He has a joint MBA from London Business School and Columbia Business School.
Trevor is the CEO of Southport Technology Group: A software development company that specializes in mid-market automation and integration strategies for firms in non-tech...
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Ronald Skelton 0:06
Hello, and welcome to the how to exit podcast where we introduce you to a world of small to medium business acquisitions and mergers. We interview business owners, industry leaders, authors, mentors and other influencers with the sole intent to share with you what it looks like to buy or sell a business. Let's get rolling.
Hello, and welcome to the how to exit podcast today. I'm here with Trevor, Trevor. I'm here with Trevor Ewen, CEO, engineering partner of an acquisition fund. Man, thank you. I don't know why I can't ever get to the new part without stumbling just a little bit. But thank you for being here today. And let's just where are you located at right now? I think you're in New York, right?
Trevor Ewen 0:52
Yeah, thanks for having me around. By the way, I am normally based in New York. I am in kind of quiet part of southwest Virginia at the moment, which is where some of my family lives. So I'm just down here visit and then we're having some time in the countryside.
Ronald Skelton 1:06
So cool. So let's just get started, man. I always like to joke around and say, Hey, you were born. And then he ended up on a podcast about buying and selling businesses. Could you fill out the gap in between? So how did you get started? And how did you end up in the acquisitions and mergers podcast?
Trevor Ewen 1:22
Sure. Well, I think I ended up here because you were great to reach out. And it was a really good fit. But I can talk about why it's a good fit. And that goes into some of my background. I guess the easiest way to put it is, you know, entering the work world, I got into software engineering at a time when having a job was sometimes hard, right after the great recession but also at a time that software engineering hadn't really hit its peak in the US. A lot of people thought it's kind of a dying job here, it's all going to be offshored. And what happened is that became ever and ever more relevant to businesses. We saw a big, big uptick in both kind of rates, opportunity, but also just the rhetoric around people learning how to code, and around 2013 was when I started to hear a big difference on that. So it was really lucky in a way because I kind of stepped, stepped into a career that fit me, but also have a lot of tailwinds, really that have been going in the last decade. And so, you know, I think as an individual contributor, and then eventually, eventually managing teams inside of a larger context and a corporate context, eventually you say what's next. And in 2021, my partner and I decided to break free from both of those contexts for ourselves. And so we have a dev firm called Southport technology group. And then we have an acquisitions fund called Southport Ventures. And I think we, we see this kind of emerging software acquisitions market is a pretty exciting thing to do. And it matches our stage of life kind of matches our temperament as well. So that's why I'm here.
Ronald Skelton 2:49
How do you feel that the recent changes in the economy, the stock market going down, and inflation going crazy? How do you think that's going to affect your ability to acquire great companies in the near future?
Trevor Ewen 3:04
Right, so it's tough for us always, because I say we're, we're playing either side of the table, because on one hand, we are working with sellers, and of course, we would be buying at their prices came down a little bit. And similarly, we are also working with investors, and sometimes they get a little bit scared of the market, especially if they've got a big public exposure, or they're a little worried about what market ahead is headed, or they're also making strategic shifts. A lot of what we've heard recently from people on the funding side has been one of, hey, we're, you know, we're doing fine, but we're kind of in a wait and see mode. So I think it can be tough, because the point of concern shifts a lot. I think, for much of 2021, we were dealing with valuation expectations that we thought were a little rich. And now we're just on the other side of that, and I think we've got, we've got sellers who aren't that much more motivated, but certainly more open to that, And then, similarly, the money raising side changes a bit. So you have to you have to be agile, you have to be ready to move. I'll say this, we're we're looking a bit more durable markets. So we're not looking at the kind of thing where any of our sellers would be willing to say cut their prices in half or even do something much more than a 10 to 15% change.
Ronald Skelton 4:17
It's interesting is that's the shift it made for me as I started looking for I don't believe anything is recession proof, but what is re, recession resistant ? What are people gonna, gonna, gonna buy or do no matter, no matter what the economy does, right? And, you know, they're gonna have to have their business up and running. So there's certain business services they're going to need. So I think that's a gray area in your, in your realm. For me, I like you know, recurring revenue subscription models say we use SAS, but I like a little bit of the brick and mortar too. So I've been looking around it differently. coffee roasteries. Right. People are going to drink their coffee, whether they whether, whether they have a bad economy or a good one. I would say that, you know, bars and liquor sales don't change too much during that either you're celebrating or you're, but I'm just not interested. Yeah, I'm not interested in the culture, I'd got to be around because I have two young kids if I owned either one of those. So, the I, I think what's going to happen here is, I think a couple of things can happen, money's going to get a little more scarce. So if you're not sitting on your own cash, scared money, there's, um, there might be some scared money coming down the pike, meaning it's harder to get access to capital. The other thing is, the mult, because of that, the multiples are going to come down. I think that, you know, some of the multiples, especially in the software industry, some of them are high. And that, I think there'll be an adjustment there. That's my gut feeling. But well, I guess we're in a wait and see mode. A lot of people think during recessions and the best time to either start a business because it trains you on how to run a business when it's, you know, everything is not great. And others think it's a great time to buy one, because people just don't want to go through another year. There'll be ready to get out.
Trevor Ewen 6:03
Yes, yeah. And I think that, that will vary a lot with the kind of life stage of the seller, which is it's interesting, right? On one hand, in software, you deal with the younger seller set for sure compared to say matric businesses, business services, that kind of thing. But even so, we found people, they're not say, ready to retire. You know, maybe that's a term they've reserved for, you know, 30 years away, but they are ready for something new. It's a bit of a grind, it's a bit of a slog. And one of the things that I think people underestimate about the kind of growth, the market that we've just lived through is, it's very taxing on people, right? So having to perform at that high level and having new entrants, well funded new entrants always enter your market can be a lot. So we're very focused on that. I mean, this is kind of a truism in the acquisition world, but we've, we've lived it out, you know, as much as we didn't think it was always the case. Initially, it's okay, there's the financial reason you're selling. And then there's the non financial reason. And we are going to have a much more interesting conversation if we can get to alignment on the non-financial reason.
