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The Home Service Expert Podcast
The One Mindset Shift That Separates Good Operators From Great Ones
01:05:08
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- [00:00]
Tommy
Just know you should be the dumbest
- [00:02]
John Block
guy in the room if you want
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Tommy
to be a constant learner and thinking about your future self, you really start to hang around with the best people. You put yourself in the right rooms all the time.
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John Block
How do people think about sharing success broadly? And it's, it's both financial, but when you're in a meeting with someone, are they hogging the ball? Was it all I's, all me's or are they a we person? That's abundance. That's that kind of concept of being broader. Those are things that we look for that show up in small, subtle ways. When you spend time with people, those are the characteristics that I think can take a business from 100 of revenue to a billion of revenue and beyond. So people that think that way.
- [00:40]
Tommy
Welcome back to the Home Service Expert. Today I got John Block visiting us from Dallas. He's an expert in private equity sales business and he is the founder and CEO of Unity Partners. John is the co founder and chief executive officer of Unity Partners, a principal based private equity firm focused on partnering with businesses to accelerate growth while creating value for all the stakeholders. He's a dedicated family man with a third baby on the way and he's a runner and a passionate cook who values time spent creating and connecting with loved ones.
- [01:13]
John Block
I'm one of the lucky ones today and always glad to be here. You said it. I've got my third on the way which puts me in the camp of perpetually lucky as I wake up every day and see my two soon to be three little ones and have an awesome team of people I'm surrounded with day in and day out at work. Something I'm sure you can relate to that certainly you stack those things up and you know you're lucky when you have an amazing partner in life, amazing kids and awesome teammates. Hard to beat that combination.
- [01:40]
Tommy
Yeah, you know, private equity is a, I love it. But also I hear the sides of it like you got LPs, you got people depending on you. Eight Track had a rough stretch this past year. There's just a lot of things changing so fast. I'm just curious, how do you balance it?
- [02:01]
John Block
We always talk about staying true to our foundations. You know, it's that simple idea we always come back to. You know, when things are great, stay true to your foundations. When things are rougher, straight to your foundations. For us, you know, it comes back to trying to find ways to get better. You know, every day waking up little improvements again, whether you're, you're on, on the top of the universe. There's always ways to push to do more and get better. Or whether you're going through a tougher spill in a business, in a market, whatever, you're still owed to yourself, owe it to your team, owe it to each other, your investors in our case, or our partners that operate businesses, the employees at our portfolio companies, the people behind our investors who benefit. We owe it to all of them to wake up every day and look to get a little bit better. I love that.
- [02:51]
Tommy
Take us back. Take us back on your journey. I guess you know from everything, from what got you into where you're at today, what you're looking forward to, maybe some family stuff too. I just want to hear, let the audience know who you are.
- [03:06]
John Block
Yeah, absolutely. I grew up in St. Louis, Missouri. My dad was a roofer, mom was stay at home mom. I did not dream of being in private equity because I didn't know what private equity was growing up. Tommy, I probably thought one day would be you, to be honest. I looked around at people that had small businesses and which of course you're using now, but when you started, I looked around and said like people, people that are running small, whether it's trades, plumbing, etc. As I said, my dad was in roofing. That's what I grew up with and that's what I always thought I would do. Started my career when I went to Washu in St. Louis, played sports, ended up having a chance to play Division 3, so I was a hero. But played Division 3 football, did that, and then started my career in consulting and had the good fortune of getting a chance to just learn how to think. I tell people that the beauty of consulting is you get to stare at a lot of different things and just learn how to break down problems, learn how to think, assess situations. I did that for a couple of years and then I got into private equity where I spent a couple years as an associate, at which point I often joke I was the master of the universe. We all know that 26 year old version of me who has done consulting and private equity and thinks, you know, they're pretty hot. So I went down this journey of thinking that and thought I'd go buy a business. You probably run into people like me 15 years ago that have done that exact thing and you're probably pretty happy to say there's a lot you need to learn. And I'm glad. I didn't buy a business and instead went back to hgbc where, as you said, I was a partner, was there for a long time and learned a lot, got to partner with some awesome business leaders, learned a lot about scaling, culture, leadership, the impact you can have on people's lives when you share share successes broadly. And I took all that learning and kept building on it, kept building on it, kept building on it. And then one day woke up and said, okay, time to pursue the entrepreneurial muscle. Time to exercise that passion, that dream that you've always had. And at that I decided to branch out from my prior firm and launch Unity three years ago. A little over three years ago, moved to Dallas with my partner Shannon and our at the time newborn and build our family and build a business here over the last couple years.
- [05:20]
Tommy
So when you're starting a fund, I just want to dive into this a little bit because a lot of people that listen are home service. Some of them have gone the PE route, but there's a lot of people that listen to this show. And how does one go about do you have to have your own capital? Did you raise all the capital with the LPs? I mean what, what was the, and what caused you to say I'm going to go start my own? And were you looking for the 10 to 12, I guess eight to 12 companies for the fun or did you go a different route?
- [05:50]
John Block
We the first thing I said is I've never or I'd say is I've can, can feel like I've never been able to be more empathetic now having gone through the journey of starting because the answer is yes to all of those things. You know, you're looking to raise money, you're looking to build a team, you're looking to find eight to 12 businesses to partner with and you're trying to do that all at once. And so it's a little bit of the same thing. I'm sure you went through where you're looking for a supplier, you're looking for a customer, you're looking for a teammate. And by the way, you're trying to do it without burning too much money and sticking yourself too far into a hole while you win that first customer and deliver that first product. And so for us, it was exactly the same. So we went out. We're fortunate that we partnered with some awesome people in our past that were willing to support us and help provide a base of capital to start with. We were also fortunate that some people that I had known in my past were excited about partnering together. So we quickly found a team and started to look for our first investment. And we spent the first couple of years doing the hard work. It's not something I don't take for granted that just because you start a firm, I don't know how many firms attempt to get started a year in private equity that don't make it. It's not a zero failure rate proposition. I can promise that much. And so we just went out and put one foot in front of the other every day, said it earlier, every day, try to get a little bit better, try to find another opportunity that made sense, that fit what we were trying to accomplish. Bring on another teammate to help us do more, faster. At the same time trying to raise money, bring on new LPs while living up to the promises to our existing LPs. And I think, best I can tell, three years into the journey, that's also what I'm going to do tomorrow. It's all three of those things and probably the next day and the next day and the next day. And I think the second you stop focusing on those things is where you lead your way.
