Homepros Knows: What’s Moving the Needle in the Trades | Podcast Ep 231 | Toolbox for the Trades

Hello contractors and welcome to Toolbox for the Trades. My name is Jackie Aubel and today I am chatting with Alex Stevenofsky, the editor at Home Pros. Alec and I talked about current trends impacting the H Vac and other service industries and I think you're going to find this conversation as interesting as I did. Alex Stevenofsky, you are the editor at Home Pros, a digital media company based in Charlotte, North Carolina, covering the H Vac industry. Today you're a you and I are going to be talking about current trends impacting the service industry and how contractors and consumers are responding. Alec, welcome to the podcast.

Yeah, thank you for having me, Jackie. It's a pleasure to be here.

I am so excited to have you here. We met at Service Titans Pantheon event last year, so I'm psyched to finally have you on the show. We're going to kick this off the way I love to with a good old fashioned icebreaker and one I haven't used in a while. Alec, I would love to know if you were a professional wrestler, what would your intro song be and why?

Yeah, so I've thought about this. I, I, this might be cliche, but I'm going to be unforgiving in it and I think just because it rocks, I'm going to go with Crazy Train by Ozzy Osbourne.

Solid, solid, solid choice.

I think it's timeless. It's a song that's used at so many beginning of like so many sports games. And so I just think as like, as a sports fan personally, like when some of these big championship games open up, whether it was even back when I was younger in school or just like watching things on tv, it just, I don't know, I just think it's timeless and it's, it's very hype and it's very, that's, that's my go to.

I love it. I love it. Not to alienate some of our audience already, but what are your go to sports teams?

Unfortunately, I mean being in Charlotte, North Carolina, I have to bear the burden of being a Carolina sports fan. So I mean I am a Panthers fan, which is again in a Hornets fan, which are not good at all. But I am so I'm from Michigan initially and I have a lot of family who went to the University of Michigan. So I am a, you know, a big blue fan. So that's, I'm more proud to say that I should have just led with that one.

But so that being said, let's move on from sports and go into home pros so prior to work starting Home Pros, actually you worked in software. So I want to hear a little bit about what made you want to start a digital media company to support the trades.

I've always been interested in media and news media in particular. Just for, I don't know, I'd say maybe the past like six or seven years, I had never really had like an opportunity or like actually did anything about it. But I was at, yes, I was at a software company in the space for three years and I was mostly on the sales team. And so that kind of exposed me to like, all day long I would just talk with contractors and I would try to sell them our software, of course. And so I kind of, you know, very quickly kind of picked up on, you know, the fact that. Which everyone knows these industries are really big. And when I say these industries, I mean H Vac, sure, but also plumbing, electrical, roofing, etc. They're really big, they're really fragmented. And there's actually a lot going on. I mean from a regulatory standpoint, from an economic standpoint, technology consolidation, you know, somewhat more recently. And so, you know, I would talk to these contractors and just kind of hear their thoughts. And I got curious about who supports all of that stuff, like from a media perspective, like what other publications exist? Like, who's the. Like the Wall Street Journal of like the, you know, home service industries that are. That's really geared toward like executives, owners, you know, C level. It had been underserved from a media standpoint compared to other industries. So if you look at like tech and sports and finance and you know, et cetera, et cetera, there are, I mean, so many different publications and there's a lot that have been started in the past five years, seven years, 10 years. But that's not really the case with hum services. And so I kind of thought there was an opportunity to serve the market and to do it in a way that kind of better fit how consumers are consuming information today. Meaning quick, sort of focused around brevity with the whole idea being like time savings. Deliver it digitally, no print products, and then do it on different platforms. That's kind of tailored to the way people want to consume stuff on each platform. So that's email versus a website versus, you know, say LinkedIn and then eventually Instagram or whatever. And then to do that for, you know, really just executives in all these home service industries. So it started with just H Vac, which we're still in. We're getting ready to expand to plumbing. I can Talk about that, but there was a lot of news, there's a lot of information, but there is a white space. And there was an opportunity to serve that information to a very specific audience in a format that hadn't really been sort of done within this context.

