David Royce: How to Turn a Boring Idea into a 9-Figure Business | Entrepreneurship | E392

19:09Hala Taha:Just because people got more competitive? Right. So the math made a lot of sense. It was thinking about it like March Madness for salespeople. So we turned our salespeople into athletes and were able to get a lot more sales.

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23:04Hala Taha:That's bitdefender.com slash profiting. So let's talk about rich entrepreneurs. Talk to us about this misconception that you get rich from tech. A lot of us see tech billionaires and that's who we want to be. We look up to Elon Musk. We look up to - Sam Altman. Sam Altman. Steve Jobs. Yeah. Everybody looks up to the tech guys. Yeah. Why do you think boring, unsexy businesses are so overlooked? Because it turns out some of the richest people in the world are running unsexy, boring businesses. That's right. So think about what gets headlines, right? If somebody says a pest control person made X amount of money, maybe it might make a headline because it seems unusual, but it's actually not.

23:52It's far more common for these traditional businesses. There was an article in the Wall Street Journal this past year. It was called The Stealthy Wealthy. And in the article, there's actually a professor out of Princeton that's labeled us the stealthy wealthy. And he says that 43 % of everybody in the top 0.1%, not just 1%, the top 0.1, meaning you make$2.3 million or more per year, are in these boring traditional industries. So almost half of everybody making a ton of money. But I just think in the news, it doesn't make headlines. It's not good clickbait. People aren't that interested. And it's also not new.

24:31It's not something that really resonates, I think, with the news.

24:35Hala Taha:That's incredible. So nearly half of the people who make over$2 million a year are running, owning, boring, unsexy businesses. Yeah. The individual that they highlighted in that article, I think he made some sort of a machine to rip up carpet. And the niche he found was schools. He's like, you know, in schools, almost every year, the carpets, turns out kids are really dirty and you got to rip up the carpets every year and replace them with new carpet. And he'd been doing it for, I think, 35 years. Like, who would have thought, right? These are problems that nobody thinks about. How can we get better at starting to spot these really common everyday problems that nobody thinks about?

25:16What an amazing time to be an entrepreneur, right? When I went to college, which dates me, the internet had blown up and then it blew up. We had a big recession in 2000. And so when I graduated in 2004, tech actually wasn't as sexy to want to go get into just because it was kind of at the low point after the crash. And so the way back then you got information about business was, you know, in theory to go to college, right. And take business classes. They had, they hold, they held the keys to that sort of knowledge, or maybe you go get an MBA. Uh, but today, I mean, you can listen to podcasts, right.

25:55You can go on all these different master classes or things all over the internet about how to be an entrepreneur, how to build a business. And now with AI, I mean, I do all of my research. I'm finally in my exploratory phase. I took a year off. I'm starting to explore other business ideas. Almost all my research is on ChatGPT, like figuring out the next thing. And I cannot believe how accurate it is. Every once in a while, it hallucinates. For the most part, incredible.

26:21Hala Taha:Yeah, I use it constantly. Actually, I've been starting to get worried because I'm like, can I even work without this anymore? I've been challenging myself. I was working on a course or like a webinar for a course earlier this week. And I found myself like using ChatGPT so much and like had to step back and be like, wait, I am an expert and ChatGPT is not going to know more than me about this topic. It can help me like refine it, make it stronger, more succinct or clearer. But in certain aspects, I feel like we're like really losing our ability to think. It's starting to like worry me a bit. Yeah, it's almost like the secret's no longer to know where to get the knowledge.

27:00It used to be you just have to know where to get it. Now it's pretty easy to find it. And so it's almost like, what is your horsepower? are, your drive, your ability to just stay focused and work and build and continue learning. Like those are really the, you know, the assets or the keys to be able to grow.

27:17Hala Taha:Yeah. Okay. So back on this topic of unsexy businesses, boring businesses, we were talking earlier about passion and you saying like, you know, you're not going to get rich following your passion. Right. In most instances, right? Sometimes you can get lucky. Yeah, most instances. So how do you stay motivated and passionate if you feel like you're in, like, for instance, like, I'm sure you're not obsessed with pest control. So what did you get obsessed with in your business? So for me, it was developing people. So when I first got into the industry, on the sales side, they had this, what I call a wet rag mentality.

27:56They'd throw a wet rag against the wall, you know, see who stuck. And then after that just was what it was. And I thought, that's a shame. How many people come out here and have a poor experience and then don't help the company to be able to sell and build the business? And then they go online and write bad reviews about their employee experience. I just thought there's a better way to do that. Even if you're self-interested, take care of your people. I really found it to be a responsibility. If you have a bad boss, they can actually take years of your life away. You can be three times more depressed.

28:30There's all these stats. So I got passionate about developing salespeople initially. And then it was about developing sales managers. And then it was about operations. And then it was about entrepreneurship. So it wasn't so much the widget that we were selling. It was more the game of business and being creative, using my mind to think, okay, how do you scale this? And how do you build systems and processes so that you can scale it across the country and help thousands of people, not just on the customer side, on the employee side.

28:58Hala Taha:See, I feel like that is like the big idea in this conversation. It's not about the industry. It's not about what you do. It's about how you do it and getting obsessed with actually being an entrepreneur and scaling a company. Like that's exciting in itself. And it doesn't really, as long as you're solving a problem, especially one that has a lot of market demand and you're getting rewarded because people want this problem. So you're making money. It like that in itself is a fun game, you know? There's two things that really do it for me. One is personal growth and learning. Two is service. And those are the two key things I got out of being an entrepreneur.

29:33I got to be really creative. And there was a point, maybe six, well, I mean, even from early on, but definitely at the six-year mark where I started to say, okay, I've built and sold multiple businesses. What can we do? I've got millions of dollars now. I can reinvest in the business. And I just started studying Silicon Valley. because by that point it was really coming back. And I went and toured Google and Meta and Zappos and all these different tech companies, Tesla, later on Tesla. And I just was like, okay, well, what can you do? What ideas can we take? Because the hardest talent to recruit back then were software developers.

