Unleash Your Practice’s Potential: Differentiation and Cash Flow Mastery

The following transcription was from the Bulletproof Youtube channel. Here is the https://www.youtube.com/watch?v=iGnJdT-cxSQ&t=10s

Trey Tippit
0:00:00
It's been a while since we've all been back together. Yeah, it's been a band back.

Craig Spodak
0:00:21
The band back.

Trey Tippit
0:00:22
Look at Tray.

Trey Tippit
0:00:23
We're back together, man.

Trey Tippit
0:00:24
Tray, you got a whiteboard in the back? Yeah, I got it.

Trey Tippit
0:00:27
I didn't know you better.

Craig Spodak
0:00:28
I was thinking an entrepreneur.

Trey Tippit
0:00:29
I figure it's a great idea generator for someone else. The cleaning ladies put Fabuloso on it so you can go out to the supermarket and order

Trey Tippit
0:00:37
it.

Trey Tippit
0:00:38
Keeps it spotless. Hey, Mr. Trey, can you please order Fabuloso?

Dwight Pecorra
0:00:41
It doesn't clean anything, but it smells great.

Trey Tippit
0:00:43
I love Fabuloso. They make trash bags of Fabuloso scent and pregnant into them, I just found out.

Peter Boulden
0:00:49
Of course they do.

Trey Tippit
0:00:50
Oh, man.

Dwight Pecorra
0:00:51
Anyway, I just found that out.

Trey Tippit
0:00:52
That's like this.

Trey Tippit
0:00:53
I just found that out. So anyway, onto serious stuff, guys. I'm going to make a little push here because I've just found out that we still have Summit tickets left. And my push is there's a lot of Dennis Cummings solo. And as you both know, the knowledge is in power, execution is power. And you can come out there and listen to all these great concepts and hear the hygiene and office manager and all these ideas and sit there like, oh shit, I should have brought my team. So my suggestion, I've said this before, make sure you bring your team. I would actually say, send your team and hang out at the casino at the win and you get more value than if you went alone without your team. So it's August 11th and 12th. It's not too late. Get on there today, bulletproof summit.com. And then of course, I'm going to ask you Trey to speak to that. And you Dwight to speak to that with very powerful teams like you both have. What, what, what do you say to that? I took my team. I've taken quite a bit of, of the teams last year. I took a nine or 10 of them. I think it was enormously helpful. Uh, now this year, they're all anybody that's not going or anybody that is thinking about it has actually asked to be a part of it or if we are going. They had a great time doing it, not only from a learning standpoint, but you get to meet a lot of good people and hear a lot of good stuff. The hygiene aspect, you know, the year before I brought all hygienists who are now in administrative roles in my practice. heard another aspect of hygiene of, hey, here's another level. Let's work towards it. It's really empowering for them. It really drove our hygiene program forward. So I would be looking at anybody you can get in there and get some value to because they will come home and they are almost like a third-party endorsement. Yeah. And by the way, the endorsements began to think each right is we're going to acknowledge that the doctors that are brought their team. So, you know, when you get there and you've brought your team, we're gonna actually be acknowledging like, this is a massive investment they've made and you thank your doctor, it's huge. And I just think like, if I could go back and look at my own career, I was the nucleus of everything. I thought everybody was a dumb ass. I was the one that was holding everybody back. And I hear that with, when I listen to business people on the phone, I could hear like the way they talk to people on the way they're like literally playing switchboard. I'm like, why are you even getting in the way? Like you as the business owner, a leader just needs to set up the vision of where you want to go and then be clear and then let your team fill that space. Dwight, what say you to that? Yeah.

Dwight Pecorra
0:03:28
I mostly struggle with the fact that people think that somehow you're going to learn that amount of knowledge and take it back. Cause I've done it too. I've gone places, come back and I'm like, by the way, it needs to be this and this, and this I'm going through my notes and I'm like, we're going to add this, we're this protocol and I'm like, and about 80% of that dwindles away in the first two weeks, because there's no, there you're not coming back and actually training and developing your team on that information. The best way to do it is just to have it implemented. And the ROI on a lot of the things that, that we talk about gets learned at a summit like this, it's so much information. It's just near impossible for you to just feel like you're gonna get any amount to come back that's not gonna double down. If you are gonna 10X the practice, think about if your hygienist is gonna 10X her work. What if your assistant's gonna 10X? What if your front desk learns new practical ways to interact with each other, develop as a team, your culture development. It is impossible to actually understand the ROI that comes along with that. But so many of us want to carry that on our shoulders. And most of us have a great time. We learn a lot and then we travel back and we try and start right away Monday morning and we're kind of tired. And instead of having this hoorah moment about the team, about the team talking about what they learned and the others who didn't get a chance to go or whatever. And they're all kind of pulling all that data together. We're just tired and we're getting back into the flow of things. And I remember going to a lot of CE for many, many years and coming back to my practice and just being like too tired from everything going on. And most of that left me, right? And we can't be responsible for that. There's already too much going on, right? So it's, it was a huge ROI for me and it still is. I always bring people with me, but my goal is, is to continue to bring and expose more and more people to it as much as possible. And I think we need to get away from the concept of investing in your people means they might leave you. Like what's the quote? Is that at the end of the day, you know, you should create an environment that, what is it?

Trey Tippit
0:05:25
Teach them to stay. Yeah, train them so well they could leave, but treat them so well they'd never stay.

Dwight Pecorra
0:05:29
Treat them so well that they'd want to stay, right? And I think we have to say we have such fear, right? Such a scarcity mindset of saying, well, I've got to keep from the idea of, you know, if I over train them, then they're going to go somewhere else or they're going to ask me for more money or this, like just invest in your people.

Trey Tippit
0:05:46
Just invest in your own business. Right, but then, Dwight, then you're also, you're also the guy that trains people. So there's a lot of people that will come to Fort Bend Dental Group. Like that's, that's the place you go to learn. And then also you said one other thing I want to touch upon, then we'll move on. It's, it's this idea that, you know, you're going to come up with all the ideas and you are going to come back on Monday morning and tell them what to do if people don't weigh in, they don't buy in. So at the summit is designed this year too, is to co-create. So the general content is for everyone. So everybody's in the same room. Hey, what are the big rocks? What's getting in your way? Hygienists are taking their notes, assistants, office managers, doctors, and it's compare notes. And then there's tactical time before you leave. What are you going to do? What's the implementation strategy? So it's not like this bullshit Monday morning, like I learned this. It's you're never leaving the scene of these decisions without an action plan, because let's face it, inspiration is perishable and we can't just let it go and go out into hopium like that. Yeah, I agree. All right, Peter, you have a slideshow, but I feel like I'm the J Cal right now. I'm I'm the J Cal. Well, I take that as a major compliment. Because, oof, gosh.

Peter Boulden
0:06:50
The moderator actually has to put in work and do stuff and come prepared. Oh, my God.

Trey Tippit
0:06:54
Scarcity peak, guys. I didn't know we got this version of you today. Just because your microphone sucks, and you crashed your laptop. It's on the floor. It's on the floor. I just need a dog to kick.

Peter Boulden
0:07:05
He's a six-foot white dog.

Peter Boulden
0:07:09
I don't know.

Trey Tippit
0:07:10
I feel kind of so confused. For those that don't know, Peter's calling me the dog. So, go ahead and punch. Okay, Peter, pull your slideshow up. Let's get this dog and pony show up. Oh, if we get dog and pony show, I got mentioned on Scott Galloway's podcast. Do you have a clip of that? Oh, I don't. I'm confused. The dog and the pony. Go ahead. So, Scott mentioned you, and he was basically just raving about how you're,

Dwight Pecorra
0:07:40
you're kind of the model for consolidation kind of thing.

Dwight Pecorra
0:07:43
Wasn't that?

Trey Tippit
0:07:43
Yeah, he, he's on his, uh, prof G podcast. They were talking about rollups and consolidation and all that stuff. And he just drops my name. He's like, Hey, he actually called me his former dentist, which, you know, that's kind of always nice to hear that, but he did move to London. So maybe there's another person out there, but he just said like, you know, if for those that are not really into their business and they're not operators and they don't want to do it, this is a good viable strategy. And he mentioned me in the light of like, you know, who's doing it really right. And he's got technology and it's, it's cool when you set your practice up like the way the three of ours has it, where practices are different from each other. But most importantly, they're different from everyone else's. So you can't slip into that sea of sameness. I had a friend of mine that came to the practice today and was like, wow, I feel like I've been in the dark ages, you know, in my dentist before, and I think it's, uh, I don't know where I'm going with it, but I think it's incumbent upon the business owner and leader to differentiate your practice in whatever way you wish to do it. Random question.

Peter Boulden
0:08:43
This is going to be a marketing side sidebar for you guys. Have you guys converted to Google Analytics 4?

Craig Spodak
0:08:53
What is Google?

