August 11, 2025 • 66 mins
Are you prepared for the unprecedented transformation sweeping through the equipment dealer and rental landscape? In this eye-opening conversation with industry veteran Nick Mavrick, we dive deep into how technological advancement, market consolidation, and changing buyer behaviors are reshaping the entire industry.
"If you continue to do what you've been doing, you will not last the next 20 years. Period. Without any question, without any doubt." This stark warning from our discussion highlights the urgency facing business leaders today as they navigate what some call the Fourth Industrial Revolution.
We explore why traditional dealer management systems and CRM implementations so often disappoint, costing millions while delivering minimal value. Nick shares how predictive buyer intelligence can provide a complete picture of customer behavior across rentals, purchases, and parts consumption without competing with existing technology investments. Through real-world examples, including a parts inventory management case that increased return on capital employed from 40% to 165%, we demonstrate how rethinking established practices can yield extraordinary results.
The conversation tackles troubling trends in industry consolidation, where approximately half of competitors disappear every 20 years, and examines the growing misalignment between manufacturers and dealers. We discuss how rental companies are capturing increasing market share, how education deficits are creating workforce challenges, and why curiosity and continuous learning have become essential survival skills.
Whether you're running a dealership, managing a rental operation, or working for an OEM, this conversation challenges you to question your assumptions and embrace the changes reshaping our industry. Join us for insights that might just help your business not only survive but thrive in the decades ahead.
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 (00:00):
Aloha and welcome to another Candid Conversation.
We're going to continue with mytheme or interest in artificial
intelligence, data analytics,and this morning we're going to
have a conversation with afellow by the name of Nick
Maverick who has a very deepbackground at the manufacturer's
(00:21):
level and the rental industryand at the dealer level, using
analytics, and that's all I'mgoing to say as far as the
introduction, other than to saygood day, sir, or good afternoon
from you, from the East Coastand Nick, it's good to see you
soon.
Yeah, yeah, he's going to comeout and visit Hawaii.
His sense is going to startentering his brain and visit
(00:45):
Hawaii.
The sense is going to startentering his brain.
We've started last week apodcast with Rodan Wilson where
we dealt with artificialintelligence and how it was
going to impact dealers.
We did a podcast on it.
Built data, your company thatanalyzes and evaluates and
advises people, analyzes andevaluates and advises people on
(01:07):
market coverage, deals incertain manners with artificial
intelligence, but also it dealswith change at a dealer level,
and that's kind of what I'd liketo open the door to.
I don't see a lot of companiesthat are changing anything.
I see a transition ofleadership that's been delayed
(01:31):
by a generation, maybe 10 years.
I see a lot of senior managers,executives, that are leaving
their companies because theircareer path has been blocked,
because their boss is still hereand I don't know how to break
that logjam.
So I'm hoping that you and Ican have this discussion.
Your perspectives and thinkingand my perspectives and thinking
(01:54):
can provoke the audience tolook at things in a little
different manner.
So, with that as ourintroduction, is that something
you're experiencing with yourclients?
How do they what do they say?
No, a lot, or do they say yes,or you bring them all this stuff
.
How much do they do?
Speaker 2 (02:19):
Great question they tend to gravitate towards.
Well, we have two main entrypoints with a prospective client
.
One is the one I can say if Iworked for you, Ron, I would say
it would be the one that wouldmake you money, and that is a
(02:44):
deep kind of persistentanalytics that enable predictive
buyer intelligence.
It gives you a complete view ofthe buyer that we just
discussed.
And a buyer to us rents,purchases, consumes, parts and
service Maybe there's a betterword than buyer but they do all
of those activities generally.
They may not do all of them atthe same time.
(03:06):
Or as Steve Kleig gets into thedeep transactional research,
that suite that we offer tofolks competes with decisions
that they've already made thatthey may not get a return on.
By example I mentioned to you apretty substantial operation
(03:28):
dealer is just installingMicrosoft Dynamics.
I'm a little cynical from whatI've heard about this.
I love CRM, but I can't sayI've ever met somebody in this
industry who says I can't livewithout it.
I hear more.
I don't use it, my people don'tuse it, and it's sort of like
(03:50):
keeping it in a closet.
The other product we offer isbetter predictive intelligence,
not using their intelligence,using our intelligence.
And they gravitate to becauseit's new to them.
So we are prospect data.
(04:11):
We can give a complete pictureof what somebody rents, the
parts and service they consumeand, of course, what they own.
That is usually where somebodyenters the relationship with us,
because it doesn't compete withother decisions that they've
already made.
And I understand that.
I've been a corporate personand when you really put your
(04:35):
shoulder behind something andyou think you're right, you need
to hold your ground so you canbring people along with you.
So you.
Speaker 1 (04:46):
That lets you see RM as an example.
People along with you.
Let's use CRM as an example,where management, I believe,
used CRM to control the salesman.
They wanted to see how manycalls to whom the calls were
being made.
And then they got a littlesexier.
They wanted to know what theytalked about, how often they
(05:07):
talked about it, what's thenumber of calls to close those
kinds of things?
Because that's all oldfashioned things I used to do
manually for the small number ofsalesmen and I'm comfortable
with that.
And then here comes Salesforce,which I'm going to say is CRM on
steroids.
It gave an awful lot of thesame stuff, but it added profile
(05:34):
data of the client.
That made a much better pictureof who to use your term the
buyer was, of who to use yourterm the buyer was.
But in no case does either CRMor Salesforce look at lifecycle
(05:57):
management To say that I have awidget here that has a life of
25,000 hours and I've gotsensors and GPS that tracks the
number of hours on that widget,so I know exactly when that
(06:18):
thing is going to die.
I also have analytics thattells me that if I can do a
repair or a rebuild prior tofailure I can cut the bill in
half.
So I want to do the repair,rebuild before it fails.
So those predictive analyticsbecome absolutely critical.
Crm and Salesforce don't touchany of that.
So it's it's kind of you know,we're just continuing.
(06:42):
When I also doesn't touch, goahead, it also doesn't.
Speaker 2 (06:51):
I was going to say, though it also doesn't touch
Just this morning we're workingon, we have an industrial client
and there's this companyfocuses on providing electrical
(07:13):
services to plants across theUnited States.
There's, their focus is the top.
I'm going to change some of thenumbers 150 accounts, call them
.
They call them, think Exxon orTesla, right, parent level, who
(07:43):
has multiple factories, and it'sa national account strategy.
Fundamentally so, if you'redoing business with Exxon in LA,
why wouldn't you call ExxonHouston and say blah, blah, blah
?
And when you look at, and as asubset of that, data centers,
whether it's Meta, oracle, intel, nvidia, on and on and on, and
(08:05):
the amount of private capitalthat work is being sucked up to
the biggest players in theindustry, a lot of the cheese is
being moved and the bigcontractors are sucking up more,
are sucking up more.
And in one of our clients in amarket there's a massive data
(08:26):
center and the GC is a fullyintegrated venture.
Now he has they have a tilt-upwall division, they have their
own rental division.
It is virtually now keep inmind this data center project
five plus billion.
They formed their own fake NGOto protect it.
(08:49):
It's called Alliance forsomething right and Alliance for
this area and essentially it'sa and the project is funded by
one of the biggest investmentfunds in the world and it's
co-owned between two of thebiggest companies in the world
and it is a closed project.
(09:12):
So we can talk about buyercycles and this and that In this
market forces would be.
You have the major rentalcompanies taking increasingly
amount of business away fromdealers.
In my opinion, you have OEMshaving to buy their distribution
because they're distressed.
The OEMs are shortly I thinkyou've said it before are going
(09:36):
to have to go direct, if they'renot already going direct, and
then they're being somewhatrelegated to do I buy Coke today
because it's on sale or Pepsibecause that's a better price
today?
Right, that's certainly how Ishop for carbonated water.
If somebody's margin compression, the growth of the rental
(10:07):
companies and the shift of theUnited States economy today,
like you could look at the, it'ssort of cliche to say data
centers are a thing.
If you look at it it's.
I first thought it's kind ofcliche.
Like big deal, you build thisthing and it actually doesn't
(10:28):
create that much economicactivity, but it sort of does.
If I look back at thisindustrial client we have,
there's focus on the top 150parent companies that control or
own thousands of factoriesacross the United States is
pretty damn smart so a lot ofthings are moving.
(10:52):
A lot of pieces are moving Withthat.
Speaker 1 (10:54):
and let me go further .
I'm going to say every industryin the world is going through
exactly the same thing.
Every industry in the world isgoing through exactly the same
thing because we have peoplethat are leading the parade,
that are making significantimpact in the market, and rental
(11:17):
was the the start of this.
Light industrial is anotherpiece of it.
But you're having consolidationtake place, not because it
makes economic sense, butbecause there's too many people
that are failing.
And I'll look at the capitalgoods industries and I'm going
(11:39):
to say that every 20 years welose half of the people
competing in the market.
So in 1985, if we had 1,000dealers of lawnmowers, washing
machines, on-highway engines,containers, whatever it is, 20
years later there's going to be500, not 1,000.
And the 500 that went away wentaway because they weren't good
(12:04):
at what they did, and between2005, 2025, it went from 500 to
250.
And, coincident with that, whathas caused a lot of this is
that we've put profits in thebusinesses ahead of people, in
the businesses ahead of people.
(12:24):
So if you look at calculationsof GDP, which is the number of
units of work, population,working force, et cetera, the
units that are produced do thearithmetic the fewer people you
have, the higher your GDP growthis going to be.
The higher your GDP growthbecomes, you can attract money
(12:44):
into your country.
So, tied with that, go back tothe 1950s, when there was a
conscious effort in the Cold Warby America to try and bolster
countries around the world inface of the opposition, which
was viewed as the Soviet Union.
(13:06):
So we wanted to bolster theeconomic activity within the
countries Eastern Europe, southAmerica, wherever.
You want to talk about it as adefensive mechanism to protect
against the Soviet Union,influencing Cuba, venezuela,
whomever.
Well, the Cold War is over andhere comes Trump and he says
(13:31):
well, wait a second, we're notgoing to do that anymore.
The trade situation that we'vegot now was created to allow
this activity defense againstthe Soviet Union and the Cold
War.
We don't need that anymore.
Now I want to concentrate onthe biggest market in the world,
which is the United States, andif you want to do business here
, we're going to have fair tradeback and forth.
(13:53):
You're not going to be able tocharge us 400%, india on
anything, or cheese in Canada300%.
This is going to change andhe's causing all kinds of
disruption, scaring the hell outof people.
So you've got two kinds ofpeople now.
You've got people that arevictims, who just respond call
(14:14):
it the Trump derangementsyndrome, if you want to get
into political terms and you'vegot people that look at it and
say, well, wait a second.
That's a good opportunity.
That's a good opportunity.
So this consolidation thatyou're seeing is happening
everywhere because of anothertransition.
There's some people call thisthe fourth industrial revolution
.
That's fine, I don't care whatyou want to label it.
(14:35):
There is a huge transitiontaking place and a lot of it is
very immature.
A lot of people that are makingthe decisions as to whether
this is a good thing or a badthing use the crm, salesforce,
etc.
Example don't have the skillset to be able to make that
(14:56):
decision, because they haven'tkept up to speed on what's going
on, they're not involved in,they're not curious, they don't
read a lot.
They just continue to do whatthey've always done, which is
Einstein's or whomever you wantto call it insanity, and we're
seeing that unfold right infront of our face.
(15:17):
You're seeing that with yourclients, I'm seeing that with my
clients.
So, example, we'll we'll do askill set review.
We've got three certificationprograms now 120 questions, 150,
180, multiple choice.
You want to be a master at aspecific job function, you're
going to take 180 questions andyou've got to get 80% in order
(15:39):
to get that certification.
So all of a sudden, jobdescriptions are no longer just
duties and responsibilities,they're specific job functions.
