Ep 24 - Stockholm Sessions 2: Anticimex President & CEO Jarl Dahlfors

Patrick Baldwin:

12 transactions in 48 months or something?

David Billingsly:

Yeah. We basically almost quadrupled the business.

Paul Giannamore:

I like to believe I had a big part in that, David.

David Billingsly:

You absolutely had a big part in that. And you also cost me a shit load of money. I know you'll have to edit that out but this is key.

Patrick Baldwin:

In fact, we're going to lead the episode with that.

Paul Giannamore:

Making David Billingsly pay is what I do.

Patrick Baldwin:

Paul, I think we had a great start to Stockholm sessions last week with Svein Olav, but you really outdid yourself. You actually, earlier that day before you got in the Ferrari, I think you snuck into the Anticimex Boardroom or something.

Paul Giannamore:

I certainly did, Patrick. I didn't really have to sneak, I was invited in with open arms, with all the... there's maybe 20 people, 25 people that work in Anticimex's head office. Since they've pretty much all had COVID and I don't believe that I've had Corona virus yet, they thought they would help me in building herd immunity and get me in there. But yeah, we went into the Anticimex Boardroom and interviewed Jarl Dahlfors, the CEO of Anticimex.

Patrick Baldwin:

But I don't think we're alone here, Paul. You've got a special co-host for today's episode. I don't know how you pulled this off either.

Paul Giannamore:

We do. We do have a special co-host. We've got David Billingsly with us this morning. Welcome to The Boardroom, David.

David Billingsly:

I mean co-host... I didn't even think I would be a co-host, so I've actually got a title—

Paul Giannamore:

No, you're co-host.

David Billingsly:

...title with you guys?

Paul Giannamore:

Hey listen, you got a lot of titles and nicknames, David. But we'll start with co-host.

Paul Giannamore:

This is PG, right? So I understand we've got to keep that to a minimum, but I am certainly happy to be here for sure.

Paul Giannamore:

We're thrilled to have you. So the reason why we have David Billingsly here with us today is, David is the head of American Pest located in the Mid-Atlantic based in Maryland. David is really one of the first... Actually, he is the first kind of US platform president for Anticimex in North America. Anticimex purchased American Pest from the Nixon family back in 2016 and thought it would be great to get David on here because he and I have done a lot of deals together. He's done a phenomenal job building the American Pest platform, and he's always fun to talk to. So thought we'd get David on here to talk a little bit about Jarl's interview in the closing remarks here and see what he thinks about him.

David Billingsly:

Yeah, I was excited to hear that you guys were interviewing Jarl and I know Paul, you were somehow able to sneak your way into the Anticimex Boardroom because with Corona, we've had to cancel a few trips to get over to Stockholm. So unfortunately I'll have to live through you and you going through The Boardroom at Corporate Headquarters there in Stockholm with Jarl.

Paul Giannamore:

David, there's no country on the planet that I can't get into.

Patrick Baldwin:

Who is this guy?

David Billingsly:

I know he's like, Bond, Paul Bond.

Paul Giannamore:

It was great to get over there and it was... like I said on the last episode, it was a weird environment with this whole Corona virus situation. So traveling was just a... this is the first time I've traveled since March and it was really something else, but good to be on the trip, good to be back. Today's the final episode in the Stockholm sessions. And then Patrick, next month, I think in November, we'll be releasing the London sessions, which will be pretty interesting.

Patrick Baldwin:

David, why don't you do us the honors, get us into this episode, David.

David Billingsly:

Awesome. Awesome. Well, I'll do that. It'll be great and hopefully Patrick and I can be flies on the wall while we step into The Boardroom with Paul G and my CEO, Jarl Dahlfors.

Paul Giannamore:

Let's do this, David.

Paul Giannamore:

Jarl, thanks for sitting down and chatting with us today. I think today's session is really going to be about two things. I want to talk about the Anticimex model, but more importantly, I wanted to discuss the Jarl brand. And I think, when I first... so when you first came to Anticimex, I had of course known and worked with Anticimex prior to you coming here. I knew Olof for a short time that he was here. And I remember when you came on board, I had a discussion with a good friend of mine, Jamie Clement, who followed the cash management and logistics business, Brinks, Loomis, so on and so forth. And I asked Jamie, I said, there's this new fellow at Anticimex named Jarl. You obviously follow these businesses and what could you tell me about him?

Paul Giannamore:

And he said, I've got one word, he's a Beast. So that was kind of the Genesis of the term Swedish Beast. But before we get into the tremendous growth here at Anticimex over the last three or four years, what I'd really like to know is who is Jarl, where'd you come from? How did you build your operating philosophy? Because effectively the little that I know about Loomis is you took a largely sub-performing business, which I think had operating margins in the low single digits. When you took it over and became CEO, I mean you transformed the business model in almost quintuple operating margins which, from what I hear, had the Brinks management at the time, basically crying themselves to sleep at night. So let's talk about that.

Jarl Dahlfors:

Excellent. Yeah. Thank you. And I don't know where to start really, but before I joined Loomis, I spent almost 10 years in another security-related company. So, that's how it started. Back in '99, if I go back to '99, I was living with my family in Boston, Massachusetts, US, and had an offer from Securitas, the security company, to join them in Stockholm to develop a nursing home company that also had lots of home care. So I decided to go for that and I stayed with them close to 10 years, and we developed something that is actually very similar to Loomis and to Anticimex. We developed, together with the Securitas, a business model, where we focus a lot on the local branch. And the reason for that is really that that business itself has the majority of the clients and customers very local. And that was, I think, a strong learning point from Securitas that when you have the majority of your clients, current and potential new ones, very close to the local branch office, then you should try to develop the business model more out of the local branch rather than the other alternative would be to develop more, centrally.

Jarl Dahlfors:

So, that's really where it starts. So then from Attendo, I went back to Securitas after we sold Attendo twice, first to Brisbane Capital...and secondly to Industry Capital and other private equity firm out of Stockholm. Then I went back to Securitas in 2007 and were asked to do the same thing again, but that time with the cash division, that's what you referred to today as Loomis. So Securitas' cash handling was a division within Securitas, and the challenge there was exactly what you said, very poor profitability and pretty slow equality. And when we compared Securitas cash handling, Loomis today, with the peers, Brinks, Prosegur and G4S, we did realize quickly that we were well below their margin and well below their growth. So we started as a spin-off project. So I managed finally to list the company Loomis at Stockholm Stock Exchange, 8th of December 2008, which was a few months after Lehman crashed. So, it was pretty hectic few months to make sure you could do the IPO. From that day, you could say from 1st of January 2008 and over '09, we started develop the business. And today, or when I left, rather, we were best in the class. And the only thing we did, the only thing... I really emphasized on "only" was that we changed the operating model from a very centralistic model to a very business class model. So it was the same reasoning, again, that we did as quickly that the majority of the clients that we could win were local clients. We need to understand how the branch operated, and also that within Loomis, the number one cost component that you could affect a lot was of course, cost of risk, which is then you get robbed. That could be internally, your employees stealing from you every day, unfortunately, or you get robbed on streets and you have the cost for insurance. So the more—the better you are, the lower the cost of insurers. So really to drive that cost down, the only way to get that work done was to empower the branch manager, making sure that he or she were very close to the employees and very close to the customers. So it became very clear to us that with the responsibility and accountability, comes that commitment you need in the Cash Handling business, because those guys are typically truck drivers being promoted up to chain to some type of management. But typically they've been instructed from the head office rather than thinking themself, "How [do I] operate this branch?" So we implemented a business model that we call the Loomis model.

Paul Giannamore:

Okay.

Jarl Dahlfors:

And that was driven out of the Attendo model, which was driven out of the Securitas model. So it all goes back to "How do you actually develop a business model that is very decentralized and driven out of the fact that the majority of the customers are there, and the fact that, once you get someone being responsible and you can motivate them to become also very accountable, then they will drive the cost in the right direction, and they will drive satisfaction among the client to better level, and the employees would like to work there more than anywhere else?" So when that was done, as...it sounds a bit boring, but basically to do the same thing again for the third time, the down it amount leaving the Securitas family after more than 20 years and start to work for Acadia, which is down one of the major private equity firms in the world actually. And they have a heritage of like a lot, it goes back to a couple of 100 years with the Valberg family. So it's a very industrial view on how to drive business. It's far away from being a very short-term, purely financial engineering-style of private equity. But of course they have the classical toolbox as well. But, in reality, it's much more long-term building value. And that goes back to the Valberg philosophy of creating long-term value. So I really like these guys a lot. So I decided then to leave the Securitas family and the Loomis family, and then start to work for Acadia and Anticimex, that was in the summer of '15. And back then Anticimex was very similar to Attendo or to Loomis, i.e., companies that were pretty centralistic-driven because they had a merge done with ISS and ISS is a super centralistic company. And so that was more the culture, and then they had some ideas that Acadia had — "How can we then develop this business to more of a global business?" So I think Acadia had thought it through. They had it , I would say, spot-on when it [came] to strategy. "How to make this?" was to go through a branch model, to decentralize and cut the biz in manage small pieces. And then globalize it and then implement technologies ... Rather than us using the same traditional pest control with toxic and chemicals. They were really thinking about sustainability. And that's one of the investment things that they could typically use. It's a combination of new technology, and they're very strong in the digital arena, and something more sustainable. And I bought into that concept and...the philosophy 100%, I decided then to start, as I said, summer of '15. So what we did back then was we said, "Okay, here we are mainly in the northern countries, where we have a strong position — Sweden, Finland, Norway, Denmark." And then the rest of the world was a few countries in Europe...

Paul Giannamore:

This ISS portfolio that was acquired in '14, right?

Jarl Dahlfors:

Yes.

Paul Giannamore:

Largely loss leaders in many markets.

Jarl Dahlfors:

Absolutely. So it was a very badly-operated division out of ISS because ISS is a cleaning company.

Paul Giannamore:

Yep.

Jarl Dahlfors:

And 99% of what ISS do and did back then was cleaning. So if you have a small division in such a huge conglomerate, I think there were like 600 and 700 or 1000 people employed by ISS back then under this tiny little pest division of couple of thousand people employed in 10 countries or eight countries or something like that. Of course, it was not properly managed because you don't focus that much in a huge conglomerate, in a huge company like ISS. So when Anticimex bought that division, it was a handful of companies, as I said, with some branches and you know, some employees, but it was not a proper company. So we had to start by fixing all the problems. So we have a methodology or, rather, a philosophy that also goes back to kind of my model. And that is "quality, profit, growth." It's like a three-step model. Do not start to grow the business too much and don't focus too much on the profitability margin before you have the quality. So it's a three step. So, first, make sure that you have the quality in place. That was within the first few months, making sure that the super basic procedures and routines were working. Once that was in place, we started looking into profitability and said, okay, this business operates at, back then, in a 10-11% margin. And then we thought, okay, what could the opportunity be? What should the target be long-term for margin here? And then we did what the model says.Two things. One, check—

Paul Giannamore:

Before you did what—do what the model says, how did you determine what the appropriate margin should be in the first place?

Jarl Dahlfors:

So what we do in the model, we always have two dimensions. One is the targets, we say, okay, who's best in class internally? Because then we know we had already cut the business into the branches. Back then we had maybe say, 100 branches, something like that, maybe eighty-nine, I can't remember it. And then we said, out of all of these branches in all of those markets, who are the best ones in terms of profitability? And we realized that some that were between 15% and 20% was a super strong branch — and this was back then.

Paul Giannamore:

Yep.

Jarl Dahlfors:

So that was the first dimension. And then the second dimension is, once you have internally decided who was best in class, you do the same thing externally. So then I went out, I was in US, meeting lots of people—it was the PestWorld Congress in Nashville, 2015. I met quite a lot of people and start to understand what the profitability level was at the best operators in US and realized it's 20% plus. So then I went back home, talked to the guys and said, okay, this is my conclusion. Internally, best in class, [is] around 15, externally 20. Can we agree to set the target's medium-term, within a year or two, 15-16% or something operating margin? And then long-term, in five years, better than 20%? And of course they started to throw tomatoes, And they wanted to kill me and shoot me, and they said, "Are you crazy? Because we're at 10-11%. And it's impossible to do all of that because we are not American. We're not..." Blah, blah, blah, all sorts—like a swamp of excuses, really. So we had to work through that and then make sure that people should understand—and this is really important—they need to understand, all the branch managers and all the country presidents, why I think 20% or better is the ultimate target. And why 15% or 16% was the minimum target. So by using arguments and logics and some tricks, some magic, you convinced them. That's what I did. That's how I spent the first year, basically. And today we can conclude to say that from 10%-11% five years ago, we have improved the margin. Every single quarter sounds down. Yeah. And we are now about 20% as a group. And we have close to half of all our branches are above 20%.

New Speaker:

So we still have lots of issues, of course. And there will always be a few branches in a few markets where we can't reach 20%. And that's fine because as long as there's a reason. And that's really how the model works, that it has that "comply or explain" methodology. We have a best practice. So we pretty much know a branch of this size with this customer mix, with this type of market position, it should have a more between X and Y and either you, as a branch manager, fix that because you know there is a portfolio, a menu, best practice of how to recruit people, how to train them, how to find clients, how to install SMART, all these things.

