Contract Sweeping Services: Manny Saxena

Manny: Every decision you make impacts 150, 200 people. You know, you drive a lot of satisfaction in the impact you’re making in your community, not to say our customers, which is 45 municipalities and hundreds and thousands of people who live in each of the municipalities has an indirect impact that you could make, that sometimes feel surreal but the level of satisfaction I have doing this than any other corporate job that I’ve had in the past, there’s no comparison. Absolutely no comparison.

(intro)

From SMEVentures, it’s The Search Fund Podcast, a show about hungry entrepreneurs who, instead of starting a business, decide to buy one. These are their stories of success, failure, and the lessons they’ve learned.

Jake: This is Jake Nicholson of SMEVentures and on today’s show, we’re joined by Manny Saxena, an engineer turned search fund entrepreneur, one of the many, and CEO of Contract Sweeping Services. Manny’s search fund path was fairly unique in that it culminated in two acquisitions from the same owner right at the height of the COVID-19 pandemic. In this episode, he discusses how he recognized and realized synergies across both companies and now how he’s driven value creation post acquisition. We even touched on the implications of his visa status on his entrepreneurial journey.

(interview)

Jake: Manny, thank you so much for joining today. Very excited to talk to you. Just spoke with your colleague Mia recently from Broadtree and maybe there will be more Broadtree alumni coming through here, but you have a pretty unique story and I’m eager to get into it today.

Manny: My pleasure, Jake. Thanks for having me.

Jake: Let’s start from the beginning, Manny. Where did you grow up?

Manny: I grew up in India. Like most other Indians in the US, I was an engineer by background. You know, came to the US for my MBA, went to Northwestern Kellogg in 2012. 

Jake: What was your childhood like? What were you like as a kid?

Manny: So my dad was in the army in India, which meant that we had to travel a lot. We basically moved places every year, sometimes sooner, which meant I changed twelve schools growing up. And I look back at that time, I feel like, at the time, it felt incredibly frustrating because it took about that much time to make friends. And as you’re getting into your thick of friendship, you learned Dad got transferred again. But in the hindsight, I felt like that gave me a lot of qualities which I think have served me well, especially now in the search world. One was this flexibility. I got flexible and basically didn’t mind a lot of changes in my life, which if you talk to any CEO operator in the search world, every day is a new day and you gotta adjust and adapt. And then the other piece was I learned to make relationships quickly and realize that time was of the essence when you really talk to people to create that connection, which really served me well through my search days when I was talking to CEOs, owners, dozens of owners every week to make that relationship quickly. And then we didn’t have a lot of resources or money growing up, you know? Government paycheck for my dad, which instilled, you know, just being careful with money, which, again, serves you well when you’re, you know, running a small business. So all those things I’m really happy that I got that exposure growing up and it certainly is something that I use on a day-to-day basis right now.

Jake: Were you a good student?

Manny: Define good, I guess. I was never the topper but I was usually, you know, in top three, top five students because I was a lot into sports growing up and, you know, divided my time between sports and studies. So that, and then, obviously, was really interested in the physics, chemistry, math side of things and, hence, became the engineer and gotten incredibly lucky along with the hard work also to get into a pretty coveted engineering school in India called the Indian Institute of Technology. So, from that perspective, yes, you can say I was a good student, but never loved studying. I liked the schoolwork specifically growing up.

Jake: Tell me about IIT a little bit. You did a bachelor in technology. What does that mean? What kind of technology?

Manny: So, it’s basically an engineering degree like BS in the US, it’s a four-year course, and I did Material Science Engineering at IIT (BHU) Varanasi, which is in the middle of India, and spent about four years there and wanted to experiment or keep working in my core field so basically joined a huge manufacturing plant of power equipment manufacturer, more on the side where they use a lot of different types of materials right after my engineering days. But, yeah, that was kind of — material science was maybe not my first love but definitely my first foray into the professional world.

Jake: And on the side, you were captain of the swimming team?

Manny: I was, I was, but I do want to say this, that captain of swimming team, I actually represented my state also in India, but being anything at that point, specifically, in swimming, because there was so little competition because it’s not a very popular sport, it’s not a big deal. So, I do not want your audience to have any comparisons between what they expect a swimming captain here in the varsity team versus there.

