#247 LEGENDS | The $1.2B Contractor: How Kelso Built a Billion-Dollar Empire

Summary

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Podcast Summary

Podcast: Owned and Operated – A Plumbing, Electrical, and HVAC Business Growth Podcast
Episode: #247 LEGENDS | The $1.2B Contractor: How Kelso Built a Billion-Dollar Empire
Host: John Wilson
Guest: Steve Carroll, CEO of Kelso Industries
Date: October 2, 2025

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Main Theme Overview

This episode features an in-depth conversation with Steve Carroll, the CEO and co-founder of Kelso Industries, who scaled the company from zero to $1.2 billion in revenue within five years by acquiring and building commercial, industrial, and institutional service companies in the mechanical, electrical, and plumbing (MEP) sector. The discussion is a masterclass on scaling through acquisition, the complexities of integrating large service organizations, leadership lessons, and Kelso's unique "flywheel" business model.

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Key Discussion Points & Insights

1. The Genesis of Kelso Industries (00:51 – 08:00)

• Steve Carroll's Background: Started in construction management with a passion for the complex challenges of mechanical, electrical, and plumbing work (08:42).
• Founding Kelso: Officially launched in May 2021 with the first acquisition, after years of failed attempts and search-fund style efforts (07:09–07:59).
• Early Funding: Bootstrapped at first; later involved Steve’s childhood friend and now partner with private equity experience (08:00).

"It took me a few years of my own agony of messing up and spending dollars on trips and lawyers trying to get a deal done. And it wasn't until May of 2021 that we got our first one done." – Steve Carroll (07:15)

2. The Kelso "Flywheel" Business Model (01:41 – 04:46)

• Flywheel Concept: Entry via construction projects (new builds, data centers), then transition to retrofit/remodel, followed by establishing maintenance programs and ongoing service relationships across MEP trades.
• Market Focus: Core business is industrial (data centers, manufacturing), with significant institutional (hospitals, schools) and commercial (retail chains, restaurants) presence (05:12).
• Customer Scale: Focuses on large-scale clients (Amazon, Walmart, hospital chains), not small local businesses (04:15).

"What we're trying to do is we're trying to get an entry point with a customer. And construction is a good entry point... then we want to sell a maintenance program, and then we want to have a service opportunity. So we call it the flywheel." – Steve Carroll (01:53)

3. Acquisition and Integration Strategy (09:00 – 44:56)

• Acquisition Growth: 29 acquisitions in five years; targets robust, often stand-alone, platform companies, less focused on small "add-ons" (19:06, 45:30).
• First Acquisition Lessons: Started with a $17M commercial company after a failed attempt at acquiring a much smaller operation — learned the risks of small business deals (13:33).
• Deal Funding Evolution: Sought SBA loans initially, but ultimately partnered with Peterson Partners (PE) for major capital needs (17:29).
• "Partnership" Model: Many sellers/owners stay after acquisition with significant equity in Kelso. This approach fosters continuity in relationships, culture, and performance (41:14).

"It's just impossible to take over for an owner that's been there forever. And us being the new guys have it work out very well." – Steve Carroll (38:53)

• Integration Style: Purposefully light-touch; keeps acquired companies' operations, brands, and teams largely intact. Focus is on integrating only essentials like cash management, insurance, and bonding, to preserve relationships and momentum (43:03).
• Decentralization vs. Centralization: Believes strongly in empowered, decentralized teams. Corporate functions are focused mainly on things like cash management, insurance, HR support, and access to capital (30:44, 34:19).

"I do highly believe in empowered, decentralized teams." – Steve Carroll (31:08)

4. Organizational Structure and Leadership (20:42 – 26:56)

• Structure: Kelso is divided into five divisions (by geography and specialty), each with its own leadership and key functional support. Most locations are largely autonomous (25:04).
• Size: 3,500 employees, 30+ offices, $1.2B annual revenue.
• Growth Challenges: Communication, culture diffusion, and leadership development are ongoing challenges at scale. Steve emphasizes regular meetups, internal communication strategies, and the importance of local leadership (21:38, 24:19).

"I'm trying to learn every day about how to be a better leader... At this level, most of the people don't ever see me." – Steve Carroll (21:11)

5. Value Kelso Brings to Partner Companies (47:21 – 49:04)

• Cross-Selling: Leveraging the flywheel to expand service across the MEP trades for existing customers.
• Shared Resources: Improved insurance rates, access to large-scale bonding, ability to bid on larger projects, and career advancement for local teams.
• Corporate Support: "Slight improvements" rather than wholesale changes – preserving what works locally.

"...even $100 million business can benefit from being a part of a bigger balance sheet for winning big opportunities and bonding." – Steve Carroll (47:57)

6. Deal Structures: Partnership vs. PE Buyouts (75:25 – 80:29)

• Operator vs. Investor: Explains the difference between selling to a PE investor (likely highest price, but more hands-on oversight, especially if things go wrong) versus Kelso’s operator model (less upfront cash, but with equity in Kelso’s future and ongoing support).
• Pitch to Sellers: Kelso often isn’t the highest bidder but is more likely to close and offers ongoing role, partnership, and the opportunity to be part of a much larger vision (78:49).

"The other side of it, selling to an operator or partnering with an operator... you're betting on us that your rollover is going to turn into something special." – Steve Carroll (77:18)

7. The Scale and Nature of the MEP Market (69:46 – 74:33)

• Market Size: U.S. MEP market is $500 billion (2023), with Kelso entirely focused on non-union work.
• Data Centers & AI: Huge expansion in data center demand due to AI, requiring massive power and sophisticated cooling (72:03).

8. Steve Carroll’s Entrepreneurial & Corporate Journey (52:59 – 67:06)

• Roots on a Tree Farm: Instilled blue-collar values.
• Construction, Tech, Walmart: Experience in ground-level construction, then climbing to an executive role at Walmart, where he learned about scaling, systems, and the dangers of being at the mercy of massive platforms (59:45).
• Side Hustles: Ran digital marketing/affiliate efforts and learned valuable lessons in SEO, lead gen, and e-commerce, which translated to business-building skills at Kelso.

"I don't know if Kelso would even be here if I wasn't doing those other side hustles because getting email started, getting a website started... LinkedIn. Like, I spend a. I've spent a lot of effort over many years to build up my LinkedIn. And yeah, some of our best acquisitions came from building a relationship with someone because of LinkedIn." – Steve Carroll (66:18)

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Notable Quotes & Memorable Moments

• On Reaching $1B in Revenue:
  "It's not. It feels goofy actually... that number is so crazy." – Steve Carroll (19:32)

• On the Partnership Model:
  "He doesn't think we're complete idiots. He thinks we're complete idiots at least enough to be partners with us." – Steve Carroll (41:14)

• On Challenges of Scale:
  "I've got all of the emotional war wounds of running out of money to make payroll next week or in like three days and realizing, oh, crap, I need to go sit in my customer's office to get that AR check today so I can make payroll." – Steve Carroll (82:44)

• Advice to Sellers:
  "If your goal is to make the most money today, you should probably sell to someone else. ...But I'm also going to offer what I know I can close on. ...You're betting on us." – Steve Carroll (78:18)

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Important Timestamps

• 00:51 – 08:00: Kelso’s founding story, initial struggles, and partnership beginnings
• 01:41 – 04:46: Explanation of Kelso's Flywheel business model
• 19:20 – 20:37: Scale as of the episode: 29 acquisitions, $1.2B revenue, 3,500 employees
• 21:11 – 24:19: Steve’s leadership and approach to culture/communication
• 34:19 – 36:26: What functions get centralized versus decentralized
• 41:14 – 43:03: The first true “partnership” deal and its impact
• 45:30 – 47:21: Acquisition criteria: platforms vs. add-ons, size thresholds
• 47:57 – 49:04: How Kelso improves acquired companies
• 52:59 – 67:06: Steve’s career journey, side hustles, and building transferable skills
• 75:25 – 80:29: Advice for sellers, operator vs. investor partnerships, and acquisition dynamics
• 82:44 – 84:05: Real talk on survival and the emotional costs of rapid scaling

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Closing & How to Connect

• Steve Carroll is active and responsive on LinkedIn and, more recently, on Twitter/X.
• For more on the flywheel concept, partnership opportunities, or to get in touch, search for Steve Carroll or Kelso Industries.

"If you just want to connect and ask for advice, usually try to respond and be helpful." – Steve Carroll (84:49)

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For more information and future episodes:
Visit ownedandoperated.com.

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Summary Takeaways

• Kelso’s radical growth was built through strategic, people-first acquisitions, strong decentralization, and a unique “flywheel” model tailored to commercial/industrial MEP contracting.
• Partnering with sellers and keeping them engaged post-acquisition proved to be a key accelerant for success.
• The company’s structure, balancing empowered local operators with limited but strategic corporate support, is highly differentiated versus most large aggregators.
• Steve’s career journey highlights the unique value of operational grit, digital marketing acumen, and adaptability—lessons relevant to any ambitious service business owner.

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This is a must-listen episode for owners serious about scaling in the service industry, considering acquisition as a growth strategy, or curious about the business mechanics behind billion-dollar contracting empires.

Transcript

[Steve Carroll]

We're about 1.1, 1.2 billion. Top line, we just crossed. We just.

[John Wilson]

Does that feel cool to say?

[Steve Carroll]

It's like, what am I even? That's numbers. So crazy.

[John Wilson]

So you've done 29 acquisitions.

[Steve Carroll]

We thought that would be an easy thing to step into and boy, were we wrong. But I do highly believe in empowered, decentralized teams. We learned in that first one it's just impossible to take over for an owner that's been there forever.

