Austin Gray: Hey! Welcome back to the OWNR OPS Podcast. I'm your host, Austin Gray. In this episode, Malcolm Marshall is joining us. Malcolm owns a pool service business down near Austin, Texas. Malcolm was an early employee at one of the large energy drink companies, and after selling some stock, he went and started his own pool service business. They've since grown the business to multi-millions in annual revenue, and if you have an interest in starting a pool service business, you're going to want to listen to this episode.

I learned a lot from Malcolm, and I think you will too.

Before we jump into the episode, I wanted to mention that we just launched a school community for OWNR OPS. What is OWNR OPS? For those of you who don't know, OWNR OPS is an online hub specifically for people who are starting a local service business. We've documented the process that we use to get our business up and off the ground, and it's designed specifically to help you guys who are starting a local service business go from $0 to $500k. So check it out at ownrops.com (that's OWNRops.com).

I hope you enjoy the episode!

Real quick, I wanted to share with you two agency partners who have helped me grow Bearclaw Land Services. Striker Digital manages all of our SEO services, and they've got us to number one on Google for specific search terms within our local service business. Cedar Digital Consulting manages all of our social media and YouTube, and they make it very simple for owner-operators like myself. All I have to do is go take photos and videos in the field, upload those on my phone to a shared iCloud album very quickly, and they handle everything else from there. They edit and publish—I don't have to worry about it. I can focus on growing my business.

So if you're looking for SEO services, check out Striker Digital at stryker-digital.com (that's S-T-R-I-K-E-R-Digital.com), and for social media, check out Cedar Digital Consulting at cedardigitalconsulting.com. Welcome to the show!

Malcolm Marshall: Hey, Austin! Thanks for having me.

Austin Gray: Yeah, so you've got a pool business north of Austin, huh?

Malcolm Marshall: Yeah, that's right. We do construction, we do equipment repairs, service—we kind of do it all.

Austin Gray: How did you start the business?

Malcolm Marshall: We started in just service in 2014. We bought a route of 43 pools down in Austin, and we kind of just took it from there. Neither my business partner nor I had any pool experience. We thought that it was going to be a kind of cut-and-dry, easy business to jump into. So that was kind of the start—just buy a route and get going.

Austin Gray: How did you find the route to buy?

Malcolm Marshall: There used to be a lot of routes listed online. So, you know, the standard sites like LoopNet and all the places that you Google and say "pool routes for sale," 10 different sites pop up or 10 different brokers. There's not as many anymore because of some PE rollups; they're kind of hard to find, particularly in this area, but they were easy to find back then.

Austin Gray: What is your background? What were you doing for work before you bought the route?

Malcolm Marshall: I went to Texas A&M. I got a bachelor's degree in accounting, a master's in finance, and I never sat to take my CPA exam, but that was kind of the plan. So, that's what I did for the first nine years of my career—I worked in accounting and finance for C4 Energy, if you're familiar with the—

Austin Gray: Oh really?

Malcolm Marshall: Yeah, we started there before C4 was a thing. At that time, it was just a sports nutrition company called Cellucor, and it was about 10 of us in an office. Then the company started blowing up, and we grew from $8 million in sales to about $300 million in sales at Cellucor. So that's what I did before—I ran their accounting and finance groups.

Austin Gray: Wow, that's crazy! For those of you who are just listening on the podcast and not watching the video, he's talking about C4 like the energy drinks. Yeah, that's crazy! So $8 million—you were with them throughout that whole growth phase, $8 million to $300 million.

Malcolm Marshall: I was, yeah. Since then, I think they've doubled again. I left in either 2017 or 2018, and I believe they doubled again, really with the release of C4 and more of the ready-to-drink cans that you see in the convenience stores now.

Austin Gray: Wow. And they're a Texas company?

Malcolm Marshall: They are. When I was there, we were based out of Bryan, Texas, which is where Texas A&M is, and they moved to Austin a few years back.

Austin Gray: Nice! Yeah, you're in a hot area down there—lots of startups, a lot of good business opportunities.

So you identified the pool business. Why?

Malcolm Marshall: We thought that it was going to be a simple business, and we had an outstanding marketing plan. We had some money in our pocket because Cellucor had sold a third of the business, and we participated in some equity sales that put some money in our pocket. We thought, "Hey, here's a business we can jump into, dump a lot of money into marketing, and we're going to be able to grow really quickly."

How hard could it be to clean a pool? And then we found out that it was a lot harder than we thought, which kind of seems to be what anybody who decides to just jump into this industry says. But yeah, it really came from us. When we made that equity transaction, my business partner and I were just working all the time, and we were kind of tossing around, "Man, what if we worked this hard for ourselves? How far would we be able to go?" So we started looking at different industries and different ideas as they would pop up, and the pool business was the one that we thought we could conquer—particularly service. We thought we would be able to roll up some service companies and put together a marketing plan that would help us grow quickly.

