Carey Smith is the founder of Big Ass Fans that sold in 2017 for 500 Million Dollars. Today we discuss how he built, bootstrapped, and exited the company - where he wrote 50 million dollars of checks as bonuses to his loyal employees!
Contrarian entrepreneur Carey Smith founded Big Ass Fans in 1999 and served as its “Chief Big Ass” for 18 years. While other companies made and lost their fortunes, Carey’s business practices led to sustained, rapid growth averaging 30% annually. Inc. magazine ranked Big Ass Fans among America’s fastest-growing private companies for 11 years straight — a feat achieved by only 34 others.
Carey has earned national recognition for his common-sense business philosophies, such as selling direct, investing in silver-platter customer service and paying employees more than 30% above the U.S. average. Inc. named him “Economy Hero” in 2011 for refusing to lay off employees during the Great Recession.
By 2017, Carey had grown Big Ass Fans from six employees to more than a thousand and generated nearly $300 million in annual sales. He did so without investors, a rarity in a society that glamorizes venture capital and quick exits. That year, he sold the company for $500 million with $50 million going right into employees’ pockets.
Following the sale, Carey founded Unorthodox Ventures. He assembled a staff experienced in everything from engineering and supply chain to marketing and customer service with the goal of providing founders far more than money.
Listening To A Podcast Won't Help You Hit "Financial Freedom".
If you want the community, support, accountability, mentorship, and step by step playbook for your freedom in 12 months or less, apply below!
Join Us: Apply For The Action Academy Community
For Frameworks, Freedom Tips, and Millionaire Financial Breakdowns:
Join Our Weekly Newsletter
To Watch These Interviews In Video Format:
Subscribe To Our Youtube Channel
Are You Stuck In Your W2 Job, Relationships, And Life?
Good - Let's Change That:
Carrie Smith, welcome. How are you?carey:
Hey Brian. How are you doing?brian:
I'm doing awesome, man. I have to say, I interview a bunch of guys on this show high powered guys that have done big things, built bi businesses, but man, you've gone about it like you are just a certified badass man. I'll go ahead and give that to you because your story and how you do things is even more interesting to me than the things that you actually did because you just stick to your gun. Nocarey:
that's interesting. No. And I'm not a badass. I was a big ass and it was a cheap, big ass. So there's a difference.brian:
There's a huge difference, man. Key distinction. So I wanna start with a quote that's actually on your LinkedIn, which I'm sure you check all the time. But I found this really interesting and I wanted to start the show with what you think that you did differently to be part of this statistic. And that statistic is, every year, 500,000 plus companies start. , only 200 of those 500,000 ever hit a hundred million dollars plus in revenue. You went zero to 300 million plus in 18 years with big ass fans. What do you think separated you guys to begin that made you one of that 200?carey:
I think that there's a couple of things. One of 'em I knew the market into which I was selling, which is a big deal. I had, prior to starting the fan company I had another company that that where I sold to the same group typically, which was maintenance directors and maintenance supervisors, facilities, guys. . And so I understood what their problems were and I understood where they fit within the organization. And I also understood how much money they had. And all of these things are important. If you're starting a company you should know these things. I it strikes me odd that I read about people or suggestions, follow your dreams and do this sort of thing. That's just that if you wanna waste some time, that's a good way to waste it. You should know before you start, you should treat it like it's, you don't start a race a foot race without knowing how far you're gonna run or where you're running to, where the finish line is. And the same thing is true in starting a business. And you have to know that. As a matter of fact, what we do now is we do investments. We're basically a VC firm. But I think that one of the most important things are the main markers that we're looking for people that not so much, oh my God, this is my life's dream to do this, but that I understand where I'm going. I understand how large the market is. I understand the market channels, the sales channels. I know my customer, if you know your customer, if you know those things, you're halfway there. You really are.brian:
I like, there's a quote that you said that I really like, and it applies in business and I don't feel like nearly enough people do this, where it says, start with the problem, build the solution. So what was the problem? Yeah. So what was the problem that you were seeing? , when you were looking out at the market you were like, whoa, okay. What's going on here and how can I fix this?carey:
the problem is or was, and I guess it still is. I, I can't say that I'm that close to the market anymore, but Is that in the us especially in the south a lot of people work in facilities or did work in facilities. that were not conditioned, especially in the summer. And incredibly difficult working conditions. And the maintenance facility staffs really had very few ways to to handle the problem. And they could buy a lot of little fans, obviously they could air condition, but the cost of installing a huge, you're talking about big places. These places typically from a hundred thousand to a million square. Square feet. Square feet, yeah. Yeah. So it very large it's large and to install an air conditioning system be tens of millions of dollars and then to. very expensive. And so I knew that was a problem and I knew that I'd studied quite a bit as related to human physiology and productivity and so on over the years. And I knew that what would work in the situation was going to be air movement because the sort of cooling we were involved with prior involved indirect cooling and not nearly as effective, very difficult. But this, people like fans, they think they understand fans and they do, everybody understands how it works and much easier sell. And that's all it was. I knew what the problem was and I was lucky at the time. And this is pre. I wouldn't say it's pre-internet, but it was it was where you still found, at least with trade publications, they were printed. And I wrote an awful lot for these various publications over the years. And I also read them, God forbid I hate to admit to that, but sometimes you have