About this video

• Video Title: The $174M Remodel Company No One Saw Coming #199
• Channel: JohnWilson
• Speakers: John Wilson, AJ, Noah, Vince
• Duration: 55:19

Overview

This video features an in-depth discussion with AJ and Noah from Premier Home Pros, a company that experienced rapid growth in the home remodeling sector, specifically focusing on bathrooms. They share their journey from starting with a small team and a dining room table idea to achieving significant revenue milestones and expanding across multiple locations. The conversation covers their business strategies, including product development, marketing, sales processes, operational scaling, and their approach to hiring and company culture.

Key takeaways

• Rapid Growth: Premier Home Pros went from zero revenue to $15 million in their first year and $86 million in their third year, with a current target of $174 million. They are recognized as the only company in home improvement history to achieve $15 million in their first year and $100 million in their first two years.
• Strategic Product Shift: Initially selling acrylic bathroom products, they transitioned to a higher-quality manufactured stone product, which significantly increased their average order value and market differentiation.
• Lean Operations & Scalability: The company focused on streamlining operations, reducing SKU count, and shifting to a "pull and replace" model for bathroom renovations to improve efficiency, speed, and installer satisfaction. This also led to a slight decrease in closing rates but an acceleration of cash turn.
• Data-Driven Decisions: Premier Home Pros emphasizes knowing their business metrics inside and out, using historical data to accurately forecast revenue and profit, and making calculated bets based on conversion rates and market analysis.
• People-Centric Growth: The founders believe that success hinges on having the right people. They prioritize hiring and cultivating talent, fostering a strong company culture, and believe that leaders are developed internally after being brought in initially from outside.
• Financial Prudence: The company has maintained a no-debt, cash-flow-positive model, allowing them to fund growth and find the right talent without immediate financial pressure. They have a remarkably short payback period for new market openings due to their highly variable P&L.
• Marketing & Sales Focus: Sales and marketing are identified as the core drivers of the business. They utilize a mix of buying leads and building brand awareness, adapting their strategy based on market needs and conversion data.

Here are detailed notes on the video, focusing on the key aspects of Premier Home Pros' journey and strategies:

Company Origins and Early Growth:

• Founding: Started in 2022 by AJ and Noah, friends who previously worked at Window Nation and Leaf Filter.
• Initial Idea: Began at a dining room table, deciding to focus on bathrooms as a niche with high growth potential, unlike the saturated roofing and window markets.
• First Lead & Sale: Ran their first lead in December 2022 in Courtland, Ohio. The first sale was for $11,300.
• Aggressive First Month: In their first month (December), they achieved a 91% demo rate and an 82% close rate, generating $557,000 in revenue with just three people.
• Product Strategy Evolution:
  • Initial Product: Started with acrylic (high-definition plastic) wall systems.
  • Catalyst for Change: Met Jake Amron from Trumble Industries, who introduced them to a manufactured stone wall system.
  • Initial Hesitation: The new product was 40% more expensive than acrylic, causing initial hesitation.
  • Strategic Partnership: Visited Trumble Industries, realized they manufactured not only walls but also doors and bases, becoming a one-stop supplier. This partnership proved crucial.
  • Impact of New Product: The stone product impressed them, leading to a calculated bet on higher material costs for higher average order value and market differentiation. This proved correct.
• First Year Milestone: Finished their first year (2023) at $15 million in gross sales across three offices (Cleveland, Northeast Ohio, Pittsburgh, Philadelphia).

Business Model and Operations:

• Service Offering: Full-service bathroom remodeling, specializing in bathtub and shower replacements, but also offering flooring, vanities, and toilets on a "pull and replace" model.
• Average Order Value (AOV):
  • Overall Average: $18,300.
  • "Wet" jobs (tub/shower replacement): ~$16,000.
  • "Dry" jobs (flooring, vanity, toilet): ~$21,000 (when combined with a wet job, the AOV increases).
  • Initial Year AOV: ~$1,700 (combined wet and dry) - significant increase to current AOV.
• Lean SKUs & Repeatability: Aim to keep Stock Keeping Units (SKUs) tight, offering around 14 wall systems in different colors/patterns, 4 bases, and various doors. This creates ~20-30 combinations, making the process more repeatable and easier to manage.
• Shift from Full-Service Construction to "Pull & Replace":
  • Previous Model: Engaged in full construction, including moving plumbing, widening doorways, removing walls, and extensive drywall work, leading to 3-4 week project timelines and poor margins.
  • Current Model: Focused on "pull and replace" which simplifies installation, reduces labor time (allowing installers to do 4-5 jobs/week instead of 2), improves installer income, and increases cash turn.
  • Impact of Simplification: Reduced closing percentage slightly (from ~57% to ~53%) but significantly increased revenue and profitability. They learned to say "no" to complex jobs that didn't fit the streamlined model.
• Office Structure: Each office typically includes a Sales Manager (leader/manager), Operations Manager (day-to-day), Project Manager (scheduling, installation, aftercare), Service Manager, Sales Team, and Installers.
• Growth Trajectory:
  • Year 1 (2023): $15 million
  • Year 2 (2024 Target): Aiming for $50 million (achieved $86 million)
  • Current Goal: Chasing $174 million.
  • Locations: Expanded from 3 to 9 offices by the end of 2024.

