Asurion: The Early Days (‘95-‘01) with Kevin Taweel

Introduction to Kevin and Asurion

[00:01:37] Will: So today we’re going to do a deep dive on a company you may never have heard of. It’s called Asurion, and we’re delighted to be here this morning with its co-founder, currently chairman, Kevin Taweel. Asurion actually has several claims to fame. Measured by MOIC (multiple of invested capital), a metric we obviously care deeply about on this podcast, I believe it is both the best search fund investment ever and the best institutional private equity deal, period.

The company, which was originally called Road Rescue Inc., turns 28 years old in July, and for investors who held their investment for the entire holding period, their MOIC is well into the thousands. To put a finer point on that, a dollar invested in the original purchase of Road Rescue in 1995 has grown at a compound annual rate of over 61% through the most recent transaction in 2021, translating into an MOIC north of 5,275x.

Interestingly, and very unusually for us at 50X, it is a story where the predominant source of value creation came from organic growth – although, that’s a little bit deceptive as we’ll see. Importantly, there have been two constant presences throughout that entire period: Kevin and a deeply talented lead director named Irv Grousbeck. We are incredibly fortunate and grateful to have them as our guests on this episode of 50X.

Okay, now, full disclosure, I am both an original investor in Asurion and a close longtime friend of both Kevin and Irv – which doesn’t mean, of course, I won’t be actively grilling them Merrick Garland style on this podcast. Anyway, Kevin, we’re delighted to have you here. Thank you for coming.

[00:03:06] Kevin: Thank you, Will. I’m excited to be here.

[00:03:08] Will: Excellent.

Kevin’s Background Pre-Asurion

[00:03:09] Will: Let’s dive in! So, if you don’t mind, let’s maybe start with a little bit of your background pre-Asurion.

[00:03:14] Kevin: So, I grew up in Prince Edward Island, Canada, small province in the east coast, maybe 120,000 people. And I grew up working in my dad’s grocery store. We had the predominant grocery store where everybody in the community came and shopped every week. And I’d be packing bags and filling shelves. And that was probably where I first got to understand this idea of entrepreneurship, of working for oneself.

Not that I saw it in a great light, because I saw my father coming home from work at five o’clock, tired, he’d have dinner with us and go back to work till 10 o’clock at night. And we’d work six days a week. So, it was sort of all I knew. I knew other friends had jobs working in the government or different businesses, and they didn’t necessarily appeal to me anymore, or certainly not more than what my dad did at the time.

Athletics was a big part of my life. Of course, hockey, I’m Canadian, it’s in the blood. It’s in the water. I also played soccer competitively.

[00:04:12] Will: What position in hockey?

[00:04:13] Kevin: I was a defenseman. All five foot eight of me. I was not a large defenseman, but…

[00:04:19] Will: It was the Bobby Orr era.

[00:04:20] Kevin: It was. You had to be fast, good vision, and yeah, Bobby Orr was the superstar then. But soccer was really my passion, started playing when I was twelve and immediately took to it. It was a growing sport then in Canada and certainly in North America generally. And I feel like I learned a lot of lessons through my experience with soccer, both as a player and being coached by amazing coaches along the way. So, a lot of lessons learned. I ended up playing for my high school team, local club teams, our provincial Canada Games team.

And it was also an important thread through university, because it was one of the key reasons I ended up going to McGill University. McGill had just won two back to back national championships. So that was exciting for me, I was a walk on player in 1983 and I made the team and that was just a huge… I don’t know if I’d say a huge accomplishment, but I had grown up in this small pond and I was this big fish in a small pond, then I come to Montreal and McGill and nobody knew me. Nobody knew who I was. So, to sort of make it on my own without the reputation behind me was super exciting and exhilarating. I spent five years there at McGill, taking a mechanical engineering degree.

[00:05:39] Will: What position in soccer, by the way?

[00:05:41] Kevin: I was center midfield. Not sure I played defense or offense particularly well, but I was able to distribute the ball quite effectively. Actually, my first year at McGill was spectacular and truly formational for me, not just from an athletic perspective, but from a mindset and business perspective. I still remember these moments regularly.

So, McGill had just come off two national championship titles, and we were clearly the number one favorite coming into the 1983 season. I didn’t start the first game, but when I got my shot, I think it was in the second game, I became a starter immediately, and it was exciting. But what was truly different, there was this sense on the team that we couldn’t lose. It was sort of in the air, and I’d never felt like that before, and you would see it. There was one time we were playing one of our rivals in our home stadium, we were down by two goals, and there may have been eight minutes left in the game, but nobody was stressed. And sure enough, our center back, I think he was from the Dominican Republic, he was not a particularly talented scorer, but he came up, got the first goal, we tied it, and won it in overtime. And it was really remarkable to be part of that group of people who had that sense of invincibility, that sense of we can overcome any obstacle. Unfortunately, in the national final, we lost in penalty kicks at the very end. It was during a snowstorm in Sudbury, Ontario.

[00:07:15] Will: Not that you remember it or anything.

[00:07:16] Kevin: Every single moment of it. It’s one of those things that you never forget. Interestingly, my son plays lacrosse for Duke University, and he made it to the national final this past year. I haven’t told him yet that he’ll remember that for a long time, but he’s got two more years to make that up with a national championship

[00:07:36] Will: Rectify, yeah.

[00:07:37] Kevin: Yeah. And then you’ll probably forget about the losses.

[00:07:41] Will: Okay, so post McGill…

[00:07:43] Kevin: Post McGill, I went on to work at Salomon Brothers as a financial analyst in the two year program. That was fun. Fun may not be the right word. It was sport to work these young men and women as hard as they could.

[00:07:56] Will: This is like the Michael Lewis era at Salomon Brothers, right?

[00:08:00] Kevin: Liar’s Poker was published when I was an analyst there. It was truly emblematic of the culture at Salomon Brothers. I was not on the trading floor, I was in the building next to it, but the culture permeated the entire organization. It was very fast, loose, very macho. Not a lot of guardrails or controls in place there at the time.

It was an education for me in what I really didn’t want. It was the first time I actually worked for somebody else. And the cultures of investment banks can be challenging, period, but it was particularly challenging with Solomon Brothers in the late Eighties. Not only did they have a culture where they would chew up employees as much as they could or use them as much as they could. And they weren’t really into developing or nurturing or building a real culture. It was really all about driving near term results. It was also a time when Wall Street was declining precipitously, you were coming into a recession, Drexel blew up in the middle of it, and you’ve got people being laid off, and during my second year there, mergers and acquisitions group probably contracted to about half its original size in less than a year.