New Speaker:

And then you start to work with that and we give you maybe six months or 12 months or 18 months, whatever you think you require. Some people say, "Nah, I'm not interested in doing that." Well, then you have to leave. Period. And some people are maybe not up for the job, but not fit to do it. Or they try and fail. Then we have to replace the branch manager. So the first, say a year or two years, I think we replaced way more than half of all the branch managers. And today nobody wants to leave. Very few will be asked to leave because they operate in a professional way. So that's really how it took the business from a very Swedish/Nordic service organization to more of a global firm with margins that are today best in class. Globally.

Paul Giannamore:

You were just talking about benchmarking. And I remember last year we had a discussion. You used the example of your Geneva branch, because I live in Geneva, and you were saying for, for many years it had struggled, I guess that was an ISS business, right?

Jarl Dahlfors:

It was on ISS. Yeah.

Paul Giannamore:

And your branch manager there. I still remember his name, Laurent.

Jarl Dahlfors:

Yes. Correct.

Paul Giannamore:

... who you were very impressed by how he had just taken a personal interest in the employees there and was really trying to understand that business and improve that business. And one of the things that you mentioned is you try to empower your branch managers to look at best-in-class, within the organization and best-in-class externally.

Jarl Dahlfors:

Exactly.

Paul Giannamore:

So the example that you gave with Geneva is—did Laurent go to Lisbon maybe?

Jarl Dahlfors:

He probably visited multiple branches to get the feel for how to develop this particular branch. It could very well have been the one in Lisbon because strangely enough there are lots of Portuguese living in Geneva. And I don't know the history, I heard it somewhere, but I can't remember why, but there's a reason for that. So he had lots of, he has today in the, among the employees, quite a lot of Portuguese people. So it could have been in that branch.

Paul Giannamore:

It could have been that branch. Yeah. There are a lot of Portuguese people. It's the largest, your EU foreign body in Geneva actually is Portuguese. But, so how does that typically work when you take a guy like Laurent or any of your branch managers around the world. I remember you once said to me—we were dealing—you had just acquired a platform, and you were having a chat with one of the individuals who's going to be running the business, and they were surprised at how little you wanted to do with that business. You didn't care about we're not putting Anticimex on anything—we don't—what about training? And I remember your direct quote, I think was, "If you need training, just pick up the phone you come to me. You do it on your own. If you underperform, I come to you, that's the only rule here." Right? You kind of allowing these guys to drive that. So how does this work? How does this internal benchmarking work?

Jarl Dahlfors:

It's a fundamental part of the Anticimex model is the benchmarking that what we try to...I mean, there's like a five step or so methodology in the model itself. Step one is always to find the right manager. And obviously we don't know until we try, if that person is the right person or the wrong person. But no matter what, we put a lot of efforts from a senior management perspective into how to find the right branch management. Once that is done, we unbundle the branch. I often explain it to the guys, like, "Let's say we have an engine and a Ferrari and it doesn't work. So let's put the engine on this floor here in all the microscopic parts, just tear it apart. Every single piece. And then we start to look into every piece of the engine, same thing with the branch. We tear the branch apart, really, in numbers and data and processes and routines and what have you. And then we look into each part. And when we examine each part, we pretty much know how they should look like. So it'd be like, a good mechanic's on the Ferrari engine, he would see that the problem is actually a part of the break here, or part of the sparking plugs or something like that. And once that's done, to put everything together again, and we say, okay, what's the most important driver for this branch to either grow more or have a high margin. So instead of focusing on everything, which is a big mistake, I felt, and I realized over my career in many organizations, because everything is important. But the reality, in reality, if you want to be best-in-class, you have to focus on a few things and often think about—don't pick more than five—a handful. And that's really what we have. So we select a handful of KPI's and start to track those... to know if it's good or bad. Cause that's a little bit, as I mentioned here when I came into Anticimex, they were very proud about—they were 10-11%. They had a few branches around 15% and I started to talk about 20%. So I've had a joke with people, I say, when someone says it's cold outside, how do you know? What do you mean by cold? I mean, if you ask me I'm a Swedish guy, I think minus five Celsius then it starts to get cold. You ask that to one of your Puerto Rican neighbors, they'd probably say 15 Celsius is cold. You know? And that's the same thing, profitability, growth, or quality, whatever you have or pricing you need to put things in relation.

New Speaker:

That's why we take all of those KPIs and we have a very data-driven, call it, database where we pretty much know what is good about in retention or call rates, whatever it might be. And then we tell you, so now we pick those five KPI's for you, Paul, in your branch. And here's the ranking tail for those KPI's. And you're typically, probably at the bottom when you start or somewhere in the middle, you might have one or two of the five that are really good, but no matter what, then we start to measure you on that. We start to monitor you on that and we will manage on that. So from that perspective, it's a very data-driven well of operating a business.

New Speaker:

So it's still "Paul," the branch manager, in charge of all of these things. But the good news is here then if I was struggling, arguing with Paul as a new branch manager before, now we have together kind of unbundled engine, realize the few broken parts, start with picking out what's really important in this branch, compared it with what we have in the rest of 156 branches, given you an opportunity to talk to ones that are best-in-class in those different factors. If it's a call center, for example, then you talk to the colleagues who are best-in-class in call centers, and then you realize how to fix this. Now we start just to measure that data. We monitor it on a weekly, monthly, and quarterly basis and we will manage you on that. That's really kind of the model in the nutshell.

Paul Giannamore:

How do you think about—when you're actually doing this internal benchmarking—I remember a couple years ago, you were talking about, you're talking about how your thoughts on benchmarking and you said it's unfair for me to take a branch in Northern Norway and compare it to Oslo in any way, shape or form.

Jarl Dahlfors:

Exactly. It's a good point. Yes.

Paul Giannamore:

So I would imagine you probably look at... If you're taking a branch in Geneva, Switzerland, you're more likely to compare it to another small urban European branch than a rural one or even an Asian one. Right. Different.

Jarl Dahlfors:

So what we do there is that we'll try to cluster the branches that are similar. As I said, we could do couple of factors like, size is important, market share is very important because that drives the, typically, density and big portion of the profitability, customer mix, all those things. So if we do that, then you who operates the Northern Norway branch where you have to take the helicopter to client sometimes, or drive 10 hours to get one client, that's more similar to the guys operating parts of Australia. Because they have the similar environment. Then it's more relevant for you as a branch manager in Northern Norway to talk to "Bill" in Australia rather than talk to "Catherine" in Nostra, Norway. Because [for] Oslo it's more relevant to talk to "Jim" in New York City, or "Alberto" in Madrid, Spain, they're more similar. And I'm fascinated by that because the last 30 years I've been working in this type of model developing gradually. That fact and that hypothesis is even stronger today than it was 30 years ago when I started, because back then I felt that there are lots of similarities between Stockholm or Brazil or New York or Boston. But today I can clearly say that when I met branch managers in big groups, you realize quickly that the ones that operates rural places for long businesses, you know, that type of profile, they have more in common and they connect easier versus the one living in big cities. And you can... I mean, it is very obvious when you travel around, you travel around Paul, you see a lot. If you come to Zurich or Geneva or New York City or Stockholm, it's pretty much the same type of stores. And the same type of behavior. You come into a restaurant, you expect them to speak English, and it is [the same] with Uber, even though you had problem with your Uber this morning.

Paul Giannamore:

That's very true.

Jarl Dahlfors:

But it meant the way we behave in big cities are very similar today. And that means also that from a service organization, you need to think about that, that if you develop a service organization in a specific environment in one country, that's more relevant to a similar environment anywhere on the globe today. So I think today that if you do this in the right way, kind of developing a service organization, and understand that, then it is not that complicated because I mean, five years ago, this was more of a Swedish and Nordic business.

New Speaker:

Today we are in a market in Singapore, growing fast in Malaysia, started up a business and bought a company in Cambodia. We have basically all over Europe, businesses. So it's really global... and U.S., of course, didn't exist a few years ago for Anticimex. We have shown that the model works. It's possible to develop this on a global basis. It doesn't have to be McDonald's—one size fits all. It's the other way around. The tricky thing is that if you go to the tailor, and he's going to make you the suit, it could be very expensive versus taking one of the rack at the department store. But if you do this in a clever way... And the only way to accomplish that is actually to have the decentralized model.

New Speaker:

Because if you really want to be global, you either have to be very strong, one size fits all, then you have a McDonald's. Then you can roll it out with a strong concept. And this manual, this book, how to do things. Or you say, "We do it in a decentralized way." Then you have to focus on the branch manager and establish a market condition for the branch manager. But you can't reinvent the wheel every time. So you need to find a simplistic way for that branch manager to find the best practice for his or her specific conditions. That's really what the model had done.

Paul Giannamore:

And what benefit do you see... Look, when you started in this business, Anticimex was probably doing three or four billion SEK per year now. You've breached eight billion SEK now?

Jarl Dahlfors:

Oh, it's actually close 10 now.

Paul Giannamore:

10. Okay.

Jarl Dahlfors:

Just above nine.

Paul Giannamore:

The business is dramatically larger, and as you just mentioned, you've got leading market share in a lot of countries now—Australia, a variety of countries in Europe and Asia, you're building rapidly in North America. I'm interested in your perspective on the U.S. domestic market versus Europe versus Asia, both from an opportunities and challenge perspective. And, also, I'd like to understand what benefits being an actual global provider is for your branch managers and your people from a strategy perspective, I would imagine there's got to be some advantages there over when the Anticimex was just Swedish and Nordic there.

Jarl Dahlfors:

Absolutely. It's usually different. The way I explain that when I meet new people in new markets is that if you've been competing in your national league, suddenly you're going to play in the Olympics. Because if you always compete with your same competitors, in sports, for example...Let's say we play basketball, and you play basketball in the state of Massachusetts, and you don't leave Massachusetts. And you've been doing that for 10 years at a very high level. But if you only stay in the state of Massachusetts, you will not develop as a basketball player to your optimal, because you don't know what the best is. That's what I said before when I said cold outside. Well, you need to define that really. And that's a little bit how I set targets. The only way for someone to develop up to their full potential is really to utilize the whole world. Simple as that. If we only develop at pest control companies in Sweden, we can be best-in-class in Sweden. But how do we know that that company is really good before we start to compare it with the rest of the world?

New Speaker:

That's a little bit of the danger, also, if you take a company, like Anticimex back then. Because they thought they were fantastic because they've been around since 1934, always delivering growth and the different owners always thought a 10, 11% margin is good. If you have that established truth, I mean, it's scary to see. And that's something that I came in and said, "That's wrong." I've been to Nashville, U.S., and realized that a lot of companies are better than 20%. And, of course, they start to deny that. That's the first phase, denial phase.

New Speaker:

It's like in sports. If I tell you that Usain Bolt, he runs in 9.6 seconds, you're happy with 10.0, because you're best in class in Sweden at 10.0. It's really all about giving the benefit for you. Let's say you're an entrepreneur operating your pest control company, like in Malaysia. Marcus Voon, I think you met before.

Paul Giannamore:

Yep. I know Marcus.

Jarl Dahlfors:

Great guy. I love him. Fantastic guy. And this is a true story. And he had been operating his business for years together with his partner. So one driver I think was that he felt he wanted to develop by himself. He had some ideas. And then he got in contact with Anticimex, and we ended up buying that business. And it was his business. In Marcus' world, that business was a good business. Because his reference points were Marcus' world. Right? My reference point is of course, Anticimex's world, which is 19 countries.

New Speaker:

So we said to Marcus, "This is really how it looks like." And then we developed something we call the "Base Camp Plan" because the problem he had was that he thought he could go from super basic to super advanced. But I said, "You're not going to try to reach the peak of Mt. Everest in six months. It's better to say, let that take three years." And that comes back to what I said about three steps. First quality, then we look into profitability and efficiencies. Then we start to grow the business. So now it's growing. I think Marcus and his team are actually the number one in Anticimex world today when it comes to growth and margin improvement.

Paul Giannamore:

Wow.

Jarl Dahlfors:

He's still one of our smaller markets, but it's growing more. So ultimately the earning growth we have in Malaysia with Marcus is number one in the world.

Paul Giannamore:

And if I remember correctly—it's been a couple years since I was in Malaysia— but last time I saw him, he talked about a lot of the tobacco industry challenges in Malaysia. I think it was tobacco, right?

Jarl Dahlfors:

Yeah. Tobacco. Fumigation with tobacco.

Paul Giannamore:

There was all sorts of dramatic changes, which created a lot of issues for him.

Jarl Dahlfors:

Yeah. Because if you stuck with—you think fumigation is important, because you're doing fumigation for tobacco companies, and that's your bread and butter—and you realize that, "Wow, the other guys..." Cause I remember for a second time I went to see Marcus in K.L., one of my friends from childhood, he's the Swedish ambassador for Malaysia, so he lives obviously in K.L. And we met together, and he started to explain to Marcus really what the Swedish companies are. And Marcus had no clue that you had SKF or Volvo or pharmaceutical companies that were Swedish. And I said to Marcus, "Marcus, you're going to give this person a call in Anticimex, and they're going to give you lists of clients that we work with in other places and also the unique selling points for those clients. And typically those are smart clients, the digitalized service offering we have."

