Building Wealth Through Private Equity in Home Services with Richard Lewis and Adam Hanover

Speaker 1 are great investment professionals at almost every shop I know. And there are really crappy investment professionals at almost every shop I know.
Focus on the individual. Don't focus on the name.

Speaker 2 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.

Speaker 2 Now, your host, the Home Service Millionaire, Tommy Mellow. Before we get started, I wanted to share two important things with you.
First, I want you to implement what you learned today.

Speaker 2 To do that, you'll have to take a lot of notes, but I also want you to fully concentrate on the interview. So I asked the team to take notes for you.
Just text notes, N-O-T-E-S to 888-526-1299.

Speaker 2 That's 888-526-1299, and you'll receive a link to download the notes from today's episode. Also, if you haven't got your copy of my newest book, Elevate, please go check it out.

Speaker 2 I'll share with you how I attracted and developed a winning team that helped me build a $200 million company in 22 states. Just go to elevateandwin.com forward slash podcast to get your copy.

Speaker 2 Now let's go back into the interview.

Speaker 3 All right. Welcome back to the Home Service Expert.
Today I got two special guests, Richard Lewis and Adam. Hanover with Redwood Services.

Speaker 3 They're an expert at a lot of things, but mostly private equity. They're based in Memphis, Tennessee.
Richard Lewis, founder and CEO of Redwood Services.

Speaker 3 And Adam Hanover is the co-founder, Union Main Group, and chairman of the board at Redwood Services. Richard is the CEO, one of the fastest-growing home service platforms in America.

Speaker 3 In just four years, he has scaled Redwood from zero to more than $500 million in annual revenue, supporting 19 elite HVAC plumbing and electrical companies across the country.

Speaker 3 Known for his people-first private equity approach, Richard has helped helped create over 30 millionaires by partnering with blue-collar entrepreneurs and giving them the capital and the systems and the coaching to unlock generational wealth.

Speaker 3 Backed now by Union Main Group and Atlas Partners, Redwood's mission is simple and bold, empower exponential home service operators with world-class support while preserving their culture and legacy.

Speaker 3 Richard is widely known for a transforming force in the trades, proving that with the right partnership model, the American dream is still alive and well for business owners who refuse to settle.

Speaker 3 Now, Adam is the co-founder of Union Main Group and the chairman of Redwood Services, where he helped architect one of the most successful and culture-driven platforms in home service.

Speaker 3 With a background in building and scaling essential service businesses, Adam played a pivotal role in Redwood's ascent from a startup concept in 2020 to a national powerhouse generating over half a billion dollars in annual revenue.

Speaker 3 Known for his disciplined,

Speaker 3 patient investment philosophy, Adam champions long-term partnerships over short-term takeovers, ensures founders retain meaningful ownership while gaining access to Redwood's operational excellence, leadership development, and supportive strategic support.

Speaker 3 Under his leadership, Redwood has expanded to 2,500-plus employees,

Speaker 3 completed dozens in tuck-in acquisitions, and attracted major investment. from Atlas partners.

Speaker 3 Adam is recognized as one of the most trusted thought leaders in the trades roll-up space, helping entrepreneurs scale with integrity, alignment, and world-class excellution. Woo! That is a hell of a,

Speaker 3 it's good to have you guys on today.

Speaker 1 Well, I don't know who wrote that, but that was, that was really impressive. It sounded nice.
I kind of like

Speaker 1 when you think about it that way.

Speaker 3 Well, I don't know who to start with, but why, you know, Richard, I guess, since since you're the one that kind of went to Adam and really set out the partnership, what made you want to get into starting this?

Speaker 3 Tell us a little background, what you love, what you don't love, where you're headed.

Speaker 1 Yeah, no problem. The one thing you said that might not be totally accurate is I am no expert in private equity.

Speaker 1 That's not my forte. It's not my background.
And just hearing those words kind of associated with me is interesting. But let me tell you my story.
So I'm from Memphis, Tennessee.

Speaker 1 So I was born and raised here, fifth generation Memphian.

Speaker 1 I went to school in New York City, actually did the Wall Street thing for a couple of years and did not like it at all.

Speaker 1 And moved back to Memphis in 2008 and got a job at a large home services conglomerate called Service Master.

Speaker 1 I ended up falling in love with the industry, especially coming from Wall Street where it was a lot of numbers on a screen.

Speaker 1 you know, it's just very kind of blinders on to what you're doing. When I joined Service Master and got to learn about home services, this is as real as it gets in the U.S.

Speaker 1 economy, like helping customers in times of need, creating opportunities, career opportunities for technicians and CSRs.

Speaker 1 And in addition to learning that I love the industry that we're in, I also learned that it wasn't so much Wall Street that I didn't like, but just corporate America in general.

Speaker 1 and just bureaucracy and red tape and politics and just the slow pace of change. I wanted to be a a part of something different.

Speaker 1 And I really got to learn about the MA side of home services in my last couple of years at Service Master when I was with a business called Terminus Pest Control, which is a very large pest control company, a lot of amazing people.

Speaker 1 But their MA strategy was to go around the country, find regional pest control players, buy the business.

Speaker 1 and completely rebrand overnight, put their own people in, their own systems, their own culture.

Speaker 1 So I would see all day, every day, these thriving generational pest control companies going from thriving businesses to average branches

Speaker 1 and thought to myself, there has to be a better way to invest in this industry of home services than to do it the way these big corporations are almost forced to do it.

Speaker 1 And so I took that idea and I approached Adam and his father, who are also in Memphis.

Speaker 1 And I go way back with their family and they have an amazing reputation here in town of backing people that have really passionate viewpoints on topics and I'm very passionate on this viewpoint around home services.

Speaker 1 So late in 2019 I approached Adam and Mark and said, hey, here's my idea. I told them the same thing I just told you.
And I said, there's one catch.

Speaker 1 It's going to take tens of millions of dollars in order for this strategy to be able to succeed. And to Adam and Mark's credit and maybe a little bit of insanity, they agreed a few days later.

Speaker 1 And I put my two weeks' notice in the next day. I bought a laptop and I've been hustling ever since.
And today, it's no longer just me and a laptop.

Speaker 1 There are 53 of us at the Redwood Partner Support Center. We have 19 partner locations across the United States and, as you said, 2,500 teammates.

Speaker 1 And this year, we'll do close to 600 million of revenue, if not a little

Speaker 1 And as proud as I am of the financial success and the financial results that this business has had, I'm way more proud of how we've accomplished it.

Speaker 1 And the fact that all of those horror stories and all of the kind of negativity around corporate America and private equity that scare so many people, we've been able to build a business doing almost the opposite.

Speaker 1 And we've been able to maintain that for now five and a half years. We just did a transaction,

Speaker 1 as you mentioned, with a group called Altis out of Toronto this summer.

Speaker 1 And now we're off to the races over this next few year run that we're going to be on, trying to identify the absolute best residential HVAC plumbing and electrical contractors in the country, and then partnering with them to support their business to reach their full potential.

Speaker 1 That's what we do.

Speaker 3 I love it.

Speaker 2 I want to talk a lot more about that.

Speaker 3 Adam, why don't you give us an intro, tell us what you're passionate about.

Speaker 1 Yeah, I mean, you know, I came out

Speaker 1 of private equity. I was trained at the Carlisle Group.

Speaker 1 I had a really interesting role, which is that when I was 23 and I was in investment banking, a gentleman who I had met, who was a trustee at my alma mater, University of Pennsylvania, a guy named Ed Mathias,

Speaker 1 called me up and said, hey,

Speaker 1 you know, I know we met at Penn and we had, we had,

Speaker 1 I was very close actually with his stepson through through college. And he said,

Speaker 1 we are, we're going to IPO.

Speaker 1 And there's a guy named Bill Conway, who's one of the founders of Carlisle that wants a young person to come and be his aide. And I ended up going and joining Bill

Speaker 1 basically for a run that ended up to be, it was roughly five years. And during that time, Carlisle at the time was the largest private equity firm in the world, had operations all over the world.

