In this episode of The Heat Pump Podcast, co-hosts Ed Smith and Eric Fitz are joined by Mike Missimer, an HVAC industry veteran and principal owner of MGI Mechanical Services. The conversation dives into how Mike leveraged decades of experience to build a thriving heat pump-focused business during the pandemic. They explore the nuances of starting a business, designing efficient heat pump systems, and managing rapid growth—all while navigating the challenges of running a company at higher altitudes and in a rapidly changing energy landscape.
Mike Missimer is the principal owner of MGI Mechanical Services, an HVAC company specializing in heat pumps and energy-efficient systems. With a career spanning nearly three decades, Mike has been instrumental in advancing building science principles, writing green building codes, and educating the next generation of HVAC professionals. Based in Colorado, he has expanded MGI to a multi-division company with a strong focus on innovation, customer relationships, and industry leadership.
[00:00:00] Mike Missimer: We're not a box changer. We're not about, you know, how many air conditioners can we put in? You know, when we go into a home and we analyze a situation, we're going to look at the house, we're going to understand the infiltration. We're going to test the duct system and understand capacities. We're going to do a proper load analysis on it. We're going to calculate functional and economic balance points with regards to heat pumps. But we're also going to analyze that whether we're doing gas systems and so forth. So you know I think the thing that sets us apart a little bit is just the additional approach we take on the front side to really understand the consumer, the house, what they're trying to do, get them the best rebate potential, educate them on the product that's out there.
[00:00:45] Ed Smith: Welcome to the Heat Pump podcast. I'm Ed Smith.
[00:00:48] Eric Fitz: And I'm Eric Fitz. We are co-founders of Amply Energy.
[00:00:51] Ed Smith: So today we have Mike Missimer from Colorado. We first met Mike at the Heat Pump Summit in June, where Mike gave a great, Mike, you were the keynote. Um, you were the opening presentation, weren't you?
[00:01:05] Mike Missimer: Yeah, I wasn't the keynote, but I did open the, the, uh, conversation for the, uh, seminar, so that was kind of exciting.
[00:01:12] Ed Smith: You know, the opener is a much harder job than the keynote. Anyway. Um, so that's a bigger role. Thank you for joining us. We're we're excited to have you. We've gotten to know you and your business a bit over the last few months, and we're super impressed with how you go about it. Um, so we'd love to start with you introducing yourself and your journey and how you got to where you are today, running your own business and being an educator in the space for other for other HVAC and heat pump contractors. Would you give us a sense of the Mike Missimer arc?
[00:01:52] Mike Missimer: Absolutely. Um, yeah. So it actually started out in the industry when I was in high school helping out a buddy's dad. Uh, standard retrofits. I needed a part time job, and and that's where it started. And eventually I ended up coming down to Colorado, originally from Montana, came down to Colorado to go to school and needed some part time work. So I was doing HVAC while I was in college, uh, running some service, uh, duct cleaning, expanding on the add on replacement. And it just kind of took off from there. So I eventually, um, stepped away from school for a little bit, entered the industry full time, started to understand it a little bit better, ended up going back to school with a background in engineering and, you know, at that point eventually worked my way up in the industry, uh, where I took on management roles, eventually overseeing construction sites started to learn the design side. Uh, that was really exciting to me because, you know, the engineering aspect of it was, uh, extremely interesting. You know, I had a goal to, uh, Were designed airports. At one point I thought, that's what I'm going to do. What I found my niche was more on the residential side and trying to understand the home and design the best system I could. So trying to apply what I had learned in the field and the engineering background I had. It took me down the building science road, if you would. So I started to learn a little bit more of the house as a system. Understanding things like infiltration. Gosh, this thing's. This thing breeds. This thing lives.
[00:03:26] Mike Missimer: I have to figure out how to make the mechanical system work in conjunction with the home. So at that point, you know, I knew I had to expand on it a little bit. I got my BPI certification started. Uh, learning air balancing became a certified in air balancing. Right around that time, I was also teaching for a company called Proctor Engineering out of out of California, where I traveled around the country, uh, teaching Advanced airflow and and refrigeration to technicians how to properly commission a system. We wrote or co-wrote the select HVAC contractors group for Platte River power here in Northern Colorado, and then was blessed with the opportunity to help write the Fort Collins green code back in 2012. So we we wrote it beta tested it in 2011, and it's been implemented ever since. Now the code cycles have in fact changed, but the basic principle is still there. So you've got the opportunity to, um, really help educate and train technicians at that point while still operating in the HVAC industry. At that point, um, that was 2007. You know, I guess I failed to say the journey started in 1994, but, um, at that point I was partnered in a business. We ended up, um, uh, dissolving that business in 2012. And that's where I ended up taking on a role with a company that's now a larger company in in Fort Collins, where I stayed there eight years. And, um, you know, right around Covid time, I thought, well, let's challenge ourselves even more and start a new company right in the middle of Covid. So that's when MGI was born.
[00:05:15] Ed Smith: What led you to take that leap, and was it in the middle of of Covid?
[00:05:23] Mike Missimer: Well, it was it was. So there had been some talk about ownership change. There had been talk about maybe purchasing the business. We had negotiated a little bit, and after two years of negotiations, we just couldn't quite get there. And then at that point, I was getting a little I was a little anxious. Um, plus, if you can remember the beginning of Covid, the world was supposed to end. Correct. You know, so we didn't know what was going to happen. So I thought, well, if the world's going to end and businesses are going to fail, and all these things that they say are going to happen, happen, I'm going to do it on my own terms. And I thought, well, you know, let's go out and do this. And, you know, come to find out what a deal Covid was actually very beneficial for HVAC companies, indoor air quality became a very big deal, and many HVAC companies actually prospered and thrived during the years of Covid. So, uh, my father of all people said, boy, what are you thinking? What are you thinking? And I said, well, dad, we'll we'll see. He's always taken care of me, you know, he's a he's he's my dad, of course. And, uh, little did we know that it was going to be a great time to actually start a company. So and, you know, it was a little bit easier to I'd had, you know, close to 30 years of relationships that I had built up to that point. And what I recognized a long time ago is people don't they don't follow logos on trucks or advertising. By and large, they follow people. They follow the human being that takes care of another human being. And that's really the basis behind our company. It's the relationship building component. You know, we're an HVAC company, but our our business is really building relationships. And, you know, so that's how it went all the way up to 2020.