New Speaker:

And they did that. And so now we are by far the number one in Malaysia with digital pest control. Things that didn't exist a few years ago. And if you go there today, Paul, you will not recognize yourself when it comes to the office of Marcus company. It's a nice office now. It looks like you are in a suburb outside Stockholm or a suburb outside New York. It's an ordinary office park. In the old days, they operated out a shed, I would call it. I remember that office was pretty ugly. And he had lots of high staff turnover and lots of issues with quality, but that was his normal M.O. Now it looks very different. The quality is in place and profit is really nice because of good efficiency. Customers are very, very happy. So it grows a lot. Happier customer, much happier employees, building the foundation, also building bench strength in management. He has a couple of the best branch managers we have in the whole world. One of them is a lady, Pauline, she's the head of the northern branch of Malaysia. I can continue for hours talking about... that's just one example. And we have hundreds of examples like that. So what we do to make sure that we don't lose track of all of this successes is that we write what we call "best practice cases." What that is... Ebba Bonde, our Chief Operating Officer, she has a department where they only produce best practice cases. So it's just a handful of slides... three, four PowerPoint slides, that explains this is a situation in the background, the problems, and this is how it looked like, this is what we decided to do in the next six months or 18 months. And this is the result. And then we can share those PowerPoint presentations. And very often we let the branch manager talk around this, and we showed a little movie. And all of that is then collected on a web platform, an application. So you, as a branch manager, can go into your computer in your office and— let's say, if there's any good ideas how to sell SMART to pharmaceutical—then you can find ideas around that. And you will find the branch manager standing up talking about how he or she approached a system, and you know, we did this installation and the pest control service contract went from $10,000 to $50,000. And customers are much happier now and the retention is better and staff feel more empowered because they see themselves as engineers, consultants, rather than simple pest technicians. All of those good benefits comes through in these two, three minutes movies. And all of that is collected on that platform. And that platform is also developed now as an app for your telephone. So you don't have to be in the office, you can actually pick it up.

Paul Giannamore:

So who has access to this—is it the branch managers or technicians as well?

Jarl Dahlfors:

It should be the branch managers, but of course they give it away to others as well. And I don't mind. Even if the competitor would steal it...I just like the fact that we develop Anticimex and, when we do that, the world becomes better. Because we utilize—just think about the SMART technology where we know that on average, I mean, different solutions require different amounts of chemicals and biocides to do the job, so to speak, but when we calculate millions of contracts and devices and units and client sites, it came out to be roughly a pound per year in chemicals. That's half a kilo. So my point, then, is that if we today have 170,000 devices installed in 19 countries, that basically means that 85,000 kilos or 170,000 pounds of chemicals that we don't use on an annual basis. So from a sustainability perspective, this is the best thing since sliced bread. It's really, really good.

Paul Giannamore:

And do you think it's more prolific here in Europe than it is currently in North America? The use of SMART technology?

Jarl Dahlfors:

I think it's the same thing that we talked about before. Depending on where you are in U.S. or where you are in Europe or where you are in Sweden or where you are in California. You really have to be down to the market climate. We have clients in some places, in some countries, that think this is totally irrelevant. And we have clients that think this is a must. We have a client in Milan, I know you were in Milan yesterday, and I was there a few weeks ago, two or three weeks ago, I visited this client, and it's a potato chip manufacturer. One of the biggest in the world. They produce 1.9 million bags of chips every day.

Paul Giannamore:

Wow.

Jarl Dahlfors:

So I spent a few hours there walking around with our technicians, with the branch manager in Milan, but also with the president. And I met the client and—this typical visit with the SMART client, or a client being converted into SMART technology—all of those end up in the same way, that I would go home and feel this is the right thing, what we do, right? Because that client, they have, and this is important, a demand from their clients that, "You need to tell me, Mr. Potato Chip Manufacturer, how can you convince me that your factory is more sustainable today than it was 10 years ago, and when we started doing business. What actually do you do? All the way from the potato coming in through production." We then give them the opportunity to explain to their clients, "This is how we do it." For example, they explain it with this SMART pest control with no chemicals, no toxic[ity], that's a fantastic selling point for that client, for our client to their clients.

New Speaker:

And on top of that, instead of having their senior staff and their quality departments being heavily involved in all sorts of regulatory report[s], because the regulatory report[s] just increases the more global you get with your export or potato chip or whatever you manufacture, the more client needs [reported] statistics. That is fed from the system itself.

New Speaker:

For example, one of the biggest grocery chains in the U.K. who buys different products in those factories. And they have a demand of reporting to their clients that it's sustainable. We can take this straight through the process. It's all digitalized. I think it's just fantastic and the client loves it. So we're convinced that it's a good solution for the client and for the planet because it is truly sustainable, that's one good reason, and it works.

New Speaker:

And secondly, it helps the client a lot with reporting and "regulatories," and that just increases. And it's a massive increase what you need to report. So that's the client's side. And on the staff side, we realized that once our technicians starts to understand how this works, they love it. Because it gives them a little bit of feeling of being a more consultant and more of a high-tech guy, rather than being someone doing something pretty basic.

New Speaker:

And thirdly, for me, as CEO for the company I'm representing the shareholders in my discussions, I realized quickly that happy employees, happy customers bring up the retention rates and brings up the margin. And it gives me fantastic growth.

Paul Giannamore:

The SMART technology you've used thus far has largely been commercial, but there's been a lot of noise lately about Anticimex doing SMART residential. Correct?

Jarl Dahlfors:

Yep.

Paul Giannamore:

Are you able to talk about this now or how—

Jarl Dahlfors:

Yeah, sure, we can do that. There's no...

Paul Giannamore:

What is SMART residential?

Jarl Dahlfors:

It's really the same concept that instead of utilizing toxic chemicals and instead of going to the client and see if there has been a problem, we say let's be proactive. The system, the device can tell us if there is a risk for a problem, then we go there. That's really what the client likes and what I like.

Paul Giannamore:

What exactly does that mean? I'm in my house, I've got Anticimex SMART residential. What are you learning? How do you know if I'm at risk?

Jarl Dahlfors:

Well the good news here is... think about it like this. Think about the home alarms you have. You buy it from Tyco. You buy it from Verisure. Classic home alarms. Brinks home alarm, for example. The typically operate in the same way. And I know this business quite well, because I used to work at Securitas. What the concept is that instead of the security guard going to your house and check the door is secure, the gate secure, the wind looks fine, I fill out my report, go back to the office and report that "Paul's" house looks fine, I was there yesterday, 11 o'clock...That's the old style.

New Speaker:

The new style is as a security company, we put in your house, we put in sensors and cameras and other sirens, maybe. So when someone tries something... try to break through a gate or a door, the sensor will send a signal because it's connected to the monitoring center. And we can see through cameras or other devices there is a problem. And then we go there to catch you. And that logics I have in my DNA because I've been in this industry for so many years, too many years. So when I came in here, my colleagues said there is something similar, you all should look into this SMART. Back then we had maybe, couple hundred or few thousand traps. And I realized this is exactly the same concept. So I said to my colleagues, please let me know—do some spot checks—how many of our visits are what I call 'waste'?

New Speaker:

The technician will go out there might be 10 traps around the factory building or around the logistical house or something like that and he checks them. Fills out a report, realizes that, "No, there's no rats, no mice been to this part here. It looks fine." Goes home and writes a report. Exactly like we did at Securitas 30, 40 years ago. And then I realized with this SMART technology back then, there was a company in Denmark called WiseCon. And I met them and they explained to me how it works. I felt, "This is fantastic. This is jackpot. This is exactly the same."

New Speaker:

And then I convinced the colleagues and together we said, "We really need to fund this. We need to sponsor this." Heavy investment, but this is the future. It gives us as a company, a chance to give the client what they want, preventative pest control. Because why would I be proud of offering a service where you—let's say you're a car manufacturer. You call me and say, "Jarl, we have problem with rats because in the paint shop we had to close yesterday...and the machine went down, and that cost us millions of euro dollars every hour, everything is closed." Because so everything is advanced today.

New Speaker:

Or you call me and say, "I'm the potato chip manufacturer, and we have now rats or we have mice droppings in one of the bags that the clients unpacked. Disaster, all of this. So can we be preventive instead?" And then we started to develop this, and we bought the company in Denmark, and we developed Anticimex innovation center. Pretty much a blueprint of what we did at Securitas when we entered technology. And at Securitas, which is a huge group, hundreds of billions of revenue, closed to 20% today is that SMART concept. And I think it's going to happen the same thing in Anticimex. Five years ago was 99.9% was traditional pests. Today, the SMART technology of all the revenue is very close to being 10% of what we do. It's really growing a lot. And I think—visionary—we believe this is the future. We believe this is the way you will have pest control. And that's why we felt we need to develop a similar concept for the residential, for the consumer. And that's a very new concept where we are testing it gradually in the U.S., and so far so good. But, of course, it will take time to get the concept to work. But today, if you take—not on the residential side, but on commercial side—a country like Sweden, where we are today, virtually everything we sell today to new clients are SMART. That's how big it has become here. And country by country and branch by branch has started to implement this. But it's not as easy to sell internally because if I have a branch manager who's been around for let's say 20 years, with a fantastic track record-quality, profitability, growth-why should he change? So then I have a hell of a challenge to challenge him, and convince him or her that this is the future. So that's the biggest hurdle we have internally. Because the client loves it. They want it. But our own people, they don't like it always. It takes a while. For some branch managers or technicians, it might take only a month or two. For some it takes years to be convinced.

New Speaker:

And that was the same thing in Loomis and Securitas and Attendo. When we developed the business from a pure service company to a combined service tech company, that was painful. But if you are convinced that it's right—and how do we convince people again—best practice. If you are a new branch manager in a new country... Let's say Cambodia. And you're giving me a hard time saying that, "I...believe this concept doesn't work."

Paul Giannamore:

'It can't work here."

Jarl Dahlfors:

'Can't work here." Exactly. Probably good in Sweden or in Boston, but not here. Then we'll have enough best practice to convince you or at least enough to make you start it and try it. And then eventually I just know you will love it one day. And that's actually exactly what has happened country by country, branch by branch. But in reality, I know we measure this as well, we measure everything. This is one of the KPIs that I report to the board every quarter. We measure how many, on the rolling 12-month basis, devices and units have each branch installed and sold. And that number was very low before. And then we color code the branches based on that. You're green or gold if you reach a certain number of units. You're red if you're below this number and in-between you're yellow. So we use this color coding for profitability, for growth, for SMART, for retention, for everything. And when it comes to SMART, it's way less than half of the branches that are doing okay. So the majority have hardly started. They have something, a few SMART units, but not that much. It's a fantastic opportunity for growth coming five years.

Paul Giannamore:

When Anticimex made the original investment in WiseCon, it was a minority stake?

Jarl Dahlfors:

Yep.

Paul Giannamore:

And then I think subsequently you've acquired a hundred percent of this, right?

Jarl Dahlfors:

That's right.

Paul Giannamore:

On one of my earlier trips out to Stockholm, I remember—and I don't remember who was with me. It was a client at the time and it was the middle of winter. We went outside and did the demonstrations—negative 15 degrees here—of the SMART traps. But I remember you giving a little bit of a presentation about your philosophy. And if I remember correctly, you said, "The reason why we made this investment in WiseCon is because we wanted—" The question to you was, "Hey, this stuff's available off the shelf and there's manufacturers of this all over the world. Orkin can use it, Rentokil can, companies, all these things—"

Jarl Dahlfors:

Absolutely.

Paul Giannamore:

But your philosophy, I think was, "We want to be more like Apple. We want to own the technology and we want to be able to build the technology around our operating protocols and twist them together as opposed to trying to jam together..."

Jarl Dahlfors:

Absolutely.

Paul Giannamore:

Was that essentially the way you looked at this?

Jarl Dahlfors:

That's still the driver. We went so far—so I called and had dinner with Dick Seger, former CEO and probably you can call him founder, even though he was with Securitas, the company that is Verisure today. That's number one home alarm company in the whole world. And they have more home alarms for residentials and for commercial than anyone else. So we called him, had dinner with him, talked about this and he said, "This is exactly the way to do it. But when you do that, Jarl, when you transform Anticimex into that service/tech company, you will transform everything. That will be the driver of the change." And it was really a transformational change when we did that. So today, this guy, Mr. Dick Seger, he's on our board. That's how important we think it is.

Jarl Dahlfors:

It is really not just having an option to sell SMART. It's really to see yourself as a SMART branch. And that's why we felt it was important to be an owner of the intellectual property here. And then when you have all of that, all of those devices connected, the next step is you start to realize you have lots of data. So you can start to mine that data in a clever way. And I think we had a very proud moment in Anticimex last year, when a few guys out of Microsoft here in Stockholm, they called us and said, "Our CEO, Mr. Satya Nadella is coming to Sweden for a visit, and he'd like to understand more about some Swedish companies. We thought Anticimex would be a cool presentation. Is it okay for you if we introduce him to your company?" And, "Sure," we said. But I said to my colleagues, "There's no way he will talk about Anticimex." Because this was a huge customer then in the arena probably, I don't know, of a couple of thousand people there. And for his first time coming to Sweden—and Microsoft is a high-led mind company in Sweden and the rest of the world and I love them. And then the guy said, "It's starting now out in Globen..." I think it's Globen...one of those big event centers, anyway. And some of our colleagues were there, but I more or less forgot about it, because there's no way he's going to talk about Anticimex. He could talk about Volvo or tracks in the mines. All sorts of cool, high tech in Sweden. But what happens? And you can Google this on YouTube. That little clip is on YouTube. He walks up on the scene, and he does my sales pitch about SMART at Anticimex in front of all of these people. So to me and to us at Anticimex, it was an evidence that if he sees things they're probably on his yacht from Seattle on his way to Stockholm, and has 15 different customer cases from his colleagues in Stockholm. "Which one shall I pick..." And he probably had all of those, I don't know.

New Speaker:

...[He had] all of these big Swedish, industrial engineering companies, but he picked Anticimex. And he talks about this, he says, "This is a fairly small company and they operate pest control, so it's a very basic service, but look, this is what you can do with this type of data." I was very fascinated.

