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34 minute read
What if you could do to construction what Amazon did to retail? Or what Uber did to taxis?
Mark Kasdorf has an ambitious vision to do just that, and his journey starts with heat pumps.
Mark is the founder and CEO of Forge, a venture-backed, mission-driven startup tackling one of America’s biggest challenges: the skilled labor shortage in the trades. Forge’s secret? Recruiting great talent, training them quickly, and empowering them to lead their own crews fast. Really fast.
In just 18 months, Forge went from installing its first heat pump to running over 10 crews across New England—all through organic growth, no acquisitions. That’s a pace unheard of in the HVAC space, where reaching 10+ crews can take years.
Mark describes HVAC as the “goldilocks trade”—challenging enough to require specialized training, but more scalable than electrical or plumbing, which require more licensing. Within HVAC, Forge is laser-focused on heat pumps, a decision that reflects the size of the market, profitability, and growth prospects.
In this podcast episode, Mark shares fascinating insights into:
• Forge’s rapid journey from one crew to many.
• His roadmap for scaling to $10M, $100M, and beyond.
• Why the trades can't be “gigified” and what that means for the construction industry.
• Lessons learned from other startups’ failures to disrupt the trades.
• What makes Forge both similar to and different from a traditional heat pump installer.
Whether you’re curious about how venture capitalists see the HVAC industry, or you want a fresh perspective on heat pumps, this episode is a must-listen.
Listen now to hear why Mark believes HVAC is the ultimate trade and why heat pumps are at the center of it all.
Show notes
Transcript
[00:00:00] Mark Kasdorf: You can't gigify the trades. I don't think it will ever be possible. Uber was able to gigify ride sharing and the difference between Uber and construction, we'll, we'll stick with heat pumps. the government spends billions of dollars a year to train drivers. Virtually every able bodied human is a potential driver. they still were cash flow negative for like 20 years and it took them 5 billion dollars to build that business. By contrast, if you want to gigafy the trades,I need a crew of two to three humans with very specialized skills and a $50,000 rig to show up with $5,000 to $10,000 worth of materials, shut someone's heat off, and do a complex surgery to their house over a two day period. That is two to three orders of magnitude more complicated than what Uber does.
[00:00:50] Ed Smith:Welcome to the Heat Pump Podcast. Our goal is to ensure the transition to heat pumps goes well for everyone. Homeowners, contractors, and the planet. Today we interview Mark Kasdorf, CEO and founder of Forge. If you haven't heard of Forge, then you're probably not in Massachusetts. But if Mark has anything to say about it, you'll know them soon.
Mark is building a heat pump focused, technology first, contracting business. He wants Forge to be a multi billion dollar business with a training center and a presence in every zip code in America. Mark is a repeat technology entrepreneur, so he's an interesting mix of Silicon Valley meets contracting.
18 months ago, Forge installed their first heat pump. Today, they have over 10 crews operating in Massachusetts, and they haven't acquired anyone. So that is a really fast scale up. If you're a heat pump contractor, you will not want to miss this episode. It gives you a sense of the size of the ambition and the speed of some new players in the space.
Whether you've heard of Forge or not, there's a lot you can learn from Mark's perspective in how he's tackling Forge and heat pumps. Enjoy the show.
[00:02:00] Ed Smith: Hello, and welcome to the Heat Pump Podcast, I'm Ed Smith.
[00:02:03] Eric Fitz: And I'm Eric Fitz. We are co founders of Amply Energy.
[00:02:06] Ed Smith: So today we have Mark Kasdorf with us. Mark is the founder and CEO of Forge. I can say with confidence, we have never interviewed any company quite like Forge on the Heat Pump Podcast. So I think this is going to be really interesting. So Mark, would you start just by telling us a little bit about Forge and then we'll dig in much deeper to you and Forge.
[00:02:27] Mark Kasdorf: has, I'm a very mission driven person. And we've got a very specific mission, which is to build and power the next generation of heat pump labor in America. we come very much from the labor side. So what that means in terms of practice. We were founded about three years ago.
We actually did not start in heat pumps. We started more broadly in the trades. we did, tested some of work in windows and insulation and, carpentry and found our way to HVAC and more specifically heat pumps about a year and a half ago and got hyper focused and excited about heat pumps. What we do today is we are vertically integrated from training through installation. So we, what makes us a little different than a lot of heat pump companies is we specialize in bringing Gen Z into the trades, training them, hiring them, and running an awesome heat pump installation company with a relatively young labor force.
The average age in our company across the entire labor force is 34, we hire a lot of great senior technicians, but we're really good at training and getting young people leading a crew as, as quickly as they're able to.
[00:03:37] Ed Smith: Tell us about you for a second. who are you? What's your career been like? How did you get to Forge to the point where you were founding Forge and focused on this mission?
[00:03:45] Mark Kasdorf: entrepreneur. I've ever since I graduated, college, I've been starting companies. I've, almost never worked for someone else. started, my first software company when I was 23 years old. that failed, blew up. and, out of the ashes of that, I started my second company about a year later, which was a mobile development firm, so not anywhere near the trades.
we built apps. We built Fidelity's mobile banking app. We built stuff for Bose, Procter Gamble, Whoop, a whole bunch of companies, large and small. that company was all bootstrapped, never raised a penny of outside capital. It I'm learning now, it was similar to an HVAC business in that we were a services business.
