Brace yourself for a fascinating journey into the world of equipment dealerships and rental companies with our guest, Matt Harris, the innovative mind behind Texada. A revolutionary software that is shaking up the traditional approach in this industry, Texada uses an integrated platform, cloud-based software, and an experienced team to push boundaries and bring about real change. As Matt prepares to take the stage at the AED conference, he joins us to share his valuable insights into the disruptive trends and opportunities in the field, and the critical role software plays in empowering businesses to ride the wave of change.
As we venture deeper, we explore the untapped potential of customer-centricity and data analytics as powerful tools for growth. Matt unpacks the grim reality of high customer churn rate, where dealerships lose 60% of their customers each year, unveiling the necessity of a paradigm shift from conventional approaches. You'll be hooked as we discuss the role of Artificial Intelligence (AI) not as a replacement, but a tool that enhances human work, and the secret to using AI effectively.
Rounding off, we turn our gaze to the future, where Matt shares words of wisdom for rejuvenating the industry, and the importance of sharing ideas. You'll learn how companies like Ritchie Bros. are using data and technology to disrupt the industry and how traditional dealerships can hold their ground amidst this turmoil. Matt's insights into the future of work, AI, and the concept of business disruption will energize you to look at the equipment dealership and rental industry in a whole new light. So tune in, for an episode that offers not just knowledge, but a perspective shift you can't afford to miss.
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.
Brace yourself for a fascinating journey into the world of equipment dealerships and rental companies with our guest, Matt Harris, the innovative mind behind Texada. A revolutionary software that is shaking up the traditional approach in this industry, Texada uses an integrated platform, cloud-based software, and an experienced team to push boundaries and bring about real change. As Matt prepares to take the stage at the AED conference, he joins us to share his valuable insights into the disruptive trends and opportunities in the field, and the critical role software plays in empowering businesses to ride the wave of change.
As we venture deeper, we explore the untapped potential of customer-centricity and data analytics as powerful tools for growth. Matt unpacks the grim reality of high customer churn rate, where dealerships lose 60% of their customers each year, unveiling the necessity of a paradigm shift from conventional approaches. You'll be hooked as we discuss the role of Artificial Intelligence (AI) not as a replacement, but a tool that enhances human work, and the secret to using AI effectively.
Rounding off, we turn our gaze to the future, where Matt shares words of wisdom for rejuvenating the industry, and the importance of sharing ideas. You'll learn how companies like Ritchie Bros. are using data and technology to disrupt the industry and how traditional dealerships can hold their ground amidst this turmoil. Matt's insights into the future of work, AI, and the concept of business disruption will energize you to look at the equipment dealership and rental industry in a whole new light. So tune in, for an episode that offers not just knowledge, but a perspective shift you can't afford to miss.
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 our podcast today with Matt Harris, from a business called TechSata, which he classifies as a SaaS business, which we'll get into later. This is the first of a new podcast series for us. We're calling it the clouds are upside down, which represents people and issues whereby the perspective of those in the industry is being challenged and looked at from the other side of the clouds. So, Matt, I'm really pleased to have you be our first guest in this podcast and look forward to our conversation.
Speaker 2:Very happy to be here, Ron, and happy to inaugurate this podcast with you. Great idea.
Speaker 1:Matt is in Oregon, one of my favorite states, one of my favorite wine spots, and his business spans most of the world. I think they've got clients in Australia and all around the world. So, Matt, maybe you could just start off telling us what TechSata does, and then we'll go from there.
Speaker 2:Yeah, as you said, ron, we are a software company, techsata, and we have a software platform. That software is a service, ie it's cloud-based, and we help equipment dealerships and rental companies manage their sales, their service and their rental size of their business. What makes us unique is that it's several things. First, we are the only company that will enable a dealership or a rental company to manage all their sales, service and rental in a single platform, in an integrated way, and so we do all three of those and I'll describe more about what we do a little bit later very, very well, but we let a dealership or a rental company really bring the three components of their businesses together on an integrated basis. That's one thing that we do very, very well. The second is, we are a modern platform, so we are software as a service, which means that, well, all of our software is in the cloud. There's nothing that our customers need to deploy on-premise no servers, no IP rooms, no networking and anything like that. We handle the software, we handle the infrastructure, we handle the security, and we do that all in the cloud. And so when it works through a browser, it works through mobile applications, and so we take care of that all the IT side of it for our customers. Because we're also in the cloud, our data is also very accessible, so we have access to our applications through interfaces that make it easy to integrate into other things our customers may have, as opposed to very involved and complicated. So that's the second reason why we're different.
