← The Home Service Expert Podcast
The Home Service Expert Podcast
Marketing, Sales, Capacity Planning, and Scaling Home Services with Ismael Valdez
01:08:51
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- [00:00]
A
One of the biggest mistakes that I see contractors do, taught me and their technicians do and their project managers do is that they do the shopping for the client. You guys cannot ever, ever do the shopping for your client. That's not what you're there for.
- [00:14]
B
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, Tomm. 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 podcast to get your copy. Now let's go back into the interview. All right, guys, it's a special day. It is super bowl. And I got my good buddy Ishmael here, Ismail Valdez. He's an expert in business. Air conditioning, heating and plumbing. He's based out of Anaheim, founder of nuve and founder of Next gen air conditioning, heating and plumbing. Ishmael is the founder and CEO of. He wasn't next gen and now he's 100 in on Nuve.
- [01:41]
A
Yes, sir.
- [01:43]
B
Been in the trades for almost 20 years. I just wanna.
- [01:47]
A
That sounds old, man. Honestly, 20 years, bro. So I started 17. Yeah. So I'm going on 21 years now. I feel like, dude, that's crazy. The overnight success everybody talks about. How long you been on it, Tom? 20. Yeah.
- [02:01]
B
No, I was painting garage doors for I guess 2005. Yeah. So 21 years.
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A
Yeah.
- [02:08]
B
So if you were to go in a company, let's call it a $20 million company, what's the first thing you do if you were. Let's just say call it a year. And Investor. You're buying 20%.
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A
Yep.
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B
Where do you start?
- [02:20]
A
The. The top five people in the company, the CMO. Hopefully they have one. The CEO, the general manager, for sure. So probably if they have a C suite or just a manage. Managed system in there, that's the first people I want to talk to. Without the owner being there, though, I would, my first move is I would, I would walk in, you know, I would say hi to people and, you know, just see how the operation flows. To me, like, energy inside the operation is super important. Like, I've been to operations, like even yours. You walk in and everybody's just like, yeah, everybody has their, everybody has their, their, their, their roles in their operations. So. And then I would grab the C suite or the upper management and I would probably take them out to dinner and I would want to like, dig into them because they're the ones that, they're the ones running the business. You know, this, right? And I probably spend a really, really good amount of time before making the investment. Then after I talk to them and figure out that, you know, we're on the same page, then I would, I would go in there, but I would start with those, those, those people. Then I would walk into the, you know, show me your financials and all that.
- [03:23]
B
That's the thing is I think the data, I want to know how well do they have, Whether it's service Titan or House Call.
- [03:28]
A
That would be my second thing.
- [03:29]
B
Dial in the CRM. I need to see the numbers. Where can I make impact?
- [03:32]
A
Do you think that. Would you want to talk to the people first or would you want to, Would you make your decision all based on data? Meaning the PNLs, the balance sheet, the service time set up, all that.
- [03:41]
B
I want to meet the people. But at 20 million of revenue, you're talking about, that's a good operation. $3 million of EBITDA at $20 million
- [03:50]
A
of revenue, there's something there. It's not like they're trying to figure it out, right?
- [03:53]
B
No, I would just say, like, if I didn't feel good about the data in which they were managing, there's no point in to talk to the people. But then I say, could I make a ton of impact in this business? Because these people are capable and they've got the data to know, well, they
- [04:06]
A
got it up to $20 million. Right? So there's something there. There's something to work there. Now you tell me to walk into a five, four, five million dollars company, that's one man driving that whole business.
- [04:16]
B
Not fun.
- [04:16]
A
It's not fun. So.
- [04:18]
B
And there's more opportunities. You know, I'll say this about Ken Goodrich's because he'll say this to your face. He buys broken businesses and fixes them all the time. But I don't want that. I don't have time. It's a lot of headache. There's a lot of money there. Just like in real estate. You can go section 8 housing.
- [04:35]
A
Exactly.
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B
And you're.
- [04:36]
A
It's exactly how I look at it.
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B
It's a lot of work.
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A
I rather go and look at a $10 million house that needs a little bit of work and you know, put a little bit of investment behind it and make it be worth 15, 20 million dollars overnight. Then get a million dollar house and dump another million and still be 2, 3 million.
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B
It's like, how much is your time worth? You know? But Ken's done some cool stuff.
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A
I think we all got our little. I think we all got our little things that makes us special, Tommy. I think what, like what, what? I. What? I love being around you and, and, and ag and all these guys that everybody has their own little thing that we're all, that we're all learning from. You know what I'm saying?
- [05:14]
B
I think you're good at your number one thing is recruiting.
- [05:17]
A
Yeah, bro, I'm relentless. I'm relentless.
- [05:20]
B
And really, when you thought about it, you built it. And you said this based on what Leland did is you just take his top guys, you plucked them one by one, that's it. And then you built a good business off of that. One thing you did do as well with Andrew as you spent money on leads. And so you were good at recruiting, but you had enough leads for them. You can't get great people. Victor Rancour talks about this. He goes, I left service champions. I was promised equity. They gave me equity. They gave me way more money, better commission. But I didn't even know my stats. Like, there was no team there. I was like, I was the guy. There was like three other dudes. But like, there was no infrastructure. Like, there was no meetings. There was no rah rah. There was no dealers coming and feeding you, getting you excited.
- [06:03]
A
I can't, I can't. I don't care how profitable and how dope the operation is, Tommy, to me, there has to be some kind of like, competitiveness inside the operation. There has to be some, you know, hey, you know, bonuses and just if you, if you would see the way I drive these businesses from home comfort next gen to now nuve, I drive them exactly the same way, bro. We are a sales driven organization. I don't care if it's an air conditioning, a garage door A thermostat or a toilet. You know what I'm saying? We are a sales driven organization. Obviously, I've said it before. You cannot move from the most important thing, which is marketing, after you master marketing. Marketing's the first step in the operation. After you master marketing and you could lead generate on a snap of a finger and you got your message out there of who you are. After you do that, then you move on to the second step, which is the sales process. And you don't move on from the sales process to the operation process until you master the sales. And this is where all the $5 million operations get it wrong. They think that they're working on something all the time. They're always working on something else. But they're not doing anything though. They're busy, but they're not productive. They're busy, but they're not intentional. They're busy, but they're not moving the needle forward. And that's where I think they get it wrong. To me, it's, hey, there's three different operations to growing any freaking business. I don't care what it is. There's three different departments. There's a marketing department, there's a sales department, and there's operation department. The operation department is the customer fulfillment. What happens when the sale goes through to when we collect a check? That's what I call the operation.
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B
Right?
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A
Anybody could. Dude, you know what I found out? And all these 4, 5, 10, 15, $20 million guys are exceptional operators. They freaking suck at marketing and sales, bro. They suck at marketing and sales.
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B
That's all I live for. Marketing and sales. Make the phones ring.
- [07:56]
A
Do you know where. Do you know what your superpower is? What? I think you're probably one of the dopest marketers in the world.
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B
It's marketing. Get the phone to ring off the hook. We generate 34,000 calls a month.
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A
That is insane, bro.
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B
Yeah, And I think I'm just getting started.
- [08:12]
A
And 34,000 leads in a month. Let me put this into you guys into perspective. You guys are probably going to generate 34,000 leads in your whole lifetime. Tommy's doing that shit in a month just to give you guys the perspective of how like his superpower. But correct me if I'm wrong, I know you're super operational, you're super methodical with numbers. You know, you're very data driven. But I think your superpower and what most people underrate you is you're a marketing genius, bro. That's what you are. You're a marketing Genius. From the way you carry a one, from the way you lead, generate a one, from the way you present a one. Right. I think you do okay in sales and operation. And that's why, you know, you have amazing people like Luke and all these guys behind you.
- [08:59]
B
Yeah.
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A
But I think your superpower is you
- [09:01]
B
can understand the funnel. Here's what I want people to think about. And this is where me and Luke, we got a healthy relationship that I could kind of combat with him a lot.
- [09:11]
A
Yep.
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B
And I said, luke, let's just do some quick math here. We've worked really hard to get to 90% booking. 90%, now we're in 40 markets.
- [09:21]
A
True. 90%, by the way. Not like you're fucking.
- [09:23]
B
Yeah, no, it's 90%. But here's the problem. 14% cancellations. And that's just because, you know, we have 62 guys training, capacity, planning. I think we could get that down to seven. But so, so I'm losing 10% out of the gate. Right. Because I'm at 90, then I'm losing 14. So I got 10.
- [09:42]
A
Those cancellations on the 14%, is it because you can't get there fast enough? Because. Yeah.
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B
So I've analyzed the hell out of it.
