There has been a huge surge in interest in making small business acquisitions, especially in this exciting digital age. Janine Subgang, co-founder of Bizzed Ai, is helping aspiring entrepreneurs buy their desired businesses with less stress and hurdles along the way. Janine joins Paul Swaney in this conversation about how they empower a new generation of entrepreneurs through their AI-guided due diligence and financial modeling. She explains how their service promotes hassle-free business ownership, wealth creation, community impact, and personal freedom. Janine also shares how they monetize their business to keep their work going and deal with the many risky investments lurking out there.
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Small Business Acquisition Made Easy With Janine Subgang
We’re sitting down in the show with Janine Subgang in the Americanized version of a very German name. Thanks for making the trip all the way out here from San Francisco to talk about your startup and get to know our team a little bit.
Absolutely. It’s halfway on the way to Europe.
That’s good. You basically took us as a giant detour.
I was like, “I’m already flying seven hours here.”
You might as well take a turn to sunny Florida and then go hard right. Are you going to London? Are you going to Germany now?
I haven’t decided yet, to be honest.
The Germans like coming to Disney World. There are probably twenty a day from Orlando to Germany.
We have Disney World in Paris as well.
Skip it. Come on. It’s Orlando. It’s the king.
I went to it the last time I was here in 2017 or 2018, when I was living in Ocala around the corner.
Janine Subgang Of Bizzed Ai
That’s right. I forgot you have connections there. Would you do me a favor? Give everybody the pithy two-minute overview of your education in your career, so we get to know you a bit better.
I love this because I think in your preparations, you were like, “You have a very interesting and hectic CV. How did you make this decision and pick your career?” I think the career picked me. I studied in Amsterdam and Oxford for my undergrad. I then got “stuck” in the UK afterwards as things happened, and I stumbled into a co-working space for Frontier Tech, where they led the community and led events and those kinds of things. I met a lot of people. I did a quick thing in a word that you couldn’t say in San Francisco for the last six months, and I now finally can say it again, which is crypto. It’s a very political topic, depending on who’s in the administration, but things are good again. I’m not getting kicked out of parties anymore for saying I used to work in blockchain and digital assets.
Figurative or literal, would you not be allowed to say it at parties?
I have been to parties, and I would say “Blockchain,” and people turn around and write a thing on the whiteboard saying, “Not talking about crypto,” or “Not talking about blockchain. Otherwise, you leave.” It is what happens when you give an 18-year-old $30 million.
It takes a long time. Do you use Transferwise or Wise?
I do use both, but coming from digital assets, I’m like, “This should cost me cents on the dollars and be executed in minutes,” and I should verify that it’s in there. I don’t understand why it takes five days.
It costs a lot of money to get money out of Europe and the EU to repatriate the money. The percentages are very high.
Either way, as well. I played around with that. I like market trends. When the pandemic hit, everybody ran around helplessly. Airlines were all going to go to zero. I was like, “Germany is not going to let Lufthansa die, and the British would not take the shame of British Air going to zero.”
The bailout risk is way too high.
Same for Air France, KLM, and all those things. I was pretty sure that the US would at least also save one of its airlines. They wouldn’t let them all go.
That’s the crapshoot of the US. It’s going to be American if they bail one out.
They can’t have American Airlines go bankrupt, like the public shame. I bought airline stock everywhere, and then three months into this pandemic, other people realized that this would also happen. They’re not going to go to zero, so I sold them again.
Do you know who helped bail out Lufthansa? Do you know the Aurelius group?
I don’t know.
They bought the catering business of Lufthansa. It’s an absolutely beautiful deal because Lufthansa wanted to get rid of it as non-core. It’s here in the US. It’s a beautiful business. I think they ostensibly needed some cash, and they harvested that during the pandemic.
It’s nice. If the food is going shit, I need to call them out.
It’s a European. I’m sure it’ll be fine. You got a nice meal coming down here from San Francisco, right?
Yeah, I got fourteen hours of a trip that should have been seven. I got a bag of chips, which I was very surprised about. I thought we’d get more catering.
This isn’t the European Union.
The Great Wall of Transfer
I know. There’s no socialism here. I looked at this whole thing called the Great Wealth Transfer, but then you hate it or love it. I was like, “If we have 13 million small businesses in the US and they make 40% of US GDP, 13 of those are in the hands of retiring owners. The average sales price of a business on this by sale is $375,000 according to their 2024 report. I’ll do very basic math and assume they’re all $375,000 and multiply that by the number of retiring owners. I get somewhere in that region of $5.1 trillion or $5.6 trillion.
I know we can debate which one of those goes into the hands of their children, which one goes to zero, and which one is viable. This is where we disagree with the rest of the space a lot, where people say, “This 200,000 SD or this 500,000 SD business isn’t sellable because it’s a job.” There are a lot of people with white-collar jobs who have had enough of this and want to get out. Whether or not they should, it’s a different opinion, but there’s user interest.
Let’s take another example. I know retired senior executives who will buy a board seat. They’ll jump $250,000 to $300,000 into an asset to get a board seat, making $75,000 to $125,000 a year. They get to stay a little relevant. I don’t think buying a job is the issue. From my perspective, it’s usually the capabilities of the person who has been working in the business for 30 years. That to me is the hang-up.
You have knowledge transfer and all those local things that you need to check through. One of our users was eight years at Microsoft. He was 1 or 2 promotions away from the C-suite, and he had had enough. He didn’t want to do it anymore. He had had enough of the office politics of climbing the ladder. He bought himself two laundromats somewhere around Seattle. He makes 500,000 SDE, and he’s very happy. He’s like, “If everybody cancels on a Sunday because they’re sick or hungover, I’m the one in the shop. Most days, things go well. Every now and then, things don’t, and then I’m on the line.” He was very happy. I think most people are more competent than we give them credit for.
I think that’s a decent example of a business not going anywhere. It serves a niche market. I was talking to someone who was going to buy a custom automation equipment business from a founder. The design guy owns relationships. You have to sell your own book every single year. There was one in Ibotta. I’m like, “Life is too short.”
That’s complicated. I think these are things. Originally, when we started out, we were thinking about how we make it easier for people to go through due diligence, financial and operational, questions like this, basically telling people, “You’re stupid. This is a bad idea. You shouldn’t do this,” and filtering them out, so they don’t wreck their house and their 401(k) savings when buying a business. That’s what we started thinking about this. There are plenty of companies doing AI due diligence for private equity firms, and for MBA searches for the established ones. I’m a lot more interested in creating new paradigms and new markets for what we typically would call and see the prosumer, the competent business-oriented consumer. I am making Private Equity Bros go quicker.
I understand it’s a very lucrative market. I’m sure it makes it fun. It’s a little bit more interesting for me to venture out into an actual venture like new market creation. If you think back to Shopify, for example, when they started with 40,000 eCommerce shops. There’s this interesting interview of Tobias Lütke, who’s also German, by the way. I’m very much trying to reach him at some point. He’s going down Sandy Hill Road, and he’s trying to talk to the VCs. Many say, “40,000 eCommerce shops are not big enough of a TAM. This is never going to work. Who wants to run an eCommerce shop? This is a niche thing.”
Shopify is a very interesting company, even after their IPO. Even financial markets did not know how to price it, if you see the gap from when they went to IPO to where they were a couple of years later, how many more billions they increased. The VC said, “What did I miss? What did I not see?” Tobias famously said, “Between supply and demand eventually lies friction, and friction shapes the world.”
