You Only Need One White Whale to Change Your Life

I'll keep this quick. I hope everyone knows SMB Law Group. I'm one of the sponsors of SMBash, and as the designee of SMB Law Group, I'm tapped with introducing our company. We are a transactional boutique law firm doing nothing but small business M&A. We all come from sophisticated M&A backgrounds. We're a two-year-old firm, but do high volume. We see a lot of deals: the good, the bad, and the ugly. So whether it's legal advice on your transaction or marital advice on asking for a PG, we've got you covered. The latter isn't covered by malpractice insurance, but you get what you pay for on marital advice.

With that, we're going to move over to our keynote. My friend Chris will be opening up this morning. Chris is a lifelong serial entrepreneur from the Dallas area, my office mate. He's started dozens of companies, sold a few of them, and is also a serial RV and mobile home park investor. Incredibly successful and thoughtful businessman. So with that, we'll turn it over to Chris.

Thank you, Kevin. Let me set the stage. I was in a building like this on January 13th, 2005. It was my 18th birthday. This is Bayside High School, not the Bayside from Saved by the Bell, the one in Palm Bay, Florida. I grew up on the Space Coast.

Around 7:00 PM I found myself laid out flat on a wrestling mat, Florida sugar sand pressed into my face, and a sweaty man on top of me who weighed exactly 286 pounds. I weighed about 200, about the same as I am today, and I was wrestling for Astronaut High School. This guy was almost 50% heavier than me, and it was because of what we called Murderers Row on the Astronaut wrestling team. The weight classes were 189, 215, and 285, but we didn't have a heavyweight at 285. So Coach Hackney would pull me aside and say, Chris, you've got to wrestle up.

This guy was an offensive lineman who weighed the maximum allowable limit to legally wrestle in the state of Florida. I'm on my stomach, trying to get up because in wrestling you can get penalized for stalling. The other team is yelling, he's not doing anything, he's stalling. The ref, who's supposed to be composed, looks back and says, he can't do anything, look at him, he can't move. I ended up winning two to one, barely. I wrestled heavyweight 18 times that year.

My point today is to talk about white whales. Have you read Moby Dick? I probably got the SparkNotes in high school, so ChatGPT helped. In Moby Dick, Captain Ahab is angry because he chased this white whale and lost his leg. He's driven by vengeance to go back and get him. I won't spoil the end, but Ahab had one thing right: he just needed this one white whale and he'd be set for life. He had some other things wrong, but he had that part right.

So what is a white whale? A white whale is a business you're about to acquire, or a business you've already acquired that could get a customer that could change your life, that could change the trajectory of your business. Maybe you want to buy a $500,000 EBITDA HVAC business in Omaha. Maybe your white whale is a $1.5 million EBITDA HVAC business in Omaha.

I want to show you why and how to look for a white whale. I'll give examples for people who have already bought a business and people who have not yet. My goal is for you to have FOMO. I want you to open up your laptops and start to do some research. I want you to want to wrestle up like I did, like Coach Hackney made me do. Maybe you're thinking, I don't have the tools, I don't have the motivation, I'm afraid of what people will think. I'm going to help drive those tools into you and drive that fear out of you.

I found this headline online and I loved it: "Study finds 100% of men would immediately leave their desk job if asked to embark upon a transatlantic expedition on a big wooden ship." We crave adventure, but we're stuck in spreadsheets all day. We can still have adventure in spreadsheets. We can still have adventure when we call up a seller and we say something that gets his ears to perk up. Sam said earlier, we all have competitive advantages, we're just not thinking about what ours are.

This first guy is Brigham Young. He marched into the valley a couple hundred years ago and said, this is the right place. Frankly, I wish you would have kept going to San Francisco, but Salt Lake's cool too. The next guy is my third great-grandfather who was on that expedition. He was a pioneer. I want to be, in my own small biz world, a pioneer. He marched in alongside Brigham Young and raised a family there. I named my fourth kid after him.