Trey Tippit
0:08:54
So.

Peter Boulden
0:08:55
So.

Trey Tippit
0:08:56
So.

Peter Boulden
0:08:56
All right, I know that's very in the. We're not even in the quarter and he's already.

Peter Boulden
0:09:02
So.

Craig Spodak
0:09:03
I don't know where we're going here guys.

Trey Tippit
0:09:04
I'm gonna go get some coffee.

Peter Boulden
0:09:06
No, stick around, you might learn something. Go on. Sometimes you gotta be technical in your business, buddy. Do you know what Google Analytics is, Craig?

Trey Tippit
0:09:18
Yes, I was joking, yes. I'm gonna hit record, by the way, so we can capture this.

Peter Boulden
0:09:22
We already are recording.

Trey Tippit
0:09:23
I'm just joking with you.

Peter Boulden
0:09:24
Google made a pivot into something called Google Analytics 4 and they are discontinuing the UA, which is the Universal Analytics. So log into your platform and you're probably gonna get a bunch of flashing red lights that's saying you need to convert. They are abandoning the old platform. And it's not, hey, we're upgrading you automatically. There is a process to go through and it's a pain in the butt. And it's been a colossal failure on Google's part, but it unfortunately it's the hoops we have to jump through. So I just, I wanted to take, I'm going through right now. I thought it had been done, but it had been done inappropriately. So now I'm having to hire someone else to go back and fix and do and stuff like that. So something to look at if, so it's these three things you wanna look at if you're listening from a technical standpoint. Your Google Analytics, which is gonna track everything. Your Tag Manager, Google Tag Manager, which is what your marketing company should be using for your campaigns from tagging standpoint to give attribution to where your marketing is coming from. And then your Google Search Console. Those three things should be talking to each other. Otherwise, you're getting improper data of knowing where your traffic is coming from, from an acquisition source, and where you're getting conversions and things like that. So the analytics sits at the top of kind of measuring stuff. So I just, mainly, I was asking you guys to be like, yeah, we did it. It's all good. Blah, blah, blah, Bolden. Do this, this, and this. But yeah, I just didn't know.

Dwight Pecorra
0:10:49
That's super intriguing. No, I haven't actually spent a lot of time on that.

Peter Boulden
0:10:53
You have to be the admin of your account. A lot of people are not, unfortunately, in dentistry, just like we've learned in Masterminds. A lot of people aren't the people who actually own their domain. The domain is not owned in their account. So you have to be the admin on the account. And if you're not the custodian of that account, then it's a time for you to do that. And when you log in as the admin, like I said, they're going to, they were supposed to abandon it July one guys. And by the grace of Google gods, they decided because it was such, it's been such a colossal failure in terms of a lot of the industry, they are keeping it alive, but they are, they will abandon. So all the data that you have, if you don't migrate and migrate appropriately, all the data that you've accumulated will be gone.

Trey Tippit
0:11:34
I just got back from coffee. So it's analytics four. Is that what I heard? No, I'm being serious. What do I need to tell my, my people and the powers at Google gods to do?

Dwight Pecorra
0:11:44
Just put in the time.

Dwight Pecorra
0:11:44
I'm being serious. Transition.

Trey Tippit
0:11:46
Poor Pete.

Dwight Pecorra
0:11:46
Peter, listen, he got to hang out the other week.

Dwight Pecorra
0:11:49
We, I flew up to Atlanta for the day.

Craig Spodak
0:11:51
It was great.

Trey Tippit
0:11:51
You know,

Trey Tippit
0:11:52
PowerPoint presentation on Google. We'll start AI corner and now, and yeah, you know, when you want to start,

Peter Boulden
0:11:57
you know, test more technical talks. Alright, so last week, we're doing this a little bit out of order. Last week, we did the we did the LOI, right or the term sheet form talking about private equity and the spirit of it was to break down some technology, I'm sorry, terminology and things and talk about some of the vices that are in some of these offers, why they aren't romantic, why they are romantic, where's the upside, where's the downside, where's the gotchas. That was really the, I think the spirit of it was just to explain to the industry for people who don't see this all day, every day, not that we see it all day, every day, but I think amongst the 80 plus years of experience, we've all probably seen, you know, let's call it 20 term sheets of things like that that we've had to kind of dig into. So, it may have been kind of a master's class and honestly, like, as I kind of reflected back on what we discussed, we kind of really dissected it on a granular level. And there may be some things that you don't understand, and maybe it's not applicable right now. But I think just creating some of the awareness around it is a good exercise. I remember sitting guys, this is just an interesting side, but I remember sitting next to one of the OGs in Atlanta practices, you would know him. It's Goldstein, Garber and Salama. I won't say which one I was sitting next to on the plane. I actually didn't know who it was. And we started talking and I won't say which. And anyway, this is the time that they had sold to Heartland and in conversation, it came up, I was like, why'd you sell? And he was like, Pete, honestly, like the practice does X. I forget what he said at the time. Who the hell was else was going to buy us kind of thing. Right. So sometimes where I'm going with this is that information that we went over on that term sheet might be applicable not today, but it might be applicable down the road because you may, by listening to this podcast, grow and scale your practice where you only have a certain number of people that can afford, no single dentist may be able to come in and afford to buy, quote unquote, your practice. So, yeah, I don't know. Sometimes people like brush stuff off, like Craig is brushing off the Google Analytics. You brush it off because you don't think it's applicable to the world, it's not gonna benefit you right now.

Trey Tippit
0:14:18
I wasn't brushing it off, I was just having fun.

Peter Boulden
0:14:20
Well, you do that with technology and it's fine.

Trey Tippit
0:14:22
No, for the listener, it was a joke. It's very, very.

Peter Boulden
0:14:26
I'm not offended, dude, I'm a full grown man.

Dwight Pecorra
0:14:28
I think it's a huge deal for you to pay attention on these types of things because if you are a business owner, at the end of the day, there's a great number of reasons why you want to continue and remain an entrepreneur. But a true business owner understands that everything sunrises and everything sunsets in general processes. And at some point in time, it goes along with your own personal runway and you need to know this stuff. And I'll be honest with you. I love the vulnerability, Pete. I want to call that out because I think that's a big deal to just be like, Hey, by the way, this is my deal. This is what we want.

Peter Boulden
0:15:01
I got studied by Dwight from that after post recordings. I was like, you know, like, was that the right move?

Dwight Pecorra
0:15:06
And I felt called to it at the time, but I still understand.

Trey Tippit
0:15:09
Help me understand why. Because it can go one of two ways, Craig.

Peter Boulden
0:15:12
Someone can think the Dwight Method, that's very transparent, thanks for sharing, appreciate that, or it could go another way. It's like, you know, that's not, it could be… Like you're saying, like it could be perceived as a humble flex, is that what you're saying? Maybe, maybe. I think every single one of the numbers…

Dwight Pecorra
0:15:30
That you're, you're getting all sweaty on?

Dwight Pecorra
0:15:32
Yeah.

Dwight Pecorra
0:15:33
I think every single one of us, every single one of us on this pod should do that.

Peter Boulden
0:15:40
I think we discuss numbers a lot as dentists, right? We're comfortable discussing new patients to each other, not just, I'm saying, you go to a conference, you're like, I get this many new patients. We do a top line revenue, but you're not comfortable with really granular stuff. And so, I don't know, Craig, I don't know why I have sweaty back.

Dwight Pecorra
0:15:58
It was just my gut, but I'm happy we did it regardless, so we're not gonna- Either way, Pete, you need to understand, I think that the right way to go about this is if we're truly doing it in the spirit of learning, we should all be doing this. Every one of us in our practices, we should go and get appraised, go through this whole process and bring it on here and talk about it. Because I think it's the best way to be truly transparent. I thought it was awesome. And you know what? I had some thoughts about it that I wrote on the side that I would either talk on that podcast about, or I'd talk to you about it. And I'm like, I really don't like this. And we all had a lot of different thoughts that were, and what's interesting to me is a lot of people do not know much about what we're talking about. This is probably the one, they don't know anything about this and they're not hit square between the eyes until it's not just that an offer is made, it's that they are in an, in a difficult situation in life where they have to sell, or a difficult situation where it comes up and all of a sudden you know what you're not thinking about at that time? Well, I should learn about this before I should apply it. No.

Peter Boulden
0:17:00
Or you're in a precarious position at closing table when you thought someone was advocating on your behalf. Like, right? Craig has an example of that happening when it is real estate agent, right? You think that people have your six in certain instances. Either that's your doctor has your health and you're in your health, or your real estate agent's got your health and when you're trying to rent out a complex of yours. But like, this goes back to kind of like what I always talk about. You have to not be an expert at everything, but you have to be your own advocate at things that are super important to you. Your health, your business, your family, right? Like all these things you just have to advocate hard for and not rely on someone else, or else you're gonna probably be disappointed. And so if you get to a closing table like this, Dwight, this could be your life's work that you could leave millions of dollars on the table for, or worse, you could be signing up for something that you can't fulfill.

