Patrick Baldwin: Paul, it’s 2022. I know that last year we had a big Supernova event but the market has definitely changed. In 2022, we've got Bubble Trouble.
Paul Giannamore: Patrick, we are now in an era of FED tightening, which is going to have a dramatic impact on asset prices and quite frankly, the value of your pest control business. Over the last couple of years, we've done Aftermath, Unhinged, and Supernova which was by far my favorite event. If you haven't watched that yet, you should go to our Boardroom Buzz YouTube channel, which is Youtube.com/theboardroombuzz. Type in “Supernova,” and you'll find it.
It's a great way to get some historical context in preparation for Bubble Trouble, which we're going to be filming and releasing live in May 2022. It's going to be a live event. We're not going to record it. If you sign up, put your name and email in there, we’ll get out an invite, you'll get reminders, and you’ll know exactly when it's going to be and you’ll have an opportunity to ask us questions. It'll be the most important event that we've ever put on. There's any way that you can miss this if you're thinking about selling your business in the coming months.
Patrick Baldwin: Let’s do it.
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Paul Giannamore: Jared Borg.
Jared Borg: I still can't believe you gave me zero prep for this.
Paul Giannamore: That’s how we roll. Jared Borg, private equity industrialist in my living room. Jared congratulations on your transaction.
Jared Borg: Thanks. I appreciate that.
Paul Giannamore: Our buddy Tim Mulrooney, research analyst extraordinaire, said on one of the episodes where we were trying to jockey to get him some couple of free mosquito sprays, “You guys are the best pest control service he ever had there.” You’re a level above everyone else. You were some door-to-door pest control guy that broke into the industry and now you partnered with a private equity firm. It’s $20 million in revenue that you and Kyle and your team have grown. Tell us. Give us some backstory. I want to know.
Jared Borg: It's a pretty brief synopsis but you take sixteen years. Everybody wants to shorten the process.
Paul Giannamore: I thought you were $20 million in three years.
Jared Borg: It took a while. You've talked about this. It's hard to grow really fast in this industry so that pace for us was good. We were able to plug away and figure some things out along the way. We were a slow burn. We kept going but for the door-to-door standards, we certainly weren't growing as fast as some of these big folks but we stuck with it and pushed. The funny thing about the Mulrooney, when Patrick reached out to me and said, “With this guy at your service,” my first thought was, I was terrified. I was like, “When did we have service? Did we have our act together? Whose house?”
The first thing I did was to look up his account. You see it and you’re like, “This is crazy.” Not only did we have good people there, but there was some consistency with the same people over and over again. They were sharp and experienced and you're like, “We crushed it.” It felt good. That was a little validation because anybody who says they own a business, and they're like, “We're the best and we crushed it,” I'm always on the opposite end.
I’m like, “All of my technicians work remote and they work alone. How do I even know?” There are all the basic metrics for trying to understand that, but it's hard to know. It's a unique industry and you have to figure some things out in order to have confidence that your people are doing those things. That was part of the process. How do you go from some guy that knocks on doors to how do you evolve? How do you figure some things out and be better? All startups suck. That's part of the process. When you’re new, you suck and you don’t know what you’re doing. That was a big sixteen-year process for us.
Paul Giannamore: Take us down this path. You're out knocking on doors in the early years. You guys worked for Eclipse. That was the old Orkin agency.
Jared Borg: Kyle and I worked for Eclipse for my brother initially and then he went and got a real job.
Paul Giannamore: Is he your considerably less attractive brother?
Jared Borg: Exactly. Kyle and I knocked on doors for two years and then I said, “I'm not that good of a sales rep. I need to figure something else out or broaden my reach skills.” Kyle was a phenomenal sales rep, trainer, and all those things. I branch out so I better figure out some other things. I learned how to hire, train, motivate, recruit, and understand some systems and processes. All that came together. He and I did that for five years. We said, “We've done this. Now let's go do our own thing.” In 2006, we started Pointe, and that was the beginning. We knew how to knock on doors but we didn't know how to run a business at all. We had our challenges for sure.
Paul Giannamore: How'd you learn how to run the business?
Jared Borg: We weren't that good at first. Anybody who tells you they're great at first, maybe they're great at one thing but they weren't great at other things. There was some trial and error. We've always been in a good network of people that have owned businesses and so there's some thought sharing going on and a little bit of mentoring. Even though we closed this transaction, just Kyle and I owned it.
In the past, we've had some other strategic partners, Eclipse helped us get it off the ground. Initially, we had a phenomenal partner and Aaron Allred. He would die if you heard me call him a mentor. That would drive him nuts but we had to earn our trust there when he came on and gave us some insight. Pretty soon he was, hands-off and was along for the ride but still a great friend. To this day, we can reach out if we have questions or concerns with anything.
We went on our own, and we did our own thing. That's when we got serious. In 2015 and 2016, we were like, “Aaron, we love you but let's go do our own thing. Let's double down on what we're good at.” There was probably this time for the first ten years of our business where maybe we were saying, “In 2 or 3 years we'll sell,” because that's what a lot of people feel like. When you run it with that mentality, you never get serious about investing for what it looks like 10 or 12 years down the road. You and I chatted about this earlier, somewhere between $3 million and $7 million, everybody hits a bunch of growing pains where they either have to hire someone to run it for me, I'm either going to sell it, or I'm going to figure it out.
