- Duration: 28 min
- Platform: zoom
- Attendees: Administrator’s iPhone (3), Andrew Engler, Charlie.Banks, Michael Houck
- Source: Read.ai 01JN6WMS49EAVPVXRDG6P4BMX9 (https://app.read.ai/analytics/meetings/01JN6WMS49EAVPVXRDG6P4BMX9)
Transcript
Charlie.Banks: What’s up guys? [UNKNOWN_SPEAKER]: Yo, what’s up Charlie? [Michael Houck]: How you doing good man? Charlie.Banks: How you doing? I’m good. [Michael Houck]: I think we just had and then lost Andrew, so he’s probably going to rejoin in a second. Yeah, he probably will. I think the hat looks good. [UNKNOWN_SPEAKER]: Yeah, thank you. Charlie.Banks: Appreciate it. Gotta have the swag out in the field. [Michael Houck]: Yeah, no doubt, no doubt. How’s things? How’s things been going? Charlie.Banks: Man, we’ve been. Crazy busy. Super grateful for just the partners that we’ve established here in Atlanta. It’s been great. We’ve been able to grow the team and really starting to take off. So, super pumped about it. [Michael Houck]: All right, looks like we got Andrew back here. Charlie.Banks: Hey, Andrew. Yeah, sorry about that, guys. At the airport? [Administrator’s iPhone (3)]: Yep, at the Delta Lounge. [Michael Houck]: Dang rough day for you, man. Thanks for hopping on. Absolutely. Um, so yeah, I guess excited to hear sort of what’s going on, where things are at, um, both with the, with the business with you guys and also with the, um, with the, with the fundraising and where things are out there. [UNKNOWN_SPEAKER]: Yeah. Charlie.Banks: Um, I’ll, I’ll chime into that. So I think the last we talk was that before, um, before the new year, like, Yeah, it was back in, I want to say November. Yeah. Yeah. So November, we closed out the year, did a little over 400k in revenue, started off the year super hot, and I’ve already amassed over 225k in revenue so far. It’s been great. [UNKNOWN_SPEAKER]: Yeah. Charlie.Banks: Is starting to pick up for us and signing on new partnerships every week with just different big commercial real estate owners here in Atlanta. We’ve hired on some more techs, office admin support for us as well, and really see this year big time growth mode for Air Last here in Atlanta as we continue to sign on our partnerships, insurance, and preventative maintenance type stuff. Are those people, are they finding you and reaching out to you guys? [Michael Houck]: Is it outbound? And referrals, where are they coming from Charlie.Banks: You know, that’s a good question. We got really lucky just with my previous experience in commercial real estate. So we’ve been able to leverage a ton of my existing contacts and working with them to be like preferred HVAC partner going forward. And some of those names include the likes of like a Five Rivers, Farrow Point, a Nuveen, those types of owners that own property here in Atlanta, and then they also own property pretty much in every major city across the US. Okay. [Michael Houck]: So the, the sort of ends that you’ve had are specific to the market. Obviously you guys are in Atlanta and your, your connections there, but these are people who also will be customers in other markets as well. So there is some like replicability. 100%. Charlie.Banks: And that’s always been our thought on future expansion is like, you know, knock it out of the park here in Atlanta. We’ve already, essentially created an airless HVAC program here. We can just reinvent that wheel into a new city. It’s a pretty light lift for us. Granted, when we started it, we did not have any sort of HVAC experience. We thought about starting or buying an HVAC company, which I’m glad we did not do because it allowed me to learn. So we have the processes in place to take this to whether it’s a Charlotte, a Tampa, a Miami, Dallas, markets that are similar to Atlanta for our first expansion, and then just taking it across nationwide once we get there. Cool, that makes sense. [Michael Houck]: What is the sort of, like you mentioned, obviously it seems like the first two months of the year have gone incredibly well in terms of revenue. What are you guys seeing for the rest of this year, just in terms of new markets or revenue goals? Or anything like that? Charlie.Banks: Yeah, so I was pretty surprised at the revenue growth at the start of the year because this is what’s considered like shoulder season for HVAC just with weather. I expect the growth to be, you know, at least 5 to 10x from now to when spring is and when people are turning on their ACs. That’s when the craziness really, really hits. And so, yeah, we’ve been super We’re lucky and like, you know, I’ve talked to different HVAC supply houses that we buy from that are like, I’m like, they’re shocked by, you know, the orders that are coming through from our side, just for the amount of business that’s been coming in. [Michael Houck]: So you think by the end of the spring, you guys could be, what, close to a million? I would hope so, yeah. Charlie.Banks: Wow, that’s a nice- It’s just like the pipeline we have going right now, and like jobs scheduled up, I could see it being there. [Michael Houck]: Cool. And then, okay, so then on the new market side, it sounds like you guys are gonna be pretty swamped just with what’s going on with Atlanta. Charlie.Banks: Yeah. Kind of going forward. Yeah. Yeah. New market wide. I mean, probably one to two years away, really just wanting to solidify executing on the product, right? Like I had a commercial real estate state background, not HVAC. So why would someone who just starts an HVAC company all of a sudden take over all this business? We’ve had to show the market we’ve been able to execute on that end. And so being able to do that, we’re able to go out on a Friday night if an HVAC goes out for a restaurant, we’re able to send out our guys out there and