← Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast
Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast
#156 LEGENDS: From the Trades to $110 Million with Nexgen Founder Ismael Valdez
00:48:03
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- [00:00]
Ishmael Valdez
We did, like $1.2 million in revenue in my garage. In four months, you can get from 0 to 10 in a snap of a finger. Gross profit will tell you how much of a badass negotiator you are. Don't forget that the war is won inside the home. Dude, If I've had one message for $100 million, Mark, it's not for everybod.
- [00:35]
Mark
A few months ago, we got our call center on Evoca. And Evoca is a AI call center solution for home service companies just like me and probably just like you. They have a couple different products, but the one that we like the most is their Coach product, which listens to every single phone call and runs it through a rubric to help our call takers improve. And this is a really big deal because we take hundreds, sometimes thousands of phone calls every single day. And it's just too much for our trainers and managers and leads to keep up with and effectively train. So it lets us do ride along on almost every single call every day. Click on the link below to go to Evoca and make sure you use the promo code OWNED for a special discount. Welcome back to Owned and Operated. Today we have Ishmael Valdez on with us. Welcome to the show.
- [01:18]
Ishmael Valdez
What's up, man? How are you guys?
- [01:20]
Mark
Good. We're good. We're excited to have you here. Very excited. You founded Next Gen. You took it from nothing to something, and we're really pumped up to bring you onto our Legend series and talk about what that looked like. Do you think you could spend. Do you think you could spend a minute or two and just sort of walk us through the Next Gen story?
- [01:40]
Ishmael Valdez
Of course, of course. First, congratulations on the podcast, guys. I love doing these podcasts. The name's dope too. Owned and operated. Because 99 of these podcasts that I do, they don't know. They have no clue of, like, what we gotta go through, of the everyday grind. So that's. That's cool that you guys are doing this for the trades and that you guys are still, you know, in the grind, in the trenches doing it, because like I said, 99 of these guys don't have a clue of what we got to go through every day to make sure that our operations running smoothly, to make sure that, you know, we're profitable, to make sure that we're employing people to make sure that we're, like, doing the actual things that we need to do to keep the operation going. So congrats on, on the podcast and congrats on, on Owning the business, man, it's, it's hard to do both. And you know, I, I, I, I applaud you guys so much. My name is Ishmael Valdez, bro. I started next gen air conditioning in 2018, late 2017, going into 2018, I think I got my license in January 2018, around there. You know, for, for those of you who don't know me, it was a pretty fast growth. At the time, I thought it was, you know, normal for people to do this, but I guess, you know, when I started exposing myself to social media and I started talking to people, people were blown away by the journey, the short journey that we had our first year in business. We were, we were all H Vac for the first three years. For the first four years, actually, we were all H Vac, heating, air conditioning, residential, retail. Residential. No Costco, no Home Depot, no Lowe's, none of that. It was just strictly marketing. First year we did 9.8 mil. Second year we did 18.2 mil. Third year we did 24. And I think going on our fourth year, we went up to 32 million. Huge fast growth, man. Like I said at the time, I didn't really know that what we were doing was special because I was so deep into the trenches, you know, hiring people, recruiting people, marketing, figuring out the pay structures, figuring out like, what incentivizes who to be able to push the revenue, where the profits at. So, like, obviously you guys know what I'm talking about, right? The trying to figure out the everyday grind and the everyday cycle. So a couple years ago, I sold to private equity. Was probably one of the best decisions I've ever made in my life. Ended up going to Wrench Group. I think I sold it when I was doing $109 million revenue in one year. It's pretty dope. Six different locations in Southern California when we sold. A ton of good things came out of the South. One of the best things that came out of the cell was my nouveau thermostat, which we're going to talk about it, but just a quick, a quick who I, who I am, how I, how I got here, I did, I got into the trades when I was 18 years old. I was working at a supply house named, named Howard Industry, which distributed American Standard equipment. Most of you guys back east know about American Standard Train. So I worked there for about eight, nine years, man, and I probably had 10,000 job offerings every single day. People, contractors like yourselves would come up to the counter and buy equipment for me, buy parts for me, and I would, you know, bullshit with them. I would talk to them, I would ask them a million questions because I have a really curious mind of, you know, asking a million questions. So contractors like yourself would come in here and just buy equipment from us and I would, you know, ask them a million questions. And that's how kind of I got into the contracting side. After I figured out that you were making all the money. I'm like, how am I doing here? So it took me eight years to realize that you guys were doing all, that you guys were making all the money. So that's when I started to jump on the other side of the counter and kind of started on the contracting side. But, you know, a couple years later we started, we started an action in between those couple years, I started a company called rha and then there was another company called Home Comfort usa, which we did pretty, pretty dope out things down too. We got it from zero to $21 million in four years, which is a pretty fast growth too. That was my first kind of exposure to like, man, you could actually make some really, really good money doing air conditioning and plumbing stuff. I don't want to bore you guys too much, but was that quick? Quick snip.
- [05:55]
Mark
Was that before Next gen?
