Ep. 137 — Jill Nelson: 10 at 10, Then a $38M Recap on a Service Business

5 min read

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Episode Summary

Most service businesses trade at 2-3x EBITDA because the talent walks out the door every night and the brokers tell you that’s just how it works. Jill Nelson built one that traded on a multiple of revenue and closed a $38 million recapitalization on roughly $11 million of top line. I wanted to know how. Jill started Ruby Receptionist with $17K from her 401(k) and an SBA loan, after spending two years working as the receptionist for a business broker, watching hundreds of small business tax returns cross her desk and seeing which owners had real enterprise value and which ones had a job. That seat taught her the two things she built Ruby around: recurring revenue beats lumpy revenue, and execution discipline beats almost every other variable. We got into the 10-at-10 BHAG she set in year five (when she was a $1M company), the $15/hour starting wage that cut turnover 60%, the people-powered culture that lives outside her executive team, and how she ran an investment banker process that produced 20+ LOIs with wildly different valuation philosophies. The line that stuck with me: the highest bidders were the ones who bought her vision and looked at her culture as a competitive moat, not the ones who liked her numbers.

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## Top 10 Takeaways
  1. Recurring revenue is worth more than lumpy revenue. The traditional brokers will undervalue your service business if you let them.
  2. Your execution discipline is a bigger profitability driver than your industry, your pricing, or your strategy.
  3. Set the BHAG at 5x or 10x today’s revenue, then back into what this year has to look like to stay on track.
  4. Cutting turnover unblocks growth. If you’re hiring for the door, you can’t hire for expansion at the same time.
  5. The wage you set is a marketing decision. Two extra dollars per hour can drop turnover by 60% and barely move unit economics.
  6. Empowerment isn’t a values statement. It’s tying every measurement, incentive, and dollar back to the values you claim to hold.
  7. Culture becomes a competitive moat only when nobody on your executive team owns it. That’s what produces the revenue multiple.
  8. The highest bidder is the one who buys your vision, not the one who likes your numbers.
  9. Headline price is one variable. Debt, preferred vs. common, board seats, and vesting matter just as much.
  10. If you don’t know what you want from the exit, you’ll optimize for the check and regret the rest.

Sound Bites

“I just had this idea and I was just excited to see if all businesses wanted it, if it was going to be valuable. I just wanted to puzzle through it and get it out there and see what happened.” (@TBD) — Jill Nelson

“What ended up happening is the cost to provide service for a minute of service only went up two cents. And it reduced our turnover by about 60%.” (@TBD) — Jill Nelson

“It’s easy to hire. It’s hard to make people feel safe, to make them feel empowered to be just themselves, really.” (@TBD) — Jill Nelson

“The parties that were the most competitive were the ones that really bought into the vision for the future.” (@TBD) — Jill Nelson

“It’s not just about money, it’s just not. And thinking about what would it take for you to get a transaction and solve for that, when you know what you’re trying to get, then I think it’s easier to go seek and find it.” (@TBD) — Jill Nelson

About This Episode

Jill Nelson is the founder and CEO of Ruby Receptionist, a Portland-based live virtual receptionist service that grew from a $17K bootstrap to roughly $11 million in revenue when she completed a $38 million private equity recapitalization with Updata. Before starting Ruby, Jill spent two years working as the receptionist for a business broker, where she saw hundreds of small business tax returns and learned firsthand which ones had built real enterprise value and which ones had built a job. Ruby has appeared on Oregon’s fastest-growing private companies list for more consecutive years than any other company in state history and is regularly recognized for its workplace culture. The conversation came out of Jill’s appearance on John Warrillow’s podcast and her connection to the Small Giants community.

Resources Mentioned

  • Ruby Receptionist — Jill’s company. — callruby.com
  • Updata Partners — The private equity firm that completed the $38M recap with Ruby.
  • John Warrillow’s podcast — Where Ryan first heard Jill’s story.
  • Small Giants community — Bo Burlingham and Paul Spiegelman’s network of values-driven companies.
  • Rockefeller Habits / Scaling Up — Verne Harnish — The framework Jill used to set the 10-at-10 BHAG.
  • Painted Picture exercise — Cameron Herold — The vision exercise Ruby ran in year five.
  • Finish Big — Bo Burlingham — Referenced for owners thinking through what they want from the exit.

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