Utilization was everything. we had relatively expensive people. They were software developers instead of technicians. But we were scaling a business model that is very similar to what we're doing today. Bootstrapped that business from zero to 25 million in revenue in about six years. And in 2017, sold to Accenture. A giant consulting services firm.I stayed for a few years, worked for someone else for the first time. And in 2020, had the idea for Forge. The quick genesis of Forge, was I was doing a home project, just like a zillion other people. the experience wasn't awesome, just like a zillion other people. And I started to do a whole bunch of research on. like, why? Like, why is it that my dad had on speed dial, an electrician, a plumber, a handyman, a carpenter, someone that could build a house, someone that could do big projects, small projects. when he called them, they were like there the next day.
it was a really good experience for my dad. And I've struggled. some of the people in my Rolodex are like that, and others aren't, and they're all older, which means I'm worried that they're going to retire. did a bunch of research and learned that we've got a pretty bad shortage of tradespeople in the U. S.and anytime you get a shortage in any market, it kind of messes with the labor dynamic and the, symptoms of a labor shortage can be low quality, can be long wait times, can be, all the things that we, I think, as consumers are feeling today. high prices.
[00:05:47] Ed Smith: Prices.
[00:05:48] Mark Kasdorf: I originally wanted to start a software company. raised a little bit of outside capital, raised a seed round from some investors to start a software company to help solve this problem, what I really quickly realized is a, another symptom of the shortage and the aging labor force was if you're a 52 year old HVAC technician who's booked out four months, you don't have a whole lot of incentive to buy software. You don't really have a problem that software solves. in this moment in time, the government has a problem, homeowners have a problem, society has a problem. The climate has a problem. Electricians don't have a problem. They're in a really good spot.and I decided that I did
[00:06:30] Ed Smith: Yeah.
[00:06:31] Mark Kasdorf: one of a thousand companies trying to sell software. To trades people that didn't really want it or need it.and instead decided to go right for the jugular of the problem and figure out training and more specifically, not training for other people. Cause I'd also didn't think that was a great business model training to build a vertically integrated trades company.
[00:06:52] Eric Fitz: Mark, that's super interesting background and journey that got you to where you are today.talk a little bit more about, how you moved from, The sort of broader trades to end up saying let's really be hyper
[00:07:04] Mark Kasdorf: Yeah, absolutely. So
[00:07:05] Eric Fitz: heat pumps.
[00:07:06] Mark Kasdorf: I'll start by saying, I think in the early days of Forge, I was, ignorant and arrogant. and we wrote this mission statement to build and power the next generation of trades labor. And in my mind, like the trades were this, reasonably homogenous thing. it did not take me too long to figure out that I, an electrician and a carpenter are about as similar as a lawyer and a doctor.
Right. They both have a bunch of training, both, like 10 percent of their education overlaps, maybe 20%, like they both need to know how to write, might do some basic skills, um, but a master level doctor, a master level lawyer, a master level plumber, and a master level carpenter are all like really different, do very different things. so we, we pretty quickly that we needed to specialize.and I'm going to, I don't want to go through the nitty gritty, but,what I, what led us to HVAC, is I calla Goldilocks trade. And when I say Goldilocks, on one side of HVAC, you've got carpentry. And to call yourself a carpenter, you need a hammer and a pickup truck. That doesn't make you a good carpenter. but it is relatively easy to hang a shingle. There's a lot of competition. There's a lot of noise in general trades, On the other side of the Goldilocks territory, you've got, electrical and plumbing where it's like 8, 000 hours.
and keep in mind, my mission is to build and power the next generation of trades labor and probably get to growth and how we think about growth, I want to build a really big company and try to solve big problems for the country and for people. And the whole electrical apprentice system doesn't allow you to grow fast unless you're purely recruiting from outside. I can't create electricians. HVAC sits right in the middle. it's hard to get into. It's like there's an expensive rig, and there's a, sheet metal permit, and there's refrigerant permits, licensing, and there's permits to pull, and there's system design. it's hard, but it's not hyper licensed and impossible to create supply.
And that's what led us to heat pumps. I think the other thing that led us to heat pumps is, the, Climate has never been my driving motivator, but man, does it make me happy that the work that we do also does some good for the world, if all things were equal and I could build the next generation of heat pump labor or the next generation of oil rig labor, like I'd rather do heat pump labor.
[00:09:33] Ed Smith: Love that. Now, when you were introducing Forge before, you said we're different because we're vertically integrated. how did you define vertically integrated
[00:09:44] Mark Kasdorf: know
I think the people that listen to the podcast, every HVAC company is vertically integrated.
[00:09:49] Ed Smith: that's what kind of where I was going. Yeah.
[00:09:51] Mark Kasdorf: where, you know,they think we're Uber, And I'm like, no, we're not Uber.
