Business Value and the Human Connection

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What happens when you strip commerce down to its essence? In this thought-provoking conversation between industry veterans, we explore the fundamental truth that all business boils down to two people exchanging value—and everything else is just overhead.

Steve Clegg opens with a powerful framework: the economy only functions through human exchange, yet we've built towering hierarchies of "rent-seekers" atop these simple transactions. Through cryptocurrency and AI, he envisions a future where these layers disappear, returning power to buyers and sellers. His work with Zentoro has achieved remarkable 98% accuracy in predicting customer retention through transaction patterns, revealing that frequency matters far more than transaction value.

Venky Lakshminarayanan brings his expertise in value management, describing it as "orchestrating business functions to maximize customer value." He challenges listeners to question whether they truly understand what problems they're solving for customers. His insights on how value differs between enterprises (revenue, profits) and individuals (recognition, quality of life) provide a framework for aligning business objectives with human needs.

Nick Mavrick from Built Data completes the picture by exposing how poorly most organizations support their field personnel with actionable market intelligence. He describes a world where salespeople lack basic knowledge about customer prioritization and market coverage, resulting in missed opportunities and frustration on both sides of the transaction.

Among the most practical revelations is the "50-50 rule"—research showing that conversations where both parties speak equally are dramatically more likely to result in action. This golden ratio applies whether you're a doctor with patients, a manager with employees, or a salesperson with customers.

The discussion also touches on the legacy burden of enterprise systems like CRMs, which have become expensive obstacles rather than value creators. As AI enables more agile alternatives at a fraction of the cost, businesses face a critical decision point: continue with systems that deliver poor ROI, or embrace transformation?

Whether you're reconsidering your business model, evaluating technology investments, or simply trying to better understand customer behavior, this conversation offers clarity on what truly drives successful commerce in today's complex environment.

Visit us at LearningWithoutScars.org for more training solutions for Equipment Dealerships - Construction, Mining, Agriculture, Cranes, Trucks and Trailers.

We provide comprehensive online learning programs for employees starting with an individualized skills assessment to a personalized employee development program designed for their skill level.

Episode Transcript

Speaker 1 (00:03):
Aloha and welcome to another candid conversation.
We're going to break some newice today because we got a
four-fer going on here.
There's four of us here onwhich I will strictly be a
conductor or moderator, but I'vegot three very bright guys who
come from different perspectives, and I'm going to go from the

(00:26):
youth up, which means I startwith nick maverick even though
he has the least hair on any ofus, with his company built data,
who ascribes to the theory thatwe have the ability, with data
and analytics, to determine whataction we should take.

(00:46):
And then I'll move up to theVinky, who's got a book out
there on artificial intelligence, but it focuses on value
management, which he calls theorchestration of business
functions within the enterpriseto maximize business value for

(01:07):
customers and I want everybodyto remember that for customers.
And then leading the pack is MrClegg.
Steve is in Chicago and Steve,we're going to focus on Steve's
fundamental truth that allcommerce is related to two

(01:30):
people, a buyer and a seller,and anything other than that,
which is a whole bunch of stuff,is just taking money out of the
transaction and providingburden on those two actors.
But I'm also going to ask himto bring cryptocurrency into it
because we're in a world ofchange and with artificial
intelligence, with robotics,with value management, with GPS,

(01:51):
with built data, there's a lotgoing on.
So, gentlemen, how about westart with you, steve, on the
transaction between two people?

Speaker 2 (02:02):
Yeah, I think that the economy only works the
extent that you have humansexchanging goods and services.
Very much like nature, there'salways an exchange taking place.
In nature it tends to be anoptimization of that exchange.
The human element of this hasover time evolved into a pyramid

(02:26):
of people that are what I callexploitive or rent seekers.
That sits on top of thattransaction and it's central
control or central systems, andinitially there's a need for
that as the commerce expanded.
But it's still two peopleexchanging goods and services.

(02:48):
The introduction of two thingshave really changed that, in
addition to the advances intechnology.
But one of those changes isjust the exchange itself and the
store of value that you can useto make that exchange.
And in the past you've had fiatcurrencies that are subject to

(03:08):
the printing presses of thecountries that produce them and
it's been primarily a basis ofif you want to do business with
the United States or China,you're going to operate in that
specific currency and subjectyourself to, you know, whatever
the irresponsible spendinghabits of that country are, like

(03:31):
our country right now.
The US is running a twotrillion dollar deficit and
we've got some printing pressesthat aren't recording all the
money that's being printed, butwith the introduction of crypto.
Crypto and primarily in my view, that the two coins that are
really providing the, the roador the, the pathway to this

(03:55):
instant exchange, are xrp andxlm, you know, stellar and
ripple.
That allows you to take awayall of the in-between and
actually determine what thevalue is on the exchange of not
only the transaction butcommodities, information.
Anything can be monetized onthat structure and that's pretty

(04:20):
critical.
And the other thing is theintroduction of artificial
intelligence, which allows forthe resources that are necessary
to support that transactionversus exploit it.
So it's removing all that layerof rent seekers that sit on top,

(04:40):
putting the transaction ofthose two people on top of the
pyramid with a support pyramidwhich I think, just looking at
Venky's discussion, is whatwe're looking at is how do we
support that event positively,where everyone benefits and

(05:00):
ultimately the customer issatisfied, but it's also the
customer and the seller benefits, and ultimately the customer is
satisfied, but it's also thecustomer and the seller.
And the beauty of this is that,rather than having this
ever-growing hierarchy ofsupport for an expanding
ecosystem, with the technologythat's available today you can
pretty much set up a viablehuman economy with about 4,000

(05:26):
families.
It doesn't matter where you areit could be inner city, it
could be on Mars but you have aviable capability with energy
batteries, storage of energy andif you're just using the raw
materials that are available,really anywhere in the world or
in this solar system, it wouldbe possible to maintain a

(05:49):
healthy economy where you've gotparticipation of those two
people versus exploitation.

Speaker 1 (05:57):
Yeah, and I think you're right to toss it to Venky
essentially is takingcontinuous improvement, Six
Sigma, 5S, all of the jargonelements and translating that
into creating value in thatupside down, all of the support

(06:18):
functions between the buyer andthe seller and the customer.
And Venky, I don't want to putwords in your mouth, but do you
want to expand on that a littlebit for us?

