[00:00:00.000] - Brandon
Dude....
[00:00:01.190] - Chris
man, this show... I hesitate to be so effusive about this because we have... We just... All of our guests are really great. Oh, yeah. They're all great in their own way. But, man, I was so inspired by this episode with Mr.Mark Davis.
[00:00:19.550] - Brandon
I know. I was, too. And honestly, I had a buzz from RIA. It was fun hanging out with, obviously, these three Titans of the industry.
[00:00:28.800] - Chris
Did we record those same It was just within a day or so at most. Yeah.
[00:00:33.120] - Brandon
Yeah. And just a rad... It's honestly a pretty rad guy. I think we made some similar comments about Mark Springer when we interviewed him. It was just this. When people who are doing really phenomenal things in an industry, but have really driven this hard line of integrity and consistency, it's really powerful. I think on top of that, some different versions of humility. So Mark Davis and Mark Springer, not even the same person, but they both have their own version of expressing humility with the way they carry themselves. And you see it, you hear it. Mark doesn't talk numbers, but I think people will put two and two together as they're listening to his story that this guy is not dealing with small numbers.
[00:01:22.950] - Chris
A few large numbers do come out over the course of the conversation. And we should just give people, I don't know, a warning. I mean, a A lot of our audience, I think, listens to Joe Rogan, as does a quadrillion people. Yeah, exactly.
[00:01:37.550] - Brandon
And obviously, I don't think Rogan's ever had a podcast in the last five years for less than 90 minutes.
[00:01:45.330] - Chris
This is a longer episode, but I don't think anybody's going to complain about it or get tired. Mark is such a phenomenal storyteller. I want to share something, too. This is slightly unrelated, but I think it's something for people to watch I'm always, and I know you do this, too, and I think many people listening. When I see a leader that is projecting in a lot of ways, they're the person that I want to emulate. I'm watching everything, and I'm listening to everything they say. I'm watching how they talk. I'm watching how they don't talk. And I stepped into your office, I think, later that morning after we were recording, and I was like, man, we've had a few conversations with some really epic leaders that I really admire. And one of the things I've noticed is they're really careful with their language. And I don't even know necessarily at this point in their lives, in their careers, how careful they have to be. But I've noticed they don't curse as much as I do. And it's funny, I didn't use to... I've talked this before. I didn't use to curse as much as I do now being in the restoration industry and being in construction in the trades.
[00:03:00.640] - Chris
And again, I'm not making a values judgment here. I'm not saying, none of you should cuss. We shouldn't cuss.
[00:03:06.360] - Brandon
Oh, yeah, because fuck, we do all the time.
[00:03:10.220] - Chris
That's not where I'm coming from. But I think as a leader, I think maybe there is a leadership behavior there that I could grow in, which is really being considerate of the audience that I'm in front of. And I think as a leader, we don't ever want to burn a bridge with somebody in our audience. Sure. And I just get that vibe from... Now, behind the scenes, they may cuss like a sailor when they're with their buddies and they're sitting in the sauna with their friends and lighten up a stogie or whatever.
[00:03:42.410] - Brandon
Or in Mark's case, on the boat. On the boat, yeah.
[00:03:44.730] - Chris
Yeah, for his evening time out on the water. But I just... I don't know. Anyway, so that was just something that struck me is I've just been watching some leaders I really admire. And generally speaking, even Rogan. Yeah. I've just noticed. I mean, is he more cavalier with his comedian guests? Of course. But I've noticed some of the leaders and figures that I really admire are pretty judicious with their cursing. And pretty considerate of the audience and the subject matter and just the setting that they're in. And I just found myself admiring that, and it made me want to clean up my act a little bit.
[00:04:27.180] - Brandon
I'll hold you to that. I'm a bad battle buddy for that, if I'm honest.
[00:04:30.580] - Chris
If I recall correctly, that conversation, I ended up cursing three or four times over the course of that minute conversation. That is so funny. But anyhow, so this thing with Mark Davis, I mean, there's just so much to absorb, and it's fun, and it's inspiring. Those of you who are like growth-oriented achievers, I think there's just so much to align with and relate to. And at the same time, there's something to chase here in the sense of making your vision bigger and bigger and bigger. All of us continuing to learn to take bigger risks, to aim higher. And you and I have been talking this both from a personal growth perspective. It's like asking that question, what am I capable of?
[00:05:18.270] - Brandon
Clearly, he's done that.
[00:05:19.880] - Chris
Oh, my gosh. Over and over in his career. And yet, there is also just a real humility that I think comes through of... Anyway, that's probably enough stage setting.
[00:05:30.590] - Brandon
I think so. Yeah. Let's jump in, guys. It's a longer show. Buckle up. The storytelling is great. It's so fun. The journeys are awesome. And Mark Davis is an absolute stand-up man. Tons of respect for him. So let's get into it.
[00:05:45.740] - Chris
Wow. How many of you have listened to the Head, Heart, and Boots podcast? I can't tell you that react, how much that means to us. Welcome back to the Head, Heart, and Boots podcast. I'm Chris.
[00:05:57.030] - Brandon
And I'm Brandon. Join us as we wrestle with what it takes to transform ourselves and the businesses we lead. This new camera angle makes my arms look smaller than yours.
[00:06:06.680] - Chris
I'm noticing that and I really appreciate it. I thought you did that on purpose.
[00:06:09.990] - Brandon
No, I don't. I didn't, and I am not happy with it. Hey, all, thanks so much for listening to the show. Hey, if you're not already following, please do so and ultimately share, right? Like the coolest currency that we have in terms of supporting this is share it with a friend, share it with somebody, a colleague, a peer, one of your downline team members. Let them be to take advantage of the information you're already leveraging in your favor. And finally, guys, if you hear a show that really moves you, that really moves the needle, will you please leave us a review? Those five-star reviews help us a ton.
[00:06:43.930] - Chris
Right on. And listen, if you're trying to grow your business, you might consider checking out Floodlight's business opportunity audit. It's free. We provided it no charge. It's actually what we use to assess new clients as they come in. It's a 110 point assessment for your business. And we've now decided to give access to the general public for it. So go and take our business opportunity audit at floodlightgrp. Com. It's going to help you identify the biggest gaps and opportunities in your business right now. And at the end, it'll assign you a health score to let you know exactly where your business stands right now. So go check it out, floodlightgrp. Com/audit, and take the Boa. It's a great way to get a pulse on your business.
[00:07:24.440] - Brandon
Well, my friend, thank you so much for taking time out of your schedule to hang out with us. We've been really Looking forward to getting some time with you, Mark. So thanks again, man.
[00:07:33.040] - Mark
My pleasure.
[00:07:33.830] - Brandon
Okay, so we're going to go right to the top tier in terms of, okay, we got to hear a little bit more about your story. For those of us that are listening that came to RIA, they have a sense of your background and what it is that you've been building and have built. But give us the 30 second recap of where did you come from and what is it that you currently have your arms wrapped around? Because it is no small deal for sure.
[00:07:59.420] - Mark
Well, I'm I'm happy to do that. I wish I could do it in 30 seconds. I won't be able to do that in 30 seconds. But yes, so I entered the restoration industry in 1996, and I was 27, and I did not know of the industry before then. My parents, I grew up in Nebraska. We never had a water damage at our house. So a lot of people find out about the industry from different ways. Oh, yeah. Well, the way I found out about the industry, my best friend at the time, he and I wanted to own our own company. We didn't have a lot of money. We We wanted it to be in Denver. And so we were literally searching for a small a mom and pop company in a service business. And we wanted that because it would be relatively low capital expenditure. And that's all we really knew. We wanted to be our own boss, and we wanted to be in Denver, and we wanted to be in the service business. So as we started looking, very serendipitously, we went to a business broker who had the listing for a company called Rocky Mountain Catastrophe.
[00:08:56.910] - Mark
It was a private listing. I didn't even know until that point that there were actual brokers for businesses. I thought brokers were either stock brokers or real estate brokers. Well, it's a big business of business brokers selling all-size, different businesses. We found a guy who was selling small family, mom and pop businesses. And he had a company called Rocky Mount Catastrophe. That's how it happened. We looked at this company, and it was for sale for much more than we could afford. The business was 13 years old. It was doing top-line revenue of 3.6 million. It was making 350,000 of net income to the bottom line. And the purchase price that they were asking for, the asking price was 1.2 million. And we each had about 100 grand. So we came up with this plan after we did a little research that we wanted to try to buy this company. So my business partner at that time, his name is Jeff Johnson. He is today the CEO of First On-Site. So go back, though, 28 years ago, Jeff and I were just Mark and Jeff, and we'd like to own our own business. And so we put together a plan.
