#146: This is Why The Solar Industry is Dying

Summary

Podcast Summary: Next Level Pros #146 – "This is Why The Solar Industry is Dying"

Episode Information:

• Title: Next Level Pros
• Host: Chris Lee
• Episode Number: #146
• Episode Title: This is Why The Solar Industry is Dying
• Release Date: April 25, 2025

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Introduction

In episode #146 of Next Level Pros, host Chris Lee delves into the critical challenges plaguing the solar industry. Drawing from his extensive experience in building multi-billion dollar companies, Lee offers a candid analysis of why the solar sector is struggling and provides actionable strategies for business owners to recover and thrive. The episode is structured around Lee’s key insights, supported by real-world examples and his proprietary methodologies.

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The State of the Solar Industry

Chris Lee opens the discussion by painting a grim picture of the current solar industry landscape:

“The last two years, the solar industry has been an absolute bloodbath.” (00:00)

He cites multiple companies, including Titan, Lumios, Solsius, ADT Solar, SunPower, and Sunova, which are either threatening bankruptcy or shutting down. The primary culprit, according to Lee, is the pervasive use of the "redline model" in running solar businesses.

Key Issues Identified:

1. Redline Model Mismanagement: Solar companies are operating like sales-driven entities, where the pressures of sales targets overshadow sustainable business practices.
2. Lack of Profitability: Persistent redline practices lead to minimal or no profits, pushing companies towards financial ruin.
3. Declining Commitment: Many solar business owners lack the commitment needed to navigate these turbulent times, resulting in a high turnover of industry players.

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Chris Lee’s Background and Authority

To establish credibility, Lee shares his personal journey:

“I’m one of a handful of companies that was actually able to exit in this space. And it was because of the way that we built, it wasn’t the status quo.” (01:56)

He highlights his achievements, including founding multiple nine-figure companies, executing two nine-figure exits, and participating in Harvard’s prestigious Owner’s Presence and Management Program.

Notable Accomplishments:

• Built an 1,100-person organization from his garage.
• Generated $233 million in annual revenue within five years.
• Invested over $1.3 million of personal income into business growth and development.

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Understanding the Redline Model

Lee criticizes the redline model, emphasizing its detrimental impact on the solar industry:

“There’s no such thing as competition. Competition is, is only the pain that you are solving.” (14:00)

Problems with the Redline Model:

• Profit Margins: Traditionally, companies under the redline model struggle to achieve sustainable profit margins, often operating in the red.
• Employee Motivation: The model’s focus on high commissions leads to low sales volumes and decreased employee satisfaction.
• Customer Experience: Price-driven models fail to deliver consistent value to customers, leading to dissatisfaction and loss of trust.

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Introducing the Eight Pillars for Growth

To counteract these issues, Lee introduces his "Eight Pillars for Growth," part of his proprietary "God Mode" strategy designed to build resilient and profitable organizations.

Pillar Highlights:

1. Design:
   • Five-Year Roadmap: Lee stresses the importance of having a comprehensive five-year plan.
   • Execution Chart: Outlines the organizational structure from top to bottom, detailing roles and responsibilities across sales, management, operations, and finance.

“There’s no such thing as lazy people. Absolutely. There’s no such thing as lazy people. Only unclear people.” (08:22)

2. Culture:

   • Human Development: Focuses on recruiting, recognition, competition, and building a trustworthy environment.
   • Vision and Mission: A clear vision attracts top talent and fosters a cohesive organizational culture.

3. Offer:

   • Value Proposition: Beyond pricing, it's about the value delivered to both customers and employees.
   • Customer Experience Mapping: Differentiates a company from its competitors by enhancing the overall customer journey.

4. Pricing:

   • Company-Set Pricing: Advocates for companies to dictate pricing rather than letting sales reps determine it, ensuring better profitability and service quality.

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Strategic Financial Structuring for Profitability

Lee outlines a financial model aimed at achieving a 25% net margin, a rarity in the solar industry.

Financial Breakdown:

• Direct Costs: 40% of total revenue should be allocated to direct costs, including cost of goods sold (COGS).
• Sales and Marketing: 20% of total revenue, split evenly between sales (10%) and marketing (10%).
• Net Margin Target: Aiming for 25% net margins by maintaining strict financial discipline and avoiding the pitfalls of the redline model.

“If you are not the sales and the installer, 10% of the total revenue stack should be what the installer is making from a net profit standpoint.” (22:31)

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Employee Motivation and Compensation Models

Lee critiques traditional commission-based compensation, advocating for a holistic approach that aligns employee incentives with company goals.

