The Power of Organic Growth | E16 – Hard Refresh – An ISSA Podcast

Sam.

Welcome back, everyone, to round two of the miniseries here at Issa headquarters. We got Luis here, and we've got quite the quick conversation. Our last one went a little long, so we're going to try and keep these a little shorter. We could talk all day, but we're not going to.

No, we're not. We're going to dive into it.

We're going to dive straight into it. All right, so first, Louise, let's start with an introduction, background, and then just, like, go right into our fun little two truths and a lie.

All right, sounds good. So my name is Luis da Costa. Actually, I have a long name, as all Brazilians do, but I go for Luis da Costa. I am from Brazil. I'm in the US since 2007, and I own a company named Modular Concepts out of Marlboro, Massachusetts, which is about 35, 40 minutes from Boston. All right. Yeah. So true. Truth and a lie. All right, so let's go. So I was a semi professional soccer player in Brazil until I got injured. That's one. The second one is I once was arrested or detained by helping a victim of an auto, like, a car accident in a remote area of Brazil. Now, third man, it took me almost 16 years to completely have my right to live in the US like, all my papers in order until I finally got it last year. So 1, 2, 3.

Wow. That is incredible. Those are so good. Dang it.

Okay, so the first one, I had a sales rep one time with the exact same story. He was from Brazil.

Okay.

And he was a semi brawl, and he said, oh, no, it's very common. So I think that one's a truth.

Okay. Okay.

The arresting thing, I. I actually think.

The arresting thing is real. And then the paperwork thing is real. I think the soccer player is not real.

But the paperwork thing could have been like, oh, it only took 10 years instead of 16.

I know, but the level of detail that's. You always have to say, think that again. I always get these wrong. So really don't listen to me.

You just go, I'll go with one.

Okay. I'm gonna go with. Wait, no, I said that one. Oh, sorry.

So sorry. I think.

Okay, I know. He's like, I think three is a lie.

The timeline about the paperwork, something.

I think one is the lie.

Okay, so you're right.

Yes. I knew it. Okay.

Yes. Although I played a lot and I wasn't semi pro. Again, I never semi pro.

Okay, I knew it.

Details.

I knew it. I knew it. All right. Those are really good. I'm so impressed.

And I think I'm your first win.

So I think so too. 100. My family, I always tell Katie this. My family always teases me. They're like, you're so bad at that. I'm like, listen, I, I'm very confident when I answer though. Okay, so we are going to get right into it. And the question is again, we're here for the Are you doing workshop? Right. So we're talking about acquisition, retention and expansion. So the question is, which part of your business grew unexpectedly? What do you wish you had in place to support it?

Yeah. So our business is. We all say that our business is different, but it's not really different. It's, you know, same thing. It's cleaning. It's, you know, involves all the elements and everything. We just had a different approach to it. So we work with no contracts. Right. So contrary to all my, my colleagues here, that. And there's nothing wrong about that. I, I always make that disclaimer. It's not the best way. It's not the only way. It's just my way. It's just my way.

Right.

And works for us. And that's good. So we work with no contracts. We are completely relationship based in our approach to business and to life in general. So one thing that I certainly could benefit of being better prepared because I never believed, let's say in public schools or government contracts or service or servicing, you know, like things that involve government being that local or statewide or federal, because I knew that would involve a contract that would involve, you know, like having not a subcontractor but an employee. And we work with subs and everything. So I never really went after those customers until recently. We got the opportunity to do strip and wax and a lot of floor service for a school from the district in our area. And that was like a huge increase for us in all aspects. And because we did such a good job in terms of getting those services like not just executed, but they never saw anything like that. And it's not because we are amazing, although we are amazing. But it's because mostly in that scenario of public schools and everything, all the people doing that kind of work, they are there for 30 years, they're about to retire, they're doing strip and wax as it was done in 86. So. So we get there with all the equipment, all the knowledge, all the experience, and we did in three weeks what they couldn't do in three months.

Oh, wow.