30:10And they were building these amazing facilities. They had amazing company cultures. They were doing incredible retreats and all these things. And so I said, all right, why don't we do that with pest control? So we built this incredible headquarters with the NCAA basketball court. You know, we had a 30-person suite at the jazz arena. Everybody could go and watch the NBA together. We had retreats where we go all over the world. We started out in Hawaii and we do things like skydiving and, you know, hiking up the volcanoes to see the lava and swimming with sharks or whatever. You know, it's a lot of college kids.

30:46So we're doing lots of, you know, fun kind of wild things. And it was just, I wanted to create experiences. I want to create memories. I want it to be different than everybody else.

30:55Hala Taha:Yeah, and I'm sure it helped with recruitment because suddenly it was cool to be part of a pest control team. Yeah. If you walk in and like your office has, you know, ping pong, foosball, you know, a movie room, a golf simulator, a basketball court. It's like, wait, what is this? A lot of people thought we were a tech company. They're like, I had no idea this is pest control. It doesn't make any sense. And you're like, I know, it's kind of fun, huh? You mentioned a few times that you guys developed a software. So I'm curious, what kind of software was it? Like, where did it actually, did it help your customer?

31:25Hala Taha:Did it actually help you guys find customers? Like, what was this software? Just so people can start to think about, like, if they're in a boring industry or they want to disrupt a boring industry, what kind of ideas they could have? Yeah, started on the sales side. And we were like, okay, how can we make sure our training gets everybody? So we put sales training videos or sales training manual on there. So everybody had easy access to it. I actually recorded an audible version of it just for us in-house. So if sales reps were driving out to the area, they could listen to it. And then it was, okay, let's develop the sales tournaments.

31:55And then we started expanding into other things like determining which doors to knock on. We started to get, you can pull all this customer information. We actually can know, our salespeople didn't know, but internally we can know who's paying their bills, who's paying their mortgage. Do they have a pet? Do they have a family? And there were certain key factors that made our retention better. And so we're thinking, okay, well, how do we create a more profitable, better business that has more longevity? We took it all the way down to that level.

32:28Hala Taha:Oh, very cool. And then other things too, like in-house, we created a CRM. Actually, more recently, we just barely released that. But yeah, you're just constantly looking for different ways to improve the business in terms of being more profitable, in terms of increasing revenues, looking for efficiencies with routing. making our service pros' lives easier, going from place to place. They don't want to have to drive everywhere. If it saves them gas and time and then get home earlier at the end of the day, it's great. So basically, it wasn't even about any external customer services. It was actually to help your own team operate better and make better decisions.

33:06Yeah, it was more internally. And then in time, we started thinking about the customers too, where we said, okay, what are things that we can do that other companies aren't doing? So one of the ideas we had was creating a customer app. And then every time a service pro was at someone's home, whatever pests were there, they would take photos. A lot of times when we're at a home, the customers, they're not there. Two-thirds of the time, they're at work doing something else. And so sometimes there's the question of, did your technician come to our home? So by taking a photo, they know that they were there.

33:35And two, you kind of give them that value. You show them, here's where the pests are and what pests you're having. and then you can work as a team towards doing, you know, helping get rid of those pests. So like if someone has a bunch of firewood, you know, right up against their house that might attract spiders or rodents. And we can take a photo of it, show them, you know, the rodent droppings or, you know, the spider webs and be like, hey, can we take this and maybe move to the back, backyard, far back fence. So that way you don't have stuff trying to get into the house. Yeah. So it's a way to work together, a way to visually see that they're having problems.

34:09And I think that helps our customer retention too.

34:11Hala Taha:Yeah. And it probably makes you guys more human. They get to connect with somebody. They feel like you're going above and beyond. Absolutely. I love that. Okay, let's play a game. Let's play a game called Blue Collar Billion Dollar Business or Nah. Okay, so I'm going to say an industry. You can say if it's, you know, a billion dollar industry potential or no. And, you know, be honest. It could be that it's not a great business to be in. And then let us know at the end what industries I may have missed that you want us to make sure that we, that you want to make sure that we know about. Great. Okay.

34:47Hala Taha:Okay. So let's start with HVAC services, billion dollar business or nah. Yeah, definitely billion dollar business. You can already see this private equity has actually been rolling up HVAC for quite a long time. If you think about why, so one, going back to kind of what I said before, recurring revenue model, right? You can go out, like maybe you need your filters change, every quarter or whatever it is. And so they'll make sure that they come out and do that for HVAC. And then plumbing, if somebody's got a problem with their plumbing, it doesn't matter what recession you're in. They're going to call you immediately and they want you out there yesterday, right?

35:25It's like, get out here now.

35:27Hala Taha:Yeah, so HVAC, that's a good one. So do you recommend somebody buy an HVAC existing company or actually start one from scratch? If you could choose, would you say buy or start one from scratch? Yeah. So I was just at another podcast and the host said, hey, have you ever heard of Cody Sanchez? And I was like, I've never have. And he's like, you remind me a lot of her in terms of what you talk about. He's like, you should look her up. So I looked her up. I saw she had a book, Main Street Millionaire. I just read it. I was like, this is incredible. I think her ideas are, they're even better than mine in the sense that instead of starting from scratch, like what I did and grow organically, buy a business that already exists.

36:10It's been around for 10, 20, 30 years, right? Because they've done all that. They've mitigated almost all the risk. The only risk you have is just continuing to operate it. And if you buy a business, maybe with like a small business loan or whatever, yeah, you can continue. You already have like, it's kind of like training wheels. Like you've already got something to mitigate that risk, right? If you look at franchise models, they're so successful, right? Within five years, most businesses are out of business, like new startups, 80 % of them are gone. But in franchise models, 80 % still exist after five years.

36:47And the reason why? You have the blueprint, right? You already have the processes and the systems. You have the KPIs already listed in terms of what you need to track. You've got a financial forecast that says, here's approximately what you should be doing as you grow. So experience really mitigates your risk. And I'm a big fan of that. I just don't.

