Alex Bridgeman: Thanks, Tony, for coming on the podcast. It’s great to have you and I enjoyed getting to meet you and Cassi at SMBash in Orlando and hear all about the different businesses you were involved in and had started and worked on. So, I’m excited that we get to have a full-length episode with each of you because there’s so much behind what each of you do. Let’s start with you though. What’s the background that led up to what you’re working on today?
Tony Layne: Well, I would echo back to you the same sentiments. It was a pleasure to meet you at the SMBash and how cool for those guys to put that on. It was super fun to be with everybody, meet so many faces that I’ve met virtually over the years, and to actually sit down and hang out was really cool. I was born into a small town in Florida into a really good family but a very rural family. So, my dad was the local dentist in our town of maybe 3000 people. And really today his dental practice is still kind of the only dental practice in our town. I have six siblings, so a pretty large family. My mom did not work. So, I had a great childhood. I had a lot of love at home, just a really great setting to be raised in. When you think that your dad is a dentist, you think you’re sort of in the upper realm of earnings, but he charged rates that small town rural folks could pay. So, he wasn’t exactly knocking it down, and then he had seven kids and he had a wife that didn’t work. And so particularly as the kids start getting older and he had to buy a truck for someone every two years because they turned 16, I would’ve called us sort of like normal class. Like really, my parents are awesome people, my siblings are awesome people, and just a really great area to be raised, but not a great area to start your station in life if you’re hoping to end up a successful businessperson. It is a little atypical for that foundation to produce that outcome. Being raised, I was pretty well told that I was going to be a dentist. My dad had this nice business in town. I’m kind of a people person, always have been. And my mom thought, oh, well, you’ll be perfect for this. Your brother who’s ahead of you, he won’t do it because he’s super smart. He’s going to do something really great. But you, you’re a little behind him, you’re just right. You can do this part. And so, I really was raised with the mentality that I was going to be a dentist and actually kind of believed it growing up. I was raised in a Mormon family. And so, as I got out of high school, I served a church mission. So, I spent two years outside of my home area, out in Idaho serving a church mission out there. Which most people really, really love that period kind of coming from our culture. I really didn’t. I was really ready to get going. And I would say that I just stuck through it, but I learned an awful lot from that experience. Mostly I learned what it’s like to be poor. One of the things you learn on that type of thing is they hand you like $120 a month and that’s what you have to survive. And so, the first couple of months, I bought like a new pair of shoes on the first day or something, and I had no money the rest of the month. And I learned real quick that having no money is no fun and that actually having money requires some discipline and some planning. And I came home from that experience, and I remember telling my dad when I got home, hey, I don’t know about this dental thing. I kind of want to be rich, which I didn’t really even know what that meant. I just knew that I wanted something outside of the norm from what I was raised in and what I was sort of raised to expect. I mentioned earlier that my brother ahead of me was like super smart, and he is, he’s absolutely brilliant, like just AC, ACT, just a really sharp guy. And in our local county, there’s this full ride scholarship that’s available for like one candidate a year from the county from this wealthy guy who set up a trust this way. And my brother before me did not get it. And the foundation acknowledged that they made a mistake on that. And so, when I came around the next time, they gave it to me as like an apology. So, I got like a full ride scholarship to college by default because my brother didn’t get it. I really wasn’t school material, didn’t actually think an awful lot about school, but when it’s free, it’s pretty tough to kind of not go do it. And so, I had dated the same girl all the way through high school literally from like freshman year all the way through, and she was still single when I got home from serving that mission. And so, we reconnected and got married not long after I had been home. We got married pretty young, actually. So, I married my high school sweetheart. And we had this idea that we were going to have like this big house with a white picket fence, and I was going to ride to the dentist office every day and be the dentist and that she would be the hygienist. Why not? She can just literally ride with me to work, how picture perfect would that be? We could even take a dog with us or something. And so, we had this like, I don’t know, nirvana in our head that we were going to go after. And so, in line with that, she went and became a dental hygienist. And bless her heart, like halfway through her dental hygiene program, I sat her down and I said, “Hey, this isn’t going to happen. I’m not going to be a dentist.” I got even to the point that I have a really weak system of seeing blood; if I see blood, I get sick. And so, it was like crystal clear, Tony, you cannot do this. So, I remember the day I- It’s hard to even express just how much like expectation there was for me to go this route and get a good degree and get a good job and don’t take risks. And I was just very much raised with that type of mentality. And so, to go against that was actually a really big deal, harder than it may sound. So, I remember sitting my parents down and saying, “Hey, I’m not going to be a dentist” and my mom kind of telling me, “You think you’re going to make it in this business world and you’re just going to end up selling used cars,” literally word for word, and telling her, “Well, I’m going to sell a lot of them.” So, I didn’t let it discourage me, even though really, she was trying to discourage me out of like a parent safety thing, like I want my kid to go get this safe, stable thing. So, I went to Tallahassee to go to FSU to get an accounting degree, and I started out with this job at Chuck E. Cheese making pizza. And when I got the job, I sat down with the guy that owned it and I said, “Listen, I’m a little too experienced to come in here and like just put cheese on the pizza. So, if you’re looking to hire a manager, I’ll come in and I’ll manage the store for you.” It was the first job I ever had. He hired me as his manager and I was a total dick. I was a total hardliner in that restaurant, and it was an extremely good place to learn how to run business because that is a shit show, man. Like you’re dealing with 15-, 16-year-old kids that are not showing up, there’s like parents that are mad because one kid pushed another and moms getting in fights and people not showing up for work, or if you’re running out of cheese, or you just get flooded with people on a Sunday afternoon because it’s a rainy day. And it’s actually a really hard business to learn. Probably the hardest business I’ve ever run, even to date, was this silly little pizza franchise. And so, I really climbed up there and became totally in control. I was running it entirely. The owner actually went and built a brand new store in Puerto Rico, and he left and went and ran that one while I ran the one in Tallahassee. And they said, “Hey, if you really stick around, you can probably make 60 grand a year here.” And my dad said, “Why don’t you just stick that out? You don’t want to do dentistry. Why don’t you just stay as a manager at Chuck E. Cheese?” And I realized then these are like seriously divergent visions for my life. And so, they’re really discouraging my wife and I from bringing on any debt, and you’ll hear a recurring theme through this story of like strength and courage from my wife because that’s where I get it. Like she just naturally has this strength about her and this courage about her that has carried me through the years. And so, this whole time, she’s giving me the courage just to kind of stand up to the expectation and saying let’s go chase what you want to chase. So, there was this guy who was going to church where we went to church and he was in the real estate business. And he was actually really successful. He didn’t live like a successful life, but behind the scenes, he had a really robust net worth, and he sold like these really awesome farms and big timber properties, which I thought was super cool because I was raised in a rural town where you hunt, fish, and you’re an outdoor guy. And so, I got in with him and I said, “Hey, let me join you.” And he said, “Well, I’ve got this large firm, I don’t know where you’re going to sit in this, but I’ll tell you out of the gate, if you’re going to play in this game, don’t go sell a townhouse. Go sell a $5 million farm and make some actual real money.” And so, six weeks in, they told me when I got the license, they said expect that you won’t make any money for your first year in real estate. And at six weeks, I was given the title of the highest performing salesperson in the whole firm. And I did this because I did exactly what he suggested. I simply started focusing on really large acreage tracks. My wife and I went to this little program where they were helping you figure out your vision in life, and this is important because you’ll hear about it later. And you had to write down like what was your- we’re still very young here. We’re like 21, 22 years old. They said what are you trying to accomplish? Like, what’s your end game here? And I remember writing down that I wanted to own my own 3000-acre farm. That was my like nirvana. I wanted to have like a river on it. I wanted to have a camp where all my brothers could come and we could hunt and we could fish and we could ride horses and do all the things that we love to do.