Dwight Pecorra
0:17:52
And I was approached recently by another group and I said to them, I said, listen, I'm in such build mode right now, it doesn't make any rational sense. As my EBITDA is scaling and doing what it needs to do. And they brought up an interesting point. They said, even our whole methodology is changed. And I said, well, tell me more about it. Cause I found it really interesting. It was something I was going to share last time, but it's, we were kind of blown and going, we're hitting the top of the hour on that and I found it super intriguing. So they said that post COVID because nobody wanted to look back and include COVID in their EBITDA components is that now not only will you gain your multiple, whatever your multiple is for your buyout of your existing EBITDA, but they will actually give you as regular capital gains, additional EBITDA growth for the next three years.

Peter Boulden
0:18:40
Yeah, that's a normalized run rate, what they're doing.

Dwight Pecorra
0:18:45
With the multiple.

Peter Boulden
0:18:46
And that is dangerous, because guess what? That's performance-based.

Trey Tippit
0:18:49
Right, so it works to both ways.

Peter Boulden
0:18:53
It's looking at you like it's gonna be very liberal and wow, that's nice of you, but they're like, yeah, we'll give it to you in advance, but don't be for certain that we will take it back if those metrics aren't hit.

Craig Spodak
0:19:04
Correct.

Peter Boulden
0:19:05
So there's no risk for them.

Dwight Pecorra
0:19:06
So that is not as generous as you think. No, no, no, what I'm saying is that is a newer model. Big no before COVID.

Peter Boulden
0:19:14
I don't, well, maybe post COVID, but I don't think that's a newer model. I think that that is an attribution model for people who are always in growth mode because how do you not build a model for that? Because you've always got one in the dirt, so to speak. And they want that. They like that. I mean, shit, that's what the DECA deal, long time ago, when it got that 18 multiple that everyone talked about from, you know, Brian Clare talks about, is that model was built on 18 times earnings because of the fact that there's so many future

Trey Tippit
0:19:41
earnings. Yeah.

Peter Boulden
0:19:43
Once those 20 offices are coming out of the ground, that there had to be some attribution

Dwight Pecorra
0:19:46
from a multiple standpoint.

Trey Tippit
0:19:47
Yes.

Trey Tippit
0:19:48
By the way, those guys are crushing it.

Dwight Pecorra
0:19:51
Crushing it.

Trey Tippit
0:19:52
Shout out to Suleman Ahmed, the CEO of DECA, and also I think the group president, the ADSO group president.

Trey Tippit
0:20:00
Yeah.

Trey Tippit
0:20:01
What a badass, like, you know, I was, he's got that great model. It's like that ideal dental model. And there was one right by my house. I mean, right by my office. I was going to pick up something right by a Starbucks. It was really, really cool. He's going to really change the landscape on dentistry. I tip my hat to him. He's awesome.

Peter Boulden
0:20:19
Okay, so where I was going, sorry I went on that little tangent a little bit. Where I was going is that, you know, I am a bit of advocate of Twitter. I, my wife always, it used to be like, are you on social media? And I was just like, you're on Twitter. I read Twitter a lot because I like to get in the mindset of people's streams. And I follow, you can follow intelligent people and really kind of just, it's educational for me and entertaining at the same time. So I found this thread where it was kind of talking about the terminology, right? The language of money. And I thought it was a good primer for when we were going to have the LOI talk. So we're kind of doing this a little bit in reverse, and I'm not sure how these pods are going to post, but I think it's a good place to start because Craig, like you said, we get zero exposure to this. Trey, I think maybe you even said like, a lot of people just know nothing about this, and there is no shame in that. You were not taught to do this. You were, no school taught you, no one required it in the further CE. There was no postgraduate requirements to learn this. It was, hey, go start a business without having any business knowledge. And so that's kind of been like one of the tenants of the bulletproof, obviously, right? So I wanted to go over what I thought the language of money was, the terminology, the things that you see people bob their head to, and you think, they don't know what the hell I'm talking about, right? But they're bobbing their head and you can't, and you don't want to insult them by saying, hey, do you really understand what I'm saying? You know, so I think this would be a good podcast to kind of just really talk about some terminology.

Trey Tippit
0:21:44
Well, it's necessary, Pete, sorry to interrupt you. It's necessary because the narrative of sell, sell, sell is so pervasive. There's this constant force that you're being told you should do this and without casting a very wide funnel and frankly, they're incentivized to do so. So hey, sell, but call me first and I'll make a big on your practice. You know, shout out to Brady Frank.

Trey Tippit
0:22:07
Craig, question.

Trey Tippit
0:22:08
But I do think-

Peter Boulden
0:22:09
Let me ask you a question real quick, just as an analogy. Do you think you get, or Trey, either anyone actually, the three of you, do you guys think that you get better medical care because you actually know a thing or two about medicine?

Trey Tippit
0:22:24
Holy shit, yes.

Peter Boulden
0:22:25
Well, for sure.

Peter Boulden
0:22:26
Do you think if you didn't have that level, so meaning you get that level of care, the physician hears you talk and immediately has to level up a little bit, right? And says, shit, I better bring my A game for this patient because they actually might catch me. Marketing companies do the same thing. Private equity is gonna do the same thing. Have a conversation, be like, this dentist is an idiot, right? Or this dentist actually knows what they're talking about. They're using the terminology, they understand the terms, and they're using it appropriately in the context of this argument, right? So going back to the whole advocate thing, right? Like I think you get more from people in your life by actually becoming a quasi-expert, knowing a thing or two about a thing or two.

Trey Tippit
0:23:08
Oh, you need to.

Trey Tippit
0:23:09
Right?

Trey Tippit
0:23:10
I mean, one of the first business courses I ever went to, it's like, if you don't know your numbers, you don't own a business, flat out.

Trey Tippit
0:23:18
You don't know your business.

Peter Boulden
0:23:19
You don't know your numbers, you don't know your business.

Trey Tippit
0:23:21
Well, you don't, yeah, exactly. You don't have a business, you're not worthy of being a business owner. You have to know a little bit about this.

Peter Boulden
0:23:27
So bring it up, and let's bring some, if you wouldn't mind, Craig.

Trey Tippit
0:23:30
Yeah, of course, I got it.

Peter Boulden
0:23:32
So this gal that I followed and got this thread from, I just want to give, you know, her name is Cody Sanchez. She does a lot of YouTube videos. She does a lot of things where she basically teaching the business, right? And it's not sexy businesses, it's laundromats, it's things like that, but she's, you know, teaching people how to hustle essentially with business, but she's actually teaching in the process. So keep going, keep going forward.

Trey Tippit
0:23:54
Sorry. By the way, I just want to take a pulse. Dwight and Trey, are you both active and on Twitter or is-

Dwight Pecorra
0:24:02
On, not terribly active, but I read more than right.

Trey Tippit
0:24:05
And, and try, yeah. Twitter's a thing that's on the, your phone.

Peter Boulden
0:24:10
It's the bird, right?

Craig Spodak
0:24:11
Yeah.

Dwight Pecorra
0:24:11
Isn't that a bird?

Trey Tippit
0:24:12
The bird.

Trey Tippit
0:24:12
Yeah.

Craig Spodak
0:24:13
Bird.

Trey Tippit
0:24:13
Instagram is meant for entertainment, right?

Peter Boulden
0:24:16
Twitter is more of like this community soapbox if you will. But it's, it's really an interesting place. It's like- A lot of business gets done on Twitter.

Trey Tippit
0:24:29
Yeah, I'm reading a lot of people, like they started two years ago, three years ago, and their business is catapulted. It's such an interesting space. I just recently got into it. It's like taking so much of my social media bandwidth. I only spend like nine and a half to 12 hours a day on social media. So it's like, it's hard to carve out, you know, the additional time.

Peter Boulden
0:24:48
So does the interesting to see on, like instead of trying to flex on the vacation, you may have just gone on and taken the quick picture. Or the jet that some of these influencers ran. It's a meritocracy on intelligence because you only, it's nothing visual.

Trey Tippit
0:25:03
And it's pithy too. You have to make it good or not. I mean, to write a well-crafted, you know, two, three sentences is hard. Anyway, just wanted to take a pulse on that. Twitter's awesome.

Dwight Pecorra
0:25:12
Really enjoying it. I'm just kind of interested. What about your comparison on threads?

Dwight Pecorra
0:25:16
I was actually listening to a pod on that Dwight.

Peter Boulden
0:25:18
And, and I think threads is going to succeed. I think it's going to take some business share from, um, from, you know, it's funny. It's like the battle going on between Zuck and, and Elon, you know, and, you know, he basically just like cupped him and took a whole, took, you know, spent a thousand, Elon bought a business for 44 billion. Zuck pretty much recreated it for a thousand times less.

