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The Rich Somers Report
How He Built And Sold A $100M Home Service Empire | Ismael Valdez E521
00:52:17
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- [00:00]
A
Hey, guys. We are buying two more boutique hotels along the California coast here with Summers Capital. 45 rooms off Market in Catalina island and a second deal up in Bodega Bay, which will make a total of eight boutique hotels owned and operated. Our investors get passive income tax benefits. And the best part is, unlike investing on Wall street and a lot of these other asset classes, like multifamily, our investors get to go and stay and experience these boutique hotels firsthand to see how their money's working for them. And so if you want to learn to see if we can help you before this opportunity fills up, you can go to summerscapital.com invest to book a call with my team again at summerscapital.com invest to book A free call with my team. Now let's jump into the show.
- [00:37]
B
Next gen air conditioning. We went from 0 to $108 million. Most of these contractors don't have the confidence to charge enough. They price themselves based on their competition instead of pricing themselves based on data. The home service industry in general, it's 100% people driven. You got to make it obtainable for them to make a ton of money. Everything's a competition. The way you're compensating your employees is what's going to dictate if they're building it or if they're trashing it. If you've been stuck below $2 million for five years, 10 years, 15 years, your people, it's your people. You're one higher away from five mil. You're a couple hires away from 10 mil. You need to learn how to manage those people, how to keep them. The people are the most important part inside the operation.
- [01:17]
A
All right, guys, today I got Ismail J. Valdez in the building. What's up, Ismail?
- [01:22]
B
Bro, thank you for inviting me to your dope ass podcast, man.
- [01:26]
A
Dude, I'm grateful to have you on. And you live up the road in Orange County. You're right down the street. Oh, see, baby, but dude, you've had a $20 million exit.
- [01:34]
B
Yes, sir.
- [01:34]
A
Then you built your second company yet. I had a hundred million dollar exit. And now you're on your third company. And if you sold it today, you said this thing would value around 160, maybe even 180 million today. And what industry are you in?
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B
We're in the plumbing, electrical, you know, roofing, AC just. We call it the home service industry.
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A
The home services business.
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B
So anything home service industry, we, you know, that's where our niche is at.
- [02:00]
A
When you look back at your 2 exits, 20 million and then 100 million dollar exit a little bit over. Where do you, where do you, I'm curious, where do you rank the ability, I guess the, the skill level of your team? I always say I love running with a players and the, and the more I grow, the more the bar and my, my, my bar of excellence in the standard raises right. Because we're always getting rid of the weak link and then we're replacing them with a talent. And so I'm curious for you, when you look back at both of these exits, how much weight do you put on the talent of the people around you?
- [02:34]
B
All of it. Like our, all our organizations are people driven. You know what I'm saying? They're not product driven. This is the first business that I'm growing, the thermostat business that I'm growing that is product driven. It's very, very little people driven, but the home service industry in general, which, that's. I'm a contractor at heart. I'll always be. It's 100% people driven.
- [02:59]
A
Okay. And so you say something which I found is very interesting. So you say focus on marketing, master the sales, delegate the operation and you're going to have a successful business.
- [03:10]
B
Most contractors rich get stuck under the $2 million revenue ceiling because they're trying to do everything themselves they don't know how to. Nobody is showing our contractors a way to scale their business. There's no blueprint for us, there's no college for us. You know, we're building the first college called Nuvet Contractor University right now for all contractors to, to actually get educated. And we're not. Look, we're building it with actual operators. So like we built our digital platforms called Nuve Contractor University. People could go in there. I probably have two to 300 videos in there where we're talking marketing, we're talking sales, we're talking lead generation, we're talking pay plans, we're talking operations in general, we're talking accounting. Like we have the most sophisticated university for contractors right now.
- [03:59]
A
That's good. I like that man. And that's, that's universal. Is it virtual?
- [04:02]
B
Anybody could join us. Anybody could join. They could go on nuvhome.com and on that there's a university tab they could join for free. My goal is to teach as many contractors to run a profitable business because the, the statistics are just, the numbers are the numbers. 94% of contractors will never cross the $2 million range because they're an uneducated. And because nobody is giving them guidance on what to do next.
- [04:30]
A
So H VAC plumbing, electrical, roofing, roofing,
- [04:34]
B
landscape, how important is it? Flooring? Let me ask you what it is,
- [04:37]
A
is how important is it to pick one of those and become really good at one of those first?
- [04:42]
B
I don't teach anybody but that, I don't teach anybody nothing but that they got to master one, one trade before they jump onto other one. And that's one big mistake that our contractors do is they start at a track, they start at plumbing, they start at electrical, they start at roofing and they see a shiny object, well, let me just bolt this on and everything's going to get better. And it's like, no, if you can't get past the 10, $20 million mark with 15 or 20% EBITDA on the bottom, you cannot and you should not be growing a second trade into your business because essentially it's distracting you from your first trade, number one. Number two, it's gonna, it's gonna hurt your earnings and your numbers if you start bolting on a second one. So what we try to teach people is to do things the right way and the right way is to become profitable in one trade. Grow it to minimum of $10 million, put a couple mil of EBIT on the bottom and then start bolting on a second trade or bringing a, a second trade.
- [05:35]
A
So we, what is the typical net margin in the home services?
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B
The sad reality is that most of these contractors, the 94% of them are netting single digit numbers, right?
- [05:46]
A
Only a really sophisticated paying themselves and breaking even.
- [05:48]
B
Basically, that's it, bro. Only a really sophisticated percentage of us, you know, maybe 2 to 4% of us get to run a double digit margin contracting business.
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A
And why is it so low? I would have thought it would be a little bit higher than that.
- [06:01]
B
Most of these contractors don't have the confidence to be able to charge enough, number one. And number two, most of these contractors are technicians, installers, office personnel managers that think that they could go out and do it themselves just because they saw somebody like myself do it. So effortless. So they could try to go out there and do it themselves. And, and they price themselves based on their competition instead of pricing themselves based on data. And that's where everybody's missing it right now.
- [06:28]
A
I'm a big fan of high ticket. I believe when you, when you have a higher ticket offer, whether it's a product, a service that you're selling, you're dealing with the better clientele. Every time you push pricing up, you attract higher caliber, higher quality people. Successful people don't want the free thing. They don't want their free thing. They want the exclusivity. They want something that is going to help them save time. They want to pay for the convenience, all that sort of stuff. And so when you go low ticket, you make less money, but you also have way more problems.
