Trevor Sperry on Building an Express Car Wash Platform

0:01 >> And we're going to start out this morning with a fireside chat. We're going to invite Trevor up here to the stage. And this is going to be on going from zero to a hundred million dollars in 48 months. How we out operated every competitor in a fragmented niche. Trevor is the founder of Olympus Pines. And we're going to be talking about his platform of 33 car washes and how he's pulled off growing so rapidly. Let's welcome him to the stage. >> >> All right, thanks for being here. What would you add about Olympus Pines just so everybody kind of understands your platform and what you're all about? >> Yeah, so we are we started off as a retail private equity company, but in in a similar vein of what your speech was, we we decided to specialize early on.

0:52 So we are currently building the fastest growing platform of express tunnel car washes in the US. >> Awesome. Why car washes? How do you choose that niche? I mean you could have gone into HVAC or plumbers or something else that's got a real estate base to it. >> Yeah, so my partner I founded this during during business school and you know, the topic to your is always to roll something up. You know, HVAC companies or roofers is a big one. Vet vet clinics, dental clinics. And I I was at Boston Consulting Group at the time after school and you know, so I thought I had a good job. I was learning a lot and I just didn't want to just jump into something just to be an entrepreneur. I knew I wanted to be an entrepreneur, but I wasn't going to force it into something that I didn't firmly believe in. And it wasn't until you know, the car wash came along that we saw a very large industry that was extremely fragmented and a lot of institutional money was trying to get in, but it didn't have the access to the market because of the high operating you know, barriers to entry. So what we saw was real real backed uh, very tax advantaged investments. 65% of of revenue is recurring monthly.

2:01 Whether it rains or shines, we're still going to charge you for your monthly membership. Um, and in very low labor. So, we only need three employees, uh, to run our to to run our wash at any given time. And if things hit the fan, I could run it by myself for for a few hours and and get by. So, for those reasons, it was it was good enough to to leave, uh, a pretty stable job even with, uh, with a healthy amount of student loans and jump into the car wash industry. >> Got it. So, how did the first like three locations get opened? Did you Did you open those with your own money? Did you raise money for those? >> Yeah, so we actually had been talking to a private equity company out west and they gave us a term sheet, um, after 2 weeks. They gave us a term sheet for 15 million to go build six washes. And I was thinking what you're thinking. I was like, "I we've never done real estate. We've never operated anything.

2:48 And this pretty sophisticated institution is willing to write us a pretty big check." So, we decided to take a step back and say, "If we can prove this model out, the economics for us are going to be so much better." So, we turned down that money, um, and started just raising some friends and family money. That's how we raised the first, you know, 4 or 5 million. Got connected to a few larger groups. Uh, we raised our first 110 million with an average check size about 140,000. So, we just grinded through it. And that opened up later. We brought on multiple institutions and larger, you know, very very large, well-known family offices. >> Got it. Yeah, so you just casually mentioned that you raised a hundred million dollars. That's obviously like relatively change challenging for people, especially like in today's world. So, what was key to you raising a hundred million plus? Or like now, I think you've raised over 500 million total, right?

3:37 >> Yeah, so we just crossed the 500 million mark. And for us, I think it was about one, telling a very clear story for people. But two, I think people want to invest in operators. And when you look at what's happening institutions, whether it's self-storage or whether it's multi family, there's people that have way cheaper access to capital than we did. Right? But, we found something where the operator actually matters, and where we can create a lot of value that no matter how much money you have, if you wanted to open up a car wash in the DC area, congrats, you're going to go to six city council meetings, and it's going to take you four years. Doesn't matter who you are. And so, we found an area where we could provide something that institutions really couldn't do for themselves, and we were the horses that they could bet on. >> Got it. So, part of the reason you're able to raise the money is that you're operators.