get the unit back up and running for someone. [Administrator’s iPhone (3)]: The one thing I’d say is like, it’s determined on our choice. So like, we absolutely could expand. And like, the customers are now like, obviously happy enough that we’re expanding and seeing that concentration Atlanta, it’s more of these things were like, why don’t overpush it? And like, no one can compete with the product right now or has the ability to so yeah, but it’s more just a function of cash raised and then finding another Dylan like main person that to have for that market and then already working with the same clients. Yeah. [Michael Houck]: Because I mean, my thinking is if you guys have the clients in these other markets who like their real estate presence there too, that they can, you can service them, you know, obviously that’s fruit you can kind of pull on anytime you want. But yeah, I, I worry about somebody else coming into one of these other markets and doing their, what you’ve done in Atlanta so well, you know, obviously there’s, there’s probably some defensibility that you guys have built even though we were so far ahead by now, and if someone started now, it’d take them a while to catch up and all that stuff. But yeah, how do you guys think about expansion versus future competition? Because when we were growing Uber Eats, we moved as fast as we possibly could, and we still lost a bunch of international markets to local players who popped up. Charlie.Banks: Yeah, I think of it like as a three-leg bar stool. So you’ve got to have someone who’s in expertise in insurance, which is Andrew. You’ve got to have someone who has expertise in HVAC, which is Dylan. And then you have to have someone who knows the market in commercial real estate, and that’s me. You don’t have HVAC companies that understand commercial real estate and how intricate these leases are, let alone the lines of how complicated and difficult insurance is. And so it’d be very, very tough for someone to replicate what we’re doing here in Atlanta. [Michael Houck]: OK, so basically what would need to happen is there would need to be another sort of team of either three people or two people, one person has multiple parts of the experience. I mean, that’s, I see that as hard for sure, but it’s possible, right? Someone could go to the, I don’t know, the Dallas market or the Miami market, and they could put that team together and go after it and then build in some sort of local network that’s, yeah, kind of similar, right? [Administrator’s iPhone (3)]: I would say looking at probabilities, there’s a way bigger probability you blow up a business that’s already extremely profitable and cash positive and growing at 10 X, then someone figuring out how to do a segregated cell balance sheet out of Cayman and understanding how to do a leverage like lateralization, having someone who has relationships with some of the biggest property managers in the world that trust them. And then someone who can explain what, you know, M five condenser unit costs are at wholesale and also be able to like replace them all. So like, so it’s a, We can. Again, I think Charlie’s been very prudent and smart on this. I pushed the same direction you did, which was like expand, expand, be startup. Don’t go into service business. Don’t do all these things that were like classic VC-isms. And it’s like every single one of those has been wrong and has proven out insanely profitable and very good for business. So yeah, I think it’d be good to have someone like you who’s actually seen a very big scale business understanding that and going, here’s how you need to think about it. And like, here’s how much, here’s how you want to think about it methodically with cash. We’re like, okay, you need to have five steps that you say are cleared. And like, here’s the amount of cash that you want to be willing to spend at it. And here’s how you do a risk reward, like ratio on it. [UNKNOWN_SPEAKER]: Yeah, it makes sense. [Michael Houck]: You know, you guys are obviously way deeper in this. That’s just, I think the first thing that I would hear that I’d be like, Oh, like, I’m curious, like, what’s the, what’s the thing in there? Because word will get out. Like, obviously, you guys probably keep this tight knit just with like the Atlanta sort of network. But, you know, these real estate guys will talk to one another and word will get out within, you know, some founder somewhere will see this opportunity and be like, Oh, I’d love to build that business too. So probably not urgent. It sounds like you’re thinking about it the right way. But yeah, that would be the thing that I’d be like, no, there will come a time when we need to have a strategy to go after where somebody already is trying to do what we’re doing, at least. Charlie.Banks: Yeah, 100%. Yeah, I completely agree there. And like I said before, the thought previously was like, all right, you know, Nuveen killed it for you in Atlanta, let’s take over the Dallas assets for you. Get our license going over there, which takes time to do just to get that processing through. And then just, you know, you can keep the service team light, realistically, you only you need about four or five techs running throughout the city, repairing things and servicing the units. So you can keep things tight as long as you have a good manager overseeing them. [Michael Houck]: Yeah, I mean, I’m actually not worried about the service side at all. I think the more high touch approach that you guys are taking is actually the right one. I run businesses where we have had a strong IRL presence and sort of some of those non-scalable costs And it’s usually been the right call if you control it the right way. And it sounds like you guys already are. So that’s not really