How to Build Wealth and Exit the Rat Race with David Royce

0:01Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire, the only daily show interviewing the world's top entrepreneurs seven days a week. Today, we'll be breaking down how to build wealth and exit the rat race. To drop these value bombs, I brought David Royce in the EO Fire Studios. David built four of the fastest growing companies in his industry. His recent venture, Aptiv, grew to$500 million in just eight years. And today, we'll talk about standing out against the competition. We'll talk about what holds entrepreneurs back from becoming a larger business. And David's number one piece of advice for an entrepreneur who's looking to succeed in a new industry and oh, so much more.

0:38And a big thank you for sponsoring today's episode goes to David and our sponsors. Fire Nation, this is your year to get unstuck and to grow a successful business. Attend the world's highest rated business growth workshop taught personally by Clay Clark and now featuring football star Tim Tebow and President Trump's son, Eric Trump at thrivetimeshow.com slash EO fire. Again, request life-changing tickets today at thrivetimeshow.com slash EO Fire. Are you ready for the ultimate all-in-one platform for entrepreneurs, marketers, coaches, and agencies? Build funnels, automate follow-ups, manage clients, and even white label your own software.

1:15Say hello to our featured partner, High Level, and visit highlevelfire.com to start your free trial today. David, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with? I hear a lot of people say that someone was successful in business because they got into an industry early on. And this is typically referred to as like a first mover advantage. But I actually disagree with this idea in most instances. I'm a much bigger believer in like the second mover advantage. And the reason why is there's a lot of knowledge you can gain by learning from the mistakes of those early pioneers and then capitalizing on their business model, you know, once it's already developed.

2:03A professor in college once told me it's the pioneers who take all the arrows. And I'm not sure how politically correct that saying is today, but it just made a lot of sense to me knowing that, you know, there's so many venture backed companies that fail. And so I, when I entered my industry with 20 ,000 competitors, that actually excited me because I was 100 % confident working business model already existed that I can improve on, you know, that model further. And Fire Nation, we will be diving more into this because today we're talking about how to build wealth and exit the rat race. And man, if there's anything that I know about my listeners, they don't want to be in the rat race.

2:39Just everything about that is repugnant to them. So David, let's start with your origin story and how you got started in this entrepreneurial world. This was not something I was looking to get into. In fact, it was far from it. I was originally trying to find a way to pay my way through college. And I had a friend who recommended that during my summer break, I try a job selling pest control services door to door. He'd made about, I think it was$25 ,000 in three months of working that previous summer. And I thought, all right, cool. I'll go try that. That's great money for a college student. So I tried that and I was horrible at first.

3:16I didn't sell anything the entire first week. And the job was commissioned only. So I made nothing. but I bought some sales books. I worked really hard at it. And by the end of summer, I was the top sales rookie in that entire company. And then that next summer, I went to work for a startup pest control company as a sales manager. And my sales team sold about, it was probably about twice as much per representative as the rest of the company. And the owner was so impressed that he put me in charge of the entire sales program and was willing to give me a commission on every salesperson in the organization if I personally trained them.

3:49So I created a sales training manual. I created training videos, you know, in different types of examples in terms of how to, you know, do well at the program. And we helped, we basically grew that company from about$1.5 million to$10 million in just three summer breaks. Then when it came time to graduate college, I was planning to apply to investment banks in New York. And I wanted to use my sales skills and my leadership experience, you know, to do mergers and acquisitions. and I went to my boss and I told him, I need a really great letter of recommendation from you to wow these bankers for my interviews.

4:25And then he asked me this question I'd never thought of before. He said, why would you go work 80, a hundred hour weeks for someone else when you could start your own pest control company? And at that time, it just, it wasn't even on my radar. And quite honestly, it was, it was blue collar work and it felt less sophisticated for someone maybe graduating from college. However, I was making about$225 ,000 a summer, which is about half a million dollars in today's money. And I'd saved about$300 ,000 to go to MBA school someday. And I realized I could actually use that savings as startup capital instead.

5:00You know, it still took me some time to come around to the idea, but I ultimately decided to go for it and started my first company in Southern California. I mean, that's insane. $225 ,000 over a summer. I mean, I think almost everybody listening would take that for a year and you were a college student. So that's a really fascinating thing. And you went on to start four different companies in the same industry. Why? Yeah, that's a great question. So my first company was, it was a lot like working in a lab, discovering what worked and what didn't. It was a great place to just learn how to operate the business at a small steel and get my head around the financials.

