Laurie Barkman is joined by Kevin Urrutia, CEO of Voy Media, and co-founder of Maid Sailors, a NYC cleaning services company that he sold last year. Kevin details his experience in building the business from scratch, running it for six years with his brother, and having an exit amidst the pandemic.
Listen in to learn more about:
- How a fearless, willing-to-learn mindset can fuel success
- Why you should use a scalable training model when building your business
- Benefits of productizing your service
- How recurring models can boost your cash flow and help scale your business faster
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Transcript
Laurie Barkman:
Kevin Urrutia, thank you so much for being on Succession Stories with me today. I’m excited to hear about you because you are a serial entrepreneur, and I think you’re not even 32. You’re not even 32 yet, and I know we’re going to talk about different businesses that you have launched, and some that you have sold, and some that you are actively growing. I think a big part of this show – and what I love about it – is not only talking with entrepreneurs who are next generation and their family business but people who are the founders themselves. Talking about what it’s like to build a business, knowing that you’re going to sell it so that you have this end in mind as you’re building this amazing asset and entity. We’ll dive into all of that today, so again, welcome.
Kevin Urrutia:
Thanks for having me, Laurie. I’m excited to be here.
Laurie Barkman:
So the first question for you is your background. Just tell us a little bit about you.
Kevin Urrutia:
Thanks for having me. My name is Kevin. I grew up here in Long Island. So I’m in New York now but basically, we grew up in Queens. We were there for a few years, then we moved out to Long Island and that’s essentially when we first got our first house. Growing up, it was me, my brother, and I have two sisters. Basically, growing up for us really meant, at that time, just working.
When I say working, I mean, my brother and I had to go with my dad to work; construction work. So really odd. We were like 12 or 13, we were working with him on all these sorts of projects and side jobs that he did after his full-time work. For me, it’s like I never really thought about it but especially his work ethic was something we’ve had since we were young. We didn’t know at the time, but I guess my dad was doing that for side income because we didn’t really know I guess at the time that we had no money. You don’t know when you’re a child. You just have no money but you don’t know. Then we were just like, “Oh, this is the thing we do, right?” But I think that mentality of working was really kind of what me and my brother got instilled into us, like, “Hey, either you’re going to school, or you’re going to be working.” At least at this time, my brother really loved doing the construction work and he was like, “Oh, I want to be an architect. I really like this sort of work.” Whereas for me, it was the opposite. I was like, “Whoa, I do not want to do this type of work. I like working. I just don’t want to do construction work,” and then that’s when we got our first computer. That’s when I was like, “Okay, I fell in love with this thing.”
Laurie Barkman:
You figured out what you really wanted to do.
Kevin Urrutia:
Yeah, that’s kind of where for me, I was like, “Oh, I want to build something,” and that’s when I started learning more programming and internet marketing and building stuff. Because then for me, it was like, “Oh, this thing is interesting,” and it was interesting. That’s when I first got started into learning all these tech things. At that time with my brother, Edwin, we were always still at the same time tinkering, Greg building websites, building things and this was like when I was 16, or 17.
I was big into gaming, and back then people used forums – people don’t use forums anymore – but there was a thing underneath your forum where you can put a signature. People would have custom signatures. They had emojis back then, the little lines, the squiggles where you get a name. I started seeing people doing Photoshop stuff, and putting nice little photographs like Disney stuff. That’s when I learned a little bit about web design and then it was like this curiosity of “This is interesting. How do I do it? ” I guess at that time I was 16,17. You don’t really think about any limitations, you can just be like, “Oh, I want to learn Photoshop,” and then you can go to the torrents and download Photoshop.
Sometimes, I don’t know, just thinking about things now, I’ll see something, and I’m like, “Oh, I wish I could learn it,” but then I tell myself “Because I’m 30, I can’t learn it,” so I’m like, “You’ve got to get out of that like mindset,” because when you are younger, you don’t have this weird limitation that you put on yourself. When you’re 16 or something you’re like, “Yeah, I’m gonna do it.” At least at that time, when I was that age growing up, I was just learning things, and really that meshed into learning tech and startups. That then made me go into learning how to build a company, how to build a startup, and reading TechCrunch and Hacker News like, “Oh, you’ve got to go to Silicon Valley.” That was the thing that really drove me to be like, “Okay, that’s what I want to do. That’s my goal.” Everything I did was that goal of going to San Francisco and going to college in Binghamton for computer science because that was the progression of “Oh, I want to do tech stuff. You’ve got to do a computer science degree.” What I realized when I was in Binghamton was that computer science wasn’t really what I wanted to do. Computer Science was more like the science of computers and programming, what I really wanted to do was more like web development, iPhone development. That’s more like a trade skill or skill that you learn and at that time all these colleges like Binghamton – great school – but they weren’t teaching modern web design. They weren’t teaching iPhone development. iPhones just came out, how can school teach that?