Between supply and demand lies friction that shapes the world. Share on XThere was this massive market, this untapped market of prosumers or normal consumers wanting to run eCommerce shops. Nowadays, Shopify does enterprise as well, but back in the day, it helped mostly those people who got enabled by removing the friction. You can develop a good product, but you’re not going to sign up for a process. You need to build your own website. You should figure out how to do payment integrations, how you handle your supply, inventory management, taxes, marketing, website integrations, newsletter integrations, etc. They do click, click, click.
The click is the easy part. The buy it and the storefront are the easy part. The logistics are what’s hard.
They recently needed to leak a memo because he said the team should use AI and everything. It’s horrendously controversial. The memo opens with, “For years, we’ve been thinking about how to break down barriers for entrepreneurs and get more people into this movement.” That’s a similar way where we think about how we can make it simpler, not necessarily easier, for people to acquire businesses, and those questions like, “Should you buy this business where there’s massive knowledge concentration, or should you buy this business where there’s massive customer concentration?” All those things are tick boxes. I can walk you through and say this is a good idea. This is a bad idea. Here’s a key risk. Instead, I’ll prepare.
Automated Due Diligence And Execution
Diligence and execution are two different work streams. I took a ten-minute call with my accountants, who are doing a revenue proof before they do a full QofE. How do you automate the process of having an advisor? Will a debt shop ever accept the AI version of that? I ostensibly look at business like a platform that has modules.
Were automated by the side advisory. If you go out and you want to buy a business, you have your accountant looking at the books. We have your lawyer looking at the legal contracts. He’s drafting the legal contracts, and then you grab some business experts. I would call you up and be like, “I’m doing this deal. Tell me why I’m stupid. Beat this up for me.” All those kinds of things. Lots of these are processes that we go through every time, so we have a time check for this. We check for customer concentration. We check for market competition. We check for legal documents. These are steps that you can do over and over again.
This isn’t a one-click solution in the sense that you don’t just give us a website and magically, the next day, we tell you this is a good idea. Give us a website. We write your initial reports. We tell you, “Here are the risks. Are these risks that you’re comfortable with if you go to the next step?” We tell you to upload some initial books, like tax returns, and then you go from that to that.
The way it works underneath the hood is you do a lot of ontology-based RAG, retrieval augmented generation. You have a lot of context. We’re using another company called Hypernym, which increases our context window. You let the right agent run through steps, and it’s also not one massive agent. People think about, “It’s ChatGPT. I’m going to upload this document to GPT.” There are too many steps and too much information for that to go through. You’ll see the difference in quality if you do the deep research on GPT.
The deep research button is awesome. It says, “I’ll get back to you in 25 minutes.”
It tells you what it thinks about, and its first step. It has this piece of information, and now it goes somewhere else. We do something like that, but 10X the intensity and the leverage. The whole platform is modeled as well. You don’t do it all at once. When you gave us one of your example deals, we had so much more data than people normally give us because they give us a link, and then we tell them to get us some books. We get tax returns, and then we do it step-by-step. We need to rewrite the back end a little bit to deal with all of this information at once and draw from some other old algorithm.
What did you say? I ruined your CTO’s weekend or made it a good weekend.
I think you made it a good weekend. You spend all day coding, but this is the difference between your world and my world, where we go, “It’s broken, great. Best thing that could happen.” Very early on, we broke the website. I created so much demand. I was at Searchfunder, Reddit, and all those groups. We had too many users, and somebody tweeted at us like, “You’re down.” I was like, “Awesome.” In the startup world, you don’t fix a problem before it comes up. Until people give a damn, I don’t need to have a good back-end infrastructure and waste time on that. I first need to figure out if anybody gives a damn.
You have to understand, I cut my teeth on a nuclear reactor. There’s no such thing as a good problem. No problem is ever good.
I would not recommend that we run the same attitude on our government.
I’m getting agitated right now thinking about it.
I don’t want you to turn around and be like, “Great, the coolers broke down. Now, we’ll fix.”
The reactor coolant pump shot and shit the bed. No problem.
It’s the two-way and one-way door problem. Nuclear reactors are very much a one-way door situation.
I never heard that metaphor before.
It’s Bezos, actually.
Never heard of that.
Maybe it’s an urban myth, but I think it’s Bezos who said, “Most decisions are a two-way door. I can go back and forth between them. I can change it, change the name, so do it quickly.” Some of them are a one-way door situation. Think properly about them.
When I was at Amazon, I was only there for a year, I was doing this Kaizen event. There’s a guy. I don’t even know if he remembers me. His name was Fernando Pombiero. I was like hamstrung about this idea that I liked. He was like, “Make a change. Make a change.” It stuck with me because I was at a reactor, and then an oil refinery. Oil refinery is a giant bomb, and so it’s a very different system than being at Amazon, but I went to work on things that we’re restructuring. The chemical business I worked at was simultaneously a giant bomb, and you had to make decisions quickly because it was a global financial crisis.
Do you like things that can explode?
My career revolved around things that can blow up or removing heat from things.
I think, comparatively, the idea of blowing up is so much more relaxing.
Ironically, it’s more stressful because you can’t determine it. I know what the parameters of a nuclear reactor need to be, and I can watch it. Their numbers are visible at the refinery, like, “This is going to go bad.” Funny story. We’re looking at a bolt-on, and I thought everything was going well. The seller ghosts on us. It was months later, we got a call back. He’s like, “I’m sorry. My cat died.” I thought it was us. In the absence of information, your mind is filled with devils, not angels.
It is a good sign of radical accountability. You can never control what the other person does to you.
I know, but you always take 100% over. It’s always my fault, no matter what.
At least that’s the most productive way of going about it. It’s not necessarily the best, though.
Building The Company’s Vision
It goes back to if you blame everybody else, you’re not going to accomplish anything. Back to your vision for your company. What’s your pitch when you’re raising money?
It depends on who I’m talking to. In San Francisco, I say, “Would you like AI due diligence for individual M&A, like an AI native platform with agentic behaviors?” When I talk to bankers, I sometimes say, “I want to make Private Equity Bros unemployed,” which is a joke because we don’t engage in that. We care about moving more people into business ownership. There are two ways to look for it. When you talk to VC, it’s all about the money in the market, how we can conquer this market, and how most people don’t have that much market share on there.
We’re doing 200,000 transactions a year in this space, like in small business buying. That number, with the retiring owners, needs to go to 800,000 a year. We need to 4X that number. I love what OffDeal, BizScout, and everybody are doing. I don’t think that we’re going to 4X this number by making more 2 million HVAC companies transact to MBA bros quicker. There are not that many of them as well.
The question is, do the businesses turn into vaporware? Do they need to transact or they just die and get sucked up by larger platforms, and the customers go away?
I see what you mean. I thought about this, but either way, this number is moving. From a market perspective, I’m in this place because I know $5 trillion is moving somehow, whether they go to a private equity-backed HVAC or they go to somebody new buying it, bolt-on, M&A, or those kinds of things. From what I know, when I talk to smaller sellers, they care a lot about their team. They care a lot about their legacy, their company.
They want money. Everybody does, but there is an element where they prefer and where I’ve seen people even give discounts to individual buyers that had that trust element of, “You’re going to take care of these people and what I’ve built,” versus somebody in a suit who comes in there like, “This is the multiple and here are the ten-page NDA documents that you don’t understand.”