Hiring and Team Building:

• Recruitment: Started with AJ's wife handling recruitment for the entire country. Now has a dedicated team of 5, each managing specific regions and roles (installers, sales reps).
• Installer Acquisition: Not overly challenging due to competitive pay and a focus on finding quality individuals. Emphasize paying talent well to retain them.
• Training: Rigorous training for sales and installation teams, including product knowledge, sales processes, and hands-on installation practice. Field trainers shadow new installers for the first week.
• Internal vs. External Hires: Initially relied on external hires for key leadership roles (like the CMO, Vince) to establish systems. Now aiming to promote from within, fostering a culture where employees understand the "Premier way."
• Company Size: Over 100 corporate employees, with total team members (including contractors) exceeding 300.
• Core Leadership: Founders AJ and Noah, with Vince joining as a third owner and CMO.

Marketing and Sales Strategy:

• Lead Generation: Uses a combination of buying leads (affiliate marketing, non-branded ads) and branded campaigns.
• Affiliate Marketing: Buys leads from platforms like Angie's List. Differentiates between non-branded (customer shopping around) and branded (customer specifically looking for Premier) leads. Non-branded affiliate marketing is often their best cost-per-conversion.
• Branded Spend: Active on LinkedIn, distributing their message. They aim to buy existing demand while building their own brand demand.
• Payback Period: Greenfield locations have an average payback period of 46 days, significantly faster than competitors who rely heavily on brand saturation and take years. This is attributed to their variable cost model and focus on buying existing demand.
• Sales Process: Emphasis on a documented, well-trained sales process (A to Z) and CRM integration.
• Unique Selling Proposition (USP): The manufactured stone product is a key USP, enabling higher margins, higher AOV, and differentiation from competitors using basic acrylic.
• Targeted Approach: Have marketing plans and target zip codes/homeowner types for their next 30 markets.

Financial Management:

• No Debt Model: Built the company without taking on any debt, maintaining profitability.
• Variable P&L: Designed the business with ~70% variable costs, meaning expenses decrease significantly if sales decline.
• Profitability: Consistently cash flow positive and profitable. Last year (2023), they aimed not to lose money while expanding rapidly and still turned a profit. This year (2024) is focused on increased profitability.
• Metrics Tracking: Meticulously track conversion rates (lead to set, set to appointment, appointment to demo, demo to sale) and profit margins month-to-month, achieving accuracy within +/- 2%.
• Forecasting: Use historical data and conversion metrics to model out expected revenue and profit, landing very close to targets each month/year.

Entrepreneurial Philosophy:

• Dream Big: Founders operate with an "irrational self-belief" and a drive to transcend their industry, not just achieve conventional success.
• People First: Emphasize that a business's success is driven by its people, not just the founders. "One team, one dream."
• Know Your Business: Crucial for any business owner to understand all conversion metrics; otherwise, the business runs them. "Hope is not a strategy."
• Adaptability: The business is a "living, breathing ecosystem" that requires constant adaptation. They landed the plane at $86 million last year instead of $120 million to maintain quality and infrastructure, then used that time to prepare for higher targets.
• Risk Management: While ambitious, they don't take "irrational risks." They push limits but listen to the business when it signals a need to slow down or focus on quality.
• Repeatable Systems: Success relies on building repeatable processes and systems that can be taught to others, allowing owners to step back and focus on strategic decisions.
• Sales & Marketing Foundation: These are the most critical components for launching any business successfully.

Key Differentiators:

• Product Quality: The engineered stone product vs. standard acrylic.
• Speed of Growth: Unprecedented revenue milestones in very short timeframes.
• Financial Model: No debt, high variable costs, rapid payback periods.
• Operational Efficiency: Streamlined processes like "pull and replace."
• Data Discipline: Deep understanding and application of conversion metrics.