Summary

Ron Holt shares his entrepreneurial journey from working in a lab to founding Two Maids and a Mop, detailing the struggles, strategies, and lessons learned along the way. He emphasizes the importance of grit, mentorship, and innovative business models, particularly the Pay for Performance system that transformed his cleaning business. Holt also discusses the pivotal moment of franchising his business, inspired by his relationship with Subway's founder, Fred DeLuca. In this conversation, Ron Holt discusses his journey in franchising, focusing on the impact of automation, the challenges of selling franchises, and innovative strategies for finding franchisees. He shares insights on customer relationships in home services, the transition to a new business model in the moving industry, and the process of selling his franchise business to a private equity firm. Holt emphasizes the importance of maintaining frugality in business growth and learning from past mistakes while expanding into new markets.

Takeaways

Ron Holt transitioned from a lab job to entrepreneurship.
Reading about Warren Buffett inspired Holt to pursue business.
Holt saved $150,000 over six years to start his business.
The cleaning industry was fragmented, presenting an opportunity.
Holt's Pay for Performance model motivated employees and improved service.
Franchising was initially seen as a dirty word in the cleaning industry.
Mentorship from Fred DeLuca was crucial for Holt's success.
Holt's business grew from a single location to multiple franchises.
The importance of customer feedback was emphasized in Holt's model.
Holt's journey highlights the value of resilience and adaptability. Automation has changed the economics of franchising.
Selling franchises requires a different skill set than running them.
Finding franchisees can be achieved through innovative marketing strategies.
Customer relationships are crucial in home service businesses.
Transitioning to a new business model can be driven by personal experiences.
Disrupting an industry requires a focus on customer experience.
The sale of a franchise can happen quickly with the right partners.
Valuation in franchising typically ranges from 10 to 20 times EBITDA.
Maintaining a frugal mindset can aid in sustainable growth.
Learning from past mistakes is essential for future success.

 

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Transcript:

JON STODDARD (00:00.878)
Welcome to Top M&A Entrepreneurs. Today my guest is Ron Holtz. Ron Holtz started a company called Two Maids and a Mop and he grew it to 93 locations and sold that off to a private equity firm. And he's got a new project called Pink Zebra. So welcome to the show.

Ron Holt (00:20.77)
John, I'm glad to be here. I'm honored to talk about my story as an entrepreneur and how I got in and out of it.

JON STODDARD (00:26.698)
Yeah, yeah. So let's go all the way back and I wanna talk about your ordinary life. What were you doing before you started this two maids and a mob?

Ron Holt (00:37.058)
I was a nerd. I was a biology guy and worked inside a laboratory in Atlanta, Georgia, and made very few dollars. And that's what I did because that's what I went to college for, but I realized pretty quickly that that wasn't for me. There was a lot of corporatism, even in a scientific world. Just a lot of people kind of taking care of themselves inside their middle management position.

And I saw a long career of probably success and even, you know, strong earnings and income, but I also saw sort of an empty feeling that I didn't want to live for the next 10, 20, 30 years. So I worked inside of a lab. That's what I did.

JON STODDARD (01:20.062)
Yeah. So where did you get that first inkling, this call to adventure of, I'm gonna go start a maid cleaning. I got a engineering degree and I'm gonna go start a maid cleaning business. Where did that come from?

Ron Holt (01:33.774)
So it's kind of a long tale. I'll try to truncate it into manageable bites here. So it started, I'm an avid reader. I didn't read anything in college, but for some reason, once I graduated from college, I just fell in love with books, and mostly non-fiction business marketing sales related. So this name's gonna sound very familiar to you. Everyone knows it, but at the time, I didn't know who he was, but I...

JON STODDARD (01:39.021)
Yeah, yeah.

Ron Holt (02:01.19)
sort of stumbled into this book about a guy named Warren Buffett and just devoured everything about him. You know, just fell in love with his mentality, his thoughts on life and business and investing. And he made everything sound so easy. You know, he's this Midwestern guy that makes, you know, life seem simple. And so I said, gosh, if Warren Buffett can become this global name billionaire, then I can too.

So I started believing that there was a way to earn money and have a productive, happy life in other ways besides working for the man. And that's what initially grew me to just even thinking about the idea of becoming an entrepreneur, the cleaning business idea came much later, but that was step one.

JON STODDARD (02:49.682)
Did you try anything different? Like, you know, he talks about investing. So a lot of people go, oh, I'm gonna go buy class B shares, right? I did. And it, I did look pretty good with that for a while because I couldn't afford the A shares.

Ron Holt (03:02.638)
I've owned class B shares for, gosh, at least 20 years. Yeah, maybe even more than that. So I've been to Omaha way too many times. In fact, one of my cool claims to fame, years, three or four years ago, maybe five years ago, I was featured the night before on CNBC about people who are trying to become the next Warren Buffett. And as cool as that was to have a prime time feature on CNBC the next day in Omaha.

JON STODDARD (03:08.6)
Yeah, yeah.

Ron Holt (03:32.334)
I was featured inside the arena with all 10,000 shareholders there along with Warren Buffett and Charlie Munger watching and listening. So for a short period, Warren Buffett was learning about Ron Holt and Two Maids and a Mop.

JON STODDARD (03:48.686)
Great. So how did this start? So tell me, like, why did you end up with this? Did you buy it or just start by a franchise or what happened?

Ron Holt (04:01.354)
So I didn't really think about big things early on. I just thought I wanted to be an entrepreneur. And so all the empire building came much later. But early on, I just wanted to sort of own my day. I wanted to own my future. And that was going to be a business. And so step one was just trying to figure out how much money would I need to start a business. I had zero. So anything north of that was going to be helpful. For some reason, I came up with this really

round number of $150,000. Don't know why, but I did. And so I started just literally pitching pennies day after day, month after month, year after year. It took me six years, but six years later, I was able to save $150,000 from all sorts of different avenues. And during six years, it had...

JON STODDARD (04:47.726)
Six years, yeah. Yeah, so, I mean, what were you gonna buy something at the end of it, or is that what you thought you needed to save up?

Ron Holt (04:58.022)
So it felt like 150 million. So I thought I could start any business for 150K. I was very naive, obviously. What I learned during that growth and that journey was that I couldn't start just any business. And so I was really sort of fond of services. I didn't know if it was gonna be professional services or what we later learned to be consumer services. And it...

The road sort of led me to the residential cleaning industry as I'm saving that $150,000. Step one was again, I just love services. I really think that services has recurring revenue behind it in most cases. There's a way to sort of penetrate the market in an easier fashion because most people go straight to products. Once I said I want to be in services, home services became really interesting to me because I saw a lot of fragmentation.

Even though there's a lot of franchise brands across most home service industries today, in those days that wasn't necessarily the case. A lot of people were literal mom and pops just trying to clean a house or two a day and call it a business. So I said consumer services was going to be the world I live in and then once I said consumer services I looked at everything from the normal things, painters to plumbers to lawn service to...

House cleaning and house cleaning seemed like the most attractive industry to me mainly because it was the most fragmented It had a bunch of folks who really didn't want to do it But there was some money in it kind of brainless and so that they decided

JON STODDARD (06:33.002)
Yeah, so let me ask you about that. I mean, people say that like go after industries that are fragmented, but what's wrong with fragmented, you know, unfragmented industries.

