Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast

#176 - LEGENDS: The Roofing Kingpin: How Paul Reed Went From Local Player to Multi-Million Dollar Roofer

• John Wilson • Season 1 • Episode 176

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Paul Reed from Northwest Roofing shares his journey from chasing business opportunities to running a multi-state roofing business including the route to building permanent locations and what it really takes to scale a roofing company.

Whether you're a roofing pro or just looking to grow your home service business, this episode is packed with insights you won’t want to miss.

Special Thanks to Service Scalers

We’ve been partnering with Service Scalers to maximize our Local Service Ads (LSAs) and optimize our Google My Business profiles and the results have been incredible. 

With hundreds of thousands in sales and 900+ calls in a single week, GMBs are now our top-performing organic lead channel. 

Want to learn how Service Scalers can do the same for you? Check out Service Scalers here: https://www.servicescalers.com/?utm_source=referral&utm_medium=podcast&utm_campaign=ownedoperated

Shoutout to Avoca

Looking to train your call center and improve technician performance? Avoca AI is here to help your team identify existing issues, improve call quality, and drive results from start to finish.
 
Use our link to schedule a demo: https://calendly.com/d/cp54-9jr-nht/avoca-ai-demo?month=2025-01

Episode Hosts: 🎤
John Wilson: @WilsonCompanies on X
Jack Carr: @TheHVACJack on X

Episode Guest:
Paul Reed on LinkedIn: https://www.linkedin.com/in/paul-reed-19682228/

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John Wilson, CEO of Wilson Companies
Jack Carr, CEO of Rapid HVAC

Paul Reed: I was actually driving past business to get to business.

That's been my model. I believe from leading from the front. I think we could get some of you guys to 4 million to 6 million a year in revenue. And that was seriously a mindset.

John Wilson: So the latest thing that we've been working on. is maximizing our LSAs, which is local service ads, and also optimizing our Google My Business profiles. So what that means is we're making sure that all of our LSAs are on when we need them and they're maximized to give us the best ROI. And then for GMBs, it's been partnering with service scalers to drive way more traffic to our GMBs. 

GMBs are almost like the new SEO. The more you put onto them, the better the performance. So our GMBs have been consistently getting better week after week. And it is our, currently, our single most impactful. organic lead channel. So we'll sell hundreds of thousands of dollars a week through our GMBs.

And I think last week we got 900 phone calls. So really impactful, awesome investment. And we've been able to partner with Service Scalers on both of those things. If you want to hear a little bit more about Service Scalers, check out service scalers.com. 

John Wilson: Welcome back to Owned and Operated. Today on the show, I have Paul Reed from Northwest Roofing. Welcome to the show.

Paul Reed: Thank you, man. Glad to be here. 

John Wilson: Yeah, this will be fun I don't get to have a lot of roofing on I think I had one guy And, or no, sorry, he's coming on next week, but he's a small, he's startup roofing operator. So four or 5 million, I think. So this'll be fun to talk about big roofing.

Paul Reed: Yeah, I'm excited, man. I love doing this. 

John Wilson: Before we get too into it, I've got a bunch of stuff to ask. I'd love to just get a background on Northwest roofing. How'd it start and where's it at today? 

Paul Reed: Yeah, great question. So Northwest roofing was established in 1963 in Denver. I actually got into roofing in 1992, so I'm celebrating my 33rd year. I partnered with a gentleman, shoot 15 years ago? And he had actually acquired Northwest roofing. A couple years before me. It was a dormant company for a few years and he acquired it and we partnered together and really built it up to where we are today.

John Wilson: How large was it when, that happened? That initial, partnership? 

Paul Reed: So from the initial partnership from when he first acquired it was at zero. It was dormant. Just had a name. Licenses that were still active from 1963 registered with the secretary of state.

But when Tom and I partnered up, we were about 7 million.

John Wilson:  I've heard that's a thing inside roofing. So someone will, that, happened here a couple of years ago, a lot of hailstorms. So a lot of companies got started up or they bought like dormant brands basically, and then they just stopped using them one day.

So was that sort of what that was or was it a little bit different? 

Paul Reed: No, it absolutely was. the company, again, when they had started it. I think it had probably been dormant, when I said a couple years, hell, it might have even been five years. Yeah. And he actually ran across the grandson of the original owner.