Peter Boulden
0:25:42
Right.

Trey Tippit
0:25:42
I mean, it's just, it's a pretty binary decision. Do you want your data resold? No, go on Twitter. You do go down meta. I mean, it's simple. Well, some people are dug in, right?

Dwight Pecorra
0:25:51
Cause Craig, to your point, so many P it's a new opportunity though. If you want to become an influencer on a new platform, I think it's going to work.

Peter Boulden
0:25:57
But so many people are dug in on Twitter, right? That's how they make their living, that they're probably going

Trey Tippit
0:26:03
to stay. So I think I'm going to make a gamble that Threads is obsolete. Flash in the pan? Yeah, I think it's a flash in the pan. If you look at the engagement, I mean, Zuck came out, started posting like crazy, then took like a seven day hiatus from it. You know, like you go on, you go on Twitter and Elon's active, whether that's good or bad, I don't know. He's a polarizing figure, but he's active. He's posting his memes. Yeah, he's funny as hell, but he did it for a different reason. I don't underestimate. If that guy can land rockets, reuse rockets, I think that social media platform's gonna be easy for him to handle. Anyway, go on.

Peter Boulden
0:26:38
So the first slide we get is really just getting excited about private equity and get exciting about taxes. As we know, Randy's coming to speak at our summit and he spoke to the mastermind about the biggest expense in your life. And everyone's like, what do you, what is that? And he's like, it's taxes, taxes.

Craig Spodak
0:26:53
No, I got that right.

Trey Tippit
0:26:54
By the way, everybody's like education, electric mortgage. He's like, no, shitheads. No, it's taxes.

Peter Boulden
0:26:59
Learn about taxes.

Peter Boulden
0:27:00
And he's like, here's some good books.

Peter Boulden
0:27:01
Right.

Peter Boulden
0:27:01
So like, get excited about equity and excited about taxes. Not excited. Maybe excited is not the wrong word. Learn about the metrics in your business and then just financing. Like these are the bears essentials. Go put them in practice. That's the key to learning business. Like it's just a bunch of steps. So the thing that everyone talks about in dentistry, EBITDA, okay. Does anyone want to take a stab at what this really means?

Trey Tippit
0:27:24
If we can break it down.

Peter Boulden
0:27:25
So obviously the acronym is earnings before interest, taxes, depreciation, and amortization. Dwight, what would you, if you had to describe this, would you say, like, if, if you're educating your mom on this, what would you say?

Dwight Pecorra
0:27:40
To me, EBITDA is the, well, I'm trying to make a dental comparison to the- All right. Let me ask you this. How is it different from net revenue?

Dwight Pecorra
0:27:48
Net profit, you mean?

Peter Boulden
0:27:49
Sorry, net profit, Craig. Thank you.

Dwight Pecorra
0:27:50
I like to say that EBITDA will take a complete picture of your business top to bottom. It's like when people will differentiate things between unadjusted production to collections, but then you got to take into account your expenses and then just keeps going all the way down.

Peter Boulden
0:28:16
Why is it pervasive, I guess? You hear it, you know, you hear it in dentistry, you turn around a lot, you hear people chirping, like, what's the EBITDA, what's the EBITDA, right? Like we throw that around. Why do you think it's that's so pervasive in the private equity world?

Dwight Pecorra
0:28:29
Because that's the way it is in every other industry. I think sometimes we get stuck with the idea that, I mean, I hear this stuff all the time. Well, my practice is worth, you know, 85% of it's blah, blah, blah, blah, blah. And it's not hitting a profit, right? Like it's, I hear so much of this. Well, I can get appraised for this amount or you get this card in the mail. And the truth is, is they will promise you anything. But when it actually gets down to the nitty gritty, this is the final number that they're actually gonna reflect off of. And it's because it's the reality of it. Many of us know a lot of businesses out there, even in the SaaS world, right? Even software and all these other things, they're incredibly profitable once they've developed something, right? But at the very beginning, they're a net negative. It's the worst EBITDA on the face of the planet. It's not until it flips over and they want to catch it at a particular vulnerable point, like a SaaS model, you want to catch it when that EBITDA is super low because they know where it's going. Once it starts to be profitable and a positive, then you know where this thing's going. And so the reality is, this is the industry standard across all industries, is kind of the point. So you're able to say it to any person who knows anything about finances and say, yeah, that's how it is. Cause nobody's going to look at you and say, but at my practice, my patients love me more or my, you know, it's all that, all that emotional stuff gets thrown out. And this is what your business actually is.

Peter Boulden
0:29:54
This is, this is the operating cost of your business, the operating

Trey Tippit
0:29:58
cost of your business.

Peter Boulden
0:30:00
Well, gross minus EBITDA is your cost? When you look at EBITDA, EBITDA is taking out all the below the line costs. If you go in and normalize debt service, you normalize things along those lines, this is how much it costs to run your business. It's what's left over after you subtract the operating costs. So, if you take your past debts aside, right? Sure. You, and you're all the owner benefits, you get healthcare, 401k, et cetera. It's an evaluation of the real cashflow of a business. So a private equity looks at this and is like, what's the benefit? If we buy this business for cash, what is the amount of dollars that's going to land in our, if we remove all the benefits from the owner and all the taxes that they had to pay all that bullshit that doesn't apply to us, what's going to land on our side. And so here's the interesting part is that they're going to run something called the quality of earnings.

Peter Boulden
0:30:59
Right. So this is

Trey Tippit
0:31:00
dramatically known as the Q of E, the QC sends a chill down my spine. Yes. And by the way, Pete, just sort of cut you. There's something rattling on your desk and me and you know, when you're moving your arms or something like that. Sorry, I

Peter Boulden
0:31:12
thought something typing. Okay, so yeah, the Q of E, you wanna, so the quality of earnings is interesting in that Dwight, like you're going back to your multiple thing. They may say, hey Dwight, we'll give you a 13 times. And you're like, that's fucking awesome. No one's offered me that before. I wanna do that. Like, what do you think your EBIT is around? I think it's around one and a half. No problem, awesome, let's roll with this. You get, now you get engaged for three months and you go through something called a Q of E. In the meantime of these three months, you are already romantically thinking about how you're going to spend this windfall of money. Right? We already described the term sheet on what you're actually going to land in your account, but guess what? They're going to run what's called their Q of E. And so the one five that you think you had from your, maybe you're being represented by your end or your broker, they're going to come back and be like, hey, Dwight, we're going to, you know what? We're going to keep that 13 because we like you. We really want to, we really want to align with you and strategize with you, you know, and affiliate with you. All the fancy words that mean we want to acquire you.

Peter Boulden
0:32:15
But guess what?

Peter Boulden
0:32:16
You're even, it came back at like 1.1 on during our quality, you know, our Q&E. And that was done by an independent firm. We have no control over that, but obviously that's going to affect the numbers now. You see how this becomes a mind-eff for people?

Dwight Pecorra
0:32:34
Well, they'll even go up to the fact that they'll be like, you know what? We know this is a big blow to you. We're going to give you a 14 times multiple so you can go 1.1. They typically, well, in my experience- I'm just saying, whatever it takes to make the detector set back. That's a setback. Their goal is like with everything else. If you're buying a car, their goal is to keep you out of the logic realm

Craig Spodak
0:32:59
and keep you in the emotional realm.

Trey Tippit
0:33:00
And emotional, right?

Trey Tippit
0:33:01
Keep you in the emotional realm.

16
0:33:02
That's a good point.

Peter Boulden
0:33:03
So I think that's, that's really, when we talk about EBITDA and we throw this around flippantly, right? Just the listener just needs to know, like, that's the, that's the real cashflow of the business. The real cashflow of the business. No owner benefit, no sneak cars in here, no 401k and stuff that you're putting aside, no paying your wife on salary, none of that. This all goes to the bottom line. And so typically, your EBITDA is higher, well, almost always than your net revenue, net profit, I should say, right? Than what your P&L is going to say. You don't figure out your EBITDA by taking 12 months of your P&L and adding it together. That is not an eBit.

Craig Spodak
0:33:40
No.

Peter Boulden
0:33:41
And that's what many people think it is, right? It's just my profit of my business.

Peter Boulden
0:33:43
No.

Peter Boulden
0:33:44
Okay.

Dwight Pecorra
0:33:44
So I think we've exhausted this.

Peter Boulden
0:33:46
Yeah.

Trey Tippit
0:33:46
And another thing just to add to that is like your coffee machine, that's $500 a month, you know, or $6,000 a year. Then at a 10 or let's call it an eight, that coffee machine, when you sell your business is worth $50,000.

Trey Tippit
0:34:02
Right.

Trey Tippit
0:34:02
Because like, it's only $500 a month, it's $15,000 a year.

Dwight Pecorra
0:34:06
Times eight months.

Peter Boulden
0:34:06
What you're talking about is like the example of lunch, right?

