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Flip The Switch Episode 44: Nick Barshick

August 27, 2018
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SOPHIA: Today on Flip the Switch. The guys had a very special guest on as they sat down with Nick Barshick, the COO and co-founder of Chuze Fitness. Nick talks us through growing up around business owners, and how the idea for a gym came to be. Chuze now has over 35 locations in 3 states with an average of 7000 members per location. Nick explains how the business has scaled, and how culture has played an important role in the gym’s success.

Let’s get into it.

01:01 AUSTIN: Welcome to Flip the Switch presented by Power Digital Marketing. This is episode number 44. Our Hank Aaron episode.

01:08 JOE: Hank Aaron. Wow.

01:11 AUSTIN: That was a very strong one. I didn’t have one for 43 because I couldn’t find… who would wear that number anyway. But 44? Strong number and a fantastic person to intro another fantastic person. We had a great guest this episode. Nick Barshick. The co-founder and COO of Chuze Fitness, a San Diego company that has grown into a multi-state business. A lot of you may know it. They’re down the freeway off the 8 close to us. And a lot of other locations.

So our conversation was really exciting. He explains how the idea came to be. And how they’ve grown into being such a successful business. So stay tuned, you’re going to really enjoy this interview.

With us today we have Nick Barshick from Chuze Fitness. He’s the co-founder and current COO of this San Diego based business. A local business. We’re really excited to have you on the show.

01:56 NICK: Glad to be here. Thanks so much for having me you guys.

01:59 AUSTIN: Awesome. Yeah, so he’s also… their company is one of our clients, so it’s a really exciting time to talk about their business, what they’re doing marketing side, and then from an operational standpoint. How they grew to be such a successful gym and kind of where they position themselves in the market.

So where we want to start is talking about Nick himself. And how he came to be this entrepreneur. So could you please just explain a little bit about how you became an entrepreneur? Where does this passion come from?

02:23 NICK: Yeah, well we’re a family business. My father worked at Pizza Hut when he was in college and had a really special mentor at that time. That kind of instilled the entrepreneurial spirit within him.

He was able to found and own and operate a restaurant chain called “Super Salad,” so that entrepreneurial spirit was in my blood. And I was getting out of the Marine Corps, and my dad wanted to found something else. We actually start… we thought we would start a restaurant company based on his experience in the space.

And came across what we call the HVLP fitness play. Which stands for “High-Value, Low price.” And it’s the ten dollar a month kind of starting rate gym membership. Anywhere from 15,000 to 40,000 square foot box. And we came across that model, and we fell in love with it.

And kind of felt like it was something that we could do ourselves and get our hands around. And we partnered with my God-family. My godfather and my god brother. And my brother-in-law. And founded Chuze in 2008. It’s crazy. This is our 10 year anniversary.

03:36 AUSTIN: Wow, that’s very exciting. And just walk us through what it’s like growing up in a household where you’re seeing entrepreneurship every day. Is this a conversation you’re having with your partner in high school? Saying, “This is what we’re going to do. We’re going to start our own business too.

03:50 NICK: Well, honestly, I would have stayed in the Marines had this kind of family dynamic not existed. We were always really close. I was stationed on the east coast even though my family lived here in San Diego at that time. And they had their hooks in me from across the country, wanting me to get out and come back to kind of start a family venture.

And we really were very close to starting a restaurant company like I mentioned. I was working at Islands restaurants when I got out of the Marines to get restaurant experience. We were looking at a couple of different concepts. Small-chains. 2 to 3 restaurants in the company that we thought that we could potentially acquire.

And then we came across this, like I said, HVLP model in the fitness space and transitioned to doing that instead.

04:41 AUSTIN: Low price, high volume. That’s obviously great on paper. You’re looking at that going, “Our customers would love a low price. And that means we need a high volume.”

How do you roll this out? Or what does that look like? What are your benchmarks? For this to work, this is what we need to put in place.

04:58 NICK: Yeah, I mean, you need to have an incredible value proposition. And fitness… the HVLP model really hadn’t made its way into San Diego in 2008 when we started. It was really just 24 fitness and LA, kind of in the mid-range price point area. And the ten dollar a month gym was still something that was unheard of back then. So we felt like we had a unique opportunity to make our way. Get a footprint in San Diego and kind of begin to expand from there.