And, we pretty much just bought the name, right? There wasn't, any tools or trucks or anything like that. Pretty much bought the name and the longevity in business is really what we purchased. 

John Wilson: And what year was that? 

Paul Reed: That would have been about 2004. 

John Wilson: When you first started off, I'm talking origin story stuff here.

How much of this was like storm chasing? Were you guys traveling all over the place for work? Or was it like, hey, we're, posted up in Denver and this is what we're doing? 

Paul Reed: For me personally, when I started when I was 18, it was just, I was actually a guy on the roof. But when we started Northwest Roofing, we were pretty much based in Denver.

About the first year, started to move out a little bit, a few different areas around Colorado. 

John Wilson: When did you start moving?

Paul Reed: To different states? Would have been about 2009, 2010. That's, we're used to different volumes.

We would be doing a couple thousand roofs a year. And most of that, I'm going to say all of it was, pretty dependent on hailstorms. And, back then in Denver, it was, pretty easy to sell a lot of health, affected houses. And you come up on a year and all of a sudden it gets to be July.

And you're like, man, and maybe it's not going to hell in Denver. And maybe we need to go work in Albuquerque, New Mexico, because they just, got a storm last week. And you would just launch a location there. Is that how that worked? Yeah, absolutely. So most states with roofing in particular.

You don't really have to have a state license. there's a handful of states that you do. the ones that do require it, it's not that hard to get. but, over the last 15, 20 years, like a storm would hit in Kansas, and Hutchison, Kansas, and on Tuesday, and by Wednesday, I had an LLC and an office set up and business cards and signs made by Wednesday afternoon at three o'clock and we were a local company. 

John Wilson: What, do you do? So in, in either of those two examples, what do you do once you're done with the storm? Do you just leave it dormant or does that become a permanent location that you then just sell retail?

Paul Reed: We've done a mix of both. So we, pulled out, got done. We always leave someone behind for, six months to a year. And then I also have connections to make sure if there's an issue, a warranty deal. a lot of people, that's the misconception of storm chasing is that guys, storm chasers come in uptown, screw up the market, do a bunch of roofs and then leave, and I'm sure there are people out there like that, but we have used both models where we went in, sold a few hundred roofs, left, or sold a few hundred roofs and stayed there for another few years. 

John Wilson: Just selling retail? 

Paul Reed: Yeah, just selling retail. you can clean up the storms. There's always people that drag their feet, so you, could continue to do it.

My model, it's in, in roofing. it's not that difficult to go generate. A million dollars or $2 million in revenue in a city. we're talking a few hundred roofs and that's, it's not difficult to do and we've been able over the years to keep over open different branches, just based off of doing that.

John Wilson: So how many active branches are there? For Northwest today. 

Paul Reed: We were acquired by another company in September. So now it's really multiplied but before then about eight. 

John Wilson: Okay, and is that the most that it was that like the peak of? Branches or did you guys ever run more than that? That's probably about the peak.

Paul Reed: Yes, sir.

John Wilson: I'm trying to imagine just like plumbing HVAC electric. So I'm trying to imagine the organizational complexity "Hey, I had a storm in Kansas." I need to deposit a sales manager, quickly train up reps or ship sales reps over, have them live there for some amount of time. There's a lot going on there. 

Paul Reed: Yes, and no. But the fact is, once you figured out the model, and basically you see a storm hit, on a, whatever, Tuesday afternoon at 3 o'clock, you start looking at it, we start making a few phone calls of hey, did it do damage or not.

And, literally make that decision. I'm like, Hey, we're going to go set up and, whatever, middle of Kansas, middle of Wyoming, Nebraska, wherever we were going to go. And once you have your system of, people that you're able to print signs fastly, business cards at Kinko's, it doesn't take much to do that, change your phone number with, all the apps that you have on your phone.

Different things like that, it's not that difficult. And you could send three, four or five guys in initially. And then at that time, training sales reps isn't difficult. our industry for the last 30 years on the storm restoration side, man, we've been blessed because it's, not that hard of a business.

