Understanding the Complexities of the Commercial Landscape with Josh Young

What this episode is about

Josh Young, president of Tempe Mechanical, shares insights from his extensive experience in contract management and construction, highlighting the challenges and successes in scaling his company from a $10 million to a $37 million operation within two years. He discusses the complexities of navigating large commercial HVAC and plumbing projects, including the importance of customer relationships and managing rapid growth amidst fluctuations.

Key takeaways

• Small is the new big: focus on manageable projects to avoid high-stakes disasters.
• Overbilling isn't just clever; it's a cash flow lifesaver in the payment-lagging construction world.
• Bidding on high-rises? You're better off running in the opposite direction—learn from the costly mistakes.
• Net profit goals are nice, but focusing on gross profit keeps the lights on in tough times.
• Complexity in commercial contracts means playing by someone else's rules—embrace the chaos or get burned.

Who speaks in this episode?

• Tommy (Host) · 21 min speaking
• Josh Young (Guest) · 31 min speaking

What is discussed, and when

1. 0:00 – 5:00: Josh Young, Tempe Mechanical
2. 10:00 – 15:00: 100K Genius Network, Adam Coffee, Cameron Herald
3. 35:00 – 40:00: Arizona Business Alliance

Notable quotes from "Understanding the Complexities of the Commercial Landscape with Josh Young"

• All right, guys. Welcome back to the home service expert. Today, Josh Young is in the house. He is a he's out of Chandler, Arizona. So, he's my neighbor. He's a expert in contract management, value engineering,.

  about Josh Young · at 0:00

• Oh, okay. I've heard of Vistage. Are you in a CEO group? I'm in I'm in Joe Polish's 100K Genius Network. I'm in a couple other things. I pay Dan Martell, Cameron Herald. I've got a lot of coaches. Okay. but I'm not in.

  about 100K Genius Network · at 11:53

• It's better. I will say like explain because obviously I've heard both, right? I've heard the same thing. So I just read a book, building an empire. Yeah. By Adam Coffee. Yeah.

  about Adam Coffee · at 14:10

• ABA, Arizona Business Alliance is one of them. they're Is that good? Yeah, they've helped us tremendously. So they do teaching and training, like leadership training, project.

  about Arizona Business Alliance · at 38:18

Who and what is mentioned in this episode?

People

• Josh Young — Person · Main guest · 1 mention · first at 0:01
  Primary interview subject discussing commercial HVAC/plumbing construction operations, contract management, cash flow, leadership, and growth strategy.
• Adam Coffee — Person · Referenced author · 1 mention · first at 14:21
  Cited as the author of a book the host read to understand the positive case for private equity and roll equity as a growth mechanism.
• Cameron Herald — Person · Referenced coach/consultant · 1 mention · first at 12:01
  Named as one of the host’s paid coaches, supporting the discussion about using coaching/peer groups to improve decision-making and leadership.
  You in a CEO group? I'm in I'm in Joe Polish's 100K Genius Network. I'm in a couple other things. I pay Dan Martell, Cameron Herald. I've got a lot of coaches. Okay. but I'm…

Companies & orgs

• Tempe Mechanical — Company · Business focus · 1 mention · first at 0:12
  Josh Young's company where he serves as president, specializing in commercial HVAC and plumbing projects.
  My neighbor. He's a expert in contract management, value engineering, construction. He's the president of new construction at Tempe Mechanical, where he's worked for more than…
• Arizona Business Alliance — Company · Case study · 2 mentions · first at 38:18
  Association mentioned by Josh Young that provides training and networking for non-union construction businesses.
• 100K Genius Network — Company · Referenced expert · 1 mention · first at 11:55
  CEO network mentioned by Tommy Mello as one of the groups he's part of for business growth.

Full transcript with timestamps

0:00 All right, guys. Welcome back to the home service expert. Today, Josh Young is in the house uh house. He is a uh he's out of Chandler, Arizona. So, he's my neighbor. He's a expert in contract management, value engineering, construction. He's the president of new construction at Tempe Mechanical, where he's worked for more than 16 years. Over the years, he has worked to develop customer relationships on large commercial HVAC and plumbing projects. Josh also specializes in several industrial projects, hospitals, municipalities, schools, and hotels.

0:31 What's up, dude? What's happening? Thanks, Tommy, for having me. That's exciting. I um I love home service, man. I love business in general. And uh I love hearing businesses that are growing. You guys went from what is it? 8 to 60 million in a year. Yeah. Yeah. So, we uh we've kind of gone up and down a little bit. Um but uh yeah, when I took over we actually spiked to about 16. Then we came back to about 10 and now we're up to 37. Really? Yeah. Just in two years. So So what that's a lot of fluctuations. Yeah. What's uh what happened? What what's the good, bad, and the skinny on it? Yeah. So uh we started um obviously I became president um two years ago. I was vice president for a little while. Um, so my dad kind of retired. I took over the business and then I had to learn the business, right?

1:22 Um, so he just kind of like dropped it and walked out and was like, "Hey, here's a, you know, here's a $10 million business. Good luck. Have fun." Um, so I had to kind of learn uh, you know, what to do, what not to do. And of course, like anybody, right, I wanted to run for the fences. Um, so what I did was, yeah, I wanted to scale it, right? So the things that were going on at the time was a bunch of highrises. I'm like, "Hey, I'm going after the highrises." We weren't equipped. We weren't ready. We didn't have the manpower. Um, I didn't care. I just went running right into it.

1:52 Um, so we did our first high-rise. We didn't, you know, it wasn't great. We didn't make a bunch of money, but we're like, hey, that was the whole point. Set us up on the first one. We learned, right? So, we went into a couple more. Um, and just about crippled us. um the manpower, the resources, the cash flow that you need um and the logistics behind it were just absolutely way more than I expected. Yep. So, we took a step back um and uh kind of re-evaluated everything and then um after that learned that highrises are not for us.

