Making Tough Decisions: How to Guide Your Business Through Economic Challenges

Speaker 1 whether you're a 1 million a 5 million a 50 million or 100 million dollar company your main focus for 2024 should be do more with what you got coming in instead of thinking that somebody's going to come and save the day for you or the month or the year for you that's not going to happen and when you stop worrying about what's going to happen in the outside world if wall street's going to turn down the interest rates if all of a sudden the banks are going to you know have this magical moment and we're going to go back to 2022 interest rates we got to stop focusing on that because we have no control over that that.

Speaker 1 And we got to start focusing on our operation, our people, loving on our people because that's the number one asset that we have is loving and taking care and making sure that

Speaker 1 we're helping them through these rough times. Because just like the business has rough times, people have rough times personally.

Speaker 1 And we got to make sure that their mindset and their focus for us to be able to go back to

Speaker 1 what a successful year looks like.

Speaker 2 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.

Speaker 2 Now, your host, the Home Service Millionaire, Tommy Mellow.

Speaker 4 Before we get started, I wanted to share two important things with you. First, I want you to implement what you learned today.

Speaker 4 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 ask the team to take notes for you.
Just text notes, N-O-T-E-S to 888-526-1299.

Speaker 4 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.

Speaker 4 I'll share with you how I attracted and developed a winning team that helped me build a $200 million company in 22 states. Just go to elevateandwin.com forward slash podcast to get your copy.

Speaker 4 Now let's go back into the interview.

Speaker 3 All right, guys, welcome back to the Home Service Expert. Today, I have a good buddy of mine who's changing the game in HVAC.
His name is Ishmael Valdez. He's located in Orange County.

Speaker 3 A lot of you guys have probably been to his shop. He owns and runs a company called NextGen.

Speaker 3 Also,

Speaker 3 been able to spread his wings a little bit, and he started a new thermostat company called Nuve, which is going to be changing the game.

Speaker 3 He's also invested in some restaurants, started a roofing company. He's He's a man of many talents, but

Speaker 3 he understands customer service, recruiting, and management. He's the CEO of NextGen, an HVAC and plumbing company, Nuve Home, a smart home technology company.

Speaker 3 He started working as the counter guy of a wholesale distributor to starting and growing his own business.

Speaker 3 He grew his company from zero to 24 million in three years and they moved up to 30 million in the fourth year as the CEO of the number one HVAC company in Southern California.

Speaker 3 NextGen has grown to become an impressive family owned and operated HVAC business by sticking to the basics.

Speaker 3 Superior customer service, data efficiency, and highly trained staff of technicians and contractors. HML, always a pleasure.

Speaker 1 Thomas,

Speaker 1 you make me feel like I actually know what I'm doing for once, okay? You actually make me feel like I did something.

Speaker 1 It's hard for me to feel that way. You made me feel for the first time.

Speaker 3 Well, listen, man, you know what's interesting is we're in this group of guys that are pretty uber successful. Yes, yes.
And we're always learning from each other.

Speaker 3 We just talked about rebates that we're getting on our wax cards. I get about 20 cents on every gallon.
And we always talk about negotiating.

Speaker 3 I just asked you guys if you take checks or because a lot of my checks have been, so we lean on each other a lot. And it's been amazing.

Speaker 3 And you kind of been to the point now where you've had a lot happen in the last year. Obviously, you've you've started some different companies.
You've been doing a lot for a lot of people.

Speaker 3 You still are extremely generous with your time helping companies out. But let's talk a little bit about, I know you recently decided I'm going to go back in and start showing up every day.

Speaker 3 You've got four daughters. So you wanted to be, you had to catch up, be a good dad.

Speaker 1 That was my 2022.

Speaker 1 That was my 2023.

Speaker 3 Talk a little bit about 2023 and where your focus is going into this new year.

Speaker 1 Oh, man, I think 2023, Tommy, Tommy, has been like probably one of my chillest years where I kind of took a step back from next gen. You know,

Speaker 1 I still did the data cube. I still did NUVA.
I still did, you know, I still had different ventures that I started, but I kind of took a step back and actually worked on myself. I started working out.

Speaker 1 I think I just got my first year anniversary working out. I started focusing on my daughters way more than what I was.

Speaker 1 They pretty much didn't have a father for the first, you know, six to eight years of their lives. You know, they're all, they're all small girls too.
So I was able to really spend time with them.

Speaker 1 I'm still spending time with them. But 2023 was my refocus going back to my girls and kind of an apology year for them.
So I can spend more time with them. I'm taking them to school.

Speaker 1 I'm picking them up. I'm taking them to dance.
I'm going to recitals.

Speaker 1 I'm taking them out on dates. I take

Speaker 1 one out on date every other day.

Speaker 1 2023 was my focus was to make sure that they knew that, hey, daddy's been super busy with all the things that he's got going on but you're still the most important people in his life so it was it was amazing to be able to do that um i'm back at next gen as an everyday grind because we didn't have the year that we wanted to in 2023 but i'm back at next gen uh every day showing up i get here 5 30 6 a.m every single day so i promised my team i was gonna i was gonna get next gen back to what 2022 was what got us to you know be acquired by ranch and and that's my main focus right now is my girls and and and next gen obviously I'm still going to pay attention to Nuve and DataCube and Hibachi and all the other ventures that I have and Legacy, the roofing company we just finalized on.

Speaker 1 But my main focus is going to be my girls and next gen for sure.

Speaker 3 So when you,

Speaker 3 you know, a lot of, a lot of times this happens. I mean, you bought a lot of real estate,

Speaker 3 you got paid a lot of money, you took a lot of chips off the table. Yes, sir.
And as an entrepreneur, a lot of us do the same things. We get ourselves invested into a lot of things, probably

Speaker 3 to the point where we can't keep up. And sometimes we need to reprioritize, kind of reflect and say, what's going to be the best move? And I know you and Ken Haynes discuss a lot of things.

Speaker 3 And he gave you a pretty hefty opportunity to push this year to the next level. Oh, yeah.
And so

Speaker 3 for you, it's like, what do you tell an entrepreneur that's got a lot of opportunity? It just, you know, they know they want to be a good father, a good husband.

Speaker 3 They know they want to try to communicate with their parents, be a good sibling to their brother or sister. They know they want to start taking care of their health and workout.

Speaker 3 They know they want to enjoy their family and friends. They also know they've got a lot of investments.
How do you, how do you handle all that? What's the best way to kind of

Speaker 1 look at? I'm going to tell you the best secret that helped me out get through 2023 and 2022. 2023 was a refocus into my girls, but it was also a refocus into myself.

Speaker 1 It doesn't matter the investments, the family, the friends, any of that. If you can't reinvest into yourself and give them the best version of you, 2023, I started working out.

Speaker 1 I hired a a full-time chef. I started, you know, taking care of myself mentally.
I started spending a little bit more time with myself and really digging into how can I better myself.

Speaker 1 If I can give the one advice to every entrepreneur is to give, if you want to give, you know, your family the best future,

Speaker 1 your coworkers

Speaker 1 the best work environment, your friends the best friend, like you want to give the best version of yourself to them. You got to start by working on yourself.

Speaker 1 And it all starts with health number one and physical health number one and mental health number two um 2023 was was a really really clear year for me to work on myself i'm only going to get better now but i would give them the advice of hey if you want to do all that you want to do the investments you want to do the you know blowing up a company you want to spend more time with your your family and friends and you want to spend more time with your with your with your immediate family your daughters your sons your wife your your girlfriend whatever it is you want to do that you got to work on yourself first it doesn't matter that everything else can wait because if you're just going to be giving giving a shitty version of yourself to everybody, everybody, you're always going to be stuck in that same level.

Speaker 1 And that's part of the LSD mindset that we have, or our little crew that we came up with, Tommy, is, hey, guys, let's start working on every single aspect of our lives, right?

Speaker 1 Everybody in the group started working out.

Speaker 1 Most of us in the group started taking sobriety times. You know, we're all holding each other accountable to a different standard now.
We're always asking, you know, good questions in there.

Speaker 1 So, so, what I would tell them is, look, work on yourself, find a group of of people that are just exactly as driven as you. And that's what I found in our LSD crew, Tommy, is it's seven of us.

Speaker 1 We're all very like-minded. We're very, you know, we're all ambitious hustlers.
We're all young, right?

Speaker 1 So I would work on myself and then find a group that's going to motivate me to go to the next level. And that's what I would tell every entrepreneur around there.

Speaker 1 The investments, the, you know, the next and all that. If you're not going to give your 100%

Speaker 1 of that, of yourself in each aspect of your life, you're shortcutting yourself. You're never going to go above

Speaker 1 where you capped off.

Speaker 3 You know, a lot of people, they ask me this same question. They're like, how many side hustles do you have? And I tell them, I've been doing garage rows for two decades.

Speaker 3 If you look at A1 garage rows like a bucket, it had to fill up into other opportunities.

Speaker 3 I don't believe in side hustles. I believe in going all in on something.
And then once it's super successful, it doesn't need you. You could go on and start doing more things.