Trey Tippit
0:34:10
Oh yeah.

Peter Boulden
0:34:10
And I was like, you're like, well, you know, it's costing me $75,000 a year. I was like, well, no, potentially that is a million dollar depreciation.

Peter Boulden
0:34:21
Thanks, yeah.

Peter Boulden
0:34:21
Depreciation.

Peter Boulden
0:34:22
You're getting a haircut by a million dollars on enterprise value on the multiple that you

Dwight Pecorra
0:34:28
probably could get. They're like, holy shit. That's great. Right. Multiple times over. It's not just that. When I hear often, I'll get a phone call of a doctor who's selling and they're having this conversation and they're like, but you know, my wife is an office manager at one of our locations, blah, blah, blah. And they're like, you know, of course they have all these rules and this and that. They're like, but I pay her like a hundred grand, you know, and this and that. I was like, you do know she's gonna go to zero, right? Like, you do know that anything that comes to your pocket is gonna go to zero.

Craig Spodak
0:34:55
100%.

Dwight Pecorra
0:34:56
And they're like, but you know, she should be paid for blah, blah. I'm like, listen, all you need to understand is that $100,000 a year job that you're trying to give your wife is worth like $1.8 million at the end of this deal at an 8X multiple if you don't walk away from it right now. But that's the gameplay that he's talking about.

Peter Boulden
0:35:15
So Dwight, here's the interesting thing about that though. If you know that your wife really doesn't do anything, right, and you can prove that she really doesn't do anything for the practice, then that can be an add back to you, right?

Dwight Pecorra
0:35:28
That can go, the Q of E can actually, you can-

Trey Tippit
0:35:31
Sure, absolutely.

Dwight Pecorra
0:35:32
Yeah, okay. Unless you, unless if you hear all these emotional doctors who are like, but I really want my wife to have a job and go on from this. Or, she's the worst one of all, the highest and worst one of all.

Peter Boulden
0:35:43
She's the first one, by the way.

Dwight Pecorra
0:35:45
Yes. And overall, the worst one of all is us. We say, well, we'll sell, but we want an annual salary of blah, blah, blah, blah, blah. And I'm like, the point is, is if you're not putting it up in the deal, you're missing out on the long run. But most people need to have that dollar paycheck per month.

Peter Boulden
0:36:02
Dwight, you're saying doctors say, I need to make this amount of money post-sale.

Trey Tippit
0:36:05
Yeah, 200 in a year. It'll come out of your EBITDA.

Dwight Pecorra
0:36:07
Right.

Peter Boulden
0:36:08
Required salary.

Dwight Pecorra
0:36:09
And you know what they will say to that? I would not, I would not.

Peter Boulden
0:36:11
No problem.

Trey Tippit
0:36:12
No problem.

Trey Tippit
0:36:13
That's right.

Trey Tippit
0:36:14
Absolutely.

Dwight Pecorra
0:36:15
They're going to tell you. Absolutely. We'll just put that right out of there. No problem.

Trey Tippit
0:36:19
Of course they will. It's like the car dealer analogy.

Trey Tippit
0:36:21
This speaks to the fact that this number is negotiable because much of your, much of the line items in your practice are discretionary, and you can make cases that some are and are necessary, and some are not and are not necessary. So it is not a black and white figure. You're both pushing, one side pushing to increase it and the other pushing to decrease it. 100%. So Trey, thank you for that. That's amazing. So on your side, you're going to want to have a QV, which maybe not your broker, if you had a broker, and they're going to have a QV. And Trey, you're right. It is a justification on your side to justify it as high as possible, and on their side, it's to justify it as low as possible. So it is a dance, it is a game, and you're absolutely right. But this isn't a couple calls on the telephone. This is a three-month enema.

Dwight Pecorra
0:37:10
Exactly.

Peter Boulden
0:37:11
All right.

Trey Tippit
0:37:12
So unfortunately, D-Wizzle's got to drop out.

Trey Tippit
0:37:16
No!

Dwight Pecorra
0:37:17
Sorry, guys. I've held them off. He's had enough.

Trey Tippit
0:37:20
We can.

Dwight Pecorra
0:37:21
We got to get him out there. Keep going.

Trey Tippit
0:37:23
Keep going, though.

Dwight Pecorra
0:37:24
Maybe I'll leave it.

Peter Boulden
0:37:25
All right.

Peter Boulden
0:37:26
Well, you listen to the guy.

Dwight Pecorra
0:37:27
I'm going to run back in here.

Craig Spodak
0:37:28
All right, Dwight.

Peter Boulden
0:37:29
One more. Ready? Go. Due diligence. We all know what due diligence is. It's just basically the shit you have to do in order to make an investment or research before buying and investing an asset. For example, I'm doing due diligence. I'm under contract for a piece of land. I'm doing due diligence on the land, soil testing, surveys, regulations, easements. That's all of the diligence of a property. Can you guys give me some examples of an emergent acquisition standpoint? What would be some of the things that you would recommend as a diligence if you were acquiring a practice? What would be some things? Just off the top, just snowball. Chart audits.

Peter Boulden
0:38:01
Lean.

Dwight Pecorra
0:38:02
Lean.

Peter Boulden
0:38:02
Would that be due diligence, chart audits?

Dwight Pecorra
0:38:04
Yeah, of course.

Peter Boulden
0:38:05
Okay. Dwight, this is verification of patient numbers.

Dwight Pecorra
0:38:08
Actual patient numbers, actual procedures completed, procedures by provider. Tax returns. Tax returns for sure. Details that relate to the actual clinical process, meaning if I lose this doctor, is 80% of the production based on the one head and the set of hands of one individual. Everything that would delineate liability risk in purchasing an asset is the way I see a due diligence list. So whether it's liens or whether it's the office manager who literally runs everything is married to the doctor who's also selling and it all is going to go in one heap pile of out, then that's a high liability practice and I need to be prepared to be able to replace the whole team.

Trey Tippit
0:38:52
What is? Timeline of transition. Doctor is fed up and he wants out in 30 days. That's like catching a falling knife.

Peter Boulden
0:38:59
Correct.

Trey Tippit
0:39:00
Turnover, risk, right?

Peter Boulden
0:39:02
Staff salaries.

Dwight Pecorra
0:39:03
Staff salaries, for sure. Hygiene salaries is the biggie. Philosophical alignment, by the way. So, like, if he's been watching bleeding gums

Trey Tippit
0:39:12
and no perio, it's gonna be hard.

Dwight Pecorra
0:39:14
Clinical, that's exactly right. Yeah, my clinical team calls that clinical

Trey Tippit
0:39:20
life negligence.

Dwight Pecorra
0:39:21
Because we know that we go in there and we implement our perio program and we're gonna lose a portion of that patient goodwill. Right?

Trey Tippit
0:39:30
Why are you probing me? Dr. Jones has never done that before. What are you trying to tell me?

Dwight Pecorra
0:39:34
He's been fine with that.

Peter Boulden
0:39:35
So guys, I'm asking these, does anyone have any more before I just go? And then Dwight, I know you got to go, but basically I'm including this because I think this is important going back to the whole private equity thing we're talking about. They're going to do exhaustive due diligence, A to, as part of the Q of E, but B it's looking for opportunities where they have economies of scale, right? Oh shit, these hygienists are highly underperforming. This practice is only doing 15% hygiene. We know we can get it to 35%, right? They may run their utilization stuff like Dwight does and say, God, these operatories, we know we can bring this in. If we sign up with X, Y, and Z plan, we can augment this. So they're looking at buying an underperforming asset through their due diligence and buying it and then applying their arbitrage and their leverage, which we're going to get to on the next subsequent slides.

Dwight Pecorra
0:40:27
Would you guys agree?

Peter Boulden
0:40:28
That's probably one of the reasons. I mean, yes, they're checking their box from a, from a protocol standpoint of like, yeah, we need to make sure we have these things, but it's really a dive to see where's the juice for them.

Trey Tippit
0:40:38
Agreed.

Peter Boulden
0:40:38
And you should be doing the same.

Peter Boulden
0:40:39
When I say them, if you're a doctor who's listening to this and you are in the business of want to grow and scale, the fastest way to scale your operation is, is acquiring startups are not the fastest way. Correct. Right, so get good at due diligence, get good at kind of looking in under the hood. And that's why the first slide is like, love it, fall in love with this process. Because honestly, the better you become at this, you can actually audit your own practice that you're in, even if you're just gonna stay in the competition.

Dwight Pecorra
0:41:06
Someone asked me after this conversation, I was saying that we had our last podcast discussing kind of a deal, just like what we did and it happened to be yours. And they said, you know, how did y'all learn so much of that? And I said, my biggest key learning was acquisitions. I was evaluating and then realizing and acquiring a practice and then realizing I totally missed that.

Peter Boulden
0:41:27
You blew it.