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A
How booked out do you stay? Before you answer, how booked out do you stay all year round?
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B
Oh, yeah, it's. We don't have any seasons, so that's. In the colder climates. Installs goes down quite a bit. But I don't have a month that's ever going to be less than the last month. Unless it's all we do is say, how many Monday through Fridays do we have? The month that we kill it, we've got 23. The month that we don't, we got 19. Even though we're open Saturdays.
- [10:18]
A
You know what? I would like to see you operate.
- [10:21]
B
Yeah.
- [10:21]
A
An air conditioning business, I'm telling you right now, dude, I would love to see. Because look at the one thing you mastered is marketing, operation, sales, all that. Right. You're phenomenal. That seasonality. Tommy, let me, let me give you the, the, the influx of seasonality to sell service agreements. $15 million. This is a peak at Nexon, right? Yeah. We did $15.1 million in our top month. And our low month, we were like at 6.2. So that 9 million dollar fluctuation is what drives people nuts. Why nobody can. And look, service agreements do, do help a lot.
- [10:56]
B
It's tough. It is tough, but the seasonality. So I asked Keegan, I said, you're the only guy I Know that's run lots of millions of EBITDA through garage doors and lots of millions through an air conditioning company. I said honest to God, I'm in his office, we're doing an interview, you were there. And I said H vac or garage doors?
- [11:15]
A
H vac all day long.
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B
He goes, meaning tough.
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A
What's tougher?
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B
No, he goes, if I'm going to do something, my non compete's over. He goes I'd rather do H Vac all day because it's such a big ticket. He goes, I could get 20, 25 grand from a home, garage doors. I could get six or seven. And that's of a new sale.
- [11:33]
A
But. But look at. You're not used to seasonality and you're not. You look at. You want me to tell you what you're not used to though? One thing that you're not used to that you probably never thought about.
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B
What?
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A
Turnover. Your turnover rate on employees skyrocket in seasonality.
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B
I'm at 35. Turnover of in your first year.
- [11:50]
A
No, overall you're way lower than that.
- [11:53]
B
But check this out. So you're losing 10%. So Luke, you're losing 10% in the call center. 14% cancellation rate. Study the cancellation rate. And all these cancellations are due to one thing. Customer resolve themselves. Customer found somebody quicker. Nobody resolved it themselves, they just called somebody quicker. So it's all about getting out there to these demand driven. So I go wait a minute, 10% plus 14% and then conversion rate. That's when you're face to face. We're at blended 74%. So that means we're losing 26%.
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A
Let me ask you a question on that. Blended 74%. Do you include the $88 complimentary tune ups or whatever you guys charge?
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B
We don't consider a conversion unless it's 125 bucks.
- [12:34]
A
I would consider an H vac guys, an H vac plumbing, electrical. I would consider a true conversion. 500 bucks and up. 500 bucks and up is a true conversion to me. Why? Because it already costed you 2, 300 bucks in there. It already cost you another 2, 300 bucks to get the lead like the labor behind all that. So you, if you are not producing 500 bucks inside that house, I believe you're losing money on every single one of them.
- [12:55]
B
You, you do as a we look at. I've. My scorecards are really, really good. But you know a good guy will do about $1,500 average tickets. That's blended. I got guys that are doing four grand. But if I'm losing 10% plus 14% plus 26%, that's 50%. That's half of my leads. I'm not earning their business.
- [13:15]
A
I know.
- [13:16]
B
So don't say it's a marketing problem. The operations wants to go and say it's a market. And they're like, we need more leads. I'm like, well, let's get rid of these cancellations. Let's get rid of these people not booking. Because the worst one on Lace that I see pop up is the. The service times didn't work. Like, we didn't, you know, Found some. Yeah. It's like, so. So you look at that. So I believe we can get to 94%.
- [13:43]
A
Bookie.
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B
No, no, no, no, no. 94% booking on the contact center. I believe we could get the cancellation rate down from 14 to 7.
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A
Okay.
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B
And I believe we could get our conversion rate from 73% to 80%.
- [13:54]
A
You think you're always gonna. You're always gonna be at 14% because of. Hey, I'm gonna add more. I'm gonna add more staff, but I'm gonna increase marketing, and then it's gonna keep going. You're gonna keep chasing your tail on that. Do you think you're gonna.
- [14:04]
B
So here's what I'm trying to do, okay? I'm trying to spend as much possible money as I possibly could and still have a staff to where I've gotta do outbound that day. So 20% of my volume in that market will. My list so I can pick up the 20%. But here's the deal. Same day call out.
- [14:22]
A
That's what I was going to say.
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B
I'm okay. Now I'm down. I only need to fill 10% of the board. I got a guy that. His daughter just got sick. She. She needs to go pick her up. The shit happens.
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A
Yep.
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B
So it seems like something always happens. Guy got a fender bender or something. So I want to have all my inbound to where it's 80%, 70% in certain markets, 90% certain markets, depending. We're building out a whole tool.
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A
Okay.
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B
I've got a company building the most advanced capacity planning tool. Then you staff up and you overstaff, and then you gotta do outbound.
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A
Okay.
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B
And that's the way.
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A
Do you do outbound?
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B
Right now we use a third party. We use Jack from Elite for my.
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A
For the H Vac guy. For H vac, Electrical pumping time. We live on outbound. Like that's an important.
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B
And this is where.
- [15:09]
A
This is one of Some of these air conditioning guys missing plumbing and electric guys miss it. You guys, when it's shoulder season and there's not enough leads on the board, you guys, you're freaking hammering your customer base all day long. You're hitting them with direct mail. You're hitting more the email blast, ringless voicemail text messages. You're hitting them with outbursts.
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B
This is one thing that Leland said that really stuck out. He goes, I start over today. The only thing I'm doing, focusing on service agreements.
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A
Yep.
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B
He goes, service agreements is the lifeblood. When there's no weather.
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A
Yep.
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B
That's his. That, like, no one's really. I don't know a lot of companies. So you pulled it off.
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A
Yeah.
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B
And Leland's just every single year, 22%, I think.
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A
I think I pulled it off because of my growth. If I would have had a slower growth, I would have lost more people, and I would have. I wouldn't have done what we did. We were just growing so freaking fast. Right.
- [15:55]
B
But you invested in things that very few companies will invest in. Like, you guys did the baseball stadium, the billboards. And you did a lot of billboards, and you kept it clean.
- [16:05]
A
Yep.
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B
And I remember showing up at your shop and you were laughing. You're like. You got like, 18 guys doing the lettering on your trucks everywhere in your parking lot. You're like, I just added 20 trucks. And then you got two Raptors sitting over there. Because I think you won something. Service titan.
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A
Yep.
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B
Yep.
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A
I gave them to my general. To my general manager and my ops manager.
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B
So what did you get? Because what was the contest? Whoever could get service time the most. Clients.
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A
I just kept giving them referrals. People kept coming up to me, touring my shop, and I would show them how service time would benefit the business, and they just kept. They gave me a Corvette. They gave me three Raptors. They gave me money. Like, they just. They just went above and beyond for me. But honestly, I grabbed all that and I gave it away. I never, Never really stayed with any of that.
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B
Let me. Let me go. Let me ask you another question. This is something I've been studying a lot of. So you just sell next gen. Today's the day the wire hits.
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A
Yep.
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B
I think this is important because a lot of people are probably going to exit in the next few years, which
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A
I hope you guys do.
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B
By the way, what's the best advice? I'll give you just a few things. Number one, buy a nice car.
- [17:05]
A
Yes.
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B
Buy your dream home. Go on a dream vacation.
- [17:08]
A
Yep. But keep I didn't do the dream vacation.
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B
I did the keep the money though for a while because there's a lot of opportunities day one. But if you wait for a year, deals find you like so many good opportunities. So what else would you say? Because nobody's there for you.
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A
Look, when I had the wire come into me, I did something that most people wouldn't have done. I had, I think I have like seven, seven commercial buildings, anywhere from 10,000 and 54,000 square feet that I leased out back to ranch. So I had seven buildings. I had a, like, I have like nine houses that, that I had. So like when that money came in to me, I went and bought you know, a watch and a car and like all the nonsense that I wanted to get off my chest. But then I paid down all my debt on my real estate, which looking back was pretty dumb because I could have grabbed that money and I put it, you know, stocks, bonds, and it would have created some, some pretty good return.
- [18:00]
B
Yeah.
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A
But I've sold, I've sold, I think two of my commercial real estate buildings and I made between just the two or a little bit over 3.1 mil on them. And you know, and I only kept them a couple of years. So I've done good in that. And I. And I shouldn't have paid down because now that I. If I would have had that access to all that cash right now.
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B
Yeah.