[John Wilson]

I mean, the trade off seems to be less integration.

[Steve Carroll]

There's a lot to improve upon when you're that big because it's never perfect. I've taken it very seriously that this is not just a job, this is survival.

[John Wilson]

Welcome back to Owned and Operated. I am your host, John Wilson. And today on the show, I am joined by Steve Carroll. Over the last five years, Steve has scaled Kelso Industries from zero to over a billion dollars in mechanical, electrical and plumbing. Today is going to be a wide ranging conversation as we talk about the journey that they went through and what it looks like today. Thanks for tuning in. Welcome to the show.

[Steve Carroll]

Thanks for having me. Excited to be here.

[John Wilson]

Yeah, I'm excited for this. I think we had like your first, well, largest guest on the show. So I don't know if you got to give hats out or something, but that's pretty cool. But also like big mechanical, like we're talking some big stuff here, which I think, just think is really interesting. I would love to hear a little bit more about what Kelso like tactically does on a day to day and then we can dive through the story.

[Steve Carroll]

Yeah. So we call it the Kelso flywheel. We don't shy away from construction. Again, this is all commercial and industrial type construction.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

But what we're trying to do is we're trying to get an entry point with a customer. And construction is a good entry point. So we do new builds, we do data centers, we do all sorts of new opportunities that a lot of competitors shy away from. But we use that opportunity to get a relationship to do the retrofit work, the remodel work, and then we want to sell a maintenance program and then we want to have a service opportunity. So we call it the flywheel.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

So this thing feeds itself as we serve the client, whether it's a mechanical need, an electrical need or a plumbing need.

[John Wilson]

So, okay, we just did a show with a security and alarm business and it sounded almost like the same thing, which that makes a lot of sense. So what they're Doing is they're going in, they might do bid, which sounds like you might be doing some bid stuff.

[Steve Carroll]

Yeah, you have to usually.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

To some degree.

[John Wilson]

So. So there. And it's the same. It's three things. So it's they're going to do build projects, they're going to do service work on those build projects and then they're going to do modern services. So. Yeah, really, really similar.

[Steve Carroll]

Very similar.

[John Wilson]

So like a land then expand type.

[Steve Carroll]

Yeah.

[John Wilson]

Okay.

[Steve Carroll]

The flywheel. You can enter a client at any point. You can make a relationship with a client selling a maintenance program to them.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And then they may need you later on to go expand or retrofit or we just want to have a relationship where the client depends on us because we do such an amazing job and we want to be their client for 20 years.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

Everyone knows leads are tough to come by. But what if they weren't Service scalers is the no BS marketing team for contractors and they're running SEO, PPC, LSAs and Google my business campaigns that actually bring in customers, not just clicks. They've delivered consistent leads for me tied to real revenue and they can do the same for you. Sign a 12 month contract and your first month is free. Click the link below to get started. Service killers. No bs, just leads. Who's a. What's an average client? Is this like Walmart? I know you had some like some time in your career spent there. Is it Walmart building new stores? Is it Amazon Centers or is it like local florist?

[Steve Carroll]

Yeah, so we, we. It's hard for the local small company to make sense for us to spend a lot of time into it. So it does end up being hospital chains, universities, Amazon. Yeah, for all types of things with Amazon, Walmart. But we're also, we're also using an acquisition strategy and so a lot of our companies that we focus on have relationships.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And so because we've done so many acquisitions, we have many different types and kinds of relationships and we, we bucket those into three buckets. Our industrial side of our business is our biggest side of our business. We, we include data centers and manufacturing and food and beverage. Lego, that type of stuff. LEGO manufacturing, that kind of stuff is like is in there.

[John Wilson]

Pure aside. That would be fun to visit. Yeah, like I feel like that would be fun to visit.

[Steve Carroll]

The first US LEGO manufacturing plant is coming up very soon. We're doing the mechanical for it.

[John Wilson]

That's amazing.

[Steve Carroll]

We're excited about that.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

That's the industrial side of our business. The institutional side of Our business is, that's hospitals, schools. Really anything that government or there's, you know, some, some sort of municipal element to it. Schools. We want to have a nice chunk of our business there.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Then the other side is a little more commercial in the sense that it's, it's not funded by a government and it's not some complex manufacturing plant. It's restaurants. We would do a florist, you know, we, we would do a. We would do.

[John Wilson]

Well, you're focusing on the big. I think that's what I was trying to like get there because so many of our people that we have on the show are like, like me or like, you know, like, hey, I'm a small, either local or mid sized local contractor. So my idea of commercial might be an apartment complex, but like we're talking about data centers, we're talking about Amazon Dist, hospitals. Like this is some big stuff.

[Steve Carroll]

Yeah. We, we also do fair amount of apartment complexes too. It's just we don't want to over index on our, the, the pie of the market that we serve. We want to be more like. We think of ourselves a little more like an S P500 or a mutual fund almost. Where Kelso has all aspects of the market in geographies and customer end markets that we're serving. And as one gets bigger, we work on growing the other part so it doesn't ever get out of weight.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Or out of balance.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

Okay, that makes sense.

[Steve Carroll]

Yeah.

[John Wilson]

So Kelso, you guys started five years ago, 2021.

[Steve Carroll]

We, we officially started the company May of 2021 with our first acquisition.

[John Wilson]

Okay.

[Steve Carroll]

But I also like to point out it took me a few years of my own agony of messing up and spending dollars on trips and lawyers trying to get a deal done. And it wasn't until May of 2021 that we got our first one done. So to me it feels much, much longer.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

Was this like search fund or were you like, was it raised from the beginning or how did this look?

[Steve Carroll]

Personal search fund.

[Unidentified Host/Interviewer]

Oh, yeah.

[John Wilson]

Okay. So this was search fund turned really big.

[Unidentified Host/Interviewer]

Big.

[Steve Carroll]

Yeah, yeah, yeah. What? We weren't funded by anyone. It was, you know, our own dollars. My own dollars. And trying to convince my now partner. He's our chairman.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Who we grew up together. I took me a number of years to convince him to come do this as well. But he's really the brains behind the capital of our journey because he's, he spent his career in private equity and so we, we benefited from him, but just wore him Down. Took me a long time to get him to get excited about it.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

Yeah. So can you walk me through? It's obviously a different strategy than what most people are thinking. Right. So most people over the past couple years have been heavily acquiring these residential service companies. What you're doing is different.

[Steve Carroll]

Yeah.

[John Wilson]

I would love to hear, like, what's the thesis?

[Steve Carroll]

Yeah, yeah. Today the thesis is a little different than if we were to honestly go back. But my, my background, I, I got a degree in construction management. I was going into civil, and then I, I wanted to do real estate development, so I got into commercial.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And I was on site processing RFIs and change orders and submittals. And I, I learned what I was really passionate about was the more complex elements of these projects. And that's where what pulled us into doing mechanical, electrical and plumbing. Because that to me was just. I loved it so much. Every job I did, whether it was a university or whatever, I just, that's where I got excited. And so when the strategy was coming together for Kelso, I, I, I pitched everyone, my partner included, on doing H Vac. But I, I also really made it clear to them I didn't want to just do H Vac. I wanted to do mechanical, electrical, plumbing. Because I knew clients, general contractors sometimes. But end clients want to make one phone call. Yeah, they, they don't want to, they don't want to manage three or four or five different trades. Every time you retrofit a cooling tower or a chiller or an MEP system, you, yeah. Be awesome to call one client. And so I lived that in my previous life and I wanted to bring that to life here. So that, that was the emphasis when we started. And one, one of the reasons why we called it Kelso Industries. Yeah, we didn't call it Kelso H Vac or Kelson Mechanical. And there was a little bit of pressure early on. So why are we calling IT Industries? We need to be specific. And I was like, no, yeah, it's going to be mep. We're going to get there, and it's going to take a little while. But we, we had that, that sliver of a hope that we would get there. And we, you can't find MEP businesses to buy very often unless they're huge. There's very few small MEP on the commercial side, like just at all or.

[John Wilson]

For sale or just.

[Steve Carroll]

They're not out there. It's just very rare for a mechanical, electrical, plumbing operation to even exist inside of the same walls of the same brand.

[John Wilson]

Okay.

[Steve Carroll]

So I knew there's like, that tracks.

[John Wilson]

There's a huge local 1k company. Do you ever go against them?

[Steve Carroll]

No, I haven't even heard of them.

[John Wilson]

I think they're $200 million. Like. Yeah, they're crazy. And I think they cover like the east Coast. Yeah, it's, it's wild.

[Steve Carroll]

It is wild.

[John Wilson]

But they're pure H Vac. Like, all they do is H Vac.

[Steve Carroll]

Okay. They don't do plumbing or electrical. Yeah, I mean, it's, it's hard to do that. And so our strategy is to. I called a beachhead. We go into a market, we start with one of the MEPs, and then we look for a partner. We, these are partnerships, so we look for a partner that this person would want to work with to start offering MEPs, and we look to bring them into Kelso, and then we, we build around that over time.

[John Wilson]

Can you explain the partnership dynamic a little bit? Is that like we acquire them?

[Steve Carroll]

It, it is, but I'll, I'll clarify because when we started the first acquisition, we did the owner, the husband and wife, they sold to us on May 28th of 2021.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And within two weeks they were gone.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And some they, they, it just wasn't going to be a fit for them. And they, they were upfront with us. We knew it was happening and we thought, oh, this is, this is. Okay, I'll step in to do operations.

[Unidentified Host/Interviewer]

Yeah, yeah.

[Steve Carroll]

I'm literally counting diffusers and taking off lineal feet of duct work and estimating. And my partner, he was managing the cash in the accounting side of the business. We thought that would be an easy thing to step into. And boy, were we wrong. I mean, we could go on and on about what we did or thought.

