Home Service Slowdown, Contractor Labor Models, Hiring After $5M

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Well, let's go ahead and jump right in.
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First thing on the docket, I know that right now it's very much, in my opinion, kind of a bifurcation of who is seeing really good results in home services right now and getting tons of leads versus a lot of people that are looking at
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you know, their business and there's not getting a lot of leads coming in.
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And I know you had a couple graphs that you wanted to share and just talk about where we economically from a national perspective versus what people are feeling in their home service, in their local community and take it away.
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Yeah.
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So I've been having a bunch of conversations with contractors and conversations with people that are consultants to the contractors and the
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Who knows if the data is gonna change, but so far people are talking in terms of their businesses being flat this year or being down this year, and people are trying to figure out what's going on.
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And so I have these two slides that I shared with you, Mike.
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that actually tell a totally different story.
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So if we're telling ourselves that the consumer doesn't have any money or they're in trouble or whatever the scenario is, the data doesn't actually paint that picture.
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So I think if your business is flat or not growing,
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It could still be related to the consumer.
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I don't question that story, but I think it could also be other factors.
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And so I thought it would be interesting to take a look at a couple of slides here, show people what's going on, and then let's talk through this and let's brainstorm why this might be happening to different individuals.
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Maybe explain this one, Jonathan, just because there's a lot of data and a graph that makes people horrible for our attention, you know?
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Well, you can look at this and we could boil it down to this really simple idea.
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Mm-hmm.
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If you feel like your home is worth more money, if you feel like your business is growing and you're making more money, if you feel like you're, if you have any stocks, if you feel like they're up in value, you feel a level of confidence and you're more likely to take the vacation.
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You're more likely to update the truck.
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You're more likely to spend money.
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That's exactly how our buyer feels.
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So if our buyer feels like life is getting better for them,
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then they're more likely to invest in their home, their property, et cetera.
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This graph says household net worth is as high as it's ever been.
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And most household net worth, frankly, and kind of unfortunately is in people's homes.
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Home values are up.
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And so this is telling us 401ks are up.
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The market's doing great.
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I mean, you can watch the news, but the market is killing it.
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The market is doing great.
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And so if people have any investment in the market, their 401ks, et cetera, they should be feeling good right now because –
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by all measures, they have more network than they've ever had.
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So the question is, is that real?
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I think it is.
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I think there's multiple data sources that say this is the case.
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So then the next question is...
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why are they not spending or why are they not spending with you?
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So that's graph number one.
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Maybe let's go ahead and take a look at the next one.
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And then we'll talk through reasons.
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So this one here is, they call this the change in US non-farm payrolls.
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So basically, this is real simple.
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It's saying we're still adding jobs to the economy.
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Again, what's the news say?
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AI is going to knock everybody out of a job.
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You hear about some tech companies that are slashing jobs.
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You hear...
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You hear about some of that.
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Some of that may be true.
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Maybe it's AI.
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Maybe it's just them taking cover to reduce their workforce and they're blaming it on AI.
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It doesn't really matter what the reason is.
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At the end of the day, the jobs data still says the economy is growing.
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Unemployment is about as low as it's ever been.
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And we're still adding jobs.
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So again, not a negative story.
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So these are...
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I thought, Mike, when we were chatting, I thought these were important to share for a couple reasons.
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It starts a conversation about why might your business not be growing.
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But it also, I have this general belief that if we as owners aren't confident, if we're living in fear, if we buy into the news media too much, then we let up on the gas pedal.
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Yeah, we get nervous.
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Totally.
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One thing I'll bring up, Jonathan, to Steelman kind of this chart, because whenever I see a chart, the first thing I'm looking is like, where's the data?
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How is this?
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Where is this coming from, et cetera?
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So when we look at the nonfarm payrolls, one thing that I thought was interesting, and correct me here if I'm wrong at how I'm saying this.
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when payrolls are calculated, technically speaking, couldn't this be people getting secondary jobs?
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Because this is a number of payrolls started or initiated.
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And my question is, I think a large bump of this was like the whole healthcare strike thing and stuff like around that.
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But then also, if someone needs a second job, technically, that counts as two payrolls.
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That doesn't necessarily mean we got 178,000 Americans got a new job that was added
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I wouldn't argue with that.
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I wouldn't even say that I could debate you at a deep level on how this thing's calculated, if it's even calculated correctly.
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What I would simply say is I would look at it directly and say it's not telling a horrible story.
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So if somebody is in their business and they're saying, my business isn't growing or we're thinking about shrinking this year, it's not that.
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And I also argue there's totally different economies.
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I think you would probably agree with that.
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Like we a lot many of us live in a very different economy than much of the United States.
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Like people are feeling very different things.
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And so there's multiple stories depending on who you are, what part of the country you live in, what you do for a living.
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But I would also say that for most of us, the type of people that are buying our services are living in an economy where they might be getting a second job.
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They might be driving Uber.
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They might be doing other things.
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But the data doesn't say we're falling off a cliff.
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And to some people in their businesses right now, they think everything's going sideways and they don't know why.
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That would be probably the extent of my argument here.
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So for the person that's watching, they're like, easy for you to say.
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And for both of us, we're in the bubble of people that have the wealth effect.
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We own stocks and real estate.
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And so for the person that's maybe just getting started, from their perspective, it's like, no, I'm struggling, let alone all my customers.
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My close rates down 20%, 30%.
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I'm not getting enough leads.
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Yeah.
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Instead of, instead of us just saying like, Hey, it's, it's the data.
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The data is that things are good.
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What would you actually tell them to do besides turn off the sneaking news and just focus on your business?
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And again, I want to be super clear that you have to think about, we don't know.
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We're talking to a lot of different people here in a lot of different markets.
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And this is the age old problem.
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There are some really, really smart, amazing people that have started businesses in the wrong markets.
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I mean, I can't argue against that.
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If you're in the wrong market and you're in a market that's suffering right now financially, this is a U.S. perspective.
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This isn't a city, a neighborhood, a state perspective.
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If you're in the wrong market, it might be very legit for you, but it's not for everybody.
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And so that's where we get into a little bit more nuanced conversation.
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We kind of have to walk through markets and have the conversation.
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Do you feel like in the past, let's call it three years, that the real estate market as a whole has basically been flat?
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We saw a big rise up in 2020, 2021, 2022, with real estate prices going through the roof and equity in people's houses going very high.
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Yeah.
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In the past few years, it's been a little more stable.
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Again, to your point, difference of Austin, Texas versus New York versus all these.
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But as an average aggregate...
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real estate prices and the values of homes have stayed relatively same.
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Do you see that impacting more than say something like the 401k or stocks that are not tied directly to the asset that we are protecting in home services and the maintenance or the repairs or the improvements of the
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what is seen as now as an asset.
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Like I remember in 2021, people were like, oh, my house has gone up $100,000 in value.
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Therefore, me getting a $10,000 deck or a $20,000 fence is an investment.
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It's almost looked as a different.
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Do you see it affecting the consumer and home services specifically differently when their wealth effect is in real estate versus say their 401k or their stocks?
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I do.
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I do.
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And actually, you raise a great point here.
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So, so far, it sounds like I'm making an argument that the data is all golden and everything should feel good to you.
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I actually have a whole lot of counterpoints to that.
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So I can argue a little bit of both sides, depending on who your buyer is, again, back to what market you're in.
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So to your specific point there, yeah, I think that several things have happened.
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I think that home prices have flattened.
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I think that people in, and so I think you, that's a very interesting idea that I've actually never thought of, that that might make people feel about how, differently about how they spend money from here forward.
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Also, how much spending didn't, might we have pulled forward on our homes?
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I really believe this one.
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And so there's two ways that your business could be down.
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Well, there's lots, but we'll use two.
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One is you're comparing the 22 data or late 21 data when that was an abnormality.
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And so you're comparing back to then and your lead flows down.
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And that probably some of the data wasn't real.
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That was a spike that demand has died down.
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And so you may still be doing good as a business, but have a hard time getting back to those leads.
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That's possible.
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Right.
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But then I would also ask how many homeowners who are now trapped in their homes because they have low interest rate mortgages and they can't buy the next home already pulled forward a lot of the investment in their property.
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And that's what people are now feeling.
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So I 100% think that's also going on.
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I think another thing to even build on that more is the lock-in effect is real when it comes to interest rates.
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I think that there are people that have built up wealth, though, over four or five years, and they're not going to go get another mortgage because they're going from a 2.5% to a 6% mortgage.
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But what they will potentially do
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is do an add-on, do an improvement.
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And so I almost feel like we could potentially see, even if the lock-in effect stays true with homeowners, that the person that has gained wealth in the past four or five years, I specifically think of one of our executives here that bought a house at the very bottom of like 2.4%.
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But his wealth has gone up dramatically.
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And so when he has kids, it's like, oh, maybe I just do an addition onto my existing house versus going and buying a new one.
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I know multiple people have done that.
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I believe that story as well.
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I think this is a very, I don't think we can actually give an exact answer of what's going on.
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I think it's very complicated.
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I think it's some stuff got pulled forward.
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People don't have money to invest more in their house.
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And then there's the story you just gave.
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People are still doing okay, and they will invest in their homes.
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But what I do think is different is it felt like everybody a few years ago was investing in their homes, and that has died off.
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And now it's a different
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I think the thing that's really shown, too, is like back to something we had talked about last time together is revenue quality.
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And I think it's so funny because in home services specifically, we don't really talk about valuation ever.
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And what was really eye-opening to me when we did software, it's like everyone just talks about valuation immediately.
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Like it's a –
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What's your multiple versus home services?
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We never think about it because rarely are we thinking about selling it.
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Rarely are we thinking about raising money, getting investors, or raising capital, etc.
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But in part, it also keeps us from building a better business because we simply are going after the boom and bust of the market, like what happened in 2020.
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And people build $10 million in revenue, and it looks good.
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And then all of a sudden, they realize...
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Three years later, maybe that's a $3 million business that's sustainable.
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It's not $10 million anymore.
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And so I made a video recently.
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It'll come out a couple months.
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But like quality of revenue, how have you seen that play out versus the people that have chased the revenue in the past?
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Would it be one-time jobs or reoccurring?
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And how are you shifting to go more recurring revenue?
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Yeah.
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Well, I only believe in recurring revenue, so that's not really...
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In our business, it was so long ago, I can't even remember.
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We stopped doing one time and we only do recurring.
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We got out of landscape enhancement type work so long ago, I don't even know what year it was.
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I firmly believe in the recurring.
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And then in our case, we also...
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work to identify the higher margin services in our business and really take the business more and more in that direction, which to your point is what I would also call the quality of revenue.
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You know, I actually just recorded a video today and...
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Some people that know both of us, they might hear me say quality of revenue and think, oh, well, he means get out of mowing and just do furt and pest.
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And then they know you and like, hey, Mike does tons of mowing in their business.
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And so I would I want to because I know who might be listening, I want to add to this.
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Even in something like mowing.
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There's different levels of quality of revenue.
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So mowing is.
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a lower margin service for many people because they're underpricing, they're in the wrong market or they don't, or it's something different.
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It's inefficiencies.
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They don't have density.
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They don't run a very tight operational business.
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They're not very careful with their, the asset utilization of their business.
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There's all these factors that go into creating a profitable business.
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And so, um,
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When we talk about higher quality revenue, it's not purely about the gross margin of a specific service.
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It's about how you execute on even certain services in the business.
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I think it kind of just goes back to at the end of the day, it's operations and how well that is executed on not only the type of service or the market.
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For someone that is getting started, I think when we look at these graphs, you could very quickly say, hey, if you're about to start, choose wisely when it comes to your market.
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For someone that is in a market where they're like, hey, this is a flat market.
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It's down.
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We don't have a population moving here, but I have my family established here.
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What can I do to tap into the demographic that has the money to spend, has wealth effects, and is going to be less price sensitive if we do enter a recession?
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It's not the popular answer, but you have to go where the opportunity is.
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If there's legitimately no opportunity in your market.
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So if, for example, people just flat out don't have the money to buy the thing you're selling, it's as simple as you have to sell something different that they will buy and can buy, or you have to move...
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down the road, which could be very painful, to a market where people can buy your thing.
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I don't think there's any magical answer.
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If people don't have the money, and that is a true story for many parts of the United States, it's back to what I think I said earlier.
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You could be incredibly sharp, incredibly gifted, have all the abilities that any of the rest of us have, but if you're in the wrong market selling to the wrong person,
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you're not gonna win.
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And I've said it in other videos, you're gonna think it's you.
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You're gonna think something's wrong with you.
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It's not you.
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You're just simply serving the wrong clientele in the wrong area.
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And so generally, I tend to think you've gotta move the business.
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When do you distinguish though between someone that is using that as an excuse versus someone who literally just needs to push through, do more reps, wrap the truck, get the website and do everything else we talk about from an operations sales perspective?
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Well, I think the reality is that's actually generally the situation more than I think the market's a real thing.
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The challenge for us having conversations like this is that we don't know the specific person we're talking to in their specific scenario.
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And so this is when it's really important to like, OK, I need to know what market you're in, what neighborhoods you're serving, the home values, the average income level of the market.
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I need to know that.
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But we're talking to a broad group of people.
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Over the years, I've definitely seen the market being an issue.
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But what I more often see is it's the way the business is being run.
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It's the execution of the business.
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And so many times, so much of this, as I've seen, I bet you've seen the same thing, it's
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I want to call it an excuse, but that's a little unfair.
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It's a little bit of just lacking the knowledge.
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Like all of us, we all lacked all this knowledge.
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We didn't know what to do.
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So oftentimes it's just lacking in knowledge.
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And so we think it's one thing when in reality of it's something else.
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You're just not doing the right things yet.
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Speaking of execution, next on the docket, we're going to talk about something I know you brought up before, and that is this whole notion of employees versus 1099s or contractors.
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Maybe just tee it up.
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And for this business model of not using employees.
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Yeah, so I'll tee this one up in that I'll say I have a whole bunch of friends who are running contractor model businesses.
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I used to actually be a partner in a full-on contractor model business.
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We were in the commercial cleaning industry, cleaning movie theaters.
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They were all contractors.
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And so I have a tremendous amount of experience in this area.
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And I'm not a fan.
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I'll just put that out there already.
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But I have a whole bunch of friends who are doing quite well.
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building contractor-only model businesses, and they wouldn't do it any other way.
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Now, I will tell you, they tend to be more, in this scenario, in the lawn mowing side.
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You'll see them in the landscape or design build, but you tend to see more contractors on the mowing side than you might see on pest control or fertilization weed control or some of the other service offerings.
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I'd be curious what you're seeing.
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Yeah.
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Yeah.
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Like what's interesting is I thought you were the other side.
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I thought like you thought that was where it was going because I also see that, you know, the grass is always green on the other side.
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It sounds great.
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I don't have any employees.
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I don't have to worry about it.
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Like, you know, equipment.
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They're taking care of all of that.
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But like I see a lot of people trying it and failing, especially on a smaller scale, especially when someone has, you know, 300, 400 recurring customers, maybe $500,000 in operations.
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Like, oh, I'm just going to sub everything out.
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And
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what it quickly becomes is like, instead of operations becoming your business, quality control becomes your business.
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And instead of managing employees, you're managing cub contractors.
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And if they're independent...
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First off, legally, there's bounds around that.
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And I feel like that's just going to get squeezed more and more.
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If they're showing up with a uniform, if they're showing up at a certain time, if I'm requiring them to do certain types of meetings or training, it gets really fuzzy in terms of even legally, can I do this?
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And I've talked to too many where it becomes this constant chasing down of your 1099s.
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And your brand is at risk.
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And so it feels almost like you're out of control to be able to actually make changes to the quality because you don't – to a certain extent, you don't have control of what they're doing.
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But I do think it's one of those perspectives of like it looks so good, but it's just a different problem when you switch business models.
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Yeah, no, I agree with you completely.
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I'm not a fan.
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However, I know so many bigger companies, so many individuals, that my bias or the conversations I have are more with the bigger guys than the smaller guys.
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And I know many big guys running this model successfully.
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And in my case, the business I was a partner in, we were really big and very successful.
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And so it can work, but you make great points.
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You're just trading one problem for another.
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And I think you're trading lots of problems.
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And you kind of touched on them.
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One is, are these really enduring businesses?
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Are they really, are they wealth creation machines where you might build something and have great equity value in them, sell them?
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Like some, yes, but how desirable, like sophisticated buyers that have money, are they really wanting to buy these types of businesses?
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They will, but I think they carry a lower valuation.
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I know of some big deals that have been looked at
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Big, big, big deals have been looked at and rumors of the multiples for those deals.
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And they were all significantly less than what they would have been had they been employee businesses.
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I think I always look at it now, especially after doing software in the franchise, it's just like if it appears easy, the enterprise value would just be so low I don't want to do it.
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That's an interesting point.
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and not have to walk this tight rope of legalities and have a better enterprise value and potentially be able to sell the thing one day to someone, even a, say, a $2 million or $3 million business versus having to build it to such a size to where anyone's interested in a subcontractor model.
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Yeah, I agree.
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I think most of the characteristics of these businesses are
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are not the type of business I want to own for the long term.
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I go back to, I think I said this, like, do I really want to put my name on it?
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Because what I've experienced and what I see is quality tends to not be as good.
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And to your point, if you're really managing the company to the level you need to manage it to get the level of quality that you want, are you stepping over the line of what the IRS says you can do?
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And when you go to sell, that's the first thing they're going to look at.
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It's like, will this cause, like if you go into private equity, like the first thing they're going to look at is like, will this cause a huge headache for us legally?
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Right.
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Yeah.
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And so, and I will tell you, you know, CityTurf's had a couple of bad experiences over the years because we use a lot of H2B visa labor where-
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we haven't got our H2B visa labor.
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One year, there's no other way to describe it other than a full-on disaster where we were getting them all until the day we didn't get them all and the season was starting.
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And we had to, I think it was 100 people we had to recruit instantly.
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And that was probably the hardest year the company ever had.
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And Phillip said, you know, Phillip runs the company and Phillip would say, hey, we made it through.
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We survived it.
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But we really did a number on our team.
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We really wore our team down because of everything we had to go through.
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And so something you said earlier, Mike, that I, man, I just, I totally agree with.
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I feel like you're just trading one problem for another.
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Or a lot of times we'll look at these different business models and we'll hear about somebody's success.
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We'll say, oh, well, that'll be easier.
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It'll solve all my problems.
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And, you know, I got you'll be the expert on this, not me, but like pay for performance.
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I believe in pay for performance.
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But I do think that a lot of people can see pay performance is this magic thing that's just going to solve all the problems.
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If I just compensate them on performance, they'll suddenly change all their ways.
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But there's my from my experience, you you're the expert at this more than I am.
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You still have to manage.
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You still have to coach.
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You still have to run your company.
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You still have to have hard conversations.
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You still have to fire people.
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You still have to do all the same management stuff.
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You're trying to get the extra out of them.
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And so I think a lot of people are trying to run from doing the basics, the hard conversations, the management, the organization, the business.
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And so they look at pay for performance models, again, not being negative.
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They look at contractors and they say, well, this will fix all my problems.
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It'll make it easy.
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And there is no easy.
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when it comes to P4P, for example, it's like all the same problems just exist, but now there's pressure around the money.
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Because if there is a mistake and I send someone back on hourly wages, they're still getting paid.
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On P4P, technically they're not making any more money.
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I'm going to have a whole lot more problems from a management perspective, convincing my team they got to go back when they think the customer's being unreasonable or it's not their fault, it's so-and-so's fault on the crew.
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And so it almost opens up another level of like,
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almost going to a partnership with the team, which sometimes there's more friction around that than just being like, hey, you're paid by the hour, go do what I say.
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Yep.
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Something you said earlier, are you seeing from a contractor standpoint, are you seeing a growth in this area?
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Do you think anything's changed?
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What's your perspective?
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I think the part that I'm really interested in is looking at what happened in Europe.
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It got so hard to hire W-2s, and there was so much legal tape, they got really pushed in this direction.
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And so it's very common over there.
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They also don't build big businesses in general.
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It's just a very different...
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environment, honestly.
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But the sole trader mentality, that's what they call it in Australia, of like most people are sole traders and they usually don't get a bunch of employees and they just operate by themselves.
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One guy in a truck.
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And like chucking a truck over there is...
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99% of the businesses.
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It's not 50, 60% like it would be here.
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And getting a bunch of employees is very difficult because they have apprenticeships.
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You're looking at $30 plus an hour minimum, usually up to $40 an hour if they stay with you for a year or two.
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It's very difficult to hire W-2, what we would call in the US, W-2 employees.
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And so I think there might be a world in which legislation and red tape makes it where having W-2s is so restrictive.
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For example, in Europe, you can't just fire someone.