2:27 So, we said what what is for us, right? What works for our business and the people in it. Um, so we kind of put our plan together for marketing and uh the front end and just started, you know, doing what we know we're good at, right? What are you good at? So, we we like uh small complicated projects. And I say small, you know, not 20 plus million dollar projects. We like between a million and 10 million jobs. And it's all HVAC related. Yeah. HVAC and plumbing. Okay. Yeah. So, and it's all commercial. All commercial. And as commercial fondant like apartments, we we don't do multif family. Another thing we're not good at. So, and we try to stay, you know, under five levels, right? So, like I said, highrises is not our thing. Once you get above five levels, um it just gets way more complicated, right? Your your logistics goes through the roof. It gets it gets super complex. Um huh. Interesting. Now,

3:27 one of the things I hate about commercial um is the way they pay. How'd you guys figure that out? Um over bill. Over bill. Get ahead of it. Uh so if you can get uh if you can get ahead of it, then you're not in such bad shape. Um but I agree with you 100%. Uh every contract we sign is set up in a way uh that the contractor is going to benefit, right? um we're always behind uh most of the time when it comes to payments, right? I mean, we're right now we're 90-day pay, you know, on some of these contracts. So, it is painful in that sense. But what I can tell you is if you get ahead of it and you can create if you can create a billing or structure that you're able to bill ahead of it and you can get your your money sooner, then your cash flow doesn't get affected, right? And that's kind of what we've done. What is your goal bottom line? Net profit um net net Yeah. bottom bottom bottom line. Yeah. So as a percentage of

4:28 revenue I don't know that I have like a goal for net profit. Um be honest. We have a goal for for gross gross profit. Is it in the 50s or the 40s or the 30? 30. Yeah. We're lucky to hit 30. Yeah. Damn. I'm shooting for 70. Yeah. Well, we're in the wrong business. Well, you know, B TOC is a lot more complex, but I wouldn't do it any other way. Uh, you know, people always say, "Why don't you get into commercial to me?" And I'm like, "Well, it's a different pay structure uh different talent, different trucks, different OSHA guidelines, different accounts receivable, different finance. It's It's not even in the same hemisphere." And people are like, "Why aren't you doing more acquisitions?" I'm like, because they do box stores, they do new construction, they do fireplaces, they do front doors, they do commercial. And when you're small, unfortunately, you take on everything you can. I remember I

5:23 did a commercial job and it still haunts me. I not only lost money, but I lost time, effort, energy, and a fortune. Um, it was a custom gate with solar power. It was just stupid. And u, it was a buddy of mine, and I felt so bad. I lost my ass. I had to pay a company to go fix it. Like that's how bad it was. The other bad part is you don't make the rules, right? Somebody else makes all the rules for you and you have to abide by them. Whether right, wrong, or indifferent, half the stuff isn't even is against the law. The bureaucracy and the red tape is ridiculous. And I I you know, I'm building a place in Idaho and I think there's three inspections required. You're allowed to build 47 stories tall on residential. I I think that's almost it's under like there should be a little bit more guidelines for safety. But I will say I like this city a lot. I don't think I' I I have an opportunity where I can live wherever I

6:17 want. I'm from Michigan. I really like Michigan, but I don't I I don't miss the winters. Well, that's probably why we get along then. My whole family's from Michigan. Really? Yeah. Yeah. What part? Uh Bo City. I don't know if I know Bo. So, it's up north. You know where Traverse City is? Yeah, that's where I just went my golf trip last year. Yeah. So, it's just east of there. So just east of So this May or July, we do a golf trip called the McRuber Open. Okay. My team's I pick the team, my cousin picks the team. I'm undefeated. I just have to throw that out there. I'm also undefeated in my volleyball for my pinnacle trip to Mexico next week. But um uh we're going just east of Traverse City and I don't know, it might be the same city. Is it a golf area? Not really. They're kind of on the lake. um in in that it's a very small town. Okay.

7:06 I mean, very probably near there, but it's probably close. That's awesome, man. Yeah, the Midwest the best. I um I like this city because it's easy to get around. It's not hard if you want to go to Flagstaff or Sedona, you could get there. Not far from Vegas, not far from Kelly. Uh it's a planned city. It's a grid. And there's just a lot of stuff to do. Uh I'm not a big fan of uh the west side, Glendale. I'm not that yesterday we were at an event at downtown Phoenix. I hate downtown Phoenix, but I like Scottdale, Paradise Valley. I like Chandler. I like Gilbert. You know, I like the east side of Phoenix. Yeah, that's the same for me. I grew up in the east side. I grew up in Tempee um and then moved out to Chandler, so not far away. But uh but yeah, I love the east side. I don't know that uh I would ever moved uh to the other side of town. Like you said, Glendale, not my place. No, it's or downtown Phoenix, not my place.

7:54 I I live, you know, actually I will say North Phoenix. My mom lives off Cave Creek. It's okay up there. Um, and then I used to live off of Seventh Street in Bethany Home and there's an area over there that's all old trees and it feels like the Midwest. That's a that's where my pastor lives. We go to Impact Church. Yeah. Where do you live? I thought you last time we talked you were you were moving or you're building a house or something. Paradise Valley. Okay. Um, and I'm moving to the north side of Camelback, northeast corner of the land.

8:28 Yeah, it's called Billionaires Row. My neighbors are going to be the Waltons and the Disney family. There you go. So, but I'm building my dream. Like, it's like a it's a passion of love. But, you know, we were going over the game room and I'm like this I don't have any feedback on the whole house except for the game room. There you go. This is where I need to be perfect. Uh so, it's got to be sick. But anyways, uh tell me, so you've kind of got to learn the business. Uh what were some of the biggest mistakes you've made? Obviously fast growth, you know, chasing revenue versus profit is probably one of the big ones. Yeah. Yeah. So, exactly. Chasing revenue instead of profits is is big. Uh taking on stuff that again we're not good at, right? Thinking that we were uh you know, capable no matter what building we went into. Um and finding out that wasn't the case, right? and and being more prepared, I guess, uh, is

9:26 something I've learned through this. Um, and also letting other people kind of help in the decision-m process. So, I think sometimes we get, you know, as managers or leaders, we think we have to make all the decisions, right? And all our decisions are going to be the best decisions. Well, I learned that letting some of my other leadership and even some of the people down even further down uh make some decisions and have some input um changed my views and and actually what kind of projects we went after um you know how how fast we could get projects done, you know, bringing in that feedback. So, I think you know a lot of that I learned going through challenges like taking on the high-rise building, right? Taking on some of uh these projects that uh we weren't prepared for. So there's this saying that a mistake made more than once is a choice. So you got to learn from your lessons and and theoretically I always

10:17 say like hypothetically I've got scars and bruises all over from all the mistakes I've made and this experience I believe there's a lot of smart people that get master's degrees. I've got an MBA. Uh you take my MBA at the age I was compared to my experience without an NBA. this guy's way smarter with without the NBA because of the experience. 100%. And a lot of people, they've got this authority complex like I've got the knowledge, I've learned, but there's they they lose the humility and humbleness. Yeah. And they think because they went to a stupid school with a tenure professor that never made it in the real world that they're ready to make big boy decisions.

