Roll-Up Strategies, And Learning To Fly, With Adam Carlson

Roll-up strategies can have a poor reputation in the world of private equity, but when they succeed, they can generate outsized returns for investors.

Adam Carlson, business leader and serial entrepreneur, joins Andy Hagans to discuss roll-up strategies for private equity investors (plus his adventures in learning how to fly).

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Episode Highlights

  • Background on Adam’s career, including his experience in legal services, fintech, and lead generation.
  • The core economics behind a successful roll-up strategy (and why it can generate outsized returns for investors).
  • Why roll-up companies will often aim for a particular revenue number or scale.
  • Adam’s thoughts on the single most important element for any company pursuing a roll-up strategy.
  • How Adam decided he would learn how to fly airplanes (and why he picked the specific aircraft that he did).

Today’s Guest: Adam Carlson

About The Alternative Investment Podcast

The Alternative Investment Podcast is a leading voice in the alternatives industry, covering private equity, venture capital, and real estate. Host Andy Hagans interviews asset managers, family offices, and industry thought leaders, as they discuss the most effective strategies to grow generational wealth.

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Show Transcript

Andy: Welcome to “The Alternative Investment Podcast.” I’m Andy Hagans, and today we’re talking about rollups. Not the fruit kind that we all used to enjoy in the late 1980s, but a more delicious variety that can make us all a lot of money. I’m very excited that joining me today is Adam Carlson, business leader, serial entrepreneur, and a man who’s very familiar with rollup strategies. Adam, welcome to the show.

Adam: Hey, Andy. Thanks for having me.

Andy: I was trying to get an LOL with my dad joke there, Adam. Come on. There we go.

Adam: Well, now you got it. Now you got it.

Andy: All right. So, where are you coming to us from today? You’re in The Woodlands, is that right?

Adam: Yep. Woodlands, Texas. It’s a gloomy day here, but, you know, we’re in the first few weeks of the really good weather that we get in Texas for about six or eight weeks, twice a year, and then it gets either really cold or really hot.

Andy: Yes. And full disclosure, I lived in Houston for a couple years. I gotta tell you, Adam, all around the country, you know, you talk about Houston, it gets so much hate, and it’s, like, unfair. Like, I don’t even live in Houston anymore, but I guess I’m kind of a loyalist. There’re so many things about Houston that I loved, and when you’re in The Woodlands though, does that even count as Houston, or…?

Adam: It doesn’t, a little bit… I mean, it does and it doesn’t. I mean, because we all come into town and do stuff, but you’re seeing a lot of growth. I mean, Houston’s the fourth-largest city in the U.S., so you’re starting to see it just kind of grow even further out into areas like I’m in, which is north of the city.

Andy: And The Woodlands, correct me if I’m wrong, isn’t it one of, like, the largest suburbs in the United States or something like that?

Adam: I don’t know if it’s one of the largest. It is pretty big, but it certainly is in one of the top 10 places to live in the United States.

Andy: Why is it top 10?

Adam: I would probably say schools. You know, real estate. You can kind of have your pick. Texas has a low cost of living. So, when I say you have your pick, I mean, you can go as big or as small as you want. And we have a lot of land here, so…

Andy: I love Texas. Yeah. Honestly, it’s like you’re either from Texas or you live in Texas, or you’re always a little bit jealous that you don’t live in Texas. I wish everybody could just be honest about that who doesn’t live in Texas.

Well, enough about Texas. Let’s talk about rollups. So, you’re a serial entrepreneur, Adam. You’ve been involved in many different projects, industries, throughout your career, and you’ve worked on, you know, the startup side, but also the operations side, right? You’re an operator. And I feel like, of anyone, you know, in private equity who’s worked in all these companies, you’ve honestly probably seen, like, everything from every angle. Is that fair? Like, you’ve kind of seen every little nook and cranny and, you know?

Adam: I’ve seen a lot. I would say though, you know, the one area of businesses that I haven’t had much experiences in are ones that have, like, tangible inventory type assets. That’s a whole ‘nother ballgame that I don’t have much experience in.

