The Home Service Expert Podcast - Ken Goodrich: Picking the Brain of the 9-Figure HVAC Maven

Episode Date: August 13, 2021

Ken Goodrich is an expert in business process, negotiation, mergers and acquisition, business planning and operations management. As CEO of Goettl, he is widely recognized by organizations such as the Las Vegas Business Press, Top 40 Under 40 Professionals, and the Business Professional of the Year Success Club, He has been successful at flipping companies and has nearly 3 decades of experience in acquiring, integrating and developing HVAC, plumbing and contracting businesses. In this episode, we talked about business acquisition tips and signals, understanding your cash flow, hiring from outside the industry, effective employee training...

I read something the other day that said people will join your team for the vision, people stay for leadership, right? So you paint a nice, good enough vision of opportunity, there's a lot of people, there's a lot of very talented, educated people in big corporations who hate it. There's no future there, they're just drones. You give an opportunity to help build something, be part of something, maybe there's something for them in the future, they'll sign up. Welcome to the Home Service Expert, where each week, Tommy chats with world-class entrepreneurs

and experts in various fields, like marketing, sales, hiring, and leadership, to find out what's really behind their success in business. Now, your host, the home service millionaire, Tommy Mello. Welcome back to the Home Service Expert. I'm really excited about today. I've had Ken on three shows. Now, this is the third one. For those of you that don't know, this is Ken Goodrich. I'm sure you guys have heard of him. He came out with Michael Gerber in this exact room. Then we had another one years ago. Let me just tell you a little bit about Ken. He's an expert in business process negotiation, mergers and acquisitions, business planning

and operations management. He's the CEO of Gettle from 2013 to today. From 2009 to 2012, American Residential Services President in the Western Zone. The Vice President of Southwest Division. He's flipped a lot of companies. He drives a really nice jet to work all over the country. Nearly three decades of experience in acquiring, integrating, and developing HVAC plumbing and contracting businesses has assembled and managed teams that have installed over 250,000 air conditioning systems

and completed over a million service calls. Recognized by organizations such as the Las Vegas Business Press, Top 40 Under 40, Business Professionals, Business Professional of the Year, Success Group International, LeVette Entrepreneur of the Year, by International Business Magazine. I think the list goes on and on. But Ken, hey, thanks for coming in today. Ken, you've started a diet since last time you came in here. It's amazing what you've done with your body and just healthy living. I've met up with you several times since the last podcast. And you order a salad and you watch, you're drinking a lot of water.

What's changed with you personally? And I think a lot of you can relate to this being in business. You know, you get so focused on what you're doing and then you start sacrificing other things. You know, you sacrifice your free time, you sacrifice some family time, you sacrifice your personal health, and you know, it just, it snowballs upon itself. And I think what really happened was I just got to a point where I said I got to disrupt this pace that I'm on and usually when I do this when I make changes big changes even when I go into businesses that are challenged I figure some disruption you know left turn it just completely out of character completely out of routine so that you're not tied to the old

habits, right? So in my particular case, the best thing for me was that COVID happened. And, you know, I wasn't going to the office so much, so I was conducting most of my meetings with my earbuds and my cell phone, right? And I started to walk, and I would walk around around and as soon as I got a little more healthier and feeling better than I you know I stopped the fine wine every night so I stopped drinking the wine and and then I started eating a little bit better so I took some other directions that you know kind of helped me get my mindset right you know I focused on you know that got together with a group called i am a comeback and which is really focused on personal mindset and i just did the work you know i went through the process did the six-week program you know it's self-study right did the six-week program walked didn't drink wine and i started eating And lo and behold, it just kind of came

off. And now I'm in a healthier routine, working out more, and I'm proud to say I'm down 100 pounds. Jeez. Well, that's impressive. I'll tell you, 100 pounds. How long did that take you? Well, July 27th of 2020 is when I started july 27th so it took about 10 months and when you did the big health kick well obviously if you're drinking wine and getting sloshed i mean you weren't getting sloshed but obviously walking and exercise i got sloshed but what what is it what does it do to you mentally now that you've changed your habits and routines? Have you noticed anything like mental acuity and just really has it stood out or just feel a little bit better about yourself, more energy,

better sleep? What's the biggest changes you've seen personally and in business? Well, so all of the above, what you just mentioned, you know, I'm a few years older than you. So I was starting to examine more my mortality and thinking, well, I'm getting older, this and that. But I got to tell you, once I kind of got routine, you know, I feel like I'm sharper than ever and that I now all the culmination of my experiences are coming together and I can be much more effective. So I just woke up I just I'm clear thinking I got lots more energy and You know, I really just took back my personal power You know, it's funny that I was thinking about this on the way here in the original e-myth book

and he meant book that I got and I modeled my My first and all my businesses after, he talks about the fat guy and the skinny guy. And what he's trying to talk about is when you're heavy or you're not in shape, you're not where you want to be in life, there's a mental war that goes on. And you're having these conversations every single day with yourself. I'm sure there's lots of listeners who don't understand this. You have these conversations with yourself and you're technically at war with yourself. I'm sure there's lots of listeners who can understand this. You have these conversations with yourself, and you're technically at war with yourself.

And what Berger was talking about was you have to understand that you're at war with yourself. It's not an external force, and you control that completely. And what he was urging us to do is take control of the situation, be the skinny guy, do the work, create systems for your business so that you have a prototype and duplicatable process. So it's all interrelated. Challenging with your health and your weight is no different than challenges with your discipline to take hold of your business and make weight is no difference in challenges with your discipline to take

hold of your business and make it what you envision. You know, what's interesting about that? I love the fat guy, skinny guy. I remember that vividly. We read it as a teen book here at A1, but I've read it. I've listened to it probably four times, read it a couple. I think you've read it like 37 times, right? I find that the fat guy, once I have a drink, he keeps drinking.

But if I put myself in a situation, the skinny guy will continue to make good decisions. Or there's just a lot of decisions that I go in. Like, for example, I didn't make it to the gym a lot. So now the trainer comes to me and he gives me a really hard time. He's kind of an asshole if I cancel, which I need. Because otherwise, if he makes it easy oh sure no problem so i tend to make myself i force the skinny guy out as much as possible and i think building routines that force yourself into that better decision making ability has been a lot to me how do you you had

to overcome i mean there's nights i'm sure you're like wine is okay or is there any habits that you're just like, if I do it, I'll go back to the old way? Or is there a constant struggle? I'm just curious because this isn't just physical. This is a lot more to it than just working out and eating. Yeah, it's a constant struggle. I mean, I'm not, I don't find myself, you know, staring at the chocolate cake and wanting to get a piece. There's just a struggle with the daily discipline, making sure you get your walk in, make sure you get your workout in,

make sure that you get your five, six meals in, small meals, all that stuff, right? It's just discipline. And really, you know, you're talking about this journey. It allows you time to reflect and apply it to other pieces of your life. But in business, so we talk about culture and I've said this before, I never really understood the term culture because, you know, at first brush, it sounds like it's a huggy kissy thing, you know, and just, I didn't know how it really related in business. But as I started to study the process and understand it

i understood that culture is a system right and it's a it's a system it's a document it's here's how we're going to conduct ourselves here who here's who we are and here's our non-negotiables right and so i kind of took that upon myself and wrote down some non-negotiables and so define your non-negotiables like i've decided i'm never going back to that place at all costs i will never go back to the place i was in it was a non-negotiable and to do that i have to do these discipline steps it's the same thing with your business so right and by the way interesting thing that talks about he says if you're sloppy your business is

sloppy if you're lazy your business is lazy if you're messy anything yeah just everything that with a business most owners are founders I see you're in the acquisition game. So it's a little bit different, but you know, you've taken on how many companies have you bought? I don't even know. Hundreds. That's what I want to get into.

I just like the thing that it's taking you 10 months. And one of the things I noticed after the first, let me, let me jump in. Yeah. It took me 10 months and I fretted about it for 10 years. You get that? Yeah. I fretted about that for 10 years and I fixed it in 10 months. And I'm sure lots of people can relate to this. And it's the same thing with their lives and their business and everything else. We spend more time thinking about doing the work than just doing the work. It's crazy because the momentum comes from the results. And after that second month, but you're not going to see it in your second week. You know, if I work out, here's what I tell people, intensity is not as important. If I work really hard for 10 hours, I won't get as much out of it as I work 10 weeks for an hour.

