Lessons From an Industry OG | Rob Levin (Ep. 248)

Everything was centralized. We made sure that each office only had one thing to do: sell and install. You don't have to worry about onboarding people, you don't have to worry about accounting, you don't have to worry about collections. All that was handled and centralized so we could keep the offices and the overhead smaller. Then we could have control right there in corporate headquarters with everyone dealing with— everything was Fumbling to the Center.

Hello everybody and welcome to a special episode of the Wealthy Contractor Podcast. This is not just another episode. This is an episode that I think that you are going to want to really pay attention to because with me today is one of the people that helped shape the modern home improvement industry. And chances are good if you've been in the business long enough, you've probably felt his impact, whether you know it or not. Rob Levin was the COO and major shareholder of Amri, also known as American Remodeling, one of the most dominant home improvement companies of the 1980s. They were listed on the New York Stock Exchange. Amway wasn't just big, it was everywhere. A direct sales powerhouse, Amway built a reputation for training some of the best salespeople in the industry. And here's the crazy part. Many of those salespeople went on to start their own companies. In fact, there's a good chance you've worked with or competed against an entrepreneur who got their start at Amway. I used to hear Amway all the time. Like, and I always wonder, what, what is this Amri people talk about? And it's funny, it was only in the '80s. I thought it was like way back in the, in the '60s. Anyway, Rob's seen this industry from the inside out, from the boardroom to the sales floor. And today he's going to share lessons from building one of the biggest home improvement machines of its time and what he sees as the key to long-term success in the business. Now, what's really important here is He didn't just do it one time. So Amory, you built in the '80s, Rob, you were out in '91, and then in 1994, you started another monster home improvement company called Statewide Remodeling. Statewide Remodeling was recently sold to private equity.

It was sold 6 years ago in 2019.

Oh, 2019. Okay. So it's been a little while, but you stayed on there for a little bit. After the sale?

No, I left. They—

Oh, you left. Okay.

Some of the, yeah, some of the private equity firms, some want you to stay, some want you to go. So me and my minority partner went and, uh, okay. I trained the current president to be, I'd already named him president of statewide below me. And so he was ready to go.

Yeah. Well, cool. That's the best way to do it. Sell, get a big check and don't have to show up for work the next day. All right, so Rob, let's start with Amory. So this was a massive company. Let, let's give people some perspective because the massive companies that we see today, just really over the last, I'd say 7, 8 years, you built that type of company way back 40 years ago. So can you give us an idea of scale? Tell us a little bit about Amory, how, you know, how did it start and where did it end up? Just maybe the quick version of it.

It started as American Remodeling in 1981. The actual person who started it, who's my partner, Steve Bedowitz, he started it, and I was his wholesaler that I was shipping him material down to Austin from my Dallas office. He realized that he was short on accounting and operational expertise. He was a marketing guy. That was his background. He actually had a marketing company before, and I was a CPA, and I was you know, running a wholesale company. And he asked me to come down to be his partner and take care of that part of the business. And so that's what ended up happening. I decided to take the step. My wife of 3 months was kind enough to agree to go to Austin, which was close to her hometown too, and take a big cut and pay to do it. But we started and, and everything worked out for us from, from that standpoint.

Well, give us an idea of how it worked out.

Steve had just gotten— Steve Bedowitz, who was my partner, uh, had just gotten the contract to do siding work for Sears in the Austin market. And he had just gotten about 6 or 7 months ago and, and he knew he wanted to grow it bigger and he needed some help doing that. So what happened was we got Austin and then we did so well there that they sent us to Houston 7 months after I got there. And then 3 months after that, they gave us Dallas. And then it just kept expanding from there. They just decided that they were selling it in store at that time and all these other locations. And they go, well, these guys can do it. Let's just keep offering more territory. First 7 offices were in Texas and then we started moving out from there. The secret was just, I think the secret to it is obviously getting good people and a good training process. And we had great sales manager. He knew how to train and motivate guys. It was a one-call, a one-call close at that time. And we just grew the company over the, over the next 9 years. We went from $1 million our first year in 1991 to $300 million. And from that one little office in Austin, Texas, we had 56 offices in 33 states, you know, doing mostly all, almost all work.

And this was in the '80s. So $300 million in the '80s would be about how much today, you think? Let's ask ChatGPT.

Yeah. Yes, Chat.

$760 million. $700— and this was back in the day where a big company, a big successful company, was doing how much revenue?

I mean, even the bigger companies were probably doing at that point 10 million, 20 million, 10 million.

Yeah. And, but yeah, and that was, that, that was a big company back then. Even, it's interesting, you know, if you look at the top 500 list today and you compare it against even again, 7, 8 years ago, the top 100, the numbers are just astronomical now compared to what they were in the past. And I think that just goes to, innovation in the industry, people understanding and looking back at history and looking at the past and saying, well, how did American Remodeling do it? And a lot of the people that— and I don't know, have you tracked how many people that worked at American Remodeling went on to start their own companies and, and, and build organizations?

Hundreds at the time that I left. I mean, the time that I retired from the industry, there's probably thousands today. I can't tell you how many meetings I went to, you know, back in the mid-2000s, you know, 2015, '16, that I would keep running into people who were saying, I worked there, you know.