37:07Hala Taha:Don't you think there's something to like building something from the ground up and really know, like you knocked door to door for four years. And so you knew every customer problem you need, you knew every customer desire. Don't you feel like there's an advantage in that? There definitely is, but you can have the same advantage. So if you buy a business, you can get into that business and go learn all of it. And so I just think that's a much better way than starting from scratch. I already had experience. That was my competitive advantage. I knew how to build the business. And so it was more of like, okay, I just need the capital.

37:41I need to firm up all the processes and systems and then I'll scale it from there. But I knew what I was doing because of that. And so even if you buy another business, go into it with, hey, the next six months, I'm gonna go into this business. I'm going to learn every little detail about it so I understand it. And then you're like a master that already has the perfect blueprint to be able to scale. And you can always work to improve it. Just like my boss had given me 30 different things to work on. You can go in there and go, you can ask the former owner or the manager, whoever's there, what are you doing to, what are your pain points?

38:15How can we improve? If you had the time and you could just focus on improving the business, what would you do?

38:20Hala Taha:And I'm sure you could do customer surveys and all that good stuff to really, Really understand. Employee surveys. Okay. Landscaping and lawn care, billion dollar business or nah? I would say nah right now. The hard thing about lawn care, and you've seen this in multiples with lawn care. I'm not sure where it is today. Like I think 10 years ago, the multiples really came down in terms of what businesses were willing to pay for them. It's hard. One is the retention is not as good as like pest control. In fact, you've seen the larger public companies get rid of lawn care and take it out of their service or sell it off to somebody else.

38:56And then two, the hardest thing is although it's recurring, it's visual. It's really easy to see if there's a problem. And if your lawn looks brown or it's dying, they're going to keep calling you to come back. And eventually they can get frustrated with you. And it tends to be a harder thing to manage and do really well at.

39:14Hala Taha:Okay. Interesting. Junk removal? So different model, not recurring revenue per se, but I do think there's a model there. I just, I don't know it as well, but what I, you know, had junk removal people come out before, they're really good. Like they're like, take pictures of what you have and send it to us. And we'll tell you whether we'll come out and pick it up. And so if you think about it, the only charge they really have other than, you know, it's gas, you know, and an employee coming up, picking it up and taking it out. They're kind of just like a middleman in between, you know, selling off the item somewhere else.

39:49And so if it's basic, if they get it for free and they can sell it for, you know, a piece of furniture or whatever it is for a thousand bucks, two thousand bucks, it's not a bad business model.

39:57Hala Taha:Yeah. One of my previous clients was the CEO of 1-800-GOT-JUNK, Brian Scudamore. And he actually, he created a franchise model out of it. So he learned how to do it really well in a few cities and then started a franchise. It does really well. I don't think it's quite a billion dollars though. Okay. Pool maintenance.

40:21I would say nah in the sense that if you're trying to build a billion dollar company, I haven't seen as many groups rolling up pool services yet, but I have heard that pool margins have gotten a lot better. And so like if you have 20 or 30 % margins, that's a really great business model. And then it's recurring, right? Like they need you out there on a weekly basis. and it's either your pool company or another pool company, like they have to have somebody. So if you have some sort of a strategy, maybe even going door to door, could be a really great strategy, especially to set up really tight routes in the exact same neighborhood.

40:54Hala Taha:You keep saying rolling up. What do you mean by that for people who are kind of new to this world? Sure. So what you see with private equity groups that are buying lots of companies, you know, private equity groups have funds, they have investors invested into them. And what they'll do is you can buy small companies for a lower multiple. So for less money, let's say a company is$10 million just for the sake of simplicity. It's$10 million. Let's say you can buy it for$10 million. It has a 20 % profit margin. You're going to buy it for five times that profit margin. It's$10 million. bucks. What they can do is if they attach it to a big company, like let's say they have got a hundred million dollar company, suddenly that 10 million now becomes 20 million or 30 million of value because the bigger the company, the more value is there.

41:47So in my industry, the company that bought us was looking for a platform company and we were the third largest pest control company in the United States. We're in 34 different states, 5 ,000 cities. And so what they wanted was to be able to bolt on, they wanted our current business, but they also wanted to be able to bolt on other companies where they could buy companies for less. And simply by attaching it, it was, they call it accretive. Now it's worth a lot more money. And so it's a great business model, especially if you have private equity or other groups rolling up companies like that, bolting them on to a bigger platform company.

42:23You know, even if you're small, you can say, look, I want to take it. I want to go from the 5X multiple. I want to get to a 10X multiple. you know you may not get to the 15 because you might have to have 20 companies rolled up into one but it's incredible incredible way to make money arbitrage right yeah that makes a lot of

42:40Hala Taha:sense so basically these companies are bundling up smaller companies do the smaller companies like take the other company the bigger companies process and brand or does it typically yeah yeah typically if they get to a certain size and they're bigger i've seen this in pest control like say if you're doing 30, 40, 50 million a year, they'll say, Hey, let's just keep the brand. That's a good business. And the brand is worth something. Let's let them keep that. And we'll have that run on its own. But we'll also, they'll say, well, we'll take some of our best practices. We'll look at theirs. And maybe there's a few things they can improve.

43:14Let's improve this, this, this, right. And then they'll get what's called synergies where they'll say, we probably don't need their executives anymore. We'll just use the executives at the big company. These ones are going to retire. They probably had some equity in the business. They're going to move on. So there's a lot of ways to make additional money.

43:31Hala Taha:Yeah, I definitely want to talk to you about your exit and what happened and everything like that. But let's move on and talk about systems and processes. So where did your discipline come from in terms of you being obsessed with operational excellence and you wanting to systematize your processes? My obsession probably came from the poor experience I originally had in the industry and realizing the responsibility you have as a business owner to train your people really well and to build a really incredible culture from the very start. But if I go all the way back when I started work when I was 14 at a pizza parlor, I worked at a mom and pop pizza parlor.

44:13Got let go from there after a year, went to go work for McDonald's after that. super embarrassing or whatever, but it was the one place that would hire me. I'm 15 years old.

44:22Hala Taha:Yeah. Not embarrassing at 15. That was embarrassing for me. But what was amazing about it is I very quickly realized that was a better business model because they had a best practice for everything. They had training manuals, they had training videos, the managers, they had logs to make sure you were trained in each little thing. Whereas at the other place, it was just the owner, hey, so here's kind of how you flip a pizza and here you do this and that. And it just wasn't much there. So I always joke that if you want to know whether you have a scalable business, leave for 30 days and see if it's still there later on.

