Episode 49 – The Future of Service Companies with Michael Arrieta
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Today’s guest is Michael Arrieta, the CEO and Founder of Garden City Companies. And while normally, we try to introduce you to our guests, for today, you should read you something that Mike wrote himself:
“At Garden City, we’re reimagining existing service companies by ensuring workers are radically cared for and truly love their jobs. Service companies where innovation & technology is the norm. My hope is that decades from now thousands of service workers are thriving and together we built the future of service companies.”
That’s his mission, that’s his vision. Listen in as he walks us through how God led him to where he is today…
Episode Transcript
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It is more about financial returns. For us, it is about true impact and that is our purpose. That’s our ethos. That’s what makes us tick. So the reason why we exist is for our purpose, right. Which is to honor God and to enrich the lives of working class service workers.
Henry Kaestner: Welcome back to the Faith Driven Entrepreneur podcast, and I want to set the stage a little bit, faith driven investing, of course, is about Christ followers coming to understand that there’s an opportunity for them to steward their investment capital in a way that advances God’s kingdom, the traditional method. And if this is video, you’d see what I’m talking about here. But in my left hand, I have making investments in Goldman Sachs and in Maverick and Greenspring instead of trying to make as much money as you possibly can over here on your left hand. And then to the extent that an investor understands the biblical message of generosity, then over on their right hand, they try to give away as much as possible. Well, this movement that you found yourselves in a podcast on is about the fact that we believe that the very process of investments might accomplish many of the ministry goals that we’d otherwise just relegate towards giving in this industry we found ourselves in. We have all sorts of different players across, all sorts of different asset classes, all sorts of different geographies. We have real estate. And if you go back into the podcast archives, you’ll see some great real estate conversations. You’ll find conversations with people onshore here domestically. You’ll find people all over the world. And you also have different types of people running different types of funds. I often tell people, especially as we launch this faith driven investor marketplace where we highlight a lot of individual angel deals that are super exciting. Let us know if you’re an accredited investor, want to get access to that. But most people who are waiting in the faith driven investing need to look at funds.
And today we’re talking to a fund manager, somebody whose job their vocation is to go out there and find great investment opportunities that have spiritual integration and have you participate in what they’re doing as God is honored in the different communities that they’re at now. Of those fund managers, not only do you have different types of asset classes and different types of geographies, but you have different types of fund managers. Some amount of what we’ve done in the past is talking to people like Frank Chin at Andreessen Horowitz, who has Andreessen Horowitz, one of the biggest funds out there, and Frank talks about how he brings his faith to work in what is otherwise a very secular world of Silicon Valley. And how he looks to be a faithful witness is he loves on his portfolio companies. We’ve had, of course, Terry Stephens from Founders Fund that invested in some of the biggest deals ever alongside of Peter Thiel. And he talks about how his faith informs contrarian view of investing. And to some extent, there’s some amount of retrofitting in the industry. And these are people who are established fund professionals who are going back in to look at their funds and say, how do I bring in and how do I weave in spiritual integration and what we’ve been doing for decades. On the other side, you have a group of successful business people that have said, gosh, there’s an opportunity to get out there and to have funds that would invest in companies and industries like. I know. And I’m going to start Denovo. I don’t have to worry about retrofitting a fund or an industry. I’m going to go ahead. I’m going to start things out with my new fund, exactly how I’d like to have them intended, completely consistent with my faith. That’s going to be something that’s a driver for me from the beginning. And it is Mike Arietta from Garden City that fits into that latter category. So, Mike, awesome to have you. Thanks for being with us. Thanks, Hennery. First time caller, longtime fan.
So, Mike, you’ll know from having listened before that we try to get really good understanding of the history in the story. Who is the person we’re interviewing before we get into what you do? So give us some background. What’s your story? Who are you? Where do you come from?
Mike Arrieta: Yeah, sure. In regards to who I am, I’ll answer that question by saying that a couple of years ago, I read Pat Gelsinger, his book called The Juggling Act, and it encouraged me to come up with a life mission statement of who I am. So I’ll just recap that Mike Arietta is a beloved son of Christ, knowing that there’s nothing I can do to earn more of his love. I’m a faithful and loving husband to my wife, Veronica. I’m a presence and engage father to my two little kids, Olivia and Lucas. I’m a loyal friend to my family and community. And lastly, I try to keep it. Lastly, not first and foremost is I work to make a big internal impact on the world through business.
