How to Beat Private Equity Without Selling | Zach Cooper-Vastola

Speaker A: Looking at the business and saying we're generating all this data, let's collect it and then make sure that we're accessing it and using it to make decisions that improve our customer experience has been a really huge unlock for us. And the more people can think of this as how can I generate data, analyze it and then make good decisions? I mean you have the data there to make good and bad decisions, so why not access it and let that drive how you interact with people and allow someone to get a real personal feeling conversation based on that CSR having a really detailed history and that they can see. The last call was a really great one. They shouted a out our technician for showing up on time and using the shoe covers like remind them of that, bring that up and really improve that customer interaction so they feel like it's personal and high touch and a human to human connection.

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Speaker C: Hello everyone out there in podcast world. Hope you're having a wonderful day. You're listening to or watching the Service Business Mastery podcast. I am one of your hosts, Tersh Blissett, sitting virtually next to my co host Joshua Crouch. And we have, uh, Zach Cooper Bastola on the show today. Did I say that right, Zach?

Speaker A: Yeah, thanks for having me.

Speaker C: Absolutely. So we're going to talk a little bit about AI and private equity and how AI and systems can lead let small teams outrun.

Speaker D: You're welcome for putting the banner down there to help you out.

Speaker C: Oh, uh, I didn't even read it. Oh, not that I could if I would.

Speaker D: You're looking at your other screen. There's so many distractions when you do this digital. Like I always Feel like I see these podcasts that get done in person, and I'm like, God, it must be nice not to have so many distractions, because, like, I see an email over here and a Slack message over here, and it's just like, I had to

Speaker C: turn off all these notifications. I know I'll get distracted like crazy. Welcome to the show, Zach.

Speaker A: Yeah, thanks for having me.

Speaker C: Absolutely. Josh, I'll let you. I'll let you go. You're eager to talk about this. Uh, I know you're excited.

Speaker D: Yeah. Zach, if you could, uh, just give us a brief intro on how you guys got into the home services space and kind of your guys's background, because I think you guys have some. Some interesting dynamic to talk about that everyone's always. I mean, yeah. Conversation around private equity and how do you build systems that scale and how do you expand your team and how do you leverage technology like we talk. Our podcast episodes have generally bits and pieces of this, but you guys have kind of been through the transition. You guys took, uh, a company that was on paper, so I'd love to hear, list kind of your guys's background and how you guys got into this and what got you guys into the trades and just what that story has looked like since you guys have gotten in.

Speaker A: Yeah. So, you know, around 2015, you know, I was living in Boston. My two partners, John and Greg, were also in Boston. Greg. Greg being.

Speaker D: Say, you don't really have a Boston accent.

Speaker A: No, I. So I grew up in.

Speaker D: I should have made that a prerequisite. Be like, if you're going to say you're from Boston, you got to say you're from Boston. Or however, you know. That accent was terrible, too.

Speaker A: Yeah, yeah, sorry. So I grew up outside of New York, so I'm originally from the area. I, uh, had been going to school in Boston. Met my two partners, John and Greg, while they were also living in Boston. Greg was working at a, you know, a company as, uh, a software engineer, primarily focused on nonprofit fundraising. And, um, John was working at a group that was working to buy companies. And so I had met John through a posting online that he had written about basically saying PE groups don't know how to buy small businesses. Their playbook is flawed. And I thought that was really interesting, so I sent him a message on LinkedIn. Uh, Greg, the same time I was focused on fundraising, uh, for these nonprofits. Seems like there's a lot of gaps and things from that world that we can apply to the small business world, whether it's Marketing, outreach, just systems and processes. And so the three of us teamed up and said we're going to develop and create a great, develop a software or program or something that basically was a thing that we could give to small businesses and help them sort of compete and modernize and develop a really strong playbook for them. And so, you know, Fast forward to 2018. We decided that we needed to, you know, we would use Stanley Ruth as a proof of concept. A, uh, small family owned business, four generations of same ownership. Uh, the owners were in their early 70s, servicing primarily new York City, pre war co ops. The company was over a hundred years old. And you know, when you showed up, the walls were all carpeted and people were smoking in the office and it was a really old school, uh, just

Speaker D: setting a great, little different, great picture there.

Speaker A: Yeah, we met the owners and I thought they seemed really great and they didn't really know. They had no intention of modernizing or rolling out systems. And we thought this would be a great fit for us. So in March 2018 we bought Stanley Ruth and immediately went to work. And what we discovered was running a business is really challenging. And so we focused for two years on the day to day operations. So purchasing sales, day to day operations. It was a highly centralized company where the owners who worked tremendously, who were tremendous at what they did and worked really hard, um, they were the decision makers in every piece of the business. And so we quickly learned that the processes that existed were not going to work for us long term. We could not be the central decision maker on everything.

Speaker C: We're not going to work from that bottleneck.

