How Holdco Legend Michael Girdley is Playing Multi-Decade Games (and Winning)

Today Greg is joined by Michael Girdley--who's spent the last 30 years building a $100M+ holding company. In this episode, Greg and Michael talk about whether holding companies should take sexy VC money and how to be a decades-long player in a world of base hitters. 

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LINKS FOR THIS EPISODE:
Production Team:
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Michael Girdley
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https://girdley.com/

SHOW NOTES:
0:00 - Intro
4:32 - Finding great businesses to buy
7:22 - Does Michael think Greg made a mistake by turning down $30M?
15:15 - Do this one thing before making a big decision
25:27 - Scalepath, EverthingMarketplaces.com, Reforge and other companies doing communities right
33:15 - The story behind Alamo Fireworks
44:58 - How Michael Girdley is playing the long game

Creators & Guests

Host

GREG ISENBERG

I build internet communities and products for them. CEO: @latecheckoutplz, we're behind companies like @youneedarobot @boringmarketer @dispatchdesign etc.

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Greg: We're recording.

Michael: Yeah, there we go.

Greg: Michael Girdley, Holdco legend, you know, there's this new generation of Holdco entrepreneurs and you've been doing it for A while.

Michael: going on second business I got into and really stepped out of my first one was about a decade ago. Been a while.

Greg: So for folks who don't know you, could you just explain, what your portfolio is looking like, what you're up to,

Michael: For sure. For sure. Well today, uh, what I do is, well, I tweet a lot evidently, but, um, I own about a dozen different businesses, uh, here, uh, I'm located here in Texas and San Antonio. I grew up here. moved away for a while, but came back. Uh, my wife and I got back here 20 years ago now, um, before we even got married and we've been here ever since.

And so I have a diversified, uh, portfolio of companies. I try not to call it a portfolio because it makes me sound like a douchey PC, but, um, you know, I would consider those like deep and significant investments in companies I've either created or purchased So there's everything from a fireworks business that was the very first business I got into and we still own that there is an education company. We started out. That was the first company I did outside of the fireworks business. And in the past five years have really been an explosion of new businesses.

I've, you know, I think I've honed down my ability to incubate companies, uh, my model of how to do it, uh, and my understanding of how business works. Those have all kind of come together. And, you know, over the Past five years has really been the growth from two or three businesses up to up to the dozen where we're at today.

Greg: and how do you think about incubating versus buying?

Michael: Uh incubating versus buying is a really interesting formula for me I think about it in terms of where I can find, you know significant advantage Right now assets are super expensive and it's very expensive to buy businesses. So I, you know, I think when assets are expensive, you go create assets. And so really the past four years has been a lot more incubation for me and a lot less, uh, M and a,

Greg: Which I feel like goes against what a lot of hold co entrepreneurs are saying on Twitter. especially in like tech hold co entrepreneur land, uh, they're saying, You know, it's so hard to go from zero to one, go and buy a business. Are you seeing that too?

Michael: people are saying they should go buy a business. Yes. Cause it makes it looks like it makes it look like you can skip That really annoying part of building a business, which is like when you feel like things aren't going anywhere for the first like 18 months or so, um, you know, at the same time, like if everybody's trying to go buy a new business, right, they're going to prices are going to get pushed up if there's going to be a lot of competition going after the same assets and it's going to be harder for you.

so yeah, you know, I think it's just one of those things for me, it's always like watching where the opportunity is, then rushing to it. And if everybody's saying one thing, that's usually a sign you should be doing something different.

Greg: totally. two to three times a day I get the pitch saying, do you know how many baby boomers are going to retire over the next few years? And they, you know how many businesses they run? These businesses are going to close down.

Michael: Absolutely.

Greg: buy them for pennies on the dollar

Michael: Well, so, I mean, I think what people don't do is kind of like the, you know, the law of large numbers aspect to it where it's like, okay, well, why don't you go through and think about all these baby boomer businesses? And let's go with the first thing, which is businesses you just don't want to be in. Right.

Like there's just like, okay, so that cuts out like all the gentlemen's clubs and like all the scummy stuff. So that knocks out a bunch of business that, you know, you're not going to be proud to tell people you want to be in at a cocktail party. And then there's like, okay, well let's now let's knock out all the businesses that only really exist because something that goes home every night with the owner, that could be the owner's relationships, like the owner's like knowledge that could be the owner's like credentials.

And suddenly you look up and there's not that many businesses actually out there compared to the number of buyers who are out. Getting them. And then there's another problem on top of all that, which is a lot of these baby boomers have figured out something to do with their business already. They're going to sell it to a strategic or they're going to give it to their kids or they're hiring a manager.

So like, yeah, I know people are finding businesses from baby boomers, but like, I think that's kind of way overblown in terms of how many are truly out there. It's not a tsunami. It's something more like a little ripple. This is how I would think about it.

Greg: and when you do buy a business, how do you find great businesses to buy

Michael: Yeah. there's the, there's two ways that buying businesses tends to happen for people, including me. One is like the front door approach. Like you just start, what everybody else does. Going through listings, learning about an industry, making phone calls. learning about them.

That's what we do on our podcast. Acquisitions Anonymous, which of the five podcasts I've started, that's the one that has survived because it does well. And, uh, like that's what we do. We go through listings and we look at a business each week, and then we talk about it and figure out if we would want to pursue it more.

So, you know, like most of the MNA I've participated in is, um, is software MNA because well, software is like, I know that a lot and I have a competitive advantage there. It's much better for me to go buy something that I have a competitive advantage in than to try to compete, you know, when I don't. so in the case of that, you know, there's the front doorway, which is just like looking at listings, going through the brokers and all that kind of stuff and seeing, you know, what the investment bankers and that sort of thing are pitching that works.