Andy: Sure. So, asset-backed businesses, and, you know, it’s interesting because we’re talking about rollups, and, you know, it’s a strategy we’ve actually talked about on the show before. Somewhere in our back catalog, we have an episode on rollup strategies with self storage. So, you know, in real estate and different kinds of manufacturing, it’s a pretty common strategy, but where it has the most, shall we say, juice, or at least in our experience where it has the most juice, is certain types of businesses, you know, maybe internet-based businesses, e-commerce businesses, lead generation businesses, or legal professional services, these types of businesses that are very services-heavy, marketing-heavy, it just seems like the strategy can work so fast. Like, if you have a formula… Would you agree with that, Adam? Like, it’s, if you have that blueprint, it can be very, very fast.

Adam: A hundred percent. I mean, if you’ve got the right formula, the right team, most importantly, and you’re able to execute on it, I mean, these rollup strategies, I mean, it’s essentially putting gasoline on the fire of your business, for sure.

Andy: Well, why don’t we talk about your experience. You know, where did you get your start in, you know, your first business that you were involved in that was a rollup strategy?

Adam: I would probably say that was a business that you and I were involved in together. It was a lead-gen business. And we really grew that business, one, by we did raise outside capital through both angel investment and then subsequent, you know, Series A, Series A1 type rounds. But we were able to essentially acquire these smaller businesses that had websites, and really inject them into, you know, like we just said, we had a really good formula and we had a great team, and we were able to execute on it. So, we were able to essentially buy these businesses at a lower cost, plug them into our system, and have a huge arbitrage, which did two things. We were able to, you know, almost instantly make our money back on that purchase pretty quickly. I remember, didn’t we put up pirate flags any time we got a business and were able to acquire it for less than one year’s worth of revenue?

Andy: Well, okay. Okay. Well, I gotta stop you there. Well, first of all, this whole era of my life was when I was in my 20s, so any…

Adam: Oh, same here.

Andy: Yeah. So, any stories Adam may tell or I might tell, just everyone keep things in perspective. We were a little less… We’re a little more mature…

Adam: Mature.

Andy: …than we were. Okay. But, you know, I like the pirate flag, actually. But this is an important point of the multiples, so I wanna actually make this clear. Like, a lot of times, what we were doing… Like, here’s basically how it worked, right? We were buying something at 36, or 48, or 60-month revenue, right? Like, a 3X, 4X or 5X multiple. But then we had expertise to enhance the revenue, and honestly, maybe typically, like, double the revenue very, very quickly. So, if you buy something at 48 months revenue… And by the way, these are risky assets, right? Like, there’s a reason that the owner’s willing to sell for 48 months revenue, because they’re[crosstalk 00:06:30]

Adam: Absolutely. And we were paying good money for them, and, you know, in some cases, providing life-changing money to these business owners.

Andy: Right. We’re providing… And that’s a key right there, I think, is providing liquidity, in some sort of market where there aren’t really any other liquidity providers. But if you buy an asset at 48 months multiple, and then you have a way to enhance, you know, basically double the revenue, well, now, you’ve effectively just paid 24X. And I think, your reference to the pirate flag, if you buy something at 36 months revenue, and you’re able to triple the revenue, you’re literally paid back in 12 months. And that’s where you…I mean, that’s really where you make your money, right, Adam?

Adam: Absolutely. Absolutely.

Andy: It’s not for the faint of heart though, right? I mean, like, if you’re the only liquidity provider in a market, there’s probably a reason. Would you say that’s fair?

Adam: Yeah. I mean, it shows that there’s some inherent risk in that market that you’re operating in. And while we had some success stories, I mean, there were some that just didn’t work out, for one reason or another, or didn’t work out in the sense of they weren’t pirate flags.

Andy: Well, we caught a few hand grenades that, you know, maybe… Yes. I think that would be fair to say. So, really, operating with a strategy requires a couple things, right? So, you’re a liquidity provider. And actually, we weren’t the only liquidity provider. There were others. I believe there was even a publicly-traded company operating in the space, in the lead generation space, that was going out and buying up assets. And so, there is kind of a market multiple, and, I mean, in a lot of different business sectors, there is kind of a standard multiple, right? Like, for an insurance agency, if you sell an insurance agency, there’s, like, a kind of a standard market multiple, right?