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So if we start seeing at will and other legislation that makes it harder to employ, fire benefits around when people get laid off, et cetera, start to affect the business owner, that's where I start to get where, okay, there might be a world where people go this direction simply because it's so difficult to hire and fire entry-level team members.
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And in our industry...
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There's a lot of people that don't last two, three months or four months or five months.
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And then if they're going on unemployment and it's sapping the business, it starts to be where it does look like the easy button.
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And I've seen enough businesses do it, especially at the smaller scale that haven't figured out management that now they just switched out managing employees for managing subs.
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and they've lost control because they don't even know what good quality control looks like at a larger size business.
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They don't even know how to do it with their subs.
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And now instead of having a, let's call it $30 an hour labor, you're going to have to go pay someone's salary to be quality control and be like project manager to be the relationship between the customer and your sub.
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Because now when there's a problem, I can't just tell them to go back tomorrow.
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There's a lot more legal tape around that.
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And so I do think it's a bit of a shiny object for a lot of people right now, but I also see a world in which...
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we all kind of just become subcontractors.
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And even in the world of software, a lot of people, it's like, hey, if I got laid off, I'll just go now subcontract or I'll work as a consultant to another firm.
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Yeah, it does seem that there's a general move in the economy to be a contractor.
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You could take the food delivery or the Uber driver or whatever the case might be.
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But we still have a lot of really unfriendly states to contractors.
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Yeah.
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And so I can see both sides of this argument.
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I can see as an economy, we're moving more that direction.
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And we may really move this direction if in fact, AI is disruptive to jobs at some point, because people are going to be desperate.
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But I also think the states are going to probably keep pushing back on this.
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I don't suspect that they're going to relax.
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It's specific states.
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And so I think it's going to come down to what state are you doing business in and what's that environment.
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I'll give you a story here.
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This goes back a long time ago, so I hope I can recite it correctly.
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So one of our biggest clients was Cinemark movie theaters.
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We clean movie theaters in 22 states.
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Cinemark movie theaters bought a major movie theater chain in California.
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That movie theater chain was being cleaned by a big company specialized in movie theater cleaning.
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That company was using contractors.
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Those contractors, very important to know, Cinemark was public.
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Those contractors sued the company that was acquired by Cinemark for saying that they were being discriminated against.
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If I remember correctly, this is a long time ago, and they didn't get paid all their money.
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That created a problem for a public company.
395
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We were working with that public company.
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They were our biggest client, and they wanted us to switch away from all contractors because it was a problem for them.
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You can kind of talk about this scenario where, like, oh, hey, it kind of looks like the world's moving this way, but you get enough scenarios like that that then –
398
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My theory is the little guys can get away with it, but not the big guys building real businesses because they live in fear.
399
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Back when I was part of that cleaning company, there were a couple other cleaning companies that were massive that got knocked off.
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And some of these guys went to jail.
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They were using contractors, but they were then doing little things like saying, hey, just bring me another Social Security card.
402
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Yeah, this one doesn't work.
403
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Give me another one.
404
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And like that stuff got caught.
405
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Those guys went to jail.
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So we what I've all because I've been doing this a while.
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I've also seen like back veering George Bush.
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I felt like that was one of the most challenging times.
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I don't know if it's true or not, but it felt to me like one of the most challenging times to be using contractors.
410
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And then it's relaxed and then it gets hard again.
411
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And so we go through these waves.
412
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So whenever there is unpredictability in business and there are these waves, how do you build a business?
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It's like for many people that might use H2B Visa, you can relate to this.
414
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How do you build a ginormous company when you live in fear constantly of getting your people the next year?
415
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And so this is a really complicated topic.
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And so for me, I suspect...
417
00:29:37.757 --> 00:29:51.683
that while we might move more and more towards contractors and there'll be more people doing it, I suspect as companies start to get big, they'll try to move away from that because the risks to the big thing that they've built become bigger and bigger and it keeps them up more and more at night.
418
00:29:52.023 --> 00:29:52.943
This is really complicated.
419
00:29:52.963 --> 00:30:01.967
I don't know the answer, but I am seeing, I do feel like I am like you seeing a little bit of a trend here where people are like, how could I figure out a contractor model and move away from this employee thing?
420
00:30:02.427 --> 00:30:05.911
And if they do, the IRS is not going to like it because they don't file correctly.
421
00:30:06.331 --> 00:30:06.932
Like, of course.
422
00:30:07.092 --> 00:30:12.718
And it's difficult to like we recently for the media team, we have one, two, three, four, three or four people that are remote.
423
00:30:13.058 --> 00:30:14.960
And for a long time, we're like, hey, you can be 1099.
424
00:30:14.980 --> 00:30:16.622
You can write off anything you have.
425
00:30:16.642 --> 00:30:17.943
You don't have to show up at a certain time.
426
00:30:18.384 --> 00:30:21.387
And they all recently said, hey, we want to be W2 because we can't get.
427
00:30:22.007 --> 00:30:43.750
uh a renter we can't go get our we can't get any sort of loans we're having trouble and so we just switched them all back to w2 it's a little more expensive for us but they're like hey we need to be w2 just to be able to kind of like get the next mortgage or get a car payment because a lot of these financing companies aren't looking at 1099s the same way that's a great point
428
00:30:44.512 --> 00:30:59.626
And so it's also the quality of the person working for you starts to potentially diminish when you are thinking in terms of 1099, because they aren't the type of person that's going to have a family, establish themselves, get a mortgage, get another renter, things like that.
429
00:31:00.330 --> 00:31:00.690
I agree.
430
00:31:00.730 --> 00:31:06.773
I mean, I remember it was a long time ago in the city turf business, the debates around, geez, do we have to get insurance?
431
00:31:06.813 --> 00:31:07.293
Is it time?
432
00:31:07.333 --> 00:31:09.514
Do we have to actually pony up and get insurance?
433
00:31:10.195 --> 00:31:12.456
This stuff I call professionalizing the business.
434
00:31:12.876 --> 00:31:14.257
I remember those moments.
435
00:31:14.737 --> 00:31:19.379
And those decisions way back in the day, they were all made for exactly the reason you just said.
436
00:31:19.399 --> 00:31:22.640
It's like, how do we get the next level of people inside this business?
437
00:31:23.341 --> 00:31:27.783
And so much of owning a business over, like selling a business is great, but
438
00:31:29.217 --> 00:31:30.958
Selling can also be a little bit overrated.
439
00:31:31.358 --> 00:31:36.801
There's something to be said for just owning an incredible business that makes really great money.
440
00:31:37.101 --> 00:31:41.703
You get to work with a lot of really awesome people, and it just keeps growing, and it's this dependable thing.
441
00:31:42.043 --> 00:31:44.505
That's a great thing, like to get that gift in life.
442
00:31:45.125 --> 00:31:48.366
And so if you fast forward, which business do you want to own?
443
00:31:48.627 --> 00:31:51.168
The business with a great culture, high-quality people.
444
00:31:51.944 --> 00:31:58.129
you know, the people that are going to take wonderful care of your clients or a bunch of, you know, contractors running around.
445
00:31:58.149 --> 00:32:02.893
It's like, I just like, if I, if I want to be in this game for a long time, I want to own the other side.
446
00:32:02.933 --> 00:32:08.098
And, you know, back to the decision CityTurf had to make a long time ago, it wasn't really a debate about contractors back then.
447
00:32:08.118 --> 00:32:12.522
It was like, hey, we've got to step up our game so we can get all the best people because that's how you win.
448
00:32:12.902 --> 00:32:16.285
But more than that, that's how you get to own a company that you want to own for the long term.
449
00:32:17.028 --> 00:32:18.530
As a side derail on this, it's funny.
450
00:32:18.550 --> 00:32:21.294
I just made a video the other day, and it was just basically a rant.
451
00:32:21.614 --> 00:32:30.486
And I was talking about how I kind of think the one metric that no one talks about that I see in the people that I admire the most is the longevity of their leadership team.
452
00:32:31.327 --> 00:32:31.487
And...
453
00:32:31.968 --> 00:32:33.509
for them to stick around for a long time.
454
00:32:34.209 --> 00:32:45.757
And it's funny, because as I was thinking about this, I was like, well, Elon Musk, technically not a good example, because like XAI, basically every executive has been, has left over the past year or two.
455
00:32:46.297 --> 00:32:51.281
And I also was like, well, most of us are Elon, and we need to have the self-awareness to know we don't have that level of skill.
456
00:32:51.941 --> 00:33:09.093
But one thing that I have seen, to your point, and that is not like when we talk about the quality of the team is keeping them around and having stability at the leadership level, not only for the team members below, but also maybe you do sell the business, but you take your core team with you.
457
00:33:09.513 --> 00:33:15.357
And I've seen where that happens and they just go build the same thing and they just the acceleration because the speed and the trust that's been built.
458
00:33:15.777 --> 00:33:16.278
And it's like...
459
00:33:16.758 --> 00:33:18.199
If you have trust, you can move faster.
460
00:33:18.719 --> 00:33:21.521
And if you can move faster, that's what you can – with that kind of culture.
461
00:33:21.781 --> 00:33:25.142
What has your experience been having that kind of core group, especially leadership?
462
00:33:25.202 --> 00:33:29.865
As the business scales past, say, $10 million, what has that experience been like for you?
463
00:33:30.425 --> 00:33:33.027
I mean everything you just said, I 100% agree with it.
464
00:33:33.087 --> 00:33:34.968
It's – all the –
465
00:33:35.828 --> 00:33:40.233
Everything is out of the way and learning how to work with the person, learning how a person thinks.
466
00:33:40.273 --> 00:33:42.556
Are they going to interpret this correctly?
467
00:33:42.576 --> 00:33:43.557
Are they going to be offended?
468
00:33:44.318 --> 00:33:44.898
What do they know?
469
00:33:44.938 --> 00:33:45.759
What do they not know?
470
00:33:45.799 --> 00:33:46.440
What do they believe?
471
00:33:46.480 --> 00:33:46.921
Not believe.
472
00:33:47.021 --> 00:33:51.105
There's so many – all that stuff is out of the way when you have longevity working together.
473
00:33:51.666 --> 00:33:52.867
And this trust is built.
474
00:33:54.308 --> 00:33:59.211
There's this element where when you're working with the right people, you have a respect for each other.
475
00:33:59.232 --> 00:34:00.592
So you just don't want to let each other down.
476
00:34:01.073 --> 00:34:02.394
Like we're all in this thing together.
477
00:34:02.714 --> 00:34:04.195
That just makes everything go faster.
478
00:34:04.655 --> 00:34:07.718
And so a lot of the people I've worked with for a long time, it's like, they know what I'm thinking.
479
00:34:07.878 --> 00:34:08.578
I know what they're thinking.
480
00:34:08.879 --> 00:34:11.821
Like it eliminated 90% of what we had to talk about.
481
00:34:12.041 --> 00:34:12.201
Yeah.
482
00:34:12.741 --> 00:34:13.522
We could just go.
483
00:34:14.162 --> 00:34:16.724
Or you learn, we'll go back to the word trust.
484
00:34:16.764 --> 00:34:21.006
Like if you and I are working together, like you've done big things, I've done big things.
485
00:34:21.266 --> 00:34:31.632
If we, and if we've worked together for a long time, it's like when you say, hey, I think we should do this or we should execute on this strategy because of our, your history and our relationship, it'd be like, do it.
486
00:34:32.092 --> 00:34:34.094
We don't need to agonize over it.
487
00:34:34.114 --> 00:34:35.214
We don't need to debate it.
488
00:34:35.254 --> 00:34:35.855
We don't need to,
489
00:34:36.595 --> 00:34:37.875
whatever, we just go.
490
00:34:38.455 --> 00:34:39.836
And so I think that's a good word.
491
00:34:40.056 --> 00:34:40.856
You just go.
492
00:34:41.116 --> 00:34:42.096
You can go faster.
493
00:34:42.376 --> 00:34:42.896
And it's more fun.
494
00:34:43.136 --> 00:34:45.557
And that's tying it back to the contractor model.
495
00:34:45.577 --> 00:34:53.879
That's where I'm concerned by people thinking it's the easy button is it's actually difficult when you have a whole bunch of subs and you're like, oh, we're going to change something in the business.
496
00:34:54.179 --> 00:34:58.579
The way of delivery, how we do upsells, how we're going to package services together to the customer.
497
00:34:58.860 --> 00:35:01.760
Now it's a whole different concept of like, I can't tell them what to do.
498
00:35:02.120 --> 00:35:03.320
They don't have any skin in the game
499
00:35:06.361 --> 00:35:08.262
to go decently enough for them to get paid.
500
00:35:08.803 --> 00:35:11.965
And that's where I see culture inside the business start to deteriorate.
501
00:35:12.205 --> 00:35:29.236
And I think people are jeopardizing their long-term valuation and the health of the business, as well as is the business foundationally set with leadership that does stick around for a long time and does have a team that's really solid in exchange for what seems like an easier button of, I don't want to manage people's flat tires.
502
00:35:29.756 --> 00:35:30.337
I don't want to manage.
503
00:35:30.417 --> 00:35:31.598
So we went out, they show up to work.
504
00:35:31.898 --> 00:35:37.062
And it's like, hey, realize that you're still gonna have to make sure that that sub shows up to work and does the job.
505
00:35:37.322 --> 00:35:41.005
It's just now you can't hold over firing over their head as easily as you did before.
506
00:35:41.605 --> 00:35:42.706
Yeah, yeah, I'd agree.
507
00:35:43.467 --> 00:35:45.769
You know, as you were talking, you also made me think of something else.
508
00:35:45.789 --> 00:35:47.730
So I think it is a little bit of for sure.
509
00:35:47.770 --> 00:35:48.511
It's a little bit of this.
510
00:35:48.751 --> 00:35:49.772
It'll solve all my problems.
511
00:35:49.812 --> 00:35:50.312
Easy button.
512
00:35:50.332 --> 00:35:51.253
Yeah.
513
00:35:51.502 --> 00:35:55.565
To be fair, too, the reason why, like for in mowing, I think people are attracted to it.
514
00:35:55.605 --> 00:36:06.454
So a little shift here is they can kick them off the payroll for the nine months or they can hire the illegal person because they can't find any documented people or whatever the scenario.
515
00:36:06.494 --> 00:36:14.141
So I understand that you are solving for more problems other than the easy button, but it doesn't mitigate the risks to the business.
516
00:36:14.221 --> 00:36:16.803
It doesn't, you know, it doesn't fix all the problems.
517
00:36:17.279 --> 00:36:18.880
Let's look at a blue sky for a second, though.
518
00:36:19.380 --> 00:36:24.884
In the malls that have worked, what are you seeing where it does work at a larger scale?
519
00:36:25.324 --> 00:36:32.968
Is it that it's a sales engine and they figured out customer acquisition and then they figured out enough operations for it to have a high enough quality?
520
00:36:33.028 --> 00:36:37.051
What is working when people are like switching to a subcontractor model?
521
00:36:37.438 --> 00:36:38.679
It's a simplistic model.
522
00:36:38.999 --> 00:36:40.781
We are executing on one thing.
523
00:36:41.221 --> 00:36:45.565
So in our case, way back in the day, we were cleaning movie theaters.
524
00:36:45.585 --> 00:36:46.105
That's all we did.
525
00:36:46.406 --> 00:36:47.907
That's all those contractors did.
526
00:36:49.648 --> 00:36:52.851
Or you're just mowing lawns or you're just doing house cleaning.
527
00:36:53.131 --> 00:36:55.173
House cleaning especially makes me a little nervous.
528
00:36:55.834 --> 00:36:58.116
I think about background checks and a million other things.
529
00:36:58.436 --> 00:37:00.558
But moving companies, they're all using –
530
00:37:03.340 --> 00:37:06.482
Our moving company stole like $80,000 from our house.
531
00:37:06.542 --> 00:37:06.682
What?
532
00:37:06.702 --> 00:37:06.962
Yeah.
533
00:37:07.082 --> 00:37:08.443
Are you serious?
534
00:37:08.663 --> 00:37:09.123
Yeah, yeah.
535
00:37:09.163 --> 00:37:11.765
We know 100% it was the moving company, but we couldn't do anything about it.
536
00:37:11.785 --> 00:37:12.645
They're all contractors.
537
00:37:13.085 --> 00:37:13.426
Oh, man.
538
00:37:13.606 --> 00:37:19.549
And, you know, anyway, but you kind of, you could think about there are some, I got a little off topic there, but there are so many.
539
00:37:21.310 --> 00:37:30.872
There are so many businesses that use these models, but what I do notice is they tend to be very focused on a very specific service, delivering that service over and over and over again.
540
00:37:30.952 --> 00:37:36.093
But to that point, you're going to leave a five or one-star review potentially on the brand that you hired.
541
00:37:36.694 --> 00:37:37.274
100%.
542
00:37:37.434 --> 00:37:47.416
And so that's where I see the lack of brand equity is now I am putting my brand in the hands of a subcontractor who has really no downside if something like that happens.
543
00:37:51.457 --> 00:37:52.798
And not have any consequences?
544
00:37:53.059 --> 00:37:53.439
You're right.
545
00:37:53.479 --> 00:37:54.900
I would never use that guy again.
546
00:37:54.920 --> 00:37:57.822
I would tell everybody never to use him again.
547
00:37:58.503 --> 00:38:04.408
And that is exactly one of the risks where you don't control the outcomes in quite the same way.
548
00:38:04.808 --> 00:38:18.218
And I think the businesses that stick around for the longest time, specifically in home services, they're able to switch away from having to buy every customer and every lead and rely on their brand equity, whether it be online, the reviews, the word of mouth, the reputation, to be able to drive leads.
549
00:38:18.238 --> 00:38:19.679
And that's when they really get profitable.
550
00:38:20.079 --> 00:38:24.843
And so if we don't have that because people are leaving one-star reviews about that sort of theft –
551
00:38:25.743 --> 00:38:31.426
That sort of thing, for example, when I hear that as a franchisor, for example, that's the type of thing that can sink an entire brand.
552
00:38:31.606 --> 00:38:33.707
Like that's a huge liability for us.
553
00:38:33.907 --> 00:38:40.490
That's why we have to do compliance around insurance, for example, because if something like that happens and that goes on social media and gets blown up, that's not just one.
554
00:38:40.610 --> 00:38:42.871
That can become a national problem for us.
555
00:38:43.370 --> 00:38:47.632
Well, I was going to say you were asking about the companies where I'm seeing them do this.
556
00:38:47.652 --> 00:38:50.173
So you kind of made me think of one more thing.
557
00:38:50.213 --> 00:38:51.414
So they're keeping it simple.
558
00:38:51.774 --> 00:38:57.937
And I think they're tending to run, not all, but they tend to run a more high volume business.
559
00:38:58.937 --> 00:39:02.299
And I would describe them as a little bit more lifestyle businesses.
560
00:39:03.087 --> 00:39:08.531
They may not have thought through the equation that, hey, this isn't that valuable of a business to sell.
561
00:39:08.551 --> 00:39:09.852
They may have just never thought about that.
562
00:39:10.233 --> 00:39:13.135
But they're just maximizing their annual income.
563
00:39:14.276 --> 00:39:15.597
I've been at this long enough.
564
00:39:15.757 --> 00:39:19.800
I've noticed that many of these businesses will ultimately change names.
565
00:39:20.060 --> 00:39:21.622
There are some great guys running great business.
566
00:39:21.642 --> 00:39:23.463
I don't want to – we're sounding all negative.
567
00:39:23.563 --> 00:39:25.405
I'm friends with some of these guys.
568
00:39:25.545 --> 00:39:25.705
Yeah.
569
00:39:25.885 --> 00:39:26.446
You guys are great.
570
00:39:26.506 --> 00:39:27.007
We love you.
571
00:39:27.067 --> 00:39:27.548
We love you.
572
00:39:27.568 --> 00:39:27.929
Yeah, yeah, yeah.
573
00:39:28.229 --> 00:39:28.970
I'm friends with them.
574
00:39:29.231 --> 00:39:30.072
I go to dinner with them.
575
00:39:30.092 --> 00:39:31.354
We talk about their business.
576
00:39:31.615 --> 00:39:34.399
They're making a ton of money and it's going pretty good.
577
00:39:34.700 --> 00:39:37.665
But sitting at dinner, I would voice all the exact same concerns.
578
00:39:37.685 --> 00:39:37.985
Mm-hmm.
579
00:39:39.041 --> 00:39:46.985
But my point here is I have seen over time many of these businesses will change names or they just slowly fade away and then they'll spin up new brands.
580
00:39:47.465 --> 00:39:48.365
I've seen that a lot.
581
00:39:48.385 --> 00:39:50.186
And so that's fairly telling.