45:04And McDonald's for what it's worth, the food's not great, but it is a well-oiled machine. You can't build a multi-billion dollar company and not have incredible best practices.

45:13Hala Taha:Yeah. You go from, you know, one McDonald's in New Jersey to another in Cali, the chicken nugget is the same, right? And you get the same product no matter where it is. It's very, very, it's very, very consistent.

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48:52Hala Taha:That's shopify.com slash profiting. So you've got this nail it, then scale it framework. Talk to us about how you actually created these processes and rolled them out. Yeah. So most entrepreneurs are, you know, what I'll call mom and pops. Just like I say, you have a single location. What they struggle with is typically working in the business instead of on the business. They have a manager mentality instead of an operator mentality. and it's not the big things that hold us back. It's the little things and it's mistaking movement for achievement. So what I started to do is I said, okay, I'm going to organize my time into A's, B's and C's.

49:37A's are the most important, but they're the least urgent. And then B's are kind of somewhat important, somewhat urgent. And C's are, they are urgent, but they're the least important. So a C for example, would be like paying your bills. You have to do it, right? It's urgent. You don't want to be late. But is it important? Not really. It's not important that you do it as a business owner. You can hire somebody else to do it. You can set it up on auto pay. A B, hiring people. That is more important, right? And you probably had to do it for a long time until you got good at it. But can you hire and train somebody else to do it?

50:15Yeah, you can do that. uh and then a's are the most important thing that's going to move the needle in your business so it could be a new new product a new service line it could be increasing the profitability your business increasing efficiencies uh you know figuring out how to scale uh systems and creating systems and processes to scale better and the problem is is most people it's not urgent but they are the most important and they get put aside it's like well i'm too busy today i'm working on this. I had so-and-so not show up. I'm going to deal with this. And the key is to get your business to run on its own and then to take all your best practices and put them into training manuals, which I realized is not that fun.

50:57And I had somebody on another podcast, they asked me recently, they said, so you were really good at doing training manuals. I'm like, no, I wouldn't say I was good at it or that I was passionate about it, but I realized how valuable it was. And that's why I did it. And over time I got better and better at it and I was able to do it a lot quicker and you figure it out or everything's hard before it's easy. It gets easier.

51:19Hala Taha:Yeah. How did you think about hiring your executive level leadership? What were the things that you looked for and how did that go throughout your journey? Yeah. So initially, our executives, everybody was homegrown. In fact, our COO was my first employee, insanely hard worker, very creative, had worked in the industry for five or six years prior to coming over, started out as just a technician, but quickly moved into service management and became an operations manager, a regional manager, VP, and then COO. Same thing, our bookkeeper became our person in charge of finance. And this is how you do business when you're small and you're growing.

52:01We did get to a point around a couple hundred million where I said, okay, we've got to bring in professional executives that have seen business at this higher level of the game. And it was nobody's fault. It's like we had done it all and nothing but congratulations and kudos to all those that were able to get to that point. And we didn't lose them. We moved them into other positions, transitioned to other spots in the company. But it's really important at a certain point to bring in professionals. And the way we got there, it's one thing if you have maybe a CFO that is maybe 10 % to 15 % off on financials and you need 1 % to 5 % off to dial in and be better.

52:39It's another thing. If you're sitting around the executive table and you have now thousands of people working for you and you have a responsibility to be the very best and lead so this ship doesn't go under at some point, it's important to have the very best people at that table. And if it's quiet and you don't hear a lot of new ideas coming up, that's where I typically get scared. I believe you have to always be growing or you're dying in business and you have to keep that same entrepreneurial ethos. And if you're not having any new ideas come up to continue to fight the fight and think better and grow better, you got to make some sort of a change.

53:15And so that's how we initially got into that.

53:17Hala Taha:Yeah. Talk to us about that more deeply. Like I know it must've been really hard because I know for like with me, I've got a, you know, I have a podcast network and agency. I'm scaling it with homegrown executives who are basically my best friends because I spend so much time with them. I couldn't imagine, you know, becoming a hundred million dollar company and then just saying, Jason, Kate, sorry, you know, I'm going to bring some other C-suite executives in here. I'm sure they, it was hard to break the news to them. It was hard to have that transition. Like, how did you deal with it all? And, and what was it that they couldn't do that these other executives could?

54:03so um again like on the cfo side it's like we needed uh i'll give you an example so yeah sometimes it's hard for someone to replicate themselves or build out a team underneath them and um the individual was doing our finances amazing guy so with the company um it still oversees a large portion you know similar pay structure to what he had before um but just in a different area. He needed a CFO, you know, a proven CFO to come in and show him how to do it. How do you scale, you know, the right size of department, you know, and have other people, what can you give away and what do you need to keep on your own to continue doing?

54:41And so sometimes you just, and even though we had hired, like, for example, consultants and people to come in and train, sometimes it's just hard. It takes time and you need that upper level person to come in and show them how to do it. But yeah, it's really hard. My favorite days were probably the first 10 years when you know everybody, you know their kids' names, you know exactly what their desires are in the company. And we went to them too, to the majority of them and said, hey, here's what we need from you. Can you learn this? Can you do this? And at some point, it's hard to learn what you just simply haven't ever been around before.

55:17Hala Taha:So let's talk about your extreme level of success. So you built a company to$500 million. You bootstrapped it. So how much equity did you own in it? So I owned 100 % on the first. Like, well, let's see. On the first one, I had my boss invested into me and he owned, I think it was 30 % if I go back. Okay. And he invested 300 ,000 and I invested 300 ,000. And then on the next two, I owned those 100%. And then the last one, I actually ended up giving 25 % of the company away to all of our employees. Amazing. And I couldn't have done that unless I had kept all the equity previously. The beauty of what my model was, I could build up the company.