So really, for me, my learning came from YouTube, going to websites like I remember going to like nettuts.com, PSDtuts.com, that was a big Photoshop website that was teaching from Australia. The ability to learn online was what helped me, and opened my eyes, “Oh, I can learn anything online because someone’s written about it,” and I always tell people, “Someone’s written about it, or someone wrote a book about it,” and someone’s literally like, “10 lives in like 200 pages.” That’s so crazy valuable when you think about it, and that’s the way I thought about things and eventually graduated college.
I moved out to San Francisco to work at mint.com as a software engineer, but in between here, just so that people understand, I was building stuff. So I had ideas and projects I was building. I was also competing in hackathons. I’m not sure if people know hackathons. Basically it’s like 72 hours of you and your friends just coding on a weekend. It’s funny, because for me, this stuff was just building and then people were like, “Oh, I guess it’s a startup.” But for me, it was more just like practicing and making things that I wanted to learn. For example, Twitter’s really popular, so I was like, “Oh, I’ll make my own Twitter clone because I want to know, how was Twitter made?” That concept of how things are made was really what has driven me to learn things because I see something I want to know.
For example, I’ll see someone’s e-commerce store, they’re selling like some sort of widget. I’ll be like, “How much money they’re making?” and I’ll go to Alibaba and search for wholesale suppliers. They’re charging 30 bucks, Alibaba says a unit is like 20 cents. Shipping is probably five bucks. Well, it’s a pretty good profit margin. Stuff like that really gets me excited, and I do that for any kind of business. I’ll be like, “Oh, a carwash? I wonder how much these car washes make.”
Laurie Barkman:
I think that whole part of your background is about you having no fear. You’re not holding yourself back. There’s my dog, Eddie, who’s decided to come into the interview with us so if you can hear her she’s cute. I think what I want to circle back on was your point that when you were 15, 16, 17 you had no limitations on what you wanted to do. Some people do put limitations on themselves, or some parents put limitations on their kids so I think that’s one thing from the get-go that I wanted to say was pretty cool. Let’s flash forward. Now you have this tech background, we understand you’re doing different things. You’ve moved out to San Francisco. Just step us through what was the first business that you launched, and, how did that come about?
Kevin Urrutia:
Yeah. So basically, the first business that I launched that I thought was going to be something interesting to do. It was in college, and that was called one tiny bit. This is myself and Wilson and we launched a Ruby on Rails development firm. We’re just like, “Hey, we’ve been building stuff for other people. People have been asking us, ‘Hey, can you build me my website,’ and we slowly built it out. This is, I guess, my first real business – the other stuff is kind of projects. This is where we actually got like an LLC, we actually got a bank account, and that was in college. It was one tiny bit and we grew it that whole year in college. It’s so crazy because I forget about it, but we actually hired employees to work with us during college. His name was Justin he actually works at Facebook now he’s a really smart guy but yeah, that was it. We learned pretty much everything that we need to learn about service-based business.
I remember me and Wilson being like “Okay, we got to make our contracts super complicated that we feel we’re a legit business,” because it’s hard to believe college students so we were doing all this crazy stuff to learn about payments. When you learn about sales like I was in college, I had no clue how to sell, like how to estimate projects. That was like you can read everything online about estimating projects charging and then you realize like when you’re actually in, it’s so different, like, “I should charge more, I’m like now working all night so that I can finish my homework because this thing is due next week.” So that was one tiny bit. Super fun. I learned a lot. We eventually dissolved it after a year because we just didn’t really see it going anywhere. We were getting clients and leads but it wasn’t like what we wanted it to be so me and Wilson just shut it down and then that’s when I went to get my full-time job at Cisco and then Wilson was still in college, he was a junior so he had two years left.