Adam: Yeah. There is. I don’t know what it is off the top of my head, but I feel like, you know, those… Well, you’re getting into a little bit of recurring revenue when you’re talking about the insurance company, so I don’t wanna speak and give bad information on multiples there…

Andy: Yeah. No, no, I…

Adam: …but I’ve…

Andy: I didn’t wanna go down a rabbit hole of insurance agencies. I just kind of mean that depending on the sector, sometimes folks in the sector, if they’re getting ready to sell, they might talk to somebody else who sold or whatever, and there’s kind of an industry knowledge, or behind-the-grapevine or whatever, like, “Okay, I can expect 3X,” or, in some industries, it’s 1X. In some industries, literally 12 months revenue, or even earnings, depending on the industry, because the fact of the matter is, a lot of business types just don’t have that much enterprise value, right?

Adam: Correct. Or especially, those 1X businesses are, you know, primarily focused around one person, and, I mean, they are the business. So, you know, anyone that’s buying that business from them is trying to replace that business owner, and there’s a lot of risk in that, which is why there’s a lower multiple.

Andy: But that’s not what we were talking about our experience. So, we weren’t buying those kind of businesses with…

Adam: That’s true.

Andy: Well, we were more looking for businesses that did have some enterprise value, but they were small, right? So, if a business is less than, you know, $5 million in top line, most private equity buyers, there’s just, it’s like, they’re looking at it like it might not be worth their time, right? And that’s the rollup, right? Because it’s like, well, if you buy a bunch of…if you buy 50 businesses that do $100,000, well, now you have a $5 million business. Or actually, maybe buy 25 of those and double ’em, and now you have a $5 million business.

Adam: Exactly. And now you can get on those radars, and you’re making that… Or now you’re worth those people’s time.

Andy: So, it’s really, it’s, you’re building value, let’s say, in, like, at least three different ways. One, you’re providing liquidity in some sort of niche market where there’s few liquidity providers. Two, you know, you have operational knowledge and you know how to operate those assets when maybe most people don’t. And then three, just the value of bundling them together and reaching scale. So, regardless, if you buy at 4X and then you juice those assets so you paid an effective 2X, once you bundle together a certain size, that multiple starts to expand. Is that right?

Adam: Absolutely. Yeah. I mean, so, you kind of talked about earlier, like, everyone kind of has this multiple in their head of the industry that they’re operating in, but, you know, the more services and ancillary products, or, you know, the more you can roll up or grow your business, the higher multiple your business is gonna command.

Andy: Right. Right. What would you say builds the most value? I guess, Adam, if you were starting a new rollup company or if you were trying to build out a team of those kind of aspects we talked about, that could enhance value, you know, acquisitions and liquidity, and then operating them, and then the ability to bundle, which may be to bundle to a certain size requires raising capital, like, what are the real key elements, where it’s like, “Hey, if you can’t do this thing, don’t do a rollup?”

Adam: I would say if you don’t have the operations or the team to operate and execute on that vision that’s gonna make the rollup work, then that’s really, in my opinion, the biggest barrier, right? You really do…and this is just my opinion, but it’s the team that really makes everything happen. You can have a great business and a bad team, and it’s probably not gonna work. And vice versa, you know, you could operate in a very competitive, very hard business, and if you’ve got the right team, you can really excel, and kind of command that market. So, I would say out of all of those, you know, the most important is the team and the execution of the operation. I would say secondarily to that is probably, you know, if you are, you know, going in these acquisition modes, ensuring that you have the appropriate amount of capital to execute on that, one, the purchase or in the acquisition, but also you have the capital to execute operationally. Those, in my opinion, would be the two biggest.

Andy: That’s interesting because…and I think you’re right. It’s like, if somebody just gifted me a successful restaurant, let’s say, “Congrats, Andy, here’s the key to this restaurant, you know, down the road, and it’s making money, and it’s this great restaurant.” I don’t know how to run a restaurant, right? Like, probably the wheels would fall off within 90 days because I don’t know what I’m doing, so it’s like, if you don’t know how to operate the asset, you can’t even really own the asset, effectively. But if you know how to own and operate it, you can probably figure out how to do acquisitions, or you could probably figure out how to raise capital, but you really have to start with operating the asset. Is that fair?

Adam: A hundred percent, and agree with that.

Andy: And it’s interesting. Even outside of rollups, you know, I don’t know the stat, but so many acquisitions fail, because it’s like someone will buy a good business, and then, you know, they’ll be imagining, “We’re gonna create value by somehow changing the business or merging the business.” But so many of ’em don’t really work out as planned, you know. And do you think that’s because…

Adam: Absolutely.

