WEBVTT NOTE This file was generated by Descript 00:00:00.870 --> 00:00:06.600 Welcome to Resilience Talk hosted by Paul Spencer of Second Nature Solutions. 00:00:07.020 --> 00:00:07.860 Let's dive in. 00:00:09.349 --> 00:00:14.239 Paul Spencer: Next up in the ownership series is corporate structure. 00:00:14.569 --> 00:00:21.169 So this one, I would say out of the eight, um, this is my least knowledgeable 00:00:21.169 --> 00:00:22.789 area, so we'll go through it. 00:00:23.269 --> 00:00:27.319 Um, of course, at a high level we can understand the pieces and 00:00:27.319 --> 00:00:29.119 the parts and how they play out. 00:00:29.629 --> 00:00:35.024 Um, this one though has a lot of nuance to it because we talk about. 00:00:35.749 --> 00:00:38.629 We're talking about corporate structure, like entity types, S corp, 00:00:38.629 --> 00:00:41.149 C corp, um, lots of different ones. 00:00:41.149 --> 00:00:42.259 We'll talk about those. 00:00:42.649 --> 00:00:46.909 Um, but it also affects different tax strategies as well. 00:00:47.329 --> 00:00:54.859 And so this is perfect for, uh, your CPA, um, any kind of a business advisor. 00:00:54.859 --> 00:00:59.449 You have financial advisor, um, somebody who may be working with your 00:00:59.449 --> 00:01:01.039 estate planning or trust planning. 00:01:02.209 --> 00:01:06.169 These are, this is the area you wanna have conversations with them. 00:01:06.529 --> 00:01:07.939 You wanna make sure that you bring in. 00:01:08.539 --> 00:01:11.509 So we're in the middle of the ownership series. 00:01:11.509 --> 00:01:18.169 And just to review, we have financial performance, growth, potential key 00:01:18.169 --> 00:01:24.619 dependencies, recurring revenue, right to win corporate structure, which is 00:01:24.619 --> 00:01:25.999 what we're gonna talk about today. 00:01:26.509 --> 00:01:28.369 Key management and leadership. 00:01:28.939 --> 00:01:30.829 Then lastly, owner involvement. 00:01:31.159 --> 00:01:37.369 So I've mentioned this caveat for all of them so far, is that these are the 00:01:37.369 --> 00:01:41.719 ones that I've gathered from different friends and people in my network. 00:01:41.749 --> 00:01:43.519 This is how they tend to think about it. 00:01:44.149 --> 00:01:50.929 Again, if you go out to chat GPT, Google, you'll find variations of these. 00:01:51.019 --> 00:01:52.609 Uh, you'll find a lot of them. 00:01:52.849 --> 00:01:55.849 Like financial performance will probably always come up. 00:01:56.434 --> 00:02:01.354 And right to win will probably always come up because those are the ones that rise 00:02:01.354 --> 00:02:05.224 to the top as far as, um, key valuations. 00:02:05.974 --> 00:02:09.304 But in the end, they're gonna overlap, they're gonna be different. 00:02:09.574 --> 00:02:14.644 We're just trying to get the gist so that my aim for you is that you take all 00:02:14.644 --> 00:02:16.294 of these ideas, which are just kind of. 00:02:16.519 --> 00:02:21.529 Spread out onto the board and then you can be strategic about where you 00:02:21.529 --> 00:02:26.749 wanna go, where you wanna be, um, focused on where you want to target 00:02:27.019 --> 00:02:28.399 and where you wanna go to work on. 00:02:28.879 --> 00:02:30.829 And so that's the point of all of this. 00:02:30.919 --> 00:02:36.079 So if we think about corporate structure, like I always, I already mentioned 00:02:36.469 --> 00:02:41.479 there's the entity, essentially the legal registration of your organization. 00:02:41.479 --> 00:02:44.989 So, uh, we tend to think of those as LLCs. 00:02:45.469 --> 00:02:45.949 Um. 00:02:47.089 --> 00:02:51.799 The big ones are at this point are S Corps, and then you've 00:02:51.799 --> 00:02:53.209 got your C Corps, right? 00:02:53.659 --> 00:02:56.569 And so I don't know the history of this very well. 00:02:57.064 --> 00:03:03.574 At one time, C Corp were the best ones to have because of, uh, the tax advantage 00:03:03.574 --> 00:03:05.164 and how those things were set up. 00:03:05.314 --> 00:03:06.874 And then there were changes. 