582
00:39:50.666 --> 00:39:58.950
That, to me, tells me that they have a hard time controlling that brand in the long term and so it's easier to walk away from it.
583
00:39:59.930 --> 00:40:01.211
It made for a great YouTube title.
584
00:40:01.271 --> 00:40:03.333
We did a turnaround with a young guy.
585
00:40:03.573 --> 00:40:07.937
He was 19 years old, really good at web design, AI flows, selling online.
586
00:40:08.317 --> 00:40:09.478
And then he just subbed all the work out.
587
00:40:09.498 --> 00:40:13.321
So it was like $4 million at 19 years old with no employees.
588
00:40:13.982 --> 00:40:15.783
Had like 400,000 views.
589
00:40:16.504 --> 00:40:18.786
But sure enough, it's very difficult to manage.
590
00:40:19.647 --> 00:40:21.988
And they had to really scale back to about 800,000.
591
00:40:22.008 --> 00:40:23.490
It's difficult.
592
00:40:23.510 --> 00:40:25.752
I want to pivot to the next item on our docket.
593
00:40:25.772 --> 00:40:25.912
Yeah.
594
00:40:26.572 --> 00:40:36.636
And we kind of touched a little bit on leadership already, but I want to talk to the operator that's built a $5 million, $10 million business and talk about what is the most important hire then.
595
00:40:37.977 --> 00:40:44.900
As a business scales, it's no longer you as the operator out in the field, and you're trying to build a team, really scale the organization.
596
00:40:45.400 --> 00:40:48.642
For yourself, you've built multiple businesses past $10 million.
597
00:40:48.662 --> 00:40:49.142
Yeah.
598
00:40:49.162 --> 00:40:49.322
Yeah.
599
00:40:49.702 --> 00:40:54.264
Give me your perspective on who is the right hire, because I think sometimes I get like, who should I hire?
600
00:40:54.304 --> 00:40:56.825
It's like, well, very different based on what your business needs.
601
00:40:57.305 --> 00:40:59.986
And what has your experience been when finding the right person?
602
00:41:00.647 --> 00:41:03.488
Yeah, it very much depends on where you're at.
603
00:41:05.196 --> 00:41:18.310
It's always hard to be prescriptive when you're talking to a broad audience, but if you talk in terms of generalities and what I most see, and by all means chime in and tell me what you've seen, but it's always operations in these businesses.
604
00:41:18.550 --> 00:41:21.713
Like there's absolutely other roles and I can speak to those, but...
605
00:41:22.554 --> 00:41:29.018
It could be that you're past 5 million and I would say to you, do you have a really strong operations manager?
606
00:41:29.038 --> 00:41:29.798
You're like, I do.
607
00:41:30.179 --> 00:41:31.299
I have a good operations manager.
608
00:41:31.640 --> 00:41:34.781
But my next question back to you would be like, no, but are they like killer?
609
00:41:35.022 --> 00:41:36.663
Are they really, really good?
610
00:41:37.843 --> 00:41:39.504
Do you never have to think about this?
611
00:41:39.624 --> 00:41:43.527
Are they every day showing up and making it a little bit better, a little bit better?
612
00:41:43.547 --> 00:41:45.168
Are they looking for ways to optimize?
613
00:41:45.228 --> 00:41:50.011
Are they willing to get their hands really dirty and deal with all the hard stuff?
614
00:41:50.571 --> 00:41:51.651
Are they letting people go?
615
00:41:51.691 --> 00:42:00.014
Are they carrying people like all of us as entrepreneurs maybe are still doing or had to learn where we just, you know, we carry people that we know we should get off the team?
616
00:42:00.054 --> 00:42:01.355
Are they doing the same thing?
617
00:42:01.375 --> 00:42:07.377
A really killer operations person is, to me, the single most important person in the company.
618
00:42:07.597 --> 00:42:09.778
And there's different kinds of operations people.
619
00:42:09.998 --> 00:42:11.659
You know, in the early days, you might have a...
620
00:42:12.679 --> 00:42:15.900
assistant operational person where you're still involved in operations.
621
00:42:15.940 --> 00:42:25.163
And then one day you might have a head of operations that's over the field and dealing with customer complaints and getting the crews out in the morning and coaching the crews and doing all that.
622
00:42:25.663 --> 00:42:31.065
And then operations to me progresses all the way up to what you would call a COO of the business.
623
00:42:31.945 --> 00:42:36.207
a chief operating officer who is running everything operations inside the business.
624
00:42:36.247 --> 00:42:43.990
And if it's really sizable, then you may have the equivalent of an operations person under over each division, if you're a multi-division business.
625
00:42:44.631 --> 00:42:59.817
And so that is the role that makes all the difference, that moves gross margin, that moves cogs, that leads to all the great things that can happen in a business, including you feeling like you have a real business that isn't a nightmare to run and own.
626
00:43:00.037 --> 00:43:00.678
So that that's,
627
00:43:01.845 --> 00:43:03.466
That's the one that applies to everybody.
628
00:43:03.606 --> 00:43:10.711
And I'll end with saying, you really want to analyze the person you have in this role.
629
00:43:10.871 --> 00:43:14.453
Do you really have an incredible operational person?
630
00:43:14.813 --> 00:43:16.094
Because they will change your world.
631
00:43:16.154 --> 00:43:28.802
Much like maybe the experience, I bet you've had it, I've had it, where in the early days of our businesses, we'll use another mowing example, you think the mowing guys are okay, and then one day you get this different team member, you're like, oh, that's okay.
632
00:43:28.902 --> 00:43:30.463
This is what good work looks like.
633
00:43:30.483 --> 00:43:31.844
This is what fast looks like.
634
00:43:32.124 --> 00:43:33.804
And then it changes the way you think forever.
635
00:43:34.385 --> 00:43:36.726
And the same thing happens with an operational person.
636
00:43:37.106 --> 00:43:40.328
Now, what does the operational person look like, though, at, say, a million?
637
00:43:40.368 --> 00:43:43.329
Like everything you said around, like, the crews, for example.
638
00:43:43.349 --> 00:43:48.052
An operational person at, say, five or 10 million might not actually be interacting with those frontline team members.
639
00:43:48.712 --> 00:43:50.553
What does operations look like as you scale?
640
00:43:50.573 --> 00:43:50.793
Yeah.
641
00:43:51.002 --> 00:43:51.602
Yeah.
642
00:43:51.902 --> 00:43:53.363
So depending on what you can...
643
00:43:54.023 --> 00:43:55.424
So this is my experience.
644
00:43:55.664 --> 00:43:57.124
I would love to hear yours as well.
645
00:43:57.144 --> 00:43:58.045
I definitely want you to chime in.
646
00:43:58.785 --> 00:44:16.411
So for many people, even up to a million and past a million, I tend to think, based on what I've seen and based on the money available to the company, that the owner is wearing a million hats, as they say, and he or she is living in the CEO role, the operations role.
647
00:44:16.431 --> 00:44:17.472
They're living in all these roles.
648
00:44:17.532 --> 00:44:17.992
And so...
649
00:44:18.692 --> 00:44:25.315
Oftentimes, those companies haven't really got, even at a million dollars, don't have a real operations leader, operations manager.
650
00:44:25.895 --> 00:44:28.116
I call that person more of an operations assistant.
651
00:44:28.176 --> 00:44:29.757
I think that's a wonderful first step.
652
00:44:30.497 --> 00:44:30.837
I do.
653
00:44:31.237 --> 00:44:37.080
This idea that you hire just the right person that's going to take you where you want to go is a pipe dream.
654
00:44:37.680 --> 00:44:38.940
For a million different reasons.
655
00:44:39.061 --> 00:44:47.083
And so it's a bummer, but it's perfectly acceptable to get the right person for the moment in time that can get you a little further.
656
00:44:47.203 --> 00:44:49.344
And then eventually you might have to get a different person.
657
00:44:49.704 --> 00:44:51.084
It's a bummer, but that's the reality.
658
00:44:51.124 --> 00:44:56.766
And so the reality for most people is you don't have the money or the knowledge to even know who to hire yet.
659
00:44:57.106 --> 00:45:01.588
And so an operational assistant that just, if you were to just task list all the stuff,
660
00:45:02.619 --> 00:45:13.767
dropping a line trimmer off with a crew, like buying weed eater line, you know, getting a, taking care of a broken mower, going and putting a new sprinkler head in because somebody ran over it with the mower.
661
00:45:13.787 --> 00:45:15.248
Like we'll use a lot of mowing examples.
662
00:45:15.448 --> 00:45:19.931
Like all those things are things that an operational assistant can do.
663
00:45:20.652 --> 00:45:25.415
Client complained about something, it would be a dream if this person could go talk to them, but maybe they can't talk to them.
664
00:45:25.435 --> 00:45:27.757
Maybe they just go out and they can take pictures of the problem.
665
00:45:27.837 --> 00:45:28.077
Right.
666
00:45:29.120 --> 00:45:33.101
or take video of the problem or whatever this, they can get the guys out in the morning.
667
00:45:33.421 --> 00:45:34.521
They can receive them back.
668
00:45:34.801 --> 00:45:38.782
They can make sure that, you know, all the inspection stickers are up to date.
669
00:45:38.802 --> 00:45:48.804
There's a million little piddly things that are consuming you as the leader of the business that if you got them off your plate, you could go sell more work.
670
00:45:49.484 --> 00:45:52.664
And so that to me is an example of step one.
671
00:45:52.704 --> 00:45:54.165
That's an operational assistant.
672
00:45:54.805 --> 00:45:55.125
They...
673
00:45:55.785 --> 00:45:58.450
They only have to be so good and they only have to be so expensive.
674
00:45:59.572 --> 00:46:05.361
And then step two is the dream would be that person could grow into an operations manager.
675
00:46:06.163 --> 00:46:09.288
And the way I start to think about an operations manager is,
676
00:46:10.276 --> 00:46:14.778
is you're starting to share with them some of the metrics of the business.
677
00:46:14.838 --> 00:46:22.641
And not that you can't do this with an operational assistant, but operations managers like, okay, do they understand how we impact COGS and gross margin?
678
00:46:23.041 --> 00:46:24.501
Do they understand labor ratios?
679
00:46:24.521 --> 00:46:32.964
Do they understand what these things mean to the business and how moving them means they're going to make more, they're going to do more, and the whole business gets better.
680
00:46:33.625 --> 00:46:33.845
And it,
681
00:46:34.705 --> 00:46:36.047
Are they getting to see this data?
682
00:46:36.568 --> 00:46:38.190
Are they helping us track this data?
683
00:46:38.270 --> 00:46:42.155
Are they holding the guys accountable for delivering this, like recording this data?
684
00:46:43.036 --> 00:46:45.820
They would do it because they understand how critical it is to the business.
685
00:46:45.900 --> 00:46:50.346
And then are they starting to learn or did they bring to the business this knowledge already?
686
00:46:50.726 --> 00:46:51.467
How do I...
687
00:46:52.268 --> 00:46:54.932
what are the actions that we can take to improve gross margin?
688
00:46:55.012 --> 00:46:59.118
What are the actions we can take to improve, drive down non-billable time?
689
00:46:59.319 --> 00:46:59.859
Things like that.
690
00:46:59.879 --> 00:47:02.904
And so this person is now starting to think about that stuff.
691
00:47:03.144 --> 00:47:04.206
And they're starting to...
692
00:47:05.360 --> 00:47:09.162
implement those things inside the business where you might be calm.
693
00:47:09.263 --> 00:47:10.703
You might be giving them a vision.
694
00:47:10.744 --> 00:47:13.865
You might be talking to them about these things, but they can run with the ball.
695
00:47:14.326 --> 00:47:14.946
They can do them.
696
00:47:15.447 --> 00:47:27.054
The other thing I think this person can do is they can start to have, again, it'd be nice if operations assistant can do this, but if operations manager has to be able to have conversations with the team that are not fun.
697
00:47:27.354 --> 00:47:30.216
I always like to call these the conversations nobody wants to have.
698
00:47:30.256 --> 00:47:32.878
Like they're the, they're the ones where you're firing, you're,
699
00:47:33.578 --> 00:47:36.859
coaching, you're correcting, like nobody wants to have those conversations.
700
00:47:37.379 --> 00:47:41.681
But this person needs to be able to have them, in my opinion, with the field team.
701
00:47:42.741 --> 00:47:52.585
And then they also need to be able to have conversations with the client in diffuse situations, bringing the client back around, like have those hard things where the client's like, your fertilization, we
702
00:47:52.945 --> 00:47:54.266
control programs killing my lawn.
703
00:47:54.286 --> 00:47:59.690
And you're like, no, it's the sprinkler system that the two minutes a day you water is not quite enough.
704
00:47:59.710 --> 00:48:07.055
Like you got to be able to articulate that and say that in a kind enough way where it doesn't feel like attack or it doesn't feel like you're just making excuses.
705
00:48:07.075 --> 00:48:07.816
Like that's a skill.
706
00:48:08.596 --> 00:48:15.961
Operations and manager, in my opinion, needs to ideally would be able to do some of that because it starts to get a lot of that stuff off your plate.
707
00:48:16.482 --> 00:48:21.045
So that's an example of where they're growing into doing more and more of the business.
708
00:48:21.525 --> 00:48:27.268
And so if I had to put a number next to this, so ops assistant, where do you see that in terms of revenue?
709
00:48:27.328 --> 00:48:30.410
Is that zero to a million I'm looking for an operations assistant typically?
710
00:48:32.031 --> 00:48:36.073
Man, if I could get you to hire that person by 300,000, that would be a dream.
711
00:48:36.393 --> 00:48:39.795
So basically somewhere between zero and a million, though, you got to get them basically.
712
00:48:39.815 --> 00:48:39.915
Yeah.
713
00:48:41.204 --> 00:48:42.865
In my mind, I can't even fathom not.
714
00:48:43.565 --> 00:48:43.966
You have to.
715
00:48:44.666 --> 00:48:47.988
And I want to be – it depends on your situation.
716
00:48:48.008 --> 00:48:50.310
Like it's easy to say, hey, go get this person.
717
00:48:50.350 --> 00:49:01.597
But if reality is you're paying for an apartment, you're already married, you got a kid, and you got a car payment, like there's just no – I can't lie to you and say it's going to be easy.
718
00:49:01.637 --> 00:49:06.860
You're just going to have to – it's going to be a little harder for you than the single guy who's living with his mom and dad.
719
00:49:06.880 --> 00:49:07.220
Mm-hmm.
720
00:49:08.018 --> 00:49:10.180
and he's got a little more disposable income.
721
00:49:10.400 --> 00:49:13.523
I've had friends that have started companies that have done it part-time.
722
00:49:14.184 --> 00:49:18.668
I don't tend to think part-time always works out, but I've had friends that's worked out wonderfully for them.
723
00:49:19.008 --> 00:49:20.229
They had more disposable income.
724
00:49:20.249 --> 00:49:21.170
They could hire it sooner.
725
00:49:21.230 --> 00:49:27.877
So it's for sure by a million, but the sooner you can make this hire in the business, the better.
726
00:49:27.977 --> 00:49:31.059
I would say live as cheap as you can live, live,
727
00:49:31.700 --> 00:49:35.621
and hire this person as fast as you can because it'll get you to the next level faster.
728
00:49:35.701 --> 00:49:40.603
It'll get you through the pain of growth faster, and in the long run, it'll be better off.
729
00:49:41.043 --> 00:49:46.564
So in terms of revenue, just to kind of give more round numbers, operations manager, when is that starting to be needed?
730
00:49:46.584 --> 00:49:49.805
Is that like after a million to say, get to someone to say 3 million?
731
00:49:49.965 --> 00:49:51.446
Do you think that's approximately right?
732
00:49:51.486 --> 00:49:52.166
Or 5 million?
733
00:49:53.346 --> 00:49:59.308
I think it depends on- Assuming they're a, assume they're a killer.
734
00:50:01.060 --> 00:50:05.482
It's probably going to, for most people, frankly, be a millionaire after because of the cost of that person.
735
00:50:06.603 --> 00:50:10.485
You know, again, I need to quit hedging here, but, you know, it depends.
736
00:50:10.505 --> 00:50:11.285
There are variables.
737
00:50:14.062 --> 00:50:18.345
And I've seen many companies where their operational assistant, like they grew into the role.
738
00:50:18.485 --> 00:50:20.527
So sometimes, you know, it works out sooner.
739
00:50:20.567 --> 00:50:25.870
But to me, by a million dollars, you really need to, again, this is why you have to live cheap.
740
00:50:26.050 --> 00:50:28.612
And it's not a fun story, even at a million dollars.
741
00:50:29.072 --> 00:50:35.877
I say live as cheap as you can, because getting a really good person there is the fastest way to get to 3 million or 5 million.
742
00:50:36.575 --> 00:50:41.698
So once you do get to that size, 5, 10, are we still focused on that operational role?
743
00:50:42.238 --> 00:50:45.040
What does that role start to look like as it starts to get even much larger?
744
00:50:45.080 --> 00:50:46.781
Is it still really just operations manager?
745
00:50:47.301 --> 00:50:51.063
Or do you start to have actually multiple tiers within operations?
746
00:50:51.444 --> 00:50:56.927
As I say, regional manager, am I talking an operational executive, a COO type?
747
00:50:56.967 --> 00:50:58.108
When does that start to make sense?
748
00:50:58.708 --> 00:51:00.329
Again, I'm asking for broad numbers here.
749
00:51:00.349 --> 00:51:00.629
Is that 5?
750
00:51:00.789 --> 00:51:01.389
Is that 10?
751
00:51:01.409 --> 00:51:02.010
Where are we looking?
752
00:51:02.090 --> 00:51:02.230
Yeah.
753
00:51:02.549 --> 00:51:04.310
It depends on the business, of course.
754
00:51:04.331 --> 00:51:05.952
And you gave the example of regional.
755
00:51:05.972 --> 00:51:20.284
Like when we were doing the cleaning thing, we had to have district managers and regional managers because we were running our model like a restaurant chain would run the model where you'd have a district manager over a bunch of like chilies as an example.
756
00:51:20.304 --> 00:51:27.690
And then you'd have a district or regional manager over, I don't know what I said, district manager over a bunch of general managers and then a regional manager over a bunch of district managers.
757
00:51:27.930 --> 00:51:30.212
Kind of depends on what your business model is.
758
00:51:30.672 --> 00:51:37.335
In my case, and in most of the companies I've had experience with, they tend to be more centralized to one or two or three branches.
759
00:51:37.435 --> 00:51:38.195
Most are one.
760
00:51:38.775 --> 00:51:43.477
And so where I start to see, I see two scenarios.
761
00:51:43.717 --> 00:51:45.218
And this was true for CityTurf.
762
00:51:46.222 --> 00:51:49.345
So we had a operations manager.
763
00:51:50.085 --> 00:51:59.173
And then as the business got bigger and bigger, it was too much to manage F&W and mowing and a couple other service lines.
764
00:51:59.233 --> 00:52:04.458
And so then we put an operations manager over mowing and bed and bush work.
765
00:52:04.598 --> 00:52:06.859
So more like a department operations manager.
766
00:52:06.879 --> 00:52:07.660
Operations manager.
767
00:52:07.840 --> 00:52:08.120
Yeah.
768
00:52:08.340 --> 00:52:17.786
And so now you kind of had the operations manager who was kind of over, they were over the person running mowing and all that, but they were then still personally running F&W and irrigation and such.
769
00:52:18.507 --> 00:52:18.927
And then-
770
00:52:20.208 --> 00:52:30.381
When the mowing and the bed and bush work and the mulch and all that, flowers and all that kind of stuff got so significant, we would start adding assistants to the operations manager.
771
00:52:30.822 --> 00:52:35.528
So that person, if I remember correctly, had three assistants at some point.
772
00:52:35.568 --> 00:52:37.430
They would be doing a million different things.
773
00:52:38.511 --> 00:52:44.172
They could even be out like recruiting, putting door hangers on apartment complexes, like they could be doing all kinds of stuff.
774
00:52:44.593 --> 00:52:53.875
And then as the business got bigger and bigger, you start to put operations managers over F&W, or over pest control or over fertilization weed control.
775
00:53:08.653 --> 00:53:13.634
There's this point where it's very justifiable to do it, meaning you have pain in the business.
776
00:53:13.654 --> 00:53:18.335
We've got to put an ops person over to own this department, to manage the numbers, to deal with all this stuff.
777
00:53:18.875 --> 00:53:30.737
There's this other concept where when the business starts to get to these sizes, you actually hire an ops manager before that you could even possibly justify putting that person over a division.
778
00:53:31.297 --> 00:53:35.958
So an example would be, this is the only way I would spin up new parts of the business now.
779
00:53:36.618 --> 00:53:37.979
And this is as you start to get bigger.