Andy: Why is that? I guess, what are some of the reasons that those, typical, smaller acquisition, let’s say, might fall apart, or mid-size acquisition?

Adam: You know, if you’re integrating teams and cultures, that could certainly be a barrier, and something that’s hard to do. A lack of funding. That’s certainly something that I’ve seen out there happen. Perhaps something we might talk about a little bit later. You know, those are kinda the big ones that come to the top of my head.

Andy: Yeah. Okay. And on rollups, so, we started by talking, you know, our experience in lead generation websites, you know, that whole area of, like, e-commerce, very, I don’t wanna call them ethereal businesses, but they’re not asset-heavy. They don’t have a lot of tangible assets, right?

Adam: Right.

Andy: But our experience was in a pretty narrow space of lead generation, but I know, you know, since the time we worked together in the lead generation company that we built together, not just us, you know, obviously a whole team, but that we worked together in, you’ve worked in many other spaces, right? You’ve worked in professional services, you know, legal, financial services…

Adam: Financial services.

Andy: …payments, FinTech, all that stuff. Where are some of these other areas, some other industries, where you’ve seen a lot of rollups where you’ve seen this strategy be employed?

Adam: I would say in the professional services industry, I’ve seen, especially as of late, a lot of acquisitions of kind of your smaller law offices, smaller CPAs. They’re getting bought up. At least two that come to the top of my head were straight acquisitions. You know, you see a little bit of joint ventures. Especially in the CPA world, you might see, “Hey, I’m Andy Hagans, CPA, but I’m part of, you know, a group that’s in the top 10 accounting firms.” But not to get too far off track, you know, some firms here in Houston that I use have, both this year, both on the CPA side and on estate planning side, have both in the last 12 months been acquired by top-10 law firms, or top-10 CPA firms in the United States. You know, fortunately, you know, it’s a little bit early into that relationship, and I haven’t seen… You know, I’m still seeing that personal service and that local service that I’m used to, and for picking the firms that I did, I’m a little nervous if any of the bills are gonna change, but time will tell.

Andy: Because somebody has to pay rent in a New York City office, right? Versus…

Adam: Exactly. Exactly. I mean, just…

Andy: Well, do you have any… I mean, is there, like, when something like that happens, like, that’s not necessarily an industry that you’re deep in, or maybe you are, but, you know, is it because a lot of the principles at these smaller companies are just retiring and there just aren’t any buyers? Or is it because the larger companies have realized this is actually an inexpensive way for them to grow? I mean, is there…I guess what’s the strategy behind that? Like, why is it happening?

Adam: Without having dug in, you know, in great detail, I really think it’s more of, you know, these larger firms are just kind of seeing the opportunity to acquire these good, smaller, local firms, and be able to essentially plug them into their broader group, possibly cross-sell, and really accrete…

Andy: That’s a bingo right…that made my ears perk up right there, because now I’m thinking of, you know, like, in banking, and I don’t know too much about banking, but it’s just, like, constant, constant acquisitions. And it’s like small banks never seem to last very long because somebody else always wants to buy the small banks, right? And then, why? Because they get the client base, and they can cross-sell a million, zillion other things.

Adam: Exactly. And plus, obviously, I think that they’re offering an attractive enough package for the owners or members of these particular firms to not only, you know, fly the larger firm’s flag, so to speak, but actually stay on in a, what seems to be a long-term role. You know, sometimes when you see an exit, you know, you got that one-year lockup, and then everyone’s out the door.

Andy: Right. Yeah. So, this isn’t typical… Well, I shouldn’t say typical. Sometimes people hear the word “private equity” and they think of “Wall Street,” or 1980s movies, of, you know, buy a company, fire everybody or whatever. But private equity and acquisitions can take a million different forms with a million different objectives and ways to operate. So, what you’re saying is, you know, sounds like it could be win-win, and even as a client, you’re saying you haven’t seen the service go downhill.

Adam: No. Not at all. In fact, it’s remained the same, if not better. So, interested to see…

Andy: You know what, Adam, that reminds me just of this core concept with rollups, which is just, a teeny-tiny little business just sometimes doesn’t have the scale to access certain types of things. So, you know, arguably, it’s not just that there’s financial value being built. There’s actually tangible value, where the individual nodes in the rollup are being strengthened because they all have access to a better back end, or better resources.

