Welcome to Structure Talk episode 100!
Kevin Wagstaff, one of the founders of Spectora, joins today’s show to talk about their company. Spectora is the fastest, easiest, and advanced home inspection software that is currently assisting around 5,000 home inspectors in the US. He shares that their focus is making reliable, understandable, and useful information for inspectors and homeowners.
Reuben discusses the concept that in the future, home inspections might be a loss-leader. The real money might be in managing services and information, being a conduit for the services that people need. Kevin and Reuben also discuss kickbacks from these kinds of business relationships and being a preferred partner by other vendors.
Bill shares that the presence of Spectora as a trusted third-party provider, a communicator between homeowners and inspectors, will influence the home inspection industry. Then, Tessa realizes there are many opportunities in the industry that have yet to be explored, especially on the technology and marketing side.
The following is a transcription from an audio recording. Although the transcription is largely accurate, in some cases it may be slightly incomplete or contain minor inaccuracies due to inaudible passages or transcription errors.
Reuben Saltzman: It bugs me when you hear about kickbacks, just that word…
Kelvin Wagstaff: It’s a bad word.
RS: Raises the hairs on my neck.
KW: A bad word.
KW: Referral fee, is that better.
RS: I hear kickback.
Bill Oelrich: Welcome everyone, you’re listening to Structure Talk a Structure Tech presentation. My name is Bill Oelrich, alongside Tessa Murry and Reuben Saltzman, as always, your three-legged stool, coming to you from the Northland, talking all things houses, home inspections and whatever else might be rattling around up in our brain on a given day. We are very excited to have Kevin with us. Kevin’s back from Spectora, and he’s going to be talking to us today about home inspection software and a variety of other things, but we’re gonna dive into a very special milestone that Spectora has reached just in the last week or so, and Kevin’s smiling… You can’t see him smile, but I’m gonna let him unveil all of that, all I know is that’s crushing it, once we get to that point and we’re gonna dig into some other things. It sounds Kevin, like you guys are making some changes, some updates to the software, and I was hoping to dig into that a little bit with you today. So here it is everybody Kevin Wagstaff from Spectora.
KW: Sounds good. Honored to be back. I don’t know how many repeat guests you have. Thanks for having me back.
Tessa Murray: We’re a huge Kevin fans, Kevin. I’m a Spectora fan.
RS: Second that.
KW: We just had the IEB conference with Reuben, I don’t know if you could ever make up the friendship that was made with me and your team maybe next time.
RS: So sad to miss it. So sad to miss it. Oh man.
KW: They’ll be more, there’ll be more.
TM: Did you know that Kevin is an epic volleyball player?
RS: I know he used to play, but I didn’t know he was epic.
TM: You’re like almost pro level or something Kevin.
KW: Reuben, I played semi-pro basketball, that was my sport, so basketball was my main sport, and then I switched over to volleyball like about seven, eight years ago. But no, the story we were at the IEB conference and my co-founder who got me into sand volleyball, so sand doubles volleyball, there’s only two of you out there, you have to cover the whole court, really exhausting, a lot of people would not punish themselves in that way. We were like, Hey, Austin has a really cool sand volleyball scene, we have a few friends that moved down there, so we were like, Hey, should we tack on an extra day in Austin and just try and find some good volleyball? So we actually reached out to a friend, he knew of another friend that was running a tournament on the south end of Austin at this bar that has sand volleyball courts, so we went down there and found some pretty high level sand volleyball at the end of the trip and some people from the conference, Tessa, Eric came out and had a drink at the bar and watched, and we all kinda hung out, it was a really cool environment.
RS: Oh, I didn’t even hear about this.
TM: So Kevin, you and your brother played, and how many people were you guys playing against in that?
KW: So it’s like a 16 or 20 person kind of tournament where you do a round-robin, you play against everybody, they keep track of points and then they rank you and so it’s this kind of like king of the beach format.
TM: And it came down to the final two players and guess who they were? Kevin and his brother.
KW: Had to play against big brother and he beat me, of course, as he usually does, but it’s cool.
TM: Oh, he beat you oh? You know what, it was so tragic, we had to leave ’cause our Uber came and we didn’t wanna have to wait another hour for an Uber to show up, so we missed the final match between you two.
KW: It’s so fun and…
BO: Good for you guys, wow.
KW: A couple other IEB folks came out and hung out and so… Yeah. We’ll do more of this stuff. Hopefully, we can explore Austin some more.
