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From Data Rails, this is FP&A Today.
Welcome to FP&A Today.
I'm your host, Glenn Hopper.
I'm joined today by Preston Nagley, Director of Strategic Finance at Midway Mechanical Services.
Preston started his career in private equity before moving into the operating world where he now leads FPA at a PE-backed roll-up in the HVAC industry.
He is building finance from the ground up, taking newly acquired businesses and integrating them into a unified platform, introducing budgeting and forecasting for the first time, and using tools like data rails to make it all work.
We'll talk about what he learned in private equity, the challenges of being a one-person FPA team in a roll-up, and how he sees AI reshaping the future of finance.
Preston, welcome to the show.
Thanks for having me.
Glad to be here.
So man, before we dive in, I just mentioned it to you before the show seeing what you're doing right now, out of all the guests I have, I feel like I can empathize with you in being that one-man finance team in an acquisitive business where you're having to roll up all the disparate charts of accounts and you know getting everybody's accounting to match and getting people on the gap and getting them all the reporting in a place where PE folks want.
So I guess before we dive in, how are you doing?
How are you hanging in there?
Hanging in there, doing just fine.
I will say I'm not just the one man.
I'm the one man FP&A team.
We do have a really strong team of accountants that are wonderful and great to work with.
But outside of core accounting, it's just me basically out there on an island.
And yeah, it's a lot, but it's fun.
It's fun.
I work with great people.
I was going to say though, and actually having that accounting team has to be helpful too, because you don't have to bother with getting everything tied into gap.
You can start just doing the actual finance work and doing the forecasting.
And I'm sure a lot of the businesses that you guys are acquiring probably have, just because if they weren't an audited company or weren't a public company or something, they probably didn't have to have as tight a financial.
So it's got to be interesting pulling all that together and being able to do FPA on data, probably for the first time for a lot of these businesses, right.
Yeah, for sure.
It is the first time.
I think very few have ever done any sort of budgeting and they've mostly just operated by gut feel.
And so bringing us into the equation is a challenge for most.
You know, they're like, why would we do this?
So there's a lot of learning curve on both sides to really get there.
But it's, like I said, it's fun.
You know, they're great people.
They do what they do very well.
And so you know it's about harnessing what they do well and trying to improve, with kind of that FPA function, the budgeting, forecasting and then all the other you know data analysis goes into it.
What I love about that and I'm just going completely off script here, but I guess what I love about that though, is it almost feels like magic when you can get to the point where especially if you're dealing with a company who's never had to do that before where you can show hey look, finance and accounting, don't just think of it as a cost center.
Look at these insights we're giving you from the numbers.
And we're going to get into all that.
But is that I mean, I'm sure there's probably that first point where it's like, what are we doing?
And then they get to the other side of it.
It's like, oh, this is cool.
Yeah, you probably have to ask them.
You know, I think a lot of them would say they're still waiting for that moment.
But yeah, there's a lot of that where it's like hey, you have a founder who's run this thing for 20, 30 years and they make their decisions based on instinct.
And those instincts are often correct.
But now you have kind of new, you know, new leadership in there oftentimes, right?
A seller is looking to kind of move into a different phase of their life career.
And they don't have the 30 years of instinct in many cases.
And so it's how do we translate that instinct into data to really support smarter decisions?
And it's fun to see that process happen.
Most would probably say we're not there yet.
And I would agree.
I think we have a long way to go.
But It's great when you can see light bulbs starting to go off.
Like, ah, now I understand why you're harping about this KPI or why forecasting makes sense.
Because in most cases, they're like, why do I even need to do this?
So it's fun.
It's a good time.
I'm sure I stole this from someone else, but I always say it's going from hunch to hypothesis, when you can start using the data and applying that rather than just that gut instinct.
Sure.
Yeah, I like that.
Tell us about your background.
How did you end up?
I know you were on the investing side before.
Walk us through your career and kind of how you landed where you are now.
Yeah, honestly, it was kind of luck.
I landed in private equity straight out of undergrad, which is pretty rare.
And it's nothing special about me.
It's just right circumstances.
I was prepared in the right way and met the right people.
My dad owns and runs a business in the firearm space.
That entrepreneur side was just always intriguing to me.
And then I got into school and it's like, well, what am I going to study?
I guess I'll study accounting.
And I added finance to that.
And I didn't really know what I wanted to do, but being involved in that space seemed interesting.
And through one thing or another, I started learning about the buy side, what that looks like, and being engaged with a lot of different businesses and learning how they operate.
And that just wasn't treating to me.
And also, it was just the sexy thing to do, if you will.
And it was well.
You do consulting or you do investment banking, and then you end up in private equity.
And I skipped all of that just through connections, right place, right time.
And I ended up at a first-time fund in Salt Lake.
