How does the average person go from nothing to $220 million a year, 40 plus locations, and more than 700 employees? I watched my mom work three jobs just to put food on the table.
Wow, garage doors. And it all started with one life-changing realization. I always tell people, you don't have a business, you have a job. I couldn't sleep at night if that were me.
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Probably the smartest thing I've done. And then we started to explode from 5 to 8 to 12 to 17 to 25.
Tommy, thanks for having us. Before we dive into your origin story, tell us a little about where we are and how you typically start your day.
Yeah, so this is headquarters of all of A1 Garage. We're in 21 states, and this is where it all happens. All the decisions get made. This is the hub. This is the C-suite down this main aisle here. And the way we designed this office is I'm the hardest person to get to. You got to pass a lot of other people in our C-suite to make it to me. So usually my door is closed and I'm in.
Gotcha. And you treat your calendar like your boss, essentially, is what it sounds like.
Yeah, the calendar is the boss. Yeah, it tells me where to be, why to be. I've got a rating system, one out of five, and if it's a one, it needs to get done. If it's more than a three, I can put it off a couple weeks.
Let's talk about your upbringing a little bit. Do you come from money? What are some big takeaways and lessons from your early days?
Yeah, so I don't come from money. We weren't broke, but we were, I'd say, kind of lower middle class. Dad told me, 'You're going to win. You're going to win at everything.' He was my coach, he was my everything. My mom just said, 'I love you no matter what. I will love anything you go for, anything you try. I got your back.' So with my dad being competitive, my mom giving me the love, it was like what I consider the perfect combination.
We're going to hear Tommy's take on this later on in the video, guys. There's the old adage that says the customer is always right. What do you think about that? Is that true? Do you need to correct them? Let us know what you think in the comments below and keep watching.
Give us a sense of the scale of operations and what happens here at HQ.
Yeah, so this is about 35,000 ft. The building over there is about 45,000 ft. So cumulatively, there's 80 to 90,000.
All right. Out of all the home service businesses, why garage doors? How did that come about?
I was doing landscaping, but I'm allergic to grass. Not the best industry. And you know, I kind of fell into it. I was painting garage doors, realized it could be pretty lucrative. So there's a lot of opportunity. You know, the market cap in our industry is about 14, 15 billion.
Before we talk about revenues, can you share with us, give us an idea of the overhead for a company this size?
So you got labor, you've got cost of goods, you got indirect labor. Typically, I try to get around 30, 32% is my labor cost of revenue. If I'm not making more than 20%, there's something going wrong. We've got too much experience, too much buying power, too much economies of scale. That's what's nice about going in one industry across the board to a lot of different markets. So many people, they go deep into a market, they want to own every single different service, but they don't get any economies of scale on buying. I'm purchasing, so we purchase more. We're going to spend over $50 million just on parts next year between graduate parts and course location across all locations. But that's still, it's a ton of money. So we're able to negotiate with our vendors because we're important to them, they're important to us, we want them to make money. We happen to have the best product mix in the industry, meaning people are buying better quality parts from us than from other garage door companies. It's because we educate our clients more. We feel like it's a better investment. It's going to last longer. It's going to save them on their energy. It's going to have more curb appeal. It's going to be a better ROI. All the reasons why that we spend time with clients, we make sure they know what they're buying.
All right, man. Well, we've seen enough of this incredible HQ. Why don't we go check out your place?
Let's do it. Come with us. Let's go.
All right. Well, welcome to Tommy's residence. Beautiful place here.
Here we are. Beautiful Paradise Valley.
Only what, 3,000 square ft?
Yeah, somewhere in there. About 16 off by 10x probably.
All right. Let's talk about startup costs, those initial days for A1. Give us an idea on what that was, how you secured the funding, and what's your advice for entrepreneurs in the beginning stages when it comes to securing funds to be.
Yeah, you know, we were talking 2006, 2007. I was still painting garage doors. I was still selling houses, flipping cars. I was still, I had my landscape company. I was still bartending. I'm not a big fan of borrowing money and maxing out credit cards to get a business going. I'm just not. I don't think debt is the right tool to use in the beginning of a business. I make sure you saved up the money yourself. You're not going to use debt. You're not going to rack up credit cards. You're not going to borrow against your house. I think you should work harder rather than use that as like a pot of gold to just use. You've earned that equity over a long time. Work harder. So work harder. Those first couple years, yes, it's sacrifice, but business is sacrifice and it's not easy. If it were easy, everybody would be doing it.
