David Williams on Long-Term Ownership in HVAC – EP.292

(00:00:00) – Intro

(00:00:54) – From consulting to HVAC entrepreneurship

(00:04:42) – Finding Central Oregon Heating

(00:05:29) – Building toward a billion-dollar vision

(00:08:22) – First year in Bend learning the business

(00:11:24) – Going multi-location from the start

(00:12:42) – Single versus multi-location operations

(00:16:39) – Integration strategy across locations

(00:23:07) – Organic growth as primary driver

(00:25:51) – Goal setting unlocks growth

(00:30:33) – Competing for acquisitions as partners

(00:34:03) – Moving to Denver and early mistakes

(00:37:19) – The path to $350M by 2030

David Williams: Everything at ASG is meant to serve the branch so the branch can serve the team, so the team can serve our customers. ‘Cause ultimately, you know, reality is we can talk about systems and culture, ultimately, what do we do every day? We’ve got technicians in homes serving customers. That’s what we do. So ultimately, everything we’re trying to do is about how do we get better at that and facilitate the branch to be able to do that better and better and provide a higher level of service to our customers and create a great place that people wanna work at every day.

Like, that’s what we’re trying to do.

Alex Bridgeman: David, thanks for coming on the podcast. Think Like An Owner is all about ambitious companies and growing them and exploring different industries on the podcast here, and we’ve had a couple HVAC CEOs on in the past, and I’m ex- I’m excited to dive into it, especially because you, your first business was in Oregon, Central Oregon HVAC.

What brought you into the industry, and how’d you get started?

David Williams: Yeah, sure. Well, first of all, thanks for, thanks for having me. Really excited to, to chat with you here today. So how did I get into the HVAC world? So, you know, I… it’s kind of a unique story. I didn’t kinda grow up in the trades, which is probably a more common story in our industry these days.

But I, you know, I grew up out on the East Coast, so I went to school up in– went to college up in Boston, and then spent– started my career working for a big consulting firm in New York City. And, you know, look, I very early on in my career knew that I wanted to do something entrepreneurial, right? So like, I, you know, even in my first…

I was always kind of a student of business and a big reader of business biographies and things like that, and sort of studying other people who had kinda done entrepreneurial things, and my goal was, even very early on in my career, I was like, “How could I go do something like that?” And I knew I wasn’t, you know, kind of the typical Silicon Valley startup entrepreneur.

Like, that wasn’t gonna be me. So, you know, I got very focused on, you know, really, how could I find my way into an industry and a business that I could then go spend the next, you know, twenty plus years of my career building a great business. So, you know, ultimately, what happened was, you know, I got kind of exposed to sort of the search fund world, the people going out and buying small businesses and becoming a CEO, and I got very interested in that.

And ultimately, you know, went to business school out in Chicago and, and started to find a way of like, “Look, how could I ultimately go out and do something like that?” So ultimately, what happened was, in grad school, I was kinda kicking around, “Hey, you know, what’s this gonna– what’s the next phase of my career?

What path should I pursue?” And basically came to the conclusion of, “Look, I wanna go find a small business to acquire that I can ultimately grow into a large business, and if I don’t do it now, life’s gonna start and, you know, um, there’s gonna be a million reasons not to do it,” right? So ultimately, in November of twenty nineteen, I just made the decision in my second year of business school of like, “Look, I’m just gonna…

I’m gonna start focusing on working on this full-time.” And my goal was, I wanna find a business and an industry that I can ultimately learn from the ground up and then go spend the next twenty years turning a small business into hopefully what would be a large business, right? So what happened was, at the time even, I didn’t even care what the industry was, right?

I think a lot of, especially in the search fund world, there’s a lot of kinda dynamics around, you know, what’s your background and what industries are you interested in? And my view was like, I– it sounds kind of It sounds kind of ridiculous, but my view is I didn’t really care. Like, I wanted something where there, there was gonna be a 20-year timeframe, there was an opportunity to build a large business, it wasn’t gonna go away.

And you know, like I always joke, like the first business I ever looked at was a styrofoam manufacturing company outside of Pittsburgh. So, you know, I think there’s a variety of reasons, but I’m, I’m happy that, you know, I didn’t end up in the styrofoam manufacturing industry. But ultimately what happened, you know, got exposed to some of the home services world, HVAC, plumbing, and electrical, and my view was big industry, lots of opportunity, a lot of private equity interest at that time, kind of start to starting to take off.

It’s something that’s not going away, and my view is there’s a lot of opportunity to go out and, you know, build a large business here. So what happened was I started to look at heating and air, plumbing, and electrical businesses kind of all across the country. So this was really what sort of happened is, you know, really COVID hit, so then ultimately I’m back on the East Coast and looking at businesses kind of all across the country with the perspective of I’m gonna relocate to wherever this business is.