And, you know, in a sense, we did grow quickly, but it turned out to be a lot harder on the operations side than we thought. So when we started, it was just a service business, and then in 2018, we started doing construction as well.

Austin Gray: You've mentioned it multiple times here. Why is it harder than you thought?

Malcolm Marshall: There's a little more to cleaning a pool than cleaning your car or cleaning your house. The main thing is just there's a lot of environmental factors that you don't anticipate. So whether it's you get a big rain or there's something in the air, the lawn guy blows all the clippings into the pool that week, and now there's phosphates in the water and organic material that you didn't plan for. There are just a lot of factors that are there that aren't there whenever you're, like I say, cleaning your house or cleaning your car.

There's also a lot of different technology and equipment out there, and so it's really hard to train people to be able to troubleshoot all of that, especially when they're coming in in an entry-level role. There are probably 10 other factors that we could walk through; those are the two that stick out. It's also, you know, people need service-type work, but you're also out there to do maintenance, so it's kind of hard to draw a line between "Okay, this is where my maintenance work stops," and "Where my service work starts." There are just a number of factors about the industry that are kind of quirky that you have to work through, and we still haven't figured out—we're still working on trying to tackle.

Austin Gray: So when you say the difference between service and maintenance, I'm sure you have recurring contracts in place for the service side of things, correct?

Malcolm Marshall: Right. I would call that maintenance—just recurring contracts for weekly cleaning.

Austin Gray: Okay. And then you have repairs?

Malcolm Marshall: Right. And so you're saying it's hard to draw the line between like what is covered under the regular maintenance?

Austin Gray: Yeah.

Malcolm Marshall: So with equipment repairs, which sometimes I use interchangeably with service—I say both of them; I'm probably talking about the same thing—you may have the pump go out, the filter may be having issues, or it may just be like a simple leak in a valve or a union, where you know there just needs to be an O-ring replacement. It could just be that the top of the pump is leaking and it needs an O-ring replacement.

Some of those things, like those simple O-ring replacements, we try to make sure that we take care of with maintenance when we're adding that value and picking up those customers on that monthly recurring revenue. But for the service piece of it, the equipment repair piece of it, some of those repairs get over the standard maintenance technician's head, right?

So how is it that we make sure that we gather all the information that we need so that we can easily go out and fix it? A lot of service companies would charge you a service call—maybe $95—to go out there and diagnose the problem. Well, the customer feels like, "Hey, you're already out here anyway; you should be gathering all that information." So there's much more of a quoting process on the service versus more of a "Let me charge you a fee and go out there and diagnose it." Some of those lines kind of blur, making operations a little bit more complicated.

Austin Gray: Got it.

Alright, let's go back to whenever you decided to buy—43 pools, is that right?

Malcolm Marshall: That's right—43 pools in Austin.

Austin Gray: What did that cost you to buy?

Malcolm Marshall: At the time, it was $90,000. A standard route goes for 12 times monthly recurring revenue.

Austin Gray: 12 times monthly recurring revenue?

Malcolm Marshall: Right. So if your average monthly recurring revenue is $200 on an account, that account's going to sell for $2,400. Okay? And that's standard, even at the level of 43, all the way up to whenever you have thousands. I would think at thousands, you would be looking at more like an enterprise value of even a multiple, or you could potentially get more for it because you're operating at a larger business. But your standard routes—anything that I've seen under, you know, 300 pools or something like that generally sells for 12 times monthly recurring revenue.

Austin Gray: Got it. Alright, so let's go back to the marketing plan. You said you had this amazing marketing plan in mind—wasn't all that amazing?

Malcolm Marshall: Really, it was just achieving a lot of touches, right? Making sure that we were hitting specific neighborhoods that we were already in, trying to densify routes. Lots of flyers, lots of door-knocking—you know, just the standard get in front of people, make sure we're already in the neighborhood with WRA trucks, make sure that we're getting references from those neighborhoods. I think it was more so, "Hey, we have the money to invest in this, so let's push it," than it was actually an amazing marketing play.

Austin Gray: So that's tactically how you're marketing. Did you end up buying any more service routes?

Malcolm Marshall: We did along the way. Once we got in and started having some employee issues and figuring out that, "Hey, this was harder to manage than we thought it was going to be," we slowed down a bit on adding routes. But we did along the way whenever there were good opportunities—usually it was anywhere from maybe 50 to 180 accounts at a time. 180 might be on the high side, but yeah, generally it was just as the opportunities popped up. It became much less of searching and more of people heard we would do it, and they would kind of search for us.

Austin Gray: And how many routes are you currently servicing right now?

Malcolm Marshall: So right now, we go to 670 weekly maintenance accounts. We go to them every week. We sold our Austin business in 2020, so we actually kind of downsized our Austin service routes. We just serviced up in the Temple-Belton area, which is about an hour north of Austin. A lot of those pools that we bought during that time, we offloaded and decided we were just gonna focus geographically on what we were conquering easier.

