From our archives. This article originally appeared in our Report on Small Business Magazine in 2009.
Mike Holmes is a big man. That much you can see on TV. His broad face, topped by a buzz cut, usually towers over the distraught homeowners looking to him for salvation from financial ruin. His bare, beefy biceps appear amply up to the job of tearing out waterlogged drywall or shoddily installed floorboards before his crew puts it all back together the way it should have been done in the first place.
But how big could Mike Holmes get? Could he, for example, become bigger than Wayne Gretzky? Make It Right: Inside Home Renovation , his 2006 bestseller, is close to breaking publisher HarperCollins Canada's sales record, held by Gretzky's 1990 autobiography. Holmes on Homes has for years been HGTV Canada's top-rated show. The white knight of renovation has beat out Canadian Idol wrangler Ben Mulroney and decor diva Debbie Travis for the Viewer's Choice Gemini Award, and been voted Canada's most trusted man. He was Brad Pitt's go-to guy for rebuilding Katrina-ravaged homes in New Orleans. On her show, Ellen DeGeneres asked him to marry her (he demurred).
This is the year, however, that the Holmes Group will find out how big and wide Mike Holmes can stretch. Holmes on Homes launched on the U.S. HGTV channel in late April, bringing Canada's working-class hero to nearly 100 million American households. The Toronto company's logo-those same beefy biceps folded across the chest-appears on workwear and boots now available in Canadian and U.S. stores. It's attached to an ambitious, ultra-green housing development in the Calgary area, slated to begin sales this fall. It's behind a nascent home-inspection business in Ontario and the upcoming Holmes Magazine, planned for a fall launch despite a calamitous advertising market.
Looking for a ceiling on the growth potential of a personality closely calibrated to the zeitgeist is tricky. Consider the career of one former model and caterer: "What Martha Stewart did is make homemaking a profession you could be proud of," says Alan Middleton, a marketing professor specializing in brand management at York University's Schulich School of Business. "What Mike Holmes is doing is taking an area where people aren't comfortable and providing them branded reassurance. That's possibly even more powerful."
Still, building a brand on the back of one man is risky, especially when that brand's fundamental selling point is integrity. The Holmes Group's ability to grow its revenues by an average of 160 per cent over the past three years has rested on consumers' belief that the crusading contractor is the real deal, not a media persona crafted by backroom Svengalis who saw a market niche and cast an appealing guy's guy to serve as its manifestation. As those biceps adorn ever more billboards, gear and spinoff services, it may become increasingly difficult to buy into the pitch that Mike Holmes's sole motivation is to "make it right™."
Where it all began
A curious thing about garages: They serve as birthplaces to an inordinate number of entrepreneurial ventures. So it was in one such brick shed that Mike Holmes metamorphosed from a builder moonlighting as a TV host into a media entrepreneur. Although his show had been on air since 2003, one night in early March, 2005, Holmes invited Michael Quast and Pete Kettlewell to his house in the countryside west of Toronto to discuss his future.
Quast had become interested in the craft of turning TV personalities into brands after working as vice-president of media at Lynda Reeves's Canadian House & Home mini-empire. That night, Quast told Holmes, "This could be bigger. This should be bigger already. There's so much potential here that isn't being used properly. You have a television show-and that's about it." The trio agreed it was time to extend the Holmes brand, though that wasn't Holmes's nomenclature. "He just wanted us to watch his back," says Quast.
Holmes had already been burned in the TV business. By all accounts, he stumbled into the industry via his big mouth. Quast first met him in 2001 while working as director of studio production for Alliance Atlantis specialty channels. One of Quast's shows provided home-repairs advice, and he needed a contractor to build some models for the set. Enter Holmes, sporting overalls and muscle shirt.
It wasn't long before Holmes, who'd been running construction companies since he was 19, offered up some opinions.