- [07:52]
Tommy
You know, I don't know if a lot of people are familiar with how PE works, so I just want to explain a couple of things. First and foremost, you're able to get leverage on the company's EBITDA. Depending on the business, maybe it's 3, maybe it's 5, maybe it's 7. But you need to have those banking relationships to be able to get that kind of leverage. And then the day one, the principal company that did the deal is liable to make those payments out of the profit. And it's a, you know what? I love PE because it's just a simple, great formula. And the reason I did it is because it gave me a blank check to grow with somebody that I knew would be looking out for us. That's been through the rodeo a bunch. But, you know, first you need the banking relationships to kind of get that debt from the ebitda. What did the, what did the first deal look like and what made you want to do it? If you don't mind sharing.
- [08:47]
John Block
Yeah, maybe I'll start by sharing just a little bit of our strategy. And I'll start with our why quickly. Cause I think understanding our firm allows you to better understand everything we do downstream. We start with our why. Simon Sinek wrote the book Start with why. We love that philosophy. Capture the heart, win the audience. And for us, our why is building better together. Those three words. First, we're building. We start by looking for a strong, ambitious leader that we can partner with to try to build A world class platform. We love the connotation of roll up your sleeves and get to work. We have a mix of investors and operators on our team. We have 20 teammates. By the end of the year, it'll be 24, 25. That mix looks like kind of 40% investors and 40% operators and 20% firm operations. So very intentionally, a group of operators that can come in alongside these strong, ambitious leaders and roll up our sleeves and get to work. We don't just want to be a bunch of investment jocks sitting on the sideline thinking we're smarter than the world because we have MBAs. It's the proper mix of investors and operators. Coming together is our approach to help build. So that word build second better big believers of being the best to getting better. Constant improvement mindset, make progress every single day. Better operationally, strategically, financially. Talk a lot about building better culturally. We want leaders that share this desire to build ownership, culture, high degrees of communication, accountability, transparency, a spirit of abundance. We wrap all of our businesses with employee ownership plans. So we want leaders that lean into that, think, okay, I want to build a scalable platform, scalable culture within it that allow us to be not just bigger, but better finally together, bringing unique individuals together into one whole that's stronger. We didn't accidentally choose the name Unity Partners. The name's pretty intentional on the firm wall because we try to bring businesses together. We buy and build, but we try to integrate these businesses and spend the time getting systems right, getting brands right, getting culture right and doing it together. So that's our whole kind of firm ethos, building better together. That cascades into our strategy. We call it partner and propel. Partner with ambitious leaders, partner through M and A to accelerate growth, partner people with technology to solve recurring and essential needs, propel organic growth and propel platform integration through investments in people, processes and systems. Our Propeller team is our portfolio ops team that comes in and sits alongside our operators and helps accelerate value. Very intentional about the words we use. We don't say we create value for you, Tommy. We count on you to create the value we want to help though. We accelerate and try to do what we can to round out what you have and what you might need help with if you're a business owner. So that's the whole framework that we approach the world with. You asked about our first investment, we were introduced to an awesome, awesome individual, Jeremy Dubeau. He leads a business now called Prosperity Partners. It was originally called ndh, which was the initials of the founders. We went through a whole Rebrand. They leaned into the whole start with why have a firm that has a name that means something, that has an ethos? And they rebranded the firm Prosperity Partners. It's a tax and accounting advisory business. So does high net worth tax planning primarily, some business tax as well and some other accounting services. And in our first meeting with Jeremy, he said, I'm small, I'm 10 million of revenue. I keep getting called by strategic acquirers that are trying to buy me. I want to be the platform, I want to do something bigger, I want to be more, I want to show the world. And he laid out a map that said I want to go from 10 to 100 of revenue in five years. And we said yes, Strong, ambitious leader, large, fragmented market, partner through M and A partner. People with technology leaned into the idea of us helping him and we leaned right back in and said these are the people we look for, people that have those characteristics that have built something special, that are at the beginning, have a huge Runway ahead and are looking for a partner that can help them. And so that's kind of the bread and butter of what we try to do. Our first investment, I think has proven that to a T. We're kind of three years in. The businesses be north of 60 million of revenue this year. So go from 10 to 60 in three years. That's the kind of kind of journey we try to go on and keep going from there.
- [13:04]
Tommy
We. What was I going to tell you? The. You said something about shared. How much do you guys is it usually? It's usually 10 to 15% you give as an EIP slash P unit plan, right? You, you give out depending on the company and the size they want to grow to and how much stickiness you need and plus making it great for the outcome of the leaders and all the down. I love ownership works that KKR kind of figured out as well. That's like a little bit more. It's a little too esopy for me, but I still, I still like it. But what are your thoughts? What does that do to a business when you share ownership like that?
- [13:46]
John Block
So we do exactly what you said, kind of 10 to 15% incentive plans and we carve out 20 to 30% of that. So, you know, 2 to 4%, something like that that we give to all employees and we share broadly in effectively a employee appreciation plan or kind of phantom ownership plan. And we do that as part of our concept of ownership culture. We don't think it's enough to create ownership culture. We think it's an Important pillar of it. But we talk a lot about communication. And if all you did was give someone an employee ownership plan, but didn't talk about it, and didn't talk about the business, the business's goals, where you're headed, you wouldn't achieve that ownership culture that we strive for. We also talk a lot about transparency. It's not enough just to talk. You have to talk openly about what's going on. Goods, bads, indifference in the business lean in to being transparent. We think that allows you and that builds accountability. And that's another key pillar for us in this idea of ownership culture is high degrees of accountability. We all want to win together and hold each other accountable to doing so. And then the kind of fourth thing comes back to that ownership idea of spirit of abundance, sharing broadly big believers that employee success leads to customer success leads to financial success. If you pay it back, you win together. But we don't think it's enough just to say, hey, I put in place an employee ownership plan, so I create an ownership culture. We think that's a kind of failing proposition of sorts because you miss the other links that are extremely important to create that kind of feeling of ownership for people.
- [15:30]
Tommy
When you're talking to LPs and you're raising capital, I'm sure one of the biggest questions is what kind of irr? What's the internal rate of return we're looking at? And that's a tough question because you got to be well diversified and no one's Nostradamus. But considering it's your first fund. But what do you answer that question with?
