Persistence, Partnerships, and the Future of Scrap with Lenny Formato

In this week’s episode, I chat to Lenny Formato, Co-founder of Empire Metal Trading. A third-generation recycler out of New York, Lenny has lived and breathed this industry from a young age. From riding trucks as a kid to building a business that’s still evolving today.

We cover everything from persistence and patience in deal-making to the power of going “all in” when it really counts. Lenny shares stories that only come from decades in the game, including the deals that took years to land, lessons from starting again in his mid-40s, and why backing yourself matters more than ever.

We also get into the importance of collaboration across the industry, staying involved in trade associations, and how relationships, not just transactions, are what keep this business moving forward.

This one’s full of real, hard-earned insights for operators who are in it for the long game.

In this episode, we talk about:

👉 Building partnerships that last
👉 Going all in on big decisions
👉 Showing up consistently
👉 Playing the long game
👉 The future of scrap
👉 Gut feel vs tech
👉 And much more!

Born Scrappy.

Brought to you by Buddy.

The only all-in-one platform for buying, selling, and managing scrap metal.

Built for scrappies, by scrappies.



https://www.tradebuddy.io/

https://www.linkedin.com/company/tradewithbuddy/



WHO IS STU KAGAN ANYWAYS?

27 years in the metal recycling game and still learning and growing…

I learnt from the best and worked my way up from yard labourer to Executive Director of Trading and Operations for the largest metal recycler in sub-Saharan Africa. Responsible for 4,500 employees, 85 sites, and the overall profitability of a multi-billion dollar operation.

I brought my breadth and depth of knowledge to bear and co-founded the fastest growing, most-loved, and most awarded metal recycling company in New Zealand.

I thought it was time that tech worked for our industry, so I built THE killer scrap app, Buddy - built for scrappies, by scrappies.

Father of two crazy-awesome boys. Husband to Lisa. Kids rugby coach. YPO member. Founder. Lifelong learner. Mentee. Mentor. Committed Stoic. Aspiring cowboy.