I’ve seen that 2 or 3 times over the last 3 years, where we met a founder who was 80. He’d been fighting a major big-box retailer in the trenches for 45 years. He couldn’t go to his team and then say he was selling to them now to the turn of two multiples. I mean an eight-digit number left on the table. If you could literally take the business and then restrain it during the sale to close, he didn’t make that decision, though. It would be disingenuous if you did that. You said you were going to do it. Even if you did that, I think that would let him off the hook and go, “I’m sorry. Not my fault.”
You are currently creating this dichotomy where you’re either selling out to private equity big companies or you’re going to be eaten up by them. I don’t see the market as centralized. It is in certain retail and other things, but I see a lot of fragmentation all across most physical businesses, from dock walking to who’s big in window cleaning, maybe Phil’s? I haven’t seen massive franchising private equity-backed moves. I see private equity buy more and more HVAC, plumbing, and those kinds of things, but still, I think this market is massively fragmented.
I’m still competing with you locally. I’m competing on knowledge. I can build the community. I have the existing brand, and there are a lot of deals that are valuable. There are deals where you’re like, “This is a sinking ship with a big leak and a lot of headache and repair costs.” That’s what we’re there for, to tell people this is a bad idea. You’re buying a laundromat that’s next to a trailer park, and the trailer park is supposed to move in two years because they’ve released some building permits for a new skyscraper. Maybe don’t buy that. Those are the thought processes.
How does AI catch that, though? That’s such a pen stroke risk. There’s no way it can catch that.
The way you were thinking about this is that somebody thinks ahead. We just ran through all the scenarios. Every time I see a new niche one, I come across somebody else’s deal that went sideways or reasons for that, will add it to it, and we go, “Just check for this.”
Your filter gets tighter. You go from a 100-micron filter to a 20-micron filter. Is that good?
That’s the beauty. A buy-side advisor has 24 hours in a day, of which he needs to sleep at some point. Otherwise, they die of heart attack issues, with which we’ve seen quite often enough in finance. AI doesn’t need to sleep, and the cost of computing is trending downwards. I think we had this debate a couple of months ago, where I said that the graduate-level thinking is becoming a commodity. I think it’s Sam Altman who was like, “The models are the worst they’ll ever be right now. They just get better.”
A business advisor has 24 hours a day, and they need to sleep at some point. AI can help do their work without sleeping, and the cost of computing is just trending downwards. Share on XI think the leap we’ve seen with OpenAI’s latest release, which I’m sure you tried out, is massive. I was shipping my clothes from the US to the UK. I did this once in Germany, and Germany is annoying. They charge you £50 for a fee to process your own goods being resent into your country, which you own, and where you live. I was like, “I don’t want to deal with that.” I sent OpenAI out to do it, and the leap that it did and the detailed research that it did into “I’ve checked this law, I’m checking this law, I’m checking HMSC,” etc., was massive. This is a good report, and I now know what to do. It is so much better than asking on the general GPT for the model without deep research. You see that thinking difference and that thinking capability.
This friend of mine on Twitter is in Dubai. He bought a recycling business named Ole. He said, “I don’t want to know anything that’s bad news for a deal that would make me not transact if I could manage it after we close.”
Is your friend experienced and has done a couple of deals?
It is his first control deal. He was an investment banker.
He’s a private equity. He’s an investment banker. He has the knowledge. He had seen a million deals. He got paid on somebody else’s dime to learn the skills needed to do that. This is great. I think we should help those people. I talked to a lot of professional or semi-professional searchers, self-funded, or those who race to search funds that are just, “Can you make this quicker? I want to upload some Sims. I need them to run against my thing, and then I need them to go into financial analytics directly and do a detailed analysis, not a key quality of earnings yet, but a little bit more detail. Give me outputs and tell me if this works because I have too many of those.” I’m like, “We can do that.”
Who’s your target market?
It’s all the people who want to move into small businesses buying, whether or not to leave a job or to extend cashflow, but who don’t quite know how to do that. Right now, the beachhead segment of users we deal with is users who are actively in the process and have a current pain issue. They’re on Searchfunder. They’re on Reddit. Somebody was like, “My supplier is going up for sale. I’m 50% of their revenue. How on earth do I negotiate this?” or, “I work in this gym,” and I think she was 22. Her boss was like, “Take it over from me. I’m retiring. You should buy it.” She was like, “He walks away with $10,000 a month. I know that, but I don’t know if this is a good idea. How much risk is there?” This sounds like a great opportunity. Other people would be beyond happy getting handed an aka job.
It’s scary to put that much debt on something.
What are you in? Once you’re in, you’re going to fight. We are there like a consultancy. We’re there to give you the warm and fuzzy feeling that somebody has thought about it. We tell you the risk, and you have a second person guiding you through this.
What I’m hearing you say is you’re Xanax for the new small business entrepreneur.
Think about it. This search term for how to buy a business has a 900% year-over-year increase in the last 12 months. If you look at this little graph for the ‘buy a business’ search term, it has been going steadily upwards since 2019. Whether or not that’s also partly Cody Sanchez’s work, I’m not going to say, but there’s an element where we focus on the people. Look at this space right now. If you think about it, there’s so much friction.
The search term “how to buy a business” has seen a 900% year-over-year increase in the last 12 months. Share on XMy two options are, if I’m an individual and I haven’t done this before, I either pay around $20,000 every time I want to deep dive into a business. Assuming I need to look at 100 businesses in general and 10 in depth to buy one, that’s like $200,000 for all the due diligence I need to spread out. If I’m buying a $500,000 acquisition business or maybe $800,000, that’s a lot of money.
You can get an SBA 7(a) loan. We’re working on private credit with structured instruments for people to get even more liquidity quicker for those acquisitions. That’s a lot of money. The alternative is I pay one of the gurus that you dislike so much. I’m in a system where I get on a call maybe once or twice a week, where I can bring my deal, and then I need to wait a whole week or two weeks before I can bring the next one to get feedback.
You’re talking about your target market, would go A or B, and they should call you B instead of A, the gurus?
I’m saying that we are a lot quicker. You can upload your website at 3:00 AM on the business you’re buying. You have an initial report twenty minutes later. You get a deep dive in about a day. We can tell you by the end of your workday if you should look further into this business or not. It’s a lot quicker than waiting a week or two weeks to be on your deal review again, and then maybe get your deal with you.
I can’t even imagine waiting for someone who’s never bought a business before to tell me how my deal is.
You have experience, right?
I’m talking about I can’t imagine someone in this space taking selling advice to get it salient from someone who has never bought a company before. We’ll leave it at that.
I care about more people wanting to buy businesses and being halfway educated on the matter. Those two factors are being done.
Monetization And Financial Strategies
How are you monetizing this?
We monetize at the transaction point, so we take a success fee. We eat the cost of you maybe having ten bad businesses and running these queries. The cost of these models is also trending towards zero more and more. Isn’t that nice? Google gave us $350,000 to play with their models. We have some leverage there, but we let you analyze businesses for free. There’s an element where we do a test to pay willingness because that’s very important early in a product.
Everybody loves stuff for free, but you need to test if somebody would be willing to pay $50 or $100 down to see what actual consumer interest is. On the other hand, there’s the credit that you take. Most businesses are bought with some form of a mix of debt and equity. May I interest you in buying a business with a mix of debt and equity?
This is a good time to plug your Live Laugh Leverage. Thank you. I’m going to put this on one of the Yeti cups. If you had told me people would be buying $40 cups as corporate swag ten years ago, I never would have believed you.
Everybody loves to hate the consumer until somebody gets it right, and then everybody loves to love the consumer.
That’s the thing. You can’t figure it out. I would never underwrite being a consumer investor because I’m terrible.