[00:07:09] Ed Smith: What an awesome articulation of the entrepreneurial mindset. And also what a great articulation of how humans mostly overestimate risk and underestimate opportunity. It's like, yes, that's what everyone said about Covid and it was an awesome time to start a company. We heard something similar when we were founding amplify and people were laying off, you know, all the giant tech companies were laying off tons of engineers, and that was actually like a great time to hire engineers, especially if you were a small company and couldn't compete with Google's salary and whatnot. So it's um, anyway, I love I love that and echoes kind of Eric's and I experience in a bunch of different ways.
[00:07:50] Eric Fitz: Yeah. And in periods of great change. There's always, always some kind of business opportunity.
[00:07:55] Ed Smith: And never waste a good crisis. Right?
[00:07:57] Eric Fitz: Yeah, right.
[00:07:58] Mike Missimer: Well, that's. Yeah, we hadn't been through one. Well, at least in my in my lifetime. Not like that. And it I reflect back on it and it was a it does definitely change your perspective. We do live in fear quite a little bit. And sometimes it does. In fact, it creates boldness. At least it did for me. It allowed me to believe more in in in myself than than than, say, circumstance. Um, you know, and what the world might be doing. You know, ultimately, we're in control of our own destiny, I think. And, uh, and how we decide to make it work. So we just navigate the nonsense out there and, and, uh, um, try to do the best we can.
[00:08:37] Eric Fitz: And, Mike, will you just tell us a little bit more about your business today? Are you doing mostly, you know, new construction related systems? Is it mostly retrofits? Um, yeah. What's that look like?
[00:08:49] Mike Missimer: You know, my, um. My background being that I've been in the energy side quite a bit and consulting side. I spent a lot of time with a lot of the people from the, uh, the code review. I sit on two different code review boards. I used to teach code for the Front Range Community College. I helped, uh, consult the Efficiency Works program here in Fort Collins. So a lot of the, the areas that, um, you know, we've been involved with have been typically regarded as more progressive style thinking, you know, back in the day, back in 2007 when nobody was commissioning systems, we were commissioning everything for ACA, uh, at least five at that point. And, um, and it was looked at as kind of an extreme thought process. But, you know, eventually it evolves into more looking at, again, the house is a system. What's the best way to approach this, not only from a comfort standpoint, but an energy efficiency standpoint? How can we reduce the load on the house by while making the consumer more comfortable? So, you know, a lot of the exposure I'd had in these general areas gave me a positionally pretty good in the industry to be able to jump into some of the electrification movement that's happened, especially over the last, oh, three years or so. So from an add on replacement standpoint, you know, we started off slow, primarily dealing with construction and a lot of my construction background. But we were building up our add on replacement retrofit side and our service side.
[00:10:12] Mike Missimer: You know, after four years. Well, we ended up putting 19 trucks on the road in just under two years. And, you know, as we kind of talked earlier, it was the growth was great, but it was too fast. We could not handle the I did not have the administrative structure, internally mapped out, process mapping structure mapped out for managers to be able to follow. And the other hard part is, you know, we're generally people from the field that have to try to come into the office and unwire our brains from what we're used to being and rewire them to be a creator and not a doer. So trying to get up even a great technician or an individual to come in and manage a department, it's very, very difficult. So, um, you know, with that being said, we kind of had to pump the brakes and, and pull it back and, and sharpen the saw per se. And, uh, focus on our administrative structure, focus on the excellence component, change our quality assurance aspect to make sure that we were not leaving the system compromised. You know, we were doing the best we can to create excellence, while at the same time, you know, definitely doing my best to keep the exposure in the industry still work with the Efficiency Works program, still work with the college, still work with the city officials, do things like the National Heat Pump conference, uh, seminar, you know, just try to position ourselves in the industry to be recognized as somebody that's going to take it to a level that other folks don't, won't necessarily do.
[00:11:43] Mike Missimer: So, you know, we still have our construction side, which is a good portion of our company, but our add on replacement side, we're probably 95%. Heat pumps, air source and or ground source. Our service department is growing. We do have another division. We just started our commercial division, which does a lot of refrigeration. We're building up on that, that side. We're eventually we'll start looking at auditing commercial buildings. We have another division that does do energy auditing, blower door testing, duct leakage testing. We do a lot of commissioning for other companies out there. And then I do have another company, an engineering company, that we perform mechanical design work for architects, engineers and and and other HVAC companies all around the Front Range in northern Colorado. So we currently have, I think, 27 trucks on the road now. And, um, we have all of our division managers in place where we can hopefully continue to develop their growth and develop our, our technicians growth. And, uh, you know, try to do what we do. We really enjoy the passive House approach, and we're involved in a lot of passive house. Uh uh, design and installation. We've got a community over in Donath Lakes here in Loveland that we've done. I think we've done five designs and five installs over there now and have consulted on quite a few others. So it's been quite the ride. It's it's been a good four years for us.
[00:13:11] Eric Fitz: Wow. That's super impressive. I was just going to ask, is there anything you don't do? Um, so. Well, I mean, you okay.
[00:13:20] Mike Missimer: For now.
[00:13:21] Eric Fitz: We'll see. You know, there's so.
[00:13:23] Mike Missimer: Many concierge services out there and whatnot that they take care of plumbing and electrical and the whole gamut. And I think, yeah, I think, you know, we're not a box changer. We're not about, you know, how many air conditioners can we put in? You know, when we go into a home and we analyze a situation, we're going to look at the house, we're going to understand the infiltration. We're going to test the duct system. We're going to understand stand capacities. We're going to do a proper load analysis on it. We're going to calculate functional and economic balance points with regards to the heat pumps. But we're also going to analyze that whether we're doing gas systems and so forth. So you know I think I think the thing that sets us apart a little bit is just the additional approach we take on the front side to really understand the consumer, the house, what they're trying to do, get them the best rebate potential, educate them on the product that's out there, and then the back end commissioning, which is we're about to change our process. It's robust now, but I think it's going to get more intense where we can actually give them, you know, hopefully at the end of the day, accurate certificates. Um, that shows that it has been properly tested and certified.
