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Man, I'm in PE buying these companies and if you want to get rich in America be competent in skilled trades. If you have a little bit of management skill it is

Man, I'm in PE buying these companies and if you want to get rich in America be competent in skilled trades. If you have a little bit of management skill it is very doable. I've been offering 40 year old high school grads $30M in cash for their companies (and they would get that much again as we are doing rollups and they maintain significant equity.) What is amazing is that these guys just do this again and again. You want to know who has boats and planes? These guys!!! Richer than I'll ever be.

acchow 4y ago
These companies being acquired - what do they do?
- meetingthrower 4y ago
  Directional drilling, electrical, road striping, traffic control, etc etc.
lotsofpulp 4y ago
How much more are these high school grads earning than you? Is it not sufficient to incentivize you to do what they do, or do you not possess the “little bit of management skill” it would take? Or is it something else? I suspect the volatility is much higher for possessing the skill to be able to “cash out” $30M+ regularly, compared to going to a nice undergrad school, getting a job at a prestigious big company, then going to a selective business school, and then landing a gig in private equity.
- meetingthrower 4y ago
  Laziness on my part. I'm old and comfortable, and it takes real work for 10 years to get there. And of course it requires technical knowledge learned over those ten years! But if I had worked as hard as I did earlier in my career at a trade business (remember - much lower risk than a startup as the market is very well known and demand omnipresent), I would be much richer now.
  - blahblah1234567 4y ago
    So, it sounds a bit like Selection Bias-- The guys who create these companies you purchase have a local a network in the industry-- That is to say: The guys who create & run the companies are able to find labor. This article is about a labor shortage... Apparently a few tradesmen are able to recruit other tradesmen, and perhaps pay them well, in the right geographic locations where there are enough skilled tradesmen (or train-able interested apprentices) to hire. But it sounds like the vast majority of Tradesmen company founders are unable to find labor.
    - meetingthrower 4y ago
      The skill of management is what allows you to recruit (see above. Good pay, career path, good training, treating people like humans, driving growth which creates opportunities for staff.) Most do not have it. Of course I have selection bias. But I would say if you took a y-combinator founder and said "start a trade business", in 10 years that founder would have >50% chance of cashing out for $30M or more. (Which means $5M EBITDA, on typically a 30% EBITDA margin business. So $15-20M revenue.) And they would be able to cash flow it. AND they would be taking the profits out as they go.
biofunsf 4y ago
Private equity buying up all these companies is actually a huge part of the problem! IMHO. For the older folks who are selling their company, it's of course a huge boon, but for people entering the trade, it's a huge negative. In the past, when you started a trade, you could apprentice with a small, locally-owned and operated company. If you worked at it long and hard, you'd have a good chance at being able to buy the company or a stake of it from the owners as they enter retirement. I've heard that in many areas, like veterinary clinics, this was a very common path forward for people entering the career. But nowadays, all these small local companies are increasingly owned by private equity groups from afar that have their eyes on profit. You'll have no chance of working up to an ownership stake. And once the private equity group takes over, you can be sure that your work will be increasingly optimized to maximize profit, which could be good, but it can also mean cutting out the parts of your job that are less profitable but more enjoyable. The path forward is harder. To be a real business owner, your only real option will be starting a new firm from scratch. So anyway, I don't mean to be overly critical, and it's great to see someone in private equity posting here. If you have any thoughts on my comments above I'd love to hear them. Cheers.
- meetingthrower 4y ago
  I would offer a bit of a different take. When you get some scale, you can start to offer real benefit packages. You have a real career path. In many of these subscale ops there is just owner and workers, in stasis. And fundamentally in a market where the talent is tight, you HAVE to treat your people well to keep the lights on. I truly believe there is a giant untapped value creation potential for tradesfolk. What I see is the gap is basic "management" of the business. It is really hard for "doers" to become managers and leaders. And of course, these industries are not known for leveraging technology. (I mean, if your HVAC guy used a scheduling app he'd automatically be in the top 5%!)
dinkumthinkum 4y ago
What does this mean? So the tradespeople are all the ones with the Lambos. I’m not even sure what you’re taking about but whatever is must be a tiny minority of tradespeople. By this logic, we should tell people to skip the trades and study hard for Ivies and get jobs in investment banking because these are the people that own Islands.
- meetingthrower 4y ago
  I think if you looked at the data of who the $10M+ people actually are, you would see they are actually the owners of these "real" businesses. Of course we are talking selection bias with the businesses I'm talking about (just like startups here on Y combinator!) But I would argue the overall risk is lower, and the expected value is higher if you applied the same rigor to the business. There is no yCombinator or Harvard b school for trades. And that is what sets the ones that I see apart - they have leaders who naturally figured out how to lead, set up processes, do marketing, manage talent, etc. This is a huge gap for most high school path tradesmen as they've never "seen what good looks like," so most get stuck pretty early.
daseiner1 4y ago
fuck you

acchow 4y ago

These companies being acquired - what do they do?