Early Beginnings: Engineering to entrepreneurship (6:00)

Jake: You’re so modest. So you went to this manufacturer out of university, and from what I can tell, pretty electric start to your career. You were chief of staff to the CEO of a $10 billion company in India, which is an even bigger deal than a $10 billion company in the US. How did that happen?

Manny: So I started off in the manufacturing division on the manufacturing floor as my first job out of undergrad and spent a good year there and then got transferred to the corporate office of that company and really was not necessarily the chief of staff but in the secretariat of the C-level executives in that $10 billion company and that was partly because they were looking for somebody young who had had some experience in the manufacturing divisions in the company and then I think I also got lucky to get that role and then I feel like the role was pivotal in helping me understand that I was more of a business guy than an engineer because the work that I was doing there was helping the C-level executive evaluate investments in different types of technology systems across the company and basically cool projects across the company found its way to us in terms of getting approved by the CEO, by the director at that point of that company and we were basically the ones who were evaluating each of those projects and recommending investment or no investment for these different projects that came across the company. So, you know, that made me get into the world of IRR, NPV, you know, looking at cash flow projections, figuring out competitive dynamics across the landscape in India. I felt like I was more of a natural there and, hence, after spending about two, two and a half years there, I realized it was about time for me to go get business school education and what better country to have that education than the US. So, hence, started looking for schools in the US.

Jake: It’s interesting you mentioned you found you were more a natural fit with the business side of things than the manufacturing/engineering side of things. A lot of searchers, I think a lot of entrepreneurs in general are trained as engineers and then they transition to the business side. And sometimes people see those as two very different worlds, business thinking and engineer-type thinking. What do you mean when you say that it was more of a natural fit for you, the business side of things? And were you able to draw on your engineering training as a business operator?

Manny: Yeah, so I think that’s interesting because I’ve seen, even in Broadtree, you talked about Mia who’s also an engineer and then we had another work mate called Paige, she’s also an engineer. I feel like, as an engineer, there’s a lot of qualities that you pick up. Being analytically smart or rigorous, attention to detail, things like that really help in you in running business but, for me, I felt like the biggest thing was I was more of a broad, like, broad skill set person, where I could do a lot of things reasonably well versus a person who would be really great at one thing, which is, you know, engineering, and for you to be a great engineer, I think, as time passes in that field, you gotta be really good at one thing and kinda hone in on what your specialty is and then become an expert on that, right? And I was never interested in that. I just wanted to be — I guess I didn’t have the patience to be really good at one thing. I just wanted to be reasonably good at a lot of different things. And that’s kind of what you wanna be as a CEO operator as well. Like — and I can do, you know, cash flow projections, I can do LBO models, I can read the balance sheet, you know, but if you asked me for this specific type of transaction, how would it kind of lead into our accounting software, I may not be able to tell you the right answer every time but I intuitively understand how the three statements work. That’s the kind of person I am and I really wanted to kind of get to a profession where I would be really good at being whatever I did, like a business guy, a CEO, than being an average engineer.

Jake: So your next step then is Kellogg at Northwestern University to get your MBA. At what point did you start thinking that you wanted to do something entrepreneurial or run your own business? 

Manny: So I came in, really, I’d say underconfident in the US, primarily because this was a new country. A lot of my classmates, you know, were consultants, bankers, private equity folks. And me coming in with no business background really felt like I was underprepared to jump into the world of business, let alone entrepreneurship. But that was something that I was always interested in and so I incidentally was studying abroad in Barcelona at IESE school and I got into a class called Search Fund that was taught by Peter Kelly, which was completely alien concept to me when I got the class, but by the end of the class, I kinda knew that that’s what I really wanted to do. Because what attracted me to entrepreneurship was more that I wanted to work with people, I wanted to work in teams, I wanted to create a vision, get people excited about that vision, and that’s where my pleasure of working or starting a company or entrepreneurship lay. And I was not that interested in product market fit or raising money or, you know, comes along with, you know, starting a hot new startup in the Bay Area, in Silicon Valley comes with. So, for me, entrepreneurship through acquisition was love at first sight. I was realistic enough to know that I had to get a few years of experience under my belt before I could go out and run a business and convince people to invest with me, like investors, and have the confidence to command or work at the helm of, you know, 100-, 200-people organizations. So that’s what I did.

Jake: And yet you decided not to launch a search fund right away after business school. It wouldn’t be until several years later that you did that. Why not? Why didn’t you go right into it?