[00:09:54] Ed Smith: Uber doesn't train people to drive. Uber doesn't employ people. So when I say vertically integrated, it's to separate me from the Ubers of the world. Where I think we are a little bit different than your typical HVAC company we've made, particularly recruiting Gen Z. a core competency, like how do we meet them where they're at, know what they're looking for, know how to find the good ones, then figure out how to train in an efficient way. And when I say train, like our, one of our internal KPIs is a number of jobs to lead a crew. it's a big deal when someone gets their own truck and they're now leading a crew. and we want to do that as fast as humanly possible in a way that still generates really high quality. It's super helpful to know that when you talk about vertically integrated, you're comparing yourself to like other tech companies. you said a couple of things that I think as well. Makes Forge unique. One is how you think about building the HVAC side of your business.
But then two is the sort of the scale and the size of your ambition, which you said before, you want to build a really big company. Paint us a picture. if you succeed, what is Forge look like in X number of years down the road, when you've solved this labor problem, built a very big company and still have a vertically integrated.
Construction company that solves a whole bunch of problems for the government, for homeowners, I'd love to know what that looks like.
[00:11:11] Mark Kasdorf: a two time scales. I'd be like a eight year and a 28 year.on an eight year time scale, create an end to end system. From recruiting, through system design, through deployment, through a great customer experience, that I can go replicate in most of the area codes in America,
I want there to be a Forge training facility and forge as an option to install people's heat pumps, everywhere.and that, that's a five to eight year timescale on more of a 28 year timescale, and this is more when I talk to investors. I view I compare us to Amazon a lot and I think Amazon started with books and books back in 1995 was about a 500 million market. We're starting with heat pumps, which is like a 50 billion market. So I think we've got a lot more headroom and heat pumps than Amazon had in books, on a much longer time scale, I want to do for the trades what Amazon really did for,commerce, which is be the one relationship a homeowner needs to improve their house, whether, eventually, whether that's a new HVAC system or a new kitchen or plumbing or a service call or whatever it is. I think we're in a moment in time where technology and some other things enables that company to start being built. And I don't think you can actually build it 20 years ago. I think today's the right time, just like you couldn't build Amazon in 1985.
[00:12:38] Eric Fitz: what is your relationship in terms of the training journey with, institutions like, community colleges and technical institutes, that kind of stuff.
[00:12:47] Mark Kasdorf: we don't charge for training. We really, we want to hire everyone that we train. so those are all feeder programs for us. We've got great relationships with local trade schools, with local high schools, with some of the nonprofits that work on placement of various disadvantaged communities. all of these can come into our program. Our program is pretty quick. from the day you start, you get paid on day one at Forge. you're in the field within two weeks. You're, gross margin positive within four weeks. for a lot of people, you're leading a crew within a year. you can't get, it won't be weeks to lead crews. but certainly within a year, we've got a lot of our young people leading their own crew.
[00:13:20] Eric Fitz: what is the, what are the unique things that you're doing that allows them to go from, brand new getting in the field to being gross
[00:13:27] Mark Kasdorf: yeah. So I think
[00:13:28] Eric Fitz: quickly?
[00:13:29] Mark Kasdorf: two, two things that allow that to happen. First one is selection of the people. I read an article once that there, there's, we all talk about IQ. And IQ is intelligence. There's actually eight different types, distinct types of IQ, and you can be really high on one and really low on another,
Where your body is in space is its own type of intelligence. Like my son could do a front flip into a pool at seven years old. I can't do a front flip into anything at any point in my life. Like he's just better. That I am. He's got a natural gift that I don't have, and the ability to visualize something in space, hand dexterity, like these are discrete forms of intelligence,that different, some people are really high on, some people are really low on.
So I think step one for us, is to figure out how to source people are high on the right kinds of intelligence.and I think very closely associated with that is, find people that aren't just mechanically inclined, but mechanically interested. So when I ran a software company, one of my favorite questions was like, Hey, what's your side project? And it wasn't necessarily a disqualifier if people didn't have one, but percent of the people we hired, like a side project is an indication of interest in building software. And we wanted people that were passionate. So first question I always ask a trades person is like, Hey, what's the last thing you built for yourself?
A birdhouse, a playhouse for your kids. what was the last project you did? And if they don't have one. like there's a good chance that they're not going to really enjoy being in the trades. so I think selection, if you find people with interest and a high ceiling and you can test for that, you're like seven tenths of the way there.so what comes after that, I think, and I listened to one of your other podcasts and they hit this pretty hard. if I was trying to do. HVAC, When I say like HVAC,to be a crew lead, to have your own truck, you need to be able to walk into any home in New England with any type of heating system, diagnose what may or may not be wrong, replace, fix, install.
I can't do that in four weeks. I can't do that in five years, that's a lifetime to become that kind of technician. we only do heat pumps, So my goal within four weeks is to have you able to have a young person able to be, depending on the size of the crew, the number two or the number three person.usually initially on a ductless crew, you work your way up to a ducted crew. We've broken the entire trade down into what
I listen to a lot of AR and you can write a lot of conversations but not a lot of I don't keep,I mean I, it is still a good thing. There's a lot of things that, 24 year old hands and 52 year old hands, like they both carry stuff and neither is going to be more efficient with carrying.
So it's all about how do we like make our job sites efficient and allow young people to do the things they can do and learn very quickly. And then get a lot of on the job training as they work their way up to, more advanced stuff, say, commissioning a system.
[00:16:32] Ed Smith: Super helpful. I've got a three part question. I'm realizing we didn't cover some more of the basics of Forge in the beginning. Cause I want to draw out.
