I was washing dishes under the table for $4 an hour. I moved to Arizona when I was 16. I found a really good guy. He understood a little bit about finance and just a hard worker. That was when I found an integrator and the business started to fly.
What starts as a small service business can become a legacy if you chase mastery instead of shortcuts. Tommy Mello began with a garage door company buried in $50,000 of debt and no road map.
The garage door industry is one of the hardest industries. It's a low ticket average. If you look at most billionaires, they're not happy people. I'd say 80% of them because they became obsessed and they're obsessed with the wrong things. You got to be able to like reflect and think, what are the main goals here? What do I want my life to look like? But you got to have purpose. You never want to lose purpose.
He worked around the clock, learned every hard lesson in the book, and transformed that business into a $200 million home service empire with hundreds of employees across multiple states. Tommy doesn't just teach growth, he's lived it.
You need to love yourself first. And if you don't love yourself, there's no point in doing anything. You'll never show up for anything you care about if you don't start to find that inner peace and think you deserve more. Time management is the best skill. Focus on time management. Focus on how to be more efficient with your time and learning how to delegate. You got to ask more questions. Be more curious. Be willing to do the work. No matter how good your success is, be curious. Go learn more.
Tommy, welcome to Miami. Thanks for coming down.
It's humid here. [laughter] It's a little bit more humid than Arizona. I want people to know where you came from because you have a really interesting origin story, and interesting in the way that I think that when somebody looks at you and all you've built, they can make the assumption that you had a leg up or a helping hand or something that got you off the ground when you were young. Now, I know your story. I know that you didn't come from...
I'm thinking about a leg up right now.
A leg up, right? I know that you didn't come from a family of entrepreneurs. You didn't come from somebody who gave you a handout. You didn't come from like a dad who got you into the family business, anything like that. You had like a pretty rags to riches to a degree.
So, talk to me about talking about your family. Talk to me about where you came from and talk to me about sort of how that shaped who you are.
Well, my grandpa worked at General Motors and retired in 1974. 12 kids and you know they were all raised in a small house in Royal Oak. My mom grew up in Detroit, very small house, five kids. Grandpa left, my grandma, she knocked on doors, figured out a way to make it work. My parents got a divorce when I was seven and my dad went through his trials. Still going to be my best man at my wedding. Amazing dad. Taught me how to be super competitive. No second place. We don't get awards for that. But you know, mom worked three jobs. We went to church. They'd help us out with Thanksgiving and Christmas. And I learned if I wanted to do anything, I had to shovel snow and mow lawns back then.
And then when you turn 12, I was washing dishes under the table for $4 an hour. But I was happy to do it. I'd walk straight to the rookie's clubhouse from middle school. And you know, I moved to Arizona when I was 16. I wanted to be closer to my dad. You know, puberty, my buddies in Michigan. That time I got a job as a busboy, and I was a lifeguard. And then I started up a landscaping business. Got that to $30,000 a month.
That's the first like step in entrepreneurship.
It was hard cuz I'm allergic to grass. And what I used to go do is water conservation analysis and tell them how much water they could save because we're in the desert. And then my roommate, we were paying $700 total for rent in Tempe where ASU is. And he's like, 'Can you paint garage doors for me? I got this great job managing this garage door company.' I was like, 'What does it pay?' And at this point, I'm bartending. I still got the landscaping company. I'm serving tables and I'm going to school, but I still had time. I'm a workaholic. So, he's like, 'A hundred bucks a door. You got to pay for the paint.' So, I was taking home about 80 bucks of that and I could paint 10 doors a day. I went through the yellow book, called every single company I could, became their number one painter. And as I'm meeting all these guys, this is 2005 and six. I'm like, 'How much are you making a year?' They're like, 'Six figures.' And I was like, 'Man, I got to look into this.' My other roommate's like, 'We should start a garage door business.' I knew how to do an EIN. I knew how to get in the yellow book. I knew how to get an LLC. I understood how to pay taxes. Just general stuff. But, didn't really know the full grasp of business. So, we made ends meet, but it was still a struggle. In 2010, I was like, 'Look, there's a lot of debt on this business. Either you could take the business or I'll take it.'