4:24 Um anything else that was part of the secret sauce? Like, did you fly around and like make sure you met in person to close them? Did you have like an amazing deal structure? How'd you pull that off? >> Yeah, I mean, so the way that we structured the deals early on was we are very low fee people. So, we were fine eating ramen for, you know, a decade before school, during school, uh and I have a very loving wife who is like, just let's just bet on bet on us. And so, we took very low fees, which when you go and approach, you know, larger institutions, they want to make sure that you're not going to get rich without them getting rich. And so, what we said was was, "Look, we're going to want more on the back end, but we're fine taking a very I I took a 50% pay cut when I left my when I left my job, and uh and very low fees, but we want more of the upside." And so, they really thought that we were betting on ourselves, so it makes them more comfortable betting on you.

5:13 >> Got it. I know you mentioned before like your um your site selection process. Can you talk about that? Like like McDonald's is famous for putting tons of research into their site selection. Anything you want to share with others here that operate platforms where the location matters a ton? >> Yeah, so I think and I I don't think I'm going to say anything new here, but I think, you know, one of the challenges about growing is is you want to grow as quickly as you can. And so, you're very There's a little bit of moral hazard there to put one of these in an in a place that you think could be a B plus site, but it's a retail business, right? And it's going to be around for 30 to 40 years. And so, sure, you're going to accelerate the growth timeline by maybe eight months, nine months, but you're going to sacrifice 30 years of of below average performance because you make that. So, what we do is is we we studied '08 to '11, all of the retail by zip code, and what happened in the Great Recession. We ran a bunch of regressions to find which zip codes would perform the best. We identified five or six factors. We built our own systems. Um and then and then we you know, there's nothing that sacrifices the time you can just drive in a car. So, we did a lot of windshield time. So, our highest performing site was a site that I I got done building a deck at BCG. I threw my wife in a car.

6:29 We didn't have kids by then. We we drove around the DC area for two hours at midnight. We found a spot, and that site is is our best performing site. I called the broker, and he's like is our first site. And and he's like, "Are you a broker?" And I was like, "No, I just want to buy the land." >> Right. >> And he they didn't take me serious, and it turned out the on the other side was Guggenheim, the hedge fund. And they're like, "Who is Who's this guy calling us just to buy the land?" And it worked out, and we bought it from them, and it's been it's been an awesome story. So, I think actually being on the ground, technology's great, but there's a lot of things you just can't see from a desktop. >> Got it. And like, when did you realize you could scale this massively? Was it like after you had three to five locations you realized the true possibility? Was it when you turned down the $15 million term sheet and said, "Wow, if they're willing to give us that, this must be a an area that could be huge" or >> Yeah, we recognized it early on. I think that once we hit we had opened up 12 very quickly. So, we we spent two years doing greenfield, and then we did a few acquisitions in 2022.

7:27 And so, we grew from, you know, zero to 12 in a year. And and it was then that we had a little bit more track record to go to institutions for from the debt perspective that they could trust us a lot more, and we had a lot better track record. And so, our cost of capital, you know, almost cut in half from a debt perspective and that's when it we really realized that we that we could take off. >> Right. Got it. Yeah, that makes sense. Um, where do you think like most founders egos get in the way or just big assumptions maybe get in the way or some mental model that's stopping a lot of people here from scaling as massively or as quickly? >> That's a great question. I I I firmly believe that nothing nothing can can outperform this hard work. Um, you know, Ken Griffin was on and he said that these are the smartest people in the finance world and he said that there was an AI bot that was outperforming his PhDs in mathematics in an hour. So, you can't have the hubris that if I train my own real estate model, there's someone out there who's already trained a better real estate model, right? So, from my perspective, there's certain things that people aren't willing to do and that is to spin a sign at a grand opening, that is to actually talk to a customer in the parking lot. And we always talk, you know, these platitudes of your customer's the most important person and no one talks their customers, right? So, Mike and Mike who's my co-founder and I,

8:45 we spend a very large percentage of our time in the parking lot of our washes to make sure everyone is happy, employees are happy, everything is going great because that's something that AI can't do and that's something that people, you know, in a in a big institution, they can't do from a desk. >> Right, right. I think a lot of people who are the deepest on AI show that now the importance of having the right programmers, even if you're live coding with AI or whatever, are making those right judgment calls when you can go left or right or question when it does go off track a bit and I think it's a bit about what you're talking about. You keep on coming back to the operator strength of it. So, like what other things do you do that most people don't do that's because of that operator DNA that you have, you think? >> I think for us it starts at the beginning of of getting sites open in markets that are that are very hard to open up car washes in. So, if you look at who we're competing with, nine of the top 10 chains are private equity backed.