Amen to that. And a lot of businesses fail, man. A lot of them. All right. Before we get into margins, revenues for this industry, when you first started, was it a success right away?
You know, we made ends meet, but it was a slow start, man. I knew it could make a lot of money, but I had to go all in. I'd say that first four years we got to 5.5 million. We went from a few $100,000 to 5.5 million by 2014. And then I found a great integrator. I found a right hand, and then we started to explode from 5 to 8 to 12 to 17 to 25. And then it just kept going. And now those numbers are bigger, and now they're more profitable than ever.
Here we go. All right. Wow, what a place. That's a beautiful rock right there.
So that's from Uruguay. It's amethyst. Wow. And I got the second half in the Idaho house for building.
I love it. I mean, this is really just the testimony of hard work, the fruits of your labor. I think that's inspirational. What do you think holds back a lot of people from taking the first step on an idea?
Yeah, lack of preparation. I think a lot of people that get a great idea, they don't really have a plan. But this is your life. This is your life savings. This is everything you have. So people like, just go for it.
Did you ever play sports?
Uh, no. Well, I played football and we used to do two-a-days. So we'd practice 10 times a week to play one game. My point about that is we'd prep, we'd prep, we'd prep, we'd learn the plays, we'd learn to trust each other. And in business, for some reason, they say just go start it and figure it out as you go and practice on people's homes and make mistakes and don't have the insurance pulled correctly, the workman's comp on your people, and don't buy the right vehicles or breaking down all the time. Like, don't learn on the job. I would tell you it's all in the prep. Yes, people are afraid of failure, but I don't think they have a clue on what to do. Just because you're good at fixing something doesn't mean you know how to run a business, doesn't mean you understand leadership, doesn't mean you understand culture. So the best advice I can give you is go intern with somebody that's already done it and have them give you the good and the bad and the ugly. They call it a SWOT analysis: strengths, weaknesses, opportunities, and threats. Work through it and understand if this is right for you.
All right. You've been extremely vocal about making a point that entrepreneurs need to know their numbers. Seems like common sense, but what's the first number that they need to know in order to maximize success in their business?
Yeah, average ticket. If you're a bartender, you should know that your average tip amount. If you're an automotive shop, what's your average repair? If you're a car dealership, what's the average sold vehicle? Like, you should know that number.
And how do you increase that number without being a slime ball?
Remember, there's only three ways to make money: you get more customers, you charge your customers more money, or you keep them coming back more frequently. Those are the only three ways to make money. So if you're going to charge your clients more money, how do you do that? Make them other offers. So when you're working on a garage, you can sell deco hardware kit, you can sell different types of installation, better bottom rubber to keep out all the nasty bugs, nicer openers, you can sell garage storage that hang from the ceiling. There's a lot of things you can offer. So when you're talking about average ticket, just offer more. Let the client decide what they want. I think you got to ask questions and find out what's important to them.
Okay. All right, guys. Thanks for submitting your questions. Blitz time with Tommy. You ready?
What's the strangest or funniest thing you've ever encountered in a customer's garage?
I've seen a lot of snakes, a lot of venomous snakes in a garage, and lots of spiders.
I guess that's common for Phoenix. Yeah. Okay. What's one surprising skill every business owner should have?
The ability to walk in a room and speak, just stand up and be able to talk to a crowd.
What's one piece of financial advice that every entrepreneur could benefit from knowing?
Delayed gratification. Live below your means until it starts, the compound interest adds up so much, so you're making more money than you ever thought possible.
That's awesome. What's your go-to way to unwind after a busy day?
Um, depends on if I'm drinking or not. I like to play Golden Tee and Big Buck Hunter. Those are my two favorite games.
Okay. Do you have a motto or a phrase that keeps you motivated?
Lots of mottos and phrases, but if you're not first, you're last. Shake and bake.
Okay, good. What's something that every garage owner should know?