10:58 Yeah. And it's just not the case. And it's funny because private equity is getting into it, but without great founders and leadership, private equity fails. If they could do it, if then they would. Yeah. Yeah. 100%. So, I It was funny you say that cuz I was at a CEO uh group meeting uh just yesterday and there's a doctor that created a business um and been running it for, I don't know, 15, 20 years. This young kid with an MBA comes in, super smart kid, right? Gets to her to believe that he should be the CEO of the company because he's smarter than her. We basically showed her that like, hey, you have the knowledge. You're just doubting yourself right now. And uh and by the end of it, she was like, "Yeah, what am I doing?

11:40 What am I thinking? Like just because this kid's, you know, showing me a bunch of cool stuff, you know, and and has a bunch of new uh shiny objects, I I should put myself to the side." Um what's the CEO group called? Uh Vistage. Oh, okay. I've heard of Vistage. Are are you in a CEO group? I'm in I'm in Joe Polish's uh 100K Genius Network. I'm in a couple other things. Um I pay Dan Martell, uh Cameron Herald. I've got a lot of coaches. Okay. Um but I'm not in like YPO or Yo or any of this stuff. I just it's a commitment and I don't like to tell people I'm going to do something and not show up because I'm busy. Sure.

12:16 I'm I'm sprinting at the next churn of the company um the next equity deal. You know, that's a great question I had for you is is I think every business should be built to sell. Yeah. What's your goals with this business? How do you look at it? What's your timelines? How are you manifesting the outcome? What where do you see the business in three to five years? So, uh my so my big audacious goal right now, my behag is is 100 million I want to do in in one year. Um you know, that's kind of my 10-year plan. um hoping to be able to get it done quicker than that. We'll see. Um but uh I don't really have any plans to sell right this minute. Um I've got three other partners in it, right? My brother's a partner and so is my uncle.

13:03 Uh my uncle's only got about three years left and then we'll buy him out. So it'll be me and my brother will, you know, on it. Um but I don't, you know, I'm kind of playing the long game. You know, I see all these companies getting bought up by private equity. um and people kind of just, you know, getting out of the the game. And I think that's a benefit to us. I think we're going to be one of few uh small subcontractors or subcontractors out there that are family-owned. And I think that's a that's a huge uh advantage that we're going to have in the market. So, yeah, you know, I'll tell you this.

13:38 There's great stories and then there's the nightmares of private equity. I happen to mine's a dream. Mine and I'll tell you this. People underestimate what you do with the money they give you. But that money I had a guy to come up to me yesterday. I was at a event and he's like, I'm doing a deal next week. I go, you idiot. I go, you should have called me. I've got so much advice about this. But um anyway, he found a great company. I'm really excited for the guy. Um but I really I didn't know my life was going to be um it's better. I will say like explain because obviously I've heard both, right? I've heard the same thing. So I just read a book, you know, uh building an empire. Yeah. By Adam Coffee. Yeah.

14:24 Yep. And so, you know, that's kind of the the positive side of it and how you can, you know, use private equity to kind of to grow and and do all you roll equity. So I I rolled 50% 49%. So the deal is is this next deal I'll be a billionaire on the next term. But but the fact is um Jeff Basos owns 8.3% of Amazon. Uh Mark Zuckerberg owns 14% of Meta. Like the way you build an empire is by getting cash infusions. Otherwise, you're reinvesting your living off of it. Now, here's the deal. I'm going to write a I'll give you my book when it comes out in September.

15:01 It's called Pay them What They're Worth. And it's about equity incentive programs, Phantom Equity, uh profit units. Sure, there's a lot of ways to skin this cat, but you want to give key players in the business. Number one, it helps you recruit the A+ best players in the world like Elon Musk does. Number two, it keeps people from leaving. Number three, it has them run and sprint towards the same goal you are, which is build an equitable company. So, the deal is they don't not get the money till a change of control. So, your second turn, you can make more money than the first term. Parker and sons, good buddies of mine, Paul Kelly. Five turns, sold the business five different times, pulling out chunks, tens of millions, if not hundreds of millions of money each time.

15:41 So my life, I had money. I had $12 million in my account before we did the deal. But now I'm like, I will say this, I'm taking my niece and nephews next month to Disney World. We're not waiting in any lines. We're getting VIP. And the money is a fart in the wind. I don't worry anymore. Yeah, I I I pay for dinner every single time and I don't ask anything in return because I worked very hard to be able to do this for my friends, family, and people that are important to me. And I will say like it's not that I didn't have money, but now I mean look, my house is the most expensive house in Arizona that I'm building. And I'm not cocky, but but here's the deal. Right now, there's five people staying at my house. My employees come to my house. My mom's birthday party was at my house. My dad's birthday party. My niece three years old. We have Like I'm doing this I can live in a thousand square foot apartment but I'm

16:32 doing stuff because I want to take people with me. I want to live the best life. I want them to enjoy this stuff. So for me that was good. I'm helping like I'm going to give a ton of money to the church. Do you think though? Do you think even you could never have done that without without those guys or without? Well, I'll tell you this. We went from 27 million this year we'll do about 80 million net of Ibida. Um I learned way more going through the process. Ken Goodwith Kettle called me up. He goes, "You're a badass home service dude." He goes, "When you learn what these guys know, how to raise capital, how private equity works, how the money game works, the financial engineering, you're going to be an effing ninja." And he was right. And so everything they tell me, I listen. I have two ears and I write it down and I implement quickly. And now I'm like, I'll never invest in a business again

17:17 that's not going to have an exit within the next 5 years. And I'm not trying to change your mind. And look, I just I want you to have the full knowledge of like what I've been through. I think a lot of people they don't understand. They're like, "Oh, I'm going to lose a piece of my soul." There's a book called Shine by Gino Wickman that when you sell your business, it's a piece of your soul. It's like part of your DNA. For me, I'm like, my face on the side of the like I I trust me, I'll have plenty to do. And like you said, I I want to start going golfing again more often. I I've never been married. I'm 41. I'll be 42 in March. Yeah. Congratulations. No marriage, no kids. I'm engaged, but I've had to sacrifice two decades and break the family curse of having nothing. My mom worked three jobs when I was a kid. My mom lives a really effing good life now. Uh, but the generational curse I had to get broken

18:10 and nobody should live the life I had to live and nobody should not be able to like I sacrificed not getting married or walking out of movie theaters and broken up with girl after girl after girl. If a girl wanted to hang out with me that I was dating, we were going to fix garage together. That was our time. So people say, "I want what you got." I'm like, "Okay, don't get married. Don't have kids." Be careful what you wish for, right? I'm an overnight success of two decades. I think, and here's the deal, like when you get like these this company that that's guiding me, they don't tell me what to do. They just ask really smart questions and make me think through a different lens. And that's why it's good to have consultants. Dan Martell got me to look through a different lens about things. That's why I hired a driver and a chef. Yeah. That's why I go to Vistage. Same. Yeah, Vistage is amazing.