56:05And this is the reason I sold multiple companies. I would build it and I would sell off. I do what's called an asset deal. And so I would just sell the customer base with the technicians to a large strategic. it was Terminex who bought my first three companies. And then they give you a bunch of money and I would, I would keep my Salesforce, you know, my key operators in each location, my leaders, and I would go start a new company and just put a different logo on, on the brand. So it was very, very unique. And initially we couldn't go back in the same areas to compete. The second time I negotiated with them and said, you know, I need to be creative here.

56:40I'm our people. I can't just keep moving everybody around. If you want the business, then you gotta you know agree to these terms uh and and then it had you know tens of millions of dollars and then you know 100 million dollars or whatever uh on the third one to be able to keep reinvesting the business and so it was nice because if i had been owned by somebody else or had investors to be as generous with all of our employees it just wouldn't have happened and then i gave my ceo a massive portion of the company as well so yeah i mean i own about half the company or whatever by the time we sold.

57:13But it's really amazing to, when we sold, to give you an idea of how big we were, you know, 500 million in revenue per year. And, you know, based off those multiples we were talking before, you know, a company in my industry, we'll just go off revenue. A company in my industry usually sells from one to three times revenues, right? So, you know, it's usually dependent upon how big you are. And so I can easily say that we had nine digits that we gave away to all of our people, many of them making six and seven figures on the day we sold. So it was one of the coolest moments actually in my career is having people call me and said, just say, thank you.

57:53I just paid off my home. I just paid off my school loans, my kids' school loans, just bought my parents' car. Yeah, you can see it's almost emotional for me now.

58:05Hala Taha:That's amazing. It's amazing what you were able to do for your employees. And it's impressive to me that in some of your first companies, like you were able to hold on to so much equity. Like I know, like, for example, I'm building a company right now and like working through vesting agreements and going to be giving some of my key players some equity. But I do think we're different. So for example, like I'm creating so much content and being like an influencer creator, it's hard to be everything. Where that's kind of one of the benefits, I think, of having an unsexy, boring business is that the customers are there.

58:41Hala Taha:You don't need to keep drumming up so much marketing and advertising in order to get these customers. So you were able to kind of hold on to all your equity because... The recurring revenue model. Yeah. Right. There's always sales and you got to keep it scaling, but it definitely makes it easier. You just teared up because you were thinking back to all the employees that you were able to help when you sold your business because you were able to give some of that money back. You obviously have generated a lot of income, way more than the average person. And I think a lot of entrepreneurs tuning in right now are in a position where they're going to be earning a lot of money.

59:24Hala Taha:And, you know, with the good always comes the bad and things that we need to kind of consider and think about. So how did becoming this rich impact you as a person? Like what changed, good and bad? So what's funny is the greatest impact it had was the first time I sold, right? Because to sell for, say,$13 million, that's life-changing, right? When you're used to making whatever, even though I was doing well initially, I went for three and a half years where I almost made nothing. in the business. It was more of an equity play. We were growing so fast, I could not take a lot of money out of the business.

1:00:07And so, it was one of the reasons I sold. It was a way to be able to get cash, throw it into the next business, and grow even faster. Here's the thing I got to warn people about. If you think that having a bunch of money will solve every problem, you're wrong, right? You still have to deal with who you are. you still probably have the same whatever trauma may have caused you to want to get into entrepreneurship there. I had some financial trauma growing up. My mom told me we're almost probably going to lose the house the next month when I was young. And my dad was gone five days a week traveling.

1:00:41So my mom was basically a single mom during that time. And it really scared me. And I just now I've worked with therapists and understanding, okay, we're like really wanted financial control. And that's why this was so important and maybe one of the reasons it drove me. But I've noticed most entrepreneurs have a chip on their shoulder about something that drives them to keep working. I do think that entrepreneurship is addictive. I think there's massive dopamine hits on a daily basis. And I love working 16-hour days when that was possible. I think things to watch out for are if you start to have a family and deciding that you're going to put time into what's important.

1:01:25And it's not a bad thing. Your priorities start to shift, right? It's a good thing to be able to put time into your family. But I do have other friends where, you know, similar situation, they built big companies, but they're still working, right? Really, really hard, long days, don't see their kids. And it's like, they're okay. They're financially like, you can do it for a couple of reasons. One, maybe because of whatever trauma you still have, but two, because it's really fun.

1:01:52Hala Taha:Yeah. And you just have to make that decision. Okay. Am I going to be there? I never wanted to, uh, you know, look back someday and go shoot. I really agree. I should have spent more time with my kids. I only have such a long window. I grew up in a family where, um, the saying was, uh, no amount of success compensates for failure in the home. So I love that. Yeah. I know your dad was really inspirational to you growing up. He was. Bless his soul. He was. He was a really great father. So you have two kids. I do. And you were just talking about how you worked at McDonald's when you were 15, right?

1:02:33Hala Taha:You really earned your stripes. You knocked door to door for four years. you know what are your thoughts around teaching your kids how to be successful on their own or like what are your thoughts around how to handle having kids when you're really wealthy and instilling really good values and hard work in them i think it's really hard to give them the same experience i did i've joked with uh my wife maybe we need to fake a bankruptcy and go live in apartment while they're in high school. So they have some of that financial insecurity to want to go do something and gain control. But it's, you know, it's, it's funny, but then at the same time, it's like, it's not, but I don't, um, I don't wish upon them that experience, but for me, it was a gift.

1:03:19Right. And, uh, I do want them to work, you know, when they're 15 or whatever, as soon as they can go get a job, I want them to have something, even if it's just, you know, on Saturdays or, you know, a weekend thing or in the summertime, I think it's really healthy to learn how business operates, to get those communication skills, to see the systems and processes at a young age, and just be able to kind of connect the dots when you're younger. I'm also, I'm giving everything away when I die. So I'm telling my kids, like, you've got to go make it on your own. Everything? You're not going to give them a dime?

1:03:51I mean, maybe a dime, but But what I'm telling him is like, look, your biggest advantage is you have two parents. My wife was an attorney for a bunch of years. I've obviously been in entrepreneurship. You can ask us any question. You know, we're here to mentor you. And school, we'll take care of your school and get you through that. That's another advantage I didn't have all the way through. But yeah, I want them to have that desire to go do something. I have seen children, like trust funders that have, it's just been crippling to them.