Ronald Skelton 7:00
Now when you say b2b Software, Software as a Service, and stuff, what type of are we talking, like accounting software? What, what kind of things are you looking for?
Trevor Ewen 7:09
Yeah, so we like vertical market software. Accounting would be a bit broad. Although we'd be, we'd be open to accounting platforms that targeted specific industries, maybe for regulatory or kind of like industry complexity region. But we like niche markets. So focusing in on say, I'm trying to think of some of the ones we've done recently. So scheduling software, and medicine, we looked at asset management software for industrial and construction oriented industries. We've looked at some government services that work specifically with state governments, we work with clinical trials, software, you know, a lot of these were, your, your defense in the market should be that Google, Amazon kind of the big, the big tech giants are not looking to just make this into an add on market. And it's specialized enough that there's that kind of sort of durability stickiness in the markets. Frankly, we'd like it to just as a, as a product management challenge. I think we're, we're interested in the idea of working in markets where your actual way to win is to build the best tool for the sophisticated practitioners in the market.
Ronald Skelton 8:18
So, I like that when you when you get down into a niche area, you can provide tools that just the general tools just, just are going to miss, and quite frankly, not relevant to the big scheduling software stuff, because it's not a need across, you know, every client. So, I get that I think that's a brilliant place to stay. So, do you. What do you do? Well, let's just talk about the process. You start from the beginning, right? Sourcing, and then we'll kind of talk about what you do once you've acquired one. What's the onboarding? How do you have some ideas around automating some of this stuff? So let's start with just sourcing what do you, what do you do to like to go find the next business to acquire?
Trevor Ewen 9:08
right, So I think it's, you know, worth the standard. Kind of disclaimer here. This is going to vary widely based on the market. Although I do think you can, you can take the same kind of methodology top funnel approach. The other thing I'll say is these, these ideas can feed right into an outbound sales strategy later. So it's a really good thing to learn. Sometimes I think people can talk themselves out of getting good at sourcing because, like, oh, I only have to do this once. And then once I source the deal, I can just run it, but it's actually going to be a super useful thing for just realizing how to identify targets and go find them. In our case, we have we have an advantage and disadvantage, which always seems to be the case, right? So the advantage being we are entirely interested in fully remote tech businesses in the US and Canada. And made by definition, will have some kind of online presence. So we can rest assured that, you know, looking and online is going to be the method of sourcing and then also emails is going to be a pretty fairly reliable way to reach owners every now and then we'll give them as a call to we're not opposed to that if they do have a phone number available for us, but so it's, it's a very, I guess, you could say digitally friendly strategy to run. And what that means is sourcing different verticals at a time. So will source different batches by scraping just general listing sites, usually not for the purpose of sourcing. So a lot of these companies will market themselves to potential buyers. And, and we don't mean buyers of the business, but buyers of the actual product, the software that they're selling, right. So finding those marketing channels are a great place to source companies from, then we do an exercise and right sizing them. It's you know, fairly. It's fairly blunt instrument, but we're really looking at headcount as a way to decide, okay, this is the size of target we're looking at. And then we do proprietary outreach to the owners. Big thing, these are standard, typical here, but we focus on short, plaintext emails, making sure the owners know about our backgrounds, the people, the fact that we're in tech, and we're not just, you know, kind of a generic PE buyer.
Ronald Skelton 11:05
Trevor Ewen 11:05
And just make sure we get them on the phone as quickly as possible to actually talk about the situation. And, you know, it's good. You have to, you have to go pretty wide for top of funnel. But we have been outperforming some of our initial estimates in terms of actual conversations. A lot of it is making sure that first call is really efficient to disqualify the business, which very often happens. And one of the best treats about it is that people who disqualify themselves early or who don't respond early, they still keep the email around, they'll keep it handy. And so sometimes, you know, we've seen a few responses, 9 months to 12 months after we sent the original email, which is always interesting, because you almost assume in that situation, you're, you're dealing with someone who's a little bit more strategic about what they're doing. Because they are have been actively thinking about this for some months at a time, and not just quickly responding to you.
Ronald Skelton 11:55
It's interesting that happens with direct mail all the time, too, you'll, you'll send a batch of direct mail out. And especially like when I was in the real estate space where I sent out a batch of direct mail. And I would do zone, so we would target a particular day roads for a while or whatever, and or sometimes whole counties, if it's a smaller county, and then we wouldn't come back to it for six months to a year. And we a year ago by and I get an email, or a letter, or a call that said, Hey, I got your postcard. And then when we get to their addresses, like I haven't sent you a postcard and you know, in 11 months, they keep it and they put it on their counter. You know, it's like, you know, one of these days, they know they're going to need it, I think the same thing happens, they probably you know, start your email to say, hey, you know, thought about selling it before, if I ever think about it again, you know, I have it. So contacting you later, is both very strategic, because they're there, they've already kind of got that, you know, I think the same thing. I think those those tend to be a little more motivated to they're not what I call, you know, looky loos or whatever, I, a lot of times you reach out to somebody said, Hey, I'm looking at my own businesses and they're like, for 5 million, I'll sell you my business. And I was like, Okay, let's take a look at it, see what you got. And their numbers are nowhere near justifying. It was like, hey, if I win the lottery, I'll sell it. But I get it, you get more of those at the beginning. But the guys that wait a little while, you can tell it was thought out. So I think, I think that's very true in that realm.