Like it's not the organizational thing that you think of, like on, on your side, on the HVAC. Now, it has gotten a little bit difficult, there's a lot more contractors. So we have a lot more competition and, so those things have come into place, but in back in the day, and even go back just five years ago, it was, simple.

It wasn't a nightmare to open up a branch in Omaha, Nebraska tomorrow. 

John Wilson: What percentage of revenue today is like storm chasing versus retail roof? Even just in Denver, is Denver still the big banana and we're just doing a ton of retail now, or have we really just dispersed? 

Paul Reed: So Denver's probably 80 90 percent storm, but across the country I believe the number is about 30 percent storm, the rest 70 percent retail, I believe are the numbers, I think I'm pretty close to that.

John Wilson: So Denver's 80 90 percent storm? Storm. That's crazy. 

Paul Reed: Yeah. No one in their right mind is going to replace their roof out of pocket. 

John Wilson: Like how many hail storms a month is that? 

Paul Reed: Last year, it, came in and it was, I think they said it was a billion dollar storm.

John Wilson: That's fascinating. All right, so if I'm, pretend I just launched a roofing contractor. Walk me through this here. I, I'm in Cleveland. I hear there's a storm in Florida.

I don't know, there always seems to be a storm in Florida. maybe that hurricane from a couple months ago. All right, so that hurricane from a couple months ago, does that impact roofs? Not, probably not like hail. 

Paul Reed: Oh, it does, yeah. the wind. It's, so we work off of wind storms. Tears out the shingles.

John Wilson: Do you think this is the best place? So I'm contrasting this with I have a friend who has a roofing franchise. And he's pretty locked in to an area. Cause that's a, it's a franchise, right? It's a geographically contained Whereas it doesn't sound like your business model would really work with that at all.

Cause you get your whole thing is let's go find whatever just happened. 

Paul Reed: Yeah. And that's been my business model. And listen, I'm 50 years old. And again, I've been in this 33, 30, this is my 33rd year in this. If I had to do it all over again, I probably would have stayed a little bit more local because I also think that I got it in my blood to where I was actually driving past business.

To get to business, right? Because of the rush of running into a new city, a new state to open up an office. And your ego kind of comes into play. And I hope that makes sense. But there's this whole, this rush of doing that. And that was fun. And we were successful. I know a lot of people that were successful, but I probably know more people that failed at doing that.

Yeah. But again, if I had to do it all over again, I wouldn't drive past business to get to business. I don't know if I would've grew to be a 30 or $40 million a year company. I might've stayed around, I don't know, 10, $15 million a year and been happy and had a little more quality of life with work-life balance.

John Wilson: How often were you personally going to some of these, or was it, was that always the game? 

Paul Reed: That was always the game. I was usually the storm setter. I, was out leading the charge with the guys. That's been my model. I believe, from leading from the front, and I've never asked any of my guys to move to a city.

To go work there for three, four months without me going as well. 

John Wilson: You partnered with, you partnered with Tom you're in Denver, which apparently has a wild amount of hail. That's crazy. you start seeing these storms in the first one. Was it actually Albuquerque? You use that as a reference. 

Paul Reed: Yes, that we actually moved to.

So Albuquerque got hit in 2009. And we went down there and we bought a company again that, that was a small little company that had been open since 1986. literally paid, I think we paid 20, 000 for the, name and the licensing. And now we've been in Albuquerque since 1986. And we've, been here 25 years.

John Wilson: Yeah, I, we had a major hailstorm. I want to say it was three years ago. And I had a friend who was a roofer and he described how people from out of town were asking to rent his name. Cause he was a, he was an active business. Yes. But he was like, yeah, they wanted me to, they wanted to rent my name and maybe change the phone number, maybe not.

And have you guys done that before? 

Paul Reed: Yeah, that's a common model. the godfather of, roofing, the guy that really originated the storm restoration, storm chasing model, which is a gentleman named Marty Haight. That's what they used to do. They would go in and they would use your name and give you so much.

Per roof, or so much per square. So 30 square roof, they'd give you like $3 and so you'd get 90 bucks. They would just sell it under your name. 

John Wilson: In that scenario, what happens with the warranty? 

Paul Reed: So you, you have per, because, and I'm gonna take that back. I have done it one time. I did it in, home on Nebraska because I had to have a license there that I couldn't get for a few weeks.