- [15:54]
John Block
Yeah, we target private equity type returns, which for us that means we try to achieve or exceed a 3x over 5 years type returns is what we target and push for. And, and so that looks like kind of 25% IRR is a good target range for us. And we try to find teams and leaders that can align around a path to exceed. That is what we attempt and target.
- [16:24]
Tommy
You know, it's interesting because in a fund, and I've studied this stuff quite a bit, I've read a lot of books, it seems like when you've got 12, there's kind of a couple that are going to fall off. And I don't know if that's your experience, but then there's a few home runs usually and they kind of. And by the way, I don't think any private equity company could go in and run the business that'd be in a really bad spot to be in. What is your what is your take on how the funds usually work? And tell me if I'm wrong. Is there home runs and possibly some, maybe less returns or possibly they don't work out?
- [17:01]
John Block
Yeah, I think across a portfolio you do get a dispersion of results. So I think exactly what you said is fair. Not everything follows the exact same path. That comes back to what we started with talking about when you asked the question about different markets in different times that go through ups and downs. And we just kind of look at our businesses and say we owe it to each one to push forward and drive to the best outcome for each one, day in and day out. That's our duty to our, our investors, our duty to our companies. And so that's what we, that's what we push to do. But there is always going to be a dispersion, a dispersion of performance across the fund. Absolutely.
- [17:45]
Tommy
When I got luckily invited to speak at one of the annual meetings with Cortech and there was a lot of panels and I paid very close attention because definitely one of the dumbest guys in the room. I know home service, but I don't know macro and microeconomics as far as what's going on in the world. You know, I just, I'm not as in tune with that stuff. And one of the panels was very interesting. It was all different heads of PE firms and they talked a lot about, they've gotten wiser over the last few years about making sure they get behind founder based companies. And founder based companies seems to be a really, really, really keen topic. I'm not saying it has to be founder based, meaning the founder is still involved, but what is your take on when a company gets to a certain size of making sure the founder is
- [18:32]
John Block
staying on or not? We love partnering with founders. We do it all the time. The one thing I would say is we start by saying partner with strong, ambitious leaders and say it typically and oftentimes is the founder. But for us it doesn't have to be. We care most about having a strong, ambitious leader at the front of a company. But we partner often with founders. And also if you think of our platform builds, sometimes it's the CEO that is a founder, other times it's a lot of the different partners or leaders within the business that we've acquired that stay on and stay active and continue to build or run their office or their region or their city, whatever the case may be. So we respect the heck out of and think there's a ton of value driven by people that have Built businesses and the founders that we're able to partner with. We also have instances where founders are looking for a transition plan because they might want to retire or they might want to move on to the next thing. And we know there needs to be
- [19:38]
Tommy
a solution for that as well.
- [19:39]
John Block
And as business builders, we look to have solutions for that as well and can be kind of amenable and understanding. We love it when they, the founders stay on as investors and roll over equity into our platforms. Even if they look to retire. We like that alignment that's created with kind of shared ownership as well.
- [19:56]
Tommy
I think it's really smart if the, if the, you know, if the founder wants to leave and not roll, how does that change? If it's. Let's just say they're 66 years old and they're just. They're kind of burned out and they want to enjoy life.
- [20:14]
John Block
The first thing we tend to look at, if I were to look at your business model as an example, is do you have a GM in the city that they're operating in that can take on more volume? If the answer is yes, then we can make that add on, because now we've got a team that's ready to run with more volume and ready to take it on. If it was a new city and you didn't have a GM ready to go to cover it, that can be really hard.
- [20:42]
Tommy
Yeah, you need to have a. If you're a great leader, you got to be training no matter what. The next you get hit by a bus, you know, you should be always training leaders.
- [20:53]
John Block
And if you could drop someone from a different office that wanted to go to that city and take over, great. But if you didn't have that person, then I think you're kind of fooling yourself thinking you can acquire a business that has no leader and do well with it. So it's very situational. Is the short answer, Tom, is you just kind of have to be smart, look at the situation and say, do you have the team to be able to handle that? If you do, great, great. That can be a perfectly fine acquisition.
- [21:19]
Tommy
What if. What I was going to ask,
- [21:24]
John Block
I just.
- [21:24]
Tommy
I have so many things going in my mind right now. I could just talk to you all day. You're on an interview, you fly out to a company, you probably got another couple people with you. You're sitting down at the conference table. What kind of questions? What do you look for? Obviously, character is a big deal. I know there's turnoffs and some really good things. What are some of the stuff that you're like, and I don't know if you want to share a story, I know you don't want to go tell us individual names of people or companies, but what are some things that you're like? Because I want the listeners to actually understand what, what a company like yours is looking for in a leader and in a company and some of the things that they're not looking for.
- [22:08]
John Block
Yeah. One of the things that we think a lot about is that the core values that we look to put in place, unity and in our businesses, these values of ownership culture I talked about, we look to test those and understand are the people that we're sitting across from, do they espouse those values? And again, communication, how do people talk? And you can ask them how they communicate with their teams today. And you learn a lot by that answer, by how a leader communicates with their team. We learn a lot about are they high communicators internally with their businesses coming in. And that's important for us because it's one of our pillars of ownership culture that then cascades down to transparency. You know, what do people tell you in the first meeting, the second meeting, the third meeting, ultimately, with more time with people, you're going to learn a lot. And you hate to find out that people were trying to pull the wool over your eyes. And that stuff usually comes out. And you know, I don't have a lot of patience for people that aren't transparent. And so that's something that we try to test. And there's, that's hard to always test in your first meeting. But we don't partner with someone after one meeting. You know, we meet with people a few times over the course of a period. You know that through the diligence processes, you know how it, how it works. And so that tends to flush itself out. Accountability. The little test of if we were in a meeting and you said, I'll follow up with you on a, B or C, did you follow up on a, B or C? Those are little subtle tests of accountability that I think about and that we do. And little things are big things over time. And so are people accountable? And it's okay to forget something, that's fine. But generally, are they demonstrating accountability? I talked about spirit of ownership. How do people think about sharing success broadly? And it's both financial, but when you're in a meeting with someone, are they hogging the ball? Was it all I's, all me's, or are they a we person? That's abundance, that's that kind of concept of being broader. Those are things that we look for that show up in small subtle ways when you spend time with people and if you're looking for them, you can kind of take note and, and diagnosed those are, those are things. We also talk a lot about the lean in test. We know partnership's a two way road. If someone leans in. When we talk about big ambitious goals and plans, we tend to lean back in. If someone leans out, we kind of say probably not the right fit for us. You know, if there's just that kind of classic lean in resonance test that we try to do as well because we don't want to be button heads and not have a good partnership just because we got off with a different perception of what the next three or five years would look like.
