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The Home Service Expert Podcast
How ServiceTitan Took Over the Trades Industry (Ara Mahdessian)
01:13:06
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- [00:00]
Ara Modesti
It is all a battle for attention. And if you are not out there building a place in the customer's mind, guess what? All the other folks will displace you in the mind of the customer.
- [00:14]
Tommy Mello
Welcome to the Home Service Expert where each week Tommy chats with world class entrepreneurs and experts in various fields like marketing, sales, hiring and leadership to find out what's really behind their success in business. Now your host, the Home service millionaire Tommy before we get started, I wanted to share two important things with you. First, I want you to implement what you learned today. To do that, you'll have to take a lot of notes. But I also want you to fully concentrate on the interview. So I asked the team to take notes for you. Just text notes N O t e s to 888-526-1299 that's 888-526-1299 and you'll receive a link to download the notes from today's episode. Also, if you haven't got your copy of my newest book, Elevate, please go check it out. I'll share with you how I attracted and developed a winning team that helped me build a $200 million company in 22 states. Just go to elevateandwin.com forward/podcast to get your copy. Now let's go back into the interview. All right, welcome back to the Home Service Expert. Today is a special day because I got Ara Modesti and he's a co founder at Service Time. He's based out of Glendale and now he's the CEO of Service Time. That's been the way since he began the business, the leading software platform with over 15,000 residential and commercial service businesses worldwide. Born into the Trades are a group. Watching his father run a contracting business, long days in the field, longer nights managing paperwork at the kitchen table. That firsthand experience became the foundation for Servicetein's mission to give contractors the tools they need to build modern scalable businesses. Found alongside of his lifelong or longtime partner, Vi, Service Titan was grown into a category defining company backed by top tier investors and recently taken public on nasdaq. A Stanford trained engineer and operator, Ara is known repairing deep industry empathy with relentless execution. Today he's helping elevate the trades through technology, leadership and long term vision, proving the blue collar industries deserve world class software. How you doing brother?
- [02:26]
Ara Modesti
Thank you for such a kind and flattering intro. I'm not so sure I'm deserving of most of it, but honored and grateful to be here always. Just an absolute blast and very insightful to connect with you, Thomas.
- [02:37]
Tommy Mello
You know, I think back to the days I got on Service Titan after our conversation through LinkedIn in 2017. And what I realized the most is there's a lot of good people that want to help others. I think H Vac Plumbing was the first to it, all the way back from H Vac Bells wealth with Ron Smith and then looking at guys in the trades just helping each other in the 70s, 80s and 90s. But that didn't catch on to every trade. And that's where I met Tom Howard, Aaron Gaynor, I mean everybody. And the first event I really was impressed with. Oh man, now, now I gotta think of. I was impressed with a lot of people, Ken Goodrich and a lot of these guys. But I. You had Darius Livers on stage and he was talking about memberships and how to sell financing. And I become pretty close with him throughout the years. I mean, I don't talk to him a lot, but when I do I just get a vast knowledge. But I think that's one of the things that Service Time kind of did more than anything is pull the right people together. How did that happen? I mean, how, how did, how did like everybody just commit to helping each other and, and obviously the big event that you guys have each year.
- [04:00]
Ara Modesti
Pantheon, I think, I think this is the most fascinating phenomenon about the trades. I mean, they say if you want to stand tallest, stand on the shoulders of giants. And certainly even before Service Titan, you had all these wonderful contractors that would go out of their way to help their peers in the industry. Many cases there was contractors in different cities, so they didn't really compete with each other. But you had so many examples of just contractors in the same city in the same trade, still willing to open their doors and invite another contractor in and show them exactly how they ran the operation, show them how they solve all these common problems. I think if I try and psychoanalyze why it probably happened, one, I think generally contractors are just really good hearted, good natured people. And then two, they've probably been so ignored and underserved by like every other industry for so long that there was a sense of like compassion and sympathy and this idea of like, other people aren't going to help us reach the success we deserve, so let's just help each other out. And then, you know, when we started Service Titan that we probably naturally started to appreciate that dynamic. And it was probably born out of just our interactions with the customers that we partnered with. You know, all of these guys treated us as partners not as vendors, obviously. We were very invested in understanding their businesses, understanding their pain points, and doing all we could to solve these problems that would create value for them. And of course, in return would be a reason for them to pay us for the software. But like, the. Also the. How they interacted with us, you know, all these guys invited us so warmly into their homes. In many cases, they invited us to sleep over, you know, at their houses, they cooked us dinner, and then we reciprocated anytime they came out to la. And so I think organically, this culture, you know, was cultivated around Service Titan. And now you see it even at scale, even at something like Pantheon, where you have 3, 4, 5,000 people coming to an event. Of course, it's very insightful and everybody's all about performance now that we raise the bar. But the level of camaraderie and friendship in a relationship is just the most beautiful thing.
- [06:26]
Tommy Mello
You know, I had a few guys call me after last Pantheon, and they said, we've never seen more sports jackets because you got the PE guys rolling in hard. And it's a much more sophisticated founder or. Or C suite now at these events than it was even when I started in 2017. But I could imagine you guys started early 2010, 2012, that.
- [06:51]
Ara Modesti
Yes.
- [06:52]
Tommy Mello
What?
- [06:53]
Ara Modesti
2012? Yeah.
- [06:54]
Tommy Mello
I mean, you guys, I know about all the stories in the beginning of, like, you guys just kind of through pure grit, just made things happen and built it as you go. As you went. You just go, yeah, you'd say, listen, we could get that for you and you'd build it, and, man, it's pretty crazy. It's been 14 years. What are you excited about going forward? There's a lot more competition out there in software. AI is a real thing that everybody's talking about. Everybody's coming at you guys. I mean, you guys are the leader of the pack. And it, you know, it's. You want to stay in front. You got a huge competitive advantage. You got more data than anybody. So what do you. What are you looking forward to? What do you. What do you think about?
- [07:37]
Ara Modesti
Mostly, Yeah, I think to your point, this industry as a whole, that includes you as contractors and us as the software company for the trades, the industry as a whole is seeing far greater level of attention than any time in the past. Naturally, all of that is because of the incredible success that you and others have seen and how you've built these wonderful businesses in this industry. And look, I think for a lot of folks, they see the dollar signs and they see an opportunity to Come and find a way to make money, which is all great. You know, competition just results in better products. So that's all fascinating. I think the really exciting thing is of all the innovations that have come our way, this AI wave is the single greatest innovation that has ever happened. And it will result in two things. One, it will result in those that adapt and embrace it correctly and successfully will see far greater success than what was ever possible before. But unfortunately that will come at the expense of those that do not adapt and embrace it. And unfortunately they will suffer. And we see our mission as making sure we help democratize access to this technology and this capability to make sure. This is like the one time where contractors are not going to have to play catch up, where contractors can lead from the front and have the best in class AI and automation tools, and not tools for the sake of having fancy software, but specifically for the sake of these things helping increase revenue and increase profits. I think what is most like gives me a lot of excitement is when I think about AI impacting industries like negatively. If you probably, you know, went to ChatGPT and asked which trades are going to be least, like destroyed by AI, probably the trades is going to rank at the very top, probably literally number one. And in industries where the work is just purely cognitive, those are the industries where AI is going to replace these businesses most aggressively. And then in industries like the trades, where the work is very much cognitive, but also involves a lot of physical dexterity and movement in uncontrolled environments, like technicians having to crawl into attics and crawl spaces or get on top of rooftops. Like it's going to be a very long time before, I don't know, Optimus version 14.0 is able to do that. And so that disruption isn't going to happen from the outside. This industry, the demand for it is going to continue to be resilient. But even in these industries like the trades, what's going to happen is the disruption is going to happen between the players. Those that adapt and embrace AI and automation are going to increase revenue and become wildly more profitable. And then what do you do, Tommy, every year that you generate immense profits, you take those profits and reinvest it in more growth, right, Reinvested in better lead generation and whatnot. And what's going to happen is guys like you, that automate, are going to be able to pay a higher price for the next incremental lead. And so you're going to start to consolidate most of the lead volume that's going to come at the expense, unfortunately, of the contracting businesses that don't automate, that don't see increased profits and can't match the level of spend you're going to make. And you know, guys like you are going to be the bigger winners and you'll build even more phenomenal businesses than ever before.