Yeah. I have two clients right now that I know for sure that directly worked for American remodeling back then. And what's interesting now is probably we've got— now we've got some second-generation entrepreneurs that have started, and they don't even know the background, the history of where it all came from. And where they're getting their knowledge from is from back from your days, which is really fascinating, really interesting. And so you guys, you guys were a hell of a direct sales organization. You trained some of the best salespeople in the, in the country, in the industry. What was your philosophy when it came to building, training, and scaling a high-performing direct sales force?

Well, my partner Steve took care of, and my, our sales manager, obviously, VP of sales, they took care of the training portion of it. But we set guidelines. I set guidelines for performance in reference to numbers, the mathematical side of it, you know, and because I'd done a lot of research over the years that we had, as we started and kept good numbers in reference to what a successful salesman really needs to net out of the leads that we give him, the presentations that he makes and how many of those he closes and say, and, and goes to, goes to installation. And we, I was black and white on it. Steve and the sales manager were always a little on the grayish side sometimes, not always, but sometimes we're on the grayish side. Yeah. And they would discuss it with me and I would go, I'm just telling you it's not going to happen. Or yeah, this guy's close enough that I can see a trend that he's, he's, he's good enough to save. But if they save somebody, I would give them. Let's just say I'll go, come on guys, you know, we've got a plan. We need to stick to it. We'll be wrong sometimes, but that's okay. But if we were wrong by keeping the guy, that's a bigger mistake.

So it's interesting. You just said mathematical formula and we talk about it here all the time. This business is very formulaic. Can you talk about some of those formulas that you looked at And you managed to?

Well, the biggest thing was, was the, the closing ratio and, and what affected it. Um, sometimes there were, you know, there were cancellations, they were in bad areas for rejects for credit. So there were, there were things that were included in deciding whether that they were performing according to specifications that we're looking for, the numbers we're looking for. And I think that's the thing you really have to do in business. My partner used to tell me, I says, you're the most black and white guy I know. And I go, that's what I do. I'm a numbers guy. There is right and wrong. And that's how my mind works. And that's how I ran, made my decisions as COO of Emory. You make decisions. That was the job of COO, because if you don't make a decision, nothing keeps moving forward. Making a, you just hope you make the right decisions more than half the time for sure. And that's the goal is to just, you keep things moving, make decisions using the information that you have and do what's best for the success of the company and for the people that are there.

If we can, let's kind of drill down into, let's just say like what, what the numbers you were looking at, you were looking at close rates. You were, you were probably looking at NSLI, net sales to lead issued. Yes. Was there anything else you were looking at?

Cancellation rates.

Cancellation. Okay.

Were a big, were a big thing. You know, what was causing the cancellations, that their number was, was high. Certain guys had very low numbers, uh, in reference to cancellation rates. There were certain guys that we, doing the analytics, they were selling too low. And that's why they, I mean, there was a lot of analytics involved in it, even back in those days. You know, I think you said I'm just a numbers cruncher. I'm a CPA by background. I mean, I started out in public accounting out of, after I graduated at Maryland. And so I analyzed things, you know, and those were the, Steve wasn't as analytical as me. He was a marketing guy. My job was to, you know, take care of that and do the analysis on what's going on and see what causes the results that we get. I mean, you have to analyze things to get to understand why you're getting the result you're getting. You know, Steve used to say, you know, um, you keep doing the same thing over and over, it's going to be the same result, right? Yeah. It's just the way it is.

Now, let's say that you had salespeople that were not hitting the right numbers, what would happen?

The manager for, I mean, when we were smaller, the managers would try and handle retraining the guy, take them out in the field for a little bit, ride with them. I mean, the managers all rode with the guys just to see what their presentation was. They rode more with some guys who are having, when they're having problems, they spent more time with them. Um, we also had a program where at some point we took some of the retraining out of their hands and we brought them back into corporate, into Dallas. And we would have guys in the re— we would, we would do a 2-week retraining with them, you know, the, the whole presentation. They'd go through the whole thing, um, see where their problems were, and then, and our, our trainer would, would analyze on an individual basis what the issues each individual had.

Now, would you look at their performance? Obviously you would look on, you know, monthly, weekly, and daily, but at what point did you say, uh-oh, this guy needs to be pulled out?

Well, if he was under 20% for more than 3 months in a row and, and he was always on the bottom, you know, toward the bottom, uh, yep. You know, and he was gone. Just that simple.

But when did you, when did it trigger for you that, hey, wait a minute, this salesperson, uh, should not be getting any more leads. They need to come back in for some training.

That wasn't my final decision. I would just, I would give the information and listen. I trained the guys on how to read what they're getting. I mean, you know, all the managers, we had managers meetings on a quarterly basis. We would go over how to analyze the information we were giving them and they would make that decision with the sales manager. The VP of sales, um, that these guys need, certain guys need to come back in, in their places. He goes, well, I'm going to be short 3 guys or whatever the number is. You go, we're not going to give this guy any more leads and you don't want them because your numbers are not going to be where you're supposed to be for you to get what you're supposed to be doing. So they didn't fight it. Let's just put it that way. After a while, they understood that this was the best thing for the long run for them too.