[John Wilson]

How big Was that first one?

[Steve Carroll]

17, 18 million.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Top line, all commercial, big, big operation. We, there's so much to talk about here. But we, we, we started there, but that's not where we actually thought we would start. Yeah, we, we had a num. Another business that we were going to close on much smaller and so many things didn't work out, we ended up not being able to close on that business.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Mostly because when it's that small, any one or two things go wrong in the business and it dramatically tanks.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

How. What house?

[Steve Carroll]

That first one was like 900 grand of revenue. Oh, yeah.

[John Wilson]

My thought was that is tight.

[Steve Carroll]

My thought was I'll start with something small.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And I, I, I've seen that before with people in our industry. That totally. I'll just start small, and I'll do it on the side. And, man, that's how you can get into trouble, because someone starts doing something different, anything different, you know, maybe not working as hard because you're not paying attention. You know, things. Things can go haywire. And that one did. And we didn't close on it, but it was very, very close. So we. We swung all the way to the other angle of what we could do with an SBA loan.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And this business fit within the box of an sba.

[John Wilson]

So you bought, like. This is kind of wild. So you bought this with an SBA loan. I should introduce you. There's a guy named Logan Leslie. He's not in industry. Good. Good friend of mine. And his story, it reminds me of this a little bit. Okay. Where, like, he was. He just a guy went and raised, like. Well, sorry, He. He, like, went and bought his first one with an SBA loan. Four years later, he's bought, like, 130. And it's main street auto business. Like auto repairs. Like, wow, I have a oil change.

[Steve Carroll]

Or my gosh.

[John Wilson]

Wild. But, like, it started with the sba, which is, like, kind of a crazy way to start. What this turned into.

[Steve Carroll]

It. It is. And I. And I. For good or word bad or good or whatever, it's. It ended up not being with an SBA loan.

[Unidentified Host/Interviewer]

Yeah, yeah, yeah.

[Steve Carroll]

But that's what we had spent a few years working on.

[John Wilson]

Sure.

[Steve Carroll]

And we were gonna. We were gonna buy something.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And when it's. When it's that small investor, it's hard to raise money.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

When it's. When it's a. You know, that first one, especially 900 grand, like, if we couldn't fund it ourselves.

[Unidentified Host/Interviewer]

Yeah. Yeah.

[Steve Carroll]

An SBA loan is really convenient for those type of circumstances. And so that's the way we had been going. We found this business in Phoenix, and it was. It fit the box and all the way through diligence. And we're. Again, we're not very smart with this stuff. They told us working capital was this much, you know, for the audience that can't see a small number.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And then when we got into it, we realized, oh, crap, this is literally 10 times what they said we needed for working capital.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And this is part of why doing deals are. Is so dang hard.

[Unidentified Host/Interviewer]

Oh, yeah.

[Steve Carroll]

There's the price and then the working capital, and that made the deal too expensive. We didn't have enough money to buy this with an SBA loan. Now, not. Not just with An SBA loan.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And so we. We. After. We had spent tens of thousands of dollars, I mean, flying to Phoenix constantly. And lawyers and accountants, and we. My business partner and I, we had. We were up, up, up on a wall of. Oh, man. We have this thing in loi. They're expecting us to close.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

In, like, a couple of weeks.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And we had put everything into it. I mean, a lot. And so that. That's when I realized, oh, crap, we need to do something different. So that's where my partner's relationships turned out to be really hugely beneficial.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And we were able to convince a PE group out of Salt Lake City called Peterson Partners.

[John Wilson]

Okay.

[Steve Carroll]

To back us.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And they. They've been amazing. They're still our partners.

[John Wilson]

So they came in on the first deal.

[Steve Carroll]

They did.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Yeah.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

That's interesting.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

We got. We got extremely lucky.

[John Wilson]

And still the same partner.

[Steve Carroll]

Yeah.

[John Wilson]

Okay.

[Unidentified Host/Interviewer]

Yeah. Yeah.

[John Wilson]

That's amazing.

[Steve Carroll]

Yeah.

[John Wilson]

Do you think. I mean, the answer has to be no, but, like, I gotta ask. Do you think you could have gotten anywhere near this scope without that backing?

[Steve Carroll]

No.

[John Wilson]

I don't know how you could have.

[Steve Carroll]

No way.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

I mean, this is amazing.

[Steve Carroll]

We. We've. I gotta give my partner a lot of credit, too. We. We were together over the last couple days here in the area. Um, we were kind of reminiscing as we were going in between meetings, and I. I had to give him some kudos because there were so many moments where. Along this journey where, oh, my gosh, if we didn't have a growth mindset from a capital standpoint and a ton of elbow grease, knocking on doors, you know, constantly pitching why someone should partner with us. We would have been stuck so many times.

[Unidentified Host/Interviewer]

Oh, yeah.

[Steve Carroll]

And it's. Capital is hard. It's a hard part of the.

[John Wilson]

Yeah, it is. Yeah, it is.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

So, yeah, no 100% without the capital. I mean, we've. We've raised a lot of capital at this point, that inequity to keep going.

[John Wilson]

And, I mean, you've done. You know, my notes say 28, but since then, you've closed another. So you've done 29 acquisitions, and. Yeah, that's a lot. And, like, big. Like, today we talked a little bit about origin, but, like, what is Kelso today?

[Steve Carroll]

Yeah. In. In, like, revenue.

[John Wilson]

Revenue headcount.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Yeah. We're. We're about 1.1. 1.2 billion. Top line, we just crossed.

[John Wilson]

That's great.

[Steve Carroll]

We just.

[John Wilson]

Does that feel cool to say?

[Steve Carroll]

It's not. It feels goofy Actually it's like what am I even. That's number is so crazy. But we did just cross that on like a 12 month trailing 12 months basis a couple of months ago. Really, really excited that we got there. I'm really excited because I've been telling my partners for a few years that we'd get there and they would usually laugh. They'd be like haha, yeah Steve, maybe, maybe. But we did, we got there. We're 1.1, 1.2. We're, we're about 3,500 employees with, with the companies that we have. And yeah, the Flywheel is, is real for us. Mechanical, electrical, plumbing. We, we like, we love to cross sell because a lot of companies focus on a part of the Flywheel. And just because someone only does service or only some. Someone only does construction doesn't mean they can't serve a customer in the Flywheel. And that's where the partnership gets really special.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Is they can bring another Kelso partner to the table to serve a customer.

[John Wilson]

When you, I'm. I'm trying to visualize in my life going from maybe not zero, like you've led teams like you were doing big stuff in, in a previous life, but going from like 0 to 3, 500 employees in five years. I don't, I don't even know like what does that look like as a personal development, a professional development? How do you brace yourself for impact?

[Steve Carroll]

It's. I'm, I'm trying to learn every day about how to be a better leader. There's so many things that I'm not good at and I, I know I need to work on one of those things is I communicate pretty well with enough of our team. But at this level, most of the people don't ever see me. Most of our teammates don't see me enough.

[John Wilson]

I mean you probably work with like six people.

[Steve Carroll]

Yeah. I mean. Yes. And, and people at our corporate office. I see. I, I try to pop into our companies every now and then. So you know, that stuff helps. But there's certainly a lot of areas to improve when you're highly distributed like this. We have over 30 offices all over and one of the areas I'm excited to improve on is to bring more communication deeper into the organization.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And show them I'm excited for what they're doing and that I, I don't speak to them enough, but I care about what they're doing.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And so there, there is areas for improvement. I'm willing to admit we got, we've grown so Fast. We don't have a good internal way to do that.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

LinkedIn is one of the ways I do that. I try to be pretty active on there. We've got about a third of our workforce on LinkedIn or at least connected to us somehow through our companies or through me. And yeah, there's a lot to improve upon when you're that big because it's, it's never perfect. It feels like.

[Unidentified Host/Interviewer]

Yeah, yeah, that'd be a lot.

[John Wilson]

And that's a complicated problem. I mean if we. Chad Peterman from Peterman Brothers started a podcast and it was an internal podcast. He later ended up publishing live. But the. That was his original goal. I think there are 10 or 12 locations now and it was the same thing. They're distributed. I see these guys once a month. How do we still spread culture? How do we talk about what I'm doing? How do we talk about like Jimmy's amazing five star review? How do we still do the small but really important stuff?

[Steve Carroll]

Spot on. I love the podcast idea. We're exploring a few other mediums. What's also pretty cool is some of our companies have already got mechanisms where they, they do it within their company already.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And so most of the companies have some sort of connection already, at least to their.

[John Wilson]

Which is probably what matters the most.

[Steve Carroll]

Yeah.

[John Wilson]

I would imagine. Like the people you see every day eye to eye.

[Steve Carroll]

I, I would agree. I want our teams in the field to know they're part of a local organization that cares about them. I care about them deeply. But I don't get a chance to see them all the time.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

So the leadership in whatever local organization or opco, it really matters to me that that person takes this seriously as well.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And I get to see them more. Like we're all going to be together next week. 50 or 60 people from around the company are flying in that all run P. Ls and our local leadership and we're building that culture.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Twice a year. See each other at least four times a year for various things. But this meeting is a real culture. We focus on culture there so they can go back and at least impart some of the care that we have for them through them as the leader. That's locally.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

Can you walk me through a little bit of the org structure? So there's 30 locations. Each one has a branch president or branch GM or something. What's the smallest location? What's the biggest?