Key Strategies:

• Transparent Compensation Structure: Moving away from high commissions to a model that supports team leads and setters within the 10% allocation for sales.
• Training and Development: Investing in employee growth to enhance performance and job satisfaction.
• Recruitment Philosophy: Prefers hiring C-level players with potential over A-level players who may demand more.

“Everybody has a number where it’s like I need to make that number. Okay, if a sales rep’s number is 20k a month and I use your model, they make 2,000 versus a redline model where they make 10,000, how many deals do you think that they will sell?” (31:36)

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Leveraging Technology and AI Integration

Emphasizing the importance of modern tools, Lee introduces the use of AI to streamline operations and improve sales interactions.

Innovative Tools:

• AI-Driven Feedback: Utilizes devices like the Plout Note to record sales interactions, feeding data into AI models for real-time feedback and SOP development.
• Software Integration: Encourages the adoption of comprehensive software stacks and AI to enhance productivity and decision-making.

“This little guy that I’m wearing, the plot note, it’s absolutely game changing... 30 bucks a month, you’re going to be able to do that.” (33:06)

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Building a Robust Community and Continuous Learning

Lee underscores the importance of being part of the right communities and continuous learning for sustained business growth.

Recommendations:

• Networking: Engage with high-performing individuals and mentors to accelerate personal and professional development.
• Investment in Education: Prioritize spending on workshops, masterminds, and training programs to stay ahead in the industry.

“The number one cost on your P and L is opportunity cost. And the way you fix this opportunity cost is to get in the right rooms with people that have run that map.” (37:57)

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Conclusion and Call to Action

Chris Lee wraps up the episode by reiterating the necessity of abandoning outdated models and embracing his Eight Pillars for Growth. He encourages listeners to take actionable steps towards restructuring their businesses for profitability and sustainability.

“There is a whole lot more to why people are with you than pay... It's about culture.” (22:56)

Action Items for Listeners:

• Assess Current Models: Evaluate whether your business is operating under the redline model.
• Implement the Eight Pillars: Start integrating the Eight Pillars for Growth into your business strategy.
• Engage with Next Level Pros: Join the community or book a call with Lee for personalized guidance.

“If you find value from what you’re hearing, book a call. No high-pressure sales, it's about fit.” (33:39)

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Key Takeaways:

• The solar industry is in crisis due to unsustainable business models.
• Adopting a strategic, profit-focused approach can reverse current trends.
• Building a strong company culture and leveraging technology are essential for growth.
• Continuous learning and community engagement significantly impact business success.

Chris Lee’s episode serves as a comprehensive guide for solar business owners seeking to navigate challenges and achieve long-term profitability through strategic planning and innovative practices.

Transcript

[Chris Lee]

The last two years, the solar industry has been an absolute bloodbath. Companies like Titan, Lumios, Solsius, ADT, Solar, SunPower, and now Sunova is threatening bankruptcy. They continue to shut their doors. Why? Because solar businesses keep running their solar companies like sales reps, allowing the tail to wag the dog in running the redline model. In this episode, I am speaking live to hundreds of solar business owners where I tell them their model is completely broken. Why the redline model is killing the industry and what you should do about it. In this presentation, I'm going to teach you exactly how to structure a budget that allows you to hit 25% net margins regardless of the industry that you're in. You're also going to learn how to keep your sales reps motivated on a completely different compensation model. In addition, we're going to introduce you to the eight pillars for growth in which we teach God Mode. So let's dive in, get a round of applause. Come on, give me a round of applause. Let's go. Let's get some hoot and a holler. All right. All right. Let's go. Let's go. Okay, so here's. Here's what I know about you. So the solar industry is obviously in disarray. There's. It's been a bloodbath. It's been a bloodbath for the last two years. And so you're here because you're committed to the solar industry. There's a lot of guys that aren't committed to the solar industry that have gone through the grind and they are no longer at the table.

[Audience]

Okay?

[Chris Lee]

And so, one, I just want to congratulate you because you are committed. You're not satisfied with mediocrity. You're here to learn, to grow, to develop. You're taking time out of your day to be here with me. So I appreciate that. And hopefully you are tired of the status quo in solar.

[Audience]

Okay?

[Chris Lee]

So for those that do know me, know that I am not a status quo guy. All right? So everybody else built their solar businesses this way. I was completely, completely this direction.

[Audience]

Okay?

[Chris Lee]

I'm one of a handful of companies that was actually able to exit in this space. And it was because of the way that we built, it wasn't the status quo. How many of you guys are currently involved either in the sales side or the installation side of the solar industry?

[Audience]

Okay.

[Chris Lee]

And of those people, how many of you are not on a redline model?