And you can sometimes find deals there. Um, what I find is much more interesting is like. The serendipitous approaches where it's like, you know, through your network, like the great deals always seem to have some weird way that they come into your, into your world. Like it's a friend of a friend or your college buddy knows something going on.

It's some data that's not out there that everybody else can see. And that kind of inside information is where the most kind of interesting M& A opportunities happen. And, and most of the M& A I've done over the past four years has been through the company Duro software that we set up. It's a, a really quickly growing company.

Um, they're up over 200 people or so global, uh, and we've bought going on 15 companies now, um, through that platform. And it's a hold co that is actually underneath my hold co. So there's other shareholders there as well, but I founded the business and got it started that way. So, uh, I've participated in, you know, the underwriting of all those acquisitions those guys have done.

Greg: so you raise money for that that sub hold co

Michael: Yeah, we started, we started it with our own money, me and the, the CEO. Uh, and then we did a couple of acquisitions and then we ran out of money. So then we brought on equity partners and some bank debt, and then it has grown since then. And then we brought on a professional. Uh, investment group, uh, a private equity firm called Peterson, uh, they agreed to invest in the company and took board seats and came in and put 50 million in the company, uh, about four months ago.

So, you know, when it was clear, the opportunity was really big and required a lot of capital and we were going to run out of my capital, uh, we brought in a partner there. And so I'm on the board with those folks and, and so that's how that got structured, but we started it with our money and took it from there.

Greg: You know for as much as you can share like are you happy you did that and the reason I ask is I haven't publicly said this, but we like last week we had an offer for about 30 million to invest in late checkout our holding company and one of the top institutional investors, VCs, someone I really respect, he sits on two public company boards or two or three public company boards of some of like my favorite products.

So I really respect him. But the idea of like giving up control and. Just having, and maybe VC is different than PE, but just having to prime it for an exit at some point made me, a little uncomfortable. So we ended up declining that. I'm curious, A, are you happy with that situation? And then B, if you were me, would you have taken that deal from that VC?

Michael: Oh, if I was you, that's a great question. Um, first of all, I'm a happy, uh, totally delighted. Like when we started to talk with Peterson, we asked around about their reputation and talk to references and all that kind of stuff. And it, it was fascinating even after we signed the deal that friends of mine, like college buddies would be like, Oh, I've worked with those guys.

They're really great. And it turns out they are really great. And what I enjoy about them, and this is a cool anecdote, like, um, they're from. Utah. So it's like a very family oriented stuff. So it's not like, it's not like, uh, what I've described as New York private equity or Dallas private equity where they like show up and they're like, okay, show me how you're going to make me some money.

Like these guys, like, uh, they were awesome. Like the first meeting they're like, okay, well, welcome to the business meeting. First, I'd like to know about you. Tell me about your family. Like, and I was like, what is going on here? Like, these guys are amazing. And that was really like a cultural alignment with the company we've created.

Like our number one core value is to make mom proud. Like literally we have that written there. So it's like the nicest group of people ever. So it was a good fit there. And I think what is awesome is When you bring on growth equity from a private equity firm, like the good ones will go in and invest in adding value enough to where they earn their seat at the table.

And like you, like it's totally worth it. And so, you know, I think there's also besides that, which Peterson is doing for me, there's an understanding of my limitations currently. Like I've never really built a business. bigger than where Dura is currently. Like at a couple hundred people, like your mindset and your like small business habits really have to change, right?

Like I've done a lot of like 30, 50, a hundred person companies. Like I understand what that's like. And you can still kind of think and act like a small business person, but like, as you start to get into the midsize company range, like your mindset and your habits have to change again. And so I knew when I looked around the table before Peterson came in, we were going to have to grow again as a board and also as a leadership team to meet the kind of ambition that we had and the small business thinking and the habits that I had potentially, like I needed to grow.

So frankly, like in those board meetings now, like I'm learning a lot just because they've been exposed to a lot of companies on the 200 to a thousand person kind of trajectory and like, that's new to me. like in a small business.

For example, you don't have to look really two or three quarters ahead to think about people problems, right? You could, you're fixing your people problems right now, but like at a midsize business, like you have to get ahead of the game to be ready or it'll stunt your growth, right? For example, you need to start planning ahead three or four quarters to say, okay, what we need to have this person in is VP of corp dev, or this person has a controller.

Otherwise the company, like you can't look up and just. change it on a dime because a little small company is like speedboat and like, uh, a midsize company is like more like a tanker, right? It takes like a couple of quarters to change things. And so that's just like one example of like, I knew Paul, who's my co founder, like we just knew where we needed to learn and brought in some people who've done it already.

And so anyway, just totally delighted by, by that decision. I think it's a win, win, win for like everybody involved and super happy I did it. Or we did it.

Greg: if you were in my seat, if you were in my seat, let's play this out, you're getting 30 million. You know, call it a 100 million post. Um, we're, we're doing quite well. Um, we don't really need the capital, but the capital would help fund more acquisitions, like larger acquisitions.

And we might be willing to do, um, but we're in software mostly. Right. So as you know, the cost of incubation isn't that high. so if you were Michael Girdley, which you are, but you were playing my role, would you, what would you do?

Michael: Uh, I would really ask myself in that situation, like if I, if you look at your day and you ask yourself during your day, based on what you do from get up to do podcasts, to go to bed at night and, and how you describe that.

And I think it's the first sign for me, like, you know, I'd ask you right now, like in terms of your day to day, like what percentage of your hours are tap dancing to work hours and what percentage are not as fun?

Greg: mean, I don't want to sound pompous or anything or like I'm gloating, but 95% of my day is tap dance.

