Speaker 0Hey, what's up everybody? It's your boy Chris. This episode is going to be from this past Rhinox, a great session, awesome session, where it was Ken Goodridge versus Jake Gress. Who's Jake Gress? Jake is the current day operator of Gettle and Ken interviews Jake and Jake interviews Ken. And this was quite enjoyable. So we thought, let's turn this into a podcast episode.
Speaker 1this is to the point of Rinal Experience, fully one of the top home services marketing and operations podcast, cutting through the bullshit and getting to the point.
Speaker 2So we're going to have a conversation today, you know, Jake is the new CEO of Gettle Been here for the last three and a half years. And so we're just going to have a conversation, I'll tell you a little bit about Gettle, and I'll tell you a little bit about the journey we took, and then I want to talk about Jake and how he's approached the next phase of growth of Gettle. And it's very interesting to me. I was thinking about this on the way here this morning. Gettle has a long rich history. It's 89 years old this year. The founders, gusts, and Adam Gettel, they invented the residential air conditioner. They've patented the first residential air conditioner. They first created the assembly line for the evaporative cooler. They made Phoenix, Arizona habitable. First with the evaporative coolers, then they built a package to unit for residential use. The first unit, and they started to put refrigerated air conditioning on air conditioners here, first in Phoenix, and then throughout the Southwest. As a matter of fact, the history channel has a whole story about the birth of Phoenix Arizona and the impact ghetto air conditioning made on it. to make it habitable and have, you know, refrigerate and air conditioning and make a place where people can live. So it's deep with history. And including that history, it's been a very large company over the years from time to time. In the 70s, if you guys know contracting business magazine back then, in the 70s it, they chose Gettel-Erika to see there's the largest HFAC contractor in the country. And these guys were very head of their time, but I was the sixth CEO of Gettel, and now Jake is the seventh CEO of Gettel. And I happened to pick it up in 2013 days away from bankruptcy. But it for a half a million bucks. So I made a couple bucks along the way in my exit. But, going to the back story of this was when I was a kid, 10 years old, my dad asked me to hold the flashlight for me. He was an AC tech. He was working in an air conditioner, and the first air conditioner I ever lit up with my flashlight was a ghetto. because they used to manufacture air conditioners. And this was in Las Vegas. And over the years, my dad became a ghetto dealer. And we would repair and install sell new ghettles in Las Vegas. My whole career up until they stopped manufacturing. And I think it was 2009. But so ghettles, I've been around this whole business for 50 plus years. one way or the other, and I got the opportunity to get my arms around it and take it to the next phase of growth and now Jake has the opportunity to do the next thing.
Speaker 3It's going to be a challenge.
Speaker 2Yeah.
Speaker 3It's going to be fun though.
Speaker 2So just kind of give everybody a little idea your background and how you got here.
Speaker 3Yeah, so I'm not from home services. I actually started early in my career in consumer products. So a lot of brand marketing, advertising, new product development, that type of stuff. I worked for companies like Newell Rubbermaid, Sunbeam. And then I kind of fell in a little bit of the trades and working for the largest drywall manufacturer, USG. And then that led to many years in drywall distribution, working for a company called LNW Supply. And we scaled that business from roughly about a billion to four billion over six years. And there's a lot of similarities and a lot of parallels, actually, to this business, because you've got branches out in the field, you're trying to figure out, what you want to put in the branch, what are the common processes, what your operating structure or system's going to be, and then you got a lot of back office stuff that you got to get figured out and kind of understand where you're going to put some of that accountability, where you're going to put some of the controls and the decision rights within the business.
Speaker 2So here we are. We're moving along with this journey. I've been a student of the industry I think I listen a lot more than I talk, I watch all of you operate, what you do, I study different business models and such, and it's very interesting to me to watch Jake and how he's approached this business. You know, he comes in the end of 22, kind of gets his feet wet, gets his arms around things. And then he gets punched in the face, 23, early 23.
Speaker 3We have to see the top of the mountain and then just start going down the backside a little bit.