And... it just was all kind of happenstance and anyway, ended up there, loved it.
There was a lot to learn and you know, it really kind of jumpstarted my career.
So I'm really grateful for that.
From there actually went on the entrepreneurial side.
Um, me and a few, a few colleagues were building a software business for software developers.
Really technical stuff.
I'm not the technical person but did a lot of work kind of in the product space like just bridging the gap between the technical side and, you know, ultimately the customer um still involved there just more nights and weekends now at this point, but did that for a handful of years and then ended up back here through you know a few connections and really with the, the intent of you know understanding private equity, understanding that this business is fantastic, a lot of good assets, but we need to kind of prepare it for that next stage of you know really being a platform, and so it was brought into kind of help bridge that gap.
So you know, just listening to your previous guests, I'm probably the least qualified it seems to be on this podcast, but I'm excited.
It's exciting to take what I know and kind of adapt it to you know running an FPA function and doing it in a way that hopefully is, you know, lean and mean and can really get to a place where we are, you know, a true platform in the future.
So I spent my career in private equity backed businesses, and multiple times in my career I thought I'd really like to go to the other side, I think.
I don't know.
And we can get into this a little more, but I always thought here, all my eggs are in one basket.
But if I were on the investing side, I could have a portfolio and I could be exposed to a lot more.
And I really, I mean, what a great opportunity for you to get private equity right out of your education, because it's almost, it had to be like a finishing school because you're exposed to so many different companies, so many different industries, and you see so much.
It had to really refine your understanding of what's important in a business and what kind of things to look.
Oh, absolutely.
I mean, you're looking at, you know, just dozens and dozens of businesses at any point in time.
And obviously they're in various different stages, but it's just a fire hose of learning business models and what works and what doesn't, um understanding markets and really, you know, creating value.
It's awesome.
It's really a great school for that.
But opposite to you, being on that side of it, you just kind of have this bug of like.
Well, I don't actually know what it takes to run a business.
Like I say that I do, but I don't actually do it.
So there was always that just drive, like, I want to be on that side of the fence.
So maybe the grass is greener is a problem for everyone.
But for me, that was like, okay, I feel like I know what I know now.
I want to go try to apply it on the other side.
I just had a guest a couple of weeks ago who she was at the VC side.
She was at the investment side and she actually moved into one of the portfolio companies and took over the CFO role there.
And it's I mean ideally you'd have experience on both sides, because I think it does influence, and we'll get to this a little more later.
But it influences.
You understand why the board and why the investors are asking the questions they are.
And you sort of see this shift. bigger picture and everything.
So that's, that's super valuable coming from that.
I'm wondering, on the being in PE first, were there things that you took from that that I mean?
I understand you know from inside the business what it looks like, but truly creating value, like the way it's measured by markets and by private equity?
Did you?
Were there things that you learned on that side that you're now that you're on?
You know inside the business that you're applying today?
100%.
In some cases, it's hard because I want everyone else to see that vision.
It's not just our board or our investors saying, hey, this is what the business needs to look like.
There's actually a real reason for it.
But until you've stepped back and look at that picture, it's hard to see when you're operating a business every day.
It's like, well, I just got to go land the customer.
I got to go land the job.
I got to hire the technician.
I understand all of that.
And it's so important.
And that skill set is so important.
But if you take a step back and say, well, does this customer fit where we want to go long term?
Maybe there's a better version of this deal that we're looking at.
And really trying to blend those two things together, because it's really easy on the private equity side to just be like well yeah, of course, just do this.
Just get that customer.
And so I think both sides, kind of you have to blend that to say hey, really driving value is actually executing, but it's also, you know, really understanding the strategy and why you're trying to do that.
Um, i don't really know if i answered your question specifically, but there's just so many cases of that where it's like we want our revenue mix to look like this and our businesses are going well why, like historically, we've always done this and it's worked really well for us.
It's like well, here's why markets value a business that looks like this a little bit more and why we want to do that.
And in the longterm will make your life better.
Like this customer profile is more attractive or whatever it may be.
So there's a lot of that learning where it's like Hey, I got to bridge that gap between the people who are operating day to day and what our investors and board are expecting.
And that's so interesting because, looking at private equity over the last I don't know two decades, maybe forever, but the era of roll-ups and this is where you guys are in are now, but the idea of taking best practices and maybe you've got one lead company that you know, it makes sense that this is, you know, this is the process, the business excellence that we're going to apply to all all the other companies in the rollup.
But also, like you said, I mean, very smart founders that do what they do very well.
And then having that investor eye and it's, It's amazing to see when it works, how well you can create value in these roll-ups.
So the biggest exit that I personally had, I was in a car wash business.
And they were a huge roll-up.
And Leonard Green, I think, was behind this big group that ended up buying us out.
But it was pretty amazing to see.
And we were...