Michael: That's amazing. That's, that is a much higher ratio than most people. Um, you know, it's interesting. I talked to an entrepreneur last week who took a big slug of money like that. For a VC back business, he's running it and we did the same exercise and about 40% of his day was tap dancing to work. And, uh, but at the same time, once you take that VC money, I think that's the second part of my question.

Like what happens to your days then? Like how, how tap dancing to work are you going to be after you take that money?

Greg: know, you know what I really love about my situation right now is there's no, I don't have a boss, you know, like we, my, my take is that if you have investors, you have micro bosses

Michael: Right.

Greg: and you have to manage expectations and you have to manage up. And sometimes subconsciously you're doing things that are, you're just trying to please them, even if it's subconsciously, um, because a lot of times you respect them, you know, for example, this particular person, maybe he says, You know, go acquire a marketplace.

And even if I'm in that boardroom and I'm like, no, I think we should only be acquiring social networks for these reasons. And then, you know, a month later I come across a marketplace and I'm like, Oh, I'm trying to like fit it in his model. And then all of a sudden I'm like, I guess I'm working for him, uh, in some ways.

So one thing I really like about my situation is, is we're self funded, you know, me and my co founder do whatever we want.

Michael: Yeah. And it sounds like that's super important to you and would, and would really reduce your like day to day happiness. So I don't know, based on that, like time, time is like the one thing we can't get back. Right. And it's like, why waste a minute of it on doing a life that really sounds like at its core is something that this VC wants you to live that life.

right? And you have a different life that you want to live. So to, to me, if I was you and I did the same analysis, um, you know, I would, I would totally, you know, make that decision. Now, if I was Michael Gridley and I did things the way I do it, which is like, you know, it's scalable for me because I tend not to run things.

And, you know, that sounds pretty exciting because I like interesting problems. And it sounds like the 30 million on a hundred posts would be like some pretty cool problems to go solve. And I think that would be fun. But it wouldn't change my life as much as it sounds like it would change yours.

Greg: whenever you have. a fork in the road like this, I think that you should call smart people because actually you could just call, call five people. They don't, you know, they don't all need to be smart. They just need to be people that you respect.

Michael: Yeah. Did

Greg: I called a few people.

Michael: or what happened?

Greg: You didn't pick up. You didn't pick up. You were, you were too busy tap dancing to work or something. Hey, this, uh, you know, I don't have much reception here in this Chili's set, something like that.

You know, one of the, one of the people I called and I'm not going to call them but. He was like, I think you're making a really, really big mistake. And he was like concerned for me. He was like, I don't know why you're making this mistake. you can be so much bigger and you're not unlocking your potential.

And with that 30 million, like you could, you know, be public in two or three years. And I was like, have you spoken to public company CEOs lately? Like they don't love, love it, you know, um, obviously the liquidity is good. but he's like, well, it's not even just about that. It's about the problems. He says the same thing.

He's like, you'll be able to solve bigger problems. And I'm like, I don't know. I, I, I don't know about that. Like, cause you know, I think if you're a solopreneur, you're a multipreneur or whatever, a lot of the times you're solving interesting problems. Uh, you're just standing on the shoulder of giants in terms of the technologies that you can be building upon, the audiences that you can create.

And so I feel challenged. In fact, I feel more challenged today than I did running venture back startups.

Michael: Yeah. And I think there's a fundamental, I mean, when I listened to what your friend talk, I think there's a fundamental misconception. A lot of people have, especially here in America, that bigger is always better. Right. And it's like, it's our nature, like, and it's so ingrained in the way we think about things.

Like we don't even really like slow down and realize like, It's all around us, right? Just like competition is such the core of American society. Like nobody even really talks about how weird that is. Like other, other countries don't act that way. And to me, when I see somebody like your, your advisor, they're like advising, like, Hey, you need to to be bigger and better, or it needs to be bigger.

Otherwise it's not better. Like it's just a fundamentally flawed, like worldview on the other side of that. I think I really appreciate this advisor because when you call somebody like that, you really want them to like, give you a strongly worded, but loosely held opinion. And it sounds like he did, which sounds like exactly what you wanted because it helped you think about the issue better.

Greg: yeah, yeah. I mean, another person, another advisor I asked, he was the senior vice president of Corp Dev of a 500 billion company. And he just said, I just texted him. I was like, what would you do? I could read you the text, just full transparency here on the pod. He had texted me about something else. And I was like, while I have you, if you were, if you were me and you were offered 30 million for your hold co to fuel acquisitions for 20% of the business from a top institutional investor. Who sits on some board of some dope companies, would you do it? And then I said, we currently generate X dollars of EBITDA. And then all of a sudden he's just like, Oh, so it's, you know, this amount of, like, he was just calculating the multiples. He's like, well, if the multiple is this, then you should do it. And multiple is that, you know, you should do it. And I was thinking to myself, no, like, where's the multiple of fun? You know, the multiple, where's the multiple of fun?

Why is no one talking about the multiple of fun?

Michael: Well, it's, it's also this idea that nobody talks about is that there is a diminishing return on money. Like, and I also have this like weird idea I've been toying with that. It's actually, there's, there's negative marginal returns on money as you get more of it. Like, as I watch people who are like super rich, like super duper rich, like G six or whatever, whatever's the more expensive version of that, like those people are actually all very, like they spend a lot of time, like a protecting the money and be like trying to figure out who around them is not a faker.

And to me, like. You know, I think, I think being somewhat rich, you know, someday I'll get there. Right. Like that's the perfect thing rather than have to get more money. And then, you know, you eventually get to a point where you're like Jeff Bezos, where you're just like, like, he's just trapped in his fame and each, additional dollar, like that actually makes his life worse in my opinion.