- [24:49]
Tommy
Have you ever heard of the term long term greedy?
- [24:53]
John Block
Mm, absolutely.
- [24:57]
Tommy
I've been hearing that word a lot lately or that phrase long term greedy. And I guess that phrase. I think there's a lot of companies, whether it be kkr, Blackstone and there's so many areas, there's so many great companies out there, but I think some of them are starting to realize they might want to hold longer and not have to, you know, I guess PE you get 10 years and then you get extend for two. It's typically how it works. And you know, what do you think about that term? And I think it's an appropriate term because long term greedy to me means I want to stay with the company and continue to grow this thing and continue to prevail and have fun doing it. The only thing I don't like about long term greedy and there's ways around this is there's a lot of people that don't want to wait 8, 9, 10 years to get, you know, some of their P units turned into cash. It's a, you know, somebody would rather take it something that says, hey, we're only two to three years out. So. So what does that mean to you and how do you navigate that?
- [26:03]
John Block
I probably take a slightly when I hear that. I absolutely appreciate the perspective of people that want to hold for a long time. I think what you said is important. You have to find ways to solve for ringing the collective bell for teams. Especially in our model of putting in place deep employee ownership that really gets felt. The benefit of it becomes very real when you share some of it. And so we think that's very important. Our kind of take on long term greedy is we want to build things that are going to last long beyond Us and we want to make decisions that benefit the platforms long into the future to the best of our ability. And so that's kind of a bit of the don't be short sighted, short term thinking, try to make a buck tomorrow, have a business positioned to be successful in the long term. And we think the way you benefit from that as an investor is other investors see that as well and ultimately will value your business for more because they know it's a business that's making long term greedy decisions versus short term greedy decisions, which we think those that make short term greedy, ultimately the big investors, some that you mentioned, I think they get a sense of that pretty quick and they just think differently of the business generally. So we kind of think irrespective of when you have capital events, being long term greedy and how to build is the right way to do it.
- [27:27]
Tommy
Yeah, so I think a transaction is a speed bump. I mean, it's like that's not what I, you know, I want it to work out for everybody, but this is not what we're building for, you know. Yes, it's gonna go well for everybody. And the reason I call it a speed bump is some people leave, some people are exhausted. I mean, going through, when you start getting into the hundred million of ebitda, you know you're gonna look like, mine wasn't that big, but I lost some hair. It's a lot. You got a lot of meetings, you're getting like, there's crazy. I mean, I think they, they got my blood, they got my DNA, they knew what my grandpa did. No, I'm not kidding. It wasn't that big, but it's, it's a lot to go through for a team. And just some people are like, man, that was exhausting. So sometimes there's recalibration of the team a little bit. It's usually a good thing. Most of the people stay and then they want to do another tour. And then some people, maybe you had somebody great FP&A. Right, just a wizard and they want to go on to become a CFO and the position doesn't exist at that company. You might have some fallout and that's expected, correct?
- [28:32]
John Block
I think there's often some fallout. I think speed bump's a fair term. I sometimes use an accelerator though, because I've seen it happen that way too. When you have success, everyone looks around and says, oh shoot, we've got something special here. And they show up the next day and say, let's work harder than yesterday because we're doing Something special here. So I've kind of seen it both ways where, you know, capitalization events can be accelerators as well. They're exhausting. But I'm sure you felt this sometimes on your. When you're under the most stress, most tired, etc. The next day you're the first out of bed, you're ready to go again. And so there's a bit of that that occurs too. And you know, you got to stay balanced. It's a marathon, not a sprint. But we find for the right people a lot of times it's an accelerator and a kind of energizer of sorts.
- [29:27]
Tommy
I know a company recently put $300 million in the business and they don't plan on seeing that money come back till 2028. And it's a technology company, it's actually a hardware company that does some software things as well. And I love that because they're willing to make the investments for tomorrow and it's very hard. I love Jeff Bezos when he said, who cares what the stock price is at? I know the health of the company, we'll just buy back some of the shares cheaply. I got the five year plan, you know what I mean? It's interesting. What do you do with a founder who might not have an mba? Not be used to the conferences going in and having a board meeting every month. I enjoy it. But also I know, like when Ara just took Service Titan public, he's like, I gotta be with my clients and I gotta be with my team to continue to forward develop this thing. Right. He told all the investors, I'll come to a once a quarter, I'll show up for a day, but I need to be close to the action. And as long as I'm getting results, hopefully that works for you guys is the way he went about it. I was just with him at Service Titan in the tower, ivory tower of his office.
- [30:43]
John Block
How do we go about kind of managing that transition?
- [30:46]
Tommy
Yeah, so like, you know, depending on the founder, you know, if it's your second turn, it's way different. Even going through all the deals, you kind of know what to expect. But if it's your first time and now they're reporting to someone that they really. The only person you got to really report to is if you got a delayed relative term loan or some type of loan, you got to, you know, you got to meet with the bank, but now they got a boss.
- [31:08]
John Block
I think the simple way we try to do it is get in front of it by being clear on what, what our expectations are. And that comes back to the lean in. And if someone says, okay, I understand, I can see how that would. That governance model for us. It comes back to this idea of having a clear, transparent, open governance model. If that's something that the other side, the founder says, yeah, I can see how that's helpful. AKA leans in and says, great, can you help me put it in place? We have all the time in the world to help put it in place. What we don't have time for is people that say, that's not for me. In which case we're not going to have a partnership because we do think it's important to have some governance model. Now. We're not doing monthly board meetings, we're quarterly board meetings. So we think there's a balance in kind of how you. You have to work in the business. You can't constantly be doing kind of LP or in this case, board reporting. So we kind of get that balance, but there is value in, we believe in having that governance model. And so it's kind of try to be fair, try to be balanced, try to show up with. Instead of saying, we need a board deck, say, here's an outline of a board deck. Can we help you populate it? We have a. I talked about our Propel team. We have a position, we call our Propel Vice president. Kind of drops in as chief of staff for the first year of a business and helps put some of this stuff in place. So we also try not to say, by the way, you're on an island, CEO, this is your first time doing this and you're on an island. Good luck. You know, I guess that's not exactly fair, but we do say, here's the plan. Let us help, talk about our strategy, good leaders, good markets, where we can help them. And they want our help.