That business, we were running like 63% EBITDA margins at the unit level.
And the funny thing is we were running super lean.
And I would say that after the rollout they weren't running anywhere near the kind of margins we were.
But it is amazing to see, when it works, how much value can be created just by that.
Taking the best practices and applying it across and mixing up you know, shifting the customer mix a little bit, and whatever those fine fine tuning things are that value can really be created there.
Yeah, absolutely.
I'm also fascinated on the private equity side.
And we talked about this before the show a little bit, ramping on a new industry.
We talked about, you know, healthcare and Medicaid nuances and the whole rev rec and everything around that.
But I think you mentioned something about how that shaped your approach to sort of problem framing and modeling, even today.
Can you walk me through that a little bit?
Yeah, sure.
You know, I think about, you know, we looked at a deal.
We were at a healthcare fund specifically.
We looked at a deal.
We got brought in by another fund and we were supposed to be the healthcare experts.
And we looked at a space that we'd never seen before.
No one on the team had seen it.
It was, you know, treatment for traumatic brain injuries.
He's got two, three days and you're expected to be the expert in this space, right?
And so it's like hey preston, go figure out what the market looks like across the united states, what the different payers are, Who pays for this type of treatment?
What are the stipulations behind that in every single state, so that we can understand how we can grow this business?
It's in California.
We want to grow to the rest of the United States.
Where's the best place to start?
Why?
Et cetera.
And you have two, three days.
And today it would be a lot easier with AI because it could really help you sift through a lot more data to understand the space.
But because of that you have to say okay, I'm going to break this problem down into you know, hypothesize what I think the most critical elements are and then quickly come to a conclusion in each of those and try to find the data to support that conclusion.
And it just framed up the rest of my career.
It's been, hey, you're faced with something you don't know.
So how do you break down the problem in something that can be understood by everyone and answer at least confirmed or disproven quickly so that you can keep kind of moving down towards what the right answer is?
And in that case, it was whether or not to make an investment.
But you know in an everyday world what we're doing.
It's like well, should we, should we pursue this thing or not?
Should we pursue this acquisition, should we go after this customer or what you know, whatever it is?
And so having that but have it being super intense really quick, just forces you to operate in frameworks and set up problems in that way, because at the end of it, you have to explain to someone why we're doing what we're doing or why we should do something, and so just which is everything in life like being able to take what you know and explain it in a way that moves the ball down the you know, down the court, down the field.
So I don't know if that answers your question, but for me like having to do that over and over again and lots of different industries that, to be quite frank, I didn't care about.
I don't care about health care.
You know my wife laughs because even just walking into the hospital to, you know, deliver our children, I'm like passing out because I just can't deal with anything.
And, like I've lived in that space, I would visit health care facilities and be trying not to pass out while I was there and just learning to really dive into problems and framing them up in a way that was interesting and valuable to people.
So I found it to be invaluable, like is a really excellent fire hose to be trying to drink from, just from a learning perspective.
Yeah.
I, you know, but right now, doing all the roll-ups you've got even continue.
You know, I think that two great ways to sort of continue your education.
One is I mean there's way more than this, but you know, if you're on, if you have a portfolio of companies and a portfolio of industries and are exposed to all of them, that's a great early career ability to have.
But then, On the other hand, being in whether it's highly acquisitive or startup mode or whatever it is where you are sort of forced out of that ivory tower of finance and it's no.
I need to quickly understand the business.
And oh, now we have a new wrinkle because we've acquired another company and we've got to roll them in.
I mean, if you didn't want to be a continuous learner, you're going to have to...
Become one to survive.
Yeah.
Before the show, you said another thing.
And this also really resonated with me because when I felt the same way when I was in telecom fairly early in my finance career, we were very acquisitive and every you know we're doing everything.
Well, there was mergers and acquisitions and roll-ups as we went along, but it was one to two, sometimes three deals a year.
And I was on the due diligence team and we were always responsible for coming up with the synergies and having a number that would make sense that we could sell to the board and the investors.
And you said um, that there was a point where people became numbers in a spreadsheet and that's i would have to say, oh well, we have to cut 10 of the combined customer service group or whatever.
And knowing that that's happening and seeing all the layoffs after all these mergers, it got really, really difficult.
But for you it led to a change and i'm wondering If you can kind of recap that a little bit and talk about how that realization influenced you to go from PE to operating and maybe if that impacts the way you lead FPA today.
For sure.
You know I mean private equity generally has kind of the reputation for just going in and cutting people right.
Like it's just the common playbook.
At least it's parroted by people.
We didn't do that at the firm I was at.
Like we didn't go in and just lay off a bunch of people, but it was always...
Like, well, here's where they're operating and we need them to be here if we want our return.
So what is that gap?
And usually it was people that you would ultimately pencil into a spreadsheet.