It was okay. I mean, we were paying our bills. Any cash job we took, it's over seven years, so I can say that. We split amongst each other, but the bills kept adding up more than we were making. And so he said, 'Listen, you could take the business, but you got to take the debt. Anything that comes later is yours.' I said, 'Fine.' And I called my mom. I was like, 'Hey, mom. I need somebody I could trust out here.' So my mom and stepdad sold their home in Michigan. Came and I'm three years into the business, had about five good employees, but I was still running the majority of jobs. I was doing the recruiting, the training, the marketing. I didn't like doing payroll and I didn't like the phones. Actually, the phones became super annoying to me even though I knew it was a money job calling. I mean, I would book 15 calls a day while on a ladder at the customer's house.
So, at this point, you were just okay with hard work. You were always okay with hard work. And it's so interesting because it seems like hard work got you to a certain point, but then at some point held you back, too.
Yeah. I always say the hustler had to die for the leader to be born.
So, at this point, you're doing every job in the business, more or less.
Yeah. Listen, I was a janitor. There was people stealing toilet paper at the time. Like, I was like, 'Mom, what happened to all the toilet paper?' We found a guy was taking all of our toilet paper, but they were taking everything. They were stealing parts, stealing tools. You know, at this point, I didn't own the trucks, so they had to provide their own trucks. And I mean, it was tough, man. Every I walked in, this is a couple years in when my mom started there. So, like 2012, by the way, when she moved out, I said, 'I'm going to get a master's degree.' So, I started an executive master's degree at U of A. So, that 18 months, while I was doing a lot. And in 2014, and there's so many other stories, but 2014, I found a really good guy. He had taken a buyout from the airlines. He was a mutual friend. He understood a little bit about finance and just a hard worker. And I said, 'Listen, if you come in and you could be the bad cop, I'll take care of the marketing. I'll do the training. I'll grow the business. I need somebody that understands how to set up the CRM, basically work on the backend office, deal with the lawyers and different things we need with the CPA.' He's like, 'Dude, no problem.' And that was Adam Croninberg. Amazing guy. That was when I found an integrator and the business started to fly. 2017 I started a podcast, got on the right CRM and met the right advisor and that was like a triple, like that was a home run because the advisor taught me about system, standard operating procedures, checklists, how to build manuals. So, I built a repeatable system and then the podcast I could get anybody I wanted in the home service industry because it was early in podcast. So, they were like, 'Yeah, I'll come on your podcast.' Like, I'd get a $20,000 an hour person for an hour for free. It was my show. So, I was like, 'Teach me, teach me, teach me.' And I take notes and every 40 podcasts I've done, I'd hired somebody.
Still to this day, every 40, that's just the average for you?
Sometimes it's every 20, sometimes it's every 60. So, the CRM worked great and I started just diving into marketing. I went and visited every hundred million dollar HVAC shop that there is in the United States at the time. And they let me in with open arms and they were like, 'Dude, we've heard about you. We've heard about the podcast.' I wrote a book called The Home Service Millionaire. And then a few more key hires in 2020. And, you know, 2022, we did a partial exit. I sold half the business, well over 500 million, and there's 100 million slotted out for 24 people at A1 that earned it.
And I think people need to understand the level that you're playing at now. Like, you pay 24 people $100 million.
Yeah. Well, look, at the end of the day, now the company's worth over two billion and I feel like we're still in the fetal stages. Like, now that I understand the rules of the game. I understand arbitrage, how multiples work, how EBITDA works.
Leverage, huge amounts of leverage.
Yeah. The garage industry is one of the hardest industries. The reason why, it's a low ticket average. It's not like an HVAC unit you're selling for 15 grand. A roof you're selling for 30 grand. A hot water heater is seven grand. And people are like, 'Yeah, you go to Home Depot and buy it cheaper than that.' But that's what they charge to come to your house the same day and fix a leak. You know, I got a buddy in Ohio that does really bad leaks with like under your concrete. I mean, he's charging 40, 50 grand a pop. My average ticket is 1,200. So, I run 25,000 jobs a month. I mean, we've got 1,500 employees. So, and the crazy thing is this month we got 54 brand new technicians and I don't see us slowing down. So, we'll probably go to 60 to 70. Next year, I'd like to hit 100 a month by probably Q4. 100 brand new guys coming on, learning the trade, getting a brand new van, getting the tools, and having the work for them to be able to support them.
