Scaling a Home Services Company to $30M: Pricing, Leadership, and the Path to Private Equity

Summary‍

00:00 – Introduction to Dan James

01:04 – What sustains long-term founder motivation

04:45 – Launching Black Diamond Experts during the recession

10:55 – The breakout decision to expand into HVAC and plumbing

17:00 – Scaling leadership and implementing EOS

24:46 – Preparing the business for exit and improving EBITDA

31:42 – Lessons from private equity diligence and repricing

38:18 – Transitioning from operator to SaaS co-owner

41:56 – Advice for founders earlier in the scaling journey

‍

Full Transcript

Jeff Holman (00:01.189)
Welcome back to the Breakout CEO Podcast. I'm Jeff Holman, your host, and so glad to be here today with Dan James joining us. He's got an awesome story. I was introduced to Dan by a banker friend of mine, and he told me that you have just a trajectory that's worth sharing. And so we're really glad to have you here today, Dan.

Dan James (00:24.268)
Yeah, yeah, I've worked closely with Ivan for a while and it was awesome for him to get that intro. He's actually worked with me for quite a while and seen a lot of the growth, the companies I had. so, yeah, glad to be on here with you.

Jeff Holman (00:38.877)
That's awesome. It's fun, you know, talking to bankers, being an attorney, talking to some of my finance friends. We all get to kind of see the back end of this, right? Behind the curtains, what's going on? And so when somebody comes and says, hey, Jeff, you know, I've been watching this company, I've been working with this company for a while, you should talk to them. I'm all ears, right? So fantastic to finally connect because I know you're super busy too.

Dan James (00:59.266)
Yeah, definitely.

Yeah, yeah, I'm excited to be here.

Jeff Holman (01:04.529)
Fantastic. Well, so wanted to ask you an initial question. It doesn't have anything to do with your businesses. I know we've got a couple of businesses we wanna kind of touch on before we talk about your breakout moment. But with all my guests, they're all really busy. They've done some incredible things. And I'm always really curious, what is it that keeps you going? Like this is a grind being in this role. At least I'm gonna say it's a grind. Maybe there's one or two guys who it wasn't.

wasn't really a grind for, but I haven't met them yet. What is it that keeps you going day to day building, working, know, designing things, launching things? How do you do it?

Dan James (01:43.948)
Yeah, it's a great question. And I've kind of gone through a little bit of up and downs through that as I recently retired from the company I founded and now heavily involved in a new company. You you've got to have that internal, you know, internal passion to see a result that's far enough down the road that it gets you excited about it. And you can wake up every morning and think, you know, am I on the path to reach that achievement? I had the option to just follow to retire and start.

you know, taking it easy. I learned very quickly that even if you're retired, you know, life isn't fun if you're not being challenged, if you're not doing things that, you know, get your blood boiling and going. so I think that, you know, regardless of where you're at financially or what your bandwidth is, if you can find that, you know, that core thing that drives you and keep your focus on that, it'll help you push through everything. Because I agree, it's always a grind. It doesn't matter what any business you think, oh, that business is doing amazing, blah, blah. And then once you go and talk to them and realize that they're doing the same thing we are, they're

it out. Nothing's perfect. They're making tough decisions and living with past decisions and so just part of the deal. That's what makes us unique and it's awesome to hear other stories from other entrepreneurs that have been through a similar thing like me.

Jeff Holman (02:56.251)
Yeah, yeah, it really is. And that's what this podcast is all about is kind of bringing those stories to light. I'm curious, I've been thinking a lot lately about winning and talking with other guests. And I've wondered for CEOs who are getting, mean, clearly, let's just say you've had some wins, you mentioned you could retire or whatever, you've had some wins, right? From the outside, we would all say those are definitely wins.

But what's the mentality around winning? Do you think about, you you're playing a game and you're trying to get these wins or is it just the grind is the grind and I just hustle? Like, do wins come into your thought process at all?

Dan James (03:39.891)
yeah, yeah, definitely. You've got, if you don't have wins along the way, then there's nothing to get excited about. And so I think it's really important to celebrate wins, clearly to find what a win is. A win is because, you know, like for example, we, every day we have a daily huddle and we review yesterday's numbers and if we win the day, we celebrate, we get excited. If you don't win the day, you got to keep your head down and figure out how to win the day next day. And so I think those moments of peak excitement and activity really kind of keeps your,

your motivation there and yeah, if you're not focused on winning, what are you focused on? yeah, I fully agree with you there.

Jeff Holman (04:16.326)
That's a great question. I sometimes wonder if I have the answer to that. If you're not focused on winning, what are you focused on? I'm not sure yet, but I don't know if I'm always focused on winning myself. That's why I love talking to people who really have that winner mentality, right? That mentality of there is a win today, there's a bigger win this month. So anyway, that's a theme I'm gonna keep exploring with guests and on my own. I would love to hear about your business, Black Diamond Experts. This was a long time thing.

This is the business that you started from scratch, right? Tell us a little bit about that.

Dan James (04:49.026)
Yeah, Yeah, so.