And it just got to a point where it's like, over and over again, I'm not seeing the people on the finance team there.
I'm not seeing like I'm interacting with with the leadership team, which is probably the CEO and the CFO and maybe a COO.
And like, that was, that was it.
And like, well, all of these numbers really are just the people operating the business.
And I don't ever see them.
And I'm like making recommendations that really could impact a lot of people's lives.
And it started it kind of gross and not that we ever fired a bunch of people or anything, but it's like I don't.
They are just numbers to me.
Like that's all I ever see, you know, sitting in my office.
And so it just started to be like this isn't what I want to do, like I want to interact with these people.
And anyway.
So now on this side of it, like you really start to appreciate it takes a lot to run a business and everyone has a role.
And They're not just a salary plus benefits that you can cut out.
You have to really think about what's their impact.
How can we get the most out of these people so that they get the most out of their job and we get the most out of them from a business perspective?
And you really are all rowing in the right direction, in the same direction.
And it's just, it's fun to see that and just remember like hey, this is yes, it's financially motivated.
And the people on you know our investors, our board, They care about their returns, but it can't be at the expense of all the people that are here.
And our private equity firm, they're not traditional in many sense.
They're not a traditional fund, so they don't have a very specific timeline, which is great, but they care about the returns.
So it's like helping bridge that gap and say, okay, we have all these people.
Some of them are probably not best utilized.
They're not in their highest capability role or whatever it may be.
And so it's about helping people see the vision and getting them in the right place.
And so it's fun.
It's fun to be on that side of it, really interacting with people, knowing that hey, there's a place for everyone here.
We just got to figure out what the right place is and get everyone, you know, growth is fun.
Growth is fun.
Let's all grow together and move that way instead of, yeah, let's cut our way to a return.
So, you know, I mean, neither of us are going to sit here and not PE.
We see the value in it.
But I wonder and we talked about this a little before I ask you to expand on it a little more, because I'm thinking there's got to be some PE mindsets that carry over to the operator side, you know, sort of risk reward pathways, return design.
But there's also probably some things you have to unlearn.
When you are, you know, when you're at the PE level and you're looking at the whole portfolio and everything and it's more it can seem more academic versus when you're in the trenches.
So I don't know, are there, and you may have already hit all the positives, but did you feel like there were any other areas that you were like?
I've got to kind of shift the way I'm thinking now.
Yeah for the.
You know the positives like really framing up risk reward, understanding you know what drives value.
All of that super helpful in this role.
The flip side, everything can't, every decision can't be made in a spreadsheet.
And like you're just kind of trained that way in private equity, like well, put it in a I don't know if you've read any of his work, but thinking fast and slow.
Humans are terrible at probabilities.
We have a really hard time assessing probability.
Private equity really helps you force that.
You put it in a spreadsheet, you stress test things.
In the real world it doesn't really work that way.
You have, you know, someone who's having a hard time in their job like you.
Can't take that conversation and go put it in a spreadsheet and say how are we going to solve for the right outcome?
And you have to kind of unlearn that I've learned over the last few years like everything can't be in a spreadsheet, even though it's like my default, like I want to go there, it's my, my comfort zone.
We have to operate faster.
And also just the human element, like is is so important.
So that's probably the thing i've had to unlearn, if you will, as much as i still want to do it, and even in my role i am in spreadsheets a lot like, i'm sure, our operators.
If they listen to this, they would just laugh at me because i am using spreadsheets every day.
But you can't as much as you'd like to like.
There's just the human element that is hard to quantify.
And most times you don't have the time to quantify that in a spreadsheet.
That was always really hard for me because in several businesses I was in and a lot of them were a lot of my career was I was with the same group of investors and they would put me in not as a complete turnaround guy, some kind of were, but really it was if they had an investment that was uh, you know, long in the tooth and they did have a you know that typical four to six year horizon and they'd put me in a business that they'd had for five or seven years that was not failing necessarily, but was flat and they weren't getting the value that they needed from it.
And um, i had a really bad habit because you come in and you want it to be so sterile and so simple that, like you just crunch the numbers and you're like boom, and so that really resonates with with the pe folks.
But I was never the one who had to go.
Well, later in my career I was because I was I would have, because of that, the nature of that, I would have a CFO, slash COO role.
And that forces you out of your comfort zone of you know it's not just add to the spreadsheet, hand it to someone else and and go fix this and make it happen.
But it's I had a real tendency, like especially when you got when you just nailed a forecast thing.
And someone called me out on this years ago and it was the tendency to mistake the model for the terrain.
Because it's like you know, it's like I'm looking at it.
I see it right here and look, look at the actuals.
We did it.
And it's like, yeah, but you don't know what it took to get there.
And you're more focused on, you know, the sort of academia or hypothetical part of it.
So I feel feel for you there, too.