- [06:58]
B
You created yourself a liability.
- [07:00]
A
Yeah. And so you mentioned, you said when people don't have the confidence, they don't raise their prices. What else do they need in order to just say, hey, we're going to raise the pricing? And this is what the new offer is.
- [07:10]
B
They need to educate themselves on how to, how to properly pay their people to, to incentivize them to create a better customer experience inside the home in order for them to charge more. Listen to what I said. They need to incentivize, they need to learn how to incentivize their people properly to be able to create a way better customer experience inside the home so that they then in return they can charge more.
- [07:33]
A
And that's give me an example of, of a lever you could pull with your people creating a better experience for a customer in their home.
- [07:39]
B
Learning learning how to pay your technicians is the fastest lever to be able to increase your average ticket inside the home. Most contractors are paying their technicians hourly. Creating a lazy technician inside the home and just being okay with okay instead of being a performance, putting them on a performance pay compensation plan to be able to create opportunities inside the home where both the homeowner, the technician and the company make a lot of money.
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A
Yeah, I love performance based compensation and I'm the only way they should do. I'm also a big believer is like every arm of the business, it's like the comp plans should be scalable and simple. I think simple is more so what is for a technician in this, in this industry? What is a comp plan that's simple, scalable, that creates an alignment of interest for them to make you more money.
- [08:30]
B
Most of these contractors are paying them hourly only inside the home. Meaning the technician goes in there and takes their time. They don't look for the problems, they don't educate the client, they just go in there because you know they're getting paid 25, 30 bucks an hour. The way we compensate our technicians is we pay them an hourly or a commission, whatever's higher on their pay. Meaning if they worked 40 hours in one week and we pay them 25 bucks an hour, they're going to get a thousand bucks. But if, if they went inside the home and created opportunities by educating the client properly. We pay them a percentage of the, of the repairs and a percentage of new equipment sales. That will generate way more revenue than just paying an hourly wage.
- [09:09]
A
Got it. Are you comping them based on reviews and also on, on, on how quickly they can turn customers and get jobs done?
- [09:18]
B
We bonus them on reviews, we pay them a sliding scale on, on, on repairs and tune ups and anything and anything service related. And then if they educate the client on a brand new install, brand new air conditioning system, a brand new water heater, brand new roof or brand new flooring, whatever they do, if they educate the client on that, then a project manager or senior technician will come in and educate the client on, hey, this is how much it would cost for a new system. They get a percentage of the whole ticket that the sales guy comes in with. Okay, it's a little bit complicated for you guys that are not in the trades, but I promise you, my tradesman people out there, when, when, when you guys see how we pay our technicians and how we're able to scale these, you know, we at Home comfort, we went from zero to a little bit over $20 million in revenue in a, in a four year span. Next gen air conditioning, we went from zero to $108 million in revenue in a little bit over six and a half years. The only one of the, you know, one of the key ways that we're able to do this is number one, we're aggressive with our marketing. Right. But number two, we are able to pay these technicians, project managers, office personnel, installers, everybody on performance pay.
- [10:24]
A
Yeah, because you're making more money, of course. So you took it from what to what income wise?
- [10:29]
B
So we, we were in, in 2017 we had zero employees.
- [10:32]
A
At NexGen, this is the first company
- [10:34]
B
that you sold for 20 was HomeComfort USA. That was in 2012. From 2012 to 2016 in a four year span, we had zero employees in 2012. One hundred and sixty something employees.
- [10:44]
A
It was just you?
- [10:45]
B
It was me and my, and my co founder Ken Sar.
- [10:49]
A
So you were doing the installs?
- [10:50]
B
No, no, no, no, no. It was me, him and Obviously we had 168.
- [10:54]
A
Were you a technician at one point?
- [10:56]
B
No, I was, I was running the whole operation. So I was the CEO. He was the CEO. Second company that we grew was NextGen. That was 100% mine, that one. In 2017 we had zero employees. When we sold it to private equity in 2022, we had a little bit over 600 employees. We were generating $108 million of revenue a year.
- [11:14]
A
Damn. And has it always been just SoCal
- [11:17]
B
or are you guys just SoCal? Was.
- [11:18]
A
Yeah. Yeah.
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B
How the jungle.
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A
How big is your, your market in SoCal?
- [11:22]
B
There's about 24 million people in Southern California that we could have serviced. I was about to come into San Diego and blow up our. Our. Our. Our eighth location when I, When I, When I was at action.
- [11:32]
A
But San Diego is the best city on the west coast.
- [11:34]
B
San Diego's dope, bro. San Diego's dope. I was about to open up here, but, you know, private equity came in.
- [11:39]
A
And I always say, I always say, if you look at the four major markets in, in California, you get the Bay Area, Los Angeles, Orange County, San Diego. San Diego's got the best beaches, the best vibe, and if you look at the cost of living, median house, median home price, or the cost of living down here, it is the cheapest, the most affordable. It's got the best restaurants, the best people, the best culture. And so for me comes, I think,
- [12:02]
B
one of the lowest down here, too.
- [12:04]
A
Yeah. And if you look at San Diego, it's on an island. To the north, you got Camp Pendleton. To the west, you got the Pacific Ocean. To the south, you got the Mexican border. To the east, you got the mountain ranges. And so from a supply standpoint, there's no more land to build on. And as more and more people migrate here, it's only going to push real estate pricing up. That's why I, I like San Diego. It's one of my favorite markets. As far as.
- [12:22]
B
Were you raised here?
- [12:24]
A
I was born and raised in San Clemente.
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B
Okay.
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A
Your neck of the woods, bro. Orange County.
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B
How long have you been down here in San Diego?
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A
Back when San clemente was the 714.
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B
Actually, San Clemente should be part of San Diego, bro, to be honest with you. Let's get. We're gonna.
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A
You got Camp Pendleton in the middle. You got Camp Pendleton in the middle, man. How.
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B
How long have you been down here?
