Ep 154 - "State Of The Industry, With Leighton Healey and Michelle Blevins"

0:00 Well, amigo, you know, it's kind of funny. I think sometimes when we press record, people don't know what's happening. right beforehand. Today is one of those days where we're feeling a little bit of reality in your circle, not to go into the detail, but it is fun. Guys, just a reminder for all those that you list that listen to the show, you know, we have a lot of fun doing this. We believe that there's a mission behind it in terms of just at the end of the day, we just want you as fellow business owners, restorers, service team members to not feel alone. Like at the end of the day, this is a journey many of us share. Lots of overlapping experiences and struggles and pains. the show, man. And, and I think if you're not happy, if you're not finding happiness in your work now and you just find yourself constantly delaying happiness for the future, oh, I'm just grinding to get to, I'll be happy when it's just, uh, this happens to be Thanksgiving week when we're recording the show.

0:55 And, um, you know, it is, it's an important reflection. Right? You don't want to stay in that pocket. No. No. You don't want to stay in that pocket. All right. Well, anyway, so moving along. This is not the content of... Today's show is not a navel-gazing event. No. We talk about the... It is not. Existential realities in our life. We're going to talk about something far more practical today. We have... Michelle Blevins and Leighton Healy, they are here to just chat with us and have a really great dialogue about the state of the industry. And it's interesting because this survey data was collected before Hurricane Helene and Milton, which of course has changed everything for a lot of restorers this year.

1:38 Yep. And so, you know, that's part of the conversation is, okay, how did that affect the data? But there's some really interesting outcomes from this in comparison to previous years' state of the industry that we get into pretty deep that I think is relevant for just about anybody listening to this podcast. Yeah. So dig in with us. It's a fun conversation. We get some laughs in with both of them. And it's actually been a while since we'd hung out with those two. Yeah, for sure. And if anything, look, at the end of the day, and we kind of talk about this in the show, there's no way for us to even scratch the surface. And so it's more just bringing it to your attention and awareness. And we would really encourage you to go in and dig in for yourself on the state of the industry data.

2:20 And start looking at how it applies to you and your organization, that you aren't alone, and that there's clearly some very good signs for us to make some changes or iterations in our behavior and process to win. And this data really is a concrete way for you to evaluate. Yeah, I feel like there were data-driven, practical, actionable takeaways in almost every area of the business. For sure. Right, from sales to HR to operations to how are we paying our technicians, all that kind of stuff that's useful right now. All of us, you're going to hear this in Q4. This is going to come out sometime in December. There's still time for you to update your pro formas, your budgets, your outlook and say, okay, what's the most important stuff for us to be oriented around?

3:02 this coming year. And there's some, there's some good Intel inside it. So check it out. All right. Let's go guys. Wow. How many of you have listened to the head hard boots podcast? I can't tell you that react how much that means to us. Welcome back to the Head, Heart & Boots podcast. I'm Chris. And I'm Brennan. Join us as we wrestle with what it takes to transform ourselves and the businesses we lead. This new camera angle makes my arms look smaller than yours. I'm noticing that and I really appreciate it. I thought you did that on purpose. No, I don't. I didn't. And I am not happy with it. Hey, y'all. Thanks so much for listening to the show. Hey, if you're not already following, please do so. And ultimately share, right?

3:42 The coolest currency that we have in terms of supporting this is share it with a friend, share it with somebody, a colleague, a peer, one of your downline team members. Let them be able to take advantage of the information you're already leveraging in your favor. And finally, guys, if you hear a show that really moves you, that really moves the needle, will you please leave us a review? Those five-star reviews help Right on. And listen, if you're trying to grow your business, you might consider checking out Floodlight's Business Opportunity Audit. It's free. We provide it at no charge. It's actually what we use to assess new clients as they come in. It's a 110-point assessment for your business. And we've now decided to give access to the general public for it.

4:23 So go and take our business opportunity audit at floodlightgrp.com. It's going to help you identify the biggest gaps and opportunities in your business right now. And at the end, it'll assign you a health score to let you know exactly where your business stands right now. So go check it out, floodlightgrp.com forward slash audit and take the BOA. It's a great way to get a pulse on your business. Well, you two, welcome to the show. It's, we were just saying before we started recording, it's been actually a hot minute since we've connected all of us. Mm-hmm. It has been. It's nice to see you guys. Yeah. Everybody's getting ready for some turkey day. I don't know when this one will actually come out, but it'll be somewhere near this holiday mix.

5:05 And you've been road worrying and you've been preparing the state of the industry. I mean, you guys have been nothing short, but freaking busy as heck. I think all of us can kind of equate to that or relate to that. Things have sure picked up this last quarter, haven't they? Yes, they have. Do you guys feel like you're like sprinting toward the end and you're like, okay, we're almost there. Like, we're almost there. I'm literally counting the rest of the year and days. That's how, like, I feel like literally every hour in our calendar right now is like, hey, there's 15 minutes there. We could do something with that 15 minutes before December 20th. What are we going to do with that 15? It's actually kind of nerve wracking. Well, and I...

5:45 I think too, there's just, there was this real, everybody was just kind of at a standstill, almost spinning their wheels like mid to late summer and before the hurricanes hit, it was just like, it was so tentative. in our industry. And I'm sure from an advertising standpoint, Michelle, maybe you and your team felt that, you know, as a consulting company, we certainly have felt that as a software founder, a lot of our sales pipeline and everything, it just felt really tentative. Yeah. Yeah. And I think just in being in conversation with our clients, I think at times this year, it's been difficult for clients to know what gas pedal to push on. Like what area of their business to focus on to stir things up.