Yeah.
Yeah, yeah, that resonates with me.
You know, there have been a few times where people are like holy cow.
I had no way that I think we were going to hit that number and your forecast was like right on.
And I'm looking at this going, well, if you looked at the details, like all of them are way off.
They just happened to sum to the same number, you know, and like, oh yeah, like high five.
But, you know, you're like, oh, I'm not so sure you should be celebrating that.
And more important is like, does it actually matter what the number was?
Like, is it driving the behavior change that we're hoping to see?
And that's where we really are like missing.
It's like it's way less about getting the number perfectly forecast that it's what are the drivers?
Like, what are the levers that each of us have to help drive to the result that we want to get to?
And that's where we're trying to move people.
And so, you know, that, that resonated with me, you know, a lot.
And you know the other thing where you were mentioning, like I think you know, and what is it that Ned Stark says in Game of Thrones?
Like, He who passes the sentence should swing the sword or whatever.
I hate to be in a place where it's like, hey, here's all the changes we should make.
Now someone else go make them.
If it means laying someone off, go make them.
I don't want to be in that place ever.
And being in private equity kind of made you feel that way.
It's like, well, here's the right thing to do.
Now go give it to someone else to go actually execute.
It's a lot more fun to be on this side of it and harder to be on this side of it to say okay, The things I'm saying I actually have to go do now.
And am I willing to do that?
Yeah.
Yeah.
Well said.
All right.
So give give us the lay of the land at Midway.
They're around 600 or so employees.
What, 15 acquisitions?
15 or so acquisitions.
Yeah.
We're kind of across the western U.S.
You know, have presence in I don't know how many states it is now.
We just we've done three acquisitions this year. and which is a lot.
And it's kind of various places within kind of the mechanical, electrical plumbing space, but we're primarily HVAC.
We are a pretty lean team at the corporate level.
We don't even like to use the word corporate because it like makes our blue collared employees just like I don't know, they like cringe, you know, but they call us corporate all the time.
So we're cringing.
We're trying to move away from that.
Like, Hey, we're a team.
We're not sitting back in, you know, Salt Lake and an ivory tower, like directing the work.
Like you guys are the ones out doing it.
We're just trying to, you know, really bring.
I don't know that sophistication is the right word, but just like strategic vision and movement towards the right platform.
So yeah, across we have various different sizes of businesses, but most are between 10 and 20 million in revenue, probably.
And mostly commercial, we do some residential, but mostly commercial.
And we try to lean towards service.
But we do a lot of projects, construction type work, but that's kind of the leaning where we want to be.
And yeah, always looking for great businesses.
So if anyone knows any commercial HVAC or electrical or blowing businesses, we'd love to talk to them.
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You're a team of one building out fpna.
So what is your?
Your personal mandate, or what is the?
What is your charge every day is your?
Is your going through this roll up?
Yeah, I mean, so much of it has been focused on the platform side of this, like getting ready for a private equity buyer, which means like, oh well, you got to have a budget every year and you should have some forecasting and you should have a data element.
Right.
And really that that has been a lot of the driving force behind what we're doing.
But you know, my CFO and I are really trying to push towards.
This is the, you know, strategic decision center.
Like we are basically trying to be the strategic data and decision resource for the entire business, whether it's the board or our executive team or individual general managers of our businesses or a project manager.
We want to be that place where they can say, okay, I have this decision set in front of me.
Which one's the right one to make?
And not that we will make that for them, but produce the right KPIs, the right data to say hey, we're going to be forward looking and make better decisions every single day to drive financial performance.
So that's like.
My personal mandate is that like trying to drive towards like data based decisions, data driven decisions and, you know, support that at every level of the business.
And then it's got to be like just balancing that when you have all these disparate sources, you have to build a platform.
I mean, ideally, I've seen so many of these roll ups.
It's very complex. easy on paper to say, yes, this is the ERP we're going to use.
And yes, we're going to use this CRM.
But the post-merger, you know, making it actually happen is very difficult.
So how do you balance?
I mean obviously yes, you want to get everybody in one system and just make everybody's lives much easier down the road.
But you've got deal execution, you've got operating and all those other challenges, but you, you know, ultimately obviously want to work towards those tuck-ins actually becoming one business.
Is it, I guess you can't really say one of them is a priority.
You just kind of have to do everything.
So how do you balance all that?
Well, that's a good question.
I think if we, you know, we did it really well, I would have awesome answers for you.
I don't know that we do.
I think first and foremost, it's about the businesses that we're buying.
We're focused on buying businesses with great people in them and then figuring everything else out as we go.
Let's just have good people.
Then from there it's like well, we're going to have some bumps and bruises from systems implementations.
We're not going to do things perfectly, but everyone is like-minded.