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A
Then I could have bought a business here. I could have bought a business. I could have, I could have done the Tommy Mellow.
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B
Well, the thing is with me is
- [18:28]
A
like you own did I the industry now, Tommy.
- [18:31]
B
I burn a lot of. I've got all mine sitting in the market and it's killing it. It's doing very, very well. And you know Joe, of course Joe does good for me. He just got me the Amex for
- [18:42]
A
him, by the way.
- [18:43]
B
He gave me the Amex black card. He just got it. He figured it out.
- [18:46]
A
Yeah.
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B
And I'm like, do I want to pay for this? It's only five grand a year. And you should. All this access y. What else was I going to say?
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A
What else would you. Okay, now that I answered that, I think I would have kept a little bit more cash to have a little bit more liquidity to be able to step on these huge opportunities because I bought into some dope ass businesses.
- [19:04]
B
There's some deals. And that's one problem is on this next, on this next deal, you're on my list of just people I want to do business with. Because you're a hustler.
- [19:13]
A
Thank you.
- [19:14]
B
And I probably got to list like 25 people that like I've got an. I've got a plan to like. Really? Really.
- [19:21]
A
What business gets you excited? Besides, I know you're going to say what business?
- [19:25]
B
I like software a lot because it's revenue, it's annual reoccurring revenue and I like home service and I'm starting to like home improve. But the multiples aren't there because it's not demand driven. So the multiples are half of what they are in home service. So there's like roofing a lot. I like water restoration a lot. A lot. Because I think Edward did amazing stuff, dude. I mean those guys did well in California.
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A
Are you guys going to.
- [19:49]
B
They got the 10 million EBITDA.
- [19:50]
A
Damn. Are you guys going to turn this year?
- [19:53]
B
They're working on it. It's not my place, but he's done. They've done it. Edgar and Edward did exceptionally well. But here's one thing that I am working on on the next deal. The PE company doesn't care at all about the real estate. In fact, this net, the real estate, the bigger PE companies, I'm going to go tell them I'm going to buy a building in every market that has substantial EBITDA and it's got to be 20, 20 plus buildings. And I'm going to put 10 year leases minimum on them.
- [20:24]
A
That's fine.
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B
And then you sell this portfolio. It's worth 50% with the 10 year lease.
- [20:30]
A
Yeah.
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B
And it's on a triple net. And so let's say my average building I go out and buy 20 is $5 million. That's 100 million. It's worth 150 million the day I put them all together. Then there's a PE company, not the PE companies. We work with their real estate. All they're shooting for is 10, 12% return on investment, IRR internal rate of return. So they're happy. It's slow money but you know, the rent goes up every year and we're happy because they're really good properties and we do tenant improvements and everything. But you make 50%. So just by doing that, just by stacking them up 50 million bucks and I'm doing a favor for a one because I'm getting the best locations. True. So.
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A
And it's not like you're going to take advantage of them on the lease. You're going to give it to them
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B
at whatever great cost they got to sign off on this. But that's day one and here's the cool thing. You might say, hey, he made 50% on 100 million. No, because there's hundreds of millions in the bank. I'm getting loan 90 to 10. So I would literally spent $10 million, paid a little bit of interest along the way the first year. So on the 10 million. 10 million, I made 50.
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A
And you could grab that 90 back.
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B
Oh, yeah. So. Because the banks, they look at this and they go, well, you got hundreds and hundreds and hundreds over here or good, you're not going to default. So they'll give me all the money I freaking want for that.
- [21:47]
A
So that's where you learn this from Cardone or the other Pace guy who,
- [21:51]
B
you know, like, Pace more be a lot, but. But I. I don't know who told me. And they're like, but it needs to be a portfolio. So CBRE. And then I started using ChatGPT and they're like, if you get 20 year leases now, yeah, 10 years are great.
- [22:10]
A
Yeah.
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B
I mean, it's very, very, very safe. That's what's so cool about real estate now. Pace is a genius. Cardone's really good too. You know, I will say, like, you got to respect all these people.
- [22:20]
A
I do. You know what? I've seen the video when him and Cardona are talking about what? Yeah. Have you seen that video? Yeah, yeah. Just like, what the.
- [22:28]
B
Like, I said that to Matt and Jacob and Eric.
- [22:31]
A
Yeah.
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B
And then I text Pace.
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A
Yeah.
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B
In the text.
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A
Yeah.
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B
And I said, I need you to give us just a one day class.
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A
He's like, dude, that. That was probably one of the dopest videos I've seen them do. Cardone's just like, what? I feel like I've been doing this wrong my whole life.
- [22:46]
B
Well, Hannah told me that that's a
- [22:49]
A
smart girl too, bro.
- [22:50]
B
She's like, there's some laws passing that make it harder to do the creative financing. So that. But he's a very creative guy.
- [22:57]
A
I know he is.
- [22:58]
B
And me, I'm like, wait a minute, like, what if we went to like the Brian Cohen's of the world? Like all those bankers we know, Eric and Rob? I say bring us deal flow. Like, there's a lot of deals that they're like, they're not even big enough yet.
- [23:10]
A
You're about to open up the floodgates for you, huh?
- [23:12]
B
Well, look, you gotta have a system. It's gotta be. Here's one thing that you should think about, like, is it Lennox? Is it Goodman? And I know you might change depending on who it Is who's the finance company Service tight. The exact same playbook, the data, the exact same APIs. You're gonna. Are you gonna use Trip, you're gonna use Lace, you're gonna use a vocal, like, whatever you're using Bam. Because all the companies you negotiate that. That's the thing, is you pay less.
- [23:37]
A
Yeah.
- [23:38]
B
And that's one thing. Ken Haynes. You know, I know this needs help with. I mean, these guys said, we're gonna start buying together. So Parker's gonna buy what they buy in at Atlanta, and by buying together, they're gonna save like $40 million of eBay.
- [23:51]
A
Trust me, I've been. I was. I was the number one person knocking on Ken Haynes door, telling him, bro, we're not taking advantage of our size. You can go to Daikin, you could go to Lennox, you could go to all these finance companies and leverage our size and put so much money on the bottom line just by leveraging it so much.
- [24:07]
B
And then the way you buy insurance, the way you buy your truck, I
- [24:10]
A
know that's the way you do it, right?
- [24:12]
B
Yeah. I buy the same trucks that's in every market, the same exact tool.
- [24:15]
A
That's what I'm saying.
- [24:17]
B
Everything is the same throughout the whole company. I only one CFO too. That's one thing. Like, I think Wrench is a genius company and they've done extremely, extremely well. And their answer was, well, we buy great companies and leave them like they are. And I'm like, but then you got a CFO in every market. Yeah, I got one CFO.
- [24:34]
A
And then all those CFOs, there's friction between them.
- [24:36]
B
And you get one CFO, one COO, and one COO could run 100 markets. So I think Frank's doing a killer job, bro.
- [24:47]
A
I think they're about to.
- [24:49]
B
I've heard some rumblings. Hopefully there's a press release any day now. By the time this comes out, might have already been announced.
- [24:55]
A
Hopefully. Because we need these portfolios to start churning. You know what I do want to talk to you about, though, Tommy, that I don't think a lot of people notice this. And because, you know, their EQ is a little low, or they're just, you know, living. Look, what happened at NextGen, bro, was the perfect timing to what's happening right now. So in 2018, 16, 17, 18, when we were barely starting NextGen, the blue dots and all those guys and the arse were coming into our industry and they were trying to, you know, do what they're doing right now, and they Pissed off a lot of managers, bro. They pissed off a lot of C suites and high level managers, high level sales guys and everything. So I came in as the fresh face into the industry with this, you know, next gen 4995 does it all. And everybody was talking shit on me. How could you be selling systems for 5,000? You're crazy. You're gonna go out of business. All I was doing was stacking labor, bro. Because labor, you can't do nothing without labor, right? So that happened in 2016, 17 around there where everybody. Dude, I had access to people because I was the fresh face and I was advertising. I was being aggressive with my recruitment. I had access to people that I would never have access to ever in my life. Some of the, you know, five million dollar guys and three million dollar technicians and all these guys, because PE was pissing them off. Well, the same thing's going on right now. And this is why I tell all my, my $5 million companies, you guys are in the best place of your life right now. You guys are in the best. You guys are going to have access to next gen people, which, look, you know, unfortunately, next gen went backwards, right? And they let go of like six or seven of the highest drivers in there. Now they're starting. Who?
- [26:31]
B
Daniel?