We got good at replacing ourselves as we went, whether that be with door-to-door programs, I'm not a general manager anymore, or I hadn't run day to day anymore. We have someone who does that. In 2016, we got good at saying, “We've been in business for ten years. What do the next 10 or 12 years look like?” Maybe we moved into a little bit more of a role of saying, “How do we progress further with this being the door-to-door startup or a door-to-door marketing company who sprays houses to transition into being a robust service offering that invests in their employees and offers true advancement leadership?”
When I say invest in employees, you pay your employees well. We pay 100% of our employees' health care. We're putting our money where our mouth is. We're paying these guys. We have technicians that make over $100,000 a year because of the way their comp plan is structured. They stick with us for while they learn how to make some add-on sales. All those little knobs you adjust of the way the sausage is made, whatever you want to do, none of those were, one day we woke up and said, “Let's be a little more serious.” It's a constant effort and constantly figuring it out. That brought us to where we are now.
Paul Giannamore: Let's take a step back for a second. You've got two operating businesses. You've got Green out in Virginia and then you've got the Midwestern operation of Pointe. 2015, 2016, was that era where you are starting to think about pulling off of door-to-door in the Midwest.
Jared Borg: Our door-to-door had flatlined so as our top line grew, the amount of revenue we're generating door-to-door was somewhat flatlining and we needed to start adding some different methods of adding customers. We got serious about learning and understanding the way of the online market. Prior to 2016, it was outsourcing to a marketing agency, you pay someone to do some SEO, you pay someone who's in pay-per-click. I have friends in the tech industry that you're like, “How do you track customer acquisition costs?” They’re like, “With clicks, it's easy. Phones are a little more challenging.”
You start figuring out how to do stuff with phones and all of sudden, I'm on YouTube one night and you’re like, “How do you write a SQL query so I can understand these BI platforms that maybe will track our spend or lead sources without a CSR’s input.” That process of saying, “I don't think I can outsource strategy,” you can outsource one little part of it, but we had to start bringing strategy in-house for an entire marketing and growth plan.
We started to wrap our brains around that. We didn't invent the wheel. My brother has a robust inside sales program that we were able to see. We have a super talented chief marketing officer. His name is Shawn Peters. He came from a background of doing a lot of stuff online and was able to adapt and learn pest control quickly.
At one point, we brought on a full-stack software engineer who turned into a project manager. We started seeing that we want to be ahead of the curve. We want to know, because, right now, for example, we know at some point, people are going to stop calling us to buy pest control and they're going to want to click to buy. That is happening at some point. No one's effectively doing it yet but that's one of our projects right now. We want to be ahead of the curve when that comes.
Those are the kinds of investments that when you switch from knocking on doors you're trying to understand that stuff and how to be ahead of it. Frankly, we're still a small shop. Even at $20 million, I don't know the strategy the $100 million or $200 million companies are doing but we're trying to be a little boutique about it and also be lean and mean but cutting edge. For the most part, we figured some of that stuff out and now we want to go deploy it at scale if that makes sense.
Paul Giannamore: That makes perfect sense. You were talking about strategy and not outsourcing. As you grow this business, at the end of the day, your role as CEO of the business is effectively to set strategy. That’s key. You're thinking about how door-to-door starts to flatline. I would imagine you start getting in your mid to late 30s and you're like, “I'm out of the door-to-door party, too.”
Jared Borg: I'm not as cool as those guys. I'm not as hot. They're all good-looking, fit, and athletic. That’s a hard lifestyle. Frankly, we'd never fit the door-to-door crowd from the aspect of my friends working for me and their friends. We gave them a good experience and they brought friends. We never ran a huge large scale $10,000- or $20,000-account summer-type program. I ran out of friends and friends’ buddies.
Paul Giannamore: Was it because you were canning them?
Jared Borg: No. At one point, our biggest recruiting source was our original buddies’ little brothers. We’re like, “Do you have little brothers?” We were washed up.
Paul Giannamore: They’re like, “Our parents stopped making them.”
Jared Borg: The writing was on the wall. We had to adapt or we were going to flatline. We had to figure that out. The writing is on the wall and that wasn't a quick fix to figure those things out. It takes a lot of time to step back into your business and say, “How do we deploy these strategies?” “What are other people doing?” We're not inventing anything. We're trying to be a little bit cutting edge and ahead of the curve.
Paul Giannamore: When you guys started to get scale off the door, so to speak, in Chicago, what year did you bring Shawn on as your CMO?
Jared Borg: I hope I get this right. 2016 or 2017.
Paul Giannamore: The capabilities he brought to the firm are instrumental and you guys continue to juice that top-line growth but not do it through the doors.
Jared Borg: There was some figuring out because nowadays, we'll spend $2 million in pay-per-click. I don't want to give away Shawn’s secrets or whatever but you can't do that until there's a vast array of systems in line to make sure phones are answered instantly or leads are followed up lightning-fast. With that spend, you can burn cash fast so it's scaled. I have people ask me, “We want to blow up our inside sales program. What do we do?” You’ve got to get ready to spend money, spend it correctly and scale it. Your organization has to grow with it.