780
00:53:38.399 --> 00:53:46.262
If I'm spinning up, for example, pest control, and this is exactly what we did, we didn't spin it up until we could go recruit a guy that was running it somewhere else.
781
00:53:47.122 --> 00:53:56.245
So now you're basically taking profits and you're bleeding profit for a little bit by hiring the person that can just run it right from the beginning.
782
00:53:56.706 --> 00:53:58.626
Because there's a lot of reasons.
783
00:53:58.786 --> 00:54:02.428
One, it'll grow faster, but two, you kind of touched on this with the contractor thing,
784
00:54:03.208 --> 00:54:11.610
if we're learning it, figuring it all out, one, it'll be slow, but two, we're more likely to make more mistakes and,
785
00:54:12.207 --> 00:54:23.796
reviews matter, brand reputation, conversation to market about the company matters so much that I, as I get bigger, I'm going to hire that ops person early to let them with the person.
786
00:54:23.816 --> 00:54:24.656
It's a done it person.
787
00:54:24.676 --> 00:54:29.140
They've got experience to build that part of the business for us for a whole ton of reasons.
788
00:54:29.160 --> 00:54:32.602
And we just look at it as an investment in the business.
789
00:54:32.762 --> 00:54:36.065
We're losing money for a little while, but it's going to get us to where we want to go faster.
790
00:54:36.366 --> 00:54:37.547
Would that usually be an acquisition?
791
00:54:37.587 --> 00:54:41.690
Like you're buying someone that does a new vertical of service or even a new market?
792
00:54:42.010 --> 00:54:44.572
Is that usually an acquisition or are you starting from scratch?
793
00:54:44.792 --> 00:54:45.893
There's a W2 employee.
794
00:54:45.913 --> 00:54:47.054
You're paying them very well.
795
00:54:47.274 --> 00:54:50.197
You know, you're going to lose money for a year or two, but you're okay with that.
796
00:54:50.337 --> 00:54:52.258
In my example that we've never bought.
797
00:54:52.458 --> 00:54:57.022
So it's always been an example of you hire that person and build it.
798
00:54:57.442 --> 00:54:58.242
What was your experience?
799
00:54:58.422 --> 00:55:02.563
This is me being curious because like when we start new locations, we have two different ways to do it.
800
00:55:02.723 --> 00:55:05.404
One is you do it more slowly, which is I extend my service area.
801
00:55:05.444 --> 00:55:13.126
I slowly move in and then I find a general manager over the course of time and put them in that and break it off kind of in that new division.
802
00:55:13.506 --> 00:55:15.326
Once it's profitable, that's one way.
803
00:55:15.386 --> 00:55:19.888
It's a slower model, but it's more, more, uh, I guess you'd say conservative financially.
804
00:55:20.288 --> 00:55:25.469
The other model is you find the person, you go put them there from day one and then you, uh,
805
00:55:26.089 --> 00:55:27.490
gas it a lot faster.
806
00:55:29.271 --> 00:55:34.934
The risk in that is if that person doesn't work out, now I've got a whole division that's up a creek without a paddle.
807
00:55:35.334 --> 00:55:40.496
What has your experience been when you do find that person to, has it always worked out?
808
00:55:40.776 --> 00:55:42.317
What do you do to make sure it does work out?
809
00:55:42.357 --> 00:55:45.079
Because now there's a lot more investment in that area.
810
00:55:45.399 --> 00:55:46.780
Yeah, it hasn't always worked out.
811
00:55:47.420 --> 00:55:51.282
And I don't know that there's a formula to this.
812
00:55:51.342 --> 00:55:53.243
I think it's more of a
813
00:55:55.797 --> 00:55:58.660
I think we want business to be copy and paste.
814
00:55:59.101 --> 00:56:01.544
And we imagine that to a degree it will be copy and paste.
815
00:56:01.584 --> 00:56:02.205
And it can.
816
00:56:03.146 --> 00:56:14.900
But my reality in building businesses behind the scenes, if you're a fly on the wall, you're sitting at conference tables, you're sitting at lunch, and you're all having conversations and you're making decisions.
817
00:56:15.523 --> 00:56:23.609
You're making decisions based on the scenarios of the business at that moment, what you think the opportunity is and what the money available is and what you think the risk is.
818
00:56:23.649 --> 00:56:29.753
And so to your question here, I think it's one of those non-satisfying answers of it sort of depends.
819
00:56:30.153 --> 00:56:40.900
If you find the rock star and you have the capacity to back, like you find the rock star to put them in that market and you're like, we're going to take a gamble on this.
820
00:56:40.960 --> 00:56:42.241
We think the odds are in our favor.
821
00:56:42.381 --> 00:56:42.982
We're going to do it.
822
00:56:43.830 --> 00:56:45.573
And the and is really important.
823
00:56:46.033 --> 00:56:56.907
We have the capacity, both from a capital money standpoint, and from a time standpoint, to backfill that market with all the marketing it's going to take to go fast, then you might make that bet.
824
00:56:57.728 --> 00:57:00.472
There could be times you're like, hey, I found the rock star, but
825
00:57:01.906 --> 00:57:05.168
where are we going to fit into the roadmap, all the marketing that we need to do?
826
00:57:05.188 --> 00:57:07.910
Like we're already just trying to keep all these other promises and do that.
827
00:57:07.970 --> 00:57:09.331
So that would kill the deal.
828
00:57:09.451 --> 00:57:11.553
And so then you would do the more conservative approach.
829
00:57:12.053 --> 00:57:17.197
And so I give those examples to say, I really feel like a lot of this is a case by case basis.
830
00:57:17.217 --> 00:57:20.199
Did you find the person and can you do the sales and marketing?
831
00:57:20.639 --> 00:57:26.203
So many people in city, a hundred percent us, like when we started pest control, we found the person.
832
00:57:27.883 --> 00:57:29.624
Jonathan was off doing service autopilot.
833
00:57:30.765 --> 00:57:32.446
There was no pest control marketing.
834
00:57:32.966 --> 00:57:40.011
And like everybody else, you found out it's like, oh, just because you have a million customers doesn't mean they're all going to naturally buy the thing I have to sell.
835
00:57:40.331 --> 00:57:41.532
It's just easiest.
836
00:57:41.552 --> 00:57:44.233
Hey, guys, now we're doing pest control and everybody rushes in.
837
00:57:44.273 --> 00:57:48.616
So that's one example of how I learned that lesson over the years.
838
00:57:49.217 --> 00:57:52.899
I've also learned it from, you know, we're talking to other clients as like.
839
00:57:53.219 --> 00:57:54.920
That sells the marketing function.
840
00:57:55.000 --> 00:57:57.481
Are we ready to really go all in and do that?
841
00:57:57.862 --> 00:58:00.923
And that's a huge part of the answer to your question in my mind.
842
00:58:01.224 --> 00:58:07.347
I think, too, I've found is even if the model is copy and paste, no person is copy and paste.
843
00:58:07.927 --> 00:58:17.313
And one of the struggles we've had for our owners is being able to identify the rock star and treating them differently than the technicians you've hired in the past.
844
00:58:17.933 --> 00:58:23.918
And it takes a few sometimes for them to just go through a couple of GMs just to identify what is a rock star look like?
845
00:58:24.118 --> 00:58:35.366
What are the actions that a rock star takes so I can confidently put them out there, back them up with a bunch of marketing and know they're going to succeed versus being, okay, I'm going to treat them like a technician, which is I tell them what to do.
846
00:58:35.466 --> 00:58:36.547
Here's your list of things to do.
847
00:58:36.847 --> 00:58:38.028
I'm the bottleneck for decisions.
848
00:58:38.388 --> 00:58:44.413
And then it becomes a, just a big problem that then I have this churn at the GM level, which is always bad for the technicians.
849
00:58:44.433 --> 00:58:44.553
Um,
850
00:58:45.073 --> 00:58:51.598
And that's really been our biggest hurdle when it comes to, okay, when I go and expand and I find the rock star,
851
00:58:52.748 --> 00:58:53.368
How do I treat them?
852
00:58:53.428 --> 00:58:59.311
How do I as a leader have to adjust my leadership style to ensure that they're actually set up for success and gonna do well?
853
00:58:59.651 --> 00:59:02.333
And don't just copy and paste what I've treated my technicians.
854
00:59:02.693 --> 00:59:05.934
Maybe potentially it worked well for the technicians, but very different for that leader's role.
855
00:59:06.415 --> 00:59:07.515
Yeah, that makes a lot of sense.
856
00:59:07.915 --> 00:59:14.539
In your business, how hard is it for you guys to spin up and support a new market from a sales and marketing function?
857
00:59:14.579 --> 00:59:16.439
Again, I'm just local to this one little area.
858
00:59:16.479 --> 00:59:18.480
So I don't have that experience.
859
00:59:18.961 --> 00:59:21.142
Yeah, well, it's a variable that is...
860
00:59:22.312 --> 00:59:23.872
our biggest problem.
861
00:59:24.272 --> 00:59:30.614
And so we've really worked this year on how do we actually just make it where is we guarantee a certain number of customers.
862
00:59:30.634 --> 00:59:34.595
So for us, almost every location can break even if they get over a hundred recurring customers.
863
00:59:34.975 --> 00:59:37.455
That puts them usually around 30 to 40,000 a month in revenue.
864
00:59:37.755 --> 00:59:40.836
And that's assuming they have a GM, they can pay their salary and pay for overhead.
865
00:59:41.316 --> 00:59:50.118
And so we're just starting to work on this program where it's basically, we will guarantee you'll get to a hundred recurring customers, assuming that you spend X amount flat.
866
00:59:50.978 --> 00:59:52.440
on the Augusta leads.
867
00:59:52.520 --> 00:59:56.945
So we run the ads for them, mostly to take that variable out of the equation.
868
00:59:56.985 --> 01:00:07.817
And I take the risk on of getting them past zero because that's where we see the biggest problem when it comes to churn or like getting a location is like, if they just get past that, the GM now has profit sharing.
869
01:00:08.317 --> 01:00:09.917
And it's much stickier.
870
01:00:10.278 --> 01:00:20.280
When they're in growth mode and they're getting their first 20, 30, 50, 60, 70 customers and their route density is not good, their first couple employees are not working out, that's where we see the churn happening.
871
01:00:20.580 --> 01:00:26.602
But if we can get them very quickly past profitability and then they're getting profit sharing, then the GM world becomes more sticky.
872
01:00:26.622 --> 01:00:26.742
Yeah.
873
01:00:27.082 --> 01:00:33.026
And so that's like our biggest thing this year is how do we make it where it's just guaranteed and we'll cover the marketing expense until they pass that.
874
01:00:33.587 --> 01:00:38.790
And so just setting up tracking has been the thing that we were really trying to figure out the kinks on that right now.
875
01:00:38.810 --> 01:00:41.733
It's like, did this create a recurring customer or a customer?
876
01:00:42.033 --> 01:00:43.914
Because like, I want a hundred recurring customers.
877
01:00:44.154 --> 01:00:45.735
So if a project comes from an ad,
878
01:00:46.676 --> 01:00:52.018
okay, cool, you got some cash, but like getting into a certain amount of monthly recurring revenue is really the goal.
879
01:00:52.598 --> 01:00:55.679
And it's difficult because sometimes we'll get leads for 10 bucks.
880
01:00:55.859 --> 01:00:57.079
Well, what's the quality of lead?
881
01:00:57.519 --> 01:00:58.340
Are they recurring?
882
01:00:58.640 --> 01:00:59.980
Do they accept upsells?
883
01:01:00.040 --> 01:01:01.821
What's the pricing on that as well?
884
01:01:02.201 --> 01:01:04.461
Like, is it a $40 cut or is it a $60 cut?
885
01:01:04.781 --> 01:01:06.222
And what's our hourly rate on that
886
01:01:06.642 --> 01:01:07.682
that lead that we've now sold.
887
01:01:08.083 --> 01:01:09.563
And so it's certainly a variable.
888
01:01:09.583 --> 01:01:10.303
It's very difficult.
889
01:01:10.523 --> 01:01:20.167
And we're trying to take that risk away from the owners because it's a trickle down to the risk of now getting a GM that's stuck in growth mode, doing door hangers and other marketing that they're not really cut out for many times.
890
01:01:20.467 --> 01:01:20.747
Yeah.
891
01:01:21.327 --> 01:01:21.707
Interesting.
892
01:01:23.308 --> 01:01:32.931
Along those lines, again, an area I don't have experience, how different is marketing across the different markets?
893
01:01:33.351 --> 01:01:33.831
So different.
894
01:01:34.412 --> 01:01:34.612
Is it?
895
01:01:34.632 --> 01:01:34.812
Yeah.
896
01:01:34.972 --> 01:01:35.192
Yeah.
897
01:01:35.352 --> 01:01:35.512
Like,
898
01:01:35.732 --> 01:01:45.620
One of the things that in the past year and a half we've worked on a lot with Augusta Leads is aggregating the data and trying to figure out, okay, based on zones, like growing zones, for example, what works when.
899
01:01:46.040 --> 01:01:50.083
But for example, three weeks ago, we were running a certain type of ad.
900
01:01:50.424 --> 01:01:51.965
It was at $70 cost per lead.
901
01:01:52.265 --> 01:02:00.451
The exact same ad across all markets dropped by 65% in terms of cost per lead just because it's seasonal.
902
01:02:00.752 --> 01:02:00.872
Yeah.
903
01:02:01.332 --> 01:02:03.293
The last timing, you're selling at the right time.
904
01:02:03.413 --> 01:02:03.874
Exactly.
905
01:02:04.134 --> 01:02:05.735
And then like, here's crazy.
906
01:02:06.315 --> 01:02:11.318
One of those, like if you had a US flag, our cost per lead dropped by 15%.
907
01:02:11.979 --> 01:02:14.981
And then in Canada, we just swapped the flag out using AI.
908
01:02:16.001 --> 01:02:16.762
Same thing happened.
909
01:02:17.302 --> 01:02:18.423
Little stuff like that.
910
01:02:18.623 --> 01:02:25.888
And as we're seeing, especially with meta, with the creative side being so many variables, it's been really helpful and really interesting to see all the little things you tweak.
911
01:02:26.228 --> 01:02:27.829
So for example, we do instant quotes.
912
01:02:27.969 --> 01:02:30.291
Well, if we just put the price on the ad,
913
01:02:30.991 --> 01:02:35.132
Now our conversion rate goes way up because they click on the ad already knowing the pricing.
914
01:02:35.992 --> 01:02:41.013
They're not getting surprised when they see the price, but our click-through rate will be way lower because we have the price on the ad.
915
01:02:41.413 --> 01:02:51.236
So what's the opportunity cost here of getting their information on the form and them seeing the price and bouncing versus them coming in and 50% of them converting to a paying customer?
916
01:02:51.756 --> 01:02:52.616
So it's a lot of fun.
917
01:02:53.436 --> 01:02:55.877
Aggregating the data has been very, very cool.
918
01:02:56.868 --> 01:03:03.952
Yeah, that's when these businesses get amazing is when you can get to that level of sophistication and be optimizing.
919
01:03:04.472 --> 01:03:07.073
That's when you can really make some progress.
920
01:03:07.373 --> 01:03:09.214
But unfortunately, it takes a while to get there.
921
01:03:09.735 --> 01:03:17.679
Yeah, like going back to kind of our leadership and hiring that role, one thing I think about is like the three-step process of solving a constraint in the business.
922
01:03:17.879 --> 01:03:21.801
It's like, first you have to find the problem, then you have to find the solution, and then you have to execute.
923
01:03:22.401 --> 01:03:25.503
And in the perfect world, I'm able to afford someone that can do all three.
924
01:03:26.203 --> 01:03:33.405
which is essentially running the business without, they find problems, they go solve them, and, or sorry, they find the solution, and then they go, so go do it.
925
01:03:34.045 --> 01:03:41.327
And I found, until I could pay someone very, very handsomely that had a lot of experience, I had to be somewhere in that equation.
926
01:03:41.847 --> 01:03:49.169
Either, and a lot of times, I think for a lot of people, say under two or three million, you're gonna find someone that can find problems, but they still come to you,
927
01:03:49.909 --> 01:03:50.670
to get the solution.
928
01:03:51.110 --> 01:03:51.270
Yeah.
929
01:03:51.730 --> 01:04:03.439
And then they might be able to execute, but that middle section of finding the solution is a lot of times what you're paying for that I've found in any role, whether it be engineering or whether it be product or whether it be sales and markets.
930
01:04:03.840 --> 01:04:04.500
Can you find the solution?
931
01:04:04.520 --> 01:04:07.483
Because if I'm the solution, I just become the bottleneck for the business.
932
01:04:08.063 --> 01:04:12.026
And I think as I've gone, the revenues of business has grown, that's the thing I've had to figure out.
933
01:04:12.046 --> 01:04:18.811
It's like, I will have to pay, what I'm paying for is I don't become the bottleneck for all the decisions of the business and therefore can focus on,
934
01:04:19.913 --> 01:04:25.277
strategy instead of the operations of finding problems, finding solutions, and then just go get it done.
935
01:04:26.217 --> 01:04:37.325
So the way you just articulated it as perfect, if we rewind back to something I said in the conversation I was talking about, I don't remember the context of it, but it was about operations manager, but it was earlier.
936
01:04:37.465 --> 01:04:39.186
And I was like, are they really good?
937
01:04:39.206 --> 01:04:40.807
Like, are they really the right person?
938
01:04:41.608 --> 01:04:45.530
Because you may say, well, I already have that role field, but okay, but are they the right person?
939
01:04:45.871 --> 01:04:48.873
The way you just articulated that is a definition of the right person.
940
01:04:49.758 --> 01:04:57.765
And that is the unlock that as a business gets bigger, we eventually experience it and we figure it out.
941
01:04:57.825 --> 01:05:12.938
And you realize like, oh, wow, the whole time I've been building this business and trying to be a little more cost efficient, which you have to do and careful with the money, I created a lot of pain for me and the team because I was still in the loop on all these things, the way you said it.
942
01:05:13.319 --> 01:05:17.082
The unlock is when you get to the place you can hire the done it person.
943
01:05:17.420 --> 01:05:19.505
And I'll bet a lot of people have heard that said before.
944
01:05:20.407 --> 01:05:20.607
And...
945
01:05:21.662 --> 01:05:27.426
But hearing it and experiencing it and then truly knowing it are very different things.
946
01:05:27.926 --> 01:05:31.569
Like I can easily repeat this information because I've lived it.
947
01:05:32.009 --> 01:05:44.497
But then when I sit down to make the hire, I start thinking about the salary and the money and like, well, like, do we really, you know, it's like we all, you know, I can still get caught up in that, but that's how you go fast.
948
01:05:44.917 --> 01:05:50.041
And so as you're making these decisions of growing through 5 million and 10 million, 15 million, I think in the...
949
01:05:50.602 --> 01:05:53.839
the big conversation you're also having with yourself and your team is –
950
01:05:54.933 --> 01:06:00.374
Are we hiring a person that's close to doing it on their own?
951
01:06:00.394 --> 01:06:04.195
Or are we hiring somebody that's going to take like three years to get them there?
952
01:06:04.215 --> 01:06:06.856
Or are we hiring a person where tomorrow they own this function?
953
01:06:07.296 --> 01:06:09.316
It's off my plate and they just run it.
954
01:06:09.476 --> 01:06:11.877
And that is also one of the big decisions.
955
01:06:12.157 --> 01:06:15.238
And that's one of the big things that becomes possible as you start crossing these numbers.
956
01:06:15.898 --> 01:06:24.860
I tend to think this is a small sample size, but I'm guessing most people start getting more comfortable making those kinds of decisions past 10 million.
957
01:06:25.340 --> 01:06:36.606
I think that's a hard, you know, I've owned a bunch of businesses and I just have, I don't believe I ever made that kind of a decision at 5 million, much less in the early days.
958
01:06:36.626 --> 01:06:37.266
I didn't even know.
959
01:06:38.527 --> 01:06:47.352
So that may be one of the single biggest takeaways from what we just talked about is starting to figure, starting to think about it that way.
960
01:06:47.472 --> 01:06:51.033
Is this person going to still involve me on most things?
961
01:06:51.454 --> 01:06:53.855
And if so, there's another level yet to be had.
962
01:06:54.425 --> 01:06:59.689
For finding that person to move on to the next part of the docket today, hiring.
963
01:07:00.250 --> 01:07:01.971
I know you use Loom a lot.
964
01:07:02.331 --> 01:07:03.192
I use Loom a lot.
965
01:07:03.472 --> 01:07:03.653
Yeah.
966
01:07:03.813 --> 01:07:06.955
But specifically, I'm interested how you use Loom for hiring.
967
01:07:07.396 --> 01:07:10.078
I know you said you like 2,000 videos you do on Loom.