RS: Did you bank some money in addition to the title of being the best sand volleyball players not from Austin?
KW: Yeah I think Mike won 100 bucks. I think I got something like 50 or something like that, it cost like 30-some to enter so it’s more for bragging rights.
RS: Yeah, absolutely. Sweet.
TM: That’s awesome.
BO: Alright, well, Kevin, let’s talk about this milestone. I feel like it’s an amazing milestone knowing the industry, so why don’t you unveil what you told us kind of in the pre-discussion?
KW: Yeah, sure thing. So Spectora software scheduled only business tools have reached 5000 users, clients, as we call them, a couple of days ago, which has always seemed like a distant kind of goal in the future, kind of a thing we’d hit down the road, but… Yeah, super humbling. And anyone that’s listening that contributes to that, thank you. I feel like I almost keep track and know of each and everyone… It’s impossible, I don’t think I actually do, but it feels like it. So it’s kinda…
RS: Five thousand kids in the family. [chuckle]
KW: Yeah, yeah. That are all great and deserve attention.
RS: That’s absolutely amazing. I can’t imagine all the work that’s gone into that, and by my math, that’s one-fifth of the industry, I think there’s roughly 25,000 home inspection companies in the country, so… You own it. [chuckle] And that’s just fantastic. I can’t even tell you how amazing that is so congratulations.
KW: It’s such a combination of amazing early adopters and even middle adopters and even people like you all that continue to make it better, but our team is just a group of people that come to work every day that are invested that are smart and they’re working on themselves and they’re driven, much like I know Reuben has said to me about his team and any really high performing team in our industry, it’s like it sounds cliche, but you really do gush when you’re just like, Holy crap, these people bring it. And I feel like from day one, Mike and I gosh, we wish we could just clone ourselves and it’s like in the best way, it feels like it’s happening where there’s people that are doing it better than he and I did.
TM: Since I’ve been out of the field since last March, I haven’t really had a ton of Spectora time myself, but from all the interactions I’ve had with the other inspectors on the team with Eric Houseman working on it and stuff, I know that your customer support is awesome and you’re always answering all the questions that we have, fixing little glitches here and there that happen, but just meeting your team in person at IEB was amazing. You have such a great team of people with such great attitudes and they’re so helpful and smart, so I was just kind of blown away by not only you, but your whole company.
KW: Thank you. I guess it’s reciprocated because that conference was so special, just seeing those interactions and our industry is really niche and weird, and like most people don’t ever find themselves going down this rabbit hole, the levels to the home inspection industry, and then it’s software within that and then IEB, it just all feels very weird to people when you tell them about it, so yeah, it’s been a lot of work, but it’s kind of like anyone that’s raised kids, it’s like you see the results as they’re happening and then they continue to grow and they kind of emulate certain things and it’s beautiful to see.
TM: You know what, can I back up for a second? For anybody that’s listening, that didn’t catch the earlier podcast we had Kevin on, go back and listen to that, there’s great info on that, but for people that are just listening now, can you give us a little background on when you started Spectora and how quickly you’ve grown and where you are at today?
KW: Yeah. So we’ve launched January 2017, so we’re about four and a half years old, so the year prior to that, Mike and I were talking to home inspectors, conceptualizing this… Interviewing anyone that would let me buy them coffee to ask about their software, so I’d often drive to local home inspectors, like the Starbucks by their house, saying like, Hey, can I buy you coffee? It’ll just be 10 minutes of your time. Then whip out the laptop, show them a really junky version of Spectora and then ask him about his software. And so yeah, that whole year was just doing that whole hustle of finding out what pain points were. We were so naive ’cause we didn’t know the industry, which ended up being a positive…
KW: ‘Cause they would tap through their app and we’d say, “Oh, why did it take so many taps to do that wait, how many times do you do that thing in a given inspection?” Okay, you only add that up. Okay, so you’re spending three hours there and then you’re going home and spending three hours… It just didn’t make sense to us, so it was like, that’s the benefit, I think, of any quote outsider in any industry. We dug deep and got a hell of a lot of nose, a lot of, Hey, good luck kid. No one’s ever gonna change softwares ’cause that’s really hard, and it takes forever and templates and…
BO: Reuben, did you tell Kevin that?
RS: He just shook my hand and smiled and nodded a little bit…
BO: I don’t think I’m much older than Kevin. I don’t think I would have called him kid.
RS: True, that’s true.
KW: You are 48 years in the inspection industry from the start of your career, so…
BO: Right, right.