I’m gonna learn the business from the ground up, and this is gonna be the start of a journey of us ultimately building, you know, a company from s- small business to ultimately, you know, something large over the course of my career. So, you know, what happened was I looked at businesses, I looked at business in Florida, Texas, Tennessee, up and down the East Coast and, you know, ultimately got introduced to a business out in Oregon.

I always joke, like at the time I had never been to Oregon. I had no real plans to go to Oregon. I mean, you know, my whole life was really on the East Coast, family, friends, et cetera. But ultimately flew out to, to Redmond, Oregon, met the owners of Central Oregon Heating and Cooling, got to learn a bit about their business, their story, what they were looking for, and really it just felt like a great culture fit.

They had kinda met some of the bigger private equity buyers in our space and were more interested in the idea of kind of selling their business to the next generation. And, um, so ultimately, you know, in October of 2020, you know, we acquired Central Oregon Heating, and, and I moved out to, to Oregon full-time and, and really, like that was the start of Advantage Services Group, you know, in October of 2020.

Alex Bridgeman: And what was your plan for Advantage Ser- Services at that time, and how has that kinda vision for the, the combined group evolved over time?

David Williams: Yeah. So, I mean, from the start, my goal is to build a, a large business. So like even from the start, like our goal– my goal was always like we’re, we’re– we wanna build a billion-dollar revenue business.

So like even before… Like, I wrote most of kind of the central points of like what our strategy is and the kind of company we wanna be and what’s our multi-year plan and where do we wanna be in five, 10, 15 years. Like, I wrote basically all of it before I even moved out to Central Oregon. So there was an element of like we came in with some very large ambitions, and my view was a lot of people at the time sort of were like, “Okay, you know, that’s, that’s nice, David, that’s a nice dream,” but there’s an element of like, you know, in some ways my view was like, “Look, this is what we’re doing, right?

So we’re gonna start here. Like, it’s gonna take us a long time.” We always thought of it as like, you know, this is gonna take us like fifteen years, but we’re here to build a large business. So like even it– one of the owners of Central Oregon very early on, you know, I, I was sort of hesitant to kinda communicate that to the, to the, the initial Central Oregon team at the start, and they really pushed me: “David, you gotta tell everyone.”

So I like– this was like a month in, I presented to the team like, “Guys, look, we’re gonna be $100 million in revenue in 2025, and we’re chasing a billion dollars in revenue, and we wanna build a big company with locations, you know, all across the United States.” And ultimately, you know, we’ve used that sort of vision for what we’ve done.

We have been sharing that with our team from the start, and we continue to do so. So our view is, you know, look, we’re, we’re six years into this journey. You know, just to give you a little bit of sense of what Advanced Services looks like today, right? We’ve got, you know, nine locations in four states.

We’ll do 120 million in revenue this year. We’ve got four hundred employees. So, you know, my view is- We’re still very much in the early stages of what we’re trying to build here, but we’re on the journey. So I think from that standpoint of when, you know, we were one location and, you know, like 12 million of revenue, and people said, “David, you know, we wanna build a billion-dollar revenue business,” people are like, “Yeah right, David.

That’s, that’s a pipe dream.” But I think as we’ve started kinda down that road, when things have started to get a little bit more real, you know, it’s kinda given the team a little bit of a reason to believe. And I think for us, we still consider ourselves very early in that journey. And, you know, look, there’s been a lot of bumps and bruises along the way, and we’ve made, you know, basically every mistake you can make, as I’m sure you can imagine.

And, but, you know, ultimately, my view has always been if you take a long time horizon, you know, there’s a lot… It’s very hard to accomplish anything in a year, but over, you know, 10 years, you know, you can really accomplish a lot if you stay committed to what you’re trying to do.

Alex Bridgeman: And what was that first year in Bend like as you learn the business, you understand how the dynamic, the daily dynamic works.

What was that like?

David Williams: Yeah. Yeah, it’s funny. I mean, in some ways there’s an element of like, like in, like going into it, you alm- you just don’t know what you don’t know. So there’s an element of like, you start to look back, and I’ve heard this from a few people who’ve done sort of more entrepreneur… “Would you ever do it again?”

I’m like, “Oh my gosh,” like, “now I know too much,” right? So that first year, you know, look, I was 27 years old. I’m, uh, you know, from the East Coast, and I, you know, I don’t know a thing about HVAC. And I’m showing up to this company that’s being led by somebody who started the business, two guys started the business 30 years prior, you know, and now there’s 70 employees, and all of a sudden like, “Hey, here’s the new guy.”

So a little bit of like that journey of like going from, you know, all of a sudden, like, you know, you are drinking from the fire hose. And it, it like the, the dynamics of I gotta learn this business, I gotta lead this team, I gotta make sure the business performs, I gotta make sure the team doesn’t, you know, abandon ship.