Austin Gray: And what drove that decision to sell?

Malcolm Marshall: I think it was more that we could focus on this particular area where we were having a lot of success in construction and also with service. And also just how hard it was to service—you know, Austin can be a little bit of a beast when you start talking about going down south, and you get into the Hill Country, and the roads get narrow. To get to one pool that may be having a problem, it may take us an hour and a half to get there from our home office.

With all of that, this secondary market had become secondary for us even though this is where we had started. So requiring that level of management just got to where it was like, "Let's focus our time up here and hit the avenues where we're really growing," which at the time was construction. It allowed us to take a bit of cash out on those routes and reallocate it to the right spot in this market where we are more consolidated.

Austin Gray: How long ago was it that you bought the first service route?

Malcolm Marshall: It was in 2015. So the very first day we serviced was March 1st, 2015—almost eight years ago.

Austin Gray: Okay, so you've been in this game for almost a decade?

Malcolm Marshall: Almost, yeah. It's hard to believe.

Austin Gray: And you're at 670 currently in the Belton market, is that right?

Malcolm Marshall: That's right.

Austin Gray: Alright. What does an average service contract look like, or excuse me, maintenance contract? From a dollar amount, what does that consist of a month? Does it include chemicals?

Malcolm Marshall: So you get two different models. Some people will just charge labor and then charge chemicals. We kind of do an all-in-one contract. So we charge $285 a month. That includes weekly maintenance visits and your chemicals. And that’s one visit per week at $285 a month.

Austin Gray: That's right. Okay, and so you obviously have that leg of the business, and then you have the construction side. I've checked out your website, and it's incredible, by the way!

Malcolm Marshall: Thank you! We just had it redone. It wasn't that incredible two months ago, but—

Austin Gray: Who built it?

Malcolm Marshall: We used an SEO firm called ClickFunnels Media.

Austin Gray: Oh, cool! Yeah, I might need to look that up. They've been excellent. They turned it around in like three weeks and they're very good about pushing for calls and keeping you updated on the SEO side. If you have an SEO firm that hides from giving you updates or isn't pushing to make sure you're on the phone with them, they're probably not working on it behind the scenes. These guys have done extra for us and gone beyond the contract to make sure that they're regularly updating us. They've been great. They're out of San Antonio, and I just happened to find them online and decided after some research they were who I wanted to give a shot.

Austin Gray: How much did the website like this cost you?

Malcolm Marshall: It wasn't very much. With the SEO contract, I think it was like $3,500.

Austin Gray: $3,500? And then what's your monthly spend on SEO?

Malcolm Marshall: We're spending $2,500 a month on SEO. They kind of gave me a package tier. You know, "Do you want this one, this one, or this one?" I picked the middle tier like I'm sure most people do, but it's $2,500 a month.

Austin Gray: Do you get primarily new construction leads or maintenance contracts from that, or a blend of both?

Malcolm Marshall: We get a blend of both—pretty even.

Austin Gray: So what does new construction look like? At what point did you decide that you needed to jump into the new construction side of this business?

Malcolm Marshall: In 2017, we had what was a slower growth year on the service side. I had actually talked to another guy who was in the industry who kind of told me what his margins were on a swimming pool he had just built. I was like, "Hey, that's a little better than I thought." So, with the slow year and that conversation, I went back to my business partner and I was like, "Hey, I think this is something maybe we should look into a little more."

So in 2018, after some research and digging in a little bit more, we decided to go ahead and make a hire that would help us manage that side of the business. So we started building in 2018.

Austin Gray: What were the margins on that that he told you?

Malcolm Marshall: He was running a 35% gross margin, didn't have much overhead, so it looked pretty nice. We're pretty overhead heavy. We've, you know, at this point, between the offices and the staff and the people and the service level we want to provide, we're pretty overhead heavy from what I've seen in the industry. Just a few conversations I've had, most builders are producing margins of maybe 7% to 10%. We've had years where we've done better than that. Last year, we were below that, but we added a lot of overhead from an acquisition and some things like that, so we're trying to grow back into that. But I think that our gross margins will end up around 35%, or even margins as we grow back into that overhead. We'll end up in the low teens.

Austin Gray: How big is your team right now?

Malcolm Marshall: We have just over 50 people.

Austin Gray: How many offices?

Malcolm Marshall: Just one.

Austin Gray: Oh, just one? Okay. 50 people, one office, 670 maintenance accounts. What is a typical new build project like? What's an average ticket item on a new build?

Malcolm Marshall: About $100,000.

Austin Gray: Okay. And then the business model now—I'm taking a wild guess—is that you build a pool, and you get the maintenance contract?

Malcolm Marshall: We try, yeah. We convert probably half of the new construction builds to maintenance contracts.

Austin Gray: Only half? That's surprising to me.

