← Making It with Jon Davids
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A
What's up guys? JD Here and today I'm talking to a $300 million founder who started a business in college and then just kept on going. His name is Nick Friedman and he's the guy behind College Hunks Hauling junk and moving. That's the name of the business and it is a big business. Nick started the company with his Buddy Omar in 2003 and today they got over 100 franchises across the USA. So in this conversation we get really tactical to understand how the business went from zero to a million DOL. A million to 10 million, 10 to 30, 30 to 100 and then all the way up to 300 million. And it'll be way beyond that before long. You're gonna love this conversation. Let me know what you guys think. And if you like picking up what I'm putting down, leave me a rating and review wherever you're getting this. Okay, let's talk to Nick.
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B
You're listening to Making it with John Davidson.
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A
So give me the early day story. You're working with, I guess a co founder, a buddy, a friend, and you sit down one day and decide, we're going to start a small business together.
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B
Yeah. So you know, really we were home for summer vacation. We were just kind of scratching our heads what to do to keep ourselves busy, maybe make some money. And, and you know, my buddy from high school, Omar, his mom had this beat up cargo van, like I said, and, and she, you know, I think was hoping to keep us out of trouble, let us borrow the van to move people's furniture, kind of gave us that catchy moniker, College Hunks Hauling junk. And very I realized, you know, this is, is not something we learned in school. You know, there was never anything like that was preparing us to do this. And we went back to school our senior year of college. Omar wrote a business plan. It won an entrepreneurship competition at University of Miami. And so that gave us a little more confidence in the idea. And you know, most college kids would quit doing that after college and go do something in the quote unquote real world. And we did try our hand in a regular job briefly and then said, you know what, let's go back to this business that we had done last summer and try to make it a year round venture. And of course a lot of skeptic from our friends and family, they thought it was okay when we were doing it in college, but now we had just graduated, we were going to do this full time. And I remember emailing Omar from my, you know, cubicle right after college and saying, hey, what's our timeline for starting college hunks on a full scale? And he emailed me back all capital letters. You know my timelines right now, exclamation point, let's do this. And so, you know, we just kind of jumped into it sight unseen really. We had had the experience the summer before, we'd had the business plan, but we decided we were going to make it a year round venture.
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A
If your business is doing a million bucks a year or more in sales and you think you could be growing faster, head over to JohnDavids.com grow. I want to show you the growth system we've used at Influicity with over 200 clients in just the last year. Go to johndavids.com grow. Watch the short video and if it sounds like it could be helpful to you, book a call on that page. And one more thing, guys, if you already have a marketing budget, spending on Google Ads, Facebook ads, Instagram ads, TikTok, LinkedIn, do not skip this. Go to johndavids.com grow and I'll see you there. So that whole story of starting a business in college and it's always junk hauling, moving, find a roommate, you know, party promoter, it's all those things, but 99 times out of a hundred, that's the first business. And then you start your second business, your real business. So what was it that actually made this stick after 1, 2, 3 years? Like, did you get traction pretty quick or did you just not know how to do anything else? Else?
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B
I've second guessed that at least once or twice every year for the past 20 years. Whether that should have stayed as our summer gig in college and then we gone on to do something bigger and better in real estate. I think it's worked out okay for us. I call it a 20 year overnight success now that we've got roughly, you know, 300 million in annual sales and 200 franchise owners around the country. But honestly, I didn't have any other bright entrepreneurial ideas coming out of college. I actually didn't even really know what the word entrepreneur meant coming out of college until we started this business. And people were like, oh, you're an entrepreneur? And I was like, okay. I guess that's what that crazy word means because, you know, back then this was early 2000s, you know, shows like Shark Tank didn't exist. Social media wasn't, you know, out and about. There weren't podcasts like this that were sort of promoting and I would say normalizing entrepreneurship. It was very seen As a very risky endeavor. And so, you know, we knew that the name was catchy. We felt like the name and the branding could be kind of like lightning in a bottle. Even though it was a long brand name. College hunks hauling junk and then we added and moving flies in the face of any branding experts recommendations. But we, when we got started, we were on the trucks doing the work ourselves. And it was kind of profitable from day one. I mean, we were living at our parents house, we were parking the truck at their house, which I don't think they, you know, liked very much until we eventually got our own office and we were doing all the work ourselves. And so very low overhead. It was profitable. And we started reading books. I wasn't really passionate about learning in college, but once we started a business, I started reading books about entrepreneurship. And that's when I kind of dug into, you know, Rich dad, Poor dad and the e. Myth revisited by Michael Gerber. And you know, that second book I just mentioned, the e. Myth was really where the lightning bolt hit, where, hey, wow, we could actually have a second truck, a second location. We could franchise this thing. This could be a national brand. That's when our sort of vision and aspirations got bigger and bigger and bolder. And we did some research and there was other companies that were actually very successful at this. I know you're up in Canada. This company called got junk that had already franchise. I think they were already doing 100 million. They had gotten a lot of publicity. And I was like, there's no Burger king to their McDonald's or Pepsi to their Coke. Why, why couldn't that be us? And so we decided to just stay on that path, you know, even after that was early, just kind of doing the work ourselves, you know, getting out of the gates.
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A
Brian is a friend of 1-800-God junk. He's been on the pot a couple of times. And his story, I mean, it's a super similar story. And you know, making 1700 bucks that first summer and then it was 3000 and then it was. And he stumbled along for long time. I'm sure we're going to find similarities in your story too. But let me go back to the early days. So was there anything that you did at the beginning? You said it was you and a buddy and you were profitable on day one, probably because you had no expenses. It was just other than your time,
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B
cost of goods was zero.
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A
Exactly. So was there anything that you learned early on that was actually an operational advantage or, hey, if we do it like this if the trucks, like any pricing mechanics, was it anything like that or was it just brute force? Let's get this done. Yeah.
