Jeremy Weisz 7:46
What made you decide to do that, like you’re making money, right? What made you decide to go the police route as well?
Chris Vendilli 7:54
I don’t know, childhood dream. My dad was a cop. My dad’s a retired police sniper. We still hang out and do lots of shooting. And it didn’t seem mutually exclusive, like, this is good job security, great retirement. It’s a cool job. And then maybe three, four years in, I started to realize, like, it’s still a cool job. I love that. I love the people. But it was hard to do like something on the side. Although most cops, and all my cop and fireman friends and even medic friends, they all have side hustles, or they work a ton of overtime. So I never took all the overtime. I did the side hustle, and I took some time off when I was a rookie police officer, and kind of got immersed in that that’s more than a job. It’s a lifestyle. And after a while, I kind of missed it, and I started building websites for like, friends and family.
And then word got around that I was good at that, and it actually got me a promotion at work. I thought it was like a bridge to get out of there. And I got called to the chief’s office one day, and I was at a almost 1,000 person, maybe 900 person department. I’d met the chief twice. Once was Academy graduation, and once was for an award I got for an incident I was involved in. And I got coming to work that day check my mail, and they’re like, the chief wants you to drive down the headquarters. We have like, six or seven stations in Pittsburgh.
Jeremy Weisz 9:16
These are really good or really bad?
Chris Vendilli 9:18
Oh, I thought it was bad. I was like, What did I do? I thought I was in deep trouble, and I walked in there all nervous and plopped down across I’d never been in his office before. He’s like, so I hear you build websites. I was like, I do like, is that a problem? It’s like, I didn’t think it was a conflict of interest. Everybody, like a lot of guys do hardwood floor refinishing, and some guys are plumbers, like, what’d I do wrong? He’s like, well, you build a website for one of my friends, and he’s very pleased with your work. He said you’re very professional and you’re technical, you know your stuff.
And I was like, maybe I’m not in trouble. He’s like, have you ever thought about the computer crime unit? He’s like, not really. I like chasing bad guys and going over fences and guns and drugs and gangs and that stuff. And kind of like, where I’m at, he’s like, well, if you ever want to do a rotation through you there to see what it’s like, you’d be working with digital evidence, cyber-crimes, that sort of thing. And I eventually came to my senses and realized there’s a lot more career opportunity there to go that route.
Jeremy Weisz 10:20
It’s funny, you call it career opportunity, and I’m thinking it seems a lot less dangerous, but…
Chris Vendilli 10:27
Well, that too, the best part of that gig was — didn’t have to answer 911 calls. I mean, I enjoyed being a public servant, don’t get me wrong, but not being at the mercy of the radio is really nice. And we had a secure computer lab where my own supervisor couldn’t get in without knocking on the door. So it was a good gig, and I got in there. I went to a secret service training to get some certifications and get kind of brought up to speed. It was like two months down in Hoover, Alabama. They sent me home with lots of cool new gear for our lab. And I did that like my last three years. But during that time, I was working for myself during the day, like 7 a.m. to 3 p.m. and trying to build up this business, and I go work at the city four to midnight and kind of burning the candle at both ends, and throw a few kids in there and that time, and eventually decided, YOLO, let’s go all in on the agency thing.
But at that point, I had built it up to almost a half million a year in sales, and had a couple full time employees and some office space we were working out of, and then working at the city at night. And that was your side gig, yeah, and that’s what I said. Like, what if this was my full time gig, so my goal was, I realized that I was looking ahead a little bit, but with my military time, I could retire from the city at 43 — which I’m 43 this year. And a lot of my buddies I went to the academy with are retiring, or they’re eligible, but I couldn’t get the pension till I was 50. So what most people would do is work till they were 50. I was like, my goal is to build this up so I can get out of there 43 and then just do that for seven years until my pension kicks in. And actually, what happened was it just grew way faster than I thought it would. And I honestly think you get all this business advice like, learn the power of no and say no to the wrong customers.
I actually did it, but I could afford to, because it wasn’t my full time gigs, like I’d see certain projects come along and the budget wasn’t right or didn’t like it because it just wasn’t a great fit. And I was super honest with people like, hey, I don’t think I can help you. Either don’t have the time or it’s not in my wheelhouse, and I think that’s why the word of mouth just spread for me really, really good. I was very picky in the early days.
Jeremy Weisz 12:39
We’ll talk about some of the agency life, but I don’t know if there’s a most memorable Police Story.