- [05:57]
Ishmael Valdez
Yeah. So RHA was first got into a couple mil just, you know, recruiting people and then Home Comfort usa. When I met, when I met Ken, it was a 50, 50 partnership. And look at this is how ignorant I was back in the day. I didn't know about corporate structure and I don't know about shares and I didn't know about none of the legalities behind the operation. So I took a handshake deal from him and we were supposed to be 50, 50 partners. We get it up to like 21 and change in like a little bit over four years. And you know, he decides that we needed to part ways at the time. And probably looking back now, it was probably one of the best, you know, decisions that, that, that not the best decision, one of the best things that happened to me. So yeah, Home Comfort was my second, my second company that I started after that when me and Hip parted ways. That's when a couple weeks later, we started next year.
- [06:47]
Mark
Yeah, yeah.
- [06:48]
Unknown
Ishmael. I mean, not to, not to fanboy too much here, but I think when, right when I bought my business, I did a 30 hour drive and I'm pretty sure I listened to almost every clip from you about the next gen startup. I do remember in there though, you were talking about running out of your garage Was that with NextGen or was that with Total Home Comfort?
- [07:12]
Ishmael Valdez
No, no, that was with Next Gen. I did three months in my garage and that was probably one of the dopest. So in between homecoming, me leaving Home comfort and starting NextGen, there was about a three to four month period. I'm going to trip you guys out on this. I don't think I've ever told anybody this. So between three to four month period, I was in my garage because I needed to get a license, right? And you can't just fucking go and sign and get a license the next day. So I was studying for my test, I was trying to get, you know, my license set up and everything. Obviously it takes time for, for me to do that. So I was grinding out of my garage, doing subcontracting work, doing, you know, calling friends and family, posting on social media, like just doing everything I fucking could to pay the bills because I knew I wanted to start Next Gen. I knew I wanted to do it. But it was a fourth month, four months. For about four months in the gap where I was in my garages, dude, we, we did. Let me tell you something, we did like close to 1.7. No, no, it wasn't 1 point. It was like $1.2 million in revenue in my garage in four months. That was probably one of the dopest ships that I heard.
- [08:15]
Mark
Zero overhead. I mean, you're just going zero, zero.
- [08:20]
Ishmael Valdez
It was me and my sister.
- [08:21]
Mark
That's hilarious.
- [08:22]
Ishmael Valdez
Me and my sister. So it was me and my sister in the garage and we had four or five, five installers. We had Tony, which was my right hand dude, me, my, myself. I had, I had one project manager and then I was grinding out the phones like, hey man, you guys need work? I got installers ready to go. And these were other contractors that, you know, would, you know, book out jobs and I would go and do the labor side of it. But bro, I would go pick up checks, I would go to Home Depot and get material, go drop off to the guys, go run warranties. I was like, that was the funnest time of my life. And those four months we were grinding every day. I remember, I remember the first month in my garage. We had piles of duck in the front yard, scrap everywhere. Dude, this is a traditional white neighborhood. Okay, let me, let me reemphasize what I just said. This is a traditional white neighborhood and there's fucking vans coming in and out. There's trash all over my front yard. I'm like four in the morning with Black trash bags. Fucking putting the ducks inside. Putting registers, dirty ass registers. Like, dude, those are dope. That's.
- [09:29]
Mark
That sounds. Yeah, that's, that's hilarious. What did that immediately? Did that same team turn into next gen and you just took it? That became the founding team. So we're, we're. You described your revenue journey. We're on a similar revenue journey. I'm curious now. I'm just. This is me being selfish. You know, we're going from, we went from like 13 to 17 to 25 and next year budgeting 34 and we're hoping for mid-40s after that. When, when you're imagining that like what were the levers you pulled? Because we're starting to feel, we're starting to really feel the top and you know, we're in a different marketing world now, you know, than we were four or five years ago. So maybe it's. But obviously some of it's still going to be relevant.
- [10:11]
Ishmael Valdez
What were the levers I was pulling at 40 million.
- [10:13]
Mark
What were the levers you were pulling from 20 to 30? Or like where did new markets come into that? Like how did you think about that gap?
