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Ep. 42: Make It Hard to Buy: How Larry Waters Broke the Standard HVAC Business Playbook

Picture of Amply   Amply  ·  40 minute read

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Larry Waters doesn't go to a home until the customer has already said yes. No free estimates. No emergency service calls. No speed-to-lead. Instead, customers spend 20 minutes filling out an online form, uploading photos of their home, and sitting through a 90-minute virtual consultation before Waters will even consider visiting the property.

It's the opposite of how HVAC is supposed to work. And it's exactly why Electrify My Home has installed nearly 1,000 heat pumps in four years while staying booked out 2-3 months year-round.

Built on Everything He Hated

After 40 years in HVAC—from installer to service tech to sales—Waters knew exactly what kind of business he didn't want to build. "When I built this business, I wanted to build it on a foundation of all the stuff I hated about my previous years in the business," he explains. "I didn't want to repeat any of that."

Top of the hate list? Windshield time. Driving 40 miles to quote a furnace replacement, upselling a $15,000 heat pump system, only to discover the customer was just tire-kicking. Waters figured out his ideal customer demographic—tech-savvy homeowners interested in electrification—and redesigned everything around eliminating wasted time.

The solution: make customers invest effort upfront. The online assessment takes 20 minutes and asks detailed questions about the home's systems. "I know anybody that's coming through is serious about getting a project done," Waters says. "They've got skin in the game."

The payoff: A 40%+ close rate on virtual consultations. No driving required.

Friction as a Filter

Most HVAC companies treat every lead as gold. Electrify My Home does the opposite—they systematically filter out the wrong customers before anyone wastes time.

The lengthy online form isn't just for information gathering. It's designed to screen out personality types that won't buy from them anyway. "It really eliminates one of the personality profiles that's never going to buy from me because they don't have the patience to fill out the form," Waters admits.

His VP of Operations, Alex Sloan, puts it more directly: "People don't want a high-pressure salesman in front of them trying to hard-close them and stand between them and the door. That's just not our style."

They've identified their ideal customers with marketing-persona precision: climate-focused homeowners and engineering-minded types who ask endless questions. "A lot of salespeople hate engineers because they want all the data," Sloan notes. "We love those customers and they love us."

The virtual sales process presents budget numbers immediately, allowing Waters to gauge reactions and address objections before anyone drives anywhere. By the time they schedule an in-person site assessment, the customer has already authorized the work.

Electrification Means Everything or Nothing

If you call Electrify My Home for just a heat pump installation, you might not get what you expect. They're not an HVAC company that does heat pumps—they're electrification specialists who happen to start with HVAC.

"If you want to call yourself an electrification specialist, you need to understand panels. You need to try new things like heat pump water heaters," Waters insists. "Or you need to call yourself an HVAC company that can put in heat pumps."

Nearly every project includes envelope improvements—insulation, air sealing, duct modifications. They ask about future electric vehicle plans during initial consultations to avoid costly panel upgrades later. They've installed hundreds of projects on 100-amp panels using load management devices, saving customers thousands while being better stewards of the electrical grid.

Sloan reinforces the point: "When we approach a customer, we explain the roadmap for their future. It might cost an extra $1,500 for the more power-efficient appliance approach, but we can avoid $8,000 of a panel upgrade. Who else is explaining that to customers? Nobody."

This comprehensive approach creates customers for life. "We want to be the lifelong partner for their whole electrification journey," Sloan explains. "We get in the door for just a heat pump water heater, and that might roll into $100,000 worth of work after that."

Training the Competition to Fulfill the Mission

Perhaps the most counterintuitive move: Waters actively trains other contractors across California through partnerships with utilities and TECH Clean California. He teaches his methodology, shares his processes, and helps competitors learn to do what he does.

Why give away the playbook? Mission. "California has a goal for 6 million heat pumps by 2030," Waters explains. "We need more people doing it right. I need to get some other contractors excited about it."

He's not worried about competition. "Out of all the people we've trained, I only have one person that exists in my service area. And I would dare anybody that has an operating HVAC company to try to pivot to what we've done. Nobody's going to go out and try to duplicate our business model completely, because it just takes a crazy person like myself to want to do it."

The training also creates unexpected business opportunities—lead swaps with contractors in other regions, a network of like-minded partners, and potentially future acquisition targets.

The company's vision reflects this mission-driven approach: be responsible for 100,000 electrified homes in California by 2035, either through direct installs or training. At their current pace of roughly 340 heat pumps per year, they won't get there alone. But that's exactly the point.

What Makes This Work

Electrify My Home's model works because every counterintuitive decision reinforces the others:

  • Know your ideal customer. This lets you say “no” to some customers with confidence. 
  • Adding friction for customers increases ROI. Only people genuinely interested in electrification will complete the lengthy assessment.
  • Stop giving away windshield time. Price realistic budgets remotely, then visit only once the customer has bought into the range.
  • Mission and training make advertising easy. Waters built relationships in sustainability groups and city government early, creating "rabid fans" who refer endlessly. They're still over 40% referral-based after four years.
  • Comprehensive electrification creates lifetime value. Once you're a customer, you keep coming back for the next phase of your journey.
  • Cross-train your crews. Build teams that can handle HVAC, heat pump water heaters, basic electrical work, and envelope tasks.
  • Premium positioning boosts brand. Waters gets customers who tell him, "You're too expensive for me, but I'll tell all my friends about you." That's not a problem—that's brand strength.

The business has grown 30% annually, from three people in July 2021 to 22 people running 11 trucks today. They're booked out 2-3 months year-round with zero seasonality. And they can't hire fast enough to keep up with demand.

"It's a lot of fun to be different," Waters reflects. "To start a business and go compete with guys that have been in business for so long, try to break into their customer base, didn't make any sense. I need to go invent my own customer base, and I need to get out there and just do it differently."

Different is working.