And we’ve evolved the model quite a bit. Over the last 10 years. We started very much more like a Planet Fitness or Crunch Fitness. And we’ve since evolved to offering a whole lot more. Like 3-lane lap pools. Sauna, steam, Jacuzzi. Functional turf space. We have a heart-rate based team training play that we do now as well.

So we basically added all of these other amenities and square footage to the model. But we’ve kept the price the same. Competition has really made things a lot better for the customer, that’s for sure. They’ve made us figure things out, that we never really thought we would be confronted with. Which is good.

06:09 JOE: Yeah, just kind of jump in here. I’ve always been curious about this… as I’ve worked pretty closely on the Chuze fitness account, and I get to get access to a lot of the location photography. And see some of these big box locations that you do.

How were you guys able to transition or get that start to building some of these places? Like out in Littleton, Colorado. That location is one of the nicest gyms I’ve ever seen. And so I’m very curious as to how you guys are able to pull that off at such a low price point.

06:35 NICK: It’s very much a team effort. As far as just the construction arm and the design, we’re as much a construction company as we are a gym company.

One of my dad and my godfather’s contacts from their time with Super Salads, back in the ’70s and ’80s actually helps oversee our builds and construction to this day. With Chuze.

So we brought him on. We also have our own design person now as well. That does all of our materials and helps source those and lead us through those phases of the buildup. Because none of us has any experience with that whatsoever.

And then of course, like Austin mentioned, it definitely is a volume play. I mean, given that the cost of membership is very low, you do need to have a lot of members to be successful. So that’s just the way the model is built.

We just have to monitor very closely our attendance. Usage of our amenities. Classes. Just to make sure that everything is still accessible. Cause what’s the point of having something–even if it’s 10 bucks–if you can’t access it?

And we can sort of measure and monitor that through enrollment fees. There are some other levers that we can kind of pull to make sure that the gym doesn’t get overcrowded. And, of course, our business is very seasonal.

07:57 JOE: Yeah, so even then… kind of in the beginning when you guys were first starting out. Trying to open up the very first Chuze Fitness, what were some of the big hurdles you had to get over in the very beginning? Or was there anything that you kind of had to really figure out and do things very grassroots in the beginning that kind of looking back on you thought were crazy and would never be able to work out today?

08:17 NICK: Well, we kind of started running into real estate roadblocks. Especially in Southern California, it’s hard to find 15, all the way up to 40,000 square foot space with parking. So that’s one of the big challenges is finding the right sites.

And San Diego is tough with real estate. It’s just a hard place to find good deals with real estate. And so in 2012 we decided we needed to start branching out into other markets.

And I actually moved from here myself to Tucson, Arizona. We did 3 gyms out there in 2012. And simultaneously were expanding up into Orange County and LA County.

And to me that was a huge threshold. That was like, “Wow, we’re really having to get outside of our comfort zone.” Myself, my god-brother, my brother-in-law we’re not able to just be inside of all of our gyms every day. We’re having to find and select to find people we can trust to uphold our culture, and execute at the standard to deliver the member experience that we able to just always do ourselves.

And that was a big gap to bridge. One of our biggest challenges, for sure.

09:29 AUSTIN: And the word I picked up on there is “culture.” That seems to be a very important part of what makes Chuze so successful. What is it that embodies your culture? Those values that you instill that you want to be emulated across every single location?

09:40 NICK: Yeah, we’re in the fitness industry, but ultimately this is a people business. It’s about the team that we select to wear our uniform and to represent our brand. We’re very deliberate. We have a very detailed hiring process that we take every single candidate through. They take a behavioral assessment. There’s a series of 3 different interviews. We ask them for 7 references and we call every single one of them. We really want to learn a lot about each candidate. The behavioral assessment company that we use allows us to take a look at what our roles entail, and sort of what behaviors align with making people successful within those roles. And that’s been a huge game changer for us.

Ultimately if we can have talented, capable, resourceful and engaging people in the units, they’re going to deliver on our promise to have an amazing member experience and have a really, really clean facility

10:42 AUSTIN: Behavioral assessment, is that something you see typically across the industry? Or is this maybe a differentiator for your brand?