6:29 Obviously, with claim volume being down and very little storm activity the first part of the year, it was just like everything. It's the word I can. It keeps coming to mind. It's just everybody's just kind of like, okay, we're optimistic because we're in the industry we're in. Something's going to happen, you know. Some pipes are going to freeze. Some dishwasher supply lines are going to break. Like something's going to happen here, you know. Something. That's something. And then, of course, we get hammered with a couple of doozies here. I mean, I just immediately think of the Carolinas right now. I mean, still suffering greatly. And here first of the year, we never could have seen that, right? So gang, we're going to yak a little on this state of the industry. We're going to get into some data, probably wrestle with it a little bit.

7:12 But before we do... Let's just do a quick reminder. What is the state of the industry survey? What's the intentionality behind it? And you know what? I'm curious. I'd actually like to hear from you two what your own drivers of participating in the project because this volunteer project takes your time and energy. We get to benefit from it as an industry, but I am curious what's driving your guys's want and willingness to participate in this. You guys cool with that? Yeah. Sounds awesome. Leighton, you want to go first? Yeah. I can go first. And it's great to see you guys too. And I unsuccessfully shopped around a very long hashtag online in Q1 and Q2, which was, hug a sales leader that has to defend a sales forecast right now, right?

7:54 It just didn't get any traction. No bumper stickers went into print. That's a long one, man. I feel it. No, but I felt they needed some hugs in Q1 and Q2. They did. So true. Because probably more so than we even want to admit. Yeah. Yeah. I just, the amount of times that they would have had to just step into a management meeting and be like, this is going to be uncomfortable. Yeah. Yeah, it's like someone's going to grind me on timeline and deal velocity and all this stuff. So hug your sales leader, right? Hug your sales leader, right? But the state of the industry report, we're formally known as the CNR, state of the industry report, powered by KnowHow, is in its third year.

8:35 It is the seminal report on the property restoration industry. with a focus on being able to equip leaders and decision makers with the prevalent themes, patterns, and I would say critical data around workforce and predictions. And then it begins to dabble in how do you begin to arm a leader in the industry with overall, let's call it more like holistic insight in the industry that they're a participant in. So they can improve and sharpen the quality of their decisions as they participate in a seemingly commoditized industry where the speed of their decisions and the quality of their decisions really matters if they want to be able to find a competitive opportunity or not get left behind.

9:16 It is a free report that's put together in collaboration with CNR Magazine and KnowHow. And it's become what we hear is a resource that companies look forward to and incorporate into how they plan for the next year. And the full report, if you were to kind of put like a, If you were to kind of put the whole tent together, there is a long 60-page digital report, and it's complemented with an enormous content base that CNR Magazine puts together with a collection of industry experts commenting on some of the relevant themes that come out of the data. So that's what it is. There's always things we try to do to, I think, to kind of spice it up every year. But fundamentally, that's what it is.

9:58 What's the drive for you, Leighton? I mean, obviously, you play a big part in this. What makes you, and just for the obvious, I know that everyone listening knows that we are all business owners, and we clearly run for-profit organizations, and we have business purposes behind things, obviously. But in addition to that, what drives you to take on this and want to invest time and energy into the survey? Yeah. It was interesting. I was actually, I was in a conversation with someone known to the show here, Mark Springer. This kind of came up and he had made an observation, which I thought was an accurate observation, which is, why does KnowHow do all these studies and these reports and why do we partner and collaborate? And Mark made a comment, which was accurate. And, you know, you could ask anyone on the KnowHow team and they would, if you shook them upside down, this answer would fall out is fundamentally, we think it's the right thing to do.

10:46 Right. So we think it's the right thing to do to be able to provide this type of reporting and insight. But what goes beyond that? And if you dig into the report, you know, I have this opening comment where Michelle's team, they have an opening comment and we have an opening comment and we speak to this directly. Like, what is an AI software company doing producing reports like this? And I would say that it's two things. One is, is that we are very focused on what we refer to as people powered industries and fundamental to our value set and know how. is we believe that people are intrinsically valuable, that there is a dignity and worth there. And yet when you look at large workforce studies, increasing what you see is that the largest employment category, which is blue collar labor service represents about 67% of the North American workforce.

11:34 High 70s will report report after report. And these are, these are, strong authoritative workforce reports, high 70s will say, I find my work just arduous and tiresome and unfulfilling. And so what's downstream of high 70% of 67% of a nation's population coming home and responding to that proverbial question, how was your day, honey? And them saying, it was just another really crummy day. So what's downstream of that? We have a term internally at NoHo, we call that societal rust. And so we know why there's frustration because the studies have been out for a long time. And the studies indicate that there are addressable workforce obstacles that can be solved for.

12:21 And so a great deal of know-how's focus is alleviating causes of... of societal rust that result from blue collar workforce challenges. Yeah. And so underneath it all, if you value the person, we believe that you need to equip leaders who, in a sense, lead these workforces to be able to make quality decisions that impact the lives of thousands of people. And so call that altruism, but we just think it's the right thing to do. The second thing is that we are trying to create a version of the future that we think is both compelling and necessary.

13:02 And so when you're trying to create a vision for how a worker interfaces with generational knowledge in a manner that's more in keeping with how they behave, fix stuff on their car on the weekend or make sourdough bread. Like when you're trying to kind of, you know, meld two things together and you're deploying capital and resources and talent, it's becoming on us to make sure that as we lean into the future, we are making good decisions. And so we do this research because we're making decisions every day that influence a product that today we're very thankful to power hundreds of workforces. And so that's important to us.

13:42 And so, well, we just think that the most practical way to get high quality data is to tell the participant, hey, if you participate, we'll just give you the results at no cost. And then no question, there's like just practical benefits to working with a world class team like Michelle's who already understand the the industry and just maintain an annual pulse on what matters. And, you know, they have such powerful editorial chops. And so, yeah, that's a little bit around our insight. So what is the report? Why do we do it? Love it. Yeah. Michelle, I'm curious, right? Because different worlds, you are not an AI-driven software company. But we also, for years, have kind of made this reference that we really do feel in many ways that you're a friend of the industry.

