Patrick Baldwin: We were down there in Seth Garber Land in Tampa, Florida. We came to visit him in the Pest Daily studio before we had a U Group meeting.
Paul Giannamore: I ate my weight in sushi down in Tampa that night.
Patrick Baldwin: Seth questioned me. He said that I couldn't eat sushi or something. He was judgmental. Maybe you were just poking the bear to see if I would eat it.
Seth Garber: I'm still not sure you ate any real sushi. I feel like it might have been some of that cooked stuff but that's okay.
Patrick Baldwin: Maybe because you were all chugging down the sake without me just to rub it in my face.
Paul Giannamore: You don't like it raw, Patrick? You don't eat sushi?
Patrick Baldwin: I eat sushi. Waco is probably the last place you want to eat sushi. It’s so far off the coast. I get scared. Tampa is a little closer to the source.
Seth Garber: We should probably open a sushi place in Waco. That should be your new thing, Patrick.
Patrick Baldwin: Come on.
Paul Giannamore: I look around in Puerto Rico and think to myself, “I should open the restaurant called Not Fried.” There's a reason why. No one would eat there. The market has spoken.
Patrick Baldwin: What got us down to Tampa, Paul, you were recording some of those Pest Daily sessions. Of course, Seth did his best to keep me out of the studio so I didn't bring down the average intelligence.
Paul Giannamore: He didn't do such a good job, did he?
Patrick Baldwin: He didn’t. He did a buy-side session. Finally, we snuck me into Pest Daily. We did the session in San Juan. Seth, are you going to get that up soon?
Seth Garber: It'll be up soon and we can have something like that. It's going to be awesome.
Paul Giannamore: Mr. Dylan sent it down? You got the video?
Seth Garber: I did. I've watched them a couple of times. They're awesome. We shared it with a couple of the members as well to get their thoughts and they liked it prior to launch, which we don't typically do. I found they were interesting and brought a ton of value.
Paul Giannamore: I like how enthusiastic Seth is about many things because I didn't find them to be that awesome but I appreciate that.
Patrick Baldwin: I do remember making a 30-minute hike to the mall to your house because you want to pick me up, but you did help score me some hats for The Boardroom Buzz so thank you. Those are collector's items now. When you brought up Pest Daily, Seth, it was like this coming back, this regenesis of Seth as a pest control guy. I didn't know. I’ve gotten to know you a little bit over the last couple of years, but you had an exit in pest control several years ago. Take us back. What's your background? What did you do in that hiatus?
Seth Garber: It's interesting because when Pest Daily came out, that was when people started seeing us again to the world but we had been participating back in the industry since 2017, which was interesting in the consulting capacity. Back in the early 2000s, I was a corporate sales guy. I was working at one of the big diversified services companies. It was interesting. I ended up finishing the year number one in sales.
Patrick Baldwin: We can name-drop. Who was your former boss? What's his name?
Seth Garber: I reported to a guy named Chris Calloway who reported to John Myers, who is now the CEO of Rentokil Initial, which is neat. The funny part is that now he's the head of the company. Looking back, I was like, “He was inspirational.” I was a sales rep coming up and he was head of the company on the sales side.
Patrick Baldwin: It was Cintas.
Seth Garber: I was in corporate sales and went out there. I had a territory down here in Florida. I ended up finishing the end of the year number one in sales. I broke all the sales records, all these kinds of interesting things. I was fortunate to be part of one of their big sales protocols. We went to work and I was successful down there and finished top of the market.
The interesting thing was my head of operations who oversaw fixed operations for West Florida, which has all the service routes, approached me and said, “We should probably go start our own company.” I never thought about starting my own company. I never thought about being an entrepreneur. I never thought about any of that. He goes, “I'm not doing it without you.” I said, “I don't know if I can do it. I bleed blue. I love this company.”
I was sitting there at President's Club as the top rep down in Atlantis in the Bahamas and it occurred to me that this was my one shot. I was talking to a guy named Dick, a great leader. I'm sitting there in a nightclub in Atlanta and I said, “When I get back, I'm going to resign and go start my own business.” He looked me dead in the eye and he said, “We'll do whatever we can to keep you here but my advice is that you live once and you should just go for it. You can always come back here. You can always be home again.”
The interesting thing was, for me, that was my a-ha moment. I'm like, “If these guys believe in it so much, then it's time for me to take a chance and go for it.” We did. We went out and got into the pest control business. We had a good run. We didn't know much about it. I got on the streets, created a bunch of processes, went door-to-door in the commercial space, and spoke to a bunch of great guys who are all in the industry today. They gave me some good guidance. Four years later, we had a multimillion-dollar sale and it was amazing.
The part that I learned there was that the industry had low barriers to entry. At the time, it gave us an opportunity to take advantage of that so we did that. The company is called Nvirotect down here in Florida and they still operate today. It's an incredible business. As things progressed, after I left the company, I took a five-year non-compete. The company did well by me and everything was right.
As I moved from there, I was fortunate enough to move into the healthcare sector. I had a little bit of healthcare understanding. Long story short, I ended up becoming CEO of a company called Bild, which was the largest senior living post-acute healthcare consulting firm in the US. I started as head of sales. Six months later, I became the CEO and did some amazing things. I got a chance to learn a whole nother industry. I got a chance to do some acquisitions.
In that company, we were in the sales coaching business. We were in the diligence business. We acquired a recruiting company. We also had a marketing team. We did some amazing stuff. I did that for a while. I was traveling about 200 some odd days a year. I ended up leaving the business and then moving into high tech. I was in high tech from that point on all the way until March of 2020, where I had worked for three separate technology companies as CRO or CEO.
We scaled the companies up. I had two great exits. I had one that was a complete failure. One was in the email marketing space for real estate. The other one was in the commercial real estate sector where we did architectural technologies. The other one was in the artificial intelligence business, which was a unique company where we built bots and all kinds of cool stuff. It was a successful run. I’m sitting there back talking about the pest control side.
In 2017, we had a small little company we built as a side hustle where we acquired a couple of thousand pest control domain names and we started leasing them out. We started taking CityPestControl.com and leased it to companies for a few hundred dollars a month. We ended up leasing and got a few thousand of them.
I was at a pest management conference down here in Florida and a guy comes walking up to me and goes, “You've got a good reputation in the industry. People know who you are. Would you coach or consult for us?” This was in 2017. I was like, “Might as well. I missed the industry.” I started doing that. That started the consulting business, which now represents a lot of companies. We did some neat stuff.
In March of 2020, I started to think about it a lot more. We were working well on the consulting side so I said, “How do I take all this information that we've learned from the other industries that I participated in and create a scalable platform that any company can go learn the business functions of pest control? Also, some of the things that we had done in the pest control industry and all this stuff that we're learning from across the country.”
That's what we did. Pest Daily became a passion project for me. I never expected to be sitting here talking to you guys 1.5 years down the road and have 600 companies actively using it and being able to produce the levels of content that we are today. It's been an interesting thing. We've got that up and running. That's the background. I got a chance to meet you guys which made it a lot more fun for us all.
Paul Giannamore: It dramatically improved your life.
Seth Garber: It’s meeting you guys though. Not any of that. That was all for the fun and games.
Patrick Baldwin: I love how you can ask Seth one question and it's like the pole string toy. You’re a ball of energy. I love it. That was the interview. Good job. That was Seth Garber.
Seth Garber: The Boardroom Buzz episode 84.
Patrick Baldwin: Paul, break that down for us. What did Seth just say? Mile a minute.
Seth Garber: Was that fast? Sorry, guys.
Patrick Baldwin: That was awesome.
Paul Giannamore: When you're talking to Texans, Seth, you got to slow it down a little bit. I talk slower nowadays.
