- Some entrepreneurs are geeking out over unglamorous businesses like self-storage and lawn care.
- Many want to own a business but don’t want to compete in the high-stakes gamble of Silicon Valley.
- Known as “sweaty startups,” local services provide a low-risk, low-investment business venture.
- See more stories on Insider’s business page.
When Mike Botkin needed money to acquire a lawn-care business in his hometown of Orlando, Florida, he didn’t go to a bank or an investment firm. He went on Twitter.
The 31-year-old sought counsel from Nick Huber, a self-storage entrepreneur who dispenses advice for profiting off “unglamorous” businesses via the @sweatystartup handle.
“To me, this business is labor and fuel,” Botkin told Insider. “If I can control labor and I can be efficient with fuel, I’m going to make money.”
In a series of tweets, Botkin — who at the time was working as the chief operation officer of a commercial real-estate firm — laid out the pros of buying the 45-year-old company: It had a loyal customer base, a trained staff, and a growing local housing market. He also detailed his plan: Build a website, introduce door-to-door and social media marketing, and streamline operations with software.
—Mike Botkin (@MikeBotkin_) September 16, 2020
Within hours of tweeting his proposal, investment offers began trickling in. The six figures he landed from Opendoor cofounder JD Ross may not have made headlines in Silicon Valley media, but it was enough to help Botkin afford the $650,000 price tag on his dream of owning a business.
“Mike showed on Twitter that he understood the key drivers of the business, and also the micro details of operations,” Ross told Insider. “A partner who can go from operating at ground level details to bird’s-eye view without getting a nosebleed is someone I want to bet on.”
Botkin, Huber, and Ross all connected in a corner of the Twitterverse popularized by Huber, who joined in 2018 and surged this year to more than 113,000 followers. This is the land of the “sweaty startup” — businesses that typically involve manual labor and are not inherently reliant on technology and venture capital to scale.
The sweaty-startup movement reflects the growing awareness among young entrepreneurs that coming up with the next billion-dollar tech company isn’t a reality for most. For many, a six-figure income is plenty, and the best way for them to earn that is by starting a service business or buying one of the 4 million boomer-owned US businesses poised to turn over to a new generation by 2034.
In the sweaty-verse, Silicon Valley savvy is spreading through the accessible, come-all platforms of Reddit and Twitter and democratizing business ownership, as long as you don’t mind getting your hands dirty.
—Nick Huber (@sweatystartup) April 14, 2021
‘I feel really passionately about unsexy, low risk, entrepreneurship’
Botkin’s story is typical of sweaty-startup dreams: Purchase an existing business complete with existing customers and trained staff, and improve the way it operates to increase profits.
Since leaving his corporate job to run B&B Landscaping full time, Botkin has been executing his plan to streamline operations, invest in more efficient equipment, and market to a growing customer base. By February, his second month in business, he’d boosted monthly sales by 14%, documents viewed by Insider showed.
While this route does require investment and business know-how, it’s a much less risky alternative to building everything from scratch. That’s why entrepreneurs like Botkin are looking to invest. According to the online business brokerage BizBuySell, 2021 sale prices for existing businesses such as gas stations, construction and home improvement businesses, liquor stores, manufacturers, and distributors were up 30% over last year.
But some do start from scratch, including Huber. He said that when he graduated from Cornell, in 2012, his friends were all trying to take their business ideas to Silicon Valley or raise venture capital. Huber and his business partner, Dan Hagberg, had another idea, one that posed less risk and less competition.
“We just bought a $1,500 rusty cargo van on Craigslist and started picking up boxes, and we were profitable from the very beginning,” he said of his early days running a self-storage business called Storage Squad that now spans 17 states. He has even expanded to a second brand, Bolt Storage.
Though Huber says he could’ve gotten a salaried job straight out of college, he’d always dreamed of being an entrepreneur. And since self-storage required little overhead, he knew if he grew slowly and responsibly, he wouldn’t lose money.
This is the kind of advice that got him Twitter famous over the past year. His appeal lies in his frank talk about money, rejection of risk, and belief that unsexy businesses hold significant financial opportunity for those outside the Silicon Valley bubble.
“It is actually really, really hard to get venture-capital funding and make a profitable tech startup, and the people who succeed are one in a thousand,” Huber said. “So they try and they fail and they look at it and are, like, ‘Damn, maybe I should have tried something a little bit lower risk.'”
In prepandemic times, the average failure rate for small businesses was one in five in the first year, climbing to half by year five. Andreessen Horowitz estimates there are 4,000 startups seeking venture funding each year, from which just 15 are expected to satisfy investors’ need for returns — ultimately leading to a startup success rate of about 0.05%.