And you got to see all that happening to the point where when I was being interviewed upon my exit on route to Stanford Business School, I remember the MD asking if I’d consider coming back after business school, and I just wasn’t expecting that question, and I just answered honestly and naively and said, “Well, I suppose if I don’t have any other offers, I’d come back.” It was just intuitive. It was just like, “No.” It was a reaction. I would never want to work in that culture if I didn’t have to. But I learned a lot, that’s for sure. The thing I take away most from that era was the importance of getting it right. Of doing work at a high level and checking your work, making sure it’s perfect. And I took that with me out of that experience.

[00:10:03] Will: And so then you go to Stanford, to the GSB.

[00:10:07] Kevin: Went to the GSB, lovely. I mean, like a lot of Stanford business school graduates at the time of my life, it was certainly not overly taxing. I met a lot of people who become my lifelong friends. And these are people who you work with, invest with, sit on boards with, are friends with, raise kids with. Of the things you get out of an education, probably the most important was a core group of people that you end up spending the next 30 years with. And that was fantastic. I also got the opportunity to work as a case writer. I call it my third year of business school.

Origins of Kevin’s Search Fund

[00:10:42] Will: So, yeah, talk about how you ended up doing the case writing thing, what that job entailed, and maybe when did you first hear about what the heck a search fund was? Because Kevin, when you and I were in business school, 1992, I think there had been five of them raised to that point.

[00:10:57] Kevin: Yeah, there weren’t a lot at that point. It was certainly Jim Southern, David Dodson, couple of others. Well, the search fund was sort of in the background a little bit during our two years of business school. I hadn’t really focused on it a lot.

[00:11:13] Will: When you went to be a case writer, did you know then you wanted to search?

[00:11:17] Kevin: Absolutely not. I was more in the camp of I wanted to start a company. So, I wrote about this in my business school application, the desire to be an entrepreneur. I certainly saw my father working in this door during summers while I was at University at McGill. Basically, I was my own boss. I was teaching soccer schools or soccer clinics throughout Prince Edward Island. The opportunity to be my own boss. And I even started with McGill Classmates, a small consulting firm during one of the summers. So, this idea of starting a company, being an entrepreneur it goes back to the beginning. And so, when I was in my second year of business school, along with a handful of other classmates, we’d get together – maybe Monday Tuesday every week – and we’d bat ideas back and forth. We’d be brainstorming trying to come up with some company that individually or as a group could start, and I struggled at finding the right idea, what would make sense.

Interestingly, this is in ‘91, ‘92. Had we been coming out of business school, maybe five or six years later, at the dawn of the internet, where eyeballs were everything, I’m glad we didn’t because I think any one of our dumb ideas then could have gotten funded. As they all ultimately got funded five or six years later.

I took the job as a case writer, Will, because I had no other offers. I may have interviewed for one consulting firm, maybe one or two other types of jobs, but I didn’t get the offers and then it was getting late in the year and my then girlfriend suggested I apply for this case writing job.

[00:12:54] Will: Spoiler alert, our story arc is about to intersect with Irv Groesbeck.

[00:12:59] Kevin: The job was to be case writer for three professors: Irv Groesbeck, Jim Collins, the author of Built to Last and Good to Great, and Bill Lazier, another wonderful professor and friend who’s passed away and was a great influence in my life. They had interviewed a number of candidates. They had offers out to two of those candidates for one position. And those two candidates were holding out for better offers elsewhere. I come in on a Friday afternoon. I interviewed with all three of them. They made me an offer I think that night and I accepted before the other two could accept. So at least I had my job. I had my stable $40,000 a year job.

I didn’t really know what I was getting into, Will. It was more of a stopgap. While I was doing my work, I could think of ideas to start a business. And it was about that time, because I knew Irv had really been the godfather of the search fund, or the mastermind behind it, that I started thinking about the search fund as a Plan B, if I couldn’t find a company to start.

[00:14:11] Will: Fascinating. So, what point did you make the decision to go down that path, have those two things merge together.

[00:14:18] Kevin: Yeah, about halfway through my year as a case writer. I used to say it was the best job I ever had – running Asurion is actually a little bit better – but it was fantastic. I got to work with on average an hour a day with Irv or Jim or Bill. I’m learning about businesses and management and leadership. And it was like an intensive course, or almost an intensive third year of MBA, which was better than the other two combined. Obviously, gave me some time to think about starting a business and gave me some time to reflect on that. I still wasn’t making much progress on that front and about halfway through, I decided it was time to pivot to Plan B. Which was doing a search fund and I thought, “Oh, gosh, it’s not going to be as good because I want it to be my company.” I wanted this to have my fingerprints all over it from the start. What I know now, but didn’t realize then, was when you buy a company through a search fund, yeah, your fingerprints are going to be all over it from the start. If not from day one, certainly within a couple of months. You are the person that the culture is going to be built around. So, the fear I had about not being able to get that out of the search fund was not founded.

[00:15:29] Will: You decide to do it. You go down the path, you raise the capital, right? Nontrivial in that era, still sort of a novelty.

[00:15:36] Kevin: I think I raised a little over $200,000 in eight or nine or ten increments. Started looking in the healthcare industry. Jim Ellis took over as case writer about the time I raised the fund. And so he was officing at Stanford.

[00:15:53] Will: He was your successor.

[00:15:54] Kevin: Who was my successor as a case writer and then my eventual partner here at Road Rescue. While Jim moved into my office, I didn’t move very far. I just found an empty office and started my search out of that empty office. I didn’t really tell anybody. I felt like it was, you know, just keep my head down and nobody will figure it out. Eventually, somebody figured it out and they kicked me out after about six months. But, it was important because I got a chance to spend time with Jim every day. I was helping him with getting up to speed on case writing. Jim saw what I was doing. It eventually led to a partnership between Jim and I. Near the end of his year of writing cases was about the time that I had surfaced two potential transactions.

And Jim and I talked about them, we decided we’re going to do this together, in that I would pursue one transaction, he would pursue the other, and if one fell apart, that person would come back to the other transaction, or if we both ended up buying these companies, then we’d share some equity in each one, at least that was the idea.

Acquiring Road Rescue

[00:17:01] Will: And he raised his fund at that point?