Manny: I mean, there are practical reasons. One was I was on a visa. I still am. And in case, not a lot of viewers know about this, but it’s not the easiest to work for yourself on a work visa and that was one of the biggest issues. And then the second one was basically what I said earlier, I wanted to get some experience under my belt before I went out to raise money and ask for — and get into the world of search funds.

Jake: So you go to Sears Holdings and you’re essentially involved in turnarounds and what was the scope of that position and what did you learn?

Manny: Yeah, so I wanted to — I realized that if I wanted to get some business exposure, when I say business exposure, the act of implementation and operations more so than, you know, the strategy world which is what business school students to joining consulting, I realized getting into a place which had a lot of problems would give me good exposure on dealing with those problems. And Sears, at the time and still, had a lot of problems. It was a $30, $35 billion revenue company and had a lot of issues, legacy issues and new competition, the likes of, you know, Amazon, Target, and whatnot that they were dealing with so I realized joining them would be a great learning opportunity. And that too, in a role that they had called Senior Leadership Program, which is basically a Leadership Program which was directly under the holding company of the company and you went in almost like an internal consulting gig, you go in and work on different projects. So, one day, it’s marketing; the second day, it’s, you know, store operations; the third day, it could be pricing; so you really got as good — and these projects were more implementation projects, not strategy projects, right? So you spent about three to six months there and you basically, you know, try and figure out what the root cause of the problem is and improve the functioning of the organization. And that was, you know, I wanted business experience, that was basically baptism by fire and I spent multiple roles in the organization and eventually found home in their marketing division as the Senior Director of Marketing for all their underperforming stores, which was a lot of stores, got a chance to really manage a large team and a large budget, presenting to the CEO of, you know, a $30 billion company on a weekly basis. You know, absolutely loved my time there. There were plenty of smart people there who I learned a lot from. I just feel like the experience I got there, because it was a struggling retailer, was so much more richer than I would have gotten at a place like, let’s say Target or Amazon or, you know, any of the large retailers that were not struggling which would have given me a 10 by 10 matrix of what needed to work and not really provide me the freedom to think outside the box and, you know, really experiment within my role within my organization. So, definitely would never take anything away from that experience and I do think I’m a better operator today because of my time up at Sears.

Jake: Fairly entrepreneurial, it sounds. You were given the ability to really take ownership of some projects. Did you start developing some confidence that maybe you might be getting closer to CEO ready?

Manny: I did, especially my last role there when I was presenting to the CEO of Sears Holdings Corporation every week, which was Eddie Lampert, the CEO of the company. Initially, the first two to three months, I definitely felt out of my element and I felt like it was something that it was not naturally to me. I had to write in literally every word I used to present, but slowly but steadily, you know, when you learn that the conversations that are happening at the top level are not that different from the conversations you’re having with, let’s say, your boss or your peers, your colleagues, you start to gain confidence that there’s no such thing as a genius or no such thing as somebody who is so much better than you that you needed to think badly about yourself, right? So that really propelled me to think about the fact that I could have a place in what I was doing and since I was putting in the hard work and, you know, looking at every project I got analytically and figuring out ways to implement the strategies that we were creating, I was someone who could make change happen. And that was, I think, one of the biggest turning points in terms of me gathering the confidence that, hey, I think it’s time to start thinking about buying my own business and running that business.

Jake: Great. There was one more stop on your way to launching a search fund and that was at a company called Persado. It seems you essentially had a sales role there, is that right? Was that a deliberate decision? You saw it was a gap in your skill set? How did that happen?

Manny: Yeah. So when I was nearing my three-year stint at Sears, I started to think about search funds and then, out of the blue, I got an opportunity at this hot Series C startup funded by Goldman, really doing well, to come in and do sales for them. And the reason they reached out to me specifically was because I was their customer at Sears. 

Jake: Got it. 