Speaker 2:And then the third reason why we're different is this industry and equipment dealerships and rental houses is all that we do. We've been in the industry for 30 years. Our businesses were born from an equipment dealer and a rental house and came together. We have people in our organization who have been in equipment dealerships, who have been in equipment rental houses. They are installing our software, they are developing our software, they are selling our software. All throughout our business we have people with deep, deep, deep intimacy and understanding of equipment dealers, and this industry is not one of 20 or one of 1,000 different industries that we serve. It's all we do and we are super excited about the industry, where it's going, our potential contribution through it and, yeah, that's a little bit about PICTATA.
Speaker 1:I find one of the points that you made in there rather intriguing and I think it makes you also very unique that you have employees that are involved in sales installation support that actually have been in the business. I don't think any other software has got that anymore Used to be, but everybody's kind of drifted away from it.
Speaker 2:Yeah, we added up like we did an exercise, and we added up especially in our customer facing organization. So sales, implementation, training, support, the total number of years that our team has in actual dealerships and rental houses and I think it was approaching something like 450 years and so it's a nontrivial amount of knowledge, and so it's not only its understanding of how our customers work, but also what their challenges are and also how some of the things that we can do can help them make a difference.
Speaker 1:I understand you're also going to be at AED this January. You're going to be putting on a presentation. Is it going to be about PICTATA?
Speaker 2:Yeah, we are going to be at AED. We have a great presence there and talking about our entire suite of software, and I'm also doing a presentation a bit about the trends of digitization in the industry. As you and I spoke previously, there's a dramatic opportunity for dealerships in particular to digitize their businesses, and we can put some meat on that bone too and talk about what it means. But the way dealerships use to operate cannot be the way they operate into the future.
Speaker 2:The competitive market is very different and so in other businesses trying to take their customers post sale, it's very, very active. We see also that dealers are not only concerned about other competitors with other brands in their regions, but they're also really concerned about competition from their own brand partner, their own OEM partner, and that's actually becoming a number one concern for dealers and dealer principles. So the ability to compete, to understand their customers much more, to use data to inform them more on where a spelling opportunity and where growth opportunity may be, to use data and automation to help them create new business models, new ways to add value to their customers these are all things that are top of mind for dealerships now, in the face of what is potentially a very disruptive time for them, and so what that's what we'll talk about is what are these disruptions? How can we be thinking about them, what are our avenues to improve and where can software companies like us or others? How can a dealership think about using software to help build a business?
Speaker 1:It's also a remarkable time. You know I've been around here for a long time and so have a lot of the leaders in the industry and there's been an awful lot of the chairs on the deck being rearranged. It's kind of like musical chairs anymore. And the number of people that are in the software business and I'll just list down some, I'll probably miss some, but to those I apologize but SIP and Oracle and Microsoft Dynamics and Infor, jd Edwards, and then you've got DIS, which is a combination of the old NDS, national Distributor Services, which was a whole bunch of caterpillar guys, and EBS, which is no longer it's still around but it's in a different place which was also a bunch of caterpillar people that started with dealer data processing, batch processing of paperwork and I'm really troubled and don't let me forget the emphasis and CDK. They'll be upset with me, but each of these companies has almost evolved into a can. It's like here's my layout of the grocery store and that's the way it's going to be Not recognizing the grocery stores change everything every week and going to the cloud was a difficult migration, just like relational databases.
Speaker 1:It was a difficult migration. You've jumped right at the top of the pile with a completely different perspective, which I find very refreshing, but also, like you said, the supply chain disruptions, amazon's supplying parts now we don't know who the competitors are anymore and most of the DMSs and I'd like you to make a comment on this, even though it might be controversial Most of the DMSs that we're looking at today are process people, they're not business people. They're transaction-driven, not market-driven, and I think that's a failing model.
Speaker 2:Yeah, I think you nailed it. I think that the beginnings of software and the dealerships started in the back office with the DMS environment, which is accounting and transactionally based. And then the DMS has expanded and they're trying to go out and there's this perspective of accounting or transactionally related processes, and that's an approach. The other approach is one where TXADA and others have taken we didn't start from the accounting transaction and then try to go out. We actually started out and then are trying to come back in to help a dealer manage the process. What's that mean?
Speaker 2:We start with the customers, which is the key assets of a dealership, and then we start with the equipment, which is the other key asset of the dealership.
Speaker 2:Management of the customers.
Speaker 2:We call it customer intelligence understanding who the customers are, what they're buying, what the opportunities are, what their history is, what their future could be.