Henry Kaestner: So that’s who I am. I don’t William, we’ve done hundreds and hundreds of these. I don’t think anybody’s done that as crisply is. That was definitely one of the preparation of word to start out on a bar that I may borrow, that I may end up saying that my kids are Olivia and Lucas. Oh, was that good? Okay. All right. So tell us about tell us about your growing up, your faith journey as you grew up in a Christian home. Has faith always been a part of your life? Bring us through and maybe take us through your to your first work experience.
Mike Arrieta: Sure. Sure. Great question. I was the first of my family actually born here in the States. So my two older sisters and my parents, they were all born in Puerto Rico. So I’m I’m Puerto Rican.
Henry Kaestner: Did you know that my grandmother grew up in Puerto Rico? You probably didn’t know that. But we share that kind of. Yes.
Mike Arrieta: With disciplinary cases. You’re Puerto Rican.
Henry Kaestner: So I am Puerto Rican. Yes, my grandmother grew up in Puerto Rico, spoke Spanish, and I am. Yeah, absolutely.
William Norvell: And if this was a video podcast, our listeners would be more surprised by that fact.
Henry Kaestner: I don’t look very Puerto Rican, but nonetheless, my grandmother did indeed grew up in Puerto Rico.
Mike Arrieta: Should we do the next phase driven investor conference in Puerto Rico?
Henry Kaestner: I love to do that. I love the old San Juan. Absolutely. I love that place.
Mike Arrieta: So you’re probably more Puerto Rican than I am because I was raised in South Florida my whole life. I had two very hardworking parents who did their very best to provide for my two sisters and I. There was always food on the table and we always had a roof over our head. We were raised in a Catholic church the way probably ninety nine percent of Puerto Ricans and Hispanics are. So we have the fear of God to kind of God somewhere way up high. I don’t know where that way of high is way up there, but we never had an intimate daily relationship of walking with the Lord. And so it was purely a Sunday morning thing. You know, you go get your little wafer and you dress up and you go back home afterwards and then you resume life. Right. So it started and stopped there on Sundays. We moved 10 times and about 18 years growing up on the same kind of town due to our financial situation. My father worked a ton of jobs. He started selling Flon like the Puerto Rican or Cuban. Yeah. You know, he started selling Flon, that kind of of cards. And he worked at Home Depot just in the warehouse. And then I started selling timeshares, worked in furniture store. My mother worked in a retail store, just hourly worker to make matters more difficult. My father had very severe health conditions his whole life growing up since he was two years old, particularly Type one diabetes. He worked around the clock, you know, came home after I was sleeping already ten, eleven o’clock every night. So the constant theme around our home was financial stress, which, you know, in a hard working family automatically leads the marital issues. So they constantly fought and eventually they got separated by the grace of God. They came back together. But that was it kind of growing up, you know. So I’m very grateful for my family, for my parents and looking back. But looking back, my youth was pretty difficult to zero in on myself. I was never a good athlete. Pretty terrible. It was never a 4.0 students. I’m confident that if yes, all my teachers, which of the students they were most worried that would do something meaningful with their life, I’m pretty sure I would be at the bottom of the list. I was just rebellious. I challenged everything. I did not like to be in control, which now that I know I’m an eight on the anagram, it speaks a lot of that at a young age. However, I started realizing that I was naturally really gifted at selling. I was a good salesperson. I just came naturally to me. I would go buy something from someone next door and sell it to someone down the street for fifty dollars more. I would ask my dad to do a garage sale and I would have a whole strategy of how I’m going to sell my Nintendos and only sell that for an inexpensive price. We get a lot higher prices for the games or for the controllers, right? I would buy a little Caesars box for five dollars a pizza box. I bring a knife to school and cut them up into 16 slices and make it three hundred percent return at lunch on a couple of boxes. Right. I would buy baseball cards, Pokemon cards, Beanie Babies and figure out which shops wanted what based on the geography that they were in. So I was a sales guy, you know.
Yeah, that was it. And then the three things really in my life, I would say, were sales, as I just mentioned of the second one was service workers. I was just surrounded by hard working working class people like my family who are trying to do their best to stay alive or survive. But they really didn’t have any dignity or purpose or fulfillment or any calling. It was purely just a paycheck. And probably the third theme was I was obsessed. It’s really weird.
I think boring is so sexy. Right. William and I have talked about this for a while, but service companies have always been obsessed with learning about car washes and furniture store deliveries and dry cleaners and restaurants. I was naturally drawn to them. And so all that was kind of it that I was drawn to.