Dwight Pecorra
0:41:28
I blew this and I screw that. Because of that, that's why I've gotten good at this. Now I'm not saying that everybody needs to and there's different ways to do it, but that has been my biggest learning tool to be able to kind of get through it. And honestly, a lot of individuals on the mastermind, they're also acquiring practices or acquiring their first practice or going through those things. And when we've done that, I've learned a ton watching them and realizing the abusers that are out there and how a lot of those brokers really play games even on your side, not just on their side, on getting you the wrong…

Peter Boulden
0:41:59
It's kind of like when you buy a used car. Typically we all sell our cars when we really don't, wow, this thing's breaking.

Peter Boulden
0:42:05
I don't really want it anymore.

Peter Boulden
0:42:06
Let's get rid of this car. Yeah. Right. The job of the buyer is to find out like, why is that front suspension squeaking? Right. Why, why do I hear a valve clicking?

Peter Boulden
0:42:15
Right.

Trey Tippit
0:42:16
That's why somebody's selling the car.

Trey Tippit
0:42:17
Why is somebody selling the car?

Dwight Pecorra
0:42:18
Yeah.

Peter Boulden
0:42:19
Why are you selling this car?

Trey Tippit
0:42:20
Exactly.

Peter Boulden
0:42:21
Yeah.

Craig Spodak
0:42:22
And moving to Europe.

Peter Boulden
0:42:23
Great.

Trey Tippit
0:42:24
Love you, buddy.

Peter Boulden
0:42:25
Thanks for, thanks for all that. Thanks, Dwight.

Peter Boulden
0:42:28
See you, Dwight.

Dwight Pecorra
0:42:29
Miss y'all, we'll see y'all soon.

Peter Boulden
0:42:31
The next two are kind of easy, just cashflow, we talked about this, Craig, and I think you mentioned it a fair amount in the EBITDA. So there's cashflow, that's money coming in minus the money going out, and that should always be a positive number. And that's represented on your P&L. The cashflow statement tracks cashflow over time. So you know where every dollar is going. And you also can identify trends with this up or down. These are delivered from your CPA. And I would recommend that you were getting them no later as a lag indication and two weeks after the month has closed. If your CPA is delivering you data longer than that, it's academic. There's really nothing to do. Right? You guys know what I'm saying by that? Okay, cool.

Trey Tippit
0:43:11
Of course. And you need to push to get it as soon as possible.

Peter Boulden
0:43:13
As soon as possible, right? Because otherwise, like what, there's no more levers. The levers get, the more time goes out from the data you get the smaller the little levers get because they don't really do much anymore because it's data that happened in the past, right? So that's a lag indication. Anything more to add on this guy? I mean, he's, this is great.

Trey Tippit
0:43:30
Yeah, I just like, you know, that idea that cash is not king, cash flow is king because cash left alone has no potential.

Peter Boulden
0:43:36
Wait, you're saying that cash flow is king, not cash.

Trey Tippit
0:43:39
Yes. Cash is not king. Cash flow is king. So this idea when they tell you to sell while you have cash and cash is king and taking chips off the table and, you know, shout out to Brady Frank again, like call me, you know, but cash left alone has no cash is like pot potential. It has no, it has no use until it's deployed. So as soon as you have your cash and you screenshot it, you text it to your friends, you have the obligation to deploy it because you realize you can't eat.

Trey Tippit
0:44:09
Cash.

Peter Boulden
0:44:10
You have to cash as a golden egg. Cashflow is the goose.

Peter Boulden
0:44:14
Perfect.

Trey Tippit
0:44:15
Given.

Trey Tippit
0:44:15
I think it's a mistake because I think we get very hung up on

Peter Boulden
0:44:18
talking about a melting ice cube. But cash is important because you have to have it to deploy it. So you have to have liquidity as part of a personal balance sheet to be able to do the next deal that pops up in terms of real estate, practice, whatever you're doing that you want

Trey Tippit
0:44:37
to invest cash in.

Peter Boulden
0:44:38
Yeah, dry powder, dry powder. That should be another term.

Trey Tippit
0:44:40
Exactly right. That's exactly right. And that's something that you always want to keep in mind, that accessibility to cash or your liquidity is important.

Peter Boulden
0:44:49
So Trey, different than an emergency fund? Yes. If you're labeling it as an emergency fund, as you always see in the circles of wealth building, so to speak, an emergency fund is in fact an emergency fund. Stick it there and leave it alone. But if it's accessible, it doesn't have to be in a bank account. But who you talk to, depending on who you talk to, an emergency fund has all sorts of pieces to it. And as long as it's accessible and very accessible. So go back to your melting ice cube. What were you going to say?

Trey Tippit
0:45:22
I do keep cash. So I keep cash in order to deploy it, but I only keep a period of, I mean, I keep cash so I have it that I can go, hey, here's a deal that popped up today. Here it is today. Yeah, but you keep the bare minimum. But I want to be able to catch things that I can get to within a day or two that allow me to move very quickly as well, that's liquidity. And that could be equity.

Peter Boulden
0:45:41
Craig, talk about your strategy. I think it's good. So Trey, like you're saying, you've got a, meaning you've got a day or two to get your hands on some money. It doesn't mean the physical dollar, but liquidity is important. Craig, so I'm guessing Trey, you're putting yours in a floating money market where you're, I mean, Trey, you're earning some yield. Yeah, Trey, I think you're pretty good

Dwight Pecorra
0:45:59
at kind of flushing things back and forth between maximizing your yield with your operating

Peter Boulden
0:46:05
capital.

Peter Boulden
0:46:06
Will you talk about that?

Trey Tippit
0:46:07
Yeah. Well, I mean, if I had to cut in broad brushstrokes, I'd say like looking back over the last 15 years, I was not prudent. I kept more cash than I should because I have like, I guess, a psychological need to have it and the proverbial rainy day never came and the opportunity also never came. So I was like, I want to keep this around because there might be something that I need real quick. And I think it's better to have, you know, for those purposes, maybe a line of credit and had deployed my cash because I've looked, you know, now that I'm, you know, the ripe old age of 52, I see the law of compounding interest and how it's dramatically affected my life and deploying the amount of cash that I had above and beyond what I needed as the psychological buffer for me would have changed the game for me. So. I carry more than I should. I'm like the land sale. I sold that other piece of land because I'm like, oh you know we're gonna go in a recession I should hold on to this. And it's sat, you know, albeit now the interest rates and the money markets are four and a half to five, that's great, but still that's not keeping up with inflation. So I've had a psychological

Peter Boulden
0:47:07
need that has not benefited me I think. Well I should introduce you guys at this point then to a digital stable coin called Bitcoin. It stays right at $30,000 and that's just where it sits. Is that like Luna? No, fuck, Trey. That's too soon. Still too soon. Too soon. Yeah, he's very sensitive. I mean, don't do that to him. I only like to talk about my crypto wins, if you haven't noticed, not my losses. And that was a huge hit. Holy shit. All right, so let's move on from this.

Trey Tippit
0:47:36
Oh, sorry. I thought I'm advancing you. You can do it again. We've got,

Peter Boulden
0:47:39
we've got two more and then that's if you're listening, hang in there.

Trey Tippit
0:47:43
Hey, if you're listening and any of this has been valuable, some, can someone comment, anyone to say, good job, thumbs up, comment right now, subscribe or comment. Give us a like.

Peter Boulden
0:47:53
So this one's going to be a little bit, a little bit longer just, just to give you guys a help, but leverage is it. I think it's super, super important to understand it because I think it's the true way that you can generate wealth. Actually, I think it's the only way you can really generate wealth. Agreed?

Trey Tippit
0:48:11
Not agree?

Trey Tippit
0:48:12
Agreed. 100% agree.

Trey Tippit
0:48:14
Absolutely.

Trey Tippit
0:48:15
Okay.

Peter Boulden
0:48:15
100% agree. So leverage, when someone uses the word leverage, all they're saying is debt. They're just taking a debt instrument. It's your bank. Your bank is gonna give you leverage. Your bank, or maybe someone else or a mezzanine loan or private investors, but it's someone else's money that you're going into debt for. Okay. And that's the whole thing of debt, like being good and not good, Greg. There's certain types of debt that are good and certain that are bad. Obviously, credit card bill, bad, right?

Trey Tippit
0:48:43
Well, I think borrowing on a depreciating asset is-

Peter Boulden
0:48:45
There you go. Perfect. I think that's full stop, right? I think we can dumb it down to that.

Trey Tippit
0:48:49
That's the compounding the wrong way. You owe more money and the asset is worth less. So you have double compounding interest the wrong way. So compounding interest works wonderfully like debt. It can work to your advantage or it can fucking destroy you.

Peter Boulden
0:49:01
I think that's a great thing. I think, you know, Greg, you asked me why I buy my cars and boats and stuff with cash sometimes. You're like, because I think I've ascribed to exactly what you're saying. The only debt I have is on, quote unquote, appreciating assets.