[00:09:59.930] - Mark
We We borrowed most of the money. We came up with a million, too. And a few weeks before the closing, the business broker who liked us, called us and said he had bad news, and that is that a full cash offer just came in. We had negotiated to have the sellers carry 400,000 of the million, too, and we would pay them over a five-year period. This cash offer had just come in, and the broker said, I'm so sorry, but I have to recommend to them the cash offer. And Jeff and I said, please give us a meeting with them at 10:00 tomorrow morning. We'd like to adjust our offer. We put a PowerPoint together. We meet with him at 10:00 in the morning, we change our offer from 1.2, which was their asking price, and we changed it to 1.7. And the way we were coming to come up with that extra 500 grand is they had already agreed to seller carry 400,000 of the million, too. So we increased the seller carry number to 900,000. And we really said, if you believe in us, then you'll make an extra 500,000. And if you don't, you'll get your business back because we will have defaulted and you will have gotten 800,000, and you get your business back.
[00:10:59.500] - Mark
But if you bet on us, you can get a million seven, which is 500 more than you were asking for. And they just needed five minutes. They left the room for less than five minutes, and they came back in and said, You guys have a deal. So Jeff and I then bought this company doing 3.6 million in Denver called Rocky Mount Catastrophe. And it didn't take us long to figure out that we didn't want to just do local residential mitigation and rebuild, even though that's what the company did and did well. Because in 1996, in the fall, Hurricane Fran at Wilmington, North Carolina. In this business, as we all use, identify periods of time or milestones in restoration based on storms, whether it be Andrew, 92, Northridge, earthquake, 94, Katrina, 2005. Everyone thinks about the industry in those terms, is after we did go out to Wilmington, North Carolina, in 1996, and we had some success there, we were like, okay, so we are no longer just going to be Rocky Mount Catastrophe. We're going to be a national company. And that was the plan. And so literally, this is... And again, we were undercapitalized.
[00:12:03.990] - Mark
So remember, we had to borrow most of the money to even buy the company for a million seven. And now we tripled revenue in the first year. We did 11.1. And what happens when you grow is it takes working capital, which means it eats cash. And even though I have a business degree, you do not think about those things relating to that until you're in it. And then when you're in it, you're like, okay, why are we growing? And it shows we're making money on the P&L, and we have no cash. And so running out of cash is a very serious issue for any growing small company, right? You just can't run out of cash. You heard me say it in the podcast at the RA conference, you can never miss the payroll. Now, you can skip your payroll. Jeff and I, we cut our salaries down during this growth phase down to $50,000, and we had to be extremely frugal, but we were investing back in the business. So in the second year, we did 25 million up from 11. And in the third year, we did 35 million. Now, there were a number of things that happened, obviously, to get there because we did a couple of acquisitions, but they were bootstrap acquisitions, which means we took over the balance sheet.
[00:13:10.590] - Mark
We didn't pay a lot. The second company we bought was the Rosebrooke's company, Spectrum It was out in Oregon. Then we bought a company in New York City called TRC, which was the remnants of the restoration company that MF Bank used to own. So all of a sudden, we're Coast to Coast. But then at that time, the number one commercial drying company was Munters, worldwide. They were headquartered, I think, in Sweden, and they were the biggest in the US as well. And Jeff and I were able to somehow convince the top eight people from Munters, including the managing director, their national sales manager, the national operations director, three sales salespeople and a project manager, to all come to leave Munters on one day and all come to work for us in May of 1998.
[00:13:51.830] - Brandon
Okay, how did that happen? What in the world transpired to create that movement at one time?
[00:13:59.320] - Mark
So in '96, Seven, when the Red River flooded in North Dakota, we loaded up the trucks again. We went to Grand Forks, and we were bidding on commercial jobs, and we were getting them. And the people from Muntres came to our job trailer and wanted to meet with us because we weren't using Muntres' equipment. We were using a Greco equipment. So we were signing the big Central High School and some of these other big jobs. And then we would put Rocky Mountain Catastrophe banners on top of these big desiccants or these generators. And so Muntres, being the market leader, wanted to know who is this company. So they knocked on the job trailer. They came in and they introduced themselves. And this amazing dynamic woman named Theresa Williams wanted to meet who's this Rocky Mountain Catastrophe. So we met with her, and we liked her. So where she's thinking she wanted our business, we were immediately thinking, Oh, no, we want her on our team. So we started recruiting her. And that process was really very interesting because she showed interest, but she's a very loyal person. And she said, I can't leave my But I think she wanted to come with us.
[00:15:03.120] - Mark
So then she sent us an email and said, Okay, I will actually accept your offer with the following conditions. And the condition said, You will hire my boss. You will hire these other six people. And in essence, you'll get all eight of us. And here's their salaries that are needed. And here's the... And so we're undercapitalized, we're levered, okay, but we're growing, and we're technically making money. So our bank was amazing. It was called Citywide Financial out of Aurora, Colorado. We went to the bank, we showed them the spreadsheet of these eight people and how much they were going to cost. But we explained to them that we had this relationship with a Greco where we could rent the AGRECO equipment, so we wouldn't need anything for capital expenditure. And a Greco agreed to rent it to us exclusively, and no one else in the industry for at least one year to see how this experiment would work if we hired the Muntres people. So the Muntres people knew we would have equipment because we'd have access to the entire AGRECO fleet on an exclusive basis in the entire industry. I couldn't believe we pulled that off, but it was only for one year.
[00:16:01.760] - Mark
So it was to see how it worked. Well, how did it work? So we hired all those people in May of '98. And then September 30th of 1998, Hurricane George's hit Puerto Rico first and then hit Biloxi, Mississippi. We end up with eight 8 to $10 million of drying, commercial drying business from the hurricane. You guys know what that means. And although it did tie up cash, our bank increased our line based on the receivables, so we were able to receive or finance that growth. And then the collections came in. And again, one of those things where we were rolling the dice, but it was moving, and we were making money along the way. And yet, even though we were strapped for cash, and I can't emphasize that enough, is that although the thrill and the adrenaline of victory is great, we're growing people, we're making a difference, we're building a brand, and we're doing great work. But every other Thursday, Jeff and I would look at our bank balance, and we're like, we can't afford to to pay our CEO, and we used a CEO for another three or four days afloat on the payroll, where we would write a check on a Wednesday for Friday's payroll, knowing full well that we didn't have enough money in that account, and hoping that by Monday or Tuesday, when it actually cleared the bank with the CEO, that we actually had, and we never missed a payroll.
[00:17:18.170] - Mark
You could heard me say that before, but those were very challenging times. And so everybody always thinks, well, growth is good. And yes, I'm a big believer of growth, because if you're not growing, you're shrinking. People don't stay static. You don't stay the same. It doesn't happen. So you're either growing or you're shrinking. So you got to pick which one. And I've always been a high growth individual. It's what motivates me. But being properly capitalized. And I remember our bank asking us to slow down. And I remember Jeff and I thinking, can you imagine slowing down? What does that mean, slow down? That means don't go after that next million dollar job or don't go to the store. You can't turn it off. You either are going or you're not. And so we loved our bank. Al Crize was The guy's the name of the President of the bank, I remember from 20 years ago, he gave us our shot. They kept increasing our line of credit. And yet here we were in the third year doing 36 million.
[00:18:10.900] - Brandon
Unbelievable.
[00:18:11.970] - Mark
Our profit was what our revenue was three years before. And during that three-year time, we made enough of a splash that our name got shortlisted to this group of Germans and Europeans that owned the Belfort brand in Europe. Because Belfort started in Switzerland, in Gysikon, Switzerland, in 1989, and a German company called Franz Haniel, the company, had renamed it Belfort. And they came up with this name Belfort, the Germans did, because they researched. They wanted a global name because they were going to start buying up companies in Europe. They started in 1989. They started at Switzerland. They went to Austria, Germany, the UK, France, Belgium. And every time they bought a company, they changed its name to Belfort. And they wanted to pick a name that didn't offend, didn't mean like something rude in another language. So that's where the Belfort name came from. It was created by an ad agency that the family business, Frantz Aynal, had hired to come up with that name. And the logo, if you look at that Belfort logo, it's the symbol of all the fire alarms in Western Germany. So it's got two things in a circle in the middle.