Speaker 2:That's what we bring together and then we manifest that in data and information that our customers can use, and then understanding of the equipment and the status of the equipment, whether it might be in need of service, whether it's productive, where it is, and the understanding of the equipment helps then operationalize some automation and workflows that a dealership can help them, make them more efficient, but also give them more value add as well. And for example, by understanding the equipment and the needs of the equipment, our software can tell the dealer when their customer may need a service appointment, so for a hydraulic fluid change or a transmission rework or something like that. And so our software understands that from the equipment. We let the dealership know, we tell them when a service availability could be, and then we help them schedule service technicians for that. And so it's that the outside in approach. It helps our customers better understand the end users, their end users, but then also helps them operationalize better service for their customers too.
Speaker 1:You open up a world that I love. The only people that matter in this damn thing are the customer. And yet that's an afterthought for a traditional business system. It's a transaction, and you're right. They started in accounting and then parts, and where was the big volume and the driver to justify it is? Well, we got rid of people. You don't need 30 people doing cardex work anymore. You got it on the computer. And that's when the computer system flaw I call it a flaw first exposed itself. The people in parts didn't understand the theory that was used to manage inventory. Number one. Number two it took them two to four weeks to get the report back to say what it was versus the cardex. You looked and you knew it right now. So it's.
Speaker 1:You know, what does the customer need and want? And you've heard me say this over and over again Whatever they ask for, I'm going to say yes, confuses the hell out of them. But if you need something and you're telling me you'd need and wanted, what the heck's wrong with me that I won't want to try and satisfy that and provide it? And then number two if they don't ask, because more often than not and this is a bit of a nasty comment too. They don't know, they're not systems, people. They don't know how they should approach it.
Speaker 1:So you know, if they don't ask me questions, I say, okay, how can I help you? What's your biggest problem? What causes you the most distress? What causes you to just be awake tonight? So data analytics all of a sudden becomes the fore and, like you say, customer and equipment the machine tells us what it needs. We've got sensors and technology all over the place, but very few people pay any attention to it. And what also happens the OEMs drives me nuts. They have their own version. It's not like automotive, where everybody cooperates with each other. We got silos of people that say, well, I'm only this brand, or I'm only this brand, wow, so you're breaking the mold. You must be causing a fair amount of consternation out there.
Speaker 2:We're trying to do something unique, for sure, but we're very, as you mentioned, focused on solving the problems that we understand our customers and our industry have. And disruption is happening, it's on the horizon. It's the number one fear of dealer principles right now. In order to get through that, they want to and need to understand their customers better and, through that understanding, identify growth opportunities. Another great example when all dealerships want to sell more stuff, isn't it wonderful to understand If you have a customer who's continuously renting something from you? Wouldn't that be a great lead for an equipment sale? It sounds completely obvious. You know how many dealerships actually do that. Very few, very few. And increasingly there's a desire to get into both heavy and general rents and they're into a great business model in there as well and turning that information into a sale or using service information if equipment is in for a long-term service, a transmission rebuild, using that to motivate a rental opportunity, let's rent them a piece of equipment to backfill that that is almost never used. So what a great opportunity, we think right.
Speaker 2:For the dealership to understand across their lines of business, what they sell, what they service their parts and what they rent, where they can grow in terms of share of wallet.
Speaker 2:If I could use your phrase of churn, I think this is a revolutionary concept that I will give you credit for 100%. And the concept is that the average dealership is churning about 60% of their customers every year. 5% of the customers a month, 60% a year. What that means is that from one year to the next, only four out of 10 of a dealer's customers will do business with them. They went from one year to the next. So this dealer to grow, they have to refine 60% of new customers from the previous year, which just makes it monumentally difficult. If they have the ability to understand their share of wallet of their existing customers and could not only sell them equipment but could rent them more but can provide more services to them, more parts, that's an ability to stay engaged with that customer from one year to the next and it's the fastest and most sure way of growth. But dealerships aren't doing that. They're churning 60% of their customers a year, which is astronomically high.
Speaker 1:What is even more distressing, man, is they don't know and, like you say, disruption is the thing that's concerning everybody. But the data let me change that the information that they're traditionally used to looking at financial statements, operating results, balance sheets, to some degree, cash flow forecast but that's much more esoteric. It's masking the truth. The truth in the equipment world is over the last 20 years, the number of dealers in the marketplace has shrunk by 50%. The price of product has gone up about 100% over that 20-year period of time. One of the things that drives people crazy in 1969, when I started, a D8 tractor was about $85,000. Today it's about $800,000. So the second piece of that puzzle, then, is my sales keep going up because my price is higher. Everything's okay. Looking up at the clouds, everything's okay, but if you consider the fact that your price has doubled, your competition has halved and you're still at the same place, that should be troubling. And I go into dealers and I say, okay, what's your retention of customers? Don't know. There isn't a report in the system that produces that. You have to actually do something with data to translate it into information. That's another place, in my view, where the dealers have failed.