Patrick Baldwin: You leave Cintas. We shouldn't publish this. We should go recruit at all these award events, Atlantis, the Bahamas, like when arrow takes people. Like Mike Rogers took Killingsworth people, these VIPs. You need to land at that event and that's where you start recruiting talent and say, “Let's go start a business together.”
Seth Garber: We're doing it all over the country. It's the number one place we're hiring sales reps from.
Patrick Baldwin: Seth’s like, “We started doing that a year ago.” The pest control thing, you've had several exits. You did mention that one wasn't so good. Of course, don't let me forget about that one. You have a heart for pest that brought you back. You left Cintas. Tell us about the pest control business you grew and sold.
Seth Garber: It was unique. You and I have talked about this in the past. We operate in one of those companies that stays off the radar. It was a private company. My partner was an incredibly private person, which was great. It helped us because it gave us a competitive advantage in all honesty. We weren't aware of the associations. We didn't know other people in the industry. We stayed focused on what we did.
One of the things that I found unique is that because we didn't understand the processes of the industry, we were able to invent different things. Whether it was our go-to-market, as it related to residential sales, whether it was the way that we sold a commercial business, all of these things were a lot different. The main reason was simply that we didn't interact with other companies. The strategy that we deployed, which was great, we were good at selling commercial business. Whether it was good business or bad business, we were good at selling it.
I had a simple concept that we ran the business by. The concept was if a commercial account had bugs, I did not want the business. If they had bugs, I didn't want to do business with them. I didn't want the restaurant business. I didn't want the apartment business. That's not what we wanted. I wanted nice clean accounts that I knew that we could sell to a higher dollar, that I knew that the competitors wouldn't go after. I knew that once we had it, we could keep it forever because we wouldn't have to do service calls. That was the model that we ran on the commercial side.
We got good at going after large accounts and selling multiple location deals, selling all over the state of Florida, and getting good at billing. We got good at that but if we bought all the way down, we got good there. In the way that we parlayed that, which is something that we still execute today across the nation for our clients, is that after we would engage commercial accounts, we did a good job of engaging the residential accounts that people that worked for these companies. It was interesting.
I'll give you an example. If you sell a big HMO company with 1,000 employees, we would manage those 1,000 employees to ensure that we could convert those to residential accounts. We started to create these little bubbles of customers, which was great for route efficiency. It was great for all of that. What it allowed us to do was scale fast because if you sold large multiple location accounts and then you had a good program to engage residential, now you had a deep hub and spoke system within markets.
That's what we did. We stuck to that model from day one all the way until the end. We had no one ever done it before. We were being treated as true professional partners versus a commoditized pest control company. Those were the models that we deployed, which went great. That's how we did it. No real deep secret sauce there.
Patrick Baldwin: I think about Paul saying, “The market from a valuation standpoint is up 300% over the last few years.” This was several years ago now. You retired at 31. Good for you. You got to a place where you decided it was time to sell. From there, you went to healthcare?
Seth Garber: I did. An interesting point that could provide a lot of value to the people that are thinking about selling their companies was the part for me was that I didn't know if I should sell or shouldn't sell. The reality was, at 31 years old, your life changes overnight when you decide to take an exit like this. I had a chance to come back and be able to build another career. When I came home and talked to my wife about it, it was interesting.
After we did the transaction, I went through that same thing like lots of the people you guys work with, where you lose your identity afterward. I didn't know who I was. I didn't know what I was about. I was tied to a brand for my career. All that stuff mattered but we recovered well. It was an interesting time. We moved into healthcare, which was an amazing transition.
Patrick Baldwin: Speaking of healthcare, we met your family. We should have Summer on the podcast.
Seth Garber: Should I go get her and bring her in?
Patrick Baldwin: Everything she was talking about was way over my head. Sharp family.
Seth Garber: Thanks. She's great.
Patrick Baldwin: With her doing pharmaceutical sales, is that how you found yourself in healthcare?
Seth Garber: No. When I grew up, my father was a healthcare executive. He's an awesome guy and still in healthcare today. He operates a great healthcare clinic out of Grand Rapids, Michigan. My dad was in the healthcare industry. I grew up listening to him all the time and he would take me to all of his events and things like that. We would do it with my kid today. I had an understanding of the language.
One of the things that were interesting is that he had built a consulting firm. Because he was older, he wasn't super sophisticated with technology. I would build all of his presentations before he would give his PowerPoints and things like that. I would run through them for years with them. The interesting thing was when I was recruited to go into the healthcare space, I already understood the language track. I understood the nuances. I didn't understand the business, I didn't understand post-acute, I didn't understand the senior living, but I was good enough to understand the language. We already could sell.
I moved into the healthcare space as head of sales for a consulting firm. Six months later, we had great sales. The company exploded and I ended up as the head of the company with people all over the country. Looking back, it probably made that move a little premature. In all honesty, I don't know if I had the skillset but we did it and the company was still successful today building company. They're an amazing brand. I feel like it was a great learning opportunity. It’s interesting.
Patrick Baldwin: In hindsight, what do you say to that person that tells themselves, that inner voice that’s like, “Maybe I shouldn't have been CEO,” versus, “I want to step up to the occasion.”
Seth Garber: I had a couple of moments where I wasn't sure what the right decisions to make at the time were. I made a lot of mistakes through that process. The way that I would think about it is simple. They made the decision to put me in that role for a reason. If I was 80% right, then it's probably the right decision. If I can make 20% bad decisions and I made 80% good decisions, it was probably okay.
Looking back, if you're ready to go for it, if you don't feel uncomfortable, you shouldn't take the job, to begin with. If you've got a high level of confidence going in, then you're probably going to set yourself up for failure. Coming into something like that, a new industry, limited knowledge, if you come in with a high level of confidence, you could set yourself up for failure instead of coming in with a little bit of humility.
I questioned every decision I ever made there. A lot of great decisions, a lot of poor decisions. Somebody else had confidence who is a lot more important than me in the organization and they felt like I was the right fit. In the part where someone needs to step in underneath someone else or underneath the board like my scenario, there's a reason you're there and it's amazing.
For people who have never led an organization and you step into the role directly, there are probably some inner components there. Even Pest Daily today, I'm the head of the company, I have all the confidence in the world, I can do it but every day, I get myself a little uncomfortable. I'm like, “Am I going to make the right decision? Am I going to do the right thing? Am I going to support my staff in the right way? Am I going to make a poor decision that doesn't support the organizational goals?” I still do that today. It's a tough thing. I never thought about that question if they’d ask it to me.
Patrick Baldwin: You're welcome.
Seth Garber: Thanks.
Paul Giannamore: Speaking of poor decisions, Seth, how many poor decisions do you make on a day-to-day basis?
Seth Garber: A lot. I don't know if it's day over a day now but in a week, I bet 50% of my decisions aren't great ones. There are decisions though which is good but probably half of them are bad at this point.
Paul Giannamore: Let's talk a little bit about Pest Daily. I got some background from you. Over dinner down there in Tampa, you’ve given me some background in Pest Daily, which for you in a lot of ways is a labor of love. You love the industry. You want to provide value. What's the concept behind Pest Daily? Talk to us a little bit about how it's grown.
Seth Garber: I've got my consulting business. I can wake up and do that every day for the rest of my life. I love it. It's an absolute blast. Clients are great. That's all great. When you take a look at that thing you're going to leave for the world, I started thinking about this and I shared this with you guys. In twenty years, if someone says, “What mark did you make on this world?” The only mark I can make is how many companies I've been able to support and how many organizations have grown based on one little thing they might have learned from us. That's my legacy in our industry.
When I built Pest Daily, the concept behind it is simple. In our industry, there's a big gap and the gap is simple. The gap is that there's not a ton of true business training for growing organizations. It simply doesn't exist. When I started thinking about my business and building it, we had to figure a lot out so I said, “What is missing in our industry that I can easily produce that can support hundreds and potentially thousands of companies?” I never thought about it from a monetary standpoint. I go, “I've got the money. I'm going to reinvest in this thing. I'm going to do all this stuff. I'm going to put people in place.” I never thought about where it's going to go or how big it's going to get.