Speaker A: Right. You know, working from 4 in the morning till, you know, 9, 10 o'

Speaker C: clock at night, we've all done that.

Speaker A: And around 2019 we decided we're going to really start to layer in these processes and try to invest in systems. We put in place Service Titan, set up new phone systems and really went to work on trying to modernize and get this company up to where we wanted it to be. And I think, you know, we did a really great job of deploying those tools and the technicians were really excited about it. I think at first that transition from paper based where you were hand reading or reading these handwritten notes and trying to figure out is this a living room, dining room? Yeah, whatever it is, you know, immediately in the office people were super excited because the system we were using was this really antiquated, uh, locally hosted software that if you opened a customer page, you couldn't open. If I had it open Someone else couldn't open it and look at the same profile.

Speaker C: Nice.

Speaker A: Immediately we saw these changes along with big cultural shifts of giving people responsibility and trusting them to make decisions and letting people sort of make their own decisions, but also not only fail and not be berated for it, but also succeed and be able to take credit for their successes. It was a, a huge, you know, we had this huge amount of momentum behind us which, uh, then in 2020 in New York City closed down due to Covid. We shut down operations and it really took the wind out of our sails. And so we spent several months regrouping. But we were always very scrappy and we always were oriented towards solving problems. And so we worked a lot of different angles to bring in, you know, whether it was trying to pre sell jobs or renew contracts or a lot of different avenues. We used to be able to shore up the business, um, using our existing customer base and going remote early and preparing for what was ultimately going to happen, which was that, that shutdown once things reopened. I mean we, it was a challenge to get people back to work, but you know, it took us about four or five months to really ramp back up. And leading up to that close, we had, you know, on the topic of finding solutions, we had pre bought over a million dollars of inventory because we thought, you know, hey, if, you know, if we do run out of money, at least we'll have a bunch of ACs we could sell. Um, so, you know, Fast forward to 2022. We basically had the opportunity to expand out of New York City and grow into the Westchester market. Um, and partnered with an owner up there and really had a firsthand look at private equity buying home services companies. Um, in New York, it had really not been. They're not very present in Manhattan. I think it's a really challenging market to work in. Um, but in Westchester, we saw some of the big name groups operating and really doing things that were destroying amazing big companies. And so I think the whole premise of our business was we thought that P groups were going to do this poorly. And I think that.

Speaker D: Do you have some example, like you mentioned, things that are destroying like the companies that they had purchased and do you have any, uh, obviously you don't have to name names or anything, but like examples of what you guys saw or heard that was taking a company's great reputation of the original owner, got bought by P and P kind of tarnished that reputation and started to get a bad taste in local homeowners mouths.

Speaker A: You know, we're in a Services business, which means that you need to provide a service. And, you know, I think what we were seeing was on a number of fronts on the customer side. It was high pressure sales with, you know, really no need for it, where people were not incentivized to repair or maintain systems. It was highly incentivized to sell. We saw, you know, company owners who were being sort of, you know, not paid what they were expecting to be paid, and then technicians who were having their hourly rates modified and ramped down where they were making a lot less money than they were making previously. And so it was really this threefold thing where we would see a company sell and then a wave of technicians would show up and say, looking for a job. And we knew that something had happened there. Oh yeah, we've seen a lot of stress in our markets and other markets of these consolidators. Some big names out there that are, they're doing their thing. But a lot of these smaller groups of people who don't really know how to run these businesses, they think they're going to raise some money, go buy businesses and then run them from an ivory tower. These are tangible, real companies. You have to be on the ground managing them. You can't sit, uh, in an office building somewhere and expect that everyone's going to continue to work for you. You need to be on the ground motivating people and building a culture. Because if you don't build the culture that you want, someone else will. And it's not going to be what you're looking for, is my guess.

Speaker C: Whenever you acquire businesses because you, you have acquired several, correct?

Speaker A: Sure, yeah.

Speaker C: How do you prevent the mass exodus? Because even if you come in with the best of intentions of having, you know, maintaining culture, you still have to change some things. Because otherwise, if they were super profitable before then why sell? I mean, obviously there's some situations where they would sell even though they're profitable. But you're going to have to come in and make some changes. And oftentimes people don't like change. And so whenever you even talk about change, then there's usually an exodus of some, some percentage. And, uh, there's also the assumption that as soon as a company comes in and purchase you, purchases your company, that you're, they're going to change things. So how do you prevent that exodus whenever you do purchase the company?