Timestamps:

  • [00:00] - Episode Teaser
  • [02:07] - Meet Larry Waters & Alex Sloan
  • [07:08] - From Customer to VP: Alex's Journey
  • [10:56] - Customer Journey and Process
  • [18:25] - Knowing Your Ideal Customer
  • [22:25] - Virtual Pricing and Real-World Design
  • [27:05] - Growing the Business While Staying True to Their Core Values
  • [32:04] - Offering Comprehensive Electrification Solutions
  • [36:59] - Why Electrify My Home is Training Other Contractors for Success
  • [42:13] - Electrifying 100,000 Homes by 2035: The Big Goal
  • [43:18] - Final Advice for Contractors


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Transcript

[00:00:00] Guest: Larry Waters: So which one of you two guys is the analyzer of the group?

 

[00:00:02] Host: Ed Smith: Yeah, Eric's the analyzer.

 

[00:00:04] Guest: Larry Waters: So you're the one that went out and found the right software and looked at all the.

 

[00:00:07] Host: Eric Fitz: In this particular case, Ed was in charge of that. Okay, we tried it. We tried to divide up.

 

[00:00:13] Host: Ed Smith: Eric told me enough is f****** enough. Go find a better one. So he's got a little driver in him.

 

[00:00:21] Guest: Larry Waters: That's a good team right there. That's how we worked together.

 

[00:00:23] Host: Eric Fitz: Yeah, yeah.

 

[00:00:25] Host: Ed Smith: Nice. That's great. But Eric is generally the analyzer. It's an excellent question, Larry. Hey everyone. As you probably could tell from that opening clip, we've got a fun one for you today. We've got Larry Watters and Alex Sloan from Electrify My Home, which is based out in California. They tell some great stories. They really know what they're talking about. But what I take away from this episode is that they are the best I've ever heard of understanding who is and who is not their customer, and then building everything their business model, their sales approach, their install around that target customer and they show that that is incredibly differentiating.

It lets them win in the market. It lets them be booked out 2 to 3 months all year round, and it lets them be super profitable. That takeaway, by the way, features prominently in our new article. Stop competing on price, start winning on trust where we dig into the heat pump business model matrix and our trust checklist. If you're interested in a tangible, tactical set of recommendations for how to differentiate from the competition and build a profitable, winning business, check out the article. The link is in the show notes. Okay, onto the show. Hi and welcome to the Heat Pump podcast. I'm Ed Smith.

 

[00:03:00] Host: Eric Fitz: And I'm Eric Fitz. We are co-founders of Amply Energy.

 

[00:03:03] Host: Ed Smith: So today we're excited to welcome Larry Waters and Alex Sloan from Electrify My Home. They have installed nearly a thousand heat pumps in four years, while simultaneously training a bunch of contractors across the state on how to do electrification. Right. Larry is the president and Alex is the VP of business Operations and Development. Guys, welcome to the Heat Pump podcast.

 

[00:03:24] Guest: Larry Waters: Hey. Right on. Nice to be on here. Great to be here.

 

[00:03:26] Host: Eric Fitz: All right. So Larry, for those listening and who don't know, electrify my home, can you just give us like a two minutes or so, just a brief on introduce electrify my home, who you guys are. What makes you different?

 

[00:03:40] Guest: Larry Waters: I've been an HVAC guy for 40 years. Went directly out of high school into technical school. Did all of the versions of the trade, was an installer, bent a little sheet metal not very well and service technician for many years. Got into the sales side from a service technician side, and then I had this wondering of how to make houses work better. So I sought out some information on building science through BPI, and I drank the Kool-Aid and it had the perfect level of sugar, so I never went back. And that morphed into installing heat pumps because furnaces were all too big for out here in California. And so I just started installing these little ducted heat pump systems when they were only low static slim ducts available. So you had to do them really well to make them work well and then make the house tighter. And I just realized that was the way to go. Told my old boss then, I'm not going to sell furnaces anymore. And he was like, can't you just go sell a furnace? Furnaces are super easy. And then that morphed into being on the board of the Decarbonization Coalition and some other opportunities with consulting, which made me realize that I probably should start this business because I saw what was coming in California.

 

[00:04:50] Host: Ed Smith: That's awesome.

 

[00:04:51] Host: Ed Smith: You're right. We want to do more is get into the background and origin story. So give us more. It feels like there's like an ocean of things to explain about that. Time to then launching into entrepreneurship yourself. Give us a little more on why this company. When did you start it? Exactly four years ago, I think. But yeah.

 

[00:05:10] Host: Ed Smith: Tell us more about the why.

 

[00:05:11] Guest: Larry Waters: So I had this great idea of having just a home performance and electrification business back when I was working for my old employer, and I brought it to him and I said, hey, man, let's do this thing. We'll branch it off the business. And he said, dude, I'm going to retire in a year. And then, then I said, really, what's going to happen when you retire? And he says, kids are going to take over. And I says, okay, it's time for me to plan my retirement from here because I'm not going to be like the old guy working at dairy Queen with the 17 year old manager. And so I started looking at the opportunity and I started putting together my business plan. I actually came into this business with a business plan. If I read it today, it almost matches exactly where we're at. We're far further than I thought we would be at this point. But from around the training that we do and the installs, we do everything. I had it planned out in the beginning, and I actually built my website and got my logo created and everything while I still worked for him. And we have a very unique process that we go through that maybe we'll talk about a little bit later, but I built out that whole process and I had it ready and I went and told him, I says on February 18th, I'm retiring.

 

[00:06:15] Guest: Larry Waters: I'm not going to work here anymore. He got a little panicky, but he was retiring too. And February 18th, I knew that me alone. I couldn't start a business like this because there's no way I could sell it, manage it, install it. And so I said, what I need to do is I need to incubate my business model in somebody's business for a year. So I went and interviewed five small contractors around my house, ended up choosing the one that was the shortest drive from the house. That was really the final criteria, and he happened to be working out of his garage for 15 years, never had more than $900,000 a year. And I went to him and says, hey, if I can double your business in a year, do you want to learn how to install heat pumps? And because he had some installers, because I knew I could sell them and I knew I could manage the process, but I needed installers. So I hooked up with him for a year, quickly found out he was not somebody I wanted to be in business with long term because I originally had an agreement. If I double your business, you'll give me 20% of the business.