- [26:32]
A
No. So now they're starting their own little companies and they're starting like they're doing their own little. Look, so what I'm getting to you. If you're a $5 million company or you're a $10 million company, you want to get to 25, 30, 40, 50 people. The people that are going to take you to those milestones, you have access to them right now. I promise you guys, if I was at NextGen right now, you guys would have zero access to my people. They would laugh at you guys when you guys would try to give them more money or equity in your company or whatever it is. So take advantage of what it is. This is the greatest opportunity in home service industry. Not just because look at, and I call this the perfect timing private equity. Making mistakes. You have, you know, the industry being discombobulated. Like this is the perfect fricking time to grab those people, put them in a team and let that, and let it and cruise into 25.
- [27:23]
B
There's a lot of other things going on. People don't know this. A lot of people. But PE borrows money and is the coolest thing in the world. Ishmael. When I really.
- [27:32]
A
That is what I need to learn from you, by the way. So I hope to have a good conversation with you later on.
- [27:35]
B
This is crazy. Listen, the PE company borrows money against my ebitda. Yes, they put in some hard money, too, but they borrow the money, then I'm responsible for the payments every time they fly out. Who do you think is paying for their flights? What about their hotels? What about dinner? So although they're amazing and I made all the right moves, I remember when Ken Goodrich called, called me about. He goes, tommy, you're probably one of the better guys I've ever seen at this trade at Just Home Service. He goes, but you don't know what they know. He goes, you learn how they raise capital. You learn about their LPs, you start going to their meetings. You understand exactly how the formulas work. And now I understand all this stuff. And I'm going, wait a minute. There's a great big company that went out of business. It was Renovo. And Renovo had all these home improvement, kitchen remodel, bath remodels. They were making a ton of money. But guess what? Their debt payments were too high because they took six times leverage. So let's say you're a $30 million company. EBITDA.
- [28:38]
A
Yep.
- [28:39]
B
I could take on that 30 million. The bank will give me 6x. So I could borrow 180.
- [28:44]
A
Okay.
- [28:45]
B
But now that company that I bought into is responsible for the payments on $180 million of debt and the interest, too. Well, the interest is what kills you, right? So, dude, I'm like, that's what happened is BlackRock was their lender, and they're like, they just shut down. So when you sell your business, be careful. Of course, now debt is a great thing, because debt, because I wrote 50%. So the debt actually makes the numbers way better if it's done right. But you got to be able to grow to. Those first couple of years are critical to get the massive growth. So this is the hardest thing about private equity is they're gonna put debt on your business. So me and you went to go buy businesses. I'll give you an example. We were at the suite. Yes. Yesterday. And it was on. Might have been Friday. Yeah, Friday. And I look over and my buddy Tony's at the booth next to us, and he goes, yeah, I'm the president of this bank now. And Eric walks up and goes, dude, you know that guy? I'm like, yeah, I've known him for 15 years. He goes, they'll loan us all day long at 2x. So you go into a business that's doing 5 million of EBITDA, they'll give you 10 out of the gate. But now this company, call it ABC H Vac Company is responsible for that debt. So that's how these multiples come up because they take on more debt.
- [30:04]
A
Is it always, is it always good to take on that much debt?
- [30:08]
B
I don't think so.
- [30:09]
A
I think what's a healthy debt that you want to be when you're, when you're acquiring these businesses? Let's say they're doing $5 million of EBITDA.
- [30:16]
B
Well, well the more EBITDA they're doing, the more, the more debt you want to take because at a certain point it's more expected. Like if you looked at our financials, you'd understand that we've never had a down month or a down quarter. And what that tells you is we don't really have a lot of. We don't have Home Depot because if we lost Home Depot, let's say that was 20%. Yeah, that's a big area of concern. Let's say we had a huge contract with Costco. Now those are great contracts to have. But let's say Costco says, hey, we're taking you out. We got a better all of a sudden.
- [30:51]
A
I know.
- [30:51]
B
So that's why having a lot of different clients and a massive database and a lot of different markets. Let's say there's right now in Florida, there's a massive crisis going on that real estate's going backwards. And one of the biggest reasons too is the houses are uninsurable. Hurricane comes, like the insurance companies are charging so much frickin money. And Keegan lives there, he's like, dude, this market's upside down right now. Well, I'm in Florida, but that's only one market and we don't really feel it. You know, we're also in Detroit, we're also, we're in Reno, we're in all over.
- [31:21]
A
Is there a number that you look at, Tommy, when you open up like a Florida location, right? And let's say you're going to be that you have a three year plan and you want to be at X amount on top and bottom. And this is good for your listeners because this is one big huge mistakes that I believe a lot of contractors do is that they start their business, they, you know, they get a four or five employees, they grow it, but they're not making money and they keep holding on for dear life. Is there a certain amount of threshold time that you go like, okay, cool, if in three years we're not at X on top and bottom. How long do you hold it before you go, like, okay, we got to shut that market down?
- [31:54]
B
Well, my biggest thing is finding the right leader. But now we're a lot more and a little cool when we go into a market, but it takes bigger companies with bigger average tickets. Could turn a company, could turn a greenfield around six months to where it's profitable. It takes us 18 months. Okay, but I don't want to have a popsicle stand. So I'm putting in a lot of money into tv, radio, billboards, which you don't see a return on that.
- [32:15]
A
I know.
- [32:15]
B
For over a year.
- [32:16]
A
I agree.
- [32:17]
B
I mean, Aaron's going through the same thing. When he went into, like, Cleveland, he's like, or Cincinnati. I'm going to spend a fortune and I'm not going to see an ROI for a long time. But then all of a sudden, it seems like you were there for 10 years. You're buying credibility.
- [32:30]
A
So what's the threshold that you're looking for? Is it like a year if you're not training? If you, if you didn't hit your goal?
- [32:36]
B
I need to be able to hit. I need to be able to hit a 3 to 4 million dollars EBITDA company within three years.
- [32:40]
A
And if you don't, how long do you hold it for?
- [32:44]
B
Well, I guess the question is, did you go into the right markets? Because let me give you a good example. I'm never going to be able to get that much money out of a Tucson.
- [32:57]
A
Amen.
- [32:58]
B
But it's so close to Phoenix. It's just like Northern Arizona. So if I go into an Atlanta, it's a lot different than me going into Savannah, Georgia.
- [33:05]
A
Okay.
- [33:05]
B
Like Atlanta, Georgia is way bigger opportunity than Savannah, but Savannah is not that far away. So I go to Savannah if I could get. So you got to look at the demographic. And Valpak, believe it or not, has some of the best data. No, Valpak's still doing good.
- [33:19]
A
Okay.
- [33:19]
B
I think the, the, the head guy there of all the data was just in my office last week. The shit that they are able to do.
- [33:26]
A
Got it.
- [33:27]
B
I got to show you because you can take your whole database and upload it into their thing. It'll tell you exactly who your ideal client is and how often it hit them.
- [33:35]
A
Do you prefer Valpak over direct mail or do you think both of them.
- [33:40]
B
Both of them. Both of them do well, but my Val pack, so. So every single month I have a meeting with all of our vendors for marketing.
- [33:48]
A
Yep.
- [33:49]
B
And it's the same deck and I give them all the data and it's green, red, green, yellow. Red or purple's really bad. But how's our mailers doing if they're in the green? I go, what other can we put a double insert in? Is there more people we could hit
- [34:05]
A
here or just keep it right?
- [34:06]
B
And since I started doing these meetings, I mean, we've gone from 17% of revenue to 15% to 10. Like Valpak's killing it for us. But in certain markets, I'm not even hitting half the homes because guess what? I don't have the technicians writing the tickets there. Our conversion rate's not good yet. So I tell the guys, listen, I'm not going to be able to get you a lot of leads until I tell. I tell the managers all the time, I can't get your leads until you get the average ticket to this. And the conversion rates are this. And it's true. And I tell these guys, don't ever complain to me until you get the performance better. You gotta have stronger one on ones, do more training. You gotta recruit better because your market. I can get more leads, but it's, it's a return on ad spend.
- [34:49]
A
Let me do another question. Back to, back to. Before you go, do Valpak, magazines, direct mail, what else is there?
- [34:58]
B
I call this pbc, lsa.
- [34:59]
A
No, no, no, no. I'm saying hard print. So magazines of Alpac and Drag Mail are like the trio of print. Right? So before you do that, and this is for you, for your listeners too, do you. Is there a certain amount of reviews? They're gmb, they're Yelp there.
- [35:17]
B
Yeah. So what we do is we do friends and family for free for the first two weeks. Like we just opened up St. Louis day one before we got there, because we did friends and family. We already got 65 reviews.
- [35:31]
A
When you start dumping into Google, you
- [35:34]
B
start Google right away.
- [35:35]
A
Okay. And even though they don't have that many reviews.
