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- [00:00]
Tommy Mello
We're going to spend $4.3 million this month in marketing. And here's what I've learned. Tommy Mello. Tommy Mello. Tommy Mello, the founder of A1 Garage Door.
- [00:09]
Sean
You're doing this blue collar thing, but at this really big scale and I love that combination.
- [00:14]
Tommy Mello
A1 garage doors, we fix, we repair, we maintain, and we replace garage doors. A1 from day one, the original valuation was. Now the business is north of 80 million of you.
- [00:26]
Sam
No shit.
- [00:27]
Tommy Mello
I've read hundreds of books on sales and even more on marketing.
- [00:30]
Sean
So ring, ring. I pick up what do telling them.
- [00:32]
Tommy Mello
You never say the cost, you say the investment. You never say the most expensive, you say top of the line, you never say the cheapest, you say builder grade. These words matter, Tommy, giving us the sauce.
- [00:43]
Sam
What other businesses have you seen in the services industry that you are shocked at how big they are?
- [00:49]
Tommy Mello
Most of what I've done is repeatable. It's not like this crazy thing that only works in garage doors. Don't overcomplicate it, dude.
- [00:55]
Sean
I've known you for 27 minutes and I love this guy.
- [00:58]
Sam
Tommy, what do you suck at? Where's your weakness right now?
- [01:00]
Tommy Mello
I was going to go broke. There was a stripper living in our Dallas warehouse with my manager.
- [01:05]
Sean
We were doing so well and then we went to jail.
- [01:09]
Sam
There it is. There's the weakness.
- [01:11]
Tommy Mello
I feel like I can rule the world. I know I could be what I want to. I put my all in it. Like no days off on the road. Let's travel.
- [01:20]
Sam
Tommy, have you ever listened to mfm? My first million. This podcast.
- [01:23]
Tommy Mello
Yeah, we list. I, I listen to a dozen.
- [01:25]
Sam
What do you think?
- [01:26]
Tommy Mello
I, I love the come up stories and like, I hate how every single guy is pushing entrepreneurship because it's cut out for 45% of the population. Like you won't be able to handle this. The rejection, the failure, the five years of taking a loan against your house. The people that quit and cheat and lie, the canceled appointments, the long drives, the, the hard nights, the walking out of the movie theater to go run a job. Like, I just, I don't feel like everybody's cut out for it. And some people that invested a bitcoin early, like, they don't know what it's like.
- [01:56]
Sean
So who do you think is cut out for it? How do you know?
- [01:59]
Tommy Mello
Well, there's, there's this thing called Driven. It's a book. My buddy Gary wrote the book. And it's actually, if you're a hunter, it's in your DNA it's literally a different chromosome and there's so much more. Usually it's add, usually you're dyslexic some people, but it just means you have a high tolerance for failure. You're, you're, you're okay working a lot. You don't ever mention the words work, life, balance. You're off balance on purpose. And their seasons of life. And you actually have a bigger why. And by the way, you can't quit. The goalpost always moves. There's no, like, finish. There's no end zone. So if you're going to start from nothing, the chance of success is less than 10%.
- [02:43]
Sam
So you. So for the audience, you started this thing called A1 garage, which at this point I think does north of 300 million in revenue. You took some chips off the table. You sold about half or a little bit less than half of the business recently for I think north of $1 billion valuation. Is that right?
- [02:58]
Tommy Mello
The original valuation was about 540 million. We were at 27 million of EBITDA. Now the business is north of 80 million of even so now it's worth close to 1.7.
- [03:12]
Sam
Wow. And how long ago did you start the company?
- [03:15]
Tommy Mello
2007. So the first 10 years were practice.
- [03:19]
Sean
And explain what does the company do so people understand who you are and what you do.
- [03:23]
Tommy Mello
A1 garage doors, we fix, we repair, we maintain, and we replace garage doors. And we do this in now 23 states, 37 markets. We run on average 25,000 jobs a month.
- [03:36]
Sean
And give us the origin story. We don't usually like the origin stories because you can, you know, you can get those elsewhere. But I gotta ask, I gotta know. This is, I mean, the end point is so interesting. I gotta know the beginning.
- [03:49]
Tommy Mello
You know, when I was a kid, my mom was a real estate agent. My dad had a transmission shop. He didn't pay the irs, so that got taken. They got a divorce. So I learned to shovel snow, mo lawns in Michigan. I got a job when I was 12, washing dishes at $4.05 an hour. And I always had the entrepreneurial gene. I started a landscaping business when I moved to Arizona. And I was living at this house, $700. We paid rent for three guys. I paid 200. My other roommate paid 200. The guy with the master paid 300. And one of the roommates was manager at a garage door company. He goes, dude, I cannot find a good painter to save my life. If you guys know anything about painters, they're pretty unreliable. And so he's like, can you paint garage doors? By the way, I'm busing tables, serving tables, and bartending, and I'm flipping bow flexes. I buy them on Craigslist, sell them on the Arizona Republic. I've sold over 300 Bowflexes. And then I did total gyms, and I sold over a thousand cars. Buy them, fix them, clean them, sell them. And so I'm doing all these things, and I mean, I am hustling. I am like the epitome of Hustler at this point. And I was like, sure, how much are you going to pay me? He's like, I could pay you $100 to paint per garage door, but you got to pay for the paint and the tape and the paper. So I was like, I had a G20 Infinity in 96. It had 120,000 miles on it, and it was cheap on gas. And by the way, 2006, 2005, this is when the real estate market was booming. And so I hired a painter, this old man, and I paid him $300 per door to teach me. He taught me on three doors. I went to Home Depot, bought a Magnum 5 paint gun, and I was off to the races. And I got good. I could paint ten doors a day. I went through the yellow book and called every garage door company. I'd say seven out of ten. I became their primary painter.
- [05:37]
Sam
And does the garage door company mean, like, I install a new garage door or your garage door needs some type of service and I fix it.
- [05:44]
Tommy Mello
So the garage door company does both. They fix them and they replace them. So every time they replaced one, if it's an HOA property or a house paint match, I was the guy. They'd grind out a little section, they'd give it to me. Usually the owner would meet up, I'd get 10 from one guy, three from this guy, and I go knock them out. And I literally use MapQuest to build my routes. I mean, this is back in the day before gps.
- [06:08]
Sean
You mentioned that you called all the garage companies and you became the primary for whatever, 7 out of 10. So what was the pitch? So ring, ring. I pick up. What are you telling them and what.
- [06:18]
Sam
What worked there?
- [06:19]
Sean
Because it sounds like just being a reliable guy who's going to do what he says he's going to do. Was a. Was a differentiator here. What did you say on the phone?
- [06:26]
Tommy Mello
Yeah, so I mentioned the company that my roommate worked for. I said, I've been paying garage doors for several months. I show up on time, I work the warranties if there's any, which is rare because I spend time with the clients. I'll pick up the samples myself. I'll pay for the paint. I'm only charging $100. That includes drive time. And all I ask is that I get paid when I finish the work. I clean up after myself. I'm very reliable, and most of these guys didn't have that service to offer. So I said, it's just one more thing. You could charge 300, give me 100 out of it. You know, this is another way to make money. It's another way to go into HOAs. And they're like, you sound hungry, kid. Yeah, let's meet up. I'll give you a couple. We'll see how you do in Arizona. It was easier in the summer because it dries real quick in the winter when it's kind of wet outside and it's cool. You got to go on real slow. It takes a little longer. And you got to tape the windows. If there's windows, it could be a pain in the butt, But I got really, really fast and efficient. And so I'm meeting up with these technicians and every technician, because half the time, I met up with the technicians to get the sample. And they're like, dude, I just made three grand this week. And I'm like, you made $3,000 as a technician? And by. Like I said, the real estate market was booming. People were just like. Their real estate was going up so fast, they were just like, fix it. I went out with a guy. He charged $150 per remote. And I'm like, who would pay? Go to Home Depot, pick him up for 10 bucks at the time. So my other roommate got a job working for him as a technician. And he approached me. His name's Gabe. And he goes, we should start our own business. And I was like, well, dude, I'll form the llc. I'll get the ein number. I'll get us going. I know enough. I could handle the marketing, but you're gonna have to teach me how to be a technician. He didn't know much because their training was crap. So I went to all the manufacturers that got trained. I had the business with Gabe for three years. He also smoked about a pound of weed per month at the time. So that was like. It was like he'd be eating. And by the way, he's still my best friend, but he'd be like, listen, after I finish lunch, I'll give you a call back. And I'm like. I watched him answer the Phone. So every time he went out of town, I take the phones. And, man, we made a lot of money when I took the phones. But I also ran all the calls because this is when I quit the busboy job. All I kept was a bartending job. 2010, I gave him an ultimatum. I said, dude, you're my best friend. You're my roommate and my business partner. You take the business and the debt, I'll start my own. Or you could give me the business. I'll take on all the debt. You're in the clear. He goes, I want to move to Montana. I want to be closer to my brother. I said, great. And at this point, just quick little to top it off, I had six employees full time, two 1099s, and by the way, people were stealing toilet paper. I didn't have a real office, so I rented my first real office. We were working out of our house, and I was kind of like, just at night, just holding my hands over my face, going, what am I doing? I can't. I don't trust anybody. So who do you. What do you do when you don't trust anybody? You call mom. So I called my mom in Michigan. I said, mom, I don't know what to do. I said, I could really use your help, but I don't have enough money to pay you good money. I could afford to pay you 15 bucks an hour. I gotta pay my stepdad 65 grand. Which, by the way, my mom's best year in real estate. She sold 55 houses, so she. She's done well. She's like, tommy, I don't know. I'm like, listen, Mom, I'm your only son. I need your help. You think about it. I love you. She called back in two weeks, said, we're gonna sell our house. We're gonna move our lives to Arizona.