[Steve Carroll]

It's a range. We're, we're, we've combined kind of some of the smaller ones. So really when you look at the small ones, they're like 15 million roughly.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Our biggest ones in the high 200s.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

So there's a range. But what we've done is we've created divisions. So we have five divisions. We have a west division, a northeast division, a southeast division, an industrial division, and a service organization. Service organizations. National industrials. National. Those other three are regions of the US and so we have leadership in those divisions as well as key team members for those divisions as well. HR leader, recruiting, finance, safety, service for each division.

[John Wilson]

Okay. And these are like regionalized, Depart.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

For the three that are regionalized, they're, they're, they're regionalized. The other two that are national have kind of a customer focus, an industrial customer focus. There's a HR leader for that, there's a finance leader for that. There's a couple operations leaders. There's a leader and a, you know, a vp. And so we, we've developed a part, we've sized part of our business. So they're all roughly the same size.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And they all can like, they each.

[John Wilson]

Have roughly the same headcount. Like total reporting. Is that what you meant?

[Steve Carroll]

Roughly? Roughly, yeah. And revenue and profitability and everything like that. So, so the leaders that run those divisions are running a sizable business with the local leaders.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

That are boots on the ground.

[John Wilson]

Yes. Okay.

[Steve Carroll]

And we, we think that's, that, that's relatively new for us. Not that long ago it was me and my partner.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

I mean I'm, I'm like listening to what you're saying and I'm like the org. The amount of changes you must have made in like a five year period to nail down org structure and still a moving target because you're still acquiring companies.

[Unidentified Host/Interviewer]

But.

[John Wilson]

Yeah, that'd be a lot. I mean I just think about what we've done in a one location, you know, not that big business and we've gone through a lot like, you know, I'm trying to envision that over 30 locations.

[Steve Carroll]

It's, it's super interesting because when we started I was the president, CEO of one opco.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

And that, that, the one, the first one in Arizona. Okay.

[Steve Carroll]

That, that was my job was to survive.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Collecting payments from customers, getting big, hiring, firing. And, and that business when we bought it, didn't even have a website.

[John Wilson]

Okay.

[Steve Carroll]

So we, we've learned, we've, we've had to evolve constantly.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

I mean I, I came from Walmart, I was an executive at Walmart before I came over to this job. And it was, it was a culture shock because I got used to the big company benefits. Post a job, you get ten hundred, two hundred people applying for that job.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Come to this little opco with no website, no social media presence. Nobody hardly knows who they are, but they still do 17 million per year of revenue.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And I would post a job for a project manager and no one would apply. Literally no one would apply. I remember, I remember getting a guy to, to. I talked him on the phone and he was going to come in, I was going to interview him, he was going to come in and I remember sitting in the lobby for an hour after the time that he said he was going to be there thinking, oh, he's going to show up. Yeah, he's going to show up. Never showed up. Literally multiple times this happened to me. So there was a lot of learnings. When you talk about org, I mean that, that was like my challenge not that long ago.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

To now what we're, what we're dealing with, it's just totally different environment.

[John Wilson]

Do you think this is easier for me?

[Steve Carroll]

Yeah, way easier.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

A million times easier.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

Yeah, I would, I would imagine so. So we're getting ready to go multi location and likely multi state will be our first like new location. So like as I'm thinking about, I'm, I'm thinking about the next six months of my life and I'm, you know, I'm thinking about the last five years of yours and how I think about org structure. Like what should I be doing every day? I'm not as in the weeds as you were. But like not long ago, like three.

[Steve Carroll]

Years ago, you probably were. Yeah.

[John Wilson]

Yeah, totally.

[Steve Carroll]

At some point.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

In 2022, I was helping pick up the phone because we accidentally turned over our whole call center. Like, you know.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

So you do what you have to do.

[John Wilson]

You do what you got to do. But yeah, I'm, I'm thinking about that and I'm thinking about all of the decisions that you've probably gone through, like what should be centralized, what should be decentralized and what I seem to have landed on in theory, but obviously I haven't executed on anything is like centralize almost nothing. Like, because if I, the more I centralize, the harder my life is going to be because then I have to frankly do more versus like people want to know, they want to be eye to eye with their, the people in their branch that like that's who matters to them. Like I don't matter to them. In Cleveland if Somebody else is in Pittsburgh. Like, nobody gives a about John.

[Unidentified Host/Interviewer]

Right.

[John Wilson]

And they shouldn't, they shouldn't give a. About me. Like I'm not in their life very much.

[Steve Carroll]

Right, right.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

It's, it's a difficult thing to say what, what it should be for you guys or, or even for us because it, it's a moving target a little bit. But I do highly believe in empowered, decentralized teams.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

To a degree. They should have autonomy to make certain decisions. They should have autonomy to, you know, drive the P and L. Yeah. And are there things that that person wants to do and are there things that that person doesn't want to do? And I think the decisions of what corporate does is, is going to be unique for each individual in each company. But I think generally speaking, the person that's going to drive the best P and L for you doesn't want to manage insurance.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And doesn't want to manage for us, bonding and.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Employee renewal, you know, insurance renewals and a lot of the back office stuff. So, so there is parts of this that I, that, that I think you can get to where a new branch probably. We want them to be empowered, but we don't want them to be bogged down, completely bogged down with the overhead stuff that doesn't drive any revenue or profit.

[John Wilson]

Yeah, I think that makes sense.

[Steve Carroll]

Yeah.

[John Wilson]

That's kind of how I've, you know, so for me, I'm, I'm really curious what your like, corporate staffing looks like. But for me, the way I've thought about it, again, like much smaller scope for us, but we'll be like 45 million or something next year. So for me, I think that like my core corporate staffing is two people. Like, it's me and a CFO and maybe an assistant.

[Steve Carroll]

Okay.

[John Wilson]

Like that is it. And that feels like enough.

[Steve Carroll]

Yeah.

[John Wilson]

But I don't know, like, what does yours look like? Well, different scopes. I'm just curious what this looks like at scale.

[Steve Carroll]

Yeah. And we're, we're constantly listening to our partners. We're constantly evolving and trying to get this right because I don't think there is a one size fits all strategy here. What we've done up until recently is we've been, me and Steve and all of the OPCOs are kind of on their own. We, we did have a CFO early on and he, you know, you do need to aggregate data up at the highest level. And so for quite a while we were, we were more of a hold company, holdings company. And at a Certain point we started to realize, man, I can't pick up the phone fast enough to help one. When one of my partners needs help figuring out how to get a truck from the enterprise program that we have or somebody, you know this thing happened and somebody needs a band aid or.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Like stuff that it just changes a little bit when they're a part of something else. They partners want to do the right thing for not only for them and their employees, but their other partners. We start to realize, man, we need more resources to help make sure that our teams can focus on revenue generating activities. And it's hard to know what those are until you've got enough people that are asking for help.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And so over time we've realized we need to offer more help in insurance which we've talked about. Cash management. Cash management's done at the corporate level.

[John Wilson]

It feels like mandatory to me.

[Steve Carroll]

It, it has to for we have bank debt.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

So we, we have to, it has to be all even just like risk.

[John Wilson]

And like I think there's a super strong argument for HR for risk but like cash.

[Unidentified Host/Interviewer]

Yeah. Yeah.

[John Wilson]

You got to do cash.

[Steve Carroll]

Yes, absolutely. Absolutely. And we're actually able to bring other value that a lot of our OPCO presidents bore all of the burden themselves for years.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Like for example, HR issues. We, our HR team at Kelso's became becoming a business partner to help. Yes. Reviews and surveying to try to understand sentiment. How can we improve the overall morale of the team? Recruiting.

[John Wilson]

I'm going to clarify on that really quick because HR business partners a very specific titling for hr. Right. Is that what you meant meant by that or you just meant like they're more in operations.

[Steve Carroll]

Well HR to me is. It's kind of misunderstood because HR sometimes is only deemed as the person who manages onboarding and payroll and firing. Firing. Right. Like yes, that is, that is hr. But HR has more to bring to the table if you invest in it.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And they can. HR can be a business partner and listen to the needs of the organization and bring people skills to solve problems in the organization, whatever that might be. And so I've, I've really appreciated that team.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

For sure. Because there's, there's. We're people. We have a lot of people support.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And as we've gotten bigger we've, I've seen the value in investing their finance is a really, really important thing to get right. Especially in commercial.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

You've got 90 days of.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

Working ar be like its own. It's massive situation.

[Steve Carroll]

It's absolutely massive.

[John Wilson]

Does each and every branch have a, like a corporate controller or is it, like, regionalized?

[Steve Carroll]

Yeah. So we, We're. We try to be entrepreneur, so we don't have a specific requirement when a company joins us of who we love for it to be the team that's already there and that.

[John Wilson]

The accounting team.

[Steve Carroll]

Yes.

[John Wilson]

Oh, that feels really different.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

I feel like usually when I hear about PE coming in the first hot, like big aggregator. So I'm not trying to label usp, but big aggregators coming in the first transition is accounting. They need their own. They want to trust the numbers.

[Steve Carroll]

Yeah. And to us, it's a. It's a partnership. Right. So we're, we're not only partnering with the owner or the owners, we're listening to the needs of the organization. And if there's a great team there, we'd love for them to be a part of our finance organization. That's kind of what happens.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Is there? And it's also really cool because when they join the bigger organization, their career ladder becomes different.

[John Wilson]

Sure.

[Steve Carroll]

There's an opportunity to be involved in more things and grow where normally if you're only in a local branch, you can only grow as far as the finance need is in that local branch.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

So we, We. We try to be good partners. We're. We're not a hot. We're not a acquire partner and fire organization. That's not what we do. We look for companies that are awesome as they are and look for ways to augment the careers of the folks that are there.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

That's interesting.

[Steve Carroll]

Yeah.

