Ed and his partner Justin Vogt are former podcast guests from episode 59 where we talked about starting Evermore Industries, an industrial services holding company. Last year they acquired AVUITY, based in Cincinnati, which sells physical commercial office sensors that detect motion, temperature, humidity, and more, along with a data and analytics subscription.
Ed and I talk about making the first acquisition in a holding company strategy, working at the intersection of hardware and software, talent planning and sales development, and life running a company while being a new parent. Enjoy!
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Hood & Strong, LLP — Hood & Strong is a CPA firm with a long history of working with search funds and private equity firms on diligence, assurance, tax services, and more. Hood & Strong is highly skilled in working with search funds, providing quality of earnings and due diligence services during the search, along with assurance and tax services post-acquisition. They offer a unique way to approach acquisition diligence and manage costs effectively. To learn more about how Hood & Strong can help your search, acquisition, and beyond, please email one of their partners Jerry Zhou at [email protected].
Oberle Risk Strategies– Oberle is the leading specialty insurance brokerage catering to search funds and the broader ETA community, providing complimentary due diligence assessments of the target company’s commercial insurance and employee benefits programs. Over the past decade, August Felker and his team have engaged with hundreds of searchers to provide due diligence and ultimately place the most competitive insurance program at closing. Given August’s experience as a searcher himself, he and his team understand all that goes into buying a business and pride themselves on making the insurance portion of closing seamless and hassle-free.
(00:00:00) – Intro
(00:03:23) – Acquiring AVUITY
(00:07:20) – Characteristics that make a great business to acquire
(00:11:38) – Competing with Venture-backed businesses
(00:13:34) – Advice from investors
(00:17:25) – Accelerating Revenue Growth
(00:22:44) – Measuring customer ROI
(00:25:09) – Data application between customers
(00:29:30) – Hiring plans
(00:36:33) – Growth pain points
(00:38:55) – Learning to sell
(00:40:26) – Life as a new parent & operator
Alex Bridgeman: Do you want to start by walking through like from our last episode, Episode 59, which is quite a while ago at this point, from acquiring Avuity and kind of everything in between?
Ed Redden: Yeah. Last time, we talked, Justin and I were searching for a business to buy out of Austin, Texas. We’re doing kind of a nationwide search looking for kind of an industrial services business. And kind of fall of 2021 was when we first made contact or reached out to a DOD, the business we now are part owners of today, met with the CEO, and through a long kind of diligence process and relationship-building process, eventually closed on the business May 1 of 2022 and have been operating Avuity for the past 9, almost 10 months now.
Alex Bridgeman: And so what did the process look like? Once you discovered Avuity and got in contact with Brad, how did conversations progress from there? What did you guys do? I assume you came to visit a few times. What was that process like?
Ed Redden: It’s really uncanny. So I was actually living in Cincinnati for the summer with my family kind of at my parents’ house to escape the Austin heat, like it was so hot in Austin. So we came to Cincinnati for a month and a half to just escape the heat. And I did a lot of local outreach while I was here, kind of leaning heavily into the fact that I’m from Cincinnati, would love to return. I would love to be part of the community. And while I was working in a coworking space downtown, one of my outreach emails was to Avuity. And I can remember distinctly, we went through, we looked at a lot of businesses, and the first step was kind of is this business worth putting in the campaign or to leave it out? Make an effort or not? And I can remember distinctly looking at Avuity and kind of perusing the website and kind of going I don’t know, like we’re kind of industrial services, technicians and trucks. Yes, we’d like technology enabled. This isn’t real estate and COVID and I don’t know. I’ll just reach out to him and see what he says. So I reached out to him. And my email was very leaning heavily into the fact, like I said, I was in Cincinnati. And it kind of said, can I just get coffee with you? And Brad responded to that email saying, like, sure, I’m around, like come get coffee. So I remember leaving that day in an Uber to drive 7 or 10 blocks south, met at a conference room of the office right next door to us where we used to be at, and just kind of talking to him about what our vision was for Evermore, kind of learning a little bit about him and his business and understanding what he was looking for. And stars aligned in terms of he had reached an inflection point where the business was needing additional operations and sophisticated horsepower, that he was looking for a partner, and other passive investors that had backed the business to get it to where it was today, Brad was looking to recap and kind of figure out how to do something to get more help into the business. So stars aligned, and over the next six to eight months, we really worked through a lot of how do we make this transition? How do we buy out these 12 architects? How does Brad get to maintain a meaningful stake in the business because he wanted to remain CEO, he just needed help. And so we went through all of that and all the diligence process, which was a lot of trips back to Cincinnati in subsequent months. It even included one visit where Brad came out to Stanford. And during the search fund conference, we kind of met on campus and talked quite transparently, quite openly about what we were trying to do, he met a couple of our investors in person to kind of get the Evermore flavor of who was backing us. And it just progressed very naturally from that initial coffee meeting in the conference room to potentially closing on the business and partnering with Brad.
Alex Bridgeman: And so when you walked through the diligence of Avuity and got to know Brad more and the business more, talk through some of your kind of checklist for what you defined as a great business. And where did everybody fall in those checklist items?