Just good down to earth, people that want to do good work and, you know, be rewarded for that work, and so i don't know that we, that i really balance it very well.
It seems like most of the time you're putting out fires, but to the extent we have like a plan like this is where we're trying to get to.
As long as everyone's just trying to move, you know, inch the ball, you know, a little bit further down the field towards that plan, i feel like we're we're succeeding.
But anyway, you know, from acquisition, if it's a good business like we want to bring them on and we'll figure it all out later.
We have great people that do the kind of the accounting gap conversion.
I'm engaging on the data, like really understanding what data exists.
How are we going to make that work until we can bring them onto a system?
You know, forecasting, budgeting all starts to happen, you know, in that data process as well.
Really, it's a lot about transitioning from a seller to what the future is going to look like and making sure that all the right pieces are in place.
I think that's probably too vague of an answer for the question you asked, but No, I mean, I get it.
And it's just, it's spinning a bunch of plates and trying to deal with all of it.
So obviously with HVAC, there's a great deal of maintenance in there, but I'm really interested in forecasting.
And I do.
It's funny.
This show's obviously sponsored by Data Rails, but we don't talk about it a lot.
But since you are a Data Rails customer, I kind of want to move towards that and talk about it in a minute.
But is a lot of your revenue driven by like installs, new construction?
Yeah yeah, generally we're doing more of the retrofits.
So you know, including some like larger scale tenant improvements, but then also just unit swap outs which are project based.
They can be pretty large, you know, several hundred thousand dollars um easily in in some of those cases.
But to that point it's from a RevRec standpoint.
You have a project and you're recognizing revenue on a WIP schedule every single month.
And so from a forecasting perspective, it kind of scared me at first.
It's like, oh man, how am I going to do this?
But, as it turns out, you can really group if you have good data.
You can group these projects by size.
They look very similar.
And so you can say hey, on aggregate, here's what we expect most projects to look like if they have these attributes.
So you can start to forecast that.
I don't know if that's the question you were really asking, but Yeah, no, I mean, I guess just thinking about the complexities, because if you are, if a lot of it is on whether it's retrofit or new construction, I mean, you've got weather, general contractor pauses, you know, what's really happening out in the field.
So trying to forecast this and again I'm having like flashbacks to my car wash days, where everything is weather driven.
And it's like that's a conversation for another show is we got super excited about some of our modeling based on 15 minute weather increments and all that.
And obviously that was a silly thing, where I got.
Oh, you know, I got lost in the model and forgot about the terrain.
But you have to make so many assumptions and there are so many things that shift.
And like you said, maybe at the end it dials in because you had puts and takes all the way down.
But, you know, you want to be as accurate as possible with your forecast.
So how does and I'm kind of building this all in to see you know how data rails might help in some of this.
But I don't know, is it to make a forecast that's actually useful for operators knowing all that?
Is that something that you're still struggling with?
What are you kind of learning around that?
Oh for sure, i struggle with it every single day and like, each new business brings on new challenges, mostly around data, like data availability, and a lot of these businesses is not great.
They've always just kind of done things the way they've done them and data was kind of an afterthought.
That's not always the case, but for the most part.
So it's like how do you, in an imperfect world where i am sitting in salt lake, like how do i forecast for 15 businesses at the same time, when weather in houston can be different than Dallas and just general market conditions can be different?
And you've got GCs who are pushing projects because they're behind schedule.
Or, you know, a customer says hey, economic environment, we're going to pause this one.
And like, it's impossible to know all of that stuff without really good systems.
And so we have this like pitch, like hey, if we bring in a really awesome system, it's going to solve all of this.
Well, bringing in that really awesome system is really painful for our operating companies and like actually getting to a point where that data is useful.
So we're living in this kind of no man's land that's really hard to forecast.
You know what we've been saying.
Especially, we're in budgeting season now.
It's like one of our guys here keeps reading this quote from Eisenhower that says something like all battle plans are kind of useless, but the planning process is invaluable.
So that's what we're trying to shift to.
Like listen, we know we're going to get this all wrong, but to the extent that we can have the best data possible and the planning is right, then we can still make good decisions, even if the numbers are different than we were expecting.
I don't know if that makes sense, but there's so much that goes into it, from project work to service work to preventative maintenance contracts.
Like, oh, preventative maintenance contracts should be really easy to forecast.
Well, if your team is so far behind in service that they didn't even touch those maintenance contracts, well then, you got those numbers wrong too.
And so there's so much that can go into it.
And at first when I got here, I was sick and tired of hearing about weather and interest rates.
Guys, we can do better than that.
And then the more you spend time with him, you're like okay yeah well, it does drive a lot of decisions beyond what we're doing.
And so you really have to consider those.
But in most cases, I feel like I've surprised people in the ability to forecast.
Like oh, you actually can get a project number that's pretty close and a service number that's close.