18:54 And so is YPO I've heard is really good. Uh Tiger 21, I don't know if you ever heard of that. Tiger 21's like they're very very wealthy. All have an accent. What did you go to Waste Management Open? Who's the guys that uh they wear the medallion and they they run the whole tournament. Oh jeez. What the heck are they called? I forget the name, but it's it's something like that. Yeah. With the green jackets or whatever. Yeah, they're like bluish. Yeah. I don't remember what it's called. Um, if you could go back from the day you became the president, what would you have done differently? What would I have done differently? Obviously, listen to your co-workers a little bit more. Get their insight.

19:37 Yeah, be honest. I don't know. I don't know that I would do a whole lot different. You know, like you said, I mean, you just you have to go through it, right? You have to make mistakes. Uh, one of the things I told my dad early on and and the reason he kind of walked away from the company and sold it to me was because uh, on the way back from a job site, I basically just looked at him and said, "Hey, have you never made a mistake in your life?" Like, let me make mistakes. I'm going to learn from them and I'm going to make things better. And I think at that time, he was kind of like, you get it? Have fun.

20:07 Right. Yeah. So, so I think I I don't know that I would change anything other than Well, it's shaped shaped who you are and the decisions you make today. I agree with that. Right. So, um, you know, other than that, I just think, you know, learning faster how to become a leader and being more humble and not being so stuck on, you know, the dollars, right? um in me like what's in it for me what you know once I got over that part if I could have relieved that part of it like long long ago I guess that would be the one thing is like being more humble and and not doing it for me doing it for the cause and and for the people underneath me I think would you know I would be in a lot better place today if I had learned that faster you know I I'm going to give you a bunch of books to read but there's this new book called the courage to be disliked And if your mind is set on the mission, you're going to break some glass getting

21:02 to that. Um, but the deal is, if everyone's focused on the mission, it changes everything. And it's it's what true leaders are. And there's very few real leaders in this world. They're not willing to do what it takes. I'll say this, I like to be liked. I it's it's a flaw of mine. I I don't fire anybody. I've never I haven't fired in over 10 years. Uh I like to be liked. I like to be the uh I my glass door rating is 93% as a CEO. I don't need it to be. It's just a pride thing. Uh and I I I I kind of get bullied sometimes. Um and I got a lot of no people around me. I'll tell you this, most of the team will tell me to go f off and no. They they respectfully, but they say no. Um Sure. And I need that.

21:50 Yeah. Cuz I'm a dreamer. And you know, they're very they're very focused on the goal. I mean, look, we hit last month 27% to the bottom line. 27%. That's awesome. That's nutty. Yeah. And I'm like, I think we could hit 30. Yeah. But you can only bleed bleed so you can squeeze so much blood out of a turnup. Like the the idea is you got to go revenue growth, too. So, we missed our revenue goal last year. We we exceeded our EBA number. And so, this year is going to be a heavy revenue growth year. Yeah. But I love this, man. I could talk about business all day. Like, this is like people are like, "How do you work so much?" I'm like, "I never go to work." Yeah. This is what I do. Yeah. I don't know if you do you love what you do just as much as I do. Oh, yeah. Yeah.

22:29 Yeah. I love I love love love business. I don't know that I love commercial construction as much. Yeah. Right. But I do love business. I love the financial part of it. I love going through u you know an income statement or balance sheet and picking out things. Um you know, how do we do this better? Um, like I said, we were talking about, you know, well, how did you get, you know, get so good with the cash flow and making sure that you don't get behind on payments with these people? Just just figuring out those issues. Um, I really enjoy and building the business, right? Building people up, uh, pushing them to do things that they never thought they could do, right? I I get a lot of enjoyment out of of pushing people that said, "I can't do this. There's no way." And then all of a sudden, you know, a year later, they're doing double what they thought they could. You know, I have an estimator

23:18 that came in um he was he sold like $2 million, right? And now he's selling 15 million bucks a year. You know, he said there's no way I'm going to ever get there, right? And I just kept pushing and pushing and pushing. Finally, you know, uh last year he he went above what he had set for a goal. So that's the kind of the stuff that I love. And one of the things that I I finally learned is uh I do need, you know, a leadership team. Uh and I didn't know what that meant. And I can tell you Vistage has helped me quite I was going to ask you about that. Yeah. Vistage has helped me quite a bit in in that sense. Um I I should have joined a group a long time ago because you only know what you know, right? And if you're not meeting like you are with with uh people every single day or you know in your industry or different industries, you just don't know. You don't know what's out there.

24:04 Um you don't know the people you can go to. So, Vish kind of opened my eyes up to that and I was able to ask more questions to different people and uh and so I I learned really fast the type of leaders that I wanted. Um and then started going after them and wasn't afraid to pay like you said earlier, right? Pay what they're worth. I mean, I wasn't afraid possible you could ever pay, which means you got to raise your prices, but but means you start on time and you finish on time and you collect on time, right? Everybody's happy. Yeah.

24:33 And the clients are happier. the clients that call us up, they're like, "We've had a garage company out. We've had three garage companies out here in the last two years. We don't care what it costs. Just fix it, right?" Because I'll tell you what, how much is your time worth? Yeah. I don't always call the best deal. I want the best investment. And there's a big difference between paying the best value or paying the best price. Yeah. So, I'll tell you a story. Uh my my father-in-law just had your guys out to fix his garage door, right?