Adam: Yep. And, I mean, it could partly be, you know, what we talked about earlier. I mean, there’s that operations element that, you know, some of these smaller firms might not have, that, you know, they can essentially plug and play now into these larger firms.

Andy: Yeah. It’s like if you own a tiny little anything company, you don’t have anyone who knows how to do Google AdWords, right? But if you plug into some huge mega corporation, then you’ll have a whole team or an agency who knows how to do AdWords. And frankly, it’s pretty templated, it’s pretty formulaic. It’s, you know, every…

Adam: Yeah. And, I mean, I just thought of this, actually. I mean, you know, I’m sure you’ve watched “Shark Tank,” and I’m sure the people that are watching this podcast have watched “Shark Tank,” but, I mean, that’s essentially what a lot of these guys do, is when they invest in these businesses, I mean, they go in and they really kind of take over, obviously, the finance aspect of it, and then, and essentially plug it into their system, because they’ve already got their teams and expertise to help, you know, propel these businesses forward.

Andy: Yeah, I love what you’re talking about, Adam, because it’s not private equity vultures. It is people that are creating new value. That are simply, you know, taking a good business and essentially making it better, creating a better value proposition. You know, because in the end of the day, in the very long run, inefficient businesses don’t survive, right? So, the corner store mom-and-pop that you might love, if they can’t deliver value efficiently, they’re not gonna survive in the long run, right?

Adam: Yep. Unfortunately.

Andy: So, okay. One other industry I wanna talk about a little bit was payments, because in FinTech, in payments, you know, you have a lot of experience there, you know, very well-known in that industry. And that’s another area, you know, when I say payments, it’s almost such a broad space. It’s probably, like, 20 different spaces, right?

Adam: It really is.

Andy: Well, I guess, where have you seen rollup strategies, or maybe M&A strategies in the payments space? You know, what buckets within that industry have you seen that activity occur?

Adam: There’s certainly been a lot of acquisitions or mergers of different types of payments or FinTech companies. You know, like, I know, recently, the biggest one is Nuvei, which is a payments company, is acquiring Paya for over a billion dollars. I can’t remember the exact number, maybe multiples of billions of dollars. And, you know, they’re just another company that provides a similar payment service, more geared to ACH. And so, that’s a recent acquisition. And I would say pre-COVID, there was a lot of activity. You know, Global Payments merged with TSYS, which is, you know, two huge players in the industry. And then they actually just recently bought, I believe it was EVO Payments, which is a company that’s been around in the industry for a while.

Andy: So, this is interesting. I’m thinking of the payments industry, you know, I think of, like, Visa and MasterCard, and some of these just, like, giant, giant mega corporations, but at that, you know, at that billion-dollar-plus enterprise level, I do think with these kind of network-type businesses, that have networks, you really need the scale. And so, sometimes it almost feels like they’re not even looking at it in terms of value. Like, maybe they’re not getting a great multiple, super-attractive multiple, but they might feel like if we’re not in the top two or three networks, or in whatever niche that we’re in or whatever space we’re in, or whatever product we’re in, if you’re not in the top two or three in payments, it seems like you tend not to survive. At least, you know, maybe not survive, maybe not thrive. Maybe that’s better a word.

Adam: Yeah. And, I mean, I think that’s what you’re seeing is, I mean, you know, these… A good portion of ’em that I mentioned are publicly-traded companies, and it’s that constant provided shareholder value, right? And figuring out ways to do that. And obviously, you know, our topic today is rollups, and, which is part of acquisitions and mergers, so clearly that’s what you’re seeing happen there.

Andy: So, you and I, I mean, we had an experience in lead generation. We were almost doing, like, micro-rollup…like, rollups that are almost too small to be on anybody’s radar, but then you roll ’em up big enough, and then you reach that critical…you know, the magic number where private equity buyers or whomever, strategic buyers, are interested. Is there any of that going on in the payment space? I mean, are there liquidity providers? Are there rollups for acquisitions, you know, in the $1 to $5 million or $1 to $10 million range?