- [12:41]
A
20 years. I call it home now. Yeah, yeah. But, but yeah, I love San Diego. I'm a big fan. And it's funny because everyone that moves out here, it's funny. One of our sales gals, we got her from the Shelby SAP Academy and she does a lot of the high ticket stuff on the back end for us, but she's in Columbus, Ohio, and she started killing it. So I said, hey, why don't you come out, work out of the office for a couple weeks? You know, let's See how you do. And so she comes out here and she goes, I don't know if I'm going to go back. I don't blame. I don't blame her.
- [13:07]
B
That's. I tell that to everybody that I, That I meet. Once you guys come into Southern California, you're here for at least a month straight. You'll never want to leave. You'll never. You'll. You'll realize why we live in California and why you guys, you know, all you haters out there that say, oh, why you live in California? The taxes, the people, the government. I'm saying, bro, come live here for 30 days. Promise you, you will understand why we're here.
- [13:32]
A
Yeah, people on the real estate investing side, Ismail, they don't like the landlord tenant loss here and the bureaucracy and the red tape, and they don't understand it, and so they don't want to invest here. But for us, with what we do, we like the bureaucracy and the red tape because we're in the boutique hotel space and so tight Airbnb regulations. Near impossible to ever build other hotels in a lot of these markets that we're in and that we like that it protects your investment. Less competition, lower risk of oversupply, oversaturation. If you look at all these real estate markets that everyone's flocking to, five, six years ago, Texas, Phoenix, yeah. Dallas, New Mexico, Austin, Orlando, right. All these areas coming back, they all have these cranes in the air now. There's. There's new. New high rises, new buildings popping up left and right. They all have an oversupply issue now and negative declining rent growth as a function of it. So we like the bureaucracy, the red tape. We understand it, and it's in our backyard as well, bro.
- [14:26]
B
I feel that people that don't know California, number one, you wouldn't know why we're here, but number two, people that operate in California are the best operators in the nation because we have so many regulations, not just in contracting, like you said, in real estate, Airbnb and all that. Like, you got to be a. You got to be a different type of animal to be able to grow any type of business here in California, bro. Just the labor regulations, the law, the regulations in, in. In. In business in general, and the people. If you can operate a business in California, you can operate a business anywhere. I don't care what you say.
- [15:00]
A
Yeah, 100%, man. So you say marketing and sales, and obviously now technicians are involved. My question to you, and I'm sure that you've looked at this, I I don't know your industry, but the first thing that I thought of when, when you talked about scaling and, and increasing the revenue is okay, well what would it look like if you had a sales guy that just knew sales and was a killer in sales, doesn't know how to do the installs and they do the sales and upsells.
- [15:24]
B
There's a vision for you guys here too.
- [15:26]
A
What would that look like? Or the other option is like do you take a good sales guy that has a sales background and teach them how to do the technician stuff? Or the third option is you take a technician and teach him sales. What are the. What out of those three paths, which one is the winner?
- [15:41]
B
All three.
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A
All three.
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B
We will take a sales guy and 30 days. We can teach you our industry and put you inside a home and you're creating revenue. We could take a technician and, and teach him some communication skills and improve his performance inside the home. We can, we can. As long as you have the gift of sales though. That's what people don't understand. Like cells. Yeah, you can teach people a little bit and they could improve their communication skills. They could improve, you know, they, they could become. There's tactics to becoming. But the real fucking sharks, they're born with it, bro. You're a salesman, I'm a salesman. You know what I'm saying? Like real salesmen, real sharks, real lions, they're born with that. You can't teach people that. Those are the hyper for dude, we have, we had a plumber at next gen air conditioning that was selling $8 million of plumbing a year. We had a H vac guy that was doing $12 million a year. He was netting $1.1 million take home. Like we have high performing sales reps and project manager, we call them project manager, sales rep in our industry. That's the one thing that, that I love about our industry. It is a competitive industry to come in here.
- [16:49]
A
It's so good. We just had a big unlock within the business. Check this out, you'll like this because you like sales. The Shelby SAP Academy. You know Shelby SAP, she's got this high ticket closing sales academy for, for women, right? And you know, in our industry, business, real estate, home services, mostly men, right? And so, so yeah, if you have a woman that's a killer in sales, a lot of these guys crumble. They're like yo, right? And so anyways, so we started working with some Shelby SAP, you know, closers and, and so I thought, well, phone
- [17:24]
B
closers or in Home plus or Video closures.
- [17:27]
A
Virtual. Virtual. So, so, so I thought that up, right? So my core business is in the hotel game, right? And so I thought, well, what if. What if we hire one or two and we start literally just calling all of our guests that book reservations at the hotels and say, hey, Ismail, just want to say thank you for booking with us. I see you and your spouse are coming out for holiday weekend. What brings you out to the. Whatever, you know, and just get them set up, get them warmed up. By the way, just wanted to welcome you, make sure that, that, that we're going to make your experience as good as possible. A couple of the packages a lot of our guests like to use and utilize, that's very highly reviewed, is this, this and that. And then just casually mentioning what we have and seeing if they lean in, people that lean in, it's like, cool. Let's sell them, right? And so we started testing this recently, and it's just literally virtual. These salespeople and I gave them, we give them a script. We're having them test different offers, and I'm realizing it's working. And they can literally sell basically anything. So, like, we got this one package. It's like, let's just sell for 150 bucks. Call it Cali Unwind. We used to sell it on our site for 99. Okay. Bottle of wine gets like a little local charcuterie. And then at late checkout, 99 bucks. We used to just sell it at checkout. And so I said, now we got people on the phone, let's just sell it for 150. And it's selling like hotcakes. And so I'm like, okay, we can lean into this. But now I just gotta scale it because this is the bottleneck. We had 11,000 guests stay at our hotels last month in the month of May. And these dialers can only talk to so many people, of course. So we need to scale that a little bit. We need to get them dialers. And. But. But the main thing is we tested it. How do you work double down?
- [18:59]
B
How do you scale it?
- [19:00]
A
So we need to get dialers so they can have spend less time dialing people and more time on meaningful conversations. Okay, and then we need.
- [19:08]
B
How do you scrub them?
- [19:08]
A
And then we need more people. And how do we scrub this?
- [19:12]
B
How do you scrub the.
- [19:13]
A
Well, these are all qualified leads because they've already bought. They've already reserved a reservation with us, so they're already customers and they're coming to stay at one of our properties.
- [19:19]
B
Do a two Step closer. You're just. As soon as they, you know, the dollars go on, somebody picks up the closers on the, on the, on the phone.
