In this episode, John and Jack discuss well drilling and do a business breakdown. Jack reveals that his friend earned $8.4 million last year from drilling wells. They underscore the significant financial investment, specific licensing requirements, and mechanical expertise needed to establish a well drilling company. Despite these obstacles, they remain optimistic about the potential for future business opportunities in the industry.
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Check out Owned and Operated Weekly Insights: a newsletter where John discusses topics ranging from recruiting and marketing to the growth of your home service business. Subscribe to the newsletter here.
John Wilson is hosting a workshop in March! Join us March 19th-21st for the Breaking $5 Million Workshop! It’s specifically crafted to help you take your home service business to the next level. Seats are limited and tickets are selling fast. You can check out the agenda and get all the details right here!
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In this episode, John and Jack discuss well drilling and do a business breakdown. Jack reveals that his friend earned $8.4 million last year from drilling wells. They underscore the significant financial investment, specific licensing requirements, and mechanical expertise needed to establish a well drilling company. Despite these obstacles, they remain optimistic about the potential for future business opportunities in the industry.
Episode Hosts:
Special thanks to our sponsor: Service Scalers: Looking to scale your home service business? Service Scalers is a digital marketing agency that drives success in PPC and LSA. Discover more growth strategies by visiting Service Scalers.
Check out Owned and Operated Weekly Insights: a newsletter where John discusses topics ranging from recruiting and marketing to the growth of your home service business. Subscribe to the newsletter here.
John Wilson is hosting a workshop in March! Join us March 19th-21st for the Breaking $5 Million Workshop! It’s specifically crafted to help you take your home service business to the next level. Seats are limited and tickets are selling fast. You can check out the agenda and get all the details right here!
Contact us:
Youtube: @OwnedandOperatedPodcast
John Wilson: I'm John Wilson. Welcome to Owned and Operated. Twice a week, we talk about home service businesses, and if you're a home service entrepreneur, then this is going to be the show for you. We talk about our own business in residential plumbing, HVAC, and electric, and we also talk about business models that we just find interesting.
Let's get into it.
Jack Carr: This episode is sponsored by Home Service Engine. So this is a company that I would highly recommend if you are thinking about getting onto the Service Titan, or if you're like me and you have to rebuild your Service Titan every few months because you set it up incorrectly. So this is my go to team for any Service Titan needs, and I really wish I had them from the start.
Give them a call today and start utilizing Service Titan to its fullest potential.
John Wilson: Thanks for tuning in to Owned and Operated. Today on the show, Jack and I talk about well drilling. Well drilling has been a business that's fascinated me for a while because it's been adjacent to plumbing and we've watched these guys come in and get big average tickets and apparently Jack had the same obsession.
So he brought a really great business that we broke down and I think you'll be surprised by the numbers that come off of this thing. Thanks for tuning in.
Welcome back to Owned and Operated.
Jack Carr: Welcome back. Hey, John.
John Wilson: What's up, Jack? Dude, how was your week?
Jack Carr: It's good. If you are watching on YouTube, you can see my wonderful picture behind us of the emus. This is now going to be part of the studio. Because I get a surprisingly a lot of questions about emu farming. But my week was, it's all right, man. It's been a weird week. It's the first of the month, so a bunch of payments came out of the account, SBA loans, everything came out.
We had a shit ton, excuse the language, but a shit ton of AR that for whatever reason just didn't get collected and we're crunched a little bit right now. It's the first time in the last two years, like I've had ups and downs, but it's the first time in the last two years that I'm going, ah. Like I have the money, it's just not in the account.
Like I don't have the money. It's, It's there, but it's not there. So the first like feeling of actually hey, I need cash to make payroll this Friday, but I called up some of the AR and checks should be coming in, so we should be fine. But note to everyone, stay on top of your AR.
John Wilson: Yeah. 100%. We're gonna start getting more tactical with some of these episodes, and like AR management would be a good one.
