February 10, 2025 • 59 mins
Ever wondered how the machinery repair industry could mirror the convenience of hailing a ride? Meet Alex Kraft, the visionary behind Heave, a game-changing platform that's redefining how heavy machinery repairs are conducted. With insights drawn from his journey from a traditional heavy equipment dealer to launching an on-demand service, Alex shares how Heave addresses long-standing pains in the field service sector. Discover how this Uber-like model is swiftly connecting skilled independent technicians with customers, effectively addressing the slow responses and inefficiencies of OEM dealers.
We get into the nitty-gritty of optimizing labor efficiency and how Heave has claimed a significant share of technicians' labor hours. Our conversation uncovers the strategic maneuvers that have allowed Heave to expand into more complex repair jobs without compromising on their hallmark rapid response times. With a nod to historical shifts in the industry, Alex reflects on what it takes to keep pace in a market that has long suffered from a lack of competition. From Napa Genuine Parts to new service paradigms, we examine the landscape changes that are opening doors for innovative solutions like Heave.
Quality control and technician marketplace dynamics also take center stage as we explore the challenges of scaling a technician network while maintaining excellence. Hear firsthand about the strategies to balance supply and demand, ensuring both technicians and clients benefit from this revolutionary approach. Whether you're interested in the operational intricacies of repair services or the broader implications of Heave's expansion into cities like Atlanta and Nashville, this episode offers a comprehensive overview of how Heave is poised to reshape the machinery repair industry.
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.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Aloha and welcome to another Candid Conversation.
Today we're going to have alovely discussion, a lovely
conversation with a guy by thename of Alex Kraft.
He's written blogs for us, he'sbeen on podcasts, he's the guy
that is revolutionizing customerservice for repairs and
(00:27):
maintenance, and that's all I'mgoing to say at the moment.
So good day, mr Kraft.
How about you go backwards alittle bit and tell us a little
bit again about your backgroundand how you got to where you are
now?
Speaker 2 (00:45):
Aloha, ron, good to be with you.
I feel like this is our annualcheckup From the neck up.
Yes, so the very quick versionworked for a heavy equipment
dealer for almost 20 years for aheavy equipment dealer for
(01:06):
almost 20 years.
Then dealer was sold.
I worked in all the differentdepartments in the dealership so
I had a wide exposure to allaspects of the business.
Started around, covid started acompany called Heave.
We started with a littledifferent business model than
(01:26):
where we ended up, but then inlate 2022, early 2023, we
pivoted our business to fieldservice and then it was all
systems go from really from dayone, which is awesome and so
(01:47):
easiest way to describe it isUber for heavy machinery field
service.
We refer to it as on-demandservice, so customers can if I
have a wheel loader down in thefield, instead of calling a
dealer, what if you could go toa website or an app and see
(02:09):
available heavy machinerymechanics near you with their
rates published and you can booksomeone to come fix your
machine?
Speaker 1 (02:19):
That's what we do.
And from 2022, 23,.
When you started, let me say,when you pivoted, you had nobody
in the field service on-demandbusiness, correct?
That's correct.
And today you have 20 plusemployees, correct, we do, yes.
(02:40):
And hundreds of technicians.
Well, forget the hundreds oftechnicians for a second.
What do the 20 people do?
Speaker 2 (02:49):
A variety of roles.
So we have a field sales rolewhich I would say most closely
resembles, like a dealer PSSR,and that's really what a
salesperson is for Heave.
You think about it in thetraditional PSSR role.
We have customer success people, so like they work behind the
(03:15):
scenes to make sure thatcustomers are having a great
experience.
So they'll do things likemaking sure that the technician
is communicating every step ofthe way with the customer.
They can monitor the textmessages in our app.
You know they make sure thatcustomers are comfortable,
(03:38):
they're getting, like I said,the communication, and making
sure questions are answered,Like sometimes like hey, have
parts been ordered?
You know they'll step in andorder parts if need be.
We have software engineers.
We have a team of six softwareengineers, all in-house that
build all of our technology.
And you know we have marketing.
(03:58):
So that's the bulk of our team.
Speaker 1 (04:03):
And now shift over to mechanics.
How many mechanics would yousay use your system, say, at
least once a month.
Speaker 2 (04:13):
We're in the hundreds now.
Speaker 1 (04:15):
Good for you.
Good for you.
Why do you think this has beenso successful?
Speaker 2 (04:26):
Well, you know you have to have a few things.
Luckily for us.
The first thing is the pain ofthe customer.
You don't have to convincecustomers that field service is
a need that's overwhelminglyaccepted.
(04:47):
Um, you know, they're, they'renot happy with the.
What has been the experiencefor however many decades, so
that's the biggest thing, thatthat has helped us be successful
.
Um, you know, right place,right, successful, right place,
right time a little bit.
(05:08):
The good thing for us too isthat there's plenty of
independent technicians thatexist.
We haven't convinced anyone toleave a dealer to go independent
.
These skilled technicians haveexisted for a long time.
They've just been largelyinvisible to the marketplace.
They might know a couple ofcustomers here or there, but you
(05:32):
know.
So both sides have existed andboth sides have had certain
pains has been what I justdescribed.
They're not marketers, theydon't really have websites.
They've relied on word of mouthto get their customer business.
And so we come along and weshow them all of the customers
(05:54):
that need service and when, andwe give them access to just a
wider range.
So they don't have to marketand they don't have to drive job
site to job site with businesscards handing them out to get
business.
So that's, I would say, that'swhy we've been able to be
successful, is that there'spains on both sides.
Speaker 1 (06:17):
Yeah, I think that's that's pretty good
characterization.
Why do you think the dealershaven't looked after this market
such that the opening existedfor you?
Speaker 2 (06:32):
I think it's very clear there's a couple of things
.
Having worked at a dealer,unfortunately the economic
environment lends itself tostasis and you just, frankly,
(06:53):
don't have to, you don't have toimprove.
So if you are the such and suchdealer in this territory, no
one else can sell that productor service that product in that
area.
So you have a lock on it andthat breeds a culture of, well,
(07:16):
hey, those customers have tocome to us, and so they've never
really had to addresscompetition for service, and so
that's been deeply rooted for along time.
And so that, and with that thishappens in all the other
(07:37):
industries too.
Right, Like I think the dealerbusiness model is very similar
to the cable companies.
You know, if you I live in Tampa, if you move to Tampa and you
want to get digital cable, nowpeople might laugh because
streaming has basically killedit.
(07:57):
But if you wanted to getdigital cable, there was only
like three providers, that's it,you know.
And the same thing if you wantto buy a deer or cat or Komatsu,
there's only a couple peoplethat you can buy that machine
from and get serviced.
And so that is why there's beenreally no conversations or
(08:19):
focus on hey, are our customershappy?
Are they satisfied?
How can we be better?
Because they've never reallyfelt threatened before.
Speaker 1 (08:29):
The other thing that comes back.
I think I don't want to putwords in your mouth, but I'm
known to do that.
We're equipment houses, we'renot product support houses.
The car dealers sell cars, wesell machines.
The car dealer has a partsbusiness, has a labor business,
(08:55):
but it's not the whole business.
And there's a whole bunch ofindependents in the automotive
side, or on the marine side, oron the on-highway truck side, or
on the lawnmower side, or skidsteers, loader backhoes,
whatever the hell you want totalk about.
And yet the money is made inparts and service, not in
(09:16):
equipment.
That confuses me, because thepeople that run these businesses
are pretty smart, alex.
Speaker 2 (09:26):
They are.
I think the one thing that'svery important to mention is
that the service business isvery difficult.
So I think that plays into it.
It's brutally difficult.
Yes, there's more margin, butthere are so many more things
(09:47):
that can go wrong.
Is it hard to sell equipment?
Yes, it's hard.
I'm not saying it's easy.
I started selling equipment.
I wasn't very good at it buttheoretically I could go make 10
customer calls today and Icould sell something you know.
But think of all of thedifferent moving pieces, because
(10:10):
service and parts are alogistics business.
You have to coordinate allthese different mechanics that
you have.
You have parts that you have tostock, decisions on what to
stock.
You know scheduling aspect,quality control, service is very
difficult and I think that'swhy there's just not as much
(10:36):
focus on it is because it'sreally hard work and if you're
not excellent at it you willlose money very quickly, and so
it's hard.
Speaker 1 (10:53):
My conclusion was is that the service leadership at a
dealership not justconstruction equipment but
generally are technical people.
Very rarely are they businesspeople.
As a result of that, fixing amachine, getting it back to the
customer, is the only thingthat's important.
(11:14):
They don't really give a hootas to how much it costs.
It's understood it takes thatmuch to get it done.
Here's the bill.
How come you want to complainabout it and not pay it?
And I think the customer hasshown that they don't like that
approach by leaving thedealership.
First place they left was inmaintenance.
(11:35):
The dealers back in the 60s.
Dealers back in the 60s wereconfronted with a broad range of
new products to deal with andhad to back off on maintenance
because they had to keep up withwarranty on the new machines.
(11:55):
You know, if you go back toWorld War II, we had tractors.
We didn't have a lot of rubbertire loaders.
We didn't have any excavators.
Now, none of them were made inthe United States, they were all
made in Europe and Japan.
Everybody, I think, got blindto the reality on the ground.
(12:17):
I guess the fundamental flaw iswe don't have any tools that
measure customer satisfactionthat are meaningful.
Your three cable examples.
It's a perfect one, becausetelevision is an exact model for
this, and so is Uber and Lyft,although I like your term on
(12:39):
demand.
Whatever you want, we're here.
Whenever you want it, we'rehere.
Speaker 2 (12:50):
Where do you go next?
I mean, our mission is to be anationwide service provider.
That's pretty unique for allbrands.
So you know some cool things.
Now that 2024 is wrapped up,we've fixed over 100 different
brands of equipment since westarted in 2023.
I think that's something we'rereally proud of, not something
(13:11):
that I necessarily expected.
You know, when we started, itwas like very basic.
You know earth moving equipment, because that's what I knew.
You know we were a dirt house,so I know excavators loaders we
didn't.
Volvo didn't have dozers, butyou know we were a dirt house,
so I know excavators loaders wedidn't.
Volvo didn't have dozers, butyou know we were just.
We were focused on repairingyou know that type of of of
(13:32):
those products.
And then, quickly, what startedhappening was customers would
use us and then they would askus hey, do you have, do you have
techs who can fix generators?
Do you have?
Hey, do you have technicianswho can fix cranes?
What about uh on highway trucks?
What about?
And you know, our marketingmanager, uh, was creating some
(13:54):
materials and she came to me oneday.
She's like you know, we fixeduh at the time.
It was like 85 different brandsof equipment and I didn't
believe her and I was like, no,no, there's no way.
I think you're confusing thatfor something else.
And then she came back to mewith all the logos and I was
like, oh okay, this is prettycool.
(14:15):
So, for what's next is just,yeah, we started in Florida,
then we expanded to Texas, nowwe're in Georgia, north Carolina
, tennessee, we're in Indiana,of all places.