Eventually in college, sorry, after college, I mean, Wilson tried to build another company called Madeline Rosa, which was an online flower delivery company for local people, and this company, we took even more steps toward we actually went to interview customers, we went to local florists in San Francisco saying, “Hey, what do you do, this sort of service would you buy from us?” At that time, the way we were thinking about it is because companies like Uber and Lyft are starting up, like, “We want to be like an on-demand flower delivery company.” So a lot of my ideas just come from seeing something out there and like, “Can I apply that concept to another niche?” Because it’s like, you can tell people, because then you can say, “Hey, look, we’re Uber for blah, blah, blah.”
Laurie Barkman:
Yeah, an analogy that resonates with folks because then they can relate to what you’re saying. What year was this, roughly?
Kevin Urrutia:
This was probably – I was 23 at that time, so about seven years ago.This was probably – I was 23 at that time, so about seven years ago.
Laurie Barkman:
Okay.
Kevin Urrutia:
That was like when Uber first came out, and it was like this weird thing and I remember a time when Uber and Lyft first came out, I was literally paying like two $3 for rides. That was the best because everything was so subsidized by VC funding.
Laurie Barkman:
Yeah, no more. You got through this early phase of market research and talking to customers, did you end up pursuing that business? Or did you go in a different direction?
Kevin Urrutia:
We eventually just shut it down in a different direction. The reason why was because we were building this thing and then we were able to get the flower stores. They’re like, “Yeah, if you can bring these leads, great.” For them it made sense. This new business was a big release but the issue that we ran into, goes to the main issue that me and Wilson saw which was, how do we get customers? Like, that was one thing that we never figured out because we were always just building stuff and then we were like, “Okay, well, stores want it but now how do we find people that want it?” At that time, we didn’t know anything about marketing, we didn’t know anything about Facebook ads, Google ads, SEO. I think at that time for me, I was really big into this idea where it’s all about the idea. If you have a great idea, people will come and somehow find you. I don’t know why I thought that. I guess it’s what I just believed in at the time, so we just shut it down like, “I don’t know how to get customers. Okay, let’s go think of another idea. Maybe another cooler idea will be the one that gets us customers.”
That was a hurdle that we kept coming into not just not only in Rosa, but other stuff. We just didn’t know why we couldn’t get customers. Then it took us a long time actually to figure out what it was. I got another job in San Francisco, and it was still building things, and then eventually I got put into work with the marketing department there. That’s where I was like, “This marketing thing is interesting. What are they doing?” Then again, going back to me just thinking about them, I was like, “What makes you think about marketing? I’ve always heard it’s bad,” then I was like, “Oh, okay, this is what SEO is,” because I was researching competitors at that time, and I was like, “How are they growing?” Figuring out how they were growing made me see, “Let me actually probably learn SEO. Okay, I should probably learn PPC and start building some knowledge base,” and all that I was missing. It was a great company but even then, we had no customers. For me, it was like, “Maybe it’s not the product, right. Maybe it’s the marketing.” That’s when I got to really start learning about marketing and about stuff like that.
Laurie Barkman:
Awesome, and so what happened after that? Did you start another business? When did you go into business with your brother?
Kevin Urrutia:
After that, after four years in San Francisco, I moved back home. That’s because all this time when I was at Zaarly, I was seeing that the home cleaning companies, the home moving companies at the time it was more like individuals who were making the most money on that platform. It was a platform for service providers. So I was like, “I want to use the skills I’m learning about marketing and make my own company.” Again, it was for me like Uber for cleaning. That’s literally what I thought I was saying. I think the issue I’m seeing here was that a cleaner if you hire her, she’s pretty much booked up now and no one else can hire her. So she’s pretty much limited by how much money she can earn. So I was like, “Hey, what if I bring a company to have all these cleaners and we could swap cleaners in and out and still grow the revenues,” and that’s where Maid Sailors came from. It was around 2015 that we started that company and this was all based in New York. That’s when I started reading more about business books. I read the E-Myth about how to build a company, how to build operations, how to structure your team, and I was like, “I really want to do Marketing,” and that’s where I really focused my effort then I hired other people to help me with hiring other cleaners, other people to help me with the customer service. At this time, I was thinking about hiring people, and at the time, I had no money. So we were using a lot of online – there’s this platform called online jobs.ph where you can find remote workers, a really great place to find people to answer your emails, to answer your phone calls. Of course, this sounds easy, but you’ve got to train them, you realize, “I got to do some sort of training now,” and then you have to learn how to train people. All this stuff was working really well but for me, I was like, “If I train somebody, and they follow the script, I don’t think anymore, and they can just tell me what’s going on.” That’s really great. Now, for you as a business owner, you now just need a weekly report saying, “How many missed messages did we get? Why was it missed? What are some of the bigger issues that customers are saying why they’re not booking?” and it’s easier for you to process information and make changes versus obviously being in there answering because then you can think about solutions.
