Tom Price: 5-year race to a strategic roll-up sale at 27 years old!

In this episode of Two Commas, I sit down with Tom Price, a self-made entrepreneur who grew an air conditioning business from a scrappy startup to a multimillion-dollar operation, ultimately leading to a high-stakes exit.

Tom shares his unique journey—beginning with flyers and DIY installations to scaling his business and even starting a manufacturing line in China. He reveals the gritty, hands-on decisions that built his company and the unforeseen challenges of due diligence with venture capital buyers. This episode is a goldmine for anyone fascinated by what it truly takes to scale, adapt, and make a strategic exit.

Follow me on LinkedIn: ⁠www.linkedin.com/in/joshcomrie⁠

Download my e-book, "The Exit Factor: Sell your company for a life-changing sum" and sign up to receive the Business Growth Journal fortnightly: ⁠https://www.joshcomrie.com/the-exit-factor⁠

Episode Transcript

(00:00):
Welcome to Two Commas, the seven figure and above exit podcast.

(00:14):
We discuss a range of topics from the business backstory to the individuals, get some context
around what their life has led them to that stage, decisions that they made that were
great and some areas that they can improve upon with the intention that we both inform
and inspire you to take some massive action and help you achieve your dreams.
Today my guest is Tom Price.

(00:34):
Tom Price is a founder and owner of a number of different businesses and spends his time
across a range of pursuits these days.
And so really wanted to have Tom because once we started doing some research into Tom, my
researcher discovered that you've got quite a private profile and life out there.
Socially a little bit so, but LinkedIn hasn't been touched for about 10 years or so.

(00:55):
So really honored to have you on the show today, Tom.
So perhaps you could start by giving us a bit of an introduction about you, your backstory
and give us a bit of context into who Tom Price is.
Yeah, sure thing.
Well, it was interesting you asked the question, would I like to come and have a chat about
business and I was like, sure thing.
You're like, oh, do you have much of a presence?

(01:15):
I was like, do I have LinkedIn?
And I thought, I don't think so.
And then when online, I was like, oh, I actually do.
And there was a photo of me at sort of 22, quite sort of pale looking.
I was obviously working quite late into the night at that point.
And yeah, that was sort of the last time I sort of pushed my public profile.

(01:36):
But on the whole year, my business career has been relatively private.
I would imagine that's quite a similar story to people who have had a lot to do with the
trade industry, potentially not so good at promoting yourself beyond exactly what you're
doing and maybe who you perceive your customer is.

(01:56):
That's interesting.
So it was less intentional than it was not something that would perhaps serve you in
the space that your business was focused on, is that correct?
Yeah, I didn't believe so.
I mean, I suppose we'll come to it, but predominantly we'll be talking about the air conditioning
business that I built, Energy Efficient Solutions.
And at the time, I mean, my exit was sort of 2015, 2016.

(02:18):
That was really for, I mean, before podcasts, before a lot of people had public profiles.
Sorry, I felt before.
I mean, yeah, before a lot of that sort of digital up sweep of information.
Yeah, yeah, yeah, indeed.
So before we talk about Energy Efficient Solutions, perhaps give me a bit of a backstory and give

(02:40):
us some context around who Tom is and where you're from and that sort of thing.
Totally.
So I grew up in Auckland.
I went, well, in third form, I went to St Kent's College for about six months from a
co-ed primary school and just couldn't stand it.
So I told my parents that I just wanted to go hang out with my mates at Glendowie College.

(03:02):
I mean, school was just never a big focus for me.
I was more interested in hanging out with friends and causing trouble.
So at the start of seventh form, I was asked to leave school.
And two of my friends at the time had always been very interested in aviation, which is
very specific and sort of seems off the beaten path.
But my dad's a recreational pilot.

(03:23):
And I said, OK, cool.
Well, I'm not at school, so I should do something.
I can't go to university yet because I'm sort of two months into the year.
So decided I wanted to be a pilot.
And I mean, at the time, I was super young mentally and still sort of half in the party
mode and sort of engaged my training, finished that sort of nigh on three years later and

(03:48):
then got offered a job.
And the first job I got offered was training other people how to fly.
And they told me the income was 10,000 per annum.
And I was like, oh, this doesn't sound particularly sexy to me.
Not going to fund the lifestyle that I'm hoping to achieve?
No, I was sort of earning about the same amount working at Starbucks.
So yeah, that was sort of where I sort of made the decision that I had to look for another

(04:10):
path.
And I thought, well, if I work for an airline, I'm never going to own an airline.
There's no way I can have a business out of this.
And sort of prior and during my flight training, I was sort of I had side hustles.
I was importing sovereign rings and selling them.
I had a dress business.

(04:30):
I had a career cycling business that we sold to Urgent Careers in 2004.
Oh, wow.
So these are like high school kind of growing up age businesses for you?
Yeah, yeah, from sort of 16 to 20.
But in that time, just learned a lot about buying and selling.

(04:54):
And as soon as I left school, I was spending a lot of time listening to Tony Robbins, listening
to Brian Tracy, listening to Brad Sugar's.
So I felt like I did have this burning desire to create something for myself.
I didn't have any immediate people around me who were able to sort of guide me in this

(05:14):
direction whatsoever.
I didn't really have any friends who had taken the business path at that point at a high
level.
My parents' friends, although some of them are quite wealthy, weren't working for themselves.
So I sort of had these really, really high level mentors, but nothing in between right

(05:35):
down to my level.
So it's really interesting.
I'd like to delve into that a little bit later on.
But I'm curious as to what was it that attracted you to entrepreneurship in the first place,
rather than assume it was necessarily just the returns.
People are drawn to it for different reasons.
So as a young guy, it was probably to make a bit of a side hustle and have some cash

(05:56):
coming through.
But as you kind of evolved in your experience base and the understanding of how business
works and the buy low, sell high kind of thing that you were probably involved in early on,
what were the key attractions to founding and running your own business for you?
Number one certainly was ego.
I always had a problem with authority.

(06:17):
So the opportunity not to be able to be told what to do or how I should do something was
incredibly appealing.
So I just had an unbelievable work ethic.
So I knew that I could just work much harder than other people and create the outcomes
much more quickly.
So sort of a combination of the two, but certainly it was ego at the time and wanting to prove

(06:41):
myself.
Yeah, for sure.
Yeah, that's really interesting.
I've reflected on the role that ego has played in my life on more than one occasion.
Yeah.
And ordinarily the decisions that my ego makes for me are not the greatest decisions in my
life.
Totally.
Does that resonate with you perhaps now?
I mean, do you there's no, there's a lot of positive that would have come from you heading

(07:02):
down this path and a lot of challenges that you would have had to overcome as well.
So what do you make the role of ego make mean for you now?
I mean, I just feel like back then I was doing the right thing for the wrong reasons.
I mean, I guess I was sort of quite lucky how it sort of boiled down to quite a clear
path quite quickly for me.
I'm not sure if that happens to many people.

(07:26):
Yeah, you know, the motivation of love or friendship or creating value for other people
is certainly a more pure motivator than ego for sure.
But I didn't come to even have an understanding of that for many, many years after I sort
of started the business.

