Learning Without Scars
As a third-generation educator, it is easy to say that teaching and training are in the blood for Ron Slee. From his beginnings as a coach, through his time at McGill University, Ron developed a foundation for the work he does today. From working within dealerships, to operating a consulting company, creating a training business and running twenty groups, Ron has been directly involved in this Industry since 1969. Ron has been known as the industry expert for years, and has brought this expertise to bear through his training programs. Today, Ron provides specialized, job function based internet based subject specific classes, job function skills assessments, as well virtual seminars and webinars. These courses are designed for manufacturers and their dealers, as well as independent businesses in the construction equipment, light industrial, on-highway, engine, and agricultural industries through Learning Without Scars (www.LearningWithoutScars.com). This platform is a continuation of the work begun by Quest, Learning Centers which was established in 1996. This training is aimed at improving dealer parts and service operations through qualified people that are knowledgeable in using operational metrics and current market and operational best practice methods.
Learning Without Scars
How Concentration, Clean Data, And Customer Choice Beat Giants
What if the fastest path to growth isn’t “more leads,” but fewer, better customers you serve so well they never leave? We dive into the uncomfortable truth most teams avoid: value is concentrated, churn is predictable, and the difference between winners and strugglers is a focused list, clean data, and relentless follow-through.
Nick Mavrick of Built Data joins us to unpack how behavioral data flips strategy from guesswork to precision. We talk about why 3 percent of customers can drive most of the revenue, how to spot the accounts worth protecting, and why chasing the bottom of the market burns time and morale. Nick shares lessons from rental consolidation and dealers under pressure, then maps a practical path for OEMs and dealers to operate from a single, shared dataset that actually moves the needle: national to regional account targeting, unified telemetry for proactive service, and outcome-based offers that make loyalty rational.
We get tactical on carving out “special forces” inside legacy organizations to bypass slow systems and prove change in 90 days. Think weekend war rooms, a defined list of high-potential accounts, service promises tied to uptime, and quarterly reviews that reward implementers. We also explore the shift from selling iron to selling outcomes: cost-per-hour, automatic replacements at thresholds, and machine health monitoring that turns vendors into partners. Along the way, we tackle supply chain capital traps, competing with national rental giants via human service, and how to raise standards one name at a time.
If you’re tired of noisy dashboards and stale models, this conversation offers a cleaner lens: begin with the end, market to a defined list, and serve the right few better than anyone. Subscribe, share with a colleague who owns key accounts, and leave a review with one change you’ll make this quarter.
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.
Aloha. And welcome to another candid conversation. Today we're joined by Nick Maverick. And it's going to be an interesting discussion. Nick has a business called Built Data. He's been involved with the recent AI podcasts we've had with Venke and others. And today I want to focus on his strength, his focus, which is data. And he looks at data in ways that most of us don't have never thought of. But also how that applies to artificial intelligence. So with that as the opening, and that's a pretty damn wide field. Nick, good to see you, young man.
SPEAKER_00:Ron, always a blessing to see you. Did I give you enough ground to cover? And I may, I have to look at flights. Um make them end of next week. That's okay. I'm here.
SPEAKER_04:But so how do you how well? First of all, how long has built data been in existence?
SPEAKER_00:Good question. So uh I'll answer it two ways. One is built data to answer your question specifically. We've been a call incorporated for a year and a half. Prior to that, uh, I operated as Data Co and for a couple years. And the foundation of the methodology, and happy to share that. We I hope people do this on their own, um, was many, many, many years ago, uh, 1998, when I worked for one of the consolidators that competed with United head-to-head called Nations Rent. And Nations Rent uh had extreme customer concentrations and it just shocked me. Um, Nations Rent, 3% of its customers did 62% of the business. It was 15 people per store. And it uh was just astounding to me. And if you lost five of those customers, your acquisition, since the company grew through acquisition, the acquisition was no longer a creative. And nation's rent got over-leveraged. Um, ultimately went into chapter 11, restructured, got rid of a ton of debt, and was sold to Sunbelt at quite a handsome return for the new owners, which was a very large hedge fund and some talented people. But that taught me the a bunch of things. It's not only a concentration of data, but it was if if you you it the notion people talk relationship, if you treat your customer very, very well, they keep coming back again and again and again. And that's how you end up with these concentrations. And it's actually a very, very good thing to have uh extreme concentrations, as Buffett says, you know, too much of a good thing can be wonderful.
SPEAKER_02:So the other side of that concentration, it is a blessing of good things, like Buffett said. But you lose a lot of customers.
SPEAKER_04:And the construction equipment dealers late to the game in rental didn't understand that concentration piece at all. Didn't it was outside their their thinking pattern, their comfort zone. When you started with nations, and then for a while you worked with smart equipment with Alex, right? Alex Hirschler? Yeah, yeah. Sunbelt I don't know that these numbers still hold or pretty close. I think Sunbelt's return on assets is fifty percent. So you have ten million dollars worth of assets in the rental fleet, and you're gonna spin off five million dollars of profit. That's to an equipment dealer that makes two to five percent. That's obscene. They don't know how to deal with that. Yeah. So from that is the beginning, and the concentration and the retention being the drivers, how did you how did you start trying to slice and dice the data?
