Summary

In this conversation, Gary A. Puddles shares his entrepreneurial journey, detailing his experiences in acquiring and managing businesses, particularly in the telecommunications sector. He discusses the importance of recurring revenue, understanding business metrics, and the role of mentorship in his success. Gary emphasizes the significance of financial literacy and strategic planning in navigating the complexities of business acquisitions and growth. In this conversation, Jon Stoddard shares his entrepreneurial journey, detailing the transformative growth of his business through strategic acquisitions, navigating challenges, and innovative responses during the pandemic. He emphasizes the importance of technology in modern business operations and reflects on the lessons learned from partnerships, showcasing a resilient and adaptive approach to entrepreneurship.

Takeaways

Gary started his entrepreneurial journey with no money and a family to support.
He believes in working for oneself rather than for others.
Recurring revenue is a crucial theme in business success.
Understanding key business metrics is essential for entrepreneurs.
Gary's diverse experiences contributed to his success in the call center industry.
Mentorship played a significant role in Gary's career development.
He emphasizes the importance of financial literacy in business.
Many businesses are available for acquisition, especially for those seeking new opportunities.
Gary's approach to financing involved leveraging personal assets.
The story behind numbers is vital for understanding business health. We went from a $4 million run rate to about a $26 million.
I mortgage my house three or four times to grow the business.
We did seven or eight acquisitions in the first 18 months.
Losing my biggest customer was a significant challenge.
We saved seven companies during the pandemic.
We grew 30% in 2020 despite the pandemic.
I closed an acquisition in just three weeks.
I try to give back to the community and my peers.
Partnership agreements need to be specific and well thought out.
I am grateful for my entrepreneurial journey and the people I've met.

Transcript

Jon Stoddard (00:00.46)
Welcome to the top &A entrepreneurs. have a guest today is Gary A. Puddles. Gary has been involved in over 75 acquisitions. He runs a company called Answer Net. Jesus. Present and hosted is Flentastic, tpv.com, telemarketing.com, appointmentsettingpros.com. Winner of Smart CEO Best Run Companies.

Ernst & Young, Entrepreneur of the Year, Answernet was also on the 21st spot on the Inc 500. So he also teaches at Wharton School of Business. He's been at Forbes, Wall Street Journal. It's pretty cool. So welcome, Gary. It's great to be here, John. Thanks for the invite. Yeah, so I got to go back all the way back how you started. And I watched a couple of your other podcast interviews where you just started. I got to tell you where you said,

you were trying to buy these telecommunications company. I had no money, no job. I had a wife, two kids and a mortgage. And like, if I didn't get this job, if I didn't buy this company by this certain time, I had to get a job. So I'd love to go back and talk to that, you know, very first start. And he goes, why did you want to buy a company and run a company? I mean, what was in you that did that? That's a great question, John. The reason I wanted to buy and run a company is because

I had the most fun in my career prior to starting my company when I was running a franchise of the Musac system down in Washington, DC. And I had a boss who was the owner of this franchise. And it was interesting. I started during law school as the collections manager and law clerk. And after I left to get a real job, their local council passed away and I started

representing them and I hadn't even passed the bar yet. So I'm working as a law clerk bringing work into this small little law firm. Then I get a job in private practice and I'm doing private practice and the president of the company passes away and the VP who I become really close with, you know, basically comes to me and I'll tell you, takes me out to lunch at the university club in Washington.

Jon Stoddard (02:19.534)
starts complaining that the men can't swim nude anymore. And I thinking, I just remember thinking, I never want to swim nude with you. Where's this gear? Like, where's this going? Yeah, but he made me an offer. And he basically, slid a piece of paper across the table from me. And, and that was the beginning of my business and entrepreneurial journey. Three months, three, three weeks after I got to this company, he had gotten ill and he

and I found myself running a business pretty much day to day. He was my mentor, he was my friend, but he'd come into the office and hook himself up to dialysis and do dialysis right in the office. I did that and then when we sold the company, so I had done acquisitions with him in that business and I had done acquisitions as a young attorney and

Now I had gotten involved in a pioneer preference winner. So after I left, I wound up with a company that had won a pioneer preference from the FCC. We built the PCS, which was a wireless system, digital wireless system. Then I got involved in a real estate company as the general counsel. Again, acquisitions and acquiring leases and doing transactions was my whole life.

I moved to Philadelphia for a job and I loved what I did, but I just didn't fit in the company. You there were good, smart people. There was just, it just wasn't the right fit for me. So I often say, did I quit or did I get fired on that day? I'll just say I collected unemployment. We'll move on from there, but there I was in January of 98 in a town that I didn't know a lot of people. And I didn't want to go back to work for somebody.