And if you really consider all of the right data inputs, you can start to get to a place where The numbers are close enough.
And, you know, we can actually see what what levers we have to drive impact.
So we're far away from from that.
But we have, like there have been gold nuggets along the way, like getting people like oh yeah, I can see how that works.
I used to love that, like finding correlations that people hadn't realized before or thought of, and in finding you know if you can find that one leading indicator that suggests oh, this is going to impact whatever other budget category you know three months down the road, or whatever it is.
And in really finding those levers.
So I love that Eisenhower quote is applies to this because, as you're going through it, it's making you rethink those things like OK well, you know what is the impact if, You know whatever macroeconomic trend, interest rates go up a quarter point, or you know, or down by 50 basis points, or whatever it is like you know, when you start to really think about that.
I think it makes you.
And, like you were saying earlier, it's.
It's like solving a complicated puzzle or getting through a maze.
It's like, aha, you get that eureka moment.
It's like a dopamine hit.
Yeah.
Oh, yeah, for sure.
Well, I guess I do.
I want to.
And again, you know Data Rails doesn't ask me to do this, but I do love hearing how the software is actually applied.
So I know you tested NetSuite's native planning path and ended up on Data Rails.
And what were you trying to solve?
And like, if you have the NetSuite platform and the Data Rails platform, like what data lives in each and how are you using it today?
And is it something that you see evolving and you end up using Data Rails more in the future?
Like walk us through kind of a, how it's used and what the plans with data rails are?
For us, like the decision to go with data rails at the time felt kind of like an expensive one because we're already pretty far down the path with NetSuite and their local tool.
We also had, we're using their analytics warehouse tool to try and, you know, produce dashboards.
And in both cases it was like man, we kept running into problems and they said well, you really need a few people to manage these things.
It's like, well, we don't have that luxury.
Like, this is not, we can't do that.
And so that was problem number one that Data Rails solved.
I'm the only one that administers Data Rails.
And it ties into NetSuite.
And our NetSuite team, yes, they have to make sure that things work there okay.
But in every case it's always been something.
Anytime we've had a problem, it's always been on the NetSuite side.
Some change that we made, not.
DataRails and the DataRails team have been amazing from that front.
So, from an administration standpoint, it's just me running that and I'll sing their praises up and down.
Like it's really easy to manage and most of our data you would think would live in NetSuite and eventually it will.
You know we have kind of our service platform is run through there, projects are built in there, so all of the data eventually will live in there.
But to date, you know, most are operating in a different system, call it service titan or something else, run their service platform.
So data lives in a lot of different places.
So it's easy in in data rails to consolidate all of that data and then for me, You know it's it's power query on steroids and I don't have to worry about the back end like data is handling all that.
So as long as the data is there and I map it it's easy for me to bring it into a spreadsheet and work with it or put it into a dashboard and display it.
So just simplifies all of that.
And then managing the, the budget itself, the forecasting, it's just so easy to build in a spreadsheet and, you know use, use data rails to to consolidate all that information, so it's invaluable.
Uh, we looked at a few different tools and it was by far the leader and it has not disappointed.
I'll sing data rails praises up and down because it really has made my life so much easier and, You know, to the point where it's like, oh well, you've gained so much efficiency doing this.
Can we do more and more?
And, you know, you're like, yeah, it's been great.
It's been invaluable.
I love working with it, to be totally honest.
It's just fun.
Like, oh, yeah, I can do that in data rails and we'll figure it out.
Man, I've got like eight more questions I wanted to ask, but my regular listeners probably think I've been abducted and replaced by a generative AI voice clone or something, because we've gone however many minutes into the show and I haven't even mentioned AI.
So I have to stay on brand and I have to bring it up.
And I know in a business your size you're probably not using it a whole lot but Is what are your thoughts on AI and finance?
Have you seen any interesting ways to use generative AI?
And I know, you know, built in to data rails, you can, you know, there's the forecasting and sort of machine learning, classical AI, and there's the wizard to talk to your data and all that.
But are you are you doing anything with AI and finance right now that you're finding helpful?
Yeah, I think in the short term, it's become a really excellent assistant.
Things that are monotonous, it's perfect for it.
Some of the grand claims about it just displacing, we haven't seen yet.
I haven't seen that yet.
And I think it's true.
You probably overestimate change in the short term.
That's what they say, right?
And then you underestimate it in the long term.
I think it's going to drastically impact businesses.
And do you want to be on the right side of that wave or get clobbered by that?
And I'm opting to be on the right side of it.
I don't know what it looks like, but from my perspective, engaging with AI in every way, like trying things out is, is beneficial, just so you can learn.
But I found it, it's good for hyper focused tasks.
Like, You know, I tried shortcut AI to, hey, can you go build me this thing?
And it do a lot of the pieces pretty well.