Laurie Barkman:
How big did the company get?
Kevin Urrutia:
Maid Sailors grew pretty big. Within the first year, a company tried to acquire us for $2 million because we were growing but then we denied that acquisition, because they wanted to give us stock, and I was like, “Oh, I don’t really want to do stock.” I wanted cash. Right now, we’re around 150-200 employees and we’re based in New York City. We’re also in Boston, we’re in Chicago, we acquired a company in Chicago, and then we also are in New Jersey. We also acquired two other companies in New York City as well. I was telling you, Laurie, I sold this company, but that’s how big we got it. For me, the industry for cleaning was something that I learned. It was just like, there’s so much demand that you just literally can’t hire enough cleaners to fill this need, especially somewhere like New York City where people are moving in and out all the time. There’s some seasons where we’re just like, “Sorry, you have to close,” so it’s a great business because there’s always cleaning – it’s one of those things where it’s like you’re always needed so even for me, this is my apartment, I was just like, I literally do nothing, I don’t know how the place gets dirty. I literally say my room all the time.
Laurie Barkman:
Let’s spend some time on this. So you created a cleaning company, you saw a need, you wanted to have a more seamless platform, something that could scale and people started to show interest. As you mentioned, in your first year, you had an offer for acquisition. Let’s talk about the path to growing it and getting it to the point where you were ready to sell it. Let’s spend some time on that. So the first question would be, what do you think looking back now made this company attractive to the buyer? And let’s talk about that process of how you either found the buyer or they found you and what was the fit?
Kevin Urrutia:
I think – a few things – the company, what was really good about it was number one, people were looking at us saying, “Hey, how are you guys growing so fast compared to other companies in the space?” Our rankings on Google were really high so we had really good SEO. If you searched for maid service NYC, home cleaning NYC, we were like number one or two. That’s something that people were asking, “What are you guys doing?” That was a key thing for us.
Another thing for us, too, with any cleaning company or service-based business is through reviews. Having great reviews on Google Plus back then like Google Maps now or Yelp as well. People, especially if you’re in New York City, Yelp is big, so a lot of people are asking, “How are you guys getting so many reviews?” For service companies, those are the things you look at, because no one wants to acquire a company that’s like two stars.
A review really tells you everything about how the company’s run. If you get a 4.55 star, that means something’s happening so then people are like, “These guys are running it well.” A 2 star you automatically think, “These guys have no clue how to run the company, or at least they’re not addressing any issues,” if it’s consistently 2 stars. For us, that’s a key indicator. Even for us when we’re looking to acquire a company, we want something 4 star plus, because that means something’s working. Anything below that is like the founder-owner doesn’t care. That’s the way we think about it.
Another thing too that worked really well for us is we saw this happening before us. This is something that I was telling you before, I think, that we had our prices online. That made it super simple for people to know how much we’re charging for everything. It’s so crazy to see now anytime we raise the price, everywhere it’s like everybody’s looking at your prices and seeing so that was a big thing back. With cleaning companies, I think, the thing is, other services do this right now, we call it flat-rate pricing where no matter how big your apartment is, we’re gonna charge you this much money; 120 for example. I’m not sure the exact price right now but it made it so much simpler for operations.
Now, you don’t need another operations person to go out and measure your home. You just book on the call and that makes it simple. That means also you have a better profit margin because now you’re not trying to win jobs that are winless. Now you only win jobs that you can win because the customer knows the price so there’s no more of this “I’m surprised,” and you’re arguing with them. I don’t think people realize there’s so much human capital that gets wasted just by talking but somebody’s like, “Hey, you want that price?” “No.” Okay, well, I just wasted 10 minutes. People don’t realize that but someone else could have called and booked. I know other businesses in this space, too, that run like let’s say a microblading company for like eyebrows and I was just talking to her recently and she’s like, “Two customers canceled on me,” and I’m like, “They don’t realize that’s six hours booked up.” Customers don’t think about the opportunity cost for us as entrepreneurs. For businesses, it’s really high if you often don’t show up, because you somehow forgot.