COME SAY HI ON LINKEDIN

https://www.linkedin.com/in/stukagan/

https://www.linkedin.com/company/born-scrappy/

https://www.linkedin.com/company/tradewithbuddy

Transcript

Meet Lenny Formato

Scrap Roots In NYC

Austin And The Crane

Starting Empire Metal

Burn The Boats Mindset

Three Years Early Breakfast

Why Associations Matter

Volume Vs Margin

Your Partners Keeps You Honest

Best and Worst Equipment

Move Scrap Fast

Tech and Next Gen

Data Over Gut Feel

Future Yard Safety

Choosing Partners Wisely

Getting to Know Lenny

0:01

The scrap metal recycling industry has always run on hustle, trust, and sharp instincts. This is the podcast for traders and operators who want to get sharper without losing their scrappy edge. I'm Stu Kagan. Bringing you insights and stories from the people shaping the future of our industry. This is born scrappy. All right, thanks, Lenny. Good afternoon. Yeah, lovely to see you again. Okay guys, so this is, um, the Born Scrappy podcast where on a weekly basis I interview some. You know, I used to always say some, uh, goats from our industry, the greatest of all time. Some really great people that have done some wonderful things, but unfortunately we couldn't find anybody like that. So we're gonna have Lenny on today. Um, just being funny, bro. Not yet. Not yet, at least. Yeah. So we, the idea here is I guess, um, for those that haven't really heard. Um, I guess what I try to do, but the idea is to add value. We don't just sit and talk for 45 minutes. Kevin Sitz was here last year, um, which by mistake we didn't record. Um, but the idea is to add value. So hopefully some stories, um, from Lenny and, you know, through experience to kind of, um, just help us, you know, whenever you're next, going through some sort of tough time. So, Lenny, thank you for joining us on Born Scrappy. Thank you. I'm, I'm humbled. I've been watching some of your podcasts and, uh, I'm amongst great companies, so thank you very much for the invitation, and I hope we have a little fun today too. Absolutely. I think that's what it's all about. So, Lenny, I think firstly, I think we're in the, the part of the world that no doubt every single person here knows who you are. Probably knows quite a bit about your story as well, but there will be listeners, um, around the rest of the world that maybe don't. Can you give us a, a little bit of background of how you got into this industry, how long you've been in it for, and kind of where you are now? Sure. Um, so like many of us, I was born into this industry. So my grandfather started a scrap metal company around 1920, give or take in New York City. Um, I followed in his and my father's footsteps. Um, like many owner's sons. So I'm eight years old. I go to work. They don't want you to get hurt, so, hey, can I jump into Chuck and go to the mill? Right. Normal. I was eight years old. I went to work. Yeah. So they, so they put me on the truck, I'm sitting on a milk crate, you know, there's no seat belts, nothing. Guy smoking a cigar, we're going down the jersey turnpike to the steel mill back then they'd even let you sit in the truck when they dumped it. Like, what the heck? Everything's dumping. So I had those normal experiences, you know, that some of us have in that aspect, driving cranes, et cetera. However, I think the reason I'm in the scrap business today is really, it's not those experiences. It was being in New York City. So just real quickly, what really tied it in is I'm 12 years old and I was working with my dad on Saturdays and such, and we're living in the suburbs in Yonkers, in Westchester County, and I'm gonna Catholic school, so my exposure is not huge. So one day I'm at work and this golf cart comes in and I'm like, that's pretty cool. So the mechanic goes, you know, all mechanics, they need to like start everything that they see even though it's not running, it's just their nature, right? It's like, I bet we can get that going. So they get the golf cart going, and I go, now this is like late seventies, New York City, so it's a real life. Martin Scorsese, spike Lee movie, New York was my backyard just for that. Like three or four hours I would be, if I got too far, the cops would, because everybody kind of knew each other a little bit too. Cop car would come and be like, you gotta go back, man. You're gonna get yourself killed on the highway. I'm like, yeah, no problem. No problem, no problem. So really wanting to go back and continue to experience that fun. Was one of the main reasons I kept going back. And then I started, I was enjoying the work too, but it was also like just to see the great melting pot that was New York City, right? Yeah. I mean, you're just meeting people from all walks of life. It was a Seinfeld episode with Taxi with you name it. It was just, couldn't believe it. And I mean, things have changed a lot since then. You're not gonna see anybody in a golf cart motorway now. Uh, from what I understand, your son's now in the business as well. Is he driving a, a golf cart on the highway or, so I'm very fortunate that I work with my son and my partner's daughter, Christina also works there too, but, um, what quick, funny story with my son. Oh, absolutely. So same type of thing. So kind of, so anyway, my son is like third grade and he's 70 pounds wet and we were bringing a crane in. We were in Manhattan. So bringing 140,000 pound crane in is not the easiest thing. It's almost wider than the street. And you know, those things were usually done very late at night to save conversation with the local authorities, right? So the crane comes in and we're taking it off. And I brought Austin that day because I'm like, it's pretty cool you didn't enjoy this. So I said to my wife, can you miss school the next day? Come in, it's gonna maybe a late night. She goes, try not to make it too late. So he comes down, so the machine comes in. Mike hand, God, it starts to snow and I'm like, oh my God.'cause we can't get the machine down off the, the cats are just spinning on this trailer. So we have this huge machine in the middle of the street. I don't know what to do. And it was crazy. And then I turned and I see Austin and he's there and he's young and I said, I gotta find someplace safe for him to go. Well, at that time where I was working were all the clubs. So like the Studio 54 of that day. Was on my block. So I knew those. I knew them.'cause we were all neighbors. So I'm like, where can I stick Austin that's safe? I go down the block, I say, Austin, come on, let's go. There's a line of people, like 200 people, you know, he's like trying to get into a club. Got this little kid with me. I walk right to the front, the doorman's there. He's like, hello mate. They're always British. I'm not sure why. It just sounds good, right? Uh, Lenny, what's going on? I said, I need a favor. I said, he said what? I said, my son's here. He's like, oh, nice to meet you. I said, you got a spot? He can sit that's safe just for a few minutes. So God knows what, I've got a bad spot