S10E04: From bankruptcy to hyper growth, with Chris Lee (CEO, Solgen Power)

Richard Medcalf
Hi Chris and welcome to the show.

Chris Lee
Excited to be here.

Richard Medcalf
So this is gonna be fun. Today we're going to explore your secrets and scaling the highs and lows of the journey as you've grown Solgen. I know you started in 2017, you're now the sixth fastest growing company in the United States, and you have 1000 employees, you've got a business that's valid in the hundreds of millions of dollars and yet, your wants terrified of scaling your business.

Chris Lee
That's, that's right.

Richard Medcalf
So let's start there. Let's start there. So go back, you might need to rewind with a couple of chapters. Why were you the guy that was terrified of growing and scaling a business?

Chris Lee
Absolutely. So 2008, I launched my very first business at age 24. Young dumb, and, you know, I thought I knew knew what to do, right, I was, I was a great technician, in my craft, as far as sales and leadership and those type of things and so I thought that would easily translate over to being a business owner and so, you know, I raised money, borrowed money, or had got investors to come in and help me build a home security business and, you know, just did a lot of made a lot of stupid decisions. It was a terrible time 2008 the economy crashed throughout the world, and, you know, money market seized up and poor decisions, we scaled, we had six locations in our first year, we just tried to scale too fast. We were we're trying to compete with larger entities and you know, do things basically run before we even knew how to crawl and so, because of it, it ended up leaving all these poor decisions, and in everything, it ended up leading to our demise and two years later, I had to file bankruptcy, I lost everything, there's so much more detail to that story but, you know, filed bankruptcy for $2.2 million at age 26 had everything repoed right out of my driveway, and all acid stripped from me less than $1,000 in my bank account, you know, the drill. So, that's, that's where I found myself in the end of 2010, early 2011 and so, I learned a lot through that experience, I learned what we did, right and what we did wrong and so I immediately launched other businesses, which were successful but during that time, we, I was very scared of scale, right, that didn't want to repeat that same mistake, didn't want to bring outside debts, didn't want to open up multiple locations. So it became so my following businesses, which, you know, were were numerous, ended up ended up being just technician ran businesses, right, where, you know, I was heavily involved, micromanaging, you know, keeping it keeping it small. You know, Max, I think the biggest any one of those businesses had was like 12 or 13 employees and so made a good paycheck and but but at the end of the day was was scared of repeating the same mistakes of scaling too quickly. So I erred completely on the other end, but throughout throughout all that I learned, I learned a lot about running a business motivating a small group and, and whatnot and so that was the case for about two and a half years, I owned a handful of different businesses, I was trying everything under the moon, to make it work, sold off a couple of them for, you know, decent amount of money, nothing significant and then, you know, made some different decisions from there.

Richard Medcalf
Yeah. So what I hear is, is that that first experience, which went wrong in a big way, right, blew up in your face and then actually, you went into the hard yards, right? You actually did, through those small businesses, the hard work of actually learning how to cover the bases, right? manage a team and manage the finances and whatever. So you went through that but I still hear those that fear they're totally understandable, right of i don't really want this to go big. So what was the change? Right? So what happened with Solgen where you've said, this time, this is the big one. What happened?

Chris Lee
Yeah. So, I did something that was very, like it required me to swallow my pride and 2012 Summer 2012 I went back to work for somebody else and that was that was really hard for me.

Richard Medcalf
Well, if I can intercept, one of my sayings is the greatest fear of every employee is to lose their job and the greatest fear of every entrepreneur is to have to get it job, right?