Alex Bridgeman: Not a Chuck E. Cheese?
Tony Layne: Not a Chuck E. Cheese, maybe on a Sunday if it’s raining, along with everybody else in the whole town. So that was the goal. And I had done the one real estate deal and I saw right away that just- I did a little bit of study, and at the time, so this is back in 2002, the starting salary for somebody with an accounting degree in the state of Florida was $24,000. And the property that I sold in my first six weeks at this real estate firm, I actually made about $40,000 selling this piece of property. And it was owned by this like really wealthy guy up in Georgia. But it wasn’t hard for me to do that math, like six weeks and I made $40,000, or I can work eight to five all year to make 24,000 for someone else and have a boss. I had total freedom. I was outside in the woods. I was like this is great. And so, I went to school, got a real estate license, and I shifted my- I dropped out of FSU, their accounting program, I was one semester in. You can imagine back home, this is kind of raising hell. This is like what are you doing dropping out? You got a full ride scholarship. What are you doing? I shifted to a nighttime program at a community college where Flagler College was putting on this nighttime program to get an accounting degree. So enrolled in that, and during the day, I was just hustling. I was literally trying to put deals together. And I came across this foreclosure house in Thomasville, Georgia, which is like 45 minutes away from where I lived, and it was owned by a bank. And I just rode over to the bank. I walked in and I said, “Hey, I’d like to talk to the president of the bank.” You could never do this today, but this was sort of back before the Dodd-Frank laws when lending changed. I went in and I sat down with him, and I said, “Look, you’ve got a problem. You’ve got these foreclosures coming in the door and you’ve got a certain basis in them that you need to recover. Why don’t you just give them to me? I’ll go remodel them and I’ll resell them. And I’ll repay you a hundred percent of your basis and you’ll take no loss on any of your foreclosures.” And he agreed to do it. And so, without any loans, they would give me their foreclosure houses, and I would remodel them all day long. And I didn’t know how to do it, so my wife and I would go to Lowe’s, and Lowe’s back then would hold these one-hour seminars where they would teach you to lay tile, or they would teach you to change out a sink or a faucet or something like that. And so, we would attend these one-hour courses and then we would go up to our literally crack houses. I mean, these were dumpy little crack house foreclosures, and we would remodel these things and then resell them. And then we started taking that and we started rolling that into buying little pieces of land. And so, we’d get a piece of land, and say maybe it was 20 acres, we might divide it four times into 5-acre pieces and sell each 5 acre piece. And a little bit like not all of this was just magic on our part. This was you sort of couldn’t screw up in the 2003, 2004 range on real estate in the state of Florida. It was such a boom time in the real estate market that it didn’t matter what you paid, really, it was going up from whatever you paid. And so, we were buying stuff. And I remember I was actually in college when I made my first land deal that in a two-week stretch, I made $150,000 off of buying a piece that was on a river, 75 acres. And I flipped it to this guy that I knew, two weeks later and I made $150,000 off of it. And that was the moment, that particular year, I actually made $400,000 while I was in college just flipping properties and fixing up little rentals and that sort of thing. And I said, you know what, I’m not worried about this degree. Like it’s free, so I’m going to take it and put it in my back pocket. But this isn’t who I am. Like this hustling, that’s who I am. I actually really like this. So graduated in 2005 with a little bit of just kind of a token accounting degree. And the first step that I took is I became a licensed general contractor so that I could start building my own projects. And I started looking for places where I could build a subdivision, something much more large. And the downside to that is that also starts to bring into your game a lot of debt. And so, I did a couple of projects down in Panama City Beach where I built out, one project had 20 something houses, one of them had 12 houses. And so, this was going on and these things take a couple of years. And so, we’re sort of racking up debt and we’re bumping along and things are okay. And then, one day we woke up, and you’ll probably remember this, Alex, but you woke up and like simultaneously, Hurricane Katrina hit New Orleans and then fricking Lehman Brothers collapsed. And then the whole world just like went to shit. Like just literally overnight, it just absolutely stopped. Everything collapsed. The stock market plummeted. They had the- I don’t know if you remember the Wall Street dollar menu when you could buy like Bank of America for a buck, Citi Group was a buck. Like everything just collapsed, and it was absolutely terrifying. And so, at this point, I had brought on- I had gotten pretty ambitious and I had kind of bought out a guy locally, a fellow named Brad Bailey, who had heavy equipment. And so, at this point, we had bulldozers and we had excavators and we had dump trucks and I had a partner. And we kept hustling, but it was really hard because really large companies that had lots of employees were coming down and bidding on little, tiny jobs that normally a six or eight employee company would do, just so they could break even just to make their payroll. And so, we were getting crushed, and I came home and I had one of those little dinner table meetings with my wife where I said- she wasn’t working at the time, and I said, “I think you need to go back to work. I think you need to go get a dental hygiene job. We honestly need some money coming in to help sort of keep things afloat while we try to figure out where this world is going right now.” And so she got on Craigslist. I don’t know if you remember Craigslist. That was like a big thing back then today. I guess it’s still around, I don’t know. But she got on Craigslist.