Speaker 3 (06:27):
Yes, certainly, ron, and I'm glad you asked Steve to
open this for us, because Stevedid what we would call in the
business of value management.
And although this language isused in the world of enterprise
technology and you know this isalthough this language is used
in enterprise, in the world ofenterprise technology and
software, what Steve just did isreally dreaming big, with art,

(06:53):
of the possible, and it isequivalent to creating value out
of nowhere.
But it doesn't come out ofnowhere, it comes from a deeply
latent potential, and I thinkwhat fascinated me was the
simplicity of the definitionthat it's two people exchanging
something that is of value toeach other.

(07:15):
And we've all been in anynumber of discussions with
people who have business ideas.
You know, hey, I have an idea,I'd like to provide a service,
I'd like to, you know, create aproduct, develop a product, and
they rush into talking about Iwould like to do this, I'd like

(07:35):
my product to have thesefeatures speeds and feeds and
whatnot and somewhere down theroad somebody asked them a
question uh, hey, what are wesolving for?
And that happens to besomething related to the
customer.
And so, you know, I take awayfrom Steve's very elegant

(07:56):
definition of, you know twopeople exchanging something
that's value to each other, andthat's where the economy starts
right, and I think that is verycore to what we call value
management as well.
In fact, you know, it seemslike it's some kind of
sophisticated practice.
It's actually not.

(08:17):
It's fairly simple.
And before we start with thisrecording, ron, you said
something very interesting too,which is can we do something,
can we organize ourselves in away that we can provide, be of
value to the other?
And that's the basic questionthat I think we all ask

(08:37):
ourselves as we set out to.
You know, do a business,develop a product, provide a
service or even get to work?
The other person is talking toyou because in a daily
conversation, because they'relooking for value, and so it's a
good idea to ask the questionif somebody has a product to

(08:58):
launch, why does anybody evencare that your product needs to
be there and go from there?
And so the other one I wantedto just touch upon is just
express admiration for Steve'sbeautiful.
You know it is actually awonderful example.

(09:18):
You know, you bring 4,000families together, you can get
an economy going, and that is sowonderful because it is not
just about when everybody isgetting value.
You know there is an economythat thrives on collective value
and that pours back into thesystem.

Speaker 1 (09:38):
So I think there's lots to explore there, yeah, and
I'm going to throw it to younick, because I'm going to build
on steve's transaction betweentwo people and venky's, making
it efficient to take some of thelayers out and what you do with
built data, which I'm going tosuggest is analytics exposing

(10:02):
how poorly we cover a market,how poorly we cover our
customers.

Speaker 4 (10:12):
Can you pick it up from there?
I hope to.
I want to start off by sayingyou know, steve is probably one
of the smartest people, as areyou, ron, of course you Venky,
steve is one of the brightestpeople I've ever met.

Speaker 2 (10:27):
How much did that cost Steve?

Speaker 4 (10:29):
I paid him five bucks .
Well, it happens to be true andyou could say he's a vast
student.
But amazing life story.
I came in through a slightlydifferent lens, which ties to my
answer.
A lot of my life was growingfrom a worker to a manager, to a

(10:52):
vice president and having toinfluence people in very
pedestrian terms, and I learnedit the hard way.
It doesn't come to me naturallyand nor was I seeking to speak
to people in terms that theywould consider esoteric, but the
person in the field, whetherit's a rental salesperson or a
territory manager, are extremelybright people.

(11:15):
They may not have grown upbehind a computer, they may not
know behavioral math theories,and I also think companies say
look, we're hiring you, mr orMrs Expensive Salesperson, and
you're on your own, and theysupport them with tools that
largely make management feelgood about what's in the

(11:36):
so-called pipeline is the bossdoesn't understand the
challenges of the person thatthey've hired and presumably
paid a lot.
Two parties get frustrated andsometimes that relationship
breaks.
What we've come out withBuildData is helping break down,

(11:57):
joining what we call a unifieddata set and completing the
picture and, most importantly,supporting the person in the
field so they have actionablebuyer information, and that
involves a lot of very simplethings, not as complex as the
type of work Steve has done orRon you've done, or Venky that

(12:17):
you've done.
But we spend a tremendousamount of time establishing
proportionality in a market,tremendous amount of time
establishing proportionality ina market.
We do that not because andoftentimes in a market, 10% of
the buyers create 70% of theoutcomes the fleet they own, the
rental products they consume,the parts and service they
consume.
That's not always the rightposition to start in.

(12:39):
It may be the second groupOftentimes in this industry and
we're climbing on the shouldersof people.
So I hate to sound critical, butwhen it comes to buyer
intelligence data, I believe, webelieve, that salespeople and
organizations areunder-supported with low-level

(13:00):
junk food, and so a salespersondoesn't know where to begin his
day, nor can the manager partnerwith that person to telling
them where to begin their dayand take care of the best buyers
in the market.
So there's a fair amount oflack of discipline around
pricing.
Steve talks heavily about thetransaction and the notion of so

(13:23):
.
Do you, ron, about thetransaction is what matters, and
what you can see in a lot ofthe transactional analysis is
short-term thinking they're notlooking at the buyer
holistically.
So we aim to aggregate thatinformation so they have a
holistic picture of the buyer.
Once you know that, you canbring in what they're working on

(13:44):
, what their prospects are forgrowth.
I could go on, but I hope thatlicks a little bit of the
foundation.

Speaker 1 (13:53):
Let me use that as a springboard, steve, over to
Zinterro and your data analyticsrelative to retention and
transaction values and et cetera, because what you've been doing
is absolutely wonderful, and sohas what Nick has done, but
you're putting a motorcycleunder where I think Steve's at

(14:14):
this point with a bicycle.
Tell us what you do withZentoro.

Speaker 2 (14:18):
So for a lot of years , having bought a lot of
companies and financed them, andalso for different things I've
done.
I built models to forecast andusually it was, you know,
looking at historical data,trying to apply that, going
forward with, you know,reasonable success, but

(14:40):
generally looking backwards andgiving excuses on why some
forecast or plan didn't work andmaking excuses and trying not
to blame anybody but myself.
But the temptation foreverybody is to you know, we
didn't make the numbers, whoscrewed up and who can I blame?
And what I've always tried todo is if you really want to lead

(15:04):
, you have to be able to lookforward.
So with Zentoro, especiallywith AI, initially we started
with doing the forecast and thenwe could front run the forecast
with customer satisfaction upfor like three or four months.
We could anticipate theretention rate with some degree
of accuracy.
We could anticipate theretention rate with some degree

(15:25):
of accuracy.
But once we introduced AI, thelast several years we've been
running at about a 98% accuracyand driven on transactions and
customer retention engagement.