Trevor Ewen 13:21
And that's why I mean, I guess my biggest piece of advice for somebody to, you know, get started, because to build that backlog, of course, you have to have to be going there. And I like you bringing up direct mail too. You know, we even in our space consider direct mail as an option. It doesn't make a ton of sense. You know, you would assume people in our space are, in fact, mostly dealing with their email. but one case where we thought it would be interesting, I think one of the great tragedies of doing this is as you do it, you realize a million other good ideas that you can't really execute on because you just don't have the time. But for a lot of more legacy platforms, especially stuff that probably has been in operation since the early 90s. And it's ready for a bit of a rebrand or a change to the way the product is delivered. Those things might actually be more susceptible to a direct mail campaign or something more traditional in that way. And I think you'll see that on main street businesses, as you just mentioned, real estate. So what I would say is, you know, for people in your audience, anyone who's listening, if they're thinking about getting started on sourcing, don't think you have to match our exact process. You know, I think it just the way of thinking is, is good is where, where am I sellers live? How am I going to contact them where they live? you know, how am I going to have an unfair advantage and finding them? And then how am I going to engage with them the moment I have, and for us it was simplistic focus on our backgrounds, how we're very aligned with them, and then moved to disqualification quickly so that we can spend all of our time talking with the qualified leads.
Ronald Skelton 14:41
And I liked your idea of like, you gotta get your, your deal flow or your, your outreach going and gotta keep it consistent. Because you don't know when you're going to need the next deal and it takes time. In the real estate space. We were, we were a small shop. And we were in a very sophisticated brownwood real estate we were negotiating short sales. So at any given time, we could actually manage only about 30, to maybe 45, 50, you know, depending on who we had on staff negotiations. So we would run batches of real direct mail we'd fill up and we'd sign three, four people a week sometimes. And then we get to the point where we just couldn't negotiate anymore, so we'd have to shut the marketing off to slow it down. But you get this even and flo, flow thing of going when you need customers. There's a lead time to get people get it turn back up and get the phone ringing in and everything else. So you would ended up in these, you know, up and down cycles where you could have kept at it even if you just figured out what that throttle was, you know, said send a little less and keep it steady, as opposed to turn it. You open the spigot all you open, okay, it's floody, shut it all the way down. Okay, it's dry. You know, I think that happens in this space, too, is few. If you want deal flow, you need to figure out as a way to get to steadily because when you're ready to look at the next business, it may take a few weeks or even months for the right thing to come across.
Trevor Ewen 16:07
absolutely, yeah. And I think it's, there's a number of different disciplines that come in and are. I, I am not going to say our flow has been completely consistent, right? It's pretty lumpy in different seasons. For instance, we shut down a lot of outreach at the end of Q4, because we're just like Christmas is not a great time to reach out to people. So we focused on kind of reinvesting and some of the tooling, or some of the existing conversations we were already having at that point. So there's gonna be those patches during the year we you don't get a good, a good flow, I just think it's good to, you know, be honest with yourself is the reason I'm not doing this, because I don't like cold outreach, because a lot of people don't like it. Or is the reason you're not doing it, because there's some kind of strategic reason not to do it. And I think you always should be. I've been just overwhelmed by how, how powerful it's been right. I just, I thought a lot of this was gonna be for practice, or for learning more about the market. I didn't realize we would actually get things under LOI to cold outreach.
Ronald Skelton 16:59
absolutely, we, you know, different industries are really easy to get online. I'm imagining the software companies would be the one you're looking at. We did a roll up last year. We were working on one. And we did 200 plus interviews of marketing agencies, almost 100% from LinkedIn. And you think about it, you know, almost every marketing agency, you know, if they're not on LinkedIn, there's probably a problem, right? It's a b2b. They're looking for customers, right? They want a decent present there. And then I turn around, I own a small pest control company, I'd love to grow it through acquiring other Tulsa or area, you know, based pest control companies. And out of the 40 or 50 that exists in Tulsa, maybe five of them have a presence on LinkedIn. So it's, you know, depending on your industry, you have to shift your, your sourcing, and I agree with that. So let's talk about once you've okay, we've got the LOI, they've signed it, we're doing all that, we've done all our due diligence. Now it's time to onboard almost now it's time to, like, you just recently acquired it. How do you? How do you? How do you go about bringing them on board and integrating them in with all the other stuff you got going on?
Trevor Ewen 18:14
I think for us, we're definitely at a transition point because we are working on our largest deal right now. And so that will be new for us. So, instead of speaking to that, because I, I can't say for certain what will happen, I mean, what this is going to do is it's going to end up becoming a bigger part of our, our whole, like, it's just going to be everything is going to switch to orient around this larger star. You know, it's the gravitational pull is big.
Ronald Skelton 18:37
(inaudible) anchor property, So you're buying anchor now.
Unknown Speaker 18:38
Ronald Skelton 18:41
Trevor Ewen 18:41
But one thing I can speak to is in our last acquisition, which is smaller and tucked right into our software development firm a lot better. And then I can also speak to one of our customers critically, and this is where I go to kind of more of the customer side is, is a private equity group that is acquiring manufacturing firms in Australia. And so we help them on some of their integration efforts on the technology side, purely as a vendor. But I think it's, it's an interesting vantage point to look from, because we can, you know, we can be just clear eyed about it because it doesn't have much to do with our strategy and more about what they're trying to do in terms of integration. So speak first to our our first acquisition, which is a small properties called sight alert. And it's kind of like an uptime monitor for different applications. We use it with all of our customers, and it's got like a diversified customer base, mostly in this kind of small business services realm. And bring that in was really a matter of getting the platform into our hands, and a lot of tech handover. I mean, the amount of accounts that we had to do, which always comes up, especially when you do like an asset sale, so there's going to be a reassignment of everything. So a lot of account handoff, a lot of knowledge base handoff, we benefited from the fact that the tool itself was started by a developer. I am a developer, so him and I spoke a pretty similar language, and, and I came to really appreciate him because it was actually quite decent code, he did a really good job on the whole thing. So I think it was a little unusual in that regard, because I wasn't inheriting a ton of problems. But we did keep him on for how it was either 90 days or six months of consulting to where we can do, we get a mandate either two to three hours a week of his time just looking into specific things. Or we could just hold that time for later and then use it up at the end of the six month period, or whatever we wanted it, it went pretty well, biggest thing was just making sure that we started utilizing it and onboarding our own customers onto the platform. And then, you know, just have a good strategy for how to deal with the maintenance and everything moving forward. Like I said, we benefited a lot from the tech being in good shape. Had it not been I could have imagined, like a more of a 90 day stabilization period where we were focused on, on getting the tech in better shape.
