HVAC Success Secrets: Revealed

EP: 239 Alec Stevanovski w/ Homepros - Revolutionizing Contractor Communication

• Alec Stevanovski

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Excited to share the latest episode of "HVAC Revealed"! This time, we're diving deep into the economic and industry trends with the insightful Alec Stevanovski.

In this episode, we cover:

  • The state of the economy, including interest rates, consumer sentiment, and how these affect the HVAC industry and homeowners.
  • The increasing role of private equity in HVAC, plumbing, and electrical trades, and what this means for contractors and businesses.
  • Key strategies for HVAC contractors to navigate the evolving market, from innovative recruitment to adapting to private equity acquisitions.

Alec Stevanovski joins us with his wealth of knowledge and his path from sales at Paesr to becoming a trusted voice in HVAC industry insights through his comprehensive newsletter.

Here are three key takeaways:

  1. Economic Complexity
    Despite mixed economic indicators, including rising consumer sentiment and high household debt, the HVAC industry remains resilient.
  2. PE Interest
    Private equity is increasingly eyeing HVAC and related trades due to their stability and resistance to economic downturns, driven by consistent demand.
  3. Strategic Adaptation
    HVAC contractors can benefit by proactively adapting recruitment strategies, viewing HR as a profit center, and mitigating risks in PE-acquisitions.

Tune in to catch the full discussion and insights. Let’s stay ahead of the curve in the ever-evolving HVAC landscape!

#HVACRevealed #EconomicTrends #PrivateEquity #IndustryInsights #HomeServices #Podcast




Find Alec:

On The Web: homepros.news
Via Email: alecreadhomepros.com



Join Our Group: https://www.facebook.com/groups/hvacrevealed
Presented By On Purpose Media: https://www.onpurposemedia.ca/
For HVAC Internet Marketing reach out to us at info@onpurposemedia.ca or 888-428-0662



Sponsored By: 

Chiirp: https://chiirp.com/hssr
Elite Call: https://elitecall.net
Service World Expo: https://www.serviceworldexpo.com/
On Purpose Media: https://onpurposemedia.ca


Alec Stevanovski:

This may sound obvious, but HVAC is basically internet proof in the sense that it doesn't matter how sophisticated Chat GPT or any of these new technologies get, you're not going to, with that software, disrupt the fundamental need for heating and cooling homes and buildings.

Evan Hoffman:

Hey, welcome back to another episode of HVAC Success Secrets Revealed with Thaddeus and Evan. I'm Evan. He's Thaddeus. There we go. I even got the pointing going the right way. No, I'm super excited for this conversation. I reached out to Alec gosh, it must've been two months ago now. I was recommended to him from a friend and he said you got to check out his newsletter. It's fantastic and I think you'd be a great guest for the show. So I started following the newsletter for a few weeks. Lo and behold, it was fantastic. He's putting out great content with homepros. net or news. Sorry, not net. Honestly, a tremendous newsletter. He goes into all kinds of conversations. He interviews. top industry leaders and what it is that they're doing to succeed. He's diving into the regulations. He's diving into PE and the impacts of it, the impacts of the current state of the economy. He's studying everything. He's doing journalism the way journalism used to be and it's truly fantastic. I know you just signed up for the newsletter. So you're going to start seeing it too. I circulated some of the articles that he's putting out within our team so that they can stay up to date with what it is that's happening in the industry. So I'm stoked to pick his brain a little bit on the current state of heating and air and the home services and what this upcoming election is going to be, current state of the economy, all of it.

Thaddeus Tondu:

Yeah, and coming from somebody who does the research in and around it, right? Not just their own anecdotal opinion, but what the research actually dictates from it and diving into the impartiality behind it, which is important. But of course, today's episode would not be possible without our sponsors. We have, in no particular order, Free2Grow, Chiirp, Elite Calling, On Purpose. Media. So let's go with this one. Have you ever thought about outbounding your databases to fill your dispatch boards with lucrative service and sales appointments and boosting your memberships too while entering EliteCall, a US based call center that does just that. For over 20 years, their dedicated teams don't just make calls, they directly integrate appointments into your CRM and fill your dispatch boards. Don't let your competition get ahead. Let EliteCall connect with your customers first. Visit the folks over at elitecall.net.

Evan Hoffman:

And we have a new sponsor this week, Free2Grow. Did you know that the average booking rate for after hours call centers is about 45%? I'm sure you've experienced as a home service business. What if your customer acquisition costs for after hours calls could get cut in half? That's what Free2Grow does with their AI after hours booking service. The scripts are completely customizable to your business and your market. And, on average, they are booking 82. 5 percent of the calls that are coming in after hours. Don't believe me? Test it out for yourself. You can call 757 550 3534 to test it out yourself. Plus at the end of the call, you're going to get the exact same text message summary that your technicians will get after hours, including a summary of the call, the phone number, and you can get the complete recording. So you're going to get this when you call that number. So go ahead and give it a call. Oh, side note, this is a basic call script as well. It can be completely customizable again, to your market, to your needs and including after hours, booking call out fees. So test it for yourself and go ahead and give that call or give that number a call today.

