96 | The Evolution of ServiceTitan: A Success Story with Ara Mahdessian the Co-Founder and CEO of Service Titan

Welcome back to another episode of Freedom Blueprint Podcast. I'm your host, Justin Deese, and I've got a pretty special guest today and one that's had a huge impact on not only my life and the businesses that I've owned, but so many others.

in the trades and what started out as a dream has now turned into a very large business that has helped really shape not just one industry but many industries. But today hanging out with us is our the co-founder and CEO of ServiceTitan. Man, thank you for coming and hanging out.

Thank you so much, Justin. I'm very moved and flattered and very humbled by the kind words. ⁓ It's been a two-way journey, You are an early customer. I still remember the very first conversations we had. You, like others, have been an instrumental part of our journey, and you've helped us get to where we are today. So I'm very grateful for your contribution to our journey and honored to be here.

Isn't it hard to believe like that wasn't that many years ago that we were like going through this onboarding process and talking about service Titan to now a publicly traded company. Like that's a whole different level, which by the way, you're my first guest. That's the CEO of a publicly traded company. just want to throw that out there. So what, mean, can you, mean, did you imagine that was even going to be a possibility 15 years ago?

No,

certainly not in the early days of our journey. mean, in the beginning, I thought the extent of the trades was like my dad's business and Vahe's dad's business. And I thought that was it. And then, you know, we originally built Service Titan to help them with their business. And then given it's such a tight knit industry in a small world, other contractors found out about what we had built and

They were interested in using it as well. And of course that was incredibly exciting for us. And then as more and more contractors started to use it, only then do we begin to realize that contracting and the trades were this massive industry where today there's over a trillion dollars that is spent in the U S and Canada alone, just on the trades. And, ⁓ yeah, probably many years into it that we realized.

this could turn into a real business and a very significant one. And thankfully we're here today. And you know, what was awesome about the IPO, frankly, that one of the best parts was so many customers flew in from all across the U S and Canada into New York to celebrate that moment for us. So for us, that, wasn't so much like our IPO or our initial public offering. We really thought of it as like the industry public offering.

I mean, there's, there's not a whole lot of publicly traded companies in our space, whether it be businesses or, companies that are, that really are born in the trades and you guys were, and that's just, it's such a cool story. I listen, I can remember, ⁓ I can remember you talking about just focusing on plumbing and AC and then not, not in other trades. And then, I mean, the, the great part about the business is the customers almost demanded it.

You know, like they demanded that you guys grow. And I think that's really, I think it's really cool.

Yeah. Yeah. It's interesting. As you said, we, started by focusing frankly, only on plumbing and only on residential plumbing and only residential service plumbing and only companies of a particular size. Cause if you're a little bit smaller, a little bit bigger, you needed slightly different workflows supported. And for a very long time, that is the only segment we focused on. And only until we.

thought we did a good enough job ⁓ delivering the capabilities that this segment needed, did we then entertain the idea of expanding into other segments? And then later on at some point we added HVAC because a lot of our plumbing customers also had an HVAC division and then also electrical and so on and so forth. And interestingly, for a very long time, lots of prospective customers would reach out to us and say, we want to use Service Titan and we'd actually have to say no.

We'd say, of course we'd love to partner with you. Of course we'd love for you to use our software, but because we don't formally support your trade, we don't have the conviction that we're going to be able to deliver like nearly a hundred percent success rate. And we don't want to take that risk and have a negative impact on your business because this is your livelihood. It's mission critical. And I remember, you know, one of the stories, the way we got into garage door was actually Tommy Mello from a one garage who

tried to sign up for Service Titan. And at that time, we didn't formally support Garage Door. we didn't partner with them. And then he emailed me and then I got on the phone with him and he spent like 30 minutes explaining to me why he thought Service Titan was actually a really good fit for the Garage Door industry. And only once I had that conviction that yes, he was going to be successful, did we actually then expand into Garage Door. And now we're in 10 plus trades and we've gone into commercial and we support new construction as well. But it's been very much

We prioritized and focused on expansion one at a time. And I think that's been one of the reasons why ultimately the journey has been successful.