We do some work in Ohio.
We want to expand our footprintin Ohio.
It makes sense for us to do so,meaning when we have enough
(14:43):
talented technicians to supportcustomers in a certain area,
because we don't.
We don't want to just plant aflag and have one technician.
If we're going to tell customerswe can support them, we got to
make sure we have enoughtechnicians who can respond
quickly, cause we we do veryreligiously monitor response
(15:09):
time, and that's one of the moreexciting things.
Like, for example, we'relooking at 2024 performance and,
like 86% of our jobs inDecember were completed within
24 hours from the customerrequest.
But here's where it gets a lotof fun.
So, as we get more and morebusiness, what's hard is making
(15:34):
sure you have enough techniciansto support the business, and at
the end of last year, I'll giveyou what an average customer
experience is like on Heath.
I'll give you what an averagecustomer experience is like on
Heath, and it's if I am acustomer and I come on and I say
, hey, I need a technician onthis job site.
Within a minute you're going toget a technician first
(15:54):
technician to respond, tellingyou when they can be there.
And then we find that inthousands of jobs it takes on
average four minutes for atechnician to get booked.
Speaker 1 (16:10):
So that is our average customer experience.
Freeze frame for a second Sure.
So somebody coming in on an appor a piece of software on their
laptop or tablet or whatevermakes a request over the
internet and somebody from Heaveresponds within 60 seconds.
Speaker 2 (16:32):
Not from us, no, no, a technician.
Speaker 1 (16:34):
A technician who's affiliated with you.
Yeah, okay, within a minuteyou're going to get a technician
.
Okay, so that transaction, then, between a technician and a
customer is concluded in fourminutes.
Speaker 2 (16:50):
Yes, that is the average customer experience.
Speaker 1 (16:56):
Pretty cool right?
Well, I was going to say whatdo you think that does to the
customer?
Probably shocks the hell out ofthem.
Speaker 2 (17:02):
Most of the time, yeah, yeah, especially like new
ones.
That's really fun, like I was.
I was talking to somebody theother day, uh, and for me it's
never gonna get old when you seea customer's first impression
or first reaction to what we'redoing there, it's, it blows them
away.
We, we were actually like we'rein a phase right now like our
(17:24):
territory or eight accountexecutives like they're trying
to tell customers to wait alittle bit, so they're trying to
tell, hey, give it like fivemore minutes and you'll see more
choices, like you'll see moretechnicians respond.
Because what's funny is likewe're trying to please both
sides and so when things getbooked really, really quick,
(17:45):
it's awesome for the customer.
But then we end up gettingtechnicians who are kind of
upset because they feel likethey didn't have, they don't
have a shot at a lot of thesejobs because they're getting
booked very quickly.
So we have to tow thisinteresting line of keeping both
really, really happy Cause ifyou're, if you're an independent
technician and you get 10alerts in a day and you didn't
(18:07):
get any of those jobs, you'rekind of mad at Heath.
Speaker 1 (18:12):
So let me shift in that direction.
Then let's talk about thetechnicians.
How much of a 40-hour week doyou think they book through
Heath?
How much of a 40-hour week?
Speaker 2 (18:24):
do you think they book through Heave?
Yeah, that's a really goodquestion.
And so we see similar to likecustomer behavior.
So if it's a technician that'snew to us you can kind of see
like they're dipping their toein the water Like I don't know
about this company.
I'll try.
We probably get like 10% oftheir hours and then they do a
(18:47):
few jobs and then they see howeasy things are.
They see that we mean what wesay.
We pay them quickly.
Then it's like 30%.
I would say we now are about80% of many technicians' labor
hours in week like that.
We can't expect more than 80,but that's kind of like.
(19:09):
Our goal is like how quicklycan we get them from that 10 to
80 percent?
Speaker 1 (19:15):
so if they have 80 of their work coming through heave
, what kind of a backlog do theyneed to maintain such that the
customer still gets the responsewe're talking about?
Like I missed the the ultimatequestion and I'll get to it.
We we get a response, first ofall, within 60 seconds.
(19:38):
We conclude a transactionwithin four minutes.
The ultimate question is whendoes that?
You said 80% are done within 24hours.
That implies you're dealingwith jobs that are four to six
hours in duration.
Speaker 2 (19:56):
Yeah, our average job is five hours, five and a half
hours.
Speaker 1 (20:00):
Okay, Any idea what the average job was for an AED
dealer or or an equipment dealerin general?
What do you, what do you thinkthe backlog is for them?
Speaker 2 (20:24):
I don't know I've been out of, I've been.
You know we've been doing thisfor five years now.
Speaker 1 (20:31):
I know you and I've been talking about that long too
.
So where it gets interesting tome is the backlogs at a
dealership.
Last time I did anything on itit was between three and five
days in the field and two weeksin the shop, and that's what
(20:58):
precipitates the customerlooking for alternatives Over
the last 70 years, although Ihaven't been involved that long.
they have taken first themaintenance work away from the
OEM dealer, to the point thattoday, less than 5% of the
maintenance the scheduledmaintenance preventative
maintenance is recommended bythe manufacturer.
Less than 5% of it is done atthe OEM dealer, and that's a
(21:24):
problem.
Speaker 2 (21:26):
It's also an opportunity for others.
Speaker 1 (21:29):
Well, that's what I mean.
It's a problem.
Can you imagine selling bananasand the market for bananas is
100 tons a day and you can'tkeep up with it.
And then it gets to 90 tons aday by the time you realize
what's happened.
It's down to 10 tons a day andthere's no way you're going to
(21:51):
get that 90 tons back.
Yeah, tons a day and there's noway you're going to get that 90
tons back.
Speaker 2 (22:01):
It hasn't hit the dealers yet, which really I find
astounding.
You talk to OEMs, you talk todealers they don't talk about it
.
Speaker 1 (22:13):
They don't Worse than that.
They have no clue about marketshare.
Don't forget that themanufacturer of the machine does
not make any money on labor.
They're not interested in labor.
The only reason they have fieldpeople for service is for
warranty, making sure you're nottaking advantage of them.
So it's kind of a wrong-headedapproach, but they don't give a
(22:37):
hoot about labor.
Speaker 2 (22:40):
And you're right about no market share for
service.
That always used to frustrateme.
Then you just, I guess, assume,and you know what?
I guess that's part of theproblem too, right, is that no
one's talking about it becausethey already know that they're
shorthanded for the work that'son the books.
Right, you said backlog, andyou're right.
(23:01):
So, hey, if I can't, if I'm oneto two weeks out right now for
customers who call in for fieldwork, I'm already shorthanded.
You know what is there to talkabout Now?
I mean, I would argue that it'sa perfect opportunity to talk
about hey, can we do ourbusiness differently so we can
get more throughput?
(23:22):
But no one has ever reallytalked about that.
Speaker 1 (23:30):
Yeah, it's going to come back and bite.
In 1952, general Motors sued adealer who had two locations in
California you and I have talkedabout this and the dealer won,
which forced General Motors andthe car manufacturers to say
well, wait a second, we don'tget the market on parts and
(23:52):
labor we want, so we're going tostart another company called
Napa Genuine Parts.
It's been around since 52.
They have a margin on partsthat's just a little bit under
40% and the dealer doesn't have25%.
The business model they wentafter was well, we're not going
(24:13):
to carry the 100,000 parts,we're only going to carry the
parts that move 2,000, 3,000,4,000 parts.
So far, heave is doing shortjobs.
How difficult do you thinkit'll be to transition to,
instead of five hours, 10 hours?
Speaker 2 (24:34):
We do.
Some of those, some customersthat we work for have their own
shops so they've asked us to dobigger, longer, more complex
jobs.
Of course we'll do that, butyeah, it's not that far off.
We just focus on the.
(24:55):
Like our main competitiveadvantage is speed.
Yeah, like I was outlining, soit just and there's so many
different avenues.
You can go down here right, likebeing at the dealership, I knew
at the time it's not great,it's cost prohibitive and it's
(25:21):
punitive for a customer who haslike a hydraulic leak to call a
dealer and roll out in a$300,000 service truck to fix a
hydraulic leak and then send acustomer a bill for $1,200.
Like all those small thingswhich are many jobs, like safety
stuff, backup alarms we givecustomers an option to fix the
(25:43):
backup alarm, fix the horn, andhere it's $200.
Because it was an independenttechnician, get out there real
quick.
Hydraulic leak here's a bill,$375.
$200 because it was anindependent technician.
Get out there real quick, youknow.
Hydraulic leak here's a bill,$375,.
You know, because somebody was15 miles away from me too, so
travel time was near nothing.
Like all of this has been outthere and you know a company
(26:10):
like ours can really align withthe customer, get them up and
running and uh, and it's notcost prohibitive.
Speaker 1 (26:18):
You know, that's the kind of stuff that I love no,
absolutely, and and that's whyit's been successful, alex, and
you know it's you, you noticedit, you saw it.
As you said, you pivoted fromwhere you started and and you
found niche that has just beenwanting to have, screaming to
have a response like this.
(26:40):
And it's been 70 years to myknowledge, like when I started
in the late 60s.
We already were sheddingmaintenance service.
Like you wouldn't believe, Iwas excited when we started with
product support salesmen in1970, first one in the
Caterpillar world to do that andwe got over a thousand machines
on maintenance agreements.
I thought, wow, this isfantastic.
(27:02):
Well, 15 years later they stillhad a thousand machines.
It reaches the point ofsatisfaction and you're
comfortable and okay.
Next, and we've had a program Icall it rapid wrench for 40
years where the mechanic goesout with a van, doesn't need to
do the horn, to do the fan belt,to do the filter change,
(27:26):
whatever the heck it is, andthere's so many things where we
haven't adapted to the realityof the customer.
What do they want and need?
Correct, and you did.
So.
How do you know who's a goodmechanic that's in your stable?
Speaker 2 (27:46):
Customer reviews help .
Speaker 1 (27:49):
Who provides the warranty?
Does the technician or do you?
Speaker 2 (27:53):
We both.
You know that's part of ourterms of service.
If a technician wants to be apart of our network, is that
they have to agree to warrantytheir work, and we also stand by
it.
Like there's so many thingsthat we learn right, and like
one of the things that I learnedrecently, in the last 90 days,
from some new customers thatcame on is that they had an
(28:17):
impression that we were a brokerand that's not how we operate.
And the reason why I bring itup is the warranty piece.
Like we have a team of peoplein the field, but also customer
success.
Like we are invested in everyjob that we do goes great, and
if it doesn't, we'll figurewe'll send somebody else out and
(28:37):
make sure the customer is takencare of.
And I guess that wasn't.
You know.
People just had a misconceptionabout what we were doing and
thought like, hey, we were handsoff.
You know, hey, you booked atechnician, but that's not what
we do.
We're actively involved to makesure that it's a great
experience, and so we both wantto technician and us heave
(28:58):
warranties, so do you?