Speaker 1 And at the time, David, Wubenstein, Bill, and Dan, the three founders, were looking to transition the company to a manager-managed business, basically away from the founders.

Speaker 1 And I watched them through the struggle of that transition.

Speaker 1 They had hired Adina Friedman, who's now CEO of NASDAQ.

Speaker 1 Mike Kavanaugh, who's now, I think, co-president of Comcast, Glenn Young, who's now or just was governor of Virginia,

Speaker 1 Greg Summey. And there were a number of operators in the business that they had that were looking or they were transitioning or attempting to transition to become leaders in the business.

Speaker 1 And at 23, 24 years old, I was just sitting around these folks working on how we were going to grow the business.

Speaker 1 They ended up recruiting a guy named Q Sungley. Q ended up becoming CEO of Carlisle.
And I helped with Q in the early days of his CEO transition.

Speaker 1 I learned a lot similar to Richard about sort of what

Speaker 1 things that work and things that don't.

Speaker 1 And the way I would want to do business, the way I wouldn't do business, just different lessons. And short story is

Speaker 1 in 2016, I made the decision to go and launch a holding company, which is now called Union Main Group. And our entire proposition is we build to hold

Speaker 1 as opposed opposed to we build to sell.

Speaker 1 Now, we position the businesses to be able to be sold and to build equity value and to be able to dividend out money if and when we were to choose to do so.

Speaker 1 But if we had to or wanted to hold it at any point,

Speaker 1 that's we want to own businesses that we want to say we'd be happy to hold this asset.

Speaker 1 And that means you have to build the asset correctly, the business correctly. You have to invest in phenomenal talent, and you have to focus like relentlessly on culture.

Speaker 1 And we've been very fortunate.

Speaker 1 We've built effectively from scratch four phenomenal businesses, a legal services platform, Redwood, which we're going to talk about today, ANOVA, which is a specialty pharmacy that distributes rare disease drugs to adolescents.

Speaker 1 and a business called Echelon out of Denver that does retrofitting for commercial properties.

Speaker 1 We've had a lot of success with the model.

Speaker 1 And I think in short, one of the reasons why we've had such success is because we're attracting talent like Richard that want to do things differently and requires patience to build it correctly.

Speaker 1 And that's what we're attempting to do.

Speaker 3 I love that. You know, that build the hold strategy, I'm hearing a lot of that popping up.
And it's happened in real estate already.

Speaker 3 You know, we're just continuing, well, because now you got accelerated depreciation and every five years you can recapitalize. It just, how does that model,

Speaker 3 I mean, for home service,

Speaker 3 multiples on demand driven, still in the high teens, early, low 20s, interest rates coming down.

Speaker 3 Is there a reason to run it out? And this can be for either one of you versus taking liquidity.

Speaker 3 I just don't, I'm just genuinely curious.

Speaker 1 Yeah, I think maybe you can start with maybe talking a little bit about how we decided to build Redwood.

Speaker 1 Well, I think what

Speaker 1 build to own

Speaker 1 means to us as opposed to building to sell and building for the long run just means having the patience to make the decision for the long run, not for tomorrow.

Speaker 1 And when you're part of a big publicly traded business, everything is about the quarter.

Speaker 1 You have quarterly results, you have quarterly earnings, it's all about the stock price, and you almost cannot afford to make a decision and spend money that's not going to pay off immediately.

Speaker 1 And so one of the reasons I didn't go to a traditional private equity shop when I wanted to start Redwood and I went to more of a family office was I'm very stubborn on culture and building this the right way.

Speaker 1 And sometimes that means taking one step back to take three steps forward. And I think a great example is we, our first partner company at Redwood is a business called Rightway.

Speaker 1 And when we we partnered with Rightway, they were doing roughly 30 million of revenue and 5 million of EBITDA.

Speaker 1 Today, five years later, they're at 90 million of revenue and close to 16 million of EBITDA.

Speaker 1 And that wouldn't never, that run, which by the way, the local management team deserves every ounce of credit. It's all them and it's all the local team.

Speaker 1 But in a traditional private equity build to sell model, that never would have happened because it would have been about tomorrow.

Speaker 1 And when we first partnered with Rightway, EBITDA actually took a small step backwards while we were helping the local team invest in resources, invest in talent, invest in systems.

Speaker 1 And because we weren't thinking about, you know, what happened six months from now to the value, we were thinking about if we were going to be investors in this business forever, what decisions would we make?

Speaker 1 along the way to position the business best. And we said, if we can look through that lens, everything else will take care of itself, regardless of when we transact.

Speaker 1 And so, it's been that mindset that we've had from day one, which is why I think we've had, you know, some of the success that we've had over the last few years.

Speaker 1 Tommy, one other way to look at the quote, answering your question

Speaker 1 is

Speaker 1 really talking about building processes, meeting cadences, teams,

Speaker 1 recruiting talent,

Speaker 1 and building a revenue stream that is sustainable. So, I'll talk about both.

Speaker 1 We made the decision not to cut corners in the business. So, if we knew we needed controllers, we got controllers in the business.

Speaker 1 If we needed HR, like whatever it took, we wanted to make sure that the businesses had what they needed on the ground to be able to go and flourish and run and be able to interact with what we call here the partner support center, which Richard referenced earlier.

Speaker 1 And I have not had one night

Speaker 1 in six years, roughly, where I've lost sleep.

Speaker 1 This is a business that is highly essential.

Speaker 1 And we made the decision to be very prudent about this. 100%

Speaker 1 single-family residential, no new construction, zero exposure to new construction.

Speaker 1 So that off the bat made the business when we were started to find the right partners to build redwood. Our revenue stream was not exposed to cyclicality.

Speaker 1 And then several years later, we said, okay, we're now going to move more into plumbing, into electrical. And so today we're roughly 35, 40% plumbing on 600 million of revenue.

Speaker 1 And so when you look at both the revenue composition, but also the systems processes, Richard has a thing by the day, we look at revenue pacing translated to key metrics driving revenue across every partner by division.

Speaker 1 And

Speaker 1 we can can also translate that down to gross profit into EBITDA. So we are tracking like hawks alongside the management teams on the ground who are really well trained, like very talented people.

Speaker 1 We are tracking the business, where we are, what we're doing. And because it's such an essential business, non-cyclical, et cetera, et cetera, you don't have to lose sleep.

Speaker 1 So then you ask yourself, is there a better business to be in?

Speaker 1 And so when we think about build to hold, I think it's a phenomenal business to both not only have been in, to be in today and to continue to be in in the future.

Speaker 1 And the only the only nuance I would add is

Speaker 1 we're not tracking anything at the partner support center. We're simply looking at data to help support our local partners.

Speaker 1 So in the world I lived in in corporate America, you had corporate and you had field and corporate was looking at data and barking at the field and we were they were tracking 6,000 metrics and there was always something that you were failing in and it was just this never-ending cycle of I can't do anything right.

Speaker 1 We try to be the exact opposite. So, what I like to tell our partners and the management teams around the country is: yesterday before you joined Redwood, it was you versus the world.

Speaker 1 And now it's you and the 53 of us at Redwood that are against the world and supporting you.

Speaker 1 So, the data we're looking at is not to pick up the phone and call somebody and say, what the heck, your conversion rate is, it's no, it's, hey, did you know for the last three days, your average sale has dipped 5% a a day for the last however many days.

Speaker 1 You know, it's all these three comfort advisors, pull those guys in a room and let's make sure they understand how to use discounting appropriately.

Speaker 1 So it's all in this mindset of partnership so that we can

Speaker 1 be better together. We have this phrase that outstanding alone, better together.
And that's really the mantra.

Speaker 3 What is the, if you had to like say a perfect buy box, I mean,

Speaker 3 EBITDA,

Speaker 3 what is that buy box? Obviously, HXX Plumbing Electrical.

