Hello, everyone. Thank you for joining Did You
Know, the ESCO HVAC podcast. This episode brought
to you by Electrify My Home, designing and installing
heat pumps the right way. Learn more at electrifymyhome
.com. Larry, how are you doing today? Man, I
am doing great. How are you doing? I'm doing
fantastic. You know, this conversation came about
by one that we had a couple of weeks ago where
we were talking about the transition. of contractors
into a new era of equipment where we're really
focusing on high -performance heat pumps. Many
places around the United States are moving away
from gas installations. We see a lot of gas bans
in multiple places around the United States.
And so we have contractors re -looking at their
businesses going, okay, I know that I'm going
to have to make some changes. I got refrigerant
changes. I got equipment changes. I got to pick
my path. But I have to be successful at it, right?
And so as a contractor, you've been very successful
at electrifying your business and teaching others
how to do that successfully. So do you mind sharing
with us where this adventure began and where
you're at? And then we'll talk about where it's
going. Yeah, yeah. I worked for a contractor
for a number of years before that. I've been
in the trade for 42 years. I'm one of those high
school went to tech school guys. And so I've
been doing this for a long time. And I've always
been a guy that wanted to make my game a little
better than the next guy's game. And so go back
about 2010, there was a utility program in California
called Energy Upgrade California. And there was
a lot of buzz around that at the time. It didn't
turn out to be as good as they hoped. It was
a little ahead of its time. But it required that
you become BPI certified to become a practitioner
in it. Oh, very cool. Great organization. So
I went through the process, and I always wondered.
I lived in Palm Springs for a number of years,
and I worked on air conditioners out there. And
as an air conditioning technician, I would go
to houses, and the system's working fine, and
the people that lived in them were uncomfortable.
And so I knew that there was more of a connection
other than just me going out and fixing air conditioners.
So when I kind of read about this BPI thing and
I says, I can learn how to understand how houses
work with the system. And then the house is its
whole system. So I really got into that. A lot
of people went through those courses to kind
of get into the utility program itself. And most
of them kind of went back to the status quo afterwards.
I happened to have a teacher in the first class
that turned into be a mentor for my entire pathway.
And I like to say that they had the exact level
of sugar in the Kool -Aid there. And I ended
up drinking a lot of it, right? So I never went
back. I never went back to the status quo, throw
a system in, rule of thumb, any of that. Started
using load calculations. And then we ran into
this problem where we couldn't find furnaces
that were small enough for the... you know the
the new new shell and so uh i went to my mentor
and i said hey what can we do if they were doing
a lot of um the hydrothermal stuff so they put
in the water heater and run it off that they
could tune down the heat and i said that's a
little bit too complicated for the status quo
company i was operating at so just happened to
go to a class on one of the inverter heat pump
things back then i saw these little mini split
things and ask guy about that and he says yeah
there's some people toying around with that right
and so i put a couple in and you know much to
the owner of the company's chagrin he's like
what are we why are we doing this this is really
weird and uh the installer loved putting it in
first because it was challenged but when we started
the thing up you couldn't hear it and you could
just feel the house getting warm and so to me
it was a game changer um And so I really started
pushing those inverter heat pump systems. And
at the time, all we had was the low static pressure
models. So we really had to do the duct work
perfectly in order to make them work. And so
that was part of the whole process. And I just
started running with it. So I really started
installing heat pumps in a major way in 2013.
I was still doing some gas. And then 2014, I
really told my boss, I said, I don't do furnaces
for you anymore. I'm only going to do heat pump
projects. And the benefit for that is my sales
went from like $8 ,500 a sale to $18 ,000 a sale.
So I'm liking it because I'm making more money.
