Rentokil CEO: ‘This industry is unglamorous but gets in your blood’

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0:46I'm a working-class kid, 16. I failed chemistry O-level. I ended up at ICI, Britain's biggest chemical company, for 20 years. ICI was being sued for about$4 billion. Wow. It was in relation to the Oklahoma City bombing. It was our fertiliser. It was our product. Global warming is actually good for rent-a-kill. It is. I mean, I hate to say it. Why don't you win the UK before you decide you want to win the world? When the shit hits the fan, you've got a choice. You can either step back, let someone else deal with whatever that problem is, or you can step forward and I would say walk towards the fan.

1:33I'm Richard Harpin and this is the Business Leader Podcast, where we look at the stories and strategies behind modern businesses. Today, my guest is Andy Ransom. He's stepping down as chief executive of Rent-A-Kill after just over 12 years leading the company. The global pest control business has grown impressively under his watch, so I wanted to find out what insights he can share. This is a really interesting time to speak to you, Andy, because you're just stepping down as the chief executive of Rent-A-Kill after 12 years. How are you feeling? That's a good question to start with, Richard. strange I suppose I mean as you say I've been I've been CEO for 12 years I've been at the company for 18 if I think about the question logically with my head I'm feeling great you know I'm really looking forward to the next chapter of my in my life lots of things I want to do quite excited about it but if I answer the question emotionally from my heart this is wow this is a real wrench I mean, I think of the business as this is my baby, but I'm leaving a brilliant business and a brilliant team.

2:42So I feel good about the place I'm leaving the company at. But I'd be lying if I didn't say I wasn't a little bit emotional about it. And did you know you're going to make it to the top job at Rent-A-Kill? Talk a little bit about your background and upbringing and your journey to getting that job. I'm a working class kid from a tiny little village in Hertfordshire. My dad was the village postman. My parents never owned a home, never owned a car. I went to some pretty average state schools. I always refer to the fact that at 16 I failed chemistry O-level. Why is that relevant? Because I ended up at ICI, Britain's biggest chemical company, for 20 years.

3:23I never told them that I was clueless on chemistry, but somehow I seemed to get through that. So I started out as a lawyer. that was where I would have expected to end up. So I certainly didn't think I was destined to head up a company and probably didn't think I was going to go commercial. But about 10 years into my career, there was quite a sort of, I guess, a breakthrough moment for me. I was largely doing M &A transactions. I was a deal lawyer for... Mergers and acquisitions. M &A, yeah, for most of it. And that started my sort of deal junkie career, I suppose. I always loved the transaction, loved the negotiation.

4:06But I was walking through the office one day and a fax came in. And you and I are both old enough to remember what a fax is. But this fax came through rolling up on the machine. And I picked it up and read it. And it was a lawsuit. And we were being sued. ICI was being sued for about$4 billion. Wow. It was in relation to the Oklahoma City bombing, which at the time was the largest terrorist incident in the United States. 168 people died in that bombing. And these two characters, McVeigh and Nichols, had used ammonium nitrate fertilizer to create a fertilizer bomb. Unfortunately for us, it was our fertilizer.

4:47It was our product. And Johnny Cochran, who just won the OJ Simpson defense, was now suing us for$4 billion. And I looked at this and something inside of me said, I want to be involved in this. So I took this into my boss and said, hey, look, just had this shocking news we're being sued for billions in the US. I would like to run that case. Anyway, fast forward, I finally was able to convince him. I did move the family to North America. We were out there for four years and I ran that case, obviously successfully, Otherwise, I wouldn't be telling you the story. But I ran that case. And it was a case, obviously, we should have won.

5:27And that was my big break, I suppose. And through that, I sort of ceased being just a pure commercial lawyer. And I became much more a commercial animal. I came back from the States and became the head of M &A. And one thing led to another. So, no, I suppose like most people in their careers, it's a series of unplanned events and moments that have culminated in me ending up as a CEO. But certainly, if you'd asked, you know, 10 year old me whether there was any chance of me running a company, goodness me, no. So let's wind the clock back, Andy. And Rentacule's been going for over 100 years. Yeah.

