408: Matt Malone—From the Ground Up

Mike Rowe here with another episode of The Way I Heard It.

Chuck, do you have any idea what number this might be, or do we even care anymore?

Yeah, I do.

I mean, the number is going to be 408.

408?

Yes.

Not that it matters, but I tell you what does matter.

My guest, his name is Matt Malone.

You're going to love him.

The episode is called From the Ground Up because Matt Malone happens to be the CEO of a company that you might have heard of called Groundworks.

Yes, Chuck, full disclosure, Groundworks is a sponsor of this podcast.

And you, like many of our gentle yet marginally skeptical listeners, are no doubt wondering, why would I have a CEO of a company that sponsors this podcast on the actual podcast?

Mike, why would you have a CEO from a sponsor of this podcast on this podcast?

Because I'm hopelessly biased, obviously.

I'm bought and paid for, Chuck.

I sold out many years ago.

No, that's not true.

Well, it's not entirely true.

Here's what happened.

About a year and a half ago, maybe two years, I was invited to give a speech for a company that I was not familiar with.

This company was called Groundworks, and the speech was in Virginia Beach, where they're headquartered.

And this guy, Matt Malone, called and said, look, this is a big deal for my company.

I've got 5,400...

employees who do the classic dirty jobs.

And I said, what are you talking about?

He goes, like, these guys, they waterproof homes, they lift homes, they fix foundations, they encapsulate crawl spaces.

I said, Look, it sounds great.

I love these guys.

What can I do for you?

He said, Well, I want you to come and I want you to give a talk at our annual event.

And I said, Well, is the occasion special in some way?

And he said, Well, as a matter of fact, it is.

I've restructured the company, and at this event, 5,500 of these guys are all going to become owners of the company.

One more time, Mike?

5,500 of my guys, these frontline blue-collar home services workers, are going to become owners of this billion-dollar company.

That's kind of crazy, isn't it?

Dude, I have been waiting for private equity to do something like this in this space.

Now, it's not a new idea.

There are plenty of companies that give out these ESOP programs, right?

You can get a piece of the company you work for, but that usually only happens at the executive level.

I've never seen it happen for guys underneath the house doing the actual work.

Anyway, I said, hell yeah, all day long, I'll be there.

So I go, this is almost two years ago at this point, and I give this talk.

And I'm telling you, man, you know me.

You know me a long time.

I'm not a sentimental fool.

I don't get emotional typically.

But I'm standing backstage looking out in the audience as Matt makes this announcement to his people.

And I'm seeing mostly men,

very few of whom ever went to college, sitting there weeping with their wives and their girlfriends and their families.

And I just thought it was terrific.

Anyway, I gave the speech and afterwards I said, good on you, man.

Stay in touch.

And he stayed in touch.

And, you know, he came back around and they started sponsoring the podcast.

And then we made a bigger deal.

And I've been speaking on behalf of Groundworks for the last, I don't know, five or six months.

And part of the reason I want him on here is just to explain,

dude, this guy green lit creative for a commercial campaign unlike anything I've ever seen.

No ad agency, no script, no casting, no actors.

We literally did it like dirty jobs.

He said, let me just send half a dozen of my guys.

I'll meet you anywhere.

I said, How about Baltimore?

He said, Great.

So I went to Baltimore, saw my mom and dad, and then I went and spent like 10 hours under a house with these guys.

And that was no kidding hard work, wasn't it?

Well, it was dirty jobs.

It was no different than an episode of Dirty Jobs.

We lifted a house, we fixed a foundation, we did all this waterproofing.

They worked me like a dog, and it was great.

I mean, it hurt because I'm I'm older than I've ever been, you know, but these guys were terrific.

We shot all day long and now they've got this campaign that's out there.

So A, I love the fact that somebody actually let me do a commercial campaign totally unsupervised.

That had never happened before.

But B, and most importantly, if you've been following the headlines, you know this

strike.

with the longshoremen has been big news and unions are in the news.

And I'm not going to get political with this, I promise, but I'm just so interested in what happens to the union conversation in a company where all of the employees suddenly become owners.

I think there's a way forward for a lot of other companies who do the kind of work that Groundworks does.

Actually, I was up in Columbus filming something.

I heard Matt was going to be in Cincinnati, and I said, meet me at my hotel.

Let me record an episode of the podcast with you you and tell the world what you guys have done at Groundworks.

He said, sure,

because Chuck Matt Malone always says, sure,

why not?

Why not do a podcast with no supervision?

Why not do an ad campaign with no focus groups?

Why not restructure my billion-dollar company from top to bottom and make my workers owners?

I love everything about what this company is doing.

I love the conversation you're about to hear.

I'm calling it from the ground up.

You weren't there with me in Cincinnati, and I'm sorry for that.

I wasn't?

Trust me, you weren't.

I dare remember.

But you've listened to this conversation.

Do I have your approval?

Yeah, absolutely.

It's like a CEO Robin Hood kind of, you know, where he's given away a piece of the company to his employees, and it's really cool.

But here's the thing.

He's not Robin Hood, and he's not a bloody do-gooder.

Matt Malone, he'll tell you in the first couple of minutes, he is a capitalist, first and foremost.

He's a free market guy, but he knows where his bread is buttered.

He knows who's doing the actual work.

And he's putting these guys front and center.

It's from the ground up.

It's a great way to build a company.

And all my bias notwithstanding, I think you're going to love it.

Matt Malone, folks, right after this.

In the interest of complete and total transparency, I feel duty bound to tell you that I do not use prize picks.

I'm glad they're sponsoring this episode, but when they asked me if I could personally endorse their product, I was honest.

No way, I said.

I never got into that whole fantasy sports thing.

My producer, however, loves that kind of thing and uses prize picks all the time.

In fact, he's won all kinds of money.

Chuck, take it away.

Thanks, Mike.

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Thank you for having me on.

This is

an honor to be here.

I told you last night, the experience of watching you for years and what you've done for the American working person,

inspirational.

So I know you don't like data boys, but...

Well, if we're going to do this, I mean, let's just embarrass each other.

I think you're going to be on the cover, if you haven't been already.

You're going to be the CEO of the year at some point.

I doubt it.

I'm just telling you.

No, it's going to happen.

We've taken as deep a dive as we can in understanding what the last six, seven years have been like for your company.

But I'm telling you, man, I have never seen a commercial campaign come together like the one that you ultimately agreed to do.

I've never seen a company put their employees forward to that degree.

I've never seen a company trust their people to that degree, trust me to that degree.

I mean, you let me go into a crawl space under a house.

You let me work on a foundation in a completely unscripted way, not with actors, no ad agency involved.

We did this thing, and you know, Mary and I have looked at the work again and again, and we're like, just speaking from my industry, I haven't seen this happen before.

So, you know, we don't need to talk about it in depth, but I just wanted to get it out of the way up front.

That was an unprecedented thing.

But then again, so was the announcement in Virginia Beach a couple years ago.

Yes.

So maybe we should just start there.

Okay.

What has made Groundworks such a weirdly unusual company in 2024?

Well, that's a lot to unpack.

I think the first thing is this business was really built around giving dignity and respect to the blue-collar skilled trademen and women of our industry.

It was really built around can we build a company that honors the professional and not just punch a clock.

Yeah.

Right.

So all full disclosure, I am not a blue-collar worker.

I didn't grow up with the shovel and the things that I saw you do on those commercials.

I've been around, but I could never move around like that, like you did.

Deep respect for the men and women that make up our company.

But when I founded Groundworks in May of 2016, my wife and I bought a company to build this.

And I always had this notion that the power of equity, and ownership seemed to be regulated to or only focused on white-collar workers.

You're from San Francisco.

You read so many stories.

From Baltimore.

Sorry.

Wound up there briefly.

We'll unpack that later.

I'm not sure why.

Look forward to it.

But

you always read stories about these 20-year-old millionaires of how they developed an app or they work at a great tech company and overnight they've had success.