Well, you have the numbers. Here's the target numbers. These are the numbers we have to hit in order to hit our plan. And if we don't hit these numbers, something's wrong and we gotta deal with it today. Not a year from now, not 6 months from now. We have to deal with it today. It's one of the things that you see in smaller, even in some larger companies where they don't take their numbers as seriously as they should. And sometimes they're not looking at the right numbers, which is problematic. You talked about decisions. Your job was about making decisions. You were the CEO, but you were, you were also one of the owners. And so what, what are those important decisions that you make as an owner in order to make sure that your business is performing the way that you've planned for it to perform?

I think the biggest thing on the sales side, the biggest problem that came up was they had a per— they got to have a personal relationship over time with some of these salesmen, and that's why they were holding on to them. I think that in general, listen, it's a people business. That's one of the things I miss the most about being in the business. You know, I love being an employer and creating jobs. You know, Steve and I both from the beginning, I mean, we didn't take big salaries. It was 6 years from the time we started that company till we were the highest paid people in the company. My job was basically the operations here. I was in the corporate headquarters. We had 2,200 employees total. You know, you know, when I left, over 600 were salespeople. We had, we had about 300 in the corporate headquarters, including a call center, setting all the appointments, you know, all the accounting, everything was centralized. So we, we made sure that each office only had one thing to do, sell. And install. That's the only two things they had to do. You don't have to worry about, you know, onboarding people. You don't have to worry about accounting. You don't have to worry about collections. You know, when, you know, besides obviously doing the normal thing and getting paperwork and stuff signed, but, you know, sending paperwork to the bank, all that was handled and centralized. So we could keep the offices and the overhead smaller that way, and then we could have control right there in corporate headquarters with everyone dealing with everything was funneling to the center.

Again, I'm curious about what are the, what are the big decisions that have to be made as an owner, the important decisions that have to be made as an owner in order to, to to run a great company, a great home improvement company?

There's a whole bunch of those, but I was in, in general for us, when on the, on the Amry side, when we were growing, the biggest, this, I think the, the one decision that I think really made a difference, and we did it as a, as a group, but at the end of the day, I told them why we shouldn't do this, is, which is the first time they asked us to expand outside of Texas. Sears wanted to. You know, we wanted to grow. You know, we were feeling our oats. And, you know, Steve always wanted to make a big company. I mean, he even had this vision that one day we're gonna be on, you know, be a public company on the New York Stock Exchange. Oh, wow. Oh, he, I mean, that was like 3 months after I started, he's telling me this stuff.

Oh, that's amazing. So he had that vision way at the beginning.

Oh yeah. He, he was, he was a marketing guy. You know, he's a, he was a dreamer. Okay, he had vision. Listen, I'm giving him all the credit for that.

Yeah, that's amazing.

He had vision and I sort of, I looked at him and going, yeah, well, he gets, gets better sleep tonight, bro, but whatever, go ahead, go back to your office. All right, thanks. You know, but you know, it's the biggest decision we had to make is we wanted to expand outside Texas, but when they, Sears first offered us a certain office and I won't say which one it is. I told him we shouldn't take it. And the reason— there was two reasons for it. First of all, I think there was a better market we should have— we should get to start to see if we can do it outside. But more importantly, we had a goal for that year. They offered it to us like in May of '83, I think it was. And I said we had a goal to pay off the SBA loan that we had taken out. And I said, by the end of the year. And I said, we can't do it if we're taking out this much cash flow to open an office. I said, why don't we get that taken care of and then we're debt free? Okay. And then we'll do everything else out of cash flow because that's the way the cash flow is working right now. We'll have this done sometime in the next 3 to 4 months. Let's get that done first. An office will always be there for them. They want us to expand. We're just not ready yet for our own good. And my two partners gave in and they said, okay, all right, you're right. We really need to do that. And then that's what we decided to do. And then when we paid that off, called them and told them we're ready. And that's where it all started.

Yeah. You know, when you and I were, were talking recently and I was getting the whole background and I was getting the story. One of the things that really stood out to me, because I'm involved with helping people with their P&Ls and their balance sheets and making financial decisions, because we offer, you know, CFO services through, through The Wealthy Contractor. And you coming from that background as a CPA and then taking the business and becoming a major shareholder of a publicly traded company, you had a really unique view into the financials. Financial side of this business. What financial disciplines— you just gave us one right there, which is kind of what's causing this question— but what disciplines or strategies did you employ that today's owners need to understand?