Ed Redden: We kind of diligenced three factors. The first one was, is it in a good industry? Is it an industry that’s growing, that looks like it’s got good tailwinds that we want to be part of? The second one was, is this business- is this boat that is in this industry river, is it a good boat to be part of, hop on board with and drive? And then the third one was a little bit unique, which was, is Brad someone that we think we can work with? He wants to stick around as CEO. He wants to maintain a meaningful ownership in the business. He’s not looking to retire or transition out. Can we work with Brad? Is he someone that we think we can trust and partner with, truly partner with? And so we have kind of those three aspects of diligence, and that third one was a little bit unique because we always thought we were going to buy a business from a retiring or transitioning CEO or founder. And so that was a new factor for us. But starting with the industry, COVID had put a lot of wind in the sails of Avuity. A lot of people were struggling with or trying to figure out what does return to office look like? What is the change in how people work and engage with space? How do you manage hybrid work, especially in high cost of real estate areas like San Francisco? Basically, a lot of these offices were sitting empty, and people are trying to figure out how do I bring them back? And how do I do this hybrid thing? And one of the things that we leaned heavily into was that like, hey, you want to be making data driven decisions around that type of stuff. And our product provides that data, can tell you how your space is being utilized, when it’s empty, when it’s full. And when you’re transitioning to some hybrid in between, like that’s exactly what our product does. So the industry was right for kind of Avuity’s offering and was very much a whitespace that no one really has Internet of Things, devices and occupancy sensors kind of became more well known. Prior to COVID, we had to do a lot of education of our customers about what is this, what’s the value of it, etc. COVID just kind of slapped everybody in the face and said like, this is why this is important, like and the value proposition became much more clear. And so we had a lot of confidence in that in the industry. And then we did a lot of diligence about the business and kind of making sure that this was a stable ship to hop on board and try to make something out of. We have some significant venture backed competitors in the space. It’s a kind of a crowded space. People do different niche aspects of desk booking here with an app or sensors here doing this, like line counters, we aggregate batch data. And so you had a lot of players and it was a difficult space to kind of market and understand where do we fit. But the more we asked questions, the more we interviewed external parties, industry experts, the more we became confident in our decision that like Avuity is really a hidden gem. It’s not a business that’s well known. When people look to do occupancy sensors, they look to the tech startups in Silicon Valley, they don’t look to the Midwest and Cincinnati, Ohio. And so, even though we felt like if you already had a really strong product, and good product market fit, they weren’t getting the traction we felt like they deserved mostly because they didn’t have a great PR and press release on raising millions of dollars and blah, blah, blah. And so the business turned out to be a good quality business. And then the last one was just so natural over that diligence period to continue to interact with Brad, interviewed the people, I talked to the people that were in the business and really felt like it was a nice seamless fit with my kind of operations background, Justin’s finance background, and Brad was really strong in kind of the technical aspects of what Avuity was. As the founder of the business, he knows a ton about like a secret superpower of- knows a lot about architecture and real estate and technology and IT and data centers and everything that Justin and I would have been weak on buying into a technology business, Brad was a super strength in. And so really, as long as we felt like we could work together, it just like felt like such a great pairing of the three of us, and we really tried to do something great with the business.
Alex Bridgeman: You mentioned a bunch of venture backed competitors exist in this space as well. When you saw that and started diving in more, on the one hand, did that make you nervous, like trying to compete with some of these companies that raised a lot of money? Or it also give you confidence that okay, if there’s a lot of money being raised in this space, then it’s probably a good industry for us and there may be enough room for another company like Avuity to grow within the space?
Ed Redden: I would say both, like sticker shock of like, oh man, how are we going to compete with somebody who raised 60 plus million dollars. Like, we’re just going to get crushed. And then you kind of started to say, well, the market is way bigger than that $60 million can capture. And we don’t necessarily have to be the leader, we can be second or third and still have a great business, meaningful market share, and whatnot. And so we could talk ourselves into either one of those scenarios. Like, oh, this is a bad investment, you’re going to get crushed, or this is a great investment, look at the VCs and other people who have done even more diligence, hopefully, then we did for the same amount that we did. And they are putting this level of an investment in this space, they see the potential here, which was market validation for us on the first aspect that we were diligencing which was is this a good industry. So I think that’s where we kind of landed was that like, hey, if other people are putting this amount into it, like this is clearly a space that’s got a lot of potential. And when we compare the products side by side, or what they did, they were good at certain things, we were good at certain things. And we kind of had a more of a holistic offering than some of the other venture backed competitors. And so we felt like, I think this is what we want to take a shot at. We think we can make something great out of this. And even if we don’t end up being number one, which we can and should be, but even if we can’t or couldn’t at the time, we could still build a really great business from the start.
Alex Bridgeman: Did your investors or board have any really interesting or helpful advice on thinking through an industry where there’s growth happening, there’s VC? Like, did you have any other, any piece of advice that stuck with you as you looked at the industry?
Ed Redden: I know, I’m sure they did this, the first answer, thinking of it specifically, it’s hard to recall exactly an aha moment that was heard by a question from one of our investors. Because Justin and I were leading the diligence effort and doing a lot of those firsthand conversations. A lot of our justification tended to be more anecdotal. And the entire industry was in such flux due to COVID that we felt like there was potential, but it was hard to put a number behind what’s the TAM, or what is the- how fast is it growing or all these things that were maybe more specific ones. So it was more kind of like we think this is a great business in a really great industry. I think our investors definitely had experience with technology businesses. And now that I’m talking through it, I can remember one investor who said very openly that Avuity is a both hardware and a software business. We sell the occupancy sensor, the piece of hardware, as a capital expense. It’s not a hardware as a service rented type model. And basically, he was very transparent with us that like, hey, hardware is hard. That’s why it’s called HARDware. And so, you may not want to get into a business like this. This is where you have distributed thousands of sensors, we got tens of thousands of sensors, should know that exact number of almost 30,000 sensors deployed across the globe. And hardware is hard. And that was kind of one of his cautions to us. Is it like, hey, SaaS is great, recurring revenue is great. Make sure that you understand the hardware and that you’re willing to jump into a business where you have to maintain hardware and sell hardware as a CapEx expense.