But then piecing it all together like that doesn't make any sense at all.
But you start to say man, if I can focus it on these specific things and eventually just use our company data to really drive like decision support, I think it's going to shift our business dramatically.
But it's probably not tomorrow.
You know, it's it's in the coming months like here and there.
But for now it's, it's all of the.
I can just be way more effective today because I can say hey, go do this task for me.
That would take me a few hours and I can have it done in seconds.
Yeah.
And there are so many things like it may be on a couple of prompts or a guided thing.
It gets you like 80 percent there.
And it's funny because then you start getting this sort of sunk cost thing or it's even more like okay, i'm committed to the platform right now, but if you just took that 80 and went off and did the rest yourself, you'll probably still have time savings.
But if you stay and keep trying to beat it up and beat it up and get it like it's stuck in some mode or whatever, like if you wanted, you know a three statement model where you're trying to have, you know, have it all tied together and you know something that's just too big for it.
Well, if you had the bones of it and you got that in minutes, that's a pretty big jumpstart.
So, you know, so rather than trying to beat up the tool.
So there are ways and it just I think you're on the right track.
It's like experimenting with it now, using it where you can, understanding what its limitations are.
And then as it gets better, you know, we're more prepared for it.
Yeah, absolutely.
I mean, I view the long term.
As you know, humans are extremely valuable and there's a place for AI and us to coexist.
And I don't think it displaces my job, but if I'm not embracing AI, then yes, it would.
Like you're, I don't know, because I think you could just be so much more effective with using AI.
The scale will be massive.
You know a business that can do 10 million in revenue today.
I think that same team could support 100 million in the future.
So that's how I'm thinking about it.
Like, okay, how do I make this so that I'm way more scalable than I am now?
And that's how I'm kind of not future-proofing but trying to future-proof the FPA function at Midway Mechanical.
Yeah, love it, love it.
Okay well, we're at the time of the show where I've got my two boilerplate questions that we ask everyone.
So the first is what is something that most people don't know about you, that they couldn't just find by looking at your online profile or whatever?
It's a good question.
I have to just laugh and tell something that's not actually true.
But my CFO started this rumor at our company that I compete in whistling competitions.
And it's just strange enough that the more I deny it, people believe it even more.
So there's this contingent of people that believe in our company that I compete in whistling competitions.
So I have to laugh about that and say, oh, that's the thing you wouldn't know about me.
It's not true, but people think that it is.
I recently moved into my childhood home and my wife and I and our family and we have a small fruit, orchard.
So we have like 40 something trees.
So if I'm not at work, probably spending some time down there.
And um, I did, I did as a kid, but now kind of being in charge of the fruits, like it's a, it's a different thing.
So, and that's something you wouldn't know about me, but I love peaches and nectarines and and growing them.
And I'm really kind of diving into that process, wishing I would have paid more attention as a kid to my parents, you know, on how you actually do it, but it's fun.
That's amazing.
So where are we in harvest time right now then in Salt Lake?
We're just out of it.
So we have mostly peaches, nectarines, but we have cherries and pears and apples.
So apples are kind of the latest, but we're kind of done at this point.
So it's really busy from you know through the summer and kind of the main harvest is August for us, like late July and August for peaches and nectarines.
Awesome.
Awesome.
That's pretty cool.
All right.
Everybody's favorite question.
And I know you're an Excel warrior, so I'm excited to hear what you're going to say about this.
But what is your favorite Excel function and why?
Yeah, you know, I've gone back and listened to a few episodes and everyone says index match.
And I kind of got I have to agree like I use that the most it feels like.
But I also love offset a lot.
I'd just say with AI, I'm learning new functions every day that I didn't know existed, which is fun.
So probably the new ones I learned.
But if you're going to say what I use, the most indexed match is probably the biggest one.
Yeah, so AI writing formulas for me has been amazing.
I wrote a let formula that I don't know it was like the novel length, but it did so much cool stuff and I just thought wow this, and it did it.
You know it was a lot of back and forth and a lot of a lot of testing, but I mean, even then it was probably 20 minutes and I just had this amazing formula pull.
I can't even remember what the use case was, but I'd never even used let before.
So I was, uh, I was pretty excited to see, uh, to see how that came out.
So.
And I guess maybe Copilot's still in beta.
Have you tried Copilot in Excel, the Copilot functions, any of the AI functions directly?
Not more than just like a random, like, I'm going to play with this for a minute.
I haven't actually spent time diving in to say hey, can this increase efficiency or really help my workflow?
But it's been a function of time, it feels like, which is kind of silly.
I feel like I should be dedicating the time to it, and I just haven't.
A lot of other stuff going on.
Yeah.
Well, Preston, thank you so much for coming on the show.
Really enjoyed it.
Absolutely.
Thank you, Glenn.
It's been awesome.