(07:46):
Yeah.
Yeah, it doesn't tend to be the domain of a younger person, right?
That deep self awareness and an understanding of service that tends to come a little bit
later in life, if at all for some people.
And so when was the idea born for EES and how did that get out of the ground?
Well, when we were building, my dad's sort of a very, very highly skilled tradesman.

(08:11):
So he does the plumbing and then gets a plumber to sign it off, does the electrical, gets
someone to sign it off, does the air conditioning, the roofing.
So as we went through the build, we would do it all.
So I did have a very, very, very basic understanding of air conditioning.
I've got to underscore how primitive it was.
And I was up in Auckland for a friend's birthday and I met James Logan, who would come to be

(08:35):
my business partner in EES.
At the time he was selling HRVs, he was an HRV salesperson and I was still in need and
building away.
And we sort of, I think we must have met the first time and we both had a few drinks and
we had a lot of bravado, how he was sort of the best salesman ever.

(08:58):
And how I said, well, I can install air conditioning.
I mean, and he's like, it was just that wave where, I don't know, it was being talked about,
but air conditioning was coming into the mainstream and he was getting a lot of requests for it.
So he's going and doing ventilation appointments for HRV and people are saying, well, you know,

(09:19):
it's all well and good having fresh air in my house, but I actually want to be warm.
And yeah, we caught up.
And then a week later, I think I was still in Auckland and we sort of rounded back quite
quickly to the same conversation.
And then we're like, maybe we should have a go at this.
We'll just see what happened.

(09:39):
And then we, it was over some timeframe because I was back and forth from Dunedin, but eventually
we're like, what do we need to do to start a business?
So we, I think paid one of our friends who was sort of a junior graphic designer, 50
bucks to draw us up a logo.
And then we chose our company colours, which is a strange thing to do at the very start

(10:01):
of a business.
And then we just went and got to, we went to Cotton on and bought five, $10 shirts.
And then we went to the two double seven screen printers and got them to screen print us a
little logo.
And we didn't have a website or anything like that.
I mean, we didn't even have a means of buying the heat pumps.
We didn't know how to price them.
We didn't, we didn't know anything basically.

(10:23):
But we just got sort of an A5 black and white flyer and got a thousand of them printed off
and then just started dropping them in people's letter boxes and worked out that for every
thousand letters we dropped, we'd get two phone calls.
So it was the four of us, myself, James and our two partners canvassing the streets.

(10:44):
And we sort of worked out that we'd get two leads for every thousand flyers we dropped.
And the first heat pump in stores was pretty embarrassing.
It was actually quite a beautiful home in Mount Eden terraces.
We showed up in my dad's ute and had him on board as well actually, because we would have

(11:08):
just been absolutely lost trying to do it by ourselves and had to take sort of four
trips back and forth from the different suppliers.
And we just bought the first heat pump from sort of like a Harvey Norman style place,
obviously paid full retail for it or whatever.
But we just wanted to see if we could actually do it.

(11:29):
And astonishingly, the guy really liked us and just maybe he sort of saw that we were
young and trying.
And then I think a week later, he just referred us to one of his friends.
And then we got our next installation job and then started sort of building from there.
But I mean, once we did the first one, we just spent the whole night on YouTube, just

(11:51):
figuring out what we did wrong and how to make it better and just became sort of YouTube
search masters and just pulling every piece of data from the internet about installing
air conditioning.
Because I mean, air conditioning is a refrigeration five year trade.
It can be quite technical, especially if something goes wrong.
But yeah, we had sort of enough to be dangerous with my dad's help.

(12:13):
Yeah, I love it.
The YouTube reference is such a helpful one.
So there's so many free tutorials and bits of information available on YouTube.
If you go searching and if you are prepared to spend the time, you can learn how to do
almost anything.
I had to replace some brakes on a vehicle at one stage and there was three videos of
how to replace that specific brake type on that specific model of car.

(12:37):
And so it became a novice understanding how to do things the way that a trained mechanic
could do things.
We did an OK job.
So tell me those stats that you had the two responses for 1000 fly leaflet drops.
Did that change over time out of curiosity or did it maintain pretty consistently?
So what we figured out is we sort of got lucky in the first area we started.

(13:00):
We started in we sort of looked for houses that were a style of construction.
We knew we wouldn't have too many problems installing.
So we started doing Meadowbank and towards the eastern bays.
A because we live quite close.
We didn't want to spend ages driving and then we'd target Mount Eden with old villas because
there's no insulation in the walls and not too much timber.
So we sort of had enough sort of now to target areas which they had disposable income typically

(13:26):
didn't have air conditioning.
So we had a bit of a I mean we had good insight there.
Did that I think basically it did sort of hold true.
We got slightly nicer flyers started printing in color things like that.
Yeah, no, it was it was pretty linear.

(13:46):
I mean we just we just stopped doing it because we felt we had hit sort of the whole area
within a 5 kilometer radius of our house.
And discovered quicker and easier mediums and we were also just so busy installing air conditioning.
Flyer drops are quite time intensive when you're doing them yourself.
So yeah, so what was the what was the growth journey of the of the business and what were

(14:12):
the kind of key points of realizing that you had to change up how you were doing things
as a consequence of the growth order or to achieve the growth?
I mean the growth was pretty rapid, so I mean.
For two months, maybe two to three months, James and I both held on to what we were doing.

(14:32):
I was still doing small construction projects and he was still full time at HRV.
He stayed there for a couple of months because he was a good inadvertent lead source.
Because they weren't offering heat pumps at the time, right?
So no conflict of interest there.
Well, we just started. I mean the first week we got one heat pump installed next to the next three or four.

(14:57):
Which is quite a bit of growth and after sort of a month to two months with OK,
we need a website here so now all of a sudden we're sort of focusing on growing the business,
doing the marketing, doing the sales, doing the installations.
And starting to try and form what we thought might be a business structure,

(15:20):
which was we both do everything.
We both go on the installations, we both go to sales appointments,
we just try and learn and do and be as much as we possibly can.
And I think it started to get exciting at probably sort of the four month mark where we had.
We knew we needed to bring on another installer because we were both just absolutely tapped out,

(15:46):
just doing sales and installations, which I mean in terms of revenue that probably wouldn't be much.
Maybe I think we did 500K in the first nine months or something like that.
But it's respectable from a standing start.
Yeah, from a total standing start.

(16:07):
But then what really changed the game for us is we got our website operational.
We I think at the time had a very, very slick website and we started using Google AdWords.
And for nine months, we were the only people, only heat pump company on Google AdWords,
which was just absolutely obscene.

(16:30):
So the leads just started absolutely flooding and it was just an absolute floodgate.
So at the time 2010, 2011, the way the industry worked would be some sort of gruff tradesman would finish his day,

(16:51):
maybe as a plumber or whatever, might do some air conditioning in the afternoon.
And then it's sort of 530, he'd show up looking quite shabby and just fire a price on a piece of paper in front of somebody.
And that was sort of the process.
Whereas James took the extremely polished HRV sales mentality, we show up extremely well presented.

