough time with him and documenting his transition out and saying Hey, you get on loom and just make video, video, video. So we have a library. We made a huge mistake. They're not building up a library of content while we still had access to the two owners in the first, 30, 45 days. We're still friendly with them.

They still help when we have questions, but we should have been really aggressive in those, that time to get, suck more information out of them. 

[00:20:23] Ronald Skelton: So my team gets sick of hearing that those three questions. I ended every meeting with them. What did we do really well? What can we have done better?

Even just during the meeting and what did we totally miss? And, that's how I've managed everything I've done up until this point. I just asked them to

[00:20:35] Andrew Swiler: I'm gonna write these down. Those are good questions. 

[00:20:37] Ronald Skelton: Yeah. Every single meeting I have, every single quarter when we're doing planning, like we start off as what are we doing really well this quarter? What can we have done better? Where are areas of improvement that you guys see? And I don't speak until after everybody else has had a chance. And then what do we totally miss? Like, is there something in the market we're missing? Is there something in the, what's missing?

And if you keep asking yourself that you'll be in a constant state of improvement, right? I love starting off with what are we doing really well? Cause you, the next two are kind of brutal sometimes in the conversation. So you start off at the pat on your back, this is what we're doing really well.

This went well, this went well. And a lot of times, you may not know something went really well. Like I, sometimes I don't know certain things went really well. We start talking a month, Hey, this is really working. And then a lot of times,

[00:21:16] Andrew Swiler: That's the ideal, like with, do you ever do level 10 meetings? Like the guys from EOS, I have 10 meetings is walk through the KPIs, see how things are going and then dive into like, where are the problems? 

[00:21:27] Ronald Skelton: Yeah, it's probably where I got it. I have not implemented EOS. I'm more of the, on the EOS system, more of the high visionary. I've actually taken their score and I'm constantly looking for the integrator, the guy that scores really high on that.

I haven't taken on partners in a year, in years, sorry. I I say I have one partner in what I do. She's on the visionary side too, a little less than I am. But, I'm looking for a high end integrator,what most of us call operators. I jokingly say all the time, I would outsource brushing my teeth if I could get somebody to show up at the same time every day to do it, right?

I don't like doing things over and over again. I don't do repeat tasks very well. And I have VAs from around the world do most of the stuff. My job description for the VAs in the beginning was find stuff Ron does over and over again and take it away from him. And then the second line on the job description was find things you can do better than Ron and tell him you're going to do those too.

Cause my job should be solving new problems, finding new, new opportunities, focusing on that, not doing day to day repetitive tasks. But no, those three questions is what I manage everything by. 

[00:22:26] Andrew Swiler: Yeah, no that, I like those three questions. I wrote those down. 

[00:22:30] Ronald Skelton: Yeah. So what's the, what's the future? Are you guys looking for more acquisitions? You're going to go through growth reacquisition. You're still in the solidify this mode and turn it around. In the world of buying something that's stagnant and you're turning it around, does that just take longer?

I mean, I guess the question I am is when would you be ready for your second acquisition? If you grab something that needs a lot of attention. 

[00:22:49] Andrew Swiler: So yes, it does take longer. If you, like I said, you raise enough capital, you can kind of put a good CEO in place and have them step in.

So the plan was basically, Lanteria is a five year, that was what we laid out for, for everyone. My plan was spent two years in the trenches. Working on turning this around, improving it until we got to the point where, we could raise capital and bring on some more professional people.

I always consider myself very poor CEO and that there's people way better than me at this job. So I always have that view of myself of, okay, I can only take this so far because I know my own limits. One thing that's pulled us in another direction is from doing, from doing podcasts and like talking to people in marketing, we have been getting a lot of inbound from companies that want to sell. HR, SaaS companies that haven't been able to raise their series A. 

Haven't been able to raise X amount of capital, but they're doing, one to 2 million in sales. They're growing pretty good. So I am considering, what is the best path forward, especially, we're trying to raise some money. But,when you go out and you say we want to raise half a million.

Your pool of investors is very small. If you say, Hey, I want to raise 20 million and we're going to go buy four software SaaS companies. And here's like the crossover and here's sort of,not a rollup, but here's a lot of the systems that we can build out and the cross selling we can do.

People listen and I've been talking to some investors there and I have more traction going towards that direction than just trying to get half a million for a one company. So I think probably sooner than later, that's the next step is probably raise a fund 10 to 20 million. Go after two or three good acquisitions. 