- [32:58]
Tommy
Yeah, I think I was a wild card on the first one. Some people felt like, are we going to be able to tame the beast? And I think I was. You know, when I hear back from the guys I meet with, you know, from Cortech, they're like, look, you listen, you call us for advice. You let us stay at your house. You ask more questions by far than anybody we've ever worked with. I think I annoy them, how much I call them and we meet monthly and I've learned so much from them and I've extracted as much as they possibly let me because I want to know everything, how it works. I ask them questions, I fly out to New York. I mean, they've invited me, but I fly unannounced. I'm like, hey, listen, I'm going to come out there next week. And I've just really, really leaned in, knowing there's so much to learn, you know what I mean?
- [33:43]
John Block
Be the best of getting better. You live the mantra, you know, you wake up every day saying, what can I do to get a bit better? Like, that's.
- [33:50]
Tommy
That's what we love.
- [33:50]
John Block
When we find people like that, we say, let's go. You know, it's kind of that simple.
- [33:57]
Tommy
Is there anything that you took out of the early days at Bain? I know that was a long time ago, you were just a young lad, but was there anything or along the way, maybe beyond that, that, like, really, really, really was impactful?
- [34:12]
John Block
I think one of the things I learned at Bain, and I get asked this coming up from a consulting versus a banking channel. I think in the consulting channel you learn a lot, how to ask questions, be active, be forced to drop into a business and lead conversations early and think, do a lot of thinking. And I'm forever grateful for that, the learning how to think element of consulting. So I think there's a ton of value in spending a couple years early in your career doing just that. So forever grateful for that.
- [34:51]
Tommy
Yeah, that deep thinking. How many people do you usually meet with before, by the way?
- [34:58]
John Block
Sometimes it's deep thinking, sometimes it's not that deep. It's just, you know, how does your business work? You know, like, it's. Which is a little bit offensive. In consulting, sometimes it's the truth that people. That reputation of, like, it's not very deep. It's kind of shallow, but, you know, still, it's good.
- [35:17]
Tommy
Well, it's interesting. I've met a lot of different business types, and it's an interesting thing. It's like, I feel like I know home service pretty well. It's funny because Ken Goodrich with Gettle had originally called me up along with Tom Howard, and he said, you know, Tommy, I feel like you're probably on the top of your game. He's like, I haven't really met anybody that has studied and applied these principles and has been a successful. He goes, but when you know what these PE guys know, he goes, you'll be at a whole new level and just understanding how capital works, understanding how money works, and really taking a deep dive into arbitrage and understanding how, you know, I'm not so sure I like acquisitions as much as Greenfield. If there's an opportunity to do it, that's Scalable I mean, obviously anybody would say you could go buy a great business quicker, but it's harder to make it fit into the culture depending on the size of businesses. And we've seen this happen with airlines and all kinds of things. And that last person that Biden had didn't let anything happen. That was a good deal. But what are your thoughts as far as acquisition versus greenfield, or are they both equal to you? Let's put it this way. If you had a choice and you could be successful greenfielding versus Buy, you know, the buy companies, which route would you rather take? Is there a preferable method for you?
- [36:43]
John Block
My top out answer is yes. And because that's consistent with our strategy of doing a bit of both is pretty awesome. We think having kind of multiple ways to win is pretty powerful. So I'd say that's my top out answer. And part of that is come back to it depends. Like if you told me that you were gonna Greenfield, you're in Dallas and you're gonna greenfield in Fort Worth or even greenfield in Austin, I'd say, okay, I can kind of see how that makes sense. If you're in Dallas and you told me you're gonna greenfield in Portland, Oregon or Maine, I'd say, yeah, that might
- [37:20]
Tommy
be kind of hard.
- [37:20]
John Block
Like those are pretty far away and it's gonna be hard to really get your people there and your culture tied. And are you sure you're ready to do that? And so I'd probably say if you do both, it's great. I love organic growth. So the Greenfield concept I love. I also would want to understand. We always look at like how much it's going to cost, how confident, how on risk are you when you go to Greenfield? Can you do it efficiently? Hence you could probably greenfield into Fort Worth much more efficiently. You could start with winning some customers that you serve from Dallas and then eventually open up a branch in Fort Worth. That's a lot easier than saying like, oh, by the way, no one in Portland, Oregon has even heard of my brand or has any idea who we are because it's thousands of miles away, like that's or my people and all those things. So we just look at, we kind of look and assess and see what makes sense. We like both levers because we think there's a reason to play, to play each of them.
- [38:13]
Tommy
Is there anything you guys try to shy away from? For example, I know some companies don't invest in software, some companies don't invest in manufacturing, some only want to do high demand service. Is there Your business model, Is there anything that just doesn't fit the investment thesis?
- [38:33]
John Block
Yeah, I'll start by saying what does? Essential recurring services. So we are kind of office based and field based. So I mentioned tax and accounting. We have a swimming pool services business, we have a parking lot sleeping business on the commercial services side, we have an insurance brokerage business on the office based side. So we like office and field based and we like kind of recurring essential services. So that's what we do. What does that mean that we don't do? We don't do kind of hard asset businesses. So we don't do heavy manufacturing, we don't do real estate, we don't do energy, so there's a lot we don't do. We also don't do growth software businesses. So we're kind of more mature cash flow generating businesses is kind of our practice. We can, you talked about greenfield. Like we can lean in and invest some money into a market to open it, but we're not going to burn business for 10 years to hope we get a return in year 20. That's not going to be our investment model.
- [39:38]
Tommy
When you've met all these founders over the years, specifically the last three. But what are the best founder led businesses have in common before they take the next leap to scale?