I think it's important that you get— the first thing is getting the right people, okay, for the jobs that, that open up. I think I didn't want to have debt. So that was why we made that decision. We needed money when we first started. Steve had started the company with his own money, but to do what we wanted to do, we needed more. And I had gotten an SBA loan, actually two of them for the previous business owner that I worked for in the wholesale business. And I went to that, the banker there, because he had been turned down by Steve's banker. We had been turned down for the loan that we were looking for. So I went to my guy and he got us the SBA loan that we needed. So I think putting the, the guidelines in the, your offices also, I mean, overhead is, and, and people are one of the biggest expenses on your payroll. Marketing is probably cost-wise the number one in most places, I'd say, but You know, the number that, what you pay your people. And I think it's important that you get your business organized to the point where you understand, everybody understands what their job is and that they can, they can help each other if needed. That's why we centralized everything. I mean, I think for us, as we grew larger, I think people trying to keeping it focused on the fact that people were managing one thing. Which is getting the sale and getting it installed at their side. Okay. And take all that weight off of them. And that was part of the thing that we always talked to managers about at the managers meeting. We're only asking you guys to do those two things. We take care of everything else for you. Okay. You have one focus. Okay. That's selling. And that's what we wanted to keep it. And I think that's important. It also kept the overhead down. Yeah. You know, you, we, we opened offices in various size cities and based on the size of the city, city was how large the office ended up being from a sales standpoint. And once again, the mathematical computation after opening the first half a dozen places, I came up with, okay, we got to do these in pods of 8s. Okay. We can do, we can do a 4 every now and then if needed, if we can't But every, it has to be start, it's be pods of 8 because then you have an admin can handle both the installation part, the paperwork for the installation part and for the sales part. But once you go past that, it's too much work for her. We have to hire the installation girl now. So we need to go to 12 or 16. That was the economics of it. It was just that simple. It was, it was people. That's where that keeping overhead down, okay, is the secret to making these things work. You can, you know, like everybody says, I don't care if I'm the guy with the biggest sales, I want to be the guy with the biggest profit at the end of the day.

And that's what we want for our clients too. We tell them all the time, you know, I don't care about the top line. The top line's only a function of what you want to get on the bottom line. So you talked about overhead, keeping your overhead slim. What about marketing costs? How did you, how did you deal with that? Because I would imagine you went through Sears to get leads, but you had to pay them a fee. Did you have to man the stores? Did you have to have people in the stores?

We didn't have to have them in every store. Um, and we didn't have to have them there, you know, the whole time they were open. So, you know, we pick and chose the hours and the stores. You know, at first they wanted us to be in all the stores, but they realized that they had, you know, even they have A, B, C, and D stores.

Yeah.

So obviously, you know, manning A stores makes a lot more sense, you know, to, for us to do. And so, you know, that, that was an evolution, you know, between us and Sears. You know, we spent, Steve and I would go every quarter up to Sears and talk about what was going on and talk about the things they wanted to get to and things we wanted to get to and you know, the best way to do it for the both of us. And, um, you know, going to the tower, you know, once every quarter was a help. I mean, it got, you know, it made us closer to the people who were, you know, in the big building in Chicago that were running the whole thing. You know, as long as we had the same goals at the end of the day, it was to have a satisfied customer. That's, listen, it's Sears. That was the important thing to them. Hey, listen, they don't want to lose a customer because of us. Okay. For the guy who was going to buy a refrigerator or a hammer from them, you know, 5 times in the next 20 years. Okay. So that's what they wanted to avoid happening. And that's what we do our best to avoid happening.

So when it came to like, even with Statewide, um, later on, how did you look at your marketing costs? Because marketing, I think that Marketing costs have steadily increased year over year, except for during COVID when it was just a free-for-all and there was more leads than anybody could handle. But this business is really all about your ability to generate enough leads to give to your salespeople to convert enough sales to hit your plan. So how did you financially, how did you look at marketing and determine what your marketing spend could be? Or should be?

Well, we looked at the percentage of what we wanted to spend and could afford to spend on marketing and tried best that we could to stay in that budget. Now, it was funny when you, when we started with Sears on the, on Amory, at Amory, mail was almost all we did because mail was really worked well.

Yeah.

I mean, it really, really worked well. I mean, we were running sometimes single-digit numbers on mail. Now think about that.

It was the '80s.

Yeah, it was the '80s. Okay. And then God help us, you know, postage went up.

Right.

Okay. And it kept going up for a little bit. And so, so we opened almost our first, I mean, almost all of our markets we opened back in those days. This is back in the '80s by mailing first. And Steve had some numbers that we worked up in reference to how many pieces he needs to mail to get it started. You know, and then how much follow-up mail he, how often he has to do it and picking the zip codes and the areas up, la-dee-da, la-dee-da. And it usually worked. The number that he sent out, we'd get back, we'd say, you know, 200, we expected 100 to 200 leads. You know, we had guys trained already to start running leads. And it worked out pretty close most of the time. Then I will never forget when we opened Minnesota, which was number 16 on the list. The mail doesn't come back for 3 weeks. The day you mail it, it takes 3 weeks to get the piece back.

Wow.

Okay. Because it wasn't sent first class. Okay. And people don't send it back immediately, but on average it was about 3 weeks. So you have, you're mailing 3 weeks ahead of time, assuming the same return.

Yeah.

Well, Steve mailed, and instead of getting 200 a week, he was getting like 800 a week.

Whoa.

Every 3 weeks in business, you know, 4 weeks in business, we're sitting on like an extra 1,600 to 2,000 leads.

Wow.

And we got like 6 guys to run them at the time.

Yeah.