Invest in the purchase and invest in the growth in all three of these companies. Just bring in better people, stronger people, bring in a bigger system and take things to the next level. So that's, that's sort of what my next phase is here. 

[00:24:40] Ronald Skelton: Yeah. I only seriously looked at one company that would have been a major turnaround and just, they were profitable, but barely. Doing all big revenue numbers, 15, $20 million a year in revenue, but they just poorly managed it. And it was no fault of their own. They got thrown into it. They were third generation owners.

Granddad built it, dad ran it and handed it over and in the U. S. we have a saying is the first generation builds it, the second generation runs it, and the third generation ruins it. So that's the scenario here. It was two sisters run of them. One of them was originally a bookkeeper, but not an accountant and she was horrible with books.

And then the second one was a nurse that was the CEO now and they were running a concrete plant. When we looked at this, I don't know the first thing about running a concrete plant, manufacturing concrete products. But there was another company down the road that had high profit margins doing really well. Only doing about three or 4 million a year, but doing more profit than the big one that was for sale.

So our goal was by, and there were 30 miles apart. It was like buy them both. And then, have the general manager, the small one had a general manager in place. Have buy them both have the general manager go from site to site and run them both and manage, let's manage the big one. 

[00:25:53] Andrew Swiler: That would have been nice.

[00:25:53] Ronald Skelton: Yeah. Like we were managing. So that'd be something you could look at. The reason I brought the whole story up was to say, maybe the next one's not a turnaround. Maybe the next one, something's really well ran. Has an awesome management team and, they can actually, there's some things that you can, they add value and more than just revenue and software and tech stack, right?

They add value into, maybe you find a software company that's already EOS. You have an affinity towards it. It's a well run thing. It's good for software companies. Find that company that has great management. They've been doing EOS forever.

They have integrators on, on staff that can help other people on board EOS. Like when they bring on, because anybody that has EOS has to train their new employees. It's a little bit of an adjustment. So you find a great company that's already got all that in place.

Now the whole company kind of lifts the whole, like when they say the rising tide raises all ships. That would be a good play to do, in your find. 

There was quite a few small companies that built similar products. Not necessarily, like those two companies I was telling you about, they built similar products, but they only overlapped on one thing.

So they did kind of serve as separate markets. They did serve as separate markets and they overlapped in one area. And then the, the big one, they just had a lot of inefficiencies. I want to say more than a dozen semis sitting in the field that would haul these things to their location. Pretty much had a little miniature trucking company sitting there. And most of the time they were sitting idle.

But when during the busy time, they sold storm shelters and during the busy time of the year, they were active. Houses are being built in certain neighborhoods and stuff. And they, building out, a new housing addition and every house was going to get a storm cellar. They needed to be able to deliver 10 of them in a week.

So they had all these trucks. But most of the year, those things sat idle. And my first thing was, and it had a high liability. One of the things I was looking at, it's like, let's spend that thing off on its own company. Have it set aside. There's another building there. Make that the office of that.

And let's start releasing those, those truck, we had drivers for them. 

[00:27:44] Andrew Swiler: Have them do something else. Yeah. Have them use that idle time. 

[00:27:47] Ronald Skelton: Yeah. And these things were just custom designed to haul heavy, heavy objects. They had big I beam cranes on them. So you could do a hotshot service.

The first thing I thought is a hotshot service where you take in heavy equipment to oil fields and stuff. And I had a guy who, he just sold this a hotshot service. But he knew it inside and out. He's selling insurance now. And that's what we were going to do, is just going to take it and set it up as his own entity or even sell it off with some type of contract back when we need your services.

We get a, you're going to haul our stuff too, but we sell that off as his own entity because owning a trucking company that was sitting idle 90 percent of the time was just didn't seem a lot. 

[00:28:20] Andrew Swiler: It doesn't make any sense. It's like a sale lease back basically, but in, in trucking.

[00:28:24] Ronald Skelton: Exactly. And I'm big into that too, but I think the same thing can go in your software world. You can look at things out there and go, you know what, here's where we want to be, in six months, a year, five years, whatever the play is. Who's already there? There's a really good book out there I love.

It was done by Dan Sullivan. Have you ever read who not how by Dan Sullivan? 

[00:28:46] Andrew Swiler: No.

[00:28:46] Ronald Skelton: There's a couple of reasons I love it. Number one is, one of the things that's the fundamental questions is who's already doing this and doing it better than I am. And why am I, why don't I reach out there and have them do it?

