Royce Yudkoff:

Welcome to Think Big, Buy Small, a podcast from Harvard Business School about entrepreneurship through acquisition. We’re your hosts, Royce Yudkoff…

Rick Ruback:

…and Rick Ruback.

Royce Yudkoff:

Today we're going to have a discussion with Jackie Kopcho. She's CEO of Tortorella Pools, a large pool maintenance company based in Eastern Long Island that has about 150 employees. We're going to talk to Jackie and find out about the decisions she made and her journey from being an employee in someone else's company to being a business owner and CEO.

Rick Ruback:

Royce, one of the things I find really intriguing about Jackie's business is that it's a pool business. I would never have thought before talking to Jackie that a pool business would be a great ETA target. But I think our listeners will come around and agree that it really is a great target.

Royce Yudkoff:

Rick, one of the fascinating things about entrepreneurship through acquisition is that when you look at a variety of businesses, their products and services all seem random, one not particularly more interesting than the other. But when you look at these businesses through an ETA lens, meaning looking for the qualities that lead to enduringly profitable businesses, like sticky recurring customers, like no customer concentration, like low economic cyclicality, then the businesses that are really terrific acquisitions stand out from the others, and I think that's something the listeners will see as Jackie describes the business she bought.

Rick Ruback:

I also think it's just really cool that so many businesses that become successful ETA acquisitions are businesses that you would've never imagined existed or would be big businesses. I mean search is such a wonderful process of discovery. All right, let's go.

Royce Yudkoff:

Jackie, welcome to Think Big, Buy Small. It's a pleasure to have you here.

Jackie Kopcho:

Thank you so much for having me. I'm excited to speak with you today.

Rick Ruback:

Yeah, it's great to have you. Tell us a bit about your personal journey, how you got to this moment in your life.

Jackie Kopcho:

So, my journey really started with working at my grandparents' pizzeria in the South Bronx, from when I was probably like seven, eight years old. I dealt with everybody, from just regular people walking in off the street to district attorneys, professors from Fordham University, and the police commissioner would come in all the time, so really learned how to deal with people. Great example from my grandparents, from my parents. And as I worked through my career, I found that the one thing I was really good at is just engaging with people, talking to people, working with people, and worked with institutional investor for about eleven years, putting on financial conferences, so also had the opportunity to deal with people from the likes of Goldman Sachs and Moody's and Standard & Poor's. So, had that little finance spin. Eventually, I started working with my brother and his best friend on a business. They started from scratch, so from the ground up, and there's something to be said for people that start businesses from nothing. It's tough, it's exciting, and...

Rick Ruback:

…and scary.

Jackie Kopcho:

And scary, it really is. But if you have that vision and you have confidence in yourself, you kind of are able to bury that scariness a little bit and you have to push forward. But once they were up and settled, I came to the realization that I wanted to increase my capacity of understanding of business and finance and decided to go to business school. So, I was working as a consultant while I was going to business school and came across somebody who was working in private equity. I really liked his story. I asked him out for a cup of coffee and he mentioned this thing called search funds and, you know, I always make the joke that it sounded like a Ponzi scheme and I was like, “You know people are gonna give me money and I get to go out and buy a business”, and he's like, “Yeah.” I'm like, “Oh, let's do this.” So, I decided that day that this was going be the route that I took, and my background of being in different industries and dealing with a lot of people and making sure that everybody was respected and had an opportunity to work with me and brought me here. And I'm excited that I had all those experiences.

Royce Yudkoff:

That's great. Tell us a little bit more about what made you decide to be an entrepreneur and, in particular, an entrepreneur through acquisition. I mean, you had a bunch of jobs in other people's companies and it sounded like they were pretty satisfying. Certainly, the later ones had a lot of opportunity to them, but what made you pivot into entrepreneurship through acquisition?

Jackie Kopcho:

So, for me, I saw my grandparents and they ran the pizzeria and what they dealt with. And there were opportunities and there were a lot of hardships as well. My dad ran a business for a while and then he went out to work for other people. And for me, the way I looked at it was you get to choose your heart, right? My heart can be going out and running a business and dealing with people and relying on myself to be successful, you know, despite relying on my entire staff here. Or I can go out and start a business or work for somebody else. So, when I stack the chips up and said, “What makes the most sense and where am I most comfortable?” I put it all on myself. So, I said, “If I go out and find a business, it's on me and it's my networking and my finding a company.” If I succeed, it's reliant on what I do rather than working for somebody else who then has the ability to gain that wealth and flexibility. So, I just looked at it as, “This is kind of cool. It's going to be extremely difficult but sounds like a lot of fun.” And I'm always in for a good time.

Rick Ruback:

And when you started that process of searching, were you married or single…?

