Brad Weimert: Rick Jordan, I appreciate you carving out some time, man. Thank you so much for showing up.
Rick Jordan: What’s shaking, Brad? Dude, it’s awesome to be here.
Brad Weimert: All sorts of stuff shaking at the moment, actually. And it sounds like a lot for you. So, before we got going, you told me that you just went public three months ago, ReachOut Technology. I want to dive into kind of the story of that, but bootstrapped to IPO and quite a journey throughout that. We’ll get to present day in IPO, but give me the basics of what ReachOut started as and how you got into it in the first place.
Rick Jordan: Yeah, you bet, man. I mean, it goes way, way, way back. If you talk about when I got started in tech, I built my first computer when I was 10, and that was with the help of a family friend. And even at that, I mean, I had a natural curiosity. I thought I could do some cool things, but that’s the same with anything. I mean, my mom tells stories, dude, when I was like one year old or like 15 months old, and I’d be on the merry-go-round or the carousel and I wouldn’t be the kid enjoying the ride. I’d be looking up at the gears and how they were turning to try to figure out how all those things work. It’s a natural curiosity that I’ve had.
And I think that’s something that in order to be successful, I mean, what we’re talking about Beyond a Million, right? In order to be successful and break down and get into eight, nine, ten figures, I think you have to have a general curiosity because it’s like what’s beyond where you’re at. That’s probably the simplest question you can ask is what’s beyond, like what’s beyond the ride? What’s beyond my 100k a year? What’s beyond my seven figures a year? What’s beyond the carousel that I’m on? Sometimes entrepreneurship is that merry-go-round, right? We go around in circles until we can get our ass off one horse and get on to another. That might be doing us a little bit better of a job for where we’re at.
Brad Weimert: I think also that curiosity, it both serves and hurts, right? So, I think, some of the most interesting entrepreneurs and most successful have this insatiable curiosity that drives them down the path that they’re on, but the other edge of that sword is shiny object syndrome.
Rick Jordan: For sure. Absolutely.
Brad Weimert: Just knowing when to pursue the side road or when to just f*cking stay focused and keep doing the thing that you’re supposed to be doing.
Rick Jordan: You got it, dude. I can give you my most recent shiny object. It’s a funny story. That’s cool.
Brad Weimert: Sure. Yeah, absolutely.
Rick Jordan: We did just go public. It wasn’t an IPO. It was a reverse merger to list on OTC. The IPO is what we intend coming up when we uplist to a senior exchange, which would be like Nasdaq or NYSE, within a short period of time, hopefully. But very quickly, for those that don’t understand a reverse merger, and trust me, it’s okay, because I just learned this three years ago as we started this journey to going public, there’s a company that’s already public, and they might have wound down operations, but they’ve still stayed with their reporting structure to keep that. Shell’s kind of a dirty word. So, we’ll call it a vehicle. That’s the pretty word. They keep that vehicle alive with their reporting structure to the SEC because it has value. It takes a lot of money to get there. Even when I did a Reg A, it took over a half million dollars to just fund that process, to actually even have that offering.
So, similar story. These vehicles can cost a couple million dollars each. So, when you do a reverse merger, technically on paper, that public company buys you, they acquire you. However, there’s a share exchange agreement. So, now you take majority control in that entity. And now, you’re the CEO, the chairman of the board, and it becomes your vehicle. You do name change, all of that stuff. So, the funny story for the shiny object is the vehicle that we used, remember, we used ReachOut Technology, right? Cybersecurity and everything, the vehicle that we used is Yuengling’s Ice Cream Corporation.
Brad Weimert: Wow.
Rick Jordan: Dude, it’s hilarious to me because it’s over a 100-year-old company that’s just stopping to produce the ice cream. It’s been a family business. And you can see throughout those over 100 years and how they launched it, then they shut it down for a while, relaunched it, shut it down for a while over the course of the century. Right now, I’m signing things as the CEO of an ice cream company, which is hilarious to me.
But the shiny object I just found out, because this is all public filings, is we were able to cancel some debt on the balance sheet because we’re talking about like beyond a million, right? This is stuff you have to do when you go public. There’s never a super clean vehicle. So, you find the skeletons of the closet. But we negotiated a cancellation of like $1.2-ish million in debt in exchange for returning the intellectual property, which is the trademark of Yuengling’s Ice Cream Corporation back to the bank. This is after we took control of it.
Yeah, but what I found out, the shiny object is that the manufacturer, the factory that produced the ice cream signed a brand new 10-year licensing agreement for the recipe or the trademark just prior to us taking over the company. So, they can actually still produce it for another 10 years, even with the bank owning those pieces of intellectual property and that factory, dude, is up for sale. I could literally like, and it’s a cheap price, too, from what I see, like way less than what I’m spending on my other acquisitions. So, I’m looking at this like, I literally could be the Willy Wonka of cybersecurity. I could manufacture my own ice cream and protect people from hackers at the same time. But that’s the shiny object. And it’s like, hey, if it produces a profit, maybe, but then it’s like, I got to keep myself in my lane because it’s like, I’m not doing it. I’ve decided I’m not doing it, but it still pulls me in my brain.
Brad Weimert: Hilarious. The things that are super far off for me, I’m less likely to go down the path of, it’s the ones that are more tightly aligned that are tough, like the real hard decisions to say, “This is pretty aligned, but I still need to keep my head in the game where I’m at and stay focused where I’m at.”
Rick Jordan: That makes a lot of sense. For me, it’s things that end up becoming unique. That’s the common thread between them. So, for me, it’s like ReachOut is a managed service provider, an MSP. We are the first to independently go public out of the whole industry because we’re not a SaaS company, we’re a service provider. We use other tools to deliver the services. We are the first to go public. So, that to me was unique. And I love other things that are unique that nobody’s done before, which is why it’s like an ice cream company or an ice cream factory, maybe. Maybe that could work.