Here's a good example. We have 40 technicians in Chicago and we used to be able to deploy our inside sales program and they would cover all the initial services in the summertime. In the door-to-door game, we had specific technicians that only serviced new door-to-door accounts. One summer, we were forecasting and we're like, “We need dedicated technicians that only do the first service again,” because that insight sales program was so powerful. You can't do that overnight. You need some pretty good infrastructures to support all those different groups of people to do all those things so it takes some time. Shawn has some good capabilities that he's brought to the table.
Paul Giannamore: With these start techs, are these your most capable technicians? Are you putting your rockstars on the first service?
Jared Borg: I wish we could. I wish I had a better bounce for that. They don't do all the initial services but similarly, you're going to hire some seasonal people to do mosquito and you're going to hire some seasonal people to handle your influx of services in the summertime. Every year in September, whoever's the best for keeping. There's this natural process of you don't get to stay because you're the longest. The people get to stay because they're the best.
People are hired seasonally so we tell people, “If your job is to go from being the best start tech or the best mosquito tech to getting on a route. You build relationships on those routes, you have some relationship-based selling opportunities and you can turn this into a $70,000, $80,000, or $90,000 a year job where there are full benefits, no commuting costs, good vacation.” For a lot of folks that want to work independently or by themselves, the technicians in that mindset, if we can give them good pay, and they stick around for 3, 4, or 5 years, we knew to invest in that. That's what keeps our customers around for 3, 4, or 5 years. They have the experience that Tim had.
It was cool to go back and see the notes because these guys had taken pictures of a woodpile next to his house and said, “Mr. Mulrooney, I'm sure you want your firewood close to your house but that's not the best place for it.” He had that consistency. At one point, he went from 18 to 24 months with the exact same guy. Maybe he only saw that guy once but there's some familiarity that people appreciate versus if you have a landscaper and he's never in my house, frankly, I don't care who comes.
There's a different level of trust when I bring someone into my house teaching someone how to always put on their slippers, the way that they communicate, being polite, having some customer service skills, and then something that they remember, maybe the dog's name or something like that. Those are things that we want to do to make people feel like we have some skin in the game. We're sticking around and this is the company they can depend on and refer to their friends, neighbors, and things like that.
Paul Giannamore: You guys have put together a lot of these specific unique service protocols like the little extras that you were doing. Where did all these come from?
Jared Borg: I totally stole it. I used to travel a lot in the summertime and we had a dishwasher go bad. Prior to this part of my life, I was raised in a house that would have never gotten pest control. My dad worked and my mom didn't work. We fix stuff ourselves. I was traveling and I was like, “We’ve got to call someone to fix this. I'm not going to monkey with it.” We called a company and they came out to fix an appliance. The guy shows up, puts a mat on the door, and puts his booties on. My wife hates this. Remember in hotels and everyone says hi. I'm like, “They're trained to do that.” I like it because they have a good protocol.
This guy showed up with the door, the mat, and the booties. He even handed the business card to me in a certain way. He had his iPad and the uniform. It was all standard. He came in, gave us a quote, and told us how long he was going to get the part, and when he would be back. I thought, “That was good.” A different guy came back and put them in the part but the same mat, the same booties, the same business card, the same iPad, and the same uniform. I was like, “This is unreal. These guys are so good. This is awesome.”
I got a nice little invoice at the end. That equaled the amount for a dryer six months later. It’s the same thing. I said, “This is so simple.” I even looked him up on YouTube and I found them. They had a video of their schtick and I sent it to our COO. I was like, “We are copying this exactly and you're going to add your touch.”
We rolled out a five-star service protocol and sold our focus on not only do we want to offer a top-line service because we don't want this to be a commoditized service. We want people to feel a difference. We also wanted to start owning the online reputation. That five-star service paired with how we wanted to own that part of it pushed us to go out and say we're going to get tens of thousands of reviews online. We want them to convert themselves to the gospel of Pointe. If you put it in writing, it might help a little bit.
That was a mission of ours and that was a big check off the list to be able to say, “Back in the door-to-door days, nobody was owning their reputation online.” You're getting your ass kicked on Yelp and Google. All of the sudden, we wanted to own this and be good at it and you can't fake it anymore. We said, “Let's not fake it. Let's be good at it.” That's one of those things with technology. Everyone's like, “How do I automate my reviews?” We do not automate them. They're all real and everyone's asked in a specific way at the end of the service, “Mr. Giannamore, is there anything with my service that would prevent you from leaving me a five-star review?” “No, it was awesome.” “Would you take 30 seconds to leave me a review?” “Yeah, you bet.”
You text them a phone number, they get an invite, they do it right there and thank them. If you know that at the end of that service that you're going to ask for a review, you're going to do a service worthy of asking for a review. We'll follow up with our technicians, “We noticed you didn't ask his customer for review and he was home because we can see there's a signature. What's going on? Are you not confident? Do we need to go and spend some time with you?” Some of it you’ll learn that they're new on the job and they feel uncomfortable asking.
You coach them up and you send some people to the field to spend some time with them. That stuff pays dividends. That's investing in your business. It’s having those people that can spend time in the field of those guys getting the buy-in. Even with the stupid doormat I was terrified. We rolled that out that in six months there'd be 50 doormats in the corner of the warehouse collecting dust. Those guys are idiots.
Paul Giannamore: What is the doormat?