I mean, there, th- there’s a lot of pressure and stress associated with that. But, you know, ultimately, like for me, like I just wanted, like I, there’s nothing else I wanted to do. Like, I was just working. I was thrilled to be there. Like, that’s what I wanted to be doing. You know, I moved across the country. I did not know a soul in Oregon, and I’m working seven days a week.

But I was loving it. I was loving it and, and, uh, you know, the, the benefit… One of the things where we got, you know, in some ways any of these stories it takes a lot of luck, right? Is one of the benefits for me is October of 2020, when I moved out there, was really, you know, kind of- The peak of the COVID boom in the heating and air business.

So the reality is, you know, in our first year, we’re up 40% organically, and I’m like, “Gosh, this is amazing, and we’re doing so great.” And so in some ways, you know, certainly I learned, you know, in the latter years that it’s not always that easy. But, like, that was a big benefit to us because in some ways it covered me a little bit.

It gave… The business performed, and it gave me a chance to kind of learn and learn the team and learn kind of what it… like what it’s gonna take to be a CEO and versus coming into a, you know, if you come into a time where the, you know, more difficult time, you know, that could be very difficult. So, so that was really the first year.

But, you know, look, for us, we did our second acquisition, you know, six months after closing Central Oregon, and I think there was a little bit of, for me, a little bit of like that, you know, “Hey, look, we’ve got ambitions. We’re gonna do this a lot. Might as well start learning how to do it.” And, you know, there’s, there’s plenty of pitfalls on that and things that went wrong, but in some ways you’re kinda learning, you know, through the fire there.

And ultimately, you know, we, we had some success. We had a lot of things go wrong, but, you know, we got through it and it made us stronger and certainly made me stronger as a, as a CEO

Alex Bridgeman: What was that first deal that you did? That wa- that, I guess the second deal, was that also in Bend?

David Williams: Yeah, so we bought a business down in Southern Oregon called Rogue Valley Heating and Air.

So we had– we already, Central Oregon really had two locations, one in kinda Redmond Bend, and then one down in Medford, kinda in the southern part of the state, which was much smaller. So ninety plus percent of the business was in Central Oregon, but we had another small location down in Southern Oregon.

And then we bought another business called Rogue Valley Heating and Air, which our, our biggest supplier had introduced us to. So that happened, you know, so we bought Central Oregon in October, and we bought that business in Ap- in April of the next year, so six months later. And now that turned out, that’s been a, a big win for us, but, you know, and a great business and a great name.

But, you know, certainly kinda going from going multi-location that quickly, it just creates a lot of complexity. But ultimately, our view was, we’re gonna be a multi-location business. We, you know, thought might as well get started, right? ‘Cause once you– the difference between single location and multi-location is like two different worlds, you know?

And u- my view is it takes two different infrastructures, two different cultures, two different kinds of companies, two different systems in which to do that. And our view is we just started multi-location basically from the start.

Alex Bridgeman: Oh, can you talk more about that? What, what does the, what does a two location or just multi-location business look, feel, and sound like versus the single location business?

David Williams: Yeah. Yeah, so like for me, even like, even like more recently, you know, I guess in the last few years, I’ve started to reflect on… ‘Cause I’ve seen a lot of companies, more suc- like successful companies where they’ve said, “Hey, look, we’re just gonna master what we’re doing in one location before we go multi-location.”

And a lot of me says, “Wow, like, maybe that’s something we should have spent more time on.” But there’s an element to me of like, they really are two different things. Like the team you need, the systems you need, the way the business needs to be set up, right? So like if you’re just running one location as the CEO, right, ultimately you can control, everything’s in the room with you, right?

But the second you go multi-location, you no longer have your hands in everything there ’cause you’re not in the building, right? So what you need is ultimately, I mean, just to like to be very similar, you need a really strong GM who’s super well aligned with what you’re trying to do, right? You need processes and management systems around how we’re gonna run this business, so it’s not just sort of a free-for-all.

You need to start integrating, right, from an, from an, like an M&A standpoint. Now you need to really integrate these businesses. So you need the infrastructure from a accounting, from an HR, from a, you know, IT standpoint to really start to run as one company. Like, you know, what happened for us, like in those early days, we did an acquisition So we bought Central Oregon in October of 2020.

Then we did an acquisition in April of 2021. Then we did another acquisition in Sacramento, California, in November of ’21, and then we bought another company in Denver in January of ’22. So the reality is at that time, now we’re on three different accounting systems, right? And, and the thing, it’s like, oh gosh, like, we got a problem here, right?

So we were super unintegrated at that time because we had just kind of all of a sudden we’re in three states, and you know, we didn’t really have the infrastructure and the scale to support that. So like what that did is it just pressed us very early on to like, all right, we’ve gotta build out sort of the kind of functions that are needed to support this level of business, and going multi-location forced us to do that.