10:47 NICK: A lot of people use behavioral assessments. I think they’re pretty common these days to be quite honest. I think that the one that we use is definitely a little bit more detailed and in-depth. It’s actually quite an investment that we make every single year. And our partnership with that company–it’s called the Predictive Index–and we think they’re amazing. So I do think that ours is a little bit more detailed and it actually goes beyond just screening for candidates. It also allows us to develop our own self-awareness. Awareness of preferred communication styles of the team. Making sure that the teams are balanced in styles. We don’t want every single one of them… every single person on a team in a unit to all have the same, exact style.

So we look at that.

11:34 AUSTIN: And personality seems to be a really important part of that too. The location you have down the way, it’s crowded after work. But it doesn’t feel necessarily as gym oriented, which I think a lot of us have an idea of that in mind. It’s sweaty. It’s also over-crowded, but it’s intimidating. And maybe the workers there are also intimidating.

And kind of what I’ve seen is more so they’re engaging and saying hello when I walk in. And just letting you know that it’s a friendly place.

How do you get that point across? Or what is it that you share that, “Hey, we need this to be a place where everyone feels welcome and maybe not intimidated.”

12:08 NICK: Yeah, we definitely in the behavioral assessment we look very closely at extroversion. Imagine how hard it is to change a behavior in yourself versus getting a sea of people or employees at your company to all be extroverted if they’re not that way naturally. Better to find that skillset built into who they are as a person. And then you can sort of just allow them to shine. Allow them to just be themselves when they’re at work and have fun.

But it’s… there’s a lot of volume. There’s a lot of people coming in. No one is immune to getting worn down, and being conditioned. Losing their personal touch to try to connect with people on a personal and genuine level.

It doesn’t take more than just a few moments of sincerity and presence, I think, to make someone feel welcome. But it can be mentally exhausting. So we try to monitor that very closely. And we mix up the duties that every single person in the store does.

We’ve kind of taken an everyone does everything approach in the gyms. I’m still happy to clean bathrooms to this very day. You know what I mean?

And I think if our managers are doing that–if our leadership is doing that–and everyone is taking ownership… very much like we were talking about before the show.

I think that problems get solved and people are happy to be at work. The members are going to really notice it.

13:41 AUSTIN: It’s funny, I was just thinking of another company this reminds me of. Trader Joe’s. I don’t know if you’re super-familiar with their business model and the way that their organization functions, but they take on that aspect too. Everyone’s that working is going to be doing the same things. So the rotations are constantly occurring and they have very similar personalities in stores. That extroversion. And it really works. And it does make the customer feel welcomed and that they want to come back, right? The product’s great but how are you interacting with the service being provided are two different things.

So I think that that’s been very commendable.

14:14 JOE: Yeah, and I think too even on that front, apart from the people–kind of the values you instill in the business in terms of the cleanliness of the gym. Making that whole aspect of it welcoming. Cause like you were saying, you might think of a gym–a bunch of meatheads sweating all over the place.

But at Chuze that’s definitely not the case. It’s one of the cleanest gyms I’ve ever seen in my life. It’s pretty crazy. And so that was definitely one thing that stood out to us. A lot of us that now are members of Chuze fitness. That was a big part of it too, and like you’re saying, you’re not even afraid to go back and have no problem to clean the bathrooms. I mean, that definitely show in a lot of locations that you go to. And I know that’s a big kind of standard that you guys hold for yourselves.

14:54 NICK: Absolutely. I mean, I’m hosting culture training for our teams tomorrow up in the Inland Empire. And one of the things that I really try to convey at that point is that the most mundane of tasks like mopping and the bathroom or something like that. It’s easy for an employee–or anyone for that matter–to think, like, “What I’m doing isn’t making a difference.”

And we really try to create that line-of-sight that creating a clean environment is a game changer. It can allow someone maybe that might happen to be a germophobe–like me–a safe space and a sanctuary to come in and actually be able to work on their mind, body and soul. 15:35

Like we were talking about earlier with just how we treat people, a sincere greeting, a smile and a hello might be a key difference in someone’s day and making them feel welcomed into the facility. And so kind of marrying those two concepts together–the cleanliness and the treatment of each other–meaning the people on the team–as well as the way that we treat the members and the guests that come in.

Just trying to always strive to execute that at the highest standard possible is something that we try to get people fired up about. That customer service is a life skill that transcends just being at work. Or the relationships that they have with their co-workers. It transcends industries and goes beyond just the fitness industry.