For a few years, I taught Sunday school every single morning to high schoolers. I asked about 27 of them, mostly boys, who were tired: have you ever had a daydream about preventing an active shooter situation and being hailed a hero? As soon as I said that, every single boy had a smile across his face. It told me we are all craving adventure. We all want to do one big thing that could change the outcome of our lives, but for whatever reason we're not. Maybe we're insecure, maybe we fear rejection, maybe we don't have the tools of creativity, maybe we're worried about what people think.

You've heard stories about people in a competitive home buying market writing a letter to the seller, and it works because sellers are people too. We hear those stories and think they're common, but there's survivorship bias. We're not hearing about the 95% of people who don't think to do that. My thesis today is that there's a 95/5 or 80/20 going on in this room. Most of us are like, this is just what you do, you go to conferences, do $500K EBITDA minimum, get a broker. I'm asking you to try to be in the 5% or 20%, to be a little more creative, to get a deal that takes 20% more energy, 20% more time, 20% more money, but has 200% more upside.

My two examples today: a $1.5 million EBITDA HVAC business as opposed to a $500K EBITDA HVAC business. Or if you've already bought a business, let's say a $500K EBITDA machine shop.

I know we want frameworks. I'm going to give you specific steps.

Step one: identify all your former and future white whales. I added "former" at the last minute because we've all done the white whale thing before in some way. Kevin asked me to speak, and I thought I'd talk about white whales because I've got two cool stories. Then I started planning and realized I'm not going to have time for those stories because this is a pattern in my life. I try to find these white whale opportunities all the time. I've gotten to the point where if I have an idea, I won't launch it unless it's a white whale. So before you start thinking about your next white whale, think about what you've done from age one to today. That will help build your confidence. You'll realize, I can do crazy things. I asked the hottest girl in the bar to marry me, and she did. I've done things. Why aren't I applying that to this?

Step two: identify your future white whales. Let's say you want to buy in Omaha, Nebraska. There are 36 $500K EBITDA HVAC businesses, and there are seven that are $1.5 million and above. Those seven are your white whales. You're going to generate ideas of how to locate and identify them, because we don't just want the office number or fax number. We want the owner's private cell phone number, preferably his home address. If you don't feel a little bit uncomfortable that you might be stalking, you're not doing it right.

Step three: generate ideas of how to kill your whale. Kill equals the offer. You're not going to waltz into a guy who has a $1.5 million EBITDA business and convince him to sell to you when he probably has a lot more competition at that level.

Step four: execute until failure or success. It would be sexy to say just keep going until you get it. But he might not want to sell. These aren't listed on the market. You have to get to the point where the additional time, money, and investment isn't worth it. If so, pivot. Go to the next white whale. If you succeed, find another whale. You only need one, but we want more.

Let's go deeper on step one. How to get to the number. Let's say we're at $500K EBITDA. What's your EBITDA? $500K. Could you do $600K? Yeah. What about $700K? It would be pushing it. What about $1 million? I don't know, that's a lot, because I've got to quit my job and there might be a PG on the line. Your number is your number, but it needs to make you feel uncomfortable. It needs to be a number that's not going to bankrupt you, but makes you sweat a little. It's not just a goal, it needs to make you feel a little pressure.

When you go after these white whales, start from least to most critical. We have seven in Omaha. Maybe one is right next to our house, beautiful, we love it. We're going to hit that one last because we want to practice with the ones we don't like quite as much, because we might screw it up. We want the most experience when we go to number seven.

You need to be intentional about the process. Think of a sardine fisherman. He goes out a mile every morning, slings his cast net, brings in some sardines, goes to the market every day. Everyone knows him. That's not you anymore. Put that behind you.

My business partner and co-founder Nick is right here. He'd been working for the man for a while and said, I want to buy a business. He lived in Southern California, that's his market, his wife loved the area. But he said, I want to buy a business in Boise, Idaho, in medical billing. He wasn't thinking of it as a white whale, but looking back, that's what it was. It was that or bust. He looked, he looked, he looked. He found one for $3 million. He bought it. I was a tiny investor, he didn't even need me. I just wanted to be a part of it. Two years later, almost to the day, he sold it for $7 million. He wasn't even the operator. He gave an operator 10%. Three to seven in two years. That's white whale.

