Ismael Valdez has already built the kind of home service company most contractors spend their careers trying to create. After entering the HVAC industry as a teenager and learning the business from behind the counter of a supply house, he eventually helped build one contracting company past $20 million before starting NexGen Air Conditioning & Plumbing in Southern California. According to Ismael, NexGen grew from zero to a little more than $108 million in annual revenue in roughly six and a half years before joining Wrench Group in 2022.
Building a company of that size required hundreds of employees, multiple locations, a large marketing operation, call-center infrastructure, dispatch, management and all of the administrative systems necessary to support thousands of service calls. Ismael learned how to make that model work at scale, but stepping away from NexGen gave him an opportunity to question something he had previously accepted as normal: whether a $100 million home service company actually needs to be structured that way.
His next plan is based on a very different idea. Ismael wants to build another HVAC and plumbing company, but instead of creating a traditional back office and gradually adding technology to it, he wants artificial intelligence and automation to shape the operation from the beginning. He believes that could allow the company to support a large field team with far fewer administrative employees, reduce overhead, charge customers more competitively and potentially produce much stronger margins than a conventional contractor.
The vision is ambitious, and none of those results have been proven yet. What makes the experiment interesting is that it is not coming from a software founder imagining how contractors should operate. It is coming from someone who has already built the traditional version to more than $100 million and now believes he can build the next one differently.
Ismael Learned the Industry From the Supply-House Counter
Ismael says he entered the HVAC industry when he was around 17 or 18 years old and spent some of his earliest years working at a supply house in Southern California. Contractors came through the doors every day to buy equipment, parts and materials, giving him a front-row view of the people operating businesses on the other side of the industry.
Over time, he started paying closer attention to what those contractors were earning and how their companies worked. He has joked that it took him years to realize many of the people walking up to his counter were making significantly more money than he was, even though he understood the equipment and industry extremely well. That realization helped push him toward contracting rather than spending his entire career supplying contractors.
Before NexGen, Ismael became involved with other HVAC businesses, including Home Comfort USA. He says that company grew from zero to roughly $21 million in a little more than four years before the partnership eventually ended. The experience showed him that a residential service company could grow much faster than the conventional pace he saw around the industry, while also giving him a clearer understanding of what he wanted to control when he eventually started again.
NexGen Started in a Garage and Grew Quickly
After leaving Home Comfort, Ismael launched NexGen Air Conditioning & Plumbing. He has described operating the company from his garage during the early months before moving into a proper facility, but the modest beginning did not last very long because the business began generating substantial revenue almost immediately.
According to Ismael, NexGen produced roughly $9.8 million during its first full year, followed by approximately $18 million in the second year and more than $20 million in the third. By the fourth year, the company had moved well into the $30 million range and was expanding across Southern California.
The growth was driven partly by Ismael's aggressive approach to marketing. Rather than depending primarily on retail partnerships or other companies to create demand, he wanted NexGen to own the relationship with the homeowner and become a brand customers would recognize directly. That meant investing heavily in advertising while measuring whether each channel actually produced calls, appointments, sales and revenue.
Marketing Became Part of the Operating System
NexGen initially relied heavily on print advertising, including coupons distributed through newspapers, magazines and direct mail. As consumer behavior moved online, the company expanded aggressively into pay-per-click advertising, Google Local Services Ads, Yelp, Google Business Profiles and other digital channels while continuing to use television and billboards to create broader brand awareness.
Ismael's approach was not based on finding one perfect marketing channel and staying with it forever. He wanted several channels working together while the company continuously measured the economics behind them. Television could introduce the NexGen name to homeowners long before they needed service, while Google could capture those homeowners when an air conditioner failed and they actively searched for a contractor.
That mindset helped turn marketing into something closer to an operating function than a promotional expense. Ismael wanted to understand how much money was being spent, how many leads that investment generated, how many appointments were booked, how many jobs were sold and how much revenue eventually came back. If those numbers worked, increasing marketing spend became a calculated growth decision rather than a gamble.
NexGen Expanded Across Southern California
By the time Wrench Group announced its acquisition of NexGen in 2022, the company had grown far beyond the operation Ismael originally ran from his garage. Wrench Group said NexGen had eight locations across Southern California, employed more than 400 people and had served more than 100,000 homeowners through HVAC, plumbing, drain cleaning and indoor air-quality services.