So that’s everything from kind of like the nuts and bolts of we need an, you know, a corporate level accounting function. We need to be on– everyone to be on, you know, ServiceTitan and one accounting system. We need to, you know, get everybody onto, you know, our IT systems. And then ultimately too, like my view is that sort of nuts and bolts integration, but then you move beyond that to really, like, how do we really integrate these businesses onto like the same system?

So it’s like, what’s our meeting cadence? What’s our goal-setting process? How do we budget? Like, what KPIs are we looking about? How are we getting these teams talking? Like, and for us, going multi-location is what forced us to build all of those things because there is no other way to run a business like that.

Whereas when you’re in one location, which in some ways I, I, like, I– you can kinda get your hands around all of it, whereas like those systems can be, you know, li- not quite as strong because you’re– everything’s staring at you on a day-to-day basis. And like for me, like what we’ve set out to build in Advantage Services is we are trying to build one company, right?

So we don’t wanna be a holding company. We don’t– We’re not a roll-up. We’re not a series of partnerships. Like, we are one company, right? So we go to market through local brands, but we want one culture, one team, one management system, one way of really running the business, and I think for us, kinda going multi-location early, while painful, there’s no question about it.

I mean, I have– We learned a lot of hard lessons that way. It just forced us to build some of those things quicker than we probably otherwise would have.

Alex Bridgeman: I’d love to hear more about the being a single business across integration of the, like the daily cadence and s- uh, systems discussion too I mentioned to you Jeff Homer, one of our board members, he showed us for Ensemble a, a spectrum table of here’s the processes and activities that we will need to integrate, here’s the ones we’d prefer, and here’s a section that maybe we don’t really care.

We, we can leave these alone, the local brand, stuff like that. How do you bucket the different things that you pull together to make it a single business? And what things do you kind of leave in place and leave as is? Yeah.

David Williams: Yeah, it’s a really good question. So and I think there’s this element of we’ve been spending a lot of time thinking through that, like even today.

We just recently hired a, a chief operating officer to really help us, like, how do we get these, these… The, uh, what are we standardizing versus not? And I think there’s this argument of decentralization versus centralization. So and I think there’s an argument of you can use a lot of different words.

People say, “Oh, we wanna be decentralized because it drives entrepreneurial ethos into the business.” Love that. I, I agree. Like, we, we want that, too, but we are trying to build one integrated business, and I think what we are trying to do for us, I think about it in sort of like, what’s integration really mean?

Because there’s an element of, you know, it’s not like we’re like a McDonald’s where it’s like, “Hey, here’s the, here’s the handbook.” You know? You’ve got everyone’s… Y- you can buy a Big Mac in, you know, s- Kansas City. It’s the same as you’re gonna get in, you know, Orlando, right? So it’s not quite to that level but, you know, ultimately for us, the way we think about it is in a few ways.

One is we talk about, like, nuts and bolts integration. So, like, that’s the f- that’s the starting point of integration. Like, for me, that’s accounting, HR, IT, right? What our system, ServiceTitan, Sage, like, all the nuts and bolts of, like, how we actually run the business. We’ve even taken like marketing, we’ve centralized all of our marketing.

We have a chief marketing officer. We take all of the marketing out of the branch. Like that to me is really kind of like nuts and bolts. We are trying to take things that at the typical… If you owned a $5 million HVAC business, as an owner, you have to worry about your tax return, what your marketing strategy is, how to figure out AP.

We’re trying to take those things out of the business so that the people running the business can focus on doing great work for customers and building a great team, right? So that’s sort of nuts and bolts, right? The next layer is really what we would call like management systems, right? So the management systems are the tools we use to run the business, right?

So like to me, that’s, it’s what’s your goal-setting process? What’s your meeting case, cadence? What’s your people process? How do you set objectives, right? What’s that look like from your budgeting perspective? You know, what do you expect from a, in a branch from a daily huddle, from a weekly leadership meeting?

How do we bring the team together quarterly to do quarterly business reviews or a management offsite, right? So like that’s all like done from an ASG perspective, right? So like all of those systems are all common across the business, and if you join ASG, we are teaching from the day one, this is how to do these things, right?

So, you know, we use, you know, OKRs, objectives and key results. Here’s how we set them. This is what the process looks like. Here’s where they get recorded. You know, this is what our budgeting process, like it’s all integrated, right? And then number three Is really like the people side of it, right? So for me, I don’t want, and I hear this a lot in other businesses, where I want the teams to be very interactive.

So like for example, like, you know, we are bringing our teams together a lot. Like if you’re a GM, you know, you- we’re getting together on a weekly basis, like every week, every Monday. We all know each other. We’re comparing notes. We’re talking to each other, like, and I’m trying to do that across the organization.