Brad Weimert: Okay, so let’s get to the going public and the growth and grow through acquisition, etc. But let’s start with the beginning of ReachOut, how you started ReachOut, and what an MSP is because the people listening are largely small and mid-sized entrepreneurs. And I think that the concept of an MSP is super relevant at some point in the entrepreneurial journey. But let’s talk about that a little bit. So, how’d you get started in, what is an MSP?
Rick Jordan: Yeah, man, I got started because I was laid off by Best Buy. I was actually the first Geek Squad agent in Chicago in 2003 when they acquired Geek Squad.
Brad Weimert: Wow.
Rick Jordan: I know. It’s driving around the bug. I mean, legit the first one because it didn’t have even automatic transmission in the Beetles they were giving away, it had a stick in this Volkswagen Beetle. But then I moved into Best Buy for business. It was a B2B division that they were launching, which in the IT space, we call it a VAR, which is a value-added reseller. It’s sort of a precursor to an MSP. So, a VAR is like, sure, we’ll sell you the sh*t, like the servers and the computers, then we’ll come out and install it all. And when it breaks, call us and we’ll bill you, which is going to the transition. So, this is almost like answering your question within the question, what is an MSP?
The next step really is an MSP, a managed service provider that says, “Sure, we’ll do everything that a VAR does, but then pay us monthly for management, for maintenance, for support when sh*t hits the fan. We’re going to monitor everything for you. Our whole purpose is to try to reduce the amount of issues that you have before they even start.” And then the next transition is, which has happened as an MSSP and all these acronyms, right? Like, managed security services provider, which is where we live and breathe in the cybersecurity space. We are very much cybersecurity forward than anything else because now, it’s like, yeah, we need to protect your sh*t because there’s real dollars at stake here. It’s a risk management business now rather than an IT business. And the IT is just like, yeah, we also do that because we know that we should and we should have standards in place for you, that way we can be sure everything will be secure because we put standardized equipment and configurations in place so that we can keep your cybersecurity a top-notch.
Brad Weimert: Got it. So, simply put, for any company that is of a certain size, MSPs or MSSPs are there to handle your technical infrastructure and manage it over time.
Rick Jordan: You got it. Exactly. Yeah.
Brad Weimert: Love it. And what’s the target market or what was the target market for ReachOut when you started?
Rick Jordan: We would typically do, at that point, and this is real, like, there’s entrepreneurs in the audience that are listening right now, it’s like when you start out, you pretty much take any revenue that comes your way. That’s just the nature of business, right? Because it’s like, sh*t, I got to put food on the table. That’s just real life. And that was most definitely the case. So, when I started, there was a lot of smaller companies, so it’s like smaller entrepreneurial or smaller businesses, maybe one to five people, one to ten people within the company. And straight up, that’s not a really good target market for MSPs because it is legit a micro business.
And the reason I say that now, it used to be a little better for MSPs, but now in the realm of cybersecurity, that stuff is just so expensive, like the toolsets and the services to provide that, it’s almost like a premium service, which is one thing I’m trying to change is to commoditize it and bring the price down. One of the biggest reasons for going public and doing a nationwide brand is for buying power and bringing that enterprise-level premium price down to a small business affordability and accessibility.
Now, with the small businesses that one to ten, it’s stupid expensive, man, because there’s some fixed costs that you have to have that no matter how many people you have in your company, there’s still a basis of dollars of expense that exists in order to have these services and have the right protections that you need. So, anything with scale, it typically becomes less expensive. So, these days, for an MSP, it’s really like 20 or more people in a company. And when you push mid-market, you’re talking like more than 200. So, a target market for us is between 20 and 200 to provide that full service that we do.
Brad Weimert: That makes sense. And is that because of cost to the MSP or cost to the entrepreneur or both?
Rick Jordan: It’s both. For example, there’s certain things like data protection. Ransomware is a big thing. Everybody sees that all over the news, right? I mean, in just this past week or so, it was a pharmacy that got hit that’s still having difficulties. They’ve been down for five days now. It’s horrible. It’s absolutely horrible to see them going through this. But for that, for those businesses or small businesses, something like data protection requires a hardware component, and that hardware component, the cost doesn’t really go up the bigger that you are.
So, let’s just say round numbers, it costs 10 grand as a cost that we might roll into our bundled services. If you’re five people or if you’re 500 people, it’s still going to be right around that $10,000 for that hardware component that allows us to really kind of turn back time when you do get hit. That’s what it does, is we can take like a couple of computers, a network, a server, like, oh, you got hit here. Well, a quick response for us because we have the right other 30 components in place, is to take a time machine almost and go back to five days ago before the ransomware hit and then everything’s back up and running. It gets less expensive per person the bigger the customer is, because those fixed costs still remain fixed no matter how big you are.
Brad Weimert: Yeah. Well, and I think there’s also some point through the entrepreneurial journey, where you’ve got one, two, five, ten people, your priorities, from a financial perspective, are not outsourcing all of that.
Rick Jordan: Oh, for sure, yeah.
Brad Weimert: I got that. I know how to use a computer, we’re good.
Rick Jordan: It’s risk tolerance and timing. It’s really those two things. So, it’s like the timing of the business, the growth timing, the maturity timing of your business will determine what your risk tolerance is. The smaller you are and that your risk tolerance will be a lot higher because sh*t’s expensive. It’s just like you carry less insurance coverage when you’re smaller than when you’re bigger.
Brad Weimert: Yeah, I think that’s very well put, and whether that’s happening consciously or not, I think it’s still probably an accurate statement.
Rick Jordan: Yeah, right on. Yeah, it is kind of subconscious in a way, isn’t it?
Brad Weimert: I think when you’re very small, you’re not actively saying, “Hey, there’s a major risk here.” You’re just saying, “I don’t have f*cking money for that.”