14:26 Like you just have a different... relational approach you have since the day that you stepped out on your own with CNR. I think you brought that long before that. So why? What are you doing in this mix? Why are you giving your time and energy to do it? You know, I, through my whole career in restoration, next year will be 10 years. I've always had people coming to me asking, how big is the industry? What is the average size company? How many people is the average size team? Is the industry changing? I'm always having people come to me asking that. And I just got to the point where I was like, there has to be a way to find this out. But I also knew that, CNR, we couldn't do it ourselves. We're not like a data company. We weren't meant to kind of analyze the data and be there collecting or whatever.

15:10 So that's when I started thinking through when I first bought CNR, how can we do this? Who would be a good partner? And it kind of goes to, thank you, Brandon, what you said about we are just heavily dedicated to the industry. That is really where the CNR team sits. We want to bring as much value as possible and I believe that that dedication to the industry does come back around with revenue and ad sales and those kind of things. Like if we can continue to drive and put value into the industry and bring restorers resources that they trust and refer to and put on their bookshelves or whatever that may be, then I think that we're doing our jobs right. Right. So.

15:51 you know, I was thrilled this year. We had a record year with State of the Industry this year. We've had a good data set every year, but this year, like, way blew it out of the park, which is super exciting. And this was the first year also that at the end, we started asking, why do you like this? What value does this bring to you? And there were probably well over 100 people alone that said, I love having a benchmark for my company. I love being able to see where I am compared to others. I love to get ideas of how I can expand my company, but feeling like they're not alone, especially I think when we talk about the biggest pain points in the industry this year, which when we get into the data, we'll talk a little bit about a shift that we saw in those this year, which is not surprising.

16:32 But, So I think restorers like to know now that they're not alone. And so being able to bring this report through every year is really rewarding. And we just keep encouraging more and more restorers to please do it. It's not that intensive. We can give you the questions ahead of time if you want to make sure you're gathering things. But it's nothing super labor intensive where you need to sit down with your accountant ahead of time or anything to get these like crazy numbers out. but help us give the best data possible. The more people that do it, the better. And so we just want to keep growing that data set, even though it's super strong as it is. The more people that participate, the better. Yeah, it's maturing to a certain extent, right? Like as we grow more, it's funny because I think it's a little bit of a, it's almost catch 22.

17:18 Teams get more intentional about participating the more trust they have in the output. But then the quality of the data gets stronger the more that we're participating. So maybe the petition here is have faith That these leaders in the industry actually give a shit about the industry and participate and therefore kind of fulfilling your own prophecy on making the data worth your faith. So maybe that's the starting poll. Like when it comes out again, participate. It's in your best interest to do so. It is cool to people. Yeah, participation ramping up. You were going to say something like that. I was going to say, I think that I've owned and operated service companies and, you know, I've seen similar reports come out in different industries.

18:01 And the question comes up, you know, you sit down with your team and you have that dialogue around what this means for our company, what this means for this. And just some keener will put their hand up and they say, you know, are we represented in this data set? And it's always a pain in the neck where you're like, well, no, no. And they're like, well, you know, and so there's always that question. And so I just think it's very important because I was on a conversation earlier today really talking about how do we help young people see tenure and career progression in this industry, which is a lot of it is how can we help somebody see how. how wide and deep and broad and how many opportunities there are in this industry, of which there are many. And one of the ways to do that is you slap this report on their desk or, you know, throw it on the seat before the van goes out in the morning, right?

18:46 And to be able to say, I appreciate that things are busy here and sometimes we can just kind of be head down. But actually, you're part of a huge industry with lots of moving parts and complex dynamics and very competitive, you know, headwinds. and unique tailwinds. And for a young person to be able to dig in and say, I had no idea that I was part of such a dynamic industry. That is, I'm not saying that this is like a recruitment tool, but it's definitely one of those, you know, lobby coffee table things while people are waiting for their interview, so to speak, right? To say, wow, like this is not just a company that I walk into and throw a t-shirt on and then go home at night. Like I'm a participant in something much larger than myself.

19:27 Yeah, for sure. For sure. All right. Well, people are wanting to get into some of the data. Yeah, they're like, what's this all about? What are we talking about? I think an interesting place for us to start, because I know we have some thoughts in terms of what we're seeing with clients. And I look at some of the key... Thank you, ChatGPT, by the way, for helping me dissect and... break down the data in the report, full transparency. There are some things here that I see in the report that are interesting to me relative to what we actually see companies doing on a daily basis in our book of clients. But I think it'd be interesting for you to comment, maybe both of you, on the delta between last year's results and what were the key movers that changed this year. Maybe we don't need to go through all the comparison, but just like what are the couple things that were a pretty dramatic shift from last year in terms of the survey results?

20:13 Yeah. They can go for it. Dramatic shifts. Let me say I will do it in stages because there are many, but I'll just start at what I think are some of the most compelling. So one of the most interesting things I would say is what we're seeing in wage, rising wages and how that ties into tenure. There's always been, I think, this sense that if we find a way, we find some room in the budget to pay staff more, would it result in larger tenure? And that's what we're seeing. We're seeing a rise in a correlation between staff that are being paid more and tenure, specifically at the technician level. So what does that ultimately mean? Well, in 2022, 22%, 2022, 22% of tax are being paid between 20 and $25. Fast forward to today, 24 months later, 40% of techs are being paid between 20 and $25.