You know, so it's all about building a routine and continuing to hit the routine. And I think we all got things to throw us back into that old habit. So I think you got to be really, really careful to put yourself in the right situations. And I think that, you know, for example, if McDonald's is the thing where you get two Big Macs and a large fry, try to stay away from McDonald's, put yourself in a different restaurant. Or maybe it's about hanging out with a particular person that smokes two packs a day and you got a cigarette smoking problem. Or, you know, in business, you get with the same guys. You know, it was interesting. I was listening to Grant Cardona.

I'm a big fan of Grant's, but I'm not like a huge, I haven't read all of his books or anything. And he said, when I started hanging out with billionaires, I realized, number one is, hang out with billionaires if you want to be a billionaire. Number two is they're really bigger on the networking they do than anything. You know, millionaires, you know, a hundred million plus, these guys have a vision. They have a dream. They're good on the ground. They could execute and they make a lot of money, but there's whole different priorities when you're a billionaire. I don't know. Have you noticed the differences between 1 million, 10 million, a hundred million and so on? What are the biggest differences you see in the, cause you ain't gonna, I know you got your private jet friends, even one of the guys,

is it Mark from a service finance? Yeah, I think he flies. Yeah. Yeah. Yeah. I mean, you know what they say, you know, wish I knew then what I knew now. Yeah, so there's such a disparity on what your thinking is like when you first start, as opposed to when you get some experience under your belt years down the road and you hit certain plateaus and you're able to look back and go, man, I didn't need to go up this side of the mountain. I could have just went around the hill here and got up on top. And if I were to give any advice on the topic, it would be, you know, we all do the same thing. We all get a skill.

We say we're going to start our own company. We go out and get our van or truck and we go start doing that work. Rather than sitting back and saying okay what skills do i need to have to build this business instead we all go out we start working and we figure it out we fight the struggle we kill 10 years you know before we get anything meaningful going and you know i would say you sit back and do kind of like what you just said you're studying grant cardone what he says to do maybe you can step some of these arduous less productive steps and move forward so get yourself trained and educated right the guy talked to me recently about starting his own company it's an hvac business i

said listen please before you start you, if you're okay with your personal money so you can survive for a little bit, go take some management classes. Go take some basic accounting classes. Get involved in some of the best practices groups so you have the business systems at your fingertips so you don't spin wheels for years at a time. I'm going to take so many notes here. This is so important. When you started, well, you bought Gettle, and you're known as this guy that goes in, and you know you're known as this guy that goes into companies that aren't really running prime. You go in and you try to find faults.

And that's not saying the businesses you've bought are not terrific businesses, because I think you and all the owners get along great. Some of them are still part of the business but you've been known as this guy to go find businesses i don't think you carry a lot of debt compared to most companies that are buying other companies what would you say you look for when you're buying a company first one of the good things that you if you want a perfect company and then what do you see when you can find something and fix it because a lot of people are on this train of acquisitions now all right so let me give you some context you know the reason why i like broken companies or

under failing companies are from number one from the beginning i broke my company almost to death and i found the information i needed to fix it and applied it and i fixed it and i grew it so somehow i learned how to fix a hvac plumbing service business okay so i learned how to do that so i started picking them up then when i realized most HVAC and plumbing service businesses are broke and they're not performing well. So there's a lot more of those than the few that are performing real well, growing at double digits, you know, have a good solid management team, have a direction. So there's a few of those and there's a whole lot of ones that struck so the market was easier. And I didn't have any money. I had to buy the cheap stuff.

But I got good at fixing them, applying the same principles that I did back in 1988, 89, 1990 to repair my own business. And so here's another reason why I like them, Because I want to build a single brand. I am building a single nationwide brand. And so the businesses that we're buying generally are underperforming. And underperforming companies require some change in management team and such. And it's much easier and less risky to try to change brands and cultures inside a business that's not well pulled together than it is one that you have to spend seven, eight figures to buy and they have a real strong reputation, culture, brand. So it's kind of motive there now i think that the guys that are buying

up the good the market leaders in every city and combining those businesses i think they're doing a great job of it and that's a model it's just not the model that i'm using the deal is is you've been able to build there's a perfect word, and people that watch the podcast, you guys know about this word. It's the best word. It's called arbitrage. And you hear about it on so many different aspects. A way to arbitrage a house right now is you find an owner that's selling their house. You tell them you will pay higher rent.

You ask them for a gargantuan price. You know, you buy a $2 million house. You sell it. And you rent it on Airbnb for them and pay them a monthly fee, but take on some of the risk. There's this word arbitrage where Ken's buying companies for small amounts. And one thing you told me last time is forget a multiple of EBITDA for one second. Understand that if you buy a company getting 60 leads a day and they're not home warranty crap, the lead quality is good. They're real customers because

they got a sticker. For me, stickers, you know the sticker game. It's hot water heaters. Those 60 calls, you could potentially get your average ticket on. So if you're getting 60 calls and they're only making $100,000 a year, it's worth a lot more to you than $100,000. So can you explain that to the audience of what we're talking about? I think you'd be a little more articulate. Okay. All right. So let me say this.

I have had a lot of guys over the years say, why did you buy that crappy company? And here's how I look at it. If the phone's ringing and somebody wants to buy something from that business, it's not a bad company. There might be bad management, right? But the very fact that customers want to buy something from them, that's a good sign it's a good business. So I always look at it like lead flow. I look at it and say, okay, what can I anticipate? A number of leads coming in next year based on some prior history when I buy this business. And I'm not counting on, you know, uncertain instances or smaller businesses.

I'm not really counting on the management team or some superstar salesman or anything to give me the lift. I just look at the number of leads and then I'll discount it deep. So let's say for this conversation, we have a business that last year ran 4,000 calls. I'll take the call count and I'll take out any, for air conditioning purposes, I'll take out where you already sold a unit. I'm going to assume that that unit's off the table now, even though people sometimes have more than one. But I just take it off the table. And then I have a net lead count. And then I do a study on 33% of the leads, 50% of the leads, and 75% of the leads that I would keep. I would look and I would say, I would apply my metrics,

my average tickets, my conversions to those lead flows and I would say, okay, this is the revenue I can anticipate to have from buying this company or lead flow. Then I just

look at it as a pure marketing play. What would I pay for this much revenue in terms of lead generation? And then I craft a deal around that narrative. Now, let me ask you this. I got so many more questions. I'm just going to we're going to go extra. Let me just kind of give a perspective. Yeah, yeah, yeah, yeah, yeah. Please. 2016, 2016, we bought a business in Las Vegas. You know, it was a small company.

We did about $4 million prior year. Wasn't making any money. Had a good name. But maybe 25-year brand in Vegas. We bought it. We didn't use the name. We changed it to Gettle. We turned on our branding.

Gettleized the team, if you will. We got them up to speed with our culture and our systems. And we opened up April 1st of 2016. From April 1st of 2016 to December 31st, we did $16 million when they did $4 million the year before. And it's really about proper execution and leadership. So you four times did in three quarters of the time. Yep. I love that story. I love it. Why are people so afraid about talking about profitability?

I hear all these guys saying, I won't do that to my customers. My prices are up 61%. And they're like, I won't do this to my customers. I won't do it. You're going to go out of business. What are you doing to your employees? What are you doing? And I see where they always talk, the real companies that are the losers, I got to say this, the real companies that are big time losers, they talk all about their customers, never about their employees, never about their family. They never talk about their wife and kids that's suffering. They never talk about no vacations. They never talk about the stuff that they wanted to do, why they got into business. They never talk about PTO for their employees or insurance. They always talk about their customers. Why is that? You know, I had a customer reach out to me just yesterday. And, you know, we have all our systems in place.

Management's taking care of customer concerns, everything. But sometimes they find me, right? They get on the Internet or they get on Facebook or they find me. And I'm happy to talk to them. I talk to somebody every day, right? But this guy, he sent me a nasty, nasty gram, you know, you're charging $400 an hour, you know, the gig, right? You know, I looked up the party on the internet, you're charging $400 an hour, highway robbery, blah, blah, blah. So I reached out to him. I sent him an email. I said,

I got your email. Let me look into it. I'll get back right back to you. And he responded, hey, your guy already contacted me. He made it right. I really appreciate it, blah, blah. And he said, I felt like he was a little evasive when I talked about his pricing. And I said, and I emailed him back and I said, well, let me be clear about pricing. Here's what you need to understand. We're not just providing you a tech mission to work on your system. Our business, we have to appropriate every single cost in this business in every single power that we sell. You mean like the dispatcher, the CSR, or the warehouse guy, or the cost of the insurance? Are there a conditioning bill at your warehouse?