Rick Jordan: Exactly. Yeah, right on, dude.
Brad Weimert: So, it’s not a priority because I don’t have money for it. So, yeah, that’d be nice. But I know for me, at different stages, as you really start to analyze things more, you can more objectively look at things like risk assessment. And yeah, I wouldn’t even have the conversation with myself until a certain level of growth. Now, the other thing is that obviously, as you get bigger, those risks are actually bigger.
Rick Jordan: They sure are.
Brad Weimert: Yeah, for sure. And an operation going down when you have 20, 30, 40, 50, 500 people is very different than an operation going down when you have four.
Rick Jordan: For sure. It’s literally the cost per minute of revenue at that point is what you’re looking at. And that’s kind of how we sell our services too, man, because it is literally a risk management business at this point. It’s like how long can you go without producing revenue if you were to get hit. And a lot don’t think that way when we talk about this, but then it’s like cyber liability coverage, right? It actually includes that loss of revenue rider. So, when you are larger, you’re paying a huge frickin’ premium, man. The premium for this stuff is huge. But when you compare it to the potential loss, it becomes a no-brainer, especially when you get into eight, nine, ten figures.
Brad Weimert: Yeah, there’s no question about it. And I think, when you’re smaller, you don’t think about it as much. And also, until it happens, you don’t think about it until you know somebody that it’s happened to, you don’t think about it as much.
Rick Jordan: That’s the thing that sucks, man. It does. And it’s truth. It’s absolute truth. It’s like you don’t think that you’re ever going to get into a car accident until all of a sudden, somebody just broadsides you at a stoplight. Nothing that you did, nothing that you did at all, it’s the same thing with cyber, man, and getting hit. You’re not somebody that’s being specifically targeted because it’s like broad strokes is what the e-crime groups do. They’ll try to cover a million businesses at a time, and then they work the percentages on it, almost like a drip email campaign. It’s like they know a certain percentage is going to fall for it. So, they know they’re going to make a certain amount of cash off of that, and they’ll be able to get ransomware, and so, like, maybe 2% or 3% of those businesses that they kind of do the broad strokes.
Brad Weimert: Yeah, and the irony is that our government literally forces us to put insurance on our cars because they don’t trust humanity to be cost-conscious enough to do that risk assessment. But a similar comparison with business, the necessary insurance for business, whether it’s cyber or something else, nobody’s forcing you to do it.
Rick Jordan: For sure.
Brad Weimert: But the risk might actually be more significant than car insurance.
Rick Jordan: Right on. For sure.
Brad Weimert: So, I want to go back to sort of the growth of this, but we’ve been talking about this idea of ransomware. So, I want to at least double-click on that. Can you just give the basic process of what happens when somebody comes in for with ransomware and how that process works so that entrepreneurs know what to look out for?
Rick Jordan: Yeah, you got it. Your sh*t gets locked up. I mean, that’s pretty much the gist of it, like the end result of ransomware, you can’t do anything. The way this typically happens is, and we’ll call them Bob, right? No offense to any Bobs listening or Roberts listening. There’s a Bob I’ve always said in every business because that broad stroke that I was talking about before, to a million businesses in a drip email campaign, it’s pretty much that, almost identical to that because it’s a phishing scam. It’s social engineering. So, you’ll get something that says, and I love this example because it literally was one.
It was like Chick-fil-A, saying like, “Hey, we have this new summer lemonade, seasonal lemonade for like raspberry, orange, mango, whatever it is. Click here to read more about it.” But it looked just like it came from Chick-fil-A. And then when you go there, it’s like, “Oh, sign in to get the discount,” but the sign-in looks like a Microsoft page or a Google, a Gmail sign-in, but it’s not. It’s a fake page from the hackers. The people are like, “Oh, I want to get my $5 or I want to get my free lemonade.” It’s amazing to me what people will go through to get a free $4 drink. They will.
I mean, think about it, like a Starbucks birthday gift. Of course, you make the trip just for that $5 free drink on that day. It’s something with human psychology. And I’m not a psychologist, but it’s kind of fun behaviorally to look at. They click on that, but then they enter their Microsoft or their Google password because they think that’s actually what they need to do and it’s actually the Microsoft or the real Google page when it is the e-crime group that just has this facade up. And now, they capture that data so they can log straight into your sh*t at your company. That gives them what we call a foothold in our industry. So, once they get the foothold, they’re in there.
But here’s the twisted thing, man, is before they flip the switch for ransomware, they’ve been on your systems on average four to five months because they’ll monitor internal communications back and forth and try to pick off some vendor information, maybe some customer information specifically to try to do those wire fraud scams that they do to say, “Hey, we have new banking information. Customer XYZ, send us your payment here from this point on.” But it’s actually, obviously not the business’s bank account. It’s the criminal’s bank account. Once they monitor that and they milk it for the amount of data that resides within that network, then they’ll flip the switch as a last-minute cash grab. And that’s when everything gets locked up. That is the ransomware.
And you say, “Hey, I either pay the ransom or I can never get back into this.” And a lot of people still pay the ransom. And that’s bad too. That’s very, very bad because once you do it, sure, they might actually be ethical in the moment and send you the key to unlock everything. However, now they know that you pay up and we’ve seen this with customers before, now customers, it’s like we hit you for 10k the first time. Well, now, you paid us, but we didn’t actually remove our sh*t from your systems. All we did was give you the key to unlock right now.
So, now, they’ve flipped the switch again, and now it’s $100,000, and then it goes up to half a million if you keep paying. So, it’s like you never want to pay that ransom. You need to have the right stuff in place to give you that time machine, as we talked about earlier, so that you don’t have to. So, ransomware, they just lock your stuff up, but they get in because of Bob. That’s full circle. Because Bob, there’s a Bob in every company that will click on anything.
