Pete Burgess – Co-Founder, Tar Heel Basement Systems

I am Pete Burgess, and along with my beautiful wife Nancy, we are the proud owners of Tar Heel Basement Systems. We have two wonderful daughters, Hillary and Kari; and two amazing granddaughters, Clare and Irene. I am originally from Illinois, graduated from the University of North Carolina where I met Nancy, got my MBA from Northwestern University, was a commissioned officer in the Navy, and am a licensed general contractor in North Carolina and Virginia.

After years in the business world in Chicago, I tried to retire and find solitude with Nancy in the beautiful Blue Ridge Mountains. Upon building our dream home and encapsulating the crawlspace, I became a firm believer in the CleanSpace product and joined the dealer network. My retirement was short-lived as I am now responsible for over 80 employees and the thousands of customers we have served since 2003. The company is a deluxe dealer in the Basement Systems Inc. dealer network of basement waterproofing and crawlspace encapsulation contractors and in the Foundation SupportWorks, Inc. dealer network of foundation repair specialists.

Tell me about your early career.
Upon graduating from UNC Chapel Hill in 1967, I was commissioned as ensign in the U.S. Navy Reserve, where I was assigned to a guided missile destroyer based in Long Beach, CA. After deployment to Vietnam, I left the navy in 1970 and enrolled in Northwestern University’s MBA program. Subsequent jobs were with Continental Bank in Chicago (commercial banking, which wasn’t for me), United Airlines management training program for five years, and Trus Joist International for one year (building products manufacturer). Then, after reuniting with some friends from business school, and saddled with two infant children, a mortgage, and two car loans, I decided to try my chances as a trader in the corn futures pit at the Chicago Board of Trade. I borrowed $25,000 from my father to rent a membership and spent three years treading water. It takes deep pockets and a special mentality to succeed in that kind of speculation, and I didn’t have enough of either. But then in 1984, I called a fellow I had met a couple of times socially who I knew managed Solomon Brothers operations at the Chicago Mercantile Exchange. I asked him if he might be interested in giving me a chance as a pit broker filling his orders and he said, “Absolutely. I’ve been looking for someone who has no political ties to that exchange.” So, I had to borrow $25,000 more from my dad to start at the CME and jumped into the interest rate futures pit at the CME. This was the time when Eurodollar futures were developed to supersede T-Bill futures. Eurodollar futures were based on U.S. dollar circulation outside the U.S., which could never be predicted. Hence, there was much more volatility in the pricing. These were the short-term interest rate futures as long-term interest rate futures were traded as the Chicago Board of Trade 30-year bond futures. Eurodollar futures became the largest volume-traded futures contract during the late 80’s and early 90’s. By 1995, I was burned out and decided to sell my membership and retire to the mountains of North Carolina. In early 1996, at 50 years old, I moved my wife and oldest daughter to NC where I languished for a year trying to find something to do with the rest of my life. I got my real estate license, which I never intended to use, and then my residential contractor’s license, though I had never worked construction. My wife and I were dreaming of building our dream home, so I took a job with a custom home builder to learn how to do it. After four years of working for him, I decided to quit the job and build our dream home. Two years later, the 4,000 square foot home was finished and I was again searching for a new opportunity.

How did the concept for Tar Heel Basement Systems come about?
My wife and I had subscribed to a magazine, Fine Homebuilding, which provided ideas for custom home builders. In the March 2003 edition, there was an article penned by Larry Janesky, founder and CEO of Basement Systems, Inc. It explained how moisture problems on the dirt floor and vented crawlspaces promoted mold growth which degrades floor framing, can cause breathing problems for inhabitants with respiratory issues, and can result in a significant energy penalty. His solution was to seal the crawlspace floor with a heavy duty plastic liner, sealed to the walls, and taped at the seams. Then, seal the vents and any other openings to the outside, and, provide de-humidification to dry and circulate the air. This concept had been tested by Advanced Energy in Raleigh, NC and the science confirmed the benefits. My wife pointed me to the magazine article and I found it interesting, so I called Larry and asked him if I could buy the material and do it myself, but he asked that I travel to Seymour, CT and go through their training first, which I did. After returning home, I received the material and installed it in my brand new crawlspace. The transformation was palpable. I decided to open a dealership which cost nothing but buying the material and marketing material. I named it, High Country Cleanspace. Cleanspace is the trademarked name of the heavy polyethylene liner we use to cover the dirt floors and any walls below outside grade. The name, Tar Heel Basement Systems, came about eight years later when I moved the business to Winston Salem, NC from Boone, NC.