I realized that if I was gonna work for somebody, I wanted to work for myself. So I didn't wanna start from scratch because while I had some savings, I had a wife, two kids and a mortgage as you pointed out. And I realized that I was gonna be happy as driving my own business. And so what I did was I wrote down all the things that Let me ask you about that. What did you see in the businesses that you were working for as a W-2 that you just go,

Jon Stoddard (04:43.894)
I could do this better or I just don't like answering to somebody or what was it? So the culture of the firm that I was at before was we were bringing people on that we could afford, pushing them to the highest level that we could push them and then replacing them with someone better as the firm did better. That was sort of the philosophy. But for me, really wasn't about that. It was about, I've always believed

I love telecommunications and communications. I love data. I love people management. And I like business to business services. I never wanted to be around somebody who was, I ever want to be around people who were at the worst of their life. And I'll never forget, you know, I was looking at everything. So I'm looking at all different kinds of businesses. And at one point I looked at a,

preschool franchise and my ex wife started laughing like she didn't just laugh, giggle, haha. She started belly laughing saying there was no way that I was going to be happy running a business with a bunch of children running around and she was absolutely right. So I needed to find something that had recurring revenue. So one of the themes in my year was recurring revenue. The second theme was technology.

the call center and answering service businesses that I got into, like the Musac business I got into before and the telecommunity and the wireless system, you know, the wireless system company that I was with, that was ultimately bought by Sprint. It was part of Sprint, now part of T-Mobile, right? So what I've been involved in up to that point in my whole career was not disruptive,

changes in traditional businesses. But I was really involved in helping traditional businesses change their model to fit new realities. So going back to Musac, during my Musac days, we had private radio, we only had two channels, we had one channel music, then two. Well, then we had five and now they had, you know, then the internet made it easier and easier. So we had to change the model we were working from.

Jon Stoddard (07:05.687)
didn't change the business, we were still providing sound system, doing sound contracting work, things like that. But we now had to change the model and the economic model changed. Same thing with wireless. I'll never forget being in McLean, Virginia and somebody saying, you know, we have two cell phone carriers and they work fine. And they got on their phone to talk to their spouse and their call dropped.

And it was, couldn't have written or scripted it any better. So, you know, the fact was that ubiquitous coverage was really critical at that time. And, you know, we always likened it to imagine trying to build the highway system in America without the right of condemnation, right? That's what we were faced with in trying to build these wireless networks. And again, we weren't turning the whole world upside down.

but we were changing the face of wireless. I remember sitting at a Howard County, Maryland zoning meeting, no, town council meeting where I had my laptop and I was going at 9,600 baud wirelessly, which is, for guys of our maturity, that's when you would hear your AOL sound, okay? And I sitting.

Yeah. And I was sitting in this meeting and people thought it was the coolest thing. Now I could maybe, maybe pull up one page every 10 minutes, but it was still the coolest thing. And the same thing happened in, in, in, you know, when I went to, when I came here into this business, you know, I bought a company that wasn't even where the agent stations weren't even attached to that, that fad, what was it called? yeah. The internet. yeah. So, so the whole idea was

I often say that I'm like the slumdog millionaire of call centers because my wireless experience, my music and data experience, my legal experience, know, all of those added up so that when I got into the call center business, I understood it in a visceral level. That you could, you're putting like a pieces of puzzle together and you say, I know which way the industry is trending possibly. Exactly. So, so for example,

Jon Stoddard (09:26.945)
they used to be mainframe type computer systems and everybody was attached to this mainframe. Well, as I remember those terminals, right? As, as you know, as we started putting agents on the internet, all of a sudden, like there was a free dealer locator.com. So all of a sudden I had free dealer locator software that I could go to and I could leverage the internet.

And so what we ultimately figured out because by then at that time originally everything was premise based. Now, as we connected these, as we acquired businesses and connected them to the internet, I worked with a guy. In fact, I worked with a, ultimately I worked with a guy who I don't know if you may know his name, Jamie Simonoff, the founder of Ring. So, great.com. Yeah, Shaq invested in him. Yeah, well Shaq actually was

Shaq was actually a sponsor as well. And we connected them with National Night Out here in Ballot-Kinwood, Pennsylvania. And that's how Shaq and Ring got involved with the National Night Out organization. So it's really some really cool stories, but you know, Jamie was the president of a telecom company and had built some routing technology so I could route calls on a single, for a single customer.

to multiple call centers and I used the internet to collect all of the data and it made my little telephone answering services capable of doing so much more work. So we started in the traditional telephone answering service and it wasn't about what I saw that I could do to make it bigger or better. I understood, I like to say I understood Gazinta. What I understood was if this Gazinta that,

And that goes out of this, I can make almost anything. I thought you were saying the Jewish term and I get any like, no, do like, no, goes into that goes into that. This goes into that. And by the way, same thing, you know, we operate today. What we do is we live in a world we call the business of any, any communication path, voice, text, email, chat, you know, WhatsApp, any of those messenger connected to any business process software.

Jon Stoddard (11:51.297)
accounting, CRM, data collection, whatever system, anytime, anywhere on any device. So I've always had sort of a bigger vision. The other thing I learned early in my career as I was thinking about acquiring businesses is that every business can be managed at a high level focusing on six numbers. Six numbers.