So, for instance, you made acall yesterday.
You spoke to somebody yesterday.
You talked about the specificproduct.
They said they were going tothink about it.
Nobody follows up that phonecall the next day or the next
(16:03):
week.
Or somebody goes in on yourinternet portal and does an
inquiry.
They check a price, they checkavailability and they don't buy.
And nobody calls them the nextday to say noticed you looked at
this last night and that youdidn't buy.
Have you purchased that orwould you like a little bit more
information?
Nobody does that.
And David Griffin, who's 70 andretired but not still chairman
(16:29):
of a large material handlingcompany, says we're putting
short-term profits ahead of thefuture of our grandchildren,
which is true because we'retrying to make all the money we
can now to protect us and we'renot investing in the future for
the next generations or the nextworkers and all the rest of the
(16:50):
nonsense.
Which means where you are withbuilt data is right on the front
edge of that wave, and there'sa lot of people that are going
to say I don't understand that,nick, they're not going to say
it that way, but I don't thinkwe're ready for that.
Speaker 2 (17:11):
So a lot more people are going to say no to you than
say yes.
Am I right or wrong?
I don't know if the answer isyes and no.
Yes, we're.
You know, we're a little over ayear old, been in the business
a while, but one is, I think,just time and familiarity.
Right, it's forming afriendship.
(17:36):
So I can't discern that yet.
To answer your question, I willsay this because I alluded to
it, which is we are competinglike and that's not the first
one with entrenched interests,and you and I talked about cost
structure, but it's not aboutserving built data.
I just I would encourage folksto be ruthless about their, the
promises people have made tothem, and whether they can throw
(18:01):
that cost overboard.
Right, divorce from thoserelationships.
I would say it's a greatopportunity to rethink the
expense structure of a rentalbusiness or a dealer business
and see what you can livewithout Be curious.
Speaker 1 (18:19):
That's a big attribute Curiosity is critical.
Speaker 2 (18:23):
I mean because if you're stuck with a software
stack that in theory is supposedto make you much more efficient
and you're just beginning tolive with who likes that
relationship where you can't getwhat you want, I don't know
about you, but when that happensin my life I'm like shit, I got
to do it myself again, right,and you just learn and then you
(18:45):
become a little bit separated.
So if you're living with thishigh expense structure whether
it's through your softwaresubscriptions or through data
that you subscribe to and ifyou're frustrated to some extent
, be curious and see if you canfind something faster, better
and cheaper.
Speaker 1 (19:09):
Yeah, and let me let me pick on that one for a second
.
Relative to business systems,I've used the paper to glass
statement.
When we brought computers in inthe fifties, what we did is we
took a piece of paper and we putit on the screen.
So instead of handwritingsomething with six part piece of
paper, we put it on the screenand we put it on the screen.
So instead of handwritingsomething with six-part piece of
paper, we put it on the screenand we printed six copies.
All we did was speed it up.
(19:30):
But we also found out peopledidn't know how to type and as
time passes, a friend of mine'sgot 13 patents pending.
He can move the screen, thecursor on the screen, with his
eyeball, so the keyboard needingto type is going to go away.
I'm just giving you a weirdexample of where technology goes
.
But when we look at the stackof software, dealer business
(19:55):
systems, dealer managementsystems, whatever, erps,
whatever you want to call themToday, those people don't know
the companies, their customers,business.
They know data processing, theyknow information technology,
they know software.
So they can make elegantsolutions, but they can't do the
(20:19):
business properly.
For instance, nobody shouldhave fixed locations in a
warehouse today, you shoulddetermine where you're going to
put the part by what's availablein your warehouse locations, by
size, by activity, by location,and you place it according to
what the efficiency andeffectiveness of that space use
(20:41):
of that space is at that moment.
If you and I got on a plane andvisited a thousand dealers,
there's a thousand dealers thathave fixed locations and don't
change it.
And this takes us to a placewhere the people that are giving
us the tools to make ourselvesbetter don't understand our
business.
How can they make our businessbetter?
(21:03):
And we have that with everyaspect.
You know.
Here come sensors and GPS.
All of a sudden I know thecondition of my car Every bloody
half hour hour, every 10 milesI drive, and how many people pay
attention to that, because youknow I should change my car.
(21:28):
You know I've got 22,000 mileson my car.
I've had it five years.
I don't need another car forthe rest of my life.
So I'm dead meat.
As far as potential marketright, you can't drive between
islands.
Not yet, at least not by me, butthe other.
If you think about it, walmart,sam Walton created a different
(21:54):
business model.
Jeff Bezos and Amazon created adifferent business model.
Which one of those twocompanies is the largest
retailer in the world?
Do you know?
Speaker 2 (22:11):
I presume Amazon.
I do know this because it wasactually a lot of fun to read.
It's so interesting what peoplelearn from other people and,
according to what I've read,bezos carried around Sam
Walton's autobiography, made inAmerica, and he had it
underlined and posted, noted andin essence that was his
(22:33):
business plan and whether Ipresume that's true.
And if it's not true, hecertainly did all those actions
right.
He implemented Walmart'slogistics.
Speaker 1 (22:46):
Do you know what Sam Walton did?
That was different than anybodyelse.
You tell me, I don't know.
There's two things he said toevery supplier he dealt with,
and this is in the 40s 50s.
He said, Nick, I'm going tochoose you as my supplier.
You're going to be the only oneI'm going to buy from, but I
(23:07):
have two conditions for you.
Number one I never, ever, everwant to run out of that
inventory ever.
Number two I won't pay youuntil my customers put it
through my cash register and, asa result of that, he didn't
have any inventory carryingcosts.
I did not know that.
(23:29):
And why do you think he becamea low-cost supplier?
Not only did he not have anyinventory costs, but he had a
30-day float.
He would send an invoice to thesupplier, or he would send a
check to the supplier, or theywould send him an invoice when
it crossed his cash register.
Speaker 2 (23:46):
You know what's interesting, because you nailed
it.
I mean I'm going to say theywere, they had alignment.
If that's fair, if it's fair,I'll tell you a funny story and
you may not find this funny, andI'm going to see if I can
sanitize this a little bitbecause I'm going to show you a
contrast.
I was recently at a substantialrental and dealership.
(24:09):
Right, I'm gonna say they havesome challenges, okay, and major
OEM, and they're busy trying tofeed their people, right, you
feel it.
Right, they feel that pressure.
That evening I got togetherwith the executive at an oem
(24:31):
major oem, I shouldn't even sayevening, it was um three, four
o'clock, um, no urgency.
I won't even tell you what wasconsumed.
Speaker 1 (24:49):
I'm sure I could tell you.
Speaker 2 (24:50):
It doesn't matter, but my point is there, it was
just so.
The contrast to me like oneguy's fighting for his life and
the other one has is not.
Let me say that, and it's,whatever we can do to get OEMs
(25:13):
and dealers more aligned willserve both of them, If I can say
for an OEM because we touchedon this briefly, but whether
it's, there's many greatcompanies out there Steve
Clegg's and Toro's, one of them,I would say, you know, I can't
(25:34):
think of another.
Certainly.
We aim to solve a similarproblem.
If you're a dealer, if you're anOEM and you have distressed
dealers, one way to getalignment is through systems,
and we, and companies similar tous, you know who can provide a
surrogate system that doesn'trequire it, requires a 30-day
(25:58):
project plan and allows forsharing of data and for them to
operate on one plan, just likeSam Walton did with hidden
suppliers, can be done.
That's the truth.
So in 30 days, if you're CaseNew Holland and you've got
issues with your dealer network,you could be using the same
(26:19):
data set to make predictivedecisions and drive your actions
and prioritize your actionstoday, Today.
And if you don't do that, youget lumpy supply chain, you get
zero margin machines being sold.
You've get lumpy inventoryissues right.
You're out of stock on some ofthe things you need.
(26:41):
You're overstocked on otherthings, the OEMs bailing the
dealer out.
It presents massive amounts ofinefficiencies and it's worth
rethinking how business is done.
Speaker 1 (26:58):
Well, it's not worth rethinking.
It is an absolute necessity torethink how business has been
done.
Let me come back at it adifferent way.
Yeah, who's the largestmanufacturer with the greatest
reputation and the highestmarket share in the construction
equipment mining world?
Who is that?
(27:20):
I?
Don't know, I'm actually goingto know who do you view as
number one?
Speaker 2 (27:26):
I don't know.
I saw something recently, but Idon't have the experience in
that segment.
Speaker 1 (27:33):
It is cat and yesterday cat stock took a dump
and everybody looked at tariffsand supply chain and those types
of things as the cost, becauseit's an easy punching bag.
Because it's an easy punchingbag, about 40 years ago, don
Fights when he was chairman ofCaterpillar in the 80s, so it's
45 years ago had an article inthe Harvard Business Review
(28:00):
about their dealer number.
Speaker 2 (28:01):
That's one of the best articles I've ever read.
Speaker 1 (28:04):
And the point he makes is they're partners yeah,
they.
And the point he makes isthey're partners, yeah, they're
on the same team.
That's your, your statement.
In spades, almost everybodyelse has a conflict.
They're in competition witheach other.
(28:25):
They do not have alignment, andI'll I'll throw names Komatsu,
volvo, case.
Uh, they're in competition witheach other.
They do not have alignment, andI'll throw names Komatsu, volvo
, case.
They don't have alignment.
The manufacturer wants one thing, the dealer wants another.
So, case in point is last yearand it continues this year,
(28:49):
there's a worry that there's notgoing to be enough equipment
bought to keep manufacturingrunning.
So there's a whole bunch ofpeople whose jobs would be
exposed 100%.
So what's the manufacturerdoing?
They're giving you terms andthey're giving you preferred
interest rates and they'regiving you deferred payments.
So all they've done is they'vekicked the ball down the road
six months, nine months, 12months, whatever the heck you
(29:11):
want to call it.
And now the problem is comingback again.
And guess what?
Now we've got people that can'tafford to pay the interest
because interest rates, which iswhy in America, everybody's
upset about it.
We're not seeing interest ratereductions in Britain.
The labor department hasreduced interest rates in London
and the UK five times so farand it's not going to be enough
(29:34):
to save them.
They're out of there.
But we start having a worldwhere supply chain, gps sensors,
lifecycle data, analytics,technology is all available to
(29:59):
be a guide for us, but we don'thave people that understand how
to read that map yet.
We have a few, but not many.
Speaker 2 (30:08):
Yeah, I, I wish here's if I could proffer any
peanut gallery advice from thethe cheap seats is just do it
right, Just get going and ifyou're any of those
manufacturers you mentionedmentioned, try it.
Try a pilot with 10 X number ofdealers by the way, there's
(30:32):
less than I ever thought Ididn't realize the extent of
consolidation but try it withthree of them and seek alignment
and form.
When I worked for Volvo Rents,we were partitioned off from the
mothership.
We had the resources of themothership, but not the
(30:54):
historical.
You know red tape, that youknow that happens and we were
allowed to do things.
Now I don't want to glamorizeand say we were perfect.
We weren't, but we certainlyweren't gummed up with legacy
decisions.
Let me say that.
So if, if a dealer maybe I'mnot seeing it, it's probably
(31:15):
happening An OEM partitions offa special forces group to work
with five, picket at 20% oftheir distribution and be
ruthless in doing what you saidwith sam walton establish a
common data set, real-time dataset, so you can take action, not
(31:37):
beat you up market share whathappened three months ago and be
ruthless in cutting costsRuthless, I don't know.
Speaker 1 (31:53):
It's just a thought.
I think it's a great thought,the ruthlessness of cost, you
know.
Take a silly example, and thisis really weird because that's
kind of who I am.
I believe that parts inventoryturnover should be north of 10
(32:17):
times a year, because all I'mreally interested in is return
on capital on Floyd.