Ron Holt (06:45.398)
Well, so what I saw as an opportunity with the fragmentation was that there wasn't a uniform service offering in any market. There was a few brands here or there, but most people were just one location businesses. And with that came a lot of unprofessionalism, very few systems, no efficiency to any of the business model. There wasn't probably even a business model.

And with that fragmentation, a lot of businesses went in and out of the market on a regular basis. And so I assumed that customers would have some type of pain from all of that in and out of the marketplace and that that's where we would be able to to fit in that marketplace. I also saw a strong demand inside that residential cleaning world that I felt like would continue to grow. And I didn't see really anything inside the industry from a national perspective to regional to local.

where somebody was trying to do something about it. Everybody just said, hey, I'm another cleaning business. I've been around for 20 years. You should hire me because, you know, because that's how it works. Your neighbor hires me. But I didn't see anything that said, look at us, this is why we're different. Customer, this is why you should hire us. And so I saw all of that and said, that's where my 150 is gonna go.

JON STODDARD (07:58.059)
Yeah.

JON STODDARD (08:02.41)
Yeah. When you said, were you actually just doing this in your head or you were creating a business plan? I mean, the formal kind of, I'm writing this down. I'm taking total addressable market. I'm taking the behaviors of the market. Yeah.

Ron Holt (08:09.495)
Yeah.

Ron Holt (08:15.234)
That sounds really smart, but I was a science nerd, remember? So no business planning, unfortunately. It was all in my head. Now, there was a lot of thought, like hours and hours, days and days. I shut my life down for those six years to really focus on what my next phase would be. There was really very little social life. Friends were few and far between. I just made those choices.

JON STODDARD (08:18.177)
Hahaha!

Ron Holt (08:39.986)
And so almost every waking moment that I wasn't working towards that 150, I was thinking about what the business was gonna look.

JON STODDARD (08:46.53)
Were you bouncing that off anybody, wife, friends, buddies?

Ron Holt (08:49.998)
Oh, so many people got sick of me because, you know, people want to go play a round of golf and I would end up talking about business for most of the round. Or if somebody said, hey, let's go have a drink, then I would end up wanting to talk about business. And it kind of wore on people. And you could tell people you can even see sometimes they would roll their eyes. But I loved it. Still love it to this day. It's fun to me. I we could talk for hours and I'm not going to get bored with this conversation because I just eat it up. It's.

JON STODDARD (08:59.427)
Yeah.

JON STODDARD (09:16.758)
Yeah, yeah, yeah.

Ron Holt (09:17.566)
It's fun to me as watching a football game.

JON STODDARD (09:20.47)
Yeah, that's why they call these masterminds now. Cause now instead of your golf buddies, you can go to these masterminds and hang out with people that are doing the same thing you are. Yeah. Yeah. Yeah. And so, so what was it like, Hey, I'm going to start this franchise or what, what, where was the genus of that?

Ron Holt (09:28.094)
Yeah, fellow nerds.

Ron Holt (09:39.37)
Yeah, so the original plan was I was actually going to buy a franchise, an existing franchise that was for sale in Pensacola, Florida. I was in Atlanta, Georgia, and I had this idea in my head that if I'm going to start a business, it should be in this tropical destination so that I could work hard and play hard. I thought that play hard meant fishing and beaching and all these things you do in Florida. It turns out I could have opened in Des Moines because Des Moines would have been just as

JON STODDARD (10:09.002)
Every place has houses. Yeah. Ha ha ha.

Ron Holt (10:09.154)
little free time. Yeah, that's true. They have fishing and boating and all these great things in Pensacola, Florida, which is where the original Two Mates started, but there was zero time for that. But my original plan was to purchase an existing franchise that was for sale. This is where my young rawness kind of hurt me. I quit my job, which was great at the time. I was making really good money, traveling the world, managed to

chemical engineers that were twice my age, all these great perks that came with it, quit my job, sold my house, relocated to Pensacola. There was one little sentence in the purchase agreement that allowed the deal to just die at any point for any reason, and that's what happened on the day of the closing. I walked in the office with this business broker, they were ready to sell the business to me, and she said, he's not gonna make it, he's not coming today, and I said, what does that mean?

And so I was without a job, without any income obviously in this foreign town, thought I was going to own a cleaning business. It went through all sorts of prep in my head and really become very fond of the industry because of that and didn't have a business, didn't have a cleaning business. So I immediately said, okay, well, you know, let's figure it out. Good entrepreneur, what do we do? We solve problems. And so I started a cleaning business from the ground up. Didn't think I was going to do that. I didn't think I was going to have to.

learn all the things I had to learn. I thought it was going to be a little bit easier. Like a lot of things in life, it was a blessing in disguise because I was forced to learn so much about the industry. I even had to learn how to clean a house and all those nasty toilets. So yeah, but I didn't think I was going to have to. When I bought, when I was agreeing on the terms of this franchise that was for sale there, I thought I was going to just sort of be in the wings talking about numbers. You know, I didn't know I was going to be talking about house cleaning, which

JON STODDARD (11:46.12)
Yeah, I hope so.

Ron Holt (12:02.882)
When you start a house cleaning from the ground up, you absolutely talk house cleaning on day one.

JON STODDARD (12:07.966)
Yeah, yeah, yeah. And you start, my wife, you work in the hotel restaurant business, you start from the top up and move down. That's what I learned how to clean the bathrooms when she said I'm not cleaning the bathrooms anymore. Yeah, yeah. I didn't know that. Anyway, yeah. So how long did it take to you get these, like your franchise, your first one, you're cleaning houses and you're, when did it start making money? How long did that take?

Ron Holt (12:16.501)
That's it. Top, bottom, left, right. You got it. That's the book.

Ron Holt (12:26.094)
I'm going to go ahead and close the video.

Ron Holt (12:37.186)
Well, another crazy story. So it took me two years to earn a profit, three years, almost three years, at least to earn my first paycheck. Those first several months were really rough. No, thankfully I had that 150 that I was living off of somehow. I didn't need a whole lot of good food and believe it or not, the girls weren't it real excited about me back in those days. So I didn't have to worry about dates and fun things like that.

JON STODDARD (12:45.614)
So you didn't take a paycheck for three years. Yeah.

JON STODDARD (13:00.93)
It's like he's working on a business that is not making any money. He he he.

Ron Holt (13:05.918)
Yeah, hey, here's a guy who doesn't have any money. He works his tail off and he owns a cleaning business

JON STODDARD (13:12.49)
You think he's going to be a good match for you and spend a little bit of time with you? No.

Ron Holt (13:17.998)
No, no. So that was my life. You know, I worked six days a week. Back in those days, we would do everything from cleaning a home to cleaning a business. It was Florida, so we had a lot of vacation rentals we would clean on the weekend, and sometimes I was doing that work just because I had to, you know? So I really struggled with time management. I struggled with payroll, just how to meet that in some cases, and really struggled with the marketing side of things because I just didn't know exactly how to get the phone to ring. All those things came later, and we...

they became so strong that we were able to franchise the model. That's exactly right. There was a lot of ignorance there. Because I didn't have anybody. You know, in franchising, you have somebody who can help you. They've been down that road with you. I didn't have a big brother to kind of help me down the road. I was just literally on an island figuring it out by myself.

JON STODDARD (13:49.378)
You paid the ignorance tax, let's say. Yeah. Yeah.

JON STODDARD (14:06.91)
Yeah, I gotta go back to that franchise that what you lost it at right at the altar. What? Why didn't they show up? Did they change their mind about selling or what? What was it?