[John Wilson]

For the partnerships. Can you walk me? We're using the word partner a lot, so I just want to make sure I understand the deal structure. Sounds like owner stays on.

[Steve Carroll]

Yeah.

[John Wilson]

So like a role of some type.

[Steve Carroll]

Yes. So what, what we learned from. And I'm glad we went back to it. Thank you for bringing us back, because I was. I remember I got off track, but.

[John Wilson]

We were talking about that first deal.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

That's what I was thinking about. And we keep talking about partnership. I'm like, I'm missing something on the, on the, on the acquisition front.

[Steve Carroll]

Yes. Yes. So we learned in that first one. It's just impossible to take over for an owner that's been there forever. And us being the new guys have it work out very well.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

So in. In trying to figure this out. I'm running this OpCo, this first business, and my partner, he's a. He's got a PE background.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

So he's bringing Me these ideas. We should buy this, and let's go meet these people. And I'm just like, dude, I'm working a hundred hours a week.

[John Wilson]

I live here.

[Steve Carroll]

What do you want me to do?

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And we tried it for a while and just was never going to work. And I remember when we were in. We were in Arizona, and we. We ended up talking to someone in Idaho that owned a business two or three times bigger than us. At least two times bigger.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And we were going through the motions that Steve, my business partner, wanted us to do of. We want to buy your business to Steve's. Yeah, we're both.

[John Wilson]

Yeah, you said Steve and me earlier, and I was like, okay. I flagged it. I was like, are we. Is this third person? Okay, Two. Steve's.

[Steve Carroll]

I know there's. And there's a story there, too, maybe we can get to at some point, but we've been friends since fourth grade. And before that, our parents knew each other before we were even born. So there's. There's a lot. There's a lot there. But we. We, you know, we're going through the motions. Hey, we want to buy your business. And he's like, I don't want to sell. I'm in my late 40s. I love what I'm doing. This is. This. These are my people. This is my family.

[Unidentified Host/Interviewer]

Yeah, Yeah.

[Steve Carroll]

I don't want to go sit on my couch. I. I don't have any interest to sell. And I remember thinking, oh, well, that's this interesting. He's talking to us like, maybe there's something here.

[Unidentified Host/Interviewer]

And.

[Steve Carroll]

And Steve Nicholson, my partner, pitched the idea of. To me, why don't we partner with him? Meaning we. This is the value of his business. We're gonna offer this in Kelso equity to him at close and only this much, you know, in, you know, figurative terms that he would get in cash kind of a thing. And we went to him, and I pitched it to him. I remember being in his truck, and I remember him looking over at me this up in Idaho. I remember him looking over at me and say, yeah, I'll do it. I remember thinking like, holy shit. Really? Oh, my God.

[Unidentified Host/Interviewer]

Oh, my God.

[Steve Carroll]

He doesn't think we're complete idiots. He thinks we're complete idiots. At least enough to be partners with us.

[Unidentified Host/Interviewer]

Yeah, yeah, yeah.

[Steve Carroll]

He's way smarter in H vac than I'll ever be. And I. I love that about him. He's an amazing partner to this day. Still runs that business. One of our trusted partners. We rely on him heavily for a number of things. But that's when we realized, okay, maybe there's something here. And as time went on, he continued to run the business and he continued to do a good job and he continued to help us with other things. He helped us with the one in Arizona and helped us with other things with his team. And we started to realize, okay, if we find companies like this where there is an opportunity to partner with someone. Yeah, you don't have to start over with relationships with customers, employees, vendors. And the momentum keeps going. There's something special there versus the one. The way the. We did the first one.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And so from there, that was the, the beginning of how we were able to grow. And we, we. It's just the first.

[John Wilson]

I mean, it speeds it up.

[Steve Carroll]

It does.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

I mean, a lot.

[Steve Carroll]

We would not.

[John Wilson]

Because you don't have.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

I mean, you don't have to. Well, there's a trade off and I'll ask about it, but it seems like, yeah, you can just keep going. Which that, that does make it great. I mean, the trade off seems to be less integration.

[Unidentified Host/Interviewer]

Right.

[John Wilson]

Like, these are going to be differentiated brands. I'm assuming probably like a longer integration instead of like six months, three years or something to like fully. They're in our buying system. They're our insurance. Is that kind of the trade off?

[Steve Carroll]

Yes. And early on we were just a hold co. So we didn't really do a lot of integration. We just integrated cash and.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Then we realized we had to integrate insurance, and then we had to integrate bonding. And then we had. There were certain things that we've realized. We don't have a choice.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And over time, we've also realized it would be nice if we did xyz. And so our integration Playbooks evolved.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And it's ultimately, it's. The integration strategy is still, I think, very light. A lot of. A lot of organizations rip out the back office and change everything right away. And there's people there the day after close.

[John Wilson]

I mean, that's how we would do it. But we're buying smaller companies.

[Steve Carroll]

Correct.

[John Wilson]

You know, if I'm buying, you know, our target's going to be like a 3 to 5 million. I have to. The owner's not staying on.

[Steve Carroll]

Yes.

[John Wilson]

And we. Because we're so small and we're privately, like, funded, like it's me. There's no room for a big J curve.

[Steve Carroll]

Right. Right.

[John Wilson]

This is my balance sheet.

[Steve Carroll]

Right.

[John Wilson]

So you got a sprint.

[Steve Carroll]

Yes. And that, that's totally fair. If it is the that type of an application. I, I think of add ons and I think of platforms and partnerships.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Add ons are not necessarily what I'll always do this partnership model for. We, if it's that small, you probably need to add it onto just whatever.

[John Wilson]

You have right there.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

If you think it'll work.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And if not, then you got to really think about is this something worth acquiring if it can't stand on its own? Especially if it can't stand on its own. So to us there's a big differentiator.

[Unidentified Host/Interviewer]

Totally.

[John Wilson]

What's, what's the size difference for you.

[Steve Carroll]

And mechanical between the two?

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

Like what, what I mean I said 5 million and that was an add on. So as a platform, 20 is it 30, 50?

[Steve Carroll]

I think of it in terms of employees and it's about 100 employees. If it's less, then we're starting to think about can it stand on its own. In commercial though, you can get down to much smaller and it can stand on its own. But that's really the thing is can this stand on its own?

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Or do we need tons of resources in this thing to make sure it continues to be successful? Yeah, we tend to purchase, partner, acquire with much less add ons. At this point. There's just so much opportunity for us to focus on single standing platforms. That's interesting because our strategy is to offer an MEP solution. I don't want to do tons of add ons.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

I'll do it if a partner in a market says they want it or they need it for their MEP strategy. But it's, it's rare.

[John Wilson]

So how big was your corporate like staffing? Corporate headquarter staffing.

[Steve Carroll]

It's pretty small. I mean we're probably 50 Kelso employees at this point.

[John Wilson]

Is small.

[Steve Carroll]

Yeah.

[John Wilson]

That's like a one and a quarter percent.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

Not even. Am I doing that right?

[Steve Carroll]

Yeah, it's, it's over. It's a little over 1%. Yeah. One and a quarter. One. Yeah. Yeah. It's, it's small because our companies in the field are mostly self contained.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

We, we have multiple companies at above around 100 million of revenue.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

That are part of Kelso. They don't need much from us.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

We don't, they don't imagine we don't need to do a lot for them. They don't need a lot from us. They've got most every function already built into their business. And what we're trying to do is look for ways to make Slight improvements in that business, not massive changes. And maybe it's, you know, they're even $100 million business can benefit from being a part of a bigger balance sheet for winning big opportunities and bonding.

[John Wilson]

Yeah I was gonna say because a bonding or like what. What can you bring? I'll give my example because I think it's very different. So we're looking at these acquisitions small, right. So like 5 million bucks and under it is a totally different thing that we bring to the table than I think what you guys bring to the table. Like for us like we're going to reduce their cogs by half. But you're not going to do that to 100 million dollar company. No, we're going to reduce their software by like 80%. You're not going to probably do that. Like 100 million. Like they've gone through a lot of the cost saving gyrations. Maybe you'll get another percent or two or how do you think about that?

[Steve Carroll]

There's a few things you can work on there and what's great is these are awesome companies. So there's not like we need to do this now kind of a thing. And so a lot of times it's just us listening to what the company feels would be beneficial. And maybe it is an acquisition, maybe it is access to a bigger balance sheet. Maybe it is savings on insurance because it's insurance with the whole organization. Maybe it's winning some customers that another bigger company has a relationship with that's doing a project locally. Cross selling. A lot of companies, a lot of hundred million dollar companies do a trade in the MEP element and so finding another partner in the MEP flywheel to then go after other clients that maybe you're being pitched by general contractors or kind of a laundry list. It just, it could be a number of things. Sometimes just cross selling is. Is all we do.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Just depends on what the needs are the. The business.

[John Wilson]

That is interesting. That's fascinating.

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[John Wilson]

Yeah, I don't know how you can move fast if you have to get in and operate everything.

[Steve Carroll]

Doesn't work.

[John Wilson]

Yeah, it doesn't. Wouldn't seem to. I mean, that's a big concern that we have. So I'm trying to remember who runs Apex Alpine.

[Unidentified Host/Interviewer]

Have you.

[Steve Carroll]

Yeah, yeah, we know them. We know them quite well, in fact.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

One of the founders of Apex was an intern for my partner at their PE firm.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

He did a. He did a show on Invest, like, the best. It's a good interview.

[Steve Carroll]

Yeah.

[John Wilson]

But obviously there's.

[Steve Carroll]

He's very smart.

[John Wilson]

Yeah, he's a smart guy.

[Steve Carroll]

Yeah.