So, what now? Now, you have built a business that is bigger than most people will ever build. Not many people build a 2, what was it? 2.4 billion.
2.2 billion. So, right now we're at, you know, the multiples are really high in our industry because it's demand driven. COVID doesn't slow it down. Nothing really slows down.
The point is give yourself some credit regardless of the multiples.
But I will say the teamwork makes the dream work and you know I've got a lot of ideas. I'm very patient now. I'm disciplined. But my team is everything. Like I can't take near the credit of what they do. They run the business. I'm here in Miami with you. I'm more of the thought leader and I'm really close to my technicians and installers.
Like 17 years into the business, $17 million. Like you need some systems to get there. You can't just build that through just sheer hard work. So what is he looking at that you as a young entrepreneur at the time think is system? Like you're saying, you know, you don't have security on the warehouse and people can steal your stuff. But what is the difference between a system that gets you to 17 to 20 million versus a system that gets you to 500 million over 1 billion? Like there's different systems for every level. You thought because I know you thought you had some at the time.
Yeah. So here's the deal. I'd worked 24/7 on holidays. I was putting out fires constantly and I was like the problem is when you get to that level of that kind of revenue with really crappy systems. It's always a dog fight. It's always you walk in and there's always bad news and there's a guy that's driving on a suspended license, a truck flipped over, the police are here because you know the drug test, we didn't get the drug test in. We hired a guy three months in the drug test came back. There's a felon we hired. We didn't document things properly and either there's no system in place, the wrong system, or the system's not being followed and I think it was all three of those things and you know looking back it was really really stressful. You know we're going to do well north of 300 million this year of revenue, really really healthy bottom line and I feel no stress and it's who not how. We've got the right team. We got six people on our FP&A, financial planning and analytics. We've got seven trainers. We've got a whole fleet department. We know if someone's speeding or goes to get on their cell phone. Like every single week I get a notification of the drivers that got flagged and small speeding and stuff. I don't like they get a warning, but if it comes to me, I'm reaching out to each and every one of them in a mass text saying, 'I need you guys to cool it or you're suspended for three days.' And all that stuff comes to me because I've worked hard to create a bond between my team, especially the guys out in the field. We have a relationship where I'm going to give my all. You got to give your all. And if you're not, this isn't the right company. Go work for a competitor.
But it's interesting because you're talking about how at 300 million topline, you still feel less stressed than what you were like on the come up.
So you've obviously delegated a ton. And I know like I think you said you will, what did you say? I love this quote. It was something along the lines of you will never out delegate me, which is a great quote, right? But the point I want to make is there's still some things that you find super valuable to be involved in yourself. So when somebody is speeding, it's going to you having that communication, the conversation with the person because you built that rapport. So how do you figure out which stuff in the business you should delegate versus which stuff is still important for you to take on.
So, you got to ask yourself on every single thing, could this be delegated? Could I delegate? If I said, Scott, you know how much I appreciate you and your family, what you do for this business, could I have my executive assistant, Ashley, call you up and say that? So, culture is really, really the big thing. The next thing is I'm fascinated and in love and very curious about marketing, especially in the day of large language models like ChatGPT and I could go on and on about that. Search engine optimization, social media, TV, radio, billboards. Like I still get involved with most of the marketing. I'm not knee-deep in it, but that's the number one thing I focus on after culture. And I want to recognize birthdays and anniversaries and great days if you set a record. I'm not there to call you out. I'm there to call you up. So, a lot of times I'll reach out to somebody and say, 'Hey, dude. Is everything okay? You know, I just noticed you're slipping. You haven't been showing up to meetings on time. I'm looking at your first arrival to your first job's not been great.' I'm not going in there going, 'I'm going to put you on a performance improvement plan.' I'm going to say, 'Are you all right?'
When you look at culture, I think that you are an incredible example of building a good culture because I've met the guys on your team and I've met the people you work with and they're incredible people, but you go above and beyond. So, I'm going to say this one more time because I don't think this is something that a lot of companies do. You gave $100 million to 24 employees when you had that first exit. That's like above and beyond culture. So, what are you achieving with that? Why did you make that decision? Because you didn't have to. Nobody forced you to. I don't think the private equity firm that came in required you to do it. These are something that you did out of the goodness of your heart. That's a significant amount of money for anybody.