Be intentional about this process. Be very thoughtful. This will change my life. This is going to be a bigger deal than I expected, and I'm going to continue until I snag my white whale.

Now, generating ideas of how to locate your whale. That can be the hardest part. Let's go to the machine shop analogy. You have a machine shop in Dallas, Texas that sells to hobbyists and small business owners. Average customer gives you about $20,000 a year, 25% margin, so $500K EBITDA a year. You read an article that Safran, a publicly traded airplane seat manufacturer in Gainesville, Texas, an hour outside of Dallas, just got a big Airbus contract and is going to be making a lot more seats. You're FAA certified, but you don't have any seat manufacturer customers. This is a publicly traded company, much bigger than your current customer base. They're going to be making so many seat back fasteners and they could use you. This is your white whale because your average customer brings you $5,000 a year in net profit, but these guys would bring you $500,000 a year. They need you. They don't know that you're tiny. They don't care. They want a good product and good service.

Here's how to find more contact information on sellers or customers. We'll send out the slides afterwards.

TLO is software that's hard to get access to. You can go to Upwork and find freelancers who have access. TLO gives you so much information on a person you feel like you're breaking the law as you read it.

CPAs: hire one to hire 10. Don't go to one seller at a time. Go to one person who touches dozens of sellers. They know their books. You could skip the whole process of going directly to sellers and go directly to CPAs and say, do you have any HVAC businesses that might want to sell, owners getting near retirement age?

Upwork: find a skip tracer, very affordable.

SearchBug: I use it for mass-validating phone numbers. It's about three cents each. Upload a list and it tells you landline, VoIP, cell phone.

Outscraper: I use it to scrape large quantities of businesses across Yelp, Google Maps, anything.

TruthFinder: a cheap, light background check service.

Slybroadcast: send ringless voicemail drops. If you have 400 white whales, you could send a voicemail to all their phones without their phone ringing for about 20 bucks.

EmailSherlock: a reverse email search. If you have their email but not their address, upload it and it will give you everything else.

Phone Validator: same as SearchBug but one at a time.

Batch Skip Tracing: like TLO but in bulk.

I like to find sellers where they're not known. Strava: maybe they're well known on a social media platform but also on Strava. Comment on one of their Strava activities and you compete with no one. I get a ton of DMs on Twitter and don't read most of them, but on Instagram every DM still feels novel, so I read and respond to all those.

YouTube: comment on their videos. Most boomer sellers don't have YouTube accounts, but they could be commenting on other YouTube videos.

Goodreads, TripAdvisor: anywhere someone has a username, you can find them. I found a seller on TripAdvisor once.

Paid LinkedIn ads: I read a story about a guy who really wanted a job, so he found the hiring manager and used paid LinkedIn ads to target ads with his own face pointing at himself, naming the hiring manager by first and last name, saying, tell your friend John to contact me to hire me. John started getting texts all day from randos saying, what is going on, are you being scammed?

PayPal: this is genius. Take a list of email addresses. You don't care if they have PayPal accounts. Upload to PayPal in bulk. Send them all five cents, two cents, a dollar. If they don't have a PayPal account, even better, because PayPal is now hungry for them to make an account so they can claim their money. PayPal does the follow-up for you. Cash App or Venmo: same thing.

Find all their usernames on all platforms. Go to Google, search their username in quotations, and Google will show you all the websites, message boards, weird places, Reddit, where they're using that username.

Twitter advanced search: Google the phrase "Twitter advanced search," bookmark the page, and search for things like "contact info."

I did this to find John McAfee back in 2018. I had this idea I could predict where crypto was going. John McAfee, the most private person in the world, the late John McAfee. I didn't know his email. I guessed it. I tried jm@mcafee.com, John@mcafee, JohnMcAfee. They kept bouncing back. I found his email and showed up at his house after he said I could. It was 1:23 PM on February 27th, 2018. We started a business together and got 60,000 customers. It grew really fast, then crypto crashed and it all crashed, and then he died in a prison in Spain. Classic story. If I can contact a guy who does not want to be contacted, I promise you can find a guy in Omaha who owns an HVAC business.