Henry Kaestner: So coming back to the born and natural salesperson, when I think about all the different organizations that are really focused on being able to be a sales guy, I guess maybe when I was growing up about encyclopedias, sales people, but then very quickly, that was eclipsed by the cutco knives vector marketing. If you’re a sales guy, like kind of the best form for you was to go work at Fekter Marketing, Cutco Knives, and you did that. And so I think about this is like the job for salesmen. And you were like the salesman of all salesmen where you ranked like number one in the country or something crazy.
Yeah. Yeah, it was, yeah. So how many how many nice sales people were there. Are there there bunch. There’s a fifty thousand I think. Yeah it’s that’s, that’s, that’s pretty good. That’s pretty good.
William Norvell: It’s really helpful. One of my best friends was number twenty four along to. And every time he starts bragging about it and he knows Mike, we all went to the same church, I’m like, Yeah, but it sucks for you. I know Mike like, this is not impressive. Like, what is number 20?
Henry Kaestner: Yeah, I bought some nice from Cutco. Great night. OK, so tell us about that. Probably half of our audience has heard of cocoanuts. Tell us about your experience there and what you learned about yourself and what you learned about selling short.
Mike Arrieta: One of the most difficult parts of my story. It was I had a severe stutter problem and I still do. So today. I manage it better. But it turned out to be the biggest blessing of my life because I was granted a state grant by Governor Jeb Bush, which provided me the opportunity to get out of the public school system and go into the private school system. And so my greatest disability became my greatest blessing. Mean that’s where I met my best friend Protagoras, you know, when I was 12 years old. And so I was able to get this huge benefit of experience and a whole new world, this world where I gain older mentors that I looked up to, my friends, parents. Right. I saw the way they live, where they went to college or professional careers. And I just wanted to be like them. It reminds me of that podcast you had Reggie Joyner and Chris Naib that they were talking about were kids in poverty. Don’t make it out of poverty because of education and talent. Two out of every three make it out because of the adults in their life who help them take the next step, what to do and where to go. Right? Yeah, it was my Zach story. My father got very sick and pancreas transplant, kidney transplant, dialysis. My mother got breast cancer. I felt calling to help and ease the burden. So I asked a friend of mine’s father, he said, start selling cutco knives. It’s been around since like the 40s and you could kill it and make a great amount of money. And so I started doing it. So I woke up every morning and I made cold calls. I ask teachers, go to the bathroom and make cold calls during lunch, make phone calls.
Henry Kaestner: You made Kolka, you left class. You do cold calls from the bathroom.
Mike Arrieta: Oh, it’s crazy. I used to have a schedule that I would know. Today’s Wednesday. I asked my math teacher on Monday to go to the bathroom so I could do it again today. But I can’t do it tomorrow because I can pick up on me. So I’d have this little puzzle of knowing which teacher I would go to the bathroom and what they said to pick up on me. Unbelievable. Yeah. So it was my first real job. I had to succeed. I felt like at least I told myself that. So success was the only option. Failure was not. And so yeah, my back was against the wall. I think your true colors showing your backs into the wall and just something came natural to me. I had a big vision. I didn’t get Bob. I had persistence, perseverance. I had a big vision. I built rapport very naturally. I wasn’t scared to ask for the order. I focused on value, which in cutco value is recommendations and the long game rather than just a transaction. So I don’t care about selling Henry. I rather much so have Henry refer me to William and everyone else, ten of his friends around town, rather than just because I know long term I’ll always have something to eat first if I just focus on the sale and I run out of recommendations now I’m only eating for a day rather than a lifetime.
Henry Kaestner: I’m OK. Bridges through obviously setting up a fund and you haven’t set up a fund to invest in more mature businesses. You said boring. Boring is the new sexy. Williams says that a lot as well. But you didn’t go from knives to starting a fund, so bring us up to speed. You worked as chief of staff at some really, really important businesses. Tell us about your career and more established business. And I shouldn’t say more established somebody from Cutco. Can you hear me right now and think differently? But tell us walk us through your career, please.