to, you just publicly man. Yeah, , you could find interesting things and and and so I did, I, in reading one of the publications that I was writing for a company, a little machine shop ran an ad talking about this big fan and I thought, holy cow, that's it. That's exactly what I need. And so I called them up and they had sold, I think they'd been doing it for a couple of years, and they'd sold 17 of 'em. And actually they hadn't actually sold 17 of 'em because one of the first things they asked me to do when I said, look, I know how to do this. I'll market sell this globally and handle those problems for you. And the first problem they said was, can, do you think you can collect from our customers the, these 17 people And it's I'm gonna try. I didn't honestly, I couldn't do that. But but the point there is I knew it when I saw it and and we made a deal and we wound up buying the intellectual property of the, of that company. And then we started manufacturing fans. And this was like between 99, 19 99. . And about 2002, 2003.brian:
And I love how you started this company out. We won't go too deep into the details and the specifics of the actual technology behind it, which I actually believe it or not, researched. So you actually started as H V L S fans, so high volume, low speed, and then, so you were solving two problems. You were solving the problem for the consumer on the floor cuz they were hot as hell and sweaty and you were also solving an economic problem for the company. So then it was just someone two punch. And the reason I know this was, believe it or not, Carrie, my profession before I was just a schmuck talking on a podcast was I sold uniforms for a living. Oh, guess where, I guess where I was 24 7. I was in the same factories. I was in the same manufacturing plants so I was very familiar with your problem and your solution, so that's why it's pretty cool full circle today to be over here. I want to talk about the transition from H V L S fans that you're selling to big ass fans because we're talking about the tam, the total addressable market here and the people that you're selling to. The branding played perfectly into that personality type. Talk about , your positioning from the technical term to the brand name and how that impacted your business.carey:
I think that it was it was interesting and the, we've got a lot of pushback when we changed the name from H V L S to big Ass. And it was funny because I thought that was funny that we got pushback. And you're exactly right. The guys and the gals, there were more guys than gals, in the, in those positions, but they, it was like our sense of humors. They aligned. Yeah. And so then we could get away with an awful lot of stuff and we got a lot of pushback. But these people loved it. Our customers loved it. Our wannabe customers loved it. And and they would write us letters all the time. You know about, I don't know where these people get off. I go to church every Sunday and , Mary rode to Bethlehem on a, the back of an ass. And what the hell is this? And it was great. It was super duper . And then it allowed us to do, I made it very easy for us really to do the hats. We had big ass hats. We had these little donkeys that toys that we used to have fights with, and we used to, yeah, of course, video that and people, I don't know. It was, we had a culture that I think people working in other companies aspired to. People honestly, I think wanted, they wanted to work for us. And at some point, at some level, and we even had architects tell us, years later that, I was so anxious. I knew I was gonna be able to specify a big ass fan sometime, and here it is and I'm able to put it on my title block that, this is a big ass fan and so forth and so on. It was a we built a culture that promoted I don't know, inclusion, and in, in a, the way we looked at it, the way I look at these things, we did everything. , we did our manufacturing all in the States. , and we , the people we used as suppliers were very close to us. In terms of geographically close. And that made a difference because it meant that if we had a problem with one thing or another, and when you're manufacturing is, it's not software and you do have problems and you do have to go see your suppliers and occasionally whack 'em over the head. But, and it helps if they're very close to you, if you're, if we were, making the product in China, it's a completely outta control. But we were very focused on quality. Because I always felt that the customer was, the customer should be you should do for the customer as you would have somebody do for you. And in order to do that and actually execute on that, you have to. Treat your employees or the people that are working with you the same way, because you can't, all of us have seen situations where, you know the sales clerk or the stocking clerk or whatever, they feel like, I'm, they're put upon, they're not being paid properly. They, maybe they're even working in a, an air conditioned or un fanned building. But and then the company for which they work imagines that they're providing top quality service to their customers. And that's just bullshit. That doesn't happen. And if you wanna make sure that the customers treated properly, you have to put the employee on the same pedestal. They have to be pedestal the same. And it, as a matter of fact the suppliers do too, because you get a lot of ideas from suppliers, but you treat everybody the way you want to be treated. This is like kindergarten. It's nothing. It's just like the simplest stuff in the world. But nobody does that. And when you do that, yeah when you do that and you have fun and people, since you're having fun and I mean we had we had a lot of things. But that's what we did. And so we had this culture that we exported in essence and it was very popular.brian:
And I love that you say that because I don't know if this was still still the status quo, but I know back in 2014, you were paying your employees 30% above the minimum. And I knew that goes back from the article. There's two specific stories about where your mom got a ham as a freaking bonus for working all year. And then she used to come home and be like, Carrie I'm getting a ham. I'm getting a $5 ham for all this extra. and you had a conversation with a, with one of your bosses or some executives when you were working and selling insurance back in your twenties that formulated this whole idea of culture. You wanna share where that conversation was?carey:
It was it was interesting because it was reinsurance and we had a company meeting and there were a number of us that were relatively young, and we were there and we thought, we were proud as w as anybody would be. And this fellow who is an, as an officer of the company just offhandedly says, to a group of us I could pay you guys twice what I'm paying you. And nobody would ever even notice that. and I thought, you son of a bitch. . Seriously, I thought so much of this guy. I want to tell you how much of this guy I thought. And I didn't do, what can you do? Cuz I was just a fluky. But when he kicked the bucket and he did and it was actually printed in the New York Times I thought, there you go. Finally, that asshole is outta here. But that was just, that just indicated to me that I had no real value nor any of the rest of us have any real value. And that is not the way you get the best outta people. And I think that when you have the opportunity, I think one of the one. Things about running a business, which I don't know the people talk about all the time, but it's not to make the money the opportunity you get to change other people's lives. And I don't mean this in a touchy-feely way. They have to work. If they don't work, they get canned. That's, yeah, that's life. But I'm talking about pulling together a good team and making sure that you're paying them more than they can be paid elsewhere. And your product is made by, their or by their neighbors. In terms of the supplies, I mean that you can do what the hell you want to do. If you make a quality product, and I think this is true of anything whether it's fans or ice cream or gelato, it doesn't matter what it is. If you make a quality product, and the cost, you shouldn't try to continually be reducing the cost so that you can put more money at the hopper. You have to make money, but you should make the best product that can be made for whatever amount of money that is, that it costs, and and you should charge for it because you should make money as well, because we charged. Just to give you a rough idea how this worked. When we started the company, I think the average price, we only had one fan one model of fan, but was about 5,000 bucks. Actually was a little bit lower than 5,000 bucks because again, we knew who we were selling to. And typically the maintenance staff facility has, they can write $5,000 check. Without, it's not a capital expense. And so it's very easy to handle and we knew that. And theybrian:
don't have to go through the process with procurement and everything.carey:
Exactly right. Exactly right. Bingo. And and that's where we started. And we basically now con we were constantly improving the product. product at the end when I sold the company in terms of air movement, was somewhere on the order of three or four times as efficient and effective as the first product. But we raised the price the entire time. And when we started, we had a hundred percent market share, obviously, because we were the only people in the market. When we sold the company to almost 20 years later we had somewhere around an 85. Percent market share, which is interesting because our fans cost. If you went to buy one you by that time we had lots of, we had lots of competitors, lots of Chinese sure. Competitors as well that you were, you could buy one of their fans, gosh, for 30% of what ours cost. And so we controlled the market with the most expensive offering on the market. And the only reason we were able to do that was well, because of the quality and because of the culture. And because, I you're building this piece and it's a very rewarding thing to have done. And I know you probably read that when we sold the company. Wrote checks to people that worked with me, the totalling about 50 million, which was a great thing for me cuz I thought that was totally cool. And it is cool when people come up to you and say, oh my God, Carrie, you changed my life. That's a cool feeling. That, and cuz we had I mean we had over a thousand people working at the company. So it was a big deal. So it was fun. And but again, I think that what was more important than the money was the the feeling that, the, you were doing something interesting and important. Yeah. It's, and again, and you could say nasty things to people like, I was chief big ass like this is this . We were very cheeky and we used it because it, it's what made it fun. That's one of the reasons people liked to work there. . brian: Exactly. It was like the science of achievement and the art of fulfillment. Right? Where you're like, okay, cool, we're going to take this unsexy product and we're gonna, we're gonna just do purely simple business practices. We're gonna just do the right way. We're gonna get profitable here, but then we're gonna be fulfilled because I'm gonna build this culture how I would enjoy working here. so Yep. Two things I wanna pull out of that, first thing is I'm kind of documenting your process here of how your brain works and what I'm pulling out of it is what you do differently than a lot of the entrepreneurs that are the 498,000 that don't make the a hundred million dollars in revenue. You started with the problem, then you knew the problem, like the back of your hand. And then you know what the total addressable market is. You knew your tam like the back of your hand. And then you knew their buying process, which again, most founders and most companies don't know shit about their actual customer's buying process. And then you built the quality product. And then lastly, you spoke in the freaking customer's language. Another thing that I want to hit on that maybe you can add some more color to is the pricing strategy. Because there's two pricing models. You can either be the most expensive, or you can do a road to the bottom and be the lowest cost provider. So I like that you stuck to your guns with that man. Were there any other difficulties associated with that kind of pricing model or is that something that just produced so much more revenue that people kept going? The thing about it, when you're building something like that, the product and the company it costs money. And you can either, I don't know I it is two different, it's two totally different ways of looking at business. didn't look at business like, oh my God, this is the way I'm gonna make a lot of money. I really did not think about that. know Sure. And I don't know if people buy that or not, but it's a fact. And and so I was always conscious that in driving around the country and traveling the country that I was typically very close to one of our products physically close. And that if I had actually stopped in and talked to somebody, that I didn't want to be embarrassed. I didn't want somebody, I didn't, I personally didn't want to be embarrassed. I wanted to make sure that all of the people that had purchased, the fans got more than what they