Jack Carr: It's never been a problem for me. Like we've always been on top of it. We just, because of the snow, like the snow last week ending and being super busy, we pushed one or two big projects that we paid all the materials for, but didn't collect. We had the half up front, but we still are sitting on 40, 000 in.
Just uncollected, unfinished project because we need to put some, thermostats on just ridiculous stuff. But yeah, we should dig into it, it becomes super important in growth.
John Wilson: I mean, that. cash has to come from somewhere to keep growing.
Jack Carr: but besides that we are moving into due diligence on two companies at the moment, one 2 million HVAC company and one 2 million plumbing company.
So my life is going to be hell in about a month or two months. So hopefully I can close on just one before our zero to 5 million conference and one after.
John Wilson: Yeah, that sounds like fun.
Jack Carr: Are you being facetious?
John Wilson: I don't know. That's a double. That sounds like fun.
Jack Carr: Sweet. Hey, how was your week?
John Wilson: Week was good. I was telling our managers today, and talking about it, but we're recording this on February 7th.
And February is the bane of my existence. It has been the bane of my existence for my entire career. I don't think it's gonna go away. And this February is like ridiculous. It was 60 degrees today in Ohio, six zero
Jack Carr: I was just gonna ask. I was actually Googling. I muted myself to Google. What's the weather like there? Because it is 66 here. I was like, am I going to do maintenances right now?
Like, what
John Wilson: I know. I like, I thought I was going to change into shorts. Yeah, crazy. We have been very blessed this year we did not knock this out of the park. So I don't want anyone to walk away thinking we did. We were intentional about scheduling our maintenance visits for heating and AC season. And we saved as much as we possibly could for right now.
Jack Carr: So you're doing heating maintenances right now?
John Wilson: We're still wrapping up our heating maintenances. When the club grows big enough, it's no longer a fall tune up and a spring tune up. Like the membership base is literally too large to do it. That's where we're at. We don't even have that big of a membership base, but we can't do thousands of service calls in the month of October for HVAC.
We just can't do it. And that problem is only getting worse the bigger we go. So what we do now is we do winter tune up and not winter tune up, basically. So you will be somewhere in the six months of October to March, and you will be somewhere between April and September. And that worked really well.
We're sitting at the beginning of February, and we have tune ups fully through the end of March for heating. So I still have another 415 or so tune ups to run for heating. And then we're going to immediately turn around and start running AC tune ups. Which is April is still like a tough time for us.
So we are cruising, which is kind of wild in HVAC. We really planned for this. We really focused on it. We made sure we hit it. We got intentional with scheduling. And because of that, despite it being 60 some degrees in February like we're doing good,
Jack Carr: That's awesome.
John Wilson: HVAC is doing good. I don't know, man.
Jack Carr: So that we just hired our full time outbounder for that purpose and we're like struggling to create scripts and everything around that
John Wilson: I should add that is what made it happen is the outbounding team like without that we wouldn't be anywhere near as successful as we are currently being the outbound team changed the business.
Jack Carr: So we have a little over a thousand I think it's like a thousand two hundred members So we've done pretty well on memberships, but we do terrible. We used to just send out text messages, blanket text messages to all the team to schedule whenever you guys feel like call in and you get a very low response rate.
And so we have a thousand members that we are actively going to start calling starting Monday. That's my first script. I'm going to load those
John Wilson: Well, yeah, you're going to hit it then, like you're going to have a smooth run through March.
Yeah. That's awesome dude.
Jack Carr: So that should be enough to keep us busy. And then I know we talk about on here. I'm not a huge fan of working for property management companies, but we also do work for one kind of property management company.
That's legacied over for us. And we just hit them up. We've done in times like these last year, we'd call them up and say, Hey, you have 130 clean in tunes or 139 each, and we go and do a hundred clean in tunes and it keeps the team busy. It's not a huge moneymaker, but we do find, some issues and that generally drives some service work on the backend.
