Episode 105: The Tesla Model for the Trades

Why are the trades stuck in the past? Why are we still doing things the way we did in the 1960’s? Ismael Valdez isn’t just part of the new generation of the trades that is asking those questions, he’s leading the way in being the SOLUTION.

Ismael is CEO and Owner of NexGen Air Conditioning Heating and Plumbing out in Southern California, and a returning guest on To The Point. On his last appearance, Ismael told us his story. Now, he’s telling us about the future. To best understand, we have to take a look at the explosive start to NexGen, Ismael’s pivot in 2019, and how he views the home services industry.

NexGen

If you follow Ismael on social media or know him personally, you know that if he isn’t with his 4 daughters and wife, he is at work. If he isn’t at work, he’s with his family. NexGen is like Ismael’s 5th daughter. 6 years into business, Ismael has seen huge success and also learned a lot of tough lessons along the way.

NexGen has 9 locations in SoCal, and closed 2021 at just under 60 million. That’s after an explosive start of hitting the 30 million-dollar mark after just 3 years. Ismael’s sights are set on 100 million for 2022, with no signs of slowing down. For Ismael, though, it’s not just about the numbers. He’s passionate about the industry, and wants to have a huge impact in how the trades are viewed as a whole. Part of that is being a game changer, and he’s not afraid to take risks when it comes to how things are done.

Marketing

One of the ways NexGen really made their mark in SoCal was by thinking way outside the box when it comes to marketing and branding. Ismael did something no other trades company would have even considered and put their name on about 50 billboards throughout his service area. This was a huge investment, but it paid off. They had been very strong with their digital marketing, but now they were getting recognized all around town. What Ismael knew is that Southern California has traffic virtually all hours of day and night. That means constant eyes on his ads. In combination with their unique name and logo, their exposure exploded.

Another thing NexGen did that is certainly not a standard service company move is get involved with a professional sports organization. The Anaheim Angels stadium has NexGen marketing inside, and they are looking to land a contract with the L.A. Dodgers soon. It’s about more than just direct mail marketing, it’s about being something bigger. It’s about being the next generation of the trades.

Treating His Team Right

Ismael’s efforts had more than just value in bringing in new customers, it was also a valuable tool in recruiting for NexGen. Ismael’s team is just like his family, and he pours into them daily. Through great brand recognition and treating his team right, recruiting is no problem for Ismael. People want to work there!

99% of Ismael’s energy is spent on making sure his team has everything they need. When he talks with one of his people, his first two questions are always “are you making money” and “how do you like it here”. He knows that if they are making money and being treated well, he’s done his job. He also does things like bring in food trucks and take his employees to Angles games. He gives out Cancun trips and cash at their Christmas party. Really, anything Ismael could have wanted when he was younger, he’s trying to give to his team. That makes NexGen a highly sought-after company to work for, and is another way to make sure their customers are being treated right. If you take care of your employees, they’ll take care of your clients.

Lessons Learned: 2019

While NexGen had grown exponentially, that didn’t come without growing pains. 2019 was one of the hardest times in Ismael’s life. He was ignorant to thinking he knew everything. He was having a ton of success, and was proud about it! He gave off a perception of being too cocky, and that came back to bite him.

Tom Howard of ServiceTitan was one of the people who helped bring Ismael back to earth, and for the better. NexGen was using ServiceTitan as just a dispatching tool, and they didn’t really understand anything about financials. They were a 30 million dollar company in 2019, and doing everything on PAPER. They were so focused on everything else that the financials weren’t on point, and they had inefficiencies throughout the company. He wasn’t tracking or understanding key company vitals like his average ticket, turnover rate, gross profit, or even overhead.

At the rate NexGen was going, things weren’t going to last very long unless Ismael slowed down and learned some things. He felt stupid after discovering all of the things he didn’t actually understand. Ismael had been pumping his fists about being such a fast growing company, and understandably so, but he didn’t know so many things. It was a humbling experience for him. People like Tom Howard helped open his mind and grow as both a business owner and human being. It was a pivotal moment for Ismael, where he learned that it isn’t not just about him and what he can do. It’s about showing everyone how amazing the trades are, and the possibilities that the industry has.

Ismael wants to show the next generation of labor the opportunities the trades has. The Rolexes, the Bentleys…flashing the bling is how you get their attention. You can make a great living in the trades, and Ismael is hellbent on showing the world just that.

The Tesla Model of Contracting

Now, Ismael is focused on not just showing the next generation of labor how incredible the trades are, he’s looking at bringing the trades into the modern age from top to bottom. Enter the T-30 model of contracting.