anticipated. And so I think that's that's the nub of it. I didn't think, you laid this out, you layered this. I never thought about it like that. I really didn't. , but that's, you're right. But I ne I, it's not like I said, okay, now what's next? What's next? I should have in all probability, that's a smarter way of doing it, but that's not the way I did You just did organically. Yeah, because, and again, we didn't, for example I think this is interesting. We never had a price list. If you wanted to buy a fan because there are other fans you could buy, there are other ways to solve the problem. We wanted to talk to you, and this is something I think that's huge. This is different now than it was then because we spent a lot of time on the telephone and we to talk to people and figure out, okay, tell me what you're trying to do, where you're trying to do it. Because we weren't, we were in the business of selling something they would never buy again, and we made a big deal out of that. This is gonna last forever. And and in order to do that, we had to understand the specific problem within their facility. And in order to do that, you have to talk to 'em today. It's very interesting to me that a lot of, especially younger entrepreneurs are very reluctant to talk to their customers. And that maybe that's just me noticing that. I don't know. I don't know if you notice it, but No, you're spot on. Yeah, it's amazing. It's so stupid. It's so stupid because you're missing that, that's business. That is business. Understanding what your customer's problems are and there's no, yeah, there's not a way to do it. You can't do it via email. You can't, it is so hard to do and then, ah, you just can't do it. It's hard. And I would suggest that a lot of people that they focus on that a little bit more because honestly it's, it helps so much. And because you need to know, for example you, nobody ever comes out of the box with the perfect anything. Whatever it is, a piece of software or a fan or anything else. You need to get constant feedback. Tell me what's wrong with it. Tell me what I'm doing wrong. Tell me how I can do it better. And we used to have a A, a group within the company whose job was only to call customers, only to call customers after they had installed the product. And and to tell them, tell us about the experience and don't tell us all the good stuff cuz we already know all the good stuff that we wanna know, the bad stuff. Wow. Did the guys that, that that installed the fan, did they, they were playing hacky sack in the parking lot and they left Coke cans. I don't care what it was, and you tell me every single thing and it was very interesting because you can't learn unless somebody's telling you, you made a mistake. And I think sometimes today with some of the people we talked to the younger au entrepreneurs that I, they don't want to, they want it to be like, everybody's, they don't want their feelings hurt. Yeah. Fuck. That's what this is about. Is, how do you ever improve if somebody doesn't tell you what you're doing wrong? It's ridiculous. That's ridiculous. Yeah, and I think that causes I tell you what, it causes it lengthens the time to success and it also reduces the probability that you're going to be one of those companies, those 400 companies or 200 companies that that are successful to get to over a hundred million dollars, a hundred million is a big number. And which is something else I didn't realize when we were doing this, is I'm not I'm not a finance guy and I don't think that way. And to your benefit, I think I think I think. I think, I dunno. I don't know. I think that's the way it's sometimes . Yeah, that's right.brian:
Oh man. , I really wanna punctuate this , in the software world, it's the mvp, right? It's the minimum viable product. And that applies with everything is just putting something out there, just being like, I know I'm gonna f this up and this isn't gonna be the best that it's gonna be, but I'm gonna put it out to the market and let the market tell me what it wants instead of me forcing something down the market's throat and saying, this is what you need. What's some pieces of advice that you can give to an entrepreneur right now that's listening to you and they say, damn, Carrie, you're a hundred percent right. How I'm running my business is the wrong way right now. I've got a service business, I've got a manufacturing business. I'm creating this widget. The freaking Joe down the street just undercut my prices by 10%, so I had to lower my prices to compete with them. How the hell do I change my confidence and change my business to be able to be the most expensive product in the market and be proud of it? What's some advice that you can give to those people because it's more of a confidence thing than an actual businesscarey:
problem. No, and you're you're right. Certainly to a degree. I think that when you're doing it, no matter what you're doing, you have to be the best. You have to be. That's, that should be your focus. And in order to be the best. , you have to talk to your customers. And and you have to find out what is it, what are you looking for? Why, if I have a product that's in the market currently, tell me what's wrong with it, tell me why it's not a product that you're buying. I want to know. And you have to be, and most people are not gonna tell you that right off the bat. You're gonna have to, you're gonna have to pound on it to get the answers. But I think you have to do that. And I think that ultimately you have to believe that you're providing, and again, your customers give you the feedback that you're providing a product that is worth what you're asking for. It. There's one thing we always say on the, in the business I am in now, is that when somebody walks in the door, the first thing you say to them is, raise your. Wow. That's what we do. And because if you're not charging enough, we just, I just saw something yesterday morning, very interesting product. And had a lot of potential. Has a lot of potential. And they're like, it costs 50 bucks to make and they wanna sell it for 70. And it's that won't last long, will it? How the hell can you actually do something like that? It's impossible. It's impossible. Yeah. And so you're not you're not only not gonna take care of the people that are working with you because you're not gonna be able to pay 'em anything. You're not gonna be able to take care of the customer. , you can't support any sort of service model based on that. That's ridiculous. And, but I think that if in these guys and they're coming in that one of the things we have to tell 'em is, look seriously if you're not providing any more value than that to the product, then