Ronald Skelton 20:57
You mentioned earlier, something that really caught my ear. And we talked about a little bit before the show, the fully remote management team, right. I've designed my entire life right now about being fully remote. I'm sitting in a redwood forest in California and my businesses are in Tulsa. You know, I some of my employees are in the Philippines, and but none of them are here. I don't have an employee within 1800 Or somebody a team member. Some of them are partners. I don't have one within probably 1500 miles of me. Tell me a little bit about like, I know that you do this also, and I'm looking for lessons learn. What do you like about that fully remote teams? And is there any cool tools or things you use to manage remote?
Trevor Ewen 21:39
Sure. Yeah. So for us, maybe, this was a day one plan for us. I mean, the job is my partner lives in Minneapolis, I live in New York, both of us didn't want to take our kids out of their schools. So that meant neither of us are moving right. And, and so from the very beginning, we said, Okay, this is gonna be fully remote. But I think we embrace them more as a kind of cultural goal for the firm to you know, the constraint hiring pool is really tough, especially in tech, right. So where I live, the kind of, for one thing, just the kind of ammunition, you have to have to pay people salaries they want in (inaudible), it's, it's pretty absurd. And you're you're, you're usually competing with, I guess, in New York, you're competing with a lot of finance, right? So you're competing with hedge funds, and banks who even if they look at software, and software developers as a cost center, they frankly just have the money to pay for it. So there's an economic aspect to it, which is just we'd rather be able to recruit all over the country all over the world, as you've done to. And then once you do that, you there's, there's a, you know, additional aspect I think is even more important than economic is we could just find the best people all over and really put together a team that's still really dedicated to each other and yet, lives in different countries, different places. And one of the things we've tried to focus on is that team cohesion element to say, hey, we're remote, but we're, we are Team, I think it would be a lot harder, if we say, had some New York or Minneapolis office that was meeting together every day. And then everybody else was remote. Like I think that would end up creating a bit of a two tier system. We don't have that. Right. So what we'll do is annual company meetups, and, you know, it was supposed to be in the US this year, some of our people are having a hard time getting pieces. So we're looking at either Canada or Panama right now I'm voting for Panama personally, but probably, you know, we'll pick one of those soon enough. Beyond that, I think it's about making sure that all the async methods of communication are really up to snuff. So we use a lot of slack and, you know, not in the way where we're trying to interrupt people's workflow. You know, we're trying to make sure people have time, but really concentrate really get into something, but also just the recognition that, hey, if you want someone's async feedback on something, Slack is really good for quick points of feedback. And then a project management system is the reference point for everything. So we use clickup. for that. It's a great tool. I think there's a lot of great tools. You know, I'm not like a clickup devotee, I do like, their pricing is pretty good. It's pretty good for a firm like ours, and they have a lot of great features that I really like. So that's
Ronald Skelton 23:59
I never heard a click up on it, what is it services they provide?
Unknown Speaker 24:05
It's, it's really like, it's like an Asana or JIRA. Okay, Something like that. Just it's a project management tool. So very, very horizontal SAS market, not the kind of market we would want to acquire it but clickup kind of came in they're a bit of a venture funded behemoth came into the market did really well, I think they were really responsive in their feature design. And, yeah, so And my last secret, which is the big, big, big one, that is you know, I use this like nobody's business, it's just I record screencasts like, you know, but you know, maybe on Sundays, 20 to 30 times a day, right, and so I you know, on any given week, there's hundreds of videos coming from me to different members of my team showing them how to do things. You know, we try and make training materials to be evergreen but also Hey, I've just looked into this issue with the accounts receivable can you take a look at this and send it up to them? That's a really good way to just make sure we're a bit more timezone agnostic because we do have finance functions in the Philippines and then we have I contractors in Indonesia as well, who just, you know, they want to work their normal hours and it doesn't really bother me they're doing good work. So I'm not gonna, I'm not gonna.
Ronald Skelton 25:07
I started off with my Philippines team being on my hours, and I had to have them come back and, you know, they just, it just wasn't working, it was causing anxiety issues and other stuff because it was from midnight to 8am in the morning. And I just I, I did the same thing. You just get your work done. You work the hours you work. And, you know, we use Slack and asana and I use Asana in ways that probably wasn't designed Asana to use. My whole podcast production is a like a assembly line in Asana. It's kind of fun is I really start with you being invited. And this is like, I guess what they call them, scrum boards or whatever. It's just a board. I just draw out, you know, I drag it. And then I've used third party automation tools to add tasks to it. So if I drag it from one column to the next, it adds all the tasks for that column, and it reassigns it to whoever is responsible for that column. So all I have to do is look up today and go who's on the record on restream. Because that's the only part I do. I record it, I click the OK buttons, and then drag it to edit. And then it gets assigned to Mariel and her team and they edit it and then she drags it off to her team does everything from that. It's mostly her right now. So but yeah, so I think there's a lot of good tools out there for that. And I love the fact that you're saying it's just not, it's not to tear. We had a lot of the marketing agencies, we talked to you that we're going to go back to a kind of hybrid. And it's like, during the pandemic, some of their employees were, they were okay with, it wasn't like they moved away. Almost had their lot of their employees moved away is that was like they didn't need the CEO didn't know. They were okay with it during that. And now they're thinking about coming back to the shop. And now they've got people in seven different states. Right. So they're gonna go to a hybrid model, as like, yeah, I don't know, you know, I think that can cause some problems in the fact that there's this, us and them.