So I went on another brand and we just, there's contracts that I own the warranty for the first year. Okay. And then after that, they have the warranty, but I paid a percentage. I think I paid 4 percent of the contract total and, paid that for using their name. And they had the con, they had the warranty after the year.

John Wilson: Do you guys still have the branch in Albuquerque? 

Paul Reed: Yeah. Another gentleman runs it for us. We had split it off. So it's still active. it's not currently involved with what we do. 

John Wilson: What did your team look like? you're, you obviously you good sized business. How did you build a leadership team to be able to deploy around launching into these new markets? What did that look like? 

Paul Reed: I've always been a believer, because one of the, one of the bad things that we have in our industry is we have what's called a turn and burn model. a lot of roofing contractors attract and promote and, Bring in a bunch of guys and, burn them out, they go sell a few numbers and burn them out and it's just always a revolving door.

And I seen that model, years and years ago. And to be honest with you, we, ran it ourselves where we would attract 30, 40 people because it was a numbers game. So we looked at the first of the year and we'd say, Hey, do we want to do 20 million? or whatever we're going to do this year, knowing that the average sales rep is going to sell about 300, 000 a year.

Depending on what our target revenue was, that's how many reps I would need to attract knowing that by the end of the year. Only four or five of those guys would stick around, right? And that's just, that's a horrible model, but that's still the model in our industry. And I, did run that for a period of time.

And after a while, it started wearing on me of, seeing the people come in and out the doors. And, and I started thinking like, we got to do more with less. How can I not get my guys if the industry average was 300, 000 and we're rewarding like top salesmen, we're doing a million 1. 5. How can I get some guys, because I was personally doing at that time over three and a half million myself, still running the company, still de facto sales manager, all those things.

How can I get guys that, that high quality guys that just come out and do 3, million instead of having 70 guys? What if I just had 5. 

John Wilson: What did that look like the first couple? You just, you took your best producers and like, how did that, how did you make it sustainable?

Paul Reed: So it was, a mindset. So every, year for, those of you guys that are watching that are in the roofing industry, we're all friends with people on Facebook that every December people are showing pictures of their Christmas party.

And most roofing companies are rewarding this day a million dollar sales rep with a Rolex watch, right? So if you look back 15 years ago in Denver, the average roof was about nine thousand dollars Today, that same roof is worth 27, 000. We were celebrating a million dollar a year guy in 2009. We're still celebrating them now, even though back then I needed guys to go sell a hundred, 115 roofs.

Now I expect a guy to get a million dollars. He's going to go sell 25 or 30. Yeah. Like the, math, doesn't math with me. And so I looked at it and I started looking at my guys going, I think we could get some of you guys to 4 million to 6 million a year in revenue. And that was seriously a mindset bill.

It wasn't extra sales training or anything like that. It was just giving them permission to understand that a million dollars a year is not good. As a sales rep. That was good 20 years ago when the roof was 9, 000 today, that same roof is 27. It's. Three times higher. Yeah. How did it go? So when I, remember this like it was yesterday, the very first day I called in, I had 10 guys, I brought them into the conference room and I set them down and we were starting to do a lot more commercial roof and stuff as well.

And I told them, if you want to be in this room next year, you have to be a 6 million a year producer. 

John Wilson: Okay. 

Paul Reed: And there was not one of those guys that had ever sold over 1. 8 million dollars ever in their career. And that following year, I had three people hit six million and I think two of them hit like over four and a half and a couple, a million and whatever, but they faded out.

But it was shock. You could hear their jaws hit the table of, they were like, there's no way this guy's crazy as hell because. Personally, I'm at 1. 8. I worked my ass off last year. Like, how am I going to get to six? This guy's crazy. And so it was just really working on their mindset of this is possible.

Me showing them like, guys, I, last year I, whatever I did, 3. 8. Whatever the number was and like I literally only worked, three or four hours a week selling roofs rest time I was running the company and showing them there. There's a path and here's what we got to do. And here's how our day looks Here's what we got, all of those things self managing just a belief just a mindset did the number of leads. 

John Wilson: That makes sense. We just converted more or we sold them at a higher ticket? What was the variable that changed? 