Laurie Barkman:
Absolutely. That’s lost revenue. Was there a recurring revenue model in the business?
Kevin Urrutia:
Yeah, a recurring revenue model is probably the biggest thing, if you’re some sort of cleaning company. It’s the biggest thing that’ll be used as leverage to get customers back. We have a 10% discount monthly, 15 for weekly, and that’s where you want to be using the recurring model to come back and clean again. The first time is usually charged out a bit more because it’s a little dirtier and then it’s kind of like a maintenance fee, but recurring models work for cleaning companies and that’s why it’s such an attractive business. Because if you do a good cleaning job the first time, the customer wants it over and over again. But again, going back to what I’d mentioned before, it’s also really hard sometimes because some of your best cleaners, you want those for new customers, so they can see that the service is good. But then the new customers are like, “I want that same cleaner,” and it’s like, “We’re gonna give you somewhat similar,” because you see, it’s really a cleaning company. It took me a long time. This was managing humans. It’s like a human capital business. It’s literally like moving people around the city and saying, “Okay, this person could be 20 minutes away from this job. It finishes at three. Now she has half an hour on a subway to make it to the four o’clock job. Can she eat lunch?” You’re thinking about this.
Laurie Barkman:
All the logistics.
Kevin Urrutia:
It really is logistics. That’s how we think about it, and managing all these cleaners is a lot of work. Because it’s thinking about routes, let’s say right now, in New York City snowstorms. This for us is so tough because trains are even more delayed. That means we had to warn customers, “Hey, we’re still gonna go to your home. But just so you know, you’re going to be delayed.” That’s something that we think about but basically having, again, that logistics part is also very key, having a calendar full of people. At least for us, these employees, we know when they’re working or not working. I know some other cleaning companies use contractors. It’s a great way to get started but then you don’t know when they’re working so that makes your job a little bit harder. For us, we say, “Hey, this is your schedule, we know you’re working. We know how many jobs you can allocate,” and then we know when we need to hire and stuff like that.
Laurie Barkman:
Sure. Let’s go back to the recurring revenue model. You have a software background, were you measuring it like a SAS software company where you were measuring CAC, cost to acquire a customer, lifetime value, LTV metrics like that?
Kevin Urrutia:
for us, we use this software called launch 27 and they basically provide us all these analytics about how many new customers you’re getting a month, how many recurring customers you’re getting a month; really helpful. Also, we were measuring – understanding CAC is very interesting to measure because we were mainly driven by SEO. We were never really doing paid ads for Maid Sailors. We’d do some retargeting but most of our customers came through SEO. SEO was like this expensive set. This month, we’re gonna spend $10,000 in SEO, and we’re gonna make $100,000 revenue. Stuff like that is how we measure it. That is much harder for us to calculate because there’s no direct attribution to it but we knew that almost every booking that we must have for the company was through SEO because we had no other traffic source besides like Yelp, I guess.
We weren’t spending any money on ads there but for measuring stuff for example, when we introduce new items and things to the business like deep cleaning, we can see, “This looks likely to be our next top item. Let’s move up our talking points because customers are picking it,” and then you can see “The next item is expert cleaning and oven cleaning. Looks like no one’s doing baseboards, let’s remove that to make the form simpler.” The software Launch27 did that for us and it gave us really great stats. It’s like traditional SAS software. We can see trends up and down. You can see once you’re doing well, once you’re not doing well, and it would just connect directly to Stripe as well. This offer was really nice because one thing that was happening was because customers don’t like to get charged for the cleaning until after you pre-authorize the card. That way, you’re not running into these delinquent charges that you can never collect. We say, “Hey, look, we’re gonna pre-authorize your card here’s a charge. It’s gonna allow us to know that you have the $200 that you said that you had.” That way we don’t do the cleaning and then we can’t collect the money. I think that was a big thing too. For the cleaning industry, a lot of people didn’t want you to collect money until the claim was done because it’s very weird. Each industry has its own quirks and if this is another industry, this would make no sense.
Laurie Barkman:
Well, it’s about cash flow and so you were getting more certainty of the cash flow with the credit card pre-authorization process, which makes sense. Let’s talk about process, because you talked about the software platform, and all the human logistics, travel logistics to get from one site to the next. Was this all documented? Did you have one person that was focused on these processes? Or were you able to delegate that across a different team of people? I guess the real bottom-line Kevin was, was it you? Or did you have help? Because it seems to me if those processes broke down, the whole system would break down.