Brad Weimert: Yeah. And so, it’s funny because I think that, for a lot of people, they have this idea in their head that happened in the 90s or early 2000s and it’s not happening anymore. But the reality is that not only is it happening right now, but it’s very difficult to deal with once it’s happened.
Rick Jordan: For sure, it is. Absolutely. And the pace at which they’re doing it is only accelerating as well, because this is social engineering at its finest. That’s all it is.
Brad Weimert: AI helps everybody.
Rick Jordan: Bingo. Exactly. AI now is able to write this stuff in warp speed compared to any Indian or Sri Lankan copywriter that was there and with better grammar. Before, you used to be able to tell by reading through the things, oh, this is fake. It’s like, please, sir, kindly. And it’s like, yeah, that’s a cultural thing in India. But now, I mean, the grammar is exactly like it’s from the US, and that’s because it’s AI-written and AI-generated so they can crank these things out and quickly do split test. Seriously, bro, it’s just like marketing campaigns. It’s like, which one works better? A or B, which get submit– the password is faster so we can rip more people off.
Brad Weimert: Yeah. Okay, that’s helpful. So, you got fired from Geek Squad.
Rick Jordan: Technically, Best Buy. I moved on from Geek Squad. They actually offered me the number two position in the company with Geek Squad after I rolled out Canada. I just didn’t want to move to Minneapolis because it’s really cold there. I have some people in the company in Fargo. Literally, today, it’s like 70 in Chicago. But in Fargo, there’s a blizzard happening, it’s going to be minus nine. It’s like, no, I don’t want that. That same longitude up there is Minneapolis. So, no, not happening.
Then I did the B2B. But I always go back, it’s like the reason I did the B2B is because I wrote the sales playbook for them. Even in Geek Squad, they were like, “Hey, why are your per ticket averages three times more than any of our other seven test stores? How are you doing this?” I’m like, “Have you ever worked at McDonald’s?” They’re like, “Well, no. Have you ever been to McDonald’s?” “Well, yeah, of course.” Retail, there’s a lot of people that are a little overweight. I was one of them. Just to throw that out there, I used to be like 90 pounds heavier than what I am right now, ate McDonald’s all the time. And like, if you’ve been there, you know the question. Do you want fries with that?
I was a young manager at McDonald’s. I started in the drive-thru when I was 15 years old, and that’s what I was taught was the art of the upsell at a very, very young age. And that’s all it was. It’s like, well, if I’m already there fixing something and I see something else, it’s like, hey, can I take care of this while I’m here for you? It’s the easiest sell in the world. It’s just like a bump on a click funnel or something like that, an order bump. It’s the same scenario. If you don’t have an upsell or something to get people to spend more money with you, you’re failing. You’re losing out on so much revenue. That’s why they had me write the sales playbook for all these business consultants was just to teach them how to sell. Because even that, after McDonald’s, I was at RadioShack, right? Same scenario. It’s like somebody would be buying batteries, like double-A batteries and I’d be like, “Hey, do you want a cell phone for a penny to go with that today?” Same concept as McDonald’s, right?
And here I am, 17 years old, as an assistant manager at RadioShack, I sold 100 phones in a month, a little over that, the most in the whole country out of 6,000 stores. And I got a $30,000 commission check in December as a 17-year-old because every phone, we got spiff 300 bucks for selling it, for signing somebody up for a three-year contract at that time. It was a simple question, simple numbers. If I ask everybody, this amount of people will say yes. And they’re already spending money from batteries to a TV to a receiver, they’re already spending money in the store. So, if I ask them this, they’re ready to go, plus, it was an irresistible offer. You want a cell phone for a penny?
Brad Weimert: Yeah, well, and conceptually, the offer is great. Where most people fail is just not asking the question.
Rick Jordan: Bingo. You got it.
Brad Weimert: Which is you just have to ask. So, I grew up in sales, and the entrepreneurs that grew up in sales know this, but the rest of the world that didn’t grow up in sales, sometimes that question is uncomfortable.
Rick Jordan: Very much so, yeah.
Brad Weimert: And I think, one of the messages for entrepreneurs that don’t lean into sales heavy is, it doesn’t have to be uncomfortable. And so, hey, while I’m here, can I also do this for you? It looks like it needs to get done, is a pretty natural way to help with other tech stuff that nobody wants to f*cking deal with anyway.
Rick Jordan: Yeah, exactly. Well, it’s any business. It’s any industry, like, we’re talking about beyond seven figures here. You’re not going to get beyond seven figures if you’re not asking this one simple question. You’re going to starve if you don’t ask this one simple question. You’re going to have a small lifestyle business that might pay your mortgage. This is direct hitting for anybody listening for real because if you have salespeople that you bring on after that point, beyond seven figures, which we have salespeople in the company and I’m the one that’s still training them versus anybody else because it’s like, I’m the sales guy. Even though I started in tech and everything else, it’s like that one question I learned from McDonald’s, and it’s still the most powerful thing that we have. And even so, if it’s not even the art of the upsell, it’s the uncomfortability that we have to overcome in sales of even asking for the order in the first place. So, it’s like presenting it. It’s like you’re never going to grow beyond seven figures if you first are not asking for the order. Like, you get to the end of a presentation, whatever your sales process is, and just literally ask, “Hey, do you want this now?” That’s the uncomfortability you’re talking about.
But then even beyond that, you’d say, “Yeah, sure.” Well, cool. While we’re here, I also have this one other thing that I want to tell you about real quick. It’s like Steve Jobs’ one more thing. He understood that from a marketing perspective. It’s the same concept at sales. That’s one of the biggest ways you scale beyond seven figures because there is no problem within a business that more revenue cannot solve.
Brad Weimert: I love that. Was ReachOut the first business that you started?
Rick Jordan: Well, sort of, the first real business, I could call it that. Because prior to that, I was doing some side stuff, like doing some side hustles, which I think are toxic to, they’re a virus to entrepreneurship anyways, side hustles. I’m not all in CEO. I mean, I got on my cup right here. It’s part of my brain.