Yeah, kind of interesting story. in high school, my first job was, one of my friend's dad was an electrical contractor, hyper electric. And actually that founder just passed away last week, so I've been thinking about him a lot. But I got into that industry and I was working just as a helper, on like an elementary school remodel. And it just kind of clicked. I enjoyed it. So then my senior year of high school, I was an electrician half the time, and went to school half the time and was able to graduate that way. But I knew there was a

ceiling as an electrician, can be as amazing as possible, but there's a ceiling and it's, you know, it's not high enough to get me excited, you know, and so I always had a plan of starting a knowledge school business and I just didn't know when that would time out. And so I went through and did my, the schooling I needed to do to get the journeyman's license. And I got that done, you know, at a pretty young age. And then you have to have another four years to be able to get a master's license. And so I think I was around 28 when I got my master's license.

It was right 2008, 2009 recession where my everything was kind of going south. The boss I was working for at the time, he was a great guy, but he wasn't getting paid from his contractors. And he was on his way out. And I kind of had a choice. Like, do I just go work, go to another company and not have any control over whether that company succeeds or not? Or do I go out there and just start my own company and then if I fail, it's on me. but I always knew that I if there's

Jeff Holman (06:04.22)
Hmm.

Dan James (06:20.396)
If it's something that I'm not as experienced in and I'm a rookie in or maybe I'm playing in a bigger arena than I'm used to, the way you can make that up is just by working harder. And I always had that mindset, like, if I'm under qualified for this specific situation, I'm just gonna work harder to find a way to work through that. And so I started the company in end of 2009. It was a rough couple of years, luckily, early on, I was able to hire a couple of really good guys that have been with me throughout the whole way.

And, you know, went through, started off doing new construction, dealing with contractors. And I remember so many days just walking out to the mailbox saying, please tell me the check is here. Open up the mailbox. No check. OK, how am I going to figure out payroll this week? It was it was brutal. so we slowly started realizing, hey, I don't want to be a slave to these contractors that, you know, can pay you whenever it's convenient for them. And so my one of the guys I had hired had a lot of experience in the services industry.

Jeff Holman (06:59.682)
yeah.

Jeff Holman (07:14.682)
Yeah.

Dan James (07:20.238)
for a big company around here. so he convinced me, service is where it's at. And that way you're dealing with primarily homeowners or business owners and not contractors. And it allows you to have better margins, more control over your success and everything. But it requires a different kind of skill set. Because in the service world, you can be a great electrician. But if you can't communicate with customers and you can't sell jobs or that type of thing, then

you're not going be successful. And so we had to learn how to train really good electricians at the time it was electrical and eventually more, but teach them how to be good salesmen and be good communicators. And we'd have to learn some guys just are not meant to be salespersons and they can do a great job just leading jobs. But then other people, it comes naturally to them. You just got to be able to train them how to do it right. so the...

Jeff Holman (07:57.02)
Mm-hmm.

Dan James (08:13.367)
A big thing for me was getting away from the contractor world where I had no control over how quickly I got paid to. Every day it was on me and my team to produce the results we needed to to be able to make payroll and continue to grow the company.

Jeff Holman (08:26.716)
When was that? You started in 2009 and how long before you made that switch into the service industry?

Dan James (08:31.193)
to them.

I was probably around 2010 or 2011, but we were still just doing electrical at the time. I remember buying used vans with 200,000 miles on them. I didn't have any money. I didn't have any loans or anything like that. And so we were just scraping by. I owned a lot of interesting vehicles back in the day. But anyway, in around 2016, I would say, I know you brought up the breakout point, and I would say that's kind of when it hit for us. So around 2016,

Jeff Holman (08:43.686)
Mm-hmm.

Dan James (09:02.143)
I was looking for a marketing guy and I ended up getting in touch with a general manager for an HVAC and plumbing company. At the time we were just electrical and I met him and I'm like, dude, this is exactly what we need. got somebody that understands electrical or I know electrical. He knew plumbing and HVAC really well and he was looking to make a jump and so I was able to hire him and he had a lot different background than me. was really smart in college. He went to accounting school.

You know, it kind of had a different career path up to that point. So he had a lot of experience that I just didn't have. And so one of the first things he did was he told me to read a good to great book. And he's like, and so I don't I never read a book in my life, but I can listen to books on Audible. And so I started listening to that book. And then I just got into a kick of just listening to book after book. And I started working with him closely. Like he got in there was looking at our books and was like, oh, this is the medicine. I don't know how he didn't get scared off. But he really helped us level things up on that front.

And while I reading the books, I read a book from another home service founder named Mike Aguilero. And he had a coaching group out in New Jersey. And so I decided to join that coaching group, went out there. And that's when I started really learning the next level of business from him. he had grown a big business. He had exited. And now he was teaching people how to do that. so.

Around that time that's when we started doing HVAC and plumbing and and it was like starting to two new businesses and You know had to learn learn it all over again there, you know, let's go plumbing and HVAC They're all similar. But once you get down into the details, they're a lot different the way it works And so we you know had to go through a lot of trial and error and getting that going but once once we got Once we got those departments out in

Jeff Holman (10:40.763)
Yeah.

Dan James (10:47.789)
man it was like I had three companies now to grow instead of just one and we just started growing really quickly and it was really exciting to be a part of that.

Jeff Holman (10:55.676)
Well, want to, that's fantastic. Wonderful overview. And, I mean, you've lived it, so you, you, you're able to share it very quickly, but, but I want to step back just a minute because you mentioned a couple of things that kind of caught my attention. Excuse me. So first off, you know, maybe I missed the boat. I, in high school, I had a friend call me up and he's like, Hey, come help me out. I'm working for this electrician. We're putting in light poles at this, this facility, you know, up North and we're

We're doing lighting. think we did some schools and some retail. We're throwing these lights in the ceilings and we're pulling wire for the, this theater, you know, that that's a, maybe that's a missed calling. went from that and I loved it. And the guy was great, but I decided to go into engineering and some other stuff and now I'm a lawyer, but you know, what a fantastic path. But the thing that, the thing that where we do parallel, you said something about, know, you make up for maybe what you lack by working harder.