The boss is liking it because he's making more
money. The guys like it because it's something
interesting to do rather than just putting the
tape on straight on an evaporator coil. And so
kind of got full company buy -in. And then the
problem was going to a customer's house that
just wanted a furnace replacement. and walking
out of there with a $18 ,000 heat pump and envelope
work. And now that same job's like 30. So that's
really how I got into doing that. And because
we were doing it in such a high -performance
way, and I was kind of already embedded with
a group of performance people, I started sharing
about it at different... at different, one is
the most dry climate forum. I don't know if you've
heard of that out in California. And just happened
to be in that audience that day. There was a
guy whose brother was starting up the building
decarbonization coalition. And I get a phone
call from him and say, I really want a heat pump
installed. And I know there's nobody else out
here that's going to do it like you will. And
so he invited me after we put the system in his
house to join the board of the decarbonization
coalition. So I was on the board of that for
four or five years. And that was good because
I was the only contractor, i .e. homeowner voice
on that board. It was a lot of energy people
and a lot of people saying, hey, we can do this.
Hold on. You can't do all that, right? And so
that's kind of what led up to this. And so we
did a little bit of work with different utility
programs. And I was invited to comment on some
of the legislature that was coming or the legislative
items that were coming through. And because of
that, I was asked to do a training program by
one of the bigger groups in California. It was
called Tech Clean California. And they said,
hey, we have workforce education and training
money. We've heard you talk about this. We know
you know how to do it. Would you like to put
a proposal together for training? And so I said,
I'm going to reinvent the way training works
in this business. And I did that and we were
very successful. I got extremely good ratings
on that. And so that that program has been going
on for four years. And we've since picked up
trading with all the major. Well, most of the
major investor owned utilities in the state and
a number of the regional energy networks. So
we actually go out there, boots on the ground,
get on a plane and fly to L .A. and teach contractors
how to do this stuff right. Yeah, there's a lot
of contractors that are struggling with the changes
going, okay, my business model is going to have
to adapt no matter what. Cost of equipment's
going up, cost of refrigerants are going up.
I need to have a strong business model that is
successful. And so when we start looking at creating
a solution for a home, not just going in and
quoting equipment based. typically on what's
already there, and then maybe selling them a
more expensive model of what they already have.
We're talking about looking at a structure with
a new set of goggles, going, okay, we may or
may not be able to have the right solution for
you. Let's take a look, and I'll tell you, using
the right instruments, using the right tools
and technology, I can tell you whether the heat
pump is going to be a successful solution for
you or not. And it really comes down to that.
You have to be educated. on what these transitions
look like and what it takes to be successful
as a business owner yeah absolutely you know
and i i saw this movement coming and i said i
i have a set of skills like liam neeson right
i have a particular set of skills but i had a
particular set of skills and it says i see this
all coming i was kind of at the point the company
i was at the kids were going to take over the
management. I didn't want to be like that old
guy at Dairy Queen with a 17 -year -old manager.
And so I said, I'm going to start this business.
I'm going to take a risk and see what I can do.
And it's blown up. I mean, I started with three
people four years ago. I'm up to 19. We've exponentially
improved everything every year, and that with
the training. So the business model works. And
we don't just install heat pumps. We do... every
form of everything in the house electrification.
So pre -wiring, panel upgrades, smart panels,
batteries, everything we can do to look through
the lens of what the lowest operating cost for
that customer is going to be moving forward and
sharing with them the plan of how to get there
on every house. And it's been extremely successful.
Yeah, I just had a podcast recording right before
we hopped on here with a Midwest contractor that
does a lot of education as well. And that's really
what the focus of the entire conversation was,
is that, you know, we have companies, businesses
here in the Midwest. I'm in Indiana that are
rethinking their business model and coming up
with these solutions. And he said, you know,
the most important thing to understand as a HVAC
contractor is that going forward. I'm not going
to be able to be just an HVAC contractor. I have
to holistically be looking at these buildings
with building science, just like we should have
been doing all the time. Like we can read HVAC
books from a hundred years ago and it wasn't
just about heating, right? It was about... Comfort.
It was about the condition of the space. It was
so much deeper than what we've gotten to. It's
like we started at a plateau and we got down
and we stayed in this lower plateau for decades.
And now that we are finally relooking at structures
going, okay, we now have the tools to be successful
at this. And if I present that homeowner with
solutions instead of just selling the same old
crap that everyone has been doing for years or
decades. I can now solve someone's problems.