Jared Borg: We have five-star service. We needed a few things to set us apart. Our doormat has our logo on it. They're going to stand there and they're either going to take their shoes off or they're going to put their booties off or they're going to leave their tool bag at the door. We're all trying to somewhat differentiate ourselves. The five-star service is not one tool in the bag, so to speak, of what we can do to make ourselves a little bit different.
Paul Giannamore: Clearly, you ripped off a good chunk of this from the dishwasher company, but I also know that you and Kyle over the years and your team have implemented a lot of these Kaizen-like step by step, inch by inch, making these little innovations. You’re screwing some things up and changing it. If I'm the manager of a pest control business, how deep does this decision-making go all the way down to the technician level? Are your guys coming in like, “Jared, we should be doing a mat or doing this?” Do you incentivize your people to come to you and say, “This is a great idea. Why aren't we doing this?”
Jared Borg: We’re open to ideas. I don't know if we're incentivizing ideas as much as we're incentivizing behavior. With the reviews, yes, we'll set some bonuses if they get certain reviews. To back up a little bit, in every position, our company has a clear set of KPIs. If you're a technician, get all your jobs done, maybe we track re-services or probably not. I love re-services. This is a good chance to get some face time with the customer. We track if they're safe drivers. I'm obsessive about that. We definitely track if they're selling any add-on services to customers.
For a few reasons, we want these technicians to, one, increase their earnings. We're not competing with other pest control companies. At this point, we're competing with the Amazon warehouse paying $30 an hour or whatever. If our technicians sell, they're engaged. The technician has those KPIs. CSRs are trying to save canceled accounts and they’re trying to collect money. Service managers might have a net promoter score that they're based on. You build all these layers of KPIs for everybody.
At that point, I get out of the way. It's like a football game. The coaches get out of the way and let the players play. There's a scoreboard, and a clock and everyone does their thing. It's this living and breathing organism that everyone knows what their job is, they know what their responsibilities are, what they have to do to be successful and happy, and all those things. If anything, all these folks that you're asking about, what do they need to do, sometimes they need to get out of their own way.
Set some clear KPIs and let your folks do the thing because you need to see that with owners a little bit. Maybe they're their own worst enemy. One of the best things we ever did was move away from our business. It forced us to have good people and give them the support they need. Maybe that's one thing I'll add. This was 2015 or 2016. I had a talented field-type manager in my locations. I went to the office I visited with him. I was sincere but I always threw it out. I'm like, “Is there anything you need me for me to be able to do your job with full stability?”
It’s a pretty simple answer at the end of a trip. He shot me off 2 or 3 things. I was busy at the time. I had a pretty full plate. I remember I was like, “I don't have the bandwidth to get those to you.” I didn't like that feeling. I said, “I need some help to do this.” We hired an executive VP and we had a project manager. I started saying, “I’ve got to put some people in place to help me with these things,” because that wasn't a feeling I liked.
It wasn't an excuse. I clearly couldn't give them some of the tools he needed to be successful. They weren't basic things. They were maybe some friends or some nice things but they were enough that I felt, “I don't have the bandwidth for that.” That's a weird balance. We want people to value resourcefulness more than resources. You learn a lot of ingenuity in that process but you can't substitute good and valuable resources. That's all the owners are at this point. At this stage of the company, we're supporting our staff. Right and giving them a little bit of strategy.
Paul Giannamore: When you talk about KPIs and metrics, Pointe was unique amongst pest control businesses of its size for the advanced analytics that you used. You guys were using the BI platform. You were addicted to going in there checking all sorts of metrics. I want to talk to you a little bit about that. Before I even ask her a question about it, can you maybe explain to our readers what the BI platform is and how does it all work?
Jared Borg: There are a bunch of BI platforms you can use. We've used Microsoft Power BI to grow. A lot of people relate to this. In the door-to-door industry, there was always a scoreboard. There was a top twenty list of wraps or a top twenty list of first reps. Someone said, “Maybe we'll have a top twenty list of contract values sold.” That's cool and then maybe some will say, “I'd love a top list of who has the highest auto pay.”
Your brain starts working with all the different ways to motivate people and now we said, “What if we made a KPI that was which sales rep had the highest home value sold?” That was a cool one. That was probably Kyle's idea and I said, “Let me get it with me guys and see if we can build that out.” We got our guy and we had what’s called the Zillow Average.
If you're a rep that’s not the highest selling rep but we want you to sell good accounts, maybe they were a little more selective in their area and selling more in affluent homes and I don't have the data to back it up but in general, I'd rather have affluent customers than not. We said, “This is good practice. Let's go do that.” That became a driving force and so then you start saying, “It's a door-to-door rep. You never have leads but what if I could load new move-ins into this system and they could see them?”
That was a project we did for one year. We worked with developers and some maps. We said, “When we assign you to an area you have some leads. This person moved in the last 30 days. Make sure you talk to them before you leave.” It all started small by trying to see the big picture of new move-ins, leads, or what motivates reps.
For a guy with fourteen college credits, you probably start trying to understand maybe some big data. I got a data scientist on the phone one time and I was like, “Maybe this is overkill. I'll keep plugging away at what I can figure out.” It started with door-to-door stuff, and then it moved to we're trying to track net promoter score down to the truck level.
Even then, there's some subjectivity to it like a customer might give you a bad score because the CSR couldn't resolve a concern correctly, or maybe the sales rep didn't sell it correctly on the phone. It's not all the tech's fault but you start getting 100 data points on a technician for a net promoter score pretty quickly who your top performers are and then there are trends. It’s like, “Your net promoter score for the last three months was bad. What's going on?”