How was the first year in business?
The first year in business I sold $35,000. My marketing at that point was to educate home inspectors and real estate agents on the benefits of encapsulating crawlspaces. I live in a resort community where many wealthy people have built expensive mountain homes as a summer destination. After being locked up all winter, the residents return to musty-smelling homes in the spring and summer. Those odors come from the vented, dirt floor crawlspaces. These people were typically successful, intelligent people who quickly understood the concept and the proposed repair. I wore all hats: marketing, appointment center, sales, production, service and accounting. This is when I was 58 years old, but I felt like I was 38.

What was your marketing strategy?
As I said before, I needed to educate people about what was happening in their crawlspaces. Basement Systems provided me with printed material to help. They provided my website design, management, and ideas on how to answer the phone, present a sale, install new products, as well as other sound business ideas. These resources were virtually-free since I paid them a very reasonable fee for each sales lead that they generated for me. Today, our marketing strategy is world-class in our industry with proprietary software to track and record sales leads, an industry-designed CRM to allow us to manage the whole business, an internet support team who collaborates regularly with reps from Google, and marketing pros who teach dealers how to maximize their marketing dollars. In sum, my dealership has a three-person marketing department locally, but a national marketing department at its disposal.

How fast did the company grow during the first few years?
From our inception in 2003 until 2009, the company made no more than $500,000 in a year. In 2010, Larry Janesky visited my home, which was our office, and talked with me about what might be possible if I rededicated myself to something beyond what I had done for six years. I decided at that point to expand the business into basement waterproofing, which would require a bigger presence off the mountains and into the Piedmont Triad area of North Carolina (Winston Salem, Greensboro, and High Point). I hired a young home inspector and he began building our basement waterproofing service. At this time, we had approximately 10 employees. Our revenue in 2010 was $950,000. We also moved the business out of my home into a 3,000 square foot warehouse with a couple of offices. In 2011, our revenues were $1.5 million and we moved the business again into a 8,000 square foot warehouse where I, and a couple of our employees, built 1500 square feet of office space. By the beginning of 2012, I finally concluded that I needed to hire a person dedicated solely to marketing, so I hired a child development major who had been captain of the women’s soccer team at Appalachian State University. I didn’t even have a job description, but we put one together and I gave her the Basement Systems developed marketing program to read and learn, and I incentivized her with certain key performance indicators. Today, she is one of the more sought-after experts in our network by smaller dealers trying to develop their marketing programs. So, in 2012, our revenues came in at $2.4 million and we moved the business to Winston Salem during the summer of 2013. At this point, we expanded our services into foundation repair (piering, wall repair, floor repair and stabilization) by joining the FoundationSupportWorks dealer network: a network of dealers modeled after basement systems. We quickly added people, vehicles, and equipment by borrowing from me and the bank. 2013 saw revenues of roughly $4.2 million, 2014’s revenue was $6 million, 2015’s revenue was nearly $8 million, and 2016 ‘s revenue was $10.6 million. We now have 87 employees, and we have a goal of $14 million this year.

How do you define success?
Building a business with long-lasting value to its customers, employees, and community.

What is the key to success?
Having a meaningful mission, purpose, and values. Hiring A-players. Focused leadership. There’s something called the service-profit chain (look it up) to which we subscribe wholeheartedly.

What is the greatest lesson you’ve ever learned?
That I would rather be the tortoise than the hare.

What are some quotes that you live by?
The Golden Rule, The Serenity Prayer, “The bitterness of poor quality remains long after the sweetness of low price is forgotten”, “The person who makes no mistakes usually doesn’t make anything”, “Today is the tomorrow you worried about yesterday”, and “It’s better to struggle than to suffer.”

What are some of your favorite books?
The Untethered Soul by Michael Singer, The Power of Now and A New Earth by Eckhart Tolle, The Pillars of the Earth by Ken Follett, and Trinity by Leon Uris.

Tell me about one of the toughest days you’ve had as an entrepreneur.
Firing the young man and his wife who helped me expand the company into the Piedmont Triad. He had convinced himself he was my heir apparent. I did owe him much of our success, but he was poisoning the culture.

When faced with adversity, what pushes you to keep moving forward?
You can’t change what happened yesterday, or even one minute ago, so focus on what is happening now. You cannot predict what will happen tomorrow, so focus on what is happening now. This thinking helps to eliminate irrational fears based on past experiences, as well as the irrational fear about what might happen tomorrow. History gives us lessons which should be considered unemotionally. Allowing past, negative emotions to interfere with your focus today will only cloud that focus.

What advice would you give to young entrepreneurs?
Plan on five years of struggling. Watch your cash, as it is “king.” Growth isn’t necessarily success, as a business can grow right into insolvency. Know your fixed costs. Measure your “spread” at least monthly (spread = cash + receivables – payables), hire slowly, fire quickly, recruit A-players, and concentrate on improving peoples’ strengths before you try to improve their weaknesses. Be the tortoise, not the hare.

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