I also think it’s so much quicker. People buy things or not. You run a few ad campaigns. You run some TikTok and some Instagram. You know if people come to your website, if they put links into your shopping cart, or not. Sales cycles for B2B stars are long and complicated. Everybody tells you they want to have it.
I want people to buy washers from me. That’s it. Washers and piping. It’s slow and boring. I get how you’re monetizing it, a success fee.
Also, private credit.
You’re going to write debt on it.
We are the central allocator.
You’re going to broker some debt.
Yes and no. There are things in the making. I don’t like to get too much into depth. One of the biggest problems for analyzing P&Ls and tax returns is that it’s an obstruction of what’s actually there. Getting regional insight is very difficult but extremely valuable. What we’re currently playing around with is something like a first-class regional investment perspective.
If you have a dog-walking business or daycare you want to take over, theoretically, some of your consumers should be interested in owning a stake in that transaction to ensure that the business goes forward. Similar to how BrewDog, when they had the shipment that went uncool to the US. They were completely at zero and leverage and on the road to bankruptcy, turned around to their power users and were like, “Do you want to invest in us? You’ll get your pro-rata payout, and you have a stake in the company.”
It’s a very tri-state area, plus Silicon Valley, plus LA play, like communal investing in the businesses.
Not at all, but it’s a great way to source local, regional investment insight. If nobody wants to, you can’t even find a single person among your customers, maybe they know something about the business, the market, or you that is very hard to abstract away into an Excel spreadsheet. Now, you have a first loss order, and we’re going to do some form of revolving credit line with more risk-interested people.
I’m unpacking this. You could take a success fee. You could also write some debt, potentially with some warrants, too. You crowdsource some equity.
We were just centrally arranging. I’m not sure that we should securitize burrito taxis. Klarna x DoorDash is great for Klarna and DoorDash. I’m not sure if it’s great for the financial markets on the back of it. Everybody is currently in a frenzy about private credit, and for some reason, private credit hates to underwrite a $200,000 business. I can go to Think Ads and get you a $2 million loan for anything right now. If you have a $200,000 or $500,000 loan, it gets a lot harder.
That’s unique to the US, though. You can’t do that in the UK. That’s an opportunity. There’s no such thing as the SBA in the UK.
The UK cancelled it. Germany still has it. We have the KfW. You have the Raiffeisen Bank in Vienna, which released a fund specifically deploying into these generational wealth transfer businesses of the Mittelstand, as we call it. I was talking to somebody in London who used to know them, and they said they have a massive problem finding enough people who do these transactions because it’s not well-talked about. It’s very high-friction. Nobody knows how to file it up.
It’s a highly illiquid market.
Most things aren’t illiquid because nobody wants to buy them. Most things are illiquid because they come with three months of lawyers, shenanigans, bureaucracy, and legal costs.
Most things are not liquid because nobody wants to buy them. Share on XIt’s a highly illiquid market. It’s a major purchase. Buying a house is highly standardized in the US. I know you Germans like renting.
I don’t know if we like it or if we need to with the current market.
You don’t buy houses. Americans want to buy houses.
The British, too.
You can live in a castle. Why would you not want to have a house in the UK?
It’s $400,000 or $500,000 in the South of France. You can’t even get an apartment for that.
I want a chateau or I want a castle in Dublin, outside of Dublin. Everybody said real estate agents were going away. They never went away. Everybody said car dealerships were going away. They never went away. A car dealership is like a $30,000 to $50,000 purchase. Maybe you use $15,000. It’s still a very big number to most Americans. Houses, you want somebody to walk you through the transaction. That’s not the problem, but when it’s a business, there’s liability involved.
There’s not much liability involved with a housing transaction, and your house doesn’t go away. Your job goes away. It’s more the bank underwriting you and your credit history. You go into business land, and you’re like, “I’m going to call today. They’ll tell me about the biggest customer. How many hires did they win? What does the contract look like? Somebody else gives money. We’re going to get some debt.”
You also work levels up from the transactions we make with increased complexity, more stakeholders, and more DCFs and projections. We don’t do projected outcomes. If nothing changes, here’s how much money you get. If you have a 10% downturn and everything goes down, here’s how much you still make. These are the questions we ask. We assume nothing changes.
You’re going to want to do a $500,000 to $1.5 million EV deal.
Yes, and I want to make sure that the person who buys this business is not going to wreck their house. There’s no such thing as no risk, but it has the lowest risk transactions we can possibly have in an industry like that, with something that makes sense and is sensible.
Where do you put this in a risk matrix? More or less risky than the house loans that were written in 2007 in the United States?
This is not financial advice. The problem I see in 2007 isn’t that we were underwriting housing deals. It’s that we were underwriting high-risk housing deals with no common sense because everybody wanted more private credit. Sometimes, when I see the Klarna x DoorDash deal, I’m like, “What’s the underlying here?” I think a business that has existed for twenty years, that has customers and some machinery, is safer than somebody’s “buy now, pay later” Chipotle order, in my opinion.
Determining The Relevancy Of The Founder
We were looking at this diamond tool-making business that cut asphalt and stuff. Some of my team were worried about the founder when the founder laid out the risk. People do business with companies, not with founders. This is called a million and a half, two million business. How does your engine square the circle around how relevant the founder, owner, and CEO are to the business? What’s the math on that?
You’ll need to ask the CTO for that.
I don’t mean the ladder logic. How do you guys think about that, because that’s a critical component?
It depends on the business. These are questions that you ask the seller. If you’re on the platform and you walk through the steps from initial due diligence and discovery to LOR and credit stage at some point, there are question marks that we want you to talk through with the seller. Ideally, there’s some form of fireflies or transcript that we can analyze afterwards. We’ll give you template questions like, ask us, talk to us, explain to me how you walk through your day, how you talk to customers. How centralized are they? You can look at how many emails they are involved in. Are they the ones who are doing the deals? Those kinds of things.
It depends on the business. Sometimes, it’s not that critical. Sometimes, you can see that he is the man who makes everything go around. Do they have sales teams or not? What are the contracts like? This is industry-specific. We’re not the person who goes around and says, “This is a 100% secure deal, and you’re guaranteed to make money.” We’re the person who goes around like, “Have you thought about these things? Have you thought about this problem? We don’t think this answer is good enough for this problem. We think here’s a major key risk.” There’s no such thing as a perfect deal.
Absolutely not. Everything has words on it.
I think there’s about 10% to 20% of bad deals. Most of the time, it’s somebody bringing us a coffee shop, a restaurant, or a hotel.
They’re terrible businesses.
Don’t hate me for calling a baby ugly because there are people who’ve made Starbucks down here years ago.
That’s years ago. That doesn’t count now.
Yes. I look at the data. I look at the SBA default rates. I look at where you come back. I look at how old the business is and how prone the business is to disruption right now. I generally stir in the right direction and say, “Let’s not do cafes and restaurants unless we’ve already made a lot of money and we have space to play around with. For the first couple of deals, do something sensible. Do something easy. Do something with low complications.”
Why wouldn’t you guys start a business brokerage, too? Do you feel conflicted?
No, I think it’s on the roadmap. People come to me and say, “I want to find the right business, and there’s so much searching to do.” Right now, our user segment already has a pain and is already in search of buying a business. That’s where we start and grow the market, and start with having our wedge into the market. At some point, we’ll deal with people who’ve seen one of your least favorite influencers five times on their TikTok and are like, “I want to buy a business.” We’ll be like, “Give us your parameters, and we can present you a couple.”