Speaker 1 (28:59):
have a standard warranty that your technicians
have to stand up to.
Speaker 2 (29:05):
In terms of like just overall customer satisfaction,
like if the customer had, ifthey.
If they go out and the customercomplaint comes back up a day
or two later so they didn't fixthe core issue, then we step in.
Either they go back out and fixit to the customer satisfaction
or we are able to send somebodyelse out at no charge to the
customer to fix it.
(29:26):
The first guy gets paid.
Speaker 1 (29:29):
Absolutely, yes, absolutely, yes.
So the first guy that causedthe problem gets paid.
The second guy who goes out andsolves the problem gets paid,
but the customer doesn't getbilled correct I don't negotiate
, I do.
Speaker 2 (29:45):
I don't negotiate with technicians.
Um, that's always been like acore value of ours, Cause number
one.
We know that um, diagnosticsare not black and white.
There's a lot of gray area.
Uh, fixing heavy equipment'shard.
Um, now, if it's a repeatproblem with technicians, then
(30:07):
you know we, then we can kind oftier them and maybe say, hey,
that's, this type of repair isnot for this technician.
But we honestly really haven'tgotten to that place where we
have jobs going wrong frequently.
But I always pay thetechnicians.
Speaker 1 (30:25):
Yeah.
Similarly, though, you haven'tgot to a place in the duration
of the job where failure will bevery high the duration of the
job, where failure will be veryhigh.
Speaker 2 (30:35):
Correct, I mean, part of the reason why this doesn't
happen is that the technicianshave to opt into the job.
So we don't assign techniciansjobs.
So a customer puts in theircomplaint, their service request
.
They state the problem, servicerequest, they state the problem
(30:56):
, and so.
But when opting into a job, youdon't have technicians who are
saying, hey, I can do this ifthey don't have the software to
do it, if it's beyond theirskill level.
You know, I think that's a hugedifference, and it's something
that I saw at a dealership.
Go wrong all the time is when adispatcher would send a
technician to a customer job whowasn't prepared or didn't have
(31:18):
the skill to do it, becausedealers are under pressure to
tell the customer what they wantto hear and so they're not
thinking through.
They send the first available,they don't send the best person
for the job, and so the kind ofthe way we've always designed
our app to work is let thetechnicians opt into the job,
(31:38):
and so you're not going to say,hey, I'm going to be able to do
that if you can't do that.
Speaker 1 (31:44):
So let me circle on that one for a second.
Technician responds within aminute.
Conclusion within four minutes.
How many different mechanicsare involved in each transaction
, would you say?
Speaker 2 (32:00):
So on average, a customer's experience with us is
you'll get three to fivechoices of technicians before
the book Within five minutes.
Yep.
Speaker 1 (32:12):
Three to five.
Okay, so how does the customerknow which one to pick?
Speaker 2 (32:19):
So we do this a couple ways.
One of the things sometimes Iforget that we haven't talked
for a little while and thingsare always evolving.
So one of the biggest unlocksfor us in 2024, I think this was
maybe April or May, becausethat was a common question how
(32:39):
do I know who to pick?
And so we built a profile inour app so every technician has
a profile and so you can click.
So a customer can click.
He sees there's choices, clicks, profile.
Now he can read up on thetechnician, see how many jobs
they've done on.
He uh click into this box andthey can see their, their prior,
(33:00):
like a resume.
You know, it's very, it looksvery similar to linkedin.
I don't know, uh, maybe maybesome people took uh, some
pointers from linkedin on oursoftware team.
But but, oh, okay, this part.
So, say, I have a cat wheelloader, I click into this
profile and I see, oh, for thelast eight years before going
independent, this individualworked at the cat dealer in
(33:23):
Atlanta, georgia, and prior tothat had spent six years at the
John Deere dealer.
And oh, these are the skillsthat are listed.
Oh, these are the skills thatare listed advanced in
electrical, advanced inhydraulic.
And so the profile piece was ahuge help, and that was our
(33:47):
number one question asked bycustomers for a long time.
So we have a profile on everyguy.
One of the other things thatwe've learned in the last like
six months is for customers thatit's their first order or it's
like within their first threeorders.
For us, our sales reps are likethey see the order come in and
then they're calling thecustomer right away and say, hey
, I would recommend that youpick so-and-so.
(34:07):
He's done great work or she'sdone great work, and so we kind
of steer them towards sometechnicians if they haven't had
a ton of experience with us yet,until they get to know them.
Speaker 1 (34:19):
So, with the use of the terminology product support
salesman, your territorysalespeople, are restricted to
how many technicians or how manymachines or how much geography
restricted to how manytechnicians or how many machines
or how much geography.
Speaker 2 (34:45):
They have very large geography today.
So we have yeah, we.
So we have one AE in the Dallasarea, we have one AE in the
Houston area, and so we'll justkeep monitoring and see.
Once it gets to a certain size,we'll probably have to bring in
other people, but we give ourterritory, people, large areas.
Speaker 1 (35:07):
Without exposing anything, and if you don't want
to answer, don't worry about it.
What would you say?
The income potential is for anAE.
Speaker 2 (35:20):
We have set goals for what they should earn by year
two, because what we're doing isextremely difficult.
Yes, there's a lot of valueit's undeniable.
But when you start somethingfrom scratch and you're trying
to build a brand and peoplehaven't heard of you, it's very,
very difficult to get the ballrolling.
(35:41):
So you know we're talking.
You know low six figures inyear one, but increasing
significantly by year two andthen by year three increasing
significantly by year two andthen by year three.
Speaker 1 (35:59):
So let me just say 100,000 as a number, just a full
, arbitrary number.
How much business would you sayan AE should be generating if
they're going to earn 100,000 intheir geography, no matter how
big or small it is?
Have you gone that far?
Geography, no matter how big orsmall it is.
Speaker 2 (36:13):
Have you gone that far?
Yeah, I mean we have.
We have assumptions and we haveideas, but we're still learning
.
Yeah, Because part, as you canimagine, part of it is like well
, how many customers make upthat, that order volume, you
know, do you have more customerswho are doing fewer jobs, or do
you have a few really reallylarge customers who are doing a
(36:34):
ton of jobs?
So much of this we're learning.
Speaker 1 (36:39):
I'm coming at it a different way.
Okay, I'm going to pay you$100,000.
How much volume do I expect youto generate to earn that
$100,000?
Speaker 2 (36:55):
For us, we measured on work orders.
I understand.
Speaker 1 (37:01):
I came at it a different way, deliberately.
Okay, at the moment you'redealing with time as your limit
for a technician.
We're saying that we basicallycan do one job a day, five, six
hours for our technicians, andwe keep people busy, yeah, but
(37:23):
we don't really know what theirbacklog is yet, because it's
still early days.
And I'm not being critical, I'mjust poking.
Yeah, I understand beingcritical, I'm just poking.
Yeah, I understand, and I don't.
I let the technicians determinetheir rate.
Correct, that is correct.
But you determine theirwarranty obligation.
(37:45):
So if a man made a repair thatfailed, he still gets paid by
somebody.
You pick up the repair for thequote heave warranty.
How long does a guy have, andwhat's the number, before you
say sorry, you got too manyfailures, or have you had that
(38:10):
yet?
Speaker 2 (38:12):
We haven't had that yet.
Speaker 1 (38:16):
Do you think that's likely to happen?
Speaker 2 (38:19):
I'm sure at a certain point I'm not naive, but we
just keep very close tabs on it.
Speaker 1 (38:28):
Yeah, you're far from naive, Don't get me wrong.
Yeah, you're far from naive,don't get me wrong.
The dilemma with the model issuccess and how far can you go?
Like Napa is still 3,000 to5,000 part numbers.
They don't touch labor.
(38:51):
They've been talking aboutlabor for 40 years but they've
never pulled the trigger becauseit's too much cost facilities,
training, tooling, blah, blah,blah.
You sidestep that because you'vegot the technician bringing all
of the tooling, all thetraining, all of the materials,
et cetera, to you and you'regiving them access to a market
(39:12):
of customers which they haven'tbeen able to get before other
than by reputation, handing outcards and all the rest of them.
It's a struggle.
They weren't necessarily goodbusiness people.
They didn't collect their moneyvery well.
Sometimes the customer screwedthem and put them out of
business.
You've given them a bit ofcover.
So I guess what I'm trying toaim at is what do you see as
(39:35):
vulnerabilities?
At the moment there aren't any.
It's all upside.
What do you need to prepare forthat will insulate you from
whatever vulnerabilities youhave out there?
Speaker 2 (39:48):
No, I think you're touching a vulnerability and
that is quality of work.
I think you're touching avulnerability and that is
quality of work.
You know, one of the thingsthat we're all we always have a,
you know a list of like threeto four really important things
that we're trying to addresswith our product and with our
engineering team.
And for Q1, I've kind of I'vemade the decision I want to tear
(40:13):
down our review system andreally reimagine it, because I
do want more information onevery job on, like, customer
satisfaction.
It totally is a vulnerabilityand it's fascinating to me, like
(40:33):
how all of these things likeyou can get really in the weeds
on.
You know, there's a lot ofnuance to this.
Like, one of the things that Ifound with reviews is that you
have many customers who don'twant to give a review because
they're afraid that that certain, certain information is going
to get to the technician.
And it's like I get it becauseyou, you don't want to upset
(40:55):
them.
You still feel like you needthem.
But you know what.
I want that information becauseit helps us become more
knowledgeable about the laborforce and so like, all right, we
got to figure out.
So now in our reimaginedreviews we have a little box
where it's like you know, don'tshare with technician, but it's
important to us, we collect thedata.
(41:16):
So that, to me, is the biggestvulnerability, and so that's why
we are not trying to grow toofast in terms of geography too
quickly.
Geography too quickly, becausewe're very cautious of
(41:40):
overextending ourselves and thenlosing quality control.
You know, so many things pop upthat you don't imagine, and like
we had circumstances wherecertain like mobile service
companies because they have,when I say mobile service
company, it's basically a dealerwithout selling equipment.
It started as a technician, nowhas 10 technicians under them
(42:01):
and all they do is service whenwe'd have like mobile service
companies because they hadmultiple trucks gobbling up all
these jobs or somebody alwaysresponding quickly, getting
booked, and then you look andit's like one individual has 10
open jobs.
That's terrible, and so thatwas a vulnerability for us.
(42:22):
So we had to like put in likefences to prevent that from
happening, and there's just somuch that you learn over time.
But the quality of work pieceis the most important, because
if we fix stuff correctly, wewill be successful.
Speaker 1 (42:40):
So stay with quality of work for a second.
Why don't you use that as asales feature to say whatever
the hell the warranty is in thearea for labor.
You're going to double it.
Speaker 2 (42:55):
What do you mean specifically?
Double it.
Speaker 1 (42:59):
If they give a six-month warranty repair, I'm
going to give them 12 months.
Speaker 2 (43:04):
Oh.
Speaker 1 (43:10):
I'll give it to them as an option.