KW: And I’ve liked Reuben so much and I was like, “Oh man, this guy is kind of the content King,” so I was like, I don’t even… I don’t even care if they use this, I’m just happy to be talking to him, but… Yeah, launched in ’17, kind of trickles of new… Of customers that would try us out. People that were willing to take a chance on us in the early days, and I would talk on the phone with them pretty much multiple times a day, like hours of just troubleshooting and going through an embarrassing product that just like breaking, not working, so people think bugs now are bad, imagine back then. And I’m just like, trust us, it’s gonna get better, and we’d literally would build features like real-time for people. So that early user would say “Hey, I need this check box to do this,” and I’d be like, “Hold on, let me get back to you. I’ll email you back in 10 minutes,” and I’d be like Mike, you gotta build it. Like right now. This guy, and this guy’s vocal, he’s going to tell other people, and then Mike would literally call someone back and say, “Hey, refresh your browser now.”
KW: And then that guy would be like, “Oh my God, you just saved me an hour a day.” So those stories are so fun to think about of the hustle, and I think every home… The beauty of, I think, of our business is every home inspection company can relate to so many of those moments when you’re just trying to win people’s trust over when you’re talking to those first agents and they’re like, Who the hell are you? Why would I trust you? And with something so important, so, and in 2017 with about 200 users, we are still very small and unproven and new and being told it wouldn’t work, and no one would ever use Cloud-based software and all the naysayers. And then went from 200-1000 and then 1000-2000, then 2000 to where we’re at now so. Kind of dizzying, I think, a team of 23 now.
BO: Reuben, 5000 home inspectors. What do you think?
RS: That’s crazy. That is an insane part of the market. I don’t know how many they’re supposed to be in the US. I’ve heard the number 20,000 thrown around. Do you know how many we’re supposed to have, Kevin?
KW: I wish we had good data. I really do. InnterNACHI has 30,000 members, how many of which are actually active and in the business versus just doing their neighbors house occasionally. And then what subset of that are tech savvy and kind of the same mindset of, you know, like a structure tech… I don’t know, I’d guess 10,000-20,000.
BO: One of the documents I have access to something called the Business Reference Guide. We use it in a business brokerage. Business Brokers use it all the time. When I look up home inspections, they list out 25,000 in change as how large the industry is in the United States.
BO: So that’s where I pull that number from, but 25,000, 20,000, 10,000, any way you slice it. Five is a big chunk of that pie congratulations for walking in and providing a service that everybody clearly is gravitating towards.
KW: Thank you. It’s surreal, and it’s really cool to know and have friends that maybe have gotten a Spectora report that live in other cities. So it’s like something I always ask friends when they buy a house like, “Oh yeah, I got a home service,” and I’m like who did it? Let me see the report. A very odd question. A very personal odd question. They’re like, alright creep.
BO: So what does it look like on a daily basis as far as upgrading or updating the software? I assume this is a constant process, but what are the greatest gadgets you’re rolling out in the current version or what are you working on now that’s gonna really turn heads?
KW: Well… What a wonderful questions. I’m gonna start with the day-to-day, just kind of as almost a PSA in the fact that just like a house, you think there’s only a couple of main things to worry about. You’re like, Okay, as long as your HVAC and your water heater and the appliances are working, it’s all good. It’s like, no, there’s so many little nooks and crannies, and we’re literally fixing something daily or adding something daily, so I think for everyone that thinks software is builded, and then I’m just sitting on the beach somewhere, it’s like no, every single day there’s issues. There’s people that have one-off issues that we’re putting band-aids on. We have five developers, about to hire two more, because there’s just so much work to do in terms of patching up bugs, adding features. We have a three-week sprint cycles where we work on stuff every day to release it every three weeks. And so we do like a bug sprint cycle where despite people saying, “Oh my God, this… I’ve been reporting this bug for three years, why can’t you just fix it?” That kills me to hear it.
KW: I literally will call people and say like, “Let me apologize, first of all, if you’re not feeling heard because that sucks to tell someone something’s wrong for years and not have it fixed,” or a feature that they’ve been requesting since day one. Some remember the days when we would do it in real time, and that’s tough because it’s like, Hey dude, we can’t… We literally can’t just change the whole software for all these huge companies, so.
TM: You can’t listen to 5000 requests and answer them all immediately anymore? [chuckle]
KW: Its… I almost hesitate to tell people how many feature requests and bugs we have at any given time, so it’s not their problem, I wanna have empathy in their shoes for what they’re experiencing, right? But we get about 100 a week on average, 100 feature requests a week, and that can be on the low end. It just show you the variation of like a guy in Utah versus what Structure Tech does could have a very different idea of what could speed up his day or how his presentation could be different.