I want us to be one team versus I think a lot of dynamics start to happen where it’s like, look, I, you know, I work for, you know, Joe’s Heating and Air, and you know, yeah, ASG is, you know, our parent company, but I don’t really know anything about that. Like my view is we’re trying to really make sure that, yes, you may run a local branch for us, or you may be a service technician at, you know, one of our branches, but we’re all members of the ASG team, and we spend a lot of time really trying to get that team together.

And then the, the fourth and my view is the most important part of all this integration is culture, right? So like we spend a lot of time– Like I view culture as my number one job, right? Of like, and for me, our culture is like, who do we wanna be? What do we believe? What do we value, right? And like really, we spend a lot of time defining what that looks like and then trying to spread that throughout our company.

And we view our culture as sort of it’s an aspirational culture. Like this is who we wanna be, and my view is we’re trying to create a culture that isn’t kinda cookie cutter, one size fits all. We’re trying to create a culture where people really need to opt in, of like this is the kinda company we wanna be So I think all that to say, just to get back to your question, there is a challenge of that too, of what we don’t wanna become is bureaucratic, right?

My view is markets are different. You know, you’re acquiring businesses that have their own existing culture or have their own, you know, existing processes and things that work. So we’re not just ripping everything out, like that’s not our intention. My view is any acquisition we’re doing, we’re trying to bring things to them, and we are trying to learn everything we possibly can about what they are doing that works, and then we’re gonna try it.

If they’re doing something better than us, we are gonna bring it to everyone. And like for me, I really do believe that these branches need to be run in the branch. So I view ASG as really something that’s meant to accelerate a branch on their growth journey versus, you know, all the decisions are made at corporate or something.

It’s just not true. So like for us, everything at ASG is meant to serve the branch, so the branch can serve the team, so the team can serve our customers. ‘Cause ultimately, you know, the reality is we can talk about systems and culture, ultimately, what do we do every day? We’ve got technicians in homes serving customers.

That’s what we do. So ultimately, everything we’re trying to do is about how do we get better at that and facilitate the branch to be able to do that better and better and provide a higher level of service to our customers and create a great place that people wanna work at every day. Like, that’s what we’re trying to do.

Alex Bridgeman: You, you mentioned accelerating the growth for branches. Organic growth has been a pretty big part of the story versus something like tuck-ins or smaller, you know, add-on businesses. Is that kinda how you expected or what was different from your kinda incoming expectation when you bought into the Redmond business?

David Williams: Yeah, that’s a, that’s an interesting question. So like when I, when I got into the industry, like when I built, you know, it’s like coming from a more financial background, I’m like building the financial model right before I bought Central Oregon. I had sort of assumed like, you know, “Hey, like five percent organic growth.”

So I built the whole model on, all right, this is what we think we can deliver and, and in some ways in the first year, you know, we grow forty percent organically and I’m like, I threw that out. I’m like, it’s all about organic growth now. So like for me, we are focused as organic growth as our primary growth lever.

Like that is the primary way that we’re gonna grow these businesses. Like one thing I always say, like from an acquisition standpoint is acquisitions are part of our strategy, they’re not our whole strategy. So I think, you know, I, I kind of made some of these numbers up, but as I think about like a roll-up, like a more typical roll-up strategy, I think you would kind of think about that as sort of like seventy-five percent acquisition with twenty-five percent organic growth.

I’ve– I view us as the inverse of that, right? So we’re seventy-five percent organic growth with twenty-five percent acquisitions to really kind of accelerate us on that journey so that we have the opportunity to drive more organic growth. So like for us, I, I, I’d certainly, you know, I think acquisitions in our industry, while competitive and there’s a lot of people chasing these deals these days, continues to be a huge opportunity to, you know, find businesses that are aligned with how we wanna do things and culturally and ethically and enter new markets and…

But the primary growth driver of that is how do we take a business? My goal is that if we acquire a business and bring it into ASG, that we can make that business stronger as a part of ASG. It will grow faster. It will do– it will build a, a– it will, will accelerate the reputation, will build a great team.

People will wanna work there. Like that to me is what we’re trying to get, Russ. And I think you can go do M&A all day long, but if you acquire a business and the owner leaves and the business, you know, starts to perform worse or something like then what real value is being created? My goal is we acquire a business and then ultimately we can take a great business that’s been built for many years and we can accelerate it and to c- continue to create more value and do great work for customers and ultimately build a great place to work for the team members.

Alex Bridgeman: What have you found are the biggest unlocks for stronger organic growth in these businesses?

David Williams: Yeah. Uh, it’s gonna sound like kind of a s-simple answer, but my view is the number one driver of organic growth is goal setting. I, I think the– It, it sounds kind of– Like, people would ask me that in the early days, and I was sort of saying, like, you know, “Look, I don’t know.