- [11:27]
Tommy Mello
Yeah. You know, about 10 years ago, there was this guy with this quote I was doing a podcast and he said he, who could pay more per lead, will always win. And you know, right now I think we got a pretty healthy budget. We do about 15% of our revenue and a lot of people say never go past five, but yet we still have 27% of the bottom.
- [11:50]
Ara Modesti
So why is that? It's because you run such an efficient, such a profitable business academy is a scale.
- [11:56]
Tommy Mello
I mean, where is the. You know, obviously if you talk to Leland, he would tell you that the, the lifeblood of the company in Southern California with no weather is service agreements. And I agree with him. I know Tom Howard says very rarely do service agreements work, but when there's no weather, they work great. When you have, we've got 45,000 service agreements, I think we could do a lot better. But in your best estimate, what should people that are trying to grow revenue be spending as a percentage of revenue?
- [12:30]
Ara Modesti
It's going to depend on the trade, it's going to depend on the region, and it's going to depend on the level of growth that you want. If you want 10% revenue growth year over year, that's a very different level of spend than if you want 30, 40, 50. But we will see businesses on the lowest, lowest end spending like three and a half, 4%. But these are typically businesses that have such incredible customer referrals and like word of mouth in the market. But then we will see businesses like you that spend 15% and even north of 15%. But it's only because they're able to do so, because they are so efficient and profitable and, and still able to make 15, 20, in your case, 27% profit margins while spending 15% on marketing. That level of investment is not possible unless you are highly efficient and profitable in the rest of your business.
- [13:27]
Tommy Mello
You know, I think about a lot of people ask me, how do you get that type of profitability? And what I explained to them is our average CSR could book 55 calls a day, where at most companies, because we're answering calls in 23 states, almost 40 markets. So let's say you're paying 20 to your CSR, that's booking 15 calls. 20 bucks an hour, I could pay 35, because you're doing three times as much and still save money because if you were doing 15 times three, it's 45. So you'd be paying $60 to your three agents. We're getting that out of one. And not to mention, we've talked about this. I mean, when you buy enough, if somebody were to order a thousand doors for me, they would be paying half the price. So now we've got these economies of scale. Whether it's buying trucks, I know we're paying 30% less than most people. Insurance, all the things that we buy on a regular. The tools that we buy from Milwaukee, we get great, great, great prices. We get rebates. And that's something else Leland and Ken Goodrich talk a lot about is like your ability to buy. And as you continue to grow, there's this old phrase, if you owe somebody a billion dollars, you got a problem. You, you know, if you owe the bank a billion dollars and you can't pay, you got a problem. If you, though, if you owe them a hundred billion, they got a problem. Yeah, I like that notion. We've talked about a lot of stuff. I want to bring some of these things up because I, I really want to dive into AI later. But one of the things we talked about more life is bringing kids into this world. And it's, it's kind of scary. It's, it's no other time that's ever been. Because you said, look, you had a roommate that told you, a very wealthy roommate. I think he probably had a trust fund parents were well off and said, I'm jealous of you because you get to come up, you're the come up story. You came from a, a tough upbringing. Your dad worked, but, you know, you made it. You built your own success. You're. The claim to fame is you took what you had and made the best. You made lemons and a lemonade. And he said he was jealous of you because you had that ability. And I, you know, you, you said, I think about my kids and I don't think it's because they're going to be well off. It's because it's going to be a different world. Can you dive into that a little bit on just this ability to be successful and have to work?
- [15:47]
Ara Modesti
Yeah. I spend a lot of time thinking about, like, from a psychoanalytical perspective, what leads to success and more importantly, what I'm trying to solve for, especially as it relates to not just myself but my kids, is I want them to be happy. And I find that the pursuit of a goal, at least for me, is a source of my happiness. I want to make sure, if that's what they want to do, that they have that same opportunity, too. And so then I think about, like, what motivates people to work hard. In my case, it was the chip on the shoulder. And, Tommy, I don't want to speak for you and would love to hear in your case, but, like, I can imagine you may have also had that same chip on the shoulder. You know, for me, I immigrated here when I was really young and growing up. You know, I looked around and of course, there were a lot of other immigrants in very similar shoes to me. But then there were also, you know, other folks that came from higher socioeconomic backgrounds, and they had nicer clothes and nicer shoes and, you know, the nicer basketball cards and all this stuff, or later on, the nice cars. And that was the chip on the shoulder that gave me the drive to want to work really hard. So that probably, like if a psychologist were talking to me, probably so that I could simply prove that I was equal to others. That's all it was about, that I wasn't inferior. But that drive has led to whatever level of achievement I've seen in all the different forms in my life, whether it's business or in sports or whatnot. And I just don't want to rob my kids of that. So how do I kind of artificially recreate that same opportunity? To have a chip on the shoulder is something I spend a lot of time thinking about.
- [17:33]
Tommy Mello
And with this AI world, I mean, we're talking about universal basic income commoditization of almost everything. Tesla, the Row. If Tesla cars are $5 trillion market cap, the robots today are a $25 trillion market cap. And just we know things are going to change, and we know we're going to most likely live longer. Hopefully things don't go sideways with AI. But what does that change? What do you envision the change being? I think it's going to be Utopia. It's going to be great things for a lot of people. But I think you're actually. It's going to be tough because you and I are driven. And there's a lot of studies and there's a great book called Driven. I'm going to send it to you. I think you'll really, really feel like you're one of 5% of the population. We're hunters. Where's the world going to go? I mean, look, you got more insight than I do to these things. You're talking to Bessemer and these crazy VC funds and some of the smartest people on the planet.