See, anyone that’s been in the industry for a while knows how things are typically done. Ismael feels that everyone is running on gas, getting 10mpg. That’s running just on labor; pure manpower to get things done. The best model for business we have right now in the trades is really sort of a hybrid model of gas and electric, to extend the auto analogy. It’s a mixture of labor and technology.

This is where Ismael draws inspiration from Tesla. It’s the technology. Technology allows Tesla to use electricity as the sole power source, and that’s the new model for the trades he wants to present to the world. Sounds crazy? He knows. What Ismael thinks is crazier is that companies have 20 full-time accountants working in the office. There are full teams of people handling commission and POs, chasing sheets and entering things into Quickbooks. The amount of in-house support and labor, in Ismael’s eyes, are completely unnecessary. It’s the “old way” of contracting.

T-30

This old way of contracting tells us if you do it this way, you can hit 20% net profit. The industry has been complacent with 20%. Why mess around with something that works? Ismael is calling his new model T-30, and the 30 represents the 30% net profit he’s trying to get to. This isn’t by price gouging or raising the average ticket, either. No, it’s about taking advantage of the technology we have and that is coming down the pipeline. We simply have to want more.

Profit brings comfort into your business. That’s what the T-30 model is all about. It’s about changing the fuel source from labor to technology so we can stop being so reliant on hiring so many people and decrease our overhead. If you’re a 100 million dollar business that is getting 5% profit, you may as well be a 20 million dollar company at 20% profit. Ismael wants to prove to people that there is a better way.

Ismael is building a T-30 facility in Anaheim to prove his model works. Everything possible is automated, and data is accessible and used in real time. It’s about hyper-efficiency, and it’s the next generation of contracting.

datacube

In that pivotal year of 2019, Ismael had an idea. When Tom Howard, Ken Goodrich, and other people would ask him what his average ticket was, or his closing rate, or marketing spend, Ismael was tired of not knowing the answer. He started a software company in response.

Initially, datacube was really just a dashboard that was just for Ismael to use. Everyone has a whiteboard with their KPIs and technicians and all sorts of numbers that get erased and rewritten day in and day out. Ismael knew there had to be a better way to do this. He wanted live data, and to know at the end of the month exactly what the numbers were. With datacube, Ismael could suddenly have instant, live access to all of the data that makes the business profitable. The second something gets sold, percentages change. Data gets updated. He can see his average ticket, average discount, and everything else whenever he wants it.

Data Reinvented

datacube tracks just about everything, even 0 tickets. If you have a technician that goes to bat 3 times and strikes out each time, why would you put him up to bat again on his own? With datacube, Ismael can see things like one technician crushing it and another not, and pair them together to have one help the other. He could also pinpoint this as a needed coaching conversation. You can make tons of decisions based on the data you wouldn’t be able to otherwise.

This data is pulled right from your CRM, too. ServiceTitan, Housecall Pro, whatever you’re using can be integrated. datacube pulls that data and displays it, achieving two major things: educating you about your weak side, and creating a more competitive atmosphere inside your company. You can track whatever you want, too. By default, datacube will show you metrics that are most common such as your average ticket. If you want something more specific, like perhaps the average ticket for just your maintenance members or metrics on specific types of calls, it can do that too.

Competition

When the T-30 facility opens this year, you’ll see monitors and TVs everywhere displaying all kinds of data. The training room, the hallways, the VMIs, in the CSR room, there will be numbers right there for everyone to see. Why, you might ask? Because people are competitive. Salespeople, technicians, installers…they don’t want to be number two. If they don’t want to be number one, they are in the wrong game.

Everyone can see who is ranking where for all manner of metrics. Ismael is already seeing his installers gather around the “WAR” dashboard, for warranties and revenue. They can see it when they are picking up or dropping off equipment. These displays show who has the highest average ticket, the best closing rate, and so on. Better yet, NexGen has gamified things. Whoever is in that number one spot has a bounty on them. If you snag that spot away, there’s a bonus waiting for you. That could be a thousand dollar check or tickets to a suite at an Angels game later that evening.

Perspective Evolved

From the T-30 facility to advancing the capabilities of datacube, Ismael is completely reinventing how people look at contracting. He is fully committed to changing how people look at the trades. The incoming labor force graduating high school should be looking at the trades as a top option. You don’t have to be a ball player, you don’t have to reinvent Facebook, and you don’t have to be in debt for the next 20 years putting yourself through college to be a lawyer. Be a plumber at NexGen and make 6 figures, or a project manager clearing $400,000. It’s hard work, but there is money in the trades.

Ismael sees a future where we aren’t trying to convince people to join the trades, but rather they are banging on our doors, begging to be let in.

If you’re going to be at the 2nd annual RYNOx event this year in Phoenix, you’ll see Ismael and lots of other industry legends. If you aren’t, be sure you don’t miss out next year!