When I met with you guys, I said, “I'm going to build this platform. I don't care how long it takes. I don't care if people that contribute content to me compete with my companies. I don't care one bit. All I care about is the fact that an operator can learn from whoever they can learn the best from and I'm going to give our industry that platform.” That was it. I pushed it live maybe a little bit before we met. So far, it's got about 80 courses we've developed on sales, marketing, accounting, and M&A that you guys were fortunate to contribute to. We have other consulting firms now contributing. We've got all kinds of industry experts in there. We even released our own operator. We have operators contributing content now.
Now we’re 80 courses in and we've got about 600 companies using it. Our churn is under 2% per year, which means that we're on the right track. Frankly, it's grown a lot bigger than I ever thought it would. It's a unique tool. We've developed about another 30 or 40 courses that are already finished. They're going out over 2023. We've got some cool stuff in the works related to it. I'm still focused on the original vision of creating this holistic learning platform that anyone can contribute to as long as they provide value. The ultimate goal is to have 2,000 companies but, on our track, we're probably going to be there a little sooner than I thought. It’s amazing.
Paul Giannamore: It's spectacular how you've grown this in a short period of time since we're down there so kudos to you. Seth, I appreciate what you're doing in the industry. When you become a bigger firm, there are more resources available to you but when you're a small firm, it’s hard, especially if you come into the industry from outside the industry and you don't know anyone. There are not a lot of places for you to turn to.
There’s one other question that is popping into my mind here that I didn’t ask you last time we were together. In your consulting business, what I'm curious about are some typical problems that you run into and solutions that you help your clients come up with for those sorts of problems. Let's talk a little bit about that. What are you typically running into as you're advising these firms?
Seth Garber: You could probably choose any of the cross-functional departments that a company has. The companies that we typically consult for are the companies run for about $500,000 and the largest is around $30 million in annual revenue. We see a lot. You could probably go department by department for the things that we participate in. For us, we stay away from accounting and we stay away from finance, which there are better people at that.
A lot of this stuff comes with the idea of killing the sacred cows. Let's call it a sales department. We'll start there because it's the easiest. A lot of times, the companies don't truly understand the buying behaviors of the consumers. They're trying to improve their close ratios or specific revenue goals, but they don't even understand their buyer. The second they have a clearer understanding of who their buyer is, they sell a lot more. The only thing they know is what they hear out there and there's a lot of bad information. That's a real low-hanging fruit problem we face.
If you look at a company that has a close ratio of 30% but they're spending a tremendous amount of money on marketing, they don't understand who their buyer is. Their marketing agency is simply taking advantage of them because they don't understand what their marketing agency is even doing. They don't know where their money is going. We solve all of that through several different methodologies.
In that scenario, it's like, “What does your marketing agency do?” “They get us leads.” “How are they doing it? Who are they targeting?” “We don't know. They just get us leads. They just tell us to give them more money.” I heard you talk about it in one of the previous episodes, “If people don't understand where their money is going, they can't ever throw gasoline on the fire.” We'll solve that.
We'll integrate with our marketing agencies. We'll talk with them. We'll get a better understanding based on what they're doing with the marketing agencies. We’ll change their sales process to ensure that they're talking to the right consumers, and then build the feedback loops that are necessary to integrate with that marketing agency correctly in order to drive up their close ratios. That's one of the dozens of scenarios that we run into, but that's probably the quickest lever that we can pull to make people lots of money quickly.
Paul Giannamore: Typically, most pest control businesses are managed by the owner and oftentimes, the owner might not necessarily be the right person to manage that business from a capability’s perspective. How often do you come across that?
Seth Garber: In my scenario, if I looked across the portfolio of the companies that we service today, we probably have faced the challenge of the CEO running the company and having to put middle management in place or in some instances, putting a brand new had a company in place. Realistically in the portfolio, we have to tend to be more aggressive guys, it's probably about 25%. When companies call or interact with us though, it's all the time.
When companies come on to discovery calls with us, it's a difficult thing. It's a difficult thing to talk to a CEO of a company and have that discussion that says, “You're not the guy. You feel like the guy, you seem like the guy, and you can make all the money, but you're simply not the guy.” With my current portfolio of clients, we've dealt with something like that. 25% of the time, we've had to build the infrastructure around them. Now those guys are living the life, which is great in those scenarios.
Patrick Baldwin: How do you identify that? I'll be the bad CEO for a minute. What does that conversation sound like so I know what this is for?
Seth Garber: I got to be careful because I don't want to put everyone into a box. The thing that truly identifies it is that we're having the discussions and we simply ask an owner who may be a $4 million or $5 million company. The owner still is trying to get into the field all the time. It's the clearest one. I couldn't tell you how many companies I've spoken to that are in that $3 million to $15 million range where the CEO is still jumping in a truck and going out there and trying to do a service call. Or jump in a truck and they're still out there meeting with clients. They'll put all the rest of the business functions aside but they still want to go do that because they feel like they can solve the problem better than somebody else, no matter how big the company is.
I got off a call with a company that fits that profile. As I'm talking to him, he says, “I've got to cut our call short. One of our guys needs an extra service.” They’re a $6.5 million company. My next conversation with this company is going to be exactly that. Step one, get out of the field. Step two, build infrastructure for your management team. Step three, learn how we put the KPIs in place to manage effectiveness, and then how do we take the company culture and push it all the way down through the organization? It's a common thing, Paul. It's another question I've never brought up. It's a fairly common thing we deal with.
Patrick Baldwin: In consulting, you've got clients that are going from $500,000 revenue to $30 million. I know in Pest Daily, you're also interacting with a smaller startup. They're just getting up and running. What's a quick win for them? Who's the first customer you're calling on? Maybe it's friends and family. Apparently, you’re anti-restaurant and anti-apartment. I wonder where you would start.
Seth Garber: There's no doubt what I would do if I started a pest control company over today.
Patrick Baldwin: What is it?
Seth Garber: What would be my secret sauce?
Patrick Baldwin: Yeah. It wouldn't be a secret if you said it on The Boardroom Buzz.
Seth Garber: I don't care. I'm not going to open another pest control company. Should I tell everyone?
Patrick Baldwin: Go for it.
Seth Garber: Here's what I would do if I was going to start another company today. I would only open in tertiary markets and I would start by selling commercial services, build $1 million branches in tertiary markets and then go after the metro markets. I would start commercial and spin-off to residential, and that would be my high-level strategy. You could pick almost any market in the US. I would stay away from where all the big consolidation is taking place. It’s what I would do 100%. All the tertiary markets got a ton of new pest control companies.
Patrick Baldwin: I'm going to open up a company called Tertiary Pest Control.
Paul Giannamore: I've been saying this for quite some time though, Patrick. That's exactly the way I think about things, too, Seth. Anytime anyone wants to get into pest control, I get these random calls from people saying, “Paul, I want to talk to you. I want to get into the pest control space. I want to move to the heart of Florida.” I'm like, “You want to move to Orlando or Miami or Tampa to start one of these? That's not what you should do.” “That's where all the bugs are.” “Yeah, but that's where all the competition is as well. Go to Utica, New York. There'll be no competition there.”
Patrick Baldwin: Are there bugs up there?
Paul Giannamore: It doesn't matter according to Seth.
Seth Garber: I may not jump right to Utica, New York if I was going to pick a market, but there are some other ones that I would love to be in. We've got some clients that participate in the tertiary markets and their growth rates are unbelievable.
Paul Giannamore: I agree with you 100% on that one.
Seth Garber: Patrick, going back to your original question, “Where do you start?” I’d get on my soapbox about calling friends and family a lot of the podcast world. I definitely would start with friends and families about where they work at. That makes a big difference. One of the things that people tend to disagree with me with is I wouldn't make marketing spends as a startup. Too often or not, a lot of companies make big marketing spend on startups. I'll argue with the marketers till we're blue in the face and a lot of them are my friends.