That kind of scale changes the owner's job completely. A small contractor can often operate through personal involvement because the owner knows the technicians, sees most of the problems and can step directly into anything that goes wrong. Once a company has hundreds of employees working across multiple locations, the business needs management systems capable of reproducing the owner's standards without requiring the owner to personally supervise every decision.
NexGen therefore needed much more than technicians and trucks. The company required recruiting, customer service, dispatch, sales management, marketing, accounting, branch leadership and the administrative infrastructure necessary to coordinate a rapidly expanding organization.
Ismael successfully built that machine, but the size of the machine eventually became part of what interested him after the exit. Looking back at NexGen, he began asking whether all of that administrative structure would still be necessary if he were building the company again with the technology available today.
NexGen Eventually Passed $100 Million
In a 2026 interview, Ismael said NexGen grew from zero to slightly more than $108 million in annual revenue over approximately six and a half years. The company joined Wrench Group in 2022, although the financial terms of that transaction were not publicly disclosed.
Reaching that level gave Ismael experience across almost every stage of contractor growth. He had already seen what a company looks like during the first few million dollars of revenue, what changes as it passes $20 million and what kind of organization is required when the business eventually approaches and exceeds $100 million.
That perspective is important because Ismael is no longer trying to discover whether a large HVAC and plumbing company can be built. He already knows it can. The question that interests him now is how much of the structure required to build the first one could be eliminated or redesigned when artificial intelligence is available from the beginning.
The Back Office Became the Next Problem to Solve
A traditional home service company requires an enormous amount of coordination that homeowners rarely see. Someone has to answer incoming calls, collect information, book appointments, adjust schedules, dispatch technicians, communicate delays, follow up on estimates, process financing paperwork, monitor marketing, handle reviews and produce reports for management.
As a company becomes larger, those responsibilities often become departments with managers, employees and software supporting each function. The structure exists for a reason because a contractor cannot efficiently operate hundreds of field employees without somebody coordinating what happens around them.
Ismael's new thesis is that many of those tasks contain repetitive information work that artificial intelligence can increasingly perform. Instead of assuming a growing contractor must continuously add office employees alongside technicians, he wants to test whether AI can allow administrative headcount to grow much more slowly than field capacity.
That is a fundamentally different approach from taking an established contractor and adding an AI receptionist. The goal is to design the organizational structure itself around the assumption that software will handle a significant portion of the routine work.
His Next Contractor Is Being Designed Around AI
Ismael has discussed plans for another home service company that he has referred to as Prime, with a potential launch after restrictions connected to his previous business allow him to return fully to contracting. During a 2026 interview, he discussed April 2027 as a possible starting point.
The plan is deliberately aggressive. Instead of recreating the large conventional office structure that supported NexGen, Ismael wants the new company to rely heavily on AI and automation for customer communication, scheduling, dispatch, follow-up and other administrative processes.
He believes reducing those costs could create room to compete more aggressively on price without sacrificing profitability. In interviews, Ismael has discussed the possibility of eventually producing EBITDA margins above 40% if the model performs as expected.
That number should be viewed as an objective rather than a proven result. The new contractor has not yet demonstrated those economics at scale, and operating a real HVAC and plumbing company will inevitably introduce complications that are difficult to predict before launch. The significance of the idea is that someone who has already operated a $108 million contractor believes the traditional cost structure leaves enough room for technology to materially change the economics.
Lower Overhead Could Change the Pricing Strategy
One reason Ismael is interested in reducing administrative costs is that every layer of overhead eventually has to be recovered through the price charged to customers. Call centers, dispatch departments, administrative employees, management and office facilities may not appear directly on the homeowner's invoice, but their cost is embedded in what the contractor must charge to maintain healthy margins.
If the next company can operate with fewer people performing repetitive administrative work, Ismael believes some of that savings could be used to offer more competitive pricing while still allowing the business to keep more profit from each job.
That could create a powerful relationship between price and conversion. A contractor able to quote lower prices without destroying margins may win a larger percentage of the opportunities it receives, which in turn makes every marketing dollar more productive because more of the generated leads become customers.
Higher conversion would then allow the company to invest more aggressively in lead generation while the automated back office handles additional volume without requiring administrative payroll to increase at the same pace. If the assumptions are correct, the advantages would compound as the company grows.
The important word is if. Home services contain enough unpredictable human and operational problems that the model will have to prove itself in real conditions before anyone can know how much of the traditional cost structure can truly disappear.