21:02 And the fastest growing retention bracket of technicians is between three to six years. And so when you look at the data set of staff that are being paid 20, $25, and you're starting to see those retention rates, you're seeing just a direct correlation. And so no question, we've done some interesting studies that also indicate there's four or five other elements that really drive retention at that field tech level. But no question, I think we're able to see that and we're seeing wages rise. Certainly one of the things that's been a moving target has been the industry sentiment versus reality in the TPA conversation. So meaning when we look at participants in this industry who are indicating how much of the revenue would they like to see represented as TPA derived revenue versus what it actually wash out at the end of the year in terms of the revenue mix.

21:54 But one of the numbers that I would say really caught our eye is the percentage of restorers of which TPA represents 50% or more of their revenue. So two years ago, that number was only about 2% of industry participants. Today, it's over 12%. Wow. And so that's a huge jump. the most interesting data points, in my opinion, are not just the giant colossal bar graphs that are front and center, but it's these little micro movements that actually represent what I would say like almost tectonic shifts in the industry. And so I think that we see a lot of very tangible things that organizations like TPAs are doing to try to bring more value to the front lines.

22:38 And then, you know, one other data point that I think is certainly interesting, it's interesting to us as an AI software company, is just how we're starting to see companies go from, let's say, being a little bit trepidatious about AI to being open to it, to now we're starting to see the fastest growing wedge of the pie graph are restorers who are finding practical applications of AI to drive business outcomes that are not just simply say, chat TTP. And chat TTP is a very practical tool. But just to say that they're finding, let's call it, non-stereotypical applications of AI to drive business outcomes. So, you know, there's many, but those are a few just to maybe serve up for a conversation.

23:18 Yeah, yeah. Yeah, so I have sort of an interesting reaction, kind of almost a visceral response to both of those things. I think it is fascinating to see the massive jump in... utilization of these TPAs. And I think what Brandon and I, we may even have felt a little bit of a shift in our guts, our own experience of working with TPAs, I think it's evolved a lot. I mean, that part of the industry has evolved a ton over the last 10 years. What we're seeing is that the companies that embrace TPA work as a engine for growth, like one of the different segments of revenue for their companies, they're doing it profitably.

23:59 And it's a legitimate revenue engine for them. And I think more and more companies are realizing if we play the game to win it, rather than constantly offering up all the vitriol and woe is me and this is hard and this sucks. The companies that are embracing it as a way to diversify their revenue sources... are winning. And they're not just kind of winning. We have companies of all sizes. We work with companies that are $2-3 million. And we work with companies in the $50-75 million range routinely. And it's interesting that the companies in the middle that are really making a big play to jump for scale, TPA revenue is a key driver that keeps their team...

24:43 It's helping fuel the growth of these companies, the ones that are embracing it. The other thing that I think we've seen pretty reliably now for the last couple of years in our own client book is that the companies that seem to be doing the best with TPAs are ones that align their whole process and standards within their company around the TPA requirements. It seems like a lot of the vitriol stems from all of these cumbersome requirements and timelines. We have to have our estimate uploaded within X number of hours and all these things just to keep getting work and woe is me. But the ones that are taking that information and those requirements and saying, okay, can we just augment our normal process or what we have been doing and let's develop a process that, that addresses these demands, and everybody's going to be happy with us.

25:36 Right? It's like, if we abide by these, what sometimes are demanding and difficult requirements that TPA has put on, but we find a way to do them consistently, all of our other clients are going to be happy with that standard And we're going to be successful with TPAs, which will give us more business. We're going to collect faster on them. All of these things are positive. Now, again, I am not suggesting that Floodlight is saying, hey, go out and get as much TPA business as you want. Because that is not what we're saying. And I think ideally, if somebody has a well-diversified stream of revenue across their company without TPAs, that is ideal. To have full control over where our business is coming from, obviously we give up.

26:17 There's some cons to working with TPAs. But when I look at this data, the data is showing that companies are finding a way to win with TPAs, which I think is interesting because that was not necessarily, like you said, reflective in the data historically. But people are certainly finding a way to win with it. Otherwise, they wouldn't be doing it. Yep. Right? I mean, isn't that ultimately what the data is showing is that if people couldn't win with it, we would not be seeing this kind of growth. I'm curious, though, like staying in that pocket, Michelle, like because I think... And I'm not insinuating that, Leighton, you're not having these kinds of conversations. I just know that Michelle does because we've been present for some of them.

26:59 When you're having some of these gut-level conversations with restorers and some of the folks in your sphere, is there any chance... that some of that data was driven by fear out of the beginning of this year. Was it kind of like people throwing their hat down and being like, F it. I wanted to get into commercial. I wanted to go direct. And you know what? It's been a shitty first part of the year. I'm just going to make sure that I'm making my money from TPAs because they've been feeding me so far anyways. That is a great question. And I think some of it has to be that. Yes, I think that there is an overall shift in this mentality, like you guys were talking about, though, where people aren't as anti-TPA as the industry was maybe two, three years ago when there was a big movement, a big push against the TPAs.

27:43 I do think there are more companies now that are doing TPA work well and are being more vocal about it. So there are these companies where people are realizing, oh, well, they're doing a lot of TPA work and they're actually doing really well with it. So maybe there are ways to do it better. And I totally agree with your process point that if you can do TPA work well, take those processes into your other jobs, because often you have to be way more specific and way more in depth on things for TPA works. If you can take those processes into the rest of your work, that's great. And I think technology also plays into that and the different processes. platforms and tools that are out there now for contractors. That's actually something that we cover in State of the Industry as well as like what tools are bringing the greatest ROI?

28:26 What are the top like documentation tools that companies are using? What's the best CRM out there? What's the best job management software? We try to dig into all those things to help restorers know like what software other companies are using, what's helping move the needle. This has been kind of an interesting few years in that technology space where we're seeing some restorers, people who are restorers coming into the software space, having created their own software. platforms to try to address some of these ongoing issues that restorers have had on the technology side. So I think we're starting to move the needle there, which does make TPA work, I think, more attainable than a few years ago when you had to have a specific person, which still maybe is true, but a specific person on your staff just to funnel through the TPA work paperwork alone.