Kevin Urrutia:
In the beginning, I started them all so I wrote down how we’re going to answer. I love the software, so many reasons why but basically, we have documents for everything; how to answer Yelp messages, how to answer talk messages… We would also have videos of how to do things. If this is how you enter your Zendesk request, this is the script that you should be using. When you’re booking a call, I think having these processes documentation is so helpful and of course, I tell people all time, you can go off the script. The script’s here to help you and guide you because, after a month or two, you know what to say. At least sometimes you can use that as a reference guide. With any documentation, the thing that sucks is updating it so when prices change, you’re like, “Okay, this pricing change,” but it’s so important to have at least some sort of documents there because that makes it easier for everybody in the team, and I tell people all the time, it makes it easier. I think sometimes we were like when somebody new comes on board, I’ll just retrain them. That’s not scalable. Do you want to retrain every single new person on how to use Zendesk every three months, four months? What if the person doesn’t work out? This is what I do; if I’m training somebody, I’ll just record it and now, this is our new documentation. You can see me thinking about how I’m thinking about it. Other than that, I’ll use Loom to record quick messages so now I’ll do this, “Hey, this is the step-by-step instruction of how I think about it, and this is how you should be doing it.”
Laurie Barkman:
Those are all awesome examples because people who have a scalable process, usually something is very teachable, repeatable, and valuable. That’s an exercise that I like to do with clients – talking with them about what you do today, does your customer value whatever you’re providing? If the answer is no, then you have to say, “Why are we doing it?” Also, “Is it teachable?” Meaning it’s not the business owner who’s doing it, it’s someone else on the team, and what’s going to enable them to do that? Then how repeatable is it? How frequent is that task being performed for the audience? Is it once a year? Or is it, in your case, as you were seeing with the frequency of maid services, I mean, it’s all the time. The more you could document all those steps probably made it super easy to then say, “Hey, this business can thrive without me,” so I’m curious about the end game here. What happened? You initially told us you had an offer for 2 million you declined politely – I’m sure you politely declined – and then later on, what happened? What was the final offer? How did you end up getting acquired?
Kevin Urrutia:
We basically continued to build the business since that first acquisition. But yeah, going back through several processes, we use Slack a lot. I tell people all the time Slack is really helpful to improve your processes, especially. At least for us, we developed some sort of like – I’m a programming background – I developed a custom program for Slack where if someone booked in an area code that we know we didn’t do, we would automatically send the staff a message on Slack saying, “Hey, this thing is out of the area, call them to cancel the cleaning.” So there’s all this little stuff that I think in any business, every business has unique things that it needs to figure out. A lot of people are like “That’s unique. I can’t program that or anything.” They’ll give themselves an excuse. This is why I can’t document it. People get into their own heads.
This is why I’m like, “What’s the thing it’s gonna be and it’s repeatable.” So I created a simple program and now all the staff just says, “Hey, call them up and cancel, and it’s like a star, you can do it.” Anyways, those are other things that you should be thinking about too. Because, at least for me, I was asking our staff, “Hey, what are you guys doing? When a customer isn’t in your service area?” Like, “Oh, we go to an Excel sheet and then we look up the number, and I’m like, “Oh, that’s just like, a simple function. Like, why don’t we do a zap for that?” That makes sense so for me that’s the way I’m thinking about this process and making it simple for people.