Six numbers. Now, and the call center business is probably five, but four to six numbers is all any entrepreneur needs to focus on. Now the devil's in the detail, of course, but what I mean by that is when you're looking at any business to acquire, you want to understand the big drivers of that business. Now I was very lucky. During my journey to buy my first company in the space, I met a man.

whose company I would later buy 23 years later. that Bill? No, Bill was the first guy who believed in me. This was another guy named Tony. And Tony handed me an analysis of his business and three other companies in the space done by his daughter's Columbia MBA class. So it gave me all of the driving metrics, all of the understandings of the business. So when I ultimately did meet Bill,

who by the way was a friend of Tony's, when I ultimately did meet Bill, who was one of the sharpest numbers guys I've ever met in my life. mean, you know, it's pretty public that he and I had a pretty nasty falling out at the end and that's fine. I wouldn't be where I am if it weren't for him, if I'm being honest. But this guy could look at a financial statement and it spoke to him like a contract speaks to me. I am in the same feeling that like if you...

The Warren Buffett says, hey, send me your financials. And there's a story there. Right. Well, the story, where is this going? Yeah. So many people, and this is one of the things, one of the many things I learned, so many people don't understand that numbers tell the story. Yeah. They tell a story. And one of the challenges that entrepreneurs often have is finance people think, if I put all the numbers on the piece of paper, I don't necessarily have to order them in a way that anybody's going to understand.

Jon Stoddard (14:10.977)
because I understand them, so everybody's gonna understand them. Well, that's just not the case. So, to your point, it was the four numbers in the call center business are people, right? People represent the largest expense. So people would be benefits and salary and all of those pieces, technology costs, right? How much are you spending for internet, for telephony, for the technology?

Because in the call center space, your cost of goods sold are people time and system time. That's what you are selling. And then, you know, so that's your, those are your two biggest, then your sales and marketing expense and your facility expense. Well, during pandemic, it's been a very interesting time because facilities have sort of gone away. We still have some, but

In many cases, facilities have gone away, but wages have gone way up. And you know, that has been a stressor. So when I'm looking at a business to buy, I'm looking at, you know, a number of things. And again, very simple. Starts with a multiple of cash flow. So you're going to start with a general multiple of cash flow or EBITDA. There's nothing if somebody came to you with a communications company, you'd say,

Look, here's the cops. This is what I'm going to pay. Yeah. There's no above and no below it. it goes, I don't, you know, even if you have some kind of spiffy, you know, software, it's just, doesn't make. Yeah. Well, there's 65, you know, there are 65,000 call centers in America, four and a half percent of the U S population working call centers. and the average call center is not that 600 or a thousand seat place, 75 seats.

So if you think about, do the math, 75 times 65,000, you you realize very quickly that you're talking about four and a half percent of the population. And call centers do all kinds of really cool things. Yeah, I mean, for Verizon or Geico or all of it. Now, technology is here and that is a big thing, but what that's gonna do is just drive your percentage of, you know, it just drives your EBITDA up or down.

Jon Stoddard (16:33.577)
And a technology firm's a little different in terms of value, to your point, one of the things, again, being who I am, I started out as a collections and bankruptcy lawyer in Maryland. So having been able to get that as a background, buying turnaround service businesses made all the sense in the world. And I'm sure that many of the people in your audience

struggle because when they go out to start a business, everybody thinks they have to start from scratch. Well, if you are a parent or you have, you you're not a young person, you know, how many of our friends, John, you know, reach their late 40s and early 50s and find themselves out of their jobs in that today, that's even more who's employable after 55.

Like trying to find a job. And so there were tons, are hundreds of thousands of businesses for sale. My favorite site is a site called Biz and this is where I first saw the telephone answering service was bizbuysell.com. Yeah. There's a guy that just bought that. just bought it. Yeah. That was really where I got, I started my entrepreneurial journey on that site. Wow. That's where I started my entrepreneurial journey back in 98.

when I lost that job and I needed to get to my next place. it's, when we think about that, and we talked about in your emails, you talked about how do you finance it and how do you do that? Well, I was very lucky. I read about this guy, Bill, and I told you about him, but...

what I ultimately, my first step was I was gonna buy them and go out and raise money, right? That was my plan. was- That's what everybody talking, everybody that pings me on LinkedIn says, hey, I need to raise money to buy this. Yeah. And that was my original plan. And I was very lucky. I met a bunch of people, but the two people who really sort of set me on my way, one was a woman by the name of Liz Lambert.

Jon Stoddard (18:53.431)
who ultimately, she's been a banker around Philadelphia, haven't seen her in years, but she had done a big telecommunications deal. She understood cashflow lending, okay? Because nobody's gonna lend, you can't securitize people, in some places they call it slavery. So you can't securitize people. So you have to have a banker who understands service company lending.

or what's called air ball landing. And she worked for a bank that was run by a guy named Kirk Wyckoff, who's very, very famous in the Philadelphia banking circles. And the non-bank subsidiaries were run by a guy named Steve Hobman, who's now a principal in New Spring Ventures, which is a very well-known firm here in Philadelphia. And for whatever reason, they believed in me. Like they were really...

behind me and I had gotten a company under term sheet and we were gonna put it into the non-banking subsidiary of the bank. And that was my original plan. Well, when I got into due diligence. Let me ask you about that. And did you, how much did you want to own of that? I mean, what was it, what did it look like on the cap table? You 50, 60? So the deal was we were gonna go dollar for dollar and then we were gonna carve out a piece of equity for management. And I think we were gonna do 20 or 25 % for management.