Alex Bridgeman: It’s still around. There’s actually every so often, there’s businesses for sale too on Craigslist. It’s kind of wild.
Tony Layne: No way, you could buy a business off Craigslist still?
Alex Bridgeman: Oh yeah, go to the for-sale section, select business, and then sort price high to low. And every so often there’s a business that pops up, usually for sale by the owner too.
Tony Layne: Oh my gosh, Alex, I wish you hadn’t told me that because now I’m going to go home and spend the evening laying in bed looking through all the Craigslist businesses for sale, getting caught up on what I’ve been missing. So, she finds a job on Craigslist that is doing dental hygiene in nursing homes, which is like never heard of that. So, she goes and applies. And like I told you, this woman’s crazy. She is so ambitious. She’s so courageous and just fearless, just absolutely fearless. So, she comes home two weeks in, and she says, “We can do this ourselves.” And I’m like, “Honey, first off, we just need a W2. We don’t need like another investment to make right now. Just go get a paycheck, please, and bring a paycheck home so we can keep our heads above water. And second, they’re going to sue us if we just leave and go start your own business like competing with them.” And she couldn’t have cared less. Like none of that worked. And she looked at me and she said, “Look, I know you’re scared. I know I’m scared too, but that doesn’t matter. Like it’s not an excuse for us to just sideline ourselves. We’re going to do this and you’re going to help me and we’re going to make it work.” And so, while she was employed at this company, I would go to nursing homes that she didn’t service, that technically this company wasn’t servicing. And I would take literally a suit in the extra cab of my pickup. I’d go to my construction jobs. I’d be in the ditch with a shovel because at this point, I was like one of the crew guys instead of just an owner because this business was struggling and I know how to work hard. So, I’d stop at a rest area and take a napkin bath, put on a suit, and I’d go into these nursing homes and sit down with the administrator. And I said, “Hey, I don’t think you have any dental care for these folks available.” And they didn’t. None of them ever did. And I said, “Well, here’s what I’ll tell you I’ll do. My dad is a dentist and my wife is a hygienist. I don’t know how we’ll make any money at this, but if you’ll let us, we’ll come in and we’ll provide dental care to everybody in this facility. And my dad will do it for free and my wife will do it for free until we figure out a way to make a business out of this.” And I’d go to 6 or 8 or 10 different nursing homes and just make this pitch until I had the first one signed up. And I remember it well, it was called the Manor at Bluewater Bay in Niceville, which is a couple of hours away from us. They agreed to take a stab at it. And so sold this idea on my dad that we would- be a good dad and just go and work for free for us while we figure this out. And he agreed; he was kind of retiring. So just conveniently kind of at this turn in our life, my wife and I had been trying to have kids at this point for quite some time. And the doctors had basically said, listen, this isn’t going to happen. Two rounds of in vitro fertilization, no kids, pretty well need to just, reading the tea leaves here, but this isn’t going to happen for you guys. So, we had decided to go an adoption route. And my son was born two days before the first day of clinical of our health care company. And so, my wife left the hospital early with my dad. They went and provided clinical services at the Manor at Bluewater Bay. The hospital that my son was born at was not too far away. I left with the baby by myself from this hospital, swung by the nursing home and picked my wife up on our way home to take this child home. And so, we say that the birth of our real success in venture and business was at the birth of our son because it very much was. So, we go back home, we’ve got a nursing home to service, and we set up shop in an extra bedroom at the house, and all evening, we would take turns, my wife and I, we would dial families and ask them if they wanted to sign up for our dental program. Literally there’s a baby next door screaming, and somebody needs to change a diaper, somebody needs to feed a baby, but meanwhile, we’re trying to build this business. And we’re also trying to not fail at this construction company in a world crisis and all of this. And so, the business was not going very well initially. We started providing care, and we were not getting paid because in the state of Florida and virtually every state, adult dental is not covered by Medicaid. That’s why you recently saw one of the things that Democrats had in Biden’s big Build Back Better was they were expanding dentistry to seniors. It didn’t pass, but that was because there is no program to provide dentistry for seniors. And we didn’t know that when we went and told these homes we’d provide all this care at no cost. We had no way of getting reimbursed. And we were doing some studies online and we came across a study by this think tank out of Wharton. There was a Wharton professor in- Where is that? Pennsylvania, right?
Alex Bridgeman: Yeah, Penn.
Tony Layne: Yeah, at Penn. And a guy named John Whitman, in fact, I think he’s still a professor there today, he had this think tank called the Trecs Institute, T R E C S, and it stands for Targeting Revolutionary Elder Care Solutions. And the state of Florida had hired the Trecs Institute to help it figure out how do you solve the oral health epidemic in nursing homes. And in the very last page of his study – so I was just online, like filtering information, and I came across this study – and in the very last page, he says something along the lines of that there’s some federal laws that would support a dental insurance that the residents have a right to buy with the funds that they get from the government and that theoretically you could solve the oral health epidemic with this insurance model. I didn’t know what it was.
Alex Bridgeman: So, Medicare wouldn’t pay for the direct dental costs or that service, but they would pay for insurance premium is what you mean?
Tony Layne: That’s correct. There was this rule at the federal level that said while we won’t pay for the care, we’ll pay for an insurance premium if you have insurance for the item. And so, he knew an insurance company that was interested in underwriting a product like this. I flew to Kentucky, it was my first introduction to John Cornet and Daryl Wells in Louisville. Great guys. They took a gamble on Cassi and I. Absolutely, we consider them heroes of our lives today still because of the gamble that they took. We were just two kids with an idea. We didn’t have anything.