Alex Bridgeman: Yeah, I think Justin and I were talking about something, even stuff as simple as changing the batteries in sensors and knowing that a view of these product could last longer between battery changes than others was kind of an interesting, nuanced point of differentiation for the business.
Ed Redden: Absolutely, absolutely. And you can- there’s pros and cons to doing a cabled device versus a battery powered device. And the fact that we can do both is just even better. But exactly to your point, like we heard some horror stories talking to customers and testimonials about how like you’re always replacing the batteries on these devices. It just feels like every few months or every six months, you’re having to replace them. And as we looked at a few of these products, we had battery life that lasts 2, 4, 5 plus years, depending on how you configure them, how granular you want to get that data. And what a huge selling point, what a huge differentiator for us, our competitors, who like I said, when we did these customer testimonials, some of the feedback from the customers were like, yeah, they’re a pain to keep online and to maintain. And when we talked to a few of these customers, they were not having those problems because the battery life was that much longer. We were already on our third iteration of the hardware. And they were still on number one, or they were playing catch up to us in terms of battery life, in terms of coverage area that the occupancy sensor can detect, like it was just really surprising that with all the venture funding that was getting poured into sales and marketing, and the product was still lagging behind a little over Avuity in Cincinnati.
Alex Bridgeman: Yeah, it seems like part of what you can do now is flip that script. Like now that the product is good and differentiated, in the top of its class. Now you can go do what the VCs are doing now with sales and marketing, but with the product that you know is better. So when I saw- we talked about the press release you had recently of having 104% revenue growth last year, which is amazing. When you think of that growth, you mentioned going from like one to ten and how do we do that. What do you feel like needs to happen to get to ten and have this business accelerate and continue growing?
Ed Redden: For first point that I’ll make that you kind of made me think of here is that, yeah, we felt like our hardware was ahead of our competitors and allows us to continue to invest in hardware development and solve pain points for our customers that our competitors aren’t even thinking about yet. And we’re on to even further iterations to keep us at the forefront and keep them ahead of it. And I’m thinking of our main flagship product and our other- like just the things that we’re doing are not even on the radar, I don’t believe, that some of our competitors. But in order to get from one to ten, obviously, you got to have the best product and you got to continue to solve customer pain points from a hardware perspective. But there’s other facets that really needed to be in place in order to scale at that speed. Some of the financial accounting and controls just understanding with our business model of hardware upfront and ongoing SaaS fee versus the hardware as a service models very different business model that has financial implications for modeling and growth. And then execution wise, we have done a lot of work over the past since acquiring Avuity to build a scalable, repeatable, high quality deployment process that we can just kind of run people through. The nature of this type of a business, a lot of people will start with a small scale pilot, this is going to be one floor or a section. And then maybe it goes, if that is successful on a very small scale, then they’ll start rolling it out into a couple of their major offices in high cost areas if they’re getting value from that, and then maybe they do a portfolio wide deployment. But the rollout of that takes time. And so we talked a lot about how we just got to continue to plant seeds with new customers and let those seeds mature and grow over time through execution of a successful deployment, making sure that they’re getting the value out of the product on the back end by reading and analyzing the data, engaging with it to make business decisions. And then the last piece of that is just product support, making sure that they feel supported, things are online and it’s not a pain to maintain this investment that they put into their understanding of their real estate.
Alex Bridgeman: That sounds like a lot of continuing to focus on product as a big piece, making sure deployments go well, and then it sounds like a lot of filling the funnel too, like making sure you have a lot of prospects coming through. And there’s a good process for getting them implemented. What did that- do you think of your sales pipeline as a top of funnel and whatnot? What was that like at the start when you acquired the business? And how are you shaping it?
Ed Redden: When we first acquired Avuity, I’d say that a lot of our new customers, that our leads came from our network, like in terms of outreach, grassroots, communication, meeting people at conferences, passing around business cards, warm introductions, and it was very relationship driven. And that’s natural for the real estate market, and that’s kind of how real estate is done. But when we came in, we said, okay, well, due to the tailwinds of COVID, there’s a lot of people out there that are Googling or actively searching for a solution, where you no longer need to have a relationship with them. And you can do more of a high volume or in more outbound campaign process. And so we’ve done a lot of- Justin has led this effort, but he went on basically for the first eight months, he was on a roadshow looking at a lot of customers or at a lot of conferences, talking to a lot of people, spent a ton of nights in hotels in 2022 to really understand how to play this game. And then we started kind of taking those learnings and putting it into kind of more of an outbound process, really identifying who is our ideal customer profile? What are the job titles of that? What are the pain points of that, how to sell into that, and try to build out that sales engine through more of a high volume approach, where we’re trying to outreach to everybody in the Fortune 500. But anybody that has multiple offices, and offices and high costs of real estate areas, those are all great potential customer for you, we have a product that can help them optimize their real estate footprint, get the best utilization out of it. And when they’re trying to do this, like return to work, and try to attract and retain employees, the C suite is making decisions on investment into their real estate and trying to maximize that return on investments, do I need to build a gym? Do I need more open or closed door like soft seating, hard seating, a coffee bar? Like, what do I need to build to make you want to come in and collaborate in downtown Manhattan? Because it can be- in New York or in some of these others, it’s a challenge. And nobody wants to come into an empty office, and nobody wants to come into an office where there’s no desk for them to sit at. And so managing that return to office and helping guide the strategic investment and right sizing of the real estate footprint, and customer that’s dealing with any of those issues is a great target for us and has been put into kind of our outbound campaign to say, this is what our product does. And if this is a pain point for you, let’s have a conversation.