The garage door is the smile of your home. 40% of your curb appeal. It's the number one ROI you can make on the home. The quality matters. You know, Amazon will deliver into your garage. Walmart will deliver into your garage if you've got a MyQ, which is a Chamberlain LiftMaster. So the technology, the insulation, the energy savings, the curb appeal, the ROI, it just makes sense to call A1 and replace it or repair it.
This guy's a master salesman. All right, couple more. If you weren't servicing and installing garage doors, what would you be doing?
You know, I look at this question all the time. I'd go into home service, whichever the largest ticket is: HVAC, plumbing, electrical, roofing, gutters, flooring. It's the same. It's just as hard, like washing windows and power washing, as it is to do HVAC. So I want to go into the biggest average ticket.
Last one. What's one unconventional hack that you use to stay productive?
One unconventional hack? You know, I've hired two executive assistants, and I'll probably have a third here soon. It doesn't make sense to hire all these people for most people, but I'm telling you this, I just, I want to get in the car. They tell me where to go, what to do, where to be next. It's the best investment I've ever made is having them do all the menial stuff that I hate doing, like email and everything else. Very soon, I won't even be doing text messaging except for my own private line with like 10 people.
Curious to quickly touch on your numbers. What are you doing revenue-wise, and where are the margins as well?
Yeah, so this year we'll do about 250 million, and the goal is to throw over 20% to the bottom line, which means profitability. A fancy word for profit is EBITDA, earnings before interest, tax, depreciation, and amortization. And you know, there's this phrase that I became really fond of: revenue is for vanity and profit is for sanity. I know a lot of people, they walk into a room with their chest out, they meet their buddies, and they talk about how much revenue they did, but they're not making any profit. And so the most intelligent people, they talk about ways to make more profit. Profit is healthy. Profit is good for your vendors. Profit is really good for your clients. It means you're going to stay in business. It means you're going to honor their warranty. It means you're going to show up if something goes wrong, right? It means you got dependable vehicles. It means you got better parts and the right tools to fix the job. It's taken two decades to build to this size. I still feel like we're in the fetal state. I still feel like we're just getting started.
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What are some mistakes you made early on with A1, and how can other entrepreneurs avoid them?
A lot of things. Number one, I thought buying used trucks was actually going to save me money. I didn't understand depreciation, how much morale it kills when a guy breaks down, he doesn't have a way to get to work. I didn't own my own backyard. You know, I started out in Phoenix. I should have took a lot of market share before I expanded. You know, and I grew too fast. I grew into a lot of markets. I didn't know where the profit was coming from. I would say I didn't learn how to top grade. I allowed mediocre people to stay with the company too long because they didn't know what an A+ player looked like. An A+ player to me was the best I had, but when I really realized what an A+ player was, it changed everything. Another thing I would say is probably the smartest thing I've done on the opposite side of the spectrum is I lived below my means. You know, this is a nice, beautiful house. Just a couple years ago, I lived in an 800 sq ft apartment. We own the apartment complex, but I owned seven houses and decided I just want to live at the apartments. I drove the oldest truck in the fleet. I drove a 2012 Nissan Titan with 300,000 miles on it. I said before every single technician gets a new truck, I'm going to keep the oldest truck. Two decades of delayed gratification, man. It is, it's hard.
With what you know now, when you start out, what's your advice to those starting out, low budget, obviously just getting into the business?
Don't pay hourly. Don't pay hourly. Hourly is for losers. Would you work harder if I was paying you $15 an hour, no matter what? Absolutely. If you were in the call center, let's say you could take five calls per hour, I'm going to give you $17 an hour or $12 an hour plus 10 bucks for every booked call. Heck yeah. Which would you rather have? The lad, hey, you book one phone call an hour, you're making 22 bucks. Yeah. Two phone calls, 32 bucks. Three phone calls. So when there's stake, what's in it for me? If I'm the person who's working for you, what's in it for me to try hard? That's a fair question, right? People are afraid to ask that though. What's in it for me? They're grateful for 15 bucks an hour. If somebody said to me, Tommy, you're at 89.2% booking rate. If I got you to 96, what would that mean? Well, I happen to know that every percent that goes up is $2.34 million. Wow. Now I tell them, you get nothing until we start moving in the percentages. You don't get like this draw from that, but it's performance pay. Like every single thing you do, I can pay you more. I can pay you more. I can pay you more.