And I've said the same thing to people. And I remember talking to people about, you know, growing my practice. And I said, Hey, listen, if I work this much harder, I see this much more in results. It's just, there's some magnification factor in it. So I'm really curious if you have a number that you've ever pegged that to, that like, how much harder do you have to, do you think you have to work as a percentage or hours or whatever, whatever you have, how much harder do you have to work to make that, to, really see that.

Dan James (12:15.993)
Yeah.

Jeff Holman (12:20.924)
kind of stand out difference.

Dan James (12:23.279)
Yeah, I mean, it's to put a percentage on it, but I would say your average person slash business owner, they're...

You know, they're only gonna work, you know, maybe the eight hours a day, nine hours a day, 10 or whatever, or, you know, they're gonna, you know, make sure they have their holidays and weekends and yeah, yeah, exactly, yeah, exactly, maybe six on some days. so, man, used to, I would get to the office around 6 a.m. My one rule was always, this is when I was, you know, director leading the technicians was I never wanted to have them show up to the office before me because I was the guy that had the plan. And so I would always make sure that I'd get to the office early

Jeff Holman (12:38.65)
Yeah.

Maybe six. Yeah.

Dan James (13:03.505)
And at the end of day, I'd wait until everybody wrapped up and I'd really zone in on what the schedule was for the next day. And so I had a ton of late nights. I used to be on call 24-7. And so I remember one Christmas Eve where

big snow storm came through and my phone just started ringing. I'm like, honey, I just got to go do this, went out and did some service changes and stuff. so I was always, you know, looking for opportunities that would give me an edge and just being willing to work harder, work the hours that other people wouldn't work, answer the phone when other people wouldn't answer their phone. Those were the little things that made a big difference in my success.

Jeff Holman (13:34.161)
Yeah.

Jeff Holman (13:38.096)
Yeah, that makes sense. And I think in the trades, there's a lot to be said about being available, right? Especially home services. The things you do when something goes down, you've got to be available. If you're not the first to answer the call from the customer, then you're probably not getting the job.

Dan James (13:55.277)
Yeah, mission critical to be joining on the spot when the disaster strikes, you need to be there ready to help them out. And that's how you earn a reputation and you earn customers.

Jeff Holman (14:05.596)
Yeah. So when you were early in building this, know, 2009, 2010, how much of the, you know, because you had kind of a trajectory looking back at least, right? You started out with contractors and you moved to the home services and then you started exploring, you know, HVAC and other disciplines. How much of that do you think was something that you purposefully worked towards versus how much of that was kind of

The result of being in the right place at the right time and things just kind of came together.

Dan James (14:37.987)
Yeah, great question. I I always had the mindset that I wanted to grow a big company. I wanted to have a company that I didn't want to be the guy that has five trucks and a few guys. I always wanted to go big on everything. So I always had a vision of big goals at the end. But for a while, it was just on electrical. And I was thinking, how can I scale to that level with electrical? And I started learning pretty quickly that there's

Jeff Holman (15:04.283)
Mm-hmm.

Dan James (15:07.921)
definitely a cap on how big you can grow an electrical business and that was and then we saw you know one of our competitors any hour at the time they started doing HVAC and plumbing and so then I'm like okay that might be something you know they're doing it there's probably something there and then I started looking into it and realizing hey that you know you have the offset the slow seasons you know HVAC gets slow when it's mild and you know but then when it's really cold really hot that's super busy and so

Jeff Holman (15:33.84)
Yeah.

Dan James (15:34.007)
being able to use like we would have HVAC helpers go help on electrical jobs when they were slow or if HVAC is really busy have the electrical guys come and help them out and stuff and so there's a lot of benefits to you know having you know three different verticals essentially but and so so yeah and then I remember specifically when I was out it was called CEO or it was the coaching company and I went there and I

Jeff Holman (15:42.076)
Hmm.

Dan James (15:58.093)
I took on a break and I went and I drove to his building and he didn't run anymore. He'd sold the company, but it was right off of a freeway, know, big, you know, big building, tons of trucks coming in and out. And I was like, man, I need to build an empire like that. And I came back and we, at the time we were to kind of in a small shop in South Salt Lake. And I remember coming back and saying, Hey, we were, we've outgrown this place. We need to, we need to build our empire. And so I started looking around, ended up finding this unique building right off the freeway.

Jeff Holman (16:11.004)
You

Dan James (16:25.311)
Salt Lake called Rapp-Warm Springs Road and was able to get into that building and within a couple years of that, we called it the Empire and within a few years of that, we were filling it up with trucks and vans and the employees. so that was a big vision that I saw, I remember very specifically and I remember achieving it every day we'd have our, sorry, every week we'd have our.

weekly meetings with the techs. I'd stand out in my office, look out the window at all of our trucks pulling in and out and think, this is exactly what I had in mind years ago when I made that decision. So pretty exciting to see that happen.

Jeff Holman (17:00.441)
That's awesome. What size was your business before that? You said something about you didn't want to just have the five trucks. How much had you grown before this vision caught hold? What was your size? What were the numbers of your business, roughly?