Speaker 1:Parts managers have an inventory package that typically the theory, is designed by the OEMs so they don't have to think about it. They create stock orders according to the rules that the manufacturer specified, not necessarily productive economic rules. They have an expediting process. When I don't have a part, it's too late to find out. I'm going to run out of a part. You expedite when you receive your stock order and you find out what the manufacturer is not giving you. But people don't think that way. We've got this routine. I'm going to train you how to do this job. I'm going to show you how to do it, then I'm going to watch you do it and I'm going to let you have some time to get good at it. And for God's sake, don't change it.
Speaker 1:Don't even look at continuous improvement. Don't think in terms of Japanese kaizen. Keep doing this and if the job runs out, fine, I'll get another person to do whatever the job is now. That's distressing his health. In software, data analytics and artificial intelligence, you put those things together. You're going to just like you say. The guy's been renting this machine forever. He's putting 160 hours on the machine every month.
Speaker 2:Why the?
Speaker 1:heck, don't we sell them one Such a deal for you, and they're really. I think we're moving into and we haven't really talked about this but a subscription business model. We're not going to sell equipment, we're not going to rent equipment, we're going to sell services. I'm going to track your machine. I'll look after the maintenance, like you do, and for that it's $14.95 a month. I'll respond to your sensor alerts, and for that it's $49.95 a month. I'll deliver parts for free within 50 miles, and that's $33.95. Some such thing. And it's no longer a machine anymore, because then I can be brand independent. God save me. A customer doesn't have just my brand. Oh my goodness, how can that be possible? It's a different world, matt, and I don't see people even really thinking about it. They're scared about it. They recognize their disruptions, but they don't know what to do.
Speaker 2:Yeah, I think that A it starts with the understanding, as you suggest. So if a dealer understands what they're churning in their customer base, what percent of their customers are they doing business with from one year to the next? That's likely less than they think, and what that means is there's a tremendous opportunity that they're missing in a lot of them. And when that customer of the dealership buys that equipment, for sure they're getting that equipment service or they're buying parts on that, and they might even be renting things from somebody in the next year, but they're not doing it with that original dealership. That means they're doing it with somebody else and the dealership don't understand that. They're just actually fulfilling the number one fear that they have of being disrupted. So understanding that concept of churn is job one. Then what are you going to do about it? So the second thing to look at is okay, what is your defining as what we call share of wallets, right, and so of that of a given customer of a dealership? What could potentially they could offer to that customer? What, in addition to the sales which I'm sure they pay a great deal of attention to, what would that mean in terms of service? What would that mean in terms of parts, is that dealer renting other things from other people that we, where we could provide that capacity? I think it's really important that the dealers and they're almost going to have to disrupt their sales model as well the dealers understand holistically how to engage with their customers, and by us we hear what I mean by this.
Speaker 2:When a dealership is engaging with a contractor or a customer they have, the sales team is obviously trying to sell them stuff.
Speaker 2:They have a service department that obviously wants them to get their maintenance or their repairs done, all the parts. That's obviously going to take their parts orders and then they'll have a separate rental side. Right, none of these businesses know what the other one's doing. Right, they do not have a single person and in the rare case they have a single person that knows holistically that dealership's engagement with that contractor, that customer. And that's the difference, right, it's understanding all the opportunities to plug into that customer versus understanding a single line of business and that representation of that customer. It could be that the sales team says, hey, I'm going to sell that sell equipment one time every seven years and they'll say, hey, that's a home run for us. Right, it is on the sale side, but then every six years, somebody else is selling them parts or service or you're getting a rental business. Right, and that is what we need to change the sales mechanism and the customer engagement needs to break down the walls between business and the farm.
Speaker 1:Yeah, absolutely. The other thing that's a little intriguing I'm going to set up a sales team to cover the customers that are already customers of ours. Nobody goes out and has a sales team that goes after changing brands from one to the other. Yeah, many a number of years ago maybe 20 years ago there was a dealership out there that paid commission only when the equipment salesman replaced somebody else's brand with their brand and I thought it was way, way ahead of us, still ahead of us time.