Going back to the sale, what was happening was that we were building the company and after a few years, I was not interested in doing it anymore. It was still growing, I just didn’t want to do it anymore. For me it was fine because the company was still running well, but eventually, my brother was running it for me, and my brother was on for a long time. Actually, what ended up happening was that my brother got really busy with his own company. He started his own company as well and he just raised some money to do it. He was like, “I just can’t do it. In fact, I know Kevin, you can’t do it too,” because at this time, now I’m running Voy media. Voy media is about 25 people, so I’m like, “I can’t run the cleaning company.” What ended up happening, we were putting in our market. There’s all these websites that you can use, and we need people in this space running other cleaning companies. We’re asking them, “We want to do it, we want to sell the company,” and they’re like, “Oh, sure, I’m sorry. Oh, my God, like you guys are selling, right.” Eventually, we found a buyer. Local here in this New York City area as well, they have experience running a cleaning company before. We reached out to them, it took almost a year to figure everything out and the reason why it took a long time for us was because we had an idea of starting a business. I think everybody has an idea. Everybody has that vision but at least for us in the beginning, we didn’t plan it as well as we should have. Like I said, all the finances were so intermingled and intertwined with personal stuff, business stuff, my other businesses were charging these cards like, “Okay, this is gonna fund our stock. This is gonna fund my other company with this business’s cash,” so it was like a complete mess. It took almost a year of stripping down all these numbers. Eventually, we sold it, we sold all the companies that we own for $10 million. That was really exciting for us, and, again, yes, we sold it but again, I tell people all the time, we’re not completely off, we’re still helping consult for the year about making sure that the company succeeds. I’m like, “Hey, I want to see you succeed. It’s great company.” I like when people and everybody’s still employed. I think that was a big thing for me saying, “Hey, I want to make sure that everybody here is employed,” so sending all new agreements, or new contracts of employment agreements, stuff like that. That was the process. It took a long time.
Laurie Barkman:
So you went out and said, we’re gonna approach potential buyers?
Kevin Urrutia:
Yeah.
Laurie Barkman:
The financials are interesting because I assume your company was profitable at this point. Is that a good assumption?
Kevin Urrutia:
Yeah.
Laurie Barkman:
OKay.
Kevin Urrutia:
That’s why a couple of times, definitely for me, I was just building other stuff, because it’s like, “Oh, I just have money to use.”
Laurie Barkman:
Yeah, but the quality of the books is important because a buyer wants to know what they’re getting, and so did it take a year to do the sale? Because you were getting organized or was it the due diligence questions they were asking you that forced you to really get into the details?
Kevin Urrutia:
It was both. Obviously, last year was really bad because we saw our sales go down because of Corona. That was the worst time. Some of it was the books, some of it was like, “Okay, guys, let’s wait.” We were at Lehman Brothers like we think it’s going to increase again, back to pre-COVID levels. So then, we saw that eventually happening, we’re like, “Okay,” they’re like, “Okay, this looks good. Let’s go back.” It was a mix of everything. Bookings went down because of COVID ’cause nobody wants to get people into their home. We had to figure out the numbers, we had to figure out the price, we had to figure out how we were going to transfer the LLC, “Will we do an asset transfer?” We said, “Hey, we don’t want to transfer LLC, because we have some other stuff tied into this LLC that we need to keep so we want to do a full asset transfer,” and then they have to go figure out how to open up with the other payment accounts, Stripe accounts, Chase accounts, so they have to figure out what LLC is when we’re in a few different states so they have to get LLC in each state. Then we also advise them like, “Hey, this is what we did. We don’t think you should do it this way. This is how ideally you want to structure it.” We help them figure out what we would do differently and we talk to our accountant like, “We have a few companies, this is the main one. Other ones you should make them child LLCs.” That way you can not worry if something happens to the business in case someone sues you, this is how you would structure it and stuff like that.
Laurie Barkman:
Did you have a letter of intent or some sort of agreement in place? What was the multiple that you ultimately sold for? What was that?
Kevin Urrutia:
For us, it was like 2.3 X multiple. Very traditional for a service-based business.
Laurie Barkman:
Were you happy with your brother? Because you both wanted to move on to the next thing? Was it about the number per se or what was it about for you to really decide that this was the right thing?
Kevin Urrutia:
I think that’s a good question. Because a lot of times people ask, “What’s the number?” I’m like, “I think we would have peace of mind.” There’s no number for that. Now that we still have meaning. It’s so nice not having to think about it. Even like, “Why don’t you run in the background?” I’m like, “Cause it’s not just running in the background. It’s there.” Ultimately that was it – peace of mind.
Laurie Barkman:
Did you have a backup person? Because you and your brother were both running it but then you both had other companies? Did you have another second in command that took it over from you both?
Kevin Urrutia:
No. Basically, we even – like when I told you – the bookings were down. We were still running it. We were saying, “Hey, if we sell it great. If we don’t, we can still run it.” It’s a great business. That’s the thing. I was like, “It’s making us money.” We just didn’t want to run anymore, so it’s one of those things where eventually, we’re just gonna be like, “Okay, we’ve got to suck it up and do it.”
Laurie Barkman:
Yeah, so when did the deal close? 2020?
Kevin Urrutia:
Yeah, December 31.
Laurie Barkman:
That must have been a challenge. Because what happened? 50% or more decrease in revenue, I would guess.