968
01:07:10.458 --> 01:07:11.759
So I have so many videos.
969
01:07:11.779 --> 01:07:12.299
Walk us through.
970
01:07:12.319 --> 01:07:14.841
I've probably done nine today, 10, 11 today.
971
01:07:15.021 --> 01:07:15.882
I have no idea.
972
01:07:15.902 --> 01:07:28.091
So walk me through Loom and how you use it, but then also specifically for hiring and maybe not just for this executive level or operations level person, but just in general, how are you using it right now?
973
01:07:28.471 --> 01:07:31.252
For those that don't know what Loom is, I should probably define it.
974
01:07:31.832 --> 01:07:38.315
Whether you're on your laptop or you're on your phone, you basically can record your screen.
975
01:07:38.935 --> 01:07:40.576
You can record a video of you.
976
01:07:40.616 --> 01:07:43.757
You can record the screen on your device, and it records the audio.
977
01:07:44.937 --> 01:07:46.958
You can record any or all of those things.
978
01:07:47.638 --> 01:07:49.379
And then as soon as you hit stop...
979
01:07:50.165 --> 01:07:53.886
it automatically copies a link to your clipboard in memory.
980
01:07:54.346 --> 01:08:00.167
And then you can paste that into a text, an email, Trello, Notion, whatever you use.
981
01:08:01.107 --> 01:08:04.748
I feel like everybody that I've introduced Loom to is converted.
982
01:08:04.768 --> 01:08:11.110
And I've made this joke, like, man, if I could have founded a software company, Loom is my kind of company.
983
01:08:11.130 --> 01:08:12.410
I wish I had thought of this idea.
984
01:08:12.530 --> 01:08:17.011
So my selling point on Loom is I think it eliminates Loom.
985
01:08:18.033 --> 01:08:19.937
a crazy amount of phone calls and meetings.
986
01:08:20.358 --> 01:08:23.104
It just fully eliminates them.
987
01:08:24.187 --> 01:08:26.652
And therefore, there's a cost savings...
988
01:08:27.679 --> 01:08:32.063
both in money because of the cost of all the people that would have to attend, but also time.
989
01:08:32.564 --> 01:08:34.405
And I love the asynchronous part of it.
990
01:08:34.505 --> 01:08:39.410
Most things do not have to be talked about right this second.
991
01:08:39.570 --> 01:08:39.991
Live, yeah.
992
01:08:40.371 --> 01:08:40.531
Yep.
993
01:08:41.032 --> 01:08:49.720
The other thing is, for me, I'm a person that can, if you and I are going to hop on the phone and we both have time,
994
01:08:51.695 --> 01:08:52.977
And we have one thing to talk about.
995
01:08:53.117 --> 01:08:59.264
Odds are I'm going to introduce a new topic or we're going to get excited about something and we're going to go this way and that way.
996
01:08:59.324 --> 01:09:08.856
And, you know, a lot of times when I'm chatting with my friends, the conversations just get longer and longer because – and so Loom is an example of keeping someone like myself focused.
997
01:09:10.120 --> 01:09:10.680
To a degree.
998
01:09:11.280 --> 01:09:13.381
And so it's like, okay, what's the conversation?
999
01:09:13.421 --> 01:09:14.301
What's the point here?
1000
01:09:14.822 --> 01:09:18.843
Here's a problem, solution, whatever the scenario is, I create a loom on that and I can send it to you.
1001
01:09:18.863 --> 01:09:24.285
So most of my communication is done with people via loom by...
1002
01:09:25.445 --> 01:09:26.787
like, Hey, I need to get this done.
1003
01:09:27.007 --> 01:09:29.130
And then I can give them all the context that they need.
1004
01:09:29.290 --> 01:09:34.877
So here would be an example of why I like it better than a typical phone conversation or a Google meet.
1005
01:09:35.518 --> 01:09:36.319
They can rewind it.
1006
01:09:37.180 --> 01:09:38.201
They can go back through it.
1007
01:09:38.221 --> 01:09:39.423
It's like, Hey, what'd he say there?
1008
01:09:39.443 --> 01:09:39.503
Uh,
1009
01:09:40.684 --> 01:09:45.606
They can, so it's not lost, like in that one conversation.
1010
01:09:45.926 --> 01:09:52.127
I can take, if you pay an extra five bucks a month or whatever it is, you'll get a transcript of every Loom.
1011
01:09:52.528 --> 01:09:57.929
Take every transcript and dump it into whatever your favorite AI tool is, and it will summarize it.
1012
01:09:58.089 --> 01:09:59.370
It'll give you an action list.
1013
01:09:59.890 --> 01:10:00.970
It'll give you to-dos.
1014
01:10:01.170 --> 01:10:02.691
It could do whatever you want it to do.
1015
01:10:03.191 --> 01:10:06.872
And that's a really efficient way to process some longer Looms.
1016
01:10:07.592 --> 01:10:15.361
So like Philip who runs CityTurf, he and I trade bazillions of looms and our looms are long because we're always talking about strategic things or initiatives.
1017
01:10:15.381 --> 01:10:15.942
They get long.
1018
01:10:16.002 --> 01:10:26.834
So if Philip sends me a 20 minute loom, which are very valuable to me, like 20 minutes does sound like a long time, but they're really valuable because it gives tremendous context on the business.
1019
01:10:27.595 --> 01:10:33.978
And so I can take, if I see the looms long, the first thing I do is I take the transcript, I dump it into Claude or ChatGPT.
1020
01:10:34.258 --> 01:10:37.079
I get a summary of it real quick so I know what it's going to be about.
1021
01:10:37.440 --> 01:10:42.642
And then I still watch the loom, but it kind of gives me up front what I need to know, a summary of it.
1022
01:10:42.662 --> 01:10:48.885
And then at the end, it can give me talking points or, no, I'm sorry, not talking points, action steps or what do I need to follow up on.
1023
01:10:49.645 --> 01:10:52.707
So I use it for every single thing I do.
1024
01:10:53.555 --> 01:10:57.562
Um, I mean, if I'll give you an example, I have city turf doing some stuff at my property.
1025
01:10:57.582 --> 01:11:03.091
I, I mean, I just take pictures of what I need done by city turf at my property.
1026
01:11:03.111 --> 01:11:03.692
I don't,
1027
01:11:04.839 --> 01:11:05.780
drop them on my computer.
1028
01:11:05.800 --> 01:11:08.822
I just record a loom and talk about all the pictures that I send them to loom.
1029
01:11:09.563 --> 01:11:13.386
If I, I bought, I had a commission, a painting commissioned one time.
1030
01:11:13.406 --> 01:11:19.491
I, well, I've done that many times, but a painting commission, I literally to the artist, like, Hey, I don't like this.
1031
01:11:19.511 --> 01:11:20.151
I don't like this.
1032
01:11:20.191 --> 01:11:20.612
Can you change?
1033
01:11:20.632 --> 01:11:21.192
I do it with loom.
1034
01:11:21.212 --> 01:11:25.115
Like anything you can imagine, it can be done with loom and it's more efficient.
1035
01:11:25.135 --> 01:11:26.556
That's my selling point on it.
1036
01:11:26.917 --> 01:11:28.018
It's a great coaching tool.
1037
01:11:28.038 --> 01:11:28.138
It's,
1038
01:11:28.658 --> 01:11:34.104
And then the other thing is, as we move into this world of, and these, they persist forever, like Loom.
1039
01:11:34.464 --> 01:11:37.848
So you can dump your Loom into Notion or whatever tool.
1040
01:11:38.128 --> 01:11:39.349
It'll still be there in three years.
1041
01:11:40.406 --> 01:11:47.588
And if you can record things in Loom, I'll end here pretty soon, but I'll get to the recruiting part.
1042
01:11:47.848 --> 01:11:48.788
You can take the transcript.
1043
01:11:49.148 --> 01:11:51.209
You can dump that and you retain that information.
1044
01:11:51.229 --> 01:12:05.353
But also think about the fact that video, audio is becoming more and more important than ever because eventually you'll just allow your AI models to run over top of this stuff and surface information.
1045
01:12:05.993 --> 01:12:19.118
And so by having all of these Looms and never deleting them and doing so much of what I do on Loom, I'll eventually be able to resurface unbelievable amounts of knowledge and ideas and coaching opportunities and you name it.
1046
01:12:20.227 --> 01:12:26.111
Before I go on to the recruiting, Mike, I'd be curious to how, what other, there's other ways I use it, but what other things do you do or how do you think about it?
1047
01:12:26.131 --> 01:12:26.891
Is there anything different?
1048
01:12:27.071 --> 01:12:33.135
Yeah, we use it a bunch for sales because first off, you can see how far they watch into the video.
1049
01:12:33.515 --> 01:12:35.897
So the percentage that someone sees, did they get to the end?
1050
01:12:36.457 --> 01:12:39.058
Another thing that some people don't use all the time is the link.
1051
01:12:39.158 --> 01:12:41.719
So you can make a button pop up and have a link to it.
1052
01:12:41.759 --> 01:12:46.862
So what we will do is we will actually just open up HomeWorks in the client portal and walk them through their quote.
1053
01:12:46.982 --> 01:12:49.323
We'll be in the bottom corner, just walking through your quote.
1054
01:12:49.383 --> 01:12:51.063
Any questions, let me explain this again.
1055
01:12:51.444 --> 01:12:52.484
Hey, we went over this, whatever.
1056
01:12:52.824 --> 01:12:57.906
But then what you can do in the Loom is have the link to the estimate where they can just click accept just pop up.
1057
01:12:58.487 --> 01:13:03.449
And then they can click on it, even if they're on their mobile device, and it'll go directly to the client portal and they can click accept.
1058
01:13:04.044 --> 01:13:05.045
And so good.
1059
01:13:05.225 --> 01:13:06.986
I didn't know that the link is really useful.
1060
01:13:07.006 --> 01:13:19.396
But yeah, like the ability to take the transcript is the real kicker because I use Loom like a few years ago, right when the trans that's when I switched over is when the transcript thing came out because it's immediate.
1061
01:13:19.856 --> 01:13:26.381
A lot of other video software takes some time, like even Gemini, you can wait 10, 15 minutes after a call to get the transcript.
1062
01:13:26.981 --> 01:13:37.425
And so the ability to have the transcript immediately allows me to just write when I'm done, drop it into an AI tool and it summarizes it, but most importantly, keeps the information.
1063
01:13:37.905 --> 01:13:41.687
And so I've done it where I just have folders for whatever role I'm going to hire.
1064
01:13:42.307 --> 01:13:46.148
I just will make looms for about a month leading up to it of the problems, the issues.
1065
01:13:46.408 --> 01:13:52.891
And then when it comes to the time when I want to make the job description, I'll dump all those transcripts and say, make me a job description to solve all these problems.
1066
01:13:53.711 --> 01:13:58.956
And it also then will create a 30, 60, and 90 based upon the problems that I've been facing.
1067
01:13:59.276 --> 01:14:00.877
And it's like super accurate.
1068
01:14:01.317 --> 01:14:02.638
So I like the transcription.
1069
01:14:02.659 --> 01:14:04.180
That was the reason I got into it.
1070
01:14:04.540 --> 01:14:07.703
But the ability to be able to send the link, it's the fastest up...
1071
01:14:08.858 --> 01:14:11.899
from what I've seen, it's the fastest upload of any platform.
1072
01:14:12.079 --> 01:14:16.720
Like if you upload a video to YouTube on your phone and you're on a 3G service, for example, it could take five minutes.
1073
01:14:17.200 --> 01:14:25.222
On most Loom networks, as long as the network's decent, within 10, 15 seconds, I have a copyable link to send to someone.
1074
01:14:25.602 --> 01:14:28.983
And so it's not a matter of like record video, come back to it and send.
1075
01:14:29.323 --> 01:14:30.383
I can just record and send.
1076
01:14:31.115 --> 01:14:32.595
Yeah, I would agree with that.
1077
01:14:32.635 --> 01:14:35.576
I hadn't thought about that so much, but it is amazingly fast.
1078
01:14:35.616 --> 01:14:44.978
And then for people that have never heard of this product, if you were using it in a sales scenario, you can go in and edit the text and it will edit the actual video.
1079
01:14:45.159 --> 01:14:46.659
So you don't have to rerecord the whole thing.
1080
01:14:46.699 --> 01:14:48.119
There's just so much you can do with it.
1081
01:14:48.499 --> 01:14:53.421
And you can put like, for example, if you're making a sales video to a customer and their name is different.
1082
01:14:53.441 --> 01:14:55.781
Yeah, I think that's what you're saying is changing their name out.
1083
01:14:55.841 --> 01:14:57.382
It'll change your words.
1084
01:14:58.042 --> 01:14:58.902
One other thing, oh, yeah,
1085
01:14:59.672 --> 01:15:08.997
when I'm making videos for the team and sometimes I need to think, I can just stop, pause, and then just remove the, the, the, with one click, remove all the gaps of space.
1086
01:15:09.037 --> 01:15:13.739
So it was like yesterday I was making, I was analyzing someone's presentation and I didn't want to walk.
1087
01:15:13.839 --> 01:15:18.561
Usually you'd go through the presentation, kind of gather your thoughts and then you would make your video response.
1088
01:15:18.841 --> 01:15:21.663
Whereas in this case, I was able to go to the next slide, be quiet.
1089
01:15:23.386 --> 01:15:25.167
digest it and respond to it right away.
1090
01:15:25.407 --> 01:15:28.549
And then just click one button and remove all the gaps where I was quiet.
1091
01:15:28.909 --> 01:15:30.590
And it was a perfect presentation afterwards.
1092
01:15:31.570 --> 01:15:33.591
Yeah, I actually do the exact same thing.
1093
01:15:34.012 --> 01:15:35.252
It's incredibly valuable.
1094
01:15:35.833 --> 01:15:37.253
So to the hiring process.
1095
01:15:37.774 --> 01:15:44.997
So what I've been doing with Loom is I kind of run a similar process in that I create a
1096
01:15:47.256 --> 01:15:53.681
we'll call it a, I document what the outcomes are, what I need that role to do, that type of thing.
1097
01:15:53.701 --> 01:15:55.423
So I figure out what the role is gonna look like.
1098
01:15:56.203 --> 01:16:00.086
I then take that role, so not all of this is with Loom, but I take that role
1099
01:16:01.243 --> 01:16:05.584
And I probably worked, these days I work in an AI model all the time.
1100
01:16:05.624 --> 01:16:07.744
So I probably worked on the role in an AI model.
1101
01:16:08.044 --> 01:16:13.385
Most likely what I did is I recorded audio into there over time in a thread.
1102
01:16:13.425 --> 01:16:21.387
And we've built out a, basically an outline of who I need to hire and what I need from them.
1103
01:16:22.167 --> 01:16:26.028
I then have an AI model create a scorecard for me.
1104
01:16:26.968 --> 01:16:35.120
And then I have whomever my potential candidates are for that job, they have to record me a loom.
1105
01:16:36.186 --> 01:16:40.349
So the initial response to the hiring ad requires a loom.
1106
01:16:40.369 --> 01:16:41.630
If they don't do it, I don't even look at them.
1107
01:16:42.130 --> 01:16:43.291
So they have to record a loom.
1108
01:16:43.451 --> 01:16:46.473
I give them X number of questions to answer.
1109
01:16:47.233 --> 01:16:52.257
I take all those looms and I just dump the transcripts into AI and I kind of filter.
1110
01:16:52.337 --> 01:16:54.038
I watch them, but I also then filter them.
1111
01:16:54.518 --> 01:16:58.821
Then I go back and I do my very first interview, which could be an hour plus, and
1112
01:16:58.981 --> 01:17:00.502
And I do it, I record it.
1113
01:17:00.962 --> 01:17:06.763
So I actually have it recorded, Loom recording the interview while I do it in Google Meet or whatever.
1114
01:17:07.924 --> 01:17:10.485
However you could get the transcript, at the end of the day, it's all that matters.
1115
01:17:11.085 --> 01:17:23.709
I then take that transcript, I dump it back into the AM models and I have it keep a running scorecard of every one of my applicants based on all my questions, their experience, all the things covered in their first video.
1116
01:17:24.269 --> 01:17:25.310
their second video.
1117
01:17:25.731 --> 01:17:37.146
And because that transcript and that scoring has been so valuable to me, whenever I have additional questions for them, oftentimes I'll just pop over a question and say, hey, will you shoot me a loom on this thing?
1118
01:17:37.706 --> 01:17:40.290
And then eventually I will meet with them in person, of course.
1119
01:17:40.370 --> 01:17:41.531
But the...
1120
01:17:42.718 --> 01:17:45.259
I think most of it goes back to the element of the transcript.
1121
01:17:45.279 --> 01:17:55.925
You don't have to have Loom to do this, but Loom is the tool that I've used to get those transcripts really fast so that I can run them against my scorecards and what I'm looking for in the AI models.
1122
01:17:56.485 --> 01:17:57.966
And I wouldn't say that,
1123
01:18:00.395 --> 01:18:10.641
I follow exactly what it says, but this process really surfaces very interesting things that maybe I didn't think about or different ways to think about a candidate.
1124
01:18:11.001 --> 01:18:14.203
And I found it extremely valuable for making those decisions.
1125
01:18:14.483 --> 01:18:17.245
Now, I haven't done this for hiring anybody in the field or anything like that.
1126
01:18:17.325 --> 01:18:23.188
This has been more for hiring contractors, hiring actual W-2 people.
1127
01:18:23.628 --> 01:18:26.210
This is the process I've been following, and I've been super happy with it.
1128
01:18:27.568 --> 01:18:33.011
All right, real quick, you're going to notice the rest of the video in the podcast that Jonathan's camera is a little bit blurry.
1129
01:18:33.292 --> 01:18:35.233
And then also he's kind of fidgeting around a little bit.
1130
01:18:35.673 --> 01:18:37.374
His computer was dying.
1131
01:18:37.394 --> 01:18:38.155
It was almost dead.
1132
01:18:38.495 --> 01:18:40.816
And so he was trying to find a power cord and it was also overheating.
1133
01:18:40.896 --> 01:18:42.257
So the camera quality is not great.
1134
01:18:42.297 --> 01:18:46.220
And eventually the camera actually turns off, but it's still great content.
1135
01:18:46.880 --> 01:18:48.021
By the way, while I'm here.
1136
01:18:48.641 --> 01:18:53.222
definitely comment below what you enjoy about the podcast and what you would like us to talk about in the future.
1137
01:18:53.742 --> 01:18:58.904
We are dedicated to the next three weeks, releasing one episode every week of the podcast together.
1138
01:18:59.344 --> 01:19:04.665
And if it's going well and it's helpful for all of you, we will continue, but we need to know if it's useful.
1139
01:19:04.985 --> 01:19:09.206
And so definitely let us know in the comments and share the podcast, get as many views as possible.
1140
01:19:09.226 --> 01:19:11.487
So Johnson's like, let's go, let's keep doing the podcast.
1141
01:19:12.307 --> 01:19:16.768
But we look forward to sharing more information, but we'd love to know what topics you want us to cover next.
1142
01:19:17.008 --> 01:19:19.611
So back to the episode, but I want to give you a little bit of context.
1143
01:19:19.891 --> 01:19:24.236
If you see Jonathan fidgeting around or the camera getting fuzzy and eventually turning off, that's why.
1144
01:19:24.256 --> 01:19:25.678
Yeah.
1145
01:19:25.698 --> 01:19:33.006
It's like, I think when I hear that process, I, I wonder about if you tried to use that for entry-level technicians, for example.
1146
01:19:33.026 --> 01:19:33.126
Yeah.
1147
01:19:34.099 --> 01:19:36.640
someone don't know what Loom is or don't have the app.
1148
01:19:37.221 --> 01:19:38.622
That's where I would kind of be concerned.
1149
01:19:38.922 --> 01:19:39.702
Yeah.
1150
01:19:40.022 --> 01:19:41.463
So we have very similar process.
1151
01:19:41.483 --> 01:19:51.229
We just use a different platform because we found so many times, like just uploading a video is sometimes hard for people, especially if it's five minutes and it's shot in 4K.
1152
01:19:51.529 --> 01:19:53.810
All of a sudden you have a three gigabyte file they're trying to upload.
1153
01:19:54.250 --> 01:19:55.191
So we use something similar.
1154
01:19:55.211 --> 01:19:56.031
It's called Spark Hire.
1155
01:19:57.312 --> 01:20:02.335
And basically you can just make it when Indeed, if they apply, it automatically sends them a link to it.
1156
01:20:03.215 --> 01:20:03.516
Perfect.
1157
01:20:03.636 --> 01:20:05.477
And just opens up the video right away.
1158
01:20:05.497 --> 01:20:08.660
And as they're looking at the video, the questions pop up.