Jackie Kopcho:

I was, I was married and I remember coming home and telling my husband, “There's this thing called search funds and I could go out and buy a business and we could live anywhere”, and he's like, “Anywhere?”, and I'm like, “Yeah.” And he is the most patient, supportive man in the world, which is exactly what I need. We discussed it and I had his full support and I went for it and it ended up to be, thus far, successful.

Rick Ruback:

That's great. Tell us about how you financed the search process.

Jackie Kopcho:

So, I was a traditional searcher and I understood the different ways that you can be a searcher. It was traditional, self-funded, accelerator. For me, the idea of traditional just made so much sense. I wanted to rely on the expertise of people who have been there and done that, understanding how they evaluate companies, getting feedback on financials. People that have operated, they have the ability to walk me through scenarios and situations when I was evaluating businesses. I loved being a traditional searcher and I worked with investors that were in my cap table, but I also maintained relationships with people that weren't in my cap table, whether it was they decided that they didn't want to be in my search or just there wasn't enough room for them. Because I do believe that a solid mix of people from different industries and different experiences, it could only help you. And I looked at it like that. So, for me, the traditional search was the way to go. And I had the resources and I still learn from those investors today. So, I feel I made the right decision on that part.

Rick Ruback:

And the major motivation there was learning from your investors, not so much needing the money while you were searching?

Jackie Kopcho:

Listen, I think coming from a blue-collar family and a small business background, the money was definitely helpful and needed at that moment. So, it took the pressure off, right? Where if I didn't have a salary, I feel like it would have been a little bit of a different dynamic, and a little bit more pressure, and maybe looking at things with more of a rose-colored glass because I wanted to get a deal done and I did not want to just rush into something. So, that cushion was helpful.

Royce Yudkoff:

Jackie, how long did your search take you before you bought the company you bought? And did you have some clear criteria in searching, like geography or industry or company qualities? Maybe you could share those with us.

Jackie Kopcho:

Yeah, so I started searching November 4th of 2019 and I acquired this business on December 30th of 2021, just over two years. And in terms of criteria and clear vision, of course, when I was out raising capital, these are the industries and this is what I'm going to do. And what do they say, right? When you're in the ring and you get punched in the face, you kind of, you have to pivot. And when you're searching, I was big on the food and beverage space. I came from that world, I understood it, I really liked it, whether it was manufacturing, RFID food tracking and tracing, spices, I looked at convenience stores, like I looked at it all. You go through those industries pretty quickly. So, I was working with a handful of interns that were constantly pitching industries and ideas and we would make our way through the ones that we thought were worth our while to explore. But if you asked me in November 2019, I would have said, “Absolutely, I'll end up in food and beverage.” And now I am building swimming pools. So, definitely takes a turn, but a good business is a good business. And I think because I was not absolutely industry-focused, it allowed me to look at a lot of cool industries and a lot of cool spaces and eventually come across this one that I'm happy to be in. So, whenever I speak to searchers, as well that are thinking about searching or currently searching, they always ask, “What was your industry thesis?” And I’m like, “Your industry thesis is a good business and a good industry that you think you're going to be happy running, that can create returns for your investors. So just be open for it all.”

Royce Yudkoff:

Jackie, I note that you grew up in the New York area and you ended up buying a business on Eastern Long Island, which is only about 80 or 90 miles away.

Jackie Kopcho:

Right.

Royce Yudkoff:

I too grew up in New York and so I'm very familiar with how New Yorkers look at the world, which is there's New York and then there's everything else. So is that just random chance that could have been in Topeka or did you put your hand on the scales as you looked at businesses?

Jackie Kopcho:

You know, I think I put my hands on the scales just because of my network. I spoke to, I looked actually at my networking sheet the other day, over 650 people where I went out to coffees, I had conversations with, we had dinners, went to full-on networking events with, that were majority in the New York area, New York, New Jersey, Connecticut. So, I did speak with more companies on the East Coast than I did anywhere else. With that being said, I had an LOI out in California, I had an LOI out in Florida, actually two out in California. One actually came from my network. So, just by the proximity of my network, it happened to lead to these conversations. This business was a broker deal. So, I just came across it and it was an Italian guy and I'm from an Italian family. So that's my, I'd say, that's my bread and butter of people to speak to. And was able to drive out here quickly. For most of the meetings that I took for businesses where I was interested, whether I got on a plane or got in a car, I said, “Give me the opportunity to sit with you face to face” because I know I could win there, right? If it comes down to dollars and cents and I was up against a private equity firm, the chances of me getting the business are low. But if you meet me and you have a conversation and we're able to connect, I'll know I'll win. So, that strategy really helped with just getting across some finish lines or getting into the ring with businesses. And it just happened to be a lot out in New York.