Alex Bridgeman: In thinking through how you describe the product and its benefits to customers and like return on investment for purchasing a variety of sensors and the software subscription, how do you think through- what do you measure that ROI for a customer? Do you take a- do look at the building they enter, the square footage they’re in, and based on past customers, you can say like generally our customers save 5% or some amount of money is saved or earned? In addition, based on the software, how do you kind of go about using and developing those case studies?
Ed Redden: It’s a really great question. And Justin, probably, because he’s done so much of the listening tour of our customers probably has the best answer for you on that. But I can tell you that anecdotally, what I’ve heard is in what I’ve seen is that customers are paying sometimes upwards of $200 per square foot for this commercial office space in high cost areas. And to get the data on that of how that space is being used, our product is less than 50 cents per square foot. And so that makes a ton of sense to kind of say, if I’m investing in this real estate, the ROI just to understand if it’s being used or how it’s being used to optimize it is well worth the investment in sensors. It’s very hard sometimes to tie that back to, okay, I had five floors, and I was able to shed three floors simply strictly due to availability. But we’re building out those case studies now. And I can tell you, it’s meaningful dollars saved in terms of reduction in your footprint or cost avoidance in adding footprint, because a lot of complaints from regional managers might be hey, the Dallas office is flooded with people. And then they go look at the data and they go, yeah, it was flooded with people on one day when you had a Christmas party last year. Otherwise, you’re operating at about 40% or 30% occupancy. So you really don’t need three additional floors like you’re asking me for. You just need to optimize your space. Maybe let’s work together to kind of figure out how to redesign into more of a Hotelling or hot desk, type see and sit model. And so it’s just driving a lot of good conversation that is really engaging clients where they’re at today, which is trying to just figure out how to get people back in the office and maintain company culture.
Alex Bridgeman: One other conversation we’ve had before is on almost building a data product around Avuity. But I’m curious, how applicable have you found data between customers to be? Like a customer maybe, I don’t know if they’re a customer of yours, but think of Google downtown Manhattan, they have a couple offices that are really big. Is data like anonymized aggregated data from Google’s offices? Is that applicable and helpful to a business or a client of yours in like Cincinnati or Austin or whatnot? Like, is it pretty similar and comparable? Or is there some kind of regional differences that make that more challenging to use in comparison?
Ed Redden: The short answer is yes. And the longer answer is that yes, it is a little bit to be proved out. Because of the change in the working environment over the past few years, kind of in the heart of when Avuity has had occupancy sensors out there, we’re learning a ton about how people are using space and decisions are made based on it. But we really don’t have stable data set to make comparative conclusions because different people have different return to work policies or different strategic objectives about how they want to use their space. I think about people that like own the real estate, and they kind of have more of a corporate campus, where they’re in certain areas, versus people that lease the space, and they’re just leasing a tower in Manhattan. So sometimes people make different decisions on when I own the space versus when I’m leasing it, or when I sublet it and stuff like that. But I think long term, one of the really powerful things about Avuity is this data that we’re all kind of learning and aggregating on how a lot of different types of profiles of customers use their space, we’re starting to go through that exercise of anonymizing it and trying to get a data strategist to make some conclusions, draw some trends and whatnot. But we’re not there yet. We just don’t have a big enough dataset. And the dataset that we have is too in flux because of the last few years. But give us another year or two. And I think you’ll start to see some serious trends emerge to the point where you may not even need occupancy sensors. We might be able to tell you or answer your business questions that you’re struggling with based on data that we’ve seen from similar profile people in Manhattan or San Francisco or LA or Houston, whatever, like regional differences, or even just company objective differences, high growth tech company versus more of an insurance firm or something like that.
Alex Bridgeman: Yeah, that’d be pretty neat. Sounds like some of the data is being organized and you’re looking at ways to do that. Any kind of interesting changes that you’ve seen clients make with their data or adjustments based on data or anything that’s kind of a thing of like maybe you found out like, oh, the optimum temperature is like 68.5 degrees or something like that, and that’s like that point maximization of busyness in an office or some random fact like that? Anything interesting come to mind?
Ed Redden: Only anecdotally. So like nothing that could be generalized for all clients across the board. But a few of these devices are one of the only devices out there, it’s not the only device out there, that not only measures occupancy, but it measures these environmental metrics as well, like temperature, noise, and humidity are also readings the sensor takes every time it takes a reading on is somebody occupying the space or not. So it’s exactly to your point, you can start to draw some trends of like why is everybody- when it’s open seating? Why is everybody using this conference room? Or why is everybody aggregating to this group of desks? And sometimes it’s due to temperature, everybody likes that conference that room faces the west side of the building, and it’s in Florida in the summer, and nobody wants to sit in there because it’s super hot. And sometimes it’s due to natural light, like everybody likes the corner office because it’s got windows on two sides. And so you can kind of see trends of where when employees are given the option where they want to sit, why did they pick where they want to sit? Why are they using that conference room with soft seating, with a whiteboard, or with some type of telepresence type Zoom feature, versus this other one that’s more of a quiet huddle room that candidly never gets used? And then how can we better redesign that space?