Speaker 3 And it always will need you but the difference is is a lot of people they're like they're flipping real estate then they opened up a bar then they were looking at their home service company then they got another idea then they got another idea but they haven't had one thing be uber successful yet yeah and therefore they call it a side hustle so they're pulling away from one major thing that's really giving them money to invest in other things and rather than reinvest it and double down on it, they're like, oh, I got a really good idea.

Speaker 3 I've been watching this real estate investor, or I started doing Bitcoin trading, or I started an e-commerce site, or whatever it might be. What do you tell somebody?

Speaker 3 Like, you had an opportunity to take over 100 million out. So you could have, you got to put that money to work.
You had to find other investments.

Speaker 3 But a lot of people, they call it the side hustle, and I just don't believe in it. Like, what do you tell somebody that's got like three side hustles and then a successful home service company?

Speaker 1 The same thing that you just said, Tommy, and you're probably, and you're probably one of the most successful, if not the most successful person that has done it, is,

Speaker 1 hey, until you are, until you create one project, right? You did it for A1, I did it for NextGen, right? And there's not a lot of people

Speaker 1 in that same category that have done it in the amount of time that me and you did it.

Speaker 1 I would tell them exactly what you just told me: hey, until you've done that and you can set your family aside for generations to come, and now the money is just pouring in from interest, from different investments, until you do that, there's no side hustle.

Speaker 1 Like, I don't know if you know this, if you if you know this, but before, before next gen

Speaker 1 sold, I was 100 million percent into next gen.

Speaker 1 Like, I didn't have a bunch of noise outside of NextGen. It was all next gen.
I was showing up at 5 a.m., leaving at 6, 7 p.m., you know, grinding on the phone, emails and text messages.

Speaker 1 Like, until you can do that for you and your family, then the side hustle doesn't matter. The side hustle

Speaker 1 shouldn't matter. You shouldn't be even be talking about a side hustle until you can create that generational wealth on one project, okay?

Speaker 1 Until that one project fruits and it actually money's in the bank account, you accounted for, you know, that, until you do that, I wouldn't even, I wouldn't even talk about a side hustle, to be honest with you.

Speaker 1 I would tell them, focus on that one thing that drives you, that's going to give you that generational wealth, and then talk about other little hustles.

Speaker 1 Like, you know, me and you are working on a new bit together. Me and you are probably going to work on a million other projects together.

Speaker 1 Look, at the end of the day, we're still, you're still focused on A1. I'm still, I'm refocused on Nextion, right?

Speaker 1 And that's what I would tell people: until you find that Uber success on one project, don't worry about the side hustle.

Speaker 1 Don't worry about the real estate, the bars, the restaurants, the software company that you always wanted to start. Don't worry about that.

Speaker 1 Focus on the five-gallon bucket that you want to overflow so it can lead on to other ventures.

Speaker 3 I look at somebody like Paul Kelly and

Speaker 3 very successful company. Obviously, those guys have been,

Speaker 3 if you look at Parker and Sons, it's been around since the 70s. He acquired it in 2005.

Speaker 3 And

Speaker 3 here, I had an interview with

Speaker 3 Adam Coffey, and he's like, most people don't understand.

Speaker 3 You could sell a company and take

Speaker 3 and roll 30 cents on the dollar back end, 30%, 35%.

Speaker 3 I did 47%.

Speaker 3 And then you could sell it in a few years and do it again. Paul did it five times.

Speaker 1 Yes.

Speaker 3 So if you look at his determination and focus,

Speaker 3 now that 30%, theoretically, the minimum a PE company wants to do is 3X their investment. So if you invested 30%,

Speaker 3 your check on the next check by re-rolling is bigger than the first one. And then if you do it again, it's 3Xing minimum again.

Speaker 3 So even if you only got 10%, that 10% is equivalent to way more than that first 90% was. 100%.
So

Speaker 3 just because you have sold a section of the business, if you're still the CEO and that's where your time should be because where else are you going to get a better ROI there's not a lot of opportunities a guy like is mal younger guy could probably rebuild several companies but a lot of people don't understand Paul Kelly took chips off the table made a lot of money did it again did it again did it again and do it again and then still has got another turn left

Speaker 1 You know what's exciting about this, Tommy? Me and you probably have 20 turns

Speaker 1 that we're going to see in our in our lifetime. And that to me is probably one of the dopest things in the industry.

Speaker 1 Like people like myself, you and Karen and all the guys that we got on our group, like we're probably going to see 10 to 20 turns.

Speaker 1 The most successful people in this industry prior to us maybe thought that like you said, three to four, maybe five turns, right?

Speaker 1 And that to me is the most intriguing, most dopest part of the industry. We're still not where we're going to be.

Speaker 1 We're just getting started of like, hey, guys, I sold

Speaker 1 a good chunk of next year and I still have $24.1 million invested into wrench, right? And I'm still going to be able to see the fruits of that labor come in in the next three to five years.

Speaker 1 So that to me alone is probably some of the coolest things that we're doing, Tommy.

Speaker 3 You know, I look at it and I say, where's the next level of A1? Well, the next level is to get to 110 million of EBITDA. We'll sell again.

Speaker 3 And then after that, once you hit that point, it's like, when do you take it public? And that's the ultimate ringing the bell in Wall Street and saying we're public.

Speaker 3 Some companies, once you hit 4 million of EBITDA, take chips off the table. Then once you hit 10 million or 12 million, take chips off the table.
Then you hit 30 or 40 million chips off the table.

Speaker 3 Then 100, then 180.

Speaker 3 You know, the deal is typically they want to triple EBITDA because that's what PE companies want. Typically, the way PE companies work is they take 10 to 12 investments with their fund.

Speaker 3 And then the first five years they buy, the second five years they sell. It's a 10-year hold.
My goal is only to be with these guys for three years because that's the minimum to pay capital gains.

Speaker 3 And so if you could triple a company in three years, you could see multiple turns. But I want to talk real quick about what was the decision making.
Me and you talked a lot.

Speaker 3 We probably talked once a week about when's the right time to do this.

Speaker 3 And you and I, we said we're never going to sell. There were times we're like, we're going to sell next week.
There are times

Speaker 3 we were hot and cold trying to figure out the market, the timing. Is our company right? And we hired the right people.

Speaker 3 And what were some of the things in your mind going into like, is now the right time? Is this, how do I get the right partner? Is PE the right move?

Speaker 3 Like, what were the things that determined if you were going to do it or not?

Speaker 1 And look, and I think when my deal happened,

Speaker 1 it was probably like it was probably a lot of things had to happen to make that deal happen.

Speaker 1 And for us to see another deal like that, like mine and yours, Tommy, is probably going to be, you know, next to near impossible for it to happen. Some of the qualities that

Speaker 1 I looked for when we we were doing my deal is who the hell am I going to be reporting to and who am I going to be working with? And do I respect those people enough to know that

Speaker 1 I'm going to be a good partner to them? Because it wasn't always just the money.

Speaker 1 It wasn't always just the multiples and just this and just that. And like, obviously, you know, with my deal, everybody got creative because there were so many offers on the table.

Speaker 1 You know, the earn out was a huge one and the deal, the deal that they structured for me was a huge incentive for me doing the deal.

Speaker 1 But I think the main, main, the main thing that I looked for was who am I going to be partnering up with, number one.

Speaker 1 And number two, do I respect them enough to know that if they come in here and tell me, hey, I need you to do this, this, this, this, and that, because

Speaker 1 people got to understand this private equity thing is a partnership. Now I have a boss.
Now I got to report numbers to. Now I got to make sure that I'm coming in to the office and responding to it.

Speaker 1 Like I'm essentially a partner, but an employee to them, right?

Speaker 1 And that's the one thing that was probably the hardest transition for me because next gen grew in eight years we grew up to 130 million dollars it was it was a it was a quick decision making nobody ever questioned me nobody ever said no to me or yes like everything that i wanted got done in the time that i wanted and that was part of the success that next gen happened right and and and to me to acclimate to them of like okay hey i need to get rid of this person i don't think that now i got to talk to them and i got to make sure that they're okay with it that was probably one of the biggest things that i had to overcome.

Speaker 1 And when choosing the partner, I had to make sure that I respected it enough. So part of the things I looked at was the portfolio, right? Like who's involved in the portfolio?

Speaker 1 You know, Kevin Cummerford's in there, Paul Kelly's in there, Jonathan Betancourt's in there, JD's in there, like all the big, big names.

Speaker 1 Alan O'Neo's in there, like $100 million companies. There was a ton of those guys in there.

Speaker 1 I think we have like eight or nine companies over $100 million in the portfolio, including NextGen.

Speaker 1 So that was part of one of the decisions that the one of the the key aspects that i wanted to look at is who's in the portfolio and are they happy being there some of those guys been there four or five years some of the those guys been there eight nine years so i had good conversations with them and you know going going into the deal it was that was probably one of the main drivers is obviously you know i'm not going to sugarcoat it the money was amazing and i was able i'm able to you know set my four amazing daughters financially stable for you know generations to come and the next one was uh you know who am i going to partner up with And do I respect them enough so they could come in here and help me make next gen get to 150, 200, 300 million?