So I'll give you anillustration of a company I work
with that did about $150million a year in part sales and
had about a 33% gross profit.
(32:37):
So their cost of sales was $100million and they had $75
million of inventory.
So their turnover was like 1.3,1.4.
Multiply that times your 33.
That's your return on capitalemployed.
Maybe it's 40%.
So I took the inventory for $75million to $15 million by
(32:59):
getting rid of every part thatdidn't sell 12 times a year and
saying to the market if we stockit and we don't have it, it's
free.
So all kinds of people testedit.
It had the desired and we neverran out.
(33:20):
Why?
Because we kept two and a halfmonths worth.
We had 75 days of inventory onhand and that was the simple,
easiest way.
That's a turnover of five.
So just doing that, leavingeverything else the way it was,
we took our return on capitalemployee from 40% to 165%.
(33:42):
Now does that make more money?
Oh man, that's huge, huge, it'sunbelievable.
So let's go further.
Yeah, sat down with the groupof people big company, many
stores, many parts managers wesat down as a group and said,
okay, fine, we sell this parteight times a year.
This family of parts, you knowall kinds of information.
(34:07):
How many should we have on theshelf?
One, two, eight, what do youwant?
So we determined for 10, nine,eight, seven, six, five, four,
exactly how many we were goingto have, and everything turned
into a buy as sold.
Everything we sold today, webought today.
(34:30):
So we had a lead time flow andanything that was four or less
didn't want it at all and wedidn't.
And we took the turnover to 10.
We went from 75 million to 15.
My working with the companyended.
(34:55):
As all things do, you drain mybrain, there's nothing left, so
move on, find somebody else.
That's cool.
It took them less than a yearto have that 60 million go back
into inventory because it's toodamn much work to keep it at 15
yeah, and that goes to yournotion of and I have a kind of a
(35:17):
question that I don't.
Speaker 2 (35:18):
I'm not wise enough to understand, but your notion
of outsourcing certain things Ithink is super hard net or super
smart.
My, my, my question, beingmaybe a um naive soul, is I know
what it's like as a businessowner.
Um, there are um, I can onlyimagine how lonely it is.
(35:40):
As you know, you're the CEO ofa, of an OEM, which is a social
enterprise, or a dealer that isalso a social enterprise, and
somebody's presenting you withan alternative, or let's call it
a hope, and you get to make thedecision whether that guy's
telling you the truth, whetheryou think he or she can deliver,
(36:03):
and you're investing your moneythere and you're praying that
your precious capital getsdeployed properly.
So I can't it's easy for me tosay, you know recommend that an
OEM and a dealer take analternative approach to their
business.
I don't know what it's likebeing in their position and the
(36:26):
social pressures that they haveto keep the peace with the
establishment while they makethe change.
And for the future, I don'tknow.
I don't know how you do it andtypically that's done through.
Who was it, schopenhauer whosaid you know destruction, right
, the creative entrepreneurshipis destruction, creation and
(36:46):
destruction.
I don't know.
I don't know the answer.
I do think outsourcing is anapproach, but you can also I
could you know second guessmyself and say there's one of
the biggest consulting firms inthe world working with one of
the biggest OEMs in the world toinstall a new dealer business
system We've worked with.
I'm not even going to say thename of the firm.
(37:08):
I can say they're high-pricedpeople, right, they are the
Neiman Marcus of consulting.
They're as smart as you and I,but with a 10X price tag and it
doesn't sound good to me.
It takes too long.
They're incented for it to takea while.
Everything's a year.
(37:28):
It's a year and we're piling inhere and we got to get buy-in.
I don't know what it's like tobe the CEO of a major OEM and
having to know you have tochange.
But you've got X amount of.
How much energy do you have?
(37:48):
Or are you just going to leaveit to the next guy?
Speaker 1 (37:52):
You know, I don't know.
Yeah, it's really interesting.
Go back to the Walmart andAmazon illustration.
The largest retailer in theworld is Walmart.
Walmart has the highestcustomer satisfaction, has the
(38:14):
fastest delivery system, has thehighest availability.
In other words, they beat theheck out of Amazon on every
aspect of the business, the heckout of Amazon on every aspect
of the business.
Amazon beats the hell out ofWalmart on sales and marketing.
(38:37):
So they track every client,what they look at, how often
they look at it, when they lastbought it, when they you know
all that stuff.
But Walmart does that in theform of you bought this last
month, are you ready for a newone?
They do the same thing, but ina different way.
So then let's, let's comeforward, and I think this
(39:02):
discussion should, thisconversation should get people
thinking about am I at risk?
And to 99 point somethingpercent of them, my answer is
yes, sir, ma'am, you are at risk.
If you continue to do whatyou've been doing, you will not
last the next 20 years period,without any question, without
(39:24):
any doubt.
I'll bet you on it.
Speaker 2 (39:26):
And I don't know where this occurs, but one of my
mentors who built it is namedafter an amazing man of
integrity named Don O'Neill whonow has passed on to a higher
place.
I can say that with certainty.
And Don was part of a groupcalled GORB Don.
(39:46):
What's GORB?
Good old rental boys and he anda few uh x number of people
would come together and theywould exchange real business
advice and I would.
I don't know if this is done.
You have a bigger vista than Ihave.
You have.
More success is is there aprivate setting where people can
gather and just shoot the shitand sort of be naked, you know
(40:09):
figuratively, not physically?
Let's reimagine, let's look atour cost structures and like do
they have an independent, safeplace they can go to?
That's diverse enough.
Where they're not, you know,they're caught.
No, no, commerce is done, right, just go and exchange and leave
(40:32):
and become better.
And it would be fun to do ifyou set up a weekend and just,
hey, one rule no business.
Or you can't do businesstogether, right, re-imagine,
right.
Right, reimagine, right whatthis cost structure could be.
And, as many of the books thatI read, the notion of the quote
(41:00):
that is made is bad.
Boys move in silence, right.
So we keep, we stay quiet, westay quiet, we help five people,
I don't know.
Be kind of fun.
Speaker 1 (41:07):
So let me go backwards and that is true in a
mechanism called 20 Groups,which was started in the Packard
Company in the Northwest inSeattle by a man by the name of
Malcolm Fares who was the vicepresident of dealer development
(41:28):
for Packard, and he createdgroups of 20 dealers that were
of similar size market and theymet three times a year and he
had a data input form that theyfilled out and shared every
(41:49):
month.
Mac and I created a companycalled Insight in the 90s and
instead of 20, we did it with 12.
So I'd have Komatsu, volvo,caterpillar, john Deere, bobcat,
and we'd meet twice a year,john Deere, bobcat, and we'd
meet twice a year and the objectof the lesson was to increase
(42:12):
the net profit of thoseorganizations and we did between
three and five percentage pointincrease over a five-year
period of time by sharing bestpractices.
And every meeting we had alittle tool I called dollar time
.
I wanted everybody to put abuck on the table and make a
(42:38):
presentation to all thedifferent dealerships.
Stand up, use slideshows,whatever the hell you want, and
we're going to vote on who hasthe best presentation and you're
going to get the pot.
You're going to get the $12.
But you're going to buy drinkstonight.
So it was a good news.
Bad news, bear, because if youwon, it cost you a hell of a lot
(42:59):
more than the $12 you earned.
But we took the net income ofthe group Nick up by three to
five points over five years.
I mean, that's huge,unbelievably huge it is.
What I said to them was oh, Ihave a shelf life with you guys
of 10 years.
After 10 years, I'm gone,because if you haven't already
(43:21):
sucked everything out of mybrain in 10 years, shame on you,
because I'm not doing itanymore.
And I had 50 different dealersand I stopped it in 20, call it
2010.
I can't remember exactly when,but coincident with that, we put
it online.
(43:41):
We took parts, service, selling, rental administration,
different brands, and we put acompany together called the
Capital Goods Sages wheredealers could put their own data
in and they'd get answers back,or we could suck the data for
(44:02):
them and give them the answers.
But we didn't give them numbers, we gave them graphics.
So you had a frowny face,you're being greedy.
You had a red light, you're introuble.
Better make some changes.
Orange light, green light,smiley face and then a greedy
(44:25):
face.
So if you're making too muchmoney, you're at risk just as
badly as if you're not makingenough money.
And then for every single, wehad 200 different measures.
For every one of those measures, I created five tips.
You could buy the tip onlinefor 10 bucks, 25 bucks, 50 bucks
, a hundred bucks, depending onwhat the significance was on
(44:46):
helping you improve.
We sold it all online.
And if that didn't work if youtried it but you needed help to
do it we created a group ofpeople called ACEs, who are all
retired executives, just likeyou know, the American
executives overseas routine, andyou can get in touch with these
(45:10):
guys and they could come outand help you implement or be a
sounding board or counselor orwhatever.
And we put that whole thingtogether.
Unless I intervene with adealer, they will not do it on
their own.
Now, is it because they don'twant to know what the answer is,
(45:31):
or they're happy with whatthey've got?
And I think that's where therub is.
I think the status quo issomething that the leadership
today vigorously protects thatthe leadership today vigorously
protects.
Speaker 2 (45:49):
Yeah, I would say I don't have the same level of
depth and knowledge that you do.
I see it.
All I can see from my side isman, there's some great
companies out there and there'sgreat OEMs and there's great
dealers companies out there andthere's great oems and there's
great dealers, and I can onlyimagine being in their shoes
(46:09):
with business.
Conditions are changing andmany people are um, selling them
overpriced or, and you know,these sales people show up.
They probably make more moneyselling them the Microsoft
software stack than thepresident of the dealership
(46:30):
makes.
There's a reason and it's wrong.
It's not a fair exchange andyou need Accenture to go and
install it and it's not aligned.
It's not fair.
Speaker 1 (46:46):
Well, stay there for a second.
Let me ask you a question whodo you think is the largest,
most respective consultingcompany in the United States?
Speaker 2 (46:58):
I, I'm, I can say I, I don't.
You don't follow that enough tobe able to make a comment.
Speaker 1 (47:06):
I don't, you don't follow that enough to be able to
make a comment.
Speaker 2 (47:09):
I don't follow it.
I have an opinion.
What is your opinion?
Who is?
Speaker 1 (47:13):
it.
Speaker 2 (47:14):
I would probably say I mean, I'm going to just throw
them out there because I don'treally care who's first.
Mckenzie Bain.
Mckenzie's number one.
Speaker 1 (47:24):
Alvarez Marcell.
So stay there for a secondtoday.
Today, across the wires is thestatement that McKinsey is
completely changing theirbusiness because with artificial
intelligence, with copilot,with chat, gpt, with other tools
that are out there, theirclients don't need them to
(47:46):
crunch the numbers anymore.
They can do it themselves.
What they need is the analytics, the conclusions, the
recommendations, the projectsand a roadmap of how to get them
done.
So they're changing their wholebusiness.
It'll probably take them a year, maybe less if we're lucky.
(48:09):
That's a consulting project fora consulting company.
Isn't it Redefine us so that wecontinue to exist?
So let me give you anotherexample of a similar situation.
Ibm hired a guy by the name ofGerstner to become their
chairman.
This was a long time ago, inthe eighties.
He had his first.
(48:30):
I don't know if you and Italked about this.
Yeah, gerstner has his firstmeeting with all his direct
reports and he's a superstar.
I mean, his reputation isimpeccable and there's about 20
guys and gals in the room and hegoes around the room and he
says who are your top threecustomers?
(48:51):
After four or five responses itbecame clear that they didn't
know.
So he ended the meeting.
He said we're going to conveneagain in a, in a week, and I
want you to give me the topthree, the three most important
clients that you have.
This is the whole corporation.
(49:12):
This is the largest computercompany in the world with the
highest market share oftechnology in the world, and
they couldn't tell who the topthree customers were.
So he goes back.
Here comes the meeting.
He gets the top three customers, has a perfunctory continuation
of the discussion, thanks themvery much, ends the meeting.