And then for the rest of the 75, they'll, they would let me put as much of the money up. w I wanted to, and they were going to put up the rest. That was, that was the plan. So whatever we put up in equity, that was the deal that you got to put the skin into the game to get that. But I was going to put in a little bit and I would get, you know, I've got enough equity and you know, that was still better than no equity. And that was my plan. Well, that plan didn't work out. You know, what's the old saying every time you think you have a plan.

God sits up there and laughs at you. Well. Yeah, punch to the face. Yeah, so I'm now months in, as you've talked about. I'm now months in and I lost my job in January and my ex-wife and I had an agreement that if I didn't have a company by August 1, I was gonna go out and look for a real job. Did you really mean that when you said that, yes? Without question. Okay.

Jon Stoddard (21:19.561)
I guess talk to entrepreneurs have this problem with this addiction. He goes, no, I just do the next one, right? It's the next one. I get in a golf shot or something. See, but at that point, I wasn't really yet an entrepreneur because I had never the real to me, the real definition of an entrepreneur is one who takes risk. Yeah. So I had been with a startup, probably the best funded startup in the in in American personal communications, which was the wireless startup that we ultimately that

that was ultimately partnered with Sprint. But the reality was I wasn't senior enough. So I ran the Musac franchise. Musac franchise I ran was one of the oldest franchises in America. So there wasn't a lot of startups. And while the owner of the franchise let me do some new and interesting things, the reality was is that it was the same business that they had been doing since General Squire had founded it in 1929.

And most people know the story of the franchise or ultimately went bankrupt, sold to a company called Mood Media, which was a Canadian public company. And then they took it private and it's been there. And then I went to Sprint and then I went to the startup rooftop management company in Philadelphia. And again, I was right under the owners. And while I was gonna be earning a piece of equity,

It was not, I wasn't at risk. I took a lower pay, but to be fair, I didn't put my money up and take a real risk the way the founders did. The way the investors did. The leveraged buyout. Yeah. This was my real first foray into my own path. And so when we got into due diligence and we couldn't prove the numbers, the bank went looking for an exit.

And during the process, I met that guy Bill and you know, I'll fast forward through the whole story, but essentially when I went to tell the seller of the first business that I wasn't gonna buy his business, I then went to Bill's and thinking I was applying for a job. So to your point, no, I was a pragmatist. I got bills to pay. I had a mortgage, I had two children. I had an ex-wife who had been quite patient up to that period.

Jon Stoddard (23:46.237)
And when I went to him, he made me an offer I couldn't refuse. He offered to sell me half of his company and he allowed me to put basically my life, as the story goes, so what happens is he offers me an opportunity to buy half of one of his companies, but it was late on the day on Thursday. So he said, tomorrow I'll send you financials, come back Saturday and we'll see if we can do a deal.

one of this guy's superpowers is the ability to make fast decisions and to see if you could as well. How would you get paid like a salary from the Royal Pony? So our deal was everything was equal. Everything was equal. So what happens is he offers, he sets the price. So he sends me the financials on Friday and I go in, we talk for two seconds and I already had in my brain,

with the highest price that I would pay. We're in the meeting, three minutes, he says the exact highest price. I said, that's a very high price because that's your cost of admission. And I said, so what was I getting besides just a business? was getting a mentor, a guy who had already built one of the biggest businesses in that space. I was getting immediate credibility and...

And I didn't know realize it at the time. And, by the way, he said, if I'm not happy in six months, he'd give me all my money back. Okay. Which is highly unusual. And so I said, okay, what, you know, I'm getting, I'm getting that and all this other stuff. And, did you place any value on the mentorship part of it? not in dollars and cents. I knew that the number was high and I,

But I mean, again, at that point, I mean, I was gonna go from being a small minority owner to I went to a 50 % owner. took, I told him I didn't have that kind of money. He said, how much you got? I told him, he said, I'll take that and I'll give you a note for the rest. And the note was personal. So what really was cool is a week later, he walked in and he was incubating the company. So my corporate office was in Princeton, even though was an hour drive and the

Jon Stoddard (26:07.799)
company I bought was operated at a Valentine, which was an hour drive from my home. So I had a mentor, I had a corporate office separate from the operating office. So I never really had to work in the business. I got to work on the business, which is, as you know, and talking to entrepreneurs who are buying existing businesses, that is such a benefit. So fast forward a week later, he comes into my office and he tells me that

there's a company in Portland, Oregon, that's also for sale. It was actually bigger than saw the first the company in Allentown was doing $50,000 a month. And the company in Portland was doing 60. And so did you accept the company that he offered? You say yes. So what happens is he said, you know, my other partner had because he was he would help entrepreneurs, he would. And this is what the article that introduced me to, he would help entrepreneurs. Well, one of his other entrepreneurial partners,

didn't have the money to close on a term sheet that they had signed. Something I'm very proud I never did, right? Every term sheet that I have signed, unless there was a problem in due diligence, I've closed on. But this partner of his didn't have the cash, they had run out of cash. So I said, well, me some time. So I pick up the phone, I call the bank that was gonna be my partner. I said, you're never gonna believe this. I got into the business a week ago. I have a balance sheet that's completely clean.