Malcolm Marshall: Yeah, you know, it's been a while since I've really dove in, but it seems like in the industry, only about 20% to 25% of pool owners hire a pool maintenance company. So we're converting twice that many. Like I said, it's been a while since I've done that research—probably like 2015 or 2016, so maybe that number's a little higher now. But most pool owners are DIYers; they're maintaining their pools themselves.

Austin Gray: Okay, what are your overall goals with the business? You've been in it almost a decade at this point.

Malcolm Marshall: So right now, our overall goal is to build an amazing business. We try to optimize for if we ever were to exit, but I think that those two things can go together. For us, I would like to see—last year, we did $16 million in revenue. This year, we're targeting $18 million, so a little bit of a slower growth year from what we've seen. But I'd like to see us get to $50 million, and I want to see our team grow. I'd like to build a great business where people feel appreciated, where they can get a kickstart to their career, where we can provide them with world-class training, and where we have the best customer experience in the industry. Those are the things we're really focused on.

When we talk about the future of the business, that's primarily what we're talking about. We're not talking about how do we optimize enterprise value or, you know, should we roll this benefit out or that benefit out because of how it's going to affect the company if we were to sell. Those conversations just aren't happening—it's just how do we build a great business?

Austin Gray: That's awesome. One thing I'm really curious about—you're at $16 million currently, you started with one service route. What's the first thing you do after you acquire that service? Like, you've had to take decades of different steps to grow to this point, but what did the team consist of at that point?

Malcolm Marshall: So it's me and my business partner.

Austin Gray: What roles did you bring to the table, and what roles did your business partner bring to the table? And what were some of the first things you guys implemented to help jumpstart that process?

Malcolm Marshall: I was still at Cellucor, and I was primarily working on the business in the evenings a lot—probably 30 to 40 hours a week on marketing-type tasks, right? Website, SEO, Facebook advertising, mailouts, and the other execution that we were trying to take care of on the marketing side. We also had a guy that was going door-to-door in those markets that we were targeting. My business partner was in the operations, and he was learning the business, but the first thing he did was hire somebody—right? He hired somebody, tried to train them on cleaning a swimming pool so that he could focus on working on the business. But that first employee quit after three weeks and tried to steal all of our service customers, which he somewhat succeeded at—he got like four. Props to him. After a month, he stopped showing up, and they called us back.

But, you know, step one was really a lot of BMBs (door-to-door visits). We tried to execute this marketing plan. I was executing some marketing behind the scenes and really just driving some things that I thought the business needed for a foundation. My business partner was operating, which was supposed to be from a managerial perspective. But from the very beginning, we found ourselves consistently having to jump in the business and participate in the operations. Up until really the last year and a half—maybe two years—we've really kind of stabilized the operations so that we're not occasionally getting pulled into the field and things like that. But, you know, step one was to try to grow and to try to put that management structure in place; it just didn't go as we thought it was going to go.

Austin Gray: So tell us, what happens next? What happens after that?

Malcolm Marshall: We just keep driving, right? Keep driving, keep trying to hire, find some people to put into place. They're turning over occasionally, which continues to pull us into the field, but we do start to grow the route because of the aggressive marketing plan. It was more expensive than we ever wanted it to be, but because of the aggressive marketing plan and the door-to-door primarily, we do start to grow the route.

We grow from 43 accounts to— I think we ended that year with about 80 accounts. Then the next year, we're able to double that again. We're still—Michael was the only one working in the business full-time—my business partner. So he's still getting pulled into the operations, which is, you know, okay at that point. But what we didn't want him doing was going out and running a route of, you know, 50 pools in a week when he should have been managing, making sure the phones were answered, stuff like that.

What really helped us grow was that about two years in, we decided—where we were primarily operating in Austin only—we decided to move the operation primarily to Belton and Temple, which is an hour north of Austin. There was just far less competition, and we also had some connections around here because this is where I'm from.

We were quickly able to kind of build a route here, and then once we started building that route and doing a good job at it, it got very easy to grow in this market. That’s when we really saw things take off—when we kind of made that geographical shift—and really started growing two markets simultaneously: we're still growing Austin and growing Temple-Belton. Instead of adding 40 accounts next year, maybe we added 140. Then the next year, we added 140. Then we were able to acquire and add some routes. So we were going from 40 to 80 to 180 to 300 to 400. It just got to where we were growing regularly at 100-plus accounts.

Austin Gray: What's the best way you've found to keep the service technicians up with the growth?

Malcolm Marshall: We've always hired off Indeed, which—Austin, give me just a second; I've got to plug my computer in—I forgot to do that.

Austin Gray: Yeah, no worries!

Malcolm Marshall: Yeah, so we've always hired off Indeed. Post a job listing, screen as many that come in, and if we need one, we hire three. That's the basic formula.

We've obviously taken referrals—right? If an employee had a friend who wanted to come on, we found ourselves actually in trouble because of that, where we’ve taken on three guys at once. So we've got, you know, the first employee who talks to three of his friends; they come on. After a year, they all decide that they want to go do something else.