RS: But I will say, I’ll just share this after we did the last podcast, I don’t remember when that was, it was kind of after we had stopped hitting record. We were chatting about something and I was like, You know what, there is something I wanted to ask you about, Kevin, ’cause I can’t understand this. And it had something to do with the way you view photos and you download photos, and you’re like, “Yeah, I just do this,” and I’m like, “Well, but if I do that, it does this,” and you’re like, ” It shouldn’t do that.” We’re on this and you must have had it fixed by 6:00 AM the next day, I mean it was just… You saw that it didn’t do what you knew it should, and man, you guys had that fixed so fast, it was like…
KW: Oh, yeah.
RS: Lightning speed…
KW: I remember that.
RS: I could not believe it, that knocked my socks off.
KW: And the thing is, I don’t tap around the app as much anymore, and so it’s just like those are those little… And it’s like a little baseboard in a room that’s coming off and you walked me to it. There’s like, “Oh wait, that’s a big deal that affects everybody. Yeah, let’s prioritize that.” And fortunately, I have the voice in the company to say like, “Hey guys, let’s prioritize this… Ruben is kind of a big deal for one.”
BO: That’s what George says all the time…
TM: We need to get shirts that say, “He’s a big deal.” And a picture of his face.
KW: Ruben is a big deal. I would wear that.
BO: I gotta go. See you guys.
TM: Embarrassing you.
KW: I’m gonna try and answer this concisely, but big things on the horizon, we basically have revamped the hood of Spectora, so to give everyone context, when we built in the first year, Mike and I did everything quick and dirty because it was survival. So we built things quickly with maybe technology that gets it out there, but maybe isn’t stress tested for like they say thousands of users, and so there’s a lot of tech debt that was incurred, so a lot of what we’ve been doing this past six months is rebuilding the core tech underneath the hood, like the engine, like upgrading the engine basically to say, “Okay, if we double again, could we handle this many reports all sinking at once and data flying in all different directions?” So really, it’s so much work that no one will ever see but it’s the stuff that in a year from now, when you’re just humming along without issues, that’s kind of what we’re future-proofing against, so it’s very un-sexy and very not seen, but it’s part of the journey we took because if Mike and I had built from the beginning, very careful and very future-proofed, we would have moved way slower, we may not had a… May not have been able to hire the team we’ve had, grow to where we can grow, start thinking about the next generation of tools at this point, so it was a trade-off.
RS: Just a quick side note, Tessa, does this make you think about the education platform for home inspectors that we’re looking at developing?
TM: I was just gonna type you a private message of that Ruben.
RS: Yes, I just had to say it on the air, if that’s okay.
KW: But outside of that, I think the more fun stuff to talk about, new mobile app with a redesign and basically an upgraded framework that anyone that’s ever had sync errors or discrepancies when they’re doing multiple inspectors on a house, there was lots of stuff with our old tech that was hard to explain that that core technology wasn’t being evolved and worked on to get to a point where we need it to be, to be super resilient. So we switched technologies on the mobile app, and that’s what we’ve been building, and that’s what’s going into alpha and beta testing in the next month or two, so we’ve literally had two developers working full-time on that, and that’s again, tech that… I wish it wasn’t just build it once and it’s fine forever, but it’s like all of this money and effort has to go into just making it work in the future, which is the part I think most don’t understand or they shouldn’t understand. It’s not anyone’s expertise. So new mobile app’s gonna be cool. I think it’s gonna enable us to bolt on and add features quicker and be more agile with adding stuff into the mobile app, so there’ll be cool stuff like calendar views in there and accessibility stuff with just the design of it’s gonna be a lot easier to see in the sun and certain screens and pages in there, so Eric will geek out over all of this… I promise. He’s working with James. Yeah.
TM: Yeah, he’s just… He’s sitting there trembling. So excited listening to this, I’m sure. Yeah.
BO: Kevin, when you’re optimizing a program like this, I imagine battery life on a device comes into play, or does it?
KW: It does.
BO: And the original kind of engine under the hood when you built it, did you consider battery life, and at what point did you realize, “Oh, we gotta begin to optimize this so it’s not killing the battery inside a phone in 25 minutes.” That seems like a very non-technical question, but I bet you it’s way more technical than anybody would ever think.