Trevor Ewen 27:02
Yeah, and I mean, maybe you, I would make the case for it, if you had teams doing just completely different things, and they just don't really have to interact. But I'd be very concerned about the actual. Yeah, the actual viability of what happens there. And, you know, I think this is more of a maybe philosophical kind of observation here, but or, you know, work philosophy, I don't think it's like general philosophy. But I think that the remote kind of revolution brought by COVID, and it was already underway in some professions anyway, I think it is now selecting for different management styles. And I think the returns to charisma are going down. And the returns to organization, like organizational abilities, are really going up, right. So, you know, I knew a lot of managers in the kind of office era of my life, you know, in New York City, who would seem like their, the big thing they brought to the equation was being a person who is like, very vibrant, and lively and person. And that just doesn't translate as well. You know, over Zoom, it's great when you have that once a year off site, that's an awesome person to have getting everybody together. But the thing that does translate well is now a person who is very organized about everything they're doing, just like you just said, where you you're able to get your team in the Philippines doing all this work, because you've got Asana, doing these tasks in an automated way that it's very standardized. And you have a good procedure, right? It's those kinds of things. I think it's those were always valuable in my mind, like, I always think those people were very process oriented, were underrated historically. But now, the benefit on that it's just flown to the roof and the benefit of Christmas going out of it.
Ronald Skelton 28:32
I don't think I had a choice. I'm extremely ADD and very disorganized. And when I was looking at the way I was managing this stuff was not getting done. So I needed like one of these. If I do it right once and I, you know, I lay it out how I want it done, then all people have to do is okay, this puzzle piece goes here at this time, you know, the, who needs to do what by when long as I've got that defined, everything is done. And so it was organized by necessity. And I started this remote work thing, you know, like having people all remote, I want to say 99 to thousand I moved to Oklahoma 2007. So, probably 2004, 2005, 2006, I had an entire web development team in India created an online dating service that failed miserably and used up most of my funds at the time. But, uh, it was out of necessity. And I think that that's what's going on right now. COVID made it a necessity. So it speed it up. I think we were going there anyway, so I agree. We're probably going there anyway. And then the, you know, I moved back to here to California. I was talking to one of my friends and you know, the job I used to do many years ago at Lockheed Martin was a software test engineer. So for, for computer security stuff. So I would they would build it I would break it. You know, I tried to break the code. I tried to hack into it. I got to work on some really cool like i My job was to break into firewalls and stuff. And in unfortunately Gotta eat, you know, eat, sleep, and live computer security or you're, you're out of, out of touch with how it works. So that was 20 something years ago, but there's a thought that crossed my mind when they told me what they're paying those engineers now here. It's high six figures, it's crazy what they have to pay to get an engineer in the Silicon Valley, within 400 miles of here, to actually take a job. It's, you know, I know one software engineer, he's a high level software engineer, but he's got a salary of $450,000 a year. And that's like, buying and selling businesses got plenty of money. But if you paid me that, and I was working for somebody else, I'm might be interested in going by. So it's crazy. I don't think you could, without the VC if the VC, the VC funds dry up, you know, I don't know that they will be there's a lot of dry powder out there right now. It might actually start moving, both things being on sale. It might actually be the opposite of drying up your mind. Actually, people want to get, get engaged and buy things when they're on sale. So, I think it's a wait and see on that. But for for what's going on in the world and the fact that everybody's comfortable with remote work, I think it's going to be you know, if you're a listener out there, you're looking at buying business, and you're concerned that the business you're looking at as most of its voice overseas, all that's doing is expediting where you probably should be anyway.
Trevor Ewen 31:25
Ronald Skelton 31:26
And I'm a big believer of US made and, and you know, buying things here and building things here, but you've also got to run a business and numbers got to make sense. And, you know, I think there's certain key people that I always probably will have nearby. But
Trevor Ewen 31:42
There's also different sub markets where it's, it's very hard to find people in the US, right? I mean, that's the whole issue is that you look in certain things like, I mean, the VA or accounting, you know, the business services stuff you get in the Philippines, it's like, it's really good, right? This is not, the narrative can often be like, Oh, they're going to a low cost provider. And it's like, this is actually a highly skilled provider that is cost competitive, right? But for me, the number one thing isn't cost. And I know that's the case because we tend to recruit to Latin America because we want that timezone overlap. And those aren't the cheapest markets to be in a coast, you know, software development. You know, it's debatable what the cheaper markets are. But, you know, I think Pakistan would be in the running. Certainly some countries in Northern Africa, you know, these days, if you can get into Russia, that's a very affordable market, you know, Belarus, places like that. But, you know, for us, we're looking at, we want a good, talented labor force that we, we can afford, but not like bottom of the barrel, obviously. And that's the thing that we've really been happy with is I say, you know, the best engineer in the US, or let's put it this way, like a lower level engineer at Google, is not likely to come work for me, and I probably can't afford them. But the best engineer in Uruguay, I could afford, right, and there's a reality to that. That is pretty cool. And probably it flatlines. In the long term, especially in Mexico, we're seeing a lot of the rates flatten out, but that's fine by me. My biggest thing is I just need a labor pool, not, not a super low cost, like.
Ronald Skelton 33:07
A funny thing, because I got a call for an interview. Because I also worked for Excite, which was, I don't know if I can say this or not, but was during September 11, some of the terrorist or wherever you were using email servers, and they came in and took a look at ours. That excited I ran the, I was their senior director of operations. And the email servers were working for me. So I ran the email servers that were involved with that. And then I had all these remote workers from around the world. I got an interview over the phone as to why I'm wire transferring money to the Ukraine into
Trevor Ewen 33:43
What exactly you're up to? Yeah,
Ronald Skelton 33:45
Yeah, what exactly you got going on here? I see. You know, they were looking at, you know, know, like, Okay, I'm a person of interest to what, but, uh, once I answered everything, it's a man hunky. And come on over here, I'll open up my bank accounts to show you. I'll show you the software. I don't mind whatsoever. And they never bothered me again. But uh, you know, it was just a touchy time to have money going everywhere. But I honestly think that, if you're limiting to, like, if I were to start any type of company that you just saw for here, the kind of funds you'd have to raise in the Silicon Valley to do that would just be 10x. It what it would be if you look globally for your staff.
