When longtime Sacramento builder Aquarius Pools closed its doors last summer, it left 60 vessels unfinished — and wounded the Northern California pool industry’s reputation.
Among a number of firms picking up the pieces in the aftermath was Premier Pools & Spas Inc. “It’s going to be bad for the pool industry in the next few years,” says Paul Porter, CEO of the Rancho Cordova, Calif.-based firm. “We’re trying to protect the industry. This isn’t just about getting our name out there.
“I’ve always believed we’re in the business of making people’s dreams come true,” he adds. “We still want the consumer to think about pools as a real dream that they can have in their backyards. If we don’t do that as the leader in this market, no one will.”
Porter’s deeply rooted sense of responsibility stems from a desire to protect the industry that has made his own dreams a reality. For nearly 20 years, he has successfully managed Premier’s dramatic growth and now is embarking on aggressive expansion plans.
Revenues have more than quadrupled in five years, jumping from $24.7 million in 2001 to more than $100 million in 2006. What’s more, a merger with Midwestern retail chain Litehouse has the firm looking to compete with the likes of national giants Anthony & Sylvan Pools Corp. and Blue Haven Pools & Spas.
It seems Porter and Premier Pools & Spas are unstoppable. Here’s a look at the highs and lows of one man’s life, and how he found success in the pool and spa industry.
Porter did not grow up affluent. He and his three siblings were raised by a single mom in a small town just outside Stockton, Calif. His family lived off welfare. “Growing up, I didn’t know anyone who owned a swimming pool,” he says. “We associated swimming with a wealthy lifestyle.”
Porter married at age 20, and his wife, Debbie, became pregnant while he was still in college. He chose to leave school and find a job that would support his new family.
“I started a lot of sales jobs — selling health club memberships and vacuum cleaners door to door 14 hours a day,” he says.
Four years later, Porter entered the pool business — and was bitterly crushed. In July 1987, the Northern California builder he worked for asked Porter to revive a failing Sacramento office. He even offered stock in the company.
“I was 28, bright-eyed and bushy-tailed, and he wanted me to conquer California,” Porter says. “My wife and I gave him $60,000 — our life savings. Within two weeks, he took off.”
Soon, Porter’s car was repossessed and his home was in foreclosure. His wife and two young sons were forced to ride a bike to the supermarket. Keith Harbeck, a former service technician, also had invested time and money into turning the Sacramento business around. Both were left penniless.
“We were so desperate,” Porter says, “I remember Keith’s sister offering him a job at Hewlett-Packard. And he asked me, ‘Paul, what are you going to do?’ I told him, ‘This is all I know, so I’m going to go out on my own, but if I were you, man, I’d take the job!’”
Harbeck decided to stick with Porter. So in 1988, the pair started Premier Pools & Spas in a garage — well before Google made it cool. They took out a $50 loan.
“It was all anyone would give me,” Porter says. “So we used it to print up fliers, and we went out every day and passed out the fliers to different neighborhoods. Because they were so scarce, we’d look over [people’s] fences and peek into their backyards to see if they had a pool or not. If they did, we didn’t leave a flier.”
The pair canvassed neighborhoods for three weeks before landing their first lead. When the homeowner asked Porter and Harbeck for references, they told him they had none. The customer then asked to see pools that they’d built in the past. Still nothing.
Finally, the skeptical homeowner asked, “Just how long have you two been in business?” Porter replied, “What time is it?” and the tension broke.
Then Porter told the client that no one needed his business more than Premier. Though flat broke, they offered not to take a dime until the work was done and the client was satisfied. Fortunately, the client refused and Premier built its first pool.
“We went on to build his neighbor’s pool and then the pool for a high school swim coach. We got 13 leads from their referrals,” Porter says.
In March 1989, they opened an office. Management of the company was split 50-50: Porter handled sales and marketing; Harbeck oversaw construction. “Paul’s got a great, positive personality. He’s a good motivator and an exceptional speaker. He’s the point man for the organization,” Harbeck says.
In the hands of Porter and Harbeck, the company has thrived, including becoming a Pool & Spa News Top Builder. Last year, Premier built 1,950 pools in California, Arizona, Nevada and Ohio, but getting there wasn’t easy.
“There are challenges as you grow because not everything is going on right under your nose anymore,” Harbeck says.
To maintain quality, the company has implemented a number of processes (see “Striving for perfection”). For one thing, more than 90 percent of the construction work is done in-house. In Sacramento, for instance, Premier has 12 tile and rock crews, seven electrical crews, seven plumbing crews and three plaster crews.
This strategy has enabled the company to reach more markets. In 1990, Premier opened its first satellite office in Vacaville, Calif. That followed with offices in Lodi and Modesto, Calif.; Peoria and Tucson, Ariz.; and Las Vegas.
All in all, the company now has more than 500 employees. To maintain a sense of uniformity, every store has a design center with one or two inground pools, an expansive tile and stone room, sales center and fixture displays.