- [18:32]
Ara Modesti
Yeah, it's a great question. I don't want to pretend like I have all the answers. The best I've come up with is that in the long run this all trends to a world of radical abundance, what you called utopia. Because ultimately, like if you think about the price of anything, the price of anything is based on the labor cost, the material cost, and then some profit margin on top that labor cost, assuming AI automates all labor, that labor cost goes to zero. And then if you think about the material costs, like the material cost of that desk you're sitting in front of, like it's the cost of the wood. Now what is the material cost based off of? What is the cost of wood based off of? It is based off of the labor cost involved in going and finding timber and chopping down a tree and going through whatever process it goes through to turn into, you know, the lumber that they can make. That that's gotta. So material cost is actually composed of simply purely labor cost. What happens when that Tesla Optimus 16.0 can just go off in the forest, chop down a tree, process it how it needs to be processed, and brings you that that timber? Like now your material cost is zero as well. So now the cost of production of anything is zero. Everything is free. That table is free, building a house is free. You know, your Ferrari is free. Everything is free in terms of cost. So then what happens then like the people that own the means of production, if they want to sell something that is effectively free, well then you have to have buyers that have money to spend. But if all labor is now automated and nobody's working, well, the buyers then don't have money. So in this case, like either those that own the assets, the production decide, we're not going to sell any and we're not going to give away any. And nobody gets to have desks and cars. Or they just say, you know, what cost is free? They can't pay anyway, we're going to give it all away for free. And now you literally have radical abundance. Everything is free, Everybody gets access to everything. And then the question to your point becomes, well then how do we get like satisfaction and fulfillment? And this is the part that I have less of a grasp on. I think as I talk to people, the suggestion is, well then everyone has all day free, that they can do whatever they want. They can go play soccer all day, they can go ski all day, they can go walk around the park all day, they can sit in their yard and daydream all day. They can spend time with their families and look, maybe there is a, you know, a world where people can do that all day and everyone's happy and it doesn't result in all kinds of problems because what is that quote about? Yeah, the biggest devil is idle hands or something like that, you know, or we could have social problems in that
- [21:29]
Tommy Mello
situation
- [21:31]
Ara Modesti
because for me, a lot of my fulfillment comes from just the notion of working hard. Of course, like the outcome being successful is also great. That's the source of value. But just the fundamental values of hard work bring me a lot of fulfillment and the curiosity of going and figuring something out and making something that seemed impossible possible, that brings me a lot of fulfillment. Resilience of like facing obstacles in business where after, you know, it beats me over the head day after day. But then I finally figured out that brings me fulfillment. If these things are lost, I don't necessarily know where fulfillment is going to come from. That's part of the reason I'm a little bit concerned for my kids because, yeah, they're going to spend the next 10 years going through school and after that building a profession. And what if we have radical abundance, you know, 20 years from now? And then what? I don't know. What are your thoughts? How are people going to find fulfillment?
- [22:29]
Tommy Mello
Yeah, well, the people I've talked to that are much smarter than me say we're going to have to switch to silicon bodies eventually. I mean, the brain is a amazing thing, but we don't really do well with how we process energy. The reason our brains, our brains take up 25% of just our energy. And look, I don't know this can happen in the next few decades, but when SGI happens and, and the computers are smarter than every human being combined, there needs to be a way to work with it. And we'll start by working with it. But eventually, you know, when they plugged in Facebook, they thought all of our, whether it was php or.net or Python or Ruby on Rails. They said it was primitive, it's not what it should be. So they started writing their own code that no one could actually understand. And the only thing I can think about is that there's a greater good. We want to go explore space and we want to see what's out there and solve some really interesting problems. But. But it's scary. It's scary, but I'm optimistic because there's no Other way I could control the controllables in my life.
- [23:40]
Ara Modesti
Yeah, I would say two things. One, humans are very resilient creatures. I assign a high degree of probability that we will figure out a positive outcome even in the world of radical abundance. And then two, that world of radical abundance is probably like meaningful number of decades away. And so it likely will not be our problem. Maybe it'll be our kids problem to figure out. So in the meantime, let's focus on what we can control and indeed, well,
- [24:11]
Tommy Mello
let's see if you can make it another 10 years. You're probably going to live to be over 100. So we'll see then. I've been reading a lot about China and their AI and apparently whoever invents AI first, it doesn't matter if it's China, Russia, United States, Canada, whatever, because the AI is uncontrollable if it's real, super AI, right? I mean, it doesn't matter because it kind of thinks on its own. You could try to build in code to, but 70% of all the patents for AI last year came from China. What are your thoughts about this race with energy? And, you know, you look at the processing chips, Taiwan, and what's going on across the whole global atmosphere. Where are we at and who wins?
- [25:01]
Ara Modesti
Yeah, first and foremost, I'm no geopolitical expert and I'm not going to try and pretend to be, but I'll talk about the more general things that play here. If you look at the improvement in the standard of living that we've seen in the past 250 years, all of that has happened because of technological innovation before. Like, if you go from 0 AD to like the 1700s, the quality of life was poor and did not improve. Like, life expectancy was 40 years. Like, 90% of people lived in poverty, 90% of people were illiterate. Infant mortality was very high. And these things only started to improve during the late 1700s, early 1800s and then through now, where we have life expectancy of like over 70, nearly everyone is literate. Poverty is thankfully below 10%, infant mortality is way, way, way, way, way down. All because of all the innovations, right? Telecom, computers, Internet, cars, chemicals, medicine, electricity, steel, so on and so forth. And so if quality of life is driven by technological innovation and AI is the greatest technological innovation we've ever experienced and maybe even greater than all the other innovations combined, that means the leap we are going to see in quality of life is going to be very, very big. And hence, I think from a just like positive perspective, the race to be the winner in that race. And then, of course, then there are all the other, you know, things related to geopolitics that I don't necessarily understand very well. But I can see how when AI is this superpower capability, then any country that is interested in its own national security and being able to, like, protect the livelihood and future success of its population is going to want to make sure that they are the winners of that race. And probably even more important, because once AI gets to a point where it's really, really good, what it will then do is then be able to learn from all of its thoughts and get even stronger. That's when you start to discover new laws of physics. That's when you do get to discover, like, new things that can help with medicine. And then the AI becomes even more capable and valuable. At that point,
- [27:40]
Tommy Mello
it's almost too much for a human brain to kind of predict. Anybody that says they know what the future looks like, past three months, I've heard, is just full of shit.
- [27:51]
Ara Modesti
Because, you know, one with the Tommy. One of the things that makes that very hard is because humans are quite good at thinking, like, seeing linear progression. What humans are not very good at exponential, myself included, is seeing exponential progression. And so if this is something that's exponential, like, I don't think any of us can really, with a high degree of accuracy and certainty, forecast where things are headed.
- [28:19]
Tommy Mello
You know, there's a lot of things happening at service time behind the scenes. I mean, you guys are investing a lot into the products, and I feel like it's a different time for you. You're more engaged, I would say you've never lost engagement, but you're. You're paying people in a different pay structure. Obviously, there's people nipping at you guys, saying, I want to do call center stuff. And there's different companies trying to come after you, which is no secret. Where do you see the biggest advancements coming? I mean, obviously, you could automate hr, you could automate the call center, you could automate dispatch, you could automate a lot of the marketing. You can automate almost everything but the technician going and doing the work. Where do you see the biggest breakthroughs here in the next year or two? And how do you plan on being the leader of them?