Mike Arrieta: Yeah, after college, I went to Silicon Valley and joined a company that the CEO did a recap on called Lies. He gave me an opportunity, which is a great reminder of me to give people opportunities. He said, Alexander the Great Conquer the World in nineteen twenty one. I have high expectations. You’re two years late. Yeah, exactly. Exactly. And so we got acquired by Dell about a year later. At that point in time was the largest payout I’ve ever seen. Right. And I thought that’s the point, that I would be content and happy and have purpose and say I made it. I’ve never felt so empty my entire life. Right afterwards, I got the opportunity to be the chief of staff for the cloud group at Dell. I was traveling all around the world going to World Economic Forum in Davos every year, and I’ve never felt so empty inside. My best friend Brett Haggler calls me and tells me he just got baptized in Atlanta and invites me on a trip to Haiti. And then that’s where my Life 2.0 started. I became a believer in 2013, and that’s really where I started to live on the scales off my eyes and saw the world in a way like I never had before. I was able to love and see and experience in a way that before was no longer I truly Christ who lives and still lives in me. And it was amazing. I started following him that year and I never look back since. That’s where I met William right when I became a believer running the gates there. And so after that, twenty fourteen was a big year for me. I got married. We start a new story charity and I joined this company called DocuSign and I became the chief of staff then at DocuSign to the CEO there. And I was there for six years. We grew the company from one hundred and seventy five people and so I left in February of this year. We were about five thousand people now and the chief market cap of about 40 billion dollars. And yeah, it was a tremendous opportunity. And I realized none of it has to do with our own ability. But really got favorite was with my involvement with it.
Henry Kaestner: So Mike is really interesting. I mean, when you look at a company like DocuSign, Dell Time in Silicon Valley, DocuSign, having that type of growth, one hundred and seventy five employees of five thousand or whatever the case is, that seemed very, very different than where you really feel called now to be involved in kind of more traditional businesses that are presumably growing slower than that, growing profitably, but slower than that. But tell us about what you learned in those six years and how it informs the way you think about your career now.
Mike Arrieta: Yes, during those six years, especially when the chief of staff plays the role spans across the entire organization. Right. So you’re doing M&A integration, equity, fund raising, international expansion, launching your products, recruiting and everything in between. It’s like a little mini CEO role, which I just loved so much. And during my last tenure there, when I was operating a business unit, I missed having a holistic view of the business. Right. I liked actually being one inch deep and a mile wide rather than just one mile deep. And so I was really reading this book called Garden City February of twenty eighteen.
And it just talked about how when God created the world and in it he made us in his image to thrive, prosper and flourish, and he made us to labor and co create alongside him so we could get the kingdom of heaven and we could bring it on to earth and say it is good, it is good. And that’s just really spoke to me about thinking about people like my father and like my family to say how come they have not experienced that kind of culture or that sort of environment here in the city as it will be in heaven. So what would it look like if we met those people? Were there wrath, which is in the marketplace, in those service companies? What if we actually invested in those companies, service companies? And once we were investors, majority investors, we would have the opportunity to build a kingdom culture so we would radically pursue the enrichment of working class through culture. We would enable the business to make it beautiful and modernized and reimagine. And then lastly, we would help them with sales and create new technologies out of the business and everything else in between. So that’s where the vision came in.
William Norvell: We also McWilliam, jump in. That’s awesome. We’ll put that in the show, notes John. Mark Colmer, amazing book. Weingarten’s You Stole the copyright from him and double-Check, that one. But it’s an amazing book. My Faith and ERG starter pack is usually ten killers, every good endeavor. And John Mark Combers, Garden City. I think it’s a great head and heart combo pack. And John Mark really does an amazing job. He’s a guest pastor at the church. Mike and I went at Mike and I met as part of the random Alabama people that happened to be wandering around San Francisco crowd and someone ran into him. And as usually happens, they say, oh, I know a guy that went to Alabama, you should meet him. And I remember that little restaurant off of the street in San Francisco. There we grab a drink and then started, you know, along for. A ship that went through church, that went through Huxley, which we didn’t talk about in the news story in the Garden City, and it’s been tough on brother, it’s been a ton of fun to watch what God has done in your life, but mostly in your heart and in your relationships with Veronica and everyone around you. OK, so excited about Garden City. I know you’re very particular with your phrases, as we saw from your opening, and I know that’s something I always love hearing from you about. And so I want to talk to you about a couple of the terms you use to describe Garden City and let our audience into that, because I know you’re so thoughtful with what each word means. You say on your website, you say in your talks that you are purpose driven, holding company. Walk us through that. And I also know you did a lot of diligence. I want you to walk us through what it means and then why you chose that model.
Mike Arrieta: Sure. Purpose driven goes to exactly what Henry first started with in regards to it is more about financial returns for us. It is about true impact. And that is our purpose. That’s our ethos. That’s what makes us tick. So the reason why we exist is for our purpose. Right, which is to honor God and to commercialize the working class service workers.