Manny: So they were one of our vendors and they had actually performed really well through our marketing channels and they just wanted me to come on board and I spoke to the sales leader up at Persado and I was like, “You know, I’m a brown kid from India, you don’t typically reach out to engineer students coming in having spent a lot of time in general management to go to sales so why me?” and he replied, “Manny, we’re looking — this is a very consultative sales approach and it was a million-dollar product so we needed people who had credibility, we needed people who had used the product before, we needed people who could understand the problems of the customer and then suggest a part of the product that could act as a solution for those customers so I think you’d be great at that job.” And the way I thought about this opportunity was I thought this would be a phenomenal training for me in sales, because I’ve never done sales before and I had heard from a lot of people that sales is an experience that every professional should undertake and you learn a lot. And I felt like when I joined the company, that was an understatement. It felt like it’s the most humbling thing you do and that it prepares you so much better for your professional life because, at the end of the day, as a CEO, a lot of your job is sales, you know, whether you’re selling to your customers, that’s an obvious thing you do, but you’re also selling to your employees, you’re selling to your investors, you’re selling to the bank, you’re selling to all the different stakeholders that you can think of in any business setting almost 70, 80 percent of your time. So I think having done that for a little under a year, it gave me the building blocks of, you know, what do we need as somebody who doesn’t do sales as a full-time job but also knows that he uses the skill set for his daily functioning. So that’s why I chose to take that but because I knew I was going to do search fund, by no means was it a foray into sales as a long-term career, but I think spending a year gives you like, in my mind, a good chunk of what is needed to be a good salesman, which will be helpful for me — it was basically picking up a skill set which I thought was super important for whatever I did for the rest of my life.

Jake: I often tell prospective searchers that the CEO is often the company’s number one salesperson and it baffles me that sales is so under emphasized in business school, because it’s kind of important to a business, you know, to generate sales. And as you mentioned, not just the literal definition, but selling to all stakeholders involved in the operation of a company. Super important. So then you feel you have the pieces in place, you have the confidence, you have the operating experience, you have the CEO exposure, you have the sales experience, you have the engineering degree and the MBA and now it’s time to go buy a company for yourself. And you choose to work with Broadtree. I’m a fan of David and his team, as I mentioned, talked to Mia Jackson, your colleague, just recently and I think you have about — Broadtree has about 10 acquisitions under its belt now, is that right? 

Manny: Yeah, something like that. Every few months, you know, they do an acquisition or two so they’re making good progress. Yeah.

Buying not one, but two companies (21:11)

Jake: Yeah. In any case, the process worked and you acquired two companies, Statewide Construction Sweeping and Contract Sweeping Services, right? 

Manny: Yes. 

Jake: What do these companies do, at the risk of stating the obvious? 

Manny: Yeah, so Contract Sweeping Services, first of all, these two companies were bought from the same owners, even though they were completely different companies, they were bought from the same owners which made it a little bit easier for us to buy both companies simultaneously so I don’t want people to think that, hey, this is also something we should do or something that one can even aim to do because it’s not easy to close two companies simultaneously. But Contract Sweeping Services, we have long standing contracts with municipalities, counties, cities to sweep their streets and highways and roads on a recurring basis. So, wherever you’re at, there’s probably a street sweeper that comes by and you get really annoyed because you have to move your car for the street sweeper. The street sweepers is us. The enforcement of parking is not us so don’t hate us for that. So these are like longstanding contracts, 3-, 5-, 10-, 15-year contracts with municipalities across, at the time, Northern California, where we own 70 percent of the market, in all the big counties and cities and towns that you can think of in Northern California that have outsourced sweeping program, we probably did those. You know, City of Palo Alto, City of San Ramon, Napa, you know, Stockton, Livermore, you think of a city, we probably do it. So that was what Contracts Sweeping was. The biggest thing there was recurring revenue, obviously, and you knew exactly where the next year, how much you’d be billing to each of those customers you had. But the issue there was always kind of from a cost perspective, you just needed to make sure the trains ran on time and the cost can go out of whack. So that was kind of Contract Sweeping. Statewide Construction Sweeping, the second business we bought, in my opinion, as different as it can be from Contract Sweeping in so many different ways, even though they both are sweeping. Statewide Sleeping basically was a service that we charge our customer hourly rates on — where large sweepers would go out on roadway and highway construction sites typically or construction in general and our sweepers would go out there and sweep dust or debris out before there was storm water runoff and, hence, could impact water table and get pollution. So, basically, that was regulatorily-mandated service. Also, no contracts, only repeat business generally to general contractors of roadway and highway construction. And the other interesting piece was Contract Seeping was an open shop whereas Statewide was a union shop so that was another flavor of differentiation between the two companies. Combined revenue of about 23 million dollars at the time and then about 4.5 million EBITDA when we bought the companies.