Speaker 1 And if they, if that, if those boxes check, that's who I went with. And there was, you know, there was a ton of interviews that I did.
And there was a ton of people that came in the door.

Speaker 1 And, you know, within five minutes, I knew that they weren't the partner. And when Kenny came in, he came in more of a like a mentor kind of thing and advising me what to look for in my deal.

Speaker 1 And I really liked that about him.

Speaker 3 So, you know, it's probably the best decision I made, to be honest with you well when the money comes and that that wire hits your bank account all of a sudden i know that uh you've had family members you work with that helped you build the company and all of a sudden friends show up that you've never talked to in the last everybody stands out

Speaker 3 and everybody everybody said you know and i i think people don't understand what it's like until you're actually going through it.

Speaker 3 And also now it seems like everybody,

Speaker 3 their hands are not only out, but they're like,

Speaker 3 it's tough because it's nice to have the stuff documented going into it. But there could be drama.
There could be family drama.

Speaker 3 I mean, literally money helps a lot of people, but money also could help tear apart families. So what would you tell somebody getting ready to do this?

Speaker 3 I mean, as far as their key employees, maybe some family members, even their relationships, because now all of a sudden, man, money changes people sometimes in a great way. Sometimes it goes opposite.

Speaker 1 And you know what I would do? would, if I could do my deal again, I would really define the line of what I'm going to do with everybody.

Speaker 1 Because once, like, it happened so fast for me and you, obviously, and a lot of people

Speaker 1 because of the rush of private equity that came in. And dude, they swept, what, maybe half of the big guys or 80% of the big guys in a two to three year period.

Speaker 1 So like it came when when our deal started to when it ended, it came in, it came in fast and we and we went and did diligence quick.

Speaker 1 And so what I would advise them tommy like if i could redo my deal i would set that line i would like create that line of hey talking to my sister talking to my brothers talking to my employees and telling them detailed exactly hey this is exactly what's about to happen do not expect anything more or less from me or from them or from anybody because i will give you the best word of the best piece of advice and i'm sure you're probably one of the people that can relate to this tommy is the people that expected something from me more than more, the people that expected more than just, you know, me being your brother or me being a co-worker or me being, you know, a friend, they expected whatever kind of money they expected because of my deal.

Speaker 1 The people that expected that are the people that our relationship didn't make it through. The people that expected more than just me as a person.

Speaker 1 You know, they expected money. They expected retirement.
They expected cars and houses and all this. The people that expected that was the people that this transaction was the rough run.

Speaker 1 The people that didn't expect nothing from me and just got back to work and kept doing their thing and

Speaker 1 essentially understood that, hey, this is my company. I was the one that took the risk.
I was the one that put all the money.

Speaker 1 I was the one that had the, you know, the hundred different fights with my wife and the hundred different fights with my brothers or not showing up to Christmas events and grinding until 9, 10 p.m.

Speaker 1 and, you know, sleeping and waking up at one, two in the morning, questioning everything that I'm doing and not having enough enough money in the bank account to hit payroll for weeks and weeks at a time like i was the one that went through all that stress so the people that understood that that was my company and and the transaction was to benefit me and my family and they didn't expect anything from me those people are still here those people are still grinding those people are still going hard right the people that did expect some things from me are the ones that had a little rough with the transaction so i would if i could advise them something set your boundaries man set your boundaries Set your boundaries so freaking solid that

Speaker 1 they're not going to jump over them or try to

Speaker 1 go through them.

Speaker 1 And that's probably the best word of advice I could give them if you're about to do a massive transaction, because I'm sure you've went through it, Tommy, where personal relationships got affected.

Speaker 1 And especially in the work environment, I'm sure some of your work environment got affected too. So, you know,

Speaker 1 I think that I think that's one thing that private equity doesn't tell you.

Speaker 1 And none of the brokers or none of the people that are doing the transaction for you, the lawyers, none of that, them prepare for you to what's about to happen during and after the transaction.

Speaker 3 Yeah, I agree with that.

Speaker 3 I think I could help a lot of people understand the mindset and the communication that takes place before that because a lot of people won during the transaction for me, but there's some people that didn't that aren't here anymore.

Speaker 3 And you can't have, it's not an ESOP. It's not like everybody has a share of stock in the company.
But some of the people that helped you get here, yes, they made out.

Speaker 3 And now, private equity is smart. They do an equity incentive program.
They put 10% on the table and you distribute that.

Speaker 3 But like you and I both, we've lost great people and there's hunters out there. They're going, wait a minute, we're in Southern California.
We're in Phoenix.

Speaker 3 Let's go after, and they find our people and they give them a crazy offer. You recently had this happen.
We don't need to go into details.

Speaker 3 But how does that feel when somebody that's stuck with you that helped you build the company?

Speaker 1 I mean, you might lose a right hand here and there, a right hand man or left hand you know what does that feel like you know what tommy before um a 2022 version of me a 2023 version a vulnerable 2023 version of me would have been pissed off at them and cussing them out and what the are you doing you should be with me and why are you doing it like the new the new ishma and the new more focused and more more in tune ishma actually when they come up to me and they present hey you know somebody's offering me this and this this i mentor them and i and i talk to them and i tell tell them, look, man, at the end of the day, you have to do what's right for you.

Speaker 1 And if you feel like this is an opportunity for you to go to the next level, for you to make your family a little bit wealthier, for you to give your family more financial security, you have to do it.

Speaker 1 Like, and if it's something that I cannot match because it's something ridiculous, like, you know, a ridiculous salary or ridiculous percentage of the company or something that I just

Speaker 1 can't do because I'm obviously I have partners partners involved now. I always tell them, you got to go out there and do what's right for you, man.

Speaker 1 I am never, ever going to hold you back from doing something that could potentially set your family apart because then it would make me feel guilty.

Speaker 1 I'm in a way better place in my life now where I can put myself in their shoes now.

Speaker 1 I don't always look at what's going to benefit me or what's going to benefit my partners or what's going to benefit financially.

Speaker 1 I always put myself in their shoes.

Speaker 1 Kind of like when a customer gets pissed off at you at our company, Thomas, uh most of if a customer gets pissed off at our company and puts a bad review i never ever

Speaker 1 go to my managers and what the hell are you guys doing you guys don't know what you guys are doing and this customer this that this i always put your myself in the consumers in the consumer spot and and and i analyze the the situation based on what what i feel why they why they got mistreated why you know they got a bad experience like what could we have done different that's what i'm doing with my employees now i always put myself in their shoes and if it makes sense for them i will always be brutally honest with them and i will tell them hey this is this is the upside and this is the downside and now it's for you to make the choice of like what do i want to do but don't don't don't ever don't ever think that you know you owe me anything or i owe you anything do things for your family because the reason why i did my transaction was 100 to make sure that my girls were set right and i and they can't be mad at me the same thing i'll tell them if you got to do decision based on what's going to take care of your family financially and for the future, don't worry about next gen.

Speaker 1 Don't worry about me. We're always going to be fine.

Speaker 3 So if we talk about what's made like Peterman, Chad Peterman, we look at even Yano, different type of company, but we look at, you know, gainers doing it. We've got a lot of good people that are.

Speaker 3 building up a company. And we talk about capacity planning.
I know your biggest thing is recruit great talent, pay them more, but also got to get them leads.

Speaker 3 And people that have seen Southern California next-gen billboards, you're a sponsor of the baseball games and different things, but you have a strong digital footprint.

Speaker 3 Last year, what I've seen, every HAC plumbing company was pretty flat because it's getting expensive. It's getting very expensive to do pay-per-click.
There's more competition coming in.

Speaker 3 When you add up the private equity companies, they're not short of money. So they can put the money and bid on keywords and they can spend a lot of money.

Speaker 3 And it started to feel like Google was just hard to keep up because everybody's outbidding each other even on your own company's keywords so what's the strategy going forward this year to kind of turn things around because you need leads and a lot of people have let a lot of people go i mean i know a lot a lot of hvac plumbing companies and a lot of them are trying to right size because then you go through the shoulder season and you got all these installers you're trying to keep on payroll for when season hits.

Speaker 3 So you're going through three, six months of like getting buried in payroll to have enough people for the season. So how do you, what's your mindset going into this new year to be able to handle that?

Speaker 1 2024, I told my partners at Wrench that we are going back to traditional marketing. We are going back to what got us to the deal, which was newspapers, direct mail,

Speaker 1 treating our customers,

Speaker 1 focusing on our customer experience,

Speaker 1 TV, radio.

Speaker 1 I dropped all the billboards because

Speaker 1 people got the point of who we are already. And I'm minimizing, I'm downsizing my digital presence because you're right.

Speaker 1 Private equity is so heavily involved on the digital side that they're going all in on it. And the ROI is not there.
And that's what we had to find out in 2023 is that finding out that.

Speaker 1 the ROI is not there in the digital presence and making sure that we pivot into a different strategy of marketing is what I'm doing.

Speaker 1 So Q1, Q4 of last year, I started, I started, I think I went down to under 40% of my of my actual budget is going to digital when before it was 80 to 85 percent of my budget was you know Google, Yelp, LSA,

Speaker 1 SEO, all that. And now I'm going back to under like 40, 45 percent of digital presence.