Well, and I think one of the things too with Service Titan is it never stops growing. And I think sometimes that's difficult for people, ⁓ know, that's kind of like, I gotta always be learning new things. Well, sure we do, just like in business. mean, it changes and it evolves. And the things you guys are adding onto it are really mission critical.

Yeah, you know, there are multiple reasons for that. But one of the most important reasons for that is simply that our customers are getting increasingly more sophisticated in how they operate their businesses. Like if I go back 10 years, back then, there were almost no contracting businesses that for example, were doing email marketing automation, right? This idea of

remarketing to your existing customer base who may not have used you in the past year and reminding them that we can take care of your plumbing needs or it's time for your inspection. Or ⁓ if, for example, you had been to their house and left them a quote ⁓ and at that time they didn't move forward with it, the idea that you would use email marketing to nurture that opportunity and share with them the value of moving forward with that quote and ultimately leading to them moving forward.

These things most contractors didn't do today. They've become table stakes because our customers have gotten more sophisticated. And as a result, we've had to build email marketing, ⁓ and nurturing capabilities inside the service side or in the same way of like, for example, you know, sales pro today, if you go back five, 10 years, the idea of the, of software recording, the conversation.

between a technician and a homeowner because the company wants to make sure that they deliver on all the commitments that are made in the home and they want to maintain a really high level of service in the home. That idea didn't really exist and today a lot of companies do it and results in a much better experience for the homeowner to the end customer. But as our customers have gotten more sophisticated, it's required us to build a lot more on top of service Titan. And now, even the journey you've experienced building

and scaling your successful business and then ultimately partnering with a larger organization, these organizations have become much bigger. And so now they need a lot of enterprise capabilities, need roll up reporting and centralized user management, advanced security and uptime. And so all these things require us to build things to keep up with the needs of our customers. And yes, that also then means customers have to learn to use these things.

So let's walk through that journey ⁓ from a leadership perspective, Because from a tech standpoint, as I think about it, one of the things I often think about is 10, 15 years ago, there was not nearly as many large companies as there are now. And I don't know if you look at that and you attribute some of the things that Service Titan has done, but I think you guys have played a really big role.

and more companies being more successful by doing things like the email marketing. ⁓ but so, so let's shift a little bit from the leadership side. So let's talk about a little bit of what are some leadership things that, that have shifted over the years? Like when you were the salesperson slash on board or slash technical support to now, the CEO of such a large company, like what are some leadership things that really had to shift for you?

Yeah. I mean, I love this one quote I learned from a dear friend of mine who said, good judgment comes from experience and experience comes from bad judgment. And so I've certainly made a lot of mistakes and learned a lot of great lessons from them. From a leadership perspective, I think some of the greatest impact I've seen is when other really talented individuals have joined our mission.

Of course, early on it was Vahe and myself, you know, doing most of the work. And then at some point more and more great people joined the company. And when running organizations of scale that involve a lot of team members, what I've learned throughout the years is that to have a highly functioning and highly capable team, it requires a very high degree of trust.

And so I've spent a lot of time thinking about, what does it really mean to have a high degree of trust? And, ⁓ you know, I don't have a monopoly on answers. This is just what I've learned through my experience. But in my experience, this idea of trust has boiled down to three components of trust. The first is competence, right? I have to be able to trust that you are, you know, roughly as competent, enable as I am, and you have to trust that I am roughly as

competent and disabled as you are. The second is I also have to trust your intentions and you have to be able to trust mine. Right? We have to trust that you and I are only interested in what is best for the business. We are not trying to optimize for our own personal outcomes. We're not trying to build our own territories inside the business. You know, we don't have another angle in any conversation. And the last is commitment. It's like,

We have to trust that we are equally committed to the success of this business and willing to work equally hard to make that happen. ⁓ I think at service Titan, what is really allowed for that second, the intentions piece to shine is it's not so much just focused on. have to, our intentions have to be what's best for the business because we so maniacally and singularly focused on just one thing, which is what is.

