The State of Work Videocast with Jesse Rack (Southeast)

0:09 — Jesse: My name is Jesse Rack. I'm the CEO of Rack, a multi-energy platform down here in the Southeast of the United States, here in Florida. We're a family-owned and operated business that has really grown largely on the automatic standby generator side, as well as gas and propane. We also do HVAC as well as electrical service. And on the opposite side, we have this extremely dynamic commercial department that focuses on EPC — engineering, procurement, and construction — for some very large clients.

0:39 — Anthony: How does the family dynamic and the personal dynamic crossover?

0:44 — Jesse: Well, we're 50-50 partners. As I'd like to always say, my dad gave me a really strong foundation and I had the ability to build a skyscraper. That's always been my vision. I didn't want to just be an electrician — I wanted to build a brand. It just so happened through strong branding and partnerships and the right people — it's all about that right team — that we were able to bring in these different verticals, and here we are today as, I feel, one of the leading energy providers on the private side in the Southeast.

1:13 — Anthony: Your work is fundamentally different than a lot of the businesses we've seen in this study. You've been leading your company going from 5 to 160. You have people out on the field in cars driving around the city. What does going to work look like for your team?

1:33 — Jesse: We have a lot of technicians on the road, and a lot of office staff. The technicians report every day around 7 o'clock, or if they take their vehicle home, they report to the job by 7:30. The inside team is in shifts — we have an AM team and a PM team to be able to satisfy all the dispatching that is needed. Every day it's evolving. Our main focus is automatic standby generators, and generators will not run without gas, propane, or diesel. So we built a department in a new vertical through that. And then ultimately at the end of the day, we run a lot of preventative maintenance, so we've got a lot of guys on the road maintaining these generators to make sure they're working when you need them most.

2:19 — Anthony: Father and son duo, 5 to 160 — that is not easy in a family business. You guys are a large independent generator dealer. I'm assuming you have some independent shops; you're not owned by a larger conglomerate. So when you're building out your workforce, what has changed going from "Hey, I know all five of us" to maybe 161, I forget who that new hire was last quarter? How does the culture shift? How does the scale? Did you like it when it was smaller? Is it better now at this size?

2:48 — Jesse: I would say every size has its positives and negatives. When your vision is to build a big brand in the Southeast, you have to make sure that you align with a strong strategy and a strong culture. It started with getting the right management team in place, and I'm only as strong as my team leads. We run a lot of things just like I used to do in football. We're very much a team-oriented company — setting expectations, setting goals, and then holding people to the culture. We're a big believer in hiring for attitude, not necessarily always skill. We like to get guys that don't come from another location where they've always done it that way — that's not how we do it here at Rack. We do things the right way, or as we like to say, the Rack way. There've been learning curves at every single level, but every day you get to compete with yourself again and reinvent yourself.

3:44 — Anthony: You're in a trade business where your physical demands are real, and work isn't something you can do from home or not do when you're tired. So how do you think about workload and sustainability when you have drivers in different places and they can get tired and work can digress, and a double shift isn't really double productivity. Love to hear your thoughts.

4:04 — Jesse: Ultimately, we try to honestly evaluate the workload. We're working in 100-degree weather. It's very hot here down in the South. So we really try to make sure that we are able to maximize our production without burning out our employees. Depending on the position, you're always going to have those five-tool players that can just handle a lot more than anybody else. Some of those are the ones that get the opportunity to make more overtime because you know they're going to bring their A-game every single day. But ultimately it really comes down to the systems in place and the culture that you have. We have some employees that just love what they do, and if they're on salary, we have to kick them out at the end of the night — "Hey, go home" — because they just really enjoy it. We really care about the customer experience. That's something we really focus on. So at the end of the day, it's really a cultural shift that we've brought, and we really try to prioritize our employees.

5:08 — Anthony: Let's dive into that. In the State of Work Report for TriNet in the Southeast region, about 60% of employees — 57 to be precise — said they're actively looking for new jobs. So more than half, but that's across all industries. You're in a little bit of specificity. You have some certifications and training. So how accurate is your read on where your people stand? What type of retention numbers do you have? Are you proud of how long the tenure is of your average employee? Do you have some turnover in the driver positions, and is that okay? Like the pizza delivery man — we just get another one, our college kids work on summer, it doesn't really matter, we're just delivering a pizza.

5:43 — Jesse: Listen, we love to retain employees — number one because it costs a lot more to retrain new people. So we really try to focus on the people that work with us. We give them opportunities to continue to excel. That's one of the things I'm proud of that we offer at Rack — there's a lot more opportunity than most other corporate locations. I don't know if that's because we're private and independent, and the other employees just don't like being a number at a larger equity firm or commercial-style location. We try to give back to them. We have competitions. We give out gift cards. We give out different opportunities for them to just be excited to come into work. Work is the definition of insanity, right? Every day you're expected to come in and reinvent yourself, and not much is going to change. But what I have found ultimately is that people enjoy working for us because they're continually being pushed. The opportunities are present. I find that sometimes guys in the field, if they stay in the field too long, they never really want to get into the office. But when they're younger, if we get opportunities to give them a few days in the office, they say, "Hey, I might be able to shift into this mentality of becoming more than just working with my hands. I'm really talented with my hands, but my brain is, you know, I'm really smart mentally, and I understand these drawings and these prints." So in the trade industry, it kind of depends — is the company private? Are they private equity? Then depending on what they're doing as far as their hours — are they throttling their hours? We find that our teams just want to work, and that's something that maybe starts from the top down with our leadership team, but it also could be us focusing on people that have a really hardworking attitude.