You go talk to him and you might find out someone’s wife is sick. You see those things. Those are the tools that once they're in place, you can get them your guys and it helps them out with that stuff. The BI is cool but also building out good training protocols for guys. You start matching those things together and it starts to be pretty powerful tools for your crew.
Paul Giannamore: When you're tracking things like Net Promoter Scores down to the truck level, who at the firm has access? If I'm a technician who can see my net promoter score?
Jared Borg: Everyone.
Paul Giannamore: It’s completely public. Do you find that the fact that you've got these public scorecards are in and of themselves motivators that don't even need to have monetary incentives tied to them?
Jared Borg: We don't gamify Net Promoter Scores because we don't want anyone to say, “You might get a survey,” because those are different from reviews. We also don't gamify Net Promoter Scores for incentives either because we want to stay pure but we post it and we use it more of, “If you’re a manager, maybe you want to know who needs more attention, or maybe you can reward guys.” Maybe we go to a guy and we're like, “How do you have such an amazing score? Teach us something.”
Paul Giannamore: Find that guy and model him.
Jared Borg: Learn from those guys. Frankly, some of this BI stuff, you read a bunch of data and you're like, “That's what we thought,” and you don't learn much from it. I spent a lot of time figuring that out and so got to be pretty selective. In any one position, they can't have more than 3 or 4 KPIs because it's not it's, you lose some effectiveness with it. We want to retain the best employees. We want to sell and retain great customers. We want to collect revenue efficiently and then we want to build a culture. We have DBHA, Dream, Believe, Hustle, and Achieve. If we can do those four things we are usually doing pretty well. We're cooking with oil.
Paul Giannamore: For example, what are the publicly available KPIs that your colleagues can see for a typical technician?
Jared Borg: Net Promoter Score is a good one, how many accounts, and how much revenue have they generated through sales. We'll publish that and there's a handful of folks doing Net Promoter Score for customers. You can go look them up online. Some context to that, you can even look this up, some companies will publicly post their Net Promoter Scores and you can see what it is. We have the Net Promoter Score and do they drive safely. I'm obsessed with driving safely. It's the most dangerous thing my folks do every day but I got a call a couple of years ago about a near accident and it made me sick. I’m big about driving safely.
We want an engaged employee so we can see if they've asked for Google reviews and how effective they are at that. We'll track the cancellation rate a little bit down to the truck level but we're not so obsessive where we’re holding them accountable. What if it's the first time you service that guy's house? There’s some subjectivity to it but in general, you put a batch of these together for technicians, and you start having a good idea of what's going on. The challenge is these guys work remotely. By and large, they're great employees. These men and women do an awesome job but how do you trust and verify that all the things that we're putting in place are happening and the end result is a happy customer?
Paul Giannamore: What KPIs do you and Kyle use to judge your own performance?
Jared Borg: Paul, how awesome are you? We have an ownership dashboard so the stuff that I'm working on, that strategy is we’ve set some pretty lofty goals for growing our inside sales program. That's one. There are a few different ways to look at retention in our industry and we have proprietary KPIs. We don’t have retention where we're not going to beat up our guys if a customer moves on the retention rate or we have a few products that we sell that maybe our standard pest routes, KPI, maybe we want to modify that.
We're concerned about retention. Once you start obsessing with retention, you've gotten to a good place in your business. Retention, organic sales rate, and we track what we're doing online. We definitely track our customer acquisition costs. That's a big one that we want to know. That one's hard to track alive. We don't have that quite dialed in but we know it on a weekly basis that’s for sure.
Paul Giannamore: Now that you've got a co-investor in your business, you've gone through the sell-side process. You and I had a chat with Jay Keating, the CEO, I'll say it again. never suspected at every sitting here with you in this capacity.
Jared Borg: Same. I didn't. I also never thought multiples to be what they are. I probably also didn't understand what my mindset would be at 41 years old if I'd be ready for a new challenge or something different. That's something that's unique. I’ve done the same thing for more than sixteen years. I mentioned earlier that there's this chance you're going to turn into everybody else. mid to high single-digit growth rate and scaling off the doors are only using them to maybe open new markets strategically. It's not the most challenging thing at this point for our business and it would have been pretty hands-off. I don't want to use the word boring, but it is not challenging enough.
Paul Giannamore: At some point, it becomes Groundhog's Day. You clearly weren't ready to be done. Ever since I've known you, you've watched transaction multiples go up and said, “Those are wicked high purchase prices but at the end of the day, what am I going to do?” I’ve got a great lifestyle and a great team. Everything's good. 2021 was a spectacular year from an asset price perspective. You decided, as opposed to going the strategic route that you want to stay in. You wanted to partner with the right firm and you found the right firm. From what I understand, you’re the president of the residential platform.
For you, this gives you additional resources. You’ll be able to focus on doing some M&A which is something you weren't going to write a check for out of your pocket for. You've had six months to somewhat think about this or maybe you haven't. You had been doing a lot of due diligence. Maybe you haven't thought about it. What excites you about the future of this company?