[00:17:04] Kevin: No, he actually didn’t raise the search fund. We leveraged my search fund. We started doing diligence on each of the companies. Mine was a small HMO based in Miami that focused on the Cuban community there. And Jim had Road Rescue, a small motor club, or roadside assistance company, based in Houston. And we did diligence on each.

Just as Jim was about to start raising money for the acquisition of Road Rescue, my target fell through. It wasn’t that the seller had misgivings. The reason it fell through was I went to Miami with one of my investors, Bill Egan. We spent a half a day with the seller. And then we went out to Joe’s Stone Crabs in Miami, and Bill was very impressed with the seller. So much so that later that evening, when he and I conferred together about the transaction, Bill’s opinion immediately was, you know, let’s run away from this deal. This guy is super talented. He knows this space really well. He knows the community. He has been part of it for a long time. If he’s leaving, I don’t want to be stepping into his shoes. Not necessarily something amiss, but you’ll never live up to that. It’s going to be too difficult.

So we walked away from that and. I think the next day, Jim and I met up just right before he was about to start fundraising. We met up at a Chinese restaurant in Menlo Park, and before appetizers hit the table, we came together, resolved who got what equity, which is 50/50, and that we were going to be leaving the next day to start fundraising together. It was instantaneous.

[00:18:50] Will: And when you say fundraising, do you mean for the transaction?

[00:18:54] Kevin: For the Road Rescue transaction. Were looking for, I think, purchase price is around eight, eight and a half million dollars, and we generated that with two million in equity, two million in subordinated debt, all from investors, and then some senior debt on top of that. That was an interesting experience going out to raise money for Road Rescue.

[00:19:13] Will: Talk about what that was like. It was a little different than search fund deals prior to that point.

[00:19:20] Kevin: I think we were sold out in 24 hours. It was almost instantaneous. Jim and I, we knew it was a potentially good transaction and good company, but we didn’t have a lot of experience looking at companies. I don’t think we realized how good it was.

This, while small, yes, was showing meteoric growth, had recurring revenue, was profitable, low capital intensity and simple operations. It’s like you hit the jackpot and our investors got that right away. They took as much as they could. Like I said, I think we sold out in less than 24 hours and we had to end up carving people back. And importantly, we and other investors wanted Irv to be part of that transaction. He was not in the search. So, we went to all our investors who had the right and all were very much willing to pare back their ownership stake to allow Irv to come in because Irv was not only going to come in as an investor, he was going to sit on our board. And here we are 28 years later and Irv is still our stalwart on the Asurion board.

[00:20:24] Will: Some quick data on Road Rescue and that transaction. So, an important point is you guys bought all of that, the multiple that you paid was, it was four and a half times trailing EBITDA. For a business that had grown 90 percent in the prior year, revenue. Pausing on that, that’s extraordinary. And if you took the year before that, it didn’t grow as fast. It grew at 33%. So you average those two, that’s like 65 percent growth, right? Pretty conservatively. And you pay less than five times EBITDA for it. We use this metric now in the world of search, Power Ratio, as a way of evaluating transactions, the organic revenue growth rate divided by the EBITDA multiple and a typical private equity deal would have a metric of like less than one times, like 0.75, and a good search fund deal would be a lot better than that, it would be like two to three times, which is a lot. You and Jim were sort of 15x, literally the highest power ratio in history. So it is not surprising that it got that sort of response from investors.

[00:21:30] Kevin: We did a lot of things right over time, but clearly we were really lucky. I mean, to find this company that was leveraging growth in the wireless industry, because they sold their product through wireless carriers. And it was, I think there may have been at the time in 1995, maybe 10 million wireless subscribers in the US, which was going to go to 300 million. That was really lucky.

The dynamics of play were important and difficult to, I think, replicate. The CEO of the company had a small stake in it and his father owned the majority of it. So, he’s basically living under the thumb of his father, and he had been running it for a few years, not too, too long, but was ready to stop working for his dad. And so this was a big payday for him, personally. It would have been a few million to him, several more million to his father, but in their world, that was a grand slam home run and we caught them at absolutely the right time.

[00:22:30] Will: Clearly no auction involved. No deep process. I mean, just to give some math on that, so the trailing revenue was $5.9 million. Trailing EBITDA was $1.5 million. You guys put out a deck where you sort of projected what the next five years would be like. The deck called for 15 million of revenue by the year 2000. 5 years out. So that’s 17% growth. And $3.7 million of EBITDA. You assumed a little bit of multiple expansion, kind of a crazy assumption, you said you’d get to 5.8x EBITDA. All that got a 37% IRR.

[00:23:06] Kevin: We may have been a little aggressive.

[00:23:08] Will: Okay, so 17% revenue growth was the core assumption there. So you bought the company?

[00:23:14] Kevin: We bought it, yeah. The actual process had its twists and turns, Will. Probably the most interesting part of getting the transaction done was for two months, Jim and I sat in the office next to the seller, working with him, waiting to get the largest contract, GTE wireless, renewed because we weren’t going to sign the contract unless that contract got renewed.

So, we were very earnest and very cheap. We shared a hotel room at the Embassy Suites. It was super entertaining how I said, “Jim, just give me 10 minutes to fall asleep first because you snore like heck.” But we would get up every day, it was a groundhog day, we’d try to help the seller prepare for his negotiations. And I do believe proper preparation for important events, whether it’s a contract renewal, whether it’s a difficult conversation, is so critical. And Jim and I may have gone overkill on this one. We actually wrote a tome. It was, here’s the main contract terms, here’s your position, Ray, that’s the seller’s name, and then here’s what we expect GTE will say. This should be your response. It was sort of a back and forth, and it was probably 60 pages, and we handed it up to Ray, asked him to review it in preparation for his contract. We would actually rev it with him. And it was probably overkill, but it was important to us. We needed to get that contract signed to get the deal closed, and it happened, and sure enough, two months later, July of 1995, we got the deal closed.

[00:24:52] Will: Very cool. One last thing to mention is I’ve been back through the materials, obviously preparing to talk with you on all this stuff and the PPM you guys wrote for the deal. I think it goes straight to the Irv training as case writers. It’s just excellent. Like I would still recommend that as a model for people going down this path to look at. It applies also to the early board decks, which were also very crisp.

Operating Road Rescue

[00:25:14] Will: Maybe talk about, you buy the company. You relocate, you and Jim do.

[00:25:19] Kevin: We moved to Houston, Texas.

[00:25:21] Will: Overnight, you go from Stanford MBAs to CEOs, talk a little bit about the first hundred days in the new role?