Trey Tippit
0:49:15
That's it.

Peter Boulden
0:49:15
And I become very disciplined in the fact that if it's depreciating, which we all know boats and cars and shit like that is that it should be, if I can't buy it, then I can't afford it. That's just the way I was raised kind of thing. I'm saying that should be everyone's thing, but I think that's a healthy mentality personally. I don't, I agree.

Dwight Pecorra
0:49:31
You what?

Peter Boulden
0:49:32
I don't think that's a healthy mentality. That is a legitimate reason. That is something that you can say at your level. But there are many times when you have to finance depreciating assets, even when you

Dwight Pecorra
0:49:46
have appreciating assets, because your actual liquidity is not available for whatever reason.

Dwight Pecorra
0:49:51
Why?

Peter Boulden
0:49:52
Give me an example.

Trey Tippit
0:49:53
Give me an example. So let's say I have X amount of dollars of liquidity, and we're going to say that I want

Peter Boulden
0:49:59
to buy practice, which I can finance for 100%.

Peter Boulden
0:50:03
That's an appreciating asset.

Peter Boulden
0:50:04
And I can find a real estate deal that I can, I have to invest and put my 20%, 25% down in. I take my liquidity, which is all I have, and I put it into my real estate. Now I need to buy a car, a depreciating asset. I have to finance the car at that time. You don't have, okay, Trey, fine, I hear you on that. Do you have to drive an Audi A7?

Trey Tippit
0:50:25
No, but that's not what you said.

Peter Boulden
0:50:27
That's different. Okay. You're right. So, the idea there is you can't blanket statement that you should never finance a depreciating

Trey Tippit
0:50:33
asset.

Dwight Pecorra
0:50:34
There are times you should.

Peter Boulden
0:50:35
You have $10,000 left over to buy a car. So if you had five grand, would you, then after buying those things, your legitimacy of that would be buy the used Corolla that you found on the green sheet for three grand?

Trey Tippit
0:50:47
100%.

Trey Tippit
0:50:48
I totally disagree. I agree with Pete on this one. As a person who, like my first year of dental school, I made $85,000. What did I do? I went out and bought like an $85,000 Mercedes. So had I not done that, it felt great.

Peter Boulden
0:51:01
Y'all are playing in extremes though.

Craig Spodak
0:51:03
No, I mean, that's losing.

Trey Tippit
0:51:04
I don't think those people are playing in extremes.

Peter Boulden
0:51:06
No, we're not. I think reflecting on the pain that we had in the past, knowing we messed up in certain areas, I did the same kind of thing. And I've also then like learned from that mistake and never did it again. And I think it was wise. So Trey, like I always advise dental students. So like, you want to get out and be like, I'm a dentist now, I need to have a dentist car. I'm like, hey, you're just trying to live like a student for a couple more years. Keep driving the 10 year old beater. It's no one's going to care, right? Like, don't go blowing your cash because you think that society expects you to have that.

Trey Tippit
0:51:38
No, I agree, but that's a different topic.

Craig Spodak
0:51:39
It's not though.

Peter Boulden
0:51:40
It's not, you're telling me you can't, you're gonna buy investments in business and stuff and you can't afford a $5,000 car for cash? No, you're not gonna drive a $5,000 car.

Peter Boulden
0:51:49
Well, that's the only reason.

Trey Tippit
0:51:49
Because you just created an asset that creates cash flow.

Trey Tippit
0:51:51
Exactly, I think it's a serious deprivation.

Peter Boulden
0:51:53
So what I'm saying is you're giving a very extreme example that I don't think is necessarily a good way to do this. I don't think it's extreme at all, as a matter of fact. I think it's very simple. Meaning like you are not ready to buy that.

Trey Tippit
0:52:04
I think it's from, it's from, comes from a standpoint of a very, where you are, it makes sense, because you're a far cry from where

Peter Boulden
0:52:13
I did this. I did this, so I can say like, we're getting too tangential.

Trey Tippit
0:52:18
Well, I did the same thing. I was the douchebag that bought the Mercedes when I couldn't afford it. Had I, the only thing that's created real prosperity and security for me is living within my means. I didn't do that, and I was stressed out and beholden to everything. People lose their freedom because of money, and I want everybody to be free, whatever that means. And that means, you know, if you're making 2 million a year and you're a rock star, but you're spending 2.2, you're broke. And I think it's really important because when you borrow for those depreciating assets, where you have double digit credit card debt or five figure credit card debt, you're in a hole that can't be surmounted. And that's real for many people. And I'm not the damn Dave Ramsey guy that's like, no debt, no debt. Like we have to make the nuanced decision between good and bad debt. And leverage is wonderful when you use it to your advantage, but it can unwind you very quickly. And the way to get unwound is borrow on things that are worth less every day that you borrowed on them. It's a very, you know, I don't understand why you're seeing it. Definitely. Trey, help me understand. That's a single example that doesn't always go into, it doesn't unwind you. If you do it as an excess and you, like you say, you're the douchebag that buys the 85 grand Mercedes that you got. Well, I am that. I am that. Yeah, that's true.

Peter Boulden
0:53:30
I agree with those things, but it is not a good blanket statement to say across the board, because there are plenty of examples like the one I gave that is not appropriate. You're not gonna go buy the Corolla, but you're not gonna do that. And although, yes, you may have, but you didn't need to. It was not necessarily the financial good.

Dwight Pecorra
0:53:46
So that's one example.

Peter Boulden
0:53:47
Listen, give me another example where you think this is not.

Trey Tippit
0:53:51
So I gave you one. And it goes back to the same issue of, I gave you one, you don't like it, you want another one.

Peter Boulden
0:53:56
No, no, no, no, no, no. You gave me one and we refuted it, saying like that's on them. If their ego can't drive a $5 million dollar investment. So my deal there would be you're buying an appreciating asset that they can afford the next depreciating asset. You have things in order to do things that you can pay them off later. I'm going to pull the Jake out.

Trey Tippit
0:54:15
We'll take this offline. Next slide.

Trey Tippit
0:54:17
Hold on. I wasn't.

Peter Boulden
0:54:19
So I think it's important to…

Peter Boulden
0:54:20
It's like the leverage.

Trey Tippit
0:54:21
Hold on.

Craig Spodak
0:54:22
I just want to make sure that, that, that I'll be pithy with this.

Peter Boulden
0:54:25
Sorry.

Peter Boulden
0:54:25
That leverage happens, not just capital, right? Naval talks about this a lot. You know, he talks about this in four things, people, capital, code, right? Software platforms, and then your audience.

16
0:54:37
Yes.

Dwight Pecorra
0:54:38
Great.

Peter Boulden
0:54:38
So we won't go into all those, but like there's, there's lots of leverage in your business beyond just the debt. Okay. So that was enough on that. I won't, I feel like you guys are gonna start start snoozing. Do we have an aim? And there we go. Okay, so balance sheet, we'll go quickly through these. Balance sheet is important. You're getting this from your P&L. Essentially what it shows is your assets of what you own and your liabilities of what you owe. It's the business medical chart, the business's dental chart, that's what it is. People always say like, hey, let me see your balance sheet

Dwight Pecorra
0:55:15
and P and L, not P, letter P, N, letter N, L, P and L.

Peter Boulden
0:55:20
So anyway, balance sheet is important. Do you guys have anything to add on balance sheet? There's several types of balance sheets, but essentially when you're gonna get the most is like it's called a comparative balance sheet, where it's gonna indicate a trend over time, comparing different times in the business. There's vertical balance sheets, horizontal balance sheets, but essentially the comparative is probably the one that everyone's going to see. But essentially, just remember, it's what you, assets you have versus liabilities you owe. Okay. Craig, since you are the thing. Yeah. Oh, look at you. You still, you give it to me and still do it. Okay. Can't help it. Profit. Of course, profit, we all know it is. Gross profit equals your revenue minus the cost to deliver the product. Pretty simple there. We all get the profit on our P&L at the end from our CPA. We all open our emails from our CPA and immediately, where does our eyeballs go?

Trey Tippit
0:56:16
Bottom line. One thing I wanna add about Peter, it's not just cost of product, it's cost of the, because we're in dentistry, it's the cost to the doctor to deliver the service. So if you feel really…

Peter Boulden
0:56:28
So Craig, what that means is cost of the product, meaning the delivery of the product, the service of the product,

Dwight Pecorra
0:56:34
all the intangibles that got to that product.

Trey Tippit
0:56:37
What I was trying to point out is that the solo doctor who says, yeah, my overhead is 35%, my product, I have a D, what do you pay yourself? Well, I make 70%. I know, but would a dentist like you need to be paid? I don't know, 35%? Okay, put that in because then you'll see your entrepreneurial profit, not just your real profit. What is the profit you generate for the work that you do the business? So that's everything, it's entrepreneurial profit. It's above and beyond what your doctors get paid.