Well, this ownership mentality changes everything. It's called equity incentive programs. If you think about it, every public traded company has stock options for their leadership team. Sometimes they do an ESOP where it goes all the way down. I don't like an ESOP because everybody gets equity, but the greatest people working the hardest don't get enough.
Explain that just so people understand.
It's a way to set up instead of a C Corp or an S Corp, they'll set up an ESOP. But what I do is an equity incentive program where it goes all the way down to the technicians now. So if they hit pinnacle, which means their KPIs are dialed in, their whole scorecard, not just sales numbers, but they don't get any recalls, they get five star reviews, they drive right, all the major things, they can earn their first, they earn 200,000, then $75,000 after that. So if you're there for four years, you're going to make 425 grand at a transaction. Now, that's at a technician level, installer level. There's a lot that I try to make sure it's fair for everybody. It's kind of like social security, though. Once you give it, you can't take it back and no one's ever really happy with it because literally at the end of the day, if you do the math, I own 48% of the business. It's a healthy chunk of money. So, I got to figure out how to be fair and make sure everybody feels like, but I want to keep them motivated to go to the next round. And because I still got an obligation to the investors because by the way, the private equity company, they work with teachers, pensions, and firemen and police officers and they've got their life savings in there. So, I got to be obligated to them as well. And the best thing is do the right thing for your internal clients which are the employees, which I call them my co-workers, and do the right thing for the homeowners and you'll win every time and everyone wins.
A lot of businesses don't do this though. I don't think I see many people handing out $100 million in...
Every private equity does what's called profit units, but they're kind of forced to do that because that keeps your attention. But for me it was like dude, I could have been lonely at the top of the mountain, kept all the money. There would be a lot of anger and just resentment and they worked so hard. I mean, certain people probably got too much. Certain people probably didn't get enough. Some people probably didn't get anything. Well, because the business wasn't small. I mean, it was 400 people back then. So, I like meritocracy a lot more than tenure. No one got it because of tenure. I just don't believe in tenure.
Well, based on what they were able to...
I've got a lot of loyalty with tenure. You've worked with me. You stood by my side. Don't get me wrong, but that doesn't mean you should just... You get paid plus you get a bonus. Like, this is above and beyond because people have the ownership mentality. And now everybody's sprinting towards the same goal, the north star.
And tell me something though. When you give out that kind of money and you are not out of the business, just so people understand, like you are still in the business. You sold the minority piece.
Technically, they're the boss. I could get fired. It would be very hard to fire me, but they can't take away my equity. But when it's not founder based of a company like mine, it tends to kind of fall apart.
My point was when you give those kinds of dollars away, do you retain that talent? Like the best of the best, when I don't know what the, you know, do 100 million divided by 24 is probably not even like...
No, the top five people, are they staying with you or are you over incentivizing them to retire?
Well, I'll tell you this. There's different seasons of the business and the people at 50 million are different at 200 million are different at 500 million. Now, I don't think I'm the smartest guy by any means, but I've learned how to delegate. I've learned how to be the face of the company and I've learned how to negotiate like crazy and I've learned how to keep the morale up. So, as the founder, I want to be the dumbest guy when I enter the room. Like if the right CEO came across my path, it'd be very hard because they'd have to understand the culture. So, I might be like a co-CEO or chairman of the board, but I'm not going to give up because I still haven't fulfilled my promise. I need everybody that stuck by me to win big. And what does that mean? Everybody's got different goals. We got a full-time dream manager. I really like to know what everybody's dream is. And we're building this software understanding. Some people's dream, unfortunately, are too small. And some people's dreams are like they're bigger than mine. And maybe they just... But when anybody says a dream, I'm like, well, what would you do? If you want $10 million, what does that even mean? I don't want to hear about the money. I want to hear about what you want to do for your family, what you want to do for your kids, what experiences you want to have. Like, I want to know everything, but not a monetary number. We could back into that number, but what is it that you really want? Some people like, dude, I want to do what you did. I'm like, okay, so what does that mean? They're like, well, I want to get to at least 100 million. What would you do with that kind of money? Well, I haven't thought about that, but I know it's possible. Well, do you have kids? Yeah, I've got kids. Well, you don't want that because there's no way I could have raised a family and been around my wife and made her happy if I was doing that kind of stuff. Like, literally, I was working crazy crazy hours and on holidays and on weekends and skipping like I broke up with so many girls because just work. They were like, 'Listen, if I'm going to hang out with you, I'll just ride with you in the truck.' I can't. Those were our dates at the time. Like, you're going to come with me on jobs.