00:03:06.874 --> 00:03:11.044 I, I think, and I could be completely wrong on this, but there were things 00:03:11.104 --> 00:03:15.604 changed around how the S Corp was structured and it became more friendly. 00:03:15.724 --> 00:03:22.234 So I would imagine most of you are scorp, um, but they're probably a good 00:03:22.234 --> 00:03:24.754 handful of, of C Corps as well, so. 00:03:25.594 --> 00:03:31.894 It's a, but it's also a good reminder that just because the registration of your 00:03:31.894 --> 00:03:41.134 company today is the best one, given your situation and given your tax implications 00:03:41.134 --> 00:03:48.124 and your, your ownership structure that, uh, we recommend you use the C corp. 00:03:48.424 --> 00:03:52.534 Well, you may have different regulatory, either state or federal. 00:03:52.924 --> 00:04:00.544 Changes or even, um, into the, the tax codes for state or, um, federal or 00:04:00.544 --> 00:04:04.084 just how the entities work themselves. 00:04:04.444 --> 00:04:07.114 And so, uh, those things can shift. 00:04:07.294 --> 00:04:11.584 What's, what's good for today for the C corp may make this S corp 00:04:11.614 --> 00:04:13.924 better for you 10 years from now. 00:04:14.044 --> 00:04:14.344 Right. 00:04:14.494 --> 00:04:16.264 So it's just, just to be aware of that. 00:04:16.594 --> 00:04:19.219 So there's the, there's the C corp, the scorp. 00:04:20.374 --> 00:04:25.114 I'm not gonna get into the nuances of all of those and, and why 00:04:25.114 --> 00:04:26.344 one is better than the other. 00:04:26.344 --> 00:04:28.744 That's, um, things we can talk about. 00:04:28.744 --> 00:04:33.484 But, um, there are, there are experts in that can, that can give you infinite 00:04:33.484 --> 00:04:35.044 amount of more detail than I can. 00:04:35.314 --> 00:04:45.034 So, um, just know that the, the, uh, tax filing and the ownership structure legally 00:04:45.034 --> 00:04:47.434 is different between the two C Corp. 00:04:47.929 --> 00:04:49.039 S Corp, right? 00:04:49.069 --> 00:04:50.419 S corp is a pass through. 00:04:50.599 --> 00:04:52.849 C Corp has different, uh, tax filings. 00:04:53.089 --> 00:04:56.359 So there are other ones that you can have, which is a more of a partnership. 00:04:56.869 --> 00:05:02.689 Um, you can have an esop, which is an employee, um, owned organization, 100% 00:05:02.689 --> 00:05:05.089 owned by the company or by the employees. 00:05:05.599 --> 00:05:10.009 Uh, you can have B Corp, which are, they're not non-profits, 00:05:10.009 --> 00:05:11.539 but they're very focused on. 00:05:12.589 --> 00:05:18.199 Uh, soc, social aspects or environment aspects, and they operate similar. 00:05:19.069 --> 00:05:26.749 To a, um, a nonprofit in that, in its vision, uh, the, the organization 00:05:26.749 --> 00:05:28.909 is focused on a social cause. 00:05:28.909 --> 00:05:33.559 So you could have a traditional technology business that is a B Corp. 00:05:34.009 --> 00:05:37.699 And what that means is that, um, maybe some of the profits. 00:05:37.909 --> 00:05:41.689 Some of the things that we do within our culture are focused on a certain, 00:05:41.749 --> 00:05:44.329 um, aspect within the community. 00:05:44.929 --> 00:05:47.389 Um, you could have different holding companies. 00:05:47.389 --> 00:05:53.209 You could have a holding company with, um, different types of entities underneath it. 00:05:53.869 --> 00:05:57.649 And what that does is that gives you the ability to have different carve outs. 00:05:57.649 --> 00:05:59.719 So I could sell a subsidiary. 00:06:00.439 --> 00:06:04.519 Of my, uh, holding company and still hold onto the rest. 00:06:04.639 --> 00:06:04.909 Right? 00:06:05.389 --> 00:06:10.309 Um, there's a new thing called Series LLC, which is a similar concept where 00:06:10.309 --> 00:06:16.249 I could have a series of LLCs that are separate but also enjoined and, uh, 00:06:16.249 --> 00:06:20.389 you can do a similar thing, meaning I could, I could, uh, sell this product off 00:06:20.389 --> 00:06:23.514 because it's a separate, um, series LLC. 00:06:24.544 --> 00:06:28.204 So anyway, those are the different entities that we register within our 00:06:28.204 --> 00:06:30.724 own state or maybe outside of our state. 