Chris Lee on Scaling a Company Through Culture and Sales

0:01 >> All right, next up is our second fireside chat of the event. So, Chris, you want to make your way on up. I'll read your bio a bit here. Chris Lee is a founder and chairman of NLP Holdings, a multi-vertical operating company spanning trades of roofing, medical, and coaching. He's widely regarded as one of the most influential operator investors in the home service and trades economy. He's personally built and exited multiple nine-figure companies. In 2017, he founded Solgen Power from his garage. And under his leadership, it became the number six fastest-growing private company in the United States with 18 locations and over 1,000 employees. In 4.5 years, he scaled it and had a nine-figure private equity exit. That experience of raising capital, growing the company, hiring and scaling, and ultimately transacting is something we're going to be talking about here today. He hosts the Next Level Pros podcast. I encourage you all to check that out, which ranks among one of the top 15 entrepreneurial podcasts worldwide. Let's welcome Chris up to the stage.

1:01 >> Thank you. Thank you. >> >> Appreciate it. >> What else would you add? What else would you add about your your background and your bio? >> Let's make sure. Sport. Check, check. Uh what I would also add my family. I'm a father of five, been married for almost 21 years. >> Awesome. Congrats. All girls, boys? >> Three boys, two girls. >> Awesome. >> Yeah. >> Great. Well, appreciate you being here. Um so, let's start at the top. >> Walk us through the exits. Uh maybe not the super short polished version, but like what was the first one, what industry, what did you learn from that, and then what was the the second company you started? >> Yeah, so I've been an entrepreneur since I was 24 and had a lot of failures before the exits. I think it's important to note. So, started my first company when I was 24, found myself completely failing at age 27. Ended up filing bankruptcy, had my car repoed, went through that that whole thing and I I grew up dirt poor. I had no idea. I was college dropout, ended up going to Harvard later, but uh doing different things, but uh after banging my head against the wall multiple times, I actually went back and I worked for a couple large-scale businesses and I got education there

2:18 just working for them and I experienced two different IPOs working as an executive for these different businesses, which ultimately led me to founding the the company out of my garage in 2017, which is Solar Empower. So, we scaled it in 4 and 1/2 years, completely bootstrapped. No no outside capital. >> company or what what type of >> It was a solar and roofing company. And so, we did 16 million our first year, by year five we were doing 233 million a year. >> How do you do 16 million your first year? >> Uh you know, I I I'm a firm believer that anybody can do 16 million a year just if you understand marketing and sales. And so, it doesn't matter what your product is. >> Got it. So, in 4.5 years to massive private equity exit, you obviously figured out a lot in addition to marketing and sales. But I guess that was like your strong suit. You just ran circles around the competition in that area, or >> Uh marketing and sales is definitely a like a high thing, but we we govern things by priority. We have like four principles that really govern everything. And so, like principle number one is like prioritization, putting the company first, the team second, and the customer third is what allows us to serve the customer. So, a prioritization of profitability. So, we do it through premium pricing, premium sales, and uh and I'm a big believer

3:36 that there's no such thing as competition when you build a company right. >> Got it. So, when it comes to marketing and sales, let's focus on sales for a second. Do you do heavily commission-focused sales teams? Do you just you pay more than others, but only on a performance basis? Like what's your edge in the sales part of that scale up? >> Um I would say the the culture aspect. I think when somebody pays more than somebody else that's similar is charging a customer less. It's the the equivalent. You're basically taking the cheap way out of not actually figuring out the solution. And so building teams through culture, leadership development. So one of the things that we scaled in that company, we had a 300 man sales floor where we virtually would sell these uh these systems over the phone. And then we have installation hub locations where we'd come and and perform the installation.

4:27 >> I mean, I would guess that someone would have to go to someone's house to sell solar, but what do I know? I haven't built a $100 million platform in the niche. So you got it done over the phone while others were going on site and selling mostly? >> Yeah, and and we were one of the lucky ones that did it pre-COVID. And so we were positioned right when when COVID hit as far as being able to continue without having a hiccup in in any of those type of things. But yeah, we were vertically integrated everything from we we bought a loan processing company. So we processed our own loans. Financing is a huge game in the consumer world where 96% of our our sales were done through financing. So just making high ticket items extremely affordable. >> Got it. And on the marketing side, were you good at lead gen? Were you just really good at branding or auto follow-ups with email? Like what was your edge in there?