6:08And when you arrived there 12 years ago, you'd been in Rentacool already but got the top job. What were you thinking then and what was your plan to keep stuff the same or change? By the time I got the CEO job, I'd done five years, most of which as a divisional head. So I'd sort of worked my apprenticeship, if you like. I think I'd worked out what worked in Rentakill initial and what didn't work. And what were those things? Well, the model that we had at the time under my predecessor, he came from FMCG. So he was more of a centrist. He had this central top-down model, put the clever people in the centre, do all the innovation in the centre, put the pricing team in the centre and then push out.

7:05So it was a central push model. Being on the receiving end of the pushes from the corporate centre, I can tell you that was a model that didn't really work. And we're very much a local business. So the first thing I did was to change that whole mindset and said, no, no, we're not going to do central push anymore. We're going to do regional pull. So we basically asked the teams in the regions, what is it you need from the centre? And if we can't provide it, we'll either find it for you somewhere else or we'll get rid of the people in the centre. I challenged the organisation because there was a lot of internal strife at the time about the model.

7:44But we agreed as a team what we really wanted in the centre and what we needed locally. Which was a much smaller team then. Much smaller team. Reduced the headcount and got more resource into the businesses on the ground. Yeah, but it was also a mindset change as well. We had to be a one-team set-up. Before, there was a bit too much internal strife and inter-Nicene conflict between, you know... Them and us, head office. All of that, you know, a tortured matrix, as I always used to put it. And we had to come together as a team, and we did. And we used things like incentives, and, you know, winning together became part of the mantra.

8:23We had to move from, you know... Winning is, you know, you get in the habit of winning. You get in the habit of losing as well. And we'd been too long in the habit of losing. So we had to create that mindset change. We had to create the fact that we were now one team and we'd either all win together or we'd all lose together. Fortunately for all of us, we started winning. And that was the start of the journey. And what about the people changes at the top, the team that you inherited that reporting into you? Much change there? There was a bit of change. There was a bit of change. and I decided to rip the band-aid off.

9:03There were changes that I needed to make, not because they were bad people, none of them were bad people, but they were not people that I thought wanted to be on the journey or perhaps wanted to be on the journey with me. And it was important that we had a team that all wanted to be there. So I decided the changes that needed to be made, I'll do them on day one. I didn't miss about. Day one, these are the changes. And I think that was the right way to do it and got the respect to the organisation, also got the attention of the organisation that something's going to change here. Did you make many changes to the range of products and services that Rent-A-Kill was offering?

9:43Yeah, it's a good question. In the 20-year career I had at ICI, in the last few years I was working for a brilliant character called John McAdam. And I learned a lot from John. And in his period at ICI, he used a really simple tool. It was the old Boston Consulting Grid, the four-box grid, and you plot all of your businesses and at the bottom left. Nobody wants to be in the bottom left of any grid, but those are the businesses that you shouldn't be in. You should either sell them or close them or starve them of investment. Those are the dogs, are they? The dogs in the old terminology. And then the cash cows are the ones that you should run for cash than the ones that you should be investing in.

10:25And so we took that, I took that with the team and applied it to the Rent-A-Kill portfolio. And the Rent-A-Kill portfolio, we had some really interesting businesses that we shouldn't have been in. And so first call for me was to get us out of some of those businesses. And which were they? Well, we got out of facilities management, which it was a good business, but much lower margin. our business at Renterkill is route based these were site based businesses rather sadly we were also in a business called CityLink which was our parcel carrier business and that was actually the last thing I did before I became Chief Executive was to exit that business That's the one you sold for a pound I think wasn't it?

11:11That is the one, Richard you've got a good memory we sold for a pound we were never paid the pound by the way but it did have a really sad finish because that business ended up going bust. And, you know, it was a lesson, I think, to everyone that that was a business we should have got out a lot sooner than we actually did. We persevered with that business, stubbornly persevered, and that was wrong. We should have exited much, much sooner. Anything else that went? Yeah, we had a big laundry business, workwear business. and so you know uniforms overalls but also tablecloths and and bedroom living for hotels etc and that and that was a big big business that was a I think it was one of the best deals I can never remember working on we were actually able to put it into a joint venture with our big German competitor we retained a 30 % stake of that ran it together as a JB for two years and then we came out um they bought us out for the other for the other piece that was excellent great at a really good price on that one a fantastic price a fantastic price so doesn't it take courage though to say we're getting out of these businesses because for a lot of chief execs it's big is beautiful and want to take over the world i think um courage i suppose you've got to have the courage of your convictions.