Speaker A: I think that ultimately comes down to building goodwill with people. I mean, for us, like we are owner operators. We are not a, uh, fund or a group that's just investing in businesses and then expecting them to run on their own. So, you know, we spend like my partners and I and our team, we spend a lot of time at the, you know, at every location. And we've got about a dozen locations across the tri state. I mean it's a lot of driving but uh, ultimately people don't like change. But if you can show the value in what you're providing, which is, hey, we're going from this system that causes you a lot of stress and time and you show the benefits and display them and also just give them examples and say, look, yeah, this paper ticket system that you are reading and spending hours trying to interpret, we're going to set up a new company or a new software, you know, that technicians have access to that you have access to and we have free information that anyone can access. Like no one wants to have an opaque process in their business. So I think it comes down to just uh, showing the benefit, you know, having the confidence to, you know, make good decisions and say, look, these are the systems that we're running, you know, but also knowing it. Right. I don't think anyone should roll out a system unless they've vetted and understood, you know, we're a service titan company. We, and we think it's a good product for what we need. But other people might think that there are other products out there that would be better for them. And I think ultimately you need to understand the product you're showing people, but also show them it's ultimately a benefit. Change for the sake of change is not bad. You're gonna have a hard time on that.

Speaker C: But I mean that's, that was one, that's one consistent thing with our company is that change is normal. Like that's it happens a lot whenever we find a better way of doing things. One of the things that was talking about this a couple days ago and actually uh, I think on our last podcast episode we were uh, talking about that and that's pay change. And like when you come in to a company and the pay structure is set up a certain way and that's the way that everybody's used to doing it, how long would you typically say if you did keep something like that in place, like because you don't want to come right in and day one and change every single thing in the company because that's how you get mass exodus real fast. How long would you say you keep a, uh, pay structure in place that you didn't necessarily do? And have you ever come into that? Not necessarily Like a pay structure, but any kind of system where you had every intention of changing the system to the way you do things, but then you, you seen that that company was actually doing it. Like the, the structure that they're doing, the system that they're doing is actually better than the one that you have currently.

Speaker A: Yeah. And I just want to address one more thing on the change side of things, which is I think pay systems, whatever it might be, ultimately there's a lot of businesses out there and a lot of them are doing things that are really great and some of them are doing things that need to be improved. And ultimately, at the end of the day, the best way to convince people to embrace a change is to listen to them and understand them. And we spend a lot of time with our people, asking them and trying to get feedback to say, are the pain points for you? What are the things that you really love and think work really well? And so I think when you ask people what is a challenge for them, they will tell you. And so I think our typical philosophy is to try to address those things early on and incrementally change other things that maybe aren't really pain points and that really won't garner much goodwill. And on the pay side, we typically don't change pay structures. In fact, people typically will make more with us. But our general approach is to find people, empower them to elevate themselves within the company. And what does that look like? It could be anything from, you know, a really talented sales manager who maybe should be the GM at some point, or a really phenomenal, you know, technician or apprentice that maybe could be a foreman, uh, or a, you know, some sort of leader within our organization. We've seen people rise up within our company and we're approaching 350 people every corner of the business. I mean, you really can never discount anyone. And we've had a lot of success and giving people the opportunities to succeed and take ownership and run with their ideas so that they can say maybe this guy who was an apprentice who's really talented on the computer, maybe he could be inventory manager or whatever it may be. So our general philosophy is, you know, try to elevate people, allow them to raise the bar and then pay them for that versus just, you know, I think and some people, they want to be on a commission, right? Salespeople, like a lot of the times we see sales commissions that are, that don't quite make sense. And if, you know this, everyone feels that way, we'll, you know, put in our Standard, you know, sales commission. But, you know, in general, we try to pay people more and we try to elevate them so that they can achieve that and do better by themselves. Like, one of the. One of the best things, uh, one of my favorite things about this business is, you know, seeing people who've been with us for. We've been at this for eight years. And so there are people who've been with our company for, you know, 30, 40 years, but there are also people who have been with us for eight years. And seeing someone who is a junior employee, you know, put in a PTO ticket because they're closing on a house or.

Speaker C: Yeah, that's cool.

Speaker A: It is the coolest thing when you can see that someone has been working with you, you've allowed them to elevate, and now they're providing for their family and building their own sort of, you know, their own life. I mean, that is so rewarding. And I can't. I mean.

Speaker C: Yeah, that's always exciting.

Speaker D: What's interesting. So, like, Tertia and I, we've had, uh. I mean, we have some good friends who are in M and A and stuff like that, but they're typically helping someone sell their business, and that person is wanting to exit at some point. You guys are buying businesses to keep them and build essentially under your umbrella. And you guys sounds like you guys are pretty still, uh, the three of you are still really involved. So is there something different that you believe you guys look at when. Because, like, there's probably people out there listening to this that, hey, instead of selling, why don't I go buy some local competitors? And what sorts of things did you guys look for that were appealing to you to bring in someone? Bring in a company that enhanced your culture, not. Not, uh, made it worse or, uh, enhanced your business overall, at least from a, you know, a value perspective. What. What kind of things did you and your partners look for that might be a little different than what a private equity company looks for, who they're just building it into their portfolio? They're going to sell the portfolio to a big bank at some point or like a black rock or whatever.