However, someone needs to pre-approve the fact that they can build a business to $200,000 before they should spend on marketing because they won't have an understanding of what their marketing dollars mean at all. If I started, I'd start with friends and family and I would start with networking groups, the fundamental basics, grassroots to get going. Once I got to my first $200,000, if I was brand new, not if I had the knowledge base that we have today, that's what I would do. I would ask for meetings. I would be aggressive. I wouldn't negotiate prices with friends and family. I would tell them my retail price and they need to pay retail because we're friends. That's how I would operate the business.
As a matter of fact, we funded a company to test some of this stuff here locally, and we did it. That's exactly how they started. We ran with friends and family. We ran door-to-door for fun. Not the type of door-to-door that we hear about but a different method of door-to-door that we've developed. It worked well. The company is sitting here with hundreds of thousands of dollars in revenue two years down the road. That's exactly how they started with no marketing and everything, just to describe right now. That's how I would go about it. Straightforward and simple, nothing spectacular for you guys there.
Patrick Baldwin: I've never heard door-to-door and fun get associated together. I'm not talking about Paul grieving it but the actual guys who are out knocking doors have never said, “This is fun.”
Seth Garber: They have a lot of fun when they stop by my house and knock on my door.
Patrick Baldwin: I don't know what that means but hopefully you're dressed.
Seth Garber: We work with a lot of door-to-door companies and they're good guys. We do a lot of process development for them. When the door-to-door guy has come knocking on our door, we always give them a shot at the business and we always have a good time with them.
Patrick Baldwin: Is your camera rolling when they show up?
Seth Garber: Of course it is.
Patrick Baldwin: What do you do to them?
Seth Garber: We give them a shot on goal. We run them through. We have them tell us all about their services. It's a ton of fun. I give my information so that way, I can see what their follow-up processes look like. They essentially go through a mystery shop. It helps us stay in tune with the markets here. It helps us stay in tune with what the national companies are teaching because a lot are national here. It's been good. A lot of times when the guys come, we'll end up throwing some cash, and then we'll tell them what we're doing because I'm from the industry. I don't want to be that guy. We usually throw them $20 and let them get on their way quickly.
Patrick Baldwin: Have you ever been a buyer on the doors? Do you have solar and a pool service?
Seth Garber: No. I'm bad to show up too because, immediately, we start looking at their sales process. The people who get me are the magazine companies. I've bought a lot of magazines door-to-door but I've never bought a home service door to door.
Paul Giannamore: Seth, it's been a while since you've been in the pest control game as an owner. You've built that business up, you guys exited, and now you're dealing with hundreds of different pest control companies out there as both part of Pest Daily as well as your consulting business. How has the industry changed from a competitive perspective? I'm particularly interested in the quality of the competitors out there as their overall market dynamics when you think about the market. We can only compare it to your region because that's what you're most familiar with. Let's think about that.
Seth Garber: We could process this a lot. I'm a learner. On the consulting side, we operate in 25 markets in the US and we study the competitive market a lot. When we were building our company, the world's changed a ton. The benefit though that I do have is that over the years, I've been able to acquire all kinds of playbooks from across the US and have a good understanding of most of the major markets now.
There are a lot of ways to slice that up. The market here, from one perspective, is more competitive. From one perspective, it's less competitive. From a more competitive standpoint, we're dealing with a more educated buyer in the metro markets but we're also dealing with the concept of this tremendous amount of information out there.
The companies that are competing, the more competitive side tends to be the bigger companies trying to grab more business. The high quality from a sales and customer service side, which is the smaller operators in these markets, it's probably become less competitive. There are a lot of them here because it's competitive here. What's happened for a lot of them is that there's a lot of small competitors, then there's a handful that is in the $1 million to 5 million range and there's a lot of big companies.
It tends to be that the ones that are in that middle range are a lot less competitive. The small companies are competing on price a lot or they're so focused on getting their hourly rate that they aren't even on the radar. The companies are competing for that middle ground customer, which is more of that higher profile customer. I would tend to say it's gotten a little less competitive because there are not as many companies in that space anymore, which is interesting. I could go way into the metrics in most markets on that.
It may be a different perspective because it seems like there are a lot more companies, but the ones that are winning, and I'll call it the area that I live in, we're the ideal customer profile in the area that I live in. We don't see the big companies in our markets. We see them in service driving around but the companies we see competing for business are those $1 million to $5 million companies. The little guys, we don't see at all in our market. The big companies, with the exception of the door-to-door companies, we never see them from a marketing standpoint. The midsize companies, we see a lot more frequently.
Paul Giannamore: When I look at the market and I think back, on the one hand, you clearly have a lot more door-to-door activity than you did years ago. That was always ever-present but now it's way more prolific. You have a lot more middle-market businesses now when you look at the Massey, Arrow, Certus, even the Anticimex portfolio companies. Those are big, sophisticated companies, but they're not the big national firms per se.
When I look at it, it seems as though it is becoming more difficult for the sub-million-dollar players to compete in this market. This isn't just the acute labor shortage but as more and more have moved online, it’s the use of technology. We all look at technology as the great equalizer in a lot of ways. If you think about it, with technology, everyone and their brother can use the same platform that Rollins is using in a lot of ways, communications, salesforce, management. On the other way, it's harder for these smaller firms, a lot of times, to implement this stuff.
Maybe I'm completely off on this, Seth. I'm interested in your opinion on this. In 2022, as we have oil at $91 a barrel, we've got tremendous wage-price inflation in certain areas of the country. It's becoming more of a difficult playground. Certainly, this chessboard is going to favor the strong in a lot of ways. I'm wondering what thoughts you have on the challenges folks are going to face here in the remainder of ‘22 and ’23 and how that's going to impact the market.
Seth Garber: I'm sure we would agree that everything that's happened is going to affect us moving forward, probably more so than it already has. These are some high-level thoughts. I would think that the labor shortage for these mid-market companies is probably going to start to ease up quickly. We're seeing it in a lot of markets already. Out of the markets that we support clients in, all but one, we're not seeing issues hiring because of some changes that we've made.
The big challenge a lot of the mid-market companies are going to face is effectively raising prices correctly. That's a major challenge for a lot of organizations. A lot of people are scared to do it in an effective way. We're going to be obligated to do it. That has to happen for a lot of companies or we're going to look at a lot of P&L at the end of 2022 that are not what they looked like in 2021 or 2020. That's a major challenge.
The other component that we're starting to see a lot is a lot of consolidation of the big marketing platforms and a lot of the ways people are generating leads now. That consolidation is not helping the small to medium companies. It is going to help large companies that can make those stronger buys that have specialized account management and things like that in place. I would argue you're going to see more consolidation in the tech space between now and the beginning of 2023 and probably a lot more to 2023.
The market is saying a lot of the guys that we support in the CRM space, there's probably going to be some IPOs issued and some other things that are going to take place which is always in the benefit of the big company when those things take place. You're also going to see the large companies start to create more sophisticated sales organizations. Not sophistication from a process standpoint but understanding deeper sales process, start to manage the deeper sales process and start to go down market in order to hit their sales numbers that they may be chasing the big fish.
You're going to see a lot of that start to happen because with the consolidation taking place, there are all these new types of businesses that these guys are looking at that they never maybe looked at before, which could cause an issue for some of the small to medium companies. You're going to see a lot of that taking place. Those are a few things I can think of off the top of my head. What have you been thinking about, Paul? I'm sure you've got all kinds of stuff that's way smarter than me sometimes.
