By Lina Irawan 
One of Philips’s initial forays into the world of bolt-on acquisitions—a strategy championed by Deibel—involved a seemingly straightforward target: a small, specialized shop in rural Oregon. This particular business, run by a craftsman who had dedicated decades to fabricating custom interiors for Porsches, represented an ideal complement to Philips’s burgeoning automotive interiors empire. Eager to make a strong impression and perhaps a little too confident in his new entrepreneurial persona, Philips flew to Portland. There, he leveraged his freshly acquired Hertz President’s Circle status for a complimentary upgrade, securing a brand-new convertible Mustang. The ensuing three-and-a-half-hour drive south through what he describes as “the most beautiful” Oregon landscape was picturesque, but the destination held an expensive lesson.
The shop owner had initially quoted a reasonable $40,000 for the operation. However, after two days of observation, watching Philips arrive and conduct himself from the driver’s seat of a conspicuous, luxury rental, the seller dramatically re-evaluated his asking price. The perceived affluence signaled by the Mustang led him to believe Philips could afford significantly more. The revised figure? A staggering $320,000—an eight-fold increase. "I regret that so much to this day," Philips later confessed to Fortune. "I should have just taken the Camry." This anecdote, now a cornerstone of his personal acquisition wisdom, underscores a fundamental truth in small business transactions: perception, humility, and understanding local nuances can be as critical as financial projections and due diligence.
Lucas Philips’s entrepreneurial drive isn’t a sudden spark but a deeply ingrained inheritance. He grew up observing a phenomenon increasingly rare in contemporary America: his father successfully owning a small business outright while still maintaining a robust family life, making it home for school drop-offs and hockey practice. This model of sustainable, owner-operated enterprise, balancing ambition with personal life, left a profound impression. At 26, Philips decided to follow a similar path, acquiring Newark Auto, a niche manufacturer of custom automotive interiors in Newark, N.J. Now 29, he reflects on his decision with a mix of satisfaction and realism, telling Fortune that while he’s glad he did it, “it’s really not for the faint of heart.”
Since taking the helm of Newark Auto, Philips has engineered remarkable growth. Annual revenue, which stood "a little over a million" at the time of purchase, has surged to more than $3 million this year, all within roughly five years of operational time. This expansion hasn’t come from venture capital infusions or tech-startup fanfare, but through a disciplined strategy of bolt-on acquisitions, meticulous operational integration, and a dedication that often involves long commutes and early mornings. He jokes about the absence of "proverbial ping-pong tables" in his office, highlighting the stark contrast between his blue-collar manufacturing environment and the perk-laden tech world many of his peers inhabit. Yet, his experience has taught him that in the world of small business, seemingly minor details—like the choice of a rental car—can have monumental financial consequences.
Philips traces his entrepreneurial spirit back further than his time at Northwestern University. His family’s journey to New York during the Ellis Island era, a little over a century ago, instilled a self-reliant ethos born from necessity. With limited employment opportunities for immigrants, small business ownership became a lifeline. He proudly identifies as being from "several generations of Jewish small business owners," suggesting that this mindset was a natural inheritance. The family’s business ventures are diverse and extensive: one grandfather supplied paper goods—boxes, plastic wrap—to New York’s Jewish bakeries; his father pioneered importing sunglasses from China before it was common practice, then moved into hair accessories, and eventually acquired a high-end custom furniture business that now boasts a Madison Avenue showroom and a factory in Christiansburg, Virginia. This lineage provided a powerful blueprint for independent enterprise.
His own entrepreneurial journey began in college. As an undergraduate at Northwestern, Philips launched a coffee concept, successfully raising "millions of dollars in outside capital" before graduation. However, the reality of reporting to investors and navigating conflicts with an MBA cofounder quickly soured the experience. He described leaving that venture disillusioned with the equity-funded startup model, yearning for a path that offered greater control, even if it entailed more personal risk.