- [09:58]
Sam
Oh, my gosh.
- [09:59]
Tommy Mello
Big move, baller.
- [10:01]
Sam
Mom. Hey, everyone. Really quick, if you're enjoying this episode on CEO stuff. So delegating, having hard conversations with your team, then I've got something for you. So the team at HubSpot, they actually went and put together a bunch of best practices that Sean and I use in our own companies, and they put it together in something that's really easy.
- [10:19]
Tommy Mello
To read and understand.
- [10:20]
Sam
And so if you want to just save yourself 10 years of headache and heartache, then you should check it out. I wish we had this a long time ago. Would have helped me a lot. But there should be a QR code on your screen that you can scan or a link in the description. So check it out. It's totally free and totally awesome.
- [10:37]
Sean
At the time. The business is doing what roughly so. Like, you know, because that's a big leap of faith.
- [10:42]
Tommy Mello
It's a million and a half bucks a year. It's. And by the way, like, a lot of people have a tough time hitting a million, but I was the highest ticket writer for seven years, and then I finally started to delegate. Like, anytime we weren't gonna hit payroll, that my mom would call and say, hey, because I'm working on marketing and hiring and training. She's like, I need you to go run two jobs today. And then in 2014, I found a good integrator. The dude was super smart, and he still tells me the stories. He's not here anymore. He's kind of retired now. He's younger than me. He goes, you would pay me two grand one week and then not pay me for two weeks and then give me, like, 1200 bucks the next time? He's like, we. We didn't even have any type of payroll worked out the first year. I was like, yeah, dude. But 2017, we got on the right software, and, man, all of a sudden, we were doing 17 million but keeping hardly any of it. Next year, we did 30 million. Next year, we did 50 million. And we'd never lost money in profit or revenue. Well, basically since the beginning. But 2017, we were just on a rocket ship.
- [11:43]
Sam
So you were. You made a joke that you. The first 10 years were practice. So on your 10th year of business, what was your revenue and profit?
- [11:51]
Tommy Mello
Revenue was 17 million, and that was out of grit. That was just like, working nights, weekends, and holidays, just overworking. And I remember Al came in and said, let me tell you something, buddy. I'm looking at your P and L, looking at your balance sheet, your income statement. Revenue is for vanity, and profit is for sanity. You're not making any money. You're just a squirrel running around in circles. He goes, we need to figure out how to make serious profit. So I was 17 million. Everybody's like, man. And I'd puff my chest out everywhere, and I'd say, how much revenue we're making. Revenue means nothing. I don't even talk to anybody about revenue anymore. The name of the game is you got to make profit.
- [12:29]
Sam
Well, do you remember your profit on 17?
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Tommy Mello
I was. You know, I was paying myself 150 grand. Taking a couple hundred grand out. There was not a lot of money left. And by the way, we didn't have a great CFO or controller at the time it was, it wasn't super lined up. That's one thing that changed my life is getting control of the money.
- [12:46]
Sean
When you said as you were growing, so how many markets are you in to do that? You know, that type of scale to do 17 million in revenue.
- [12:54]
Tommy Mello
I started in Phoenix, then I went to Tucson in 2012, 2014, we're in Wisconsin and Las Vegas, Milwaukee and Vegas. And by 2017, I was probably in seven or eight markets. But Phoenix was just massive, by the way. I had to close down four markets. A year later, I had to close down Dallas, Houston, Atlanta and Tampa. And if you want to talk about somebody having to swallow their pride and basically say, you're a failure, I was going to go broke these. There was a stripper living in our Dallas warehouse with my manager. I mean, I just didn't have the systems in place to scale as quick as I thought we could, right? And what I tell people now, they're like, what had to change? I said, the hustler had to die for the leader to be born. And I truly mean that. Now I'm a systems guy. Now I sit down and I work on systems and processes. And if the system's broken, either there's no system, it's the wrong system, or the system's not being followed. And that's like, I mean, I'm a student for life. I'm the most curious guy. I walk in, I take notes, I try to stay super humble. And I'm always learning. I've always got three to five coaches at one time. I need help all the time. And I extract and then I implement.
- [14:06]
Sam
So I have a ton of questions on the courses and the seminars and stuff because you've talked about them a bunch and I'll get to that in a second. But first, you mentioned four stories. So the technician who you used to cold call your integrator, your mom and service titan, where you convinced them to do something special, Were you always convincing or did you have to read to get good with words? I mean, how like the way that you're telling these stories, I'm like, this seems like a no brainer. This also seems like this person's incredibly persuasive.
- [14:36]
Tommy Mello
I don't necessarily know if I learned that. My dad. When I'm five years old, I remember this day vividly. I was in Royal Oak, Michigan, and this is the longest driveway I've ever seen in my life. And there was a yard sale or a garage sale, my dad always stopped at those. And I found this CB Radio. And I'm picking it up, and I'm playing with the antenna, and I got the little. I'm like, five, zero, five zero. And I'm like, just talking into it. And I put it back, and we walked back to the car, and my dad looks at me and he goes, hey, Tommy, you really wanted that, didn't you? I looked at him, I go, yeah, dad. He goes, here's five dollars. Go get it. I go, dad, there's a Scotch tape on it that says $20. He goes, I know. Go get it for five. And that didn't make sense to me. He goes, just go up to her. I want you to smile. I want you to point at me and say, my dad and I were wondering if you'd take $5 for this radio. And I'm talking. This was like. I was worried. I'm looking back at my dad, and he's like, keep going. And he's waving, and he's like, keep going. And I look back at him every five steps, and I walk up, and I mean, man, I had. It was like I was anxious as hell. And I go, ma', am, I was just curious. Would you take $5 for this radio? And I go, that's my dad over there. And he's waving and smiling. And she gets down on one knee, she pulls out the Scotch tape, she takes the five and presents it to me. And I'm telling you guys, the radio was awesome. But I walked back, and I learned a lesson that you'll never lose in life. Like, don't be afraid of rejection. You go up there, you ask, you just go for no. And I think that he taught me at a young age. I watched him negotiate things I never thought possible. And just. You know, he used to say, I wish I knew then what I know now. And what he told me is, like, don't be afraid to ask the girl out. Worst case scenario, her loss. Don't be afraid of what people think about you. You're living in your own world. He goes, a lot of people are going to have contempt. They're not going to like you. You're going to be more successful. But don't worry, this is the world we live in. Continue to run. Like, look, hang out with people. You got a common future instead of a common past. Figure out how to get in the right circles. And so. And my mom. I would say my mom gave me more love. She said, you could do anything. I'm going to get behind you. Like, if I went to prison, she'd move next to the prison to see me every day. Like, my mom loves me. If I said, mom, I got in a really bad wreck. The person's not okay. She'd grab a shovel, be like, how do we get rid of this mess? My dad just was like, I'm gonna teach you sales. I'm gonna teach you persuasion. And so the combination is just. I think it turned me into, like, the belief system that I have somebody no matter what. That's why my mom and stepdad moved out. And then my dad was just like, you're gonna have the skills because you're going to be around me. And he was good at it.
- [17:20]
Sean
You said he used to negotiate things you didn't think possible. What do you mean by that?