[00:25:30] Kevin: It was eye opening to say the least. Spending those two months sitting next to Ray, we got a chance to feel the sense of the organization, got to know the people, so it wasn’t quite as hard cut. But now we’re in charge. There was some element of like, what do you do, what do you do now? And we were really lucky, Will, we had this amazing board of directors that, honestly, I still marvel at how talented a board we’re able to pull together for such a small company and for Jim and I. You had Irv and you had Joel Peterson and Bob Oster, Bill Egan and David Dodson, four of them were operators, Bill Manley, an investor, but all with tremendous experience and were there willing to support us and give us advice at every turn, more of an advisory board versus a governance board. And so we had them to call on, which was helpful.

And yeah, I recall the first few months were a lot of asking questions. A lot of just observing, what do you do, trying to understand the business. That was number one. And really getting to know the managers.

We, importantly, I thought, we wanted to follow the money. How does this really work? Are people really paying us? Are we really sending out checks? So we would literally sign every check. And because our business was roadside assistance, where we would send a tow truck in some town out to support or help one of our customers. They would send us an invoice and we would pay thousands of $50 checks to him and I would have to sign them.

[00:27:03] Will: You guys signed all the checks, thousands of checks. How long did you guys do that for?

[00:27:09] Kevin: We probably did that for six months and then we handed that off to our new CFO, who we hired a little bit later. Jim and I were both happy to do it just so we understood the business. As we got to know the managers – we learned in business school, it’s good to delegate – we attempted to do so. We quickly found that that didn’t work very well. So, we were trying to manage by objectives, set up objectives and scorecard and we’ll measure against it over time. Yeah, that didn’t work.

What the team that the seller built was used to was executing orders. So, I would tell the specific leaders what to do and they will go do it, but once they were done, that was it. They didn’t know what to do then. So, the idea of setting goals, empowering them to achieve those goals and scorecards and manage them along the way, that quickly led us to realizing that the team that was there was not going to be the team that was going to be with us. Certainly not the medium term and not the near term as well. I think within a year, most of the team, if not all of the team, was entirely replaced.

[00:28:20] Will: What do you remember about the first year?

[00:28:21] Kevin: Jim and I, we saw this engine that was growing rapidly, and we had this sense that okay, land grab may be not exactly the right term, but it was a sense of, once we got in and realized oh, this is big and growing, we knew that we wanted to spend most of our time on the revenue side.

So, Jim and I, to the extent we have 200% of our time, a hundred each, we probably allocated about 150% of the 200% to revenue growth. And Jim was entirely on either landing new accounts or managing our existing clients to drive more subscribers through their customer base. And I was about 50% on that, working with existing clients, and 50% on operations.

Which meant that we knew by commission (which is the right way to do it) that we were taking risk on the operation side. So, was the call center open? Were calls being taken? Were customers happy? Were they being supported and aided on the side of the road appropriately or not? And we were counting on the people we had in place to manage those to ensure that that happened.

Now, one of the things we did do to make sure that the operations were up and running, Jim and I would actually set our alarm clocks in the middle of the night, so I would set it for 1 AM and 5 AM, Jim would set it for 3 AM and 7 AM, and we would wake up and literally just (while still in bed) call the 800 number, make sure somebody picked it up, because at that time, while we were 24/7, Will, 24/7 meant three people in a couple of cubicles in a small room in Houston, Texas.

It wasn’t much of a fail-safe or a Plan B there. And occasionally it’s not what happened like one time, somebody threw a brick through the window at our call center and police got called and so the call center was down. So, Jim and I rushed down in the middle of the night and sure enough – I mean, police presence in Houston in the mid-nineties was incredible – so, we were there in probably five minutes, the police had the place surrounded in probably two or three minutes. And everything was cleared out, it was fine, but our call center was down for an hour or two.

[00:30:36] Will: Put us in that room. Like, what was it like being in that first office in Houston?

[00:30:42] Kevin: Yeah, Jim and I, we’d have our offices adjacent next to one another. Our assistant, Tanya, was out in the other room. We had to make sure that she didn’t bring her weapon, her Glock Nine into the office. We asked her to keep that outside. Which by the way, when we ultimately had to terminate Tanya, Jim and I rock, paper, scissored in terms of who was going to fire her. And fortunately, I won and Jim had to do it.

It was exhilarating. It was really fun working with a partner. We interacted continuously. We probably didn’t even need the wall between us. I think we effectively separated our responsibilities. I think that’s important. But we were always looking to the other for advice: “Hey, I’m thinking about doing this. What do you think?” “Can I get your input on this?” There’s a lot of energy in that and excitement and, well, I got to make the decision in the areas of my responsibility and the same for Jim. We wanted the other to be involved and engage with it. Strategic matters, Jim and I would come together and make the decision together and there may have been three instances in our whole time together where we disagreed. And then we’re like, okay, we’ve got two co CEOs, how do we handle that? Well, we would pick a board member, it was usually Irv, and Jim and I would either meet face to face or on the phone with Irv. And we we’re actually pretty good about this, I would defend Jim’s position and Jim would defend my position. And we didn’t want Irv to know who felt what. And inevitably, in every case, instead of picking A or B, Irv had a third alternative that was so much better.

It was fun. Changing out the team was, that’s challenging, right? I mean, we are early on in our first conversations with people of how to terminate them, performance manage them. And a lot of the conversations that Irv teaches at Stanford in “Managing Growing Enterprises,” or “Conversations in Management,” like we were living it real time. I remember Jim and I had made the decision to terminate one of our regional managers and Jim called him up and said, “Hey, we’re coming to San Antonio tomorrow and would like to have a conversation.” And it had been like three or four months and we’d never been there. And so he’s like, okay, I will see you tomorrow, and we hung up the phone. And he called back maybe an hour later. He said, “So my wife and I were planning on looking at boats later today and thinking about buying one. Should I maybe delay that until after our conversation?” Jim had to respond, “Yeah, why don’t you hold off on that? We’ll talk about it tomorrow.”

We were learning our way through it, of how to have these conversations. He clearly knew. There’s so much we did wrong there. Obviously, he was sitting in place for months, probably realizing he wasn’t doing a good job, and we were letting that drag out. And instead of just showing up and having the conversation, we had this pre-conversation, which led to an effective termination without a termination. So he had to wait for 24 hours to hear it. We were making our mistakes. And yet the company was still growing. So one of the geniuses of the search fund is if you buy a company that is growing early, stable and profitable, it can withstand the mistakes the young new entrepreneurs will inevitably make.