You know, we're still staffing up. And we're going, holy shit. Pardon my French. But anyway, so that, that's one of the, but it evolved. Over the years into internet really became the number one thing. Not back then, obviously it was before the internet was, was big. We moved to other things besides mail. At Statewide, it moved in fairly quickly into every year was getting more and more. Internet was still the best return. It was, it was down to low double digits and sometimes single digits on a continuing basis. And I kept running, I kept, you know, telling marketing that they needed my, my partner, uh, Frank, uh, at Statewide was in charge of that. But I said, we need to keep moving it off and, you know, into the internet marketing. That's really working well. The company that we've hired is doing, you know, the second company that we hired did a very good job in, in generating those leads. And, um, it was hard, you know, because he's an old-fashioned guy and he was used to doing direct marketing himself. And, you know, he did TV, you know, we did TV commercials and all the other things that I think people do just to get recognition as much as anything. And yeah, it's evolved. I mean, and today I'm sure from, even though I left the business 6 years ago, I'm sure it's evolved even more. Oh yeah.

Oh God. Yeah. So financially it's interesting, you know, 'cause these businesses, it's all about the marketing and the overhead costs, marketing and the overhead. 'Cause as you're growing, those are the two things that are gonna, that are gonna continue to grow in cost. And I think what a lot of people don't understand how to do, and I'd like your kind of your take on this, is they don't know how to adjust their gross margin to be able to pay for that increase in marketing and overhead. And because they don't know that relationship, where does the money come from? It comes right out of their bottom line. So you see company growing, growing, growing, growing their top line, but then their bottom line doesn't change. It stays the, you know, they did $2 million, and made whatever, you know, $150,000, then they do $6 million. And how much did they make? Well, they made $200,000. So how did you deal with— how do you deal with that?

What generally happens is, as you— what I've found in the years that I was doing it is, as you're expanding, in the case of the Amory, at least when we were expanding, we'd have profits that were going like this, then they take a small dip because We, we were open 5 offices that year. Yep. Knowing they're startups. And then we'd go back up again. And it was sort of a small seesaw. We'll put it that way. You're like teeth.

Well, because you're funding that growth.

Yes. Because we're funding the other things and their closings aren't what they're— they don't start out as well. The normal reasons that, you know, the profitability in those branches aren't as good as they're going to be down the road. You know, at Statewide, we only opened 4 offices because we wanted to stay in the state of Texas. You know, Frank and I had discussed that. I said we can, we could expand, but I didn't want to. We'd already done that and all the travel and all the other stuff involved that didn't want to do it. You know, we were both too far along in our lives to want to do that anymore. And that we agreed that that's what we wanted to do. Now, since then, they've expanded to quite a few places. The other part of the profitability besides the marketing that may go up is your overhead. You know, as you're growing, you're going to have to put on staff to manage that. And, you know, those are the other— that's the other half of what happens is, you know, you're paying people more. You know, on an annual basis, you're probably giving some form of small raise or bonus or whatever it is to people on top of the expansion, training new people in the administrative side of it and the installation, finding good salespeople, finding good installers. You know, those are the things that, that's where overhead can just get out of hand sometimes. And you don't know it until, you know, if you don't keep current books, you, you know, you're, you're in trouble. Yeah.

And even the people that keep current books and look, for those of you listening, this is not judgment. This is not criticism. Nobody taught you how to do this stuff. And so the stuff that I see, these P&Ls that I see, oh my God, what a mess they are. Because the bookkeeper doesn't— bookkeepers don't understand accounting. Sorry, bookkeepers, but you're not accountants. You don't understand. You're data entry. You take this expense and you put it in QuickBooks over here. You know, you take this invoice and you pay it and you know, and then the accountants, a lot of accountants, CPAs, don't understand this business. They don't understand accrual accounting, job costing. They don't understand the relationship between marketing and sales. And so people get a lot of bad advice, and they have messed up, messed up books. I think that was one of your huge advantages, is you understood the P&L like nobody's business. So as you're growing, doesn't that mean that you now, you need to, if your marketing and overhead's growing, doesn't that mean now in order to remain profitable, you've got to grow your gross margin?

Oh, absolutely. I mean, we was our, our margins, you know, in American Remodeling, when I first got there with Steve were horrible. I mean, that's, he was right. He says, I know how to get, generate leads. And I know, I know how to sell, but I don't know anything about running a business. And I spent 90 days looking through everything. And at the end of the 90 days, I reported to him and said, you were 100% right in your assessment of your situation. And the first thing I did was change the pricing as well as how the salesmen were being paid. That's, that's a funny story at the end, but anyway, so we, I changed that immediately and started, and as we grew, we kept growing our margins because like you said, marketing costs, you know, when postage started going up. Those things, we have to get that money from somewhere and we get it from getting higher margins. So our margins increased probably 30% over those years.

And you have to, you have no choice. I mean, if you're going to grow a business, you have to raise your prices. There's, there's really, I mean, there are some other little things you can do. Like you can improve your sales conversion rate and get a few more sales out of your marketing costs. But that's not enough to get you where you need to go. You need to always be looking at, well, what am I charging? And people don't understand that. I always say the customer pays for everything. So if your costs go up, you don't pay for it. You got to make the customer pay for it. And so one of the things you guys did incredibly well to the tune of billions of dollars, if you add it all up. Was you knew how to sell value at the kitchen table, right? Because you weren't competing on price.