I have three years of operating history and I have an opportunity to buy another company. But I need a half a million dollars and the company was doing 600,000. I said, I need a half a million dollars. Or I need 600,000, I wanted to fully finance it. So they called me back a few hours later and said, well, we can do 500,000 and you're gonna have to come up with 100.

So I went back to my partner, Bill, and I said, Bill, okay, this is what they said. And we each put, I mortgaged my house to put up another 250,000. Remember, I'd already given him my life savings. So I mortgaged my house. He was very well off. This guy was a very successful entrepreneur. mean, he had hundreds of businesses. had years of experience. He worked with Bill Levitt from Levittown, Long Island.

Jon Stoddard (28:32.491)
Levittown, Pennsylvania. Yeah, I know that. Yeah. So he built my bill was Bill Levitt's fix it guy, fix it CEO. So Bill Levitt had a turnaround situation. And that's where I learned all that turnarounds too, besides my bankruptcy career. Again, the slumdog millionaire of call centers, all of these disparate experiences coming together to give me the experiences I need to do what ultimately I could do. so we do, I mortgage my house.

I get my 250,000 or 300,000 and he writes his check and we close on that deal less than a month after I did the first deal with him. And the bank liked the numbers and just went through. Right, the bank was amazing and we were off to the races. we did have some sales effort but 18 months later,

we did a turnaround of what was then the largest company in the space. So 18 months after we started, we went from a $4 million run rate to about a $26 million. Yeah. So now he has you like doubling his efforts, you know? He has me doubling his efforts and I have opportunity. Like I never would have gotten that opportunity if it weren't for him. Right. Okay. So now again,

Those were the good days. You know, there's an old saying that nothing is really for free. So I am I mortgage my house three or four times over the next few years to buy companies and grow the business. I'll never forget I was in a pitch meeting with an investor and he said, what's your burn rate? And I looked at him, I said, what's that? You know, because I was buying profitable businesses at reasonable prices and.

and running them through the cashflow to pay for the acquisition costs. I had a partner who had, there was no check I was ever gonna write that he couldn't just go write the check and match me. At one point I know we, for unknown reasons, for reasons not relevant, we figured out he was worth well over $100 million in our partnership.

Jon Stoddard (30:55.009)
you know, he had, he had no trouble writing checks that caught that required me to go mortgage my house, but it's, was a, it was a very cool time. And as I said, I mean, even in that first 18 months, we did seven or eight acquisitions. Wow. And, a couple that I didn't want that didn't fit me, I helped them did for him. So, you know, it's,

And he took a part of all your acquisitions too or? Well, we were partners until we were, right? And then we had a falling out and, you know, and, as, as want to happen, you know, until that point, you know, ultimately we wound up splitting the company. I took half, he took half. And today we're three times bigger than we were after the split. So it's been, you know, it's been a huge ride. And I know, you know, we talked, this is and A entrepreneurs.

So in the last year, I did 11 acquisitions in 11 months. Wow. It's been the craziest. So let's fast forward to where we are today. What happens is we're coming out of 1999. We had done a couple of large acquisitions in 17 and 18. And coming into 19, I had to right size the EBITDA.

and fix the company. And I'm really lucky. The president of my bank, guy named Tim Abel knows just when to kick me in the ass. And he did, and he needed to. And so 19 was a year where I focused on executing, really getting the best EBITDA. Coming You gotta start getting stuff at the-

first cafeteria and put it on your plate, you've got to start eating it. Yeah. Right. And you have to eat it correctly. And you have to do all that. So, so we focused on that in 19 and coming out of 19, last day in 19, I lost my biggest customer and I was, you know, bummed. Now the good news is for most of the business, you know, when I get beyond, are, we have currently about 10,000 clients. And after the top,

Jon Stoddard (33:12.365)
say 30. So let's say the top 30 represent probably 40 to 45 % of the business. No client represents 15 % of 1 % of my overall revenue. Did you fix that? I mean, that's always a challenge with entrepreneurs going, hey, if they ask you, well, I've got this one client rep in 75 % of my business, like, dude, that's just too much.

The risk assessment on that means you can go to cash, your cashflow burn rate is zero if he leaves. Well, it is and it's not. So here's the cool part of where we are as a company today. We've built this model to be a very much variable expense model. So with the ability to go remote and with the ability to use SaaS products, I can flex and unflex at will.

this is kind of like Uber. like, are you available? Availability rates, Right, so it is a really cool model because all my stuff is in the cloud, right? All my technology is in the cloud. So now we still have physical locations, get me wrong, and that's a different model. But I have the ability to turn on call center seats in hours, not even days or weeks, in hours.