Chris Lee
Yeah, and you know more than fear, it's just like, it's not fear about income. It's not fear about anything. It's like fear of what other people think. Right? And that's one of the things that I learned throughout my journey is like, you got to stop caring about what other people think you just got to do what's best for you and so don't do things to compete, don't do things to impress, right? That's when real businesses ran and so in summer 2012, I went back to work for somebody else and it was purely, well, one, it required me to, like, come to grips like, Hey, I'm no longer to be the man in charge and, like, I gotta be okay with that but to was with the intention to go and study and basically receive paid education and so for the, for the next five years, I actually worked for three different companies with pure intent during that time, of like, exactly why I was there. Right, it wasn't just to get a paycheck, it wasn't just to lead a team, or whatever it was, it was to study the CEOs of high growth businesses and so the first two businesses that I was a part of were very high growth. One of my favorite mentors that I had the opportunity to study under, was the CEO of a company called Vivint and Vivint, was a home security home automation business that had scaled from zero to $2 billion. In 2012, they received a valuation from Blackstone 2 billion and during that time, they spun off a company called Vivint. Solar, which IP owed for $1.8 billion and at both had been able to scale and so when I was there, it was purely with like, how do I get time with Todd Peterson. So he was he's the CEO and so any chance I got I was there, I was studying from him learning, asking people that were working directly under him, like what he did, you know, just saw things from a microscopic macroscopic level, and just just learn so much from that guy and then, and then after that, when so I opened up a location for Vivint. Solar and that's where I got introduced to the industry that I'm in.

Richard Medcalf
Right? Yeah, that got you into the Solgen business, right? Okay. So then that was, so then what was it where you said, you know, what, I want to build something myself again, and go big? Well, I mean, I guess that first point, right?

Chris Lee
From my first step into that world was after Vivint, solar, my buddy, or while I was working for Vivint, solar, one of my good friends that I had worked under, decided to start his own solar business and he tried to bring me on initially, I was like, No way I'm here and then about four months in, so not not very far after, he convinced me to come be an executive for his team and run the growth division and because one of my unique capabilities is the ability to recruit and to instill vision into people and so he brought me on as the vice president of human capital and my whole job was to go out recruit, build, recruiting teams, build, build an organization. So I worked there for two years and during that time, and so for this, this was kind of like stepping into because, because it was a startup, right? It wasn't super secure, but it wasn't my own thing and so we built that to 28 locations in two years and it was a it was a sales on the engine, but I learned so much from it and gained a lot of experience and then it was at that point where I felt like okay, I'm, I'm ready. Like I saw this thing from the ground up, I'm ready to go back and it was interesting. During those five years, there was a lot of people that would come to me and be like, Chris, you have the smarts, the ability, like go start your own business and I would let them know, I'm like, No, I mean, I'm here like, this is like, this is my education and I'm going to, and so really, I didn't go back out on my own until it was like forced upon me that it was it didn't make any more sense, right. I think a lot of times as entrepreneurs, we get antsy, we get, you know, we have like this, what the e-myth refers to the book, right? Like the entrepreneur myth of like, oh, like, I just got this dream and it's all you know, I can't sleep at night and everything else and and it's actually suppressing those feelings and like focusing on on the principles that allowed me to continue to, to grow during those five years and so that eventually that eventually led to the launch of our business.

Richard Medcalf
Perfect. So you launched Solgen at that point. Very freely, just a couple of words of what are the business do just let's just kind of make sure everyone's up to speed with with what it is?

Chris Lee
Yeah, so we are we are a solar provider, we residential 99.8% of the thing that we do is residential, because my background is in residential marketing sales and we do, we do solar distribution, marketing, sales, installation, and financing, the only thing that we don't do in that space is manufacturer and so, which is very unique in our space. Most most companies, they only do one of those verticals. I'm marketing company, I'm a sales company or install company, or finance and, and so that's one thing that's kind of been a unique identifier to our business was when we started, we're like, okay, we're going to own as much of this as possible control the full customer experience.

Richard Medcalf
Nice. Okay, great. So, obviously, it's going well, you'd say you've been fast growing company, you've hit your 1000 employee. What were a couple of things that you did you think really well that have really helped the company scale? What have been its drivers?