Alex Bridgeman: How old were you at that point?
Tony Layne: 28; 28, 29. And so they created an insurance product and we went back to the nursing homes and we sold this insurance product to the residents. And then we submitted this stuff to the state of Florida, and we said, okay, they should get funding now. Well, they didn’t actually even know what to do with it. And so, we had to go sit down; at the time, the Department of Children and Families was headed by a lady named Carrie Sheffield. I literally sat down with Carrie Sheffield, myself. I literally created in Excel the form that you use to submit this stuff to a caseworker to get it adjusted. And for a number of years, that same form was the form you submitted anywhere in the state of Florida if you submitted for this stuff. And we figured it out and we kind of got the wheels moving. And it was at this moment that my prophecy came true, and the group that she had originally been hired by filed their lawsuit against us. And they sued her and they said, “Hey, you stole our idea.” And so, if you can imagine, we’ve never been sued, we’ve never- We’re terrified. Like we literally- I remember like it came across the factory scene at my dad’s dental office, like my mom showed up at church with it, it was just so dramatic. Just this terrifying moment of, oh my God, we are going to get crushed by the big guy. And my wife, I was ready to just shut the business down, like, oh shit, shut it down, we’re getting sued. My wife is like, “No, like we’re going to fight this lawsuit. There’s nothing- this is America, you should be able to chase your dreams and we’re going to fight this.” And so, we settled that lawsuit right away. It was like a $50,000 check and we settled that lawsuit. So, it was another moment of like her courage that sort of carried us through the challenge we were having. So, we get through that piece and things literally just start clicking. This business starts getting funding on every policy, and it’s a fully recurring level of funding. Every single person that buys gets their premium funded to them every single month. So, they make their premium payment. And we’ve got this capitation arrangement with this insurance company out of Kentucky. Every single month, we start getting paid on everybody that’s enrolled to participate in our program and it just, it starts snowballing. And we realize, okay, we’re going to need to scale up here. We need to get a marketer. And we had initially agreed for this insurance company to do our sales for us. And we thought, well, we want to do our own sales. We want to kind of move vertical here. Let’s get vertically integrated across this space. And so, we decided to set up our own agency, and this is the worst we’ve ever been sort of extorted or treated bad in business. We brought on a guy, a local guy, to do our marketing and he sort of scammed us and said, hey, he had verified it with the state of Florida that if you’re not a licensed agent, you couldn’t own a majority of an insurance agency. And so, foolishly, we didn’t hire an attorney to verify that, which actually wasn’t true. And so, we gave this guy 50% equity in this agency that we created because- for free, by the way, he put nothing in this business, for the fact that, hey, legally we have to, or so we thought. It wasn’t all that long later, like 8 or 10 months later, we actually came across the regulation and realized that he had kind of duped us and we fired him. And of course, then he sued us and said, “Hey, I own half of all this business. And I invested nothing, but I got half of it.” And so, there was this big lawsuit that spun up over us being kind of wrongfully dealt with by this guy. And it continued on, you’ll see as we go through this story, like it continued on for eight more years of he had like a contingency firm where he didn’t have to spend any money on legal fees, and the whole time, we’re having to fund a lawyer to try to get out of this mess with this guy. Absolutely the most unscrupulous character I’ve ever dealt with. And it was a huge lesson for us in like got to have your guard up as you go into business with people to make sure you team up with people that are of good character. And so that was like a scary moment that happened. So, we did the first lawsuit with the group and got out of that and triumphed over that, another moment where Cassi said we’re going to fight this and we’re going to win. And the business just at this point, it really started going. So, we’re building out the state of Alabama, we’re building out the state of Louisiana, we’re building out the state of Iowa. The only reason we went to Iowa was because my brother went to dental school there and he had a dental buddy who we could hire to be our dentist. And so, we just- I’d like to sound like we were like these business masterminds, but we weren’t. We were just absolutely hustling. Anywhere we thought we could grow our business, we were just absolutely pushing it, bumped into the Carolinas. At some point along the way, and this is a wild curve ball, we get some visitors from the state agency in Florida. It’s called AHCA. I’m sure you’ve heard of AHCA, which is the Agency for Healthcare Administration.
Alex Bridgeman: Oh no, I’ve never heard of that.
Tony Layne: Think of them as like the police force over Medicaid. I’m like out on a sales call and I get a call from the office, and they say, “Hey, these investigators just showed up.” And I’m like, “Oh shit, what? For what?” And they said, “No particular reason, but they just left their card and they left.” Two days later, I’m like riding down the road in Panama City Beach and I get a phone call from this orthodontist, and he says, “Hey, my name is so-and-so. I know that AHCA investigators were in your office two days ago. I know what they found, and I can keep you out of this trouble. Should we meet?” And I’m like, “Shit yeah, yeah, we should meet. Where do you want to sit down at?” So, we meet at a Cracker Barrel in Tallahassee, and this guy says, “Hey, my wife is senior legal counsel for ACHA, and she showed me what they found in your office,” which was we actually did have a flaw in our legal structure. Like one of the LLCs I owned I couldn’t, my dad had to own it as a licensed dentist. So, we had a problem. And he says, “Hey, we can make this go away if you’ll pay us $5,000 a month. We’ll just get rid of the file. Or we’re just going to let the hammer drop. And you guys are going to have to go deal with this problem that you’ve created.” And I’m like, well, it’s not really a problem. Like it is a dentist owned, like he is a licensed dentist. It’s just I like created that LLC in like five minutes with a credit card myself. It’s not like it’s egregious here. But we got extorted by this guy. And so, FDLE got involved and for months, my cell phone was tapped. And every time this guy would call, FDLE was like listening in on my cell phone. And every time they would arrange meetings for me to meet with him, I’d have to meet them behind Sam’s Club and put on like this giant Tommy Hilfiger shirt with a camera in the button and like a key fob that had like a recorder in it. And I’d go sit down with this guy, and he would extort us for money in exchange for like scuttling some problem the state had found. And this stuff was like extremely stressful. You’re in the middle of trying to grow a business. You’re hiring employees. You’re fielding ridiculous lawsuits from people that sort of misled you. You’ve got this guy out of the state who’s throwing this curve ball of, hey, I’m going to like extort you for money or let this little flaw you’ve got take you down. And finally, they arrest this guy, like when I would meet with him at Cracker Barrel, there were FDLE officers undercover like stationed throughout the restaurant. And finally, they arrest him one day while I’m eating with him, like right there in front of me, just the most wild, bizarre. I doubt anybody on this podcast has ever talked to you about being extorted by a state while they’re building their company. And so, finally, the state of Florida comes to us and they’re like apologizing. They’re like, “We’re sorry. That’s not how that’s supposed to go. Go ahead and clean up your legal structure. You’re fine. Just don’t sue us” is basically sort of what the plea was. So, we were able to get everything fixed. And so, I share all this to say like it can be really scary and it can be really challenging to get through the crap that comes up when you’re doing a business, and you can do things not perfect and not even know you’re doing something not perfect, and it can create all kinds of headwinds. And it just takes a certain amount of dog in you, like just some grit to be able to power through stuff like that and not let it completely derail you where you say, you know what, let me just go back to Chuck E. Cheese and get a salary. My mom was right.
