Why a $50M Company Can't Hire Its Way to $1B — Transcript

Full transcript

1. 0:00I own a pest control company. We're $50
2. 0:02million this year.
3. 0:04>> Big body.
4. 0:05>> I started I'm third generation. I'm the
5. 0:08one that had the story about the
6. 0:09Undercover Boss
7. 0:11when we acquired a company. And I want
8. 0:14to know how
9. 0:15how do I get it to a billion dollars and
10. 0:17what's holding me back is manpower.
11. 0:21We built a recruiting engine and we kill
12. 0:23it, but honestly
13. 0:25there's these cycles that you run
14. 0:27through and now we've gotten to the
15. 0:28cycle where our A players kill it. We
16. 0:30hire an A player and they get off then
17. 0:32it's they're fine, but we've got
18. 0:34constant churn at the lower levels of
19. 0:37the company.
20. 0:37>> It's door knocking, right?
21. 0:38>> Yeah, well no, we don't do we don't we
22. 0:40only do about a million dollars a year
23. 0:42in sales from door knocking. The rest of
24. 0:43it's organic acquisitions.
25. 0:45>> Oh, so you're doing M&A?
26. 0:46>> A little bit, yeah.
27. 0:47>> Okay.
28. 0:48>> So, I bought a $3.6 million company last
29. 0:50year. I average around a million maybe a
30. 0:53half a million a year in acquisitions,
31. 0:55so probably average.
32. 0:57>> [snorts]
33. 0:57>> So, it's mostly organic. I'm growing
34. 0:59about 20% 21% organic annually and then
35. 1:03the rest of it has been so that
36. 1:04>> When you say organic annually, what do
37. 1:06you mean?
38. 1:06>> I mean paid LSA organic Google search
39. 1:10>> Okay, so paid ads. Okay, got it.
40. 1:12>> but yes, absolutely. There's a little
41. 1:14bit. SEO
42. 1:15>> Okay.
43. 1:16>> current customer upsell referrals all
44. 1:19those types of mostly a sales
45. 1:20organization is what I would oriented
46. 1:23as, but not like I said, we do about a
47. 1:25million door-to-door.
48. 1:26Um
49. 1:26>> Out of 50?
50. 1:28>> Yeah, out of 50.
51. 1:29>> So, 2% of sales come from door-to-door?
52. 1:31>> Yeah, and I mean we do have a budget to
53. 1:33scale it up to about 4 million next
54. 1:34year.
55. 1:34>> Okay.
56. 1:35>> Um because we're trying to figure out
57. 1:37all right, how do we get to a billion
58. 1:38dollars? I mean the guys that are doing
59. 1:39it are either massively funded and
60. 1:41acquiring you know, hundreds of millions
61. 1:43of dollars or they are been around for
62. 1:4575 years or they're door knocking.
63. 1:47>> What's the EBITDA right now?
64. 1:48>> Uh 20% so we had eight eight million
65. 1:50last year.
66. 1:52>> So, you got eight in EBITDA. You want to
67. 1:54get to a billion in sales or billion
68. 1:55dollar valuation?
69. 1:56>> Billion dollars sales.
70. 1:58>> Okay, so you need 20x.
71. 1:59Um, how many What does each market do
72. 2:02roughly?
73. 2:03>> Uh, the average branch?
74. 2:05>> Yeah.
75. 2:05>> Yeah, 2 million.
76. 2:07>> Okay.
77. 2:09So, 950 to go.
78. 2:11Um
79. 2:13>> Exactly.
80. 2:14>> Yeah, yeah.
81. 2:15Uh,
82. 2:16only only 475 locations to go. Okay. So,
83. 2:21I mean, the like I mean
84. 2:23Do you have a time frame or you just
85. 2:24would like to get there?
86. 2:25>> Well, in under 20 years.
87. 2:26>> Okay, yeah. Um, it's likely um, do you
88. 2:30have like some special sauce?
89. 2:33>> Realistically, um,
90. 2:35I would say that we have an excellent
91. 2:36execution on sales. Um, our our supply
92. 2:40is the issue, not the demand.
93. 2:42>> Supply of sales people?
94. 2:44>> Uh, well, that is. Yeah, absolutely. I
95. 2:45That's It's mostly It's not about the
96. 2:47sales people. It's typically about the
97. 2:48delivery of the product.
98. 2:50>> Of like literally just the pest control
99. 2:51services?
100. 2:51>> Yeah, we get backed up, you know, like
101. 2:53every year. That's our constraint. We
102. 2:54have
103. 2:55>> Is that where you're saying the A
104. 2:55players from? That's where you're saying
105. 2:57the constraint is, it's for them?