It's better than sitting around, man, better than sitting around.
John Wilson: Yep. A hundred percent. Yeah, so things are going good. Like revenue is not hitting target. We're about 20 grand short a day of where we should be. So we're doing like roughly 80 a day.
Jack Carr: Oh, I should 85,000 a day
John Wilson: Dude, I've got 140 people on payroll
Jack Carr: I know you do. I know it's a, different,
it just, it sounds funny.
Yeah. Like we should be doing a hundred.
Yeah.
John Wilson: So yeah, so we're not totally hitting like revenue goal, but so far February is moving which is fun.
Jack Carr: Yeah. Sweet man. I know we talked about this offline, but we are going to do a business model deep dive today. I'm very excited.
John Wilson: Yeah.
Jack Carr: So I brought this one little history. So when I got outta college in California. In the early two thousand and tens. I'm aging myself for everyone out there. I'm giving you the age.
But with that, California was in the worst drought that has ever been in, for seven years, eight years. And water in California has always been a thing. So I actually coming out of college. Almost went in to well drilling. And so I want to deep dive a well drilling company. Me and my buddy, we were going to raise 300, 000 by an old school drilling rig and go drill wells all over California.
That was our goal. That's what we were going to do. It fell through last minute and he ended up still going and doing it. He had an MBA and he was an entry level well driller for three years with an MBA. So sweet use of your MBA. He loved it. I loved it at the time and so he still went ahead and did it and I went off into facilities maintenance.
That being said, I love these kind of companies, right? It's the same as the septic company. It's the same as all these companies that are very heavy on asset. The difference though is it's also heavy on like skilled labor. So you need a 300, 000 rig, but you also need this team of experienced well drillers.
That are willing to work strange hours and long hours and kind of dirty jobs. I would feel like it's a lot similar to the oil and gas industry.
John Wilson: Yeah, I think so. And that's probably where they get people. That's probably like a somewhat interchangeable talent pool but yeah well, drilling is interesting. So we've had a lot of exposure to well drilling over the years, and I've always loved the business because it's ridiculously necessary.
I like businesses that you have to have it like you have to have this thing and Well drilling is water for the home or water for the business, but usually for the home Like we'll go to a no water Like, hey, I got no water the well pump needs replaced, or the pipe is broken, or, you know, could be any number of things, but what it could also be is you need to drill a new well, which is crazy, so maybe the pump is stuck, and the pump is 80 feet down, and you can't get the thing out so you have to drill like, a new casing down in, or maybe it's collapsed yeah, so it's this funny scenario where you don't really think about it, and then suddenly you just don't have water.
Which makes life really complicated, right? If you don't have heat you can get space heaters and like, dress warm. It's not gonna be great, but like, you can survive it. But like, not having water is much more complicated. So, It's this highly urgent, ridiculously expensive and highly important job.
We've always been attracted to it, because every time we run into that scenario, It's like pulling teeth to get somebody out to go do it. There's a huge moat because of the assets required to do it. The talent required to do it. And the tickets are dumb for like three hours of work. It's 10 grand or something like that.
It's just outrageous.
Jack Carr: And you're just speaking about, I mean, it's kind of the same in any service industry that's residential too. There's a whole commercial side where you're drilling these, 800, 1000 foot deep holes with, you know, freaking, I'm holding my arms out right now with five foot bores.
The price on that, just one of those is hundreds of thousands of dollars to drill. The rigs get more expensive. You're not drilling with that 300k rig anymore. But the tickets are there. And to be honest that, I mean, Google well drilling in your area, there's not very many companies.
I remember when, back when I just started Twitter, I was searching for a home, a well drilling company, a residential one. And I actually went through the government, like the city of Boise's website, and I looked up all the people with well drilling licenses and I was cold calling them. I almost had one.
But he ended up is like, ah, I'm just going to pass it on to my sons. Very interesting. There weren't many. It was enough that I could cold call in two days.