Jake: So let’s dwell a little bit on this idea of buying two companies. You’ve highlighted the differences between the two different revenue models, different customer bases. Are there some synergies there that make it feasible for you, particularly as a first-time CEO, to successfully manage both of them?

Manny: Yes, they have synergies as well and the biggest one was I think financial synergies where Contract Sweeping’s biggest months were during the winter or fall when the leaves fell down and we had more revenue coming in because we had more routes and Statewide was basically construction oriented so they basically kind of shut down a lot, or slowed down a lot during winter season but picked up again during construction season, which is typically summers. So that was an obvious financial synergy where you always had cash coming in of the business, and then kind of related to that, you also had, you know, capex lines that we had negotiated from the banks which helped a lot, knowing that we had a big business, because some of these trucks are $300,000 and are extremely expensive and, hence, you know, having a bigger capex line and having the covenants to help support that capex line or our term loan was really helpful to have a bigger base. Some of the other synergies were more on the backend side where we could have potentially one common team in terms of certain functions which were not key to the operations of the company and then basically back charged each company based on the services that they did. Those were kind of two obvious ones. Other than that, I did think that there were not so many synergies that we could tap into, primarily because we are running a double-breasted operation, which basically means you have the same ownership for a union and non-union shop so there are legal guidelines around what you can consolidate versus not and we adhere to those very strictly. So we keep everything separate. We keep — we have a different yard, we have different employees, we have different operational staff so everything is very separate.

Battling pandemic setbacks (26:31)

Jake: So you bought in the fall of 2020, during COVID, which, to say the least, has been a tough time for many. I assume it has been for you as well, though I bet you’re somewhat protected due to the nature of the recurring contracts, at least for one of the businesses, but I’m sure you’ve been hit. Can you give us a couple of examples of how and when COVID has been really tangible in the running of these two businesses? 

Manny: Yeah. So to what you said earlier, on the Contract Sweeping side where we have contracts, we didn’t miss a beat. Nothing changed at all. We didn’t even lower our frequency because the services we performed are not just for the streets to look pretty but they also have some significant safety and health benefits for the city and its residents. So nothing changed at all from that perspective. On the Statewide side, however, there were a couple of months where we slowed down significantly, primarily because construction was shut down in the Bay Area. This was right around April, May, June which impacted the business. This I’m talking about 2020 significantly, but then it jumped right back in July when construction was opened. And then the government kind of decided that even through COVID shutdowns, there were some key construction projects that will keep going. Almost like we got a sense of like what the downside could look like in one business when we closed in fall, we already knew it was like 20, 30 percent, but that was the extent of it and then we saw a lot of those projects kind of just get shifted or moved to later months and not get cancelled completely. That was another kind of confidence builder as we bought the businesses in fall. What’s interesting has been the aftermath of COVID. That’s been a pattern a little bit more than the actual COVID, primarily in terms of some of the long tail setups followed COVID, like, you know, the price increases across different categories, including fuel. Fuel is a big portion of what we do. You know, almost 79 percent of our revenue is fuel which is obviously, if you have a car, basically doubled since the last one year. Other things like brooms and tires are getting more and more expensive. The repair and maintenance parts, you know, if you’ve been following what’s happening in the automotive industry, are extremely hard to come by now because of the supply chain issues around the world and because of that, we have to stock a lot more parts and pay 30, 40, 50% more to get that stock or secure that stock in the first place. Sometimes, trucks have to sit for months or weeks, at least, before they’re repaired. So those are some of the things that we’re kind of dealing with now than the actual COVID time, which is peak time which you would regard as 2020 and early part of 2021.

Jake: You’re a year in, approximately. Aside from putting out the COVID-related fires, what levers are you pulling to create value in the business?