12:39I'm not sure it's a particularly courageous act, but I think I've always felt in business, you can't be sentimental. You've got to be logical. You've got to be dispassionate. You've got to follow the numbers. But I was also taught early in my days as an M &A guy, if you find the best deal for the people working in that business, it's typically the best deal for the shareholders as well. So we were always very good sellers of businesses. We were not just trying to flog them for the best price. We were trying to get good outcomes. These are businesses that deserved a future and deserve someone that really wanted the businesses and would invest in them.

13:18And by definition, using our differential management matrix, these are businesses we were not going to invest in. So I'm not sure whether it's courageous or brave. But yeah, at the time, it left you feeling, well, this better work, because we're We're putting a lot of eggs into this basket. But it's two sides to this equation. Getting out of the businesses that you shouldn't be in is one thing. What are you going to do with the money and how are you going to make the businesses that you are in better, which is actually much more difficult, much more challenging. And talk about the real star, the one that was in the top right-hand corner of that four-box matrix.

13:59And that's pest control. And I'd been running the pest control division for about four years, by the time I was fortunate enough to be offered the CEO job. Pest is just this amazing industry. I mean, we run it well, but it's an amazing industry to start with. It's an industry that's been growing about 5 % a year for as long as I've known it. In the 18 years I've been there, it still grows. It's a necessary service. We need it. We used to call it the fourth emergency service. You've got a mouse running around the kitchen. You know, you don't say, well, let's leave it until the economy improves before we fix that problem.

14:36And we always say the rats don't read the Financial Times. You know, it's indifferent to the economic environment because you want it sorted. You want it sorted quickly. If you run a restaurant or food manufacture, food distribution, you have to have pest control by law. As the planet has warmed, that's increased the number of insect problems because the breeding cycle has shortened. So you've got some natural... So global warming is actually good for rent-to-kill. It is. I mean, I hate to say it, but it's good in the sense of it does speed up the cycle of breeding for many, many insects. So it's a wonderful industry, but it's a very local business.

15:20And I would say don't think of us as a multinational. We're a multi-local. So for us to be successful, we've got to be successful in every town and every city that we operate in. And that's where the actual magic happens. And it's so easy to miss this point. The real skill in Rentakill and doing what we've done is all in the people side of the business. This is not about product. It's not about brand. It's not about technology. All of those things are relevant. The absolute fundamental part of Rentakill, and indeed initial, it's sister business in hygiene. is this model that says if you can get happy, engaged, well-trained, high-quality individuals that do a brilliant job for your customers, then this is a business you can make real success with.

16:11If you can't get people out of bed in the morning because they don't want to come and work for you, or they'll come and work for you for six months and you lose them again and you have to go back to the market and keep replacing people, this is a very difficult business to run. So these are the pest technicians. How do you keep them happy? It's partly culture. I know that's soft and fluffy, but it is partly culture. We passionately believe that people that work in the company, we want them to be proud to work for the company. So what we stand for is protecting people and enhancing lives. And it's quite a sort of lofty ambition.

16:47So it starts with putting purpose behind what we do, making colleagues feel this is good. They're doing important work. It starts with culture. Training is incredibly important. People typically want to better themselves. Pest control technicians are skilled experts at what they do, so giving them good training, giving them career opportunities. How long does it take somebody to come in and learn to be a pest technician? Well, entry-level pest control, you could learn within three months. So I always say, look, the barriers to entry in the pest control industry are incredibly low. I mean, Richard, you could be a pest control technician in, let's say, two.

17:26That might be what I do next then. There you go. The barriers to entry are low. The barriers to excellence are actually very high. To be really good at what you do in pest control, you've got to be skilled. You've got to be trained. You've got to be on top of the technology that we use in the business. So three months to get you to entry level, level one technician, but several years to get you to the top of your skill. And then we have field biologists who are expert biologists who actually advise the solutions that we need. We've got a big, big innovation and technical team. We've got a big digital team that's using exciting stuff in AI and vocal recognition, cameras, all of that.