Paul Reed: We actually treated a sales job like a sales job. Because most independent sales reps, like in roofing are 1099. Most managers don't know where they're at during the day. They're waking up in the morning and they might get out at 10 o'clock, maybe run to the office.

And at the end of the day, They were only actually trying to sell for an hour or two a day. that's the average sales rep is actually only selling an hour or two. And what if I could get you to sell five or six hours? What would that look like? What if you treated this like a real job? Like it was eight hours a day and you were actually out in the field doing what you're supposed to for eight hours a day.

That's part of the mindset. And when we started doing that, it wasn't, hire tickets, more leads, anything. It was just, we were out in the field and they sold more jobs. And almost, honestly, like almost had just as much time as, they did before.

John Wilson:  How much does a roofing, is it like 10 percent or like how, does the commission work?

Paul Reed: 10 to 14, probably I would say. Okay. 

John Wilson: Based on gross margin or? 

Paul Reed: 14 to 16. That's, like on total revenue of the job. So like my, most of my guys, we've all transitioned mainly to commercial now. I'm probably, some years I've been like 98 to 100 percent commercial. Yeah. The last couple of years we went and sold some residential just.

Because it was their million dollar job, they're gonna make 150. 

John Wilson: Okay. 

Paul Reed: But see their mindset is a lot of guys. They're like, I can make seventy five thousand dollars. That's plenty.

Yeah when they have the ability to go make two or three hundred and they're just like, yeah, I could get by, I pay my bills at 75. So that's, it's just, we bred a laziness. 

John Wilson: We're about eight months into using Avoca. And Avoca has been an awesome partner for us in our call center. So what Avoca does for us is they do two different things.

One, they have their coach product and coach has been helping us do what it says. Coach our CSRs every single day. It listens to every call and uses AI technology to basically pick apart that call and tell us where we can improve. And for the last eight months, we've been consistently improving our scores, which has been awesome.

The other product they have is just conventional booking. And it's an AI tool that books over the phone. A customer calls in and it either handles overflow, as in our phones are full, or it does nights and weekends for us. And a customer will call in and actually deal with an AI Agent all the way through booking and the savings inside call center has allowed us to ramp up our marketing to continue to grow Even more.

Thank you Avoca and thank you Tyson for your partnership 

John Wilson: How much of the business now is residential versus commercial? 

Paul Reed: This last year I did if you do the simple math Five million, and we finished around 35, so whatever that math is. 

John Wilson: Five million was residential? 

Paul Reed: Residential. The rest was commercial.

I pivoted about seven years ago to almost fully commercial. got out of the residential, but like this last two years I've jumped back in because there was opportunity and why not go get 5 million if you can. 

John Wilson: What's the benefit? The larger ticket obviously makes sense.

What else is the benefit of choosing commercial over residential in your industry? 

Paul Reed: So for, me, we were doing for, our side, so I was doing 2 3, 000 residential jobs a year. part of it has to do also, I think, with, where we're doing a lot of restoration work, homeowners are, their responsibility is to pay the deductible, right?

So deductibles have gotten a lot bigger, back in the day, their deductibles were a couple hundred bucks, 500 bucks. Now they're 5, 000, 8, 000, 10, 000. So it's almost more of a retail model anyway. So you're having to actually learn sales. having two or 3, 000 POs versus, 500 POs.

That, that was a big draw for me and, listen, I, and part of it was, I think I, got burned out a little bit of doing that many jobs and running over here, running over there and, not, why not just be here and sell a job and, it's. 1. 5 million job. Instead of having to go sell 40 residentials, I sold one commercial that I actually roofed quicker than I did the 40.

John Wilson: I don't even understand how Klein, so that's still storm chasing, right? Or like some variation of that. So big storm comes in and we're going to go, do we go cold call like commercial properties or management companies, 

Paul Reed: Commercial properties, management companies, property, community managers, things like that.

Industrial parks. Bob's garage, Caution with dentistry office. Things like that. 

John Wilson: Okay. Yeah. Okay. That makes sense. That makes sense. And look, the average commercial roof is like 200, 000 or a million or what's an average ticket here for commercial roofing? 

Paul Reed: Ours last year was over 300, 000.