00:06:31.324 --> 00:06:38.224 Um, and, uh, those are important because as you know, as an owner, they 00:06:38.224 --> 00:06:45.214 affect your accounting process and they affect your, um, tax process, right? 00:06:45.604 --> 00:06:48.064 So how often are you paying taxes? 00:06:48.334 --> 00:06:50.614 What are the rules on distributions? 00:06:51.184 --> 00:06:55.324 Um, at the end of the year or during the year, all of those things 00:06:55.324 --> 00:07:01.054 come into play depending on, um, the, the entity that you have. 00:07:01.324 --> 00:07:07.504 So when we're thinking about as a buyer, that is important because that 00:07:07.924 --> 00:07:10.354 that corporate structure that you have. 00:07:10.984 --> 00:07:15.304 Um, will be part of the sale transaction, right? 00:07:15.334 --> 00:07:20.554 Which could include, which would mean maybe that I have to, as a buyer, add 00:07:20.554 --> 00:07:26.134 more cash or maybe, um, just based on the, the holdings themselves. 00:07:26.524 --> 00:07:32.134 Um, it will reduce or increase the amount of value that I get 00:07:32.134 --> 00:07:34.144 cash from the purchase itself. 00:07:34.204 --> 00:07:37.504 So anyway, those are, those are nuanced, those are, there's lots of. 00:07:37.849 --> 00:07:41.839 Industries, businesses that handle that, they'll know that way better than I do. 00:07:42.019 --> 00:07:44.839 Those are my quote unquote Baker Banker friends. 00:07:45.529 --> 00:07:49.459 So when we're thinking about what's the best for your situation, you're, 00:07:49.519 --> 00:07:55.789 you're really trying to understand, getting advice and having a good 00:07:55.789 --> 00:07:57.859 sense of what is your estate planning. 00:07:57.859 --> 00:08:00.709 So what's your personal family wealth? 00:08:01.009 --> 00:08:03.079 What are the members of your family? 00:08:03.079 --> 00:08:07.189 What's your, um, what's your, uh, beneficiaries? 00:08:07.474 --> 00:08:09.184 Look like, who are they? 00:08:09.364 --> 00:08:10.384 How old are they? 00:08:10.384 --> 00:08:11.914 How many are, are they? 00:08:12.214 --> 00:08:15.934 All of those kind of play into your estate planning, obviously. 00:08:16.354 --> 00:08:21.694 Uh, but they may also feed into as an input in the type of business, 00:08:21.694 --> 00:08:24.994 the corporate structure that you choose for your business. 00:08:25.744 --> 00:08:29.734 Um, there's also, obviously what we already talked about is the tax planning. 00:08:30.214 --> 00:08:33.994 You may have, um, executive planning as well. 00:08:34.384 --> 00:08:44.014 So, um, as I, um, onboard new leadership, new executives, uh, my corporate 00:08:44.014 --> 00:08:50.914 structure may give me more options on, maybe I give them some more equity. 00:08:51.244 --> 00:08:57.154 Maybe I have, um, kind of a, um, a profit share or a. 00:08:57.874 --> 00:09:01.354 An opportunity to claim options, right? 00:09:01.714 --> 00:09:06.724 All of those things fit into the type of corporate structure that you have. 00:09:06.964 --> 00:09:09.064 And then obviously there's employee planning. 00:09:09.064 --> 00:09:15.754 So, um, with, if I have hundreds of employees, thousands of employees, I may 00:09:15.754 --> 00:09:22.444 have a different entity, um, just based on the size and how I want to, uh, do 00:09:22.444 --> 00:09:24.244 compensation plans and things like that. 00:09:24.304 --> 00:09:26.374 What kind of flexibility do I want? 00:09:27.124 --> 00:09:32.044 So, um, when we think about corporate structure and the eight, 00:09:33.094 --> 00:09:36.574 um, evaluators that we, that we're looking at, the valuations that 00:09:36.574 --> 00:09:40.054 we're talking about, corporate structure is pretty low on the list. 00:09:40.564 --> 00:09:45.304 Um, meaning that the most important thing is financial performance, and 00:09:45.304 --> 00:09:47.974 then likely we get into right to win. 00:09:47.974 --> 00:09:49.204 Where are you in the market? 