5:41And we did so well that first year, I almost bankrupt the company because I had to pay my salespeople their commissions in advance of the revenue coming in. It was a really good problem to have, but that was the first time I had the inkling that I might need better capitalization to grow that fast. So after four years, I sold my first business and started my second company, EcoFirst. And that influx of capital, it not only provided me with the ability to grow faster, but it allowed me to avoid giving up equity to investors and ensure that I could maintain control of the business. So now for my second company, I took my four most loyal leaders with me and we opened up new locations in four different states, eventually opening up, I think nine states west of the Mississippi.

6:27And this is how I learned to run a regional company. And I learned the importance of having great leadership at each location. You know, I personally could no longer visit locations on a daily basis due to the, you know, the distance constraints. So I learned how important it is to choose diligent leaders who would religiously follow the company's best practices and make them even better. I spent a lot of time at my first company determining our best practices and creating a recipe for success. And Ecopurse was all about seeing if we could expand the business model at a multi-state level and deliver a similar quality.

7:01After another two years, I decided to sell again to acquire even more growth capital. And again, I carved my leadership team and Salesforce out of the deal, and I took them with me. And with that additional capital, I really wanted to reinvest in my team and build a fun company culture. So I started to study the big tech companies like Google and Facebook and Apple, who were recruiting some of the top talent in the country with all their amazing employee perks. And I wanted to take a more high-tech, white-collar approach to my blue-collar industry. So I bought a new modern headquarters with an NCAA basketball court, a break room with really cool amenities like a golf simulator, a movie room, ping-pong, foosball, pool tables, all that sort of thing.

7:43And we also started doing really cool annual trips with our managers and our top 10 % of performers to places like Hawaii and the Caribbean. And these trips were legendary at our company. We do everything from scuba dive to skydive to clip jumping, swimming with sharks, you name it. We also focused a lot those years on creating and emphasizing our core values to help us attract the right people and create a culture that felt more like family. Then another four years go by with Altera, and we'd expanded into a couple thousand cities. And I began to feel like I was no longer learning anything new, but rather just kind of replicating the same business model across the country.

8:25And I realized after spending almost a dozen years building the organization as CEO, it was time for me to replace myself. In addition, I felt selling Altera would allow me to finally take some chips off the table for my family. and it would provide our new organization Aptiv with plenty of capital to grow into every remaining city in the U.S. For the past decade, I'd actually been training my protege, Bess Pearson, to take over as CEO. And Bess had joined the organization. It was my second year in business. He'd been a top sales representative. He'd been a top sales manager. And I promoted him his fourth year to work with me as president to oversee our entire sales recruiting program.

9:04So when I sold Altera, I started out with Vest as CEO and I as the founder and chairman. And this allowed me to get out of the day-to-day and focus more on big picture items such as strategy and hiring key executives. Over the next, you know, eight years, the most important thing I'd say I learned was how to hire and work with seasoned executives who had already worked at billion-dollar companies. And, you know, it was those guys who were going to be able to help take us and our organization to the next level. So it was a hell of a ride. And in just eight years, we expanded into about 5 ,000 cities across three or four states.

9:41And we became the third largest residential pest control service in North America. Man, that does seem like one heck of a ride. And Fire Nation, we have a lot of really important questions to ask David when we get back from thanking our sponsors. Fire Nation, this is your year to get unstuck and to grow a successful business. Are you looking to learn the proven processes and success systems that have been used to create thousands of millionaire success stories. See thousands of success stories and testimonials from real people just like you who Clay Clark has mentored and coached into prosperity at thrivetimeshow.com slash EO fire.

10:13Clay's proven business coaching program is month to month and costs less money than hiring a minimum wage employee. Yes, it's month to month and costs less money than hiring a minimum wage employee. Schedule your free personal 13 point assessment with Clay Clark himself today at thrivetimeshow.com slash EO fire because Clay only takes on 160 clients and only allows 300 attendees to each business conference, you will interact with Clay directly. See thousands of real success stories and learn about attending the Thrive Time Show two-day in-person workshop featuring football star Tim Tebow and President Trump's son, Eric Trump, today at thrivetimeshow.com slash EO Fire.