 

[00:07:12] Guest: Larry Waters: I'll always be there. But I realized quickly that wasn't gonna be something I wanted to do. But it gave me the opportunity to incubate the business model and the business name there while I had people to install. So it gave me an instant kind of infrastructure to work with. And so I quickly built up a 90 day backlog. And then when my year's time was up with him and I rolled into my own business, I rolled into my business with myself, a lead installer that I hired for over there, the lead installers wife as my office manager, completely no experience managing anything. She used to do bail bonding, but she was enough to keep the paperwork going. Then we rolled out and I rolled out with three months worth of work on the books from day one. Because I transferred all the work over from that. And that was the original agreement. And so I started this company with my first payroll in July 1st of 2021. And I still have my first helper that I hired three months after I started the business. Who was the lead? Installer's nephew is now my lead person and just transitioned into the project manager. Yeah, so lots of longevity here.

 

[00:08:22] Host: Ed Smith: Yeah.

 

[00:08:23] Host: Ed Smith: And then Alex, I want to dig more into that. Larry. But. Alex, how did you meet Larry? How did you come to join the team? What made you want to join this team in mission?

 

[00:08:33] Guest: Alex Sloan: So Larry actually installed the heat pump in my house. So right around when he rolled out from the setup, he was just talking about, I was looking around, trying to find a good contractor to install a heat pump in my house. My background is in energy efficiency program implementation. I had just come off of my master's degree in energy systems so I knew enough to be dangerous. Actually, part of buying my house, part of the criteria was like I knew I wanted to have a perfectly installed heat pump system, and so I went for a house that had two dinky wall furnaces and some spark wall mounted AC systems that were just completely awful. And so looking around, trying to find the right guy doing online research and found Larry Waters, I was like, Larry, that sounds familiar. I did a little research. I was like, oh yeah, Larry and I would have met back when I was managing a program in the Bay area, because he was one of the contractors that were part of this home performance program. And so I was like, okay, yeah, let's reach out to Larry, reach out to a couple other contractors. And it became very clear with the name Electrify My Home that he knew what he was doing.

 

[00:09:39] Guest: Alex Sloan: He knew the path. This was back in 2021, right. So the movement hadn't quite fully sparked yet. And in the midst of the installation, doing the good job that he does. Getting to know his customers. If you couldn't tell already. Larry loves to talk. Loves to get to know people. Building rapport. It's all part of the process for sales and learning a little bit more about my background. He said, hey, I'm looking for a business development guy. I think you might be interested. And at the time, my initial reaction was a chuckle. Okay. Yeah, I'm gonna leave my cushy consulting career to go work back in the field. But then thinking about it a little bit more, I've got blue collar roots. My dad was an auto mechanic, had his own shop for 30 years. I grew up working with him, and I love wearing lots of hats and working in the startup space. And so eventually the idea came around. Larry and I got to chatting, and I saw the way electrification was going, and knew that this was the only place I wanted to work. And so far it's worked out really well and we've got a lot done.

 

[00:10:39] Host: Ed Smith: Larry. What did you see? I've actually never heard of anyone hiring a customer. That's like a that's a new one. So that's tell us about that conversation. What did you see in Alex? That's just fascinating bold awesome move.

 

[00:10:53] Guest: Larry Waters: I personality I don't know if you guys get into the disc personality stuff. I'm a high I personality. So I like to talk to people and I like to collaborate. And I see the opportunity when I meet anybody I talk to. How could that person fit into my sphere? And so if I find somebody that would fit into the sphere, I talk to them and I open up the conversation. And Alex was in energy programs. He was heading up a program that we were in, Energy Upgrade California. Related to that, he already knew how to do the blower door and all the testing because he's a BP guy. I said, this guy's great. And I still remember a few months after we installed his system, Alex was customer number six for my company. This was fresh, and he helped us with some of the install because we were still trying to pull it all together right then. And Alex has a very unique house. He has a roof built on top of an old flat roof house, so there's some air sealing and envelope challenges there. He was helping the whole way along the way. So I'm this dude is great, man. It'd be great if he ever called me. And then a couple months later, I get a text message from me, says, hey, Larry, you want to go out and have coffee? And I was thinking, oh crap, his heat pump isn't working and he's just really nice. But yeah, it turned out to be way better than that. So I'm big on collaboration. And so that's, I think part of the reason why we've been able to build as quickly as we have.

 

[00:12:14] Host: Eric Fitz: And what a fun story. Let's go a little bit further into the business. And your from both from an operations perspective, but also from a customer perspective. Can you walk through a typical project that you guys do from start to finish, and what does it look like? Is it really straightforward? Is there are there a lot of complex pieces? Just tell us about that.

 

[00:12:38] Guest: Alex Sloan: Yeah. So a typical project for us. Our projects tend to be comprehensive, so we're installing a heat pump, water heater, perhaps an electrical panel, and almost every job we do has some form of envelope improvement. So even if that's just some minor air sealing under the house. But not everyone, right? So we have this philosophy to where we want to have. We want to work with the customer at their pace. And sometimes that's going to be rolling down the river in a speedboat. Sometimes it's going to be paddling in a canoe. One thing at a time. And so it all starts with really understanding the customer, their journey and planning it out from the start and actually looking at their final goals. Do they want an electric vehicle someday? We want to plan for that up front as part of the whole journey. So that's our whole philosophy in our operations, is that we want to be the lifelong customer for their whole electrification journey, which is really attractive, right? We get in the door for just a heat pump water heater, and that might roll into To $100,000 worth of work after that. Yeah. Typical process for us is going to involve starting with our unique sales process, which I'm sure we're going to dig into a little bit more.