- [17:23]
Tommy Mello
We went to Mexico, and there was a jacket for 250 bucks. Leslie. He walked out of it for 20 bucks. And he's like, watch this. And he's like. They're like, senor, no, no, no. It's meet me in the middle 100. And he's like, tommy, we're out of here. And like, he meant it. He's like, I don't need the jacket. You don't? One day we. We rebuilt a C10 truck, and, I mean, I spent the whole summer sanding this down. We got it painted. Me and my dad rebuilt the engine. We put the transmission in, and it was sitting in my front yard. And I said, dad, a guy came by, offered me 10 grand. He's like, take it. He's like, you haven't driven it in two years. And I go, dad, me and you did this together. He goes, take a picture of it. You'll remember it. We could do another one. He goes, you're not driving it.
- [18:14]
Sam
Sell it.
- [18:14]
Tommy Mello
And I love that, because I was like, man, I was all sentimental about it. He's like, tommy, it's just material things, dude. You could buy another one. We'll do another one. Take a picture if you want to remember it. But that's just always how he is, you know?
- [18:26]
Sean
Today's episode is brought to you by HubSpot. Did you know that most businesses only use 20% of their data? That's like reading a book but then tearing out four fifths of the pages. Point is, you miss a lot. And unless you're using HubSpot, the customer platform that gives you access to the data you need to grow your business and the insights that are trapped in emails, call logs, transcripts, all that unstructured data makes all the difference, because when you know more, you grow more. And so if you want to read the whole book instead of just reading part of it. Visit HubSpot.com you were telling the story, and I feel like the story had like the. The humble origins and the figuring things out. And then it was like, zoom. We're doing 17 million here. 13 million. It sped up real quick. So I want to. I want to go back to that. Cause you seem to me like a guy who, if you don't have the answers up front, you'll find a blueprint. You find the guy to train you to do the garages. How do you paint the garage? You find a coach. So I like this word blueprint a lot because I think that people underuse blueprints. They exist, you can follow em, you can build your own thing. But it's very helpful to start with a blueprint. What were blueprints you saw? Because it didn't sound like any of the people around you initially were doing $100 million, you know, garage repair. But at some point you got that idea. At some point you started to figure out, oh, I need to scale this thing. I need to do this and do that. What were the blueprints that made you think that?
- [19:47]
Tommy Mello
Oh, I'll give you real quick example. We're getting ready to expand into St. Louis. I'm like my good buddy Chris Hoppins, since He's been in St. Louis for a long time. In fact, his parents started in like the 80s. So I said, chris, can you jump on a call for about an hour and give me the good, bad, and the ugly about the marketing? What's important in St. Louis? And by the way, worst case scenario, he says no. But he's like, tommy, absolutely. He goes, I'll even give you my heat map. I'll tell you what zip codes to stay out of. I'll show you. Stay out of the east part. He goes, this north area. And he literally gave me the keys to the city. He saved me a year of mistakes. And so what I've always said is, success leaves clues. If you want to find out how to be number one on Yelp, go find an H vac or roofing company, pick the phone up, and you call them. And you say, my name's Tommy Mello. I want to let you know I'm super impressed by your company. I read your book. I've used your business. I wanted to buy your whole company. Lunch today might cost 400 bucks, right? You bet. You buy. Get them Chipotle. If I could get an hour of your time, I promise I'm not Going into your industry, I got a lot to share with you as well. Seen a couple opportunities, but I want to understand how you dominate Yelp. Then you do that with Angie's List, thumbtack, Google, lsa, ppc. Success leaves clues. They're right in front of you. It's right around the corner. All you got to do is ask. So my favorite three letters in the world are ask. So I did this. I learned how to sell memberships. See, when I had the podcast, I could get the best of the best. I started it early 2017. This is before podcasts were a real thing. So I'd be like, man, I'm having problems with payroll. So I'd find, like, the top person that wrote the book on payroll. And I. I mean, my podcast was simply selfish. It was like, man, I got a question for you. If you got a W2 versus a 1099 and they. They need to show up to me, and they'd be like, bam, bam, bam, bam, bam. And then I'd get like, okay, what happens? Cash versus accrual. I get a CPA on. And then I go, okay, what happens when you want a Greenfield versus buy a company? What's your integration checklist? And I don't know why, but almost everybody was excited to just give me everything. They're like, dude, you're just in the garage door industry. They're like, sure, take it. You could have it. And I've always just been super humble with especially, like, the people that have been where I want to go. And I walk in and I'm like, man, I am so impressed. Like, I will do whatever it takes. They're like, you really are like, you're not like most guys that come up like, you're you. You don't think your shit doesn't stink. And I mean, man, I come from very humble beginnings. I'm just trying to get ahead. I care a lot about my family. I'm just literally, I'll do whatever it takes. If you need money, if you need me to introduce you to somebody, if you want me to come mow your lawn, whatever you need. I want to learn from you.
- [22:33]
Sam
So I told Sean a story about a buddy of mine from my high school who bought his parents H Vac company and has since blown it up. And Sean made fun of me. He goes, you're not even the most successful person from your high school. Well, that person is Chris Hoffman, the person you just referred to, Sean. He's done the same thing where he's like, blown this up these Services, businesses. But what I've noticed actually about Chris as well, but I'm actually Chris has this trait and I'm inspired more so that you have this trait, Tommy, because our listeners of MFM are like Sean and I and we have this attitude where we're really good at starting stuff, but sometimes you stay scrappy and you stay as a hustler. And unfortunately after some type of mark, I don't know, the 10 million in revenue range, the 5 million, the 15 million revenue range, that hustle, that scrappiness, that like just go and get shit done, that actually kind of holds you back. And I'm going through that right now with my company of like being systems focused. And you have done a really good job of showing how a person goes from like being a hustler to systems and scaling and hiring a good team and being an executive, I would say. And you actually have this really good quote. I think you said that in order to scale I had to kill the hustler inside of me or something like that. Yeah, yeah.
- [23:43]
Tommy Mello
The hot started die for the leader to be bored. And I'll tell you, I delegate to elevate. People are always like, dude, I'll outwork you. I remember I had my let's say and I could work three days in one day. My day starts in six hour increments and I work three of them in 18 hours. And I'm like, dude, I don't respect anybody that works harder. I know there's people shoveling poop somewhere on a field that are working way harder than me. I look at skill way differently. There's certain people I hire that can handle the task of three people, 40 hour work weeks in 10 hours. And so I came up with paying for performance and paying for outcomes. And I will be very transparent that I am the dumbest guy on my team. I mean, when it comes to The C suite, VPs, directors, I'm just a visionary. I dream really, really big. I love sales and I love marketing and I love relationships and culture. I am not gonna be the specialist. I live in a different planet. I don't live within the walls of this company. I'm creating a personal brand. And by the way, there's 62 guys training next door. 50 of them found me on social media and said, I want to work for that guy. So building a personal brand for your business really matters. And you know, the thing I ask now is would I work for you? Would I buy from you? Would my grandma buy from you? And would I go have a Beer with you. You tell great stories. You don't shake my hand like a limp fish. You make eye contact. You smile a lot. You're interesting. I'm going to ask you tough questions to see how you figure things out. There's no right answer. And so the. I started thinking about this about five years ago. It's who, not how. Who is the right hire, not what's my strategy, not what system. Systems are super important, but what's the next hire that I bring on the bus that'll take me to the promised land. And when you start thinking like that and you feel you stack the deck with A plus players, your job gets easier. Like, it's gotten so easy. And whenever it gets easy, we explode. The business explodes. So you go through these peaks and valleys, and I'm like, I will tell you guys, we did 315, 315 million. And I'm like, there's no reason we can't be at a billion in two and a half years. And so I gotta set that vision. And people are like, dude, you're crazy. And then I gotta map it out and show them. This is all that would need to happen. The average technician is 700,000 now. And so what would need to happen for us to do this? We would need to have this department, this department, this department. We need to make sure we got trucks on command. They make sure we got a good greenfield strategy. And you start reverse engineering your goals. You create some accountability and consistency, and all of a sudden you wake up and it's there.
- [26:13]
Sam
Dude, that's awesome. I love hearing you talk.
- [26:15]
Tommy Mello
I get excited, guys. I love entrepreneurship, and I run towards failure. I don't really care what people think. I'm not going to lie to you guys and say, I really do care what a lot of people think. I care what my parents think. I care what the people I work with. I'm not the guy that just says, I don't care at all what anybody thinks. I'd love to pretend that's the truth, but I guess now I think I'd rather be respected than loved. But by a lot of people. I choose love first.
- [26:40]
Sam
Yeah, but do any of your employees actually think that you're a dick? I mean, you don't seem. You don't you come off as, like, a pretty caring, empathetic person.
- [26:47]
Sean
I've known you for 27 minutes, and I love this guy.
- [26:50]
Sam
Yeah, like who? Like who thinks that you're disrespectful or rude. You might be a guy who says, look, it's not working out, unfortunately, but I think they would still have love and respect.