- [19:27]
A
There's no, there's not two closers. That just one person that's good on the phones. They can answer questions. They can welcome to the property. Even if they don't buy something, it's still a nice touch and first impression for the guests because it's like, damn, these guys really, these guys really care, you know?
- [19:41]
B
Genius.
- [19:42]
A
And so anyways, I realize you can sell anything as long as you offer it. As long as you offer it and as long as you have something good.
- [19:50]
B
That's it.
- [19:50]
A
And that's it, man. So anyways, I'm curious right now. You got this new company, man, 160 million. And, and, and what's the goal for this third one? Are you going to hold out for a, for a.
- [20:03]
B
I've been self funding this. I'm 22 mil deep into it already.
- [20:07]
A
Okay. I've been in the hole for what
- [20:09]
B
you guys caught in the tech industry. You've been bootstrapping it. I've been bootstrapping it the whole time. And I'm trying to hold it as much as I can because I just see the, you know, our revenue spikes, you know, month over month. So I'm trying to hold it as much as possible. My goal, my ultimate goal is to take it ipo because then, you know, you've done it at. I've done it and I don't want to sound cocky or arrogant, but you know, if you could, if you could build a business at 20 and then you could build a business at 100 and then you could take another one IPO then you know, that just, it just polishes you up as a, as an operator. So my goal is to take it IPO in the next year or two. Obviously, you know, we still got a long ways from there, but yeah, I would.
- [20:48]
A
My going public 100%. I love it.
- [20:51]
B
The first since, since day one, I've been saying I have videos on my Instagram and yeah on my social media that I've been saying like I want to take this company public just so I can just. Number one, when I heard, I think it was the CEO of Google or that said all the big boys play in the public sector. That. And you know, I'm a competitive person. So I've always, I've always wanted to compete with the best.
- [21:13]
A
Yeah, I like that. And what makes this company today that you have different than the other ones
- [21:18]
B
you had Nobody's charging a membership, nobody's charging a monitoring or subscription fee for monitoring their energy inside their, their comfort inside their, their house. So we monitor their, their runtime on their ac. We monitor water, we monitor gas, we monitor humidity, we monitor air quality inside there. It's, you know, where I took the idea from was from the alarm people. The alarm people have an alarm panel with their logo in their, in their contract, their information on the, on the, on, on the keypad. Well, for the last 20, 30 years that we've been installing air conditioning in people's homes, or 50 years, however long it's been, we've been installing Honeywell, Echo Bee Nest, just brand, just regular branded thermostat. Meaning if the homeowner needs them, what do they do? They grab a phone and they look for a contractor instead of the contractor being the provider inside the, the thermostat. So that's where I got the idea from. You know, luckily we've.
- [22:11]
A
And what do you guys charge for that? The subscription.
- [22:13]
B
There's four different options, 500 to 2000 bucks depending on the features that they want to turn on per month. And then we sell the, the, the hardware separate as well.
- [22:24]
A
Okay. And so 500 to 2,000amonth, different features on it.
- [22:27]
B
Yeah, the 500 basic one just gets you your logo on each thermostat. No custom app, none of that. And then the 2000 premium, you could message the consumer on the thermostat on the app. You could do, you could turn on their systems from your office, test them out, make sure they're running efficiently, they're running properly. So we have a bunch of features that we educate the, the contractors on, on why they should go with our premium package. So I like that.
- [22:51]
A
That's interesting. Subscription model for, for the home services.
- [22:54]
B
It's the first one, so it's hard, but you know, we're getting that.
- [22:58]
A
Yeah. And are you still wrapping the, the H vac, the plumbing and electrical into this?
- [23:02]
B
2027 is my. April 2027. My non compete is over. So I'm going to start another eight track electrical plumbing business and, and I'm still going to keep Nu going.
- [23:12]
A
Got it. Okay. Okay. Okay. So this is strictly just, this is
- [23:16]
B
my, yeah, my whole focus and energy and time is on my thermostat right now.
- [23:20]
A
Been hanging out in California too long, man.
- [23:23]
B
Way too long.
- [23:23]
A
Yeah. Yeah. But the, the Iran war that went down, that, that was a good reminder that, that regardless of all this energy stuff, the world, the world economy still runs on oil, bro.
- [23:34]
B
We're, we're, we're gravy. Yeah, we're gravy.
- [23:37]
A
Eight bucks a gallon at the pump these days, man. California, man.
- [23:40]
B
Tell me about it.
- [23:41]
A
Yeah, so I want to run through some, you, you have some, some viral videos on social media and I want to run through some of the stuff that, that you've said here. So this one's interesting because I actually have my last name into my brand. And you say CEO's hot. Take your last name could be costing you money. Spit some game on that, bro.
- [24:02]
B
I've been telling contractors for the longest, like you guys got to come up with a, the point of a logo and the point of a company name is for a consumer to see you and your service and be able to remember you, right? If they're going to judge you before they use you, you already lost. If they're going to judge you, let's say you're going to name your company Rodriguez, you know, Concrete. If I see Rodriguez Concrete on a magazine, on a Facebook ad or on a Google Ad or on, on tv, I'm going to assume it's a Hispanic name, right? It's a Mexican owned company. Right. Half of the people might not even use you because they already see like, oh, I don't want to deal with them. Not, not because the races or whatever. It would, it would increase the, the opportunity to get inside the home just by changing the name. Because instead of being judged at, at first sight, they're going to be like, okay, cool. I could see myself using that. That's why I named my, my. All my company names have been neutral, right. They're rememberable, they're catchy, they're simple. They're usually four to six words, four to six letters. And that's the point of a logo. The point of a logo is not for them to judge you and, and to start assuming things. The point of, of a logo is for them to look at you and recognize you and be like, okay, when I need you, I'm going to go there, right? Make it rememberable. Like example, Apple, Coca Cola, Tesla. You don't see Elon Musk naming Tesla Musk Motors.
- [25:25]
A
Yeah, right? Yeah.