[Audience]

Okay?

[Chris Lee]

So first of all, congratulations to those that are not a part of the status quo. I Love to call the red line the status quo, okay? And I know that may hurt for some of you guys that are like, oh, but I'm a sales dealer. I'm this or that or the other. But guess what? There's a reason why it's called the red line. Because that's what created the bloodbath, okay? That it's red for a reason, okay? It's not because it's profitable, okay? I've never seen any profits in red, okay? They come in black. So you're tired of it, hopefully. So what we do is we teach what's called the eight pillars for growth. So now I run a company called Next Level Pros. And my intention today is that I can provide some value to you that you're going to be able to go and take into your businesses, that you're going to be able to apply and that hopefully you'll have a desire to have an additional conversation with me.

[Audience]

Okay?

[Chris Lee]

So you'll see several different people wearing these shirts in the crowd. And we run in a booth over here. My whole goal of this is that to give you value so much that you'll want to book a call and dive in and see if we're a good fit. So we run a training platform, which I teach my exact model to be able to go and scale any company. I don't care if you're a solar company. Any. Any space. We consult hundreds of companies throughout the nation, in fact, throughout the world on our. What we call our eight pillars for growth. I'm going to briefly touch on these eight pillars, and I'm going to dive deep into a couple of them where we're going to be able to help create profitable organizations. How many guys want to make a profit? Yeah. So how many of you guys are currently hitting 25% net margins?

[Audience]

Okay.

[Chris Lee]

How many are not hitting 25% net margins? And how many of you guys are lying? Because literally only six people raise their hand, okay? So 20, 25% net margin is very rare, especially in the solar industry. And this is. This is the model that we built on that we did this at hundreds of millions of dollars in revenue at 25% margins, okay? So we're going to dive into that. So my commitment to you today is to get clear, help you get clear on exactly what your next move is, to help you take one step closer to that 25% net margin. Everyone good with that? Hey, guys, it's Chris. Hey. A lot of you leave comments asking for help. Do me a real quick favor, shoot me a text at 509-374-7554.

[Audience]

That's.

[Chris Lee]

That's 509-374-7554. Shoot me a text, I'll answer and help you with whatever you need. Don't worry, I got you back. Let's go back to the show, baby. So why should you listen to me? So family man. Built multiple businesses while raising a family of five kids. Love my wife, love my kids. Been in your shoes. I've taken very big risks, Knocked on a lot of doors. I cut my teeth in the door to door industry, in the, in the sales industry. I was one of the top performers. I launched my first business when I was 24 years old. I had. That was my Mercedes CLS 500 that I had re put out of my driveway after my first failed business. And that happened in 2000. End of 2010, beginning of 2011, had everything ripped from me. Less than $1,000 in my bank account. Started completely over from scratch. It sucked. Okay, so I've, I've been there, I've taken big risks, I've lost big. Been hustling for 20 plus years. I've knocked, I've ran the teams, I've done all the different things. But I'm not just another sales guy. I promise you that. So I've invested over $1.3 million of my personal income. Just recently became a Harvard alumni. Part of their owner's presence and management program. It's an executive program, three year program there. And again I built an 1100 person organization W2 employees, not 1099 W2 employees out of my garage. Okay, so these are just some of the behind the scene videos. There are things that from there, okay, again, we did 233 million a year in revenue in less than five years. We were the sixth fastest growing company in the nation. Did all kinds of cool stuff. Two different nine figure exits. One was one that I built from scratch. The other one I consulted from scratch. Got an equity play on that. And then I had an additional business that I consulted. Didn't get equity that I also exited for nine figures. Okay. So what we teach, it's what we call God mode. How many guys have ever heard the term God Mode? Little bit. So it comes from the gaming space. What does it mean to be in God Mode? Can't be defeated. You're. You play outside of the rules.

[Audience]

Okay.

[Chris Lee]

Most of us are building our businesses in either player one status, right? Like we're sitting there, we're inside the rules, we have a little bit of autonomy. Of different things. Or sometimes we're even operating like my kids call it an npc, the non player character. Right. Like we're just doing the same thing every single day. We hate our life and we freaking just show up and sell swords or whatever it is that you do in video games. And so ultimately the goal is to work on your business, not in your business. And what I'm going to teach you is how we operate from God mode. Get outside of the game, start working on it to be able to scale it up. Okay, so first and foremost the first pillar. Again, I'm just going to briefly touch on a few of these things to give you an idea of what we teach and what it looks like to actually build a nine figure organization. So it's what we call design. So designing is starting with a plan. How many of you guys have a five year roadmap of how you're building your organizations? One person, okay? One person in this room.