Speaker 1 And then the rest I'm gonna I'm gonna retarget to you know TV, the radio, the traditional stuff that we know works, but it takes a little bit of time to work, Tommy.

Speaker 1 And we're just gonna go hard on, you know, hey,

Speaker 1 the customer experience and incentivizing the right people to make the right decisions.

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Speaker 3 There was a time in the last couple of years, especially through COVID, where people were just spending like crazy. They say we had enough demand for five years in a course of like less than a year.

Speaker 3 Yes, sir. So what do you think is going to work that most people aren't thinking about? Obviously, traditional, and it's scary doing traditional because you don't see an ROI.

Speaker 3 You're like three months have gone by, and your CFO might be knocking on your your door saying, dude, the numbers,

Speaker 3 we're spending an extra 300 grand a month, but we haven't moved up in revenue.

Speaker 3 Is it just an act of faith? How do you see that that is working?

Speaker 1 No,

Speaker 1 it's, you know what,

Speaker 1 what people need to focus on in 2024 is treating 2024 exactly how 2023 was, which, hey, if you had a thousand leads to all of 2023, expect those same thousand leads at 2024.

Speaker 1 And instead of spending more to get more leads and spending more to do this and spending more to do that, and let's open a different source of marketing and trying to, and trying to cover up the mistakes, which essentially are, Tommy, when you're buying new leads and when you're buying new customers and when you're trying to do new marketing, instead of thinking, I need more leads, I need more, I need more, start working on inside the metrics of like, hey, our booking percentage is like 74%, which is not good, right?

Speaker 1 And all we're working on, instead of that 74%, i want to get it to 78 to 80 percent our booking percentage and that's going to have a drastic change in our financials and and our revenue and so my advice to everybody out there is that instead of thinking that you're going to be able to buy your way out of mistakes and you're thinking that you're going to acquire new clients to cover up all the mistakes inside the operation what i would do is i would refocus my attention inside the operation and i would work on your booking percentage inside the call center, making sure that you're going in there and

Speaker 1 training the CSRs and spending time with them, incentivizing them to book properly, incentivizing them to start the customer experience properly.

Speaker 1 And instead of wanting more leads, just do more with what you got.

Speaker 1 Increasing two to three to four to six percent on your booking is going to impact your organization in a ways that you can't even imagine. Same thing with the project managers and technicians.

Speaker 1 Guys, don't expect to run more leads. Don't expect to run more or less opportunities.
What happened in 2023 is going to be a replica or even worse of 2024.

Speaker 1 So instead of us thinking that we're going to fix and we're going to cure what happened in 2020, 23, let's work on ourselves, number one, and let's better ourselves inside the home, right?

Speaker 1 If you were closing, you know, 40, 50, 60% on your in-holes estimates and your turnovers and all that, work on 5% increments or 3% increments of

Speaker 1 increasing,

Speaker 1 of going towards improvement instead of just thinking that sales is going to cover up all the mistakes.

Speaker 1 There's nothing that's going to happen in 2024, guys, that's going to redo, come and give you a lifesaver for your operation. You have to work with what you got.
Booking percentage is key.

Speaker 1 Closing percentage in the project, man, in the sales department, in the tech department, right? Increasing your average ticket. You know, if you could increase your average ticket, $1,500, $2,000,

Speaker 1 whatever you can, increasing the average ticket is huge. And then number three is, and probably one of the things that we don't talk about enough is retaining.

Speaker 1 Retention is going to be fucking key in 2024 because there's charts out there that are going to try to take your people because they already figured out that NextGen employs the best people.

Speaker 1 And in order for them to get to the level that NextGen is at, they need to grab my people or they need to grab people alike of them so they could go and venture off and have a stable platform or whatever they want to do.

Speaker 1 So retention is going to be a huge key for myself. That's why I'm in here every single day at 6 a.m.

Speaker 1 Talking to my main, talking to my installers, going into every tech meeting, pumping them up, going into every sales meeting, walking in the CSR room and incentivizing them to stay active and to treat our customers with respect.

Speaker 1 That is what's going to take to make 2024 a successful year, not spending more marketing money and, you know,

Speaker 1 ridiculous sign-on bonuses that people were doing in 2022 because money wasn't an issue back then.

Speaker 1 Like you guys got to refocus your attention on fine-tuning the machine instead of redoing the machine or trying to build a different machine just fine-tune it there's a couple tweaks inside the operation that everybody everybody in the industry can be better at and you have to focus on where are those fine-tuning where are those controls that need to be fine-tuned to make it a successful 2024 yeah i agree i think a lot of people right now are mad at their marketing company they're saying we need more leads we need more leads well you look at their booking rate the conversion rate the number number of turnovers, service to sales, the service agreements, the form leads coming in from Angie or Thumbtack or HomeAdvisor or Yelp.

Speaker 3 Like, are they doing a great job of getting to those right away? And like you said, culture with retention, average ticket, those are what they can't control.

Speaker 3 So I find that miserable people that are always depressed focus on things they can't control.

Speaker 3 Optimistic, high achievers, they focus on the things they can control.

Speaker 3 And here's what I see going on right now, unfortunately, is a lot of companies outside of HVAC Plumbing Electrical and even Garage George and within that group, they're trying to figure out where they're going.

Speaker 3 So they're saying, I'm buying 10 more trucks without having technicians ready for those trucks. They're saying I'm building this massive training center.

Speaker 3 When we know Tom Howard's discussed closing his training center, he's not hiring and training as many people. So a lot of people are like, yeah, I've got all these installers.

Speaker 3 I got these people training. I hired a better office staff.
Now I got a trainer. I got an LMS.
I got all these things.

Speaker 3 And I'm like, so you're going to have to triple this year in leads to handle what you're trying to build. So we made a mistake.

Speaker 3 And I think everybody in our group has made a mistake of saying, we're hiring today for where we're going to go instead of where we're at today.

Speaker 3 And all of a sudden, they go from making 10, 12, 14% down to low single digits, or they're losing money now based on, hey, man, we decided we're going to grow, but the leads just aren't there.

Speaker 3 And I think a lot of people make the mistake. They overhire for where they want to go.

Speaker 1 They need to be realistic, Tommy. I know there's a lot of motivational people out there.
You know, I've seen some Facebook ads and

Speaker 1 going on from people that don't know what the fuck they're talking about, to be honest with you, and saying, oh, yeah, this is just like 2008. And we're going to muscle our way through it.

Speaker 1 And we're going to be up, like, guys,

Speaker 1 there has to come a point in time where there's reality sets in. And you have to be, yes, you have to be optimistic.

Speaker 1 Yes, you have to make sure that no matter what, you freaking go through that wall, but you have to do it strategically.

Speaker 1 You have to do it uh methodically you have to do it with a little bit more caution than just thinking that hiring more people and getting more vans on the road and spending more marketing money is going to fix everything like you got to you got to slow down and really look at the operation instead of muscling your way through what's about to happen because it's going to happen right we all know there's there's something going to happen we don't know if it's a recession or we don't know if it's uh whatever is going to happen we have no control of what we do have control of we have 500 amazing team members here at nextion we have 500 amazing families that we got to take care of we have 500 amazing people that that still need to come to work and give it 100

Speaker 1 let's focus on those 500 people or if you're a 10 million dollar company you got you know 50 or 40 people focus on that and what you got and strengthening them and making sure you prepare them mentally for what's going to happen instead of thinking hey i'm going to hire and i'm going to do this and i'm going to do that when everybody has their guard down i'm going to triple down on my marketing and now guess what?

Speaker 1 They go back into their PLs, and they're like you said, they're losing money or they're not hitting their budget or their KPIs. And now they have nowhere to turn.

Speaker 1 So, so, I'm going to be honest with you, be more methodical about what you're going to do in the next three to six months. Obviously, for HVAC companies, we're waiting for April to get here.

Speaker 1 It can't get here fast enough, but let's focus on today, though. Today, you know, it's 60 degrees down in Southern California, it's cold at night, people need their heaters tuned up.

Speaker 1 Let's make sure we focus on today and every single customer that we touch on today's experience. And we'll worry about tomorrow when tomorrow gets here.

Speaker 1 Let's not plan three to six months or a year from now because we don't know what's going to happen with the economy.

Speaker 1 And if we do that, if we start planning that far out, the economy could come in and take everything away from you. And now you're at zero.
So let's work on today and

Speaker 1 let's work on today and make the best out of today.

Speaker 1 That's my advice to everybody.

Speaker 3 I have an exercise I think everybody should do. And it starts with CSRs, dispatchers, technicians, and installers.
Is write everybody down or

Speaker 3 pull it out of your payroll system and then grade each one of them based on certain KPIs because you only have a certain amount of time you want to put into it.

Speaker 3 A lot of people are like, man, if I get a year with this guy, he's going to be a killer. And I'm like, in this economy, yeah, three years ago, you could say I could work with somebody a lot more.

Speaker 3 Now you need to think about either I got to get them up or out.

Speaker 3 Top grade in recruiting is so important. Like you might have a C player in your accounting team on AR, and it's not the right year to say, I'm going to get this person great.