best for the customer that really aligns everyone's intentions. We know that inside a service that it's not even about are we optimizing for our own personal outcome or are we optimizing for the company's outcome? Like we don't even think of that. We're just so focused on what's best for the customer that it's clear that everyone has pure intentions. So that's been very helpful in our business. And then what I've also found when I reflect on like

the best talent at ServiceTitan. And there's a lot of incredible people. But what I find in common among those is that number one, they typically introduce great clarity in the organization, right? They're able to think about here are all the things that might matter in our business or for our customers. But when we boil it down, these are like the three most important things of all those things. These are going to have the disproportionate impact. And so

They help the organization focus on those three things that matter most. They also typically introduce a lot of energy into the organization. Like people love working with these folks. They're typically optimistic. They give really great feedback, but do so like respectfully in a way that motivates others to want to raise their level of performance. ⁓ and typically they're just really good at solving hard problems.

And you think about that. as I, and I've got some really good notes that I just took. So you're putting on a, you're putting on a class here and I'm taking notes and I love it. All of those things also apply to the home service space, right? It's, know, give your team a mission, give them a vision and then trust them, but verify as they, move forward. Would that, would that be a fair statement?

Absolutely. this is related to another thesis that I have. My thesis is that ⁓ in business, the biggest constraint to achieving things is not money. Money is often a constraint as well. But I find that the biggest constraint to achieving things is actually leadership bandwidth.

It's the bandwidth of really talented people because achieving great things typically takes really talented people to do. And so you are constrained by the number of really talented individuals inside the business and their bandwidth.

So what's a really good way ⁓ for anybody listening, they're all home service business owners, what is a really good way for them to know if somebody has the bandwidth to do whatever task you're putting them to do?

Yeah, mean, certainly you can ask directly, like, ⁓ do you have the bandwidth to do this? Or if not, you know, what would have to drop from the list of things you're already working on? And let's compare that thing that would have to drop and see if it's as valuable as the thing I'm asking you to do. ⁓ That's one. The other approach is to just start by being extremely prioritized in the number of things the organization tries to focus on.

at a single time and then selectively add more and see where the breaking point is. Like for example, you know, if I don't know, you want to grow, there are many avenues through which you can grow. The standard things people might think about might be like, I could be really great at SEO. I could become really great at paid ads. I could get involved in community events. I could do business development partnerships. can work on improving close rates. I can work on improving the average tickets.

and trying to do all those things at the same time will probably result in poor execution and none of those things improving meaningfully. It most likely will be better to take one of those things that you have the most conviction behind. Like the thing we use this, what we call the ice prioritization framework. We think about what's the impact potential impact of any one of these things. What's the level of effort required to drive that?

level of impact and what's our level of confidence that will actually work. so based on whatever has the highest impact, kind of lowest effort and the highest confidence, that's the one thing that we'll pick. ⁓ and then we'll dedicate all of our efforts to thinking about, okay, to make this thing work. Let's say, for example, it's, don't know, paid ads. We think about what are all the things we got to get done correctly to make paid ads work. Well, there's probably 20 things of those 20 things. We'll think about like the top five things that are going to move the needle the most.

and we'll concentrate all our efforts on those five things and successfully execute them. And once it's done and we see the results and it's kind of on autopilot, only then will we move on to the next thing. Right? And so in the beginning, I'd start by doing one at a time. And then at some point I tried doing two things at a time and see if that works. And if you can get amazing execution, you can expand.

Well, cause you have a certain size team.

Yeah. You got to have a certain size team in order to take on certain initiatives. But I think that's a really good point because most business owners, they want to just go do everything at one time. And then, one of my favorite, ⁓ acronyms I've ever heard for focus is follow one course until success. And if you just do that and stay dialed in on the one thing, it certainly helps move the needle. Cause now you're not departmentalizing or separating your different.

bandwidth doing different things that aren't getting you where you need to be.

Agreed, very much agreed. I learned this the hard way.

So,

well, and so, you know, as an entrepreneur, it's very difficult to say no. And it's very difficult to think you can't take on the world all at one time. And if you just kind of, you know, humble yourself a little bit and realize there's only so much time and energy you got. Focus on the things that are going to move the needle the fastest and go after that. think that's great advice.