[00:19:19.050] - Mark
So a lot of people look at that, don't know what it is. It's because that's what the fire alarms look like.
[00:19:23.280] - Brandon
Oh, that's mild. Yeah, I had no idea.
[00:19:24.970] - Mark
In Western Europe. Yeah. Okay. So anyway, our name got shortlisted along with Some Titans of the industry at that time, like BMS Cat, ATI. They were emerging, but they were on the list, and a company called Inrecon, which we ended up buying later out of Michigan. Anyway, somehow, after they met with the five companies and interviewed them for who they were going to try to propose some merger acquisition with to be the platform for growth in North America, they selected us. So our first meeting was Easter weekend of 1999, so right around April first, I guess. And we closed on September ninth. So on 9/9 of '99, that's what it was, and they picked that date, but on 9/9 of '99 at 09:00 AM is when Mark Davis and Jeff Johnson started Belfort in North America.
[00:20:16.720] - Brandon
Unbelievable. So just to recap this, because not very many people understand it, you literally were the anchor point for Belfort becoming an American brand, basically.
[00:20:27.270] - Mark
This is true.
[00:20:29.160] - Brandon
Unbelievable. Wow.
[00:20:30.320] - Mark
And we were young. At that point, I was 30, and Jeff was 31.
[00:20:35.030] - Brandon
Wow.
[00:20:35.850] - Mark
And we didn't even know about the industry three and a half years before that.
[00:20:39.090] - Brandon
So I'll pause you there, Mark, because this is unbelievable. If we don't give this enough air time, everybody's going to just hear all this ridiculousness and not know what to do with it. So, okay, there was some really profound things you guys were doing as very young men as you're spending this operation up. So you have a business degree, but where was the rest of this instinct coming from? Was this just naturally in you guys?
[00:21:03.280] - Chris
Or what did you do from '21 to '27? What was the origin story before?
[00:21:07.900] - Mark
Okay. Yes. A lot of credit goes there. And also the trust that Jeff and I had together and also understanding each other's skills, our strengths, and maybe our challenges. So Jeff is originally from Grand Junction, Colorado. He went to University of Colorado in Boulder, and he joined a fraternity called Sigma Phi Epsilon. I didn't know Jeff. He was a state champion tennis player. He won doubles in the state of Colorado. Well, I grew up in a small farm town in Nebraska called Nebraska City, population 7,000, 16 kids in my high school graduating class, 14 boys and 2 girls. We had to play eight-man football because the school in We had 60 people in the high school. It was an amazing experience. And I go to University of Nebraska, and I joined the same fraternity that Jeff had joined. And I didn't know Jeff at the time, but these were parallel paths where we did not intersect. So I'm a year younger than Jeff. So Jeff graduated from Colorado in 1989 from University Colorado, and he accepted a job working for Sigma Phi Epsilon headquarters as a leadership consultant in Richmond, Virginia. Well, I was hired to do that same job one year later when I graduated from University of Nebraska.
[00:22:13.920] - Mark
So when I moved to Virginia at age 22, right after I graduated to start my job, Jeff Johnson was my boss. He was 23, I was 22, and he had just graduated the year before. So we worked together for a year, and then I got promoted to be his peer, and then he was in in charge of chapter administration. We had 280 chapters. So think of it like a franchise system, pretty much. 280 locations, yet we were the headquarters. So Jeff was in charge of chapter administration. I was in charge of expansion. So over the next two years, those next two years, I started 22 CIEP chapters, would add them to Jeff's administration, and where Jeff would then be managing 300 instead of 208. So in essence, what we were doing, we were working... You may think, Okay, well, a fraternity. Look, a fraternity is a small, not not-for-profit business. It is. It has members, it has dues, it has alumni, it has a budget, it has risk management, it has to pay insurance. It is a small business. And so a lot of people will give fraternies a hard time. Oh, People pay for their friends.
[00:23:16.220] - Mark
I never looked at that way. I looked at it as a social organization that if you get into leadership, you learn how to run a small business at age 19, at age 20, at age 21. So Jeff and I had been officers in our individual chapters at both Colorado and Nebraska. But then we went to go work for the fraternity. We went through an extensive training program to learn how to help a small business survive, first of all, survive, and then, secondly, grow, and then, third, thrive. Little did we know that that incubation period of working for the paternity, which was really about belief in young men and developing young men and helping an organization, would transfer into understanding how to run an organization because neither one of us had owned a company. So when we bought Rocky Mount Catastrophe, there were 33 employees of Rocky Mount Catastrophe, and we closed on April 15th of 1996. And in the warehouse in Arvada, Colorado, 5762 Lamar Street, I'll never forget it, Jeff and Angela Steem act that owned Rocky Mount Catastrophe, they introduced us to the 33 team members. Here's Mark, and here's Jeff, your new owners.
[00:24:21.540] - Mark
I'm 27. Jeff's 28. We're smiling. We're not the youngest people in the room, but there was only a couple of people in the room younger than us. These are all people. They're like, Oh, okay, you guys are running the business. And the very first thing we did, we got on a plane a week later and went to San Juan, Puerto Rico, because Rocky Mount Catastrophe was a member of DKI, and DKI was having its annual convention at the L San Juan in San Juan, Puerto Rico. So Jeff and I are green. We just bought the business. We just borrowed all this money. Then we fly to Puerto Rico, and then our eyes were opened up. We're like, Oh, we met some amazing people. Okay, that's where I first met Phil Rosebrook, senior and junior. Okay, that's where I met Denny Jensen from Utah Disaster Cleanup, Frank Heedon from North Carolina. Jeff and Angela had been members for a long time, Rusty Amarante. And so Our eyes were opened up saying, okay, we didn't just buy a small company in a suburb of Denver. Yes, we did. Look at this industry and look at it. Wow.
[00:25:24.310] - Mark
And so it was such a beautiful thing because that happened in our first week. That it opened up our eyes to what this possibility could be. Now, of course, because we're undercapitalized, we didn't think we're going to start buying up other DKI members, but that did happen. One year later, we bought the Rosebrooke's business, okay? And we ended up buying Simon Katz out of Indianapolis. And Rusty Amrante had already sold to Inrecon before we bought Inrecon. So we ended up buying six DKI members over the course of that period. But again, to answer your question, that's how Jeff and I got the training, and it was through through working for the fraternity.
[00:26:02.060] - Brandon
It's interesting how there are these common stories. We have some relationships that are associated with the college pro-painter system and then the pro-painter system. And And some of these franchise models or groups where they're bringing young people in and really giving them full-blown responsibilities to build and grow and educate teams and do all these things, it's absolutely profound what many them are capable of moving on and doing because they just start putting in reps when they're so young. Like one of our counterparts that we have a relationship with. Same thing. He's in his 20s, and this guy's building a $50 million franchise, cutting his teeth on every scar, every hard thing that you go through. And the guy's done all of this before he even hits 30 years old. It's just so profound. And your guys, the story clearly is this similar pattern of exposure, putting in reps when you're young.
[00:27:01.150] - Mark
You don't know what you don't know. So there's not a lot of fear because you're not smart enough to know that you should be afraid of that. That's great. I can tell you, we were not smart enough to know that if we sold a If we had a bunch of jobs, we'd run out of cash. We were not smart enough to know that, okay? Now, we figured that out relatively quickly.
[00:27:21.170] - Brandon
Yeah. Sometimes what you don't know is the fuel you need to do some scary crap, right?
[00:27:26.240] - Mark
The old saying, ignorance is bliss.
[00:27:29.230] - Brandon
Yeah.
[00:27:29.860] - Mark
There's so much truth to that, okay? And that's why they say, look, I'm always with my children. I'm like, you got to get good grades. You got to get good grades. But one of the things that I've known, and I heard this when I was younger, is, and this is just a generalization, and I'd certainly not say this to my kids when I'm talking about their academic performance. But one of the analogies I've heard is that, well, be nice to the C students because the C students are going to own the companies. They're going to hire the B students to run them. And then the B students are going to hire the A students to be the accountants and the lawyers. And part of why those A students become the accountants and the lawyers is because they're so smart, they know not to take risks. But the C student is like, Oh, risk, no problem. Let me dive into that. Because they're not thinking about what could happen negatively. So anyway, it's not always true, but I can tell you right now, I definitely was not the A student, and I hire those A students to work with me.
