With a tech startup approach, Canopy seeks to shake up the residential landscape maintenance industry with a national brand.
Ryan Winkel, operations specialist for Canopy Lawn Care, squints at his computer, straining to see a blue Post-it stuck to a contract that’s been scanned into the company’s system. The note was an add-on to a contract that belonged to Grass Monkey, a Raleigh, N.C.-based company Canopy recently acquired. Winkel is entering the company’s former accounts into the data management software that serves as Canopy’s backbone. From what Winkel can see, only a small strip of low-tack, pressure-sensitive adhesive was keeping a vital portion of this client’s contract from falling to the wayside. Not to mention, the information hardly lives in a space that will allow it to be easily communicated to a crew member serving the property.
“This is the type of thing that lives in our tech stack and is seamlessly communicated to whoever is servicing that customer,” Winkel says, explaining the difference between the old way of doing things and Canopy’s way.
It’s a perfect example of how the landscape industry, which has been relatively untouched by technology, is prime for disruption. If it’s up to Canopy CEO Hunt Davis, his residential landscape maintenance company based in Raleigh, N.C., will be the one to shake things up.
Canopy employs a team of software engineers, which spends each day creating, improving and refining the technology the company is built around. Davis believes if Canopy’s software and operations are constructed to be “scalable” and it puts a new face on the industry for customers and employees, the company can build a national brand by consolidating the residential maintenance segment and dominating the market.
“The landscape industry is a $76 billion industry and residential is 31 percent of that, but you only have one company focused on residential that’s over $16 million,” says Canopy CEO Hunt Davis, referring to Mariani Landscape in Chicago. “It’s such a fragmented industry that’s ripe for consolidation. It only takes $10 million to get into the top 150 landscape companies in the country. That’s so crazy.”
To the industry veteran, this 37-year-old executive might sound smug when he says he’s building a national brand. But Canopy is not your average landscape firm, and Davis is not your average landscape contractor.
Going into its second year in business, the company is already projecting 2017 revenue at $5 million—halfway to breaking into the LM150.
It also has $4 million in funding from investors that include Lowe’s Home Improvement; venture capitalists from New York, California and North Carolina; and angel investors including foreign billionaires—all of which have goals as lofty as Davis’.
“I don’t think there’s any reason why there can’t be a national brand for residential maintenance,” says Chris Langford, managing director, Lowe’s Ventures, the retail giant’s affiliate dedicated to investing in “the most innovative and disruptive technologies in retail and home improvement.” “Most other industries, even some pockets of other home services companies, have national brands. I would expect Canopy to be in that same vein. I think that’s what success with this looks like, and I think there is a very clear opportunity.”
But opportunity alone didn’t entice Davis to leave a lucrative job as an investment banker to start up a landscape company. His bachelor’s in engineering from North Carolina State University makes him a problem solver, the CEO says. Looking at the industry, he sees a poor employee experience and a painful customer experience—something he and his wife went through as first-time homeowners. Those, he says, are problems worth solving.
Who is Hunt Davis?
Canopy’s headquarters is located in a two-story townhouse a few miles outside Raleigh, N.C. Inside the front door, Davis greets visitors from his stand-up desk, which fits the restless owner. Davis appears to subscribe to the “geniuses thrive at messy desks” theory. His is covered by papers; a pile of iPads in blue cases adorned with Canopy stickers; jars of peanut butter and protein shakes for his “bursts of creative energy” and two computer monitors atop coffee-can stands.
One of the screens is showing a video recap of the company’s first holiday party in December. Davis is beaming and fighting back a tear.
“I’ve watched this, like, 50 times,” he says. “We gave each employee a unique superlative, and nearly every employee in the company was in attendance. It was such a special day.”
Davis’ life didn’t always look like this. Five years ago, he wore $500 suits to work every day—not the blue jeans, button-down shirt and Canopy-branded Patagonia vest he wears today.
As managing director and partner of FMI Capital Advisors, an investment-banking firm in Raleigh, he used his MBA from Wake Forest University. The global firm handles deals that range from $20 million to $100 million. It was a lucrative gig, and had tragedy not struck, he might still be there today.
On October 14, 2012, Davis’ brother George Merrill Davis III was killed in a car accident. At the time of his death, Davis III was 34 and general manager of Stone Bros. & Byrd, a century-old landscape and farm supply store owned by their father. The store is an institution in the town. Just over the left field wall of the Durham Bulls’ old ballpark, the store, brandished with a funky mural of plants and insects, can be seen in the background of the movie “Bull Durham,” based on the minor league team.