We found that that's actually can be effective, but only effective in doses. The main way is we always go to Indeed. We pay well; we have benefits. You know, as a service tech, you're getting your health insurance paid for, participating in a 401(k) plan. We have a short-term savings account. We have more benefits than most companies, and the reason is that we're trying to attract and retain people. But, you know, during certain periods, we've experienced high turnover—particularly during COVID.

Just like everybody else, you know, we were a pool service that was deemed essential, and so there were a lot of people staying home while our people were having to come to work. The result of that was that we experienced more turnover than we would have liked, and it took a couple of years to really stabilize the business.

What we really found is that we saw our labor force start to stabilize at the beginning of 2023. So all through COVID, things were turning over. Before that, from maybe 2018 to 2020, we had a pretty stable workforce. The first three years, we didn't, but really in the last year, we took a big culture focus. We made sure that not only did we have the right pay and the right benefits, but that we were really engaging the team, talking about direction where the company was going, making sure we were only hiring for our core values, continuously communicating vision. Through that, we've seen a major stabilization of the workforce.

So part of it was kind of timing, part of it was great managers, and part of it was this culture focus. But we've always hired off of Indeed.

Austin Gray: How successful has that been? Has it really been effective at retaining people?

Malcolm Marshall: Yes, so we've always hired off Indeed, you know.

Austin Gray: What do you pay well for those service techs? What are they starting at?

Malcolm Marshall: They make in the low 40s per year. So a lot of them, they make about $20 an hour. If you take that average 40-hour week, we pay a salary. Most of them find themselves not working 40 hours a week; they're more like 35. There are some weeks where it gets a little worse, and they work a little extra, primarily around spring or fall when there's either pollen falling or leaves falling. But for the most part, we pay a salary, and it amounts to $20 an hour unless you consider the fact that they're not usually putting in 40 hours a week.

Austin Gray: Got it. And how many pools can one service technician service?

Malcolm Marshall: They do about 10 a day. Some companies will put their guys on more. You can definitely do more! When Michael and I used to service, we would do 12 to 14 a day. But what we find with our team members is that about 10 is the sweet spot.

Austin Gray: What other costs do you have associated with—so if you take 10 a day, 50 a week—

Malcolm Marshall: Yes, 50 a week.

Austin Gray: And they're hitting each one weekly, so that one person is responsible for roughly 50 pools, right?

Malcolm Marshall: That's right, and they do the same 50 pools every single week—ideally!

Austin Gray: Ideally, yeah. What other costs do you have associated with that? What sorts of trucks do you have? Do you buy your trucks? Do you lease your trucks?

Malcolm Marshall: We buy our trucks. All our trucks are Chevy Colorado. We wrap them. It's about $30,000 a truck. It used to be $24,000 two years ago. Now they’re $30,000 to $35,000. We wrap the trucks for about $3,000. The guys need equipment—not much. A brush, pole, net usually costs about $1,500 to outfit a truck. That includes some parts that we want them to have on the truck. The initial chemicals and equipment. Everybody has a cell phone. Fuel is probably one of our bigger expenses.

We have a custom piece of software that we have to maintain. It's a piece of software that we built and really was part of that overall initial marketing strategy. The software has been successful; the marketing strategy wasn't super successful, but we built some custom software to help us solve some of the problems we were seeing in the pool industry, primarily around communication. We have to keep that maintained. But really, if we kind of look at that as an expense associated with headcount, we can divvy that cost up as a cost driver behind headcount.

So, there's software expense, fuel for the truck, equipment, cell phone—not too much more.

Austin Gray: What are your gross margins on the service?

Malcolm Marshall: Deducting labor and chemical expenses, we're probably at about 40%.

Austin Gray: And then how long can you run that vehicle? How long do you get out of that truck that you buy?

Malcolm Marshall: We have some of them that are paid off. The first five or six that we bought were paid off over five-year notes. So we’re getting five years out of them at a minimum. I don't know how many years we'll get out of them because we're not old enough to know that yet, but we're getting at least five years.

But the strategy of buying the trucks early on—you’re replacing the bet that you can get enough out of those to where it makes sense to buy that.

Austin Gray: Yeah, that was part of it.

Malcolm Marshall: Another thing is when you're sticking a $3,000 wrap on it, it starts to make more sense to run it a little bit longer than your standard three-year lease. So that was part of the decision for that. Every time I've looked at the numbers and tried to make sense out of leasing versus buying, I never got there. It's been a while since I've looked at them, but we always thought we could get more than three years out of them and continue to use that wrap as an asset to market the business. So we've just always decided to buy.

Austin Gray: Can you hear me? I think we lost some connection there.

Malcolm Marshall: Yeah, I got you.

Austin Gray: Cool, yeah, I think we're good now. That software—did you guys build custom software specifically for your use, or did you build software and do you sell that as a SaaS product to other pool companies?