Here's our standard warranty,but for this additional price we
can give you a 12-monthwarranty on any failure reported
within 48 hours.
Speaker 2 (43:25):
MIKE GREENWALD Warranty is interesting.
It's in my mind more as along-term thing.
Speaker 1 (43:33):
Yeah, that's why I'm bringing it up.
The other part of warranty,alex, that becomes interesting
is you basically have twocompanies dominating in the
world Lloyds and Aon on repairwarranty, but that's something
to consider.
(43:53):
The second thing you mentionedthat I found interesting is a
guy's got five jobs in front ofhim.
That's a bad thing.
Why?
Speaker 2 (44:07):
Because I see this happening.
This is one of the coreproblems at a dealer to me is
that you want somebody to go out, diagnose, finish the job, on
to the next.
When you have all these openwork orders, then you have
customers who are waiting andyou're spread too thin.
It's something that weencountered early.
Speaker 1 (44:30):
Stay with that for a second, because you're making an
assumption.
The customer has chosen thatmechanic and he knows he has to
wait until next Thursday andhe's agreed to that.
Why is that an issue for you?
Speaker 2 (44:45):
Well, no, so getting a little deeper, so the
technician's already gone out onThursday.
Getting a little deeper, so thetechnician's already gone out
on Thursday had to order parts.
This is Thursday.
Speaker 1 (44:56):
Yeah, the guy's booked for next Thursday.
He's booked on Monday, tuesday,wednesday, thursday.
He's not bidding on anythingbecause he's busy.
Speaker 2 (45:05):
Why is that a problem ?
Speaker 1 (45:06):
for you.
Speaker 2 (45:10):
That was the problem was he was in that circumstance.
That person was bidding onstuff.
He just wanted more and moreand more work.
Speaker 1 (45:17):
Then, then you've got a device to make sure that
doesn't happen, correct?
Speaker 2 (45:22):
Yeah, that's we had to, that's something that we
encountered and we put somethingin to fix that.
Speaker 1 (45:26):
Including separation.
Speaker 2 (45:29):
Yeah.
Speaker 1 (45:30):
Okay, so the four-day backlog next Thursday.
Is that an issue for themechanic?
Is that an issue for you or isit an issue for the customer?
Speaker 2 (45:41):
I think it's always a case-by-case basis.
Speaker 1 (45:45):
That's why I'm putting you in a corner.
Whose problem?
Speaker 2 (45:49):
is that so?
You make a good point, becausethat's why we want customers to
decide what type of job is it.
If it's a PM service, peopleare okay scheduling it out right
.
Speaker 1 (46:02):
I'm with you 100%.
But you mentioned if he's gotfive that's a problem.
Speaker 2 (46:08):
It isn't a problem because the customer and the
mechanic are making thatdecision they are, I, you know,
like, like I said, getting intothe weeds, like one of the
things that we've kind ofnoticed, um on experience is,
like I just we've been so hyperfocused on delivering yeah, yeah
(46:30):
, no, no.
Speaker 1 (46:31):
And again, none of this is critical at all.
I think what you've done is no.
Speaker 2 (46:34):
I don't take it as critical, but where I was going
with it is we found that whenpeople have a lot of open jobs,
then it delays their invoicing.
Like, invoicing is a criticalcomponent to what we're doing
Like I love Perfect.
Speaker 1 (46:47):
So stop there.
Yeah, perfect, so stop there.
The mechanic today does aclerical job.
He does his own invoicing.
Why?
Speaker 2 (46:59):
We're working on that .
Speaker 1 (47:04):
It's, and similarly parts.
Don't get carried away, butTampa is where you started,
correct?
Yes, how many technicians haveyou got based out of Tampa?
Now Spitball 50.
Okay, and then go back to myvery first question before we
(47:25):
got on the call how manymachines are there in the Tampa
area that you're trying toservice?
Speaker 2 (47:33):
Oh, how many machines are there in the Tampa area
that you're trying to service.
Oh, you know, probablythousands at this point, based
on the customer size.
Yeah, thousands, I mean tens ofthousands.
Speaker 1 (47:43):
So I just did a quick look at a document that I did a
long time ago.
There were 2.8 million machinesin the United States and I'm
going to say that that recordnumber is about 50% of what the
real number is.
That's what's been put out by,you know, caterpillar, aem,
(48:04):
volvo, bobcat, whomever the heck.
And if we go by the basis ofhaving one technician for every
20 machines and let's just saywe got 5 million machines, not
5.6, that means I'm going tohave what 250,000 technicians
(48:28):
the dealers get, maybe 10% ofthat.
So they've got 25,000technicians Say I'm completely
wrong, they've got 50,000technicians.
There's 200,000 technicians outthere that are independent,
working for customers, componentrebuilders, et cetera.
That's your market, it is.
So with TAPA, with 50, 50 guysjust as a goal and I know it's
(48:56):
you need to think about a littlebit more.
But how many machines, whatpercentage of the machines do
you think you want to have innumber of technicians?
20 percent, five percent, fiftypercent?
That's a nasty one, I know.
So you know there's no realanswer right at this point, but
that's something that's going tohit you.
Speaker 2 (49:19):
The way we look.
That's why we monitor responseso closely, yep, and so the very
difficult thing marketplacesare very, very difficult because
you have to have both sidessimultaneously Like we can't get
, we couldn't not, we could nothave 150 technicians in Tampa
(49:39):
today because we don't haveenough business to keep 150
technicians.
You know it's like so it has to.
Both sides have to go at thesame time.
That's why marketplaces arebrutally difficult, because you
know the first question.
You know when we just went into, like Atlanta, charlotte,
nashville, and so we wererecruiting our first batch of
(50:01):
technicians, and you know,obviously the first question is
well, how much business iscoming through here?
Because if you don't have acertain level, you know they're
just not going to, they're goingto ignore you.
Speaker 1 (50:17):
And so yeah that's, you just have to do it both at
the same time.
Speaker 2 (50:24):
What?
What's the biggest surprise tome is and this might sound bad
and a dig, but you got toremember my background.
My background was with a Volvodealer and so I always looked at
Caterpillar as the goldstandard.
(50:46):
I did, and you know we had.
You know, over my almost 20years it was like a roller
coaster ride and you know therewere many times where I'm like
you know we're got to be theworst in the world and you
assume that everyone does itbetter, or at least I did.
(51:09):
Everyone does it better, or atleast I did.
The biggest surprise to me isthat no one does it really
really well.
That, honestly, I was shockedthat some of the markets were in
that Caterpillar is not verygood at service and that's just
(51:30):
an honest to God statement.
Speaker 1 (51:32):
Well, I think you know I've been at it longer and
I've said that longer to dealers.
I've been in meetings wherewe've got executives from the
manufacturers and we talk aboutmarket share.
And you know I'm all aboutproduct support and the machine
(51:53):
is baked for me.
You guys got to put out themachine.
I don't care if you put out acost because I'm the one that
makes the money with it if Ilook after the customer.
But then the product supportworld in the large construction
business is terrible.
(52:14):
If you're really lucky, bestpractice dealers, market share
on parts might be 40%.
If you're really lucky, servicemight be 15%.
Yes, there's outliers that arebetter than that, but those
numbers are terrible, alex.
And yet you're going to havethe majors John Deere and
(52:34):
Caterpillar, probably pullingbetween the two of them 70% to
85% of the market share ofmachinery in any geography in
the United States, meaning thatI got 15% to 20% available for
another 10 manufacturers, noneof whom can really make any
money doing this.
So when I'm Caterpillar andI've got, let's say, 30% of the
(53:00):
market share, just for grins, aslong as I have 30% I'm okay.
I'm fat, dumb and happy.
Is that kind of what surprisedyou?
Speaker 2 (53:16):
Yes, did I say it properly?
I think so.
Yeah, another way of saying ityeah, and this is, this is a.
This is one of our customersstarted a business and didn't
get great service.
And he had it in his words.
He's like you know, I justthought that, look, it's because
(53:36):
I'm the new guy in town.
I got a small I'm not a bigfish and I so he.
He operated for years with thisassumption of all right, well,
once I get to this level, thenI'm going to get a better level
of service.
And once I bought X millions ofequipment and then he got to
(53:58):
those levels and his experiencedid not change whatsoever.
And that's honestly what forcedhim, or helped him, try out us.
And then we haven't looked back.
But yeah, it's just that was.
The biggest surprise to me wasthat no one does it.
Well, I won't say that I'msurprised anymore that there's
(54:23):
not a focus on improving it.
I just I've read enough aboutbusiness and these other
industries.
Like we have, we are followingthe textbook layout of how to
disrupt an industry.
You know and you you mentionedit earlier.
You know, true, disruptioncomes from someone from the
(54:45):
outside who can compete againstthe incumbents.
Who can compete against theincumbents, but without
following any of the same rules.
So we are competing head tohead on service.
We're a technology company.
We don't have to employ any ofthose people.
We don't have the capitalinvestment in all of the tooling
(55:07):
and all of the expensive partsthat they have to supply.
We're playing by differentrules, you know, and that's a
lot of fun.
Speaker 1 (55:16):
Oh, it's fantastic fun and I congratulate you.
I think it's fantastic and youand I have been talking about it
all the way along the line andyou've done pretty much
everything that you said.
You would One of the you knowgo backwards too early on in the
discussion.
The reason that they don't payattention to services is
complicated.
It's too complicated for mostpeople.
I don't know very many guysthat I would hire to be the
(55:43):
general service manager of adealership that had a thousand
technicians.
They don't exist in my worldbecause they don't know the
business.
They're wonderful at repair andmaintenance.
They go to schools that themanufacturer gives them for that
particular brand.
They don't look over the wallto the other brands that do it
(56:03):
all the same way.
It's a riot.
This is wonderful news.
I'm really pleased and I wantto say, proud but that's not my
role At what you've done.
This is remarkable, and don'tslow down and don't back up.
Speaker 2 (56:21):
We won't be backing up.
We'll just, like I said, wekeep learning every month.
We keep.
That is the most fun.
I I love um.
You know we, we came from asimilar, I came from a similar
world where you know there wasno nothing changed over years
and, like, every month, we learnsomething and we can, like, put
(56:44):
something in place that fixessome a potential issue.
For us that's a lot of fun apotential issue for us.
Speaker 1 (56:54):
That's a lot of fun.
Yeah, it's why in 1980, that'sa long time ago now I went
independent of everybody.
I didn't work for anybodybecause the job was babysitting
in politics and I'm not good atit and I don't like either.
So you know, here we are.
What kind of a bow do you wantto put on this?
What conclusions do you want tohave out in the air that people
will remember at the back endof this?
Speaker 2 (57:18):
Oh, what to remember.
Just there's a purity in wewant to provide customers with
very fast service for as cheapas possible, like for all their
(57:40):
equipment.
I love that.
We're aligned with the customer, we're brand agnostic, we can
fix all of it, we can fixmultiple brands on one trip.
Like there's a purity, purity,and I love that and there's, and
then we'll just keep doing it.