Or the flights you take to be at a meeting or hmm that's weird right so we have we have that has that goes into there no matter who you use if they understand how the price that's how you build your hourly rate based on a productivity ratio so and i said at the end of the day, on a $400 job, after-tax dollars, we might make $40. So are we entitled to make $40 to make sure that your family had air conditioning in one of the hottest climates in the world yesterday? Anyway, I didn't say that last piece, but I explained it to him. And then he came back called me and he said you know what i you know i really apologize i didn't really understand how it worked and i get it now and you know the first impression was we're all sitting back smoking a big cigar and

you know raking in all this money on 400 service calls but now he understood that you might use that term it takes a village really to deliver our services to the homeowner and the cost has to be covered inside the fee. You know, I always talk about this, but I can go to the store. I think flour costs a few bucks. Water's generally free. Cheese is pretty cheap. I could make a nice big pizza for probably under a buck, but people are fine paying 20. So it's different when it's, it's comfort. They realize there's a delivery driver. They realize they got to pay for the ovens, the electricity. That's a building. They got to advertise pizza, pizza, you know, all that stuff. It's it's they get it, but they don't

get it when they look it up on Amazon. And you know why I love to sell to business owners? Because they understand that there's a marketing fee. There's an accounting team. There's so much that goes into it. And your company, I think a lot of the other companies look at you and they go, you don't need to charge those prices. You don't need to have meetings with your board of directors. You know why I'm having meetings with my board of directors? Because my company is going to be buying companies and growing. Number one. Number two, the reason why I'm setting up the best management team paying a little bit more than everybody else is because we are better at advertising. We're better at branding. We're better at training. We're hiring the best.

And the difference is, is these small companies, I hate to say this because I am one, I'm still nowhere near the size of you, but they don't really have a company. It's not really a business. It's a job. They don't have meetings. They don't talk have a company. It's not really a business. It's a job. They don't have meetings. They don't talk about profit. Is it really taking care of the client when you go out of town and no one's answering your phones and you're the guy and they all say, we're sitting back on this fat horse. We had a month above 15% because we owned a lot of inventory, but generally speaking, 15% is a good number in our industry. And the difference is, is we actually have the infrastructure and I can spend the whole podcast on this.

I'll just give you the last word just to tell some of the people out there, because I promised you I'm not talking down to you. If you believe you want a company one day, I just want you to understand, quit talking down to other people that are trying to grow their business by hiring a lot of people that when he's on his private jet, because he worked his ass off for 20 years, that are trying to grow their business by hiring a lot of people that when he's on his private jet because he worked his ass off for 20 years that he gets to enjoy some of the fruits of his labor and the labor does not have to be fixing hvac units in fact me and him both know how to we know our trades pretty well but that's neither here nor there i don't care if

you i never fixed an hvac unit in your life you probably regret knowing as much you do about hvac units i do hey let me let me tell you something about the pricing. So years ago, I read this book about Tom Monaghan, the guy who created Domino's Pizza. And the name Domino's Pizza came, I think it was his third or fourth try at a pizza shop. And the last one he called Domino's because he said they're falling like dominoes, right? But anyway, in the book, what he said was he really didn't start making any money until he hired three times more accountants than he thought he needed. And so that kind of resonated with me.

Basically, he says, you got to know your numbers. You got to know your cost every which way. And so I really started to focus my time and energy on understanding the numbers and the relationship between the numbers and the ratios between labor and materials. What's a gross margin mean? What's a gross profit mean? What is our liability insurance? What should it cost in percentage of sales? I really became a student of that. And I assure you, for anybody who has pricing concerns or are insecure about their pricing, here's the remedy. Go get your financials. Go get a great accountant. Make sure you get great

numbers every single day. And you study them. And you look at them and you say, I did all this stuff and that's all we got left. When you start to realize the risk that you take every single day. And I mean, like in our business, I mean, think about what knuckleheads we are. We like put people in trucks and we drive them all over Phoenix, Arizona, and we don't have any idea what they're doing, really. I mean, we have deep business. And we're trying to make sense out of that, coming back and completing jobs and bringing revenue back. When you start to look at the risk that you take, how hard we have to work, what it really takes, what kind of capital it takes to grow a business. And when I'm talking about growing, I'm not saying growth for the sake of growth, right?

Look, you're a sole proprietor. You're running your business. You have to grow to the point where you have a management team that's running it because you just can't do it all by yourself, right? And to be able to have a management team in place, trained, in concert, you know, running a nice, clean business, it's going to require you to invest capital. And if you don't have, you know, Uncle Jimmy, who's going to throw you a million bucks, you've got to earn the capital yourself through proper pricing and profits. Yeah, and profits are okay. I think I was talking about the book.

You mentioned it last time, Matt and Michelle, the power of positive pricing. That's a hard book to get. I got it on my shelf. You know, and Alan Rohrer wrote a good book on pricing as well. I just got to tell you, and a lot of you guys that are listening to this are a lot like me. When 2015, my CPA told me, here's how much you made. Here's how much you're getting taxed. I said, that money, I couldn't have made that much. There's not that much in the bank. Where did the money go? That's exactly what's called. Where did the money go? And her advice she gave me in my book was, she said, whatever your pricing is, double it and add 20 bucks because we don't really understand how much it costs until you have a couple of

trucks break down on the same day. I had two trucks, one transmission blue, $2,500, one with a $3,500 motor. And I'm like, six grand a day? I don't really have an extra six grand for that. And no one accounts for any of this stuff. And they say, they all brag that they're making 200 grand a year. You see a lot of guys are like, man, I'm working every day. They're working not nine to five, five in the morning to nine at night. They go on vacation. The system turns off. There's no passive income. And then the biggest problem I see is they can't sell any of that. They say, I've had 10,000 customers in the last 20 years. Your business is worth nothing. I'll give you 10 grand for your phone number. It just bugs me because they say that the guy goes the other day

on my facebook page he goes you're an idiot to tell people you should wrap your truck he goes i don't even wrap mine it was a waste of money and probably because the wrap looked like a scattergram that was like you're trying to what do you even do and you you know we talk about dan antonelli and i wanted to transition this into branding i just can't get off the pricing thing but let's switch to branding because i think what dan let me say one thing yeah pricing is i can spend all day i love this so pricing is an element of your costs and an element of market so doesn't mean you have to match the market it just means you need to be cognizant of what the market is and be able to either sell past that by adding value or sell under it by being a low-cost leader but there is a market you need to be concerned but i can't tell you how many businesses i bought that were

struggling and the owners were just they were done they sacrificed their lives they tragically wasted their lives trying to make this business work and they didn't get the help they needed and I came in with a new price book in front of the text said today this is what we sell this is how we do it and we went out and we made profit the first day and it's an insecurity about pricing and the insecurity comes from because they didn't do the study and get confident with the numbers. So please know your numbers first and foremost. I don't know how comfortable you feel about talking about this, but you said that you guys are

much higher than the industry average. And I actually use a stat that sometimes I'm more than double. And I'm more than double than the prices these guys are charging from 1993, because I offer value. I've got trademarks. I've got patents. And they say, how do you sleep at night? And I'm like, you sleep a lot better knowing that you don't have to do the work the next day. You sleep a lot better knowing you have brand new vans. You sleep a lot better saying, there's a good book by Jim Collins called Built to Last. And I love how certain CFOs, CEOs, COOs, they go, they're going to miss me when I'm gone. This company is going to crumble. And I look at this, when there will be a day I leave A1, you know, I'm not going to keep this till I die. Well, we'll see. I want to say when Tommy left, he left it better off than when he was here. He left it in such a great management team. He

really figured out where his flaws were. And why don't managers and founders have this mentality of just, they're going to miss me. There's employees like that too. They just say, when I'm gone, you guys will realize how how much why don't you do your job so good that when you're gone you train somebody so good it's something to brag about it's better to brag about that i think yeah well pick who you're going to be you're the leader of the business right you set the tone you set the course so you want to be walmart be Walmart. You know what? Walmart's Walmart is because they have a very, very sophisticated way of controlling cost. And you don't. You want to be Neiman Marcus? Then be not Neiman Marcus. And Neiman Marcus is Neiman Marcus because they have a very sophisticated way

of adding features and benefits to their product to command a better price. So both models, it's going to take a decision and study and effort. Me personally, I like to be a premium provider instead of a Walmart provider. That's what I want to play. I want to be able to offer my customers the best of the best in everything we do. And that's the best part. You know, I don't like to say best price. Best value is different. Because what I always tell people is, listen, if you got to, I'm just going to use garage

returns because it's so simple, the math. A 10,000 cycle spring that costs $200. If you got paid $200 and I've got an 80,000 cycle spring, the cost would be 1,600. But the value, because it's valued eight times more, it's an eight times better value to buy my spring. So if I'm 600, instead of paying eight times, you're paying three times, you're getting a much better value for that 80,000 cycle spring. And customers and our clients, they understand this. They understand brakes on their car. They understand there's certain things.