So I think there was an inflection point and somewhere around being able to afford flying private, but, but you know, it's like above that, I think the marginal utility of dollars, like Eventually turns negative.

Greg: Yeah, there's a great framework for this. I think it's, you know, are you building a prison or are you building a castle? And I feel like not enough people take that framework when they're making big decisions like this. They oftentimes they get so seduced by, the vision of what would, you know. 30 million, 2 million, whatever it is, whatever that milestone is, they just all humans, all of us, we kind of just like picture what it, what it looks like when that moment hits your company gets acquired, like all these milestones.

And then it happens. And you're like, Hmm, am I in a prison right now?

Michael: I think it's totally true. Well, it reminds me it floated around on Twitter last night. There's like a great. Don Draper from Mad Men quote, where he's like, he's given a speech about why people shouldn't pursue happiness. And the reason they shouldn't pursue happiness is because when they get it, they want to go pursue more happiness.

It's just like the most bizarre like approach to life, but also makes a ton of sense given how Don Draper like grew up like dirt poor and all this kind of stuff. And that's this really bizarre life view, but

Greg: I mean, This is a spoiler alert for Mad Men, so block your ears for people listening. But the last minute of Mad Men, I don't know if you remember it, but it's Don Draper in Big Sur, I think he's at the Esalen Retreat Center in like the sixties, and you just see him. Not wearing a suit, wearing maybe like a t shirt tucked in, like he's in casual wear, and he's looking off into the water on these beautiful California cliffs, and there's just this amazing freedom, like hippie.

60s music that's playing and you could just tell that Don Draper finally is happy after all that, after, clawing through life and climbing up the ladder and selling agencies and like Madison Avenue and, you know, and I think there's, I think that was one of the big lessons for Mad Men. So one of the reasons I wanted to talk to you is. It looks like you're having a lot of fun. It looks like you're having a lot of fun and you do things, I think, based on like your curiosity. So for example, I, you know, you created a course, uh, when people think about creating courses, a lot of time it's like negative and, you know, people are like, why are you creating a course now you're just like, I'm curious about this.

And you created a course. Why did you create the course? What is it? And are you having fun doing it?

Michael: Yeah. look, creating a course is like writing a book. It's not that much fun. It's a lot of work and it's never as good as you want it to be. That was the thing I definitely learned. I also learned a lot from doing the process. Like I did very much like a masterclass style course where it's just like, look, here's a lifetime of learning.

I'm going to cram it in. Like the original script was like 450 pages, like just this enormous dump of like everything I feel like I've learned over 25 years in business. Uh, the reality is I think what I've learned Since then is like people, especially in a, like an attention starved or a focus starved world.

Like now, like the idea of like a, an 80 hour masterclass is probably not something like I would ever do again. Like, I think people want stuff much more bite sized and you're seeing like. Like me sharing messages now, like I wouldn't imagine starting another podcast, no offense to your podcast, but like the aperture of consumption for potential podcasts is like, is shrinking.

Like not only is people consuming less of them, but like the demand for people wanting 60 and 75 minutes stuff, I think, you know, it's limited in terms of the options there for somebody like me. So I'm doing like a lot more shorts. Like I recorded like 20 video shorts and I find those like super appealing.

Cause I just have to concisely. Put everything down. And I think anything I would do in the future around a course, um, would be something much more manageable and short, like a two to three hour thing, very specifically around that stuff. Um, and so for me, like the course is part of figuring out how to, like, there's this like idea that I want to grow my impact in terms of sharing messages and things I've learned and helping other people kind of figure out.

Or get to the point where I feel like I'm like super happy. I want other people to be here. And like the course is like, how do I make the investments and feel good about it? Um, By monetizing the things I'm saying and then using that to reinvest in more content. So like I've hired like a whole team to do like social media, like I have a CEO of it.

Now there's two of us, or there's two of them plus me. Um, and I'm trying to get it to a point where I just worry about teaching and messaging and then they just take care of everything else. So the course was kind of the first bucket of that. And I think we'll do more of that in the future just because, well, those guys that I hired, they kind of want to get paid, which is, which is important.

And I, I don't want to come out of pocket paying them. So.

Greg: Another business that I find fascinating, just cause I'm a community guy is Scalepath that you incubated.

Michael: Yeah, , what we saw with scale path is we very much like deployed the effectuation model that I used to build companies, which is like, I went and looked at the things that we have available to us, you know, in terms of our current resources and the change we could make on the world.

And, you know, I saw that I've created a bit of a voice around small business operations, leadership. ownership, all that kind of stuff. So there's that level of trust that I felt like we could start with and use that to go build a business around. So using the associate model, um, that I used to basically bring on entrepreneurial apprentices, um, you know, Sam, who is the CEO of scale path, he and I like dug into that particular idea after going through three other ideas over the previous six months that all sucked.

we dug into that idea and Sam. And I went and interviewed a bunch of potential customers. And what we saw was in the small business space, like there were a bunch of people that were like stuck in their business. They wanted to like grow both the business and themselves, but they didn't know how to like get past it.

So we did like straight up, like lean startup, like interviews with them. Like what matters to you? What are your priorities? What are you solving for? And we heard like the same things over and over again. They're like, you know, I want to grow my business, but I don't have time to go to EO or Vistage, um, and spend like a whole day doing that kind of stuff.

And also they expect me to show up and know a bunch of things that I don't know already, like how to hire people, how to fire, how to select a lawyer, like none of that. There's no class that teach you all that stuff, unless you have a parent like I did, who like teaches you how to do it. And so what Sam and I saw was there was this niche of people running these businesses, 5 million, wanted to grow, but there wasn't anything out there for them.