And I thought, even long before Groundwork, which is my fourth company, that why can't we do that in a skilled trade profession?

Why isn't that available for blue-collar, hard-working, skilled trade men and women?

Because historically, it's always been the purview of the unions, right?

You've got labor, you've got management, and rather than looking at the two of them as two sides of the same coin, there's this always this horrible divisiveness.

And I've always wondered, is there a different way?

Is there a better way?

And, you know,

I think maybe there could be.

There's definitely a better way.

This has to be a collaboration.

For a business to work, there has to be a collaboration between ownership and management and the employees.

I think we've gone to the nth degree at Groundworks.

We say in our company, and we actually believe this, that great companies are only built by great people.

And if you treat them with dignity and respect and you give them pay packages and incentive programs and then ultimately ownership, there's alignment there.

There's complete alignment.

We are aligned on our mission as a business.

We're aligned on one simple fact, that our job is to, and frankly, my job as CEO is to, if I can, give everyone in my company the tools to be successful.

The rest is up to them, but we could have a life-changing wealth event as we build this company together.

So it's not only my shareholders, which I have many,

but it's also my employee owners, which are also shareholders in a different way, that all align together.

to achieve some outcome we're all looking forward to.

I want to make it clear, too, the kind of work that we're talking about, that your whole company is based on,

the foundation of your company is truly foundational, right?

Yes, it is you guys repair foundations in homes.

You encapsulate crawl spaces.

You repair crawl spaces.

You waterproof basements.

You basically are in a never-ending war with groundwater.

Yes.

Right?

The degree of difficulty, the manual labor required, the grit.

in your employees, which are now, what, close to 5,000?

5,500, yes, sir.

Unbelievable.

You can't overstate it.

And so

this is why we ultimately met, I think.

You probably saw your employees in old episodes of Dirty Jobs.

100%.

And so to turn those guys into owners of a company your size.

I don't want to put words in your mouth, but has it been done before in the blue-collar space?

We've all heard great stories of Walmart and other great companies that ultimately gave ownership along the way.

Mostly, though, they would do that after they went public, because they had a vehicle in which to do that.

There are really none in our industry that have done this.

My industry is just frankly full of about 3,500 competitors.

No one's thinking about

ownership for employees.

They're thinking about I hope they show up for work.

And we're thinking, okay, if you incent someone the right way and treat them respectfully, give them incentive programs, they're going to show up for work.

So if you think about the home services industry, very few examples, if any, of a large company like this granting ownership to employees.

It's certainly a big experiment.

You know this.

I am a capitalist.

I am proud to be a capitalist.

I think our country is shifting in a different way.

But I think capitalism does need to be more inclusive.

And the men and women that help make a company successful should share in the gains of the success of that company.

So we're leapfrogging around a bit, and I apologize.

It was back in 2016, you and your wife...

Buy a company.

We bought a company called JES in Virginia Beach, Virginia.

And we decided to make a go of this business.

And ironically enough, the characteristics of the business, I didn't wake up one day and say, hey, I'm going to be in the foundation repair business.

What the hell do you know about foundation representation?

I know nothing.

I know nothing.

I do a little bit more now, but I have great people around me that know what the hell they're doing.

What I saw was, and again, accolades to you to some degree.

We talked about this briefly last night.

So you open the world to many folks that might not work in skilled trade about all the businesses that exist in this country to keep it going.

You literally opened the world.

So I was a finance person, and as I sat there and watched these, they were entertaining, of course, but for me, it was more business-oriented.

Roe is out there finding businesses that no one knows even exists.

And in my little mind, I thought, man, there's so much opportunity to build a business.

And frankly, so many businesses that people don't even know about or forgot, making healthy livings and building something special.

So that was always a nugget in my mind.

The other was

looking at industries that are inefficient.

Waterproofing is probably the second oldest industry in the world, maybe.

Especially in the soil.

Yeah, no tell on.

As I looked at this industry and I met Jesse Waltz, who I bought the Ultimate Company from, I thought, wow, there's an opportunity to build something special here that you have an inefficient industry.

There's no capital.

Frankly, there are a lot of men and women working on the business, meaning like they're doing the day-to-day.

They're not really thinking about how to build build this business beyond a nice paycheck.

And our industry is so episodic in nature.

So when we come to your home, we're going to do a job and we're going to do a good job.

And that would typically be it.

And by the way, your customer is probably in a stage of panic or something close.

They're scared.

The water is coming in.

Their most important asset is potentially crumbling under their feet.

They're freaked out.

Yes.

So you're not just sending in some guy with some tools to fix a problem.

You're sending in like a superhero, potentially,

and an ambassador to the whole company.

It's an extraordinary set of skills that you have to have to do that job right.

And you have to be trustworthy, right?

So think about the work we do.

Our customers can't do that work.

You can do DIY all over your house, but what you can't do is lift your own home.

So we literally lift houses, as you saw.

We lift houses, we peer into the ground, we lift houses to fix settlement.

We jackhammer around a basement to put in a water management system that gets the water expelled from the home.

All of these jobs are not things that you could typically do yourself.

And so there is anxiety from the customer.

Oh man, there's something going on.

I'm not sure exactly what it is.

And if you look at the material and the information out there, it's hard to discern the cost.

and the issue related to is this discretionary, non-discretionary, how fast will my home fall down?

In the case of waterproofing, yes, they want that water out of there.

There's no question.

But the other services, there's just a lot of misinformation or lack of information on what to do about the issue that arises.

And so going back to trust, our job as a company is to deliver a trustworthy solution to the consumer.

And that's why in talking about the commercials that we did together, why wouldn't we show the truth?

Because that's literally the business we're in.

Because nobody does, Matt.

I I mean the story of my life has been a constant struggle with brands not to trust me, but to trust themselves, right?

To have the courage to let your own employees or your own customers truly do the talking, not in a traditional testimonial way, but really in an honest way.

I mean, I know a lot of CEOs.

I know a lot of small business owners.

a lot of big business owners.

They all say the same thing.

When it comes right down to it, nobody ever does it.

Nobody ever does it.

You can can hear the sound of their sphincter slamming shut

when it really comes down to doing it.

So again, it's a...

Well, thank you for saying, look, Mike, I think the thing that really resonated, I'm not a real corporate CEO.

You know, we didn't build this company because I'm some corporate guy.

I'm an entrepreneur, and I really believe in the men and women that make up our company.

And if we're in the ultimate business of water management and displacement and selling trust, that we will solve this issue.

Which, by the way, you're selling trust into an industry that's riven with mistrust.

Oh, it's terrible.

Is there any other industry that suffers more from a pre-existing skepticism and suspicion on the part of the consumer?

I don't know I could answer that, but I do concur that in this industry in particular, there is...

There's the opportunity because maybe auto, like when you go and get, you know, your wife goes to the mechanic and he says to her, hey, look, you have, you know, your light bulbs are out because the fluid's low.

I mean, unless you're an educated person, you wouldn't know that guy's lying to you.

It's exactly you're helpless.

Completely helpless.

And so, contractors, in general, just to be fair, so we are a contractor.

We go to market as a consumer company because that's how we're serving our consumers.

But in the end of the day, we're contractors across 33 states.

We have 23 engineers.

When we go into a customer's home, contractors typically are notorious

for

scamming people.

You go in,

what's your typical experience with a contractor in your own life?

You go in, you have an issue, someone comes, they show up in a kind of a beater truck, they're not looking very professional.

They kind of look around, they give you some estimate, they write it on a piece of paper.

And they say, okay, I need 30% deposit.

They slap it down, and you're like, okay.

So you give this person a deposit.

You hope they come back.

And my experience is they rarely show up on time.

They rarely finish on time.

and you pay more and you don't get quite what you hope you got, right?

So our company is the idea would be to deliver that service in a differentiated way.

So that we come, we assess the problem honestly, and the price is generally going to be the price.