Chris Lee
By far the biggest thing is building a culture by design. Right? So culture happens either way. It's either by design or by default. Right? And most companies are built by default, it just what happens happens, the based on interactions, whatever. So culture by design is based on consistency, and buy in, right? And the crazy thing about culture is it doesn't have to be based on really anything, right? Like, but it's just got to be based on something in and so like, for example, day one I got, I'm watching this business in my garage, and I'm going around and giving my two employees high fives and there's like, who's this crazy nut? Right? And I'm like, listen, from now until the rest of Solgen, when I show up in an office, I'm gonna give high fives to everybody. Right? And it seems stupid. It did. Like it seems first grade level, right? Like, all the all these things, but it's like, after time people start buying into it's like, okay, Chris brings energy every single day, he gives high fives. It may seem weird at first but after a month, like people are expecting it and right and without those consistent actions. It's like they're losing on the culture and so just little things like that. Right?

Richard Medcalf
Why high fives? I mean, the random thing you did, I'm sure you didn't like, think about it.

Chris Lee
I actually did think about it, right? Like, high five is something that most people don't experience as adults on a regular basis. Right? And so as a child, when you're in sports, or whatever else, like it's common happenstance, but it isn't as an adult and so like, taking people out of like, their normal, everyday routine and putting into something that is just like, completely different and awkward, maybe at first,

Richard Medcalf
Disrupts right? It kind of makes me think again, what's going on here and your energy, I think it's fantastic.

Chris Lee
Yeah, and then and then on top of that, right, just the level of volume that's been that's been portrayed, like, Hey, good morning. Good morning. Right. And, and, and it's, it's celebrating a win from the, from the beginning of the day, right? So like, hey, today's the best day that that's ever existed upon, you know, in the history of the world, right. Like, like, those are the phrases that I that I that I share with my team underwired getting emotional, but yeah, just just you're also culture, culture by design, and that that goes into like, how consistent are you with your meetings? And how consistent are you which is just everything with your, with your core values, your mission statement? And like, do I bring those up? Do we have common language that's different than anywhere else? Right. And so like, day one, we were applying all these principles, things that I have learned from working with other businesses, things I've learned from authors books, and, and and it was just very much on purpose and so anybody like we we we ran that business out of my garage now my garage is a little bit bigger than most for the first two and a half years of our business. I had 53 people showing up to my garage shop every single day that literally is right across the driveway from a house and you know like the the energy and like like people walk in and be like, dude, what is this Google like, I'm in a, I mean, a ghetto shop, but like, it's so somehow, like, the the energy is different here and so much of that like was very much on purpose.

Richard Medcalf
And how much of that was in terms of what you how much that came down to you as the leader, right as the founder? I mean, how much of that culture do you feel you really had to still carry that is meant to you? Does it? Have you spread that?

Chris Lee
Yeah, yeah. So I still I still carry a lot of that and but in and culture is the hardest thing to scale. Right? I think more than anything, you know, processes and whatnot. Those are those are fairly easy if you have them locked down but culture is the hardest thing but it all it requires is consistency and getting other people. One thing other people to buy in one thing I love is do you know who Ed my lead is?

Richard Medcalf
No.

Chris Lee
So you should follow him. He's here in the States, big, big business owner, founder of a very large organization. ed ed, my lead talks about when as a leader, someone that's buying into culture or whatnot, your your goal is to be an evangelist and an evangelist doesn't mean that everyone believes what you believe in Evangelists is people believe that you believe and so that's, that's the biggest thing I've always tried to portray is I've created vision and everything is like, so much confidence, so much energy in what I believe that people will like, it's impossible for them not to believe that I believe.

Richard Medcalf
Right. Yeah, I love that. That's a great distinction. Actually, that's a great distinction. Yeah, it's often talked to my clients, right? About like, what is it that is a fire inside you right, that you have to do? Because you say the first thing is to yourself, if you don't believe it, no one else is going to believe it. Right. And people see if you hesitate, if you don't ask if you're not actually all in with whatever it is you're up to in the world. So yeah, I love that and so that culture has been a key part of it and is there anything else that you would point to to say, you know, what, as we kind of built this business, this was something that we, that we really nailed?