18:10This is all really interesting. Talk about sort of innovation and cameras that I think you now have in the mousetraps. Yeah, I suppose we worked out a few years ago that unless you're innovating, you're going to die. You're going to atrophy. You've got to innovate. You've got to keep pushing the boundaries. And a few years ago in the European Parliament, they passed some legislation that banned permanent baiting. So people won't have realised, but as they walk down the streets, if they see black plastic boxes outside a building perimeter, they typically they've got poison in them. And so the industry forever has used permanent baiting as the means by which you avoid having a pest problem in the first place.

18:59So you put poisons in the box, rat or mouse goes into the box, has a feed, goes off quietly and dies later. Well, the EU said, we don't want that. We don't like it from a sustainability point of view. We don't want all this chemical on the planet. And we don't want it from a secondary poisoning point of view. Non-target species getting into the box and eating the poison. So the EU put a ban on permanent baiting. So we had to respond to that quickly. And our response was technology. So we created boxes that had UV light and infrared light. So the mouse or the rat would go through the box, trigger the beam.

19:46That would open a wall in the baiting station, which would reveal the poison. So that was our entry-level technology. So as we've invested more and more in that, we said, OK, what's the next generation of technology? Well, the next generation is connecting that through the Internet. So when a mouse does go through, we know instantly. So not only do we know that this customer has got a problem, we know precisely where the problem is in their facility. OK, that's helpful. Now we've added camera technology. And on top of that, we've added AI technology. so we can actually see the mouse or the rat.

20:28And with AI recognition, and you may ask me why, what's the point, but with AI recognition, we can now tell you exactly which rat or mouse is visiting. So it's rat number 37 has visited 15 times in the last hour. So it's using the technology to say, look, what we're trying to do here is not solve existing pest infestations. We're trying to prevent them. So in our industry, if you get early intervention, if you see the problem coming before it's become a real crisis, you can make early intervention customer happy. So that's the that's and it's very cool technology. This is sort of constant evolution, isn't it?

21:08And and also coming up with a competitive edge versus those local players that have not got the technology that you've got. That's exactly right. And it's a broad church, the pest control industry. So it ranges anything from pest control in the home, residential pest control, which could be a wasp nest or a mouse running around the kitchen, all the way through to a very large, complex pharmaceutical facility where the pest control is, as you would imagine, very, very sophisticated and everything in between. So the technology, when we first invented it, was much more with the complex customer in mind.

21:48But as we've used it more and more, it's not quite yet ubiquitous, but it's getting there. So we're actually using that technology in a pizza restaurant or in a pub. But we're not yet using it much in the residential space. We are a little bit. So it's interesting to see how far we can push that technology. So this business is B2B and B2C. Yeah. And talk a little bit about the pricing, because I think you've got a subscription model. Yeah. And that's, you know, that's the great thing about the business model, if I'm honest. I mean, roughly 70 % of our revenue is under contract. And the other 30 % is one-time jobbing revenue, as we call it.

22:30And that's 70%. I would say, look, Pest is the original subscription model before it became trendy to have subscription models. And the thing about pest control is nobody really wants to spend money on pest control, but it is a necessary service and it's an important service. So provided you're meeting the customer's expectations, which ideally means you're keeping them pest free, when it comes to the annual renewal of the contract, because typically they do renew annually, most customers will say, yeah, OK, they do a good job. They've kept me pest free. They're going to keep paying. I'm going to renew, and okay, they've given me a price increase, but they do a great job.

23:11So that's the model. You've just got to keep customers delighted, keep them pest-free, respond quickly if they do have a pest problem, and all being well, they will renew each year, and all being well, you'll get a price increase each year. So that is the gift that keeps on giving. It is a beautiful model. And Rent-A-Kill is not a UK-only business. This is a global business that you're running, Andy. Just talk about how you internationalised it. We're in about 88 countries around the world. Two-thirds of the business is in the United States. A statistic I never tire of using, half of the world's pest control takes place in the USA.

23:52Wow. It's staggering. And the other half of the world's pest control industry is all the other countries added up together. So in the US, we've been on a journey to consolidate that market now for, I guess, 16 years. That's about building density. And in my industry, density is the absolute key. And so what we're trying to do is reduce the amount of time a technician spends in their vehicle and increase the amount of time they spend on customer premises solving customer issues. So we've done hundreds and hundreds of acquisitions in the United States, including obviously the very big acquisition of Terminex three years ago.