meetingthrower 4y ago
Directional drilling, electrical, road striping, traffic control, etc etc.

lotsofpulp 4y ago

How much more are these high school grads earning than you? Is it not sufficient to incentivize you to do what they do, or do you not possess the “little bit of management skill” it would take? Or is it something else? I suspect the volatility is much higher for possessing the skill to be able to “cash out” $30M+ regularly, compared to going to a nice undergrad school, getting a job at a prestigious big company, then going to a selective business school, and then landing a gig in private equity.

meetingthrower 4y ago
Laziness on my part. I'm old and comfortable, and it takes real work for 10 years to get there. And of course it requires technical knowledge learned over those ten years! But if I had worked as hard as I did earlier in my career at a trade business (remember - much lower risk than a startup as the market is very well known and demand omnipresent), I would be much richer now.
- blahblah1234567 4y ago
  So, it sounds a bit like Selection Bias-- The guys who create these companies you purchase have a local a network in the industry-- That is to say: The guys who create & run the companies are able to find labor. This article is about a labor shortage... Apparently a few tradesmen are able to recruit other tradesmen, and perhaps pay them well, in the right geographic locations where there are enough skilled tradesmen (or train-able interested apprentices) to hire. But it sounds like the vast majority of Tradesmen company founders are unable to find labor.
  - meetingthrower 4y ago
    The skill of management is what allows you to recruit (see above. Good pay, career path, good training, treating people like humans, driving growth which creates opportunities for staff.) Most do not have it. Of course I have selection bias. But I would say if you took a y-combinator founder and said "start a trade business", in 10 years that founder would have >50% chance of cashing out for $30M or more. (Which means $5M EBITDA, on typically a 30% EBITDA margin business. So $15-20M revenue.) And they would be able to cash flow it. AND they would be taking the profits out as they go.

biofunsf 4y ago

Private equity buying up all these companies is actually a huge part of the problem! IMHO. For the older folks who are selling their company, it's of course a huge boon, but for people entering the trade, it's a huge negative. In the past, when you started a trade, you could apprentice with a small, locally-owned and operated company. If you worked at it long and hard, you'd have a good chance at being able to buy the company or a stake of it from the owners as they enter retirement. I've heard that in many areas, like veterinary clinics, this was a very common path forward for people entering the career. But nowadays, all these small local companies are increasingly owned by private equity groups from afar that have their eyes on profit. You'll have no chance of working up to an ownership stake. And once the private equity group takes over, you can be sure that your work will be increasingly optimized to maximize profit, which could be good, but it can also mean cutting out the parts of your job that are less profitable but more enjoyable. The path forward is harder. To be a real business owner, your only real option will be starting a new firm from scratch. So anyway, I don't mean to be overly critical, and it's great to see someone in private equity posting here. If you have any thoughts on my comments above I'd love to hear them. Cheers.

meetingthrower 4y ago
I would offer a bit of a different take. When you get some scale, you can start to offer real benefit packages. You have a real career path. In many of these subscale ops there is just owner and workers, in stasis. And fundamentally in a market where the talent is tight, you HAVE to treat your people well to keep the lights on. I truly believe there is a giant untapped value creation potential for tradesfolk. What I see is the gap is basic "management" of the business. It is really hard for "doers" to become managers and leaders. And of course, these industries are not known for leveraging technology. (I mean, if your HVAC guy used a scheduling app he'd automatically be in the top 5%!)

dinkumthinkum 4y ago

What does this mean? So the tradespeople are all the ones with the Lambos. I’m not even sure what you’re taking about but whatever is must be a tiny minority of tradespeople. By this logic, we should tell people to skip the trades and study hard for Ivies and get jobs in investment banking because these are the people that own Islands.

meetingthrower 4y ago
I think if you looked at the data of who the $10M+ people actually are, you would see they are actually the owners of these "real" businesses. Of course we are talking selection bias with the businesses I'm talking about (just like startups here on Y combinator!) But I would argue the overall risk is lower, and the expected value is higher if you applied the same rigor to the business. There is no yCombinator or Harvard b school for trades. And that is what sets the ones that I see apart - they have leaders who naturally figured out how to lead, set up processes, do marketing, manage talent, etc. This is a huge gap for most high school path tradesmen as they've never "seen what good looks like," so most get stuck pretty early.

daseiner1 4y ago

fuck you