Jason Jacobs

As I learn more about commercial contractors, it’s amazing how much of the business comes down to cash flow management. Managing the timing of payments going out. Praying the ones coming in don’t get unexpectedly delayed. Hungry for more revenue, but acutely aware that if the margins are too slim, more business might actually make the cash problem worse. Hoping you win that next big job. Worried you won’t have the staff to deliver it. Eager to hire more people. Afraid to pull the trigger because every new hire adds more cash pressure before the revenue catches up. Pushing to keep your bids competitive. Knowing that bidding too low means winning work that isn’t profitable enough to be worth it. Wondering how your competitors are consistently bidding so low. Are they more efficient than you? Are they taking on bad business? And if they have the cash to wait it out, does it even matter? And all the while, you’ve got payroll coming due every week, whether your customers pay you or not. I have a million more things to learn about this industry, but as I climb the learning curve, I’m finding it both thrilling and not for the faint of heart. And did I mention the personal guarantees from the owners? I don’t know how these people do it. Much respect.

Nothing to see here. investor.adt.com/News--Event…

It sounded romantic to trim my beard with a straight razor instead of a normal kind so I bought one and proceeded to hack my neck and face to pieces. Just thought someone should know.

A few observations from spending today inside a small union electrical shop: - The owner is already doing quite a bit with AI, and a few simple tweaks to his setup could probably unlock a lot more. - Some of his best people are borderline allergic to computers. - The slowdown in commercial construction is making projects more competitive to win, as larger shops are bidding on work that used to be too small for them. - It is VERY hard to get a new contracting business off the ground, particularly from a cash flow standpoint, and especially as a union shop. - Subs effectively finance the early stages of every job, paying for labor and materials long before they get paid themselves. Collections can take 60-75 days, while payroll comes due every week. - Construction work is important for stability and labor planning, but service work is where the margins are. - Bidding and takeoffs are still done with pen and paper, and at least at their current size, that's not a pressing pain point. - Bank lines of credit are based on historical performance, not future opportunities, making them difficult to use to fund growth. - Over and over, good judgment turned out to be bad judgment learned the hard way. And that kind of judgment is hard to automate or replicate without the lived experience behind it. My biggest takeaway: Getting ready for growth takes a lot of work, but finding the time to do that work when you're on the execution treadmill every week may be the hardest part.

One of my theories coming into commercial construction was that private equity is the right fit for some owners looking to sell, but that there may be room for another model. One designed for younger, ambitious owners who want to keep building for the long haul but need more support along the way: a stronger balance sheet, more working capital, greater bonding capacity, more sophisticated finance and technology capabilities, etc. Yesterday I spent several hours with the young owner of an electrical contracting business. He's four years in, has grown to $5M in revenue largely through the school of hard knocks, and sees a clear path to building something much bigger. But getting there will require a tighter handle on cash flow, a better understanding of the financial and operating ratios to manage as he adds PMs and installers, and technology infrastructure that can support increasingly complex operations. And perhaps most importantly, he'd love a peer group of other contractor owners who are a few steps further down the path. Not decades further, where the lessons may no longer apply to a shop his size. A few steps. That last point stood out to me the most. He's been figuring much of this out the hard way and largely on an island, without a bench of experienced owners to call on when he needs help. I'm not taking this conversation as validation of the HoldCo model I've been exploring. That's a much bigger leap, and there are plenty of unanswered questions. But I am taking it as another data point that there are younger contractor owners who want to build for the long haul, have real ambition, and want more help than they've found so far. I'm curious where owners at this stage typically find that help today: their CPA, a fractional CFO, a trade association, a formal peer group, or mostly each other. Whether any of it needs to come from an ownership platform is still an open question.

found a local commercial electrical shop who will let me come by every week and start learning the biz from the inside. woo hoo! start with the people/workflows and work backwards, before building anything. I am ready to learn!