KW: Yeah, and it’s one of those things we wouldn’t experience just by testing it, so when we built the original mobile app, we’re clicking through it, and making sure everything works, that’s great, but did we ever spend two and a half hours, three times in a day without service, with it just getting hammered on LTE? No, and so we would just listen to our early users basically, that say like, “Guys, this is killing my battery… What do you recommend?” So early on, people had to get the back-up battery packs just to kind of charge in between until we started to look at our sync process and make it more efficient, so every time you hit savor sync in the app, if it’s literally scanning everything you’ve done. That’s just processing power. That’s gonna drain it right.
KW: And so a lot of it was kind of going to our core, kind of safe sync logic in saying, “Okay, can we… ” Basically, if someone comes up and tells you a story, they’ve ready, told you the first two parts of the story, they don’t need to repeat it to you, just tell me the end… It was like telling the app to say, “Okay, just go to the end, we know you’ve already saved all this data, just go to what’s been touched recently since the last save to preserve battery life.” So that gets kind of technical, but that’s one of those things that takes so much more thinking through and development than people think of just the sync logic of what happens when you literally press that sync button, all the little zeros and ones that it takes to get that information to the cloud, down to the report sent to the agent, they open it, it’s gotta all show up, the fact that this can all happen in a day, beyond me.
BO: How do you sort through all the if-then scenarios?
KW: Segmenting, basically throwing things into small containers to where it’s digestible, and we can look at one section of the app, we can look at just that code that does one thing, that sends it somewhere else, so it’s really distributing it out. One of the other cool features and things that the future though came up at the IEB conference, there was so much conversation about the future of the industry and how to empower companies to kind of control their own data and everything Mike and I talked about in the session. So I think future features around having home inspection companies kind of be the hub of the home owner and kind of be the quarterback of all these services and products getting purchased, huge concepts, huge, probably billion dollar kind of implications, that kind of stuff is what we’re thinking about, kind of trying to plan for and trying to just see how we can enable that is a big deal to us.
BO: You see the home inspection software as being the vault on a home in perpetuity, and I know there’s other programs out there that are trying to store house data so went from one owner to the next, it’s not dropped or lost… Do you see the software becoming a vault of sorts?
KW: It would potentially the CARFAX to homes or whatever is something Mike and I threw around five years ago and we were like, “Wow, why isn’t that a thing?” Obviously, very difficult with how fragmented every home data is and different sources, and everyone’s trying to win that game, so to be determined if that ends up being a thing that’s something we pursue or if it’s more of a homeowner needs, warranties, insurance, plumber, HVAC, do they get those via the home inspector, the home inspection company’s recommendations, and how all that commerce flows. That part is interesting because what’s a homeowner to do now, right? They ask the home inspector, the inspector’s, “I don’t know. Google it or… I don’t wanna be on the hook for that.” And then they go Google it, it goes somewhere else.
BO: The home inspection business is the center of a lot of potential relationships, which I find fascinating about this business. Like, you are the data finder, you are the aggregator of all this information, and you can control a lot of… And control’s a bad word… But you can move a lot of chips around on this board if you want to.
KW: Yeah, I think we’re in the early innings of this industry getting more okay with that dynamic, and then the sophistication of the tools and the infrastructure, and I just think we’re really excited to help be a part of that because the traditional industry has always shied away from that. It was like, “Hey, I’m just the guy that hands you the report and I’m out.” And I think what a wasted opportunity I think when it comes to a center of influence. I don’t think inspectors realize how much power they have.
BO: I think they do, and the Association seemed to want to distance the inspectors from being able to make that decision. Maybe I’m wrong by saying that, but I think there’s [chuckle] a lot of people know they have a lot of power in this. And power’s the wrong word…
BO: But you get what I’m saying…
BO: Yeah there’s a lot of influence in here because you are a trusted third party, and the client turns to you immediately and says, “What would you do?” And you’re like, “I’m finding facts right now, I’m collecting data. I’ll tell you at the end. I’ll give you my whole opinion at the end. Right now, it’s just a partial opinion.” What’s on the horizon for all of this is really mind-boggling.
KW: Yeah. Tessa, what were some of your takeaways from that? ‘Cause I think it blew some people’s minds at the conference that had never thought about it in this way.