- [26:58]
Tommy Mello
No, I don't fire anymore. I, I had to fire five people that were direct reports to me this year, this past year. But I, when Adam started in 2014, I said, you're going to be the bad cop because I'm not good at it. But I do have to have these fierce, hard conversations with people. And it's not easy, but it's for the best of them. Like, if you think about who changed your life was there. Like, I, I had a coach that literally made sure I got a warm mill. Like, I, I respected him. I mean, he literally told me, I'm not going to play. Like, if my grades weren't good, if I didn't show up, I'd give it 110%. So he didn't play me two games, but he made sure Listen, three nights a week he was going to buy me a meal with dinner because he knew my mom was working three jobs. And I found out I respected him more than I loved him. But the respect turned into love. And that was a lesson for me, is I got to be straight up. I'm going to tell you what you're doing great, but I'm also going to tell you you're not living up to your potential. I see something better in you, and it's my job to pull that out of you. And I'm either going to pull that out of you or I'm going to force you to quit or you're going to not have a job here. I'm going to give you the invitation to go work for one of my competitors.
- [28:02]
Sam
Me and Sean were talking about like these inspirational leaders and stuff last episode and I think we, we. I told a story about how I had a cross country coach that was like, this year you're going to learn how to be better men and we're going to do it via running. And that's kind of the same energy that you have, which is, you know, you, young technician, you're going to learn how to be a better man this year. And I'm going to do it by teaching you how to smile when you meet a customer. How to say, yes, ma', am, no, sir, how to, you know, like, it's like more. So we're going to learn how to live great lives and be great high class people. But we're going to do it via, you know, serving the customers wonderfully.
- [28:35]
Tommy Mello
It's 100% right. I used to find fours and try to make them Sevens. Now I hire sevens and try to make them tens. And so now I've got a much harder way to get into the company. So I did orientation yesterday with 62 people, and I said, you should feel proud because it takes 50 interviews to even get one of you to this room. But now the hard part starts. And we got a bell you could ring if you tap out. We get about two people a class that just say, this is. We don't. They gotta clean after they're done. They gotta show up. If you're late one day, there's a good chance for sending you home.
- [29:06]
Sean
There's a bell. So during training, anybody can just go, literally ring a bell and quit.
- [29:11]
Tommy Mello
It's the same as the Navy seals.
- [29:13]
Sean
Are you ex military? You have that vibe.
- [29:16]
Tommy Mello
No, I'm not in the. I never was in the military.
- [29:18]
Sean
Okay. You mentioned this guy Al, in passing. You said, my mentor Al. And I'm always curious about mentors because I think everybody wants a mentor. I think few people ever end up with that special kind of relationship with a great mentor. But one of the great things is when somebody has one, they can kind of share a story that, you know, kind of becomes our mentor, too. And so can you tell me a great Al story? What did this guy kind of make you realize or teach you about?
- [29:45]
Tommy Mello
So he was the second guy in my podcast, and he wrote a book. It's on my shelf over here. It's called the seven Power Contractor. Explains the different stages of the home service industry. And he had gone through every masterclass and just studied how to build a business. And he had a business with his brothers and his father, and one day they just got fed up. And his daughter, he had his camcorder on the back of the room recording his daughter at a play. And his wife comes up to him and says, al, you know what your daughter says she wants at school today? She says she wishes her dad was around more. And he goes, natalie, I mean, it gives me goosebumps, but he goes, natalie, I'm going to disappear for about a year. I'm not going to be around as much, but I need to systematize this business. I need to get SOPs. I need to make sure that I could spend time with my two daughters and you. And so we're going to go on a vacation for two weeks in one year, and I'm not even going to look at my pager. I mean, this is back in the day. And Al, he met me for lunch, and I handed him the book. I was working on the Home Service Millionaire. He flipped through it and said, this is garbage. He goes, you need to rewrite it. And I said, okay. And he goes, the thing that I wanted to work with you originally, Tommy, is you brought a notebook and you wrote down everything I said. He goes, that's the only reason I thought about working with you. He walked into my shop that day, goes, can we go do a shop tour? I said, sure. He goes, why do you have all the calendars on the wall? Haven't you ever heard of Outlook or Google Calendar 2017? That was around then. It was early stages of Google Calendar. But he goes, I tripped on a cord that you had a microwave plugged in at. He goes, dude, this is not organized. And he goes, I could have stolen your whole warehouse. The garage was open, no cameras, your forklift was sitting there. He goes, show me your manuals. All I had was this, like, onboarding manual. He goes, well, how does anybody know how to win? He goes, how do they? How do they know? Are you allowed to get tattoos on your face? Are you? What happens if your truck breaks down? Like, who do you call? What happens if you lose your gas card? What happens if you need PTO for Christmas? He goes, how do people know this? He goes, it's all in your head. He goes, what I'm going to ask is, you're going to pay me $150,000. And by the way, I didn't have 150 to give him. I had to take an equity line out of my house. So that's why I had to pay attention. And when I walked in there, if I started talking or talked about a book, he goes, stop. You're going to listen to what I'm going to teach you, or I'm going to quit. You're going to figure out exactly what I'm going to teach you, and you're going to do this perfect. You're going to stop reading books. You're not going to do stuff any other way than what I teach you. You're going to turn your cell phone off when I'm in this room. And you're going to get your two top guys. We're going to sit here, we're going to work through each and every scenario, every manual, and then you're going to read these manuals out loud with every employee, have them initial every single one, and then you're going to read a page out of the manual every week in your meetings. And, man, I was adhd. I still am. And he's like, you are going to focus. You're going to be all here and we're going to sit in this room for eight hours, three days a week. The dude drove a Mercedes. He'd pull back in the same spot really slow. It was always detailed. And every time he Left, I'd get $43.38 was how much he paid in gas. I'd get a bill for it like this. I mean, he was just high CT personality, dialed in like it's my way or the highway and that's what I needed. He was tough and he'd bring in a consultant to get us our financing. Figured out that he trusted. And she's like, I don't know if I want to work with this guy. I said, listen, I'll be quiet, I'll do whatever you say. And he goes, trust me, he goes, he'll do whatever you say. I'll make sure of it. And that's what I needed. And it was tough love. But he set me up for a lot of success.
- [33:33]
Sam
Was he. Are you Now, I've never heard type C personality, but are you? Are you? Whatever that personality type is of just paying attention to the details, are you? It sounds like maybe you're a 3 out of 10. What are you now? Are you like really high or you just improved?
- [33:48]
Tommy Mello
Well, I, I was pre dental, so I love math. I took advanced calculus and I got obsessed with geometry and calculus and algebra. So I'm a numbers guy. I've always been, but I'm still a macro guy. I still look at the big picture. I'll dive into certain areas. I always say I live on Mars. I look at Earth for volcanoes and earthquakes, but I'm still not the details guy. I don't. I love my CFO and my controller and I love my HR team, but I don't really interact with them very often. I am working on operations and marketing and culture and always driving sales and quite frankly, I don't want to be good at these other things. I want to go continue to be the best at what I'm great at and continue to hone these better skills and delegate the rest. I don't want to be well rounded. I never want to be good at that stuff because it tortures me to have to do that stuff. Like for me to do payroll, which I had to do for a long time. I mean, it was like pulling teeth. So the first thing I got rid of, if you set up your org chart and you've got, you wear a lot of the hats, first thing you do Is circle what you hate. So now when I come into work, I love coming to work. I'm like, man, I'm on a podcast right now with you guys. Everything's getting handled. I just got back from Costa Rica for 10 days. You think we lost money? You think when the owner, founder, CEO left that things didn't go right? We set records the whole time I was gone, like I don't need to be here. And that's what we set up is we go on the Pinnacle trip. My whole C suite, all my directors, my area managers go, my top 40 technicians and installers go on this trip. Do you think we lose revenue that, that, that week when we leave? We've never lost revenue.
- [35:33]
Sean
We've talked a lot about in this systems. I think if we're playing a drinking game and somebody said, you know, if you're taking a shot every time we said systems, they're now. But, but I, but it strikes me that you really harp on this because that's what was hard and broken for you. And you really had to put in work to get great at that. And it's kind of like you feel the, the benefits of having not everything on your shoulders. But it, I, I gotta believe that in order for your company to succeed, you know, you don't, you don't grow because you have a great operations manual, per se, right? You have grow because you're great at sales and marketing. You sort of survive and thrive if the operations can back that up. And I'm guessing it sounds like that the sales and marketing were more things that were more in your core competency. You did a good job of early on and you haven't been as demand constrained. But I want to know more about that. So I want to know what did you do to kick ass in sales and marketing that was different than the average service company? What were the things that you did that made you guys rock and roll in terms of demand?