Chris Vendilli 12:48
Oh God, I’ll give you a good Pittsburgh story. This one’s PG-13. Got a call at about. I mean, Pittsburgh is a pretty busy city. We have 60 to 90 homicides a year. I was involved in a lot of those investigations, doing digital evidence. And even when I was a street cop. I was a street cop for five years in the pretty busy zone, one of the more, more busy ones in the north side. But we got a call one night. I think I may have even been in field training or just out for loud music complaint, and it was in a very bad part of the north side. So we’re thinking it’s going to be like a party or something, and you just, you never know what you’re walking into. And I go down there with one other officer who’s still a good buddy of mine, and we get there, and it’s a senior high rise, and at the desk, they tell us, these two neighbors upstairs have been disputing it’s like midnight or 1 a.m. is middle of the night or very late, and might have even been later.
I might have been on night shift. I forget. So we go up to, like, the sixth or seventh floor, whatever floor it was, and says, the door opens, you just hear blasting. Anyone from Pittsburgh will love this story. It’s the Pittsburgh like, I mean, the whole floor was shaking. So we get there in the rooms, the doors open and we knock. Obviously, it’s so loud we could barely hear each other. We go in there, and we’re yelling, like, are you okay? Are you in here? We’re afraid we might find like, a deceased senior resident or something, and this little old lady in her bathroom comes running at us and screaming, get out. I didn’t say you could come in here. We’re like, looking for the stereo to turn it off so we could, like, hear what’s going on. I was so loud. We’re like, covering our ear.
She had a system in there. So we finally get the radio off, and we realized she has in earplugs, and she was asleep, and this was all because she was mad at her neighbor, and she was blasting the Pittsburgh Polka so loud that the whole floor was shaking. And that was a funny one.
Jeremy Weisz 15:00
Literally, you never know what you’re walking into. No, never. Talk about your new space for a second. COVID hits. People are downsizing. They’re even just working from home, not even renting an office anymore. And you go out and you buy a space.
Chris Vendilli 15:22
Yeah, I might be crazy? Well, the short version is, we were in a historic building in the south side of Pittsburgh that was conveniently located very close to police headquarters, and I was there for about 10 years. I left the city in 2014 but I moved into that space in probably 2012 I think. And when we moved in, the place was a dust bowl. It was in a part of Southside that wasn’t a lot going on. The last few years, a new developer came in, and they did a beautiful job fixing the place up, put in a new brew pub. There’s a new fitness center downstairs, but all the things we kind of loved about started to change, like the free parking went away. There’s $150 per person per month.
Once they built the new parking garage, they had two buildings in our complex, and they finished one, and they were starting on ours. In order to renew the lease, they wanted me to move into a space that was about 20% smaller, or three times what I was paying in rent, and I had to move. And I started looking at it like, what would it cost? Because we do some video production, we have some equipment and stuff, it’s like, what would it cost to get a storage unit? Like, what would we lose? Really, culture, and I think a lot of bigger companies are talking about this, what would it cost to lose our home? Basically, we weren’t coming in five days a week. We only going in two or three days a week since Covid. But we really liked that hybrid was working great, but we needed a space to collaborate and kind of keep our identity, I guess. So, I found this place. It was completely remodeled by a commercial construction company that have intended to inhabit it, and it was kind of too good to be true. It’s about 5300 square feet more space than we need so we can grow into it.
It’s just a little bit more than I’d been paying for rent for 10 years. And I did the research and everything I could find said large downtown skyscrapers, 100,000 square feet plus, like they’re in trouble for a while, but privately held, owner occupied spaces, like in the outskirts of the city, which is where we are, we’re in a nice suburbs. That’s not going, it’s on sale right now, and it’s probably not going to take the hit the way that, like the big skyscrapers will side. Not a commercial real estate agent. But I did all this research, and I felt like this a pretty safe bet. Pay a little more than I paid for rent, but now I own the building. If we want to invest in really customizing the space to, like we were talking about before you hit record, we want to invest in really customizing the space to differentiate ourselves even more and provide more value to clients, not afraid to make those investments. And I’m just, I’m really thinking long term with the whole business. So in addition all that was a great personal investment. It’s an asset that I hope will appreciate in 15 or 20 years when I’m ready to hang them up.
Jeremy Weisz 18:23
We’re talking to about you purchase a few agencies, and I love for you to talk about some learnings there and why you went the acquisition route.
Chris Vendilli 18:36
Yeah, I guess to back it up, I’ll come back to your question. But I signed up and put myself through a training called Goldman Sachs, 10k ASB. I’m not sure if you’ve ever heard of it, but I went through it. Oh, I didn’t know you’re an alumni that. Yeah, it’s a great program. I loved it. One of the best things ever did. Did you go to the one at Babson or a different one?