And the relationship is completely different.
You now have a partner. You have a consumer for
life when we solve their problems instead of
just providing numbers. Yeah, I mean, that plays
out in what we've experienced. I have nothing
but awesome reviews out there. And my customers
tend to write books about their experience. And
a lot of them are, like I talked to four or five
companies, three of them tried to talk me out
of it. And then we found these guys. They had
the solutions. They came out and did it. The
communication was amazing. And, you know, I've
been in the trade for a long time, worked for
a lot of companies. So I wanted to build the
foundation of my company so that it didn't work
like those other companies did. And so our communication
is amazing. We're an interesting company. We
don't have a service department. We only service
what we sell. So we're a little bit more of a
home improvement company than we are an HVAC
company. And that's been beneficial because we
don't have the fires to put out everywhere and
the emergency situations. And the guy that does
service at my company, and he's also my field
supervisor, he says, when are we going to put
a service department up? And I said, when are
we going to be able to install something in three
days? My calendar is always out three months.
If I found a broken furnace tomorrow, I wouldn't
be able to do anything about it. So, and our
market just works better for this. And so the
biggest thing that I see is the block from companies
being able to really do this is the works a little
bit harder, but they have to step back a little
bit and understand how things work and then understand
how to talk with different people. Like I've
designed my business. So the personality types
that I wanna sell to are naturally. coming over
here. So I've kind of eliminated some of the
pushback by just making a little harder for those
people to come through. But one of the things
we talk about in our training program is disc
profiling. And I'm sure you're aware of what
all that is and how to figure out what somebody's
personality is and discuss the heat pump in a
way that fits their personality type. And not
get thrown out of the house because you were
either too eco -friendly or too on the other
side of the bag. And that's been extremely successful.
Man, that's intriguing. Yeah. So like I type
personalities and D type personalities, technological
driven. We want to talk about this as a technological
revolution in your home. But if I'm talking to
people that have a little bit of bark on their
sleeves, then I want to talk to them about the
eco benefits and the carbon reduction and all
that. And if we keep our conversations focused
on the personality type, we can sell heat pumps
to anybody. That's pretty crazy. It actually
comes back to a conversation I had with a software
company about two weeks ago. And they were telling
me about a software that they've just deployed
and they're introducing it into some of the larger
service software. But it uses artificial intelligence
to look at the previous service tickets as well
as the service call, incoming call. And artificial
intelligence looks at the vocal characteristics
of the person, compares them to previous jobs,
and gives that technician or the person going
to that call a personality evaluation of your
customer, not a problem evaluation, a personality
evaluation. That's intriguing. I mean, to be
able to have a perspective of that homeowner
before you get there, it's not just another house
with another number. It's a solution for someone.
It's extremely important. And so we actually
use a note taker. So one of the things that's
very unique about our company is that we don't
engage people by driving to their house and giving
them an estimate. Everything we do is virtual.
So everything we do drives them through our website.
They fill out a pretty comprehensive form about
all the systems in their house and where their
house is, age, do they have knob and tube wiring,
galvanized plumbing, all that. So they learn
a little bit of something about their house through
that. But it also takes about 25 minutes to fill
out that form and upload pictures. Wow. So what
it does is it gets rid of all the people that
don't have the patience for my solution. You
bet. I'm not even talking to them. And so I've
gotten rid of one of the personality types that
likes to make the quick decision and is really
good for the other companies. You bet. There's
a place. eliminated that from our process and
then so we we do a virtual assessment with them
afterwards so it's all done right here from this
camera in my desk all my sales and and my salesman
downstairs has a similar setup and then we present
them with the budget numbers immediately after
the call because we've done a lot of these we
kind of know what things are going to cost yeah
and we don't engage with that customer until
they've signed that what we call a handshake
agreement yeah And so they've agreed to our price
and our methodology and what we're going to do.