Alex Bridgeman: That’s pretty wild. What’s your talent plan look like for this year? What kind of key hires are you excited to make? And do you have a sense for like order of operations of which hires need to come first to make others possible?
Ed Redden: We’ve gone through a very strategic planning process about what are the roles within the company that we need to fill, and to your point, what is the timing of those. You can’t always thread that fine detail. When you find somebody that you want on board the bus, you kind of should just go grab them and get them on board, whether that’s three months early or six months early. If there’s someone that you want to be part of your team and can feel they can add value, you should just go get them right away. So the timing piece of it is always subjective or subject to change. But we have identified 2023 as a definite year of what we talked about earlier, of like sales and sales growth. So we’re looking a lot at trying to add an additional account executives, VP of Sales later in the year, even some business development reps and some customer success managers, because there’s punters that you want to go find new clients. But because of that growth period, where they kind of go from the pilot to the semi rollout with a few buildings to the big rollout, you definitely need customer account managers to kind of manage that continued rollout and to deeper and deeper sell deeper into existing client portfolios. So I’d say that if the short answer is those are the hires that we’re most focused on, we’re laser focused on for 2023. But we can’t take our eye off the ball for needs in R&D product. We just hired most recently, at the end of last year, kind of someone that’s really working on our AI and backend algorithms to do better detection and improve our ability to track things beyond just people, which is a really exciting conversation. We’ll table that for later. But right now, we’re measuring people, but we have the ability to measure everything from a QR code on the top of a Microsoft Surface whiteboard, these tens of thousands of dollars super touchscreen type things. We could if you put a QR code on the top of it, if it goes under an occupancy sensor, instead of detecting people, that algorithm can now say, hey, I just saw a whiteboard go by or there’s a whiteboard in conference room B, if you need to wheel it to the training room, see, you can go find these types of things, like really cool things that you can do in terms of detection of things beyond just people. And then the last hires are always, always, always going to be on the implementation side, specifically focused around smooth deployments, easy to work, with high quality deployments, where it’s kind of pain free for our customers, when they do decide to buy it, that they’re happy that they bought it. And then they have support once it’s installed, and they start looking at this data to help make sense of it. You can get lost in dashboard fatigue and get mixed up, and am I understanding this right, and so sometimes you need some assistance, making sure that you’re reading the tea leaves correctly. And those customer success type roles and QA and ongoing support roles are probably the second most key hire for 2023. And there’s a couple of roles in there for that.
Alex Bridgeman: So it looks like you’re- it sounds like you’re hiring almost like a pod like way where you have, correct me if I’m wrong here, but it sounds like you have the business development or account executives come in. And then after that, there’s the customer service or customer success who kind of manages anyone they bring as a customer, and then there’s the backend product at the very end. Is that how you’re thinking of like each hire progressing? Like you have hired this one person, and then their work creates opportunity for that next hire. Is that how you’re thinking of it?
Ed Redden: I think so, a little bit, yep. It’s very natural to kind of say, hey, sales is the front end engine. And so if you got sales, then you all of a sudden have need for people to do the deployments. And if you do deployments, that you need people to help support and train and onboard your clients post deployment. And so it’s exactly right, the first hire was driving the volume. And so it follows very naturally on that front. But I would say probably, back to my original point, the timing is always very difficult to kind of say, okay, I don’t want to have to wait for the next new big client to make a sale to the next new client before I make the hire that I need in the install patient that piece because there’s a training curve. It takes a new employee that doesn’t always add value day one. They just need to find where the restroom is and who to ask if they have a problem, right? They’re just trying to figure things out. And so they need time to mature. So you always have to hire a little bit ahead of the curve. And you always got to keep a good pulse on what your forward looking pipeline looks like, what you expect it to be, and what’s the ramp up time for the middle support piece that kind of comes after that.
Alex Bridgeman: Yeah, definitely a little bit more about what have you learned about timing that hire, of course, trying to do it ahead of when the customer actually shows up at the company, and they need to be installed and communicated with, like how do you think through, especially if you’re- since you’re trying to grow if you’re not, if you grew 100 plus percent last year, I assume you want to do similar or better this year when you’re trying to grow quickly? How does that affect the timing of your hires and how early and ahead of time you make them?
Ed Redden: We’ve done a lot of great work with strengthening our partner relationships to kind of ease that need in the short term as we prepare for higher volume sales and a really big growth here in 2023. By planting a lot of these seeds, we expect those to mature in 2024 and even further in 2025. So we’ve got time to ramp up kind of the other hires that are needed in other departments. But the most immediate need we’ve solved for either by finding outsource resources to kind of be supplement our team contract resources that can do some of the more repeatable tasks of the deployment. But also through our installed vendors, we used to kind of only go with one vendor, and they were a good vendor to us. But we now have four vendors that we use across the United States. And some different clients have different or some of these vendors have better experience with different clients. But we’ve trained them on how to be more of a subject matter expert on our product and how to install this and kind of own the deployment piece of it, which has really enabled us to multiply our team well beyond what it would have looked like if we tried to hire somebody indirectly, it was a single person and just train them up to speed. It’s kind of the train the trainer model with outsource vendors. And so as we kind of continued to our next challenge for trying to experience as we continue to do more international sales, we’re looking to build out that vendor network internationally as well, we found a great partner to kind of start that in Europe. And now we’re going to be expanding to kind of Asia and maybe even the Middle East to South America a little bit. But yeah, it’s mostly to achieved through partnerships through vendors today, our manufacturing partners and our install partners. But eventually, we’ll turn into more concrete, full time hires at Avuity as we continue to grow.