Jeremy Weisz 18:58
Well, I mean, it was local here in Chicago. But yeah, it’s the same thing. It’s Babson, you know, collaboration with Goldman Sachs. So, yeah, I actually happen to go through it. Typically you go in person in Chicago, but I went through while COVID was going on. So yeah, our cohort was all virtual. So they brought all the professors and people virtually. So I don’t know, they had people from Penn and other colleges even coming in and teaching courses.
Chris Vendilli 19:32
Yeah, it was great. And it was free, like you had to apply. Obviously, I’m sure, I’m sure you remember this. But the one I did was through the Babson cohort, or whatever. And it was, I forget how long it was, maybe six or eight months. And there was some virtual but ours also had the in person portion. So I flew up to Babson, I think, for maybe once or twice, for one to two weeks each time. And they told us at one point, I think, the value of all the training that we received, they estimated it was like $80,000 or something.
Jeremy Weisz 20:00
It’s essentially a very comprehensive, expensive Executive MBA Program.
Chris Vendilli 20:06
Kind of, yeah, except it’s like a full ride, if you get it. I did that. And that’s kind of, I think I got to give them a lot of credit, thinking back, like, that’s where I learned, like, you can use your money, I guess, is another asset, and borrow money to grow your business. They always say it takes money to make money, and if you’re really smart about it, buying those agencies, just like buying this building, I feel like, is a great way to kind of grow. And they did an exercise there. They gave us a paper dollar, and they said, if you had $1 to invest in your business. How would you spend it? And they gave us a paper $100 bill. And so, if you had 100 what would you do? You had to write it down.
They gave you a $1,000 bill. What would you do? It’s pretty easy. Like, I don’t know, I’d buy a new desk, or I’d buy a computer. Then they give you a million dollar bill, a paper million dollar bill, and they’re like, write a plan on how you would use this million dollars to grow your business. I was like, wow, that was powerful. Like, what I wrote down was really interesting. And now, what if you could borrow that million dollars? Do you think you could get better than a 6% return on it, or 8% return, or whatever the SP is? So that really stuck with me. And I found two different opportunities, kind of, right place, right time, and it made a lot of sense. And at the point…
Jeremy Weisz 21:23
Were you looking, or how did you end up finding them?
Chris Vendilli 21:26
Oh, yeah, I was looking, but very patiently, I had antennas up. The first one was, think how that came to be. Oh, so I had a couple that were kind of swing and a miss. I had one that we got pretty far. We were actually sitting in an attorney’s office in downtown Pittsburgh, and I just didn’t like some of the terms, and I trusted my gut. And I basically said, I’ll give you the short version without revealing anything, because I still talk to this person and something might happen down the road. But basically it involves some real estate and office building and an agency that had been in business for decades, and they wanted some agreements for all their employees that I could not terminate anyone’s employment for three years. I wasn’t allowed to make any like material changes to the products or service.
There’s all these restrictions. So I basically said, like, what am, what am I buying? Like, how about we just talk in three years? Like, if, you know, because, because I also wanted the owner to join me, like, to kind of merge and roll up. And I think she kind of agreed. She’s like, maybe I’m just not ready. Like, there’s, I don’t want to lose control of the ace. Like, well, that’s what we’re talking about. Like, I want to, like what I’m doing….
Jeremy Weisz 22:49
Did you at that point, Chris, the valuation and the purchase price agreed on or not yet?
Chris Vendilli 22:56
Oh, yeah, we’re getting ready to make moves. We were very close. And that one felt almost like deflating, but at the same time, it led to two other ones that were probably, in my case, even better. So that I came very close and worked with a business broker who helped me. He specializes in M&A for creative agencies. I kept in touch with him. I still, I just talked to him a few weeks ago. Actually, this is probably five or six years ago, two or three years later, come across another one that he kind of dropped in my lap. He told me about the opportunity. And, long story short, it turns out I knew the guy, and he basically said, I’ll introduce you to this person. And it’s just kind of a smaller deal.
It’s an interesting situation. I would just ask for a $10,000 success fee if you’re able to pull the deal off. And he told me all about the agency, and they were in my backyard, and then he was being slow to reveal who it was like, I have a feeling I know who this is. And eventually he kind of let the cat out of the bag, and turns out it was exactly who I thought it was like, oh, I’m just gonna call them when we hang up and say, like, hey, we know each other, and we’ve talked, and a couple lunch meetings led to a deeper conversation. And at the time, at their peak, they were probably, I forget, maybe 800,000 in sales, and there were three partners, and then three employees and some contractors, and two of the partners were halfway out of the business, and the remaining partner had some gas in the tank, and they did WordPress website design and development and video production, and they had all the staff.