It had an advantage and a disadvantage to it. You know, we were, we were Sears when we walked in the house, you know, you were Sears. Yeah.

But at Statewide, you were Statewide. And you weren't Sears.

Statewide. No, but we had it. What you do is you, and the answer is yes, you have to increase your margins. As costs go up. I mean, that there's some inevitability in those things. And I'm just glad I don't have to deal with it in this marketplace now with, you know, the tariffs on and off and all the other things that people have to deal with. I mean, it's hard on people. And, you know, we have different things in our business that we have to deal with. You know, the cost going up on product that we're buying is, they're still going to be going up. And you just have You know, you have to have the cut, the customer, everything ends up being passed on to us. I don't care whether you're at the food store, buying siding, a kitchen. Okay. At the end of the day, the end user is the person who ends up paying for all of those.

And that's how it is. There's nothing wrong with that. As long as you deliver on your promise, whatever you promised in that sales presentation, you better be able to deliver. And make a happy customer. People will pay more. That mean, well, that's a whole nother conversation. Let's talk about when you, you know, you sold your company 6 years ago, but you're still, you're still involved in the industry. You, you kind of know what's going on. And the business has, has changed a little bit since 2019, but the, the basics of this business are the same, but from your You know, looking at where we are today, what's changed, what stayed the same, and what advice do you give to someone that's trying to grow a strong, sustainable business in this market?

Well, the one thing that I don't think has changed at all is the presentation. They may do it on an iPad now. Yeah. I mean, they may do it on something else. Everything's more automated, obviously, than it was even 6 years ago. But the one thing that I, that I've learned is that's the one thing that really hasn't changed. I went up to, to the state. I was in Dallas a couple of weeks ago and went up to visit and still saw some of the guys that were working for me that are now 20-plus years working there, mostly in the installation department. And, um, it was funny. He says those, those two things, you know, putting on siding, windows, best guess, they really haven't changed that much. Everything is more computer generated. You don't have to look at a price list to price out your product. Everything is, you know, in your, in your iPad for you.

Yeah.

But, but the basics of the business, I don't think I've ever changed. Even when I was doing the same thing. Listen, I was in the wholesale, wholesale siding business before I got into the siding and window business. And I can tell you, the guys that we were selling siding to back in 1970 when I started in that, um, I think these were some of the guys— did you ever see the movie The Tin Man? Of course, with Danny DeVito. Yeah.

Oh yeah, of course.

We sold the two guys in Baltimore that were— that was based on.

Oh, how funny.

We used to sell— we sold siding to them. My boss knew them from way back when. Yeah, he'd been in the business since the early '50s.

Back then, were they doing step selling back then in the Tin Man days?

I was never in the house. I was only in the house with window guys.

Okay.

Times I rode, my boss wanted me to learn what we sold. I mean, I was in with retail guys on the, on the window side, not on the—

But even on the window side, were they doing step selling back then? Yes, they were.

They Well, there's— it depends. There was two types. There was the ones who had canvas, the canvassers who would go in, the guys with canvas leads. And the presentation was a little bit different on those, from my understanding, uh, was for somebody who answered, you know, a mail piece or a flyer that you left on the door. It was, it was just a— it was, it was a little different presentation.

Watch the movie and we'll— and, and you'll see You know what's interesting is that, you know, my, my mentor is a guy named Dan Kennedy, and Dan always told us, you know, if you're going to be in an industry, know its history, go back and look and understand its history. And I think this conversation, one of the reasons that excited me so much about this conversation is that you take this this whole thing back a couple generations for people so they understand where the business came from and what the business was like. Because they see it today and they say, oh yeah, there's step selling and there's this and there's that and it's marketing and it's direct sales and blah, blah, blah. But what was the core? Where did this thing start? And it started with back with you guys. So what is your advice to the to the new people, the people that are in business today? What's your best advice to them? How do they build a strong, sustainable business?

Well, first of all, I wouldn't say that it started with us.

Well, but you guys were very influential.

Yes, that we were. And there was a company right before us, Pacesetter, that was selling windows and—

Oh, Pacesetter. That's another one. Yeah, yeah, yeah.

Paycenter had started probably back in the '50s.

Okay.

And when I got into the business, yeah, they were the biggest at the time. They had— were the first ones, I think, to make $100 million in sales. Yeah, yeah. And a lot of the guys that we got were Paycenter— had Paycenter background, just like guys other people were hiring in the '90s and 2000s were guys who had, you know, Amritra—

Amritra training. Yeah, yeah, yeah.

Get guys who are pacesetter guys. I mean, my salesman was all pacesetter.

I know a few, I know a few pacesetter guys too.