you shouldn't be doing the product. What the hell? And we can see by looking at the product and by talking to potential customers, and we have that, yes, no, we love it. I want to use it. This is a medical device. And I'm a surgeon. I want to use that. That's exactly what I would put in here. And these guys are like, you know what the hell? They're not thinking about it, but they're not thinking like business people. But you have to do that. You have to do that. You have to be comfortable. You have to have money for marketing. You have to have money. For r and d or iterations of your product, you have to, it's a, it's, you owe it to yourself. And if you're paying attention if what's driving you is what your competitor's doing then you're fucked. It's not something you should be worried about. It's, you should be thinking, okay, that guy's a dummy because r he's making something, or she's making something that's not as high quality. I know exactly what the problems with this are and you're able to make that case. You never want to badmouth the competitor. That's not a good idea. But understanding where the competitor is and why they're charging what they're charging, and it doesn't mean, I made a big deal out of getting every single sale, which I hate to, I'm not sure I should cop to that, but I did it. Because we were the biggest. We were the biggest. And it was like, we can screw anybody. I shouldn't say things like that, that we can't take that, that we can be as, as competitive as we need to be in order to do what we want to do. Because you set the market. Yeah, we set the market, we knew what we wanted and we got it. But by the same token we came into situations where there was no way you were ever gonna make money on doing business like that with, especially with big customers. And I think one of the problems, and, if you worked with Cintas big customer and when we dealt with people like that, you had to be very strong. This is the price. , that's it. And then selling the advantages. Selling the benefits, and the fact that you're gonna take care of it. We never had, if somebody had a problem, we took care of it. We took it back. You have to do, you have to be proud of what you're doing. And if you're proud of what you're doing, you should charge for it. And it doesn't mean it's gonna work every time, but over the long haul, it willbrian:
work. And what you did was you made it more than a commodity. And Exactly. So if anybody's listening to this podcast right now and you're saying, oh, I sell a widget. I sell this, I sell that. I can't make it more than a commodity. It's a transactional, it's a transactional business Bullshit. Carrie sold fans like you sold fans, and you made it a culture. You made it like a bigger idea.carey:
It's. it. There are some people, and I would suggest and I know what you're saying and you're right but if you're selling a widget, you should ask yourself exactly why it is that you're selling a widget. If you're starting a business, cuz there's lots of people I think, that start businesses and go the guy down the street selling these, if I can get, they're doing 10 million annually, if I can just get 10% of their business, I can do a million, they'll be happy. That to me is not, you should try to avoid that. Yeah. It is, I hate to say it's lazy, but it's not rising to the occasion. That's a fact. And when you're looking for things to get into it, if you said, oh, here I am out of school or out of this first job or second job, I want to do something. You should really put some effort into thinking about it and getting to know the market so that you'll know what you're doing. I, we invested in a company that's doing very well that, and I was very impressed with the founders because they did it. They said we had, they had another company that they'd sold, and so they'd made money. They had a, I don't know, a couple, 10, 30 million bucks. I don't know how much. Sure. And they, but, and they wanted, and they were young and they wanted to start another business and they said now what is it we want to do? And what was foremost in their minds was, okay, what can we do to make money? What can we do? How can we build a product? that's going to fill this niche. And they found the niche and they filled the niche and they'd done exceptionally well. Now, that's not the way I did it, but I can tell you I was in awe of them because they were thinking about this. That was what they were concerned about, and they solved that problem. And but they had to think about it. You can't just you can willy-nilly it, but it's a lot harder because I always tell people it's great, yeah. I was able to do all this stuff, but Jimy cricket, it took forever, and I think if you do it in a more planned way, you can do it in half the time, maybe less than half the time. And that's what you want to do. Because the money is, it's your life. , for heaven's sakes. . brian: Yeah. A couple of the key takeaways I've got so far is being the best product and the most expensive. Being the most expensive in your market. A tactic that you said that you glossed over, but I really agree with is everyone is leaning towards just having their sales page and they just throw it out on online and people can just click and buy and there's no interaction. So you didn't have any pricing. They had to call in and actually have a conversation with a rep of yours to be able to do it. And then you also had people call and say, Hey, what did we do wrong? You had an entire department dedicated to seeing what, where you messed up and what you did wrong. And I love that because nobody's doing that because they don't wanna get their feelings hurt. Yeah. I, and I wanna make sure that last point that was something we focused on and that was harder than it sounds because you've got to, because people. An awful lot of the time don't really, oh, it was fine. I like it. Of course. It was great. They expect that's what you want to hear and you really have to dig, have to push into it.brian:
Yeah. Can you give some tactics on that? Can you give some ways that you guys were able to dig into the rot?carey:
You have to, the people that know the most about this are gonna be the people that are, in terms of the management are the lowest. They're the guys that install the damn thing. They're the guys that work under it. They're not, it's interesting to know what the supervisor says or the director says, or the manager says, but it's very interesting to know what the guys that installed it said, and I'll tell you the sort of things that we ran into, which were interesting. Is in the installation, because this is a big. . It's a couple hundred pounds. It's heavy. Yeah. And it's, it wasn't incredibly difficult to install, buddy. You had to pay attention. And the hardware that we provided to install it had to be installed properly. And the, you had to use what we sent you. There were a lot of nuts and bolts. They were grade eight, which is the highest grade, the a bolt, because this is a, it's a big item. It's a big ass item. . Yeah, no, it is. And we found that some people, they get the fan, they take it apart the box, oh, this is cool and this, that, and the other. And they'd lose the bolts, they'd lose the instructions. They'd lose this, they'd lose that. And we recognized that we had to make all of these things obvious. We had to make all of these things so that absolutely. You could not lose them now. , I'll say if they did lose them, we didn't say tough shit. We sent 'em to you. You paid this farm, that's what you got. We said, yes, sir. Because we always, it was funny because the production lines were set so that if they didn't if it didn't weigh what it should weigh, and we knew what everybody, everything weighed that it wouldn't, you couldn't push it off the line. It wouldn't go anyplace. It stopped. Sure. But people would call us up and say, oh, you didn't include the bolts, or you didn't include this, or the safety harness, or that, and it's I know that's not true because he couldn't have even gotten out the bore, but fine. Oh my God, what a terrible thing. We'll get those to you. Like right now, we apologize and we used to send, m and ms to people that we screwed up. like that. We didn't screw up, but you the, because the last thing you wanted 'em to do the last thing you want 'em to do is to go to Home Depot and start buying bolts. There's a big difference between a graded bolt and a, and just what you find at Home Depot. I It's crazy. But that we found that we needed, and we also found that after talking to these people, that over a long period of time that we had instructions and the instructions were in English, and we could put instructions in Spanish too. But we realized that some of these people they don't read either. Our Spanish. And so it, it became very pictorial, everything that we did. And wow. And we found, the other things we found that were interesting was that your salespeople are always anxious to sell whatever you're making. And sometimes they got a little overexcited and we had situations where we sold products that shouldn't have been sold, should not have been sold. The cus the customer understood what they thought they were buying, but not really. And we knew it was wrong. So we, when we came to situations like that, we took 'em back. We gave 'em their money back because, they made a mistake. We made a mistake. And that's the way we did it. We had one ridiculous situation where one of those salespeople install sold a fan to be installed. in a old I guess it was Cathedral in Brooklyn, and there was no way they could get a lift inside. They couldn't do all these things. And they built scaffolding. And this was union shop, and they built scaffolding to, to get it up there. They put it up. The priest calls me after this is all done. He says, Hey, Carrie, this is not good. This isn't what we wanted. And and and they were raising money from their parishioners to do this. And so I said, okay fine. We'll, let's just take it down, so don't pay us. We'll take it down. , what I didn't realize initially, I. Shortly thereafter was that they had to put up the scaffolding that the scaffolding was installed by union number one. And it was outrageous. So this fan is I don't know, 8,000 bucks. I wound up paying for the installation of the scaffolding the first time to put it up, installation of the scaffolding to take it down. Anyway, it cost the whole thing 65,000 bucks. And I said fine. I said, fine. And when it was all done, I said, is there anything, cuz this has been, they had this in the New York Times. All of the parishioners had signed, the fab was terrible. And. . I said, is there anything I can do for you? Because this just seems like it's been a pain and it's our fault. And he said I need to replace some of my windows, some of my stained glass windows. And I said, fine. I said, how much? And he said, 10,000 bucks. And I said, fine. And so this job, which we made nothing on, I we didn't get paid for at all, cost me 75,000 bucks. But the Advantage one nobody said anything nasty about us. Two, I was able to tell everybody in the company, and this I think was important, that when we make a mistake, goddammit, we take care of it. , I don't care how much it costs, I really don't care. It doesn't matter. We take care of it. We cause problems. And again, that was part of the culture. Of the company was, if you make a mistake, you pay for it. And I could tell you that, as you're working for me and I say, Hey Brian, when you fuck up, make sure you take care of it. Maybe you'd remember it, maybe not. But if you do it yourself, if you do it and you say, this is what I did and I'm proud of it and you should be too. That's, I think that's how you convince people that are working with you that well, he's serious. He's dead serious about this. Cause I always told people that, we have to make money to stay in business. We're not necessarily in business just to make money. And I don't care if we lose money on an individual transaction. And we did. Occasionally you do that, but you do it for a good purpose. And. and it makes sense. So anyway, yeah. The, again, the audio, it's culture.brian:
Yeah. The audio matched the video. It's like leading from the front. And there's a book the author is gonna come on this show, but it, there's a book called The Mom Test. And the mom test is basically the same thing that you're talking about, where it's like you're asking for feedback, but if you ask your mom, you go to your mom with a business idea and you say, Hey mom, I've got the best business idea ever. Can you tell me, oh, honey, that's the best thing I've ever heard. It's bullshit. She's lying to you. So instead you're saying, Hey mom, do you have this problem? Hey, have you've done anything to solve this problem in the past? What did you spend on it? And so it's a really cool progression. But for the sake of time I wanna be conscious of your time here too. I wanna talk about the e I wanna talk about the exit, because that's what started this show. And that's what even got me interested in interviewing you in the first place is you said okay, I wanna sell for 500 million. And they go, okay, we'll give you 4 99. You said, no, fuck you. 500 million. And you just you pulled it outta thin air Walk me through this story.carey:
Yeah I'll tell you how it really started. It. It's, and this, I'm not suggesting that people do it this way because this, it's the thing about it is I did not give it enough thought. I should have thought about the whole thing, report . But what happened was I came out of a meeting and I was just, for whatever reason, cuz sometimes you come outta meetings and you're not in the best of moods fair. And I said, fuck this thing, if somebody would give me $400 million for this, I'd be happy to walk away from it. And I had a, my COO who was, who hadn't been with me that long, he said, really, you would do that for 400 million bucks? And I said, yeah, I'm just tired of it. . And so then he says, oh okay let me see if I can do anything. I was like and then I turn around leave the room of a conference room, I, and walk back in and I say, no, make that 500 million. Because I didn't think, and this is how, this is stupid. This is the stupid part. I thought my 400 oh, make it 500. Why not? Just do it. And that's how that got going. And it really was not a serious thing in my mind. And but the COO was somebody that had worked with general Electric from his. . . And for him it was like, oh, okay, I know people that might be interested in this shopping around. And it was very under, it wasn't something we talked about or even thought about. Actually, I mentioned it to my wife one time and she's oh, come on. Will you cut it out? This is ridiculous. But anyway, it went through the process and these processes take some time. It took about a year, yeah. And and so when you get into it I, and I was like, okay, fine. That's great. That seems like a reasonable amount of money. It seemed like a huge amount of money to me at the time. And, but there's all sorts of work that goes on with companies that are interested in buying you and diligence and on. . And so it got down to the end and I'm talking about that was, let's say, that was January. I'm not sure exactly when it was, but it was early in the year between January and April anyway, whatever. , and we get around to it in the final quarter of the year. And that's serious now. And and so these guys are like, we've been looking at this, that and the other, and we think maybe a fairer price for this is, four 50 or four 60. And I told him, Hey, I've got an idea. Fuck you. If you wanna buy the company cost 500 million bucks. And if you don't, I don't care. I'll just keep doing this. It's not gonna kill me. I'm ambivalent, which is the important part of this is not the way. Not the lackadaisical way I approached this because I'm not sure that was good, but was that I was absolutely ambivalent. I could have cared less position of power. There's nothing. No, you're right. There's nothing scarier to somebody sitting across the table than to be told, I just don't give a shit. We're gonna do it this way. Or I'm wa I'm outta here. I don't care. I'm, and that's the way it, that's the way it turned out. And which was amusing because, and I didn't even realize this at the time, that that there was actually a term for this, which is re-trading and that I should have expected this. But I was so clueless, honestly. I didn't, and it just pissed me off. It really did. It made me very. . We all came around and they agreed and that's what they did, and that's what we did.brian:
And they sold for 500 million 2017. Yeah.carey:
Which, heck yeah, brother, again I think the important thing about that to me was one, I got to write the $50 million in checks, which is 50 million bucks, which sounds stupid, ridiculous, but it's 50 million bucks. That was the best 50 million bucks I ever spent. And because I look forward to that, it was a big deal to me to be able to promise people because they didn't necessarily, I don't know that they believed that we were, that they were ever gonna make any money. I really don't. We paid a lot of bonuses and , we did all sorts of silly things at the end of the year and but but I thought that's enough. They should be satisfied with that. And because some of 'em, I've forgotten how many of them we were made multimillionaires, and then we had a number that were just millionaires and then just a lot of people. But it wasn't just people in the C-suite, it was guys driving fork trucks too. But they had done a better, they had done a very good job and they were people you could depend on. And they've been with us through thick and thin and it was great to be able to do that for 'em. It was a great feeling. Man, I, but that's what that was about. Now, that's, if I was to, if I was to tell you the way to do it, I would not tell you It wouldn't be that way. . No I would suggest that you spend a little bit more time in the front end and understand what your market was. I went against everything that I. That I held dear in terms of business strategy and thinking when I did that. Cuz it was just like, what the fuck? This is what it is. And it seemed like a big number and that's why I did it, but then I wasn't gonna back off ofbrian:
it. I don't know how back to back you are if it are you able to go another like seven, 10 minutes on this, on the exit or do you need to cut it? Course. Okay, cool. Because this is super interesting for me because I've got a baby business right now that I'm building. I'm packaging this whole Action Academy thing under an umbrella as like a media company to be able to exit it later. I'm doing the whole build to sell thing , now that you've been through the exit, so first off, I've got a stupid question that's just interesting for me, and then I want to talk about, what did you expect, what parts of the exit went, how you expected, what parts went differently? But first when you sell for 500 million. Where does that money go? Do you just get like a wire to your bank account? ? What does that look like? No.carey:
No, you don't. There's a lot of really silly things that you don't know or you don't have when this happens. That's interesting you asked that because that was one of the first questions. It's oh my god. The bank in town won't take it. They won't take it. Yeah.brian:
It's much, this bank is only like 250,000 F D I C insured. So do you split it up and across banks orcarey:
no. There are banks that handle this sort of thing. And what we did was we had preemptive, preemptively gone to actually it was my brother-in-law that worked in investments and asked him, what the heck do we do? How do you do this? Because I don't know. And he put us onto money. a family office that he knew and so they handled it. But basically it, it goes into a bank and I honestly, I've forgotten what it's called, but it's, the bank is bank of New York Mellon, bank of New, something like that. And they basically handle huge or large sums of money. . And you need to do that because no matter what you do after that, you have to have someplace where the, you're drawing on the money. You have to draw the money from someplace. And Yeah, if you don't, I don't know what the hell you do with it. So that was a good thing. I'll tell you the other thing that will surprise you. What state are you located in? What state? Oh.brian:
