Don't Start a Software Company — Transcript

Full transcript

1. 0:00All right, so my name is Hector Quiroga.
2. 0:01I
3. 0:02I'm the owner of an immigration law
4. 0:04firm. We do
5. 0:06>> Immigration law firm?
6. 0:07>> Immigration, yeah.
7. 0:07>> Got it. US?
8. 0:09>> Yes, sir.
9. 0:09>> Okay.
10. 0:10>> Uh
11. 0:1124 million last year or run rate right
12. 0:14now
13. 0:14>> 24 million last year?
14. 0:15>> 24, yeah.
15. 0:15>> Okay.
16. 0:16>> And our run rate right now is 60
17. 0:18million.
18. 0:18>> Nice.
19. 0:19>> Yeah.
20. 0:20Something happened in January. So,
21. 0:22Um we would like
22. 0:24>> That's amazing for you.
23. 0:25>> Yeah. We like to be at 100 million on
24. 0:28revenue.
25. 0:30So, what is stopping me is I'm sure I I
26. 0:33have a little bit of a shiny object
27. 0:35before me, and that is I can expand our
28. 0:38current operation, open more locations,
29. 0:41and why not do more.
30. 0:43But, to get to the 24 and 60, we
31. 0:48developed quite a little technology
32. 0:50inside
33. 0:51our process, procedures, software, apps,
34. 0:54all of this.
35. 0:55>> And it's to the point where it from my
36. 0:58perspective
37. 1:01when when you're trying to develop tools
38. 1:03for the thing, and those tools are
39. 1:05probably more valuable
40. 1:06than the thing itself.
41. 1:08I feel that I could
42. 1:10profit out of that.
43. 1:11>> Don't start a software company.
44. 1:15>> It's too late.
45. 1:16>> It's not.
46. 1:17>> [laughter]
47. 1:18>> Way too late.
48. 1:19>> So, let No, I'll be clear what I mean.
49. 1:21So, this is actually I think this is
50. 1:23really important for a lot of people.
51. 1:24So, a lot of services over time become
52. 1:27more technologically enabled, and you do
53. 1:29that because you want to expand your
54. 1:30service ratio, right? You want to get
55. 1:32You can drive more incremental margin
56. 1:33because you can get one guy who can
57. 1:34normally do 10 deals or 10 customers,
58. 1:37whatever, to doing 100 in the same
59. 1:38period of time. So, it dramatically
60. 1:40improves the margin of the business.
61. 1:42But, the thing is is that the the
62. 1:43decision to then say, "You know what I
63. 1:45could do is I could start selling this
64. 1:47to other immigration firms."
65. 1:49I'm telling you right now, if you have a
66. 1:51hundred million dollars per year with
67. 1:53probably high margins because you use
68. 1:55technology in terms of how you're doing
69. 1:56it, do that.
70. 2:00The likelihood that you that you
71. 2:02actually do true like true software is
72. 2:05such a different animal. But the thing
73. 2:07is is that you can get almost the best
74. 2:09of that world with tech-enabled service,
75. 2:11which is what you have. And so you have
76. 2:12service revenue multiples, so you have
77. 2:14service EBITDA multiples, and then you
78. 2:15have tech-enabled service, which
79. 2:16sometimes can get 13, 15, 18 times
80. 2:19bottom line, and then you have true SaaS
81. 2:21multiples, which you're just not going
82. 2:23to have anyways cuz you're not going to
83. 2:23burn your business to the ground. So I
84. 2:25just don't think it's worth pursuing,
85. 2:26but you can get a huge amount of alpha
86. 2:28in terms of enterprise value lift just
87. 2:30from having the tools, which you have.
88. 2:32So you're doing everything the right
89. 2:33way. Don't just try and sell it to other
90. 2:34people. Just keep using it to maintain
91. 2:37and multiply your your competitive
92. 2:38advantage compared to the marketplace.
93. 2:40This gives you a market leadership
94. 2:41position. You drive more EBITDA than
95. 2:43everyone else does, and for them to copy
96. 2:44you, they have to copy your software.
97. 2:46>> Okay.
98. 2:48Then let me pivot.
99. 2:49>> Then what?
100. 2:50>> then let me pivot just for a second.
101. 2:52>> Head it. Okay.
102. 2:53>> So I'm going to say not to do the
103. 2:54software thing.
104. 2:55>> Sure. Keep Keep building it, but for
105. 2:57yourself.
106. 2:57>> Yeah.
107. 2:58>> Yeah.
108. 2:58>> Now
109. 3:00going into new areas costs me about
110. 3:02150,000
111. 3:04to open a new location, get it done.
112. 3:07It's too slow. I feel like I have I can
113. 3:09only open about two, three firms in a
114. 3:12year
115. 3:13>> Okay.
116. 3:13>> to get it
117. 3:14profitable.
118. 3:15>> Sure.
119. 3:16>> If I could lease my factory, in other
120. 3:18words, I can go to other lawyers and
121. 3:19say, "Listen, family lawyers, bankruptcy
122. 3:21lawyers, other lawyers and say,
123. 3:25'Here's how you sell this. I'll train
124. 3:27your sales people
125. 3:28and feed your cases through my machine.'