And I think it takes a certain individual. I wrote down everything that I'm looking for in a tech. And the list goes on and on. But I said, hey, I'm looking for somebody that's confident, like to look me in the eyes. Look for somebody that's confident, like to look me in the eyes. Look for somebody that's trainable. And recently, me and your goat, Dale, I've had some conversations. He said, they also look for financially stable. He said, we also look for people that are stable in their relationship. I look for somebody that's coachable. And we went through this huge list. And my question to you is we've all made,

I've made more bad hires than I've made good hires. But how do you make a great hire? What are the things you got to do? Always be recruiting, but what do you look for? How do you really narrow the gap when you're hiring? Because I think everybody needs to sit down right now and think about who they need to hire and listen again. Because he's hired some of the best for some of the numbers you're turning out which we'll talk about here in a little bit if you don't mind well you know obviously every role has a different personality type right but i would say if you want to ask me one of my core competencies i would say

is picking talent and i just learned when i first got started you, here's a profile of a good one. Here's not what I'm looking for. Right. And so I am constantly searching for talent. And, you know, when I see a guy that's driven, he wants to better himself and his family disciplined. So he's disciplined. He's driven. Maybe not too creative. You know, we can only have one Tommy Mellon, right? Not too creative and coachable and all the other attributes. But how do you figure that out? Obviously, well, you just spend a little time with him.

I've gotten to the point now where I can kind of see it in somebody. Then you start talking a little bit and you kind of get their background. But like, I went to this trade association in Arizona meeting the other day and they asked me to say something and I said something about my GM here, but give me an idea. So my GM in Phoenix, he's in his 30s, former F-16 Air Force pilot. He was retired from the military, and he was graduating from ASU with an MBA. And I happened to meet him, a friend of a friend, a friend of one of my employees, actually. And I started talking to him, and I said, so what's your plans? He goes, well, I really want to go into mergers and acquisitions or be an investment banker, something like that. I go, you don't want to do that shit.

You want to be in air conditioning. And anyway, so I explained to him the opportunities of getting on board of what we're trying to do, what we're trying to accomplish, and what the long-term vision of the company was and where he could fit in and the opportunities that he would be afforded by being a part of it. And one of them being, I said, look, worst case is you're going to come in and you're going to experience and learn how to run your own company. Here's the methods that we use to run a smaller business. And in terms of what we do, I think we're a little bit bigger, but in terms of all businesses, we're a small business, right?

Somebody can come in and kind of duplicate and have his own thing. So anyway, I sold him on that. So I sold him on that. He graduated, he came to us, we put him through a training course and he's taken the business, and he's grown it. 5X on revenue and multi, multi millions of dollars on the bottom.

But he didn't come from the trade. He doesn't know about air conditioning. He doesn't. Well, you know, that's interesting because. But he has the discipline, the character. We gave him the systems. He owned the systems. He learned the systems. He started to discipline, the character. We gave him the systems. He owned the systems. He learned the systems.

He started to execute on the systems. He didn't get distracted by the other stuff that he could get distracted because he didn't know any different. It's like what you said earlier, that I may regret knowing as much as I do. I mean, sometimes I do because I know an air conditioner down to the last screw, and sometimes I'm distracted by that. But he was not. And I mean, I have countless stories like this, identifying the talent, but I guess what I'm trying to say is

don't be afraid to look outside your own door. Don't be afraid to look outside your industry and get some business managers in your business. You know, when Julian from Next Start, that one visited me, he came and visited me, and he's like this. He's sitting next to me across the table, and he goes,

dude, I want to know one thing. And he smiles. He goes, I just want to know where you're going to get your leadership. He goes, because you're not going to get it from the garage or in the street because you've got to go outside of it. You know, you look at the owners of a lot of these companies and listen, I can't see anything bad. I was a garage door guy. I happened to go to school for a long time.

I got more in the last five years of being in the garage door business than I could ever get with my master's degree. But what I can tell you is, you know, I actually have a PhD at Portland Redetermined. But the fact is, when I look at a lot of the guys that I'm getting talent, it's not from the industries. And that was a great question he had. He said, how do you plan on getting all this talent? And I think you've searched. I've met a lot of the people that, you know, you had a gal. She lives in Washington, D.C., I believe. She's my market director. And we spent several hours together talking about marketing.

Because I love marketing. You know me. Marketing is jam. Because marketing is recruiting, by the way. But great people. She's working from Washington, D.C. She's never done HVAC in her life, actually. Before this.

All of your people, I find, they didn't have HVAC like your technicians, some of them did, but how do you find these great people from outside of the industry? You've just got to go to work, right? Everyone you meet, you start talking to. I read something the other day that said people will join your team for the vision people state for leadership, right? So you paint a nice something the other day. It said people will join your team for the vision. People stayed for leadership, right? So you paint a nice, good enough vision of opportunity. There's a lot of people. There's a lot of very talented, educated people in big corporations who hate it. There's no future

there. They're just drones. And you give an opportunity to help build something and be part of something. Maybe there's something for them in the future. They'll sign up. Let me throw this one at you. 2008, I was at a family barbecue in California. And there was a guy there and he was somehow related to my wife's family. And I started talking to him. Sharp guy.

Him and I hit it off immediately. We're talking about business because that's what I like to talk about. And so, you know, we're talking about business. And he was a senior VP at Otis Elevator. And he ran a huge region, $500 million of revenue. Been there for many, many years. Harvard MBA, polished, smart guy, but not kind of had a little street side to him. Oh, by the way, when I look for these management types, I look for a little street in them, a little street fighter, you know, not too much, but nobody's fool, right?

You got to pick somebody who's nobody's fool. So anyway, I get this guy, and he says the same thing as the fighter poly. Well, you know, I'm retiring from Otis. He was only 50 at the time. They said, I'm going to look for a president's job somewhere, another company. I said, you don't want to do that. Be some corporate drone, you know, work for a PE firm and get on the treadmill and just like kill the last 10 years of your life that way. I said, come to me. I will teach you how to own your own company. Nice, clean,

controllable business you can run in San Diego. But you work with me for the next five years and you will have that education. And so the guy came in, he took the deal. So I have a Harvard MBA, very accomplished business guy, is one of my key guys. And this guy, he brought so much value to our company, so much value. And I still rely on him today as one of my key mentors. But he went off, he finished our project, he bought a little company in San Diego, making good money, loves it. Everything that I told him what happened came true. So I guess the point here is that you just got to go out and do the work and find these people and bring them onto your team and go outside sometimes of your industry. I think it really goes back to that networking.

It's networking is everything. It really is leveraging, asking more questions and doing the talking too. You've already, I know you've always said that I was quite a networker. Yeah. Well, you have this aura, like, because you're already very accomplished. You have accomplished what happened in the nineties with service round table, nextStar, everything that's happened, and the acquisitions and stuff you've done. Most industries haven't seen that yet. So you're like a legend to me and a lot of people because you've done a lot. You know, there's a lot of really smart people in the HVAC industry.