(17:11):
And you take them through a process where you explain to them the fact advantage benefit of getting a heat pump and sort of a tailored experience
and explain to them exactly how it's going to be installed, what the benefits are, what areas it's going to heat and some of the other features of the heat pumps.
And we were just closing out of sight.

(17:33):
So I think our close rate must have been sort of like 75 percent or something.
It's phenomenal.
Phenomenal, right? Just ridiculously high.
And it's a total green sea market. No one had heat pumps.
Probably one in 20 houses had a heat pump.
Five percent penetration. That's a huge opportunity.
Yeah, and just that goes to what we're talking about for his timing.

(17:54):
It's just so important, so critical.
I'm just going to highlight a couple of things that you said there because they're really valid to anyone going through or pondering going through a startup journey.
Essentially, there was some lean startup principles that you adopted.
So minimum viable proposition, which is that you printed up a leaflet,
spent a very small amount of money and then distributed those things around to see what would be conjured up as a consequence.

(18:17):
Turns out there were some leads and one of those leads turned into a sale.
So you kind of validate the hypothesis.
You had an idea that people might want to buy heat pumps in the Mount Eden region.
And so you went out and sought to test that hypothesis, printed them up.
People did indeed want to test those things.
You managed your risk really, really closely by keeping your incumbent employment on.
So you had an income stream that was separate to the business.

(18:38):
So you were desperate for the business to survive.
And then you also made sure that you were multi skilled across all of the different things that were required within the business.
So you both could kind of do everything that was required to make sure the business grew and thrived as well.
And so some really strong principles that perhaps you didn't know theoretically, but instinctively, they felt like the right things to do at that stage.

(18:59):
Yeah, I mean, it's an easy decision to make when you don't have much.
I think, you know, as soon as you got a million bucks cash in your account or whatever,
you know, the opportunity for you to just go and spend that on a new business endeavor when really the right thing is to do is start like,
OK, how can I do this with nothing? Because you absolutely can.
I mean, I think by the time we had made our first sale, our total expenditure was 150 bucks on uniforms.

(19:26):
That's incredible. I love the first thing you did was to buy a uniform and get a logo printed up in a color that was just bang on.
Oh, we just had sky blue, by the way.
Oh, yeah. Blue is my favorite color.
So, yeah, that's a great way to get things out of the ground.
So talk us through the scaling journey now.
So you're nine months in, you've done half a million dollars, you've hired your first, maybe first two installers.

(19:49):
So what were the next couple of inflection points in the business for you?
I mean, it was pretty good timing for one, because a lot of our friends who we sort of love and trust had all just started finishing university
and they were sort of still had nominal jobs at Vodafone and they were about to enter the workforce.
And then on my side, I had a couple of friends who I just knew were real weapons

(20:10):
and they were doing things that they weren't loving that hadn't gone to university, like being chefs or something similar to that.
So we just had this enormous hiring pool of all of our friends.
So after we had sort of proven the model, OK, we need another salesperson so James can focus on something else.
So we just cherry pick one of our friends who we thought would be the best salesperson.

(20:33):
And then I cherry pick one of my friends who I know wasn't loving his job, could easily be trained up, even if they weren't in the trade industry.
So we were able to build a network of sort of 10 of our best friends all in the business.
But we just had 100% trust in them and they had 100% trust in us.

(20:54):
There's nothing like fuel slippage or stealing or time wasting.
And because we're also jazzed up about the business, we were just spending 15 hours a day together.
And no one cared that they were working 75, 80 hour weeks because you're doing it with your mates and you're sort of just hanging out.
And the good thing about air conditioning is you get to change tasks.
Quite often you might be driving to a site or going to do a sales appointment.

(21:17):
So a change is sometimes as good as a break if you want to be able to smash up those really, really long hours.
But we were sort of nine months in and our monthly revenue was really starting to crank up to sort of $100,000 a month.
Still operating out of my parents house, by the way.
So we got all these floodlights installed and 6am all of these vans would start reversing up and just illuminating the entire neighborhood.

(21:45):
There's a second lounge, which is quite huge, just totally full of heat pumps.
The garage was totally full of heat pumps.
We'd sort of it was outrageous, just every extra work space was an extra office desk or something.
So we operated like that for about nine months and then determined that it was just too outrageous.
And we got a little office in East Tameke.

(22:07):
Hated driving to East Tameke, but anyway, it was what it was.
It sort of made us look commercial and we did a really, really good job of marketing our new space to make us look bigger than we were.
And then I think about a year and we got a call from Fairgo and we're like, oh my God, what have we done now?
Thinking, I don't know what we're thinking, but it was pretty nerve wracking.

(22:29):
But they just wanted to interview an industry leader.
And we went on Fairgo and ended up helping the family out.
We got ripped off with a heat pump and it was just enormous exposure for us.
I mean, unbelievable exposure, having sort of somebody who's trusted with the authority of Fairgo coming and saying,
well, these guys are the masters and this big, the lady was crying on TV when we gave her a heat pump.

(22:53):
On your white steeds with your cap flacking.
It was just all of that.
So we obviously plastered that all over our website and then just started going pretty vertical.
We sort of went from one mil first year revenue to three million to five to six million in year three.

(23:14):
It's phenomenal.
And then started scaling out.
So there's two types of air conditioning.
There's high wall air conditioning and then there's sort of ducted air conditioning,
which really wasn't available here other than sort of a commercial solution.
And my dad and I have always loved creating and thinking, I can see what is going on, what's available in the market here.

(23:35):
So how can we make this better?
And we started sending off sort of prototypes of screws and things over to China and started
getting customized components made for our installations, which would just fix the unit back to the wall more quickly
or a new type of metal splitter that hadn't been designed before that was either vastly lowering the cost

(23:58):
or including improving the utility or usability of the product.
So around about year three, started making regular trips to China.
And we actually started a manufacturing plant in China in year three, which dropped cost of our component
from sort of 150 locally mass producing it ourselves at about 110 locally and then down to about $25.

(24:24):
It's China.
So, yeah.
But I mean, dealing with China is a challenge in itself.
I remember one time we asked them for a 40 foot container of goods and it just arrived.
It was just like totally random, just not a single thing we asked for.
I mean, they're all still air conditioning components that we could use eventually.
We'd like 14 years supply of this one good and wow.

(24:44):
Yeah, it was just it was.
I love that you had the gumption to delve into developing your own essentially intellectual assets.
So, you know, there was a cost driver that was at the start there, no doubt,
but also looking to achieve better results on behalf of your customers.
And so investing in the design, the manufacturing, then building your own plant in China.

(25:08):
That's a really in those days because we're probably still about what 2011, 2012 or roundabout now.
Yeah, 2012, 2013.
2013.
It's quite early in the journey.
It's now a much more well trodden path, not necessarily any easier.
But there's some luminaries that have gone and made some big kind of strikes in that space.
You know, the zero, the toy manufacturing.

(25:31):
Zuru, Zuru, Zuru people.
So, and a bunch of others as well that have kind of gone and trodden that path.
But what was it that led you to go this is the right thing for us to do for the business?
How did you land on that decision making?
I've always been really interested in importing and always kept a close eye on sort of the generic importation sites.