Step three: generate ideas of how to kill your whale, which is the offer. From Moby Dick: "From hell's heart, I stab at thee. For hate's sake, I spit my last breath at thee." You are going to get this whale. You need a good offer, you need to be creative. If you're not creative, go to a friend. Someone in this room is really creative. Ask for their help.

Strategy: pride. Get his pride involved. Never say to a seller, what's your bottom dollar? If his bottom dollar is a million bucks and you'll pay $1.2 million, and you say genuinely I can't pay more than $1.2 million, he already told you his bottom dollar. Now his pride is involved, and pride is the most powerful force on earth. Just say, hey, what's a ballpark? That's my favorite word. If he says a million, then you can get to $1.2.

Flattery: compliment him on his business. He'll love you. He spent 30 years on it. Compliment specific things. Don't say, you've got a great business here. Say, I love how you expanded to Lincoln back in 2017, that was really smart, college towns are a good place to be. He'll think, this guy with a vest really knows his stuff.

Friendship: are you more likely to get money from a friend or a stranger? Become friends. Play the long game. He'll be more likely to accept an offer he otherwise wouldn't.

Storytelling: tell him your story. I went to Northwestern, had this investment banking job, 80-hour weeks, I hated it. My friend bought this HVAC business. I thought I could do that. Don't just say, this is my buy box.

Most important: a stupidly good offer. This trumps all of those. It has to be creative, but not too creative. If you say, let's do a JV and then buy back some equity and over time we'll earn out, he'll say, dude, how much do I get? Creative, but simple.

Have intimate knowledge of his business. Web Archive: look at the history of his website. There's a good chance it's never changed. Do this research on all your white whales.

False confidence is confidence. Jacob Becker bought a business that was a white whale, a Florida events business way bigger than he thought he could afford. There were 28 people vying for it. He said, I'm your guy, I'm going to take care of this business. Luckily the seller was also the landlord, so they'd be married for a time. He bought it and it changed his life. False confidence is confidence. We say, I'll fake it till I make it and then I'll be confident. No, when you're faking it, that's you being confident. You're already there.

Be transparent. Jacob said, I'm not the most qualified, I'll have the money at closing, I don't have the pedigree, I've never done an events business, but I will do the best job and I will come up with the money you're expecting. Be so transparent you almost cringe at yourself.

Creative deal structure. Positive ROAR: I made up this acronym, return on additional risk. There are economies of scale here. To go from $500K to $1.5 million EBITDA, it could be 20 to 30% more risk, more headache, more heartache, but two to 300% more upside. More upside on the exit because you're starting from a bigger basis.

Mining story. Three years ago, China backed out of Bitcoin mining overnight. All these enterprising Americans wanted to get in. Nick and I started talking. We thought, this is a very short window, if we can get in now, let's do it. We went to BizBuySell. Believe it or not, there are still deals on BizBuySell. We found two mining facilities, both two and a half megawatts. One was in Oregon listed for $3 million. One was 30 minutes from my house listed for $750K. This was a white whale. I didn't have $750K, and this guy was getting mobbed. Bitcoin was going crazy, China had just exited. But Nick and I just kept beating him up. His name is Josh. He lived in West Texas. I've never seen his face to this day. He has such a generic name, I've never met him in person. I just kept calling. We had a bunch of conversations, became friends. He said, you remind me of me when I was younger, I like you. We did a deal. We paid $700K down from $750K. He seller financed $650K of it. We only put $50K down. We tied the repayments back to the price of Bitcoin. As Bitcoin dropped, our payments got all the way down to zero, and he would hold them. It was creative. He could have sold all cash to anyone else. Now we're in the process of selling this facility for a pretty healthy profit.