00:09:49.834 --> 00:09:54.274 Um, and then they, they kind of, they're kind of, there's those middle ones that. 00:09:54.754 --> 00:09:57.304 Each buyer is gonna move some of those around. 00:09:57.304 --> 00:09:59.314 But those, those are really the top two. 00:09:59.974 --> 00:10:02.464 Um, recurring revenue could be up there as well. 00:10:02.974 --> 00:10:05.944 Um, but corporate structure is pretty far down the bottom. 00:10:05.944 --> 00:10:09.814 If you, uh, they're not gonna look at corporate structure first and say, 00:10:09.874 --> 00:10:12.934 Hmm, C Corp probably not gonna buy you. 00:10:13.204 --> 00:10:14.884 I don't even care what your financials are. 00:10:15.094 --> 00:10:15.334 Right? 00:10:15.334 --> 00:10:16.264 That's not gonna happen. 00:10:16.624 --> 00:10:19.864 So they're gonna go through their due diligence as normal. 00:10:20.284 --> 00:10:24.544 And they may be aware of your corporate structure at the beginning, 00:10:24.874 --> 00:10:29.374 but that doesn't really come into play much until the end where 00:10:29.374 --> 00:10:30.754 we're gonna make a deal, right? 00:10:30.754 --> 00:10:34.024 And now we have to figure out what that transaction's gonna look like 00:10:34.354 --> 00:10:36.334 based on the entity that you have. 00:10:36.694 --> 00:10:40.894 So I think that's important to know that, um, and we'll talk about this a little bit 00:10:40.894 --> 00:10:46.204 later, is, uh, out of all of these, the ones that are gonna give you a big bang 00:10:46.204 --> 00:10:49.384 for your buck on if I'm going to sell. 00:10:49.759 --> 00:10:54.679 Or if I'm just looking to increase the value of my asset, it's most likely the 00:10:54.679 --> 00:10:56.389 other ones that I'm gonna be focused on. 00:10:56.689 --> 00:11:02.299 Those ones take more time to establish, um, mature processes, right? 00:11:02.299 --> 00:11:05.779 All the things, uh, uh, getting reputation within your market. 00:11:06.019 --> 00:11:09.619 Corporate structure, we have, we do have the ability to change. 00:11:09.949 --> 00:11:11.119 Our corporate structure. 00:11:11.239 --> 00:11:12.019 Is it painful? 00:11:12.019 --> 00:11:12.499 Yes. 00:11:12.739 --> 00:11:14.749 Is it complicated sometimes? 00:11:15.139 --> 00:11:16.819 Um, can it take a long time? 00:11:17.239 --> 00:11:17.839 Yeah. 00:11:17.989 --> 00:11:22.669 But in relative terms to the other ones, uh, it's not, it's, it's manageable. 00:11:22.789 --> 00:11:23.059 Right. 00:11:23.629 --> 00:11:23.929 All right. 00:11:24.139 --> 00:11:29.239 So, um, but where we do get into deal breakers, and I wanted to highlight 00:11:29.239 --> 00:11:31.549 this 'cause I think it's important is. 00:11:32.269 --> 00:11:36.649 When we do get to that part where, okay, I'm interested, I wanna buy, let's look at 00:11:36.649 --> 00:11:38.809 your entity and your corporate structure. 00:11:39.349 --> 00:11:44.659 Things that can break the deal is a complicated ownership web. 00:11:44.806 --> 00:11:51.731 So the complicated ownership web is basically, we've got cousins, 00:11:51.761 --> 00:11:54.431 we've got, um, nieces, nephews. 00:11:55.076 --> 00:12:02.906 Just over time, we've allowed, um, um, I would call them micro shares, 00:12:03.236 --> 00:12:10.016 entity shares to be equity shares to be distributed a across our family. 00:12:10.136 --> 00:12:14.846 And all it does is it complicate and complicates the, the structure, the 00:12:14.846 --> 00:12:21.896 deal, because now, um, depending on your entity and the roles that you have within 00:12:21.896 --> 00:12:24.176 shareholders, some of them have to. 00:12:25.076 --> 00:12:30.896 Um, approve or, uh, they have to, there has to be a sell and then 00:12:30.896 --> 00:12:34.316 you have to agree to a price, and then you have to pay everybody out. 00:12:34.376 --> 00:12:37.166 And then it just adds so much complication. 00:12:37.196 --> 00:12:42.236 And if that's not well, um, documented and you don't have a nice clean 00:12:42.836 --> 00:12:49.466 cap x table, a cap table around that, then uh, it can, it can. 00:12:49.991 --> 00:12:51.731 The deal can break because of that. 00:12:51.731 --> 00:12:52.871 The buyer gets skittish. 