SPEAKER_00:Uh good question. You know, I'll do my best to answer because so many things kind of rush into my head. There's a number of ways uh we look at data, and I'm gonna say our jobs are relatively easy. The hard work is done by the rental company or the dealer, specifically by the salesperson, and to stay in the path of growth. And we we look at a few things. One is we look at the behavior, uh, which is just think of it as a bunch of photographs and putting them together, as Steve Clegg says, the transaction. And Steve is so brilliant that, and you're brilliant, and that the transaction, which is the behavior of what I did today and yesterday, and the last month, and the month or in the month before, matters incredibly so. So we look at the behavioral side of math, is the fancy word, um, of what happened. We look at the concentrations in the market to point people towards desirable customers, meaning you mentioned um customers do turnover. But when you break down in construction SICs, some people prefer the NAICS codes, about uh 83% of the companies have less than 10 employees, and they count for 23% of all construction segments or businesses.
SPEAKER_02:So say that again. 83%.
SPEAKER_00:83% of the companies is the bottom end. I'm gonna say the lowest value. That doesn't mean they're valuable customers, but they're not gonna drive um they're not you're not you're gonna have a very hard time prospering off this segment. So 83% of the business money. Correct. Yeah. Have less than 10 employees, and they account for 23% of the number of employees. And so that you can look at that number of employees is a proxy of their of their capability or their their wealth, like a better word. And there's an extreme amount of turnover uh in that one to 10 category segment. Those businesses come and go. What we aim to do is point people towards the more secure companies, uh, generally 20 plus employees. It isn't does also include 10 to 19 employees, and the ones that are working in the highest growth areas. So a dealer or a rental company, or an OEM for that matter, can secure their business with the most valuable customers strategically. As opposed to, um, granted, a salesperson executes a transaction. The a lot of sales focus and marketing focus is very transaction-oriented. Now, I know that recognize that's a contradiction. They're trying the I've got to sell something today to achieve my market share goal. I've got to sell something or rent something today to achieve my quota. And then they scatter all over the market to achieve that outcome, but it may not be strategic.
SPEAKER_04:So stop there for a second.
SPEAKER_00:Yes.
SPEAKER_04:For 27 years, you've been digging around in data. You've been analyzing things, and 27 years later, you've got conclusions that stand the test of time. But they didn't come in the first year, first three years, five years, which is why most people don't want to walk through the door that you did. What triggered or why or how, or what is it about your personality that makes you so curious? Doesn't matter how many times you don't get the answer, you're going to keep on digging. Because that's what's missing in almost all of us, isn't it?
SPEAKER_00:Yeah, I wish I had the Bill Burley. Well, yeah, it just it's been a life, yeah, a life. I I was watching, uh, I don't know if you've ever seen the Bill Burley uh video about running running down a dream. Uh I'll send it to you. But he just is publishing a book. And I would say the younger version of me stuff had was blessed with a bunch of different experiences. And the teachers like Alec Schussler, um, Don O'Neill, who great entrepreneur who really found was the foundation of call it my realization of how important integrity is and caring for people is John Kaske. John Kaske, absolutely very good friends with Don, Don Charbonnet, um, McKay. There's others. And what about uh when I was in my very early 40s, I turned 41. I was working at Volvo Rents and for almost 10 years, and I realized I had become, I always thought of myself as an entrepreneur, and I and I I realized I was quote unquote a corporate guy. And the so I left the industry. I said, I'm gonna had enough call it uh accumulated to uh not have to work next week, and I left the industry for um probably eight years and went and did other things. A few years ago, I did some uh work for the owner of a large dealer enterprise. It happened to be a caterpillar dealer, and it was very well um resourced. They had more data, they had systems up the wazoo, subscriptions, people in all the seats, but they quote unquote couldn't get their data. And I you know have to kind of blind some of this information, but they that I think they had lost, uh, my opinion, they had so many strengths, but they had lost awareness of what the how they were succeeding. So a lot of what I learned early on was proportionality, and the proportionality is in everything. It's if you flip a coin, of course, you're you have a very even distribution. But you if you can look at and understand, get on the scale, understand the proportionality of your most important customers and your least importance. Now you can put a stake in the ground and you can say, How am I going to go strategically? And if you don't do that, your results can be quite volatile. For the industry as a whole, there's a huge opportunity, as you know, with the amount of capital that's stuck in the supply chain, meaning a dealer places an order, a manufacturer, manufacturer, ships it to the dealer, floor plans it, it may sell, it may not, it sits around, it ultimately gets discounted and rinse and repeat. And there's an incredible amount of capital that's trapped in that supply chain. Our vision is if we can provide a common data set to the manufacturer and their distribution, they'll be more successful. There's no reason this industry should have 2% net income margins, um, or a dealer should have 10% gross margins.
SPEAKER_04:It's not what we're seeing recently, though, Nick, is about every 20 years we're losing half of the people in the supply chain.
SPEAKER_03:Yeah.
SPEAKER_04:Again, part of that is the low return they're getting, part of that is the excessively high investment that's required. Part of that is the process and methodology they've been using, which is, I think, to some degree why leadership sticks their hands up in the air and says, Well, we'll just continue what we've always done, because everything's okay. My sales number's going up. And if it isn't going up, when you're dealing with only half the number of competitors, you got a bigger problem, you know. But they didn't, they don't know that because they're not data driven, which I think everything that you talk of, think of, deal with, and every decision that any of us should make should be data driven. Without it, we're dead.