- [35:38]
B
So here's what I did. I did exactly what you would think. What I thought to do is going super light, just focus on reviews, spend the first year and then hit all the other stuff. Then I found out from like a company like Groundworks, Matt Malone, they're doing like 280 million of EBITDA. He goes in four months before they're even in that market and starts doing want ads. So people are hearing your name every day. A1 is hiring great people and you just make it just recruitment. It's all. But people are hearing your name. A1, A1, A1, A 1, A1. And that's a lot of money to think about. You're spending four months worth of endorsements and radio and tv.
- [36:15]
A
Yep.
- [36:16]
B
And you're not making a dime. You can't even run a call. But that's what it's going to cost because people will remember you. They'll be like, who's that company? All the time it's hiring those awesome technicians. But this is the biggest thing. The next company that's looking at us is going to say, how good are they at greenfields? How quick can they go? Take market share? And if you build that playbook, that's worth more than gold. Because an acquisition is like, I might be able to get a good acquisition, but I can't plan it.
- [36:43]
A
You're gambling.
- [36:45]
B
Maybe. What I found, though, when you go into a market like St. Louis and you're spending 300 grand a month, now everybody's calling you, saying, I want to sell. Because you're going to freaking. It's already expensive to market here, and now you're spending this much. I see you on the bus stops, I hear your name every morning, like, we don't want to go. So now they're like, how do we do a deal?
- [37:02]
A
Yep. And your competitors see you as like, hey, my employees are going to want to go work for you because you have.
- [37:07]
B
Oh, yeah. Well, hopefully they understand that I'm willing to lose money for the first 18 months.
- [37:12]
A
Not only willing, you can too.
- [37:15]
B
Well, think about this. You know, just like a check, the multiples are going up.
- [37:19]
A
Yeah.
- [37:20]
B
So my question is, you get a million dollar EBITDA company, what are you gonna pick up? What's a fair price for a million dollars of EBITDA? I know what they're getting in H vac.
- [37:26]
A
Six to eight, maybe eight.
- [37:28]
B
Some people are paying 10.
- [37:29]
A
Yeah.
- [37:30]
B
So. So the question is on $8 million for that million dollars of EBITDA, you're paying eight?
- [37:37]
A
Yep.
- [37:38]
B
Could I go into there and spend $8 million if I could spend five and get the same reaction?
- [37:43]
A
You're right.
- [37:44]
B
I'm way better off because now I'm building it with my same culture. And then here's the other trick. Pay your top guys 150 grand a move. Get them to move. You got to get your top guys to move to a market.
- [37:56]
A
And that's an add back all the things you've been through right now. Right. You, the green, filling the acquisitions because you're doing both. What do you enjoy the most? And which one's giving you the best return?
- [38:06]
B
Yeah, Greenfield's been difficult, but it gets better and better and better.
- [38:11]
A
Enjoy the week. I wouldn't, dude. I would. I love to start from nothing and go on, you know.
- [38:17]
B
You know, I've bought some really cool companies, like Cody Johnson. You know Cody?
- [38:22]
A
Yeah.
- [38:22]
B
Like, dude, that guy's the hardest worker. Him and his brother Ryan. You're never like, I've never seen that because they're just great. And then Don's, the guy had been marketing there for 32 years on the radio, like, but they had an average ticket of like four, four hundred dollars. So we go in there, and this is what's so cool about knowing your numbers is I'm like, well, their booking rate's 78%. We're 90. So you just picked up 12% there. The conversion rate, they're not working nights or weekends. They're running four calls. They're running like seven calls a day. I'm running three a day. So I cut. I cut their jobs in half. So now they could take the time. So my conversion rates up, my average ticket goes up. So let's say you paid 8x for them. The effect of my multiples, too. By the time you fix these things and people don't realize that I'm like, all that I care about is these numbers.
- [39:06]
A
Did you. Okay, slow it down for them, because I want them to really get that substance that you just said. Look it, you're running six to seven calls a day, and then you're wondering why your ticket is three to four hundred dollars. Okay. Yes.
- [39:18]
B
Wham, bam, thank you, ma'.
- [39:18]
A
Am.
- [39:19]
B
They're waiting for that easy customer. They're waiting for the easy one. The best guys I know, they go to those hard clients and they take the time. And I say this, if your average job is an hour and a half, I'd like you to get to three and a half hours. And it's just the time. I don't know. The people feel better about spending the money when you're there for four hours with them.
- [39:36]
A
Yes. Look at people ask us how we. How we were carrying a $21,000 average ticket. At wrench, we go in there for three hours with a certified technician, good looking, knows how to communicate, knows how to work on those units. He's in there for three hours. Okay. Project manager. When the customers ask the right question, a project manager, comfort advisor, will going there for another three to four hours.
- [39:57]
B
Yep.
- [39:58]
A
Another three to four hours. To educate the client on different options of why they should replace their systems and, you know, make all these headaches.
- [40:04]
B
They get to know the clients, they see who's sleeping in the rooms, they look for inhalers, they look for air quality. They're looking at everything. You got to get to know the people, diagnose the person before the problem.
- [40:13]
A
Five, six hours, we're inside that home and we come out with 20, $25,000 tickets. You guys, I've mentored hundreds and hundreds of you guys. And the first thing I ask you, tell me what the technicians do every day. Oh, you know, we got calls when it gets busy. I Show we're running 7, 8, 9, 10 calls or running Saturdays and Sundays. And I'm like, so how do you expect to build any kind of trust, any kind of value when you present a 20, $30,000 average ticket when you've been there for 45 minutes?
- [40:43]
B
The other thing is that I look at is how long did it take you to start that first estimate? So I do. Garage doors are a lot different because a lot of my revenue comes from straight repair. Okay, I don't need. It would be great to get a million turnovers, but our gross profit on service is way higher. The dollar amounts are not enough, but
- [41:02]
A
just because the material.
- [41:03]
B
I had all these technicians a couple weeks ago. They're like, all we do is talk about turnovers now. And I'm like, they're like, we used to be a service company. Now you just want us to sell Negoras? And I said, well, I was a technician for a long time. I run a lot of calls personally in the client's home. Do you think it's not right to mention it when it's a 20 year old door and it's falling apart and the styles are coming undone? It's not insulated, the paint's oxidized, the trim's messed up. You're gonna make a lot of money on a service call. But it's the right. If it were your mother, would you at least say, have you ever thought about a new door?
- [41:39]
A
One of the biggest mistakes that I see contractors do, taught me and their technicians do, and their project managers do is that they do the shopping for the client. They do the shopping for the client. They get in there and they're like, oh, but the capacitor is $390 for us to. And I'll get Tracy. It's like, okay, did you guys give them options on replacing the. A hard start kit, a capacitor circuit, a coil cleaning, something like, you guys cannot listen to me, you guys cannot ever, ever do the shopping for your client. That's not what you're there for. Your job as a technician or a project manager is to present three to four different options to make sure that you educate them and let them. Let them.
- [42:20]
B
Mantle. We just started with Mantle, and it's this thing that basically it's software that allows the client to kind of do their own shopping. They scroll through and this guy called me, one of my product specialists. He's like, dude, he's like, there was no way I was selling a three star. They saw the difference of the price because they went with the five star and then they added a window.
- [42:41]
A
There you go.
- [42:42]
B
And the crazy thing is with Mantle just starting out with it, a couple sales presentation.
- [42:46]
A
Is that what it is?
- [42:47]
B
A sales presentation tool? So the first page, it shows you all the work we've done in that neighborhood. Like, and it shows you little Tommy characters. So you see, like this, we've done a work for all your neighbors.
- [42:57]
A
Okay.
- [42:57]
B
Then the next page is a video from me, and the next page, it shows you what you need. And then you could add subtract. But here's the cool thing. Mantle adds in my dealer fees.
- [43:06]
A
Do you own Mantle, by the way?
- [43:07]
B
No.
- [43:07]
A
Okay, guys, we're going to. Because you should see how many freaking links we get on our group of like, what sales presentation? Why service time sucks.
- [43:16]
B
And let's just say I think Mantle is great for $10 million plus companies.
- [43:22]
A
That's right.
- [43:23]
B
And what I got to tell you guys is my conversion rate went from 55% on turnovers to 68 and a half percent. And the average tickets up $1500. But no, Zach's a beast.
- [43:36]
A
And.
- [43:37]
B
And Aaron brought him to me and they were like, we didn't make this for garage doors. And he. He for 90 days made it.