Thaddeus Tondu:

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Evan Hoffman:

And last but not least, we have On Purpose Media. For those of you that don't know, Thaddeus and I, we happen to run a marketing agency as well as do all this podcasting. So we do everything from websites, SEO, PPC. We want to make sure that people are showing up online, getting found by your potential customers when they're looking for your services. And then on top of that builds you a beautiful website that represents your business in an effective way, transforming leads or sorry, visitors into actual leads and book calls on your dispatch board. So visit onpurposemedia.ca to book your call today. Welcome Alec. Thank you so much for joining us.

Alec Stevanovski:

Yeah, thanks guys. I appreciate it.

Evan Hoffman:

Sweet. Why don't we just skip the pleasantries, dive right in. Yeah. How did you get into this situation now where you're, you started this newsletter? Where did this start? How did you get into the home service space?

Alec Stevanovski:

Yeah, so basically so in 2020, I started working at a company called Pazer and Pazer is a software business that serves HVAC employment contractors. Simple way to put it is we built a full, Pazer built basically a full end to end business management software. So we handled everything from scheduling, scheduled dispatch CRM, invoicing, credit card payments out in the field, things of that nature. And so I spent three years there to be exact. I was for the most part on our sales team. So I would sell and talk to these contractors all day long. They would explain to me their problems and what was happening and I started learning about the industry and what was going on. so I got, I don't know, it was probably maybe, I don't know, a year and a half in, something like that. I started getting really curious about first of all, there's all this stuff happening. There's, interest from, Outside investment, professional investment private equity operators. There's, a number of things on the legislative front and regulatory front that are happening that impact these contractors. There's tons of new technology, just given the existence of Pays or where I was working, for example. And they were just, there's all this stuff going on. And so I got curious about who supports it all from a media perspective. So who's covering it. Who is writing about it, who's talking about it and did some research. And basically what I found was there were only a small handful of companies that were doing that. And they'd been around for a long time, more legacy businesses, a lot of print publishers, and just thought that was, I don't know, that was interesting. And at the same time started really researching digital media and how news and information kind of works in other industries like politics and technology and finance found that there was a model that had working really well over the past five or so years, seven years ish. That is basically this idea where first of all, you don't print anything, you deliver it all digitally. People read news online on their phones and their emails and people appreciate it because if you're formatting it in a way that allows them to skim and dig deep, dive deeper if they want to, or just sit down in the morning or in the evening, whatever, whenever you send stuff out. And digest it pretty quickly. And just have a good, holistic understanding of what's happening. And so I just thought that model would make sense in not just HVAC, but, plumbing, electrical, and eventually down the line, all these other home service industries. And eventually just said, you know what, I'm going to leave the company and try to do it myself. And that's what I did. I guess I can expand it a little bit, but that's the high level kind of what happened and how I got to start doing what we're doing.

Evan Hoffman:

No that's super cool. So you didn't have any kind of journalism background, any kind of interviewing background. It was purely based on seeing a need within the industry and wanting to attack it and create some value.

Alec Stevanovski:

Yeah. I never had, formal journalism training. I went to school for it or anything. Same thing with interviewing. I will caveat though, that I did get a pretty good education on interviewing and talking with people over the past, over the five years prior, because I basically spent a lot of time on YouTube listening to just people in banking and technology interview each other. So I say, that's my color. That was my sort of journalistic education was just watching YouTube videos and listening to a podcast.

Thaddeus Tondu:

Sometimes that actually is the best way to be able to do that because it's learning too. And in a different sense, you're educating yourself and then you pay attention to their mannerisms, how they do things and you adapt and you pivot. And also think about somebody like the hustle, and their email and their newsletter, what they've done. He had a, eight figure exit on his newsletter. Which is crazy. Like it, and so like the power that can happen from a newsletter to be able to do that and whether that's your plans or not relevant to the conversation here today. But you mentioned two things in terms of the impact of contractors from both the private equity as well as a regulatory standpoint. I'm curious to unpack those because especially, PE, you look at what happened in 2020 and people coming in, COVID like, oh shit, recession proof business and COVID and people are spending money and money was coming in hand over fist into the industry from private equity and maybe it's slowed down, maybe it hasn't, maybe it's done more harm than it's done with good, maybe it hasn't. What sort of things have you seen from the private equity front that has either helped or hurt contractors?