Um, and they didn't want like to go sign up for a marketing course. They want to just like, tell me what to do. Give me a recipe on how to solve this problem that every business has. And so from that, we went and like, Set up the business. And it's, uh, you know, you pay a monthly fee. You join the CEO of your network.

And the unique thing that we've done is create these playbooks that we're releasing now to per week. And it's everything from like, how do I hire a lawyer to like, how do I fire someone to like, how do I do cash planning for my business? And you get You come for that stuff and then you stay for the community.

And we've built a community around that. That's, um, I think very vibrant now compared to a lot of other ones I've been in super engaged. Um, and, and it's going off really well. We're on month's number five and adding new members like, you know, every couple of days, which to me is pretty exciting.

Greg: Yeah. It reminds me in some ways, similar to playbooks.

Michael: Yeah.

Greg: Um, but then stayed for the community, although their community was on Facebook groups. Do you, your sounds like it's more like zoom discussions, maybe hosted by a moderator. Is that how it works?

Michael: interestingly enough, when people are in this kind of 500 to 5 million stage, like they're, they're working in the business. Like they generally can't leave. So what they'll tell you is they want something asynchronous. So we're all Slack centric. And then what Sam does, um, And, and I'm part of this is, uh, we'll have a couple of synchronous events per week.

And those could be things like, we'll bring in an expert who wants to talk about like, you know, how audits work. And like, that'll be that particular thing or a Q and a around one of the playbooks. We'll do, we'll do that as well. And he's built up a roster of these experts. There's like a sales one. And then, um, we have one around, uh, banking.

Like there are all kinds of folks that he's brought into this network now. So it's mostly asynchronous, but then there's the synchronous aspect of it as well as how we do it. And it's all Slack centric Slack and, and basically we use an online portal for the, um, the actual like playbooks themselves and so far it's worked really well.

Greg: Have you heard of everything marketplaces. com?

Michael: No,

Greg: So you go to their website, I'm not involved or anything like that. I just find it. They did a great job. Uh, it says we're a community for marketplace founders and leaders. So first of all, you would think that is like super niche.

and it is, but first let me explain the product. So basically the way it works is you get access to this, you know, community, they have events, they have a knowledge hub and resources. Um, so I'm sure some playbook type stuff and just different guides, tutorials, toolkits, investor database.

So like who are the most active marketplace investors? And they've got 1800 people, I had heard that, you know, they're in the seven figure revenue range, which is really amazing. And in this, I think it was came out of a venture studio where they were working on multiple products, but this was working so well, the team was just like, let's just focus on everything marketplaces.

Michael: like every venture studio does that.

Greg: Yeah, So I feel like this model that people like you and everything marketplaces are pioneering is, is only going to get more and more popular.

Michael: Yeah. And look, we, uh, what re I don't know if you're familiar with reforge, like in what that does for like. You know, tech continuing edge, like our ed, you know, what scale path really wants to be is reforge for a small business. Like that's what we're planning on doing. So we've got a good chance of getting there.

I'm excited about it.

Greg: How does, how does Reforge work?

Michael: I think you end up showing up and buying like it's the 2, 000, last I saw it was the 2, 000 a year and you get like a level of basic stuff. And then I think there's some add on courses that you can pay. on top of that. So basically they've, they've optimized everything for most, uh, employees have a 2, 000 educational budget and they like use all of it.

Greg: Right.

Michael: they've raised money from induce and Horowitz and all that kind of stuff.

Greg: That's their first mistake. Yeah. I mean, I would have just not raised money. Um, but there's artifacts piece that they're doing is really cool. So they have like, you could, you know, this is really cool. So they basically list out, uh, you know, board survey at Carrie first user interview cards at Sidley, Holy Trinity of dev team planning at fractal.

So they're basically getting all these product one page brief at brilliant smart home. So they're getting all these. assets from these companies and they're just, you can just download them

Michael: Yeah. So the pricing is 2, 000 for a person. You get one seat and you get to join one cohort. And then, then they have corporate plans on top of that.

Greg: Interesting. Yeah. I mean, great, great business. This looks really smart and probably producing a ton of value for folks. I just don't know if they, I would have raised money for this business.

Michael: Yeah. Well, like you, it's like, do you want to own 100% of a great business or do you want to own 40% of a great business? And I think there's this interesting category of ideas and it's a lot of your businesses too, that don't need a lot of capital to grow quickly. And you know, marketplaces, communities, um, to some extent agencies, if you can get in the right niche, like they all check that bucket.

And to me, like, that's the other thing I've learned over the past 15 years. Like, I don't really want to be in a bunch more heavy CapEx businesses. Cause it turns out they eat up all your capital, which totally, which totally sucks.

Greg: Was the fireworks business that you started or you're involved? I mean tell the story about, I think it's Alamo fireworks How did you get involved in the fireworks business?

Michael: it's, it's the one thing that doesn't look like everything else. Um, so, yeah, so I got in the fireworks business. I'm actually the fourth generation currently in the fireworks business. Fifth, if you count my, you know, by marriage. Um, so my great, great, great uncle sold fireworks door to door with a hand cart in Kansas back in the twenties.

And then my grandfather came back from the war. Uh, and the war being World War Two, he was in the Navy in the Pacific, he and his wife, my grandmother moved down to San Antonio because they wanted a slower pace of life. And that is San Antonio. It is a slower pace of life place. It is the anti Miami. Let's put it that way.

Um, and so they got into the wholesale and retailing of fireworks. My grandfather was the first person to import fireworks directly from China into Texas. Uh, so that was a pretty cool aspect of that. And then my dad joined the business in the seventies. He grew it significantly from just a handful of retail locations to much bigger.