Pulling levers: The of value creation (29:36)

Manny: Trying to wrap my head around two businesses, that itself has not been an easy thing to do. You know, you almost have — it’s a different culture as well, right? So you almost have to wear a completely different hat as you’re tackling with issues with each company, have a separate KPI structure, have a different team structure, different controls to be put in place as you manage your business across both sides. So that itself took a few months. And then, after that, I think one of the things that I really wanted to do as we spent time on understanding the business and as we kind of laid low in terms of investments we’ve made through COVID, was acquiring another business. So, as luck would have it, we started talking to one of our biggest competitor on the Statewide side in the Sacramento area which would have been a normal natural geography for us to expand to from the Bay area. We started talking to that competitor and the company is called Szeremi Sweeping Service and they liked our idea, they liked the, you know, the direction we had taken and they had heard good things from the previous sellers of these two businesses so started engaging conversations with them in terms of acquisition of that company and we actually closed that acquisition October 26th so right around one year after we had acquired the first two businesses, and now, in the past two, three weeks, we’re spending time on integrating that business with Statewide and trying to figure out our organic growth strategy in areas close to these two locations. So, a lot of my time was spent in acquisition of that company because that was a proprietary deal as well. Most of your listeners, I’m sure, know, proprietary deals are great because you get a great deal, but also, they sometimes can act as a source of a lot of frustration and consume a lot of time. So it took us about six months, basically, to close the deal. But I’m so happy we did that deal and I feel like the owners of that company have stuck around and become employees of ours going forward and rolled a significant chunk of their proceeds back in the business so really trusting our growth strategy and our team in terms of taking their business to the next level. 

Jake: Fantastic. Are you able to tell us relative to your existing revenue base how much that acquisition added?

Manny: Yeah, it was about 8 million revenue, 2 million EBITDA, approximately

Jake: Exciting. Has there been an element of tech enablement to your value creation as well?

Manny: Yes. So that was basically a big portion of what we did when we came on board, primarily because the previous owners were not as tech savvy, like a lot of such deals. And then sweeping industry in general is probably not known for being too tech for one to begin with.

Jake: There’s no sweep tech industry?

Manny: There’s no sweep tech, even though we’re, you know, half an hour from the Silicon Valley, there’s, unfortunately, haven’t been any unicorns lately in the sweep tech world. So there was a lot to do. And that’s something we felt comfortable making those changes because business had gotten to a size where it was already kind of demanding that. So, you know, the first thing we’d really put into place was a fleet maintenance — oh, sorry, fleet management software, which is basically like the ERP system for other companies so it’s basically like heart of a lot of what we do on the fleet maintenance and telematics side in our day-to-day business. And I can get into that if you want me to, but that was one big thing that we did. We also —the procedures for accounts payables was very rudimentary in that the previous sellers basically approved everything in the past and that was a culture shift as well but we brought on a system called bill.com which is pretty popular amongst a lot of companies that basically made all our payables completely paper free. I signed about 50 checks a week when I joined, I don’t sign — I sign one check a month now in the past one year. You know, that was a huge improvement we felt from a payables perspective. And then we were in the construction industry so receivables sometimes became an issue and were outstanding for longer than you’d want it to be so we got a software called AR Collect which basically helped us reduce our outstanding and, hence, really reduced our working capital from last year significantly. And then now what we are doing is we just okayed a CRM system with Salesforce and a whole dispatch module within Salesforce. And we’re actually proprietarily building that system as we speak for the past couple months. And once we have that, we could literally have drivers on tablets where they could get signatures of the customers on the construction yard so that there’s no back and forth with the paper, you know, payroll is solved for, and then also use that same system for billing, connecting with our accounting system. That’s a very anticipated project and we really look forward to having that completed hopefully in Q1 of next year. So there’s a lot, as you can tell. There’s a lot of activity that’s gone on in the past one year and making a change in an organization, which has not been that tech savvy in the past, has been a lot of work in terms of both implementing the systems but also changing the culture within the organization to be able to utilize those systems that we put in place. 

The complications of immigrant status (35: 18)

Jake: Yeah, kudos to you. Sounds like you’ve tackled quite a bit successfully. Very impressive. Next question is a bit sensitive so, hopefully, you’re okay with it. These are obviously not only economically but also politically and socially turbulent times, particularly in the United States. As you mentioned, you’re on a visa, you’re an immigrant to the United States, and I would love to hear from you how, if at all, but you are in Northern California, which is fairly progressive and diverse, but have you felt — how, if at all, has your immigrant status affected your search and operational efforts?

Manny: Yeah, no, I’m happy to talk about it, primarily because it’s something that’s not as talked about because it doesn’t — it’s a small portion of the population that gets impacted, but it is significant impact on the people who do get impacted. I almost feel like, over the years, I’ve been in the country for, what? Nine years now, came in 2012. Visa has had continuous and significant mindshare of my everyday life —

Jake: Right.

