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ServiceTitan founders Ara Mahdessian (left) and Vahe Kuzoyan at their headquarters in Glendale, California.

IoT may be key to future of home services contracting

Ara Mahdessian and Vahe Kuzoyan are thinking about your future. They have to. The future of plumbing, HVAC and electrical contractors will be their future too.

GLENDALE, CALIFORNIA — Ara Mahdessian and Vahe Kuzoyan are thinking about your future. They have to. The future of plumbing, HVAC and electrical contractors will be their future too. The ways that contractors acquire work are changing and if contractors don’t adjust to that shift, they are in danger of getting locked out of the market.

Mahdessian is the co-founder and CEO of ServiceTitan and Kuzoyan is the co-founder and president of ServiceTitan. Part of the Armenian community in Glendale, their fathers were both contractors and the pair have known each other for years. Their fathers were subject to all of the slings and arrows that have always hit contractors, and Mahdessian and Kuzoyan got into service management software simply to help their dads.

Their product worked, and they started selling software to other contractors. Ten years ago are the olden days in software, and Mahdessian and Kuzoyan had to go to a contractor’s office and physically install the software on his server. All of ServiceTitan’s software is now on the cloud.

ServiceTitan serves 1,500 of “the most successful contractors in the country,” Mahdessian said, and his company has been successful because the customers told them what they needed in order to run a contracting business.

“Every business in the world has a process automation system like Salesforce.com,” Mahdessian said. “But contractors didn’t.”

That was the genesis of ServiceTitan, which provides a software platform that allows home service businesses of any size to manage and streamline their operations, improve customer service and grow their businesses. The company’s solution includes customer relationship management, intelligent dispatching, invoice management, marketing analytics and comprehensive reporting, designed to meet the needs of home service contractors and allow them to focus on their installation and service businesses.

The company has grown rapidly because of its three core values, said Mahdessian, who was wearing a tee shirt with core value #2 printed on it.

The first is to change lives by being fanatical about contractors’ success. They will do anything to make a contractor successful, including giving him all of his money back. ServiceTitan’s growth has been fueled solely by word of mouth. Mahdessian acknowledges that not all outcomes are perfect, but he wants the effort to be perfect.

Core value #2 is to achieve the extraordinary. They will do anything necessary, including flying a team of people overnight to a contractor’s office, he said.

Core value #3 is to be a great team. The firm employs 250 “rock stars,” with about a third being developers and coders, one-third on the customer success team, and a third being everything else, such as human resources, marketing, accounting and other management.

That’s the present. The future is much more interesting and the paradigm shift in how homeowners and contractors interact will be crucial to contractors’ survival.

In the future, homeowners will likely be able to book a service call directly from a review portal.

A lazy homeowner may also try to book a service call through a portal such as Amazon, but Kuzoyan pointed out a major weakness in that approach — plumbing and HVAC are highly trained skilled trades. The people who will respond to cut-rate labor prices are handymen. One online plumbers’ discussion thread about Amazon pointed out that homeowners would buy a garbage disposer on Amazon so the contractor wouldn’t even get the equipment sale, and the installation labor pays around $70. Even less than that once Amazon takes its cut. Professional contractors walk away from business like that.

Kuzoyan is bullish on the Internet of Things, but he pointed out that IoT presents both an opportunity for contractors and a threat.

“It changes the customer-acquisition model,” he said.

With IoT, all of the homeowner’s “stuff” can talk to all of his other stuff and to both the homeowner and the contractor. The water heater may not be firing properly or may be leaking or the performance of the air conditioner may be slowly degrading, and the equipment can tell the contractor to notify the homeowner before the problem is obvious.

Here’s the rub, Kuzoyan said — the contractor has to register the device to his business to tie himself and the homeowner together.

“Whoever registers the device wins,” Kuzoyan said. “It becomes a land grab.”

But the registration process is a hassle and OEMs have told ServiceTitan that 95 percent of the time the contractor doesn’t register the equipment. Additionally, getting the notifications is crucial and if they’re sent to a contractor’s Hotmail account that he hasn’t looked at in a month, they’re useless.

So Mahdessian and Kuzoyan are working on getting the registrations and notifications channeled through ServiceTitan and they’re negotiating with a handful of national OEMs to make the process easy and semi-automatic so that it actually gets done.

This is a big deal. “It may determine the future of the industry,” Kuzoyan said.

What’s the biggest opportunity for a smart product? Toilets that perform medical screenings, Kuzoyan opined. A handful of models have been introduced in the past few years, but Kuzoyan believes that early detection of, say, cancer, would be the killer app on such a product.

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