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B
You know, it's funny, I actually use the word brute force quite a bit, and it's gotten us very far. I think we've got to be a little bit more tactful now that we're a little bit larger. But when we first started, I remember we actually went out and bought our own 1-800-Vanity number, 1-800-Junk USA. And we put it on the back of the truck to make ourselves look bigger. And it was still routed to our cell phone. So people would call the 800 number to complain about driving. And I'd be in the driver's seat answering the phone, saying, oh, yeah, we'll fire those guys when they get back to the office. Probably fire ourselves three or four times that first summer. But the unlock for us was we would actually, you know, strategically park that one orange and green truck in, you know, various different parts of the D.C. area, which is where we started. And when we would tell people what we were doing, they're like, oh, I think I've seen your truck. What do you have, like, five, six, seven, eight, nine, ten trucks? And we're like, actually, we only have one. We're parking it in different areas of the city. And then a reporter from the Washington Post had seen one of our little bandit signs or yard signs and thought it was a catchy name. She wanted to learn more, and she did a story about sort of how these two high school buddies started a company in college, kept it going after college. And again, this was pre social media, so people were actually printing out that article and putting on the refrigerator and calling us, you know, to come haul their junk away. So I would say we didn't have any real sort of like tactical differentiators, aside from the fact that we had a lot of energy. We had a catchy name, bright orange and green trucks. And this was also around the time we read the book Purple Cow by Seth Godin, and he talks about, you know, driving down a country road. You've seen a field of brown cows, and you've seen it before. You're going to keep driving. If there's a purple cow in that field, you're going to take a picture of it. Nowadays, you'll put it on social media. It's because it's remarkable, it's different. And so, you know, of course, there was already plenty of independent movers and haulers out there. There was a couple, you know, branded national or international branded companies like we just talked about. And so we said, okay, the name stands out. It's a conversation starter. People want to learn more about it. The colors stand out. And we realized that that was sort of the exterior, the, you know, purple cow of the exterior. That's the sizzle. But we also had to have the steak. And what I mean by that is like, the cow, when you cook it up and make it into steak, has to taste good. And so that was our customer service, our company culture. And so we realized very quickly if we were just going to rely on the name alone or these, you know, kind of bright colors alone, it was going to be just a gimmick. But if we could become intentional about culture and service, that would actually allow us to create some both attracting good quality people, eventually being able to sell franchises, and eventually creating a, you know, a loyal brand base.
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A
That, that idea of marketing, marketing with your vehicle, you parking. I've. Have you heard that term before? I've heard it a few times now.
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B
Yeah, absolutely.
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A
Marketing. I mean, if you're in home services, if you're in moving, anything like that, just take your truck, put it at the busiest intersection. Costs a hell of a lot less than buying a billboard, right?
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B
Yeah, yeah. There's a lot of guerrilla grassroots stuff we did back then that we still have in our, you know, franchise playbook today. I mean, yeah, you just said parking the trucks invisible, know the, the yard signs, the door hangers, you know, even posting on places like Craigslist or Angie and just to generate leads early on out of the gates. Those things are still relevant today as they were 20 years ago.
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A
You talked about customer service and all these things. Let, let's just get to the point. So you, you decide to keep this going, at what point was it a legit real business? Let's say, let's. Let's just get to a million dollars. How long did it take you to get to a million in annual revenue?
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B
I want to say it took us about two years to get to a million do. Billion in annual revenue, which we had to have, I think, at least five or six trucks to do that. This was. I had read an article about the Entrepreneurs organization when we first started our business eo and their. Their threshold to join was a million dollars in annual revenue. So that all of a sudden, like, triggered me as, like, wow, that could be really cool if we could ever get there. I think in our first full year of business, we did close to half a million and we essentially doubled that in our Second year, and that was just a lot of. A lot of hustle. We were in the D.C. area. This was kind of. We were still in sort of the housing boom before everything collapsed in 2008, you know, 2009. So we were, I think, beneficiaries of that a little bit. But, you know, we made a lot of those early mistakes of hiring people that could just fog a mirror and lift a couch and. Or potentially drive a truck. We weren't entirely sure when we hired them.
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A
Sometimes these early people were employees or contractors.
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B
Yeah. So the first people we hired were, like, our friends, younger siblings. Like, are your friends younger brothers? They were still in college or still in high school. We would hire them to lift the other end of the couch. Actually, still to this day, there's probably, like, five or six of them that'll reach out to us and be like, dude, I remember when you guys had us coming on the trucks with you guys, and, you know, we had no idea what we were doing. You guys had no idea what you were doing. You know, you were taking apart a hot tub with a hammer because you didn't have any tools in your. In the truck, by the way.
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A
I love that job description. Lift the other end of the couch.
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B
That's right. We needed just. Especially when we were the ones driving. You know, we just need somebody to lift the other end of the couch and help us put it in the truck so we can charge the money. Craigslist. You know, we were getting employees off of Craigslist back then. We never went so far. I don't think this to, like, pull up to Home Depot and just grab the people that were, you know, standing on the curb looking for. For work. But, yeah, we. I think we probably just paid them directly in those early days. Eventually we, you know, figured out, okay, we need to get. You know, I went to some networking events, like BNI business networking, International Chamber events to try to pass out business cards. And I probably met, like, a Paychex representative or an ADP representative, and they're like, hey, you need payroll if you got people working for you? And I was like, okay, I guess, you know, we got to professionalize some of the things that we're doing here. Eventually, we got a bookkeeper to kind of help keep those things in line.
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A
What year was this?
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B
We started? So the. Oh three was the cargo van. Summer oh four. We graduated from college, and I'll say, oh, five was our sort of first official full year of business.
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A
Okay.
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B
We're talking, like, 2005, 2006, so you
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A
were already kind of in the era of Google Ads, almost in the era of Facebook ads. Were you using those in the early days or not at all?
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B
Yeah, once my business partner Omar, he discovered Google Ads and man, that was a wonderful time when we were kind of, I wouldn't say an early adopter, but probably not like before. Google was the only pay per click, was the sort of only bottom of funnel source for leads. But it was as things were transitioning from phone book to Google. And I think we even still took out some, some yellow page ads when we first started because that, you know, I was still getting them delivered to my house and I still saw some of our, you know, competitors in there. But, but yeah, Google pay per click we leaned into, I think we set it up ourselves through an account and we got a ton of business out of the gates with that. And you're right, it was before Facebook, I think that came around. Like Facebook existed like right around that time, but they weren't starting to monetize with advertising and things like that. So I think like, like, you know. 080909 exactly.