(25:54):
You know, the made in China's and the Alibaba's and stuff like that.
So I always when you start doing things in scale, it's really, really good to understand what the absolute base cost of the widget is.
Whether it be, you know, even something like a screw.
You know, if you can buy it 50 times the volume and get a 90 percent discount and you know you're going to use it over 12 months

(26:18):
and you've got adequate cash flow and cash reserves, there's absolutely no point in paying the higher price.
When the only cost you've got is sort of storage and use of capital.
So importing for us when our growth trajectory was looking so good just seemed to make a lot of sense.
I mean, the important thing is, yeah, the important thing is having the capital to do it because it's so nice going down to ideal electrical

(26:46):
and getting 30 or 60 day trade terms.
Whereas if you start importing, you've got negative 60 to 100 day trade terms, which, you know, that is,
I guess you've got to make sure the products that you're picking do have that sort of, you know, 50 to 80 percent cost benefit margin.
Otherwise, don't bother because there's also a huge amount of risk dealing with overseas.

(27:10):
But what you were saying about China, it certainly was a least trodden path.
I mean, the first sort of 10 trips I did over there, even the train stations, they didn't have the, you know,
the English name of where you were going or on some of the bullet trains, you couldn't convert to English up until sort of 2015, 2016.

(27:32):
So it was, yeah, it was a pretty bold endeavor at that time because our factory was in the middle of China in Hunan province.
Yeah, I mean, we just had a connection over there.
And that's sort of why we put it there. But, you know, when you're hours and hours and hours away from the closest airport,

(27:54):
you can actually get out of China. It does add layers of complexity for sure.
Yeah. Yeah. So 2013, 2014, you were manufacturing in China.
The business was doing five, six million bucks of revenue.
I'm guessing that it was quite a margin, a healthy margin business.
So you're able to then therefore fund that bit of the operations as well.
Yeah, totally. I mean, we were always operating.

(28:14):
I mean, first two years were better, but minimum sort of 10%, sort of minimum 12% EBIT for the first four years.
Not remarkable.
And also our primary supplier, Panasonic, who are an amazing company, by the way, gave us very good trade terms.
And so if we're buying a couple of hundred thousand bucks of air conditioning, we always had just a huge amount of capital.

(28:36):
Well, not always, but often had a huge amount of capital just because we were selling these units and recycling their capital so quickly.
Yes. Yeah. And so at what point did you start to ponder maybe it might be time to consider selling this thing?
Well, honestly, not till the very end.
I mean, so we went from sort of six to nine to 12 million.

(29:01):
And at sort of the 10 to 12 million revenue mark, a lot of things started to change.
We sort of went over the sort of 60 staff mark.
My role changed quite a bit because we had such a large installation force.
I couldn't have enough touch points on people.

(29:23):
And I wasn't really using sort of a lead from the front style management approach anymore.
So started to have installation issues, basically.
It started to get bigger than what we I could sort of cope with.
Also made a couple of sort of amateur errors where, you know, you've made a large amount of money and, you know,

(29:49):
buying the Mercedes and that kind of thing. And then all of a sudden you're rolling up to work in a Mercedes and it's creating this disconnect between
your very, very loyal staff and yourself. And you sort of start to it starts to sort of drive a wedge.
And all of a sudden they're like, oh, we're not seeing you as much. It's like, yes, because we're running 100 sites a week instead of 30 sites a week.

(30:10):
And I just. You're just you're just less there.
So we sort of had no no desire to sell until we did quite quickly, because.
Yeah, we with reflection, we were just young and. Didn't weren't able to step back and think,

(30:34):
how could we just take a breather? You know, maybe get a board or have some other high level input where people can say, look,
step back for a little bit so you can really take a breath and review what you've got
and be strategic about the next couple of moves.

(30:56):
Yeah, so we sort of decided.
That we wanted to sell it sort of in the year five and then listed it with a broker.
And then I mean, the initial getting into the D.D. phase just happened quite suddenly.
But the D.D. took one year basically from initial engagement, first heads of agreement to the deal being done.

(31:22):
And it was sort of a big regret of mine. You know, there weren't podcasts like this.
Like the information on the Internet was not freely available.
I mean, this sort of not much has changed, by the way, it's still a bit of a wide open space of misinformation
and lacking of real insight into how to go about the journey.
Yeah, yeah. I mean, we made so many amateur mistakes.

(31:45):
Just for example, if you have a million dollar vehicle fleet and you're talking about an EBIT multiplier,
you're getting paid zero dollars for that million dollars of vehicles.
And unless you negotiate well, or you've got a sort of stock plus business,
you're essentially not getting paid for your stock either.
So how much stock you start to carry becomes incredibly important.

(32:10):
I mean, the greatest. The thing that was the saddest about was we had the retail business,
which was called EES, and then we had the wholesale business, which was called HVAC Hero.
HVAC being heating, ventilation and air conditioning.
Cool logo like a Superman holding a bit of air conditioning.
But we had only just started separating the businesses in terms of books.

(32:36):
We were all running it as EES and just like a sub account as opposed to sort of two totally separate businesses.
And when we started the DD process, they were all sort of wrapped up into one in HVAC Hero
in the first month that did 40k of revenue, which was still pretty respectable.

(32:57):
But just a great business, just moving boxes and a lot of stuff that we had created or we had sort of the only access to from overseas.
But by the time we sold the business, HVAC Hero was doing 400k revenue.
So the 10x revenue in 12 months.
And so they got that for free as a parting gift, basically, where I perceived that business was actually more valuable than EES.

(33:21):
Yeah. So looking back, would you have segregated those businesses like clearly at the outset and then put up for sale EES?
And then the HVAC Hero would have been a very separate entity.
Absolutely. And maybe maintain the ownership of that and then kind of push the trajectory of that business out, for example.
Yeah, for sure. And my two managers of HVAC Hero went on to start their own independently successful businesses,

(33:45):
which were quite similar, one in the HVAC space, one in the electrical distribution space.
So I had the right people there as well to pump it.
So having to fold that up and then having a very strenuous non-compete was a pretty colossal era.
Because I think we still would have got 80% of the sales value for EES, maybe 80 to 90% without HVAC Hero.

(34:09):
Oh, wow.
Because they bought it because they wanted a sales force.
Right. So heads of agreements, 12 months of DD.
What did you learn during that process about the due diligence, the evaluation process that you now look back upon going,
if we had only done such and such, it would have made that process much smoother and quicker.

(34:31):
That's 12 months is relatively standard for a business of some scale to go through.
But it can be done as quickly as three months if you've got a really effective data room in place
and you've got thorough record keeping and you're able to respond to queries within 24 hours kind of thing.
So what were the key lessons for you going through that journey?
That's the first part of the question.
And then the second part is how different was the heads of agreement from the ultimate deal that you actually signed and then received the payout for?

(34:58):
Yeah, I mean, firstly, I would go back one step and think, OK,
what do I need to do to get my business ready for sale?
And so you want to firstly make sure your books are super crisp and clean and easy to assimilate because they're going to be dissected beyond comprehension.