24:59 That was a good story. So, no, it was great. So, I'm over there uh during Christmas, right? and he's telling me, "Yeah, I got these guys to come over and do." I said, "Who is it?" He's like, "A1 garage door." I'm like, "Oh, Tommy Melo." And uh anyways, we're getting to talk about He's like, "Yeah, alls I wanted was a new garage door, right?" Um so the guy comes over and he said, "This guy was super knowledgeable." So he starts talking to him about the springs and about the rails and about the different things, right? Not necessarily trying to upsell him, just talking through things. Yeah. Educating him, right? And uh he was like, "By the end of it, I had not only garage door, but my rails were changed, the springs were changed, the the head was changed." He said, "He hooked me all up, got my iPhone working, you know, with the garage door." He was super stoked about it. And he paid like 15 grand, you know,

25:45 he was looking to spend like five, you know, and he was excited that he spent more money cuz, you know, he had a story to tell. And I was just like I'm like, "Wow." And that was I mean kudos to you, man. Like that's that's huge, right? Well, we trained a lot on that. But the biggest thing that we train on is like be a great human. Like here's my number one rule. Would I go have a beer with this person or want to go on a camping trip? Like dude, I want to like get to know you. Like do you make great eye contact? Do you smile when you work? Do you ask great questions? Do you tell great story? Because that's like my litness test if you're going to make it here. It's not if you're a great technician. I can teach anybody to fix a garage door. I want and I need to be able to trust you if I got a wife and two young daughters at home to be there with them alone. So that's a big deal to me. And I here's the thing is my mom

26:28 worked three jobs. I love my mom. And I tell the story to my clients. I say, "I love my mom more than anything in the world." And here's what I'd be doing for mom if this were mom. Yeah. And I just smile and I look at them genuinely in the blackest part of their pupils and I just smile. And they say, "All right, then let's do that." But if mom's moving in two weeks, I just got to get it past inspection. Do the right thing for mom. I'm not trying to like take advantage of you. And here's another thing that I'll I'll tell you. Always give options because if you're not giving options to your clients, you're giving them ultimatums. They can only say yes or no.

27:01 So say if they say, "Wow, that's more than I was expecting to spend." Oh, let's let's just do a more economical option, then it's up to you. But you'll have a 100% conversion rate if you give options. Yeah, I agree. We do the same in our business, right? Even though we're we're given a set of plans and specifications and told, "Hey, this is what get pregnant." Yeah. This is what we want. Right. You get them to say yes. I've learned this about commercial. Yeah. And I'm not even doing commercial. You get them to say yes and then you say by the way and then what are those called? Adjust not adjustment add-ons or what? Yeah. We we call change orders.

27:35 Yeah. Change orders. Yeah. That's after you get the job though. You get the job. Yeah. You get the job. We give what we call VE options, right? So value engineering options. So it's like, hey, if we do this a little bit different, we can save you a bunch of money. And sometimes they're like, yeah, we'll do it that way. And sometimes they're like, "No, we want it exactly how it is on the plan." So we call it value engineering or VE. I love that. So one of the things I've learned about myself over the last couple years is I'm a seeker of knowledge. I'm curious and I bring it back to the company and and I got a team that helps implement it. Um what is Vistage? So it's taught you number one to get a good team around you. What other things have you taken from being around the best practices group like that?

28:17 So, uh, you know, don't be afraid to, uh, you know, talk about, uh, things that are going on. Um, I I feel like some people, you know, they want to be the biggest and the baddest company out there and they don't want to show, you know, you know, their dirty underwear, right? Um, and that's what the nice thing is going to Vistage. It exposes that, right? So, it's like, hey, this person's having an HR issue. Well, so am I, and so is this person, and so is that person, right? So it's it's nice to be like I'm not the only one out there with these issues and then you learn like holy crap everybody's going through this. Um you know so I think you know that was one of the big things in friendship you know you're you're in these meetings they get kind of deep. Um I've made a bunch of friends through it and and when I say friends they're just they get it right. They're a business owner. They go through this stuff every

29:08 day. you can talk to them on a different level than your neighbor, right? Or uh your friend from high school that you know works a regular job. So I think some of that is is also important. Um and it gives you contacts, right? It gets you in front of people again, business owners, contacts. Um you know, helps you, you know, kind of get a network of people around you that you can trust that will help you, you know, hopefully grow your business. You know, Bri hates it when I'm around somebody like you because I enjoy talking about business and I don't get a chance to talk to all my friends, family, cousins, and stuff. So, she's like, "Oh my god, all you do is talk about business." And I'm like, "No, I don't. I don't get a chance to talk to anybody about this stuff." And you sure as hell don't want to talk about it. So, so I enjoy the discussions. Like my buddy Aaron Gainor has a massive plumbing

29:56 company and he added HVAC and electrical. Then he's in uh Columbus, but he's out here. His son's going to ASU. So he comes out here, we just dude, he tells me something and I take notes and I'm implementing and he's like we text each other all the time and like it's nice cuz he's going to do 100 million this year. Yeah. Um and it's nice because I talk to people that like here's the deal. You hang out right now you're uh at Vistage. The best advice I could give you is you got to be able to adapt and change your circle quickly because as you're scaling it needs to be I want to be the dumbest guy in my circle, right? And that means I can't be in the circle because my goal is to win in my circle. I'm a competitive sob. And then I got to look over at this next mountain and say, "Huh, I got to go back to base camp to start climbing this mountain. Who's the best, smartest person that's going to get me up this

30:46 mountain the quickest?" And it doesn't mean I don't have friends. I have a lot of friends. It's just I still Dan Martell taught me this. He said, "You can't pick your friends when you're in middle school and elementary school and high school. It's like neighbors and but you can pick your friends as you get older. Sure. And you know, it's not only about money either. It's about fitness and and faith and and and fun and future self and the the sixfs I call it. And so, you know, if you want to be a better father or a better husband, you need to like hang around with guys that don't go to the strip club. Sure. So, really picking really great friends. And that that that's the time machine that'll put you 20 in six months. You can go 20 years faster, but just being around you want to become a better golfer, hang around with better three people that are better golfers when you go on your foresome. That's true. If you don't,

31:34 you're not going to play good and you're going to drink the whole time and just get wasted. Yeah. No, that's good advice. I appreciate that. Like that's uh that makes a lot of sense. Like I I hang out with guys now uh at the Waste Management Open. I invited a lot of home improvement people there. Not home service. Everybody there did over a billion. A lot of them are doing two billion. So I'm like, "Guys, I'm only gonna do 320 million." Yeah. I heard I heard you were talking about on one of your podcast you're looking to get into home improvement stuff. Oh, yeah. Yeah.

