The Rise of AI

Pete (00:02.753)
Hey everybody, welcome back to the Rufr Report. I am your host, Pete McKendrick, here on the Rufr Podcast. And we are excited today to have a conversation with one of our partners and a good friend of ours, Sebastian from Rilla. So, Sebastian, welcome. Welcome to the Rufr Report. Excited to have you on and excited to get your take on some stuff today. We got a really interesting topic here, I think, dealing with the future of the industry and the direction that we're heading just.

in general as a society but also how is that going to affect the future of the roofing industry and what we're seeing as far as technology coming into the industry and its use case. But let's start first off by just give a little intro of yourself, your background, and then

Sebastian Jimenez (00:53.898)
Yeah, man. Great to be here, Pete. Thank you for having me. I'm Sebastian. I'm the founder and CEO of RealVoice, we're the leading speech analytics software for the home improvement industry. And what that means is when you have salespeople going out, talking to homeowners in the home, try to make some sales, trying to make an honest living. They record their conversations with a RealVoice mobile app, and then we use AI to automatically transcribe, analyze and give them feedback to help them improve their sales. By giving them

kind of tips on how to talk and what to say based on what the top performers of their team are doing in those homes to close more deals. And we've been out in the market for a couple of years now and we've thrown from like zero to over 400 contractors in a very short amount of time and we've become one of the fastest growing startups in the world which is really exciting but it's all due to amazing customers that have partnered with us and doing great things.

Pete (01:50.265)
Yeah, and I think one of the main things to note here is that there are products that do it specifically for phone conversations I know like even at roofer we use a product similar to that analyzes phone conversation We do a lot of obviously a lot of phone sales here and you know conversations with contractors But yours is the only one that does the in person conversation

Sebastian Jimenez (01:55.979)
Yes.

Sebastian Jimenez (02:00.043)
Yes.

Sebastian Jimenez (02:09.767)
That's right. And that was part of the foundational hypothesis for our company that we wanted to bring the power of speech analytics from the call center and the Zoom meeting to the real world, where most people still work today. And in our hypothesis, we started this during COVID. And during COVID, all the investors were kept telling us, like, hey, are you out of your mind? Like, what are you talking about? We're living in the metaverse now, man. There's no such thing as outside sales. There's no such thing as offline.

commerce anymore, we're all going to be living in Zuck's world and we're all going to be avatars. Like, what the hell is wrong with you? And our bet at the time was, because we didn't want to, and the general advice was like, oh, just do it for the call center. I was like, that's been done before. This is already like a done deal. There's no adventure there. Our bet was the rate at which technology will replace the offline world, you know, like Amazon taking over retail, Amazon take e-commerce, taking over offline commerce, it's going to be much slower than the rate at which technology.

Pete (02:42.177)
Yeah.

Sebastian Jimenez (03:07.714)
comes in to enhance the offline world. And that was a very easy bet for us to make because you look at the rate of e-commerce growth, right? Taking over, it's like 10, 20% year over year. And it's estimated that it's not gonna be the majority of commerce in the United States until the year 2050, if it keeps the growth rate constant. And that's if it, so there might be, it might never happen that e-commerce might overtake offline commerce as a, but then you look at the most popular tech product ever, and it's the iPhone, it's the smartphone.

Pete (03:33.045)
Yeah.

Sebastian Jimenez (03:37.438)
And that's how most people get access to the internet. And that's literally, if you don't believe in a world where people are going out and meeting each other face to face, there's no need for a mobile device. But yes, our foundational premise was that we want to bring the power of AI, the power of speech analytics to the real world where people are still meeting face to face. Yeah.

Pete (03:57.033)
Yeah, and I think we're in an industry where so much of the sale is still contingent on that face-to-face meeting, right? Because yes, we are ultimately, we're selling roofs, but at the same time, the key to this is that we're selling the relationship, right? We're selling ourselves, we're selling the company, and sometimes that's more important because they're still from a...

Sebastian Jimenez (04:02.474)
Yes. Yeah.

Pete (04:17.973)
from a customer standpoint, there's still an ignorance around the roofing product. You know what I mean? So I'm not necessarily buying you because I'm an expert in roofing products and you are presenting the best product. I'm buying you because I trust you and I trust your company, right? And so, you know, so I think the face-to-face meeting will always be a huge part of the contracting world because, you know, it's just so contingent. The sale is so contingent on me liking and trusting you as an individual and your company that it's gonna be hard to ever replace that with, you know, some tech.

Sebastian Jimenez (04:21.334)
Yep.

Pete (04:47.469)
you.

Sebastian Jimenez (04:50.183)
There's a lot of companies that tested that model of like, let's just like do everything online. Let's just like, you know, we get the measurements online. You just like, you go into a Zoom meeting to present the results of the inspection, give your kind of like your proposal, do the sales pitch, do all of those things. And they did that because of COVID, right? Because it was really difficult to go out there. And we work with some of the top roofing and solar companies in the country, like-

you know, companies that are making billions of dollars in revenue. And, and they've actually, you know, largely by and large, just shifted back to the outside sales model. Um, there's a lot of reasons for this. Uh, one is that it, it's just an easier way to do the inspection when you're there and, and being able to catch things and, and then the immediacy of being able to present the results right there, just as you found them. But then there's another thing of like, just having the captive audience there where like,

You know, even for SaaS, you know, like we sell technology and you guys probably do great at conferences because you get to like meet people face to face. You get to shake that hand. And it's not an easy thing for people to swipe away or like, you know, lose attention. And when you're in somebody's home, it's like you have that captive audience. You do a good job there. And, you know, it just gives you a really big competitive advantage to just have that relationship, that face to face kind of like bond building with the customer.

Pete (05:54.409)
Really?