Ron Holt (14:14.666)
Yeah, you know, it's funny, the owner of that business continued ownership for several years, for at least seven or eight more years, and I would see him, you know, just around town and he would always turn his cheek, you know, but it, it, it was a really tough moment for me.

JON STODDARD (14:28.778)
Yeah, here's some information I could have used earlier before I sold everything. Mood, Fensicola, yeah.

Ron Holt (14:33.222)
Yeah, but he was my like, he was like, orange enemy, you know, my name, that was the guy when I, when I saw that those cars, when I saw their ads somewhere, it just fueled me to want to just fight hard to beat those guys. And so I can still remember, I won't name the brand, but I can still remember thinking, I wonder, I wonder if I'll be as big as he is in Pensacola, Florida, just one city and years later.

the brand, Two Maids and a Mob, was named one of the top three residential cleaning franchise brands in the country. And so not only did we overtake him in that local market, we overtook him across the country.

JON STODDARD (15:12.498)
Yeah. So you, you had your enemy. I mean, this is like your Darth Vader. I know a story about Bill Gates when he was started in Microsoft. He used to have this picture of Philip Kahn who had that database company and stare at Philip Kahn's picture. Like, I hate this guy. I'm going to beat this guy. I'm going to do that. He focused on them all the time.

Ron Holt (15:35.254)
That was me. If I saw him at the store or at a restaurant or just at this point, I knew what car he drove. I was ready to get to work. Yeah. I don't know. Well, I don't know about that. I don't think he understood the relationship. He probably thought we were just peers, but yeah, there was some serious, serious fuel bubbling up.

JON STODDARD (15:45.695)
You're going to beat him somehow. You're going to beat him in the market. Yeah, yeah. If it was 2000 years ago, you would have probably killed him. Ha ha ha ha.

JON STODDARD (16:01.922)
But he knew, did he know who you were? Yeah, yeah, yeah, okay.

Ron Holt (16:04.602)
Oh yeah, yeah, yeah, we met over and over again for weeks. So yeah, we absolutely did.

JON STODDARD (16:08.491)
Yeah.

So how did you turn it around? I mean, three years not taking a salary. What did you put in place to turn it around? I mean, it was a, it's either strategy or mindset. So.

Ron Holt (16:21.674)
Yeah, it's a lot of both of those things, honestly. When it comes to entrepreneurship, whether you've got the secret sauce or not, there's gonna level of grit and hustle that you're just gonna have to have to get through some of the tough days, because otherwise, it's a job. You never want owning a business to be a job because it's just a lot of reasons to wanna quit. And I always believed in my mission, which eventually became to build it into a national brand. So that always got me through the low points, and there were several of those.

JON STODDARD (16:41.121)
Yeah.

Ron Holt (16:50.326)
The big thing that really changed was there was this seminal moment where I read, you know, like I said, a reader. I read this book called The Purple Cow by a guy named Seth Godin. Yeah. So it's pretty simple concept. Yeah. It's a great book, right? And so if you, if you've ever read it, you know what it means. If you see, if you were to see a cow in this rural area and it were purple, then you would remember, always remember where you were when you saw this purple cow. And that philosophy, that principle sort of.

JON STODDARD (16:59.318)
Seth Godin, yeah, yeah. I've got the book, yeah.

Ron Holt (17:19.722)
wasn't occurring in a lot of business or industries and Seth wrote this book about how it should. And so I said, ha, you know, residential cleaning, nobody's different, everybody's the whatever cleaning company or whatever made service and nobody really stands out. So what is my opportunity to stand out? And so I started really brainstorming and thinking what can I do to really stand out? And I said, well, what if I were to do a two for one here? What are my biggest problems?

And if I could solve that problem and then use that to market to new customers, then I got a winning solution. So my biggest problem was just getting our employees to care as much as I did as the owner. Um, you know, they're cleaning houses, they're getting paid an hourly rate, probably not real high back in those days. And I'm over here expecting them as the owner to work their tail off and do a great job, make customers happy. And it was a broken relationship. So I said, let's figure out a way to get our customers to provide us feedback on a regular basis.

and that feedback will determine what we pay our employees. So we ask customers to rate their level of satisfaction on a pretty simple scale of just one to 10. That number directly determined what we paid our employees, and employees loved it because now they were able to make more money if they worked hard, and our customers loved it because now we put in every one of our marketing pieces in our cell scripts, and everything we did, we talked about the Pay for Performance program, which is what we called it then, and it was gold. It worked immediately.

And that's how we started to grow.

JON STODDARD (18:44.61)
So show me the compensation plan. I can show you the outcome, which was Mr. Charlie Munger would say that, yeah.

Ron Holt (18:50.378)
That's right. That's right. So yeah, I mean, it was a pretty simple plan. I always thought over the years that somebody was going to copy it because it wasn't, can't really trademark or patent paper or format, you know. But I cannot believe even to this day, no one has ever tried to copy that. But I think because it's all in, you know, we didn't say if this happens or if that happens, it was one, two, three, four, five, six, seven, eight, nine, ten.

JON STODDARD (19:01.75)
Yeah, that's not a process that you can IP it. No.

Ron Holt (19:19.414)
Whatever that number is, is what we pay our employees and the customer owned that power.

JON STODDARD (19:24.002)
So if they rated seven, eight or nine, they would get paid how? I mean, let's say a house was cleaning, how much is an average price for a house to get cleaned?

Ron Holt (19:35.562)
Well, at the very start at the bottom, at the very bottom was minimum wage. So if you, if you had a one, um, yeah, and you got paid a minimum wage at the very top, it was well above that, you know, well above the local average. I don't remember the numbers at the time, but it was a strong hourly wage that was much higher than other house cleaners in that local area at the time. And it was a real motivating factor for our employees because it allowed them to make more money, you know, just.

JON STODDARD (19:50.028)
Yeah.

Ron Holt (20:05.227)
dollars and cents.

JON STODDARD (20:06.442)
Yeah, so what you want to happen is something viral going, hey, you want to go work for two maids and a mob because they pay more. Like, well, how do you get paid more? You just got to do a better job of cleaning.

Ron Holt (20:14.85)
Right.

Ron Holt (20:18.246)
And it worked the other way too if you had someone who just didn't really want to bring it You found out pretty quickly and so there was this almost sort of natural selection going on because if there wasn't a strong performance on a consistent basis that customers would let you know their wages would prove that and There would have to be a reckoning either you get better you get out

JON STODDARD (20:40.746)
Yeah, well, what did that look like? You know, Jack Welch used to terminate the bottom 10%. I mean, what did that look like with you?

Ron Holt (20:48.822)
Yeah, well, it was sort of self-fulfilling. You know, someone's like, hey, I'm tired of making not enough money, so I'm out of here. It's your fault, not mine. And so we let them believe that, and then we moved on to the next person. The residential cleaning industry, along with most home service industries, turnover levels are pretty high. We were able to trim that, reduce that. It's still higher than what you'd see in a law firm, for instance, but it was much lower than what we saw prior to the pay-for-money.

JON STODDARD (20:53.869)
Yeah.

JON STODDARD (21:03.658)
Right, right.

JON STODDARD (21:19.246)
So how did the economics of that? So the getting a house clean stayed the same price, but your payout to your customer, I mean to your salesperson and your cleaner increased. So that reduced your profit margin to pay you, but you're saying it started taking off. Yeah.