I mean, it is expensive, like depending on what we do, this is not cheap work.

You have to overcome that, by the way, because the consumer has no relative measure of price and value.

In our process, we show them the pictures, as you saw.

You get under there and you see this.

In the case of our home that we did together, the walls didn't even connect to the room that you were working on.

The foundation wasn't even connected.

And so consumers would have no idea.

They would expect that home to be built properly.

And rarely do they get under there and witness it.

And so our process is we show them the pictures.

If I come up to you and I show you, hey, Mike, I was just under your crawl space.

And here's what we found.

That's a trust exercise.

Somewhere, somebody is listening to this right now in real time in a home.

that is literally being supported by a stack of wood, right?

Like two by fours and four by sixes.

They're down there in some crawl space and somebody somewhere took a shortcut at some point in time.

And you know what?

It's still somehow standing, but maybe not so much tomorrow.

Completely.

We see it every day.

Not to put fear into your listeners, but we see every day shoddy workmanship and bad construction habits across the country.

Literally, because we post pictures on our own system where we see when we make a proposal to a customer.

And you go through these pictures and you really can't believe all the shisters that are out there and how they frankly take advantage of customers.

So, what the heck happened?

You and your wife buy this company, and seven years later, you're running-what is this now, a two-billion-dollar concern?

So, we went from about 30 million to a billion in seven years, and this year, the end of our eighth year, we'll be about a billion two.

I can't believe it.

I'm still the CEO of this thing, you know.

So, what did you do right?

A lot has gone well.

I think the first thing I did right was hire the right people.

I surrounded myself with experts and really smart people.

I think any smart business owner would tell you, the CEO is just the CEO.

The company is run by the men and women that make it up.

And so I believe I really was successful at attracting and hiring talent that I could align and building on a mission.

So we build our company in three ways.

So we make acquisitions.

So we acquire businesses across the country.

We've done 42 to date.

Which makes you a greedy, rapacious capitalist who's sucking up all the monpop businesses and probably the target of no small amount of derision over the last couple of years from a certain sector.

All the time.

All the time.

But if I presented the 42 men and women that I bought companies from, men and women that started these businesses out of a garage, I had one fella that, this is our biggest acquisition.

And you've probably heard a million great entrepreneur stories, but the biggest acquisition we've ever done, well over $150 million.

This is a big business.

And I won't say where because I don't want to disclose who it is.

But he started his business.

He wanted to be in foundation repair, and he knew a company in town, and he knew their best salesperson.

He would follow this salesperson to the job that they would go pitch on.

They would go assess the home.

He would wait a couple hours and go back to that house.

And he just happened to say, hey, I was in the neighborhood and I know you have issues with your foundation.

Because he couldn't afford to build the business, to get the marketing, to get the lead.

So he literally would follow around the best salesperson from a competitor and then go into that company afterward, I mean that house afterwards and sell a job.

That's how this guy started.

GED.

This is a hard-working man.

His wife was a cosmopolitan.

She cut hair.

Cosmetologist.

Frankly, that couple, really smart, right?

So people often think if you don't have some piece of paper,

you can't be intelligent.

And I've actually seen quite the opposite.

I know folks with great degrees that never use them, as opposed to some of the people that I've surrounded myself and I work with and I buy companies from.

That's some of the most full of innovation and ingenuity and grit, you know, because there is no, we call it burn the boats, right?

There is no other option.

They find a way to be successful.

Burn all the ships.

In this case, this one fella, you know, he built a great business and now, of course, is worth hundreds of millions of dollars.

Another example is we was a fella, I can't name him, but he worked at a greeting card company, got fired, decided for whatever reason he was going to be a waterproofing contractor, put an ad in the paper and started a company and was very successful.

We bought it.

So I have a litany of these stories.

So they would tell you the opposite.

They would tell you, hey, I don't care about this bad notion of private equity.

What I know to be fact is this company, Groundworks, and Matt Malone and his team, they did everything they said they were going to do.

I am now a millionaire because this crazy guy came in and bought my business.

And most importantly, my people today are better off than I could provide it for them.

As you may have heard me say several thousand times before, we need to close the skills gap in this country and we need to do it stat.

I hate to be an alarmist, but there are currently 7.6 million open jobs out there, most of which don't require a four-year degree.

And currently, 250,000 of those jobs exist within the maritime industrial base.

These are the folks who build and deliver three nuclear-powered submarines every year to the U.S.

Navy.

And there's a real concern now that a lack of skilled labor is going to keep us from building the subs that need to get built.

On the positive side, there's a growing realization that these jobs are freaking awesome.

I'm talking about incredibly stable, AI-proof careers, just waiting for anybody who wants to learn a skill that's in demand and start a career with some actual purpose.

Added is manufacturing, CNC, machining, metrology, welding, pipe fitting, electrical.

All of it is spelled out for you at buildsubmarines.com.

That's where all the hiring is happening, and you really need to see it to get a sense of just how much opportunity is out there.

That's buildsubmarines.com.

Come on and build a submarine.

Why don't you build a submarine?

That buildsubmarines.com.

The real reason you're here, from my perspective anyway, is that article that came out in the journal, I guess it was about six or seven months ago.

Big survey.

Gallup was involved, a couple of other companies that essentially determined that 64% of Americans across the board believe the American dream is dead.

And, you know, that had an impact on the way I think about my foundation.

And it was part of the reason that we reached back out to you after we met a year and a half or so ago.

Because those 5,500 people on the front line, how many of them roughly have any college at all?

You know, we don't track that stat, but if I were to wager, I'd say less than 20%.

How many of them are either making six figures plus or on a path to do it?

Well over 50%.

So in the field, for us as a foreman, the average pay for a good foreman for us is somewhere between $85,000 and $110,000.

Now this is hard work.

I know.

And by the way, in the field, foremen don't look much different than guys on the first day of the job.

They're all doing the work.

Right, right.

In fact, you know that you saw the ages as well.

You can be young and be a foreman.

It's just about the experience and knowing what you're looking at.

And frankly, being able to speak and lead people.

And so when that article came out and we actually talked about what that means for our business, I actually, I believe the opposite.

I believe that the American dream is still healthy and alive.

We have to do a lot to revive some of it.

But Groundworks is just one example of what I see as the American dream.

You are a piece of the American dream.

I know I am a lucky piece of the American dream.

And I know 5,500 men and women at Groundworks that will achieve the American American dream once we're successful.

We've partnered up with private equity firms along the way and have had multiple events that allowed for wealth creation.

So when I started the company, I granted ownership immediately to managers and that 43 managers that we granted ownership to.

Again, never done before.

And I remember managers would say, what is this piece of paper?

This is just some bullshit con.

I mean, I literally, and I understand that.

Sure.

Some guy, financial guy, coming in, doesn't know anything about foundation repair, comes in, grants ownership.

Okay, this is a scam.

A couple years later, when we partnered with our first private equity firm, those folks made about $15 million,

which is good.

Just recently, we partnered with, as you know, when you spoke at our kickoff,

it happened to coincide with the announcement of our newest partner, a firm called KKR, and they allowed us to facilitate ownership to everybody.

But prior to that,

we expanded the pool from 43 to about

330 employees from the time we partnered with our first firm called Cortech in 2020 to 2023.

We expanded that pool from 43 to 300 plus.

This is why it's relevant.

So we paid out about $100 million to those managers.

Now some of those managers left because it was the American dream.

They had now the capital to go pursue something else that they wanted to go do.

and they wanted to go lead and have the freedom to do that on their own.

And, you know, as a CEO, that course you don't like that because your best folks leave.

But in thinking through it, this is what this company is about.

This is what the American dream is about.

You seize the opportunity in front of you to change your life, you have a little bit of capital, and then you go give it a go.

That's the American dream.

And so, to some degree, as we build this company, I know, I know hundreds of people will ultimately leave our company with wealth to go do something on their own.