Paul Giannamore:

Right. Something as boring and mundane as pest control coupled with technology.

Jarl Dahlfors:

Exactly. I was fascinated by the fact that it was not just our hypothesis it was actually some type of measure that "Yes, you were thinking right, Anticimex, when you developed this." So today I think that the colleagues—It's an endless amount of products we are developing, and we have a department here in head office, a small department, they are developing that technology. And we continue to see different benefits for clients.

New Speaker:

But again, for me, the biggest hurdle is still internally. But we have all of this, but we're still struggling to sell it. And they think it's fantastic. Because we have 170,000 devices. And yes, it's good. It's almost 10% of the revenue. I don't want to badmouth my colleagues. I think it's a good job. But think about it. It's 99% of the clients out there has never heard about this before. So it's a little bit like that guy at Coca-Cola when he came in and all his people said, "We have 10%, we have 15% of the soda..." But he redefined the market and said, "No, we're not going to have one or 2%. Because we are competing with milk and water and beer and wine." And I think that's little bit how I see it. That we should open up our eyes and realize that we can't go out on the street here and within 10 minutes we have probably 10 clients that really needs this concept, but they don't know what this is. Like this smartphone and 10 years ago I didn't know what this was, and now I can't live without it.

Paul Giannamore:

Of course. Yeah.

Jarl Dahlfors:

We created that. But it's a good thing. It helps me in my day to day life.

Jarl Dahlfors:

And that's the same thing with SMART technology, for pest control. It really helps the client.

Paul Giannamore:

So, Jarl. I've brought some questions from some folks that are interested in asking you some things. I'm going to pull this up real quick. And we had some of my colleagues that knew I was coming here, one was Jamie Clement. He wanted to ask a question or two, and then the honorable Patrick Baldwin, the producer of The Boardroom Buzz, asked some of his listeners. And of course, I've got 50 pages of questions, and we're not even going to scratch the surface. You and I would need to quit our jobs and focus on these full time. So here's what—Jamie wanted to ask you a question about—he says, "Jarl, coming from Loomis, the armored car business, over and over, in pest control we hear about the importance of culture." He often heard a lot of the same things in cash in transit armored car market. He'd love for you to discuss a little bit the similarities and differences in what culture meant to you back in your Loomis days, versus what they mean to you now.

Jarl Dahlfors:

Yeah. And I would—the best way to explain that a little bit, going back to this cost of risk I had talked about before, that one of the major cost component in the cash handling company is the cost of risk because there you have theft, internal theft, external theft, and the insurance that goes up, goes down in cost, depending on how you manage the different thefts. And then of course organization, how many people you have, to manage the cost of risk, the risk department. And when I started in Loomis, I don't remember how many people we had in the risk department, but many people, and if you're an external viewer, you say, "Well, it's not so strange because it's a significant part of the business. And it's also really dangerous stuff, so of course they have hundreds of people working with risk."

New Speaker:

But from my perspective, I said, "Hang on a minute, that's wrong. You—the way I see it, we're all responsible for that. I can't ask someone else to deal with this. This is our job." I didn't close down the risk department, but more or less, I think I took out maybe 90% of all the people. I said, "You can start to work carrying bags of money or counting money, not standing next to the branch manager and pointing fingers." And to accomplish that, I then needed to make sure that the branch manager understood that he or she, they are responsible for this. You can't just point at the risk department to say, "We got robbed because the risk department forgot to put up an extra fence out here. It's you who are responsible, Paul, because Paul, you're the branch manager here in Tampa, Florida," for example. "You are responsible."

New Speaker:

So, that was really how we developed Loomis, with that culture change. And if I do then come back to Anticimex, here, for example, a similar example, we have an HR department here in the head office. And you would probably... I mean, you're a former banker, you visit hundreds of companies. Say you come to the head office, you know there's a finance department, it's an IT department, there's an HR department, but in Anticimex, you don't find the HR department. I closed that down, because culturally, I think the most important thing we have is our employees. And if I want that to be the truth, I need to walk the talk. I need to make sure that we don't have an HR department, because if I have an HR department, and if HR is very strong and I don't mind HR, so of course we have some people in HR in different places around the world, but from a—to drive the business, the problem is if you have HR, is that the manager, they feel that they can delegate questions around the employees—how to treat the employees, how to make sure they're motivated.

New Speaker:

And the HR people graduate to from nice HR schools or business schools. They, of course, they come to the office every day and they really want to do a good job, so they in turn, take that kind of work out of the branch manager and try to work with all the employees. You know, this is how we develop them I think, and I think that's wrong. The driver behind—of that "car," or that process, should be the boss. They should feel responsible for it. I feel very responsible for all our branch managers. That's why I do. I'm lost at travel 160 days, 164 days to be, to be more precise, actually. And what I do when I travel, always is the branches, 'cause I feel if I really keen on explaining to them that we need to stay close to the employees, we need to stay close to the clients. That's the culture we should have. Then I need to be there as well, of course, to understand what's going on, to be able to help all of these people develop the company.

New Speaker:

So, that's really culturally how we developed Loomis from their cost of risk and little bit of the same thing in Anticimex. We developed it by being responsible and accountable, that, I think, is culturally the biggest thing we have done. And as you compare it to ISS—and I don't want to badmouth them, it's a good company, but it doesn't work for me. And it doesn't work for the current Anticimex organization, 'cause they, of course, have lots of HR processes.

New Speaker:

So just a branch manager, you're seeing your result on your yearly employee survey, that they're not happy. And then someone from HR, centrally, sends in an instruction that dictates exactly what you should do. My point—it's much better if we have a dartboard in the canteen in the branch, where we can play some darts while discussing the business. So if you go to the head office canteen here, the coffee shop here, you will see the dartboard, the Anticimex dartboard. And hopefully you will see the same dartboard in virtually all branches you visit. And that dartboard, I can show you the dartboard later on, has the Anticimex model described in a nutshell. So in the bullseye it says, "The branch manager is the hero." And then it talks about how to manage, all these good things. So that's really how I see it, that the dartboard and the discussion around that, is more important, and gives more value for the employees and the branch manager himself, or the client, if they discuss this matters, rather than trying to delegate that to someone else. And it's not just HR, it's kind of the—that's not what I try—I use HR to explain the culture change, but in reality, it's more about making sure that we all feel not only responsible, but very accountable for what we do every day. And the only way to accomplish that is that we all feel that we need to talk to each other. We can't delegate important things to someone else, is all. We need to solve it. You are responsible. You are in the middle here. You're in charge.

Paul Giannamore:

Well, it's pretty much... Obviously most people listening to this will have never been to your HQ here in Stockholm. Now it is bigger than it used to be five years ago, but it's an unbelievably small operation. I spent a lot of time at your Swedish operation, which is a bigger office, and you're doing hundreds of million in revenue there, but this corporate HQ, we're literally sitting in your boardroom, and there's five people walking around. There's nothing. There's not much here.

Jarl Dahlfors:

No, we are. I mean, I think we are less than 30, I can't remember now. When I started, I think ...

Paul Giannamore:

There was six or seven, back in 2014, I think here.

Jarl Dahlfors:

No, I think maybe you had—no, actually, when they started the business, there were more than today. Then we took out quite a lot, okay. Just to kind of clean the stairs from the top, so to speak. And down today we are, I don't know, maybe 27, 28, but we have done both the innovation centers, so that's kind of one important piece of the puzzle. And they have a department here, and then of course the M&A department didn't exist under best practice, so we have built up corporate functions, but it's very slim. I mean, we don't have a legal department, for the same reason. People do need to have a lawyer, you need to have a legal department.

New Speaker:

We didn't have a legal department in Loomis either. We didn't have an HR department in Loomis, but are you crazy? You have 22,000 employees in Loomis, you don't have an HR department. No. Why not? 'Cause I think we are HR, and same thing with legal. You don't have a lawyer, legal? No, we don't. Same here, but you have millions, or hundreds and thousands, at least, of contracts, so maybe it makes sense to have a lawyer. I don't think so. I think we are in charge of those contracts. We must make sure that they are so easy to understand, so the branch manager should be able to read them and understand. Then of course we use lawyers, law firms when making M&A, or when it's a complicated customer contract that spans over many countries or something like that. But the reality, one of the fundamental parts of the Anticimex model, is simplicity. Don't complicate things. Same thing with reports. I mean, before, it was in tons of reports, minimize that. If nobody reads the report, take it out.

New Speaker:

That's a good way of—I think it's funny way of testing whether the reports is interesting. I learned that many years ago when I worked in the insurance company, that the guy, the CEO, he was new, and he started write funny things in the different reports that were sent out to the management team, and he got zero feedback. So then after three months, he revealed that and said that, "Now this is what we're going to do. We're going to take out these 10 reports. You're going to keep these two." And people started to yell and scream, and saying, "Oh, we need this, it's important," because they felt that he was taking away parts of their job basically. But then he said, "Nobody reads it. I've been writing things here that you haven't even seen. So you don't even read those reports."

New Speaker:

And that's a little bit what happens when you have too many departments—legal department, HR department compliance department, IT department. They all want to do good job, but the problem is they're going to kill the branch manager with new reports and new procedures. Let that guy develop his business, so I see myself as the protector of the branch manager, but of course we have some compliance things and finance things, and all this that that requires to operate the global company. But as little as possible, is my point. And if I don't do that, I know, 'cause that's just human nature. He will drown from all the reports and things they need to do. That's just the way it is.

Paul Giannamore:

Some of the observations I've made about you is, I'm much more likely to run into you in Geneva, or Singapore, or New York, than I am here in Stockholm.

Jarl Dahlfors:

Absolutely.

Paul Giannamore:

Because you're 75% plus of your time on the road, you're in the branches, you're dealing with your teams. If I remember correctly, over the years that we've talked, one of the things that always interest me are key performance indicators and specific data that guys like you look at. And I know you have a massive reporting function, obviously, you're a large international business, but you're 164 branches now?

Jarl Dahlfors:

Something like that.

Paul Giannamore:

Roughly like that. Reports up, you're basically categorizing things, looking at performance. And you've told me historically, that the two main things that you look at on a branch level basis is profitability and organic growth. These are your two big numbers.

Jarl Dahlfors:

Yep. At the top, that's the two ones, that's it?

Paul Giannamore:

It's really when you start. And I remember years ago, you gave me the example about how you're driving in a car and you're looking only at a few...

Jarl Dahlfors:

Exactly. You have a good memory. This is fantastic.

Paul Giannamore:

So tell me, talk me through that example here, for our guests, because I thought it was interesting.

Jarl Dahlfors:

I like that example.

Paul Giannamore:

Then you tied in sailing to it too.

Jarl Dahlfors:

But I liked the example because it really tells a lot about the culture, talking about your friend's question there. Same thing there, because if you—the risk is that it's a little bit when you're out sailing, if everything is nice and dandy, I can have—'cause I love sailing and have a sailing boat. I have lots of instruments on that boat because I like technology—but if everything is nice and dandy, everything works, then I can read all of this different instruments. But when the weather gets really bad, the storm is coming, I only have time to look at one or two, so here's the compass. I say, the compass, "I'm going which direction?" And then I can read my sails and try to understand how the wind is changing, not more than that. There's no reason for me to check exactly the depth, or the exact speed, or something like that.

New Speaker:

And that's little bit how I see the business itself, that if we now have decided to have a decentralized organization, it's impossible for me or the management team to control all the details, while looking at all those indicators. It would be hundreds of pages in one report if we want to do that, 'cause we measure retention, and quality, and pricing, all of these things. We have the data, but ultimately we have to pick two because if we pick these two, and we track that, we will see if the trend is wrong in profitability development, margin development, or organic growth. So we are trend-focused on two indicators. So if we see that the trend is wrong for one branch in terms of—and we typically do LTMS last 12 months, rolling. So we see if the trend, as long as the trend is fine, we'll let you go on with your business. I'm not going to disturb you.

New Speaker:

You will typically see me more frequently in places with wrong trends than places with good trends. If it's a good trend, I feel maybe nowadays in Geneva, for example, I haven't been to Laurant's branch for a while, but I should really go down to celebrate, not kind to try to understand what the problem is. So, that's really how we operated with few indicators. And if I really have to pick, I would love to have five or six, but if I have to pick two, which are the two that I think tells me the most, and to me, that's the margin trend and organic growth trend. These two, if I only have to pick two, then underneath there, I will say, okay, margin is going the wrong way, because the quality is bad, or we lost some contracts, or we didn't negotiate salary in a proper way, we didn't use the pricing right, or poor efficiency in this process versus the rest of the branches, or something like that. But keeping a close eye on organic growth trends, growth trends, and the margin trend, that's the key thing.

Paul Giannamore:

Because I think you, what you did say is with your car example, you are looking at the speed, and if organic growth, or these two trends that you're looking at, if these things change, that's when you start looking at the other instruments, that's when you stop the car, pick up the hood, look at, okay, why is profitability going down? Let's unpack that.

Jarl Dahlfors:

Exactly.

Paul Giannamore:

Well, what's our gross margin doing? What's our density? So on and so forth. So how does that cascade down throughout the organization where you're looking at these key things—

Jarl Dahlfors:

And the board looks at the same.

Paul Giannamore:

Of course.

Jarl Dahlfors:

Exactly. It goes really from the board, all the way down to the branch manager.

Paul Giannamore:

And so when you get—so the branch manager, is the branch manager then looking at a wider variety then?