Sebastian Jimenez (06:13.142)
Aside from the convenience of being able to like take all the results and present the immediate presentation out there. So there's a lot of reasons why we think it's still, and we've seen, we've seen the bigger companies like try it. And like we had a company not in roofing and home remodeling. They try to like build an online store to like kind of Amazon, their whole experience, and they spend like millions of dollars building a website where you could just pick and choose your, your products.

Pete (06:31.701)
Yeah.

Sebastian Jimenez (06:38.251)
And the net result of those $2 million of investment was $0 in purchases. So they were like, screw it, whatever, you're just going to keep doing the model. Yeah, yeah, yeah.

Pete (06:43.724)
I'm fine.

Pete (06:47.865)
Yeah, back to the way we used to be, right? No, I love it. And I think you said something really important there is that instead of thinking of technology as a way to replace the current way of doing things, it's a way to enhance the way you do things, right? So it's a way to take this model of, hey, we're doing this in-home selling. How could we make it cleaner, more efficient, better for the contractor to present and ultimately present a better customer experience?

Sebastian Jimenez (06:59.969)
Yeah.

Yeah.

Sebastian Jimenez (07:17.322)
I think, but I think ultimately that like replacing versus enhancing, I think the best products of all time have done that, right? They haven't replaced the way that human beings fundamentally do things. They've enhanced. Like the iPhone is a perfect example of that. It's something that fits in your pocket. It's all designed to fit the way that human beings go about their day. You can hold it in your hand. You could tap with your fingers. It's all designed to enhance the human being and make them kind of bionic.

There are certainly going to be, especially with AI, there are certainly going to be technologies that completely replace entire jobs, entire industries, and entire economies that are based around those jobs, similar to how the car replaced the entire industry of like horse and carriage, you know, industry, and like the entire satellite economies that were based on that. That's certainly going to happen. I think just from like the high level view.

Pete (08:00.245)
Right.

Sebastian Jimenez (08:10.806)
The jobs that you could do very easily behind a desk that require a lot of, you know, calculation and compute power or just like written language online. Those things are a big risk of getting replaced entirely by AI. But even in those cases, like, you know, like chat, GPT, the easiest use cases is going to be like replacing marketing writing and stuff like that. But I think what you're going to have is like the power law. You're going to have the top 10% of people or the top 1% of people still remain.

and then use and kind of become almost like prompt engineers and like this symbiotic collaborator with the machine. So even in those cases, I think there's going to be a lot of job displacement, but still you're going to need the human being kind of like working in tandem with the AI. But I think the jobs in the field are very, very unlikely to be replaced anytime soon. And we have not seen any, like we were talking about it before we started recording, when a new development in AI happens, like Chad GPT.

people just take the umbrella term AI and they think like, oh, you know, the robots are taking over. It's like, no, there's AI, there's like, you know, the chat GPT, natural language processing, being able to understand written language, you know, in the internet, and then there's like robots, right? Like things that could walk and live in the real world and like, you know, open doors and shake a hand and like put a shingle where it needs to be. And that's a completely different problem that we have, there hasn't still been a.

Pete (09:26.038)
Yeah.

Sebastian Jimenez (09:34.858)
major development in terms of like humanoid robots that can do those things. So the jobs in the field I think are still like really far away from being replaced. So me as an entrepreneur knowing that it's like okay if we can't replace the jobs in the field let's try to you know let's try to really enhance that experience for the people that are going out there doing great work.

Pete (09:51.817)
Yeah, I think that's a really important distinction, right? Because I think, like you said, a lot of times we see AI and we're like, oh yeah, they're gonna replace everybody, right, like everything is just gonna become artificial, it's gonna become robotic, like it's gonna be easily to replace all of my employees and it'll just run by itself, right? So I think that is an important distinction to make is that there is a big difference between the AI piece and the robotics piece. I know that, I think I even saw a...

Sebastian Jimenez (10:00.543)
Yeah.

Pete (10:20.577)
post on Facebook about some company was testing the ability to use a robot to install shingles on a roof. Right? And it's like, so you guys, everybody hears AI, they think, oh, we're getting replaced, like soon we won't even need a. Right. And so I think it's important, you know, for maybe for us to explain, you know, maybe it's just ignorance, right? Like people just don't understand the difference between the robotics piece and the AI piece.

Sebastian Jimenez (10:32.159)
Yeah, yeah, yeah.

Sebastian Jimenez (10:43.85)
Yeah, I mean, if you think about it, it's just like, Chad GBT is just like a very large language. It's literally a large language model. They call it a large language model because it's insanely huge and it's trained on all the internet's data and it's all it's trying to do is understand human language. It's like trying to predict the next word. And that's all I can do. It doesn't have a, it doesn't understand 3D reality. It doesn't understand how to walk around. That's like a, there's people working on it. There's like great companies like Boston Dynamics or companies like Tesla.

that are working on humanoid robots, but this massive kind of lift in progress in AI doesn't mean that it translates to robotics. And if you actually look at the people that are going to get replaced, it's very funny what's happening. Because people thought that it was the blue collar jobs that were going to be automated first. People thought like people frying McDonald's fries were going to go away and replaced by robots.

Pete (11:28.493)
I'm going to go ahead and turn it off.

Sebastian Jimenez (11:34.338)
and you know, like people, the plumbers and stuff like that, we're just like, we're gonna replace them. And what's happening now is the advancement of chat GPT, which is a great advancement, by the way. It's a really big leap forward for humanity. What you're seeing that's more likely to get replaced is not roofers or plumbers or people that have to go out there and do the dirty work to keep society running. It's accountants and doctors and lawyers, all the people that, you know, like write for a living or like use their computer for a living.

Pete (11:53.901)
I'm going to go.

Pete (12:01.857)
Yeah.

Sebastian Jimenez (12:03.306)
You know what I mean? Marketing people who write copy. Like those are the jobs that are getting displaced. That's what the A.I. is really well trained to do, to like communicate online. That's what it's, you know, but it doesn't translate into like being able to do any of the tasks that we human beings do. So it's like very funny what's happening, because it's like, you know, it's almost like the way I think about it is like it's like kind of like what the printing press did to the Catholic church in the medieval ages. You know, printing press happened and allowed the reformation movement.