One of the things that says in the book is procrastination is not a fault. It's actually a blessing. So anything you procrastinated on getting done, you should probably just hire somebody else to do for you. If you need it done, you should probably. And the, other second one is quit trying to figure things out.

Instead of saying, how do I figure this out? Who does this good already does this better than I could figure it out. Even if I figure it out, who out there does this better than I would have figured it out. And then, but, the second reason I liked the book, cause that changed my whole business structure, my mindset. I outsource way more things now.

And the second thing that I like inside of there is a thing called a, they do a thing called an impact filter. The whole model I use to track and train everybody on I'm right now hiring a, a head of growth. Like it's, glorified social media manager, but, I'm putting them responsible for growth for my media company.

But the job description is an impact filter and an impact filter that says, what are their, what are you expecting from them? How do they measure, success in that realm. What happens if they succeed? What happened if they fail? And you do these impact filters for all your projects and everything.

And it's a real simple one pager that gets everybody on the same page. Check that out too, but,I think that the, the real cool play here for you might be, figure out where you want to be. Like to find okay, sit down and do an impact filter on what this company looks like in, two years, three years from now.

And now that's your acquisition targets. Find somebody that's already there or 90 percent there. And if you're going to raise funds and stuff, you go out and buy something like that. 

[00:30:22] Andrew Swiler: You're right. I agree. It's definitely something that we need is to bring in some people that are, more professional, whether it's through hiring, whether it's through acquisition. I have through the inbound that's come in. I have talked to a couple of companies that are very well run.

I don't know if they'd be able to sort of get to that next level of, beyond like the 5 million in sales that they're doing. But they would, they are definitely ahead of where we are right now. But it's for me, the key next step is really building up the capital. That's where my difference maker is going to be is if we have the capital and we can deploy that. The rest of it, I'm happy to go out and find the deals, negotiate the deals, find the right people. 

But, right now, step one is get a little bit more capital in here for acquisitions and for the current company. 

[00:31:04] Ronald Skelton: Yeah. What does that look like as far as, what's the process you go through? I know you just said you dialed 300 people to get the funds to buy this. Is that because your prior, private equity experience?

You kind of just know you just got to dial for dollars and talk to enough investors or? 

[00:31:20] Andrew Swiler: Prior to the pandemic really changed a lot of things for me. Like I, I was just a guy, I lived in San Francisco. I'd worked in private equity, but I disappeared for most people because I lived over here.

They were like, what are we gonna do with this guy? Unless you worked in a specific sector, a specific company, like even in tech, like people weren't working remotely. The pandemic made it, you and I are talking to each other through a screen and I'm just another guy on a screen, but prior to that, it was not like that at all. But now it gave me this opportunity to go out, find the capital, raise it.

And that's what I'm going to have to do again. It's really just cold outreach. Cause a lot of the people I knew before,they're not investing in these type of deals. I was working in private equity deals that were billion dollar deals, a hundred, hundreds of million. Our stuff is peanuts for them.

They're not going to look at it anyways. So I'm looking at specific types of, LPs or partners to, to join us. And it is just basically starting from scratch, building up a network, building up trust, showing people. We send a monthly update to our current investors. We send it to potential investors.

We show them every month, what we've been doing, what's working, what's not working. to your point, I go through like, here's the highs, here's the lows, here's what we're going to get done next month. And then send them the P and L and balance sheet and do that every month and hammer away.

And for me, that's just like the building blocks of getting to this next phase, hopefully. 

[00:32:35] Ronald Skelton: You ever looked at any of the companies out there? There are companies that their whole job is like their capital placement companies that they, they go and raise capital for guys like you. Their private equity investment banker back, that type of stuff.

And the one I'm thinking about, he's been on the show. It's castle placement. They do everything from crowdfunding to debt equity to help you raise, do your private placement memorandum and raise funds. They even have a, all the security license to do secondaries. It's an extra pitch to the investors is they're not locked in until you exit.

There's some, there's a second chance of liquidity if they need it. Not very many people have that license. I've only come across, I've interviewed probably a dozen or two of those capital placement type of companies where they help entrepreneurs like us raise capital for acquisitions and stuff.

And he's the only one I've seen that did through the effort to get those securities licensed to sell secondaries. 

[00:33:25] Andrew Swiler: No, I've talked to a few in that have done cold outreach to me. Their fees were very high, very few guarantees. And so I was hesitant in, in that. Especially for where we were at.