29:16 Liftify.com forward slash bloodlight. You've heard Brandon and I talk a bunch of times about the importance of Google reviews. Maybe you even heard our episode with Zach Garrett, the CEO and founder. Recency, consistency, two of the most important things when it comes to maximizing the benefit from your Google reviews. Why not use an outside partner? Liftify is targeting 20 to 25% conversion, right? So if you do a thousand jobs a year, you ought to be adding right now, 200 to 250 reviews a year, every single year. If you're not doing that, you owe it to yourself to get a free demo from liftify.com. See their system, see how it works, see how affordable it is. I promise you, you'll thank us.

29:56 Liftify.com forward slash blood light. You know, we spend a lot of money and a lot of attention trying to get that first call. And one of the things that we do once it happens is sometimes we leave it to chance, right? Who picks up the phone? How do they respond? How do they walk that client into a relationship with us? Well, one of the benefits of partnering with a team like AnswerForce.com is we can systemize that. We can make it more consistent. We can also have backup for when our teams need that help, right? Somebody goes on vacation. Somebody's out sick. We get a storm surge. We get cat event. All sorts of things can have an impact on how we receive that client. But the most important thing is they need to know that they've chosen the right team.

30:37 And so AnswerForce.com can support you, be a bolt-on partner to help you consistently produce an awesome onboarding experience with that first call with your client. So AnswerForce.com forward slash answerforce.com. blood light. That's great. CNR Magazine, we're friends with all the folks at CNR. Michelle and her team, they do a great job of keeping their ear to the ground and reporting all the important information from our industry. Right? You want to stay up on all the M&A activity and what the latest best practices are for selling your company successfully. Right? She's got that. Great articles about all the four quadrants of our business. Right? CNR is constantly pushing out great material and leveraging great writers and subject matter experts in our industry.

31:19 It is the water cooler of our industry. So if you're not subscribed, go to cnrmagazine.com. Follow them on LinkedIn. Follow Michelle on LinkedIn. Trust us. If you're trying to stay on top of everything happening in the industry, your best destination is cnrmagazine.com. You guys, many of you have already heard about actionable insights and the training and the technical expertise that they bring to the industry. But how many of you are already leveraging the actionable insights profile for Xactimate? That's the game changer. It's essentially an AI tool that's walking alongside of you as you write your estimate, bringing things to your attention that should be added, that could be considered.

32:00 All of them items that increase our profitability, increase the effectiveness and the consistency of that scope. And it can do anything from helping a new team member assimilate some estimating best practices. And it also helps the grizzled vets add back that few percent that we've just forgot over time. So actionable insights, get insights.org forward slash floodlight and take a look at what the actionable insights exactimate profile could be doing for you and your team. I am curious, just because we have a bit of a friend in the business. I am very interested to see what happens in the next 12 months in terms of clean claims.

32:40 So look, I'm going to just do some, is hypothesizing the right word? I don't know if this is the right, I'm not very educated guys. Okay, very blue collar. Here's my thought on this. We've been behind the scenes really monitoring what Lane and his team is doing at clean claims. I'm going to be shocked. now that they're being way more aggressive in presenting the product and letting people get their hands on it, I'm going to be shocked if they don't start showing up on this list. I think you're doing something pretty freaking rad. And I, anyways, there's, Lane, you owe me five bucks. He owes you five bucks. Well, I think that- Buy me a beer. I think what you're doing is you're tiptoeing into this space of AI adoption within the industry. And the feelings I had on it, and Layton, I know you guys are at the forefront of that.

33:23 The adoption of AI inside the know-how framework and how you guys are leveraging AI to deliver business intelligence to your clients, I think is really neat. And what I see in terms of... actual adoption and AI usage in our industry, it's still very incremental. Oh, tip. Yeah. It's still very incremental. And it's exciting, I think, just as business people to see that our industry is showing an interest in it. Leaders are engaged with, like I should be paying attention to AI, but I think we were at a conference this last week in Orlando with some very, very high-performing restorers, several people in the room running $50, $60, $70 million restoration companies.

34:03 Yeah. And the question came up, how are you seeing clients use AI? And the reality is the predominant ways that we're seeing people use AI is in enhanced search function, which is like how to find the right things more quickly. And so I think some of the software tools that are now being embedded in, say, Xactimate, and perhaps in a similar category with know-how, helping people find things, the thing they're looking for more accurately and more quickly, which is useful. And then I think also the other way that people are utilizing AI is by bolting in AI functions into their otherwise mundane tasks, for example, like Grammarly.

34:48 People are paying for Grammarly Premium across your Google Apps suite so that their project managers are sending more professional emails, their technicians are sending more professional 12-hour reports, right in line with our text creation. people are utilizing some of this AI suggestion, you know, in terms of how can we write better. I also see a fair bit of adoption amongst teams on the marketing side and sales side. You know, the ability for us to throw a transcript from a webinar, right, into an AI engine and have it spit out a blog post for our website, right, that's keyworded out, you know, for all. So I think we're finding incremental ways to use AI, but I'm not...

35:29 And I don't think we are within our book of clients or what we're seeing in the industry, any kind of transformational leaps. Not yet. Of AI usage yet. Are you guys hearing or seeing any more transformational kind of applications of AI that people are starting to leverage? I would say not yet. I'll toss it. Not yet, but in conversations with people behind the scenes, I think there are things coming, which probably I think you two kind of are alluding to a little bit ago as well. Like there are things coming. There are tools that are coming. We're just not quite there yet. There are still some restorers that are in like the ChatGPT 101 world where we're still trying to figure things out and how do we use this. But I think it's coming.