SPEAKER_00:I I mean it it you might as well wear a blindfold. It's in it's unf the outcome is unfortunately when businesses don't do well, it destroys families. It it really does. And it's from a humanity standpoint, it's it's a shame. It it's completely preventable. And you there's a few more market forces today, right? Well, by the size of the three largest companies, um, United, Sunbelt, and Herc, very well run. How they did it, I get kudos to them. It's very difficult to pull off what they did. But they now have extreme market power. Uh, they can open and close factories. And so if you're a dealer, you the rate of shift, as you know, from ownership to rental is changing dramatically. And what was general rental, now they're in specialty rental. And the amount of used equipment that they pump into the market um quarterly is massive. And you see that in the numbers. And if you're a dealer, what you you may want to consider were a rental company is the employees of big companies generally aren't happy, right? They don't feel valued, they feel as a number. So, how can you play into that inherent weakness? And I mean, if they're not true believers, and they're not, because it's a big company, has nothing to do with the pedigree of who these companies are, in my opinion. Then the the independent, the dealer, the locally owned businesses, the locally owned rental companies, the way they can play against those companies is by securing the customers through better relationships. Now, I'm being a little simplistic because of course it it breaks down to advantages that those big companies have, like incredible buying power.
SPEAKER_04:Um the the thing, and let me interrupt for a second, the thing that that focuses on is that crazy word loyalty. Yeah. And almost everything that we have in society is saying to us loyalty doesn't exist anymore. And that's from marriages, that's from all kinds of different directions. I believe our activity, our actions have caused loyalty to become less important. We went to voicemail, nobody answers the phone anymore. We did the customer service from India, and no disrespect to India or Malaysia or wherever, but it wasn't local. Do we not have enough people here? Oh. And then in the last this year, it's kind of interesting. We're suffering now because we don't have enough employees out there because we're getting rid of the illegal aliens. They were performing a valid function in society, but Ronald Reagan and Tip O'Neill back in 1980 decided that they didn't want the visitors' visa to exist, the temporary visa for the agricultural workers, for instance. The consequences of regulations and governments and is is really amazing. And the only way you can fight that, it appears, is like you just said. I've got Sunbelt, I've got United, I've got Herc. And they have an inordinate amount of power. Like you said, they can bury a manufacturer. Unbelievable. Yeah. And that's not just in our industry, this is generic across regions. It's in the paper business, it's in the mining business. You know, one little side, and it's a little weird. Do you know who the largest forestry company is in America?
SPEAKER_00:I don't.
SPEAKER_04:Warehouser. And that's three guys that started in Minnesota. You know what the largest forestry company is in Canada?
SPEAKER_00:I do not.
SPEAKER_04:McMillan Blowdell, British Columbia. So in Canada, the forestry companies are given trees to plant. So the part of the forest is subsidized, according to America, because we don't do that. So the America puts a tariff on it to make it equal. You know who owns McMillan Blowdown? Warhauser. So they got both sides of the border. It doesn't matter to them what the governments do. And that's the same thing with those three rental companies. It doesn't matter what the regulators want to do. They've got enough stroke, enough power, they can overcome damn near every obstacle that's out there. If you don't deal with data, you're dead.
SPEAKER_00:Like you said, you're blindfolded. You're blindfolded. And you if you flip it around, um, they can win. They can. I mean, it it's uh in the military, it would be special forces backed by great intelligence. You need a small team. You cannot get in a land war. It this can be one, but you you can you have to take it in layers because it's intimidating otherwise. Meaning, an OEM with their dealer operating off of literally one name, same row of data. Some of the biggest OEMs, as you know, have national accounts. Regional accounts are tough for them to execute. That's that's not that's not right. And it just requires organization. So the they could work down from national accounts to regional accounts and be specific with a brand. And so they can want to secure their business, working from national accounts to regional accounts by working off a list that's shared with the dealer and using systems, not legacy systems, that can jump over, you could argue it'd call it AI, but just call them flexible systems that link the OEM to the dealer on a common set data set with these regional customers and provide them the level of support to guarantee uptime. It just requires a little bit more imagination. And to the extent they leave that to and they just say, no, it's not a national account, that's not cool. Um, United, you know who has great national account programs? United, Sunbell, phenomenal. Um, I would again argue that those people don't feel completely valued. Maybe they're not fully supported. Nothing against those companies. It's by virtue of being one of the tens of thousands of employees that you you could beat them through better relationships, meaning a better understanding of what you're trying to accomplish.
SPEAKER_04:So what you're you're describing really is the competition to a shopping center, to a mall. It's specialized services, specialized products with people that know what they're doing. You go into Walmart, uh change that you go into Safeway, and you ask for what's the special today in meat. And they'll come up with hamburger, they'll come up with rubai, they'll come up with New York's, they'll come up with pork chops, whatever the heck it might be. And I'm a bit of a jerk. I say, well, why is that special today? And they can't tell me what's the content of protein on that? They can't tell me. So mom and pop, or whoever does the shopping, have their tribal knowledge of what's good for the family, like a dealer has tribal knowledge of what's good for the customer, and here comes Reynolds, here comes Amazon, they change the whole damn game, and they don't need the the traditional doesn't know what hit them.
SPEAKER_01:Yeah.
SPEAKER_04:Whole Foods is gonna deliver in four hours. Why does anybody go to the shopping to the grocery store anymore? I got other things to do, I'm too busy. Let me spend some time with my family. It's a real shift, Nick.