That's a good thing.

That's a good thing for America.

Now, we have to struggle internally to rebuild those teams, and that's going to be hard, but you have to take perspective and say, okay, that's why we founded this thing for that very reason.

It strikes me that

the skepticism that exists between the consumer and a company that's coming to fix a problem in the home services world is really not so different than the skepticism that exists with

the average American today who's looking at private equity, venture capital, entrepreneurship over here,

and then just back to the brute realities of getting the work done over here.

And we see these two different groups of people and we're so divided today

among, you know, well, which side are you on, Mike, for God's sakes?

See, you and I do have a lot in common.

I worked on dirty jobs for a long time, but I'm not really that guy either.

You know, my parents were public school teachers.

I grew up, you know, middle class, and I went to college and I sang in the opera and I did a bunch of things that are totally inconsistent with the way people think about me who have seen that show.

But I also had a front row seat to real work growing up and I did have a genuine appreciation for those men and women and I wanted to do something that bridged it.

Right.

You know?

Right.

And so

if there's a question somewhere in there, it's how are you able to bring those two sides together?

Again, separate and apart from a typical union conversation and all of that

collective bargaining and all that drama and all that acrimony that winds up tearing so many companies apart, many of whom I've worked for before, big blue-chip companies that this country, you know, really relies upon, but have such a catastrophic relationship with their own people.

That's the shit that breaks my heart, honestly.

How in the world can a company move forward that's hobbled that way?

Well,

I thought a lot about this, not just for this podcast, but just from the course of how this business is coming together.

Because we get this quite a bit, like you evil empire, you're private equity.

They call you Darth Vader.

They did.

So I was in Seattle yesterday.

We bought a company in Seattle, our second one.

And,

you know, even the former owner, you know, he was recanting a story of how...

Second company in Seattle.

Yes, sir.

Second company in Seattle, yes.

And we're merging these two companies together, and we will rebrand them groundworks.

And great companies, once foundation, once waterproofing.

But so Dan was on the stage yesterday talking about his reticence to even talk to us for fear of what he heard is that we were big, bad, evil empire, right?

So he referred to me, and that's the name I guess I had in this industry, was Darth Vader.

So he introduces me as Darth Vader.

So I get up in front of, you know, 40 new employees, teammates, and, you know, there's Darth Vader.

So I try to make a joke about it but what'd you say I'm not your father Luke I said welcome to the dark side or something

that's great well the truth is you know when you're evolving an industry you're gonna get a lot of pushback and this is an easy scapegoat well he's got private equity backing behind him and thus he's evil right and I actually think sadly some of my competitors in our industry they're rooting for us to fail

Now

think about this you have 5,500 men and women that depend on this company And I always extrapolate, it's probably three to four people that depend on that person working at Groundworks.

So well over 20,000 men and women.

And you have folks that hate and are looking forward to a company failing so that 20,000 people could potentially be out of work.

It's odd to me.

But as I unpack the private equity, I always say this is in our industry, we have a great range of quality of service.

You have some really bad waterproofers and foundation companies, and you have some really good on the other end of the spectrum.

Private equity is no different.

It's no different than any other industry.

You need to pick your partners well.

And I've picked good partners.

I used to be a private equity investor and worked for several firms doing that.

And frankly, decided I wanted to do something on my own.

And that's how I got into kind of my path.

So as I share that with my partners that join me and I share that story, it resonates with them.

Because I go to their town and I say, hey, Dan, you got so-and-so company over here.

Do they do a good job?

No, they're terrible.

They're terrible.

Okay, then I say, okay, is there a good one in town?

He said, yeah, me and this other guy.

I said, private equity is no different.

So let's get rid of the fear of private equity and understand that I'm going to pick good partners.

We have a track record now of over years of success.

What do you want to achieve here?

Do you want to achieve a wealth event for you and your family?

If you do, we're the right partner for you.

If you want to achieve a career path and a path to financial freedom for your employees, this is the best choice for you.

And I have now, when I was talking to Dan, we have over 40 people you could call have restaurant reference checks to see if I'm full of shit or not.

And so they do.

And they all come back and say, okay, this is legit.

Struck me yesterday as Dan was giving his final speech.

At the end, he said something that I'll never forget.

He said, I did this.

I did this because I love you.

Now, he has kids in the business, three of them.

And his plan was to give the business to the kids.

But he felt like, after hearing our story, that giving ownership and a path to financial independence for 40, 45 people in his business was a better example of true love for the company and the legacy that he built for over 20 years.

You know, so that's something we've overcome and continue to overcome.

And you asked me the great question is like, how did you do this?

How did you get into this?

And

I think the role of the CEO is to walk in the light.

to always walk in the light.

And that means doing things that are uncomfortable.

When you need to fix fix a problem for a customer or some piece of your business, you have the courage to stand there and address it and own it and you fix it.

And so this issue with labor management, this conflict, there doesn't need to be a conflict if the path of walking in the light is always in the best interest of the company.

And if the best interest of the company is collective growth and success, and I define that in a bunch of ways, but in particular at

a path to financial success and freedom for 5,500 people, including my investors, we are all aligned on the same mission.

We can only do that by taking care of our customers, doing things the right way, being open and honest about how we do it.

And then when we get there, guess what?

We all win.

So this dichotomy of like management and the workforce,

I don't see that.

I don't even think about it.

I don't even think about unions because in my company,

my job is to serve and work down to serve my employees so they can grow our business and thus I make my shareholders happy.

It's such a nuanced thing to say.

It shouldn't have to be, but as you may have noticed, we're in an election year.

The country's divided, it seems, on virtually every imaginable topic, and there's a lot of pressure from a lot of different sides to deepen that divide, right?

Yes.

So, I don't know, as you were talking, I was thinking it's the tropes that I'm so suspicious of.

And in some cases, you know, tropes and bromides and stereotypes,

they're understandable because they're rooted in something that actually happened.

Like, if you think about KKR and R.J.

Nabisco back in the day, that was a thing.

Yes.

Now they wrote a book about it.

Yes.

Called Barbarians at the Gate.

And they made a movie about it.

Yes.

Right?

That's it.

Yeah.

And I think of

Charlie Sheen in Wall Street.

You know, the good guys and the bad guys are so clear, right?

And the line is so crisp and bright.

But

in reality, I mean, I was in Virginia Beach.

I was standing backstage with my partner watching you turn 5,500 men, by and large, with a high school degree, maybe, into owners of this company.

That was something.

That was something.

to see.

And do you think it's a model, not just for your industry, but for all industries?

I think it must be.

It has to be.

And so this grand experiment that went underway with our company, it has to work.

Because I think this is the path forward for our country.

Capitalism has done so many great things for this country.

I mean, there's no question about it, right?

There are some bad things that come with it.

There is no pure anything in the world.

There's no pure economic system that's ever existed.

But you have to balance the good and the bad, right?

And try to eliminate as much bad as you can in terms of capitalism in particular.

You know, as that whole economic system has evolved, and there are compassionate people, and I hate saying that phrase, but compassionate people in charge of companies to change that paradigm, where you do act with an inclusive nature, I think it can change.

And that's the only path forward for me.

The other path forward is disaster.

The other path forward is you have a country that is no growth, no prosperity, no hope,

as opposed to a capitalist system that is more inclusive, that it rewards everyone for success.

That allows everyone to align to achieve a higher standard of living for everybody.

And that's ultimately the goal, I think, is we talk about the American dream.

We talk about my little company doing its bit.

I am just a business guy.

I am not

an advocate.

You do such a great job.

There's some great people in this country that are trying to be good advocates.

I'm focused on my company and my family.

And my goal, though, is if I can do my bit as a CEO of one company and I could show a path, a different path by our success, then maybe other CEOs and maybe other private equity firms will follow suit and say, okay, there's an example here of something that really works.

Well, you're going to have to navigate an interesting path.

I mean, I know the all shocks thing is genuine.