Let me just say real quick, as someone who's been in the industry tangentially, as everyone knows, and as I famously say on the show, I've never run a service business before, but I have been speaking to contractors, owners, operators for years now. I joined Service Titan in August 2017 and I noticed the same thing while when I first started here and I was trying to learn the industry, that the media outlets that were serving these very robust and impactful industries weren't nearly as comprehensive as I had expected them to be based on what was happening. So I actually love what you've been doing at Home Pros and here's where I'll do a shameless plug. Like when you and I met at Pantheon last year and I forgot who introduced us. But when I signed up for the Home Pros emails, one of the first things I did was forward it along to my content team. I was like, oh, this is so cool. Like this newsletter format of, like, very quickly, very quick at a glance, what is going on in the H Vac space has been so helpful in finding out, like, what's going on. And it's just really easy to read. So I just did a crappy version of explaining what Home Pros does. But for folks unfamiliar with the brand, how would you describe your company and its mission?

I think it's very simple. I mean, I just, we want to, you know, become sort of the de facto kind of go to business news outlet for executives in the home service industries, starting with H Vac.

I think it's an awesome resource and I really recommend that everybody check it out. And that's one of the reasons I wanted to have you on the show. So with that being said, we wanted to talk about a couple of things. And for the record, I don't normally do this and listeners will know this. I don't normally timestamp our episodes. And that's because, you know, a little industry secret. Sometimes I bank these episodes and we record them quite a few weeks before they actually air. But we're trying to do this as close to the air date as possible. So we are actually recording this in early June of 2025. And we can start out actually with a really simple, like, super straight to the point 1. The economy. The economy has been a Big part of your reporting this year. And I'm curious that in your opinion, what economic trends are having the biggest impact on H Vac and the other service industries?