Brad Weimert: Well, done a cup. It must be true.
Rick Jordan: Exactly. I see right there, but it’s…
Brad Weimert: All right. So, you started ReachOut and that– because I want to get to today, but ReachOut was a managed service provider, security focus, so MSP. What was the scale and scope of that? And how long did you run it before you got to a transitional point?
Rick Jordan: Yeah. Before we got to a transitional point, it was probably about seven years, and I was the same, and that was actually maybe eight years when we broke the seven-figure glass ceiling was around that time. Because of everything that I’m talking about, it’s like I’m not just some dude who’s never struggled with revenue or never fell into the trap of a lifestyle business, at least– say, the trap, but there’s nothing wrong with the lifestyle business if that’s genuinely what that individual wants and that’s okay. However, there’s a lot of those that want more than that. And that’s the whole purpose of your show, right? It’s talking about really not falling into that trap of a lifestyle business.
So, that seven years was the recognition. It’s like, well, cool. I just got comfortable for a few years, man, because I’m taking home a decent amount to be able to take some distributions out on my S-corp. Things are great. I got a nice house, cars. My kids are taken care of. Everything’s phenomenal. And then it’s like, there was a wake-up call when I got really, really sick. Like, I almost died on the operating table from a gangrenous gallbladder. And I woke up and it’s like, what am I doing? It was a tragedy in my life. I’m glad I survived, dude, because these last couple of years, it’s like, I’ve always had these dreams, a vision. And it’s like, why did I stop? Why did I take my foot off the gas? And it’s like, oh, okay, because there’s these other comforts that are around me. So, then I decided to make myself uncomfortable, and I started doing some things to shake some stuff up.
It used to be a joke around the office that we have in Chicago. It’s like, whenever Rick goes away to a conference or something like that, he’s always barging in the door when he comes back in the office, being like, we’re changing everything. And that’s because I’d learn something new. I’d consume something that’s like, oh, there’s a better way of doing this, or maybe this is something that can take us exponential at this point. So, that comfortability something, I believe that we need to intentionally make ourselves uncomfortable. There’s some points of where it’s like uncomfortability sucks because it’s other thing, it’s like I want to avoid that risk management.
However, when things are coasting along and they’re just kind of there or maybe they’re accelerating and growing at the point of inflation, maybe not these past few years with inflation, but 4%, 5% growth, just so you keep up and all that, that’s not who I am. But I recognize that I fell into that part of not who I am for too long. So, when it transitioned and when I started doing literally the stuff that I had taught for real, like, got back on track with my mindset and literally started doing the stuff that I taught, then it became seven figures, then multiple seven figures, then being approached to go public, doing a Reg A offering, raising capital, going public with a reverse merger and OTC, all in a matter of like four years of going from breaking that seven-figure glass ceiling to being an eight-figure public company.
Brad Weimert: Love it. So, let’s talk about the Reg A process and fundraising. Because there are definitely, first of all, public offerings, fundraising in general, are very specific skill sets that many entrepreneurs don’t know anything about unless they’ve explored it. And some people study this stuff, I think, because they’re curious. But most people that I know in my world don’t go down this path unless they’re seriously considering it. And when we look at focus versus shiny object, to them, this is unnecessary information until it’s really necessary. But I think it’s really, really helpful to know what the options are for entrepreneurs. And so, listening to the experience of it from somebody that’s gone through it recently is really valuable. So, when did you hit the point of, I should bring on money? How did that happen? And why was that the choice? Because you had been bootstrapped to this point, right?
Rick Jordan: Yeah. I started recognizing– mine was more like industry trends because cybersecurity was just coming around. And it’s a skill set. It’s kind of like that curiosity that– not even a skill set. It’s more of like an intuition that I’ve had to where I can see things a little ways in the future and it’s not like voodoo or anything like that. It just probably comes back to the curiosity to where it’s like, I’m noticing little things on observing, and I can draw some conclusions that the industry is changing. I’m even looking at consumer spending and how that affects us in general because consumer spending is a great trend to watch for any business, I think, anyways, because you can actually see how people like to spend money, how they’re used to the transaction right now.
So, whether it’s recurring revenue or non-recurring revenue, contracts versus no contracts if it was like the cell phone industry, the wireless industry, when you look at those shifts, we’re like Netflix increasing pricing, eliminating password sharing, all of those things, right? You start to look at how consumer spending takes place in those trends and you can start to gauge that for your own industry. I saw my industry, to answer your question directly, making a large shift. And that’s because a lot of these companies, these MSPs, were started 20 years ago. And those individuals are now in their 50s and 60s.
So, when I started noticing this, I was like 40, 41. I’m 44 right now. Like, this is going to be an issue because cybersecurity is a brand-new competency, a brand-new skill set. It’s difficult to learn this because there’s even sub-competencies that exist within this. It’s the white elephant in the room that most MSP owners will not be able to overcome because it’s complex. When I saw that industry changed, like we figured it out already, we figured out how to put these components together to deliver the appropriate service, had the right people in place with competencies. It’s like, well, in order to have exponential growth, if I’m seeing many of these MSPs going to be shutting their doors in the next three years because they can’t function this way, what if they didn’t have to shut their doors and I just bought them?
And then I’m looking around, like, there is no nationwide brand for this for small businesses. You can see CrowdStrike, which is a software package and all these public companies that are in the news, but they provide just one component. They’re not providing services to small businesses. So, when I see that, it’s like there is no public company in this space right now for an MSP. Why is that? And I’m looking around. I felt like it was 100,000 MSPs lined up and I keep looking. I’m like, “Why has nobody else done this?” That was the question I was asking. It’s almost like everybody was looking around, waiting for that one person to step forward. And I’m like, “All right, f*ck, I’ll do it.” That was seriously the thought process that took place.