Dan James (17:17.903)
Yeah, I'm thinking I was probably around $3 million in revenue or so when we were just doing electrical, which is pretty big for just electrical only. then once we added HVAC and plumbing, we quickly got to, I think we went from like $5 or $6 million to $8 or $9 million, and then from them to $12 million. then from there, I grew up to, I think it was around $15 million. then,

Jeff Holman (17:24.86)
Mm-hmm.

Dan James (17:42.639)
In 2021, when I took out on partners, we were at 18 million. And then from then till 2023, we got up to 28 million. we had some pretty big, yeah, every year we grew. And even through COVID, we were able to grow through COVID, which I know is a challenge for a lot of companies. But it was pretty awesome to see. But we were always aggressive on our goal setting. Luckily, my controller, Timothy, who works with me now at Wink, he was...

Jeff Holman (18:01.019)
Yeah.

Dan James (18:11.247)
huge in helping me with the numbers side of it, tracking, you know, we'd come up, we'd do a budget planning at the end of the year, we'd come up with our numbers on what we need to get every month and stuff, and then, you know, doing our best to hit those numbers. And so having that structure was really, you really helpful. then just having, I had a lot of great team members. mean, I was always really big on taking care of our employees, regardless of if it's, you know, someone worked in the call center or one of our managers, I always did the best I could to, you know, take care of them and.

And fortunately they took care of me as well. So it was a good win-win situation.

Jeff Holman (18:39.921)
Yeah.

Jeff Holman (18:43.482)
That's awesome. I want to hear more about Timothy, because I think having somebody who's there with you, struggling, pushing, setting goals, helping achieve the goals hand in hand is key from what I'm seeing with other scaling businesses. But before I do that, I have a question about the size of the business. When you say three million or six million, I'm really curious how many, I see the trucks running around for the different businesses.

What's the average revenue for a single truck? How many trucks does three million translate into?

Dan James (19:18.927)
Yeah, I mean, I'd say depending on if it's electrical plumbing or HVAC, know, somewhere between, you know, 250,000 and 400,000, you know, per truck is what you're seeing. So you kind of do the math off of that. like electrical. There's not a lot of markup on the materials. And so most a lot of electrical, you make your money on the labor side of it where HVAC and plumbing, especially HVAC, you can actually make money on marking up equipment and stuff. And the equipment overall is just more expensive for HVAC and plumbing.

Jeff Holman (19:27.302)
protract.

Jeff Holman (19:48.4)
Yeah.

Dan James (19:48.923)
And so that kind of, you know, that raises the overall revenue levels. But yeah, around 250, 350, something like that is a pretty standard, you know, per truck. You know, yeah.

Jeff Holman (20:00.391)
Okay, yeah, so if you're doing $3 million in electrical, you maybe have 10 trucks, but when you said, think you got up to, was it 23, 28 million eventually? That's 75, 85 trucks going on. That's a huge growth, right? That's fantastic. So, and is it?

Dan James (20:07.192)
Yeah.

Dan James (20:12.577)
Yeah.

Dan James (20:18.711)
Yeah, yeah, we had a ton of trucks in it. Yeah. Yeah, we probably had I think we had at one point close to 100 trucks because it's not only that we had our trucks of the guys we drive every day, then we also have the warehouse trucks or the manager trucks. And so you back that in. But usually when you're talking about the revenue for truck, it's more of revenue per lead technician in a truck. It's kind of the better definition of that, not just the truck itself, but.

Jeff Holman (20:23.068)
go ahead.

Jeff Holman (20:33.278)
yeah.

Dan James (20:45.667)
But yeah, having that many vehicles on the road is quite the, it's a lot of work and a lot of risk having all those vehicles on the road and always pay attention to that.

Jeff Holman (20:54.875)
Yeah, no, it's symbol of the success and the growth, but also the liability and the insurance going on, So, well, tell me little bit more about working with, I think you said it was Timothy, right? Your finance guy or did you have, was he sort of a right-hand man for you or what did your core team look like that you built this with?

Dan James (21:01.699)
Yeah, yeah, definitely.

Dan James (21:10.02)
Yeah.

Dan James (21:17.773)
Yeah, yeah, it's a great question. within the first couple of years when I started the company, I hired Jared, who I worked with at a company, another company, and he had a lot of home service experience and he was a good friend of mine. So I hired him. He was one of first guys I hired. And then I hired Jason, who was similar. He went to school with him and we worked for similar companies. And those two guys ended up being the primary drivers for Black Diamond and for

for long time and then in 2015, 2016, I was able to bring on Timothy and his skill set was much needed. I just didn't understand that part of the business. I was just focused on growing revenue and doing the best I could and he really helped me slow things down a little bit and be more strategic with our planning and our decision making. I think our personalities complimented each other pretty well. I was a lot more aggressive and gunslinger.

where he was more, hey, slow down, you don't wanna, let's be smart about this. And so it worked really well. I'm not sure if you, you probably, if you're familiar with EOS, Business Management System, there's the visionary and the integrator. And I would, I mean, we basically both fit those two seeds very well. He was a great integrator and I was a great visionary. And then I had Jared and Jason.

Jeff Holman (22:27.492)
Mm-hmm, yeah.

Jeff Holman (22:38.523)
You're running fast and he's like, hold on, hold on. Let me make sure the cash is there for this.