These lower-risk businesses tend to be service-oriented, are often home services, and have fairly predictable demand. Think landscaping, auto detailing, house painting, or chimney sweeping. It’s the trades and “dirty jobs” that millennials and Gen Z were often told to avoid growing up. They’re based anywhere and everywhere, but their only competitors are local, which means swapping tips and tricks with your peers on Twitter poses little threat to your livelihood.
“I could share my entire playbook, what I’m paying for properties, how much those properties are making, and what’s the worst thing that could happen?” Huber said.
His extreme financial transparency and sweeping observations that often end with the phrase “few understand this” have spawned several parody accounts like Dick Luber and Prick Huber.
—Dick Luber (@sweatiestartup) April 11, 2021
Huber says the mockery doesn’t bother him. It’s a strategy for him to be over the top about his contrarian stance on tech founders.
“I wouldn’t want to compete with those folks because they’re brilliant, and I’m blown away every day,” he said. “I’m all about picking my competition.”
The Lean Startup Method — but make it sweaty
When 24-year-old Wichita native Bryant Suellentrop’s fiancée was accepted to graduate school in North Carolina, he saw an opportunity to leave his sales job at a small business in Kansas to start one of his own in Greenville, North Carolina.
Ahead of the move, he set up a website and a Google business listing for commercial janitorial services. This “map hacking” approach would give his business visibility in local Google searches without competing with national brands for search-engine optimization.
Soon after moving last summer, he landed his first recurring contract, for $2,000 a month, before he ever spent a dollar on supplies and equipment. Suellentrop said American Cleaning Enterprises was profitable from day one.
This scrappy low-investment launch dovetails with the popular “lean startup” model popularized by entrepreneurs and investors Eric Reis and Steve Blank. The aim is to get something to market as quickly and cheaply as possible to learn if there’s demand for what you’re offering before investing too much time and money into the venture.
But one need not be based in California to iterate on a good idea.
Starting lean inspired Huber when he was just getting into business. In fact, before he bought the cargo van that kick-started his self-storage business, he put up flyers advertising his services and stored his first customers’ items in his car and home until he had enough inventory to justify a big purchase.
“We used exactly what we had to basically launch for free until we had $10,000 worth of storage in our basement and $10,000 in cash on our bed,” he said. “That’s when we’re, like, ‘OK, we have a business, let’s invest now.”
A core tenant of Lean Startup methodology is reaching what’s called the “minimum viable product,” or MVP, the quickest version that’s ready to sell, to get market feedback as early as possible. For sweaty startups, the MVP is the sale of the advertised service.
“The only difference between what Steve Blank preaches for tech startups and what we do is that our job is a lot easier because these businesses are already operational,” Huber said. “We’re not trying to figure out if our actual business model is a real business model.”
—Nick Huber (@sweatystartup) April 23, 2021
Opportunities in the sweaty-verse
The sweaty path isn’t for everyone, nor is it the option that will land you on any rich lists, Suellentrop acknowledged in a Tweet.
—Bryant Suellentrop (@SullyBusiness) April 13, 2021
And most people in the sweaty-verse are like him. Scroll through the advice and success stories on Twitter and Reddit, and you’ll see a typical profile — white male millennial skeptical of Silicon Valley, Wall Street, and Washington — and an attitude toward valuing hard work, contrarian views, and independence. One place where the democratizing nature of the internet could really create opportunity is in diversifying the sweaty-startup movement.
Women and people of color who want to serve their communities and attract attention from self-proclaimed “micro private equity” could find a vehicle in the sweaty movement. Where conventional private-equity firms would hardly bat an eye at six-figure deals, some individuals and smaller firms are eager to take a position in local businesses with reliable leadership and cash flow, as seen with Ross’ investment in Botkin’s lawn-care business.
Starting one of these sweaty businesses from scratch can take a long time, but there are a lot of good ones available for sale, if you can land the funds. A recent analysis of transactions from the BizBuySell marketplace showed significant increases over last year in sales of lawn care, cleaning, and auto-repair businesses, fueled in large part by what broker Andy Rosenthal described as “a perfect storm of boomers ready to exit and potential capital gains tax increases on the horizon.” The median listing price has ticked up since last year to $350,000, from less than $300,000.
Even though Huber didn’t start out with the purchasing route, it’s how he’s growing his empire now, and he’s bullish on it for those looking for a career change.
“I think it’s a no-brainer that if you have some operational chops and a little bit of capital, then you buy a business instead of start one,” he said. “But a 21-year-old right out of college? Starting new businesses is the place for them.”