[00:14:33] Eric Fitz: So wow. Fantastic. And you mentioned blower door tests. Are you doing a blower door test on all of your retrofit projects in addition to new construction?
[00:14:43] Mike Missimer: We're not. But in all reality, most of them are already done. So a lot of the people who referred to us are referred from, um, different entities who had energy audits already done. So most of that data is, um, available now. We do offer the blower door test on the front side. You know, it's hard to get it's hard to justify it on every aspect. But I think infiltration is a very important, uh, key ingredient to, um, to properly sizing the system. And, you know, anytime that we are going in from an electrification standpoint, if we're looking at converting from, say, gas to 100% electric, and we need to really dial in and understand where that, that, uh, balance point is, we will do a blower door test at that point to get a, get an understanding of that infiltration.
[00:15:34] Ed Smith: That's that's awesome to hear. I want to go deeper into your design process if you're up for it. You gave us like a brief Overview I have. I basically have three questions, but they're all kind of strung together. You've talked about it a little bit, but like, how does a homeowner perceive you as different from the competition? How does that manifest in your design process? And how do the economics of that play out? Because we know you from before the pod. So I know your design process is highly differentiated. One of the things we hear from a lot of other companies is like, I just can't spend that time to do that sort of thing. You know, Chuck and the truck is going to come in and like, walk in a room, eyeball it and say, you need to you need a two ton system. And here's my quote. You know what I mean? It's like written on a piece of paper. And you guys are just so far on the other end. So anyway, how do you differentiate from the competition? How does that manifest in your design process? And then how does that play out in your economics? And how are you not radically underwater based on the time your salespeople are spending designing systems?
[00:16:38] Mike Missimer: Well, I think you have to you got to reverse that order. What you talked about. We have to understand the economics of it first of all. So I have to be very clear about my budgets. What is our what can we spend? What can we not spend? What what, uh, what can we afford to do? And and then we also have to ask ourselves, what are we willing to sacrifice in the event we don't get the project right? In a lot of cases, and there have been cases that we got to we've got to figure out certain details here. But, you know, we've gone out and done some testing just to educate our competitor, which is frustrating. So I'm trying to navigate that a little bit to determine whether or not we should start charging for, you know, basic proprietary information or whether we should, uh, let it be known. But, you know, I think we have to understand what we can afford and what we can't. And, you know, at the end of the day, spending a little additional time and teaching our, uh, comfort advisors to do a blower door test doesn't take that long. If we're already out there to set the door up, it's really not that much more time. So getting that key piece of information that might add 20 minutes to the equation is is very important. You know, I think so I think it's a small price to pay for valuable data. Um, so we have a good understanding of what our budgets are. Um, um, as far as the design process goes, you know, actually, I'll go ahead.
[00:18:01] Ed Smith: Could I ask a follow up on that? Sure. Um, understanding your budgets. And I hate to be, like, crass, but, like, do you end up being more expensive than the competition? And does that give you a little flex or. No.
[00:18:11] Mike Missimer: Not always. No. I mean, here's an example. It's, uh, my neighbor. This was not a heat pump system. We just did a system for my neighbor. And my neighbor goes, Mike, you must really give me a neighborhood deal. I said, no, you had the same price, Jim, that we did everybody else. Um, right now, our industry here has been infiltrated by all the private equity groups that have come in and bought up some of the big names around here, which has done a couple of things. It's, it's it's changed their business model and some of their culture, which has in fact allowed the market to be flooded with with great talent because people might be looking for a change. It has, um, you know, consumers are changing because they it's not again, people don't necessarily follow companies. They follow the human being that started the company, or they have a a foundation with a certain technician. And I think people still want Joe the Plumber, um, if you will, in this general area with, you know, so with that also being said, the pricing structure with a lot of these companies, they have a much bigger nut to crack every month. They've got a much larger marketing budget. They the private equity group group, might own 15 companies.
[00:19:27] Mike Missimer: So it seems the pricing has been inflated, which, you know, helps raise the bar. But at the end of the day, we know what we need to survive. We know what we feel is fair. We're not undercutting the market I believe we're doing. We're living in what with what we think the market can bear. So, um, are we more expensive than everybody? No. Are we. Are we less expensive than others? Yes, I'd say if you're going to ask us, we're probably in that top 75% tier in the industry as far as our pricing goes. But I think a lot of it is where did they hear about us? Did they see us on a podcast like this? Did they see us out in front of the at the National Heat Pump Conference? Did they were they referred to us by somebody in the energy side? Um, did they you know, a lot of the marketing we do has to do with our exposure in some of these areas. So generally when people are looking for us, they're looking for a specific because somebody has said they're probably going to take it to a level that other people won't, and that in itself helps build value. The other part of it is, and when they see our comfort consultants actually walking around with your software, by the way, which is really cool.
[00:20:38] Mike Missimer: It's neat, it's different. It's refreshing. There were analyzing things, and then we're drilling holes in the ductwork and they're asking why. And we're analyzing the duct system to understand what capacity levels are. We're putting this big door in your this big fan in your door to try to understand things. And I think what they do is they recognize that we're really putting some effort into it, and then we might take some time to try to put a quote together. It's not a high pressure sales tactic. It's not, hey, here's your quote. It's $25,000. But if you sign up today, um, and with a three year maintenance contract, I'll take five grand off tomorrow and we can get it installed tomorrow. That's not how it works. I'd much rather give them the opportunity to understand the pieces of equipment that are out there, understand what we analyzed, what their home is doing, and create a good, solid roadmap for success to get them where they want and give them choices. There's multiple budgets, multiple options. Let's take it. And no, we do lose out, uh, to some of these high pressure sales tactics. If somebody else gets in before I would call them, you know, mildly mild scare tactics, if you will, uh, to help encourage the sale.
[00:21:51] Mike Missimer: Um, I think we just try to take a little bit different approach. And as of right now, it is, in fact working for us if we're going to advertise, you know, especially if we're going to run a cost benefit analysis on their home and try to anticipate what their utility costs are going to be, what their ROI might look like. We have to do our research. We have to we have to actually analyze things and make sure we're we're close. So that's an uncomfortable conversation to have with someone. If we were wildly off in our in our analysis and, uh, you know, so we try to try to provide that, uh, that little extra attention there. Um, so and when you do that, of course, there's extra things that we try to do with the installation. There's extra time that we try to spend with the education piece on the consumer. There's extra time filling out paperwork for rebates, there's extra time registering equipment and getting them additional warranty potential. So you know that all is taken into account when we look at our pricing. But I would say we're we're very competitive still.