Serving as a reporter in the industry, it's based on, like, the conversations that we're having, the data that's being published by, you know, these agencies, etc, and trends and kind of what's actually happening. So that's kind of my, like, lens and the perspective. So that's. That's where this all comes from. So I wanted to preface it with that. But, yeah, I mean, I think, yeah, the economy is obviously a huge. A huge conversation. I find myself talking and writing and reading a lot about it. Part of that, you know, has been fueled by the new administration that took office in late January. And so we can talk about that. But I think there's a. I mean, I would say if I could kind of distill it down to a couple big things that sort of drive the conversation. It's. It's all things pricing and there's kind of a few things that go into that and consumers. Because again, keep in mind, we're sort of a lot of our reader base is. Is very residential focused versus, you know, heavy commercial or industrial. And so we look at, like, both things on the industry side, like trends on the industry side, the wholesale side, but then also on the consumer side, given that they're buying and, you know, buying all this stuff. So, yeah, pricing is kind of the. I'd say the first big one. And then I think what goes into that, there's sort of the wholesale side of that, meaning, like, the cost of equipment, tariffs are playing a part of that. And then of course, there were just, you know, this refrigerant, this transition to, you know, sort of a new class of refrigerants, and all of those kind of play a role. So the Federal Reserve or some of these economic databases track what's called the producer Price index, which is basically the average wholesale price of H Vac equipment. There's a data point for that. And so if you look from. I think the latest data was through the end of April, because sometimes these things roll out like in like a little bit, like behind. That was up 2% year over year through April. So, okay, you look at that and you go, okay, well, but when you zoom out over five years, it's up 44%. So, like, everyone knows this, people talk about it, but like, when you look at the actual data, like, the price of equipment has meaningfully gone up over the past, especially over the past five years. The other kind of part to that, of course, is this transition to A2L refrigerants. Kind of the latest thing there and particularly with 454B. So obviously there's like, you know, there are two. There's 454B and there's R32. Those are kind of the two primary refrigerants that manufacturers have opted to utilize. But really with 454B, there have been some issues that have kind of driven up the price even over the past few months. And so kind of the, the story from the manufacturers, Both like the H VAC equipment manufacturers, the carrier trains, Lenox, etc. But then also the refrigerant manufacturers is really that demand came sooner than expected. And it put pressure on the supply chain but noticeably around the actual cylinders like the jugs of the refrigerant. And you know, pair pair that with tariffs, which I'll elaborate on, on raw materials for the actual gases. There, you know, have been price increases. And so two of the big ones, you know, Honeywell Commerce, I think it was in April, April or May, but announced between two and just under $5 a pound price increases for their 454B products plus one of them, there's big surcharge in response. What some of the equipment manufacturers have done over the past 30 or so days has been to increase the amount of refrigerant that is pre charged in certain 454B units to account for that. So that's kind of this whole dynamic. But one of the results is of course there are, you know, the price goes up and then of course there's tariffs. Now they're fluid. I mean everyone, you know right now there's a story like I joke personally and this is just purely based on the news flow. Like you know, one announcement can be made on a Monday and then there's, there's some change to it on a Wednesday and then by the time Friday comes around, there's like some third change or something like that, like to what's going on. But the sort of latest is that as of today, over 75 countries around the world have kind of a baseline 10% tariff rate through July as the administration like negotiates trade deals. China in particular, separate from those countries, has a baseline tariff of about 30% through August as they, you know, the administration works out deals with them. Roughly, I think under half of H Vac imports from China have an additional 25% that was from like a separate 2018 deal. That kind of nets those to 55%. So that's kind of where we're at with China. Now. The good thing is that a meaningful amount of the manufacturing capacity for the H Vac industry lies in Mexico. And those products from Mexico and Canada are currently exempt from tariffs. And then really, the last thing, kind of the most recent one this was announced just literally this past Friday, was that the steel, the tariff on steel and aluminum will go from 25 to 50% starting on Wednesday. So which is June, what is that? June 4th. That's sort of the lay of the land as to kind of where things stand. And the reason that's important is because pretty much all of the top 10, I think, exporting countries of H Vac products to the US kind of fall within one of those areas. So, yeah, I guess I'll start there. Prices is kind of a big, huge conversation, at least from what I'm hearing and the people I'm talking to. And that is, you know, E2L driven. It's tariff driven. It's. It's already been increasing before that. And so there's a couple of things that go into that, but I'll pause there. That was kind of a long rant.

No, no, that was super informative. And again, I just want to say we are recording this in early June of 2025. And so when this comes out, there is a very high chance that everything that Alec just said could be slightly different or completely changed. So check out Home Pros for the most recent up to date information about all of these. But I want to actually zoom out a little bit on everything that you just said there. The stat that really caught my eye was H Vac equipment in general is up 44% in the last five years. So that's since 2020, that's since the pandemic. And I want to talk about how this impacts both the H VAC provider and the consumer. So on our side of things, we're seeing a ton, a ton of contractors have successful with offering financing and with breaking down these potentially really big, these very big purchases, right. In ways that a homeowner can actually afford them. So I'm seeing that as definitely an option for H Vac contractors to kind of lessen the blow. Right. And then on the other side of things, I'm also thinking that for the folks listening to today's episode, who are H VAC providers, man, the number one thing you have to be doing, no matter what, is checking on your cost of materials on a very regular basis to make sure that you are making a profit.

100% agree. I think I kind of joke. I, I've tried to get access to all the manufacturer distribution list as if I was a contractor so that I can get their emails as quickly as some of their, as a lot of their customers do, unsuccessfully so far. But I do think the manufacturers have been making good efforts to communicate, you know, things in real time, even if it's a big price increase or something that maybe is not going to be perceived as a really, really good thing. I mean, at least they're, I think they're making good efforts to communicate that very quickly. I think on the financing point, yeah, there's one data point that was interesting. There does seem to be an expectation that financing just overall use and even as like a percentage of overall revenue kind of going forward over the next year or so, like will kind of step, will increase, will be more of more importance because of everything that we're talking about. But an interesting data point that I kind of looked at maybe a few months ago was, and this is based on data from one particular financing provider. So kind of keep that in mind. It's not like encompassing of the, you know, however many financing providers exist overall. But was that from January 2023 to December of 2024, applications for like financing like installs and equipment kind of steadily trended downward. But over the same time applications for repairs down jumped about like 37% roughly, or 40%. I think it was 37. But regardless of the repair, replace kind of application specifics, I do think, at least based on my conversations, that there is an expectation that financing is, you know, it's always been important, but that it will continue to be important, if not more like more important, you know, over the next year or so.