Jared Borg: It's pretty exciting to direct strategy from a bigger level. It's fun to have some resources from a bigger platform like TSCP that they can bring some expertise to. There are certainly some things that I don't want to do anymore that I'll probably get off my plate. It's weird too when you own your own business. Our corporate office was always super grungy. No one ever comes. Why do we care? A couple of years ago, we got a little nicer office and I felt guilty about it. To some extent, it's not that nice but there is a change when you don't own it and now, I still own it but you're investing in growing an organization and you're building for the future.
There's a little bit of change from being maybe president to being the owner. That's been a nice change to maybe there are fewer things I stress about and there's some help you get. We set this process up and we're like, “If we don't find something, no big deal. We will certainly keep doing what we're doing.” We're happy. Things are going good. Frankly, I didn't think that this unique opportunity would present itself. It wasn't until we had to let the whole process play out to see if it was even the right fit. That was a little exhausting to run that whole process through whereas I can definitely see if someone says, “I'm 55. I'm 60. Paul, run the process. I'm done.” That wasn't me.
We have some great people who we have great relationships with. I can't call them general managers anymore. Prince Cunningham in the Chicago market was a guy who started out as a technician and we promoted him to General Manager. You've seen this. As your businesses grow, and they outgrow their talent, it's awesome. We've never outgrown Prince Cunningham. He's grown with us and he's built an amazing culture there. I have a guy in Virginia. In my last year with the Eclipse, my team went out and sold 6,000 accounts and Kyle sold 1,000 accounts.
The GM that was for Orkin that summer was a guy named Dan Seymour. In 2006, twelve years later, we reconnected and he came back to work for us and he runs that Green platform for us. These are lifelong relationships that we have. I'm not ready to see those end. I want opportunities for guys like that to keep going on. You have to let that process totally unfold to see, “Is this a right fit?” That was fun too. We brought those guys into the process and said, “I want to do this. Are you guys on board? Are you ready to blow this up and go even bigger?”
Paul Giannamore: You brought those guys in when you looked at it and said, “Okay. I'm not ready to do a 100% change of control with a strategy. If I do a transaction, it's going to be with a firm like Thompson Street. I'm going to roll some equity. I'm going to grow the hell out of this business. I'm staying in but it's got to be the right price. It's a financial transaction.” If I remember correctly when you were on the fence, you're like, “This feels right and I'm excited but I'm not 100% sure.” You started reaching out to your team. You got involved and said, “This is what's going on.” What are those conversations like?
Jared Borg: Not only did I reach out to my team but I started reaching out to Jeff Aiello’s team. I want to chat with founders he'd worked with. As we brought those guys in and we explained that this is way different than us like, “Here are some Terminix uniforms.” When we said, “This is a chance for us to do acquisitions, preserve these brands, and preserve their identity.”
The first thing they thought about was the folks below them. They have chances to grow and to do some things. I was excited for them. I never had any real awkward conversations where people were like, “Jared, are you sure about this? This is crazy.” Most of them gave me a pretty good vote of confidence and said, “If you feel good about this, we'll do it with you.” I was also getting some comfort lever with these acquirers and with Jeff especially, Brandon and their team. That took some getting used to. It's like these reality TV shows like 90 Day Fiancé or whatever. That's what this is like.
Paul Giannamore: In a process, unfortunately, you're making a decision that's in a lot of ways, almost as important as marriage but you're forced to do it again and again. You mentioned preserving the brands. You've got Pointe and Green. Of these two brands, Pointe is a story name. Pointe goes way back. If I remember correctly, it was more than twenty years ago, give or take, there was Eclipse and then Eclipse turned into Pointe.
Jared Borg: You could list off the names of people that started with Eclipse that are in the industry and have excelled. It’s a huge list of sharp guys. At some point, they said, “We're going to keep losing talent unless we own a pest control brand ourselves.” At that time, I was ready to leave and go do my own thing and they said, “Why don't we help you out for the last couple of years and get some financing.” They're going to own a little bit of it and 2008 happened. Banks are crashing. That's a little weird. Once your business model is built around some financing, and banks are crashing, there are some decisions that we made.
They sold a bunch of their locations at Terminix. Myself, my brother, a gentleman by the name of Andrew Israelsen kept our locations. That was a pretty unique time. Here I am with my mentors for years and then my business partners. They're negotiating to sell the business on my behalf and I hadn't even committed to selling. When you decide to back out of a transaction like that and you're the biggest location in a prime spot in the Midwest, what now seems a ridiculously cheap multiple. I did a lot of the blood, sweat, and tears for a couple of years and it didn't feel right.
That was tough go of it when those banks were crashing and were laying off employees. Kyle and I aren’t paying ourselves for months at a time. We were still pretty young. That was a scary time. They were in the mindset that pest is dead. They were ready to move on. We brought on a new partner and we stuck with it. Talk about a turning point in your life where it was touch and go. We could have succumbed to them and said, “Okay. We're going to sell,” but we stuck it out and worked out pleasantly.
Paul Giannamore: At that period of time, there was, of course, Pointe in the Midwest. Your brother Jacob gave Pointe Pacific Northwest and I know there's another one on the East Coast. At least from your perspective, right now, you Jared, we’re talking about Thompson Street and PesCo. When you think about the potential to grow Pointe in the Midwest, what do you think about that? What would be a back-of-the-envelope strategy as to how you grow that from a geographic region?