Still, the pool-building formula proved too narrow. “We realized we spent energy creating a relationship with the customer over six to eight weeks, and then we would leave,” Porter says. “People wanted to expand their backyards with barbecues, toys and fixtures, and we didn’t offer these things. It was a segment of the business we were missing out on.”
So in 1999, the company opened its first retail location in Sacramento. The retail business model required a different skill set, though — one that Premier officials realized they didn’t have.
“Inventories and cost structures are different, and we were trying to run it like a pool company,” Porter says. “We ran it for four years before we thought we either needed to get out of the business or find someone who could succeed.”
Enter Litehouse Products Inc. Porter heard through the industry grapevine that the well-established, longtime retailer in the Midwest was looking for opportunities to expand in the West. That day, he called Litehouse CEO Jamie Colbourne. “I was on the plane the following day to meet him at his Arizona home,” Porter says.
The two companies launched a joint venture in 2005, wherein Litehouse would run Premier’s retail operations and Premier would manage the Midwestern chain’s building division. “We realized that we liked each other and could work together,” Porter says.
So on Jan. 1, 2006, the companies merged. “Our goal is to create scalable models,” Porter says. “We’ve invested a lot of money in software, scheduling programs and an RMF system for retail operations.”
In fact, Premier spent $1 million on technology infrastructure last year. Porter asked the company’s CFO, George Heath, to take on the newly created role of CIO. Heath has since implemented an extensive job-cost tracking software that improves project estimates and streamlines expenses.
Simultaneously with the Litehouse venture, Porter and Harbeck inked a deal with Kevin Woodhurst, owner of a growing pool-building company in Chandler, Ariz. “He had all the traits we were looking for: He was young with tons of skills and opportunities,” Porter says.
Woodhurst sold his company, Precision Pools and Spas, to Premier and stayed on as general manager of the Arizona operations. “Like any business, when you totally immerse yourself in it, it takes away from family time and marriage,” Woodhurst says. “I called Paul and Keith and the next day, they were here. We started negotiations and, by the end of the year, we came to [an agreement] that would work for everybody.”
Yet evolving into a large company has brought Premier, as well as Porter, their fair share of critics. The recent rumor mill suggested that the company was underbidding pools and laying salespeople off.
Porter, who recently moved to Phoenix to personally oversee growth in the market, is quick to set the record straight. “We have a lot of cost efficiencies,” he says. “For example, I hedged some of my costs three years ago by signing contracts that locked us into a 4 percent rate increase for concrete, which has since gone up 30 to 40 percent in cost. We can get [thousands] in savings as a larger company that the smaller companies just can’t. They don’t have the cash flow or size to justify those large purchases, so our costs are lower.
“With a company of our size, you can’t manage top-line; we manage the pennies,” he adds. “In Sacramento, we’re taking business away from other people, and they’re mad. We’re a big company, but we’re healthy.”
Since the unfolding of these mergers and acquisitions, Porter, Harbeck and Colbourne created a new company — KPJ Holdings Inc. The powerful entity owns Premier and Litehouse.
But this is just the beginning, according to Porter. “We’re going to continue to look for partnering and acquisition opportunities,” he says. “There are companies out there that sell their names with no regard for reputation: They set up a franchise and disappear. We want to make sure that when someone buys a Premier pool in Sacramento or Cleveland, it’s backed by a large company that takes care of and protects its brand.”
Porter keeps a keen eye on demographic trends and the home-building industry. He frequently talks to representatives at Pool Corp and various equipment manufacturers. His goal is to sell clients a “lifetime service contract” to have Premier fulfill all of their pool-related needs.
“I stay in tune with what’s going on, [especially] with the housing inventories and interest rates,” Porter says.
“I’d like to see the company twice the size it is today in five years,” he adds.
“I want to branch out and take advantage of the opportunities out there, whether it’s the insurance businesses, retail operations or financing.”
This may be tough, considering sluggish numbers in some of the company’s leading markets. Porter admits that leads in Sacramento are down 40 percent, and Phoenix home sales are stagnant at best.
“Every one of our offices has aggressive growth strategies to increase market share,” Porter says. “We think there are opportunities in the specialty retail markets. In Cleveland, for example, we sell spas and pool tables. We’re big holiday stores in the winter. In the West, we’re expanding into barbecues, gazebos, landscaping and fireplaces.”
Woodhurst has no doubt that Premier will succeed, especially with the strength of its three principals. “With Paul, you have a point man with an incredible drive and vision,” he says. “Keith is well-versed in operations, and a good person who wants to do things right and be fair. And then you’ve got Jamie, who’s very much a businessperson and makes smart business decisions.
“You take all three of them and you’ve got a management group that can take Premier to whatever level we want it to go,” Woodhurst says.
In the end, the struggle to succeed is personal for Porter. “I want to leave a legacy. I grew up without a father and had no stability in my life. Coming from that, it’s amazing to see my family today,” he says. “To be able to provide for my family, my wife of 27 years, my four kids and now my extended family within Premier, it’s so gratifying.”