SPEAKER_00:It is, but what if you um and I want to share with you something, and I would love your advice. But what if you a manufacturer picks their national regional accounts? Okay, they may have to form alliances called allied brands, right? And because they have to serve this customer, they can't leave, they have to just pick off enough of this customer's needs, slash share of wallet, to um to secure that base and leave the remainder to these large rental companies. They may have to become creative in working with people to other call it the allied brands. They may have to dig a little bit deeper and grow a little bit closer to offer a complete offering to the customer. And where I would love your advice is we're we're just about to come out with call it a new data product. And specifically, when you spend enough time staring at the same thing, we're identifying the gap in the market that's not in your customer data, and it's not in data that you may receive from external providers. And we we believe it's 30, it's about a third to 50 percent. And when we we can score these customers, we can project what they rent, the parts and service they consume, and what they own, what and what they're likely to purchase, whether new or used. How did we do that? By observing uh lots of rental data, right? And lots of parts and service data. And when you when you I guess I can stop there.
SPEAKER_04:Uh when I say I love your the thing the thing that you're pointing at is life cycle management. And one of the flaws that we have is the availability and the accuracy and the cleanliness of data. So I have a question that says, I've got data at the OEM, I've got data at the rental companies, I've got data at the dealers, I've got data at the contractor level. Why? Why don't I have one common database that everybody has access to?
SPEAKER_00:Or with go with that. Limit, take that database, you just created it. We magically, you just press the button and you magically create it. Only put in that database what you're trying to accomplish. That's it. And what there's so much layers of brain damage, which is this the systems today, if you really broke it down all down, my opinion. There in unfortunately, there is some of the data is inconsistent. And what happens is it's like a drop of poison. It will not kill you, but it will make you sick. And people burn, they put it off, they say, I'm not gonna do this, I get confused, it's not my job. Um, these systems, quote unquote, can mostly talk to each other. Uh portions of it will will be called duplicates, et cetera, et cetera. But I would say start over or actually forget that, scratch that. Create a new database, it's Ron's database, and only put into it the targets that you're aiming to go after. That's it. And watch it and secure it, treat it almost like a startup within your enterprise. An OEM could do this, they can link it with their dealer distribution and go after something that's beyond their national accounts, my opinion.
SPEAKER_04:But what what what you're describing is what the TrueMax and CarMax and those types of boys do. And go back to Alex Schuschler and SmartEquip when he started it with Eric, the systems guy, and John. He was looking at life cycle management. He was looking at the total cost from birth to death. And we've often talked, Alex and I and others. Who owns the first machine sale? The OEM dealer or the OEM? The OEM if it's selling to a rental company, the OEM dealer if it's a normal customer. Okay. Who owns the second sales transaction? That's where Ritchie Brothers got to roast and smart equipment and a bunch of other things because Anne's vision was uh an auction company is gonna own the second machine. But there's a flaw with that. The the auction company then has to provide the same services that whoever sells the first machine does. Example, maintenance services, extended warranty services, field service response times, all of the happy stuff. But today I've got sensors in almost everything of every piece of capital equipment anywhere that's going to tell me there's a problem. Nobody sells that. Why don't we sell that?
SPEAKER_00:You're a thousand percent right. These things are computers now, or more, you know, tilted in that direction. You're a thousand percent correct. That what a dream that you can be connected to this asset, and if you can connect that asset to a customer you've already identified as either a best customer or future best customer, you've secured your base. And you're part of their solution. You're part of helping them elevate their margins. It's with a little bit of planning, uh, you could do stand up Ron's database, put it only in it, the people that you're targeting, link it with this call, this channel, the OEM and their channel, and service the shit out of them. And what happens is is it's it's it's a death move because they will succeed at a faster rate and they will bleed out their competitors with um call it internal bleeding. They won't know it immediately. You have to do it. You have to do it.
SPEAKER_04:The interesting thing, I think, is the unit of prominence is changing. We sold a machine for a price, a million bucks. Not so fast. We rented the machine for five thousand dollars an hour. Not so fast. I didn't rent the machine, I didn't sell the machine. I'm gonna charge you thirty bucks a month, I'm gonna charge you seventy-five bucks a month for these ten or fifteen things, and after so many hours at so much cost per hour, I'm gonna change out the machine for nothing. I'm gonna keep the price the same. Now we're talking about a doctor, a patient, and instead of the doctor being a pull prescriber or a plumber, they'll be interested in the health of the patient. Instead of making a million bucks selling a machine and making three percent or five thousand dollars an hour and making fifty percent, they're gonna be making an inordinate amount of money. And who the heck's gonna displace them? If I sell you a machine, whether it's new, used, or whatever, and I'm collectively charging you$3,760 a month, and I have somebody monitoring the health of that machine remotely, and it's gonna give you a call or shut your machine down without your knowledge, in a safe circumstance. What's the contractor gonna want it? He's gonna then all of a sudden realize, well, D, all I'm really worried about is how much am I gonna make per hole, or how much per mile of road, or how much per trench. Cost of the machine, cost the it doesn't matter anymore. The whole thing's gonna change again, Nick.
SPEAKER_00:You're right. And the best entrepreneurs know those unit costs, meaning the cost of digging that hole. They do.