Speaker 1:But what we're looking at, we have data, and I think you and I come from the same place and analytics is critical. It's kind of like any statistical statement the shorter the time is between the last two events, the higher the probability is that there will be a future event, the longer the time. So not only do they not have retention data, that comes back in a report that says that George just left, you hasn't bought from me in the last three months and he used to buy every week but they don't predict when that's going to happen by saying the buying habits have changed. You better talk to George and find out what's going on. I teasingly say what happened? Did my deodorant break down, george? Or how come I haven't heard from you and we don't do any of that proactive stuff? The phone rings we process something. Somebody asks for something, we process something. That's so gone, that's so upside down. That's the bottom of the cloud, babe. That's a completely different place.
Speaker 2:Yeah, and that's I think, and it's not all too big a clue. I think the questions are being asked now. It's like how do I do this, how could I leverage this information, how can I have more engagement with my customers? And so I think the right questions are being asked.
Speaker 2:We've seen some really interesting research that tells us that the expectations of dealerships to digitize meaning to engage through the web and other means with their customers for sales, for sales of new equipment, sales of used equipment and rental equipment that expected to triple in the next four years or so. And so there's that intentionality is there. We see it in our customers as well and what they ask of us. The desire to create more value within dealerships customers is clearly there and offering, as you mentioned, it's not necessarily a piece of equipment sale, but how do we offer a more broader service and offer more broader productivity? And there's some interesting models that are coming into place now that are early but are really interesting. So I think the desire is there and, to your point, giving dealerships the tools to do it, the information that they need, and also making it easy for them, is the challenge of all of us serving the industry.
Speaker 1:Then, yeah, I agree with that. The other thing that's very evident in the developed world the Americas and Western Europe let me call it parts of Asia, but not a lot is the need for construction, the need for mining, the need for dams, electrification, transmission. The needs are huge, so equipment is going to be in use. The trouble is and we've seen this coming we don't have enough operators. So now we got autonomy with the machine. The machine is autonomous, I don't need anybody on it. In mining, it's present, it's there agriculture, it's there.
Speaker 1:Construction jobs not yet because we haven't figured out how to map a job site very well yet, but all that's coming. Material handling it's been that way for a long time the operation within a dealership. Now you need to look at distribution differently. My points of contact, one of the interesting things about Retention Mat is the closer the source of supply is to the customer job site, the higher the retention. And yet the models that we've got are this corporate structure and branch stores, not retail operations. Think about banking. We've got remote banking all over the place, cash machines everywhere. That's got to come to us as well.
Speaker 1:Every dealer that I know has got a market share somewhere between 10% and 20% on labor. And every dealer that I know says I can't find technicians. And I say to every dealer that I know double the wage and you won't have a problem finding technicians, but you still won't do anything. Why? Because they don't have enough bays. They haven't figured out that the physical plant and now I'm talking about the operation of the business, not the system, but the system's responding to the same problem. It's really weird. And now here comes security. Oh baby, everybody's scared to death and there's horror stories out there. But buying it in the cloud, you can control all of that much more effectively, can't you?
Speaker 2:Yeah, and you brought up two really, I think, important concepts. Well, three, if you include security. The first is the development of infrastructure developed world, undeveloped world. I speak to peers of mine who are in other companies, in other types of industries they're not in construction or equipment and look, there's a lot of concern around. Is there growth, is there contraction? What's happening in the world economically? And, to be honest, we don't see that in our industry we're extremely. We're in a great state right now. There's like continuous investment in infrastructure and then if one component of building construction is falling off, inevitably there's another component that is picking up, and so we're in a great place in construction. And so to some extent we're, we have a bounty of a market that is really truly unique and this day and age because our peers in other industries definitely don't feel, don't see the way, don't see it the way we do they see a very different macroeconomic state. So on the one hand, we're very lucky, but to your point then, this luck then puts continuous demands on a few precious resources that are highly finite. That is really throttling the growth of the industry.
Speaker 2:For a dealership, we consistently hear that active service technicians, trained service technicians, is the number one, a limited to growth.
Speaker 2:And you'd ask yourself well, okay, I understand how that would limit a service department, but why don't they just sell more?
Speaker 2:Well, the people who are doing the set up, the equipment and the free you know, free delivery, inspecting and everything like that are the service technicians, the people who are taking care of the rental equipment and the rental fleet you know, make sure it's ready for the next cycle or the service technicians. So the common denominator across all the lines of business are the service technician, and that's the number one throttler that we see with the largest and the leading dealerships in the continent right now are telling us this. So everything that we do to help with service tech productivity, to your point, getting more service technicians, getting them onboarded, trained when they are trained, making them more productive that is a unleashing power to the industry. The macroeconomic conditions that we're in are fantastically good, you know, knock on the wood will be that way for a while. You know. We need to now give our dealerships and our customers the ability to, you know, unleash some of their resources, to get more value from their resources, to take advantage of that.