 

[00:13:48] Guest: Alex Sloan: We'll meet virtually. Send them an initial estimate. If that estimate looks good, they'll give us an initial nod. We'll come out to the house, do a site assessment. After the site assessment, if there needs to be an adjustment to the estimate, we'll go ahead and do. From that point, we'll go ahead and file for incentives. We will pull the permit. We'll conduct our load calculations, thermal load calcs as well as electrical load calcs. So we work on a lot of older 100 amp panels, electrify a whole lot of houses on 100 amp panels. We're going to order all the equipment, including all the unique stuff we do. We change out the registers on almost every project. We do custom sheet metal on our slim profile units. We do, and we're often adding AC in our climate zone. So these customers never had air conditioning before. So we got to run electrical. We have to lay the pad, Prepare everything from scratch. So a lot of busy work in the warehouse and logistics wise, behind the scenes to prep everything before we even get to the house and start the job.

 

[00:14:46] Host: Eric Fitz: So you mentioned from a customer perspective you're doing a virtual assessment to start. What does that look like?

 

[00:14:51] Guest: Larry Waters: One of the things when I built this business is I wanted to build it on a foundation of all the stuff I hated about my previous years in the business. Like I didn't want to repeat any of that. And one of the things I hated as a salesperson was windshield time. And I knew my demographic and the people that were going to buy from us are very computer savvy. So when I originally built my website, like six months before I started the business, and I got the logo and the name and everything way before I retired from the other company, I had my website building company build a actual, we call it the online assessment form. Pretty easy, but it asks a whole bunch of questions about the house that are designed to elicit a little thinking on the customer side about these different systems that are in their house. And there's a couple of questions that are in there to figure out who the customers are a little bit, but the biggest thing is the customers have skin in the game. At that point. It takes them about 20 minutes. They have to upload some pictures. And so I know anybody that's any of these that are coming through, are serious about getting a project done by electrify at home.

 

[00:15:50] Host: Ed Smith: That's a hot lead.

 

[00:15:51] Guest: Larry Waters: It's a really hot lead. They've got skin in the game. And one of the things I mentioned it before, I'm really into the personality profiling thing. And it really eliminates one of the personality profiles. That's never going to buy from me because they don't have the patience to fill out the form. So I instantly don't have to deal with those people, which is another thing. And I don't mean to say it like that, but just not our customer, not our preferred customer. It makes it so much easier. And then we meet with them. Our assessments usually take an hour and a half, and we go really into the education side of what it means to electrify how you use your system, how well you know your house, and all the regular questions everybody else asks. Does your family have allergies or asthma? We ask that all, and it's all those kind of things, but ask in a very technical way and explain to them in how the system is going to work, how that benefit will be achieved in their system. And we go all the way down through how heat pumps work, how the refrigerant flow process works, how the reversing valve works. And we go through all this because we want to be looked at as the educated, knowledgeable people of this.

 

[00:16:55] Guest: Larry Waters: And then that has resulted in just I don't know, what is our what's our online closing Alex up in the 40s and we never have to roll a car out to their house until they've agreed on our price. And so one of the things that I noticed before, when I was doing it before, is we were going out a lot of furnace replacement estimates, and I was upselling them 15 or $18,000 heat pump system. And a lot of those would turn into tire kickers going, oh, it's not for me. I don't have to drive 40 miles and 40 miles back to learn that it's not for them. And through the process of their going through the assessment and the presentation, they're going to find out whether we're a good match. And so and then we present them instantly with the budget numbers while they're still on that call. So we can judge their reaction to the budget numbers. And we can deal with any of those kind of cost things. But the sales process is designed to close all of the objection doors down the hallway. So at the end we just get to the price. And so it's worked out really well.

 

[00:17:52] Host: Eric Fitz: It's great for your business. It's great for your customers too. Like you're not wasting people's time. You're getting that initial kind of filter to assess fit you're not dealing with. If your company is not set up to deal with emergency replacement market, like you're avoiding that whole situation, you're not. And those people are quickly discovering, oh, you're not a fit, so you're not wasting their time. Yeah. And then oh my gosh. Yeah. If you are engaged in the process and you discover on that sounds like it's a video call that you're doing, is that right? Maybe it's you're not ready at that stage. Awesome. Like you at least got a little bit of information. Maybe you're going to come back a year later or two years later, but it's great for you to again, you've either closed the deal or you haven't spent that extra time driving around. That's fantastic.

 

[00:18:33] Guest: Larry Waters: There's nothing more of a waste of time than sitting behind the steering wheel and being able to do nothing. And so I always want to be doing something. And so it works out better for us that way. And we do have lots of customers that come back two years later. They're like, I'm ready now. I want to go with you. We have customers that didn't go with us, that refer us to people because they knew that what we were providing might work better for their friends than what they got. That says a lot.

 

[00:18:58] Guest: Alex Sloan: And another thing about the virtual process is that most of our customers actually really prefer the virtual process. We're not there. Larry likes to say. Sometimes I spray it when I say it when I'm in front of people. So that way the customer, no one wants that. And folks also don't want a high pressure salesperson in front of them, trying to hard close them and stand between them and the door. That's just not our style. We're very educational and our customers prefer that. So in light of post-Covid era, where everyone ended up getting onto zoom and figuring it out. People in their 80s getting on web calls all the time with no issues. So it's worked out really well.

 

[00:19:34] Host: Ed Smith: It sounds like you guys have a better sense of your ideal customer, who they are and who they're not, than almost any other HVAC contractor I've talked to. And you guys are more than just an HVAC contractor. Who is your ideal customer? Tell us more about that, because I think other HVAC entrepreneurs would gain a ton from the clarity with which you guys know who's in our strike zone and who are we not going to swing at?