John Wilson: Yeah. There's only a couple locally for us. But the demand there's demand. There's a lot of demand. And it's the same as like pulling water lines. So there's this old pulling water line thing where this company just used to replace water lines. So anything touching water, it's going to be urgent.
If a home doesn't have water, it's urgent because there's no easy solution to not having water.
Jack Carr: Yep. you need water, you need to drink it. You need to flush toilets. You gotta have water. And like any other solution isn't going to be great because the longer the buyer postpones the decision on what they're going to do about water is just costing them more money because they're probably in a hotel.
John Wilson: So like every night that they don't decide is another 500 and then another 500. It's this like ticking clock of dollars, just like slowly ramping up. Whereas replacing water lines or drilling wells is a quick affair. Okay. Let's dive into the model. I'm here for it.
I'm fascinated.
Jack Carr: So this is my buddy. So like I said I got really into well drilling for a long time. It was one of my entrepreneurial pathways that I truly thought was going to get. Which is the way we're going to go. So he was in central Oregon. A friend of a friend I reached out to him, I said, Hey, gimme some quick numbers.
And he said last year, so he's been doing this for six years now. Last year he did $8.4 million in wells.
John Wilson: Stop it and he launched it from zero?
Jack Carr: He launched it from zero. But you have to realize so Central Oregon is like Bend, Oregon and those kind of areas, it's desert and. they saw a huge influx of people into that area in that 2020 COVID situation of people leaving California to go live out in the countryside and own a little mini farm or homestead.
Guess what? All of those are on Wells. So he's grown it about 2 million per year and did 8. 4 last year at 56. 6, 57 percent margins.
John Wilson: Okay. I was like which margin? Okay, that's obviously good.
Jack Carr: Crazy.
John Wilson: So what's above the line on that? What's labor percentage? Do we know?
Jack Carr: I don't think I know labor percentage exactly. Let me see.
John Wilson: So like they're dealing with pipes, they're dealing with casing
Jack Carr: That's what I was going to say. They're buying casing. They're buying the pump
John Wilson: Okay, so it's probably like a 20 20, so you probably have 20 percent materials, 20 percent labor, and maybe a couple percent of like permits or something.
Jack Carr: Yeah, I mean, there's really not much into it cause it's like a septic, right? It's mostly your labor. But you get the guys that are there, they're on hourly. There's not much to that. I guess they are doing casing. So that's definitely part of it.
It's definitely a decent percentage and then maintenance of the vehicles goes into expense. So that's what that looks like. And then they start driving into operating expenses, which came in at about two and a half million. Totaling down. So they made 4 million give or take on gross margin and two and a half million. So they cleared 15 to 20%. EBITDA.
John Wilson: That is ridiculous. Well drilling septic. I'm sure there's others, but this is one of those fun businesses where the more rural you are, the better. That's just like where the customers are, because I think most people, especially plumbing, HVAC, and electric, because the tickets are smaller than well. You know, in plumbing, HVAC and electric, like you want dense, you want density cause you're going to run more calls.
You're going to do this thing. But in drilling, you only need like a couple of calls a week
Jack Carr: Do you want to know what that is per well? They do about a 58, 000 average ticket.
John Wilson: Oh my gosh.
Jack Carr: Could you imagine? Every HVAC ticket is 60, 000.
John Wilson: Yeah.
Jack Carr: Absolutely nuts ,
John Wilson: So is that mainly new construction? It's a lot of like new projects. How much of that's retrofit wells?
Jack Carr: I mean, It doesn't matter because when you're drilling out a well to put in a new well I don't think they do much as you were saying like fixing casing pulling well pump I know that some do that was between then actually drilling out 120 wells.
John Wilson: Yeah. No, what I'm wondering, reason I think it matters is lead gen. Are they working with a few builders that toss them all these wells, or are they like, getting leads to go run wells?