1159
01:20:08.700 --> 01:20:08.800
Okay.
1160
01:20:08.821 --> 01:20:10.082
They just go next, next, next.
1161
01:20:10.282 --> 01:20:15.106
And what's cool is the AI is kind of built into it and it'll rank them based upon your parameters.
1162
01:20:15.547 --> 01:20:18.309
And so it just basically avoids that dropping step.
1163
01:20:18.329 --> 01:20:20.111
Like, hey, drop the transcript into AI.
1164
01:20:20.391 --> 01:20:22.213
It does all that directly integrated.
1165
01:20:22.673 --> 01:20:23.734
We found it super helpful.
1166
01:20:23.774 --> 01:20:23.914
Okay.
1167
01:20:24.615 --> 01:20:25.616
I didn't even know about that.
1168
01:20:25.756 --> 01:20:27.197
I was rigging it all with Loom.
1169
01:20:27.278 --> 01:20:33.583
I will say that for a lot of what I do, if they can't do a few of these things, then that's kind of a watch out.
1170
01:20:33.623 --> 01:20:33.964
Totally.
1171
01:20:33.984 --> 01:20:35.525
So it kind of depends on the role.
1172
01:20:35.945 --> 01:20:37.707
So there's just a little part of me as I heard you talk.
1173
01:20:37.727 --> 01:20:39.168
It's like, oh, wait, maybe I should check that out.
1174
01:20:39.188 --> 01:20:40.109
And then there's this other part of me.
1175
01:20:40.129 --> 01:20:43.312
It's like, well, there's some value and some hurdles here.
1176
01:20:43.452 --> 01:20:47.396
So I don't know what the best approach is, but I rigged it together and I've been happy with it.
1177
01:20:47.496 --> 01:20:49.597
Yeah, I think it kind of comes down to the volume, right?
1178
01:20:49.617 --> 01:20:56.101
Like if you want to make it easier and you need, you know, 50 technicians, potentially make it easier to submit a video might be a good idea.
1179
01:20:56.121 --> 01:21:01.784
But if you're looking for one operations manager and they can't figure out how to download Loom and get a Loom view, we might have a problem.
1180
01:21:02.004 --> 01:21:02.164
Yeah.
1181
01:21:02.705 --> 01:21:02.885
Yeah.
1182
01:21:03.125 --> 01:21:09.548
And again, we'll go to like, if we're talking about somebody in the field, this is not stuff they normally need to do or probably not need to do.
1183
01:21:09.568 --> 01:21:12.070
And so, okay, if they can't do it, that's a little more acceptable.
1184
01:21:12.927 --> 01:21:13.447
Yeah, absolutely.
1185
01:21:13.827 --> 01:21:15.167
Let's move to the last topic of the day.
1186
01:21:16.668 --> 01:21:17.488
I'm in software.
1187
01:21:17.568 --> 01:21:19.448
You've been in software, are still in software.
1188
01:21:19.588 --> 01:21:21.108
We both have run home service businesses.
1189
01:21:21.628 --> 01:21:28.210
I want to talk a little bit about comparing the two business models, software and home services, the pros and the cons of both.
1190
01:21:28.850 --> 01:21:33.991
And from your experience, building both of them to eight figures plus, how do you see it?
1191
01:21:34.611 --> 01:21:38.731
And I think that for many people, the other industry is always better.
1192
01:21:39.751 --> 01:21:41.152
Now seeing both sides of the story,
1193
01:21:43.403 --> 01:21:43.804
Yeah, I don't know.
1194
01:21:43.884 --> 01:21:45.105
I think it was you that I was talking to.
1195
01:21:45.165 --> 01:21:50.433
I've probably had this conversation with a few people, but I might have been you because we know people in both worlds.
1196
01:21:50.793 --> 01:21:58.824
And I was joking that all my friends that were in software are now, I'm buying home services companies and all everybody in home services is now vibe coding.
1197
01:21:59.265 --> 01:22:00.527
They're going to be in software.
1198
01:22:00.887 --> 01:22:03.748
It's like everybody sees the other side is better.
1199
01:22:04.168 --> 01:22:07.008
And then as I've thought about like, what am I going to do again?
1200
01:22:07.068 --> 01:22:10.129
Work wise, like I don't know which world is better.
1201
01:22:10.189 --> 01:22:11.029
I like them both.
1202
01:22:11.489 --> 01:22:13.490
There's pros and cons to both worlds.
1203
01:22:14.590 --> 01:22:17.971
I guess if I had to pick, I gravitate a little more to the software world.
1204
01:22:18.991 --> 01:22:19.991
But I like them both.
1205
01:22:20.572 --> 01:22:21.392
I wouldn't want to not.
1206
01:22:21.432 --> 01:22:22.992
I'm thankful I got to be in both things.
1207
01:22:23.692 --> 01:22:25.893
You know, the thing I would say is.
1208
01:22:26.753 --> 01:22:31.554
to answer this question is the thing that is exactly the same between the two businesses.
1209
01:22:32.614 --> 01:22:33.615
It's all about people.
1210
01:22:34.795 --> 01:22:36.435
It's the story of business.
1211
01:22:36.575 --> 01:22:47.518
It's back to the theme of a lot of what we've even talked to building a great business that goes fast, that you want to continue to own, that has a good brand reputation that gets good reviews.
1212
01:22:48.490 --> 01:22:49.231
There's only one thing.
1213
01:22:49.451 --> 01:22:52.355
It's the people you hire and the people you get off the team.
1214
01:22:52.375 --> 01:23:00.126
That's all that business actually kind of is, is getting the right people to do all the things that have to get done inside the business.
1215
01:23:00.166 --> 01:23:04.993
And so for me, the most important decisions, whether it be software or...
1216
01:23:06.403 --> 01:23:08.325
Service delivery, it's the people.
1217
01:23:08.665 --> 01:23:10.007
That's the thing that's the same.
1218
01:23:10.587 --> 01:23:14.511
I think that the thing that there's lots of things that are very different.
1219
01:23:16.193 --> 01:23:22.499
One thing that's very different is the level of sophistication on who you're competing with is very, very different.
1220
01:23:22.519 --> 01:23:23.000
Right.
1221
01:23:23.458 --> 01:23:30.842
Because a lot of these companies are funded and or they're now owned by private equity.
1222
01:23:31.622 --> 01:23:36.364
And so there that could be a positive and a negative if you're competing with them.
1223
01:23:36.884 --> 01:23:39.105
But it's a different playbook.
1224
01:23:39.186 --> 01:23:41.046
It's a more sophisticated playbook.
1225
01:23:41.166 --> 01:23:45.989
They're willing to do some of the things we talked about, like spend the money on hiring the right people.
1226
01:23:47.534 --> 01:23:59.366
especially the companies that are venture-backed and are trying to go fast, or the private equity companies that are not just trying to extract profits, but are actually still in a growth mode.
1227
01:23:59.626 --> 01:24:04.191
In those cases, those are formidable competitors with a tremendous amount of money.
1228
01:24:04.451 --> 01:24:04.812
And so
1229
01:24:05.232 --> 01:24:10.877
They're looking at they're doing all the things that we should be doing in our home service businesses as we grow and become more mature.
1230
01:24:11.117 --> 01:24:12.178
They're looking at all the data.
1231
01:24:12.198 --> 01:24:13.700
They're using data to make decisions.
1232
01:24:13.940 --> 01:24:15.321
They're looking at churn.
1233
01:24:15.601 --> 01:24:19.325
They're looking at most profitable markets, most profitable services.
1234
01:24:19.345 --> 01:24:22.067
They're focusing their marketing dollars in very specific areas.
1235
01:24:22.387 --> 01:24:25.710
They're thinking about the handoff from sales to the customer service team.
1236
01:24:25.730 --> 01:24:28.072
Like they're doing all these things.
1237
01:24:29.053 --> 01:24:37.196
that many companies don't do because they have hired people that have a lot of experience and they're spending the money on those people.
1238
01:24:37.216 --> 01:24:42.237
And then they have the money to spend to go faster, to spend a lot more money on marketing.
1239
01:24:42.577 --> 01:24:51.960
And so that's where the software side can get pretty tricky where you don't face quite that level of competition generally in the home services space.
1240
01:24:52.440 --> 01:24:56.742
And so it's easier to build a bigger business for less money.
1241
01:24:58.362 --> 01:25:02.286
The other thing that comes to mind is selling a product versus selling a service.
1242
01:25:02.466 --> 01:25:02.986
I'd be curious.
1243
01:25:03.527 --> 01:25:04.908
It's like it's not even the same thing.
1244
01:25:05.949 --> 01:25:07.971
It's like it's a totally different world to...
1245
01:25:09.382 --> 01:25:14.086
Mike and I, I know, I know from our, that you've went through this pain and I sure went through this pain.
1246
01:25:14.106 --> 01:25:21.272
It's like, it really is not awesome to start a software company and just pour money, money and time into the thing.
1247
01:25:21.592 --> 01:25:26.856
Like back when I started, uh, is it, you know, 2010, it was a very different world than it is today.
1248
01:25:27.156 --> 01:25:33.982
Our two membership levels, we were coming into a competitive market where $29 and $47, like that was it.
1249
01:25:34.062 --> 01:25:36.304
Like we moved obviously up market, but
1250
01:25:37.425 --> 01:25:39.667
When we started, everybody was desktop software.
1251
01:25:39.988 --> 01:25:42.030
And then Jobber started, what, a year later?
1252
01:25:42.690 --> 01:25:44.632
Service Titan had started a couple years earlier.
1253
01:25:44.652 --> 01:25:47.856
It was such a different time.
1254
01:25:48.036 --> 01:25:51.459
Like we had almost no functionality compared to all these old desktop systems.
1255
01:25:51.479 --> 01:25:53.521
And so you're coming in at this low price point.
1256
01:25:53.922 --> 01:25:54.823
My first employee is $100,000.
1257
01:25:54.843 --> 01:25:54.983
Right.
1258
01:25:56.284 --> 01:25:58.125
You know, it's like, it's very expensive.
1259
01:25:58.185 --> 01:25:59.186
That was back then.
1260
01:25:59.366 --> 01:25:59.506
Yeah.
1261
01:25:59.666 --> 01:26:03.868
And so that is really different to be trying to fund the business.
1262
01:26:03.908 --> 01:26:09.071
Whereas in the services business, you can fund it based on the delivery of the service.
1263
01:26:09.111 --> 01:26:12.293
Whereas in the software business is massive long-term investment.
1264
01:26:12.553 --> 01:26:15.355
Now, some of this is going to change quite a bit with AI.
1265
01:26:15.875 --> 01:26:19.557
Then the last thing I'll say, then we kind of be curious to hear what you say, Mike, is,
1266
01:26:20.750 --> 01:26:22.132
distribution model is totally different.
1267
01:26:22.713 --> 01:26:32.806
Like the way that you go, like you've done a masterful job with your business of the distribution model of how do you attract people to you to notice you and homeworks in the business.
1268
01:26:33.407 --> 01:26:37.072
And a lot of the things that work in software
1269
01:26:38.718 --> 01:26:48.106
because you're going after a national market, they don't scale or don't work in a local market in nine zip codes or whatever the case might be.
1270
01:26:48.146 --> 01:26:50.528
And so it's a very, very different game.
1271
01:26:50.608 --> 01:26:52.970
And it's very expensive to acquire clients.
1272
01:26:52.990 --> 01:27:01.557
I'll give you, without giving away some names, there are companies in the software space who spend $12,000 per client acquisition.
1273
01:27:01.938 --> 01:27:04.360
It costs them $12,000 to acquire a client.
1274
01:27:05.741 --> 01:27:07.142
And you hope they're going to stay.
1275
01:27:08.182 --> 01:27:09.883
And that was not service autopilot economics.
1276
01:27:09.903 --> 01:27:17.325
And I know that's not your economics, Mike, but there are big names that you know that have those kinds of economics and some will push 20 grand to acquire a client.
1277
01:27:17.645 --> 01:27:26.207
That is, if that's what it costs for, you know, most of us to get a client worth a thousand bucks or 800 bucks a month, you wouldn't be in the business.
1278
01:27:26.307 --> 01:27:30.669
I ran, I ran, I ran Google ads for like two weeks for homeworks and I gave up so fast.
1279
01:27:30.689 --> 01:27:31.749
I'm like, forget this.
1280
01:27:32.049 --> 01:27:34.830
Like the cost per click is a gajillion dollars.
1281
01:27:34.850 --> 01:27:35.150
It's insane.
1282
01:27:35.310 --> 01:27:37.591
Everyone wants to bid this thing up to the moon.
1283
01:27:37.972 --> 01:27:38.992
So I think I tried it.
1284
01:27:39.012 --> 01:27:39.933
I was like, hey, I got to try it out.
1285
01:27:39.953 --> 01:27:42.254
You know, paid acquisition instead of organic.
1286
01:27:42.294 --> 01:27:42.935
And I'm like, forget that.
1287
01:27:42.975 --> 01:27:43.835
I'll make another video.
1288
01:27:43.915 --> 01:27:44.356
Get it.
1289
01:27:44.396 --> 01:27:44.796
Goodness.
1290
01:27:45.156 --> 01:27:49.339
So what would be your, I mean, I could add more, but what would be your general list and your thinking?
1291
01:27:49.659 --> 01:27:50.940
Buried entry being low.
1292
01:27:51.520 --> 01:27:54.063
for home services is a double-edged sword.
1293
01:27:54.103 --> 01:27:56.065
Everyone complains about there being so much competition.
1294
01:27:56.125 --> 01:27:57.066
Yep.
1295
01:27:57.287 --> 01:28:00.811
But also you have basically 100% guarantee of demand.
1296
01:28:01.371 --> 01:28:03.254
And I think that's the part that we don't have with software.
1297
01:28:03.274 --> 01:28:08.179
If you still go start software tomorrow, the problem is not whether or not you solve a problem, it's whether or not anyone wants that solution.
1298
01:28:09.040 --> 01:28:11.923
and everyone needs their lawn mowed.
1299
01:28:12.623 --> 01:28:13.924
Everyone needs their gutters cleaned out.
1300
01:28:14.084 --> 01:28:15.225
Everyone needs pressure washing.
1301
01:28:15.265 --> 01:28:17.547
Demand is like, it's there.
1302
01:28:17.667 --> 01:28:24.733
Assuming you're in a decent market, assuming what we talked about in terms of having the customers that can afford these services, like the demand is there.
1303
01:28:24.753 --> 01:28:27.495
And as long as the grass keeps growing, I have a job.
1304
01:28:28.096 --> 01:28:36.363
The fact, especially with AI, I think even with valuations of software and what it's looking like now, it's the reliability that income has become less and less.
1305
01:28:36.883 --> 01:28:48.278
And that's why I think it's so interesting when I look at home services, the reliability that I will continue to mow grass and make money from it is actually higher than whether or not in five or 10 years, AI is going to be doing all this for me in terms of software.
1306
01:28:48.318 --> 01:28:50.361
And this is why valuations are down 50, 60, 70% across SaaS.
1307
01:28:52.203 --> 01:28:57.186
Um, and I find that very interesting to even the fact that your, your friends that were in software are moving to home services.
1308
01:28:57.566 --> 01:29:01.369
And many times when you see that trend, it's people are chasing the highest quality revenue.
1309
01:29:01.769 --> 01:29:04.510
And for so long, people were chasing software because it's, oh, it's sticky.
1310
01:29:04.530 --> 01:29:05.131
It lasts forever.
1311
01:29:05.391 --> 01:29:09.333
You get a 50, 50 times on your annual recurring revenue in terms of valuation.
1312
01:29:09.373 --> 01:29:11.154
And that's just not happening anymore.
1313
01:29:11.675 --> 01:29:12.195
So, right.
1314
01:29:12.715 --> 01:29:19.279
Man, talk about unknowns right now in the software space, which would you say is more stressful for you?
1315
01:29:20.915 --> 01:29:21.376
Oh, man.
1316
01:29:22.718 --> 01:29:27.664
It's funny because I see, as humans and as teams, we will always make mistakes.
1317
01:29:28.285 --> 01:29:33.212
If I make a mistake on a customer's property for, say, mowing, for example, or let's take it worse.
1318
01:29:33.372 --> 01:29:35.495
Let's say you put Roundup in the wrong place.
1319
01:29:36.376 --> 01:29:37.397
spray tank, for example.
1320
01:29:37.797 --> 01:29:39.379
Which we've experienced that.
1321
01:29:39.479 --> 01:29:40.120
Oh yeah, I remember.
1322
01:29:40.140 --> 01:29:40.480
Let's go.
1323
01:29:40.540 --> 01:29:41.060
I did it too.
1324
01:29:41.641 --> 01:29:43.162
And you kill every plant.
1325
01:29:43.282 --> 01:29:45.304
We're maybe looking at a $5,000 or $10,000 mistake.
1326
01:29:45.945 --> 01:29:56.434
And when it comes to software, when there's thousands of businesses and then they have employees and now you have an error, like what happened a few weeks ago, for example, we were fixing a query and optimizing it.
1327
01:29:56.674 --> 01:30:00.258
And all of a sudden, it just out of nowhere, just everything crashed.
1328
01:30:00.758 --> 01:30:08.744
Well, that put us out for 10, 15 minutes, but you extrapolate that across thousands of people that are affected and we have a massive problem.
1329
01:30:08.764 --> 01:30:09.145
Massive.
1330
01:30:09.325 --> 01:30:10.246
It's not $5,000 or $10,000.
1331
01:30:10.346 --> 01:30:13.388
Like in that moment, I would pay whatever to just not make that.
1332
01:30:13.588 --> 01:30:13.889
Yeah.
1333
01:30:14.829 --> 01:30:23.336
And so I think the barrier to entry being so low for home services is a double-edged sword of, yes, there's lots of competition, but also demand is there 100% of the time.
1334
01:30:24.597 --> 01:30:28.498
With software, you can build an incredible product and still not have anyone lining up to buy the thing.
1335
01:30:28.898 --> 01:30:42.583
And I think with AI and reducing the barrier to build entry-level software, it will certainly reset what valuations look like and whether or not it's a blue ocean that people actually want to get involved with.
1336
01:30:43.303 --> 01:30:56.227
And then from my perspective, I think it's especially with Mythos coming out, for example, and the other softwares, AI is going to get just as powerful from a hacking perspective and nefarious actors.
1337
01:30:56.487 --> 01:31:03.809
And everything like we saw with BugHell was a lot of it was to do with people getting inside the software that shouldn't have been there through our free trial.
1338
01:31:04.510 --> 01:31:05.190
And I think that's-
1339
01:31:05.630 --> 01:31:15.620
Yeah, a lot of those problems, I think, will only compound when it comes to AI because the tools they have will be just as good as the tools we have in terms of AI that are building the software.
1340
01:31:15.840 --> 01:31:18.342
And so I think it'll even become more important around security.
1341
01:31:18.362 --> 01:31:24.088
And you've talked about this before in databases and the scalability of the software will become more important.
1342
01:31:25.049 --> 01:31:25.529
I agree.
1343
01:31:25.769 --> 01:31:27.511
Yeah, the security thing is important.
1344
01:31:28.758 --> 01:31:31.039
It's back to my, it's what you're saying.
1345
01:31:31.059 --> 01:31:31.819
It's like concern.
1346
01:31:31.859 --> 01:31:36.161
I have two things I think about from the vibe coding world, security.
1347
01:31:36.582 --> 01:31:41.884
And then if we're vibe coding lots of different independent systems, like how do you make them all talk?
1348
01:31:41.984 --> 01:31:43.505
Everybody wants these things to talk.
1349
01:31:44.245 --> 01:31:47.887
And so it's just incredibly exciting time, but also, wow.
1350
01:31:48.167 --> 01:31:50.008
I mean, so hard to know where it's going.
1351
01:31:50.383 --> 01:31:51.603
Yeah, it'd be really interesting.
1352
01:31:51.683 --> 01:31:56.205
I think every time an industry has a bunch of fear, I immediately think just slow down in a way.
1353
01:31:56.225 --> 01:32:01.707
Because we all thought robotics was going to take over lawn care like 20 years ago, for crying out loud.
1354
01:32:02.247 --> 01:32:04.728
And so in a way, I've just seen it.
1355
01:32:04.848 --> 01:32:08.169
Regardless of industry, it kind of just keeps playing out the same way.
1356
01:32:08.269 --> 01:32:15.692
Even if you look back, I guess, four years ago when ChattoBute came out, three years ago, we all thought next year we weren't going to have a job.
1357
01:32:16.172 --> 01:32:19.193
And now it's like, okay, we use it for emails, we use it for hiring and training.