Kevin Urrutia:
Pretty much, almost a distant decrease in revenue but now we’re sort of seeing a great uptick right now and we said, “Hey, look, booking you off and then stuff is going up into the right, which is great.” We’re helping them, consulting with them about how to market and thinking about things and what we do differently and we’re saying, “This is how we would expand.” They want to know what your thoughts are.
Laurie Barkman:
Now I know that you had another business because that’s what you’re working on now, which is Voy Media, and so is that what happened next with you and your brother? He went and worked on his new venture and then you became more focused on Voy Media?
Kevin Urrutia:
We still run our own e-commerce company called Chester. So chapters of the company that we run, that’s more like another side project. For that business tester, for us, that was about $2 million in revenue and that’s like a side project for us because we’d like to do e-commerce. But then Voy Media is another company that I’m running. That’s more like, the reason why Chester works really great is that it’s only me, Edwin and two other people – very easy to manage. You don’t need that much staff, manager staff. Again, it’s e-commerce but Voy Media now that’s more like 30 people. It requires more of actual meetings, weekly staff meetings, planning, budgeting – it’s a different type of business. It’s just more human. When I’m thinking about business, I always think like, “Which one do I want to build? Why?” Again, I don’t know. I’m having fun, and you just don’t know.
Laurie Barkman:
I think you’re showing a pattern with service businesses. You seem to be gravitating to that where tech is the underlying way that you can scale, but there’s people that help make that tech come to life so you’re a mountain climber in the sense of you’re always looking for that next thing. As we shared your age earlier in the show, you’ve still got a long career runway ahead of you. I really appreciate you sharing your story about Maid Sailors because there are probably a lot of people listening who are like, “I’m not really in a super sexy, high tech services business,” but I think what’s interesting about that is that you were able to productize the service. Your pricing was there, you probably had bundle packaging, you offer discounts for your recurring revenue model.
That’s a big part of again, what I work with clients on – how can they productize a service so that they can have a subscription model? There are lots and lots of service businesses out there that, like you said, will say, “Oh, that’s not for me. I can’t do that.” What’s cool about you and your brother is you said, “Yeah, we can figure this out.” You didn’t have a background in doing but you had the no fear indicator to figure it out so I think that’s pretty cool. I think if you look back, just another question for you, if you look back, and there’s one thing that you would do differently in terms of the sale of the business, what would that be?
Kevin Urrutia:
I would definitely, I think definitely separate these LLCs that we have where we have one main one for everything that we did for me and Edwin, every project that we built during this time of making Maid Sailors. I tell people, that was probably the biggest thing that we did because it was such a hurdle to separate stuff and even in the contracts, this asset is not going to be acquired by you, like that.
Laurie Barkman:
Yeah, so having a good team of professional advisors is probably important; the accounting firm, the law firm. Did you have a law firm that had experience in M&A?
Kevin Urrutia:
We had really good lawyers that helped us with previous stuff. I think a lot of the time, like, people like accountants and lawyers get a bad rep and when you need them, they’re gonna be helping you. We have great lawyers and accountants, and they help us with everything, so yeah, they’re worth it. I know they charge a lot, but for us, having it was well worth it. Having great consulting to understand what’s going on is worth its money and you don’t know you need it until you need it.
Laurie Barkman:
That’s right. Mistakes can sometimes be very costly. Last couple questions for you, Kevin. What is your favorite personal mantra about entrepreneurship or leadership?
Kevin Urrutia:
It’s a good question. This a quote or something I heard from Steve Jobs over 10 years ago, and I think he said it like a Stanford thing. He said, I’m probably butchering it, “Everything around you was created by people no smarter than you. So why don’t you go out there and create?” For me, I heard that I was like, “Oh, yeah, this makes sense.” Everything that we live in was created by somebody and why can’t that somebody be me? What makes this person so unique and special? I’m unique and special. I want to create things. I always think about that. Everything you see out there, it’s a person. They’re not this crazy genius. They somehow figure it out so you can figure it out.
Laurie Barkman:
Absolutely. Kevin, if people want to connect with you online, what’s the best way to find you?
Kevin Urrutia:
The best way is – I love using Twitter, so twitter.com/danest
Laurie Barkman:
Thank you so much for coming on to Succession Stories and sharing your success in building Maid Sailor and now building Voy Media. So thanks again for being here.