I know you're,

I believe you, but

people

to know about what you all have done.

You have to be out there in some way.

And if this little podcast helps, great.

But I just wonder, what will it take to tip?

Like right now, I'm guessing other CEOs are listening and they're probably asking themselves, could we do this in our company?

What would it cost?

What would the shareholders think?

What kind of downward pressure am I going to get?

What kind of lateral pressure am I going to get?

What kind of pressure did you get from your own suppliers early on when you started to make these moves?

You know, I think it's interesting to understand, like the world just didn't roll out a red carpet to Matt Malone and go, oh, good, that's a great idea.

How can we help?

No.

It was opposite, Bill.

So when we first started, we don't talk about this much, but when we first started, there was a period of time I was worried about making payroll, put in perspective.

So when I bought the company, my wife, Sarah, she's crazy, crazier than I am.

I bought this company in my early 40s, put every penny I had and it moved in with my mom.

In your early 40s with two boys and a wife.

And she's expensive, you know.

Your mom or your wife?

Well, both, but my wife in particular.

She's worth it.

But she agreed to do this.

And so we put every penny we had in this company, go do this.

And

a complete outsider.

Imagine putting everything you have in a company that you don't really know exactly.

Like, I can't get on a, I can probably now, but back then, I couldn't do any of the work, right?

So we get in there and I'm learning as fast as I can.

And the thesis was bring capital, process, technology, world-class marketing, world-class talent, and then we'll be able to grow this business.

Early on, though, I'll never forget, we had 190 employees.

Payroll is about $290,000 every two weeks.

And I had enough money to make payroll for a couple months.

If I really things up.

Today, payroll is closer to $30 million a month, so I can't do that.

But back then, it was a thing, it was real.

And so the story looks great.

You look it out on a piece of paper, and it's up and to the right, and people have said, hey, this company's like a unicorn in home services and fastest growing home services company ever created.

But what they don't know is, you know, talk about the sphincter tightening, you go home to your mom's house in the bedroom you grew up in, and you're like, man, I hope this shit works because I don't think I can work for anybody.

But there's countless examples of that in America with great entrepreneurs.

So as we started off, you know, one of our desires was to lower our material cost, get that savings, and reinvest into our business to grow it.

Our suppliers didn't like that.

So there's a unique thing in our industry.

The suppliers actually charge more money and they give you some kind of territory.

It's very odd, and I won't unpack it here.

But they literally tried to put us out of business.

They literally...

Grow suppliers.

Yes.

Yes.

In fact, I got kicked out of the supplier network.

Never forget,

I bought the company.

This is embarrassing to tell you, but I will.

My due diligence did not include due diligence on the supply chain.

This is steel and plastic and dehumidifiers.

I thought, okay, like, there's nothing unique about these products.

It's how we install them.

That's unique.

Well, I didn't know that we bought from this buyer group.

So as soon as I bought the company,

the former owner, he said, look, we got to go talk to these folks.

And so I go up, and I won't say where, but I go up to meet

the controlling interest of this supply group.

And they had this beautiful campus with like nine buildings, an homage to them.

So people understand, these are the people who control your oxygen.

100%.

Okay.

Not only that, Mike, they supplied the software that our business ran on.

Yeah, so for those budding entrepreneurs out there that want to buy a business, always due diligence on the supply chain.

I didn't do that.

So anyway, so I get up there and I'm touring the building.

They have plaques to the companies that buy the most shit.

And they rank them.

Like, this is supposed to be, you know, you should be honored to have your name on these plaques.

And mind you, all that means is you're buying more crap from them.

And so I'm going around and I see our brand.

And okay, okay, so it's cool.

I walk into the president's office of this company and I said, listen,

as I grow my business, will my unit costs go down?

As we grow, and I see I'm ranked really highly, will my unit costs go down?

He says, well, what do you mean?

And I said, well,

my wife goes to costco and gets the 36 pack of toilet paper the unit cost of that roll is lower than if she went to 7-eleven.

he looked at me and he said you'll get the catalog price and you'll like it

rack rate you'll get the rack rate i couldn't believe it

yeah doesn't matter i i literally i literally i remember i got back to hotel room that night and i told my wife i think I will

Because the idea was I wanted to enhance my gross margin, to pay my people more, do a better job on technology, reinvest in that business.

And I thought with size, I could do that.

So that was not the case.

I ultimately got kicked out of that group, as you can imagine.

I was the devil, some dude with new ideas, wanted to evolve my business more and more and at a great pace.

Well, it sounds like you wandered into like a mafia movie and you encroached on a territory that, you know, wrong block, dude.

Totally.

Wrong area.

Still going down.

Dumb.

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Mike, I bought a company one time in Winston Salem, North Carolina.

My third acquisition.

We bought the company, announced we had an event.

That night, this network brought in a guy from another area in Knoxville, Tennessee, to do a coup on the business.

He He hired every one of my production staff.

Every single one.

So the next day we go to work, I have no production staff.

Think about that for a second.

That was the last stand, or they thought it was.

They wanted to put us out of business.

Now, thankfully, I had other businesses nearby that I could bring production staff from to serve our customers.

They literally hired every one of the production folks to go work for them.

Now, the flaw in that, though, they should have hired also the sales force.

They should have hired the sales force because I had a a couple other branches nearby I can bring my teams down, we could serve customers.

But that was one instance.

Another instance, we bought a company, a great company in Columbus, Ohio, Ohio Basement Authority, and they tried to make the same run.

They came in and they offered, get this, $100,000 bonuses to come work for them and not work, but just sit there because they couldn't compete against us in a certain market.

And so they literally paid, I think it was like 15 people, $100,000 a year not to work just to try to harm us, right?

So the only thing that's comparable to that that I know of is in the ag business, where for a time they called them set-asides, essentially, where you were paid just to set your crops aside.

You were just paid to keep them off the market.

You know, world full of hungry people just will pay you not to sell the corn.

at any price.

This whole capitalism thing that we're talking about, it's not perfect, perfect, it's complicated.

It's rife with unintended consequences.

But I think your point is, you know, can you find a better system?

Or blend a system that is more inclusive.

I think groundworks we're trying to do that.

And by the way, we see other examples of this across the country.

We really do.

I've seen a lot of companies and manufacturing and distribution attempt this and many success stories.

What's interesting is you don't hear about it.

You don't hear about it.

You know, because corporations are bad.

Rich people are bad.

Making money is somehow bad.

But if you go to my team and you talk about, hey, what's exciting about ownership?

Why are you here at work, for example?

We work because we have families to support.

And as the job of the provider is to give them a better life.

That's called work.

We all have to do it.

Let's pick a place that allows us to do that in a way that...

with grace and dignity, but also gives us the opportunity to have some kind of wealth event.

So I think you know this, you know, over 60% of Americans live paycheck to paycheck.

Like four out of 10 don't have $400 in their account in case of an emergency.

This is not a dignified way to live.

And what we're trying to do at Groundworks is along the way, we have bonuses and performance bonuses, by the way.

So as we perform, we share profit sharing along the way, but also having a wealth event that allows

everyone in the company to have, by the way, they're not all going to be millionaires, Mike.

This is not going to all be millionaires, but they will be able to generate wealth to, say, have 12 to 15 months of salary in their bank account at one time, as one lump sum.

And this is transformational.

If you ask the average American, would you like one year of pay or a little more if we're successful in your bank account as a nest egg?

And what could you do with that?

And look, I can only speak for my team.

There's a lot of excitement about what that means for them and what that could mean for their family to provide some level of protection and financial.

We're not talking about massive financial freedom.

No one's going to go the south of France, but they can sleep easy at night.

They can know that they work for a company that's that allowed them to earn more.

And when I say allowed, forgive me, this is a meritocracy.

This is not charity.

This is not charity.

Our team and I will only get paid as if we increase the value of the company.