106. 2:58>> Uh, no, no. I I think we're killing it A
107. 3:00players. Our our problem is we we we
108. 3:02don't have uh, we're not retaining any
109. 3:04average talent if that makes any sense.
110. 3:06And so, our A players are quickly
111. 3:07rapidly rising through the ranks. We end
112. 3:09up promoting them, they end up running a
113. 3:10branch or whatever. And next thing you
114. 3:12know, you you don't have any average
115. 3:14average talent.
116. 3:15>> Yeah. If that makes any sense. So,
117. 3:18not a bad thing, but um, so manpower is
118. 3:21the issue on the delivery side, right?
119. 3:23>> Yeah.
120. 3:23>> Okay. So,
121. 3:25what's the
122. 3:27What is the
123. 3:28recruiting methodology that you have for
124. 3:30the deliverers?
125. 3:32>> How are we recruiting now?
126. 3:33>> Yeah, to get the the delivery team.
127. 3:35>> LinkedIn, uh, Indeed, um,
128. 3:38and then we, um, Indeed was the majority
129. 3:41the vast majority. And then a lot of
130. 3:42outreach, a lot of individual like we we
131. 3:43treat it like a sales organization.
132. 3:45>> Yeah, the recruiting.
133. 3:46>> Yeah.
134. 3:46>> So, but that's still the constraint is
135. 3:48what you're saying.
136. 3:49>> It's Yeah, it's it's the retention of
137. 3:51the employees.
138. 3:52>> Oh, so you can get those deliverers,
139. 3:53they don't stick.
140. 3:54>> They don't stick. That's right. It's a
141. 3:55hard job.
142. 3:56>> Yeah.
143. 3:57>> It's a lot It's a lot of work.
144. 3:58>> All right. Do they have a career path?
145. 4:01>> They do, but it's so quick that the A
146. 4:03players are like step into that and then
147. 4:06you see
148. 4:06>> you say so quick, how many steps are
149. 4:07there?
150. 4:08>> As far as getting identifying an A
151. 4:10player? I mean
152. 4:11>> Well, how many promotions are there in
153. 4:12the career path?
154. 4:13>> Oh.
155. 4:14Let's see. Team lead, branch manager,
156. 4:16regional manager. Um that's
157. 4:18>> Three?
158. 4:19>> So three.
159. 4:19>> Okay. So I'll give you a little
160. 4:21little little tactical Tuesday.
161. 4:24Um
162. 4:31>> [sighs]
163. 4:32>> So beyond what I would consider the soft
164. 4:34cultural stuff, which is probably beyond
165. 4:35the scope of an answer that would be
166. 4:36reasonable and actually actionable for
167. 4:38right now. Um the way that I like to
168. 4:40think about career ladders, and this
169. 4:41applies to roles that are repeated
170. 4:43within an organization. So this is
171. 4:44sales, this is video editors, whatever,
172. 4:46right? Is that you've got title
173. 4:50and you've got pay.
174. 4:55And so I like to think of each one of
175. 4:57the rungs that you just had, there's
176. 4:58three.
177. 4:59I think that you could make this into
178. 5:00nine or 18 rungs.
179. 5:03And what ends up happening is that
180. 5:04instead of it being like oh, I I'm in,
181. 5:07I'm not an idiot, so I got promoted, and
182. 5:09I'm better than not being an idiot, and
183. 5:10I got promoted again, that's it, and now
184. 5:12I'm going to leave because there's no
185. 5:13other there's no career advancement for
186. 5:15me, right? That's probably one of the
187. 5:15reasons but literally the reason they'll
188. 5:17cite on the way out, right?
189. 5:18>> Yeah.
190. 5:19>> Okay. So we just need to create
191. 5:22career advancement. So So I'll just use
192. 5:24I'll use sales cuz everyone kind of
193. 5:25understands that, but you can translate
194. 5:27it over. So if we have or delivery, it
195. 5:29doesn't really matter. So I have junior,
196. 5:33normal, and then senior
197. 5:35for each role.
198. 5:37And so we say
199. 5:39the first thing you're going to do is
200. 5:39you're going to go from junior to
201. 5:43junior that's paid
202. 5:45more.
203. 5:46And then you're going to go to We're not
204. 5:48going to call you junior anymore. And
205. 5:50they're like, "Thank god." And that
206. 5:50comes with a perk, which is that you
207. 5:52don't have to work on Saturday nights.
208. 5:53Great.
209. 5:55Then from there, we're going to go to
210. 5:56here with a little pay bump.