 

[00:19:57] Guest: Alex Sloan: There are a few. We have our marketing personas. Any company that doesn't have their personas lined up, that's always a good first start before you get into the marketing game. Our number one customers are the folks who are interested in who have we call it's type personalities. They're generally curious about the world, want to help other people out, very concerned with climate change and improving their carbon footprint. We're a perfect match, right? They're willing to spend a little bit more often for something that's going to be a project that Is beneficial not just for them, but for the community and for the world. So anyways, climate focused folks, also the techie and engineering focused customers, a lot of salespeople out there hate engineers, right? Because they ask so many questions. They want all the data. And like we were talking about this earlier, the analyzer or conscientious type personality just happens to be my personality. We love those customers and they love us because they're not going to get the full depth explanation of how does a heat pump work? What should I look out for? How should I operate the system? And just being able to actually have the knowledge base and dispel the myths and ask questions come up? Yeah, here's all the data so we don't shy away from that. So anyways, those are our two top customers. Is are the folks who are have sort of a climate focus and then those who have an engineering mindset.

 

[00:21:20] Host: Ed Smith: This is fascinating. So you've got your marketing personas like how did you develop those and what does that process look like? Because we've never interviewed anyone who has a true like marketing persona. So that's very cool.

 

[00:21:33] Guest: Alex Sloan: There are several ways to do it. The way we did it initially was we workshopped it. We thought we actually looked at our past customer list and said, what are the types of folks we actually have done work for, and what box do they usually fall into? Or who do we usually tend to sell or not sell? So that's one way you can do it honestly, like it's 2025. Just put some information about your company into ChatGPT and ask it what your customer persona should be. We've done that too, and it's come out to be exactly the same.

 

[00:22:00] Host: Ed Smith: That's amazing.

 

[00:22:01] Guest: Larry Waters: I'll add a little something to that. So when I was doing sales at the company before I started this company, I realized just being observant with the people that I was selling to because the company I was at would they'd ask two questions and send a guy out, right. And you would get every type of person. And I realized over the years that I started selling heat pumps and converting from gas who my basic customer was. And so early on, when I was first putting the company together, I infiltrated, like all of these groups in these areas, that I knew there was a concentration of this personality type. And I got into the sustainability groups, and I got into talking to the people that were responsible for sustainability in those cities, and I actually did projects for them. So now I have bullhorns inside those, like I breached the enemy lines. Yeah, I don't want to say it like that, but you understand what I mean? I got in behind the field of battle and met people that were going to be instrumental in the growth of the company, and we built rabid fans early on. And so we're super proud that we're still in the low 40s on referral after four years. And we can trace back a number of our customers to referral, just like we were doing our own family's genealogy. And I've got some customers that I did like Alex the first year we were in business that are still referring us and their referrals are referring us. So it was really like, get in there with some guerrilla marketing and go shake hands and kiss babies and meet the people that were moving it and get entrenched in that. And so that helped us build the personas out, because we were really able to look at exactly what we were doing.

 

[00:23:40] Host: Eric Fitz: Amazing. I'd like to circle back to some of the process pieces. We've talked in detail about the sort of lead generation side from your website to this video conversation. How are you pricing a project sight unseen? Just talk a little bit more about that, and then let's hear more about the process after you've got a yes from the customer. What does it look like when you get to the house and you're doing that site assessment in person?

 

[00:24:09] Guest: Larry Waters: There's a couple of things about that. Once you've done hundreds of the same type of houses, you get a pretty good feel for what they're going to be, the different models, what it is. And every heating and air conditioning company that whether they use an iPad or a sales book. They have a page they open to that is supposedly the system for your home, and it has a price. So we all know what the price is going to be before we come in. The idea of going in and sitting across the table for them is to sell them on all the upgrades you can and get in there. We all know what this stuff is going to cost pretty closely. We do run into situations where we have to adapt the price. When we come out, we try to put our budgets out to the customers so they're realistic. So maybe if there's adjustment it might be down a little. And then really if you're going to get in there and figure out every fitting and do that on every single job, it's because you want to get into the job with as low a price as possible, and you need to make a little bit of profit so we don't have to worry about it as much, because we know the picture of what that customer's home is going to be and just about how long it's going to take. And we have a revenue goal for each day. So if we can keep it within the revenue goal. And the days that were there were golden on pricing. And so there's a lot of experience from being doing sales for 20 years before that and understanding, like, I know this house, I can do it for this amount. If I want to do it with this, it's a little bit more or a little bit more. So it's not difficult to do that.

 

[00:25:35] Host: Eric Fitz: All right. Awesome. So you've got very clear price books well defined. You're not trying to get into all these fiddly details about I need I have this many elbows and that's you view that as that's not worth your time. And it only ends up working out in the end. If you're a little bit, you have a few extra of these extra components or a few fewer on the next job. It's not going to be an issue for you because you're getting enough margin.

 

[00:25:58] Guest: Larry Waters: Yeah. And really, like I said, the only time you need to, as long as you're in a position of profitability, which everybody needs to be profitable, I don't want to be over profitable on any customer. So oftentimes we'll give them a budget and the price will come down a little bit when we get out there. And that happens more often than the price goes up when we get out there. And because we build it out that way.

 

[00:26:18] Guest: Alex Sloan: Oh yeah. I was just going to add that we have our default pricing, but also we do get actually pretty granular. So we generally know if we're going to do a duck replacement. One run is going to include it's going to include a register, a boot, average number of connections etc.. So we've got all that priced in by run. We just ask the customer how many registers do you have? We get a general sense of how far the indoor unit is to the outdoor unit, to get a sense of the lineset and electrical runs, so we can gather all this information just through a virtual call, by asking a few questions within a pretty good degree of reasoning. And then we just drew it all up when we come out on site. I think we've got a pretty good balance of the average approach, as well as the specifics all up from the front.

 

[00:27:01] Host: Eric Fitz: Love it. And so let's go a little bit more into what happens if you price the job. Customer said yes let's do this. You show up on site. What does that does. What kind of diagnostic processes are you going through? What is your design process look like to really Finalize what your product is going to look like.