Speaker 1 (15:37):
Okay, stop there just for a second.
What do you mean by atransaction?

Speaker 2 (15:41):
Any exchange it could be.
If someone does a consistentexchange of a dollar six or
seven times, they become, you'reretaining them, you've engaged
them.
It doesn't matter how manydollars they spend.
The consumer and the.
It's all about transactions andwhat that experience is.

Speaker 1 (16:01):
So the value of a transaction is less important
than the number of transactions.

Speaker 2 (16:06):
The number of transactions drives that
interchange.
And when you think of theequipment industry, which is the
industry is focused onequipment, well, equipment, new
and used for this industry onlyrepresents 2% of the
transactions.
Use for this industry onlyrepresents 2% of the

(16:29):
transactions.
98% of the transactions areparts serviced into a much
lesser degree, rental.
So it really is.
You know, if I can get them tobuy a filter four or five times
a year and a couple of otherthings.
I have established an accountand they're 100 times more
likely to buy from me the longerI retain them if I have other
services and products to offer.

Speaker 1 (16:49):
Can I?
Can I translate that in adifferent way?
Can I say that what this isleading to is the importance of
the relationship.
You have a better relationshipwith more frequency of
transactions than you do withless.
Is that a fair comment?

Speaker 2 (17:07):
That's fair.
And also what's starting tohappen is people are moving back
to people-to-people contact.
They're being overwhelmed withall the noise in the system and
it's coming back to who do youknow?
So the introduction and time tobring a customer on you're
looking like in the equipmentindustry.
Introduction and time to bringa customer on you're looking
like in the equipment industryyou're looking at it's always

(17:33):
been like a five year to sevenyear period of slowly developing
them.
But once you get to a stableaccount and again it's just has
nothing to do with revenue orhow much money you're making.
It's just based upon a seriesof things, which is that
interaction, the frequency andconsistency of that interaction,
determines stable accounts andwhat the result of that is those

(17:53):
stable accounts by 10 timesmore often spend anywhere from 6
to 20 times more than youraverage at-risk account, and
most companies live on 10% to20%.
Usually when we start with themit's 10% and by refocusing we
can move them up to 30% to 40%of their customer base will be

(18:15):
stable and they triple theirbusiness.

Speaker 1 (18:18):
And that's relating back to what Nick does with
built data identifying thetransaction level.
But I think, interestinglyenough, now Venky comes in with
a completely differentbackground and I'm going to use
my interpretation, venky, andthen you correct me as I go on.
I think you were very in deepin project management and

(18:40):
systems at a time that the worldlived with features and
benefits I can fool you with oh,I got the best bandaid on the
planet, I've got the bestCoca-Cola on the planet.
But that led you to the valuemanagement proposition, saying
wait a second.
Features and benefits aren'tthe real deal.
The real deal is what Nick andSteve have been talking about

(19:03):
the value that you're providingto that consumer or to that
supplier.
Am I right in explaining yourbackground?

Speaker 3 (19:11):
Yes, ron, you're right, and Steve just talked
about customer success withoutusing those two words.
It doesn.
You know, it doesn't matterwhich domain or which business
that you know, you're talkingabout the art and science of

(19:35):
retaining a customer and landingand expanding.
If you want to use that, youknow much abused framing is
actually cheaper to use that.
You know much abused framing isactually cheaper to do that and
to acquire new customers onlyif the business was aware of it.
Number one and number two isthe.

(19:58):
You know Steve talked aboutincreasing the points of contact
, or little, medium and largeservices and products that you
can sell related to yourexisting product and therefore
kind of almost keeping in touchwith the customer and what it
does.
In any industry it could besoftware, hardware or

(20:19):
construction equipment.
Your customer ends up usingyour product and what do they
get when they use your productand utilize your product to the
fullest extent?
They get value, and so customersuccess and value management
have a natural convergence andcustomer success is nothing but
helping your customer achieveutilization and value, and

(20:41):
sometimes it means you have tosell more than the product.
Whether you sell it or youoffer it free.
You know if you sell anapplication, software
application you have to providetraining, whether you charge for
it or you do it free, becauseit's in your vested interest and

(21:02):
in the customer's interest thatyou provide that, so that the
customer gets value.
There's no point buyingsomething and not using it, and
in order to do that, there aremany creative ways to engage the
customer throughout the lifecycle.
But so when the time comes forrenewal, you have an opportunity
not just to renew but to crosssell upsell.
So one of the things I followedwith a lot of passion through

(21:26):
my experience with valuemanagement is customer success,
and so what steve is laying outis a is is broad, broadening the
idea of customer success as itapplies to other industries.
In the world of software, forexample, your North Star is 99%

(21:46):
retention, and then you can seesigns.
How do you know when a customeris at risk?
It's when, number one, you'venot had many interactions.
Number one, you've had somenegative conversations.
But the most telling sign ofall, they're not using your
product, and so if you don'thave anything at that point to

(22:08):
re-engage with a customer, youcan be pretty sure.
In fact, there are companiesthat made a lot of money by
being able to predict the churnrate of companies?
How likely are you to retaincustomers?
So it's a fascinating area andyou know it's been the story of
the software industry for thelast 15 years or more.