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A
So, okay, so you've got this business, you're making a million bucks a year. You're paying everyone in cash. I asked if they were employees or contractors. The answer is neither. They were just getting paid cash, which is cool. That's how we all start. So then you get to a million and maybe let's go 1 to 3 million. What were the growing pains? Because you've already talked about a couple. You obviously needed systems and processes. You said you went from one truck to five trucks. I'm sure there was financing and leasing and a bunch of money involved there. What were some of the big challenges around that kind of 1 to 3 million phase?
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B
Like right around this time where we were roughly around a million in revenue, we got this harebrained idea that we wanted to franchise our company. And this was like way premature in hindsight of us going down the path of trying to franchise. But in the book the E Myth, he talks about, you know, creating systems and creating your business as if it were a franchise so it could replicate itself and you can, you know, it can function without, you know. And so this light bulb went off and I think we had this naive view that franchising was going to be this, you know, I don't want to say easy street, but like we thought of royalty in the synonymous, like almost synonymous as passive income, which it was like completely, you know, not passive to become a franchisor, but we had a manager who we hired to kind of run the operation in the D.C. area where it had grown. It was a guy who started on the trucks. He seemed trustworthy enough. He was very resourceful. He got stuff done. And we said, okay, let's go hire some consultants to tell us if we can franchise this business. And we paid a bunch of money to these consultants to write ourselves a bigger operations manual and get us a franchise document. And then they said, hey, you need software if you're going to support these franchisees and if you're going to operate your business effectively. And so, so I think doing that was probably premature, but it also forced us to, you know, invest in things like software or, you know, get our accounting and payroll and all those administrative legal pieces of the puzzle in order. And so, you know, we took our eye off the ball of the local junk removal operation. Thankfully, we had a pretty solid guy to run the trucks and get them in and out every day. And he, you know, hired a weekend manager to kind of handle the weekend. We hired, like, I think it was like our. My dad's CPA's wife to do our books part time. She came in and would, you know, just kind of like do our QuickBooks accounts. And then we hired, you know, somebody off Craigslist to answer the phones. So the business was, was functional. It was still profitable. And the cash that it was producing, we were able to kind of take out and put into, like, hey, let's hire these consultants to tell us if we can, you know, franchise our business. And they gladly took our check to, you know, tell us that, yes, of course you can. Here, let us do it for you. For, you know, this much money and probably 100 grand at the time was, you know, it still is a lot of money. And then, you know, but that included the attorney fees to write up the disclosure documents and stuff like that. So that kind of took us into, you know, two, three years into the business where we said, okay, now let's start selling franchises while we continue to run this, this local operation.
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A
So you were at what revenue number when you started franchising?
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B
I would say we probably at roughly just shy of 2 million. Let's, let's.
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A
In retrospect, was that too early?
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B
It was too early. Really what we. I really think I should have done. I tell people that approach me all the time to ask me if they should franchise their business. We should have had a second location or operation to kind of prove the model can, you know, replicate itself. Put a manager, another manager, there Find out what we don't know about trying to run, you know, two separate locations simultaneously, you know, create a more streamlined playbook. I would have done that or should have done that, I think in a market adjacent and then, then come to the decision point of like, hey, if it's working with these two locations, do we even need to franchise or could we open a third location adjacent or, you know, just a little bit further away and do it all corporately? There's really three reasons that people want to franchise a concept. One, they want to expand the brand quickly. It's kind of like a micro funding strategy where, you know, every time somebody buys a franchise, you get a small injection of capital. You know, two, you're, you're lacking in human capital to be able to deploy into these other markets. And three, lacking, you know, the financial means to expand into other markets. And we were kind of lacking all three. We knew that, you know, again, there were other people doing moving and junk removal franchises and, and nobody else really in, in a number two slot. And so we just kept asking ourselves, why not us? Why can't we be that, that, that number two? And, and so that's, you know, what ultimately led us to, to go down that path.
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A
Okay, so let me ask you kind of the dumb guy question because I'm thinking about this and everything, obviously in hindsight is 20 20, but the business is fundamentally, you need a truck, which obviously is a capital expenditure. And then you have the people who have to do the labor, but you only really need them once you have the job. You get the cash up front. So why is this prohibitive financially to expand? I mean, isn't it just really the cost of the truck up front or is there other costs?
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B
I'm not thinking about here, you know, honestly. So we, we actually own a lot of corporate locations now, but I think with the biggest constraint for us was yes, you probably need the truck, you need the office, you need the insurance, you know, you need the equipment. So there was some, some upfront capital, but probably that's the equivalent of the capital we spent on that franchise consultants or maybe even less. But really it's, it's the, the person, the who that's going to run it. And we just were still pretty like trial and error about hiring people and getting it right or getting it wrong. And we felt like somebody owning a franchise that has equity in the operation that's willing to put their own money into it is going to care about it and be there every day to make sure that, you know, the trucks are leaving on time and that the service is getting, you know, completed. So that was kind of our mindset of why we didn't, you know, think, hey, let's just take the money. And we probably honestly, like I said, had this naive view or glamorized view of franchising. Like, hey, we could have hundreds of locations all over the country and eventually that's what we have. But, you know, took us 15, 20 years to get there.
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A
It's okay, you got there. So we're at $2 million in revenue. You've got one location of your own, you've started to franchise. What was the next kind of milestone of growth like for you?