- [29:10]
Ara Modesti
Yeah, the end state that we see is nearly all the key workflows in your business being automated, being automated by AI, so that one, it doesn't have to be done manually, because when it's done manually, most of the time it's done correctly. But some of the time it's done incorrectly and that causes all kinds of problems for being automated. And second, that automation is done through smart intelligence and therefore the outcome is also typically greater. So increased revenue and lower cost, which means you know you win on profit from both sides. Naturally, all of those workflows are not going to be automated immediately at once. Today there will be a progression of them. Some of them we will do, some of them a lot of our partners will do. But the end state is our customers will have a relatively fully automated business where the marketing that's done to generate leads is nearly mostly, if not all, automated. The call booking is nearly mostly, if not all automated. The dispatching, the diagnosis in the field, the generation of the good, better, best options, all the inventory and procurement, payroll, and then a lot of the financial reconciliation. So today our focus is one on automated marketing and you have seen a lot of that with Marketing Pro. What you will see in the coming weeks, like very imminently, is the automated growth activities where whether it's scheduling membership visits or reaching out to sell memberships to your existing customer base, or if there's an upcoming weather event like a heat wave is going to come up and you want to proactively notify customers to get their AC systems checked or a freeze is coming up like unfortunately we just had, and again, notifying customers, you want to get your systems checked so things don't freeze and ultimately blow up. All of this will be done automatically, where not only the campaigns will be launched automatically, the copy will be done automatically, the audience segmentation will be done automatically, but then when customers respond expressing interest, the back and forth with the customer, that whole conversation will be done by AI and then the job will just be booked. Right? So that's 1, 2. You've seen the voice agents. We started building that right after Pantheon, and in a couple months we have built a product that is already pretty darn good. And the call booking rates are actually higher than the average csr. I don't think there's a voice agent out there that books better than the best, best csr. But maybe that day will happen too at some point in the future. But what matters is can you book better than the average csr? And I think most of the voice agent products out there are there, whether ours or third parties. The automated dispatching, which we continue to work on together very aggressively, and then the opportunities in the field, like what I love so much about you is how engaged you are in the front lines of what matters in your business. And One of those key things is your selling process. And like I see you thinking about and experimenting and talking to me about everything related to how to optimize close rates and average tickets from like, you know, how do technicians walk into the home, how do they build rapport, how do they start the conversation to how do they introduce financing? And should we actually introduce financing up funnel? When the customer first books, let me just, you know, tell them we offer financing through text message. Even things like, hey, when the customer's booking, should we ask them for pictures, you know, during the booking process so that that can help us figure out what kind of tech to send down screen and will that optimize the, both the experience for the customer and our close rates and average tickets? Like that level of obsession with optimizing for close rates and average tickets is what we have from an AI perspective with something like Field Pro. So those are the big investments for today. And then at some point we'll also do the back office or our partners will do it. But we just want to make sure you get the ability to nearly fully automate your business in the next, you know, several quarters.
- [33:27]
Tommy Mello
You know, the smartest people that are going after this are saying, where's all the money going? I mean, yes, we have a lot of HR people, but you save me 10hr people, that's 700, $800 million, whatever. It's looking at every call that gets booked. If you got a fifteen hundred dollar average ticket, if you're missing twenty calls a day, that's money, that's real money. And then the additional upsells and then the reducing cancellations. One of the conversations I've been having with our CEO Luke, is if you look at our booking rate, we're missing 11% of the clients. Mostly because capacity planning. You look at our cancellation rate, we're in a lot of markets. It's probably one of our biggest things to focus on is 14% cancellation rate. So take 11 plus 14, that's 25. Then you look at our conversion rate, 73.6%. We're missing roughly around 26% of the conversion rate. You add those up, that's 51%, 51% of all of our marketing dollars. Everything we're doing is going to the competition. And I look at this and I say, how can you look at marketing? Because I'm in charge of marketing. How could you point the finger with over half of the business going out the window? That's operations and that's why I'm plugged back into operations. Like nobody's business. I'm obsessed. And then again, I look at this, I believe we could get to 93% booking rate pretty easily. I believe that we could get to 7% cancellation rate. I believe we could get to 85% conversion rate. And you might ask how? Well, a lot of that has to do with the people we're marketing to and using data to market to the right people. Because if you're just doing Craigslist ads, you know, obviously you're not going to have those KPIs where you need them to be. But it's, you know, Ara, I think the biggest thing with Service Titan and Power BI and everything we're obsessed with is knowing the data and having data accuracy and seeing the holes in the business and knowing that it's not speculative like some people say, yeah, me and my wife hands handle the phones. We're booking at least 90%. And I'm like, you know, you got to have it down to the decimal. You need to know every single CSR where their weaknesses are like the every single aspect. And you got to be relentless at prioritization. And I see people, they walk into their office on a Monday and they have no idea what they're going to be focused on. They're waiting for the fires to start. And unfortunately, I'm going to say this, and I say this bold, and I'll back this up, is they'll be out of business if they don't get very serious. I met with a guy, amazing guy, doesn't really know anything about the CRM they're on, doesn't know anything about their booking rates. And I'm going, you're doing $4 million of EBITDA and you don't know any of this stuff. I'm like, I could come in for a month and get that to 15 million of EBITDA.
- [36:05]
Ara Modesti
Well, a couple things. One, like every business, even the most successful ones have these opportunities for improvement. If they're still successful, it's because they have a superpower in this one other thing that they're doing really well. So your friend that's doing 4 million of EBITDA, despite all the other problems, he probably has a superpower somewhere. That superpower tends to then dissipate as you scale. And the only way to maintain that level of success as you scale is you got to fix those other areas that have opportunity. But more importantly, you nailed it. It's very important to look at the end of the day, this is a math problem. We are trying to optimize for maximizing profit in a durable way. Right. Not just let's generate a ton of profit today and then lose our business next year, but let's generate a ton of profit today that turns into more profit next year and more profit the year after that. Okay, then if you want to optimize for profit, what are the drivers of profit? The drivers are, in a classical sense, revenue minus expenses. Okay, what are the drivers of revenue? It's what you laid out. How much are we generating in terms of leads? And are these quality leads that can be converted? What is our call booking rate on those leads? Of the calls that get booked, what's the cancellation rate? How do we minimize that? Of the calls that don't get canceled and get ran, how do we optimize close rate and average ticket and so on and so forth? And so if you have this quote unquote, dashboard of These are the 5, 10, whatever, 12 most important drivers in my business, then you can look at it and say, oh, lead generation is fantastic. Call booking rate is fantastic. This week is my cancellation rate. That's terrible. Let me focus on that. Or maybe all those things are fantastic. If it's a lead gen that's broken, let me focus on that. What I will also add is, in my experience, most of the time, the biggest opportunity is not up funnel. The biggest opportunities is the lowest part of the funnel, which is the experience in the field and optimizing the close rate and average ticket first. And once you do that, then moving upstream to something like call booking rate. And once you do that, then moving ultimately to let me generate more leads. Otherwise you're getting tunnel leads that are very expensive and you're not able to convert them anyway. So you're wasting a lot of dollars.