I feel like we win customers,one at a time, every day.
And you know now what's fun iswe're starting.
(58:03):
I think it's natural forcertain customers to not want to
do business with a brand newcompany because you want to see,
like all right, well, I'm goingto monitor them, like we'll see
, like if they're around acouple of years from now and I
can start seeing that now, whereit's like hey, we've been
watching you guys.
You know now let's talk.
(58:23):
So you know, the timing has tobe right for everybody and we're
just going to keep doing whatwe're doing and executing.
And more customers are comingaboard every month.
Speaker 1 (58:35):
Well.
Congratulations and thanks forthe time, alex, and thank
everybody who's been listeningto this candid conversation.
I look forward to having you onwith another one in the near
future, mahalo.
Aloha and welcome to another Candid Conversation.
Today we're going to have alovely discussion, a lovely
conversation with a guy by thename of Alex Kraft.
He's written blogs for us, he'sbeen on podcasts, he's the guy
that is revolutionizing customerservice for repairs and
(00:27):
maintenance, and that's all I'mgoing to say at the moment.
So good day, mr Kraft.
How about you go backwards alittle bit and tell us a little
bit again about your backgroundand how you got to where you are
now?
Speaker 2 (00:45):
Aloha, ron, good to be with you.
I feel like this is our annualcheckup From the neck up.
Yes, so the very quick versionworked for a heavy equipment
dealer for almost 20 years for aheavy equipment dealer for
(01:06):
almost 20 years.
Then dealer was sold.
I worked in all the differentdepartments in the dealership so
I had a wide exposure to allaspects of the business.
Started around, covid started acompany called Heave.
We started with a littledifferent business model than
(01:26):
where we ended up, but then inlate 2022, early 2023, we
pivoted our business to fieldservice and then it was all
systems go from really from dayone, which is awesome and so
(01:47):
easiest way to describe it isUber for heavy machinery field
service.
We refer to it as on-demandservice, so customers can if I
have a wheel loader down in thefield, instead of calling a
dealer, what if you could go toa website or an app and see
(02:09):
available heavy machinerymechanics near you with their
rates published and you can booksomeone to come fix your
machine?
Speaker 1 (02:19):
That's what we do.
And from 2022, 23,.
When you started, let me say,when you pivoted, you had nobody
in the field service on-demandbusiness, correct?
That's correct.
And today you have 20 plusemployees, correct, we do, yes.
(02:40):
And hundreds of technicians.
Well, forget the hundreds oftechnicians for a second.
What do the 20 people do?
Speaker 2 (02:49):
A variety of roles.
So we have a field sales rolewhich I would say most closely
resembles, like a dealer PSSR,and that's really what a
salesperson is for Heave.
You think about it in thetraditional PSSR role.
We have customer success people, so like they work behind the
(03:15):
scenes to make sure thatcustomers are having a great
experience.
So they'll do things likemaking sure that the technician
is communicating every step ofthe way with the customer.
They can monitor the textmessages in our app.
You know they make sure thatcustomers are comfortable,
(03:38):
they're getting, like I said,the communication, and making
sure questions are answered,Like sometimes like hey, have
parts been ordered?
You know they'll step in andorder parts if need be.
We have software engineers.
We have a team of six softwareengineers, all in-house that
build all of our technology.
And you know we have marketing.
(03:58):
So that's the bulk of our team.
Speaker 1 (04:03):
And now shift over to mechanics.
How many mechanics would yousay use your system, say, at
least once a month.
Speaker 2 (04:13):
We're in the hundreds now.
Speaker 1 (04:15):
Good for you.
Good for you.
Why do you think this has beenso successful?
Speaker 2 (04:26):
Well, you know you have to have a few things.
Luckily for us.
The first thing is the pain ofthe customer.
You don't have to convincecustomers that field service is
a need that's overwhelminglyaccepted.
(04:47):
Um, you know, they're, they'renot happy with the.
What has been the experiencefor however many decades, so
that's the biggest thing, thatthat has helped us be successful
.
Um, you know, right place,right, successful, right place,
right time a little bit.
(05:08):
The good thing for us too isthat there's plenty of
independent technicians thatexist.
We haven't convinced anyone toleave a dealer to go independent
.
These skilled technicians haveexisted for a long time.
They've just been largelyinvisible to the marketplace.
They might know a couple ofcustomers here or there, but you
(05:32):
know.
So both sides have existed andboth sides have had certain
pains has been what I justdescribed.
They're not marketers, theydon't really have websites.
They've relied on word of mouthto get their customer business.
And so we come along and weshow them all of the customers
(05:54):
that need service and when, andwe give them access to just a
wider range.
So they don't have to marketand they don't have to drive job
site to job site with businesscards handing them out to get
business.
So that's, I would say, that'swhy we've been able to be
successful, is that there'spains on both sides.
Speaker 1 (06:17):
Yeah, I think that's that's pretty good
characterization.
Why do you think the dealershaven't looked after this market
such that the opening existedfor you?
Speaker 2 (06:32):
I think it's very clear there's a couple of things
.
Having worked at a dealer,unfortunately the economic
environment lends itself tostasis and you just, frankly,
(06:53):
don't have to, you don't have toimprove.
So if you are the such and suchdealer in this territory, no
one else can sell that productor service that product in that
area.
So you have a lock on it andthat breeds a culture of, well,
(07:16):
hey, those customers have tocome to us, and so they've never
really had to addresscompetition for service, and so
that's been deeply rooted for along time.
And so that, and with that thishappens in all the other
(07:37):
industries too.
Right, Like I think the dealerbusiness model is very similar
to the cable companies.
You know, if you I live in Tampa, if you move to Tampa and you
want to get digital cable, nowpeople might laugh because
streaming has basically killedit.
(07:57):
But if you wanted to getdigital cable, there was only
like three providers, that's it,you know.
And the same thing if you wantto buy a deer or cat or Komatsu,
there's only a couple peoplethat you can buy that machine
from and get serviced.
And so that is why there's beenreally no conversations or
(08:19):
focus on hey, are our customershappy?
Are they satisfied?
How can we be better?
Because they've never reallyfelt threatened before.
Speaker 1 (08:29):
The other thing that comes back.
I think I don't want to putwords in your mouth, but I'm
known to do that.
We're equipment houses, we'renot product support houses.
The car dealers sell cars, wesell machines.
The car dealer has a partsbusiness, has a labor business,
(08:55):
but it's not the whole business.
And there's a whole bunch ofindependents in the automotive
side, or on the marine side, oron the on-highway truck side, or
on the lawnmower side, or skidsteers, loader backhoes,
whatever the hell you want totalk about.
And yet the money is made inparts and service, not in
(09:16):
equipment.
That confuses me, because thepeople that run these businesses
are pretty smart, alex.
Speaker 2 (09:26):
They are.
I think the one thing that'svery important to mention is
that the service business isvery difficult.
So I think that plays into it.
It's brutally difficult.
Yes, there's more margin, butthere are so many more things
(09:47):
that can go wrong.
Is it hard to sell equipment?
Yes, it's hard.
I'm not saying it's easy.
I started selling equipment.
I wasn't very good at it buttheoretically I could go make 10
customer calls today and Icould sell something you know.
But think of all of thedifferent moving pieces, because
(10:10):
service and parts are alogistics business.
You have to coordinate allthese different mechanics that
you have.
You have parts that you have tostock, decisions on what to
stock.
You know scheduling aspect,quality control, service is very
difficult and I think that'swhy there's just not as much
(10:36):
focus on it is because it'sreally hard work and if you're
not excellent at it you willlose money very quickly, and so
it's hard.
Speaker 1 (10:53):
My conclusion was is that the service leadership at a
dealership not justconstruction equipment but
generally are technical people.
Very rarely are they businesspeople.
As a result of that, fixing amachine, getting it back to the
customer, is the only thingthat's important.
(11:14):
They don't really give a hootas to how much it costs.
It's understood it takes thatmuch to get it done.
Here's the bill.
How come you want to complainabout it and not pay it?
And I think the customer hasshown that they don't like that
approach by leaving thedealership.
First place they left was inmaintenance.
(11:35):
The dealers back in the 60s.
Dealers back in the 60s wereconfronted with a broad range of
new products to deal with andhad to back off on maintenance
because they had to keep up withwarranty on the new machines.
(11:55):
You know, if you go back toWorld War II, we had tractors.
We didn't have a lot of rubbertire loaders.
We didn't have any excavators.
Now, none of them were made inthe United States, they were all
made in Europe and Japan.
Everybody, I think, got blindto the reality on the ground.
(12:17):
I guess the fundamental flaw iswe don't have any tools that
measure customer satisfactionthat are meaningful.
Your three cable examples.
It's a perfect one, becausetelevision is an exact model for
this, and so is Uber and Lyft,although I like your term on
(12:39):
demand.
Whatever you want, we're here.
Whenever you want it, we'rehere.
Speaker 2 (12:50):
Where do you go next?
I mean, our mission is to be anationwide service provider.
That's pretty unique for allbrands.
So you know some cool things.
Now that 2024 is wrapped up,we've fixed over 100 different
brands of equipment since westarted in 2023.
I think that's something we'rereally proud of, not something
(13:11):
that I necessarily expected.
You know, when we started, itwas like very basic.
You know earth moving equipment, because that's what I knew.
You know we were a dirt house,so I know excavators loaders we
didn't.
Volvo didn't have dozers, butyou know we were a dirt house,
so I know excavators loaders wedidn't.
Volvo didn't have dozers, butyou know we were just.
We were focused on repairingyou know that type of of of
(13:32):
those products.
And then, quickly, what startedhappening was customers would
use us and then they would askus hey, do you have, do you have
techs who can fix generators?
Do you have?
Hey, do you have technicianswho can fix cranes?
What about uh on highway trucks?
What about?
And you know, our marketingmanager, uh, was creating some
(13:54):
materials and she came to me oneday.
She's like you know, we fixeduh at the time.
It was like 85 different brandsof equipment and I didn't
believe her and I was like, no,no, there's no way.
I think you're confusing thatfor something else.
And then she came back to mewith all the logos and I was
like, oh okay, this is prettycool.
(14:15):
So, for what's next is just,yeah, we started in Florida,
then we expanded to Texas, nowwe're in Georgia, north Carolina
, tennessee, we're in Indiana,of all places.
We do some work in Ohio.
We want to expand our footprintin Ohio.
It makes sense for us to do so,meaning when we have enough
(14:43):
talented technicians to supportcustomers in a certain area,
because we don't.
We don't want to just plant aflag and have one technician.
If we're going to tell customerswe can support them, we got to
make sure we have enoughtechnicians who can respond
quickly, cause we we do veryreligiously monitor response
(15:09):
time, and that's one of the moreexciting things.
Like, for example, we'relooking at 2024 performance and,
like 86% of our jobs inDecember were completed within
24 hours from the customerrequest.
But here's where it gets a lotof fun.
