Comment by quirkot | Hacker News Reader

Comment by quirkot | Hacker News Reader

I've seen other construction related businesses try to go direct and it is extremely difficult. By going direct to the homeowner you are targeting the venn diagram union of "people who are willing & able to do the work themselves" and "people who will pay more"

How are you going to build your service network? You say you will "connect them with a contractor to do the actual install." But contractors make their money on equipment sales, not on labor. I bought my residential HVAC system direct from a friend and it took me 3 weeks calling around to find a contractor that would do the install and THAT was only because of the same friend connection.

Who are the decision makers in your target market exactly? Wil Joe Homeowner be deciding? Will you pursue developers who install and build? Are you pursuing multi-family complexes and engineers will be specifying the equipment? Each of these will require you to provide value above and beyond what they are receiving now and it's not clear what your value proposition is.

>> "contractors struggle with installs because of the difficulty of properly sizing the system, and understanding if your duct work is compatible with a heat pump"

What? How could duct work possibly be incompatible with a heat pump? Any forced air system is already ready for hot or cold air. Additionally if you are banking on contractor unfamiliarity or incompetence as part of your business plan, you are in for a rude surprise.

One other headwind is that you're VC funded. No one wants to buy a HVAC unit from a company with a 5-7yr liquidation event timeline. If you do go into any other channel than direct to home owner, no one wants to SELL a unit that may not exist in 7 years. How will support work? What about parts? A well built machine could be in working for 15 years (or longer) and the question everyone has is: will you?

> By going direct to the homeowner you are targeting the venn diagram union of "people who are willing & able to do the work themselves"

This is meant to be installed by a professional contractor, not the homeowner.

> How are you going to build your service network?

Compensate the contractors fairly and act as lead gen.

> Who are the decision makers in your target market exactly?

Homeowners. Not targeting multiunit residential or new builds, they care less about efficiency because they don't bear the cost of ownership.

> What? How could duct work possibly be incompatible with a heat pump?

A natural gas furnace requires ~150cfm airflow per 10kbtu heat produced, while a heat pump requires 330cfm per 10kbtu. This large mismatch in required airflow means that if you replace a natural gas furnace with a like sized heat pump, you've likely exceeded the ability of the air handler blower. Luckily most natural gas furnaces are grossly oversized for homes. The way you find the right size unit is with our software.

> This is meant to be installed by a professional contractor, not the homeowner.

This quote was obviously to emphasize that HVAC contractors make money from margin on equipment sales and not labor, which (according to OP) means you end up targeting people who either can do it themselves or purchase this before finding out how hard it is to find a certified technician willing to basically waste their time on installing a HVAC system for little profit.

The only way I can see this working is if perhaps Electric Air pays a hefty commission to their HVAC techs as a way to ensure they still profit from their time, which is what I assume OP was trying to find out.

> This is meant to be installed by a professional contractor, not the homeowner.

But I would want to install that myself. I do everything in my house myself. Could I order a device from you and at the same time save the compensation that otherwise gets the installer?

> This is meant to be installed by a professional contractor, not the homeowner.

And where are you going to get the contractors? Nobody is going to want to contract with you. HVAC companies go with 1, maybe 2 companies. How are you going to pull them away from Carrier, Lenox, etc who can offer volume discounts or just dump their products into the market and bleed you dry without even noticing the effect on their balance sheet?

How are you going to get the plumbing/heating distributors to supply companies to stock your units and parts? You're going to distribute them yourselves? That's going to be very expensive, slow, and unreliable.

How are you going to guarantee you'll still be around for the lifespan of the unit, to provide parts and technicians who know how to service the units?

Puts envelope with your business plan to forehead

You're going to:

-lock down the protocol between the components so nobody can use standard thermostats

-lock down access to the controller for diagnostics, forcing people to go with you for service

-charge a fee for remote "smart" thermostat features

-justify all this with some hand-wavy nonsense about using ML/AI to maximize energy efficiency or predict when the unit needs service

How close am I?

> A natural gas furnace requires ~150cfm airflow per 10kbtu heat produced, while a heat pump requires 330cfm per 10kbtu.

How do you arrive at these figures? First, you are stating flow numbers at total energy which does not make sense. Second, airflow requirements at certain power (not energy you cite) come from heat exchanger size and temperature gradient. What are operational parameters of the reference natgas heater?