- [38:24]
Tommy Mello
Yeah. You know what's interesting is you guys came out with a study several years ago, said the average home service, home improvement company is booking at 45%. We get really upset with a technician when they walk away with a zero. But that CSR making 22 bucks an hour gets 10 zeros a day when they don't book. And so I walk into businesses and I really believe it's the contact center. And they might say, hey, we got a 77% booking rate. I think they should be at 90. But then I say, what about your speed of lead? What about your Facebook leads? What about the on site? What about Angie and Yelp and, you know, thumbtack? And the call center seems to be the biggest culprit when I walk into a business. And not only the way not only do you book the calls, but the way that you book them. When my mom booked calls in 2010, she would set me up, man. I'm telling you, Ara. She'd go, oh, my gosh, honey, I am so sorry to hear that. Honey, we are going to make your day better. That I. I cannot believe you're stuck. Oh, that sounds horrible. Listen, we're going to send out Tommy Mello. He's one of our best technicians. This kid. He's on it. He's going to make sure your door is safe. He's going to make sure you could get out of the door today and this doesn't happen again. And she talk about me. And it annoyed me at the time, 15, 16 years ago. But then I realized they'd give me a hug when I showed up, and they'd have lunch waiting for me, and they'd walk in and say, whatever the garage door needs, go ahead and take care of it, because we trust you. And that's the one thing that I don't think AI has dialed in yet, is to tell a company story of why I work here and say something really great that I've never seen anything like it. We call it the Gina effect in our call center because her name is Gina. We got this acronym, but it's like if you could get the call center dialed in with the tonality and the empathy, it would make a. Because your conversion rate would go up and the average ticket would go up.
- [40:14]
Ara Modesti
Yeah, I totally agree with you, Tommy. Now, my question to you is, how easy is it to build that level of love and attention and energy and passion, enthusiasm for the homeowner in a call center, not yours. Okay, because.
- [40:31]
Tommy Mello
No, no, it's still not dialed in perfectly. But what I will say is I would reduce my marketing spend, make sure I'm my. I got the avatar picked out, and if I can get my booking rate to 90% and it's the right clients, my conversion rate, my average tick, will automatically go up because obviously there's Sales Pro or Mark. You guys changed the name from Sales
- [40:58]
Ara Modesti
Pro to Field Pro now?
- [40:59]
Tommy Mello
Yeah, Build Pro. And that's going to help out a lot. But if I can't even get you to the door to knock on it. And by the way, Service Time does the best at this to send the profile, the tech, and we're building some AI to make sure that this guy sounds like the Taj Mahal. He's got a picture of his family. He talks about why he loves A1, why he wants to Work here. And you just load it into a prompt. But it's got to be from them. It's going to be answering questions, but that, you know, many times we showed up with another company there and they said, we're picking a one because they sent the profile and we want to work with this guy. And then offering coffee on the way, I had John Jay enriched, this massive, probably the biggest radio station in Phoenix. And he goes, dude, you guys offered me Starbucks on the way. I got a large green tea or a Vinte, whatever. He's like, I've never seen anything like it. He goes, you guys knocked the door. The profile came. He goes, I had a buddy that said, a one's gonna sell you a bunch of stuff. And I wanted to see it firsthand and. But I've never had a problem since then. This was about 18 months ago. And he goes, it just was spot on. And I said, can you do that with a quick recording? And I sent it out to every technician in the company. You never know who's watching. Let me ask you a question. So, by the way, I really enjoy this conversation because we could have this debate is call center conversion rate, average ticket. The way I tell people is this is an interesting formula for those out here. I say, come up with the revenue you want. So you could call it $10 million or 100 million or a billion. And then I want to know, what's your booking rate? Because you're going to divide this by your booking rate minus your cancellation rate. And then what you're going to do is you're going to divide that by your conversion rate. That's when you're in the home talking to the client face to face. And then you're going to divide that by your average ticket. And this is blended. If you do like install, repair, and then I want you to take that and multiply that by your CPI cost per lead, and that's your marketing budget. And what's interesting about this formula, as you increase the booking rate, take down the cancellations, you increase the conversion rate, you increase the average ticket, and you take down the cost per lead. The dollars going in to get that 10 million significantly reduce the efficiency goes up. Yes, I. I want to ask you a couple of selfish questions, but, Tommy,
- [43:19]
Ara Modesti
that is such a critical thing for every contractor to do, like every contractor should be doing. That.
- [43:29]
Tommy Mello
I know, and I try to tell them and they. But the biggest problem, Ara, is they don't have these numbers. And even if they're on service time, they have a hard Time getting to them. Because the way they set it up and the way that we talked about this, the first podcast we did in 2017, is they didn't use Service 10 as it was intended to. It's got a lot more versatility now on the way you pay. You could do hourly plus, you know, the custom configurable payroll. But I just, I still. They need a couple like you guys got the blue collar nerd. They need a couple nerds in there to figure these numbers out and make sure it's set up correctly.
- [44:05]
Ara Modesti
Totally agree. There's a massive opportunity to improve, like configuration, all that. But like the numbers you're talking about or it doesn't matter how you configure it, it's like front and center on your dashboard. Your average ticket, your close rate, your call booking rate.
- [44:20]
Tommy Mello
Well, the booking rate is very speculative. You know what, Tom will tell you this, all right. Are you counting leads that are out of your service area? Oh, no, we don't count those. They're out of our service area, so they're not counted against the csrs. Well, then it's not a true. Or what about a parts call? Are you counting those? But that's why. So a lot of people don't count. Well, they just called up for springs, so the CSR says that's not a lead.
- [44:41]
Ara Modesti
Well, that's a good point. That's a good point. By the way, we'll. We'll solve that within a couple weeks so that all the call V rates will be consistent.
- [44:51]
Tommy Mello
Have you ever heard of the wizard of ads? Ken Goodrich?
- [44:54]
Ara Modesti
Oh, yeah. Oh yeah, Roy.
- [44:56]
Tommy Mello
Roy Williams. And so, yeah, I will say that I've read his books and I really like the guy a lot. I've went out to Austin, spent 10 grand for a day with him, drink wine with him, and he's an amazing guy, but I learned through reading his books that I'm supposed to create relationships, not make things transactional. And I needed to write ads in a whole different context of just, hey, we'll pay less, you know, we charge less. So here, here's one of the ones I've been working on. And I got a hundred of these. So there's a Kawasaki noise in the background. When I was a kid, my dream wasn't a mansion, it was a yacht. It. Oh, no, no. When I was a kid, my dream wasn't a mansion, it wasn't a yacht. It was a 125cc Kawasaki sitting right there in the garage. Chrome handlebars, knobby tires. It Smelled like oil, grease, and freedom. That garage, that was my castle. I'm Tommy Mello, founder of A1 garage door service. And I never forgot that feeling. We don't just fix garage doors. We bring them back to life. Where dads tinker, where kids daydream, where bikes get turned. Where bikes get turned or bikes get tuned and memories get made. Your garage door isn't just a door. It's a gateway to everything that matters. So whether your door is stuck, squeaking, or screaming for help, call A1. We'll be there. Fast, friendly, and always ready to roll. Because somewhere out there, there's a kid dreaming of a dirt bike and a garage that makes it all possible.
- [46:28]
Ara Modesti
I love it.
- [46:29]
Tommy Mello
I love this stuff, man. That's like Tommy 3.0.