Right. In terms of holding company, why do we choose the holding company model? For a few reasons. One of the reasons is shared services. Right? We believe that once we have a good amount of companies in the portfolio, we could be of value add to the portfolio companies by providing the back offices such as our marketing, legal finance, so that they could focus on what they do best. Right, which is providing the actual service and the operations instead of the office stuff which typically box them down. The other reason why we did a holding company model is because we want to share best practices across the companies. But the probably the biggest reason as to why the holding company model is we were not called to do a fund or a fund had an end life. Right. So most funds have a typical year structure of three to five to seven years with a couple of years extension. Right. That’s the way typically fund models exist, especially buyout models. There’s an impending event that you’re being forced to embrace regardless of the performance of your portfolio companies. Right. So in that ticking time bomb comes in, you’re seven years out. So we sat on it for about two years to say what is our approach that when we make investments, we have no outside selling date, so we have a permanent horizon? Right. So we basically modeled it of saying we buy companies and we have the ability to hold them forever.
Right. We never have to sell how that goes.
William Norvell: So that’s one of those things that I hear. And I go, OK, that sounds really great. It’s a fantastic model. I think we’ve already mentioned this your first time. I know you’re not calling it a fund, but fund manager or first time operator of an investment vehicle. Right. Let’s some of our investors. How did that track go out on the trail, raising the money for it? What were the pushbacks to it? What were the critiques? What were the wins? What do people find exciting? What do people not find exciting? Just walk us through how the journey went.
Mike Arrieta: I love these deep, tactile questions. It’s kind of what matters most and put meat on the bone. So, William, there’s I mean, baby boomers started more businesses than ever before in our country’s history. You know, you wrote the search on paper at Stanford, right. And they were the most entrepreneurial generation. Now they’re all in their 60s and 70s and they need to figure out something to do with their baby. I mean, business. Right. And so they got to figure out something to do with their business. Their son became an architect. Their daughter became a nurse, and they run an eight track business. What are they going to do? Right. They’re getting older by the day. The years are taken away. They don’t have a succession plan. They don’t have a liquidity plan right now. You would say private equity funds, private equity funds are typically too large to ever entertain deals in this one to five million dollars of EBITA. Right. They cannot put enough money to work in there. There are some lower middle market funds, but for the most part, they do not like to play in there. So you have a lot of onesies. And these players like great search funders or independent sponsors. Right. But in terms of committed pools of capital, that you can make multiple acquisitions. Right. And you’ve committed pool ready to deploy. It’s very rare to have committed capital in the lower middle market. So what we do is we raised thirty five million dollars from all mission aligned investors and we call down that capital as we find companies to acquire. Once we called on that capital into that company, we take a majority stake targeting anywhere between 60 and 80 percent. We like the owner to hold some equity and do a roll over. It shows us that they still believe in the future of the business. It also still keeps them as part of the team, which we believe is sacrosanct. So now that we have the business, that means we now have control of 70 percent of the cash flow that comes out every year. So this business is already making money, right? So let’s say we bought a business for two million dollars of EBITA. Well, we bought it at four times EBITA. That typically means it’s going to take is four years to get back our investment. That means starting in year five, now we profit two million dollars with no growth. And you’re 60 million. You’re 70 million. You’re at 80 million. Right. That’s the whole model. We buy existing profitable business at a couple times. Iveta, we call our investors capital. Our investors get paid back in a couple of years. And then once our investors get paid back, here’s a big question. How do they make money? We split ongoing distributions in terms of the percentages to investors and to Garden City, and we do that in perpetuity. So it’s more like a yield play. It’s more like a dividend play. If you’re familiar with the commercial real estate investment. Right, that it’s mailbox money, as I call it, it just keeps coming. And as a company compounds and grows, it makes roll ups and tuck in acquisitions or builds new technologies. The checks in the mail get bigger and bigger, so there’s no reason to sell. If you’re investing in Garden City, it’s because you’re OK with the model that we’re going to buy and grow and hold and you’re going to get distribution in the mail rather than when we sell this in five or seven years, because that is not our model.
William Norvell: Let’s get in. And I love what you’re highlighting there because it’s so good, right? There are different models for different people, both what God put inside them like you. And you want to dig into a company for 20, 30 years or so and investor basis who want to be a part of that. And that can be part of their portfolio. Right. I think one of the things we talk about a lot on this is especially the faith driven investment space. There’s not always right and wrong. There’s just different. And God is calling us all to different things. There’s nothing inherently, quote unquote, wrong with the 10 year fund.