7:28 — Anthony: I can appreciate that. As an athlete myself, it's hard to interview for grit. It's hard to interview for hustle. You can look at someone's resume, but whether or not they're going to get up in the fourth quarter and sprint 100% is an internal question, not an external question, and only they can answer that with themselves. So I sincerely sympathize with you on the translational skill set of being in a competitive team environment and how well that translates to a competitive business environment.

7:56 — Jesse: Look, competition breeds success. So we want guys that are competing with each other. And the thing is with our teams, when they identify somebody that just doesn't fit, they usually don't make it very long — the employee will end up quitting. That's what's tough, right? We have a reputation down here for working hard. I'll take that any single day.

8:24 — Anthony: Do you know when someone's close to leaving? Do you have indicators — like KPIs, cultural fit, general mood? And following on, do you conduct exit interviews when people do leave?

8:36 — Jesse: We do. We have a full HR department that will do that if the employee is open to it. I'll tell you this right now, Anthony — we don't hire anybody to want to fire anybody. But usually it takes your first 90 days to figure out who exactly that person is, because a resume to me is just a piece of paper. We want to see them in action. We want to see them in the field. They get training. They get opportunities to work with people that have been here for 5, 10, 15-plus years. And usually we'll know within those 90 days if they're a culturally strong fit. The trades is not for everybody. I tell people all the time, if you expect to be sitting in air conditioning, go drive Uber. We're not in air conditioning. We're outside. It's 100 degrees. It's hot. You're going to be sweating. But the opportunity is there to make a lot of money. And that's the thing — shaking them out of that shell of just doing their eight and skate, getting that opportunity to speak to a customer and upsell something or recommend something, is really on them. And we do a really good job training on that.

9:39 — Anthony: Well, the TriNet State of Work Report in the Southeast showed you guys have a surprising finding, but more specifically because you're in trades and there are lots of different ways you can be using your hands. You have lots of different tools. I'm going to bring up the buzzword du jour — artificial intelligence. So how are you guys using AI? How is it just slowly bleeding into the tech stack naturally by your systems including AI feature sets? And then are you personally leading any internal projects where you're like, "Hey, we want to own this. We want to bring in a new tool, technology, widget, gizmo, gadget"? What's the process or thoughts there?

10:21 — Jesse: Here's how I feel. Ultimately, private equity is very heavy in the trades right now, especially in our area. So we've been playing with and practicing and incorporating and integrating AI for the last couple years. We're part of some very strong best practice groups, and being that we are uniquely a very large generator dealership, AI when it comes to the trades is very much geared towards electrical, HVAC, and plumbing. So we spent a lot of time behind the scenes. It was actually really great because we didn't have to pay for it — the AI companies wanted to work with us until we got it all right. And what we found is this: our goal isn't to eliminate any of our employees. Our goal is to enhance the current employees that we have, because we want to make sure that they are as efficient as possible. So incorporating AI has allowed us to — for example, we get a high call volume — our AI agents can handle 3,000 phone calls within 10 minutes. That software now works with our back-end CRM. It allows us to identify who's part of the Rack Memberships group so we can prioritize our current customers. It also takes which calls are emergencies, which are potential moneymakers, and which are a waste of time — because we've all been there before, right? Somebody just wants to get on the phone and price shop for an hour, and now your call center agent's on the phone for 45 minutes. So rather than wasting the time answering the phone, we're able to have the AI agent create these efficiencies so that our team can have all that data already within our system and then attack the problem much quicker, much more efficiently. I think ultimately you have to embrace it, and our team really has — and that starts again with our leadership.

12:14 — Anthony: Thank you for that. And just calling out — I want to call it ironic, but you are part of the AI supply chain. Because no AI can be processed without a data center. No data center can exist without a generator. You're the largest independent generator distributor in the Southeast, where lots of data centers are being built. Arguably AI can't exist without you backing up the data centers that process the AI requests. So for better or worse, you're part of the supply chain.

12:42 — Jesse: Listen, I'm very fortunate to have started doing this 13 years ago, and now you're seeing this maturation of the trades, and a lot of people are fascinated with wanting to work with their hands. Everything kind of seems to ebb and flow in life. You're seeing trades make a comeback, and you're right — those data centers will not get built without people like myself and my team. Things won't get repaired without myself or my team. And I think ultimately a hybrid model utilizing AI and human interaction is just the most efficient model that's out there.