Jack Carr: I think that it's a mix, right? So it's definitely they work with builders. I know that for sure, but mostly then that's for the few new construction projects they have, it's one of those businesses, like I said, that has more demand than supply of contractors who are doing it.
It's an interesting thing. I think that people actually work really hard to seek them out. So I was talking to him about paid. He's like, we don't really do paid. We have a Facebook, we have a Google. We do a little bit of ad spend their word of mouth. Because they deal with people like yourself plumbing companies who come out there that will need to drill a new well.
And most of the time, especially in central Oregon, I think it's water table dropping. And so they're digging, pulling out the 80 foot well from, 1960 and they're putting in 150 foot well today. So wild numbers. They said they did that between, let me see what he said. I'm more interested like revenue per truck, right?
John Wilson: Yeah, how many staff members are there? This is going to be depressing
It's like four,
Jack Carr: asked him the question about marketing and he said it's really modest. They do a little bit of internet advertising, but it's all word of mouth. Some realtors they still do a placement in a phone book. Interesting. Listen to this. They have three competitors in a hundred mile radius.
John Wilson: I mean, locally there's like two for me and there are a lot of wells, like there's a lot of rural there's just not much yeah,
Jack Carr: and so that was done with 14 full time employees,
John Wilson: Jesus Christ
Jack Carr: That's 571,000 almost 600, 000 per employee.
John Wilson: Per employee, yeah, including call takers
Jack Carr: Yeah. They don't really have a call taker. I think it's his wife cause there are small welds or the company this isn't even a giant one, but it's his wife who does it takes the calls. Cause it's not like a home service company where you're getting 7000 calls a day.
It's really two or three come in a day, but when you're looking at it, a well to drill takes maybe a day, maybe a two days to do. So you might get those two calls on Monday and you're booked out for the week.
John Wilson: Yeah. Oh my God. That's wild. I have to like recheck my pricing. Now I'm fascinated because that's so different from what I remember it costing. So I'm like, is that market dependent?
Jack Carr: That's what I was going to say. My guess is it's market dependent because here in Tennessee, we don't have a water issue, right? There's never been a water issue that I've known of here since I've lived here and that's wonderful.
John Wilson: What does water issue mean? Everything is on city or there's just no dropping water
Jack Carr: Like nobody talks about water. There's no dropping water table. It rains constantly. think like Bakersfield, California, where they're growing thousands of acres, thousands, hundreds of thousands of acres of almonds and using all that water that's in that basin, that water table is dropping feet per year.
And so you're sitting over there with your little well, try to pump water to your house. Newsflash the orchard pumped it all out, the last six years. And now yeah, get any water anymore.
John Wilson: If you're a home service entrepreneur that's just starting out, or is early on in the journey, and you haven't broken the five million dollar revenue mark, we've got an event for you. This spring in Cleveland, March 19th to the 21st, we're hosting an event at my office. It's going to be awesome. Honestly, some of the most impactful visits of my career have been visits to companies that were larger than we were, that we could take lessons from, and see how they're doing stuff.
Like get a behind the scenes look, how are they structuring warehouse? How are they thinking about call center? Can I talk to their managers? Can I understand what their KPIs are? We're going to dive into all that stuff. We are here to help people get above 5 million in revenue. So join us in Akron, Ohio, March 19th to the 21st for a breaking 5 million event.
Love to see you there. Details are owned and operated dot com.
I'm one of those doomers that like, I think the whole Sunbelt and like California, Arizona, Florida, like ridiculous water problems that people seem to be refusing to accept and like they're still building more and more And it's guys, you don't have water.
Like you literally don't have water. And what are you going to do with 9 million people in Phoenix when you don't have water?
Jack Carr: We had to drill 10 different boreholes on the property, on the wineries in Napa to try and find water.
John Wilson: Yeah.
Jack Carr: We brought in people who do the switches
John Wilson: It's like finding oil.
This is insane. And it's like, what do you do when you don't have water? And I agree. Like water's never been an issue in Ohio, but that's because I'm like 30 miles from the great freaking lakes. Like water will never be an issue in Ohio.