So it's a complete flex model now. Now it wasn't back in the day. know, we, at one point we had over 50 locations. Now, you know, now we have 30 locations and we just had a meeting yesterday and the question was, what are we gonna do with the real estate? Right, right, right, right. That's facilities is number four. Yeah. Right, and in conversations with my leadership team, you know, that's when you know you're an old man, okay? That's when you know that you are seasoned because

If somebody would have told me I would have gotten everybody home in two weeks and I had a former VP of Ops was available just at the time I needed him, right? And my COO, but the woman who's now my COO, who later became my VP of Ops, she kept things rolling.

Jon Stoddard (35:37.261)
as he was moving us home. was really, mean, and we had a great IT organization to make it all happen. And so it's become much more of a variable rate deal. But as we come out of 2019 and we lose this big account, we started laying off in February of 19. And then I don't know if you know, there was this thing called a pandemic that just happened. Yeah, I actually read something about this that you did something pretty incredible.

during the pandemic work with bankers to save companies by hiring. So yeah, tell me that story. Yeah. Yeah. So, so what happens is we get a call from the state of New York and state of New York calls us and says, okay, I need, I need a hundred people for, for this project to schedule coronavirus testing at mobile testing sites. That's how hard it was to get testing. If we remember at the beginning of the pandemic. Yeah.

And as I'm trying to figure out how I'm gonna staff 100 agents, they then call back and they just push the number up. So I get a phone call from my banker, a woman by the name of Beth Packel. And Beth calls me and she says, listen, how are you doing? And you could tell she'd just gotten the snot kicked out of her for hours as she's calling clients and they're trying to figure out.

How do I change my business model? How do I do what I have to do in order to make my company run? And she told me the story of a client of hers, 90 year old trophy and awards company that was what I didn't know then was marketing royalty here in Philadelphia. Inside of this guy's business was the Philadelphia Sports Hall of Fame.

Okay, and the guy knew everybody. mean, I, you know, et cetera, but she called me back 10 minutes after, because I told her I needed, she goes, would you consider, she told me the story, would you consider hiring my friend's employees? And I realized that I needed to onboard a lot of people fast. I said, I'll do one better, because you know, the bank was who they were. I'll hire the company, let people keep their jobs, benefits, all of that.

Jon Stoddard (37:59.053)
And I was able to do that for about seven other companies that not by my own, I don't mean to brag, but by their statements, we saved their companies. So we were able to save like seven companies, but this goes into our growth story. So instead of being down 20%, which I was figuring that was what it was gonna be in 2020, we wound up doing that deal and then having another deal with Deloitte.

So we created this relationship with Deloitte and we started doing government work with Deloitte and they're a wonderful partner. They were just terrific. They were smart and they were driven and it was really a wonderful partnership. Well, all of sudden we're growing. Well, then we come down to the end of the year and I know, cause you know, I'm smart like this. I knew that the pandemic could never last into 2021.

That's just silly talk, right? Silly talk. Right. So. Don't a mask. Yeah. Yeah, right. Yes. See, well, I was going to wear a mask for this for this podcast, but I figured I couldn't get you sick. So so the last two weeks of December, twenty, twenty one and the first two weeks of January, January, twenty, twenty, I'm sorry, twenty, twenty and twenty, twenty one was the longest year of my life. All of a sudden.

The vaccines were coming, all the states needed to have, needed to vaccine scheduling teams. And what was insane became complete insanity. In order to solve all of that, we had grown, you know, so we had grown 30 % in 2020. And I'm sitting there trying to figure out, okay, how am gonna manage all of this? Well, we created a entirely new level of management in the company.

director level, if you will, of people in the company. And February and March, our revenue for February and our revenue for March equaled the revenue I had for a year in my original business plan back in 1998. I couldn't believe it. I mean, I was pinching myself. I was waiting for somebody to tell me it wasn't mine. I realized that I had never worked for a company as big as the one I was now.

Jon Stoddard (40:22.605)
owning. Yeah. So it was, you know, you know, put whatever crazy superlatives you want, but it became obvious really fast that the drugs chain, CVS, Walgreens, RightAid, were doing a much better job of distributing vaccines in the government. So I knew that business was going away. Who would have thought? Now, I could tell you that I then planned it all out. And I

And that- It just sounds like you were in the right place at the right time. I was in the right place. So all of sudden I get, starts with, I start getting phone calls. You know, people are worried that the administration is changing. They want to get out. You know, in one case, in one case there was a guy who, there was a guy who had bought a big company and he had a division of the company or two that didn't fit. And he asked me if I wanted to buy them.

I had a software company vendor of ours who just wanted to retire. So he sold and we got into a couple of new verticals during this period, we acquired, so we acquire eight companies in eight. And now I'm telling people it's almost Thanksgiving. We've done eight, Nate. And now because a good entrepreneur is always thinking about the story the numbers tell.