Royce Yudkoff:

Well, maybe this is a good point for you to tell us a little bit about the business you ended up buying. Give us a description of the business.

Jackie Kopcho:

I am the CEO of Tortorella Swimming Pools. The company is made up of four divisions. There is a pool construction division, so we do design and construction. There is a service and maintenance division, where we maintain pools, clean them, get them opened, closed. We have a heating and gas division, which is mainly installation of the heaters for service and propane delivery. Long Island is a majority propane, there's not a lot of natural gas lines. And we have an auto chem division. They deliver chlorine to municipalities, water districts, commercial pools. And then we have one non-revenue generating division, which is a full mechanic shop. We have a fleet of a hundred and eleven trucks, so any time they're not rolling it's costing us money, so instead of sending them out to a mechanic shop we fix them in-house. The company in the prime season is about a hundred and fifty employees. That prime season runs from March until end of September. We do have a lot of seasonal workers that, they go back to either Jamaica or Honduras. And in the winter in our off-season, we are about ninety. And those ninety people over the winter, we still maintain the pools. We check on them. Tortorella is not just a “let's clean your pool during the 18 weeks or the 20 weeks of the season.” We want to check your pool all year. So, we help with the longevity. We help to make sure that the opening is really easy. So, when you're ready to come out here, it's a quick “take the cover off, throw some chemicals in it, get it running and going.” So, as we think about things, it kind of flexes up, flexes down, in terms of labor, but we try to offer top-notch service throughout the year.

Rick Ruback:

So, can I ask about the pool business? I don't own a pool but can you let your dog swim in the pool? If my dog couldn't swim in the pool, I don't think I could have…

Jackie Kopcho:

Oh, some people have pools just for their dogs.

Rick Ruback:

Just for their dogs. Well, okay. Well, maybe this is a possibility then. So, the business is like about 90% pool-related or not, or a hundred percent pool-related?

Jackie Kopcho:

It's 90% pool-related. The chemical division, with the water districts, et cetera, that's not necessarily related.

Rick Ruback:

Yeah, it's a little different, but you probably wouldn't be in that business other than the pool business as kind of the anchor, so it's all pools. And how many of those pools are in residential settings?

Jackie Kopcho:

The majority of the pools that we build and service are residential.

Rick Ruback:

Okay, so you're dealing with humans all the time.

Jackie Kopcho:

It is a people business. This is not construction, it's not pool service. We are in the people business.

Rick Ruback:

So, it's not so different than selling pizza, really.

Jackie Kopcho:

Pizza, it's a little easier, right? The pizza doesn't yell at you and answer back. And, you know, as long as your recipe is right, it tends to comply. Some of these conditions we can't control out here, like pollen. It was very bad this year.

Rick Ruback:

People don't like yellow pools?

Jackie Kopcho:

People don't like yellow pools and it's funny because we'll take photos and we'll send a photo and it's like, “Hey, we were at your property today” and whatnot. And then they come out and they're like, “It's been three hours and our pool has this layer on it.” And we're like, “Great. It's the pollen. We'll get there, we'll get it cleaned up.” But yeah, some of those outside environmental issues that we can't control…

Rick Ruback:

So, most of these pools are outside, I take it?

Jackie Kopcho:

The majority are outside.

Rick Ruback:

Yeah, so they don't swim in them in the winter. So, pool season begins in Long Island in May?

Jackie Kopcho:

First, we do have a handful of people that keep their pools open year-round. They keep them at ninety degrees and they're swimming laps on New Year's Eve. But the majority are seasonal. The season here runs from Memorial Day to Labor Day. And I would say it's less about weather and more about to be seen in a social aspect of it. For anybody that knows the Hamptons, it's the place to be for the summer.

Rick Ruback:

So, you get out your white pants and out you go, charging to the Hamptons. And the pool has to be ready when you get there. So, it's really seasonal.

Jackie Kopcho:

It is seasonal. So, the majority of people come out for Memorial Day and then there are handful that trickle out for July. After the 4th of July, it tends to even out. Most people are out here. We have some people that honestly start closing their pools at the end of July, August, just because their season is done at this house. Maybe they're heading off to the south of France or one of their Palm Beach locations. It's interesting, the dynamics and the schedule of people swimming out here.

Rick Ruback:

So, most of the revenue happens in winter maintenance and preventative maintenance, and then some of it happens, I suppose, throughout the season and then closing, but most of it must happen associated with opening.