Malcolm Marshall: We built it specifically for us. We had it built the first year that we started. We used a firm that marketed themselves out of Austin and Houston. They sold here and kicked everything to India. So it was a little bit of a challenge to get it built—lots of 11 PM phone calls where we’re going over a piece of software that really, although we had wireframed it and had a good understanding of what we thought we were getting, didn’t necessarily materialize.

It took a lot longer than we expected, but we battled through it. We actually came out with a really good piece of software. Guys who come over from different companies always comment that our software works better than their kind of more industry-wide software, which always blows my mind because it was such a battle.

What we ran into at this point is that the initial build was not done well, so now we're at this point where we really need to rebuild it, which is going to cost $150,000 to $200,000. So there have been some challenges with it, but it was a piece of software made just for us.

Austin Gray: Why custom build it versus using something out of the box?

Malcolm Marshall: There weren't a lot of great options at the time, and there definitely wasn't anything that was trying to solve some of the problems that we were trying to solve, primarily around communication with the customer.

Some of those features that we were trying to get really didn't materialize. But ours does kind of notify the customer multiple times before we show up, makes sure they get automatic reports. We never did build out a customer-facing portal where they could log in and get information, but that actually would be a less expensive add at this point compared to the rebuild that we need to do.

I think overall it opens up some avenues and some opportunities for the business. Let's say we ever wanted to license or franchise or anything like that—like, having a custom piece of software would put us at an advantage in doing those things.

Austin Gray: How far are you away from making that decision whether or not you license or franchise?

Malcolm Marshall: We're pretty far at this point. When we started, everything was an option. At this point, we're a little more focused—particularly just construction has been successful, and we think there's a long runway there.

The market just north of Austin—Georgetown, Leander—is growing really, really fast, and it's a market that we really have just kind of dipped our toe in. We think that right now the focus is on growing in the market that we're in and really moving one market south, 45 minutes from us, and trying to capitalize on the growth.

Austin Gray: Are you able to service that out of your existing office, or do you have to think about building a complete new location—a centralized place for people to meet and people to office out of? How do you think about that?

Malcolm Marshall: We could service that market out of our existing office. The challenge is that during the pool design process, you have multiple meetings with the client. So asking them to drive, you know, 45 minutes to an hour and 15 minutes to our office is a bit of a disadvantage compared to local builders down there.

That would be the only office that we might have to add—a meeting room, a showroom for that pool design sales process.

Austin Gray: I have so many questions associated with this. For your construction process, what does that team look like? Like you mentioned customers meeting face-to-face with somebody—who handles that role? What does that look like?

Malcolm Marshall: The kickoff to a pool is with the design process. So somebody picks up the phone, they call, they say they want a pool, and they get in contact with a designer right away. That designer is going out and meeting them on-site, looking at their backyard, talking about what they want in their backyard and in their pool.

They're also shooting grade, making sure we understand the elevations, and then they're coming back and, based on that conversation, they're creating a design—a 2D and 3D plan—that we can show to the customer to make sure that we're nailing their vision.

So we call the first meeting the "on-site meeting." The second one is the design meeting. The design meeting happens in our office. We don't send those plans out electronically. We've put in a lot of work at that point, so we try to hold on to those, so they don't get quickly pushed out to the lowest bidder who doesn't have to put in the same front-end work.

From that design meeting, there are typically some updates in the design, we quote it, and send that quote out to them electronically. That's kind of the sales process.

Austin Gray: Are all of your construction field crew in-house employees, or do you have subcontractors in place for the actual building?

Malcolm Marshall: The only thing that we have in-house is project managers. We have four project managers on our team. We built about 120 pools last year, so each one is put on about 30 pools a year. Some companies will put project managers on double that. But anything that's being done in the field is subcontracted.

We have some—120 pools, we’re one of the bigger builders in the area, and we have some really good relationships with our subcontractors. A pool is excavation, steel, plumbing, gunite, coping, deck, electric, plaster—it's about eight subs. Most of the subs that we work with, we’re their biggest client, so they feel almost like a part of the team.

Austin Gray: So you don’t have one specific sub who's like, "Hey man, I focus on—like, I have everything to do a pool soup to nuts?" You have to manage a pool build—not completely different than managing a construction build for a home. You have eight different subcontractors for the different processes associated with the pool itself.

Malcolm Marshall: Yeah! So our excavation, steel, and plumbing is all one company, actually. A lot of builders have it that way, so that's a big advantage because those are your first three subcontractors—up until the gunite shell or the concrete shell. Up until having that shell, you're really working with just two subcontractors. But after that, it’s pretty broken-up, pretty segmented.

Austin Gray: That’s interesting—excavation, steel, and plumbing are managed by one subcontractor?

Malcolm Marshall: Yes, that's right! It's a specialized thing to do. So in our situation, it's a father-son team: the son handles the excavation and the steel, and the father does the plumbing.

It has to be done well! There are others who offer it out there who try to do it all and don’t do it well. But then there are a handful of guys who can do it all, and they do it well every time.