Speaker 1:It's like athletics, I think, man. It's very hard to repeat as a champion a Super Bowl or the World Series or basketball or hockey or whatever the devil it is. It's very hard to repeat. Everybody comes after you In the equipment world and you're right, there's a finite amount of suppliers and if we get nasty looking at it, we've got very large equipment.
Speaker 1:There's basically three vendors there Caterpillar, kamatsu and Hitachi. Then you come down to I'm going to call them large, and the field grows. So now we have all the one Kamatsu and Caterpillar and John Deere and Case and JCB, and perhaps of you know another six. So there might be three at the top, maybe 15. At the next level and this is historically true in economics the next size down we might have 50, and at the bottom of the scale the Kubota's, the hinders, those things we might have 500. The interesting thing is, in economics one of the old games was the more suppliers there are in a chain, the more money is made out of that chain, but not enough money is made by anybody to survive. So you start at 500 and only because of attrition does it start shrinking. It's not because of performance, it's just a fact of life.
Speaker 1:So here again, I've got data analytics. Here again, I've got infrastructure. How do I do this without infrastructure? Well, why don't I use tents? Look at Denver Airport, look at Munich Frankfurt, look around the world in different things. What are they doing over there that we can learn from? We don't do enough of that either. We're starting to ask the questions, you're right, but I need a whole host of people more and heck, I'm on the back end of my career. This isn't going to be something that's exciting for me because I want to generate more work. I'm done with that phase of my life. But there's a whole bunch of people like you and younger that what am I going to do? Where do I go? How do I? You know, it's really distressing.
Speaker 1:The skills the universities, as you know, we're heavily involved in education. Skills are changing from the classroom to adult education. They're starting to recognize that learning is a lifelong enterprise, not a school enterprise. It used to be. When you left school, you stopped learning. It was done. You didn't need anything more. Now, when you leave school, you're just gonna start to learn because you haven't got a clue what you gotta do and whether you've got very smart employees or just really good, solid workers.
Speaker 1:How do you keep them? Because retention of employees is just as important now, if not more, than retention of customers. Those two and the piece you missed, in my opinion, is yes, we got customers, we got equipment, but the real deal is the people, the employees. They're who I call the heroes. They glue the relationship between the customer and us. And if they don't feel good about what they're doing, if they don't know what they're doing, if they're not trained, if they're not given new tools and current tools, they're cooked. And if they're cooked and they're young today and you've seen this they're not gonna hang around. They're not like me that you stay with a place for 10 years. They're gone.
Speaker 2:If I'm not learning, I'm out of here.
Speaker 2:Yeah, no, I think you bring up a great point and increasingly, the people in our industry and it's not just that companies like us, software companies, it's actually in the dealerships, in the rental house with either real knowledge workers, they their understanding of the equipment, of their customers' workflows and processes, of the intricacy of the engineering, of the work that's being done, of the engineering of the equipment being provided. I mean, it's incredibly profound what they have to know. And so when you think about the generation of knowledge workers who we want to have in our industry, we're competing against all the other industries financial services, healthcare, you name it, hospitality that could have access to want knowledge workers as well. So how are we going to compete? You brought up a really great point tools tool set. Nobody wants to come into an environment where they're working with a set of tools that are yesterday's tools. In the software world we call that green screen, right?
Speaker 2:Nobody wants to come in and start working on a bunch of this green screen stuff that was developed in 1960, which is a great decade it's when I was born, and so not in 1960, but the decade but they want to work on modern things. They want to work on off of their phone, their tablets you mentioned artificial intelligence. They want to feel like they're embracing and have access to some of the latest, greatest the trends that are important to the world that we read about and hear about all the time, and so that's an important component about attracting folks like this. The other side of it, then, is, once you have somebody in in the generation, as you mentioned, that is with us now they're not like you and I and others and where we would want to be in a job for several years and sort of prove the points that we could make in that given job. They're in a job, they want to do it, they want to learn it, then they want to do something else. So and that's going to happen If a dealer or whomever is not continuously finding opportunity for this for these knowledge workers, they'll find it one way or the other, but they'll just find it somewhere else, and so it's continuously refreshing, which means giving them the tools to kind of start learn something, but then give them new tools to help them learn the next thing, and continuously helping them understand what a career progression could look like from one part of the business to the next.