The 40% Margin Target Is a Major Bet
Producing EBITDA margins above 40% would be an extraordinary result for a large residential service business, particularly because artificial intelligence cannot eliminate many of the industry's largest expenses.
Technicians still need competitive compensation. Trucks require fuel, maintenance and insurance. HVAC equipment and plumbing materials still have to be purchased, advertising still costs money, warranties create obligations and physical work still requires trained people to enter customers' homes.
Ismael is not suggesting that those costs vanish. His argument is that the administrative layer surrounding the field operation may be much more compressible than contractors previously believed.
If AI can allow one dispatcher to support significantly more technicians, reduce the number of people required to answer routine calls and automate large portions of follow-up and customer communication, the savings could become meaningful at scale.
Whether those savings are enough to consistently produce the margins Ismael is targeting will be one of the most important questions surrounding the experiment.
His Interest in Technology Did Not Begin With the New Company
After leaving NexGen, Ismael invested heavily in another venture called Nuve, which develops smart thermostats and connected controls for the HVAC market.
He said in 2026 that he had invested more than $22 million of his own money into Nuve and reported approximately $15.2 million in first-year sales with more than 110,000 units sold. Those figures are Ismael's own reported business results rather than independently audited public financial statements.
Building Nuve forced him to operate differently from the contracting world he already understood. Instead of simply managing technicians, salespeople and homeowners, he had to think about hardware, software, product development, manufacturing, distribution and the relationship between contractors and connected equipment.
That experience appears to have pushed his thinking further toward the idea that technology should not merely sit beside a home service business. It can become part of how the company itself is designed.
His next contractor is intended to bring those two worlds together.
AI Does Not Replace the Need for Marketing
Despite the attention Ismael gives artificial intelligence, his fundamental view of contractor growth has not changed. He still believes that sales and marketing create the opportunities that allow everything else in the business to work.
A perfectly automated company without enough incoming demand still has an empty schedule. Ismael therefore continues to emphasize the economics behind lead generation, including how much a company spends to generate opportunities, how successfully the office books them, how effectively technicians convert them and how much revenue comes back from each channel.
This is particularly important because automation can improve the economics of marketing without replacing marketing itself. If AI helps the company answer more calls, respond faster, book a larger percentage of leads and consistently follow up with homeowners, the same advertising budget can potentially produce more completed work.
The technology therefore becomes most useful when it removes friction between demand generation and revenue rather than when it is treated as a separate experiment.
Conversion Matters as Much as Lead Volume
Ismael has also argued that contractors can waste enormous amounts of money generating more leads when the real problem is weak conversion.
Consider two companies receiving the same number of opportunities from the same marketing spend. If one closes 30% of those opportunities while another closes 50%, the second business produces much more revenue without purchasing a single additional lead.
That difference becomes even more significant in HVAC replacement, where individual tickets can be worth thousands or tens of thousands of dollars. Improving conversion by a relatively small percentage can materially change the economics of the marketing program.
This is another area where Ismael sees AI working around the sales process rather than simply replacing salespeople. Automated systems can respond to leads immediately, make sure appointments are booked, maintain consistent communication and continue following up after an estimate without relying on an employee to remember every next step.
The technician or comfort advisor still has to create trust inside the home, understand the customer's needs and close the work. The technology is intended to make sure fewer opportunities disappear before or after that human interaction.
The Most Interesting Part Is That He Already Built the Old Model
Most people proposing a radical new operating model have never built the thing they want to replace.
Ismael is in a different position.
He knows what happens when a contractor grows from zero to $10 million because he has done it. He knows the complexity that appears at $30 million, and he has managed an organization with hundreds of employees operating across multiple locations. He also knows what the company looked like when annual revenue eventually exceeded $100 million.
That experience allows him to examine the traditional structure with a much more informed question. Instead of wondering whether home services can scale, he can ask which parts of the organization were genuinely necessary and which existed because the technology available at the time left no better alternative.
Success with NexGen therefore makes his willingness to challenge the model more interesting. Founders often become attached to the structure that produced their success. Ismael is using what he learned from the first company to identify what he wants to remove from the next one.
A Large Contractor May Eventually Look Very Different
For a long time, the visible signs of a successful home service company were relatively predictable. Growth meant a larger fleet, more technicians, additional branches, a bigger office and an expanding administrative team capable of supporting the increased volume.