5:15 >> Yeah, so my background, I started in the world of door-to-door sales. And so I used to be one of the best people in the world knocking on somebody's door and getting them to buy. And so when I started this company, I knew I didn't want to do it through door-to-door sales. And so I coined the term digital door knocking where we were one of the first to actually generate leads online through alternative methods than just Google search, right? So we did educational funnels through YouTube, Facebook, those type of things to the point where our internal marketing team, which with AI now probably could be eight, but it was about 32 people, uh we would generate 1,100 leads a day. And so, people that were interested in getting quotes for their home. >> Wow, that's awesome.

6:02 Um what's one pattern across all of your exits that you think other people miss just by looking from the outside or might assume? >> Just the the formation of culture with people, right? A lot of people are like product first, product first, it's got to be just the product market fit, where I can take pretty much any product and just apply a culture to it, which is vision, direction, leadership development, uh get people behind it, right? And pretty much any any type of product. >> Right. So, as you're scaling the company or just in general, um are you someone that's always working 80 hours a week to scale a huge platform and go go go or you more like work smart, not hard and you're working 4 hours a week? What's what what's that like? >> I'm uh work a lot smartly. >> >> Um so, I've always always been a grinder and, you know, when when our company was at its at its biggest peak, I was only probably working 40, 50 hours a week, but I've always been one that um I only get you know, I I delegate, but I'm also very integrally involved and so, I love I love operating.

7:10 >> Got it. What's the most valuable lesson you could share with founders and investors here in the room that you think is worth over a million dollars? >> Over a million dollars, um I would say uh that when your people come to work and view it more as more than just a paycheck, where it's a a full person development, what we what we call our P's, the physical, economic, social, and spirituality, and you really develop a place where it's it's more of a uh a place that they can come to as a refuge from society and learn and grow and develop. Like that uh you can you can do that inside of any organization, and people find real passion and drive in that. And when you get that passion and drive from people, they will go to the ends of the earth for you.

7:58 >> Got it. Um with Sol Ag did you have to raise capital several times along the way? Did you not have to? Any lessons or insights on that? >> Uh we were one of the lucky ones because we've always believed in premium pricing. Our cash flow was able to fund most of our growth. There was one point where we started sourcing product directly from Asia, uh which we flipped our cash flow on its head from like an 8-month turnaround. Um so during that time we had to go and get some some private capital from close friends and family just as as a bridge loan to be able to make it work, which we paid back in like 3 months. Um but yeah, when we when we sold the business, we had $40 million in completely paid for uh inventory. Uh you know, I mean we were in an extremely I mean we bought a jet cash. We did that, you know. We luckily were able to do it without a lot of investor capital, but uh you know, just very very slight.

8:47 >> Got it. And then what about uh productivity? Like how do you scale up a company that large that quickly and manage your time? Like how do you prioritize weekly, monthly, daily, quarterly? Like what type of a system do you run on? >> So I'm a big believer that uh most of us have very small goals, and the goal is what directs the output. And uh you know, if I if I need to go from here to Washington state by tomorrow, there's no way I'm considering walking or taking the bike, right? I'm always going to take the jet. Or most people are just trying to get next door. And so I I function on a 5-year growth model where we go and we shoot for the moon, and then we have it forces us to think and and recruit and develop people. And so I I built teams like when we exited that first business, that I made 12 other people multimillionaires in the transaction.

9:38 Um I'm a I'm a big believer in in building out teams and that me as a person I have one particular strength and many weaknesses and I got to make up for those weaknesses. And so we use a lot of like uh personality uh evaluations. We do something called the culture index where we analyze people and put them in their proper positions. And so like I I would say that would be like a huge key to a success in scaling is bringing people in and incentivizing them with the right way. I'm a big fan of Elon Musk. He owned 11.2% of PayPal when they exited. That gave him a $165 million exit. And so uh I think he did it the right way. >> Got it. So I'm guessing going from zero to 16 million your first year, like going back to that point, um there's probably some other time in your life where you did something that was just astronomically bigger than either others expected you to do or that you did yourself. What what was that experience that led you to come out so hard on on this company and go so big fast?