126. 3:31Because what they care is about winning,
127. 3:33right? So if you feed it through my
128. 3:34machine, we can we can get that.
129. 3:36I could sort of
130. 3:38amplify the speed on which I could
131. 3:41onboard do more, right?
132. 3:43>> So you just told him long term versus
133. 3:46short term.
134. 3:47>> It's definitely new, to be clear. This
135. 3:48isn't a do more strategy.
136. 3:49>> Yes. [laughter]
137. 3:50Okay. Um
138. 3:52I have it's a follow-up, but that's
139. 3:54that's
140. 3:54>> do more so that I do new so that I could
141. 3:56do more. I was like, I know what you did
142. 3:57there.
143. 3:58>> [laughter]
144. 3:59>> Um so so basically you want to have an
145. 4:01affiliate model
146. 4:03um that you want to introduce to these
147. 4:04other other other attorneys.
148. 4:08>> [sighs]
149. 4:09>> What do you want to do with the
150. 4:10business? You want to do 100 million,
151. 4:11right?
152. 4:12>> Right.
153. 4:13>> So how many offices do you have to open
154. 4:14to get to 100?
155. 4:16>> Probably five more offices, maybe four.
156. 4:19>> So 24 months to go from 24 million to
157. 4:22100 million?
158. 4:24Then why are we talking about anything
159. 4:25else?
160. 4:27No, I'm being super real. Like
161. 4:28>> Yeah, all right.
162. 4:29>> Like this happens honestly more times
163. 4:32than it doesn't happen, which is hey,
164. 4:34I've got this thing. I'm incurring this
165. 4:36friction, right? I have this this
166. 4:37constraint in front of me, and so rather
167. 4:39than deal with the constraint, I'm going
168. 4:40to start a new business.
169. 4:42>> Mhm.
170. 4:42>> It's like the It's like we all do this.
171. 4:45So but the like what's the one thing if
172. 4:47it were true would make all my worries
173. 4:49go away? Well, if you got five more
174. 4:51offices open, you'd be at 100 million.
175. 4:53So let's just do that. It's the thing
176. 4:56you already know how to do. You open up
177. 4:57five more. If it takes you two to three,
178. 4:59I'll bet you if you just put out of your
179. 5:01mind that you could do this other thing,
180. 5:02that if you took all of that effort and
181. 5:04said, how could I open five this year?
182. 5:07>> Right.
183. 5:09>> Then you probably would figure it out
184. 5:10cuz it's not a capital issue. 150's
185. 5:12nothing for a new location relative to
186. 5:13the revenue. You so each office does
187. 5:15what? Like 15 million a year, something
188. 5:16like that?
189. 5:17>> Yeah.
190. 5:17>> Right.
191. 5:18So like
192. 5:21let's do that.
193. 5:22The thing is is like what you're running
194. 5:23into is is a problem that everybody
195. 5:25deals with, but it's just it's purely a
196. 5:26focus issue. And this is why like the
197. 5:28Zuckerbergs and and uh and and Jobs get
198. 5:31on stage and Bezos get on stage and they
199. 5:32talk about how like it's just ruthlessly
200. 5:35focusing. And at every level the
201. 5:36opportunity that you have to say no to
202. 5:37looks juicier.
203. 5:38>> Yeah.
204. 5:39>> Because exactly, cuz you have already
205. 5:40this base. But if you know you can get
206. 5:42100 million and there's very low likely
207. 5:44that that doesn't occur. It's doing more
208. 5:46of the thing that you already know how
209. 5:47to do. And you have market dominance
210. 5:48compared to other people because of tech
211. 5:49that you invested in.
212. 5:51For the love of God, do it.
213. 5:52Just do that.
214. 5:54It's hard though cuz the other thing
215. 5:55looks juicy.
216. 5:56But I would encourage you to just open
217. 5:58the five. If you are a business owner
218. 6:00and you are not growing as fast as you'd
219. 6:01like, I'd like to give you a free gift.
220. 6:03So, my team and I put together the $100
221. 6:06million scaling road map, which is
222. 6:07basically 200 hours of us looking over
223. 6:09all the portfolio companies we've had
224. 6:10and what stages of growth they went
225. 6:13through and more importantly, where they
226. 6:14got stuck and how they got past it. And
227. 6:16so we broke it into these 10 stages and
228. 6:18we made this little kind of quiz thing
229. 6:20where if you put in your business
230. 6:21information, it'll tell you where you're
231. 6:22at and the most important part for you,
232. 6:24what to do for each of functions of the
233. 6:26business across product, marketing,
234. 6:27sales, customer success, recruiting, IT,
235. 6:29human resources and finance. And so no
236. 6:31matter what you're struggling with,
237. 6:33someone else has already struggled with
238. 6:34it and solved it. And so I'd like to
239. 6:36give you this thing absolutely free. You
240. 6:37can go to acquisition.com/roadmap,
241. 6:39plug in your business information and if
242. 6:41you want us to actually help you
243. 6:43deconstruct the business and you're
244. 6:45trying to scale, we'd love to help you
245. 6:46out. On the thank you page, you can book
246. 6:48a call with my team and we will
247. 6:50look at the business, see if we can help
248. 6:52and if we can, we'll invite you out to
249. 6:53Vegas and we'll do this in person live.