TM: I guess that was kind of a whole new world I hadn’t really spent too much time thinking about, just the other opportunities that there are in this industry that we haven’t taken advantage of. We’ve got such a narrow view of what we do, it’s just our head is in like this little bubble, focusing on just delivering an inspection report and delivering the facts and all of that, but there’s just really so much more to it that it could be one of the biggest takeaways… Just like processing this for days after the conference… It’s just like how our industry is changing and will continue to change, and who knows what the market’s gonna be like a year from now, five years from now, 10 years from now. Is the inventory gonna increase, is it gonna decrease, what kind of buyers are gonna be out there? And really starting to kinda think about the future of this industry and where there would be a place for us.
TM: And as I was kinda thinking about it, it’s like I don’t think we’ll have a guy in a tool belt who walks through a property and clicks on all these things and writes a report for a house in another 20 years, 30 years. It’s going to change completely. So it’s just really kind of… I think it was fun at that conference being able to just brainstorm with other people in the industry from the tech side, from the marketing side, from the actual… All these different perspectives, and think about these potential changes that are coming down the road. That’s not a very specific answer, that’s very broad, but it was a fun exercise that we did, I think on one of those last days of the conference.
KW: Yeah, it’s part of IEB’s role is leading these conversations, and I think thought leaders in the industry, like the biggest companies, the IEB’s, we see ourselves as being in that circle of saying, “Let’s throw things out there ’cause we have to be prepared.” Sometimes it’s ridiculous hypotheses that may or may not play out, but we can’t get blind-sided because all of our livelihoods are dependent on this industry growing and thriving, not shrinking, and I think part of the risk is that there’s transactions getting sucked out currently by the open doors of the world, by the companies that are taking away business, and I don’t think any of us want that.
BO: If a human has a medical record that’s attached to them permanently, it feels like a house in a way should, and a home inspector might come in and just play a part in updating that medical record of the house, so to speak. And the whole real-estate transaction I find very interesting because it’s all based on trust, and the person you’re trying to trust is the person who wants the most from what they’re selling, and you’re hoping that everything you’re being told is exactly the way it happened while they were in this house. You’re like, “Okay… ” It’d be nice to know the actual material… Material’s the wrong word… It would be nice to know the actual repairs and the schedules that repairs were made and that kind of thing over time. It just feels like a fair thing for someone who’s gonna put down a lot of money on an asset that should perform at a certain level.
KW: I’d love a future where that’s the case, where the people doing the work can plug in and kind of document what happened, exactly the level of service or the standard of whatever they’re doing, and then this kinda just like almost unbiased record is how it should be.
BO: We’re a long way from that. [laughter] There’s a lot at stake for people to put lipstick on a pig, as they say, so… It’s beautiful. [chuckle]
KW: Yeah, exactly.
KW: Reuben, what do you think about all this? I see you nodding over there and thinking. I see the wheels turning.
RS: Something that I’ve been hearing from IEB for a while is that a potential future for the role of the home inspector is where the smallest amount of money any home inspection company is going to make is gonna be on the home inspection itself, and it’s almost like you’re really not even gonna make money on the home inspection, even the idea that a home inspection is going to be a loss leader, and that really the place where you’re going to make money… I don’t even wanna say this out loud ’cause it just, it bugs me, maybe I’m not saying it right… But the thought that I’ve heard, this idea that I’ve heard, is that it’s almost like the biggest way that you’re going to make money is by controlling data, and what I end up hearing is that it’s like selling your client’s data, and that’s one thing that just, it drives me nuts. I don’t like the idea of that at all. We have never dabbled in that even, so I hope that’s not where things are going, but maybe a nicer way of putting it, and maybe…
RS: Maybe somebody who’s listening to this, and who’s like, “No, that’s wrong,” they might say it’s just a matter of controlling services and making more services available to a homeowner, being helpful and being a conduit for these services that people need. It’s like, “Alright, you need a plumber. Work through me to get that.” And it’s lead development that’s being funneled through the home inspector. I’ve heard people say that this very well could be the future of home inspection companies.
KW: I think you just nailed that, and I think you just worded that beautifully.
TM: Yeah, you he did.
KW: Because it’s funny you say that ’cause everyone throws out the word data and control, and it’s such a heavy phrase, and I never word it that way when I’m like if you’re just being helpful, referring someone to a trusted partner who they may or may not have found otherwise, that feels pretty ethical and good to me, just from like… If I’m literally coming in blind and I’m like, “Oh, so you know an HVAC company that’s five star Google hundreds of reviews, that’s really good. I’d rather you tell me to go use them, then I could just not search. I can just go right to them.”