36:11 Layton, go ahead. There would have been a day where, and many of your listeners were probably present when the internet entered the industry or Xactimate entered into the industry and whatnot. So now things are different now because the pace is much more accelerated. And I would say the stakes are much higher. And so many things are table stakes, especially to, we talked about TPAs. And so TPAs are obviously closely tied with insurance companies. And so... there's all these dynamics that are at play. So for example, traditionally, insurance companies would, I think they would consider themselves more kind of, you know, leading edge early adopters of say, insure tech and financial technologies and stuff like that.

36:52 And so because in many ways, they're signing the checks, that was called that speed of adoption, no question is going to have a trickle down. And there'll be certain things that will just be table stakes for them that will be monumental and revolutionary to some contractors where they're like, no, it's just like, where have you been for the last 24 months? Right. So that stubborn reluctance to, I think, adopt is going to, I think, create, is going to be met with more and more friction in a way where perhaps a person could be more resistant to change, say, 15 years ago or five years ago. So I think that stubborn stick in the mud individual who says, well, you know, I'm just not a tech-oriented person, is going to start to be met more and more.

37:33 It's not just going to be their granddaughter who rolls their eyes at them. It's going to be insurance companies and other participants that eventually acquire us who are saying the reason why this multiple is because, you know, your mindset is not nimble and dynamic. And we think that actually your company's not worth it as much because, you know, with you at the helm, there is a risk of your business not being competitive in the next three years. So that's... So I think that's difficult. I think that what I would say, just from the perspective of a technologist, would be AI, like anything, whether we're in healthcare or whatnot, is that each field is making, let's say, significant advancements in some areas and fewer advancements in others.

38:16 And so where AI has made tremendous advancements is in the areas of language models, the area of generative AI, in the areas of what we call virtual assistants and whatnot. Where AI has not made tremendous progress is in areas of, say, mathematics and stuff like that. And so I think a lot of people are hoping, you know, one of the things we survey for is... Where would you love to see AI? And it's very often the most, the highest rated one is estimating and helping us to kind of scope projects. So, and there's no expectation that they know this, but what they're saying is calculations, advanced calculations and advanced computer visualization of complex environments.

38:57 And those are actually, not to say that there haven't been significant calculations. expansions in those areas of research. But those are actually what I would say are some of the areas that have made slower progress. Yeah. The ability to capture and assess visual environments that are say perpetually changing as the job progresses and then be able to do calculations. That's just not where AI has made the most progress. So, but where we have made progress is in a couple other areas. So what does that, what does that all mean? Well, I think what that means is to understand What are the questions that you can arm a contractor with to walk an expo floor and ask just very simple, open-ended questions like, help me to understand an area of my business.

39:41 where your product will bring operational gains. Ultimately, how can a contractor, they don't need to be an AI expert to walk up to a company and be able to say, how does your product eliminate risk, save money, or help you make money, right? Just break it down for me and just show me. And I'm a big believer in... When technology is making big leaps forward, for you to start by identifying, let's say, areas of your business where you believe that there's areas for optimization, and then to begin to look for solutions that address that very specific pain point, as opposed to discovering some solution and then kind of shoehorning it into your business and just hoping that it grafts in.

40:24 I like to say, start with what you know. What you know is what keeps you up at night. And then how do we reverse engineer and find solutions that specifically improve that area? I see companies that have someone who's very excited about a product or solution. They become a champion for it and they somehow get budget approved and it comes into the business and it really wasn't correlated towards a true keep me up at night problem. And then it falls by the wayside. Yeah. But the product has its merits. Yeah. Yeah. You know, this is interesting. So one thing just for our listeners sake of time, like I don't want to in any way give the impression that there's not mega value in all of us taking some time to sit down and go through this survey and read through the nuts and bolts of the data.

41:12 It's really important. We have no way of trying to even cover or scratch the surface on that as part of our conversation. So yeah. I just want to encourage everybody, please don't use this as your summary of the data contained in this report. We're just digging into a few areas of it and more looking at it from 30,000 feet. What's it telling us? So please, guys, get in and dig into the data. Yeah. And I think, and this kind of goes back to the TPA conversation we opened with, is like a lot of this stuff is fundamental business behavior that we're talking about. So like people utilizing TPAs and being more unemotional, I guess, about the TPA topic and utilizing TPAs in their business to generate revenue and all these different things.

41:54 Like that's just, I think the most successful business leaders that we see around us outside of our industry they're very agnostic and open about what makes the most sense to do at any given point. Right. And I think we're in a season right now where the industry is making a big transition from being heavily carrier dependent, which is really where we started out was one-to-one relationships with adjusters, right? If we go all the way back to the beginning, um, To now, we're recognizing that just like these other industry verticals, we really need to make a shift into owning that client relationship, i.e. commercial business has become an area of interest across the entire industry.

42:37 I mean, we talk every day with restorers that are even some of them starting out $1 to $3 million. They're oriented on commercial like never before. It always used to be, let's clean Mr. and Mrs. Jones' carpets, and then we'll help them out with their water loss. But even small restorers now are starting to have a mind for, I need to establish a commercial sales aspect to my business. And that's just other industries have been here first. And I think now we're just adjusting to that. And I think TPAs are one of the things to kind of bridge the gap as people figure out How do we move into this more controlled B2B sales environment that most of us want to get into? So it's not unique to our industry by any stretch.

43:19 I'm really curious about something, you guys, because, I mean, obviously the data set goes into wages. It goes into... to cost, you know, and of course we have the cost of doing business to partner these two things together and you start getting a really good vision of what's happening. So lots of measurable concrete things related to financials, related to service offerings, where our business is coming from. So dig in into that data. But... One of the things that we actually started talking about a little bit before we started recording was the data that was coming back to tell us more about the, let's just call it mental state of our workforce. And I think that this is super curious. So one thing that I have noticed, and I'm going to ask for your guys is like, is this true from your perspective?