[00:22:52] Eric Fitz: Wow, wow. So just to recap, it sounds like you're you're sort of your standard operating procedure on the design side. You're you're going to the house. Hopefully you maybe they've already got a blower door test done, but if not maybe you're doing your own blower door test. You're you're measuring static pressures and air flows on the ductwork. If you're going to do a ducted project.
[00:23:10] Mike Missimer: Correct. We're understanding capacity.
[00:23:12] Eric Fitz: Yep. So you've got you've got you understand the ductwork. You understand the loads on the home. You're doing a full manual J. You're going through a equipment selection process and then you're even forecasting electricity consumption. Sounds like and and so with if you're switching fuels from say a gas or deliver fuel system to all electric. You help the homeowner understand that piece. And what else am I missing? That's that's like it's an amazing set of steps you're taking. Well, I think.
[00:23:42] Mike Missimer: It's important especially I mean, people are they're very curious about especially heat pumps. Um. They're nervous. Am I going to spend more? You know, I think we have to have a good understanding of the cost of fuel. The cost per kilowatt hour, um, time of use rates, the cost per therm right now. Uh, you know, the other thing, you know, we try to anticipate, too, is we have a current reality right now. A lot of these people are are looking at other measures. They're going to they're going to air seal or insulate their homes to. So when you look at the current reality versus what the anticipated future reality is going to be, and that plays into it, definitely. But, you know, I think it's important that we have the ability to try to calculate those details for folks. You know, at the end of the day, we have some incredibly efficient equipment out there. It's great equipment, but natural gas did not escalate like people were talking about. Um, natural gas is still sitting. It's anywhere between 60 and $0.80 a therm. Electricity, at least in the city of Fort Collins. I think it went up 7% last year. It's going to go up another 8% in 2025. So we're looking at close to 15 points in two years.
[00:24:52] Mike Missimer: How does that how does that change things. What cops do. We need to be able to rival natural gas. And then the other piece of it, we have to understand the consumer. And I think that's the first piece, is asking them a question. It's not just about design. We have to understand why they want it. What is their motivation? Is it financial? Is it environmental? Are they just curious? You know it's financial. Well, you know there's so many companies going in or going, oh yeah, you're going to save all this money. And next thing you know we have negative ten degree weather in January and their utility bills are $100 more than it was when they were on gas. Well, gosh, that was a snapshot in time in the very worst case scenario of the year. We have to make sure the people understand this is a we have to look at this from an annual fuel utilization, not just a snapshot in time of one day or one month or one week. We have to be able to understand and let them know. And these are the questions we get in the field. Well, I heard these things are almost free to run. Well, no, that's not how it works. It's we are going to be giving up gas, which is a relatively inexpensive fuel right now when we convert it to energy in comparison to electricity.
[00:26:01] Mike Missimer: We have to make sure we understand what those cops are to, to know whether or not these people are going to see an increase or potential increase or a decrease in their utility bill. You know, folks that are more environmentally conscious, um, they, you know, a lot of people, they'll they don't care if they spend a little extra money every month. They're really dead set on reducing or eliminating their direct carbon footprint. And, you know, so we'd approach people like them a little bit differently. Maybe we'd approach them with a different style system and then other folks that are just heat pump curious. Maybe they're trying to do a little bit of both. Maybe they'd like the opportunity to be able to have options in the event that one fuel decides to. We see an extreme escalation on one on electricity, but not gas. If we have a dual fuel application at that point, they have a choice of how they want to operate their system. So, you know, I think that's a that's a key piece that a lot of people forget about is the human being that you're communicating with and why they are, in fact doing this.
[00:27:01] Eric Fitz: And in your area, what are you is it is it like a real standout reason? Is it is it mostly about comfort? Is it mostly financial? Is it environmental? Like what's what's driving a lot of folks, particularly for retrofits?
[00:27:13] Mike Missimer: I think comfort is starting to play a role in it. The financial aspects, definitely. They're the utilities, the local utilities and just the just the advertising that they get. People get in their, in their bills. Um, people find out that they're going to get money back from the federal government, or they might get $2,000 a ton back from Xcel Energy. They just raised the rates. People are sitting here going, wow, I have I have to get a new furnace. Anyway. Maybe I'll look into one of these heat pump things, you know? And, um, at the end of the day, they'll find out. Yeah. It it it during extreme times, we may not see a very good return on our investment here. Our utility bill might even go up slightly. However, I'm going to get incredible comfort. I'm going to get incredible efficiency, by and large, for the other 99.9% of the year. And I think that education is really starting to spread. And when we have good successes, it's great. But we've also had some some complete failures. You know, companies that don't quite understand what they're putting in or how the system works, what's the logic behind it? And then people are frustrated because, you know, they're seeing 4 or $500 a month utility bills. And you know, that's a we've got to combat that as well. So you know, fortunately that is becoming less and less the norm and more and more success stories are happening. So I think I think initially it was curiosity. I think the local utilities were paving the way for a lot of this. Um, I think the the Inflation Reduction Act and some of the advertising from there sparked interest, uh, for people. But now that there's actual data out there, proven success stories, um, and the ability to get some pretty good money back either on a local or federal level, it's it's really taken off.
[00:29:06] Ed Smith: That's great.
[00:29:06] Mike Missimer: That's the long version, I guess. Yeah.
[00:29:09] Ed Smith: Yeah, it was a great answer in there. Like the the phrase that came to mind for me is happiness equals reality minus expectations. And those failures come from folks not setting expectations with a homeowner the right way for what's actually going to happen. Heat pumps are there's aspects of them that are quite magical. Um, but they're not perfect, you know? And you just you need to understand what you're getting and what you can expect. Now, having comfort advisors or what do you call your salespeople.
[00:29:40] Mike Missimer: Comfort advisors. But yeah, they're salespeople. Okay.