[00:16:43] Mark Kasdorf: Yeah.
[00:16:43] Ed Smith: Forge is and how you differ from other heat pump installers that exist all across the country. So some basic questions, like where do you guys operate?
How big are you guys? Like just paint us that sort of, basic level of
[00:16:59] Mark Kasdorf: we're
[00:16:59] Ed Smith: Forge today.
[00:17:00] Mark Kasdorf: yet. we're based in Massachusetts. I think to 100 percent of our revenue is in Massachusetts, although we'll be doing work in other New England states very soon. We're up to 10 or 12 crews out in the field. we're installing anywhere from 10 to 15 heat pumps a week. so I don't know how big that makes us in comparison to other companies. I don't think we're huge. I don't think we're top 10 in the state or anything. I think what makes it slightly more impressive is we installed the first heat pump in the history of the company last April.
[00:17:31] Ed Smith: So you're like 18 months in
[00:17:33] Mark Kasdorf: Yeah.
[00:17:34] Ed Smith: to 10 or 12 crews. Okay. Yeah. That's fast.
Part two is,aside from the training, although that is clearly a core differentiator.
Are there other things about how you operate that make you different from what would be a traditional HVAC company today?
[00:17:48] Mark Kasdorf: let me start with a framework and then zoom into what I think makes us different. I'll stick to the trades, but I think this is true of any company,that delivers a service. you can break that service down, the delivery of that service down into three parts, people, process, and software.and I think every trades company that's good, Kind of nails people, Like we're not unique in that we train people. We're not unique in that we deliver, I think, an incredibly high quality service. and that, that's the people side. And I think we're great. I think we're best in class, but I don't know that we're unique. the next one is process. Here. I think we're more differentiated, not than everyone, but then a lot of companies. I think a lot about process. we, I'll make a silly example. Snow stands. I think a lot of HVAC companies assemble snow stands with 50 an hour technicians at a job site. And a better process would be to assemble in the workshop with a 15 an hour technician. Resource and a better one still is to hire and buy them preassembled and have them sitting like in a container where we bought, 1500 of them all at once, So we think about scaled processes and how do we remove costs from jobs and how do we make people safer and how do we, like, how do we use process and then the last piece is software. Every single part of the Forge journey, and I think of Forge in kind of three journeys, there's the customer journey, there's the job journey, and then there's the pro journey, Over the course of both a week and a career, I guess it's four journeys. each one of those is as tech enabled as we can make it. so from using best in class software tools like Amply there's a lot more software at Forge that I think you'll find in most trades companies.
[00:19:39] Ed Smith: Great answer. And so the thing I was comparing that in my head to, we've gotten close with a lot of
[00:19:47] Mark Kasdorf: Yeah.
[00:19:48] Ed Smith: heat pump entrepreneurs, and To a T, they all have significant ambition, right? These guys are entrepreneurs through and through who want to work for themselves and build a good lifestyle in a business. And, um, I haven't met anyone who said they wanted to be in every zip code.
So that is new. I was thinking about like, many of them hit a ceiling at some point. There's a few nationwide. Contracting businesses, but there's not many and sort of more happening with these PE roll ups, but they all hit a ceiling. And so the question underneath my question was like, how do you guys bust past the ceiling?
But it sounds like it's through, it's through people, processes, and software. Like if you are laser focused on hiring the right people and training in the right way, unbelievably focused on driving costs and efficiency through your processes, and then being like a Silicon Valley tech company in terms of your ability to.
Implement software, you can, you can shatter those ceilings where you hit a manager's capability to scale like in their head, right? That's my assumption. I, I guess my question is, did I put words in your mouth or is that accurate?
[00:20:57] Mark Kasdorf: those ceilings. Um, they're not ceilings, they're plateaus.
Every process you build breaks every factor three, lemme take a simple one. Payroll, like you're one man in a truck. payroll is collections. Like I, I collect money and you probably don't even need to set up a company if you don't want to.
If you take cash, You go from one to three people. Everything changes. You're, the whole process you use to pay yourself, it doesn't work for three people. you can hack something together. It can be relatively simple. go from three to 10 people. Like now you need health insurance and 401k and like you need an accountant and like the whole process changes. You go from 10 to 30. Changes again. So the reason I bring this up is that's every process system design, the system design process that works for doing two jobs a week is the owner does all the system designs You want to go to six jobs a week?you need a new process. You want to go to 60 jobs a week. You need a very different process. And I think people make two mistakes. One reason people hit plateaus is because they don't want to rebuild from scratch a process that was working.they don't actually want to grow. And that's like super mature. not everyone should want to grow to infinity. the other mistake that I think, People make is they try to design a process that scales to infinity. I tell my team all the time, you don't need to build a process that works for 500 technicians. Like we're 25 technicians. We need a process that scales to 75 and we're going to rebuild the whole thing again at 75. I think focusing on like, where am I now? I'm at five techs, build a process that comfortably goes to 15. And when you get to 15, have the like awareness, like now it's time to do this again. The other reason I think that companies hit plateaus, and it's heavily related to that whole framework, is CEOs, I think, have a certain range,
And it's, it can be a lot bigger than a factor of three. but it is rarely the same human that can take a company from zero to a million. can take it from a hundred million to a billion. Those are very different jobs. and, I know that I've taken a company to 25. I think I have the range to go to a hundred. If Forge is fortunate enough to get to a hundred, I'll be one of the first people to say am I the right guy to take us from a hundred to a billion? I've got a certain skillset and a sweet spot, and I'm really good at some things. And it may be very different things that I'm not good at to keep that growth going.