Well, you know, well into the hundreds. And then my brother and I got involved in the two thousands. I was the CEO for eight years. Uh, and that is a very difficult business to run. It's super high complexity, very difficult for a lot of reasons. And, um, the businesses where it is now today, we're 37 stores around Texas, hundreds of locations that are temporary, uh, pretty significant, you know, amongst the top two or three vendors in the state.

So, um, I got involved in it because my dad wanted to retire. He, uh, you know, recruited my brother and I to come in and, you know, I got an entrepreneurship the old fashioned way. Daddy. So,

Greg: And he, and he didn't want to sell the business. He wanted to share it with his children.

Michael: uh, he had flirted with, um, flirted with selling it. Um, but I think ultimately like, you know, it was a win win for everybody. I got to come back from California. I got to live, I think a really good life. My wife and I are super happy here. And, um, you know, he got to stay, you know, involved. Um, he's, uh, significantly involved in the business.

He's a landlord for us. And, um, Yeah, it's a, if you can figure out how to do family business with family, I think it's like a superpower for the family. You get to really have, you know, some interactions that normally you don't have. The danger is family businesses have a way of like exploding families. So you really have to be careful and navigate the whole thing.

So, you know, we spend a lot of effort trying to communicate well as a family, get along well, be transparent, open, and that's the way to make a family business work.

Greg: Was the exploding families line there a fireworks pun or were you just

Michael: Yeah, no, I've heard them all, you know, that's an explosive business. Sales must be skyrocketing, you know, on and on and on, uh, since I was a kid. So yeah.

Greg: what's something you love about that business and what's something that you don't like about that business?

Michael: believe it or not, the consumer dynamics create real interesting moats for a retailer that. Often other retailers don't have, um, you know, we have brand affinity with people, uh, but also just the customer dynamic.

They all mostly shop on a couple of days a year. Um, so that creates opportunities. If you own real estate, you know, in the right places, you can potentially do really well for, for your life. you know, and it, it puts food on the tables for, you know, multiple Girdley family members. . And it's easy to forget as the business grows that ultimately the business needs to switch to serving you. And I think the business that, you know, that business taught me that lesson of like, Oh, okay. Like at a certain point, like this business exists to serve me, the owner, rather than for me to service it.

And, Um, things that I don't like, you know, like, look, it's much more fun to be in businesses that like fire officials and police officers and public officials, like want to have around like the, the first business I started that, that wasn't fireworks, like, like the fire inspector came in and he was like, Hey, like, uh, okay, well you guys are pretty close.

Like you're, you're past, like, just call me when you fix that one thing. You're open. And I was like, what is this? Like, these guys were never this nice when we were selling fireworks and it's because they just, you know, they had this attitude that just wasn't as nice. So, you know, it, it, it taught me that the thing that matters most in business is not how well I run a business.

It is what game am I playing? Like I would much rather play a really good game and be in a super good business and do that not very good than to be the best. at a really hard business And I would rather just, I'd rather at this point in life, I just want to play easy games and definitely being in that business taught me that.

Greg: I feel like Dura software is a very good business to be in like the business of buying hyper niche software. I mean, Constellation software. I've been. following them for the last five or so years and such a great business. Um, what do you think of Constellation Software?

Have you spent much time just looking at what they're up to?

Michael: Tons of time. I mean, there is, there is a thesis right now that there are going to be a lot more constellation style, you know, hold codes and roll ups happening. Um, especially ones that are just holding for yield rather than for appreciation, right? Which is what, like what Dura does, right? Like we're, we're cashflow buyers.

And so like, I think. Constellation and Mark Leonard and the things that those guys have invented. And then the level they've taken it to, like, it's just ungodly. Like, like most people don't understand the level of just what Mark Leonard and his team, Mark Leonard is the CEO and founder of it, former VC, what they've done through like 25 years of just inward focus of like, how do we optimize every part of like learning and feedback and the acquisition model and keeping track of potential acquisitions and like organizing it. And then all of that, like they just do it at such a high level compared to the smaller aggregators of which we're one.

Right. And someday we want to get there, but like. For example, their feedback process of how they do posts acquisition, like, you know, reflection to do better for the next one is like over the top. Like it's just like standardized, beautiful data centric, just like all the stuff you want. And that's because Mark is really smart.

He's not in there trying to run those companies. He's in there trying to do two things, which is, you know, manage the culture of that business and have the right learning culture there. And then second, create the systems around that. to facilitate that learning culture. And so holding everybody accountable around that, just, I mean, just the dude's like a super genius.

Like when I look at it, I'm like, okay, that guy's really, really good. Like someday, someday I want to get that good. Um, and we'll see, he's been doing it for 25 years. We've been doing it for five, you know, we've got a long way to go and, and I'm optimistic.

Greg: Could you, can you explain just like what they do for the, for folks who don't know much about Constellation Software and just a primer on, What do you need to know if you're interested in, in building a mini Constellation?

Michael: So what constellation realized when they first got started is there's two types of software. There's vertical software, which is software that goes towards a specific industry.

So it might go to like the pet care industry, or it might go to the insurance industry. And then there's horizontal software and horizontal software is stuff like Microsoft word, like it sells across every single industry. And what. Constellation realized early on is that this vertical market software was super powerful.

You could go buy this stuff. You immediately had pricing power. You had durable revenue. Like you could generate cash. You didn't have to reinvest in the business really to grow it. Like these are all beautiful things. So what they did instead of trying to write and create vertical market software was they went out and started acquiring these companies.

And he raised 25 million from, um, was it CalPERS? It was Omar's or whatever the Ontario pension fund, I think it was. OMERS. Yeah. And so that's how they got started. They kept doing that compounding buying guts. It was relatively slow for the first 10 years. And then the snowball kept going because they would take the cash from these acquisitions and go use that to buy more companies.