00:12:53.261 --> 00:12:54.161 It's a lot of work. 00:12:54.161 --> 00:12:55.151 I don't wanna do that. 00:12:55.481 --> 00:12:55.781 Right. 00:12:55.781 --> 00:12:57.641 And that can get very complicated. 00:12:58.061 --> 00:13:00.611 So another one could be embedded tax liabilities. 00:13:00.971 --> 00:13:07.931 So you, um, some of you actually done this recently, um, is you've, were a long 00:13:07.931 --> 00:13:12.821 time C Corp and you've converted to an S-corp and there's a timeframe with that. 00:13:12.821 --> 00:13:15.941 I think it's, I think it's five years, but I could be wrong. 00:13:16.346 --> 00:13:18.806 Um, for that whole conversion to complete. 00:13:19.256 --> 00:13:23.786 Um, because there may be some embedded tax liabilities that you have to 00:13:23.876 --> 00:13:30.416 basically wear off, um, over time for you to be, um, for you, for you able 00:13:30.416 --> 00:13:34.196 to get out from under some of the C Corp tax liabilities that you have. 00:13:34.316 --> 00:13:38.246 And then you become able to, to have the S corp and then operate 00:13:38.246 --> 00:13:40.436 as S corp in order to sell. 00:13:40.946 --> 00:13:43.286 So those could be some of the, um, deal breakers. 00:13:43.901 --> 00:13:47.351 There could be, um, regulatory issues. 00:13:47.351 --> 00:13:53.561 So if you're a, uh, a lawyer firm, a legal firm, or a medical practice, 00:13:53.561 --> 00:13:57.701 right, you're called a professional service and, um, and you're not 00:13:57.701 --> 00:13:59.051 gonna be able to transfer those over. 00:13:59.051 --> 00:14:00.011 Those are really difficult. 00:14:00.161 --> 00:14:01.751 They're just non-transferable. 00:14:02.111 --> 00:14:11.141 Um, loss of current contracts, um, which basically means that, um, as a license. 00:14:11.516 --> 00:14:13.016 Issuer, right? 00:14:13.106 --> 00:14:19.766 I, there may be when we transfer the sale of ownership, that, um, in the contract it 00:14:19.766 --> 00:14:26.756 says that, um, when we change ownership, then maybe, um, we have the right to, 00:14:27.326 --> 00:14:31.911 uh, go shopping for another, um, vendor or to cancel our, our contract outright. 00:14:32.981 --> 00:14:37.031 Um, and that could happen with vendors, our customers. 00:14:37.361 --> 00:14:38.921 So that's something to be aware of. 00:14:39.401 --> 00:14:42.701 Um, all of that fits, does fit into the entity registration. 00:14:43.331 --> 00:14:49.961 Um, things that we wanna think about though for, um, how 00:14:49.961 --> 00:14:51.521 important these things are. 00:14:51.641 --> 00:14:52.781 You have to be aware. 00:14:53.051 --> 00:14:54.731 So be aware of these things. 00:14:55.061 --> 00:14:55.451 Um. 00:14:55.886 --> 00:14:59.156 Talk with your CPA, with your business advisors. 00:14:59.156 --> 00:15:03.056 Your financial advisors, to make sure again, that you are aware of 00:15:03.056 --> 00:15:10.346 any changes in the, in the law or changes in the IRS regulations. 00:15:10.796 --> 00:15:17.306 Um, but know that this is not always, unless, and this is not always where 00:15:17.306 --> 00:15:20.246 you wanna spend a lot of your time, unless you have one of those deal 00:15:20.246 --> 00:15:22.616 breaker scenarios, then it's worth. 00:15:23.036 --> 00:15:28.526 Jumping in and trying to simplify your ownership structure, right? 00:15:28.526 --> 00:15:34.436 Your equity table, um, your cap table, um, maybe understanding, looking 00:15:34.436 --> 00:15:37.676 through your, your current contracts and looking at some of those things. 00:15:38.156 --> 00:15:44.546 Um, so anyway, most of the time the buyer is just gonna see the, your corporate 00:15:44.546 --> 00:15:49.916 structure as, um, like if we wanted to use a, a buying a home analogy, 00:15:50.156 --> 00:15:52.556 we might say the home's not real. 00:15:53.141 --> 00:15:56.831 Clean and well kept, but it's not really gonna keep me 00:15:56.831 --> 00:15:58.541 from buying the house, right? 