[00:28:28.840] - Brandon
Yeah, a lot of the C students aren't getting analysis paralysis in most cases, are they? Right. They're just moving.
[00:28:36.420] - Chris
That's funny.
[00:28:37.520] - Brandon
That's epic.
[00:28:38.850] - Chris
Liftify. Com/bloodlight. You've heard Brandon and I talk a bunch of times about the importance of Google reviews. Maybe even heard our episode with Zack Garrett, the CEO and founder. Recency, consistency, two of the most important things when it comes to maximizing the benefit from your Google reviews. Why not use an outside partner? Liftify is targeting 20 to 25 % conversion, right? So if you do a thousand jobs a year, you ought to be adding right now, 200 to 250 reviews a year, every single year. If you're not doing that, you owe it to yourself to get a free demo from liftify. Com. See their system, see how it works, see how affordable it is. I promise you, you'll thank us. Liftify.
[00:29:21.990] - Brandon
Com/bloodlight. We spend a lot of money and a lot of attention trying to get that first call. And one of the things that we do once it happens is Sometimes we leave it to chance, right? Who picks up the phone? How do they respond? How do they walk that client into a relationship with us? Well, one of the benefits of partnering with a team like answerforce. Com is we can systemize that, we can make it more consistent. We can also have backup for when our teams need that help, right? Somebody goes on vacation, somebody's out sick. We get a storm search, we get cat event. All sorts of things can have an impact on how we receive that client. But the most important thing is they need to know that they've chosen the right team. And so answerforce. Com can support you, be a bolt on partner to help you consistently produce an awesome onboarding experience with that first call with your client. So answerforce. Com/bloodlife. That's great.
[00:30:15.650] - Chris
Cnr magazine, we're friends with all the folks at CNR. Michelle and her team, they do a great job of keeping their ear to the ground and reporting all the important information from our industry. You want to stay up on all the M&A activity and what the latest best practices are for selling your company successfully. She's got that. Great articles about all the four quadrants of our business. Cnr is constantly pushing out great material and leveraging great writers and subject matter experts in our industry. It is the water-cooler of our industry. So if you're not subscribed, go to cnrmagazine. Com. Follow them on LinkedIn. Follow Michelle on LinkedIn. Trust us, if you're trying to stay on top of everything happening in the industry, your best destination is cnrmagazine. Com.
[00:30:59.070] - Brandon
You guys, many How many of you have already heard about Actionable Insights and the training and the technical expertise that they bring to the industry? But how many of you are already leveraging the Actionable Insights profile for Xactimate? That's the game changer. It's a Essentially an AI tool that's walking alongside of you as you write your estimate, bringing things to your attention that should be added, that could be considered. All of them items that increase our profitability, increase the effectiveness and the consistency of scope, and it can do anything from helping a new team member assimilate some estimating best practices. And it also helps the grizzled vets add back that few % that we've just forgot over time. So Actionable Insights, get insights go to www. Beckhoff. Com/e-e. Org/ floodlight, and take a look at what the Actionable Insights Xactimate profile could be doing for you and your team.
[00:31:55.940] - Chris
This story so far, I mean, I'm just sitting here with my mouth wide open, just listening to you recount this origin story. And while you've described a lot of challenging factors, you spent a fair bit of time talking about your relationship with your bank and how you were able to problem-solve through a lot of these growth modes with a great relationship with your banker, and you guys were performing to the vision that you were giving the banker. And so it all came together. It would seem to, I think, a lot of our stores is listening to this. Like, holy cow, this is just a beautiful dream A dream, a dream that unfolded for you. But what did the hardship look like? I mean, you talked about payroll, Wednesday to Friday. We don't know. But what were some of the skills that you guys had to learn as you went in order to keep the dream alive? I was talking with Jerry at ATI. He's the head of their National Disaster Team. We were just talking about how these cat situations, you can sell yourself into bankruptcy. And you see this all the time in our industry is people go out, a couple of million dollars with work in a storm, and they have trouble collecting on it.
[00:33:03.250] - Chris
They overspend. They don't know how to manage the operation. And what could have been Ferraris and Lambos ends up, they go back to work for somebody else because they can't put it all together. So what did that learning process look like internally? And what did you have to begin understanding to keep that operation growing and solvent?
[00:33:25.320] - Mark
I'm going to go back to the fraternity because even though the bank was accommodating, and I mean, every six months, this was not like once a year we'd go back to the bank. We were having to go back every six months because of the trajectory that we were growing. And the fact that they would give us receivables financing, and I can remember it like it was yesterday, is that we had a 70 %. We went 70, 50, 30. But the minute we signed a signed contract, let's say it was for 100,000, then we'd get 70 % of that signed contract in AR eligibility. And then after 30 days, it would go to 50. And then after 60, from doing 60, 90, it would go to like 30. And so literally, we kept continuing to sell our way into liquidity, because the minute we'd sign 100,000, we'd get 70. Okay, access to 70. And now that works only till you stop selling, because it can happen. So say you have a slow month or you have a slow quarter. And then all of a sudden, you're like, whoa, we don't have any new cash. That's fully levered.
[00:34:21.510] - Mark
And so at one stage, and this is at about, I'd say, about a year and a half, maybe two years. So we're talking 1990. Yeah, it was Probably early '98, late '97, the bank said, yes, we will do this if you guys put some more money in, okay, during one of these requests. Because we didn't have any more money left, we had to go back to the Friends and Family program that we had done to even help raise the money in the first place, where we had borrowed money. I remember Jeff's parents loaned us money, my parents loaned us some money, and then we went to our fraternity brothers. And even though Jeff and I were not the ones that were from wealthy families, we had fraternity brothers, wealthy And we asked some of our friends for loans and some other people that we'd met when we worked in the fraternity, and we literally did a second round of private financing to be able to keep the machine going, which then the bank was happy to see, because once they saw that we were able to put some more money in, and it was technically off balance sheet debt.
[00:35:19.140] - Mark
So Jeff and I took that debt on personally, and then we put it into the business, knowing that on a waterfall, we're not getting that money back until the end, because debt always gets their money back first, obviously. So we We did. We had to go back to the... And what skills did that take? First of all, humility, right? But at the same time that you've got to have the humility, you have to have the confidence because no one is going to want to loan you money out of just because they like you, okay? And especially if you're going to personal relationship So, yeah, people may want to help you, but okay, what is the business case? And what is the timeline? What is the interest rate? What is your trajectory? And all those things. And so Jeff and I got good at forecasting, at planning what we thought we could do, when we thought we could pay people back, that thing. And so, yeah, those skillsets that took, first of all, yes, humility, but confidence in their plan, and then the ability to articulate and sell that vision to friends and family so that they would believe in us to be able to help us with our capital position.
[00:36:17.430] - Mark
So I don't think that's uncommon for a lot of small businesses where they'll run out of cash and they'll go to... And a lot of them don't end, like you were mentioning, don't necessarily end favorably. The good news is ours did work out, but you don't know that when When you're in that position, you believe it. You have to believe it, otherwise you can't go ask for it. But one of my other favorite sayings is, Isn't it ironic that the harder you work, the luckier you get? And we were definitely working hard. But in this business, as you know, tailwinds can be helpful. And we certainly had the benefit of tailwinds with some timely storms. Like I mentioned, Hurricane George's really was this huge boost for us at that time in '98. And then again in '99, And then in '99 is when the phone rang and we ended up selling to Belfort. And had we not sold to Franz Haniel, technically, and started Belfort in North America, I can honestly say I'm not sure what would have happened to us eventually because we were so undercapitalized at that time. The good news is we don't have to wonder because that happened, but we could have never dreamed, oh, some German multinational is going to call us literally on our phone and ask if they can come to Denver.
[00:37:27.350] - Mark
And then six months later, we sell 80 % of our company. Then we start the Belfour brand, and then they give us $400 million of capital to go roll up and consolidate the industry over a five-year period.
[00:37:39.660] - Brandon
Unbelievable. I mean, so you were really riding the lightning right up until that moment. So to a certain extent, I don't want to underplay this, but to a certain extent, the shit could have still blown up in your face had that moment not come.