- [10:22]
Ishmael Valdez
So, so the 20 and 30 million dollars journey is a dope one, right? Because that requires a little bit more structure, more, more methodical thinking. The 0 to 10 is just fucking fine. It's getting up every day, closing deals, having an aggressive sales team or aggressive couple sales guys. You can, you can get from 0 to 10 in a snap of a finger. If you had. If you have a aggressive sales team, okay, Aggressive sales team will get you from 0 to 10 easy. Okay. After from 10 to 20, it requires a little bit more marketing, more discipline in and being able to stay consistent because you see the difference ups and downs in revenue, obviously the shoulder season and all that. The 20 to 30 mark is a special mark because that's when you start bringing the tech turnover. The sales team will get you 10 to 20 million dollars once you start perfecting and managing a service department. That's what I found in my journey is the 10 to 20 even to the. I mean, sorry, the 20 to 30 even to up to $40 million. It was perfecting the tech turnover and perfecting the tech experience. Right? Because there could only, you could only push so many sales in the, in the on season. You could only push so many sales in the off season. Right? Obviously you get handicapped in the off season when there's no demand. So when I found. And this is when Leland, Leland Smith owner ex OWNER of Service Champions Came into my life when I found out the tech turnover process in his operation and the way he was running the customer experience through the technician going in there, either through a tune up or through a repair or do a free whatever inspection, whatever they, whatever it took to get in the door. Once I found that, that was probably one of the biggest game changers because average ticket went up, closing percentage went up and then call volume went up. Right? So average ticket closing percentage and call volume got me from 20 to 40 million dollars. Those were the three KPIs that I was focused on there. Once I got to like 32, $40,003,233 million, that's when it like things started getting wobbly and things started getting, you know, not falling apart, but it kind of, the operation kind of fell loose. That's when my accounting team came. Yeah, accounting. When I started structuring my accounting team and I started getting a high, high level controller, putting somebody in AP are starting to pay more attention to the commission structure. Starting to pay more attention to the way people are getting paid. That's when, that's when things started tightening up. So if I could give you guys an example, advice from 20 to 40 million. It's average ticket closing percentage being being consistent in your marketing, being disciplined to be able to keep your marketing and also always keeping an eye on your accounting team and like knowing your fucking numbers inside of now, knowing what gross profit you're running. Gross profit is one of the like the key things that people miss when they're running a business because everybody's so focused on the top and the bottom. Like the middle is where the fucking money's at, right? The middle tells you exactly how much of a fucking badass negotiator you are with labor, right? Because that will, that will put you, that will put you on the top or the bottom and then the middle will tell you the gross profit will tell you how much of a badass negotiator you are with distributors. Listen to what I fucking just told you. Gross profit will tell you how much of a badass negotiator you are. If you're, if you're, if you're not a good negotiator. This is when you start bringing in a team to be able to start dialing that in. Right? You're most most. And then I don't give a what people saying most most H vac companies are running between 35 and 45 actual gross profit. And that's assuming they're putting cost of goods on the top Cost of goods on the top sells tax and labor. Okay. Most people, some people put cells on the bottom just to high just to increase the gross profit or they'll do some dumb like that. That doesn't tell you anything. So if you are running a screw hustle a true, a true operation, a really really solid operator in a track will run about 45 or 40, 40, 44, 45, 46, 47. Grow Actual Gross profit on it. So paying attention to your numbers bro, the closing percentage, the average ticket is what is and putting start putting controls in the business is what's going to get you profit at that 20 to 40 million dollars cycle.
- [14:33]
Mark
Yeah, we, I really think we just had a conversation about this with our last guest and it was earning the right to know your gross margin every day because it, it. I, I think the reason that we all hone in on revenue is because it's easy. You pop open service titan and there it is. Yep. But gross margin and growth daily gross profit takes, that takes a lot to get right. But we've spent, we've spent a lot of time on it and it did, it did move the needle because we now have daily dashboards everywhere where month to date I can tell you our gross margin, gross profit dollars any day of the month which has been like that's been a really pretty big unlock for us as we've been moving.
- [15:15]
Ishmael Valdez
Before we get into the next one. Look you guys, the numbers are cool and the KPIs are cool and the counting's cool and all that. Don't forget that the war is spot inside the home. Right. Don't forget that, that the battles are won inside the home. Having a dope ass customer experience, being able to turn a phone call to revenue is where the fucking magic, yes, the numbers and the gross profit and the gross margin and all these sales like. But all that is dope guys and you need to pay attention to it. And what makes us solid operators and fucking dope ass operators is that we are able to, to see everything. Not just hey, let me just focus on marketing and hopefully that fixes the operation or let me just focus on sales and hopefully like being a dope ass operator requires you to focus on every aspect of the, of the, of the operation. Don't forget that the fucking war is won inside the home. And making sure that we are providing these customers more value than what they see on a piece of paper is the name of the game. When you are in there providing the value, providing the option, making sure that the customers are trusting you that's where the fucking money's at. Not, yes, the KPIs are cool and you know, having a badass accounting team and knowing your numbers are dope. At the end of the day, whoever, whoever provides the best customer experience is who's going to win the war. Okay?
- [16:37]
Unknown
And Ishmael, how did you, how did you design or how did you cultivate that culture within NextGen? Because that, that's one of the key pieces that I keep coming back to with your story and trying to understand how to get that. Not, not the experience for the customer, but how do you find and attract the people that can give that experience.