down there. He goes, yeah man. I'll get some of the waitresses and we'll bring them in. So they come out, they pick up Austin. I said, just, just go do whatever they say, go inside. And I knew them a little. So fast forward, we finally get it off. It's like an hour and a half later they say, oh my God, where's Austin? I forgot he was even with us like, crap. I go running down the block. Cut the line, go into the talk, see the dorm. He says, oh no, he's in the back by the bar with the waitresses. He's doing fine. I walk in Austin's holding court, everybody's sitting there. I said, Austin, come on. It's time to go. And he goes, I think I'd rather stay here. Thanks. So that was kind of his, and he was never baptism into those type of experiences. Yeah. Well, I mean, I would also wanna join the industry if that's what I was treated to. Yeah. Yeah. That's fun times. Um. Let's get into a little bit more specific to the industry, um, and hopefully some experiences from you that you can kind of relay that maybe resonate with a whole bunch of people. Can you think of any, um, I guess experience that you've had, whether it was a deal or a transaction, which was really tough at the time, but was one of those kind of things that I know I'll never do that again. And it's kind of the thing that sticks with you and it, it helps teach you and make you a better leader, a better person in the industry, et cetera. Very clearly. So, like I said, I had worked the family business for three generations and it came time that the business was closing and I was, at the time, it was about 12 years ago, so 46 at the time. And, um, and it was, it was planned. Like you knew things were coming to a halt, but you know, you, you always think about what you're gonna do when those things come and then they come. Right. So I'm at this position in my life where I'm 46 years old and I needed to keep working, and I wasn't gonna start a new career at 46. I had already committed my, you know, my life to the scrap metal business. I knew what it was, I liked it, it provided for my family, uh, provided for our employees. So I made decision, like, what was I gonna do? And, um, it's funny you even said, you know, that you weren't gonna make again. So I, it was conscious to me like, like, okay, whatever move you make, I hope this is the last move, so to speak. You know? So I was jocking around in my mind and trying to figure out what I wanted to do. And there was a gentleman that had a yard in Brooklyn, um, named Wayne King, and Wayne and I were friends. We didn't talk that often, but we knew of each other and our families had known each other for many years. So I was doing some business with him and he was letting me store some material there, like a box or two or things like that. So one day I was sitting and I. And I really was trying to figure out what to do. Like I wasn't really sure was, you know, was I gonna go to work with somebody? Was I gonna open my own yard again, what to do? And uh, so I went out and I once said to say thank you. Like Wayne really was doing the right thing and I wanted to go out and say thanks. I really appreciate what you're doing. So I went out and we were having lunch and he said, well, what are you thinking? What are you doing? And from that conversation came a couple more. And Empire Metal Trading was born and Wayne and I started a new chapter in Life Together. Um, and, uh, we're gonna keep it that way for a while. And we're blessed to have our, I have my son there and his daughter Christina. And, um, it's a good thing. Was there anything about the actual, not necessarily the physical transaction, but the actual, um, experience that was kind of a lesson for you? You know, and maybe it was from what happened before. Where was the lesson that we can all kind of go like, okay, I can see, you know, I shouldn't do that before. Maybe it's, you know, in your late forties and it's like. Make a decision that's gonna be with you for life. I don't know what it is. For me, it was have faith in yourself. You know, I knew what I was capable of doing, but I played it close. You know, it was, I don't know if it was a generational, we didn't have debt, we didn't leverage, I don't wanna say it's a diff, everybody lives in a different era, but it was a different era. So for a long time, that was my thought. And the decision that really changed me on that was for the first time I consciously said. I'm going all in to hell with it. Like this feels right. Wayne and I are friends. We have the same vision of what we want for the future, and I'm going all in. And you know, there weren't many times in my life where I went all in like that, where I was like, okay, I'm, I'm, I'm doing this, I'm confident. And I think having that, it was almost like a jumpstart for me, you know? And that was the big, that was the big difference for me at that point in my career. I think. Um, there's the term burn the boats. I've also heard burn the bridges and it's kind of like, it means. When you get somewhere, you don't have the option to go back. And it's kind of like being all in on the weekend. I was sitting with a young entrepreneur who was at an event with me and I asked him what he was building and he told me what he was building and then he said, but the good thing is that if this one doesn't work, I've got these other two projects that I'm working on. And then he told me he was trying to get investment and I, I had to kind of explain to him that nobody wants to invest in somebody who's just kind of unsure about, you know, maybe I'll do that. Maybe I'll do something else. I definitely have to say that all my life, when I'm all in, I have the best results when I'm considering that. If this one doesn't work, I can do something else. It's just too easy to pull out. Um, would you agree with that? A hundred percent. You know, I mean, I'm, I'm, I'm a universe guy, right? So to speak. So my thought process now is, you know, make it real. Make it happen. That doesn't happen overnight. You know, it takes a lot of life experience to, to get to that. And that's works for me. Excuse me. Sorry to the mic guy, but, so however, no, I agree a hundred percent. Yeah, that, that's something. And don't look back, like you said, you know, just get a vision, see where you want to be and just keep going towards that goal, put in the rear view mirror and keep moving forward. Um, one of the questions I like to ask is, can you think of a deal that you've done before that was maybe a great deal? But maybe it's this transaction that you're talking about now, but is there a deal that you've ever worked on or done? And I can think of a few I've done where I bought a parcel, a demolition parcel, and I thought it was all structural steel, and we found like hundreds of tons of copper cable underground. It's like, well, that worked out well. Is there ever a deal that you've done that you've just, it's like a scrap man version of Landman. Yeah. Yeah. It was all underground. Exactly. I do. So years ago, an