THE TWIST: In the Comfort Zone With the Founders of Homesense Heating & Cooling

August
25th, 2016
Keyhole - Content Marketing - Joe Dudeck
Joe Dudeck
President + Founder
Categories: Interviews
August
25th, 2016
Keyhole - Content Marketing - Joe Dudeck
Joe Dudeck
President + Founder
Categories: Interviews
In the Comfort Zone With the Founders of Homesense Heating & Cooling

The plot twist…that moment in a story when an event or experience dramatically shifts the future direction of the storyline and all the characters involved. I’ve always found these moments fascinating in real life, and so I started this new, recurring series—called “The Twist”—where I talk to entrepreneurs and explore the plot twist that led them to start their businesses.


In the Comfort Zone With the Founders of Homesense Heating & Cooling logoBrian Schutt and Jesse Cross are two Purdue University grads who decided over bagels one morning that there just had to be a better way of providing heating, ventilation, and cooling to homeowners around Indianapolis. And so in 2009, they decided to combine their inverse skillsets and found Homesense Heating and Cooling, with the goals of offering more integrity and better storytelling.

We recently met at their new offices near 46th Street and Keystone Avenue to chat about how they got started, why they chose the HVAC field, and how they build trust in a skeptical marketplace.

On how this odd couple came together…

Joe: First up, could you share some background on yourselves? Talk a little about your childhoods, your families, where you grew up. And share if you have any entrepreneurial background that you draw from.

Jesse: I grew up in Goshen, Indiana. My mother was a teacher until she began working for Mary Kay Cosmetics when she was about 30 years old. She worked there until she retired at 65, finishing 19th of 350,000 worldwide salespeople. And my dad was a schoolteacher/guidance counselor. He was quite the opposite of my mom—very conservative and always stuck to one plan. It’s kind of interesting to have both extremes. I don’t know how they ever got along—from a financial and risk standpoint—but they did.

I went to Purdue University and graduated with a finance degree, before working for a consulting firm for three years where we investigated corporate fraud. In college, I started and ran a lawn care service for two summers.

Joe: And you, Brian?

Brian: I was born in Indianapolis at St. Vincent Hospital on a cold, snowy day in November 1979. Haha. My dad was pastor of a church, about a pitching wedge away from [the Homesense headquarters]. Literally, you can see it looking out the window. My mom was a nurse before having children, and then, a nurse again. They divorced when I was in third grade.

Growing up, business entrepreneurship was not necessarily something that I saw. I was really close with my best friend and grew up around his family. His dad was in business, and probably that was my greatest exposure to entrepreneurship.

Joe: What’s funny about you guys…I wouldn’t walk into this room and immediately think those guys must be in business together. How did this odd couple come together?

Jesse: We met in college where it was kind of a forced relationship as we were both fraternity presidents at the same time. And then, I think, we got to know each other better by being involved in Greek InterVarsity our senior year. From there, we were a part of the same Indianapolis church community.

Brian: The only thing he left out was that I had a crush on the girl that he was dating, but I didn’t know that they were dating one another. So that was the other piece at play. I loathed him for a little while.

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Joe: And back then, did you guys ever talk about going into business together some day?

Brian: No, not really. I mean, Jesse was far more forward thinking as it relates to business and entrepreneurship and looking through the lens of opportunity. To his credit—then and now—his risk tolerance and capacity to analyze opportunity is profound.

His strengths and my strengths compliment one another incredibly well. What I’ve learned is that with a partnership, much like a marriage, you don’t always want to be coming from exactly the same place. And so we tend to let the other play in his own sandbox and are able to report back to each other.

On the plot twist toward heating and cooling…

Joe: And so now that your paths had merged, how did it get to you asking the question, “Hey, should we start this business?”

Brian: We were part of a men’s group that met weekly at Einstein Bagels. Somewhere in 2008, Jesse throws out, “If you know anybody who needs an air conditioner, I’ve got a couple of good guys that I’ve been working with who do great work. The prices to get a new air conditioner are crazy. If you refer anybody, I’ll give you a referral fee.” It was something along those lines.

Joe: And you’re still employed at this time, Brian?

Brian: I’m still employed at this point, working for a marketing firm. But that question planted some sort of seed of this guy analyzing an industry and seeing that the price point in most customers’ minds is much higher than where it needs to be based upon what he’s seeing.

And then after that, the very brief story is the economy tanks in the fall of 2008. Marketing becomes an easy line item to cut from people’s budgets. And by the spring of 2009, the majority of the clients that I’m managing have either not renewed or scaled back considerably. And so, I’m out on my own by March of 2009. Oh, and I had just gotten married.

From there, I feel like it was an evolution. And Jesse, you can pipe in here, but I remember a phone call while I’m in the car with [my wife,] Tiffany. I remember saying something like, “We should do something together. That idea you’ve mentioned about heating and air conditioning. I don’t really know what it is, but I think there’s something there. I don’t know much about the industry, but I feel like I’m pretty decent at marketing. You know the technical side. You know finance. What do we have to lose?”