Martin Luther and all those things to happen because now people could print their own Bibles. They didn't need to rely on the church to actually get knowledge, right, or get the word of God. And so what's happening now is, and I think this is really going to be the big disruption over the next few decades, is that what ITPT did is it just basically commoditized written intelligence. That's what it did.

Pete (12:40.457)
say.

Sebastian Jimenez (12:58.518)
So you don't have to go to Harvard or you don't have to hire a massive MBA to do an analysis on a spreadsheet or to like, like to write a poem. You could just like literally have this AI assistant that does it for you. So it kind of democratized not only knowledge, but intelligence, like the ability to interpret vast amounts of information. And in doing that, it's gonna display massive displacement, but it's also gonna democratize a lot of, you know, talent and power across the world, which I think it's a great thing, especially for people who are in blue collar industries.

Because there's no more, there's no longer a massive intelligence gap between, you know, the MBAs and the plungers, you know what I mean?

Pete (13:36.781)
Yeah, no, it's very interesting. Yeah, it's an interesting take. I mean, it makes sense, right? Like, you know, before you needed to hire a content expert or a subject matter expert. And now essentially those are the guys that are being replaced, which is very interesting. And your blue color folks are becoming the more skilled and more sought after positions because they're the ones that, you know, need that training and that experience now to be able to do their job. You know, but before we kind of thought of those guys, I think as

you know, maybe like the less educated of the group.

Sebastian Jimenez (14:07.902)
Right, right. But, and that's such a, like, the way you put it, the less educated, the more educated. Education is actually the first industry that's suffering from this, like, because, and you look at how they're reacting, it's really similar to how the Catholic Church reacted with the printing presses, like, trying to ban all these books, and trying to, you know. Like, if you go to college, my sister, she goes to NYU. They literally banned Chad GPT, you can't, like, they're not even like...

Pete (14:23.309)
I'm going to go get a drink.

Sebastian Jimenez (14:33.886)
responding to like try to adopt it. It's like you're it's banned because it's the parts the entire model. It's like, you know, it's you no longer need to go and get knowledge or intelligence at these like really fancy places. You could just like literally have your like, Hey, man, can you imagine you're like a farmer? And like, you know, in India somewhere, you could be like, Hey, what's the proper way to organize the crop field so that you don't have to hire a consultant anymore to do that? You know, just go in and ask this little bot.

Pete (14:59.4)
Yeah.

Sebastian Jimenez (15:02.494)
on your pocket. It's a great thing. It's a great thing.

Pete (15:02.629)
Yeah. Just saying. I remember back, uh, you know, a number of years ago, now I was working at a CRM. We were working with a SRS and SRS at time was using, was starting to already use bots on the backend to do a lot of their repetitive work. Right? So anything that was like a repetitive task that could easily be, you know, repeated

Sebastian Jimenez (15:18.413)
Yes.

Pete (15:23.241)
by a bot, by AI, they were already starting to program that and be able to streamline their operation. And it was amazing to see how forward thinking they were and how they were already utilizing that technology to streamline their operation and make things more efficient and make it easier for them to obtain information. So yeah, it's very interesting the kind of the course of events here.

Sebastian Jimenez (15:45.074)
Yeah, it's the power to the blue collar worker, man. I'm excited. Ha ha ha.

Pete (15:48.809)
Yeah, yeah, it'll be interesting to see if it definitely does drive, uh, you know, a bit of interest back to the trades because like you said, you know, a lot of that is based on skilled training and, and experience in the field, right? Like those, you know, you look at, I think of all the roofers that I, that I talk to you on a regular basis. And so many of these guys are, you know, either have come up from, you know, their teenage years all the way through, you know, learning, you know, the industry or

They were a sales guy who's now parlaying that into running his own company. But it's all based in experience. It's all based in real world field experience.

Sebastian Jimenez (16:24.67)
Yeah, and that's the thing that's like the most irreplaceable, right? Like this, the trial and error, the learnings over the years, the being able to like, you know, spot, you know, things in a shingle that somebody else might not be being able to like talk to a customer in a certain way, right? You know, when they deal with, when they have an objection about the price, being able to deal with that in a really, really masterful way, those are things that we don't have any technology currently.

available to be able to replace those yet. So I would say, so job safety is secure if you're a top roofing salesperson, I would say.

Pete (16:56.033)
Yeah.

Pete (17:02.009)
Yeah, yeah, and I mean, so we have seen, we obviously have seen some AI come into, you know, into this space. And you guys, another product that I think of right off the bat is RoofHawk, which is using AI to do, you know, roof inspections. You know, obviously, Chad's UTP comes into play quite often. And I mean, I was at a conference last week and we were introing some of the speakers and they were using it to write the intro.

Sebastian Jimenez (17:13.709)
Yes.

Yes.

Sebastian Jimenez (17:28.875)
Yeah, yeah.

Pete (17:28.949)
piece, you know, like just quickly like, Hey, here's the guy, here's some information about it. Like would kick out this really nice like intro, you know, at least a good starting point. And yeah, so it was interesting to see the use of the products, you know, already coming in there. But I know the most prevalent ones I can think of are yourself and Rufach that have really, you know, used been forward thinking and used AI to start to push into the home improvement space. What do you guys see like over the next couple of years? Like, do you think more and more?

Sebastian Jimenez (17:33.212)
Yeah.

Sebastian Jimenez (17:48.108)
Yeah.

Sebastian Jimenez (17:58.23)
Yeah.

Pete (17:58.641)
companies are going to start to employ it, where do you think it will be useful in the home improvement space?