[Audience]

Okay.

[Chris Lee]

We call that the next level plan, where you actually design out five years and you work backwards from exactly the way you want your organization to look like. And you build it from what we call an execution chart. The execution chart is top to bottom. How many salespeople, how many management, how many operators, how many installers, how many, how many fulfillment, how many in finance? What does that all look like? That's top to bottom and next level plan with the exact roadmap of how you're going to be able to do it. So one thing that I love to say is there's no such thing as lazy people. Absolutely. There's no such thing as lazy people. Only unclear people. Okay. When you do not have a clear plan of what you are building, that sucks, right? Like you're unmotivated to show up to work. You don't even know why you're taking the daily activity. Maybe it's the way that you feel in the solar industry right now. I'm just like, dude, I'm just grinding, just trying to survive, just trying to make it to my next paycheck, next payroll, next whatever else. How many guys have ever felt that way? Okay, everybody else who doesn't raise their hand, you're lying. So creating a plan is part of the design process. You have to get crystal freaking clear to be able to know exactly what the next action is to take. Because otherwise you're sitting in a dark tunnel, no light, and you have no idea. If I take a step forward, even if it's in the right direction, the plan creates clarity. You see exactly where you're going. And so you know that every single step actually matters. When you're clear again, you are motivated, you take the action, you're excited again. There's no such thing as lazy people, only unclear people. And so with this is all about designing the vision, the mission, the core values, the execution chart like this is absolutely vital. Where most people absolutely miss again, they don't even know. Maybe they planned the next quarter or the next year, but most of them aren't even thinking big enough to be able to go on a five year roadmap. So that's, that's like one of the absolute imperative parts. That's one of our pillars. And the thing is, is when you get clear on vision, you're able to attract the biggest talent. How many guys struggle with getting the right talent in the door? Okay, how many would love to just get unlimited talent in through the door? It literally starts with what we're talking about from a design standpoint. Because when I sit down with somebody in my garage and I've got three employees in there and I say, yo, it may not look like it, but this is what we're going to do. So over in the next five years, we're going to have 500 employees. We are going to design. This is exactly what it's going to look like. You're going to be coming in at this part of the org structure, the execution chart. And then this is where we're going to be able to go and scale. You cast a vision, you show them the roadmap of what it looks like to be able to go and obtain that. Okay? And he who cast the biggest vision with a clear path, not just a big vision. It's not just, hey, we're gonna go do all these cool things, it's we're gonna do all these cool things and this is how we're going to get there. You're gonna start attracting your ideal employee. And because the reality is Chris Lee has a very big vision. But if Elon Musk called me up today and he said, kris, I want you to run operations to getting to Mars, I'd be like, ah, shiz. I just drop everything. And I would go, why? Because Elon Musk, Chris Lee has a very big vision. But Elon Musk is freaking going for Mars, right? Way bigger vision. And he has a clear direction on how he's going to get there. And so he would be able to recruit over whatever talent he wants. Right? And so that's, that is the basis of the culture. A lot of you guys, how many guys run sales departments? Okay, so a lot of you guys are awesome at this. Culture is all about the human development, the recruiting, recognition, competition, environment of trust. We're not going to go super deep into that, but just know that there is a whole lot more to why people are with you than pay, okay? Just like customers don't buy from you because of price reps and employees do not work for you because of compensation, okay? This is absolutely vital. We don't have enough time to go super deep into it. And at the end of the day, people will bleed for two things and two things only. It's not pay, it's culture. And it's a piece of the pie. A way to be able to share in the upside in some level or direction or at least a vision on how they can go and share in that. Okay? So this is where we're going to dive a little bit deeper in and where most of you guys have things completely screwed up. It's the offer, okay? And the offer is not just what am I charging, but what kind of value am I providing to my customer, both internal and external? What kind of value am I providing to my employee, to my. To my residential solar customer, to what are the different services? Everything like that and going through and mapping out experience. How many guys have your customer experience completely mapped out? Again, we have three hands, okay? So going through and actually understanding what differentiates you from every single other person on the. On the block. Because ultimately, this is one of my core principles of running business. There's no such thing as competition.

[Audience]

Okay?