(35:18):
So make sure that everything sort of forensically categorized or your depreciation and all that kind of stuff is all up to date.
And then make sure all of your assets that you need 100% of the assets on your books and that they're all
valuably contributing to the outcome of the business, especially in trade businesses, because I just know we had,

(35:42):
you know, we probably had 250k of stock we didn't need.
We probably had 200k of vehicles that we could have juggled around and probably another half of the vehicles we could have gone to a lease model.
We did have some specialized vehicles that we did need to own because they're just so heavily modified in the end.
But, you know, if we had taken that approach, we could have pulled out sort of seven or eight hundred thousand dollars before

(36:11):
before we even engaged the broker or get serious about selling.
How far? Well, for a start, we were dealing with a VC firm.
So their ability to understand the process was just so far above ours.
It's just they're just I mean sophisticated operators and we were not sophisticated operators.

(36:39):
We we sort of agreed with the multiplier pretty quickly up front.
Can I ask what that was? Yes, four point two five was the multiplier.
I mean, actually for us, how far away it was from A to B wasn't particularly.
Vast, maybe sort of 15 to 20 percent from this year less.

(37:06):
But that was a lot taking into consideration how fast the business was still growing.
Yeah. So the fact that it was chipped away at and the business was actually improving
was where it was poorly negotiated, I suppose.
Just lack of understanding about the whole process.
And I mean, credit to James, he's very, very he's got a good legal mind.

(37:34):
So he was able to, you know, do quite a bit of the heavy lifting.
But they just drown you in paperwork was a hundred page, a hundred page sales document.
And especially with like a business ongoing, there's just so many mechanisms for them to claw you back.
And I mean, they're just written so in such a complex manner, you just got to be so careful how they read.

(38:00):
Yeah. Just about contingent liability and warranties and mechanisms for this.
Yeah. And I mean, they were pretty good at just sort of, you know, death by death by paperwork for us.
Yeah, right. By a thousand cuts of paperwork.
Yeah. So.
Do you think sort of an entrepreneur thought, do you think at the outset of the business,

(38:25):
lean was really the name of the game and perhaps was so for one or two years.
And what I've often observed in businesses over time is that once they start to succeed,
they can become a little bloated in terms of how they go about doing things.
And so you've talked about a million bucks worth of vehicles that were there and carrying a lot of stock that you didn't need to carry.
Do you think that if you could have been beneficial for you to maintain kind of lean principles inside the business throughout?

(38:49):
And that would have had a markedly different result at the back end.
Yeah, for sure. And just putting unnecessary when you're getting serious about selling,
realizing that if you can save one hundred thousand dollars just in that year prior,
because typically if you experience linear growth, they're only taking the last 12 months revenue expression unless it's unfavorable for any reason.

(39:12):
So if you're saving or making an extra hundred thousand, you're getting another four or five five hundred K in the bank.
So for sure, I mean, we had sort of towards the end of year three, we had some management changes and we had a very,

(39:33):
very slow summer where our cash flow just dried up and we were sort of negative three hundred or some scary number.
And we were like, wow, what what's happening?
Our heads, it sort of happened so fast that our heads were spinning.
And from about then onwards, we realized the key number in the entire business is labor as a percentage of revenue on the installation side.

(39:56):
So our sales guys were fixed sort of for four to six percent commission, depending on hitting their overs and how juicy the sales were and stuff.
So the sales side was sort of always super slick and as at a fixed percentage, we always had our office was always pretty good.
We basically had an office revenue target against the revenue.

(40:17):
And we had a very good CRM system that James largely built that did keep the workflows pretty tight.
But in the first two years, our labor as a percentage of revenue was about 13 percent, which I mean, it's because myself and one other guy,
we weren't paying ourselves very well. We're just doing an unbelievable amount of work.

(40:38):
You know, no one can do 13 percent.
And then we got up to sort of 19 percent, then up to about 25 percent, which is dropping to about 8 percent EBIT or below.
So, yeah, just the journey of realizing what the key number is in the business for us and really just drilling it and finding a way to have it represent super clearly each month or each week or each day.

(41:03):
So, you know, before you're getting off track and that was sort of, yeah, it was quite a scary moment at the end of year three.
But at least what came from it was, you know, finding out what the mechanics of the business were that were absolutely imperative.
Yeah. Yeah. In terms of the deal, just going back to that, you had the team of VCs and their analysts and their advisors that were kind of working on their side.

(41:26):
You had a broker that was on your side.
Who else did you have that kind of assisted you through that journey that was giving you some some sage wisdom and some insight and some some ways of kind of navigating that journey better?
We had a very good lawyer. I mean, yeah, a very, very good lawyer who was extremely helpful and was giving us sort of advice outside the outside the, you know,

(41:55):
what his expertise or what we're paying him for technically was basically a sound contract.
We got a little bit of advice from James's dad. I was sort of chatting to as many people as I could about it,
but no one that I was chatting to had been through a business sale.
So we were pretty lacking in good advice.

(42:18):
We were just sort of felt we knew approximately what it was worth. And, you know, they keep trying to chip it away at it.
And we just got to the point where it's just like, if you go below this, we're just going to walk away because we're tired of being angle shot.
And they sort of realized that. And with retrospect, we didn't realize how important the deal was for them.

(42:43):
Long story short, they rolled us up, HRV and a couple of other businesses and sold out to Vector for 10x 12 months later.
So we didn't realize that this was sort of the last piece of their master plan.
So would they have paid more? Probably. But I don't know how we would have got there.
It's really interesting. So you move from being a what I call an economic exit,

(43:07):
which is about analyzing the nuts and bolts of the business and drilling down into net margin customer contribution,
those sorts of things, which is the economic exit, which tends to be quite time consuming and not necessarily in the upper quartile of the EBIT multiple.
You could have potentially jumped into the strategic corner because the purchase for them represented a real opportunity to cobble together a deal,

(43:30):
which would have markedly increased the value of all of the assets that sat in there.
What would have been the question or the questions that you could have asked them that gave you that insight?
I would. It's a really good question.
And I don't know how we would have done it because they were sort of running laps around us.
And I don't know if I don't know that they would have known why they were trying to keep the conversation in that realm and the sort of nuts and bolts four times,

(44:00):
three to five times EBIT multiplier realm as opposed to the sort of higher level strategic realm.
I'd have to think about that because it's definitely a question worth asking.
But yeah, I mean, they were quite guarded and quite good at keeping us on track for the conversations that they wanted to have.

(44:24):
Yeah. Had they announced any of the other acquisitions during that 12 month period?
Had they announced the HRV purchase, for example, or was everything kept quite quiet until everything was launched?
No, they had announced the HRV. They had already fully acquired HRV.
But I mean, just for a total lack of understanding on my behalf,

(44:47):
I mean, I just didn't understand that concept at that point in time of building and rolling up businesses to have sort of a significant amount of market penetration
and then some other company can buy it for a strategic reason as opposed to just wanting the money that it's generating.
Yeah. I mean, now that's absolutely something that I mean, I don't think I'd have to ask the question now.

(45:11):
Straight away, I'm thinking, OK, this person wants to do this deal. Why are they doing this deal with me?
What are their motivations? And like if I knew that that's what they were doing, I would find a way to have a conversation about it.
But actually having a total lack of understanding about the whole structure.
Yeah, I just didn't know what I didn't know. Honestly.