Thank you. So I think it's a combination of all of that, that when a company hits a plateau, they may or may not have the right CEO, they may or may not be aware of which processes need to be rebuilt, which ones need to be retooled.
[00:23:43] Ed Smith: That was only part two. All right. Part three of my question.
Venture capital and Silicon Valley and tech has a lot of skeletons piled up of companies that tried to tackle the contracting world the way you are. So why is now or why is Forge different? I think that's very, I'm personally intrigued by that. At
[00:24:10] Mark Kasdorf: Valley wants to solve every single problem for humanity with one of three business models.they want to be SaaS. They want to sell people software. That's like a great scalable business model. they can't do SaaS, they want to gigify the thing. and if they can't gigify the thing, they want to turn it into a marketplace. And I, those three core ways that one makes money, other than e commerce, which like, we'll put that off on the side. Like I just described 98 percent of every software, I guess advertising is maybe a fourth, like there's a couple others, but if you want to tackle the trades, you're either SaaS, Gig, or Marketplace. you can solve point problems with a SaaS software platform. but you've got to find people willing to use it. Now I'll go over to marketplace. Marketplaces is basically the yellow pages,
Thumbtack to me is just an evolution of the yellow pages, I'm a homeowner. I need to go. I want a place where I can go that's going to present me with three to five options. And marketplaces are fine. they were, they increased market liquidity, but they're not really going to change the world.
They're not going to solve a supply problem. They're not going to solve, they're not going to save us from climate change or increase supply or do any of that. gigification, like I, I, this is where the bodies are. This is where the skeletons are. This is where the problems are. And I talked to investors a lot about this.
You can't gigify the trades. it's, I don't think it will ever be possible. you can, Uber was able to gigify ride sharing and the difference between Uber and with heat pumps.the government spends billions of dollars a year to train drivers. there's a whole bunch of infrastructure set up. So Uber is starting out with virtually every able bodied human is a potential driver. the complexity of the service that Uber needs to deliver. is to deliver someone with a completely generic skill that everyone has to point A, to pick someone up and bring them to point B. they still were cash flow negative for 20 years and it took them 5 billion dollars to build that business. By contrast, if you want to gigafy the trades, instead of a driver taking someone point A to point B, I need a crew of two to three humans with very specialized skills and a $50,000 rig to show up with $5,000 to $10,000 worth of materials, shut someone's heat off, and do a complex surgery to their house over a two day period. That is two to three orders of magnitude more complicated than what Uber does.
Not going to do it with a gig economy company, not for a very long time, if ever, And this is why I talk about vertical integration. you're going to do it the way Forge is doing it, the way every HVAC company does it,
you're going to build a great labor force and you're going to build great processes and you're going to deliver a great service. And these San Francisco companies that are arrogant enough to think that every HVAC tech technician is as similar to each other as every Uber driver. that is not the case.
[00:27:02] Ed Smith: Awesome. Thank you for that arc. I actually was like personally curious in those three questions. That was extremely helpful.
[00:27:10] Eric Fitz: just to circle back, I love that insight around the plateaus, and this, we call it the rule of three when trying to scale that basically process has to be,rethought, each time you scale up by a, multiple of three. My own kind of personal insight around that is that one of the other challenges that we all have of why these plateaus happen is that you're dealing with like the sunk cost fallacy.
You mentioned that you get to, you have this process that was working great. You spent all this time, blood, sweat and tears building something that was really working and it, it can be hard to say we're going to shut down that process and do something new because you feel like there's a bunch of money and time that was invested there.
[00:27:51] Mark Kasdorf: And the other big challenge to overcome, whether you're HVAC business or Yeah.
[00:27:56] Eric Fitz: and I'll say that Ed and I certainly have experienced the, the challenges around each time scaling,
[00:28:01] Mark Kasdorf: But I, and,
[00:28:02] Eric Fitz: sure.
[00:28:02] Mark Kasdorf: I know a lot of the listeners this podcasts are HVAC entrepreneurs. I'll give maybe a piece of advice. I think advice is at the end, but, I give a piece of advice, which is, the one to three.struggle through, get there. If you've got aspirations, if you're at three and you want to go to 10, I personally, I would invest in a CEO coach or a CEO peer group, or, some kind of business training, like you don't need an MBA.
you don't need to go to night school for two, three years. what you need is the pattern recognition of someone that's done what you're doing, has gone through those challenges. And they're remarkably similar between jobs. Like you don't need to be in an HVAC entrepreneur peer group, Probably services business in general, construction would be more, slightly more helpful, but the problems that you face when scaling from three humans to ten humans are remarkably similar across many different types of businesses.
[00:28:55] Eric Fitz: 100%. great advice.
[00:28:56] Ed Smith: walk us through the anatomy of a Forge job. Where does it come from? Who's your typical homeowner on the other end? and then what's the homeowner's experience? from lead all the way through completion and customer satisfaction on the other end.