10:48Become the next success story. Schedule a free consultation and request tickets to join football star Tim Tebow and President Trump's son, Eric Trump at Clay Clark's next business conference today at thrivetimeshow.com slash EO fire. Okay, let's talk about a platform that's completely changing how entrepreneurs are running their business. And they are also our featured partner, HighLevel. If you're an entrepreneur, coach, agency, or course creator looking to grow faster and smarter, HighLevel is the all-in-one platform that replaces your entire tech stack. Seriously, think ClickFunnels, Calendly, MailChimp, Kajabi, and even your CRM all rolled up into one powerful white label solution.

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12:00Seriously, every question that pops up, they will have your answer waiting. And if you visit my special partnership link, you'll get a free trial. So visit highlevelfire.com to start your free trial and see why thousands of businesses are switching. That's highlevelfire.com where marketing, sales, and automation finally come together. High level, join the revolution. So David, we're back. And I mean, all the success that you've had across those four different company starts and all the different things, like what exactly did you do to stand out? Share a couple of those competitive advantages that just allowed you to rise so quickly.

12:38First, our sales program was highly unique. Most people think of door-to-door sales as antiquated. and there were only a handful of companies experimenting with this marketing to make. We developed our sales program into a sales force of, gosh, it was more than 3 ,000 people with one of the most elite training programs in the country. And as a result, we could grow our business on average about seven to 10 times faster than our competition, you know, who typically dabbled in more traditional forms of marketing. The second thing we did to stand out was add additional service features, you know, that our competitors weren't willing to do in order to both help our sales and increase our customer retention.

13:19For example, when I got into the industry, most companies did about half the things we were doing. In fact, our service took twice as long, but we were thorough and our customers loved it. Having knocked in over 60 ,000 homeowners doors personally, I'd heard a lot of great feedback about what customers were looking for over the years. And so we implemented a lot of those ideas into the service. My personal view is that quality never goes out of style. And then the third thing we did was start investing in software development early on to improve our efficiencies and gamify the business. This idea was really revolutionary at the time for my low-tech blue-collar industry.

14:00And it helped us jump ahead of the competition in terms of things like sales productivity, operational efficiencies, and profitability. It also left a really strong impression on both our customers and our employees that we were truly the frontrunner of our industry. Fire Nation, I hope you're taking notes there because this is how you can start the process and get ahead, even in a crowded industry. And, you know, that's where I really want to jump back and just kind of talk about your number one piece of advice for any entrepreneur who's listening right now, who's looking to both find and then succeed in a new industry.

14:37I'm sure you've heard that luck is what happens when preparation meets opportunity. Oh, yeah. So my advice to wannabe entrepreneurs would be to learn how to identify a great business opportunity and then go get experience in that industry so you can be prepared to start something on your own. I think it's always best to learn an industry on someone else's dime whenever possible. And that experience is, I think it's critical to improve one's likelihood of success in business. And to prove my point, 80 % of new businesses fail in, say, five years. However, with franchise models, that actually flips.

15:15It's only about 10 % to 20 % of businesses fail because they already have a working business model in place, and most of those kinks are already worked out. In fact, they already have all their best practices outlined and training manuals. They know exactly which key metrics to measure, and they'll even provide the financial targets to be successful. I'd also counsel against things like just following your passion. I do think you have to be passionate, but only following your passion can actually even be dangerous. For example, I wasn't passionate about pest control when I got into it, but I worked really hard to get in the top 1 % of 1 % pest control sales, which it made me an expert at it.

15:55You know, a few skills I think can tilt the odds in one's favor, like real experience in the industry you're about to enter. And again, I think passion can even be dangerous, just blindly following your passions. For example, just because I love playing basketball, it doesn't mean I should go try it for the NBA, right? Ideally, you need to first discover your strengths and develop them so you can then leverage those into a competitive advantage where you can be the very best at what you do. Fire Nation, I know if you're listening to this show, you wanna be the best that you can be. And learning for people like David are gonna help us get there.

16:28Now, what would you say, David, is one thing that holds entrepreneurs back from becoming and or building a larger business? Well, this may not sound that complicated. A company's secret sauce, it's really just its recipe of best practices, its key metrics, and its people. So to scale from a single location into maybe say a national company, one has to take the time to put all their best practices into manuals and training programs to ensure the same principles that made the first location so successful can also be perpetuated across all its additional locations. Basically, you've got to nail it before you scale it.

17:07In fact, ironically enough, I learned this value of having good business practices back when I got a job at McDonald's at just 15 years old. They literally had a rule for everything, and it operated like a well-oiled machine. I think the reality is that most small business owners, they get so caught up in the day-to-day at their single location that they just simply don't have the time, you know, or the money to develop these tools to scale properly. Secondly, you've got to create engaging employee training programs. I think most companies' training programs need to be far more in-depth and entertaining.