[John Wilson]

But I mean, his staffing is really interesting.

[Steve Carroll]

Yeah.

[John Wilson]

Like, he, he's probably one. He's probably the case of like, hey, you actually can replace quite a bit, but like, you know, it's uncommon and arguably it doesn't work that well. But he at least has a funnel and they're, they're moving. I think they're still doing two deals a week. Like, it's still crazy.

[Steve Carroll]

They are extremely busy at Apex.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Alpine also has a commercial platform, too.

[John Wilson]

Yes. Orion is it a direct competitor commercial.

[Steve Carroll]

Service on certain deals. So we, Our flywheel, to us, we're happy to do all of it. We want to do all of it. They're only focused on the service and maintenance side of it.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

We might compete with them sometimes on deals that might do some construction, but they really want to go after service and maintenance. And so I do compete with them for acquisition positions, usually in that part of the Flywheel, which, you know, is fine. There's a lot of PE that is focused on that. It just makes it a little hard to scale. Yeah, but we do, we do compete against them, for sure.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

But they had. They're. They're probably the big. Unless you can think of another one. They're probably the busy. Biggest example of like, they really do come in and just. They run it.

[Steve Carroll]

Yeah. They. They are using their playbook of.

[John Wilson]

It's a full integration in like two weeks.

[Steve Carroll]

Yeah.

[John Wilson]

Like, it's crazy.

[Steve Carroll]

Yes. It's. It's a lot. I think it's hard to do in commercial. I think they would even argue it is harder to do in commercial.

[John Wilson]

It's so relational.

[Steve Carroll]

So much relationships.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Yeah.

[John Wilson]

We experienced that. We bought a commercial business and we ended up, like, shutting that all down because we're like not our strong suit. And it is very relational.

[Steve Carroll]

It's. It's extremely relational. And that's why our first core value and why I say it so much is partnership.

[Unidentified Host/Interviewer]

Yes.

[Steve Carroll]

It starts at my level, all the way down into the field that we have to partner with our clients and our teammates and our vendors. It really matters.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

A lot.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

Before you got into building a billion dollar mechanical contractor, you, like, what were you doing prior? You spent a life at Walmart.

[Steve Carroll]

And I. So I grew up in Oregon on a tree farm.

[John Wilson]

Okay. So Taylor Swift.

[Steve Carroll]

Yeah. That's funny. Yeah. So I grew up driving the Kubota tractor and pulling weeds and planting and yanking out and selling trees. That's. That's how I got my. My interest in the blue collar.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

World. And I thought I would do that forever. And then my parents decided to move and sell the farm. And so I. My career changed and I realized what I. What at that time made sense to me was I like being outside. I'll get into construction. It's gonna be great. I'm be outside all the time. And I realized I'm in the office a lot for construction.

[John Wilson]

Once I got like, project management.

[Unidentified Host/Interviewer]

Yeah. Yeah.

[Steve Carroll]

Yes.

[John Wilson]

You can be like managing new Walmart builds or the retrofits or both.

[Steve Carroll]

Oh. So good question. So I, I did. I didn't go straight to Walmart.

[John Wilson]

Okay.

[Steve Carroll]

I went to work for all sorts of types of builders. I did heavy civil for a while. I did asphalt for a while. I did underground utilities for a while. RCP pipe installations.

[John Wilson]

So Kelso is kind of bringing home a lot of the stuff that you start.

[Steve Carroll]

For sure. Career for me.

[John Wilson]

Yeah. That's really cool.

[Steve Carroll]

Yeah, for sure. For me it is.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And when I graduated, took me a long time to get my degree, but when I graduated, I wanted to be a real estate developer.

[Unidentified Host/Interviewer]

Yes.

[Steve Carroll]

And graduate in 2008.

[Unidentified Host/Interviewer]

Oh, yeah.

[Steve Carroll]

No real estate development anywhere.

[John Wilson]

Yeah.

[Steve Carroll]

And so I had to go get a job with a gc because that's where the jobs were and that's where I learned how to do commercial construction. And I was the lowest guy on the GC job site for years, doing everything from the bottom and then working my way up to running jobs.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And learned a ton. But that's, that's where my passion for the mechanical, electrical, plumbing came from is equipment. Set day was amazing. My favorite part of the job, commissioning and startup and just all of the elements of br bringing a building to life. You can't bring it to life without electricity.

[Unidentified Host/Interviewer]

Yes.

[Steve Carroll]

And water and cool Clean air. And so I just brought this excitement to me. If I'm going to pick a career, that's where I'm going. And liked, liked the construction career path, but it felt like there was a lot of people above me and it was going to take me forever.

[John Wilson]

Oh sure.

[Steve Carroll]

To just keep climbing that ladder. Especially during the 8, 9, 10, 11, 12 time frame.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

A lot of my friends were without a job.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And I had a job, but there was a lot of people because of all that things were clogged.

[John Wilson]

That's where my career started too.

[Steve Carroll]

Okay.

[John Wilson]

Like different. I was a service plumber. But it's, it was weird.

[Steve Carroll]

It was weird to me. It felt like I'm gonna be doing this forever. I'm gonna be the bottom guy forever if I don't make a change.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And some of my friends, they made it work by moving and going to other parts of the country where there was more opportunity. And my wife and I had an opportunity to move to Florida and it. That didn't work out. We personally, it wasn't going to be a good fit at that time for us. And so again it was like, we have to do something. And so I went to graduate school and I went to, so I went and studied business and I thought, well, I, I got here and this could be a slog eventually I could be here, here, here, but it's going to take a long time. So I totally pivoted, went to graduate school and I, when I went to graduate school, I was like, I will do anything. I love learning. I'm going to just find all the opportunities I can, wherever that ends up being. So I got involved in a lot of things and then I ended up at Walmart in Arkansas. I thought I'd be there one year.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And stayed for seven years. Stayed for seven years. And I loved my time at Walmart.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Amazing. We, we saw so many different things go on while we were there. The E. Commerce boom. Oh yeah, while we were there. I mean, when I got there, no one knew what Amazon was.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

As amazing as that is. Yeah. And within a few years everyone was talking about Amazon in every meeting.

[Unidentified Host/Interviewer]

Yes.

[Steve Carroll]

And so had a lot of fun being a part of that and some different roles. And about halfway through I started to realize there's a game in corporate and the game is how much impact can you make? How much risk are you willing to take with your career, personally and professionally? You're, you might get fired if you make someone look bad above you or you, you, you just may not be able to work there anymore if you push too hard. And so I, I did a few moves and one didn't work out as well. But I made a lot of progress in a, in a part of their business. And then I found another opportunity with a boss that was willing to push as hard as I wanted to. In fact, he probably pushed harder than I do.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

He's an executive at Walgreens now. Crushing it. And we had a ball. We had absolute ball. We spent three years, we built a business that was 15 million in revenue forever. All the way up to 20280 million of revenue and 275 million of EBITDA. We built, we crushed that thing.

[John Wilson]

That's crazy.

[Steve Carroll]

We did like, what was it?

[John Wilson]

Are you allowed to say.

[Steve Carroll]

Yeah, yeah, it's, it's, it's a media business.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

So running ads, sponsored products and banners.

[John Wilson]

It's a hell of a thing. Especially when you have a website like whatever, like Walmart or just anything that they own under that. The amount of traffic.

[Steve Carroll]

Yeah, the traffic was insane. And no one was monetizing.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And, and what we were doing specifically at the end was Sam's club.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And Sam's club was under monetized. And it was just the, a heck of a journey. I could.

[John Wilson]

That would be so much fun.

[Steve Carroll]

It was so much fun. I, I loved it.

[John Wilson]

It was like the traffic's there and it's like millions of visitors.

[Steve Carroll]

Millions of visitors.

[John Wilson]

Well, and that was like peak. If there was a time to monetize like a website. I feel like it's dropped off quite a bit in the past couple years. But I mean, Walmart, that's Walmart, you know, Sam's here or Lowe's or what, you know, whatever. Like, yeah, there's a ton there.

[Steve Carroll]

It's definitely a under monetized. It was an under monetized opportunity because there, there is a certain point where you can't monetize anymore and your advertiser doesn't get enough clicks or enough leads. I mean, you're a big advertiser. There is a point where the CPMs too much or the cost per click is too much or whatever. And so I, I loved this. I, I spent all of my time doing side hustles and advertising and e commerce. And then I came to work and I just. One plus one equaled three so many times because I was able to know things and say with confidence how things work on Amazon because I'm selling stuff on Amazon and when I came to Sam's and Walmart, I could say this how it works and we should do it this way. Nobody else had that experience, so it was really fun for me. But what happened was I, I, I wanted to be an entrepreneur. I loved my time at Walmart. It was, something was going to have to change and I was tired of Amazon literally shutting down all of my businesses or Facebook or Google or you name it. They change the algorithm this much and.

[John Wilson]

The whole like the side freaking thing.

[Unidentified Host/Interviewer]

Yeah, yeah.

[Steve Carroll]

I mean some of my side hustles did millions in revenue.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

But also went to zero.

[Unidentified Host/Interviewer]

Yes.

[Steve Carroll]

With small tweaks.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

On Amazon's algorithm or Facebook's lead gen algorithm. And so I tried so many different things and one thing that worked forever was lead gen on Facebook.

[Unidentified Host/Interviewer]

Yes.

[Steve Carroll]

And so I developed a book of business, of customers that I generated leads for and they paid me for.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And I was in the pest control space.

[John Wilson]

Oh yeah.