I'd love to know what that looks like.
[00:29:13] Mark Kasdorf: not that much different, other than a bit of tech enablement than a lot of the people you've had in the past on the podcast. we have two different sources of customers.one is we call them partner jobs. So someone else sold a heat pump to someone.and they're going to have us come in and either augment their labor or do the job or get that job done.
I'm not going to name any of our partners. but, we've got, four or five different companies in the New England area that are good at selling heat pumps and they often need some help installing those heat pumps.
And that's part of the way that we kind of got started, and, and built, you know, got a lot of our, our people reps, like, let's, you know, we, we want to be doing work. Um, more and more of our revenues, is direct to consumers. So we, someone finds us, or we find someone that wants a heat pump. They get referred to us, or they find our website or just like anyone else.
And they become a lead just like anyone else. and we take them through a journey. that journey starts with responding as fast as humanly possible, preferably within minutes. in whatever way that they reach out to us. Um, scheduling a qualification call. asking a bunch of questions.
Scheduling a site visit. Generating a quote. and then hopefully getting that quote signed. once it's signed, it moves into projects here, move into system design, depending on the complexity of the project, the site visit that the salesperson does captures a bunch of information. And what we're, we're getting more and more sophisticated about how we do this, let's oversimplify a bit and say there's a type one complexity jobs, type two and type three. Type one complexity jobs can be done just from the data collected at the site visit. Type 2 complexity jobs are we're going to require a second site visit, but probably only by one person and to having looked at that packet that's generated from the first site visit, to answer very specific questions. And a Type 3 complexity job, like we just got to send a master HVAC tech and a master electrician. Like this, this, this job's going to be compliment complicated and we got to do like very formal system design. So we've got the system design phase. Once the system's designed and we, you know, we've got a signed contract and a deposit and we've designed the whole system.
We know exactly what we're building. every project has a PM through that whole process. It gets added to the schedule. Day of job is, its own little journey and experience of, showing up and doing that job as efficiently as possible. And, here I think some of your other guests have done an amazing job of breaking apart everything, through invoicing.
So I won't go deep. Our process is not substantially different than anyone that does a high quality job, day of install through invoice.
[00:32:04] Eric Fitz: that type one, type two, type three complexity, who's responsible for identifying what kind of situation you're in? Is it that salesperson that's making that first call? hey, this is like clearly a type one or whoa, we should, this is like a type two. We need to bring somebody back for the, for another site
[00:32:17] Mark Kasdorf: It's mostly the salesperson. It's a little bit of a marriage, and I oversimplified slightly, but it's a bit of a collaboration between him and the salesperson. And the system design team, which has like mostly master technician level people, the, may be a phone call while that site visit is happening to the master technician.
There may be a FaceTime call, like we, they may identify there Hey, this is definitely a type three, make it quick on the site visit. You don't even have to capture the stuff. I'm going to have to show up. we might identify once we look at the packet that the salesperson thought it was type one, but it's really type two. we don't always know with perfect clarity before we walk into the house which one it is. but the sales team, has a pretty high degree of accuracy in identifying how complex a job is.
[00:33:03] Eric Fitz: Your partners that you're working with, are they doing the design work? are they handing the lead off to you and you're doing the
[00:33:08] Mark Kasdorf: Yeah,
[00:33:09] Eric Fitz: it varies from partner to partner. And some people think they do design work and they don't actually do the design work. And we're redesigning the system. It varies and we're getting more and more sophisticated about how we charge and,do we charge for design work? There's some things that we haven't figured out part because we didn't need to scale to 10 crews.
[00:33:26] Mark Kasdorf: But I think to go from 10 to 30, we're going to have to build some new process to get there. but it varies from partnership to partnership.
[00:33:33] Ed Smith: that line you just had, some people think they do design work, but they don't.
For your partners who Think they do design work, but they don't. What pieces are they missing
[00:33:44] Mark Kasdorf: I
[00:33:45] Ed Smith: that would take it to your level?
[00:33:46] Mark Kasdorf: your traditional master technician that runs a single crew and he's on that group. He's selling, there is no design phase, he's got a well stocked truck and he can solve through 30 years of pattern recognition, every single problem that might come his way, day of install.
There doesn't need to be an install packet. that's a process you don't need when you have one crew. And the system design is organic. Like it's just an expert knowing what to do. The other extreme is, your like fancy Silicon Valley startup that says, you know what? know the year the house was built. We know the code. We know exactly how many electrical permits have been pulled. We can design this whole system from Zillow listings and permit data and like smart boys that write software like code it all up and like boom system design's done. And then they send someone to do the job and it's Oh, they didn't pull four electrical permits.
Their box is already completely overwired. None of that was on the online information. They put a small addition on that wasn't in the online information. They didn't follow code when they built the house in 1986. That wasn't in the online information. so I, I think that it's a really, it's hard. So now to.I think the better the system design, the more junior the lead can be. So we're obsessed with system design because when I have a really tight packet and a perfectly sized system, we know exactly where the line set is going. I can hand that to a 26 year old who has been on at least a hundred jobs. And, they can do that. If you call system design done by specking out that it's a three ton system and that's well sized for the house, and the technician needs to figure out where the line sets run in real time on the job site, that ain't gonna be a 26 year old who's done a hundred jobs. So this kind of goes to like, how do we scale and how do we have a younger labor force?
we take things that normally a master would do on the fly and we shift them into a process and offload some of that expertise to a beefed up system design process. So I think some of these fancy Silicon Valley companies, if they're handing jobs off to small mom and pop master technicians, it might actually work. Like maybe they, they probably can just figure it all out and solve all the little problems, but we're building a little bit more of a scaled process.