Trevor Ewen 34:24
Yep. Yeah, And there's, I mean, there's different, like you said, there's different levels. There's people you're gonna keep stateside for several reasons. We've definitely seen that in government. So we did a limited source of campaign in government services. And the realization was we'd have to just underwrite for a totally different salary structure. Because we would have so many limitations on that. You know, the advantage you get, you know, you talked about recession proof that tends to be one of those kinds of recession purposes. Right. So,
Ronald Skelton 34:49
Trevor Ewen 34:50
usually a unlimited upside but also very limited downside is the way we thought about the government work.
Ronald Skelton 34:55
Yeah, I guess if you're buying defense contracting companies or something that has encryption even, I think there's all kinds of laws around corruption as to where you, where it can and can't go and all that stuff. So you'd have to, you'd have to do that. Let's talk. Let's just kind of look at what's your end goal here? Are you a holding company? Is that what you want to do you want to buy acquire a hold for long term growth is going to take them public at some point. You have a game plan already?
Trevor Ewen 35:22
Yeah, sure. So I think, I think we, you know, my partner and I temperamentally are into the whole (inaudible) model. But that's also very on trend right now. And we're really for that. To be honest, it's not we don't have to decide that just yet. And so what we want to focus on is being really good. And what we do, and there is this kind of, this kind of weird two step that you have to do, I mean, on one hand, the area we are experts in is software, so we will continue to be experts in that. But the sub market we're in, you know, we're kind of new to it, right. And, as a result, I think I'm going to spend a lot of the next three to four years just trying to double down on that market and see if we can really rise to have a level of thought leadership in it, which I think would then translate into, you know, more opportunities there, especially if you think about like, doing roll ups, you know, we'll talk ins and bolt on kind of acquisitions, right, starting to know what's going on in the market. And I'm excited about that, because I think it's been a while in my career since I've really been able to just double down on something for the sake of it. You know, being in, we're in the New York City, kind of banking and media environment, as I did for so many years, it was great, because I got to see and do a lot of things. You know, I had two consulting companies, right? And I worked for one prior to that. So I've been all over the consulting map. And that gives you great experience. But it also means you kind of end up in this jack of all trades situation. You know, the one trade that I was always doubling down on software and technology, that was the thing I always knew. But, you know, I know financial services, I know streaming technology and fraud detection and streaming, I know a little bit about the education space, you know, I know a bit about consumer products, like there's a lot of things. And so it'd be nice when we get into a specific b2b market to say, alright, this is our b2b market. You know, we're gonna go to this conference. Now during the year we're going to focus on this, we're going to write white papers in this topic. And I'm a little excited about that. So that's like a kind of a different direction to go. But I think the next three to four years, we'll be talking about that. And if that market is big enough, for us to just focus on that we just keep doing things in that market. And we have, we have a whole code that's focused on it. And if it's not, then we, we start to say, Okay, what's, what's adjacent or what's something nearby that we will continue to get more interested in? I think, I think we're in a b2b SaaS for the long haul. Because we like, we just like the rhythm of that we'd like the defensibility of it, the fact that it's not super valuable the way consumer products are, and I think we've got we've got a good handle on it. But we'll see also what the market brings. I don't see the return of kind of like perpetual license software, or, you know, some of these older models reemerging. But, you know, I'm not outside the potential that there could be more crowd sourced or defy oriented models of the future, and we'd have to adjust accordingly.
Ronald Skelton 38:04
Yeah, that's those are some of the interesting things that are out there that defy and those types of things like that, because, you know, that's just a totally different beast altogether in itself. So, you know. I don't, I don't, I looked into it a little bit, I actually was looking at creating one for a particular reason. And didn't do it just because the partners I was putting on that. It just didn't make sense at the time. And it's still new enough that there was just unanswered questions. So, with a standard LLC, and did something totally different. But what other what are the things are on the horizon that you see that can impact? Like your buying and holding stuff? Do you see anything else out there that you're kind of just keeping your eye on to see where it goes?
Trevor Ewen 38:51
Well, I think we're okay, so just a couple, and this speaks to your background. I think we're headed toward a era for massive cybersecurity problems. Like I think there is a just people don't, people don't even realize that we've had an uptick since 2020. I mean, I think 2020 had five times the number of cybersecurity incidents that were happening in 2019. So people were already more aware of it, but it's hard to illustrate how many of these legacy systems are just kind of aging on the vine, and how many attackers are out there just waiting to go. So I think cybersecurity is not my specialization. But if I had that background, I would be very focused on that right now. And I think I don't know that how much that's gonna change our market. I think what's going to happen is there's gonna be major cybersecurity issues just kind of rocking the market constantly and therefore just causing new, new weird pivots like major players will cease to exist almost overnight because of some huge kind of cybersecurity problem, meltdown that happen and that's like a weird thing to have in a market where you could have the possibility of having to steal market share, and then all of a sudden, a major player is more or less knocked out because of some cyber security incident, and then a bit of a gold rush to go and get all their customers. That's something that I see a lot coming up. In software, I see, you know, US is at a weird inflection point where we're a big, big on demographics. You know, we're getting older, we don't have as many new people. So they always said there was going to be the great tsunami. And I think there's just going to be more of that there's going to be more opportunities in both acquisitions, because people are retiring, and there's fewer buyers down there for them, and then also services for that market. Those are two kind of like mega trends that I'm very,
Very focused on.
Ronald Skelton 40:36
I think it'll open up a lot of stuff for you guys, too, because as people like me buy a lot of, a lot of those silver tsunami or, you know, the aging out market. They tend to be brick and mortar, they tend to be like, they have their systems have been on for a long, long time. And when guys like me get our hands on, and we start looking at moving them to, you know, cloud based solutions and software as a service based solutions as opposed to some old Vax machine. They, I was looking at a manufacturing company not too long ago, and their newest computer in their building, which probably 25, 30 years old it was they still, they were still using machines that were the old green text only computer monitors, like, nice with their timecard systems and star four, and old Wayne computers, I think it was a wayne model. And so yeah, I think there's gonna, I think the market will open up a little bit as these things change hands. And guys, like me, look at that, and go, I don't want to make that, you know, it's more expensive to maintain that old arcade system, you know, within its limitations than it is to just replace it with something that, you know, is cloud based, you know, upgraded all the time. The security side, I agree. I interviewed Gary and I'm gonna butcher his last name, Gary is the CEO of real defense, they acquire a $50 million and software security companies, and they do it in a unique enough way. That might be something you know, because some of the times they do it through divestitures. So they they're constantly looking for VC backed things that just didn't, you know, the unicorn turned out to be a Shetland pony, it's only making you know, 25, 30 million is never going to make them billions. So they want to sell it off. He's built a network of, you know, contacts inside of all the VC firms and network inside of all the private equity companies and everything else. And a lot of times, you'd be Google companies and stuff, they buy something that has three or four product lines for the intent of only owning maybe one of them, and either shut the other ones down, or they sell it off. So that may be another stream. If you're out there looking for, you know, tech companies and stuff like that as a lot of times what you it would be a really great business for you and me, it was a side project, a side hustle for some company that a major corporation purchased.