- [36:36]
Sam
Well, step one was naming your company A one. So you show up first in the white pages, right?
- [36:40]
Tommy Mello
Yeah. Well, that was stupid because there's 93 other A ones, even though got an irrevocable and contestable trademark. So that's my biggest mistake was being A one. Honestly. You know, sales cure everything. And to get sales you need good leads. And I'll tell you this, I'm not afraid we're going to spend $4.3 million this month in marketing. Not afraid to spend a lot of money. And here's what I've Learned. I was $30 million. I met a guy named Dan Antonelli, that Al Levy, my. My coach, he referred me. He goes, tommy, he goes, I think your wraps are garbage wraps.
- [37:16]
Sam
As in car wraps, trucks, the vehicle wraps. Yeah.
- [37:21]
Tommy Mello
And he goes, the best way to do it is I took a picture of your truck, I made it black and white, and tell me what pops out of you. He goes, that's the best way to see, like, what pops out. And you got Angie's List, Yelp. You got your phone number, your, your, your everything. You got springs, rollers, cables, bearings, all this crap. He goes, I want you to go to this company called Kick Charge, and I want you to use Dan Antonelli to redo your brand. I called Dan Antonelli and he gives me an estimate. Guess how much it cost me to get a new logo and new brand on the trucks? $35,000. And at this time, I'm going, I'm $30 million. I'm like, dude, it's working. Why would I switch? And I just, I trusted Al and I bit the bullet and I did it. And then Dan called me, this guy, and we got a caricature. Like the, the logo's awesome. He studied every one of our markets. We don't want to look like any other thing we want to pop. We don't want our phone numbers or, or website on it. You don't even need any of that or Angie's List or what we do. It's just garage door service. And he goes, I want you to change all your email signatures with this. Every one of your yard signs, every one of your coupons, every single thing needs to be this brand. And I remember three weeks later, there was a line of people that wanted to work for us. Like, I was like, man, this is like, you know, I'm putting everything on the line. All my time, energy, effort. But I had such a crappy brand, and now I spend a fortune on tv, radio. Yeah, that's.
- [38:48]
Sean
This is, this is the before.
- [38:49]
Tommy Mello
That's. That's what it was.
- [38:51]
Sam
Oh, yeah.
- [38:52]
Tommy Mello
So look at how crappy that is.
- [38:54]
Sam
What is that? I can't even see it. What is a what above your, above the, the red wall?
- [39:02]
Sean
It's like. What is bricks of a garage? It's like the outline.
- [39:05]
Tommy Mello
Yeah, that's. That's like a. Two garages that are carriage style with like, like brick. And then you have white on white on white text. That's horrible.
- [39:15]
Sean
And then you go to this.
- [39:18]
Tommy Mello
Yeah. So I said, dan, I want that old fashioned feeling, like the maytag in the 70s when you trust the guy to come out and it's like it just. It pops and it's trust. Trustworthy. And so if you walk in my place, Dan designed, we brought the brand inside. So we've got all the brand inside of the building, too. Like, we live and breathe the brand. And people don't talk about this stuff. But, like, Nike is a brand. That's why they pay Tiger woods and Roger Federer. And, like, the brand is what? You could buy a T shirt, the same as Nike, for 20 bucks, but you're willing to pay 120 because of the brand. Right. So what does our brand mean? It means my dad taught me you could do three things in business. You could be the best. Best warranty, best technicians, best quality, best, you know, everything. You could be best timing. If it happens today, you bring your car in, we can fix it today. Or you could be the cheapest. He said, pick two out of the three. You'll never be all three. You can't be the cheapest. The best. And on their timeline. And I got this guy in Milwaukee, best mechanic I've ever met. He's the cheapest. He does me right. Right now, he's four months out. I can't use him. He's four months out. So I called him up, I said, hey, why don't you triple your prices? I'll pay triple because you're honest and you do great work. But this is the hardest thing for people to learn. You wanna start out and be the cheapest, but then you realize you don't have enough to hire people or pay for the right software or buy new trucks or invest in great inventory. And I'm not saying, like, one of the things that I learned a long time ago in sales is I don't give yes or no. Like, if I walked up to you, I'd say, listen, these are the three options of what we have for springs. We got the one year, the five year, and the lifetime. You might say, hey, that's too much. I say, let's just pick another option. Let's make something that works for you and your family. I'm here to earn your business. And then I shut up. And I've got other options. Of everything we do, I don't give yes or no questions, because that's stupid. Either you're going to say yes or no. I'm going to say, listen, let's just pick something that makes sense for you and your family. And I've studied. I've probably read. I've read hundreds of books on sales. And even more on marketing. And that's where I go to all the Google events. I show up to different offices. I like. I speak on a lot of state like I live and breathe marketing and sales. And honestly, I hate, I hate that word. Honestly, I shouldn't have said that. I always say that's a no. No. I hate a lot of words. But you never say the cost, you say the investment. You never say the most expensive, you say top of the line, you never say the cheapest, you say builder grade. You never say you could cancel at any time. You say you have the right of rescission. These words matter. But what matters more is the way I say it when I'm making eye contact. Would you go to a doctor if the doctor walked in and just looked at you and said, hey, here's your medication. Now the doctor walks in, he smiles, he says, let me ask you a few questions. How's the alcohol? What's the stress level? Are you any recreational drugs? How much are you working out? I'm going to run a few tests here. We're going to look in your eyes, we're going to look up your nose, your ears. I'm going to have you cough. We're going to run a few tests. And then the doctor says, listen, what's better for you? CVS or Walgreens? All right, here's your prescription. Here's what's going to make you better. Do you ever go, I'm going to need a few estimates document? No, because they're the authority. They diagnosed the person before the problem. They spent the time, they asked the right questions and they nurtured you along the way, and you believe them. And they didn't say like, you know, well. But no, they said, here's exactly what we're going to do to fix you up. And we're the doctor the minute we step in that garage. And that's what, that's what I trained the guys. And I go over and over like, I don't believe you. I don't believe you because you don't seem confident. You don't either you don't believe in yourself or you don't believe in the products or you don't believe in me and the company. Which one is it? And let's work on, let's work on it. I could do this all day. And I love training guys because I'm like, smile more, offer coffee on the way, play with the dog, get to know the clients that they love. Bernie Sanders. Talk about Bernie Sanders. If they love Fishing. Ask them what kind of fish they like and what kind of pole they have. But you gotta be genuinely interested. Don't fake it. If you hate babies, don't talk about babies. You know, find something you love and you correlate well to them with. And you'll enjoy every minute of your life.
- [43:52]
Sean
Dude, play with the dog is so true. I've had a couple guys come over to do some work and they, the ones who play with the dog, instantly I'm in on them. Cause they're in on me. And the most important thing that they saw in the house so far, I had a guy come in to do a repair and as soon as he walked, I have a tiny dog, like an eight pound dog. And he goes, whoa, killer. He goes, I don't want to, I don't want no problems. And I just immediately love the guy. He could have sold me anything. He was like there for the heater. He could have sold me a washer and dryer if he wanted to.
- [44:20]
Tommy Mello
Now that's great. I always say, listen, we don't, we don't ring the doorbell because strangers ring the doorbell, friends knock these simple little things. Listen, I'm so. I have a 7 11. Can I grab you something, get you a coffee? No, no, no, no thanks. Listen, you come to my house, my fiance is going to cook for you. Don't make me guess you like Green Monster. Should I get you a coffee? And I want to bring you something because no one that ever fixed your house brought you something.
- [44:46]
Sam
Wait, so you guys order coffee for. Are you, you, you have like a system for ordering drinks or whatever so they could order.
- [44:54]
Tommy Mello
I got guys that order donuts and apple cider in Michigan and Wisconsin. And all you do is expense it. You take a picture of the receipt and it comes back on your check that next week, including the taxes. So you could buy. I mean, we try to say keep it under 30 bucks, but literally I don't, we don't really check. Like, my goal is that every single person gets offered something on the way.
- [45:17]
Sam
Have you seen the average customer value or a customer order go up because of. So what you're saying, by the way, is like a world famous. It's the rule of reciprocity. It's Robert Cialdini's book Influence, which is basically like I, if I do a favor for you. So if me and Tommy are next door neighbors, I go, hey Tommy, can I borrow a cup of sugar? And you give me a cup of sugar. The next day Tommy comes to me, goes, hey, Sam, Could I borrow your car for a day? Because of the rule of reciprocity, I feel in debt to you, and I will do something. Even if those two favors are not equal, I will do something to get back to. So we're even because we want to feel even. And so the idea here is if you bring a customer a coffee, even if it's a $2 coffee, they're more likely to spend an additional $500 in garage doors. And so my question is, have you seen the average order value go up just because of that? Simple.