Alex Bridgeman: And as you’ve continued to grow and are continuing to look for other ways to make that growth faster, what has become painful, what were areas you’re like, oh, I didn’t expect that to be a mess now that we have more things to do, or we’re trying to grow faster, what pain points have come up as growth has continued?
Ed Redden: The one that comes to mind immediately that is not surprising, as expected, but has proven to be a challenge is I come from a big company, so I’ll caveat that I was part of this problem as well. But everybody is very busy, right? And especially when you get into these big multinational companies that got multiple sites and multiple priorities, it’s not always the top of their priority list to get your sensors installed or to coordinate site access and some of these more minute details of an installation, even configuring the product. You ask the customer, okay, do you want to call it conference room 123, or conference room ABC. Like you just tell me how you want it named. And just getting the naming convention that they want for their own rooms is sometimes a challenge. And it’s just because everybody’s busy. So I don’t blame them at all. But we’ve had to put a little more intentionality behind helping our customers have a successful deployment. And then post deployment have a successful interpretation of the data that they’re now collecting. It’s easy to install this and then kind of glance at it every so often or maybe not fully engaged with it. And so we’re here to help them draw those insights and make those decisions that they’re trying to make, without them having to put it at the top of their priority list. And so that’s been a real struggle as we kind of are- it’s been more of a struggle than I think we anticipated. And I think it will continue as we continue to work with Fortune 500. They’re just big companies that have a lot of things going on somebody in the real estate or wants this data and wants this decision. But the guy at that site or the guy or gal at that site whose manager of the Cleveland office, he may not be as invested in the getting the solution deployed and getting the data as the head of real estate who sits in corporate headquarters. So that’s something that we’re just learning to develop and help make it easier on our customers to deploy our product and maintain it as well.
Alex Bridgeman: Yeah, that’s great. What are you excited for this year that we haven’t talked about yet or I haven’t asked you about yet?
Ed Redden: A lot of things. What I am probably most excited about is the discovery process in learning to sell to our prospective clients. Everybody out there today, and a lot of every fortune 500 companies, someone in that organization is asking this question about return to office and how to manage people and culture and how people interact with their office space. But it’s never the same sales process to get them over the hump of, man, that’s a really cool solution. But like, I just don’t have the time, or I don’t have the budget, or I’m not sure I would even use it or just there’s a great sales discovery that’s going to happen as we ramp up sales here in 2023. And I’m excited to learn those anecdotes and solve the pain points that prevent people from doing or investing in the solution that they know will help them or provide the data that they are looking for, they’re craving to make those decisions. And trying to identify what those sticking points are. And help remove those barriers to make a sale, I think is what I’m most likely most interested in, most excited to learn as we go through 2023.
Alex Bridgeman: Yeah, that’s pretty really exciting. Switching gears a little bit, you and your wife, Sarah, are new parents, and being a new parent and at a new venture makes things really interesting and exciting in many ways. What was it like maybe prior to acquiring Avuity considering that you and your wife were going to you have your first child, you’re going to have another one and perhaps more, how did that factor into looking for your first business to acquire and where you would live? And then I would love to dive into life as a quasi like operator within this business being a new parent.
Ed Redden: My wife is a saint in terms of she’s always supported me as I graduated from business school. I partnered with Justin and we decided to embark on this kind of crazy, somewhat crazy journey to do entrepreneurship through acquisition, she supported me through it all. And I took that the obligation of family and the role of being- just I’ve taken that very seriously in terms of we had, it went right along with the partnership that I have with Justin and Justin has with his fiancé soon to be wife, to kind of make sure that what we were embarking on a 20 year career journey, and whatever business that we decided to acquire or whatever path we decided to go down, that it was not just a good decision from a business standpoint, but it also aligned with our values and our personal life goals. We’ve looked at a lot of businesses when we were searching, and we were able to rule some of them out just based on their geography, but obviously bad businesses, we rule out that like some of the businesses were good businesses, but they were in challenging geographies where we couldn’t see ourselves living for the long term, or we couldn’t see ourselves being kind of happy there, they’re going to raise a family there. And when we came across a few, it just so happened that it was in my hometown, right where I grew up, it was new for my wife. And so even though I was very familiar with the city and could tell you, it was somewhere that I’d be willing to live. Now there was a little bit of a sales process to show off Cincinnati is a great city to raise a family and kind of be here for the time that we’re going to be here. I think we haven’t committed to being here for the rest of our lives. But I think it was definitely at the forefront of our minds and an open conversation amongst Justin and I, is this the right business for us as a business and geography for our spouses, but also with my wife to say, is this someplace we want to go live? Are we both in on this? And if she would have said no, we would have passed on the business. And I know that we would have had investor support because some of the anecdotes that they told us, or they came to class and talk to the ETA community about was how they had to say no, because their significant other was not on board with going to wherever it was, they were looking to buy that business. And so we were very open and transparent about it. And through just kind of real serious conversation, we kind of decided that, yes, Avuity was obviously a great business, but it was in a geography that we felt we live in and kind of raise a family in as well.