(45:34):
Yeah, I mean, you're in your late 20s still at this stage, right?
Yeah, yeah, 27. Yeah, yeah. OK.
So unsurprising given that you didn't perhaps have a couple of other folk in that team on your side that could have been quite helpful,
like a deal advisor, for example, could have been really helpful to give perspective on things.
100%. I mean, even if I was just in my ecology that I'm in now with sort of yourself as a friend,

(45:58):
Will Palmer and all of these other people who have done these exits, it would have been a very, very different experience.
And I mean, an experience I hope to have again in the future with the superior knowledge and hopefully and as good a business at least, if not better.
Yeah, absolutely. So you've talked through a couple of lessons there.
Is there anything else just in terms of that process of going through the sale experience itself that would be quite helpful for others to kind of know that

(46:26):
if you could repeat that process again, what would you do differently kind of thing?
Oh, just. Just keeping a level head because it is such an emotional journey because the difference in outcomes is basically you've still got the business
or you've got a huge pile of cash and the outcomes are so tangible and different
and just being able to because it is a real roller coaster.

(46:50):
You know, when you think the deals on, you think the deals off, you're also they are causing quite a bit of business disruption.
They are trying to have key conversations with staff. They're doing all kinds of things internally.
So you've got to make sure your business is pretty robust.
Otherwise, you're going to start to have internal issues in the business, which are naturally stressful.

(47:11):
And then you've also on the other side, you're trying to negotiate and get the two to marry up.
So. Yeah, that was very, very difficult.
Was a question again, what would you do differently looking back now on that deal process?
I would desperately try and get some as much external counsel as I possibly could.

(47:33):
I just it doesn't even have to be in the same industry and also speaking to people just around mindset and fortitude.
And, you know, really taking good care of yourself, because it's a really, really difficult time.
And I would say that's something I didn't do. So, yeah, those would be the biggest two elements would be having people

(48:00):
that you can have intelligent conversations with and then having people as well who might not be in the business world,
just who can sort of bring you back to yourself so you can step back and sort of think about the whole thing without,
you know, having a lot of emotion attached to it. Yeah, as I said, it's such an emotional process.
Yeah, part of wisdom, I think, is having perspective on things and perspective tends to be born out of having experience

(48:23):
and reflecting on that experience properly.
So, yeah, it's such a fraught journey. And what people don't know before they go into the DD or even the negotiation phase
is that it's incredibly distracting from the business itself.
And so advice that I was given with my first business when someone started to express some interest in buying it was that

(48:45):
keep your strategic plan on your desk at all times and make sure you continue to execute upon that.
Because more often than not, this expression of interest won't result in a meaningful offer or one that you're probably going to be happy with.
Even if it does, then you're going to go into DD and you've got to make sure that you keep on growing the business
and achieving the things that you set out to achieve. Because the worst case scenario is that you pursue the opportunity

(49:10):
in the offer and get into the DD and then your business suffers and then they decide to pull out or they defer and they defer and they defer.
And I've heard of people doing this where they push it out by 12 months, 18, 24 months.
The value of the business has decreased and then they roll in and then expect to pick it up for pennies on the dollar,
which does happen because people get distracted and fatigued and worn out by the deal.

(49:30):
So for sure. And I mean, I'm glad that wasn't the purchaser's strategy and that they did have a timeline,
because I could see how, you know, they're big conversations to have with staff and like because you're essentially leaving them.
So this can, you know, we sort of started it in a way together and built it.

(49:53):
And there is that sort of potential abandonment, abandonment, resentment element.
And then then say that the purchasers walk away and you're like, we're back, guys, let's get into the trenches together.
That's sort of a tough one to navigate, especially with a staff heavy business,

(50:14):
when you've got 60 or 70 people that you're speaking to regularly and keeping them enrolled in the vision of the company
where you're no longer going to be part of your own vision, which, yeah, it's an interesting one to try and spin.
Yeah. The other aspect of that is that for a lot of us, our first business or our first meaningful business,
we can't help but tie our identity up. Oh, yeah.

(50:38):
So tell me about your journey in relation to that concept.
I mean, for sure, most of my identity was engaged in the business.
I mean, we were basically a cult.
And I mean, we were able to build such strong culture because everybody when we were hanging out,

(50:59):
what we talked about was business. We had a bar upstairs and a pool table and a gym and everything.
So people could just spend so much time in the business and on the business.
Like Google before Google.
Yeah, yeah. I mean, I'd like to, yeah, sure.
And yeah, I mean, huge amount, huge part of my identity.
And yeah, there was, you know, especially starting the business in the house where you're sleeping,

(51:23):
you know, 10 feet away from 100 air conditioning units and you've got seven or eight people using your home as an office.
There was just, yeah, there was no separation.
Yeah, yeah. Eat, sleep, install, repeat.
Totally. Yeah, yeah.
So just running out that identity piece.
So you sold the business.
You achieved a phenomenal outcome from a financial perspective.

(51:46):
One that you're really, really wrapped with at the time, especially 27, 28 years old.
Structure of the deal out of interest. Was it 100% cash?
Was it earn out over a period of time? How did that work?
I mean, no, it was because and we should have seen this as a sign that they weren't trying to run and grow it.
It was here's 100% of the money. Give us your key. Walk away.

(52:09):
Wow. So zero day personal retention, no financial retentions, nothing.
It was just all of the money. The next day. Don't come in.
Yeah. Won't see you Monday.
Which I mean, from their point of view is not smart.
Yeah, yeah. Continuity.
Oh, just 90 days to transition systems and stuff.

(52:30):
And I mean, I still have a lot of friends who are working in the business and they're like really struggled for 90 days
because they were moving, changing admin systems and software and they didn't know.
It was just heaps of IP that we still had that we would have given them.
We wanted to see the business succeed. So, yeah, I mean, in terms of an exit, incredible.
I mean, literally for the six years of owning the business,

(52:52):
we didn't have time to spend much money because we were working so much.
Yes, just one Mercedes. Yeah. Yeah.
Well, I actually did a part contra for that with air conditioning.
And yeah, from an importer. So, yeah, it was a bit of a sweetheart deal.
But yeah, we were just firing all of our money into property.
Not living other than the Mercedes, not living a sort of particularly lavish lifestyle.

(53:18):
And then we owned the factory that the previous factory we were in there
and then just one day all cashed up and sitting there.
What did you think that means? So your identity was tied up in the business.
You had a Google S campus where you kind of hung out.
Your friends were a part of that place. You'd done super well financially.

(53:39):
You'd been very smart with your money.
So you'd gone out and invested in some appreciating assets.
And then you got a big wodge of cash. And then one day you wake up
and you don't have this thing to go to anymore. So was that liberating?
Was it jarring? Was it confounding? Was it?
Oh, extremely liberating. I mean, near the end of the business,
it was getting hard to run. It was turbulent.

(54:00):
And it was sort of just a slight bit of a gargantuan, sort of slightly uncontrollable beast.
So yeah, I mean, it was just liberating. And I mean, it just felt like a good time to take a break.
So I just sort of booked a one-way trip to Europe.
And then James moved to Bali for a couple of years and just sort of signed out for a couple of years.