32:02 Yeah. Yeah. Cuz because my multiple is still two and a half times theirs. Well, you know, commercial, I mean, you can skyrocket in commercial. Well, I can't do it. The amount the amount of dollars that are in that that uh there is a lot of money. My buddy U is already doing 15 million in commercial. It's like I said, but you got docks, leather, storefront, rolling steel, you got all these different things. And if it was just garage doors, I might do it. Um, and here, like, for example, if I just did firehouses in Phoenix, I can make a small fortune. Yeah. Um, I just It's something where I'm not going to dip a toe in and dabble. If I'm going to go in, I'm going all in. I'm hiring a whole team. I don't just go, "Oh, we'll just try it out and see how it goes." No, I'm going all in and I'm hiring a badass team to go like, but but here's the thing. Do we go into commercial? Do we go into water treatment? Do we do front

32:51 doors? So, I'm working on some cool stuff because my average ticket is about a grand. Mhm. But I run 22,000 jobs a month. Wow. What if I get it to five grand? Yeah. You know what the company's doing now? That's what commercial does for us. The tickets are, you know, the project. Yeah. Yeah. So, we have a service department as well and same thing, right? Their service tickets are small, right? So, it takes a lot more effort, a lot more jobs to get to that point where we can, you know, it's like, hey, we just secured a $10 million job yesterday, you know, one job. Well, as long as the profit's there because if it's not bid correctly and you got is it the blue book that you guys go to bid it on? No. So, we don't we try not to do hard bid stuff, right? So, we've been around long enough now with 38 years, right? Everybody knows who we are. Um, business development Julia um she she kind of goes out and meets with all of

33:41 our clients and brings in leads. So it's all warm leads. We we rarely bid anything that somebody else is bidding on. Oh, that's nice. So it's all negotiated work. And then and then you get to charge by the hour and so you can't lose money. Not not necessarily that, but you get to work with them on the front end, right? So you kind of create the the budgets from the the beginning. So it's not a surprise, right? So we come in, we say, "Hey, this is a design we should do. This is what it's going to cost us." Right? And then we bring in some engineers, architects, they design it. As long as the price adds up, it's like, "Hey, yeah, everybody's happy because you told us this was what it was going to cost, we designed it, that's what it is." Um, so that's what we like to do. And then they just sign us up and we move forward and everybody's planning. So what do you think an average ticket is? Uh, for us,

34:27 probably around a million bucks. One million. So you need a 100red jobs to hit a 100 million. Mhm. So, but I I like to reverse engineer my numbers. That's how you build a budget. Sure. And I what I look at is here's my revenue goal. Here's how many leads I need. Here's my booking rate, here's my conversion rate, here's my opportunity, job average or average ticket. Sure. So then I just look at the marketing side and as long as those are good equations like good booking rate, good conversion rate, good average ticket, then you just pour gas in to get more leads, which means you need a higher, right? Yeah.

35:02 But that's the deal for me. 100 million. What I'd start to do if I were you, 100 million is the goal. Here's how many leads I need. Here's how I'm going to bid it. Here's how I'm going to be an acquirer of great people to help run the business. And that way, it becomes a reality. And you share that vision with everybody in the company and say, "Here's the plan to get there." And it's based on lead genen and conversions and collecting on time. And that way, you know what's nice about 100 million too is you start buying better. So, you got to like negotiate with your vendors, right? And that's a big part of HVAC plumbing is yeah we're getting and we're getting even even at 50 million I think you know like right now uh there's already some guys coming in right and posturing and like hey how can we sign a contract or make a deal with you guys so you're buying you know straight from us and you know not shopping it around but

35:49 yeah agreed you can leverage that right when you're buying a bunch of stuff you can leverage that 100%. Well, I always say, look, right now I'm spending 60 million this year. My manufacturer, like um here's the old saying that I say. When you uh when you owe the bank 100 million bucks, you got a problem. When you owe them a couple billion, they got a problem. You get to start calling your own shots. And that's what's nice about being in the garage door business in 20 states is I'm I'm able to to buy better than most companies. And they they you know other my my competitors aren't very happy about it. But I'm like then just get bigger and buy more. Yeah. You know it's not it's not my fault we grew faster than you. And by the way I showed you and you're and you're here trying to tell people how to do it, right? I tell them exactly what to do. I'm trying to show you how to do it. I I had 40 garage

36:39 door companies come here about four years ago and I said, "How many of you guys charge this for a garage door and opener and they were shaking their head angry and they were like, "How do you sleep at night?" And I go, "How many of you guys uh make sure your people can make six figures a year? You train them for three months. You give them the best PTO and insurance possible. They drive new trucks. You're allowed to be on billboards, TV, radio, like the HVAC plumbing guys. How many of you guys do all those stuff? You give your guys $6,000 worth of tools? Any of you guys give your guys $6,000 worth of tools?"

37:06 Every one of them shook my hand that day and said, "I'm going to raise my prices." Way of thinking, right? Alex Ramoszi says, "Most people go into business, they find, what's the average cost of this parts? How do I offer it for a little cheaper and to give a little bit more, not knowing that the people you're following are bankrupt, barely making ends meet? You're not in business to make a living as a W2. You're in business to make prop to to make profit. And uh I think people forget that. Like the normal goal of business is profit.

37:35 Or else you don't stay in business and your clients lose and your vendors lose and your employees lose. Well, yeah. And that's the whole thing too, right? Your employees are going to lose, right? If you're not profitable and you're unable to grow and you're unable to raise their wages, right? Yeah. Uh you just stay in one place, right? And nobody wants to do that for very long. So yeah, all your employees are going to leave, right? I mean, you can't help them grow. How do you get leads? I mean, when you're going and meeting these people, these soft sales, is it just past clients or is it like do you guys go to BNI groups or how do you get these soft touch points?

38:06 Yeah, so all the above. Um there's events that we go to, right, where where, you know, people from our industry all get together and you just kind of meet and greet, talk about it. Uh we also are in a couple associations. Um ABA, Arizona Business Alliance is one of them. Um they're Is that good? Yeah, they they've helped us tremendously. So they do teaching and training, you know, like leadership training, project management training, uh stuff like that. Um but getting involved with them um helps us because it gets us in front of our clients on a regular basis outside of the the norm, right? Um otherwise Arizona Business Alliance. Yeah. Okay.