And probably the biggest one, the biggest mistake we made, Will, was when we saw that wireless was growing, we thought we were in the roadside assistance business. So we defined ourselves as a roadside assistance company. And this had meaningful impact to what we did and how we resourced and where we allocated our time. And, so, probably in it, I don’t know, six months, a year, and we decide, look, we’ve got this great channel distribution wireless. Well, there are probably other channels of distribution. Why not sell roadside assistance to automotive manufacturers, to insurance companies, credit card companies. We know you can access roadside assistance directly through those channels as well.

And so, Jim and I built a sales force and we started going after, you know, maybe half a dozen people with a leader and started going after those channels of distribution. So, it took us about a year or so to realize that this was a mistake. Because we were effective at actually getting in to talk to the companies and even we were able to bid on some RFPs – and General Motors I recall vividly – but the big difference between these other channels of distribution and the wireless channel was it was a cost center. Roadside assistance was a cost center. It was something that these channels gave away for free and they would try to squeeze on the providers so that they would minimize the cost of that loyalty benefit that they were offering. Whereas for roadside assistance, the wireless carriers marked it up and made a healthy profit. And so they were comfortable growing that and we could make money at that. Whereas with the other new channels of distribution, it was a very low margin business. We finally figured it out, took us a while, and then we backtracked. And, to our credit, we made some hard decisions, and we let go of that entire team.

[00:35:58] Will: And this is year two?

[00:35:59] Kevin: This is probably, yeah, year two, year three, maybe ‘97, ‘98. And we decide, hold on, while we were undertaking all this folly over here with new distribution channels, the core was still growing – roadside assistance to the wireless industry – and we thought, let’s continue to lean into that.

So this is sort of our first lesson on the concept of “focusing on the core,” getting more juice out of the core business. And we did refocus on the core, and started looking at other products and services we can sell into wireless.

[00:36:30] Will: You guys put out a paper around that time. If you look at the growth characteristics of that core market, they’re just extraordinary, right? I mean, you can increase your penetration of existing customers. You can sell new accounts. And then meanwhile, the overall market is growing. People are signing up for more phones. When you started cellular penetration in the U. S. was 32 percent.

[00:36:50] Kevin: I think it might have been even lower than that, Will. I think by 2000, it was 30 percent. So, we got to ride even a little bit earlier than that.

[00:36:58] Will: When did you and Jim decide to move back to Bay Area?

[00:37:01] Kevin: I think we moved back a year from the day of starting. So we started in July 95 and we moved back in July 96. And Jim and I hadn’t really contemplated it. The topic was brought up by Irv.

So, Irv was close to the company, still is, but he saw that we were traveling a lot. Jim in particular was traveling for client meetings and new business development. I was on the road as well for client meetings and for going out to our different offices. And he felt like we would be happier, and it would be a more long term sustainable for us as leaders, to relocate back into the Bay Area where we wanted to be and where both our spouses had jobs. Because while we were traveling, so were our spouses. I mean, they were traveling, they’re both consultants, and traveling four days a week. So, he saw the stress that was putting on the system and thought that even though it would be potentially better for us to be located in Houston, that it was going to be long term more sustainable for us to leave.

And we were… it didn’t take him mentioning it twice to get out of there. We were happy to leave.

Early Success: Hold or Sell — a Critical Early Decision?

[00:38:05] Will: In sort of the first two, three, four years, I would describe it, having read through those board decks recently, I would describe it as what my daughter would call a hot mess. So, there’s like a consistent pattern of you guys growing, you know, above budget. So, subscriber and revenue count. Which is what, as you said, that was the, that was what you were focused on. That was the driver of revenue. That was exceeding plan. SG&A would be a little bit over and EBITDA would be a little bit short. There’s a lot of moving parts going on. The key point in that is never once across that period of time did the company grow subscribers less than 50 percent a year. And that is pure organic, all roadside assistance, right? And so, in the middle of all of that comes a bid, right? So, it’s an interesting moment before all this where CUC, I think it was, comes in and they bid, this is 1997, two years in, they bid 60 million bucks, which is 15 times MOIC. How did you and Jim, the board, process that? That would still, by the way, be a top 5 percent outcome. 

[00:39:12] Kevin: Can I address your comment about us being a hot mess at that period of time?

[00:38:16] Will: Mess is a little strong.

[00:38:18] Kevin: Oh, no, no, no, you’re right, you’re right. This was quintessential. Irv doesn’t need to say a lot to make a point. One of his great strengths. So, in that time period, the first two years. And he sees what’s going on. He reads the decks. He sees us overperforming on revenue and underperforming on margin. And he pauses during the board meeting and says something to the effect of, “So, Jim and Kevin, do I have this right? Feels like you’re overperforming on all the uncontrollable items and underperforming on all the controllable items. I don’t think there’s any response needed for that. Got it. Message received. That will never be forgotten. And will be retold again and again.

Going back to CUC. We get an offer from CUC who were high flyers at that time. I don’t think I had merged with HFS at that point in time (but this was before the principals of CUC all went to jail.)

It was sort of incredible. It was like 15 times it would have been in two years. And we were proud, is the way to describe it. It was like, wow, this is real. Somebody will actually pay a lot of money for this. It was more of a LOI offering. They hadn’t gone into diligence. And so we don’t know if they really would have paid up. But the conversation at the board meeting was absolutely enlightening. Like Jim and I were just spectators. We were listening. We presented the offer to people, the board knew and to hear the various opinions expressed on how to look at this and evaluate it was… I felt like I was in a classroom and learning and absorbing all this great experience.

One of our board members has a long history and was very, very successful at transactions. I mean, he was a proponent of selling. He was like, “Look, you just can’t beat it.” It’s 15 times your money in two years. You put a big win, not just a small win, a big win on your resume. You go out and you and Jim, you go at it again and you go find another company and you set the bar and your reputation is established and it’ll be a win for the investors and everyone. And that made a lot of sense to Jim and I.

And then one of our other board members, Irv, had a different view. He started with, “how do you feel?” And he asked Jim and I some questions. How do you feel about the company? How do you feel like the prospects are for Road Rescue over the next five years? Do you think it’s going to grow? Do you enjoy what you’re doing?

