Before You Start a Business, Check These 3 Things with Cameron Bawden

When you thought about starting another business, what makes it— what makes a good one? What makes you say, yes, we can be successful in this? Is it recurring revenue? Is it margins? What are the characteristics of something that gets Cameron excited about starting a business?

At the time when I started those 5 other companies, I didn't do the homework enough. I think that's a huge mistake that people make is they just, they, they just do the math in their head. They're like, oh, this guy's charging $1,000. He can't be into it more than $200. So he's probably making $800 and then he gets going. And it's just, it's a mistake that a lot of business owners make even today. You know, when I sit down with a business and I see their margins and their route values per day. And they're doing $800 routes, $900 routes, and I do the math with them, like, bro, you're never going to scale this thing at these rates, right? And so for me, what excites me is one, the margin. Like, it has to make sense, right? The margins have to be there. I love residual income businesses. I don't like when, um, you know, insurance— I hate, you know, I don't like the restoration world. I was in the glass world. We were dictated by the insurance companies of what we charge and what we can't charge. I've had to learn that lesson the hard way. I want to be in control of my pricing structure. And then it's people, man. Like, so in the, every company that we started, I went out and got a managing partner that was an expert in that industry. We brought the finance, we brought the marketing, and we brought the systems to the table. We didn't want to be the jack of all trades thinking like we could go into the carpet cleaning industry and be the best carpet cleaners when we don't know anything about carpet cleaning. So I went and got a partner that had experience, years and years of experience of running other carpet cleaning businesses. Same thing for pools. And this is the other thing that I learned is there's some people that want it more than others and to, and there's different levels. And even like a guy like Tommy, what Tommy's willing to sacrifice to get to where he's at, like I wasn't willing to go and do what Tommy does and sacrifice the time, the time with the family. And things like that. And so that's okay. And so managing expectations with business partners, and that goes all the way down to employees, and that's why an offer letter is so important, spelling out exactly what you expect from that person, is just making sure everyone's on the same page. And so if you can bring all those things together, the income, the pricing structure, the right people, the right team, and expectations, that's what gets me excited about going into a business and investing it or running it.

You've had success with Green Mango and also now Coconut Clean using clubs or loyalty programs.

Yeah.

Talk to me about the Coconut Club and what makes a loyalty program successful and sticky.

Yeah. So the pest control residuals, that's kind of like, that's just the norm. So we didn't have to create anything new there. But with carpet cleaning, when we started it, it was like, man, like the norm is, is that when you go out and clean your carpets, the stats would say that you wouldn't see that carpet cleaner again for another 24 months. And that's just not okay. And so we created what we called the Coconut Club, which is we come out once a quarter and we give a huge discount. So there has to be value. So with the continuity program of coming out every quarter, every month, whatever it might be, there needs to be a huge value add and there needs to be bonuses. Let's say your couch is $250. The average sofa is $250 to get cleaned. If you're a Coconut Club member, you get it for $99. You get free spot and spill treatment, right? Which means, hey, if your kid throws up in the middle of the night, which we've all had, are you paying $250 for the guy to come out and clean that thing? No. We give you free spot and spill treatment. So that's a huge value add that we sell to the customer. So a discount in pricing and valuable additions that you can sell or bonuses is what makes a great offer in my opinion. And to my knowledge, we're the only carpet cleaning business that has been able to figure out this model of how to get sticky recurring customers to see us not once every 24 months, but once every 3 months. And so what I love about it is that we're able to increase the customer value within the year, but also the stickiness of that customer because now, because they paid an initiation fee, they have this loyalty to you that they're not going to go out and get Stanley Steamer or Xerores or anyone else because they're committed to you. And, you know, Restoration Hardware does a really great job at this. Your wife's probably a member. Yes, I think it's funny because I just sit back and you and I are probably the same. Like, we see everything in the lens of a business. But my wife is like, no, we have to order from Restoration Hardware because I'm a member. I've already paid the initiation fee. And I'm just laughing because it's like, you know, their prices for non-members, cool. Like, but the membership pricing is what they really want to sell it at at the end of the day.

