I recently went one-on-one with Ken Goodrich. Ken is the founder, chairman, and CEO of Generator Partners and the chairman and former CEO of Goettl Air Conditioning & Plumbing.
Adam: Thanks again for taking the time to share your advice. First things first, though, I am sure readers would love to learn more about you. How did you get here? What experiences, failures, setbacks, or challenges have been most instrumental to your growth?
Ken: I started as a 10-year-old boy holding the flashlight for my dad while he worked on an air conditioner for a customer. From that day on, I worked nights, weekends, and every day in the summer in one of the hottest climates in America, Las Vegas, side by side with my dad, learning the trade. By the time I got my driver’s license at 16, I was a proficient technician running service calls, and I sold and installed air conditioners all through my twenties while I was going to college. When I was 25, my father passed away, and I bought the family business from my mom. That was my first acquisition. My dad’s business was a one- or two-man shop: him, me, and my mom answering the phone and doing the books. A real family business. But I had higher aspirations. I wanted to grow, and I wanted employees.
About two and a half years in, I came to the office one morning, and a guy in a disheveled suit was standing out front. I introduced myself. He said he was from the IRS and he wanted to talk about my back payroll taxes. I was so green in business that I said, “What’s payroll taxes?” He said, “Well, son, we’re going to show you exactly what payroll taxes are.” A week later, on a Friday, he came back with other agents and some tow trucks. They towed three of our vans out of the parking lot, garnished my business account and my personal accounts, and I bounced payroll to 30 employees. And that still didn’t cover what I owed with interest. That was my baptism by fire. I had a couple of decent guys who stuck with me, and every single day I would go out and sell some work, buy the materials, my guys would install it, I’d collect that same day, and every Friday I would go hand the IRS some more money. I did that for a few years until it was paid off and I could get credit and hire again.
In the middle of all that, I read a book that changed my life: The E-Myth by Michael E. Gerber, subtitled Why Most Small Businesses Don’t Work and What to Do About It. The premise is that your business is not the work you are doing. Your business is a system, a prototype made up of processes you can teach your employees to operate, so you have a duplicatable, predictable business that serves customers well and makes a profit. That resonated because I am a technical person. I understand order of operations. So I went to work on my business instead of in it. I documented processes, quantified results, wrote job descriptions, and built onboarding and training. By the time I finished paying the IRS back, I had a genuinely solid residential HVAC service and replacement system. Two years after that, at 32, I had the largest residential HVAC company in Las Vegas. And because of what I had just been through, I started buying every bankrupt, broken, and for-sale company I could find and applying the same techniques I had used to fix my own.
In 1997, I became a founding partner of American Residential Services, now ARS Rescue Rooter, and we went public on the New York Stock Exchange. I spent years there learning mergers and acquisitions at scale, multi-branch operations, and executive leadership, things most people in the trades never get access to. Then I went out and did it again with everything I had learned, built another company across Las Vegas and Phoenix, and ARS bought that one from me too. After that it became a routine: go into a market, buy up the smaller fragmented businesses, put them together, build the business system, build a winning culture, grow it and sell it. The last HVAC business we did that with was Goettl. We bought it in 2013 doing eleven million in sales and losing three million a year. We sold it in 2021 for over half a billion dollars, applying the same principles.
Adam: In your experience, what are the key steps to growing and scaling your business?
Ken: I approach every business the same way. There are seven fundamentals, seven centers of management attention, that have to be in place: leadership, management, money, marketing, lead generation, lead conversion, and client fulfillment.
Leadership is the owner’s job and it cannot be delegated. You cast the vision, you know where the company is headed, you keep a brave face, and you keep everybody moving in the same direction.
Management is about people: how we actually manage them, organize their work, and quantify their results.
Money is the finance side: accounting, cash flow, receivables, payables. How do you create one accounting system for the whole business ecosystem?
Marketing, which can often be confused with advertising. Marketing is your brand, your brand story, your colors, how you relate to the public. How will your brand connect with people more efficiently and effectively?
Lead generation is exactly that: what mediums and campaigns do we use, and how do we manage them?
Lead conversion is sales: how do we become effective enough to sell our products and services at a price that makes a profit and a closing rate that grows us?
Client fulfillment is getting the work done so we honor the promises we made in our marketing and our sales. Efficiently, on time, on budget, every time, with real quality assurance behind it.
So I come in and build the fundamental processes for each of those seven. Eventually, I had a dedicated team whose entire job was this. They were my business system team. Once the fundamentals in each pillar are solid, we do the most important thing: build a brand and a lead generation process that is genuinely unique and delivers efficient leads, and a sales system to match. Then we pour gasoline on lead gen and sales, and we take off.
Adam: What are your best tips on the topics of sales, marketing, and branding?
Ken: Here is what I know for sure, and it is what most people miss: you have to create a brand and a brand story that connects with your community on an emotional level. Calling yourself Zippy Air Conditioning Service is not connecting with anybody. Let me give you the brand story we built for Goettl. I was a 10-year-old boy holding a flashlight for my dad while he worked on an air conditioner for a customer. His name was Duncan Goodrich. He didn’t talk much, but there is a certain kind of magic that happens when a son holds a flashlight for his father. I held it steady and quiet, and Dad talked to me while he worked. He said, “When a person needs help, you go right away, not when it’s convenient for you.” He said, “Always do what’s right.” And he said, “The Goettl Iron Horse is a magnificent machine. Nothing else even comes close.”