"You guys have it all wrong," he told Quast. What followed was a spirited half-hour rant about all the houses Holmes had needed to fix because amateurs thought they could do the jobs of electricians and plumbers, and how the network should instead be documenting the nightmares caused by horrendous workmanship. After Holmes apologized for his "diarrhea of the mouth," Quast urged him to write down the concept. "I said, 'You'd have to host it. With the passion I see there, I can't see anyone else doing it.' "
Holmes's rage played great on TV. From each episode's "holy shit" moments when he revealed to homeowners the extent of their problems, to the "shock and awe tour" when they saw the demolition performed by his crew and listened to Holmes, veins popping in his neck, inveigh against the shoddy labour, to the redemptive ending of a family back in its nest, Holmes was more than the host-he was the show. "I used to say, 'Mike, your sweat is gold,' " recalls Quast. " 'The more you sweat, the happier I am.' "
It's always been one of the challenges, that you're building the brand on the shoulders of a man who needs to sleep and eat. Michael Quast
By the fall of 2004, Holmes on Homes was a big hit, drawing 250,000 viewers. The timing was perfect: Amid a long boom in the housing market, home renovation had become a pop-cultural phenomenon. "When you'd buy a house, there was an expectation that you'd do something to it," says Mark Healy, a Toronto marketing strategist. "Holmes tapped into that sentiment in an accessible way. Consumers generally feel disenfranchised and skeptical, so there's a tremendously untapped appetite for that." The show had no scripts; Holmes spoke plain English; he had authority; he got mad-a Don Cherry of construction.
Nevertheless, television does require some touch-ups. In 2003, the network demanded Holmes take media training after his language got a bit too salty. Lynda Reeves, who gave Holmes his first TV exposure on her House & Home HGTV show, remembers him as a quiet carpenter. The biceps weren't on display. "Someone told him that his physique is important, but that didn't strike me as the main thing," she says. "Clearly, they've encouraged him to be blunt."
Despite his success, by 2005 Holmes was thinking of quitting. His partnership with his producer, Scott Clark McNeil, had soured. No one at the Holmes Group will discuss what went wrong, but the fact that McNeil pushed for a single sponsor for the show-what Sears is to Extreme Makeover: Home Edition in the U.S.-and publicly likened Holmes to an action figure suggests his approach may have been too commercial for the idealistic Holmes. "They divorced, and the kids went with dad," is how Quast describes the fallout.
Which is when Quast and Kettlewell got the call. Though they'd both worked with Holmes, they didn't know each other, yet immediately agreed on the potential. There was no grand plan for a brand empire, says Quast. Holmes's goal was simple: educate homeowners, build better houses and improve the state of skilled trades. To do that, he needed broader reach, a bigger pulpit. "You can't build a sustainable business just on television," says Quast. "But we were motivated by the desire to make sure the core integrity of this stayed true and didn't fall apart into mush." Right there in Holmes's garage, the trio decided to form a company and picked their titles-Quast took vice-president of business development, focusing on building the Holmes brand, while Kettlewell, as VP of production, would oversee the show.
Quast, a soft-spoken, middle-aged guy who dresses in polo shirts and slacks but who has the most corporate-looking office at the Holmes Group, displays none of the marketing maven's bravado: The company has grown by trial and error, he says, and it was really "through serendipity" that things started to gel. As season 5 launched, the Holmes Group put out DVDs of past shows and went looking for a book publisher. Every potential venture or partnership was vetted by three criteria: Is it on message? Is it something Mike would use? Is it the right thing to do? "That sounds falsely noble, but it's genuine," says Quast.
Holmes was being approached constantly about sponsorships and endorsements. Up until then, he had endorsed only a few professional products. For example, he'd raved about spray-foam insulation on his show, and when the manufacturer got in touch, Holmes agreed to attach his name to a more eco-friendly version. Quast wanted to move out into the consumer arena, and Home Depot became the company's first major deal. In September, 2005, Holmes signed on as spokesman for the retailer's professional installation services arm. Holmes has always preached against DIY and in favour of hiring pros. So when the retailer tried to present him as a pitchman for the broader chain, tensions arose. The three-year contract was not renewed. Quast is philosophical: "We've learned from every deal we've done."
Then, in 2006, Nestlé Canada called. It was launching a new brand of Nescafé instant coffee and wanted to market it around trust and integrity. The company had commissioned a poll asking Canadians-without suggesting any names-whom they most trusted. When Holmes came out on top, many Nestlé staffers had no clue who he was. Quast was intrigued by the opportunity-a major brand whose commercials would take Holmes beyond the specialty channel and onto the networks-but it would be Holmes's first non-construction product, and Quast wasn't sure he'd go for it. He knew Holmes drank coffee, so Quast asked him what kind. His answer: Nescafé instant. "It's the God's honest truth," says Quast, "and it's what clinched the whole thing."
Quast concedes that instant coffee was a stretch for the brand. What does a building contractor know about the calibre of coffee? Ken Hardy, professor emeritus of entrepreneurial marketing at University of Western Ontario's Ivey School of Business, says the credibility of beloved personalities extends only so far-cross that boundary and you invite accusations of a sellout. "Nescafé is about as far as the Holmes brand reaches," he says. For their parts, both Nestlé and the Holmes Group say the partnership has been a big success, and the deal has been renewed three times.