early part of my career. I would go to the same diner for breakfast every day. Uh, six o'clock, six 30, something like that. Same time I was pretty routine. So every day I'd go in and, uh, one day I went in and I was 10 minutes early from my normal time. And this gentleman walks in that I knew that had a company that I used to do business with and then we didn't. But I knew him from a long, long time ago. And he's looking at me, I'm looking at him, say each other. Hello, how are you? Good to see you. How you doing? He said, I'm good. How are you? Good. What are you doing? Oh, I'm still in the scrap business. I'm still in this business. Okay. And that was it. And I'm like, wow. I had wanted to buy, you know, from this company, but I just didn't have it in so to speak. I had into contact and here's this guy who's working for this company that I knew. So the next time I come, I start going to breakfast 10 minutes earlier. I notice that's what time he comes every day. So one day I approached him and he said, you know, Lenny, you're a good guy. I appreciate it. He said, you know, we have something going on right now. I said, no problem. I went there every day for three years, 10 minutes early, maybe two, two or three times a week. Hi, how are you? Good. Never said a word. And then one day he turned to me, he goes, you have a few minutes? And I said, sure, that'd be nice. But I never brought it up again. But for three years, give or take, I went every day just. I'm like, I can make this happen. Mm. I'm guessing you landed. The accountant all went fantastically well. It worked. Yep. Like I'll just finish your sentences for you. That's fine. But I could not give up the opportunity just'cause I had to wake up 10 minutes early. Yeah. Do you know what I mean? No, it's, I know what you mean earlier. It's awesome. Sounds like it was meant to be as well. I walked up in a coffee shop and turns out to be one of your best deals. That's awesome. It worked. It worked out. Do you believe in collaboration? This industry. So yeah. You know, you and your partner have collaborated, you guys have built something great. Um, is there any other form of collaboration that people can utilize in the industry? Whether it's being more part of the associations or reaching out to, maybe not your neighbor down the road,'cause you're probably competing aggressively, but maybe in another town and whether it's equipment or whatever, it might be a hundred percent why we're here with the trade organization. I, I really. Never realized the importance. I always knew of it. So I always knew of the trade organization. My grandfather was a part of it, my father was a part of it. I was a part of it. There were years I was involved, there were years I wasn't. And then you realize like so few people are doing so much for so many, so you can't complain about things that aren't going your way. And well you can. But for me I was like, how can I complain if I'm not gonna be part of the solution? And that was one of the reasons I started getting involved nationally about. 10 years ago, give or take, I became chapter president by the graciousness of the other gentleman, our chapter, and I stuck with that for a while and then I stayed with some national positions and it was really through that exposure to outside of New York. You know, when you're in New York, it's very, it's, it's singular, right? I mean, for me it's sometimes you feel like you're the only place in the world, like how can any place else exist, but New York, right? Yeah. Yeah. Just has that way. Then I went out and I met all these new. People who had different ideas and yards in different places, in different countries. It was like almost that feeling that I had when I first went to New York City, where there was like this whole world I had known of, but never experienced like this. And from that experience, I realized how important it's to collaborate with everybody, including the people in the businesses, in our areas. We, because we're all working under the same guise, right? We all have the same challenges, right? So legislatively, if we're all in New York state, we have the same legislative issues. If we're in New York City, we have those legislative issues. There are so many issues that we do need to be together on as much as we may compete. We also need to work together.'cause we need to keep, you know, we need to keep going.'cause what we do is such an important and vital industry in this country. You know, the jobs that we give, the work that we do, it's, you know, there's not a lot of it left. So we need to keep going. You know, it's quite funny'cause since I've been living in America now, which is just over a year, I find that when I ask this same question about collaboration and working together. People kind of look at me like, well, I mean, of course we're collaborating. We're all here together, and if somebody has a question, you know, to ask, we can introduce you to the right people. And that it's not like that in the rest of the world. And you guys don't necessarily appreciate how good you have it that you can actually reach out to somebody. I know, for example, Australia doesn't even have an association because when they've tried, everybody's gone into literally physical fights, so it's like they can't even be in the same room. And that does happen in a lot of places in the world. So just bear with me when I ask those questions because I think you guys have it. Very lucky. And, and I think the people that listen and the people that I interview are probably, um, the people that believe in it the most and the people that come to these events are, but not everybody is a REMA member. Not everybody's a part of the association. I'm actually busy in the book I'm writing. I'm busy writing a chapter at the moment, and it's literally the whole chapter's about why you should be a part of the association. Why you should be more involved in your community. Let's get into more, oh, sorry. Absolutely. Lemme go on. Well, just as a quick footnote to that, I agree with you, but I will tell you one thing, and this is from personal experience and many of my fellow New York members can agree when something happens and everybody thinks that their business is gonna be outta business, you didn't even realize how many people were in your business until that phone rang. And then what's the call? What are we doing about it? What are we doing about it? So it's amazing how quickly people can realize how important that collaboration is when it hits home. Yeah, a hundred percent. Okay, let's get into more tactical stuff. Um, easiest questions, but I want to kind of double down on them. So like, straightforward, easy question. What is more important volume or margin? Don't just gimme a one word answer, please. What is more, what's more important in your business Volume? So buying everything or margin depends on the business. So I have had both, I worked at a smaller place where you really couldn't do the volume, so you had