17:44And this is true even at larger companies. For example, when I started my industry, there just was little sales training at all. And the mentality was, it was more like throwing a wet rag against a wall to see who would stick. In fact, I saw lots of people quit who probably could have been successful. And I remember thinking, gosh, what a waste of recruiting and what a horrible experience for these individuals who decided to quit. So over the years, I continually developed our sales training manual into hundreds of pages with photos and examples and training videos to help our people really maximize their potential.

18:20And what I learned is that if you're passionate about training, you're showing your people you truly care about their financial success and that they'll return the favor. In all my experience as an entrepreneur, nothing gets me more passionate than teaching others a skill set that can help them provide for themselves, their families, you know, in a meaningful way. David, you shared so many value bombs in this episode today. I mean, you walked us through the four different ways you were able to be successful in the same industry and number one piece of advice, what holds entrepreneurs back. Of all these things, what is your biggest takeaway?

18:54What is the one thing you want our listeners to walk away with from this conversation? So the number one thing that comes to mind is to look for ways to improve incrementally. You know, there's two types of innovation. There's disruptive innovation, and then there's incremental innovation. And when people think, when most people think of entrepreneurs, most tend to think of someone with an entirely new idea disrupting an industry like Elon Musk or Steve Jobs. However, the reality is that most innovation is incremental, meaning it's based on just the small improvements of an all existing practice in an industry.

19:32So for example, when I was a sales representative, I spoke to, you know, 60 ,000 homeowners and I heard a lot of feedback about what customers were looking for. And when I've heard someone, you know, some of these needs expressed enough times, then I decided, all right, I'm going to experiment by adding, you know, one feature into our service at just one location and see how it goes. And if things went well, we then test across multiple locations. And then if that worked, We'd roll out the additional service feature to every location. I feel like a great brand is a story that never stops unfolding.

20:08And if you don't believe it, think about this. The Fortune 500 list was created in 1955. Today, less than 10 % of the company's names that were originally on that list are still on it today. And this is why one of my favorite quotes is, if you aren't growing, you're dying. because it emphasizes that need for entrepreneurs to continually innovate in order to survive. So I suggest trying daily to have a goal to improve your business by just 1%. Just 1 % because ultimately that could lead to a 365 % increase over the course of a single year. And I also think innovation just makes work fun. You know, I found that humans are always happiest when we're striving after our true potential.

20:58100%. It's all about the progress, Fire Nation, about the journey to get there. And a lot of people who set too high of expectations on that actual mountain peak, that goal being hit, it's about the progress, not about the end. So let's talk, David, about how Fire Nation can connect with you. What is your call to action for our listeners today? I'm more just here to be helpful, just to provide advice. If somebody wants to reach out to me on LinkedIn. I'm happy to maybe reach back out and give some advice to people, but it's been a long journey. And after, you know, 20, 24 years of having been in the industry, I thought it'd be fun to give back at this stage.

21:37So happy to be of help. David, that means a lot, brother. So thank you for sharing your thoughts, your success, your, you know, just advice with entrepreneurs in general, and especially with Fire Nation here, because they know that we're the average of the five people that we spend the most time with and Fire Nation. You've been hanging out with DR and JLD today, so keep up that heat. And for links to everything we talked about, visit eofire.com. Type David in the search bar and the show notes page will just pop right up. David, thank you for sharing your truth, your knowledge, your value with Fire Nation.

22:08For that, we salute you and we'll catch you on the flip side. Thanks so much for the opportunity. Hey, Fire Nation, a huge thank you to our sponsors and David for sponsoring today's episode. And Fire Nation, are you ready to rock your very own podcast? Check out our free podcasting course where I will teach you how to create and launch your podcast for free. Freepodcastcourse.com. I'll catch you there or on the flip side. Fire Nation, this is your year to get unstuck and to grow a successful business. Attend the world's highest rated business growth workshop taught personally by Clay Clark and now featuring football star Tim Tebow and President Trump's son Eric Trump at thrivetimeshow.com slash EOfire.

22:46Again, request life-changing tickets today at thrivetimeshow.com slash EO Fire. Are you ready for the ultimate all-in-one platform for entrepreneurs, marketers, coaches, and agencies? Build funnels, automate follow-ups, manage clients, and even white-label your own software. Say hello to our featured partner, High Level, and visit highlevelfire.com to start your free trial today.

23:17Thank you.