Building H2Joe, Selling to Your Tech & Creating Pool Trader

Today I'm talking to Joe Wilmot, the owner and creator of Pool Trader. Joe, welcome.

Thank you. Nice to be here.

Thank you for coming on. We'll be talking about your background in pools and then talking about Pool Trader. How did you get your start in the pool service business?

It was around 2005. I was in a bit of a career shift, and one of my best friends was already in the pool industry for about 10 years. We just got talking one day, and he hired me to clean filters for him — gave me a very brief synopsis of how to take down a cartridge filter. DE filters were a heavy learning curve, but I started off just cleaning filters. As the months went on, making a little extra side cash, I just fell in love with the business model of the pool industry.

What were you doing beforehand?

As an electrician. I still am to a degree — I can't seem to shake it. I grew up with it. I was born and raised into an electrical contractor's household.

Were there any significant differences from pools versus being an electrician as a career?

We moved to Arizona in 2005. I'm originally from Ohio. As the trades were — it was kind of leading up to the housing crash, so things were just kind of all over the place. But I fell in love with just the recurring revenue. We'd go here every week and charge 25 bucks every week. With electrical, you might wire a brand new house and then it's done. Service calls are intermittent, not predictable. The recurring revenue of that service stop — and how profitable that was — made so much sense to me. I really fell in love with it when it all came together.

Could you give me a big picture of your pool business? How many pools were you at at your peak? How many employees?

My first introduction to the pool industry was in '05. I started my own company and went out on my own in 2008. At my peak, we were doing just under 90 pools — exactly about 85. It was me and one technician, and his wife was actually doing my books. So I had a husband and wife team working with me at my peak.

Could you walk me through a typical day of your route at the peak of your business?

I'll answer that in two parts. At the point which I brought on my technician — which I was really fortunate, he was one of my best friends, I actually view them as family — he came on around 2014. Out of our 85 pools, he was doing between 60 and 65, and I was doing the remaining 20. But then I was doing all the repairs. So at the peak, he was doing the vast majority of service and I was doing all the repairs and a handful of customers — the problem customers, the ones that demanded the boss actually be present. Any pool guy who's been in the industry any length of time knows those particular customers.

Right before I brought him on, I was doing that 60 or 65 myself. I really tried to condense it into a four-day week — about 15 service customers a day. I always tried to base the daily route on the worst day of the year. Here in Arizona, the worst day is right after a gigantic dust storm, a haboob. That next week is just killer. If you're at 15 on a normal basis, it's still manageable on that worst day. Looking at expansion and he wanted to come on — we continued to grow about 20 or 25 more.

You transitioned to doing mostly repairs. What was that process like, switching from lots of service to primarily repairs?

That was real easy. With about 80 or 85 customers, there was at least a couple repairs or something extra to do every single week. Repairs are where every pool service company makes their money. The routine weekly maintenance — that keeps the lights on. You can earn a very good living doing that solely. But repairs are where you make the money. So when we had that all together, that was a very good period.

It sounds like your family background as an electrician helped a little bit with the repair side.

Oh yeah, even just being in the trades my whole life — taking things apart, cutting, gluing, wiring up motors and all that. The learning curve was very easy for me. Going into repair work was a very smooth transition.

You got your start in '05, started your own business in '08. How did you go about getting your first few pools?

My very first pool was from my best friend who taught me the business. He lived here in Fountain Hills as well. He got a referral customer that was almost 35 to 40 minutes away — he didn't want it because he was already consolidated into Fountain Hills. So he passed the lead to me.

From there, I went through — I didn't really have a lot of money or know-how for marketing. I'm a pretty personable person. I enjoy talking to people. So just being chatty and encouraging customers to give me referrals with incentives — that's how it all started. Word of mouth. I got magnet signs on my truck pretty quick. And I pounded the pavement, I really did. My wife would put my business card at the nail salon she always went to. And everybody, they fell in love with the business name: H2Joe. "If your personality is anything like your business name, I want you as my pool guy." I owe a lot to coming up with that name.

Even the local Ace Hardware — I went up and asked if I could set up a little tabletop and pass out business cards. The manager said yeah, absolutely. I got a handful of business from there. Literally everywhere I could have an opportunity to interact with people. You know, being chatty at the grocery store, helping someone load groceries — those interactions sometimes led to them asking what I did or seeing my truck. Customers just talking, referring their neighbors and family. It progressed like that.

How long did it take until you made your business a full-time thing?

It was just after a year. I think it took me a year to get to 15 or 20 customers. In the very beginning, I worked three jobs. I wasn't doing electrical at the time. I was driving — it was like an executive car service, like the businessman version of SuperShuttle. And I worked unarmed security. I'd drive down to the Dish Network building in Chandler and work through the night. So I was working three jobs for about a full year to 14 or 15 months before I had enough customers to where it made financial sense to move forward.