- [16:58]
Ishmael Valdez
Being a look at. And I don't think I've ever told this to anybody. That so guys, our employees aren't stupid, okay? They're not retarded. They know what, they know we're making money, they know that how much we're charging. They see the contracts, they see the repairs, they see the cost of the parts, they see how we're running the operation. Like why we created such a dope ass culture connection is because I, I'm number one, I am unselfish person in the world. If I'm making money, everybody's making money. And that creates a whole culture of like, hey man, if this guy's gonna take care of us, you guys gotta understand how many times have you had, have you guys heard your employees? I was at this company and this guy grinded me on my commission and he wouldn't pay me sometimes and sometimes this and sometimes that and right. And like these were disgruntled employees that weren't treated properly, right? Why we were so successful at next gen is because part of the most, the key elements in operation is the onboarding process. And this is where you fuckers miss it, okay? Onboarding people properly, setting the expectations. Property. Making sure that when you hire somebody, when you hire somebody, you let them know exactly what's going to happen and being confident enough that you fucking step in there and you go like, hey, look it, you don't have to worry about money here. You don't have to worry about leads, you don't have to worry about getting paid, right? You don't have to worry about am I going to have a job tomorrow? That is 90% of the fucking battle, okay? Making sure that you have a hundred percent employee to work every day instead of a half ass employee that's worried about their pay, that's worried about making money with you, that's worried if they have leads, that's worried about their bills. That's worked like part of the dope ass fucking culture that we built was being able to bring our employees in and be like, look, I'm going to take all your fucking worries away. All I need you to do is make sure that when you get inside that house, you take care of our clients, no matter fucking what. I don't care if we're wrong, I don't care if we did something wrong. I don't care if we fucked up there. Whatever it is that we need to do to take care of that client has to be done. And we took and we had that message from day one of always taking care of the clients. And whoever took care of more client the most clients would make the most money, right? That's how simple I got it to everybody that went to apply on next year is making sure guys that guys you gotta fucking onboard property. You gotta set the expectations properly. You gotta make sure that you set your boundaries for employees and clients and you don't fucking violate them, okay? This is how you're gonna get paid. Being black and white. Look it, I'm going to give you guys a fucking tip and write this shit down. If you're listening into it, when you're onboarding people, you guys gotta have a pay plan right in front of them that is so simple and so that they look at it and they go like, okay, cool, I know how I'm getting paid, right? You guys got to be able to do that on every single employee. You ask anybody on NextGen. You go to any technician, any sales guy, any installer, any customer service rep, any accounting, any production, any, any department in that operation, okay? You ask them how they're getting paid, I guarantee you they'll, they'll describe it with less than fucking 10 words. This is how I get paid. That's how simple my pay plans were, right? And that's half of the battle, guys. It's making sure that they understand their pay so they could, they can in return focus on the client and taking care of the client every single time. That's what you guys need.
- [20:32]
Mark
Can you give me an example of that? For H vac service or call taking.
- [20:36]
Ishmael Valdez
All day, baby ready? Technicians. Technicians get paid on hourly backup. But then we pay them on performance, okay? Performance, hourly backup. Meaning California is the strictest state in the universe. Not the, not the country, not the world. The universe if you, if you can pay people properly in California. My paint plans work across the universe. It works in Mexico, Japan, it works in Mars, baby.
- [21:03]
Mark
Elon's going to use it in 60 days.
- [21:07]
Ishmael Valdez
So hourly backup. So we would pay everybody $20 an hour, backed up. So they would get, you know, double time, overtime, eight hours, all that, right? And then we would show them what their performance day was based on what they were doing. So repairs where you pay them 30% on a sliding scale all the way to 15. Okay, 30%, sliding scale, 15% meaning, hey, if I went out there and did a motor for a thousand dollars and that was the full book price for the motor, a thousand bucks to install it, to take care of the client, that's what they need. And I didn't discount anything. They would get a full 30%. If they discounted 5%, we would give them 5% on their commission. If they discounted 10%, we hit them up to 10% on their, on their repairs. Turnovers, okay? Meaning when a technician goes in there, provides the service for the client and it has, you know, three, four different options for repair ranging from $500 all the way to $2,500, whatever you guys want to fucking come up with that in the consumer, then in return says, hey, look, it's a 10 year old unit. I don't want to invest 2,200 or $2,500 into this unit. How much is a new one? When those magic words come out of that customer's house, that means we provided so much fucking value to them now, now they want to explore permanent solutions. That is called a turnover. That turnover, that turnover gets paid. And we were paying 5% on action. And again what I was paying attention, the 30% slightly scale to 15 and the 5% on turnover is because we had a high average ticket, we had high closing percentage, we were priced out property. Okay? So I'm not saying go ahead and do this to your, to your companies right now because you 99% of these fuckers are not priced out properly. So first, price yourself properly in order to pay your employees property. So turnovers, they would get paid 5%. I've seen companies pay 2 and a half, 3, 3 and a half percent. We were paying 5% because we wanted to recruit the top talent in the industry. The reason why everybody wanted to work on action, there's two reasons, okay? We had a dope ass fucking competitive culture. We have a dope ass competitive culture, right? We have a every. Everybody wanted to work there because the top technicians, top sales guys, top installer, top, everything was there. So competitive atmosphere. And the number two, and don't fucking forget this because you fuckers forget we Pay more than anybody. People go to your job, people go to your contract. People go to your shitty ass shops. People are driving your shitty ass masks because they're getting paid. Okay? The reason why they were coming to me to action over anybody in Southern California is because I was paying more than anybody. I was treating them better and I was paying them better. That's the reason why we were growing so fast. So again, super simple 30, 15% sliding scan. Anything repair or IQ and then anything that had to do with the labor department, which is install insulation, ducting, whatever they wanted the labor department to do, they would get paid a flat 5% on.
- [24:07]
Mark
If you need help with your overseas hiring, let me tell you about my friends at Sagan. For years we have been hiring overseas team members in our call center, accounting and marketing. We've typically run this discipline ourselves, but the more we hire, the more complicated it is. Scotten as we started to add deeper expertise hires, like hires in accounting, in AP and ar. So we called up my friends at Sagan and we said, hey, here's what we're looking for. How do you guys think you can help us? And they were awesome. The thing that I like about their model is it is a monthly retainer instead of this giant 30 to 50% of the first year salary of whoever that person is that they hire. So it's this monthly charge they hire X amount of candidates that it's a year. And it's been really good. We just hired our first two couple weeks ago and they've already been awesome. They're jumped into the accounting department. Check out Sagan Go, which is s a g a n go.com for more information. That makes sense. What was gross? You were sort of describing gross margin there for a second. Were you guys at 45 or were you north of 45%?