SPEAKER_04:But go back to How you got to where you're at. There's people out there right now trying to figure out what that next iteration is, and they're going to be stubborn like you are to get there. And it'll be bringing new data to us that's going to change the whole thing. And it probably is going to change the kind of equipment that we have available. Money more small. If you look at mining, look at forestry. You probably have two, maybe three manufacturers that have the lion's share of the money in mining, Caterpillar, Kamatsu, and Hachi. In forestry, it's a similar type of situation. But now go down. So that's the D10, the 575, the you know, the obscenely large machines at very expensive prices. But go down into the middle. The mid-sized wheel loader on rubber, mid-size tractor, mid-size crane. And then you go down to the small stuff. Oh, wait a second. Now we've got a different game. Here's Mahindra. They might, and it's a sold product, they might have 15 million, 20 million dollars, they might have seven, eight employees. It's an old mom and pop type of shop. Everything's fine. And who's going to compete with them? I don't see anybody out there. So take somebody like Bobcat or somebody like Kubota. Kubota's a better example. They're worldwide. Under 50 horsepower, probably the largest engine manufacturer out there. Maybe Yanmar would be a little bit of competition. Who's going to compete with them? They're in Bobcat skid steers. All of a sudden, Kubota comes out with a skid steer. Uh-oh. See how the dynamic changes. World War II starts. There were seven tractor companies going into World War II, all about the same size. Coming out of World War II, one was head and shoulders above everybody else, and we know it was Caterpillar. You know what made the difference?
SPEAKER_00:I don't.
SPEAKER_04:Caterpillar got the track contract on tanks.
SPEAKER_00:Huh. That's interesting. I didn't you've seen that in other industries.
SPEAKER_04:Oh, it's the same thing in other industries. You got to identify where the big problem is, concern is, whatever. And and the guys come back after the war, Corps of Engineers, they were all trained on cap machines.
SPEAKER_00:Yeah. I heard that with chocolate, with Mars chocolates, because MMs apparently didn't melt if you kept them in your pocket all day.
SPEAKER_04:And did you know that if you have one MM, you have to walk a block?
SPEAKER_00:No kidding.
SPEAKER_04:Yeah, somebody actually went through that. See, so that that's what makes this whole thing so exciting. Who's the one that created the quartz watch movement?
SPEAKER_00:I don't know.
SPEAKER_04:The Swiss. But because it wasn't gears and all that fancy engineering, etc., they didn't think much of it. And they showed it at a trade show. And guess what? The Swiss, the Japanese saw it. That was the end of that. Right. Who has the best watch mechanism in the world? Omega. Who owns Omega? Swatch.
SPEAKER_00:I didn't know.
SPEAKER_04:It's all over the place. So the trick is to have the data, to have the people that are curious enough about it, to have them have enough comfort economically that they can do this without any necessary gain in sight. And it's amazing what we find. Winter wheat. Invented in Saskatoon, Saskatchewan, University of Saskatchewan. Now we have three seasons of wheat. Soybeans, sorghum, all of these, every single thing you want to talk about is the same thing. Here in Hawaii, it's wonderful because everything comes to us from land somewhere. It comes in by boat primarily. It comes in in containers. So there's one expensive machine that can tow two or three boats filled with containers that have no power, no staff, no nothing. That's interesting. It's all so what you do with built data, and the thing that's intriguing is the number of apostles, the number of followers you have of built data's theory is small. Fair comment? 100%. Yep. And how you get mass acceptance, let's say, is in this kind of change environment is really tough. I was talking to a school this morning, one of our centers of excellence. And schools have never had to sell anything. There's been a syllabus, there's been a book, a parent and a child, a teacher and a child, they'll sit down to time this class, this class, they'll place an order to go to the school. Schools never had to sell any of that stuff. This particular school has now three people, only three people, five different campus locations across the state, three people in marketing. Because they've never had to sell. Just that is a radical shift. Change is really our enemy.
SPEAKER_00:It uh the I don't want to be a cheerleader, but the good news is there this in technology inflection point called AI allows you to uh it allows you a shortcut to change. You just have to have the courage to dig in. There is look, Charlie Munger would say turnarounds too hard. And the what if these these companies are looking at their declining profitability over time, you've talked about it with your cat parts example, many that I've heard is in is etched in my mind. The good news is if you pull back and you look at the amount of cost that you're carrying, whether the OEM or dealer, and you can free up some of that, it's not it's not working for you. Um free up some of that capital, create Ron's database, work to a dedicated list. You can begin to pull some of those capital back back in, restore your coffers, and keep going.
SPEAKER_04:I think the the best illustration to use on that one, Nick, is since COVID, go to a restaurant, and it's pretty general now, 80% plus, you're gonna get a one and a half percent credit card charge. The restaurant doesn't pay a credit card charge. Why should the customer? Well, because the restaurant figured out, well, I can charge more and the customer is not gonna get too upset. Go on a takeout now and pay for the bill. You have to choose a tip or none of the above. It's all of these things, so where I'm going with that, we have societal changes, one of which is chips, NVIDIA and AMD, one of which is crypto, and crypto's got a lot of fraud in it, a lot of risk in it, but there's some parts of CRISPR that are just clean and are going to be there forever. And then you got networks, let alone electricity, let alone the number of people that were going to have to support the electrical grid, let alone that we lose 50% of the electrical from the source to the user, let alone fusion's coming that's gonna replace the need for oil and gas. All of this stuff's out there, and people are discontinuing their life because it's too complicated. And there's not very many people that think this way. Alex is one of them, you're one of them. Steve Cleggs is one of them. Well, you're one of them. Well, you know, I'm too old to be considered anymore. The the uh so all like this belt data basically, you've heard my statement. I I talked to a lot of sales people in sales management of what are you gonna sell next year in 2026? Well, I don't know. I gotta wait till later in the year. Really? Do you have a fixed number of customers? Yes. Are they assigned to salesmen? Yes. Do you know what the operating cost is for parts and service to those machines? Yes. You know how many hours you're putting on it? Yes. Well, how come you don't know what you're gonna replace next year? Oh, darn, I never thought of it that way. That's the kind of thing that we need to have people talking about.