to do the margin. I work right now at a slightly bigger facility. That volume tends to be one of the more important things. So. Having done both, I think they're equally difficult. Um, I mean, you have to really just play the cards you dealt, depending on the day. How's that diesel goes to$5 and 60 cents. Damn volume is a pain in the ass because your diesel bills just went out the wazoo, scrap flow dries up and you don't have that much scrap to buy. Damn, what margin are you making if you're not buying anything? So a lot of that has really depended for me on what situation was at hand and what I was doing at the time. But I, I would say when they're challenging, they're both equally challenging. It's just finding a way to keep working through them. They're both challenging. I, I don't doubt that. But there's strategies in companies and I, I've seen it in South Africa and New Zealand. I've seen in the US as well. You get companies that are. Out there, and they're quite happy to keep their prices slightly lower. They know that they're gonna buy less volume, but they're gonna make more money with the capital that they're actually utilizing. Right. And then you've got other businesses, which was like mine in New Zealand, and I went aggressively to buy volume. We were a brand new company. We had to build a brand from nothing. And I went aggressively and we took close to 80% market share in Auckland within three to five years. And that was all about volume for me. We had to buy absolutely everything. And when you get past that level, obviously you're making margin, but when you get past that level and you're doing enough volume and you're covering the cost on all your pieces of equipment and your rental and all your overheads, then all of a sudden you start to make a a decent profit. But there's so, I mean, I remember literally living that and being like, we will buy everything. And we pretty much did. And then I remember. Looking at the numbers, and I think this is my point, for me, it isn't about their one size fits all. It's really that you need to understand the data in your business that a lot of the times you could buy 20% less and make the same amount of profit. Right? And spending 20% less on scrap is a huge amount less, um, working capital that you require. I think a lot of companies either have the one strategy or the other, or they don't even have a strategy. They just go out there going, I wanna buy some scrap, I wanna make some money. And I think, you know, with the ERPs or your inventory software system that you have now, being able to rely on that data to help you make decisions. Like I was speaking to somebody the other day and that they're running a digital twin. They're basically like running their business with different models. And they're saying, well, what happens if I bought all that scrap at 10% less of a cost or half the volume, et cetera. And they can actually have AI help them spit out, which is maybe the best strategy based on the previous few weeks or few months, whatever. It's, so I wanna delve more into that in general. Um, have you been through experiences where it's been like, we need to buy volume? Because there's nothing coming in the door, or is there experience where you're going, you know, we're buying a decent amount. I'm actually gonna drop my prices now and see what effect it has on the volume.'cause often you're competing with yourself and you don't even know it. You drop your price and the same volume comes in and you make more margin. Again, just from me, it's every day. So you don't know what you're gonna buy tomorrow, right? Sure. So. I, I basically go in and, and I just work as hard as I can every day to buy as much material as I can every day. And,'cause you don't know what's gonna happen tomorrow in any fashion. You don't know if it's gonna be a blizzard and you're not gonna have work for a couple days'cause everything froze over, or, or just make it quiet. So I, I really don't specifically look too much at that.'cause what happens for me then I get caught up in that. If I start looking too specific at, like, if I have to buy this many tons every day, that's not really the way I'm wired. I know I have to, I'm not ignorant of the fact, it's just it can't consume me. I just have to go in and let it naturally flow. Do you then at least look at what margin you need to be making or are you just kind of sitting your prices based on what you believe the regional area is paying? So I have a partner who reminds me constantly of my margins. Of course, this is the part, this is why we said it such a great partnership, right? Because my partner Wayne, he's the trader, the commercial side, and that's what he does and he does that. So, you know, he's the one we both keep each other, you know, he keeps me in check, right? So, um, I would say I think that's the value of having a good partner.'cause you know, your strengths and weaknesses and, you know, his strengths are very beneficial to me. Absolutely. Okay, let me throw this into your wheel. Ask then. Um, what's the best piece? Worst piece of equipment you've ever bought. Don't have to mention names if you don't want to. Probably, if you say your best piece, you will. If you say your worst piece, probably better. You don't, okay, well give us both. So the best piece of equipment I ever bought was anything new. So I It's true, right? You are on the fence all day. You choose anything. I'm telling you. This is again. I came from a small company. We didn't buy new equipment still, right? Yeah, yeah, yeah. It was the people out here that know me, knew the way I worked. We had a couple cranes and some trucks, but we didn't buy new equipment. We fixed what we could. If we needed a piece of equipment, we bought it from a yard that we were, you know, friendly with and we would buy something that they had that was slightly used, which is probably in the answers your question. It's the worst piece of equipment, somebody else's headache. But you know, when the transition into Empire Metal. When we were doing our business plan, we started to buy new equipment and trucks and things like that, and that was, I'm not kidding, that was foreign to me, right? And I'm sitting there, I'm watching guys come in and put machines together, and I'm like, holy, this is great. See, I always thought about it, but I had never seen it. So the enthusiasm that I had, every time a new piece of equipment came. Was equal'cause I was pinching myself. Okay. That's the feeling when it arrived. Yeah. I felt that many times and then the thing blew up and it was the worst experience of my life. The worst is every time something breaks down, you know, anything breaking down in a spot where you can't move it is a bad experience. So would you say, if you can think of any of these used pieces of equipment, can you think of a time where. One of those pieces, don't tell me all of them, but one of them let you down and you're like, you had a Bailor, you had this new account and you just landed