Sebastian Jimenez (18:06.41)
Yeah, great question. This is a really interesting topic. And this is also a very interesting turn of events that's happening right now. So companies like Rufhawk and Rilla, those are just like, I would say we're kind of like Paul Revere riding our horse, screaming like, the AI is coming, the AI is coming. And it's not coming, it's here already. And there's like a lot of macro things that are happening that are making this such.

Pete (18:25.751)
Yeah, yeah, that's it.

Sebastian Jimenez (18:34.278)
And over the next few years, you're going to see like an insane wave of adoption, or it almost by force. And let me explain what I mean by that. So, so, um, so Chad GPT really opened up the floodgates for AI applications, for people like me, entrepreneurs to take and, uh, and productize, uh, you know, and, and to existing workflows, like AI technology, right. And it made it really like the barrier to entry to use AI products and to launch AI products is really low right now because of, uh, innovations like Chad GPT.

Um, so that's happening at the same time for the first time in, uh, I guess like 15 years almost, we have a very high interest rate environment. Right. So over the past 15 years, the past decade from the 2010s, 2020, we were living in a very low interest rate environment, which meant that venture capitals, uh, venture capitalists like, you know, like Sequoia and Andreessen Horowitz, the people who fund tech companies like yours and mine, right. They, they're, they're kind of like.

defaults mode of operating was we're going to fund tech companies that sell products to other tech companies like if you were if you're a B2B software it if you're in starting your company in the 2010s chances are that you're going to try to build a product that sells to other tech companies like LinkedIn or Qualtrics or you know people that work in Silicon Valley or New York City behind a desk and you could and the reasoning for this was very simple it's like if interest rates are very low there's no price for the future technology is a very future.

forward-looking industry. So you're like, okay, technology is going to eat the world, like Andre Zinoro has said. So we're going to fund technology companies that sell to other tech companies, because technology companies are going to take over the world. What happened recently, and it was last year, interest rates go up for the first time. All the tech valuations come down, because now the future has a really big price. So if you're going to make most of your cash flow in the future, that has a discount. And so venture capitalists, just like private equity people,

are really trying to flock outside of technology and go into industries outside of technology. And they're trying to fund companies that are trying to sell products into these industries more than ever. And so an AI is a thing at the exact same time that this is happening. So for the first time in many, many years, people in home services and people in roofing and people that sell products in the trades largely are basically, it's almost...

Sebastian Jimenez (20:56.05)
they're forced to be the early adopters of this like insanely new technology that's insanely powerful, which is AI. Because companies like Rilla are getting funding, not to go after tech startups and to go after tech companies, we're getting funding to go after roofers and to go after plumberists and to go after people that are selling products in the trades, right? Because just, and I'm sure people have seen this like the private equity rollout of acquiring a bunch of companies, because they're seeing that these industries, unlike technology industries, are very recession-proof.

Pete (21:02.445)
Thanks for watching!

Sebastian Jimenez (21:25.218)
They have survived ups and downs throughout the years. So that's the kind of thing that investors are looking for. And it's happening at the same time that AI became possible, which is really interesting because it's kind of forcing all the people in the trades to become the early adopters of technology when before they could take advantage of the fact that all the new technology developments were gonna be tested by Silicon Valley first, but now it's not. Silicon Valley has no money to spend right now, but roofers do. So it's a really...

fascinating development because it's kind of switched the technology adoption curve on its head. And it's like the people that used to be the late adopters are now the early adopters, have to be the early adopters. If you don't become the early adopter, then your competitor will because companies like mine are literally going after you. And that's not just companies like mine. I know this. I always pitch this company is really fascinating company called Avoka.ai. Their entire thing is we're going to replace a call center. You're going to get a call center that's a machine.

What's wonderful about it is not that, it's that they're literally just targeting the trade specifically. And it's one of the, and it's many examples like that as well, like for automating dispatch or automating a lot of things with AI. So if you're in roofing and you're still not getting your feet wet with AI, I would highly recommend you start doing so because things are gonna be moving much faster than with any other technology adoption. Like this is gonna be much faster than CRMs.

This is going to be much faster than anything else I came before because you guys are the early adopters now, unfortunately.

Pete (22:57.289)
Yeah, it's really, no, that's really interesting. You know, like I often, I do this thing where I talk to some of our incoming employees when we hire new employees, uh, and kind of give them like the lay of the land, you know, and I've been on the SaaS side, on the tech side of the industry for about six years now. And the difference between six years ago and today in the way a contractor's used technology, the way they look at technology, you know, like we used to have to beg people to use it. We're like, come on, like this is the future trust us, right? Kind of the same.

Sebastian Jimenez (23:22.923)
Yeah.

Yeah, yeah, yeah.

Pete (23:27.241)
Like you're like, hey, I swear to God, this is the future. Trust me on this, right? We were doing the same thing with the CRM at the time, you know, and they were like, no, I don't need a CRM. Like we've been doing the same way for 18 years. Like, you know, I make plenty of money, I don't need a CRM, right? And so I really give COVID a lot of credit, right? Like I think COVID changed the whole view of the industry. One, because it forced us into a situation where we had to adopt some type of technology. You know, like you said, you went to...

Sebastian Jimenez (23:30.184)
Yeah.

Sebastian Jimenez (23:36.148)
Yeah, yeah, yeah.

Sebastian Jimenez (23:45.995)
Yes.

Pete (23:55.401)
not being able to get on the roof and not being able to sit at the kitchen table and having to zoom meetings and things like that. And then on top of that, it really made everyone outside of the blue collar of the home improvement industry, pull up and take notice because we were still working. When everyone else was sitting at home, we were still working.

Sebastian Jimenez (24:09.494)
Yes, pay attention. Yes.

Sebastian Jimenez (24:16.186)
And not only still working, but COVID, as you mentioned, COVID was a big catalyst for this because so interest rates go up, technology becomes a non-attractive industry to invest in. But then it's like, OK, where do all these venture capitalists still have a bunch of money? The private equity companies have a bunch of dry powder in the bank. Where do they put their money? Why does home improvement become one of the first industries that they literally start dumping billions and billions of dollars in venture capital funding? Well, it's because of COVID, right? COVID comes along, right? And what happened to COVID was two things, very specifically.