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B
Yeah, so franchising out of the gates was, was, was a rough, rough go. Like if you were to pick a certain time in history to franchise a home service concept that was dependent on, you know, discretionary income of homeowners, 2008, 2009, 2010 was probably not the right window to do so, but we didn't know any difference. So we moved. We knew we needed a bigger call center to be able to support the franchisees. Remote work wasn't really a thing at the time. We were still in Washington D.C. so I literally went on Google and I searched call center cities and it was like five cities popped up. It was like, you know, Phoenix, Minneapolis, you know, Texas, Oklahoma, and Tampa, Florida. And I kind of just went down the list in my head and I was like, oh, Florida sounds nice. And then I did, you know, call centers in Tampa and pods, the portable storage franchise popped up. They were down here in the Tampa area and they just had like a 400 million dollar private equity transaction. And I was like, whoa. You know, they sold their business for 400 million. They're kind of in a similar sector as we are. You know, theirs is more of a do it yourself with people moving or putting stuff into storage. Ours is more of a full service. But I was like. And then I remember I called the PODS call center. I was like, hey, how do you like living in Tampa? Oh, we love it. It's beautiful sunshine. And I think I was sitting in my office in D.C. it was like, you know, December and it was raining or snowing. And then I started looking up real estate in Tampa and it was like, whoa, I could live in that for what I'm, you know, paying for here in D.C. you know. So me and Omar just kind of sight unseen relocated our headquarters of Tampa. We left our manager in place up in the D.C. area to run that location. We Got just a small office, smaller than the size of the room I'm sitting in today. To be our call center was actually. We should have seen the writing on the wall.
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A
Literally.
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B
It was a mortgage company that was going out of business, and they were leaving all their cubicles and all their phone systems. We were like, oh, this is perfect. We can just walk right in and put people in here to answer the phones. And then we started trying to sell franchises. Our first franchise we sold was to my business partner's buddy from college. That guy's family had owned a bunch of different franchises. And the funny thing about it is, you know, he kind of raised his hand because he heard we were franchising. He was like, hey, yeah, I'll be the first franchisee. And. But I want all of Central Florida. We were like, you mean like Orlando? He's like, no, all of Central Florida. Like, from Tampa to Daytona. We're like, okay, sure, you can have the whole. The whole market. And he's like, oh, but I don't have any cash. I got this land. Another writing on the wall. He was like doing land flips during that. Housing up and. And then drop. So give us this random land, swamp land in Central Florida. I think it's that we still own it, by the way. It's the only land that hasn't gone up in value or only real estate that hasn't gone up in value in the past 20 years. I think it's going down, down in value. We got to do like a, you know, some sort of ease. Environmental easement on it or something. But so. So we joined the ifa, the International Franchise Association. We started learning as much as we could about franchising. We had a couple people, surprisingly, that bought our franchise because they thought, you know, they had read some pr, they heard about the story, and they kind of wanted to take a, you know, a chance on us. And then we actually landed on the very first episode of the very first season of Shark Tank. And that was just kind of by accident. We answered an ad in Entrepreneur magazine that said, looking for entrepreneurs to pitch a TV show, a business for a TV show. And it was a pilot at the time. And so we went on there and that kind of, I think, expanded the awareness of our brand. But it was a good, you know, five year march forward.
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A
Did you get a deal?
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B
We did not. We got an offer from Robert Herjavec, which was probably a fair offer. I think he offered us like 10% of our business for 250 grand, which would have valued us at like two and a half million, probably worth 100x that today. And so, you know, it would have been 100 times his, his investment. We, we ended up turning it down not because, you know, we were, you know, I guess trying to be playful on the show. It was like we didn't know these sharks were going to turn into television celebrities because it was episode one, season one. We didn't know who they were or if the show was even going to make it to air. So we were like, we don't know this guy. Like, we really want to be in business with them. So we ended up turning it down. Of course, you know, you could always, as you say, hindsight, 2020 maybe would have been beneficial to have a shark alongside for the, for the, you know, for the journey.
- [23:43]
A
I think you did fine. I think you did okay. I think, I think your business might be worth more than herjavecs today. If you spend any money on Google Ads or Meta ads, I've got something that you're gonna love. It's influicity's AI ads generator. And you can get it right now for free@johndavids.com ads. So here's the deal, guys. We took a decade of our best ads that we've been running for clients at Influicity, literally something like 6,000 different ads that have all crushed on Meta and Google over the years. We put them into a database so that you can make ads that are just as good. Seriously, we use this thing internally all the time to come up with copy ideas and it's so good. So if you spend any money on Google or Meta ads, I want you to head over to johndavids.com ads, get it now for free. Okay, so that makes sense. And there's a lot in there that you covered. The call centers, Were those call centers to book? Like, were those, were those consumer call centers or were you doing call centers to try to sell the franchises?
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B
No, it was consumer. So like the idea was, you know, we would centralize that service for our franchisees. So anybody who called the 800 number or the phone number off the website or went to our website and submitted a lead request, we would handle all those leads and then we would book the appointment into our software system which we had now purchased and we. That's a side story. I'll tell real quick. I mean, we kind of locked ourselves into this like three year contract with some random software, you know, shop out of, I think they're out of Vancouver actually. And you know, we were Trying to customize it and you know, we couldn't get out of it. But it was, it was fine, it was serviceable, but it had a lot of issues and we probably overpaid for what we were getting. You know, compared to today's world where you get all these sort of off the shelf, you know, operating softwares that, that you could still tweak. But we were locked in for this long term, you know, contract software to
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A
manage the entire business or just the
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B
truck schedule, the call center. It was kind of a CRM like the goal was somebody calls the way we sold our franchises was zip code based. So you'd buy a set of zip codes, it would, you know, add up to a population of 3 to 500,000 people. That became your territory to operate in. So anybody who called, we would first ask the zip code and then in our system that would pull up their pricing, their schedule, availability and so forth. And then it was our goal to book the appointment so that all the franchisee would have to do is go into their system, pull up their schedule, see, oh, I've got a job on the calendar or I've got a job today and then, you know, make sure they've got the guys to go perform the job. A lot of manual handoffs still had to occur. Still happens to, you know, still has to occur today. We've got to, you know, continue to, you know, smooth out that, that value chain from lead to booking to, you know, execution to, to follow up. But yes, that was the idea is we were going to have this inbound call center. So we came down here, we hired a couple call center agents, another one of Omar's, my business partners, buddies from college, became the call center manager and you know, we were, we were off to the races.