John Wilson: I have, I know buddy of mine's Mills Snell. He is in North Carolina. and. Okay. I think he's almost all I don't actually know the size of the business now. Last I heard it was like 22, 24, somewhere in there. All commercial roofing. but like just one area. I don't think they travel. I'm going to follow up now.

But I don't think they travel a lot for it. But yeah, average ticket is huge. 250 or something is what he told me last time. And that is monstrous. You need 100 jobs. To do 20 million dollars. That's crazy. I, we're 100 percent residential. So I'm, I feel this a little bit. I still like residential, we visited 42, 000 homes last year, 42, 000 homes.

Isn't that just unreal? That's a lot of  homes.

Paul Reed: It is, but my biggest factor to get out of residential was I can't stand like Google reviews and Yelp and all that type of stuff. And it got to the point where homeowners started to leverage. And it was such an important thing to have, a 4. 9 rating or, whatever. And it was driving me freaking crazy because I had so many different homeowners. And when I say so many, like a handful, like eight homeowners leveraging of Hey, I, yeah, I owe you 2, 300 bucks, but maybe I'll write a bad review if I, have to pay this.

And I was just like, I'm done with. Yeah. I got cranky on service. 

John Wilson: No, I mean that, that's definitely real. Homeowners weaponize reviews. 

Paul Reed: A hundred percent. Some do. Obviously not everybody. But that's definitely a thing. They understand the value of it and they make a really big stink. all about it.

What I've liked about it is we, just understand the customer acquisition and we understand the sales process. Whereas I'm just, I just don't get it as much. It just doesn't come naturally to me for commercial. Whereas the residential side seems to come naturally, so it's just easier for us to lean into it.

But, we also don't have 300, 000 average tickets for commercial. That might sway me. Yeah, and listen, it's almost turned into more service, like that's what we do now. because all our stuff, our leads are all based off of our service and maintenance. So we've had to master the service and maintenance side of it to be able to be in the running for these jobs.

John Wilson: So what, does that look like? Or do people just call you or do you have a concerted outbound effort to get those service contracts? 

Paul Reed: Yep. So we, we have dedicated business development reps that, literally their job is just to constantly be in touch with. With clients knock on doors.

I'm a big believer in knocking on doors and asking for the opportunity. 

John Wilson: Yeah Are there service contracts in commercial roofing or is it really just hey, we're here when you need us.

Paul Reed: So there are there service and maintenance contracts So we have a pretty large repair department that we serve with But if there's any more we've transitioned into a lot more service and maintenance Tickets twice a year, manual, maintenance and things like that.

John Wilson: This is like flat roof maintenance, basically. 

Paul Reed: Yeah, we do, a lot of low slope, flat roofs and a lot of steep slope as well. 

John Wilson: I don't think any, I don't think we've ever been offered a maintenance contract, but we have a couple commercial buildings and yeah, it seems to be like a twice a year. They got to go patch something or do something or other for, yeah, a couple grand.

Paul Reed: Gutters, yeah, things like that. Absolutely. 

John Wilson: What's the average ticket and service? And like how many technicians are on the service side? 

Paul Reed: So on our service side, I think I have six technicians, and then a, a whole kind of support staff behind, behind them.

Yeah. average ticket on that is, is about 1, 900. is, do you do that? Yeah, out of one of my offices, I did two million. 

John Wilson: Really? in, in, you said in all of them?

Paul Reed: One of them, did two million.

John Wilson:  How are you doing this across multiple offices? Are guys, traveling to go service? Or is it, one service guy each spot?

Or how does that work? 

Paul Reed: No, and when, I said the six, that was based out of the Denver. in my Phoenix office, I've got two service techs. A lot of the, a lot of the admin stuff always will be based out of Denver. But, boots on the ground, guys in the field. That are there on occasion when we don't get to pick all I got to send guys from.

John Wilson: Sorry, now I'm just back to locations. Cause it's just fascinating. It's just, for our industry locations is completely based on Tommy mellows a little bit. It's just okay, where's the next zip code that has opportunity.

And it's not really based on any external factors other than, Hey, I'm an hour away from this place. I might as well go there. So when you're thinking about additional locations, what was the closest they ever got? Because it sounds like you're, each one's just in a different state. 