Next story, you may have read this on Twitter. I went to Buc-ee's four years ago. I thought, these guys must crush it online. I opened my phone, no shop button. They don't sell online. They were a $2 billion company at the time across only 40 gas stations. I cold-emailed the CEO. He wouldn't answer. "You need to sell online." I had an e-commerce logistics company at the time, so the pitch was, we'll do it all for you, fully managed. No response. We said, what if we launched it for them and maybe it becomes a business of our own. Maybe they buy us, maybe they sue us. It's a great story. Or maybe it just generates PR to drive to our e-commerce fulfillment business. It's asymmetric.

I took my family to Buc-ee's. We bought one of everything. It cost $2,000. I documented everything. We listed it on a website, cold-emailed reporters. They loved it, called Buc-ee's for comment. Buc-ee's said, we've never heard of it, I want to talk to this guy. The reporter called me back and said, the Buc-ee's in-house counsel wants to talk to you. I said, here we go. We talked and he said, I love this idea, we love e-commerce, we just don't want to do it. If you want to do it, pay full retail, mark it up as much as you want, just don't confuse the customers, because there's this thing called first-sale doctrine where you can sell any company's stuff, you just can't pretend to be that company. We put disclaimers up there. We've been in business four years, do mid-seven figures in revenue, it's profitable, growing steady Eddie. We're the only website dedicated to reselling Buc-ee's stuff. It all started with, what if we tried this, wouldn't that be crazy?

Step four: execute until failure or success. Captain Ahab failed for a specific reason. He was driven by vengeance. The same whale had taken off his leg and he was angry. You are not driven by vengeance. Ishmael, the narrator, was the only survivor. That's how it ends. He didn't kill the whale. Here I am talking about white whales, and it didn't even work in the book I'm referencing, but it's because Ahab's why was off. He had the wrong why and he didn't pivot. He could have said, I tasted a white whale, he took off my leg, that's a lot of blubber, I can sell that for a lot of money, I'm going to find another one. He could have pivoted at any point. If a seller is just saying no, go down the line. Pivot.

Step five: rinse and repeat. Better to sail with a vengeance-seeking captain than none at all. Chip on your shoulder. When that first seller tells you no, let it drive you to the next one.

These are some of my white whales. I wrestled up in 2005. I served a mission for my church in Hungary and it completely changed my life. I left a gamer and came back ready to conquer the world. In 2010 I was in college, signed a five-year lease with a personal guarantee for a store that was the dumbest decision according to all my mentors at the time. I wanted to fix iPhones. They said, start in your dorm room, start small. I said, no, I'm going for broke. I don't recommend that, but I exited and made a lot of money for a 20-something. In 2014 I had another business. We were living in Alabama, happy. I looked at all my customers and they were within a one-day drive of Alabama. There aren't a lot of big cities within a one-day drive of Alabama. I pulled out a map and saw Dallas had one-day shipping to all these big metroplexes. We moved my family to Dallas and my business went from this to this. Then the McAfee story, the Buc-ee's story.

You are Ishmael right now. I can give you ideas, you can write down these websites, but it's up to you to execute on this plan.

It would be great if the acronym worked out to a talk about having a bias for action, but no, it's: you only need one white whale. You're taking asymmetric bets over and over, and your life completely changes for the better. Right now you might be thinking, I'm going to buy a $500K EBITDA business, do it for a couple years, then do another one, tuck it in, roll it up. Let's skip a lot of that. It's not a proportional amount of risk to the amount of upside.

Downside: you have a great story. I have all kinds of white whale stories that didn't work out. I did a Kickstarter once that completely failed. We took my family on a road trip around Europe. Serbia stopped us at the border. We turned around and went to Italy. Great stories.

I've always wanted to do this: look under your chair and you'll see a white whale sticker. I put stickers under every seat. Put it on your computer, your mirror, your desk. It cost me about 46 cents apiece. It's a reminder you should chase your white whale. Now you're accountable. Talk to your spouse. Maybe your goal is the same, maybe different, but you're accountable to it.

I've noticed all these stories started at the end of the sentence, "what if we tried?" So please try. Thank you.

I have about 10 minutes for questions.

Question: When you come across a seller who's open to selling, you're open to buying, there's alignment, but they don't have great-looking financials, and they don't want to do the work to fix it, how do you go around that?