Speaker 3 And sometimes you got to make a tough decision to let someone go based on the fact that if you're not at a peak performance this year, when it's tough, they say that strong people, tough times build strong people, weak times build weak people.

Speaker 3 And we went through a lot of easy times. Yeah.
I mean, if you had a little logo on the side of your truck in HAC or plumbing two years ago, you were slammed.

Speaker 3 If you could fog a mirror, if you could fog a mirror and knew how to install anything, you were hired. We couldn't hire fast enough.
The phones were ringing off the hook.

Speaker 3 We were like, and now it's getting tough. And you're going to see companies falling apart.

Speaker 3 You're going to see them falling off, going bankrupt, giving up everything because they're not making decisions quick enough. They're going, we could tough through this.
And then they're going,

Speaker 3 I got enough money in the bank for payroll for two months. All of a sudden, I got enough money in the bank for six weeks.
All of a sudden, they're like, oh, shit, I might have to mortgage my house.

Speaker 3 All of a sudden, they're upside down on an arm loan because now it's coming due. And now it's going to be refinanced.
Instead of it being refinanced at 4%, now they're at 12%.

Speaker 3 They can't afford the payments. So you need to think of, you need to look at each and every person on your team and decide, do they have the ability to make it through these tough times?

Speaker 3 Because a lot of us, we have really, we have long-term relationships with these people. We know their families.
So we say, we got to keep these people.

Speaker 3 We got to keep them they've been they've been loyal to us but they're not really a top performer and all of a sudden the company's going to go out and that doesn't help anybody it doesn't help customers it doesn't help the a players that work for you so how do you make tough decisions when when it's like man this person's been loyal they're they're okay

Speaker 1 they show up every day but they're not really they're not really making us a profit they're not they're not five out of five Hey, I tell this in every meeting that I go into with my managers, executives, directors, everybody in here at NextGen.

Speaker 1 Tommy, I tell them the first thing I tell everybody is, hey guys, when you guys come into NextGen, make sure you guys leave your feelings at home because that's where my feelings are.

Speaker 1 As soon as I go back home, I pick them up and I grab them. And

Speaker 1 they're running around and they're hugging me and they're kissing me. And those are my feelings.
Okay. So I make sure I leave them at home.
When I come in here, things need to be made.

Speaker 1 Decisions need to be made. They're going to be made no matter what.
It doesn't matter who it is, unfortunately.

Speaker 1 because at the end of the day, we still have to make sure that we can still turn on the lights, we can still hit payroll, we can still go through these hard times, right?

Speaker 1 And there's no one in the whole company that's good that is worth sacrificing the whole company just for one person.

Speaker 1 So I tell everybody, and I'm infamous here at Nixon for saying it, make sure that before we start this meeting, you guys left your feelings at home because whatever we're going to talk about is strategically talked about and it's going to be strategically done to make sure that the company keeps going forward and that we don't fall back and we got to let go of half of the people you know obviously everybody in and in the industry whether garage doors air conditioning plumbing had to trim down on people and and and this was probably one of the best things that could have happened to our industry to be honest with you tommy and i looked at it as a positive instead of a negative instead of you know i had to lay off some installers and some low performing technicians and some low performing csrs and sales guys instead of instead of looking at it as like man you know he was here for two years or three years or a year and a half and he was such a good guy he was always in the company meeting being positive.

Speaker 1 Like I looked at it as, hey, man, I need to make sure that we're able to keep moving forward. Right.

Speaker 1 And what is it going to take for us to keep moving forward is making sure that we trim down on our low performance and tell everybody, hey, guys, we only want high quality people here.

Speaker 1 This isn't a bad thing that what's going on right now.

Speaker 1 This is actually a good thing because we're going to reevaluate the company as a whole and we're going to make sure that we only retain the high level players because we, at the end of the day, we want them to go into our customer's house and give them the best customer experience possible.

Speaker 1 So, there was some of these people that were letting go. They were, you know, half of the time they were going into a customer's house, not giving it all.
The other half, they're hungover.

Speaker 1 The other half, they're worried about, you know, going home and doing this.

Speaker 1 And the other half, like, to me, we only want hardworking, focused people that want to come into Nection and make sure that we do what's right by our client.

Speaker 1 And that's what the message that we threw in through the organization. And it's been amazing for us.
We haven't lost people that we don't need. And we only let go of people that we needed to let go.

Speaker 3 So before we jump into Nuve, I got a question for you because,

Speaker 3 you know, you're on Facebook, I'm on Facebook. We go on social media and we see these guys, whether it's Grant Cardone and Brandon Dawson.

Speaker 3 It seems like everybody now is a home service expert out there.

Speaker 3 So much advice coming from different angles, whether it's your call center recruiting or different inventions or CRMs and switching to this or that or house call pro a jobber.

Speaker 3 And there's these different influencers that have popped up that may have not have a great track record, but they decided to teach because they didn't make it in the real world.

Speaker 3 How do you know there's a thousand voices coming at us all at once? And there's all these consultants and there's, should I get my manuals done? Should I get, you know, kick charged?

Speaker 3 Should I, should I get more vans? Who do I call for vehicles? How do I build a training center? Who's the right person to listen to?

Speaker 3 I mean, there's so many voices out there and they all have a great story. It all sounds great.
You know, they're getting into the Lambo. They're getting into the private jet.

Speaker 3 A lot of these guys, maybe they're renting it from somebody, but it all sounds great, but they don't know if it's real or not.

Speaker 3 What do you tell somebody that's like, hey, I invested 200 grand in the Cardone stuff, or I put 100 grand into this coaching? Or, you know, there's a lot of great ones out there.

Speaker 3 I think Julian does a great job over. They're at Nexstar.
But, I mean, overall, where do you go? What do you do? How do I know it's right? How do I know I'm not going to burn through money?

Speaker 1 You guys got to start being blunt.

Speaker 1 You guys got to start being straightforward with these people when you're interviewing them because most of these people are sargays at like the Grant Cardones and the people that are, you know, out there on Facebook showing off the Lambos and showing off the private jets.

Speaker 1 And they think more of a celebrity thing. You guys need to come to realization that these people are just human, just like me and yourself, right?

Speaker 1 And you guys got to make sure that when you're interviewing these people, you drill them to the wall based on facts, okay?

Speaker 1 Because because one thing we forgot here in the united states of america the greatest country of all time that there's a ton of noise out there and there's a lot of people that are not stating facts there's a lot of people that are just talking to talk and nothing is fact proven right the grand cardone things i have nothing against those guys they're good people but have they been a successful home service platform in any way shape or form the way tommy did it the way i did it the way you know anybody else in our level did it tommy that's that's number one number two, some of these guys that are out there on Facebook pumping their chest have broken businesses or sold off their business because they couldn't take off the burden anymore.

Speaker 1 So you guys got to start asking those tough questions. It's kind of like

Speaker 1 when you're about to interview a high-level position in your organization, you can't just go based on what they're telling you.

Speaker 1 You got to go based on the facts of the resume and start actually checking the facts inside. that resume instead of just, oh yeah, he told me that he wanted that he made $300,000 last year.

Speaker 1 He told me that he improved sales and he told me that he did this for the company and they made him profitable.

Speaker 1 And all it, if, if he was so good at what he did, trust me, he wouldn't be in front of that chair. Number one, number two, verify that it was a $300,000

Speaker 1 salary that he actually was getting, right? Because most of these people are asking for money without actually like,

Speaker 3 bring me last year's W-2s. You said you had a $30 million exit.
Show it to me. I want to see the tax.
I want to see your taxes.

Speaker 3 So what I literally like, if anybody's willing to brag that they did these things, they should at least have the

Speaker 1 Tommy. You and me, you and me could agree on one thing that if anybody came up to me and you and said, hey, show me your transaction, I'll be more than proud to show them my transaction.

Speaker 1 And that's what these people on Facebook and that's what these contractors need to start doing for themselves is actually asking for fucking proof.

Speaker 1 What have you done in the home service industry that's going to help me elevate my company to the next level? And I don't want you to tell me. I want you to show me exactly.

Speaker 1 Show me a P ⁇ L where you ran or owned a successful business.

Speaker 1 I want to know and run down the P ⁇ L and tell me why you did the decisions you made to be able to attribute to that P ⁇ L.

Speaker 1 So I would tell people, start fact-checking people and start asking for actual proof instead of just, you know, being

Speaker 1 starstruck by the cardones and by all these dumb influencers out there that have done nothing for themselves. And all they're doing is talking because they're number one, great sales guys.

Speaker 1 And number two, they know how to fucking, they know how to convince people to write them a check. Stop doing that.
Start fact checking everybody.

Speaker 1 Start to start actually, you know, interviewing people. When you are interviewing, start asking them questions, uncomfortable questions.
That's what I would do.

Speaker 1 Start asking uncomfortable questions to people that you're interviewing. Number one, and number two, to coaches that you're talking to.

Speaker 1 Anybody wants to mentor you on improving your business? Start asking the most most uncomfortable questions. What was the highest earning year you've made? Show me a W-2.