9:37 And if you look at the 10-year fund life, and if you just do the math on even if you're investing in day one out of your PE fund, it's going to take you 4 to 5 years to identify the land, get a permit, and get a car wash open in the DC or the Mid-Atlantic area, right? After that, it's going to take you 3 to 4 years to reach maturity. That gives you 12 months to execute a deal. Like it doesn't make a lot of sense for these people, right? So what we did was was we said it's going to be a lot easier to take this money to Texas or to Florida where everyone else is going and get way more up faster, >> Right. >> but if we can just be patient in markets that people aren't willing to go, over the long term there's going to be a lot less competition and a lot higher unit economics. >> Got it. Makes sense. Um so you've worked with some billionaires and centimillionaires. What would you say you've learned from that experience? Like either learned from watching them operate or learned about negotiating deals with them?

10:29 >> Just their diligence, honestly. The questions that they ask and and I wouldn't say that it's a a time diligence. Some people you know, they they exchange time for quality. And if we're going to take 3 months to look into something, then we know we did a good job. And I don't think that's the case. I think that a lot of the family offices, I mean we have $40 billion family office on our cap table, they were very quick with diligence. But the questions they asked were in like you were just very very smart. >> Got it. Makes sense. What's the number one most costly mistake you've made over the last 4 years that a founder or investor here could avoid after hearing it from you? >> Yeah, I think we've we've lost capital um not not that we've raised, but I think we could have raised a little bit more money from people.

11:17 It's hard to have There's a There's a few different exit plans that we could do, right? We could go public, we could sell to a private equity company, we could be be privately held like the Flynn Group, you know, forever. >> Right. >> And people don't want to hear that that you have options. They want to know exactly how they're going to get their money out and when. And for us, um, we made the decision of we didn't want to tell people something that we didn't firmly believe to be true. >> Right. >> And so not having like an actual firm, this is when we will exit and how, even though the reality of that happening is is probably not super high. Um, that's something that we did learn early on is people do want a very clear path if if you want their, you know, and so we a lot of groups were fine with those with the optionality and being part of that decisions, but some groups were they they want a very clear plan from the beginning.

12:05 >> Okay, got it. So, um, if you were to exit this today and then you go out and create your own family office, now you're on the investor side, what have you learned from the smartest family offices, centimillionaires, billionaires that would be a piece of advice for investors here in the room if they're looking at a platform like yours, what are one or two sharp due diligence actions or really sharp angles to question any platform on that maybe you know because you're the builder of such a platform. What what would that be? >> I would say spend time with with the operators. Like on the ground time with the operators, seeing how they work, seeing how they function in the setting of that that that they're working in. I think that there's this hubris that we can do things better than everyone else. And in business school it's go find some HVAC company in the south because you are so your heart you're from Harvard.

12:54 You are so much smarter than Joe from Memphis at running HVAC companies. And you realize you go to Memphis and you're like, I don't I don't I don't know anyone here. Joe knows everybody. He can run this business pretty well. And so there's this there's this false sense that money is going to solve an operations problem. And at the end of the day, especially in competition, it's going to come down to who out operates. If there's two self-storage groups next door to each other across the street, who's going to be the best operator? >> Right. >> So, I think that's what I would do and that's what groups did with us. We flew around to, you know, seven markets in four days and they saw everything from our our land acquisition strategy to the way our sales at the window operated to they want to touch the technology and those those have been the groups that have that have had the highest returns.