Were you making sure those new customers were on weekends? How were you fitting them in?

I did not sleep for about a year and a half. In the beginning, I let customers pick their day. I was so hungry to build the business that I gave the customers more power than they deserved.

Do you have any advice for someone at that stage — they're not quite full-time, maybe just considering getting started, they have a full-time job?

Definitely don't be as much of a pushover as I was. People are reasonable. If they want a certain day, you're either available or you're not. The best thing I can encourage them to do is really get comfortable saying no. You know when you're stretching yourself too thin and you shouldn't agree to something — trust your gut and your instinct. It just accelerates the process of burnout. Pool guys — it's probably one of the most popular trades where guys get burnt out.

All demand Friday service, right? They all want the pool perfectly clean for the weekend. Say no. Move them to Thursday. New guys, get used to saying no.

How did you network in the industry?

I literally talked to everybody I could. Going to the wholesale places — SCP, anywhere. I ran into pool guys even at the gas station. You see them with the pole hanging out. I'd just go shake hands, introduce myself. Where are you at? Are you here in Fountain Hills? I asked them the same questions you're asking me. How did you get started? How long have you been in the industry? Where are you buying? Do you prefer a particular brand? I just tried to get as personal as possible to make connections.

Even out to dinner — if you see a pool guy's truck outside a restaurant, "I wonder if I can figure out which guy he is." A couple times that happened. It was fun. Pool guys tend to have a particular look. You can just spot them — something about their demeanor.

What were the biggest unlocks for you in the business — mindset or tactics?

Saying no. That was a big unlock.

There are two customers I remember in that first year that I said no to — because I did not say no a lot. One was in Goodyear, about a 50-minute drive, and the other was in Buckeye, about an hour drive. It killed me to turn down work. But it was the right decision. What am I doing driving an hour?

And I still accepted pools that were too far. I went as far north as Cave Creek — about a 40-minute drive from my house — and as far south as Chandler. But as you're getting customers, you justify: it's only 10 more minutes. It's only 12 more minutes. Every 10 or 12 minutes is getting further and further away from where I wanted to be. My goal was to have everything in Fountain Hills. I eventually did attain that goal — at my peak, my full perimeter, nothing was more than a 10-minute drive end to end.

Other big unlock: saying no to customers that refused to drain their pool. It's like taking your car to a mechanic and refusing to change the engine oil. I refuse to work on your car because you refuse to do what's necessary. You are no longer my customer.

Is there a rule of thumb on how far is too far?

Not necessarily. Every area is different. Here in Phoenix, we're a pretty tight metropolitan area. But somewhere like Texas — guys there drive 20 or 30 minutes between pools because it's more rural. And their pricing is different too. Phoenix might average $150 a month. Texas might be double that — $275 or $300 a month — because of the length of time spent and the distance driving. My goal was always to be all in Fountain Hills. At my fullest extent, nothing was more than a 10-minute drive.

Did you end up doing any marketing for your business?

Here and there. I had the magnet signs on the truck. I did take out ads in the Fountain Hills Times. Obviously at the corkboard at SCP, putting my business card. But by and large, everything I built was word of mouth.

You had 85 pools and most were in Fountain Hills eventually. How did you go about tightening the route?

I literally just started segmenting off and selling off groups of pools here and there — five or six here, five or six there — or trading to get something closer. I traded maybe once or twice. Unfortunately, there were a couple of customers that I just let go because Pool Trader didn't exist at the time, and I just couldn't find anybody to take them. I wish I had done that slightly different. But the drive to do them outweighed staying — my price per hour was very small in comparison to just focusing that time and energy where I lived.

When did you consider selling your business to your technician, and what was that process like?

It wasn't much before I actually sold it. It was a husband and wife team — she did my books, he was in the field. As time went on, I could tell they were getting a little bit of the itch to go off on their own. And I was kind of looking to do something new — Pool Trader was heavy on my mind. So the timing worked out really well. We had a couple of conversations. We said a number out loud and we were instantly on the same page. Almost no negotiation. I went to an attorney, he drew everything up, terms were all agreed upon, signed, notarized, and that was it.

The nice thing was — because he was already with me for four and a half years and in the field — he just took ownership of my phone number. All of a sudden I'm not answering the phone and now it was him. The transition was literally seamless. And they've since doubled the company from when I had it.

You are firing on all cylinders in the tech direction. Tell me about the story of how Pool Trader got started.

Pool Trader is an online platform where pool service companies go to buy, sell, and trade accounts, routes, and whole businesses without any brokers.

Where that came from — it came from the very beginning, when I was driving far out to my furthest pools and I'd see these pool guys on the same street routinely. Just thinking, "I wonder if he's driving a half an hour to get to this account, just like I am. I wonder if he's got something closer to where I live in Fountain Hills and we could trade." I always thought of that. But I was never able to make a transaction in that way — there was nothing other than a handshake deal.