Speaker 1 When were you the most profitable? Show me P ⁇ L. Show me balance sheet.

Speaker 1 Show me. Don't just tell me that, you know, last because last year you made $300,000 and you improved profit by...
you know, 20% or 18% or whatever. Show me.
Show me that.

Speaker 1 And then I'll consider you coming into my organization and mentoring. So what I would advise them is fact check people.
Fact check people. And don't just get a foot of rich.

Speaker 3 And what I would add to that is there are good consultants. Like I worked with Al Levy.
He never had a massive exit, but he was good at manuals and SOPs.

Speaker 3 And one of the things Al told me was, Tommy, if you want to work with me, you got to stop listening to all the noise out there because I'd come in with a new book, a new idea.

Speaker 3 I'd say, I want to bring this guy on. And then all of a sudden you find yourself with a dozen consultants that sometimes it's opposing things.

Speaker 3 I can tell you that what makes a great company is capacity planning, getting the right people running the jobs, certain very little KPIs, booking rate, conversion rate, average ticket, and how much it costs to acquire a client.

Speaker 3 But these,

Speaker 3 everybody sits down in a room and they're like, I don't know what to do next. And I'm like, do you have reliable data to make decisions? Do you know your booking rate?

Speaker 3 Do you have a CRM that can at least spit out real, actual, accurate data? Because a lot of people, they're like, they go to all these events and they hire all these people.

Speaker 3 And they're like hearing all these different things, but they don't even have data to even know what they should be working on today. They come in and they say, hey, it's Monday.

Speaker 3 Should I rebrand? Should I change the name of my company? Do I do an LLC, C-Corp, S-Corp?

Speaker 3 How do I do performance pay? Where's my manuals? And then they say, how do I get the best deal on trucks?

Speaker 3 All these factors are so important, but maybe their booking rate is 40%.

Speaker 3 Don't worry about those other things until that's fixed. And my goal when I work with somebody is this is the most,

Speaker 3 it's like you're in a big-ass boat and you're on the ocean. Where is the biggest freaking hole in that boat? Because you don't want to sink.
So fix the big holes first.

Speaker 3 And some people are like, hey, man, I branded through Dan Antonelli and now I got no money.

Speaker 3 I'm like, well, if you started out the whole company with zero dollars, maybe the best idea was to save a little bit more money as an employee before you got into business because now you can't even build a website.

Speaker 3 And guess what? You're going to be stuck in the truck for the next seven to 10 years because you started with zero.

Speaker 3 So I do recognize that you need to be able to check everybody. And there are good coaches that never had a fat exit.

Speaker 3 But

Speaker 1 they're far a few in between though.

Speaker 3 Yeah, 100%. And like, like a great coach that you might want to get that didn't have a great exit might be a financial, like a fractional CFO, somebody that can give you the data, right? The numbers.

Speaker 3 Like, I know when Tom came in with you, and he's not necessarily a CFO, but he understands numbers.

Speaker 3 He looked at you and he said, Ishmael, let's at least get the data so we know what to work on. And that's where he started.
Exactly.

Speaker 3 And once you got financials and you understood Service Titan was doing its job, because you had Service Titan, I always tell everybody, Service Titan's a Ferrari, but most of you guys have it stuck in first year.

Speaker 1 Yes.

Speaker 3 So you say Service Titan sucks, but you're not using it right because nothing's set up your

Speaker 3 automated payroll, your automatic reconciliation, the way your trucks are located on the map, the way you do dispatching. You're not even using the software the way it's supposed to be used.

Speaker 1 So until you're using the software using quickbooks or or in intact until you're using the tools like you hire all these consultants and all of a sudden they don't move the needle because you're working on the wrong stuff i agree i 100 people don't give you enough credit how a badass of a operator you are and and the numbers could tell you one thing tell me about you personally you know you had probably the biggest exit in home service industry that's one thing but people don't give you credit of how fucking sharp you are in an operational standpoint because some of the things that i'm hearing you say right now i'm like god damn i missed that too you know what i'm saying like you you teach me things whether you see it or not and i and i and i i can guarantee you you don't see how much you teach me on an everyday text message or on an everyday you know conversation that we can have a five 10 minute conversation i will i will guarantee you that every time me and you have interaction i pick something out of that conversation and it makes me a better person.

Speaker 1 So I think we need, I think people need to give you a fucking lot more credit, not just for your exit, but for your operational fucking IQ is probably the best in the industry right now.

Speaker 3 I appreciate that. And, you know, we all, in our group, we all have a lot of different things we do well.

Speaker 3 I mean, there's so many different aspects that like when we were talking about WEX the other day, first thing I did is go into my CFO. And we planned on a plan to get more from WEX.

Speaker 3 And we look at our credit cards and we say, this guy's getting 1.9% back.

Speaker 3 This guy's getting two, three, or maybe gayner got a better way of getting financing through his local bank and so all these things we talk about there's always contribution of things and it's it's nice to hear because he's in ohio peterman's in indianapolis and like like you look at all these different areas where everybody's at and you say okay wow that's like and we have a lot of fun too we goof off a lot and we enjoy each other's friendship and we always we have serious conversations about marketing and hiring and performance and bonus structures but we always got a good, we're at a good level.

Speaker 3 And that's what's nice is like we've always talked about this in our group, but the Dave Geigers, the Ken Goodrich, the Ken Haynes, those guys are amazing. They left a massive, massive footprint.

Speaker 3 And there's a lot of them, the Paul, Paul Kelly. I mean, but we're the new age.

Speaker 3 We're like the new up-and-comers that kind of kind of fill those seats because these guys. I think Paul retired.
I think Ken's just on the board and he all amazing guys.

Speaker 1 They're not, it's not like they're lifestyle.

Speaker 1 I don't want to call them old, but they're all on their way out. And they know, and I mess around with them and call them old all day long.

Speaker 1 I guarantee you, in three years from now, these guys aren't here, and there's going to be a new platform of leaders that are going to have to arise.

Speaker 1 And I think the LSD crew is probably one of the main groups that are going to come in here. The reason why that group is so successful, Tommy, is because our intentions with each other are 100% pure.

Speaker 1 I genuinely want you to be more successful than myself. I genuinely want AG and Tom and everybody to meet their goals.

Speaker 1 And I have, if you guys exceed me by a million, by a hundredfold, I'll be more than happy because my intentions to be in that group is to make you guys better if I can't.

Speaker 1 But most important, my intentions with you guys to do, to have fun while we make money.

Speaker 3 And the nice thing is that I have no holds bar. Like I'm not afraid to share anything.
There's not like, man, if I share this, they're going to be successful.

Speaker 3 When I wrote the book, Elevate is everybody's allowed to win. And I believe that in that group more than anything is like, oh man, if I tell them that they're going to make more money, good.

Speaker 3 It's not like because you're doing good, I do bad. And I think people have the mentality a lot of the time.

Speaker 3 If I share in my local community or my group of friends or my local group of contractors, that if I give them everything, well, if that's the mindset, it's a limited mindset and it's a non-growth mindset.

Speaker 3 And if you're afraid to give up, your secrets, I mean, like someone's just going to come in and dominate you with your own methodology because the day someone implements my stuff, I'm already on to the next thing.

Speaker 3 And I'm always, I think, ahead of the curve. That's because of the group, because we share with each other.

Speaker 3 Like, one of the things I talked about with you that you're the first one to implement almost always. And I think me and you have that is we're like, we don't really take a lot of time to implement.

Speaker 3 We're like, okay, today's the day.

Speaker 3 And we talked about the Spanish market. You're like, dude, I'm sitting in one of the largest Spanish markets in.
the world. I should jump on that train.

Speaker 3 And so immediately you started marketing to Spanish. And it doesn't happen overnight, but it's a whole new audience.
40% of Californians speak Spanish as a first language.

Speaker 1 And things like that, people won't pick up on. Like, as soon as you told me that idea, I was already texting that same conversation we're having.
I'm texting Andrew, my marketing guy.

Speaker 1 Hey, we need to get some Spanish content going. I got interviews with you, Unity Decion and Kaimek.
He's all the major news, Spanish news broadcasts right here in SoCal already getting done.

Speaker 1 So that's probably one of the main things that

Speaker 1 people don't see on uh on on our success level is we me you and all the all the guys in the we implement quick man we go as soon as as soon as the idea is fat out it makes sense you know and my my brain is so simple and so basic that if it makes sense to me it means i i go and implement right away so thank you for that too so let's jump into this because i want to talk about nuve first of all we're going to go a little bit over but how did you come up i i mean i know tom howard was involved i know you got guys in Armenia, but you kind of took that over.

Speaker 3 Tell me a little bit about the whole Nuve,

Speaker 3 what your intentions are, how it's going to work, the technology, the software, the hardware, and just jump into how you got involved.

Speaker 1 So originally, it was just going to be a regular thermostat to compete with Echo Bee and Honeywell and Nest and all these thermostats when Tom presented the idea for me.