 

[00:27:17] Guest: Alex Sloan: After we've validated the estimate and we're all signed and ready to go. We bring that back to the office. We're going to we conduct our load calculations actually after that process. So we always have to start with something when you're selling in terms of system size in the initial plan. So we always start with that and then we validate it through a desktop review. We conduct our load calculation. We look at the flows to each room across that back to the existing duct sizes and validate the system that we initially selected. And so every now and then, maybe 20% of the time, we need to change the system at that point. And most of the time we're able to do that with no additional price to the customer. And I don't think we've had a single instance where we've said, this needs to change a half a ton, and they're like, no, I don't want to move forward. It's just it doesn't happen. And so yeah, we've got that validation in the office. And then once that's all ready to go, we're typically booked out two months at a time, which is fantastic. So we've got a little bit of buffer time to do some of that design. And so yeah that gets into the Q gets its way into the warehouse. The warehouse buys the equipment, stages everything and gets prepped for the install.

 

[00:28:26] Host: Ed Smith: How big are you guys now. And I'm wondering like for how many folks do you have doing the virtual calls, then doing the on site visit and then doing the install? If that's not too personal a question.

 

[00:28:37] Guest: Larry Waters: We've grown about 30% a year.

 

[00:28:39] Host: Ed Smith: Oh, wow.

 

[00:28:40] Guest: Larry Waters: And I started and like I said, July 1st with three people and I think we're up to 22 now. I think we've got 11 trucks on the road and we're running four different crews on and off. Right now. We're going through a huge growth. Problem is we can't grow fast enough to keep up with the demand of work that we have. So finding qualified guys and getting them trained up and doing all of that has been a bit of a challenge. So I do have a couple of subcontractors that I use that I've known for 20 years, and they do really high quality work and I've tuned them on the way we do it, and I bring them in to help. I got one of those guys that's going to work with us every day till the end of the year. It's been mild out here in California. His heating and air conditioning business is not he's not busy. So he was more than happy to come over here and hang out for three months.

 

[00:29:29] Host: Ed Smith: Congrats on the success. That's awesome.

 

[00:29:31] Guest: Larry Waters: We're gonna hit a new.

 

[00:29:32] Guest: Larry Waters: Big number this year. And then we have goals for an even bigger number next year. So we're going to continue to scale the business up. And that might include expansion next year.

 

[00:29:42] Host: Ed Smith: A lot of HVAC contractors treat every lead as gold. It's all about speed to lead the idea that you guys have introduced all this friction, a long survey where people are like taking pictures and uploading them in the 90 minute zoom call, and then the fact that you are overbooked and can't hire fast enough when you have such a narrow focus, like it's not everything in HVAC like you're doing, I could just imagine some people being like, what are you talking about? So, like, why does this work? And because it seems so counterintuitive to the way most of the industry runs.

 

[00:30:18] Guest: Larry Waters: It is counterintuitive.

 

[00:30:19] Guest: Larry Waters: And that's the way I designed the business when I left the HVAC business. Five years ago, I was in the business long enough to work for every type of company. The big consolidators down to the small mom and pops. I helped grow the last business I was at from 3 million to 8 million in the ten years I was there. And I realized that there's some things that we didn't need to do. There were some things that would be better addressed if they were done differently, and utilizing our people's time better, and engaging the customer in more conversation that engages them from the beginning, means I can lock in that set of customers that aren't as hard to deal with. I don't have to deal with all that. Like our service department here is one guy that services what we sell. If I did regular service work and found a broken furnace, it would be really hard for me to go do that because I'm 90 days booked out. So it's a different business model that I thought was there wasn't another business model out there like it, and I designed the business model for that reason. I saw the gap in there, and I don't want to speak ill of any like thing in the industry.

 

[00:31:23] Guest: Larry Waters: But the industry has changed dramatically in the last decade and a half, with acquisitions and one company owning five of the biggest companies in town. So all the prices are set in one place, and these are speed to lead and all that. We don't need that. There's a lot of people that want to deal with a company that's going to be honest. I don't want to say honest, but because we are honest, but I don't want to act like somebody else isn't a little bit more old school in in our approach to customer service and customer relationships and those things and have it be about them getting what they're paying for and not paying for what they're seeing. Maybe that's a way of putting it. But so I didn't really like after being in the business for 40 years, I didn't like how it went to all commission base. Everybody's got to earn a commission in order. You pay your guys nothing, and they have to earn it on the back end. And so we don't operate this business like that at all. And it's because I just, I thought that there was a niche that could be filled with this type of business model and proving itself to be workable.

 

[00:32:25] Host: Eric Fitz: It's really great. It's definitely counterintuitive and also just fantastic to hear that it's working really well for you. I see both of you guys smiling and it seems like the business is growing. Your customers seem happy, so that's the best feedback you can get that you're doing something right.

 

[00:32:40] Guest: Larry Waters: Yeah, and it's a lot of fun to be different. So the just being different and existing in a different thing. Like I have a lot of friends, been in the trade for a long time. I have a lot of friends that work at other companies and own other companies. And to me, to start a business and go compete with these guys that have been in business for so long, try to break into their customer base, didn't make any sense. I need to go invent my own customer base, and I need to get out there and just do it differently so I can do that. And it's proven to be great because we have no seasonality at Electrify My Home, and we get people saying that a lot like, oh, we won't in the summer. I know you're busy. And I says, I'm no more busy in the summer than I am in December. We're booked out two and a half to three months all the time, and it just works out awesome.

 

[00:33:26] Host: Eric Fitz: So I'm curious, some of the other you guys are offering some weatherization improvements. You're talking about like at least doing basic air sealing, you doing a heat pump, water heaters, you're doing panel upgrades and you're doing HVAC system. What are some of the challenges if someone is actually ready to go for, let's say, all like these three different services, they got some weatherization. They want to heat pump, water heater and HVAC system. Are you staging that? Are all these crews showing up at the same time? What does that look like?