Jackie Kopcho:

With opening, closing, we tend to try to package things together. In terms of revenue recognition, you'll see those little spikes early and late. With revenue, our construction season really runs from September to end of June. July and August, it's a little quiet. It really depends. This year we actually have some pretty big jobs, so we've had a nice steady stream of revenue on the construction side, but historically speaking, the months that construction might be a little slower, that's when service bumps up. So, the seasonality, it helps even it out a little bit. Plus, you have those nice little summer jumps, which are good.

Rick Ruback:

Royce and I have recorded a separate episode on Robin Kovitz, who I think you might know. She owns a gift basket company in Canada and she too has a seasonal business. And there we talk a lot about the curse of a seasonal business that everything happens at once. Do you feel like it's just harder to manage cause it's seasonal or not?

Jackie Kopcho:

I do, I do. And when you look at staff and workload and just full-on operations, again, you can prepare your team. And we have a full department for training and quality assurance, but we try to bring in everybody a little earlier who's a seasonal worker to get them fully trained up, working on automation and fixing things. But when the season comes, it's tough because it's not just “Get the pool open.” It's actually “Now these tiles fell off or this light needs to get done.” So, everything needs to get done in this very short amount of time and some of those things you just can't do on the off-season. So, it makes it hard, and it makes it hard in terms of labor as well. We rely on H2B programs, but it's political football sometimes. We were lucky enough to get our team in early this year and be prepared for the season, but there have been some seasons where the staff doesn't come in from abroad until, it could be June or July, and at that point your busy season's over, so I think dealing with the labor side of it, the unanticipated issues that you have to work with in a short amount of time, definitely much harder than if we could say we could do this at any month and any day.

Rick Ruback:

I think it's an interesting contrast to Robin Kovitz's business in a whole variety of ways. One is when you have a pool, you have a hole in your backyard and it's not like you can just not have that pool working this year, right? I mean, you can't just plant flowers in it. It's a big flower pot. So, in a gift basket, you could choose just not to send it. But in a pool, I think you can't just choose not to open it once you have it. And if you do, particularly in the Hamptons, I suspect people will make fun of you if you say, “I'm not opening my pool this year because the service is just so expensive”, right?

Royce Yudkoff:

Making fun would be nice, actually. They're more likely to sort of say, “That person is going bankrupt or what a loser.”

Rick Ruback:

HAHAHAHA!

Royce Yudkoff:

No more party invitations.

Rick Ruback:

But I do think this issue of wealth matters in the sense that what you want to be is a really unimportant part of your customers’ expense and an important part of your customer's experience. So, in the case of the pool, you know, having a lovely pool on a warm Sunday afternoon, with your family around, your grandkids, your friends, this sounds like a lovely thing, right? But if the pool isn't working and everybody's standing around, grumpy around the pool, not so good. And, and if you're wealthier, then you're much less likely to say, “Oh, I can do this pool service myself. I can figure out the chemicals. I can make it work.”

Royce Yudkoff:

I do think we agree that seasonal businesses can be very successful businesses, but they are all harder businesses to run than a non-seasonal business. And I think Jackie said as much.

Rick Ruback:

Absolutely. Now let's return to the conversation and learn more about Tortorella Swimming Pools.

Royce Yudkoff:

How about the fact that you have a distributed labor force? Is that complicating running a business or not really a complication versus having most of your labor force in an office where you can sort of walk down the hall and watch what's going on? Because most of your employees are in vehicles all day across Eastern Long Island.

Jackie Kopcho:

It definitely makes it a challenge. I'm not going to say it's more challenging than having office staff, especially with people nowadays working two jobs and, what is it called, quiet quitting? So, at least with the trucks rolling and then filling out paperwork and we know if pools are cleaned, we're able to track the data on how things are being done and what they're doing. So, I'm not going to say it's more challenging, it's definitely hard, but we're trying to give them the resources and how do we get them out of the lot earlier? Do we get their trucks loaded up? What chemicals can we give them? How do we monitor chemical levels remotely? It's all stuff that we're working on, on the technology and data side to help our techs. So that's a big thing that we're doing is efficiency, the data analytics to improve the operations overall.

Rick Ruback:

It makes a lot of sense that if you can centralize some information, you can just optimize routes and make everything else simpler, right?

Jackie Kopcho:

Yeah, and it's just dealing with traffic too. So, you plan everything and then you have, you know, fifteen thousand cars on a one mile strip. It's one lane in, one lane out, and you have to take it into consideration.

Royce Yudkoff:

Jackie, tell us what was attractive to you about buying Tortorella Pools?