1:04:22Hala Taha:Yeah. And they never, it's not just about having to go to work each day, but it's about finding passion in life and having purpose, you know, and being excited. Like, I really do believe that humans are here to work and that we derive a lot of value and community from that. Yeah. As you're saying that, the thing that popped in my mind when you said that, you know, humans, And, you know, we have the desire to work and having passion is so important for our mental health. You think about AI and taking so many jobs. Yeah. And what that might do to a lot of folks, especially younger folks, who won't have those entry-level jobs available to them.

1:05:02You know, the beautiful thing about blue-collar businesses is I think it's going to be really hard for AI to replace them. I can see it's funny because I see like the white collar jobs, like transactional lawyers or accountants or a lot of those jobs being not completely going away, but getting minimized. You just don't need as much help around them. But the blue collar, like you're going to have to create robots and they're going to have to be really, really good at what they do. We'll see if we can get to that point.

1:05:28Hala Taha:That's a really good point. Okay, let's go back to entrepreneurship for a bit. So one of the things, one of the principles that you have is to always be paranoid. And you're a proponent of 1 % improvements. Why is that so important to you? And how can we become more paranoid as entrepreneurs? Yeah, so only the paranoid survive is an old quote that's been around Silicon Valley for a long time. And the idea is that you're always trying to improve. If you're not growing, you're dying. If you think back to the Fortune 500, I think it was invented in 1955. And only 10 % of the companies that were originally on that list are still on it today.

1:06:08so to me that's a really great reminder that you've got to keep evolving and learning and growing the the most dangerous thing is when bigger companies get to a point where they're just like you know what we're the biggest we don't have to do things differently you know and they start to kind of rest on their laurels uh i joke that there's there's three phases of business there's a startup a scale up and a screw up i love that you know where you start to become a dinosaur. You know, startups probably that mom and pop phase, you're trying to dial in best practices. Once you have those, you scale up.

1:06:40But then at some point, you start to lose that entrepreneurial ethos. You start to lose the culture, people feel like a number. We don't have to be better, we're good enough. And then, you know, I think pride comes before the fall.

1:06:53Hala Taha:Yeah, we've got to make sure that we're not getting lazy in any way, especially like, you know, once you're making money, why do you feel like if you're not growing, you're dying? Like, couldn't you theoretically just stay the same? Think of it like an escalator. So the escalator is coming down and every competitor is trying to walk up it. And if you stop, you're now going backwards on the escalator and everybody else keeps walking up. So imagine if you said, oh, we don't need software back in the day. And like, it didn't exist before. We're too good. We've always done it this way. We'll be fine.

1:07:29Well, if a company has software and you don't, it's a real easy to go. So yeah, that company is going to die eventually. Same thing now with AI. If you don't adopt AI, you're going to be less profitable. Eventually, you're going to go away. Everybody will be used to working with AI. They won't even want to go work the old school way. Who wants to sit and go through Google and different websites trying to find answers to whatever the question is? It's just not even thinkable.

1:07:55Hala Taha:Yeah. So you've sold your company. Are you planning on starting another company ever again? Yeah. Yeah. Yeah, this last year, I said, I'm going to take a year off and I really want to be intentional. And so now I'm in that second year and I'm starting to explore different business ideas. And it's been all over the board. I didn't sell with the idea of I want to go do this specifically. It was more, I've got to a point where I'm not learning anymore myself. And we're in 5 ,000 cities. If I go scale another 5 ,000, it's going to be the same for me. Yeah. We also, we're getting so big that we're going to have to go public if we didn't find a buyer.

1:08:31And for me, like once you become public, then you've got to stay with business for a long period of time. You can't just sell all of your stock at once or, you know, it freaks out the market. And I thought, ah, do I really have another, you know, 10, 20 years in me to do this? And I'm like, you know what? I think I'm ready for a different challenge. So it was a way to be able to get all the money out at once, you know, help everybody have an incredible payday. And I felt like we had the right team in place to, to be able to carry the business forward. Yeah.

1:08:57Hala Taha:So how are you finding purpose now and what does legacy mean to you? Legacy, you know, my kids really are my biggest focus. I have a home that I'm working on, remodeling. It's just, it's funny how I still go to my office each day. You still go to the office each day? Yeah, I call it work, but it's like a lot of brainstorming new business ideas. Yeah. And just a lot of the other things that I do. I'm involved in an organization called YPO, which I'm a huge fan of. There's 38 ,000 members across the country, well, across the world. And there's about 100 people in our chapter. And it's broken up into all these different chapters.

1:09:40But you have all these other entrepreneurs. You have to do$15 million in revenue a year or more. And then you need to be in a CEO or chairman or whatever position. After a certain amount of time, then you can be in it forever. I think it's seven years, but it's such a great way to like find mentors. Uh, I think mentors, uh, are really helpful and they're, they're more like peer mentors that you can bounce ideas. It's almost like your personal board to ask questions. You can ask, you know, life or life questions about your family or whatever else, or you can ask business questions. Uh, it's a great way.

1:10:12Like I, I definitely make sure to mention that trying to find other people who are in your same situation is important. I always say, tell me who your friends are and I'll tell you where you'll be in five years. Right. And we're the average of our five closest friends. So super important to make sure you're surrounding yourself with other people that you can grow with over time.

1:10:32Hala Taha:Yeah. I feel like that's so important for entrepreneurs. I feel like it's important to have mentors. And you often have mentors at different stages. So like if I think back to my journey, I had a mentor that helped me start my company. I had a mentor that helped me grow my pod, who is like a huge podcaster who helped me grow my podcast. Right. And then you just have like different mentors for different seasons. And then I think these entrepreneurship groups you're talking about like YPO. There's a new group called Hampton that I'm in that a lot of people are in now. Sam Parr's group. It's called Hampton.

1:11:09My first millionaire.