Jared Borg: I like the Midwest man. There are a lot of people flooding in. Let's be honest. The way door-to-door has unfolded, there are no untapped markets anymore. We're not Chicago in 2006. I don't think anyone ever knocked on doors there. It was 1 or 2 years for Orkin and the teams failed and they left. There are no hidden markets anymore. In general, AX isn't in the Midwest. There are a lot of tertiary markets there that are good. There are opportunities for growth there because it's not a general focus point especially compared to say where Green is in Virginia. There are a lot of options in the Midwest and we like that. We're happy to expand that footprint there.
When you can get into real granular things like if you go into Texas or Florida, your customer acquisition cost to get a click. Having alone a phone call, but a click significantly more expensive than say, maybe a Midwest market or an East Coast market. The strategy is we want to buy companies at reasonable rates. We want to be able to maybe run some door-to-door through there to add some density and then it takes a little bit of time to turn on these online programs. You don't get thousands of reviews overnight. You don't have to hire some guy that does pay-per-click and all of the sudden you get tons of calls.
Shawn, our CMO will tell you. He's like, “I can't do what I do. Unless the service side does what they do.” It's been a good marriage for him because anytime you're going to go sell a brand that destroys it online and crushes it, we've got 25,000 or 30,000 reviews makes his job much easier. You have to be careful when you go to these other markets that you can't think, “He's going to turn it on like that. Cue my new boss. Be patient with us as we roll these things out.” It takes a little bit of time to get all those things in place.
Paul Giannamore: This theme from you I've heard you say dozens and dozens of times is you think about a business almost as a systems engineer where if you tinker with one aspect of the system, it could completely mess up the other side. It's all about the yin and yang balance. Potentially some of this came in from your experience on the doors. It’s seeing how all that revenue coming on that if you don't have your back end and everything else working right, it can turn into a disaster pretty quickly. Maybe that's where that comes from because a lot of guys don't often think like that.
Jared Borg: When you're running those door-to-door programs, even a simple thing is like not having enough technicians to service the accounts. Even with some of that basic planning, you start picking up on trends and patterns right in your life and you start thinking, “I can see what's going on.” One thing I learned too is I learned to trust a lot of other people more than myself. In fact, I heard you talking about this. We're horrible consumers. If we ever make marketing decisions based on what you and I would do, it's the worst thing ever. I heard you talked about it and I was like, “Yeah, that's me too.” I'll tell my CMO, “I would never buy something like that.” He's like, “Yeah, but you're not normal.” Being able to detach yourself from some of those things and have some good people that you trust to get input from helps.
Paul Giannamore: I say this sincerely, Jared. I know I get on the bus and I blow all sorts of smoke about how all my clients are great but you guys have truly built a phenomenal business. You guys were growing at that double-digit clip. Your profitability was immense and you seem to have a team that was happy. This is an important discussion because a lot of guys get into door-to-door and they want to flip a business but a lot of other guys want to build a long-term income-producing asset that's a home for their team.
You are one of the guys and there are others out there but you're one of the OGs that went did that. What you said a minute ago made me think. You said that you're in a good position if you start to think about customer retention as opposed to thinking about sales and everything else. You got yourself in a great position. What advice would you give to Jared Borg of more than 15 or 20 years ago, a guy that's in your position who wants to do the right thing to build a great business?
Jared Borg: I was lucky. I had some good mentors along the way. I had a brother in the same industry. I have good partners. I certainly can't take all the credit. I have been blessed that way. I have a sharp partner in Kyle. We paired well together matching those things. Probably some real simple advice is getting good at replacing yourself. Someone said once, “If you could take a pill that would make you self-aware, you’d be the richest man in the world.” That's a hard thing. How do you tell someone to be a little bit self-aware but have someone in your life that gives you some direction or maybe you trust for some input?
Get good at replacing yourself. No one understands the industry we're in and sometimes that door-to-door industry is almost like they're two different industries. You have folks that do pest control and there are folks that do door-to-door. You can meet in the middle because there are a lot of sharp, young talented guys on the door-to-door end doing good things. It's easy to bang on the door-to-door scene and say maybe they're not doing a good thing. Part of that trend is all the guys that are coming from door-to-door They're injecting energy into pest control.
Frankly, if it wasn't door-to-door, let's say there’s a huge influx of new people getting into pest control. Every new business suck when they start. Part of that is a byproduct of they’re new and they’re figuring it out. That perception is changing a little bit. The retention rates are changing but door-to-door retentions are probably some challenges to figure out but those are some sharp guys. They're going to stick around and they're going to grow. Find someone that you can emulate a little bit and see what they're doing. We looked at Bulwark years ago and I'm like, “I want to be those guys,” and now I'm not because those guys are still doing their own thing but it was a good path for us.
Paul Giannamore: When you talk about learning to replace yourself, all that stuff sounds great in concept but give me a pointer on how you have done that. What are some hard decisions you had to make in order to replace yourself in an org chart?
Jared Borg: When we started, Kyle ran door-to-door and I ran the branches.
Paul Giannamore: Because you sucked as a sales guy according to them.
Jared Borg: Kyle would grow those teams and he would have to replace himself because, at some point, he has a wife and family and he can't knock doors so I’ve got to get a different manager for this, and I got to give this manager tools to do this. We had to put a branch manager in place to run the day-to-day so that I can focus on all the non-day-to-day things. Anytime there's a task that requires any of my attention on a day-to-day basis, at this point in my life, I'm trying to avoid all that. If I'm a bottleneck or a clog in any process, I'm getting myself out of that, whether that's payroll or onboarding even with goal setting.