Oh, brother. I'm in Austin, Texas. That's why I just moved here. Oh, good. You're lucky. That's why I saw you. Yeah, that's what I was about to say. If you want to go grab a beer, you got a guy right here with two thumbs and enjoys drinking beer. . carey: No, I was gonna say We're right here in south Austin south of 71. I'll also, I'll show up . No, that's fine. That would be great. We have we called them bourbon meetings. And so being from Kentucky are a lot of the guys in gals here from Kentucky. We have bourbon. So I lived in Louis always bourbon. What's that? I lived in Louisville before and then Oh, really? Okay. Yeah. . carey: Yeah. So the other thing is the taxes. The taxes. Now in, in Texas you're good because you don't have to worry about the state taxes. I don't know the way. , a media company is handled because every single one of the states is going to want a piece of you. Even though you think how in the world, I never, I've never even stepped foot in Idaho. But Idaho will want a piece of you. I'm a corporate in Wyoming. Oh, you are? Okay. Yeah, it doesn't matter. It doesn't matter. We were in Kentucky and we were California taxes. What? They chase you forever. Oh yeah. Oh yeah. Cuz we sold in California, we sold all of, so it matters about the physical pla Oh. So Oh shit. So it actually matters wherever you transact. Yeah. Then that's, andcarey:
so what I would, yes. And so my question, and I don't know, I'm not a tax guy, but if you're broadcasting, I don't know what that means. In terms of did you touch the state? Did somebody in. California, listen to what you're doing. I have no idea. But I would look into that. I'd look into that now versus later because the taxes are ridiculous. Totally ridiculous. Because the capital gains, of course, is 20%, and if you're lucky, that won't change. And then all of the state taxes, we paid, I think, ooh, we paid like 17 million to Kentucky. There, it's a lot. And it takes, you'll be paying taxes to these states for a number of years. It's very heavy. Dobrian:
they keep you as I know you, you sold to private equity, right? Yes. Did they keep you, did they keep you on as CEO e o for another year to three with a vesting schedule, or was it just a buyout?carey:
It was just a buyout. I, in, in, for whatever reason, or I must have indicated to them that I had no interest in working for them, which is true. But it was just flat out andbrian:
it was, it Would you recommend that or, because like from what I've heard from other founders that have sold they said it's effing miserable to sit there. I know. And yeah. , oh,carey:
yeah. Smiling. I didn't wanna do that. I didn't wanna do that. So I would suggest normally the, they make you do that. If they're, it's not as strong a deal. Obviously, because you're having to work through it and sometimes you have, do you have to hit certain numbers and so forth? And I, that, that wasn't part of my deal and I wouldn't have done it. And I don't need to. The reason you do what you do as an entrepreneur, so you don't have to listen to. somebody else. She didn't tell you what to do. Yeah. Yeah, don't need that.brian:
And feel free to shut me down whenever you want for your schedule. But so when you exit and you finish up, did you do anything? Was there any like trip or any purchase or you're like, okay, cool, I'm gonna make this one now because I, besides obviously writing 50 million of checks to your employees?carey:
The only thing, we, we started this business. We moved to Austin and we moved to Austin because the PE firm was shucking off. They shucked off the r and d and new business departments. And I thought, holy cow. So anyway I told those guys, well look, let's all go someplace else. And they were, pretty young and still are. And I asked 'em where they wanted to go. And so it wound up being Austin, which I think was a good. Move for all of us. So that was good. Other than that, my wife wanted to buy a place in Manhattan, and so I did that. That was my, and then the place in Manhattan, the roof caves in and what, it was wonderful. I, the thing about Manhattan, if you everbrian:
play, did you put the big ass fan in the flat? What'd you do, dude? No. Hell no. . What'd you?carey:
No, it was it was it's interesting in New York, any place else, if you buy a property, you buy a house. . But normally, there's warranties. If it, if the whole thing collapsed within a year, I, you, you're made whole. You're, you, it's repaired in New York. In New York, it's not that way at all. They cap it at 5,000 bucks. And so we'd, it was a mess. Anyway, needless to say, we bought it in 2018 and we just stayed in it. Oh, I don't know, a couple of months ago. It's taken that long to straighten it out. To actually physically straighten it out, it was a mess. Holy hell. It was New York. New Yorkers are interesting peoplebrian:
to say the least. What parts of the due diligence and like the packaging did you run into that you didn't expect? Because I know that you have to do so much with your different systems and different cuz it takes like normally a year and a half to exit, right?carey:
Yeah I would say at least a year, but no, they provide that. We had McKenzie or they had McKenzie and then they had a t k I think come in and they did all that work. I didn't, I ran the content meeting. I didn't pay any attention to that and I told 'em that they need anything. , fuck off. But were, was not very nice. I was not the, I was nice ish. Ish, but no, because I figured going through the, I didn't know if we were going to complete it. I had no idea. So I'd run the company. I didn't wanna, to jeopardize the company. But you're right. It takes a while. It takes it, it took a while. Almost a year. The whole thing. Wow, man.brian:
It was, I'll let you get back to your day, brother. I appreciate you coming on, man. This has been absolutely amazing. We got a lot of gems for new entrepreneurs that are out here. Guys, stick to your guns. Stick to your guns. Build your culture. Be the most expensive, best product in your market. Go sell for 500 million. Be like Carrie today. Be a little, be a bigger ass today. At least those things, , carey: at least those things. All right, Carrie, I appreciate you coming on my friend. All right. This has been, it's been Carrie and Brian with the Action Academy Podcast signing off.