- [46:32]
Ara Modesti
I would just change one thing, okay? I would change one thing. It's the gateway to everything. I would change everything to something a little bit more poetic, like to all the wonderful adventures in family or something like that. Those aren't the exact words, but it's phenomenal.
- [46:48]
Tommy Mello
I love it. I love it. Look at the editing.
- [46:51]
Ara Modesti
You can also add in there. And. And it's where two founders built their startup.
- [46:55]
Tommy Mello
Yeah, yeah.
- [46:56]
Ara Modesti
To make shopper for the trades. Not kidding. Of course not.
- [46:59]
Tommy Mello
It's where all the. You know what's interesting is I've learned on some of this stuff before you're going to go spend a couple hundred thousand putting commercials out. You test it on social media and you kind of, you try before you buy it. You know, I've been reading a lot of questions. Yeah.
- [47:15]
Ara Modesti
Can I ask you a question? When you talk about brand, what does brand mean to you?
- [47:21]
Tommy Mello
You know, I think about Nike, I think about Starbucks. I think about that someone pays 150 for a T shirt because Tiger woods and Roger Federer wore it. And I think about what it, what it means. Like a Rolex is not a nice gold watch. A Rolex is like, man, I accomplished something. It. It has deeper meaning. It stands for something. And I, I think that when you really want to build a really great brand, what do you stand for? And my dad taught me there's three things a brand could stand for. You could be the cheapest, the best quality with the best technicians, with the best warranty, or the fastest. You could only pick two out of the three. You'll never be all three. You'll never be the cheapest, the best quality with the best warranty. And also show up on a moment's notice because think about it. Anybody that you know is giving great Deals. I got a mechanic in Milwaukee, he's booked out six months. He's an honest guy. He does quality work. He doesn't rip anybody off. It's very affordable. He's cheap. But you cannot book an appointment. You can't get in there for six months. He's got more work than he knows what to handle. So I get people that call me, they're like, I got more work than I could handle. I say raise your price, but also raise, raise your price, but raise the quality in which you serve your clients.
- [48:33]
Ara Modesti
Done car. I, I think about brand because as I go through all those examples, Nike, Rolex, etc. A1 for me, brand is about the feeling that is engendered, that is created. The feeling that your customer gets based on all the interactions they have with you as a business. Those interactions are things like seeing your marketing copy re hearing your ad. What happens when they call your call center, what interaction they get when the technician comes to the home, is that all those interactions, what is the feeling that they are left with? And now we can then talk about, okay, if the brand creates that one feeling based on all the interactions, what should that one feeling be? And you can answer that question from different perspectives. You could say I want that feeling to just be, I don't know, quality, because that's what I care about in my life as a business owner. Or you could think about it from that feeling should be the feeling that the customer cares most about because I want to make sure that when the customer is making this buying decision, they get what they are seeking. And so if you think about from your customer's perspective, what are the feelings that they care about? I would say as a customer myself, of a lot of contractors coming into my home to build or fix or do things. And I'm not every consumer, so I'm not saying I'm representative of every consumer. Just for me personally, I care about number one, like trust, reliability, that this guy isn't going to screw me over on price. That doesn't mean I don't want him to make a profit. I want him to make a very healthy profit. Just don't obscenely rip me off where I feel like an idiot. Okay? 1. And like, can I trust you in my home with my wife and kids around? And are you going to do reliable work, like quality work that I'm not going to have to fix again? It's not going to mess something else up, right? It's not going to cause damage my home like that. Reliability, trust is what I care most about. Another thing I care about is, like, the convenience. That one, I can text you instead of having to call you. I can book you online instead of having to call you. And you'll come relatively quickly. Doesn't have to be right this second, but, like, it's not going to take three weeks and you're constantly going to reschedule on me. Like, for example, let's say those are the two things. If that's right here, as a buyer, then the business that wants to target me, that wants to build their brand, should build it around what engenders feelings of trust and convenience. Like, that is how I ultimately think about brand and branding exercises so that it doesn't turn into some fluffy thing. It's like, that's what helps you optimize lead generation. Close grade average ticket is if you successfully deliver on that feeling. And that's the authentic. Obviously, you can't, you know, lie yourself into that feeling.
- [51:34]
Tommy Mello
I agree with that wholeheartedly. I think Morris Jenkins did a great job saying, we'll be there within an hour or they will open till midnight seven days a week. I think the other part that Ken figured out with Roy is you're relatable. Like, I used to hold a flashlight for my dad. Everyone, the best comedians, they know how to stage things. They know how to the frame it. And if you become an expert framer, what are you going to remember? You're going to remember that story about Ken holding the flashlight for his dad, because I used to hold a flashlight for my dad when he fixed stuff. So really what you're trying to do is get back into the, I don't know, the hypothalamus of, like, Total Recall of who's that company we always hear about. Those guys are in our street. It's really. I'm not trying to generate a phone call. I mean, I do some direct response. But what I'm trying to do is when you do have a problem, I'm the first person you think of.
- [52:20]
Ara Modesti
Yeah. Memorable. Totally agree there. And that whole flashlight with the dad like that, that is what engenders feelings of trust, too.
- [52:29]
Tommy Mello
Yeah, you're right.
- [52:30]
Ara Modesti
Think about, oh, this guy is a regular kid with a dad. They worked hard. Like, this guy probably isn't gonna be the type of guy that's out here to screw me 100%. And then the. The whole relatable thing. Yeah, I just think about some of the things that are most like memorable. I wonder, and I don't know this to the effect this is just now I'm speculating like Geico, right? Geico so famous for the amazing ads that they used to have. Why did Geico pick comedy and introducing humor in their ads? I wonder if it was for this reason, to make insurance companies like more relatable and accessible to people. Because otherwise you would think of these big large corporations that not very relatable. I'm kind of afraid to engage with them. It seems very scary to me until that walking talking lizard came along. You're like, oh, this is funny. If it fits funny. I can probably talk to the guy now.
- [53:23]
Tommy Mello
100%. I mean listen, we try to. Endorphins come out when you smile, when you laugh, when you've got a good feeling, when you think about a brand. And I think that's what they've tried to do. Let me tell you this just breaking PayPal is hiring a head of CEO content. This is what you need to know. The job pays over $200,000 a year. The mission is simple. Make sure the CEO Alex Chris is visible and consistently posting. This isn't about getting likes. It's about building trust with investors, inspiring employ employees and keeping PayPal top of mind against competitors like Apple Pay and Google Pay. PayPal has proven that in 2025, 2026, the personal brand of the leader is just as important to the brand of the company itself. Visibility is no longer nice to have for leaders. It is part of the business strategy. If your audience cannot see you, they will get, they will forget that you exist if they can see you enough with the right message. You shape how they think before they, even before you speak to them. I'm building a personal brand hardcore just as much as I'm doing a one because 62 guys are training next door and a vast majority of them said we found you and we wanted to work under you. What are your thoughts on that?