- [26:46]
A
So what's the value proposition when you were selling back then? I'm sure it's evolved until today, but the idea of somebody buying into a franchise in your business is that you're going to obviously centralize the call center. So you're going to send them the leads. I'm sure you give them the software, obviously the branding, that's what the truck's got to look like. Here are the checklists and all that. And is the franchisee at that point just, just responsible for performing the jobs or are they running a bigger type of business?
- [27:13]
B
Yeah. So to your point, today it's a lot different. We've got, you know, some really big, you know, empire building franchise owners. But I will say really the core, what you're getting or what we, what our franchisees were getting back then was branding, which, you know, was debatable because people hadn't heard of our brand yet in most markets. But you're getting a standout brand that separates itself from the rest. You know, a website that we've already developed, we had vendors that we had identified for trucks, insurance, marketing materials, and we're going to run the call center behind the scenes for you to book the jobs and, and we're going to train you on how to run this business profitably like we did up in D.C. we're going to teach you how to hire your first employees, how to train them, how to, you know, handle sales out in the field. So our franchise owners really kind of wore two hats. They were manager of their team, meaning hiring and training and dispatching their team. And then we like to say they were mayor of their market, meaning networking and the property management circles and the real estate circles and the BNI's and the chambers to be the go to resource for anything junk removal or moving related. And we actually, right around this time is probably when we added the moving service. I didn't really mention that when we first started franchising, we were strictly hyper focused on the junk removal. And as we were spinning our wheels trying to franchise into the housing downturn, there weren't a lot of people jumping out to, you know, spend money to get rid of stuff when they were, you know, struggling to pay their mortgage. So we would always, ever since we started, have people say, hey, can you help move my furniture? Can you move me? And we said, you know what, why don't we expand our sandbox to trucks and labor junk removal and moving. And that was a bit of a learning curve as well because now we're asking franchisees to add a new service line, you know, and again, we only had four or five franchisees at this time. But we're saying, calling them up on the phone and say, hey, does any of you guys want to pilot test this new, you know, moving side of the business? We think it can complement the junk removal really well. So, you know, again, those were in that, that were in that 2010 to 2013, 14 time frame and price selling, you know, five, six new franchises a year. And you can kind of feel the flywheel start to move a little bit. You're feeling the housing market get a little bit, you know, looser. We're starting to attract and appeal to a higher level of caliber of franchise owner. We're starting to, you know, attract an appeal to a higher Level employee. The systems that we build are starting to improve a little bit. So you kind of see the, the momentum start to, you know, start to shift.
- [29:43]
A
So when did you start to feel escape velocity? At some point, you know, you're at 2 million, 5 million, 7 million. Now you're at 300 million system wide sales. When did the escape velocity come where you just let it rip?
- [29:55]
B
I, I remember I talked to a mentor of mine in the franchise space and he was basically like, once you get to 100 franchisees, you know, you'll start making more money than you ever imagined. And I think at the time he told me this, we were at like 20. So it seemed like a very steep mountain to be looking up at it because, you know, we didn't have two pennies to rub together when he told me about that. But it seemed very aspirational and encouraging and something we wanted to chase after. And so I don't remember what, what year, how many years into it it was, but we started going from like five or six new franchises a year to 10 to 15 to then like 2025. And I think we hit over 100 million in system system revenue in like 2018 or 2019. And that was like the biggest, you know, whoa. You know, what just happened? And it kind of felt like it happened overnight, but it happened over, you know, plus more than 10 years. And, and so, yes, it's hard for me to put a pin on it. We got some really good people into our organization. We, we have a guy who's actually our president today. He came in as our financial controller. And I say, like, I can track back. Like, I think when he joined we were doing maybe 15 million in system revenue. And like, we didn't know metrics. We had no transparency of key performance indicators, like no dashboards, nothing. So it was like we were driving a car with like mud on the windshield and no gas gauge and no speedometer. We were just driving and just, you know, driving knowing we were trying to get somewhere but just, you know, keep plowing through. He came through and like all of a sudden we could see the metrics. We could make decisions based on data. He was more even killed emotionally than me and my partner. We were just sort of like, you know, we'd bring in a crazy new idea every other day. So if you're familiar with the EOS model, he was really almost like a natural integrator to us being visionaries. And, and that really helped. I think, you know, the book Rocket Fuel is all about that integrator. Relationship. So I do think that that was probably, if I had to trace it back to one thing, the, the escape velocity happened when we brought him in, and then eventually he moved up into a role of running the entire organization.
- [32:00]
A
Yeah. Bezos says he gets 100 ideas every day that could destroy his business. And the visionary needs to have a restraint mechanism. Either another person that is your restraint, or in my case, a lot of people do this. You have a Google Doc where you just write down all your ideas and you let them simmer and then you come back to them eventually. But if you start throwing that stuff at your team, if you start turning every thought into action, if you have that visionary mindset, man, you. You can drown your business pretty quick.
- [32:28]
B
Yeah, he became Roman.
- [32:29]
A
He.
- [32:29]
B
I called him Roman numerals because. Because he was a numbers guy, but he had a really high level of EQ as well. So it was a great combination. But he became sort of that filter like before he was there. Anytime an idea would pop into my head, I'd be texting it to whoever on the team I thought could run with that idea. And the team was like, you know, running around like a pee wee soccer field, chasing the ball around, not knowing if Nick and Omar sent him a text, if they should chase it, or if they're supposed to leave it on the shelf or if they should drop what they're doing and. And do something different. So now once we started having a little bit more of a structured cadence of meetings, we could put everything in front of Roman and he would help kind of distill whether it was something that we needed to pursue, whether it was a long term priority or initiative or rock as people call them, or it was just something that we needed to get off of our chest and onto the whiteboard and maybe we'll revisit it down the road. So you're absolutely right. I think that discipline happened once we got somebody that happened to be a great compliment for us and a really good need. And we were always reading and students of entrepreneurship along the way. So I was always trying to at least inject these different frameworks into the business that we were reading, whether it was Jim Collins Good to great, or Patrick Lencioni five dysfunctions, or eventually the traction, you know, EOS framework. Like I was. My team would look at me kind of side eyed if I came in with a new book because they're like, okay, he's got a new framework for us to pursue.