I think what the HVAC industry has done is increased the level of competency of the business. The reason private equity companies are flocking capital investors, they're flocking to home service now is because of the intelligent people now in the industry. You said you had a Harvard grad in 2008. OK, that kind of what guy on this call on this podcast right now could afford a harvard grad a guy that you know just in debt that's 250 000 at a bare minimum of this they're schooling so can you pay a harvard grad to come work for you today if not your prices are wrong yeah my coo is a woman uh kim miramontes, and very accomplished.

I've heard great things about her, by the way. But I'll tell you, she would eat any man alive. She was a very sharp business person, great leader, really has enriched our team and our business. But, you know, we're dealing with a pro. You know, we're dealing with

a high-level pro, and when you get a high-level pro on your team, you better be out ahead of the game so they don't run over you. You've got to make sure you provide the field they can run in. That's one thing, too, is I think a lot of people are embarrassed.

They get someone like a pro on their team, and they go, we didn't really know much about that. The thing is, you've got to have complete transparency and say, listen, the reason I'm getting you is we know there's a couple of holes in my business. This is where I excel at. And one of the things I found, Ken, is when I started stepping into zones like finance or accounting or even in the training, I can give a great orientation speech. But if you want to get me out there and tell me slow down and really take my time, it's annoying to me. I don't function well. I know how to read a balance sheet and income statement. I can dig into things, but is that the best use?

My time? No, not for me because that's annoying to me. I love meeting new people. I love talking about marketing. I love sales. I love branding. I love what we're talking about. I love podcasting. What's great about this is I'm able to do the things I love. My example in numbers was, if you're unsure about how to price, spend some time with that, and you'll be sure how to price that. Spend some time with your own number. Hey, by the way, let me throw this at you. We're going over, by the way. Can you tell Bree we're going to go over by 30? Do you have time? Yeah. Well, listen. Okay. so you want to go outside and you want to get this talent on your team. But be wise, too.

Look at their background. I always say, like, if you're going to get an older guy that looks like, you know, an older guy or a woman that's accomplished in their career, make sure they got momentum, right? They have momentum in their career. Don't get somebody who's on the way out yeah because i've done that a bunch of times too so you just got to make sure that they have that discipline they have that drive got the little street sign to them and they got option don't pick up the guy with this was his last stop you know's interesting. One of the questions just came through is, do you hire skilled people or do you kind of hire the people?

And for me, is you need people that are skilled in certain departments. Financing. If you understand the finance department, it's picking the best financing for the company. It's setting you up with money to grow. It's setting you up. They're checking insurance. They're the defenders of the money. I've always been good at making a lot of money. I can make the phone ring off the hook. I know how to grow. It's setting you up. They're checking insurance. They're the defenders of the money. I've always been good at making a lot of money. I can make the phone ring off the hook.

I know how to sell. I know how to get five-star reviews. I know how to sell new potential hires on it. One thing I don't know how to do, I mean, I hate to say it, but it's hard for me to keep it. And I think a lot of owners are like that. A lot of owners, they were the salespeople at one point. And we're really good at making money. But if get the right partners and i call them partners because really they are partners man they're part of the business they're a team is they're the ones that help us keep that money i is that what it was like for you and your controller we made a lot i'm on my fifth or sixth person i finally got somebody that's actually helping me keep a lot of the money you know yeah well that's i didn't start to really keep any money until one i lived the numbers i knew the numbers so you weren't gonna pass me and then i just like i

said earlier about tom monahan i just went out and I put counting team in place and we counted everything. Until even today, we count everything. There's not much that goes on our business that we're not counting every single day. We're making decisions based on that data. Let's jump into something. So we talked a little bit about hiring. Now, one of the things I really love that I realized one day, and Al Levy was a big help with this, is he said, you cannot go find guys. You know, most people in the home service industry are going out. They're going, how can I poach somebody from another company? I need to find a good guy.

I think one of my biggest things is I got 19 guys leaving on Friday that are going to be badasses. They never knew what a garage door 716 11th, 11 point socket is. These guys go out and they know everything now. They've got their own set of tools. They're going home with a brand new van and they're going to be, you know, I have a guy, his first month, and this is going to piss off a lot of garage door guys. I don't care. He did over a hundred thousand dollars his first month in sales. Now he sold a lot of doors because we teach people how to sell doors. We still believe in selling doors. We love giving people options of buying a new door when it's over eight years old. Now a lot of guys will say, oh, they don't need a new door. Who gives a shit? If the customer wants a new door, they don't need anything that you think they need. I'm sorry.

I hate it when they say they don't need that. Nobody needs a brand new HVAC unit. You could probably piece it together and make it work for another month. Whoever's listening to this and they don't like it, just turn it off. Don't listen to me anymore. It's fine. But I'm telling you, that's what I'm asking right now. What were you asking? I did go into a lot because it went

off on a little tangent, but yeah, I did go off a little bit. let's go back to the originals yes yeah so you're training guys you train them from scratch too you guys are excellent at sales they're excellent at five-star reviews they're excellent at maintaining your brand so you've gotten to poach guys in the past in the 90s like you said i'm sure that was your whole game so let's just talk about how you're training i went off a deep edge because i said i was the guy i got you so again i try to stick to things that work right so i've stuck to the michael

gerber system it's just kind of my rock i go back there all the time so it sucks michael gerber clearly says your business is a school for your employees, has to be a school for your employees. Right. Your business has to be a school for your employees. I mean, it's an exercise in futility for you to run around and think you're going to put an ad in Indeed or Craigslist. And a group of Prince Charm is going to show up and make you a million dollars a year in your business. It's not going to happen, especially now. There's such a trade labor shortage, right? So if you're going to be in the business in a meaningful way, you've got to build the school first. The first thing that comes is the school.

Here's how you do it. Here's how we do it here's how we sell it here's how we answer the phone here's how we account for it here's what we do right here you build the school first and then you move your team through it but you know you talk about we have you know our industry traditionally has a very high turnover rate it has a higher turnover rate because everything's transactional people are in most of our kind of businesses because how much you're going to pay me not i want to be here i want to be part of this growth i like the culture i like the people i work with i respect everybody not all that it's all transactional if you build a business that's a school where you've they started with you and they learn and they grow that's a business that your turnover is down

people would want to advance and you build something of lasting value this whole coaching game and all this nonsense that goes on that's 90 stuff yeah well anyone playing that game you're just playing the old school game it's over school you gotta have a school you know it's interesting because when i get on a whiteboard first thing i do is they go oh they're gonna pay you more money first question i ask myself is how many jobs can you give me a day number one number two am i a 1099 or am i a w2 and what does that come with and what are you doing to grow me i'm a right first year millennial i think i'm 83 they started on 82 so i want to be grown as a person i want i want to know that you're going to take me into a class i want to know that you're going to continue to support me

and i gotta say it's hard to do there's's a guy named Shane on the other side of the camera here, and it's not easy. He's getting supported by a guy, Bill Hillestead, who's been on the podcast and he's learning. And it's important that I'm trying to get as many great people. I can't teach everybody. I can probably teach 3% of the people here, but I love what you said. So basically for the answer for that is the creative school for your employees. Let me ask you this. So it's the first thing you do.

Well, I've noticed that I continue to get better every single month. My first class, if you look at it was like, man, the guy took 87 cigarette breaks. Great guy, by the way,

he's not here anymore. He comes to visits, but it was just a different mentality and it continued to scale. Well, let me just share this. Yeah. Let's go with the brand thing. But if I was starting over, I would get a warehouse. If I was in the air conditioning business, I would build up one system,

build it like I typically see it in my market. I'd build it exactly how I want to do it. I would take pictures. I would make a little book on step one through step 452 to have it done that way. And I would start hiring people and I would say, take it out. Let's put it back in. And I would grade them and coach them and teach them and say, take it out, put it back in perfectly. You think McDonald's hires some kid out of high school and says, go make me some Big Macs? I mean, they teach them how to do it first. But what we do, we say, oh, you used to work over at Joe's Air Conditioning, so you're probably pretty good.

Get in my van and go serve my customers. Why do we do that? So I would get the one system. I'd start there and I'd get them trained. And then when I expand your product offering, you build a system, you train them on that one. But at least you know that the jobs that you're doing are done right, done the way you want them,

done exactly the way that the customer was told that we'd done them, done the same way that you told the customer it was going to be. They got what they promised. They were promised, right? And then you don't have callbacks and problems, and you can grow from there. And you find yourself, if you're just going after the top bid, you find yourself in this constant pressure of what if someone pays more? And it's not good.