Absolutely, yeah, we call those deals VC roadkill, I don't know if that's super friendly to the deals, but that's the, the quiet name we use for it. And we have looked at a couple of those. I mean, the thing about it, that we I think we see that in the future for us, because what we want to do is get our playbook a little better, because those tend to be if not distressed, they have all the characteristics of a distressed deal, because you have to, you have to lay off staff, you have to do a lot of repositioning very quickly. So we started more with a calmer thesis about let's do businesses that are pretty stable, you know, growing, you know, have some margin of safety. But I think we're headed that direction, in part because we see the opportunity. It's, I mean, I'm still looking at one product we looked at in the, in the oil and gas space earlier this year. That was it was it was an unbelievably cool product. Just couldn't, couldn't hack it with the VC world. But I think my partner and I spent, you know, probably more time than we needed to just trying to talk about how we can make it work, right? Because it was a cool, really cool idea. And so I think there are there is a lot of that, that super interesting stuff.
Yeah, I'm always cautious too. I'm not, I'm not looking for anything that's a turnaround or, you know, or to fix anything that's broken, mainly because I always joke around with the fastest way to make a small fortune is from a big one. right? You can hurt yourself really fast by trying to fix somebody else's this day, to where if your up something that's up running, cash flowing, positive and working, and you can improve on it a little bit. It's yours to run, of course, but you could screw it up really bad, but then at least you're not dumping money into something that, you know. I just concern myself because I consider myself a fairly intelligent guy. And when you do that sometimes you think you're smarter than the guy that was running that for 15 years you can fix something he couldn't fix. And you'll find out, more often than not, my gut feeling is you're gonna find out that there's more to it than you You would, you know, could have ever imagined. And it's gonna be harder to turn around than you thought there are people out there, they're just, that's what they do, they just know how to turn things around, they know how to, that's just not me. So I don't do turn around either. For the sheer purposes, I just don't have the team built around making sure it's successful. Maybe one of these days, I'll build a team around, it was just people I know, have done it and do it again. And then you know, you know, pick up things that the turnaround doesn't risk, I guess it's kind of like a risk portfolio thing. If you look at it and go that, you know, if I dumped this money in it to turn us around, that's risking X number of percentage of my overall, you know, net worth or my overall portfolio of businesses. You know, how long can I sustain that? And is it worth the risk? You know, what would happen if it turned around?
Trevor Ewen 45:51
Yeah, I guess that's a good way to think about it is, you know, it's something you can do when it represents a small part of your net worth, but don't, don't bet the farm and turn something around. And I think what we would want to do, I think strategically, what I'm just thinking about here is I would love to find kind of tuck in acquisitions that look like turnarounds. So that we can practice in a situation where if it doesn't work, we just ingested into the larger organization, the customer list still could. And that would be, you know, I think we,we honestly believe in some cases that we would decommission a lot of software platforms, because we love this market that hasn't really transitioned to the cloud, as like a bolt on or target market, because we're just more than happy to say, hey, guess what, guys, you know, we're taking on your existing contract in three months, we need to transfer to the new platform, we'll build all the data transfer tools, so it really is like sunsetting a platform. But we like that market, because those guys, they can't, they can't get SAS multiples. And a lot of times they're older, they're trying to, trying to move the business to a new home, they, you'd be amazed how many of these guys actually make sure their customers get taken care of is much more important than the money, right? And, and that's something you can offer them, and you said, Hey, we're gonna give you, you know, right now your customers are on a sinking ship, we'll give them a life raft over to a new ship. And, and that's something that's going to have to happen in a lot of those firms too. So, that, that's where I see us maybe starting to, to apply some of those turnaround principles, then maybe one day, when we're feeling a little a little glib about it, we'll give it a go. A big one.
Ronald Skelton 47:18
The other way area to look for in the turnaround spaces, if they have a large customer pool of customers that you can upsell to and cross sell with your other platforms. Right.
Trevor Ewen 47:28
Ronald Skelton 47:29
You know, I, I didn't want to, like, shoot it. I don't do turnarounds. If you've got a company out there that's struggling, but you've got you know, 30, 40, fifty thousand customers, and you know, they fall in something I already do, I would look at that just because, you know, the value of being able to sell those customers, my other products, my other, you know, company's products would overweigh the fact that I'm gonna have to fix some of the things with what, what's sitting on the table right there.
Trevor Ewen 47:59
Yeah, and the way I always think about, like, planning strategy is we all get rich, and we're super happy. Plan B strategies, we don't lose a ton of money, right? If you can make sure your plan B, it's just not that you
Ronald Skelton 48:09
Trevor Ewen 48:09
Are in really bad shape. That's probably good.
Ronald Skelton 48:12
I got it. Cool. So I've asked you a bunch of questions. We've had a nice conversation here. It's, it's about 10 minutes to the end of the show. Let's do two things. What did I miss? Is there anything I like? Like should have asked? Is there anything out there that, uh, like, man, we probably should talk about this, or?