Alex Bridgeman: And you’re raising a young kid through all this, too.
Tony Layne: Yes, at this point, we had one baby at home. That’s right. So, we’re rocking along. So, we sort of get through what I call earning our stripes. We got through all of what was probably the most stressful things we ever dealt with. And we had this season of several years where the business just grew. We didn’t have any legal problems with the business. We didn’t have any- we had no debt in the company. And all of a sudden, I remember the first day we pulled a P&L and we really weren’t even very organized. Like we were just looking at our bank account and it was just growing, and we weren’t even- we didn’t even really have a P&L at most points. And we finally produced a P&L, and I remember seeing it, and we had made $70,000 that month. And the next month we made like 80, and the next month, we made like 120, and the next month, we’re making like 200 grand. Debt free out of this thing, and it’s just growing and growing and growing. And so, we start thinking about what’s the goal here? What are we doing with this business? If we’re going to keep growing, we probably need to start doing some acquisitions. And so, we contact this group out of Chicago, and this was our very first acquisition, and it’s a guy named Frank Camarda. He had a company up there called SeniorDent. Frank was an awesome guy, actually just, he’s an interesting character, a really different personality, but also this just super nice grandpa guy. And so, we merged with Frank’s company, and 90 days later, Frank knew of another competitor. And so, we went and bought that too. And so, we spent, oh, I don’t know, we probably spent $10 or $12 million buying companies in a stretch of three months. And we had done none of that to date. So, this was very new. So all of a sudden, we’ve now got a board, and we’ve never done this before. So, we go to our very first board meeting and one of the board members actually had season tickets to the Kansas City Chiefs. And the deal was after the board meeting, the next day, we’d all get up and we’d go to the Kansas City Chiefs game together. And at this board meeting, Frank and sort of his panel of equity holders said, “Hey, let’s, talk about distributions.” And Cassi and I are like, “What do you mean distributions? Like we’ve never distributed. We’re each on salary for 40 grand a year still. Like we don’t even have a nice home. What do you mean distributions? We don’t want to take any money out of this company. We’re in this for the real thing. Like we want to build an awesome company. We don’t want distributions.” And he’s like, “Hold on, I have to have 80% of the earnings come out every single month. I’m 70 something years old. I don’t want to leave any money in this company.” And we reached a massive impasse in our very first board meeting to the point that we literally said, “Hey guys, if this is how this is going, you really just need to take your ball and go home. We need to undo all of this that we’ve done.” And you can imagine that’s like easy to say and not easy to do. And so, over the course of the next six months, we did a tax-free spin-off where we took their – whatever, I’m using generic numbers here – but call it $5 or $6 million block of business, and we literally spun it back out of our company, and we kept the second one that we bought. And so, we ended up still larger but having gone through a real learning curve.
Alex Bridgeman: Yeah, no kidding. That sounds expensive. And incredibly time-consuming.
Tony Layne: Yes, both, expensive, time consuming, distracting, disheartening. You have all these goals and visions when you go into an acquisition or a transaction, you’re modeling out all this success that you’re going to have. And at this point, we’re actually starting to develop some business savvy just organically. We’re starting to get pretty darn good at financial modeling. We’re starting to get pretty good at designing a good hierarchy of management beneath us. At this point, we’ve probably got 200 employees in our downline. And so, we’re pretty robust at this point anyway. And we’re starting to really get our wings as far as businesspeople, both Cassi and myself. And at the same time, it would be disingenuous if I didn’t say like it’s starting to tax our relationship. Like you’re going to the office every day, you’ve been through some really stressful things creating this business, and you’re with each other all day and then you’re with each other all night. It’s very, very, very hard to shut the business off and turn the family on and delineate between the two. And there was just an awful lot of sort of bleed through between those two things. And it was just really starting to tax us, and I think she would say the same. And so, we get through this piece, and we end up with Resident Dental, which was the second one that we had bought. And it came, actually, with a really robust infrastructure. They had a really good software. They had a CFO. They had a CEO. Like we had none of these things. We still had QuickBooks, which we weren’t running well. They had a really robust built-out platform within Salesforce that they had customized themselves. It’s still today how we run the business. It was that good. Even after the private equity firm hiring outside firms to really scrub it and figure out what you should do, we’re still using that same platform. So, we picked up out of that a lot of really good sophistication in business. We doubled the company from the time we bought them. So, if you take Resident Dental and Senior Dental Care, which is our brand, and you combine those two, in the course of two years, two and a half, we doubled that company again. And