And he made the case for if you have confidence in the runway ahead of you. And at this time we did. While there were pockets of competition from AAA sprouting up, we did have confidence in the growth. And it was tough not to given how fast we were growing and how fast the wireless industry was growing. Irv said, look, if you’re confident, you enjoy what you’re doing then do you really want to sell now, pay half of what you get in taxes to Uncle Sam, and then you guys got to go out and find another. And it’s not easy to find the Road Rescues of the world. They’re few and far between. That point of view ended up carrying the day. I mean, Jim and I, of course, made the decision. It gave us a chance to actually really evaluate how committed we were to this company and the industry, and in a sense we emotionally doubled down after that.

[00:42:40] Will: It’s worth mentioning that Irv built his career as the co-CEO of one of the two best run cable companies. A company called Continental Cable Vision that he and his partner ran for 30 years. So, Irv had some direct experience with similar situations that informed his views as a board member and investor and partner and friend.

[00:43:02] Kevin: I think both of them came at it from their experiences that they had.

Entry into Handset Insurance: Acquiring the Merrimac Group

[00:43:06] Will: Okay. Well, so let’s maybe talk about handset insurance.

[00:43:09] Kevin: My favorite topic.

[00:43:10] Will: Yeah, good topic. How that evolved as a business for you guys and how you got the M&A hat back on there and just maybe talk a little bit about that, the Merrimac piece.

[00:43:20] Kevin: So, once we decided we’re going to focus on wireless, we looked at doubling down in that space. So, building out our client services team and sales team to sell into more wireless carriers. But we also looked at other products that we could potentially sell through that same channel of distribution. Because it was such an amazing channel of distribution. And at the time, if you went into any wireless handset store, you would see a couple brochures on the desk when you’re waiting to buy your handset or set up your wireless plan. One was roadside assistance for $3 a month and right next to it everywhere was cell phone insurance for $3 a month. And so, of course, we’d be mystery shopping and training in these stores all the time. So you literally look at the pamphlet and read it. I’m like, hold on. Cell phone insurance. That seems to be more closely aligned with wireless than roadside assistance. Hmm. I might want to be in that business. And so we would never have found cell phone insurance were we not in the business. But because we were, we got to see it.

And outside in, it may seem like a big move. It’s an entirely different product. Why would you consider this as an acquisition? But, once you’re in the industry, you realize that in fact, both the person you pitched to at the wireless carrier is the same marketing manager. I did some value added services marketing manager within the wireless company. So the person you’re selling to is the exact same person.

The financial orientation of the products were identical. They’re both insurance-esque. So a customer would pay $3 a month billed on your cell phone bill and the risk of how many times somebody would break a phone or use the service was born by us. And operationally, they were very similar. Somebody had a problem, they would call a call center, we would either send a phone or send a tow truck. They were almost identical businesses.

We actually got conviction pretty quickly we wanted to be in this business. So, we pursued both a buy and build strategy. We knew that our biggest client, GTE, was looking for a provider of cell phone insurance, so we started bidding on it because we had a seat at the table because of our relationship.

At the same time, we started talking to the three players in the industry that provided cell phone insurance. So, there were three small players at the time, the company we bought, the Merrimac Group, Lock/line, and Signal. And before that RFP concluded, we were able to actually move down the path with the Merrimac Group and close that transaction. And that’s what really launched us into the cell phone insurance industry.

[00:46:05] Will: Talk a little bit, if you don’t mind, about that deal. How’d that come together?

[00:46:10] Kevin: It was based in Nashville. Two partners who were former insurance agents with one of the big firms, I think, Marsh McLennan, started it, and they were in the insurance industry and saw others doing this niche in cell phone insurance.

Their growth profile looked not dissimilar to what Road Rescue did four or five years earlier. So, you’ve got this business that may have been doing four or five million in revenue, a little over a million of EBITDA, but were adding wireless subscribers, hand over fist, much like Roadside was. So, it’s sort of like going back in time a little bit.

But they were insurance agents. They had never run a business, scaled a business. So, they were running at the limit of their capacity and ability. We hit them at the right time. They were ready to cash out, if you will. I mean, they had a nice run. They were agents for a while. Now this will give them plenty of money for retirement.

[00:47:06] Will: You approached them, right? So given that this is proprietary direct approach.

[00:47:11] Kevin: Proprietary direct. We actually approached all three and we tried to hold simultaneous conversations with all three. This one progressed more quickly. And so we focused on it.

I recall that the transaction negotiations, we were at the union station hotel in downtown Nashville. I remember we had two hotel rooms. The four of us were negotiating in one and they came to us with their final offer like the price is eight million I think it was or something around there and not a penny less and Jim and I looked at each other. I was like we’re gonna have to think about this and so we retired to our room. And we had this little squishy basketball that we’re playing with and we’re throwing it back and forth and our first question is how long do you think we have to hang out in here before it’s okay to go back in and say, yes.

We had experienced with roadside assistance. So we had some idea, we knew that the acquisition of the Merrimac Group could be a really good transaction a la roadside assistance. Turns out it was 10x that. We didn’t know that, but we knew it was going to be good. But once we got inside and under the covers, you get to spend a few months in the organization. You’re like, oh, hold on. There’s a lot more here than we thought.

[00:48:28] Will: How many minutes did you give them?

[00:48:30] Kevin: 20 minutes.

[00:48:32] Will: 20 minutes, okay.

[00:48:35] Kevin: That’s the lesson, 20 minutes, no less than that. Yeah. We ended up buying. I think it was six times EBITDA. It was growing so fast I think the multiple on a run rate basis was a lot lower than that.

[00:48:44] Will: So the numbers just that we’ve got for that were just exactly what you said, Kevin. So a little over $4 million of revenue, $1.2 of EBITDA, sub growth of 60%, right? So very similar to the growth rate at Road Rescue initially. You guys paid on a run rate basis, four and a half times EBITDA for that. That doesn’t even include the fact that some of it was paid overtime, and you could probably discount that if you wanted to, but it ended up sort of at that time about 18% of enterprise value.

[00:49:12] Kevin: That’s an important point, the 18%. While Jim and I had confidence, our board didn’t have the same level of confidence. So, there’s this element of when you’re, particularly when you’re doing acquisitions, you never want to bet the firm, like you don’t want this to be, the acquisition doesn’t go the way you think, then it takes the whole thing down. My rule of thumb there is max 20, 25 percent of enterprise value. I will deviate from that by commission.

[00:49:39] Will: We’re going to get to that by the way, but yes, go ahead.