Alec Stevanovski:

Yeah,

Thaddeus Tondu:

I think

Alec Stevanovski:

so there's a couple, Ways to get into that. I think the first thing is maybe understanding like why private equity is so interested in not just HVAC, but plumbing, electric, what in the trades basically. And I think, a simple way to understand that is the industries there, there are structural, like the structure of the industries make for a good long term investment. So what that HVAC. First of all, This may sound obvious, but HVAC is basically internet proof in the sense that it doesn't matter how sophisticated Chad GPT or any of these, new technologies get, you're not going to, with that software, disrupt the fundamental need for heating and cooling homes and buildings. So it's very resistant in that sense. It's technology, it's internet proof and it's obviously, resistant, not necessarily proof. Like recession proof, but resistant in the sense that, a lot of that stuff, whether you're in a recession or not, people are going to pay to be comfortable. So those are two kinds of things that just say, okay it's not like a super volatile industry. Like cryptocurrency is for example, where you could argue it's just a fad or where it might not even exist five years from now. That's just not the case, heating and air. That's one thing. I think the second is, at least on the residential front, is that homes there's a couple things that make it a good investment a couple other things make it a good investment, like homes, for example, are continuing to get older, and I think the latest data point was, and this is Angie used to put out a report called the Economy of Everything Home. I think the last time they did it was a year or two ago. I've actually asked them why they haven't done it and I think that the guy quit who used to do all the reports, so they haven't replaced him. But their whole stat was I think the average home in the United States is over, was about 42 years old. And I think it's driven primarily by homes that are really old in the Northeast where it's, the average age is older versus Southwest. I think they're a lot, the newer but as homes get older, simply speaking, their equipment breaks down because, if you've had a number of replacement cycles as that home, from when it was built now, so homes get older, their equipment needs placing these repairing maintenance. And so that drives the demand for, in this case, HVAC over time. The second, another part of that is the demographics of home buyers are changing. So millennials as a percentage of home buyers that they're, that percentage is growing. So more and more younger people are buying homes. Younger people do not do things themselves. Not a knock on any millennial and anyone young, include myself, but They're much more willing to pay a premium.

Thaddeus Tondu:

Careful what you say, I technically am a millennial, right?

Alec Stevanovski:

Totally. No, yeah, totally. Including myself. I don't, we're willing to pay a premium for people to come in and to do this stuff. And that's one. The third part of that, a little subcategory I guess of that is on the flip side with older individuals, there's more of a trend toward what's, I don't know who made this up, but the term is aging in place. Where because a lot of in home technology has improved like from a medical standpoint, senior citizens, people who are older are choosing instead to go into retirement communities to age in their homes. And so they're going to stay there while those homes also age. And that kind of drives, again that's just an added demand for these, for these home services. So that was a long explanation of, I think that's why. Just fundamentally private equity and all these investors are so interested in the space because there are tailwinds as they say in the investment world behind them.

Evan Hoffman:

You mentioned the houses in the northeast as one example, and it's fascinating. We've had many clients that are up in the northeast and oftentimes they're encountering homes that have an oil, Basin furnace and then they've got a gas based heater with their air conditioner and then they've added in electrical and added in some mini splits and the house is sectioned off into four different parts as to what it is that is heating and cooling at home. It's not on the northeast at all. So yeah it's, and then you got a boiler system too mixed in there. Sometimes the demographics of home buyers makes a lot of sense there and it's funny, you're talking to two guys that are technically millennials, but I built my own basement suite. Thad's fixed his own furnace and air.

Thaddeus Tondu:

Depending on what it is, the blower motor went the other day. I was like, you know what? No, I'm going to pay somebody to do the blower motor. But my igniter went, yeah that's one screw. I will do that myself. Thank you.

Evan Hoffman:

Stay at home. This is one that really hit home for me because I just I drove across the country moving my girlfriend Lizzie here and we stopped in Regina to go visit my parents. The day before they had a backup and the toilet flooded and it was all clean. It was just the line was plugged with roots and so they had to get a guy in to cut it all out. But my parents are 85 and 80 years old. Like they don't want to leave their house and their systems are getting old. The house is getting old. Everything's aging with it. They've been in that house since 70, since 1970. And yeah, I saw it firsthand this weekend of the necessity behind home service companies and being able to take care of them because they don't know.

Thaddeus Tondu:

My grandma is in her 90s and is still living at home on the farm. She's going to home now, but same thing.

Alec Stevanovski:

Yeah, I think, no, it makes sense. And I think all those are like reasons why, okay, it makes sense to put capital behind these companies and you could have that, there are obviously like financial reasons to some people will look at it just as a pure math thing. And let's say if I can buy a company at, I'm just going to, I'm going to round here, but if I can buy a company at 6x and I can put seven of them together and I can sell it at 11 or 12, then you're just playing multiple arbitrage. Like people do that which is fine. But you can see it. People are clearly doing it. I the latest I looked at actually before this, So Capstone Partners is a, a group that does a lot, puts out a lot of research on this the space, and one of their charts is, I think, just all in HVAC deals, and it does include, I think, some commercial deals, but basically all in, by year, a number of transactions that have happened. In 2018, or from 2018 to 2023, even though 2023 saw a drop off in deal volume from 2022. So it's all the way up 2018, 2022, a little bit drop off 2023. Still looking from 2023 to 2018, there were more than triple the deals done than there were in 2018. So it's just kind of evidence like, It's not just people talking about it. It's not just one deal, big deal happening here and there. Like it is actually happening, right? It's happening a lot.