it was already a pretty good size. It was probably already 20 or 30 million bucks. And we doubled it in just a couple of years again, and that started bringing some attention from private equity. But in the middle of this, I was out in Kansas City one day, so another curve ball, out in Kansas City one day and my wife calls and she says hey, this being a small town, a total HIPAA violation, but like somebody from the health department called her and said, “Hey, a lady showed up. She’s about to have a baby. She’s not from the states. And she doesn’t know what to do with it, and she doesn’t want to keep it. Do you want it?” And we’re like “When she’s going to have the kid? They’re like two weeks. And so my wife calls me and she shares this with me and she says, “Oh, and I said yes.” And I was like, “You said yes before you called me?” She’s like, “Yeah, I’ve already agreed.” I was super thrilled by it, super happy about it. So, in the middle of this, Lynnix [RD1] came into our family. So, we now have Lynnix and Liam, those names are important because they kind of play into a name later in this story. So, Lynnix comes into the family, which starts to tug at Cassi a little bit. She, at this point, is carrying a little bit of mom guilt over how hard she worked while Liam was an infant, and she’s got a little bit of internal pressure inside of her not to repeat that. She sort of has this desire to go home and be mom rather than be mom who also runs a very large business. And literally by now we’ve probably got 350 employees. And so, it’s this juggernaut. I’m involved, but Cassi’s absolutely, the entire stretch of this time, was like the systems person, like the process, the brains for how you make the business run. And from the time Cassi steps out to go be a mom, even through today, the business has never run as high a contribution margin as the time when she was the one running it. And so over time, I’ve really gained a tremendous amount of respect for her, actually her managerial ability from just a process and business operations perspective. Me, I’m a transactionalist. I want to buy the next thing, I want to grow the next state. She is much more into the make a business run well. So, we go a little while, and Cassi finally wants to step out. And somewhere in the middle of this, I started getting a desire to, you remember earlier, my real goal was to have my own farm. And so, I started shopping for a farm to buy, and just on a whim, I called this really large company and I said, “Hey, you guys have this-” They had bought like 500,000 acres. And I went and met with him, and I said, “You’ve got this 1800 acres over here on a river. It’s just not far from where I live. Would you sell us that 1800 acres just outside of Tallahassee here in Florida?” And they agreed to sell it to us. It turned out to be just like an unbelievable deal where the trees that were on this, if we were to cut the trees, would nearly overpay the property, and they had just acquired it. They really didn’t know it. And so, we managed to, in the middle of this, go out and acquire this large farm that was the initial foundation for what is now called Lynniam Farms, which is Lynnix and Liam combined, which is our family office, which is kind of how you and I met. But that was sort of the birth of Lynniam Farms. So back to sort of where we’re at, Cassi is starting to feel a tug to leave the business and go be mom. And at the same time, we get news that Citizen’s, our largest competitor in the space, has acquired Trident, which is our kind of second largest competitor, and they’ve also acquired On Health, which was like our third largest competitor. And so all of a sudden, the competition had like consolidated against us, and we were the outliers, and all of these folks, the backing of them is like hundreds of millions of dollars. And the backing of ours is Cassi and I. At this point we own this business. It’s a hundred percent debt-free, it’s throwing off a ton of cash every single month. But we don’t feel capable of like taking on this juggernaut that we now face. And so, they reached out to us, and they said, “Hey, we’ll buy you guys.” And they put a number in front of us that was like, frankly, more than we ever- it was just more than we ever dreamed possible for ourselves. Just in the sake of confidentiality, I’ll steer clear of it, but it was tens of millions of dollars against something that you owe nothing on. So, it was going to be extremely life changing. But at the same time, I had been being chased by a guy out of San Francisco with a private equity firm, a guy named John Caselli with Serent Capital, and had basically almost struck the deal with Citizen’s. Their offer was so strong, I thought we should just go ahead and do this deal. Called John Caselli, he was actually on vacation somewhere up in Manhattan or something. And he said, “If you’re willing, I’ll be there tomorrow if you’ll pick me up at the airport.” And so, I pick him up at the airport the next day. We sit down in the office and my wife comes, and she’s really unhappy about him being there. She really doesn’t want to sell the business. She’s really kind of caving to pressure from me feeling like we’re kind of outgunned. So, this is sort of one of those moments where her courage wasn’t prevailing and maybe my weakness was, or my calculus that, hey, we’ve got too many eggs in this one basket that now has like the whole enemy against it, this giant juggernaut against us.
Alex Bridgeman: Did that feel pretty scary having a huge juggernaut facing off against you? Like in terms of the fear you had at various earlier stages with being sued or other competitors, like where on the scale did this point feel for you?
