Building Scalable Empires in "Boring" Industries Through Systems and Culture

Key Quotes

"We've done really well on the sales side our company would grow seven to ten times as fast as the traditional business model the key aspect of this growth model is the sales force if somebody came over from another company they would sell 70 more with us the next you know that summer than they had the previous summer."

David Royce explains that his company's rapid growth was driven by a superior sales force. Royce highlights that new hires from competitor companies sold significantly more, indicating a strong competitive advantage in their sales approach and training.

"Most entrepreneurs they get focused working in the business instead of on the business you have to learn as an entrepreneur either be a jack of all trades or hire somebody else to do that if you want to scale but the true test of scale is leave for 30 days on vacation and if you come back and your company's still there that's how you know you have a business that can actually scale."

Royce emphasizes the critical distinction between working in a business and on a business for scalability. He posits that a business's true ability to scale is demonstrated when it can operate successfully without the founder's constant, direct involvement, such as during an extended vacation.

"What are we looking at we're looking at oh okay we can go ahead and work a remote lifestyle want to work that laptop lifestyle but no we have an entrepreneur that chose a different path he's been able to expand to over 5 000 cities across 34 states and within eight years his company active grew from a startup into the third largest residential pest control company in north america with over 500 million in annual revenue guys phenomenal right and when we talk about entrepreneurs what makes a true entrepreneur guys having a team well david has been able to lead by example and have over 6 500 employees."

The podcast host, Paul Alex, contrasts the popular "laptop lifestyle" trend with David Royce's success in a traditional industry. Alex highlights Royce's achievement of building a massive pest control company with a large team, framing this as a testament to true entrepreneurship.

"I'd taken business classes in college and I read this book called the e myth by michael gerber and it just talks about the importance of creating systems you know best with best practices and how much you can eliminate your risk by for example going and buying a franchise or you know doing something that you already know a lot of people jump into an industry they've never even been a part of before so I'm a big advocate of getting experience and not just experience to know if you like it but to also like develop some sort of a core competitive advantage in that industry."

David Royce attributes his success to understanding the importance of systems, as detailed in "The E-Myth." Royce advocates for gaining experience in an industry before starting a business, believing it builds a crucial competitive advantage and reduces risk.

"The key aspect of this growth model is the sales force how do we attract the right talent so that we can create this machine and continue to grow nationally you know into you know 5 000 cities or whatever so we we built a killer headquarters we had an ncaa basketball court we had a golf simulator a movie room ping pong foosball you know air hockey all that kind of thing pool table and we started doing like these really cool events now we had a space that we could have like dan reynolds from imagine dragons come play for us or we could do a charity event with an nba player that might do a three point shootout or something and we could have really good all hands on meetings you know have like professional out of business business authors come in and speak to us."

Royce explains his strategy for attracting top talent by creating an exceptional company culture and environment. He describes building a lavish headquarters with amenities and hosting unique events, demonstrating a commitment to making the workplace appealing beyond the industry itself.

"I think that a lot of entrepreneurs like for example if you think about mom and pops businesses like small businesses they maybe got one location I think our country like our country is probably two thirds small businesses and there's an innate competitive advantage that they have right because it's them in person like they really care about the company and their incentive is it's stronger than any employee that you would hire because it's it's coming to their family at the end of the day right."

David Royce points out that small business owners possess an inherent competitive advantage due to their personal investment and care for their company. Royce suggests that this direct stake, tied to their family's well-being, often creates a stronger incentive than that of an employee.