[00:37:52.900] - Mark
For sure. That's why when I say that humility is that people say, oh, do you get nervous? Look, Jeff and I are both competitive, and we both like to win, and we both just believe that you can get... Jeff is such an inspiration. We both had that. Neither one of us had any doubt. However, other people would look around and be like, well, if that hadn't happened, or if that hadn't happened, and yet we both believe in resilience. Resilience is one of my favorite words, is that although the whole journey, believe me, had lots of ups and downs in it, we never stopped believing in ourselves. And that, when you think about cultures are driven top down, when any organization and the team members are always looking at the leadership, and if the leadership is genuine, is believable, and when they really are all in believing that you're going in the right direction, people want to follow people that they believe in. And even if it seems like it's a doubt, if those leaders don't show any doubt at all that they are charging forward, that just gives confidence to the rest of the organization.
[00:38:54.310] - Mark
And it really does help elevate the performance of everybody. And I believe that's what happened. I don't want to think what would have in the head with that because the good news is we don't have to. But I'm telling you, Jeff Johnson and I would have found a way to make it work.
[00:39:06.750] - Brandon
It's interesting. I think one of the things that you're highlighting, and I feel like we've heard this a lot, is there's this very distinct difference between those that are winning, right? They're building nice small to medium-sized businesses, and they're having success, and it's a great lifestyle that's coming out of it, versus the men and women that do things on the scale that you have. And we haven't even moved into what you're currently focused on. That's a whole another huge adventure in front of you. But one of the things I hear you talking about is very early on, you were getting keyed in on this vision casting, on your ability to sell what you're doing, the vision of what you have in front of you. It's interesting. We see a lot of successful business owners, but they never really finetune a focus on developing that skill set, that core competency. It just constantly is this returning back to how we how we do service, how we deliver the product. And so if that makes sense at all, what was it for you that you guys learned early on was like, hey, our ability to communicate and cast vision is going to be a difference maker between just building a business and building an empire.
[00:40:16.710] - Brandon
Was that even relevant? Was it part of your thinking process? When did that come up?
[00:40:20.790] - Mark
I'm going to go back to the fraternity training that we received. We talked earlier about mentorship, but that's where we also, Jeff and I both had some great experiences This is with early life mentors. But one of the things we learned in working for the fraternity is what's counted counts. And this goes back to again, a culture and part of how we did it. When we were members of DKI, as you know, we bought our way into DKI. In that second year, so in 1997, the actual convention was... Because the '96 was in Puerto Rico, like I mentioned. And in '97, it was actually in Denver. It was scheduled to be in Denver before we bought Rocky Mountain Catastrophe. So we were the host members of the 1997 DKI International Conference, and they asked us to then present. You guys have had this success in a year. You've already bought your second DKI member. And so Jeff and I gave a very controversial presentation to the DKI annual convention in 1997, and we got a lot of criticism for it. And it was about how Jeff Johnson and Mark Davis were building a sales organization in the restoration industry, as opposed to a restoration company that was performing sales.
[00:41:29.390] - Mark
So you When you think about that. We basically said that... And we gave a presentation that we bought Rocky Mount Catastrophe, that was a restoration company in Denver, Colorado, and we transitioned it into a sales organization that was selling restoration services all across the US. And We talked about what that means in changing the mindset, and certainly not discounting operations, but what the theme was, highly criticized, again, by the leaders of DKI and a lot of the more seasoned members is, those young whippersnappers don't know what they're doing. This is all about production. It's all about operations. Those guys will be bankrupt in a year. We heard it all. But Jeff and I just believe so much in this what's counted counts, and we're going to build a sales organization. And how do you do that? We then built a training room in our little warehouse in Arvada and put whiteboards along all four walls. And we listed every one of our estimators and every one of our business development people. And every Thursday at 08:00 AM Mountain Time, we had a sales meeting, and everyone was in the room, and everyone's numbers were posted on the whiteboard.
[00:42:34.860] - Mark
So this is before spreadsheets and before PowerPoint on the thing. This is like a true whiteboard with the dry race marker. But it would say, Dan Dansby, Weekly Sales, because this was every Thursday. And then month to date, okay, year to date, and last year. So we are tracking activity sales in a manner where it was nobody wanted to show up to that Thursday morning meeting at 08:00 AM and have a goose egg and then have to talk And so that culture would be one where if someone was not performing, they didn't want to be in that culture because you don't want to show. It wasn't a high pressure situation. This wasn't like Boiler Room or something like that. It was obviously very friendly and positive, but it was definitely friendly competition and one that that drove revenue. And so that was a big part. And in fact, when we hosted that DKI meeting, I'll never forget it. I'm giving Denny Jensen, who's like the godfather of restoration at the time. I'm giving him a tour. And in the training room, we did not put those numbers up there just for this tour. And he goes, did you put those numbers?
[00:43:36.590] - Mark
Is that just for this tour? Because the numbers that we were doing. I said, Denny, that is last Thursday's sales effort through October, blah, blah, blah. And so anyway, I think from that standpoint of what did we do differently, Jeff and I did not come from this industry. We didn't know anything about it. We knew how to build a small not-for-profit and help them thrive. And we had some great mentors, and we He just believed that nothing happens till you sell something. So you have to sell something. Now, you can't think that, oh, well, you could just be sales. That implies you still deliver excellent service. So you don't ever discount that. But if you don't sell it, you don't have the opportunity to deliver relentless customer service or great service because someone else gets that opportunity. You have to get it sold. You have to get the ink on paper. Nothing It happens until you sell something. And a big part of our success was the fact that our national sales manager that was already an employee of Rocky Mount Catastrophe when we bought the company in April of '96, his name was Stacey Mizzur.
[00:44:45.260] - Mark
So when Jeff and I bought the company, we meet this young guy who's only two years younger than we are named Stacey. I mean, his title was National Sales Manager, but yet the company was only in Arvada, Colorado. And he had come from Gerlough, which is a restoration company in San Antonio. And Jeff and Angela Steemack had recruited him from a headhunter, and he'd want to live in Denver. So Stacey, Missouri, as you guys may know, is that when Jeff and I hired Theresa Williams in 1998 from Munters, he decided to leave and form his own company called Interstate. And that company today is first on site.Unbelievable.Okay. So anyway, Stacey knew how to sell. And so Jeff and I, even though we knew how to sell, we learned how to sell in restoration from Stacey. And Stacey was That's a big part of our sales growth in those first couple of years.
[00:45:33.660] - Brandon
That's so wild. What an absolutely interesting trajectory. Some of the names that it's similar. We hang out sometimes with Thomas Maguire, Large Loss Mastery. And it's like, he's one of the guys that came up as a PM and in the heart of a lot of these things.
[00:45:52.090] - Chris
That Munter space. Was he one of the guys you pulled over in the Rocky days?
[00:45:56.590] - Mark
No. Okay. No, I know Thomas Maguire. I know Most of the guys, Randy Lambert is a cotton. Robert Peats is still at Belfort. Eddie Placuda is, I think, now at Electrolux. Theresa Williams is still at Belfort. Richard Freud was the managing director. He retired. Yeah. No, I have a very clear photographic memory visual of the eight people and how much it was going to cost us to hire them in 1998. And thinking to myself, this is really a great idea or this is going to bury us. And seriously, we did, or not necessarily bury us, but we're like, you don't want to ever hire someone and then not be able to afford them a year later.
[00:46:35.460] - Brandon
Yeah. I would assume that payroll load from that group of eight probably wasn't the smallest salaries that you had been put.
[00:46:42.240] - Mark
No, they were not. They were the biggest. They were by far the biggest of anybody in our entire company. But again, had we not made that move and then had that move with a greco for the equipment, then we don't get selected by Franz Haniel to start Belfort in North America. That was the move that sold the Germans on us being the platform.
[00:47:01.580] - Brandon
So unbelievable. Okay. All right. So I think we keep stopping your storyline, but there's so much awesome stuff happening here. Okay, so you sold to Belfort. What now? What leapt into where you're currently grinding gears? Walk us into this more modern scenario that you're currently leading.