We had the largest migration from people living in cities to people living in the suburbs, I guess in like 50 or 60 years or something like that. So I live in New York City. In New York City, there's no market for home improvement for fixing your windows or your roofing or whatever it is because, I mean, what the hell am I going to remodel in this crappy apartment in New York? When you move to the suburbs, now the market for home improvement expands. First thing that people do when they want to buy a new house is they remodel the roof, they do the whole thing.

Pete (25:06.677)
I'm gonna go.

Sebastian Jimenez (25:15.67)
So the market expands. And then because I work from home, people are spending the most amount of time that they spend home ever. So that allows people, like roofing companies or other trades companies, to have more time to meet somebody in the home because they're there. So it's not like, oh, I'm at work or whatever. I could meet you because any time of the day. So you can have more meetings. And your appliances are breaking more often because you're using them more often. Your window, if it's not broken, you're

Pete (25:21.662)
ever.

Sebastian Jimenez (25:39.714)
put in properly, it's kind of like, kind of, you know, you feel the cold more because you're working there all the time. And maybe your roof is like, you know, kind of like leaking or you see feel the mold more like, you know, and so you expand the need and the pain points for customers because they're spending more time at home than ever. And so the home has become one of the most powerful marketing and sales channels in American history. And when that happened, all the venture capitalists and all the private equity people are just like

Holy crap, like there's a gold mine in suburbia. Like there's a gold mine in the home. We gotta just devote the dollars, right? And so COVID is not only like, oh, it forced roofers to kind of have to adapt to new methods. It's that it also made the people outside, like you said, notice and want to devote a lot of cash. And when they're devoting a lot of cash and there's like a whole ecosystem of technology that's coming after you guys, it's just a matter of time before the early adopters take note, that they take it and they start out competing everybody.

Pete (26:09.101)
Right? Yeah.

Sebastian Jimenez (26:35.058)
And then everybody else who follows, they need to follow. They don't want to stay behind. So yeah, it's a really fascinating development.

Pete (26:43.145)
Yeah, it is. It's interesting. You know, like I live about 35 minutes from you, right? Outside of the city in New Jersey. And we saw it. I mean, firsthand, you know, we had, you know, people moving into houses. You couldn't have a house on the market for more than a week in our town before someone from the city or someone from that general area came down and bought the house. And you know, you're talking overbidding on the price. I mean, it was getting, it was crazy for a while. And what and like you said,

you know, what's the first thing they do when they move in, remodel, right? Start ripping things out, you know, changing things that were perfectly fine, because it doesn't fit their taste, whatever the case may be, because, you know, for one thing, they were bringing a decent amount of funds with them, right? And they're coming out here and buying houses that are much more affordable than what you know, they had in the city, you know, and to they were, you know, they were buying older homes, they needed to be remodeled, things can be fixed. And like you said, and they're spending more time there than they ever have before, you know, I work

Sebastian Jimenez (27:14.014)
Yeah, yeah, yeah.

Pete (27:40.861)
out of my house, my wife works out of our house. Like it's, you know, like we're here every day now in comparison to before where I was gone all day, right?

Sebastian Jimenez (27:49.906)
Yeah, yeah, yeah. It's just like you just the only place you really care about is your bedroom, that's where you go to sleep and everything else about the house. You probably realize that working from home is like, I never noticed this place. I never noticed we have such a big living room. Oh my God. Yeah, yeah, yeah. So that's the end. And that's why there's big dollars. I mean, like when you have roofing companies, I'm sure you've seen it with some of your customers. You have a roofing company that went from 40 million to like 180 million dollars in annual revenue from like 2019 to 2021.

Pete (27:55.165)
Yeah.

Pete (28:00.597)
Yeah. Right, I'm in this room more than I've ever been, right?

Sebastian Jimenez (28:20.254)
And when you have that insane level of growth, it's just everybody's gonna know when there's a lot of money to be made, the people who fund the technology developments, especially when their core market's crappy right now, you know, like all these, you've seen it. We work in SaaS, look at all those SaaS companies that sell to other SaaS companies like this like weird Ponzi scheme that happened for the last 10 years. It's like, you know, I'm a SaaS company, I'm gonna sell to your portfolio, the SaaS company. Yeah, it's like a massive layoffs in tech.

Pete (28:25.558)
Yeah.

Pete (28:41.252)
way off.

Sebastian Jimenez (28:45.102)
And you know, meanwhile, the rooping companies, the trade companies are still like growing like crazy. And even after coming off of the COVID high, you still see like massive growth happening in a lot of areas in the country. And so when that happens, it's just like, it's inevitable that you're going to have the people funding tech companies like mine noticing and wanting to fund even more. So, and I'm just like one of many, but there's like many more and not only tech companies, but AI companies, AI enabled products that are coming after the industry because of this. So.

Pete (28:53.941)
That's the way.

Pete (29:13.409)
So where are some areas in the roofing industry, the home improvement space that you see AI becoming really prevalent? I know you mentioned before, like, you know, dispatching, that's one that I didn't even think of, right? The ability to quickly dispatch through AI. You know, like it came to mind, we have a customer right now who he's working on an inventory management system, because he's gonna start to carry some inventory in his roofing company, because they've gotten to the point where it just is more efficient for them to do that. And, you know, so,

Sebastian Jimenez (29:33.578)
Yep.

Pete (29:42.653)
So there are some interesting use cases, I think. Like where do you see it being the most prevalent?

Sebastian Jimenez (29:47.478)
Yeah, I mean, there's like dispatching. There's like basically like an entire operations, right? Like, I mean, you guys are working on things for like, you know, automating inspections and like, you know, labeling things properly and, you know, for insurance. And there's a company that I talked to recently that's doing like.