And eventually they're where they are today, which I haven't even looked at the market cap recently, but it's, it's probably close to a hundred billion. Um, they're generating just tons of cash and now they've just turned into a giant. You know, vacuum cleaner that just goes around the world, buying software everywhere from North America, Canada, Europe, Australia, they have all these divisions and they've segregated them into vertical market groups, depending upon the vertical that they're going after.

And, uh, it's just turned into this really beautiful kind of. Cast generation machine. Um, that is, uh, it does this at scale. And I think, I don't even know the exact number, but I think they acquired like a billion dollars in revenue last year. I mean, just something, just like they did an acquisition like every day, like just ungodly.

And they're doing them all like, you know, mostly small, 10, 5, 10 million in revenue with some bigger chunks, but like just create a crazy velocity. And it's turned into this giant behemoth all done out of Toronto,

Greg: if you look at their stock chart, it's literally up and to the right. They're at an all time high. Their stock is up just about 10, 000% since 2009.

So,

Michael: Real stocks are up 50,

Greg: yeah, exactly. Come on. Come on, Mark. Come on, Leonard. Get back to work, buddy. He's also like an epic looking guy, right?

Michael: Yeah. Have you ever met him or no?

Greg: No, not all Canadians know each other, Gridley.

Michael: Yeah, I thought you guys just hung out the Tim Hortons. Um, yeah, he's got like this. So Mark Lennon is like this, like this very reclusive guy. He rarely goes into the public. And part of the reason is a, I think he doesn't like it. But B, you can see in his shareholder letters, he got sick of going and telling people how to do stuff in public and then they would copy him and compete with them.

And, and he did not appreciate that. So he doesn't do hardly any interviews anymore. And the ones that you see are like few and far between, it'll be like some grainy cell phone camera where he's like taking, taking in a room. And, um, yeah, so he's like a reclusive guy. He refused to fly anything but economy class for until recently.

He's also like my size. Uh, in terms of height and also like much wider, like I think, yeah, it weighs me by like 50 or 60 pounds. And then the best part is he has like this giant Gandalf the wizard beard, and it just makes him seem like he's just like an oracle, like a sage. Like he's Rick, imagine Rick Rubin, but he's doing software.

That's what you end up with.

Greg: exactly. Yeah. He's a Rick Rubin meets Gandalf software Canadian look guy. So he's, you love to see that, you know, his. He's got a crazy looking vibe about him. And, and sometimes you need that. I mean when he decided what, you know, when he started Consolation, what he was doing was crazy, right? Like it was definitely against the grain.

So, and I love that he declined, like he's declining media interviews. He's, he's doing, you know, he's a recluse. You know, he's an interesting character.

Michael: I think he is. I think Mark is a perfect example of the power you get from maniacal focus for decades at a time. Like I think, you know, I think we keep talking about this issue. You and I have talked about it on Twitter a lot, like, you know, are you willing to go do something for decades at a time? And if you're willing to do that, like you're basically unstoppable because 99.

9% of the planet is totally incapable. investing more than a couple hours in something. And if you could do it for a couple of decades, like you're guaranteed to win. And, uh, like, I think that's, that's the biggest takeaway for me watching Mark is like, Oh, if I'm going to do something, like I want to play multi decade games.

I don't want to play like multi year games. Not as much fun.

Greg: So what's the This is a good place to end. What is the multi decade plan for Michael Girdley and companies?

Michael: there's two answers for you, which is like, I'm getting ready to turn 49 and I. Don't think I haven't figured out, like I went on a retreat like last week and like they asked my two issues where I was like, Oh, I'm figuring out this media thing and like, I'm trying to figure out what my life's going to look like, you know, 15 to 18 years from now when I'm in my late sixties.

And frankly, I just don't really know, like I haven't figured it out. And that's one of the things I started last year was just kind of thinking about what do I want my life to look like? Where am I going to be? You know, am I traveling around? Who am I with? What am I working on? What risk profile do I have?

What am. You know, what is my interaction model with my kids and all that kind of stuff? Like, what does that look like? I just, I'll be totally straightforward with you. Like, I don't know, like I got to spend the next year or so kind of figuring out because that, that 20 year thing is, it seems soon, right?

I'm 48 and 68. We'll be here soon. You know, in terms of the business plan, the business plan is doing more of exactly what I'm doing. Like I am, uh, I am, you know, working with the companies that I'm already in. you know, I hate to use the word portfolio, but it's the portfolio and I'm working on it and they're growing and, and they're going to, I think we're going to have a hundred percent success right there.

Um, but I think, you know, the thing I want to work on for the next 10 years is creating more huge ideas where that's buying companies, where that's creating companies that buy more companies, or whether it's incubating things like scale path, you know, or, or staffing company near that are going to turn into.

Yeah. you know, big impactful things. Like I only want to work on that stuff. Like I don't want to launch anything that's small. Um, I only want to do stuff that I think is going to change the world and get really big someday at this point. And maybe that's just a factor of being almost 50. Like I see, I see the end is coming and I'm just going to do more of that.

And I love that because it makes my life like so much easier. Like I just say no to so much stuff now. Cause I'm like, I'm just doing that. And otherwise I say no. And. Yeah. It gives me a lot of peace.

Greg: Going back to the I don't know answer that you have for yourself, I think there's so many of us who don't know what they want to be doing in 5, years. How do you, how do you turn question marks into periods? and answer some of those hard questions.