[00:47:20.710] - Mark
So as many of us in every industry have seen, and what will be a big impact to our industry going forward is this FTC ruling on the removal of non-competes. And I bring that up because it had a profound impact on me because when I sold Belfort, okay, to the Germans, and again, the Germans were called Franz Heinel. That was the family office that then owned. When I sold my remaining 10 %, the Germans owned 100 % of the business, so Belfort worldwide. And I signed a non-compet. And I will tell you, I made the decision to sell, and I wanted to sell. And I just had never imagined coming from small town, Nebraska, that I would be in this position. And yet what happened the year After I sold, Hurricane Katrina hit. So I'm on the sideline, and I miss Herk and Katrina. Now, I had made the decision as a husband and as a father with a now growing young family. And in order to grow that business, as you guys know, takes a lot of sacrifice and a lot of nights on the road. And that's when I made the decision, what I want to focus on family.
[00:48:22.650] - Mark
Well, okay, you can do that and be an entrepreneur at the same time working on it. And a year after, I was just, oh, I I wanted to get back in so badly. So I asked Belfort if I could buy my way out of my non-compet. And the answer was no, you're too young. We're not going to do that. So I had to wait. And as I waited, okay, I'm like, okay, I'm going to reenter now at the completion of my non-compet. And instead of thinking, let me do exactly what I did before and find a small platform like a Rocky Mountain cat, I was thinking, no, I'd rather do something bigger because once I got to the scale of Belfort. So I was by a private equity firm that was buying a subsidiary of Service Master called Instar, Instar Services Group. So it was PE-owned. They wanted a CEO. I came in to partner with them. I had a minority stake, and I'm now re Entering the industry with a newly acquired subsidiary that came out of Service Master that was doing just commercial loss. And the reason Service Master sold it is the Service Master franchisees did not respond well to an independent commercial company being brought in saying, refer your big jobs to them.
[00:49:33.910] - Mark
So that was a very interesting experience because that company was losing money. So I was not a turnaround guy. I had never run a company that was losing money. We were always making money before. So I take over this company that was losing money. And what happens? Not because of me. I can tell you this was not because of me. But Hurricane Ike happens, and we signed $70 million with one client in Houston. $70 million with one health care client. And so obviously, we have a huge financial turnaround. So that all went well. And again, I have nothing negative about private equity. I just think there are some people that can work for private equity and some people that can't. And I think I would put myself into the category of challenged I would be challenged with that, maybe a little better now, but now that I'm in my later 50s. But at this point in time, when I'm early 40s, it's like, wow, I'm not so sure because I have that heavy growth Well, let's go, let's go. And so anyway, we didn't see eye to eye. So I decided to sell my shares in Instar and fulfill a one year non-compet.
[00:50:38.970] - Mark
And this is where I had the pivot in my mind, where before, remember, I said, I started with a small mom and pop platform. That turned into Belfort. That was great. Then I went with Instar, which was a PE-owned firm doing 100 million to start with, right when I took over. After reflection on those experiences, I was like, You know what? I'm going to come back in, and I'm going to go right back to what I did before. I'm going to find a Rocky Mount catastrophe. I'm going to find a husband and wife-owned great business with a great foundation. And again, whether it's serendipitous or not, I literally had a vision of what I was looking for, and that's exactly what I found with Signal Restoration. But I needed a Jeff Johnson. So Jeff, when he had sold Belfour, then he ended up fulfilling his non-competent, then he ended up partnering with Stacey and buying in with Interstate. So I needed to find... Because again, back to strengths and weaknesses, I always defined myself as outside the Curb, and Jeff was inside the Curb. So I wanted to find someone with... Because operations is not my expertise.
[00:51:36.640] - Mark
So I found the most amazing business partner you could imagine. Jeff was great. And then for the next chapter, I find Frank Torrey. And Frank Torrey is an operational master. He's just incredible. And he had built from scratch a landscaping company to turn into one of the largest regional ones in the country. He was in 16 states, and he started with one wheelbarrow. So he had just sold his landscaping company, and he and I knew each other because I used him as a subcontractor before. And we were talking, I'm like, this guy is incredible. He would be the perfect partner. So I said, Frank, what do you think about this? You've sold your business. You know a little bit about restoration. What do you think we go in 50/50 and we do this together? And here's how Jeff and I did it before. And I think you and I'd be great. So he's all in. We go in 50/50. We decide to search for that platform, and we find a husband and wife owned business that was 40 years old in Metro Detroit in Troy, a suburb of Detroit, that was doing just under 10 million a year and making about a million bucks a year.
[00:52:36.160] - Mark
And they had no lawsuits, no debt. They were part of the State Farm PSP program. That's how they built the business. And they had the best reputation. But they really range between $8 and $10 million for 10 years. And they had never done a job outside of Michigan, and mostly just in Metro Detroit. They also only did reconstruction. No mitigation, no content. There were other companies that they had partnerships with where they did lead sharing. And so literally, a company called Modernistic did the water damage. A company called Coaches that Belfort ended up buying later did the contents. And so they had this partnership. So when Frank and I bought it, and we bought it March first of 2012, the company was 40 years in business, Michigan only, reconstruction only, 95 % residential, never a job outside the state of Michigan. And the first thing we did was hire eight operational people. So we even go back to the DKII presentation in 1997, when we were very much, we are building a sales organization, and we did. When we bought Signal, it was like, okay, Signal already has cash flow of a million bucks a year.
[00:53:41.320] - Mark
And Frank and I are like, we're not going to touch that cash flow. So we're going to use that cash flow. And we know how to sell. So what we're going to go do, we're going to go hire the best large loss commercial operators because we know we're going to go sell those jobs, and we have to be able to perform them. So I think those critics in 1997 And would be proud of my evolution of that, because I always appreciated operations, but they were the first eight people I hired. Seven of those eight are still with us today, 12 years later in our operational team. And so that $10 million company that had never done a job outside of the state of Michigan, ended up doing $140 million of commercial work outside of the state of Michigan in the next 14 months.
[00:54:24.020] - Brandon
Holy cow. Wow. That is ridiculous numbers.
[00:54:28.320] - Mark
Let me talk about tailwinds. How did that happen? I always say, and you guys have heard me say this before, is that you got to have a vision, okay? And then you've got to articulate that vision. You set the goals. But if this is the definition of success right here, planning an opportunity. That is the intersection of success. Because the opportunity will go by. But if you're not planning, then you will miss that opportunity. So you have to be planning. So we were planning to be a nationwide large loss commercial contractor, but we had to hire the operations people first. Superstorm hits. That's what we did. We got hired by the city of New York. Our one TNM contract was 133 million, and we rebuilt all the hospitals in the city of New York for the city of New York in 10 months under signal restoration, which then put us on the map in year one of our ownership, which was Year 41 of Signal's existence. And now, all of a sudden, people are like, well, who's Signal? Where's Signal? And then we bought a company in California in 2013 called USA Specialized. So now we have an office in Orange County, and we now have a satellite office in New York because we've now done all this work.
[00:55:35.500] - Mark
And so we're officially Coast to Coast one year later. And since then, it's been absolutely incredible. Now, two times in Signals, 12 years, we've done, ironically, $230 million jobs. When Hurricane Maria hit Puerto Rico, we got hired by Hilton and Blackstone, and just the Caribe Hilton job was $130 million. And then we did the embassy suites for Blackstone for $22 million, and we did the Intercontinental and a number of other hotels. So we ended up doing 200 million in Puerto Rico in 2017 and '18 after Hurricane Maria. But what Frank and I did after Superstorm Sandy, instead of paying ourselves big bonuses and instead of buying Ferraris, we didn't do any of that. We kept the money in the balance sheet. So we've now got a strong company. It was a strong company before, but now we have a strong balance sheet. And then we use that strength of that in our personal balance sheets because we were considering... We We didn't want to bring in outside investment because we had done that before. And the thought was we don't need it unless we want to grow through acquisition. But growing through acquisition would mean that you have to bring in a financial partner if you really want to do it to compete with those like ATI and First on site in Belfort that are growing that way in Blue Sky.
[00:56:48.610] - Mark
We wanted to stay private. So we were going to franchise Signal, and we met with Wayne Wadaika, who's the founder of CRDN. We met with another gentleman named Lee Caputina, who founded ERS and Electronics Services and ART, and he franchised those. And so we were talking to our different colleagues that had franchised, and it wasn't long that basically the consensus was, Mark and Frank, you guys move too fast. Franchising will take too long. It's also a crowded space. Maybe you should consider buying a franchise system. Well, we're not a private equity fund. And so we have to go down the list. How far down the list can you go to get to affordability? And by the way, you just can't buy a franchise system because they're not for sale. And most of them are owned by private equity. So anyway, we would go down the list. And so Puriclean was near the bottom of the list of restoration franchise systems. And the company was in a difficult time in that they didn't really have any national accounts, and they were losing some... Instead of growing, they were shrinking in that the number of units was going down, and then the royalties were going down.