Tony Layne: So, the stuff before it was so much scarier because we could sort of lose everything in those early things. If you were somehow violating healthcare regs, like that’s really scary shit, and if you get sued early in a deal and it just takes the wind out from under you or somebody prevails and they win some stupid lawsuit saying they own half of your business because you hired them and they kind of tricked you into this, that can really be disruptive. At this point, we’re very financially conservative. This business has been making millions of dollars a year for 10 years for Cassi and I. And so, we still had basically every dollar we had ever made socked away, and it was either in land or it was in some diversified stock portfolio or something. And so, this was a little less scary because if the business was to fail the next day, we were still very strong financially and we would just go do something else. So, I would say it was scary in the sense that we could lose the value of what we had created. It was not as scary in the sense that it couldn’t put us back on to ground zero. But we had checked those boxes and we had been so principled in not blowing what we had made, that we had a really, really robust nest egg to fall back on. But all that being said, it was enough to give us momentum to entertain talks. And so, John Caselli comes in and Cassi’s not happy with it. She’s not happy he’s there. She’s not even really nice to him particularly, the meeting did not go well. And just like what saved this deal is that he went to get an Uber from our town back to the- he didn’t even ask for a ride back. He was going to get an Uber to go back to the airport because the meeting was just like full of tension. It just didn’t flow well. Well, there was no Uber. There is no Uber in our little town. And so he had to come back inside and he’s like, “Hey, can you give me a ride to the airport?” which is an hour away. And we’re like, “Sure, hop in the truck.” That saved the deal because the first thing that happened, like my wife had him like this little captive audience. She turned around to him in the back seat, and her first question, I’ll never forget it, she said, “So who’d you vote for?” Totally, totally put him on the spot, straight to the point. And what she was really asking is like cut the shit, who are you really? Like don’t come in here as like California private equity into our little, small town, who are you for real? And he started talking about working in his family business. He started talking about him as like a real person. And she got to see that, and it totally changed her perception toward doing business with him. So immediately, he circled right back with his principal, which is a guy named David Kennedy. David met us in Tallahassee. This is kind of funny because we haven’t done a whole lot of traveling at this point in our lives, and so we don’t know all the best restaurants and that sort of thing. So, we make a reservation at Outback, Outback Steakhouse to take this like mega star from this private equity firm in San Francisco. And we meet at Outback and he tells us, he’s like, “This is a good restaurant. It’s a good restaurant.” And I remember telling him later, you were absolutely in selling mode at that point. So, we go back that next day, we go back to the office and literally with just a whiteboard and that principal and John Caselli and Cassi and myself shut into a conference room for the day, we did the deal. We spent time talking about what gave us anxiety with the consolidation of our competitors, how we felt outgunned. We talked about what it would require to overcome that. We talked about our growth and the durability of our revenues. We talked about what we would do with this business if we had more money. And after all of that, he stood up and he walked up to the board and he scratched out a deal where he would buy 60% of the business, and we would keep 40% that we would roll that equity over. Cassi and I looked at ourselves and we said- it was more money than we’d ever thought possible for ourselves at that point, and we said, “Let’s do it.” And we shook hands that day. We didn’t even like go away as a couple and talk about it or ponder on it really. We just said, “This feels right. Let’s go.” So, we went through the process of a private equity investment, which is like a colonoscopy on your business. It’s very painful and embarrassing and they’re doing all this digging, and got the deal closed. And Cassi stepped out and went to be mom, went to scratch that itch that she had of staying home full time as a mom, which when you interview her, you’ll see she’s grateful she did that, but that’s not who- she wasn’t wired to just sit at home. And so, it took work for her to suppress her ambitions enough to devote that time, but I think she’s grateful that she did. I stayed in as CEO of the company for another 90 days. And the plan was that I would step out and the number two behind me, a guy named Scott [inaudible [RD2] 53:24] would get promoted and he would become the CEO. I also had the desire to work a little less at that point. And Scott spent I think it was six- I think it was nine months that Scott was in there before it became apparent that he and this private equity firm weren’t getting along. He wasn’t the leader that they wanted and they weren’t the partner that he wanted. And so, they had a little bit of an impasse, and the PE firm came back to me and said, “Hey, will you go back in as CEO?” Which was exactly what I didn’t want to do. And I told him, I said, “If I was just going to have to stay in and run this thing, hell, I wouldn’t have sold it to you. The whole goal was to get some freedom here.” But I don’t regret it. I went back in as CEO. At this point, that transaction had transformed Cassi and I’s lives in all the ways that you think it might. You put tens of millions of dollars behind you, you all of a sudden have so much more confidence and comfort around and just ability to make decisions that you think are fun, that you think are just good for your career, that you think are just good ways to learn for your life. And I thought that going back in as CEO under a private equity firm was probably good education for me. And it wasn’t about money. I didn’t even ask for a pay raise. I just kept the same salary I’d had for a good number of years. I didn’t even ask to participate in the MIUs. I just simply went back to work. And that was the hardest I probably had worked in a long time. I was in Kansas City every week, all week long, while my family was in Florida. And I ran that business for the PE firm for a full year before I finally went back to them and I said, “Listen, guys, I don’t want to work this hard. This is stable now. Let’s go find a different CEO.” And they did a very limited search; they actually had a guy that they thought would be perfect and they were exactly right. He came in as CEO about the time COVID hit. I stepped into a role doing what I like. I told you I’m a transactionalist. They wanted to go on a buying spree, and they put me as an active executive chairman of the board, but as an active executive chairman, you’re a W2 executive in the company. And so, all I do is M&A. And so last year, we acquired six companies, so one every two months, and that pace was kind of quickening.
Alex Bridgeman: Are these still mobile dentists or are you starting to acquire other related businesses, too?
Tony Layne: Yeah. So, the new CEO really- well, just before he came on, I had broadened the horizon some and I had acquired a company called Senior Vision Services, which was the largest optometry provider in the nation to nursing homes. So, we had already expanded into optometry three months before I brought him on. And so, then we’ve kind of run with that. We built out optometry in a pretty big way. So dental, optometry, and we’ve now branched out pretty heavily into audiology, and through some partnerships, into podiatry. And so, the spectrum of services has quadrupled largely in the last two years. And so last year we did six acquisitions, and that pace was quickening. And so, this year, we’ve already got four deals under LOI in Q1. And I think probably it slows down after that. I feel a little bit today I’m a little bit hostage to the company in the sense that I kind of want to go do other stuff, but I’m also really building my own net worth because we rolled so much equity that every time I buy one of these, I own a pretty good chunk of it myself. And so, I’ve stuck with it. Outside of this, and sort of of particular interest to you and to your listeners, at the beginning of last year, we set up a family office. And we call that- we’ve just continued with the name Lynniam Farms, which spawned from our initial 1800 acres that we bought.
Alex Bridgeman: Yeah, I love that name. It has a good sound to it.
Tony Layne: Well, it doesn’t fit in, which is great actually because it gets a lot of attention. Everybody’s so-and-so capital, something capital, something funding or whatever, and we’re over here, Lynniam Farms. They’re like what the hell? Why are you here? But it’s also true to who we are. At this point, in the state of Florida, we own a collection of like we’re up to 7,500 acres of various farms that we own just outright that are what we call, they’re like our hedge money. You can’t screw them up. If we take risky bets that don’t work out, the hedge money is still just kind of ticking along, land is going up in value. The trees are on them that are growing, or crops or whatever. And so, it’s a good way to hedge against pretty risky activity, which is what we are doing otherwise. And so, in the past year, Lynniam Farms has spent $2 million on various searchers, both self-funded and traditional. And then it funded a series of- it invested in two accelerator programs, search funder accelerator programs. One of them was A111. One of them was Broadtree. You’ve probably heard of both of those. And then we also funded two accelerator program acquisitions. We did one of the acquisitions in Broadtree, and we’ve done an acquisition within A111 now as well. And so, third, sort of third of where we’re at today, and I’ll not spoil it, but Cassi has decided she wants to go run a company. Again, I’m highly encouraging of that because she’s super good at it. And she closed on her own business two weeks ago today in an e-commerce space. And she hasn’t made a formal announcement, so we won’t talk about the name of the company, but we’re super excited for her and happy for her to be able to dive back in and hang up the mom apron and get back into the business world.