Paul Giannamore: I've been thinking about things from a broad perspective because I've been working on my first commentary of 2022. One of the things that I did is I went back and I spent a lot of time with economic indicators. When we think about prior to COVID and we look in 2019, as we started to get into the fall of 2019, things are normal, and no one knows anything about COVID, we began to see the economy begin to roll over. Things started to cool off dramatically in the fall of ‘19. Equity multiples peaked in Q4 2019.
We go into 2020 and it was a massive monetary and fiscal bazooka, unlike the world I've ever seen before. We go into COVID and it's mind-boggling as to how much money the US Federal Government conjured to pump up the economy. We all know what the story is. Everyone is scared in March and April of 2020. We don't know what the hell's going to happen. For the pest control and all these home services businesses, it was a boom year.
My thought process as I start to think through what 2022 and 2023 are going to look like, we have trillions of dollars in fiscal spend rolling off. When we look at Q2 of 2021, that's when all the checks hit. That's when the PPP loans were going through. It was GameStop. As I think through and I know this is turning into a soliloquy, but I was trying to get my thoughts and I kept thinking about the Seinfeld episode with George doing the opposite. If every natural instinct he had was wrong, then the opposite had to be correct.
We live in 2022 now. If bad news was entirely good for the market and we had this tremendous fiscal impulse in 2001, when this stuff rolls off, I start to wonder to myself, “What happens to this industry where you have guys that have dramatically overinvested?” There was a tremendous amount of investment in this business made at the end of 2020, end of 2021. I know everyone talks about pest control being recession-resilient, and it is and it's proven that it is, but at what point is this time different?
I feel like, in a lot of markets, things are becoming more competitive. Certainly, you would probably agree that online marketing has become more competitive, especially the way most people do it, which is the whole spray and pray part. Not a lot of guys are particularly sophisticated about that. That's becoming more competitive.
I do tend to agree with you that when I look at these labor markets, part of me says to myself, “The only way the federal government can contain inflation is to break labor.” The whole thing from the ‘70s. We got to cool this thing down. I feel like everyone's out there is running super hot. I scratch my head and wonder what's going to happen in the back half of 2022 because it's going to be difficult in the second half of this year as this stuff rolls off. I don't think there's any two-way about it.
When I look at the Congressional Budget Office and I look at the delta between fiscal spend in the United States in 2022, irrespective of what they do with the Build Back Better legislation, there's a $1.6 trillion delta between ‘21 spend and ‘22 spend. What makes up that gap? The US economy will be moving into a cyclical downturn in a tightening environment. It’s one of the things that I think about here as we're going into ‘22.
Patrick Baldwin: I do want to follow that train of thought going back to technology. Seth, you've probably known things way beyond I could ever understand, but try to break down what technology you're seeing in pest control, what's up and coming.
Seth Garber: There's a couple of components. I know that you guys have heard me on my soapbox about this before. One of the things, as it relates to technology, is our industry regardless of how large and sophisticated the companies are, we're fifteen years behind what's taking place in the technology space today. The reality is that we can look out into the world and we can say, “What's going on today?” That's where pest control is going to be in 5 to 10 years for the big companies and fifteen years for the growing companies.
There's lots of talk about sensors. We could talk about sensors till we're blue in the face. I would like to see efficiency created by sensors. I'm not sure how much talk about this is going on, what I'm about to bring up. We can put sensors on anything. I had some discussions with some sensor companies at the Nikola event. Even the sensors that we're building today are expensive versions of old sensors.
One of the things that would be interesting to see and someone can do it, could somebody invent a sensor that can connect to a system and automatically schedule a service call? Someone's going to solve that. I know some of the big companies are going down this path already. From a tech standpoint, sensors are a huge innovation and we're just scratching the surface with them right now. We can talk about that subject for a long time.
We went down the path when we were developing another technology company about the potential of utilizing sensors to create a gig economy in the pest control industry. Could we take a sensor, put it on a property, and then it executes a service call to the closest technician regardless of the companies it's driving by? We went down the road and tried to think about that. It was interesting. Some of the pushback that we had received was, “If you do it, licensing gets in the way. All the state rules get in the way.”
I find it interesting because as I process that a little further, I said, “All the gig companies already doing it. The gig companies are already saying licensing doesn't matter.” You're going to see that happen in the next several years, which would be unique. As it relates to CRM, this is getting interesting. I'll use the word finally. This consolidation of the CRM going up underneath ServiceTitan, I find it interesting regardless of how I feel about different CRMs. We know them all cold.
I don't have any insight on this but it's a belief that I have. One thing that I love is that ServiceTitan is that they're going to ultimately create an open-end system, which is something that industry is needed for a long time, a system that can accept real integrations from lots of other software. People can start taking advantage of other tools out there without having complex integrations because if you look at the rest of the CRMs out there, everyone says, “We want to own it all.”
ServiceTitan has already proven the fact that they don't care to own it all. They want to own the source of record or the source of truth. I'm hoping that they bring that into the market or the other CRMs, who many of their leaders are friends of mine, follow suit. That's interesting. Paul's probably chomping at the bit on that one. Right, Paul?
Paul Giannamore: Less than the ServiceTitan discussion, you were talking about sensors. A couple of things on that topic. We had Pam Blauvelt from Griffin on here and they tried to do this whole pest control Uber thing. For example, their company covered half the state of Michigan and there are some rural areas in Michigan. What they wanted to try to do is let's say you've got Jim Smith who owns his own little pest control business. It’s a couple of hundred grand a year.
They wanted to develop an app whereby a commercial property that's 65 miles away from Griffin's nearest facility has a service issue, it would ping with this app. A handful of subcontractors would see it. The closest one to the location would be able to click it. “I got it. I'll be there.” They've got a Griffin shirt in the car. Put that on there, go in, and service it.
They spent time developing it and then gave up on it. Part of my conversation with them, and this is the question for you, when you were talking about sensors, I can see how they work in a commercial establishment. When I was in Israel with Ethan and Ronen, I saw with my own eyes how powerful that is in the commercial environment.
On the residential side, here in Puerto Rico, we get residential pest control service, and quite frankly, it takes care of my issues. I have yet to have an issue with the service. I'm wondering how many homeowners have an issue with service where you think a sensor would make sense? Is it mainly on the commercial side or the residential side you're talking about?
Seth Garber: It doesn't matter whether it's commercial or residential. There's a simple metric, which is the callback metric that we can take a look at how good your callback ratios are. We can take a look at a simple metric that lets us know if we're within the range based on a company. Let's set up an argument where you've got 10,000 residential customers in the state of Florida. Sensors are so inexpensive today that if my callback percentage is 10% and I can cut my callback percentage to 5%, whatever that math is if I cannot have to schedule 50 additional services through a service call, does that make sense?
If it's 50 out of 10,000 per month, does that make sense to put a sensor that might be a few cents or maybe $1 or $2 on a residential property? Maybe it does, maybe it doesn't. If you start thinking about the impact that could have on CSRs in an office, it could make a tremendous impact at some point. The other component where it could be interesting is if a sensor could schedule a service call with a level of efficiency. The tech exists already with geolocation. If your technician is across the street, that sensor now says, “We need a service call,” your technician now walks across the street and does the service call. There are high levels of efficiency that get created as that gets down the road.
On the commercial side, they have a lot of sensors in the rodent world but the reality is that the revenue models of selling the sensors almost make it impossible to do at scale. The revenue model is to sell sensors then sell bait stations to customers. The customer now has essentially a capital expense against their budget. It becomes something that’s no longer a budgetary item inside of their account. The discussion I got into was, “Could you take a sensor that's $100 to sell to a customer? Is there a better revenue model so we could distribute lots of these sensors to commercial buildings?”
Frankly, I got a lot of pushback on that and I said, “You can't get to scale without creating a better model because a customer that has 300 rodent stations and has to make a $30,000 initial expense to switch to your company is simply not going to happen on an audited facility. If we can figure out how to make that change and give them a better level of service with better technology, all of the sudden, sensors make a world of difference.” That put together with the ability to schedule services creates a high level of efficiency. Do you see where I'm coming from there, Paul?