I picked up the phone today and made my first call about an HVAC/mechanical contractor that’s for sale. To be clear, I’m a long way from being ready to pull the trigger. On many levels. But it still felt like the ice was broken on the next phase of this journey. It’s daunting how much work lies ahead to get this train on the tracks. But one thing I find encouraging is how much clearer the pieces are becoming, even if I haven’t figured out how they all fit together yet. A few things that would be particularly helpful at this stage: Transaction experience: People with deep lower-middle-market M&A experience I can learn from, especially in construction and the trades. Contractor operations: People who have built, scaled or operated mid-sized commercial contractors, particularly HVAC/mechanical businesses. Fellow travelers: Independent sponsors and holdco principals on similar journeys who are interested in comparing notes. Experienced mentors: Recently retired contractor owners or operators who might be open to advisory or mentorship roles. Industry relationships: Brokers, surety professionals, CPAs, investment bankers and others with longstanding relationships with contractor owners in this market. Ultimately, I suspect I’ll need a couple of partners in this endeavor, likely one with deep transaction experience and another with deep industry and operating experience. But I’m not trying to force that prematurely. Right now, talking to smart, experienced people, building relationships, and continuing to learn would be immensely valuable. Thanks in advance for any introductions, suggestions or advice!

Lots of talk about automation as the end goal, and about “human in the loop” as a temporary stepping stone. I don’t really think of it that way. To me, the whole point of AI is to make a person’s superpowers stretch further. Without a human guiding, shaping, and conducting the work, the result may be functional, but it will probably also be sterile and uninspiring. “Human in the loop” isn’t a bridge. Human in the loop is the destination. That’s why I don’t view any of this as a threat. I view it as an unparalleled opportunity. We all have different superpowers. The key is to figure out yours, then surround yourself with the infrastructure that helps those superpowers go further, whether that infrastructure is people, machines, or some combination of the two. “AI slop” isn’t a knock on AI. It’s a knock on how we’re using it.

More and more, I find myself chatting with an LLM to figure out exactly what I need, then going to a website to make the purchase. When do I get to chat with a brand’s agent the way I’d chat with a salesperson in a store? Someone who understands what I’m trying to accomplish, helps me make the tradeoffs, and fills up my cart along the way with everything we’ve discussed. I review it. Approve it. Done. The technology seems to be here. I’m surprised this isn’t already the default way we shop online. And no, I have no plans to build it.

I spoke with the CEO of a long-term holding company today who was drawn to acquiring small businesses because of the coming “silver tsunami,” or what he described as a potential mass extinction event for small businesses as their owners retire without succession plans. He wants to help more of these important businesses not only survive, but thrive. One thing that surprised me was how much he and his partners have had to figure out on their own: how to structure the holding company, source deals, conduct diligence, finance acquisitions, support the businesses after acquisition, and so on. Much of it has been learned through the school of hard knocks, and if there's a peer group to learn from and collaborate with, he hasn't found it. He also mentioned a personal mission to encourage more technology entrepreneurs and operators to invest in small businesses, potentially as a complement to the angel investing many already do. It got me thinking about two questions: Community: Are there communities where independent sponsors and long-term holdco builders can commiserate, compare notes, and collaborate? Particularly ones focused on actually building and operating these businesses, not just getting deals done. Capital: Are there platforms or initiatives that educate new sources of capital about investing in small businesses and connect those investors with emerging holding companies and independent sponsors? For example, helping successful tech entrepreneurs understand how these investments work and how they differ from traditional angel investing. I know there are established ecosystems around private equity, search funds, and entrepreneurship through acquisition, including gatherings specifically for long-term holdco builders and independent sponsors. What I don't have a good sense of is whether anyone has built something like YC for experienced founders transitioning into building long-term holding companies, a high-signal community that helps them navigate the early stages of formation, acquisition, and scaling, while connecting them with relevant expertise and capital. Would love to hear thoughts on what's out there and what's missing.