After his brother’s death, Davis ruminated on his life. He saw the joy owning the store brought his father and his brother. He wasn’t going back to sweeping floors or stocking shelves, but he wanted more fulfilling work.
During his last year at FMI, Davis was investing in Pack Purchase, a web-based on-demand home service platform that connected local providers with customers. Davis’ roots are enmeshed in startup culture. During undergrad, he tried his hand at a few new ventures, which are prevalent in “The Triangle,” an area that’s become a startup destination thanks to the college towns that make up its three points—Durham (Duke); Raleigh (N.C. State) and Chapel Hill (UNC-Chapel Hill). Pack Purchase, though still in its R&D phase, seemed like the change of pace he was seeking.
“I loved investment banking, but it was a very bottom-line driven business,” he says. “(With Pack Purchase) I found an opportunity to create and solve this problem for people. That was really exciting to me.”
Davis became CEO of Pack Purchase in 2015. While he had a nest egg and could’ve returned to investment banking whenever, the move was a lifestyle change. He sold the BMW and started riding the bus to save money. The rides changed his perspective, he says. In his new role, he spent time researching the service industries. He saw an injustice in how employees were paid, treated and denied upward mobility. “How could you build a career this way?” he thought.
Pack Purchase quickly evolved into Canopy, launching in its current form in 2016, but the experience taught Davis the importance of a rewarding employee experience. It also influenced his decision to build a company from the ground up—not serve as a middleman developing software.
“This industry is known for high customer churn and high employee churn,” Davis says. “We believe we can improve both of those by using technology, but technology doesn’t fix some of the fundamental problems in industry, like culture, communication and the treatment of workers.”
Canopy culture
Today, an employee-centric focus remains. Canopy field workers don’t report to a shop each morning. Instead, they depart from home, where their equipment is parked at night. Industry incumbents might question how you can foster company culture with a “lone-wolf” approach, but employees say it doesn’t hinder camaraderie. Digital communication over channels on web message platform Slack, which is built into Canopy’s tech stack, creates a richer sense of community than any company they’ve ever worked for.
“If you read through that entire (Slack) channel, you would see encouragement and support,” says Foster Nichols, sales manager. “All the folks in the office and our first core team of employees in the field have been intentional with fostering that environment. You will find companies with a great office culture—that exists—but to have a great field culture in our industry—that’s special.”
Take the story of Area Lead Brandon Juarez. Last year, his daughter fought a respiratory illness, forcing him to take extended time off. Juarez says some of his past employers would have terminated him over the missed time. At Canopy, he was met with compassion. Some fellow crew members even asked to donate paid time off or stay late to cover his routes.
Culture isn’t just kindness and understanding, however. Canopy’s structure offers a chance to build a career and wealth, Davis says. While he declined to share what an average production team member—known as a Canopy Pro—makes, he says the company pays at or above industry standards. Employees also earn performance-based incentive compensation based on metrics, like monthly customer ratings, and Canopy Pros are also compensated for upselling customers on additional services in the field. Some employees even earn stock options.
Most importantly, Davis says, employees don’t have a ceiling that naturally occurs at many smaller landscape companies. For example, Juarez, a 25-year-old with eight years of industry experience, has already gone from apprentice to area lead, leading a whole network of Canopy Pros and gaining ownership in the company.
“There’s pride in working for the Canopy banner,” says Lowe’s Ventures’ Langford. “There’s a legitimate career path and people are incentivized either through some level of ownership in the company or just this potential to grow within a career that has often been limited because of the fragmentation of (the industry).”
Other than the obvious business opportunity, Langford says this culture is part of what attracted Lowe’s to Canopy. He also believes this factor is what will help the company grow and attract the top talent in the industry.
“How do you get the best people?” he says. “Well, if there are regions to manage and national accounts to manage, then there are all these other ways that you can go from the field into the office and grow within your career.”
A full-stack startup
Some industry stalwarts have feared disruption by the on-demand economy—the so-called “Uber of the landscape industry.” Companies like LawnStarter, Lawn Guru and Plowz/Mowz have hit the market in recent years but haven’t become the transformative force some expected. Davis doesn’t think they ever will be.
“It’s not a good business model,” he says. “None of those will end up working out. I’m willing to make that claim.”
Davis should know. Prior to its current incarnation, his Canopy Lawn Care tested an on-demand home service model called Pack Purchase starting in 2014. The application served those looking for landscape, construction, cleaning and other home services.
“We spent a lot of time and money in R&D mode, and we tested an on-demand model,” he says. “Strategically they don’t make sense. Landscape maintenance is a recurring business.”