Evan Hoffman:

Now, are you seeing a slowdown at all in that activity? Cause it, it's, it ramped up massively through 2021, 2022, even into 23. Have you seen a slowdown if it like the same way that we have in 24?

Alec Stevanovski:

Yeah, I think from, so they put out that, that same company, I think they did a year to date as of the end of May. And I believe from looking at that, that was on pace too. I don't need, I don't think exceed 2023. So it was still a drop off deal volume. So I have seen that just from, some of the people that I'm talking to as well, but I think there are some other things that caused that, cost of capital interest rates are a big one, just so much activity that happened over the past couple of years. And then I'll, and they were doing that at essentially zero very low borrowing costs. Now you have this. You should rise in interest. It makes the math equation a little differently. So there's, I think it makes sense why that happened. That doesn't totally, surprise me. But while I do say that though, like I talked to a guy yesterday, runs a a platform, investment platform out of, I think it was a Midwest, cause I asked him the same thing. I said, have you seen deal buying immediately drop off? Are people just not interested or do they just. Are you guys not willing to buy? And his thing was, that's just not true. Like we're continuing to buy. If we can find good quality companies, yeah, I get it. Maybe from a high level, some of the data shows that there's less deals or whatever, but on our day to day, like we're not really seeing anything meaningful that's gonna harm our business. Like contractors are still interested in talking to us, we're still looking for good companies. We will still put offers in, we'll still, we're still buying.

Evan Hoffman:

It makes sense, especially for the ones that are trying to do more of the m and a type of activity. Right now it makes a ton of sense to be diving into that, especially when there is a contraction in the economy. That's when deals are meant to be had.

Alec Stevanovski:

Yeah, I think, and something interesting too and I'm just ranting at this point, so I hope you guys don't mind, but like, part of the whole thing that's interesting to pay attention to, and a lot of this stuff is, keep in mind, like a lot of this stuff, it's all private companies, so there's data out there, but a lot of it is just based on what people tell you, some of the reports that do come out, But some of these companies, these huge, these consolidators have gotten really big, the apexes of the world, the turnpoints of the world, the wrenches of the world. Like they are ginormous companies, like several multi billion dollar companies just from a market cap standpoint which is just nuts to think about. And I think, based on some conversations that I have, something to keep an eye out for, at least that I am paying attention to, and I'm going to, I'm curious as to how it's going to unfold over the next, I'd say 12 to 24 months. Is that, okay, these companies have gotten so big where for them to keep growing, obviously they need to continue making acquisition. They need organic growth as a big part of that. So once they do buy a contractor, they want to improve the operations of the business and they want to grow it organically, but still, you still need to tack on more. You need to do more M& A. But because they're so big, I think what may start happening is some of these super big consolidators start buying the smaller consolidators. And there's some evidence that's happening. There was I'm forgetting exactly when it happened, but I believe it was within the past, I don't know, nine months or something like that. It could be something within a year, I believe. But, Apex bought, it was a company called Frontier Service Partners out of maybe Missouri. Could be wrong, but they bought, it was a smaller consolidator. And so they're using it, like that's something that's interesting. I think that's what happened. There was a report put out by an investment bank called Anchor Peabody. That was pretty interesting. And the guy basically made a point of, if you look at the timing of when some of these big consolidating consolidated groups had last capitalized, either, either formed or last capitalized. So the last time they either raised money or did a deal, or they just started a chunk of them were over the past, four to seven years or something like that. And if you think about the average timeline for these funds, so basically, they have to form or they raise money. Okay. They have a certain timeline that they say, everyone who invests in our fund, we're going to, our timeline is say five years or seven years or whatever. And then we're going to exit. We're going to give you your money back as a limited partner, as an investor. If you look at the timing of when a lot of these guys did it, it essentially comes out to where over the next two years or so, it would, you could assume that a chunk of those companies are going to have to recapitalize in some way, meaning they either need to sell to a bigger consolidator. They either need to go public or they need to do some sort of deal. Because their timelines are essentially right now. You could argue like there are different ways to do that. Like you could, without getting into some of the weeds, like you can essentially, I don't want to say delay the timeline, but there are different ways you can do that. But that'll be interesting too. I'm very curious as to. I'm constantly bugging people asking them, who's going public. When's it going to happen? Who's buying who? And so just another kind of interesting thing to pay attention to.

Thaddeus Tondu:

Especially if you're looking like one of the next one or two years, that's going to be some big noise. If you have one of those larger groups go public and I don't want to put a name to it and say, Hey, you're going public now. That's not the point here of what we're talking about and in different ways to be able to do that now, In looking at that, what are some of the harms for a contractor to be able to be on the lookout for? Because, obviously, it can be the good things we've had enough people talk on our show about the good things that can happen with private equity, what could go involved with it. What are some of the pitfalls or the things to watch out for, the hindrances or hurtful parts for a contractor when it comes to private equity?