Speaker 1 (22:31):
Yeah, right from the beginning.
Actually, venti, you know, inthe early days the guys and gals
were changing jobs every threeor four months and getting 50%
more income until that ran outof steam.
But what I find intriguing isI'm chatting with a person
yesterday who's in the systemsbusiness and I'm complaining

(22:55):
about the employees that areworking within companies that
provide dealer managementsystems that they're now all
software people.
They don't know their client,they wouldn't know that.
They're now all software people.
They don't know their client,they wouldn't know them if they
tripped over them.
They don't know what they do,they don't know how to do it,
but they're interested inelegant solutions.
And her comment to me was youknow, I don't have enough

(23:17):
installers, I don't have enoughcustomer support people.
And I said well, when you makea sale, why don't you make a
deal with that customer thatyou're going to hire one of
their employees maybe two,depending on the size and
they're going to work for youand they're going to be involved
in installations and supportwith other dealers?
And it's a win-win both ways.
The dealer employee is going toget a much broader experience

(23:51):
level and the system supplier isgoing to have a hell of a lot
more practical application.
And so that struck me.
And then this morning I'mtalking to a really good friend
of mine I've known for a longtime and he's brilliant and he's
a software guy and he built anunbelievably good software
package but he wasn't able toscale it because he didn't have
enough money to be able to getsales people there.
So what happened?
He went out himself, he builtthe relationships with all the
clients, and that's northamerica, that's europe, that's

(24:14):
asia, that's south, it's allaround the world.
And I said, well, how the helldid you do that?
He says, well, we don't havethat many clients.
I said, okay, so now it comesorganizationally.
He becomes part of a biggerorganization, and that bigger
organization they want to scale,but they can't without him.

(24:39):
And now we end up withdependencies.
So I'm going to go back to Nickfor a second as an entry.
Here comes CRM.
Crm, when it was first sold inthe market, was for sales
managers to be able to know howmany calls the guy is making, is
he doing his job?
And then Salesforce comes alongand it gets a little fancier.
But now we start seeing abreakdown because Salesforce has

(25:02):
a profile and the dealerbusiness system has a profile,
and those profiles don't talk toeach other.
So now we end up with the dirtydata dilemma that's going to be
hard like heck to be able toovercome.
Nick, am I saying it?

Speaker 4 (25:23):
your mic's off nick mic on, babe.
Oh sorry, that's okay.
Yeah, you said it correctly andyou want me to comment on?

Speaker 1 (25:31):
that please, as you know, how do we get out of that
trap?

Speaker 4 (25:35):
yeah, so great.
You know, with steve and youand venky and I talk to Venky
quite frequently With thisfourth industrial revolution,
with Steve's mind, your mind andVenky's mind, you can help

(25:56):
companies redo.
Crm has become a legacy systemand let me start off with just
two days ago I shared with Venky, spoke to a firm who has
created something similar to CRM, created CRM from a market
leader, and they can make a verygood living at 80% less
charging, and so theseenterprise grade products are

(26:19):
extremely expensive.
They come with three-yearcontracts and annual price
increases.
Now talk about usage.
In many respects, they've justbecome a management decision
that is too embarrassing to ridthemselves of.
And now they have theopportunity that, with AI, they

(26:42):
can.
The opportunity that with ai,is they can and they should.
They should do it immediately.
And um, when it?
When it comes to crm, I don'tknow how we got so far away from
the notion of crm helpingsomebody manage relationships
slash.
Help me remember Steve'sbirthday or Ron's birthday

(27:07):
October 13th, october 13th, sobut help me remember I could
have used CRM for that.
Or help me remember the lasttransaction.
Help me remember something so Ican convey value when I'm
talking to you.
I've just heard more failuresthan successes, and I think

(27:31):
these big Duran you and I talkedabout it the enterprise
salespeople at Salesforce andMicrosoft Dynamics and on and on
and on, make really good.
They make better livings thantheir clients do, and good.
I don't want to say good forthem because I think that's
unfair.
I think they should be notselling their product to

(27:51):
somebody who can't afford to getlost further, and CRM, among
many other systems, has causedmore confusion.
Recently, I met with a verylarge OEM dealer group who's
just installing MicrosoftDynamics in 2025.

Speaker 1 (28:08):
Hello.

Speaker 4 (28:10):
They got consensus.
Think about it.
They had to get team consensus.
God forbid somebody rejects it.
They've got their trainingdepartment spun up.
They are so deep into thisdecision they're not going into
this decision.
They're not going to let go?

Speaker 2 (28:26):
No.
Yes, I think that for a lot ofyears Bill Hewlett invested in a
lot of the deals I did.
So he was on the boards andstuff and his whole view of the
world was that when they startedthey had a window of change.

(28:47):
They could like the autoindustry.
They'd do fixed lines.
You'd put a line in, you'dexpect to last 20 years.

Speaker 1 (28:52):
It needed that long to make money didn't it, steve?

Speaker 2 (28:54):
It took that long to make the money and then they
became variable manufacturing,which brought it down probably
in the mid-80s, where it beganto break even against a fixed
line.
That evolved and it moved downfrom start to finish design to a
finished product.
It's moved down to three years,then two years, then 18 months,

(29:17):
but always, as Hill had said,you never make any money in the
electronics business because ifyou're not investing in the R&D
you'll go broke.
So you're always broke.
It's just this illusion.

Speaker 1 (29:34):
Just to interrupt for a quick second.
1970, I'm just going to put itthat way.
I'm just going to put it thatway 55 years ago I was involved
in putting in place the firstparts and service sales team in
the Caterpillar franchiseworldwide and the qualifier for

(29:58):
a salesman was their handwritinghad to be neat.
Number one.
Number two that we were sellingproduct and giving commissions
on product that weren't evenmade by Caterpillar.
They were outsourced Batteries,for instance, hose and fittings
, that kind of stuff.
It always struck me as funny,but the characterization that I
gave to people was that was it.
It was left to the dealer tofigure out what to do.

(30:21):
So I remember sitting with aguy that was going to go out
into the field as a salesman whoworked for me in the parts
business, and I said okay,here's your customer list.
He said okay, it's alphabetic,john, go through, you'll be able
to recognize it.
We did it by County.
In those days it could havebeen 7,000 customers, for
goodness sake.
Here's the keys to the truck.

(30:43):
It's outside in stall 14.
And then I looked at him funnyand I said there's the door.
How come you haven't left yet?
Get out there and sell.
And that was the extent of thedirections.
So if you go forward, nick, tothe CRM and then go further
forward to sales forecast, Ithink most of you heard me say I
talked to a lot of salespeoplein the last couple of months,

(31:05):
deliberately and saying what areyou going to sell next year?
Well, I don't know.
I'm going to have to wait untilit gets close to the end of the
year.
And I said well, wait a second.
Haven't you got a fixed numberof customers in your territory?
Yeah, don't you know whatequipment they own?
Yeah, don't you know what theybuy in parts and service?
Yeah, don't you have a lifecycle management and on that
equipment?
Yeah, well, how come you don'tknow who's going to buy what in

(31:27):
April next year?
And they look at me like I'vegrown another horn.
We haven't got thinking outsidethis routine.
So when, when we talk I thinkyou've all heard my grade 10
year old example we all go toschool, we're 10 years old and
we do tests for the first two orthree hours.
Then we go home and we comeback and we're assigned a grade
from grade 3 to grade 9 based onour skills and ability.