So, as we increase the value of the company, the percentage of that growth comes to us as an employee base.

And so the investors, I have two, KKR and Cortec, great investors, firms, they've said, okay, I believe if you empower an employee with ownership, they're going to work harder, they're going to take advantage of the opportunity, and they're going to build more wealth for me as a shareholder.

This is how it works.

But along the way, they're going to set aside monies for us.

As they grow their return, we're going to grow our return.

But here's where it's different.

In the mind of the average listener, I think if I were talking to the CEO of NVIDIA or if I were talking to any of the Silicon Valley guys, we would just simply be repeating this idea that risk, innovation, technology, and forward-thinking prescience all leads to some massive growth potential.

And now, all of our employees, like how many millionaires are there at Facebook?

How many millionaires are there?

And so that's been drilled into our brain.

We know that that's how great wealth is created.

So there's a whole generation right now saying, well, I got to get with one of those companies because that's the only way.

That's the only way that I'm really going to hit it out of the park.

But

no one's telling the story of the company that has 5,500 guys who are willing to crawl under your house to do the kind of work that kept dirty jobs on the air for 22 years.

Because people, deep down, Matt, they know.

They know that there is a difference and I

don't mean for this to sound like a value judgment but when you look at a smart educated person coding or doing a cerebral thing to help the AI connect in a more efficacious fashion you get it but it just kind of bounces off your head and you're like okay good for you whatever voodoo you've worked out good for you right

dirty jobs worked and your company is thriving for the same reason.

The optics are undeniable.

And when people get a look at the actual work that's being done, there is no mistaking it for work.

It is work that we all understand.

And so

there is an imbalance in the way, there's an imbalance in what we elevate, there's an imbalance in what we magnify and the kinds of work and the kinds of people who do the types of work we're talking about.

That's exactly right.

That's what I want to get at.

Well, think about, that goes to the heart of it.

The perception that

a white-collar person at NVIDIA, right, and like they are millionaires at this point, $3 trillion market cap, crazy.

Three and a half.

Oh, geez.

Bought some a few years ago.

Good for you.

Good for me.

But imagine, so you have.

Sold it a few months later.

Wee.

Oh.

Oops.

Oops.

Anyway, but think about the dichotomy here.

You have this belief that, oh, yeah, they're doing some mysticism, some magic over here, and thus they should be compensated in a way that the average person can't be, because it's different.

They're doing something so unique.

May or may not be true.

Also can be true that the men and women that keep this country running, that keep the power in this building on, that keeps the shitters from overflowing, that keeps that shower from working, that keeps this foundation from sinking into the ground, they too do magic, and they too add value to a company and thus should also be treated the same way as employee at Facebook.

They actually, I would argue, the grit required to work at a company like ours

is hard.

You've experienced it, and not many people can do it.

So, the resources, the men and women that want to come and do this, it's harder to find.

And thus, I would argue, div and scarcity, they should have the ability to earn and earn equity as this company grows.

So, but if I could, this dichotomy between this accepted norm that if you work in tech, that you're some genius and thus you should be enabled with the privilege of ownership and wealth creation, as opposed to the men and women that work under houses that keep this great country afloat, they are the also rans that have been forgotten and thus they don't deserve anything.

This dichotomy is the most stark and it's apolitical.

Both parties seem to not really understand this fact that you can't really have both and be a good society.

There's a balance here.

And I would argue companies like Groundworks and not just a commercial for us, but the men and women that keep this company, this country rather, going,

they must be rewarded in a way that's similar to the white-collar companies that are out there and the wealth creation opportunities that are available to them.

Well, look, the metaphor is right in front of us.

What is your foundation built on?

And how sturdy is your foundation?

And who's looking after your foundation?

You can have that conversation in the context of your home or this hotel or your nation or your country or any number of things.

So when you peel back enough layers, there's the water trying to get in.

There's the foundation succumbing to Newton's second law.

Entropy, I believe,

thermodynamics, right?

Disintegrating universe.

That's what we're dealing with, Matt.

Yes.

We're living in a disintegrating universe.

And it's undefeated.

That's right.

It's undefeated.

You know, it's like gravity.

Water will find a way, right?

So, but I think one thing that we talked about off camera that is so important is,

look,

foundations are important,

but the national security of this country is also at peril because we don't have enough men and women to do the hard work to build the war.

ships and tanks and equipment that this country needs to defend itself.

We saw in the pandemic, we couldn't even supply our own goods and services.

We have outsourced everything, so we are not a sustainable nation.

And a long time ago, I owned another company in the shipyard industry.

And I know for a fact, and I don't know the broader statistics in general, but I know at our company, we had about 350 employees, the average age of a welder was 53 to 54 years old.

And they're retiring at three to one.

So

as they retire every three retire, one is replacing them.

Latest is five to two.

This is unbelievable.

It's five to two.

This is a national, national issue that no one seems to talk about.

Look, education is very important.

I went to college.

I'm a liberal arts guy.

Me too.

I believe in it.

I believe in broadening the mind, but I also believe it's not for everybody.

And we have to celebrate the men and women that say, okay, I'm going to

go work in an industry that I'm proud of that I can earn a great wage, hopefully be a part of of a company where I do get some upside and equity ownership to provide for my family.

When'd you graduate, by the way, from college?

In 95.

Where'd you go?

I went to a little college in Virginia called Hampton Sydney College.

Founded in 1776.

No kidding.

Yeah.

Well, here's the thing about your degree, man.

Everything you learned there, everything I learned at Essex Community College, and then Towson State a couple years later is on this device right now.

100%.

And

a lot of what I paid for back then and you, it wasn't the information, it was the access to the information.

And we now have anybody with an internet connection has access to all of the known information under the liberal arts umbrella.

And so, you know, one of the things I said to your people a year and a half ago, in Virginia Beach that I really meant was, look, this combination of grit and skill that's enabled you guys to become owners of this company is a wonderful thing.

But in defense of the other side, for God's sakes, don't abdicate on your own sense of curiosity.

Dig in, man.

I don't care how hard you work or how much grit you have.

You'd better be curious to know a whole bunch of other stuff.

From all the things we make fun of, from philosophy to English lit to the south of France, which, by the way, is a little overrated, but whatever.

It's a big world, man.

And there's no reason to think that the color of collars ought to keep people forever in their lane, right?

The segmentation of blue and white colour, I even hate using those phrases, right?

Knowledge and the quest for knowledge is independent of any colour.

I have great examples of our company that men and women that don't have some sheepskin, but they're always in the quest for knowledge.

As human beings, we have to to be always on the quest for knowledge and improvement.

That's how we get better.

And so, when we talk about the men and women that do a lot of hard jobs around the country, dirty jobs,

what we should make sure that the listeners know, and as we move forward and talk about it and advocate for this, that doesn't mean that we're against the quest for knowledge.

It's actually the opposite.

The premise of you need to go to a university that has increased their costs since 1969 31 times the cost of tuition,

that is what we're arguing against, that the path for each individual is not dictated through some institution of higher learning.

It should be driven by someone's own desire to seek a quest for themselves, inclusive of the powers that we have with the internet and all these great things that are out there, the quest for knowledge.

For example, I have

Two people that are really senior in our company.

Our chief revenue officer, Jeffrey Martin's his name.

He's 34 years old.

He went to Moberly High High School.

Never went to college.

He's probably been in this industry.

He started with his dad parody when he was 14.

His gray matter, his brain is one of the finest I've ever been around.

And he's not running all the production for us because he's a dummy.

And he's also not running it because he's been doing, you know, foundation work for 20 years.

He's doing it because he's really smart.

Our chief sales officer, Ben Flowers, He too never went to college.

But cerebral, man, he reads all the time.

He's like you, he just quotes great books and authors.

So this notion that if you work in a dirty job or a trade or whatever you want to call it, that you're somehow not intelligent, this is a fallacy.

And frankly, I think what it does, it continues to push this divide.

Yeah, it does.