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These are a whole bunch of different ideas here, but if somebody doesn't want to be an entrepreneur, wants to build anything the size of what you've built, like I think a season of their life has to be unbalanced. I think that's pretty normal. I don't think I know a single person who I've had on this podcast or myself included, I've never built anything as big as what you've built where even a much smaller version of that for a couple years, your life is chaos. And you have to be obsessed with what you're building. But you have to know when to shut off. Like you have to know like, okay, so now I've gotten it to a certain point. That's when you out-delegate everyone. And that's when you hand off stuff.
Yeah. Look, at the end of the day, if you look at most billionaires, they're not happy people. Most, I'd say 80% of them because they became obsessed and they're obsessed with the wrong things. So, you got to be able to like reflect and think, what are the main goals here? What do I want my life to look like? But you got to have purpose. You never want to lose purpose, especially as a man. Like, you want to be a provider. You want to go do stuff. You want to use your brain. Like easily I could fade into the sunset and golf every day in Hawaii and then all of a sudden I just become a lush. So I still want to maintain purpose, just focused purpose, and I don't need 12 hour days. I could do six hour days of focus. And I'm still exploring things. I'm podcasting a lot. I'm learning new ideas. But I bring so many ideas now. We're not ready for all my ideas yet. But the company will grow into a company that's ready for everything I got to give because listen, we're just doing garages now. You know, there's certain months we run 25,000 jobs. What if the person said, 'Listen, I'm thinking about putting a pool table in here. We could do the floors and put in a mini split to keep it nice and cool in here in the summer, warm in the winter.' All of a sudden, that ticket for 3,000 turns into 20,000. And there's so much opportunities. We've maintained a lot of discipline and focus. And so, I release certain things at the right time. And I think our team's...
Did you get that from Jeff Bezos? There's a Jeff Bezos story about this as well. Jeff Bezos, the best story in the world. And do you know the story about the too many ideas and...
Well, yeah. He had a partner that basically came in early, an adviser, and said, 'Hey, Jeff, you'll bankrupt us if you go to the whiteboard again. You will literally one hour in the whiteboard, we'll bankrupt this company.' And he said, 'Well, what do you suppose I do?' He goes, 'I want you to keep your ideas, keep them in a file, ruthlessly prioritize, give them to us when we're ready.' And I played that to my team. I played that on stage. Like, that is me. And he's like, 'Why don't you build a company over the years that's ready for all your ideas?' And so, yeah, I just took his and put my own little... Everything I do is I call it R&D, rip off and duplicate.
I love it. [laughter] There's no really authentic ideas here. What do you think? Because I know like when you were very young, you were hearing your parents fight about money.
And you never wanted that ever in your life. And I'm assuming, I don't want to put words in your mouth, but I'm assuming that's why you worked hard. That's why you hustled. That's why you sort of built your own thing. I'm going to make sure that money's never a problem in my life with my family, whatever. You have more money than you need at this point in your life. I mean, you can make the argument that you can keep going and keep buying fancy new things, but I think you're doing pretty well. What drives you now?
Well, you know, the weird thing is when you start out at an age hearing your parents, I used to stand on the toilet because the bathroom was next to their bedroom. So, I could hear through the drywall. I used to stand on the toilet and hear them argue and just this brokenness. It was like we don't have money. And my dad was very generous and took us shopping and would spend it faster than he was making it. And I guess I still sometimes feel like I could lose it. And I don't really know why because I've seen so many people in my life, they made money then they lost it. And I'm not doing stupid stuff. I'm not a gambler. I'm not a drug user. I just don't go down those things. And you know I've got a fiance so I'm set there. This idea of success and working out or like even faith or like sometimes it's just continued like how much better could you get? Like I've never arrived at anything. So now it's like how because I gave up. I didn't go to church every Sunday. I didn't hang out with friends. I didn't see my family enough. I didn't focus on my fitness. You know, I didn't have a lot of fun. So now I'm trying to catch up for those years. You know, I really want to do a lot of stuff for a lot of people. But one thing I don't want to do is just pass out fun tickets to people. I want to invest in their dreams. Especially the close people in my life, my cousins and my family. Like look, if you're past 70, I'm going to help you out. Like you don't have to work anymore, but if you're my age, 40 or younger, like let's invest in your ideas. I'll help you along the way. I've learned a lot in the process and I'll tell you something stupid. I'm going to ask you a million questions. I don't need to tell you anything. I could ask you questions. You'll come to your own conclusion based on the questions I ask you.