this business and like you got the secondhand bailor and you thought you were gonna go to the moon and that Bailor never operated and you went out, took it to the back and shot it. I guess the worst experience would be when something like that happened and it was our fault'cause we didn't check something. So we had bought a piece of equipment and uh, it was, I think it was a mobile shear. It was like, oh, this is great. We're gonna start mobile shearing. This is this again, a long time ago. You know my father, you sure you can afford this? Yeah, we can afford it. Anyway, so we get to shear and something happened. There was a leak or something, and that day no one had checked the oil one day. So what happened? Looting engine to this day. I still walk by things and I'm like, did we check that? Did we check that? Did we check that?'cause all it is is just one minute of you not checking something and it just, the whole thing starts to crumble. So that would be the closest thing I could explain. Um, here's a question for you. Might be a little bit more commercial though, and I've seen many different strategies in the United States, but do you buy and sell in the same market? If I went in G yard now, would there be thousand tons of certain grades sitting there? Would you like I'm waiting for a happy day, you know, um, well again, uh, my partner does most of the trading for us. However, you know, the majority of the material that, that we produce is sold into this market. You know, we're close to the coast and some rail access and things like that. So I would say the majority does that. So it comes in and goes out as much as possible, as fast as possible, as fast as definitely. Still struggle when I see yards with, um, couple thousand tons, 30, 40,000 tons in their yard. Um, and they're like, eh, don't need to sell it. Still crazy to me. That doesn't really happen in the rest of the world. But, um, I guess America, you are spoiled with a lot of land, which is helpful. Um, and I see these yards and I, I mean, I remember asking the one yard, why don't you just. Clear all that stock and just like put up warehouses and rent out some space because apparently their stock had been there for three or five years or whatever and it was like a third generation business. So I, I like to ask the question just to see, and then hopefully I was gonna drill into it if you did go that way,'cause I still don't have the answers to that. Tell me a little bit about technology. Like what sort of technology are you guys using now? In your business, there's a huge push for it in so many different aspects of the business. Is there anywhere there that you're using it, that you're saying, well, this is really helpful, or that you tried to use it and it was like that was just a waste of your time? So herein lies the advantage to having younger generations work with you. Right. So, you know, I'm, uh, technology and I are kind of like golf. We don't necessarily get along that well. Um, I'm still a person that writes a lot of notes on his hand, right. But however, it's an important part of what we do. From maintaining equipment to running books, to keeping customers. So the thing is, it feels as though every three months the technology we're using is outdated, right? So we're doing the best that we can. I mean, ai, not so much at this point. Sure. Um, honestly, but we're doing the best that we can to use technology that, you know, it's slow, slow and steady wins the race. But I leave that. To a large degree to the next generation of people that are coming.'cause it seems to be more intuitive to them than it is to me. So I think it's a work in progress, to be honest with you, Stu. You know, I will, I'm gonna, I'm gonna double click on that though. But I think wherever I ask, they always say, well, we are not using AI yet. So I'm not a proponent in this industry that I know of using ai. Well, I'm, I'm like, use AI as much as you want on your phone and, you know, um, use chat GBT or Claude or whatever you want to use to help you with, you know, general. Questions. And we were talking last night about don't necessarily show people what you've asked, chat GPT. It's always an interesting one. If somebody was to ask you if they could see your chat, GPT, what they would look like, right? Sometimes you ask really stupid questions like, remind me how to spell hat. Is it two T's or one? Like those are the kind of things that that chat GPT, right? But it's in the industry. Like I don't think we're gonna go from using no technology to all of a sudden using. AI and having, you know, not have to think again. Is there any technology that your son is looking at or has looked at, is brought in and maybe it was like clipping across the air. What are you thinking that never worked or, yeah, this seems that great. It actually is slightly beneficial to start using this even if you're not, I'm trying to think of a good example here. Um, you know, I guess it's, to me, this is technology. It's the computer programs that they're using to buy and sell every day to keep inventory. I mean, to me, that's technology, right? That's a hundred percent. I'm primarily an outside person, so my inventory consists of looking at it gut feel, right? You know, is that a boat? Is that how many trucks? So that works to a. So, but, but what I like what they're doing is, you know, they're running spreadsheets and they're saying, okay, this is how much non Ferris we bought versus Ferris. This is what our profit margin was. So they're using technology and, and new software. I would say for us it's software, right? New software. Sure. Um, abilities to, you know, when was the last time we bought from this customer? Yeah. And things like that. So they're really running point on using that. I'm. I don't wanna say I'm hands off, but I'm happy to see them moving forward with it. And I have total confidence in, in their ability to do it. So it makes me comfortable for the future. And, but I think you gotta be careful. You don't wanna move too fast. Right? A hundred percent. So, you know, that's, I think just my, you know, I think we're not talk technology. That's perfect example. I'm not talking about anything else mind blowing. I'm just talking about having the data at your fingertips to be able to make better decisions. And what's really interesting, and I was writing this just the other day, is that. I don't say to people, use technology for the sake of using technology. I say it because your generation. I'm not gonna be around forever in your generation. Sorry about that. Um, you guys can rely on Gutfield.'cause at 12 years old you're driving a golf cart around and you basically, you can identify the different grades by smelling it right? A hundred percent. The next generation went to college and has not that you didn't. But spent their time in college and maybe went out and spent five years as an attorney or five years as an accountant, and then joined the scrap company. And although we all say our kids are