Chris Lee
Yeah, I mean, it's building with the right people, and like, targeting the highest level of individuals not being scared, right? So, you know, when, when businesses are first starting out, they the owners typically feel like they're the smartest person in the room, right? They're bringing employees and, and a lot of times, we're like, Okay, what's the cheapest person, I can get to do this job or whatever, whatever it is and a lot of times, we're scared of people that are as smart as us, or smarter than us. Right? And, and so shifting the point, like, I need so many people way smarter than me, way more capable way more experience, I need those people on my team and so, you know, day one, I was targeting the best in you know, and, and getting them to believe that I believed in the vision, right and so, recruiting those type of people and, and one thing that's really helped in our recruiting is like my top level management from the beginning, we tied into the long term, right, so we had executive plans and or equity plans in place and there's there's actually a methodology that I use that I developed through my, my experience with these other organizations, what I was seeing happening with other businesses, ones that worked once, it didn't, all these things like that and this is actually something that I that I teach, and I've taught over in France, and I've taught in throughout the US and whatnot and it's it, it's this structure, it's called the 618 three year, and what it what it is, is to attract the highest level of individuals, people that are willing to come in and work for hardly nothing right like a give you I'll give you an example. There's a guy on my team named Matt, he had sold the business for a few million dollars, he was sitting well 28 years old, super high tech, really, like, like didn't need to work another day in his life had great investments, everything like that. We convinced him to come in and take a $40,000 a year salary hero which is like real close to minimum wage here in Washington State and with the upside of equity, and the way that we structured was this 618 30 or three year methodology and what it is is you take the amount of equity so if for example this guy we we gave him 8% of equity in the business Now you don't need to, it's kind of this thing, like, the longer you're in business, though, obviously, the less equity you gotta give right up front, it requires a little bit more, because there's literally just a hope and a dream that you're building off of and so this particular guy, we did a, we did an 8%, equity split play and the way it was structured was at six months, he would receive 50% of that and then at 18 months, the other 50% Would vest, and three years, if he did not work for three years, the whole amount could actually be retracted. And so let me let me walk through through the structure and the mentality behind it. The reason for six months is twofold. One, six months is the longest any honeymoon period can last. When you bring on a partner, when you start a business, there's going to be a honeymoon, right? Like a we're going to take over the world, there's, there's nothing that can stop us, you believe they have great intentions, they believe you have great intentions. But during that six months, you're gonna find out what that person is really made of and I've never seen the honeymoon period lasts longer than six months, right to be to see your what you're going to know, you may know day two, you may know month two, but for sure you will know in six months. Yeah. And so the reason I want to vest is faster. So the second fold is I want it to vest as fast as possible. So this guy sees, like, hey, I can get immediate result. If it's not work, I'm gonna cut him out, he's not gonna invest anything, and we're and we're done but if it does work, right, he's gonna get that first 50% and the reason I want him to do that is not only is not only see it quickly, but I want to get distributions, I need to run a profitable business that I can get distributions out as fast as possible. Because once somebody tastes the blood, right of distributions, they're hooked, right? And and they want they want, they want more and so and then 18 months is very similar, right? It's a, it doesn't, it doesn't seem like a very long time. Right? It's very attainable but it also has the it has the men, right, so now you have another 12 months to evaluate this relationship and so, but then three years, like I said, if they leave before three years, or you decide to get rid of them before the three years, everything's retracted. Now, they get to keep the distributions that they received up until that point, right. So there's nothing there, they just forfeit their ownership in the their equity in the business and so the interesting thing about this is like, if they've stayed three years in one day, they could walk away with a business without from the business without any obligation and have and retain equity in my business. Now, nobody in their right mind who you've vetted for three years that seen returns, that seen value is going to want to walk away from that, right? Like it's there. They're so vested, their roots are so deep, right? And a lot of these big companies, they have like five year vesting periods, 10 year vesting periods, just like you guys are idiots like, you don't it doesn't require a five year commitment to get fully committed.