RS: Yeah, right, and that’s what we do today. We already do that, but then the idea of monetizing that, where I get a piece of that, just feels a little bit unethical or sneaky to me, and that’s the part that I have a tough time getting over, and Bill and I have probably discussed this for hours.
RS: I don’t know what the right answer is here.
BO: I think the right answer is transparency. If you tell people what your relationships are, it’s up to them to make their own decision, but one thing that a home inspector can do at a very high level is be a communicator between the homeowner and this other vendor who needs to provide a service. And so instead of you telling the homeowner, “Oh, go call this company,” you can say, “Give them this information. This is what I found.” They can read what a homeowner didn’t try to explain to them on the phone and they can understand quickly what problems they’re coming out to resolve, and it feels like there’s a lot more trust in that than there would be in just the homeowner calling a vendor, they come in and they look around and they’re like, “Well… ” And it just seems to cascade from, “This is what’s wrong,” to “This is what we could do, and what’s wrong costs X and what we could do cost X times four.” And then now you’re in this place where people lose trust, and so I think home inspectors can be conduits to great communication and relationships between vendors and homeowners because they wrote up the comment or the problem and they gave it over and somebody was able to almost diagnose without having to be in the house.
RS: Yeah, yeah.
KW: It’s a great debate.
RS: And one other thought I wanna share on this… This thought popped into my head as I was talking, and I didn’t wanna sidetrack the one way I was going… But one other thought is, when I was joking about the home inspection being a loss leader, is at Structure Tech, our home inspections are almost loss leaders. If we didn’t have ancillary services such as radon, sewer inspections, chimney inspections, our company would be in the red. We would lose money. And part of it is that we just started out paying our home inspectors such a high commission split at Structure Tech that it’s not really sustainable if we’re just doing home inspections. Thankfully, we have a bunch of other services, but it makes me think of Best Buy selling a laptop. They don’t make any money on the laptop. They only make money if you buy a protection plan and cables and this, that and the other. It’s the only way that that business works, and most home inspection companies don’t have this problem, but we do. [chuckle]
KW: Great problems. Great problems to have. On the monetization thing, I wanna dig into that ’cause I’m so fascinated by it, just having worked at Home Advisor and seeing the value of leads and lead generation and what contractors often pay for different kinds of leads. So, Reuben, is it because it’s such a local, personal thing, it’s like a company that could be down the street from you all, or it’s someone that you know, or is it just the fact that you don’t want there to ever be an illusion of maybe the home buyer saying, “Oh, they’re getting a kickback?”
RS: That’s exactly it. It bugs me when you hear about kickbacks, just that word…
KW: The bad word.
RS: Raises the hairs on my neck.
KW: The bad word.
KW: Referral fee. Is that better?
RS: I hear kickback.
RS: It’s like there’s such a clear line in this business where we could never even consider giving the referral fees to real estate agents, but then why would it be okay for other service providers that we recommend to give us the referral fee? How is this any different? That’s what I can’t get past.
KW: Yeah, yeah, and it’s like monetizing the trust almost, the relationship.
RS: That is a great way of putting it, Kevin, yes.
KW: Yeah, and some people say, “You know, I’ve built up 20 years of having great reputation and service, and these companies would pay for these leads at Home Advisor,” so it’s gotta come from somewhere. And others say, no, that it’s not worth it, and it’s not something that should be there. So it’s fascinating, ’cause in the warranties and insurance space, everyone seems to be okay with it, and so it’s interesting to me how… If it’s like, say, Progressive or State Farm, if they were gonna Google it and get that insurance anyway, would it have been okay if you were like, “Oh yeah, you can just get a quote here. I’ve a relationship with this insurance company.” Everyone hates insurance companies. Is it okay to get a referral fee from them? That’s a fascinating question. Those are the things we’re asking home inspectors. I just wanna know.
RS: Yeah, and I don’t think we have an answer to this. And as we’re discussing this, I remember the first time I did your podcast, Kevin, before we even had a podcast, I remember in the middle of it, you were telling me… I always like to think of the title at some point during the podcast… And you announced the title of my podcast during it, and I was like, “That’s genius,” and I think I just figured out the title of this. We’re gonna say, “Are kickbacks ethical?”
RS: I think that’s a good question.
KW: The hard part is me always typing down the nugget that someone drops, when I’m like, “Ooh, that’s the title, I gotta type this out.”
BO: But if people get a fair price for whatever repair and whoever did the repair did a great job. And they stand behind their work. I don’t see the problem with these kinds of relationships. Because if advertising is paid to an agency, let’s say, or referral fee is paid to a trust, its source, it’s still money that’s going out of that vendor’s pocket, so it’s not like the price of the service goes up, they’re gonna spend that money either way.