- [43:42]
A
I'm posting on my group because that's
- [43:44]
B
a one you'll dig this, dude. And Zach's a really smart guy. I mean, these guys, like, it made a large impact in my company. And now we're rolling it out to Don's a garage door doctor and the company's underneath. And I'm like, man, this alone will increase. That alone could bring in an extra $20 million of EBITDA. Because here's the deal, it's eating my dealer fees. So now I can start marketing. Pay nothing till 2029. But the. The client's paying the fee for the dealer fee. Of course, it's built into it and it's legal. You got to show them and say if you want this one. But it's just a small monthly number. So now, like, the cool thing about a garage door is I could do it for 20 years. 20 years.
- [44:23]
A
Is that one thing that you wish the. Your team and your. And your. And just your industry in general did better. Better. The financing. I know, dude.
- [44:32]
B
We're not good as a company. I mean, look right now, last year, where 17 of our revenue came from financing, I like. This year, Luke's goal is 30 to 35.
- [44:39]
A
I think we're 64.
- [44:41]
B
Yeah, that's about. That's probably the right number.
- [44:43]
A
64 was that next year, these bigger
- [44:45]
B
tickets people want to use the finance.
- [44:46]
A
Yeah. So could you imagine what it would do if you finance half of your. And this is for your garage door people. Because garage door people and electricians, Tommy, suck at financing.
- [44:57]
B
They don't. They don't even. The thing is, if you just show them the. That's what you need to do, like, yeah, stop talking.
- [45:03]
A
20. Stop talking. 5, 10, 15,000 and start talking. For as low as 80, for as low as 90, for as low as $100, we could replace your garage door. And guess what? You, you, you. It brings this warranty and peace of mind and, and. And you never have to worry about it. So I like the idea.
- [45:18]
B
So my buddy Rob that was just out, he goes, you're going to spend the money anyway. They're anyway dollars right now. Do you know how much air conditioning you're losing in the summer just out of this garage?
- [45:28]
A
I believe you.
- [45:29]
B
And if you add in the insulation 20%. Let's just say it's 30%. Your bill's 3, 300 bucks. That's 100 bucks a month. It's the same monthly payment of what we're going to save, by the way, the garage door seven years in a row. Remodel magazine the number one. So you'd never say the cost. You say, this is the investment. And then I show them right now we're building this health monitor. It basically is like. It's not your. It's not newbie. It's. We go through all these questions and it says, you've got two more years left on this store. The lifetime. So it's like your tires on your car. We learned it from discount tire. So you could. We could band Aid this and make it work for the next couple years. And then it shows you your Zillow price of your home today. What do we do after the door?
- [46:16]
A
Let me ask you a question, and I don't Want to miss this one, do you? You, you said something about repairs. Right now I don't want to miss. I don't want to miss it. Oh, do you credit. And this is what we did.
- [46:30]
B
Yeah. No, so I'll give you. So here's the deal. You get it up to $1,000 most of the time.
- [46:34]
A
Say we give six months.
- [46:38]
B
No, what I'll do is I'll say because I want to build urgency. I want to say today and today only, either we're going to brace it or replace it. I'm working on your door, Mr. Ishmael. Okay, you want me to fix this thing 100% or what? If I took the money we just spent and I'm able to work with my product specialist and apply some of this towards a new door.
- [46:54]
A
Well, what we do, and I agree with how you're doing it to build the urgency. What we do in the electric and, and this is for the listeners too, because most of you guys aren't doing this. And then you guys are wondering why there's no urgency behind your calls. So I think we give a three month or a six month ad. We used to give it, but I'm sure they still do. So, hey, as long as you know, in the next six months you call us back and I know you're about to invest $1,500 into this air conditioning. And we, you know, we smart, we always tell them if in the six, if in the next six months you change your mind and you say, hey, you know what, Israel, I've been thinking about it. You know those $1,500, it's a seven year old unit. I know I could still go on with it with this for three, four, five more years. I thought about it. Yeah, let's go ahead and do it. Come back, I want a new air conditioning so I could get those fifteen hundred dollars. Always offer and don't go a year, don't go four years, don't go five years. Don't do that shit. It should be three to six months. You can always call back and get your money back applied to a purchase of a replacement system or in plumbing to a replacement of a re pipe, a tankless water heater, water filtration, electricians to your, you know, your panels and all that. You're replacing breakers inside those panels and you're charging the customer four or five hundred dollars. Hey, by the way, what really needs to happen here is this electrical panel needs to be upgraded and you really need to, you know, get a permit
- [48:09]
B
and all that, Yeah, I think, I think if you had a great mailer that went out, let's call it Amen.
- [48:13]
A
There you go.
- [48:14]
B
Three and six months and say final offer.
- [48:16]
A
Yep.
- [48:16]
B
And we just got this new program through our finance company. And you offer the best one. If you could do a handwritten letter that they open up with the hand because that will, you know, gets open, I could get those down for like a buck fifty.
- [48:27]
A
Amen.
- [48:28]
B
So it's a handwritten card.
- [48:30]
A
Same.
- [48:30]
B
And it says we could take the $1,500 off of your repair and you could programmatically build this with an API. So it's not a human being.
- [48:37]
A
Yes, you can.
- [48:38]
B
And it's an envelope. It shows up, you know, personalized letter. It's gonna get read. It's got a normal stamp on it, it's got a return address on it, it's got handwriting. And it gets opened up and it says we got this program. We could do this. By the way, it's 268% return on investment. I'd bet you 30% of the people
- [48:56]
A
would do it all day long. But the problem is our contractors aren't, you know, really good at direct mail or follow up or putting these little implementations inside your operation like the buyback program or incentivizing the technicians to always bring that up inside the operation. Like all those little things guys, is what you guys are missing and what's keeping you, you know, under the $10 million mark.
- [49:19]
B
Let's talk about a couple more things here. So personal brand. You're one of the biggest things I think with this AI world is just build, build your personal brand.
- [49:28]
A
I've been going so hard and you're.
- [49:30]
B
But, but it's so important.
- [49:32]
A
It is.
- [49:32]
B
I mean right now PayPal came out and said the personal brand of the CEO is important to the company itself.
- [49:38]
A
Yep.
- [49:39]
B
For talent, recruitment, for clientele. Everyone should be.
- [49:44]
A
So everyone.
- [49:45]
B
I'm working with a coach right now. And you know how much Alex Hermosi spent on his book launch?
- [49:49]
A
No.
- [49:49]
B
8 million. So I'm looking at how could I do that? Maybe 10 million on my book launch. All I want to do is get my money back. I don't want to make money. I don't want to make money on the book launch. I want to grow more personal brand.
- [50:02]
A
Personal. Look, I saw a statistic on also that said your personal brand is 20 times more effective than your company brand. Your personal brand is 20 times more effective than your company brand. And look at, just to give you guys why it resonated with me. My following on Nuve page is like, you know, I don't know, like 5,000 people. My following on my Instagram and Facebook page is like over 250,000 people now. Like, your personal brand is way more powerful. And everybody in the home service industry listen to me because I've told this to you too. I told this to you. I told this to Chad, to ag, which he still hasn't got his ass in there. But you guys, for the next three years, it's all put a freaking camera in front of you guys and just pretend it's not there because you will catch the most dopest moments. Yeah.
- [50:54]
B
And the best happening at work. I mean, that's what these guys are working on is like the. In your natural habitat, bro. And, and I think it's super important. And I think certain PE companies probably are like, that's a waste.
- [51:05]
A
Yeah.
- [51:05]
B
Understand the deal flow, the connections, the learning that happens.
- [51:09]
A
And this is where. And this is where you connect the dots back to the company. Every single video that I post. What am I rocking? My Nouve hat? My new.
- [51:18]
B
I'll tell you this, I just had a really good meeting with a guy who's got tons and tons of tons of followers, like 700,000. And I said, do you ever get caught up in the vanity metrics? And he says all the time.
- [51:31]
A
Yep.
- [51:32]
B
And Rob Williams would say, Roy Williams would say, hey, you want to just get as many people as possible because they all have friends. But I know this girl, she's making 200k a year. She's got 900 followers and it's all sold to those 900 people is I want the right followers that trust me and know I'm giving them good.
- [51:53]
A
You know how I, how I measure my, my, my personal branding affecting my business by the revenue spike when I'm putting a content up, so. Meaning if I didn't have, if I had all these followers, you know, 250,000 plus followers. If I had all those followers and Nouveau wasn't doing shit and we weren't closing deals and we weren't making, you know, we weren't increasing our MRI, we weren't selling. Dude, we sold $14.2 million of fucking thermostats in our first year. If that wasn't happening, then I would stop the personal brand, but. Because I know how much it's affecting my actual baby nuve.
- [52:27]
B
Yeah.
- [52:28]
A
That's why I keep going so hard on it. That's why you always see me with my Nuve hats that's why you always see me talking about it, because the personal brand is feeding it. You said it. You said it best. And this is one thing I'll never forget. You told me you marketed for A1. How'd you say? Say, yeah.