Jarl Dahlfors:

Yes.

Paul Giannamore:

Of course.

Jarl Dahlfors:

Yes. Even the country's presidents, because this is a complex process. So I can't explain everything in a few minutes, but basically when I present to the board on a quarterly or bi-monthly frequency, the performance, it's maybe 20 slides, but on a day-to-day or weekly basis, they see two KPIs to see the organic growth and margin development trends, and the same thing for the country. When I sit and talk to country president for Italy, for example, Luca, he then presents Italy with maybe 20 slides. And those are typically the same 20 slides I use to the board. Then when Luca sits down with one of the branch managers, Eduardo, for example, in Tuscany, and they sit to discuss the business, out of those 20 slides, they only focus on the areas where Eduardo is struggling or needs some coaching or improvements.

New Speaker:

But, and that varies between branches, as I said, we only pick a few KPIs that the branch managers are focusing on. We have all the data, we have all the instruments for all the branches, but we focus on a few on the branches. So the only thing that is exactly identical for all the branches, in all the world, that goes from branch manager all the way to the board is organic growth trend and margin trends. The rest varies.

New Speaker:

So it's a pretty compliant package of data, financial data, and other operational data, for the board, for the country. Then it hits the branch. It looks a bit different. So the only thing we have the same, is the margin development and organic trend development. That's how we secure—because that's probably the challenge when it develops such a distanced class organization—you want to secure the control. I mean, trust is good, but control is better. So the price you pay, if you're part of Anticimex, as a branch manager, I give you the freedom, but you better give me the right of checking on you, and, having all my indicators there. Typically, they're automated, so I don't want to drain you with all sorts of data. You should focus on the clients, and on the employees, and making sure that everything works, but you will be measured. And it's only when you deviate in a negative way, we have a problem.

Paul Giannamore:

You seem to train your managers—last time I was here, you and I had a discussion about basically proximate objectives being approximately correct, as opposed to focusing all of your effort on being 100% correct. It seems to me as though you've tried to get these guys to be as data-driven as possible, but act quickly, not worry about spending so much time being 100% correct? I've got one more—you and I can go on for days and days. And we covered all the interesting stuff about M&A last night—which, unfortunately, our listeners won't get to hear. But in regard to—this show is listened to by institutional investors, guys like you. There's a lot of folks that listen to this show, but I think the core of our audience are guys who own businesses, privately-held family businesses. So with the decades of experience that you have, taking Loomis from a sub-performing business really to a powerhouse and what you've done now, growing Anticimex, is basically almost a billion U.S. revenue now, at this point.

Jarl Dahlfors:

It is like above a billion U.S. dollars now. The current exchange rate helps me.

Paul Giannamore:

Exactly, right. The last three weeks, with the dollar getting knocked around, you're right. But what sort of advice do you have for a guy or gal out there running a family business? Let's say that you popped into a $5 million family business. And how would you think about, or advise folks to think about value creation? I know that's a very open-ended question, but what suggestions you have?

Jarl Dahlfors:

Yeah. And if I was an operator, and I meet a lot of those guys. And if they have zero interest in selling the business, they just want to develop it, or if they might be in risk, might also want to sell it. And that's, I mean, to be honest, that's of course more common when I meet some people, I haven't met before, 'cause there is an interest somehow. And very often, I like to offer an environment to be part of Anticimex, as a group, because once you are there, it's again, like you are part of the Olympics. You will have a chance to learn, not just from your competitor in your local town, but from the rest of the world. And if you are a competitive person, which I believe that virtually everyone I met of entrepreneurs, that's a strong DNA. They are very competitive, extremely competitive, and they really want to do good. They want to have the best quality, but they really don't know how to do that because they are competing in their own town with a few competitors. I can open up the globe for them and we can compete in—and this is in a healthy, healthy way, of course, competition. And that I think, is the best way to continue to create value, to understand what is the full potential. Cause if you don't know the full potential, you limit yourself. That is, to me, super clear. If you are a competitive person, you really want to develop something better or more profitable or bigger, whatever it might build, but something else, then you need to understand what is the benchmark. I can't benchmark to my competitor in the local town. I need to benchmark to the best in the world. If you really, if you mean serious, that's really what you should do.

Paul Giannamore:

World class?

Jarl Dahlfors:

Exactly. And I think the world is like that today, that the world has opened up. I mean, if you go back 100 years, we were more in our own village, living there, competing there. We didn't really compete on a global basis, today, we do. So long term, the only way I think, to continue to have a healthy development, and then ultimately to survive, is to be open for global competition. Then everyone can benefit from that.

Paul Giannamore:

Which areas of the world are you most excited about, from a future opportunity and growth perspective, when you think about the geographies around the world, for Anticimex, pest control in general even?

Jarl Dahlfors:

I would say that good news is that we'll have 160 branches something in 19 countries, and all of them could do well better when it comes to SMART, probably 10 times more. So that's kind of the first step. Don't go over the bridge to find water. I mean, we have it here. Look where you are. Secondly, when I explained to the board that we can continue to mine what we have today for many years to come, make things more effective, efficient, work with different procedures in quality, more smart, all of that. That's the farm that fills us on a daily basis. That's how we find bread and butter and you know, meats from the cows and milk. That's what we do today in the farm, but long-term for the next 10 and 20 years, we need to put the seed in the ground in Asia and in Latin America, eastern Europe, where a very underdeveloped market, and Cambodia for is a good example. We do not expect Cambodia, not even to move the needle, for Anticimex profitability or revenue this year, not even next year. But when we sit and talk in 10 years, you will say, cause you have a good memory, I realized, you will then say, "Jarl, do you remember talking about Cambodia? How does that look right now?" Then I say, "Well, look here. The portion of our business today that are in that part of the world is very small, but in the next 10, 20 years, we all know that the population growth is coming from that part of the world." I mean, the rest of the world, where we are today, the Western world, Western Europe and parts of the Pacific are not going to grow really. The growth will be other places. So for us to think about that on a daily basis, we need to continue to invest into new markets and that's Asia of course, central and Latin American, south America and parts of eastern Europe. So that's kind of the next, that's the forest in the farm. But the next year, in two years, the profit and the growth will come more from current markets, both organically. But of course, we're going to continue to do acquisitions, as long as people like Anticimex, and they want to participate in this journey. And there's a good reason for that, that acquisition is going to continue for many, many more years to come.

Paul Giannamore:

Jarl, I love coming to Stockholm and spending time with you. I've actually, and in all sincerity out of all of the CEOs of these businesses, you've actually spent the most time with me. And I've learned a lot from you, and you read my commentary, and we have a lot of discussions about it. And I appreciate that, because I have learned from you. In closing today, I guess I just got one question for you. And I know it's probably a question you hear from everyone, institutional investors, investment bankers, probably knocking down the door over here in the EQT. But I always look at it, it doesn't really matter necessarily who the owner of a business is. It kind of depends it—what matters more is what they do with the business. But what do you think the future is for Anticimex, having been a business owned by a variety of private equity firms? I think it was public at one point, right?

Jarl Dahlfors:

Correct.

Paul Giannamore:

So what's the future?

Jarl Dahlfors:

I think the next step, we really don't know what will happen. But what we do know is of course that Acadia, as you said, it is a private equity company, and the fund structure they have inevitably will have to be expiring mandate. And so something will happen. So there is couple of alternatives. We could be sold to another private equity firm, they could keep it in another fund for longer term, or it could be listed on Stockholm stock exchange, or New York stock exchange, I mean something that will happen. But in reality, from a day to day perspective, we will just continue doing exactly the same thing as we've been doing the last five years, continue to develop Anticimex.

Paul Giannamore:

But you know what strikes me as—struck me as a very interesting situation—is when I look at EUT and their history with other investments, you come into Anticimex and it really got towards the end of that fund. And so UT in a normal situation, would've exited Anticimex, but now you're on board, you're showing a lot of growth and what do they do? They double down. So now they've pretty much extended it for, one could argue another five years. And then of course the recent recapitalization is bringing in various investors. It seems like they're getting more and more serious about this.

Jarl Dahlfors:

I think that's pretty obvious that they love Anticimex as much as I do. And if you have an investment that you love that much, it fulfills all the—what you can dream about from an investment perspective. You want to keep it. But again, I really don't know what's going to happen there, and I'm not that interested in it. I think it's been fantastic to work with Acadia, and if they stay, great. If not, someone else comes in or it gets a listing. We continue to develop the business. That's my prioritized focus, obviously.

Paul Giannamore:

Awesome. Thanks for your time today.

Jarl Dahlfors:

Thanks a lot, Paul. Take care. Safe travels. Bye-bye.

Paul Giannamore:

Bye.

Automated:

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Patrick Baldwin:

Paul, another great episode, Stockholm Sessions. I don't know how they turned out so well without me, but I think that's exactly why they're so good.

David Billingsly:

I was kind of thinking the same thing, Paul.

Patrick Baldwin:

David, you've listened to every episode of The Buzz, I guess, right?

David Billingsly:

Oh, I'm a Buzz stalker now. Absolutely, 100%.

Paul Giannamore:

The other day I was shocked to hear, we started at 8:00 in the morning, and it goes out Thursday morning, and you had already listened to it on your way in. Which surprised me.

David Billingsly:

Yeah. Luckily you guys release it before 5:00 or 6:00 AM when I was on the road.

Paul Giannamore:

Yeah.

David Billingsly:

Up here in DC we've got quite a bit of traffic, so it gives me a little extra entertainment while I'm sitting in traffic to listen to you two knuckleheads.

Paul Giannamore:

Well, I guess this week you'll be listening to a third knucklehead.

David Billingsly:

Yeah. No, no, no, no. He's not a knucklehead.

Paul Giannamore:

I'm talking about you, big guy.

David Billingsly:

Oh, that's right. I am a cohost. I'm honored.

Paul Giannamore:

Yeah.

Patrick Baldwin:

Is it D-Bigs or Dollar Bill? In pest control, we've talked about you've got to have a nickname, but apparently this is widely contested.

Paul Giannamore:

He has a lot of names over there, so let's talk about some of those.

David Billingsly:

Yeah. I've got a few names. A few that I was growing up with. My mom had a few choice words for me too. I was quite the active young child in my childhood. I've got Dollar Bill at American Pest. An old friend and one of our branch managers, he refers to me that way. Then Giannamore has been kind enough to give me the D-Bigs nickname. I'll let you guys chose.

Patrick Baldwin:

I felt like that was gender neutral. That's kind of why I went with it.

David Billingsly:

I respond well to just about anything though. "Hey, you" works for me too.

Paul Giannamore:

Oh boy.

New Speaker:

Oh, all right. David, unfortunately, it is true. It seems like a lot of trips have been canceled this year. I mean, you guys had your upcoming Singapore meetings. I remember, what year was it? Wasn't last year. Was it in '18 where you guys had it in Stockholm? You took the trip. I met you guys up there in Stockholm. You had your managers and country presidents from all over the place. That was a really good time. I remember—

David Billingsly:

In '18 I think you missed your flight, didn't you?

Paul Giannamore:

I missed my flight the next day. That's right. Well, my flight was 7:00 in the morning, and we finished up at 5:00 AM. I went back to the hotel. I said, "You know what, I'm going to get 15 minutes of sleep." Woke up, and it was 11:00 AM, and I missed my flight.

David Billingsly:

Stockholm's a fun city, Patrick. You should go sometime for sure.

Paul Giannamore:

Patrick, it was in June I think. Was that right? May or June, David. Of course, the sun's, it's light out until 2:00 in the morning there. You lose track of time.

David Billingsly:

Then by 5:00 AM, it's light again.

Paul Giannamore:

Exactly.

Patrick Baldwin:

David, you're the first person that's ever invited me to Stockholm actually.

Paul Giannamore:

I didn't even hear an invitation.

David Billingsly:

It was definitely '18, Paul.

Paul Giannamore:

We actually go to Stockholm every spring for Anticimex. They bring in all the platform presidents and country presidents and above. We meet in Stockholm during the warmest times of the year. Thank God they don't bring us in December when it's frozen and dark the whole time. Generally the end of May or June, everybody comes in and spends a few days in Stockholm. I've been fortunate enough to extend those trips a few days, and bring my wife with me. Giving us an opportunity to really travel around the world which is certainly something I was not expecting when I got into the pest control industry 15 years ago.

Patrick Baldwin:

Before pest control, you were in clothing. I don't know if you ever picked up some extra clothes while you're over in Stockholm.

David Billingsly:

No, nothing fits. You know, I've—

Paul Giannamore:

David doesn't wear skinny jeans.

David Billingsly:

No, I have a really unique shape. It's like a square block or a round ball. That does not necessarily fit the clothing profile for my colleagues over on the other side of the pond.

Patrick Baldwin:

What's the exchange rate of clothing over there?

David Billingsly:

The exchange rate usually, I may be an XL here. If I can find something to fit me, it's a triple or quadruple X over there. I have to shop at the short fat store for sure. There's just none of them. I can't buy clothing over there, unfortunately.

Paul Giannamore:

I think that summer trip to Stockholm, you and your wife had just come off a tour of Italy so to speak, right. Was it that time? I don't remember now.

David Billingsly:

We went to Italy three times in one year. It was amazing. Two bookend around my meetings. We had a meeting in Milan, and then a year later we had one in Barcelona. We enjoyed it so much. We hopped on a cruise ship over the spring and toured the Mediterranean there and hit Italy again. Amazing, amazing country.