(31:50):
We don't do that anymore.
And, steve, you get to your 98%, 99%.
It's wonderful.
You and I talked about this.

Speaker 2 (31:58):
That's because the dealer doesn't change anything
Doesn, because the dealerdoesn't change.
Anything Doesn't change.
So this is what's going tohappen if nothing changes.
And like equipment sales and Iwent through this earlier a year
or so ago I told everybody donot take the offers of the
manufacturers.
They're going to push equipmentout on you and dump it into
your yards and you guys run therisk of going bankrupt.

(32:20):
You don't have a balance sheetthat could sustain that type of
burden and that's why thisindustry has all these failures.
So sure enough, these clownsdecide they know better and I
think we're off, I mean onactual unit sales for almost all
the dealers.
We got over 120 equipmentdealers on Zintoro.

(32:41):
We got over 120 equipmentdealers on Zentoro.
We were projecting that they'dsell 1,400 machines.
They came in at 1,406.
I mean, the world doesn't change.
They can have all these plans,but you're moving an army
forward and it takes years tobuild that foundation.

(33:07):
It's already existing in thecustomers you've got and all
we're doing is monitoring thatinteraction, looking at how far
they are from a source ofservice and a bunch of other
factors.
And also we benchmarked theexpectations.
So I mean simple things like ifpeople expect to get parts in
24 hours and you don't tell them.

(33:27):
That's the number one reason forlosing the customer.
But for every new customercoming in they call up and say,
um, you know I need this part,and you tell them you know it's
going to be, you know, five daysfrom now.
Your close rate on that dropsdramatically with every day.
It exponentially decreases thelikelihood of them purchasing.

(33:50):
It's the same thing if, if youhave a time line on purchases,
if every month that goes by itexponentially increases
likelihood of them not buyingagain if they don't purchase
within that window.
So if you don't have a customerand this is where Nick comes in
that is buying and has acapability of buying relatively

(34:12):
frequently and again it doesn'tmatter how many dollars they
spend you're not going to retainthem.
And it takes three, four, fiveyears at a minimum for most of
these customers to switch theirmachines, to switch their
support fully to you as anequipment dealer.

Speaker 1 (34:32):
Let me take that a little further, on the basis
that inventory management,whether it's machines, rentals
or parts or labor, has alwaysbeen predicated on the
investment.
It's the wrong end of the horseto be looking at.
The only thing that's importantis the part you don't have, and

(34:54):
nobody is focused on makingsure that.
One of the principal rules thatI've employed my whole life is
every part everybody orders.
Today, I'm going to find whereit is somewhere on the planet
and I'm going to let them know.

Speaker 2 (35:08):
And how much?

Speaker 1 (35:09):
Well, how much at that point is it's immaterial
when we're talking aboutequipment.
That's 20, 30 million dollarsand I can't get a tire to keep
the truck running.
You know that's a problem.

Speaker 2 (35:20):
You know they never.
They.
We track this and we monitorthe phone calls.
We do this for AT&T I thinkwe're the only ones inside their
firewall, so we're monitoringon the calls.
So if you don't manage theirexpectations, it's their
expectations over ruraleverything.

(35:40):
And price is never asked 'swhat for this industry?
It's do you have it?
And then is it within thewindow and then becomes when can
I get it?
And only four percent of thepeople actually ask for the
price.
Yeah, I often likely the partsdepartment or the guy goes don't

(36:02):
you want to know the price?
And you I had one guy which wetaped said hell, no, give me the
fucking part.

Speaker 1 (36:09):
The other side of that is I say price is only
important when every otherelement of the transaction is
the same Right and you beinginvolved in the transaction,
it'll never be the same.
Vinky, doesn't this fit rightdown your sweet spot?
Isn't this that yeah?

Speaker 3 (36:28):
It does.
Ron, just picking up a threadfrom Nick's book and, steve,
your thoughts.
Data can uncover truths likenothing else.
You gave wonderful examples ofthat.

(36:49):
I was once in a workshop whenthe conductor of that workshop
was saying, hey, please tell us,uh, your strategy for your
product, what do you want to begood at?
And we all wrote down one, two,three, four, five, six, seven,

(37:14):
whatever number of things.
And then she said, uh, what doyou want to be bad at?
And there are many that didn'tenter anything.
I don't want to be bad atanything I want to be bad at,
and there are many that didn'tenter anything.
I don't want to be bad atanything, I want to be the best.
And then she landed the truthon us that intentionally being
good in something andintentionally being bad as in

(37:35):
when you say bad it means it'snot important is the secret.
And what Steve just explainedis to be able to get to that
point and ron, you gave thatexample too.
So it's almost counterintuitivethat walmart's a success and
apple is a success and I'm justrewinding a little bit.
You know, in the historythey've been successes, right,

(37:59):
but what apple is good at,walmart is not, and what Walmart
is good at, apple isn't.
And that's because that is yourgame plan and that is your
strategy.
And how do you take thosedecisions?
You take those decisions basedon data, and so the investment
in uncovering data firstrequires systems that can

(38:21):
measure it, systems that canaggregate it and systems that
can put it together and tell you, like how Steve said, you know
what.
These are the variables thatmatter to you.
If you delay or part deliveryby just four days, you're going
to lose most of your business.
But what have you been workingon.

(38:43):
It's not in your list of whatyou want to be good at.
You want to say, hey, you knowI'm going to discount my product
so nicely and you know I keepwondering why it isn't working
and I'm going to keep buildingmy relationship.
But I keep wondering why itisn't working.
And then maybe my sales guy isbad and I have to fire him.

Speaker 1 (38:59):
So let me interrupt for a second.
Everybody, think about what hejust said.
Think about what he just saidIf I can deliver 100% of my
parts in four days,congratulations.
You're going to lose all yourbusiness.