- [52:45]
B
So basically, A1 built my reputation.
- [52:48]
A
That's what you said.
- [52:48]
B
And then I'm rebuilt, and now I'm doing it back, the favors.
- [52:51]
A
Amen.
- [52:52]
B
And, you know, a one's a beast, bro. And that's why people are like, man, if A one's on this, it's got to be good. Like, even. Even, like the way at least the vehicles are the finance companies. So now I'm able to negotiate for them because of how quick big we've got. But they're like, dude, you've been podcasting for a decade.
- [53:08]
A
Amen.
- [53:08]
B
You're writing books, you're talking on stage stages. You start doing that, get comfortable with that, you become a secret weapon. I mean, you know, if we put our name on something that we believe it's going to do well. Because, of course, I've never really did anybody wrong. Like, I just. I. Talking about Mantle, I'm like, it's a great software for the right person, but I don't have secrets. That's why when people come to my shop, I'm like, this is everything we're doing.
- [53:31]
A
I think that's one of the people. That's one of the. Your. Your things that. That nobody really gives you enough credit for. Tom, how many people have been through your shop? When I was at Nexgen, we had, you know, hundreds of contractors there. Every Thursday, we would have people come in and just tour the shop around for a day. And that's one thing you do for our industry. And I think that industry is always going to pay you back for that.
- [53:51]
B
They do. And that's why, you know, guys like Aaron told me, try this, do this. Half the stuff he tells me, I don't do it because we look at it and say, we've already got software doing this. But every once in a while, it doesn't need to be Aaron. It could be somebody. And I'll go, anybody. I just told you 15% higher conversion rate, $1,500 more per ticket. Because somebody was willing to call me and say, you've helped me out enough. I'm going to repay you the favor.
- [54:17]
A
You know what I think people do really wrong, Tom? That they need to do a little bit better. They need to start paying attention to those little golden nuggets that people drop. Because, look, I'll give you one example. When I was. When I was growing my social media following, I was just doing 32nd, 32nd, you know, 90s quick. And then I had a meeting with Tai Lopez and he's like, no, no, no, no, you're doing it wrong. You're doing it wrong. You gotta start putting, you know, two, three minute content. And I just saw the spiked up. So, yeah, you gotta listen to people.
- [54:48]
B
Yeah. That's why I got one of the things. And my last work with me, he's like, dude, he's like, this is gonna be fun. And they're like, you're doing it wrong. And so I'm just listening to the playbook, hiring the right people, and then we're going to start treating the content like we do the business where how many people watch this video and then you change it and you like. I must say, we haven't been running the social media like a business.
- [55:12]
A
Yep.
- [55:12]
B
And now we are.
- [55:13]
A
Good.
- [55:15]
B
So what's up with Nuve?
- [55:16]
A
Good, man. So, you know, first year, $14.2 million ended it. I'm super proud of our.
- [55:21]
B
How many demos are you guys doing a day, bro?
- [55:23]
A
On a slow day we're doing. And look, it goes back to how sales oriented I am. Okay. And how sales driven I am. We're probably doing six to eight demos a day right now for the last 45 days. Knock on wood. Please keep letting it go through. We're closing about two to three deals every single day. But the one thing that we are is a fucking sales machine, Tom. Like, we have 20, some of these SaaS, companies that I talk to, and I'm like, okay, how many SDRs you have which you know are lead setters or how many AES which are sales guys? It's the same thing to contracting. And I always ask them, it's like, oh, Yeah, I got two SDRs and I got a couple AES. It's like, no wonder you're stuck where you're at that. You need to turn on the gas, bro. My goal is to have 50 SDRs. Listen to me, 50 SDRs by Q2 of this year. And I want to have 15 AES running two, two appointments every single day. If I get there that it took service time, 14 years or 12 years to get there, I'm gonna do that. So.
- [56:20]
B
So are they just doing outbound, Outbounding?
- [56:22]
A
Yeah, outbounding trade shows. So I'll try to bring around the trade shows soon just so people could put a face on it, you know, what's the one thing that I, that's funny to me, when contractors see us at a home show, at a, you know, at a, at a freedom event or at a Pantheon, the first thing that they come up to me and they say, ishmael, your people will not stop calling me. Yeah. You know why? Because they're incentivized. They're incentivized to call you.
- [56:45]
B
Let me ask you something. So a stat that I'm really would be interested in if I'm you running nuve, is I'd be looking at a graph of purchases by company. And I expect those purchases to go up because what I find the biggest mistake is people chasing people coming in the front door, but don't realize the back door. Because what if you could get every single company to say, I'm going to start including these on every service call or I'm going to start including these on every membership.
- [57:12]
A
So my goal, my goal, Tom. And we're almost there. In the next 90 days, we're going to release our, our third version of version one, which is, knock on wood, we're going to be able to sell thermostats for 99, which would freaking open up the floodgates too.
- [57:27]
B
That's where you want to get to. That's what me and you talk about. I said figure out a way to get.
- [57:31]
A
Ever since you told me that that $99 thing has stuck to me. Contractors will give a $99 thermostat with their logo and all the technology behind it to every single customer. If I could give it to my $99, you know what it's going to do to Honeywell and all those guys.
- [57:45]
B
I told you, forget about the EBITDA game and play the ARR game.
- [57:50]
A
I am.
- [57:50]
B
Because that's such a better deal that you've got the ability to play both. Now if you're not playing the EBITDA game in the beginning, it crush you because it costs a lot of money because you got to wait for the membership. Exactly. That's where you said.
- [58:01]
A
So now that I picked up the memberships, now I could decrease the. The.
- [58:04]
B
Yeah, because now you got this money coming in.
- [58:06]
A
Of course.
- [58:06]
B
So. So now it's kind of self fulfilling.
- [58:09]
A
The. The next six months for Nuve Tommy are probably going to be the most insane months. My goal is to take NUVE IPO by the end of next year. I've hired a badass cfo. I have my, my.
- [58:20]
B
Susie, where do you want to be in ARR by the end of this year?
- [58:23]
A
I'll probably be 24, 26 AR this year.
- [58:25]
B
Then when for IPO, what do you
- [58:27]
A
want to get like 48 to 58 to 50 mil of ARR.
- [58:31]
B
And what do you think it's worth multiple wise? Have you talked to anybody?
- [58:35]
A
48 to $50 million of. Of ARR. You're probably close to 800, 750. Because we also pick up on the, on the thermostat.
- [58:43]
B
Tom say you're like 20x, you think
- [58:46]
A
probably lower than that. But we also make a ton of money on the thermostat too. So we would like. I talk. I talked to Tom Howard. He's the one that told me this. Like we running 39% gross profit right now with our thermostat, Sophia, which is our version 2 with voice and monitoring. And it's just a sleek, round, beautiful thermostat. We're going to sell it for 289 as a premium thermostat and it's going to pick up about 11 points of. 10 to 11 points of gross profit. My CFO already calculated it. So we're probably going to be running about 50% gross profit on our thermostats.
- [59:14]
B
When you run to $99, is this going to.
- [59:16]
A
Oh my God, bro. Because look, I'm covering both bases. I have a $99 thermostat. Maybe you driven a $99 thermostat. And then I have a $289 thermostat. One is meant to give away, the other one's for memberships and the other one's for new installs. Those are the three tiers I'm trying to give. Once we open up the floodgates to that, bro, let me tell you how exciting Our version 2 is. We have almost $500,000 of pre orders paid for already of people waiting for that thermostat, 500,000, $520,000 of pre order thermostats, of people waiting for that thermostat.
- [59:50]
B
Here's something I think about. What if. What if you did mailers and you said I did. No, you did them for you.
- [59:58]
A
Yeah. For nuve.
- [59:59]
B
And you sell for 99, we'll come to give you a tune up. And then for every one of those, you said if you sell, if you. I'm just thinking it would cost you money. Let's say it cost you $50 and you just say, hey, all I'm asking for. I got you. I got you a tune up.
- [60:16]
A
Okay.
- [60:16]
B
I got you a tune up. And the thermostat.
- [60:19]
A
Yep.
- [60:19]
B
And that's the lead. It's 99 bucks including the thermostat. But now you're in the door and all you got to do is you got to pay me a hundred dollars because I just like you do all the marketing. Is that what you can do? But then you're actually in control of your own destiny.
- [60:33]
A
Of course, right now we're not. We're waiting for them to.
- [60:35]
B
Wait for them to sell them.
- [60:36]
A
Yeah.
- [60:36]
B
So now you say I'm going to give you these leads. You got to sell them.