I think now, yeah, we've grown our company, I think we're up 35 percent in revenue. I think we have some, a decent story now. And we do have proof of like people are reaching out to me and asking if we want to buy them. So I think there's something there and I do have some investors that are interested in being part of it. As long as we can get sort of an anchor person to step in.

Yeah, that, that could be something to look at. I hadn't thought of reaching out to some of those again. I'll look at this one. 

[00:34:05] Ronald Skelton: Cool. Like we already talked about what's going on next. What's the long-term vision? You said it's a, you're gonna build this up and hold it a part of a HoldCo? Or you gonna eventually sell it and do something else? 

[00:34:14] Andrew Swiler: No, I mean, for me, the plan is, the next step is probably over the next five to 10 years is this is, probably take 10 to 20 million invested into this, focus specifically on HR.

I really like this space. I think it's interesting. I think the content is interesting. I think the people are interesting. So,my next 10 years is focused on HR SaaS. Now, what does that look like? If it's a holdco I did, start going down the holdco path. The biggest issue is for raising capital.

It's way harder. The LPs, the investors don't really get the structure. How are we valuing this right now? How are we valuing in the future? What are the clawbacks look like? Where, you say to them two and 20 or two and 20 with certain step ups based on like Mike, it's a little bit easier story.

So I still think the holdco is probably the most, capital efficient. But I think it's the hardest one to sell to investors if you don't already have a good, solid relationship. So I assume we'll probably go down sort of a fun path. But, I'm open to sort of both paths and the investors I've talked to are like, I don't really care what your structure is, the smaller ones that I already have. But the anchor ones are usually bigger funds and they want to put it into a fund that they understand. But it's, that for me is the next 10 years. I mean, focusing on HR, focusing on SaaS and I think I got lucky that, Lanteria was in HR.

It wasn't really the market I was looking at. But I really like it. And I think there's huge opportunities in here across the whole stack of HR, because, as much as we talk about AI, I think humans have proven to be the most challenging and the most important part of every business in the world.

And that's not going to stop for the next, for the rest of my career, humans will be a important part of every business. 

[00:35:55] Ronald Skelton: Yeah, I mean, there's a lot of areas where AI is an augmented and I still believe in that saying it's, your job's not going to be replaced by AI. Your job is going to be placed by somebody who's really good at AI.

So I think it'll be integrated in and people working with it. If you refuse to learn it and how to help use AI to make your individual job at a company more efficient, you're probably getting yourself out of a job in the future. Other than that, I'll be surprised, I read a lot of the newsletters on this subject. I'll be surprised if anybody ever creates a company that's 100 percent AI run. 

[00:36:25] Andrew Swiler: Yeah. Unless it's an individual, like a single, solopreneur that, that kind of spins up a lot of things using AI. It's like you said, it'll make everyone more efficient. I think creativity is going to be more important.

Critical thinking is gonna be more important in the future and how you harness these tools is going to be more important. Headcounts are going to go down, of course, but humans are still going to be the most important piece of every company. 

[00:36:47] Ronald Skelton: I don't think that headcounts are going to necessarily go down. I'm going to go the other route and say a head test, headcounts going to flatten out. Like I see call centers right now where, they're retraining, the call center is a big area. They're retraining, a thousand staff cause they brought in AI. But, sometimes they're laying them off.

What I see is, it'll be augmented in such that they won't be hiring for a long time. You'll retrain anyways, willing and wanting to retrain. And I honestly, maybe head counsel go down a little bit, but if you look at the history of things, like when ATMs came out, everybody thought the bank teller would go away.

There's just as many bank tellers today as there was when ATMs came out, right? They took on better roles. If you really look at what all the bank teller does now, he's more of a customer service agent. They deal with, a lot of more stuff. Somebody goes to the bank on a regular basis to do something and goes to the cashier often. There's still a line. There's still a line at every one of them. 

And those banks haven't been remodeled in 30 years. Some of these banks are old. There's still three, three open teller booths at some of these small branches, and there's still somebody at every one of them, right? I think the same thing will go with AI. I think that, it'll be utilized to help the companies grow.

But, I don't, I can see the stagnation of new head count for a while. 

[00:38:00] Andrew Swiler: Yeah, I can see that. 

[00:38:02] Ronald Skelton: Yeah, I need to, I needed to hire 10 people next year. Now I need to hire two kind of thing. 