Speaker 3 Can you just talk about what it looks like?

Speaker 1 Yeah.

Speaker 1 I mean,

Speaker 1 don't be annoyed at this, but we actually don't buy, I don't look at it as buying businesses. So we don't have a buy box.

Speaker 1 We would have a partner box because one of the very unique things about our model is...

Speaker 1 when we find a business that we like and they like us, we're not buying 100% of that business and telling the owner, thanks for the hard work. We got this.
See you later.

Speaker 1 In fact, we walk away from those. The deals we do, we're typically investing in 75% of the business and the owner is maintaining 25% equity in their business.

Speaker 1 So they're not getting fandom shares of the mothership.

Speaker 1 They own 25% of their entity. And so that's the first thing is we're not looking to buy companies.
We're looking to partner with amazing management teams and invest in businesses.

Speaker 1 And for us to enter into a new market, which, by the way, we're geographic agnostic.

Speaker 1 I don't care where our partners are located as long as they're good people with a good business, a good story, and a good culture.

Speaker 1 And so, typically, for us to enter in a new market and start a new partnership, those businesses are like 90 plus percent residential. So, a little commercial is okay, but mostly residential.

Speaker 1 HVAC plumbing and electrical, like you said, and they're typically 20 to 25 million of revenue as a minimum and 2 to 3 million of EBITDA as a minimum.

Speaker 1 And we've done smaller deals, we've done much bigger ones, but that's kind of like we had to put a partner in a box. That's typically,

Speaker 1 and really the most important thing is a management team that wants to run.

Speaker 1 You talk to some $25 million businesses and they're out of gas and they feel like they've reached the ceiling and it's someone else's turn to come figure it out.

Speaker 1 And then other times you meet management teams that are at 25 million, they have a full tank of gas, and they want to get to 250 million.

Speaker 1 And they just know that to do that, they're going to need expertise, a balance sheet, and resources that they don't have today that we can offer. And those are the partnerships that we love.

Speaker 3 You know, it's interesting. I interviewed Ken Haynes, who is now the CO of Wrench Group.
This has been a couple, couple few years now. I still talk to him quite often.
And

Speaker 3 he said, I buy good businesses and I let them run.

Speaker 3 And I said, well, how do you get buying power? He goes, oh, we're working on that. I said, well, my average CSR could book 47 calls a day.

Speaker 3 How do you get that? He goes, well, we're talking about a centralized call center. I go, well, what about your E-mod score and your insurance? You're all buying different insurances.
He goes, well,

Speaker 3 we're thinking we might be doing that too. And I said, well, your service Titan, you could obviously get it cheaper if you buy, if you got that buying power.

Speaker 3 But I know you don't have to be as a group. You could still get a lot of these things.
But my question, I guess, for you guys is, well, the economies of scale and the efficiencies.

Speaker 3 And I understand you don't want to pull the culture out, but I look at Terminex

Speaker 3 and there's different, you know, different strategies, but Terminex, I think, is one of the highest trading companies on the planet, pest control, who hard to believe, but it's true.

Speaker 3 But what's your philosophies around that economies of scale and just getting that kind of buying power and everything else that comes with it?

Speaker 1 My goal is for us to have our cake and eat it too on this topic. And

Speaker 1 what I want to do is I want to grow businesses. I want to support growth.
That's the number one thing that we're focused on is growth. And growth doesn't mean short-term, short-term EBITDA growth.

Speaker 1 It means

Speaker 1 long-term sustained growth. So I'll give you an example.
We have probably 150 amazing CSRs around the country.

Speaker 1 Each one of our partner companies has their own call center, their own thriving call center with a call center manager and dedicated CSRs.

Speaker 1 Tomorrow, a business like ours could build a warehouse in Memphis, lay off all the CSRs across the country, all 150, and have 100 people in Memphis and answer the phones, you know, maybe more consistently with less people.

Speaker 1 But by doing that, you are sucking the entrepreneurial spirit out of a business. You are taking away a lever from a local manager.
You are taking the locality out of the customer experience.

Speaker 1 There are still customers that want to talk to someone who is around the corner and knows what's going on in their community.

Speaker 1 So historically, we have been willing to give up some economies of scale in order to protect the entrepreneurial spirit of our partner companies.

Speaker 1 And that is one of the key reasons why I believe we are growing four to five times faster than the market every single year.

Speaker 1 Because instead of making a short-term decision for today to drive, you know, one-time boost of EBITDA by taking cost out, we're focused on positioning each of our partner companies to be the best version of themselves.

Speaker 1 And that means owning your own marketing, owning your own call center, having your own local HR and not relying relying on somebody a thousand miles away to think they can do it better than you can.

Speaker 3 And that means there's a CFO, there's a controller, there's an FPA team in every single company you invest in.

Speaker 1 So we have an FPA team in Memphis, but each of our businesses has a controller. They do their own payroll locally.
They have their own pay plans.

Speaker 1 I am not arrogant enough to think that I could buy the best business in Tucson, Arizona, and somehow run it better than Rick Walter and Chris Sundon. I just, I can't do that.

Speaker 1 But what I can do is help a $30 million business go to $90 million for the things that I'm good at. And that I've hired people around me that are amazing at.

Speaker 1 And so that's the whole philosophy: find amazing businesses, hire amazing people on the Redwood team, and let's put those two together and see what happens.

Speaker 3 What's a

Speaker 3 what would you,

Speaker 3 you know, some people think 10% of the bottom is good. Some people say 15%.
Some people say 20%.

Speaker 3 I like to be much healthier than that, actually.

Speaker 3 But

Speaker 3 where do you feel like HVAC Plumbing Electricals should be once you got the right operators? You got a hold of things?

Speaker 1 Great question.

Speaker 1 So for a long time, John Conway, who's our COO and is an absolute legend in the industry for a long time he had this rule called 50 35 15

Speaker 1 50 gross margin spend 35 on opex put 15 to the bottom line and that was his easy mantra that he would coach businesses on around the country and when john came here to help me build this business That was kind of his guiding principle to answer that question.

Speaker 1 Well, over the last few years, we've realized that being a part of a group like Redwood, we can buy equipment cheaper. We can buy technology cheaper.

Speaker 1 We do get economies of scale across different areas as we're pooling our resources together. And so now, you know, it's no longer 50, 35, 15.
It's closer to, you know, 52, 33, you know, in the 20s.

Speaker 1 So we think that the long-term sustainable, healthy EBITDA margin for a business in our industry is roughly 20.

Speaker 1 But we also know that there are different business businesses are at different points in their journey. So this is not an artificial one-size-fits-all corporate mandate.

Speaker 1 There are businesses that are in high growth mode that may need to be investing more in OpEx to support the long term. And there may be a year where they're at 13% and that's a home run.

Speaker 1 And then there are others that are at 90 million of revenue. They're finally getting some operating leverage and those are closer to 20.

Speaker 1 So it's kind of, it's a longer way of answering that question, but that's kind of how we think about it. And

Speaker 1 my view on this, which I try to tell folks all the time, is think about

Speaker 1 running a business like you're a race car driver. And by the way, I'm not, I don't follow like F1 or anything.
So bear with me if I don't use the right analogy here.

Speaker 1 But you want to at all times feel like every finger, your hand,

Speaker 1 you have complete control of the vehicle.

Speaker 1 And when there needs to be a turn, and Richard and I have talked about that since day one, there will be moments where you need to turn, either you knew you did or the market forces you to do so.

Speaker 1 You have complete control of that vehicle. And so it's really important not to think about, do I have 13% EBITDA margins?

Speaker 1 And therefore, on an absolute basis, I'm either good or bad, but instead to say, where am I? in my phase of growth. Where am I going? Where was I?

Speaker 1 And then based on that, being being able to articulate why you're at 13.