00:15:58.841 --> 00:16:05.741 It's, it's a dirty home and, uh, maybe it will over the long haul, it will reduce 00:16:05.741 --> 00:16:10.121 the number of offers you get and maybe slow down the process, but it's rarely 00:16:10.121 --> 00:16:13.001 gonna be the deal breaker all by itself. 00:16:13.781 --> 00:16:18.101 Um, and, uh, so, so that's, that's important to know. 00:16:18.461 --> 00:16:21.311 One other thing before we wrap it up is that. 00:16:22.211 --> 00:16:24.011 Um, you do have options. 00:16:24.011 --> 00:16:26.621 So I kinda mentioned this at the beginning, is the other 00:16:26.621 --> 00:16:28.631 ones kind of take longer, right? 00:16:29.501 --> 00:16:33.731 So to get your, um, growth potential, your revenue, uh, 00:16:33.761 --> 00:16:36.581 recurring revenue, that takes time. 00:16:36.581 --> 00:16:37.721 It takes some maturity. 00:16:38.141 --> 00:16:43.841 Um, you can make a decision that you're gonna sell your company or 00:16:43.841 --> 00:16:45.401 you're gonna put it out on market. 00:16:45.401 --> 00:16:49.901 If, if you wanna call it that, and in five years or in 10 years. 00:16:50.441 --> 00:16:54.911 And you can give yourself kind of a, a three year-ish window, even 00:16:54.941 --> 00:16:59.921 18 to 24 months prior to when you wanna put thing, put the shingle 00:16:59.921 --> 00:17:04.811 out for sale and you can make your entity conversion if you wanted to. 00:17:04.811 --> 00:17:09.851 So I wanna go from an a c corp to a S corp because of whatever reasons. 00:17:10.691 --> 00:17:14.891 And so you don't need to do that right now, um, if you're only doing 00:17:14.891 --> 00:17:18.941 it for the sale or for a potential sale to make it better for the buyer. 00:17:19.391 --> 00:17:19.511 Um. 00:17:20.216 --> 00:17:23.396 You can do that with, with, with some good planning of about 00:17:23.906 --> 00:17:25.316 a year and a half, two years. 00:17:25.706 --> 00:17:29.036 Um, and then that's typically just some paperwork. 00:17:29.486 --> 00:17:35.216 Um, doesn't make mean it's easy and, and it's not always clean, um, but you 00:17:35.216 --> 00:17:36.596 go through the process and you're done. 00:17:36.776 --> 00:17:37.046 Right. 00:17:37.286 --> 00:17:39.926 As opposed to when I want to sell. 00:17:40.346 --> 00:17:42.806 Um, I don't have a good sales pipeline. 00:17:42.806 --> 00:17:47.906 My recurring revenue is a little, um, stop and go. 00:17:48.476 --> 00:17:54.866 And if I'm wanting to sell, sell, say in the next two or three years, that's 00:17:54.866 --> 00:17:57.746 gonna be, um, a big headwind for me. 00:17:57.776 --> 00:18:03.386 I'm gonna have to really, really pump it out and, um, make sure that 00:18:03.386 --> 00:18:05.276 I can make those things clear up. 00:18:05.756 --> 00:18:08.816 But that's also gonna, that those forensics are gonna 00:18:08.816 --> 00:18:11.906 be left in my financial. 00:18:12.296 --> 00:18:13.106 Performance. 00:18:13.136 --> 00:18:13.436 Right? 00:18:13.436 --> 00:18:17.066 And the customer's gonna be able to look backwards and say, geez, 00:18:17.096 --> 00:18:21.326 for a long time you didn't have any recurring revenue, and for the last 00:18:21.446 --> 00:18:25.346 18 months, 24 months, you've improved. 00:18:25.376 --> 00:18:26.636 But what's going on there? 00:18:26.636 --> 00:18:26.966 Right? 00:18:27.296 --> 00:18:30.686 And you may say, well, we weren't good at it, but then we did get good at it. 00:18:31.436 --> 00:18:35.756 But they still, it's still a risk for them because you don't have the track record 00:18:35.756 --> 00:18:41.186 necessarily over the long haul that has proven the longevity of your business. 00:18:41.486 --> 00:18:43.736 So anyway, um, you guys get it. 00:18:44.006 --> 00:18:49.016 It's, again, fun conversations, I think, uh, to be thinking about the divergent 00:18:49.016 --> 00:18:50.846 thinking, all these different aspects. 00:18:51.116 --> 00:18:56.396 It doesn't have to be overwhelming, it just has to be aware and then we can 00:18:56.396 --> 00:18:58.136 figure out where we wanna go to work.