Speaker 2:If the expectation is, you know, they're only going to be in that job, in that line of the business, for 20 years. Nowadays, that won't happen, right, there's a much different, eclectic kind of view on work, and people want to be doing and learning new things, and so that's important. That's an important component of it too.
Speaker 1:Yeah, you mentioned green screens. I'm from the era of unit record, that's even before green screen, which is faithful for me to say. But you know and I use the expression I think Alex Schuessler might be the one that gave it to me what we did with systems initially is we went from paper to glass. We took a form and we put it on a screen. Instead of writing it, we typed it, and none of us knew how to type. So we became two and three finger typers real quick, or typists real quick we.
Speaker 1:That knowledge worker concept hasn't gotten across in the industry really. The people that sell parts have to know parts. They have to know heat treating. They have to know a lot of stuff. Engineers are wonderful at that. The people that collect bills, that's an art form. That's not something that you pick up in Tuity, but you know, I used to say in classes here's your customer list, here's your keys to the truck, there's the door, go sell. You know sales and that kind of a job. It's not intuitive, matt, as we know, you got to learn this stuff and if you go out to a customer and you do not know you're cooked, customer's not going to see a second or third time they're not going to reply to your phone messages. And you know, when I started it was a tough market in 1968, and it was hard to get a job and everybody said be patient, because you're going to be there for the rest of your life. Okay, then my daughter, 20 years younger, when she hits the workforce, I think before she'd been working for five years she'd had four employers, from drug rehabilitation to law to security, whatever the devil they were, and she's a full-time teacher now, with a master's in education, very talented person. But the generation she was in, they said well, between six and 10 jobs before you're done Today. God only knows, because the jobs that are in place today, maybe 15 years from now that won't be at all present.
Speaker 1:Think in medicine. We got doctor shortages everywhere. All of a sudden, nurses are being trained, people are being trained as physician assistants, so you don't see the doctor anymore unless there's something. It gets escalated. The maintenance technician goes out to a machine, everything's fine, cool. You're not going to see a diagnostician come out to fry and figure out what it. You're not going to see that surgeon unless there's something seriously wrong. That whole evolution, that's the other side of the cloud again, isn't it? It's a different perspective of life. You're not there.
Speaker 2:Yeah, and I think to your point. We talk about artificial intelligence. I think we and I have a little bit different perspective on that and, borrowing an expression that I recently heard, that I really believe is that I don't think for any one of us, or any one of us who work in our teams, I don't think any of us are going to lose our job to artificial intelligence. I don't either, but I think we'll lose our jobs to people who know how to use artificial intelligence better than we will, and the point that's the operative point is that they know how to use it, and so AI is a tool, and it's a tool that will help us do some things better and faster.
Speaker 2:The opportunity that our industry has is to identify uses of that tool. The requirement of folks like myself and technology vendors for the industry have is to make it easy and obvious To integrate the tool into the normal daily activity that somebody is doing, not as a replacement for that activity, but as a way to make it faster and easier and better, and I think that's the opportunity. So that's where, when we talk to our customers thinking of AI as AI won't put them out of business it's the dealership who's using AI better than they will. Who's going to put them out of business?
Speaker 1:I think the term is incorrect. In fact, matt, it's not artificial intelligence. What it is is it's an algorithm that we have created that, because of computing power, we can let it loose on a mass of data that, artificially, will come back to a conclusion. Give us an answer from that algorithm, and you're right. I don't think it's gonna replace anybody. It's gonna require many more people that have better understanding of what we're looking for, so that change in buying pattern, the churn rate, the churn rate in different sizes, different industries, different areas, the knowledge worker requirement and demand, and all of this. It's gonna ebb and flow. It's not gonna be static anymore. There will be beginning and end and there'll be new life, there'll be new birth.
Speaker 1:Like Lee Iacocca, revolutionize the world with the van Holy pro. Look at the SUV replacing the station wagon. Oh my God. That's to some degree, an idiotic parallel, but isn't it the truth? So what have we done in technology? Saas, what is that doing? It's gone to the cloud. That means I don't need to have computer operators, I don't need to have punch cards, all of this stuff. That was the evolutionary process. Now we're at the top. I don't know where the next one is. It's probably gonna be right in the machine. The machine's gonna tell us orally what's wrong. Yeah, I'm repeating, you've been idle too long.
Speaker 2:Yeah yeah. The distribution of information and just the amount of information that is available is just accelerating and accelerating.