This is for the other end of the roofers, like the adjusters who go out and do the inspections, like automate a lot of the compliance work that they have to do just by taking pictures and using computer vision to do that or writing up estimates like automatically with AI based on like certain prompts with images. Like, you know, like I said, the call center, the call center is one of the, I would say the call center is one of the biggest disruptions that I see coming. And that's the, and it's, and it's one of the biggest because it's so easy for entrepreneurs to see.

that that's such an obvious use case for AI, that you can literally have a call centering machine answering your phone, that I just see a lot of companies coming after that use case and I already know a couple of them. And that one's like also big because it could literally, it could literally change the unit economics of your business, especially if you have a large business, you have a large call center operation, you could be talking about like 10 percentage points of margin that you could be

adding back into your business because you no longer have a human operated call center. You know, there's things like Rilla, they're going to help your salespeople become better and what we do is like the whole experience of like automating ride alongs and instead of having to like have a sales manager go into the home with the rep, having it done remotely with an AI assisted sales manager, obviously I think that that's a big use case.

Pete (31:09.569)
Yes.

Pete (31:27.966)
Absolutely.

Sebastian Jimenez (31:28.374)
But marketing, like automatically writing marketing copy, there's things like Jasper online that, but they're still gonna be not just Jasper, that's like more like a consumer product, kind of like everybody can use, but there's gonna be people that say, okay, let me come and take this technology and automate it for workflows that are specific to the roofing industry or specific to the trades industries so that it integrates properly. So I would say like, you know,

marketing, operations, and then sales. Those are the five big ones that I see.

Pete (32:06.217)
Yeah, and I find that really interesting because I think traditionally, your roofers are your production specialists, right? Like that's most of the time, that's where they've come from. They were started on the roof. They can run production. That's their bread and butter and probably the biggest area of opportunity for most of your business owners in the roofing industry in the home improvement space is sales and marketing, right? So it's interesting that those are the two that potentially could be affected the most because I think it's probably the biggest areas of opportunity for...

Sebastian Jimenez (32:28.426)
Yeah, yeah.

Pete (32:36.245)
contractors in general to learn and you know there's a huge learning curve there for them. It's not something that they are good at or they feel confident doing. So it's interesting that those will be the biggest areas of potential opportunity to use AI and maybe help that process along a good bit, maybe move the needle a lot quicker for some of these guys.

Sebastian Jimenez (32:57.87)
I mean, but you already see that trend, right? Of like the roofers who focus more on sales and marketing and being able to not just like sell insurance jobs or sell retail jobs and like higher profit margins, right? That's the difference. Like you look at the margins of a roofing company, sales and marketing, like branding and sales and marketing is a lot of what has to do between being a 30% margin company and a 3% margin company or a negative margin company that goes out of business, right? That's a big.

Pete (33:23.777)
Yeah.

Sebastian Jimenez (33:25.014)
difference of like you being able to sell a job at a higher profitability than your competitor because you have the right sales and marketing operations. What's really great about it is that these companies that have gotten really good over the years at doing this through manual trial and error, they're now going to be competing with an onslaught of new companies. They're going to be able to learn the same things much faster because they're going to be AI enabled. But if the smaller guys...

are not devoting the budget to implement these technologies. It's like, imagine you're competing with the large roofing contractor in your area. Like your top, you know, these are the people that are the big dogs and you're trying to compete with them and they always come up in your biddings and your deals and you're competing with them and all of a sudden, they just implement an AI automated call center. And when customers call them, they're talking to a version of their top performer always because it's a robot that doesn't sleep, it doesn't eat.

Pete (34:16.255)
Yeah.

Sebastian Jimenez (34:18.334)
and you're still answering the phone yourself, like your office manager, they're not answering the phone like 50% of the time because they're not there. And then your top competitor, who's the larger company already devoted the budget to implement an AI-assisted call center. It's like, it's... Then the gap becomes even wider, you know what I mean? And if you wait six months to do that, because now the progress of AI, that's the other thing, it's like with other technology developments,

Pete (34:35.169)
Yeah.

Sebastian Jimenez (34:48.054)
You could have waited for the technology to become better in a matter of years, right? Like when the iPhone came out, I know people remember, it took like two or three years to get the app store and the camera so that you could have apps like Instagram and stuff like that, right? It took like, it was a progress that was measured in years. DPTChat came out November or September last year or October, November last year, someone sometime, it was like October last year, someone like that. And DPT4 came out a few months later.

Pete (35:04.214)
Yeah.

Sebastian Jimenez (35:13.866)
And then people started coming out with AI agents that could like automate your entire trip booking. And then it's been an explosion. So now you're measuring progress, not in a matter of years, but in a matter of days and weeks. And so, and then engineers are also getting much faster. So if somebody becomes the early adopter of a technology, it could potentially like give you 10 extra points of margin. And they become better than you, like by just a matter of three months. We're talking like, you know, big gaps, big gaps in terms of profits and market share. So yeah, it's exciting and very scary.

Pete (35:40.629)
Yeah, it's a-

Sebastian Jimenez (35:42.887)
if you're in the traits.

Pete (35:43.177)
Yeah. Well, it's interesting. And one of the things that comes to mind when you say that is, you know, traditionally in this industry, I think because of the amount of time that it has taken to find success and build a company to be profitable and be efficient, you know, we see a massive amount of attrition in this industry, right? Like we see, I think it's something crazy. Like in the first two years of business, almost 90, like 95% or more of the companies go out of business, right. And now,

could this potentially help them to learn and hone that operation a lot faster to where maybe that number starts to drastically change.

Sebastian Jimenez (36:25.522)
sure yet because technology what I've seen it do is that it basically. It doesn't eliminate the power law the power law is the law that says that you know. That 80% of resources are going to go to the top 20% of people and the law that says that- you know that- the 1% of the space in the universe outcontains a 100% of the atoms and 99% of the space is empty and the thing that says the people most of the people live in the.