 

[00:33:56] Guest: Larry Waters: I've trained everybody here. All my 7 or 8 base installers. All are cross trained in a lot of it, so I don't want my leads to go blow insulation. But if I need them to, they know how. And everybody on their team knows how. What are the basic requirements for doing that? I got six people here that are really good at installing heat pump water heaters. I've got a whole bunch of guys that are really good at installing the heat pumps. I have one dedicated electrician who's also a licensed electrician, and he handles the bigger stuff on the changes. But all my guys can wire circuitry and they can all put in the. I won't say all of them because I do have some younger guys or some newer guys, but all of my leads are middle guys can run an air conditioning circuit or run a circuit to a dryer, or and do it where it's up to code. But when we get into panel changes and things like that, I do have my dedicated electrician and his assistant to go do that. It's really more of orchestration and trying to get things done. It doesn't go perfect every time because sometimes jobs take a little bit longer for whatever reason, like it's raining outside or the wood that we have to drill through is 100 years old and it's ate up nine bits and whatever. And sometimes the houses fight back a little bit and it changes the time structure. So we have to reschedule and go back and do insulation at another date. But we're really fluid at how we're doing that and keeping the project open and adjusting the investment for the customer so that they'll pay for what they've had done so far, and then they'll pay for the insulation when we come back and do that. And you mentioned panel upgrades. We don't upgrade very many panels. Most of the houses we electrify are on 100 amps. And we do that by utilizing different techniques and devices and things like that to shore up the power in the house, I guess is a good way of saying it.

 

[00:35:35] Host: Eric Fitz: Load management devices.

 

[00:35:37] Guest: Larry Waters: So like span panels, we install lots of span panels and we install lots of switching devices and circuit parsers and things like that. So we do this because there's an inherent problem with upgrading a panel if you're not going to use that power. And we have very expensive electric rates in California. And part of that is because of unnecessary power upgrades in houses. And we know on 100 amps you're going to have 24,000W. None of my houses are going to use 24,000W at once. But for safety you can only put so much load in there. So we want to know what that house is actually going to use, design around it and say you don't need a 200 amp panel because when we upgrade from 100 to 200 now, I got to get the utility company involved. And that just puts the brakes on things and puts another level of complication into everything. So we're going to try to do everything we can behind the panel. And if they've got an older, unsafe panel, we'll just change it out with the same size panel. So it's nice and new and safe and clean. And then there's less complication with trying to get an amperage upgrade into the house, because we've seen it where we've tried to get an amperage upgrade. And the utility company says, no, we're going to put new transformers on this street next March. So we'll let you do it then. And now, does my customer need to wait till next March? No, we have lots of ways around that.

 

[00:36:53] Host: Eric Fitz: Totally. Yeah, it can be a six month or 12 month wait, and it can be easily five grand to do a service drop and upgrade to 200 amp. It's. It's nuts.

 

[00:37:02] Guest: Larry Waters: It's not easy. When we provide more power to a house that they're never going to use, the utility company has to allocate the ability for that house to use that power, which takes away from all the people on the street that might need it. So I'm anti amperage upgrade unless it's absolutely necessary.

 

[00:37:18] Guest: Alex Sloan: Right. So much so that it's in our mission statement responsible electrical management or good stewardship of the electrical panel. It's the other way we explain it. And when we approach a customer who has a tingling of electrification, like they might want to add an EV charger later, or they might want to do a heat pump water heater at some point. And you have one contractor who approaches them and says, hey, here's the roadmap for your future. And by the way, here are some important decisions we need to make upfront. And it might cost you an extra $1,500 for the more power efficient appliance approach, but we can avoid $8,000 of a panel upgrade. Who else is explaining that to the customers. Nobody. So it's a huge it really helps us stand out. And that's why we need more contractors like Electrify My Home, who are specialists in electrification.

 

[00:38:10] Host: Ed Smith: That is a perfect segue to the question I wanted to ask next, which is so much of what you guys said is counterintuitive, but works also, I think counterintuitive is training your competitors. You guys do a ton of training, and as you have been on this conversation, super open about like your special sauce and what do you guys do? So tell us about how you train your competitors, why you're so invested in training, why that's strategic for you all as a business.

 

[00:38:37] Guest: Larry Waters: It's simple. We need more people doing it right. California has a goal for 6 million heat pumps by 2030, and we all have a societal goal of just having cleaner air and being more efficient with our carbon reduction. And then also everybody should have the latest technology in their house. I'm not taking out your gas furnace and putting in a heat pump. I'm taking out your tube TV and putting in a flat screen. So we're doing a technology upgrade on your house. It doesn't need to be. I'm getting rid of gas because I feel good about that. Check this out. My house works so much better with this system, and that comes back through. What we want to train the other contractors for is one, I want more contractors to be out there competing with me on what I am, because then I can get what I really need to get for my jobs. If more people are realizing that it costs a lot to do it right. But the other part is in order to have good outcomes. With 6 million heat pumps being installed in California, I need to get some other contractors excited about it. And California's a big state. Out of all the people we've trained, I only have one person that exists in my service area, so it's not a big deal. We've trained up a lot of people in Southern California and through the Central Valley, and I think it's right for the outcomes of electrification to have more people understand the implications of doing it wrong. And so that's really the passion of doing that. I do it because I want the whole thing to turn out right.

 

[00:39:56] Guest: Alex Sloan: And yeah, we just we feel strongly that when we invented a lot of these processes in the way that we do them at least, and we have confidence that we can outcompete just on merit. So if everyone else wants to go and come to our training and listen to what we do and try to outsell us, bring it on a little more. Competition never hurt anyone. So we're confident there. The other cool thing about doing these trainings up and down the state. Number one, it's really hard to get folks out to the trainings. So we train as many people as we do. We get a lot of contractors coming through the door. We find we get a lot more architects and general contractors and people who are spend a little bit more time in front of a computer. Let's say we need to get more contractors out to these trainings. But when we do make good connections with these contractors at our trainings, it opens the door for business development growth. So we have the opportunity. We have a program where we bring people through what we call bootcamp training in person. And then the training after that is a 12 week virtually led. Call it a cohort program, where we put folks in groups of six contractors and hold their hands through starting to adopt some of this work into their businesses. Through that program, the alumni that come out of that become really good friends with our company. We've swapped leads with folks in LA and other places throughout the state, and maybe even down the road in the future. It might be an opportunity for acquisition and growth for electrify my home. So that's not really why we're doing it, but it's a neat after effect. We've built a pretty good network of other like minded contractors who have the same mission.