Artificial intelligence creates the possibility that one part of that relationship could change. Revenue and field headcount may continue growing while administrative headcount increases much more slowly.
A company with 100 technicians will still need people capable of handling unusual customer problems, making judgment calls and managing the operation. What may change is how many employees are required to perform routine scheduling, communication, data entry, follow-up and other repetitive tasks.
If that happens, the contractor of the future may look surprisingly small from the office even while the fleet and revenue continue expanding.
That is essentially what Ismael wants to test.
The Hardest Part Will Be Preserving the Human Experience
The model becomes much more complicated once it leaves the spreadsheet and enters customers' homes.
Residential service contains endless exceptions. Technicians get sick, jobs run late, equipment fails to arrive, customers misunderstand appointments and emergencies appear without warning. Some homeowners are comfortable interacting with automated systems, while others may become frustrated if they cannot easily reach a real person.
Those moments are where a home service company's reputation is often built or damaged.
The challenge for an AI-first contractor will therefore be deciding which interactions should be automated and which require human judgment. The best system may not be the one that removes the largest number of employees, but the one that removes routine work while allowing employees to spend more time on situations where empathy, experience and judgment actually matter.
If the new company becomes cheaper and more efficient but delivers a worse customer experience, the financial advantage may not last very long.
Ismael's model will need to prove that automation can improve economics without making homeowners feel as though they are being serviced by a machine.
NexGen Already Proved He Knows How to Create Demand
Whatever happens with the next company, Ismael has already demonstrated an ability to build a large residential brand.
NexGen combined print, digital advertising, Local Services Ads, pay-per-click campaigns, Google Business Profiles, television and outdoor advertising while expanding across Southern California. By the time of the Wrench Group transaction, the company had eight locations, more than 400 employees and a customer history exceeding 100,000 homeowners.
That history matters because the AI-first experiment does not begin with someone trying to learn marketing, recruiting and field operations simultaneously.
Ismael already understands how to create demand and scale the physical side of a service business. His next challenge is determining whether that demand engine can be connected to a much leaner administrative structure.
If it works, the result would not simply be another large HVAC company. It could provide evidence that the economics of building a large contractor are beginning to change.
What Contractors Can Actually Learn From the Experiment
Most contractors should not respond to Ismael's plan by trying to eliminate their office staff.
A company doing $2 million or $5 million in annual revenue has very different problems from the organization Ismael wants to build, and poorly implemented automation can easily create more problems than it solves.
The more useful lesson is to examine why each repetitive process inside the company still requires a person.
If employees spend hours moving information between systems, manually sending the same reminders, listening to routine calls, updating customers or following up with every unsold estimate, those workflows deserve examination.
Artificial intelligence may not eliminate the role, but it may eliminate enough repetitive work that the employee can support more customers or technicians without becoming overwhelmed.
That is how the economics begin to change.
The objective is not to use AI because contractors are suddenly being told they need AI. The objective is to identify expensive friction inside the business and determine whether technology can remove it without damaging the customer experience.
The Second Company Is Really a Test of Everything Ismael Learned From the First
Ismael Valdez spent years learning home services before NexGen ever reached $108 million. His career took him from a supply-house counter into contracting, through partnerships and eventually into building one of Southern California's largest residential HVAC and plumbing brands.
That first company taught him how powerful marketing can become when a contractor measures it carefully, but it also showed him how much organizational infrastructure is required to support rapid growth using the traditional operating model.
His work with Nuve then pushed him further into technology and gave him experience developing products rather than simply purchasing software from outside vendors.
The new company is intended to combine those lessons.
Ismael wants the demand-generation capability of NexGen, the technology mindset he developed afterward and an operating structure built around the assumption that many traditional office functions can now be automated.
Whether he can produce another $100 million company with dramatically fewer administrative employees remains completely unproven.
That is precisely why the story is worth following.
Ismael has already shown that he can build the conventional version.
Now he wants to find out whether the next version can be leaner, cheaper and significantly more profitable by treating AI as part of the company's foundation rather than something bolted on after the business is already built.
Skip the $2,000–$4,000/Month Marketing Agency. Learn to Run Google Ads Yourself With AI for Just $97!
The Google Ads & AI Masterclass for Home Improvement Contractors shows you how to research your market, build your campaign, create a high converting landing page, track leads, and use AI to improve performance.