[00:49:41] Kevin: I remember one of our board members thought this was the stupidest idea in the world. It’s like, who would buy insurance for your cell phones? At the time, you may recall, cell phones were sort of free. They were given away as part of your wireless plan if you signed up for a contract. And he was like, why would you do this? This is stupid. We had confidence. We didn’t know for sure. But we also knew because the roadside assistance business at that point was so much bigger that it wouldn’t have killed us if things didn’t go as we expected.

[00:50:08] Will: You’ve financed it all with debt and cash off the balance sheet, no equity required.

[00:50:15] Kevin: Correct. Yeah, nothing required.

[00:50:17] Will: That’s actually an important point that we haven’t really touched on, which is the business, in addition to rapid growth, had kind of exceptional economic characteristics, right? So crazy high returns on tangible capital, well over 100 percent on that metric. Simple way to think about that is for a dollar of EBITDA, typically at least half of it and often more turned into free cash flow for you guys. All of that growth you could finance internally.

[00:50:42] Kevin: Yeah, with cash flow or debt, yeah. We didn’t have a ton of networking capital that was required to grow the business. Not a lot of PP&E. We inherited that structure and it was certainly wind in our sails if you will.

Vertical Integration

[00:50:56] Will: Acquisition closes. Talk a little bit maybe the integration, how quickly you guys brought that on stream, and then we’ll talk a little bit about a capital allocation topic.

[00:51:02] Kevin: That was an exciting time. We’re no longer traveling to Houston we’re traveling to Nashville to get this up and running. And there was a big “aha” within a month or two. Because, essentially, round numbers, the customer paid $3 a month for this insurance and you give $0.50 to the carrier as a billing collection fee, and then $2.50 of that would go basically to the underwriter who managed everything. And of that $2.50, The Merrimac Group only got 50 cents of it. The other $2 went to the underwriter to pay for claims, to pay for the logistics of getting those phones to the customers, and to pay for profits that they would get. Even though the $2.50 was managed by the Merrimac Group.

Whoa, hold on. We’re managing it. We know everything, we know the economics of this, we know the risk, we understand the risk better than anybody else, better than the underwriters themselves because we actually see it real time. And so the first move we make, which changed everything was, no, no, we captured the $2.50 and that becomes our revenue, not the 50 cents.

We didn’t know that before. We brought in an insurance expert who basically quickly told us, no, no, no, you don’t need the insurance company, you can rent their licenses. And so immediately, instead of them taking the risk and controlling all that, we took that on, and we rented their insurance license for a few percentage points, maybe five at that point, and now it’s a lot less, but that gave us control of everything. And now we’re like, okay, yeah, sort of game on.  Now we get the underwriting profits immediately because we’ll take that out. But then it opens up the world for us to better manage the claims distribution process and ultimately the repair of those funds.

So step one is to get control of the entire premium and take over the underwriting profits.

Step two was become the logistics provider. So instead of having a third party, FedEx or UPS, and not just delivery but manage the warehouses and all that, we created our own. We started our own warehouse and this way we would ensure that the customer got served, if not next day, the day after, which was an important customer service metric. But we also were able to do that a lot less expensively than those third party logistics providers.

And then finally, the final step of vertical integration, Will, was the repair of cell phones. So every time, probably a majority of the time, a phone had a problem, it was damaged and not lost or stolen. So, there’s still value in those phones. And we started the process of getting those old devices back, refurbishing them, making them like new, we would always replace the plastics on the outside so you’re never touching old stuff, but we reuse the internal parts, and we can in turn save a lot of money in that process while getting the customer into the same handset that they had damaged originally. So those three steps led us to both control the customer experience, keep the price down for consumers, and increase the profitability of the program for our carrier partners.

[00:54:25] Will: So how long do you think it took, Kevin, to get to the point where you guys were sort of fully in vertical integration mode?

[00:54:32] Kevin: It took about three, four years. Step one took about a year. Getting into the distribution business started about a year after we were in it, and that just scaled. We were in it right away, but it was a room the size of a closet. We gradually, over the next years, took more and more from the third party and created our own logistics center. So that took a little over a year.

And then once we had the logistics center, we carved off a space and started repairing phones there. It evolved over time, but really it took about three or four years to get fully into it. And then we just perfected it. We scaled it and perfected it. And ultimately we had operations in Hong Kong. We had operations in China. Now we’ve consolidated them all in the Philippines, a lot of our logistics and repair operation.

[00:55:22] Will: And again, the sort of linchpin for all this is the Merrimack acquisition, $7.3 million purchase price.

[00:55:30] Kevin: Road Rescue got us in the game, and the Merrimac Group was really the main engine. While we stayed in the roadside assistance business, it was clear that handset protection was the engine after a couple of years. We intentionally diverted resources from it, time and attention, but that became competitive quickly as well. Probably around the 2007, eight time frame, the roadside assistance went away, but it had all been about cell phone insurance since 2001.

Capital Allocation in the Search Fund Period

[00:56:02] Will: The headline for Asurion is phenomenal organic growth over time, but the selected M&A activities have added just enormous value across the whole hold period, Merrimac being front and center in that, and one other we’ll get to, but a very unique feature of the company’s history over time.

There was one capital allocation event in those early years where in 1999, you guys have the cash generation that you were talking about, Kevin, and you decide to do a share repurchase, something that’s pretty unusual in private companies. Can you talk a little bit about that early purchase. Sort of how it came about? Do you have anything you remember about that?

[00:56:42] Kevin: There’s always this debate on whether you do a dividend, or a share repurchase. And Irv was instrumental in our learning on this dimension.

[00:56:52] Will: It was a big part of the Continental playbook over time.

[00:56:55] Kevin: It’s almost always the right tool to use as long as you can value it fairly. It allows individual investors to make a decision. Do you want liquidity or not at this price? Are you a buyer, are you a seller, are you a holder? Versus a dividend, which is your force feeding somebody money that they may or may not want. Sure, intuitively, it’s like, oh, yes, give me a dividend, that sounds great, but as the recipient of that, what do I do with that? Can I redeploy that in the same place? Do I want to redeploy that? That was our first introduction to balance sheet management, if you will, from Irv. It was a good lesson, the importance and the impact, although I’m not sure we fully appreciated it at the time, of a share purchase over dividend.

[00:57:40] Will: Yeah, that’s extremely well laid out. Basically, this is the first step down the path for the company, right? ‘98, ‘99 is very early days and you guys invest $12.5 million dollars, all financed by debt and buy back 10% of the company. The IRR math on that transaction is rather good, 41 percent IRR over 22 years and a MOIC of 275X. So just the power of doing that early, and it’s very rare in private equity, almost basically never happens in private equity. It’s very rare even in search.