Speaker 1 And another saying we talk a lot about is, you know, folks say you have certain managers who say, oh, I'm going to be at, and this isn't, I'm going to be at

Speaker 1 $1,500 or $2 million in profit.

Speaker 1 And then they hit $800,000 at the end of the year. Or you've got a guy who says, I'm going to be at

Speaker 1 $800,000. And instead they hit 1.2, 1.
Whatever of EBITDA.

Speaker 1 Over time, no matter where you are, big business, small business, doesn't matter what scale, the management and we all should seek to be right where we thought we were going to be.

Speaker 1 So if you think you're going to be at 1.1 million in profit, you want to be at like 1.15

Speaker 1 because that demonstrates that you have control over the business. And you know how to manage both your controllables and uncontrollables.

Speaker 1 And that is something we preach a lot here, which is if you really ask, you know, what's the secret sauce? And Richard, you may have a different view of exactly how you'd articulate this.

Speaker 1 It's a roll up the sleeves operating focus, just complete excellence. One more point on that.
John Conway, Richard referenced, who's been an amazing partner

Speaker 1 and really helped build the business in its vision.

Speaker 1 John will often say,

Speaker 1 okay, so sure, there could be market headwinds due to whatever. You know, we could talk about interest rate, whatever.
So the consumer's weaker in this and that.

Speaker 1 You'll look over at all the partners and one of our many retreats. Richard does a bunch of events throughout the year.
He brings people together. It's a core strategy of ours, our Redwood.

Speaker 1 And John will say, do any of you think that you have less than 10% of inefficiency in your business, either on the revenue or operating side,

Speaker 1 spend side?

Speaker 1 Do you either any of you feel like you're running so efficiently that you're at less than five, you know, less than 10%? And of course, nobody in the room says that because of course we can do better.

Speaker 1 But his point is go focus on that. And that'll, that'll outrun any headwinds or tailwind you might have in market on the macro level.

Speaker 1 And so it just gives you a sense of kind of how we think about this.

Speaker 3 Ability to hit a budget and be close is a, is a big deal.

Speaker 3 You know, I think the problem with traditional private equity is They try to say, hey, you guys could have your own internal goals.

Speaker 3 Let's hit a budget we make sure we hit because we're, we're going to be telling the LPs, which are teachers, unions, and, you know, could be a lot of different things.

Speaker 3 You know, one of the things I'm working on right now, and I've been talking quite a lot to my COO, and I'm curious your point of view on this. I think this is a good topic.

Speaker 3 So if our booking rate is 89%,

Speaker 3 it means we're losing 11% of our clients.

Speaker 3 If our cancellation rate's 15%,

Speaker 3 well, we're losing now, it went from 11 to 26%.

Speaker 3 If our conversion rate on services costs 76%, there's another 24%.

Speaker 3 That means half of the marketing we're doing, we're not earning the client's business.

Speaker 3 And my question for people within my company is, I could make leads go up dramatically, but I think that's going to go from 50 to 60%.

Speaker 3 And really, the hardest part about home service is their short-term and long-term capacity planning.

Speaker 3 I think we're world class. There's no other company in our space even coming close to those KPIs, but it's still half the clients lose.
We're losing them.

Speaker 3 So

Speaker 3 when it comes to marketing, finding new clientele,

Speaker 3 and you guys seem to be pretty deep in the weeds, this is probably more of a question for the operator, but where do you guys like to be on some of those things?

Speaker 1 So you...

Speaker 1 The point you just made in that story is literally what we talked about two weeks ago at our annual budget workshop that we had in Cincinnati, where we brought the leadership teams from all 19 of our partner companies together to talk about this exact topic.

Speaker 1 And we took it one step further. We actually built a calculator, like a fifth grade Excel calculator, where our partners can type in their current KPI on all of those things.

Speaker 1 And then what would the business look like if we just got to what we think is best in class?

Speaker 1 And there were tens of millions of dollars in growth if the phone doesn't ring another, an incremental one more time. So it's not, you know, everyone wants to spend more on marketing.

Speaker 1 Everyone wants to, you know, look at the marketer in the room. Well, the marketer in the room is looking at the operators and saying, I'm doing, like, I'm getting the phone to ring.
But like you said.

Speaker 1 Half of the time a customer actually dials our number, we're not actually, we're not getting to their home and converting it into revenue.

Speaker 1 So this is what John Conway, Conway, this exact topic, is what he was doing. But, like I said, he took it one step further by pre-populating Excel spreadsheets individually for all 19 of our partners.

Speaker 1 And then we had a breakout segment where everyone got to type in where they think is a realistic goal that their team can get to on every high-level KPI and what that would do to the business.

Speaker 1 And then the question is: well, do we need to spend more on marketing? Should we spend less on marketing and just hone in and force ourselves to get these operational KPIs in line.

Speaker 1 So this is a huge topic for us. And obviously the performance varies when you have 19 businesses.
I'm sure you have this across your many, many locations.

Speaker 1 If it's at 89%, there's not 200 locations at 89%. You got some at 96, you got some at 57.

Speaker 1 And, you know, part of our job is to help just move everything up.

Speaker 3 And so this is this is a huge topic and honestly one that I think the whole industry, the whole industry should do some self-reflection on yeah marketing gets blamed for everything i happen to be the cmo and the ceo as i said today but here's here's something interesting i just had a shop tour with about 60 people and

Speaker 3 i i basically said they said what's the biggest opportunity i said your ability to find leadership your ability to scale your org chart the ability to find a plus players Obviously, internal net promoter score is really important because then you'll have more people recruiting for your company.

Speaker 3 But, you know, if I walk into the room with my leadership team and I feel like I'm better than any of them, I got to ask myself, either I'm not hiring correctly or not compensating correctly to get the right people.

Speaker 3 Traditional companies, PE usually gives 10 to 15% of profit units and pays the leadership team with that.

Speaker 3 How do you guys think about that?

Speaker 1 So I don't have that problem of walking into the room with my team and ever thinking that I'm the smartest guy in the room. I haven't had that problem yet because this team is unbelievable.

Speaker 1 But I think there's kind of two pieces to this. There's the Redwood team, and then there's the team at our partner locations.

Speaker 1 And for me, at least at the Redwood level, I see my number one job as making sure we have A-plus talent in every seat.

Speaker 1 And that's one, I always tell people there are two things that I refuse to outsource. One is hiring and two is culture.

Speaker 1 Those two things I'm going to own for for as long as this business will have me. And I refuse to outsource those.
By the way, we joke that Richard's title is chief LinkedIn officer. Yeah, I go.

Speaker 1 He will go anywhere to find talent. I mean, not that LinkedIn's not a good place, but I'm saying the guy will go hustle for any.
If we have an open job, I will go on LinkedIn.

Speaker 1 I'll just find the needle in the haystack and send them a random message and just say, Link, can you start?

Speaker 1 And we hired so many amazing people through that strategy. But seriously,

Speaker 1 having an A-plus team, and that's a phrase we use every day here, a rock star talent, that is my number one priority. And thank God

Speaker 1 we have that and we continue to add amazing people.

Speaker 1 It gets more complicated when you get out across the country in 19 locations. And this is just another area where we've been super, super

Speaker 1 lucky is not the right word, but we're just grateful for the amazing businesses that we've partnered with that already had great managers in them.

Speaker 1 And so our job has not been to replace people, drop in, you know, people that from outside the industry.

Speaker 1 Our job has been to help continue to develop and challenge the leadership we have locally and then scaffold around those leaders with additional people.

Speaker 1 Like, you know, one great example is controllers. A lot of our businesses, when they partner with us, do not have controllers partly because the owner didn't know what a controller is supposed to do.

Speaker 1 So we've had owners say, How can I hire a controller when I don't know what they do? I don't know really what the skill set is. And how am I going to find that person?

Speaker 1 And that's just a great place where we can say, well, we do know what that looks like. We have a job description.

Speaker 1 And we partner with our local business to strengthen their management team, not by replacing people, but by continuing to build around those that are already there.