Speaker 2Yeah, so he gets punched in the face a bit. But I will say, and we'll talk more about how his approach was, because it's interesting to me and I think it'll be interesting to you. How do approach a difficult situation in business? Through all the challenges that have come up with supply chain and the 23-wall will call hit-in-the-wall and the increased competition, more sophisticated and I've ever seen in my career, the poaching of people, the pala that goes on now with technicians and salespeople and this not just making everything much more difficult, he walks into this day one, right? So, how was it?
Speaker 3You know, it was rough. What I would tell you guys, this is a complex business. So, even though there's a lot of parallels from some of the other industries or jobs that I've been in, there's a lot of complexity. And I think it was well said earlier today, where You know, it is a simple business but a lot of it is the execution because you're trying to execute through people at the end of the day and you're trying to figure out the systems and processes that can support those people in the right way so that they can be effective in their jobs. And so there was a lot of just spending time in the field doing right along, trying to really understand the space. The difference really between something like drywall or drywall distribution, you're selling contractors at the end of the day. And those contractors have big jobs, and there's newities, basically, you win work, and that work, you may ship a giant tower a hundred times over a year, and so you've got a certain amount of business already on the board for the year. where is this business? You walk in the day, walk in the office every day and sometimes the board is zero and you're trying to get those jobs on the board. So just a lot more of a dynamic business and trying to get everything running effectively. And then I would say the other thing is there's a lot of places where you can leak. You know, and I think Tony and Alan talked about it really well. There's just a lot of places on all these handoffs. I liken it to like a hundred-person relay race on every job, every day, with all these handoffs that have to happen perfectly. And you don't want to lose the job. You don't want to not close on something. You don't want to treat a customer the wrong way. And so it's a lot to kind of take in and really try to understand. But I would say more than anything coming into the industry, Like, like, events like this and a lot of other industries and spaces just don't happen. And so I think it's a rather unique trait within this industry of just how people are willing to share, have debates with folks, you know, really share mistakes as well as share successes. And it's a really special thing that you guys should take full advantage of, because it just doesn't happen in a lot of other industries.
Speaker 2You know, when Jake showed up, I remember having this conversation and I said, hey, listen, here's the way I see it. What got us to hear ain't gonna get us through there, right? We knew that we had pushed this business to the wheels almost came off to get to this exit and it needed some, you know, the foundation needed some fortifying to make it ready for the next day.
Speaker 3You told me just tighten them up a little bit.
Speaker 2And so, you know, he went to work on it, but I'm curious to, like, how did you tell me how you looked at it and how did you pick, okay, here's my, here's my spots. I'm going to focus on these several things to get the foundation solid to take us to the next level of growth.
Speaker 3You know, I think the first things, I just took the first 90 days and I just observed. I just tried to listen, I just tried to ask questions, I tried to be as curious as possible. I was trying to figure out what we were really good at, right? And then I was trying to figure out where are the blind spots, where are the areas that we've got really got to pay attention to? And a lot of my focus went to the operation side. is a very good communication company, has very good sales process, we've continued to innovate on the closing, be in a phone close and are called by call and how we operate all those things. So that wasn't something that I had to really worry about. Really I started looking at the operation side and where were the leaks? Where were the ways that we were losing money? And the hardest thing I think is if you don't have that service tight and set up just right, and then for us at the time we had, you know, well, well over 11 branches where they set up consistently branched a branch with the same configurations, who could change a configuration, could change a process. Because sometimes people are trying to do the right thing, but in essence they changed the KPI. right and then how you were measuring things just kind of fell apart. And so we actually sat down with Aura and literally just said the service titan like, what are we doing wrong, right? Because service titans designed a certain way, are we trying to be too cute or too bespoke? with how we want to use service statement versus just using it the way it was built so that we could get the most out of it. And I think that was a big unlock, right? Because once we could get the data really consistent, that helped us really understand where we were and where those leaks were. And I would say the other thing, you know, you supported this, but I'm like, We need a data lake, you know, and I didn't think that a contractor firm would need a data lake per se, right? Something we had in distribution, it was something we had in manufacturing, but it was a big unlock for us because a lot of the data is in service Titan, you just couldn't get the certain metrics, even measuring on time. It's not something that's super easy within service Titan, but I wanted to know how on time are we on the first out? Because if we're on time on the first out, the rest of the day is gonna go way smoother, and I saw cancellations happening, but often happened at the end of the day. And it was just that we were starting our day too late, and we had to get earlier to that first job. And then our big feeling was that is better service, right? Customers don't like sitting around or waiting. They want to know, and if they know that's just going to help condition the customer a lot better to be more relaxed as we go into the home. So getting to know the people, getting to know the functions, getting to know the tech stack, really trying to understand how well we executed some of our processes. We had some really good, tribal things that we did, but we had to get it documented so that we could teach it more often. and that was a big piece of just getting the team to get things on paper so that we could coach and teach it more often.