38:45 Yeah. And they're a good group of people and and the whole point of it is so we you have the unions, right? And the unions have their own training and their own things and their own groups. Um and non-UN guys don't really have a group, right? Right. So the ABA was created. It's AGCABA. Um, but they were created basically to help the non-union guys. Like, hey, let's get together. Let's talk about best practices. Let's help with the teaching and training, right? Let's let's help each other. There's 168 hours in a week. 168 hours. How do you make the most out of those 168 hours? If you work 50, you sleep 50, you work out for 10, you still got 60 hours left. You could go on a date with your kids every night, you could take your wife on a date, watch your favorite Netflix, slow, read a book, and still got 20 hours left. So, people say, "How do you find the time?" time. I'm like, you you get a

39:32 good EA and you get your calendar budgeted correctly. Plan it. Yeah, plan it correctly. And that's the that's the equalizer. I don't care how rich you are, we still got the same hours. It's how could I compound mine more? I don't even I don't know the password to my email. I don't look at like I've got a whole team now. I got processes for this. Here's what I think everybody should do. Get an oldfashioned journal. You know, a calendar journal like the old ones that you write in. Mhm. And literally every 15 minutes, write down what they're doing. And then if they could hire somebody for less than they make per hour, which is an easy calculation to figure out, you highlight all that stuff. And then that's the first hire you make. You got all this time back and you start making highlevel decisions. Yeah. And do you think Jeff Basos is working 80 hours a week? You think he's working 40 hours a week? He

40:19 doesn't start his day till 10:00 a.m. He makes his important meetings between 10 and 1 p.m. He takes off weeks at a time. Yeah. it. This idea of butts and seats, more hours equal more productivity is crap. I like Ed Mlet, but he says they work seven day or, you know, three days to your one day. I don't want to outwork anybody. I want to out delegate their ass. Yeah. I I have a funny story about that. So, uh I had a when I was growing up in the business, obviously I worked for my dad, but he had hired these project managers and and it was funny to watch them because, you know, it was like who could outlast who the longest, right? And I remember leaving one night, you know, I I usually stayed there till, you know, four o'clock and then left um because I always thought it was stupid.

41:01 Like, why am I going to stay here even longer if I don't have any work to do? Um I just thought I was more efficient, right? I get my work done and get the hell out of there. Anyways, I'm on my way out one evening and there was a project manager passed out in his chair, right, sleeping. And I wake him up and I'm like, "What are you doing, man?" I'm like, "Go home. You're not kidding anybody. You're not just because you think you're working harder. I stayed here till 8:00 last night. It's like if you if you got that work either that or hated his wife. Yeah. Yeah. Right. He didn't want to go home. But I just I don't understand the you know, let's work. Well, I used to I will say unfair.

41:37 I used to say, "Why aren't you here today?" Like everyone takes Fridays now from home after co and it bothered me. I'm like, "Why am I here? No one else." And I'm like, "You got to show face." And I still think it's important to see people in in public and like get to know them, personal relationships. But now I'm like, I don't care if you work 10 hours a week. Uh, I really don't, but I don't care if you work 80 either. Like, if you're more productive and you're smart and you figure out a way to do things, like the biggest thing I'm we're taking a class, me and uh I've got two EAS and Bri helps a lot. Okay. So, we're taking these uh AI classes because if you could input artificial intelligence, by the way, 50% of the the top 10, they call it the the fantastic seven or something about the largest seven, the Apple, Nvidia, the biggest companies.

42:27 50% of all their money is going into AI. Yeah. Like if you don't start to learn it right now and start to get smart with it. That's another thing I'd fear just you know being a family business is PE is at the cutting edge looking at all the technology. Yeah. And the bidding system CRM have you guys implemented AI and if so what like what are the some of the things that you're implementing now? Um so one of the things you feed in is is you could feed in your income statement balance sheet P&L and it'll literally tell you like it could compare markets. It could compare like it takes all the online data and it says like my buddy that I told you the plumber put his in and it said renegotiate with your vendors because of the uh the cost analysis of the supplies which is the cost of goods. Um so like that's one way. Another way is like I started using CHBT just in emails so I actually seem like I know what I'm doing. Yeah. Yeah.

43:22 And like I'll take books now and get the summaries and just if I love the summary uh I'll read the book but if it's something that I like but the deal is is I don't even know what I don't know like once once once you start using these tools like AI right now we built a software that listens to every call in the field. It's recording the call. This is a oneperson consent state and it actually matches to our script and then it tells you what they didn't do correctly. Was their voice inflections wrong? It literally tells us in a snippet how to train them. Like this is the crazy thing. Yeah. It's like my call center right now if I showed you lace AI. It listens to every CSR's call. If they don't book the call and it automatically handles the disposition, I'm at 89% booking rate. There's some people at 75%. It tells me the objection. It goes right to the call where the objection was. And then it's

44:17 got five trainings of people that overcame that objection for them to train on. Yeah. This is happening whether you like it or not. And there's this exponential effect of technology will be compounding faster than human beings can keep up with it. But just get ready. What do you think? What do you think about these autonomous cars? Like the no the no people driving these cars. Yeah. Yeah. Yeah. Well, look, it's going to change a lot because um you know, Lyft and uh Uber will be out of business. Uh it's really big here.

44:45 Obviously, you see them everywhere. The Whimo. Mhm. And um whether you like it or not, you better either you're going to embrace it or you're going to get ran over. Well, just think I mean, just think about like the autonomous cars. I have discussions with people all the time about this. I think it's going to be So, that's where it's going to start, right? I mean, who wouldn't like for us, right? Get in the car and maybe you have a driver, so you don't need to worry about this. For for me, I get in my truck like I mean 30 minutes to work, 30 minutes back. I mean, drive to meetings, you know? So, I mean, imagine how many hours a week. Yeah. How many hours could you get back? And I mean, I could be on my, you know, my computer on the phone.

45:18 Why do you think Google's investing crashing? Google's investing more money than anybody. You want to know why? Because they're losing an hour a day of your ad spend. You could be clicking on ads. Yeah. And Tik Tok's losing money on ad spend and Instagram and Facebook. So all these companies are saying if we could get you in your car to be on social media and on Google, right, we get to make more money. Yeah. Not to mention we can bring down insurance costs because you know people wouldn't be crashing into each other. Well, here's the problem. Listen, there's a lot of books about this. But what do you do? How do you think the police get funded? Through tickets. Through DUIs.