KW: Fair point.
RS: It’s being paid there, or it’s being paid to a salesperson right now.
BO: Just feels less oily if it goes to the salesperson. Is that what you’re saying?
KW: We’ve kicked that around, Bill.
RS: Yeah. That’s true.
KW: We’ve kicked around. There’s actually a few inspectors on our network already. That are selling advertising space at the end of their reports. They created a section for partners, and so then you’re right, that exchange of commerce is like… It’s viewed different. But it’s still an exchange of money, so it’s interesting to say preferred partners as a last section in the Spectora report. What if you allowed two of each category to be there? They’re paying to be on your park bench, kind of. That’s an interesting thought.
RS: And then the other side of that, it’s like real estate agents will do that all the time, they will have preferred partners, and the home inspectors have to pay a boatload of money.
KW: Oh, Yeah. Right. To be on that list.
RS: To be a “Preferred partner.” Why are they preferred? Oh, because they write us a gigantic check.
KW: That’s the transparency thing, Bill. Right? So it’s like if the transparency is like, we partner with this HVAC company, ’cause they’re the best in town.
RS: And they give us a big check.
KW: And. That’s exactly. And they’re willing to advertise with us because they know we attract the best in town, that kind of thing. So.
KW: The devil’s in the details. I think with all this stuff.
BO: These relationships exist all over throughout all kinds of different industries, and some we accept without a problem, and some we have these big problems with, and I don’t understand why. I think of home inspections as, home inspectors can’t work on homes they inspect, yet I go to the auto mechanic, and if they find something wrong with my car, they fix it. I don’t drive off to somebody else to fix it.
KW: Fair point.
KW: Very fair. I just picked up my car from the mechanic, and I was thinking about this dynamic, and I was explaining that to my daughter who’s 14, and I’m like, I was just testing her knowledge. And I’m just like, “Let’s talk about incentives for a minute. So do you see any issue with the person calling out the problem also being the one to fix it?” Especially coming out of a pandemic when people weren’t driving. So it was a fun conversation.
BO: Right. It gets you thinking, and those are fun conversations with young people because that just… It hasn’t entered their mind yet. I’ve got a 17-year-old daughter, and we’ve kind of scratched the surface in some of these more adult conversations sometimes, and I really, really enjoy it.
KW: And is it our place as an industry to care what the home buyer is going to do anyway? Like you said, if they go to Yelp and they have a terrible experience. Is it still like, “Yup, I was done with them when I handed in the report?” Or do we know we can find a better relationship? Or if they go to a Home Advisor and just have a terrible experience? ‘Cause they’re gonna go find that flooring company one way or another.
BO: That’s exactly right. You nailed it. If we can get somebody there quicker, faster, and more affordably. And there’s more trust in the whole system. I’d love that, but we could debate this all day long. We’ve been on this podcast now for, I don’t know, 45 minutes. We should probably consider wrapping things up here pretty soon, but Tess, I know you’ve got something to say that you’re just about to.
TM: Oh no, I was just laughing ’cause I’m like, Reuben, you could be full-time, just a vetting service. Looking for good quality companies to partner with because I know you love doing that. Didn’t you just vet about 10 different HVAC companies for your own house?
RS: I spend a fair amount of time vetting people to see if I even want them on our list or not. Absolutely. I already spend a ton of time doing this.
KW: Reuben, part of me thinks for the trust and the amazing company and the people and everything that’s gone into everything that Structure Tech is. Part of me is like, “Hell yeah, Reuben’s company should get paid for that.” For the trust that transfers to these other companies. I could be swayed either way. I love debating both sides.
RS: Yeah. I’m glad we don’t have to decide this today.
RS: What fun conversations to have.
KW: So, we noted at the beginning of our podcast, that Spectora is crossed the 5000 home inspection company mark, but one thing we at Structure Talk can cross the small milestone ourself. This is podcast episode number 100. So we are…
BO: Awesome, guys. So cool.
RS: What better person to have on.
BO: Thank you Kelvin for… Thank you spending the time with us. Couldn’t think of a funner person to have a conversation with over episode 100. So thanks for joining us. We should put a wrap on this. You have been listening to Structure Talk a Structure Tech presentation. My name is Bill Oelrich. Alongside Tessa Murry, Reuben Saltzman. Thanks for listening. We will catch you next time.