Pete (36:26.389)
Yeah.

Sebastian Jimenez (36:54.934)
20% of the space on planet Earth, right? Because we're conglomerating in cities. So I don't think that this is going to change the power law. It's just gonna flip it. I'll give you an example, right? So a company before a tool like Rilla, right? Which allows your sales managers to kind of do remote coaching with AI enabled kind of analytics. An amazing world-class sales manager was, you know,

your guy that could go out there on the field and have like amazing rapport with the reps and be, and it was usually one of your top performing salespeople. You know that they had the natural charisma to be able to lead teams in person and stuff like that. What we've seen with Rilla is that it's like kind of like the rise of the nerds, like the sales managers that are really, that have become the best in their company.

Pete (37:33.173)
Right.

Sebastian Jimenez (37:42.014)
are the people that are able to like look at data really well and look at conversational data like how long are you talking versus the customer, like your talk ratio is off and like really numeric people. If people want to understand the dynamic here, it's kind of like watching the movie Money Ball where baseball was overtaken by these like old school kind of like super personality driven baseball recruiters and baseball coaches. And then it was overtaken by these nerds like the guy who...

Pete (37:58.081)
Yeah.

Sebastian Jimenez (38:09.386)
Jonah Hill plays Pete. He's like the guy who's like does the statistics. We've seen that happen with real. It's like an insane development where the top sales managers become like the most, it's almost like the quiet guys, sit in the background and they just really go with data. It's just changed the skills that you need to be successful. What it does open up is an area of opportunity where if you're not one of the has-beens, where you're not the top person in your industry.

Pete (38:10.477)
Okay.

Pete (38:19.533)
Of course. Yeah.

Sebastian Jimenez (38:37.174)
this disruption is causing a window of opportunity where if you get really good at these kind of really technical skills and you get really good at all these use cases that this new technology enables and you do that first thing, you're entrenched competitors, right? You could kind of flip the power line in your favor. You know what I mean? And you could be the dominant player just by adopting these new skills that are enabled by this new technology, right? So that's kind of what I see that's gonna happen. There's gonna be a lot of, a lot of the big players are gonna get ahead and they're gonna maintain their position.

Pete (38:53.739)
Yeah.

Sebastian Jimenez (39:06.846)
But in a lot of markets, the small guys, they're going to be quicker to adopt. They're going to be faster to adopt an AI automated call center or an AI enabled sales manager that can coach remotely or an AI enabled inspection automation. And that'll give them a massive advantage of their competitors. And they're going to become the dominant players.

Pete (39:24.093)
Yeah, it's interesting. It will definitely give some of the smaller guys the ability to close the gap, you know, much faster and be much more competitive in some of these markets where, you know, I think what comes to mind like Florida and in Texas, where they have these incredibly, you know, competitive markets. And what are you doing to potentially set yourself apart?

Sebastian Jimenez (39:29.387)
Yes.

Pete (39:43.585)
from the thousands of contractors that you're competing with on a daily basis, where something like this could add to your speed of efficiency and get you there a little bit quicker and definitely give you a competitive advantage for sure.

Sebastian Jimenez (39:56.086)
Yeah, and 10 percentage points of margin is not a small competitive advantage. It's like insane. That's more money that you have to reinvest in leads and marketing and market share and then, you know, so, yeah.

Pete (40:01.599)
That's huge.

Pete (40:05.293)
Sure. Yeah, it's very interesting. So where do you see kind of the future of this going? You know, like obviously you guys have, like you said, you're kind of like the first in the door, kind of leading the charge here of saying like, hey guys, this is coming. You know, let's look, I guess, like maybe five, 10 years into the future. Where do you think you see AI in the Hill improvement space or in the roofing space then?

Sebastian Jimenez (40:30.342)
In five to 10 years, I think the call center is going to be automated fully. Call center reps, that book meetings, I think, you know, five to 10 years, the call center is going to look like, you know, one or two call center managers who are kind of like prompt engineers who are going to be managing this AI bot to like come up with better, more creative responses for customers and going to be able to like give instructions at scale. I think the call center is going to be replaced.

Sorry. In five to 10 years. And in terms of other source, I think dispatching is not going to be fully automated. I think that, but it's going to be highly, highly automated with AI. And there's going to be a few dispatch managers that are going to be like managing an entire operation. You could have like a few dispatch managers manage an entire, like a hundred person operation because they're going to be AI enabled.

Pete (41:02.113)
Interesting.

Sebastian Jimenez (41:28.346)
and being able to route the right rep to the right appointment and so on and so forth. I think what you mentioned, being able to use computer vision to automate a lot of the inspection tracking, I think that's already happening. It's going to happen sooner. One thing that I don't know yet, I hope this happens.

Sebastian Jimenez (41:52.214)
The, in five years, I think we're overdue for a big hardware revolution in consumer devices. So like, if you look at you, usually like every 10 years that we get a massive new hardware, like the iPhone, right? iPhone came out in 2008 and it's like, it's just like the biggest thing. And I think we're overdue, like the glasses were supposed to be the next one, but the glasses didn't work out. I think it's, we're just missing somebody like Steve Jobs.

Pete (42:19.425)
I'm going to go.

Sebastian Jimenez (42:19.71)
who knows how to put all the technology components together and make it all work and make it pop. You know what I mean? Google tried, but they kind of stuck at building new products. And, you know, and so I think Apple's trying it again, like with their new glasses that the Vision Pro or whatever they're called. I hope, and I don't know if this is gonna happen, but I hope it does that in five years, we will have a new consumer device that,

Pete (42:23.757)
Yeah.

Pete (42:27.661)
I'm going to go to bed.