24:32But the primary raison d 'etre for those Bolton acquisitions is to build city density, to give you more opportunities, more customers. More jobs in a reduced travel time. That's exactly right. And if you get that right, it doesn't really matter what the mix of your customers is between residential or termite or commercial or SME or big ticket national account. It's the density of the route. Outside of the United States, we've got a mixture of mature businesses, the UK, continental Western Europe, South Africa, Australia, New Zealand, and then some really exciting new markets, obviously China, India, the Middle East, Latin America.

25:18And in those markets, what we've done is deliberately we identified what we call the cities of the future. So we've said, where are the cities big today and where are the cities that are going to be huge in 2050? And we worked back from 2050 and said, OK, if we could own, in inverted commas, those growth cities now. That have got more rats and mice and insects. And more growth, frankly, just more GDP activity because it's GDP activity and growth and urbanisation and buildings and all of that and restaurants that drives that growth. If we can get in on the ground floor. So our plan has been let's go buy the very best pest control business that already exists in a city.

26:07Make it rent or kill. Buy another one. Buy another one. Buy another one. And we've been on that journey now. probably now about 12 years or so. We've been doing, I'd say, about 40 to 50 deals a year, acquisitions a year. Typically, these are small family-run businesses that you're acquiring. Talk us through what you do with them once you've bought them. Are you keeping the brand name or not? How do you integrate them? Yeah, they are typically mom and pop, family owned, the vast majority. The trigger moment is often when the owners decide to retire. If they've got kids in the business, they'll stay running it.

26:53If they don't, that's a moment where they look to monetize their life's work. We like to position ourselves as the acquirer of choice. We're very respectful of what people have done and they've built over years. We're respectful of their teams. We're the company that says, look, we'll look after your people. We'll treat them well. We'll welcome them into the family, our family, the Renticle family. But we will have to make some changes. We will have to modernize. We'll typically put more technology in. We'll typically take some cost out in terms of back office and shared services. The brand is probably the most sensitive thing.

27:32In some cases, you look at that and say, we need to keep that brand for years. In other cases, you can say, OK, we can transition that over the next year or two. That has to be very brand specific. Depends on the equity in that brand. Depends on the scale of it. Depends whether it's been nurtured and invested in or whether it's withering a little bit. So we take those decisions on a case by case. But I would come back to where I think I can see mistakes being made by some of the private equity houses going into our industry. The absolute key is the people. Back to that again. So if you take the right approach and you respect what that company's built and what the team have done, and you don't come in with a big, arrogant, multinational type of attitude, you come in with a local, friendly, open approach that we've got as much to learn from you as you have from us, that tends to go well.

28:34And that's the key, I think, is looking after the people. Had you taken over a UK-only business and you were saying, I want to go global, how would you have gone about deciding which country you do first after the UK, do you think, for any entrepreneur that's listening to this and thinking, I've got global ambitions, I'm only in the UK today, where do I go first? Yeah, it's an interesting one because I've had that precise question asked of me quite a few times by entrepreneurs and the advice I typically give is, why don't you win the UK before you decide you want to win the world? Because all too often they haven't actually cracked the UK yet and it's a big market, right?

29:13So prove that you can win the UK, prove that you can get outsized growth in your home market. That's a really good starting point. So don't do international too early. Exactly. But when you have cracked the UK market, then... Well, then you've got to do your homework, right? You've got to look... Business is very complex at one level. At another level, it's very simple, right? You've got to look for growth. You've got to look for growth. Trying to internationalise and going into markets where there isn't that underlying growth is going to make it more difficult. You've got to decide if you've got growth markets, are you going to go organically, which means you're going to lose some money for quite some time until you can get to scale, or are you going to go through acquisition and then scale your organic growth on top of the acquisition?

30:04I've tried both. We've tried going into new markets. We had a program called Branch in a Box. Let's go into new cities around the world, pre-packed. We know exactly how to do it. That was really difficult. It wasn't branching a mousetrap, was it? No, no. But, yeah, same idea. I don't think we were terribly successful with that. I mean, yeah, they worked. But you were loss-making for two to three years. And you've got to really talk about courage. You've got to be really courageous that this thing, you know, if we build it, they will come. Whereas I think the better model is to identify someone that's already in the industry, assuming you're in an industry which is not completely unique.