Yeah, I agree with you. That level of ambition, of wanting to do great things and wanting to do it all at once in the urgency of I want it all done immediately, those are great things. We shouldn't lose the ambition and we shouldn't lose the urgency. We should just recognize probably the best path to getting to the outcome that we want through ambition and urgency is actually to do things one at a time or two at a time or whatever your leadership bandwidth constraints for, as opposed to everything at the same time.

That's great advice. So can we, can we shift gears a little bit, um, to a rapid fire? Can I, can I pepper you a little bit? All right. So we're gonna, we're gonna ask a couple of questions here and I reached out to some people and said, Hey, what do you want to know? So this is straight from, from the audience. So here's the first one. What is one thing that people would be surprised to know about you?

Yeah, absolutely. Yeah.

I don't know, frankly, what might be most surprising is like, I don't think I'm very different from most people around me. ⁓ At least the folks that I spend time with and have gotten to know. Like I enjoy my work. ⁓ I really enjoy spending time with my family and I enjoy being around other really good hearted, good natured people. ⁓

I don't think that's very surprising. find that most people I'm around are very similar. So maybe that's the surprising thing.

So you took, the second question is what do you like to do when you're not working? But I think you answered it.

Yeah.

Yeah. You know, nearly all of my time is spent on service Titan and my family and like close friends, good people. And ⁓ frankly, that's, that's how I like it. I, know, during the winter, I like to ski and throughout the year, I love to play soccer. That's like both my hobby and what I do to try and stay physically healthy. And coincidentally, it's like,

a large part of how I spend time with the kids as well, because all my kids also play soccer. I actually coach my oldest son's soccer team and it's a ton of fun. yeah, it's coincidentally a lot of the same values as like in business. So I really enjoy that.

mean,

sports and coaching and business, there's so many alignments. ⁓ It's pretty great. All right, so here's another one. Knowing what you know today, what advice would you give yourself when you were 18 years old?

Yeah.

So one, ⁓ maybe there's typically no such thing as an overnight success story. Yeah, the quote unquote service-tightened overnight success story is ⁓ over a decade long journey. so I think that highlights just how much resilience and perseverance and hard work ⁓ such journeys require. think another one, which is coincidentally

how we've always ran the business, but I could never explain why this was the right way to do it today. Having the benefit of experience, I can actually like mathematically articulate why this works. This notion of like, you know, just simply focus on one thing that is doing right by customers that is making customers wildly successful. And if you do that, interestingly enough, all the financial aspects of your business will magically work out. today I can describe it because

when customers are highly successful using their product, they grow more. And when they grow more, they want more products for you. And so they spend more money with you and then they're highly evangelical and they tell all their friends in the industry about it and that accelerates your customer acquisition cycle. And so there are great financial benefits and your retention goes through the roof, which are really important in business. And then, the other thing that I really think about is this.

There was a great article written by ⁓ Paul Graham called Founder Mode. It's become very popular in the tech community. Everyone in tech has read it. I'm not so sure outside the tech community if that's the case, but I highly encourage everyone to read Founder Mode by Paul Graham. And what he talks about is how important it is for founders to stay really connected to what's going on in the business. I have a slightly different take, which is...

One, it's not so much about founders. It's about leaders. Okay. And those leaders are not necessarily the CEOs. is the CEO, the CRO, the director of whatever sales, the manager of sales, frankly, anyone of any kind of leadership position. And the idea is, of course, we cannot be involved in all the details. And also we have to allow our teams a great deal of autonomy.

But what I think is super important is that in the business on any important product you're working on, important critical project you're working on, or any critical function in your business, and that function might be sales or marketing, I think it's very important for leaders to be involved in the trenches on the most important parts of that product or that project or that function. For example, it's very important for me and my CRO to be very involved in my

how we ⁓ talk to a prospective customer when they're evaluating our product and make sure that whole talk track and sales conversation is focused on the key ROI points that we wanna highlight. Or like when we are building a new product, obviously I'm not involved in all the details, but it's very important for me to be involved in exactly what is the ROI that this is gonna deliver for customers. And for me to validate that the ROI is gonna be there and that we can build a

a product that'll actually move the needle on helping my customers increase their close rate or their average ticket or how many leads they're generating or their call booking rate. These are the things that really matter in the home services business. So ⁓ that's another thing I really believe in.