And then we go out and do all the energy audits
and load calculations and stuff on the house
because I'm not doing that for people that aren't
buying from me. And so that's been hugely beneficial
and saved untold gallons of gas and tire rubber
and carbon and all that stuff. Well, I think
of that as such an amazing solution for one of
the problems that contractors have when they're
looking at these business profiles. Because we
get so much pushback from... contractors, and
even from some of our schools as, I don't want
to teach this because I'm not going to get paid
to do this stuff. I can't show up to a house
and provide an estimate for a piece of equipment
doing the right things when Joe Blow just pulled
up in his 30 -year -old vehicle and looked at
the house from the street and give them an estimate
for something. I can't compete because I'm trying
to sell quality versus cheapest price. And you've
removed all of that. Yeah, I did. When I started
the business, I said, I want to get rid of all
the stuff from the other jobs that I had that
I didn't like. And one of them was tire kickers.
And then going out and figuring out somebody
wasn't going to be your customer anyway. And
so I eliminated that through that process. And
it's been extremely successful. And the beautiful
part of it is, is when we're in a format just
like this, and I'm talking to the customer just
like you and I are talking. I've got that time
to make rapport with them. I've got all the information
about their house in front of me. I've done a
little internet recon on their house. And then
I can get down into the conversations and figure
out what their personality type is. And then
I can start talking to them about what they need
and not the stuff they don't care about. And
then I'm also able, because this is a great way
to teach and people are really around this, I'm
able to just pull up the PowerPoint presentation,
go through the way our business works, the way
we feel about our mission statement, how the
process is going to go, all the way to building
value around the load calculation, how we install
the systems, why we use different registers than
everybody else does in every heat pump system,
and guided airflow, air bounce. I can show them
all that. like in a lesson plan. And by the time
they're done, they're either going to go, I don't
want to do the business with them, or I don't
want to do business with anybody but them. Yeah,
so we're assigned. Exactly. Please. Exactly.
So it works really good. I absolutely love that.
Because really, when we look at contractors,
you're going to be successful in volume, you're
going to be successful in solution. And so if
we decide that Our business is a solution provider,
not just a service provider. We have to change
the way we look at work. We have to focus in
on those that are after the solution and not
just the low cost. And in that, the traffic comes
to you. Yeah. Yeah, it's worked pretty good.
It's kind of crazy to think about it that simply,
but really it's a matter of providing the right
solution for the right customers. It's not about
going after every customer. It's about providing
the service for the ones that are looking for
that type of solution that you offer. Right,
right. And so another thing that I know what
my demographic of customer is, the easy ones.
And so I also, I've taken the time to go meet
people that are in organizations in the cities
around where I want to operate. And I've kind
of entrenched myself as the solution. Because
there's these groups of people that get together
and talk about heat pumps over coffee and donuts,
right? And I've gotten into those audiences and
done a lot of work for them. And every conversation
they're having is literally like us having a
conversation with a new customer. So I built
myself just a militant group of people that are.
electrify my home supporters and the business
is built on that. So we're still five years in,
we're over 45%. I think, I thought the number
was a little higher, but we actually looked at
it the other day, but we're 45 % referral based
still. It's still crazy high. It's an incredibly
high number for KPI. Goodness. Yeah. So, so it
works good. And I build these relationships and
nobody is ever going to, because there's always
been this thing like. Did you put your stickers
on? Are you communicating with your customers?
Are you doing all this to keep your name alive
in their brain? And also when I put the company
together, I put a name together that people aren't
going to forget, right? And they also stumble
onto us on the website a lot just by doing it.
How do I electrify my home? And boom, you know,
so all those little things that we kind of dialed
in in the beginning are all really working well
now. So how do you work with companies that are
wanting to rethink this? Because I guarantee
you, I'm going to have some input if we didn't
cover this. So I'd have people reaching out going,
hey, I like this idea. I think I can build some
technicians that would be perfect for that kind
of a company. Or I get the call, hey, I'm a company
owner and I'm really digging this concept. What's
the next step? I mean, how do we rethink who
we are? So, I mean, we have our own LMS system,
and we just brought that on this year. And so
it's emhlearn .com. And they can go on there
and they'll get a calendar of all the free webinars
that we do for all the utilities in California.