1:11:10Hala Taha:Yeah, my first millionaire. Yeah, he's got an entrepreneurship group. So I feel like that's also really important because even if they're not in the same industry, it's often even better because it's like you can really tell them everything and not feel like they're your competitors and they're coming from different perspectives. And entrepreneurship is lonely. They'll give you ideas that you couldn't even have thought of or that nobody else in your industry has even thought of. And so that's what I love. It's this brand share of different ideas. Yeah. Okay. So I want to ask you some last questions about entrepreneurship.

1:11:44Hala Taha:What's the one mistake you hope that the next generation of entrepreneurs don't have to deal with? I would say be careful not to believe you are just that, like your identity. Be aware of having your identity completely wrapped in what you do. I realize in our country, we tend to think like that. I am an attorney or I am an entrepreneur or whatever. and if you go to a lot of other countries, they don't necessarily think like that. It's just, I am Dave and I go to work, but I also play and I do all these other things and I have hobbies and all that. And I think it is really fun and addictive as an entrepreneur to be all in all the time.

1:12:34But I think there's times and seasons. And that would be the one thing I'd say is just be aware not to be so wrapped up in it because it can hurt too when you have moments of failure. Your reputation, you feel like it's your reputation and it's probably more the company's reputation, especially if you're a really big company at that point. And it can sting a little bit more than it probably needs to.

1:12:56Hala Taha:What's the number one lesson you had to learn as a leader scaling such a big company? Always be growing, constantly be growing. I was paranoid in the sense that if I didn't feel like I was learning, so I read a couple of books every month because of that. It's like I have to be growing. I don't ever want to get to a point where I can't be the leader of the business or the chairman and founder where it's okay to have other people know more. But I have to reasonably be smart enough, educated enough, have enough leadership skills to be able to be in that position. I don't want to be there just because I founded it, right?

1:13:37Or because, you know, somebody else put me in that position.

1:13:41Hala Taha:I know that, you know, you mentioned throughout this interview, like how important the team has been to you. What are you looking for in an interview? Like what is the skill or the personality trait that you're really looking for when you're hiring for your companies? Yeah, I think every job description is going to be different in terms of what you're looking for. And I think it's actually less about the job description, like identify what all those key skills are and determine that the individual has them. But also, like, are they an A player? Like, how bad do they want this? You know, do they believe in all of your cultural values as well?

1:14:20Do they come from a field that rhymes with yours? It doesn't have to be the exact same industry, but is it something similar where it's like, yes, I can see that they're going to get it. And then the other thing too, is when they first come on, trust, but verify. We had a CFO come over when we originally hired and he had worked at a billion dollar tech company prior, but it was a public company. And one of the things we didn't realize is that he had dozens of people underneath him at the other. So he was more the face of the company. And when you hire executives from half a billion, billion, multi-billion dollar companies, you got to make sure that they're willing to get their hands dirty and really get in there, learn the business in depth as opposed to just hiring other people to do it.

1:15:06We got in trouble in that one. We started to notice our forecast. He created the forecast, but we noticed that we were missing our forecast over time. It was actually worse than the previous individual who we had doing it. We're going, what's going on? To make matters even worse though, we had just signed up to run a process to sell half the business. And it wasn't as bad in the beginning Then we got offers from six different companies ranging from a billion dollars to$1.6 billion. And we kept missing our forecasts on a larger scale. So much that over the next couple months as they were doing their due diligence to make a final offer and sign an LOI, all of them pulled out and just said, you know what?

1:15:50We want to see another year or two just to make sure you guys know what you're doing. It's like, no.

1:15:56Hala Taha:I'm sure you're paying this guy a million dollars a year too. We're paying a lot of money. Yeah. And so it was tough. It's just a really hard lesson. So one, trust, but verify. Two, never miss your numbers. If you're running a process to sell your business, the buyers hate it. And it also gives them leverage over you. And then third, you only sell a business half the time when you run a process. Those are about the odds. And so it's okay. You're going to learn so much running that process in terms of what the buyers want, that you can take that information back and go, okay, here's what we got to work on.

1:16:28And then, you know, take it to market another two or three years later and you'll be in a much better spot.

1:16:34Hala Taha:Yeah. When you think about selling businesses, I feel like there's two types of entrepreneurs. There's entrepreneurs that start a company and they never even think about selling. They don't design their business for selling. They're just, you know, they're not really thinking so long term. And then I feel like there's people who are creating companies to sell them. Yep. Right. And maybe there's in between. but how do you think about it and what are the key things that you need to do if you want to sell your business like how do you make sure that it's a sellable business that people will want i think it's always important in life to begin with the end in mind because you may not want to sell today or have no intentions of it but you never know is it five years 10 years 20 years for me it was around the 20 year mark when i just said you know what i think i'm i think i'm good or the company was a certain size, it's like, I've got to sell if I want certain things or it's going to shape, I'm going to have to be a public company or whatever else.

1:17:30You don't know when you stop learning, if that's the thing that really does it for you. So it's a good idea. And most companies, if they're going to get investors, they have to know what the end is going to look like because no one's going to invest into them just to see how it goes and if they're going to make a little bit of money along the way or whether they can or can't make it. Maybe you can get friends and family members to do that. But to really get like C, C, C money or a money, you've got to have a business model and show exactly where it's going and you have some good traction to be able to pull that off.

1:18:00Hala Taha:Yeah. What did selling look like for you? Like, what did it like? What were you just completely out of the business and you sold it? And yeah, I went, I went into the last one saying, you know, I'm ready to be out. My CEO is going to continue on. And I'm going to, you know, after 20 years pull out. And were you CEO of your company for a very long time and then transitioned that role? The first three. So yeah, the first three I was CEO. And I just, I feel like it was kind of the same. We had a couple thousand locations and I'm like, okay, scaling another thousand locations. I'm not going to learn anything new.

1:18:34And so I had my protege who he had been top sales rep, top sales manager. And then when he graduated college, I put him in charge of all of the recruiting for our company. And he was recruiting thousands of salespeople to come work for us. and he was the individual that I replaced myself with as CEO. And we would talk every week. We maintained our cultures and our processes systems. Initially, the first few years, he had to ask me for changes. He was more like a hired gun. And then over time, as I became more comfortable, I was able to allow him to have more flexibility and anything over, say, 0.1%, that decision he could make on his own.