- [45:59]
Tommy Mello
It goes up dramatically. And it's not a question if you're going to use this. It's how much are you going to spend? Robert Chettini became a good buddy of mine. Him and Bob. Oh, there's seven rules of influence I got. I studied him at U of A in my master's program when he's an ASU professor, their arch nemesis. I got to meet him. He comes to the house now. My COO and head of sales just went to his conference here in Tempe, Arizona. And the more we could apply those seven principles, we're always looking to apply more and more. And it's not to manipulate people, by the way, he says, you gotta use these for good. And, I mean, I ask him questions all the time. He needed a garage, and I'm like, dude, this one's on the house. You know, like, it's gonna be the Taj Mahal, too. And that's just. He's just one of the smartest guys I've ever met.
- [46:53]
Sean
All right, let's take a quick break, because I got to tell you a story. Let me tell you about the first time I tried to run payroll for my team. I was using a traditional bank. And you know the type. It's got a janky interface. It's built like a 2002 tax form, and it was open only during business hours. And I hit send, and it froze. They flagged the transaction. They locked my account. They put me on hold for 45 minutes, and then they told me I got to visit my local branch. And that was the day I started looking for a new banking solution. After asking a few founders what they were using, I found out about Mercury. And so now my payroll is two clicks. I can wire money, I can pay invoices, I can reimburse the team all from one clean dashboard. That's why I use it for all of my companies, and so do 200,000 other startup founders. And so if you're looking to level up your banking. Head to mercury.com and apply in minutes. Mercury is a financial technology company, not a bank. Banking services are provided through Choice Financial Group, Colombian A and Evolve bank and trust members.
- [47:40]
Tommy Mello
Fdic.
- [47:42]
Sam
One of the many interesting things about you is basically a lot of times that courses kind of get shit on. People make fun of, like, courses, and people make fun of seminars and stuff like that, and books fall in that category. But it seems like you are prolific when it comes to hiring coaches, hiring consultants, taking courses, taking seminars. Things that people would say, even at 17 million in revenue, they would say, but, Tommy, you. Why are you paying money to come to this course? What courses and books have, like, really moved the needle for you in your life. It sounds like you've consumed a lot.
- [48:14]
Tommy Mello
Well, I'll tell you, the latest one was buy back your time. And Dan Martell, he goes, let's just do this. He goes, when do you think you're gonna sell? So we wrote it down. He goes, how much do you think you'll make? And I wrote the number down. Then he goes, how many hours do you work a week? I go, probably 50. We did the math. He goes, do you know how much you make per hour? And it's like hundreds and hundreds of thousands of dollars. And he goes, you got a great business mind. He goes, tell me you got a good chef. And I'm like, a chef. I don't need a chef. Like, he goes, what do you normally eat? I'm like, uber eats. He's like, tommy, you don't understand. He goes, if you want to become the best for your people. He goes, you have a driver, right? I go, what? Why would I. Me a driver? He goes, how often do you drive a week? I go, about 11 hours. He goes, what if we could buy back 11 hours for you to be productive? And he got me to look through a whole different lens. He bro. He got me. So now I got a house manager, we've got a chef, we've got a driver. Our dogs are walked twice a day. They go to doggy daycare. Huckleberry and Finn are our dogs. And, you know, these mentors. Dan Martell was a big one. I go to very, very. I go to the. All the home service ones. But, you know, most people sit in this. This procrastination and indecision. There are softwares I've used that were crap. But, you know, we just got on one. It increased our conversion rate on door sales by 18% and our average ticket by 3%, and it picked up an extra 5 million of EBITDA because it eased the dealer fees. Because I heard about it from a buddy of mine. We were on it within six weeks. But to not do these things, so many people are like, man, one day I'm going to get started right after the wedding. I'm going to be on the diet right after the golf tournament. And they live in this world of like, we're just not ready for that yet, man. I'm like, let's just fail. Who cares? Let's, let's fall down a bunch of times. We're going to fail a lot, but we're going to figure it out before anybody.
- [50:16]
Sean
You said you guys sold a piece of the business and you were at like whatever, 20 something million in EBITDA and now it's 80 million. What was that big jump? Did you guys start rolling up other businesses or what happened? What went so well?
- [50:29]
Tommy Mello
So it's three years, we bought 12 companies. We've grown. I think it's 78% organically. And then the, the 22% was by buying companies. And what we did is, it's kind of funny because I call my vendors and I say, tell me how you win. How do you meet your bonuses? What is your objectives this year for like the vendors? This, I'm going to spend $80 million in garage doors this year. I say, what product mix do you need us to be at? And I say, now, if I do this for you, when do I get a bigger rebate? My growth, like if I sell a hundred doors to somebody, they're paying a different price than if they buy one door. So I work out these things. So, you know, we've got economies of scale, we've got efficiency. And you know, the crazy thing is what a great home service business does. 15% of the bottom, we're almost double that. And I still see, because of our efficiency, like you might have a call center rep that could book 20 calls a day. Micah book 60. So let's say you're paying yours 20, I'm paying mine 35. They're doing three times the work. You know what I mean? So you get these economies of scale and people don't like when I say this, but if you work at A1, most people will hire you in their garage door business because we've got, we buy $6,000 of tools, we train, we train, we train. You know, when I played football, I played two a days. I practice twice a day for six days to play one game at home service. You say you're going to go with Our best guy for two weeks and you're on your own forever. Training is not something we do. It's who we are. And we continue to train. It's not just in sales. It's smiling, it's making sure you're efficient. You're showing up to your first job within 15 minutes. These new one on one forms I'm working on, I'm more excited about that than anything this month. So one on ones with the technicians and installers, so they're very complex to get the data I'm looking at. But what I'm building is if this is where you're at, it's a series of things to get good at. If you're not great at this, we gotta get you good at this before we go on to the next one. And then there's a recipe for each one. So now it's standardized. Now, in any market, this is the one on one form where you're gonna use and you're giving the exact same thing across the board that you're gonna do ride alongs for two days, you're gonna go back to Phoenix for a refresher for five days, you're gonna do role play for one day in the training center, whatever that looks like. We're building all that right now. And my expectation is it'll increase. It'll increase revenue by 40%.
- [52:58]
Sean
Wow. What, has I changed your business at all yet? Have you seen any impact with AI.
- [53:05]
Tommy Mello
Call center and dispatch, and quite a few things in marketing. But call center, obviously it's coming to the spot where this year, right now, yesterday, my AI agents were 87% booking rate, my real agents were at 92%. So it's a 5% variance. But the AI continues to get better and the goal is not to get rid of people. The goal is to go on a hiring freeze and keep the best. So right now I got 68 agents. Let's say I go down to 40, they last forever. But I never need to hire another agent because now you're just blocking and tackling. Dispatching. What our dispatch software does is regression testing so you could feed it data. Credit card score, how much did they pay off in the home, how many garage doors do they have? And then it looks for outliers and it knows what technicians do well on this type of job. And the most important thing is customer satisfaction, Net promoter score and my internal net promoter score. So I'm not just looking to sell. I'm trying to create a relationship build, you know, get you on a membership which we call a protection plan and be your garage door company for life. I'm not trying to go wham, bam, thank you, ma'.
- [54:14]
Sam
Am.
- [54:14]
Tommy Mello
I wrote a big ticket. Let's get out of here. I'm trying to say what's right for you. You're selling the home, Ms. Jones, let me make sure you pass inspection. We want to work on your new home. You know, that's what's important is we need to build relationships. And that's very rare in the home service industry.
- [54:28]
Sam
I never would have thought. And it makes, it's, it's, it's like obvious in hindsight, but I never would have thought that a garage door business could be as big as you. And you seem like you have a ton of growth ahead of you. You haven't even scratched the surface. What other businesses have you seen in the services industry that you are shocked at how big they are or you think that most of our audience, which is a largely Internet or tech based audience, would be surprised about?
- [54:52]
Tommy Mello
I'll tell you, my favorite one is pest control.
- [54:56]
Sam
Tell me, tell us about it.
- [54:57]
Tommy Mello
Well, well, the fact is pest control is the only company that went public and right now they're paying 22 to 25x EBITDA. So if you could get your business to make $2 million, you're going to get 50 million. And the best guys that do it. It started out the Mormon guys out of Utah would knock on doors, door to door. They're very good at it if you sell religion and they'd all tell you this. So you start out by door to door and then you get good at advertising on Google and radio and you just, you optimize for routes. But anybody could do it. I mean, you're literally there spraying. You're looking out in Arizona, looking out for scorpions, spiders, making sure there's no pigeons, stuff like that.