[00:36:28] Eric Fitz: It's so insightful, Mark. I love the way you broke that
[00:36:31] Mark Kasdorf: Sure.
[00:36:31] Eric Fitz: I'm taking notes for myself, for product ideas. That's fantastic.
Mark, I'm just, this conversation has been just fascinating. I think there's, you have so many unique insights into this industry and some incredible learnings from your experience over the last many years. I guess I'm curious from your perspective, if you could wave a magic wand,what would the problem that needs to be solved that would just transform your business or transform the heat pump industry?
[00:36:59] Mark Kasdorf: my dad has a saying, which is if it were easy, trained monkeys would do it. and I like the fact that it's not easy. that's why there's a cool company to build here. And that's what makes it. Fun. so I don't know that I would wave a magic wand. I do, so I answer your second part of your question, which is for the industry. If I could wave a magic wand, I would educate everyone in America that heat pumps are pretty awesome.the Mass Save program went into effect in 2019. In 2019, the statistical data that we found was there were a total of 6, 000 heat pumps installed in the state of Massachusetts in 2019. 2020, 6, 000. 10, 000 credit, 6, 000 heat pumps. In 2021, 6, 000 heat pumps. 2022 is 10, 000 and it was in 2023 that we hit like 25, like it started to take off, And the rebate, if it was just the money. It would have happened a lot sooner. I think what the money did is it caused everyone in Massachusetts to slowly over a four year period educate themselves that he pumps work when it's cold. they're a little bit more expensive than a simple equipment swap, but they're not a lot more expensive, especially with the rebate. and if I could do one thing for America, I would have everyone in the country instantly be aware heat pumps are really great and understand
[00:38:25] Ed Smith: Forge is a very unique company. Knowing who our audience here is for the pod.
if I was in their shoes, listening, I'd walk away thinking like, how do I think about Forge? I would say, I'm going to steal some of that and use that to think about how I scale my business. But I'd also start to think about your local community bookseller, how they thought about Amazon.
how would you guide someone listening, what should they think about Forge?
[00:38:52] Mark Kasdorf: didn't use the Amazon analogy for that exact reason, because it does sometimes freak people out. So there's a big, big, big difference between what we're trying to do and what Amazon did. there was no shortage of ways that one could get books 1995,
It was very much a zero sum game. If you bought a book from Amazon, you didn't buy it from your local bookstore. Bookseller. that is not the world that Forge lives in. I don't ever want to sell 100 percent of the heat pumps in New England. I don't want to sell 50 percent of the heat pumps in New England.
I don't want to sell 25 percent of the heat pumps in New England. I want to sell 5 to 8 percent of the heat pumps in New England, We have an astronomical labor shortage. don't need to put anyone business in this country for decades, the way Amazon put a lot of people out of business. So I want to expand geographically. I want to put Forged training centers everywhere. I'm not threatened if people want to start businesses after going through my training program, although I don't think they're going to want to. And I could talk about that separately. but I think that are not in a zero sum game.
[00:39:54] Ed Smith: my mission is not to steal everyone's business. mission is more like save the country, save the climate, create amazing careers, create amazing blue collar jobs, pay people really well. so like I, I think that there's so much work to go around. we are not going to be a small business killer. That's not my goal. Go into that question you just didn't answer, why would someone choose to stay at Forge rather than going out and hanging up their own shingle and wrapping their own truck and starting their own business?
[00:40:21] Mark Kasdorf: answer to this. I think, That we have a romantic notion in the US that trades people are born entrepreneurs and white collar people are risk averse. and I think that's actually the causal relationship is completely wrong. people are people. but if you're a white collar worker and you work at Google and you make a great income and you've got health insurance and you've got PTO and you get paid on Christmas, like why would you start your own business?
That's a pretty good gig. whereas many people in the trades. Don't have health insurance, don't get a fair wage. They are not really treated well, So they are almost forced to start their own business if they want to have any chance of getting ahead, We think about at Forge, my goal is to be a cradle to grave employer, I want to serve a similar function of what unions have served, people don't very often leave unions, as long as they're treated well and they're getting enough hours. And I think that if we provide people with a great career, with a very transparent path from 22 an hour to a six figure income in five to eight years, and then a six figure income for 20 years of their career with health insurance and at least a 401k, if not a pension, we've eliminated. 80 percent of the incentive for someone to need to hang their own shingle to provide for their family. So hopefully I'm right. We've had very little attrition. The other thing I'll note is it's really hard to start a company, Knowing how to install a heat pump, you have 6 percent of the knowledge you need to Go from, LEAD to Invoice. There's just so many other steps in there. and I think if you give people a great career where they just have to become an expert at two of those steps instead of all 15,that's a really great place to be.