And now, the eyeballs are on us within the industry. And I hear this all the time. It’s like you’re blazing a trail for us. We’re watching to see what happened to you. Let’s see how this goes. But the exponential growth that I saw was because of an industry trend where I see a lot of these MSPs closing doors. One, because they’re smaller, these tools are expensive. They only become affordable when you are bigger as an MSP.
And second, it’s the competency because of the average age of the owner of MSPs. And how they started years ago was like the IT consultant and just kind of became an MSP. And they’re still just doing the job, still fixing the servers. Most MSP owners are still working trouble tickets for their customers or still doing the tech job rather than being focused on the business and on growth. So, that’s why I’m like, “All right, I’ll do it.”
Brad Weimert: So, you have an MSP that you’ve been running for. You’ve got this company that’s managed services for IT that you’ve been running for seven, eight-plus years. And you see the trend in the industry leaning heavily towards cyber and that a lot of people that have been there historically aren’t good at that and are likely moving into retirement age. So, you see an opportunity of roll-up through acquisition to buy other existing providers and integrate them, and then you have more scale and you can grow quicker.
Rick Jordan: Which is why I needed capital. Bingo.
Brad Weimert: Great, yeah. And so, you saw this and thought, okay, I need capital to grow to do this. Really at all, but certainly to do it more quickly. How did you approach getting capital? And did you know anything about raising capital at that point?
Rick Jordan: I knew nothing. Zero. Never done in my life. And it’s like, well, what’s the difference? It’s like I ask for sales all the time. Can’t I do this? But then it’s like, because I had never done it, I think it was naturally like going out there. It was okay for me to have the conversations, but the dollar amounts were something that I had to get past because I was excited for somebody, like in a Reg A to put in 1,500 bucks, and people were asking like, what’s the minimum? Because you can set your minimums for Reg As.
Brad Weimert: I’m like, can you explain a Reg A for people?
Rick Jordan: Absolutely. It’s sort of, you could call it a mini IPO or a micro IPO. You’re still a private company, but you segment off a portion. You can sell shares to the public under SEC regulations. So, it gives you more credibility because you have to report, you have to have audited financials, at least for a tier two, which is the highest tier where you can raise more money. So, there’s more credibility when you do that because everybody can see what’s going on. And that was the first step.
And a Reg A, I’ve got to make this for anybody who might be considering this because it’s still kind of touted as like one of the best things ever, right? To get a lot of retail investors or smaller investors, they buy shares and everything, that was the premise of it. It’s like, let’s get 50,000 shareholders at a dollar a share or 50 cents a share or something like that. And what I found out is that it really doesn’t work that way. Not well. It’s very difficult to start from the beginning and try to gain tens of thousands of shareholders to get the capital that you need, and still from talking with other people who are on Wall Street, a Reg A still functions best when you go to accredited investors who will put in larger amounts because it’s like, what’s the math there? It’s almost like a premium price versus a volume play. That’s literally the difference.
Like, well, shoot, if I can go to 10 investors that’ll put in half a million each versus 50,000 investors that’ll do 100 bucks, it’s a completely different ballgame. It’s like, I can have less conversations, get the money faster. So, even the Reg A, the spirit of it is to kind of like for the people thing. The way it works in reality that it does 98% of the time is that it’s more so still for the accredited large investors.
Brad Weimert: Yeah. Okay. So, I mean, there are lots of ways to raise money, right? And one is debt. You can just try to get a loan from the bank also or somebody. And the Reg A is a way, though it is governed by the SEC, so I want to talk about that component to basically cast a wider net and say, hey, people can put in whatever dollar amount they want, 500 bucks, 1,500 bucks, 500,000 to get us to a certain funding amount, which opens the doors, like you said, for democratization of fundraising to say, hey, more people can participate in this. But as you pointed out, dealing with a thousand people that have put in a few hundred bucks sounds horrific if you can just have one person put in a good chunk.
Rick Jordan: You got it. And usually, they’re a lot quieter about it, too, because they see the longer-term play on everything versus the person who literally did put– I mean, I still get phone calls from some of the original ones that did like $1,000 versus the one that when we did like a friends and family round, that would put in like a half a million. It’s a different scenario. It’s a different level of mental capacity for an investor.
Brad Weimert: Yeah. And also, the person that’s putting in a half million dollars, it probably is negligible relative to their whole net worth, whereas the person putting in a thousand is probably meaningful thousand dollars to that person.
Rick Jordan: For sure. And that’s an interesting point you bring up, because I remember receiving the question a couple times, “Hey, can we use a credit card to buy the shares under the Reg A?” I was like, “What?” So, to your point, that is literally something that is like against the whole regulation for Regulation A tier 2 is you’re supposed to take it out of your existing assets that you have not purchased the shares on credit. So, to your point, it’s like the smaller investor’s like, “Sure, I’ll do that.” It’s almost like looking at crypto, right? Sure, I’ll go to my Coinbase wallet and I’ll buy Bitcoin and take the 3% hit from my credit card.
Brad Weimert: What is the process like with the SEC to set up a Reg A?
Rick Jordan: It was fairly simple for a Reg A. And the reason being, one, you have to have a good Security Council for this. And I had one of the best ones in the country. It was expensive to get it to this point, to get everything in line, and that’s because of the audited financials, all the team that you have to have in place. It was a little over a half million dollars to do that entire process with the SEC itself. That actually flew through pretty quickly because of the way that this was written.
And it’s so interesting with the Reg A because if you’re going to get a good lawyer, the way that the SEC likes to see things is if you have a couple pages, maybe five pages, like, hey, this is our plan, this is what the money is going to be used for. And then 40 pages after that, that pretty much says, don’t invest in this, you’re going to lose all your money because it’s all the disclaimers. So, as long as the SEC sees all that, being like we’re advertising, we’re high risk, then they’re more comfortable with it because we want to put it out there to be like, it’s pretty much saying like, “Here’s our filing. Don’t invest in us.”