Yeah. So I mean, they were there really before us in reference to that. And, um, but yes, I mean, like we had, like I said, there were pacesetter guys everywhere at the time that were being hired, just like there's, you know, Amory guys and Statewide guys that are getting hired. The one thing I can tell you is that I think as entrepreneurs, owners of companies, the biggest joy I ever had was really making a living for people, having a place for people to make a good life, a good pay with good benefits, and feed their families. I think that is the joy that, and if you're fortunate enough that money comes with it, that's a bonus to me. I think it was, I mean, I loved walking through the offices. I loved walking, seeing the people and talking to them. And at Statewide, you know, when Frank and I started the company, we were a little 400-square-foot office building with 2 offices in it for the 2 of us. And we did everything. We generated the leads. I did the financing. You know, he ran the, he ran the leads. you know, we were doing it and then as each part, as the, as we tried to grow the business, the one thing that I could say 10 years later in the business was there wasn't a single job that any person in that building did that I didn't do first. Make phone calls, call off that list, you know, make appointments, go out and run leads. Install, did it all. And I think that's the advantage that I had is I, I didn't, I come from an accounting background and to learn the business and, and be able to tell people when you go into the office and walk the office, like I like to do every day is the fact that I know what your job is. You don't have to tell me how hard it is or what it is. I know exactly what you have to do. So I get it. And they knew that. And that's what they appreciated. That when I talked to them, they knew that I knew what they were going through. I knew what they faced every day. And I think that was the real enjoyment out of the last 40 years of that, being in that business, to be candid with you. And I think maybe for any entrepreneur in any business.

That's cool. Looking back, is there a moment, maybe like a mistake or a tough call that taught you an important lesson?

Absolutely.

Can you name one? Can you, can you give us an example?

I can name the biggest for sure. When Anderson was coming out with the renewal window, we were actually working with them on the marketing part of it at Amway. Our marketing people They were asking feedback and they came to us because we were the largest and excuse me, it's statewide. They came to us and they offered us the first license to sell. And we, we took, and my partner was against it because he thought we couldn't sell. Our market is a lower priced market. We're, you know, in compared to some of these other places. And he didn't think that we could sell the window for the price that we needed to make the margins. But we took the license and we did poorly with it. And I think that, and the reason for that was because he didn't believe in it. And, you know, from the standpoint of when we saw which zip codes we were getting leads from, I mean, the demographics were just horrible to buy a window that was going to be costing 50% more, no matter how good it was. You know, we just, it was a belief system, I guess, and I fell for it. Okay. So at the end of our contract, they said, I'm— we're not going to renew it after our 3 years or 4 years. They were very nice. They— I mean, they had gotten other dealers obviously in those years, but we just weren't doing the job of the size of the market that we had. And look what's happened to Emerson. I mean, those guys are are killing it. I mean, there's, there's guys who own 4 or 5 Anderson dealerships. That's all they want.

That is a license to print money today. It wasn't when you got it because they were still figuring it out.

Yes, they were.

They were, they were, they were still figuring it out.

Yes, they were figuring it out.

And so your timing was a little off, but it was also, but I, I, I thought what you, what you said there was very interesting that it was a lack of belief. On your partner's part.

And partly on mine too.

Yeah.

You know, because you saw what we had to sell the window for to make margins, even though they were even slightly less, we were willing to take slightly less to start out with. And Anderson was very good. I mean, they were good people to work with. They're very structured. I mean, back then when the people who were starting it had a huge belief that, you know, How can you not sell this window? It's so great. And that's where we sort of butted heads a little bit with them because we didn't have that belief system at the time. And, uh, it was a mistake.

How important is belief to you when it comes to success?

I can tell you the conversation that I had when we had become a public company. We was just selling siding and windows at that time. At, at, back in the Amory days. And I, we did, we did obviously road shows because we're a public company, you know, for investing companies, for investment banking firms and things like that. And I remember sitting around the table in Boston with one of the investment firms and they had 9 of their money managers sitting at the table to just listen to our presentation. And I can tell when they're You know, not interested, not interested. So finally I could tell that they just weren't listening. And I said to him, I said, what's your favorite company that you follow, that you recommend? And he goes, well, GE or GM. And I said, GM, really? I said, why is it? And he said, well, the cars that they make, Goes through this whole spiel. I said, let me give you a scenario here between what you, you like the best and what we do. I said, you get a car, the minute you drive it off the lot, it's 10, it's worth 10% less. Is that fair? He goes, yeah, probably. You have to maintain it, tires, oil, all that. You want to sell it 5 years later. So that $12,000 car. Back in those days. If you're lucky, you might get 5 or 6 grand for it. And he goes, yeah. I said, well, here's what happens when you buy my siding or my windows. I put it on your house, windows usually one day. Okay. And siding, we'll say it takes a week. What you do to maintain it is you clean the windows. And you clean the siding twice a year with a hose. And when you sell that house 5 years later, you added 10 to 15% to the value of your home. Now, as an investor, which one's the best one to invest in? And he looked at me and the other 8 guys looked at me too. I'm going, that's just what this, that's just what we sell. We sell that peace of mind because it's got a lifetime warranty, not the 3-year to 5-year that you guys put on it.