(54:21):
Really. But no, it's certainly liberating.
I mean, with the fullness of time, it's been quite interesting.
Even when you asked me last week, do you want to come on this podcast,
just going down memory lane in the last week and chatting to a few people,
what their external experiences were of the business and then just doing a little bit of note taking and journaling.

(54:43):
And I mean, for me, I'm not going to sit here and dwell on things that I, you know,
recognise things that I did poorly and realise that that was me then and I want to be better in the future.
But thinking strategically and more high level,
what were the inputs that I could have done differently to tangibly improve the outcome?
So, yeah, I mean, based on where I was at and the amount of money on the table,

(55:08):
it was pretty easy to walk away.
Yeah, right. OK, cool. Yeah, no, I wasn't sort of at that point.
And also just the DD project process was so arduous.
Just the, you know, that really ground me down a lot as well because, yeah,
it's just a stressful process. It was for me at where I was at.

(55:30):
So the ability for that to sort of be over was fantastic.
Yeah, yeah. I think for most, it's a pretty strenuous process unless they've put in place some prep for a year or so beforehand
and achieved really thorough data readiness, particularly.
And then the ability for people to assess the asset and do the analytics and all that sort of stuff pretty quickly and easily.

(55:51):
Yeah. So we met at a pub about six or seven years ago.
Yeah, we did. We bonded quite quickly over growth related subjects.
I think I was talking about Tim Ferriss or someone on a podcast. Yeah, yeah.
And you chipped up in the corner and said, have you heard about Aubrey Marcus?
And so we immediately delved into a growth conversation. So growth is something that's clearly really important to us.

(56:12):
And we've continued to bond and talk about that thing over the course of the years that we've known each other.
I suspect that's one of your success factors.
I'm curious about what others may have been for you.
So the things that you believe that led you to the stage of being able to build a multimillion dollar business
and achieve a multimillion dollar exit as a relatively young person.
So what are those success factors for you, Tom?

(56:34):
For sure, hard work.
I mean, I think for me, as you get older, it becomes harder to work as hard because you might have kids.
You know, you've got all kinds of surplus demands on you.
But sort of when you're 22, 23, you're blank slate.
You're not beholden 20 of your assets.

(56:56):
You are basically just a free slate for hard work.
And as long as you have a partner who's sympathetic to you exerting yourself at that level,
you can make some pretty average decisions and just work so hard.
You can turn the milk into cream.
So I'd say, especially if you're trying to grow quickly, being able to just push into something and then off,

(57:22):
you need to you can work so hard. You can run right back to the start and then outpace somebody to the finish line on the next track.
So, yeah, hard work.
As long as you're not literally working against yourself, you can get yourself.
I could get myself out of some sticky situations.
I could also try so many different things quite quickly.

(57:42):
See where it's stuck and pursue that route.
Yeah, I mean, certainly hard work.
Number one, I think having a good business partner who complements your skill sets or my skill sets.
Sort of I was more trade and rapport based and more on the creative side.

(58:07):
So running the Google AdWords campaigns and where James was more on the sales and operational accounting side.
So making sure that all your bases are covered and if they're not covered hiring out what you don't have.
So I'd say probably those probably the two strongest drivers for me for success.

(58:32):
And also in the case of yes, timing.
Green Sea Market and.
Yeah, just identifying the opportunities through timing, because, you know,
if we tried to do the had the same business and the same veracity today,
we'd still be very successful, but at no any of the magnitude.
Yeah, right. Yes, because the cost to acquire the business will be much higher.

(58:57):
Yeah, there we go. Yeah, as an investor, I historically believe that the founding team
with the number one most important criteria and then the second was the idea and ability to execute upon the idea.
And then the third was timing. Over the years, I've really clearly moved for me into the space
of being timing as the number one most important factor.
And then it comes down to team and the ability to execute upon the idea.

(59:20):
So that really does resonate with me as well.
And that's a bit of perspective and a little bit of luck and also being able to something that you touched on at the start
and then through the middle there as well was the willingness to trial things.
So to give things a bit of a go and experiment and see what worked inside your business and for the industry as well.
Hard work, you know, being prepared to outwork the person that's next to you or the person that's down the road as a competitor.

(59:45):
So, so important and then perhaps some working in a space that you continue to evolve and adapt inside that space.
So your ability to take problems that you had inside the business and then solve them creatively,
but then go and start a factory in China.
I mean, that's a really, really innovative thing to do, especially at that time.
So, you know, you really solve problems in ways that other people perhaps weren't solving those problems.

(01:00:08):
So, you know, well done to you as a young person that was kind of just finding their way around in the world.
And I didn't know a lot of this back story as well. So the last thing I will say, Josh, is something that, yeah,
I didn't really touch on so much, but was team.
I mean, without sort of our key foundational members, which were all of our friends who were just diligent and hardworking and just totally bought into the vision.

(01:00:34):
We could never ever scaled if we were just relying on the open market for those first six or seven foundational employees.
We just would have just. Yeah, yeah, would have been severely compromised.
Yeah, right. Yeah, yeah. You mentioned having a business partner.
I've done both sole founding and also had business partners.

(01:00:55):
They both have the benefits and their drawbacks.
So for you, working with the same person for five, six years, what were the keys for you to make sure that relationship ran as well as it possibly could over that time frame?
Yeah, I think one thing is still maintaining a personal friendship as well as a business friendship.
I think it's quite important because when things get tumultuous in the business relationship, you can fall back on your personal friendship.

(01:01:22):
I mean, this is a questions that I sort of had for you, which I'm still working through it in my mind.
You know, say, for example, you and I go into business together.
I'm working 10 hours a day. You're working six hours a day.
But your contributions are more unique or something like that.
We is equilibrium. What is fear?

(01:01:46):
Is it based on number of hours? Is it based on inputs?
Is it based on expectations? What? Yeah, I mean, I've sort of got a little answer in my head, but it's something I've been pondering a lot recently.
Yeah, I think it's highly contextual.
But the method that I've heard that I quite like the best.
So you can either go we're equal and we're going to pay ourselves the same amount of money and we expect to put in the same amount of time to achieve the results of the business.

(01:02:13):
Rarely does that play out to be the case in reality.
And so the method that I actually really like is you establish what your worth is in the market.
And so let's say that you're the CEO and chief revenue officer, for example.
And so that role might be about $250,000 in that specific market.
And then you've got someone who's the head of trades and head of services.

(01:02:35):
So that sounds like it was kind of a not dissimilar breakdown to what you and James had inside inside your business.
And so that role might be worth 200k in the market.
You can't pay yourself those numbers at the outset of the business.
And so, you know, because there's two different aspects, right?
There's the remuneration that you receive as a salary and then there's the dividends that you receive.
And then hopefully down the path you receive the outcome from selling the business as well.

(01:02:59):
And so you value what your time is worth as a salary.
And then whatever you draw the delta between those two goes into your shareholders current account.
All right, so and then you establish rules and guidelines at the outset in terms of what you should be able to draw down on that that salary basis.
And so the remainder just kind of adds up in your shareholders current account.