Jack Carr: Put it this way. We had the option and this is commercial water. This is for the winery, right? But the wineries are on the country, so it's not a significantly different other than wineries use high amounts of water. But that being said still we had two options. We had option one is we could do a pipeline to a known water location through two people's property and pay them.
I think it was like ungodly amounts of money to rip up vineyards and put in a water line or try and bore 10 holes. We bored 10 holes and we got six gallons per minute on the last hole. And that was a win six GPM and that's garbage well.
That's insanity.
And so that, we're obviously talking about this while California supposedly is flooding, which is extremely ironic, but at least I want to put it in a time and a place over the last few years, it has been a drought area
John Wilson: Oh yeah, like we saw Lake Mead last summer, and it's insane. I don't even know how many feet Lake Mead's dropped over the past decade. Yeah, but it's been crazy, and it's, like, we're using up all the water and we went and stayed in Phoenix for a couple weeks last year And it was honestly terrifying I have like four or five different stories of all these like south states that i've been to Florida was one of them where the aquifers like getting drained out No one seems to acknowledge that they just keep building houses Like I get growing tax revenue, but what do you do when there's no water?
Phoenix makes zero sense to me. Like you're in a fucking desert. Like why are we attempting work? This is nonsensical that we're trying to make this the fastest growing thing. It's just what a waste of resources. I just don't get it. I really just don't get it.
Jack Carr: Yeah, Boise was the same. So it's kind of the whole west coast. It's at least, I don't know too much about Florida, but it was all the intermountain west of Montana, Wyoming, Boise, Arizona, Colorado, Utah. We saw this giant drought. And so what was great was, and you can see here with my buddy's company, is everything in well drilling blew up because it was a perfect storm of, Hey, there's no more water. People pumping more corporations are pumping more and then we need new wells, water tables lower, than it was 60 years ago.
John Wilson: Florida is 30 feet lower than it was 40 years ago. g certification in Florida. Two years ago and like a part of it was diving into these like water pits basically, which is the aquifer and so we jumped into these pits and there was all these like holes in the ground where it used to be supported by the aquifer, but the aquifer dropped 30 feet in the last couple decades.
So now, like the water is just 40 feet down there and like, it's just a giant hole in the ground because there's no more water supporting it. Like, It's just insane. It's crazy. So yeah, I'm definitely one of the doomers. That's just like people are going to move towards water at some point.
No one thinks about where water comes from. They just don't think about it.
It's always going to be there. It's not always going to be there.
Jack Carr: It's not. So the talk about a moat and business sustainability. I can't pull this picture up all the way, but check this out and screen share. So I checked in Bakersfield subsidence can you see this?
John Wilson: Yeah.
Jack Carr: So it's a picture of a telephone pole, a normal sized telephone pole.
And you can see where the land was in 1925, 1955, and 1977. And it's over that same what, 40 feet? Same idea.
John Wilson: So what does that mean where the land was?
Jack Carr: There's a thing of water right here. And as the water gets pulled out of the ground, the land drops, and then you can't, it can't refill either because it's already compacted.
So then you have to drill deeper. pretty wild. But once again, great business, good moat. You
John Wilson: Yeah.
Jack Carr: can't refill those aquifers so
John Wilson: Yeah, you can't that was a whole part of like the plumbing licensure exam and that was really eye opening it was like you're tapping into millions and tens of millions of years of stored water and when you use it that water is like that's it. That was the water that you tapped into.
Like obviously groundwater can refill it, but if it's dried up, it's dried up and it does exactly what you're describing.
Jack Carr: So ground water I think it refills better like in these climates. I don't know what Ohio's like, but Tennessee is really rocky. So when you pull the water out, there's still that space in between the rocks. And the shale and whatever in the Central Valley of California, where that picture was, it's all silt.