13:40 >> Got it. Okay. So, I'm guessing, you know, bringing in your first 3 million from friends and family probably looked different than the next 97 million to get to 100 and probably somewhere between 100 million and 500 million the structure got smarter either for you or for investors. So, because it's a depreciation related investment play, do you ever segment and people who care about the depreciation get class A and people that don't get class B or those that put in million-dollar checks get different terms and those that put in 100k checks? Like can you talk about how the structure has evolved because we just talked about how structure can Trump strategy sometimes. What have you guys learned on the structure side? >> Yeah, that's a great question. I I think what what what we specialize in, which has been very helpful to us, is we find the deal first and then find the partner second. And instead of just raising as much money as we can and trying to find a use for it, we actually work with a family office and say, do you do you need depreciation this year? You know, do you want cash flow this year or are you do you want more upside that's going to take you a year? And so, we we curate these relationships over, you know, sometimes years and then once we have a deal or an acquisition or a greenfield portfolio that's coming online, we'll go and match that with the with the with the family office.

14:53 >> Got it. Got it. Yeah, that's smart. So, I see a trend where family offices in general, especially single family offices prefer the direct investment versus a blind pool fund. They know what they're getting, but one step further is not just saying here's a cookie cutter direct investment, it's actually listening to them and in mid negotiation you can custom structure something but also just develop that relationship, I guess, and then just say, "Okay, that's what you like. Well, let's just let's structure this to really serve what you need this year." I guess is what you're saying, right? >> Yeah, 100%. I mean, if you look at just the search fund world in general, you know, 40% of search funds don't even ever get closed. So, you're giving an entrepreneur money, 40% of the time they're not even finding a business to buy. And of that of the 60%, 30% fail. You're right? So, if you give someone money to go out and find a business or find an operations, if you're flipping a coin, you're going to lose.

15:41 Right? So, for me, it's you have to know the deal. And you have to know the operator. And after that, for us, it's super easy to say, "Oh, great. You wanted these five development sites. Now, you had some sort of liquidity event this year and you want to shield some passive gains. We can go find you two great acquisitions to do that." >> Got it. Yeah, interesting. I mean, I still come back to like how massively quick like you ramped up this whole thing. I guarantee there's people in the audience being like, "What? Doing this for 15 years? I haven't raised 15 500 million dollars or even 100 million dollars, right?" Um when you talk to other people in a community like this or just talk to other CEOs and founders, what are two or three things that just make how you think or act like dramatically different that you haven't said yet?

16:31 >> It's a great question. I I think that when you're raising money from people, I think sincerity goes a long way. And I think understanding that you can only grow as quickly as you can grow. I think from what you It sounds like we've raised a lot of money and and I you know, we definitely have. But, this is a market where the top 10 brands only own 15% of the entire market. So, it's funny that you're saying that we're growing really fast cuz I think we're growing really slow because I see a massive opportunity out there. But, there's times that we were talking to a you know, a massive private equity group a few blocks from here and they wanted to write a 90 million dollar check. And we just weren't ready to take it. And that that that sucks to to say no to a that amount of money. But, it's understanding where you were currently at in that life cycle and not sacrificing 5 to 7 years in advance just to grow faster over the next 12 months.

17:23 >> Got it. What is one question a capital partner asked you that you weren't prepared for and how did you end up answering that? >> Yeah, I think it was the exit question. I think that we are so focused on building and growing that uh you know, we don't really have uh you know, a firm in 5 years we want to sell. We have a you know, some some some put option to sell it to this institution, right? So, for us it was uh we have really good options, but we know where we have to go in order to be attractive at that scale. And we're super focused on getting to that level um while still entertaining, you know, these other offers etc. but you know, we we think that there's still a lot of room to grow and again, like I alluded to earlier, a lot of people don't want to they would they want to know who's on the other side and when. >> Got it. So, 33 locations you need to manage, you know, a growing team. I think you help coach like your son's travel baseball team as well.

18:17 Uh how do you keep focused? What's like productivity tips or how do you just keep your your mind organized on all that when there's more, you know, LLCs, more locations, more investors every day? >> You have to build a really good team and you have to know what you don't know. Uh I think that um you know, I I have the I have the ability to do a lot of things that I don't have the time to do. >> Right. >> And so, you have to be able to leverage your time for the highest and best use. Like I love coaching you know, Little League baseball. Right? We have a playoff game tonight, so good thoughts, guys. Um and and I think that that's something that I won't give up and I don't want anyone else to replace. Similar in business, there's certain things that I have to do in my business and recognizing over the first 3 years that I was doing a lot of things that I can do, but it's just not the best use of my time to do and giving that to other people and finding the right person to give it to is is very important.