We know that a lot of our employees might be viewing their time at Chuze as stepping stone. Maybe they’re interested in working for a marketing company at some point after their time at Chuze. And the customer service skills that we teach and try to embody ourselves, I think can benefit people in their life and their career. Their relationships. Their friendships. And in their families. And so we really believe that.

16:50 JOE: Yeah, I agree. That’s definitely something where, like you say, it might be seen as a stepping stone, a lot of jobs for younger people or when you’re in school might be seen as a stepping stone to get to that bigger place. But if you can’t have the focus or determination to do even more of a simple job as well as you can, how can you expect someone to depend on you to do a bigger, more important job at that same level?

And it kind of compounds on itself. It’s like whether or not you know it, you are learning skills about yourself. And you are developing as a person. Even if it is you’re a waiter in a restaurant. Or you are cleaning the bathrooms at the gym. I mean all that stuff all still will compound and come back one day to be very important in your development.

17:35 AUSTIN: And a lot of this… the positivity and the installment of it is fantastic. What are some difficulties you’ve had with maybe getting this point across? Or making sure that this stays in place?

17:48 NICK: Yeah, that’s… if you figure that out, you let me know. That’s something that I think all companies face. I mean, I personally believe that excellent customer service…almost wanting to call it “Enlightened Hospitality,” is rare. Where someone’s that behind the counter and in uniform is there to serve or assist you is driven to do it at a high level. I think it’s within all of our power to wow a customer. I think anybody could do it once.

I think the challenge is actually a discipline. And it takes relentless effort. You can’t take your foot off that gas pedal. I think there’s a lot of companies out there that want to greet the customers–and so they want their employees to greet the customers–and so they just say, “Say welcome to Subway” when you come in.

And that box is checked off. And then they move on to the next task, the next priority, the next action item.

We don’t do that. We actually stick with the basics. We aren’t very sophisticated. And maybe that’s to a detriment. But we just focus on basic things, and that’s our mission. That’s our passion. And I don’t think that that’s something that will ever change about our organization. We’re not going to pretend that we’re perfect at service and so now we can focus on other things.

19:12 AUSTIN: Yeah, and so let’s talk a little bit about your customer moving on. And you have all these differentiators that make you who you are. And you’ve found your niche in the market. Who are you trying to reach? What does your ideal client look like?

19:25 NICK: Yeah, it’s… we’re actually fairly wide-ranging. We’re definitely a non-intimidating gym. As we referenced. And so we particularly do appeal to people who have never been to a gym before. We provide an environment that’s clean, that’s friendly. It’s certainly not rocket science. It’s very simple.

But it allows people to come in and feel comfortable where they can start working on their goals. Everyone that comes to Chuze certainly has an intention. We want to try to help them reach their goal, whatever that is.

And we don’t do it with sales or pressure. We actually do very little personal training in our organization. None of us can sell anything to save our lives, so we’ve kind of departed from that in large part. We do have personal training in some of our locations, but by and large, we’re just trying to appeal to someone that wants to come to a clean and friendly place. It doesn’t really matter what age they are, what their background is, what their fitness experience is. Our clients and customers range anywhere from competitive athletes and bodybuilders all the way to someone that maybe has never been to a gym. Or has maybe not worked out in 30 years. Since they were in high school. And they want to get back into spending time on their health and wellness so they can live longer, healthier lives and be with family. Do things they maybe didn’t think were possible.

20:49 JOE: And that 10 dollar a month kind of aspect is a huge selling point too. Where someone that might be unsure about it, “I don’t know if I want to spend all this money. If I’ll be wasting all my money.”

At the end of the day, if you take ten dollars a month and you break that down between 30 days and that daily cost of what it would cost you to go workout or exercise or whatever it is. That’s definitely… I feel like the biggest selling point on that side. Cause that’s what would turn a lot of people away from going to the gym

21:15 NICK: Absolutely. A low entry cost is huge. We definitely want our members to know that just because it is a low-cost, that they still deserve an amazing experience and a clean facility. Where the equipment’s working. And they don’t see Out of Order signs for weeks on end. And that they’re going to be treated like they would want to be treated.

Even though the cost is very affordable.

21:40 AUSTIN: And has it been difficult to keep that price low as you’ve scaled? Or has it made sense because you knew that this was going to be a volume play?