[Chris Lee]

No such thing as competition. Competition is, is only the pain that you are solving, okay? Because just because ABC Solar down the street offers X, Y and Z does not make them the same product or service that you offer. So mapping out an experience and identifying ways that you are going to be completely different to your customer is absolutely imperative. And from that you're going to be able to go back, and that goes back to the designs factor and be able to identify what employees you need in your organization, but then also really develop out the offer and exactly what you're going to do to separate. And then there comes the pricing. Okay, so again, how many of you guys are running on a redline model? Okay, why is redline terrible? Or, I mean, you guys all probably think it's fantastic. Okay, so we have a red line installer, sales rep, whatever. This is what customer pays. Why is that terrible? Tell me. Come on, you've thought about this. What's that? No. Okay, so first of all, I think there's no morality in price. That's a bunch of bullcrap. There's no such thing as a moral price. I don't care who you talk to or whatever else doesn't exist. There's only morality in the way that you offer something to a customer. If they know exactly what they're getting and exactly what they're paying, there is no morality in price. Okay, so redline. The reason why a red line is absolutely death is that this is what it takes to deliver that customer, right? This is the cost of goods sold. This is the experience. This is all the talent that's directly related to that customer getting it. So it doesn't matter where they pay. They get the same exact experience.

[Audience]

Okay?

[Chris Lee]

So my plea to the solar industry, to any industry as a whole, is to stop letting the tail wag the dog. And what I mean by that is sales organization, salespeople wagging the dog and determining what price the customer pays and the value that you're actually able to deliver to that customer. Because again, this customer could be paying $3 a watt, they could be paying 450 a watt, they could be paying $10 a watt, and still they get to $2.20 watt experience.

[Audience]

Okay?

[Chris Lee]

That freaking destroys the industry. And I am going to be the. I'm going to shout that from the rooftops. You're going to disagree with me. You're like, but, Kris, it's so great to make all these commissions and all these different things, but guess what? Why do you think we've been experiencing what we've been experiencing in the industry for the last two, three years? It's because of this crap, okay? At the end of the day, if I, as the company want to set the price, I should be able to have the additional benefit of charging more so that I can go and add additional to this experience.

[Audience]

Okay?

[Chris Lee]

I can hire better people. I can provide a better product. I can go into my total customer experience mapping versus the sales rep charges more, and I get nothing more to be able to deliver to that customer. Hey, guys, it's Chris. If you're finding value in what you're hearing, go ahead and like and subscribe. That way, people just like you can find this content for free here on YouTube. Now let's dive back in the show. So first of all, got to stop running our sales sales companies, our businesses, like a sales rep. I come from a background of being a sales rep, and this is the hardest thing about being an entrepreneur. Not to put myself back into the Shoes of where I once was, okay? And think like, oh, I want the highest commission or I want this, I want that, whatever, right? So priorities. In fact, I was having a. I was having a discussion with a guy earlier, and he's on the install side, and he's like, yeah, you know, I make all my decisions based off of like, do they put the customer first? And he's like, don't you agree? And I was like, no, I don't. I don't agree. In fact, I think most people have their priorities completely jacked up. So most guys, the priorities are customer, employees or reps and then company. And what happens, it's like I either charge the customer more or less or whatever. Do it, I think, to take care of the customer, then I take care of the reps. And if there's a little bit of money left over, then I take care of the company. The reality is, the only way that you're going to run a business that is worth anything and going to provide value to anyone, number one, has to be company. And I tell you this from personal experience. My very first business, I made decisions on this model, okay? I charged the customer less, I paid the rep more, right? So it was like, this is where I should have been charging. I charged here. This is where I should have been paying, and I paid here. And just with that little leftover, I was trying to survive, okay? Versus if I build a model that takes care of the company first, first, then I can take care of those people that employ. I employ. And I'm going to dictate again. I'm not going to let the tail wag the dog. I'm not going to pay on a redline model or I'm not going to, like, overcompensate from a commission standpoint. I am going to dictate and provide an incredible experience that's going to be able to take care of these people and provide a steady paycheck, opportunity for growth, development, potential, equity, upside, whatever it is. And then so that's my employees or my team. And then the customer will always be taken care of. Because ultimately, when my first business went out of. When my second. When my first business went out of business, when we filed bankruptcy, guess who got screwed? The customer. The customer got hosed. Nobody was there to answer their phone calls. Nobody was there to service their systems. Nobody was there to, like, take care of any of those type of things. Totally hosed. Because why? Because I put them first. Because I did what I thought I was supposed to be doing to serve Them bull crap. I got to serve the company, got to make sure this thing is super freaking healthy. It's going to be in business for the next 20, 30, 40 years. And the way I do that is with high profit margin. And I can't do that under a red line model. And then guess who got screwed? Man, I had people calling me up. But Kris, you screwed me. I'm out here in Houston, I have a 12 month lease and I've been here three months now. Don't have a way to put food on the table. But I thought you wanted a higher pay scale, right? Like that's literally what was going through my mind. But guess what? Because I didn't put the company first, I could not take care of them. So ultimately we have to build a model that is this. So this is the model that I teach and I preach across the board, okay? Direct cost needs to be 40%. And the way that you're going to calculate this if you are a sales dealer is you have to calculate in your EPC model into your direct cost because that's your direct cost, okay? And you got to take the total revenue that you receive after any dealer fees. That's your true revenue, okay? That's what's getting paid. Even though your installer may be paying you after the fact you paid for their services.