Jackie Kopcho:

When I found Tortorella, I was actually coming off a software deal that had fallen through. And I took a weekend and I said, “I'm going to go back to the roots of search funds and HVAC.” And this deal popped into my inbox and I was able to research the industry. It hit a lot of key criteria. It's very, very fragmented. There are a lot of older owners. The industry is very much pen-and-paper so the opportunity for tech-enabled efficiencies was huge. More and more people were putting in pools, right? So, the pool installation side was growing. The service side, it just naturally grows from that as well. And it's a certain skill that you have to have to balance a pool. And that doesn't mean that it keeps competitors out. The barrier to entry is actually very low, but homeowners are unlikely to do it themselves. So, we knew that the opportunity was there. There was definitely competition. And out here in the Hamptons, most of the time, money is no object, so we had the ability to charge what we needed to charge to make this business worth it. Those things were attractive.

The things that kind of sat a little bit more on the risk side were really the construction side of the business. They're project-based, it's not a repeat model. And the way that I got comfortable around this is there are home renovations happening all the time, and there are builders and architects and estate managers that we've been working with for forty years, that there's a constant flow of projects. So, there was a little bit of comfort there as we came to looking at that risk side of the business. So those things all together I thought would be pretty cool and the idea of working in something that's a tangible product, the construction side, it's so fun. I was on a job site this morning and it's just exciting. So, just overall, I like the space, I like the industry, I like the characteristics of not only the company but the industry as a whole and…

Rick Ruback:

Yeah, the service business must be highly recurring.

Jackie Kopcho:

It is, as long as we do a good job. And that's something that we have to focus on. And that's why we hired a trainer and a quality assurance department. People, for the most part, don't mind paying if they're getting the value of what they're paying for. So, we do demand very high prices for the services that we offer and those services are, you call us at two o 'clock in the morning and you're out of propane, we could probably get somebody there at that time. We show up, we make sure that we care for the pool and we're licensed and insured. It's just quality. We have to focus on quality and that means treating our people with respect and giving them the resources that they need to succeed.

Rick Ruback:

Yeah, I think it's really interesting that in small business, high quality service is itself a barrier to entry. If you're providing at a reasonable price, high quality service, people are happy to pay that. It's when the service declines and you get unhappy that you start getting customer turnover. But if your service is good, it creates a barrier to entry and customers have a kind of loyalty to good service. Nobody wants to spend their whole summer being hassled about their dirty pool. They just want it right.

Jackie Kopcho:

That's very much accurate and, buying the business, there was an opportunity there. The company had been around for forty-two years, the owner of the business had done very well for himself, and it didn't look like the attention to the service division was given the attention that it needed. So, speaking to my Chief of Staff and my VP of Finance yesterday, we're taking a 44 year old business, at this point, and trying to put a startup on top of it. People that want to move quicker, we could use some of this technology. We're offering top-notch service. We're getting in front of customers. We're available, you know, almost twenty-four-seven. But you have to do that to stay competitive and to keep up with what the customers expect. And just showing up and doing a fairly good job, that's not even the entry anymore. And, you know, if you ask me, I think there's pros and cons to that. People are just expecting more and more, which makes it a little difficult on businesses. But at least we know what they want. And we're trying to put the infrastructure in place to offer that to them.

Rick Ruback:

And that desire is probably helpful to you, right? Because as people increase their quality standards, it's easier for you to meet those standards than for perhaps your competitors.

Jackie Kopcho:

Part of it too is we always are cognizant of, “Can we take this client on?” Because growth for growth's sake is not good, right? If we could offer the quality that people expect and also grow, that's wonderful. We just always need to be careful of not taking on more than we could chew because if our overall quality goes down, that's our reputation. That's extremely difficult to build back up. So, I would rather have a slower revenue growth and higher quality service, and service and construction and delivery than just take everybody and falter.

Rick Ruback:

Would you have invested in this?

Royce Yudkoff:

You know, I think I would have because I see those qualities, the recurring revenue, the small cost to the customer, but the big cost of failure. Those are qualities you and I hunt for, mostly in B2B businesses. And, you know, the negatives really would have centered around the seasonality just being a tougher management job, but with someone like Jackie, solvable. So yes is the answer. I would have voted yes with my dollars.

Rick Ruback:

You know, it's funny because landscaping is not a business I like, particularly. And I'm just struggling why I think this is so different than a landscape business.

Royce Yudkoff:

The difference is the cost of failure to the customer, right? If you don't get it right in a twelve-week season, the customer is going to fire you and be really unhappy, and therefore if you are getting it right the customer really doesn't want to take the risk of seeing what the other guy does if they charge a little less. You know, in landscaping it's hard to feel like it'll be terrible if you switch and it doesn't work so I think that the switching side of that is different.

Rick Ruback:

I guess the other thing is that the nature of your grass is that it's only perfect for five minutes after it's mowed, where you expect your pool to be continuously perfect.

Royce Yudkoff:

Perfect.

Rick Ruback:

Well, Royce, let's get back to our conversation with Jackie.