Paul Giannamore: I do. We're getting there now, at least on the commercial side. A lot of these guys are moving to the leasing model and we're going to see a lot more focus on remote monitoring because gasoline is not getting any cheaper. It's not unreasonable to think that gasoline could be $10 a gallon a few years from now. We're at $90 a barrel right now. You read some analysis due to ESG and all these governments trying to force everyone into electric vehicles, which are clearly not there yet. We're going to have this period of time where oil might be $200 a barrel, which implies $10 to $15 a gallon. At some point, you’ve got to do everything you can to not go to the customer's place.
Seth Garber: There are other technologies that are bleeding-edge technologies that are starting to solve some of this, too. There are a couple of technologies out there that are working in what we call in the tech world, the velocity selling model, which talks about how fast we can have a human interaction with a customer. There are some interesting new technologies that are coming into our space from other industries that I like, where they're saying, “Allow the customer to make a service call decision or a buying decision in any way that they want, and then let's create velocity in the relationship with the customer.”
That's something that our industry has never seen before. There are some ones that are doing amazing stuff that we've vetted out now and a lot of our clients are using them, which are absolutely great. You're going to see a lot of evolution in that, Paul. You're going to see a lot of it overall in the coming years. I agree with you 100%.
Patrick Baldwin: Hiring a consultant, Seth. You tend to have a lot of consulting clients. When it comes to consulting, I’m trying to think back if I've had a consultant. Why would I need one? What can I do for myself?
Seth Garber: I don't know if I can answer the when-to question. When a business owner tends to plateau in their business like large organizations, they bring in people that are subject matter experts and they help them push through. There's a variety of reasons why. In the consulting world today, if the question is, “When do I?” I would argue to say the when is when you hit that plateau, the who is a much different question.
There are a lot of different types of consultants in our industry. There are some that are designed for growing companies that are tactically driven. They're essentially paying for tactics. There's a lot of success there and that fits a specific business owner. There are other consultants that have their defined playbook that says, “This is the way that I did it so you follow this and we're going to tell you exactly what to do.” For certain personalities, those consultants work well.
There are other people which are more along the lines of how we do it, which is we have multiple playbooks. We develop multiple playbooks depending on the culture of the organization, as well as the concept that we're not going to hold anyone accountable. Our methodology is that you're hiring us to develop whatever the playbook may be that fits your culture and then to be an executive sounding board to your organization.
Across all those three different facets, it's the right fit for certain people depending on what they want to accomplish. If someone's looking for a quick money-making component, make a little bit more money, the people that are tactically driven do a good job there. For people who like to be told what to do, there are specific consultants that like to do that. They like to say, “This is exactly what you do.” For others that want to learn it and develop, there are companies like us that have a little bit different approach, and that makes a big difference.
The when is when you've hit that plateau in your business and you're ready to go to the next level, either from an operational standpoint, a revenue standpoint, or you are in an unknown area and you need to develop leadership skills, or whatever it may be. That’s the right point. One of the things that I love about our industry that makes me wake up and get inspired is the fact that our industry is one of the few in the world where you can choose your own adventure as an owner. An owner in our industry can decide to go out and build their own company. They can make a $200,000 company, they can make $100,000 a year, and they can have the time of their life.
Doing the exact same thing and pulling a couple of levers, they can now be a $1 million company, making $200,000 to $250,000 a year, and make more of an income with a little bit more work. You can choose our industry to what size you want to get to. I would argue that you could choose to grill around a $5 million company by that methodology.
Once you're ready to go bigger than that, there's a lot of hires and you have to make in a lot of other things. That's one of the things that I love about our industry. It can be the greatest lifestyle industry in the world. It can be the greatest wealth-building industry in the world and it can provide tremendous amounts of futures for lots of people. I know that's a long-drawn-out answer. Paul calls himself soliloquy. Right, Paul?
Paul Giannamore: Yes. The question there is what I always think to myself. I agree with you, Seth. When I look at this industry, here are some negatives about pest control. Pest control is a business that grows inch by inch. You can scale it, you can get good, and you can build a salesforce and all that. Clearly, if you juxtapose pest control to a scalable SaaS business, it's night and day. It's hard to hit grand slams in pest control. It's easy to hit a double. You can hit a home run every now and then, but to kill it, it's a lot of toiling in the proverbial pest control vineyards.
This might sound like a dick thing for me to say but if you look around a lot of markets, some of your competitors aren't particularly sophisticated. You don't have to be the best in the world. You just have to be better than they are. Sometimes the bar is not set that high. Some of the guys that I talked to, I encourage folks to focus more on self-development and trying to learn not from other people in the industry. Go out and look at the high performers in other areas, whether it's sports if you're a sports guy whether it's other areas of business because it's something that can, in a lot of ways, be self-taught.
When you think about what you're doing as a consultant, I see this stuff all the time. There are some consultants out there that got one playbook. It doesn't matter what you're doing. They come in and they assess a situation, “Here's going to be the prescription.” What I see that you guys are doing is more what a McKinsey or BCG consultant would do. Come in and say, “Let's diagnose what the problem is. Once we determine what the problem is, there's potentially a variety of solutions to overcome this.”
You're not there to hold hands. You're not there to hold people accountable. You're there to determine what the problem is, diagnose it, and prescribe a solution that ultimately fits with that company. Every now and then, every business owner needs something like that. One thing that I've learned is that when they say it's lonely at the top, it really is. Patrick, it's been reinforced in our time here on The Buzz.
A lot of times, business owners get somewhat siloed. A lot of times, no one wants to tell them what they're doing wrong specifically in their own company. Sometimes it takes outside eyes to look at a problem and identify it. I see value for everyone in the industry to think about the different types of advisors that might help them. Quite frankly, in my capacity as an M&A advisor, I wish many of these folks had done that years prior. How do you like that for a soliloquy, Patrick?
Patrick Baldwin: I feel like it's time for mine, but I don't have one prepared. I always make fun of the easy button. Guys want to have the easy way out. Even in light of our interview with John Roberts, that was not an easy button. That was high-level deep thinking. This is not a how-to book. There's no listicle in that episode. I'm going to go ahead and ask Seth the easy button because I figured Paul doesn't like me doing it, so there's my soliloquizing Seth. If I toss you the keys as a consultant and say, “Run it for me,” what's the least amount of work I have to do?
Seth Garber: A couple of years back, I had a client who made that phone call. He had some stuff going on and he goes, “I need our company operated for the next six months. I'm gone. I'm taking off.” I said, “What do you want us to do?” He goes, “Be sure we don't go out of business.” I said, “Okay.” At the end of the day, the easy button in our industry is if companies focus on what drives dollars first, like in any other industry, most of the problems will get solved at the end of the day. We make it difficult.
I'm probably going to get a bunch of hate mail for what I'm about to say, but I figured out well anyway. From a service standpoint, too often or not, we focus on the 0.1% of customers. 99.9% of our customers never have problems, we make tremendous amounts of money on them. What we talk about is the 0.1%. The easy button is to be able to shift your organization for ones that do that, whether it's a service manager, a group of technicians, your head of operations, whoever it may be, to not necessarily focus on that and focus on a sales-centric organization.
The easy button is if we were bad at everything as an organization but we greatly increase our activity relating to generating new business, if we simply did that in our industry, we are successful. I've seen that prove out in market after market. The door-to-door companies are proving that out where activity drives the result of growth in this industry. That's the easy button.
Outside of all the complicated things that we can come up with, outside of all the great models we can build, outside of all the playbooks we can hand somebody, outside of all the big philosophical questions that we come back to. At the end of the day, if we can figure out and engage more customers, our job becomes easier, whether they're prospects or existing customers, and learn how to cross-sell our existing database and generate new customers that we can win across the board. At the end of the day, if you grow and that's your easy button, you can backfill all the best of the best than every other role that can fix everything else for you. That's an easy button. I could probably think about some other ones, but that's probably it.
