The Idea
Stanford’s business school has been tracking a specific type of entrepreneur since 1996, building on a model that dates to 1984: people who raise a small amount of capital, find an existing business to buy, and run it. Across more than 850 of these funds, the aggregate internal rate of return is 33.9% with a 4.75x return on investment through December 2025. That has consistently outperformed the S&P 500. The businesses being acquired are things like industrial services, niche software, and specialty distributors.
Chad Riddersen and Kyle Voss are building from a similar instinct, except they started from scratch instead of acquiring. They co-founded Epic Septic, a septic services franchise, and they got into why on the podcast this week. Chad previously co-founded a marketing agency whose clients included Dollar Shave Club and six Shark Tank companies. Kyle is a former Marine Corps Captain and professional football player. Between the two of them, they could have started almost anything. They chose septic tanks, and they hit a $1 million annual revenue run rate in their first 90 days.
The chapter from our conversation called “Why Unsexy Jobs Win” gets at their reasoning. The septic market is fragmented. Most operators are small, local, and don’t do any real marketing. Chad’s argument is that the advantage in a market like that is generating your own leads through strong branding, because almost nobody else is doing it. They brought real marketing to an industry that mostly wasn’t doing it, and the returns showed up fast because the demand was already there waiting for someone who knew how to reach it. That’s the practical filter for anyone choosing a business: look for a market with real, constant demand where the existing players aren’t doing the basics well. Most people are chasing the business they want to tell people about instead of the business that will actually work.
Quote
“Part of it, I think, is being able to tune out folly as distinguished from recognizing wisdom.” Charlie Munger, 2004 Berkshire Hathaway Annual Meeting
Question
If nobody would ever know what your business was, what would you build?
Listen
Chad Riddersen & Kyle Voss: Why Boring Businesses Beat Sexy Startups. Chad and Kyle talk about how they reached a $1 million annual revenue run rate in 90 days, what “brown collar” means and why they wear it proudly, and why generating your own leads is the real moat in service businesses. They also get into the specific economics of the septic business, what it takes to get started, and their goal of building a billion-dollar franchise.
Read
The Millionaire Next Door by Thomas Stanley and William Danko. Stanley spent 20 years studying how people actually become wealthy in America and found that the typical millionaire doesn’t look the part. They own welding companies, pest control businesses, paving contractors. The whole book is evidence for what Chad and Kyle are building: the money is in the work nobody wants to glamorize.
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— Scott