- [60:39]
A
Hey, you know what would be better? If for X amount of thermostats, I'm going to put dump X amount of money into your marketing budget and direct mail for free thermostats or for, you know, free tune ups or whatever. If you sell 100 thermostats will dump whatever, $5,000.
- [60:52]
B
Or if you what if you could generate 5,000 leads per market.
- [60:56]
A
Oh my God, bro, that's 5,000. These contractors would love me, bro. These contractors would be loyal to our brand. Oh yeah, because this is what I've told you since the beginning. We're not a thermostat company.
- [61:05]
B
Nobody's offering that.
- [61:06]
A
No.
- [61:06]
B
99 bucks with a new thermostat that I control from my phone. So you drew up the right ad. You can even do social media ads. And if you could generate cheaper, if you could figure out that it costs you 50 bucks but you're getting. I didn't have to look. I mean your CFO could figure out how this could scale because obviously the more homes you're in.
- [61:25]
A
Yep.
- [61:25]
B
How many of you guys in right now?
- [61:27]
A
34,000 active units. We deployed about 78,000 units already our first year. We have a company called Top Line Heating Air Conditioning, Pennsylvania.
- [61:36]
B
Good guys.
- [61:37]
A
Really, really good. All social media ads. They were running tune up. I mean they were running free estimate ads and they were getting the regular conversion 15, 20% on, on, on social media. And then they started putting a free thermostat on, on their ads and it spiked like their conversion like 15, 20% thermostat.
- [61:57]
B
Especially if you could say it's a smart thermostat.
- [62:00]
A
Smart thermostat.
- [62:00]
B
So it's going to lower. It's not going to be like if you could prove that it saves a few hundred bucks a year.
- [62:05]
A
This is the one proud statistic that I'm most proud of. Nuve and the technology that we have behind, we are generating between 6,800 to 7,000 logo clicks a month for our contractors. Meaning, listen to me. Meaning those people would have been searching for you online because.
- [62:24]
B
So they're clicks to book.
- [62:26]
A
Yes, 66,800 to 7,000 on these 34,000 units that are active right now. So we could already. We could already predict what happens at 340 at 3.
- [62:36]
B
That's the whole thing that new way does.
- [62:38]
A
We keep people away from Google.
- [62:40]
B
We keep people away from Google and online. Book the call through the. Yep, just through the app.
- [62:45]
A
Through the app. And the thermostat. And the thermostat API. We just finalized our deal with, with Service Titan. They're going to be able to dispatch a technician from the thermostat and that meaning. Hey, Sophia, my water heater is not working. Can you send me a technician? It'll dispatch a technician from your voice all the way to your dispatch board without talking to a CSR. Hey, Sophia, my AC. Can you turn on my AC to 72 degrees? Hey, Sophia, my AC doesn't seem to cool off. Can you send a technician? And they will give you the slots of. Hey, today at 1pm, tomorrow at 3pm and you click confirm dispatches the technician without ever talking to a technician. That is one technology that I'm super proud.
- [63:21]
B
You can get that fucker.
- [63:22]
A
Oh, we're done.
- [63:23]
B
Million houses.
- [63:24]
A
It's done. It's game over. After five, I talked, I talked to Ara. He's like Ishmael, between 500 to a thousand to 500,000 to a million units. Once you're that at that you have. Yeah, it's bro, you.
- [63:36]
B
I like the 99 and I like. Starting to think about Legion.
- [63:39]
A
Yes, I'll get on legion, but the 99 is already implemented. We'll have three different tiers. One at 99, one at 199 and one at 289.
- [63:47]
B
Well, especially if you could get them to Leeds in the shoulder season.
- [63:50]
A
But imagine if we could give thermostats out for free later on tomorrow. Once we, Once we cure the cash flow and once we, you know, we have enough subscriptions coming in where we're just like, hey, as long as you sign up for our membership, here's your thermostats. Install them everywhere.
- [64:03]
B
Yeah, no, if you get them for free, that's what I've always talked to you.
- [64:06]
A
Yeah.
- [64:06]
B
Now you're like, it's game over.
- [64:09]
A
It's game over. You know how many contractors would be like, fuck these Nest and Honeywell and echoes. Let me take them off the wall and put my logo in there. Of course.
- [64:16]
B
And it doesn't cost you anything and
- [64:17]
A
it doesn't cost you anything. That's the main thing.
- [64:19]
B
So we'll get keep up with that kind of production.
- [64:21]
A
Oh, not right now. Not right. But event by the time I do.
- [64:25]
B
A hundred thousand a week, bro.
- [64:27]
A
More. I was burning $812,000 last year. A month.
- [64:32]
B
Yeah, that's, that's, that's the thing is that, that's when you go to go to the right partner.
- [64:36]
A
Yes.
- [64:36]
B
And say I just need a couple hundred million because we're gonna give these out for free. That so, so you're gonna come.
- [64:41]
A
Once I have the right partner. Once I have the right partner, Katam it becomes that's where the IPO comes in to place. So I'm excited, man. Honestly, I'm excited about nuva. I'm excited. Thank you for partnering up with this. I don't think people know that. You help tremendously. I.
- [64:57]
B
Look, I was the first guy that I was like you guys, this will work. I mean, I love Travis, I love Tom Howard, but I know you're just going to make the phone calls.
- [65:04]
A
Oh, bro, I'm not, I'm not. I told you, you know.
- [65:07]
B
You did. You found the right CTO and the right CFO with, with those hires. That's what's going to make us think Sprint.
- [65:13]
A
Yep. Yep.
- [65:17]
B
How do people get a hold of you, Ishmael?
- [65:19]
A
Look, I have a Facebook group called the NCU Nube Contractor University where we just put content all day long. Free content. My Instagram is Ishmael Valdesio. My Facebook's Ishmael Valdez CEO. I'm always, you know, I'm just like you. I'm always giving content for free.
- [65:34]
B
Yeah.
- [65:35]
A
How to pay people, how to, you know, lead, generate, how to bonus people, how to treat, how to, you know, construct the perfect customer experience. Like we are. We are so detailed in our, in our content that we put on NCU that every single contractor you go on our Nuvehome.com you build a profile and then you get access to hundreds of videos that we've done. I record everything, Tom. Everything. If it's going to be a 30 minute Zoom meeting about financial. The Ellen Roar put it on ncu. If it's going to be a. We just did one with Ara and we talked about managers and recruitment and all that. Everything that I do, I record and I put on NCU and we label it. There's forms, there's forms that nobody. Dude, we have forms to write up people. We have, we have our, our employee handbook on ncu. Where people could just download it, take out the next gen logo and put their logo and use it. It's California compliant, meaning you're compliant in the world. Yeah, we have. We have customer satisfaction sheets. We have everything on ncu. I want to build the first digital university for contractors where they could actually get educated. Because I know. I know how bad it feels and I know how, you know, how bad it is to run an unprofitable business.
- [66:44]
B
I think the biggest problem with most companies is they're the bottleneck. They don't have the talent and they
- [66:48]
A
don't have the data all day long.
- [66:51]
B
You know, they know just enough about the trade, but they don't know anything about.
- [66:55]
A
They're great operators, Tom. Most of them are mediocre. Sorry. They're okay operators. They're missing the most important thing, which is the marketing, the sales, man. Marketing and sales is where the money's at. Marketing, sales is where the golden. The gold is at. You know what I'm saying?
- [67:09]
B
Yeah, dude. You drive the right leads. But by the way, sales come from marketing to the right people. People always ask me, they're like, how do you get clients pay that? Like, I'm very careful on who I market to, of course. And I'm not trying to be discount city, you know, I don't want to attract those type of clients.
- [67:22]
A
Amen.
- [67:24]
B
Close us out, brother. Any final thoughts, bro?
- [67:27]
A
Thank you for always having me on, Tom. We have a badass group of people. Me, between me, you, ag, Travis, Tom. You know, we call ourselves lsd. Like, I believe we are probably one of the most impactful people inside our industry. And the best part about it all is that we're just willing to give it all for. For free to our contractors.
- [67:45]
B
That's good, man, because I think Hoffman will do a deal here in the next year and a half. Peter, man, Peterman's doing ag. So at that point, we've got like seven us that have all done deals.
- [67:54]
A
Yep. So what happens after that? That's going to be the interesting.
- [67:58]
B
More deals together. But, like, it's billions and billions of dollars just between that small group.
- [68:03]
A
I know, I know. So I do.
- [68:04]
B
I love working with you, brother. I want to do a lot more with you in the future, but we'll go out here and enjoy the party.
- [68:10]
A
All right, let's go.
- [68:11]
B
Thanks, brother. Appreciate it. 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, 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 high 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.