- [54:30]
Ara Modesti
Totally great. First of all, particularly in your case, you know, we often talk about the biggest, biggest, you know, shortage is labor. And the labor, especially technicians, they get to kind of pick and choose where they want to work. And they all want to work for someone that is a standup guy, you know, is going to be successful, but is doing things the right way and treats them fairly. And so of course all the visibility that you have, in addition to helping so many contractors, I'm glad that the benefit is that, you know, technicians see you and want to work for you. So that's 1, 2. I like to think about everything from this notion of like what others might call first principles. What I Call driver based thinking. I think at the end of the day what this is all about is it is all a battle for attention, right? It is a battle for the space in the mind of the end customer. And if you are not out there building a place in the customer's mind, guess what? All the other folks will displace you in the mind of the customer. And then when the customer needs something, they're going to remember Joe or Sam or Samantha and go to them instead of going to Tommy. So totally agree that it's valuable as long as it's done in like both an authentic way and actually imparts value to the listener, which you know you do in spades.
- [55:56]
Tommy Mello
You got it. You got to deliver on your promise or you get a bad name quickly. You know, we've been talking a lot internally about ruthlessly prioritize and I think you're a lot like me when I'm like, I could ruthlessly prioritize 10 things per department. I'm like, we've got a massive, we got 1300 people now. I'm like, yeah, we could have these things that bring us to our North Star and we could list 10 of them. But under those 10 there's probably 20 things under each one of them. And I've been reading a lot about the MOIC and people getting 10, 20 times MOIC and I, I have a hard time because I think we could walk, chew gum and listen to the radio at the same time or listen to our headphones. What are your thoughts? I mean, you run a massive company, there's a lot of moving parts, there's a lot of things going on and I'm sure you've heard prioritize, prioritize, prioritize. But that doesn't mean Rob Peter to pay. Paul, how do you look at building impact zones and prioritization?
- [57:02]
Ara Modesti
Fascinating question. I think this is probably the most important question when building something of scale. Because the number one constraint in any business is not capital. The number one constraint is leadership bandwidth. And the reason why leadership bandwidth is valuable is because the more impactful and complex and difficult the project, the greater demand it's going to have for bandwidth from the highest level of leadership in an organization. If you were going to make some small, tiny change in your business, you probably wouldn't need to get involved. You could ask someone who could ask someone who could ask someone and that person could go get it done quite successfully. The more bigger the, the bigger the transformation, the more it's going to require your involvement and maybe like literally Your leadership directly for its success. If you were going to add a new trade, I have a very hard time believing that is going to get done successfully without your direct leadership and Luke's direct leadership, not delegation. You know, three rings, 100.
- [58:21]
Tommy Mello
That's a big, big.
- [58:23]
Ara Modesti
The project transformation. The more it's going to require for new. And therefore, like, okay, you. The difference between having one priority and having a thousand. Okay, what's required to have a thousand? If you're gonna do a thousand, you need more capital.
- [58:40]
Tommy Mello
Right.
- [58:41]
Ara Modesti
To be able to pay for more people doing a thousand things instead of one thing that's easy to solve, you could raise the money yourself from PE or VC or whatever. But to get it done correctly, if these are big, important things, is going to require your bandwidth. You cannot, and I think you're, I've said, one of the most amazing, if not the most amazing operator in the trades. Even you and even me cannot successfully oversee the success of a thousand things at the same time. We could probably do one phenomenally well, and we could probably do two, like, decently well. That's it. Well, and so if you're going to take on projects that big, you can't do more than one.
- [59:25]
Tommy Mello
Well, let me ask you this, because you were the one that really raved about hiring the most incredible chief of staff. And you could have a president, you could have a great coo, a chief Revenue officer. At what point can you hand the trust down for certain initiatives? I mean, look, and I know the founder is a lifeblood, and we're the ones that have the relationships and whatnot. But, but. And I, I agree, you can't do a hundred of them. And there's certain things that. That the very top you need to be involved in. But at what point can you get those people? Because you said you had some of the best experiences ever. You said the guy could run circles around you when you hired him.
- [60:03]
Ara Modesti
Yeah. Again, it goes back to leadership bandwidth. If you can hire other phenomenal people like that, you have increased the amount of leadership bandwidth that is available in your company. I was very fortunate to come across that individual and for that individual to partner with us and go do great things here. And Alex today was not only an amazing chief staff to me, but now runs our commercial part of Service Titan. And he has scaled and made that program successful, of course, with his involvement, my involvement, involvement of others, but he's led the way. The more people like that you can hire, the more leadership bandwidth you gain in your business that you can then take a piece of it and put on this big project and take Rista and put on that big project. But how many such individuals can a single organization hire? Like it is a very, very small number.
- [61:02]
Tommy Mello
Well, you look at, here's something interesting. Jeff Bezos said in the early days of Amazon, he said he had a consultant that he ended up bringing in. This is probably one of the best lessons he said. Jeff said, hey listen, I want to go whiteboard some ideas for you. And he goes, no, Jeff, you're going to bankrupt the company. You get in front of a whiteboard for 30 minutes, there's going to be more ideas and we're not ready for those ideas. So what I want you to do is I want you to build a Rolodex of ideas and I want you to release them after you ruthlessly prioritize them and give them to us as the company grows. But your number one thing, Jeff, is to build a company that could handle all of your ideas and execute on them. And now Jeff probably works from 10:30 to 2:30. His best decision making ability and he's got a team around him. And by the way, a lot of the things that I do, I'm like, let's just sub it out, let's go to the specialist. Like when we got a on intact, I spent 80 grand. I'm like, let's go get the professionals to help us. Yeah, we had to do some internal work but they've done this before. So that's one of the things it's that I think about a lot.
- [62:03]
Ara Modesti
It's the highest leverage, activity and use of your time. If you can find someone that is another superpower in the business, it is the highest leverage you activate. Because the biggest constraint is leadership bandwidth. And so in any business, whatever the biggest constraint is if you improve that, that has the most massive impact on your business. It's not the thing that you have infinite capacity for. Like why increase that? You already have so much and it's not being fully utilized. This thing that is the bottleneck is like at 5 million percent utilization or you know, needs to be there. So if you increase that has the biggest impact on the business.
- [62:43]
Tommy Mello
Yeah, it's literally I think recruiting and getting the talent. That's why open AI was giving I think a billion dollar sign on bonus. I talked to several people about that and they said there's probably 15 people on the planet that could actually fit that role to get the billion dollars. But that's where the world is going is, is the who's and being Have a really good lure to get them in and make sure you take care of them. You know, here's the problem with that Ara, is I've got a really strong C suite. Just amazing people that I trust, I care about. We've got camaraderie, we've worked together a long time. You know, Adam was part of the company Cronenberg. He's done amazing things. He's pretty semi retired now. We're still great friends. He texted me last night, you know, you think about. You had Amy and Matt Roel on the team in 2017. They're no longer there. We go through peaks and valleys and you got to retool the people. Some people that could take you to here can't take you to the next level. And it's probably the hardest thing in business is, first of all, bringing on people that could actually run circles around myself and some of the other people and having them feel okay with it. And then secondly is, when do you retool and say, you know, I'm going to set you free so you could go do very well for another company?