- [25:10]
Ishmael Valdez
We were running at 47.1% gross profit on the H vac side and on plumbing, we were running at 54.2, I think.
- [25:19]
Mark
Yeah. All right, so you guys, after that like 30, like, what was the gap from 30 to 100 million?
- [25:24]
Ishmael Valdez
What?
- [25:25]
Mark
What happened?
- [25:25]
Ishmael Valdez
Walk.
- [25:26]
Mark
Walk me through it.
- [25:27]
Ishmael Valdez
We went 32, 60 and then 100.
- [25:29]
Mark
Yeah, it's crazy.
- [25:30]
Ishmael Valdez
So 30 from 32 to 6.
- [25:32]
Mark
When did the new locations come in? We're in the 30, 60 hundred.
- [25:36]
Ishmael Valdez
So we've always had the locations open. We've always had the locations. I think what took the jump on it was the emphasis on fine tuning the operation at that scale. Like at that scale, I already had a cfo. I had a Controller. I had a operations manager, I had a sales manager, a sales executive, I had a service executive. I have a plumbing. Like it was a fucking whole team of people making decisions for the operation. It wasn't just me. Because right now it's going to get you stuck between 20 and 40 million. Is that the CEO still feels like he has to be the big man on the team and show everybody that he's the best one at that. At that point I saw myself, I saw myself humble myself a little bit more and I started letting people do, giving people more, you know, authority to make decision. That's what took me from, from 60 to 100 was building the executive team. And then on the bottom of the executive team there was a, there was a man, a high level management team. So there was two different layers of it. So there was executives and then the high level managers. That's what took us from 60 to 100.
- [26:45]
Mark
Yeah. And when, when did the new locations launch? Because you said there was six.
- [26:49]
Ishmael Valdez
So for year one we did Anaheim first. Year two with the Palm Desert. Year three we opened up Riverside. Year four, we opened up Los Angeles. Year five, we opened up Simi Valley. And year six we opened up South County.
- [27:03]
Mark
Yeah, yeah.
- [27:04]
Ishmael Valdez
So we, and then on top of that we have micro locations too which were just used for GMBs, for, for Yelp accounts, for, for LSA accounts, for, for Google Ads, for all that. So we, we had, we had, we had five actual operations and then we had four micro locations around the, the operations just to be able to lead, generate more through Google at $100 million. Guys, the fuck is one of the biggest keys at 100 is your lead generation has to be. So yeah, it's got to be non stop all year round or otherwise you go backwards, right? You go backwards from 100 to whatever if you don't, if your lead generation is not on point because at that point your sales team is already profound. Your sales team is already fine to. Your service team's already done. Your, your, your production team, your CSR is your all that is done at 100. There's nothing to work on there no more. The structure is already there now is just fucking making sure that you're feeding that beast enough leads to be able to be able to sustain.
- [28:09]
Mark
What was the split between lead gen and like branded spend in marketing along that journey? And did it, were there points where it changed or was it pretty much all legion?
- [28:20]
Ishmael Valdez
It was all lead generation through Google, through Yelp, through billboards, through radio, through TV. Most of our spend though I would say 60 to 65% of our spend was always Google. Google was a fucking. Google was our machine to be able to lead generate. Right? And at that time, at that point, imagine we're spending the 10 to 12 million dollars a year in marketing. Like 6, 7 million dollars of that is getting spent on Google, bro. No other company here in fucking. But not even. And not just here like no other company spending 5, 6, 7, $8 million on Google. So we're lead generating through Google. But the key to that part too is being able to feed the machine too, because it's not. You can't just spend all your money on Google. If people don't know who the you are, they're not going to click on your ad. So that, that's, that's where the Billboard game came into place. 30, I think 30% of our budget was spent on billboards. 60% was spent on, on, on Google. And then 20 would fluctuate 10 to 20% on Yelp. And then the rest was just like direct mail, email blast, ringless voice, all the neural campaigns that nobody gives a. Yeah.
- [29:23]
Mark
So you never really did mass media like tv, radio?
- [29:27]
Ishmael Valdez
No man, I was in it for a little bit. I was in for the radio, TV for a little bit. I just found out that, that what, what, what most people are missing right now is that they're not paying attention to where the consumers at. The consumers here, baby boy, that's all they, that's all they pay attention to. They're not on tv, they're not on radio. If. Let me tell you something, Let me, let me, let me explain to you the psychology behind marketing. When you're, when you're watching a baseball game, when you're watching the news, when you're watching a TV series, what are you doing on the couch? You're on your phone. You're on your phone and you're using as backnotes. That's what most people don't realize. Even the older generation, the older generation is stuck on their phone. Now you have all these grandmas and grandpas on Facebook all day long posting pictures and selfies and pictures of their grandkids and a kid like this is it right here. Whoever wins this, wins the war. Right? That's why I stopped doing tv, that's why I stopped doing radio. Because we were getting little to no return on it. Now I might be wrong. Now you know, some of the traditional medias are coming back too. But at the end of the day, everybody's stuck on their phone. We gotta find A way to keep, to get their attention there.