That was the first time I held the flashlight for my dad, but it wouldn’t be the last. At Dad’s funeral, I realized that every time he handed me that flashlight, he was passing the torch. And my dad believed in Goettl air conditioners. So I bought the company. Goettl is hard to spell, but we’ll respond right away and do the right thing always. No one knows air conditioning like Goettl. As soon as we put that story out, people called and said, “I just heard your story. I held the flashlight for my dad too.” Everyone else in the market was shouting about a $49.95 service call. I was talking about what happened when my dad died. And I won.
On the radio, instead of talking about price, I would say that most companies do background checks and drug tests before they hire somebody, but at Goettl we take it one step further: they have to meet my dog Sadie. She’s a Wheaten Terrier, and if she doesn’t give them the Wheaten greeting, I know they don’t have the caliber and character to come into your home. Dog people understand the sixth sense of a dog. That one blew up the business. And by the way, we were the most expensive company in town, times three. It stopped being “I’m going to call Goettl.” It became “I have a friend in the air conditioning business named Ken.”
On sales, here is what I learned: sales is a system. It is a system people follow to build rapport, build trust and confidence, and overcome a customer’s objections to buying. Most of my competitors don’t see it that way, and my response to them is always the same. Your title is not price man. Your title is not give-it-away man. Your title is salesman, and that means executing proven techniques that make someone comfortable with the decision in front of them so you can close the business. Once we understood that, we leaned all the way in. Everything in our businesses is a system now.
Adam: What do you believe are the defining qualities of an effective leader?
Ken: Number one, you have to be a good storyteller. It is no different from the branding exercise. You have to connect with your team on a personal level. There is a line from The 21 Irrefutable Laws of Leadership that I come back to constantly: you have to touch a heart before you ask for a hand. That is rule number one.
Second, you have to cast a vision and lead a culture that makes your team feel like they are part of something bigger than themselves when they show up. Something they are proud of, something they are building a life and a career around. When you have that, you have something special.
And the last one: great leaders protect their team. Whatever is coming at the company, your people should not have to carry it. That is your weight.
Adam: How can leaders and aspiring leaders take their leadership skills to the next level?
Ken: Leadership does not come naturally, and it certainly did not come naturally to me. I was raised by a Depression-era father, a hard man who did not subscribe to any of what we are talking about. That was my first education in leadership, and when I tried it on my own employees, it ended in disaster most of the time. So I went and found coaches and business groups and learned the actual techniques. Once you see it in practice and you do it enough, it becomes part of you.
I will add one thing, and I think it is the real answer to this question. The best version of my leadership came while we were building Goettl, because the story was so personal to me that it meant more. I was not walking in saying let’s go make some money. I was talking about my father, and what he taught me, and why we do the work the way we do it. I could project that to my team, and they could feel it was real.
So if you want to take your leadership to the next level, find the true story underneath what you are building and keep preaching it humbly. Techniques you can learn. Authenticity you cannot fake, and it may be the most powerful leadership tool available to you.
Adam: What are your three best tips applicable to entrepreneurs, executives, and civic leaders?
Ken: First, keep up the brave front. No matter what is happening, you have to be the strong one. Your team is reading you every day, and what they see in you is what they carry into their own work.
Second, understand that your job is to make sure your team succeeds. Give them whatever they need to succeed. Your job is not to be the smartest person in the room and it is not to solve every problem for everybody. It is to cast the vision, pivot the team when a pivot is needed, and keep everyone focused on the mission at hand.
Third, work on the enterprise, not in it. Most people go to work every day thinking about the work. The work is not the work. The system is the work. That applies whether you are running a service company, a practice, or a civic organization.
Adam: What is your best advice on building, leading, and managing teams?
Ken: Most people who own a business do not come to it with these skills naturally. It is no different from sales. Management is a skill set. There are proven techniques to be an effective manager, and people need to go get that education and then rehearse it before they are any good at it. Every one of those seven fundamentals I mentioned is a different skill set. The leader does not have to master all of them, but he absolutely needs to understand what each of those roles requires, because you cannot hold someone accountable for a job you do not understand. And everyone should be continually sharpening the saw. Read books, take courses, join one of the organizations that teach these fundamentals. There are plenty of them out there. Go vet them and find the right one for you.
Adam: What is the single best piece of advice you have ever received?
Ken: People don’t care how much you know until they know how much you care. That one has held up in every business I have ever run, with customers and with employees both. The other one I live by is that the system is the solution. Most people in business today believe the work they are selling or doing is the most important thing. It isn’t. The system is. Until you learn to systemize your business, all you really have is a job working for a lunatic.
Adam: Is there anything else you would like to share?
Ken: I have been writing a series of books for the trades with Michael Gerber, whose work changed my life when I was broke and rebuilding. There is one on HVAC, one on plumbing, and one on electrical coming next. What surprised me in writing them is what they revealed about my own thinking over time. I wrote the HVAC book in the voice of the man I was when I built those businesses, and that man talked pretty basic. He was a technician who had just figured out that a business is a system. I wrote the plumbing book from where I stood in 2001, after I had already built companies, sold them, and been through a public roll-up. Same principles, but a far more sophisticated way of thinking about pricing, about people, about what a business is actually worth. The electrical book is the culmination of the whole journey. Reading them back to back is like looking at three photographs of yourself taken twenty years apart. The through line is the same, but you can see exactly where each hard lesson landed. That is the thing I would want another owner to take from it. You are not supposed to have it all figured out at the start. I certainly didn’t. I was a guy in a truck who bounced payroll to thirty people. What matters is that you keep building the system, and you let the work change how you think.