SPEAKER_00:Yeah. You know, I wanted to ask your advice when we launch this new kind of what you can't see in the market. We're playing with sort of positioning. One is mind the gap, right? That could be one of them. Another one could be uh for a sales guy, it could be the no smoking sign that says no leads. Um, we it could be you know, stop digging for your data, or it could be market share in your pocket. I would welcome what you think would what would resonate to get people's attention. What I would make a very, very strong argument about is there their systems and the data that they're using is not serving them. The they're inferior. In my opinion, there well, you can start with the end. If you're getting inferior results, back up from it and say, what what can I do differently uh tomorrow? Go go go more deeply.
SPEAKER_04:The the leadership, and that's from supervisors up, of any business in our industries, the data they're dealing with is 30, 60 days old. 100%. Why? Why don't we get this stuff every day?
SPEAKER_00:Well, 90 a significant portion of it from various third parties is um modeled.
SPEAKER_04:There you go. Okay, so let's stay with that word. No, let's stay with that word. We're using a model. And I'm at the counter in a parts department, in a car dealership, in a marina, in a house builder. The stuff that I'm dealing with is too old. But I'm not prepared and understanding enough of what the data means for me to be able to draw a conclusion. I have to rely on somebody else to do it. There's nobody out there that I can look to because I don't know Nick. I don't know his competitors, and they're not there. And you look at it in medicine, it's the same. In repairing cars, it's the same. Try and be a woman going into an automotive repair shop versus a man. There's market segmentation for you. Yeah. Um, try and be somebody who's knowledgeable on health and goes to a doctor and is told to take these pills. You out of your mind. I'm not going to take those things. Do you know what the consequence? You know what the side effects are? Everything is going to come back to how do we get the knowledge? Where do we go? Google isn't doing it anymore. Copilot isn't doing it, Gemini isn't doing it. Oscar, all these little names that we're coming up with for people to ask questions of, where do they get the answers?
SPEAKER_00:Well, you uh a common theme I hear from in when I either read or listen to podcasts on autobiographies or biography is bad boys move in silence. And if you're using the same systems and the same external data sets that every competitor is using, and a lot of these people do, they sell to you and the person on every corner, your competitor on every corner, then you don't have an advantage. And I would say challenge every internal cost that you have and move in silence.
SPEAKER_04:Stay this stay there for a second because I agree with you 100%. I think we're coming into a new age where it's not going to be that everybody might have the same tools. I'm going to call it tools to make it more generic. But the person who uses those tools is going to be the differentiator. We haven't had that in society for decades, if not millennia, where the person, the individual that's sitting in front of the customer, now we're going back to Steve and his buyer and seller, and we're taking all the rest of the noise away. So you have something I want to buy. And there's nobody other than you and I involved in that. So, salesman, equipment salesman, black book. Then it goes to CRM. CRM came in not to help the salesman, but to have the sales manager be able to manage how many calls the salesman was making.
SPEAKER_00:Or the illusion.
SPEAKER_04:Exactly. And then here comes Salesforce. And now I've got another wrinkle because your database as a dealership in my black book, your database in my CRM, and your database in sales, they're all different. They have different measures, they have different communicate, they have different addresses, for instance. And then we get something like EDA, Equipment Data Associates, that starts tracking everything, every machine that's financed. Now, how the heck does the name get put into the file? How do I match names across three or four databases? And that's what we're dealing with today.
SPEAKER_00:Yeah. Or what if a company can't find it? The bigger the company, uh, as you know, the bigger the company, the less likely either it's not necessarily that they're less likely to finance. It means it's less, it's hard much harder to find in a state filing um because of corporate revolvers and securitization and dot dot dot. So, or multiple tax structures. And you you're the data can be very, very good at the low end. That's the 80% of businesses that constantly turn over. So just think that through. You have very good data in the worst segment of the fucking, pardon my language, of the market. And imagine the brain damage it causes when that's when you don't know that. So you spend an enormous amount of time, uh 80% of your time chasing the 80% of the companies that don't matter. And but you don't know that. You don't know it. What that leads to is fights, disappointments, turnover, expense, lost structure, turnarounds, crisis management, bankruptcies, dot, dot, dot, dot, dot.
SPEAKER_04:Frustration, ulcers, heart attacks, strokes. It's not good. It's not it it hurts people. It you know, one of the I don't know how to characterize this, but the last couple of weeks, you know, I read like an idiot. But one of the things that got my attention the last couple of weeks is paradoxes, and me thinking that it is more important today than ever before that I can keep in my mind completely oppos opposing positions at the same time and be productive. Because I think that's what we're conduct we're we're confronting today. My car is consuming too much gas. I haven't had it maintained for three months. My tires are wearing out. I haven't had them balanced and aligned in six months. Not that it's 110 degrees outside. Not that I didn't warm up the engine when I started. So all of these things, and like and we know this stuff. My my Subaru and I I kinda like this little thing. There's a light on my dashboard. Until that light goes away, in other words, the RPM's down, the temperature of the oil, and everything else is back to the right place, then I can start. And I've done that since I owned the damn car. My wife had an A6. She's had 12 years, 41,000 miles. She never did that kind of thing. But she didn't put enough miles on it to cause a problem. If you're gonna drive at 80 miles an hour, you better ought to have the right fluids and you better ought to have the right temperature and you better ought to have the right filtration, or you're gonna have trouble. We know all this stuff, but we don't act on it. And we're getting to the point that the prime product is almost too expensive, except for televisions. Yeah, they're getting cheaper.