Alex Bridgeman: Especially considering you don’t have any defined ownership time period, there’s no need for you to sell the business doesn’t mean you won’t, but there’s no need to. So there, it kind of raised the bar for location for you, especially without also being the first business.
Ed Redden: That’s right. And the Evermore philosophy was always to be we have no intention of selling any business that we acquire, we are only going to partner or acquire a great business that we want to hold kind of indefinitely for the long term. We think it’s got a lot of potential in 10, 20 years. But then as we build up the holding company of Evermore, we do our second acquisition, our third acquisition, was never in the cards to move and hop around the country to each one of these acquisitions as we kind of grow the holding company. I was always planning to relocate to wherever the first one was getting heavily involved in the operations. And through the learnings of running this first business, Justin and I had intentionality around building out kind of a playbook around what are we learning as we continue to do this? How can we do this on the next one? What tools, systems, things do we need to make sure are in place as we build out this playbook, which we’re doing actively right now, and we’re learning a ton. The next acquisition, maybe we have to be boots on the ground, but maybe we can now kind of elevate into more of mentors and coaches of CEOs, COOs, VPs of sales and tell them hey, this is what I learned. You bring your experience from your prior jobs and we can work together and it’s not going to require me to be in the office or acquisition number two, we’re acquisition number three and as we build out the holding company in the future,
Alex Bridgeman: And then let’s dive into life with you at Avuity being a new parent of your second child now, how’s that? Whats that been like?
Ed Redden: It was a whirlwind. So we moved to Cincinnati in April, actually ahead of closing on the business that we closed on the business in May 1, we bought a house in June, we had our second kid in August, and like it just life event after life event. And so it was like it was a big period of change in 2022. And we’re kind of just now kind of coming up for air in 2023. And it was all great things, I wouldn’t have traded it for the world. And I’m very blessed and happy with how things have unfolded. But it was definitely challenging. It was definitely challenging. And we had to make personal investments in things that that were high cost, or that we wouldn’t have made otherwise, simply to enable the move and the house and just sanity while we kind of went on this wild part of the journey, which we knew was coming. They’re very grateful. We’ve got two very healthy boys and a great wife, and really enjoyed working with Justin and Brad and everybody here at Avuity to kind of see what we can achieve as we look to grow this business just very, very fortunate on all fronts.
Alex Bridgeman: Are there any habits or things you’ve done that have made life as a new parent easier for you and Sarah with running a business as it is a very intensive role to have? Is there anything you’ve done that has made that easier?
Ed Redden: We have overly invested probably in childcare for our kids, because they’re went back to work part time this past fall. And she’s continuing to work part time; she loves being in the workforce, and I want to support her in continuing to grow in her career as well in parallel with me, but that puts a lot of needs on other people to help out around the house. And so we’ve definitely invested in childcare on that front. And we talk a lot after the kids go down, and we’ve got some time to sit and breathe before we go to bed. We talk a lot about kind of just the struggles I’m going through at work and I’m trying to be transparent with her about you sit around dinner, and you’re like, how was your day? And it’s easy to brush over, oh, it’s good, or this happened or whatever, and have more like intentional conversation or serious conversation about what are the struggles and challenges that not just in the day to day operations and to-do’s but like, what are the struggles and challenges we’re encountering in our marriage? Or in our work life balance in our parenting abilities? And how can we solve some of those? We’re not great at it yet. We’re working through a lot of the dynamics of having two kids and trying to run a business and whatnot. But we’re trying to talk about it a lot and understand why I’m frustrated one day, or what she’s having a really great day, for whatever reason, I think it has been a challenge mostly just because kids take a lot of time and energy. And we’ve been learning to have additional patience with our kids, with each other, with our co workers at work. And I think Evermore’s philosophy aligns very well to that. We’re not trying to get rich quick. We’re actually trying to get rich slow by building a good business over time, that is something that can endure long term. And that attitude and approach gives a lot of grace when I’m sitting here kind of feeling stressed about, man, like I need to make that change, or we need to improve quickly. And it’s like, well, yes, everybody wants to succeed at work and make improvements and go conquer the world and all that kind of stuff. But if it happens in two months versus one month or three months versus that’s okay, that’s okay, we’re going to do it the right way. And we’re not going to cut corners or make sacrifices on things that matter, like our family, and like our marriage and stuff like that. And so definitely have tried to focus on that, that aspect of it and have open conversation about that.
Alex Bridgeman: Is there any skill as a parent or spouse that you’re really excited to improve on this year or work on refining?
Ed Redden: I think I’m looking to- trying to balance this here, because it’s not that I’m looking to improve on my mentorship and coaching of my two and a half year old. But like, we talked earlier about how he’s just in a period of high growth in he’s learning a lot of new things for the first time dealing with a lot of big emotions and stuff. And it’s easy as a parent to discount the fact that like why don’t you get that like, why are you having such a meltdown over this really and whatnot? And you got to remind yourself that like he’s only been on this earth two and a half, three years. And for one and a half of those years, he didn’t know what was going on. So he just started to kind of go to school, and interact with friends and make friends. And today that was the first day that somebody called him a name. And he’s trying to figure out what’s that mean and what were the feelings that were resulting from my teacher telling me that like I did something wrong. And so it’s just like trying to understand how to relate to someone at that level is an ever growing journey. But I’m working on that with my two year old, or my three year old that in a couple of months will be three. And I think that that’s kind of a goal I have for improving my relationship with my kids over the next 6 to 12 months.