Let's assume that you mean 10kbtu/h instead of 10kbtu. That is ~3kW. For reference Nibe F730 produces ~5kW at 250M^3/h, i.e. 150 cfm.

Heat pump output temp is lower than a furnace's. Thus, it needs to move more air to inject the same heating power.

In Europe, where the traditional working fluid is usually water in water radiators, this has been a big issue in popularizing heat pumps. Radiators sized right for hot water from electric or gas furnaces were undersized for heat pumps and their lower output temp. This required expensive replacing of the water network and radiators.

Heat pumps in new builds are popular for heated floors, which are great.

> > How are you going to build your service network? > Compensate the contractors fairly and act as lead gen.

I used to work at a company which makes security and access control systems (swipe cards, electronic locks, etc).

They created a consumer-level system (as opposed to the big Enterprise ones they were known for) and tried to create a distribution model which appears to be how you're thinking about it. The idea was they'd build a network of contractors ("Installers"). Customers would buy direct from the company, who would then forward a request to your local installer (lead gen). The company would cut the installers in for some percentage of the ongoing subscription revenue cost, plus whatever margin they added at install time.

This failed miserably. The company learned within the space of a couple of years, that all the good installers want to build a relationship with (and critically, to bill) the customer, they don't want to be a behind-the-scenes referral on someone else's website. Few signed up, and the ones that did, weren't incentivized to prioritize it highly. They put it lower down on their job lists, which led to customers having to wait a long time and experiencing poor service in some cases. Not great. The company also struggled tremendously to drum up interest. Because security systems (like HVAC) come with maintenance/repairs/etc, the market had evolved into one centered around companies/individuals looking around at their local providers first, picking the "best" one, and then choosing a product based on what the provider was offering or what they recommended, much like you would with a Plumber or Electrician.

Maybe the HVAC industry is sufficiently different from Security and this model might work for you? From what I saw though, there's a lot of overlap there and I'm not optimistic.

After a year or two, the company pivoted to a model where they formed partnerships with contractors/installers and moved away from the direct-to-consumer model. At the time I left, this was proving much more successful of a model. The partnership model involved more revenue share, training, and a bunch of other stuff I wasn't involved in, but critically, it meant that when an end-customer went to their local security system provider and asked them what was good, they'd be highly likely to recommend my ex-company's product. That was the clincher.

I hope that's of some use @cmui

A flip-side from the consumer perspective.

The company who installed the windows in our house operated this way. They have a network of contractors for installs.

The contractor that showed up was accompanied by their general contractor who managed the relationship with the window company and customer.

The general contractor came with business cards, was friendly, and kicked off a 15 minute conversation where we walked around the house and made a list of everything they could help with later down the road.

The lead for them wasn’t the window install, it was follow up business once they built a relationship. The window install was an ad for them.

If I still have to hire a contractor, then why on Earth would I direct buy from you? The only reason I'm even interested in reading this post is the idea of installing myself with no contractor involved. I can't imagine why anyone not interested in self install would ever want to direct buy. Too much hassle to still have to go find a contractor willing to do it.

>> How are you going to build your service network?

> Compensate the contractors fairly and act as lead gen

This will be tough. At least in my geography every decent contractor is busy all the time. Additionally, you'll need to provide enough business to your partners that it's worth the time to deal with. I don't know if that's 1/x install per week or enough to basically have a whole dedicated person. I've tried to outsource something similar (equipment start-up, not install), but my volume was only ~20/year and my guy eventually said it wasn't worth the hassle unless the price was outrageous.

I see a bunch of people dogpiling. I'm skeptical of the distribution approach, but there is space for more heat pump players. Good luck. See you at AHR in Chicago

> But contractors make their money on equipment sales, not on labor.

This. No competent contractor will install a unit you bought off some website.

That will lead to two possibilities: 1) Homeowners try to install it themselves and screw it up 2) Incompetent contractors install it and screw it up

The result of both is bad word of mouth/press and reputational damage to the brand.

That is exactly what most people fail to acknowledge: (nowadays) every competent contractor in trades has more work than he can handle. You need him more than he needs you.

Basically the same business model Solar City, and a whole bunch of other PV start-ups, tried and failed with. In this model, you take the capital requiremts, someone has to fund the equipment, and the resource requirements, selling once every twenty year purchases to consumers requires loads of people, combine them together and hope all the hot VC money will allow you to squeeze enough existing companies out to create a comfortable nieche for yourself by the time VC money isn't there anymore...

(intersection)

Doh!

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