[Audience]

Okay?

[Chris Lee]

Now one, one key thing to realize here. I teach how to get to a 25% net margin, but it is impossible if you are splitting those margins, okay? So the only way that you can actually successfully get there in the solar industry is you have to do sales and installation. If you don't do that, 25% is going to be split between you and the installer from a net profit standpoint. And so you have your revenue, which is 100%, you have your COGS, which is 40% giving you a 60%. Now this is a target. Sometimes it's not completely attainable, sometimes it's a little bit difficult to get to. We ran our solar business between 56 to 57%. Now I understand markets change and all like all the excuses everybody's got, everybody's got an excuse of why you can't do this or why it doesn't work or whatever else. I promise you this is possible. This is being implemented today in today's markets by solar companies, by roofing companies, by freaking all different types of service companies across the board. They're using this model and having success, okay? From there you have sales and marketing. This has to be 20%. And we're talking 20% of the total revenue, not 20% of what is given to you as a sales dealer. 20% of the total revenue. So for example, if you have, if you are net charging after dealer fees and everything, $4 a watt, you have 80 cents to sales and marketing. And the key thing here is to understand first of all what is sales and marketing. A lot of guys are like, well I run a door to door program that is both sales and marketing. Marketing is when they knock on the door and get somebody interested. Sales is what happens at the table. Right? So, so marketing on Facebook is your marketing. Sitting at the table over zoom is the sale.

[Audience]

Okay.

[Chris Lee]

And typically the way that I structure this is a 10 in 10 model. 10% to marketing and 10% to sales. Again, no red line model. We're talking percentage of revenue that you pay.

[Audience]

Okay.

[Chris Lee]

Now the key thing here to understand is we're talking 10% to the whole sales organization, not 10% to your reps. We're talking about full stack five year plan. Exactly what it's going to look like to have a vice president, a director of sales, a regional manager, a team lead and seven people under each one of those, each one of those team leads. That whole stack has to be paid with 10%. Now if you have again a door to door model and you're purely door to door now, you have 20% to deal with. But the key thing is like when you bring on other marketing type strategies, whether it's Facebook or cold email or whatever it is that is coming from here and you have to reduce the amount of compensation and you have to have a completely different structure for that type of marketing strategy. Okay, so you had a question? Yeah. So when you're talking about your employees, are you, are they W2 or they 1099? So I build my organizations off of W2. I mean the reality is regulation is completely changing. You've seen it happening across the board of California, whatever else. And 1099 is really difficult to be able to have any real equity value. Right. Because to, for somebody to technically be 1099, they have to be able to have contracts with everybody else. Right. Like they can't be using any company tools, they can't be showing up and, and having mandatory meetings. All the things that actually build a real organization you can't do under a, a typical 1099 you may be able to do with like five to 10 people. But if you want to build something that's actually worth value, you can. So again, so when we're talking like top to bottom, this is the ideal stack that you're looking at. Again, if you are not the sales and the installer, 10% of the total revenue stack should be what the installer is making from a net profit standpoint. And let me give you an idea. They are taking 10%. Say this is like $4. Well, say this is $4 and they're taking 10%. That means they're making 40 cents. And say they're redlining to you at 210, 220. They should be able to run their whole operations off of a buck 70, a buck 80 and make 40 cents. Does that make sense? Is following and so 15% of the total stack is what you should be netting at a $4 a watt. If you are just a sales only installer, this is the ideal structure.

[Audience]

Okay.

[Chris Lee]