So, as we get more and morebusiness, what's hard is making
(15:34):
sure you have enough techniciansto support the business, and at
the end of last year, I'll giveyou what an average customer
experience is like on Heath.
I'll give you what an averagecustomer experience is like on
Heath, and it's if I am acustomer and I come on and I say
, hey, I need a technician onthis job site.
Within a minute you're going toget a technician first
(15:54):
technician to respond, tellingyou when they can be there.
And then we find that inthousands of jobs it takes on
average four minutes for atechnician to get booked.
Speaker 1 (16:10):
So that is our average customer experience.
Freeze frame for a second Sure.
So somebody coming in on an appor a piece of software on their
laptop or tablet or whatevermakes a request over the
internet and somebody from Heaveresponds within 60 seconds.
Speaker 2 (16:32):
Not from us, no, no, a technician.
Speaker 1 (16:34):
A technician who's affiliated with you.
Yeah, okay, within a minuteyou're going to get a technician
.
Okay, so that transaction, then, between a technician and a
customer is concluded in fourminutes.
Speaker 2 (16:50):
Yes, that is the average customer experience.
Speaker 1 (16:56):
Pretty cool right?
Well, I was going to say whatdo you think that does to the
customer?
Probably shocks the hell out ofthem.
Speaker 2 (17:02):
Most of the time, yeah, yeah, especially like new
ones.
That's really fun, like I was.
I was talking to somebody theother day, uh, and for me it's
never gonna get old when you seea customer's first impression
or first reaction to what we'redoing there, it's, it blows them
away.
We, we were actually like we'rein a phase right now like our
(17:24):
territory or eight accountexecutives like they're trying
to tell customers to wait alittle bit, so they're trying to
tell, hey, give it like fivemore minutes and you'll see more
choices, like you'll see moretechnicians respond.
Because what's funny is likewe're trying to please both
sides and so when things getbooked really, really quick,
(17:45):
it's awesome for the customer.
But then we end up gettingtechnicians who are kind of
upset because they feel likethey didn't have, they don't
have a shot at a lot of thesejobs because they're getting
booked very quickly.
So we have to tow thisinteresting line of keeping both
really, really happy Cause ifyou're, if you're an independent
technician and you get 10alerts in a day and you didn't
(18:07):
get any of those jobs, you'rekind of mad at Heath.
Speaker 1 (18:12):
So let me shift in that direction.
Then let's talk about thetechnicians.
How much of a 40-hour week doyou think they book through
Heath?
How much of a 40-hour week?
Speaker 2 (18:24):
do you think they book through Heave?
Yeah, that's a really goodquestion.
And so we see similar to likecustomer behavior.
So if it's a technician that'snew to us you can kind of see
like they're dipping their toein the water Like I don't know
about this company.
I'll try.
We probably get like 10% oftheir hours and then they do a
(18:47):
few jobs and then they see howeasy things are.
They see that we mean what wesay.
We pay them quickly.
Then it's like 30%.
I would say we now are about80% of many technicians' labor
hours in week like that.
We can't expect more than 80,but that's kind of like.
(19:09):
Our goal is like how quicklycan we get them from that 10 to
80 percent?
Speaker 1 (19:15):
so if they have 80 of their work coming through heave
, what kind of a backlog do theyneed to maintain such that the
customer still gets the responsewe're talking about?
Like I missed the the ultimatequestion and I'll get to it.
We we get a response, first ofall, within 60 seconds.
(19:38):
We conclude a transactionwithin four minutes.
The ultimate question is whendoes that?
You said 80% are done within 24hours.
That implies you're dealingwith jobs that are four to six
hours in duration.
Speaker 2 (19:56):
Yeah, our average job is five hours, five and a half
hours.
Speaker 1 (20:00):
Okay, Any idea what the average job was for an AED
dealer or or an equipment dealerin general?
What do you, what do you thinkthe backlog is for them?
Speaker 2 (20:24):
I don't know I've been out of, I've been.
You know we've been doing thisfor five years now.
Speaker 1 (20:31):
I know you and I've been talking about that long too
.
So where it gets interesting tome is the backlogs at a
dealership.
Last time I did anything on itit was between three and five
days in the field and two weeksin the shop, and that's what
(20:58):
precipitates the customerlooking for alternatives Over
the last 70 years, although Ihaven't been involved that long.
they have taken first themaintenance work away from the
OEM dealer, to the point thattoday, less than 5% of the
maintenance the scheduledmaintenance preventative
maintenance is recommended bythe manufacturer.
Less than 5% of it is done atthe OEM dealer, and that's a
(21:24):
problem.
Speaker 2 (21:26):
It's also an opportunity for others.
Speaker 1 (21:29):
Well, that's what I mean.
It's a problem.
Can you imagine selling bananasand the market for bananas is
100 tons a day and you can'tkeep up with it.
And then it gets to 90 tons aday by the time you realize
what's happened.
It's down to 10 tons a day andthere's no way you're going to
(21:51):
get that 90 tons back.
Yeah, tons a day and there's noway you're going to get that 90
tons back.
Speaker 2 (22:01):
It hasn't hit the dealers yet, which really I find
astounding.
You talk to OEMs, you talk todealers they don't talk about it
.
Speaker 1 (22:13):
They don't Worse than that.
They have no clue about marketshare.
Don't forget that themanufacturer of the machine does
not make any money on labor.
They're not interested in labor.
The only reason they have fieldpeople for service is for
warranty, making sure you're nottaking advantage of them.
So it's kind of a wrong-headedapproach, but they don't give a
(22:37):
hoot about labor.
Speaker 2 (22:40):
And you're right about no market share for
service.
That always used to frustrateme.
Then you just, I guess, assume,and you know what?
I guess that's part of theproblem too, right, is that no
one's talking about it becausethey already know that they're
shorthanded for the work that'son the books.
Right, you said backlog, andyou're right.
(23:01):
So, hey, if I can't, if I'm oneto two weeks out right now for
customers who call in for fieldwork, I'm already shorthanded.
You know what is there to talkabout Now?
I mean, I would argue that it'sa perfect opportunity to talk
about hey, can we do ourbusiness differently so we can
get more throughput?
(23:22):
But no one has ever reallytalked about that.
Speaker 1 (23:30):
Yeah, it's going to come back and bite.
In 1952, general Motors sued adealer who had two locations in
California you and I have talkedabout this and the dealer won,
which forced General Motors andthe car manufacturers to say
well, wait a second, we don'tget the market on parts and
(23:52):
labor we want, so we're going tostart another company called
Napa Genuine Parts.
It's been around since 52.
They have a margin on partsthat's just a little bit under
40% and the dealer doesn't have25%.
The business model they wentafter was well, we're not going
(24:13):
to carry the 100,000 parts,we're only going to carry the
parts that move 2,000, 3,000,4,000 parts.
So far, heave is doing shortjobs.
How difficult do you thinkit'll be to transition to,
instead of five hours, 10 hours?
Speaker 2 (24:34):
We do.
Some of those, some customersthat we work for have their own
shops so they've asked us to dobigger, longer, more complex
jobs.
Of course we'll do that, butyeah, it's not that far off.
We just focus on the.
(24:55):
Like our main competitiveadvantage is speed.
Yeah, like I was outlining, soit just and there's so many
different avenues.
You can go down here right, likebeing at the dealership, I knew
at the time it's not great,it's cost prohibitive and it's
(25:21):
punitive for a customer who haslike a hydraulic leak to call a
dealer and roll out in a$300,000 service truck to fix a
hydraulic leak and then send acustomer a bill for $1,200.
Like all those small thingswhich are many jobs, like safety
stuff, backup alarms we givecustomers an option to fix the
(25:43):
backup alarm, fix the horn, andhere it's $200.
Because it was an independenttechnician, get out there real
quick.
Hydraulic leak here's a bill,$375.
$200 because it was anindependent technician.
Get out there real quick, youknow.
Hydraulic leak here's a bill,$375,.
You know, because somebody was15 miles away from me too, so
travel time was near nothing.
Like all of this has been outthere and you know a company
(26:10):
like ours can really align withthe customer, get them up and
running and uh, and it's notcost prohibitive.
Speaker 1 (26:18):
You know, that's the kind of stuff that I love no,
absolutely, and and that's whyit's been successful, alex, and
you know it's you, you noticedit, you saw it.
As you said, you pivoted fromwhere you started and and you
found niche that has just beenwanting to have, screaming to
have a response like this.
(26:40):
And it's been 70 years to myknowledge, like when I started
in the late 60s.
We already were sheddingmaintenance service.
Like you wouldn't believe, Iwas excited when we started with
product support salesmen in1970, first one in the
Caterpillar world to do that andwe got over a thousand machines
on maintenance agreements.
I thought, wow, this isfantastic.
(27:02):
Well, 15 years later they stillhad a thousand machines.
It reaches the point ofsatisfaction and you're
comfortable and okay.
Next, and we've had a program Icall it rapid wrench for 40
years where the mechanic goesout with a van, doesn't need to
do the horn, to do the fan belt,to do the filter change,
(27:26):
whatever the heck it is, andthere's so many things where we
haven't adapted to the realityof the customer.
What do they want and need?
Correct, and you did.
So.
How do you know who's a goodmechanic that's in your stable?
Speaker 2 (27:46):
Customer reviews help .
Speaker 1 (27:49):
Who provides the warranty?
Does the technician or do you?
Speaker 2 (27:53):
We both.
You know that's part of ourterms of service.
If a technician wants to be apart of our network, is that
they have to agree to warrantytheir work, and we also stand by
it.
Like there's so many thingsthat we learn right, and like
one of the things that I learnedrecently, in the last 90 days,
from some new customers thatcame on is that they had an
(28:17):
impression that we were a brokerand that's not how we operate.
And the reason why I bring itup is the warranty piece.
Like we have a team of peoplein the field, but also customer
success.
Like we are invested in everyjob that we do goes great, and
if it doesn't, we'll figurewe'll send somebody else out and
(28:37):
make sure the customer is takencare of.
And I guess that wasn't.
You know.
People just had a misconceptionabout what we were doing and
thought like, hey, we were handsoff.
You know, hey, you booked atechnician, but that's not what
we do.
We're actively involved to makesure that it's a great
experience, and so we both wantto technician and us heave
(28:58):
warranties, so do you?
Speaker 1 (28:59):
have a standard warranty that your technicians
have to stand up to.
Speaker 2 (29:05):
In terms of like just overall customer satisfaction,
like if the customer had, ifthey.
If they go out and the customercomplaint comes back up a day
or two later so they didn't fixthe core issue, then we step in.
Either they go back out and fixit to the customer satisfaction
or we are able to send somebodyelse out at no charge to the
customer to fix it.
(29:26):
The first guy gets paid.
Speaker 1 (29:29):
Absolutely, yes, absolutely, yes.
So the first guy that causedthe problem gets paid.
The second guy who goes out andsolves the problem gets paid,
but the customer doesn't getbilled correct I don't negotiate
, I do.
Speaker 2 (29:45):
I don't negotiate with technicians.