Kevin, we touched on this a little bit as we were talking about the share repurchase, but business is generating all this cash. Can you talk a little bit about use of leverage in the very early days and how you guys thought about that?

[00:58:24] Kevin: I think it was an important consideration and driver of returns, obviously. And when we did the original Road Rescue deal, I’d say we used leverage to the maximum extent possible. So we went out and got a sufficient amount of as much senior debt as we could. And in fact, the investor capital that we raised, we structured that partially as debt and partially as equity in order to drive the highest returns to shareholders.

You just look over the next couple of years as we came to the Merrimac deal, of course, using leverage the lowest cost of capital out there. We are going to use that at every turn whether it’s like cash on the balance sheet or cash that we could generate from raising debt. We always had that mindset from the start of responsibly using the lowest cost of capital that’s available to us. And debt was at times it was more available than less, but we had that as part of our ethos. I think that interestingly, you saw our leverage ratios decline. From the initial transaction and up until the Merrimac transaction. And we just didn’t have a use for that. So you think of what’s the highest and best use of that. And you’ll reinvest that in the operations to the extent that you really believe in the return on investment that you’re going to get from that. And we were, we were investing as much as we could. Number two would be acquisitions. And so there was nothing available to us.

And then number three would be returning capital to shareholders, ideally in a share of purchase secondarily in the form of a dividend. And in those early years, we didn’t really think about the latter too much. Obviously we did that small transaction returning 10 percent of capital through a share of purchase, but we would really come back to leverage mainly at least in those first two years at either an acquisition or in conjunction with an equity recap that happened to undertake in the first one from that was really 2001 when TA came onto the cap table.

TA Investment

[01:00:26] Will: Okay, TA is a good segue. So let’s talk in a minute about that transaction, sort of the first material transaction for the company. But before we do that, I just want to stop. And give a snapshot of the business in the year 2000. So just after the Merrimac deal closed in 99, you’ll remember that the original PPM document, the base case was $15 million of revenue and $3.7 million of EBITDA. The year 2000 actual numbers for the company, which of course include Merrimac at this point in time, early days, was $135 million in revenue. So it was a 63 percent compound annual growth rate since closing and 27 million in EBITDA, right, at a 20 percent margin. So that’s pretty substantial value creation by any metric along any measure. The subscriber count grew about 8x over that period of time, right. So that’s now come to fruition in the business and you guys make a decision to explore a transaction. Offer some liquidity to shareholders. Can you talk a little bit about that?

[01:01:29] Kevin: We had seen mercurial growth, and we were excited by it. But at the same time we took it all in stride. Maybe we were a little overconfident, because with the Merrimac transaction you know, things were, it’s a little more challenging. We had now had two companies. Jim and I were stretched. The management team wasn’t as strong as we would have liked it. And so there was some element of I think Jim and I just seeing the risk. I was like, hold on, this is great, but neither Jim or I had taken anything out at this point. And we were both interested in some financial security. We decided, confirmed with the board, we had conversations about whether we could buy in as many shares as we wanted to, or as were desired with just debt and we thought we couldn’t do that.

So, we opened it up to an equity process and that generated some interest but in particular, the highest bidder was T.A. Associates. And while investors were interested in liquidity, I think it was really Jim and I driving it. Sort of the need for financial security and the board, they thought that was a good idea. I mean, having management sort of hold on too tight is never a good idea. And they understood that from the early days. So just allowing us to sort of let some air out of the balloon and give us some financial security. They thought and we agreed would help us be better managers.

The TA transaction was once again, a situation where Jim and I were back in the classroom. He and I were nominally negotiating it. We were the front men. But really, there were people behind each of us pulling the strings.

On our side, it was really Bill Egan and Irv Grousbeck who were negotiating through us with TA. So Irv, TA had been an investor in Irv’s company. Bill had been a partner with the folks at TA, so they all knew each other very well, and there was, I’m sure there were baggage from each of their past that were being handled through surrogates that were Jim and I.

And on the other side, Jim and I were dealing with Jeff Chambers and Richard Tadler, who were wonderful, but they weren’t really in the control seat either. It was Kevin Landry and Andrews McLean behind them. So, it was sort of an interesting negotiation, but at the end of the day we had the, what I call like the Irv factor in the sense of when we said “no” to something, they knew it wasn’t us and they weren’t really negotiating with us. They knew it was coming from Irv and we understand what that means.

[01:04:00] Will: And no meant no.

[01:04:01] Kevin: No meant no. And they came in with a term sheet that had a high price, but it had a number of conditions to include. They wanted control over major operating decisions, including the budget and key hires. They wanted to take the company public, registration rights, and they wanted a preference, and they wanted a couple of other items.

And without getting into too much detail, basically we came back at the advice of Irv of Bill and just said no to all of it. The insight for them, which again, Jim and I in the classroom, being the students, was TA is in the business of investing in great companies. If we have confidence in the company and we don’t need the capital because it’s all secondary, then we’ve got all the power. And while we ultimately acceded to some minor rights to TA. At the end of the day, they basically come in with the same security. It’s all common and I think happily so in the end.

[01:05:02] Will: And honestly, if you looked at the history of TA Associates, that transaction not being preferred is a wild outlier, thanks to the quality of the business.

[01:05:12] Kevin: It was absolutely common to both be preferred and have a coupon, and they got neither of those. Jeff Chambers ended up joining the board and was a wonderful fit. I think the board dynamics are always incredibly important. And he got a chance to shine early on because soon after TA invested, we missed our numbers and I think the next two quarters, that was really the first time we’d missed our numbers. And Jeff was as cool as a cucumber. He may have been sweating behind the scenes, but he was consistent and supportive, and we made our way through it and everything turned out fine for TA. But he was tested early on, that’s for sure.

[01:05:52] Will: Jeff is great. Quick math on that transaction was they paid a valuation of $225 million. They bought $60 million worth of stock at that, so they ended up owning a little bit over 25% of the company. All of it secondary, as you said, Kevin, significantly none of it preferred. And the IRR for selling shareholders from the original search group over five and a half years was a multiple of invested capital of 41 times and an IRR of 102%. So that’s a reasonable start. And we’ll return to get into what followed from that start. But I think that’s a good place to cut things. So thanks for your time, Kevin.

[01:06:27] Kevin: Perfect.