Dan James (22:44.535)
Yeah, yeah, or just make sure you're not missing something and and and then he would always help me with meetings and stuff like that. And then Jordan Jason they were they were dealing with the technicians. They were trying to keep these you know, you know guys these divas some of them happy you know dealing with whatever you know the the know daily projects that come up or the issues that come up. You know we we had you know some higher level salesmen and we all know salespeople are very high maintenance and so they they were able to handle a lot of that for me which which was a big help.

because dealing with people and managing them correctly takes a lot of bandwidth and a lot of time. so having them there was huge for that as well. So that was kind of our core leadership team. We did have a couple other people, Michelle and Julianne on the team as well. yeah, having that leadership team, doing the EOS. I mean, you could probably do whole podcast on EOS, but have you ever read the book Traction before? Right over there. That was also...

Jeff Holman (23:36.389)
Yeah.

Yep, it's right over there somewhere. Traction, Rocket Fuel, yeah, they're great books.

Dan James (23:43.999)
Yeah, yeah, I think it was, can't if was get a grip or traction. of those two is the storyline of a company that, you know, ran into somebody and they ended up getting introduced to EOS. It's kind of like a story about it. I was in that book and I thought that was awesome. And then we, you know, I read the other books that kind of showed you how to do it. And man, that was super powerful. And all the way up to

When I took on partners, those guys are big on EOS and we partnered with with any hour that they were big on EOS as well. So I'm a big fan of that. And it's not that hard to implement once you just got to believe in the system and you got to follow it. But yeah, that was huge.

Jeff Holman (24:18.235)
Spend the time, yeah, take some time and energy. So I'm curious because also, you know, I've done a little bit of that with my team here and we're a smaller team. And I know getting people to buy into the vision and to adopt the system and maybe adapt to the system is its own thing, right? I'm really curious, it, I think you said at some point you went to this coaching, you you joined this coaching community.

and you came back to your team and you're like, or maybe, maybe I'm confusing things. Maybe it was something else. You said you came back to your team at one point. You're like, I've seen what we want to be. Like I've had the vision, like we need to grow. We got to get bigger. How did your team respond to that? Like what was the messaging you brought back to them and what was their response?

Dan James (25:05.327)
Yeah, yeah, I mean, yeah, definitely. That was the clear message I brought back. I was really pumped up at the time on that and seeing that, you know, really excited me. And yeah, it took me a little while to get the team excited about it you're the one coming up with the ideas and a lot of times they're the ones that have to implement it. so if they don't have buy-in on it, then it's not going to get implemented right. so, Kevin, we used to have our leadership team meetings were at 6 a.m. on Friday morning. And I can't remember how many years we did this for.

I don't know, know, looking back, like, the hell was I waking up at five in the morning for this? But at the time, I didn't want the the.

Jeff Holman (25:37.883)
You

Dan James (25:43.439)
EOS process slash leadership team meeting to, you know, drag into the rest of the business and slow the rest of business down. And so and all the technicians, everybody shows up to use around seven o'clock. And so we would we did those meetings for a while that early in the morning. But those being the system is super powerful. If you can get everybody on board and buying in on it, doing one on one is really critical. The weekly non-negotiable meetings that you have every week, the level 10 meeting, that's

you know, that's super impactful. so, yeah, kind of a combination of those things really helped me get the rest of the team to buy in on it and help us, you know, work through problems as a team and not just always Dan's solution. It was more of what's the leadership team's solution to this instead of just you making all, you know, me making each of the calls, know, so.

Jeff Holman (26:27.845)
Yeah.

Jeff Holman (26:31.259)
That's awesome. So I'd love to hear about the moment where, know, just, and maybe we've gone through it a little bit, but I know there's usually some lead up. There's usually some like, we're hitting this wall. And then you kind of maybe listen to that book or you join that group or you, you know, implement this new system and all of a sudden you're like the frame, the framework changes, the mindset changes on the team. And all of sudden you experience growth that you haven't seen before.

What was, how would you describe your, you know, one of your breakout moments in the business?

Dan James (27:05.174)
Yeah, yeah, there's another, this is a really big one. So when you're, at least when we were growing really fast, I was dumping most of the profits into the company and I was prioritizing growth over profit. because I was trying to grow, but we started running into our own ceiling on that front and right around, yeah.

But when COVID happened a little bit shortly after that, so anyway, kind of what happened in our industry around that time is private equity started getting involved and started buying up companies. And then COVID happened and that kind of made it even more, made our home service world even more attractive. So we had, all of sudden it was pretty clear to me that every company, of all the bigger companies were gonna be PEO bought soon because of.

Jeff Holman (27:56.185)
Hmm.

Dan James (27:56.879)
you know, the multiples were great and it just, it would be a no brainer for people not to. And so, so that was around 21. And so I went, met with, well actually I had a PE firm reach out to me and talk to me and, you know, told me this, that and the other kind of got me excited about it. And so first thing I did is I called my coaching company. said, Hey, this, this guy from PE company wants to talk to me, blah, blah. And he's like, you know what? You need to talk to this guy first. And I'm like, okay. So he linked me up with a guy kind of like yourself, a

you know, a broker slash, you know, can't remember, &A transaction guy. And so I got linked up with them. I started the process of, you know, doing with doing our own little mini QV with them and really, you know, started diving into the numbers and it very quickly started realizing that, hey, you know, you could have an amazing top line and but if your bottom line isn't, isn't great, then your company's really not worth that much money. And so

Jeff Holman (28:31.739)
Uh-huh.