(49:34):
What do you think he did next?
He's got 60 names.
He got on a plane and went tovisit every single one of them.
In three months he came back.
He's got his 90-day project outof the way.
He's been given input from the60 most important clients that
(49:57):
the company has, according tothe leaders.
And he asked them what do youlike that we do that you want us
to continue?
What don't you like that we dothat you want us to continue?
What don't you like that we dothat you want us to stop?
What do we do that doesn'treally matter to you and what
would you like to see us doinstead of everything else?
Those four things, and hedistilled it down to two or
(50:22):
three things for every singleone of those four from those 60
customers.
And then he went out andexecuted it and saved the
company, doubled the volume ofthe company within the first 18
months.
So there's a man who, likeMcKinsey, comes in with fresh
eyes, which is an expression Iuse.
Speaker 2 (50:44):
I think when you were speaking, a couple things went
through my mind is, first of all, a really cool story.
Second is jake, brad jacobs,you know powerhouse and pretty.
Um.
The third thing that's in mymind is umEMs are either going
(51:05):
to fail or go private.
It's the only way you can do itis to fix it.
You're going to have to takecontrol of it and it's going to
be interesting.
Speaker 1 (51:17):
And that's a great word.
I love that word.
It's interesting.
Let me go a little bit furtherhere for a second.
Let me go a little bit furtherhere for a second.
We're not okay.
Let me get really nasty.
Grade eight American education.
(51:39):
There's a grade four and gradeeight standard testing that
takes place with every studentin America every year 2024 grade
eight and they test arithmeticand English.
70% and 72% of the students inAmerica at grade eight cannot
(52:00):
read at grade eight level andcannot do mathematics at grade
eight level.
Interesting, oh, no question.
Like what the hell's going onhere?
So go up further in thehelicopter or the hot air
balloon.
Somewhere in the 50s it becamedetermined by American
(52:23):
government that they wanted youto have a university degree
because you'd make more moneythat way, and the whole
education community turnedaround because the product that
they're trying to create is awork ready student and employee
for the community and they'vebeen failing.
Speaker 2 (52:44):
Keep talking.
I'm going to.
I'm going to go grab somethingI want to show them.
Speaker 1 (52:47):
Okay, and in the process of that failure in the
80s, a new program came out ofCalifornia called AVID, which is
Advancement Via IndividualDetermination, and the
illustration that I use is we'reall 10 years old, we go to
(53:09):
school for the first day and wehave three hours worth of
testing, and then we go home andwe come back a week later.
We're all 10 years old andwe're all assigned a class.
You could be in grade three tograde 10, based on your specific
(53:30):
skills and knowledge level.
Now we're starting to educateaccording to the capacity of the
student.
My daughter's the curriculum isresponsible for the avid
curriculum in her schooldistrict and she says Dad,
students don't have criticalthinking skills anymore.
(53:51):
So we create assessments likethose tests for the 10-year-olds
, so that I know exactly who'sgood and who isn't, what they
need in order to get good, howthey can get better, what are
the different options of them intheir career, and we can create
(54:14):
a complete, individualized,personalized learning path for
them.
However, employers look atemployees as tools in the
toolbox.
I'm going to hire you tosatisfy this need with your
skill set, your tools, and ifthose tools become outdated,
(54:37):
I'll replace you.
Speaker 2 (54:39):
yeah, and when you contrast that with rockefeller
who said it, you know I'll buytalent, put them on my team, or
Brad Jacobs, and I want the bestpeople and I want I'm going to
pay them so much they wouldn'tdream of going anywhere else.
And this whole notion of aquote, unquote a player is
interesting and it kind of tiesto your outsourcing model.
(54:59):
I guess if I had to addsomething on is I would
encourage OEMs and dealers tothe sense.
If you know, I have this book.
I'd like to send it to you.
I'll show it to you in a moment.
But what does informationreally measure?
It measures the uncertainty weovercome.
It measures our chances oflearning something we haven't
yet learned, and it's kind ofthat simple.
(55:20):
What does early informationreally measure If it's not
helping you overcome uncertainty?
Cut your arm off.
I think it's a really fun book.
Send me your address and I'llsend it to you, okay.
Speaker 1 (55:33):
We have a suggested reading list for interested
people on our website.
There's a couple of 300 booksin there.
One of the guys that I list inthere is Patrick Lencioni, who's
got about 10 books out there.
One of them is called GettingNaked, because you used the word
naked earlier on and what thatis is that you're starting a
consulting business, so you gointo a client, you're completely
(55:56):
naked because they have no idea.
They want to know who you areand what you are and what you
can do and how much you're goingto cost and all the rest of
that stuff and you got to becomenaked.
In it.
He has three signs of amiserable job um, a whole.
And they're all fables, easystories 100 to 150 pages, small
(56:19):
format, big print, easy to read,Absolutely wonderful.
But in almost every class I did.
I'm not doing classroom traininganymore, but I always used to
start with okay, who's read abook in the last year?
A lot of hands went up.
Who's read a book in the lastsix months?
Who's read a book in the lastthree months?
(56:40):
Who's read a book in the lastmonth?
I said you know, if you're notreading books, you're dying.
And then I would ask the room.
I said how many books do youthink I read a month?
And everybody guesses one ortwo or whatever.
I have two going every week ofall manner of stuff.
Might not have anything to dowith anything that I have any
(57:04):
interest in, Might be astronomy,Might be astronomy, Might be
SpaceX, it might be Neuralink,it might be it doesn't matter.
It's just trying to exercise mylittle peanut so that I can
stay relevant.
I've got two grandkids.
My daughter's got a master's ineducation.
My daughter's got a master's ineducation.
(57:25):
My granddaughter's got amaster's in animal science.
My grandson's in the Navy, thenuclear Navy.
He's the brains of the family.
He's going to have nuclearengineering and astrophysics
degrees by the time he's 20.
He'll have master's in both ofthem by the time he's 22.
I said what are you going to dowith that by the time he's 22.
?
I said what are you going to dowith that?
He said, well, they want me togo to officer's training school.
(57:52):
They want me to go to Annapolis.
I said okay, what are you goingto do?
He said, well, he was the headof the ROTC in his junior year
in high school.
He says Bobby, this is nuts.
I tell them to do something.
They don't do it.
It's driving me crazy.
I said well, you're in themilitary, you know if you ask
them to do something, it's notoptional, it's get it done, so
you don't need to worry aboutthat.
(58:13):
When you're in the military,However you get in the private
sector, you kind of have tolearn how to motivate people,
manipulate people whatever thehell you want to call it to get
them to do what you want them todo.
He said is it really that bad?
I said it's worse.
That's why I got intoconsulting in 1980.
My job was babysitting, andpolitics I don't like and I'm
(58:35):
not good at either.
I like solving problems.
So we've got a whole world outthere of people that don't know
how good they are or how muchthey're missing.
Companies are using trainingand employee development as
discretionary funds, which is ahuge mistake, and we have this
(58:59):
fourth industrial revolutiontaking place.
That's changing the completesupply chain and all trading
between all nations on theplanet.
Speaker 2 (59:08):
Yeah, I'm going to say I've changed an opinion
since I entered this call.
If I were an OEM, I wouldaccelerate in buying back your
distribution.
Then I'd take the companyprivate.
Speaker 1 (59:21):
Okay, so while you're doing that, I'm going to go
down another path.
I'm not going to be affiliatedwith any OEM.
I'm going to get a replacementfor every damn machine there is
out there and I'm going to sellit at 25 percent lower than you
can buy it.
Speaker 2 (59:35):
You know it's funny.
That went through my mindbefore I mentioned that to you.
That last comment to you.
I think that's brilliant.
So let me go a different way.
Hang on a second.
You would bleed them out, ofcourse.
Speaker 1 (59:47):
Of course they wouldn't even.
I mean at the beginning, theywould think it's crazy.
But customer review, well shit,tvh right.
So you know what's really funny?
I started consulting Another.
Speaker 2 (01:00:00):
Harvard Business Review case study.
Yeah, they gutted that industry.
Speaker 1 (01:00:07):
Of course, and I use those Harvard case studies as
training films in my classes.
Yeah, and they use that as okay.
Here's a case SouthwestAirlines, herb Kellner.
He's the Sam Walton of airtravel.
His business plan was on anapkin in a bar.
(01:00:31):
There's examples all over theplace.
The trick is we have to getcritical mass and we have to
continue to see the breakdown.
So here's an interestingstatement.
(01:00:52):
The first machine owner isowned by the supply chain.
That starts with the OEM.
Maybe it'll be a privatenetwork, maybe it'll be private
dealers, doesn't matter, but itstarts with the OEM.
Who owns the second machineowner?
Speaker 2 (01:01:08):
An auction.
Richie Brothers, yeah.
And if you look at the Larry K,Right, you know Larry K, yeah,
here's an example of how littleI know and it's shocking how I
lower how much I know on a dailybasis.
(01:01:30):
The half-life of what I thoughtI know is declining or
accelerating.
So, Larry, at last year's AEDhe presented something and it's
like you know, when you seesomething like I'm the village
idiot.
How did I not see that before?
He put up the disposals likeCapEx for the three or four
(01:01:52):
major rental companies is what?
Five, 10 billion a year?
Right, it's a huge number.
And it just never occurred tome they dispose of a similar
amount.
Never occurred to me, it justnever occurred to me.
They dispose of a similaramount.
Never occurred to me.
Like you talk about crushing amarket, I mean like it just
never occurred to me you floodthe market with late model,
(01:02:15):
well-maintained equipment.
It doesn't help.
I mean it's nuts.
I like your, like your idea.
Speaker 1 (01:02:27):
Yeah, let's just drop it like your idea and and say
that's enough for one.
I think we probably overloadedtoo many people and in too many
thoughts.
I hope that's the case and I Iappreciate your perspective and
you know.
Speaker 2 (01:02:42):
Thank you for being with us well.
Speaker 1 (01:02:44):
Well, your statement that you don't know.
Remember Rumsfeld, when he wassecretary of defense, made the
statement that we don't knowwhat we don't know.
That's a very significantstatement, oh yeah, and we don't
know, you and I don't know.
Nor does the industry, nor doesthe world know what we don't
(01:03:05):
know you and I don't know, nordoes the industry, nor does the
world know what we don't knowtoday.
We do know that there isunbelievable challenge.
We do know there's aconsolidation.
We do know there's a forcedindustrial revolution.
We do know technology ischanging faster than we keep up.
We do know that we feel likewe're victims, but we got to try
(01:03:27):
and get control of our livesagain.
So my grandkids I tell them allthe time I want you to be in
business for yourself.
Find out something you'repassionate about, something that
you think you can help peoplemake money at, and give it
everything you've got, andunderstand you're going to
change that every 10 years forthe rest of your life, yeah, and
(01:03:50):
I want to see Americancompanies.
Speaker 2 (01:03:53):
I don't you know I?
America means a lot to me.
The ideals and the freedoms Ithink we enjoy, and certainly
the people who laid their lifedown for us enjoy, and certainly
the people who laid their lifedown for us and to the extent we
can bolster the prosperity offuture families in this country
is something I'd like to do andI think it's fun.
(01:04:13):
By the way, I've got yourservice.
I hope you know this.
You are frequently in myprayers of gratitude and I
appreciate that, because I feelthem my friend.
Well, you are a blessing and Iwill report back on Helen's
birthday.
Speaker 1 (01:04:29):
Way to go.
Okay, so we'll see you in thefall in Hawaii.
Speaker 2 (01:04:33):
See if I can pull it off I think I can.
Speaker 1 (01:04:35):
Okay, so on that I'm going to say thanks very much,
nick.
I think this has been a reallyvaluable hour.
Speaker 2 (01:04:41):
You're a gift and a blessing.
So, oh, I had a lot of manygood conversations with Troy
Otmer.