Adam: Absolutely. I mean, you see and hear about ’em all the time. I mean, I don’t really have any that I’ve noted down to talk about, but a lot of…I wouldn’t say a lot of companies, but companies that have recently gotten a capital injection of some sort, they’re looking to grow their business, and finding portfolios, or companies that are offering ancillary services to what they’re offering, you know, so, one, they can cross-stick, or cross-sell, and it makes the customer stickier, just because you’ve got more touch points. It’s harder for them to leave, which, you know, lowers your overall attrition rate.

Andy: Right, right. Okay. Well, you know, it’s interesting how our conversation went, because just all these industries, big or small, and it almost just doesn’t even matter. Like, there’s just, like, these… Whether you’re going from $1 billion to $5 billion or $1 million to $5 million, there’s, like, these inflection points of scale that people are looking for, right?

Adam: Yep. And, I mean, I think that’s what any good investor in the private equity space, whether it’s a firm or an individual, I mean, they’re looking for, you know, these types of opportunities.

Andy: Absolutely. Well, you’ve worked in so many industries, you’ve been involved in so many deals, and one of the things I respect about you, Adam, is just, you know, you’ve always, since I’ve known you, at least from what I’ve observed, you’ve had a work-life balance. You know, you’re a guy, you work hard, but I think I can say you play hard, right? And I recently learned that you’re learning to fly, and that’s not, like, a euphemism. You’re learning to fly airplanes, which, I gotta be honest with you, I used to fly all the time in my 20s, and then I went, like, whatever, seven years and barely flew at all, you know, had a bunch of kids, etc. I’ve started getting on flights again, and I’m like, “Oh, man. I gotta, like, almost break myself in again.” Like, they’re kind of making me nervous, you know. So, the idea of flying my own airplane, that just seems crazy to me. Like, how did you get this in your head, “I wanna learn how to fly airplanes?”

Adam: Well, I guess I should first say that my family, my dad and some other folks, have been very heavy in the aviation industry. You know, primarily in the ’70s, throughout the early 2000s, my uncle was a pilot, so, you know, I grew up around airplanes in my childhood. You know, I could tell you what kind of plane it was just by, you know, sitting in the terminal. You know, that’s what my dad and I did when we were waiting for flights. And I always heard cool stories from my dad about the aviation industry, like he made multiple trips on the Concorde, which was, he said, an amazing experience. And I will tell a small story about that, just because I think it’s really cool.

So, he worked in New York, and he had to commute to London very often. So, and this is in the ’70s and ’80s. There was no Zoom and all the technological capabilities that we have today. So, he would end work at, like, 5:00, he would go to the airport and he would fly over to London on a, you know, like, a plane like you and I would fly to London on, right? And he would be able to sleep, he’d land in London, and have a meeting at Heathrow Airport. And when he was done with that meeting, he was able to get back on the Concorde, fly to New York, and be in his office by 7:00 a.m., like it had never happened. So, it’s just like…

Andy: Wow.

Adam: …like, that’s just such a cool story. And it’s… I understand why…

Andy: Adam, how did we go backwards? How did we go backwards?

Adam: I think, you know, it was very expensive to do that, and I think with, you know, it’s kinda why I brought up technology, the fact that we have all of these tools now kinda negate that necessity to need to do that that fast. So, hopefully, you know, and I’ve actually seen United is invested in a company that is making, or is attempting to create a new supersonic plane. So, we’ll see what…

Andy: We might do it again, or we might have…

Adam: We might. You know, you never know. I mean, they are a startup, but they did get a pretty large investment from United Airlines. So, I mean, that does speak to that. They’ve got something.

Andy: We gotta get Elon on the case, Adam.

Adam: Now you’re talking. If he can get these rockets to land themselves, he can probably build a plane.

Andy: Yeah, okay. So, okay, you grew up around it, but then you weren’t a pilot in your 20s, when…

Adam: No, not at all. I didn’t really have much interest in it, and actually was a nervous flyer for quite a bit until, you know, I had to start traveling a lot for work. And then just, you know, kind of just got used to it. And so, I think, you know, there’s been a couple of times in my career where I’ve experienced burnout just from, you know, going too hard or, you know, just solely focused on one thing, or whatever the case may be. And so I was just kind of looking for something that, to learn a new skill, that would be fun, and that I could completely check out of everything else. So, I think that, coupled with a poor airline experience that my dad had, going to Thanksgiving out in California, kind of like, “Hey, well, why don’t you learn how to fly, and maybe one day down the road we don’t need to take the airlines?”