Speaker 2And I'll say this. Gettles in more solid foundation that's ever been. since I was involved in it when I was 10 years old. Like, he really has got the things solid and everything firing all cylinders to take the next leap. And it's very interesting. I love watching this situation. You know, when I first showed up, I said, you know, I go listen, here's something that's been bothered me. Like, how the fuck? How do the heck do we, Do we have a 60% margin on replacement sales and you know 80% margin on service work and we put 55% gross margin on our piano how the where is it weren't to find this fucking money I'm find this gosh darn money. And my team, we didn't have the infrastructure. We didn't have the bandwidth. This really started digging into that. And he comes and he goes, well, I think it's the price books messed up. I think the price book needs to be completely redone. And I think we need to lower some prices. We're a gainer. Here's an, well, area is back there chatting. But yeah, so he wanted to lower the price. I'm like, this is completely encountered intuitive what I've ever always done, right? But they went to work on it. And he was able to actually lower the prices and increase the gross profit margin and broke gross profit dollars by fixing the system, make everything much more efficient, really drilling into the things that, you know, I didn't know or I couldn't get to or I ignored because I was trying to drive the business up and at the right too much probably.
Speaker 3Yeah, I mean, look, sales hide sense, right? And as any good operator, there are times that you actually will drive sales because you know you can't necessarily collect it on the bottom side, but when you have the time and the energy, You want to make sure that your three-legged stool is strong, right? And for me, that three-legged stool is really your sales, right? And your sales process, but it's also your operations, and it's your technical aptitude, right? Your craftsmanship, like if any leg on that stool is shorter or longer, that stool falls over. And so we had an incredible sales culture, but we didn't have a culture around technical or around the operations side that kind of matched it. but we also didn't have the data. So the operators couldn't see it. They didn't know it was there. And a lot of what we've tried to do is create the dashboards and the visualizations for these guys to be able to see the insight so they can drive the action, drive the change in behavior, down to the individual. So a lot of the things that Tommy shared with you guys, we've got very similar dashboards, scorecards, down to a technician so that we can really understand where are their blind spots? Where can we work with the individual and contribute to train them, coach them, and make them the best them.
Speaker 2You know, we were kind of sharing some questions back and forth about what we would be talking about today. And he made, I don't know the exact question. It was basically like, you know, what's it like to sell your baby after so much certain amount of time, something like that, right?
Speaker 3Yeah, to give up the baby, right? You were CEO for a long time.
Speaker 2Yeah. Well, you know, this, this, this, Gell was my sixth, sixth business I built and sold. And, but I'm interesting enough, When I think about that question was, every single time I kind of went through the same, where the five stages agree, right? The first time I ever sold, Leeland and I sold businesses about the same time in 97, I think. And we worked together back then, but I'll never forget, you know, I get my statement, my Dean Witter statement, right? my bank account, right, and I look at it. I'm seeing this big number in there, and I'm thinking, I felt better about myself when I had zero dollars, and I was sweating payroll, but it was mine, and it was my creation, and that was working on. And then every single time I went through that little period of time, little bit of blues, Then I had to talk myself out of it because usually I had some roll over investment in it or I had to earn out or something like, well, I better get out of the funk because, you know, I got, you know, like in this particular case, I got 50 million reasons why I need to stay on top of this and lend everybody a hand to try to help it get through. So, but it is interesting that the psychological things that go on when you sell a business that you've devoted so much time and energy to, you know, it becomes part of your identity. And I would say for anybody here, you know, as you're thinking about building the business to sell, just be careful with that. Don't let it too be too much of your identity, you know, it's something that you own, it's something that you're building, it's something that serves the purpose in your life, but it's not your life, right?