Again, not always obtainable, but if you have a target, if you know what your numbers are and you're actively designing and working towards it, it becomes way more, way more obtainable versus what has gone on a lot in the solar industry where guys don't know their numbers. Operating off of redline models. Right? Just completely, completely destroying their market because of this red line. Again, the reason why a red line is red is because one, red numbers aren't profitable and two, that's where all the blood comes from in the streets right now, dude. It is the destruction of our industry. Does anybody have any more questions regarding this stack and how to properly build that out from an overall budgeting standpoint? That's a, that's a great question. So how do you keep guys motivated? Here's the thing that I'll tell you about sales reps that I've seen over the last because I've been in this industry since 2014. 2014, the industry in California was almost where it is at today. Like it was super saturated. 2014, almost like not like nothing has drastically changed. So here's the thing. If you pay a sales rep, everybody has a number. I don't care what, who you are, what, what you believe. Everybody has a number where it's like I need to make that number. Okay, if a sales rep's number is 20k a month and I'll give you two different scenarios. One, you use my model and they make, let's say $2,000. Or two, you use a redline model and they make $10,000, how many deals do you think that they will sell under this model? 10. How many deals do you think that they will sell under this model? They'll sell freaking two. And we've seen it. We've seen as the whole industry has shifted over to a red line, all it's done is decreased the actual volume of accounts that are being sold on a per rep basis. Those reps aren't making more money. And guess who's really getting screwed if, if they're getting. If as an installer you are doing it for less and less and you're getting less and less volume, nobody freaking wins. And so how do you guys keep them motivated? First of all, help them understand this principle. Like, and be transparent with the sales rep is absolutely imperative. Like, yo, look, you can go and work for somebody else and yeah, they're going to tell you to do this. Or you could be here where we're actually going to take care of your customer. We're going to provide value, we're going to train you and develop you. You're going to have, you're going to have five times the amount of referrals because you have a large customer base. You're actually going to feel motivated, fulfilled because you're doing real work instead of treating this like some half a job on the side and doing two deals a month like, and you actually provide value outside of pay. Again, customers do not buy because of price and reps do not work for you because of commission. It is the biggest, is the biggest lie that has ever been told. And I'll tell you from personal experience, when I owned my business, my, my home security business, I could go out and sell and make $1,500 in account. And in fact, after my first company failed, I started up a small home security dealer and I did that. I made $1,500 an account.

[Audience]

Okay.

[Chris Lee]

Then I decided to swallow my pride and go back to work for somebody else. To go work for a Vivint. Guess how much I made at Vivint. $550 in account. Okay. A third of what I was making as a dealer.

[Audience]

Okay.

[Chris Lee]

Where do you think I made more money? I freaking made three times the amount of money working at Vivint at $550 an account than I did working for myself at $1500. Why? Because Vivint provided the systems, the support, the culture, the development, the brotherhood. Everything that I loved about knocking on doors came from Vivint. And there are. And if you continue to pay on a redline model, you just will not be able to invest in that type of an experience. So this is the typical structure under the 10% model. I'm going to provide them leads, okay? And a sales rep is going to make between three and a half to four and a half percent if somebody else said it for them and it was a lead generated, okay? And this is going to, this is going to fluctuate based on monthly production, okay? Then there's a team lead that's going to make an override.

[Audience]

Okay.

[Chris Lee]

And then there's also a setter that's involved. And a setter is going to make between 1 to 2%. But again, we're providing, we're providing leads for that.

[Audience]

Okay?

[Chris Lee]

And then what that does is it allows for the full stack to be able to fit within 10, 10 total compensation incentives, management development, training all fits in my total 10% stack. And what happens when you pay on a compensation structure like this? Instead of guys selling two a month, these guys are going to sell 12 to 15amonth. So this is another one of my theories. I hate recruiting A players.

[Audience]

Okay.

[Chris Lee]