21:47 NICK: Yeah, I don’t know that we’re really going to have many price increases. I think the low rate is very attractive and appealing. And we aren’t really having any challenges with our volume. You know, so it’s not to say that potentially that wouldn’t happen down the road, but I certainly don’t anticipate it at this point. I think we like being a value based gym company. We don’t want that to be an objection, and we can’t sell. So we just need to give a great presentation and then let people make an informed decision. That’s really what our goal is. I think we’ve done our best if we do that well.

22:34 AUSTIN: Typically the business owners that we perceive to be the most successful that come on our show know what they’re good at. And it’s really interesting to me to hear you say you’re not good at selling. “So we’re never going to sell. We’re going to let our operations and what we’re about dictate getting more clients.” And then potentially just growing our business.

So I think that that’s really fascinating, cause maybe someone else in the same position at another gym company would be “We hit the floor. We hit the ground running with we’re going to try to upsell every single client that we get. And that’s our business model.”

It’s just the inverse. It’s creating more business. I think that that’s truly exciting.

23:08 NICK: Absolutely. I mean we network with a lot of people in the industry of course, and they look at us like we’re from outer-space when we talk about how we don’t do sales commission or sell personal training. Or try to funnel people into it. It’s definitely a departure from the norm

23:25 AUSTIN: You’ve gotta be the only gym not calling people after they get the first week free, right?

23:27 NICK: Yeah, we don’t do any of that stuff. Honestly. I know plenty of companies out there that ask people when they’re signing up for their own gym membership to pull out their phone and to give the salesperson 10 names and numbers right out of their phone that they can cold call. And that’s a very common practice to this very day. I think we’ve all had stories of wanting to visit a gym for a tour and then they’re calling you and texting you and showing up at your house. Or standing over you while you’re sleeping. Or whatever they’re doing.

23:55 AUSTIN: Definitely.

23:56 NICK: Yeah, we don’t do any of that.

23:58 AUSTIN: So talking more about just the operations and trying to emulate that feeling. You now have… I think you’re in Colorado, Arizona and California. 7000 members on average per location is where you’re at. How many locations do you currently have?

24:13 NICK: 25. 2 are franchise locations. Le Mesa and Rancho Bernardo here in San Diego.

And then we own and operate the other 23.

24:23 AUSTIN: Wow. That’s incredible. And then so that’s been pretty substantial growth. What would think was maybe the year or the turning point for your business? That you saw some real upward projection?

24:35 NICK: Definitely, like I referenced, 2012 when we entered Arizona and also Orange County simultaneously. I think there was a 13 month period where we opened 7 locations. That was for sure our biggest growth spurt. To date. At that stage.

We really aren’t trying to be the biggest gym company. We’re really trying to grow slowly and steadily where we can still continue to execute in the way that we would want.

I actually just picked up a book called “Small Giants,” and I can’t wait to keep reading it because it’s about companies that strove to be the best, not the biggest. Our CEO actually… my god brother gave it to me. So I’m excited to read that.

25:21 AUSTIN: Is it difficult working with family members at all? Or does that sort of…?

25:26 NICK: Absolutely.

25:28 AUSTIN: I was going to say… the whole time I’ve been thinking that. “He’s been around his family and had a business literally the whole time.”

25:32 NICK: Yeah, it’s definitely interesting dynamic. I look at it like it’s the American Dream. Absolutely. But the benefit I would say is we certainly aren’t afraid to call a spade a spade. Like, if we need to have a serious conversation–it wouldn’t be the first time or the last. And we’re happy to go to the mat like we do in owners meetings.

So I think it’s to our benefit. Certainly there are times that it’s not always easy. It’s still work in some ways when it comes to working with family.

But overall, I think, we couldn’t be just luckier. I wouldn’t change a thing. I’m almost fortunate in a sense that I can’t stop thinking about how lucky we are. In a way. That’s just kind of where my mind goes.

26:21 AUSTIN: I think a lot of people would want to work with family and friends. It’s definitely, like you said, the American Dream in a way. You get to be surrounded by the people you love and care about. And then also be super-successful in another avenue. So finding that is extremely difficult because of the emotional side of it, right? You have that attachment to these people so when it comes to business it can be difficult to address those concerns.