I asked the CEO of an employee-owned holding company that has acquired contractors employing thousands of people what gave him the confidence to buy into his first one, coming from outside the industry. His answer: “Ignorance is bliss.” I told him that’s my problem. I’m too old to be ignorant. But a certain amount of ignorance is a required skill for an entrepreneur. If you fully understood every way a thing could fail, you might never start. Note to self: preparation is good. But if you wait until you feel qualified, it will be too late.

It's funny. My journey into construction started with a question: "How will AI transform the industry, and how won't it?" I even started a podcast framed around that question. But I'm ~6 months in, and the further I get, the less I'm thinking about AI. Commercial construction firms are under tremendous pressure to work more efficiently, as the industry faces labor constraints while demand for construction continues to grow. There are also enormous opportunities to improve how these businesses operate. But change is hard! And it often requires DNA, skill sets, and headcount that haven't historically been needed in these shops, along with budgets and time that owners may or may not have. I went in thinking "AI-native roll-up." Well, commercial construction is local and relationship-driven. These businesses have their own cultures, reputations, and ways of operating. Increasingly, I think they're better off retaining their independence, brands, and local decision-making rather than being integrated into one big operating company. So the conventional roll-up playbook is out. And there are lots of things these owners (or longtime operators aspiring to become owners) could use to help them drive change that have nothing to do with technology. So "AI-native" is out, too. Don't get me wrong. There can be economies of scale. Certain functions can be centralized. And technology, including AI, can absolutely help. But this is no longer an AI expedition. I don't have the right words yet. Maybe it's a "contractor efficiency expedition." Or a "help owners grow beyond what they can do alone" expedition. Or a "help turn the next 100 strong construction operators into owners" expedition. Those all feel closer to where this is heading. All of this is caveated by the fact that I need to get MUCH closer to the workflows. MUCH closer to the owners and operators. MUCH closer to the field. Etc., etc. So PLEASE tell me what's resonating and what I'm getting wrong. None of this is baked at all. But maybe if I keep making noise on here, more owners will invite me in. :)

I’ve written here before about two owner profiles I keep running into in construction. Profile 1: The owner approaching retirement who doesn’t have a succession plan and wants to take some or all of their chips off the table. Profile 2: The next-generation owner who is ambitious, in it for the long haul, and wants to keep building, but could benefit from more resources and support than a single shop can justify on its own. There’s a third profile I’m increasingly curious about. Profile 3: The experienced construction operator who wants to become an owner. A longtime construction COO recently told me he makes a good living and can comfortably support his family, but he feels stuck on a treadmill. He can keep earning a good salary. But he’ll never have the chance to build the kind of wealth the owner has unless he’s willing to take what feels like a very large personal risk. That got me thinking. There are probably a lot of talented construction executives who have spent decades learning how to run these businesses and have never made the leap into ownership. It seems that Profile 1 and Profile 3 are often in the same building. The owner with no succession plan, and the operator who already runs the place. On paper, that looks like one of the most natural succession paths in construction. In practice, it seems far more complicated. The owner wants a price the operator can’t finance. The operator doesn’t want to personally guarantee the debt. The bonding program may depend on the owner’s personal balance sheet. The owner may not be ready to let go. And sometimes neither party wants to be the one to bring it up. It makes me wonder what’s really holding these operators back. Access to capital? Personal financial risk? Bonding capacity? The challenge of building a team, winning customers, and standing up a back office from scratch? Something else entirely? There are already search funds and other acquisition models operating in construction. But I’m curious how well they serve experienced construction operators who want to become owners, particularly in commercial contracting, where bonding, working capital, and project risk can complicate the equation. What’s missing from these existing models? And could a different approach to capital, resources, and support help more operators make the leap, whether by acquiring the business they already run, buying another shop, or starting one of their own? I’d love to hear, publicly or privately, from longtime construction operators who have considered starting or acquiring their own shop. What’s held you back? And what would make it easier to take the leap?