SPEAKER_00:If we go back to working from a defined list, it's it's not that hard. What's hard is count to 10, right?
SPEAKER_04:And I love you, man. Because that's really what it's about, isn't it? It's basically blocking and tackling.
SPEAKER_00:Meaning you could multiply 10 times blank, right? 10 times dealer, 10 times salesperson, blah, blah, blah. But when you're marketing to a defined list, you're now looking at the holistic relationship with the customer, and you're looking at you're making gross margin dollar decisions, not gross margin percent. And the I think what OEMs could do, uh, there, you know, look, who am I? If and you know more than I do. I I hope, God willing, they're doing there's some great people in all these companies. They're probably doing it. And if they're not, we would, I would hope, I'm sure you would hope, at this point in time, when you you can get root rid yourselves of legacy systems and legacy behaviors. You didn't have a choice before. You had to install it and work its way. You can now jump over these systems. Um, I would say consider starting a little piece of your company, carve it out, call it special forces to begin to chip away at uh impending doom. You said it, the paradox. You can operate.
SPEAKER_04:That's extremely I um lost the sound, so bear with me a second. Something happened here that uh I have to adjust to. I can hear you though.
SPEAKER_03:Okay, that's what it was.
SPEAKER_00:Go ahead, and I went um I would say, you know, I mean I to I'm being uh forgive me for being on the soapbox, is no matter what you the I you know, you have an amazing uh reputation, uh a voice, you are the voice of the industry to me, and to many, is your idea of creating the segregated database and only putting into it the fish that you want to cater to. Watch what happens and form, go consider doing new things to call it, manage those names that you're going to go secure to secure your company's future. It it's uh as Buffett says, if you're in a chronically leaking boat, your time and energy is better spent switching boats than plugging bolts. I can only imagine if you're the CEO of one of these OEMs, how difficult it is that you've got to keep your constituents happy while you make this hot sink and before you run out of energy and retire. Um broadly speaking, I would say companies can raise their standards and they can raise their standards one name at a time.
SPEAKER_04:Yeah. Yeah, I I I I I agree. I agree.
SPEAKER_00:And I would welcome your advice on call it as we f provide this uh data set that says what you rent, the parts and services you consume, your new and used consumption. Would welcome your advice about how to position that to I don't want to say get people's attention, but make them aware of the part raise their standards. Yeah that seven.
SPEAKER_04:Yeah, no, I agree with you, but how how you how you do that is tricky.
SPEAKER_00:You agree? It is tricky. I think it starts with Volvo construction equipment, Volvo AB, actually, I think did a very good job in starting Volvo Rentz. They I was blessed to work uh for Volvo Rentz, and they segregated this division and protected it and kept it away from um a very good company, in my opinion, that was just run very differently. And I'm not suggesting um Volvo Rentz wasn't you know a gold menor Olympic Olympic athlete or gold medal winner um at the Olympics, but it had a much higher chance of succeeding or call it change management than it would have had it been a subsidiary, you know, or managed by the parent.
SPEAKER_04:Yeah. Yeah. You know, this this whole thing of change and and artificial intelligence and data driving us. Um all of this leads us to a pretty dangerous time, I'm gonna say. So it's the consequence for us is nothing. The consequence for the next generation is huge. So I'm talking with a company yesterday, and there's three people that they've identified as the replacement of the current executive. And they're gonna make the transition somewhere in the next six to eight years. And I said, that's terrific. So you're gonna end up with a new boss. Yeah, it's gonna be really exciting. I said, Well, how expensive is it gonna be for the two guys that don't get the job to leave for you? Well, they're not gonna leave, really. Their future is taken away because the the guy who's taking the job is gonna block them for the rest of their career. You think they're gonna stay? So we get all kinds of changes in how business operates. Then we we started collecting sales tax now on education products, which drives me crazy. And it's gonna cause us to start thinking about different things. For instance, in the European Union, it's 145 bucks per client. If you're non-EU, it's 445. So obviously my pricing module is gonna have to change altogether. I said, no, no, I'm not gonna change the pricing module. I'm gonna have a membership. You want to join and you're in the EU, it's 100 bucks. You want to join and you're in the non-EU, it's 500 bucks. Or some such thing, because I don't want to just continue to do what we've always done. I have to look at it in with fresh eyes. I don't know many people are looking at their business with fresh eyes. I'd almost want to have a weekend getaway with whomever the players are, sit at a table and have it out. What do we want to change in the next 12 months? What's our biggest risk in the next 12 months? And it's not what you're looking at, it's to the core of their business, how they operate.
SPEAKER_00:Yeah. I would agree. And I think that is, you know, call a there's a few people equipped to help them do that diagnostic from top to bottom. You're one of them. Steve Clegg. Um, I could see, you know, a Larry Kay, you know, meaning a a Kasky, a Schussler, right? There's a small group. Frankly, that scripts team was pretty solid, as you, in my opinion. Yeah. Scripts International. And you, you know, I think I shared with you, of course, I had to read something to know that you were at the day zero of smart equipment. And I was like, of course, you know, it's where I didn't, you know, you didn't expect to see a name. Uh I mean, it was just a it's like a great end, great beginning of a book um that you just didn't know for the first chapter. So yeah, I would uh I would think you're right. Put those people in the room, bring in your special forces team, and start and fund it. And start small. And those those small moves can be incredibly powerful.
