I’ve been running an electrical contractor since 2024.

By 2022, we’d hit the end of the road market- and money-wise with Dials; in figuring out what was next, the general theme of “electricity” caught my attention:

• Growth: by 2022, EVs and climate change meant there was a lot to do here; ChatGPT’s launch that November kicked things into overdrive, with credible people discussing wide-scale nuclear deployment and electricity becoming a national security concern.
• Workforce: most electricians I knew in 2022 were in their 50s or 60s. I think a lot of younger people (born in the 90s and 2000s) have gotten into the trades since then, but even today, trade work isn’t a young person’s game.
• Education: I have an electrical engineering degree. That flattened the technical learning curve, but also, critically, cut three years off the licensure process.

I spent the latter 4-6 months of 2023 looking for a company to buy. I still think this is the better option—shortcutting decades of business building by buying, provided you find a good one and can get the money—but I didn’t find one I liked, so in 2024, I decided to stop looking, and get to work building my own.

Two quick asides on that process. One: reading a lot of tax returns (customarily provided under NDA to buyers deemed “serious”) is a very fast way to get up to speed on an industry. You notice patterns: margin profiles, sales growth, union vs non-union, what goes wrong (most common problem: gross margins too low). And second, there are types of business buyers—PE-funded roll-ups, trade buyers, search funds, etc. In my view, trade buyers (people already in the industry) are best—they have the deepest understanding of value and can often realize the most value from an acquisition—so maybe I’d just buy one later. (Anand Sanwal’s writeup on selling his dad’s company is amazingly well-written, and goes into a lot of detail on the process.)

Nobody’s going to let a guy with zero years of experience work on utility infrastructure. They might, on the other hand, let him work on their house, particularly if he’s prompt, properly licensed, can write/spell, and runs a tight ship.

Which brings me to another point: fields like law, medicine, and increasingly, tech, run on prestige—brands—school, employers, etc. Whereas in construction, it really is about the work—what matters is delivering good work in a low-bullshit (lateness, whining, messiness, excuses) way. There’s a place for Harvard—it’s a great school and I’m having breakfast with some people who went there next weekend—but there’s also a place for grit, and having work be about the work.

That said, not all opportunities are created equal. Homeowners just want the thing done and even the smallest electrical projects—adding pendant lights or switches—require patching, painting, sometimes even fixing stucco. With practice, I’m now passable at drywall, but it’s not something I enjoy. Some of my best-outcome jobs (not surprisingly, also the ones I enjoyed doing the most) involved skilled and organized homeowners acting as their own GCs (general contractors), hiring plumbers, painters, and carpenters to work alongside our electrical work. That works well for people who can pull it off, but only for larger jobs, and owners with the money, project management skills, and knowledge to discern between good- vs. bad-quality work. These skills are rare and valuable, and so mostly enountered in retirees; in midlife, these people are typically busy, well-employed managerial or technical employees.

So the main thing I’ve learned is: homeowners generally don’t want single-trade contractors. Here, “homeowner” is synonymous with “remodeler”—it’s not about the “where”, but rather, who the customer is, and who he (or sometimes she) would prefer to hire.

When it comes to homeowners as customers, the three archetypes of “good company”—those able to pay everyone (their employees, lenders, owners) enough to make it worth the bother—time, risk, hassle, stress—are:

1. Handymen: small-job specialists—the stereotypical “Chuck in a truck” that knows basic painting, plumbing, drywall, electrical, flooring. The secret to these guys is keeping it fast, simple, and cheap: no licensing, permits, insurance, specialty materials, or lengthy back-and-forth over contract terms. They typically show up, bill by the hour, and rely heavily on reputation and word of mouth in lieu of complicated contracts—basically, a “maintenance man” for homeowners. Guys who do this well will book out weeks in advance and can net over $100k/yr. Kirk Powers does this in Homewood, my hometown; Moraga Handyman works in the East Bay, where I live now.

2. General contractors: the other end of the spectrum from handymen: big jobs, big money. These guys add floors, redo bathrooms, and sometimes even repair after fire or water damage (so-called “restoration” work). My friend John is remodeling his house in California; it’s about a $500,000 job. That’s paying for: highly professionalized sales and project management functions, materials procurement (design/ordering expertise, inventory) and 20-30 construction professionals including core trades, plus specialties like tile, stucco, or landscale/hardscape. Residential GCs are established firms with insurance, permits, and heavyweight contracts.

3. VARs: Anderson Windows, Carrier HVAC gear, Enphase micro-inverters (solar), Tesla Powerwells. “Value-added reseller” (VAR) is a word from my tech (not construction) days, but the concept is the same: a product distributor offering bundled installation/deployment services. The key thing about VARs is that most of their profit comes from selling products—not services—which is why HVAC companies always push replacement, even when a simpler service item could, theoretically, fix it. The problem is, the guy with the skills to fix complex HVAC equipment probably has a factory or industrial job making double what a residential installer can pay. This is also why many homeowners are conditioned to believe a service call can cost $100 or $200; that only works when subsidized by the (more profitable) sale of a larger ($10,000) furnace or heat pump. For context, I paid $347 in labor for a one-hour service call to get a complex commercial lock assembly fixed last month, in the Chicago area; trucks, gas, equipment, and travel time aren’t cheap. Most homeowners would flip out paying that much.

“Specialty electrical contractor” isn’t on that list. About the only thing a homeowner needs a specialty electrical contractor for is a panel swap, a fussy job that requires permitting, a bunch of specialty parts (e.g. arc fault-interrupting breakers) that are critical and very easy to screw up buying, months of delay (if dealing with PG&E), and a highly skilled crew. It is some of the hardest money in construction, in my opinion.