[00:29:43] Ed Smith: Um, having comfort advisors with the knowledge and confidence in their knowledge to do that expectation setting ain't easy. And I know you said you had to kind of step back and sharpen the saw. What is your training and education process look like for comfort advisors to to get them to be able to go in and execute this sales and design process. That is very impressive.
[00:30:14] Mike Missimer: Well, in a perfect world, what it might look like is, you know, getting them to understand that house, uh, getting them to rewire the brain to look at it as a, as a system, the entire home. We've got to understand the building science first, and that's where I try to to to train them effectively. On on the envelope side, we've got a great a school here that's starting up. It's actually called blue Sky. Um, and they do a lot of BP training, building science principles, understanding the just the principle component of it. And one of the things that I'm going to start doing is actually enrolling all of our comfort advisors and their service techs into that basic principle, um, class with this, with this program, but getting them to understand the home first, then getting them to understand software like we're using now, the amplify and or write stuff, whatever the application may hold. You know, we do a lot of new construction design work. So, you know, understanding what, uh, what this home is doing, getting a proper load analysis and then teaching them how to analyze and measure airflow. Um, and we do a lot of that in house. We've got a couple of systems here that have more holes in it than any other system out there. Test ports and try to get them to understand that aspect of it. And then we just try to do some, uh, you know, mentoring with them, uh, spend time with them until they feel comfortable. Um, you know, it is very difficult. Uh, there are a lot of them are based on trying to get close to the deal, and they want to make the customer happy.
[00:31:45] Mike Missimer: So sometimes I find folks will revert back to old principles, will just kind of rush the deal, but getting them to slow down, put it together and believe in our system, believe in the customer. A lot of these people, they call us, they're trying to be proactive. So we're in not a big rush. We're not in a big hurry because they do have heat still. So it's, you know, slowing it down, but getting them to, uh, understand the equipment. Obviously, our vendors have great training, um, understanding what the equipment has, what it can do, understanding why is a Mitsubishi, uh, system different than a carrier? 25 four what's the logic? How is the consumer going to operate this possibly differently than, uh, than they would this other piece of equipment? Because the reality is not all heat pumps are created equal. They have various levels of heating potential at low ambient conditions. They have varying levels of controllability. And if we have engineers who like to tinker with them, we have to make sure we have a specific brand they use so they can monitor everything and control it. And, you know, as far as the education piece go, I wish I could tell you I had this incredible school process map driven out. I don't one day we'll get there, hopefully, but really getting them to understand again, the House is a systems approach. Not we're not focusing on the equipment first. We're focusing on the human being, the home, and then the options we can provide based on the known details the home, the duct, the human.
[00:33:16] Ed Smith: So I mean, it sounds like you've got a clear philosophy And you just listed them, right? The home is the system, the equipment, the ducts. Like it's there's a there's a handful of very important learning building blocks. And then it sounds like you're leveraging trainings. You're doing a bunch of stuff in-house and then you're leveraging trainings where they exist distributors, manufacturers, this group called blue Sky or BPI. Like it sounds like you're you're leveraging the great stuff that's out there. And given that you've been an educator in this space for so long, it seems like you've got a great finger on the pulse of that. But you're also willing to take salespeople out of the field for X amount of hours, sacrifice that revenue, but let them invest in themselves, and you invest in them to get them better at what they do.
[00:34:07] Mike Missimer: Exactly. You know, the other piece of it we try to do as well. We just brought on a new guy. He was, um, he came from a very large company down in Denver, very successful. Um, but he was given cookbook pricing without any. Why behind the work? We want to try to get them to understand the budget aspect of it, be able to create kind of an a la carte approach towards the consumer, the an individual approach that caters to the personality of the, of the homeowner, not just here's five options pick. And you know, and I think if we give them the the opportunity and training to understand truly the why behind the what almost on a cellular level. Boy once they get it it's it's gratifying. It's it opens the door for other opportunities. It gives them complete confidence in what they're talking about. And they don't have to ever second guess and feel like they're just regurgitating something they heard on some podcast, possibly, or a book, you know, it, uh, they can kind of create their own identity within, uh, within the organization. And I think that's the I think that's the internal philosophy that we try to have. And I wish, you know, I wish we could do a little bit better job honestly, internally at making sure that we're creating that career path for our, uh, our technicians and our salespeople and our office staff. But, um, you know, giving them access to knowledge, um, and encouraging that knowledge, um, effective knowledge now, not just sending them some random class that may not apply to their field, but, um, I found that the motivated folks will will really, really gravitate towards that and enjoy it and, and learn, you know, you kind of find out who's motivated and who's not, um, you know, and it it's easy to help make decisions in the future.
[00:35:59] Eric Fitz: Well, it seems like you put in place are the foundational elements for creating amazing team. I mean, I my sense is that how you've grown so quickly is that you're, you're educating your team. That gives them mastery around these, these key areas. And it allows them to be just better, smarter people and it allows you to for them to learn and innovate and bring ideas back to the business.
[00:36:27] Mike Missimer: That's the goal. Exactly. I think we have a foundation set on creating career paths for the individuals to get where they want on an individual level. Now, obviously, if we don't have the ability to get someone to there, unless somebody says, Mike, I want to work on commercial commercial chillers and screws and said, gosh, you know, it's probably not. We're not the right person. Um, but getting our leadership team and, uh, our, our staff to buy into the fact that we want to get them to where they want to be and provide options, not just give them the training for today, but, you know, hopefully give them an opportunity for tomorrow or a goal for tomorrow. I think that's where we have to start. Um, you know, obviously we have our niche. We're going to focus on that niche. We're going to get them into these areas that we feel good and comfortable with. Um, you know, I think over the next year, especially now that we've got management. Our management team in place will expand on that, and hopefully we can develop our process structure a little bit better to really be able to capitalize on that. That goal of creating a, you know, here's what months one through six look like six through 12 your first year. If you've got a five year goal of this, let's get you there and make and hold the managers responsible and our field staff responsible to getting the younger staff up to up to speed. And you know that. I mean, that's a whole different part of the business outside of, you know, what we try to do for the consumer. But, you know, it would sure be nice to be able to have a good, um, uh, a very good structure internally. And I think that's something we're going to try to build upon this year.
[00:38:06] Eric Fitz: Mike, can you talk a little bit more about some of the specific challenges for designing a heat pump system at higher elevations? It sounds like you're in the Denver metro area that's already Mile High City. I think you do projects even even higher elevation than than 5000ft. Yeah. Just what are some things you've learned from doing those those kind of projects?