Paul Giannamore: There's nothing easy about it, by the way. At the end of the day, a couple of thoughts on that, everyone is always looking for a quick fix and the thing is not easy. It takes a lot to go out and build one of these businesses. We live in the Facebook and Instagram world because a lot of business owners look at these other companies and they don't realize what goes on behind the scenes. That's frustrating for a lot of folks and I hear it. “How are these guys doing all of this?” If you knew what was going on behind the scenes, you wouldn't be thinking that.
Seth, you hit the nail on the head. There are some basic fundamentals here, which are effectively putting your capital to the highest and best use, and determining if we're going to allocate resources to a certain activity, then we better understand what our return is. A lot of the problems in a lot of these pest control businesses come down to the misallocation of capital.
The other thing is it's one of those things where I find some of the growth stunted. This is directly related to what you said and I talk about this sometime over here. You run into a $2 million pest control business and they can't seem to get over that plateau. You start talking to the owner and the owner is a sincere individual who cares about service quality. He cares about service quality to the nth degree that you can't scale it. You're not going to be able to provide the customer hand-holding in pure quality that this guy wants to deliver and scale a business.
What you said, which is to look at the mini part of the bell curve, set up your service protocols, your marketing, and everything to that mini part of the bell curve instead of focusing on that 1%, a lot of the door-to-door companies do it the other way around. They focus on the 1% that doesn't care and they can do whatever they want.
You've got to put so many customers on the door and don't service them. You got the yin and the yang there, but you can be the exact opposite of what you consider the worst door-to-door company and still be as bad as they are because you're not going to be able to grow. That's probably the most important point you've made in this discussion, Seth. I like it. It's an important topic.
Seth Garber: We see it too often than not. The same thing you're describing, it's the same scenario, whether it's companies calling, whether it's clients before we start transitioning on whatever it may be. At the end of the day, that's what it is.
Paul Giannamore: If we travel a little further down that vein, in your line of business, I'm wondering if you do it as well, sometimes we'll see owners who are concerned about the cost structure of the business when it doesn't matter. They’re not concerned enough about putting effective advertising and marketing dollars to use. If you're measuring your returns on your advertising, your sales, and your marketing, it should be viewed as an investment, not a cost.
Seth Garber: It's a common thing. It's interesting when we have these discussions, especially as the companies start getting a little larger. We're talking to an organization that’s $3 million to $4 million. Our discussion goes from, “You spend $5,000 a month in advertising,” to, “You probably need to spend $30,000 a month in advertising,” or, “$40,000 a month in advertising.” It's always the discussion.
“The $5,000 has been working. We generate leads and it's fine. I don't want to spend more money.” The reality is it always boils back to exactly what you described, Paul. The money's not measurable. I don't want to paint with a big stroke here, but a lot of the ad agencies in our industry, and I work with five directly, aren't set up to service these customers. They're set up to service smaller customers. They're 1 or 2-man shops and they're managing this large ad spends. They can't simply provide the reporting of the knowledge base to these companies.
What happens over time is outside of being big numbers, there's no validation of spend. They spend $5,000 and they get 50 leads or whatever it might be. They might be happy with that. If it's managed correctly, they should be thinking about how do they generate more, and then what those real conversions look like. The ad agencies struggle to provide that nowadays. It's fairly straightforward to do. The cost structure is a major component. We get focused on advertising cost or we get focused on chemical cost. I always argue why are we even talking about chemical costs. Let's talk about doing things that make money.
Paul Giannamore: It's one of the areas though when you think about it because everyone always thinks about advertising, marketing, and these sorts of dollars as it instantly goes online. People think about it from an online marketing perspective. I don't run into a lot of companies in this industry that have somebody looking at all facets of the sales and marketing function and saying, “We're doing online marketing but we've got a sales team here. We got all these different things going on.” How do they coordinate with each other? How are we measuring the returns on all of these? It's always a haphazard thing.
I see that even at $500,000 a year spend. Sometimes I see that at $1 million a year spend. Patrick, how many guys have we had on the show that’s like, “We spent $500,000 on a radio show and it didn't work out.” “Why did you do that?” “Because the guy at the country club does it and he told me to do it.” If you're an owner and let's say you're doing $1 million a year right now, if you can quit dicking around in the field and start to educate yourself on measuring return on capital investment. You will double the rate at which you grow your business. If you start looking at your marketing spend and trying to put it to higher and best use as opposed to answering the phone, you'll be off to a good start.
Seth Garber: I got super pissed about this over the last couple of years, exactly what we're talking about. People kept messaging us saying, “What do we spend our marketing money on? Who should we go with all these questions?” As I started to process it more, I said, “I don't want to give any advice.” The reason I don't want to give any advice is that I'm giving advice to someone who doesn't understand the advice I'm giving them.
It's interesting we're talking about this now and not as a plug for Pest Daily. We launched seven courses going step by step on educating owners on exactly what all these things we're talking about are. It's funny because I got so mad about it that we went and had a well-known agency build these courses for us to go, “If you spend money on Google, here's exactly what you should need to know step by step. Here are exactly the questions you should ask your marketing agency, not as a sales pitch but as your educational tool.”
If a chemical rep walks in and says, “We need to try these three new products,” the owner of the company immediately understands exactly what those products do, the way the active ingredients work, the mechanism, which is going to kill the insect, and it makes logical sense to make that decision. When we go and spend our money on marketing or any capital investment for that matter that's out of our comfort zone, we don't take the same steps to educate ourselves. We know enough to be dangerous but not enough to drive a result. That's what I see as most important. You got me all fired up about that one, Paul. Thanks for bringing that one up.
Paul Giannamore: It’s what I was shooting for.
Seth Garber: I'll get all heated about that one. I hate seeing money wasted.
Patrick Baldwin: Now I feel guilty. I've called Seth many times and said, “Which agency should I use?”
Seth Garber: Then what do I always tell you?
Patrick Baldwin: “You're pissing me off, Patrick.”
Seth Garber: We don't make recommendations as a company. We just decided to get behind our first tech company in the industry. We'll give people a lot of choices. We decided to get behind one of the velocity selling tools but outside of that, we try to stay super agnostic with different technologies because most of the guys that run them are friends of ours. They all have a lot of good technology out there.
Patrick Baldwin: It sounds like everything you've said was controversial, but I do have a question for you. Seth, where do you feel yourself most going against the grain where you have a strong belief in the industry and you find yourself beating your head against the wall?
Paul Giannamore: Patrick, was that a prepared question?
Patrick Baldwin: Not at all. This is on the fly.
Seth Garber: We know each other fairly well at this point. I'm a big thinker. I'll state something that's probably going to be super controversial and probably super against the grain that I don't think I've ever said publicly before. Here's one of my new trains of thought that I've been thinking about. A few years ago, I'd probably disagree with what I'm about to say. If we think about great customer interaction, how do we interact with a customer, every time I'm talking to companies, we say, “Let's get a lot of touchpoints on this customer.”
We sign a customer up and we should notify them a week before or a day before we come. We have our technician call them. After the service, we follow-up three times. I've been in this huge contemplation. We're deploying this in parts of the country where we should stop communicating with customers. People are thinking to me about why I would ever think that. Consumer buying behaviors change this tremendous amount.
Remember, I'm talking about customers, not necessarily prospects here. One of the things that I've been thinking about is that the gig economy is changing our entire world. The gig economy is devaluing the service companies because we've gotten so good at taking our phone out and starting and canceling things super quick. We buy things from Amazon, we buy in Uber, we cancel our Uber, and we're doing all these things. One of the things that people would scream and yell about that we put against the grain is, in today's world, we should stop communicating with customers as much as we are. If it's not meaningful communication, we don't communicate with them.