A lot of these guys are—you know, the guy who’s out there, the excavator, doesn't have the same guys who are excavating also doing the steel—right? He’s running different crews and just finding the skilled labor and basically brokering it. He’s just charging me an extra three or four dollars a linear foot to do it and sends them out there, but that’s not the one you currently use, right?

That is—it’s the one I currently use. Yeah, he’s more or less brokering it, but, you know, from an ease of operations and just speed, to have him charge me a few extra dollars a foot is absolutely worth it.

Austin Gray: Sure, and have him pretty much manage the subcontractors.

Malcolm Marshall: Yes, for sure.

Austin Gray: Now, I guess the only reason I bring that up is like in the excavation industry, like it seems like, and maybe it’s just because we don’t have a lot of pools here in Colorado—or not as many as you guys do down there—that seems just like a very specialized thing to focus in. Like, if you’ve got an excavator, the likelihood of you being a good plumber—unless you’re a septic installer—is probably slim, right?

Malcolm Marshall: Yeah!

Austin Gray: I just found that interesting that the one can manage those three phases of the pool.

So then take us through the next phase after that. You have the gunite shell—that's a one-day process. They go in there and they shoot it from a truck into the shell at a high PSI, high pressure, so it basically sticks and they can cut it and form it.

Malcolm Marshall: Right. After that, you're letting it cure for a little bit of time. Some people will tell you 28 days. If you look at a cure chart, you'll see that a week is pretty sufficient.

Austin Gray: Got it.

Malcolm Marshall: After that, we're sending in a mason, and that mason’s doing the tile on the waterline and the coping, which is the stone band between the deck that basically sits on the top of the concrete shell. From there, kind of simultaneous to this, we’ll have a couple of other things going on.

So we set our equipment during the plumbing phase; we have a concrete pad poured, and we set our pool equipment. We’re getting our electrician in anytime during that phase. The electrical is done either right after gunite shell or before plaster.

Austin Gray: Then we pour—almost exclusively pour concrete decks. Depending on where you're at in the country, a lot of people do pavers. We don’t do a lot of pavers; we mainly pour concrete decks.

Malcolm Marshall: Exactly! So somebody comes in, does the flat work, and then the final phase—what we like to do is right after that flat work, we bring somebody in that does the cleanup: basically grades the yard, spreads a little topsoil, and puts the fence back up. So when we finish the pool with plaster and fill it up, we're almost done!

So, the final step is to plaster the pool or do the interior finish—plaster, quartz, pebble. The general term would be plaster, but some people just call it pebbling because so many people put a pebble product in the pool. It's basically a cementitious product that they're spraying on the shell and finishing to give it a nice, smoother finish.

Austin Gray: Interesting. Do you guys ever do the stamped concrete around the pool?

Malcolm Marshall: Sometimes—not much. I think it's more our market. Our market is not as affluent as, let's say, Austin or DFW or something like that. Generally, the budgets are just a little lower, and they’re not doing those extras.

I think it's worth noting, though, there's certain parts of the country where, if I was building in DFW, I might use one subcontractor after gunite. So I might only have three subcontractors—one for excavation, steel, plumbing; one for gunite; and then you’ll get companies that can do the flat work, the tile, the coping, and the plaster.

So you were kind of asking about that a while ago. In our area, it’s a little different; it's a little more segmented. There is one provider that kind of does it all; they’re just steep because they’re doing all that for you, and most builders in this area their model is more segmented.

Austin Gray: Gotcha. I'm always interested in the actual construction phases. That's what I grew up doing. My dad owns a stamped concrete business down in Texas—they do a lot of pool decks up in West Texas around Lubbock and whatnot.

Malcolm Marshall: Yeah!

Austin Gray: I always find the construction phase super interesting. Man, this has been fun! You've shared a lot here.

We kind of went down a rabbit hole on the construction side. From the business perspective, what would you share with other people? What are some lessons you've learned through building this business over the last almost decade?

Malcolm Marshall: I think probably the biggest lesson that stands out to me right now is that there were certain points in the business where we decided that maybe growth was more important than sticking with some of the fundamentals that we grew the business on—particularly during COVID.

It just got really frustrating to find people or to have people not show up for no reason or just some of the bitterness. We found ourselves getting away from some of those fundamental values that we had built the business on. Up until that point, we started bringing in just anybody that would work, either to try to keep up or maintain growth. We were constantly chasing.

Last year, we said, “Hey, we’ve gotten away from the fundamentals and the values that we built this business on. Let’s get back to that.” When we got back to it, we saw a major stabilization in the business and a major team buy-in.

So one of the biggest lessons that I learned was just that sometimes you give this idea that establishing that culture is more of a buzzword in business, and you lose sight of the value of it. If I could do it all over again, I would have made sure that we were always focused on values, always focused on vision, always communicating well with the team. That’s brought so much clarity, so much drive, and just unity within our team at this point that I think we could be substantially further along had we not gotten away from that.