Why? A players think the world is owed to them. A players think that they already got everything figured out. A players think that they should be your boss. A players like all the negative things. I would much rather recruit a C player and train them up to be a B player than I would ever to get a B plus or above. And so the vast majority, building my sales organizations is training guys where I can identify characteristics of a killer versus somebody that's proven themselves in somebody else's model that is completely broken. I would much rather recruit a C level player. Somebody that's maybe had a job at a coffee shop or whatever else but has demonstrated certain characteristics. I use something called the disc analysis. The disc analysis is absolutely phenomenal. To be able to identify great characteristics. A high D high I is a player from a characteristic standpoint, even though they may have not demonstrated it in their previous work experience. How many guys are getting some value? You getting some good stuff? All right, again, if you are getting some value, I would recommend that you book a call again. We can dive into your individual needs and what you're building in your organization. I will go over it again. No, no high pressure. No, no high pressure sales. It's fit, it's fit. If it's not, that's fine. I want my. Like, the only reason I work today is because I love training and developing, providing value to two different industries. Like it's, it's what gets me excited. I tried, tried retirement for six weeks. Absolutely sucked. And I'm like, I gotta, I gotta get back. I gotta get back. This is. I love, I love being in the grind. I love being with the people. Love building Teams. So again, so if you find a value from what you're seeing, book a call. Happy to go through some different things. So I'm going to touch on the last different pillars. I think we've got about six more minutes and then we'll. So we'll do some Q and A real quick. So expansion is the other pillar which is your marketing, your sales, your financial growth strategy. Impact quadrant. This is like a specific thing to make sure that you are not wearing the wrong hats within your organization. A lot of us are spending most of our time doing unproductive tasks in our, in our business where we could actually go and hire and replace ourselves and be in the things that, what we call quadrant four, which, which is high energy, high value. That's the goal in business. Don't have too much time to go through that. The systems, the procedures, processes, the checklist, the tool software stack, AI integration. How many guys are utilizing AI right now in your business? Okay, so let me give you just a couple good goodies to take away there. There's a lot of softwares that you can download on your phone which are, which are great, but you got to remember to turn them on and everything else. This little guy that I'm wearing, you guys have probably seen it, the plot note, it's absolutely game changing. I've been wearing it for three, two, three weeks now and it is unreal. Unreal. So I am training a GBT on exactly how I interact the level of feedback that it can do from a sales. If I was sitting in your guys's shoes and had a sales organization, I would require that a guy wears this every single day. It can go for two days recording based on one, one charge and literally just get every bit of transcript in there. You can plug that sucker right in GBT and say, give me feedbacks on my sales interactions. Boom, you're going to have it all right there. 30 bucks a month. 30 bucks a month you're going to be able to do that. Plaud P L A U D. Don't even got an affiliate commission on that sucker, dude, just go get it. So like, and this is also a way that I'm building my SOPs. I'll go and interact with somebody. I'm like, hey, make sure you do this, this and this. And I'll go back to, I'll go back to. So my assistant downloads the RAW files of this and I'll be like, hey, make sure you ask about this. Sop. Make sure you ask about this. And it'll literally design out all my SOPs, all my sales feedback, all my interactions, everything based off of what I am doing on a day to day basis. I would be utilizing this with my sales organization top to bottom. Easiest, cheapest money you ever spent. Any questions? Other AI stuff? Dude, there's freaking all kinds of AI. We go super deep on this. Somebody had a question? No.

[Audience]

Okay.

[Chris Lee]

Impact is what is our name for KPIs? It's indicators measuring performance, achievement, change and trends. Having proper dashboards, analytics, training and development across the organization. Accountability which all kinds of different things from a feedback loop standpoint. Performance reviews, firing, finance budgets, break evens. Knowing your numbers, it's, it's remarkable to me how many people don't know their numbers. Like I was freaking asking a couple guys out in the hall, I'm like, hey, what is this? And they're like, I don't know, like you're going to have to talk to my accountant. I'm like, dude, that is the most important number you should know. We're just talking about net profit. Like how do you not know where your net profits are or how do you not know what your revenue is? Or you know, different things like that. Creating the educated budgets, top to bottom, development of leadership, cadence of meetings, hard conversations, crisis management, perfected communication and mindset frameworks. These are all the different things that, that we teach within, within our community. Again, I would invite you to be a part of it. The cool thing is to be in our community. It's less than the cost of a, of a minimum wage employee. It's like having a business, a business partner in your corner without giving up equity. It's the absolute most remarkable thing ever. But the best thing I could tell you, I don't care if you join my community. Really don't like don't need your money, but invest to be in the right rooms. That is the number one thing that I would say has changed my life. In 2015, I made a decision that every single quarter I was going to do something. I was going to be at a workshop, I was going to be at a mastermind. I was going to be in the room with somebody that was kicking my A in a total performance level. And since 2015, I've spent $1.3 million to be in these types of rooms. I've been trained and developed and mentored from some of the greatest, like the things I share with you or just a conglomerate. Everything that I have taken from these different mentors. So the best advice I can give to you today is the number One, the number one cost on your P and L is opportunity cost. And the way you fix this opportunity cost, it's what I could be doing, what I could be obtaining. And the number one way that you fix that is you get in the right rooms of people that have ran that map, people that have gone and developed and built it out. Like when I'm hanging with my friends, one of my best friends in the world, Adol Sajan, he nets $4.3 billion a year. Nets like that is a cool guy to hang around. That is a guy that I want to be rubbing my shoulders because that blows my mind. I have no idea how to get to $4.3 billion a year in net. But I'm going to continue to hang around him and do everything I possible to be in those right rooms. So get in the rooms, network with the right people, pay for the right programs. Ultimately, the dollars don't change. It's the time that it takes to achieve those dollars. A million over 20 years or a million over two days is the same exact number. The only thing that changes is time. Figure out ways that you can compress time and again. The best way that I know how is getting in the right rooms. Guys, I appreciate you coming out. If you haven't had a chance, make sure you, you book a call. Would love to chat with you and appreciate you guys coming out.