Um, that's always been like acore value of ours, Cause number
one.
We know that um, diagnosticsare not black and white.
There's a lot of gray area.
Uh, fixing heavy equipment'shard.
Um, now, if it's a repeatproblem with technicians, then
(30:07):
you know we, then we can kind oftier them and maybe say, hey,
that's, this type of repair isnot for this technician.
But we honestly really haven'tgotten to that place where we
have jobs going wrong frequently.
But I always pay thetechnicians.
Speaker 1 (30:25):
Yeah.
Similarly, though, you haven'tgot to a place in the duration
of the job where failure will bevery high the duration of the
job, where failure will be veryhigh.
Speaker 2 (30:35):
Correct, I mean, part of the reason why this doesn't
happen is that the technicianshave to opt into the job.
So we don't assign techniciansjobs.
So a customer puts in theircomplaint, their service request
.
They state the problem, servicerequest, they state the problem
(30:56):
, and so.
But when opting into a job, youdon't have technicians who are
saying, hey, I can do this ifthey don't have the software to
do it, if it's beyond theirskill level.
You know, I think that's a hugedifference, and it's something
that I saw at a dealership.
Go wrong all the time is when adispatcher would send a
technician to a customer job whowasn't prepared or didn't have
(31:18):
the skill to do it, becausedealers are under pressure to
tell the customer what they wantto hear and so they're not
thinking through.
They send the first available,they don't send the best person
for the job, and so the kind ofthe way we've always designed
our app to work is let thetechnicians opt into the job,
(31:38):
and so you're not going to say,hey, I'm going to be able to do
that if you can't do that.
Speaker 1 (31:44):
So let me circle on that one for a second.
Technician responds within aminute.
Conclusion within four minutes.
How many different mechanicsare involved in each transaction
, would you say?
Speaker 2 (32:00):
So on average, a customer's experience with us is
you'll get three to fivechoices of technicians before
the book Within five minutes.
Yep.
Speaker 1 (32:12):
Three to five.
Okay, so how does the customerknow which one to pick?
Speaker 2 (32:19):
So we do this a couple ways.
One of the things sometimes Iforget that we haven't talked
for a little while and thingsare always evolving.
So one of the biggest unlocksfor us in 2024, I think this was
maybe April or May, becausethat was a common question how
(32:39):
do I know who to pick?
And so we built a profile inour app so every technician has
a profile and so you can click.
So a customer can click.
He sees there's choices, clicks, profile.
Now he can read up on thetechnician, see how many jobs
they've done on.
He uh click into this box andthey can see their, their prior,
(33:00):
like a resume.
You know, it's very, it looksvery similar to linkedin.
I don't know, uh, maybe maybesome people took uh, some
pointers from linkedin on oursoftware team.
But but, oh, okay, this part.
So, say, I have a cat wheelloader, I click into this
profile and I see, oh, for thelast eight years before going
independent, this individualworked at the cat dealer in
(33:23):
Atlanta, georgia, and prior tothat had spent six years at the
John Deere dealer.
And oh, these are the skillsthat are listed.
Oh, these are the skills thatare listed advanced in
electrical, advanced inhydraulic.
And so the profile piece was ahuge help, and that was our
(33:47):
number one question asked bycustomers for a long time.
So we have a profile on everyguy.
One of the other things thatwe've learned in the last like
six months is for customers thatit's their first order or it's
like within their first threeorders.
For us, our sales reps are likethey see the order come in and
then they're calling thecustomer right away and say, hey
, I would recommend that youpick so-and-so.
(34:07):
He's done great work or she'sdone great work, and so we kind
of steer them towards sometechnicians if they haven't had
a ton of experience with us yet,until they get to know them.
Speaker 1 (34:19):
So, with the use of the terminology product support
salesman, your territorysalespeople, are restricted to
how many technicians or how manymachines or how much geography
restricted to how manytechnicians or how many machines
or how much geography.
Speaker 2 (34:45):
They have very large geography today.
So we have yeah, we.
So we have one AE in the Dallasarea, we have one AE in the
Houston area, and so we'll justkeep monitoring and see.
Once it gets to a certain size,we'll probably have to bring in
other people, but we give ourterritory, people, large areas.
Speaker 1 (35:07):
Without exposing anything, and if you don't want
to answer, don't worry about it.
What would you say?
The income potential is for anAE.
Speaker 2 (35:20):
We have set goals for what they should earn by year
two, because what we're doing isextremely difficult.
Yes, there's a lot of valueit's undeniable.
But when you start somethingfrom scratch and you're trying
to build a brand and peoplehaven't heard of you, it's very,
very difficult to get the ballrolling.
(35:41):
So you know we're talking.
You know low six figures inyear one, but increasing
significantly by year two andthen by year three increasing
significantly by year two andthen by year three.
Speaker 1 (35:59):
So let me just say 100,000 as a number, just a full
, arbitrary number.
How much business would you sayan AE should be generating if
they're going to earn 100,000 intheir geography, no matter how
big or small it is?
Have you gone that far?
Geography, no matter how big orsmall it is.
Speaker 2 (36:13):
Have you gone that far?
Yeah, I mean we have.
We have assumptions and we haveideas, but we're still learning
.
Yeah, Because part, as you canimagine, part of it is like well
, how many customers make upthat, that order volume, you
know, do you have more customerswho are doing fewer jobs, or do
you have a few really reallylarge customers who are doing a
(36:34):
ton of jobs?
So much of this we're learning.
Speaker 1 (36:39):
I'm coming at it a different way.
Okay, I'm going to pay you$100,000.
How much volume do I expect youto generate to earn that
$100,000?
Speaker 2 (36:55):
For us, we measured on work orders.
I understand.
Speaker 1 (37:01):
I came at it a different way, deliberately.
Okay, at the moment you'redealing with time as your limit
for a technician.
We're saying that we basicallycan do one job a day, five, six
hours for our technicians, andwe keep people busy, yeah, but
(37:23):
we don't really know what theirbacklog is yet, because it's
still early days.
And I'm not being critical, I'mjust poking.
Yeah, I understand beingcritical, I'm just poking.
Yeah, I understand, and I don't.
I let the technicians determinetheir rate.
Correct, that is correct.
But you determine theirwarranty obligation.
(37:45):
So if a man made a repair thatfailed, he still gets paid by
somebody.
You pick up the repair for thequote heave warranty.
How long does a guy have, andwhat's the number, before you
say sorry, you got too manyfailures, or have you had that
(38:10):
yet?
Speaker 2 (38:12):
We haven't had that yet.
Speaker 1 (38:16):
Do you think that's likely to happen?
Speaker 2 (38:19):
I'm sure at a certain point I'm not naive, but we
just keep very close tabs on it.
Speaker 1 (38:28):
Yeah, you're far from naive, Don't get me wrong.
Yeah, you're far from naive,don't get me wrong.
The dilemma with the model issuccess and how far can you go?
Like Napa is still 3,000 to5,000 part numbers.
They don't touch labor.
(38:51):
They've been talking aboutlabor for 40 years but they've
never pulled the trigger becauseit's too much cost facilities,
training, tooling, blah, blah,blah.
You sidestep that because you'vegot the technician bringing all
of the tooling, all thetraining, all of the materials,
et cetera, to you and you'regiving them access to a market
(39:12):
of customers which they haven'tbeen able to get before other
than by reputation, handing outcards and all the rest of them.
It's a struggle.
They weren't necessarily goodbusiness people.
They didn't collect their moneyvery well.
Sometimes the customer screwedthem and put them out of
business.
You've given them a bit ofcover.
So I guess what I'm trying toaim at is what do you see as
(39:35):
vulnerabilities?
At the moment there aren't any.
It's all upside.
What do you need to prepare forthat will insulate you from
whatever vulnerabilities youhave out there?
Speaker 2 (39:48):
No, I think you're touching a vulnerability and
that is quality of work.
I think you're touching avulnerability and that is
quality of work.
You know, one of the thingsthat we're all we always have a,
you know a list of like threeto four really important things
that we're trying to addresswith our product and with our
engineering team.
And for Q1, I've kind of I'vemade the decision I want to tear
(40:13):
down our review system andreally reimagine it, because I
do want more information onevery job on, like, customer
satisfaction.
It totally is a vulnerabilityand it's fascinating to me, like
(40:33):
how all of these things likeyou can get really in the weeds
on.
You know, there's a lot ofnuance to this.
Like, one of the things that Ifound with reviews is that you
have many customers who don'twant to give a review because
they're afraid that that certain, certain information is going
to get to the technician.
And it's like I get it becauseyou, you don't want to upset
(40:55):
them.
You still feel like you needthem.
But you know what.
I want that information becauseit helps us become more
knowledgeable about the laborforce and so like, all right, we
got to figure out.
So now in our reimaginedreviews we have a little box
where it's like you know, don'tshare with technician, but it's
important to us, we collect thedata.
(41:16):
So that, to me, is the biggestvulnerability, and so that's why
we are not trying to grow toofast in terms of geography too
quickly.
Geography too quickly, becausewe're very cautious of
(41:40):
overextending ourselves and thenlosing quality control.
You know, so many things pop upthat you don't imagine, and like
we had circumstances wherecertain like mobile service
companies because they have,when I say mobile service
company, it's basically a dealerwithout selling equipment.
It started as a technician, nowhas 10 technicians under them
(42:01):
and all they do is service whenwe'd have like mobile service
companies because they hadmultiple trucks gobbling up all
these jobs or somebody alwaysresponding quickly, getting
booked, and then you look andit's like one individual has 10
open jobs.
That's terrible, and so thatwas a vulnerability for us.
(42:22):
So we had to like put in likefences to prevent that from
happening, and there's just somuch that you learn over time.
But the quality of work pieceis the most important, because
if we fix stuff correctly, wewill be successful.
Speaker 1 (42:40):
So stay with quality of work for a second.
Why don't you use that as asales feature to say whatever
the hell the warranty is in thearea for labor.
You're going to double it.
Speaker 2 (42:55):
What do you mean specifically?
Double it.
Speaker 1 (42:59):
If they give a six-month warranty repair, I'm
going to give them 12 months.
Speaker 2 (43:04):
Oh.
Speaker 1 (43:10):
I'll give it to them as an option.
Here's our standard warranty,but for this additional price we
can give you a 12-monthwarranty on any failure reported
within 48 hours.
Speaker 2 (43:25):
MIKE GREENWALD Warranty is interesting.
It's in my mind more as along-term thing.
Speaker 1 (43:33):
Yeah, that's why I'm bringing it up.
The other part of warranty,alex, that becomes interesting
is you basically have twocompanies dominating in the
world Lloyds and Aon on repairwarranty, but that's something
to consider.
(43:53):
The second thing you mentionedthat I found interesting is a
guy's got five jobs in front ofhim.
That's a bad thing.
Why?
Speaker 2 (44:07):
Because I see this happening.
This is one of the coreproblems at a dealer to me is
that you want somebody to go out, diagnose, finish the job, on
to the next.