30:47See if there's a good fit between what you're doing and what they're doing and maybe acquire them. But I'd go do your market research and work out where the growth opportunities are, work out what the competitive landscape looks like, and then work out whether you're going to go greenfield entry, organic growth, or whether you're going to go acquisition. Sounds like acquisition works better. And then are they going to buy 100 % of this business or the majority or what's your advice? You can't make a success if you're not in control. Minority, that'll just get you like headaches. And joint ventures typically don't work.

31:26By definition, almost every joint venture has unwound at some point. Some of them will last 100 years. But it's only a temporary structure of joint venture. Minority interests, you don't want to be involved, in my view, unless you've got a clear route to majority. Then I think it depends. Every deal is different. And I wouldn't say acquisition is the answer to all situations. And we all know, we've all read the data, right, that whatever two-thirds of all acquisitions destroy value. You've got to be really, really careful when you're doing acquisitions. It is a real skill to do acquisitions well.

32:04So, again, if you're an entrepreneur and you've made a great success of your business here in the United Kingdom and you want to scale and you want to go international, you've got to get great advice. You've got to get really, really good advice, really good due diligence capability, really good financial capability, good legal capability. And then you've got to get someone to run the business. So I wouldn't say it's an easy, and it's not always the right answer, but I think it is certainly for my sort of business, which is a services business. If you're a software business or a product business, you might have a different approach.

32:39I think it's a tried and tested route, but you've got to be well advised, you've got to be thorough. And I learned years and years ago, the very best deal you can ever do is to walk away from a bad deal. So you've got to have the, that's brave. Only by really good businesses. And then who do you put in to manage all these businesses in international territories? Again, it depends. If it's territory that we're not in and it's a good business, we typically hope that there's someone in that business who can take it on and run it. If it's a business country that we're already in, we typically have someone in the team.

33:18We like to move people around from time to time. I prefer to have local managers running local operations. I don't like the expat model so much, but sometimes the expat model is the fastest way and the most certain way. Put someone that's already proven for you that they're a good business person and they know how to run the company and put them in for two or three years and get them to hire or groom their successor. So, you know, horses for courses. Do you have many founders of businesses that you acquired that then made it to the top levels of your management team or not? We've had a few over the years.

33:56One of the things we do have, I'm doing a politician now, I'll answer the question I wish you'd asked me instead of the one you did ask me. What we do have is a really good network of founders that have sold their business to us that stay involved in the company. And they're typically our best referees when we're talking to someone else who might be selling a business to us. We say, well, don't listen to us. Can I have a word with Richard or whoever? He sold us his business five years ago and he'll tell you what the experience was like. So they're great ambassadors. And pest control is a funny industry.

34:31you sort of look at it and say, well, yeah, it can't be that. You know, it's not glamorous. It's not particularly, you know, sophisticated. It gets in your blood. And there is an awful lot of people that, you know, once they've done a few years in pest control, they spend their life in pest control. So people that we've bought businesses from actually want to stay involved and they want to, you know, continue to be relevant to their industry. So we've got a really nice network of former owners. We have got examples of people that have come through and gone all the way to very senior managements.

35:06But as I said, more often than not, the people that come and join us are actually selling to us because they've got to retirement age and they don't have kids in the business that they want to inherit. If I was looking at Rent-A-Kill in Sao Paulo versus Rent-A-Kill in St Albans, how similar are those two businesses? Well, the weather's a lot better in South Park. More insects then or more rodents? I would say that the similarities are more profound than the differences. And again, I come back to people that the secret source or the special source is the culture. So I think, I mean, I'm fortunate.

35:52I'm off to Latin America soon, actually, to visit the business. What strikes me when I go into a rent-to-kill business or initial business, they're just so similar. They feel the same. What percentage are the same if you're putting a number on that? Is it 95 %? It's a difficult one to measure, I suppose. I would say culturally, there's a fantastic overlap. I'd say 90 % plus. You would feel you were in the same company, the same metrics, the same measures, the same KPIs, the same behaviours, the same discussions, the same conversations. But the point about the business not being a multinational, being a multi-local, is you're competing against different competitors in Sao Paulo.