Yeah, and that's really interesting. More people are taking out financing for repairs rather than straight up replacements. This is very different from five years ago when we first started this podcast and the pandemic hit and now everyone was at home working from home and all of a sudden, you know, that run that toilet that, that would always run after you flushed it, that air conditioning unit that, you know, you haven't changed the filter in two years now. People were more incentivized to make big changes because they were going to, they were in their home more than ever before. And now it seems like we're kind of going the opposite where it seems like people are really trying to extend the life of their existing systems. This is what we're seeing in general when trends and anecdotal conversations you're having with your readers that people are more likely to extend the life of their unit rather than be quick to replace it.

That's a good segue to, like, the consumer side of things, which is, like, how are they doing? Because, like, a lot of the conversation, like, we just, you know, when you're just chatting with someone, you know, at work or wherever, you know, while looking at some headlines is like, you know, it's kind of hard to make out, like, okay, well, how are people actually doing? Like, it sounds like, you know, there's. They're not doing good. The economy's not doing this. People are like. So I put together some. Some like, just real hard data points over the past five years. And this is all five years through, I think, end of April or May, so 2020 through now. A couple of the. The things that do kind of paint the picture for, like, maybe things are getting worse is that credit card delinquencies, so that's. You're 30 days or more late your credit card payment. Those have been trending up over the past couple years. So those, those are rising. Savings rates have kind of come down. People are saving less as a percentage of their overall income, but at the same time, people are still spending. Like, if you look at the. It's like a consumer spending chart, I mean, it literally just looks like it goes straight up for the past four years or whatever they consider real disposable income, which is just after taxes and like, inflation. The. Those have actually trended upwards over the past five years. They haven't, like, skyrocketed, but they've, like, you know, they've steadily trended upwards. And then also, home values have gone straight up for five years. And so people who are homeowners are sitting on more equity than, you know, in the value of their home than they were five years ago. And so those things, I think, kind of buoy people, but I think the result is that you have this sort of, like, mixed picture because some data is saying, okay, maybe these things are getting a little worse. But then at the same time, it's like, well, they're still spending money and, like, they're still making money. People are still employed. So that's the hard data. The thing that I think is most interesting for me, at least, to pay attention to right now, I would call it more of a soft data point, but it's consumer sentiment. So how are people feeling about the economy and about the future of their, you know, income and their job and their financial situation? What has kind of happened is 2020, it goes up 2021. From 2021 through 2022, I believe it goes down. And then over the next two years to 2024, it goes up again. And then recently it's gone down. It's gone down.

So the economy in general is having like an identity crisis, it seems.

Like consumer sentiment for sure. Yeah, yeah, yeah, absolutely. Now in May, the most recent reading was up compared to the four months prior. So that I get that that is a good thing. But consumer sentiment, I think, is just, that is certainly more volatile than some of the hard data, like spending, for instance.

Dang. This is so interesting. And I am really, Alec, I am biting my tongue as just a, just a humble podcaster to not extrapolate meaning from all of these stats that you're, that you're finding. I know. I want to talk to you also about the private equity, too, but before we get there, I want to just hear about how your community of readers is responding to these economic trends specifically. So what are you hearing from the folks that you're talking to on a regular basis?