When you have all these openwork orders, then you have
customers who are waiting andyou're spread too thin.
It's something that weencountered early.
Speaker 1 (44:30):
Stay with that for a second, because you're making an
assumption.
The customer has chosen thatmechanic and he knows he has to
wait until next Thursday andhe's agreed to that.
Why is that an issue for you?
Speaker 2 (44:45):
Well, no, so getting a little deeper, so the
technician's already gone out onThursday.
Getting a little deeper, so thetechnician's already gone out
on Thursday had to order parts.
This is Thursday.
Speaker 1 (44:56):
Yeah, the guy's booked for next Thursday.
He's booked on Monday, tuesday,wednesday, thursday.
He's not bidding on anythingbecause he's busy.
Speaker 2 (45:05):
Why is that a problem ?
Speaker 1 (45:06):
for you.
Speaker 2 (45:10):
That was the problem was he was in that circumstance.
That person was bidding onstuff.
He just wanted more and moreand more work.
Speaker 1 (45:17):
Then, then you've got a device to make sure that
doesn't happen, correct?
Speaker 2 (45:22):
Yeah, that's we had to, that's something that we
encountered and we put somethingin to fix that.
Speaker 1 (45:26):
Including separation.
Speaker 2 (45:29):
Yeah.
Speaker 1 (45:30):
Okay, so the four-day backlog next Thursday.
Is that an issue for themechanic?
Is that an issue for you or isit an issue for the customer?
Speaker 2 (45:41):
I think it's always a case-by-case basis.
Speaker 1 (45:45):
That's why I'm putting you in a corner.
Whose problem?
Speaker 2 (45:49):
is that so?
You make a good point, becausethat's why we want customers to
decide what type of job is it.
If it's a PM service, peopleare okay scheduling it out right
.
Speaker 1 (46:02):
I'm with you 100%.
But you mentioned if he's gotfive that's a problem.
Speaker 2 (46:08):
It isn't a problem because the customer and the
mechanic are making thatdecision they are, I, you know,
like, like I said, getting intothe weeds, like one of the
things that we've kind ofnoticed, um on experience is,
like I just we've been so hyperfocused on delivering yeah, yeah
(46:30):
, no, no.
Speaker 1 (46:31):
And again, none of this is critical at all.
I think what you've done is no.
Speaker 2 (46:34):
I don't take it as critical, but where I was going
with it is we found that whenpeople have a lot of open jobs,
then it delays their invoicing.
Like, invoicing is a criticalcomponent to what we're doing
Like I love Perfect.
Speaker 1 (46:47):
So stop there.
Yeah, perfect, so stop there.
The mechanic today does aclerical job.
He does his own invoicing.
Why?
Speaker 2 (46:59):
We're working on that .
Speaker 1 (47:04):
It's, and similarly parts.
Don't get carried away, butTampa is where you started,
correct?
Yes, how many technicians haveyou got based out of Tampa?
Now Spitball 50.
Okay, and then go back to myvery first question before we
(47:25):
got on the call how manymachines are there in the Tampa
area that you're trying toservice?
Speaker 2 (47:33):
Oh, how many machines are there in the Tampa area
that you're trying to service.
Oh, you know, probablythousands at this point, based
on the customer size.
Yeah, thousands, I mean tens ofthousands.
Speaker 1 (47:43):
So I just did a quick look at a document that I did a
long time ago.
There were 2.8 million machinesin the United States and I'm
going to say that that recordnumber is about 50% of what the
real number is.
That's what's been put out by,you know, caterpillar, aem,
(48:04):
volvo, bobcat, whomever the heck.
And if we go by the basis ofhaving one technician for every
20 machines and let's just saywe got 5 million machines, not
5.6, that means I'm going tohave what 250,000 technicians
(48:28):
the dealers get, maybe 10% ofthat.
So they've got 25,000technicians Say I'm completely
wrong, they've got 50,000technicians.
There's 200,000 technicians outthere that are independent,
working for customers, componentrebuilders, et cetera.
That's your market, it is.
So with TAPA, with 50, 50 guysjust as a goal and I know it's
(48:56):
you need to think about a littlebit more.
But how many machines, whatpercentage of the machines do
you think you want to have innumber of technicians?
20 percent, five percent, fiftypercent?
That's a nasty one, I know.
So you know there's no realanswer right at this point, but
that's something that's going tohit you.
Speaker 2 (49:19):
The way we look.
That's why we monitor responseso closely, yep, and so the very
difficult thing marketplacesare very, very difficult because
you have to have both sidessimultaneously Like we can't get
, we couldn't not, we could nothave 150 technicians in Tampa
(49:39):
today because we don't haveenough business to keep 150
technicians.
You know it's like so it has to.
Both sides have to go at thesame time.
That's why marketplaces arebrutally difficult, because you
know the first question.
You know when we just went into, like Atlanta, charlotte,
nashville, and so we wererecruiting our first batch of
(50:01):
technicians, and you know,obviously the first question is
well, how much business iscoming through here?
Because if you don't have acertain level, you know they're
just not going to, they're goingto ignore you.
Speaker 1 (50:17):
And so yeah that's, you just have to do it both at
the same time.
Speaker 2 (50:24):
What?
What's the biggest surprise tome is and this might sound bad
and a dig, but you got toremember my background.
My background was with a Volvodealer and so I always looked at
Caterpillar as the goldstandard.
(50:46):
I did, and you know we had.
You know, over my almost 20years it was like a roller
coaster ride and you know therewere many times where I'm like
you know we're got to be theworst in the world and you
assume that everyone does itbetter, or at least I did.
(51:09):
Everyone does it better, or atleast I did.
The biggest surprise to me isthat no one does it really
really well.
That, honestly, I was shockedthat some of the markets were in
that Caterpillar is not verygood at service and that's just
(51:30):
an honest to God statement.
Speaker 1 (51:32):
Well, I think you know I've been at it longer and
I've said that longer to dealers.
I've been in meetings wherewe've got executives from the
manufacturers and we talk aboutmarket share.
And you know I'm all aboutproduct support and the machine
(51:53):
is baked for me.
You guys got to put out themachine.
I don't care if you put out acost because I'm the one that
makes the money with it if Ilook after the customer.
But then the product supportworld in the large construction
business is terrible.
(52:14):
If you're really lucky, bestpractice dealers, market share
on parts might be 40%.
If you're really lucky, servicemight be 15%.
Yes, there's outliers that arebetter than that, but those
numbers are terrible, alex.
And yet you're going to havethe majors John Deere and
(52:34):
Caterpillar, probably pullingbetween the two of them 70% to
85% of the market share ofmachinery in any geography in
the United States, meaning thatI got 15% to 20% available for
another 10 manufacturers, noneof whom can really make any
money doing this.
So when I'm Caterpillar andI've got, let's say, 30% of the
(53:00):
market share, just for grins, aslong as I have 30% I'm okay.
I'm fat, dumb and happy.
Is that kind of what surprisedyou?
Speaker 2 (53:16):
Yes, did I say it properly?
I think so.
Yeah, another way of saying ityeah, and this is, this is a.
This is one of our customersstarted a business and didn't
get great service.
And he had it in his words.
He's like you know, I justthought that, look, it's because
(53:36):
I'm the new guy in town.
I got a small I'm not a bigfish and I so he.
He operated for years with thisassumption of all right, well,
once I get to this level, thenI'm going to get a better level
of service.
And once I bought X millions ofequipment and then he got to
(53:58):
those levels and his experiencedid not change whatsoever.
And that's honestly what forcedhim, or helped him, try out us.
And then we haven't looked back.
But yeah, it's just that was.
The biggest surprise to me wasthat no one does it.
Well, I won't say that I'msurprised anymore that there's
(54:23):
not a focus on improving it.
I just I've read enough aboutbusiness and these other
industries.
Like we have, we are followingthe textbook layout of how to
disrupt an industry.
You know and you you mentionedit earlier.
You know, true, disruptioncomes from someone from the
(54:45):
outside who can compete againstthe incumbents.
Who can compete against theincumbents, but without
following any of the same rules.
So we are competing head tohead on service.
We're a technology company.
We don't have to employ any ofthose people.
We don't have the capitalinvestment in all of the tooling
(55:07):
and all of the expensive partsthat they have to supply.
We're playing by differentrules, you know, and that's a
lot of fun.
Speaker 1 (55:16):
Oh, it's fantastic fun and I congratulate you.
I think it's fantastic and youand I have been talking about it
all the way along the line andyou've done pretty much
everything that you said.
You would One of the you knowgo backwards too early on in the
discussion.
The reason that they don't payattention to services is
complicated.
It's too complicated for mostpeople.
I don't know very many guysthat I would hire to be the
(55:43):
general service manager of adealership that had a thousand
technicians.
They don't exist in my worldbecause they don't know the
business.
They're wonderful at repair andmaintenance.
They go to schools that themanufacturer gives them for that
particular brand.
They don't look over the wallto the other brands that do it
(56:03):
all the same way.
It's a riot.
This is wonderful news.
I'm really pleased and I wantto say, proud but that's not my
role At what you've done.
This is remarkable, and don'tslow down and don't back up.
Speaker 2 (56:21):
We won't be backing up.
We'll just, like I said, wekeep learning every month.
We keep.
That is the most fun.
I I love um.
You know we, we came from asimilar, I came from a similar
world where you know there wasno nothing changed over years
and, like, every month, we learnsomething and we can, like, put
(56:44):
something in place that fixessome a potential issue.
For us that's a lot of fun apotential issue for us.
Speaker 1 (56:54):
That's a lot of fun.
Yeah, it's why in 1980, that'sa long time ago now I went
independent of everybody.
I didn't work for anybodybecause the job was babysitting
in politics and I'm not good atit and I don't like either.
So you know, here we are.
What kind of a bow do you wantto put on this?
What conclusions do you want tohave out in the air that people
will remember at the back endof this?
Speaker 2 (57:18):
Oh, what to remember.
Just there's a purity in wewant to provide customers with
very fast service for as cheapas possible, like for all their
(57:40):
equipment.
I love that.
We're aligned with the customer, we're brand agnostic, we can
fix all of it, we can fixmultiple brands on one trip.
Like there's a purity, purity,and I love that and there's, and
then we'll just keep doing it.
I feel like we win customers,one at a time, every day.
And you know now what's fun iswe're starting.
(58:03):
I think it's natural forcertain customers to not want to
do business with a brand newcompany because you want to see,
like all right, well, I'm goingto monitor them, like we'll see
, like if they're around acouple of years from now and I
can start seeing that now, whereit's like hey, we've been
watching you guys.
You know now let's talk.
(58:23):
So you know, the timing has tobe right for everybody and we're
just going to keep doing whatwe're doing and executing.
And more customers are comingaboard every month.
Speaker 1 (58:35):
Well.
Congratulations and thanks forthe time, alex, and thank
everybody who's been listeningto this candid conversation.
I look forward to having you onwith another one in the near
future, mahalo.
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