Would you ever do sell-side diligence and it’s a Bizzed AI-stamped deal?
I don’t want to be a marketplace. I think the incentives are misaligned. If you look at OffDeal and all those other marketplaces, they mischarge the seller, and you can tap for sellers and buyers. They always tell you that they get you the best deal. I don’t quite believe that. This is why I want to make money on success and the money with the lenders and the acquisition loan, because now I am incentive-aligned to not only make sure you get a business but also make sure you get a good business. Otherwise, it looks bad for me.
Are you tied to the default?
We haven’t decided that yet.
I mean from you might have given the stamp.
There’s a massive data play. In five years, we will have all the data not only about which businesses work, but also which buyers and which user behavior on the platform is indicative of success later on. We get all this data that you don’t quite get if you’re an SBA lender because you’re so tied in. They look at your employment history.
You made an interesting point. Talk to me about the median profile of someone who uses your service.
Interestingly, at the moment, we see a lot of highly competent white-collar workers. We had somebody at Microsoft, we had somebody at Expedia, those kinds of people, and then searchers.
What does a searcher mean anyway? It’s kind of nebulous.
For me, a searcher is somebody who is out there and playing more of the MBA, M&A, private equity game of I need a $2 million EBITDA business and either uses outside capital or is playing around with the SBA 7(a) loan in a way where they’re a lot more strategic and a lot more on a ten-year horizon. When I have my classic white-collar person who does marketing for a midsize firm or middle management somewhere, they’re like, “I want out of here.” I think Eric made that post, SMB Law Group. He was like, “A contact of mine left her six-figure job to have an online business that makes her $80,000 because she wants to pick up her kids.” They want to buy a business for the long term. They’re not yet thinking about the multiples they get later or the bold acquisitions. They’re like, “I want more cashflow.”
They want to buy a rental house for lack of a better word.
There’s a difference between house flippers, who are searchers, in my opinion, and people who are thinking about moving in for the long term. It might sell later at a point when the number is right, the life is right, or there’s a circumstance.
I had the new ChatGPT model. I’m going to pull the archetype. What are the archetypes of people who want to transition to small business ownership? You want to use deep research, too. We’ll let that bake, and we’ll come back to it at the end.
I wanted to say that we had a very interesting point earlier that I think we’ve brushed over that ties in rightly. You talked about the dot-com bubble and how people sat there like all these jobs will be gone. I think there’s an element where it’s hard to predict. When you look inside the dot-com bubble, all the crazy suggestions we had and how most of them didn’t turn out true, but then also how we quickly were so in love with dot-com.
It took the tech so long to come after, like, “Yes, they were right. We’re going to order everything online. We’re going to have apps. You’re going to order your pizza. Everything is going to be digital and Docusign.” At the time, the tech wasn’t frictionless enough for consumers to move through. A lot of companies also had big promises. Nobody knew the benefit of it, which I feel is a little bit like in AI right now as well.
It’s the Wild Wild West again. We went through this with www.everything.
Now, we’re doing it with .ai.
A friend of mine bought a $1 million dot-com domain name.
I am not sure if .com will move to .ai, but then again, I’m also in the group of people who think .xyz endings are normal. My Wi-Fi in San Francisco still blocks our .xyz.
Two Types Of Target Market
I didn’t even know there was such a thing as a .xyz ending. My grandma would be so disappointed in me. Back to your target market, there are two kinds of sales conversions. You’ve got an existing person that’s in the marketplace that you don’t need to convert. You’ve got someone who doesn’t know they want the service. I use this on someone who uses makeup. You can convert them to your brand, or somebody has bad skin that they need to go on skin care. Which of those two types comes to you first?
Somebody who already uses makeup, because you know about the beachhead segment, and when you have a new product. You’re not going to initially get everybody who could potentially use this. It’s interesting. You use people with an active pain point, which are people who are already in this. They want to do it.
It’s a one-step sell.
We do, we grow from there, and we move forward. It’s growing pretty quickly. We’ve done no paid ads, and we’re growing an average of 80% month to month since last summer.
How many queries did you do?
I don’t know that number off the top, but we have around 3,000, 4,000 users on the platform. The average proposals, I think, are 2.3, 2.4. As I said, we have a $2 billion enterprise value analyzed.
That is a big number for the size of the check.
Also, for the size. At the time, we’ve been active. In six months, users brought us $2 billion. We’ll see. Money, in the end, is cashflow. Happiness is positive cashflow. Money is all that matters. We’ll see. There are $200 million of actual businesses in the right stage, which are good businesses, but users who seem ready to buy, which we call debt origination, that we could facilitate. Assuming a $200 million enterprise value, 50% of that would be finance and debt.
There are 27 ways. Not that we think we’re about monetizing, and I see a vision, but somebody gets a deal that they like, that you like, that they can’t quite take down. Do you need a syndicate of investors? Do you have bids?
There are so many people. Every time I go somewhere, it doesn’t matter if I go to a crypto conference or I’m at floodgates, family and friends presenting, there’s always somebody in the audience who’s like, “I don’t want to manage that thing, but I would love to deploy a loan into it or take a minority equity percentage. Can you build that?” We’re playing around with that. That feature is coming. I don’t want to do too many things at once.
You won’t do them well. That’s my whole principle from board governance. You set up a heartbeat and a PMO, and you do three things at a time. Once you get those heartbeats up, you take one off the list, then you add another one on. I’ve seen private equity deals go horribly awry because there are twelve things on the to-do list, like strategic big initiatives, and none of them get done.
Despite them hiring consultancies to tell them that they should move online.
That’s a whole set of perverse incentives. Consultants are like bedbugs. Once they’re in, they are not leaving.
I know, which is why I very quickly stepped out of it. I just can’t.
You did the McKinsey Accelerator type of thing.
They do this thing in Germany, which I think is called a fellow or something. You’re in university, and they’ll take you to a lot of events, meetups, and workshops, and put you on a pre-consultant career path.
You didn’t go back?
No.
Were they disappointed?
I don’t know. The interesting thing about the UK is that I’m not a proper bread-and-butter Oxford grad. I have it a lot harder. I was a visiting scholar, so I wasn’t interested in competing. I was only half an Oxford grad.
The Germans again.
I could have probably gone to Germany, but at that time, I was being flown around the world, going to digital asset conferences, and doing sales in Europe for a crypto payroll company. I had a good time, and I liked playing around with new tech primitives. I like messing things up a little bit. I’ve always felt like the imposter amongst the elites. I know I’m very privileged.
Everybody at McKinsey feels like an impostor.
I got a scholarship to a boarding school. I got some financing for Oxford, so it never felt quite like I properly deserved to be there. I think I come from a rather middle-class German family. My grandfather was in the, do you have this as well, the workers council inside the company? We call it the Betriebsrat.
Like the unions?
Not quite, but similar.
Like the workers’ board. We don’t have that here, but I know what you’re talking about.
It’s a mix. It’s the company board, but two of these people are always like presentative from a lower level.
You have the supervisory board in Germany. You have two boards in Germany, but they put a worker on, I forget if it’s a junior board or the senior board.
Exactly. My grandfather was there. My mother is in one right now. Here’s my formative experience and my opinion on this. When I was in Mexico, my school had an exchange with the German school in Mexico. I was in Mexico City for 3 or 4 months. I loved it there. I was shocked by the artists there and the culture.
Mexico City is great.