1:19:14But if it was over a$500 ,000 decision, then we'd discuss it as a board. and work on it.

1:19:20Hala Taha:It's so cute. It's such like a full circle moment. It's like your manager, when you first started in pest control, kind of like brought you up and gave you responsibility and let you kind of work up the ladder. And then you did the same thing for somebody else. And then it allowed me to focus on the things I really enjoyed still. So the strategy, hiring key executives, and eventually working to find a buyer. Yeah. Well, I end my show with two questions that I ask all of my guests. The first one is, what is one actionable thing our young and profiters can do today to become more profitable tomorrow?

1:19:54Oh, that's a good one. I'll give you the easiest one I can think of. That's okay. Get on chat GPT and ask it questions. If you have something, the more detail you give it, obviously, the better. I mean, I don't have to tell a younger generation this. I guess I'm just so amazed with how much information you can give it, and it'll give you a very specific answer. The other day I was asking about if you have a certain amount of money, exactly how should you be invested? Why? And I started challenging it with my financial advisor's advice to the advice, you know, a chat. And we just kind of kept going back and forth, trying different things.

1:20:28And it's fascinating.

1:20:30Hala Taha:Yeah, I agree with that. And I think also explore the other apps out there. Like Claude is really awesome. Like there's so many great apps out there. And honestly, if you're not spending like most of your time toggling between AI and your own work, you're kind of behind at this point. I feel like if you're not really getting immersed in it and really learning how to prompt and use and experiment with tools and getting comfortable with it, I feel like you might be a little bit behind right now. Definitely. What would you say your secret to profiting in life is? You know, to me, I think there's two things that I've mentioned do it for me.

1:21:07One is personal growth. and learning. And then the second is service. Um, so I think you've got to figure out like, if you want to be happy in life, you know, I think we're happiest when we're striving for our true potential. And then two, like no one's ever going to regret giving their best, you know, and those are the things that made me happiest. So as an entrepreneur, if people are looking into being that, it's great. But I also think it's great for any other aspect. You want to be an athlete, you want to be a parent, you know, just constantly be evolving, constantly be learning, constantly be serving.

1:21:40Hala Taha:So true. David, thank you so much. Thank you for joining us on Young and Profiting Podcast. You bet. It's great to be here. Yeah, fam, I really enjoyed my conversation with David. He completely flipped the script on entrepreneurship by proving that real wealth isn't always just chasing sexy tech startups. It's also in mastering these boring, unsexy businesses that solve everyday problems. these recession-proof businesses where people need these problems solved no matter how the economy is doing. And I personally took away so many lessons today, but one that's top of mind for me is his philosophy on passion.

1:22:17Hala Taha:David said that following your passion is dangerous advice if you wanna get rich. Instead, develop a skillset first, build a competitive advantage, and then become obsessed with the game of entrepreneurship. So for example, David's passion was not pest control. It was actually developing people, building systems and scaling businesses. Now, here's what I want you to think about. If you're in the market to buy a business, think about a boring business, an unsexy business with bulletproof fundamentals. Look for recurring revenue models, high profit margins, and recession-resistant demand. Remember, 43 % of people earning over$2.3 million a year run traditional unsexy businesses.

1:22:57Hala Taha:Now, while the industry might be unsexy, making that much money is certainly really sexy. Next, I want you to think about whether you're buying a business or your existing business, how you can build more repeatable systems. David's competitive advantage, the thing that really separated him from other pest control companies, was training so effective that salespeople would sell 70 % more at his company than they would at their previous company. So take a play from his playbook and commit to documenting every best practice in manuals and videos. Think about the thing that you're strongest at and how you can scale that to your team with a repeatable process or SOP.

1:23:36Hala Taha:And here's another tip to test if you've got enough SOPs and best practices for your team. Try taking a vacation for 30 days like David suggested. If your business can't survive without you, you don't have a scalable business. You have a job. Finally, the last thing I want to point out is this concept of actually selling off assets in your business rather than your business itself. So this is something that I never really thought about or knew about before this conversation with David that was really eye-opening for me. So essentially, David had the same company that he basically sold off parts of it three times before he ultimately sold the whole company.

1:24:11Hala Taha:So he would just sell off his customers and keep his sales team and rebrand. And he just kept doing that, which is just so smart. It's such a great way to get cash. He knew he could just get more customers with his process. And he was just able to kind of sell off his customers each time and do these asset deals. That's what it's called, asset deals. So that just got my wheels turning in terms of my own business. Like what could I actually sell off as an asset that I feel like I could just grow right back? Or is there anything in my business that I could actually just sell off that isn't my entire business so I can get a cash infusion?

1:24:42Hala Taha:It got my wheels turning. I thought it would be worth reminding you guys to maybe get your wheels turning too. And I'll leave you with this, Yap Gang. The path to wealth isn't always glamorous. Stop chasing passion industries where you're competing against millions and start building something boring, potentially, that prints millions. A huge thanks for tuning into Young and Profiting as always. And today, before we go, I did want to shout out an amazing listener who dropped us a heartfelt review. Mike BH says, as a beginner podcast creator and host of the Do You Ever Wonder podcast, I'm astounded by the guests Hala brings to the party.

1:25:17Hala Taha:Add to that the value each episode provides and it's a must-listen channel. Five stars for sure. only because there's no option for 10. Well, thank you so much, Mike. Feedback like this keeps us inspired to bring you the very best guests and content possible. If you want to be like Mike and support the show, drop us a five-star written review on Apple, Spotify, CastBox, wherever you tune into the show. And also, we are leveling up our YouTube game. Make sure you subscribe to YouTube, Young and Profiting. All of our episodes are published on there. And all of our in-person episodes are on Spotify Video if you like Spotify Video.

1:25:49Hala Taha:Also, if you're on YouTube, make sure you drop us a comment. Let us know what resonated with you. I love to hear back from our listeners, reviews, YouTube comments. Those are some of the only ways I get to hear from you. And if you guys wanna get to know me better, you can follow me on LinkedIn at Halataha and I'm on Instagram at Yap with Hala. All right, guys, until next time, this is your host, Halataha, aka the Podcast Princess, signing off.