But you think that because you mentioned most billionaires are not happy, which I agree with. But I think that they got too much to worry about, more money, more problems. But they also I think they've lost like that original purpose.
I think they definitely have. There's a man's search for meaning that you lose your purpose. You just... But the other thing is like now you think about it, a billionaire, you start questioning now, this hasn't happened with me. You start questioning people that want to hang out. You start questioning family members that start showing up. Things start breaking. Like now you got four houses. There's a problem with the roof. The hot water heater went out. Your...
Yeah. Well, so you were on MoneyWise.
With Sam Farr and this is a fun podcast. He breaks down how you spend money. And I don't think I mean like I've listened to a couple of these episodes and people with massive amounts of wealth like they talk about their maintenance costs on their homes, right? And it's just an insane amount. It's an insane amount. So it's like it truly is more money more problems. So it never ends.
Yeah. You know, if you do it for the right reasons. Like look, my cousin, his wife, they just had an anniversary. Ryan and Cheryl, their friend Katie Klein was in town. We went and saw Rob Schneider perform. Like if you got the ability to do great things and enjoy, like I didn't get the house to say look at my house. I got it because I have family there. I've got the family office. They all stay there.
You always invite people. You had me over.
Listen, I'm always going to have like that's a bonding spot and I want to just have fun and I want to do cool things. So like ultimately I think a lot of people are like look what I have and they compare like keep up with the Joneses and that's never going to create happiness. And I'll tell you, there's a lot of people that buy a massive house and then they downsize. And some people don't even like to own. They're like some of the most wealthy people in the world like I don't need that liability because it turns out it's not a liability. Hopefully, it goes up in value. The real estate does well, but things break. And ultimately, it could be a liability, especially like you don't need much more than two. Just you get nice Airbnbs. Flying private's super cool, but you got to have internet. You gotta have Elon hook you up.
Well, if you don't have Starlink, it's not near as fun.
Like I'd rather go first class than private if they can't have the internet.
The reaction that I've heard from many people that have sold for, you know, nine figures, like high eight figures. It's like this immediate fear that you're going to screw it up. You're going to screw up some and it's like it's more like it's stupid because if you just invested it like in a very conservative portfolio, [laughter] you're going to be just fine, right?
You're making 10 million a year.
You're stressed out for some reason you're going to screw this up or that you can't do it. I don't know if this is a universal experience. I'm sure some people have an ego and they think they're God's gift to business and that they're never going to screw anything up. But a lot of the self-aware people that I know that don't have a huge ego, very humble, successful people, like for a moment, you're worried about all the things you mentioned, like am I going to screw this up? If now I have to figure out how to invest, just because I'm a good operator doesn't mean I'm a good investor. Now I have to sort of audit everybody who comes into my world because are they liking me for me? Are they going to take advantage of me? So all these like rich people problems, of course, for sure. But I think that anybody who's on this journey at some point if you stay in this game long enough you'll find a way to make more money than you even thought possible. Like in all seriousness, again it's like time in the game, if you stay in the game you will make more money than most W2s ever will earn.
Listen, I'm two decades into this and I've already had success. So I'm like a guarantee now. But most businesses fail. If it was easy everybody would do it. You give a piece of your soul away for a temporary time. Sometimes a temporary time is two years, sometimes it's 10. But there's a lot of problems. There's a lot of people that turn their back on you, a lot of backstabbing. There's a lot of people that aren't loyal. And by the way, loyalty goes both ways. There's a lot of owners that don't do anything when they sell for anybody in their company. And they say, 'This is mine and this is my family's. We took all the risk.' And that's not... So it goes both ways. You know, by the way, there's more shitty owners than there are shitty employees probably. I was alluding to that when I was talking about the $100 million being paid out. Like I've been part of exits and I've seen a lot of friends exit. They don't all pay out their employees. Most don't.