Yeah.

And so the people that do pay double, great. But the people that are paying the 50% off, right? Like they're happy at that rate anyways. And then they bought loyalty. And so Coconut's no different. So our 50% pricing really is where we need to be from a profitable side, from a company. And the people that aren't members paying 50% more, whatever the numbers are, 25% more, like we're happy with that. It's still a great deal, but we're trying to lock in loyalty from the customer base. I think consistency. Right? Like the messaging is clear, but what I, even if it was the craziest brand in the whole world, I think staying consistent. And I learned this from, because I'm not a, I feel like I've learned a lot about branding, but when I started, I wasn't a brand guy. What I brought to the table with my partnership with Dusty is my ability to create systems and processes and be able to stay focused in, in the follow-up within that procedure. Right? So I'm, I'm much of like an operator. Dusty was the wild brand visionary type of guy. And so what I learned from him at an early stage is that everything from top to bottom, so even our fonts that we use in our email addresses, or if we were going to send out a card to a customer, like it was consistent. Our green, like green was a major color for us, right? So many companies have a different shade of green on their trucks versus the website versus the uniform. What are the color, like what is the branding guidelines? To me, if you can create this brand guideline and then stay home to it, the customer can't, if you're like me, is you understand what looks good, but you can't describe why it looks good. And there's a lot of customers out there that are like us in knowing that, right? And so when you're consistent with the truck, you're consistent with the website, you're consistent with the leave behind folders, And the uniforms of the technician comes up, the customer's like, wow, like everything just fits. I don't know what it is about it, but it just fits. And so that's what makes a great brand to me. The ones that have 5 different trucks, 5 different logos of green, their uniforms, like it's an off gray, it's, or it's like, you know, whatever. Like that's what frustrates me when I, when I look at people's companies and see like, wow, there's, you have no, You have no brand presence or loyalty within the industry because you're all, you don't even know what it is. So I had to learn this the hard way. I, uh, I was burning through technicians like crazy, right? Office, like I was burning through everyone, you know, but I, I'm like, man, my solution was I just need to pay more. Like people, like any inefficiency that I have will make up for it because people only care about money. I was so wrong. I tell the story about being at a Diamondbacks game, sitting in a Dutch Brothers line, right? And because I was losing so many people, I was always in recruiting mode. And I saw this girl working the counter. And as business owners, you can just tell when people have it, right? And you're like, man, like this girl stood out to me. Long story short, I pitched this girl to come work for me. My pitch was all about how much money she could make. She politely declined the job offer because she said, I make minimum wage at Dutch Brothers and I'm here because of the culture. No matter what you offer me, I'm here because I like being here. And so it was just like this light bulb moment. Selfishly, I was thinking to myself, okay, I can have this amazing culture and I don't have to pay all this money. Like I was paying $4, $5, $6 above the normal rate because I was making up for all my bad habits and bad things that I was doing. Not intentionally, but it wasn't an area of focus, right? So the next day I literally remodeled our whole office. We got the soda machines, we got the massage chairs, we got the basketball hoops, we brought out the snacks, and it was like, we're going to focus on culture. And that's what we focused on for 3 years. And finally it was able to turn around and we became this company that was fun to work for. The second part, which is instrumental for me, Jocko talks about how You can only manage up to 7 people at once. Anything over that, comms get lost. People's lives, you know, are lost. And so why is it different for employees? Why is it different for companies? So this costs a lot of money. I mean, think about this. You give a manager a bonus for every 7 people. You have 150, 200 people working for you. That's a lot of managers, right? The point is, is hiring people and retraining them is a lot more money. And when you start out your company, like it's got all the vibes of a small business, like everyone's working together, it's a brotherhood. Why should that have to change just because you become this 150, 200 employee company? It doesn't if you do the, if you obey by the rule of 7. And so I was able to learn that probably 8, 9 years in. And when I implemented that, I was able to get back to that, the early days feeling of Green Mango. And people were a lot more sticky and people were having fun and I wasn't having to overpay for people. And, you know, so that's my leadership style is lead by example, make sure there's not too much on the plate. And that's like, you know, there's so many other things, but that's a great starting point for people that are listening to this podcast that are feeling like, man, my people are leaving, my people, I can't manage my people. It's like, man, you know, how many hats are you wearing? How many people are you managing? Right?