If I could sum it up, I would say cautious optimism with a focus on just executing the fundamentals. And this is based on some conversations that I had, like early, early this year and then even some more recent ones. But really it's, and this is at the contractor level, it, it seems to me that it's okay, I can pay attention to all the headlines, all this and that, all day long. But at the end of the day, what's really going to matter for us is the that we get back to basics, that we execute the fundamentals, that we present options, that we do good work, we continue marketing, getting new customers, that we're tapping our existing customer bases to, you know, to generate revenue. Or to your point, we're watching our costs, we're watching the P and L balance sheet, whatever, and we're just going to keep our heads down and execute. That's kind of the sentiment, if I could summarize it.

Yeah.

At least just, you know, among our readers.

Yeah. And as someone who's been talking to contractors, owner operators now for five years on this show, I think it also goes back to the basics and what we've talked about before, which is making sure that you're priced accurately, making sure you're keeping very up to date with how much it costs for you to do business, your cost of materials, to make sure that you're keeping, staying profitable, and also making sure that you have financing options in place so that you can still serve your customers and then also that you're really nailing home that sales training so that you are educating your customers on the best choice, the best options for them. We're also going to be talking about financing in an upcoming episode. So this actually pairs really, really nicely. I'm going to pivot from the economy quickly because I do want to talk about private equity. Private equity has been very much in the space, especially since the pandemic. It's always been a hot topic on this show. I would love to know if you have any unique insight on private equity that you can share, given how closely you and your team monitor new mergers and acquisitions.

If I could say, I mean unique insight, I would expect that over the next 12, 24, 18, 24 months, something like that, that there will be an increasing number of acquisitions at the actual private equity or the platform level versus just a continuation of consolidation at the contractor level, if that makes sense. So from some data that we gathered, some reports that we looked at, there were a little under 30 either deals or formations of these private equity backed platforms that happened between 2019 and 2021. And typically, you know, the private equity company who's usually the sponsor or the company who puts up the money to kind of form the platforms and then go out and buy contractors, and this isn't 100% of the time, but you know, typically it's, you know, I don't know, say five years on average, four years, six years, some or seven, whatever. And then they want to realize a return on that investment by either selling the entire thing or selling a majority stake to the next investor who will then do the same thing over the next four to six years and so on and so forth. With that said, okay, 27, the number, exact number was 27 formations or deals that happened between 2019, 2021. So that's four to six years ago. So that basically tells me that, okay, at some point now those investments need to be realized and so those platforms need to be sold to a bigger buyer. In January there was a transaction that happened, platform transaction that happened with Fixit Group. More recently, Redwood Services is set to take on a majority investor. There's kind of a merger at play, which we can talk about, but that, that will happen. And so you're kind of starting to, you know, you're starting to, to see it. And I think a lot of the conversation around private equity is what does this look like? Like super far down the road does a market structure become one in which it's Majority or at least a huge percent owned by, you know, consolidated. I don't know the answer to that. I, I really don't. I think there are so many contractors out there that, I don't know, think that will happen. But like, it'll just be interesting because once these deals happen and the next owners come in, I mean, how, you know, does the companies continue to grow? I, I just, I don't know. It'll be interesting to kind of see how it plays out among a couple different factors, I guess.

Yeah, it certainly will. There's so many moving parts on a global scale, a national scale, like just within the industry that I am so glad that your publication exists so that we can get this information in a. I'm just very happy that you're doing what you're doing so we can get this information in a digestible format because there are a lot of things that are happening that impact contractors down the line and it's important for them to stay appraised. Anything you're hearing from your readers about their feelings about private equity? I have all different types come on the show. I've got people, I have, I've had private equity companies come on the show. I'm planning to speak with one soon actually about the benefits of partnering with pe, but then there's other contractors who are really committed to staying independent. So what are you hearing from your readers about the private equity trends?