Yep, he's world-class.
Oh yeah, he is a.
He is a Titan.
Speaker 1 (01:04:56):
So thank you for that oh, there's, there's, there's
Troy, and there's a whole bunchof others that are, that are
coming.
There's a bunch.
There's an amazing amount oftalent out there and, to the
audience listening, I hope yougot something from this candid
conversation.
If you have any thoughts orcomments, we give you.
When we send this out forconsumption, we give you an
(01:05:16):
email.
You can send any questions orthings that you want, and we're
going to be following down thispath for the next six months,
for sure Until I get someindication that we're starting
to make some progress.
So thank you very much,everybody, and I look forward to
having you with us at the nextCandid Conversation Mahalo.
Aloha and welcome to another Candid Conversation.
We're going to continue with mytheme or interest in artificial
intelligence, data analytics,and this morning we're going to
have a conversation with afellow by the name of Nick
Maverick who has a very deepbackground at the manufacturer's
(00:21):
level and the rental industryand at the dealer level, using
analytics, and that's all I'mgoing to say as far as the
introduction, other than to saygood day, sir, or good afternoon
from you, from the East Coastand Nick, it's good to see you
soon.
Yeah, yeah, he's going to comeout and visit Hawaii.
His sense is going to startentering his brain and visit
(00:45):
Hawaii.
The sense is going to startentering his brain.
We've started last week apodcast with Rodan Wilson where
we dealt with artificialintelligence and how it was
going to impact dealers.
We did a podcast on it.
Built data, your company thatanalyzes and evaluates and
advises people, analyzes andevaluates and advises people on
(01:07):
market coverage, deals incertain manners with artificial
intelligence, but also it dealswith change at a dealer level,
and that's kind of what I'd liketo open the door to.
I don't see a lot of companiesthat are changing anything.
I see a transition ofleadership that's been delayed
(01:31):
by a generation, maybe 10 years.
I see a lot of senior managers,executives, that are leaving
their companies because theircareer path has been blocked,
because their boss is still hereand I don't know how to break
that logjam.
So I'm hoping that you and Ican have this discussion.
Your perspectives and thinkingand my perspectives and thinking
(01:54):
can provoke the audience tolook at things in a little
different manner.
So, with that as ourintroduction, is that something
you're experiencing with yourclients?
How do they what do they say?
No, a lot, or do they say yes,or you bring them all this stuff
.
How much do they do?
Speaker 2 (02:19):
Great question they tend to gravitate towards.
Well, we have two main entrypoints with a prospective client
.
One is the one I can say if Iworked for you, Ron, I would say
it would be the one that wouldmake you money, and that is a
(02:44):
deep kind of persistentanalytics that enable predictive
buyer intelligence.
It gives you a complete view ofthe buyer that we just
discussed.
And a buyer to us rents,purchases, consumes, parts and
service Maybe there's a betterword than buyer but they do all
of those activities generally.
They may not do all of them atthe same time.
(03:06):
Or as Steve Kleig gets into thedeep transactional research,
that suite that we offer tofolks competes with decisions
that they've already made thatthey may not get a return on.
By example I mentioned to you apretty substantial operation
(03:28):
dealer is just installingMicrosoft Dynamics.
I'm a little cynical from whatI've heard about this.
I love CRM, but I can't sayI've ever met somebody in this
industry who says I can't livewithout it.
I hear more.
I don't use it, my people don'tuse it, and it's sort of like
(03:50):
keeping it in a closet.
The other product we offer isbetter predictive intelligence,
not using their intelligence,using our intelligence.
And they gravitate to becauseit's new to them.
So we are prospect data.
(04:11):
We can give a complete pictureof what somebody rents, the
parts and service they consumeand, of course, what they own.
That is usually where somebodyenters the relationship with us,
because it doesn't compete withother decisions that they've
already made.
And I understand that.
I've been a corporate personand when you really put your
(04:35):
shoulder behind something andyou think you're right, you need
to hold your ground so you canbring people along with you.
So you.
Speaker 1 (04:46):
That lets you see RM as an example.
People along with you.
Let's use CRM as an example,where management, I believe,
used CRM to control the salesman.
They wanted to see how manycalls to whom the calls were
being made.
And then they got a littlesexier.
They wanted to know what theytalked about, how often they
(05:07):
talked about it, what's thenumber of calls to close those
kinds of things?
Because that's all oldfashioned things I used to do
manually for the small number ofsalesmen and I'm comfortable
with that.
And then here comes Salesforce,which I'm going to say is CRM on
steroids.
It gave an awful lot of thesame stuff, but it added profile
(05:34):
data of the client.
That made a much better pictureof who to use your term the
buyer was, of who to use yourterm the buyer was.
But in no case does either CRMor Salesforce look at lifecycle
(05:57):
management To say that I have awidget here that has a life of
25,000 hours and I've gotsensors and GPS that tracks the
number of hours on that widget,so I know exactly when that
(06:18):
thing is going to die.
I also have analytics thattells me that if I can do a
repair or a rebuild prior tofailure I can cut the bill in
half.
So I want to do the repair,rebuild before it fails.
So those predictive analyticsbecome absolutely critical.
Crm and Salesforce don't touchany of that.
So it's it's kind of you know,we're just continuing.
(06:42):
When I also doesn't touch, goahead, it also doesn't.
Speaker 2 (06:51):
I was going to say, though it also doesn't touch
Just this morning we're workingon, we have an industrial client
and there's this companyfocuses on providing electrical
(07:13):
services to plants across theUnited States.
There's, their focus is the top.
I'm going to change some of thenumbers 150 accounts, call them
.
They call them, think Exxon orTesla, right, parent level, who
(07:43):
has multiple factories, and it'sa national account strategy.
Fundamentally so, if you'redoing business with Exxon in LA,
why wouldn't you call ExxonHouston and say blah, blah, blah
?
And when you look at, and as asubset of that, data centers,
whether it's Meta, oracle, intel, nvidia, on and on and on, and
(08:05):
the amount of private capitalthat work is being sucked up to
the biggest players in theindustry, a lot of the cheese is
being moved and the bigcontractors are sucking up more,
are sucking up more.
And in one of our clients in amarket there's a massive data
(08:26):
center and the GC is a fullyintegrated venture.
Now he has they have a tilt-upwall division, they have their
own rental division.
It is virtually now keep inmind this data center project
five plus billion.
They formed their own fake NGOto protect it.
(08:49):
It's called Alliance forsomething right and Alliance for
this area and essentially it'sa and the project is funded by
one of the biggest investmentfunds in the world and it's
co-owned between two of thebiggest companies in the world
and it is a closed project.
(09:12):
So we can talk about buyercycles and this and that In this
market forces would be.
You have the major rentalcompanies taking increasingly
amount of business away fromdealers.
In my opinion, you have OEMshaving to buy their distribution
because they're distressed.
The OEMs are shortly I thinkyou've said it before are going
(09:36):
to have to go direct, if they'renot already going direct, and
then they're being somewhatrelegated to do I buy Coke today
because it's on sale or Pepsibecause that's a better price
today?
Right, that's certainly how Ishop for carbonated water.
If somebody's margin compression, the growth of the rental
(10:07):
companies and the shift of theUnited States economy today,
like you could look at the, it'ssort of cliche to say data
centers are a thing.
If you look at it it's.
I first thought it's kind ofcliche.
Like big deal, you build thisthing and it actually doesn't
(10:28):
create that much economicactivity, but it sort of does.
If I look back at thisindustrial client we have,
there's focus on the top 150parent companies that control or
own thousands of factoriesacross the United States is
pretty damn smart so a lot ofthings are moving.
(10:52):
A lot of pieces are moving Withthat.
Speaker 1 (10:54):
and let me go further .
I'm going to say every industryin the world is going through
exactly the same thing.
Every industry in the world isgoing through exactly the same
thing because we have peoplethat are leading the parade,
that are making significantimpact in the market, and rental
(11:17):
was the the start of this.
Light industrial is anotherpiece of it.
But you're having consolidationtake place, not because it
makes economic sense, butbecause there's too many people
that are failing.
And I'll look at the capitalgoods industries and I'm going
(11:39):
to say that every 20 years welose half of the people
competing in the market.
So in 1985, if we had 1,000dealers of lawnmowers, washing
machines, on-highway engines,containers, whatever it is, 20
years later there's going to be500, not 1,000.
And the 500 that went away wentaway because they weren't good
(12:04):
at what they did, and between2005, 2025, it went from 500 to
250.
And, coincident with that, whathas caused a lot of this is
that we've put profits in thebusinesses ahead of people, in
the businesses ahead of people.
(12:24):
So if you look at calculationsof GDP, which is the number of
units of work, population,working force, et cetera, the
units that are produced do thearithmetic the fewer people you
have, the higher your GDP growthis going to be.
The higher your GDP growthbecomes, you can attract money
(12:44):
into your country.
So, tied with that, go back tothe 1950s, when there was a
conscious effort in the Cold Warby America to try and bolster
countries around the world inface of the opposition, which
was viewed as the Soviet Union.
(13:06):
So we wanted to bolster theeconomic activity within the
countries Eastern Europe, southAmerica, wherever.
You want to talk about it as adefensive mechanism to protect
against the Soviet Union,influencing Cuba, venezuela,
whomever.
Well, the Cold War is over andhere comes Trump and he says
(13:31):
well, wait a second, we're notgoing to do that anymore.
The trade situation that we'vegot now was created to allow
this activity defense againstthe Soviet Union and the Cold
War.
We don't need that anymore.
Now I want to concentrate onthe biggest market in the world,
which is the United States, andif you want to do business here
, we're going to have fair tradeback and forth.
(13:53):
You're not going to be able tocharge us 400%, india on
anything, or cheese in Canada300%.
This is going to change andhe's causing all kinds of
disruption, scaring the hell outof people.
So you've got two kinds ofpeople now.
You've got people that arevictims, who just respond call
(14:14):
it the Trump derangementsyndrome, if you want to get
into political terms and you'vegot people that look at it and
say, well, wait a second.
That's a good opportunity.
That's a good opportunity.
So this consolidation thatyou're seeing is happening
everywhere because of anothertransition.
There's some people call thisthe fourth industrial revolution
.
That's fine, I don't care whatyou want to label it.
(14:35):
There is a huge transitiontaking place and a lot of it is
very immature.
A lot of people that are makingthe decisions as to whether
this is a good thing or a badthing use the crm, salesforce,
etc.
Example don't have the skillset to be able to make that
(14:56):
decision, because they haven'tkept up to speed on what's going
on, they're not involved in,they're not curious, they don't
read a lot.
They just continue to do whatthey've always done, which is
Einstein's or whomever you wantto call it insanity, and we're
seeing that unfold right infront of our face.
(15:17):
You're seeing that with yourclients, I'm seeing that with my
clients.
So, example, we'll we'll do askill set review.
We've got three certificationprograms now 120 questions, 150,
180, multiple choice.
You want to be a master at aspecific job function, you're
going to take 180 questions andyou've got to get 80% in order
(15:39):
to get that certification.
So all of a sudden, jobdescriptions are no longer just
duties and responsibilities,they're specific job functions.
So, for instance, you made acall yesterday.
You spoke to somebody yesterday.
You talked about the specificproduct.
They said they were going tothink about it.
Nobody follows up that phonecall the next day or the next
(16:03):
week.
Or somebody goes in on yourinternet portal and does an
inquiry.
They check a price, they checkavailability and they don't buy.
And nobody calls them the nextday to say noticed you looked at
this last night and that youdidn't buy.
Have you purchased that orwould you like a little bit more
information?
Nobody does that.
And David Griffin, who's 70 andretired but not still chairman
(16:29):
of a large material handlingcompany, says we're putting
short-term profits ahead of thefuture of our grandchildren,
which is true because we'retrying to make all the money we
can now to protect us and we'renot investing in the future for
the next generations or the nextworkers and all the rest of the
(16:50):
nonsense.