A big-budget, national advertising campaign is a great way to raise profile and earn endorsement revenue-both of which, Quast insists, are mere tools to help homeowners and improve the industry. He points out, for example, that until last season, Holmes was dipping into his own pocket to cover reno costs on the jobs featured on his show, as the budget of $60,000 to $150,000 per episode, funded by the broadcast licence fees, wasn't enough. As well, 10 per cent of net profits from Web sales go to the Holmes Foundation, which funds scholarships for skilled-trades students. "Mike's spent hundreds of thousands of dollars helping people," says Quast. "He's not perfect, but he is hands-down the most sincere and generous person that I've ever met." Every staffer at the company extends similar reassurance: Wait till you meet him, and you'll know he is the same earnest do-gooder as you see on TV.
'I don't feel like a celebrity'
Mike Holmes is seething. It's a low boil, and he tries to suppress it, ignore it, tell himself it doesn't matter. But it does, damn it! "They call me a millionaire contractor!" he exclaims, pointing to the April issue of Canadian Home Workshop magazine on his desk, his own mug smirking from the cover. "I'm not a millionaire," he insists. "I see it as an insult."
Unsanctioned coverage is one of the crosses celebrities must learn to bear, but Holmes resists it. "I don't feel like a celebrity," he says. "I'm a contractor." (Actually, his construction company is no longer a commercial business; it only does projects for the show.) Holmes's image is literally larger than life: In person, even at six feet, he looks smaller than he does on TV. Other things are the same, though: the piercing stare, his trademark "keep smiling" sign-off, the tendency to run off at the mouth.
Seated in his messy and well-lived-in office in the west Toronto building he bought to house his company, Holmes, dressed in a khaki shirt from his own workwear line, needs little encouragement to recite how it all began-how he learned construction from his father; how, even at 21, he was so appalled at the botched work he saw that he imprinted his business cards with "The F-Up Fixer"; how he could only do TV if there were no scripts because he's no damn actor. "I care and I want to make a difference," he says. "It's not about making a lot of money. But, I knew at the beginning that nothing would change in the industry unless I did something. So I focused on what I could do in the next five years to reach a certain goal."
Holmes's goal these days isn't fixing homes but building them right the first time: self-sustaining houses with their own sewage and grey-water collection, living roofs, radiant floor heating, solar-heated water. Last summer, Holmes spent 10 weeks working with the Brad Pitt-led Make It Right Foundation (they connected over a dispute about the foundation's name, a phrase Holmes had trademarked), overseeing construction on new eco-friendly homes in hurricane-ravaged parts of New Orleans. "We had the [power]meter running backwards and Brad was dancing in his shoes," Holmes recalls. As he warms to the subject, he gathers speed, detailing how houses can be built fire-resistant, airtight and mould-resistant. "Everyone's talking green," he says. "Well, let's really go green! Why don't we change the building process? If no one else is going to do it, I'm going to do it. Build a home that won't burn, won't mould, that's termite-resistant. There's a book, Cradle to Cradle, and I like that: like a farmer, take from the land and put it back ... lost where I was going with that." Then he remembers, and is off again on the horrors of deforestation and how there are (he looks it up on his iPhone) 256 trillion BTUs of solar energy striking the Earth right now and we're not harnessing that power, and what a waste that is.
"I'd love to be a developer," says Holmes. "To me, everything is simple technology. All we have to do is put it all together." So, in 2007, the Holmes Group partnered with Oko Properties and design consultants Baird Sampson Neuert to build an entire green community on a 100-acre site near Calgary-the first of three planned Holmes Homes developments in the area. The new houses will cost 15 per cent more than comparable-size homes, but buyer interest is nevertheless running high, says Quast. The Holmes Group's role is to oversee the construction of the houses and back the quality with a five-year warranty.
The real-estate project is his most ambitious new venture, but hardly the only one. Some of them have had rocky beginnings. Take Holmes's boots. The Holmes Group is on its second footwear manufacturer.
The workwear line has also hit some bumps: Richlu, the Winnipeg-based maker of Tough Duck jackets, overalls and other rough-wearing garments, was the Holmes Group's first licensing partner. Holmes insisted on having a say in the design rather than just attaching his name to existing products. But in stores, the Holmes overalls were surrounded by Tough Duck gear, and marketed as a premium version of the existing line. Quast says the workwear problems have finally been sorted out, and this spring, more than two years after the initiative started, the first shipments hit small retailers and chains across Canada.