- [39:52]
John Block
Yeah, I mean it's kind of simple things that we look for. We think having that strong ambitious person that leads with culture and leads with identity and leads with values says it again and again and again. You know Tommy, you've probably told the story of a one one thousand times, a thousand times, a thousand times internally at your business, like, let alone externally. But you kind of like have to love it, have to live it, have to own it, have to be in front of it every single day to get the team behind you like that we look for. That's something we love. When you've got someone who just is manic about it and loves it, that's pretty awesome. Pretty awesome to see. So that's the first thing that we look for and stare at. And then we look at people that just naturally are looking for scalability, that are kind of thinking ahead, like what is this business going to need in three to five years? Whether it's investing in the right systems, the right technology, whether it's investing in the people in a way where you're constantly saying okay, I'm going to need three GMs because I want to greenfield these markets. Who's going to be ready to be a GM in a new market in three years. What's it going to take to get them there? Because they're a rising star. How do I get them to a spot where I know they can open anew? Like that. Kind of always thinking about scalability dynamic is so real. And then the other thing, a finance way of saying it is capital allocation. Capital is meant to be labor, money, kind of all sorts of things. But people that can just look at a set of options I talked about. Yes. And for organic and inorganic can just look at a set of different options and using some thought it doesn't have to be perfect data driven science in some ways. I was listening to a talk the other day talking about the problem of being too data reliant. Is there a lot of things that we don't have data on? And if you only rely on the half of things you have data on, you're missing the other half of things that are factors to decisions. So people that are making decisions with information, not just data and are constantly thinking about where they want to allocate time, energy, effort, resources, those types of leaders, those are the characteristics that I think can take a business from 100 of revenue to a billion of revenue and beyond. For people that think that way, you
- [42:10]
Tommy
know Amazon, it was in the news yesterday, they've automated a lot of the future. They're trying to make each worker be capable of doing 10 workers jobs using technology. They said it's going to displace the future of 600,000 jobs and technology. When it comes down to it, anything repetitive, it's already happening in the call center, it's happening in the dispatch world. It's not happening necessarily in the warehouse except for Amazon, but anything, you know, hr, Massive, massive. Look at Opal. I mean not Opal, Oracle. You look at just the functionality of these large companies, what AI, machine learning, regression testing is doing. Where do you think the displacement's going to be? Obviously home service blue collar work is actually coming to the rise. No one's going to be out there on your roof anytime soon robotically. But how is that going to change the future do you think? And I know it's a tough question, I know nobody knows all the answers, but I'm just curious your take on it.
- [43:20]
John Block
Yeah. Generally we kind of take the view that there's no doubt the future is going to change, of course. And we think it's going to change in the short term, slower. We're thinkers like this in the short term, slower. In the long term, faster than probably how we all comprehend it because that's Generally how tech transformation occurs is everyone in the short term overestimates the speed at which technology changes things. And in the long term you tend to underestimate. So we probably take that view generally and we talk a lot about investing in office based services and field based. And if you break apart the two, we kind of think of technology having a huge impact on both in different ways. Office space, you said it kind of jobs that are hyper, easy to repeat, whether it's filling out forms, collecting information, all of that stuff is just getting easier and faster. And so we're big believers in kind of some of the lower end tasks constantly getting replaced by automation. And your people then have to be trained to do more relational work and get better at the kind of relationship management side because that we think for a long time will still be very important. On the field based side, you're right. We think the same areas you mentioned, whether it's agent work, things in that nature get replaced pretty easy. I do think, I mean you probably have a better sense than I do, but some of the like robotic eco skeleton things I've heard are quite fascinating. You talked about H Vac moving equipment around. If you've got the assist of some sort of semi robotic thing I've heard like the back brace and arm support things are pretty amazing already. What some of these kind of warehouse type jobs are using are pretty real and pretty powerful in the ability to have people do more out in the field even. And some of those things aren't. That's very different than a robot doing it. It's technology enabling people to do more, safer, faster, more efficiently and repeatably. I think that's pretty cool and it has a big impact. And that's the kind of stuff that I think people probably in the short term don't think much about. But in the long term could, could drive safety, efficiency, et cetera in ways that are pretty real.
- [45:34]
Tommy
It's.
- [45:35]
John Block
I will say, lastly, I will say I was driving down the street the other day and I saw on a street site autonomous things working on the street. You know, so it's happening in the street today. And you sit there and say there's guys standing around probably with a remote driving trucks or what looks like those robot delivery things working on street work. And so you just see applications if you keep your eyes open of this kind of autonomous stuff everywhere now. Pretty cool.
- [46:07]
Tommy
You know, I was at an event recently in Aspen. They asked me to speak at Goldman Sachs. I don't know why. There was 70 people in the room the average net worth was 800 million. It was an honor to be in there. And I was watching some of the other speakers, and one guy said, and this guy was wearing shorts and a T shirt and tennis shoes, and he didn't care. I think he was a multi, multi, multi billionaire of a software company. He's kind of like, I'm just here, so I'm going to tell you guys what I know. And he said, we're not far from, like, self thinking. Like, you know, SGI is super intelligence. But he said, we're not. And then I watched the David Solomon. I was just in, and I like to be around these people just to see what's going on. I went to Sonoma and another Goldman event, and I watched the old founder of or the old CEO for 12 years of Google say, this is we're just getting started. He said, when you see the breakthroughs, he goes, all of Silicon Valley and San Francisco think that within three years there's gonna be a breakthrough so profound, it's gonna like the Industrial Revolution or the telephone or something so profound. It's gonna change everything in the way we all think. And it's great. I'm very optimistic. I was with Robert Ciardini the other night, the guy that wrote Influence, one of the best psychologists in the world on influence. And he said, I'm optimistic. He goes, it's an exciting time. He's 81. He's like, this is gonna be amazing. And, you know, part of it is just, what's the world gonna look like in 10 years? So, I mean, I love to work. I love capitalism. It's a weird thing. I love, like, may the best man win, continue to raise the bar if you want to be an adversary. So. And I love that. I love the competition. And I'm just wondering, as this thing starts, you know, Ara, the guy I was talking about, the CEO of ServiceTitan, the founder, he said, I'm a little bit worried because we might not have to work. I mean, Bill Gates came out and said, in five or seven years, no one will have to have a job. And I don't know if these guys are right or not. I'm just here for the ride, I guess.