Austin Gray: What specifically are those values and that vision that you got away from, and then you’re coming back to?

Malcolm Marshall: We obviously redefined those in the last year and a half, but if we go back to some very early communications between me and my business partner, they were the same then as they are now—they're just phrased a little bit better.

The vision is to be the industry leader in employee happiness and customer satisfaction—ordered that way on purpose! It's focused on our people first, and then through focusing on our people, we believe that they'll drive the customer satisfaction piece. That's what we want to be—that’s the big goal.

I think we kind of talked about that earlier where we ultimately wanted to take the business—to just grow a great business. So it starts with that vision. Our values are trustworthy, team over self, be relentless, and a desire to grow.

I can expand on those if you want, but basically, we're looking for those qualities within people or the lack thereof when we're building our team.

Austin Gray: And what you're saying is in your hiring process, you're turning people away if they don't fit all of those values or do they have to meet like X amount?

Malcolm Marshall: Yeah, so we operate on EOS, and we use some of the EOS tools that they give us. We talk on plus-plus, minus, or minus. If we find that anyone's a minus, they're not a fit. More than two plus-minuses in certain positions in a managerial position, more than one plus-minus would not be a fit. Obviously, we're looking for all pluses. We use it in hiring, firing, rewarding promotions, annual reviews. It's a focus in all of our people conversations.

Austin Gray: When did you implement EOS?

Malcolm Marshall: We implemented EOS in Q1 of 2023.

Austin Gray: Oh wow, okay, so very recently.

Malcolm Marshall: Yeah, and is it something you wish you would've done earlier?

Malcolm Marshall: Absolutely.

Austin Gray: Wow.

Malcolm Marshall: I don’t think I would ever—I if I were to start a new business tomorrow, we would operate on EOS from the beginning. You know, eight years in, it was a little more—I don't want to say it was difficult, right? But it was a different need at that time. It was more selling it to the team—there was more getting the leadership team on board.

I believe that if you started and consistently operated on EOS from the beginning, it would take away a lot of the headaches that we faced in our first eight years.

Austin Gray: Got it. Along those lines, what are some mistakes you've made that you would go back and either change or just recommend to someone else? Like, "Hey, I tried this; just don't do it this way"?

Malcolm Marshall: A lot of what fixed—made our business operate better with EOS was things that made me operate better. So I did a poor job of communicating with the team. I did a poor job of communicating the vision and direction with the team.

Like I said, we got away from really looking for people with the values that were important to us, and we let some of the principles of the business kind of dilute with making the wrong hires. Those are some of the biggest mistakes that we had going on in the business, and it was just creating a bit of disarray.

I wasn’t telling people, "Here's the plan, here's where we're going, here's the goal for the year, here's the goal for three years." I actually had them—I’m a finance guy, so I create annual financial plans that are how we expect to grow, how we expect cash to grow, and what we need to invest in. I was doing a poor job of communicating that with my team, and if I could go back and change anything, I would have been doing that from day one.

I really probably got away from it in like year three—probably, like 2017 or 2018 in the business. There was just this four-year period where people were guessing. So I would make sure I communicated with my team better. I would make sure they were always aligned on where we were going. I would never allow people to enter the business that don't align with our principles and values. I think those would be my primary things that I would have done differently.

Austin Gray: Okay, that's awesome. Well, thank you so much for sharing here. I really appreciate you being on, Malcolm.

Malcolm Marshall: Yeah man, I enjoyed it! Thanks for having me.

Austin Gray: Is there anything else you'd like to share with our listeners?

Malcolm Marshall: You know, I don't think so.

Austin Gray: Alright, where can people find you online and find more about Poolology?

Malcolm Marshall: If you want to know more about Poolology, you can find us at py.—there's a dash in the middle. We do a lot on social—Facebook, Instagram, TikTok, YouTube, LinkedIn—we're posting regularly one to two times a day. Most of it is video, most of it is more entertainment-based; some of it will add some value if you want to know about pools.

If you want to connect with me, I think the best place to do that is on Twitter. It's about the only social network I really engage with, and I am @MalcolmPools.

Austin Gray: Awesome! Well, thanks so much for being on, Malcolm.

Malcolm Marshall: Yeah, Austin. Thanks for having me! It was fun.

Austin Gray: Cool! Well, there you have it, listeners—Malcolm Marshall with Poolology. Thank you guys so much for listening! If you are enjoying these episodes and you're listening on YouTube, please make sure to like, comment, and subscribe to the episode. If you're listening on Apple or Spotify, would you mind to just give us a like, follow, and share five-star reviews? Five-star reviews are super important for podcasts as well. So if you don't mind taking 30 seconds right now to leave us a quick five-star review, we would greatly appreciate it.

Finally, this episode is brought to you by OWNR OPS. OWNR OPS is simply put, just a resource for service-based business owners. You can learn more at stryker-digital.com (that's OWNRops.com).

We'll see you guys in the next one.