Dwight Pecorra
0:57:03
For sure.

Peter Boulden
0:57:04
P&L, of course we know, it stands for profit and loss. It's the report card for your business. It's usually given to you by your CPA and it is the lag indication of, like we were just talking about, the timeline of when you're gonna get it. So it indicates what happened in the preceding month or quarter or all the months behind you, right? And so it is good to kind of review those and have a mapped over time to see where you are trending. Anything else you know guys? Straight. That's an interesting thing, just shits and giggles. Which timeframes do you both track on your P&Ls? Monthly and yearly. Year to date or trailing 12? Yeah, yeah, sorry. Yeah, that month and then year to date, yes. I do not look, I do a trailing 12 month EBITDA, but I do not do it on a profit and loss. Does that make sense?

Craig Spodak
0:57:51
Yeah, yeah, you bet, you bet.

Trey Tippit
0:57:53
I do trailing 12 month EBITDA, and I do year to date and this month versus last year. So year to date versus last year. I always want to look at year over year. I always do that. Everything. For me, like for everything has no context unless it's year over year, which is interesting.

Trey Tippit
0:58:11
Very good.

Peter Boulden
0:58:12
That's legitimate. All right.

Dwight Pecorra
0:58:14
Last one, guys.

Peter Boulden
0:58:15
So this is probably my favorite one. And we talk about this a lot on the podcast and it's called arbitrage. And so essentially, does anyone want to take a stab at kind of what arbitrage is at a definition

Trey Tippit
0:58:25
layer?

Trey Tippit
0:58:26
I don't want to take that stab.

Dwight Pecorra
0:58:29
Drew.

Peter Boulden
0:58:29
I'll take a stab. Arbitrage is the difference between the let's call it percent. That can be, you know, I'll use an example as the best way to work in case

Craig Spodak
0:58:41
that, cause I'm not going to get it right.

Peter Boulden
0:58:42
Defining it. A practice by itself owned by a single individual is worth 3X. A practice owned by someone in Pete's example, for example, is a 10X. The 7X difference in between those two is Pete's arbitrage on that deal. He makes that money by just owning that practice as it is, whereas the single buyer does not. Hunter, very well done, I think. The arbitrage is taking the same asset and having it be worth something different in a different environment, right? So just like you said, Dre, in the solar practitioner that has a, you know, it's called a million dollar practice, it's worth three times earnings typically, which equals about 85% in a well done practice, which is why we see the valuations there. In my ecosystem, if it was bolted on or inquired potentially, you could buy it for three and then day two of it being in our ecosystem, it could be a 10X, like you're saying. So those revenues could be inherently worth seven times more, right? Seven times more turns, meaning it bought for three and it's worth 10. The delta in there is 7X of that EBITDA. And that can happen pretty quickly, which is why this consolidation is going on. We see the Instagram ads, right? And the time is running out. It's fast and furious because there is massive arbitrage for people who have bigger, more efficient vehicles. So that's another example. I mean, that's true. I think that's a perfect example. I don't want to go into other examples. I think it's a perfect example in dentistry. When you hear the word arbitrage, that is really what it's going.

Trey Tippit
1:00:32
It's roll-ups and arbitrage is what I typically hear those two words. Justification of the roll-up. Do what? It's the justification of a roll-up. Exactly. A roll-up exists because of the arbitrage.

Peter Boulden
1:00:42
But also, remember how we were talking about in the due diligence, Trey? And so, some of the arbitrage comes from actually looking at the practice from a diligence perspective, right? The research of saying, oh shit, Doc here only has, you know, you know, hasn't done a crown in three years. And you know, that's an arbitrage situation or the hygiene is underperforming or the docs are underperforming, whatever it is. There's arbitrage in that too, just isolated, not in the arbitrage of private equity, but just isolated in someone who's a better business operator. So there's still arbitrage for you, the person listening to acquire practices, even though you're not a giant private equity, that's it.

Dwight Pecorra
1:01:19
That's it dudes.

Trey Tippit
1:01:19
That's it.

Peter Boulden
1:01:20
Like it.

Trey Tippit
1:01:20
Everybody is now educated and ready to go.

Trey Tippit
1:01:23
We're asleep.

Trey Tippit
1:01:23
One of the two. Well done. Let's go. Let's go apply some practices. Let's see you at the summit is really what we meant to say. Hey, one more thing. If you've got any value from this whatsoever, please drop a comment below. We read all the comments. I read all the comments. Peter's faster than I am, but we read all the comments. And just so you know, Trey, we actually put this on YouTube so you can comment. YouTube's like almost like your TV screen, but on a computer.

Trey Tippit
1:01:52
Yeah, yeah.

Dwight Pecorra
1:01:53
Not to be confused with-

Trey Tippit
1:01:54
I'm not confused with this one.

Craig Spodak
1:01:56
It's harder for me to make the bird comment.

Trey Tippit
1:01:58
Not to be confused with you porn where Trey spends most of his time. No, no, I'm very familiar. I'm very familiar with this one, that's different.

Trey Tippit
1:02:05
Yes.

Peter Boulden
1:02:06
I spend 8 to 12 hours like you on Twitter but on download.

Trey Tippit
1:02:11
Oh, that's good stuff.

Peter Boulden
1:02:12
No, that's me.

Peter Boulden
1:02:13
Craig spends it on Instagram.

Trey Tippit
1:02:14
Oh, Instagram. No, but I'm loving Twitter, guys. Wow, so cool. Get on Twitter. Have you just gotten into it? Yeah, just recently. Yeah, because, you know, I didn't want to have another social media spot to check, but

Peter Boulden
1:02:24
My wife always says to me, she's like, you're really not that smart. You just read a bunch of shit on Twitter. That's why everyone thinks you're smart. I'm like, thank you.

Trey Tippit
1:02:31
Yeah, I agree with your wife, by the way, because the comment you put on Michael Moreno. So you follow Strip Mall Guy, right? And Strip Mall Guy post something yesterday and said, it's not about option. The worst thing you can do is option. You got to be careful of your options because your options are tenant friendly and they're not good for you. They lock your flexibility. And so Pete posts that on Michael Moreno's post and like gets a whole bunch of likes, but just good at, I'm the same. He's a curator. Yeah, I'm a curator too. If you steal from one, it's plagiarism.

Trey Tippit
1:03:00
I've always said that.

Peter Boulden
1:03:01
Like, dude, when we went into Mastermind, remember we're talking about options

Dwight Pecorra
1:03:04
and people were showing us their leases.

Peter Boulden
1:03:05
I was like, options are designed for your view.

Trey Tippit
1:03:07
I know, I'm just messing with you.

Craig Spodak
1:03:09
I know, I know, but like-

Peter Boulden
1:03:10
All knowledge is borrowed.

Trey Tippit
1:03:11
Exactly.

Peter Boulden
1:03:12
And sometimes it's really just exposed and you're like, oh shit, yeah, I need to do that kind of thing. Just like the summit, right? We go and you get exposed to all these new techniques and tactics and you have these conversations and you come home just busting at the seams of shit you want to implement. And like, that's what gets you fired up in the morning, man.

Trey Tippit
1:03:31
Yeah.

Trey Tippit
1:03:33
All right.

Peter Boulden
1:03:33
I agree.

Craig Spodak
1:03:34
That was fun guys.

Trey Tippit
1:03:35
Do nothing for 12 months and go back to the summit next year. What? Then you forget it, do nothing for 12 months,

Peter Boulden
1:03:41
you go back to the summit next year.

Trey Tippit
1:03:43
You know what?

Peter Boulden
1:03:43
You're right. The masses probably do do that. But we have, you know, you've actually know a lot of them. Try, I mean, we've had some people just.

Peter Boulden
1:03:50
No, I'm just.

Peter Boulden
1:03:51
Rubber to the road.

Trey Tippit
1:03:52
I'm fucking with you on it, but no.

Dwight Pecorra
1:03:53
I know, I know.

Trey Tippit
1:03:54
It's true. And that's impressive. When you have an implementer of that caliber, it is so cool to watch. Hey Peter, just a little validation for you before we hang up. As we're talking, cause you know, you're the AI corner and I'm like, you think I'm like giving you shit. Immediately I text my marketing person. Hey, I think we need to upgrade to Google analytics for Peter Bolden says we must do it and also said it's a pain.

Trey Tippit
1:04:15
Yes.

Trey Tippit
1:04:15
Your site was rem was moved to G4 analytics months ago. So you're good to go. Just so you know, I do not, I may feign lack of caring, but I listen to every hang on every word you say Peter Bolden every fucking word Oh good, and with that you keep succeeding succeeding buddy and with that follow train is new Twitter handle broke back 2626 It's 2626. I don't know just made that shit. I've got a guy's gotta go available. He got the handle for you Yeah, I got the original I get it Yeah, I got the original I get it

Peter Boulden
1:04:49
original I get it

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