Brad Weimert: Yeah, the government likes to do that. I mean, the FTC is full of things like that with marketing in general, where you can’t use unrealistic claims. And the way around it is to market however you want to and then afterwards, be like, yeah, by the way, you’re probably going to…
Rick Jordan: Yeah, exactly. You should just kiss your money goodbye. I mean, that’s pretty much what that filing is.
Brad Weimert: So, how did you learn the Reg A process? Because that’s the other thing, you said, “Hey, I had no idea.” And why did you choose Reg A versus debt or another vehicle to raise that initial money? And how much money did you raise? I guess all those are important.
Rick Jordan: Yeah. It wasn’t much on the Reg A. And the reason being and we shut it down quickly because I went to my board at the time and even though it was still a controlled company, I went to them, like, listen, I don’t think this is the right structure for us because if we fulfill the entire Reg A, which was like 6 million, I think we filed it for, then we’re actually giving away a third of the company, a third of the equity. And in that process, we had actually used debt to acquire, to make our first large acquisition of 6.6 million. So, when we did that, the valuation of the company increased, but then this Reg A was still kind of hanging overhead. I’m like, whoa, timeouts. Because now, a third of the company might have meant 6 million just a month ago. But now, a third of the company actually means more like 15 if I were to make an educated guess. And we’re still only charging $1 a share. So, it’s like, let’s shut this down and pursue a different route, which at that point, we were introduced to some amazing people to help move us to the point to where we could do a reverse merger and list on OTC.
So, it was, if you want to use the word pivot, but it’s a pivot because our business accelerated. And I didn’t know anything about Reg A. I was approached by it because somebody saw a photo of me when I spoke at an event. It was an entrepreneurial event at Nasdaq, in the boardroom, and it was a great marketing photo. Believe me. It’s like, that’s what caught the attention of these consultants. And they’re like, “Hey, have you ever heard of Reg A?” I’m like, “Nope.” “Well, have you ever thought about going public?” And I’m like, “Nope.” And they’re like, “Well, how about raising capital?” I’m like, “That, yes, because of these industry trends.” They’re like, “Well, what would you do with the money?” Like, “I’d buy other companies. I’d use cash to buy more assets to produce more cash.” Like, “Great, you’re the winner.” I’m like, “What do you mean I’m the winner?” Like, “We’ve been trying to vet other companies for this because we’re the first, this is our first Reg A as a financial consultancy firm.” They were trying to foray into this, like, “You’re the first one that said you want to do this to acquire other companies. Everybody else is just working capital. That’s it. We’re going to do marketing, all this stuff.” I’m like, “Well, that’s dumb.” Like, “We think so too. So, how about you? Would you like to do this?”
I mean, I’m dumbing it down a bit, but in essence, that was kind of the context of the conversations. And it’s cool. If Reg A can be a way to do this, let’s f*cking try it. And I didn’t know anything about that obviously at the time. And I think for entrepreneurs, when you get beyond that point, even beyond seven figures, you still have to try new sh*t, stuff that you’ve never done before in order to continue processing down the road of, I want to get to eight and nine and ten figures, even though the risks might be higher, but dude, the greater the risk, the greater the reward for real. And then you can analyze these things and still be curious, like I did halfway through and be like, “We need to shut this down because our valuation increased. And now, we’re not going to offer a fire sale for equity in our company anymore. What’s our next step?”
Brad Weimert: Yeah. So, you said, I mean, there’s a bunch of stuff there, but one of the things you said was it got the attention of this consultancy who introduced the Reg A to you, and it was a picture at Nasdaq. I want to get into that because, and I’m saying this from a place of love, but the MSP business model and cybersecurity is a boring ass industry.
Rick Jordan: It’s true. Yeah.
Brad Weimert: As our payments, right? So, here’s the question.
Rick Jordan: Reminds me of cleaning carpets, for real.
Brad Weimert: Yeah, it’s funny. I have a buddy who started by cleaning carpets. That’s a massive marketing thing now, but the question is, what role does media play in your business and how do you think about media in general to further, either you personally, but more importantly, the ReachOut Technology brand?
Rick Jordan: It’s huge. You talk about the ReachOut Technology brand. Let’s not minimize the value of a personal brand. I mean, you and I understand that, but when I speak on stages to entrepreneurs, to MSPs, I always tell them, I was like, “You need to be findable.” Because if you Google Rick Jordan, it takes up the whole frickin’ front, like eight pages of Google. And at this point, because it’s been five or six years that I’ve been investing into media, into content, a podcast that’s now 500 episodes, I’ve done national media, News Nation, Fox, Washington, DC. I mean, millions of people literally in the ratings watching me at one time.
It’s a credibility piece so that people can get to know you. And no joke, when we went public all of a sudden and all these, like, micro cap chat rooms for shareholders that exist, like the ones that I exist in and people that are looking to buy the actual trading stock now, they’re pulling up videos of me as soon as we announced the reverse merger from like five or six years ago and posting them up there just to say, “This is who Rick Jordan is.” So, in the midst of an MSP or carpet cleaners or payments or anything else, people still buy from people. So, they’re going to look you up as the entrepreneur, as the top dog to see what kind of a person you are and what your values and belief systems are and how you present yourself to the world. If you’re not findable, they can’t do that and then they’re going to be like, “Next, I’m moving on.”
Brad Weimert: As the CEO, how much of your time is focused on media and marketing versus everything else?
Rick Jordan: It’s probably about 30% is what my time is because I’m still the face. I talk about it. Everything on news is I’m saying podcast, I mean we’re releasing 10 episodes a month still, two a week. Instagram, you see the reels, I mean, that I post. There’s still a lot of effort that’s put there, and that’s because people are still wanting to find that additional content. And now, we’re gaining shareholders.