[Steve Carroll]

And I was really good at it. In fact, I did it for a while after we bought our first business and eventually had to go to my customers and be like, dude, I can't do this anymore. You're on your own. I just gave them my whole system. I gave them my whole workflow, my zapier workflow. I should, I gave them access to all of our ads. I just gave it to him and said, hopefully he can figure this out. So I tried to not put anybody in a bad spot, but I thought I could use that to go into H Vac. So that was, that was the evolution of how this evolved.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And I ended up buying a commercial H vac business.

[Unidentified Host/Interviewer]

Yeah. Yeah.

[Steve Carroll]

So I haven't hardly done any of it.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

With the side hustles, like were any of them affiliate? Yeah, yeah. Because I would imagine, like that's most of you, you take a little bit of that to a Walmart dot com.

[Unidentified Host/Interviewer]

Like.

[Steve Carroll]

Yeah, I couldn't, I couldn't.

[John Wilson]

I'm just imagining how much fun that would be.

[Steve Carroll]

Oh, I, I had a ball. I had a ball. I didn't quite figure out how there, there's this, this honor code, if you will, at, at Walmart. You can't cross pollinate your side hustles and you can get fired for having dinner with a vendor. So you're, there's, there's very clear lines you don't cross.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

So I was, I was always very careful to be, to have a clear conscience.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

But I still learned from both and my personal benefit was great. Both in both cases. But yeah, I did affiliate. I learned how to generate leads from Facebook Optimize Google business profiles. This is hilarious.

[John Wilson]

I think.

[Steve Carroll]

Yeah. I mean, all the stuff that you probably spend a lot of your time on, that's what I was doing on the side for these pest control companies and I did a few in other industries and it was. I realized it works better for certain industries and pest control just really, really good. That model was working really well. I built a website for my friend who started a pest control company from scratch and that turned into a massive lead source for him. I built his Google business profile. I did all of his Google lead gen and all of his Facebook lead gen basically for free because I wanted to learn how to do it.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And he thought he was going to start his business and knock doors for the rest of his life.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

He only knocked doors for one month.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And all of that stuff started to massively take off.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

That's why I was like, okay, there's something here.

[John Wilson]

Oh, yeah, yeah. I. When I was like, you know, early 2010s, I wanted to run a content affiliate business, like, so bad.

[Steve Carroll]

Oh, really? Okay.

[John Wilson]

Oh, like, well, all these, like, I didn't, I didn't. I went to college for like intermittent periods, but I didn't finish a degree. And I learned a lot from reading, like, avid reader my whole life. So, you know, early 2010s peak blog. Right. So like all these financial blogs, like Mr. Money Mustache and Financial Samurai and they changed my life. And I always wanted to, like, build this, like, content, like, you know, thing because it's fun and.

[Steve Carroll]

Yeah.

[John Wilson]

And like a month ago, my wife and I were talking. I don't even. You know, we've been married for 10 years, so I think we're just like talking about the journey of being married for 10 years. And it, it randomly snuck up on us that it was like, oh, my God, I did end up building a content business.

[Steve Carroll]

Like, you're a media machine here.

[John Wilson]

But it was funny to, to. To. So. So maybe. Yeah, maybe you're. It will come back around on for Kelso.

[Steve Carroll]

I. I still have five websites that I make a couple pennies on every month from affiliates. It's, it's, it's.

[John Wilson]

Well, I feel like it teaches you so much. I mean, sort of the breadth. I've thought about that a lot over the years as I'm like, really actively building two very different businesses, like owned and operated in Wilson. There's definitely correlation, but a lot of stuff different. But it has taught me a ton.

[Steve Carroll]

It's. It's powerful stuff, man. Like learning how to rank in Google.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Learning how to put content out there and be brave enough to put yourself on video. And it helps. I'm sure people follow you or recommend you guys or. I'm sure it helps to some degree for Wilson being able to do owned and operated. And I don't know if Kelso would even be here if I wasn't doing those other side hustles because getting email started, getting a website started.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

My LinkedIn. Like, I spend a. I've spent a lot of effort over many years to build up my LinkedIn. And yeah, some of our best acquisitions came from building a relationship with someone because of LinkedIn.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And they joke with me about it, but it's powerful, it's real.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

The dig. We're meeting today because of the digital Twitter.

[John Wilson]

Yeah. Percent.

[Unidentified Host/Interviewer]

Yeah. Yeah.

[John Wilson]

We talk about that a lot here. How. You know, five years ago, I did my first tweet and like, it changed the scope of our business forever in, like, in all the best ways.

[Steve Carroll]

Yeah.

[John Wilson]

But like, you know, hey, we learned about how to really, like, run through acquisitions. We learned how to onboard. We started hiring people directly. Like, our director of sales was a connection that I made from a connection on X.

[Steve Carroll]

No way.

[John Wilson]

Which, like, that's amazing. And he's amazing.

[Steve Carroll]

That's awesome. And I think it gives confidence to the people that want to apply because they know you're investing in it and you're doing podcasts and you care about it and you're. You're not just going to sit at home and put your feet, you know, in the sand.

[John Wilson]

That does sound nice, but. No, it does sound nice.

[Steve Carroll]

At least that's what I. What I tell myself.

[Unidentified Host/Interviewer]

Yeah. Yeah.

[John Wilson]

So that. That was. I mean, that's fast. That's amazing. Like, that was. That would have never been the background that I would have expected, and I loved it. I think that's hilarious.

[Steve Carroll]

I wasn't expecting to talk about it, but that's.

[John Wilson]

Let's go fun.

[Steve Carroll]

About.

[John Wilson]

That's.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

So 28, 29 now acquisitions. What do you guys. What are you guys looking for as you're thinking about new acquisitions for Kelso.

[Steve Carroll]

Where we're really focused on building the Kelso flywheel.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And we. We have a map on our website and I go look at it all the time.

[John Wilson]

Yeah, that's cool.

[Steve Carroll]

I go look at it all the time. And I'm like, oh, man, there.

[John Wilson]

We're missing Colorado.

[Steve Carroll]

Missing Colorado. We're missing here, we're missing there.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

So many different spots were missing. Even just a Part of the flywheel. And that gets me fired up every single day. I love the opportunity to meet entrepreneurs that built these great businesses. And sometimes it's just an entrepreneur that gets to a point of man. I could use a partner that could help us think differently. Or maybe I do want to retire someday, but I don't know how to take care of the business or it's gotten so big that I'm worried. All of those are reasons for someone to talk to us. And I'm not afraid to. To be blunt and offer what we do. And it doesn't work for everyone. But we spend a lot of time explaining partnership as we've discussed today. Yeah, we spend a lot, a lot of time explaining the Kelso flywheel and why someone should consider joining us and the value we can offer, not only to them selling part of their business or selling their business to us and buying Kelso Equity. I'm selling the vision of what Kelso, what I believe Kelso can become. There's a competitor of ours that just got invited or inducted into the s and P500 that would love to emulate them. Yeah, I mean, this is a massive, massive business. We've got a long ways to go. A billion's not even scratching. They probably don't even know who we are this business. But there's a few of them. Like that mechanical's wild.

[John Wilson]

You know, off camera, we talked about Moss or, or the, you know, the folks I brought up around here. I mean, it is amazing how big, big some of these businesses can get. I, I heard of one a couple months ago. I want to say it's gem and they're in the Northeast, like Maine. They're $190 million. I had never, I had never heard of them in my life.

[Steve Carroll]

It's fascinating to me too. We, we paid for. Took cost a lot of money, but we paid A1, a big research firm a lot of money to research how big the MEP market is, both residential and commercial and industrial. And the number came back for 2023 was 500 billion in the U.S. wow. Service, maintenance.

[John Wilson]

And that's including like my section, like the resident. Okay.

[Steve Carroll]

Yeah, it does includes. It includes all of it.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And of course, we're not doing all of it. We're also 100% non union, so.

[John Wilson]

Oh, I was going to ask that actually. Yeah, that's in. I feel like that's differentiated.

[Steve Carroll]

Yeah, it is.

[John Wilson]

Are you missing the unions? Because some cities, like, you're just not going to have a choice. I mean if you were in Boston, like there can't be a single non union.

[Steve Carroll]

You would think, you would think I would think there, there, there are a lot of unions there. I've looked at three or four in Boston that are non union. I. And it, I didn't end up getting those companies. My. Some of my competitors did. But there's a place for it in the cities. It is harder.

[Unidentified Host/Interviewer]

For sure. Yeah.

[Steve Carroll]

We are, we're just focused on non union for. We, we feel it's, it's a good strategy for now and that allows us to be friendly with a lot of the union organizations too, because they have their space and we have ours and there's a lot of, there's a lot of room for everyone to go win.

[Unidentified Host/Interviewer]

Yeah, for sure. Yeah.

[John Wilson]

Same is crazy.

[Steve Carroll]

Same thing with residential. I don't feel the need to go do residential service and compete against you guys. And you're, you're more of an expert than we'll ever be. But the commercial industrial stuff that's out there, it's, it's wild. I mean the data center space.

[Unidentified Host/Interviewer]

Oh yeah.

[John Wilson]

I mean with all the AI stuff that has to be just like explosive, right?

[Steve Carroll]

It is, it's exploding. It's. One of my friends is one of the top guys at a very large GC that has the Facebook account and the Google account.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And he developed the Google account there from scratch. But he spent his entire career, we did our undergrad together. He developed the Facebook account over many years and has lived all over the world doing data centers for Facebook. Facebook. And he came back and helped grow the Google business and told me the other day that all these companies are doubling their spend year over year.

[John Wilson]

Oh yeah.

[Steve Carroll]

For the next three years.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

@ least.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

Well, I read about that with, with Facebook and it was, it was interesting. I mean half the, I'm curious what the take is here, but half the problem seems to be one water. Like, don't they consume like just copious amounts of water?

