When Majid Samarghandi left the first mechanical contracting company he launched, the scene was a moving one for both him and his employees. It was 1998, and Samarghandi decided it was time to move on after fulfilling a management agreement with the company that had acquired his firm five years before.
“When I left, it was an emotional time because I had built that company from ground zero. I was there 18 years and when I left, there was a big crying session,” says Samarghandi. “They were very gracious, my employees, because they were the ones who made me what I was.”
He enjoyed similar loyalty from his clients, and many took their business to him when he started a new contracting company, Triton Services Inc., in 2003. He maintains that his success is built in no small part on his insistence on doing business in an ethical manner, a plus in an industry in which shady operators too often mar its reputation.
The company’s performance would seem to back Samarghandi’s contention. He predicted that Triton Services would stand at around $20 million in revenue at the end of five years. In contrast, by the end of its third year, revenue should instead be approximately $30 million, says Samarghandi. That dwarfs the performance of his previous company, which took nearly 10 years to reach the $5 million mark.
“I remember with my old company, it took seven years to secure my first $1 million bid,” Samarghandi says. “With this company, in months, if not weeks, we secured our first multimillion-dollar contract.”
Samarghandi spoke with Smart Business about how and why he holds fast to his ethical principles and how it benefits his business.
How have you managed to grow Triton Services so successfully?
There are a lot of contractors, and I always tease my friends and tell them that anyone that gets mad at their wife opens a mechanical contractor business because lot of times, it doesn’t take much. But a lot of times, what differentiates you from others in our industry — because the construction industry as a whole has such a bad reputation — is that you honor what you say you will do, that you meet or exceed what you promised and what is expected of you.
I ask myself, if I were a customer, ‘What would I expect from Trito? Am I getting the best value?’ One of the reasons that Triton has been so successful, has grown so fast, is that almost every customer has come back to us and used us. I’m proud of that fact, not that I ever claim infallibility. Our company has weaknesses like every other, but hopefully, we are men enough, principled enough, to acknowledge our mistake, pick up the phone and call a customer and say we’ve made a mistake and take care of it.
I’ve had instances where we were right and the customer said, for whatever reason, they felt we owed them something. And I always told them, ‘If you think I owe it to you, I’ll take care of it.’ And I’ll tell you, a majority of the time they’ll back off. But sometimes they’ll insist on it, and we’ll deliver on it. My reputation means more to me than any dollar amount.
What’s the source of your ethical principles?
I learned my lesson mostly from my upbringing. My father taught me how to treat people. I’m a Baha’i, and in my religion, you have to live your life the way you talk, you have to show with your conduct how you live your life.
For me, I’m aware every moment, I’m cognizant of my behavior. What I hope to never do is to do something wrong intentionally, to cheat someone. We have sent invoices to people by mistake, and they’ve paid us. We’ve sent the same invoice to a customer twice by mistake, they’ve paid us for the second invoice, too. We turned around and sent the money back, and I assure you, you have those customers for life.
Why does the industry have such a negative image?
There are many temptations. It’s not unique to our industry. Some businesses are exposed to it more than others. Just like the stock market, brokers sometimes compromise their ethics to make a quick buck. The same thing in our business.
The worst thing is what they call ‘shopping,’ where you get prices from different vendors and subcontractors, and after you secure the job, you let every bidder bid against each other again and it becomes an auction. It’s legal but it’s not ethical, and that is very prevalent in our industry, to a point where people just literally expect it.
And there are a lot of general contractors that play that same ‘shopping’ game, and I don’t want my low price to be a ticket to an auction, and one that doesn’t even guarantee you a front seat.
How do you filter out the risks of becoming vulnerable to the unethical practices of others in your industry?
Our industry, regardless of how you look at it, is a small industry. You come across them even on a national basis. Their reputation is there, you can make one phone call to a friend in a different town and you get so much information.
And if you live in this town and the company’s in this town, I can assure you that any vendor, any contractor, subcontractor, they can give you vast information as far as any company you wish to know about. We just call around. If we come across such folks — and I won’t mention names, but there are many of them locally — we flat out would not do business with them.
I haven’t done business with them for 17, 18 years, and I will never do business with them.
What kind of contracting practices do you look out for?
Obviously, the most important thing is that your contract is a good one that protects your interests. We have actually walked away from many, many contracts because I will refuse to sign a contract … that I feel is unfair, is one-sided, that leaves us exposed to a lot of things we could not defend ourselves against.
Like lately, a lot of contractors write into their contract clauses that you waive all your lien rights. That’s the only protection that a contractor has against nonpayment. If you waive that, you’re flat out of luck.
How do you overcome the negative image that a few bad practitioners have created for your industry?
The only way I can earn my trust with you is to be given an opportunity, and many, many times, I tell people, ‘Don’t give us a $2 million contract, give us a two-hour project, let us show you what we can do, and if we do a decent job and if the chance for a bigger job comes along, God willing, we can earn it.’
My first customer when I started Triton Services was a customer I had done business with for 15 years with my old company. They said, ‘Here’s a design/build project, not a very big one,’ for a bid of $130,000 that my old company gave them.
Now typically, if someone gives you a $130,000 price from someone else, the typical contractor would be at $128,000 or $129,000. My price was $87,000 and some change. They came to me and said, ‘Majid, you’re too low’ and I said, ‘No, it’s a fair price, I’m fine with it.’
We did the job, we didn’t make a killing but we did it. He sent us a check for $105,000 because, he said, he budgeted $130,000. ‘You were fair enough,’ he said, ‘so we’ll split the difference.’
And three months later, they gave us a contract for more than $1 million.
How do you keep those relationships going?
To be there with them when there’s not a contract pending. Usually, people go call on clients when there is a contract pending or they’re in negotiations or something.
You build a relationship over the long-term. One handicap that I had with my old company was that many, many of the contractors in town are second, third, fourth generation companies. I’m an outsider, I came to Cincinnati to build Procter & Gamble’s world headquarters project.
So you had to build a relationship from ground zero, and it was an uphill battle. I remember how I used to call people — this goes back 20 years ago — to even try to get on the bid list, forget getting the job, and many times, people would just laugh and hang up the phone.
Now, people call us, and we pick which jobs we want to bid on.
How to reach: Triton Services Inc., www.tritonservices.com