Speaker 3 Hey, you fill in the holes. Yep.

Speaker 1 And it's worth it. So, let's talk about ownership for a second because I think there's a couple pieces that are pretty unique that the team here has really built.

Speaker 1 The first is that, and I think this was a big reason for our success early on.

Speaker 1 Richard mentioned that we're only acquiring 75% of the business. So, it's 25% of your business

Speaker 1 as an owner of an HVAC, plumbing, electrical, whatever business.

Speaker 1 You will maintain that ownership. And what's different about our model today, and what was different then

Speaker 1 is

Speaker 1 we did not cap you on the upside.

Speaker 1 So typically in a traditional rollup, folks will have a view in the private equity model, which is, look, we're going to pay whatever, eight, nine, 10 times, whatever the size of it, this multiple times your profit.

Speaker 1 And in essence, what we're going to do is we're going to help you grow. But the multiple of the overarching entity, that's mine because we built that.
We paid for it. We built it.

Speaker 1 So in essence, someone will say they sell, they build their, they grow their EBITDA and then they're capped. So in their contract, they'll be capped at whatever the multiple is.

Speaker 1 We made the decision to share that outside day one because our view is they're doing the work alongside us. And so if Redwood, which we just completed a transaction with Altus,

Speaker 1 if Redwood gets X multiple, whatever multiple it is with Altus or any other party, we're going to share that all the way down to the partner level.

Speaker 1 And so that was a massive wealth generator for folks. Yep.
Richard has this great line, and it's happened. So just it's a great statistic.

Speaker 3 I'm not millionaires for a living.

Speaker 1 Well, that's a hell of a line. And I love that.
I love that line.

Speaker 1 But I think this stat is something the market should know. I think it's really, really something I'm probably most proud of.
Is

Speaker 1 as a result of the strategy, if you're a partner and you were with us for greater than three years,

Speaker 1 you made

Speaker 1 at least as much on your 25% remaining interest as you did on your selling your 75%

Speaker 1 or more. So we have guys who made 150% of what they made selling the first 75%, like four years out, you know, three and a half years out.

Speaker 1 So one is that ownership model is a phenomenal, highly incentivizing model. So just make that point, make two more points real quick.

Speaker 1 We have profits, interest, and forms of plans for all the leadership here at Partner Support Center and the management at each of the partners.

Speaker 1 And so that's a way to start getting management to become owners outside of just the direct owner of their respective brand or partner.

Speaker 1 And then the third thing I would note, which we're very excited about, is Alt has just helped us launch

Speaker 1 an investment program for folks in the business, leadership, key leaders across the business to be able to invest alongside Union Man Group Richard and Altis in Redwood.

Speaker 1 And that's a whole new vision of co-ownership that we're just ecstatic about.

Speaker 1 It gets people to be able to put their own money in and gets them to be able to really be side by side as an co-investor alongside us.

Speaker 3 I love it. You know, I got a question for each of you, and I need you to be

Speaker 3 very honest. This is selfish of me to ask.
So, Adam, for you, you go back to the early stage of starting a family office. I don't know when you and your dad got involved.

Speaker 3 Mark,

Speaker 3 what were some of the,

Speaker 3 you know, I work with Goldman Sachs.

Speaker 3 You built a pool of funds and you were probably wanting to capture, change lives and get high internal rates of return and create generational wealth for everybody involved.

Speaker 3 But you probably made some mishaps along the way. So you get to talk to your, you get to have a meeting meeting with young, uh, young Adam and Mark.

Speaker 3 And so we're back in this little time capsule. What does that conversation look like?

Speaker 1 Shoot. I mean, the number of mistakes I've made, Richard sits with us in meetings and I'll be like, I made this mistake back in this year.
I made this mistake. And I'm like, yep, you did.
Exactly.

Speaker 1 I think it.

Speaker 1 The number one, if I were to sit back and kind of guide myself in my first, when I did the legal services roll up back in 2016,

Speaker 1 I think the first thing I would say is I had a vision for that consolidation and that strategy.

Speaker 1 And

Speaker 1 in reality, I thought I was going to be able to execute it in two and a half or three years.

Speaker 1 And I just now am seeing the business, which we've now sold our interest in that business, just now, like 10, 11 years later,

Speaker 1 finally beginning to do the things that I thought we were going to do in year three or four.

Speaker 1 When I was a first time CEO,

Speaker 1 I just didn't know how to prioritize a set of strategies and translate that down to like the execution.

Speaker 1 And

Speaker 1 you think you're going to do a lot more than really what what you probably will be able to do.

Speaker 1 And so one of the big learnings from my kind of early time is just, you know, be really, really patient and thoughtful about the way you're treating the people

Speaker 1 and the way you're implementing your strategies.

Speaker 1 We had an instance this morning where some docs were going to go direct to a partner, like legal docs, and Richard asked on the call, who's called the partner?

Speaker 1 And the answer was no one had called the partner. Well, you can't send the doc to someone if you haven't called the partner, right?

Speaker 1 So the way we do business here, and I've learned it from Richard, make the extra phone call. Get in front of the guy.

Speaker 1 If you need to, get on a plane and have dinner. Sit with their spouses.
One of the key things Richard instituted day one, we're not having summits and gatherings without spouses.

Speaker 3 So

Speaker 1 it's just critical in our business. And I know I know the husbands and wives of all these partners and their management teams.

Speaker 1 And they know my wife.

Speaker 1 And

Speaker 1 it just drives you know, a better way of doing business. It is harder.
I want to be very clear about this. The way Richard has chosen to build this is harder.

Speaker 1 It takes more time and a hell of a lot of effort.

Speaker 1 But I have to tell you,

Speaker 1 I've learned a lot from him on this. So when I look back to my early days, that's probably the primary guidance I'd give myself.

Speaker 3 And for you, Richard, what is your take on some of your early mistakes?

Speaker 3 that would have been a different thing you would have done early on or a hard lesson you may have learned a few years in that you would have talked to your younger self about?

Speaker 1 I think that the run that we've had over the last couple of years has been so incredible. And I think a lot of it was a combination of timing, hustle, and luck.

Speaker 3 100%. I say the same thing.

Speaker 1 And I mean, like,

Speaker 1 I'm not arrogant enough to think that I could go do this again. It's just there's so many things that have to fall into place.

Speaker 1 And I do believe you create your own luck, but it does require some, you know, John Conway responding to an email, you know, or catching somebody on the right day.

Speaker 1 But to me, you know, one of the things sometimes I lay in bed thinking about in terms of regret is

Speaker 1 it took me 12 years to muster up the courage to do something on my own like this.

Speaker 1 And

Speaker 1 I think, thank God, I didn't try to do this with two years experience because I would have failed. It wasn't enough.
But I think, you know, eight or nine years in, I probably could have

Speaker 1 left and bent on myself a little bit sooner. And so, you know, if I had to do things over again, I probably would have mustered that strength and that courage a few years earlier to get started.

Speaker 1 But just as far as Redwood is concerned, not that we haven't made mistakes, but we have learned so much from those mistakes that it's hard to have regret on them.

Speaker 3 No, it's a good, yeah, it's hard to say that the lessons that made you who you are, you'd want to change.

Speaker 3 You know, one of the biggest topics I've been really studying, I was sitting with a VC firm, the initial one, Bessemer, that invested in Service Titan.

Speaker 3 They've since, about the 49ers, invested in a lot of companies. They're working on Fusion right now, one of 10 companies that they're investing into free energy, basically.

Speaker 3 There's tools out there, whether it's RilloVoice or Lace.ai or Evoca that are going to automate. There's dispatching tools.

Speaker 3 You know, I'm a big fan of investing in technology, but at the same time, this isn't the Industrial Revolution. I think private equity's got this wrong.

Speaker 3 We're going to adapt. We've always had Industrial Revolution versus the AI Revolution, completely different.