- [48:26]
John Block
Tommy, you're in the room with all the smart people, so you have as good of an idea as I do on some of these things. And I probably would say much the same. I'm a believer in the fact that there's going to be a lot of change. I'm a believer in the fact that you can be part of the journey. Try to get a bit better every day. Wake up and don't be afraid of it. I probably hope that I'm working in five to seven years because I probably take the same view. I don't know what else I would do. So I don't know that I'll be able to just sit on the beach and do nothing. But I think that kind of don't run from it. Run to it, run to it smartly. We also at Unity are the kinds that say be fast followers on a lot of this stuff. Don't feel like we need. We're not going to go out and spend all of our money trying to create the future. But we're also, and we don't think that way day in and day out. We're kind of be boring, make money type investors. But we do pay attention to it and we think, you know, as it changes and as it evolves, you better be ready to kind of grow with it because it's not. The technology changes aren't going away is our view.
- [49:39]
Tommy
So, you know, you've lived.
- [49:42]
John Block
Go ahead. It's awesome.
- [49:43]
Tommy
It's awesome and it's fun. I do, you know, the innovations we're making just today, I mean, we're a garage door company and I always say we're a technology company now that does garage doors. It's changed a lot. You've lived in Chicago, St. Louis, West Palm Beach, San Francisco. Now you're in to Dallas again. What is that living in all those spots change your perspective? Just those different cultures.
- [50:13]
John Block
It is a big country, it's a bigger world. I'd say to quote the great Ted Lasso, be curious, not judgmental. That's probably what I've learned living all over that there's a lot of wisdom and a lot of truth to that quote that I think about often. And when you've lived a lot of places, if you're willing to use your two ears and one mouth and listen a bit and give people a chance to share a voice, you can learn a lot. And it's pretty awesome. It's pretty awesome. So that's probably been the biggest thing I've been thankful for. Having had the chance to move around a lot is is it instills a bit of that thinking of, you know, be open minded, be curious. So I'd summarize it.
- [50:58]
Tommy
You gonna stay in Texas for a while?
- [51:02]
John Block
I sure hope so. It's a pretty darn good state. It's a pretty darn good state. So I don't I don't see myself going. I don't see our family going anywhere. We like it here. We're pretty entrenched, raise our kids here, while at the same time I'm not afraid to get on a plane. So, you know, always happy to come see people and go visit places. But we like calling Texas home.
- [51:23]
Tommy
So you're a pretty creative guy. You like to cook. What's your favorite dish?
- [51:29]
John Block
Last weekend we had 20 couples at our house for our annual paella party. So if I don't start there, I've got a 40 inch paella pan. I'm out back, got the apron on. You know, we've got. I'm allergic to shellfish, so I can't put shellfish in it. I do sausage and salmon and I'm out getting the sucker out the burnt rice just right. So I have to start there because, you know, if you're going to host a dinner with 20 other couples and the list is growing of people that seem to get invited every year, you probably should. Should cook one of your favorites, right?
- [52:06]
Tommy
I love that. No, that's great. What's the best investment you ever made for both yourself and for your career?
- [52:19]
John Block
Yeah, I think I'm going to say the things. I hate it when people say the cheesy answers, but it's probably right. Investments in health are pretty important. Physical, mental health, pretty important investments. You get to make investments in relationships, extremely important. Significant others, family, friends, business partners, maintaining. You know, the advice you get when you get married, I mean, I know you're engaged. The advice you get when you get married is relationships are hard work. You have to make investments in them all the time. Those things are all true. And so I'd say those are the obvious ones, by the way. Those are the ones that when I'm 80, talking about the next decade, I hope are the same things that I'm most thankful for that I made. Whether I've got way more money or way less money than I have today. I hope I'm saying, like the investments I made in my health and my family and relationships are the things that were most important. And I think that's when you ask most people that get to that spot. That seems to be pretty consistent.
- [53:19]
Tommy
Very wise. Is there a book that changed the way you think about leadership or business or life?
- [53:26]
John Block
You know, I'm going to use the book I referenced earlier because it's an obvious one that we reference a lot at Unity, which is start with why. And there's all sorts of. I've Read all sides of the arguments of the science behind it, which is all sorts of, who knows. But the spirit of it I think is spot on. Like win the heart. Win the heart and brands and people and leaders that are really good at that. We love. And so that book is one that I think a lot about and that we reference a lot. We do a book club at Unity every quarter. So, you know, we have fun reading different books and talking about them. That was one of our first ones. The Happiness Advantage was our actual first book club book. I think there's some truth if you just hear the title the Happiness Advantage. Like there's a lot of people that wake up every day looking for a reason to be mad. Don't be one of those people, you know, life's pretty good and try to find reasons, even when you're going through tough moments, try to find the reasons to kind of lift each other up. So those are simple things that I think a lot about. I mentioned I played football. My college football coach used to say PMA positive mental attitude probably stuck with me more than anything of my experience there. I think that's pretty powerful, that idea.
- [54:46]
Tommy
You know, think about the coach, I think about the coaches that I love the most. And actually here's the question for you as a leader, do you want to be loved or do you want to be respected? If you had to pick one, that
- [55:02]
John Block
is a really good question. That's a really good question. I think, I think respected as a leader and I'm going to say that's very different than respected as a boss. We all know the leaderboss dynamic, but being respected as a leader. So if you start with leader, I think respected is a pretty awesome place to land. I hope with that is a lot of love. But I'll say respected as leader.
- [55:26]
Tommy
Well, you love your family and in your business, hopefully you have a high performing team. I've had a fire family too. It's never easy, but it's not an easy business, is not an easy road. I don't care what anybody says. Everybody says, hey, I want to do what you did. I said, why? You don't even know. You don't know the pitfalls along the way and what it took to get here. And I don't advise it for anybody. I don't know how I still have hair or, you know, I'm still sane. But I loved every minute of it. And I've learned more from the failure than I did the success.
- [55:58]
John Block
What's your answer to that question?
- [56:02]
Tommy
Here's the Thing I think about the people I love the most, I do love, I love and respect them. But they were willing to have very, very difficult conversations with me. And it's something I really reflected on a lot this week is if you really care about somebody, you're willing to have the hard conversation that no one wants to have. That. You know, my cousin, she called me up and she said, hey, we're so proud of you, dude. I love you so much. She goes, do I have the permission to tell you something right now? I said, yeah, you can tell me anything you want. She goes, why don't you love yourself? And she goes, I think you drink too often. She goes, you're not eating right. I know you're not getting enough sleep. And she said, take off. She's got a doctorate degree. And she says, take off your shirt and look in the mirror and tell me how you feel about yourself. And I wanted to say, you don't know how busy I am. But what happened was tears came down my eyes and I said I could do better. And that's. I almost get emotional, but I said, you didn't call me out, you called me up. And I needed that because not a lot of people are willing to go that hard and say those things that I don't want to hear. And I'm in a position of control where it's kind of scary to talk to me and I don't want it to be that way. I want to have an open door policy where you can tell me whatever's on your mind, good or bad, or if I need to do a better job. But I respect the people that are, first of all, set a high standard and we're going to live at this standard and we're going to be constructive and if we could do that with each other, we're going to have a very healthy company. We're going to be able to move quickly.