My BI platform is when January 1st first hits and renews, everyone's goals are set. For the most part, I got to go and make a couple of tweaks but I remember even being like, “I’ve got to reset goals. Let's see if I can program this in.” It still needs a little bit of tweaking but if there's ever a process that I'm a bottleneck, I want to get out of that.
Paul Giannamore: You were talking about the self-awareness pill. You want to find somebody who's better than you at a particular task but I would imagine there are probably also times when you have to say, “Good enough is good enough.” How do you balance that? Does that give you some angst?
Jared Borg: We learned that the hard way. When Aaron was our partner in 2009 or 2010, whenever I moved to Chicago.
Paul Giannamore: He had better hair than you.
Jared Borg: Way better. He still does. When he told us to move away, we were like, “Maybe only one of us should move away.” Maybe Kyle would move and I don't. He was like, “You guys need to get out of the branch.” He knew. He was like, “You guys aren’t general managers. You guys aren’t day-to-day. Your sales guys. Get out here and come back here and recruit full time so you can grow the business.” I remember having a specific conference with Kyle and saying, “There's no way that branch will be around as good if we were there.” Aaron said, “Who cares? Your skillset is better to use somewhere else and we'll work on that.” It wasn’t going to get instantly better.
As we work through that process with getting the right people in place in Chicago, pretty quickly, I'd show up and I'd be like, “These guys are way better than me. Who am I kidding?” They love it more. They live it and then they start setting their own culture. We're not even the ones doing it. It's all organic and we're like, “Let's empower these people. Let them do that and we're going to get out of their way.” That was a unique pill to swallow and Aaron told us to get out of our branches. It forced us. It's a strange deal. Tim Ferriss writes about this. You need people to leave your business for 2 to 3 weeks at a time, it should run seamlessly without you. Set some vision, set some goals, get out of bottlenecks, and you'll be alright.
Paul Giannamore: What's the longest period of time you've left the business?
Jared Borg: A few years ago, I bought a sprinter van and drove to California. I drove it home and gutted it in my driveway. I watched a bunch of YouTube videos and we built a little touring van and we toured the country for six weeks in the middle of summer years ago. I remember taking a few phone calls and responding to some emails but not being overburdened. I remember feeling that was a pretty good notch in the belt to say, “I put some stuff in place where I can leave for six weeks and it wasn't a big deal.” It was summertime. Summertime is funny too because it used to be that summer was our busy time. Summertime is now when we get out of our people’s way.
Paul Giannamore: Winter is where you’re all into strategy and planning. Now that you're a big PE industrialist Pennypacker, you're going to have a lot of work ahead of you but you're also going to have a little bit of time to step back from the business and be a little bit more strategic. What trips do you want to take with your family? What things do you want to do? This is a good time in your life. You've killed it and worked hard for more than two decades. Is there something you want to do with your wife or your kids? Do you want to do something crazy during the summer? Jodie didn’t put me up to this. This is my own question.
Jared Borg: We have a standard checklist of things. We love whitewater rafting, multi-day trips, and we have a group of about 30 or 40 people we do trips with every year. We put it out for lottery. We go do 1 or 2 of those a year. That's it. We go and take a mountain bike trip with our kids. I have three boys. Every year, we go to Colorado for a week and ride resorts and ride mountain bikes. We did it with a great group of friends. Every year, we used to go to Hawaii after spring break. We have a pretty good annual list of things that we do but since we've started this process in June 2021, my life has been on hold. I haven't done squat. This has been a long process. My wife's taken a few trips without me and she's like, “You need to wrap this up. We have to have a life again. We'll go to Hawaii over spring break.”
Paul Giannamore: You skipped Hawaii in December of 2021.
Jared Borg: I'm going to go to dirt bikes and Costa Rica in April 2022. That's one of the things I'll do with some buddies. I was supposed to that April 2020 and then COVID happened. A big hobby of mine is riding dirt bikes. That'll be a good bucket list to do.
Paul Giannamore: That's fantastic. I clearly can’t sit with you here all day but guys are down in Puerto Rico. We're going to go and have a formal closing dinner. I'm super excited that you and your wife are down here. We’ve got a lot of folks. It's been super fun. I appreciate you coming down here.
Jared Borg: Thanks for having us.
Paul Giannamore: In closing, what's a Borg motto?
Jared Borg: In 2004 and 2005 all my siblings were in college. I secretly dropped out. I’m not telling my parents that I'm trying to figure this out. At the turning point in your life, you're trying to hear what to do. There are a few key points in my life where you have to put it all in line so I have this dumb phrase. I've never regretted being bold. I think about that.
Think of a time when you've been bold. It may not have been the right choice but I've never regretted being bold so there are a few times when you look back at some key moments where you say, “That was a pretty bold and aggressive decision.” As an entrepreneur or as a leader, people are looking for someone to have a little bit of strategy and some things in mind but I've added to that and I'm never going to be bold or generous. When you take care of the people that are around you, you treat them right and the rising tide lifts all. Those are maybe some words of advice I’ve got for everybody.
Paul Giannamore: Thanks for joining us.
Jared Borg: I appreciate you having me.
Jared Borg – LinkedIn
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Green
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