But I am imagining you going to the mat with your god brother. Nick was telling us right before we started the interview that he’s been wrestling and had a little bit of cauliflower ear. I don’t know if we should tell your wife that.

But anyways, I’m just imagining them doing that in a board meeting. Just going, “What’d you say? I’m going to the mat.”

Anyways, that’s a great way to deal with it. And it’s exciting to see and hear about a family that has grown and been so successful.

So let’s wrap this up with a little bit more personal questions. Talking about you and motivation. What really keeps you going?

27:15 NICK: The team. The People. I mean, I read a really cool article recently about the All Blacks rugby team in New Zealand. One of the most successful sports franchises in history.

And they were talking about self-centeredness. And how everyone has that built into them. “When is my next promotion? Why am I not getting more playing time? When is my next pay raise?”

We all have those thoughts as humans from time to time. But the point of the article is that you can actually achieve everything that you want for yourself. Everything that you want to get if you focus on what you can give. And how you can serve.

And that really resonated with me. I like that concept and I would only hope that I could become a team person like the people on that rugby team. So that really resonated with me, and that’s kind of really what drives me and I’m focused on.

Seeing the organization grow. See people that started with us as a team member, move into a supervisor role. A manager. A regional director of operations. Director of Operations–Training. Recruit/Select Director. These were all people that were promoted from within the organization and that’s really what fires me up.

28:38 AUSTIN: Yeah. That’s incredible. And the consistency I can see with you is a big deal. And has been a big part of your success. It’s seems like everywhere you go, you’re taking all those core values and dropping that in the location. It’s selflessness, right? It’s that team-oriented feeling and look. Like you said, you’d be willing to clean a bathroom if you had to because that’s just the way you are. This is the person you are and what you’ve instilled in this organization.

So I can definitely feel it and understand it.

29:06 NICK: Cool.

29:08 AUSTIN: Great, so last question we like to ask all of our guests this one. What’s a piece of advice you’d give your younger self? Let’s say you’re just out of the military and thinking of starting a business.

29:17 NICK: Gosh, you know I thought about this, and it’s a tough one. I don’t know. I mean, I feel like I’m evolving every single year. And there’s a bajillion things that I’d probably tell myself. Like stay with Jiu-jitsu. Don’t take years off. Stuff like that.

But the biggest one that stood out to me recently that I would love to tell myself back then is that discipline equals freedom. And that’s a quote from a gentleman that I mentioned before we started. Jocko Willink. A retired US Navy SEAL. And Brazilian Jiu-Jitsu Black belt. And I couldn’t believe that more at this point in my life.

And I was quite a mess when I was teenager. I think I needed the Marine Corps way more than the Marine Corps needed me.

And I think I really went from being a boy to being a man by the time I got out of the marines. And I began to have an idea of what discipline could accomplish for me in my life and my career. And that’s kind of something I would probably share with my younger self.

30:28 AUSTIN: Yeah. Discipline equals freedom. That is a fantastic quote. I haven’t heard that one before, but you explained it very well.

30:33 NICK: Appreciate that.

30:35 AUSTIN: Great. Well, want to say Thank you so much for coming on the show and being one of our clients. It’s been a thrill to work with your team and the company. And then to hear your story. Truly unbelievable.

So thank you so much Nick for coming on.

30:46 NICK: Thanks for having me. It’s an honor to be here with you guys. Appreciate it.

30:51 AUSTIN: Thanks again to Nick for coming on the show. We really appreciate him taking time out of his busy day to meet with us. I learned a lot from that.

It’s really interesting to figure out how he’s turned such a low-priced gym into such a giant and such a successful part of gyms in general.

31:07 JOE: Yeah, I also heard he’s a pretty good golfer, as well.

31:11 AUSTIN: Yeah. Supposedly that guy can strike the ball. That’s what Grayson, our CEO, was just telling us.

But Nick was super-excited. They had a big culture event that was going down today. In the Inland Empire, so just more testament to how this guy is, and what they preach over there at Chuze.

All right, everybody. Thanks so much for joining us. As always, I’m going to say it every episode–go onto our forum. Please. Log on. Check us out. Sophia’s going to post some more awesome articles. Every day. All day.

And also, I might be in there. You can comment and I’m probably going to respond as well. So look forward to that.

All right, that’s going to do it. Wrapping us up as always, this is Austin, Pat, Joe, John and Sophia signing off.

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