Speaker C: Roll it all up.

Speaker D: Yeah, they're all just going to roll it up. And they don't, you know, they don't really get. They don't get to know the people and see them buy the house and all the things that you just shared. What does that look like for you guys?

Speaker A: For these large buyers, all these companies, there's a number on a spreadsheet. No one sees when the field manager takes off time to go buy a house, or when someone's able to go buy a new car and really receive those benefits of their growth. Um, for us, I think it really comes down to the culture and I think there is a base level of financials that need to make sense. Yeah, you've got to make sure that you're not putting, you know, either an unreasonable amount of debt on the business or putting the company in a position where it would be strained in a post close world because you overvalued the business or you tried to meet some expectations that were unreasonable. But for us, I think it really comes down to the culture of do we have the opportunity to meet with every employee before we do something like this? No. Right. And typically we don't meet with any of the employees, but typically there you can find clues within, you know, what is a good culture of a business. And the owner is always a really great reflection of that. And I think we've been really fortunate that the, you know, the people that we've worked with, the owners that we've either partnered with or that have sold to us, you know, we were able to say, these are people that we want to work with. And we spent a lot of time building that relationship and underwriting and saying, you know, is this person someone that we want to work with? Are they someone who would, you know, foster a great culture? And you can see that when you walk into an office, right. Things are organized, you know, it's a, you know, well maintained. You walk into the warehouse, I mean, there are boxes everywhere.

Speaker E: Right.

Speaker A: When you like, you know, for us, safety is enormous.

Speaker C: Right.

Speaker A: When I walk into a, uh, warehouse and I see like ladders chained up, there's no slip hazards, there's good signage, there's good lighting. I mean, things like that where you can tell there's a well run business, you don't need to see the financials to know a company is run well versus you walk in and it's like the light bulbs are out and the trucks are a mess and it's like, yeah, there's stacks of paper everywhere and there's garbage all over the place. Well, if this is the level of management that's happening, I mean, that tells you a lot about a business's culture. Um, and look at, for us, that is the most important part is we want to work with the people who we trust and want to be with. And we've gotten to the point now where we're really heavily valuing that and saying who are the people we want to work with and how do we make that work? And again, there's that for people who sort of sitting out there saying, I would love the opportunity to go out and buy a competitor and grow my business the way that we have, do that, find someone you want to work with. Because the worst thing you could do is do a deal or try to come up with a partnership or something with the wrong person. And I think, uh, these companies, it's about the people, right? The employees, the managers, your partners. You have to pick the right people. And for us, we've been so, I'd say disciplined about making sure that we're bringing in the right people and picking the right employees and protecting that culture and finding that, you know, you will, if you build a culture with values and you find people that align with that, you put them together, they're going to bring in more people like that. And so I think, you know, it's really important that you, you trust who you're working with.

Speaker C: Oh, for sure. Absolutely. There's nothing more painful than having a partner that either isn't pulling their weight or isn't doing what they said they were going to do, or you get into working with them and you just don't have a good relationship anymore. Like, that's terrible. Uh, especially if you're not working bad marriage.

Speaker D: Like, it's really no different. Right? Like it's, you have to talk to people all the time and if you don't like talking to them, it's like you just can't get much done. You just. Probably just brutal. Yeah, you stay in your own lane and don't really communicate much because you know it's just going to lead to more of a headache.

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Speaker D: How many calls did you miss last month? Not, uh, how many you answered. How many did you miss? Across the home services industry, about 30% of inbound calls go unanswered. And those aren't just tire kickers. Those are customers ready to give their business to whom? Whoever books first. Breezy fixes that with AI agents that answer every call. They book the jobs for you and they follow up instantly. So instead of waking up to missed calls, wake up to book jobs. If you want to see how many jobs you're losing right now, go to get breezyapp.com use code SBM M and they'll give you $500 towards Breezy on us. Now back to the episode. If we, if we go backwards a little bit in 2018, you guys, on paper, when this first, uh, company you guys acquired and you, you know, you mentioned some changes, you obviously getting the CRM, that's usually like one of the first things people do now there's been an explosion and I don't think I'm over exaggerating that of technology in the home services industry since COVID and even more so since AI came about in like, what was it, November of 2023 or two. I don't even remember.

Speaker C: I don't even remember.

Speaker D: 22 maybe, uh, like forever ago. What is when you guys are, you know, especially at a company, getting close to, you know, 80 to 90, 100 million this year? You know, a technology decision is probably a lot different than it is when you're at, uh, two, three, $4 million company, a few people and you can be on your way. Well, how do you guys evaluate technology to see if it's going to benefit the team, make you more efficient? Like what, what's the decision making criteria look like for you guys at that scale?