[00:42:09] Eric Fitz: Yeah, Mark,I love how we're as we're wrapping things up, painting this picture that there's just massive opportunity that the heat pump market today,small relative to the entire HVAC market, but it is still very large and the challenge ahead of us for this country, retrofits. It was 80 to 100 million homes,likely need a, their HVAC system retrofit with a heat pump. man, that's just, there's so much opportunity for tradespeople, for technicians, for designers, for people that love working on the process related to, this whole transformation. it's a super exciting future.
It's exciting today and there's just so much opportunity going forward.
[00:42:50] Mark Kasdorf: Yeah, I agree.
[00:42:52] Ed Smith: what you're doing at Forge and what private equity is doing, rolling up HVAC companies. They're different, but they're like related. how do you think about where Forge fits in relative to that trend? Cause when we talk to HVAC entrepreneurs, private equity acquisitions of HVAC companies is like
[00:43:15] Mark Kasdorf: Yeah.
[00:43:15] Ed Smith: a top three topic all the time.
from 50, 000 feet in the air, motorcycle and a bicycle look identical.so I think we are very different. the fundamental motivators of a PE firm, like they don't differentiate or distinguish HVAC from hair salons,
[00:43:36] Mark Kasdorf: they're financial organizations that are rolling up revenue, EBITDA, and cashflow. Wrapping it in a more efficient financial wrapper. everything is EBITDA. That's all that matters. The customer doesn't matter. The technician doesn't matter. The training doesn't matter. Unless you can draw a straight line to EBITDA. They don't care about the climate. They don't care about anything. and this is not me trashing P. E. this is super rational behavior. They are Wall Street guys that are rolling up EBITDA. they love HVAC right now in part because of labor shortage has allowed for price gouging and price gouging is a great way to get more EBITDA.earnings before interest taxes, depreciation average, basically profit. EBITDA is profit. I'm sorry for all the jargon. FORGE, I do think, EBITDA to me, profit is a little bit like,the report card at the end of the day. what I think PE firms do is all that matters is the final exam for one class. I think FORGE, like we're taking a whole series of classes and we've got like a 25 year vision out in front of us, and it doesn't involve maximizing EBITDA through any means necessary. It involves building and powering the next generation of trades labor, both consumers and the country from some really bad stuff that's happening if we don't solve that. I think we just have a much more holistic view and run the company wildly differently than you would find at a P Roll.
[00:45:17] Ed Smith: So Mark, this has been fantastic. we love to end the podcast with, this question of,for our listeners that are thinking about starting a heat pump business or,
[00:45:29] Mark Kasdorf: Ahem.
[00:45:29] Eric Fitz: getting into the trades, what is it, resource, a book, an organization that you would recommend that they check out and, to get going?
[00:45:38] Mark Kasdorf: So I'm going to start, instead of a resource, I'm going to give a couple of recommendations,I am not going to talk, so many of your podcasts, you're amazing people that,you interview, they give like very specific HVAC advice, because that's their whole world.
And I'm going to just try to give a slightly different answer that gives people like different information.if, so a couple of pieces of advice. First one is, You gotta leave your ego at the door, When I say leave your ego at the door, there's a bunch of stuff, if you feel like you're ready to start a company, there's a bunch of stuff you don't know and go surround yourself with, I'll call them advisors. But advisor doesn't mean like this, like a college professor, It could be your uncle that ran his own plumbing business or his own cake. Baking business, Like someone like there's a bunch of stuff you got to do. You got to get leads. You got to run a business. figure out payroll and all these little things and surround yourself with a couple of people that have done all of those things. and maybe I'll zoom into payroll, You got to set up payroll. what you don't want to do is spend nine hours on. and then have a sales person at a company talk you into something. Go talk to two people that run payroll for a company, no bigger than three times where you are. And they're going to all run payroll.
And in two, three, 20 minute conversations, two of them use paychecks and hate it. One of them uses Rippling and loves it and be like, Oh, I'll use Rippling. Like boom, then go get the sales demo and implement it.I think so many humans, it's nothing to do with the trades. They like, they don't want to be vulnerable.
They don't want to appear like they don't have an answer. They don't want to ask questions. They don't want advice. they like feel like that somehow less like you don't have to do it all on your own. I didn't when I was 24 and started my first company.
you want your advisors to be, have lived through the stage that is one to two years ahead of you in the last decade,
So what you don't want to do is call your uncle who's the CMO of ARS. That guy's going to be useless, A billion dollar HVAC company. Like he's not solving problems that you need to solve. You want to talk to someone that in the last decade had a five person company.that's going to be a really valuable person to talk to.
[00:47:53] Ed Smith: great. Mark, this has been fascinating. Thank you so much for joining us on the Heat Pump podcast.
[00:47:59] Mark Kasdorf: It's an awesome resource. I love doing it and I really appreciate it. Thanks for having me.
[00:48:03] Eric Fitz: Thanks, Mark. We learned so much too.
[00:48:05] Ed Smith:
[00:48:07] eric outro: Thanks for listening to The Heat Pump Podcast. It is a production of Amply Energy. And just a reminder that the opinions voiced, were those of our guests or us, depending on who was talking. If you like what you've heard and haven't subscribed, please subscribe in your favorite podcast platform. We'd love to hear from you.
So feel free to reach out. You can reach us once again at hello@amply.Energy. No .com, just .energy. Thanks a lot.