[00:38:29] Mike Missimer: I think really understanding how to design at higher elevation. It's you know, we grew up we we work here. So we just kind of we understand that we're not going to move the same energy at 5000ft, potentially the same energy at 5000ft. Um, as we do at sea level, you know, we understand a lot of people have learned and understand that the sensible, constant change is the higher up we go. So we've got a couple different ways. We've got to look at this. We add more airflow. We might need to introduce 17% more air at altitude than we do, say at sea level. But then we have to look and go, really? How much of that is really giving us what we need? We've got bigger ducks now. We've got higher status, we've got the possibility of noise. Then we also learn how to de-rate the air, or do we de-rate the equipment? And I'm a big advocate of de-rating the equipment. I've spent a lot of years trying to add more air to systems to squeeze more energy out of a smaller unit, and when we commission these systems and actually calculate our sensible output, we're finding we're not moving a whole lot more. And if you look at the engineering data in many of the manufacturers, the difference between 400 CFM per ton and four ATP of CFM per ton is minimal when we're looking at a sensible output.
[00:39:48] Mike Missimer: So you know when any time that we're looking at it, we understand where equipment is rated to do we have to understand what is it rated to do here. And and then, you know, especially when we're dealing with heat pumps, what is it rated to do at five versus 47. What is it rated to do at negative ten versus five. And and taking into account the rates at that point as well. So you know, as far as the challenges go, I think initially my challenges were understanding the science of why we actually have to. Why do we move less energy at 5000ft than we do at sea level? I mean, a cubic foot of air is a cubic foot of air volumes, volume. Right? But we've learned that at sea level, air has more stuff in it, if you will. That gives us the ability to move energy. So, you know, I don't find much of a challenge. You know, honestly, I get in the challenges now. Well, the other thing we ought to consider here in Colorado, too, we're very arid. Um, there's not a lot of latent load here, by and large.
[00:40:51] Mike Missimer: So when I'm doing design work for people in Florida or Georgia, um, I've really got to look at how am I going to change the way that I design the system, you know, based on, uh, what I'm used to doing here every day versus what they need down there. So I think, I think understanding your your community, understanding your weather data, understanding your sensible and latent capacities of the equipment in an understanding. The death rate is a key component to being able to be successful here. So, you know, the nice thing is though, to most, you know, a lot of equipment is inverter. It's variable capacity equipment anymore. Usually we fall within a pretty good range. And unless we're on one of the right, on the ragged edge of of borderline equipment size, we don't have many problems, especially with today's today's, uh, uh, technology. And, you know, even with as, as in depth as we try to get with our load analysis, there's still a level of of especially manual J is pretty conservative in its approach towards, uh, the heat loss and even even gain. So there's some built in fudge factors there that, you know, if you know about that as well, it helps to cause hopefully that answer.
[00:42:11] Eric Fitz: Yes. That's great. It's interesting. Like in your climate you can end up with negative latent loads, which is, you know, if you're coming from a place like the East Coast or the southeast, that's like impossible to even imagine that we're going to have to add winter humidification because it's so, so dry. Um, and. Yeah.
[00:42:33] Mike Missimer: Absolutely.
[00:42:35] Ed Smith: So I was doing a little math in my head. You started out in 94. You founded MDI in 2001? No.
[00:42:42] Mike Missimer: 2020.
[00:42:43] Ed Smith: 2020. Yeah. So, um, you had 25, 26 years of experience starting off MDI. Your growth is tremendous. It sounds like you've had your share of hurdles. Every business does. I'm curious. Our target audience for this is heat pump entrepreneurs, folks who kind of want to build businesses like yours. You know, you're. And you described it as a progressive business. I'm curious when you started out, I guess I get two questions in the first year or two of running MGI like, what would be the advice you'd give someone who's in their first year or two of running? Mgi and then I'm curious now, like when you've got 27 trucks, I think you said, like, what's the thing that keeps you up now? Because I think those two answers help a newish heat pump entrepreneur think like, all right, this is going to be my plateau that I got a bus pass in the next two years. And then this is what it's going to be like down the road, which I think is interesting. You've got a unique perspective on that.
[00:43:55] Mike Missimer: You know, I think I think the thing that helped me feel comfortable with everything. And when I look at year one, you know, fortunately I was I was blessed with the opportunity to operate a larger company. And during that time I was the operations manager? I spent a lot of time in school, so there was a time when I was the technical guy around. I was teaching refrigeration and air flow and all these cool things that had to do with HVAC, if you will. Um, all of a sudden I had to learn how to run a $10 million business, and I had never really done that before. So I spent a lot of time with a coach understanding accounting, understanding things like balance sheets and statements of cash and and profit and loss statements and how they all connect, but more importantly, creating something that we take for granted. And that's a budget, uh, building a robust budget sheet of of that, that where I have my sales goals mapped out. I have my known, uh, cost of goods, I have my known G&A, and then I can apply to that. And if I have that math on the front side, I know how to navigate things. I might be the best HVAC guy on the planet, but if I'm terrible at running a business, this can go quick. And if I'm going to gauge my financial success on how much money I have in my account, that's a pretty poor way to go about it.
[00:45:21] Mike Missimer: So you ask, what is the the advice I give to somebody starting out? Understand your numbers. Understand what? You understand your budgets. Have a fundamental understanding of the financial component of your company and how to navigate times that are good, times that are bad. And keep your hand out of the cookie jar so you have a little thing for a rainy day. But, um, having a good understanding of that piece, a lot of I think the biggest mistake that a lot of great, great, uh, technicians that have an entrepreneurial mindset make is they come into the office thinking they can do this without the first understanding of, of any part of the business side. So that would be my, my, my first thing to tell somebody. Um, second thing, I'd, I'd, I'd tell somebody who is looking at building a business is, is focus on yesterday. Focus on the people that you've, you've, you've, you've worked with. Um, you know, hopefully you haven't burned a lot of bridges in your life. Hopefully you've developed a relationship base with people. You have some sort of a network that you can rely on, because those are the people that are going to help build your tomorrow. You know, the relationships that we built, like I said, they were 30 years in the making. I've got people who I was working for, installing for, who are now taking care of my family that I still work with 25 years later, even 20 years later.