- [55:39]
Sam
What pest control company is, is public.
- [55:41]
Tommy Mello
What's the big one that went public? They, they bought so many companies, but Terminix went public.
- [55:47]
Sam
So. All right, I'm looking up at Termin X. They have, it looks like nearly a $5 billion market cap. So pretty shockingly.
- [55:55]
Tommy Mello
Yeah, well, that's the deal. And then they have subsidiaries on top of that. And when you go public, it's like, how many companies can you buy? Because you're raising capital from the investment pool and it's almost like you've got to eat when you go public. You got to eat, you got to buy. I mean, that's one of the prerequisites. If you do an ipo and there's a lot of advantages. But then you got Sarbanes, Oxy and all this other things. Like this is the kind of stuff I get really excited about. But you think about, here's something to understand about home service, home improvement. Is it demand generated? Like if your pipe breaks, you're calling me today, you need it fixed. Windows, you know, I want new windows, maybe a window broke, I'll get the glass fixed. But windows. So the multiple of a demand driven industry where I need it done and pest control is one of those that's not necessarily needed it done, but cause that company went public, they're paying a lot more and it rose the market cap. But a window company might get 8 to 12x whereas H Vac, plumbing, electrical, garage doors, there's just these must, must use, are getting, you know, 15 to 20 when you get past 20 million of EBITDA.
- [57:01]
Sam
I remember during like Covid, those multiples were going in like if, correct me if I'm wrong, but it appears as though that there was like a pre and post Covid number. Like the post Covid emergency exploded those multiples.
- [57:13]
Tommy Mello
Here's exactly what happened is think about it, you're a venture capitalist, you're pe, you're going, man, all of our hotels are failing. No one's going to Airbnb. The nail salon just shut down because people are leaving their houses. The movie theaters went bankrupt. Where can we put our money? And they looked at this simple blue collar that we were like, we were like second class citizens. And they go, wait a minute. These guys have predictable income. They're needed. They've shown month after month, year after year that they could continue to grow. And they're sophisticated. They use things like power bi, they use things advanced analytics. And when they realized that the money started shooting in like crazy. There's miracle stories. And the multiples are still really, really high. What they did learn is you got to keep the founder involved because the founder, you know, is kind of the glue. And if you pay the founder a lot of money, are they going to stay on and get happy and keep the culture? Because imagine giving a guy that worked his ass off $100 million and having them, hey, dude, I want you to stick around and be the same. I want you to work harder than you worked before. It's few and far between. So they're getting pretty sophisticated now. But there's a lot of home service industries, man. I'm telling you this like the future of A1 many splits in the garage, garage flooring, EV chargers, pest control, front doors and windows. Like, if I could get into those. I'm running 25,000 jobs a month. 17% is financed, so it'll be 35% this year of our revenue, which is low. It needs to continue to improve. But, hey, you qualified for 20,000. Do you want me to make this garage door livable? And you can set up a gym. We'll do the floors, and we'll put, you know, it'll be warm in the winter, cool in the summer. And by the way, we noticed all these spider webs in your garage. You want us to take care of that? And by the way, the garage, probably you want it to match the front door, and you qualified for it. We can make it a low payment. You know, the garage door, I got really lucky because remodel magazine, eight years in a row, said garage doors are the number one investment. Wall Street Journal came out with two articles last year. 268% return on investment. You put a buck in, you take 268 out. And then we trademarked the garage door, the smile of your home. So I'm going into the garage, and the plan is to create other opportunities in the garage.
- [59:24]
Sean
Dude, this is fascinating. This is not at all what I thought this episode was going to be. You're this mix of a bunch of things that I really love. You're, you know, one third just pure hustle and common sense. You're one third self development, personal development, you know, learning machine. Just how can I learn, grow, and be better? And then one third is basically like, I'm gonna play. Play big. So you're doing this blue collar thing, but at this really big scale, and I love that combination. That is a lot of fun to me, to this conversation. So I'm glad you came on.
- [60:02]
Sam
Check this out, Sean. So I've been following you, Tommy, for about two years now, and you. You get me amped up. You know, I'm not in the. I'm not in your space at all, but I feel like I'm learning so much. But I also, like, feel like I'm getting amped up. But, Sean, Google, Tommy Mellow Conference. So he has this conference called the Freedom Event. And if you and whoever's listening Google that and go to the. The page. The. The video is him with his arms out and, like, fireworks shooting up with him on stage, and it's pretty awesome. But Tommy, obviously, he has a behemoth of a. Of a business. But then it looks like you have a side hustle of being like, sort of like a. A home services influencer. And if I had to guess, like your conference, and I think you had a course or a community, something like that. If I had to guess, that's doing all right, too. Yeah.
- [60:44]
Tommy Mello
We had 1500 home service contractors at our last one. This year we'll have 3,500. And the average person that's worked with US increases by 70% their first year. And that's profitability, because that's what we shoot for. And basically, most of what I've done is repeatable. It's not like this crazy thing that only works in garage doors. It's knowing the numbers. It's paying attention to the important things. You don't need to be good at 50 things or 500 things. You need to be good at five things a thousand times over. So it's understanding. Don't overcomplicate it. It's pretty simple.
- [61:18]
Sean
Wait, so can you explain how this media side of your business. So forget the actual nuts and bolts of what you're doing. So you have the podcast, you have media. And so explain how this. Why you do it and how. How the kind of sort of like, from a business perspective, why do you do this and how does it work? What is the goal of how you're doing this? For example, are you throwing this event because you want to be the largest kind of event trade show in your industry, and that's a good business to be in? Is it because you want to have a relationship and go buy the top 1% of these companies and it's lead gen for that? Is it, you know, why are you doing all this and how does that work?
- [61:56]
Tommy Mello
Well, first and foremost, I used to just have a garage door. We realized the industry's so crappy, the industry would have to improve. People would need to raise their prices and show their worth. So we figured out that we would have to train other garage door companies. So we invite hundreds of garage door companies. And then I looked out in the audience and it was all plumbers and roofers and pest control and even mechanics. And I'm like, this is supposed to be a garage door show. And we didn't really filter who was coming in. So I was like, look, I want to keep garage doors kind of in our realm. And then I started this other thing called home service freedom. And the real reason is people open the door to me. People gave me the time of day. People let me come into their home, their business, and they gave me the answers. And people call me up and they're like, dude, I'm getting a divorce, my kids are leaving me. My dad, I took over his business, he just died. I don't know what to do. And quite frankly, Alevi and all my other, you know, Dan Antonelli with branding and we've got this formula of like the step by step, it's not for everybody. Like I said at the beginning, not everybody's meant to be an entrepreneur. Some of them are meant to be intrapreneurs. But the other thing, the selfish byproduct is if I love a company and they show up and they do the work, I could date them before we get married because I know if I invest with them, I'll give them endless amount of money. I could personally give them what's worked in like really one on one. Because I can't coach anybody one on one. I got 12, 50 people depending on me here. But the idea being I gave you guys a bunch of other industries that A1 wants to get involved in. I like know and trust these people. They know they're going to win with me. So it helps grow the core business too. If we ended up doing a deal, I have no expectations of doing deals and I don't know if anybody wants to do a deal. But I know this, that if it came down to it and we loved each other and we worked well together and there was a win win for both of us, A1 and this other business that, you know, it just makes sense. You know me, I know you. So yeah, there is a byproduct. But the fact is now I know everybody and guess what happens? I'll show them everything I know. Who do you think they call when they figure something out? When they figure out Google's new algorithm or they figure out a certain thing on Meta, or they figure out a new mailer technique that I've never heard of? Who's the first person they want to call? They go, tommy, you've taught me so much, I feel indebted. I haven't come to you for three years, but I finally got something I think you're gonna love. You gotta try this. And I get those phone calls 10 times a week.
- [64:21]
Sam
I'm on homeservicefreedom.com it looks like a community plus, like you gave a playbook. The headline is really good. It says, accelerate five years of growth in 12 months. How much does this cost?
- [64:31]
Tommy Mello
So there's three different programs. We only got 12 companies in the top program, but you know, we got a basic one. It's a few hundred bucks a Month. The next one, it's, it's about 50 grand a year. I mean, it's not crazy. I'll tell you, we took a. We. We took a roofing company that was doing $12 million, bringing home about 300 grand. Within one year, they're doing 30 million, bringing home 6 million. And a lot of these things are just turning the knobs a little bit and paying attention to some things. You're not looking at the data. The KPIs will set you free. And the fact of the matter is, I'll come to you guys and I'll say, hey, what do you think your booking rate is? They'll say, well, me and my wife answer the phones. We're probably 90%. I'm like, you don't understand. It should be a decimal place. It needs to be exact. It should be by CSR. Like, I know every single one of my CSR's booking rate. I know exactly what we're training them on every day. I know exactly my technique. You should see my scorecards. I mean, these are world renowned. Like, we spent millions of dollars to build this internally, and they are the baddest ass thing you'll ever see in your life.