So the minute you pull it out and like there's no putting it back in. So anyway, all that to say that's why I love this business. He ran so hard for the last five years and still just went out, his dad was in construction, bought him a truck, paid him back already. And some really good business
John Wilson: Man. Yeah. That is really cool. I can't wait to have an over half a million dollar revenue per employee business. That sounds like sounds pretty good.
Jack Carr: Gonna up them septic prices.
John Wilson: Yeah, I got to have them septic prices pretty hard. Okay. So what's it take to get into well drilling? Walk me through it.
Jack Carr: Great question. Depending where you're at the state, but generally there's a license of some sort and I have never seen a state That doesn't have, it's like a four year master well drillers license. Like you have to actually really get into it. And so that's why I was giving my buddy with the MBA a hard time where he went out and actually did it as a well driller and worked his way up to the company, but it was because he wanted to own his own well drilling company.
And so you need to go to school, which you can knock off a few years that way, but really it's experience in the field, especially when you get into those large commercial jobs, which he was trying to go for. And so that's the big thing. And the first thing is you need your license. You need the experience to get the license and it is not easy in any way, shape or form.
The second thing you need is a boatload of cash to buy all the equipment. So you have to buy the rig. You have to buy all the drilling pipe. You have to buy the drilling heads. And then the third and last part to this, which people don't think about is you actually really do need to shop for this one.
So there's a lot of kind of, I'll call it backyard maintenance that goes on. But really what it is it's like, Hey, can you weld
John Wilson: Totally. It's the same with septic. You have to be scrappy. You have to be mechanic y. You have to be able to weld. Yeah. Hundred percent. Septic, excavation, anything big, machinery like, equipment goes down, and you lose a thousand dollars an hour or more. Like more probably in this case. So yeah, you got to figure it out. Cause if you send it to a mechanic, they might have a month long backlog to get that thing.
Jack Carr: Oh, yeah. And then on those drilling heads, it's not like you can pop down to Home Depot or even a local supply house really doesn't have, a giant, rotating rock specific drilling head for when you hit something that you weren't expecting. And so there is a need for some kind of shop to be able to fabricate and fix and weld and do metal work like heavy duty metal work. And then lastly, probably some kind of supports for that, like a forklift. I'm sure you could start a little bit smaller, especially or geographically based. If you were, somewhere where your wells were only 20 feet deep you could probably get away with a cheaper rig and a kind of a little bit like a smaller setup, almost like unseptic, where some people just have those F four fifties that are running with a tank on the back.
Same idea is, you can do a smaller version, but to do the scalable version like this business, you definitely need the kind of the whole shebang right out the gate.
John Wilson: That makes sense. Okay. All right, 500 and like, from everything you said, very difficult to start,
Jack Carr: Very difficult to start
John Wilson: But the juice is worth the squeeze. Ridiculous average ticket, highly urgent projects, they need water low competition, like you might be launching it and there might only be one other company servicing your area. But, 300 grand.
Jack Carr: 300
John Wilson: That's basically a franchise fee. what I like about any of these heavy equipment things is one let's touch on that last sentence. That's basically a franchise fee, but it's equipment which is resaleable so you could get that 300 grand back and it's equipment so you can get just dumb Financing terms on it on equipment. Oh my god. Anybody in the freaking world is gonna lend on a 300, 000 piece of equipment they do that all the time for our septic like and the interest rates are just stupid like my lowest interest rates are equipment, and many of them are still 0%. Like our blended, total debt cost is something like 2.9%, and that's in the beginning of 2024.
Because so much of our equipment is 1% or under.
Jack Carr: Yeah,
John Wilson: They can just reclaim it and sell it like they're not worried about it. Yeah, that is one of the beauties of heavy asset, heavy equipment stuff is it's very easy to get financing. Any bank in the world will lend on heavy equipment stuff at ridiculous rates.