We wrote down goals and started chasing them and told the whole team about it.” I, I’ll, I’ll just give you sort of a– I had one of the owners of a business that we bought told me very early on, “David, don’t show anybody on the team the numbers.” And I said, “Okay, well, what– like, why do you say that?” And they said, “Well, they’re not gonna understand, and they’re gonna think you’re making too much money, and they’re gonna resent you.”

And I said, “Well, I…” Li-literally from that day, I said, “Well, like, I can’t not show everybody the numbers.” So if you work at ASG, you’ve seen your branch’s numbers, your department’s numbers, the whole P&L. Like, ev- it’s all shared publicly, right? Because we are trying to align the team around a common set of goals, and then ultimately we’re all incentivized around going out and achieving those goals.

So what I found very early on is that most companies, at least that we encounter, they don’t do that. They might set some– They, they’re not sharing setting goals and then aligning the team around them. They’re sort of– It’s kind of done in the background through an owner to say, “Hey, I know, you know, I wanna drive this percentage of growth, and I’m gonna push this on the team.”

And my view is we’ve just been very open about it, and it’s worked really well for us. And I think, you know, there’s an– those elements for us of, like, we’re open of, like, we take– We’re not taking the pro- We’re– We use the profits of the business to reinvest in the business. So, like, this is why, you know, we wanna, you know, continue to drive growth in the business, and growth creates opportunities for our team members to continue to progress in their careers.

And, like, for us, like, that level of just openness and goal setting and, and getting the team aligned around going out and chasing those goals has been the primary growth hook.

Alex Bridgeman: What started to happen when you started sharing numbers? Like, what, what little things or daily examples of activities did you see start to happen?

David Williams: Yeah, and what I saw is people start to really care. So I think like, like people just– My view has always been people wanna be on a winning team. It’s more fun to be on a winning team than it is to be on a losing team. It’s just a, it’s a fact of life. So look, there’s sort of the easy answer to say, “Hey, look, you know, you can align people’s, you know, financial incentives to a budget goal or something,” which is great, and we do that.

But in my mind, that’s not even the primary driver. My view is show people the scoreboard, and people are gonna try to find a way to win. You know, we, we had a– It’s sort of a longer story, but there was very early on, there was a, there was a, a, a bet between me and a, a former owner about, you know, a, a month and are we gonna hit this number or not.

So we very quickly– Like, this is really when it all started. We shared that with the whole team of, “Guys, this is the goal, and, you know, this is, this is the bet we have, and, and this is what it’s gonna be like, and we’re all gonna rally together to do this.” And, and it’s always, it’s like nobody’s got any financial incentive.

The bet’s like, you know, a hundred dollars or something. It’s not like, you know, gonna– There’s no financial incentive for the whole team. But what I learned very early on was like, I’ve got people in our call center coming to me saying, “David, where are we tracking? Are we gonna win the bet? What’s going on?

How do, how we– What can we do?” And I’m like, “Whoa,” like, “this works. This works.” And it’s like there’s no financial incentive. It’s like, but people, if you’re gonna come to work every day, what I’ve found is most people, if they’re gonna come to work e-every day, they wanna feel the fulfillment of I’m doing well, we’re winning, I’m part of a company that’s doing g- that’s a winning company.

Like, people want that. And certainly, look, you also have to tie, you know, we’re big believers in winning and losing together. So, you know, certainly a big piece of that is financial, right? So whether that’s, you know, we think about, you know, you know, equity compensation or bonuses. So we, we use all of those tools as well.

But what I’ve found is like that just– That happened to me very early on in our journey, and I’ve just continued to double down on that. Like, we need to get the team aligned around chasing a goal and, and really it’s had, it’s had some really positive effects. I mean, the downside is sometimes you miss the goal and then, you know, you lose and it doesn’t feel great.

And, you know, there’s negatives to that too, but that’s, that’s life.

Alex Bridgeman: And I mean, this must be a pretty differentiated conversation when you go to other potential sellers, and you’re building relationships with businesses that may wanna join, and you can tell them all about these different pieces or even bring them by and introduce them to a, a couple people.

What’s that conversation with sellers like today versus, you know, you’re, you were just starting and just beginning this journey?

David Williams: Yeah. Yeah, it’s, it’s an interesting question. I mean, I, I, I would, I would take it in a few ways. One is our industry for, for acquisitions is extremely competitive, right? So, you know, in some ways I, I always, I always just use this example, but it’s like you have a– if you have a business with 1,000 Google reviews in any, you know, within 50 miles of a major metro, you’ve gotten reached out to, you know, 25 times.