What I'm starting to see is consumers have gotten so used to clicking something on their phone that when we're communicating about every aspect of our service, they can simply communicate reschedule or cancel incredibly quickly. I've been processing it. We've been testing it in markets and we're already watching churn percentages go down due to implementing exactly what I'm talking about.
When someone reads this, they're going to scream and yell at me and tell me that I've lost my mind but it’s effectively working. At the end of the day, the customer we want is a nice, simple, clean business where we show up, we capture our recurring payment, whether you're doing monthly or quarterly billing, whatever you're doing. We want to give that customer the least amount of opportunities to cancel. In our relationship, we're doing a good job. Not that we're there, we're doing everything else. If I did pick one thing that I've been thinking about, that's what it is right now. I could probably give you ten other things in the industry, but that's my number one thing right now.
Patrick Baldwin: I love it and you're testing it. Where do you want the hate mail going?
Seth Garber: To Patrick@BoardroomBuzz.com.
Paul Giannamore: I think about it maybe even almost from a generational perspective. My mother would appreciate every email. She'd wait by the mailbox for the letter from the pest control. She wants to hear about this. I don't care. Quite frankly, I get so annoyed I don't even want to talk to the technician that comes to my house. He's schooling me on crypto. This guy's telling me, “This crypto and that...” I don't even want to hear about it. I don't want to hear from the pest control company at all. I don't want to have any bugs so I don't value the relationship with the technician.
One of the things that we talk about on the show a lot and it always comes up in M&A discussions when you think about the end user’s relationship, especially on the residential side with an actual technician, that might be the case but do you have a relationship with your pest control company as a consumer? There might be something of what you're saying, Seth. I'm glad you're testing it because everyone always comes up with harebrained ideas and I'm mature enough to know that I don't know much about anything, so the fact that you're out there testing it makes a lot of sense.
Seth Garber: I'll tell you what pushed me over the edge on this thing because it's important. People tend to make our business simple if you talk to them. We talked to technology companies and people from other industries. People immediately give you an answer. I started seeing all these templated messages going out from some of the systems that said, “If you'd like to reschedule, click here.”
Paul Giannamore: You're like, “Why give them an option to do that?”
Seth Garber: Why would we ever do that? That's not our business. Our business on the residential side is showing up, being there for fifteen minutes, which I know people are going to get mad about that as well, do a good job, and leave. The reality is we're guaranteeing the service between services anyway so even if we don't do a great job, we're going to come back out. Why do we give the consumer the easy way to cancel service? We've worked too hard to capture the service.
Consumers as a whole don't want to go through the process of change so why make it so simple for them to change? Let's make it a little difficult. In the tech world, we always made it difficult. As a matter of fact, the simplest cancellation thing that I've ever built in my entire life sits on Pest Daily right now where someone could cancel easily. It drives me nuts but it's a passion project of ours so we leave it that way. The reality is, why make it so simple? The consumer needs your product so why give them an option? Reschedule is the killer. It got a little heated there, Patrick.
Patrick Baldwin: I’m also wondering if Paul's going to get some hate mail saying, “I don't want a relationship with my technician.”
Paul Giannamore: I don't, I'm being honest. No one does. Who does? There were some discussions we've had earlier on in the Buzz where I was like, “Patrick, I get it.” I agree with you wholeheartedly, why make it super easy for them to cancel? If they want to cancel, they're going to cancel anyway.
Seth Garber: I'm sure you guys operate these. If you get into some of the real rural markets, there is a lot of that relationship stuff still going on. If you get into the metro markets, I'm not seeing it as much. One of the companies that I'm fortunate to work with, they're a fairly large company now, the discussion I had with them, we started getting to the efficiency conversation. They've been in business for more than 30 years.
What he said to me was, “Seth, one of our core policies is if one of our customers asked us to come in to have a cup of coffee, our technicians are required to go sit down and have a cup of coffee with that customer.” I went, “This is crazy. That's super inefficient.” He said, “That's our policy. That's what we're at as a company.” The size of this company and the growth rates would blow your minds, but because of where they operate, maybe that makes sense and they have these customers that that's the case. I would agree with you, Paul. In almost every market, it doesn't make any logical sense.
Paul Giannamore: People get comfortable with certain people coming into their house. I don't want a relationship with my technician. I don't care to get his advice on cryptocurrencies. However, he's got a track record of being responsible. There is that level of comfort and I'm happy with him. If he were canned tomorrow, I would have to say “What knucklehead are they going to send over now?” I don't want to underplay that that is important.
I don't need to hear, “I'm on your way to the house.” “I'm at your house.” “I'm at your door.” “Do you want to cancel? Do you want me to go home? I did the service.” I don't need 98 pieces of contact or 20 pieces of flair, as it were, Patrick. Everyone takes this anecdotal evidence as gospel, especially in industry. When somebody says something, the next thing you know, “That's the way it is.” I have these conversations all the time and I'm like, “Have you ever tested that?” They’re like, “No, but I heard it. Somebody else told me.” Test it, guys.
Seth Garber: We've been on this mission so a good friend of mine is an operator in this industry. He runs a good operation in Minnesota. His name's Matt Eickman. We've been on this mission to kill every sacred cow in our industry. You've heard me talk about sacred cows before. Everything that comes down to, that's the way it's always been done. We talk on a regular basis about should it be done that way or shouldn't be done that way. It's one of those things and I feel like these are all sacred cows stuff we're talking about right now, which I find interesting.
Patrick Baldwin: This has been super awesome. I didn't expect it to get controversial. I thought that you were so likable and everybody loved everything you said. You're going to make some enemies on this one.
Paul Giannamore: I don’t think we were that controversial, as a matter of fact, this time around.
Patrick Baldwin: The most controversial thing I said was Seth opening the door and not wearing any clothes. There was something to that effect.
Seth Garber: We did stay away from building pest control vehicles in the metaverse. We stayed all away from that stuff.
Patrick Baldwin: You have one though.
Seth Garber: We'll talk about that maybe at some point in the future.
Paul Giannamore: The other thing I didn't announce at Potomac is we're going to quit selling actual pest control companies and sell NFTs of pest control businesses going forward but that's for another episode.
Seth Garber: I love it. It's hysterical.
Patrick Baldwin: Keep up the great work with Pest Daily and everything you're doing on the consulting side. I love everything that you're doing and all the people you're helping. You're making the industry a better place so thank you.
Paul Giannamore: For all our readers out there, Seth is an all-around great guy. He's super friendly and he has an appetite to learn everything that you're doing. He's a good guy. If you want some advice or you want to see what's going on, he's a great guy to track down. If you’ve got a small firm and you're looking to grow it and you're struggling, Pest Daily is a great place to pop in and visit. Seth, if somebody wants to go out and check Pest Daily, they go to PestDaily.com. How does it work?
Seth Garber: It's simple. There are two choices you have to make. One is you want to buy a program called Sales School. The other one is called the Pro Plan. Pro Plan has about 80 courses. It's got the buzz syndicated in it, which is neat as well. It's $59 a month with a seven-day trial. You can cancel anytime. That's the way it is so. It takes two seconds and you're up and running with tremendous amounts of content about how to build a business.
Paul Giannamore: Seth won't send you weekly emails asking if you want to cancel but you can do it anytime.
Seth Garber: We'll send neat other weekly emails about all kinds of great information, or at least that we think is.
Paul Giannamore: Thanks for joining us, Seth.
Seth Garber: I appreciate you guys having me on. It's been a pleasure and I appreciate everything you guys do in changing the industry. You guys did some amazing things so thank you guys so much.
Patrick Baldwin: Thanks, Seth.
Pest Daily
U Group
Rentokil Initial
Cintas
Nvirotect
Bild
CityPestControl.com
Killingsworth
Rollins
ServiceTitan
Pam Blauvelt - past episode
John Roberts - past episode
Matt Eickman
Sales School
Pro Plan