Ron Holt (21:39.276)
Yep.

Ron Holt (21:43.286)
Yep, it did. So we assumed everyone was going to get a top rating. That was how we built our model. And so we had to increase our prices to our customers, but it all worked out. People wanted to hire us because they knew about that plan. They understood the power they had as a customer. It became this amazing marketing tool that we were excited about. But once it started actually working, we said, oh my gosh, we got something. I can't believe it.

JON STODDARD (22:09.678)
because it increased word of mouth, which didn't cost you any money to acquire the customer, which increased your profits. Yeah.

Ron Holt (22:12.44)
Right.

Ron Holt (22:17.258)
Yeah, it changed everything. We went from, how do we grow this thing to, oh my gosh, how far can we take it? You know, it was, it was a pretty cool moment.

JON STODDARD (22:24.478)
Yeah. So what was it looking like in revenue? I mean, how big did you get it? After it started taking off and going, uh, before you made the decision goes, we should franchise franchise us.

Ron Holt (22:35.37)
Yeah, so we were cleaning a lot of homes. We, gosh, you're talking 20 years ago. So it's hard to remember exact numbers, but we were cleaning hundreds and hundreds of customers on a regular basis. The market we were in there was Pensacola, Florida, which is only about a half a million people that live there. So we were the dominant maid service two or three years into this once we started building out the Pay for Performance plan. Right, yeah.

JON STODDARD (22:42.635)
Yeah, yeah, yeah.

JON STODDARD (23:01.918)
Yeah. And then when did you start decide what kind of revenue did it look like? I mean, you say, Hey, we just started doing a million a year or 5 million a year. And then we go, I'm in a franchise or I should do that. Yeah.

Ron Holt (23:13.022)
Yeah, so that one particular location, it was a little bit south of a million dollars. A million, there's only, of all cleaning businesses in the country, a million dollars is sort of the top of the top, you know? And so we were able to do that as we started growing, but early on, we were probably closer to seven, eight hundred. Again, I can't remember the exact numbers, but yeah, it was a few years ago.

JON STODDARD (23:30.998)
Yeah, yeah, yeah.

Yeah, but in 2023 numbers, it's probably close to million. So where did the franchise idea come from?

Ron Holt (23:38.379)
Yeah, I mean it.

Ron Holt (23:42.082)
So that's another funny story. I'll kind of wind you through a path to get you there. So we were seeing great success, strong profits, everything was working well. I was very important to the business. I didn't know how much I was important to it until we started growing. We opened eventually 12 corporate locations all the way from the Carolinas to Florida, eventually relocated to Birmingham, Alabama. My wife's from lots of miles and

JON STODDARD (24:06.216)
You put a lot of miles on your body in car.

Ron Holt (24:10.334)
found myself in a plane more often than not, and that was just not efficient. And you know, we needed to relocate to a place I felt sort of in the center. So we relocated to Birmingham, my wife's from here, and it was sort of this again, the center of the footprint. So it made a lot of sense. But even with all of that growth, I was still so important. And we were starting to see some growing pains. We were starting to see...

some of the systems become less efficient because we were just outstripping them. I was gonna have to really invest deeply into the infrastructure of the corporate office and I had not done that. I wanted all the money to be out in the field and that mentality and that philosophy worked for a long time, but the growing pains, they were more bottom line growing pains than top line, were, they were surfacing. And so someone said franchising, I said, I don't know about that. That sounds like a dirty word in this industry because I'd heard so many horror stories of franchising going wrong.

And I said, well, you know, let's see, because I think we have something strong here, but from a corporate growth strategy, no one had ever done that before in the cleaning industry. And I was seeing why. And so I went to Vegas, to an IFA conference, International Franchise Association Conference, and was inside this ballroom, of course, listening to a guy speak, and wasn't really interested in it. So I walked out into the lobby to just check email, my laptop, sat across the table from

this guy who felt like he wasn't going to bother me, but he started asking all these questions and I started giving him all these answers like, oh, we've got 12 stores, we're in five states, we do all this revenue and look at us, you know, and I'm here to talk about franchising. I'm going to be a big deal one day. And I said, so what do you do? And he said, I'm the founder of this little company called Subway. I have 42,000 global locations. My name is Fred DeLuca. And so-

JON STODDARD (26:04.514)
No way, you met Fred DeLuca on accident?

Ron Holt (26:07.798)
by accident and sat across the table from him for the rest of the afternoon, developed a strong relationship with him. He passed away about a year and a half later. But between that period and a year and a half, we talked a lot. He became a mentor to me and he taught me a lot about franchising. He had never been at home services, obviously he was all food. But franchising is franchising. And so I became a big fan of franchising because of that relationship and said, I can do this. And so we.

JON STODDARD (26:35.762)
Oh my god, you drank the Kool-Aid, you drank it fast.

Ron Holt (26:38.494)
No doubt. Yeah. I mean, he's the godfather of franchising, you know, so

JON STODDARD (26:42.154)
No kidding, man. Yeah. Put subways right next to a university. That's the key. Yeah.

Ron Holt (26:47.506)
Yeah, it was funny though because I really was thinking highly of myself at that point in life and he brought me down very quickly. Yeah, across the world, you know, and so it was humbling, but also informative and educational because and inspirational even because he is what I still tell people what was so interesting about him is, you know, he was again the godfather of franchising, just world renowned.

JON STODDARD (26:53.986)
I got 12, I got 42, thousand.

JON STODDARD (27:04.567)
Yeah.

Ron Holt (27:17.262)
He knew it all. And when you talk to him about franchising and his life in general as a business owner, all he talked about were the mistakes he made. He never saw all the great, cool, great things he built and made, which I can see. Yeah, and I'm this small compared to him even today, but I can sort of relate to that because when I look back at my time at Two Maids,

JON STODDARD (27:31.796)
All the success he had in spite of the mistakes. He just talked about, yeah.

Ron Holt (27:44.542)
I see so many mistakes that I wish I could have avoided. And trying to fix those and avoid those here at Pink Zebra Moving when we're building out again. But yeah, he told me, here's what I did wrong, here's what you should do right. And I said, let's do it. So we started selling each of those 12 off as a franchise. We kept one, the corporate store in Birmingham, Alabama, which is where our headquarters were. We kept that just because we wanted a presence so that we could test ideas and just stay in the industry.

JON STODDARD (28:13.886)
So what did that conversation look like? Whoever's managing that store, hey, I'd like to have a conversation with you about buying the franchise. Or did you list it or what? How did that go?

Ron Holt (28:13.986)
But the other level...

Ron Holt (28:23.55)
No, you know, I didn't know So at the time it was real scary because i'm like, okay franchising that sounds good. How do I get anyone? To want to buy one of these things and so That was very intimidating to me until it wasn't so once I said hey world like my small inner world I'm going to start franchising this model. I've got 11 stores across the southeast Is anybody interested? Oh my All these people who I thought

JON STODDARD (28:33.762)
Yeah, yeah.

Ron Holt (28:51.102)
at one point were rolling their eyes at me because all I did was talk about business, came to me and said, I want in, I want in, I want in. And so most of those 11 were sold to people that had some connection to me. Maybe it was a college roommate or a college roommate's uncle, or a friend from my hometown, or whatever it might have been, family members, neighbor. But all these close connections said, hey, I've been following your story and looking for an opportunity and here it is. So I'll take that store in Knoxville, Tennessee.