Right. It just does mean you will do different things with those companies. You will use debt differently. You will look at growth differently. And to make sure that if you go to work for one of those places or decide to start one, that you understand the trade offs you’re making and understand what you’re going be able to say to these business owners. And on that, furthermore, you made another decision.
You have focused on the southeast specifically. So you have taken the chance. And you said, you know, I actually think God is even I don’t put words in your mouth.
You tell me if you feel like it’s a calling or if it’s just a good business opportunity or both. Tim Keller says ability, affinity and opportunity. But you’ve intentionally focused on that niche, saying this is where I want to build Garden City in the southeast. Walk us through how you came to that meeting and how that story played a little bit on the investment trail. And and if that got people excited or if they invested, even though they’re nervous of that, but they still believe in you or anything like that.
Mike Arrieta: Sure. Sure. Yeah. So really, Garden City, it’s like Berkshire Hathaway meets ServiceMaster, right? That’s the way that we see it is we like the approach that Warren Buffett takes by with no intention of selling. Right. Keep things very simple, especially on diligence. Right. Keep your team nimble. Allow them greater autonomy to do what they do. That’s the reason why you’re buying those, because they did something right. So don’t break it then. Also, ServiceMaster, where we love those service companies, as we mentioned, they’re very fragmented in nature, right. That they need some professional misandrist, great opportunities for efficiencies and everything else of that sort and then mix in a culture with Silicon Valley technology enablement. That’s kind of a four legged stool there. But to answer your question about the Southeast, personally, I wanted to focus on the Southeast because I’ve heard horror stories over two years of Prain into the insurance business about how demanding private equity is when it comes to diligence and business development. To me, as I mentioned, to start off with my mission statement, the second most important thing for me is to be loving to my wife and to be present engaged to my children. I knew that if we bought companies in California or Washington or anywhere else, it’s longer. Flights longer or earlier or later calls more time on the road. And so I made the decision up front to say we focus on Southeast. I could go to Birmingham, I could be back the same night. I go to Kentucky and be back the same night. So it was more of a personal thing for my kids family night for the longevity. Second reason is has the largest density of service companies in the entire country and it has the largest density as well of retiring business owners. There’s more baby boomers. They go to the southeast than anywhere else. Right. We also have great seasonality so we don’t shut down for the winter, unlike the Northeast. And then lastly is our network, our network of investors are primarily in the southeast. So there’s great referrals that we get on businesses, make it supports as well and deals.
Henry Kaestner: Can you give us an example? Just walk us through a company that you found what the story was of the founder. Maybe you can speak into the spiritual integration of the companies.
Mike Arrieta: Well short. Two examples. One, I’ll say that the owners and secular owner and the second one, he’s a believer. Right. So the first example of the owner, that is a secular owner, they own a children’s sports camp company. So this company does sports camps all year long. You did about five hundred sports camps that fifteen thousand kids went through last year. He’s. Older and he started this business because he was an assistant baseball coach at a university and he had to make supplemental income, so he started the sports camps 13 years ago. He’s getting older. He no longer wants the calls, the emails. He wants to retire. He realizes his own shot clock. His brother had a brain aneurysm. Right. It made him realize how precious and short life is. Right. And he’s willing to sell at a multiple of a couple of years ahead to get this off of this place so we would engage with him. And on that example, we would figure out which of our advisors are skilled in the sports arena. Right. We would invite them in on that diligence process and we’d say, you know, this is way better than we do. What should we look out for? What are they telling us? That’s true. What are they telling us it’s not true? Or are they not telling us that they don’t know about their own business? Right. And then we put together an offer to see if that works. That was, you know, Henry, it’s months and months of cultivation and there is no impending event for them to sell. Right. When you’re dealing with an investment banker or broker, those are companies that have a for sale sign in front of your front door. They’re willing to sell right now. When you deal with what we’re looking for, proprietary deals, it’s cultivations, building trust of money over time. So that’s one example of a company that has no spiritual integration that we told them, hey, we believe in chaplains, OK? The Senate uses chaplains, airport chaplains, teams, police chaplains. They are so value add every human deals with financial circumstances, marital circumstances, work circumstances. What is the downside of having someone who’s going to love on our people with nothing to gain or return? That’s my permission only. So that’s something that as majority investors, we would want to institute. We want to institute a new training to focus on how the pursuit of excellence. We want to focus on integrity. We want to focus on having fun. We want to focus it on a bunch of things that to us, we call that honoring God. They don’t have to be believers. Right. They do need to agree with the ethos that we have on what it looks like to have a humble pursuit of excellence. Right. Got it. So that’s example. And then there’s other examples that people are already believers and they already have a head, that they may already have a chaplain or have Bible studies. Right. Or tithe out of their profits and so forth. So there’s a wide variety of them.