10:36 >> You're going to make me emotional. Um So uh when when I was in uh door-to-door sales, it was very common for, you know, a good a good producing sales person could sell one or two a day. And I was in a competition. And uh and uh in this particular competition there was a Range Rover as the prize. And uh it was a 256 man bracket in the championship. Uh one day um I uh I I saw what was possible when you like put it all out there and made my first sale at 7:30 in the morning and the last one at 11:45 at night. And I sold 18 in a day. And uh and before that like industry records were like 11.

11:25 And uh that opened my eyes of like what's possible when like and it was like that moment that that I knew if I just thought bigger and acted crazier and like more people will get behind that and so that that was like a a defining moment in my life. >> Yeah, that's awesome. And the Range Rover was cool. Give him a round of applause. I think the founder of Nvidia, Jensen, talks about going through hard times. You know, on the last panel, we had someone talk about going through painful times, hard times, kind of like teaches you things. I think it was James earlier today who was talking about that. It like builds character and makes you realize what you're capable of. So, super important. So, how do you transfer that through the culture comments you made earlier to your team? Because if you can transfer that into the DNA of your sales team and show them what they could get done in a day compared to what they think they can get done, it could probably be like 5x or 10x, right? So, how have you tried to transfer that?

12:30 >> Yeah, so that's a good question. So, like going back to my my first company's failure, right? When I was $2.2 million in debt and didn't have less than $1,000 in my bank account and and all the fears of my life were coming true, right? The realization that I had was it's really not that bad. And and the fact is is most of us are so scared of taking big crazy action because of this fear of what our worst-case scenario would look like. And going through my worst-case scenario and realizing that man, my life is still good. God is God is real. My family's still there and I still have everything that I've learned up until this point. Like how amazing is that? So, like from then on, I have never been scared of failure and like I'm willing to go to zero. Like and and I think the willingness to go go to zero is what makes me lethal because I will go and take crazy action that I am not afraid of. And so, I share that story on all the time with my with my team. It's like, "Look, your worst-case scenario that you're creating in your mind is not as bad as you think it is. Therefore, let's take the action that gives us the crazy infinity upside." >> Right. Yeah, that's awesome. The more like I've read 130 some books authored by billionaires, the more that I

13:47 interview people like you and read things from them and interview some of them, the more that combination of you try to work smart, but you also work harder than most people that you know and take massive crazy action and just are extreme at least on the action spectrum, if not on other spectrums, because like if you're if you're acting average, you're going to get average things out, right? >> Absolutely. >> So, I think that's something like So, what led you to want to sell 18 in a day versus the industry record 11 that led you even having the confidence to do that or go all out or is it just like in that back against the wall pressure? So, you just thought you had nothing to lose or is there anything else you learned from that that goes into kind of like your morning ritual now or your daily mantra or some theme about your life now?

14:33 >> Well, I I believe I'm probably the craziest person in the room as far as like my goals, my ambitions, my drive. And so, the the thing that I have never missed on is when I go big and dream big, it's never been it it's never been like a a real failure, right? And so, I'd much rather like go extremely high and hit half where everybody else is aiming down here. Um and that that's played out extremely extremely well in my life and and it's allowed me to get crazy rooms, right? To to network with the Queen of England, to be in in the room with different prime ministers and and and whatnot. It's just like because I think so crazy, people are just like, "Hey, let's let's see how this thing plays out." >> >> And so, you know, I'm I'm just kind of that like most people are just aiming here and it doesn't inspire anyone. But, when you're sitting in your garage and you're telling somebody in 5 years we're going to have 500 employees and be doing 100 million a year and you believe it with your whole soul and people get in and they see the road map to be able to go do it, that's what allows you to build an 1,100 person team doing 233 million a year because those people want to back a vision.