I'll take that one in Pensacola, Florida. And we sold the first of those 12, the first 11, we sold to literal close connections in some way. Once we transitioned from corporate cleaning company to franchise cleaning company, then we started talking about opening new markets that we had no history in. And so Tampa, Florida was our very first one. That was also sort of a chance encounter. I met that franchisee in a hotel lobby.

in New Orleans at a conference there. So got to go to more conferences apparently. And we shared, we shared a, this shows my age, we shared a cab to the airport and on the ride to the airport, he said, you know, I've been thinking about starting a cleaning business and there you go. Several weeks later, we bought a franchise.

JON STODDARD (29:54.806)
No kidding, yeah.

JON STODDARD (30:07.23)
Really? Really? You've got some synchronicity and serendipitous favor working for you.

Ron Holt (30:12.926)
I know. Well, definitely had some fortune along the way.

JON STODDARD (30:18.93)
Yeah. Yeah. Yeah. That's amazing. Yeah. So tell me about these 11 locations. Now, did Fred DeLuca teach you how to run and manage those people or what to look for or to like sources to go to to like now you're managing 11 locations. Yeah.

Ron Holt (30:32.534)
Well...

Ron Holt (30:39.198)
You got he never charged for a minute. So he didn't give me the excess anos Yeah, we would talk this we were just taught by phone, you know and whenever he had the time to do it and Sometimes we'd go several weeks without talking but when he would talk he would he'd give it he'd give you some information. So He was yeah, you know, he was gosh he was later in life and he had accomplished so much and yeah, I was

JON STODDARD (30:43.702)
What did you call him up or email him or what was it?

JON STODDARD (30:55.998)
Yeah. Do you think he was doing this with other people that he met too? Yeah.

Ron Holt (31:07.214)
So the franchising world is very closely connected and it's much smaller than you think. And so the IFA actually fosters that type of mentorship. A lot of folks that have been there, done that, work directly with emerging brands like us at the time. And that's a service that they try to foster. So that was sort of how we got connected and just kept the conversation going. But yeah, he said this is what I... It was all about what he did wrong.

JON STODDARD (31:10.143)
Uh-huh.

Ron Holt (31:35.71)
And so I would always listen to what he did wrong and try to use that in our business as we were scaling it.

JON STODDARD (31:42.666)
Yeah, to the person that has eaten at Subway more than times than he has on his fingers going, I don't see anything wrong. Yeah.

Ron Holt (31:52.686)
Yeah, I mean it was small things like the profitability at one point the unit economics was different than today for instance than it was 30 years ago whenever it started and A lot of that was because of according to him automation automation kind of came inside the business and made life easier for everyone specifically the owner and so the more Easy it became for a franchisee the more costly it became to be a franchisee because you had to pay for all that automation and so

JON STODDARD (32:01.195)
Yeah.

Ron Holt (32:19.582)
Automation is good. It's 2023. Obviously you need you need to speed things up and use less manual process, but there was a cost to that automation and so You know both at pink zebra and at two maids we worked hard To make things easier and faster But I also tried to keep in the back of my mind that my job is not necessarily to make their franchise ease life Easier is to make them more money

JON STODDARD (32:44.242)
Right. Yeah. That's what they got into it on the first. Yeah. So how did you go from these 11 to 93? I mean, and what was that process, you know, time process?

Ron Holt (32:48.704)
Right.

Ron Holt (32:58.782)
Well, we did. So we knew we learned a lot about how to run a franchise, but we didn't know is how to actually sell a franchise. So we had to learn the hard way. The first year we only sold two, you know, so there's 11 we had were profitable. They were growing. They were easy to sell the next two were very difficult. It took us a whole year.

JON STODDARD (33:09.195)
Yeah.

JON STODDARD (33:15.394)
How much did you sell those for? I mean, like somebody can go out and say, how much to buy a McDonald's franchise? It's a million dollars, right? Yeah.

Ron Holt (33:23.038)
Yeah, so well, you mean the startup franchises? So those were set, you know, every franchise has a different way to determine the value of a territory. So you have initial franchise fees, sometimes you have other fees that kind of stack onto that, and of course there's ongoing costs afterwards. And so we would just charge a flat rate for a single territory if you wanted to, another rate for that and so on. So you didn't buy a business, you bought the opportunity.

JON STODDARD (33:52.594)
Oh, just to kind of territory you purchased, yeah.

Ron Holt (33:54.606)
Right. So anyway, we sold one in Tampa, one in D.C. The funny part is he had said, hey, don't sell too large of territories because early franchises or franchisors always do that. And so I said, got it, not going to do that. And then the time came to make that decision. We sold all of Tampa, which is...

Hillsboro and Pinellas County, which is basically Clearwater, St. Pete to Tampa. We saw all of that in one person, way too big. Even worse, we sold all of DC, DC proper, Northern Virginia and Maryland to one group. Yeah, so everything I was not supposed to do when it came to that, I did. And when you look back on it, you're like, why did you do that? Well, when you're an early franchisee or franchisor and somebody wants to buy a large.

JON STODDARD (34:31.682)
They locked it up. Yeah.

JON STODDARD (34:45.43)
You don't have a lot of people knocking on your door and going, I'd love to buy this franchise from you. Like, well, we just spent a year trying to market it and sell the first one, but yes, we'll take your money.

Ron Holt (34:47.57)
Yeah, you know, you... Yeah, now...

Ron Holt (34:53.87)
Right. There was a slight air, you know, sense of desperation there because we were just really struggling to find people to want to do it. We later found the secret and it worked really well for us. But during those early days that first year it was tough because we just all we had was a website. Well, it's not that big of a secret anymore because a lot of franchise brands do it. But there are multiple franchise broker groups.

JON STODDARD (35:09.39)
So what was the secret? Yeah, what was the secret?

Ron Holt (35:20.802)
that work really well for home service businesses. When you think about franchise and you probably do think about McDonald's and you probably think about Subway, like we just talked about, well, most of those folks who purchase that franchise opportunity are current customers. You go to McDonald's and you're like, well, we can't do this, I guess, today. But let's say you go to this new pizza shop in town and the pizza's delicious and you're like, man, this is awesome, this is a franchise? Yeah, I'm gonna go open one in my neighborhood.

JON STODDARD (35:45.47)
I love it so much I want to buy one. Yeah.

Ron Holt (35:50.158)
And you do that. In home services, you own, when you're a customer of that particular local franchise, that local franchisee already owns that area more than likely, like several zip codes. And so, very limited opportunities to market to customers of the brand. So what we had to do was think outside the box. And so we found brokers from across the country that focused on franchising. And we said, hey, you're in Seattle, and you're in Atlanta, and you're in Miami, and you're in Omaha.

Whenever you find someone that wants to talk to you about a franchise opportunity or even just a business opportunity, how about sending them to us? And here's what we offer. We would educate them on our, on our investment. We would educate them on our business model, our story, and we would try to bring them in. Of course we would incentivize them to do that. And that became sort of our channel for how to find franchise candidates all over the country, from California to Florida.

JON STODDARD (36:48.002)
Gotcha. And then it just kind of took off from there, right?