Speaker A: You know, when we started this business and started our sort of our thesis of trying to deploy technology and systems into these companies, a lot of the things that were best in class back then were very different and probably a little bit more table stakes today. Um, and a lot of people weren't. That was not a, you know, a hot market. People did not want to see that. And we received a lot of resistance to the concept of technology and home, um, services in the trades today. I mean you go to a conference and everywhere you look there's some AI company that whatever it is trying to sell, whatever product.

Speaker D: There's almost more AI voice companies than marketing companies, which is saying something.

Speaker C: That's a lot, that's a lot of companies, right?

Speaker A: You walk around, you're like, I don't want to make eye contact because someone's Going to try to sell me some AI voice company.

Speaker D: Um, believe me, I'm the. I own a marketing company. I didn't tell you this before. And so I see that. I see people look like they're looking around. All of a sudden they see the marketing company lock eyes and like, like,

Speaker C: oh, yeah, no, we're nice people.

Speaker D: I promise we're not. I'm not gonna say anything, but anyways. Um, but yeah, I'm curious just what that looks like because it's such a big decision. You know, one, the contracts are a lot bigger when you have 300, 300, 350 people that sometimes you got to be, you know, you got to have at least half of them as users or whatever. Um, but it also can make such a huge impact if you get the right technology in place, because you can save probably thousands of hours or get rid of monotonous, tedious things that everyone does every day that it's, they don't really. It doesn't fill their cup. And that's, that's why I asked the

Speaker A: question early last year. I remember we were starting like, AI was starting to pick, uh, up and it was becoming this thing. And ChatGPT had sort of evolved from this, like, sort of, you know, parlor trick chatbot to like, now this can actually, like, you can do things with it, do stuff.

Speaker C: Yeah.

Speaker A: We had a meeting and my partner John came in and said, we've got to go all in here. Like, this is something that is going to change the, change the way we work. And I think we're all pretty tech forward and we're all really ready to embrace this. But we really had some trouble understanding, like, well, what are the right products? And a lot of these companies are very early stage and they're pretty small. So if you make a bet on a new startup company and you're spending, you know, hundreds of thousands of dollars a year with them, you know, what are the odds that they're actually going to survive? Like, are they going to get bought by someone? Are they going to get. They're going to make it to their next funding round. And so it was a mixture of underwriting, well, will this business exist in 18 months? But also this is the right product for us. And so we brought in, uh, our cto, who, you know, then brought in a team of engineers. And we've got 10 people who work full time on our AI team that are both underwriting and evaluating products, but also developing our own homegrown systems. So, yeah, it allowed us to not only be like, an educated buyer of these systems, but also allowed us to look at the systems that were not quite what we wanted and develop our own. And so what we've been able to do within our company is develop our own business intelligence dashboard that is really taking all these different data sources and things and consolidating it and pretty much giving us one central location where we can see, you know, call volume, call sentiment, things that, you know, customer journeys of, you know, someone calling one of our, you know, locations and seeing how do they sort of transition through a pipe like a sales pipeline or a lifetime as one of our customers. Because we have different geographies that we're working in, we've actually been fortunate that we can test different products and we've run side by side trials with different companies to say, well, let's see, you know, sure, everyone's demo is shiny and fun and exciting, but once you get it on the ground, I mean, sure, to commit every employee to one product, we have to really be impressed. And so we've been running these trials back and forth, but the embracement, the amount that our employees have embraced it is, is really surprising. And you know, now we've, we're trying to set up this understanding that everybody's a builder and so everybody has a, a, you know, we have an LLM that we use that everybody has access to. They're building their own tools, um, and people are just starting to develop their own solutions that would, uh, otherwise be a SaaS product that we were buying. And so within home, um, services, I'd say we're having this really amazing moment where for the last 10 years it's always been how can someone sell a product to me and how can they get a percent of my bottom m, whatever my revenue is if they can get $0.10 out of every dollar for whatever CRM or voice system that was? What. There was billions of dollars going towards that. But with these new tools, we're able to develop our own solutions and then deploy them into our business using our engineering team and say, how can we capture all of that value back and say, you know what, rather than using this off the shelf solution, we're going to build something that is not only better for us, but we're not paying a monthly subscription per person per month. So, um, you know, our deploying it into, you know, I think like any, as we mentioned earlier, change is, is a challenge and you need to go through the steps of, you know, showing someone why there's value in this new system. And you know, the Rate at which we've been able to roll out tools and have our local managers request things or features or suggest that they have problems that are then solved by one of our engineers. Developing an AI solution has been really, it's really incredible how fast that we can stand up products whether it's an accounting forecasting tool or a calendar sync solution because someone might have multiple calendars that they're managing to a training and enablement uh hub where people can go and learn what are the sops for certain whatever processes that are out there, whether it's accounting or you know, booking a job or selling a job, whatever it may be. But we've really um, seen a high level of embracement and it all goes back to letting people develop their own solutions that they have extreme buy in on the product. And if, if you have an inventory manager develop their own inventory solution, they're going to be a lot more likely to use that than if I absolutely put something in front of them and say you got to use this now has there been.