Paul Reed: Yeah, it is. So I've got locations, as close as an hour away.

And, that was, in my opinion, a waste, to me for. The way that we look at locations instead of locations now is on my customer, my client's needs. So I have a lot of different clients that are major property management companies. That, we'll have properties here, Utah, wherever they have Matt.

And so what we do is we start offering to serve them. And so for me now, like that's, where locations pop up for me now is, hey, Graystar's got, a bunch of properties they want me to serve. wherever in, in Utah. And so now we've, now I've got to, I need to have a branch out there. And from there, Hey, we, at least got our foot in the door.

We've got a little bit of revenue coming in. We're serving gray star. Now I could go out and find, Cushman Wakefields and all those of the world and start building it out. So that's been the model. 

John Wilson: That makes sense. And even despite all of that, cause that sounds like a lot of retail.

Paul Reed: Still a huge majority of the work is insurance. So we, transitioned though. Okay. We, transitioned because again, I think the commercial and insurance restoration stuff and residential as well has changed over the years. insurance companies, excuse me, are pushing back a lot more.

And so we intentionally transitioned to do a lot more retail over the years and also that kind of tied in with private equity as well. But yeah, a lot of the different areas that were called into, yeah, they could get a freak storm and. And that's why we originally got there, but we will stay there sometimes for retail stuff because, not everywhere it's like Denver or Dallas that gets hell every year, there's sometimes like Phoenix got last time Phoenix got hell was 2011.

John Wilson: So then what does your, so your branch in Phoenix primarily is just going to serve like retail customers then? 

Paul Reed: All retail. 

John Wilson: Okay. Okay. 

Paul Reed: Okay. Yeah. Our branch is in California. All retail. 

John Wilson: Okay. That, makes sense. And all the majority commercial? 

Paul Reed: Yes. Majority commercial. I'll probably do some residential in California though this year because those fires were crazy.

Oh yeah. There's a lot of damage all around, not just in the fire zone, but from the wind and embers actually from the fire, from hell, 10 miles away from where it all burned down. 

John Wilson: When would, what's an average size branch right now? average size branch is probably two to three million.

So the model changed a little bit, obviously, we just said that. So started off storm chasing and now like Phoenix. It's not really storm chasing at all. So that's just a permanent location is what it sounds like. Like we're just always going to be there. 

Paul Reed: Yeah. I had some clients ask me if I could serve them in Phoenix and I said, absolutely.

So we set up there and then. expanded it. Phoenix since last year did. A little over 3 million. this year, hell it'll probably hit 5 though. 

John Wilson: Yeah there's what Plant and Expand or something, I met somebody that was doing that in plumbing for 3rd party administrators basically. they would serve Starbucks.

And they would do their grease draps and water heaters and whatever else. And I think they had a few of those, but Starbucks was just my. Best example, and maybe five total clients that were big, and then they would just go launch wherever there was enough density of service calls for that, for Starbucks or whatever, and then they would use that as their into market model, and it sounds like that is now the into market model, instead of storm chasing.

Paul Reed: Yeah, it is. Storm chasing, in my opinion, is going to go away, after a while. There's going to be storms always, but I think the model is going to change. And I'm not going to rely on it. 

John Wilson: What makes you think it'll change? Driven by insurance? 

Paul Reed: Driven by insurance, they're a profit driven, their business isn't to just pay for your damages, right?

Like they, they're a big business. And it's got to be profitable and the way that it's been the last few years for them. It's not that profitable So they're starting to go to a lot more what's called managed repair programs where they have their own contractors You know that are selected that already agreed to do the work for a certain price.

John Wilson: Yep. 

Paul Reed: And so your typical Roofing contractor is not going to go out and doorknock and get a job like we used to. 

John Wilson: Is it, is this all subcontracted labor? 

Paul Reed: Depends on the state. So California is all W 2 employee. Arizona is W 2 employee. Yeah. And the rest of it pretty much is 10. 99 in my subcruise. 

John Wilson: What is an average, this is a nuanced question maybe, but What's an average roofing contractor size? Who are you competing against? 