[00:38:06] Andrew Swiler: Yeah. Yeah. You can definitely get more bang for your buck because of this. 

[00:38:10] Ronald Skelton: Especially like what you're up to and what, some of the stuff I've got going on.

AI is making software engineers way more efficient if they're using it. Out of the box, ChatGPT is a low to mid level engineer, software engineer. Like, I can walk in there right now and play around, and I haven't written code in years. I can walk in there right now and, use AI and code at a mid, what would be in a six figure engineer level before. 

I don't think it's at the top level. But I know some friends that are top level engineers that are like, senior staff engineers type of guys, and, I don't think it could compete with them. But I don't know how far off it is before it can. I don't know if it's six, months a year.

But, that said, I know I can actually take a piece of code that one of my guys gives me or something I'm working on and slap it in there and go, Hey, this is throwing this error message. What is it? It would rewrite it for me in a couple of seconds flat. So, are you guys, have you guys fully implemented that your engineers are all using it now?

[00:39:03] Andrew Swiler: No, because we have, we are using a pretty antiquated, we're using VB. net and, some stuff in C sharp. Yeah. it's pretty, pretty antiquated. 

So we're moving our new CTO, I mean, we're moving to sort of a new modern tech stack. And with the new development as we get into that, we'll for sure be using that. But we, a lot of what we've done up until now, like I said, we just hired a CTO in July. So we spent most of the past year just spinning our wheels and making sure the wheels didn't fall off. But now we're definitely moving towards more modern tools and modern technology. 

[00:39:34] Ronald Skelton: When I got into this tech space, many years ago, we were moving software from, we were moving defense products, software that runs defense tools, from Fortran, to C Sharp, C++ or C Sharp.

And, now, like all that, if I think about it, all that stuff needs to be moved again. I think, 

[00:39:54] Andrew Swiler: Well, it's like the banks with Cobalt and, I mean, there's a lot of, 

[00:39:57] Ronald Skelton: We had Cobalt and Fortran.That was our, all these softwares, all these tools were written in these languages that nobody uses anymore.

[00:40:03] Andrew Swiler: People that do use them are well paid. I can tell you that the people that aren't writing them are well paid.

[00:40:08] Ronald Skelton: ThaT's the thing about tech stacks is it's expensive to rewrite all that software. But now you could, I think you could probably even use chat GPT for that.

I don't know how well it knows Fortran, but I bet you, I would trust it. Like here's some code in Fortran, can you rewrite it for me in Ruby on Rails or something? I don't know what to do. I'm going to date myself here because I don't know what the current tech stack should be. I don't, is it Ruby on Rails? Is it something else? Is it? 

[00:40:30] Andrew Swiler: It depends on what you want to build it. A lot of people are building things on Ruby on Rails. I think still I'm, we're focused because of our Microsoft focus. We're building into. net. net core. So that's what we're focusing our next journey in the tech stack on.

There's a lot of different questions around technology. Now, there's so many things that are sort of prebuilt, and have these prebuilt packages that you can buy and install. The question is security then comes into play and, what are you installing?

What are you not. Like using Kubernetes and things like that, that I know a lot of people that, that debate this stuff endlessly. And it's hard to say what everyone's using. You can look at, you can go into, what's it called? To stack overflow and see like the top 10 that people are working on.

And those are usually the ones that are most interesting to developers right now. But we chose, we're going to go with .NET just because it's sort of in there, but it fits the security needs we have.

[00:41:23] Ronald Skelton: Well, I appreciate everything you said today. Let's make sure everyone knows how to reach out to you. If they've got a, maybe not another turnaround, but if they've got a really good, well run, HR company they want to sell and they want to talk to you, or maybe they want to become a customer.

They heard what you build and, they like who you are as a person and they want to use your software and their company or something. How do people reach out to you? What's the best way to, to have people contact you? 

[00:41:45] Andrew Swiler: So the best way, obviously on LinkedIn. I'm easy to find, Andrew Swiler. Otherwise on Twitter, it's Swiler, S W I L E R A is my, my, thing on Twitter.

You can reach out to me in DMs there. You can email me at andrewatsecurehrinc. com is sort of my non business email. But yeah, if you're interested in investing, you're interested in selling your company and you're in the HR space, we'd love to take a look. 

[00:42:11] Ronald Skelton: Awesome. Well, I appreciate having you here today. Thank you for hanging out with me in chat and we'll call that a show. 

[00:42:16] Andrew Swiler: Thanks Ron. Nice to meet you.