Which means where you are withbuilt data is right on the front
edge of that wave, and there'sa lot of people that are going
to say I don't understand that,nick, they're not going to say
it that way, but I don't thinkwe're ready for that.
Speaker 2 (17:11):
So a lot more people are going to say no to you than
say yes.
Am I right or wrong?
I don't know if the answer isyes and no.
Yes, we're.
You know, we're a little over ayear old, been in the business
a while, but one is, I think,just time and familiarity.
Right, it's forming afriendship.
(17:36):
So I can't discern that yet.
To answer your question, I willsay this because I alluded to
it, which is we are competinglike and that's not the first
one with entrenched interests,and you and I talked about cost
structure, but it's not aboutserving built data.
I just I would encourage folksto be ruthless about their, the
promises people have made tothem, and whether they can throw
(18:01):
that cost overboard.
Right, divorce from thoserelationships.
I would say it's a greatopportunity to rethink the
expense structure of a rentalbusiness or a dealer business
and see what you can livewithout Be curious.
Speaker 1 (18:19):
That's a big attribute Curiosity is critical.
Speaker 2 (18:23):
I mean because if you're stuck with a software
stack that in theory is supposedto make you much more efficient
and you're just beginning tolive with who likes that
relationship where you can't getwhat you want, I don't know
about you, but when that happensin my life I'm like shit, I got
to do it myself again, right,and you just learn and then you
(18:45):
become a little bit separated.
So if you're living with thishigh expense structure whether
it's through your softwaresubscriptions or through data
that you subscribe to and ifyou're frustrated to some extent
, be curious and see if you canfind something faster, better
and cheaper.
Speaker 1 (19:09):
Yeah, and let me let me pick on that one for a second
.
Relative to business systems,I've used the paper to glass
statement.
When we brought computers in inthe fifties, what we did is we
took a piece of paper and we putit on the screen.
So instead of handwritingsomething with six part piece of
paper, we put it on the screenand we put it on the screen.
So instead of handwritingsomething with six-part piece of
paper, we put it on the screenand we printed six copies.
All we did was speed it up.
(19:30):
But we also found out peopledidn't know how to type and as
time passes, a friend of mine'sgot 13 patents pending.
He can move the screen, thecursor on the screen, with his
eyeball, so the keyboard needingto type is going to go away.
I'm just giving you a weirdexample of where technology goes
.
But when we look at the stackof software, dealer business
(19:55):
systems, dealer managementsystems, whatever, erps,
whatever you want to call themToday, those people don't know
the companies, their customers,business.
They know data processing, theyknow information technology,
they know software.
So they can make elegantsolutions, but they can't do the
(20:19):
business properly.
For instance, nobody shouldhave fixed locations in a
warehouse today, you shoulddetermine where you're going to
put the part by what's availablein your warehouse locations, by
size, by activity, by location,and you place it according to
what the efficiency andeffectiveness of that space use
(20:41):
of that space is at that moment.
If you and I got on a plane andvisited a thousand dealers,
there's a thousand dealers thathave fixed locations and don't
change it.
And this takes us to a placewhere the people that are giving
us the tools to make ourselvesbetter don't understand our
business.
How can they make our businessbetter?
(21:03):
And we have that with everyaspect.
You know.
Here come sensors and GPS.
All of a sudden I know thecondition of my car Every bloody
half hour hour, every 10 milesI drive, and how many people pay
attention to that, because youknow I should change my car.
(21:28):
You know I've got 22,000 mileson my car.
I've had it five years.
I don't need another car forthe rest of my life.
So I'm dead meat.
As far as potential marketright, you can't drive between
islands.
Not yet, at least not by me, butthe other.
If you think about it, walmart,sam Walton created a different
(21:54):
business model.
Jeff Bezos and Amazon created adifferent business model.
Which one of those twocompanies is the largest
retailer in the world?
Do you know?
Speaker 2 (22:11):
I presume Amazon.
I do know this because it wasactually a lot of fun to read.
It's so interesting what peoplelearn from other people and,
according to what I've read,bezos carried around Sam
Walton's autobiography, made inAmerica, and he had it
underlined and posted, noted andin essence that was his
(22:33):
business plan and whether Ipresume that's true.
And if it's not true, hecertainly did all those actions
right.
He implemented Walmart'slogistics.
Speaker 1 (22:46):
Do you know what Sam Walton did?
That was different than anybodyelse.
You tell me, I don't know.
There's two things he said toevery supplier he dealt with,
and this is in the 40s 50s.
He said, Nick, I'm going tochoose you as my supplier.
You're going to be the only oneI'm going to buy from, but I
(23:07):
have two conditions for you.
Number one I never, ever, everwant to run out of that
inventory ever.
Number two I won't pay youuntil my customers put it
through my cash register and, asa result of that, he didn't
have any inventory carryingcosts.
I did not know that.
(23:29):
And why do you think he becamea low-cost supplier?
Not only did he not have anyinventory costs, but he had a
30-day float.
He would send an invoice to thesupplier, or he would send a
check to the supplier, or theywould send him an invoice when
it crossed his cash register.
Speaker 2 (23:46):
You know what's interesting, because you nailed
it.
I mean I'm going to say theywere, they had alignment.
If that's fair, if it's fair,I'll tell you a funny story and
you may not find this funny, andI'm going to see if I can
sanitize this a little bitbecause I'm going to show you a
contrast.
I was recently at a substantialrental and dealership.
(24:09):
Right, I'm gonna say they havesome challenges, okay, and major
OEM, and they're busy trying tofeed their people, right, you
feel it.
Right, they feel that pressure.
That evening I got togetherwith the executive at an oem
(24:31):
major oem, I shouldn't even sayevening, it was um three, four
o'clock, um, no urgency.
I won't even tell you what wasconsumed.
Speaker 1 (24:49):
I'm sure I could tell you.
Speaker 2 (24:50):
It doesn't matter, but my point is there, it was
just so.
The contrast to me like oneguy's fighting for his life and
the other one has is not.
Let me say that, and it's,whatever we can do to get OEMs
(25:13):
and dealers more aligned willserve both of them, If I can say
for an OEM because we touchedon this briefly, but whether
it's, there's many greatcompanies out there Steve
Clegg's and Toro's, one of them,I would say, you know, I can't
(25:34):
think of another.
Certainly.
We aim to solve a similarproblem.
If you're a dealer, if you're anOEM and you have distressed
dealers, one way to getalignment is through systems,
and we, and companies similar tous, you know who can provide a
surrogate system that doesn'trequire it, requires a 30-day
(25:58):
project plan and allows forsharing of data and for them to
operate on one plan, just likeSam Walton did with hidden
suppliers, can be done.
That's the truth.
So in 30 days, if you're CaseNew Holland and you've got
issues with your dealer network,you could be using the same
(26:19):
data set to make predictivedecisions and drive your actions
and prioritize your actionstoday, Today.
And if you don't do that, youget lumpy supply chain, you get
zero margin machines being sold.
You've get lumpy inventoryissues right.
You're out of stock on some ofthe things you need.
(26:41):
You're overstocked on otherthings, the OEMs bailing the
dealer out.
It presents massive amounts ofinefficiencies and it's worth
rethinking how business is done.
Speaker 1 (26:58):
Well, it's not worth rethinking.
It is an absolute necessity torethink how business has been
done.
Let me come back at it adifferent way.
Yeah, who's the largestmanufacturer with the greatest
reputation and the highestmarket share in the construction
equipment mining world?
Who is that?
(27:20):
I?
Don't know, I'm actually goingto know who do you view as
number one?
Speaker 2 (27:26):
I don't know.
I saw something recently, but Idon't have the experience in
that segment.
Speaker 1 (27:33):
It is cat and yesterday cat stock took a dump
and everybody looked at tariffsand supply chain and those types
of things as the cost, becauseit's an easy punching bag.
Because it's an easy punchingbag, about 40 years ago, don
Fights when he was chairman ofCaterpillar in the 80s, so it's
45 years ago had an article inthe Harvard Business Review
(28:00):
about their dealer number.
Speaker 2 (28:01):
That's one of the best articles I've ever read.
Speaker 1 (28:04):
And the point he makes is they're partners yeah,
they.
And the point he makes isthey're partners, yeah, they're
on the same team.
That's your, your statement.
In spades, almost everybodyelse has a conflict.
They're in competition witheach other.
(28:25):
They do not have alignment, andI'll I'll throw names Komatsu,
volvo, case.
Uh, they're in competition witheach other.
They do not have alignment, andI'll throw names Komatsu, volvo
, case.
They don't have alignment.
The manufacturer wants one thing, the dealer wants another.
So, case in point is last yearand it continues this year,
(28:49):
there's a worry that there's notgoing to be enough equipment
bought to keep manufacturingrunning.
So there's a whole bunch ofpeople whose jobs would be
exposed 100%.
So what's the manufacturerdoing?
They're giving you terms andthey're giving you preferred
interest rates and they'regiving you deferred payments.
So all they've done is they'vekicked the ball down the road
six months, nine months, 12months, whatever the heck you
(29:11):
want to call it.
And now the problem is comingback again.
And guess what?
Now we've got people that can'tafford to pay the interest
because interest rates, which iswhy in America, everybody's
upset about it.
We're not seeing interest ratereductions in Britain.
The labor department hasreduced interest rates in London
and the UK five times so farand it's not going to be enough
(29:34):
to save them.
They're out of there.
But we start having a worldwhere supply chain, gps sensors,
lifecycle data, analytics,technology is all available to
(29:59):
be a guide for us, but we don'thave people that understand how
to read that map yet.
We have a few, but not many.
Speaker 2 (30:08):
Yeah, I, I wish here's if I could proffer any
peanut gallery advice from thethe cheap seats is just do it
right, Just get going and ifyou're any of those
manufacturers you mentionedmentioned, try it.
Try a pilot with 10 X number ofdealers by the way, there's
(30:32):
less than I ever thought Ididn't realize the extent of
consolidation but try it withthree of them and seek alignment
and form.
When I worked for Volvo Rents,we were partitioned off from the
mothership.
We had the resources of themothership, but not the
(30:54):
historical.
You know red tape, that youknow that happens and we were
allowed to do things.
Now I don't want to glamorizeand say we were perfect.
We weren't, but we certainlyweren't gummed up with legacy
decisions.
Let me say that.
So if, if a dealer maybe I'mnot seeing it, it's probably
(31:15):
happening An OEM partitions offa special forces group to work
with five, picket at 20% oftheir distribution and be
ruthless in doing what you saidwith sam walton establish a
common data set, real-time dataset, so you can take action, not
(31:37):
beat you up market share whathappened three months ago and be
ruthless in cutting costsRuthless, I don't know.
Speaker 1 (31:53):
It's just a thought.
I think it's a great thought,the ruthlessness of cost, you
know.
Take a silly example, and thisis really weird because that's
kind of who I am.
I believe that parts inventoryturnover should be north of 10
(32:17):
times a year, because all I'mreally interested in is return
on capital on Floyd.
So I'll give you anillustration of a company I work
with that did about $150million a year in part sales and
had about a 33% gross profit.
(32:37):
So their cost of sales was $100million and they had $75
million of inventory.
So their turnover was like 1.3,1.4.
Multiply that times your 33.
That's your return on capitalemployed.
Maybe it's 40%.
So I took the inventory for $75million to $15 million by
(32:59):
getting rid of every part thatdidn't sell 12 times a year and
saying to the market if we stockit and we don't have it, it's
free.
So all kinds of people testedit.
It had the desired and we neverran out.
(33:20):
Why?
Because we kept two and a halfmonths worth.
We had 75 days of inventory onhand and that was the simple,
easiest way.
That's a turnover of five.