Richard Medcalf
Yeah, I'm with you. I'm with you. Yeah, I love it. Thank you for sharing that in detail because I think that explaining why you do that it makes lots of sense, especially when you're in that high growth phase, right? People don't want to wait five years if it says young businesses going places fast. That's great. Well, we're out of time, but I just have to cover like, quickly, like, is there one thing that you know, where you perhaps made a mistake, and it made things painful, and their lack of learning along the way that be valuable to share for other people?

Chris Lee
You know, if I could do it over again, I try not to live in regret but if I could do it over again, I would actually access capital sooner. So we built this thing. completely debt free, completely and with like, basically no access to lines of credit or any anything else. Which was a lot of it was based off of my previous failed business, right? Like, hey, we're gonna scale but we're gonna do it in a little bit of a conservative way. Like, I wish I had a little bit more confidence in myself up front because I mean, 1000 employees seems fast and seems amazing and it to the outside is like, there's no way you could have grown faster but honestly, I think if, if I had access when access capital sooner, I'd be at 2000 to 2500 employees today.

Richard Medcalf
Got it. Yeah, that's it's good. Cool. Well, I'm probably that was part of your journey, right, as you have to kind of come out of that previous mindset from before. So let's just switch gears and just jump into our quickfire questions that I like to ask. So I'd love to kind of get in behind behind into the skin of the leaders to find out what what forms you write what crazy. So what's, what's the favorite quote that you live by or that you'd remember telling your team about and boring them about?

Chris Lee
You know, early on, when I was a startup, the quote that I lived by was just do it and figure out how later that doesn't so much apply to my business now, right? We gotta gotta be a little more strategic but that was definitely like the big pusher and then, and then for me now, it's fall in love with the process. Forget about the fruit.

Richard Medcalf
Yeah, nice. Yeah, for him. Yeah. I like it because yeah, often it's easy to be out there in the future in our heads and not in the present and what we need to get done. What about the book? What about books has really influenced your leadership?

Chris Lee
I mean, so many, but the one I would say that I have 20 copies on my desk here is atomic habits by James clear.

Richard Medcalf
Yeah, it's nice one. Yeah, it's really good one. Yeah, it's, yeah, for anybody. I mean, anyone who's not really listened to this podcast, and is not a student of habits, you know, you need to become one because it transforms everything. It's a great point. What advice would you give your 20 year old self?

Chris Lee
Just be patient. It the, you know, I was very, very impatient, young, right and I wanted everything. Now, I wanted success now and I was willing to put in the work and the effort but because of it, I missed out on so many learning opportunities, you know, back in the day

Richard Medcalf
Yeah. It sounds like you've, you've been on a great journey, right? I've mentored being mentored and learning the hard way and learning through others and everything else. Chris, tell me, me if best guests on the show come from referrals. So I'm always curious, you know, who's an impactful CEO that you know, that you could recommend? Right? You know, who's a great person for you, who inspires you?

Chris Lee
So I mean, to two different people. You know, Todd Peterson, which, which I shared with you from the CEO of Vivint. You know, we could potentially get him on here and I know a guy that for sure we could get on here is Casey Baugh, which I worked with at Vivint and he's gone on, and started a couple different companies that are very highly successful, and very world class investor and whatnot. So yeah, so those are, those are two guys that I look to, as, as a mentor. I don't interact with Todd as much on a day to day, but Casey is somebody that I interact with on a on a monthly basis, and we get together and golf, and he's somebody that bounce ideas off of that I love.

Richard Medcalf
What inspires you about them? It's great to kind of celebrate that.

Chris Lee
You know, Casey, is where I learned, like the power of the power leadership and building culture and then Todd is where I learned, like the power of vision, and owning the truth and so which, those are the things that inspire me about those guys.