Manny: — all throughout. And it’s something that’s not just a problem that you have to overcome an issue, you have to overcome, but it’s existential, right? To give you an example, even at this level, let’s say I get fired from my job here, I have something like three months or two months, I think, to find another job. Otherwise, I literally have to leave the country. I can’t start my own business on my work visa so I have to find ways where there’s a sponsor backing me at all times, whether it’s Broadtree or if it’s Contract Sweeping, and it’s not easy to get — and, basically, extremely hard, I’d say borderline impossible, to ever start my own company where I own more than 50 percent of the company. So, hence, for me, traditional search model and self-funded search models were completely not available. So the only way I could have done search would be to join forces with a company like Broadtree, right? And still, like when you — after having put in the effort, spending two years to buy these two businesses, transferring over my work visa from Broadtree to Contract Sweeping itself was not — also there’s a probability involved there, right? And so there could have been a world where I spent two years trying to do this and then, when it came time to it, I couldn’t get the visa so I couldn’t run the business that I spent two years buying, right? So there’s all kinds of like these binary existential issues which are always back of your mind and extremely stressful, but, you know, like anything else, you gotta take them — get a good lawyer, that’s one, and second is take it in the right spirits and move on and keep doing it until you can’t. And then, obviously, coming into an industry which is pretty blue-collared poses its own challenges. I don’t think there’s any other brown person or at least Indian person in the entire organization of, you know, 150 to 200 people that we have. 

Jake: Wow.

Manny: So, that cultural challenge was also there to be, I had to recognize that and temper my interactions with what I call is the real America because that’s what largely US is comprised of, not the business school like friends that I had, and, you know, work with them, right? And establish credibility to begin with, gain some experience, make data-driven decisions, without making it personal about any one thing. And, you know, COVID obviously has posed unique challenges with that, right? Not everyone in the country, as you know, wants to get vaccinated. That has been, you know, issues in our company that we had to find ways to get around. Per OSHA, you know, now we need — a company with over 100 employees, you need to either mandate vaccinations or need to be able to test routinely, you know? The obvious question becomes, if you mandate it, I don’t know what percentage of staff I’ll lose based on that, but if I didn’t mandate it, then who’s gonna pay for the cost of testing every week?

Jake: Right.

Manny: You know, it’s not gonna be insignificant. So there are unique challenges that come along with that. But, you know, like anything else, I think it’s one of the things that I have to deal with on a regular basis but I feel like when you peel off the differences, in this case, me being an immigrant, at a raw level, human beings are pretty much the same. They like the same things, they love the same things, they hate the same things, in a lot of ways, and it’s just understanding the real human behind that skin, that becomes more important. And I’ve spent time trying to do that and that kind of ties back to my experience growing up where I dealt with new friends every year, new people everywhere and trying to figure out common things that united us more than things that divided us so that’s kind of the mantra that I live with, and that’s really served me well.

Jake: Yeah, I love that. Thank you. When you started on this journey to business acquisition, you had some goals in mind, presumably. Do you feel like this is it? Running this business is the culmination of your dreams and the achievement of those goals? Or do you still have more things in your career you want to you want to accomplish after this stage?

Past, present and future goals (40:44)

Manny: Yeah, I’d start off with saying that it’s definitely something that I felt the most satisfied and most, I guess, for lack of a better word, realized that I feel doing, because, not to sound vain about this but when every decision you make impacts 150, 200 people, you drive a lot of satisfaction in the impact you’re making in your community, not to say our customers, which is 45 municipalities and hundreds and thousands of people living in each of the municipalities as an indirect impact that you could make, that sometimes feels surreal. But the level of satisfaction I have doing this than any other corporate job that I’ve had in the past, there is no comparison. Absolutely no comparison. I feel like the small business world is an industry, if I might call it that, that is here to stay, not just here to say but it’s a huge, huge opportunity. Trillions of dollars of wealth is going to be transferred over from Baby Boomers to the next generation in the next 10 years and all the money that private equities have, which is, again, trillions of dollars of dry powder, don’t have a scalable way to actually get to the small businesses because their teams are not set up in that place. So I think there’s a huge opportunity being in the small business world here in the US, both from a financial standpoint, a financial return standpoint, but also impact standpoint, because, you know, something like 60, 65 percent of the US is comprised of the small businesses. So, I would love to do a lot, play a bigger role in that ecosystem and I do think this is just the start and having the experience of searching and then running and then, hopefully, someday selling the business and creating the network around the search fund and ETA community, a small business community, is going to serve me well to get me to the next stage, whatever that might look like. But, again, don’t wanna jump the gun, there still needs to be a lot of things that need to happen for my next stage so completely focused on what I’m doing day to day here.