Speaker 1 He presented the idea on a baby stage. So when he brought it up to me, it was just going to be a thermostat that was eventually going to connect with the service time

Speaker 1 when i saw the the when i started really digging into like what a thermostat does what a thermostat can have an impact on our industry that's when i started like really developing the the extra the extra features that that are that that are already done the main main and basic you know feature that i came up with that was probably is probably going to be one of the most impactful ones in our industry is have like you walk into an office you walk into a house you walk into a building, and there's thermostats everywhere.

Speaker 1 And nobody knows who installed those units.

Speaker 1 That to me, in the hundred years that air conditioning has been around, nobody ever thought of putting, you know, I know that five, 10 years ago, they were putting a logo, they were printing a logo on the actual plastic casing, but after a couple months, it would fade away and then we would be back on step one.

Speaker 1 So what I did is I came up with the new concept. We have a digital logo that's registered to the contractor.
So that device is always going to go back to

Speaker 1 the server side CRM that's originally installed on it.

Speaker 1 That was probably one of the best ones that the best features on it because now if you go to a five-year-old system and you replace a motor and igniter and you throw on the thermostat for free, now that customer is going to be able to see your logo on that wall.

Speaker 1 It's a digital display, so they can't change it, they can't erase it, they can't, it's always there.

Speaker 1 They're always going to know who installed that unit because 100% hundred percent of every single client and i'm not exaggerating a hundred percent of every single client as soon as somebody goes something goes wrong the first thing they go do is go check their thermostat see why it's not turning on why it's not turning off why their heater's on all that so when i came up with that concept i'm like dude first of all we need to identify the contractor that actually installed this unit so imagine what that's going to do to your marketing right right now you could go install something uh a five-year-old unit you change the motor and igniter and six months later, they forgot that you did it.

Speaker 1 They can't find the invoice, they can't find the email, whatever the case is. Now they got to go on Google again, look for another company to come back out and rework on that unit.

Speaker 1 The first thing that the customer is going to do is go to that thermostat, touch that logo.

Speaker 1 As soon as they touch that logo, the screen changes and you can request a technician from your thermostat or from the app.

Speaker 1 That alone.

Speaker 1 is worth a hundred million times what any other thermostat could provide right being able to remind your customers that their heater tune-up is due or their AC tune-up is due via app or via

Speaker 1 on their thermostat. Now you're going to be able to retain that client.
Now you're going to be able to run those tune-ups, right? Because nobody's checking their freaking email blast.

Speaker 1 Nobody's checking their direct mail anymore. Like nobody's doing that.
So we needed to come up with a different way to be able to attract the customer to be able to contact us.

Speaker 1 So that's where we came up with a customization of messages on there. The best, probably most coolest thing about the thermostat, Tommy, and you know, there's

Speaker 1 a ton of other features. I don't want to go into all of them.
The best one that I came up with, and it's going to change the industry for sure, is being able to auto-trigger these units

Speaker 1 from your desk at your location. So imagine if you installed 100 units last year, you're going to be in your office and you could trigger these units to turn on just to see if they're still online.

Speaker 1 right so 100 units came on and you could you could trigger them based on zip code based based on city based on install date whatever you want to trigger them on you could trigger them on see how long it takes to satisfy the set point once it's satisfied you you know that that unit's ready for demand season so instead of you know the first 100 degree weather gets here and you get a thousand freaking warranty calls on those units that are not turning on turning on the customers having a problem now you could do that in January, February, March, when there's no demand.

Speaker 1 Imagine what that's going to be able to do to your labor. Having all your technicians, all your installers ready to go.

Speaker 1 So when the demand does get here, you're having them produce revenue instead of stuck on warranty costs because you couldn't get a hold of the client because you couldn't, they're not even reading your emails.

Speaker 1 They're not even reading your direct mail. They forgot who installed the unit.
Imagine you're going to be able to do that on the shoulder season.

Speaker 1 keeping your technicians busy and making sure you prevent all these warranties. So when the first 100 degree weather or the first 30 degree day comes in, all these units turn on.

Speaker 1 And now your warranties are down to the ground to zero. And now you're able to operate

Speaker 1 your operation at 100%

Speaker 1 chasing revenue instead of dealing with pissed off clients because units can't come on. That alone is worth the $400 we're going to be able to charge for this thermostat.

Speaker 1 So, you know, I'm excited about it, man.

Speaker 3 So a couple of things there. So number one is it's super simple to know who the contractor was.
And you know that if someone's tampering with that, you could see that someone else was out there.

Speaker 3 Number two you can cycle the unit in spring for the summer for the high temperatures, and you can cycle the spring in the fall for low temperatures just by cycling the unit on, making sure it's all popping up.

Speaker 3 And while you're not busy, getting those problems fixed. Exactly.

Speaker 3 What is the idea of the perpetuity of being able to charge?

Speaker 3 Because I know it's a controversy. You talk a lot about memberships are dying.

Speaker 1 And the reason memberships are dying is you don't need to go to that house all the time in busy season when you got new demand opportunities where you can sell a 10 20 000 five ton unit versus going out and fixing stuff of course so so where does the monetization come in that works like a service agreement on on monitoring these thermostats right so instead of instead of charging a membership fee or look at you you might keep your membership model and just attribute a thermostat to it so you can retain that client because once that the that thermostat is installed in that customer's house that client is going to be able to see your logo and on their app they're going to see your logo for life until they take it away until they want some another thermostat or whatever the case is so the reason behind the monetization is is being able to charge a client a monthly monitoring fee on your thermostat and not be not sending a technician two to three to four times a year and you know finding out that the 30 40 dollars a month that you're charging for a technician to go out there three to four times a year and not really selling anything you're losing money on right on a regular membership model instead just monitoring the runtime and actually going out there when they need it right instead of bugging them and always trying to upsell them imagine what the what the customer mindset Tommy is gonna do to the

Speaker 1 the consumer when you pull when a technician pulls up to the the house and the thermostat is saying that there's something wrong with the unit not the not the technician okay listen to what i just said the thermostat is going to tell you there's something wrong with the unit the technician is just here to find out what's wrong with the unit Imagine what that's going to do to the customer, the customer walls of like, oh, you guys are always trying to sell me something.

Speaker 1 Ma'am, I'm just here because we have a fault on your thermostat. I want to make sure that before it's 100 degrees outside, that your system is operating properly.

Speaker 1 And now you're able to present option based on the thermostat telling you that there was something wrong with it, not going in there and digging through it and then coming to the customer.

Speaker 1 And the customer's like, oh, you guys are just trying to sell me something.

Speaker 1 What about if nothing was, you know what I'm saying? Just that alone. Yeah,

Speaker 3 it's gonna be able to i mean the only time i think the reason service agreements work so well in the hvac industry specifically maybe hot water heaters is because they need filters right they need how often does a house need filter changes um I would say once a year, we're going to be out there for plumbing, and we are developing the sensor that's going to go on the water heater, Tommy.

Speaker 1 So, we're going to be able to trigger alerts for the water heater and the air conditioning system because those are the two main components that people need on demand, right?

Speaker 1 And garage doors, obviously, garage doors, if they can't open it, they can't get out of their house. But if the water heater doesn't work, they can't take a shower or wash the dishes.

Speaker 1 And if their AC and heating doesn't work, then they're freezing their ass off.

Speaker 1 So, so we are going to develop, we are developing a sensor as we speak on the water heater that we're going to be able to trigger demands so we can get out there and make sure that the water heater is running properly, that your filtration, while you're doing the water heater tune-up and safety checks, that you're checking out the filter and the water and the water clarity too.

Speaker 3 So, if somebody wants to know more and they think Nuve might be the right opportunity for them, how do they learn more?

Speaker 1 Going on my social media group, Service Avengers on Facebook. We're always talking about Nuve in there, or they could go on NuveHome.com.

Speaker 1 There's a quick landing page in there where we're taking customer information and orders right now. I'm telling you right now, we're only going to be able to cater to service sign users for right now.

Speaker 1 That's our first phase. We are going to look into other CRMs like HouseCop Pro and other as we keep expanding.

Speaker 1 But our first clientele is going to be our ServiceSign users just because the millions of dollars that have been spent already, we already developed where the thermostat connects all the way back to the CRM and we're able to dispatch technician based on location, based on availability and based on demand, right?

Speaker 1 on that thermostat. So

Speaker 1 we were able to do that with service sign and other CRMs can't give us that information yet. So that's going to be pretty cool too.

Speaker 3 So if they want to get a hold of you personally, what's the best way?

Speaker 1 service avengers on facebook guys go in there i have a full-time uh a full-time person in there um answering dms and i i i probably have no no kidding over 10 000 dms on my on my facebook um and i have somebody full-time responding to them making sure that they're helping you guys out with new vide questions number one and number two We have hundreds of thousands of contractors coming next gen, you know, every Thursday for the next year.

Speaker 1 It's already booked out of contractors coming from all over the United States to tour the facility and see the operation so you know if you guys ever want to do a tour and see why how we grew up to 130 million dollars and go on service avenues that you know they'll be able to help you in there too

Speaker 1 all right um is there anything

Speaker 3 dope you are thomas let's talk about how fucking how you're everybody's idol let's talk about that for a minute you you you're the killer you're the killer beast so Is there any books that you've read that have completely changed your mindset in the game for you in home service?