1358
01:32:19.273 --> 01:32:44.605
transcripts and emails like but like are we not working and right do i have less work to do no like there's plenty of jobs out there still and so in general i tend to slow down when i see the fear thing happening however it definitely pushes you to be like we've got to create the thing that they can't build and then empower them to build the tools that ai allows them to have yeah so like we we have like
1359
01:32:44.965 --> 01:32:48.791
in the past three months, just immediately pivoted, like open up the MCP API.
1360
01:32:49.011 --> 01:32:55.560
We have to give access for people to read and write, whether it be sending out quotes, like be able to talk to Claude and be like, how many jobs I have tomorrow?
1361
01:32:55.580 --> 01:32:59.686
Okay, skip so-and-so like, and just be able from one interface, interact with the software.
1362
01:32:59.967 --> 01:33:01.148
That's been like our highest priority.
1363
01:33:01.729 --> 01:33:01.929
Yeah.
1364
01:33:02.530 --> 01:33:02.770
Yeah.
1365
01:33:03.130 --> 01:33:04.391
It's a man.
1366
01:33:04.451 --> 01:33:05.752
I just keep saying it's a fascinating time.
1367
01:33:05.792 --> 01:33:06.813
I think about it every day.
1368
01:33:06.833 --> 01:33:19.162
I also think in these software businesses, to your point about the MCP and the APIs, we have, I, I theorize what's really going to happen is software is just going to look very different in three years.
1369
01:33:20.403 --> 01:33:23.386
And I kind of like to think about it as,
1370
01:33:24.903 --> 01:33:30.746
I keep, because I'm older and I've been around a while, there used to be IT guys and nobody liked their IT guy.
1371
01:33:32.046 --> 01:33:33.467
And their IT guy was expensive.
1372
01:33:33.967 --> 01:33:37.349
And so when cloud software came around, it was like, this is the greatest thing ever.
1373
01:33:37.369 --> 01:33:38.669
We can get rid of the IT guys.
1374
01:33:38.689 --> 01:33:39.730
We don't need them anymore.
1375
01:33:40.130 --> 01:33:42.531
We can use Gmail, we can use whatever the software is.
1376
01:33:43.352 --> 01:33:44.992
And everybody was happy.
1377
01:33:45.473 --> 01:33:50.075
And now everybody's like, ah, I pay whatever hundreds of dollars a month for my software.
1378
01:33:50.855 --> 01:33:51.796
They're ripping me off.
1379
01:33:51.836 --> 01:33:55.658
I could just vibe code this, but what it's going to lead to because of security and data.
1380
01:33:56.138 --> 01:34:02.081
And at some point, the owner doesn't really want to be managing software all day long, or he shouldn't be.
1381
01:34:02.101 --> 01:34:04.162
He should be out selling and getting team members.
1382
01:34:04.642 --> 01:34:08.845
Then he's going to end up trading it for the equivalent of an IT guy again.
1383
01:34:09.225 --> 01:34:15.048
So if we move to all these internal systems, we're going to have to have somebody to manage this stuff for us.
1384
01:34:15.268 --> 01:34:17.069
Because the risk of it going down is so high.
1385
01:34:17.949 --> 01:34:20.610
The bigger your business, the bigger the risk is of it going down.
1386
01:34:21.210 --> 01:34:21.591
Exactly.
1387
01:34:21.611 --> 01:34:24.712
And it makes less sense to save the few hundred dollars, right?
1388
01:34:25.132 --> 01:34:29.194
And what stinks, like for me to say this is so horrible because it looks like I'm trying to speak.
1389
01:34:29.214 --> 01:34:30.214
It sounds like you're promoting.
1390
01:34:30.254 --> 01:34:30.374
100%.
1391
01:34:32.215 --> 01:34:32.936
I'm not in software.
1392
01:34:32.956 --> 01:34:33.856
I don't have anything to sell you.
1393
01:34:34.276 --> 01:34:35.457
So I'll say it for you.
1394
01:34:35.497 --> 01:34:37.638
Like, I just can't get my head around this thing.
1395
01:34:37.698 --> 01:34:39.159
Riley and I talk about this all the time.
1396
01:34:39.199 --> 01:34:43.262
I was like, I'm trying to figure out where this whole thing's going, but I can't get my head around.
1397
01:34:43.282 --> 01:34:47.684
It's like, are we really all wanting to shift back to the IT budget?
1398
01:34:47.804 --> 01:34:48.425
I don't think we are.
1399
01:34:48.485 --> 01:34:51.567
And then my other analogy is we...
1400
01:34:53.730 --> 01:34:56.071
like, okay, great, you can vibe code the thing.
1401
01:34:56.551 --> 01:35:02.573
And maybe if you're just like a little guy in a truck and all you need to do is the most elementary thing, that may be plenty fine for you.
1402
01:35:02.813 --> 01:35:03.473
That may be true.
1403
01:35:04.573 --> 01:35:10.715
But if you move past that to any degree, you're going to quickly discover, oh, I need this, I need this.
1404
01:35:10.815 --> 01:35:11.756
Gee, if I could do this.
1405
01:35:11.976 --> 01:35:17.517
And if it's just you, your system's going to be like this big and you're always going to be adding on it.
1406
01:35:17.557 --> 01:35:19.778
But imagine there's a company that,
1407
01:35:20.315 --> 01:35:41.128
that has a bunch of employees and a bunch of agents and all they do every day is think about this and they have thousands of clients and they're seeing all the best things and they're building that into the software you'll never compete you'll always be running behind the software company that's building more and more functionality and so i've had multiple people ask me at city turf about city turf like hey are you guys just going to build your own technology it's like
1408
01:35:42.350 --> 01:35:43.631
No, it makes no sense.
1409
01:35:43.691 --> 01:35:48.695
Like as soon as I build it, it's going to be outdated by the guys that are spending every minute of their life doing this.
1410
01:35:49.036 --> 01:35:50.917
And then we're going to have to bring the whole IT thing back in.
1411
01:35:50.957 --> 01:35:52.559
So, but, but.
1412
01:35:53.544 --> 01:36:02.567
I do think, in your case, in Riley's case, if I was ever back in software, which I doubt it, I think the model looks very different.
1413
01:36:02.847 --> 01:36:07.048
I think what we're building is more of a future where the software does it for you.
1414
01:36:07.088 --> 01:36:11.670
Like the old version was data in, data out, data out as a report, and then what do you go do?
1415
01:36:12.110 --> 01:36:16.411
I think the future, which is going to take, like you said, longer than most people think, the future.
1416
01:36:16.471 --> 01:36:26.268
Future is the technology is the equivalent of an agent that's running and doing things on your behalf all the time and then getting a person involved when they need to be involved.
1417
01:36:26.829 --> 01:36:29.213
I don't actually think that's going to be a cakewalk to build.
1418
01:36:31.804 --> 01:36:32.984
Well, I could go in 90 directions.
1419
01:36:33.264 --> 01:36:41.127
I right now we think we're just building data in data out systems, but the new future is going to be way more advanced than that.
1420
01:36:41.187 --> 01:36:44.768
And it's not that Claude code or whatever won't write it.
1421
01:36:44.888 --> 01:36:51.130
It's that's just going to take, it's going to be harder to manage, harder to think through harder design, harder to build.
1422
01:36:51.450 --> 01:36:57.912
And so most people, when they're vibe coding, something will still be building the old way and they won't be building this new version of whatever software is.
1423
01:36:58.192 --> 01:37:01.795
That's literally doing it, running things for you, delivering outcomes to you.
1424
01:37:01.815 --> 01:37:03.236
I don't know if that makes sense.
1425
01:37:03.516 --> 01:37:04.156
100%.
1426
01:37:04.416 --> 01:37:13.763
And even sometimes when people talk about it, it's like, have you ever built and like your budget for AI tokens right now, just that alone, you can burn through AI tokens pretty quickly.
1427
01:37:14.043 --> 01:37:15.784
Oh, yeah, yeah, yeah.
1428
01:37:15.824 --> 01:37:16.985
Oh, this isn't even talked about.
1429
01:37:18.226 --> 01:37:19.587
Riley showed me a system.
1430
01:37:20.567 --> 01:37:26.391
I think it's this week, I've seen three new systems popping up in the green industry, software systems.
1431
01:37:26.852 --> 01:37:27.332
AI-coded.
1432
01:37:28.657 --> 01:37:33.680
I don't know what they look like, but one of them is pure AI, where it's basically all tokens.
1433
01:37:34.760 --> 01:37:40.183
Or it's going to, as I'm interpreting it, it's going to take tokens to make all the decisions and run it.
1434
01:37:41.023 --> 01:37:43.484
Like, okay, well, that's a whole other thing.
1435
01:37:43.504 --> 01:37:48.667
Now, when you're buying software in the future, you're going to have to say, wait a second, does most of the processing happen?
1436
01:37:49.367 --> 01:37:53.071
at the cloud level or a model level where it's constantly consuming tokens?
1437
01:37:53.632 --> 01:38:01.661
Or is some of the processing happening at the code level, which I'm not going to have to pay any extra for people think about how you educate the buyer on that.
1438
01:38:01.761 --> 01:38:02.882
It's like, Oh yeah, great.
1439
01:38:03.182 --> 01:38:09.910
This solution is a hundred dollars, but in about five months, you're going to find out that it's costing you $900 a month to run it in tokens.
1440
01:38:10.230 --> 01:38:13.651
Like, how are you going to educate the market to be making a wise buying decision?
1441
01:38:13.991 --> 01:38:24.573
Because I think as you're building software in the future, it's like, okay, what can we do at code level internally without running an LLM over top of it that consumes tokens?
1442
01:38:24.654 --> 01:38:30.315
And then what do we need to, what part of the decision making or the actions need to be deferred to the LLM that are going to consume tokens?
1443
01:38:30.875 --> 01:38:35.736
That's going to be an important equation to people that determines how much their software costs to run.
1444
01:38:36.256 --> 01:38:39.077
And it will be an ever-growing bill as the data set gets bigger.
1445
01:38:39.237 --> 01:38:54.105
kind of zooming out kind of very broad and a little further outside of what we've been talking about, but like when it comes to AI, do you think that, for example, a $20 subscription with chat to PD is being subsidized right now by all the money that's being poured into this.
1446
01:38:54.465 --> 01:39:05.491
And do you think this cost of AI tokens, for example, is going to go down like it has been, or are we, as we have all this investment coming in and there's billions of dollars being burnt essentially, um,
1447
01:39:06.091 --> 01:39:06.952
Where do you see this going?
1448
01:39:06.972 --> 01:39:13.835
Because I feel like that's almost the part that I feel a little bit uneasy about is the whole infrastructure, the amount of infrastructure required to build these things out.
1449
01:39:13.995 --> 01:39:16.096
Is it all being propped up by just investor dollars?
1450
01:39:16.596 --> 01:39:19.378
AI just raised $120 billion.
1451
01:39:19.778 --> 01:39:24.741
Where is this going in terms of just the token consumption and the energy requirements around AI?
1452
01:39:26.942 --> 01:39:29.123
Of course, I don't know.
1453
01:39:29.403 --> 01:39:31.424
But my theory is that
1454
01:39:34.020 --> 01:39:42.285
This is probably a typical curve where it was, historically, it's been the big software model.
1455
01:39:42.325 --> 01:39:51.971
You're subsidizing, you're selling the software for cheaper than it can really be afforded, than you can afford to sell it to because of the cost of client acquisition, onboarding, things like that.
1456
01:39:52.011 --> 01:39:58.095
That's a pretty typical model, and you're subsidizing it for years until you get to a point of scale in the, in it.
1457
01:39:58.515 --> 01:40:07.580
And I think there's something probably similar happening with AI where right now, to say it a different way, it's costing this insane amount of money to build these models.
1458
01:40:07.980 --> 01:40:10.181
And they're going to get cheaper and cheaper to build.
1459
01:40:10.761 --> 01:40:14.643
And so the subsidizing, you have to do it now and it makes sense.
1460
01:40:14.963 --> 01:40:17.745
But eventually the economics will start to level out.
1461
01:40:18.385 --> 01:40:23.268
So if I was betting, I'm actually betting on a lower token cost in the future.
1462
01:40:24.145 --> 01:40:33.630
And then from a software standpoint, the way I'm thinking about it is you're probably building into, I think time solves a lot of these problems.
1463
01:40:33.650 --> 01:40:40.673
So one example would be time solves the problem of tokens get cheaper for a software company or somebody running their own models internally.
1464
01:40:41.033 --> 01:40:46.056
The other thing that I think time solves is the models right now are pretty dang amazing.
1465
01:40:47.156 --> 01:40:49.418
But imagine what they're going to be in two years.
1466
01:40:50.098 --> 01:40:56.242
Well, the models of today will still be usable and they'll be dirt cheap.
1467
01:40:56.322 --> 01:40:59.083
And so you could still run some processes.
1468
01:40:59.544 --> 01:41:01.165
You can still solve some problems.
1469
01:41:01.225 --> 01:41:08.769
So, excuse me, from a software standpoint, what I think is going to happen is within your software, you have the equivalent of what I'll call a router.
1470
01:41:09.930 --> 01:41:11.991
This is another thing that's not going to get talked about.
1471
01:41:12.572 --> 01:41:14.233
And when somebody's buying software,
1472
01:41:15.428 --> 01:41:17.130
how are they going to know how to make this decision?
1473
01:41:17.850 --> 01:41:30.143
So imagine like if I was building software right now, again, I don't know where I have blind spots cause I'm not building it, but if I was building it, I would be thinking about, okay, I have a router and in that router, I'm going to plug in multiple models.
1474
01:41:30.603 --> 01:41:32.165
Some are going to be open source models.
1475
01:41:32.645 --> 01:41:34.527
Some might be the most recent Claude model.
1476
01:41:34.747 --> 01:41:38.051
Some might be a older Claude model and you,
1477
01:41:39.981 --> 01:41:44.889
inside the software, I am going to route and use the right model for the right problem.
1478
01:41:45.787 --> 01:41:58.070
And that's challenging from a software development standpoint, but it's how you bring your cost down massively to whether you're passing that token cost onto the client or you're pricing it into your monthly fee.
1479
01:41:58.670 --> 01:42:00.250
I think you're going to have to be really efficient.
1480
01:42:00.270 --> 01:42:01.591
So I think two things are going to happen.
1481
01:42:01.811 --> 01:42:03.971
One, token cost is going to come down.
1482
01:42:04.651 --> 01:42:06.072
Maybe three, many things are going to happen.
1483
01:42:06.132 --> 01:42:08.412
Three, open source models are going to keep getting better.
1484
01:42:08.732 --> 01:42:14.594
So we can use a combination of open source models and of the frontier models like the current...
1485
01:42:15.614 --> 01:42:18.336
the most recent ChatGPT or Claude model.
1486
01:42:18.736 --> 01:42:25.480
And then the third thing is we're going to internally in our technology be routing to use the right model for the right use case.
1487
01:42:25.960 --> 01:42:27.761
That's how I think it's going to probably work.
1488
01:42:28.362 --> 01:42:28.922
But who knows?
1489
01:42:28.962 --> 01:42:31.184
You almost kind of see that with ChatGPT now.
1490
01:42:31.244 --> 01:42:36.467
You just put your chat in there, and it's choosing which model on the back end it's going to use.
1491
01:42:37.228 --> 01:42:37.488
Yeah.
1492
01:42:37.788 --> 01:42:42.894
And so there's probably an element of that, but that would work within the software.
1493
01:42:42.914 --> 01:42:45.477
Again, I'm not writing this, so I'm not in the know enough.
1494
01:42:45.578 --> 01:42:48.922
But I also think it's not just the model you use with ChetGP.
1495
01:42:49.022 --> 01:42:50.844
I suspect you're going to use different models.
1496
01:42:52.686 --> 01:42:55.510
I'll give you an example just to mess around.
1497
01:42:56.746 --> 01:43:03.270
And the problem with talking about anything AI right now is whatever I say now, you say tomorrow if you're wrong, and they're going to be like, that guy's a total idiot.
1498
01:43:03.471 --> 01:43:07.293
Yeah, you say ChachamG 5.5 is like, oh my goodness, he's been a stone agent in two months.
1499
01:43:07.533 --> 01:43:16.099
Yeah, I've said some things on video recently about the cost of really building significant things using tokens and how expensive it is.
1500
01:43:16.599 --> 01:43:19.461
Somebody's going to watch that video in a year and say this guy never knew what he was talking about.
1501
01:43:19.761 --> 01:43:22.503
I promise at one time, it was really insane.
1502
01:43:22.543 --> 01:43:24.364
Well, the other thing that I...
1503
01:43:25.646 --> 01:43:26.508
I'll give you an example.
1504
01:43:26.809 --> 01:43:32.862
The other day or a while back, I just created a, you know, because I always talk to chat, GPT or Claude.
1505
01:43:34.761 --> 01:43:38.902
I created something where I could just go in and ask my, have a conversation.
1506
01:43:38.922 --> 01:43:47.844
But when I'm having the conversation, it sends my prompt or my whatever you want to call it question to Gemini, ChatGPT, and Claude.
1507
01:43:48.184 --> 01:43:49.064
Oh, cool.
1508
01:43:49.124 --> 01:43:52.105
And so you have to integrate their, it's like, I just vibe code.
1509
01:43:52.125 --> 01:43:53.125
It's no big deal.
1510
01:43:53.565 --> 01:43:55.906
So you have to link up with their three APIs.
1511
01:43:56.306 --> 01:43:59.867
And you have to go in the back end and apply money to the account.
1512
01:44:00.507 --> 01:44:04.348
And then what I have, it brings back the answers, but then I have them all fight.
1513
01:44:05.128 --> 01:44:07.871
until they surface the answer they all kind of agree on.
1514
01:44:08.091 --> 01:44:10.073
And then I can interject and they all debate it.
1515
01:44:10.093 --> 01:44:11.414
And then I get my answer.
1516
01:44:12.134 --> 01:44:15.097
And it's interesting looking at the API costs.
1517
01:44:15.117 --> 01:44:16.178
Claude, it's the most expensive.
1518
01:44:17.559 --> 01:44:19.801
And I think Gemini seems to be the cheapest.
1519
01:44:19.841 --> 01:44:20.722
I may be wrong on that.
1520
01:44:20.942 --> 01:44:23.084
And again, this could be outdated already.
1521
01:44:23.504 --> 01:44:23.805
But...
1522
01:44:24.843 --> 01:44:27.344
I think that is probably not going to change.
1523
01:44:27.364 --> 01:44:30.106
I'm going to guess we have to really manage that token cost.
1524
01:44:30.146 --> 01:44:36.610
And then on top of that, how do you put in, you've got to really put in preventions to keep things from running away from you.
1525
01:44:37.830 --> 01:44:38.731
I know you've had bugs.
1526
01:44:38.791 --> 01:44:39.371
I've had bugs.
1527
01:44:39.391 --> 01:44:41.212
We've had crazy things happen over time.
1528
01:44:41.812 --> 01:44:46.275
And like one little crazy thing could just spin these things out.
1529
01:44:46.713 --> 01:44:48.194
off into crazy land.
1530
01:44:48.215 --> 01:44:54.000
So then in the technology, you've got to have preventions to throttle this stuff and alert people inside the company if it gets out of control.
1531
01:44:54.680 --> 01:45:01.807
And so, yeah, I kind of went a little off topic there, but like, there's a lot to this and a lot to think through.
1532
01:45:01.827 --> 01:45:08.053
And this is why I think it's going to get more and more complicated to build this stuff and build something really amazing.
1533
01:45:08.294 --> 01:45:14.361
What I find interesting too is you can kind of almost tell by just the best in this industry are getting paid more than ever.
1534
01:45:15.342 --> 01:45:22.791
And it just shows like the complexity of the problems that need to be solved are so much more complex than they even used to be when it comes to AI.
1535
01:45:23.391 --> 01:45:23.591
And...
1536
01:45:25.053 --> 01:45:28.898
So yeah, it's certainly for me, like, it's one of those things like, we've just passed profitability.
1537
01:45:29.398 --> 01:45:32.182
And it's a function of like, okay, like, am I in the wrong industry?
1538
01:45:32.202 --> 01:45:34.144
Should I just be focusing on the lawn care only thing?
1539
01:45:34.545 --> 01:45:38.009
And then have to ask myself, like, where is the future software going?
1540
01:45:38.029 --> 01:45:40.272
But then just going back to the try and true, it's like, it is the basics.
1541
01:45:40.292 --> 01:45:40.372
It's
1542
01:45:44.597 --> 01:45:47.359
When it comes to AI, can I give them the tools to be useful?
1543
01:45:47.399 --> 01:45:49.581
Because everyone wants their own software.
1544
01:45:49.621 --> 01:45:51.242
In the perfect world, we all build our own thing.
1545
01:45:51.742 --> 01:45:53.183
It would be perfect for us.