Dan James (28:53.295)
It really had me open my eyes a little bit to like, hey, I need to get my EBITDA up. I need to stop being, I need to put profits over revenue. And that was a really hard thing for me to do. And right around that time, so once we did the mini QAV, I met with a few different PE firms and none of them, I didn't feel good about any of them for various reasons. One of them, felt like our team just wasn't ready. I felt like the culture shock would be, because we were always,

Jeff Holman (29:16.763)
Yeah.

Dan James (29:18.607)
all our competitors, the bigger ones, they were part of the next star coaching group. We weren't part of that. were always kind of the, I've looked at it as kind of like the new kids on the block that were a little bit rougher, you know? And so I felt like going straight to private equity would just be a big culture shock. And so I kind of, my aim, but I wasn't looking great at the time. And so I kind of was like, hey, let's just keep on meeting every month. We'll do the roll forward, see how we're looking and take it from there. So that went on through 2021 until, I'd say,

spring or maybe early summer and my guy he gave me a call he's like, hey, got these guys I want you to meet with and I'm like, okay, so I went and met with them and it's four guys that, you two sets of partners that had sold their companies to private equity in California. I did very well there, you know, had a decade or two on me on age and experience and so I met with them and just kind of to start talking. So I never wanted to take on partners. You know, I knew I heard horror stories about, you know, this guy's.

Jeff Holman (30:07.695)
Mm-hmm.

Dan James (30:14.351)
took on partners and this happened. So I was really, really, you know, you know, I was against that. But once I kind of met these guys and I started seeing like, hey, these guys knew how to do it. You know, these guys knew how to grew and they had to know how to make money at the same time. And so so more and more I got to know them, the more excited I got. And then in 2021, I was able to bring them on where I essentially sold 100 percent of the company and we created a new company. And then I bought in 35 percent of that company at that time. And so so I saw a lot of skin in the game. And then

Jeff Holman (30:43.6)
Yeah.

Dan James (30:44.129)
I went through some tough training. mean, went from, after we closed, came pretty clear to me that I needed to level up a lot and that my leadership team needed to level up a lot. And we had a lot to do to reach our goals. so then we started working on improving the bottom line and making the company more attractive for a future investor.

I'll kind of pause right there. know that was quite a bit of story, but any questions on that so far? Yeah.

Jeff Holman (31:12.219)
No, I love it. I love it. That's I mean, that's what happens, right? You you've been running this business for 2009 to 2021 up to this point, right? 20. And so you've got 12 years. You've got a dozen years of this 6 a.m. meetings with your team 6 a.m. to we'll just call it 6 a.m. to 6 p.m. But you probably were working more than that, as a lot of owners do. I mean, so there's so much going on. What do you think throughout this process? I love that you talked about

Dan James (31:35.694)
Yeah, yeah.

Jeff Holman (31:42.214)
quality of earnings and like rethinking your financials and you know, what are we, are we really going just for all out growth or do we need to have some balance with the profit? Like what do you think were maybe your one or two takeaways, the big lessons or the shifts that you, the insights that you got from going through that process where you're like, grow, grow. Wait a second. Pause. Let me think about this. I think we got to tweak this or shift that.

Dan James (32:13.103)
Yeah, I very specifically remember when I was meeting with these guys before we partnered and they told me they had an EBITDA at 28%. And I'm just like, how the heck can somebody pull that off? I'm sitting there with like a 10 % or, like, how can you do that? And so we quickly learned a big part of it was just charging the right price. I mean, we were, you know.

Jeff Holman (32:24.443)
Your jaw just drops. You're like, what?

Dan James (32:37.675)
we were underpriced in the industry, which helped us grow a bit, but it also was hurting us at the same time. So we had to do a combination of raising our prices to where, to a point where we actually had a chance to be profitable if we sold jobs at these prices and then really being more.

smart about your cogs and your everything below the line. mean, being smarter about do we really need to be have this expense every month? Can we be smarter about this? You we also we locked our price book where it made it were the only way a technician could change the prices by discounting it. And that affected his or her commissions. And so that was that was a really tough thing to get the guys do that. But once we did it and we started seeing the results were like, OK. And so there were so many things that those guys helped us implement. And at the time,

Jeff Holman (33:15.032)
yeah.

Dan James (33:26.083)
either myself or Jason or Jared or Timothy was like, wait, this doesn't make sense. And then we'd go through the process and be like, okay, I see the light now. I understand why we did that that way. so that last, the time from 2021 until 2023 when we ended up selling to private equity, was constantly reviewing every month we'd have to do our roll forward on the Q of E and we'd have to see if we're actually growing EBITDA or not.

And so we were just really paying attention really closely to the bottom line. And that takes a lot of energy and a lot of focus and discipline. And so I quickly learned why some businesses just don't ever become a whole lot while other businesses become amazing. And a lot of it just goes down to the basics. If you don't sell for the right price to begin with, how are you ever going to have a good profit margin if you didn't sell for the right price? Because even if you sell for the right price, you've still got to have the install go smoothly. You've got to be smart about this, that, and the other. But if you start with the wrong price,

Jeff Holman (34:14.288)
Yeah.

Dan James (34:21.625)
you're never gonna hit the profitability because it's not possible. So that was something that was really impactful for me that helped us out a ton.