Paul Giannamore:

When you guys had the meeting in Milan, it was in December. That was the trip that Scott Stevenson became the Senator.

David Billingsly:

He was. He still is the Senator, by the way. He still is the Senator.

Paul Giannamore:

For everyone listening, Scott Stevenson came over with Sharon. We were in the process of moving from Paris to Geneva. I had my place in Paris still. I had just gotten a place in Geneva, and Scott came over. I really wanted to take them. I really wanted to go to—there's this restaurant that I really had wanted to go to. It's in Paris, so there's two tables, eight chairs and it was booked for months in advance. I'm making phone calls. They're rolling their eyes. Finally, I walked over to the restaurant and I said, "Listen. On Friday night, I have some important guests coming in, and I really want to try to get into the restaurant." They're just like, "Listen man. This thing is booked up three months in advance. Get the hell out of here." I said, "Well, it's unfortunate for you guys because my guest is Senator Scott Stevenson from the great state of Maine." Scott was a US Senator that night, and they let us in. Had a fantastic dinner, and everyone was excited to meet a United States Senator from New England. You know what, if you know Scott Stevenson and you look at him, he looks exactly, I mean, that's what a Senator—

David Billingsly:

He's very Senator-esque.

Paul Giannamore:

Yeah. He looks like a New England Senator. We only exclusively refer to him as the Senator, actually.

David Billingsly:

Didn't he change his name? I don't even think he responds to Scott anymore.

Paul Giannamore:

I guess we should talk about our interview today. It's good to have you on board David and good to kind of allow our listeners to get to know you a little bit. I want to talk to you about this interview with Jarl. I want to talk to you a little bit about your experience. You left the retail clothing business, you got into pest control, and I think you were in clothing or retail for 15 years or so before you got into pest control. Is that about right?

David Billingsly:

Yeah. Worked for Brooks Brothers for about 10 years.

Paul Giannamore:

Then how long were you at American Pest before it was acquired by Anticimex?

David Billingsly:

I started at American in January of 2006. Ten years later, we were acquired by Anticimex in September of 2016. So, 10 years.

Paul Giannamore:

If I remember correctly, the ink was barely dry on the purchase agreement, and you and I were around the corner drinking coffee, working on your first acquisition. I mean, literally that same month. Olav came over. He was brand new. He flew in from Stockholm and it was time to get down to business.

David Billingsly:

Still wet behind the ears. You and I, that's the first time I had the opportunity to meet you. We did our first deal. It was like 90 days we closed on Green Star, December first of 2016.

Paul Giannamore:

That's right. Olav took over for Mikael Vinje who's now the president of Anticimex North America. I hadn't met him in person yet, and I thought he was a woman.

David Billingsly:

Matt and I met him in a Starbucks. We were going over to go meet with the seller.

Paul Giannamore:

You met him the morning that we all met. Yeah. Right. You guys stopped at the Starbucks and then came over to the office and met with us.

David Billingsly:

Matt and I said, "Yep. That's him."

Paul Giannamore:

Was very easy to pick out of the crowd.

David Billingsly:

He had the skinny jeans on. He was all scarfed up. That was actually Olav's first deal that I think he did with Anticimex as well. A lot of people don't know, we didn't do a lot of M&A before Anticimex.

Paul Giannamore:

I knew that. I knew that the second I met you. I knew that the second I met you.

Patrick Baldwin:

Did you take advantage of that, Paul?

Paul Giannamore:

Well, no, I...

David Billingsly:

Yes, he did.

Paul Giannamore:

Whoops. No, I want clarify this for everyone. I only thought Olav was a woman when I was communicating with him over email. I realized that he was a man very quickly after meeting him.

Patrick Baldwin:

You know, you're checking him out in the scarf or something—

David Billingsly:

Olav's a great guy. He's done an amazing job over in Europe expanding Anticimex. He oversees all the M&As, so our VP of M&A here, Mike Schmidt has done a good job with us. Olav has done an amazing job over the last four years for us.

Paul Giannamore:

I agree with you. I think Olav's fantastic. Every single time I'm in Stockholm, which actually turns out to be way more than I ever thought was possible, I always like to see Olav even just socially. I consider him a friend. He's a great guy.

Patrick Baldwin:

Great interview. Great setting in the Anticimex board room. I've never met Jarl. I don't have to say that enough for y'all. His background we know, speaking of Jamie, come from this route base, this Loomis and Securitas model. He said the only thing he did with them was decentralized Loomis. Then that same model translated into Anticimex. He put that to work in AX, right?

David Billingsly:

Oh yeah, absolutely. I mean, and that's his mantra. I love the fact that your guys' listeners have an opportunity and a chance to get to know Jarl and my CEO and my leader. I know as Paul sat in the boardroom with Jarl going through this interview, one of the biggest things that stood out to me is the fact that the message that he was delivering to Paul is a message that I've heard Jarl say 20 or 30 times over the last four years as I've had an opportunity to spend time with him and sit with him. It was really cool for your listeners to get an opportunity to really know the leader and our CEO the way that I've gotten to know him. The guy is fricking brilliant. The other part though, Paul, that I loved is a little backstory on where the Swedish beast came into play. That was cool. Getting a little framing on that.

Paul Giannamore:

He came on board I guess in September of, was around September of 2015. You business was acquired, David, in '16. I worked with Anticimex when Olav's son was around, and he was Jarl's predecessor. That's when Anticimex was somewhat of a slow moving, sluggish, Nordic business. They had just acquired the ISS portfolio in Europe and Asia. I was doing a lot of Asian work. Malaysia, Singapore, and so on and so forth.

New Speaker:

Back in 2014, Anticimex was really starting to focus on expanding outside of Europe. The focus was do we go into North America or do we go into Asia first. Asia, there were a lot of bite size businesses to buy. In North America, 2015 is when we really started to see a dramatic run up in transaction multiples in North America. Platforms started to get pricey, and I think it took some time for Anticimex to acclimate.

New Speaker:

Here's a question to you, David. When I think about my dialogues with Jarl over the years, he said this on more than one occasion that he views himself as the protector of the branch manager. Now, I guess when you get in the United States, you're not really a branch manager. When I think about businesses in Switzerland, for example, they have a branch, but you are really kind of a platform president. How does that look in the United States? What's the difference between a branch and a platform? How does that work?

David Billingsly:

That's a great question. When we were acquired in 2016, American really didn't have any branches. We're a little different because of the makeup in our area. We had three distinct divisions. A commercial division, a residential division, and then because of the government work that we do here in the DC market, we had a government division. Really over the first 12, 18 months, there was a little bit of restructuring that we did to really begin to break up our PNL. When they bought us, we were around $12 million, and I was the owner of the PNL. I was the owner of that $12 million PNL. Jarl's philosophy over his years has really been to push that PNL responsibility down as close to the clients as we possibly can. Over that time, we now have, gosh, I think eight branches now. We've got eight branch managers that are in charge of PNLs. Somewhere between two and a half, 3 million up to almost 10 million.

New Speaker:

Our business is almost quadrupled. Other than that, our business itself is relatively the same. They've given us some guidance and there's some financial reporting and things like that that we've got to stick to. Our business overall is very similar to the way it was four years ago. Very decentralized. I know that you were saying that the home office there's 20, 25 people there. I've been to the boardroom there, Patrick. I just wasn't there this time. Sorry, man. Sorry to leave you out.

Patrick Baldwin:

Keep rubbing it in y'all. That was "y'all" not Jarl. Y'all.

David Billingsly:

I've had the opportunity to be over there and it's really not a top-heavy organization like some of the corporate things that I've dealt with before in my previous world. What Anticimex has given us the opportunity to do is the financial support to really execute the M&A, and then allow me and our branch managers who are really close to the customers to run those business at a local level. It's been really, really a great ride for us.

Paul Giannamore:

When Jarl talks about there's roughly 160 branches give or take, would he consider American as one branch?

David Billingsly:

No, American's viewed as a platform or a country. When you go to Italy, Jarl talks about the Italian president over there, Luca. Luca runs that country. Then there's multiple branches broken up into that country. Up in modern, Dennis has multiple branches. He's got branch managers. The Boston area and up in Maine, when you look at Viking with what Paul's doing, that territory, Paul's got six or seven branches. It's my job to action the M&A. It's my job to oversee the overall company more at a 20 or 30,000 foot range. I had an opportunity to spend about an hour with Jarl a few years ago when he was in the Baltimore area for PestWorld. He was really pushing me to work more on the business, not in the business. As a platform president, it's our job to work on the business and allow the branch managers to really work in the business. If that makes sense.

Paul Giannamore:

Given the fact that you haven't gotten many visits from Jarl, based on what we just heard, that's a pretty good sign.

David Billingsly:

It's a beautiful day.

Patrick Baldwin:

Knowing what that one meeting was like, Jarl came to see David.

David Billingsly:

I was talking to Jarl's executive assistant, Erica, one day and I said, "Erica, listen, I am just really enjoying what I'm doing. You know, I just don't want to mess it up. I don't want to get fired." She said, "David, Jarl loves you. As long as your numbers are where they're at. You're fine." I know Jarl said that in the interview today. While I think Jarl is an amazing leader and a very fair person, but in the end, we're running a business here. There are hard expectations for me to deliver specific results around organic growth and EBITDA margins. If I don't live up to that, then you know, he's got to find somebody else that can do it.

Patrick Baldwin:

Speaking of Erica, I actually, Jarl was my second choice for interview subjects. She's the most powerful individual in that global organization. I tried to get her to do the interview, and she gave me number two, Jarl.

David Billingsly:

Yeah. For sure.

Patrick Baldwin:

For real.

David Billingsly:

Yeah, yes, it is.

Patrick Baldwin:

When you think about your business then, you've got yourself as, I guess you're referred to as a country because the Mid-Atlantic is pretty big so they break you up and you're considered a country there. I guess if there were an issue at American Pest, you've got your managers below you. Would Jarl be visiting you or would he be visiting one of your "quote unquote" branch managers?

David Billingsly:

It depends on if we were having a problem in a specific branch. If we were having an overarching issue with American Pest that was throughout the entire organization, then I would probably have the pleasure of a visit from Mikael Vinje and Jarl. If we had a...

Patrick Baldwin:

That doesn't sound like a lot of pleasure ,though.

David Billingsly:

No, I don't think so either. Luckily enough, I haven't had to have any of those.

Patrick Baldwin:

That's great.

David Billingsly:

If we're having a systemic issue that's probably isolated to a branch, then just like Jarl said he would want to go spend some time with that branch manager and get explanations. Our government branch, and Jarl said this in the interview, that all the branches are expected to perform at a high level. He also understands that not all branches are going to be green or gold. Above that 16 or 20% margin level. My government division, my government branch, is very similar to that. It's a comply or explain. Even though my government division or branch there isn't performing at a 16 or 20% margin level, we understand that that particular business doesn't have a higher margin. The credentialing we've got to have for it can be expensive. They understand that. That's one of the things that I probably enjoy most about Anticimex and that's, they understand it's a long haul for them. It's just not about let's get these numbers fixed in the next six months. It's really a long haul. The last four years just have it's flown by. It's been a great ride.

Paul Giannamore:

When I think about all the platform businesses in the United States, as well as the ones globally, I think we were involved in probably half of the large platform acquisitions for Anticimex in North America and a handful around the world. Every time I talk to guys like you, we did Mikael last year, a couple years ago Stevenson, Killingsworth so on and so forth. Every time I stay in contact with a lot of these guys. I've become close friends with a lot of them. It's always interesting to me because I hear about the competition amongst the global Anticimex businesses. I swear, every time I talk to any one of these guys, I hear about how Paul, our business it's got the fastest growing branch in the world, or ours has got the highest return. Everyone's winning on some sort of a metric. Everyone has got—David, I don't even know if you could talk about this, but when you think about kind of this global benchmarking per se, how does that work?

David Billingsly:

Jarl loves competition. They publish a branch ranking and a country ranking on a regular basis. Every month we get a branch ranking and it's based on four or five different metrics, whether it's about percent profitability, statutory dollars for profitability, organic growth. You certainly don't want to be last. It's great to be in the running for first. In 2019, it was us and Turner for the top country in the world. Bill Talon, who's the president down there, and I, we were very intimate in regards to understanding exactly where we were and where we were scoring. By the end of the year, Bill ended up edging us out. Jarl absolutely has created a competition amongst all the businesses around the world.

David Billingsly:

The other part of this is we've got access to all those things. When we launched our disinfectant business back in March, we were able to put that together here in North America in just a few weeks. We had access to all of our colleagues over in Italy and Portugal and Singapore that had already been doing it for two or three months. We didn't have to reinvent all of our protocols and processes. We were just able to get that. There's lots of best practices sharing. They've got the term "sharing is caring." They want to make sure that we are feeding into the folks that are doing things best globally. Like Jarl said in the interview, it also gives us the opportunity for specific markets. If you are in a highly-urban environment, where I'm at in the DC area, I will tap into branch managers around the world or have my branch managers tap into other branch managers around the world that are performing well in high urban environments versus more rural environments. Competition is absolutely part of the Anticimex structure. Being a former college athlete, I love it. I'm a competitive guy. Paul, you've known me well enough. I don't like losing deals.

Paul Giannamore:

That's what I love about you.

David Billingsly:

He's playing me like a banjo and I need to— "Hey, watch this. I'm going to get Billingsly!" You can leave that out.

Patrick Baldwin:

This condition alone.

Paul Giannamore:

That's the fun stuff. This is the stuff they inquiring minds want to know.

