#321: Inside the Mind of a Strategic Buyer: How Tommy Mello Took A1 Garage Door from $50k in Debt to $150 Million in Revenue

Ep.#7 [THEME FIVE]

If someone were to ask you to create a short list of companies who should buy your company, it probably wouldn’t take you long. The list is most likely based on logical reasons these buyers would want to acquire your company, because by owning your company, it would help the buyer grow their business and take more market share.

The goal of today’s episode is to better understand the mindset of strategic buyers, why they are buying companies, and what they plan on doing with the company after the purchase. Instead of just assuming why buyers would want to purchase a company, in this episode we get to understand the mindset of someone who has scaled a company and become a strategic buyer of dozens of companies in the home services space.

On today’s show, Ryan talks to Tommy Mello, the owner of A1 Garage, author of the book Home Service Millionaire, and the host of the Home Service Podcast. Tommy shares how he went from two trucks in 2007 to over $150 million in revenue and over 500 employees through a combination of organic growth as well as strategic acquisitions.

Tommy unpacks how he built A1 Garage into a machine and the various components and KPIs that run the machine. Tommy explains how they predictably scale organically as well as how they apply their internal playbook to companies they acquire within their space, both of which have fueled their exponential growth.

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What You Will Learn

What data and activities Tommy and his team work on every day and how that is tied to a future EBITDA and equity valuation.
How Tommy built a team of rock stars that he delegated to without micromanaging them, even though he had problems in the past with trust.
Why it is possible for Tommy to buy a company with $1 million in EBITDA and turn it into $4 million EBITDA within 18 months.
How Tommy intentionally keeps himself in his “zone of genius” and how that keeps his energy and motivation levels high.
How collaborating with the top industry software helped propel A1 into exponential growth.
The role the industry software plays in acquisitions.
How Tommy thinks about systems and processes and why that was so crucial to him hitting $100 million.
The simple equation Tommy uses to decide what he needs to do every day to hit a certain revenue goal.
What traits Tommy looks for in people that will help him scale.
What a dream manager is and why it can be so crucial for the company culture.
Why giving your employees what they want looks amazing to a buyer and how it can help a business owner find the right buyer.
Why Tommy brings his employees on retreats very frequently.
How to hire top talent without betting the farm.

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Bio:

Tommy Mello is the owner and operator of A1 Garage Door Service, the host of the Home Service Expert podcast, and owner, partner, or investor in fourteen other businesses ranging from Christmas lights to real estate to mobile apps. In 2010, Tommy became the sole owner and operator of a single Phoenix-based garage door service business, which came with $50,000 in debt. Today, A1 Garage generates north of $30 million dollars in annual revenue with over 250 employees in twelve states.

Tommy is a regular contributor to Inc., Entrepreneur, and other business publications on the topic of entrepreneurship and small business as well as a sought-after podcast, radio and television guest. When not in the office or working on the businesses, you’ll find him on a plane headed to exotic destinations or chasing the little white ball around one of Arizona’s many golf courses.

Interview Quotes:

10:56 - “A lot of people always live in the gap instead of living in the game. I’m really just trying to live.” - Tommy Mello

11:35 - “I love what I do. I build relationships. I travel. I look forward to each and every day.” - Tommy Mello

12:18 - “What I started doing during COVID is to just sit and (I don’t want to call it meditation because I don’t love that word), but I like reflecting. I like celebrating the wins.” - Tommy Mello

13:02 - “And success just doesn’t mean money. It means great relationships and living every day like it counts.” - Tommy Mello

20:16 - “400 million in EBITA? What needs to happen today to hit this goal? We put our mindset on that goal and that’s how you build and grow.” - Tommy Mello

26:32 - “We spend a lot of money on development, especially with our leadership team. And I like to call my guys coaches, not managers.” - Tommy Mello

28:00 - “And I think a lot of people go to these events and they write down all these notes. Then they wait for the note fairy to come grant their wishes.” - Tommy Mello

32:00 - “I believe in people so much. I believe in eye contact, tonality, a good handshake. Can you tell a great story. And then I teach them all that. I look for leaders, people that smile, people who have a great relationship with their wife or their husband. Because if they’re not happy at home, they’re not going to want to come to work.” - Tommy Mello

32:37 - “When I find a really good person, I find a place for them.” - Tommy Mello

37:05 - “When you figure out what’s in it for them, what’s important to the people–Do they want to move up the corporate ladder? Do they want insurance? Do they want this dream anniversary after ten years? Do they want to put their kids through private school? Do they need a better home? Do they need better credit?–All of the above! And what I realized was that my dream needs to be big enough to have everyone else’s dream inside.” - Tommy Mello

39:24 - “What I found is that recruiting is the most essential thing in a business. Finding talent.” - Tommy Mello

48:49 - “Feed the people!” - Tommy Mello