Alec Stevanovski:

Some of the two things that come to my mind right away are, And there, there has been some evidence of this, but and that's just based on me talking with a handful of independent contractors in different regions. But one thing is, they can push a lot of their good talent away just by degrading the culture. Meaning, when they buy these companies, there's obviously return expectations. And one of the ways in which you do that is you grow your revenue, simply speaking, and you do that by selling. And so there's this whole talk about once I get bought by a company. Private actors are going to come in, buy this company, and they're going to force all the techs to turn into salespeople. They don't want to do that, and they're going to drive all the talent away, and all the independent people are going to benefit. That's like somewhat, in my mind, a valuable, or a valid argument. that has happened in some cases. So I think, there's potential for culture to be degraded in some of these companies, depending on who the group is. I'm not saying they're all bad, because I don't think they are. But I believe it has happened in some cases. I think the second part is, if these guys come in and something happens in the broader economy and it forces them to have to make a shift with their plan and cut costs even more, or just take some sort of measures like financially where, maybe they end up having to lay off a lot of people because they either can't make their, or there's how they capitalize to do in the first place. They can't make their debt payments because the revenues are down, whatever. I think that's something that if some of these platforms are actually, Some of these platforms may be in more trouble than maybe they present and that could be something that I think could have an impact is if they just have to go into cost cutting mode and lay a bunch of people off. Which again, that would benefit independent contractors on, in theory, same way as degrading culture. Those are the two big things that come to my mind.

Thaddeus Tondu:

Makes sense.

Evan Hoffman:

And then in terms of standing out in the marketplace around that if there is other companies in your market that are getting bought up by PE, how do you see them? Looking at ways to stand out and be able to compete against these companies that have massive amounts of dollars behind them.

Alec Stevanovski:

Yeah, no, I think that's a good question. I think that's like one of the questions lingering in the industry that's been lingering. It's what do we do? I had a conversation with a contractor and two actually one in Oklahoma and one in Arkansas. And they were very similar to me because they're both independent. They're both pretty scaled, pretty sizable businesses, but they're not backed by any, sort of private equity or any platform. And the common thing that they do realize, they almost look at their HR team as a profit center of the company. And basically what they're, what they mean by that is as much as they, and as much as everyone puts a ton of time and money and effort into marketing and marketing data and, which channels are working, which aren't. And that's its own initiative. They align their marketing team or they have these two companies line of marketing with their HR teams in the sense that we're going to look at our brand and we're going to look at positioning our brand is just as much as like we're going to look at positioning our brand for potential technicians just as much as we are for potential customers. And they invest behind that. And so when they look at an advertisement, for example, that goes out online, whether it's Facebook or Google, whatever it is that is going to acquire customers, they think that acts twofold and also attracts technicians and they have, so they closely aligned that really their marketing teams and their HR teams to look at advertising as a two pronged weapon, that does both of those things at the same time. And that's something that's really stood out to me when I talked to them. As just like a way in which to almost counter private equity, but I guess for lack of a better term, really do that and and really stand out if that makes any sense.

Evan Hoffman:

Yeah, no, I really like that. And it makes a lot of sense in terms of, and we've had this conversation before where recruiting is a, it's an active sport. It's an active participant thing. You can't just put up a job posting and expect people to come flooding in. So being able to align those two efforts of marketing and HR to not only attract more customers, but also attract the highest quality technicians, service providers, etc. Call center representatives you need great recruiting.

Alec Stevanovski:

Another thing I think that the the company in Arkansas did really well. Again, these are, they're pretty scaled players. So it's different if you're, if you might Have a handful of guys or handful of people working with you than if you're, they have, I'm not thinking the exact amount of employees they have, but they're a pretty decent sized company, but they've made such big investments into, for example, their facilities, their office, their shop. It almost looks like you're I saw a video of it or I was looking online, like it's a pictures and stuff. And I felt like I was looking at a satellite office of Google. Like literally, and their whole thing was, we've made such big investments in video in particular, both on the marketing side, but also we leverage it for recruiting that when people come in, first of all, they come in because they're attracted to it, to all, highest quality tools, high quality facilities, et cetera, et cetera, et cetera. That when people come in one, not only do more people come in than, maybe our technicians are coming into other companies, but when they come in, it's almost like a proof. I just want to see if this stuff is real because I've already seen so many of your video assets and all this stuff online. And now I just want to come see like what the heck this is all about in real life. And it's like a totally different, I don't know, to me it seems like a totally different way of looking at it because they're not going out there having to scrape and cloth for two or three people. They might have 15 guys come in and they have to pick or they get the opportunity to pick a few of them.

Evan Hoffman:

Makes sense.

Thaddeus Tondu:

And even like we've had some smart people on that do that, right? Like it's just so much easier when they have everything all in line. Shifting into the random question generator, probably one of our favorite parts of the show. The random question generator is brought to you by the folks over at On Purpose Media. Hey, that's us. If you want a second opinion on your marketing, onpurposemedia.ca/second-opinion, no obligation, no strings attached. We'll look through your online shit. We'll tell you if it's good or it's bad and what you need to do to fix it if it is bad. And then if you want, you can just hire us. But Again, no obligation. All right. Do you, Alec, want question one, two, or three?