Jesse, anything else to add there?

Jesse: I mean, my recollection was that we were at Einstein Bagels and you asked me: “If you had to make a business out of one of the residential services, what would you do?” And I said, “I would start a roofing company, or I’d start an HVAC company.”

Then we waited a week or two. Brian came back and said, “Well, I’ve looked at the HVAC industry, and it’s very blue collar.” And that was quite the opposite of what was trending then during the age of social media, which was to start a real customer-oriented service industry—rather than just the nuts and bolts of we fix stuff. And he said, “I can do that. I could do a much better marketing job than 90 percent of the companies in the city.” And I said something like, “Okay.” At that point, in 2009, if it was profitable and I enjoyed it…why not?

On the need for a strong supporting cast…

Joe: Talk a little about what others around you thought of that decision?

Jesse: Well this is a bit of a side story, but I talked to my dad when I was 26 years old. At the time, I was making $80,000 a year at my firm. And I also managed eight apartments or rental houses that made me about $1,000 a month. And I said to him, “I’m going to leave my job. And not only am I going to leave my job, but I need some money to start working with investment properties.”

For one year, to his credit—and this is coming from the side of my family that’s very intent on finding a good job and sticking with it—he subsidized my income $1,000 a month so that I could pay rent and eat for one year. For him to do that just validates to me the need for a strong support cast.

And the other side of that is, if you’re in a partnership, your business partner’s support system also needs to be somewhat on board with the idea. Otherwise, this is just a losing battle to try to start something.

People’s ideas, the stuff that makes it to network TV is quick money, fast money, shark tank, got this idea, start this, fund it, we’re in Rio for Christmas. No, you’re not. Nine times out of 10, you’re not.

Brian: I think that’s a great point. Without spousal support, nothing happens. Without Tiffany’s support, nothing happens—both financially and emotionally. You need that cheerleader.

I’m blessed in a lot of ways, but, with regard to business, I’m grateful that she grew up around two entrepreneurs. She had, and has, a realistic expectation of how it looks. Eight to five is not a reality. Income, especially early on, is not on a two-week payroll. You take money when money’s available, but more often than not you invest it back in. She’s been, and remains to be, incredibly patient and supportive. She’s bright and understands business pretty well in her own right, so I think, it’s just been essential.

Jesse: One of the things that I think is key to venturing off, especially in the partnership realm, is to make sure that this is not your sole source of income. And couple that with partnering with someone who is not greedy and does not have a high cost of living.

In three years, you’re going to make nothing. You’re barely going to get by. If you can work off your spouse’s salary, that’s great. If you can moonlight and keep a job, that’s great. If you think you’re going to step across the threshold and make $50,000 in year one—and keep nights and weekends free—you’re crazy.

On why they chose the HVAC game…

Joe: Earlier you talked about how you would have started a residential service business in either the roofing or HVAC industries. Why did you end up choosing heating and cooling? What was broken in that industry?

Jesse: I don’t know if I thought anything was broken because I didn’t know anything about it. But having done a lot of construction and dealing with a lot of customers, I wanted to be in and out of a customer’s home very quickly. Working at a customer’s home for a month or two was never attractive to me.

With roofing and HVAC you were typically in and out in one day, so that was my main attraction. Plus, one thing that I noticed early on is that HVAC is still really the one only thing that cannot be sold at Lowe’s and Home Depot legally through the Environmental Protection Agency. And from a technical standpoint, it’s nearly impossible. They do sell installs through a third party, but that’s not something that they can sell off the shelf. So I liked the protection of that residential service.

And to this day, as the industry continues to progress and become even more technologically advanced, it becomes harder and harder for even the old HVAC guys to keep in the loop. Of course, on the flip side of that, I spend thousands of dollars on training for my guys to continually be educated because the technology’s continued to advance, so it’s…

Brian: …protected but expensive.

Jesse: Yep, protected, expensive, and it’s one of the few industries that continues to advance. Whereas the technology in dry wall finishing, for example, hasn’t progressed that much.

Brian: And back then, when I looked at the HVAC field, I thought—and still believe—most of the marketing is done in a really antiquated way.

Not everybody is the same, but look at nine out of 10 companies, and they market themselves in exactly the same way. It’s somewhat painful. Red and blue logos for hot and cold, using costly and hard to track tactics of marketing, and everybody flows in the same way because they’ve grown up working for the same companies. And many of these guys are doing very well. But it’s not the most efficient way to gain a customer, and it’s certainly not the most long-term approach.

That doesn’t mean you have to be Seth Godin in the heating and cooling industry to do something really profoundly different. We just utilized the mostly free online resources available, told our story, and helped customers. It all created a snowball effect.

Joe: I feel like, in this industry, you can’t really predict sales. I mean, it’s difficult to create demand. Has that been a challenge as you’ve gotten into the space?