13:07 — Anthony: The Southeast employers in our research in the TriNet State of Work Report shows that you have the largest gap, where 73% of employers — if you're comfortable about where the leadership is, so as a boss, as a CEO — they're like, "Yeah, my company's happy." But only 50% of the employees agree. So it's like a 70% delta. You guys are a family business. Your name's on the building. Leadership's pretty visible — Rack Electric, I'm seeing the play on words here. So what is closing the gap, where your employees never feel that they don't have the ability to talk to you? Is that keeping private equity out of the landscape so you stay a family business? Or how do you maintain this culture as you grow, is a simple way of asking that complicated question.

13:59 — Jesse: Well, at the end of the day, I've always been a leader that's going to lead from the front, not from the back. I have an open door policy. I have all the information coming to me via my assistant from HR on all new hires. I've got a really good pulse on the industry. If you want to be the best, you want to come work for us. I think ultimately you never forget your strong foundation and where you started. There are days where I throw on my work boots because I missed digging trenches 10 years ago — it was much simpler back then. There are days where I'll jump out there and go in the field, I'll see the guys, we'll do a ride-along, and I'll coach them up. I'm always interacting with the teams, always interacting with the project managers. I think that's part of our success — that our ownership hasn't abandoned the team. I work just as hard as they do, and I think they see that and they thrive on that.

14:58 — Anthony: In the Southeast, the data shows that there's a little bit of a shift between growth plans. In your company specifically, you can be a journeyman, you can be a master, you can be a foreman. How are you working with your new hires and helping them understand where they can grow in your organization? I don't know much about trades — so are there senior levels? Are there black belts versus white belts? How does that work for 25-year-olds, like, what am I going to be in 10 years?

15:24 — Jesse: Again, it starts with the hiring process and talking about the opportunities. We ask them what their strengths and weaknesses are. We ask them what their 5, 10, 15-year goals are. These are items that I don't know if everybody asks. I don't hire somebody to fire them. We hire them because we think they have a really good opportunity to grow within our organization. We're continually trying to find the next round of great electricians and great gas techs and great AC techs and great EV installers. 10 years ago, I was pulling wire. I was installing panels. I was putting in lights. And it just really rapidly grew fast because, being the son of the owner, I wanted to show those guys I knew what I was talking about. You can't talk the talk and not walk the walk. So one of the cool things is we have that ability with our managers — I've really helped them mature and coached them to speak the language of the technicians. It's not like some white collar where we're just cranking on the numbers. We're going through the entire SOP, we're asking them, we're involving them. So ultimately, having that pulse on your team, having the right culture — that's really what presents opportunity to those lower-level employees. And then we put guys in trade school. It's amazing how many guys finish trade school and then will not go get their journeyman license or their master electrician's license. And we're pushing — we want people to be the best. That's who I want to work for us.

17:06 — Anthony: One thing that people should be aware of now, or perhaps a regret you have made, or for an operator just getting started in their career — what's something that a leader could consistently get wrong? What should they have some concerns about?

17:14 — Jesse: Oh, that's a fully loaded question. So I would say this: you need to get your vision on paper. Where are you trying to go? Three or four years ago, I said that I wanted to build a hundred-million-dollar company. I think last year, had we had a hurricane, we would have been much closer than we are at this current date. But we ultimately put that on paper and said, how are we going to get there? And we designed everything in a way that the numbers were not going to lie — if we were to hit these metrics, we were going to hit our goal. So number one, you need to get your goals on paper. Number two, you need to surround yourself with people that are more intelligent than you are. I always tell people this all the time: my greatest strength is not electric. My greatest strength is recruiting. I recruit extremely intelligent individuals that want to work with me and want me to lead them to a new level in their life, a new level in their career. Ultimately, our goal always is to continually build long-term enterprise value. It's a fast-paced environment, so if you like challenges — like you said, iron sharpens iron — I want to be surrounded with the best. I don't want to just be the best guy on the worst team. That's not a lot of fun, that gets pretty boring. If you like winning, that is something we really like to do. We like to win projects. We're proud of the brand. So at the end of the day, you need to look at yourself and say, "Okay, what do I bring to the table? What is my vision? How do I get people to see my vision?" And then start slow. When I say start slow, that doesn't mean don't work hard and work fast. That means put your energy in locations that you know you're going to see immediate returns. If you don't understand generators, don't just start selling them to sell them and then crash and burn and ruin your reputation. Your net worth is your net worth. So if you're a smaller guy, you want to respect and have some professional development with a larger firm, because at the end of the day, you guys really aren't competition. I was fortunate to have that coming up in the industry — not so much now with everything being private equity. But I think if you believe in where you're trying to go and you trust your team and you measure the numbers and the KPIs, you can build something that's really successful.

19:42 — Anthony: Jesse Rack, Rack Electric, the CEO, the father and son duo — it has been tremendous and encouraging to learn about your growth, how you're operating, and the things you've taken from the sports world into the professional world. If you're interested in learning more about the TriNet State of Work Report, we welcome you to come join us at trinet.com for the full report for your review. Thanks again to Jesse. Have a good day.