Andy: Okay. So, okay, I got that. So, then, what is step one? So, okay, he planted this seed. Where do we go from there? I feel like you’d need so much training from there before you’d actually be flying an airplane, right?

Adam: Yeah. So, I’m a big, “No, no. Let’s not…” Well, at least in this, I’m trying not to put the cart before the horse. So, the first thing was, you know, hey, let’s find a reputable company to learn to fly on, or fly with, and let’s, you know, pick an adequate aircraft to learn to fly.

Andy: Just adequate? I mean, what would be an inadequate aircraft?

Adam: Well, I mean, they’re all adequate. I would say, you know, some of them, and a lot of people learn to fly on planes that are, quite frankly, older than you and I. They might not have air conditioning, which you can imagine in Texas would make it not a pleasant experience.

Andy: Yeah. That’s gonna be a pass for me, bro.

Adam: So, it’s fun… So, I did… So, and, one, you know, I think, if you are gonna ever look at renting planes to fly, or potentially buying a plane, you know, you wanna pick one that is gonna fit your “mission profile,” right? And, you know, I’m kind of a tech guy, so I wanted to learn how to fly in something that had, you know, avionics that were from, you know, this decade, and stuff like that. And obviously, the air conditioning was probably the main selling point.

Andy: So, you basically, you pick one aircraft and you learn how to fly one aircraft, versus learning the generic skill?

Adam: At least to start, yeah. So, right now I have about 11 hours of training, or flight time in the air, under instruction. Nine takeoffs and three landings. But the landings are touch and go, and you wouldn’t really… Which is when you basically come in, you land, and then you give it full power and take back off again. I haven’t done what’s called a full stop landing, and I don’t think anyone would wanna be in that plane, other than the instructor, at this point.

Andy: Boy, that’s gotta be a job for somebody with a strong stomach, is being a flight instructor.

Adam: Yeah. Yeah. He says I haven’t scared him yet, so that’s a good thing.

Andy: Oh, man. Yeah. I’m like, learning to fly might be tough. Imagine being the instructor teaching everybody how to fly.

Adam: Yeah. I couldn’t imagine.

Andy: So, have you had any moments where you’re like, “Oh, shoot,” you know? Or has it all been pretty much smooth sailing?

Adam: I mean, it’s pretty early, and it’s been smooth sailing. I’m really enjoying it. The studying aspect is, you know, I think you could maybe relate, to some extent, as an entrepreneur, you’re going a million miles a minute, and some things you’re just kinda, you know, you’re dealing with on the fly, right? And there’s no manual, so to speak. So, kind of putting…

Andy: So, the big flock of geese that you fly into, it’s like, “Oh, there’s no manual for that.” Well, that probably should be in the manual.

Adam: But, so, I mean, it’s been a little bit of a change for me of like, “All right. Well, you know, I’ve got this material that I need to study and prepare for before I go and, you know, execute that day’s lesson in the air.” So, I mean, that’s been…it’s been a change. It’s been a little bit challenging, but I’m starting to get my own procedure for that down. And then, the lessons in the air are just a blast. And, you know, every time you go out, you’re getting a little bit better. I mean, I remember the first time I took off, and it was like, just weeble-wobbling down the runway, not being able to keep a straight line. And yesterday, actually, went flying and was able to take off pretty straight and narrow, right down the runway, so that was a good feeling.

Andy: So, how many, I think you said 11 flight hours or 9 takeoffs. How many flight hours do you need before we can say you know how to fly, or before we say you’re a pilot? Or are you already a pilot? Could we say you’re just a really bad pilot right now? Or, you know, when are you officially a pilot?

Adam: I was actually talking to my dad yesterday and he was like, “So, could you go out and start the plane and take off, get us in the air, and come back and land?” And I said, “Well, I could certainly go out and I could certainly turn it on, make sure we’re safe, get it on the runway, take off, get it in the air, do almost anything we need to do, but it would be a hard choice whether or not you would want me to either land the plane, or…” There’s one other reason I picked this particular aircraft, and it actually has a parachute built into it, so if there’s any sort of mechanical trouble, you can essentially just pull the parachute, and it’s not gonna be fun, but it’s better than crash landing. So…

Andy: And that’s just, that’s for the pilot and co-pilot? Are there any passenger seats on the plane or anything?

Adam: There are passenger seats in the back plane, and it’s…

Andy: Does everybody get a parachute, or just you?