Alec Stevanovski:

Question one.

Thaddeus Tondu:

Question one. What's your favorite joke?

Alec Stevanovski:

I can't say my favorite joke. I don't want to get in trouble. Oh, it's okay. We've said some

Thaddeus Tondu:

pretty horrendous things. I referenced fluffers just for the case For context. Yes.

Alec Stevanovski:

Oh God, I want to switch over to question two, if that's possible.

Thaddeus Tondu:

Okay. So question two, what's your favorite joke?

Alec Stevanovski:

I've actually, hold on. This is horrible that I don't have this written down or that I don't have this off the top of my head, but I actually wrote this down once and thought it was hilarious. Hold on. I'm totally breaking the rules, but.

Thaddeus Tondu:

It's okay. I can buy you some time and go with mine because I already know what it is, but What do you call an empty jar of Cheez Whiz?

Alec Stevanovski:

Empty jar of Cheez Whiz?

Thaddeus Tondu:

Yeah, Cheez Whiz. Cheez Some people think that's a little cheesy. I think it's a little crafty myself. That's never put a lid on it, don't worry. That's not bad. I also like the what's worse than having ants in your pants uncles.

Alec Stevanovski:

What is uncles.

Thaddeus Tondu:

All of those actually I heard on the one time I was riding public transit. I don't really ride it that often now that I have a knocking against public transit. I always had a vehicle. Actually my truck broke down. I was riding some old guy that looked like Santa Claus was trying to talk to these 10 to 12-year-old kids. And he is you guys got any good jokes? And he is I got some. And he spouted all of those off. And I just sat there killing myself laughing. I'm like, yeah, you know what? I'm writing those down. I'm keeping those in my memory bank. Kids, it went right over their head, but especially the aunts and the uncles one.

Alec Stevanovski:

I completely lost this joke, but I got to do it. One, one did came to mind or it's somebody told me, I said, what was it? What's Forrest Gump's password? What do you think? It's one Forrest one. It's actually better than I liked that.

Evan Hoffman:

What's worse than running with scissors?

Alec Stevanovski:

And running with scissors. Yeah.

Evan Hoffman:

I don't know. Scissoring with the runs. Push the boundaries a little bit, but not too far. Hey, it's not racist.

Thaddeus Tondu:

It's

Evan Hoffman:

not

Thaddeus Tondu:

derogatory. We're good. We're good. You mentioned a few times the economy and talking about the R word that people are throwing around right now. And some people are like, no economy. Debate last night, political shit coming up, like this potential for a colossal shit storm. What are you seeing on your end?

Alec Stevanovski:

Yeah. So that's a good question. So I think first of all, the economy is like a, an extremely complex thing that I, by no means, I'm not an economist. So I just want to preface it with that. I try to understand some of the big things that drive, what's happening, but by no means am I an economist. So I do want to say that, but yeah, I think the interesting part about it is that there are two almost like opposite viewpoints existing at the exact same time or two, you can find data that support. That supports the opposite things. And that's where it's, it gets interesting to me. So what I mean by that is, for example, if you look at it, obviously the past couple of years, interest rates went from near zero. Now they're, I think the fed funds are, it was five something percent or give or take consumer sentiment at one point over the past couple of years, just completely dropped. So how people feel about their personal finances, how people feel about the economy during COVID people, I think through a stimulus checks and number of the government measures, at least in the U S. Saved up or accumulated about two trillion dollars in savings, roughly during that period. That's all gone. They've spent it all. I think as of March of this year. That specific pool of money is gone. Earnings growth, so I think just like wages growth, or wage growth has slowed. And so you have all these negative things that exist. There's a election in two months, give or take. Election years always make people feel weird. Again, prices of just eggs and groceries and all this stuff is higher. And people say this is all bad stuff. But at the same time if you look at a five year chart of consumer spending, it's just gone up. Like people have just kept spending. If you look at the average price of a, excuse me, US home over the past five years, it's up over 50%. So people are richer who own homes, just, across the board. So you pair that with, if you look at the past six months, you zoom in a little bit, Consumer sentiment has actually started to tick up. You pair that with the fact that next week it's highly believed or it's believed for the most part that Federal Reserve is going to cut interest rates starting at their meeting next month. And I think people are looking at that and they're Look, they're projecting out, they're looking for, and they're saying, okay hold on. Things may start to come down, whether they do or not, different conversation, or how long, different conversation. But, so you have all this data that can say things are maybe a little rough. Again, interest rates are high, things are expensive. People have depleted their savings, they're not spending money on big ticket purchases, blah, blah, blah. But at the same time, they've just kept spending and they're worth more in their homes. And inflation has actually come down. The rate of inflation has come down since 2022. I think it peaked at around 9%. Now it's like right around three. And so then you have this like pool of Good evidence and, but they both are true. And so that's like the weird part about it and what makes it so complex. And I don't have the answer by any means, but I think that's, what's happening is that just that stuff is existing at the same time that all that, both of those things are true. And I think it's gonna be an interesting next two months. I think if the federal reserve does actually cuts or announced that they're gonna start cutting interest rates, I think that's going to be a good thing for sentiment, just people's general viewpoint on the economy. Now just because they say that on Wednesday, for example, doesn't mean that you're going to turn around on Thursday and things are going to be half the price or your mortgage rates are going to crack, go down the next day. It takes a little while. But I think that's generally a positive. I think the election makes it a little sticky. People are uncertain about what's going to happen there. And I think, that's reasonable. And I don't know, I'll pause there, just to answer your initial question.