It’s beautiful. The museums are free, unheard of for me as a German. There were people doing ballerina performances at the red light just for show, not to collect money, but because of art. I was in love with it, but I remember sitting in my friend’s Mercedes. He goes, “This is security glass. You can’t shoot. Here’s the button that you press if you’re under attack.” I was like, “Is this a special edition?” He was like, “No, this is how they come off the factory.” I remember my neighbors, my friend’s house, they didn’t have any service staff anymore because the neighbor’s daughter got kidnapped by the chauffeur after sixteen years of service.
I think it was a McKinsey report as well that said at some point, if society goes too far out, you have this chaotic perspective. What’s the gun-to-citizen ratio in this country? I think it’s eleven guns per capita. I’m a believer that money is earned and money is earned hard, but that there also is an element of I want to move more people into ownership. I think it’s called political efficacy. You’re doing something. You have ownership. You’re active. It’s better for wealth building as well if we have multiple millionaires there instead of these massive discrepancies. I think it’s a way better way to get people into ownership and entrepreneurship and working their way up than trying to reallocate this via taxes or otherwise.
I forget that 80% or 90% of all millionaires in the US are first generation, something like that. Most of them are created through 401(k)s. If you impact that, though, the number is 20% or 30% of something that built a business or built a bit.
Acquisition is still one of the major mains of making millionaires and billionaires.
Real estate is, nine out of ten, the millionaires in the US that are not 401(k)s.
There’s a massive multiplier effect as well to this. We’re getting people who aren’t your classic CEO, private equity person into leadership roles. They’re becoming CEOs. They’re hiring, and they have new hiring practices. Suddenly, if you hate the way the world is, you have an impact on this. I can hire differently. I can have different hiring practices. If I don’t disagree with certain policies, I can run my ship differently. If I hate my bosses, I can be a better boss. You have all these ways to be efficient.
You have some levers you can pull.
It matters who you buy from and who your suppliers are. I know these studies very well because I care a lot about the impact. My CTO cares a lot. My co-founder cares a lot about the money and the finances. He’s the fin bro, $0.68 of every dollar you spend locally stays in your community versus $0.43 when you go to a big office, Amazon, or Whole Foods. This goes beyond. I think small businesses are 300% more likely to donate. If I think back, we would sponsor a local competition for the soccer team, or we would sponsor a prize at the horse riding competition. Those kinds of things happen with small businesses. That’s important for communities, and that does something for society.
Going all the way back to Mexico, there is a price that comes to these things, like an emotional price that I can’t pay to walking out of a nice club in Germany and knowing I’m not getting beaten up by somebody or my car not being keyed. I admit that everywhere in Europe, this is going south as well, but it used to be Berlin back in the day. You could drive your Porsche around in Hamburg, park it, and be fine, or in Munich.
There is value to that, and there’s value where I would put money on. When you earlier had your colleague or your friend who had this business that he didn’t want to sell to private equity, even though he said it was an eight-figure sum, you can say, “He’s losing money of eight figures,” or you say, “His honor, his morals, and his conscience is worth to him that amount.”
It’s subjectively foolish, but humanly the right answer.
There are things money can’t buy. Some of them are your honor, your principles, your backbone, your way of life, your satisfaction with who you are as a person, and how you want to live.
If you go back to what you were saying about having an opinion and doing it your way, you know Dr. Drew is?
No.
He’s an addiction medicine specialist. He’s like a celebrity doctor. I was listening to him. Apparently, 78% of physicians are employees, and they carried the corporate narrative through during COVID. When many of them disagreed with the science after we unpacked everything, we found out the dissenting opinion was correct. If you had asked me what percentage efficient physicians are employees before I heard this number, I would have told you in the US, 30% or maybe 40%, not 80%. There is value in not having corporate complexes. What does it say?
Happiness is positive cashflow. This sticker I have on purpose, the finance bros love it. It has my QR code, and I have a way in. They reach out to me on LinkedIn. What I have it for is the people who don’t have this opinion and start a conversation with me. They go like, “That’s very capitalist, or money isn’t everything.” I’m like, “If you don’t have enough money, you can’t leave a job you hate or be bullied. You can’t leave a relationship that might be abusive because of financial dependence. You can’t leave a town that might hate you for your political views or who you are. There are dire consequences, especially in the US.
If you do not have enough money, you cannot leave a job, a relationship, or a town you hate. Share on XIs it more contentment or is it positive cashflow then?
It’s the ability to move things around.
Freedom is positive cashflow.
Look at the physicians. You have a board. You are bound by certain things. You have your boss and all these systems. Having other income streams, it might not always be nice, but at least you have the ability to walk out of things when you disagree and say, “I think this is completely wrong. I can eat that loss. I can leave this job. I can leave this position. I don’t need to do money deals with you, even though for the money, because I think you’re a horrendous person.”
I felt like I drove a massive impact the whole time. In three and a half years, I never felt like I did not overdeliver what we charged.
I’m very sad about never having properly gotten to it. This is the impact your environment has on you. I had a lot of ex-consultants around me who went into startups and were successful. Everybody told me I hated it, or I wouldn’t do well. What they meant is, “You do great, but you hate your life and your soul.” I’m not sure if it’s true or not. I always think it’s a little bit like boot camp for corporate people.
This is what I’ll tell you. I did not get it. I met this guy. The reason I went to McKinsey is that there was this guy, Nathan Flesher. I haven’t talked to him in a decade, almost by more. He’s got a beard, and he’s at a mine in Labrador, Canada. He interviewed me over a video call in 2012. I was like, “This is cool.” It was a video call, like a corporate video call on FaceTime. I was like, “Do you have any advice?” He’s like, “Just work with good people. I’m in a mine and miserable in the middle of nowhere.” He was in San Francisco or Silicon Valley. He had to go to Labrador every week. I did probably three flights.
Everybody says, “Work with the right people.” I was on some teams there where I had spectacular people. I was on some teams there where I didn’t gel as well. It’s better to do anything with good people, whether you know anything about it or not. You’ve got to get hot, study up, get smart and work harder than to work with crap people and have an eight-hour day.
All About Work, Money, And Freedom
I would agree. I think that’s the whole appeal of startups as well, and how we get talent for less is a culture. I’d love to talk with you about work, money, and freedom because I think we differ a lot on this, and how you think about hard work and achieving anything. Can there be a balance? Is there a way of buying businesses where you also get to enjoy yourself and don’t work those crazy hours that you put in?
I don’t see it. That’s probably a mental block for me. I know I have two things signed, not closed right now. Please touch my custom table. Please pray for my control deals. I see people on Twitter say, “I run this business on three hours a week.” I don’t believe it for two seconds.
I was in Austin, and I met Paul Millerd, the Pathless Path author. I think it’s a great book. Maybe you hated half of it, but it’s a good read. We’re talking a lot about wanting more life versus wanting more money and how he sees things. I think he’s very much on one extreme of the end. I think there’s a difference between growing companies and buying something and optimizing things. The way I think about this is that there is no such thing as passive money ever.
All money is worth something. All money costs you time. There’s a question you always need to spend time learning about a skill, familiarizing yourself with the market, or the way things move. There are things where you can set up things for better or for worse. I don’t expect anybody to buy a business, and then after three months, just coast. I think if you take a look out on a Zoom for 3 to 5 years, you will be able to reduce your workflow by hiring other people. It might cost you money. It eats into your profit margin.
If I could buy a business and only show up to the board meetings once a quarter, maybe dial in a monthly one-hour financial update call. Maybe not. One of my guys does. The thing grows like clockwork. Not that there aren’t problems, but year over year, it grows at 7% CAGR without me touching it.
You’re an endless growth person.