Speaker 3 We were replacing muscles back then. We're replacing brains right now.
And everybody's like, yeah, but it's going to take a long time.

Speaker 3 And all I do is read books on this and podcasts and go to Goldman Sachs events. And I sat down with the old CEO of Google.
And

Speaker 3 I don't don't think it's doom and gloom. And I'm glad we're in this industry, which is home service, home improvement.

Speaker 3 But I'm not as optimistic that people are just going to find another career all of a sudden. And I'm talking about a lot of other things.

Speaker 3 We're a technology company that does garage doors now.

Speaker 3 We're using, I think, 26 different softwares

Speaker 3 between the

Speaker 3 call monitoring, the dispatching, the CRM, the intact. We've got the Samsara.

Speaker 3 We've got Lace. We've got construction model.
There's just tool after tool after tool.

Speaker 3 What are you guys' thoughts on where we're headed in being a technology first company to manage some of the day-to-day?

Speaker 1 I think this industry has been technology first for probably a decade.

Speaker 1 And I get a lot of credit to the Service Titan team for helping change the landscape of how a contractor runs the business and the ability to scale.

Speaker 1 So I feel like we as an industry have been leaning into technology for quite some time. It's just this is the latest technology with AI.

Speaker 1 And I

Speaker 1 don't want to be first mover. I'd rather someone else take the time to pilot, have it fail, fix it, try again.
Like we will join this revolution when I think it's ready.

Speaker 1 We tried you know, early on to test some of the AI solutions and it just didn't do what it was promised to do and

Speaker 1 my team is too

Speaker 1 is too kind of

Speaker 1 um

Speaker 1 maybe stubborn on the calls that come in that that's that's gold when a customer calls you in a time of need we have no choice but to but to be excellent and the pain in my team's eyes when you know an AI agent would answer a call and not handle it the right way we just said it's it might not be today that it's ready.

Speaker 1 It might be tomorrow. So when it comes to AI, first of all, AI is a big topic in itself, and there's AI all over the place.
You might not even realize you're using it.

Speaker 1 But on the classic kind of use cases around

Speaker 1 call center, for example,

Speaker 1 we're just not. there right now.
We know it's coming, but we're going to let the software continue to evolve before we

Speaker 1 go all in. I don't know if you have anything.

Speaker 1 But I would say, you know, for example, and I think Tommy, you mentioned it, like, I don't know, but I think across all of our, you know, partners, we're probably using more than 10 or 15 different AI apps or different applications out there for that.

Speaker 1 So

Speaker 1 really what I like what Richard's done is a lot of these new AI companies will go to those folks and try to get them to start working with them and they'll test it.

Speaker 1 So I've had, I was in New Jersey with one of our partners and he's showing me some AI tool for with that's within

Speaker 1 dispatch, not to answer like Richard's talking about, but just to be able to vet a certain type of call. And

Speaker 1 so a lot of our partners are using it.

Speaker 1 It's just, I think that, you know, I think the bifurcation here is customer facing versus not. If it's customer facing, that's where we are extremely protective of the customer and that interaction.

Speaker 1 But to drive behind the scenes operational efficiencies, if there are tools that can do that, and like Adam said, there are dozens. We're doing it.
We're doing it and we'll continue to.

Speaker 1 And this is also just very basic, but just to be clear, every one of our partners has to be on

Speaker 1 Service Titan, their Sage Intact, ADP. I mean, there's the core infrastructure.

Speaker 3 Right, right, right. Yeah, that's very important.
You know, the only thing I tell you guys that I disagree is I think it's a worse customer experience when the phone rings 12 times.

Speaker 3 Now, hopefully you've got capacity 24-7, Sunday night,

Speaker 3 late on a Christmas night. But when you have the AI model built for, because if you got more than 0.1% abandonment rate, you're not doing your clients any.

Speaker 3 And I've got 67 call reps and I've got them in every single time zone and we're very good at getting to the calls.

Speaker 3 And then I've got an automation that'll actually text message the customer to a schedule engine that happened to do 280,000 last week of revenue.

Speaker 3 So I've got a couple of different things working in the background. So I agree with you.
None of it's really here yet. We're promising promise and promise.

Speaker 3 It's coming, but I tend to try to use the things and test them out and maybe test because I think it's a bad customer experience that they don't talk to anybody.

Speaker 3 I just went to Hungary not that long ago and I called Verizon, AI agent. It text me.
I hit the button. I confirmed I picked my plan.
Boom, I was done. It was actually better for me.

Speaker 3 So I agree with you, though. I don't want to talk.
I've had a busted pipe. My air condition is not working and it's 120 degrees.
I want to talk to someone. I want empathy.

Speaker 3 I want to know that you're sending somebody out in a perfect world.

Speaker 1 So the big question, just because this is just such an interesting topic, is

Speaker 1 for sure the phone should not ring 12 times or in some cases for 12 minutes. The question is, is, is it a better experience for the customer?

Speaker 1 And is it better for your business to roll them over to an overflow call center where another human is answering the call after five rings? Or is it better to have your own AI agent answer that?

Speaker 1 And that's where we go back and forth. It's definitely getting to a customer quickly.

Speaker 1 And one of the things I love, and I don't know, maybe it was a Chad, Chad Peterman that had said this at this Service Titan conference that you and I were both at a few weeks ago, but I think Chad said they give their customer the option.

Speaker 1 And I love that. I love the idea of when you call your local HVAC company, there's two choices.

Speaker 1 Press one or stay on the line and your whole time is two minutes to talk to someone live or get help immediately by pressing two and you can chat with our digital agent who can take great care of you.

Speaker 1 And if at any point during that conversation, you want to go back to a human, just press one and giving the decision to the consumer because I think over time, more and more customers are going to get comfortable talking to a digital agent and getting immediate support, especially if it's for something routine.

Speaker 1 Yeah, if your air conditioning is out and it's 120 degrees outside, you probably want confirmation from a human.

Speaker 1 But if it's about rescheduling your maintenance visit, doing that with a, you know, a digital agency agent may be totally fine.

Speaker 3 Yeah, you're right. I mean, look,

Speaker 3 I've always, I'll tell you, my experience with private equity has been amazing. I'm the leader.
They back me up. They They could be harsh when I need them to be.
I kind of

Speaker 3 work at my own little angle. But private equity, I'm on all the forums.
I'm on everything from service side to my own. I've got,

Speaker 3 I know, there's about 16,000 people in my,

Speaker 3 and I try to help people, but there's this nasty, nasty thing about whether it's private equity, even sometimes a family office.

Speaker 3 And it could be, because listen, you've got a financial responsibility, a fiduciary responsibility to get a good ROI. But I like the way you guys play the long game.

Speaker 3 You might take a couple steps back to take a ton of steps forward. But why does private equity is such a bad name?

Speaker 1 Let me start and then Adam can come from a different angle. Saying private equity is bad is like saying all car mechanics are thieves.

Speaker 1 It's just not, that's just not true. Maybe you had a bad experience with a mechanic once that ripped you off, but a majority of mechanics are just trying to feed their family and do a job.

Speaker 1 And I think the same is true with, it's not private equity, it's investors in general.

Speaker 1 And I do think there have been private equity groups that have made short-term cost-cutting decisions to drive an exorbitant ROI that give us all a bad name.

Speaker 1 But all investment groups are not created equal. And I think it's kind of just become the boogeyman for anytime something doesn't go right in the industry, it's easy easy to point to a scapegoat.

Speaker 1 And for some, that scapegoat has become private equity.

Speaker 1 But I can tell you in my experience, whatever you want to call what Adam and his father have started, a family office, an investment vehicle, they've been absolutely tremendous partners from day one.

Speaker 1 This business would not exist without their stewardship. And I'm forever grateful.
And this just would not have happened without them.

Speaker 1 And I think about how many lives we've been able to impact by what we've done over the last five years.