Royce Yudkoff:

Jackie, like just about every entrepreneur through acquisition, you'd had a set of management and business experiences, but this was your first CEO role running a business. Reflect with us a little bit on what were the surprises, what were the challenges that you'd want to share with listeners about your journey in that first few months of being a CEO owner of a business.

Jackie Kopcho:

Oh, wow. If you guys could see just the big smile on my face. Everything is a lesson, every single thing you do in the seat. And it starts from the minute you find the business and diligence. Day One, you're getting the team together, you're making the announcement. Everybody's a little nervous. You're nervous. You have to come in and one thing I've told some of my staff members recently is, “You know when we bought the business, I was more scared of you guys leaving than you were scared of me firing you”, right? So, for new CEOs, just get in front of people, have conversations, ask non-threatening questions, instead of like, “Well, I just don't understand why you did it like this.” It's like, “Hey, could you walk me through this process? I want to learn.” The more you can bring down the walls for people and show them that you genuinely care about the business and you very much care about the people, it helps build trust. And this is something with my senior leadership team here that we've recently discussed is it takes a while for them to trust you. I mean, it was probably a year and a half before they came around and they're like, “Okay, we see what you're trying to do.” Because although you're learning in the beginning, you're also seeing tons of inefficiencies in the business and it doesn't mean that it's bad. It just means that's opportunity there, but you have to decide when the time is to make that change or implement something different.

I mean, I learned from Day One, where I did come in hot on some of the construction stuff because when I would come in and ask, “This is great, thank you so much for walking me through these projects. What is the typical margin for this project?” And the answer would be, “Well, it's good.” And I'm like, “Okay, well, is good a number between fifty and fifty-one or thirty and thirty-two”, right? So, I had them start thinking about things differently very early on in the process. And we implemented a new technology three months in and people did not necessarily like the process to start and fought me tooth and nail. But I found some advocates that understood what we were doing. And now they can't live without this technology. And for other parts of the business where we're starting to make those big changes, I have those team members speak to the other team members about like, “Yes, I know, like it's tough to get the data in and get up and running and learn the process, and to learn the system, but it will make a difference in your day-to-day operations.” So, try to get some of those small wins, and those small wins turn into big wins, and get those advocates and build the trust.

And another thing that I tell people all the time is if you're working in an office environment, and the staff is used to working from nine to five, do not come into the office at 6am and leave at 10pm because then they feel that they need to come in at 7am and leave at 9pm, and you're creating like a huge wave with that. So, I would say, you know, be very cognizant of that time you have in the office because whether or not you expect people to be there at that time and doing, you know, twice the amount of work that they're used to just because you're doing it, people pay attention to that. And most of these businesses are unlikely to have people that are going to put in sixteen, seventeen hours a day every day like you do. So, just go work from home.

Rick Ruback:

It must be the case that, at least in May, it is everybody working…

Jackie Kopcho:

Oh yeah.

Rick Ruback:

…all the time. And my only experience on this is like teaching, right? And when we're developing a new case, you know, we always have plans to get them done in the off-season. And then suddenly, you know, you're three weeks away from teaching a case and you're cramming it down. Never with Royce. Royce is always ahead of me and always planned and always careful about that. But sometimes I'm a procrastinator. And I just wonder like this must be such a hard business to manage because you pop from emergency to emergency. In May you have 31 days of emergencies. And I guess this year was really hard because Memorial Day was a week earlier.

Jackie Kopcho:

It is, and May, everybody, everybody's working late. Everybody's working on the weekends. There's no escape from that. Which is why I encourage people to take time off once it smooths out. Go screw your head back on straight. Take a walk in nature. We're going to have a postmortem. How can we do things better? We try to do that every week, at least, the postmortems. People haven't been able to necessarily take a step out and go hike in nature just yet, but you have to have that balance. And those are the pros and cons of a seasonal business. We work our heads off over the summer and then we have a little bit more down time for strategic planning and training and for a lot of these team members to just take vacations and see their kids again. But the planning of it, you have to be precise because if you overshoot or you undershoot, like that's cash, right? You could burn pretty quickly if people are putting time and a half in. Are we doing too much? Are we doing too little? And working with customers on opening them maybe a little bit early and saying, “Listen, we'll open you two weeks early, we'll eat the chemicals and the labor until you're ready to open and then we'll start your contract”, to try to take the pressure off some of those heavier weeks. You just have to get creative and, working in an environment where customers are not used to being told “no”, it does add a layer of complication to it. But as long as we're providing top-notch service and we're being responsive, and sometimes it's calling people and saying, “Listen, we know you wanted this done but we can't do it but we're telling you”, it gets further than just not showing up, so communication is key. That is something that we have put front and center this year, where we're hiring people to answer the phones at all hours and, you know, we might not be able to solve your problem at this moment but thank you for telling us and we're going to get in front of it and make sure we get to it.