- [33:49]
A
Now how did you find Roman?
- [33:52]
B
Well, man, that's a great story. So he grew up in very humble beginnings in rural Jamaica. No running water, you know, dirt floor. Went to University of Tampa on a scholarship his senior year of college. His marketing class did a case study about college hunks in like, roughly 2009, 2010. And somehow he got passionately, like, excited about wanting to come work with us and work for the company. And so when he graduated, he asked if we could hire him. We didn't have a role for him. He didn't have the experience. So we kind of lost contact. He went back to school, got his mba, his cpa, and he, you know, I give him all the credit. Followed up periodically on LinkedIn and just said, hey, checking in on you guys. Hope all is well. It's like three or four years of following up and randomly. Our controller at the time, who was kind of a train wreck, she quit. And I remember that Roman had said he was, you know, got his MBA and a CPA and was doing finance. I was like, hey, that guy Roman, maybe I can, you know, reach out to him. So I. I met him for dinner, and he. That very day, he was on his way to put in an acceptance letter at cbiz, which is a big public accounting firm. And so we kind of intercepted him at the, you know, the one at the goal line to come, you know, work for us as the controller. And here he thought he was, like, joining this great big company, came in and he saw all the, you know, the warts and the, you know, holes in the ceiling with respect to, you know, how our business was actually functioning. And he, you know, he was able to kind of clean that up very quickly. So, you know, anybody that's trying to get that escape velocity, you got to find yourself. Find yourself a Roman numerals. But it was a very unique way that. That he came about. It's kind of a testament to him seeing, like, his vision of wanting to come work for us. I don't. Still don't quite know why. And then two, like, you know, the. The persistence that he had, like, he didn't. Just when we, you know, kind of kept the door shut for a little while, didn't dismiss us as jerks or, you know, guys that, you know, going to go prove those guys wrong. He, like, continued to follow up, and then, you know, gratefully, we were able to get him on the team.
- [35:46]
A
Tell me about the empire builders. You dropped this little nugget earlier, and it reminded me of the story of Greg Flynn. And so Greg Flynn, who's the biggest, is. Was the biggest franchiser of Applebee's. And now he's Taco Bell, Pizza Hut, all these. I think he's the biggest restaurant franchiser in the U.S. probably the world. So I did an episode on him and then his team got in touch. So I learned a little more about the story. And there are these people that are just these franchise magnates that come into a franchise and run the business honestly better than the founders of that business ever did. And I've heard this story over and over again. There's one company, I can't say which one it is because they're not public about this. It's about a billion dollar franchise. They do a billion dollar system wide. And there's one franchisee that does 500 million and, and like, you know, I've seen that a couple times. So tell me about the empire builders. Where do these guys and gals come from and what do they do? So different.
- [36:39]
B
Yeah. So what's interesting. So our franchise model lends itself more to what, I'll say the owner managed, not, not necessarily owner operated, where they're getting on the trucks, but owner managed, owner owner supervised business. And so it doesn't lend itself as effectively to an absentee or investor model. So even our, what we call our, our empire builders are still involved in the business from a day to day basis. And we've got one up in Long island doing over 10 million a year. We've got one in Kalamazoo, Michigan doing over 6 million a year. So it's not always necessarily the market based, you know, performance. It's, it's really, you know, how the operator executes the playbook. The three things that I distill it down to, you know, how what separates somebody from like, you know, a true trailblazer franchisee versus somebody that's just sort of middle of the pack or struggling to keep up is one, they execute with the similar or same maniacal intensity as we did in the early days. And, but they don't just execute haphazardly. They execute the playbook, which is now, you know, proven and time tested and, and, and can show results if executed effectively. Two, they're engaged with their fellow franchisees, they're engaged with us as the franchisor. They're not, you know, operating as if they're out on some island, but they're, you know, somewhat collaborative in most cases, even sometimes combative. But it comes back to the Lencioni model where, you know, there's trust and healthy conflict so that we can kind of break through to the results. Ultimately and hold each other accountable along the way. And then number three, I think this is a big one for any of our franchise owners, but really, any business owner that has employees is they view the leadership component of their business as a blessing, not a burden. Meaning, like, we're hiring frontline employees. There's turnover. There's guys that don't show up, or they show up out of uniform or they crash a truck or, you know, drop a client's, you know, piece of furniture, hopefully not on purpose. And, like, those are all teaching and coaching and learning opportunities for the front line. And if our franchise owners have that mindset of mentor, coach, leader, as opposed to, like, oh, this, you know, I can't get. I can't. My business isn't working because I can't get good labor. And people, you know, it's. There's no work ethic right now. Like, they're the ones that sort of fizzle out pretty quickly. And so. So, yes, we've got, you know, we don't have anybody doing 500 million yet, but we have talked to some of our top performers, say, like, hey, guys, keep raising the ceiling, raising the floor, you know, because what you've done is great. Like the ones up in Long Island. He actually kind of wrote the Playbook for us. So he, you know, he. He's unique. He. He was our very first employee when we started franchising, and then he and his partner moved up to New York to open the Long island franchise a few years later. So they obviously had maybe a little advantage because they sort of wrote the Playbook and now they were going to execute it. But I think was a good example of, hey, the Playbook works. And then, you know, the gentleman Kalamazoo, who I mentioned, you know, he actually came from the moving industry, and so we kind of removed. He was a manager, kind of hit a glass ceiling. He joined our system as a franchise owner, and it just kind of took the. The cap off of what he was capable of doing and becoming.
- [39:52]
A
And have you learned anything about how you select franchise partners these days? Are you much more selective? Do you say no to a lot of people that want to own a franchise?