Speaker 1 And I'm incredibly grateful for what Altus is now doing and the support they're providing and the resources and opening our eyes. And like you, they're letting us operate the business.

Speaker 1 We're the operators, but they're really good at the things they're really good at, just like we're good at the things we're good at.

Speaker 1 And so now we have amazing contractors that are good at what they do. You have an amazing partner support center and we're great at what we do.

Speaker 1 And you have amazing investors in Union Main and Altus that are the best at what they do. So I just look at this as having a dream team.

Speaker 1 And as long as everybody is cut from a similar cloth and believes in what we're doing and how we're doing it, I think we are better positioned to take care of people and customers than anyone else is.

Speaker 1 Yeah,

Speaker 1 I couldn't say it better. I think it's great.
The only thing I would say is if you're ever looking to partner with a private equity firm or anyone, it's all about the people.

Speaker 1 So

Speaker 1 it's not that you're partnering with some big firm,

Speaker 1 or Bessemer or Carlisle or Blackstone.

Speaker 1 You're by and large partnering with the deal team, the actual individuals that are going to be at your board. And so those people can, just like any human being, they can have a family crisis.

Speaker 1 They can be more anxious or more calm. They can be more high-faluting versus any, just like anyone.

Speaker 1 And so based on your personality and the way that you want to run your business, my recommendation is to focus on the individuals in the room, because those are going to be the people in the room with you when you're having a really bad day or you're having a really good day.

Speaker 1 And

Speaker 1 there are great investment professionals at almost every shop I know. And there are really crappy investment professionals at almost every shop I know.

Speaker 1 So my point would be, you know, focus on the individual. Don't focus on the name.

Speaker 3 I want to go through a quick speed round. I know we got to get going here.

Speaker 3 My first question, super quick. If you sell a company at 35% to the bottom, still growing 30% a year,

Speaker 3 not through all MA, what would be, but you know they're paying their people fair.

Speaker 3 What would be your first thought?

Speaker 1 Red flag. Big time.

Speaker 1 Red flag. And not that it's not possible.
And not that there's anything nefarious going on, but that is not sustainable long run that I've ever seen.

Speaker 1 And so if you're, if your margins are too high, typically, but not always, it just means you're not fully investing in everywhere you need to invest. And at some point, something's going to happen.

Speaker 1 You know, your warehouse, you don't have, that's not properly resourced. You don't have the marketing infrastructure.
You're not investing in. preventative maintenance on your fleet.

Speaker 1 Like there's so many things and so many areas you have to spend money that driving a 35% profit profit margin in our industry long term is just nine out of 10 times not sustainable.

Speaker 1 So if we saw that, we would just have to dig in really deep to try to understand how are you able to do something that 99.9% of others that we've looked at are not able to do.

Speaker 3 I like it. I like that.
And that's, I usually, when I see something like that, I got to understand it.

Speaker 3 The only way that it makes sense is you're getting way better pricing in everything you're doing. The next thing I would say is, you know, the CSR is able to do a lot more with technology.

Speaker 3 And now you're starting to get to this point where I don't think AI is going to take over. It's going to cause superhumans that they're able to do 10 times as much.

Speaker 3 What is the top question that you appreciate, Adam, when a new partner is thinking about coming on board with you guys?

Speaker 1 Well, you know, Richard and John talk about this all the time, but in the first meeting, if within the first 10 minutes, these partners are not asking how we treat the people and the legacy and the brand, we're almost certain, like I think it's 90%

Speaker 1 that it's not, this is probably not a partner for us. And so I think we just sort of bifurcated.
You've got folks that are going to say, how valuable am I? What's the multiple?

Speaker 1 You know, you know, tell me about, and then there's the folks who say, you know, let's put value aside for a minute.

Speaker 1 Tell me about Redwood and tell me how you guys make our people and our processes and invest behind us to make us better. We've got big plans.
This is the things we want to do.

Speaker 1 Those are the questions that we, in my view, it's like off, right off the bat,

Speaker 1 you know that they're going to be

Speaker 1 a likely good fit for us and us to them, frankly.

Speaker 3 All right. A question for each of you.
Is there one book, not the Bible, not the E-Myth,

Speaker 3 not Napoleon Hill or Del Carnegie, but one book that really

Speaker 3 sets you up. And it changed the way you look at things.
And it could be a business book. It could be a fiction book.

Speaker 1 You want to start or should I go for it? Okay.

Speaker 1 So this is super bizarre.

Speaker 1 So there's a book called High Output, maybe not bizarre, but there's a book called High Output Management by Andy Grove.

Speaker 1 And early on,

Speaker 1 someone recommended that I read it.

Speaker 1 And

Speaker 1 Andy Grove starts the book by describing

Speaker 1 that you're managing a restaurant. You have one person come in.
They order eggs, piece of toast, and coffee.

Speaker 2 What do you do?

Speaker 1 You go to the back, you write the order down or not.

Speaker 1 You go to the back, put the toast in the toaster. Do you start that way or do you put the eggs on? And it goes through this process

Speaker 1 of first serving one person, then serving 10, then serving 40 in a restaurant. And how as you scale, all of the processes break down.

Speaker 1 I have used the first few chapters of that book in all, like every business experience since I've read the book.

Speaker 1 And whenever things get crazy or there's an issue or something's complicated, and I don't care if you're talking about a specialty pharmacy, legal services, but it doesn't matter about industry or type of product or service.

Speaker 1 You just got to break it down to the egg, the toast, and the coffee. And you literally have to ask yourself every step of the way, where is there a break?

Speaker 1 And as you go in scale, where is there a break?

Speaker 1 That's probably one of my favorites. I would tell you, one of my other favorites is, and I'll just give two more, but Hard Things About Hard Things is awesome.
It's such a great how-to book.

Speaker 1 It's super practical.

Speaker 1 And it goes through a lot of cases that, you know, anyone who's run a business is like holy crap that's hilarious that's such great advice it's a great book and the other one is built to last which is one of my all-time favorites um

Speaker 1 and so so those are probably my top three they're all business books they're not they're not the bible and they're not fiction but

Speaker 1 see this is how you can tell adam doesn't have four kids because he just listed off his top 50 favorite books that he's read this week.

Speaker 1 Trying to survive when I get home. Exactly.
And maybe, maybe get a chance to read the Wall Street Journal, you know, on the weekend if my kids will leave me alone for five minutes.

Speaker 1 So

Speaker 1 I don't, I'm, I'm heads down with my family. Like, like reading has not been something that I've had enough time to do over the last literally 10 years.

Speaker 1 But I read a book recently. It's the Bob Iger called, I think it's A Ride of a Lifetime or The Ride of a Lifetime.
And he talks about his leadership lessons running Disney.

Speaker 1 And it's like it's fascinating, the parallels. Obviously, as far from home service as you can get, but the leadership lessons and, you know, they were, they were doing lots of acquisitions.

Speaker 1 And how do we treat the culture of this business that we bought? Do we stamp the Disney culture on it or do we leave it, you know, to thrive on its own?

Speaker 1 And there are so many parallels from that book that

Speaker 1 I'll go back and read that, you know, once a year, skim through it. But besides books,

Speaker 1 if someone asks what intellectual lineage, because that's what the book gets to, right? It doesn't matter if it's a documentary or a book or a podcast. What is your intellectual lineage?

Speaker 1 Where do you drive your ideas from?

Speaker 1 We have a little library down the hall here.

Speaker 1 It's in the main Richard Knight. When we expanded the space, we decided to have a little lounge for everyone, and we have a library of some of our favorite books.
But

Speaker 1 I'd say, like, a quarter of those books are

Speaker 1 sports books. And the big driver of, if you really, one of the key drivers of our intellectual lineage comes from

Speaker 1 the former Alabama coach,

Speaker 1 Nick Sabin. John Conway references Nick Sabin.

Speaker 1 Richard will reference Nick Sabin. And what they're referencing constantly is follow the process.
Follow the process, follow the process, follow the process.