- [64:00]
Ara Modesti
Yeah. So first and foremost, there are a lot of folks at Service Titan. We've been now doing this for, I don't know, over a decade. There are a lot of folks who have spent seven, eight years a decade at Service Titan. They've scaled every step of the way, they've added insane value every step of the way, and just after a decade, they want to go do something else. So that is totally understandable. And we will probably have that, you know, happen to us over and over again for. Throughout our whole journey. So there's a lot of those cases. But for the, for the others, like, as soon as you start to see that the particular role is not the best fit for an individual, you must act. Because, you know, I'll speak. In my business, in my business, we have 3,000 people whose livelihoods depend on the success of Service Titan. I have to be extremely sympathetic and empathetic to people, but I can't cherry pick one individual to be sympathetic and empathetic towards. I have to think about the interests of 3,000 people. And so if there are folks in any particular role who are not the best suited for that role, and by the way, that includes me in my role. I have to look out for the interests of all 3,000 people and replace that immediately. And that is the most empathetic and empathetic thing I could do on behalf of all the folks who, like, entrust me with, with all their Hard work and their livelihood. And then the second thing is, like, all of these things are about probabilities. Right. When you're managing someone and you have a sense that they are not fit for the role, it's very rare where you're like, 100% guaranteed. I can prove mathematically this person is not the right fit for the role. Like, in those cases, you move on it quickly. The ones where you regret not having moved fast enough is where it's a probability. Like, I sense something. I. Like, he's not necessarily hitting the numbers I want. Maybe it has to do with the market, but I'm pretty sure that it's actually not because of the market that he's missing his numbers or, like, he's causing too much issue in the organization. He's having negative consequences on others. And so we're not getting the level of output from others. So while his output might be good as a whole, as a business, our output is lower. Like, in those cases, a probability game. And people are uncomfortable making decisions when probabilities are involved. I have found time and time again, and now, like, the team kind of says this to me. Like, when there is. When. When there is doubt, there's certainty.
- [66:47]
Tommy Mello
Yep. If you even got it. If you're even the right person, do it now. Do it now. Do it now. Yeah. Because you'll have.
- [66:55]
Ara Modesti
Because if I ask you, if I ask you, if I ask you, hey, Tommy, like, what do you tell me someone who's a star in your company.
- [67:03]
Tommy Mello
Luke.
- [67:04]
Ara Modesti
Just give me a name. Don't have to give me Luke. Great. If I ask you, hey, Tommy, what do you think of Luke? What's your immediate instinctive reaction? What would you say? Hey, Tommy, what do you think of Luke?
- [67:14]
Tommy Mello
He's great. He's a great leader.
- [67:17]
Ara Modesti
Exactly. He's great. He's amazing. I freaking love the guy. Right? Like, if that is not your reaction to an individual, that is the bar that we want at companies. The bar isn't like, how do I feel about this individual? I guess, like, he's okay enough to pass. No, that's not the bar. The bar is, he's freaking amazing. She's freaking awesome. She changed, you know, X, that's the bar. If that's not your reaction, it is clear this is not the right person for the role. And you need to go get a Luke or a Jessica that, you know, you will rave about to all your peers.
- [67:54]
Tommy Mello
But one thing I'll add to that is one of the things that makes Luke great is I put a book on his desk and he'll read it. I'll give him a podcast. Listen to a. Listen to it. He's growing at the pace I'm growing, the lull of the lid. And if we could continue to keep this lid growing together, we're going to be prosperous for a long time. But there's certain people that Liz just doesn't go as far. By the way, I'm trying to work myself out of a job, except every time we grow, I step back in. I'm sure you've had the same thing. And it's not necessarily that I'm the smartest guy. It's just that over 20 years of this business, I've got relationships and people that count on me and trust me and it takes time to earn that.
- [68:29]
Ara Modesti
It look that all of that is very valuable. But I can tell you firsthand, Tommy, I engage a lot with you. I can tell you firsthand the reason why I consider you, like I said, one of the best, if not the best operators is yes, you have the relationships, you have this institutional knowledge. You have all these things. You're very inspiring, you're very motivating. You will now occupy a lot of like mind share in people's minds, all those things. Fantastic. But you actually are in the trenches in your key things. Whether it's a key project or it's a key process, like how things are sold, how your call center operates, what expectations. You are involved in the key things and figure out how to optimize them to make them better and better over time. That's why and to your point, like, you recognize because your company is growing, your role is changing every few months. And so you invest the time and effort in self development and self improvement to get yourself ready for the role that's about to come your way six months from now. We all have to do that, starting with myself, but extending to my team and their team and their team and their team and those that choose to do it have a very high chance of success continuing to be amazing at the roles as the company scales and those that don't have a very high chance of, you know, not meeting the bar as the company evolves over time.
- [69:47]
Tommy Mello
I love this conversation. I'm going to ask you a couple closes. I can keep you all day, but this has been very valuable to me and I think the audience is going to love this. Is there. You know, I just read that book Sapiens. Is there a book that that really stands out to you in the last year or two that you've Read.
- [70:05]
Ara Modesti
A lot of my reading nowadays is on AI. Most of that is not in book form just because it's literally changing every day. So a lot of it is podcasts, tweets, articles, sub stacks, etc. In terms of books getting past, no is a great book. You know, supposedly on negotiation, but mostly about just understanding what it is genuinely that the other side wants and what is the interest that they care about. And then how do you take the interest behind what you want, the interest behind what they want, and build, like, this golden bridge to deliver both interests? That's been a fascinating book.
- [70:45]
Tommy Mello
Sounds like the art of the deal. And I think people know how to reach out to you. I'll let. I'll let you close this out, brother. This has been absolutely phenomenal to spend time with you today, man.
- [70:57]
Ara Modesti
I don't know what to say. It's always so much fun and also very thought provoking every time I get a chance to talk to you. I'm very grateful for the opportunity to do so. Thank you to all the home service businesses listening to this podcast for the incredible work you all do. For those that are Service Titan customers, thank you so much for your trust and partnership. And, yeah, I can't believe all this time flashed before my eyes. It was. It was an absolute blast. Thank you, Tommy. Thank you for what you do for this industry, how much you help people. And it's. I, I heard a great quote the other day, like, I don't want to get morbid and, like, start thinking about your funeral. But the quote was like, yeah, at a funeral, the eulogies you hear are never about what the man accomplished. It was about the type of man that they were while they were accomplishing those things. And it's incredible to see how much you help everyone around you despite your absolutely phenomenal, extraordinary, you know, out of this world success. So thank you for being who you are. Thank you for your friendship and your partnership and. And the brotherhood that we have. Thank you.
- [72:07]
Tommy Mello
I appreciate it. I'll leave you with a quote I heard yesterday. You could. You could put it in the walls at Service Titan. You've heard the sky's the limit. Well, that's not true. There's footprints on the moon. So listen, brother, I appreciate you. I'll be in contact with you next week. My man. You have a great one. Hey there. Thanks for tuning into the podcast today. Before I let you go, I want to let everybody know that Elevate is out and ready to buy. I can share with you how I attracted a winning team of over 700 employees in over 20 states. The insights in this book are powerful and can be applied to any business or organization. It's a real game changer for anyone looking to build and develop a performing team like over here at A1 garage door service. So if you want to learn the secrets that help me transfer my team from stealing the toilet paper to a group of 700 plus employees rowing in the same direction, head over to elevateandwin.com podcast and grab a copy of the book. Thanks again for listening and we'll catch up with you next time on the podcast.