#01 - Ujwal Velagapudi

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Last week, I sat down with Ujwal Velagapudi. Ujwal owns UV Holdings and since 2016 has purchased nine (digital and physical) SMBs, like an on-demand virtual assistant platform HiBryon.

Ujwal and I talk about getting started on Craigslist, the importance of people, and learning by doing.

How did you get started buying small businesses?

Starting in high school, Ujwal would buy and sell shoes, gym equipment, and even cars on Craigslist. It was those early days where he developed the ability to hunt for and negotiate good deals.

Eventually, he started buying commercial real estate through the marketplace. First one property, then a few dozen units. And as his assets grew, he realized the opportunity to buy actual living, cash-flowing businesses.

Long story short, he spent 18 months searching for his first business — much of which was with an investment group trying to acquire a club that ultimately fell through — until he finally landed on a small sports bar in downtown Detroit.

What’s the craziest story or experience you've had so far?

Here’s the absurd timeline of that first sports bar acquisition:

On Wednesday, he quit his 9-5 with plans to do a soft opening that Friday.

On Friday, he:

• Met his two bartenders for the first time, one of which came through Craigslist (of course),

• Set up his POS system just hours before they opened and with only a few minutes of training,

• Received his liquor delivery, which was supposed to come on Thursday, after the doors had technically opened, and

• Had to serve a massive crowd because the bar down the street that normally got all the foot traffic was closed for the day.

Oh, also:

• After spending $5k on signage, he learned that the name of the bar wasn’t trademarked,

• He had a separate real estate deal on the brink of falling through, and

• He left for the Olympics in Rio hours after shutting the bar down at 5 a.m.

I guess the silver lining is that it was the best day of sales the bar ever had.

Knowing what you know, if you were trying to break into the space again, how would you do it? Where would you start?

What is the most overlooked or under-appreciated challenge that acquisition entrepreneurs or HoldCo owners face?

Two years ago, he was a part of a large transaction and there were a lot of people involved. The only way he was able to get it done was by “dealing with every unique individual out of the dozen-plus people involved in a unique manner” — and doing it in a genuine way that was truly relational and not just transactional.

You have to establish that relationship with the seller, nurture that — potentially for years and years — then you finally get it. But even through the acquisition phase, you're still handholding them throughout that process to make sure that everyone gets over the finish line. And it’s not just the seller, but the attorneys, the CPA, and every other vendor associated with the transaction. It’s a lot of herding to bring that deal over the finish line.

And even once you do get the deal done, you’re just getting started. There’s still the people management side of things with your own team. Bringing people on board who are in alignment with your vision, from management to advisors to investors to all the vendors you’re working with. You have to shift your mindset and “put an emphasis on the people.”

Where do you feel like there's still a lot of opportunity in this space, whether it's an industry, geography, skill set, or just ways to add value?

What’s an unpopular opinion you hold about the ETA or holding company space?

Nowadays, it’s very common for people to use “other people’s money” (OPM) right off the bat, especially for those coming from a consulting or banking background who can speak the language and have dealt with larger transactions. “But it's a completely different ballgame when you're dealing with small businesses.”

Ujwal spent years buying five- and six-figure businesses, “fighting tooth and nail to scrape out every single dollar,” while people today are “buying a 5 million dollar company levered up fully” with an SBA loan.

Having done smaller deals several times with his own money, he can say confidently “if there's a 50 million or 100 million dollar business … it's not going to scare me.”

Any advice or keys to success that people who are aspiring to succeed in the space should know about?

If there’s one theme that ran through this interview, it’s that you gain experience and hone your skills by doing, so just start (small).

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