SPEAKER_04:Well, no question about it. So there's a project for you. You sell the services, you're gonna meet six o'clock on Friday night, you're gonna have dinner, you're gonna explain what we're gonna do, and then Saturday, Sunday, we're gonna meet all day, beat each other up. Sunday, we're gonna have a report, we're gonna have a to-do list, and everybody's in the room, they got their fingerprints all over it. You want to do it, you want to do it, you want to do it or not? And every quarter have a checkpoint. And get that kind of embedded in our thinking, in our management. We is a heck of a lot more powerful than I or me.
SPEAKER_00:Asking me to kind of be the yeah, absolutely. You know, I the answer is yes, as you as you say.
SPEAKER_04:Yeah, that's right.
SPEAKER_00:I would be honored to do that. And to you know, if we called it DARPA, right? It's we peel off this private uh intelligence unit and we just stay quiet and tight.
SPEAKER_04:And well, you've heard you've heard me use the term virtual garage, and you've heard the term STX, which is what we're calling. This is what Steve and I are calling the virtual garage. What this leads to is we'll have people that are specialists that can go into a company that recognizes they have a need and facilitate, not do, facilitate. Because I think you've heard me characterize this. We've got people that are strategic thinkers, we've got people that are doers, and we've got people that are implementers. There's probably 75 to 80 percent of the workforce that's doers. Strategic, that's theory, so I can get that from school. There might be five or ten percent of the population that do that. The real trick is who's the guy that's gonna do and the gal that's gonna do the implementation. Because those dudes and dudets, they got real skills, baby. Yeah, you're right. And they're rare skills.
SPEAKER_00:Yeah. Yeah, it takes a lot of energy to, and it is rare. You have to be, it takes a very rare skill set, and it's and it which also includes a lot of energy to do change management.
SPEAKER_04:So let's wrap this up because we've been about an hour. What what do you think we've gained out of this? Have we exposed what we wanted to expose?
SPEAKER_00:I gained a call to action. I I had one other note to to share, which is as companies reevaluate, starting with the end in mind, right? It simplest. I had a great boss, uh, Nations Ryan, who would say that it wasn't his, he didn't coin the term. Begin with the end in mind and back out of it and start with this. Ron, I will, I pledge to you, I will do that. We'll you know, work as call an assistant to form this group.
SPEAKER_04:What what your guy, what your guy said should be, should be, every single leader. Where are we going? Christopher Columbus, I'm gonna find the new world. Where are we going? I'm gonna find the new world. How am I gonna get there? I have no idea.
SPEAKER_00:You know, it's interesting. I'll just tell you with this gentleman. I'll I'll kind of omit his name. He he went from uh being a nation's rent executive to I'm gonna skip a step, became a partner at a major private equity firm that has a very strong opera, you know, they're operators, truly. I mean that with sincerity, not just a marketing tag. He they owned a company for many years that kind of went nowhere. He was the operating partner responsible for one of them. And he became its CEO. And one of the strategies he used, um, you know, different layers of strategy, typical part Porter's five forces. Um, he focused them on top 200 accounts because he knew that big plants, people that own plants, own other sites, right? Or big companies own multiple sites, think ExxonMobil, think uh Facebook data centers, dot, dot, dot. We are only focusing on these national accounts. He secured his position there. He um gained leverage over its suppliers, which is the same counter argument he makes with the top 200 accounts. He says top 200 accounts, we'll cut you a better deal because we're getting your business across the nation. We'll give you better service because but he accumulated these nickels and dimes, and he just sold a services business to one of the largest companies, private equity funds in the world for 19 times IBITA, right? And there's no D in that business. So it's nuts. And this transformation happened, and I remember going there and sitting with the interim CEO about five years ago, until this gentleman became CEO, which is probably three years ago. This was an investment. I'm now I'm speaking in my Wacko world, that they were probably saying, shit, how are we gonna get out of it? So in three years, transform something that may have been sold at you know, whatever, 5x because it was worthy of that. Sold it for 19 times.
SPEAKER_03:So stay there, stay there, and there's one man.
SPEAKER_04:Charlie Munger, there's one man or woman, yeah, Warren Buffett. They're rare entities, they're rare individuals. The trick is for society, for us, you and I, to find them before they become them and help them get there. We're not mentoring people like we used to, we're not coaching people like we used to, we're not allowing people to fail like we need to. If you don't make mistakes, you're not learning. And that's why I call the company Learning Without Scars. I've got the scars, baby. I promise you. Other people don't need to get them because I've had them. Nick, it's a pleasure. And I want to do this again and keep going because I hope people are paying attention and I hope this provokes thinking, because that's what we're trying to do.
SPEAKER_00:And I'm gonna tell ask Helen if I if I can find an inexpensive flight from San Francisco to you. I'm gonna do it.
SPEAKER_04:So you're welcome to come, buddy.
SPEAKER_00:It will be the end of next week.
SPEAKER_04:That's okay, whenever it is. I look forward to it. I hope and thank you very much, Nick, and thank everybody who's listened to this. And we hope you turn in for another candidate conversation that provokes your thinking. Mahallo.