And it was never so well done. Like everybody was like impressed. So that brought us to now have seven, eight people. Now they're doing regular service because also five hours of our people gives them more productivity than eight hours of their people. Yeah. And certainly at a lower cost because again, if your third year is there, like your salary and your benefits.

Exactly.

And, and every time, like, they get on a. On some kind of medical leave or, you know, like day off, they have no service. Why with us, you know, they always have the service because if Maria is not there, then John's gonna go and call. So they are like, they can believe that, you know, such a level of service exists, can be provided and at a lower cost overall for them. However, because we are always like, set on our ways with subcontractors and with, you know, the relationship, no contracts. So we never focus on that. And I could have 10 people, or I think we have 10 now, I could have more people there because there is the need. But I wasn't prepared for that in terms of having the people like that, the designs, you know, all the stuff that you need to have in order to have employees, not subcontractors. So we do have like a hybrid model, but it's much heavier in subcontracting, and that's not going to work for that kind of customer. But it was an eye opening that there is an entire industry or segment in terms of opportunities there for us that we're not exploring that because just didn't know about it or believe it could be done. So I would say that's. Although we're doing that, you know, I wish I was like, ready right away to do that and pursuing that, which we never did.

That's interesting because I think one of the things that I like key words that stuck out as you're saying, you're talking through this is like, obviously relationship. Relationship allows you to expand because essentially a customer, you have formed that relationship, you were able to expand, retain. But from your perspective, and what I'm hearing too is you were presented an opportunity that you. That's not like your primary vertical. Right. But you were presented the opportunity. And I think one of the things that I Is very. It's a recurring theme or narrative within the BSC community is the level, this concept of resiliency. And also we just don't say no. We don't say no. Any opportunity comes our door, we're like, we'll do it, we can do it. We'll figure it out. And I think that's what I'm hearing from your perspective. So talk us through, because. Right, you're saying we Got this opportunity, we're growing. So what's your mindset now in terms to essentially optimize this opportunity and keep growing it?

Yeah. So, so for us, as I said, like we are super having in relationship and I always say that it's because I am super happy in the relationship. Right. So whoever owns a company or, and you guys probably can attest to that, the company tendencies, biases and values, those are yours.

Right.

Because it just transcends to the alignment. Yeah. And not just that, but also the people after four or five years that you are established, the people that stuck with you, it's because they share those values that you know that kind of vision that you have. So I always say that if you're like a dishonest person and you are running a dishonest business, you're gonna, you know, in the end work with dishonest people.

Yes.

And the other way around as well. You know, very committed, very, very relationship oriented after, you know, a certain time. That's the thing that's gonna stay with you just for the identification and everything. So based on that, like this opportunity came to us through relationships because in, in my neck of the woods, I'm very active in terms of community, like giving back, participating, being directors of the local hospital or of the chamber of commerce of the economic development corporation of the area and everything. So that brings us relationships and that opportunity came through, you know, someone that I met and then start working in other projects and say, why don't you do our school for. Yeah, because that's all we do.

Right.

We say no.

We never say no.

Yeah. And that's the, the kind of the entrepreneur vibe or gene or virus that, you know, you, you, you just go after that.

Yeah.

And, and go for it. So, so for us, this, this kind of opportunity that it, it came organically. I would say yes. Just like everything else. I was, I was watching the previous episode with, with Shane.

You got a listener here.

Yeah. And I was thinking about that because, you know, like she's in, in the differences stratosphere in terms of revenue, number of people and everything. And I was also in other events and it's all about growth and everything. And there's again, there's nothing wrong about that, but for me it's always about taking care of what we have and never gaining the next customer at the expense of the previous one.

Right.

So that's the organic growth. So I don't want to, I mean, I would gladly go to, you know, 200 employees and $10 million. That's fine. But that's never the goal. The goal for me is to take care of what we have.

Right.

Such a good care that organically, you know, getting to 200 employees or 500 or $10 million in revenue is the consequence of whatever we are doing right now with what we have. So I really don't. And again, because I'm the owner, I have no. No outside pressures.

Right.