1546
01:45:53.643 --> 01:45:54.784
We'd never have a problem.
1547
01:45:55.044 --> 01:45:56.005
There'd never be a bug.
1548
01:45:56.265 --> 01:45:57.066
You just talk to things.
1549
01:45:57.086 --> 01:45:57.967
It's exactly what you want.
1550
01:45:58.407 --> 01:46:00.068
How can I give some optionality around that?
1551
01:46:00.088 --> 01:46:03.991
That's where the MCP and the API access has really been our focus.
1552
01:46:04.711 --> 01:46:13.858
If you want to build your bespoke tool to do your specific type of job cost and the way that you want this specific automation to run exactly the way you think, great, you build that and then connect in.
1553
01:46:14.518 --> 01:46:14.979
Um, yeah.
1554
01:46:15.059 --> 01:46:19.662
And that's kind of my current mentality is to, is to really focus on that.
1555
01:46:19.842 --> 01:46:23.946
And I just be good at that because otherwise, if you look at the AI stuff, you just feel like every day you want to quit.
1556
01:46:24.806 --> 01:46:28.489
It's like, I, I already have this problem, but I don't even have a business.
1557
01:46:28.509 --> 01:46:31.131
I just think about Riley, you know, building his thing.
1558
01:46:31.151 --> 01:46:33.273
And I'm like, I think about it every day.
1559
01:46:33.293 --> 01:46:34.494
It's like, where is this going?
1560
01:46:34.514 --> 01:46:35.615
I'm trying to figure it out.
1561
01:46:35.695 --> 01:46:38.037
And I don't think we can, I think your philosophy is
1562
01:46:39.904 --> 01:46:43.286
As I'm interpreting is you just keep showing up and doing the right things every day.
1563
01:46:43.467 --> 01:46:47.429
And being an entrepreneur was never a promise of easy.
1564
01:46:47.749 --> 01:46:55.354
It was never a promise of you could just, you'd start a business doing one thing and 20 years from now, it'd be exactly the same.
1565
01:46:55.394 --> 01:46:57.095
That's never been what we've been promised.
1566
01:46:58.078 --> 01:47:05.400
The reality is the best entrepreneurs are constantly iterating and trying new things and testing things and pivoting.
1567
01:47:05.460 --> 01:47:09.841
And I just think, unfortunately, we're going to have to do that more and more than we've ever had to do it.
1568
01:47:09.881 --> 01:47:16.122
But that's what brings me a little bit of comfort on the software thing is to say, hey, I don't believe the software model's dead.
1569
01:47:17.502 --> 01:47:25.244
What I believe is that we're just going to have to be more aggressive to find new and unique ways to execute on the business model to stay relevant.
1570
01:47:26.462 --> 01:47:27.384
And that's my theory.
1571
01:47:27.584 --> 01:47:30.427
The other thing is I still just, I did this for too long.
1572
01:47:30.527 --> 01:47:36.955
Like, I'm not saying I would never in a million years say service autopilot was easy and got everything right.
1573
01:47:37.515 --> 01:47:45.544
But I will tell you that just things like giving a person a report and giving them a few tools to edit a report.
1574
01:47:46.652 --> 01:47:50.694
like 90% of people giving automations, like automations is a better example.
1575
01:47:50.714 --> 01:48:02.501
It's like, as soon as a, I'm not saying we nailed it and everything was perfect, but I am saying that if you ask the typical person to document every single step in a process and then think about the exceptions.
1576
01:48:02.661 --> 01:48:07.324
And when there are exceptions, what they're going to do, they're like, ah, that's not.
1577
01:48:07.364 --> 01:48:09.025
They don't say, oh, this is too hard.
1578
01:48:09.045 --> 01:48:10.266
They say the software sucks.
1579
01:48:11.426 --> 01:48:13.908
Because, but documenting processes,
1580
01:48:14.947 --> 01:48:20.210
And all the exceptions and edge cases is really actually prize your brain.
1581
01:48:20.350 --> 01:48:21.030
It's tiring.
1582
01:48:21.571 --> 01:48:28.274
And that's what people are going to have to do to build these tools to a degree to get them to become what they want.
1583
01:48:29.315 --> 01:48:34.558
The other funny thing I think about, too, is like one of the big mistakes service auto pilot made and you'll be at risk of this.
1584
01:48:34.618 --> 01:48:36.419
Everybody's at risk of it as a software business.
1585
01:48:39.439 --> 01:48:40.700
A little behind the scenes.
1586
01:48:40.760 --> 01:48:48.727
So over the years of owning service autopilot, like in 2010, we had this software that would track all of the service requests.
1587
01:48:49.888 --> 01:48:52.891
And then the things would get out of control.
1588
01:48:53.131 --> 01:48:53.992
Not service requests.
1589
01:48:54.012 --> 01:48:54.372
I'm sorry.
1590
01:48:54.452 --> 01:48:55.954
All the requests for functionality.
1591
01:48:56.434 --> 01:48:56.774
Oh, yeah.
1592
01:48:56.835 --> 01:48:57.115
Yeah.
1593
01:48:57.155 --> 01:48:57.315
Yeah.
1594
01:48:58.152 --> 01:48:59.093
They get out of control.
1595
01:48:59.133 --> 01:48:59.873
Thousands, thousands.
1596
01:48:59.913 --> 01:49:01.735
And so periodically John would come in.
1597
01:49:01.775 --> 01:49:05.558
Like at one point, this was like, we did three of these systems if I remember correctly.
1598
01:49:06.058 --> 01:49:09.821
At one point we had 14,000 feature requests logged.
1599
01:49:10.622 --> 01:49:14.585
And John's like, we're moving to a new software.
1600
01:49:15.485 --> 01:49:16.306
too much in that.
1601
01:49:16.967 --> 01:49:25.998
I don't, basically it was like, we're just going to shut that down and we're just starting over because, and that's, and then it built back up to thousands and thousands and thousands of software requests.
1602
01:49:26.478 --> 01:49:32.846
My point in telling you that story is like, it's so overwhelming the amount of stuff people want and need and all their ideas.
1603
01:49:32.866 --> 01:49:33.026
Yeah.
1604
01:49:33.286 --> 01:49:41.387
So I'm just imagining in the problem that Service Alpine has and every software product has is this overbuilding of features and functionality to satisfy the market.
1605
01:49:41.488 --> 01:49:44.128
And then the software gets complex and overcrowded.
1606
01:49:44.208 --> 01:49:45.968
And then it gets intimidating.
1607
01:49:46.028 --> 01:49:48.289
And your brain shuts down when you see everything.
1608
01:49:48.349 --> 01:49:50.889
And how do you serve the big guy and the little guy?
1609
01:49:50.909 --> 01:49:52.229
It gets really complicated.
1610
01:49:52.650 --> 01:49:59.571
In a world of vibe coding, can you imagine what software is going to look like where every single time you ever have an idea, you just build it right into the software?
1611
01:50:01.191 --> 01:50:03.333
That's why I was like, so it's just fascinating.
1612
01:50:03.353 --> 01:50:04.854
Like, where are we going with all this?
1613
01:50:04.915 --> 01:50:05.955
I have the faintest idea.
1614
01:50:06.236 --> 01:50:07.917
Yeah, I know.
1615
01:50:09.759 --> 01:50:17.886
It's probably the most excited I've ever been, but also like you feel like what used to be so sure is no longer like there's no certainty.
1616
01:50:18.347 --> 01:50:18.487
No.
1617
01:50:18.587 --> 01:50:21.349
And I think you see it in the public markets like around software specifically.
1618
01:50:21.429 --> 01:50:23.491
It's just, yeah, no one knows where it's going.
1619
01:50:24.012 --> 01:50:24.212
Yeah.
1620
01:50:24.510 --> 01:50:29.093
My bet on the software, I'm already so heavily invested on the markets.
1621
01:50:29.513 --> 01:50:33.335
I don't really know if I want to sell and reallocate.
1622
01:50:33.895 --> 01:50:37.137
But I do kind of think there's a trade around the software thing.
1623
01:50:37.257 --> 01:50:38.778
I feel like it's really oversold.
1624
01:50:38.858 --> 01:50:39.458
Yeah, I agree.
1625
01:50:40.079 --> 01:50:42.100
You just can't convince me that some of these...
1626
01:50:43.373 --> 01:50:47.898
Everybody knows the same story that all the big guys get left behind by the little guys.
1627
01:50:48.038 --> 01:50:48.839
Nobody's dumb.
1628
01:50:48.859 --> 01:50:49.480
They all know this.
1629
01:50:49.500 --> 01:50:51.142
They're like all trying to figure it out.
1630
01:50:51.182 --> 01:50:52.724
Like, yeah, it's harder to turn the ship.
1631
01:50:53.084 --> 01:50:58.230
But I think these guys that have money, these tech companies, a lot of them are actually going to figure this one out.
1632
01:50:58.270 --> 01:50:59.752
They're going to be in pretty good positions.
1633
01:51:00.228 --> 01:51:09.651
Yeah, right now, the average of some of these indexes and software is like three or four times revenue when a few years ago is 50, 60 times.
1634
01:51:10.211 --> 01:51:11.012
Yeah.
1635
01:51:11.032 --> 01:51:23.396
And like, I just think it's going to take some big company getting like their whole database wiped out, showing up to work and there's no data on their vibe coded little plugin.
1636
01:51:24.116 --> 01:51:26.918
And then maybe people were like, hey, this is a real problem.
1637
01:51:27.078 --> 01:51:29.000
I recorded a five for 50 video today.
1638
01:51:29.020 --> 01:51:35.365
I was answering a question and it kind of dawned on me in the last day or two.
1639
01:51:35.385 --> 01:51:46.914
You know what's going to happen now is because have you ever, have you listened to these podcasts or like maybe seen where everybody's starting to talk about the best business to get in right now is to become an AI expert and go in and help all these companies?
1640
01:51:47.054 --> 01:51:47.614
Oh, my word.
1641
01:51:47.654 --> 01:51:47.874
I know.
1642
01:51:47.895 --> 01:51:49.576
It's kind of like, what was it?
1643
01:51:50.076 --> 01:51:53.299
Small business, SMB like marketing like 10 years ago.
1644
01:51:54.198 --> 01:51:57.241
You said exactly what I just said on my video today.
1645
01:51:57.642 --> 01:52:02.668
I said it's like everybody wanted to be in the localized marketing business, agency business.
1646
01:52:02.968 --> 01:52:05.611
Then the hot thing is like everybody should buy a business.
1647
01:52:05.651 --> 01:52:06.692
Don't start a business.
1648
01:52:06.872 --> 01:52:09.275
And now the hot thing is we're all going to start aging.
1649
01:52:09.615 --> 01:52:11.797
I'm sorry, agencies to do AI stuff.
1650
01:52:11.897 --> 01:52:14.259
It's not that I think it's a dumb idea.
1651
01:52:14.299 --> 01:52:16.622
I think there's a lot of opportunity there and people will need help.
1652
01:52:17.102 --> 01:52:20.385
But now I think what's going to happen, this is where the whole point is.
1653
01:52:20.405 --> 01:52:22.607
So everybody's going to be promoting their thing.
1654
01:52:22.887 --> 01:52:32.536
And so everybody's going to be telling all these stories about how you should build vibe code stuff and you should do this and you should do that because they got a thing to sell because you'll then hire them.
1655
01:52:32.796 --> 01:52:36.199
And so more and more people are going to all believe they should be doing this thing.
1656
01:52:37.100 --> 01:52:42.749
Yeah, we started doing AI voice in 2023.
1657
01:52:43.611 --> 01:52:50.382
And to date, not a single owner of Augusta wants AI to answer that phone versus a human agent.
1658
01:52:51.435 --> 01:52:52.276
Another awesome.
1659
01:52:52.296 --> 01:52:52.936
I got to chime in.
1660
01:52:53.016 --> 01:52:54.757
Another awesome one right there.
1661
01:52:54.777 --> 01:52:56.838
We can take a whole episode just on that one topic.
1662
01:52:57.018 --> 01:53:00.441
The amount of money I burnt personally building that thing.
1663
01:53:00.661 --> 01:53:05.023
And then basically like, yeah, we just got to put it on like an open source model to bring the cost down.
1664
01:53:05.584 --> 01:53:06.925
And no one wants it, by the way.
1665
01:53:06.965 --> 01:53:08.926
So let's put it behind human agents only.
1666
01:53:08.946 --> 01:53:09.686
It's just.
1667
01:53:10.907 --> 01:53:18.970
My question to everybody that's posting on Facebook, that's creating YouTube videos, that's selling this whole thing of video, of audio, answering, you know, doing your phone conversation.
1668
01:53:19.371 --> 01:53:21.431
Have you ever listened to a call recording?
1669
01:53:21.932 --> 01:53:22.132
Ever?
1670
01:53:23.092 --> 01:53:23.252
One.
1671
01:53:23.772 --> 01:53:24.813
Because I've listened to them.
1672
01:53:25.313 --> 01:53:27.274
And I'm sorry, but I'm not convinced.
1673
01:53:27.834 --> 01:53:28.214
Yeah, like...
1674
01:53:28.394 --> 01:53:29.215
It is painful.
1675
01:53:29.435 --> 01:53:36.658
Yeah, we found, like, for example, with your best customers, a lot of times we could get the AI pretty far because we could train it really specifically.
1676
01:53:36.678 --> 01:53:36.778
Yeah.
1677
01:53:37.378 --> 01:53:41.600
But as soon as they found out it was their AI and we hadn't told them, they'd get mad.
1678
01:53:42.261 --> 01:53:43.041
Like they felt tricked.
1679
01:53:43.642 --> 01:53:46.423
And so then we'd have to tell them at the upfront, like, hey, we're an AI assistant.
1680
01:53:46.443 --> 01:53:47.083
And we have to say something.
1681
01:53:47.103 --> 01:53:48.284
And they're like, they don't know what to do with it.
1682
01:53:48.424 --> 01:53:48.604
Yeah.
1683
01:53:48.704 --> 01:53:53.027
And then they say dumb stuff or they don't accept upsells.
1684
01:53:53.587 --> 01:54:00.412
Because now they know they're talking to an agent versus a human where we can get like the vast majority of people to accept the secondary service if I'm talking to a human.
1685
01:54:00.632 --> 01:54:04.675
But if I tell them an AI agent, that call is just completely different.
1686
01:54:05.396 --> 01:54:10.159
And then like what we found, too, is like the hang up rate was still around 25, 28 percent.
1687
01:54:10.760 --> 01:54:12.081
And that alone is enough for me.
1688
01:54:12.101 --> 01:54:13.222
Like, we're hiring humans 24, 7.
1689
01:54:13.242 --> 01:54:13.342
Yeah.
1690
01:54:15.043 --> 01:54:16.404
What about names?
1691
01:54:16.444 --> 01:54:18.245
Were you able to perfect names?
1692
01:54:18.325 --> 01:54:20.247
We got names pretty good.
1693
01:54:20.367 --> 01:54:21.147
We got names pretty good.
1694
01:54:21.167 --> 01:54:23.229
We still had some problems where it seemed like it was having a heart.
1695
01:54:23.249 --> 01:54:24.649
We've done a lot of different stuff.
1696
01:54:24.850 --> 01:54:25.990
Probably not to your degree.
1697
01:54:26.731 --> 01:54:32.695
I'm sure not to your degree, but we still struggled with some foreigner names.
1698
01:54:32.755 --> 01:54:34.476
And they talk real quiet sometimes.
1699
01:54:34.516 --> 01:54:34.776
Right.
1700
01:54:35.157 --> 01:54:37.038
And we struggled with that.
1701
01:54:37.278 --> 01:54:38.899
It's like, okay, quit asking the name.
1702
01:54:38.919 --> 01:54:39.199
Yeah.
1703
01:54:39.279 --> 01:54:40.340
Just ask the address.
1704
01:54:40.440 --> 01:54:44.824
We built it eventually where it was basically if we're confused, we'll ask one more time.
1705
01:54:44.984 --> 01:54:47.967
But if we still are confused, we say, hey, I'm sending you a text message.
1706
01:54:48.007 --> 01:54:48.528
Type it in.
1707
01:54:49.088 --> 01:54:49.749
Oh, that's smart.
1708
01:54:49.769 --> 01:54:54.754
And so that's been really helpful because then that text is what is pulled in for the agent to see on the back end.
1709
01:54:55.474 --> 01:54:59.779
And like the amount of time I spent building this for it to basically not be scrapped.
1710
01:54:59.799 --> 01:55:01.500
Like we still use it, but it's behind agents.
1711
01:55:01.520 --> 01:55:03.742
So maybe one to two percent of calls now hit AI.
1712
01:55:04.523 --> 01:55:06.085
It was just like mind boggling.
1713
01:55:06.105 --> 01:55:12.833
And like, you know, maybe the next next time I'll sit back for a year or two, let everyone else spend millions of dollars figuring this out and then I'll adopt it.
1714
01:55:13.013 --> 01:55:16.197
So anyways, I plan to use all this stuff.
1715
01:55:17.153 --> 01:55:21.274
But, and I plan to kind of like slowly test it and keep seeing where we're at.
1716
01:55:21.374 --> 01:55:28.996
And I'm definitely using things now, but not, but I think it's going to be, I hope all of our competitors implement all this stuff early.
1717
01:55:29.076 --> 01:55:33.477
Like, I think there's going to be advantage to staying human for quite a while.
1718
01:55:33.497 --> 01:55:34.037
A hundred percent.
1719
01:55:34.057 --> 01:55:35.178
It's going to be a competitive advantage.
1720
01:55:35.218 --> 01:55:36.398
And I want to capitalize on it.
1721
01:55:36.458 --> 01:55:43.366
We've now changed, like, so for example, when someone's on hold, as long as there's enough lines open, we'll get it within a matter of a few seconds.
1722
01:55:43.386 --> 01:55:46.950
But if it goes for, say, 10 seconds, I dropped this in the video the other day.
1723
01:55:46.970 --> 01:55:52.897
I'm like, the easiest way to promote your services is your hold time should just be a recording of you talking.
1724
01:55:53.978 --> 01:55:56.619
And so one of the things we did is we just explained the process.
1725
01:55:56.660 --> 01:55:58.320
So it's like, hey, call's been recorded.
1726
01:55:58.420 --> 01:55:58.760
Let's go.
1727
01:55:59.181 --> 01:56:02.602
But then immediately it's just like, hey, we answer your call 24-7 with a human.
1728
01:56:02.662 --> 01:56:06.824
If we don't get to it within 30 seconds, then you're going to be transferred to our AI agent.
1729
01:56:07.064 --> 01:56:07.865
They'll take your information.
1730
01:56:07.885 --> 01:56:08.965
We'll call you back as soon as possible.
1731
01:56:09.305 --> 01:56:13.027
That led our drop-off rate to go from like 26% down to almost zero.
1732
01:56:15.308 --> 01:56:16.169
That's really smart.
1733
01:56:16.269 --> 01:56:19.312
And just explaining the process to them and showing, hey, we do care.
1734
01:56:19.332 --> 01:56:20.393
We're trying to answer the phone as a human.
1735
01:56:20.413 --> 01:56:22.435
But if all the lines are busy, you're going to go to it.
1736
01:56:23.116 --> 01:56:24.016
It's worked really well.
1737
01:56:24.217 --> 01:56:26.078
It reduced all our drop off.
1738
01:56:26.419 --> 01:56:26.979
I like that.
1739
01:56:27.119 --> 01:56:27.640
That's smart.
1740
01:56:28.920 --> 01:56:30.861
Anyways, let's go ahead and wrap the podcast.
1741
01:56:30.921 --> 01:56:40.187
For everyone that's listening, if you want to comment below what you'd like to hear from Jonathan and I in the future, we're thinking about making this more of a regular thing for at least the next few weeks.
1742
01:56:40.567 --> 01:56:42.148
We will have episodes coming out weekly.
1743
01:56:42.608 --> 01:56:45.850
But before our next episode, we will be seeing comments from this video.
1744
01:56:46.150 --> 01:56:48.491
So please, in the comments, let us know what you'd like to hear.
1745
01:56:48.831 --> 01:56:53.514
We don't know if we're going to continue this for the long term, but we're dedicated to at least the next three episodes.
1746
01:56:54.075 --> 01:56:57.977
So if you do enjoy it, definitely share it with others because views definitely help our egos.
1747
01:56:58.618 --> 01:57:02.796
And definitely go check out Five for 50 from Johnson's channel.
1748
01:57:02.816 --> 01:57:06.612
It's a wealth of knowledge for home services, software, and everything he's built.
1749
01:57:06.812 --> 01:57:07.495
So thank you so much.
1750
01:57:07.536 --> 01:57:09.102
And we'll see you on the next episode.
1751
01:57:09.182 --> 01:57:09.584
See you later.