- [40:03]
B
Yeah. The two pieces of advice I got when we were starting franchising was don't sell too much territory and don't sell to just anybody. And it's very easy to say when you're in our position where we are now back to somebody who's, you know, just starting to franchise. But when we were just starting to franchise, we needed the money and we needed to sell franchises. So we were kind of like in a catch 22 where, like, we would sell it to anybody who was willing to write the check. And we were willing to give up more territory than we probably should have because they had the leverage in whether or not they wanted to buy the franchise if we wouldn't agree to the, you know, terms of the territory. Now, because we've got success stories and we've got, you know, over 100 franchises, we can be much more discerning and selective about who we sell to, where we sell. We have performance criteria as to how they can, you know, add more territory. So we're not just handing it to them, you know, out of the gates. They've got to sort of earn it through performance. And, you know, for me, there's got to be a culture fit. We've got, you know, it's cliche to talk about, but we've got our core values and we've got our company purpose. And we want to make sure that the people that are joining our organization as franchise owners share those values. Share the purpose.
- [41:16]
A
What are the values?
- [41:17]
B
Our values are building leaders, always branding, listen, fulfill, delight, and create a fun, safe, winning team. And so those are sort of the, the wheels on the, the vehicle that, you know, keep us moving towards our vision or the guardrails on the road that keep us from driving off the. Off the road. And our purpose, we say, is to move the world. It's kind of a double meaning. You know, we want to move people emotionally through our service, through what we do every day with our frontline staff and with, with the communities we serve. And so we talk about that a lot, both internally as well as when we're talking to franchise prospects. And we try to really distill is this person, you know, just saying they align with it or do they have examples of where they are?
- [41:53]
A
So give me, give me some inside sauce there. So I think about this a lot because we know we're doing a lot, a lot of hiring at my company, and we're always. I'm always toggling back and forth between am I, am I adhering too rigidly to the values or is this the right person that could actually add to our values? What are you testing for? Give me a concrete ex. Example of this is what we're testing for and this is how we know.
- [42:14]
B
And so this, this to me applies for both franchising and employees. But because you, you have to have somebody that aligns with the values and that we have a conversation of you know, it's like, talk to me about which of the values you're most passionate about and why. Give me an example where you've lived one of these values or you've kind of seen one of these values come to life in your, in your past. How can you see yourself applying these values while you're here? And, and so that's questions that we ask both prospective employees as well as us prospective franchise owners. But you know, the soft stuff, this is a Jack Welch quote, which we had to learn kind of the hard way. The soft stuff doesn't work unless it has performance based, results based toughness associated with it. So, you know, can this person do the job? Are they the right fit? Do they have the skill set that they can execute here? Right. Like, we might have somebody that was a really good CPA that wants to be a franchise owner, aligns with the values, but isn't going to be rolling up their sleeve walking into a warehouse at 6:30 in the morning to dispatch a crew of 20 dudes, you know, that are getting ready to go move furniture just because, you know, he just doesn't feel comfortable doing that. So we've got to kind of also identify the skill set, you know, that's necessary for, for, in our case, franchising or whatever job you're looking to hire for, you know, for the job that you're looking to hire for. And the learning we had is when we first started, we read all these books about core values and the warm and fuzzies. And what we lacked was accountability and maturity in our organization. And we started trying to hold people accountable. And people were like, oh, that's not nice. You're not aligning with our values. And I'm like, oh no, what do we do wrong? And so Omar, my business partner, he goes, we need enough balance of Wall street and Sesame Street. Like if it's all Sesame Street, I love that. Yeah, you got this like entitlement culture. You got this like, you know, Kindercare. If it's all Wall street, then there's no passion, no loya, no, no purpose. You're just stabbing each other on the back to try to get ahead. And so you got to find the right balance. I think the way he framed that made, made perfect sense. But it's, you know, I like to say, cold on the numbers, warm on the people. So you got to have people that can, you know, make the numbers work and then do they align with the warmth of the organization, which in our case is our values and purpose. And so we kind of use that as the litmus test as to how we hire and also, you know, who we try to identify as a franchise fit it.
- [44:34]
A
Yeah, I don't think people realize until they get to that point where they, they have it, where they see it, how game changing the right people. I mean, you mentioned it with Roman, you mentioned it with your, with your franchise partners who are, you know, so instrumental in the business. I talked about this other franchise where they, you know, this one dude handles, you know, half a billion in revenue. When you experience that, I think we all have that early on experience where you're $7 million and you're sort of growing. But then once you hit, I remember getting to 2 million revenues, 5, 10, 15 million. And it was like, there are people that can carry the weight of $10 million on their shoulder. And there are most people that can't do that. And you've. And just having that hunch and being. And recognizing that you have to move quickly to find those people. It's hard. Kind of a game changer.
- [45:18]
B
It's a game changer, but it is hard, let me tell you. I mean, like, there's a reason why all these, you know, professional sports teams don't get the draft pick right and don't sign the right free agents. And even in those guys cases, they have all the analytics, they have all the game film, they can watch the person actually performing the work. Like in business, you're going off of a resume, you're going off of an interview, you're going off of reference checks, case studies. So it's much to your point, science and art, to be able to pick great people. And you're trying to pick people in different phases of your growth journey. You might in our case be playing peewee soccer in the early days, chasing the ball around the field. And you're trying to graduate to varsity or college, you know, level or, you know, now professional, win a Super Bowl. And not all the peewee soccer players or leaders or coaches are going to be able to coach at the next level. So you got to also identify when are they hitting their ceiling. Do we need to layer people over top? And beware of the empty suit syndrome. We've been very guilty of this before. It's like, oh, this person, you know, worked in this organization and, and you know, look, he had this title and we just hired him thinking he was going to come in and, and shake things up and make an impact. And all of a sudden we're like, oh, God, it's. He's he's not doing anything. He's falling asleep.
- [46:30]
A
I'm hired the VP of sales from Salesforce to be my first rep. Yeah, good luck. He's not going to sell anything.
- [46:36]
B
Yeah, that's right. That's right. So, so, yeah, but it is critical. And another book I just read was Science of Scaling by Ben Hardy. Highly recommend because it talks about raising the frame and raising the floor and he talks about having super who's for every role, especially in the leadership level and the leadership level right below the top line. And if we're going to be a billion dollar business, we've got to start walking, talking and acting like that identity wise today. And that means that the people we need in our building today need to be billion dollar people, not 2,300 million dollar people. And that doesn't always match up. Hopefully some people can elevate themselves, elevate their floor and ceiling to keep up, but it doesn't always work that way.