One of the things I'd recommend if you're going to get a trainer, find somebody with kids, because I find that the trainers that slow down and they're patient and they say that's okay you're okay you did okay we're gonna do better next time it's because they did well with kids and they're very very patient with me i don't have any kids yet i have a dog i'm becoming more patient he moved in the house this morning i was pretty patient with them but at the end of the day i realized my my best trainers are just, they're slow. They take their time. They talk softer. They say, I understand where you're coming from.

And that's so important. Well, I know. And that's another thing. And we can talk forever on this stuff. But I don't know why we always go out and say, you're the manager. Go train. Go train your people. Sometimes managers don't know how to train you.

Training is a skill. No different than the skill of installing a garage door or an air conditioner. It's a skill set. And if you've never trained before, you don't know the skills, you're probably not that good at it. So you're right. Everything you do, you've got to get the skill set in place to accomplish what you want to accomplish. Branding and marketing go hand in hand. So we're going to tackle these two right now i know dan did your raps i kind of helped you create the unification amongst the brand and i know roy williams kind of helps you a little bit with you know last time we

talked you said if you listen to the radio half the people got to listen to it and hear your name three times i think i don't forget what the exact stat was but you've already talked about it you know when i talked to uh dale he was out in the field every day and he said when we turned on the brand and the billboard and the radio and everything was kind of clicking though that means you had high conversion rate really good systems he said it was like something he'd never seen before. He was so excited about it. He goes, you know, Ken did it, but I was part of it because I was in the midst of it. I saw it happen. And I'm seeing it happen in Phoenix with all my trucks and the billboards and the bus stops. And it's expensive. Let me say this. I'm spending around, I don't even want to tell you guys,

it's tens of thousands of dollars a month just on some of the billboard stuff here. It's just this market. But how people are seeing it's a household name. We can afford to do it. And they see us in their neighborhood all the time. What do you think the biggest piece of building a brand and getting your marketing dialed in? Because this is something that I feel like most businesses fail at. Well, I disagree with one thing you said where brand and marketing are the same thing. So I don't think so.

Marketing advertising. So I look at marketing as this. Marketing is your brand. Here's the color. Here's our logo. Here's what we stand for. Here's our story. And this is the most important piece.

And we never, you know, we as an industry haven't done really good at it what's your story and you know the story was harder to tell back before computers and social media and stuff but what is the story of your brand what will connect your company to a human being and make them like and trust you, right? And obviously, the more authentic your story is, the better and the more connection you'll have. For me, in my particular case, Gettle had a great story. I mean, they invented the air conditioner.

They invented the residential air conditioner. They're here in Phoenix, Arizona. Gettle Brothers moved out here. You know, they have 114 patents for air conditioning. All that builds some credibility, right? Most people who lived here, they used to manufacture air conditioners, had a Gettle. And then introduced me into the story. I'm 10 years old, holding the flashlight for my dad, shining it on a Gettle air conditioner because he was a Gettle dealer.

You know, I just kind of fell into the story. I mean, I lived the story. And so then I went to Dan and Roy Williams and said, okay, how do we tell this story? As a matter of fact, just to be fair, I didn't even know I had to tell the story. They both told me we need to tell this story. And so Roy crafted the radio scripts and kind of our brand narratives and Dan created our brand logos and I don't know what you call that stuff but you know he create our logo and all our brand image right and they both tied together and

both of them said the same thing they got to be consistent the logo always has to look like this the message always has to be this and so that's important luck but that doesn't get you any customers right but now you have the brand your people live the brand you have a some sort of slogan that ties the brand to all your people and the community to you. In our cases, we do things the right way, not the easy way. Now, so now I have a brand. So now when I go out to advertise, when I do SEO and SEM

and Facebook advertising and radio and this or that, it's telling the consistent story story and it's a story that people will connect with it which makes my marketing conversion better significantly better I mean let me give you an idea when I first bought ghetto and I was pulling together we had a metric we were looking at at that time click-through rate on your paper coin, right? It was low because you were going lead gen. Yes.

So we were, you know, one, two, I think at the top we got it up like 4%. You know, I talked to other guys in the industry and, you know, they thought that was a big number. When we turned on our brand we never dropped below 60 percent now you get it it's the brand what's elevated it but to get to that brand you needed congruency but the real thing that i tell people is they go why don't you just brand in a brand new market why don't you just go into for example we're going into north carolina we're going into sub-charlotte we're going into orlando we're going into minnesota and they're like why don't you start out with that i'm like first you need there's an order of operations and i care a lot

about my conversion rate average ticket matters booking rate and then slowly what happens is you got to build a baseline so when you build a brand and there's no reviews, people are going to check out a lot. And I keep hearing this, but he got two reviews. He's done a brand new. So buying a company, changing it to get all makes a lot of sense. Cause now you're taking an old brand. That's got a lot of reviews, changing the name.

And now you've got credibility. I love the thought process to that. And there really is. If you had to tell me you're going to go straight greenfield, Ken Greenfield means organic growth For those of you that never heard What is the best order of operations When it comes to marketing?

Of course, brand Call in Dan, call in Roy Call in the people you need to call to build up Get the cohesion But after that, what's next? What would you do if you needed to? You got to start somewhere. You got to hire.

You got to keep the phone ringing. Well, I'm not sure this is what you asked me, but I'd probably go in and buy me some sort of lead flow, smaller company, just to keep the machine running. See, listen to that. He's an acquisition guy. He's going to buy a company.

And I love that about you because that's going to buy a company. And I love that about you because that's the way your brain thinks. And I'm not talking spending $27 million. I'm saying, go buy a business where you give them $50,000 down and 6% of the revenue that you create from their customer list over the first two years. Okay. A royalty payment, just so you got work to do. Then I turn on my brand campaign and my brand campaign is like, I tell the story, you know, for the first month or two, we're just on the radio telling a story. It doesn't say call us. You don't even know who we are. We're just telling a story and getting people interested. Our billboards will have our name but if we block out that we do

air conditioning and we try to tie all that together and then we start farming for you know we get a couple guys on the road and we start visiting customers putting reviews up making sure they're taken care of taking easy and just brand building making friends and once you kind of get that in place then you can start amping up the advertising to get more leads so that your story can help you sell your product and service you guys heard that write it down. Do you always buy a hundred percent of the companies you buy? Or do you ever leave the owner as a minority owner? I have like creative structures.

How do you, I've done everything. It's a tough one, man. I mean, again, I'm kind of in that. I bought a lot of really good brand businesses and the owners have stuck around us and kept part of their equity in place.

And that's been all good. It's all works fine. When you leave, when you buy a company that's underperforming and you leave the old owner in and they don't know what to do or they don't have the, you know, they just don't have the drive anymore to go help out. Sometimes it can be a distraction. So, you know, if you're going to buy just lead flow kind of businesses, I would say the best policy is buy the lead flow and let the guy go retire. Okay. You ought to understand some psychological aspects of this whole game.

One is find the man's life's work okay he's poured his blood sweat tears in this thing got to be very sensitive how you talk to him when you consummate a deal right the next thing is is every single time that i bought companies and turn them around i don't say every time the majority of time though the ex owners are not happy about it you know because you just shine a mirror and said you failed he didn't with your business right and so you have to be careful with all these nuances so you don't cause unnecessary enemies so you bring a guy on, unless he's the right character and the right

demographic, you could have him on your team and he would be a detractor because he can't help himself because like... He doesn't want it to win. Yeah, he feels so bad. For you to win, he has to lose more. You follow me? That's an interesting dynamic. I never thought of that.

Oh man. I love the model of just saying, let me get the phone ringing. Let me buy this. It keeps me, if you guys strong and then let me do my thing into it. It's a really, I love that model. Let me ask a few speedruns. I know I take a lot of time on these, but I love this. This is like gold to me. Housing market. I've just heard, and I talked to a guy that does about $600 million a year in his manufacturing company, and he told me he expects 5% increase to lease

the year 2025 on residential houses on average from the United States, meaning that this isn't a big bubble. What are your thoughts? If I could the United States, meaning that this isn't a big bubble. Yeah. What are your thoughts? I don't know. If I could figure that out, I wouldn't be sitting here. I don't know.