And you can resell it if you need to get out from under it. But it's the same as septic where I remember when we were a smaller plumbing company, We were equipment constrained, so like I didn't have a jetter, so I had to like subcontract jets because jets were 50 grand, and I didn't have a septic truck, so we'd have to bring in a septic pumper, and then we didn't have a well truck, so we'd have to bring in a well driller, so now we've acquired two of those.
Maybe we'll get the third. But assets create moat and you end up doing a bunch of work for your competitors. It actually brings me a lot of joy. Like a lot of our competitors don't have septic trucks. So like they call me. And I love it. Those are my favorite checks to cash. Yeah
Jack Carr: No, it's a good point. And I think you see this in other industries to across industry like asphalt paving, right? It's huge equipment. I'm trying to think of some other big money jobs.
John Wilson: Yeah, it creates this crazy mode. I've voiced my opinion a lot that I don't think it makes any sense to go launch a new HVAC or plumbing company when you can just make a lot more working for somebody. But you could do it relatively easily.
You cannot relatively easily launch a septic company or a well drilling company
Jack Carr: Or crane company.
John Wilson: Or crane company
Jack Carr: I think about cranes a lot. I'm coming to realize something about myself doing these episodes is I'd actually don't dream about septic. I just dream about asset heavy businesses because it's like cranes drilling septic. It's all these just giant machines that I want to own
John Wilson: They're fun. It is fun to own. But it's also super lendable. We're about to sell two septic trucks that are 20 years old. And they're worth 50 grand a piece.
Jack Carr: I believe it.
John Wilson: That's a 20 year old, so I'm gonna get 100 grand of 20 year old vehicles. That's crazy.
Jack Carr: Not to mention the miles on this thing. So it has to be huge. Cause you're driving around all day long.
John Wilson: One of them I think has a million miles on it. literally a million. Because it's been driving around for two decades.
Jack Carr: Yeah,
John Wilson: pumping shit out of the ground.
I believe it. Yeah. awesome. Crazy. Okay. All right, so this was a fascinating business. This was good. Do you yeah, other details on it?
Jack Carr: No. The thing I would just want to say is like buying makes it easier on this one. I would think, if you bought with ownership still in place, that's what I would do. If I did this looking back. I don't know enough to really give it a rating on that side, but five out of 10, just right middle.
John Wilson: This seems like an eight or a nine.
Jack Carr: No, if you buy it the ownership in place, but to start it up eight or nine 100%.
John Wilson: Yeah. But, juice is worth the squeeze.
Jack Carr: Juice is worth the squeeze
John Wilson: Big entry moat, hardly any competitors, ridiculous average ticket.
Jack Carr: If you run a drilling company on the west coast somewhere in the last 10 years tell us if we were right, wrong, what did I miss,
what,
John Wilson: I was just talking to somebody,
Jack Carr: Well driller?
John Wilson: Yeah. Yeah, I literally was. I'll get his information, I'll shoot him a DM and see if he wants to come on the show. But yeah, we were emailing. Like a month ago and he's doing it down in Texas, but I think they do a bunch of service work because they're like advertising direct to consumers.
They're like replacing pumps. I think they're doing some filtration and they're also drilling wells.
Jack Carr: Yeah, cause big thing to point on is so a pump company is not a well drilling company. They're usually two different separate companies. You can obviously grab that second vertical and take the additional, but lot of times what ends up happening is the pump company is just a completely separate, different company.
And the well drilling company is its own. All it does is pop the hole in the ground then pump water out and test. And then someone else comes on and caps it with a pump. And then there's remediation companies that come in and then they pump it with acids and try to get some stuff out if there's a sediment in it or fixed collapsed lines.
They did some geothermal too, he said, but really just mostly water wells. That's all simple.
John Wilson: That's beautiful. All right. This was a solid business breakdown. I've been interested in well, drilling businesses for years yet. Cause I've been surrounded by them and just like watching them like come in say,
Jack Carr: It's the one thing you don't
John Wilson: Man, I got to get me one of those.
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