Speaker 2 (39:10):
Yes, that's what happened.
We had this client.

Speaker 1 (39:16):
Wrong darn focus Right.

Speaker 2 (39:19):
Vicky.
Yeah, absolutely, thank you.
We had this client and theyowned in the office products
market.
They owned Staples andOfficeMax Office Depot.
They pretty much dominated theshelves and they couldn't get
into 60% to 70% of the business,which were these independent

(39:46):
office products suppliers, andso we looked at this and we did
two benchmarks.
We looked at first the dealerand then we looked at the end
buyer.
So starting with the end buyer,the end buyer, no matter how big
the company was, whoever wasbuying was buying, usually for

(40:07):
about 40 people within a radiusof an office and a copy machine.
And the person buying it didn'tmatter what their title was.
It was the most reliable personin that group, it could be the
janitor, it could be the CEO,and the average order very tight

(40:28):
, variable was $250.
And because they had limitedstorage, so the frequency of
purchase was determined by whattheir use was, so they could be
buying $250 every day or everyother day or every week or month
, but it was $250.

(40:49):
So we dug in.
Then we started asking the, webenchmarked the dealers, the
independent dealers, and wefound out that they only carried
four days of inventory and theyonly carried things that they
could roll in four days, soeverything else they were

(41:14):
purchasing from other sourcesand that was so.
It turned out that the end user, it turned out that the end
user, the trigger for thepurchase, was copy paper and
toner, and this company, it wasthe largest purchaser of
finished paper in the world.

(41:35):
And they did not have a copypaper line.
Imagine.
So we got them into selling agood, better, best on copy paper
and they finally penetrated.
But they couldn't get into themarket because the fastest they
could deliver out of theirwarehouses was seven weeks.
The independent dealer wasexpecting delivery within 24

(41:59):
hours.

Speaker 1 (42:00):
Yeah, one of the things that Benke said and I
don't want us to forget it isthat data uncovers truth and
everything that we are doingtoday, all of us is predicated
on good data and I'm scared todeath of the quality of the data
that I'm dealing with.

(42:20):
If we, if we look at everythingthat's been going on, from
physical plant to the cloud,from somebody ear telling us
what's going on versus sensors,even so far as thermometers and
the fluids on the, on the metal,all of the things that have

(42:41):
been going on we have less than50% of the dealer management
systems that are employed in theequipment world is actually
used, and that's what Nick wastalking about that at some point
in time, if you don't get acritical mass of the software,
you're out of there.
There's no value to you anymore, and that goes right down the

(43:05):
throat of what vinky's talkingabout.
What are we trying to do?
And steve just exposed it.
Nobody knew what that problemwas because we weren't analyzing
the problem.
We just continued to do whatwe've always done and
everybody's happy and everyone'sgot an opinion.

Speaker 2 (43:23):
Everyone's got an opinion and opinions overrule.
I mean, I tell people that youknow, opinions are like some
other appendage, I know, andit's worthless and I really
don't really want to hearsomeone's opinion.
I'd like to know what thecustomer thinks is important and

(43:46):
then weight that and generally,when you look at we did this
with you know people interviews.
We videoed a whole bunch ofmanager and employee.
You know interviews.
They wanted them to dosomething and then we tracked to
see did they actually do it?

(44:07):
Did they make a change?
And so everyone's got all theseopinions on what does it take
to make a change when you'retalking to somebody?
And the only thing that reallymattered I could call them all
sorts of names, they could callme all sorts of names or
whatever.
It didn't make any difference.
The only thing that matteredwas a 50-50 talk track.

(44:29):
The closer they were to 50%talking, the more likely that
that employee would actually dowhat you're trying to get them
to do.

Speaker 1 (44:41):
Yeah, and one of the things that's interesting for me
is my belief on management isthat we've got to.
Everybody has to understandwhat we're trying to do, and
then everybody has to agree thatwhat we're trying to do is the
right thing to do, but we missthe element of allowing the
fight to take place.
I don't agree with you.
That isn't the right thing todo and we don't let that fight
take place.

Speaker 2 (45:07):
As a result of that, we get a lot of people nodding
their heads saying, well, theyjust go along with it and walk
away saying that idiot, that'sexactly right.
But we did this for Merck ondoctors.
They wanted to know why certaindoctors had all the patients
and had the patients followwhatever drug protocol they're
prescribing.
So we looked at the doctors andthey're trying to figure out
where should we put our money.

(45:27):
Should we put it in videos?
Should we put it in brochures,posters on the wall?
What made the difference?
Why did these doctors have a lotof patients and why were they
so successful at getting peopleto follow whatever they're
prescribing?
And so what we found was theaverage doctor in the session

(45:53):
would talk.
Usually it was 20 minutes andtwo minutes was really spent by
the patient.
The patient was usually over 55.
They had a language barrier,they were stressed out, a bunch
of other factors and the doctorwould talk for 18 minutes.
Wonderful, it turns out thedoctors that were successful all

(46:15):
used anatomical models, so theyhad this anatomical model.
So it wasn't me talking to youor pointing something, it was
here's your condition and thisis what we're going to fix it.
So we got Merck to go out andsell anatomical, give away

(46:36):
anatomical models to all thedoctors, thinking that that was
the answer.
But once we did this employeenew manager thing we realized
the anatomical model gave thedoctor and the patient the
opportunity to talk closer tothe 50-50 golden exchange.

Speaker 1 (46:57):
Yeah, yeah, you see that You've been involved in
systems to one way or anotherfor most of your life, haven't
you, Venky?

Speaker 3 (47:06):
Yes, and Steve, that you know, ron, that golden
balance that Steve is talkingabout, I think we spoke about in
our podcast in a few days ago,which is the importance of
seeking to understand beforeseeking to be understood.
And you know, value isexchanged in conversation too,

(47:31):
not just, you know, when youknow a product is exchanged for
money and there's, you know,there's something that Nick has,
I think, on his LinkedIn pageNick, I probably let you say it
the saying about data.
You know, everybody has bringdata.

(47:52):
I'll let you, you know, talkabout that.
But you know, in a conversationwhere you are truly curious,
you are, you know, letting theother person have engagement.
You know, present ideas, havediscussions.
You know, even to the earlierthread of discussion where you
know there's company objectivesand priorities and you just

(48:17):
simply roll it out and you tellpeople that this is what we're
going to do.
They're more likely to do it ifthey understand that it makes
sense, if they understand thatthere is personal value for them
in doing that.
So one of the things we do inthe book is to talk about what
value means to different people.