Rick Ruback:

Sounds like a very sensible approach. Kind of, spread out the season as far as you can. Eat some expense to do that but flatten the peak a little bit and try to take those emergencies from being emergencies.

Royce Yudkoff:

Jackie, as we march towards the end of our time together, I'd love to hear, are you happy with the experience? Do you wish you worked for somebody else?

Jackie Kopcho:

I’m having a blast. We're lucky we didn't do this, yes, at the end of May. But even then, I'm having a lot of fun. One thing that just makes me so happy, we've promoted so many people within this organization that have been at the company for a long time. And to see them go from field service workers to managers or people that have started off here as executive assistants and now are head of operations. We were able to give so many people opportunities. That is exciting to me and that makes me proud and for the days that I want to, yeah, bang my head against the wall sometimes - and it does happen often, right? - just because it's part of the business and you bang your head on the wall and walk out into the office with a smile on your face. Those things are really rewarding. I like the flexibility of being a CEO. I do pick my daughter up from school every day and we have dinner and then I have to sign back on if I need to. If I don't, great. I get a little extra downtime but there's nothing that compares here. You're betting on yourself. You're able to surround yourself with team members that you know are going to take you to the next level and putting things in place that are going to help the entire organization and help the people and help the customers. And for me, right now, I'm having a lot of fun. I am.

Royce Yudkoff:

You know, Jackie, you've answered so many of our questions. We like to end these interviews by asking if you have any questions for us before we part ways.

Jackie Kopcho:

Not really a question but I just want to say thank you guys for promoting this industry, especially being at these conferences and seeing the number of women that are doing this. I have so many calls with women searchers that ask the question as a woman, as a married woman, as somebody that has kids or somebody that wants to have kids, “Is this the time to go out and buy a business?” And my answer is always “Yes.” Like, there's never a perfect time for anything. I bought this business when I was pregnant. I had the baby on September 10th. We closed this business on December 30th. I moved out to the Hamptons without my family and I'm, you know, pumping in the office and freezing milk to bring it home on the weekends. And was that a great time? No. But you make it work with the people around you. So, I just want to say thank you guys for promoting this and giving people the opportunity to see that there's a path that they can work for themselves and build things and build businesses and families, and personal and professional development, overall. So, thank you, guys.

Rick Ruback:

Hey, thank you. That's really kind of you. I think it's remarkable how many more women are searching than just ten years ago or fifteen years ago. Fifteen years ago it was very rare. Now, it's still not where I think Royce and I think it ought to be because I think it's such a cool career path for a woman, particularly a woman who wants to have a family. You can dovetail it, right? You can organize your life and build your world in a way that works for your family.

Jackie Kopcho:

And there are searchers and there are CEOs out there who are doing it. I know there's a prominent CEO out in California that has had kids while she was searching and as she's a CEO. And I know she has a fantastic partner that supports her in the business and in life, right? But I don't know why more women aren't doing it. The calls that I get, it's mainly like, “Is this the time?” So, I wonder if it's just the timing thing where they're scared, right? Like, “Yeah, you don't have maternity leave.” One of my female investors, I told her, you know, I was pregnant, I was like, “Yeah, I'm going to take a few days off.” And she's like, “You have to take more than a few days!” So, I did. I took ten days, but we were in the middle of closing a deal. So, there is some of that balance. I'm not going to say it's easy, and you're going to be able to take three months maternity leave while you're in closing a deal or it might be busy season, but it happens, right? So, you figure it out. You figure it out. If it's not meant to happen to buy a business while you're pregnant, then it wouldn't have happened. You know, I look at it like that. If this wasn't the deal I was supposed to get, then maybe the deal would have fallen through, but that wasn't because of me having a baby. It's just because I believe everything happens for a reason. So, more and more women are doing this, and we're succeeding by having families and taking care of ourselves and having support from investors and people in the industry. We're going to see more and more women coming into it. So, we just have to continue with that narrative and make sure that they know this is not the end of your career. There's plenty of options.

Rick Ruback:

Thank you for that.

Royce Yudkoff:

Rick, I don't have any more questions. Do you?

Rick Ruback:

I don't either. It's been a delight to get to know you a bit, Jackie. So, thank you. And I've learned so much about the pool business!

Royce Yudkoff:

Jackie, thanks. We'll let you get back to your busy summer season.

Jackie Kopcho:

Thank you, everybody.