Speaker D: So whether it's a developed solution from you guys or something you guys have gotten into, you don't have to mention names or anything like that but if there was maybe like two or three types of products that on the AI or automation side or that enhanced efficiency, what would you say that those like what, what bucket of the company of those in would it be an inventory thing, a sales solution, uh, an AI voice product? Like where would that live? Just so people that. Because there's still, I mean Tertia and I talk about AI and automation all the time. So like for us we've seen and talked to and heard all the different products that are out there but there are still a lot of people. It's, it's, it's hesitant because one rolling something new out like you mentioned is challenging and not everyone is a great, a good enough leader sometimes to get buy in on those changes. They make those changes and they're like just well team's gonna have to figure it out and jump on board instead of like can you know almost like selling them on why we're doing this and the reason behind and how it's going to make their life better. But I'm curious if there's just a couple things that you've seen like as far as, like if we could take like prioritize my biggest impact it made for you guys with some sort of new solution whether it's developed or not internally, what does that look like or what, what kind of improvements has that Made for your guys business as you guys have scaled to like 80 plus million.

Speaker A: Yeah, I'd say on the sales side we've seen a really huge improvement. And I think there's to your buckets, there's, you know, there's that back office, you know, there's accounting and things that basically just need to happen that are repetitive and easy to automate. Uh, whether it's like exporting transactions or booking, you know, whatever, you know, invoices are for the day, like those are basically just repetitive actions that you know, we can automate pretty quickly. But then there's processes on you know, that would typically be more of a human handoff, like a set, like a, like a sales handoff.

Speaker C: Right.

Speaker A: Like on the sales side we've seen a huge improvement on conversion and I think that's been the most impactful for us because when you automate an accounting process you're not really, you're saving time and you're not really saving a lot of money and it's not really moving the business forward. On the sales side, like for an example, our team had developed a solution for our sales team where historically sales engineer receives a call, takes down some information, puts them into our sales system and then it's all rather manual, right? It's tracked in an online database. Uh, and so our team had taken our phone call system, layered in an agent that uh, essentially could listen into a call, take down notes, fill in a uh, customer lead or a profile and basically generate some follow on actions that would otherwise be manual. And so we had this really funny moment where one of our sales uh engineers was on the phone, you know, took down his notes and then was getting ready to put them into our sales management tool and looked up the name and immediately everything from the call had populated. And so he, you know, so there was no address or email or any of these things that people you know, always complain about saving all that information or the notes from the call. And he runs over to the AI team and is like what just happened? Like what is this? And the whole team is incredibly embarrassed and they say we're so sorry, that wasn't supposed to launch, we'll turn it off. And he was no, don't turn it off. You have to keep doing it. This is amazing. And so I think our general approach and the things that we've seen the biggest impact from are where can we take processes that we're taking our people away from Interacting with customers, which is like data entry, trying to figure out where you know, you know where leads need to go. Automating that so that our people can spend more time interfacing with customers, whether it's sales or booking service calls or what, whatever it may be. And I think, I love that you said that. Yeah. And I think that's where a lot

Speaker D: of your size that you think you'd be like. Because we've, we've seen other like other um, other podcasts that they have guests on their $100 million companies and they lean really heavily into like AI AH voice and stuff like that. And I'm, I'm just, it's always curious, it's always, it's different to see how people approach that because sure, if the AI is really good, it could help, um, and free up your team for stuff. But like, I don't know, I guess Ter and I have always been very aligned on and we talk about this often with our, with our, we have another business that we have a co founder in that like let's make the humans super. Like let's just do that. Like why do we have to replace them? Let's make them super and have the data that we can't have never been able to analyze unless we literally had just like a super genius genius that could just look through all this stuff and analyze and tell them exactly what we need to do. Tell me what we need to do. Let the humans do it and then let the personality shine. Like let, let's get, let's start having fun instead of, you know, just always having to be a robot on the phone and say the same thing over and over again. Like smile. Let's focus on like the softer skills because I I l who's it? I was talking to someone this morning. Uh oh, this really, really smart guy with where AI search is going and stuff and this like the whole shopping experience. He's, he's actually spoken at these Google Marker marketing live conferences overseas and stuff like that. So like he's, he's pretty bright and just like by 2030 he's like the whole shopping experience is going to be different. Like agents are going to be booking calls and, and buying stuff, putting it in your cart and they're probably going to be checking out for you. And I'm just like, oh my God, like we are not ready as a species for this yet. Like you know how many fraudulent or transactions, like no, I didn't want, I didn't really want that. I wanted this one. Like this going to cause a mess. But let's just make the human connection better because people are going to, I, I feel strong, like people are going to start having an anti AI. Oh, it's on the front lines. Like if it's on, if it's behind the scenes, nobody's going to know whether you're using it or not to train your team or to analyze data or to fill in transactions. But they will know if they're talking to one.