(01:03:22):
And then at the time of wash up, which is when there's a great profit event or when you have an exit of the business,
then you clear out those shareholders current accounts first.
And so yours might have ended up being a million dollars and your partners might have ended up being half a million dollars.
And that comes off the sale price at the outset.
Right, so you see you determine an annualized rate and you break that down into an hourly rate basically.

(01:03:42):
And then you multiply out how many hours you do against that rate.
Yeah, you could add that layer over the top as well.
So yeah, that could be a way of dealing with the time input because different people have different capacity for time.
So I don't know.
It could be quite complex to run the mechanics of that continuously.

(01:04:03):
You might be talking about it more regularly than you want to be talking about.
Yeah, for sure. So personally, I'd probably gravitate towards the your CRO CEO.
We've agreed upon the strategy at the start of the year.
We've agreed upon what the key metrics and measures are that you're going to achieve.
Yeah, so you do what you need to do to achieve those things.

(01:04:23):
And so you're being paid $250,000 a year for that job because that's the market rate.
We're paying you $100,000. So $150,000 will go into the shareholders current account.
And then you might end up with a bonus based upon overachievement.
Or you may end up with not being paid all of that $150,000 into the shareholders current account if you underachieve, for example.
So that then becomes the performance component.

(01:04:45):
I'm really wary of the time as being a critical measure in terms of input because
if you're in the world of software developers, for example, then you've got this notion of a 10x developer
and a 10x developer is able to produce 10 times the volume of quality work that a average person is.
So it's not two or three times. It's 10 times. Right.

(01:05:06):
And that's a paradigm that is very much software centric.
But there are other industries that are the same.
If you've got a trading business, for example, and you're trading equities,
your best trader isn't doing twice what your average trader has.
They're doing five to 10 times.
And so therefore they should probably be rewarded commensurately for that

(01:05:27):
because there's the opportunity cost that you've got in business.
So if you're choosing to start a business, wonderful. But what are you sacrificing by starting that business?
And I don't believe it can just be contingent upon the exit event that may happen at some point in the future.
Yeah, it should be measured and marked in some way along the journey.
So therefore, you know, countering that someone's going to be worth $100,000, someone's going to be worth $200,000.

(01:05:50):
That should be factored in because that's a fair way to do things, not just a complete split of things along the way too.
Yeah, for sure. That's my view.
Yeah. If there were two or three things to you that were paramount in business,
like philosophies in business, what would those things be?
Paramount for me? Firstly is the idea of a win-win outcome.

(01:06:19):
I'm not willing to win if somebody else loses.
And that's certainly in some point to point transactions cost me.
But I think on the balance that will come to serve me even from a karmic level.

(01:06:39):
So certainly win-win transactions.
In terms of I think this is something I'm looking at, you know, working with new people and things like that.
Just taking my time to really have a deep review of say a new opportunity,

(01:07:02):
how it really ranks in my hierarchy of values and how they align with my values.
So and it's something we actually talked about a couple of years ago when I was engaged in a business that wasn't sort of a true passion of mine.
Just and you know, sometimes you get to, you know, be told something.
Sometimes you have to go through it to really. Unfortunately, unfortunately, mate.

(01:07:25):
But yeah, so just standing back and taking a principle valued approach and really, you know,
once you get into a business, it's quite hard to get out in any way.
So being able to apply that to a grand plan.
So I'm not sure how you'd what principle that would be.
I mean, it'd be the principle of clear thought with your hierarchy of values and any engagement potential engagement.

(01:07:56):
What else? For a deep question.
Yeah, I'm not sure where else I would go in terms of like deeply ingrained principles for me for business.
But I love the win-win one.
That's so important. Yeah, especially in this market in New Zealand,
just having a very long term perspective on things ensures that you can continue to work with people that you build your network.

(01:08:19):
You know, Warren Buffett says that one of the only true things that you can take of value through your life
is the people that you know, trust and maybe even love that you can continue to do business with in a positive way.
And so that's definitely embedded in the win-win thing.
And clear thinking. So, so important.
You know, it's so easy to make instinctive or impulsive or ill thought out decisions or ones driven by the ego.

(01:08:42):
And then realise down the path that you're in a situation with a liquid asset.
A business is a highly illiquid asset that is quite challenging to move on.
Unless you do the succession form of exit, which is the quick one to sell to business partners or to a family,
family members along the way or staff, of course, as well, a management buyout.
It becomes an illiquid asset.
So, you know, some great lessons that you do get from business and a deeply growth oriented journey at its very core.

(01:09:10):
It will forge you. I consider the notion of forging, which is the putting the steel into the fire and then into the cold water
and then hammering it. Yeah.
I missed that order out. Fire, hammer and then water.
You know, that's a brutal, it's temporary actually.
It's a brutal process, but that's kind of like the founders journey along the way as well.
Totally. I'm really curious, Tom, now you've been a founder, an entrepreneur, you've gone through an exit process.

(01:09:37):
How do you and you were developers as a property developer as well.
Your husband, your brother, you're a whole bunch of different things, a bunch of different roles that you play.
But how do you identify now?
Ah, husband, a friend.
How do I identify?

(01:10:00):
I mean, I guess I'm doing quite a few things, but how do I identify?
I think for now, maybe a developer in the commercial sphere.
Like I do have a business building transportable homes, but that is a mechanism to put some IP into the development process for me.

(01:10:21):
So commercially identify as a developer.
Yeah, cool. Last question.
So I'll ask the question and I'll tell you what mine is so you can reflect upon it because I haven't prepped you for this question.
Sure. But the alternative career, so the career that you didn't have that would have been perhaps fulfilling,
maybe exciting and potentially fruitful as well.

(01:10:46):
So while you're pondering that, I've always mused that Jeremy Clarkson has the single best job in the entire world.
So that's essentially a motoring journalist who does some writing as well.
So travel around the world, get to see exotic locations,
drive fast cars, be on camera and be sarcastic and then do some writing on the side as well.
So that to me would have been the dream vocation of being a motoring writer of some note,

(01:11:08):
would have been the alternative career path for me that I didn't have.
So what would yours have been?
I mean, in sort of simulation theory, probably maybe a public speaker.
Okay, like a motivational speaker, motivational speaker.
Hey, there's still time.

(01:11:30):
Or maybe, yeah, that weaved in with some kind of sort of healing process in the health and wellbeing space.
Yes. If I was I'm talking about something that's not just a few degrees away from what I was already doing or what I'm doing now.

(01:11:51):
Yeah, I'd probably say speaking or something in the wellness space around speaking and healing.
Yeah, yeah, I love it.
It's a good question.
No, it totally is.
Yeah, especially when it's some cold as well as all the questions today.
So Tom, it's been a really insightful conversation.
Not just from a personal level.

(01:12:12):
I've gotten to know your backstory and you as a person a lot better, which I've really enjoyed.
But also there's some great business lessons that you've shared too.
And so throw some notes and thoughts into the comments.
Feel free to look me up.
Tom keeps a low profile, so he's not an easy person to find.
But watch the space.
There's no other interesting and exciting things that Tom's going to be doing in business in future.

(01:12:35):
So thank you, Tom.
Cheers. Appreciate it.