Okay. Let's talk about this. What do I think? I mean, you know, from my armchair quarterback of looking at the economy, I would say we're going to have some inflation because of the stimulus money we put into COVID. So that's going to cause interest rates to rise, which is going to have some inflation because of the stimulus money we put into covet so that's going to cause interest rates to rise which is going to slow down housing growth and housing prices and that makes sense to me but i don't know i don't think the price is that's good

well you know a lot more than you'd have to know so you mentioned this you weren't sure if we should talk about it but your your team, Landon, puts a lot of stuff out there. You guys got a big group. Einstein's and whatnot. Well, you guys contribute. You contribute a lot to that. Let me tell you why. I just want you to understand something.

My wife asked me today and I think she's actually watching today. Hello. Hi, Wendy. She said, why do you do this stuff and you tell everybody your secrets watching today. Hello. Hi, Wendy. She said, why do you do this stuff and you tell everybody your secrets? And I said, well, I don't know

that I'm telling you those secrets. But here's what I know. When I first got started in business, like everybody else in this industry starts a business, they don't know what the hell they're doing. They know it trained. They don't know how to run a business.

And it's two distinctly different things. And I struggled. And I had lots of sleepless nights and lots of struggles to try to get through it and figure it out. And I finally did. But I never would have got there without the help of other operators who would help, you know, would give to me. And so when I'm on Einstein's or any of this stuff, it's just me paying forward because they did it for me when i was coming up and so i'm trying to do that for the industry going forward yeah you do you literally open up like never before have i seen very few people in my life but the podcast really for me was getting to get these i gotta say selfishly i get to listen to you tell me all your secrets

and then i go to the next guy and he tells me all you got to take everything with a grain of salt because not everybody that i've had on the podcast is nearly successful so you want to take the best advice from the most successful person and maybe facebook ads whatever it might be right so i get that person on but i will say that when i give as much out as I can and my whole team said, man, you're nuts. Why are you telling them this? Everybody's going to do that. And I said, number one, I can tell everybody to go. This is what I would say. Eat healthy, work out, get a lot of sleep, drink water. And they're not going to come back with a six pack a year later. So you tell them how to do it. Doesn't mean they know how to actually do it. They got to go out and get it.

So you can tell them anything. They can read as many books they want michael gerber they can read the book and they don't go out and do it you actually did it so i don't mind telling them and the people that do do it those are my friends those are the people i want to be their friends anyway i'm gonna call me up and i still say boom i want to hang out with you because you're actually changing your life and making a difference and you're going to accelerate everything so wendy i gotta say thank you for letting them come do this today appreciate it you know you talked about you said dude we just had a monumental huge month if everything was to go this month i think you'd be kind of quarter of a billion dollars in my mind this year it's not always going to be this hot out all year but

you just had an amazing, crazy, record-setting day, and then you had another day that you did the same, and you had another day that you did the same, and you had another day. And basically, a lot of the days this year, you broke the seven-figure mark in a day. I don't think a lot of people have ever heard of doing that. Hopefully. We talked about this. I don't think it's already out there so that's crazy that's crazy most people won't ever see that in their lifetime you did it in a day what does that feel like and how did you do it you know these are the things that I think people want to listen to well it feels great every million helps right but but you know I don't take it for granted it's just the culmination of lots of hard work with lots of great people and, you know, just doing the right thing.

And I knew we'd be here. I just always knew we'd be here. But I clearly know it wasn't me. I mean, I have lots of good quality people on the team that led these initiatives and keep growing the business. Now, me, I'm proud of it. But I'm the guy who's like, okay, well, if we did that, and if we change this, this, and this, it could be two million you know i keep pushing the envelope it's just my nature because i just love this game so much so for me it's not so much i mean i believe that you when people say it's not about the money i'm not sure i really buy that because you have to have the money to run the operation and support your primary end in life right so? So you got to have some money to do that. But for me, it's not really about the destination. Well, it's about this game that we're playing,

this business game, this home service game, evolution of it. I think that in terms of our industry, home service industry, it's ripe for a huge disruption with technology or other means and you know i just i want to be in that game i want to see how far we can go i want to see how far we can elevate it and i also really really enjoy watching my people grow and succeed and build things. I have taken, over the years, I've always taken my key people. I've done 24, I've sold 24 companies in five different transactions, and I've always taken my key people and made them a part of the equity to do that. So I like to see people grow and flourish and make something and step out of the norm and build some future for themselves.

I'd like to be part of that. It's a great answer. I think that you got to look back and the first thing you said, it wasn't all you. And I don't think anybody to reach your level or my level, you know, going on 400 employees, there's no way to get there without the team. I mean, they're everything putting yourself in the spotlight you either get a lot of lovers or a lot of haters you get both and i think uh you and i both get our majority both or a lot of both of them i generally seek help from better industries hr plumbing electrical i don't think they're better than us i think that they're further along.

So, what do you say to people that are just out there going, man, that Ken guy, he talks a lot of crap, but whatever. You know, the reason I'm asking is I'm just curious because I get a lot of it too. You get the haters that just, they don't want to see you succeed. They're jealous almost. Yeah, I don't pay much attention.

I mean, I'm only interested if you're in the game. If you're a nasty spectator, I don't pay much attention to that. For us guys, men and women who are in the trenches trying to build something and trying to create something from nothing, and the struggles of that, that's the people I like and admire. You know, you said you studied the numbers and I always go back to four main numbers and I'll just want to go over these real quick and then we'll close it up here is you've got the booking rate, which that's where it all happens. Like you got to understand your cost per acquisition first. Then you got to understand your booking rate. Then you got to understand your face-to-face conversion rate and your average ticket. And I feel like that kind of gives you a formula for how much to dump into the tank. Because if you know that, you could figure out the end number and you could just keep adding until that number changes and you get a point of

diminishing returns. So those are the things I look at. The finance side looks at, wait a second, maybe we could get it cheaper right here. Maybe we could use this. Maybe we could get better gas, you know, whatever that stuff. They're always trying to keep more, but I'm more on the offense. You know, let's just make more money. Let's let them do better jobs. When you're really stepping into a company, what do you look at?

What are the quick wins? What are the ones that you're like, well, obviously selling more HVAC units because very few people, they brag about how they can fix something rather than replace it when it's not their decision. So I think you told me one day to stand, I'm not going to share it, but a lot of your income comes from new HVAC, more new than repair. So where do you see the big win? You made it sound like the price book was probably the biggest one you said i give them a new price book i turned black automatically instead of being right in the books all right so here's what i did i created this years ago i created just a checklist called branch right one is the leadership right can the leader recruit train and motivate the best and

brightest that's question number one recruit, and motivate the best and brightest? That's question number one. Recruit, train, and motivate the best and brightest. So if you don't have a guy who can influence his team and get good people on the team and motivate them and drive the plan, that's number one. You've got to get that fixed. Next one, price strike. There's mathematics behind pricing.

You know, pricing isn't just, gosh, I want to make a bunch of money, so I just charge a lot. There's math behind it and justifications for the pricing and market constraints. So make sure you're priced right. 99% of the time in our industry, guys, are priced incorrectly, meaning too low. And they're not bringing in enough per job to cover their costs and or creating retained earnings to grow the business with. And then are you paid right? Pay programs are a big challenge in our industry. A lot of us base our pay based on what the guy said he was making at the last place not an organized pay plan that fits into your pricing model it's just we'll pay you 22 we'll figure it out later no that's not how

it works so you're priced right you're paid right you're people right now are your people of the character and caliber that you need to execute the plan? So you go into a business and if I don't have the right character, you know, sometimes I've gone to businesses where I'm like, holy crap. I feel like I'm, you know, with a bunch of mobsters, you know, everybody had their own side deals going. So do they have the right character and caliber to execute the plan are the positions right so positions call to org chart do you have an org chart here's who reports to who and here's i have the right management in place to make sure that we execute on the the promises to the customer and our promises to our employees,

right? I have enough staff and the right staff. And then the big three is my lead generation right, my lead conversion right, is my client fulfillment right, meaning am I doing the work better than expected, better than what I promised the customers to do? And the final thing is accountability. And what I mean by accountability is you've got to run the business by the numbers. It's a metrics-driven business. You want to make decisions on your business, you have to have the metrics. So for me, that was an easy stretch because I was trained from 10 years old to be an air conditioning technician.