Speaker F: Yep.

Speaker C: Uh, yeah, and we're chatting on the website with one.

Speaker A: And for us, I think our general philosophy is while everybody's out there trying to figure out how to make their customers interact with AI agents, we're trying to figure out and come with solutions that allow our people to spend more time interacting with people and taking out those, you know, those monotonous tasks that get them off the phones or get them distracted or have them doing other things and, and you know, look, there are companies out there that, that works for them. But for us, like the people are important and having human and human interaction, I believe that that is going to always remain, you know, a really important part of this business. I think that people will pay a premium to. They're talking to a person that knows their name, knows who they are and isn't just a, uh, another AI bot. And again, I think that's where these small businesses though, and companies that are out there that are trying to compete with private equity, they don't need to eliminate their call center or their CSRs to compete with a PE group. They just need to figure out, how can I get my people to 10x when that, and what does that look like? It's not eliminating them. It's getting them away from doing the things that don't really produce the business money, like data entry and booking, you know, these manual processes. I mean there's a lot of really neat tools out there where you can 10x your existing, you know, employee base and take a CSR or two CSRs and run at the scale of something that's like a 20, 30 person team. You know, that was, you know, you know, five years ago.

Speaker D: Yeah. And then you can analyze the data within seconds. I mean, I think that's, that's mostly what I used. I'm um, I'm analyzing stuff that I never thought I'd ever be able to analyze for our business. Like, it's just, it's, it's wild. And it's so helpful though, because it gets me to the point of like, I can make a decision now because I actually have the fact instead of these huge spreadsheets and I'm like, oh my God. I'm like, you know, you're looking at one line like, okay, and the next one I'm like, shoot, what is that telling me now? You know, you just kind of, you can, you get more confused the more data you look at because you're like, it's just too much for our uh, brain. We're not computers, but the computers can spit out. Okay, here's the top five things you need to know. Great. Now I can do something with this because I can read through that and make a decision. And there's just so many, like, especially at your guys scale, inventory. I mean if you guys are buying a million, uh, this is obviously you said before, but a million dollars in inventory, how well was that inventory used? What systems did you buy the most of? What parts did you buy the most of? What filters did you buy them? Like all these different things that you can have different discussions with suppliers about like, hey, we buy a lot of these and we're going to focus mostly on these. Let's get a price break on that specific item because we're going to purchase more of them from you if you give us a good price. And so you can have like really in depth conversations that most people just like, man, I bought the filters. Well, that's the stuff that suppliers make their money on. They don't necessarily make their money on equipment. They make it on PVC and fittings and pipe and all these other things that it's pennies but they, they make 40, 50% margin on that stuff. Which of course, you know, we can start getting that money back in our pocket now. Uh, because we, we actually can have that conversation, know exactly what we buy, how often we buy it, how much we need. Um, so I love your guys. I love the fact that you guys are. And there's no wrong way. Like just if, if you lean having an AI and you love the technology, there's no wrong way. It's just, I don't know, I'm not ready to replace people yet. I don't like. You see these movie, um. What was the movie with Bruce Willis? It was like, um, they stay at their house. It was um. And they use like these robot bodies out in the world but they're in like a. I can't think of the name of the damn movie. It was pretty popular.

Speaker C: I don't know.

Speaker D: I'll find that, I'll find the name of it.

Speaker C: Some weird stuff you watch.

Speaker A: Is it surrogate or.

Speaker F: Yeah.

Speaker D: Yes, that was it. Were they like, he was a cop and he, he didn't like the way the world was going because like everyone uses surrogates. And of course they did all this crazy stuff because it wasn't actually their body, it was like the body they bought or something. They just tapped their brain into it. And uh, he ended up killing the whole system in the movie because he, he was like the only, he was the only cop out there fighting against all these robots, essentially. Terse. Now you gotta go watch the movie. It's like 20.

Speaker C: Yeah, I guess so. I, uh, guess so.

Speaker A: Uh, I don't know.

Speaker D: We're heading this way. Like it's funny because we, we're laughing about it now. But I can promise you somebody somewhere is like, wouldn't that be cool? And they're gonna create a, I mean, look at, we're getting, uh, Tesla by 2027, supposed to have like a million robots in the world. At least if he's going to make his.

Speaker C: Have, uh, you seen, have you seen the metas thing where they, they put the device around the head and it read the brain waves? Like it's at like 60% accuracy. But it's crazy that like without even

Speaker D: having an implant there's, well, there's, you know, I don't even know what the neural link or something like that.

Speaker C: Yeah, neural link was grok or whatever.