We have a pretty good mix as far as our readership of those who are independent, those who are owned by, you know, a private equity backed platform. But then also people at the, you know, private equity backed like the level themselves. I don't know if I have something so like polarizing necessarily where it's like a huge, you know, leans one way or the other. There are clearly pros to, I think, what the private equity dollars have done and are doing to the industry. I mean, I think that's, you know, like, I just. They're clearly upside too. Now with that said, just like everything else, you know, in every other industry, you know, that private equity has gone into over the past, you know, decades. I mean, yeah, sure, there are downsides or there are things. There are bad actors, by the way, that also give it overall kind of a bad name because it's also, you know, we're talking about private equity as if it was just one entity. I mean, there are plenty of companies, you know, all of which are different to some degree. I have one more point that I, you asked me earlier, I just thought of it. So you Asked me like what are readers saying in general, whether it was your economy or you said you also asked about private equity from a business operate like operating and just like sentiment standpoint is that contractors are putting their heads down, they're executing and it's fundamentals, et cetera, et cetera. I think the other thing to keep in mind is that this industry, plumbing, HV, whatever it might be, they're mission critical industries. And so even as volatility happens in the economy, out in the marketplace, in the world, politics, whatever, like at the end of the day people are going to do what they need to do to pay to keep themselves comfortable. And obviously a part of that, you know, from, from the contractor standpoint is making sure that they're able to do that and serve that via finance, whatever it may be. These industries are just set up for tons of success over the long term because structurally they're just not that they're not disruptible, but they're much more insulated than other industries to a lot of things that happen around the world, a lot of things that happen in the economy because of just how break fix, how mission critical they are and the fact that it keeps people, it keeps society sort of physically running, literally running. Right?

Yeah. I mean if you live in Las Vegas and your air conditioning breaks, that's not something that you'll save for later. If you only have two toilets and you're a family of four and one of those toilets breaks, you're not going to all be just sharing one toilet for the foreseeable future. The trade industries are mission critical and, and I think it is important for our listeners to always keep that in mind, you guys chose a pretty good businesses to get into. And as someone who's worked for plenty of startups before Service Titan, which is definitely not a startup anymore, but I worked for startups prior to Service Titan that don't exist anymore. And that's because the services or products they were offering were not must haves, they were nice to haves. And I think that that is definitely something to keep in mind as folks, you know, keep, keep their head down and focus on the stuff that's going to continue to drive them profit to drive their profits. But, but I'm really excited about Home Pro's existence and you keeping us appraised as you know, the years, the months and the years go by and how these trends change. How are you guys hoping to expand in the next couple of months or years?

I'm a simple guy, I don't like to, I Don't know if I'm smart enough to figure things out that are super complicated or do like a rocket company or anything. So I like news, but it's basically do business news through email, digitally through email and online. Our website in all these different home service verticals, plumbing being next and then roofing and electrical being after that, so on and so forth. Take that content and all that information and news and it's repurposed it on different platforms within each of those verticals. So that's build up a big franchises on social media, whether that's LinkedIn, Instagram, Twitter, et cetera or X. I should say it's potentially do audio, like what we're doing now, short form video and then events. When I say events, I mean not necessarily trade shows or like sort of like expo style events but more so journalistic events where it's, you know, intimate smaller summits that are focused on the stuff that we're covering. You know, panel discussions, things like that. Kind of geared toward our audience like at the executive level. But yeah, really, if I could draw you like on a napkin what I think the company looks like in 10 years or five, seven years, it's. I would draw little circles up top for each industry. So you have H vac, plumbing, roofing, electrical landscape, et cetera. And then underneath each one of those you would have email, website, social, audio, video events. Like a bunch of clouds and like rain coming down.

Kind of like an org chart almost.

Yeah, yeah, right, right. And that's it. And that, that's literally it. Our core news product, website and email and plumbing and then going from there.

Amazing. Well Alec, again I've really enjoyed being subscribed to Home Pros. I'm sure our listeners are going to check it out if they haven't already heard of it. Thank you for coming on and sharing some of the insights you've gotten from this recent, you know, from the current news climate. I'm sure you are going to have a lot more opinions in the weeks to come. Thanks so much for coming on Toolbox for the Trades. I really enjoyed this conversation. I know our listeners did as well.

Thank you very much, I appreciate it.