And repairing an air conditioner is metrics. I look at temperatures, I look at pressures, I look at volts and amps, and I come to my conclusion based on that. So what I did way back then is I developed a system so I could have gauges and meters and thermometers on my business at all times. And so I can sit back and look at it and go, hmm, lead flow is coming down. I got to keep that up. Conversions are going down. I got to get some training. Marge is going down.

My cost must be going up on my prices. I better check that. You can proactively watch the business that way. You follow me? It's gold right there was probably one of 10 things that, you know, so much gold there. I think if you learn to read a balance sheet and income statement and a cash flow statement, really, really good and have comparisons on what a legend should be, a legend, meaning the best companies in the business, and then learn to have a good crm how important is this we didn't even talk about the crm but without having a good accounting software and a good crm like service titan it's really really hard to know those

numbers it is but let me tell you this i mean i'm a serviceTitan fan and early adopter. Right. I mean, we center a whole operation on ServiceTitan. However, ServiceTitan or Housecall Pro or Successware is not going to save you. It's not the solution. It's not the solution, right? And so it's a tool that you use at certain stages in the business. But the fundamentals of business have to be in place for those to even work, because I've seen a lot of people didn't have the fundamentals in place. And they get into the mix of trying to install a service Titan software and it puts takes them down into a vortex. The whirlwind. Yeah, it's a death spiral. You've got to be very careful that you are in a good place.

Service Titan is really good at this, by the way. They coach you and say you're not ready. Put these things in place first to their credit. Yeah, they don't think every time they can get... One other thing I'd add to success of a lot of businesses is they either go in with a lot of money because they

got a loan or they've got money or they're putting sweat equity in. And for some reason, Ken, you know, I finally got a, I leased the truck. It's a lease to own, but I finally did it after 30 or 38. So I was 38 when I bought it. Now, you know, right now I'm 20 grand up on it because they gave me a big discount, but I never felt like I deserve a new truck or I deserve this. Like me, I never felt like, you know, there's a lot of people that say, me and my wife have worked so hard, we deserve this, but then they'll drain all the cash out of the account to go buy that second cottage. Have you ever noticed owners, they say, we worked our butts off, we deserve this, but they don't invest in themselves and the business which gave them those assets. They're

putting sweat into it. The first five years, you don't deserve anything except to work harder. What do you say to the people out there that go, it's time for us to buy a second house, go on that vacation for 10 months that we never did. You need to take some time off with your family. I understand that. That's super important. And I'm not saying anything bad about that.

But what do you say to somebody that says, we deserve this all the time. We deserve new cars. We deserve vacations. We deserve a new building. You get what I'm saying? Yeah. So again, you're not a garage door guy.

You're a business builder. And the single most valuable asset that you're ever going to own is your business. Because it gets valued based on, you know, it creates good cash, great cash flow, and it gets valued on multiple of earnings. And the cash flow is typically that you invest inside of your own small business. You can't match those returns in real estate, in the stock market, anything else. I mean, you can do the math. You put $100,000 in this business right now for a particular task. You know it's going to pay 50% to 100%

returns every year. Can you get that anywhere else? So I would just urge everybody to look like this. You're building a business. And the net result of you building a business is that you have this asset that is worth significantly more than the money, the dollars, and the time and effort you put into it. That's your goal. So you come in, you say, I'm going to build a business. And by the way, when I'm talking about playing the game, this and that, what I figured out a long time ago is I like playing the game. I like being in this game. I like to network with people. I like to see new things and try new things. But you always got to have an end game, right? You got to define what the end looks like, or you could be flailing around for 25 years and not really know what's going on, right? So you define the end game of your business. You work towards the end game of

the business. You exit with that business and you take that value created and apply it to a new business or your lifestyle is the end game i can't stop this this is all good then i'm gonna let you finish this up i know i went way too long sorry guys is the end game a value or a year is it a time or is it a value or is it both? It's whatever you want it to be. For me, so what I've always done is like I'm a sprinter. I like three, five-year things, right? So I try to keep all my ventures in the three to five years. And so I define what the end looks like, what my goals will look like you know maybe some goals i want to accomplish or rewards or something during the journey and i lay it out before i start and i go at that

okay but but it could be time well it sounds like three to five years was what really yeah i think get all with you going on nine so you're about due here one of these days. Yeah, but remember, I bought it 2013. 2013, yeah. I monetized it in 2018. Yeah. I'm going to monetize it again, hopefully this year. I'm going to monetize it again two, three years from now. So I love that.

Oh, guys, if you really understand what he just said there, he's taking taking some paydays, which is great. And that's why, you know, you live a pretty good lifestyle. You get to do what you want when you want with who you want. People say, what do you want in life? What I want with who I want when I want it. Right. Who when and to be able to take people. I think my big thing is I have a lot of good people out there that have done a lot for me. And I also have the ability to take some of the people that maybe didn't do as much, maybe some high school buddies. But the fact is that I get to choose. And they're the people I actually enjoy being with.

And the fact is that we get to do this stuff. I got to tell you, I love playing the game. I don't know if it's as much as you, but I don't go to sleep at night because I'm whiteboarding and I'm doing stuff and I'm just contemplating. And the more time I put into a routine of where my time is going to be allotted, I think when I started living by a calendar is when I released freedom for me. But I got to say, Ken, I got a lot out of this. I'm not finishing because I'm going to let Ken finish. We talked about a lot of stuff.

One of the coolest things we talked about was get your branch right. Hopefully you guys took notes on that. And I got a ton. I wanted to hit all these subjects. I hit probably a tenth of them. But Ken, why don't you tell us one thing that maybe someone out there needs to hear right now. Maybe it's to take action. Maybe it's just to think more about their business and their KPIs, know their numbers. But whatever we didn't talk about, whatever you didn't get enough time on, just feel free to close us out because this is one of the best podcasts yet.

So appreciate you. All right. I would give you everything I have to be you now, your age and the place you're at and this exciting level of your business, because there's nothing better than where you're at today. You know, I'm in a great place too, but I'm just so long down the road, all the excitement, I'm not saying all the excitement's out of it, but now I have to reinvent excitement by new innovations, right? That's how I'm doing it now.

But you're learning, you're climbing, and you're trying to apply new innovations. And I thought, your audience needs to understand that's the place you want to be. That is where all the fun, that's where all the satisfaction, and that's where all the reward comes in this game of owning your own company you can hear the passion he has and so we all start out this way right we all have the best intentions that we're going to do it and then the journey and the business sometimes beats us up and we lose that so i would just challenge don't lose it. Think about some of the things we talked about today. There's lots of resources with these best practices groups. I particularly,

you know, I'm a member of Service Nation Alliance, and I've been a member of Service Roundtable, which is the affiliated business since its inception. And that's where I get a lot of my knowledge and contacts and this and that. You've got to be part of one of these best practices group to get the knowledge and get out of the funk. If you're in a funk, so you can have the passion that he just described or he's emulating in these, in all of his work,

because that's where the joy and that's where the fun is in business. Well, hopefully you guys took some notes. I sure did. Thank you very much, Ken. Appreciate you. You guys make it a great day. Go and get some of this stuff put into action.

Hey, guys, I just wanted to thank you real quick for listening to the podcast. From the bottom of my heart, it means a lot to me. And I hope you're getting as much as I am out of this podcast. Our goal is to enrich your lives and enrich your businesses and your internal customers, which is your staff. And if you get a chance, please, please, please subscribe. You're going to find out all the new podcasts. You're going to be able to ask me questions to ask the next guest coming on. And do me a quick favor, leave a quick review. It really helps us out when you like the podcast and you leave a review. Make it four or five sentences,

tell us how we're doing. And I just wanted to mention real quick, we started a membership. It's homeservicemillionaire.com forward slash club. You get a ton of inside look at what we're going to do to become a billion dollar company. And we're just, we're telling everybody our secrets basically. And people say, why do you give your secrets away all the time? And I'm like, you know, the hardest part about giving away my secrets is actually trying to get people to do them. So we also create a lot of accountability within this program. So check it out. It's homeservicemillionaire.com forward slash club. It's cheap. It's a monthly payment. I'm not making any money on it to be completely

frank with you guys, but I think it will enrich your lives even further. So thank you once again for listening to the podcast. I really appreciate it.