44:02 And then get into some of your perspective on this is... The leadership in our industry is shifting quickly into a much younger group, period. I shouldn't say it that way. My opinion is that it's shifting. That group is way more natively connected to their mental health, to this balance, to this idea that they are not going to just grind for a machine because someone told them to. So from your guys' seat, is that true? Are you seeing that? And then how is it affecting the data that came from this report? What is it telling us about the current status of our workforce from a mental health perspective? I was surprised and encouraged by the fact that most restoration companies do have these types of conversations.

44:49 Some are more deliberate than others. 20% of the industry says we've implemented team-wide initiatives, policies, practices to proactively address burnout. But then there's another 34% that have said we've had discussions. We don't have firm policies, but we have discussions. And still another 29% of the pie that says we've taken steps to impact this on a case-by-case basis. Wow. So only 17% of the industry is in this. It's not a topic that we discuss at all. Wow. So that's actually, I think, really impressive. And this was the topic for, we do a few webinars to break down the data every year. And this was one of the topics that we talked about in the very last webinar, which you can go find on the CNR website. But we brought in a couple HR experts in the industry talking about, well, an HR expert and a CEO.

45:34 What are you doing in your companies to help combat this? And it might be, I'm calling every single person that's on cat duty during a cat every single day to see how they're doing and what they need. What a huge, massive undertaking, but we're doing this every single day to check in and take a pulse, get the pulse of what our people are doing. Or, you know, sometimes it's like, you got to go home. I don't know. Like we're just, you have to find these lines. And it, the CEO that was on also talked about positivity and being as positive as possible, but then finding that line of like, okay, we've been positive. We're thankful that we can give back. But at some point also, if our tanks are empty, it's hard for us to keep serving our customers. So I thought that it was encouraging that more of the industry is talking about this.

46:17 And I think we realized, and I do think like, To your credit, what you just said, part of it is that generational shift that we're seeing where people are more aware of kind of mental health state, all of that, and trying to be more on top of it. I can think of a lot of HR professionals in the industry now who really are meeting their teams in a different place than I think leaders previously have in the industry. Yeah, those stats are super interesting. Leighton, you got anything you want to throw on top of that, ma'am? Look, I think that one of the challenges in the whole topic around workforce health is that I don't think it's an unfair generalization to say that a lot of leadership and ownership are of a vintage where some of these topics are loaded with, let's call it just some of their own gut reaction to, I came up through the fire of this industry and maybe you just don't have to cut it and maybe they're weak and whatnot.

47:17 or maybe your grandson, or perhaps your sister's kid came to you and said, I'm feeling disillusioned. I'm feeling fatigued. I'm feeling undervalued. And ultimately, I don't even know why I do what I do at work. I get very little support. Everyone around me seems totally just exhausted. And the leader gives us very low clarity in terms of where we're going and where our inputs, how our inputs contribute to where we're going as an organization. Like, what would be your advice to that person? Yeah. Would you tell your niece, look, just tough it out, cookie, right? No, I think what you would say is, let me tell you, that organization is lacking leadership, right?

47:58 And they're lacking vision. And you need to think about... about, you know what I'm saying? Like it's, if you reframe it, but I think we have to move past what, and Hey, I'm, I'm guilty of this, of just, you know, I grew up kind of in that farm mentality where just like crank it out. Right. But at the end of the day, I think that there's a need to look at some of these data to maybe just choose a different word to describe it. But ultimately, when a person is feeling burnt out, what they're ultimately feeling is they're feeling fatigued. They're feeling like they just ultimately have just lost a view of the horizon as to kind of how what they're doing contributes to anything meaningful for themselves or the company. And the question is, I think that there's just things at odds.

48:40 I think you have leaders who the data is telling us they're feeling they're in a cash crunch. They're feeling a little bit uncertain as to kind of how these storms will flush out and whether we're going to have another Q1 and Q2 like this past year. And I think for them, the whole AI dynamic, they're questioning, like, where am I taking this business over the next 24, 36 months? Yeah. A big antidote to burnout is anticipation, anticipating a future that I'm excited about. And when leaders are struggling to cast vision because they're so in their business, I think that those two things are at odds. And so I think that there's an opportunity here for leaders to, I like to say, up Periscope, to use a report like the CNR State of the Industry Report to...

49:28 Carve off some time, sit down with it, get re-excited about your business, get re-excited about your industry. Recognize that areas where you're struggling, others are succeeding. Areas where you're succeeding, others are struggling. It's kind of fun, right? But I think that you have to recognize that this is a people-powered business, right? Someone steals your dehus, no problem. Yeah. Someone, but your staff don't show up to work, you're dead, right? In the water. And I think that Michelle and I both agree that we're going to keep doubling down on this kind of workforce health elements in future years because people are important.

50:09 And they are the hands and feet that actually get things done. I think the other thing too, just to round out this topic, because it's a very interesting area to focus on. I think another thing that's happening too is that the old sort of benchmarks for service have now become table stakes because of Google reviews and Yelp reviews and so forth. So the other thing that's starting to really hit us and I think starting to affect the workforce and I think create some of this feeling of overwhelm and lack of support and burnout and It used to be that just showing up on time, doing a quality job for a fair price was the mark of a great company. Now everybody expects those things as baseline, right?

50:53 And we're in an experience economy where in order to differentiate yourselves, right, you have to be so much far and above those baseline expectations. And yet, I think we have a lot of people, frontline staff, that they're being told to and yet they don't have a frame for that. They don't themselves experience world-class care or consideration, and so they don't really have a framework for that. It's like, and I forget, I read an article sometime back, there was some luxury brand there, that when they would hire frontline staff, they would send them to go stay in a luxury hotel and experience what it feels like to have personalized care and service.