Speaker 2:I love it and on one hand you almost get into a panic mode. What am I going to do with all this? I'm like Lord, and I think that's where there needs to be a thoughtful approach to you know there's and I should say there's data and information. Right, Data is everywhere. It doesn't mean it's necessarily helpful, it doesn't mean it's informing us, it doesn't mean it's doing things that are useful for us. And so the opportunity, the requirement almost, is to take that data, filter out the 99.9 percent of it that is not information to distill down to the.1 percent. That really is information, and that's hard to do, To really get into that and to really, you know, look at what matters. But to your point, I mean, that is the key. You know, use the data to create information that will give you, you know, the understanding and prioritization of your business.
Speaker 2:Where are you turning customers? You know, where are you not turning customers? What's working for you? What's selling better, what's selling worse? When you rent somebody a piece of equipment, how often is that turning into A sale downstream? How much longer downstream does it take to convert that into a sale?
Speaker 1:I think those are all the bits I agree, and I'll take it down to a different place. The number of customers in your territory that sell or machine at auction Is another really important point. The dealer typically owns the first buyer, but they rarely own the second buyer. And who's picking that business up? The auction companies? And as you look around out there, what Richie's done with the acquisition of Rouse and Smart Equipment, merging a whole bunch of quote data businesses, is ahead of the curve again, isn't it?
Speaker 2:Yeah, and that's a disrupter man, that's a whole secondary market that didn't exist. And now the adoption, their adoption of data and system data on the price points of equipment and the accessibility. And then the productivity tool through keeping this equipment going with parts. I mean, what a smart move. But if the dealership or what's the dealership going to do stand by and nothing, of course they have got to do something. That business is materialized in what? Two years, three years, yeah, that's come together. It is completely potential of completely disrupting the industry and that's what we have to be in front of right now. It's exactly something like that.
Speaker 1:Your point is well made. I knew Dave Ritchie back in 1970 when he was starting, and he had no idea where he was going. He had more energy and had another disrupter and the real deal that comes along is change scares the bejesus out of all of us. So here comes Ritchie. Just use them as an example. Say that they're ahead of the curve on the disruption. The internal management at Ritchie I bet you right now are scared to death. It could be.
Speaker 2:I think they have a very smart CEO who I've heard very good things about. But, yeah, it could be that the average employee at Ritchie is absolutely petrified. But you can't argue with what they've done and I don't think that's been an accident Like the pieces that they put together there and the ability to really holistically create a secondary market that is informed by data and supported by accessible, fair parts. I mean, it's genius, right. That's the best thing to do. If they have a service infrastructure for that, that'll be it right. We'll have it all and maybe they're working on it, who knows, but it's a really smart thing and that's all brand new. It's all brand new and that's what.
Speaker 2:Look, there's nothing in our dealership that's preventing them from really thinking about using that information in that way as well. And they have access to, and the use of, very sophisticated data, or they can, and I think they have access to and understanding of, really sophisticated models and how their equipment or their customer's equipment consume parts. They obviously know their service business moves extremely well. They have touch points that are very strong. They can really compete effectively. They just need to use the tools and empower the teams in themselves to go do it.
Speaker 1:And I think Texas is in the same position in the same place. I suspect that a lot of the traditional dealer business systems and I'll call it that rather than DMSs they're hoping, they're hanging on, they're hoping they can make it out, they're hoping that they can keep their jobs until they retire, and hope is not a strategy when you're going disrupting things. I think it's wonderful Customer first, machine second, wonderful Cloud, absolutely great. So anything and everything that we can do to help and support. We're already colleagues hooked back and forth, but I think your services to the dealers is invaluable. So congratulations and thank you. And thank you for joining us on this inaugural the Clouds are Upside Down podcast series. We're going to do these maybe once a quarter, because there's not that many people I can find, like you, that are disruptors, that look at the world from a different place. So thank you for being here and continued good luck. Is there anything you'd like to say as words of wisdoms to old guys like me or young people that are listening?
Speaker 2:I would just say words of wisdom. Thank you for having me. We're really excited. The first of thousands of these podcasts, I'm sure and I would say words of wisdom is keep on espousing your thoughts. When I first met you, it was at last year's AED meeting. By the way, I was blown away by the concepts that you were bringing to the industry, so I think you're continuing rejuvenation and ideas that you're bringing to us all. Please keep on doing that. It is refreshing.
Speaker 1:You're much too kind. Thank you, Matt, for being here and thank everybody who's been listening. We hope you've gained something from this the Clouds are Upside Down podcast and look forward to another podcast with you in the near future. Mahalo.