So as you say that, think about ⁓ how businesses have grown over the last 10 to 12 years. And by proxy of that, they've got more employees. So by streamlining the business that the owner getting more tech savvy, ⁓ understanding how to measure their business based on using service Titan, there is tens of thousands of people that are positively impact by software. That is.

It's awesome. It's fascinating, but it's pretty incredible.

It's the best part of my journey, Justin. Like literally the best part of my day. And I get these texts almost every day is when I get a text message from a customer that says, for example, we just got up and running on service Titan. Man, it's amazing. My revenue is already up 12%. Or like we just started using sales pro. Our average ticket is up 22%. These types of texts are the best thing that happened to me.

And of course I also get the opposite sometimes, right? It's like, man, we sign up for service Titan. The implementation has been challenging. That's like the worst text message I can get, but it's important. get it so I can immediately try and help and fix the situation and prevent it from happening again. But yeah, it's been a, like I said, it's, been a two way street. Our customers have been instrumental part of our journey. So many customers, you know, I've visited that have when I've been in there,

cities they've asked me to stay with them in their homes and have dinner with them. When they've been to LA, I've offered the same and ⁓ it's awesome that this industry has built this incredible amount of success that I don't think anyone envisioned and that the trades are now hopefully not only getting the respect and appreciation that they deserve, not just from of course Main Street, which I think has always been the case, but like from Wall Street now. So yeah, it's exciting.

They definitely

are. So one more final question. What is a piece of advice that you would give a business owner right now that was wanting to grow?

I think it would largely center on this idea of prioritization. If you want to grow particularly in home services, you can either work on generating more leads, improving, you know, your call booking rate. You can improve your close rate. You can improve your average ticket. I would pick one of those. Like if you're to pick, I don't know, average ticket, let's say you're an HVAC and you think the one way to do it, there are many ways to do it. Let's say you decide, you know, best ways for me to get better at selling, you know, offering IAQ.

in the rare quality, ⁓ focused on that one thing, think about like the five things that are necessary to make that really successful. That might be, you know, one, I got to find the best IQ products to, don't know, I got to make sure my, technicians in the field have really great collateral to use to explain the benefits to homeowners. Three, I got to provide a lot of training so that they understand how these products work, how to sell them, how to install them. You know, four might be

I got to make sure I have a great review cadence where we're getting together as a team every couple of weeks and reviewing who's doing well presenting these options in the field, who's doing well selling them, installing them, and who's not. ⁓ Whatever those four things might be, just focus maniacally on relentlessly executing those four things and see the results iterate. And once you have it highly successful and it's kind of on autopilot, then focus on the next thing.

That's one and then the whole founder motor, what I call leader mode is also critical in my opinion. ⁓ These businesses have been built by these great entrepreneurs. They clearly add a lot of value. And in my opinion, it's very important that they stay engaged in the right way, of course, as these businesses grow.

I want to add one more piece of advice to this which is if you're not using Service Titan, start using Service Titan. It's the standard in what our industry is right now. ⁓ It is, yes it's a premium product but you have to use it. There's a reason all the all these big successful businesses are using it. So I know you didn't say it but I it.

Thank you for the plug.

Thank you for flying the service Titan flag high. It's been an incredible journey and man, I'm Justin, and I'm very grateful for your trust and your partnership. took, had faith in us, you trusted us, you took a big bet on us. I'm really grateful that your journey has been so successful and exciting and we got to witness it firsthand from the sidelines. So thank you.

Yeah.

Well, Ara, thank you so much. I know that you have a lot to do and I really appreciate you carving out some time to connect and, you know, let us get to know you a little bit better. So Pantheon, we will definitely see you at Pantheon. know you got to go, but, ⁓ thank you so much, man.

can't wait.

Can't wait to see you, Justin. Thank you. This was a blast and it's always been a pleasure. Thank you, brother.

Thank you.