Royce Yudkoff:

You know, Rick, I enjoyed that interview with Jackie for so many reasons. One of the reasons was she has characteristics you and I see a lot in successful entrepreneurs through acquisition. So one of them is successful ETA-ers get along with all types of people and are able to work with all types of people. But beneath that, you really see a sort of purposefulness and mission of steel, but it doesn't translate into a hardness or, you know, a ruthlessness. She's also someone people would want to work with and I thought that quality came through as she talked to us. The other quality which I see in successful ETA-ers is she really focuses first on the customer experience. She doesn't go to work saying, “You know, we're going to make a big profit here.” She says, “We're going to do a great job for these customers.” And everything flows from that.

Rick Ruback:

Right. I think she has a really nice vision of what success means in her company, that the key factor of success is happy customers. I think it's true that a happy customer is one who has no problem, but maybe the happiest customer is a customer who thinks they have a problem that disappears almost instantly because the service provider solves it for them.

Royce Yudkoff:

I agree. And I'd like to hear your thoughts on this point, which is she chose a business where the customers aren't in the business of bidding out the lowest price for their pool service. They're in the business of enjoying their pool, which means no problems. And so if there are no problems, they're probably not going to be hunting around for another pool company to see if they can get a lower price. Talk to us about your views on that.

Rick Ruback:

Yeah, absolutely. I think this is so interesting. And I don't know if you remember back, but about 15 years ago when we were doing our earliest work on small business, we both approached it, I know I certainly did, with kind of a traditional economic model. We kept on seeing these firms that had these high margins and sticky customers and no visible barriers to entry. Sure, we found some businesses that had geographical barriers to entry, but by and large, particularly in the service sector, the B2B services, which is most of the acquisitions we look at, there were no visible barriers to entry that we could see. And yet they had high margins and recurring customers. What I concluded then was that great service is itself a barrier to entry.

Royce Yudkoff:

And there are certain businesses which really have that characteristic. And one of the things you see here, that you see in a lot of the businesses you're describing, is that the cost is a small part of the customer's budget. The pool service cost is item number ninety in what these families spend money on. And so what they really care about is that crystal clear water and the right temperature, and it's working during the summer season, not whether they could shop around and get the service for 10% less.

Rick Ruback:

Right. This is probably a terrifying calculation, but if you were to think about how many hours people spend in their pools over the summer, and consider the cost per hour, it's probably huge. As you know, I'm a wooden boat guy and I'm blessed by a really good service provider up here who takes care of my boats. And I got the bill the other day and I thought instantly, “Wow, you know, last year was a really rainy summer and I think I sailed like six times.” And if I divide my annual maintenance by six, and then think about, you know, the sails were three or four hours long, the hourly cost of my sailing is a lot more than I've ever gotten paid by the hour. That was a horrifying thought. But you don't think about that, unless you happen to be cursed by being an economist, and you're just happy you're on a beautiful boat. I'm sure people who have pools are just happy they're in their clean, wonderful pool and they don't think about how much it's costing an hour.

Royce Yudkoff:

Well, you know, you've actually just told in story form something you and I always talk about, which is one of the characteristics of great businesses is it's a tiny part of the customer's cost but getting it wrong is a terrible consequence to the customer. So, it makes them not want to switch if the service is working right, right? Because they will save a little money but they'll take a big risk. And so when you said the cost per hour of being in a pool in the summertime is probably really high, that's exactly it. If your pool isn't working right, that's probably a $500 an hour cost for you every time it’s not working.

Rick Ruback:

Oh, I think it's probably five times that.

Royce Yudkoff:

Or five times that, so that is a really terrible thing. Whereas a 10% difference in cost for your pool service, that's not a big cost.

Rick Ruback:

It doesn’t matter.

Royce Yudkoff:

Right.

Rick Ruback:

Well, Royce, we're at the end of our conversation with Jackie. It's been great. So much fun. I've really enjoyed learning about the pool business and thoroughly enjoyed the conversation with Jackie.

Royce Yudkoff:

Me too. We learned a lot.

Rick Ruback:

Listeners, next week we'll be speaking with Michael Orzetti and he'll share his story of his successful acquisition and running of a really cool company that does two-way communications in all kinds of specialized settings. It's another one of these businesses that you wouldn't really think very much about until you owned it and ran it.

Royce Yudkoff:

You’ve been listening to Think Big, Buy Small. We’re your hosts, Royce Yudkoff…

Rick Ruback:

…and Rick Ruback.

Royce Yudkoff:

Katie Zandbergen produced today’s episode. 

Rick Ruback:

Craig McDonald is our audio engineer. If you have any questions, comments, thoughts, feel free to just e-mail us – rickandroyce, all one word, at hbs.edu.

Royce Yudkoff:

We’ll be back next week with another episode of Think Big, Buy Small.