You know, like it’s just happened, right? So my view is it, there’s a lot of people out there trying to find these businesses. So my view is always about in some ways- Any acquisition, it’s a people game, right? So I think you gotta think of it from that perspective. And my view is there’s opportunity everywhere.

So people have said to me, “David, how are you gonna compete to find these?” I’m like, “There’s a lot of businesses out there, right? So… And we don’t need to acquire every single one.” And it’s like, you know, look, certainly there’s a financial component. But what I’ve found is it’s all about the connection from a, from a real human perspective of, like, what is that owner looking to accomplish?

What are they worried about it? And ultimately, how can we work as partners to make sure the transition of the business is a success? And, like, what I’ve found is it’s just about showing up. And it’s about, you know … Like, the, one of the tricks we’ve always used v- is we’re on a Zoom call, it’s going well, I’m coming to meet you.

Like, I will be at your office tomorrow for dinner. Like, I don’t care where it is. I’ll fly across the country because I’m now gonna build a personal relationship with you. And my view is it sh- has to be genuine, right? Because I say this to owners all the time of like, “Look, whether you wanna stick around for the next 10 years and work with us, or you wanna

you know, you’re ready, you’ve reached a point of retirement where you’re saying to yourself, you know, ‘Look, I’ve been doing this for 30 years, and I’m really ready to retire,’ you know, we can do it both ways,” right? We’ve gotten owners out in 30 days. We’ve had owners who, many owners who are still working with us today.

And my view is we just become partners. We- Whether we’re working together for 10 years or 10 minutes, we are gonna become partners. So one is we’ve gotta understand, you know, can we go out to dinner together? Are we aligned? Like, do we like each other, right? And then really starting to understand, what are you looking for?

Here’s what we’re looking to accomplish. Being honest about it, being upfront about it, and really trying to work with that owner to, like, ultimately make sure the business continues to succeed, right? And, like, look, these things are hard. I mean, owner … You think about somebody who’s started a business and ran it for 30 years.

I mean, it’s like a, it’s like a child to them, right? So, like, I take that very seriously. Like, my view is I am giving you my word that we are gonna, we are gonna take good care of what you’ve built and your legacy. And look, these things aren’t always easy, right? But, like, for me, as we think about competing for deals, it’s like how do we really start to get down to that relationship side?

And what I’ve found is a lot of people are sort of … you know, they don’t take the time. It’s a little bit too … You know, you get into an owner- a meeting with an owner, and you’re asking about, like, you know, “Why is gross margin, you know, down 100 basis points six months ago?” And so they’re like, “Really? Like, whatever.”

Like, we’ll get to that, right? Like, let’s talk about kinda what you’re looking to accomplish and what we’re looking to accomplish, and are we aligned? Because we’re about to enter a marriage, and I’d rather know now than, you know, six months later. So, you know, I’m not sure if I answered your question there, but that’s, that’s really how we think about it.

Alex Bridgeman: No, no, it was great. What prompted the move to Denver?

David Williams: Yeah, it’s a good question. Well, both personal and professional. One is I got married i- in October of last year, so there was some, some personal sort of incentive there, but, but then really the, the, the challenge– Our goal is to build a national business, right?

So, you know, we just recently started an East Coast expansion. You know, my view is w- we, we wanna be throughout the, you know, the United States, and the reality is just the sort of centralized place and kind of being in Colorado, you know, the Denver Airport, you can basically get anywhere. Where, like, when I was living in Redmond, the reality is, you know, I– you get a lot of United points connecting through Denver, so, you know, that was really the primary driver of it.

But, you know, look, it was tough. It was a tough move. I mean, I, I, I was at Central Oregon Heating every day for, you know, five-plus years. So I had a real, and still do, have a, you know, very much… That was our first acquisition. I have a very much a connection to that place, you know, as I do to all of our locations, but that in particular ’cause I just– that’s where we started, and I spent a lot of time there.

So it was tough, but, but ultimately, you know, we’ve got great team there and, and some really strong leaders, so ultimately, you know, that was the decision that we made

Alex Bridgeman: Is there anything you’d do differently early on that would’ve set you up for success that you wish had happened or you wish you’d done or would advise others?

David Williams: Yeah, it’s a good question. I mean, I think there’s elements for me, like the– where, where my mind go– It’s hard for me to look back and say, look, in some ways we made a lot of mistakes, and I could talk about specifics. I wish we didn’t do that deal or like… So there’s a lot of mistakes there. But I think in some ways all of those mistakes have led to us continuing to, you know, learn from them.

And in some ways it’s like, how else do you learn, right? I think people have asked me in the past, it’s like, you know what? You know, I, I wanna be a CEO. How am I gonna– What could I do to prepare? It’s like, there’s nothing you can do. You’ve gotta get into the seat and, you know, start learning. Like, it’s like you’re sort of trial by fire.