Yeah. Who reported into you?

Um, so my COO, um, and at the end I actually had Evan, who, you know, come over and help me out with Green Mango. And he was instrumental in bringing it all together. And that was one of the hardest days of my life. Um, when I sold Green Mango, I got up in front of the entire company and let them know that we'd been acquired. And right before that, when we start our company-wide meeting once a month, going over all the numbers, we do the anniversaries, we do the Google, like highlight the Googles, the, the greatest techs and the energy in that room, the passion, the commitment, the excitement for other team members as we had announced their names. It just brought me to tears because it was like, man, we worked so freaking hard to get here because. 3 years ago when someone would, you know, have an anniversary, it'd be like a little golf clap. You know, now the, the, the room's like roaring.

Yeah.

And it's all, and it's like, and it's all those little things that we worked on and it's, it's special when you have it. If you're listening to this podcast and you announce a win from another, from another coworker and it's kind of just like this polite, like, you know, clap, you're missing out, man. Like something needs to change with what you're doing because if you can have that in your organization. Everything else transforms and follows. I'm talking about sales, contact rate, close rate, retention of customers, of employees, everything, man. It's just, it's a special thing to watch.

Those are clearly things to shoot for. What's the shortlist of things that you won't tolerate? Or is it a shortlist?

Man. I've gotten soft and lenient lately, man. Um, I'm huge about being on time, honestly. Like if a meeting starts late, I'm like, it's probably unhealthy. Um, I, I refer to my things as sacred rhythms. And so with each department, I have a sacred rhythm that that department needs to adhere by. For me, and I learned a lot of this again from Tommy, is that like, hey, everything needs to be documented. There needs to be a system and process for everything. You have clear expectations, and the main thing needs to be the main thing. There's a lot of companies out there where there's 100 main things and bonuses are given for like 30 different items. It's like your people are confused. You're confused. You don't even know what the main thing is. Right. And so for me, I've kind of gotten soft in the sense of like, not worrying too much about what the technician's boots colors are. I let the field manager worry about that, and it's still important, but it's like the thing that I care about is 7-week rotation. That's what drives everything at Green Mango. And so if we're not on 7-week rotation, like that's where I don't— I have a short fuse if we're not doing things right.

So what is a 7-week rotation?

So for us, what we learned at Green Mango is that if we're on a bimonthly schedule and we bill our customers after each visit. If the holidays come, if there's a rain delay and we go from an 8-week rotation, which is every 2 months, to a 9 or 10-week rotation, you do the math on 30,000 customers times, you know, it's the difference of servicing them 6 times a year versus like 4 or 5 times a year.

Okay. So you're talking around frequency of being in the home.

Frequency. And so you do that times your average, you know, uh, rate per service. I mean, for us it was a difference of $4 million swing for better or worse. So we went from an averaging 9.5 to 10-week rotation on the year to a 7-week, and it meant in the positive another additional $4 million in revenue. And that was like being able to identify that, hey, this is our main thing. And of course How we get there, you know, it's an iceberg effect of what it is and everyone needs to fall in line with what we need to do. But like everything was talked about, 7-week rotation for us. There's a lot of companies out there as I consult that don't understand their lifetime value, let alone their annual contract rate and all the contingencies that happen or could go wrong to where they don't actually collect that and that revenue that they have contracted. It's one thing to say, hey, you're gonna pay me $2,000 this year, right? And then to actually go bill $2,000. A lot of, a lot of companies don't do it. They're missing it. Yeah.