Thaddeus Tondu:

Yeah, no fair. Yeah. And like you look at some of those the data points and you look at that now, the other one is conversely that household debt is at an all time high compared to earnings. And so you look at how, okay, consumer sentiment is going in the positive direction, but household debt is also going in the same direction going up. Okay and again, I'm not an economist. I actually haven't really looked into how this would actually relate into the economy. I just know that those two things are true and accurate. And so looking at that from a homeowner's perspective, or I guess an HVAC contractor's perspective, okay, sentiments going up, but so is household debt. What do I need to do to be able to position? What do I need to be careful for? What are consumers going to be telling me?

Alec Stevanovski:

No I think that, yeah, I agree with that. I think I was talking to a contractor in two countries, one in Ohio, one in Texas. And one of them said that they're having a gangbuster year and that their revenue, they're going to grow 20, 30, something like that percent just this year what they're budgeting. The other one goes every, almost not every, but so many of my customers are getting declined for financing and we're not, our sales are down. We're not, we were a little skeptical about how things are going to go over the rest of the year. And so I think I'm like, okay, that's interesting that those two things are existing at the same time. But I, yeah, I don't know. I think it's going to be, again, an interesting next two months. I think if homeowners start to get a little bit more confident about big ticket purchases in general, obviously that's going to be a benefit. And the reason I say that is because some of the banks, so for example, Synchrony public company, they announced quarterly earnings past one or two earnings calls ago, they had some real data and they said, look, people are, they're spending, they're fine, but they're not, they're hunkering down on large, pretty large ticket purchases. And so companies like that have a pretty good sense of what's happening because they're involved in the transactions throughout the quarter. So I'm going to be curious to read, companies like those, their next, core learnings causes to see if some of that stuff actually starts to take back up.

Thaddeus Tondu:

Yeah. And I think you are right. Like we have, we've seen that too, in terms of the marketing side of things and installs and replacements are replacements are down and repairs are going up. And just because again, it's the positioning and people have that uneasiness surrounding it, or maybe they're just strapped for cash. And positioning business and obviously looking at what your financing providers are, is there ones that can be able to help those individuals that have a lower credit score, et cetera, et cetera, things that are going to aid in that I still, it's going to be very interesting time up until November and then, oh, up until the end of January, it's going to be a very interesting time to say the least, not just economic wise, but political wise too.

Alec Stevanovski:

Yeah, there's also the I'll have to pull up the stats. But it's this idea of no matter who the president is, whatever happens, it's how people think it's going to impact their their finances or the financial part of their lives and how long that takes. And again, I have to pull up a stat, but also, the other thing to consider is regardless of who gets elected, like the next day, again, if this election is on a Tuesday, like Wednesday, things are not going to be either really bad or really good compared to Tuesday. It's gonna take time for things to iron out, and half the time, presidents obviously put forth propose things it needs to go through congress so there's all this thing it's not just because the president says, I'm going to do this, he actually gets in office. One, it may not even happen. Two, if it does, it may take nine months.

Thaddeus Tondu:

Or they're going to try it and nothing's ever going to happen in four years or eight years. It's just, it's politics. And and I think people, should I did a post on this and people started referencing like political leaders won't determine your level of success and then maybe not. Okay. People start referencing Germany and Stalin and Russia and Venezuela and okay. Very dictator communist countries. I don't think a U S is going to all of a sudden drastically fall to a communist country. It just won't happen. There's going to be the capitalist tendencies behind it. It's just a matter of, the Republican versus Democrat lines and where you sit, but those parties aren't going to magically just crater every single person out there, in my opinion.

Alec Stevanovski:

I think I generally, I think it's comparing, I understand that, but I don't think to your point, you can compare like something like a Venezuela to the U S and in that argument

Thaddeus Tondu:

or Russia or Germany from 1930, like it's almost a hundred years ago, completely different worlds.