And anybody anywhere in the country or the world
can get on those. So you can hear the pieces
that we do. And we do a lot of webinars geared
to different trades. Like we have a trade process
coming up with our local utility. And so we talk
about electrification for plumbers, solar guys,
electricians, and HVAC, and general contractors,
I believe it is. But really a more focused way
for that. But on our learning website is a calendar
for everything. We do a program through Tech
Clean California. That's a three -day really
immersive boot camp type training. And we've
done those for a couple of the RINs in the state.
And so they're out there. All the training that
we provide through those programs is all free
to the contractor. That's crazy to think about.
And it's all paid for through utility dollars
in one way or another. Sure, because it's success
for everyone. I sit in on a lot of committees
for energy rebates and system commissioning and
trying to look at ways that we can validate system
installation and commissioning because the rebate
companies and utilities, they just want it to
be done right. so that people can save money.
I mean, it really comes down to that. And there's
not a great system in play as far as our industry
currently. I mean, I am on some groups working
on that at a high level. But if you're the contractor
and you're implementing all of them yourself,
you've already solved all of the problems that
the co -ops and the utilities and the rebates
were looking for. They just want a good product
installed. so that it will perform well and save
money yeah and once you get the hang of doing
it we'd like to tell the guys that they come
in the class and this this interesting little
quip yeah but we've had guys that have come through
our classes that are working for contractors
in california now whether they be sales people
or installers or whatever mostly sales people
um and they're from I can remember one from Texas,
one guy from New Jersey, and a guy from up north
in either Minnesota or Michigan. I get those
two states mixed up. So they all came to the
class with the same rule of thumb. And they're
from completely different parts of the country.
And they're all saying, oh, we just installed
400 square feet per ton, which is the same thing
that happens in the Bay Area here where we have
very temperate climate. And it's the same rule
that's gone everywhere. And you were mentioning
earlier, like we had the modern HVAC guide, modern
heating and air conditioning refrigeration guide,
the big book from when I went to tech school
42 years ago. And it had all of the answers in
it. Like all of the ancestors and the forefathers
of our industry figured all this out so long
ago. And then apprentices from their... from
their journeymen, from their salespeople, all
just like we've forgotten about all of that.
And all we have to do is go back to some of the
simple basics, and we can make systems that just
work so well, use so little energy, and our customers
are just blown away by how comfortable they are.
And I'll ask two contractors that'll be in the
same class, and I'm like, so what differentiates
you two guys? And they'll say, oh, we do the
best work, and we do everything, and we give
these great guarantees and all this stuff. And
I says, well, what about you? Oh, we do the best
work, and we have great guarantees. And I says,
well, what differentiates you? And you're saying
you're the best company, but what is making you
better than the next company? Are you doing load
calculations? Oh, no, we don't do load calculations.
So even some of the basic stuff. And I'm like,
so it really comes down to who's putting the
tape on straighter. right and so and it's sad
that kind of the industry's got to this but we
have a way out of it right and all we got to
do is go back to basic principles and learn how
houses work and we can build some dynamite systems
that's crazy just keeping it simple just keeping
it simple and and just doing it right and and
it's and it's hard for some contractors because
it does take longer to do but believe me it's
rewarded i'm Our projects are significantly more
expensive because we're applying good practice
to them. And they do take a little bit longer
to do. But it doesn't fit into everybody's business
plan and model. But it can really help differentiate
those companies that aren't maybe owned by a
consolidation company and part of a bigger picture.
We need to compete. We need our other contractors
to be able to compete with these guys. And this
is a brilliant way of being able to do it. I
completely agree. Fantastic perspective of something
I think everyone's going to enjoy. Larry Waters
from Electrify My Home. Grateful that you hung
out with us today. Encourage everyone to go check
them out at electrifymyhome .com. Yeah, and hit
up that EMH Learn website and see what our calendar
is. Go to some of the free podcasts. Check out
our YouTube page. We got a lot of the podcasts
up on there. And pick up the phone and call us.
We'd love to help walk people through. Awesome.
Thank you for your time. Hey, Ryan. It was nice
seeing you. Thanks a lot.