And again, to complement the other side in the same way, there are plenty of Silicon Valley types, white-collar workers, who do have grit.

They don't work under the house.

They show up at 4.

I mean, Elon Musk

slept, right?

He slept in his office for years.

Unbelievable, yes.

I make this mistake a lot.

I kick myself every time I do it because in my attempts to make a more persuasive case for what Victor Davis Hansen calls the muscular trades, I'll take a shot.

at that $52 billion endowment at Harvard, and I'll take a shot at the push to forgive student loans on the backs of the very people my foundation has assisted and the ones you've hired, right?

It makes me angry, and I wind up inadvertently deepening that divide by making those points.

I'm guilty of that.

But

back to your other thing,

let's make the alarm clear, because it's no joke.

Eight naval ships have been essentially decommissioned.

In real time, we're at the end of August right now in this conversation.

I don't know when this will air, but it it looks like it's going to be more than that.

I don't know if they're being mothballed or what, but they're being set aside for one reason, a lack of qualified mariners.

Another sponsor of this podcast, Blue Forge Alliance, oversees the submarine industrial complex.

This is 15,000 companies charged with building four nuclear subs, two Virginia, two Columbia class, over the next eight, nine years.

They need 100,000 tradespeople, Matt.

A hundred thousand.

They're like, where are they?

I'm like, well, you know what?

Ask Caterpillar.

Ask Volvo.

They're asking the same question.

I don't know

any company, any major company, white or blue collar, who is not wrestling with recruiting in a way that the country's never seen before.

No question, yes.

So, okay, you're a smart guy.

You've been on both sides of the fence.

When does it tip?

Like, when do we snap out of our stupor and stop talking about the shortage in this cerebral way and do something on a national level to light a fire?

Because we all have skin in the game.

He's not like the other celebs, you know, but it occurs to me that Theo Vaughan, like so many other guests on this podcast, is a true American giant.

What he's built with his own massive podcast and his comedy tour and his advocacy for people struggling with addiction and his whole unlikely overall rise to fame, it's not just a monument to hard work.

It's a love letter to reinvention and to the American dream.

I could say the same thing, of course, about the men and women who work for American Giant.

I mean, the sewers and the cutters and the dyers who make American Giant clothing right here in America.

For nearly 16 years now, they have been delivering on a pledge to make all their clothing right here.

And today I'm delighted to tell you that they've not only honored that pledge, they're helping MicroWorks train the next generation of skilled workers by selling MicroWorks t-shirts and zip sweatshirts to benefit my foundation.

I'm so delighted by this.

Go to Americondashgiant.com slash Mike, wherever you find the MRW logo.

You'll know the net proceeds of that purchase will help fund our next round of work ethic scholarships.

While you're there, check out their whole inventory: quality sweats, and teas and jeans and all the other essentials at American-giant.com/slash Mike.

Go there, buy something awesome, even if it's just a simple American-made tea to benefit the Microworks Foundation.

The quality is second to none.

You'll love them.

Use code Mike, get 20% off your order at American-giant.com/slash Mike.

American Giant, American Made.

American Giant, American Made.

This is the most important question, I think, of our decade, and maybe more, is if we don't replace the men and women that keep this country going, what literally happens?

What's an AI chip going to do when you don't have the power to run AI chips?

I mean, they're talking about the power required to run AI chips and these data farms.

Some of the bigger companies, they're talking about building their own nuclear power plants to keep their data centers going.

Mike, who builds the nuclear power plants?

The same fellows probably that helped build the submarines.

Like who builds those things?

These things all sound great on paper, but people have to start unpacking how will this get done?

And

what's interesting is Peter Thiel, who's a fellow that I follow and is a venture capitalist, you probably know him.

If you look at the transformation since the 70s, we've talked about like there's been a massive transformation.

And his argument is there really hasn't.

There's been an information technology transformation.

But as you've thought about the future from the 70s, they talked about, you know, think about,

he gave this great example.

A fellow on the subway today, taking the subway to work in New York City.

The only thing that's changed for him is on the phone now.

And he feels like he's transported via information technology to a different place.

The reality is that subway is still the same.

That railroad is still the same.

There's not been a lot of innovation related to moving forward in a futuristic way on

what I would call the kind of three-dimensional level, right?

Bytes and bits, great, but think about future cities.

They talked about cars that could fly.

They talked about having three-dimensional roads, right?

So right now they're all two-dimensional.

They're laying on the, there's no three-dimensional roads.

All these different factors, by the way, who would they help?

They would help support a middle class of people that actually built these things.

And what we see is a dichotomy of you have the zeros and ones.

Yes, they've exploded.

But but we have not advanced as a society in many regards.

If you remove Elon, by the way, we really haven't advanced very much as a society outside of the information technology realm.

And so what I'm arguing here is that has retarded the excitement about moving and having men and women that actually build things.

move forward in a way that is evolutionary as well.

The people that put things on screens, they've evolved and at light speed.

But the hard sciences, they have not in terms of building things and how we do things, how we live in the future.

The fundamental things,

you said it before, gravity.

My favorite

aspect of gravity is that it really doesn't care if you believe in it or not.

You can make all the bits and bytes arguments you want.

You can talk about all the new math there is.

You lean back a little too far on that chair, and gravity will rear its head in a way that is simply undeniable.

I know the arguments Theo makes and I think they're terrific because it's so easy for

the ephemeral to outdistance the practical.

And in the end, it's still highways and byways and streets and boulevards and subways and planes and trains.

And maybe it's a better plane, maybe it's a bigger plane, maybe it's a faster train, but we're still absolutely in that rubric.

We're still utterly dependent on the same basic things we've been utterly dependent upon from the jump.

Right.

Which brings us back to the foundation.

And ultimately, I think brings us back to the question you posed.

What's the tipping point?

At some point, and it has to happen soon, men like you, and maybe me have to be continued to advocate the importance of this for the national health and prosperity, independent of party or color.

If we don't address the issue of the shortage of people that actually do things and build things outside of

the zeros and the ones in the information technology realm,

it will all fall apart.

It literally will fall apart.

And it's falling apart now.

The infrastructure in this country is falling apart.

We can't even build the proper vessels to protect this country.

The power grid here is failing, and it's going to get worse as we move into environmental products as well more pressure on the power grid.

So all these things lead to how do we address this shortage and if we don't start advocating for it soon, I am very afraid of what the future looks like for my boys

and their kids and what that looks like.

I think advocation, men like you getting out there with the message, this is important.

This is not political.

This is for the safety and security of our nation.

And

we have to put trade schools back in high schools.

We have to, frankly, encourage kids.

This is the thing.

You share with me that poster that you're famous for.

We can't have that anymore.

The path to success is not through always

a sheepskin in some fancy university.

For many, it is.

And we want to encourage that because we still want that.

We need that, as you point out earlier.

But there's many paths, and a path to success for this country can go through many different iterations.

That has to be something that's back on the discussion table and advocated by the leaders of this country here.

If they really care about it, it has to be brought to the attention of the nation.

The challenge is,

part of making that argument, by definition, is making a case for grit.

And when you make a case for grit and hard work, in and of themselves, separate and apart from skill, knowledge, so forth, then you're right adjacent to a lecture.

And you're implicitly suggesting that many of the people who are listening don't possess the grit and are therefore what?

Lazy?

And now you're that guy, right?

Now you're on the porch shaking your fist at the kids, get off the lawn, and so forth.

I'm super wary of that as well.

My foundation is centered on a thing called a sweat pledge, and it's an easy target.

And people look at it and they're like, ah,

you're just running cover for whatever, the employer, back to that whole thing.

I don't know how really to get past all of that, but I wonder if that is even going to be a problem in the coming year.

Because if the American industrial submarine complex can't satisfy that need, and if the Navy can't keep the ships, then

this conversation about crumbling foundations and plumbing issues and so forth is going to become very subordinate very quickly.