Speaker 3Well, but at Like you are ghetto, right? I mean, that story rings true, as far as what our brand is and what we represent. And I think that's the huge connection that you have is that it means something in your heart, right? And people feel that, our associate's feel that, from Ken.
Speaker 2Yeah. Well, I felt like when ghetto was on the... on the bricks, I thought, kind of, it was my destiny because I'd already done some deals. I just got out of a deal with ARS, sold three businesses there, and I'm like, maybe I'll just kind of sail off into the sunset and then Gettel came available. I'm like, this is my destiny. I have to do this one just because, first air conditioner, I ever lit up at the flashlight, right? So you come into this environment, though, was there any challenges with that, with, you know, you got this big personality and set attached to the brand?
Speaker 3Well, I think, look, you're an innovator, you're a thinker, right? You're super curious about a lot of things, and then The brand was very much you, like literally the boy on the truck is a visual of you in essence. And so, you know, for the company, there's a lot of loyalty to Ken, because that story resonates with almost every contractor holding the flashlight for a father. It resonates with a lot of our customers. And that was one of the things that actually attracted me to Gettle and why I agreed to come was I believed in the brand and I saw that there were some systems and processes that were in place. We had a good footprint, we had some shared services. So there were things that we could kind of work with at the end of the day. But at the same time, I was trying to learn the business and Ken was throwing more ideas at me than some days I could even take on. Because I was still trying to figure out what we were doing and then what were the right ideas for us to apply. Um, and these conversations, like literally, we'd be sitting here with a glass of bourbon or Rye, and having them over dinner, and literally just debate about the business and what should be prioritized and what should we do, right, and how should we fix certain things. And I think a lot of that dialogue brings out the best of both of us, you know, we We agree a lot of times, but there's times we don't agree either on how to approach something or how to approach an individual. And certainly we've had to make some hard decisions on people as we kind of grew. And I think it was brought up earlier. Sometimes those individuals can't continue to change or can't continue to grow at the pace that we're trying to do within the company. You try to give them every chance to come around, but sometimes it doesn't work out. And those were hard.
Speaker 2You know, something I always want to ask you. So, you came in and you just looked at it from a different perspective, right? You know, I come at it from, I know every nut bolt screw in an air conditioner and all the way through up. But you came in and looked at as the business enterprise. But what experiences in your career, your past, got you to say, I need to put this in, I need to put that in. And most of it was the fundamentals of business, not trade specific innovations, innovation on marketing or sales. It was building blocks of the business. I need the data, I need this, I need that. So how did you acquire those skills?
Speaker 3Yeah, I think I just got lucky in my career. I ended up in a lot of positions where a business was broke and somehow I got assigned to the job. And the good news with a broke business is you can't mess it up anymore, right? So I just like to try things. I like to try to figure them out. It's like a little bit of a chess or Rubik's Cube. And so over the years, as you can expose the bigger and bigger businesses, you were just exposed to a lot of other concepts. Whether the price book, we had a lot of debates on because, you know, the price book in this business is really the heart and soul of the business. It's how you're going to basically estimate any margin that you're going to do, it's your script. And so it's really critical that that is really tight within the business. But I think more than anything, it was just being in the right place in a lot of situations. And certainly the thing that probably shaped me the most was that the journey we went on now in W Supply, where we grew that business just exponentially, and look 70-80 percent of that was organic growth. So it was a focus on people. It was a focus on processes. We like to call it freedom in a framework. So what is going to be the framework that we're going to make sure everything is consistent? But you got to design for freedom because ultimately the individuals in your business want to be entrepreneurs. They want to make decisions. They want to pull levers. And you need to design your systems around that. And I didn't know what was going to work within this space. And I still don't fully. But just trying to take those learnings and then keep an open mind. Even though I have opinions, I don't know everything. I want to stay curious. I want to learn what's important for this business, this industry, or even the timing of where we are in this industry at this time, and the crazy thing is, even in only the three years I've been here, the industry has changed dramatically. So a question back to you, when you look back, and maybe just the last five to eight years, how much of the business is still the same, and how much of the business is different.