Patrick Baldwin:

I feel like I have to ask some of these follow-up questions to David because I wasn't there to ask Jarl questions in the boardroom. Forgive me, David, but I'm going to throw some Anticimex questions at you. This episode is not sponsored by Anticimex. It is what it is.

Paul Giannamore:

I don't know. Didn't we have a Rentokil or definitely not Service Master. We had a Rentokil Pro before that, right?

Patrick Baldwin:

We did have a—

Paul Giannamore:

We've heard good feedback from Rentokil about Brandon Hire's episode. That was a great one too. This three step model, I want to know. Quality, profit, growth. You can measure profit. You can measure growth. This just seems very subjective to me. How do you measure quality? What are those things that are on the radar?

David Billingsly:

Well, I know Jarl said we can have multiple KPIs. You've got to be able to focus on a two, but at American when it comes to quality, we're an NPS company. Anticimex globally is a net promoter company. One way we measure quality is we get feedback from our customers. We certainly measure our NPS score, and I get those reports on a daily basis. I know where our score is. The other part of this is NPS has a tendency to be a leading indicator to retention. If your NPS score is slipping, chances are you're going to be having retention issues and your retention numbers are going to go down. We measure that to the branch level. Once again, part of this decentralized model is pushing things down to the branches. Isn't it amazing how one branch manager can perform at a really high level in the same environment but the other can't. Usually that helps us be able to weed through specific issues at specific branches. Probably the best way for quality is NPS and retention.

Patrick Baldwin:

I like how the branches are set up in the competitive model and they're really against their peers. You have eight branches that report to you. You did mention the government branch. Am I tracking right?

David Billingsly:

I actually have a vice president of the service delivery that oversees all of our branch managers from a span of control. As I oversee the entire platform for American Pest, we've got eight branch managers. I have a vice president that oversees the service delivery of that. He reports directly and works with me as well as we've got finance, we've got other layers within the organization as well. If I had all the branch managers and all of my other folks, I'd be about 16 wide, which would probably make me slightly ineffective as a leader.

Patrick Baldwin:

I guess, thinking back to how Tony in episode five spoke about having commercial techs and separately residential techs. Is a decision like that on the branch level? I guess my question is because you also mentioned you have a government branch. I don't know where that decision's made.

Paul Giannamore:

Well that's an interesting corollary because David's government business, a good chunk of that came from Triple-S. A decent chunk.

David Billingsly:

Triple-S and Innovative.

Paul Giannamore:

And Innovative?

David Billingsly:

Yeah. Patrick, we've over the years just kind of ebbed and flowed where we had specialized technicians that only did commercial and only did residential and only did government. Then over the years—one thing over this journey, as we basically quadrupled the business here over four years, is while I do understand that Tony was the king of route density. Now that we have shoved three. I'm a competitive guy. By the way, Tony's a friend of mine. He's a friend, so sorry Sfreddo, but I now in the DC market and the king of route density because we basically have poured three more American Pests right on top of us. As we begun that journey, it made sense for us to basically form these hybrid technicians that are going to be doing residential, commercial, and some government accounts. Now, some of the government accounts that we do, a very, very large account that we work on, I've got 10 technicians on the campus of this account every single day. They only do the government side of the business. I've got 40 technicians in the District of Columbia alone.

Patrick Baldwin:

Yeah. You said you have more employees in DC than there are politicians is what you said yesterday.

David Billingsly:

Well, I'm not sure about that. There's a lot of politicians.

Paul Giannamore:

Tony's okay with handing the crown to you. I mean, he's now the prince of potties. He was happy with making you the new king of route density, David.

David Billingsly:

Yes, that's correct. Yes, he is the prince of potties.

Paul Giannamore:

He's coming down. I'm dragging this guy down to PR here in the next couple of months, actually.

David Billingsly:

Listen, he'll go.

Paul Giannamore:

We're going to talk today because one of the things that we are going to do, and I'm not sure how we're going to do this yet. David, I'll take any advice you have, but bringing Tony down to PR. He and I are going to pretend to play some golf, hang out, but also we're going to have a few clients come down and spend some time with him. Folks that want to build up commercial operations so on and so forth. I was thinking about maybe doing something special for Buzz listeners. I don't know what the trigger would be, Patrick, but we might bring a Buzz listener down and film a live episode with Tony and allow the Buzz listener to get maybe an afternoon with Tony out on the golf course. Spending some time working on their business and so on and so forth. I think that'd be cool. How do you become a winner of that? How do you do that, Patrick? That's the question.

Patrick Baldwin:

I had an idea run by me last night, Operation Underground Railroad that deals with human trafficking and sex trafficking. It's funny how this all ties back to pest control.

Paul Giannamore:

Hookers and pest control, is that what you mean?

Patrick Baldwin:

That's the Halloween episode. No, not that one. Interesting thing. A door-to-door company, not pest control, large contractor, he's been listening to the Buzz, and he reached out to me and this is a great cause. Aptive's already looking into this. Imagine the opportunities that technicians and sales people are in the home. One of his technicians on an alarm install actually saw a lock on an interior door, like a padlock inside a house. He took a picture and they started having it investigated. Sure enough, that home was a human trafficking home and they were installing security and alarm system for it.

David Billingsly:

That's Forshaw. Did Thomas talk to you about that?

Patrick Baldwin:

No.

David Billingsly:

Thomas Forshaw is working with somebody. We've used Forshaw for years and Thomas is a good friend.

Paul Giannamore:

Yeah. Thomas's a great guy. Yeah.

David Billingsly:

We were at Associated Pest, so I'm an Associated Pest member still. Thomas had introduced me to this gal that was doing something similar to this.

Paul Giannamore:

Gotcha. Okay.

David Billingsly:

That's interesting. Cool.

Patrick Baldwin:

Yeah. They ended up busting that...

Patrick Baldwin:

That's interesting. Yeah. So that they end up busting that house. But from that, this is an opportunity for Boardroom Buzz listeners to get involved and spread the word and be on the lookout, there's training. We've got stuff in the works. Long story short, my idea was to get people this in-person opportunity with Paul and Tony, and I might find a way to sneak in down there too, having a raffle contest. Start a raffle, raise some money for Operation Underground Railroad. We talk about it here on the Buzz and...

Paul Giannamore:

Yep.

Patrick Baldwin:

All of a sudden someone finds himself down in PR. I think it'd be cool.

Paul Giannamore:

I think we'll explore this on some future episodes, Patrick, I'm down for it. And I actually think human trafficking is such a massive illicit industry. I'm definitely down to do whatever we can to help out. So—

Patrick Baldwin:

I think it hits home for you, doesn't it? No, not personally. Right?

Paul Giannamore:

I mean, how does it hit home with me? I don't recall.

David Billingsly:

I better stop doing that or I'm going to get busted.

Patrick Baldwin:

That's not what I meant. Your wife, Paul, your wife.

Paul Giannamore:

What about her?

Patrick Baldwin:

She's an attorney.

Paul Giannamore:

No, you're right. She actually is involved in human trafficking. The prevention of human trafficking, let me just clarify that. So yes, that is a big issue for her.

New Speaker:

Let's get back to this whole interview here on the whole Jarl discussion.

Patrick Baldwin:

Another question I have David, if you could give an example, you spoke about net promoter score and that's something that you're getting daily, which is really cool. You can take immediate action. Is there another example where you're acting quickly on data?

David Billingsly:

You could have given that question in advance?

Paul Giannamore:

Yeah, no doubt Patrick. But thanks David.

David Billingsly:

No, this is about proximity. It's the whole proximity thing where... So to answer your question we understand and Jarl understands that we've got some really aggressive growth goals. So Jarl had touched on margin and also organic growth. So part of this is around speed. So there's a way to grow the business in a very quick manner by still holding margins to a specific level, but by not having everything perfect. I know Jarl was nice enough to speak in this 90% bullseye. At American, we really try to work within this 95% bullseye. So when we are developing our business plans over the years we want to make sure that we're developing an aggressive enough plan to be able to achieve specific numbers within our plan. Because if you come in at 120% of your plan, well, chances are you sandbagged your butt off. All right?

Paul Giannamore:

Yep.

David Billingsly:

But if you also come in at 80%, then you probably were either a little over optimistic or you're just having some major issues. For my team I say, Hey, as long as we're somewhere between 95 and 105, then we're really doing our jobs. Ways that we impact that is we really want to pay attention to our labor. So our gross margin. We're really, really attuned to our gross margin and how that's progressing. And then also around our indirect calls, because as we have layered on and basically quadruple the business, we want to make sure that we're scaling the business in a proper way from an indirect side. So I don't know if that answers your question exactly.

Patrick Baldwin:

Yeah. You know, it's The Buzz it's close enough. Right?

David Billingsly:

Right.

Patrick Baldwin:

So you have eight branch managers under you. I guess another question on how you manage that... Paul's made a very generalization of north of the Mason Dixon line is paid hourly or salary south it's production commission for technicians. Is it uniform across American now?

David Billingsly:

I mean, at American we pay hourly. So there are still some platforms that are on some production models. As you get further south into Florida and Turner and Waynes, they're doing a lot of pest control and lawn. It's not uniform for us here in the US from an Anticimex standpoint. But at American, we used to be production, but because we do so much commercial and government work, we felt like hourly was the best approach for us. I want my team members spending the most amount of time that they need to spend at the account to give them the quality. That way our NPS scores stay where they need to be at and our retention scores remain to be where they're at so we can achieve the profit margins. And that wasn't just because an Anticimex thing, that was an American thing well, before Anticimex acquired us in 2016.

Patrick Baldwin:

And so is there a magic number for overtime for you? Do you tell your managers, I don't want to see anyone over so many hours a week?

David Billingsly:

The short answer is if we're staffed properly, we've found that around that 45 hour range is kind of the magic number. If you look at uniforms, vehicles, and all of the things it costs to hire a technician.

New Speaker:

So when I was in retail management, I could hire somebody to fold a shirt and get them trained up really quickly, right? So I didn't want them to work any overtime because it didn't cost me anything really to carry them other than benefits. But in pest control, there's probably, I don't know, two or $3,000 a month carry costs as soon as you hire somebody before they do one minute of work. So for us, that break even is around 45. If it starts [to eke] up over the 50 range, then we also see diminishing returns in our technicians just because they're working too much. I want our folks to have that fine balance of work and life and be able to spend time with their families and actually have the energy to get home and spend time with their families.

Patrick Baldwin:

Real cool. I really appreciate how the KPIs and this benchmarking's really simplified. You have universal margin trend and organic growth trend. Just easy to understand, very simple dashboard, if you will. Another simple idea was this best practices case where you're talking about like three or four PowerPoint slides. Here's a problem. Here's a solution. Here's the results. I don't know if you can let us kind of peek behind the curtain. What would example be? How do you use that to train and manage your employees?

David Billingsly:

You're basically talking about the case studies that we do in regards to, if somebody's done something really well or by the way, if somebody has tried something and it didn't work out so well. So case studies don't always have to be these amazing results things, we can do case studies around things that we've tried and they haven't worked out so well. So for us, we've got a few accounts here around SMART that we've used and I won't get into the particulars of exactly who the account is, but we've actually had some really solid results in a particular segment of the business. So we would want to publish that.

New Speaker:

So with the other platforms here in the US, or even globally, they would say, Hey, we haven't had any penetration in these particular segments and American hasn't been able to put in a hundred SMART boxes in this account and we've caught 10,000 rodents in a six month program because they really had fear around rodenticide. So, we do things like that and they'll share those globally. They've got some large accounts over in the Europe area where they've done the same thing and it allows us to actually be able to look at those segments of business here in the US and potentially take our sales team and have them begin to go after those and it's the inverse as well. They've taken some of the case studies we've done here in the US and utilized those or over in Europe as well. That's part of being this part of this large global corporate environment.

Patrick Baldwin:

You mentioned SMART technology, it's October 3rd, Saturday morning, but just a few days ago, Governor Newsom in California signed a bill effectively banning second generation anticoagulants. I don't know if the particulars are really important for where I'm going with this. But the SMART technology, what does that do for a company like Anticimex, as far as your expansion? I think California's the leading edge of pest control. See what they're doing, if second generation anticoagulants are getting banned. Where's that going to take the rest of the country? So if that's the leading edge, do you see Anticimex having a leg up for a market like that?

David Billingsly:

Absolutely. You know, over in Europe, the regulation is heavy and Paul, you know a lot about this, but I was doing a site visit at a branch office in Germany. If they put out a snap trap, they have to come back and check the snap trap every day. Government regulation over in Europe has really driven folks to SMART. And I think that's why we have so many devices over on the other side of the pond.

New Speaker:

So as a PMP, I have always welcomed more regulation because American has always been a very professional company. I've got two board certified entomologists, PhD entomologists. We've got multiple entomologists that we utilize for our government stuff. So we have always welcomed more regulation. Four years ago, I probably would've been a little bit more concerned for our business around the banning of rodenticides. For us now here at Anticimex, because we have those capabilities I get pretty excited about those regulations. But I also understand that this just isn't about American Pest or Anticimex. This is about our industry as a whole. So I know NPMA is probably working hard to help address some of those issues. But as we begin to see more and more jurisdictions banning rodenticides and you're right, California, I be leave is just the leading edge, New York, Washington, D.C., and my market. They've actually had some regulations and bills coming through in D.C. trying to ban it and they haven't been able to do it yet. But I would foresee that happening in my area very soon as well. That's what SMART's all about. It's that whole sustainability and I think Jarl said 80,000 kilos of rodenticide that we haven't been able to use and that's important to our shareholders. That's important to the public as a whole around trying to create a more sustainable environment just to protect the planet.