- [47:18]
A
Have you had people who were really instrumental in the early days or the middays that you've had to just let go and have you had to do that consistently or do you instead level them up somehow?
- [47:30]
B
Both. We've had a multitude of changeovers of our C suite leadership team over the past 20 years. Obviously Roman's been consistently in there for the past 10, 15 and he's better than I am at having those tough conversations when it's time to hire somebody over them. In some cases, if it's a great person, the seat has just gotten too big for them. We offer the opportunity tactfully of course, you know, because otherwise, you know, nobody from an ego standpoint likes to feel like they're being demoted. But the opportunity to slide into a more specialized seat where they're not, you know, have as much, you know, range of, you know, domain or bandwidth that they're trying to cover. And you know, we had somebody that years ago that we gave like a chief revenue officer title to and he was overseeing our call center and franchise development and marketing. It was just too much for him. And so we tried to move into a more focused area of marketing and it worked out. But yes, we've changed over the leadership team many, many times. Call center leadership, marketing, you know, franchise sales. And I think it's just necessary. Right. There's that adage, what, you know, what got you here won't get you there. That holds true. But then yes, we, we, we want to try to level everybody up, but we want to have, you know, be realistic about and, and I think this is where the art comes in, like being true to ourselves and true to the person. Like we're doing the company co workers and that individual a disservice if we're just sort of hoping that they're going to eventually get on, get on plane and they're, you know, struggling under the, under the surf.
- [49:00]
A
It's better to be kind than nice. And they're not always the same thing.
- [49:03]
B
That's right.
- [49:04]
A
What is the corporate team today? How about, how big are you guys today?
- [49:08]
B
Yeah, so like in, at the C suite or in the entire corporate office?
- [49:12]
A
Not the franchise folks, just your team that runs head office.
- [49:16]
B
Yeah, so head office, we've got about 60 folks and that's not counting the call center. Probably about 300 people in the call center. We own and operate eight of the locations ourselves. And so there's probably another, you know, 200 team members in the eight corporately operated locations between movers, managers and haulers. But in the core franchisor corporate staff, you know, we've got marketing, it, finance, accounting, call center, franchise sales and operations and those departments equate to roughly 60 folks.
- [49:48]
A
And is your goal, you mentioned that you're buying back locations. Is your goal to buy back these locations or do you want to grow the franchise side?
- [49:55]
B
No, we want to grow the franchise side, but as we've gotten, and you mentioned this, as we've gotten probably, you know, close to 50 sold out of territory across the U.S. we want to be a little bit more discerning because, you know, the difference between a, you know, $1 million producing franchise market and a $5 million producing franchise market is significant to, you know, us as the franchisor, the brand value, the, the enterprise value and so forth. So, and then we also have a lot of smaller markets where it might be like a two or three truck operation. And so that owner is going to be a little bit of a different avatar than the one that wants to be kind of a, you know, five, ten million dollars, you know, with a, you know, one or two million dollar profit operation with, you know, 50 trucks or whatever. So we've got to find like, who, who's happy with a, you know, two million dollar operation doing 200 grand, you know, 200, 300 grand a year in income and, and just running the day to day versus, you know, somebody that's like, no, I'm not gonna be happy unless I'm, you know, pulling down a million dollars in profit. And so we've got to be, I think, matching skill set with goals, with Values is kind of maybe where we have to focus our energy now.
- [51:05]
A
And what about you and Omar? You guys have been partners all this time?
- [51:09]
B
Yeah, yeah, we've been business partners all this time. 50 50, which they told us from day one wasn't going to work. And it's worked. The thing that I've said is, you know, our partnership is our vision and values have always been in alignment. We communicate pretty directly and openly. We don't hold resentments longer than 24 hours. That was never something we really discussed. It just sort of became kind of our default operating mechanism together, I think, think we, you know, we've had bickering like a married couple. We've had fist fights. Not as much now, but in the early days where like, you know, he was refusing to take the truck, and it was his turn to take the truck. So I just started wailing on him, you know, right away, and he started punching back, and I was like, oh, this business partnership's falling apart. And then, of course, I went and took the truck and we just kept it moving. So. So yeah, the. The partnership has worked. I think it's been fun because, you know, we've been able to celebrate the highs together and also kind of like. Like support each other through the lows. Whether it was, you know, the COVID era or whether it was, you know, we even have headwinds today with the high mortgage rates. The housing market isn't as booming as, you know, as. As it was right after Covid or, you know, from in the 2000 teens. And so, you know, it allows us to kind of keep pushing each other and, you know, pick up the other person's slack if one person's falling behind. And so it's. It's been a great.
- [52:22]
A
How do you separate titles? Who. Who does what?
- [52:24]
B
So when we first started, we just said, okay, Omar, it was your mom's cargo van and business plan or your business plan, so you're CEO and I'm president. And then we've actually relinquished our titles at this point. Roman's president, Omar and I are co founders and co chairs and co visionaries, essentially. So that's kind of how we. How we handle it now as far as where we separated our roles and responsibilities and focus areas. He was usually navigating more towards marketing, it's call center. I was navigating more towards operations, finance, franchise development. And it just sort of, you know, worked out that way. He was, you know, a little bit more doing research online about, you know, marketing tactics and, you know, it strategies and, you know, I was a little bit more about bringing these like frameworks from the books that we read and trying to inject them into how our business was run.
- [53:15]
A
Hope you guys like that. If you did, make sure to hit subscribe and get my best stuff to your inbox@johndavids.com if you sell B2B products or services and you want to generate more qualified sales opportunities, I want you to head over to JohnDavids.com grow. I'll show you the growth system we've used at influicity with 40 B2B companies in just the last year. Go to johndavids.com grow and watch the short video. And by the way, if you're already spending money on LinkedIn and trade shows and sales enablement and all the rest, this is even more important. Important because it could give you a huge advantage in the marketplace. Go to johndavids.com grow and I'll see you there.