[00:57:57.230] - Mark
And so, again, I'm not a turnaround. Turnaround person, and Frank had not been a turnaround person before, but we certainly know how to sell, and we know how to work hard. So Frank and I decided to make a run at Peericlean unsolicited. So we did the diligence. We met with the owners. We liked the owners very much. I think they liked us. We presented a plan to them that we would buy the 80 % of their business so that they could still own the 20 % to ride our coattails and ride with us, and that we overpaid for the business based on the trailing 12 month. We paid a 21 times multiple, which when people here, they're like, You paid 21 times? And I'll say this to people all the time, is that evaluation is simply a point in time. And what you're paying for is the value of what the former owners could reach. That's what the price is. But once you own the platform, it's then up to you. What value can you turn that company into? So I've had the opportunity to buy and sell several companies now over my 28 career in the industry, most of the time on the buy side, a couple of times on the sell side.
[00:59:05.390] - Mark
So I understand it. But when you really believe in yourself and your plan and your people, don't be afraid to overpay a little bit for a company, because what's the alternative? You either own the company, and now you have the platform to grow or you don't. I always use the analogy of an aquarium. If you are not in the industry yet, and you're thinking of buying a company to get in, then you're looking at those fish through the outside of the aquarium. You're not in. You've In order to get into that aquarium, you've got to buy your way in or if you can start a franchise or whatever.
[00:59:35.300] - Chris
I mean, this is just amazing. But I want to go back and I want to hit on something that you've referenced a bunch of times. First of all, this experience with SigmaFi Epsilon, early days, how formative that was for you and Jeff. And really, it sounds like set the tone for how you guys saw business building, how you learn to lead, all of those things. But I want to go back to this mentor piece because I'm curious, who What did you have in your circle at some of these different intervals? And what were they speaking into your life? Because undoubtedly, Sigma Phi, when you first talked about the fraternity, first of all, I actually did construction one summer, and we spent a lot of time in a Sigma Phi Epsilon fraternity at Oregon State University.
[01:00:17.930] - Mark
. But I think the value I immediately went to with a fraternity is, it connected you with a lot of iconic leaders that also came potentially through that fraternity system and supported the fraternity and so forth.
[01:00:32.590] - Chris
But I'm curious, talk us through some of the mentorship that you received along the way and what they were speaking into your life.
[01:00:39.660] - Mark
So it's interesting you mentioned the Sigup chapter at Oregon State in Corvallis because my first mentor was Jeff and both our bosses, the executive director at Sigup headquarters, who was a Sigup from Oregon State in Corvallis. And Corvallis was even his hometown. His name is Ken Maddox. And Ken, to this This day is still a mentor of mine. So Ken has retired, but he still performs the annual leadership retreat for Signals leadership team. So he comes in from Oregon. So he has continued to be... So I'm going to answer the question about that early stage when he was a mentor, but he still is. And I met him in 1990. So we're talking 34 years. And part of it was the training was excellent. At that time, we went through a three-month summer training before you ever went to a university campus. So you graduated, you moved to Richmond, and there was a six-day, a week summer training program. That training program included things like how to give a presentation. And the dynamic woman that came from New York City that the fraternity hired to teach us on how to give a presentation was, for example, one of her clients was the former CEO of General Electric, Jack Welch.
[01:01:53.950] - Mark
So here she was at that time teaching Jack Welch how to give a presentation. And yet she's coming to the fraternity And at age 22, I'm learning how to give a PowerPoint presentation, what to do with your eyes, what to do with your hands, how to work a crap. That's just one example of the professional training that we received. We also received sales training. We received conflict resolution training. We had these extemporaneous cards, and we would be in the conference room, right? And we also, in the first week, they would take us to Joseph A Bank. And again, those suits are $180, so it's not like they're expensive. We each got to buy two suits. The white shirts, the striped tie, and that was our uniform. So this was not, Oh, you're a fraternity, you're wearing a T-shirt. It was jacket and tie, okay, and that's what you wore. That's what you wore to training. And that was that whole theory of you're creating a culture. And so that's everything, everything from what you wear to how you speak. And so that was the fraternity experience was, wow, I'm 22 years old. Yes, I'm working my fraternity, but I have to wear a suit and a tie to work every day.
[01:02:57.660] - Mark
And I go through this training, and we're learning about sales training and conflict resolution. Then we have this exercise every week called Extemporaneous, where we'd be in the conference room, and they would toss to each person a three-by-a-half by card, a three-by-five card, and it would have a scenario on it. So give me an example. You walk into the fraternity house at Old Miss, and there is a brother laying unconscious on the couch or something like that. Or you walk into a fraternity and you see a cag of beer or whatever. Whatever those scenarios are that could Or you walk in, you're there on a Friday night, and you smell marijuana or something. You know what I mean? And so they literally was like, how would you address conflict resolution? And what's interesting is that's when we learned things like, bad news doesn't not get better with time. Little things like that. What does that mean? When you have an issue, you don't wait to confront it. You confront it right away because it's like the issue isn't going to get any better. If you're aware of the issue, why would you wait to address the issue?
[01:04:00.620] - Mark
Because all it can do is simmer and get worse. Those things that you learn, again, that were invaluable of how they transferred into ownership of a small independent restoration company when we were just there working for Ken Maddox at the fraternity and the mentorship that the whole culture provided.
[01:04:18.680] - Brandon
That is so powerful. With that, and maybe you can't reference this specifically, but in that more one-on-one mentorship, the Ken Maddox relationship, what did look like? So as you look back on that experience, and I know mentorship is important to you now, what did that skill set look like? What was it that he was doing? What did that relationship look like that carried you in to ultimately being so honoring of it now?
[01:04:45.730] - Mark
I would say instead of him talking and giving wisdom, he was the thought provoker. He would ask questions. He would answer a question with a question, because instead of him having the answers, he was the best at facilitating us to come up with the answers ourselves. And that, I just remember, continuing to be amazed by that, because we all believed he knew the answer, but he was not going to give us the answer. He wanted us collectively thinking of what would be the right answer for that. And then, of course, it would come around full circle.
[01:05:18.290] - Brandon
That is so powerful.
[01:05:19.850] - Chris
I mean, that is-And I learned that in your early 20s, to observe that leadership attribute. I mean, that is what an incredible opportunity and experience. Any other Are there any key figures besides Ken that showed up along your path that asked great questions, right? Who was that?
[01:05:36.820] - Mark
Well, his name is Ajay Scarbante. He is also a SIGEP. He graduated from Kansas State University in 1955. So he's in his 90s now. And so my father had done this same job. In 1954, when my dad graduated from University of Nebraska, Omaha, he went to go work for SIGEP headquarters. And that's why I wanted to do it, because when I grew up in a small town in Nebraska, and on a Saturday, my dad would be like, Oh, Auburn University is a beautiful campus, and I'm in the middle of Nebraska. Dad, where is Auburn? How do you know? And, oh, in 1954, I worked for my fraternity for two years. Well, while he was traveling around the country, he meant AJ Scarmante in Manhattan, Kansas, and AJ was the chapter President of the SIEP chapter. Well, I don't even hear AJ's name until 1992. Okay, so fast forward to 1992 and 1993, I'm leaving my three or two or duty with a fraternity. And my dad says, well, I would like you to meet AJ Scarmante in Omaha. He owns a company called Vital Learning that he had bought from McGraw Hill Training Systems, and they sell off-the-shelf training, sales training, supervisory training.
[01:06:43.090] - Mark
And it's a private company. He bought it from McGraw Hill, and he's hiring young salespeople. And I told him about you. And I said, well, dad, Bill Schreier, who's a Sigup alum, he is the CEO of Merrill Lynch, and that Merrill Lynch has a training program in Plainsborough, New Jersey. And And I have an opportunity to go work for Merrill Lynch, and I'd really want to do that. He said, Would you just please meet with him? So I fly to Nebraska, where I'm from, and I have lunch with Mr. Scravanti. And I was just fascinated because he came from a small town, small area in Nebraska. He had started a company from scratch. It was called Majors Corporation, and where he was literally early on one of the first people to collect all the prices from the different grocery stores and then combine them into a price book and then sell sell them back to them so they could know what their competitor's pricing was. Anyway, very innovative for his time. But just listening to him, how he had done it, this entrepreneurship. And then once he sold to Dun & Bradstreet for $80 million back in the '80s, then he was doing all this other entrepreneurship.