Why would you not grow? You’re either growing, or you’re dying. If you’re not growing, inflation is eating you alive.
Inflation is eating your lunch.
You’ve got to grow at least inflation, plus 200 basis points, or you’re eaten alive.
It’s real estate with fancy things like parking lots, vending machines.
Parking lots are an amazing business.
You can’t buy them.
It’s hard to buy, but they’re an amazing business. You think I’d be doing what I do if I owned 30 parking lots?
Why are you doing what you’re doing?
This is fun.
Is there an endpoint for you at some point?
I’m not money-motivated. Ideally, what I’d be is that there are 30 guys and girls, and 25 of them are military veterans, and five of them are deal professionals. We’ve got 7 to 10 assets, boots on the ground at every asset. I like the up or out McKinsey system. Every year, we ask 3 or 4 people, “You did a good job. You may or may not be ready to be a partner. Why don’t you go run this company for us?” Every year, we bring out a new class like McKinsey does. We’re in a new class, 5 to 7 people.
We’re always constantly training people. Am I traveling four weeks a month? No, I’m going to sit at a V-shaped table, and I’m going to look at everybody’s deals. People are fighting over their deals, and they’re not arguing over capital. They’re arguing over the team members that we have trained because they want to steal them from their asset for six weeks to run a project. I’m not money-motivated.
That’s a genius. I wasn’t wondering about the money. I know you have these massive work hours. Me, too, but I want time for my family and my partner, etc. You seem to love the grind. Is there an endpoint where you’re like, “I’m going to reduce my hours”?
No, I love this.
You’re high on the cortisol.
100% cortisol and dopamine, absolutely.
Your doctors must not be having the best time.
The Role Of AI In Business Acquisition
We’ll talk about AI now because I’m using AI. The irony of me using AI when we were fighting over AI.
You’ve come from silos to parlance a little bit.
No, I’ve always used it. It’s useful. My problem with AI is that everybody tells me it’s going to destroy all the jobs. It’s not, it’s going to make more jobs.
I can’t believe I’m saying this. Don’t crucify me. This is probably the worst word you can ever say in a finance conversation. Look at Karl Marx’s analysis of how the industrial revolution and the steam machine affected capital ownership and the working class. I think he was very track on. I think this paralyzes where you can look. Life got better if you zoom out for everyone. It’s the same with economic progress lifts people out of poverty. We have fewer spouse beatings. We have less poverty. We have less illiteracy.
More fertility.
I don’t know about that. We have all these massive things. If you look at the individual position right there, going from working on a farm, which is very much like a half-year job because the other year twiddling your thumbs, waiting for the crops to grow, to working eight hours in a factory, that transition wasn’t nice for many people. Obviously, there were many highly skilled merchants. Sewing clothes was a high skill, especially elaborate clothes, that suddenly lost all their status as you could do it for 1/3 of the cost. I think that’s something you will see where there will be a short-term pain.
The developers are getting crushed right now. They’re getting crushed like a Saxon blacksmith circa 1300.
Yes and no. There are definitely elements. I don’t know who posted this, somebody on Twitter. I was like, “My Lovable or Bolt makes Sauce,”which is this AI design thing with Cursor, “It’s making $10,000 or $20,000 a month MRR.” Two weeks after this post, he was like, “Guys, you’re attacking.” People knew how to cross our rights. They were attacking all his open vulnerabilities. There are devs who are now charging top dollar to fix somebody’s vibe-coded thing.
You’re the second person who said vibe coded.
I’m a tech pro at heart. I have a weird little outside facade, but I am definitely in the VC’s SF world in there. Vibe coding is great. I vibe coded the whole front end of this step because my CTO is a backend API genius who does all that pushes the model to the maximum they can do, but he’s not necessarily the best designer.
We argued about AI. I said it wasn’t good. I said it wasn’t going to be as disruptive as everybody’s claiming to be.
We would argue, and you were going like, “I can’t do the private equity world.” They are associates right now. They are taking their baby steps in their first four weeks. They’re doing the Excel course. They’re slow. They’re crying every day. Give them some time. Sam Altman is doing it.
What I’m hearing you say is that once it’s a gangly teenager, it’s going to be better.
I’m saying as it grows, as it learns more, it’s getting there. I also think there’s this massive movement similar to how you look at retail shops and the advent of the World Wide Web. People were like, “People always want the physical experience. We’re not going to die.” Plenty of them, lo and behold, in the long term died. Some of them were able to get that special experience and survive on that. I think you’ll see similar things. They won’t want to use it because they don’t trust it as much as an associate staying up until 6:00 AM, crunching the numbers, sleep deprived on 15 Zyns and a coffee, but that’s okay. There will be more modern firms that will use AI to get the same done with flexibility and quicker.
With the 6:00 AM grinding thing, I know it does happen, and it’s useless. I watch people who do not understand what a Pareto chart is. They work on the tiniest bar of the Pareto. They allocate the exact same amount of time, like Forex, as they do the big chunky needle mover, like your customer concentration. Does Bizzed fix that problem, or do you look at the little thing as much as the big thing?
You are having a problem with how you look at this. You think of the AI similarly to the human brain. We get more compute. We can do both at once without losing.
Why would you call it processing power?
Why would I not?
How do you weigh the factors?
That’s a CTO problem.
I know you don’t want to worry about somebody sleeping, but it’s like waiting. It takes human judgment.
There’s some waiting. I think right now, we’re doing some fancy math in the background where we score different things to different intensities. Customer concentration, for example, is a big one. I think if it’s more than 15%, big no. Massive alarms go off, red flags. Are you sure?
The customer concentration creates so much wealth, and it destroys so much wealth simultaneously. One of the biggest mistakes I see entrepreneurs make is that they get into a thing, and they get to a 30% customer concentration. They stop paying attention to that customer because they need to diversify their customer base. Do you see what I’m saying? Customer concentration builds so much wealth, and it has to be mindfully managed. I’ve seen entrepreneurs pivot away from a 30% customer concentration. The customer was like, “I was getting all this service, and you’re out there trying to spearfish new things.”
I think it’s a Paul Graham essay about users you want to or don’t want.
It’s a different situation if you don’t want the business, but they think the business is on autopilot. They’re like, “They’re not going to go away. They need me.” That’s not true. You were servicing them like a gem because you were the most important customer.
I also never lose kindness. I think this goes so far. I used to write handwritten Christmas notes during my university to all my friends, especially a couple of friends, why I had to make that money during the dot-com bubble and so on in Berlin. It goes a long way, those small things that I think we’re underestimating.
Eight Types Of ChatGPT Researchers
We’ve got the eight list. I want to read this out since you’re the AI techie. We’ve got eight types that ChatGPT Deep Researchers came up with of people who would transition into small business ownership.
I’m going to preface this with AI is good to walk through established processes and things that are there. They are where it can make new things and understand new market segments. I’m very curious what it puts out.
You got number one, the former corporate executive. Years in large organizations now seek direct control, bringing structure, professionalism, and management expertise.
That’s the classic story. I used to spend hours away at Wall Street or JP Morgan. Now, I own five vending machines, nail salons, and laundromats, living my best life. That’s a classic story.
I feel like it’s listening to me now because we were talking about this. Number two, the tech industry transplant comes from roles like software engineering or product management, thrives on innovation, or data, and needs to adapt offline realities in a more personal human human-centric environment. Translation, AI is coding away my job.
It’s yes and no. I think these are the people who look at these super old businesses and will go, “We could do all these cool things and fancy techs. Let me fix it,” and then don’t realize what team they’re buying.