And at that time, this is probably 2018 it’s kind of hard to find people, but the way I look at it is I got a team of five people and a book of business that was kind of profitable, but we had a lot of common expenses, like they had office space. We had office space. We didn’t need two office spaces. They had an accountant. We had an accountant. We didn’t need two accountants. So when I did that, normalized PNL and all the fun stuff, I learned it at Babson and we were able to come to terms on pricing. It was just a real big win for us. I had it paid off in less than a year.
Jeremy Weisz 25:10
Talk about coming to terms on price. Did you have an outside company value evaluate, or did you do it? How did you end up? What was the process then coming to the price?
Chris Vendilli 25:21
That first one we did, the broker who introduced us did he helped a lot of you. He earned his $10,000 success fee. And he’s a great guy. I’d be quick to introduce him. He’s kind of semi-retired, but the firm he was at is still around there, called Tobin Left. David Tobin’s also kind of a buddy. They’re here in Pittsburgh, and they do PR firms and marketing agencies and ad agencies like succession plans and M&A and, you know, he was instrumental in helping with that. So on that one, you know, he got pretty medieval, tore it all apart, made a slide deck, but it was a simple deal.
At the end, they were debating on what to do with the business, or how they were going to sell it, and we had so much synergy, it made a lot of sense. So one of the three partners who joined me is now basically like our, my right hand man does our Director of Client Services, and also still, at 30 years’ worth of relationships right in our backyard, came in the door with them. So that’s been just fantastic. The second one was a little…
Jeremy Weisz 26:25
Little quick, Chris, on that one, were you looking at the EBITDA and what were kind of the multiples that you were looking at that time? I’m sure, whenever someone’s listening, they change. But what, how did you come to that valuation? You have to share what the amount was, but was it multiple EBITDA, what did that look like?
Chris Vendilli 26:47
This one was pretty unique, without getting into like, the precise terms of exactly what we did, but like I can say in general, I’ll speak in general terms. Let me just ignore this real quick. My ears are ringing here. What you typically see agencies sell for is like, two to five times EBITDA and that’s for agencies, I’d say, like this agency was under a million revenue, so under a million in revenue, they don’t even usually talk about EBITDA. They usually talk about sellers discretionary earnings or SDE, right? So like you got to start to do add backs for like, are they writing off the car?
Are they writing off their cell phone? And again, this isn’t specific to our deal, but in general terms, like, if they’re paying themselves an $80,000 salary, but they have another $40,000 or $50,000 in Bennies in there, their SDE might be like 130 140 but their profit might only be 50 grand or 100 grand, so you kind of have to look at a little bit differently, and those are the size and type of deals that were just my appetite at the time. And I happened to come across probably six or seven and four or five years, and was able to complete two of them. And this particular one, we looked at all that stuff, and what we realized, more than anything, was his team and our team, we already knew each other.
There was some chemistry and synergy. And essentially, I mean, for lack of a better term, the way I would position is I paid the two guys who were halfway out the door to go the rest of the way out the door, is kind of what it came down to, and had a little bit less to do with EBITDA, and within a few months of making some noise about how we had merged and doing a press release and him notifying his customers, we saw like a huge kind of bounce back. And they were sort of taking what came their way, and then we went on offense, basically once we had some more capacity, and got the teams aligned.
And probably 3, 4, 5 months in, they were having, like, I was tracking their sales as a division and on our P&L, so I could look at my P&L and their P&L as a division, and then the total, and it’d be six months or less in first month was like, loss. Second month, like break even, and I was like, oh, boy, what did we do? This is going to get expensive fast. Third Month, we, like, doubled their best month the whole year before, when I looked at their P&L by division report, and it was mostly just the folks that were who came on board, just sharing the news and positive vibes of what we were doing.
Jeremy Weisz 29:22
For you, was there like a down payment, and then payments over time? Was there an earn out? How did you structure?
Chris Vendilli 29:30
This one was simpler. Is a little smaller. I actually have a pretty good line of credit with my bank, even 100% upfront, that was pretty calculated risk with my line of credit, and then I had it paid back, like it said, in less than, maybe about a year, a little bit less. And that was also a way that I negotiated my favor a little bit. It’s like, I’ll just, I’ll write a check. But I want the equipment. I want these personnel to join me. I want basically the website. It’s going to be forwarded to our website, that sort of thing. So I think we did an asset purchase versus like stock buyout. And I’ve heard from people smarter than me that that’s usually the way to go in these types of deals.