(48:39):
If I'm a company enterprise,value is revenue, profits,
reduced cost, productivity, allof that stuff.
If you are an individual, valueis financial reward,
recognition, you have a betterquality of life, all of that,

(49:04):
have a better quality of lifeand all of that.
And this very simpleunderstanding.
If it is a small group ofpeople maybe it's a department
within a company they're lookingfor a set of goals.
That is a subset of theenterprise goal.
So the enterprise, functionaland personal value, if you are
aware of it.
And when you are talking to avice president, you will be.
And who's the vice presidentwho is worried that you know
he's going to make he or she isgoing to make a $10 million

(49:26):
investment in the technologythat you're selling to them and
they're worried that you know ifthis fails, I'm going to lose
my job.
You want to talk to thatanxiety and concern.
You don't want to say, hey, youknow I'm going to deliver these
benefits, look at all thisamazing value and not address
that primary concern.

(49:47):
No matter what, Nick, you as asenior director in this company,
you're going to become vicepresident if this project
succeeds.
And then Nick is like, yeah, Iwant to do this.
So, just, this is simple.
This is actually not complex atall, but so much, so often in
the conversation, whether it'sbetween a customer and a vendor,

(50:07):
or between two people workingin a company or even in life in
general, there is no clarity ofvalue.
Generally taking, as Steve, yousaid, either presenting
opinions not backed by data ortaking shots in the dark, saying

(50:29):
maybe we'll pray and pray andone of these things will work,
or you use authority to say, hey, this is what you would do, and
then tomorrow, when it's notdone, you don't even know why it
didn't work.
So a lot of value managementagain.
You know the term sounds likeit's a very sophisticated
practice.
It's about common sense.

Speaker 2 (50:52):
And it's just like you're saying, venky, that if
you just ask somebody here's 10things, what's most important to
you, and weight them.
We did this for one of the bighazardous waste companies and
they were thinking it was abarrel the cheapest price at at
the dock, when in fact thebiggest concern was am I going

(51:16):
to go to jail if someone in thisline of handling dumps the
toxic waste in someinappropriate place?
So what they really wereselling was keep me from going
to jail.
And yet the sales team thoughtthey're selling barrels of
processing hazardous waste offat the end of a dock.

(51:38):
It was just, I mean, nice, goodexample.
Yeah, yeah, like it was just.

Speaker 1 (51:42):
I mean Nice good example, yeah yeah.
And the other side of thatwhole thing if we're very
skilled at what we do and I'mgoing to put it into a sales
context, it could be leadershipmanagement, whatever If we're
really good at selling, thecustomer buys.
We don't sell Right because weleave them in discussions with

(52:02):
questions listening 50%.
Yeah, there we go, that goldenthing.
And, nick, you're looking downthat throat all the time.
And your customers, the dealers?
They're not even conscious ofit until you expose them to it,
am I right?

Speaker 4 (52:25):
I don't want to overplay what we do because you
know it's easy to climb on theshoulders of greats and real
entrepreneurs that are riskingcapital and these are tough
decisions and I, you know, I cansay I have the luxury if our
team does of looking in from theoutside.
We see some huge chess piecesbeing moved.

(52:47):
We're going to strip off someof these names not to be coy,
but this is an example.
We all know the data centerspend is huge as a percent of
construction.
Let's say it's 3% of allconstruction spending.
Give or take you can argue thenumbers.
We know it's going going todouble, triple in the next few
years.
It's huge.

(53:08):
The, the companies, um, atdinner with, uh, the gentleman
responsible for I'm gonna say alarge company and forgive me,
just I'm stripping things outbecause it would be clear he's
going to present to.
He's one of two companiespresenting to the call it the

(53:35):
biggest creators of these datacenters.
The game is close to beinglocked up and if you have to
radically cut your costs, you'dhave to radically embrace AI.
You know, steve Swarcastle, ron, your training programs, jay
Lucas', bring in the Talent is.

(54:00):
There are some major playerswho are, in essence, are going
to control the growth sectors,at least for the near-term
outlook.
However, that's defined five,ten years.
Data centers plus energy.
The rest of the market thatthis person also addressed is
extremely volatile, seeminglycyclical.

(54:21):
Of course it varies bygeography, but that market is
incredibly price sensitive.
We know there's a fair amountof.
There's zero hour new equipmentslash, used equipment being
sold.
There's a glut of inventory.
The market is in a significantstate of distress.
So how do you plan for radicalchange?

(54:42):
I don't know.
I mean, I know they can be donewith the three of distress.
So how do you plan for radicalchange?
I don't know.
I mean I know they can be donewith the three of you.

Speaker 1 (54:50):
Well, we've got to be careful.
Radical change.
I love the term and I call itrevolutionary reform.
Every single aspect of our lifeneeds revolutionary reform.
Every single aspect,continuously, and as we age,

(55:12):
going from infancy to preschool,to grade school, to middle
school, to high school, totechnical school, to university,
blah, blah, blah.
Our perception changes, ourneeds change, our appetite
changes, and then, in the midstof that, life interjects itself.

(55:33):
Yeah, now we're back to the twopeople.
You fall in love with somebodyand and that begets other people
, which is kind of it.
All of a sudden, you need ahouse and now you got debt.
Oh, wait, a second.
I gotta get a car to drive towork, because I'm in the suburbs
, because that's the only placeI can afford to buy.
Whoa, wait a second.
Interest rates are too high.
I can't do that anymore.
So life becomes difficult andthis radical change nick.

(56:00):
The number of people on theplanet that could conceivably
create radical change.
That's so few people.
Look at Elon Musk by himself.
Look at Charlie Munger, look atJeff Bezos, look at, you know,
sam Walton.
I mean all of these guys are.

Speaker 2 (56:23):
It wasn't radical either.
It took them exactly right Twoyears.
And that's the.
You know, when I was at the AirForce Academy, I said how come
a lot of these innovationshaven't been introduced in an
aircraft?
Because we were doing advancedaerodynamics, you know, we had

(56:44):
the only really viable windtunnels for the industry.
So all the major scientistscame out to the academy.