Sebastian Jimenez (42:44.054)
that not only allows you to surf surf, orilla, you know, you can capture audio from the phone very well, but it's very, it was very clunky to capture from the phone, just put it in your pocket. So I hope that we're gonna live in a world, and I think there's a possibility for that to happen. I hope we live in a world that, you know, the sales rep can go out and they have like their glasses on instead of having their tablet. And from their glasses, they can just take, like they're just walking and doing their job and talking to the customer and.

and they can kind of take inspections automatically from their glasses, whether it's like, and see what the damage is, mold, and be able to like estimate all automatically because they're using computer vision with their glasses. And then first a company like Rila, like, you know, be able to give them feedback in real time about what's the best option to present to the customer right there and then. And I hope we live in a world like that, but for that we need a new hardware revolution to happen. And I don't know. I don't know if we're there yet, but there's a possibility for us to be there for.

for sales reps and roofing and other traits to be enabled by augmented reality and AI at the same time through like a form of visual and audio interface, which would be the glasses. I hope that happens in five to 10 years.

Pete (43:54.089)
Yeah, it's really interesting, you know, because you, we obviously we've started to see over the last couple of years, the use of drones more and more in our space. Right. And so like this would be essentially one step further, you know, beyond that of being able to potentially go up, do an inspection and have that data come back in real time and be able to do things like you mentioned earlier, potentially even populate an estimate, right. Uh, yeah. So it's really interesting. I think there's, there's definitely a lot of possibilities there. Uh, really.

Sebastian Jimenez (44:05.28)
Yes.

Sebastian Jimenez (44:21.226)
Not only populate an estimate, but get feedback as to what you should say to the customer right there, like right here, right now, as to what's the best, like literally get feedback in real time. Yeah, but anyways.

Pete (44:30.262)
That's cool. Yeah. There are so many possibilities of where this could go and how it could really streamline the operation, like you said. Massive differences in your profit margins. I had a contractor tell me once, hey, by using some of these softwares, I'm able to have less employees, which allows me to actually take that money and not just go on vacation, but be able to reinvest in the employees that I do have.

Sebastian Jimenez (44:55.522)
Yup.

Pete (44:56.069)
So I can offer retirement, I can offer better insurance, I can do all these things that are enriching the life of the employees that I have, and therefore making my whole operation better, like a better experience for the people that work for me, a better environment to work in. Like you said, we're not going to replace the blue collar folks anytime soon. So all of these things may give you the ability to have a better workforce, have a better experience for the people that work for you.

Sebastian Jimenez (45:02.655)
Yes, yes.

Sebastian Jimenez (45:22.381)
Yes.

Pete (45:24.09)
because you're making their life a bit easier and streamlining the operation considerably.

Sebastian Jimenez (45:28.778)
Yeah, man. Yeah, I think enhance. I hope we live in a future where we have technologies that massively enhance the capabilities of human beings who are out there talking to other human beings. But that's just me.

Pete (45:41.209)
I love it. Yeah, I love it. I mean, it makes sense, you know, because like I do think that this industry will always be kind of the last frontier of that face to face conversation, you know, where everything else is going to become a little bit more, you know, like e-commerce feel. I think this will be the last place that will adopt that because it is so important still to the success of the operation to have that face to face relationship and to build that trust and that, you know, have that person actually like us.

Sebastian Jimenez (45:49.698)
Yeah.

Sebastian Jimenez (46:08.338)
Yeah, yeah, yeah.

Pete (46:08.381)
you know, in order for them to do business with us, you know, so I think that that's something that's going to be very, very difficult to replace with AI and not being in person. And, you know, but like you said, the ability to enhance it considerably could be, could really be the future of this industry.

Sebastian Jimenez (46:25.167)
That's what I think. That's what I think, and that's what we're working every day. Keep it going.

Pete (46:31.237)
Well, man, this was awesome. I think this is some fantastic information for anyone who maybe isn't familiar with where AI is kind of breaking into the industry or where it's taking the industry. I think this is a really good eye-opener. Even for me, like some of the things you said, the light bulb went off. I'm like, oh yeah, I never thought of that as a use case for me. Even in our own software, even in Rufr and what we do, obviously we've started the conversation around what...

Sebastian Jimenez (46:48.467)
Yeah.

Pete (46:56.893)
what AI could potentially do in our software. And some of the things you said, you know, I was like, oh, I never even thought of that as a use case inside of our own software, you know, and we're doing, you know, obviously we're building some CRM functionality and coming from the CRM background, you know, I could see lots of use cases inside of there to help streamline that operation for sure. So yeah, man, I really appreciate you jumping on. This has been great. And yeah, yeah.

Sebastian Jimenez (47:02.484)
Yeah.

Sebastian Jimenez (47:20.278)
This is fun, man. We should do it again.

Pete (47:23.565)
Absolutely. I'm sure six months from now, we could have a very different conversation about the same topic. Like you said, already. We called it here first.

Sebastian Jimenez (47:27.79)
Yeah, I feel like the call center has been replaced. It's not going to be me, man. It's going to be my avatar that's going to be talking to you. It's going to be prompted.

Pete (47:39.402)
Well, and I love the fact that you brought up like, you know, it's essentially going to be like your best salesperson having that conversation every single time now, right? Like you're just going to model it after the person who's the most successful and then, you know, that's just going to be being able to repeat that process over and over again is really the key advantage to this, you know, AI movement.

Sebastian Jimenez (47:45.836)
Hey!

Sebastian Jimenez (47:51.862)
Yeah.

Sebastian Jimenez (48:01.886)
Yeah, yeah. Preach it brother.

Pete (48:04.205)
I love it. I love it man. All right, cool. Well, I appreciate you jumping on and I appreciate everybody for listening to the Rufor Report and we will see you next time. Thanks again, Sebastian. And if you guys haven't checked out Rila, be sure to go check out Rila, doing some fantastic things in the market, really enhancing the productivity of your sales team, and jump on with those guys, do a demo and check it out. Definitely the future of the industry for sure.

Sebastian Jimenez (48:33.174)
RealLoveVoice.com, happy to talk to you guys.

Pete (48:36.307)
Thank you guys. See you next time.

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