Ron Holt (36:51.614)
Yeah, yeah, it worked. So people started calling us from crazy places that we never thought we'd be in and We would bring them to Birmingham, Alabama And we would talk to them now. There was a sales process. I was I was the early sales guy So we would take them through a series of webinars like what we're doing even now We would send them information. We would answer questions. There's a regulatory structure to franchising So we'd have to send all the regulatory documents for them to review and be disclosed on

And so we're learning all that as we're talking to these folks. And the great thing was, even though I was heavily involved in sales, I was able to meet those early franchisees and develop a relationship with them. So everybody.

JON STODDARD (37:29.518)
So what was the allure? I mean, what, like, when these customers purchase your cleaning, do they purchase it for, you know, one at a time? Like, hey, I've got an event coming up, I need my house cleaned. Or are these the economic structures, stratosphere, where you come out every once a month or once a week?

Ron Holt (37:52.03)
Yeah, every two weeks is most common. That's what we were doing weekly. Of course, there are no contracts with a customer and our contracts were the franchisee. So we were, yeah. So we, we would try to keep our business. You know, we cleaned the house this week and show back up two weeks from now. They could always fire us, but we felt like if we could provide the right kind of service and we were doing a really good job with that, then they would want to keep hiring us and they were, you know, that's.

JON STODDARD (37:54.39)
And how long were those contracts?

JON STODDARD (37:58.943)
Ah.

Well, yeah, yeah.

Ron Holt (38:18.434)
That's how we, it's sort of like compound interest. Like my man, Buffett always talks about, um, $1 is not $1 tomorrow because you're, you're earning interest on it. So that's, that's kind of how I looked at recurring revenue at the time. And it all just sort of, you know, kind of growing and growing and growing and kept our best year we ever had early on, we sold 24 franchises. So we sold two one year. The next year we sold 24. You talk about boom and bust. It was a crazy.

JON STODDARD (38:45.674)
Yeah, yeah, you compounded there, yeah.

Ron Holt (38:49.682)
Yeah, yeah, it was good times. It was fun, everything was brand new, all these different markets, all these different people. Everybody in franchising is a business owner, just like me, you know, an entrepreneur. So they have these similar passions as me. So it was fun to be able to talk to people that didn't work for me, they worked with me. It was one of the better professional moments of my life because everything seemed so exciting.

JON STODDARD (39:12.254)
Yeah, so fast forward to 93. So what made you decide to sell to a private equity firm?

Ron Holt (39:20.158)
Yeah, so I, yeah, so there were a couple things. One, I had built corporate America, I felt, you know, and that's, I was trying to run from corporate America 20 years ago by starting a business, and I looked around the office and I saw lots of meetings, lots of people taking care of themselves and their positions, very little movement, even though there was a lot of talk about movement.

JON STODDARD (39:21.706)
not made you, but yeah.

Ron Holt (39:50.102)
And that was my fault. It was my business. And so I should have done something about it as the leader, but the dang ship was so big, it was hard to turn, you know? And so I said, I got two options here. I can turn the ship and just deal with, you know, that situation. It's going to take a while, probably have a little bit of pain that goes along with that because nobody like, no one likes change. Um, or I can start over, but I didn't really know what starting over meant until my mother-in-law here in Birmingham had a negative experience with the moving company.

Moving company mistreated her from A to Z from the normal things you think about like showing up late To your damaging items to unprofessionalism But even worse things the bill was like literally three times even a little bit more than three times what she thought was gonna cost So she had all these broken items. It took way longer than she was thinking They laughed at her and it cost her 300% more than she thought was gonna cost her and she was downsizing

from a larger home to a smaller one because she's entering retirement at the time. So it was horrible. She cried, it was so bad. It was an emotional experience for her. And I said, I wonder if that's happening in other places. And so I pulled out, yup.

JON STODDARD (40:58.391)
This is this is this this idea is happening before you even sold off the other one.

Ron Holt (41:04.41)
I, before I sold, so all this is percolating over here about, you know, gosh, is this thing too big now? Am I having as much fun as I did early on? A lot of the answers were no. And so I didn't really know what to do with that because my life was pretty good. You know, I was working inside this thousand square feet office, bigger than my first apartment. Had a treadmill in it, you know, like I was living the life, you know, CEO life. It was probably not working 40 hours a week, more like probably closer to 20 hours a week.

Other people were doing a lot of work for me that I used to have to do for myself. And I had reached that pinnacle, the American dream. And it was awesome. You would, at least it should have been, but I had something missing. That same feeling I had when I was in corporate America was brewing again back inside of me, but I didn't, again, didn't know what to do. Until that moment, I saw an opportunity. So whenever it happened to her, I pulled out, or pull out, opened, yelp.

and I just started literally reading negative reviews in Seattle, Omaha, and Miami. I thought that was a good swath of America. Her experience matched their experiences in each of those three markets. I knew then that there was a real opportunity because you had a huge industry with tons of demand. Even in a declining real estate market because of interest rates, you still saw tons of demand because of relocations. You had...

Another fragmented marketplace, you know, there's some big guys that have been around for a long time but there's a ton of room for other big guys and then you know, I saw an Opportunity to do something to disrupt the industry in a way that no one had ever really tried to do it Everybody tries to disrupt industry nowadays through some form of coding, you know some software engineer Engineer brand idea they code their way to the top. Well, I'm not that guy, you know, and so

JON STODDARD (42:52.363)
Yeah, yeah.

Ron Holt (42:59.458)
I felt like we could come in here and do it the old-fashioned way and we could just deliver a better, more positive customer experience. We like to say we make moving fun here at Pink Zebra Moving, and if we can make that experience fun and memorable and unique and remarkable, I felt like it would grow in another form of common interest. So that's how I got to the moving world.

JON STODDARD (43:17.386)
Yeah. So...

Was there anything about that kind of a repel? I would assume that in the cleaning business, there's reoccurring revenue with that, but in the moving business, it's a new customer every month.

Ron Holt (43:38.61)
It is. And that's what scared me. That's one of the main reasons I almost backed away from this opportunity. But what I learned pretty quickly after doing some research is even though there's no direct recurring revenue, well, I shouldn't say any, there are people who are serial movers, but they're rare. What we see in terms of recurring revenue are the referral sources, whether it's a property manager, a storage facility, a realtor.

All of those folks hold the key to future revenue. And so if you make one realtor happy because you've really treated their clients great in a previous move, then you're gonna get that realtor's next referral and that next referral and so on. So even though it's indirect, it's not as direct as what we saw on the cleaning side, there is recurring revenue here and it's important to provide a great service, obviously, because you're trying to...

JON STODDARD (44:30.59)
Yeah. So you're courting and creating relationships with real estate brokers to work on your. Yeah.

Ron Holt (44:36.606)
You we do crazy stuff. We we make we make moving fun. We send Rubber ducks to realtors that make no sense at all. Um, just to sort of get ourselves in the door. We'll send them a small Toy truck that's you know, obviously branded with pink zebra moving We'll put

JON STODDARD (44:54.498)
Pink Zebra, would that come from Purple Cow? Yes.

Ron Holt (44:58.078)
It did. That's actually a play on Purple Cow. So that's what we do. And we work really hard to make our customers go, Holy cow, I can't believe a moving company would do these things. We feed people the night before a move for free. We leave behind surprise boxes filled with all sorts of goodies. We dance during the move. We do exercise routines to be silly during the move. We play music, happy music, we call it, throughout every room in the house during a move. We do all these things to make people go, huh?

JON STODDARD (45:01.462)
Yeah.