And then the second one was really interesting. It was a HubSpot diamond partner, and I saw a post in the Facebook group for HubSpot partners, saying, has anyone ever bought or sold an agency? And I’m like, I don’t know, six months after doing this and someone tagged me or something, I said, Hey, we just did that. Love to talk. When I saw the person who it was, I assumed she was buying because she had a great agencies. Had only been out of maybe two or three years, four or five people. So we jumped on a call, and she told me, no, I’m actually looking to make a big career change, like, here’s kind of where I’m at. And she built a pretty impressive agency pretty quick. She’s doing around half a million in sales, maybe 400,000 sales. And I really like the HubSpot aspect, because we do that, and she had some folks that really knew HubSpot very well. And we got to talking, and at the time, when we first started the conversation, what she thought the agency was worth was we weren’t on the same page.
So I was like, tell you what. Feel free to hit me up anytime. I’ll help you as much as I can. Tell you what to look for, what questions to ask, what to watch out for. And at one point, she’s like, well, what do you think it’s like? I think you think it’s worth a lot more than it’s actually worth. And I told her, like, you can look at the EBITDA, this level, we’re really talking about SDE, as I mentioned, and what it’s really worth is what someone’s willing to pay. And probably six or eight months more goes by, and she talked to three, four other partners, HubSpot partners, and she wanted to do a quick deal. And she’s kind of getting feedback, similar to what I was telling her when we first started talking. And eventually we were able to come to terms. And that one did involve payment, a down payment, and we didn’t do, it wasn’t necessarily an earn out, but we basically did owner financing.
I was going to do the bank loan. And I don’t know if you’ve ever done a larger bank loan into the multiple six figures, but they can get a little dicey. And we eventually did owner financing. We had a lot of trust. We had a lot of shared connections, whatnot. She did some consulting with us, and we basically got her team kind of transitioned over, and that one’s going to be paid off at the end of this year. So we did 36 month payment schedule with a nice, healthy down payment.
Jeremy Weisz 32:33
Love it, Chris, I want to get into a little bit more understanding what you do as a company, and you had a client, customer, Backtronics.
Chris Vendilli 32:50
Backtronics.
Jeremy Weisz 32:52
So talk about Backtronics, and what you did?
Chris Vendilli 32:55
Yeah, I’d say all my clients are my favorite clients Backtronics is, I’d say, right up there with the best of them. It’s one of our favorite clients, and we always seem to do the best work with the clients who are, I guess, what’s the word? They just vibe with us. At the end of the day, it’s like a people business. They listen, they trust us. And that’s this guy, my man, Brian, here at Backtronics to a T and what we do for him, digital advertising, SEO, web design and development, little bit of branding and repositioning. What they do, I guess I’ll go there for a minute. They do air duct cleaning, mold remediation, disinfection service, and they have their own line of products, or some of these things. And when they started with us, if you go down on this page a little bit, there’s a pretty good before and after they had, I was like, these types of projects, but they had a lot of content, but it wasn’t really very nicely presented, we’ll say.
So we’re able to kind of there it is. That slider there you can if you grab that little thing in the middle, you can see the before and after. So it was just kind of like night and day to just look and feel and just growing up their brand to really match who they were in the real world. I say this all the time, but we made their digital reality more congruent with their actual reality, because they’re a big business with just an old website, and they had a lot of good content, so we had a lot of good things to work with. Over maybe the first year or so, we focused on helping them create and feature content and kick off some ad campaigns maybe in the second year or so, we introduced HubSpot, which helps us a lot as an agency with tracking and reporting and attribution, and we got a couple of their ad campaigns really humming. So we’ve grown them up to be pretty big player with their Google ads, they’re getting hundreds of leads per month, and they’re pretty happy customer been with us now I think this one has some good stats, if you scroll down, forget what the exact ones were.
Yeah, we saw their increase in conversions by over 200% we’ve more than doubled their paid traffic leads, overall traffic up 50% so we see traffic go up and conversions go up 200 plus percent at the same time, that’s when things are all going in the same direction.
Jeremy Weisz 35:26
I love it. Chris, first of all, I just want to thank you for sharing your journey and lessons. And it’s been quite a journey, from the Air Force to police to agency owner. I just want to encourage people to check out your website, vendillli.com to learn more. And thank you, and we’ll see everyone next time. Chris, thanks so much.
Chris Vendilli 35:53
Thanks Jeremy.