Evan Hoffman:

There's, there's merit to it. Yeah, that history doesn't repeat itself, but it is related, right? And are there indicators as to, we could head in that direction? Sure. You could find indicators for just about anything that would indicate that, right? Like you had referenced before, Alec, with the economy itself, that there's two equally strong viewpoints and both make sense. The numbers make sense. And, we are heading into an unprecedented time in history, I think, when it comes to the economy and what we're looking at and staring down the barrel of, and who knows what we can do or which way it's going to end up going, but at the end of the day, in reference to your post that, you know, and Tommy referenced this last week too, when we had the special episode that we had on with him. At the end of the day, it's up to you to determine what it is that you're going to do about it. Are you going to sit there and wallow in the fact that you can't control these things and you're going to complain about it, or are you going to look at what is it that I can take control of, what is it that I can focus on and how is it that I can show up for my team today to instill belief into them that we're going to make it through this?

Thaddeus Tondu:

In the other part, I encourage it. I don't know if Alec, you've you probably know who Ray Dalio is. It's it was principles for a new world order. And he talks about the six different stages of an economy since like capitalism in the 1600s in the Netherlands. The rise and fall of economies in where they're at in the stage stages. And he's us is actually walking into stage six, which is divisiveness. And that's really what we see. And yeah, okay. You're going to maybe decline in a world power, but you're not going to just go away to nothing. Look at the UK. They were one of the last ones while they're still there. They still do great things. It's just, they're not into the heightened of, of where the U S is, but divisiveness isn't going to win the day unity is. And that's, I think the big message that needs to happen.

Alec Stevanovski:

He's a Ray Dalio is an interesting guy for sure. Yeah. Smart guy. Very smart guy. Very smart guy. Runs the world's largest hedge fund. He knows a thing or two.

Thaddeus Tondu:

Just a smidge, right? Thank you. Thank you, Alec, for coming on. And we're going to wrap up here. We could probably keep going on these topics or other ones, and we didn't even get to the regulatory topic, but we want to be mindful and respectful of your time. As well. So thank you for taking the time to come on in a chat with us. Of course, if you want to get to know a little bit more about Alec, you can get them home pros. news is we able to get out to him that you can also reach him via email Alec, so it's Alec with a C at alecreadhomepros.com and check them out on linkedin.com/company/readhomepros. And we will of course, put these in the show notes for y'all later. But before we go, Alec, we've got one final question here for you. Let's do it. What is one question that you wish people would ask you more, but don't?

Alec Stevanovski:

What is one question I wish people would ask me more, but don't? I would say why do you, so I think about risk a lot. Just in business, just like with what we're doing and I think that not enough people ask me or just ask in general how people who seem to be like taking risks on things view them as non risks because they don't. that's something I wish people would ask me because I think I have a pretty good answer for that. I don't know, people don't ask me that. They're like, Hey I'll tell my friends Hey, I want to go try this, media company. And I think I have an interesting angle and I think it could work. And I understand the cost behind it, blah, blah, blah. And they're like, that seems pretty risky. I was like, eh, it's not really. So people don't ask me that enough. I don't know. It's an odd answer, but that's what came to my mind.

Thaddeus Tondu:

What's your answer to it?

Alec Stevanovski:

I think it's very dependent on the individual and so I'll just, I can only speak to my case now, but I think from a, most people, I think when they're saying something is really risky, it's because you could be in a lot of financial loss if it goes wrong. So speaking specifically to financial risk I think that. If you can figure out like one on the financial side, how to essentially hedge yourself financially so that even if it does not work out, whatever the thing is you're going to do, you will still be even wherever you are from a personal financial standpoint. So whether that's by saving up X dollars before, And you know it's going to last you Y months before you go to try the thing and you say, I'm only going to give it Z months so that even if it doesn't work out, I know exactly how much burn I have, for example, like things like that. And I think the second thing is, I think when people try things, they actually, even if it fails, they actually end up as a kind of in a net positive position just because of one, the people they have met throughout it. And then the things they picked up learnings and nuggets wise that I would argue you're actually, even if it fails, you're probably actually five steps ahead of where you were. You didn't do the thing in the first place.

Thaddeus Tondu:

It also, one's own individual risk tolerance. I would look at something like the Colby A test, for example, where they measure the quick start and your quick start is your risk tolerance and your risk adverseness. Generally entrepreneurs are really high in quick start in cause they're open to change, they're open to try things, they're open to risk where no others. And again, completely fine if they're not a risk person, if they're risk avoidant, if they're, then that's fine. They don't like change. They don't like risk things. Been great. And it's the, again, that you said, depending on the person, depending on the situation. Good answer. Love it. Cool.

Alec Stevanovski:

Yeah, no I appreciate you guys having me on. Seriously. It was fun.

Thaddeus Tondu:

Thank you, Alec for coming on. Thank you to our sponsors, free to grow Chirp, Elite Call, On Purpose Media. I give those guys a check and until next time.

Evan Hoffman:

Cheers.

Thaddeus Tondu:

Well, That's a wrap on another episode of HVAC Success Secrets Revealed. Before you go, two quick things. First off, join our Facebook group, facebook.com/groups/hvacrevealed. The other thing, if you took one tiny bit of information out of this show, no matter how big, no matter how small, you're All we ask is for you to introduce this to one person in your contacts list. That's it. That's all. One person. So they too can unleash the ultimate HVAC business. Until next time. Cheers.