45:52 Through parking ticket. What do you think happens to all the parking lots? All that becomes usable. All the all the parking literally becomes usable. real estate because the problem that I have with autonomous cars is why do you need a garage? That's the scary part. There you go. There we go. Is there any books that you've read that are like crazy badass like taught you a lot? Crazy badass. Um I don't know that there's any crazy badass. I'm reading uh Simon Silicyn. Yeah, Simon Synynic. Um, start with Y. No, it's the in infamous game or the Oh, yeah. Yeah, the infinite game.

46:34 Infinite game. There you go. So, it it's kind of interesting. Um, yeah. So, his old deal is like it's it's it is infinite. It's it's never ending. Yeah. So, you got to look at things people make decisions based on tomorrow, but you should make the long-term decision. You know, Jeff Basos says, "I don't care about the stock in the next five years." Yeah. We're too focused on what the this company's going to become and the client experience. So they'll spend money and even not make profits, but that's that's all a tax plan. But anyways, yeah, that's why I mean I that that's something that I'm looking at right now.

47:06 It's like, you know, stop looking at the shortterm, you know, duration. Let's look at the long game or the infinite game if you want this company to run forever, right? Like you said, I mean, is private equity some part of the answer? Because it's like, hey, we need the money and the cash to, you know, build this and and get the right training, get the right people, get the, you know, the right things in place uh for this thing to to run for forever, you know. Yeah. Well, I I know that this company will be around for for a long long time, at least A1. And and they I had a PE company come visit me. They said, "What would you do with an extra hundred million?" I said, "I'd probably hire a few more traveling trainers, and it would all go into marketing because they need to take more market share."

47:43 And I would start green fielding in a lot new markets. Like here's what's crazy. In HVAC, plumbing, electrical, the market cap is 200 billion. The market cap of garage doors is about 14. Mhm. So like the opportunity in HVAC and plumbing. The problem is the sophistication of people is much higher in HVAC plumbing electrical because of that market cap. Yeah. So you're competing against right now. We take all of our data, we feed it into this a it's a data analytics model called PowerBI. Okay. And I can load any outlier I want.

48:16 I can load humidity. I can load in as as data comes credit card scores. I can load in uh social media preferences. I can load in all these things to understand my avatar, which means I can create lookalike audiences and and and pixel people. And when you're dealing with this sophistication, like I I say this sincerely and I I feel bad for my competitors because how how you going to be able to beat me? Like you won't like I'm I'm making better decisions. The I I'm paying for more expensive software. And I say this, they asked me if I'm long-term greedy. I said, if that means my my family gets to win, my team gets to win, and my competitors got to join me if they want to survive, then yes, I'm long-term greedy. How do people get a hold of you, Josh? Um, like on a regular basis. Yeah. Well, somebody wants to reach out, chat with you about commercial or just, you know, bend your ear. Is there an email or find you on

49:09 LinkedIn or what's the best way? Yeah. Yeah. Email is great. Jay Young mechanical.net. Um, you know, is probably the best way to get me. I'm always checking my emails. I live and die by email and my calendar. So, um, I would say that would be the best. Lovely. And we talked about a lot of stuff here, brother. I'm going to have you just anything you want that we didn't touch upon. I didn't even use any of these questions. I know it's a great podcast when I don't use the questions. Yeah, no worries. I appreciate that. So, one thing I wanted to touch on. So, uh you you talked about you know having people that are educated and and smart in plumbing and HBAC. So, we've kind of figured out there's a huge gap in our industry with uh you know talent, right?

49:49 They just don't nobody wanted to be a plumber or an HVAC guy for a lot of years, right? Everybody went to college. So, what we're doing to try and and help with that is we're all a lot of us are creating apprenticeship programs. So, that's one of the things we're starting this year. Uh, and I think that's going to set us apart. But, but really it's to, you know, educate and teach people because I'm sure as you know, um, people just don't want to work on anything at their house. They're afraid to. It's like, "Oh my god, my toilet broke." And you're like, "Well, lift the lid and look inside. The plunger is broken."

50:21 like I don't want to have to charge you $500 to come out there and replace your plunger when you can go to Home Depot and get it for 25 bucks. Like yeah, you know, so so that's kind of our mission and in our plan is to, you know, kind of teach and grow the community, you know, even if they don't stay with us, you know, teach them how to like be better people and and some of this stuff do it yourself. Like some of the stuff is complicated. That's what we want to do, right? The other stuff figure it out on your own, man. Um I don't know. That's my Oh, no. I love that, man. And I think uh you know teaching this younger generation well here's what we've learned is uh AI is going to change unfortunately just might not have a job our videographer because uh AI is going to change that it's going to change the way we develop code. AI is not going to be taking over garage doors plum plumbing or HVAC or gutters anytime soon. So

51:09 everybody's saying get into a good trade. Yeah. And uh you know I did get an NBA but um I know a lot more uh if I could go you know why I got my NBA. I knew I wasn't going to you I knew I wasn't going to use it to go into a profession. I just knew I was going to have kids one day and I wanted to tell them dad didn't skip out on school. That was my only purpose and I don't know if I'd do it again. But uh no Josh you're going to be very very successful. You got to keep keep in touch with me and uh I appreciate you jumping on the podcast brother. I appreciate you. Thanks, Tommy. Thank you. Pleasure.

Questions about this episode

Who speaks in "Understanding the Complexities of the Commercial Landscape with Josh Young"?

Tommy (Host), Josh Young (Guest).

What is "Understanding the Complexities of the Commercial Landscape with Josh Young" about?

Josh Young, president of Tempe Mechanical, shares insights from his extensive experience in contract management and construction, highlighting the challenges and successes in scaling his company from a $10 million to a $37 million operation within two years. He discusses the complexities of navigating large commercial HVAC and plumbing projects, including the importance of customer relationships…

What is mentioned in this Home Service Expert episode?

6 people, works and ideas are mentioned, including Josh Young, Tempe Mechanical, Arizona Business Alliance, 100K Genius Network, Adam Coffee, Cameron Herald. Each one on this page links to its own page with every episode that mentions it.

How long is "Understanding the Complexities of the Commercial Landscape with Josh Young"?

The episode runs 52 min; the transcript is about 11,014 words in 73 timestamped sections.

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