Patrick Baldwin:

How does that trickle down to the P&L when it comes down to... I mean, your technicians, can you see your technicians they're happier and this more consultative approach and your labor costs are down? I mean, does all this play out down to the tech level?

David Billingsly:

I get excited about the technology, because if you look at who our new team members are going to be, they're the millennials, they're Gen Z, and they're technically savvy individuals. So I see the digitalization of pest control, whether it's Anticimex's SMART or any digitalization and I know there's a lot of really smart people working on trying to do more of this. I see the digitalization of pest control actually allowing us to be able to employ our new team members with this really tech savvy generations that are growing up. So I'm excited about it.

Patrick Baldwin:

Awesome.

Paul Giannamore:

I wanted to switch gears real quick if we can, David. I know this wasn't part of the Jarl interview.

David Billingsly:

Yeah, I thought I was the co-host here.

Patrick Baldwin:

Oh, I forgot about that.

David Billingsly:

You're now the interview subject, but that's okay. Cause you know what, maybe you'll graduate to co-host at some point.

Patrick Baldwin:

We just said that to trick you in. Guest co-host.

Paul Giannamore:

This wasn't part of the Jarl interview. When I was in Stockholm we covered a lot of this the night before, but want to talk a little bit about M&A. I mean, you mentioned earlier on that coming from American, you guys were not doing a lot of, I think you did one or two small deals historically, and all of a sudden you're part of Anticimex and you have done a lot of deals. I think even back on episode five, I made the suggestion about how I thought you were one of the best Anticimex platform presidents from an M&A perspective, and I always love doing deals with you. And that has nothing to do with the checks that you write. It really isn't. I say that sincerely. What are you doing, Patrick?

Patrick Baldwin:

I was doing dollar, dollar bills. Dollar bills, y'all.

Paul Giannamore:

Yeah. No and I say that sincerely and here's why. Because you... And look David, if I thought you sucked, I would tell you, I think all the listeners know that too.

David Billingsly:

I'm pretty certain of it.

Paul Giannamore:

But we've done Green Star together and Innovative and Triple-S and some others. You've always been extremely effective in not only managing the integration process. You've got a fantastic team around you. I think one of the things that I always appreciated about you, and now I remember my comment. I said, you're honest, almost to a fault because when we have preliminary meetings, when we were running through a cell site process and we sit down with the sellers and the buyer, and you're there having some discussions. You don't BS anyone. When they ask you a question, when a seller wants you to get into a lease for the next 20 years, you're not the type of guy that's going to push the question aside. You hit it head on. I'm not interested in taking on this massive obligation. You don't mince words with these guys, and I've always appreciated that. And that's boded very well for you because I think you've set appropriate expectations for every deal that we've done. I haven't heard from any dissatisfied sellers or team members after having done a deal with you, and I can't say that about everyone. So, I know that was a long preamble to my question. How important is M&A to your business and how have you learned? I mean, how have you gotten as good as you are now? Cause I can honestly say that you and your team have gotten great at it.

David Billingsly:

First, I think you hit on it. It's about the team. I mean, and I've told Jarl this, I feel like we have the best leadership team in the world. I have tried to build a team with a bunch of really, really smart people. I am just a country boy from Florida. I grew up in central Florida. I got a cousin named Skeeter, swear to God, I got a cousin named Skeeter.

Paul Giannamore:

I know you do.

David Billingsly:

You know, I've tried to surround myself with some really, really smart people. Then from there we really just work hard around the integration process. It's hard. I just feel like honesty is the best policy, Paul.

Paul Giannamore:

Yep.

David Billingsly:

If you're always honest with people, you don't ever have to go back and remember what you said, because my memory ain't what it used to be.

David Billingsly:

So I know that as long as I'm honest with people. If I've got to blow a deal up, I feel like I need to look another man or another woman in the eye and lie to him, I'm just not going to do it. It's not worth it. My integrity, my character, the reputation of American Pest, number one, but the overall reputation of Anticimex. I mean, I am now part of this larger team. So I'm responsible for this portion of it, but I'm also responsible for the reputation of Anticimex globally as well in my particular area. So we're just not going to play that game. No deal is worth it. At least not for my integrity and my character. But most importantly though, I have an amazing team and nobody works for me, we work together and man, I got some motivated, ambitious, smart, smart people that just kick butt. I love it.

Paul Giannamore:

Yeah. I mean, let's give one of your team members props. I mean, I work with a lot of them and I think they're fantastic. Jen Blondo's a royal pain in the ass, but damn isn't she good?

David Billingsly:

She is a beast.

Paul Giannamore:

She is.

David Billingsly:

She is the American beast.

Paul Giannamore:

She is.

David Billingsly:

And she won't mind me saying that. She is relentless.

Paul Giannamore:

And she won't mind me saying she's a pain in the because she specializes in that. No, but I say that in good faith. I mean, she really is fantastic. In fact, if I were to attempt to poach anyone from American Pest, she'd be somebody I'd try to poach for sure. And I'm not saying that—

David Billingsly:

As long as I'm still there, it ain't happening.

Paul Giannamore:

And I'm not saying that to exclude any of your other team members, Kevin and Lindsay and everyone else. They're fantastic. But we tend to work obviously daily with Jen.

David Billingsly:

Yeah. You don't get anything by Jennifer. She's relentless. She works way more than I'd like her to work, but that's... If she's not working, she's not happy.

Patrick Baldwin:

Seems like Paul, you're trying to get a couple people some pay raises on this episode between David, and I don't even know who Jen is, but you're always negotiating aren't you.

Paul Giannamore:

I'm just laying the groundwork, Patrick.

Patrick Baldwin:

So officially as a guest co-host because I feel like we kind of turned the spotlight, turned the interrogation lamp on you because I get enough of it here from Paul. As a guest co-host, did you have some takeaways or the things that you picked up on here that—

Paul Giannamore:

Any questions for us?

David Billingsly:

Paul, I'll spin that around on you a little bit. Because you have done a lot of deals with Anticimex over the years, whether it's just in the US or globally, but in realizing that this is not a commercial for Anticimex, but what makes it about Anticimex for you to have done as many deals with us?

Paul Giannamore:

Man, that's a great question. I think that every single acquirer out there will "quote unquote" bend returns and really pay to play for an asset that they believe is premium or otherwise is very, very desirable. So that's consistent across the board, ServiceMaster, Rentokil, Rollins, and so on and so forth. I think Anticimex in the United States has been—well, so let's start with Anticimex globally. So when I go to most of the global markets that I go to, whether it's in the Arabian Gulf or Southeast Asia, Africa, Eastern Europe, we're doing a lot of stuff in Eastern Europe now. It has always been, if you're selling your pest control business, who are you going to sell it to? Rentokil, that's the only global provider that's been there historically for many, many years and sometimes decades.

New Speaker:

I remember when I first met your boss, Mikael Vinje, his first couple of months on the job. He and I had some drinks in Singapore and he was over there looking at entering the Southeast Asia market through a direct acquisition in Singapore. We ended up doing a deal over there. But if I look at Singapore, Malaysia, for decades, the only global provider there was Rentokil. So I think Anticimex actually had somewhat of a leg up because now, Hey, a new acquirer is in town. I could easily make the argument that if you go to the UK, Rollins is more successful than they would be in the vacuum, except that Rentokil has for decades and decades and forever, a hundred years, has been the predominant provider in the United Kingdom. Rollins provides British pest control operators another alternative.

New Speaker:

Now, in the United States Orkin and Service Master have always been a duopoly and now you've got Rentokil in the game and then of course Anticimex is the new kid on the block, relatively. I think what has excited guys like, we'll chat with Scott Stevenson and Doug Stevenson at some point. But I think one of the things that was interesting to the modern folks was we are going to take the brand that you've built for decades. We're going to turn this in to the New England brand for Anticimex, and we're going to put a bunch of resources behind it. We're going to do acquisitions, we're going to grow it. We're going to try to retain the local culture of the business that you built. I guess I'll kick it back to you, David. I mean, you've been with American since 2006, it's 2020 now, how has the culture of the organization changed? Has it? For better, for worse? I mean, other than the fact that AX comes in, has a lot of resources, gets you involved in doing significant transactions. But other than that, what other what's changed?

David Billingsly:

Not much. We're just part of something larger. So we have the opportunity now to network with some of those top platform here and share best practices and get together. But short of that, our overall culture at American now is very similar to the way that it was in 2016. We're just bigger. We're just bigger, but the culture, one of my really good mentors has always said, the leader brings the weather. So our leadership team has just really tried to bring the same weather every single day for our team, which really ultimately sets the climate for the culture.

Paul Giannamore:

You've done some decent-sized deals. I mean, Triple S eight to nine million in revenue. Innovative was north of five million. So when you're bringing these other big businesses into American, which was, by the way when we did those deals much smaller than it is today, does that impact the culture? Does it—

David Billingsly:

Oh yeah.

Paul Giannamore:

Augment it, change it? What's that like?

David Billingsly:

Well, you've got to think in 2018, we basically doubled the size of the business in three months. So we basically diluted our culture in half. So you have the core American culture. But now we were bringing in Triple-S team members and Innovative team members and their cultures were very similar. So what I've found is the similarities in these deals really will blind you. It's the very small differences. That's really what makes these deals really hard and being able to feather those in and just let people know that we actually care about them and they're not just a number.

Paul Giannamore:

What's an example of a very small kind of difference that could trip you up or complicate your life?

David Billingsly:

It's service. We did our service this way. We've acquired some businesses where they did timed services and they would actually go in and still treat on the interior and we're an exterior-only company. So as we begin to bend that and try to shape that within our culture, it certainly causes some friction because not everybody believes in that, but in the inverse, even with some of these smaller deals, we've learned a lot from these businesses we've bought as well. So, it's not just the American way it's taking the Anticimex way, blending that with the way we do things and then taking things from each of these deals we've done and learning and incorporate them. We to always talk about this thing of continuous and improvement, it's always trying to get better and we try things and if it doesn't work, we change it.

Paul Giannamore:

David, I feel like we're literally just scratching the surface with you. And we've actually turned this into—the bookends have become an episode. So we got to leave it a here. I think, but—

David Billingsly:

Well, I've actually—let me be a co-host here for a second. I have one last question.

Paul Giannamore:

Yep.

David Billingsly:

What the hell is it about these milk bottle cookies? You can't fine me a hundred bucks Giannamore.

Paul Giannamore:

No, I cannot. Because I can only fine Patrick.

David Billingsly:

All right. Patrick, I know that short on time. I'll take that offline with you, but I think you're going to have to send me some milk bottle cookies.

Patrick Baldwin:

I think Franco is going to send you some milk bottle cookies if you know what I mean.

David Billingsly:

As I get them buddy. Listen, it's been a pleasure to be on here. I love the show. Keep up the amazing work and it's been an honor to virtually sit next to you guys and be a co-host. And then thank for the softball questions, guys. I was not expecting that.

Patrick Baldwin:

Oh man. You're great. You've got to come back. I had so much fun.

Paul Giannamore:

Oh we're definitely getting him back.

Patrick Baldwin:

I learned a lot.

Paul Giannamore:

Yeah actually, absolutely.

Patrick Baldwin:

We hear these—I think people outside of the east coast, right? I'm in Texas talking to people all over the country. Outside of the east coast, they don't know Anticimex. Some don't know the name at all. And I've started this year and doing the Boardroom Buzz, learned more about Anticimex and met some of the other players like the Tony Sfreddo just interviewed Doc Kramer this week. I've met Josh Kramer. We've got the Stevenson brothers coming on.

Paul Giannamore:

Big Mikey Rogers.

Patrick Baldwin:

Sorry, Mike Rogers. How could I forget? Hear about them all the time. Oh my goodness. And so it's great to actually put a face to this Anticimex name and get to know deeper, like the culture. I think people are more and more going to hear about Anticimex and look forward to y'all's continuing success. Again, this is not a commercial for Anticimex, that's the disclaimer. I feel like we have to do a disclaimer in every episode, but it's really great to me meet you and open invitation. Come back to The Boardroom Buzz please.

David Billingsly:

Hey, I'm happy to come back whenever you'll have me. It's been awesome. I appreciate it guys.

Paul Giannamore:

Cool. Awesome. Thanks for stopping in David. You've represented your organization very well.

David Billingsly:

I appreciate that. Now cue up the music.

Paul Giannamore:

Now we're going to do it.

Patrick Baldwin:

All right. Dollar Bill—David Billingsly. It was a pleasure having you here. I really appreciate you.

David Billingsly:

No, the pleasure's all mine guys. I appreciate you having me and hopefully you'll have me back.

Paul Giannamore:

Indeed we will.

Patrick Baldwin:

All right, man.

David Billingsly:

Great.

Paul Giannamore:

Thanks David.

Patrick Baldwin:

See y'all.

David Billingsly:

All right guys. All right. Have a great weekend. Bye.

Paul Giannamore:

Bye.

Patrick Baldwin:

Bye.

Patrick Baldwin:

This episode has been edited and mixed by Dylan Seals of HDaudiopost.com.

Franco Villanueva-Meyer:

I'm trying to make us some money and these guys are like talking, holding hands. I don't understand these bits.

Patrick Baldwin:

Hey.

Franco Villanueva-Meyer:

I'm confused. I came in early at the office to get some work done like this. I now understand what PB's trying to do. He's trying to get me on record. The cookies don't make it to Puerto Rico.

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