- [25:26]
B
You don't see them doing, you don't see him doing that. He came up with a, with a, with a neutral name that means something to him, right? The Tesla energy company or the Tesla was the guy that could create energy. Whatever he was, he, that's, that's his name. Same thing with Apple, same thing with Coco. Like all these, you know, catchy Neutral names is, is what got them to be a huge enterprise company. I guarantee you if you rename Coca Cola and you name it, you know, Jose's Coke drink, then you're going to target that certain ethnicity and they're going to buy your drinks. What about the other 80, 90% of the people that wanted to buy it? You know what I'm saying? Kind, kind of like Jitos. Do you guys, if you guys ever heard of the drink Haritos. Jitos is one of the biggest soft drinks soda pops in Mexico, not here in the United States.
- [26:16]
A
Yeah, right. Yeah, I agree. I, I, I agree 100%. Now people put LLC and Inc in their, in their, their business name too. What are your, what are your thoughts on that?
- [26:26]
B
Stop. Look, contractors, you guys got to stop that nonsense of putting your, you know, of putting the ink and the LLC letters at the end of your name on your trucks, on your billboards, on, on your magazines, on your advertising. Nobody cares about that. Like, try to keep your logo simple, clear and legible. You don't need to add ink onto it. Nobody, nobody's going to say, oh, I want to use that company because it says ink on it, or I don't. I want to use that company because it says llc. Like, if you looked at all the way, we would advertise next gen and, and home comfort, it just said that home comfort, next gen air conditioning. Right. It, Keep it simple. Don't, don't try to, don't try to overcoat. Kind of like the con. Look, I'll give you one example, Rich, that the contractors, that contractors do really bad when they're wrapping their vats.
- [27:15]
A
Okay, let's hear it.
- [27:16]
B
They put, you know, next gen air conditioning, and then they put tankless water heaters, water heaters, air conditioning, heating, plumbing, electric. Like they name all their services on their van broke. And it's like, like the, the point of a logo in a van is for them to see your logo and your service, remember you, and use you, your website, your gmb, your social media. That's where you put what you do not. Like, start putting a list of all your services on your van.
- [27:43]
A
Like,
- [27:45]
B
that's one of the things that, oh, there's many things they do wrong. But you know, that's what we're trying to do is help them out with that.
- [27:51]
A
You say real Salespeople are always 100 commission only.
- [27:55]
B
Always, Always.
- [27:57]
A
I agree with you, bro. I, I always laugh when I see like, salespeople trying to work with us or trying to work with others and they're like, they're like, hey, like, you know, I really value a base salary and like, you know, I really want to go somewhere that's going to give me a little base.
- [28:11]
B
Bro, if, if, if anybody walks into your operation and, and they're asking for hourly or a cushion or a salary and they're calling themselves sales rep. They're not sales reps. They're not real sales reps. Kill. What do they say? Kill with the ear. What they kill. That's what a real sales rep does. You know what a real project manager sales rep does? They negotiate a percentage of what they're trying to earn. They don't negotiate, they don't care about their hourly, they don't care about a base. Because if they cared about that, they're not going to be out there hustling. They're not going to be out there grinding on the phones. They're not going to be out there knocking on doors. They're not going to be out there, you know, trying to produce different avenues of revenue for you. They're going to be comfortable chilling if they sell cool. And if they don't sell cool. That's not what a real sales rep is. A real sales rep is under pressure every single day trying to close deals. You should see the guys that I just hired at nuve, bro. And I made this mistake, by the way. I made this mistake. The prior CRO that I hired said, you know what he told me? Ishmael? In the, in the, in the SaaS industry, right? In the software industry, all sales guys get paid a base salary and a commission. All sales guys get paid. And I'm like, I don't know if I could agree with that. So I let him run with it. Yeah, he was, he came from a good referral. He was up, you know, he talked the game, he brought in, he hired a bunch of sales guys.
- [29:31]
A
And you gave him a salary?
- [29:32]
B
80 to a hundred thousand dollar salary plus commission. And I'm walking into my office and I see these guys just chilling, just chilling. And I'm like, hey, you got a demo today? No, no demos today. I'm like, so what are you gonna do? Oh, well, I'm waiting for them to give me a demo. I'm like, that's the problem. A real sales guy's not gonna wait around and be like, well, I'm just waiting for somebody to. No, they're gonna be out there pounding the phones, get me on a demo, but be posting on social media. Good, I'll go, I'll go. Knock on the door right now to get a sale, right? And that's it. Dude, I wiped out my whole sales department two months ago. Three months ago, I had to let him go because he didn't believe in the in. In what I told them real sales guys get paid on commission. I just hired six. No, sorry, eight brand new sales reps that are all commission based. You know what, they're broken on demos, bro. I'll, I'll close anything. That's a real sales guy. If they're asking for a salary, please, please, 100%.
- [30:28]
A
And I think the number, the number one thing is with, with sales guys is you got to make sure they're money motivated all day, baby. You got to make sure they're money motivated.
- [30:36]
B
Yeah, you got to make it easy for them to make. No, no, not make it easy for them. You got to make it obtainable for them to make a ton of money obtainable for them to make. Dude, everything's a competition. So I took the position as a CRO. I had to let him go. And now I'm building a sales department, bro. Every day on a group message, I have 11 of my. Of my sales rep. Hey, whoever closed the next deal, 500 bucks. Hey, whoever closed the next deal, a thousand bucks. Hey, no discounts on this price. Boom. Whoever books the next lead, all day long, bro. You all the home comfort next gen. That's how we're able to scale these businesses. Everything's a competition. Everything. Hey, whoever sells the most deals for the month, 5,000 bucks. Whoever closes has the highest closing percentage. $10,000 in one month as a bonus, plus their commission, plus other avenues that they're making. So you guys got to learn how to pay people to incentivize them to create the growth.
- [31:29]
A
Yeah, 100%. And I think the more that I pay and compensate team members based on performance. And it's not just sales, but it's everything from the media. You know, we're recording a podcast right now. When we get out of this, my editors are, are compensated and bonus at the end of every month for any videos that hit X amount of views. And so any video at the end of every month that hits a million plus views, they get a thousand dollar bonus. Any video that gets a five, a 500,000 views, they get a 500 bonus. 250. 250. And so you know what this does is now when I get out of this podcast, they're both going to be fighting over who gets to chop up the best content. They're going to spend the extra 10 or 15 minutes on each video, the a. B. Testing everything like that because it affects their paycheck.