 

[00:41:28] Guest: Larry Waters: Built them, and created them. Realistically, I would dare anybody that has an operating HVAC company to try to pivot to what we've done. So they're going to take nuggets from us. Nobody's going to go out and try to duplicate our business model completely, because it just takes a crazy person like myself to want to do it. And really good people like Alex. When this company first started. I needed installers and service technicians and all these things, and I hired a guy that had a master's degree that was not going to be able to go out and put a screw in. Anything like, Alex is not going to be able to go out and install a system and bring in revenue. I hired Alex because he was a strategic hire for where I wanted to go with the business, and I did that at a great expense for a fledgling company. And so running and hiring and working strategically with a long term goal in mind and understanding where the company wants to go, sometimes strategic hires are more valuable than people in the field, because if I hadn't hired Alex, it would be a lot harder for me to do what I do right now. And that was a strategic goal, and I didn't think twice about it. I said, this guy's got to be part of my team.

 

[00:42:37] Host: Ed Smith: Wow.

 

[00:42:38] Guest: Alex Sloan: And vice versa. It takes balance, right? So like Larry and I have opposite personalities. We grew on one another. So that's what it takes to have a good partnership and to bring something from idea to actually working.

 

[00:42:50] Host: Ed Smith: One of my favorite parts about this podcast is like hearing from folks who have built businesses that I respect the hell out of, and it like holds a mirror up to what we're trying to do at amplitude. And so much of what you guys said just deeply resonates with what we're trying to do. And also the opposite personalities that Eric and I have. And there's nothing I like better than introducing friction into a relationship. Alex, it sounds like you should ask for a raise so you guys can talk about that after this.

 

[00:43:18] Guest: Larry Waters: Alex. Alex. We set him up really good. So as the company grows, he grows.

 

[00:43:23] Host: Ed Smith: Okay, there we go.

 

[00:43:24] Guest: Larry Waters: Yeah, right. Yeah.

 

[00:43:25] Guest: Larry Waters: So I love it. Alex gets a raise every time we get bigger.

 

[00:43:28] Host: Ed Smith: That's awesome.

 

[00:43:29] Host: Eric Fitz: Excellent. All right, so you guys have done almost a thousand heat pumps in four years. What happens in the next four years? Where are you guys trying to go?

 

[00:43:38] Guest: Larry Waters: We're a mission, vision and value driven company, so we have a vision. Everything I think of is probably way bigger than I'm going to be able to achieve. But you got to work for a big number to get it to a good place. And so we want to be responsible either directly from install or indirectly through training for 100,000 electrified homes in California. So that's what my goal is by 2035. And so that is a lofty goal because we install 3400 heat pumps a year, something like that. So we're not going to get there alone, but we're going to get there through that training program and collaboration with other companies. And it keeps us wanting to build our marketing system and everything. We have a plan, build our marketing system in here and white, label it for our partners, and doing things like that and breaking through and being responsible for that number of heat pumps is my vision for the next ten years.

 

[00:44:33] Host: Ed Smith: And now I think our final question to end with, and it'd be great to get answers from both of you guys on this, especially since you you do a bunch of trainings. What's one thing you wish every contractor listening would change about how they approach either home electrification and or heat pumps.

 

[00:44:49] Guest: Alex Sloan: So being comprehensive. So if you're a single trade contractor, just don't get into the habit of getting tunnel vision and only focusing on what you're doing. If you're installing a heat pump, water heater and taking up the last slot in an electrical panel like you owe it to your customer to have a conversation during the design phase about what they're going to be doing next. It's just a good moral thing to do as we start shifting towards electrification. And if that customer never installs another electrical device in their house. So what? You will have done them a big service. So you don't necessarily have to do all the work yourself, but take literally 30 minutes to watch a portion of a webinar that talks about electrical system planning. Look up Tom Kabat, look up Larry Waters, and learn a little bit more about electrical panels and comprehensive assessments for electrification.

 

[00:45:42] Host: Ed Smith: Great one.

 

[00:45:43] Guest: Larry Waters: Understand what you're installing and putting. Put the customer's lifetime living with that system as one of the things that you're putting in your plan. And make sure we're not look at other brands and try new things and understand how these machines work, and that some of these machines work better in certain houses than they do in other houses. Understand that, and then understand that electrification is more than just putting in a heat pump. If you want to call yourself an electrification specialist, but there's a couple of contractors around here that do. They only put in heat pumps. If you're going to be an electrification specialist, you need to understand panels. You need to try new things like heat pump water heaters. I don't know why the adoption of those is so hard. And you need to be all inclusive, or you need to call yourself an HVAC company that can put in heat pumps.

 

[00:46:30] Host: Ed Smith: Another great one.

 

[00:46:31] Host: Eric Fitz: Guys, this has been so much fun. Thank you for coming on the Heat Pump podcast. Yeah, it's really been great.

 

[00:46:37] Guest: Larry Waters: Well, thank you for inviting us.

 

[00:46:38] Guest: Larry Waters: This is really cool. You guys are doing a great thing over there. And I love your podcast, by the way, and I don't know if you heard me before, I've actually reached out to some of the people that have been on your podcast, and because I love collaboration, we are collaborating with a few of them.

 

[00:46:51] Host: Ed Smith: That's awesome. I hope you guys get some outreach from being on this. We appreciate you listening and being on it. And good luck hitting that 100,000 heat pump number.

 

[00:47:00] Guest: Larry Waters: We're going to aim for it man. Let's do it.

 

[00:47:03] Guest: Larry Waters: Right here all the time.

 

[00:47:04] Host: Ed Smith: That's it. All right.

 

[00:47:05] Host: Ed Smith: Thank you so much guys.

 

[00:47:06] Guest: Larry Waters: So nice meeting you.


[00:47:10] Host: Eric Fitz: 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 on 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. Thanks a lot.