So I think for me, one area that my head does go to, especially as we thought about being one integrated business, was should we have spent more time on our initial acquisition to develop the playbook before we went to the second? And I go– I kind of go back and forth with it. I think, you know, to our earlier conversation, I think there’s an element of it actually forced us to develop the playbook.

So my view is I’ve, you know, if we just had spent the first four years in one location, you’re not building the skillset required to, you know, run five. So I don’t, I wouldn’t say it’s a regret, but it’s something I’ve thought a lot about, especially when you get– There are times, especially if you’re going through acquisition, where you sort of get to a place where you’re like, “Ooh, gosh, we we’re a little bit over our skis.

You know, we haven’t quite integrated this business to the level I’ve wanted to.” So my view is what we’ve always found is there’s times when we’re going fast, right? We’re doing, you know, three acquisitions and getting ’em integrated, and then there’s times where it’s like, all right, let’s just slow this thing down a little bit and kind of get our house in order and make sure we’re doing things the right way.

And the teams are set and the cultures are set, and the systems are there and, and the businesses are being well run versus just keeping adding fuel to a fire that, you know, maybe doesn’t need any more fuel right now.

Alex Bridgeman: What’s, what’s your like next couple year vision for the business and what are, what are the key milestones you’re excited to hit here pretty soon?

David Williams: Yeah. So I think for us, we always kind of think in sort of five-year timelines. So, you know, for us, you know, our goal is to– we, we build these things we call multi-year plans, right? So they’re very detailed financial plans of like, “Well, this is where we’re going, this is what we’re trying to do, this is what we need to do to get there,” right?

So our next kind of big milestone is we wanna hit three hundred and fifty million dollars of revenue by twenty thirty, and we wanna hit a billion dollars in revenue by twenty thirty-five. So like that’s, that’s kind of the, from a financial standpoint at least, really like the, you know, the big, you know, this is what we’re chasing.

And we share that with the team, and we show our kind of performance and what’s going well and what’s not going well. So like that’s kind of the next journey. I think for us, as I think about really like what do the next five years look like, it’s really about we really are set up from a regional standpoint.

So, you know, Oregon as a region, kind of Colorado, now East Coast, like really kind of continuing to, to drive that You know, our expansion through that regional focus by behind sort of great regional leaders, which right now we have three great ones, and ultimately continuing to compound on that. And then my view is really being disciplined about this idea of one company.

So like as I mentioned, we just hired a, a chief operating officer. Like we’re really focused on how do we develop our system, our playbooks, so that they are repeatable, scalable, repeatable, scalable. And for me, it’s like, you know, I f- I, I look at some of our l- much larger competitors and, you know, you do twenty plus acquisitions in a year, and I, I, that, to begin, it, it intimidates me.

‘Cause my view is like, when we do an acquisition, we are very focused on how do we integrate this thing? How do we get them into our fold? How do we really, we call it ASG-ify this business? And my view is that takes time. So what we’re trying to really focus on right now is how do we develop that into a repeatable system?

And then I think the second thing that we’re really focused on right now is, look, our space is competitive, right? I think, you know, there’s eighty plus PE-backed HVAC plumbing electrical consolidators, right? And you know, every, it, there seems like every day there’s a new one started or another big deal announcement, right?

And, and, and you know, we admire a lot of those businesses and, and think that there’s been a lot of great things done in our space and, you know, maybe some not so great things done in our space recently. But you know, my view is, like, how do we continue to differentiate ourselves from everybody else in our market just buying up heating and air businesses, right?

So like for us, it’s like really trying to figure out what is really our differentiator. Like, how do we think about how we’re gonna continue to not only compete, but ultimately how do we win in a marketplace that’s that competitive? And like that’s a conversation that we’re having with our leadership team, you know, daily.

Like, how do we really continue to differentiate ourselves to find that way? Because my view is, you know, anybody can go out and buy a heating and air business. It’s not really that complicated. You know, what’s complicated is how do you really create a business that has long-term staying power? Like my view is I want ASG to be around, you know, twenty years from now, thirty years from now.

You know, we’re not just in this, you know, we’re not private equity owned. We are, we have a long-term time horizon. We have no intentions of selling this business. Like how do we really create a business that’s long-term sustainable, that’s gonna be around for many years to come? And my view is it’s just work.

It’s just work and w- w- our goal is to continue to do the work every day.

Alex Bridgeman: I love it. Well, David, thank you for coming on the podcast. This has been a ton of fun. Please let me know next time you’re in Bend, and I will happily drive over and meet you there. And, um, this has just been awesome. I m- I, I appreciate you sharing your time.

David Williams: Yeah. Yeah, no, thanks for having me on, Alex. I, I’ve really enjoyed it. I, I always love talking heating and air business, so appreciate you having me on.