51:37 Because how else can somebody in a luxury market understand how to provide that to other ladies and gentlemen, you know, using Ritz-Carlton speak, if they've never actually felt or experienced that kind of service delivered themselves. And I think in some ways our industry is faced with the same thing because of the chaotic, emotional nature of our business. Many of our companies are focused on this differentiated, personalized customer service experience. We're demanding that of our people because we want the really awesome Google reviews and everything else associated with marketing. providing that level of service. But internally, we haven't modulated the way we take care of our people to give them a sense of what that feels like to be cared for.

52:22 So therefore, people are grinding their face off trying to provide this level of service to the client that they're not receiving internally. And there's this almost cognitive dissonance, right? Like I have this high demand and expectation on me as an employee. but I'm not getting fueled up in the same manner. Does that make sense? I think it's a very real tension and certainly it's not exclusive to restoration. But I think with companies are having to figure out what does it look like for us to care for our people in such a way that it empowers them to go extend that same care and concern to our clients. And some are doing it better than others. I think Guarantee, like as an example, is really leading, is one of those iconic companies that seem to be really chasing that connection.

53:10 How do we take care of our people in such a way that they are motivated and inspired to go care for our clients in a similar way? One thing I'll add really briefly, Chris, just to what you're saying is every time CNR Know-How creates this report, It's broken up into sections. Each section ends with discussion questions for teams. Because I think what you're describing is a dynamic that just needs to be aired out within management teams. So, for example, in this section, which is section six, a person jumps into the report. Just an example of a question is for teams, this is an innately stressful industry. What are some examples of the ways we get things done that could be improved just to make life slightly less stressful for our team members? right?

53:50 Airing out conversations like that is part of the dynamic of a report like this. The report is not read it, close your laptop and say, I hope none of my team read this. It's distributed. And you can go to stateofrestoration.com. And if you want, You talked about ChatCP earlier. We've released kind of our DocTalk functionality just within stateofrestoration.com. And you can actually have a conversation with the state of the industry. Kind of a fun new feature this year. So you can have a conversation with it. But the idea is don't replace an AI conversation what really should be a human conversation about these themes that get surfaced. That would be at least my closing thought is you'll say, well, what do I do with all this?

54:31 What you do with it is do not... As the old saying goes, do not basically cover your torch, right? Illuminate this information to your team. Let them be adults and ingest it, right? Information sometimes will lead to people saying, I told you so, right? And that's okay. And then leverage the way that CNR know-how, try to make the report more than just informational, but interactive. And you still have time. You know, you still have time. We still have about 40 years before we run out of year to just sit down around a pizza and just pick a few questions from each section and just say, how does everyone feel about this? Yeah, I love that.

55:12 It's a great takeaway as we get ready to wrap up. Michelle, just like last thought from you in terms of anything that really stood out or that you found particularly interesting that people should be pointed towards or directed towards as they start dissecting this information. Gosh, I don't know. I like the idea of find the high points and work through those questions with your team. I did hint to earlier that there was a shift in kind of the biggest pain point in the industry and getting paid flipped to the top this year. And I don't think that that's surprising. It used to be kind of like hiring in retention. Hiring really was number one. And now getting paid has flipped to the top. And so there's a lot of conversations around that. If you want to jump into the CNR and know how webinar that we did a few weeks ago, we had experts completely talking about like, how they are getting paid.

55:57 We brought in Debbie Bogart from Woodard, who has been doing this for 30 years. And gosh, she knows how to get paid, how to get those invoices paid, documentation, all of those things. So, and we had Jessica Westcott from R1 as well on there. So they had great insight into how to get paid because I think everybody is feeling that. There are very few people now who are saying, yeah, we're getting paid in 30 days or less. You know, I've actually had vendors when I'm struggling to get paid, tell me, welcome to restoration. I'm like, okay, I'm on the vendor side. That's sure. Okay. So yeah, getting paid is a big pain point. And I think consolidation will change in a little bit in 2025. I think 2024 was a slow year, but I think 2025 is going to see some very interesting things coming about, maybe even a little bit at the end of this year.

56:42 We'll see. Stay tuned. I am really curious about that as well. I think an election year on top of a slow start really freaked everybody out. And my gut says that stuff is going to get crazy Q1 going into next year. But all right, guys, we got to close. We need to be cognizant of time. Where do we point folks, A, to make sure that they get their hands on this? And then some of the additional resources that you guys have shared so far for people to really take advantage and leverage the information. Where are folks going? You can go to stateofrestoration.com and that's also where the AI tool is embedded. You can download it for free there. You can also go to cnrmagazine.com slash stateoftheindustry.

57:23 And that's where you can find all the on-demand webinars. Again, you can download the report there. You can find all of the articles that we've done in relation to many of the hot topics from the issue. You can find some content by Floodlight there too if you're over on the CNR website. So go check that out. Yeah, a little plug for you guys there. So yeah, you can go both places have a lot of resources. So check it out. It's all free. So dabble away, share whatever you'd like. Thank you guys for having us. I appreciate it. That's awesome. It was good to connect with you both. So thanks for sharing your time, gang. We appreciate it. Thank you. And Brendan and Chris and team, keep up the great work, guys. Hey, thanks, man. Thank you. We're all failing forward, right? We're all failing forward. All right, guys. Well, if we don't talk to you beforehand, happy Turkey Day.

58:06 And we'll see you all soon. That's right. You too. Thank you. Yeah. See ya. Happy day off for all the Canadians. Yeah. Thank you. All right, everybody. Hey, thanks for joining us for another episode of Head, Heart, and Boots. And if you're enjoying the show, but you love this episode, please hit follow, formerly known as subscribe, write us a review, or share this episode with a friend. Share it on LinkedIn, share it via text, whatever. It all helps. Thanks for listening.