Ron Holt (45:27.606)
why would a movie company do all this stuff? It's crazy. We put on a show. And so I felt like that was the way to disrupt this industry. And it's working. We're growing and people are taking notice.

JON STODDARD (45:31.307)
Yeah.

JON STODDARD (45:39.038)
Yeah. So tell me about the sale of your company though, to go back like you decide I'm gonna sell this thing. I'm gonna find some, did you know and an investment bankers handle these big sales like this or did somebody knock it on your door? If you ever let me know if you want to sell, how did that look?

Ron Holt (45:45.802)
Yeah, that's.

Ron Holt (45:57.506)
So what I learned, I didn't know this until I started growing the business and the brand. Once you start doing that, everybody wants a piece of the action. So literally daily, even now at Pink Zebra, this happens daily, someone says, hey, I can help you sell this business whenever it's time. And maybe it's time now because look at all this money that's out there. So I was getting those emails and phone calls and text messages somehow.

JON STODDARD (46:19.455)
Yeah.

Ron Holt (46:23.742)
LinkedIn requests and all this was a flurry of inbox activity over and over again. And there was one particular group I said, you know, if we get to a place where I am interested in selling, you're my people. And so there was an investment. Thank you.

JON STODDARD (46:36.938)
Yeah, so why did you connect or why did they connect with you?

Ron Holt (46:41.194)
They focused on the franchising industry, specifically home service franchising, and they had a strong track record.

JON STODDARD (46:47.446)
Yeah.

Ron Holt (46:52.11)
closed, I forgot how many lots of transactions over the last several years, even during COVID and they were big players.

JON STODDARD (46:59.626)
Yeah, if it's somebody you want to get brain surgery done, you don't pick the first guy that got out of med school. Yeah.

Ron Holt (47:03.262)
Right. Well, they knew all the major players. They had first name connections to every PE group in the index. So we worked with them for this is the fun part. So we worked with them. Once I made the decision to do it, for about four or five months, we went through just a back and forth homework stage where we were building the portfolio to present and all the different questions we would hear. It was almost like the folks who go IPO and do all these Wall Street.

JON STODDARD (47:10.242)
Yeah.

JON STODDARD (47:25.837)
Yeah.

Ron Holt (47:32.458)
it kind of felt like that because there was a lot of diligence, diligent work there. I assumed and they assumed that after we started pitching this, that it would also take another four, six months. Well, once we got through the homework phase on our side and we marketed the opportunity, we received multiple LOIs like within two weeks. Several of them were really impressive. Within two weeks. Yeah.

JON STODDARD (47:33.741)
Right.

JON STODDARD (47:56.33)
within two weeks.

Yeah.

Ron Holt (48:00.13)
Several were very impressive. There was one particular group that stood out to me because I already knew a little bit about their history and knew some of the groups they had purchased in the past and heard great things about them as an organization and their culture. And I really wanted that deal to work because of that. And just so it turns out, they offered probably the best terms as well. So once we agreed on the LOI, here's the crazy part.

it took us 42 days to close the deal. And so we went from.

JON STODDARD (48:32.834)
42 days before he's like sending the LOI in the agreement and then get cash in your account. Yeah, wow, okay.

Ron Holt (48:36.214)
That's it.

Ron Holt (48:40.39)
They moved fast. And this was in the middle of like the height of COVID really. So there was limited face-to-face interactions we could have. Most of it was on this, you know, some remote meeting of some sort. And so yeah, 42 days later, I'm out of two maids and a mob and I'm going, oh my gosh, what do I do?

JON STODDARD (48:55.864)
Yeah.

JON STODDARD (49:02.478)
What kind of multiples do you get on a 93 location franchise, you know, cleaning, reoccurring revenue? What does that look like?

Ron Holt (49:11.23)
Yeah, so I can't really disclose a lot of the terms out of respect for the other group, but I can tell you that in general, most franchise groups of that are going to sell anywhere from 10 to 20 times usually like EBITDA as a multiple. So that's what you usually see in franchising. I can't really disclose the terms that we had for our group.

JON STODDARD (49:29.998)
Okay, 10 to 20 multiple.

JON STODDARD (49:36.694)
Right, right, right. Okay, it's somewhere in between. That's pretty impressive. Yeah.

Ron Holt (49:44.227)
Yeah, well, you know franchising is a great industry because there are there's contracts between you and a franchisee and so that contracts kind of dirty because you don't want that to be the reason someone doesn't work with you. But it's also the truth and it's a business that will continue to grow. And so that franchisee either wants to sell that business or stay in the business and either way you've got almost a perpetual relationship.

contractual relationship with that franchisee. And so, you know, PE groups in general are pretty excited about it because of that.

JON STODDARD (50:16.37)
Yeah, so you've got a ton of money to start a business, but sometimes the second entrepreneur kind of spends it really fast because he can't go, I mean, everything he thinks he does is right. But what did you learn? I mean, it took you three years and $150,000 to spend to do that. But you have a ton of money this, like did you just say, hey, no, we're gonna go.

Ron Holt (50:33.291)
Yep.

JON STODDARD (50:45.726)
Low budget. We're going to figure out the business model until we get probability. Well, what was the thinking there?

Ron Holt (50:52.162)
So I remember my guy, Warren Buffett, he teaches frugality. So that frugal mentality really was a benefit and an advantage, I think, for me growing the business, the original business, Two Maids. I didn't do that by design. It was just because I needed to be cheap. But that grit that was sort of inside of me at all times because...

I knew if I ran out of money, we'd be in trouble, really powered me through some tough times. So I wanted to make sure we kept that same type of culture here at Ping Zebra Moving. So we've got plenty of capital that we will always be able to utilize if we ever need it to do something for whatever reason. But from day one here at Ping Zebra Moving, I've tried to recreate that same frugal magic. And so I'm sure there are some people inside our organization that wish that...

would be a little bit less thrifty. Yeah, so, but it's by design this time. The first time again, it really wasn't. It was just sort of for survival. This is by design because I want people to think we're sort of that garage startup and it's us against the world. And that type of mindset, I think, overcomes a lot of inefficiency. And if we've got...

JON STODDARD (51:52.43)
Come more generous with your like, yeah.

JON STODDARD (52:00.13)
pragmatic. This is by design. Yeah.

JON STODDARD (52:09.089)
Yeah.

Ron Holt (52:16.074)
It's just like first generation money. The second generation money blows it, right? And so I wanted to make sure that that wasn't us. So that's, that's what we do here. Now we utilize the capital in a smart way. You know, there's no reason for us to miss a lunch or not. Yeah. We don't, we don't necessarily want to, uh, you know, just be cheap, you know, to be, say we're cheap. There's a lot of investment here.

JON STODDARD (52:30.934)
Capital Allocators

JON STODDARD (52:39.806)
Yeah. Do you buy new trucks? Are they new trucks? Are they used trucks, just repainted or what?

Ron Holt (52:44.382)
Well, they're usually used trucks not because we don't we love new trucks But covid really poses some challenges to that because of the supply chain issues In the in the logistics world, but yeah, we'll buy and lease trucks Franchisees make those decisions and we've got great partners for them to work with financing partners as well So that they can purchase them We got nine locations open

JON STODDARD (52:53.783)
Yeah.

JON STODDARD (53:04.61)
How many franchises do you have now?