I always thought: why isn't there anything that everyone could do this across the nation? The idea came early on. And then just after I sold off segments and got used to the process — if you can sell a car private party, you can sell a pool route. It's not much different.

I wasn't particularly a fan of brokers. I'd had several interactions with local ones here in Phoenix — pushy salespeople. But that's just the way the industry had been doing it for 50 years, since the '80s. Nothing like Pool Trader ever existed on a national scale.

It started off initially as an app. Within about a year, year and a half, we had 2 or 3,000 downloads. Transactions happening. I've been through several different developers, which has been a bumpy road. Where we're at now — it's web-based only. Pooltrader.net is my website. Everything is now free. I just changed this a couple weeks ago — it used to be a $10 a month membership, but I got rid of that. Completely donation based now. No pressure of any kind.

And the Facebook group, which I started two years ago — I wish I had started it in 2019 — we just crossed over 4,600 members and that's growing exponentially. I manually approve everybody that comes in and every post. I run a tight ship. No personal opinions, no politics, no brand wars. Strictly buy, sell, and trade accounts and equipment. Pool Trader has evolved quite a bit over the last six, going on seven years, but it's finally hitting its stride.

How does the activity compare — is the Facebook group more active or the website?

Facebook group, by and large. The group has grown so quickly, it's been hard to shift focus to the website. And the $10 monthly membership — I think I was shooting myself in the foot with that. Routes got sold way too fast, which is a good thing, but shifting to donation-based is better all around. No pressure, no additional monthly fee.

Someone who's never bought or sold a route before — what does a good first transaction look like and what should they look out for?

It entirely depends on their circumstance. I've had a businessman with $50 to $100K looking to make a total career shift. Or someone who's an employee at another pool company wanting to break off on their own.

I'm always an advocate of dipping your toe in the water. Have some experience first — go work for another pool company if you can. The barrier to entry in this industry is very low. I've seen guys go all in buying 80 or 100 pools with no experience in chemistry, no experience with hydraulics. By and large, most of those guys wish they did it differently. It was too much all at once.

My opinion: lesser is better. Scale up. Buy 40 or 50, get comfortable, get knowledgeable, then grow.

How about people who already have a route and want to sell?

Give me a call. Literally. On average, I probably get at least two phone calls a week from people all over the country — they've built up their company and don't know where to start. I've probably had a couple hundred conversations over the years going through their company line by line. How many pools? How tight is the route? What are your rates? What's your repair revenue? I know what the market is doing, so I can give people a really good idea of what they could get for their company.

What are the profiles of people you work with?

It's really a pretty balanced mix. Not too much private equity. Mostly solo operators or a husband and wife team with maybe a handful of technicians. When you get into bigger companies, those guys have been around the block — they've already been through buying and selling processes. They don't really need my advice, but they definitely use Pool Trader as a tool.

What do you think the state of the pool route market is right now?

With Pool Trader being the tool it is — nothing like this has ever existed in the industry. The marketplace is huge and making connections and transactions is easier than it's ever been.

Right now, buyers outnumber sellers 10, maybe 20 to 1. There are way more buyers than sellers. The amount of routes and companies for sale is at a low right now. But the demand is way higher than the supply — which actually means it's a good time to be selling, if you're a seller. And being able to search for routes for sale, it's never been easier. No matter what the market conditions are, it's a good time to be active.

How about valuation numbers? Are the 10-12x heuristics fair?

It all depends. How tight is the route? What are their current rates? Is there going to be a guarantee period? Are they willing to finance? All those questions weigh into a true evaluation.

To answer your question: 8 to 10x has been the vast normal of what I've seen in these transactions. Some people might say brokers are selling routes for 12x all day long — well, they are, but they're taking 2x right off the top for their fee. So it's still 10x.

Brokers provide a service. But I feel like as time goes on, that service is becoming less and less necessary. Like buying a used car private party versus going to a dealership every time — not necessary. Pool Trader has already been instrumental in one major change I've seen: brokerages used to lock you into a 12-month exclusive contract. They've since changed that — no contracts. I think Pool Trader is the reason they're steadily dropping these old criteria and yielding to the private party market.

Is there something someone should look for in a good broker, if they do go that route?

By and large, it's so driven by commission that it's hard to find a really good one. Brokers often don't even look through the books — they take the seller's word for it. Private party transactions — due diligence is done way more often and it's just so much smoother.

If you do use a broker, just really do your due diligence. If they allow you to do a ride-along and see the accounts hands-on — great. If they deny you that, red flag.

Well, we'll call it there. I really appreciate your time today, Joe. If people want to check out Pool Trader — pooltrader.net, there's the Facebook group. How can people get in contact with you?

They can contact me through Facebook Messenger or email — joepooltarder@gmail.com. I'm pretty easy to find. Happy to speak with anybody that ever has questions or wants advice or consultation.

Thank you for your time today, Joe.

Sounds great. Thanks so much.