Also in the spring, the Holmes Group launched a home inspection business, an arena that for years has drawn some of Holmes's most impassioned invective. The company has hired Darren Johnson, an experienced inspector, to run a pilot project in Guelph, Ont. There are more books coming, with one on green building planned for 2010. There's a newspaper column (usually typed by his PR co-ordinator after Holmes dictates it into a tape recorder while driving in his truck; he doesn't type). In April, the company agreed to team up with an independent publisher in Creemore, Ont., on Holmes Magazine-the minimal title attesting to the partners' confidence in Holmes's name recognition. All this, plus the launch of Holmes on Homes in the U.S., which requires him to find time for American media and public appearances.
As ventures multiply, the company, now 30 strong, intends to bring in consultants-specialists in the various businesses who, as Holmes likes to say, will make it right. Still, Holmes remains at the centre, and there's only so much of him to go around. "It's always been one of the challenges, that you're building the brand on the shoulders of a man who needs to sleep and eat," says Quast. "[Last season] we were killing Mike. He was not only there for all the shoot days, but had to go to press conferences, think about Holmes Homes, the new products, speaking engagements. He was working all the time." In her office, Liza Drozdov, Holmes Group's director of communications, has yearly calendars on a wall showing Holmes's schedule. Judging by the amount of red and green marker scribbles, 2006 was especially crazy-and those were just the engagements she booked. Holmes also has an agent for speaking gigs. Drozdov has been trying to book a vacation for him, but it keeps getting postponed. (As she's explaining the demands on his time, Holmes sticks his head in: "And I want to do the Mike Holmes cartoon, about me as a kid." He's serious.)
Quast admits to being concerned that Holmes's dreams "are growing exponentially." He fears burnout. But there are just so many opportunities. "They've done a pretty genius job of extending the brand beyond where people might have thought he could go," says consultant Healy. "I don't see anyone else stepping into that market." He's particularly impressed with the company's ability to maintain Holmes's reputation and a consistent public persona. Even when Holmes went on CBC's The Hour , he sported his signature muscle shirt and overalls. Reeves, who's spent 25 years "aging" in the public eye, knows the challenge. "You can't vastly change your hair colour or style, but at the same time you can't be in a time warp," she says. "And if you're relating to the everyman, you can't act super successful and super rich."
But there's a risk that Holmes will spread himself too thin, diluting the brand's potency. For all his insistence on wanting to help the industry, pros dismiss him as-in the words of one commercial contractor-"fluffy." Professor Hardy notes that "a professional would get laughed out of town if he showed up in Mike Holmes-branded overalls, because Holmes is viewed as retail-focused-the hero of the amateur-and no true professional should carry a retail brand."
Yet amateur work is exactly what Holmes rails against. Meanwhile, maintaining the quality of the Holmes products won't be easy for a small business that needs to rely on supplier partners and has to balance quality with affordability. During economic downturns, it becomes tempting to cut costs by cutting corners. For Holmes, who's all about integrity and workmanship, doing that would be especially harmful. Canadians are very patient and polite, says Schulich's Middleton: "You won't hear from them, but they will go away." And will they really be willing to fork out a 15 per cent premium for a green home, even one endorsed by Holmes? "People are green until you ask them to pull out their wallets," says Healy.
Then there is the issue of succession. At 45, Holmes admits there will come a time when he'll have had enough. Would that mean the end of the Holmes Group? Not necessarily. Other brands have survived without their core personalities-Loblaw's President's Choice, for example, is doing just fine without Dave Nichol. And Nichol was a consumer's champion, just as Holmes is, points out Middleton. "That soaks into the brand name." Match that with trust-and, to capitalize on the recession, value for money-and it's a seductive combination, says Middleton. As long as the brand's values have been institutionalized, it's possible for other people in the organization to carry the flame.
Still, the more ventures Holmes launches, the greater the chance that consumers will contract brand fatigue and dismiss him as another pitchman-for-hire. Quast, who along with Kettlewell has a small equity position in the company, insists that won't happen. "This is not just a job," he says. "I do this because I believe in the product that Mike is. That sounds really hokey, as unbelievable as the Nescafé story, but it's true." Verisimilitude is what counts. "I believe he's for real," says Healy.
As long as the average consumer agrees, the sky is the limit.