Existing on-demand sites use an intermediary business model, which means they’re essentially middlemen. They’re great for adding a few extra jobs to your route, but they’re nothing more than another lead-generation outlet, Davis says. You don’t have control over the customer experience and you can’t capture the recurring revenue.
On the contrary, Canopy is a full-stack startup, a term popularized by tech entrepreneur Chris Dixon. Rather than selling software for existing companies to implement, the full-stack startup approach is to build an end-to-end product or service.
Dixon compares Microsoft to Apple. Microsoft started out building operating systems and applications, like Office, and relied on partners’ hardware to give those products a home. Apple took a different approach by building the hardware, the operating system, the apps and the retail experience, Dixon says. They built an end-to-end experience. Dixon would say the existing on-demand sites are Microsoft. Canopy is Apple.
The customer experience
The technology-based Canopy experience is present from first contact by a potential customer through daily maintenance. It’s not “on-demand,” but it offers the expedient response modern consumers have come to expect.
In the sales and marketing office, Nichols runs point on a digital channel called Intercom, a third-party application that has been integrated into Canopy’s tech stack. Think of Intercom as a shared inbox that everyone in the company can access. Someone in the sales office constantly monitors this inbox, even on the weekends. The company advertises a 30-minute response but averages 15. Internally, they strive to be faster, and Davis awards the in-house team with a Friday lunch if the weekly average is less than 10 minutes.
Behind Nichols, salesman Brian Lattimore is preparing a quote, which only takes a few minutes. Traditionally, landscape companies perform bids on-site, in-person. Instead, Lattimore pulls public property data to outline the property, tracing around shrubs or hardscape features to measure the turf, and feeds the dimensions into Canopy’s custom tool, which uses a proprietary algorithm to formulate a quote. On average, the “deluxe” plan, which includes mowing, edging, blowing, cleanup, weed control fertilization, bed maintenance, leaf removal, aeration and overseeding, mosquito control and pruning, costs $299 a month. The company offers two cheaper packages, and customers can also choose which service they want a-la-carte, even if it’s only mowing.
“A lot of companies won’t even see a request until the owner has time to check his email, which might not happen until Friday afternoon,” Davis says. “Then the company has to send someone out to the property to do a bid in person. It might be two weeks before the customer gets a bid.”
Once the customer signs on, technology continues to improve the daily experience. A client is notified via text message when a Canopy Pro is en route. The message includes a link to a webpage, including a photo of the Pro, a description of that day’s services and a prompt to provide any requests or concerns. Customers may also text a response. After the job, Canopy Pros typically knock on the door to tell the homeowner they’ve completed the work and ask if there is anything else they can do. Some customers prefer not to speak with the Pro, and if that’s the case, it will be documented in the app. Even with all the technology and the ability for streamlined communication between customer and company, many Canopy customers still appreciate the human touch.
Once the job is complete, the Pro uploads photos of the work and sends a summary to the customer, who is encouraged to leave a rating out of five stars and a comment. This instant feedback is vital to the company’s operations, and it makes the homeowner feel like he or she is being heard.
The Canopy experience provides a seamless customer experience, and behind the scenes, it allows the company to run lean and efficiently.
Efficient operations
At the headquarters, two large television monitors hang on the wall in an operations command center. The operations team oversees its entire fleet from these two screens.
One depicts a weather map, on which the company monitors incoming weather to quickly pivot its routes and avoid problem areas. It’s also used to pull up company metrics, displayed in charts and graphs. The other monitor is a split screen. Half of the screen is a grid depicting each Canopy Pro’s hour-by-hour schedule. The other half is a color-coded map that shows where each crew member is in real time and the route he or she is scheduled to hit.
“This view allows us to rearrange our schedule in a moment’s notice,” says Josh Nance, operations manager. “If one guy is swamped or something is taking longer than expected and it looks like another guy is going to get done a little bit early, we can drag and drop a job to tack it onto the other guy’s schedule. If we see some rain is going to hit a particular area at a certain time, we can rearrange the schedule to make sure we hit that area first and then move somewhere else.”
While Canopy prefers to have the same employee serve the same customer to form a relationship, every employee is capable of doing every service the company offers. During the apprentice stage, employees ride along with an experienced Pro for no less than two weeks, and often up to several months, to learn the ins and outs of the technology and the services before going out on their own.
Furthermore, Canopy’s employee-facing app gives a Pro without experience on a property all the details he or she needs to ensure there’s no difference in service. Any preferences—these often include things like “don’t apply fertilizer in the backyard where the dog plays”—are documented within the app, and photos of past work or problem spots are held on the customer’s page within. Each time Canopy works on a yard, the client service is improving incrementally through documented nuances. If the property is unfamiliar to him or her, the Canopy Pro will often shoot a quick message to headquarters through a Slack channel. This group chat is available to the operation center and all crew members. Any extra tips from either the typical crew member who services the yard or from the headquarters will typically arrive by the time the employee gets on-site.