Richard Medcalf
Beautiful. So let's get on to my favorite questions, actually, which is, no matter how much we've achieved, there's always a next level to get to the game. I love to play with my clients, you know, it looks amazing, successful on the outside, and yet they know they're just getting started and so what's your what's next level for the business? Right? here the soldier can go next? What's its moonshot? Y

Chris Lee
Yeah, so we recently brought on a private equity group that invested in a minority stake in our business. For us, we are pushing to do a couple acquisitions, and then probably take take this thing public and so for me, you know, I have a number that's like, I would love to see from a valuation standpoint, just because of what it would represent of the level of accomplishment at that point, like what, what it would take the amount of work and whatnot. So you know, that number is 10 billion. from a, from a from a valuation standpoint, I really do believe that we can be there in two to three years and we have a roadmap in order in order to do so. So that's really where we're pushing it but I think more importantly than than the numbers is our mission statement of building a brighter future for our people. The thing I've always focused in, in my business is like, my number one customer is my employee and my number two is my end user and so building an atmosphere that is like creates the whole person, you know, association, spirituality, economic physique, not just the economic side, not just a paycheck, not just showing up to work, but better, better, better fathers better, better mothers, better contributors to society.

Richard Medcalf
Yeah, yeah, that's it. Well, at the end of the day, I love to say you know, finances You're but what's the destination? And the destination terms of impact? This is called the Impact multiplier, podcast and it's always about people, right? It always impact always ends up impacting people in some ways and I think what you described there, there's a word for it, right? Jewish word shalom, right, which is this kind of peace and wellbeing in all areas of life and that's what I'm hearing from you. So thank you for sharing that. It's, I think it's great, so great to hear people who, for whom it's not just about flipping their stock, right? Thank you, sir. What do you personally need to do differently in the future to multiply your own impact? Obviously, you've got a formula that's worked to get to hear what's going to change as you as you catapult beyond that?

Chris Lee
You know, thinking bigger, finding, like much of the same that I've done, I've done but at a higher level, right? So finding greater leaders scaling the culture, right, like, that's our biggest our biggest threat to our business is not scaling our culture. Right? And so just, I need to figure out how I can better do that and I'm spending a lot of money on coaches and programs and everything else, that I can learn how I can improve that. And so that's like, that's my main focus, and then being able to let go and trust others more.

Richard Medcalf
Yeah, letting go. It's a referral caring theme, right? It's every level, it's have to let go more like parented. Right. It's like you have to keep doing it. You can never stop the entire journey is letting go and trusting. So hey, Chris, that's a great way to kind of wrap things up. I think. If people want to find out more about you, or about soldier and how do they do that?

Chris Lee
So solgenpower.com. Me I am pretty active on Facebook and a little bit on Instagram, chrisleeqb like quarterback on both platforms. So facebook.com/chrisleeqb, there's a lot of Chris Lee's out there. So gotta have a distinguisher. So that's, those are the best platforms.

Richard Medcalf
ChrisLeeQB, perfect. Hey, Chris, this has been great. There's so much stuff in here. You know, I love your heart, your your your sense of building for people. You know, the way that you're putting yourself under the microscope, getting mentored, investing in yourself in order to be able to serve other people and to serve the business more. I love your sense of vision. You know, I think you've, you've shared some really specific things right around designing a culture, instead of letting it emerge by default. Targeting this high end people are Yeah, and you've got really specific there and tactical in a sense about, you know, how you might actually bring them on, as there's owners in the business. A lot of people talk about ownership, but then don't want to actually shell out and make people owners, whereas you're walking the walk on that one, as well as talking the talk. And I thank you went for being vulnerable about your journey and the highs and the lows, the moments of bankruptcy and moments of fear and then moments of learning and in the moments of growth and success. So it's been a really fun conversation, and I'm looking forward to following along and perhaps we talk again as the journey grows.

Chris Lee
Appreciate it. Thank you.

Richard Medcalf
Thanks, Chris. Take care.