Jeff Holman (34:27.695)
Yeah, that's interesting. had another guest on, Stephen talked about pricing more. He's more in the e-commerce field, but pricing your products, your manufacturing right up front is the key, according to Stephen to having that successful business. So how long did a change like that take for your team to adopt? Cause those are hard things. you're in your groove, you're doing awesome. There's nothing wrong with what you're doing, but you want to shift it to do it maybe.

higher quality or whatever, how long did that type of shift take for your team to adopt for those big shifts?

Dan James (35:01.837)
Yeah, I mean, we've learned it pretty fast, but I'd say for it to fully stick, you know, at least six months and quite a few. We learned that.

Once we implemented the new prices and locking the price book and being more strict about things, we just found there was quite a few employees that just weren't fit for us anymore. so we, at the same time while we're doing this, we ramped up our recruiting so that the guys that we were hiring, you know, were a good fit for us. And so we, you know, we lost quite a few guys throughout that process. And, we were hiring new guys that were now believers in the system that we built and a lot more on board with it. And so I'd say, you know, within six months, I think we started getting some good traction and,

after about a year or so. think we really had things running smoothly. But it was a big transition and it takes time and a lot of focus and effort.

Jeff Holman (35:49.945)
Yeah, no, you make it sound not that you're, I don't think you're trying to paint it as an easy process, but we're talking about it in such a condensed form. It almost sounds like it was relatively easy, but I'm sure it wasn't that way on the day to day. was, you know, the hard work and the grit and the discipline that, you know, above and beyond that added percentage or what have you, above and beyond what other people are willing to do to achieve that.

And it worked out. So you sold in 2023, right?

Dan James (36:22.095)
Yeah, so in 2023, well, so from 2021 to 2023, was in like, I went from doing a huge QAV and everything with these guys till then from 2021 to 2023, every month we were doing a roll forward on your 12 months. we growing or are we not? We went through multiple.

We actually almost sold one company earlier that year and got through the Q of E, got through everything and then it was right when the banks in California went under. can't remember what the Silicon Bank.

Jeff Holman (36:53.034)
SVB, Silicon Valley Bank. Yeah, that was a major disruption.

Dan James (36:57.295)
Yeah, and these guys were heavily, you know, they were going to finance it. And so it just didn't work out. then we luckily found this other group that was ready to rock on it. And we were able to quickly get that done. But man, the process, if you've ever gone through the full diligence and the full Q of E, it's a big deal. It takes a lot of energy. You can't really be telling the whole team about what you have going on. And so you've got to be smart about,

Jeff Holman (37:24.964)
Yeah.

Dan James (37:26.627)
that and then it's just it's a headache. And so I'm a firm believer in having, you know, having the company to help me out, our broker who did both deals for us, having him there was was so valuable because he's telling us, you know, he has a pulse on the industry, what the multiples are, what, you know, what what kind of things these groups are looking for. And he could give us that insight so that we could turn that insight into help. We do that. And so

Having that coach in the corner to help us out was mission critical. think if anybody's ever trying to sell a business, the worst thing you could do is just do it on your own because there's just so many things that could go south on you. so yeah, hopefully that helps clear some of that up for you.

Jeff Holman (38:09.368)
Yeah, thank you. Thank you. And you haven't stopped since then, right? You got your new project you're working on, Wink Toolbox, is that right? So.

Dan James (38:17.453)
Yeah.

Yeah, kind of a another interesting story. So back in the 2016, 2018 range, we were using a software that was from Australia called ServiceMate. It was amazing field service software, but it had its limitations and it was like no one knew about it in the US, but I had dug and found it. that software, the only way you could get reports out of that software is you had to use this Wink, at the time it's called Wink Reports to do that. And so I had them build us

Jeff Holman (38:45.604)
Mm-hmm.

Dan James (38:48.497)
a very in-depth reporting and commissions process where we, that's what we use to do all of our commissions every week and then to do our monthly reporting for the guys. And so I got to know their software really well. And then in 2020, we switched over to Service Titan, which is kind of like the sales force of our industry. And very, way, way more expensive, but a much deeper software. And so we made the switch to that platform and which is very difficult, but we got through that and then

Jeff Holman (39:06.649)
Mm-hmm.

Dan James (39:18.415)
Once it does settle, I'm kind of like, man, I'm seeing all these holes at service Titan. The best software has that, you know, their reporting is not nearly as good as the reporting I had before. There's, you know, these automations that suck, this, that and the other. And so that's when I was like, I called up Johan, one of the founders of Wink and I'm like, hey, we should, if it's working in Australia, there's no reason they can't work in the USA, but we have to build the connectors to be able to do it and service Titan.

It would be such a big connector to build. so he was like, well, don't have the finances to do that or whatever. And so that's when I was like, hey, I'll be your angel investor. I'll start investing. I had no ability to really help the company at that time, other than a little bit of advice here and there and then making some investments. But they took it and focused on building out this integration with Service Titan and some other USA companies. so

So that's kind of been going on since 2021. And once I retired from Black Diamond in 2024, I've kind of jumped right into that. it's been, it's completely different. I'm going from a home services arena where, you it's very, you you sell a job and you move on to the next one to now the software world. It's just a completely different beast, but it's been super fun to learn. And there's a lot of similarities that apply to both businesses. but, and it's really awesome for me to

We're helping other businesses like I was back in the day, you know, like I when I got coaching, you know, from that coaching group in New Jersey, we're helping with some of that type of stuff for companies that are now growing that might be smaller or need some advice. And it's awesome to be able to step in and say, hey, I've been there and done that. This is what we did. And this is what will probably help you out. they're like, yeah, OK. And so it's not just the software that they value. It's the combination of software. And they've got myself, Jason, Timothy, all work together on this as well to help.

help customers figure out how to scale and grow their home service company. So that's kind of a new thing and it's been pretty exciting for me.