- [65:38]
Sam
Tommy, what do you suck at? Are you. Are you. What are you bad at? Where's your weakness right now?
- [65:43]
Tommy Mello
You know, my. My fiance might say I'm not the best communicator. I don't talk about my feelings. I don't really practice. We could do, like I said, I. I don't like to piss people off too much. Fierce conversations. I'll do it because I love them, but I'm not going to have these conversations with a lot of people. I would say with my family, I like to do stuff, but my mom wants to sit there and chat. And I love my mom more than anything, but when I was a kid, we'd go to a movie, we'd go bowling. She'd take me. Like, she's. She got really involved. And I just have a hard time because sitting there and chatting, it's okay to catch up on things, but it's gotta be something optimistic for me. I have a hard time talking about. I don't go down this. Never anymore am I talking, like, I'll mention, like, what's going on in Minnesota or Ukraine or whatever, but I can't live in this negativity zone. So I'm trying to be the best son I could, the best fiance I could, the best brother I could to my sister, and the best uncle I could to my Niece and nephew. And I know I got a long way to go. Like, at least I could say that out loud. And I recognize it.
- [66:48]
Sam
Tommy Melo. Is Tommy dialed in? I mean, you. You've got it figured out, man. Like, it's. It's.
- [66:55]
Tommy Mello
You're.
- [66:55]
Sam
You're very inspirational.
- [66:56]
Tommy Mello
I'm a work in progress. What's.
- [66:58]
Sean
What's the goal? You are. You're wealthy. You did it. You pulled it off with this company. Are you trying to buy the Cardinals? Like, what's the goal out here?
- [67:06]
Tommy Mello
You know, I was playing with Chat CBT yesterday, and I would love to tell you there's a goal. You know, we're building a beautiful house in Idaho where we're going to be doing events, and then I build in my dream home in Paradise Valley here in Arizona. But, you know, I've got. I got my life. I'm 42. I'll be 43 in March, and I got my life at 45 on my casket. You know what I want? I don't want the best entrepreneur wealthy. I want it. I want number one, the best dad ever. And I don't have any kids yet. I'm a late bloomer. Luckily. My fiance's 27. She's worked with me for nine years. No, no. Yeah, yeah, nine years. Because she was definitely 18 when I met her.
- [67:45]
Sam
I was gonna say, dude. No public math. Tom, careful.
- [67:48]
Tommy Mello
Yeah, yeah, yeah, yeah.
- [67:49]
Sean
We were doing so well, and then Tommy went to jail.
- [67:52]
Sam
There it is. There's the weakness.
- [67:54]
Tommy Mello
Definitely. Definitely nine years. And so. So I. I feel like, for me, the next journey is like, listen, I want to be a great dad. I want to be a great husband. We're getting married next January 1st, and I want to live. I want to be where my feet are. I want to go all in. I want people to know how much I care about them. I want to communicate better. I want to make sure that it's not always about money and finance. It's not just working out. It's just becoming better every day. Better. Your best. I always say I'm the best I've ever been, but the worst I'll ever be, because tomorrow I need to be a little bit better. And I can tell you guys, I'm generally a happy person. I say once a month, I kind of get down on myself, and I'm like, why do I work this much? Or why don't I do this? Or why don't I do this? But you guys might look at people that are wealthy. I'll tell you the most Billionaires. And I meet a lot of them, they're not happy. Some of them are suicidal, alcoholics, drug addicts. They got everybody chasing them because of their money. They don't. They're not really good people. So they get. They begin to look at themselves and say, the only reason people like me is because I worked my ass off and I've got money and that's not going to be me. I want to continue to be humble, stay the blue collar guy I've always been. Remember that. I started washing dishes and mowing lawns and just creating the best. I don't want a million friends. I want 20 friends that I want to be lifelong soulmates with. And guys, it sounds really good and I do got a lot of great things going and I thank God and Jesus Christ every day. But I've got a lot of work. Work on every. All the listeners just know that you might think being rich, famous, Instagram famous and influencer is going to solve your problems, but that's not the answer. It's looking inside and becoming your best self.
- [69:43]
Sam
Have you ever seen the Savannah Banana?
- [69:45]
Tommy Mello
Yeah, yeah. They were just at an event I was at. Those guys are awesome.
- [69:49]
Sam
So Jesse Cole came on maybe eight weeks ago, six weeks ago, and Sean and I, he probably is in our top five favorite people that we've talked to. Very inspirational. And it's so interesting that you guys look very different. You have incredibly different businesses and yet there's this spark that you both have that Sean and I find incredibly inspiring, Contagious. Like basically a conversation with you. We probably leave feeling now. I know what a 10 out of 10 in terms of operating our lives are at. We have to step it up.
- [70:20]
Sean
Tommy, you said something earlier. You said, I used to hire twos and try to make them sevens. Now I hire sevens, try to make them tens. Me and Sam, it's like the reason we do the podcast is you find tens to make you realize, oh, you're still a seven. Give you area, you know, break your frame a little bit and say, oh, that's an area I could be better in. Oh, wow. He really had a certain spark or he had a certain point of view, or he had a habit that I'm going to pick up here. And so, you know, for me, that's the biggest thing with this podcast is to just kind of continually surround ourselves with people who are excellent in some area of their life, hopefully multiple areas of their life, so that we can kind of realize, oh, you know, you're actually a seven. There is actually Much. There are more levels to that thing that you're. You're trying to do.
- [71:04]
Tommy Mello
I want to finish out. If you guys allow me to just. I want you guys to think about this going into this year. And, and if you could, I recommend everybody write these down. First one is family and friends. That's the first half. The next one is faith. And this could be in any order you want. The next one is fitness. The next one is finance. The next one is future self. And the sixth one is fun. And I want you to set goals for all these. If you don't believe in God, you skip faith. I highly recommend you figure out what to believe in, because I do believe we're going somewhere great. And then I don't want you to set a yearly goal. I want you to get Jesse. It's her big ass calendar. I want you to start journaling and I want you to use a blue pen. There we go. Blue pen and a white piece of paper. And I want you to write your goals down. And I want you to put them in your shower, your vehicle, your refrigerator, on your desk, four spots. And I want you to sign up on the bottom. And then I want next to each one of those six, I want accountability partners that you know are going to hold your feet to the fire. That. Then I want you to put your why. And It's Simon Sinek 101. But it better be a big ass why. And you better have people that are willing to tell you you're failing and you're letting yourself down and you're letting me down. And I want you to post it on social media. I want you to come out of your comfort zone and I want you to say, this is what I'm going to do. And don't set a yearly goal. Weekly or monthly steps. It could be calories, it could be body fat. You know, it could be going to church. It could be just the answers. I'm going to time block time with my family and that's what I'm putting on here first. But these simple little tools, the accountability partners. And you better meet with those accountability partners weekly and it better be hard conversations. And it better not just last through March and then fall off like most people do. And it's gotta be a strong. Ciardini talks about this. I got this bracelet. It says, keep your commitment. You better commit and you better yell from the rooftop that you're gonna do this. And it better be a huge why. And the only other thing is try to get into better circles. If you want to be a great golfer, Go golfing with three scratch golfers. You're gonna be better. Get into the right circles and you do what I'm telling you to on all six of those. Your life is planned on, it's reverse engineered, it's manifested, and it will come true.
- [73:24]
Sam
I'm gonna run through a wall. That's how I'm gonna do it.
- [73:27]
Sean
Sam, anything we say after this will just make the podcast worse. Just do, do the line and let's end the pod.
- [73:32]
Sam
This is perfect. That's it. That's the pod.
- [73:35]
Tommy Mello
I feel like I can rule the world. I know I could be what I want to? I put my all in it like no days off on a road let's travel Never looking back.
- [73:46]
Sam
All right, my friends, I have a new podcast for you guys to check out. It's called Content is Profit, and it's hosted by Luis and Fonzie Cameo. After years of building content teams and frameworks for companies like Red Bull and Orange Theory Fitness, Luis and Fonzie are on a mission to bridge the gap between content and revenue. In each episode, you're going to hear from top entrepreneurs and creators, and you're going to hear them share their secrets and strategies to turn their content into profit. So you can check out Content is Profit. Wherever you get your podcasts.