really getting trained the hard way and they're spending all the time in the yard, I've seen it so many times realistically, they spending no more than six months actually in the yard. Whereas you probably spent 20 years. So you can rely on gut feel. The next generation can't rely on gut feel and we are not doing anything wrong. By bringing them through that way because they're gonna come through with other skills. And you know, it's great to have an accountant, a son with an accounting degree, and a great to have a legal background, all that sort of stuff. And they're coming with this. But what they can't do is walk into a yard and say, that material should have been upgraded. That's gonna cost us$2 to process. That's gonna be, that's 10, 12,000 tons that needs to, they can't do that. And what can do that? Or at least as much as possible. Is technology that you can go into and the next generation can go into and say, how much inventory do I have? What is my upgrading percentages? Am I making better gross margin or a worse gross margin than I expected at the beginning of the month? All of these sort of things, and that's why. You'll hear me talk about technology. I believe the industry needs technology for the next generation. Like when I sell my product and I deal with like a Lenny, I'm not even trying to convince Lenny Lenny's been around for long enough. He's got every relationship. He knows who to sell to all that, but the next generation doesn't have those things. And that's where there will be a much more of a reliance on technology. And you know, it leads me to my next question, which is from your vantage point. What do you see then, and this isn't about technology in particular. What do you see the next 10 years looking like? So if you could see 10 years into the future, what does this industry look like? And that's a vast question. Go wherever you want with it. How about what I'd like to see? Okay. But then I'm still gonna ask you what you think you will see. Well, I think I'm gonna answer this tying into the same way. And this is close to my heart, so I'm, like I said, I'm outside all day. I would say my real dream is here. So we get in a car and that car tells you when you're veering outta your lane, tells you how close you are to the guy in front of you. I get in a crane, I spin to the right. It doesn't tell me anything's to my right, whether it's a pile, a person, a truck. So I really hope in the years to come and what I do see too,'cause you know, first and foremost safety is the technology ai. Can it decipher between a pile of scrap and a person should be able to, seems to be able to, in a lot of other ways, right? They can take inventory with livestock. They can tell a goat to a sheep, or I mean, goat to a cow or whatever. No, but it's true. I, my, so why can't they, you know, I understand you. It's a different, you know, different size thing. But in theory, we should be able to make our work places safer, more efficient. With technology. That's where I see in 10 years, it's, I want jump in. I'm gonna be rude. This jump, I'm just a visiting. It's now, it's now. So if any of you guys are gonna Vegas, my wife's moderating the AI talk and right now there is a company called I Ride. I Like Your Eye. And they are in mining industry. They're in the waste industry, and they'll probably be coming into the scrap industry. And what they do is literally they're on your equipment and as soon as you're gonna hit something, it stops. So if there's another piece of equipment Exactly. They now do it in mining. If, if there's something that's gonna connect, if there's any sort of injury, if there's a personal, some whatever it is, it has sensors throughout the piece of equipment. It learns through AI and it knows exactly where to move and when not. So that's a ready, which is very exciting. Um, and what was the other thing that you said? Um, inventory. Sorry. So right now, Georgia Pacific use a drone system to do their inventory, which I only found out. Three, four weeks ago from a friend in Austin, a new friend who works for the company from Austin, um, and they use drones and on a monthly basis they check the inventory for Georgia Pacific. I'm like, a year ago, I, I've always said that you can't tell inventory because you just can't, because you don't know what's inside the pile. How do you, but it's now actually happening, which is pretty crazy. So 10 years, if you can imagine, that's what you thought 10 years looked like if I told you that. That's next year. You're gonna tell me 10 years, none of us can even imagine what 10 years is gonna look like. There you go. It's pretty wild. I've got a, I've got a panel, um, the Yard of the Future and we're interviewing the guys that are making robotic dogs now. They walk around yards. I dunno if you guys have seen them. Um, and they basically, they're not security dogs, but they walk around your yard identifying any sort of hazards or any issues at all times. So you now have robotic dogs that just cruise around your yard. Um, and they can tell you if there's a pile outta place, it can even learn the grading. It's like that material shouldn't be in there and it just sends, from what I understand, it like sends warnings to your phone if it picks up something. So you'll never sleep now. Yeah. Well hopefully you sleep more like, like hopefully the yarder magic gives us more time. Time. Ding, ding, ding and ding. Yeah. Yeah, a hundred percent. Um, talk to me about dealing with new partners. You know, you made a really big decision in life to join somebody like. People here, whether they've done it already, are going through it now or going to do it in the future, are gonna have to make a decision to partner with somebody new. And that could be buying a piece of equipment, buying, um, you know, a piece of software from these guys. That's a partnership because you're gonna be dealing with these guys for a long time, buying a piece of equipment that's upon it, but then you went even bigger and like you went into business with somebody. What is kind of like the checkbox? What are the things you need to do when you're getting into bed with somebody or getting into a partnership? What should go through your head? The first is to like them as a person, right? Because if you're gonna be going into partnership with somebody, look, it's like family, right? There's always challenges in everything. Sure. But at the end of the day, if you're friends, you get through it. I mean, it happens in every walk of life. So first and foremost is' just you. You wanna like be friends and you want them to to grow with you, right? So you have like the same vision. So the first thing was really for me just to be in business with somebody that I like. That I respected. I, you know, and from that, then you become family friends, right? Like, we're friends as families now, like it's grown naturally. So to me that was very important. Somebody that has the same vision. Um, again, you know, you don't want to be with