[Steve Carroll]

Well, they're. If you're cooling with evaporative cooling, you've got some challenges there. But a lot of technology now is closed loop and also liquid to chip. Closed loop. So there's, you're, you're not having the same water issues as much as you're having power issues now.

[John Wilson]

Most, most like consistency of grid.

[Steve Carroll]

Well, consistency, yes, but just sheer volume of power. Yeah, they need, they, they measure these data centers by the amount of megawatts, not how much it's going to cost or like I would ask him how big is this thing he's building? And he'll tell me all this many megawatts. And I'm like, what does that even mean?

[John Wilson]

Yeah, I, I read that the other day. It was, I don't know if it was seven or three. It was some number, but it was. Yeah, that's how they referred to it. And it was like, okay.

[Steve Carroll]

And that's the way he's been talking for 10 years.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

He'll, he'll say, oh, I've got this remodel I need to do. It's this mounted megawatts or I don't even. Gigawatts. That's not my specialty.

[Unidentified Host/Interviewer]

Yeah, yeah.

[Steve Carroll]

I have people in our company that, that is their specialty. And that's something I'm really excited about because 18 months ago we were doing zero, effectively. Zero.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Data centers. And now we're hundreds of millions and pricing billions.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Just in mechanical. And we're, we're working on adding electrical capabilities there too.

[John Wilson]

That's amazing.

[Steve Carroll]

Yeah. From. From nothing. Effectively.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

We have a killer deal today from one of our partners. We supply trades with tight deadlines, breakdowns and last minute jobs. That's just the life in the trades. And that's why we trust the [e-mail] family owned and nearly a century in business. They stock thousands of H vac, plumbing and hydronic parts from brands you already use. And they're shipped fast. Same day. If you order by 3:30 Eastern with a free pro membership, you'll get better pricing, free shipping over 99 and real experts who actually know the field. You get 20 off your first order with code owned 20. @wesupplytrades.com or the link below, we supply trades. Finally, a supplier who actually gets it. What, what advice do you have out there for someone who's thinking about partnering up with a firm? Like what do you think that looks like?

[Steve Carroll]

I think it, it, it's a big humongous decision. For anyone who's thinking about partnering. There's, there's a lot of ways you can partner depending on who you are. If you can partner directly with an investor, that's a totally different ball game. You can partner with a operator and you can, you know, I guess just sell your business. But to me there's a very different flavor for you as someone considering or anyone who's considering what's next. If you, if you think partnering is what your long term vision is and your goal for your business, it's those two investor or operator. Some people Call it strategic or financial, but investor, operator are the two of the way. I think about it, selling to an investor directly means they're going to look to you or someone in your business, or they'll need to hire someone that will be their liaison every day. And it's. It is an everyday kind of a thing. They might say they only want to talk so often. If things go down, they're going to be in your business every day. Yeah, it's just how that works. They are usually, you know, from New York. They're, they're. It's a different thing, and that's what their model is. They're going to invest, and they're going to invest in multiple things. So that's one path folks should think about, because they can usually get the most amount of money doing that.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Should that investor get a deal done with you, you can usually make the most money.

[John Wilson]

But there's like, immediately.

[Steve Carroll]

Yes.

[John Wilson]

Because I think a part of the advantage of yours is there's a role component.

[Steve Carroll]

Absolutely. So the other side of it, selling to an operator or partnering with an operator, generally speaking, I don't offer the most money. I tell people up front, I'm like, if your goal is to make the most money today, you should probably sell to someone else. I'm going to offer a lot, and it's going to be more than any SBA or any other group out there. But I'm also going to offer what I know I can close on. I know what's going to be good for the rest of my organization. I know it's going to be good for you. And I'm offering you equity in a business that hopefully is a $10 billion business in 10 years or 15 years. This other group, there's no way they're going to get there. I don't even. I don't know who it is. I don't care. They're not going to get to 10 billion in the next five to 10 years, but we will. So you're putting a little bit into the future. You're betting on us that your rollover is going to turn into something special. You're. You're betting that we've kind of know what we're doing, too. And so if things are up or down, we're not going to freak out. We know jobs push sometimes. We know somebody leaves and stuff happens where we know how this business works. And so we're going to be more reasonable. We've also got resources to completely surround you with on a positive light. And you can pull from as you need help with things. Whatever it is, there's somebody in our company that can be of service.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Sell to an investor, you don't get any of that.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

But you might get the most money today if they can close. So that, that's, that's one of the biggest pitches I make is I've seen it now and part of my strategy is I don't offer the most money, someone else offers the most money, and then they usually can't close.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And I'm still there.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And I'm still. Arms out. I love you, man. Let's do this. Let's go in.

[John Wilson]

Let's go.

[Steve Carroll]

Come in, man. Let's go. I've been saying I wanted to do this all along.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Probably half of our deals have ended up that way.

[Unidentified Host/Interviewer]

Yeah. Yeah.

[John Wilson]

I think we deal with that a little bit specifically with Apex.

[Unidentified Host/Interviewer]

It.

[John Wilson]

It's hard to. It's a hard act to follow. Yeah, there was. Even if they don't close, it's still a hard act to follow. Just because of value expectations.

[Steve Carroll]

Absolutely.

[John Wilson]

We had one a couple of years ago. It was a million of EBITDA, 6 million of revenue that were offered $14 million. Like, my goodness, no one, no one can follow that. No, like, that's so, so now they're like, well, we can't sell for under $14 million. And it's like no one can buy you. So I don't know what they're going to do. I mean, four, four or five years.

[Steve Carroll]

Later, they're still holding at the same amount of profit still.

[John Wilson]

Yeah.

[Steve Carroll]

Wow.

[Unidentified Host/Interviewer]

Yeah. Yeah.

[Steve Carroll]

I mean, look, those guys have a different model. They, they see 6 million and they see a million of overhead that they don't need. And.

[John Wilson]

Maybe you can get that six times for them.

[Steve Carroll]

Maybe after all the synergies, it is a six times thing and that's probably fine.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

For Apex, it's. It's different for the employees, though.

[John Wilson]

Totally.

[Steve Carroll]

It's different for the owner. And an owner that cares about the future may prefer to choose you or a group that thinks of partnership differently.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

This was an awesome conversation. I feel like I got a, I got a wide ranging lesson here. Scaling through acquisition. And it was fun to hear about origin story, too. I. I don't know a lot of like, hey, I Red Walker Dibels. Buy, then build. And, and then, you know, built.

[Steve Carroll]

That's funny.

[John Wilson]

I read it. Yeah. Yeah, I know you did, but yeah, it is. That is funny. I mean, there's something small turned big.

[Steve Carroll]

Yeah, yeah. We. We. I was just talking again with my business partner yesterday and I told him, have you watched the Jerry Jones document on Netflix? Have you seen it yet?

[John Wilson]

I have not, no.

[Steve Carroll]

It's so freaking good.

[John Wilson]

Okay.

[Steve Carroll]

Anyway, you don't have to care about the Cowboys to love it.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

But there's a couple moments where Jerry Jones says, along this journey, everyone looks at us and says, oh, it's been. They're this multi billion dollar thing and they could do no wrong. They won the Super Bowl a long time ago, but one super bowl under his tenure. But it was really cool. In a, In a moment of humility, he says the business to him felt many times could be. Could have been completely different based on how the wind blows.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

And. Or how it blew. And that could cause them to have. And even talks about in the documentary. He could have lost the business to this reason or that reason or this reason. And for us, someone can look at us and say, oh, that was a smooth ride to where you're at. And for me, I've got all of the emotional war wounds of running out of money to make payroll next week or in like three days and realizing, oh, crap, I need to go sit in my customer's office to get that AR check today so I can make payroll.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Or vendors calling me constantly. Early on, we, we didn't have this figured out. We made tons of mistakes. So the, the, the journey to, to where it might seem we're at today has been. I've had lots of lessons.

[John Wilson]

Yeah, I'm sure. I'm sure. But you survived and you got there. I feel like a lot of the, A lot of the, you know, over a long enough period of time, and yours is short, but over a long enough period of time, like survival is, if you survive, you'll probably get big. Now, granted, you did in five years, but survival is like the game.

[Steve Carroll]

Survival is, Is very, Is huge. And just in a few markets that I, I'm really close to, I live in Phoenix, but a few markets I'm close to, a few of my competitors and even some companies that were for sale are closed.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

Shops closed. And very, very similar to us early on.

[Unidentified Host/Interviewer]

Yeah.

[Steve Carroll]

So I feel it in my bones. And some of these shops were part of huge companies and some of them were part of investors and some were parts of various structures. And I've taken it very seriously that there's not just a job. This is survival.

[Unidentified Host/Interviewer]

Yeah.

[John Wilson]

If people want to get a hold of you, how can they find you?

[Steve Carroll]

LinkedIn. Best place to find me recently on Twitter. I am new to Twitter. You want to find Twitter? Thank you, man. You can get sucked into Twitter.

[Unidentified Host/Interviewer]

Yeah, you can.

[John Wilson]

It's its own thing.

[Steve Carroll]

Yeah, I'm, I'm having fun checking two platforms now. Yeah, but you can, you can find me in either place. Just Google, Steve Carroll or Kelso Industries. That should pop up. At least my LinkedIn should pop up. But I try to reply to everybody that's not spamming, selling me something amazing. So if you just want to connect and ask for advice, usually try to respond and be helpful.

[John Wilson]

Awesome. Well, thanks for coming on today. This is fun.

[Steve Carroll]

Thanks for having me.

[John Wilson]

If you like what you heard, make sure you check out owned and operated dot com.