- [57:36]
John Block
Very cool story.
- [57:40]
Tommy
Well, it's always fun. Like I said, she messaged me today. She's like, you got to read this book. You got to listen to this. We're always messaging. Is there advice? So you're in your early 20s. Do you go back 18 years and we'll wrap it up here? These are wrap up questions. I appreciate you staying a little longer. You're 22, you're 40 today. What are you telling your 18 year younger self?
- [58:11]
John Block
I love this question. I've thought a lot about it. Two words I use push patiently. And each word is very important. Push, take chances, lean in, go do more Work hard, push. Don't accept moderation of things. Just keep pushing, but do it patiently. It's a long road and that comes a bit of the be willing to learn, be willing to listen. There's times to slow down the Barry Sanders football analogy, wait for the hole to develop and then sprint through it. Those ideas, I think are pretty important for people. I think about them today. You know, those were 20, 20 years, 18 years ago, I would have given myself that advice. I still think about that a lot because I still have to remind myself to push patiently, let the play develop. It's okay, you got long. Be long term, greedy, continue to keep thinking forward. But I love that simple push patiently.
- [59:21]
Tommy
Yeah, I definitely think patiently. What is your advice to those founders out there that are. They're saying, I want to triple next year, and they're at $5 million of EBITDA today. I want to get to 20 next year. I think that's more of a young entrepreneurs dilemma, is I want to grow. I want to grow, I want to grow. And I. But here's. Let me just rephrase that because they never talk about ebitda. It's always revenue. And that's something I had to change about a decade ago with me is they're always like, man, we're at 10 million. I want to get to 30 million. But they never talk about profitability or EBITDA. So what do you tell somebody that just is super ambitious? I've seen so many of these guys fall apart and just their business goes to nothing.
- [60:08]
John Block
I love talking to people like that. I'll start by saying I'd rather have someone that's ambitious and wants to push. That's something I love. Ry building better together. I tell them, Ry is not building bigger together. If all you wanted to use was EBITDA revenue as a measure for being big better, then I think you're missing the mark. You have to think a lot as you build businesses. You have to think a lot about being better, not just bigger. And again, we're very intentional about the words we pick at unity. And that's one of the nods to that is better. And so I'd say that's an interesting metric that you care so squarely about. It's an important metric. It's not the only metric. It's an important metric. But if that's your only measuring stick, I'm sorry, we should be thinking about what better looks like. You know, let's pick five different metrics that we should think about. Do you have really good Employee attention. Have you developed people that are getting better a year from now? Do you have customers that love you? Those types of things are hugely impactful to the long term nature of the business. Have you done it? Have you gotten the growth capital efficiently? That's the kind of revenue versus ebitda. But there's kind of more to it than that. Have you set yourself up in areas that allowed for sustained growth? From there, let's talk about all these things instead of just picking one singular metric and saying, I went 5 to 15 of Eva does, so I'm a hero. You know, there's just more to it than that singular thing.
- [61:43]
Tommy
I always say people overestimate what they could do in a year and underestimate what they could do in five to seven. And it takes time and it always does. But then it goes like, then it goes to the hockey stick and it gets, it gets hard before it gets easy, but it gets fun. Last thing I'll ask you, you know, maybe there's something I didn't ask you. Maybe I'll let you close us out, but I'm sure there's a lot of things I should have asked you. I only went through probably five questions because I was greedy and asked you everything I wanted to know about. But yeah, just kick us off one last thing for the audience. One last piece of knowledge.
- [62:19]
John Block
I'm just gonna do what I did earlier and flip the script slightly. What would you tell yourself from 20 years ago? I'm gonna ask you a question.
- [62:29]
Tommy
Yes. Well, what I'd probably say is go spend more time with your grandma would be on the top of my list. But you know, for business wise, I would say, and I could give you a rhetorical answer that I've said many times when I think, you know, I'd probably say, listen, hire people that are more knowledgeable than you. Don't be afraid of someone commandeering the company and everybody leaving. Just know you should be the dumbest guy in the room. And if you're, you put yourself in the right rooms all the time and you really start to hang around with the best people. You know, you hang out with Eric Van Dam, you're going to become a better golfer, okay? If you go to those golf courses with him. And if you want to become a man of faith, go to guys that go to church, that don't cheat on their wives. And if you want to get a six pack, hang out with a few buddies that have a six pack. And if you want to have, you know, all these things, if you want to be a constant learner and thinking about your future self, then hang out with people that are always reading and going and podcasting and going to the right events. Because at that point, I just was a hard worker. I was. I thought the harder I worked, the luckier I got. But it's really the network, the people I know that create. It's not. It's who, not how these days. And so, yeah, I would have said, you know, you can work four jobs, you'll be able to scrape by and put a few grand in the bank a week, but imagine if you were out building relationships with that tenacity.
- [64:06]
John Block
I love that. I love that I asked that question because I think too often it's easy for me to come up with something else to share. But I've been sharing a lot and I think it's fun to. Fun to hear a little bit from you too, John. So I appreciate that and I appreciate using my last question on flipping the script. So thank you.
- [64:23]
Tommy
You did good.
- [64:24]
John Block
John.
- [64:24]
Tommy
This is super cool, man. And I don't think we've had enough people on here like you that are actually investing in companies and got to really tell the audience a little bit about what you look for. You're a man of high morals, and you look for the right partners that are going to be good stewards to
- [64:41]
John Block
not only their clients, but their internal clients, which are their teammates.
- [64:45]
Tommy
And yeah, I'm looking forward to meeting you in person. We got a lot of mutual friends, and I really appreciate you taking the
- [64:52]
John Block
time to do this today.
- [64:53]
Tommy
Thank you.
- [64:53]
John Block
I enjoyed it. Sam.