Speaker D: So the more human because at some point we're gonna, I feel like we're gonna have a rise up moment and be like, no, we're not robots. But that was a total sidetrack moment and I apologize.

Speaker C: Good job, Josh. Great job.

Speaker A: Yeah, I don't know about cyborg H vac techs, but, you know, handing off leads automatically. 100%.

Speaker C: Yeah, exactly.

Speaker D: Was, uh, there anything else as far as like the technology concern? I know you talked about the sales, your sales system and keeping, you know, your great team members on the phones and stuff like that. Was there anything else? That was like a really big aha moment for you guys that really helped you guys become more efficient, sell more, enhance the customer experience.

Speaker A: Something that a lot of people overlook is that uh, our companies, you know, any home services company is generating so much data across every like, interaction and every day, right? Every phone call, every service call, every moment, you're generating data. And so, you know, for us, like saying, you know, how can we get that data organized and then act on it? Like, I think you were just, you know, Josh, you were just saying, you know, all this data around inventory and all these things, like, you can apply that same logic to service department Sales department. And so, you know, what we've done is basically say, you know, how can we aggregate that data and pull that into one place and then act on that? So now we're able to really intelligently look across hundreds of service, typing tickets, phone calls, things like that, and try to identify what's a sales opportunity or what is a, uh, point that's important to our customer. So that by the time a technician walks into a door or csr, uh, calls someone back, they have a really clear understanding of what is important to that person. You know, what, you know, what do they value and then, you know, what's the right step there? And I think we're improving our customer experience by saying, you know, if someone calls and says, you know, oh yeah, my AC is broken, I've had three other companies out and you know, it's never worked for the last 10 years. You know, uh, a untrained service rep is going to book a service call, right, and say, yep, we're going to send a service guy out. And if that service technician is trained, they might say, yeah, this unit is, you know, probably worth replacing, but they'll most likely just fix a part and you'll be back there in six months changing a capacitor or whatever it might be. And so I think what we've been able to do is take that data and say, you know, hey, this customer is already telling us they're having repeat issues, that the unit is never is not quite working and that they're looking for a more permanent solution. And I think, you know, one of our values is delight customers. And so what does that mean? It doesn't mean, you know, fix a 20 year old unit that's limping along. It means, you know, suggest a replacement so they don't have to take off work again or be without air conditioning for another weekend in the middle of the summer. And so, you know, for us looking at the business and saying, we're generating all this data, let's collect it and then make sure that we're accessing it and using it to make decisions that improve our customer experience has been a really huge unlock for us. And I think, you know, dream the more people can think of this as how can I generate data and then analyze it and then make good decisions? I mean, you have the data there to make good and bad decisions, so why not access it and m let that drive how you interact with people and allow someone to get a real personal feeling conversation based on that CSR having a really detailed history that they can see the last call was a really great one. They shouted out, you know, our technician for showing up on time and using his shoe covers. Like remind them of that, bring that up and really improve that customer interaction so they feel like it's personal and high touch and, and a human to human connection.

Speaker D: I love that. This is great information, Zach.

Speaker E: I really.

Speaker C: Mic drop.

Speaker B: Yeah.

Speaker D: I really appreciate you sharing the experience because I think you guys have had a kind of a unique ride to the trades.

Speaker C: Like it's not, it's not what we hear every day.

Speaker B: Day.

Speaker D: Yeah, it's not a common story. And so I think you guys have a different perspective on how you can go about this and how you can compete with private equity and implement some of these things. So that way you don't have to out, you don't try to outspend them or you don't have to be like the, the wittiest person in the world to come up with a, you know, crazy idea to beat them in the marketing game and stuff like that. So um, really appreciate your guys perspective. If, if anyone has any questions they want to reach out to you guys. Is there, is there a place they can that. Because I know you're not selling like a product or anything like that. So is there a place that you guys are okay with them reaching out to if they want, want to ask you guys questions?

Speaker A: Yeah, I'd say if they want to, you know, shoot me a LinkedIn message, you know, that's usually, you know, I try to keep tabs on that pretty often. I think that's probably the best option.

Speaker C: Okay. Okay, cool. We'll add that to the notes. Thanks. I appreciate you reaching out. If anybody has any questions at all, don't hesitate to reach out out to myself or Josh. If you're connected with Zach, reach, uh, out to Zach on uh, LinkedIn. Uh, with that being said, I hope you have a wonderful and safe week until we talk to you next time. We'll see you.

Speaker D: See you guys.

Speaker A: Thanks very much.

Speaker F: Thank you for listening to this episode of Service Business Mastery. Now that you are equipped with essential business advice from this impactful conversation, you are one step closer to becoming the successful owner of the your dreams. If this episode has been helpful to your business journey, don't forget to subscribe to the show, leave a rating and share it with other owners as well. Visit servicebusinessmastery.com to learn more.