36:40You're solving different pest challenges than you would be in your St. Albans example. you know one branch might be heavy commercial another might be heavy residential i mean around the world we've got some really exotic pests that we have to deal with that we don't have to deal with another such as in the middle east we we've had businesses to collect the carcasses of camels from the desert we've had um diseased monkeys uh in in singapore and malaysia that need to be caught. We've had obviously spiders in Australia. We have snakes all over the, you know, the India in particular has got quite the challenge with some exotic snakes.

37:25So, I mean, those are more examples than the core business. But in terms of how they look and feel, very, very similar, I would say. But they've got to be local. You've got to have that relevance to the local market. And that's where the differences would be.

37:44Talk, Andy, about the big acquisition that you did in America in 2022 compared to the much smaller businesses that you'd bought historically. Yeah, as I mentioned a few minutes ago, the United States is half the world's pest control market. And whilst the company has been around for 100 years, we're a very ambitious company. We were doing 40 deals a year, probably 15 or 20 of those deals were in the United States. So strategically, we looked and said, well, look, we want to be number one, not just to get the badge. But that was important back to scale, back to density, back to margins, fundamentally back to growth.

38:27We wanted to be number one. To get to number one, we could do another 20 years of acquisitions at 15, 20 a year. or we could do one large transaction. We've already established that I'm a deal junkie. I like transactions. I've spent my entire life in the M &A space. And here we had the opportunity to do, if you like, a lifetime supply of acquisitions because we were buying effectively 350 city branches. And that's the way I thought about it. 350 businesses in one? In one go. So the opportunity presented itself that would take us the number one in the world. And there aren't that many British businesses that are number one in their industry globally.

39:16Number one in residential pest control, which is massive in the United States. Number one in termite pest control. Termites are these wonderful creatures that feed off cellulose. And in America, 90 % of all houses are built from wood. So, termite plus wood is a pretty toxic combination. So, this would take us to number one in termite control, a huge market. Number one in commercial, SME commercial, and number one in commercial national accounts. So, in one fell swoop, it made us number one in the world and number one in the world's biggest market, with an opportunity to harvest synergies from branch optimization and root optimization.

40:00So strategically, I would argue it was a, I won't say a no-brainer because it wasn't, but I think very compelling strategic case. But big ticket M &A is complex, is difficult, is challenging. And there's a reason why a lot of transactions fail. And in my view, transactions fail. These sorts of transactions fail for one of two reasons. either if you get a misalignment of cultures, back to that, back to people, or if you have poor execution. So, look, it's been a journey that we're on with that acquisition. Strategically, I would say it's a bullseye. Definitely the right decision to make. 100%. It's been a bit tough.

40:51What happens sort of post-acquisition? Yeah, look, I think, you know, the time to judge this acquisition will be in two or three years time and maybe in five, 10 and 20, 30 years time. I've zero doubt that this will go on to be a fantastically successful transaction. I'm not just saying that. I'm absolutely convinced it will. And we can already see tremendous benefits coming through. But they are network businesses. They are route based businesses. And there is, back to people again, there is a significant loyalty between the end user customer and their technician. These are very often, particularly on residential, these are personal relationships.

41:41These are people that they may have known for years that they trust sometimes with the keys to their house. They get invited to family weddings. There's this really wonderful connection between our customers and our frontline colleagues. But when you bring a branch network, two branch network businesses together, you have to break some of those relationships. Otherwise, you can't get the savings. So you have to say, well, Richard, I'm sorry, but Andy's been your technician for the last 10 years. Meet Sally. She's your new technician. And Sally will be a great technician. Andy was a great technician.

42:12But it's different and it's new. And so when we make those changes, sometimes some customers will say, OK, well, you know, that's a change that I didn't ask for. So I'm going to have a look around. I'm going to see if there's a different company, et cetera. So it's a it's a moment. Unfortunately, you know, it's omelets and, you know, cracking eggs. You can't achieve the density and the network effect without breaking the roots. But when you break the roots, sometimes you damage the customer relationship. So one of our challenges is how do you keep the customers happy? And we've certainly seen a drop off in customer retention in the branches where we've integrated.

42:53We've also seen a reduction in lead flow. And that's a bit more of a complex story as to why is that then and how does that work? That's much more about mastery of digital marketing. And we've had a few challenges as we've made those changes in our network. So I think we're well on the way through to the other side of that now. But I think culturally, it's a really good fit. And back to people yet again, if I look at the business in Terminex, when we bought it, frontline colleague retention was not good. It was, I think, in the 60s, 60%. Compared to yours at? Typically ours is 85. And over the last three years, we've improved and improved and improved.