Jesse: Yes, I think, the nice part is that it ebbs and flows, and so it’s not always busy. The bad side of that is that we have months that we lose money, and months that we make a lot more money. And so it’s very tough to budget and predict, especially when it’s so based on the outdoor air temperature, which you cannot predict.

And it affects not only our revenue stream but also flows back into our staffing. We can’t service our customers if we’re understaffed. But if we’re overstaffed, we’ll be going out of business.

Brian: Anything cyclical is challenging, especially a cycle that’s not entirely predictive. We know it’s going to be warmer in summers, and colder in winters. We know ACs break in summers, and furnaces break in winters.

I think a key assumption that Jesse makes on the staffing side—which goes along with our business philosophy on things—is that you can’t staff to the peaks if you’re committed to your team. You can if you’re totally fine with laying people off when you get into the valleys of demand. What we believe is that you can’t have good consistent teamwork and culture if you’re comfortable with hiring and firing based upon the ebbs and flows of the industry.

There are many people in our competitive space that are totally comfortable with that, and I mean, that’s certainly within their right to do. We just don’t believe that that creates the best culture for the long run, and that’s one of the things that I think fundamentally separates us from most of the people in our industry.

Maybe to our own detriment at times, we try to create a very different atmosphere within our team. We trust them with a lot of things and give them autonomy. We take much more of a white-collar management approach to this industry. I’m not saying it’s a good-bad thing, but I do think it’s very different. And I think it yields a very different result. I mean, I really believe our staff cares just about as much as we do, if not more at times, in what we’re trying to achieve.

On building trust in a less-than-trustworthy field…

Joe: You just mentioned the word “trust.” It seems to be a pretty important word to you. I mean, it’s in your website address:  TrustHomesense.com. When you think about this industry, what does that word mean to you? Why is that such a big deal to you?

Jesse: This wasn’t an industry that was full of…well, it’s not the word that would come to your mind. I think the whole idea of trust, it feels good to customers. There is this, probably, marketing advantage to it. But I really think it’s the core of who we are. Integrity’s number one. We’ve fired people for not having integrity. We’ve not done repairs after knowing what the truth was and ended up make less of a profit.

Brian and I both come from a work ethic that’s filled with integrity because—if you can’t sleep at night—what’s the point of going out and making a buck?

Brian: That philosophy of being trustworthy has become infused within everything that we’re doing. In real practical ways, by reducing turnover, by building loyalty, by doing a repair that costs a lot less. All that builds trust. Again, it’s who we are, and it’s what we do regardless. But, it just so happens that, working with integrity has the greatest opportunity for long term profitability.

I mean, I just fully believe that whether, whatever belief system one subscribes to—whether it’s karma, the golden rule, or whatever—the reality of how one is operating bubbles to the surface eventually. And doing the right thing always wins.

Joe: How do you get customers to buy into the fact that it isn’t just another mission statement?

Jesse: Tangibly, I think it’s through customer reviews that have experienced honesty. “I had a company come out. They said I needed a $3,000 repair. You guys came out and said you could do it for 300 bucks.”

Brian: That’s the incredibly awesome thing that the internet allows for—those reviews. That customer’s experience can be amplified in such a greater way than ever before. I mean, that’s part of the industry’s issue is that, for years, those isolated cases of deception were totally quarantined to the person’s direct sphere of influence of who they happen to interact with that day.

And so now our philosophy has the opportunity to be amplified, both in amplifying the positives and holding it to account the people who don’t have ethical business practices.

On the seven year itch in business relationships…

Joe: You’ve now been in business for seven years. How do you guys create and maintain that trust in each other as business partners? Is there such a thing as a seven year itch in business relationships?

Jesse: I have various other partnerships, and it’s easy for me to compare notes. You start to realize what a good partner looks like because there are very bad partners and partnerships out there. And if someone asked me now what I would look for in a good partnership, it’s some of the things I mentioned earlier. You can’t be a partner with somebody that’s greedy or that has a high cost of living. You need somebody that can roll with the punches and go through the valleys.

I care about that much more than I care about what industry we’re in. I’d go in with Brian on something else we knew nothing about quicker than I would with a industry expert in that industry because, as we’ve shown, we can learn anything. And we complement each other well.

Brian: As MC Skat Kat famously said, “opposite’s attract.” I agree with everything Jesse said. And I think we keep trust in each other by communicating. A connection is what continues to maintain trust. It’s making sure priorities are met; issues are communicated; staying on the same page with important decisions; being comfortable with important decisions being given to another and other people; and having that intuition as to where that dividing line is.

I think we’re better at that. Our alignment is better than when we started it. I mean, similar to a marriage, it’s certainly not a one and done. It’s an ongoing process for sure.

THE TWIST: Jenn Hoffman and the Therapy of Marketing
The plot twist…that moment in a story when an event or experience dramatically shifts the future direction of the storyline and...
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