How Jake Swaney & Michael Kmetz Made A Multimillion Dollar Energy Exit
The entrepreneurs are pivoting from oil and gas to real estate with DH Capital.
Presented by Luke Lintz
Starting a business with your best buddy might sound like an excellent idea, at least in theory. Two (or more) people who know how another person thinks at any given moment is a huge benefit. But the rule is that business and friends don’t mix well, as things can get tricky if everything does not go to plan.
Former Harvard Business School professor Noam Wasserman studied over 10,000 startups and discovered a shocking statistic: 40% of founders were friends before they went into business, but friends only increase the chance of failure (with each friend on the founding team, the opportunity to fail increases by a stunning 30%). However, as every rule has an exception, so does this one.
Many successful companies were born when friends jumped head-first into business only to completely disrupt their respective industries—Airbnb, Ben & Jerry’s, and Harley-Davidson are just some examples. A power duo from Texas—Michael Kmetz and Jake Swaney—are also on that list of successes. Two friends were fed up with 9-to-5 jobs and decided it was time to make a living elsewhere. They knew one thing: they never wanted to go back and work for someone else, and entrepreneurship was the only way.
But their entrepreneurial journeys, albeit separate, started long before. Michael Kmetz has had a deep-seated passion for entrepreneurship since he was a kid. He learned the basic skills of running a business growing up, as he used to sell custom nerf darts on eBay back in middle school. But the tipping point was when Kmetz received the Future Business Legend Award from the Texas Business Hall of Fame.
“Selling on eBay taught me much about customer service, marketing, and basic finances. From there, I expanded into hosting and emceeing events in college, where I also dabbled in stand-up comedy,” says Kmetz. “But the wildest moment happened in 2016 when I was awarded the Future Business Legend Award from the Texas Business Hall of Fame. Interacting with Warren Buffett and Charlie Munger was pretty crazy as a 21-year-old kid.”
On the other hand, during his early years, Jake Swaney was exposed to the energy sector through his father’s work. Over the years, Swaney learned how impactful the energy space could be on a global level, and his interest only grew. “Upon graduating high school, I was specifically interested in the Finance and Energy Commerce programs at Texas Tech University. The Energy Commerce program was one of the newer, emerging programs that offered an extensive curriculum analyzing the overall energy market, fundamental driving factors of oil/gas, and principles of land acquisition.”
Jake Swaney and Michael Kmetz met in college, and after graduating, Swaney started to work for Pioneer Natural Resources, a major operator in the energy space. Meanwhile, Kmetz took a job in oilfield sales. But after spending two and half years in the industry, the idea of pursuing entrepreneurship began to swirl around in their brains.
One night, while the duo was out drinking and having fun, they got this brilliant idea; they would combine their strengths and find a company to buy and sell oil-rich land in West Texas. The plan was ironclad; they had the necessary knowledge, dedication, and a burning desire to prove they could win. The only way they could go was up.
“We both had different skill sets but were very compatible in business. It quickly became evident that we should look at this more closely,” says Swaney. “The longer we researched and continued leveraging our contacts/network, the more the dream became real. One night over drinks, we had an honest conversation. It went something like this: “If all these other people can do this, then why not us?”
And their decision proved to be a huge success. Within the first several months of running their oil and gas acquisition company, they started to earn some serious money. In the end, they built a multi-million dollar business, but in 2021 they decided to pivot into the real estate industry. As already established business people and entrepreneurs, they saw the opportunity to enter the booming industry. And yet again, using their skills and knowledge, they quickly expanded as their real estate company, DH Capital, currently has a diversified portfolio and is sponsoring large development projects in-house.
As Kmetz explains, they owe their success to the fact that they always believed and supported each other and never took their eyes off the grand vision. “The biggest skill is being open-minded and having courage. Anything is possible. The problem with many young founders is that they can’t bring themselves to commit to one business idea for a time if they don’t see a 30-year vision,” says Kmetz.
“But I must admit. I couldn’t have achieved any of this without Jake. He’s good at moving projects along and is impeccably consistent. And most importantly, he has always supported my huge business goals that many people initially laughed at before we found success.”