Adam: No, it is one parachute built into the actual aircraft. So…

Andy: Oh.

Adam: Yeah. So, it’s not like, “Oh, we all gotta jump out real quick,” and whatnot. It’s actually built into the frame of the aircraft, to save everyone’s life, and even in some cases, completely save the aircraft.

Andy: Adam, you gotta tell me what the name of this aircraft is. I gotta put it in the show notes, because it sounds pretty cool. What model of aircraft is this?

Adam: It’s a Cirrus, C-I-R-R-U-S, SR20.

Andy: SR20. You know what, I’m gonna look it up on YouTube. I wanna see a video of a whole airplane parachute.

Adam: Yep. They’re on there. It’s crazy. I mean, that’s part of the training is, you know, knowing exactly how that system works.

Andy: Now, they don’t let you test that though, right? You don’t ever get to demo it?

Adam: No. No. No. I mean…

Andy: If you test that, that means you messed up pretty big. Is that right?

Adam: I mean, you know, there’s a couple of stories of people that have used it, and they didn’t…it was not pilot error at all. I mean, there was, you know, something happened with the engine, I believe was one story, in the middle of the night. And, you know, you get to that, kind of, that minimum altitude of, “All right. I’ve tried everything I can. This is my last option.” And then there was another guy that was actually ferrying one of these planes from California to Hawaii, and when you do those ferry flights, they put extra fuel tanks in the plane. Well, the fuel wouldn’t transfer from those extra fuel tanks, and he ended up being 200 miles short of Hawaii, and having… You know, it’s not like you could turn around and go back.

Andy: No.

Adam: So he actually found a cruise ship…

Andy: Wow.

Adam: …and, that was, you know, close by him, and, you know, killed the engine, pulled the parachute, and he touched down softish on the water, and was able to swim out, and the lifeboat from the cruise ship came and got him and…

Andy: That’s amazing.

Adam: …he was completely fine.

Andy: Well, cool technology.

Adam: Yeah, it really is.

Andy: I’m gonna make sure to look that up on YouTube. And Adam, I gotta say, I know our time’s running short. I wanna have you back on the show six months to a year, or whatever, because I wanna learn more about whatever new project you’re on or new private equity deal you’re on, but also I wanna get the update on learning to fly, because it sounds like you’re kind of in the beginning stages of it, but next time we talk, maybe next time you’re on the show, you’ll be offering to take me on a ride in, you know, your private airplane or something.

Adam: Yeah. No, I mean, there’s, really, kind of this first step is getting the private pilot’s license, which, you know, allows you to fly in visual conditions, meaning perfect weather. And then after that I’ll probably do my instrument flight rating, which means that I’ll be able to fly, you know, without having any outside visual reference points, by instrument only, which is essentially what all of your pilots flying commercial aircraft have, plus a lot of other things. But it really allows you to, you know, hey, if we went somewhere and then the weather came in, you know, when a lot of us have kids, or friends with kids, and, you know, “Hey, sorry we can’t go back tonight because the clouds came in,” you know, isn’t really a fun option for some of us family guys, right? So, I think that’s an integral piece to getting to the next step, is getting that instrument rating.

Andy: Absolutely. Well, we’re gonna have you back on the show in 6 to 12 months, or whenever you’re ready to tell us more about your journey learning to fly. But in the meantime, where can our audience of high-net-worth investors and entrepreneurs go to learn more about you and your current projects, Adam?

Adam: Sure. So, I would say you can find me on the web at, or you can find me on LinkedIn. I’m pretty active on LinkedIn.

Andy: Yeah. And if you’re connected to me, Andy Hagans on LinkedIn, I’m connected to Adam, because there’s probably a bunch of Adam Carlsons there, but you can find him. And I’ll be sure to also link to your profile in our show notes. Adam, thanks again for joining the show today.

Adam: Hey, thanks, Andy. I appreciate you having me on.

Andy Hagans
Andy Hagans

Andy is a co-founder of WealthChannel, which provides education to help investors achieve financial independence and a worry-free retirement.

He also hosts "WealthChannel With Andy Hagans," a podcast featuring deep dive interviews with the world’s top investing experts, reaching thousands of monthly listeners.

Andy graduated from the University of Notre Dame, and resides in Michigan with his wife and five children.