William Norvell: Well, if Henry’s first love language is telling you his podcast is great, his second, his corporate chaplaincy. So I love chaplains. You are just you are just knocking it out of the park today, Mike. Well, you just you gave a great pitch for it.
Mike Arrieta: I’ll be honest. All the chaplains I was not very passionate about chaplaincy until I experienced it firsthand at a company that we did an on site with. I heard verbally what the benefits were of chaplaincy, but until you experience it firsthand, you could never truly understand and comprehend the impact and the value that it has.
Henry Kaestner: Yeah, I think you did a good job of setting up why you do this. You know, as people if you love unfocussed and it’s something they opt into. And when we roll out chaplaincy at bandwidth, we had a couple of people, senior people in the company saying, listen, we know that you guys are really serious about your faith. I think that’s a little bit too over the top. And when we decided, of course, to continue with it. But when we introduced Jeff, who was our first corporate chaplain, we said, you know, we’ve got a ten thousand dollar bonus for those of you who adopt a child.
But I wouldn’t presume that any of you feel pressure to adopt a child. Right. And so same type of thing here. This is a benefit. It’s there for you to use. And as you ever find any opportunity or need to talk to somebody, know that it’s something you can do and you do it off site. But ultimately, you know enough about our family and our ethos, our foundational values of faith first and family, then work in fitness. We want you to be able to bring your whole selves to work. And if you have to check who you are as a spiritual person at the door, we’re not getting all of you. And that’s just going to be just seeing you as a person in black and white. So we want to be able to afford this to you as something for you to be able to see as a resource. So I love that you’ve picked up on that. And you’re right, you got to experience it. Some of the guys that had pushed us back on bringing on board corporate chaplains ended up becoming some of the biggest believers because they saw the way that these chaplains were able to love on people, on their teams.
Mike Arrieta: As an investor, our responsibility is to be stewards of our investors capital, and that is stewards, both impacts and financially. Right. I believe investing in chaplains through corporate chaplains of America what not that is a financial ERG you could quite literally calculate because you can say, well, what is the retention of this business pre and post? What is the employee satisfaction? How does that translate to customer satisfaction? I visited a dear friend of mine’s company in South Florida, best roofing company. The gentleman’s name is Greg Wallach. He’s had a chaplain there for the past 13 years. I was there in the morning when he did a little quick message to all the roofers, and I had a one on one with the chaplain afterwards. He told me I have four hundred employees that are there. About one hundred and seventy have put their faith in Christ.
And out of that, every time he speaks, his meetings are booked up about two weeks out because there’s such a high demand from people and we love him Amen as we’re coming near close.
William Norvell: I want to switch to this. You have a very interesting as we’ve gone through this, a very interesting. Niche and and focus, and it’s really cool to see how that’s come together manifested itself in Garden City. I know just personally, because we’ve talked a little bit that you found some other people and I guess we’ll call cultural investors for lack of a better term. That also called the vision that maybe had experienced something similar through their own life and journey and maybe the impact they have been able to have on a community. And a Drew Brees, for instance, was one who I think probably really just looking outside in. Right. I mean, what he was able to bring after Katrina to that place, I assume was a big part of why he emanated with your vision. But could you talk us through a few of those cultural investments? Have they been an encouragement to you, maybe some of the stories they’ve shared to sort of put some wind in your sails? Because, as we all know, there’s still a tough journey finding companies to buy as hard work and it doesn’t come easy. And you hear, as you know in your life here, a lot more no’s than you hear yeses in this job.
Mike Arrieta: Yeah, for sure. You’re smiling because you’re sure it’s such a messy, messy world, but it’s beautiful. At the same time, we’ve been very blessed.