19:11 >> Got it. What if you did differently do you think would have made it so that you're at a billion dollars raised and 75 locations today instead of, you know, half a billion and only 33 locations? Like is there something you look back and you're like, "Oh, if I knew that back then, we could have been huge." >> It's a great question. I think you know, I I I I don't think so. I think understanding that there is a there's a safe place to grow that's not out of control is is actually good. And I think we've seen a lot of public companies that have grown very quickly that didn't have the infrastructure supporting it. There's a lot of, you know, there's a lot of those cases out there. For us, I think that it it became a choice that we wanted to be able to understand and to build and to train our employees. And if we went and raised that amount of money, there's plenty of good uses for it.

19:59 But we would be completely scattered throughout the country. We wouldn't have the team and the infrastructure in place. And then at that point, we're not providing the value that we actually do do provide. Right? Anyone who has that amount of money could go and buy the same amount of car washes tomorrow, but who's going to run them? So at that point we're we're skewing back into what everyone can do and not what we are specialized to do. >> Got it. Yeah, uh many times at the end of these interviews we ask for like a a million dollar insight or a piece of advice and it sounds like on one level kind of crazy, but on the other level, it's like when you raised 500 million dollars, like you probably have a lot of million dollar insights, right? There's a lot of ways to create a million in value at your level. So what would you like to end with? Maybe something you wanted to communicate I haven't asked you about yet or something you haven't mentioned yet that's like super important for all the investors and founders here to hear.

20:48 >> Yeah, I I think I think starting I I I I think stepping back I I I kind of say that I've been the CEO of seven different companies, but they're all this company, right? I mean when you're running a company of five employees in one location, it's very different than running a hundred million dollar operation, right? And I think it's okay to step back and look at whether it's teams, whether it's regions, whether it's what your goals are, and to say, "If I were to start today, because we are here would I still hire that person? Is that the best person that we could get today, right? Or if I could start today and we had this infrastructure, would we be in that market?" And into redo those decisions because often times, we're not very good at making decisions even a month out. And so if you think you can make decisions 7 years out, right? It doesn't make a whole lot of sense. So I'd say constantly reevaluate where you're at and understand if you were to start today with what you currently have in place, would you have X person or X region or X product, or would you develop something new?

21:47 >> Right? You know, that makes sense. I mean, as part of that though, how do you reeducate yourself? Are you just constantly so focused on listening to the customer, learning as you go despite being fully engaged on the business, or are you doing executive education at Harvard, are you reading tons of books or podcasts, or do you have a mentor or a coach? Like, uh what do you do to evolve your brain and capability depth as the business gets far more complex? >> Yeah, I think first and foremost, learning from the customer, which is, you know, who who who runs our business really. Um second is spending a lot of time with our teams and and getting a lot of training. And then I I think you know that at the end, you know, just consuming as much as you can. Um that's why I love these events. Uh you know, I still read, you know, a lot of a lot of stuff around around business and finance. Um and stuff's constantly changing. And so constantly reevaluating and finding the people that you kind of uh you gravitate towards. Uh you know, for me I have I have a few that I really look up to and really following them and seeing what they're doing in times of, you know, some economic challenges is is super helpful.

22:46 >> Awesome. Cool. Well, um we're happy to have you here today. It's awesome story to have that that ramp up so rapidly is pretty amazing. Um if somebody has a site location or um some way to do business with Trevor and they want to connect, then obviously you can find him here after he gets off stage or let us know and we'll get you his email to connect. But, I appreciate you sharing all the story. I think it probably inspires people here that are in the room today, but also we record all these talks and have them all in our portal. And if you're liking the fireside chats, you can watch 50 more of them in the member portal and just focus on watching the fireside chats if you want to after the event, between events, etc. But, I think that was great. Thank you. Appreciate it. Let's give him a round of applause. >>