It’s like even in the midst of our filings after the reverse merger, it’s like we saw our stock last week kind of tumble a bit because there had been a period of time. And then all I did, I’m getting there, no joke, like you can see this on Twitter. I’m getting an IV, like one of the Myers’ cocktails just to build my energy back up, rejuvenate a little. And I’m like, “You know what? I’m just going to go on Twitter.” I post a six-minute video, just reiterating stuff that I already talked about in previous interviews over the past two months.
And with just that, it’s like the same shareholders that were pissed off of me, all of a sudden, be like, “Yeah, okay, we’re ready. Let’s go.” To the moon on this stuff and the stock jumps 20%. Whether it’s a customer, whether it’s a shareholder, whether it’s an investor, there’s a lot of sentiment that is involved in their decision to give you money. Period. That’s the importance of media plays.
Brad Weimert: Why public?
Rick Jordan: I got that question a lot, dude. I mean, one of them is, as I was talking earlier, I was like, there’s nobody else in my industry that’s done it, and I like the uniqueness of that. And I could see in industry trends, there probably would be in the future. I still think there will be in the next two to five years, a few more that follow. And I think that there would have been, regardless in the next two to five years, there’s value. I mean, just like Amazon, just like Tesla, there’s value in being the first. So, it’s cool, I’m going to be the first. That’s awesome. I’ll hit my head against the wall. I’ll fall flat on my face. I’ll get scars. I’ll break my bones. And then everybody else can see my mistakes. And then maybe they can accelerate. Cool. I’m happy with that. I’m good with that.
The second reason is because of the existence of public capital, there is greater access to larger sums of capital on the public side than there is on the private side for my specific mission. There’s a lot of people that will back, and private equity doesn’t really fit into my vision because they’re almost like evil for us. No joke. We kind of paint them as the devil, and for good reason because our vision is a nationwide brand, right? We care about the customers. We care about the employees. We care about the sellers. A lot of them we want to stay on.
Private equity is a different story. They have a different motivator, which is not bad in and of itself, but it’s typically not the greatest for the customers and the employees, because the only thing that they need to do is increase the multiple on EBITDA for the valuation by putting a whole bunch of these things together, and then that’s it. Then they sell it off again. It’s a portfolio. That’s it. They don’t rebrand. They don’t care too much about anything else. Even more so for the sellers for their equity role, it’s a piece of paper for real. That’s all it is. It’s like this piece of paper for the 30% that I rolled in my existing business into the private equity firm, so they’ve got a piece of the bigger pie is just a piece of paper. Will it actually work out for me? I don’t know. Public, it’s frickin’ securities that are trading, dude. They’re right there. They’re a lot more legitimate than a private equity firm, at least to me, saying, “Okay, you might get this at some point in time,” versus like, hey, go look on the boards, there’s a stock, there’s your stock.
Brad Weimert: Interesting. Yeah, I mean, the availability of capital is certainly a pragmatic approach if that’s relevant in your space.
Rick Jordan: For sure, yeah.
Brad Weimert: I mean, I suppose that’s different industry to industry, business to business, but, I like it.
Rick Jordan: Thanks, my man. It’s been a fun ride. I keep saying no. It’s like, it’s my first public company, and I don’t think it’s going to be my last either.
Brad Weimert: Yeah, well, I think the path you go down when you dig deep enough, there’s gold down a lot of different veins, and it’s about being good in competent in those areas. And of course, everything else we’ve talked about, it aligning properly in your industry and the marketplace, etc. But the focus in that one direction is, it’s cool to watch and cool to learn about.
Rick Jordan: It’s pretty fun, man. I hope we’ve given your listeners some value today, too, out of all this.
Brad Weimert: Yeah, it’s fantastic. I mean, like I said, in the beginning, talking about raising money and what the different options are, super relevant. So, I guess, before we wrap here, you mentioned that through the Reg A process, you ended up acquiring the first business with debt. You were going through the Reg A process. How did you line up debt through that process? And what kind of debt did you get to buy?
Rick Jordan: The debt was disgusting, I mean, just straight up. Part of the debt was seller notes, which is great because you can work that into the deal. In a nutshell, it is that. So, that was okay, because at the time, before interest rates were spiking and everything, it was like 7% or something. So, it was all good, decent debt as far as a third of the purchase.
The other part to actually fund the cash up front was through like MCAs, which I’m sure a lot of entrepreneurs that are listening, it’s quick money, it’s high-interest rate. You pretty much pay it back weekly with weekly payments. Some of them do daily. But it’s the sale of your future receivables. That’s what a merchant cash advance is, so the fund that cash up front. But we knew that it would cash flow out with the revenue with the company that we would acquire. And it absolutely did play out that way.
Brad Weimert: Got it. So, seller note being the owner of the existing business that you bought basically said, hey, 30% of the value of the business, you just make payments to me, and I’ll charge you 7% on it. So, owner finance, and then the MCAs are typically, the merchant cash advances are typically really expensive. But the use case for them is exactly this, which is when you looked at what the payment on the merchant cash advance was, it wasn’t relevant because the cash flow you’d be getting from the business you were buying was going to cover that, plus whatever.
Rick Jordan: Exactly. That’s when that makes sense for sure.
Brad Weimert: Beautiful. Yeah, I love that. That’s really cool to see. I love it. Well, Rick Jordan, if people want to find out more about you, where do you want to point them?
Rick Jordan: Yeah, Instagram, @mrrickjordan. I’m always in my DMs personally there, and then also LinkedIn, you can connect with me, too. Two best places.
Brad Weimert: Sweet. Rick, I appreciate you carving out time.
Rick Jordan: Yeah. Thanks, my man. Thanks for having me on.
Brad Weimert: Absolutely. Love it, man.
Rick Jordan: Thank you, brother.