It’s funny, William, we’ve known each other now for probably 10 years or a little bit less. And, you know, as an entrepreneur, you’re constantly thinking of things to start, right? You’re always thinking of things to start. But when the Garden City vision came to me on February 20th of twenty eighteen, I knew something different. It was this wind behind my sails. The doors were opening and I knew that we were on a high speed train that was never going to slow down. I knew that it was just a matter of time that God was going to launch us. And I think a big question mark on that was, well, will the investment come through right? First time fund folks in the lower middle market. Will the investment come through? And God has just flooded, flooded, flooded Garden City with Favre, financial Favre from missional and investors. So as mentioned, we’ve now raised thirty five million dollars. We have to criteria’s for all of our investors. One is, are the mission aligned? Right. Ninety five percent of them declare their faith in Jesus. They’re strong believers, right. The other five percent, they are totally aligned. They would love to see the Garden of Eden come into our cities. And then second of all, are they willing and able to be value add? So are they giving us the green light that they will help us in any which way or form introductions, diligence, whatever else it may be? And so they’ve all agreed to that. So, one, it helps us build credibility when we’re talking to businesses like we were talking to a company right now in New Orleans. And I was like, oh, well, Drew Brees is one of our investors. And they’re like, Drew Brees is one of our investors. Are you kidding me? Like, can we quickly go to management on site right now and invite him for Joe? And of course, I tell him that if we’re talking to a company in Raleigh, North Carolina, that Henry Gates, there’s one of our investors and they say, you got to be kidding me. Can we have lunch right now? The Henry Gates or you come to our lunch, right? Oh, my God.
William Norvell: Look, whenever you get to Florence, Alabama, I’m your guy just throwing it out there. I don’t have a lot of pull a lot of places. But I’m your guy.
Mike Arrieta: Exactly. Exactly. We’ll do a whole campaign there in Florence, but they give us good deal flow. They give us great wisdom. They introduce us to strategic people for the investments. They help us with diligence. Like I mentioned, the sports camp deals. So we have great people like Pat Gelsinger at VMware. Right. Maggie Walter. She’s a chairman of DocuSign, Lyft, Tiboni, HP, Tannebaum. I mean, she’s amazing. Just Korell in Kentucky. They’re Horde Chelsy from the Ritz Carlton. Right. The gentleman Lecrae more than you guys. I just interviewed a Grammy Award winning rapper. So just a whole variety of people.
William Norvell: Amen brother, nice cross production value. You gave us their go listen to FDE Lecrae and been Wilsher. Unbelievable.
Great story that Brett Haggler. We’ve had Brett absolutely Paramjit and Marshalsea. That’s right.
That’s right. You’re just you’re just you’ve just given us free publicity now, Mike. And well, and we take that to be very clear. We we happily accept that. Unfortunately, Mike, we do have to come to a close. And it’s always a sad time when I have to come to a close of the conversation with you. But in this one, we want to invite our listeners into where God is in your life today during the season. It’s always fun for us to see how God’s word is alive and living and transcends generations and thousands of years and from a podcast from someone in Atlanta to someone internationally or even in San Francisco.
And so if you wouldn’t mind sharing with us where God has you in his word and what he may be taking you through and teaching you during the season your life.
Mike Arrieta: I remember when I first moved to Silicon Valley, I was part of this. I actually met you there called legends Kleiner Perkins. And one of my friends and mentors, Joie Chen, told me he was a venture capitalist. And he told me every single day he leaves the office around five thirty. And the reason why he leaves the office of five thirty is because he’s exemplifying exercising his faith.
Right. It takes faith to leave the office at five thirty, go home to dinner with your family and then get back on at nine or whatever else it is. And I asked him. How in the world can you do that, you know, like how can you get the best deals and still provide the best returns? It goes well, if I’m only working just as hard as everyone else. But I’m saying that I’m a believer God’s basically just like a cheerleader for me. But I’m not truly trusting in what faith does it take for me to try to be the best investor but to work just as hard as everyone else? So he pointed me to Daniel, and I never really studied Daniel ever since then and probably never spent some time in it until last week. We had a company that we were about to go into Loai with, and last minute he tells me he gets an offer that’s significantly more than ours. And I had a moment to realize what to do. I could either be like the rest of the world and compete on price alone, which the price is all predicated upon debt. If you’re competing, it’s a secular buyout investor or I exercise my faith and I trust wholeheartedly on God. And so I’ve been reading the book of Daniel like crazy over the past five days. I’ve been studying in such a way of how a man trusted that God would legitimately save him multiple, multiple, multiple times, and how he eagerly prayed for God to intervene in his life and all the circumstances that he found himself in. So I am currently in the season of Daniel and just trust in the Lord like I never have before to get a place to trust.
William Norvell: That’s a good place to trust. Thank you for sharing that with us, brother. Thank you for sharing your time with us. Thank you for sharing your heart with us and in your vision for Garden City and just in just how God has placed you in the new FDE landscape that we’re trying to bring people into. And it’s just such a joy to see the different segments and the different pieces, the God’s pulling together across this landscape.
Thank you for sharing it with us.