the thought. It’s just the competitive side of it. Because I see the opportunity and the business is very clearly attractive. And so I worry that someone else will hear what you’re doing and have that same realization. Totally with you on that. OK, well, cool. I mean, so where are things at fundraising-wise? Is when we talked back in November, I think it was a little more sort of TBD, what the structure was gonna be, what you guys were thinking. Charlie.Banks: So catch me up on the thinking there. Yeah, so I don’t know if you saw Drake’s newsletter. We went out on it, we went live on it yesterday with kind of really wanting to see what’s out there necessarily. We don’t really need to raise just with cashflow where it is right now and revenue, curious for it, so we wanna see what’s out there. We really like our conversations with you and want to have you involved in some way, not knowing what that would be right now, but we think you would be a good benefit towards us as we do consider this fundraising part and we’re looking to raise somewhere like three and a half million for this portion of it. And that’s really to, you know, grow sales team, grow tech team, captive funds, um, for that money. Cool. Okay. Yeah. I mean, look, I love the business. I really do. [Michael Houck]: And I love you guys. Um, so I’m, I’m definitely interested in being part of it in some way. Um, I guess, do you guys have a safe open or what’s the, where are you guys at with that? Is it just sort of like, you know, would it be like a one-off thing or how do you, what you’ve set up right now? [Administrator’s iPhone (3)]: Yeah, so we have a safe that that one’s like closed, so we’ll open up another one we haven’t yet. And look, I think this is where you become extremely helpful is like being a partner that’s got one foot in the BC, one foot in the founder. And I’m like, guys, here’s how we should do it. Like, set it up this way. I’m going to intro do a bunch of back channeling. Like, obviously, we’ve got a huge top of funnel that’s starting to open up. And then I think you’re very well And like a lot of people know you are. And so you back channeling for us would be big and yeah, you know, kind of help playing as part of the team. And we’re like, Hey, look, you know, we already, we already want to Michael be a part of it. And so, yeah. [Michael Houck]: Okay. I’m down. Put me to work, man. Um, I’m, um, it’s, uh, yeah, I mean, I don’t do too many, too many angel investments right now, actually just got divorced. Uh, so I’m, I’m trying to, I’m trying to keep my cash like a little, a little tight while we wrap up. That process, but I think you guys are probably the one, the one investment that I’m super excited about doing right now. So I’d love to, I’d love to put something in and, and, and kind of go to work to help fill out around for you guys. Charlie.Banks: Yeah. I really appreciate that. [Michael Houck]: I know you mentioned you were traveling. I hope you went somewhere fun. Yeah. South America. I did a Brazil, Argentina, LA, and just kind of chilled out for a couple months. [UNKNOWN_SPEAKER]: It was nice. Charlie.Banks: I’m jealous, man. I’d love to get over. [Michael Houck]: So, okay. I guess, let me know next steps wise. What makes sense then? Um, in terms of, I can send over some thoughts on my end if that’s helpful, or, yeah, let me know where you guys wanna take it, because if there’s no safe open, that’s probably first up. Charlie.Banks: Yeah, I’d love to get some of your thoughts on that. [Michael Houck]: I think that’d be good. Yeah, I mean, I guess, we say we wanna raise 3.5, do we have an idea of, have we set a target for what we wanna raise that at based on, I don’t know where we want to get to, or it’s going to be more of a collaborative process, you guys think with with investors, because most of the time, especially if it’s gonna be a price round, they’re gonna want to, you know, set that level or at least have a majority voice in it. But I always think that there are ways that we can get to a target and kind of start the conversation on our terms instead of theirs that that can sort of shift some of the leverage. So I can send over sort of what we’ve what we like to do and if that’s helpful and maybe we just start there. Charlie.Banks: Yeah, that’d be great. Sweet. [Michael Houck]: I’ll take an accident to do that. I’m at a conference right now, so I’ll probably get it to you over the weekend. [Administrator’s iPhone (3)]: Yeah, no worries. [UNKNOWN_SPEAKER]: Awesome. Cool. [Michael Houck]: Guys, I’m pumped. I was thinking about it on this one day when I was in Bariloche, Argentina. I was like, man, I really should have invested in that company. [UNKNOWN_SPEAKER]: So now that I’m back, what were you seeing in this place? [Administrator’s iPhone (3)]: Was there like a broken HVAC or money pouring out of the sky? Well, no, I mean, look, you’re in South America the whole time. [Michael Houck]: It’s all these little air con units and all these, yeah, the remotes and everything. So, but no, it was just, it was very, it was just, I don’t know. I was in a little Airbnb in the woods and it was very hot. And I was like, man, I shouldn’t ask you. Yeah, so no, I’m pumped. I’m pumped. I thank you guys also for letting me be part of the journey. I think this can be really exciting, really exciting business. Charlie.Banks: Yeah, I mean, Dre, I’m super highly of you and said you guys had some funny, interesting times during COVID, so. [Michael Houck]: Yeah, back in the Beverly Hills days, we had some fun times. Charlie.Banks: That’s awesome. [Michael Houck]: Okay. Well, cool guys. I’ll send you a response over email this weekend and we can, we can take it from there. Charlie.Banks: All right. Sounds good. Thanks guys.