And that,

you know, look, I don't want to see that happen, but I do believe

it takes an event sometimes, a splat, a Pearl Harbor, a 9-11.

Something existential often needs to happen to slap us out of our malaise.

Mike, if COVID didn't do it, what's going to do it?

I mean, think about we couldn't even support, we couldn't even bring in drugs, we couldn't manufacture drugs.

And again, we're bringing chips back to the country today, but that's taking forever.

We're two years into the chips bill.

You know, they spent $8 billion billion recently.

I haven't seen any real progress on bringing that back.

If you think about these existential things that have happened, I mean, we just got out of one where we couldn't get the proper drugs, manufacturing capacity to have this country continue to service itself properly.

You're about to ask me what we learned.

What did we?

I don't know.

That's the irony.

We just got through something and it now seems like, oh, that didn't even happen.

Like we're memory holing an entire three-year period,

which, by the way, defined your company.

Completely.

I completely did.

This is why I

made it, call me

a cockeyed optimist, but there's got to be a silver lining to this shit show.

And part of it was a new, that particular thing was an elevation of essentiality.

You guys had shirts, right, that said.

The essentials, yes.

The essentials.

Yes.

For a time, anyway, it refocused people's understanding of the stuff peter thiel was talking about and that's in your lane but sidebar what did 500 pounds of steel cost in 2020 and what did it cost in 2021 yeah yeah well for us our steel prices went up about 40 percent during that period now they're down now but to your point couldn't get it in if you could get in you couldn't move it so again the importance of having manufacturing here in the United States to mitigate and lower costs and manage those things.

In terms of COVID, though, and talking about how that changed

the entire industry itself of home services, if you think about, again, we don't get off to topic, but think about the economy itself.

What I think a lot of folks realized during the pandemic was, okay,

we both know this.

Retail is dead.

You don't want to be a retail investor today.

You don't want to own real estate in a retail center.

I mean, Amazon has killed that, okay?

Look, but that's evolving, whatever, but you don't want to be in retail.

So where does the money go?

The money is realized, okay, goods and services are still consumed at the home.

And the home is the last basion of how professional investors figure out, how do we get goods and services to the consumers at home?

Because that is the last holy grail of real wealth, I'm sorry, investing, if you think about it.

So our company positioned in that spot has been very helpful to us in terms of what you said.

We help us be successful.

The other thing I think that's really made us successful, and it played out during COVID.

My investors at the time, you know, they live in New York and it's a different world.

And we went to work.

Homes needed to be fixed.

And we were essential employees and were out there doing it.

So not only us, but plumbers and electricians and roofers.

I remember at some point, even in highly blue states, we had to have letters that said our trucks could operate because it was a central service.

Someone had to fix something.

And think about the power there and think about that whole transformation.

And it really did set aside.

My team doesn't have the luxury to work at home.

I can't fix your house, Mike, working at home.

And so in our company, it was, okay, the vast majority of our men and women are out there fixing homes.

My corporate staff, their ass will be in the corporate office doing their job to support the branches that we have so they could support our customers.

This is super interesting.

So, yeah, I think Musk made the argument.

He made a moral argument for returning to work.

This is a topic that's impacting every single business I know of.

How do you guys think about it?

I think I know the answer.

You know the answer, Mike.

There's no thought.

There's no thought.

So I'm overhead.

My corporate staff, brilliant people, great people, they are overhead.

When you walk into our corporate headquarters, it says field support center.

My customer, my corporate staff customer, are the branches and the men and women that go to the home.

They serve the customer in the field.

We serve them.

And the notion, the arrogant notion that some white-collar guy because he's in marketing can somehow sit in his home where My foreman and my great crews are out there sweating or in the cold in Fargo, and we have a branch in Edmonton.

Could you imagine?

I can't live that way.

We have a code and as the CEO of this business, we have to be equitable.

There is a period of approximately eight days when COVID first hit.

We were like, okay, we're not quite sure what to do.

And I didn't even know, would the company even make it?

You just didn't know.

And I remember we quickly, we froze salaries for corporate employees and had them go to a four-day warp creek.

And I promised them we'd pay him back.

I promised him because you just didn't know.

So quickly into that, we realized we're full boar and we went back to work and everyone came back into the office.

And you had a social distance.

I remember, Mike, I had to hire firms to come and clean the office and spray, you know,

in retrospect, you're like, is this really even working?

But we did that, and we did actually repay all the folks in the corporate team.

But I completely agree with Musk and everyone else that says, look, how can you allow the segmentation of your workforce?

You can't.

If you're an honest, good person and you want to live your life with equity, meaning treat people the same,

the people that have to go to work have to go to work.

They have to be in the office.

That's our belief.

It's always been our belief at Groundworks.

And so when I hear this debate, I don't know when to bring people back.

Should they work three days a week or two days a week?

I'm like, what in the world are they talking about?

I even, I don't know if this is true.

There are some federal employees that have not gone back to work yet.

And talk about, we talk about this culture clash.

It's really a class issue.

We have those essentials that keep this country going.

And this is probably we have some of these comments that you and I have sometimes that we probably shouldn't make, but there's a true class issue.

You're not as important as me, Mike.

Thus get your ass in that truck and come fix my toilet.

Yeah,

I'm going to sit in this beautiful room and

build code for the the next

great ship.

I'm more important than you.

That's what that literally is telling the country.

And we don't believe that.

We don't believe that at Groundworks.

We never operated that way.

How many people could you guys hire right now if they showed up ready for work, ready to be apprenticed, ready to learn under the house everything they need to know to get on the path we've been talking about?

Well, we have open recs right now of over 250 people.

But strategically, our biggest impediment to growth, we're opening new offices, so we like to open new offices around the country.

That's our biggest impediment to growth is people.

And so we're at 73 offices today.

I think ultimately we can be over 200.

So that's the big puzzle for this management team and our company is figure out how do I staff 200 offices?

How do I do that?

And so right now our short-term name is call it 250, 260.

But to continue our growth and success, we we need to staff up over,

you know, call it 150 offices.

And how do we do that?

That's the biggest thing that I always worry about.

People say, well, are you concerned about business?

Are you concerned about the economic environment?

And

yeah, always concerned, you know, but it's always more important about where do I find staff and get really good men and women that believe in the dream.

So

that's probably where we land the plane because like you said, that's the question of the decade.

And to the extent that that Microworks

is able to help answer it in your world, I'm at your disposal.

And

I really appreciate you coming on to talk about it because I think

I hope we're going to see a coalescing of like-minded people who are willing to ring the bell.

I don't get the math.

I don't get five out, two in.

I don't understand.

how your challenge of staffing up a couple hundred offices over the next couple of years is somehow going to how are you going to do it at the same time

the submarine industrial base is trying to hire 100,000 people now granted they're not the same people might be a slightly different skill set

but it's the same attitude yeah it's the same willingness to dive in and get their hands on a thing to fix a problem

so

you know I don't have a crystal ball but Let me know if I can help.

Well, everything you're doing outside of my company, everything you're doing to promote and speak about this issue is critically important.

So thank you on behalf of all your listeners that

follow you, and it's really important.

And look, I wouldn't say this if I could.

Groundworks is built on two things.

People that care and then have grit.

Caring is the thing.

You have to care.

You have to care about your team and your customer and be willing to work hard.

And that's how we've been successful.

The last thing I want to say to your listeners is

the American dream is alive.

It is alive.

And don't believe any different.

I see hundreds of examples of it all the time.

My company is an example of it.

So if you're out there struggling and you're trying to find your path, keep grinding.

You can find it.

You can be successful.

Because if I can do it, anyone can do it.

Just don't give up.

Keep grinding.

The dream is there.

You can do it.

4,000 people.

with a high school education on a path or making six figures.

I say the evidence demands a verdict.

Time will tell, and I'll do my damnedest to make sure that it's successful.

Thanks, Matt.

Thank you.

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