Speaker 2I mean, I think the fundamental overall look of the business, the brand, you know, we're not leaning into the brand like we did at one time, but certainly the brand image is all still there. I just, you know, right now the business probably has more discipline, you know, more discipline than it's ever had, certainly more data. You know, I thought I had a lot of data. Like, you know, we were data guys when you could do it, when, you know, to the extent that I could do it at the time. But always kind of leading the charge with, you know, with our numbers, driving the business through the numbers. And there's a number of guys that have worked with me in the past here. It could probably be a test to, you know, 20 years ago, we did another project, and we were really on top of the data. But then you and your team have taken it to a completely whole-nother level that I just said it had not had any experience. So how did you get, what are your critics? Did you get that experience to really be able to break it down to that level of granularity?
Speaker 3Yeah, I would just say like drywall distribution although it's simple right you break bulk you offer contractors credit and you stock and scatter the job right that's it but at the end of the day you got heavy equipment CDL you crane operators. Right, and that's since we measured everything, because we had limited capacity, too, right? The most valuable time in drywall was always that first out, right? So we tried to measure everything. You know, we measured everything from a price book standpoint. We measured everything from a customer, just retention standpoint. And really, we did all of that, but we tried to make sure that we drilled the data to the insight to the individual, so that it empowered the individual. It helped them grow their business, it helped them make decisions, it helped them change behaviors, first destroying massive spreadsheets of people, because that doesn't do any good, right? So it's the translation and getting that simplified, even though maybe complex on the backside, trying to get it really simplified for the individuals, so they know what they need to do. They know what they need to change in order to improve the business. It's almost a gamification of the business.
Speaker 2So, lnw slash abc, roofing, right? I don't imagine they had that level of data when the founder had it, right? It was kind of the same evolution. Somebody came in and put some, you know, some new modern, business techniques inside that business, which scaled it to 4 billion our business, right?
Speaker 3Oh, absolutely, and you know, look, there's a lot of really bright people on the distribution side, especially in roughing and the drywall distribution side. So, like, as we deal with HVAC distributors, you know, Unfortunately, there's a lot of great people, but we're dealing with distributors that are almost 10, 15 years behind, some of the other spaces and just how they think about service, how they think about technology, how they think about integrations, how they think about speed or even AI to script a lot of things, so you have automation where you're not hand typing a lot of things in. We're just not there yet in this space. I think there's a couple players that might be able to get there at some point, but today it's still pretty fragmented. I mean, this is a really fragmented industry. Even though we've got a lot of big companies in here, there's a majority of this business that's still a lot of single location mom and pops, and even on the distribution side, there's still a lot of fragmentation across the distribution side.
Speaker 2Yeah, I would say. I mean, it depends who you ask on how big the industry is, but if you think a business like Franks, it just sold for two and a half billion, it's more than likely less than 10% of the industry, right?
Speaker 3There's a lot of upside.
Speaker 2Yeah.
Speaker 3Right, there's still a lot of opportunity. And then there's, I think it's been said today. There's a lot of market share in all of your markets. There's a lot of opportunity for new customers that are out there.
Speaker 2You just gotta earn their business, right? It's 1% right, 1% of the industry, interesting. Yeah, I got to tell you, you know, it's a different business, I would say from, It started getting a little different, I would say, and back in 1718, get a little more competition, and things started really picking up. Then we lived through the COVID thing, and then some of the big sales, bigger sales happened in 2021, early 22. But after that, I mean, the competition is a whole other game. It's a man's game now, I'll tell you. I used to really enjoy it because, you know, in the land of the blind, the one-eight man as king, and I was the one-eight man, but now it's a whole different game. You gotta be sophisticated to play the game now, huh?
Speaker 3Yeah, I mean, I think a lot of the themes we've talked about today is, you know, everything from knowing your business, knowing where your, your leakages, being strategic about your marketing, how you estimate what you're gonna spend, where you're gonna spend it. You know, they're just a level of sophistication that's happening, but there's also still individuals that spend a lot and don't measure it, that raises costs for all boats. And so if everybody's going to play checkers, we got to figure out how to play chess at the end of the day.