- [30:35]
Mark
Yeah. What, what are ways you think that did that?
- [30:37]
Ishmael Valdez
So look at what I'm gonna, I'm gonna give you the journey of what will work that next. So year one to three, newspapers, magazines, direct mail coupons, Valve pack, print, little tv, little radio, all that was fucking popping back then, the first three years. And then it started deflemishing like that and I started paying attention to my marketing, right? So that's when I came out and I'm like, okay, that's what fucking Google started popping and Yelp started rising and all the, the search engines started going, right? So that's when I hopped, I saw, I slowly turned on all my print ads and I started going into Google, started spending into Google and to Yelp into. What else were we doing? A little bit of social media, like everybody does, but mostly Google and Yelp and, and we kept a little bit of direct mail in there. The next phase. And this is where I kind of stepped back for NextGen and where I'm going to tell Direct you guys the, that search engine which was Google, Yelp, Angie's, this, all that, that's, that was a couple years ago. Like that worked really, really, really good until Google spiked up their fucking rate. And now I've been a million dollars for a lead, right? The next, the next form of lead generation, guys, the next form to capitalize on clients is social media and entertainment. Okay, listen to what I'm saying because I always talk in the future, the next three to five years, yes, Google's still going to work. Yes, Yelp and Angie's and all those search engines are always going to work. The way you're going to feed that machine is through your social media entertaining people on social media. Because everybody's stuck on this phone entertaining people on social media. Not to a before and after picture of your stupid ass water heaters or a before and after picture of your ducting. Nobody gives a about your ducking, nobody gives a about your tune up process. Nobody gives a about your water heater flushes. Nobody gives a about none of that. Listen to me, nobody gives a about that. You know what they care about? Being entertained on their phone. So entertain these people while you're branding yourself. So when they need you, they go on Google, Yelp and Angie's and all those search engines and then you capitalize on them. That's what, that's what the lead generation is going to be for the next three to five years.
- [32:50]
Mark
Yeah, no, I mean, I think I agree.
- [32:53]
Unknown
I actually Very much agree.
- [32:55]
Mark
I think, I agree. I think we started.
- [33:01]
Ishmael Valdez
Yeah.
- [33:01]
Mark
Nice. Yeah, we, I think, I don't know. I, I'm, Google's like obviously gone through a lot of variations and like LSA got crazy. It's going to be wild to see what happens with the GPT search and like where that takes you know, 15 years of SEO investment. I think that's going to be crazy. But it does seem like social media becomes more of an engine than it has been. So we're, I think we're in full agree.
- [33:28]
Ishmael Valdez
Look at 10 years, this is, look at three to five years is social media feeding Google and all that to capture right. Five to ten years from now. This is five to ten years from now, I'm calling it right now. Social media will finally get their head out of their ass and we'll be able to lead, generate true lead generation through Facebook, Instagram, Tick tock, what else? YouTube. Like those guys will finally get their head out of their ass and we'll be able to lead, generate life without using Google, without using Yelp, without using all those search engines. Social media in the next five to 10 years. After five, this is you know, 2030 and, and beyond 2028, 2029 and beyond. That's when social media is going to be a true lead generation for the, for the trades. Until then you guys gotta entertain people.
- [34:16]
Mark
Yeah, no, I agree and I think it's, I, I'm honestly kind of excited for it because I think it's a moat. It's sort of like the only people that can do social media effectively are like the one man show, like the guy who's got the time or like somebody with the resources and everybody else is just like you're just not going to be able to keep up with quality. You're not going to be able to do the output. So we're, we're, we've, we invested in it kind of early but we're excited because we think it's really going to like separate the boys from the men.
- [34:47]
Ishmael Valdez
Oh yeah, this, yeah. There's your content, your content creation and social media is what's going to drive this machine up to you know, whatever, however big you want to get. It's, it's driving content through social media and capturing on search engines. I got his wheels spinning on, his wheels are spinning right now.
- [35:03]
Mark
I think, I think it's more, I'm like, I'm rolling back through it in my head and I'm like we've killed it in lead gen this year. So most of our company or most of our competitors. Most of the industry has had a really challenging year with leads and we have not at all. But I'm concerned that next year we might have a little bit of a challenge. Just because, you know, we're. You can't be immune to it forever. So yeah, we're trying to dial in what that looks like now. And the SEO thing really threw me off, honestly. It's not here yet, but like it'll be here in six months. So I don't know. That's gonna be weird.