Trevor Ewen 48:26
Oh, no, I you know, we can't cover everything in every conversation. I think we had a good one. You know, we a lot of what we talked about with firms might be useful to your audiences. We're talking about the end is, is this question of developing an automation strategy inside the firm. You know, it's going to be a mix of things. If you're using no software, you're probably doing something wrong. I can't imagine a business right now that would use none. But one of the things we're very focused on is what is going to be so unique about your this goes back to the vertical software aspect, but what's going to be so unique about your business, that there's not actually going to be a product out there for you. So we can admit that there's good CRM solutions for keeping in touch with your sales contacts. That's not a self problem. But we tend to find that there's this, ahh, I use the term from the Postal Service or logistics, the last mile problem, if you've ever heard of that, like the last mile is the hardest to deliver. And I always say that the same with businesses. On the technology front, there's always something special that a company does, that there's no tech to help them with that. And that's maybe the moment at which you start to think do we build this as a competitive advantage? Do we build this as a strategic asset, and those tend to be the customers we work with? So thinking about that PE group in Australia who acquires manufacturing firms or we work with an insurer not too far from you probably maybe like 30 minutes from where you are right now in Lafayette, California. You know, these businesses have all figured out something unique about their business that they actually want to build technology around and then use that to power them.
Ronald Skelton 49:47
I have a friend who built a software company around the insurance space because he started off as like, he just realized that inside of this space, there was no uniformed way to do these things across multiple agencies and stuff. So he built a software platform. And actually, him and his company, you know, we were I spent a year or so with him in the in a team building program we were doing together, and him and his company started related. There was no documented standards. You know, if you think about a lot of stuff, their standard protocols and stuff are written to do a certain things certain ways. So they wrote, wrote them up, submitted them to the industry, went to the industry conferences, and, you know, they're now there, they own the software that follows the standards, but they actually aren't convincing the rest of the industry to stick to some standard formats of doing things. So there's, there's definitely uniqueness out there inside of different industries. And like the entrance has been around long enough, you would think that nobody's been able to innovate how it's done in last two or three years, but there's companies doing it left or right. So
Trevor Ewen 50:53
Yeah, there's a sequencing problem we see a lot. I mean, I know that you're not trying to get through this at the end of the conversation. But it's just fascinating to think that even if a firm's a an insurance firm, we see this a lot of law firms who got online in the 90s, like maybe they were ahead of the game. Turns out, they're probably aging, the system now to there is a cycle with this kind of thing. So there's more to do. I mean, if you're, if you're a young person today is trying to figure out what to do with your life, you know, stay, stay somewhat close to technology, and I definitely recommend a cybersecurity route, I think I'm actually telling my son to do that, if he wants to do some kind of, you know, IT or software related field, cybersecurity is going to be in a golden age for 30 years, as far as I can tell.
Ronald Skelton 51:31
I was in 97, until about 2007. I did a computer security and just got burned out and got a master's degree in marketing. But you know, it was a big deal back then. And it's a bigger deal now. And, you know, it's always gonna be a problem, you know, this, the tools and stuff people are using to get into systems and, and the vulnerabilities that we had back then are gone now. But there's a whole new set. right?
Trevor Ewen 51:58
So always changing too. So yeah, that's, that's about it. And I would commend your audience. If they feel like I should have covered something else, just, you know, shoot me a message and
Ronald Skelton 52:07
We'll talk cool. How do they reach you? What's the best way? I've got your, your personal website underneath your name up here? Yeah
Trevor Ewen 52:12
So my name.com brings you to It's really just a link tree. I don't know if you guys know about this product, but it's pretty cool. You know, I spent years always like updating a personal website. And then it was, you know, out of date in six months because your life changes, literally just let you link out to the things that are important. So if you go there, you'll get my company sites, my LinkedIn, my Twitter, pretty much all the things that I would, you know, have people take a look at. If they want to shoot me a message on Twitter, or, you know, they can figure out my email address, or one of our company email addresses from the site too. They can also send me a message on LinkedIn. I'm happy to talk to him.
Ronald Skelton 52:41
Awesome. That's funny. I'll check out that link for you. I own ronskelton.com and ronaldskelton.com. And I shut them down and routed them to my Facebook, which was cool for a little while there, because I figured almost everybody on the planet has one, but a lot of people are leaving it now. So I've had people go, Hey, I was reaching out to you. What's your Ronaldskelton.com? And I don't have a Facebook. So I'm gonna have to set up something. So linktree would probably. I'll check that out and see what that looks like. Because it's in I have no
Trevor Ewen 53:06
Simple product. Yeah, I love it. And I only use the free version. I mean, yeah, I can use the paid version, they take the logo off. But it doesn't really matter to me that much. I just want to have like, here's what's going on right now. And if you take a look at these five links, that tells you everything about me.
Ronald Skelton 53:19
Awesome. Well, I appreciate having you on the show today. Man, I'm gonna free up and let you go back to doing what you're doing. Thank you for being here today. Again, if you're out there listening in the audience, you want to reach out to Trevor. It's Trevor, for you guys that are just listening to the podcast you're driving. It's TREVOREWEN.com reached out to that he has all the links on there. It'll be in the show notes that will be you'll be able to reach out and get a hold of him. And appreciate having you on here today.
Trevor Ewen 53:51
Cool. Thanks, Ron. Happy 4th of July.
Ronald Skelton 53:54
Yep. I'm gonna end this hang up for just a second. And we'll wrap this up. That's the show guys. Hey, it's your host, Ronald Skelton. I want to thank you personally for watching the show today and invite you to call our new hotline 918-641-4150. That's 918-641-4150. Call us and tell us about our show, ask questions, suggested guests or even tell me about a business you have for sale and we'll reach back out to you. Again that number is 918-641-4150. Call our hotline leave us some information. Thank you. The investors and entrepreneurs professional mastermind. The investors and entrepreneurs professional mastermind combines that additional peer to peer mastermind introduce first in Napoleon Hills famous book Thinking Grow Rich. With accountability partnering, where your peers help you ensure that you set goals take action and get results. If you want to scale blow past roadblocks and achieve success faster than you might think is possible, I suggest you take a visit over to tiepm.com That's T i e. P m.com. And check out the investors and entrepreneurs professional mastermind.