Speaker 2Right. And you know, I will say that, you know, the team that I put pulled together over the years, you know, we had our tools and we had our methods and, you know, we had our system. But a lot of it was done just on brute force. Like, we had a team, we're going to win, we're going to do whatever it takes to win. Now you've kind of refined the culture. Let's talk about that a bit. You've refined it and tell me what's your definition of it now. How did you make it go from the brute force to a more refined process?
Speaker 3Well, I think the biggest thing is this is a people business, right? It's been set a lot today, but ultimately we've got to be a place that people want to work. You know, one of our simple goals is to be the best place to work in the industry. So engagement is key, we measure engagement, we use the Gallup Q12 for that. That, we do that twice a year, we use those surveys to create and facilitate conversations with the team. So we know what's working, what's not working, where do we need to change? But, But having that dialogue, having that servant leadership, where you're looking to help those individuals and grow those individuals, I think it's really critical. People spend a lot of time at work, right? So you've got a lot of choices out there of where you can work, but they want to feel like they belong. They want to feel like they're part of a team. And if we grow them and we develop them, you'll grow and develop your business at the end of the day. So we've put a lot of effort just into our talent, into training, whether that skill set training, at all levels, all roles, all titles, and then work really hard on the culture. And making sure we kind of live up to some of our core values and pledges each and every day.
Speaker 2So look at the horizon, what's the industry look like in five years?
Speaker 3That's a great question. I agree with Frank, I think there's going to be probably a lot more consolidation. I think the thing that's unknown is does AI lowered the barrier to entry, as far as being able to scale your business. You know, some businesses can't quite ever get over a million or two million. Some businesses can't get over five million. But with some of the automation, some things that are coming, does it allow those businesses to become ten? Fifteen, right? I think that's going to be interesting to watch, or does AI become this thing that kind of polarizes the industry and there's the the bigs and the smalls. That's going to be kind of fun to watch to see how it plays out. I mean, ultimately, customers want to have choices, right? And customers want to feel good about their experience at the end of the day. And if we stay focused on the customer, and again, use some of these technologies to support our people and power our people and help them deliver legendary service, work we're going to be just fine.
Speaker 2Yeah. I will say while the industry is, I would say it's in flux and it's more challenging that I've ever seen it. I still think that this is the greatest time for opportunity for the gen-wise, probably not gen-zeers, but the gen-wise to really go out and build a fortune, One, they raised with tech, so that doesn't scare them at all, and they can implement the new toys out there to help it grow the business, and there's just a whole other level that I haven't seen before of these younger dudes who are really knocking out of the park, and who would ever think that $100 million each fat company would be fairly
Speaker 3I mean, I think the neat shift that I've even seen in the last three, four years is the trades are actually cool. I mean, my son is a general contractor, right, and he and a bunch of his other friends are contractors in construction. And, you know, the neat thing about the trades, the neat thing about construction is people need shelter. Right? People need to have homes that are taken care of. And so that's not going to go away at the end of the day. And then we've seen it as far as the younger generation, having more interest in the trades, our latest version of our apprenticeship program, we had 1,500 resumes come through for 30 positions. So there's a lot of interest to be in this space. And what's exciting is we get to pick the best ones, right? We get to pick the individuals that have the right character, the right impersonality, the right attitude, And I think that's going to be a game changer because if we can train them from the ground up on a lot of the technology and a lot of the good practices that we want them to do, we're not trying to break habits. We're actually, we're forging great muscle memory on how to run those calls, how to treat those customers, how to use the tools that we're providing for them.
Speaker 2Go on forward. what's your growth plan, like where you go in, where you want to be, how do you want to even this situation out?
Speaker 3Well, we're super focused on the Southwest. So we want to continue to expand in Nevada, Arizona, Texas, at the same time, we'd love some colder markets. It's tough dealing with the seasonality and Darryl can attest to this of a desert market. It's feast or famine, right? And that's very difficult on your P&L. And so if we can get into colder markets, you don't either have Oklahoma, Colorado, but we'll be focused really on the southwest, it's kind of our sweet spot.
Speaker 2Okay, so anybody have any questions? Got two minutes. We were that captivating.
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