- [35:38]
Ishmael Valdez
Okay. The reason why, I know the reason why I don't bring up SEO as much as I do on paid, on social media, on other avenues on it. The reason why is because pretty much AI is gonna be, it's gonna overtake SEO, right? They're gonna replace every content creators, they're going to replace all those people. What I'm interested is finding out and this is why Google's kind of Google and search engines are going to, are going to kind of fade away and let the social media and listen to what I'm about to tell you guys because makes sense in my head, but I don't know if it's going to make sense in yours. Ready? The reason why AI is going to change the whole game on the SEO and paid search ad is because everybody's going to start using AI to lead, to lead generate through Google and through SEO and all that, right? Dude, you can't have any fucking AI bot fighting each other to get grab that best paid shirt, grab that. So eventually you're going to see a diminishing search on that and now it's going to come up to creativity. Hey, the one thing that I can't fucking do is be creative. Yes, they can lead you a certain way and ChatGPT can give you examples, but they can't get on the camera and fucking show who you really are as a person and show your intentions in the business and show how much you care about your client. I can't do that shit. And I believe the next phase of and this is where social media is going to take off on lead generation is being able to show who you are as a person coming up to your clients and then lead generating through there. I think those people are going to win over. Let's just keep pouring money on Google, SEO, paid search, all these direct mail. Let's keep doing that. Instead of like, hey, how about we, how about we look at the opera, at the marketing operation as a whole and start dissecting it and figuring out what we need to do to keep, you know, pushing forward instead of just being okay with Google taking over control of our business. Because whether you guys realize it or not, Google fucking has control of every business no matter how big or how small you are.
- [37:31]
Mark
Yeah, no, I fully agree. This became a big project of ours late last year. We wanted to un Google the business and I think that that's why we, I think that that's why our lead generation wasn't impacted as the same as most of the industry is we did on Google most of our, most of our business which was a really. Yeah, it was a big win. But all that that led to, and this is the downside, all that that led to was more lead generating activities. And I'm, I'm, I think you're right about social, but I do think that there is something more to branded than we have done or that you've said so far. I think there's another layer of branded here that we're considering our big move for next year.
- [38:11]
Ishmael Valdez
And look, and this is one of the reasons why I came up with Anuba thermostat guys because I saw in the journey, the customer journey. The customer journey has been for the last 30 years, okay? Nobody has control of the customer journey. As soon as they need us to, when they get us. That is the biggest problem we've had. Besides, let me rephrase this. As soon as the consumer needs us to, when who gets to go out there? Nobody has control. It's Google, Yelp, all these fucking trillion dollar companies, right? Amazon, they all have control of that. So that was one of the biggest obstacles I wanted to, to fix in the industry. And that's why I came up with the thermostat. The second biggest hurdle that we have in the, in the industry is the, is the recruitment which you know, we can get into later on in a different episode. But the biggest problem why I came up with our thermostat is because I saw that as soon as the consumer needed us, the first thing they did is went to their thermostat. They don't feel cold there, they don't feel hot air. What do they do? They pull out their phone and they start fucking looking for a contractor. And that's where we lost them. Yeah, that's where we lost all the consumers. And that's where I came up with the thermostat. This is the first thermostat that connects the consumer to you for life. Right. I saw that. If you go over here, if you Go. I saw the alarm company model and, and it blew me away. If you go to your panel, right, I have ADT. I don't know what you guys have. Bell82, whatever the you guys have. But if you go to your alarm panel, if you cover up that ADT logo, they're, yeah, they, they would be on the same. They would be back on square one like we are. If my alarm comes, if my alarm was up and the sensor didn't work and didn't want to harm and it didn't have that ADT logo on the panel, I would search on my phone alarm company near me and that's what they've been doing to us on the, on the H vac side for, and the plumbing and the electrical and the roofing side for years and years in years. So now what I did is I put, I put the, your, the contractor logo in front of the cousin consumer on the wall, an easy access point which is through a QR or through a custom app. The consumer gets to download an app with your logo, John. Not with nuvit, not with Nest, not with Echo Beat, now with fucking Honeywell. With your custom app, when they need you to turn on the system, guess what they're gonna do? Oh, if it doesn't turn on, click to call. Hey, hey, John. My system's not working. You get that lead back. If you don't do that right now and they don't have a brand new thermostat or they don't have anywhere to do, they have to go through their emails, they have to look for an invoice, they have to try to remember you, which we know these consumers aren't, you know, let's face it, right? They have a lot of things on their head. So what do they do? Go on their phone, go on Google AC Repair near me and call a contractor and now you lost that. Yeah, that's what we were trying to figure.
- [40:58]
Mark
How many thermostats get sold a month.
- [41:04]
Ishmael Valdez
So the project started three years ago from scratch of a circuit board molding interface to now. We just launched it for, I want to say about three and a half months ago, four months ago. We have 168 creeping up on 200 contractors that have successfully onboarded onto Nuvit. They're, you know, taking advantage of their custom app and everything we are selling, we are creeping up on the 2000 mark range of thermostats installed and sold already. And this is on our first three months of startup. So what it looks like in the, in the Next six months we will have over a thousand contractors onboarded on Nuvent. These contractors are going to be selling five to 10 thermostats on average. Five, eight to 10 thermostats a day, which would put us between, you know, 8 to 10,000 thermostats daily. How many thermostats get installed every day across the nation? Hundreds of thousands. So it's, it's insane the amount of thermostats that get installed. Why I got into the thermostat industry was to solve the problem for our contractors. That was number one. But number two, if you Google what Nest sold to what Nest sold to Google for $3.2 billion. 3.2 fucking billion dollars. But they didn't solve anything though. They didn't solve anything. They put a nice little thermostat with Google's name on it. You don't think Google's smart enough to know that if they start putting contractor names on the thermostat, what happens to the lead generation on search? They'll go skyrocket demo because now they're just going to call that contractor back instead of going on Google and searching for, for a contractor. And which, who, who benefits? They benefit on the thermostat and they benefit on the search. That's what we got.