Jake: Our listeners are — many of them are prospective searchers around the world, some in countries that are brand new to search funds and they’re just learning what this ecosystem is about. What would you like to share with these aspiring entrepreneurs that you wish you had known when you were weighing the pros and cons of launching a search fund?

On hindsight: Advice for aspiring searchers (43:18)

Manny: Yeah, I think a lot of things I would say would sound cliché but I’ll say it anyways, one is you really need to understand the why of why you’re doing this. You know, if it’s getting a fancy title or making some money or, you know, appearing cool, I don’t know if that’s the right reason to do this, right? Like money, you could probably make a little bit more money doing something else. Title wanes off really fast when you have the fourth HR issue of the week. So, you know, I would really, really encourage people to understand their why. And the way you can understand the why is by using or by living the life of a searcher and living the life of an operator. So I would highly recommend people who really are considering this as a life path to spend some, like an internship or spend some time with a searcher and an operator, and, you know, and work on the problems that the operator and the searches are working on firsthand. Outside of that, at least that’s how I think about things, create like a matrix of every kind of person you can meet in the search fund community and talk to them, right? So if it’s a searcher in like traditional search path, a self-funded search path, an investor and operator, somebody who was successful in thirst, somebody who was unsuccessful in search, or all the variables of the different types of people, like banks, service providers, again, variables of people you can talk to, on a regular basis, talk to to understand, you know, what the search world life looks like, is extremely important. So talk to at least 30, 40, 50 different stakeholders, in my opinion, and make it almost like a regimen before you think you know it well enough that you don’t need to talk to more people. And then the second thing I’d say is like just try and go broad, like — and I think that’s served me well and I would recommend it to anybody who listens, is you don’t need to be an expert in finance but you need to know how to look at your financial statements, your balance sheet, do basic corporate finance functions. You don’t need to be an expert in HR but you need to understand the basics of it. Again, same goes for operations. So, if you’re in business school, you know, try and do a lot of different types of classes. A lot of classes that you don’t think are really that necessary or sounds squishy are actually the ones that I thought were really interesting and important to be running a small business, like negotiations was a class that I took at Kellogg, which was huge. You know, MORS was a class at Kellogg which is basically more kind of the EQ piece of how you deal with people. Creativity, that was not the name of the class but I definitely took a class or two on inspiring creativity in the organization. Things like that, I think, will go a long way. And then really think about the model you wanna work in, right? Like once you talk to those people, you’ll understand, you know, do you wanna be king or do you want the cash, right? Like when I say that, that means it’s like you get the self-funded model where, you know, you would own 60, 70, 80 percent of the business and you’re owner day one, it’s a different kind of lifestyle, so to say, versus like kind of what I’m doing, maybe a larger business than a self-funded deal and institutional or sophisticated investors behind me, having a board who can hire or fire me, you know, it’s a little bit different type of experience. So maybe really think hard on what your life needs to look like, I suppose. So all those things, I’d say, really would help in choosing the right path. And if not, letting you know that this is not the right path for you, which I think is equally important in the pursuit of what you wanna do with your life.

Jake: Manny, thank you so much. Words of wisdom, very valuable to hear your story for our listeners around the world. Best of luck in the coming years in the sweeping industry. You’ve already made some pretty big moves and we’re excited to see more.

Manny: Yeah, thanks for having me and kudos to what you’re doing. I think it’s a noble job and work that you do and I did not have any of these resources when I was considering search. So congratulations of what you’ve built and I’ll always be a supporter for you and your organization and thanks for having me.

(outro)

Jake: Since this interview with Manny, just less than two years post acquisition, Manny has sold both companies and is now beginning his new journey at Sweeping Contractors of America, America’s largest power sweeping company. I don’t know what’s next for Mr. Saxena but with this win under his belt, I’m sure it will be worth following.

Thanks so much for listening to this episode. If you enjoyed it, you can find more at the searchfundblog.com or wherever you listen to podcasts. I’m Jake Nicholson of SMEVentures and you’re listening to The Search Fund Podcast.