Speaker 1 (56:52):
Oh my.

Speaker 2 (56:53):
So you know Kelly Johnson, all the guys who were
designing all the aircraft atthat time, and so I can't
remember who it was.
But he said I said, how come ittakes so long before this stuff
is introduced?
And he said, well, we have towait till all the engineers die
off before you could change.

(57:14):
It takes 20 years, so youalways have.
I mean, it's shorter, that'swhat Bill Hewlett was saying.
It's gotten shorter, shorter,that's what Bill Hewlett was
saying.
It's gotten shorter.
But the technology itself, theidea of flexible manufacturing,
existed years and years beforethat.
It was just not implemented.
It's the same thing.

(57:39):
When I got into steel, thetechnology for continuous
casting was developed in theUnited States back in 1954.
And in the late 70s Iresearched this and I went out.
I bought a bolt company andthen transformed one of their
plants into a continuous castoperation Kankakee, illinois and
then went out and converted abunch of other plants.

(58:01):
We ended up taking over 25% ofthe rebar market in North
America.

Speaker 1 (58:06):
That's not exactly a small step.

Speaker 2 (58:10):
But the technology was there in 1954.

Speaker 1 (58:15):
Yep, and my illustration on that same thing
is from the steam engine to theelectric engine, it takes 20
years for the generation ofmanagement to go away that are
stuck in.
The old and the younger peoplecome in, and what I'm seeing
today is this transition ofleadership has been delayed by
about 10 years.

(58:35):
So people that would rightfullybe leading companies today that
are in a 60-65 range, 55-60range they're leaving because
their boss, the people abovethem, aren't changing.
They're not going away, they'restill in place.

Speaker 2 (58:50):
They're living longer , and also where you always had
somebody that you're training,the apprentice type of approach,
that's all gone.
There's no entry-level jobs, soit's like bringing somebody up
a silo and saying, okay, now youknow how to load luggage, now
go to the cockpit and fly thisplane.

(59:11):
You need a new book, thank you.

Speaker 3 (59:15):
Yeah, no, I mean, there is plenty of ideas in this
room to share as a book.
You know, steve, you remindedme of one of the many
conversations either.
In the technology industry,which has grown more rapidly
than people can learn theability to manage, people are

(59:38):
thrust with glory and they getpushed to the top, and I'm not
pointing a finger at anybodyelse.
I, you know, partook of this.
You know the fortune of beingin the technology industry, and
before I knew, I was a seniorperson in the company and I
think I was too young to Iwasn't ready.

(01:00:02):
So my manager, who'd spent, youknow, for a greater number of
years, he said you know,congratulations, this is great.
And you know the thing is,anybody who was in the right
place at the right time couldhave gotten to where I got.
That's really the honest truth.
I'm not trying to be overlyhumble or modest, because I

(01:00:23):
realized this.
Because when my manager askedme, like hey, how many difficult
years have you had in these 10years, I said no, you know, it's
all been.
You know great, because theindustry is booming.
And so, you know, all of us andit's not just me, many others
succeeded along with me as well.
And he said you've not had theopportunity to grow with

(01:00:46):
challenges.
Right, you guys have been likepushed glory and, sure enough,
the next 10 years was full ofchallenges and thank god I had
the opportunity to learn, butyeah, and then you know, you
learn all the lessons all overagain, and you know you need a
bit more of an open mind.
But, steve, to your point, oneof the conversations I had with

(01:01:10):
a C-suite executive I wasworking with, I said you know,
hey, what do you want from yourleadership team?
You know they're, all you know,working very hard and you know
they seem to, you know, bepassionate about what they do.
She said, oh, you know myanswer is going to be really
boring, but I think it's theright answer.

(01:01:30):
I need them to be generalmanagers, and nobody's trained
them to be general managers.
Nobody's taught them theability to coach, the ability to
challenge their team, theability to lead with priorities
and teaching each other to sayno to things that look very

(01:01:53):
attractive to do but are notaligned with priorities and any
number of things, and so it islacking.
In the technology world, youfind a lot of people who are
very creative, who are veryproductive, who can do a lot of
things, build a lot of things,but expertise and leadership are
two different dimensions.

Speaker 2 (01:02:11):
Also, entrepreneurs are not.
So Ron and I, along with DavidJensen and Reflective
Performance, we've been lookingat personalities reflective
performance, carlson We've beenlooking at personalities and it
turns out at least so far theresearch we've done it clearly
identifies that to have asuccessful management team you

(01:02:34):
have to have three people andthey have to respect one another
.
One of them has to be the drillsergeant over my dead body.
Is this going to be a change?
This is the way we do it andjust pounding away.
Then you have to have somebodywho's open to change, but
generally that person cannot bethe CEO because they're too

(01:02:57):
eager to jump to the next thingand not willing to put in the
structure to support it.
The manager has to be in themiddle.
It's just as you're saying,keith, that you've got to have
somebody who is a generalmanager that's open to change
but also value structure and canintegrate those two
personalities and generallyrequires these three people.

(01:03:19):
So when we ran this against oneof the big dealers that Ron's
familiar with, we said, okay,let's take the profiles of these
management teams, the top fivethat we think and we'll take the
top five performers as far ascustomer retention, stable
accounts and a couple of othercentral metrics and we're five

(01:03:42):
for five.
It was 100% accurate.

Speaker 1 (01:03:49):
So let me put a bow on it there, because I think
we're going to have people thatneed to go to the bathroom that
are listening, and thisobviously needs to be followed
up again with another discussion.
But I think everybody gets theidea that data is going to lead
us to truth, the relationshipthat you have between the buyer

(01:04:13):
and the seller is the criticalelement, and that you got to
have everything aligned suchthat it all aims at customer
satisfaction, such that it allaims at customer satisfaction.

Speaker 2 (01:04:27):
Did I say it right guys?
Yes, and knowing what theirexpectations are and managing to
that is critical, and that'swhere people miss.

Speaker 1 (01:04:36):
So, gentlemen, thank you very much.
Thank you, steve Nick, andthank everybody who's been
listening.
I hope you got a lot out of it.
Listen to this a couple oftimes, because there's a lot of
content here.
Thank you very much forattending and I look forward to
having you at another CandidConversation, mahalo.