So just doing that, leavingeverything else the way it was,
we took our return on capitalemployee from 40% to 165%.
(33:42):
Now does that make more money?
Oh man, that's huge, huge, it'sunbelievable.
So let's go further.
Yeah, sat down with the groupof people big company, many
stores, many parts managers wesat down as a group and said,
okay, fine, we sell this parteight times a year.
This family of parts, you knowall kinds of information.
(34:07):
How many should we have on theshelf?
One, two, eight, what do youwant?
So we determined for 10, nine,eight, seven, six, five, four,
exactly how many we were goingto have, and everything turned
into a buy as sold.
Everything we sold today, webought today.
(34:30):
So we had a lead time flow andanything that was four or less
didn't want it at all and wedidn't.
And we took the turnover to 10.
We went from 75 million to 15.
My working with the companyended.
(34:55):
As all things do, you drain mybrain, there's nothing left, so
move on, find somebody else.
That's cool.
It took them less than a yearto have that 60 million go back
into inventory because it's toodamn much work to keep it at 15
yeah, and that goes to yournotion of and I have a kind of a
(35:17):
question that I don't.
Speaker 2 (35:18):
I'm not wise enough to understand, but your notion
of outsourcing certain things Ithink is super hard net or super
smart.
My, my, my question, beingmaybe a um naive soul, is I know
what it's like as a businessowner.
Um, there are um, I can onlyimagine how lonely it is.
(35:40):
As you know, you're the CEO ofa, of an OEM, which is a social
enterprise, or a dealer that isalso a social enterprise, and
somebody's presenting you withan alternative, or let's call it
a hope, and you get to make thedecision whether that guy's
telling you the truth, whetheryou think he or she can deliver,
(36:03):
and you're investing your moneythere and you're praying that
your precious capital getsdeployed properly.
So I can't it's easy for me tosay, you know recommend that an
OEM and a dealer take analternative approach to their
business.
I don't know what it's likebeing in their position and the
(36:26):
social pressures that they haveto keep the peace with the
establishment while they makethe change.
And for the future, I don'tknow.
I don't know how you do it andtypically that's done through.
Who was it, schopenhauer whosaid you know destruction, right
, the creative entrepreneurshipis destruction, creation and
(36:46):
destruction.
I don't know.
I don't know the answer.
I do think outsourcing is anapproach, but you can also I
could you know second guessmyself and say there's one of
the biggest consulting firms inthe world working with one of
the biggest OEMs in the world toinstall a new dealer business
system We've worked with.
I'm not even going to say thename of the firm.
(37:08):
I can say they're high-pricedpeople, right, they are the
Neiman Marcus of consulting.
They're as smart as you and I,but with a 10X price tag and it
doesn't sound good to me.
It takes too long.
They're incented for it to takea while.
Everything's a year.
(37:28):
It's a year and we're piling inhere and we got to get buy-in.
I don't know what it's like tobe the CEO of a major OEM and
having to know you have tochange.
But you've got X amount of.
How much energy do you have?
(37:48):
Or are you just going to leaveit to the next guy?
Speaker 1 (37:52):
You know, I don't know.
Yeah, it's really interesting.
Go back to the Walmart andAmazon illustration.
The largest retailer in theworld is Walmart.
Walmart has the highestcustomer satisfaction, has the
(38:14):
fastest delivery system, has thehighest availability.
In other words, they beat theheck out of Amazon on every
aspect of the business, the heckout of Amazon on every aspect
of the business.
Amazon beats the hell out ofWalmart on sales and marketing.
(38:37):
So they track every client,what they look at, how often
they look at it, when they lastbought it, when they you know
all that stuff.
But Walmart does that in theform of you bought this last
month, are you ready for a newone?
They do the same thing, but ina different way.
So then let's, let's comeforward, and I think this
(39:02):
discussion should, thisconversation should get people
thinking about am I at risk?
And to 99 point somethingpercent of them, my answer is
yes, sir, ma'am, you are at risk.
If you continue to do whatyou've been doing, you will not
last the next 20 years period,without any question, without
(39:24):
any doubt.
I'll bet you on it.
Speaker 2 (39:26):
And I don't know where this occurs, but one of my
mentors who built it is namedafter an amazing man of
integrity named Don O'Neill whonow has passed on to a higher
place.
I can say that with certainty.
And Don was part of a groupcalled GORB Don.
(39:46):
What's GORB?
Good old rental boys and he anda few uh x number of people
would come together and theywould exchange real business
advice and I would.
I don't know if this is done.
You have a bigger vista than Ihave.
You have.
More success is is there aprivate setting where people can
gather and just shoot the shitand sort of be naked, you know
(40:09):
figuratively, not physically?
Let's reimagine, let's look atour cost structures and like do
they have an independent, safeplace they can go to?
That's diverse enough.
Where they're not, you know,they're caught.
No, no, commerce is done, right, just go and exchange and leave
(40:32):
and become better.
And it would be fun to do ifyou set up a weekend and just,
hey, one rule no business.
Or you can't do businesstogether, right, re-imagine,
right.
Right, reimagine, right whatthis cost structure could be.
And, as many of the books thatI read, the notion of the quote
(41:00):
that is made is bad.
Boys move in silence, right.
So we keep, we stay quiet, westay quiet, we help five people,
I don't know.
Be kind of fun.
Speaker 1 (41:07):
So let me go backwards and that is true in a
mechanism called 20 Groups,which was started in the Packard
Company in the Northwest inSeattle by a man by the name of
Malcolm Fares who was the vicepresident of dealer development
(41:28):
for Packard, and he createdgroups of 20 dealers that were
of similar size market and theymet three times a year and he
had a data input form that theyfilled out and shared every
(41:49):
month.
Mac and I created a companycalled Insight in the 90s and
instead of 20, we did it with 12.
So I'd have Komatsu, volvo,caterpillar, john Deere, bobcat,
and we'd meet twice a year,john Deere, bobcat, and we'd
meet twice a year and the objectof the lesson was to increase
(42:12):
the net profit of thoseorganizations and we did between
three and five percentage pointincrease over a five-year
period of time by sharing bestpractices.
And every meeting we had alittle tool I called dollar time
.
I wanted everybody to put abuck on the table and make a
(42:38):
presentation to all thedifferent dealerships.
Stand up, use slideshows,whatever the hell you want, and
we're going to vote on who hasthe best presentation and you're
going to get the pot.
You're going to get the $12.
But you're going to buy drinkstonight.
So it was a good news.
Bad news, bear, because if youwon, it cost you a hell of a lot
(42:59):
more than the $12 you earned.
But we took the net income ofthe group Nick up by three to
five points over five years.
I mean, that's huge,unbelievably huge it is.
What I said to them was oh, Ihave a shelf life with you guys
of 10 years.
After 10 years, I'm gone,because if you haven't already
(43:21):
sucked everything out of mybrain in 10 years, shame on you,
because I'm not doing itanymore.
And I had 50 different dealersand I stopped it in 20, call it
2010.
I can't remember exactly when,but coincident with that, we put
it online.
(43:41):
We took parts, service, selling, rental administration,
different brands, and we put acompany together called the
Capital Goods Sages wheredealers could put their own data
in and they'd get answers back,or we could suck the data for
(44:02):
them and give them the answers.
But we didn't give them numbers, we gave them graphics.
So you had a frowny face,you're being greedy.
You had a red light, you're introuble.
Better make some changes.
Orange light, green light,smiley face and then a greedy
(44:25):
face.
So if you're making too muchmoney, you're at risk just as
badly as if you're not makingenough money.
And then for every single, wehad 200 different measures.
For every one of those measures, I created five tips.
You could buy the tip onlinefor 10 bucks, 25 bucks, 50 bucks
, a hundred bucks, depending onwhat the significance was on
(44:46):
helping you improve.
We sold it all online.
And if that didn't work if youtried it but you needed help to
do it we created a group ofpeople called ACEs, who are all
retired executives, just likeyou know, the American
executives overseas routine, andyou can get in touch with these
(45:10):
guys and they could come outand help you implement or be a
sounding board or counselor orwhatever.
And we put that whole thingtogether.
Unless I intervene with adealer, they will not do it on
their own.
Now, is it because they don'twant to know what the answer is,
(45:31):
or they're happy with whatthey've got?
And I think that's where therub is.
I think the status quo issomething that the leadership
today vigorously protects thatthe leadership today vigorously
protects.
Speaker 2 (45:49):
Yeah, I would say I don't have the same level of
depth and knowledge that you do.
I see it.
All I can see from my side isman, there's some great
companies out there and there'sgreat OEMs and there's great
dealers companies out there andthere's great oems and there's
great dealers, and I can onlyimagine being in their shoes
(46:09):
with business.
Conditions are changing andmany people are um, selling them
overpriced or, and you know,these sales people show up.
They probably make more moneyselling them the Microsoft
software stack than thepresident of the dealership
(46:30):
makes.
There's a reason and it's wrong.
It's not a fair exchange andyou need Accenture to go and
install it and it's not aligned.
It's not fair.
Speaker 1 (46:46):
Well, stay there for a second.
Let me ask you a question whodo you think is the largest,
most respective consultingcompany in the United States?
Speaker 2 (46:58):
I, I'm, I can say I, I don't.
You don't follow that enough tobe able to make a comment.
Speaker 1 (47:06):
I don't, you don't follow that enough to be able to
make a comment.
Speaker 2 (47:09):
I don't follow it.
I have an opinion.
What is your opinion?
Who is?
Speaker 1 (47:13):
it.
Speaker 2 (47:14):
I would probably say I mean, I'm going to just throw
them out there because I don'treally care who's first.
Mckenzie Bain.
Mckenzie's number one.
Speaker 1 (47:24):
Alvarez Marcell.
So stay there for a secondtoday.
Today, across the wires is thestatement that McKinsey is
completely changing theirbusiness because with artificial
intelligence, with copilot,with chat, gpt, with other tools
that are out there, theirclients don't need them to
(47:46):
crunch the numbers anymore.
They can do it themselves.
What they need is the analytics, the conclusions, the
recommendations, the projectsand a roadmap of how to get them
done.
So they're changing their wholebusiness.
It'll probably take them a year, maybe less if we're lucky.
(48:09):
That's a consulting project fora consulting company.
Isn't it Redefine us so that wecontinue to exist?
So let me give you anotherexample of a similar situation.
Ibm hired a guy by the name ofGerstner to become their
chairman.
This was a long time ago, inthe eighties.
He had his first.
(48:30):
I don't know if you and Italked about this.
Yeah, gerstner has his firstmeeting with all his direct
reports and he's a superstar.
I mean, his reputation isimpeccable and there's about 20
guys and gals in the room and hegoes around the room and he
says who are your top threecustomers?
(48:51):
After four or five responses itbecame clear that they didn't
know.
So he ended the meeting.
He said we're going to conveneagain in a, in a week, and I
want you to give me the topthree, the three most important
clients that you have.
This is the whole corporation.
(49:12):
This is the largest computercompany in the world with the
highest market share oftechnology in the world, and
they couldn't tell who the topthree customers were.
So he goes back.
Here comes the meeting.
He gets the top three customers, has a perfunctory continuation
of the discussion, thanks themvery much, ends the meeting.
(49:34):
What do you think he did next?
He's got 60 names.
He got on a plane and went tovisit every single one of them.
In three months he came back.
He's got his 90-day project outof the way.
He's been given input from the60 most important clients that
(49:57):
the company has, according tothe leaders.
And he asked them what do youlike that we do that you want us
to continue?
What don't you like that we dothat you want us to continue?
What don't you like that we dothat you want us to stop?
What do we do that doesn'treally matter to you and what
would you like to see us doinstead of everything else?
Those four things, and hedistilled it down to two or
(50:22):
three things for every singleone of those four from those 60
customers.
And then he went out andexecuted it and saved the
company, doubled the volume ofthe company within the first 18
months.