211. 6:00Then we're going to say, "Great. After
212. 6:02you get your pay bump, you're now a
213. 6:03senior
214. 6:05pest deliverer."
215. 6:06>> [laughter]
216. 6:07>> Non- Non-pest Yeah, you're not
217. 6:08delivering pest. You're like, "Here's
218. 6:09some rats." Um
219. 6:12And then here we have our senior plus,
220. 6:14right?
221. 6:15But all of this could be
222. 6:18the first title that you had. And then
223. 6:21you repeat this at title two, you repeat
224. 6:23it at title three.
225. 6:24And so what happens is they're always
226. 6:26three to six months away from another
227. 6:28promotion.
228. 6:30>> Mhm.
229. 6:30>> And so it's like whenever you're about
230. 6:31to leave, that way there's there's like
231. 6:33there's always career advancement that
232. 6:34exists. And so And by alternating title
233. 6:37{slash} perks, that way cuz if you just
234. 6:39do title people I mean, to be fair,
235. 6:40people will just take a title bump and
236. 6:42they'll still go out and have a steak
237. 6:42dinner with their girlfriend. It works.
238. 6:44But if you can have that and a great
239. 6:45parking spot, or that and you don't have
240. 6:47to work Saturday nights, or that and you
241. 6:48can pick your calendar, or that You
242. 6:49know, like there's always a couple of
243. 6:51perks. You get a better truck, whatever
244. 6:52it is, right?
245. 6:53Um those things you can scatter around.
246. 6:56And
247. 6:57on the first day or the orientation
248. 6:59process, we like to say like you are
249. 7:01here.
250. 7:02This is where you're going to be if you
251. 7:04do this. This is where you're going to
252. 7:05be if you do this. And so we tie these
253. 7:07to objective measures.
254. 7:09And what I really like to do with these
255. 7:11is that I like this with total volume.
256. 7:13So, think about it like uh
257. 7:16in the deliveries. It's like
258. 7:18once you get your first
259. 7:21you get your first uh you know, 20 five
260. 7:24stars,
261. 7:25you get to junior plus. And we get And
262. 7:26we want that first one to be like right
263. 7:28there, right? Cuz that's where some of
264. 7:29the the biggest turn is right in that
265. 7:30first, you know, 30 to 45 days, I'm
266. 7:32guessing, right?
267. 7:33>> Absolutely.
268. 7:33>> So, it's like how do we get the How do
269. 7:35we How do we make the first one a 6-in
270. 7:36putt? Okay, great. So, we have this one,
271. 7:38they get their first win. Hey, I think I
272. 7:40I my job. Great. And then here we're
273. 7:42like, okay, now you got to get to 100.
274. 7:45And so then we basically start expanding
275. 7:47the reinforcement cycle for each of
276. 7:49these roles, so that it's always just a
277. 7:51little bit further, but there's always
278. 7:52something to look forward to.
279. 7:55And this is what There's a lot of
280. 7:56There's a lot of solutions for your
281. 7:58issue or there's a lot of elements to
282. 7:59the solution. This is one that I can
283. 8:01deliver to you in 6 minutes.
284. 8:03>> Perfect. No, that's great.
285. 8:05>> Okay.
286. 8:05>> I
287. 8:06I think our our our main constraint
288. 8:09really has been We haven't been very
289. 8:10creative.
290. 8:11>> Yeah.
291. 8:11>> Really. I mean, and that's what That's
292. 8:13one thing I'm I'm really seeing. A lot
293. 8:14of people quickly rose
294. 8:16>> Yeah.
295. 8:16>> rose like they they came in, they
296. 8:18performed really really well, ended up
297. 8:19moving up really fast, making a lot of
298. 8:21money, but then you have people that are
299. 8:22real slow and they bounce.
300. 8:24>> Yeah. So, just give them more ways to
301. 8:26win.
302. 8:27>> Yeah, that's great. Thank you.
303. 8:29>> Yeah, you're welcome. [laughter]
304. 8:31>> [applause]
305. 8:32>> I can't give you every single recipe,
306. 8:33that'd be ridiculous. It'd be like this
307. 8:35long. [music] But these are the top five
308. 8:36recipes that we have used to scale that
309. 8:38Leila actually put together [music] for
310. 8:40us cuz she's really been the one who
311. 8:41operates the business. And so, yeah, I
312. 8:43don't know what's inside of it, but um
313. 8:45it's good. So,
314. 8:45>> [music]
315. 8:46>> you should check it out cuz Leila made
316. 8:47it and she makes good stuff. It's free.