15:53 >> Right. Awesome. So, I'm guessing that you're aiming to be in the the billionaire boys and girls club is what I would assume listening to you today. I'm also I don't know you super well yet, right? We're still getting to know each other, but I'm guessing you're using this platform to help others like do what you've done on and have some equity board stakes or make investments yourself as kind of like a family office holding company cuz they want to be who you are when they grow up type thing or like what is your platform now to to scale 10x more cuz it seems like you're that type of person. >> I tried retirement for 6 weeks and it sucked. And I was like, this is not what I signed up for, right? I've never been a destination type guy. I love the growth. I love the vision and the direction. And so, I launched a unique platform where we use education to source investment opportunities for us. And so, I I run this platform with a podcast and and and education where people pay us to come and consult inside their home service and home product companies and in turn we get to see their P&Ls, how they're operating, we insert principles and then when they're ripe, we go and we we partner with them. And most of these were able to negotiate 50 to 60% equity with no money out of pocket. Which is like extremely unique because we provide

17:10 an operational back structure where we'll actually partner and help scale them. And the thing I love about the home service industry, it is the hedge against AI. I freaking love AI with all my heart and I use AI to run these companies well, but the last thing on earth that's going to be replaced is the person showing up to diagnose an issue with your toilet and fix it, right? And so, when that happens, the whole world is taken over by the robots. And so, because of because of it being able to empower these blue-collar people through AI, infrastructure, everything else is what gets me jacked and excited. And so, because of it, we just launched So, we ran the education platform for 2 years before we made our initial ask, and in the last year we've acquired 13 different companies, in in which we we've come in and positioned ourselves.

17:59 Our current our current run rate is about $93 million, and and we're building we're building this platform to be a $5 million company in the next 5 years. And so, it's something that I'm super passionate about, super excited, and and being able to you know, help these companies through AI, but do the work that that literally nobody wants to do. Nobody wants to change a toilet, nobody wants to rewire their home, nobody nobody wants to fix their air conditioning unit. It is the ultimate opportunity, and we're the we're the leaders in that forefront. >> That's awesome. Yeah, during lunch the deep due diligence group was meeting, there's probably 20 some investors there in the room, and we emphasized the point if you can source deals first exclusively and at a better valuation than other people, your balance sheet compounds, and basically you've created the ecosystem to cherry-pick the best of the students who you like and think they have massive promise, and then become their partner basically to scale them up, right?

18:56 >> Yeah, that's exactly right. And you know, where people are buying at multiples, we're buying at zero, which is just the the absolute incredible. And so, and the only thing that we lack right now is like building out more and more of our infrastructure. It's actually why we're we're doing a raise to be able to back more cash into that because all these companies that are running profitably keep going and scaling inside their own organization so we're not pulling any cash outside of them. >> Got it. Is there any deal you walked away from that you wish you had done? >> Any deal that I walked I mean I've had I've had opportunity I had opportunity to invest it in SpaceX when it was you know a hundred million or you know a hundred billion, you know, so that that would have been cool but there was um selling selling to private equity although I loved it and it was an incredible ride.

19:46 Giving somebody else your baby and then them basically forcing out operational control and seeing them damage your baby um you know sometimes I regret that. >> Got it. What's the most counter intuitive thing about building a company that gets to a hundred million dollar plus exit? >> So I kind of spoke on this it's it's not it's not product based, right? And that's one thing I always told my team I said look strategy is what we sell but what we are building here is a culture. It doesn't matter if we have to shift that into any other product or service what we will provide is is incredible opportunity for each of you and an incredible product or service of whatever we do to the company and so or to our to our end user and so again the most counter intuitive thing like product doesn't need to be perfect just your strategy and culture with your people.

20:36 >> Got it. And there's some people here in the room that do have twenty to a hundred million a year in revenue or have that level of net worth but for those that are relatively new some of them might feel like they have to earn their stripes and build a track record before they have a premium offering whether it's fees as a real estate developer or a product. But you came out of the gates and had premium positioning. How do you pull that off when you have like zero track record, zero experience, zero team at the start, you're in your garage and you come out with premium positioning? Can you explain that a little bit more? >> Um I mean to the end user we're always going to look like a billion dollar company, right? So the the wrapped trucks, the market the digital marketing and everything else behind the scenes might be duct taped together. It doesn't matter. Um and so, I think ultimately just the craziness that is instilled inside of me that that attracts premium talent to be like, let's see how this thing plays out.

21:23 >> Got it. So, we're real big on mental models. Before we we end the interview here, any big core mental model that you haven't talked about yet that's core to your success or any last comments that I didn't ask you about you want to make sure and communicate to everyone here? >> I mean, just just ultimately the the 80/20 model which everybody knows, right? Finding the 20% that moves the needle the 80% and constantly focusing and compounding on that over and over again and delegating and AI-ing everything everything else. >> Awesome. Appreciate your time here. Thank you. Let's give him a big round of applause. >>