Paul Reed: Average size is probably 3 to 5 million. Okay. So there, there's not that many, there are, there's, a few hundred guys that are doing 20, 30 million, 20 people that are doing, 80 to 100. Yeah. the two biggest ones are CentiMark they're both doing 1.5 and 1. 3 billion. 

John Wilson: You said this earlier in the episode, how there's just seemingly less complexity. Maybe because there's less, obviously you've launched service, but yeah, I was again, I was talking to my friend and he, launched this roofing company. He's four or 5 million in his first year and he it's 1099 installers.

I'm sitting here, I'm like, this dude's going to have a 20 million business in It's been great. It's, been great because most roofing companies are actually sales organizations. 

Paul Reed: Yeah. It's, a racket, man. And it's, been great. It's, been great because most roofing companies are actually sales organizations.

Totally. That's all they are. Yeah. They're sales organizations. And you got, you have some more sophisticated companies, that have the big warehouse and all the tools and all the equipment and stuff and that's, set up more like you, like how you're doing that. But the majority of storm restoration contractors are sales organizations.

They need a laptop and a nice polo shirt. that's all they need. 

John Wilson: That's amazing. every time I talk to somebody in roofing, it just makes me want to get into roofing. I'm like, this is that's what Tommy Mello says too. This is freaking bullshit. I'm sure there's a lot that I'm missing.

If I was a newer entrepreneur today, if I wanted to go start a roofing company, what would be a couple points of advice you'd give me? 

Paul Reed: Amanda, that first one, like I mentioned a little bit ago is don't drive past business to get to business. I think that's, a key thing. I would also really look at what you have going on in life.

And I don't, think everybody, I hate the word scaling because I don't think the word scaling is for everybody. I don't think all companies should scale. I believe that, start now, pick, your mark and where do you want to get to? Do I want to get to be a 10 million a year company?

And I'm going to make. I'm looking at my EBITDA and my EBITDA is at, 18 percent like that's, that's, pretty, pretty good money. so for me, for a new guy starting out in this industry is to not buy into all the hype of, necessarily growing to 30 or 40. And I know that's counterproductive sometimes, and you get a lot of people up on stage and, let's scale grow and all this stuff.

It's just not for everybody. I think there's, I think there's an elite few that's really. for, and I think you need to really figure that out, have honest conversation with yourself and, get a mentor in the, in this industry, get a good, get personal mentors, things like that, man.

It's just look, don't buy into, to, all of the hype of, trying to grow to 30, 40, would you have a hell of a life at five? Would you have a hell of a life at 10? what's that number? So to meet any new guys doing that, like. Where, can you have a really good life at? 

John Wilson: We had, we had Tommy on the show maybe two, three months ago.

His message wasn't much different, really focused on. Yeah. earnings really Hey, we're all focused on top line. Cause it's the easiest thing to spout off, but yeah. What's bottom. What do you, what are you taking? What are you reinvesting? And, yeah, I agree. And I think the, bigger the company, 

Paul Reed: You take, Tommy, you take a guy like Tommy, if you look at that and you're in the garage store industry, there's never going to be another Tommy Mello, right?

You could idolize him and use a lot of his systems, but no one else is going to grow a damn garage store company to whatever it is. 250, 300 million, right? that's, not going to happen. Could you grow a garage store company to 10 or 20? And have a hell of a life as I'm not trying to like shatter people's dreams or say, shoot for the stars, but I'm just saying, I think, sometimes there's also a reality that like, that's the exception and maybe this young person coming in is going to be the exception going to be able to do that, but the average person that we're talking to, and that's maybe even listening to this, Man, where would you really be good at 5 million, 10 million, 15?

But bottom line, what's your bottom line? 

John Wilson: This was awesome. I feel like I got a real education on roofing. It, it did. I definitely don't want to storm chase at all. I didn't walk away with a desire to do that. But I do like that. It is leads and sales, baby leads and sales. I like that a lot. That's cool. If people want to connect with you, Paul, how can they get ahold of you?

What's the best way? 

Paul Reed: And the best way actually LinkedIn and Facebook. 

John Wilson: This was awesome, dude. I appreciate you coming on and sharing your story. This was a lot of fun to learn about Northwest and to learn about the roofing industry. I feel like I learned a ton. thanks for coming on.