You need to grow 20%. I said no. You know, we are. We are very focused on. On profit, not on revenue. And, and keeping, rather than necessarily growing for the sake of growth. To come here and say, I'm attending again, nothing against. I mean, I applaud, you know, like, people like Shani, like all the things, like awesome things, different things that. That you're sure. But I do believe, again, that we. We are again coming back to the. The values and everything, you know, and coming back to relationships like this, for me is just like how we establish things in terms of how we work, how we treat people.

Exactly.

In all levels. Right? You know, from the director to the janitor, to our employees to our subcontractors to everything. So I think we get those opportunities and they come to us based on that, based on the way we put ourselves out there and to give back, to participate and end up coming back to us. And. And so far, so good.

I love what you just said about. It's not about revenue, it's about profit. And I think the reason why you can kind of hone in on it is because of relationships, is because you can say you value my partnership and I value yours, that we can have this type of business model. Because I will tell you, being in a competitive industry in like the D.C. market, when you do have those established relationships, but you're going down to, you know, low bid only. You cannot justify 10% management fee. You can no longer. Right. Everyone's asking for 6%. But for your perspective, you've built a relationship, a trusted, organic relationship over years. So when you come to the table and say, this is the pricing, this is the increase, you trust me enough as a vendor to justify the 10, the 12, whatever it is. And they're like, this is my team. This is who I want to work with.

It's interesting because again, that. That was the choice to. To not, like, go after bank of America or government. Because I know for that kind of customer, my differential is not perceived. And that's something that I preach every day. If your differential is not perceived, it has no value.

Exactly.

No one's going to pay for that.

Right.

So what's my differential? It's commitment. It's being there. It's you know, like. And unless my targets can perceive that I shouldn't be there. So if I, if I'm going to put a bid on bank of America, it's going to be the best price possible with the most service.

Right.

And there are people that, that can do it much way better than I can do.

Yeah.

I shouldn't be there. Now if I can get to a, a certain class A building and develop a relationship with the, the manager or the, the managed company where they will realize that man, this guy is committed so they will never miss a, a day of work or, or they will take care of things that are not under their purview just because they are seeing that they're not ignoring. So all that stuff has value. So now I'm not talking price anymore. I'm talking about a genuine partnership.

Exactly.

With each other where you can trust me. And that of course it's niche.

Yeah.

You know, it kind of limits our possibility of growth. But again, if I can be super profitable within, you know, $3 million and make the same as, you know, other companies we elect to do with $10 million, I'm fine with that.

Yeah.

And that's my nature. And everything is not, I'm not, not have ambitions or anything. It's just like the, the way I choose, you know, chose to, to work.

Yeah.

And as long as you compensate well, my employees, my subcontractors and deliver the promises that we made to the customer, then I'm fine with that. Now it's my job is, is to, to keep that. And again, the next opportunity that will come, we're going to take care of that too. I know it's crazy. It's not that sounds crazy. It is crazy. I have no sales team, I have no marketing team. I have no effort to go out looking for sales. There is not a customer that I went there offering something. Everything we have came through us through either Google because someone Google and Embread the reviews, but mostly from satisfied customers that refer us to others.

I don't think. I think effort is not the right word because you're going out and you're leading with the fact that you want to help your community. Right. That's always the primary. But as a result, to your point, organically you're forming relationships and now they're saying how can I support you as well? I have this opportunity. So it just, it's very organic. So I think that's one of the things that in this industry, relationship is super important. And that's not creative, but I think that's a great way to start the conversation and broker that and say, first I'm going to lead with heart. I'm going to lead with what matters to me, what impact I can make. And then you start to understand people. And then sometimes you could say, and I think it's happened to me several times, if I'm not a good partner, if I can't, I will be the first to tell you, do not change janitorial companies. This would not be good for you.

Yeah. Crazy goals. Like I went to a school, like a private school. They had amazing cleaning.

Yeah.

They really didn't. And that's what I told you. Look, man, I'll tell you something. I would love to service you, but you're good.

Exactly.

I don't think I may can save you some money, but I don't think it's. You should change because it's so hard to change. Keep it. If someday, you know, they, they start like to change or anything like that, then call me.

But right now you're good 100%.