A serendipitous conversation with a friend from Kellogg Business School introduced him to the concept of entrepreneurship through acquisition (ETA). This friend pointed him toward Walker Deibel’s seminal book, Buy Then Build. Philips recalls that reading it "clicked" in a way academic guides never had, demystifying the process and clarifying that he could "buy a business with debt" rather than pursuing another equity round or starting from scratch. At 23, in 2021, he joined the Acquisition Lab, an organization designed to facilitate exits for small business owners and entry points for aspiring ETA entrepreneurs like himself. The program proved effective: within 10 weeks of completing the lab, he had secured a letter of intent to purchase Newark Auto, closing the deal just two months later.
What distinguishes Philips’s chosen path from the more traditional MBA search-fund world lies in both its capital structure and its incentive system. The search fund model, widely popularized at institutions like Stanford and Harvard, typically allows MBAs to eventually own 20% to 25% of a business. This structure is often backed by institutional equity, carries no personal guarantee on the debt, and allows for the possibility of being fired. It’s frequently described as the "rich outcome," offering significant financial upside with relatively contained personal risk.
The SBA model Philips utilized, however, is markedly different and carries a far greater personal stake. It typically involves a 10% down payment, with the remaining 90% financed through a loan that requires a personal guarantee. The payoff is 100% ownership. Philips frames this distinction in terms borrowed from Noam Wasserman’s The Founder’s Dilemmas: the "king outcome" versus the "rich outcome." He unequivocally chose to be king.
This "king outcome" comes with formidable responsibilities and risks. "Once you buy the business, it is your business and no matter what skeletons are buried in the closet, you’re stuck with the thing," Philips asserts, jokingly adding that there’s no "customer service counter" where one can return a business post-closing if unexpected issues arise. He clarifies that this is fundamentally different from venture capital, where investors anticipate a high failure rate and are prepared to write off capital if an idea doesn’t pan out. He vividly describes the SBA loan approach as akin to "burning the boats" in warfare—a point of no return—or "taking out a mortgage on your own career." The entrepreneur is entirely on the hook for whatever unfolds.
Given the immense personal risk, Philips insists that no one should undertake such a bet without formal training. He strongly advises younger, would-be acquirers to thoroughly read Buy Then Build, diligently sit through the Acquisition Lab’s modules on search and diligence, and then, only then, reconsider if they still wish to proceed. "Getting training on how to do that right is so important," he stresses, underscoring the complexity and potential pitfalls of the ETA journey.
If his startup years were characterized by pitch decks, investor updates, and the digital hum of the tech world, Philips’s current life is defined by the clang of factory floors and the insistent call of early morning alarms. He resides on the Upper West Side of Manhattan, on the very block where he grew up, yet commutes daily to Newark to oversee a manufacturing operation where workers are on the line by 7:30 a.m. "I wake up between 4:30 and 5:30, and I’m in the office by 7, 7:30 every morning," he states, explaining that manufacturing "generally doesn’t work 9 to 5" and often operates on 7:30 to 4 or multiple shifts.
Philips frequently contrasts his operational environment with the amenity-rich offices many of his Northwestern peers inhabit. "The people who work for me do not have a background working at companies that provide foosball tables and free lunch every day." Instead, he manages hourly workers who have spent their careers in plants and warehouses. Their priorities are markedly different: predictable schedules, opportunities for overtime, and respectful supervisors matter far more than kombucha on tap or elaborate office perks. This necessitates a leadership style grounded in practicality, fairness, and an understanding of their needs.
The loneliness inherent in leading a small manufacturing company, especially as a young entrepreneur, became apparent about a year into his tenure. His solution? A mini Bernedoodle named Mabel. "Running a small manufacturing company can be quite lonely at the top," he admits. His college friends are largely entrenched in tech, finance, or consulting, making it difficult to fully relate his day-to-day challenges. He finds more common ground with those in real estate, individuals who "eat what they kill," understanding the direct correlation between effort and reward. He notes, too, that his father always had a dog at the office, a tradition of companionship that Philips has clearly embraced.