A lot of these white whales will disqualify themselves. You learn it's not a great business. What you see on a spreadsheet is not what's happening. You go down the list. I'm not a serial acquirer, I've bought two or three. It's a judgment call.

Question: You talked about bringing your family into the business ideas. When you forecast a year and say, we're about to sprint on something, do you literally have a family deal, like dad's going to be heads down for six months?

I wish I were that organized. That would sound good from stage. But I do tell them, hey, I'm in a busy season. I try to never miss dinner or sports. Sunday is mostly no work. Saturday is mostly no work. Weeks are busy. I tell them, we've got this closing in three months, this is going to be a busy season, and then we'll go on an RV trip.

Question: Sounds like you've worked with a ton of business partners. What have you learned about that relationship over the years?

I recommend having a partner. Get to know their spouse more than you might think, because that can make or break a deal. You might have the perfect partner but not the perfect spouse. Every partner you add increases the chance of complexity by triple-digit percentage points. I've had double-digit partners, some bad experiences. It would be easy to say don't partner, but it's just funner with someone by your side.

Question: Are you game for talking about what white whales you're chasing right now?

A lot of the stuff I do, I get to a point where it's a white whale, and 70% of the time I never launch because the white whale doesn't work out. Right now, I want to have a home base website where everything I talk about on my podcast and on Twitter can be found. It would basically be a marketing website where the services are white-labeled on the background, because I'm not good at operations and it's taken me 15 years to learn that.

Comment: I love how you make your outreach so personal. I get so much inbound: "I'm looking for an agnostic deal, my deal terms are blah to blah." I just dump it in a folder. There's no personal outreach. That is how searchers win the deal, by being personal. Private equity guys don't do that.

Has there been a time when you realized you missed the value the seller had and you got the deal because of that?

I don't think so, because I'm not buying a lot of deals. I can count on one hand the businesses I've bought. There are times when I have such a broad buy box that I feel like I'm wasting a lot of value. I take on too many leads and don't have the bandwidth to give these sellers the time and attention they deserve. That burns me, because some of them have been burned in that process.

Question: Could you talk about your mentors earlier in your journey, how you found them and conveyed to them, I'm someone worth investing time and betting money in?

I served my mission in Hungary. I grew up lower middle class, so I didn't have a network of people who could invest in me. I met a guy on my mission who was a small business owner. When I wanted to start my first real business, called Phone Restore, I was waiting tables at a Thai restaurant and was close with my boss. I thought, he must have a lot of money. I went to him and said, I need $50K or $20K to open this business. He said, send me a deck. He sat me down and said no, I don't think it's a good idea. I take things personally and it's just fuel, a chip on my shoulder. So then I went to the guy in Hungary and said, I've got this idea. He said, where do I send the wire? He didn't want to see the deck. The person is more important than the idea. It's about having the mentor who is more trusting in you. He wired me money, it worked out, he got a great return. Next time he wired me more money. It worked out.

Question: You have a lot going on. How do you possibly manage it all?

It's tough. I have an executive assistant, a couple of virtual assistants, we're hiring a chief of staff. I'm not managing it all very well right now, period. I believe in Parkinson's Law a lot. Take on too much and the less important things will show themselves and you'll forget about them. That's good. It's natural attrition. If I take on 50 projects, I'll know pretty soon which are worth leaning into. I used to stress, I forgot about this thing, I'm going to make a spreadsheet. Now it's like, if I forgot about it, it wasn't important.

Question: How do you determine that it's really dead?

When your return on additional risk turns negative. The cost might not be monetary, it might be opportunity cost. On paper, this is 20% more risk for 200% more upside, great, keep chasing. Then it's, I don't want to sell, I don't want to sell. That 20% risk is now 60% because I'm ignoring all these other white whales. Now my cost is 220% and I've turned negative. I need to go down the list.

You just have to get rejected a whole bunch. I got rejected 22,000 times knocking doors in Hungary, that's not an exaggeration, and I baptized nine people. That would be a failing business in any industry. I did so poorly from a conversion-rate standpoint that when I got home, rejection didn't faze me. You just have to keep going.

Thank you.