- [32:14]
B
Dude, I'll give you a story. I had my market. I have seven people in my marketing team for nuve, and we're doing this event in Anaheim, and I'm like, hey, it's a thousand seats. It's, you know, 500A seats. Half a million dollars worth of revenue coming just from there. I'm like, if we sell out this place, you guys get a bonus, right? I told him, if you guys do 50% capacity, you guys get $2,500. If you guys do 75% capacity, you guys get, you know, $7,500. If you guys get 100% capacity, 10,000 bucks or something. Sold it out. You know what they were doing at 7, 8, 9pm respond, banging the phone. Hey, here's the link. Hey, like, going above and beyond. That's what pavement plans do to the operation. I don't care if you're in real estate. I don't care if you're in contracting or in social media or in restaurants. You got to learn to pay people properly where they go out there and actually hustle. Because, look, most of our employees, as sad as it sounds, most of. Of of the companies out there have a 50% employee. Half of their mind is at work. Half of their mind is worried about financial issues. Take that fucking financial issues from that away from them and have a hundred percent employee inside the operation. And watch how your fucking company just skyrockets.
- [33:25]
A
That's so good. That's some game right there. Would you say that's. That's the number one piece of advice for a founder? Growing that, growing a team?
- [33:31]
B
Besides marketing? Yes. Marketing is 100% the most important part of growing an operation. The second most important and right. Right next to it is recruiting and
- [33:43]
A
building a team 100% and compensating them based on performance.
- [33:48]
B
Amen. Amen. You cannot pay people hourly in this day and age, because if you pay people what you're gonna get for an hourly employee, they're gonna go clock in, clock out, go home and do a side hustle instead of clock in, clock out. And then at home, they're thinking about how to, oh, I just sold this, or I just did this, or I'm gonna do this, or I'm gonna, you know, bring it up to my manager. They're thinking about how to improve the operation because they know that they're gonna get paid more if this happens, right? So, yeah, there you you got to learn how to compensate these.
- [34:19]
A
When you say Marketing is number one, 100, are you talking organic social media? Are you talking running paid ads? Are you talking referral beginning getting our reviews out there on Yelp and Google? What are you talking when you say. When I say, when you say marketing
- [34:34]
B
specifically for the home service industry. When I say marketing every home service industry. Depending on if you're a demand based business or a non demand based business. There's two different type of businesses in the home service industry. A demand B based business, plumbing, electrical, air conditioning, roofing. Something happens, they got to get it fixed right away. That's a demand based business. A non demand based business. Flooring, you know, carpets, fucking windows, shades, doors. Like nobody wakes up and says today I have to replace my doors or today I have to replace my flooring. You know, they wake up and they go like, oh man, you know what feel like, you know, redoing my, my flooring today. You know, I'm going to just start doing my research and they start looking. On social media, that's a non, that's a non demand based business. Demand based businesses. You live on Google, on Yelp, on social media, on direct mail all day long. All day long. Non demand based social media. Anything visual. Anything visual. Non demand based business. Anything visual. Which means, you know, direct mail, magazines, social media, TV, YouTube. Non demand based businesses are visual. Example. Flooring an example, you know, windows, right? Doors, stucco, paint.
- [35:50]
A
Can you define again? Demand based business and non demand.
- [35:54]
B
Demand based businesses are, are, are when customers need you, they have to have it.
- [35:58]
A
Meaning if your AC breaks and it's
- [36:01]
B
100 degrees, 100 degrees, that's a demand. They, they need to get their ac.
- [36:05]
A
Everything stops until it gets fixed. Yeah.
- [36:06]
B
If a water leak happens right now, what happens? You got to call plumber.
- [36:10]
A
Yeah.
- [36:10]
B
What are you going to wait till the whole thing floods out or you, you get. Those are demand based businesses. Those are all Google driven, Google driven, Yelp driven. People are going to go and look for you on Google. If they see, you know, water coming out of their concrete, their toilet is, you know, splattering or their shower is not flushing like they're going to call,
- [36:29]
A
they're going to call the first number that pops up that has good reviews,
- [36:32]
B
Google, that has good reviews and they're going to get somebody out there and
- [36:35]
A
the only way, the only way to get ranked high is right. Either good reviews or you're paying your sponsoring right reviews.
- [36:42]
B
This is, this is the look I'm, I'm going to put you guys on game if you are. If you want to increase conversion on Google reviews, rating responsiveness is the key essentials of get making sure that you guys get more leads on Google. Google hates when they somebody sends a message to you on Yelp or Google or somebody calls you and you don't call them back. Like they're tracking all that, bro. They're tracking all that. The have you gone on Yelp and it says response time 30 minutes response time, three days response time. Like average response time on the corner of the Yelp ads or Google Ads, sometimes they'll tell you what the response is. Like they, they will give you la less leads. If it takes you three days to respond, like what? Number one, why would it take you more than three seconds to respond to somebody that's trying to invest money into your company?
- [37:36]
A
Because they got the wrong people in place.
- [37:37]
B
Amen.
- [37:38]
A
Yeah, Amen. So you say your employees are either building your business or they're breaking your business.
- [37:44]
B
Amen, bro. Amen. Then the way you compensate it is what's going to. The way you're compensating your employees is what's going to dictate if they're building it or if they're fucking trashing it. And you, you, dude, you could tell right away. Look at this is what I tell my contractors in general. If you, most of you guys are stuck below $2 million. If you've been stuck below $2 million for 5 years, 10 years, 15 years, it's your people. It's your people. We are in the contracting in the home service industry is all people driven. I guarantee you, you grab, you're stuck below $2 million. You've been there for five years and you don't know what to do. Hire a fucking shark of a sales guy and watch him take you to 5 mil. Hire a shark of a general manager. Watch, watch him take you to 5, 10 mil. What? Hire a shark of a, a CRO or a CFO. Watch them take. You're one hire away from 5 mil. You're a couple hires away from 10 mil. You're a team away from 25, 30, 40 mil. Come on.
- [38:41]
A
That's some game. That's some game right there. I like that. I like that. Okay. You say who the f cares nobody about the World Cup. Who the f cares about the World Cup? What do you mean by that?