Jeff Holman (41:11.95)
Yeah, I'm to be on the other side of the table a little bit. I'm really curious what, you've been through all the stages from, you know, from the time you started an employee, you know, getting your journeyman's, your master's, start your business, growing, scaling, adding other businesses to it, perfecting it, selling it, you know, now you're now you're doing the other side investing like, like, where are some of the points that you found the most fulfillment? you think?

Dan James (41:39.247)
That's a good question. mean, you know, clearly when you have ownership in something, it gives you a different level of, you know, excitement and anxiety versus when you're just working for somebody else. And so, I've always enjoyed.

I never wanted to be I want to be in the top, you know, five or 3 % or whatever. I never wanted to be just your average guy that did pretty well for himself. And so I've always looking for for, you know, ways that I can kind of, you know, fulfill that, you know, desire for me to grow that level. And so so, yeah, I mean, all of its all of its critical, though. I mean, if you can't let's just say you're early on and you've been doing a certain thing for a couple of years, you know, have a ton of experience really hard for you to go and start up a business if you haven't.

Jeff Holman (42:10.521)
Yeah.

Dan James (42:26.159)
you know, learn the ropes of that business elsewhere before that. And so I think that's probably one of the reasons a lot of startups just don't work out is maybe they just maybe jumped in too soon or they weren't ready for it or whatever. having, being an expert at that specific industry gives you a huge advantage when it comes to making that business successful versus just, you know, trying to copy somebody else where you haven't really done that type of stuff before.

Jeff Holman (42:51.15)
Yeah, well, this has been this has been awesome. I've been able to just enjoy pieces of the journey along the way. And our audience gets to hear some of these nuggets of insight and and, you know, gold, golden counsel, I would call it from you. What are some of the what's maybe the the thing that you would leave with somebody who's five or eight years behind you in this journey that they've they've maybe started their business there.

They're going through the struggle. They're they're trying to grow. They're trying to get their team on board and maybe trying to keep their team, but seeing that they have to replace some of their team and like like what would be one or two of those tidbits, those words of advice that you give to them.

Dan James (43:32.899)
Yeah, I mean, clearly being able and willing to work harder than the next guy is always going to give you an advantage like we talked about before. Having the right team, having a good leadership team is a world of difference because if you've been able to level up three or four of the people that you work with closely to be working at a high level.

Then it allows you to delegate, elevate and really focus on the stuff that only you can, that you're the best at. And so I'm really big on, know, leveling up employees and, you know, trying to figure out what, because some employees, they don't have the drive to become a service manager or to become an owner at some point. They just want to, you know, make some good money, go home and hang out with their family, which is totally fine. Other guys might be very, very aggressive. They want to sell as much as possible or whatever. know, those are two

different types of mindsets and you've got to be able to learn at an early stage what kind of person that is and make sure you kind of.

put that person in that scope of work or that focus. so people is huge and getting them leveled up. then systems and processes. I I spent years and years just winging it. know, Dan's way, everybody used to joke about that. And so it worked out, but a lot of it didn't. But you can't duplicate something until you build the system and a process, and then you train on that process and implement it. And so at any stage of business, the more systems and processes

you can be able to set up to delegate to others, the more that you can delegate to others and focus on the big picture for you or focus on your EBITDA or focus on whatever that might be. so, other than that, mean, just remember that most businesses, that's what the bottom line comes down to is your EBITDA. And I wish I would have been more focused on that at a younger age. think I could have made a more valuable business if I was more focused on that. And so I think really understanding what EBITDA is and how

Dan James (45:29.817)
you evaluations are and so you can always have a pulse in the back of your head like, hey, is this decision going to help the bottom line or is this decision not going to? And so yeah, those are a few tips I have.

Jeff Holman (45:38.35)
Yeah. That's awesome. mean, yeah, it sounds, that sounds like three more podcasts, maybe master classes, you know, get the right people, get the right processes, understand the real drivers in the business that, value valuable advice right there. Well, well, Dan, I hate to cut this off because I'm really enjoying the story, but, we, we really appreciate you being on the show. It's been a learning experience for me to hear your story. And I'm sure for our audience to.

to be able to hear the story and some of those tidbits that you shared, those pieces where you, you you learned something that you hadn't known or you leveled up from somewhere you hadn't been. So thank you for sharing that with us and thanks for being on the show today.

Dan James (46:22.831)
Yeah, yeah. Thank you for inviting me. I've watched a few of your podcasts already. I look forward to watching more of them. It's always great hearing stories from other people. And if you can, if you can watch one podcast or listen to one book and get one big nugget out of that book or podcast, then it's well worth it. So, uh, yeah, I, I, I'm excited to see more of your podcast. You're doing a great job.

Jeff Holman (46:40.162)
That's very kind of you, Dan. Thank you so much. And to our audience, thanks again for joining us this week on the Breakout CEO Podcast. I'm Jeff Holman and we'll see you next week.