- [42:42]
Unknown
So if our listeners want to find this product, where, where should they go to get more information? Where should they go to potentially try and onboard? How is that process working?
- [42:52]
Ishmael Valdez
So Nuvehome.com Nuvehome.com N U V as Invicta E Home.com you guys can fill out quick, a quick contact information. We'll reach out to you. Our demo team right here in the back of me will reach out and we'll do a whole presentation for you guys. Social media guys. I have a social media group that's called Service Avengers. Okay listen to me, Service avengers. There's about 6,400 contractors in there. 99% of them are CEOs, owners or general managers or high level managers that are operators. Okay? Service Avengers on social media, on Facebook is probably the dopest fucking group. It's a free group that I give, that I'm doing for, that I did for the last four years for contractors. We talk about marketing, we talk about PNLs, we talk about recruitment, we talk about Patreon, we talk about nuve, we talk about other, other tech industries, other tech companies that help us out so service of ventures. If you guys want to get in contact with myself, New way home. If you want to demo on, on the thermostat.
- [43:47]
Mark
I, I think the move to a product is really interesting and I, I agree. I mean it looks like a great product. We'll check it out. But what does it look like to. That's a totally different selling audience, right? So like, hey, I'm gonna go get a thousand contractors and I'm gonna, you know, create distribution channels. Is it all direct to the contractor?
- [44:06]
Ishmael Valdez
100. I would never go to Home Depot. I would never go to, to the supply houses being. And the reason why I would never go to Home Depot and the reason why I'll never go to Lowe's or retail is because Nest did that to us in 2015. In 2015, Nest was launched as a product to retail and they fucking sold millions of these nests to the consumers and skipped the contractor. And I'm like, fuck that. They skipped us. We should have been making money on the thermostat. Now guess what? Guess what happened. Guess what happened to Google. Three years later they call contractors. They're like, we got a ton of warranties. The, the customers are wiring them wrong. They're burning them and we got free leads. No, no, no, no, no, no, you up. And that's why I will promise that I would never go through a, through a distribution like that. It will always be to the, to the contractor. So what it looks like you guys go on googlehome.com get a demo. The demo is 30 to 45 minutes on it. You make a commitment to us, you can get your thermostats the next day. So it's, it's, it's, it's super, super frictionless. It's super simple. We are literally booked out probably, I want to say about a month and a half to two months with leads of people just pouring in from referrals or pouring from social media to try to get the thermostat. But if you guys go on new home.com, i promise you we'll take care of you for sure.
- [45:22]
Mark
This was, this was awesome to have you on. If you had any message for anybody that was wanting to cross that hundred million dollar mark, what would it be?
- [45:30]
Ishmael Valdez
Dude, if I had one message for the hundred dollar one hundred million mark. It's not for everybody, man. It's not for everybody. What happened at Next Gen was, was a, was a mixture of perfect timing, of grinding muscle and, and just grabbing the perfect team to be able to, to be able to sustain that kind of growth. So when, when you hear about the Next Gen story and when you hear about what we did in the, in the seven year span that I, that I had Next gen and how I sold it to private equity and all that, that sounds fine and dandy, but I'm telling you from the bottom of my heart, I lost a lot of relationships. I lost a lot of time with my daughters. I lost a ton of fucking time with my friends and family. There was, you know, for almost five years, nobody knew of me. I wasn't on social media, I wasn't on Facebook, I wasn't on Instagram, nobody knew of me. They just knew what kind of what was going on over there. But dude, it was because I was from, you know, 5:00am to 9:00pm Was I, you know, I couldn't, I slept, I couldn't sleep. All I thought about was Next gen. My obsession was Next gen. And now I have the same obsession with new vid, right? So it's not for everybody, guys, I promise you guys that you could make a ton of money at 10, 20, 30, 40, 50 million and still be able to sustain those dope ass relationships and still be able to have a good life. Where my sweet spot is, the next company that I grow, which you know, in my, my non compete should be over in a couple years from now. I'm gonna grow a plumbing company. I'll do, you know, I'll get it from 0 to 50 million in no more than one or two years and then I'll flip it. But 25 to 50 million, it's sustainable, it's chill. It's not. You can still have a life outside of work, you can still enjoy life, right? So 100 million, school, 150, 200, all that sounds like super dope guys. But the amount of pressure that you're under, the amount of, you know, things that you got to be looking for in the business, people stealing from you, lead generation customers to get advantage of you, all that just gets bigger and bigger at that scale. So if I can have one message, it's not meant for everybody, I would, I would focus on what, where I'm. Where you find your happy spot. Once you find that happy spot, just enjoy it, man. The journey's dope. If you guys, if you guys, you know, enjoy with your team, for sure.
- [47:40]
Mark
It'S a good message.
- [47:41]
Unknown
Thank you so much.
- [47:42]
Mark
Yeah, thanks for coming on today, sharing your story about Next gen and lead gen and everything else we got to get through. And if people want to find you, they're going to go to Service Avengers or check out the thermostat product@nuvehome.com.