Alex Bridgeman: Yeah, I think my earliest memory was three, I think I remember being in the hospital with my mom where she was doing rounds or something like that. And someone asked me how old I was. And I remember holding three fingers up. And that was the first memory. So that’s how I know like, okay, I was three years old, because I held three fingers. Like, it’s kind of like you’re just now coming online and becoming self-aware. And before that is-
Ed Redden: That’s exactly right. And it’s such a fun and exciting thing to be able to witness and be able to be a part of, just because I come home from work. And I ask how was your day and I hear it all, it’s just so funny, he’s so funny and so engaging. But it comes with a lot of responsibility, because you are their guide through all of that, they’re relying on you, and nothing is constant in their life, he’s about to graduate from the toddler program, and he’s going to go to summer camp. And that’s going to be some change. And his friends are developing and going to play dates, and birthday parties and all kinds of things that are first times for him. And the only thing consistent is his mom and his dad. And so he absolutely is leaning on us to kind of help make sense of the world that’s changing in front of them are the feelings that he’s feeling as he’s growing and developing. And I’m excited to play that role as kind of, obviously, just a parent, but yeah, excited to play that role as parents.
Alex Bridgeman: Yeah, that’s funny, as a kid, and when you’re watching your parents, and they’re interacting with the school, with other parents and they’re chauffeuring you over him and take him over to your soccer games, or whatever, I feel like you have this funny perspective as a kid where you don’t really know what’s- you don’t know really necessarily what’s going on. What’s it been like as a parent? Is there anything that as a parent, you’re now understanding about how your parents were raising you that makes sense now? Like I think, for example, my parents would, my both my parents worked while I was in school. And so they would usually come to pick me up at 4:30 or 5, instead of when school got out at 3. And so I’d be in after school care for a while. And as a kid, you’re like, oh, why is this happening all the time? All my friends are getting to go home. Why am I still here? Now as a- I’m not a parent. But as I got older, I’m like, okay, I understand what was probably happening, or what was going on, like they’re both working, they’ve got stuff to do. Is there any realization like that as a parent now? Or things that as a kid, you were confused by or didn’t understand now start to make sense?
Ed Redden: Totally. So, there’s two of them that come immediately to mind. One is this kind of a quick and easy one is that like the struggle of the morning routine. Like, if you cannot budget enough time some days, we could wake up at 5am. And you’ll still be late getting to school, for factors that are outside of my control as a parent, where it’s just like, I can’t, aside from just picking him up and forcing him into the car seat to be on time. There’s just a lot of things that didn’t struggle to, I can remember I used to, my parents used to wake me up, but they didn’t wake me up, they would wake me up and say, hey, you got five more minutes, and then I’m going to come in. And things like that where, why are you not out of bed yet? Or why are you not showered yet, like have you brushed your teeth and like just the struggle to kind of get up and dressed and out the door on time, as a parent is, I’m starting to realize and appreciate all the effort that my parents had to put in to make a lunch for me and to prepare breakfast and like just get the day going. And I was just a passive participant for so many years as a child. And now the roles are reversed. And it’s just like I’m fighting an uphill battle. Sometimes it’s great. But other days, I’m fighting an uphill battle, and especially when I don’t see like getting up or I haven’t had my cup of coffee. And it’s all that much more of a struggle. So that’s the first one that’s kind of the struggle of a morning routine and effort required to just get the day going. But the second one is the importance of faith and faith community. I was raised Catholic, and my parents used to take me to Sunday Mass and our family to Sunday Mass like every Sunday and I used to go and just again, just kind of being this passive participant and even in my teenage years, I didn’t quite value faith and faith community as much as it has totally hit me over the head. As now I am a parent and the obligation I have as a parent to raise my kids in a way that produces them to be a good and kind adult. And I have a real obligation to make sure that they understand what my values are, I’m not going to force it on them, but they need to understand what my values are, what my beliefs are. And just kind of the importance of doing that in a community and the Catholic Church for me, that they feel welcomed, and that they feel like they belong anywhere in the world, I want my sons to be able to go into a church and feel like they belong, that they are welcomed there. And I know that that’s not the case for a lot of Catholics today, and especially non Catholics today. And so just, the importance of not brainwashing them, but making sure that they feel welcomed and that they have that as an option for them. Should anything happen to me or my wife, they can always go find help and support in our faith community.
Alex Bridgeman: Those are great ones. I love those. Thank you so much for sharing a little bit more of your time. It’s been super fun to get to know you. And I think you both were some of the earliest people I got in touch with in the search fund world, like in 2019. I was in my first apartment after graduating, and didn’t really know what was going on in the search fund world or anything. So just getting started. And we’re both at Stanford still. So it’s been super fun to get to know both of you guys since then. But I’m looking forward to seeing you here in a couple weeks. And Austin should be fun.
Ed Redden: It’s our pleasure. We’re very fortunate to get to know you as well and kind of just engage with you as we both kind of explore this space and continue on this journey. It’s been a ton of fun. And so thank you very much for having me on and talking through this. It’s really exciting. Great to reconnect.