Speaker 3 Anything that really pops out?

Speaker 1 One thing people might not know about me is that I don't know how to read. So

Speaker 1 I pretty much muscled my way to where I'm at. I know how to read.

Speaker 1 I just, to me, like sitting down and actually taking time to actually read a book is so hard for me to concentrate on the words and actually absorb what they mean. I'd rather do this with you, Tommy.

Speaker 1 You know,

Speaker 1 I'm blessed enough to be able to pick up the phone and talk to you and some of the most amazing leaders in the industry. So

Speaker 1 me, the way I learn, and I'm not, you know, I'm not saying this is for everybody.

Speaker 1 The way I learn is through conversation, through energy, and through exchange of knowledge in a personal level, not sitting down in a beach or in my house, just reading a book to me.

Speaker 1 I find that to be unproductive on my end.

Speaker 1 I find more productivity when me and you have a conversation and one thing strikes to me, you said something that triggered me, and all of a sudden it makes sense.

Speaker 1 And then I start acting upon it, right? Instead of like looking through a book and reading through pages that I just, I can't understand.

Speaker 3 So, last thing here, you know, we're going into a year. I think 2024 is going to be a pretty solid year.
I'm more optimistic than most people. I think interest rates are going to start coming down.

Speaker 3 I think, based on the conversations I've had, 2024, 2025 should be a solid year.

Speaker 3 Last year, we had a great year as far as the Wall Street, right? A lot of stocks went up, the stock market killed it, but the demand was way down.

Speaker 3 And I don't know know anybody that hit the demand of the leads they needed. And I think we got to be very careful going into this year.
I'm cautiously optimistic.

Speaker 3 What kind of advice would you give looking at 2024, 2025? We kind of talked about this, but I want to just get your sense of where founders and owners and leaders heads should be.

Speaker 1 Whether you're a 1 million, a 5 million, a $50 million, or $100 million company, your main focus for 2024 should be do more with what you got coming in instead of thinking that somebody's going to come and save the day for you or the month or the year for you.

Speaker 1 That's not going to happen.

Speaker 1 And we need to stop worrying about what's going to happen in the outside world if Wall Street's going to turn down the interest rates, if all of a sudden the banks are going to, you know, have this magical moment and we're going to go back to 2022 interest rates.

Speaker 1 We got to stop focusing on that because we have no control over that.

Speaker 1 And we got to start focusing on our operation, our people, loving on our people because that's the number one asset that we have is loving and taking care and making sure that we're helping them through these rough times.

Speaker 1 Because just like the business has rough times, people have rough times personally.

Speaker 1 And we got to make sure that their mindset and their focus for us to be able to go back to what a successful year looks like. And number two, stop.

Speaker 1 listening to all the noise that's happening in the industry where there's not one guy that's going to come in there and and and and fix your whole operation and you're going to all of a sudden make millions and millions of dollars.

Speaker 1 There's no secret pony. There's no unicorns out there.

Speaker 1 There's the only thing that's going to fix the operation is hard work working inside the operation day in day out working methodically finding you know hiring people that are super smart that are going to see things that you don't see in the operation financially operationally marketing wise whatever that is you got to make sure that you go back and you start working on fine-tuning the operation instead of thinking that you can just let it ride and all of a sudden the demand's going to get here and you're going to make millions and millions of dollars that's not going to happen focus on on the shoulder season and making sure you make it out of there profitably or break even.

Speaker 1 It's still a win in the shoulder season for plumbers and air conditioning guys, right? I don't know about garage door guys. And then focusing on the demand season, fucking

Speaker 1 tomorrow, today,

Speaker 1 there's one thing that can always help out make more money is by raising your prices. And I know me and Tommy have different views on this.

Speaker 1 You know, yes, you do have to have a good operation and a good brand and you got to make sure that your customer service is off to par. That is all basic thing that you should know that.

Speaker 1 I shouldn't have to tell you that, but I'm telling you right now, there's always room for price increasements. And if we all in the industry knew that we can all raise our prices 5, 10, 15, 20%,

Speaker 1 it only gets the bar higher so we can keep making more money. Because at the end of the day, nobody wants to do this for free.

Speaker 3 You know, I didn't have any price increases in 2023. We're going to do one in 2024.
We're already at one of the higher price points and people complain about it.

Speaker 3 If you go to one thing I respect about your Facebook group and mine as Home Service Expert is, I won't allow people to come bitch about high prices because you go to these forums of the HX of America or whatever, and the garage doors of America.

Speaker 3 All they do is they bitch about how can anybody charge those prices? But yet you watch them and they pay their people 40 grand a year. They're driving old used trucks.
They're not giving any benefits.

Speaker 3 They're not helping anybody accomplish their dreams. These people got to live in an apartment if they work for them.
They're never going to buy buy a house.

Speaker 3 And it's like the people that they hang around on these sites, you could just tell the losers.

Speaker 3 They always complain of, they always complain about what other people are doing. They never look in the mirror and take any accountability.
They're like, oh, you could have fixed that.

Speaker 3 Well, fixing in a 10-year-old unit, the best thing for that particular client. The client had the money.
It's an investment into the house. They care about the air quality for their kids.

Speaker 3 And it's like, why do people hate so much? Why do people hate success? Because

Speaker 1 they don't have the balls to be able to

Speaker 1 get there and be successful, Tommy. That's why people hate on people that are successful because they look at them and they can't imagine

Speaker 1 in their brain, they don't have the capability to know that it took a lot of risk and a lot of balls to get where we're at. And a lot of decisions were made, good or bad, right?

Speaker 1 To get to where we're at. So

Speaker 1 I agree.

Speaker 1 The pricing thing is definitely something I will never apologize for. I build enough value into that pricing where it's a no-brainer for us to, for the homeowner to make the investment with us.

Speaker 1 And I will never, ever apologize for pricing because we are worth every single penny that we're charging. We are the most expensive platform of ranch.

Speaker 1 And I guarantee you, in probably the United States, we have the highest average ticket

Speaker 1 on our install side and on our service side too. And I will not apologize for it because when you call here, you get somebody out to your house that same day or within an hour.

Speaker 3 Yeah, and I I don't think people understand that. And it's kind of annoying to me to listen to people.
You said success leaves clues, chase the people that have made it.

Speaker 3 Well, I look at those people, and I'm like, if anybody's listening to this dip shit that's literally still working every day, they've been in the field for 15 years, they can't afford to hire anybody.

Speaker 3 I'm like, wait a minute, show me your 401k, show me your new trucks, show me, show me how much you invest into training. Who are your recruiters? Where's your LMS? What kind of CRM?

Speaker 3 They're like, yeah, service time. We can't afford service time.

Speaker 3 It's because you're not charging the right prices to be exactly people complain

Speaker 3 service time costs me a third of a percent of my revenue a third and people like it's nothing in the scheme of things to run the whole company and people always say oh I can't afford service time or it's easy for you to say and I'm like and they're like we can't sell that to clients I'm like well look at your marketing you're you're marketing on Craigslist and offer up for shit

Speaker 3 you know you're you're on bellpack but you don't do anything that where's the value where would you be able to charge prices? You're going to people that want deals, they don't want to pay taxes.

Speaker 3 People say I never get good customers. I'm like, let's look at your marketing.

Speaker 3 I'm going to give you an opportunity. Anything you want to say, you can close this out.

Speaker 1 Most importantly, what you just said right now, hey, why can't I raise my prices? It's because you're not paying your people properly, right? You're not paying your people properly.

Speaker 1 So they don't believe in the pricing that you're trying to obtain. And in order for you to obtain the pricing that you're trying to obtain, you've got to make sure that you take care of your people.

Speaker 1 So when people bitch at me for my prices are too high, then my number one question to them is,

Speaker 1 what is the average employee and your company making? And I guarantee you that we are, our average employee here at NextGen makes way more money than any other competition out there.

Speaker 1 So don't bitch about pricing. Take care of your people so they can take care of the client and you're able to charge more.
It's that fucking simple.

Speaker 3 I love it, brother. Well, listen, if you haven't had a chance to get to NextGen and visit Ishmael, take him up on the opportunity.
I know he's booked out a long time. Check out Nuve.

Speaker 3 And I think he's an open book. Any chance you get to see Ishmael on stage, he speaks the truth.
I appreciate our friendship, brother. I'll back you up no matter whatever you need.
I'm always here.

Speaker 3 I appreciate how good of a dad you've become and that you're working on yourself. So keep up the great work and thanks for doing this today.

Speaker 1 I appreciate it, Mr. Tommy.

Speaker 3 All right, Ish. Listen, have a fantastic day.
Take it easy, bro.

Speaker 5 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.

Speaker 5 I can share with you how I attracted a winning team of over 700 employees in over 20 states. The insights in this book are powerful and can be applied to any business or organization.

Speaker 5 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.

Speaker 5 So, if you want to learn the secrets to help me transfer my team from stealing the toilet paper to a group of 700-plus employees growing in the same direction, head over to elevateandwin.com forward slash podcast and grab a copy of the book.

Speaker 5 Thanks again for listening, and we'll catch up with you next time on the podcast.