So there's a man who, likeMcKinsey, comes in with fresh
eyes, which is an expression Iuse.
Speaker 2 (50:44):
I think when you were speaking, a couple things went
through my mind is, first of all, a really cool story.
Second is jake, brad jacobs,you know powerhouse and pretty.
Um.
The third thing that's in mymind is umEMs are either going
(51:05):
to fail or go private.
It's the only way you can do itis to fix it.
You're going to have to takecontrol of it and it's going to
be interesting.
Speaker 1 (51:17):
And that's a great word.
I love that word.
It's interesting.
Let me go a little bit furtherhere for a second.
Let me go a little bit furtherhere for a second.
We're not okay.
Let me get really nasty.
Grade eight American education.
(51:39):
There's a grade four and gradeeight standard testing that
takes place with every studentin America every year 2024 grade
eight and they test arithmeticand English.
70% and 72% of the students inAmerica at grade eight cannot
(52:00):
read at grade eight level andcannot do mathematics at grade
eight level.
Interesting, oh, no question.
Like what the hell's going onhere?
So go up further in thehelicopter or the hot air
balloon.
Somewhere in the 50s it becamedetermined by American
(52:23):
government that they wanted youto have a university degree
because you'd make more moneythat way, and the whole
education community turnedaround because the product that
they're trying to create is awork ready student and employee
for the community and they'vebeen failing.
Speaker 2 (52:44):
Keep talking.
I'm going to.
I'm going to go grab somethingI want to show them.
Speaker 1 (52:47):
Okay, and in the process of that failure in the
80s, a new program came out ofCalifornia called AVID, which is
Advancement Via IndividualDetermination, and the
illustration that I use is we'reall 10 years old, we go to
(53:09):
school for the first day and wehave three hours worth of
testing, and then we go home andwe come back a week later.
We're all 10 years old andwe're all assigned a class.
You could be in grade three tograde 10, based on your specific
(53:30):
skills and knowledge level.
Now we're starting to educateaccording to the capacity of the
student.
My daughter's the curriculum isresponsible for the avid
curriculum in her schooldistrict and she says Dad,
students don't have criticalthinking skills anymore.
(53:51):
So we create assessments likethose tests for the 10-year-olds
, so that I know exactly who'sgood and who isn't, what they
need in order to get good, howthey can get better, what are
the different options of them intheir career, and we can create
(54:14):
a complete, individualized,personalized learning path for
them.
However, employers look atemployees as tools in the
toolbox.
I'm going to hire you tosatisfy this need with your
skill set, your tools, and ifthose tools become outdated,
(54:37):
I'll replace you.
Speaker 2 (54:39):
yeah, and when you contrast that with rockefeller
who said it, you know I'll buytalent, put them on my team, or
Brad Jacobs, and I want the bestpeople and I want I'm going to
pay them so much they wouldn'tdream of going anywhere else.
And this whole notion of aquote, unquote a player is
interesting and it kind of tiesto your outsourcing model.
(54:59):
I guess if I had to addsomething on is I would
encourage OEMs and dealers tothe sense.
If you know, I have this book.
I'd like to send it to you.
I'll show it to you in a moment.
But what does informationreally measure?
It measures the uncertainty weovercome.
It measures our chances oflearning something we haven't
yet learned, and it's kind ofthat simple.
(55:20):
What does early informationreally measure If it's not
helping you overcome uncertainty?
Cut your arm off.
I think it's a really fun book.
Send me your address and I'llsend it to you, okay.
Speaker 1 (55:33):
We have a suggested reading list for interested
people on our website.
There's a couple of 300 booksin there.
One of the guys that I list inthere is Patrick Lencioni, who's
got about 10 books out there.
One of them is called GettingNaked, because you used the word
naked earlier on and what thatis is that you're starting a
consulting business, so you gointo a client, you're completely
(55:56):
naked because they have no idea.
They want to know who you areand what you are and what you
can do and how much you're goingto cost and all the rest of
that stuff and you got to becomenaked.
In it.
He has three signs of amiserable job um, a whole.
And they're all fables, easystories 100 to 150 pages, small
(56:19):
format, big print, easy to read,Absolutely wonderful.
But in almost every class I did.
I'm not doing classroom traininganymore, but I always used to
start with okay, who's read abook in the last year?
A lot of hands went up.
Who's read a book in the lastsix months?
Who's read a book in the lastthree months?
(56:40):
Who's read a book in the lastmonth?
I said you know, if you're notreading books, you're dying.
And then I would ask the room.
I said how many books do youthink I read a month?
And everybody guesses one ortwo or whatever.
I have two going every week ofall manner of stuff.
Might not have anything to dowith anything that I have any
(57:04):
interest in, Might be astronomy,Might be astronomy, Might be
SpaceX, it might be Neuralink,it might be it doesn't matter.
It's just trying to exercise mylittle peanut so that I can
stay relevant.
I've got two grandkids.
My daughter's got a master's ineducation.
My daughter's got a master's ineducation.
(57:25):
My granddaughter's got amaster's in animal science.
My grandson's in the Navy, thenuclear Navy.
He's the brains of the family.
He's going to have nuclearengineering and astrophysics
degrees by the time he's 20.
He'll have master's in both ofthem by the time he's 22.
I said what are you going to dowith that by the time he's 22.
?
I said what are you going to dowith that?
He said, well, they want me togo to officer's training school.
(57:52):
They want me to go to Annapolis.
I said okay, what are you goingto do?
He said, well, he was the headof the ROTC in his junior year
in high school.
He says Bobby, this is nuts.
I tell them to do something.
They don't do it.
It's driving me crazy.
I said well, you're in themilitary, you know if you ask
them to do something, it's notoptional, it's get it done, so
you don't need to worry aboutthat.
(58:13):
When you're in the military,However you get in the private
sector, you kind of have tolearn how to motivate people,
manipulate people whatever thehell you want to call it to get
them to do what you want them todo.
He said is it really that bad?
I said it's worse.
That's why I got intoconsulting in 1980.
My job was babysitting, andpolitics I don't like and I'm
(58:35):
not good at either.
I like solving problems.
So we've got a whole world outthere of people that don't know
how good they are or how muchthey're missing.
Companies are using trainingand employee development as
discretionary funds, which is ahuge mistake, and we have this
(58:59):
fourth industrial revolutiontaking place.
That's changing the completesupply chain and all trading
between all nations on theplanet.
Speaker 2 (59:08):
Yeah, I'm going to say I've changed an opinion
since I entered this call.
If I were an OEM, I wouldaccelerate in buying back your
distribution.
Then I'd take the companyprivate.
Speaker 1 (59:21):
Okay, so while you're doing that, I'm going to go
down another path.
I'm not going to be affiliatedwith any OEM.
I'm going to get a replacementfor every damn machine there is
out there and I'm going to sellit at 25 percent lower than you
can buy it.
Speaker 2 (59:35):
You know it's funny.
That went through my mindbefore I mentioned that to you.
That last comment to you.
I think that's brilliant.
So let me go a different way.
Hang on a second.
You would bleed them out, ofcourse.
Speaker 1 (59:47):
Of course they wouldn't even.
I mean at the beginning, theywould think it's crazy.
But customer review, well shit,tvh right.
So you know what's really funny?
I started consulting Another.
Speaker 2 (01:00:00):
Harvard Business Review case study.
Yeah, they gutted that industry.
Speaker 1 (01:00:07):
Of course, and I use those Harvard case studies as
training films in my classes.
Yeah, and they use that as okay.
Here's a case SouthwestAirlines, herb Kellner.
He's the Sam Walton of airtravel.
His business plan was on anapkin in a bar.
(01:00:31):
There's examples all over theplace.
The trick is we have to getcritical mass and we have to
continue to see the breakdown.
So here's an interestingstatement.
(01:00:52):
The first machine owner isowned by the supply chain.
That starts with the OEM.
Maybe it'll be a privatenetwork, maybe it'll be private
dealers, doesn't matter, but itstarts with the OEM.
Who owns the second machineowner?
Speaker 2 (01:01:08):
An auction.
Richie Brothers, yeah.
And if you look at the Larry K,Right, you know Larry K, yeah,
here's an example of how littleI know and it's shocking how I
lower how much I know on a dailybasis.
(01:01:30):
The half-life of what I thoughtI know is declining or
accelerating.
So, Larry, at last year's AEDhe presented something and it's
like you know, when you seesomething like I'm the village
idiot.
How did I not see that before?
He put up the disposals likeCapEx for the three or four
(01:01:52):
major rental companies is what?
Five, 10 billion a year?
Right, it's a huge number.
And it just never occurred tome they dispose of a similar
amount.
Never occurred to me, it justnever occurred to me.
They dispose of a similaramount.
Never occurred to me.
Like you talk about crushing amarket, I mean like it just
never occurred to me you floodthe market with late model,
(01:02:15):
well-maintained equipment.
It doesn't help.
I mean it's nuts.
I like your, like your idea.
Speaker 1 (01:02:27):
Yeah, let's just drop it like your idea and and say
that's enough for one.
I think we probably overloadedtoo many people and in too many
thoughts.
I hope that's the case and I Iappreciate your perspective and
you know.
Speaker 2 (01:02:42):
Thank you for being with us well.
Speaker 1 (01:02:44):
Well, your statement that you don't know.
Remember Rumsfeld, when he wassecretary of defense, made the
statement that we don't knowwhat we don't know.
That's a very significantstatement, oh yeah, and we don't
know, you and I don't know.
Nor does the industry, nor doesthe world know what we don't
(01:03:05):
know you and I don't know, nordoes the industry, nor does the
world know what we don't knowtoday.
We do know that there isunbelievable challenge.
We do know there's aconsolidation.
We do know there's a forcedindustrial revolution.
We do know technology ischanging faster than we keep up.
We do know that we feel likewe're victims, but we got to try
(01:03:27):
and get control of our livesagain.
So my grandkids I tell them allthe time I want you to be in
business for yourself.
Find out something you'repassionate about, something that
you think you can help peoplemake money at, and give it
everything you've got, andunderstand you're going to
change that every 10 years forthe rest of your life, yeah, and
(01:03:50):
I want to see Americancompanies.
Speaker 2 (01:03:53):
I don't you know I?
America means a lot to me.
The ideals and the freedoms Ithink we enjoy, and certainly
the people who laid their lifedown for us enjoy, and certainly
the people who laid their lifedown for us and to the extent we
can bolster the prosperity offuture families in this country
is something I'd like to do andI think it's fun.
(01:04:13):
By the way, I've got yourservice.
I hope you know this.
You are frequently in myprayers of gratitude and I
appreciate that, because I feelthem my friend.
Well, you are a blessing and Iwill report back on Helen's
birthday.
Speaker 1 (01:04:29):
Way to go.
Okay, so we'll see you in thefall in Hawaii.
Speaker 2 (01:04:33):
See if I can pull it off I think I can.
Speaker 1 (01:04:35):
Okay, so on that I'm going to say thanks very much,
nick.
I think this has been a reallyvaluable hour.
Speaker 2 (01:04:41):
You're a gift and a blessing.
So, oh, I had a lot of manygood conversations with Troy
Otmer.
Yep, he's world-class.
Oh yeah, he is a.
He is a Titan.
Speaker 1 (01:04:56):
So thank you for that oh, there's, there's, there's
Troy, and there's a whole bunchof others that are, that are
coming.
There's a bunch.
There's an amazing amount oftalent out there and, to the
audience listening, I hope yougot something from this candid
conversation.
If you have any thoughts orcomments, we give you.
When we send this out forconsumption, we give you an
(01:05:16):
email.
You can send any questions orthings that you want, and we're
going to be following down thispath for the next six months,
for sure Until I get someindication that we're starting
to make some progress.
So thank you very much,everybody, and I look forward to
having you with us at the nextCandid Conversation Mahalo.
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