[01:07:47.670] - Mark
And so the opportunity was to go work for him and work directly for him and learn how an entrepreneur actually runs a business.
[01:07:56.140] - Brandon
Oh, unbelievable.
[01:07:57.020] - Mark
The salary offer was 50 % less less than the Merrill Lynch salary offer. Okay? 50 % less. I can remember the numbers like it was yesterday. The Merrill Lynch offer, now this was in 1993, was 80,000, and the the Vital learning offer was 40,000. And one was in New Jersey, and one was in Nebraska, and I had already grown up in Nebraska, gone to school there, and I was interested in staying on the East Coast. But something was telling me, wow, working for this man would be unbelievable. I'm going to go. Otherwise, I'll be in a great corporate training, but I can work for this amazing entrepreneur. So the reason I made that ultimate decision was based on Ken Maddox telling me, okay, so going back to my first mentor and what he had said to me years before, which was about the decision making of those three components of what criteria should you rank as you're making those early decisions? Number one should be learning. Okay, two should be earning, three should be giving. And then those three rotate as you evolve in your career. But he said, the first 10, 15 years after you graduate, every decision you make about where you want to work should be based on where you're going to learn the most.
[01:09:08.350] - Mark
Because as you learn the most, you're building up the tools in your toolbox, and your heavy earning years are usually in your 40s. So if you're building that toolbox those early years. And so I reflected back on that and I thought to myself, okay, I think I'm going to learn the most from Mr. Scrumante. And that's where I made the decision to go work for Vital Learning. And that's exactly what happened. And then Jeff Johnson, then I hired him to come work for Vital Learning. So now Jeff and I are back together again. So we worked at Cigup headquarters for three years together. Then we worked at Vital Learning for three years together. And that's why we had the confidence of knowing that the two of us could be great partners. We trusted each other. We knew each other's skillsets. So Vital Learning was an amazing part of the journey because I got to have a mentor that I worked directly for, again. So now my first two jobs, I worked for people that I'm still in touch with today. Okay? Aj lives on Sanibel Island, and his house got hit by Hurricane Ian, and so we checked in on him to make sure he was okay.
[01:10:05.060] - Mark
And as I said, Ken is still involved in our company, providing leadership training. But that experience with Vital Learning, small entrepreneurial company, very sales-driven, and we had to learn how to sell sales training. So if you think about who do you sell sales training to, you sell it to the VP of sales. So the VP of sales, and I mean big companies like Home Depot, we sold sales training to Home Depot, where we were training all of the Clerks on how to sell. It was called customer-oriented selling. Well, what does a VP of sales look at when they're looking at the salesperson that's selling them sales training? Are you modeling what you're selling? So Jeff and I had to learn customer-oriented selling and had learned how to model it. And so what did that mean? I already knew how to sell. But once you learn a system on how to actually sell and how to handle obstacles and how to give presentations again, that really enhanced, I guess, my sales technique, which I think I I was partially born with, but I've certainly enhanced it with a lot of training over the years. So that helped us tremendously.
[01:11:06.080] - Brandon
What an hourful afterburner that kicked on. Well, hey, I want to be really conscientious of your time, so I want to bring this to a close, but I got one last question for you to sum this thing up. So amazing experiences. You've built amazing companies. You're still absolutely engaged and have the pedal down and are continuing to scale. You reference these amazing relationships that help really grow and support this trajectory. You're now clearly in a position where you have a lot to offer. And I know that you have prioritized some mentorship yourself now being in that more giving back space. Just I'm going to give us a quick perspective on what that looks like to you, and then let's bring this to a wrap. We really appreciate all the time you've already given us. Yeah.
[01:11:53.490] - Mark
Well, thank you guys for that. And I have to tell you that that's how I believe that it worked out, that Frank and I ended up buying PeerClean and that's where the story was going is, is eight years ago, we bought that Peericlean franchise unsolicited, and little did I know that it was going to be the most fulfilling business venture you could even imagine. And I'm talking about the personal... Yes, have we had business success? Yes, we have. But I'm talking about how it feels to help mentor new and even existing franchise owners that come from all walks of life and all ethnicities and all countries where most of them have not been in our business before, whether they took a corporate buyout or whatever it might be, is that, believe it or not, I would say we have 500 locations now. We just hit 500. When we bought the company eight years ago, we had 200. So we've been on a heavy growth trajectory. But I would Yes, there's at least 25 of our owners in the last five years that were introduced to the industry by having a water damage in their home.
[01:12:52.450] - Mark
And they had an experience, and they're like, Wait a minute. Wow. They start talking to the technician. That's incredible. That's interesting. And so But with people from all walks of life, the thing that today is by far the most fulfilling is I have the opportunity to mentor literally dozens of new pure clean franchise owners every year, and that number just compounds. And I think the thing And although I'm very, very honored and proud to be able to provide some leadership at any level, is our longest tenured franchise owner, Rob and Caroleanne Hunter, out of Louisville, Kentucky. They've been in the system since day one, and they are the largest in terms of revenue. And I'm very, very proud of this. And I'm good friends of them, so I hope I can say this. I don't think they'd mind this, is that they have been the top dog since we bought the company, and their revenues were about eight million when we bought. And a lot of people have said, well, how can you help the bigger ones? I know you can help the small ones, but how do you help the bigger ones? The good news is, and I'm not saying I have anything to do with other than I love providing that guidance and mentorship for them.
[01:13:57.780] - Mark
They have tripled their business, and they just did almost 23 million last year and continue to grow. And the fact that they're fully engaged because they're then mentoring, they're providing mentorship to that next level of owners. And so we have a culture at PuroClean of mentorship It's a big part of our culture. It's a big part of our success is that even in certain areas, like Columbus, Ohio, we have an immigrant from Nigeria. Okay, Sadiq moves here. He's a genius, absolute genius with internet marketing. But he decides to buy a pure clean because he had had a water damage in his house. He's one of those examples. And he's now off. I mean, it's unbelievable the success he has had in his five years, only five years, where now he started a back office company in Nigeria that provides back office to over 70 pure cleans now, not only the entrepreneurial there. And I just had a mentorship call with him on Sunday morning, a mother's day, because he got accepted into Harvard business school executive leadership thing. Now, he's only five years into his ownership, and he's asked me to be his mentor and to have a call 30 minutes once a month.
[01:15:10.270] - Mark
And those are just the things that are just so rewarding. It's incredible. And so, yes, we like the growth. And Frank and I support our franchise owners, and we have so much fun. And Signal and Peer Clean do not compete because Peer Clean does primarily smaller jobs, mostly residential. Signal does commercial jobs. And there's a cross-reference there where the companies are referring projects to each other every single week and providing a lot of cross-training. At Cigna, we're helping train the pure-cleans that want to learn about commercial loss because we believe the rising tide raises all ships. Without the pure clean franchise system, I would still be wanting to mentor, but I just wouldn't have as much exposure. I would do it through RIA and other things like that, which I still do. But the blessing that I have to be able to be in that position to help serve others that are helping build their pure clean is really incredibly rewarding.
[01:16:04.550] - Brandon
That's awesome. What a freaking journey, man. You spent a lot of time with us. Thanks so much for being so gracious with that. We'll bring this to a close, but I'm really blown away by the entire story. I mean, there's just so much history that really has affected the industry as a whole that you've been a part of in a real key way, and it's just really amazing. And on top of that, you continue to be super humble and really sharing with the people that you serve and work around. So it's pretty easy to respect you, man. So thanks so much for hanging out with us and giving us your time. We really appreciate it.
[01:16:40.240] - Mark
It's been my pleasure, my honor. And thank you very much. If there's ever anything I can do for any of you, please let me know.
[01:16:45.530] - Brandon
I love it. Thanks so much. All right, everybody. Hey, thanks for joining us for another episode of Head, Heart, and Boots.
[01:16:53.710] - Chris
And if you're enjoying the show, if you love this episode, please hit follow, formerly known as subscribe, write us a review, or share this episode with a friend. Share it on LinkedIn, share it via text, whatever. It all helps. Thanks for listening.