Instead of driving into the shop, driving out to a job and then back into the shop at the end of the day, Canopy Pros depart from home each morning. The command center aims to set up routes that minimize the distance the Pro is traveling from home. The average Canopy employee drives no more than 2-5 miles per day.
The Pros park a company-issued Ford F-150 with a 12-foot trailer in their driveway. The fleet is managed by Enterprise Fleet Management. Each trailer contains a standardized setup of a 48-inch John Deere zero-turn mower, Stihl handheld tools, a Honda walk-behind, a sprayer, chemicals and nearly 250 other tools—everything needed to perform any task.
When the Canopy Pro starts the day, he or she simply hits a clock on the Canopy app downloaded on a company-issued iPad or iPhone. This sends the automated message letting the first client know he’s on his way. It also notifies the command center that the employee is reporting for duty.
COO Keith Freeman, who spent years with TruGreen LandCare, says the traditional landscape model creates a route system that resembles a web and prioritizes the customers closest to the shop because it costs the company man-hours and fuel to reach customers who are further away. The Canopy model lets the company offer an equivalent experience to all customers without losing efficiency.
“Now, we have someone embedded right there near the customer,” says Freeman. “If we have a service call or a customer that requests a meeting, we can do it within hours, which simply delights the customer. In a branch-based model, it’s a lot more difficult to pull that off when customers are further away.”
Built to scale
Part of Canopy Lawn Care’s growth strategy hinges on its structure—the foundation for which is the Canopy Pro, company lingo for a production staff member. Here’s the current structure, which CEO Hunt Davis says will change as the company expands. For example, he foresees the Market Leads eventually reporting to a regional manager.
How they’ll grow
While the company continues to bring on new Canopy Pros, its national growth plan relies on entering new markets through two types of acquisitions. The first type is acquiring residential maintenance accounts from full-service or primarily commercial companies that are looking to divest this segment of their businesses.
Daniel Currin’s Greenscape, another Triangle-area company, is an example of this first type of company. Founded in 1979 by Currin’s father, Michael, the original business focused on residential construction with maintenance on the backburner.
Once Currin took over and partly due to the recession, the focus quickly turned to maintenance and commercial accounts. Raleigh came out of the recession earlier than most, Currin says, and the company ballooned by $5 million from 2011-2016.
In 2016, Greenscape brought in about $15 million. Still, the residential part of the business only represented about $1 million. This side of the business was going through what Currin calls “a slow death.” He wanted to sell it off, but he didn’t see another company in the area that could take on the work.
“We just didn’t have an exit strategy,” he says. “We decided we weren’t going to invest in this business anymore, but we’ll still take care of the customers. It occurred to me that when you do that, the customer isn’t important. You’re just doing the minimum from month to month.”
He started having coffee with Davis as peers leaning on each other for advice. Shortly, he realized there was an opportunity here.
“Here was this guy who’s trying to do (residential maintenance) super well,” he says. “You have this guy saying, ‘We are going to do the best we can, with the best trained people, the best technology, the best trailer and the best equipment.’ Here we are, we just want their money. It’s a horrible business plan. So I thought, ‘Man, my (residential) customers would be better off with the Canopy team.’”
So, Canopy acquired Greenscape’s residential accounts in late 2016. The company is not disclosing terms of acquisition deals, and Greenscape’s deal is unique because Currin is serving as an investor. He says the sale was a short-term risk, but a chance to focus his company in the long term.
“Now when we get a residential call we say, ‘No problem, we will just switch you over to Canopy,’” he says. “It doesn’t take much time—no visit, not even a qualifying conversation anymore. Now, we can put that time towards future sales.”
Grass Monkey, mentioned earlier, represents the second type of company Canopy wants to acquire—businesses with $1 million in revenue or less.
Davis believes Canopy can offer these companies a service. He says many landscape professionals just want to be in the field getting dirty—not in the office stressing about cash flow. His offer is this: Canopy handles equipment, capital, marketing, taxes, generating leads, hiring, training and on boarding—and you get back to what you do best: landscaping.
“We don’t talk to landscape companies who need more customers; we talk to landscapers who need help running their business,” says Davis. “We’ve created an end-to-end solution that takes the business side off the table and enables our guys to do the work that they love to do.”
Photos: Jason Arthurs, jasonarthurs.com