[00:46:51] Mike Missimer: And that's what I try and tell my staff every day. These are the people that are feeding your family. They're feeding my family. These are people that are not here today, gone tomorrow. They're long term commitments and don't burn bridges. So, um, you know, rely on that that base, that relationship base that you've built to help get you there and then get out in the community. And I say proximity is power. If you want to be a great doctor, surround yourself with great doctors. If you want to be a great attorney, surround yourself with those people. Go to the different seminars. Learn, educate yourself and speak up. Um. Get involved in the community. Get involved with your local code officials. Get involved with the local utility companies and and and ask for help. Be part of their programs. Um, take advantage of what they have to offer. There's free marketing there. They will put you on lists that will allow you to go out and prove yourself. So I guess, you know, in my journey based on, you know, you know, fortunately for me, like I said, it wasn't I wasn't five years in the industry starting another business. You know, I was part owner in a business. Well, just to recap, you know, I was I started in the industry.
[00:48:04] Mike Missimer: I was an installer and manager up to 2002 from 94 to oh two. I got my first management position in oh two. I became a partner in the company in oh seven. We dissolved the business in 12. Um, at that point, uh took on another role as a future operator where I was just going to build the division and move on. Likely. I stayed there eight years and ended up. We grew the company from 16 people to well over 100, you know, at $1.6 million company to a $12 million company. I think my approach towards starting a business, after all of that experience, you know, is definitely different than than what some others might look at. Um, so I kind of had I had some help. It's not something that I did on my own. I have I had great employees that came with me that had relationships. I had great relationships in the past. I had great opportunity from employers who trusted me and taught me and gave me the ability and resources to learn. And, um, for anybody, I think out there that's looking to do that, you got to look at it from a big picture approach. This is not a sprint. This takes time. And you can either prepare yourself the best you can, or you can go in and and learn through the school of hard knocks. It's it's some of these are tough lessons.
[00:49:21] Eric Fitz: Mike. And that is fantastic advice for someone getting started. What about, you know, the second part of what's keeping you up at night now, you know, with your current state of your business and things are going.
[00:49:34] Mike Missimer: That's a great question. It varies, I think unknown. You know, we have pretty good market out here. So that feels pretty good. What stresses me or bothers me, um, is when I have changes that I can't quite understand. I like to have math and historical data on almost everything. And when I see, like we experienced back in May, actually, we started to see an incredible revenue change. We just started 30, 40, 50% more. Before I know it. We're way understaffed. Uh, from a management standpoint. And I thought, well, I'm going to ride it out. This is a bubble. Next thing I know, we're six months in, and I'm watching my staff drag themselves out of the office every day because they're exhausted from trying to do the work of one and a half people. And, um, you know, that I think the I think certain elements of the unknown keep me awake sometimes as bold as I can be. Sometimes I'm pretty, sometimes a little slow to make that change. And, um, I tend to overanalyze it. A lot of circular thinking before I make a move. But I think, honestly, the thing that keeps me up the most is, is if I look at the big picture of it going, gosh, we're not a 100 person company. But I still have, you know, close to 40 souls that we're taking care of. Um, not getting us where, where they want to be or where we want to be.
[00:51:01] Mike Missimer: How are we going to stay out in front? How how do I start to move out of certain areas, put other people into those areas and trust them to to fail initially? Um, and be okay with it? Um, which ultimately will allow them to eventually succeed, you know? Um, and getting them to do the same thing eventually for their, uh, their staff. You know, as of right now, I feel pretty good. Um, you know, you bring something up. It, uh, two years ago, we were two years in. I was going to buy a building. Two years went by a building. I'm going to invest in the building. And it was a lot more money than I was comfortable doing, because I had no idea how we were going to do. I didn't know if we were going to be around in three. At that point, I was still scared. Um, and I was talking to a buddy of mine about it. A gentleman who develops multifamily. He's got tons of land, and I was boohooing to him about my small problem with the building. That might cost $1 million. He goes, yeah, I carry between 30 and $40 million in debt every month. And I looked at him and went 30 to 40 million. And he goes, yeah, that'll keep you awake at night.
[00:52:15] Mike Missimer: And when he.
[00:52:15] Mike Missimer: Told me that, I went, you know, I don't have it so bad. So, um, you know, so to answer the big picture question, it varies on a day to day basis. But the biggest thing is, um, you know, just making sure that we're, we're setting the industry to be able to be around for the long run.
[00:52:31] Ed Smith: It's personally refreshing to hear that every month. So Eric runs tech and development of products, and I basically run marketing and sales every month. Eric like laughs at this point because it's so consistent. I'm like, we're three days into the month and I haven't closed as many deals as I wanted to. I'm like, this can be our first down month. And it's just like, it's always like, you just you just don't know. You know what I mean? Like, you don't have enough data trend. And just because it's been like this, like, the trend could change. And when your decisions involve people's salaries and ability to put food on the table and stuff, like you just want to take it seriously and we want to build something that's around for the long term, and that can lead you to be a little bit more conservative than you want to be. Sometimes it's always that like, it's that aggression versus conservatism balance constantly for every decision. Which way do we lean?
[00:53:23] Mike Missimer: Exactly. And I think, you know, we use a lot of one of the business coaches that I had is depending on how many staff members you have, what level of your business, and you have a builder protector ratio within the company. And depending on where, what level of of business you're in, how many employees you have, are you more cash oriented? Are you looking at process structure? Are you looking at employee? But there's a builder protector ratio that has to be protected. And in the beginning it's almost 100% build, build, build. But at some point you got to have somebody going, hey, stop, we got to we gotta pump the brakes here a bit. So I think you've got to have a good, uh, you've got to have a good ratio there. Somebody that's, uh, has an aggressive approach, but somebody else that might have a more, uh, a protector type, uh, mentality to a good, good offset there. You know, I find with me, I go through trends where sometimes I'm in a high aggressive approach. Um, other times I'm, I'm like, all right, I just need a break. Let's. The staff needs a break. Um, um, but, you know, fortunately for us, too, we've been pretty, pretty lucky.