43:39Every quarter, it's got better, every single quarter. And now there's not much of a gap between our North American business and the rest of the group. And it's the necessary but not sufficient condition for success. Because if you've got high colleague retention with colleagues delivering great service, good things happen in this business. And if you have low colleague retention, bad things happen because customers are getting a very uncertain service. They see a different technician every six months. So fixing that, which we fixed, I'd say is the first, you know, it's the corner piece in the jigsaw from that we build.

44:18So, yeah, like it's – business is never straightforward, is it? And, you know, I've never met a successful business person that hasn't had tough times, challenges, and I think it makes you a better – I think it makes you a better manager and it certainly gives you the experience the next time you see similar issues. But, yeah, it's going to be a great deal. It already is proving to be. But the real proof will come down the road. Was there any other example of a problem that you overcame during your term as chief exec? I think my life has been littered with moments of crisis. And I think I have to reflect on whether that's me or whether that's just a happenstance.

45:05I do think it gives you really great experience if you do have problems to overcome. And there's all sorts that I've had. I was rather crudely, when I talk to young managers in the company, I will say, look, when the shit hits the fan, you've got a choice. You can either step back, let someone else deal with whatever that problem is, or you can step forward. and I always say walk towards the fan. That's the advice I give young managers. Confront the brutal facts. Fight or flight and take it head on and because your career will be more interesting if you're dealing with complex, messy, ugly, difficult things, you'll learn more, you'll become a better manager.

45:53It won't always work out for you but that's okay. So for me, I don't know where it comes from but I've always had this fascination with things that didn't quite work or weren't working as they should do, get stuck in, go and get stuck in and own it and be that person that, you know, get the reputation for being the fixer. And I think that is what's defined my career. But what helped you to get over those? And was it some inherent resilience or...? I don't know. I mean, because I was a scaredy kid and I'm a fear of failure person. I absolutely card-carrying, imposter syndrome, fear of failure. And I'm driven, but I'm driven by the fear of failure.

46:40I'm driven by I don't want to screw up. I don't want to let people down. I don't want to let my team down. I don't want to look stupid. And I've pushed and pushed. I'm relentless when it comes to start and finishing. So I don't really know where that comes from. In terms of what equipped me for this amazing life that I've lived in the corporate world, and it has been just a privilege to have the roles that I've had, I'm lucky. I've got good judgment and good common sense. I think I got that from my parents. And I think common sense and judgment are very underrated in terms of business skills. I'm good at various things and I'm not very good at various things, but judgment is the one that I'd say if I had to pick something that I would say has marked me out for a decent career in senior management, I've got decent judgment.

47:31And a great management team that you brought in to run the businesses. How many direct reports do you need, do you have today in managing a global business? What are your tips to other chief execs on how they should manage their team and get the most out of them? Yeah, to the extent this has been a successful career and it's certainly had its moments, I absolutely attribute that to the team every time. And I'm not one who quotes business people that much, but Jack Welsh, and you'd remember Jack Welsh from GE days, when he was asked what's the key to being successful in business, He said words to the effect of surround yourself with people who are better than you and then get out of their way and let them do their jobs.

48:22And that's always stuck with me. So I like people. I like hanging out with people. I'm very sociable. I think I can pick talent. So I think I have done a decent job of forming teams, building teams. I have a lot of fun at work. I enjoy other people's company and I like them to want to enjoy being part of the business. So forming bonds, you know, bands of brothers and sisters who want to be there because it's tough. You know, business is a challenge and we work incredible hours and we have all sorts of stresses and challenges. And we've all got, you know, personal lives and issues going on in those.

49:07It's tough. So creating an environment where people feel supported, we use the word love a lot in my business, feel love and respect for each other, love and respect for our customers. That culture thing is really what I think is the key. Find good people. Don't try and do their jobs for them. Hold them to account. Change them if they have to be changed, but really try and nurture that team. The team has always got to be more important than the collection of the individuals that make up that team. So I think that's key. Sound advice. You've been listening to me, Richard Harpin, speaking to Andy Ransom of Rent-A-Kill for the Business Leader podcast.

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