Alex Bridgeman: That’s pretty exciting. Congrats to her. That’s always a big step. You talked about investing in self-funded searchers, traditional searchers. Is that a place that you want to spend more time in over the next five years or so?
Tony Layne: Yes, absolutely. Like we think- well, first off, it’s just fun to be in a community of entrepreneurs. When you were at the SMBash with us the other day, it’s just such a room full of energy and excitement. And I’m 40 now, and I’ve done quite a bit of acquisitions. I’ve done a good bit of entrepreneur activity. And so, you can catch yourself feeling that sparkle dull a little. And so, I feel like staying in that space helps me keep that spark alive. It also helps fund it for those that still really have it. It’s an energy that I enjoy. I think the returns are remarkable. And I feel like I’ve got something to offer for some of them. I think there’ll be some really cool board opportunities to sit on boards and provide advice and mentoring to some of these folks as they strike off on their entrepreneurial endeavor. So yeah, I think we’ll stay in it. I think we’ll also continue to do independent sponsor deals. I think Lynneam Farms will also continue to acquire wholesale, just wholly own some of its investments. One Cassi recently bought, we bought a hundred percent of that deal. I expect it to be all the way across the spectrum for us for a good number of years going forward.
Alex Bridgeman: That’s exciting. Yeah, definitely a good place to be surrounded by that entrepreneurial energy. Absolutely. Moving to closing questions. What college class would you teach if it could be about any subject you wanted?
Tony Layne: So, I actually really like this question. That’s a great one. I appreciate you asking it. For me, it would be risk before responsibility. I would have a class named that that tries to drill into the head of these kids that when they get out of college and they pop out a couple of kids and they get a job and an SUV and a house and baseball practice and all these other things that come along with responsibility that you build around your life, you can’t take risk anymore. Like you’re toast. You’re stuck in this rut that has immense gravity to it. And so, the time to take risks is the time when I took risks. I was in college and I was doing stupid stuff like walking into a bank and saying, “Hey, hand me your foreclosures.” It’s a dumb idea. But it worked. I made good money doing that. And I took risks at a very young age before I had responsibility, an age where frankly, if the risks had gone sour, I really wouldn’t have cared. What are they going to do? Come take my- I had a single cab Dodge Dakota with a dent in the door. So, my class would be risk before responsibility.
Alex Bridgeman: I like that one. What’s a strongly held belief you’ve changed your mind on?
Tony Layne: Probably that all stations in life are equal. We’re raised with this mantra of you can be anything you want, if you can dream, you can achieve. But the reality is some people deserve a little better ladder than others. I’ll give you an example. You take Mitt Romney who was born son of a governor who had a $190 million net worth. Who do you think is more likely to become a governor himself and lead Bain Capital? Mitt Romney who’s born into that situation, or some guy born into a mobile home park in Southern Alabama? I’m going to bet on Romney. And so, this whole idea that, like this lateral application of if it just takes work and you can get there, sort of. Yes, you can. But we have to acknowledge that some people’s station in life, where they’re born into, just like the pure lottery of life, has immense gravity against success. And these people, we should be building ladders as proponents of success for those folks. So that has evolved as time’s gone on for me.
Alex Bridgeman: Yeah, that’s a big one. It’s really surprising; it shouldn’t be surprising. But it’s incredible how many successful founders come from either well-off families or even wealthy families with lots of connections. And it’s definitely a pattern that you notice after a while. What’s the best business you’ve ever seen?
Tony Layne: Well, I think the best or the cliche answer, obviously, the best business that I’ve ever seen and probably will exist in our lifetimes is Apple. But I think a better question for me is what’s the best run business that I’ve ever seen. And I would say for that, it’s Chick-fil-A because I think I just honor a guy and an operation that can stay true to its core values even when they don’t align with profitability. Like to give up an entire one-seventh of your week, a week, by the way, when everybody’s at home and off of work when your sales would be pretty freaking dominant, and to do so and dominate the space in a really grimy, hard space to run a good business – restaurants are hard – and to keep people happy and to keep people positive and to have the growth that they’ve had, staying true to those core values, I think Chick-fil-A is the best run company I’ve ever seen.
Alex Bridgeman: Yeah, that’s an answer a few folks have given and it’s never a dull answer.
Tony Layne: I thought I was going to be original.
Alex Bridgeman: No, no points for that today. But yeah, every time I’ve gone to a Chick-fil-A there’s lines, and of course, in Oregon, there’s always lines. But here in Nebraska, I think they’re a little more normalized, but everyone’s always super friendly. It’s always fast. Quality is the same everywhere you go. And yeah, the business they run is astonishing. There’s quite a- we’re having another guest on here pretty soon who has connections to Chick-fil-A and has learned a lot from them. So, we’re going to- there’s a portion of our episode that we’re going to talk specifically about Chick-fil-A, so I’m excited for that.
Tony Layne: Yeah, I look forward to that as well. I’ll listen for that one.
Alex Bridgeman: Yeah, that’ll be fantastic. Well, thank you so much for coming on the podcast. It’s been really, really fun to have you and hear your story and hear all the different near-death experiences that you’ve encountered. And it’s exciting to see that you’ve made it through and have had some pretty amazing success. So, thank you for sharing a little bit.
Tony Layne: Yeah, you’re welcome. Absolutely. It’s a pleasure to be here, and thank you to you for creating spaces like this, opportunities like this, for people like me to come and share the story because it’s fun to do, and it’s fun to listen to others and be inspired by that. So, I would say thank you back to you.
Alex Bridgeman: Absolutely. And we will have to have Cassi on here pretty soon, too. I’m excited to have her, too.
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