See how we're bringing all this way back to the very beginning of this podcast, right? It's all about the numbers and the story that the numbers are telling. So what happens? I say, okay, here's my story. We grew in 2019, we grew in 2020, we went sky high in 21, and then we matched 20. So even though I had COVID work in 20, we were gonna, based on where we were,

and we did the eight, I'll be fine. That's the story I can tell.

Jon Stoddard (42:24.255)
So as I'm getting ready, I'm now crazy, crazy, okay? I you know, I have satisfied my current urge to acquire and what was really cool was we did it all out of the profits from COVID. we did it. Yeah, out of the cashflow. Out of the cashflow, we still have no partners, we still have no investors and the bank had been, you know, super supportive. Well, then I get calls from

from two people who I had spoken to earlier in the year. I had made offers and the buyers that they had lined up, both of them walked. And would I do the deals? So I did those two deals. Now you're the guy with the gravity. Now I'm the guy with the gravity. And that's exactly what happened. So one of the deals, which was the biggest of all 11 deals, I closed in three weeks. Three weeks.

three weeks, we changed the nature of the deal. I had to borrow money from the bank. Everybody was just, I mean, any entrepreneur who's gonna play the game the way I've been playing it cannot do it alone. My internal team, my bank. and did I mention in the middle of all this that my accountant of 25 years passed away in the middle of all of this growth and I had to hire a new accounting firm for.

you know, to do my audits and taxes for 2021. Always a challenge in front you, isn't it? Unfortunate events, yes. Right. And so I did those two deals. So I was at 10 and 10. And then I got a phone call from somebody I'd spoken to, who's this is the worst thing that can happen. And you sit here as an entrepreneur and you you say there, but for the grace of God go I, they'd gotten hacked.

and it took down their entire company. You know, when you, when you know, you can protect yourself so much that you can protect yourself. Let's not kid ourselves. Google can get hacked. If Amazon can get hacked, if Yahoo can get hacked. They are, everybody could get hacked. LifeLog could get hacked, you can get hacked. Exactly. So we were very lucky. this guy had the same situation. He was trying to rebuild.

Jon Stoddard (44:51.789)
He thought he had a partner to rebuild with, it didn't happen. So that was number 11. And we've closed that one and we closed that one at the end of February, on the last day of February. And that was my 11 by 11. And now we're projecting to beat last year by 5%. So again, when I think about my COO Corey and my

whole executive team. you just, and we just, and you you caught me at a great day. So earlier this week, we had our first in-person annual meeting in three years. Wow. Yeah. Yeah. Yeah. Yeah. And for a guy who loves people, which is pretty good. If you're going to be in the call center business, liking people is a really You've got to like people. And a guy who is a hugger, phew.

I wanna tell you something, it was inspiring and it was, you know, just, and we've been doing it for 23 years. did two virtual annual meetings, clearly not the same. And it brings up all of these other things. The other big difference in the acquisition arena is that of the 11 companies,

only three or four of them had physical locations? Yeah, that is amazing. that's, yeah. Right, so. So that number four on the back, which is facilities, is not even an expense anymore. Yeah. In a lot of cases, it's not. Yeah. And that's sort of the, that's the, you know, sort of the story of how we were able to grow for.

know, our cater over five years is 26%. Yeah, let me ask you about the technology cost because when you make an acquisition, it could be a different technology. Do you bring it over to yours, what you like, or do you stay with what they're using? So that's a great question. And when it comes to technology, you try to run, if they own the technology and the cost of the cost of maintenance is reasonable.

Jon Stoddard (47:15.437)
you can keep them on that technology, but almost none of them had technology that they own anymore that we're. it's a app. mean, it's a SaaS app. And so if I'm going to have a SaaS app, I might as well use the one I know. just teach people the new SaaS app, right? And part of our model has always been, because it came from wireless, part of our model has always been that

any technology, we have our own MSP. So all the technologies we use, we offer anyway to our competitors. We've become one of our sort of, one of our sweet spots are we're the call centers call center. So you've got the technology to offer to other call centers. Correct. Which is nice. And we have a team that supports 24 by seven anyway. So it makes a lot of sense because

when I'm adding seats in our technology, all I'm doing is adding, you know, extra seats into my Amazon cloud or into my Azure cloud. We're happy to be on both. We don't discriminate between Amazon web services and Azure. Okay. We like them both. You know, we're very inclusive that way. Did you have that in mind to say, Hey, this helps our, I mean, let's say if you were to,

I'm looking at an exit and going, look, we've got the sock for technology that helps our multiple. It's a reoccurring. We love that. It does. And it does because it helps me get my software for a little less money. But

Jon Stoddard (48:56.319)
It was more because I, because we started in the answering service business. I got to the point where I was bigger than my vendors. I was bigger than the software vendors. I was looking to support me and I, and I decided that it was best that I didn't have other people who could take me down. I didn't want to have to rely on, on what I thought was overpriced software. know, look, software vendors are very tough, but there's so much software out there.

that I didn't wanna have a situation where I was running the same software as everybody else because there were certain technological things that I wanted. And the reason I offer it to my competitors is because...