- [38:54]
B
Look, especially our people, bro. And I speak to my people because I love you guys. And, and when I speak to you guys in, in, in, in, in these terms like who the Cares about the World Cup. I don't mean it to trash on the World Cup. If you're struggling to pay bills, if you're in debt, if your credit. If you're. If your credit cards are maxed out, why would you take a day off to go to a watch party, bro? Why would you, you know, ask for a loan to go buy a ticket to go into a World Cup? Get your shit together, then do all that. That's all I'm saying. And I don't. And I think people take it, you know, especially in social media, since it's so black and white. They run with just the first snip of it. Like, until you get your shit together, you shouldn't be at a watch party. Until you get your shit together, you shouldn't be at a fucking club or a bar.
- [39:43]
A
You know how. You know how many. How much World Cup I've watched so far, bro?
- [39:46]
B
I just asked today who won yesterday?
- [39:48]
A
I. I've watched zero, and I hear what's going on. People are like, oh, this and that. And I think it's great. And trust me, I like sports. I respect the athletes. I think it's.
- [39:55]
B
Bro, I love it.
- [39:57]
A
But you know how much World Cup I've watched? Not even one minute. You know how many NBA, The NBA playoffs just happened? You know how much I watch? Not one minute. It's not that I don't love sports. I love sports. I just. I'm so obsessed with the game that I, like, I haven't even gave that any attention.
- [40:14]
B
Amen.
- [40:14]
A
Because I'm so focused on playing my own game. That's why you're like, this is my own game that I'm.
- [40:18]
B
That's why you're where you're at, bro. You know, that's why you're where you're at.
- [40:21]
A
And to me, that's more exciting.
- [40:22]
B
Amen. You should. If, If. If people in general were obsessed with building a business as much as they're obsessed with the World cup or with the basketball series or with an MLB game or with a football team, like, you know what. What trips me the out, bro? When I'm. When. When I see people on the streets or I, you know, happen to turn on a TV and they're like, raidered out, or they got 49ers, like, all face mask and makeup done, and I'm, like, sitting there, I'm like, that took three, four hours to get done, bro, out of your day when you could have been working on business, working on, you know, building something for yourself or Working on becoming a better version of yourself. That took three, four hour. And you're doing that two, three times a week. That took 20 hours of your life to go and fucking put makeup on and cheer on a team that doesn't even know who you are.
- [41:14]
A
Yeah, it's like, what if you put that same effort into, into business, into
- [41:18]
B
yourself, into your personal development. Into the gym, bro. Yes, into the gym. I guarantee you, if you took, if you instead of watching the super bowl game, instead of watching the, the, the World cup for two hours, you go to the gym for two hours, your ROI is going to be substantial on, on the gym instead of these, you know.
- [41:38]
A
Yeah, I get passionate about this 100%. No, I get it, I get it. All right, next up, you say people aren't focused on the right things. Going to watch parties over, staying home and grinding on your goals. Piggyback off of what you just said.
- [41:54]
B
They're focused on the wrong things. Meaning instead if. And, and I'm, and I'm speaking to my community because my community does this the most. If you're living at your in laws, if you're living with paycheck to paycheck, if you are, you know, sharing apartments with, with roommates and, and, and like, if you're doing all that just to scrape by but you're at the World cup, shame on you, bro. Shame if you're. Dude, I saw some videos of, you know, Mexico won yesterday. Congratulations, Mexico, I love you guys. Congratulations on that win. But I saw in Orange county, in Santa Ana, there's thousands of people, you know, rallying up cars and, you know, throwing beers everywhere and in the middle of the streets. Thousands, bro. There's, it has to be 5, 10,000 people because Mexico won. And I'm like, that's how you want to celebrate? What's wrong with celebrating at home with your family? What's wrong with celebrating with, at home with your friends? What's wrong with celebrating at home, you know, in, in a peaceful manner? Now we're, now us. We're going to be on television all over nationwide looking like that. And why do you think we had to have a bad reputation in this country because of like that? Because of like that? There's nothing, bro. I've seen, you know, Korea win. I seen us win. I seen all these countries win, South Africa win. I don't see all these people in the middle of the streets throwing bottles and, you know, shaking cars and, you know, blocking freeways and I don't see that.
- [43:36]
A
Yeah, why do you think that Is
- [43:38]
B
again, it's our people not being focused, man. People are not focused. Our people think that, you know, it's every four years, Ishmael's chill. It's every. You're nobody to tell us what to do. Of course I'm nobody to tell you. I'm just here to tell you that there's better things that you guys should be investing your time in than, you know, being drunk at a watch party.
- [43:58]
A
Speaking of the watch party, my man's got a bright orange watch on his wrist right there.
- [44:02]
B
I love this one.
- [44:03]
A
Yeah.
- [44:03]
B
Yeah.
- [44:03]
A
What is this?
- [44:04]
B
A Richard?
- [44:05]
A
What kind of Richard Mille is that?
- [44:07]
B
I don't know, bro.
- [44:08]
A
Oscar knows watches. Oscar? What kind of Richard Mille is that? He said it's definitely custom made. Okay.
- [44:12]
B
The diamonds, I know they're factory, though. They're not. They're not busted. I don't know.
- [44:17]
A
Yeah. So. So. So you guys know I don't know watches. Initial say he's not a watch guy either. But Oscar, who's been shooting this for a minute with me since the beginning, he knows all the. The watches. So he always. He always fills me in and he tells me how much they cost, too.
- [44:32]
B
I'm pretty sure it's a pretty penny what I did, dude. If I like something, I grab it. And I'm going to take this from Dan Martell. When I look at my risk, I want to make sure that, you know, I look at it and I go like, okay, cool. We're on the right time. We're on my time. We're on my time. I've seen him talk about why he wears his Richard, Millie, and what it means to him, you know, and the value behind that. Richard Milley. And I completely agree with that. Well, whether it's a car or watch or. Or an experience, to me, I do things for myself just to remind me of how far we came, because 32 years ago, Rich, we were in Mexico. 33 years ago, we were, you know, we were orphaned, me and my brothers. We were orphans in Mexico. We weren't, you know, living this lavish life. So when I do things, buy a car or buy a watch or go on something dope like that just to remind myself that 32 years ago, we were. We were lost. We didn't. It was impossible. We. We didn't. We didn't even know the US Existed, to be honest with you.
- [45:26]
A
What is the number one piece of advice you would give to someone listening this right now? That. That is in the home service business or they want to get into the home service business. Would you say, well actually let me back up a step. Is someone listening that wants to get into the home service business tomorrow? Would you say go start from the ground up, start from scratch? Or would you say go buy an existing home service business and then build it from there?