Michael: Yeah. For me, for me, I, I take time to make really difficult decisions like that. And I gather a lot of data. I think about them a lot. Um, lots of long walks and that sort of thing. And then I talk to smart people like you did to get their opinion on it. So I'm in CEO peer groups. Um, I put it out there that I'm still thinking about it.

I guarantee I'm going to get some messages with input on it. I'll probably talk about it on Twitter at some point. That was the best thing I did. This week actually, I just, you know, I put some advice that I had gotten from other people out on Twitter and asked for other people's opinions. Like it makes for great content, but it also like helps me figure stuff out.

And so over the coming months, like I think I'll develop a vision of where I want to be, you know, 20 years from now, um, which that's what I think I haven't figured out. And then once I figured that out, it'll be straightforward. I'll just make a plan on how to get there. But right now it's data gathering.

Data gathering will turn into really listening to what my soul says I need to be doing 20 years from now, paint a vision of that, and then figure out a plan. So that's really a three step process. Says easy, does hard is what I would say about that process though.

Greg: I like it. And last thing before, before we leave, what's this, what's this Chili thing? Like where, where does this connection with Chili's come from? And basically for the folks who don't know, Girdley's a must follow on Twitter, but just so you know, you're getting 10 or 15% of his tweets to be Chili, Chili's related tweets.

Michael: I need to cut down on look for me. Um, for me, I, I have some views of the world that I think are important and, and Chili's like, yeah, it's kind of goofy and I'm a pretty goofy guy and I'm happy to be out there as a goofy guy. But I think also there's this idea of how I feel about Chili's that is, is. how I kind of feel about the part of America that I live in.

And I think America to some extent is so focused on a number of things, but one of them is like, I've always felt kind of a resentment to thinking that, you know, this idea that everything has to be special, it has to be like a Michelin star. to be beautiful, right? Or it has to be handcrafted in downtown LA for it to be great, right?

Or it has to be this extreme thing. And, you know, you got to go to Burning Man to find peace. Like that to me, it's just like, you know, there's joy to be found in many places. And I think all those things are beautiful and I think all those things are great. But when I like think about Chili's or I joke about it, it's really that feeling like.

I, if I go into a Chili's, like there are people who are nowhere near Twitter, nowhere near the world you and I live in. And they're just there with their family, like enjoying a beer or like relaxing over lunch or spending time with a colleague after, you know, after hours. And to me, like just normal people and fly over America, like just living life where it's, yeah, it's easy.

And it's the same, every place you go into, I think there's just as much beauty in that as you find in, you know, a Brooklyn, you know, a Brooklyn cannery, right. Or an LA kind of club scene that is the one place in the world that only people get into. Like, I think there's beauty throughout all of that. And it all comes down to, for me, like, You know, making sure you take a moment to slow down and find that beauty, because even though it's uniform and every single Chili's looks the same, just like every single exit off of American interstate.

Like I find, I find it beautiful that people are able to be special and human and connect with each other in a place like that and do it easily in a way that, that works for them. So that's when you see me joking about Chili's, that's what I'm actually thinking in my heart. I'm like, man, like every, all those coastal people hate this, but like there's beauty here and they're just missing it.

Greg: I love it. And I also think that a world where, especially on, on X Twitter, so much the content feels like chat GPT, like, whenever I see you tweet about chilies, I'm like, At least

Michael: It's your black back guy,

Greg: no, no, no. I'm kind of like, I'm kind of like, all right, all right. This is not AI content right here.

I know that, you know, this is human. This is Michael Gurley behind, behind this account. So for me, it's like a verification that, that

Michael: all right. I'm not. Yeah.

Greg: Yeah, and, and, and to be honest, it makes me feel as a, as a audience member, like more connected to you. And, you know, I really, I feel like I understand you more from, from those quirks.

So I think people should be more quirky on places like X.

Michael: I think it's, I, for people that are in my generation, generation X, like I go talk to all my friends and, uh, I'm going to write it. I'm going to write a thread about this, about how, like, there's such an empty gap where like, if you would actually be one of the people in their forties or fifties, who's learned some stuff and it's like willing to put yourself out there and be a little bit vulnerable.

Like it is such a blue ocean for us. Like we have such an opportunity to share and connect and that's what happened. That's what that's how I think about social media But like my friends are terrified. They're like, well, what if I say something stupid? I'm like, well, then you apologize It's pretty straightforward.

That's just like real life. And uh, like I think there's such an opportunity there to go and be a real person um, just because nobody else in my generation is capable of doing it like we just We're just wired to keep our mouth shut because you know, I don't know why maybe the boomers told us we had to do it but like I think it's such an opportunity and um Anyway, I don't know.

I wish more. Well, actually, no, more people should not do it because it would be harder for me. So yeah,

Greg: Where could people follow you for more Chili's and Holdco and business related content?

Michael: I don't know if I told you Greg, but I am a YouTuber now, so you can go to my YouTube channel. I am working hard to get good at video. It is very humbling. We've recorded 10 things and I've thrown away half of them. Uh, so you can search on, uh, anywhere on Google, Girdley, uh, will get you to my website or you can go on YouTube to Girdley World or I'm at Girdley, G I R D L E Y on Twitter slash X.

And, uh, yeah, I appreciate the opportunity to promote myself a little bit.

Greg: Of course, uh, I just gave you a subscribe and people should do the same. also if you're listening to this, just, just subscribe to him right now. Open up your YouTube app, go to the website. Uh, he told you what to do. And if you aren't subscribed to at Greg Eisenberg. on YouTube. Well, that's crazy.

So do that while you're subscribing to Michael Girdley. Thanks so much for joining. You got to come, you got to come back again sometime. And people, please, if you're, if you're listening to this, and you made it to the deep end, let us know what you thought of this episode on Twitter, X, whatever you want to call it, and on YouTube.