One of his most significant, and perhaps unexpected, satisfactions has been the opportunity to "shaping a workplace for those people that is just better than what they’ve experienced in the past." He relishes the challenge of building a cohesive team dynamic and a positive culture in a context where benefits and workplace amenities are vastly different from those offered by a tech unicorn. It’s a testament to his adaptability and commitment to his employees.
Philips’s strategy for growth has been consistent and effective. He attributes the multiplication of revenue—from just over $1 million to more than $3 million—to the successful integration of four additional, smaller businesses into his existing factory operations. Crucially, he has prioritized reinvesting heavily in systems and infrastructure rather than drawing substantial cash out for personal gain. This approach reflects a long-term vision distinct from older buyers in their 40s and 50s who might rely on immediate cash flow to fund mortgages or college tuition. Philips candidly admits he has "had to invest in the business and not invest in my 401(k)" over the past few years. There have even been times when his family stepped in with capital to support complex integration work. "The business that I have now has the potential to grow far greater than the one that I bought five years ago, but I need to grow into that, and I’m 29, and that’s fine," he adds, embracing the patient accumulation of value.
Despite his success, Philips is quick to temper the notion that his story is a simple plug-and-play template for frustrated twenty-somethings seeking an alternative to corporate jobs. He emphasizes that some of the most difficult aspects of his role—such as having to fire someone 30 years his senior who has been with the company longer than he has been alive—demand a level of emotional maturity and tolerance for conflict that most early-career professionals haven’t yet developed. He recalls dealing with individuals who disrespected him due to his youth, noting that "Once that person was no longer in the business, no one felt that way anymore." This highlights the often-overlooked psychological demands of leadership, especially when taking over an established entity.
The thought of 22-year-olds expressing a desire to immediately follow his path makes him "queasy." "I don’t know if I would recommend that they buy a business as their first thing," he advises. When strangers reach out for guidance, he directs them first to foundational books and courses, then delivers a stern warning about the personal guarantee and the very real possibility of bankruptcy if cash flows falter. His intention is to ensure they are truly prepared to "burn the boats."
Philips’s caution aligns with a broader statistical reality: according to the Bureau of Labor Statistics, approximately 20% of new businesses fail within their first year, and about 40% cease operations within three years. This makes entrepreneurship inherently a high-risk endeavor, even without the added burden of a personal guarantee on substantial debt. When SBA debt and the complexities of managing a blue-collar workforce are factored in, Philips argues that ETA becomes a niche path, suitable only for a specific kind of operator—one who is optimistic enough to drive forward, yet sober enough to fully grasp the high stakes involved.
Lucas Philips represents a micro-generation of founders uniquely comfortable bridging disparate worlds: as adept in an AI-enabled productivity suite as he is walking a bustling factory floor. He spends a significant portion of his day leveraging tools like Claude Code to build internal applications that help his team prioritize tasks, manage work orders, and reduce administrative friction, streamlining the back office with modern technology. He also maintains a 1982 Porsche 911, not just for personal enjoyment but for attending car shows—a "professional necessity" in his business, and a tangible symbol of the costly lesson he learned in Oregon.
However, he is resolute that AI will not soon replace his skilled stitchers and cutters. "I’m never going to have AI robots running my sewing machines," he declares. The nature of Newark Auto’s work is highly bespoke and incredibly varied. One day, the shop might be meticulously redoing seats for a vintage Porsche, the next it’s fabricating interiors for a newer model, and the day after, it could be tackling a custom job for a BMW or Mercedes. To automate such diverse, intricate, and often one-off tasks, Philips explains, would require converting an enormous, ever-evolving library of product files into precise instructions for AI-driven machinery. This, he argues, would demand "tremendous resources" that neither he nor his competitors currently possess. "AI is an enabler for us, but it’s not a substitute for any of my blue-collar workers," he concludes, encapsulating his balanced, pragmatic approach to technology in a deeply human-centric industry.