[00:54:31] Mike Missimer: Um, other than our trucks, I haven't had to borrow any money. And that gives me comfort knowing that, I don't know, we don't owe a bank anything. And I think back to, you know, if I would have purchased a business that was already established, I'd have possibly million dollars, millions of dollars in debt that we'd have to pay back. And, uh, you know, so I think for a lot of companies that require a lot of startup capital, um, you know, fortunately for us, we didn't need a bunch. So I guess, you know, to to to expand back on, the first question is, is make sure that you can start your company without a lot of, especially in our industry, without a lot of debt. Um, if you have the ability to do that, do that. And, uh, you know, it's a little different than, say, a tech company. I think, uh, uh, you know, we have to have a truck and a and some tools and, and a phone and, uh, and hopefully a few clients, uh, before we can start building.
[00:55:31] Eric Fitz: I was just going to, uh, kind of a follow on, you know, it's it's the end of the year. Make it sort of interesting. Time to to think about, you know, what's coming, coming next year. And we're kind of curious from 2024, are there certain things that, um, you might keep stop or start doing, um, 2024 relative to 25. Or vice versa. 20. Yeah, you got my idea.
[00:56:01] Mike Missimer: I think it's, you know, I think of two things when it comes to mind as far as our, um, as far as the technical side of things, how we're going to approach the, the business itself and how we apply to the customer. We're going to we're going to we're going to change directions on our training. I'm going to enroll the vast majority of my staff into even some of the administrators, into the the building science courses that are there so they can get a different approach towards things. We're going to revamp our quality assurance process, um, to where it's a little bit more robust right now. Um, it has some room for improvement and everything's going to be time stamped and geo stamped and, and different things. Um, uh, we're going to focus more on the educational piece of it from the, the consumer and the and our employee building those career paths like we talked about. And really, you know, my role is going to be changing to 100% operations and marketing and sales versus, you know, more operations inside the divisions. But it's funny you bring that up because every year up to this year when I've rewritten my budgets, I always took a very conservative approach towards my budget and sales and said, well, you know, I'm still working in the business, so if things go south, it's not that bad.
[00:57:17] Mike Missimer: I can easily make a lateral movement and absorb different things. So I didn't take a real aggressive approach towards my sales goals. Um, I did this year. I went, well, we've got all these people in place now. Now I have to pay for them. And when I rewrote my budgets this year, it has aggressive sales goals that we're going to attack. Um, really not a whole lot harder than we did last year. But what we want to do is, uh, I'm in full builder mode again. So if you ask what's changed, that's, uh, that's going to be that's going to be a fundamental difference. And then the other part of it is to, you know, from a personal perspective, I'm going to spend more time training again. I'm going to help develop the HVC curriculum for the school that's opening. I'm probably going to get back involved with the college, and we're going to do a lot more speaking. We've got the Colorado Builders Symposium that's coming up in in January. So we're going to speak, uh, at that and then kind of get that back out in the community.
[00:58:14] Ed Smith: So that's awesome. That's great. All right. We you've already given a ton of good advice to potential folks who want to build heat pump businesses. Um, the question we'd like to end with are any specific resources, because sometimes what people need is they need to be referred to a podcast or a school or a book or whatever. So if you're talking to someone who is that incredible tech wants to go start this business, focus on heat pumps, what resources would you point them to?
[00:58:50] Mike Missimer: Well, obviously there's a lot there's a lot of education going on right now. I mean, obviously you're doing a podcast on it right now. Um, I would, you know, search for access to, to data like that. But I think, you know, the nice thing that almost every utility out there here we have, the big ones are going to be Xcel Energy. And then up here north, we have Platte River power, which oversees a lot of different Longmont, Loveland, um, Fort Collins, Estes Park. And within those communities, they have a ton of education and resources because they're trying to push the agenda. They're trying to push heat pumps. They recognize and realize that they have to educate their their people. And and I'm going to plug the Efficiency Works program. I think they have a great program that they bring in educators. They bring in, um, resources such as tools. Um, they give technicians the ability to purchase tools at reduced rates. Um, Xcel Energy has all kinds of training set up that that allows technicians to better understand the design and commissioning process. The vendors themselves, they do a great job of teaching you about their product. Um, but there's not a lot of resources there from from the vendors, whether it be Carrier or Daikin or Mitsubishi, on how to actually commission the system, I would say get involved with ACA, uh, become an Energy Star certified contractor. There's going to be a lot of good data that you can learn from that. And especially don't forget about the building science aspect.
[01:00:28] Mike Missimer: We get wrapped up in the day to day of HVAC, and a lot of people think, well, you've got the energy raters out here, you've got the HVAC people over here. It's a lot closer than people think. So, you know, get involved with that. Get involved. Find the local BP rated. Talk to your raters. There's energy raters all over the place. Now understand the house a little bit better. Um, and you know, because if you can't go out and apply the knowledge. We might be a great businessman. But if you can't go out there and design the system, apply what you're doing and apply it in the field, you're going to have upset customers. You have to actually, uh, walk the walk. Um, after you talk, to talk. So it's it's a tough detail there, but but educate, educate all you can and and you asking about specific details. Understand, you know, resources out there like the, like the Nepa website on how you can plug in data. Um, and, you know, we use your software and at that point we can generate the load and pull the Nepa stuff over. Pearce does it all the time, shows them exactly where crossover points or assumed crossover points are. You have a better understanding of what your equipment is able to do at that point. So, you know, it's hard to pinpoint anything in particular. Um, because I think there's a lot of great resource out there.
[01:01:43] Ed Smith: That was incredible. That was a huge smorgasbord of stuff to do. And all of them are great resources. Um, no one has ever mentioned the utilities before. Um, so that was that was a new one. That's super helpful.
[01:01:55] Mike Missimer: They really are a good resource. I'd say they are turning out to be probably, at least here in this area, one of the best.
[01:02:03] Ed Smith: Mike, thank you so much for joining the Heat Pump podcast. This was awesome.
[01:02:08] Mike Missimer: You're welcome. Thanks for having me. I appreciate it. Yeah.
[01:02:10] Eric Fitz: Mike, this was so much fun. Thank you so much for for joining us.
[01:02:14] Mike Missimer: You're welcome. Thank you.
[01:02:17] Eric Fitz 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 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@amplyenergy.com just [dot] energy. Thanks a lot.