Speaker 1 And so I would say for Richard and John and me, I mean, Richard's a collegiate athlete. It's a very athletic culture.

Speaker 1 I would say that's probably one of the key drivers of the culture here intellectually is sports-related leadership stuff.

Speaker 1 I'll tell you another thing real quick. There was a great podcast

Speaker 1 just recently

Speaker 1 with

Speaker 1 the CEO of McLaren.

Speaker 1 And I'm blanking on

Speaker 1 who is interviewing him.

Speaker 1 And a lot of times richard myself my dad john sean we will send each other these podcasts and so i would i would argue more than books we're probably sharing you know day in day out or throughout a week two or three podcasts on business building which we love or culture

Speaker 3 fascinating so if people want to reach out to you guys uh each one of you what's the best way to do that

Speaker 1 uh so for for me just go to redwoodservices.com.

Speaker 1 You know, all 53 of us are on the team page with our email address and our LinkedIn profile link.

Speaker 1 I think one of the reasons that this business was built was in the early days, people responded to my emails.

Speaker 1 So when I was trying to learn or connect or network, I would send cold random emails to people out of the blue, not cold in the tone, but like a cold email, and people would respond and were very generous with with their time.

Speaker 1 And I think that's one way to pay it forward. It's richard at redwoodservices.com.

Speaker 1 And Tommy, just to compliment you, like, I think you've set an example for all of us about what you do after you've had some success. Like so many people make,

Speaker 1 have a transaction, make some money, and then you never see them again. And they took and then they disappear.

Speaker 1 Like you took and now you're giving back in a variety of ways, speaking, your podcast just what you do in our home services community so frankly i think you know five years from now 10 years from now once we've kind of you know had a couple wins under our belt to be able to do what you do would be a goal i think for for all of us yeah i appreciate that and i i'm a work in progress i got a lot of work to do we just did a shop tour i try to do as much as possible And at the same time, it's the Zig Ziglar saying, the more I find myself helping people get where they want to go, the more it kind of comes full circle.

Speaker 3 You get anything you want in life if you're helping other people get what they want.

Speaker 3 And I played this yesterday

Speaker 3 at every Thursday meeting. I had the whole West Coast on the call.
And I played this

Speaker 3 child reading this, you know,

Speaker 3 these moments in life, especially lately, a lot of people get broken. It's tough.
Christmas is coming around the corner. They don't have enough money and they're going through a hard time.

Speaker 3 And three of the guys text me and they were crying when they were, they were like, dude, I'm tearing up, like thinking about that. You hit it at the right time.
And

Speaker 3 building leaders, helping people figure out more than just money, but what's their dreams, what are their goals. Most people don't even dream anymore.
They don't know what they want.

Speaker 3 They're like, I just want to help my family. And I'm like, what about you? What do you want? Well, I only care that my family's doing good.
Well, they're not going to do good unless you're doing good.

Speaker 3 So I really appreciate the compliment.

Speaker 3 We'll get ready to close out here. The way I usually close.
Oh, I'm sorry. What's the best way?

Speaker 1 No, I mean, Richard, just for I'm not saying that. Is it the same?

Speaker 1 I'm on the website.

Speaker 3 Okay, Adam's on the website.

Speaker 1 Anyone can contact me on LinkedIn.

Speaker 1 And of course,

Speaker 1 my email is Adam at unionmaine, U-N-I-O-N-M-A-I-N dot U-S.

Speaker 1 But just like Richard.

Speaker 1 And you, Tommy, like we spend a lot of time talking to folks, answering emails, and then like getting on calls with people.

Speaker 1 People did that for us, and we absolutely want to continue to pay it forward. I think it's critical.

Speaker 1 Absolutely critical.

Speaker 3 I've enjoyed the hell out of this. You guys are awesome.
I want to spend way more time with you guys.

Speaker 3 Maybe we didn't talk about something. I'm going to let each of you close this out.
So, Richard, you go first. Adam, you can finish this out.

Speaker 1 Tommy, before you, I just want to tell you this real quick. You want to come down to Redwood and come spend a day with us.
I'm serious.

Speaker 1 When you want to, you know, come and come and visit us and uh and we'll do the same with you

Speaker 3 yeah it's an open invitation

Speaker 3 yeah people are always like why do you give everybody everything i'm like well tell them how to get a six pack i guarantee you less than one percent it's not quantum physics you take care of your people you make you pay attention to some the culture and the kpis everything comes after that so uh they're like why do you other gross road companies just rip us off i'm like good we'll buy them in the future who cares

Speaker 3 so uh i'll let you guys and i i will take you up on that. And we'll definitely keep communicating and I'll get you guys to Phoenix.
And you can stay at the house. It's,

Speaker 3 God's been good.

Speaker 3 Yeah, but why don't you, Richard, give us, maybe we talked about something. Maybe we didn't talk about something.
Maybe you got something for the audience you wanted them to hear.

Speaker 1 I think maybe just

Speaker 1 to end, it's just the importance of

Speaker 1 letting contractors know

Speaker 1 there's not one path to selling your business. And for a long time, maybe there was.
It's, I run my business. I'm ready to stop running my business.
I sell my business.

Speaker 1 And that doesn't work for everyone. And so what I think at the end of the day, we're providing to people is an alternative.

Speaker 1 For someone that has run their business to a certain point, they want to de-risk their financial life because usually 99% of their net worth is tied up in the business.

Speaker 1 So we will write you a big check for a large stake in your business. You get to take a deep breath knowing that you're financially secure.

Speaker 1 And then we get to go on this journey together where it's your team, your brand, your culture, your market, your customers, but you're doing it and going after it with all of our support.

Speaker 1 And then you're going to make as much, if not more money on the equity that you roll. And so we've had husband-wife teams, father-son teams.

Speaker 1 The average tenure of a Redwood partner company, like the average age of the business is 45 years. We have two that are over 100.

Speaker 3 These are not

Speaker 1 people that are just got into it and are flipping a business. These are integral parts of the community and the owners don't want to be done.
Sometimes their name's on the side of the truck.

Speaker 1 So I think the most important message that I've tried to get across, and there's so much noise that sometimes it's hard to break through, is there are alternatives.

Speaker 1 And we have custom, we've done 19 deals and every single deal has been different, customized to the need and the situation of the party on the other side of the table.

Speaker 1 And we're just having so much fun doing it. This has been such a blessing that sometimes you just have to pinch yourself.

Speaker 1 But I think if there was one kind of final message, it's just that there are ways to get liquidity, still run your business, still have fun, and then create generational wealth on your second bite.

Speaker 3 Fantastic. I love it.
Thank you, Richard. Appreciate you.
Adam, you'll do the final hurrah here.

Speaker 1 I've gotten, you think I can follow that?

Speaker 3 It's tough. It's going to be tough.

Speaker 1 Crazy. I'm not following that.

Speaker 1 Tommy, this has been great. Thank you.

Speaker 3 I really appreciate you both. Listen, there's a lot to learn here.
I highly recommend the team. I'm sorry.
The listeners reach out to you guys, learn more.

Speaker 3 I had a blast and I look forward to spending more time with you guys.

Speaker 1 Thanks, Thanks, Tommy. All right, Tommy.
Thanks to you.

Speaker 2 Hey there, thanks for tuning into the podcast today. Before I let you go, I want to let everybody know that Elevate is out and ready to buy.

Speaker 2 I can share with you how I attracted a winning team of over 700 employees in over 20 states. The insights in this book are powerful and can be applied to any business or organization.

Speaker 2 It's a real game changer for anyone looking to build and develop a high-performing team like over here at A1 Garage Door Service.

Speaker 2 So if you want to learn the secrets to help me transfer my team from stealing the toilet paper to a group of 700-plus employees rowing in the same direction, head over to elevateandwin.com forward slash podcast and grab a copy of the book.

Speaker 2 Thanks again for listening, and we'll catch up with you next time on the podcast.