But it's interesting that you said, because it is true. I know involved in community, when I say no effort, you're right. There is a lot of effort, but it's not necessarily a. Like I don't grab the phone to call customers.

Right. Hey, traditional sales. Right.

And again, it's not the only way. Not the best way.

Right.

That's just our way. And for us, what that made so far is our EBITDA. It's, it's a, it's about 36%. While for our industry in general, people are happy with 7 to 11%.

Right, right.

Wow. That means that, you know, as for comparison, at $1 million, I make as much money as a $3 million company does.

Yeah.

And, and now we are getting, you know, near the $3 million and we have like 85 people. Yeah. So it's not much people, you know, like the office. It's me and my son. So we're very like very lean. Very. And, and we're going to grow as, as it, it's necessary. But again, I think the beauty of all this stuff is that we are, we're very happy with what we do. We don't have like the, the, the pressure to growth and grow. You know, like just to say. And the relationship thing, it goes like 360. Right. In terms of not just the community, but also employees. Even my entire life, like family, I'M not religious, but I certainly have a relationship with God. We are super blessed. And I know it's not because of me, it's in spite of me. So. So that, that's. I guess or I think that when someone is looking for a company in our area and they find someone that can be genuine.

Yes. And authentic.

And authentic. And really be interested in providing or delivering the promises, that's, that's kind of our main card that we present. And sometimes, you know, it work and people will hire us and sometimes it won't and that fine. Our, our oldest customer is with us for as, as old as our company is.

Oh really?

Yes. So. So right now it's 17 years.

Wow.

Yes. So. And we have customers for 14 years, for 12 years. And also we have employees and subs that are with us for 12 years, 13 years, eight years. So again, I don't think it can be replicated in the thousands. Like, I don't think like a JLL can do that because it's just a different.

Right.

You know, different, different business strategies.

But I think, I think what I'm hearing too is a level of peace. Right. You have a level of peace being at this place right now because you are confident in the service delivery, you're confident in the trust, you're confident in the relationship. And you know that your team and your culture is set up the same way. Like you guys are committed to retain. So much so that you can go to bed at night every night knowing, we're good, we're going to hold this fort down. And that's a great feeling because I will tell you again, coming from the D.C. market and things change so rapidly and no matter how many dinners, no matter how many lunches we do, you just never know. And you have that like pin the back. You're like, oh my gosh, are we going to lose this contact contract? Are we going to lose it? So that's what I'm hearing. Peace.

Yeah. No, it's true. The company's name is modular because we put those three modules together like areas frequency and desks, which everybody deals with that, but I've never heard of someone that put that in the system. We, as I said, like, we didn't invent anything, but we just use the elements that were there and put them together and even the relationship. Like we didn't invent performance based commitment, but we just made it our. Our thing.

Sure.

So much so that it's our, our tagline is commitment at your service. It's kind of a double Meaning commitment, your service. So let's get it. Yeah, okay.

No, I get it. Perfect.

But that's it. And. And like, being in an environment like this with Issa, and last year we were here, and it's so interesting and rich because I thought, you know, like, man, I did this and I did that, and it's so different. And then you got like, a Dan Schindler, and he comes here and talks about all the things that I do, and he does it, like, exponentially more so exclusive. But it's good, you know, like, to have that. To see that other people are doing this in different areas, not just because you can be inspired, but also because it validates what you're doing and shows that you're not. That's crazy.

100. Well, we are. We got into it and we did. We just don't. We can't stop at 15 minutes. And then I wanted to go into, like, his. Your son, and how that's changing. But we have to have another episode on that.

We'll do another part, too.

Yeah, we will. We have to. So awesome to have you. Thank you so much for sharing your story. What an incredible. And I also want to do an episode about your relationships and how. Because there's a lot here, guys.

Yes. There's a lot to unpack from what you were just diving into. Obviously, it's not growth at all costs, which is a different business model, and it works just as well. But you've retained at a level that is not normal.

Right.

For other entities. So we'll definitely do a two parter. So thanks, Luis, for joining.

Yes.

You got some gold nuggets out of that. Thanks for joining, everyone.