I believe that, if I'm running it, and I, I'm running it, I can make money from it. I need to support my 30 by 30 locations and 15 remote teams anyway, 24 by seven. So if I have another 20 or 30 or 50 clients, what does it matter? I'm still running the same team, maybe with a couple more people, but I'm running the same team. And that's why I did it.

Is it a white label that you take the software and load it onto Amazon web service and they use, or is it connected? Because I've just had a curiosity is like you offer to competitors, they go, well, what if we upload all of our data about our customers and you have access to it? Well, I'm fair. You know, I'm one of the biggest honors that I have ever received is an award called the Tom.

from one of the call center associations that I'm a member of. And that I think is, that I think says it all. you know, the reality is if, business, we've been very well respected by our peers. You know, a lot of people shared with me when I got into the business and have given to me,

Jon Stoddard (51:08.269)
including my original partner, right? So I try to give back and I try to give people the best experience. The other thing I did was I didn't like the way most software companies did business. And so I tried to build a company, meaning we have a stack of tools in our call center offering. You can either take the whole stack or you can just take any piece of it and we'll host it for you or you can host it yourself. So, you know, I try to give people choices.

The other thing I do, which makes everybody nuts as I post my prices online, because you know, I was not happy buying from a software vendors where you're made to feel like you're buying a car or a house. Call for pricing. Right. Exactly. You know, here's what it costs. You don't want it. You don't want it. No worries. You want it. You want it. And what's really been interesting is where we have clients, we share the software with them.

and then handle the overflow when they're not using it. And that's cool too. So again, it's about that, you know, I just, and I learned this because when I partnered with Bill back in the original day, Bill had other companies and other partners. And one of the things that I noticed early on when I heard all the partners would always quote, offer to bring everybody to the table. Well, I knew I could never bring everybody to the table. I came out of franchising where,

each individual owner. And even though Bill wasn't a franchisor, he had a number of partnerships and each individual owner was independent as heck. He loved strong independent people. was his jam. The stronger you were, the more independent you were, the more he liked being involved with you. So that was, I knew that I couldn't bring it to everybody, but if you want what I have, so what I would do is I would go to a vendor and say, okay, this is what I need.

And these are the relationships, but I'm not promised you any of them. And then I go to them, this is what I have. You want in, you want in, cool, you know. But that way I was sort of being nice to him and by offering what I was uncovering to his peeps. But if they didn't want it, was all good because I needed it for myself. Let me ask you question. We're running out of time. Real quick. How do you?

Jon Stoddard (53:29.797)
You said you had a falling out with the bill earlier. How do you create or do you just avoid partnerships altogether? Like how do you create a Warren Buffett Charlie Munger partnership or you just avoid that kind of? Well, I don't avoid anything. You've got a rule for it or something like I know who you are. You know, I've done a lot of partnerships. Some have been good. Some have been bad. Sometimes I'm the bug and sometimes I'm the windshield.

So one thing I would say is there's a reason why investors tend to get out in five or six years, because in business, people's direction change. Life happens. Well, and to the point, Bill was 30 years my senior. So, Bill had been doing it for a long time and his wants and needs and

desires change. Plus, you know, so I often say, you know, there's a reason that five years, six year partnership is a good thing. So every partnership I go into, I offer a way out for partners, you know, if they need it. That's a big part of it. You know, I've gotten out a lot of good things out of partnerships. So I would not be, I would not say to you,

don't do partnerships. I would say that the agreements that you enter into need to be specific. Like one of the problems I had is I wrote an agreement with Bill and it was written by my then lawyer and she didn't know the legal impact of something, which is fine. A future event that would likely occur, but she didn't have the unknowns.

Yeah. And so it ultimately was part of the, you know, part of the undoing of the partnership. But again, you know, I think I started out before we got on recording. I'm one of the luckiest people on the planet. Yeah. Thank you for saying that. And, you know, this entrepreneurial journey has been the most exciting thing I could do. And

Jon Stoddard (55:48.693)
I could tell you about all the rotten stuff that went on between he and I at the end, but I'd rather say I wouldn't be where I am without him and I'll be forever grateful. And as I said to you about my friend who owns the trophy company, he's one of the people most that is more grateful about things than anybody I know. So I'm gonna practice humility as much as I can, you know, for a guy with a big ego. But I am so appreciative.

of everything, of my family and of my business colleagues and everything that I have gotten to do. And for fun, I play rock and roll music and ballroom. Yeah, I saw that. You did Fun Size and Bucket Band Philly. That's right. And so check out our Facebook page, our pages. But here's what is not there. So my keyboard player is my chief of staff in Bucket Band. Lead singer is my

Vice President of Sales and my base player is also the general manager of the first place I bought in Allentown, Pennsylvania. That's great. Yeah. You've got to create a great network then. And I'm out of time. Gary, I want to thank you for being on top &A entrepreneurs. Thank you for having me, John. I love the podcast and I look forward to hearing this one and continue good work and helping.

spur entrepreneurialism. Thank you so much. Great story. Take care. All right, take care.