somebody who's exactly like you'cause it doesn't work, you know? Then everything, you just, you're butting heads all day. The way I work, the way I was thinking to move forward is you wanna have the same vision, the same goal.'cause then even when the challenges come. It's okay.'cause you're still looking at the same spot, you know, at, at the end. So to me that really was the most important thing. I mean, you know, to be friends like them as a person. Um, same work ethic, right? Um, one of the most important things to me are employees, right? I mean, the guys that we've worked with 30, 40 years to be with somebody who feels the, the same feeling about his employees. So all of a sudden now, all those like little things, they come naturally, you know, we're not working. To solve that. What are we working at? We're working to grow our business and face the challenges that we do every day. All the other things, they're all okay. I think one thing I want to throw in there, um, which you were kind of getting at when you were like, um, have the same work ethic. I actually don't care if my partner has the same work ethic as long as we manage expectations.'cause maybe the partner that I want, who knows what it's for. I need them to work one hour a day. For me, it's about managing expectations. If you go into a partnership with somebody. Just be very clear. They know what is expected. You've communicated what is expected of you, and you've communicated what is expected from them. Because when, and also plan for the divorce, I always say, so like have that discussion when shit goes wrong. How are we gonna manage this? Do we need legal agreements upfront? Or whatever it might be. But managing expectation is vital because if we agree that. I'm working half day and we're gonna have this great partnership, and in six months time you're really upset because I'm working half day, right? It's like, well, we dealt with this when we went into this partnership. So if there's anything that you feel could be an issue, whether it's buying a piece of equipment, whether it's buying software, whether it's working with a brand new buyer, like, I want you to buy all of my electric motors. Well, that means that when I need a price, I need you to reply on that call. Like, I need you to reply to my messages. I need this from you. And if you can't give me that. Then I'm probably gonna leave and go find another buyer. Like it's just manage expectations and, and both of you should know what's expected. A hundred percent. And just, I guess to clarify a little bit for me, from my version work ethic's, not the hours worked, work ethic is what is your goal? How do you treat your employees? How do you treat your business? How do you plan on moving forward? I, I don't look at it as like, you shouldn't need to count the hours worked if you're working as hard as you can to get, you know,'cause everybody is a different. Different way to work, right? Like, you should run a tech company. No, you wanna work harder and smarter. Right? They're not separate. Took me a long time to figure that out too. A little bit. Everybody, but, but it's true. So I, that's just to clarify, that's what I mean. It's, it's just, it's working together to achieve a goal. We're gonna run outta time, so I'm gonna quickly end with one more question and then we're gonna hit you with the quick fire ones, um, for a 20-year-old listing right now. Even, and I'm gonna open it in link to questions. Um, what is the advice you would give a 20-year-old? And the other question was gonna be, if any of these listeners right now, what tip could you give somebody to optimize their business? Okay. So, um, a 20-year-old go into any other business? No. Uh, look, what I would tell a 20-year-old is. 51% of the day do something that you feel good at, that you're confident that you like the other 49% do something that challenges you. So at the end of the day, you've learned something new, but you don't feel defeated. You know, you wanna challenge yourself every day, but you, you, you also want to feel good and confident to go after another goal the next day. You know? I love that. So to me, that's the quick advice I would give the second, optimize your business that when you're dealing with everybody. Whether it's customers or employees, always know that you don't know what's going on in somebody else's life. Everybody's got something going on, and I think one of the most important things I've learned is you just never know what's going on in anyone else's life that minute that day. So always keep that in mind when you're dealing with anybody else in, you know, to me that it's optimizing your business, understanding the person that you're speaking to, whether it's employee, a customer, a legislator, or a police officer, and just knowing you're not sure what's going in their life right now. So. Take away the grain of salt and, and it'll go through, but you just don't know. Yeah, I love both of those, both, um, haven't heard that before in the show. And, and really like that. Thanks. Now we're gonna hit some quick fire rounds. Get to know Lenny a little bit better. Favorite TV show or movie? Uh, favorite TV show. I would say old school, Twilight Zone. Semi Old school, Seinfeld. But you're saying the movie Old school. I'm like great movies. No old school. Like, I don't know how many guys here know the Twilight Zone, but probably most, yeah, sorry. Anyway, David Twilight Zone. Uh, Seinfeld, definitely. And like modern day Landman, just because I'm sure we all have that experience where every three seconds, like, what happened? What blew up, what plane got there? One second. Yeah. What would you like for dinner? Like, it's a real life, right? So absolutely. I would say that. Favorite place to visit? Favorite place to visit, um, Rome. The last time I went, there's four major basilicas in Rome. And just, you know, I've, I've visited very few places that I've ever gone in and. Could just feel the aura of 2000 years of my religion. Have you got a favorite book? Um, I read biographies. So what happens is if I, if I see something I like, I'll read it. So if I pass a building and I see the architect, I read it. Right now I'm reading Shelby American.'cause I saw Shelby and I'm like, that's a pretty cool car when now he did that. I don't necessarily have a favorite book, but I do like reading about how people got to do something or build something. So have you read Shoe Dog? No. It's the story of Full Knight who started Nike. I'm not gonna tell you how it ends, but I think he does right for himself. I think so. It's a great book. Alright. Um, oh, I gotta end with favorite quote. Do you have a favorite quote? I do when going through hell. Keep going. Awesome. On that note, Lenny, thank you so much for being on Born. It was a pleasure. Thank you so much. Thanks guys. Thank you. That's it for this episode of Born Scrappy. If you have any questions, stories, or topics you want us to dig into. Send it my way Until then, keep it scrappy.