- [45:48]
B
Don't ever buy an existing home service business. If you've never been in this home service industry. And this is what pisses me off about social media and the dumbass influencers on here, that how many times have you heard, oh, just go buy a business from a boomer. Just go buy a plumbing business from a boomer that's getting to retire. Like you don't think they're, they have a brain and they're going to be like, bro, I'm making millions of dollars. Why would I just hand you my business? No, that's a bro. That, that is the stupidest advice in the whole wide world. And I seen everybody and their mothers give that advice. You don't just go buy a, a self funded, you know, boomer. No, no, that bro, you know what you do is you get into the trades and you learn the trades. I've given this blueprint out to everybody before. There's a four year period that everybody should. If you want to build a business in the home service industry, first year, go work for a 1 to $5 million company. Second year, go work for a 5 to $25 million company. Third year, go work for a $50 million company. Plus, every single one of those companies are going to teach you something inside the operation. Some of them market better, some of them pay better, some of them run a better install process, a better sales process, a better in house support process. In the fourth year, that's when you start your business. That's the four year plan blueprint that I've given out to everybody that wants to come inside the, the home service industry. The last thing you want to do is come in with no experience and be like, yeah, I'm just going to go buy a plumbing business. You're going to fall on your ass, I promise you, you're going to fall on your ass. Go work, go work inside the operation. Learn the ins and outs. Three to four years, no more than four years. I promise you. If anybody that's 18, 20 years old doesn't know what to do with their life right now, go and work for a plumber right now. Let me ask for an electrician right now.
- [47:34]
A
And I love that advice. But let me ask you a question. What would need to be True. If someone that is already successful in business and they've grown a couple of successful businesses outside the home service industry, if they wanted to go get in the game, what would need to be true in order for them to get in the game and not have to go through the three years working for, for a couple of these companies for anybody?
- [47:57]
B
Now see, that's a smoother transition because they got the fundamentals of the business side down. Now they just need to learn the people side inside the industry.
- [48:04]
A
Okay?
- [48:04]
B
And that's what's going to make or break the business.
- [48:06]
A
And so what would be their blueprint?
- [48:08]
B
So, so look at perfect question to what's happening in our industry right now? Okay, what's happening in our industry right now is that all these sharks called private equity bankers, you know, VCs, they all saw our industry and saw how much money we're making and they're coming into our industry bundling, buying all these businesses, bundling it up and selling them to the next buyer. There's two things that they're doing. There's one thing that they're doing really good and they're one thing that they're doing really bad. One thing that they're really doing really bad. They are just numbers, numbers, numbers, numbers. And that's not the way contracting is. The home service industry is, it's all people, people, people, people. So if you are, if you've grown a couple of successful businesses and you want to come in here and grab some, you know, buy a couple of plumbing companies, bundle them up, learn the people first. Learn the people first. I promise you. You learn the people. You, you learn how to pay them, how to treat them, how to, how to make them better, how to give them more opportunities that than their previous employee. You will always have a successful business. You come in here and think it, thinks it, think it's a numbers game, you're gonna fall on your ass because that's what these private equity groups are doing. And half of the private equity groups that came into our industry are falling flat on their ass. Meaning they're like stuck with a, you know, a bad business now because they thought everything was numbers. And half of them are thriving and killing it because they know that it's, that the business is driven on people, not, not just numbers.
- [49:30]
A
I see a lot of people on social media talking about private equities, buying up these businesses, they're combining them up in a roll up and then they're selling them to the next buyer, making a ton of money. And you could do it too, you can do exactly what the private equity people are doing. It's easy. Why not go buy five of them, roll them up, go some of the next guy make a profit. It's easy, it's repeatable. All you got to do is go do it. What do you say to those people?
- [49:51]
B
Those people are bullshitting you. And that would be the stupidest advice that somebody can give you. You don't just go buy four or five plumbing companies up and roll them up and sell them to the next buyer. That, that doesn't happen because when you are doing a transaction, transaction and buying four or five companies, there's a ton of things that need to go into place so it can make it a successful transition for the next buyer. It's not just, oh yeah, I'm just going to go buy, you know, four, four of these two little million dollar companies and put them together and sell. That doesn't happen. You need to learn how to, number one, how to manage those people, how to keep them. Because if they leave, your business is shit. If the people that you're buying, the companies leave, your business will go down to shit. So before you make that strategic move of going in there and just buying, acquiring businesses, go and talk to the people, go and learn them. Go and see how you, how you could better their life so they don't leave. Because if they don't leave, you got something good. But if they leave just because they're, they're going to come in, they're, they're going to see you as an opportunity. Well, if you don't give me this, I'm just going to go and do it myself. Or if you don't give me this, I'm going to, I'm just gonna, you know, go work for somebody else. So learn the people first and then the business side of it, the people are the most important part inside the operation.
- [50:59]
A
There it is. Ishmael, I appreciate you coming on the show. My man jobbing. So much game, so much value. I love everything you're doing. I'm a fan. And next time we get you on, we're gonna have to wrap and maybe you'll be have your third exit by then. You're gonna, you're gonna be down, you're gonna be done with your, your.
- [51:14]
B
I'm working on it, man. I'm working on it. Yeah.
- [51:16]
A
Yeah. So where can the folks get in touch if they want to learn more about, about everything that you're doing, your university stuff, all that stuff?
- [51:21]
B
I have a free Facebook group that I have over 11,000 contractors on CEO contractors, all ranging between 1 million and 100 million, called Nuva Contractor University on Facebook. That's a private group. And then if you guys want to reach me on, on Instagram, it's Svaldez, or I think it's Ishmael, new CEO on Instagram. But for, for contractors that want to get in touch with us, the best way is go on our Facebook group. It's a free group. I'm there posting. I'm there doing lives. I'm there answering questions. We're talking financials, operations, sales. Like, we just. It's. It's a really. It's a really good group that it took me almost four years to get up to 11,000 contractors.
- [51:59]
A
And by the way, Ishmael's hooking us up with a. No. Custom thermostat, which I'm excited about that I got you. Yes, he is Ishmael Valdez. Rocking the Richard Mill. I'm Rich Summers. Listen, listeners, thanks for tuning in. We'll see you guys in the next one.
- [52:11]
B
Peace.