Ron Holt (53:09.73)
We've got another one opening. It's going to be the first one really outside of the south It's going to be over in Denver so we're pretty excited about that because we are becoming it's pretty clear if you look at our footprint right now, we're southeastern regional brand and We know we're bigger than that, but we wanted it to be tight-knit early on I can get in the car right now and I can drive to one of our locations by the end of the day and you know Deal with a problem if there's a problem

JON STODDARD (53:25.388)
Yeah.

Ron Holt (53:34.998)
But we also know that there's a bigger appeal out there. So we've been fending off that national growth for a long time, the last several months until recently, just in the last couple of months, we've opened it up to anyone outside of the Southeast. So Denver's the first one, but there's a lot of other people lined up.

JON STODDARD (53:50.19)
Well, so what do you focus on now that this is your second time around that you didn't really do then? I mean, you're a Warren Buffett fan. He goes, the language of business is accounting. What do you, yeah. As an example, yeah.

Ron Holt (54:03.69)
Yep. Well, I mean, it starts with the mistake I made early on was just selling ridiculously sized territories to one group. So we've learned that hard lesson here and we've had people who say, yeah, I'll buy Florida from you. And we're like, nope, you know, we've got an idea here and you've got a lot of money and you seem like you're going to be successful, but not with us. We're not selling you the state of Florida. And so those type of things we've had to learn from.

We probably would have sold the state of Florida to someone in two maids early on.

JON STODDARD (54:35.338)
Yeah, that's great if it works out any places, locations in every major city where there's movement, but also could tie you up.

Ron Holt (54:45.738)
Right. Yep. That's one vendors that that may be a very unsexy thing to talk about but in all business certainly in the franchise world if you don't have a strong vendor network then it can really derail the entire

JON STODDARD (54:59.618)
vendors such as suppliers of trucks to financing to help the franchisees.

Ron Holt (55:05.558)
software, moving supplies, accounting, recruiting, all the different things you're gonna need to run a business from the practical things to the just general business needs. So we brought a lot of those vendors over with us. We've got 10, 15 year relationships with most of them. We had some that are unique to this industry because it's a new industry, but I did not take that as seriously early on at TwoMates as I should have.

JON STODDARD (55:12.075)
Yeah.

Ron Holt (55:35.134)
And there were some broken relationships with our franchisees because the vendor really caused some problems for us. So I made sure that when we built this brand that we had strong vendors that were ready for the growth and Understood their role understood what kind of role they were going to play as we started building the brand. So probably not

JON STODDARD (55:50.242)
Yeah. Do you feel like you're repeating what Fred DeLuca does? It's just kind of share the mistakes he made because those are the hardest lessons. Like if you have a good win, it's a great win, right? And sometimes you can brag about that, but it's the mistakes, the lessons stick deep. They cut deep. Yeah.

Ron Holt (56:12.086)
They do. You always remember them. You never forget.

JON STODDARD (56:15.53)
You never forget them. Wish I wouldn't have done that. Yeah. So what do you do now? Did you go back to the brokers to say, hey, we've got these moving franchises. Can you go out there and start selling?

Ron Holt (56:29.662)
Well, step one, we had to prove the model. So that's what we did for a year. We just moved people in Birmingham, our headquarters, and that was pretty fun.

JON STODDARD (56:32.289)
Yeah.

JON STODDARD (56:35.702)
When you proved the model, what was your expectations? What was a win? Is it profitability at, yeah.

Ron Holt (56:40.33)
I didn't know, we didn't know how to market, and so we just sort of winged it and said, let's see if this works, and man did it. It was crazy, like business just showed up almost immediately and taught us that you can really scale quickly in this industry, much quicker than what we saw on the cleaning side. So once we saw what kind of quick scale we had, we started really thinking about, well, what's next? So the next part was just figuring out how we could create a...

scalable model that created a consistent bottom line. You know, what happens in Birmingham also has to happen in Denver, in other words. And so we were building all of those efficiencies out, improving it for the first 12 months here in Birmingham. Once we proved it, once we documented it, we said, let's go, you know, let's start franchising. So we had to document all the systems that were processed that we utilized inside the business. We had to solidify the vendor relationships. We had to make sure that the software that we were using.

We're going to be able to scale with us. And once we had all of that put together, we said, brokers, we're back. Let's do this. And so we started growing and we made sure that we just worked with Southeastern Brokers at the time because we only wanted to be again here in this region early on. And again, just like.

JON STODDARD (57:52.702)
What's the territory cost for Pink Zebra moving now? If I wanted to buy something in New Orleans, yeah.

Ron Holt (57:58.026)
Yeah, I mean, you're looking at, yeah, that's a great market. We're not there yet. But it's based on one, what size of market you want to purchase. Also based on if you want to buy trucks or lease trucks, leasing is going to be a little bit less expensive up front, obviously more expensive on the back end. But long story short, it's usually somewhere between $150,000 to $250,000 all in from working cap to franchise fees and so on.

JON STODDARD (58:14.879)
Yeah.

JON STODDARD (58:26.026)
Yeah. And do you teach him how to pack to the furniture?

Ron Holt (58:29.782)
We do it all. Yeah, we've got internal professional movers that have 30 plus years of experience. All of them work here now. They never thought they'd work for a brand that open locations across the country.

JON STODDARD (58:38.798)
So who teaches them how to dance? Ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha

Ron Holt (58:42.53)
That's not me. We are not the world's best dancers, but we do attempt to do it. Ha, ha, ha.

JON STODDARD (58:46.934)
No, no, yeah. Oh, that's cool. And it's, how would you say you're happy with the revenue growth at, I mean, 11 franchise, well, how many franchises? Nine locations at 150 to $250,000 here. You're already in the multimillion dollar, yeah.

Ron Holt (58:58.569)
Yeah, nodding with another word out there.

Ron Holt (59:04.622)
Yeah, so we're very excited. It's been a great start. We've actually had to slow the growth down a little bit. We actually hit the pause button just this year because things were going a little bit too fast for us. We don't wanna open 50 new stores a year. We probably could. 10 to 15 is kind of our wheelhouse. We've got the resources to handle and manage that. 10 to 15 per year, yeah. Yeah.

JON STODDARD (59:22.966)
10 to 15 per year? Yeah, yeah. And are you already being courted by private equity companies to buy? Every day.

Ron Holt (59:31.058)
Everyday just today I did Literally every day linkedin requests. Like I said, that's everybody's got a great idea

JON STODDARD (59:36.426)
Yeah, this is not gonna help. I mean, I'm gonna release this episode. It's not gonna help. Ha ha ha ha.

Ron Holt (59:42.099)
Well, look, you know, I've turned away hundreds and two maids, but one stood out, so who knows?

JON STODDARD (59:47.87)
Yeah. Well, Ron, this is great. I mean, thanks for sharing these details of the story and the fact that you get got to meet Fred DeLuca from Subway. And I've always been a fan of Subway just because of their system and simplicity of it. Yeah.

Ron Holt (01:00:02.838)
Well, hopefully this will allow me to meet my other guy Warren Buffett. I've never met him. That's my next challenge.

JON STODDARD (01:00:08.137)
We better hurry up.

JON STODDARD (01:00:12.319)
He's going to be hanging out with Fred DeLuca real soon. Yeah. Yeah. Well, thanks so much for being on the shot show, Ron. I appreciate it.

Ron Holt (01:00:15.519)
Yeah, he's up there.

Ron Holt (01:00:21.37)
Thank you, John. I'm glad to be here.