Here, we, we believe a lot in not figuring it out all on your own, of having mentors, of learning from what others did before you. In fact, we've got a program, Success Society, where our members get together, we put them into mastermind groups so they're not alone in the business. They've always got somebody to call. And we've got incredible leaders like, you know, Scott Berman and Charlie Gundel. I think you know Charlie. Were there any mentors or key figures who shaped your thinking in business, leadership, life?

Absolutely. I, I was, fortunate enough in life to, when I started, when I left the accounting business and went into be CFO for a regional siding and window company wholesaler, my two bosses were guys named Norm Rails and Merv Snyder. Merv had Jones and Brown in Pittsburgh. Was a company that he owned and he had several other offices and, and we had 2 or 3. Those are guys who are my mentors. They, they taught me, especially Norm, because I worked in his office that it was just one of his businesses, but he was an old siding salesman. I mean, he, he used to be in houses. He understood the business and now he's in the wholesale business and he had finance company and several other businesses. And, um, his sons have done very well. I don't know if you know the name Rales. One of his sons is just one of the new owners of the Washington Redskins.

Oh, okay.

His sons have done very, very well. But he was a mentor to me and he spent time with me and, you know, he taught me what he's the guy who wanted me to learn the business, so he had me go out there and write orders. I would drive, driving a forklift. I would do, I would do these things half my workday, probably for the first 3 months I was there. So he taught me to learn what the business was from the ground up. So you really, really understood what you were doing. You really understood what it took to make a business work and what the people and meeting the people in each of the departments that I typically wouldn't have interaction with, you know, the warehousemen and things, but you do. And, you know, and, um, Merv was just the greatest guy. I mean, I was fortunate again, like I said, when I started in private industry to have those two guys. And they taught me about people too. You know, what was important to them were the right things. You know, my dad was the same way. I mean, my dad was the smartest guy I ever knew. Never went to college, you know, fought in World War II, the normal things. But, you know, he was a people person in the little store that my mom and dad had. And they taught me all the right values. And they taught, Norm and Merv taught me really how to be a good businessman and what are the things that really make their businesses a success. I mean, people loved them. They respected them. And I think that's what I wanted people to do is I wanted to earn the respect of people and the right way to do it is just treat them right. And those, those are honestly, those are the two mentors that really formed my life to me when it comes to being in the industry that we're in now. I've had the joy of being in for 45 years.

So this may be, you may have the same or similar answer, but there are a lot of business owners listening to this who are grinding every day to build something, to build something great, whatever that means for them. If you could leave them with a piece of advice, one piece of advice, what would that be?

I think the secret to having a successful business is the people at the end of the day. And I think it's just the golden rule in reference to, I always tried to treat people the way I wanted to be treated. That's one of the things, first things that Norm Rails ever said to me. He said, Rob, this is your first chance at, you know, at management, okay? Your first opportunity in management. And I want to tell you, you're in charge of a lot here. And I said, and he says, just if you treat people the way you want to be treated, it'll turn out fine. And I know it's a grind to start. Every time I thought I was working hard, And believe me, there were plenty of days I worked long, long hours and all those things like all of you do who get started on the business. I look back at my dad's life and a guy who opened my, our little store at 7 in the morning every day. We had a short order place that my dad, that, um, you know, it was the local place to come for something to eat. And he'd work through lunch. My mom would go down there at 11. My dad would leave at 1. He'd run errands, do some things. Sometimes he'd go, like, going out to the track, come home, get 2 hours sleep, feed me and my 2 brothers, go back to work at 7 o'clock, close the store at 11, mop up, clean up, be home at midnight, sit around with my mom and watch Johnny Carson. And go to bed and do it again, 6 to 7 days every week. So when I looked at what I was doing, you know, I was— it was nothing. Every time I got to that place where I thought I couldn't do anymore, I thought about my dad.

Beautiful. What was the business? Was it a restaurant?

It was a hard goods and a small, small, uh, shoemaker place, uh, where we were We were basically the local grocery store because the— a Safeway or, you know, a national chain was miles away. Miles. This wasn't the best part of DC, we'll just put it that way. Yeah, but it's— and listen, my— I was lucky, you know, when you— I think one of the secrets where I've been fortunate enough is my dad taught us what really hard work was, because when the nighttime shift guy didn't come in You know, mom said, you know, Joey's not coming in. He's calling. He would grab me or one of my brothers. And when you're 12 or 13 years old, okay, and you're going down to the store at 7 o'clock at night and you're getting home at midnight and you got to get up at 6:30 to go to school the next day, you think your life stinks. We always realized that that was the best thing that ever happened to us.

Yeah, that's beautiful. Well, Rob, wow. We've, uh, we've covered a lot here today and there's probably a ton more that we could talk about, but, uh, thank you so much for, uh, your time and your wisdom. And I hope maybe you could be back again at some point and we could talk more stories about, you know, what it was like.

I got a million of them.

You got a million of them.

Yeah.

You know, for everybody listening, as the young kids say, uh, you are one of the OGs of this industry. And, um, so I, I think there's a lot to learn from people like you that have been there, that have done that and have done it so incredibly well, so successfully. And I hope that the listener, you the listener, have gotten some good nuggets out of this. And until next time, this is Brian Kaskavalciyan, and this is the Wealthy Contractor Podcast.