That’s the Ben Kelly “You got to take the fax machines away” playbook.
Every one of them has them. People need to understand who they’re managing. You’re going from a computer sommelier environment at a tech taxing to probably blue-collar workers and employees. This is a different management style. You can’t just come in, rip everything out, and expect them to know how tech works. The reason that they still print the NDA, photocopy it, convert it into a PDF, and then send it to you because they don’t know how the other system works, and they’re confused by it. What many of these people miss, especially the more employees you have, is that the harder it is to switch. I think it’s easier to go into a two-man operation and be like, “Here’s your Google Maps business profile. Here’s the social media. Here’s the automated backup.”
I’d rather have no tech than bad tech. We were looking at a business now that’s over $100 million in revenue, and they have no CRM.
I have something mean to say here, which is, but you also asked a lawyer to analyze if you should move something online or not, so I’m not surprised.
I also had to get that to the investment committee.
I know. The only reason that consultancies won’t die is the IC.
Let’s go to number three. We’ve got the military veteran entrepreneur.
I hope that we can help move more of these people in there as well. I’m passionate about being thankful for everybody who’s in the service, whether it’s police, military, or all those things. I think they do amazing work, and I know there are people already doing that, but I hope we can somehow maybe also help there. We’ll see.
We have people who leverage their military background to target those people. All right. We’ve got a financial dealmaker. That’s a private equity bro that didn’t screen for Vice President.
Now, he’s angry, doing it himself, building his own Berkshire Hathaway, and going to show all of them.
I got a serial entrepreneur.
Boring.
Next-generation family successor, boring. Lifestyle-motivated owner.
This is where we disagree because you say that if I don’t grow 7%, I’m dying, which I think is technically right, but there are so many small businesses who are still profitable, who haven’t increased their price in forever. I think it’s fair to say that I have my little corner of this thing, and I want to focus on high-quality work, doing better services, and being integral to my community. Let that do its thing. Let that roll around.
The last one is this skilled practitioner. This is weird. Perfected a craft or trade.
This is classic. The gym is a bad example, but somebody being in a trades business or doing trade school, and then the owner going, “You should take over. You’re 25.” You’re like, “Should I? Is my house going to go up the line? Am I going to have nightmares because I don’t make payroll?” Even if you’re an employee, there are so many things you don’t see. You don’t see how often they’re a day away from making payroll or not taking pay themselves to say you get paid. All those kinds of questions.
Biggest Piece Of Entrepreneurship Advice
We’ve got ten minutes left, and I didn’t even hit any of my interests in entrepreneurship questions I asked every entrepreneur, because we flowed like Rogan.
Sorry, I’m a yapper.
What is the biggest piece of advice you’d give? You’ve always been an entrepreneur.
I think so very much to the dismay of my parents. I didn’t want to be. When I was in boarding school, I was in an environment where kids came to you and calculated how much your clothes were worth and how much their clothes were worth. There were lovely people. I was in this environment. I wanted to make money. I was like, “I’m going to be a consultant or a lawyer.” That all didn’t pan out because I’m too pragmatic, and the brain’s wired differently.
I wrote this blog article now coming back from Jordan, and meeting with some people there. They were caring about designing their schools and systems so that their youth has a chance at this competitive, not only on the global market, but also by themselves.
The best piece of advice is to do things. It’s so hard, especially for me with a German mindset coming from this straight A path of good grades, Oxford, and going into consulting. Learn to do things. Get a Lovable or a v0, play around, and make some online videos. You don’t even need to use your face anymore. You can use AI on some videos, do things, and learn through that. I think there’s so much more feedback loop, and it’s so much quicker in the time that you went and did something than it takes to think about it.
Just do things and learn through them. There is so much more feedback loop in doing that than thinking of doing something. Share on XMove faster, break things. You can do stuff.
Not your bank account. I’m not saying to quit your job right now, and do a toy company that makes plushies with the face of their owner for dogs. I’m saying, make the toy company website on the weekend, promote it, see what comes back, and do it. Stop researching, doing more market research, and listening. Throw it out there in small steps.
I couldn’t agree with you more. If I take it over to all the sales jobs I had in my career, I had this LATAM asset. The head of sales was like, “I’ve got to get the marketing logo right.” Everything, we’d call.
I need to admit I was there as well. We don’t even have an agreed-upon logo yet. If you see it on the stickers as well, I spent so long, and I wasn’t quite happy. We still haven’t settled. We have a creative on our team that I’ve now tasked with picking the logo. We have the best here, which has the small arrows above it, the purple. We have this in quiet here as well. The website is black now, but it used to be purple. It’s going to be fun.
Most Impactful Book
This is my question that I say to everybody. What’s the most impactful book you’ve ever read in your life for your life? You can only give me one.
I think The Top Five Regrets of the Dying by Bronnie Ware. Lovely woman, a lot more like hippie, leftist, and manifestation, but it’s a great account. I think it’s a good reminder. I’ve read it three times by now. I should probably read it again because, as an entrepreneur, you’re constantly thinking, “I want, I want, I want.” It’s a nightmare that this recedes inside, this Angel fell through, or we didn’t get that deal. I can’t believe this person hasn’t responded to me. My flight is delayed. Everything is always like the world’s against you, and everything is death or life.
Sometimes, it’s good to read, and you know the things people regret more than not living their true selves. You’re like, “Should I go into this business deal with this person that I’m not happy with, or are not spending enough time with their family, or not laughing enough?” You read it, and you’re like, “People are dying every day. Everything’s fine.” I think it’s a good reminder. I like data. She’s taking care of however many hundreds of people who are palliative. There’s great data in that as well, the successful people, not the successful people, young, and old.
Get In Touch With Janine
Where can we find you?
You can find me on Twitter at @j_subgang. You can find Bizzed.ai. You can find me on LinkedIn, where there’s only one Subgang in the world. There’s a small street in Germany after our name, close to where my great-great-grandparents grew up. I can never rock anybody or do a bad deal because you can find my house, and you can find where I am. If you put my store name in LinkedIn, that’s exactly one person. You can come say hi if you want to buy a business. Come say hi if you’re lending into it. Come say hi if you like AI and building cool consumer products.
I’m going to send you a SIM for something I’m looking at, and I’m going to put on Twitter what I think.
We don’t do big cap deals. We do small-cap deals, but send them anyway.
What if I do a SIM in a data room again?
Your data rooms are massive, but sure.
I know. We’re like, “In God, we trust. All of us bring data.”
Size does matter.
On that note, super nice to have come out. Very inspirational person.
Thank you for having me.
You’re the one human who talks faster than I.
I think as fast as well. I hope you enjoy the sticker. Happiness is positive cashflow.
Live, laugh, leverage. Thanks for coming out. It’s super nice to meet you face to face, finally.
Important Links
- Janine Subgang on LinkedIn
- Bizzed AI
- Hypernym
- Searchfunder
- Nathan Flesher on LinkedIn
- Pathless Path
- What I’ve Learned from Users
- The Top Five Regrets of the Dying
- @j_subgang on X
About Janine Subgang
Janine Subgang is the founder of Bizzed.ai, a platform that simplifies small business acquisitions with the help of AI. Bizzed has analysed over $2 billion of aggregate business value in the first 6 months of operations, and is set to continue that growth trajectory.
Janine is certain that you do not need an MBA to (successfully) buy a 200k SDE car wash, and keeps building products that enable new groups of people to become business owners. With a background in psychology and frontier tech, Janine enjoys applying technology to create new paradigms and disrupt existing hierarchies.