Learning Without Scars
As a third-generation educator, it is easy to say that teaching and training are in the blood for Ron Slee. From his beginnings as a coach, through his time at McGill University, Ron developed a foundation for the work he does today. From working within dealerships, to operating a consulting company, creating a training business and running twenty groups, Ron has been directly involved in this Industry since 1969. Ron has been known as the industry expert for years, and has brought this expertise to bear through his training programs. Today, Ron provides specialized, job function based internet based subject specific classes, job function skills assessments, as well virtual seminars and webinars. These courses are designed for manufacturers and their dealers, as well as independent businesses in the construction equipment, light industrial, on-highway, engine, and agricultural industries through Learning Without Scars (www.LearningWithoutScars.com). This platform is a continuation of the work begun by Quest, Learning Centers which was established in 1996. This training is aimed at improving dealer parts and service operations through qualified people that are knowledgeable in using operational metrics and current market and operational best practice methods.
Learning Without Scars
What If The Normal Distribution Is The Biggest Lie In Your Business
If 3 percent of your customers drive 60 percent of your revenue, how much of your budget do they actually get? We open the hood on the equipment industry’s quiet math—where rental term length dictates margin, customer concentration drives fragility, and blended sales-rental models bleed value. With Nick Mavrick, we connect dots from Wayne Huizenga’s roll-ups and Blockbuster’s rental logic to today’s Sunbelt and United advantage, then show how dealers can counter with focus, clean data, and local execution that wins loyalty for years.
We dig into Volvo Rents as a case study in structure: why franchising empowered local operators to target the 15 accounts that move the needle, and how financing allure pulled in owners without the operating muscle to sustain performance. We explain why sales and rental need separate P&Ls, leadership, and incentives; how average rental term becomes a profit engine; and why national accounts can’t be ceded to rental oligarchs when coordinated regional dealer execution can compete. Along the way, we challenge the myth of the normal distribution and replace it with the power law you already feel in your numbers.
Then we get practical. Define your top 100 must-win accounts and the next 100 rising stars. Reallocate spend from the long tail to the core. Build lifecycle intelligence by model—parts and service per hour, expected life, resale value—and use real machine population by brand to guide outreach. Establish a single source of truth before layering AI to accelerate insights. The goal isn’t to copy the giants; it’s to out-serve them where you live, with fast decisions, clear promises, and people who know customers by name.
If this resonates, follow the show, share it with a colleague who needs a sharper plan, and leave a review to help more operators find these conversations. Your next quarter’s margin may start with one clean list and one tough cut—what’s the first change you’ll make?
Visit us at LearningWithoutScars.org for more training solutions for Equipment Dealerships - Construction, Mining, Agriculture, Cranes, Trucks and Trailers.
We provide comprehensive online learning programs for employees starting with an individualized skills assessment to a personalized employee development program designed for their skill level.
Aloha, and welcome to another candid conversation. Today I'm blessed to have Nick Maverick with us, and we're gonna spend the next hour or so talking about built data, data analytics, which Nick is on the forefront of. So, with that as the introduction, because I don't really know where we're gonna go. We wander all over the place. Nick, how are you, my friend?
SPEAKER_00:Ron, aloha. Wish I was sitting next to you in the beautiful state of Hawaii. Um, good. Uh and thank you for your kindness always and being a blessing.
SPEAKER_01:So tell me the aura. Okay, so start at the beginning with where you started in in working. Let's let's go right back to the beginning. You finished school, where'd you go?
SPEAKER_00:Right. I uh by the way, I was so immature in college that I um I really had no right to graduate with a degree. And I went to um a million years ago, University of Michigan. Of course, I learned close to nothing. And my first job out of college was a think of middleware. So in 1991, boy, I had to really reach back when I've to do that. They would hire relatively smart, raw materials uh like me who could sit between the mainframe and the the use of the data. It was for a uh large retail conglomerate. And it did teach me the uh the math behind call it business, right? I mean it was structured data. Um that was I I I just couldn't imagine myself. Um this comp uh the retail was already in the flase of consolidation, and you could see they uh it was very volatile business. So I did go to business school, which was really my college, so I don't want to inflate it and make it sound like it was something important, but I finally uh went to UCLA, took business school very seriously, and uh sponged it all up. I think I was relatively mature by then, went to Intel Corporation as a market research analyst, and I heard now equipment, I heard that uh guy named Wayne Heisenga was backing a construction equipment rental roll-up. And that brought me into the equipment rental business at the age of 28, and I'm now 56. So 28 uh wonderful years later. Hope I didn't put you to sleep.
SPEAKER_01:No, not at all. And before Heizinger did this, he basically did garbage collection, didn't he?
SPEAKER_00:Rental businesses, yeah, 100%. He was uh waste management.
SPEAKER_01:Well, that's right. I didn't I didn't say it properly. Waste management. So he rolled up the East Coast waste management, if I remember right, and he basically had a monopoly of the whole damn place, didn't he?
SPEAKER_00:I don't know. I wasn't close enough to that entity. I know that it had very humble um he was very you know, had a very simple investment thesis. I really wonder if he read like John D. Rockefeller's autobiography. I'm I'm or biography, I'm curious, because he employed a lot of the same techniques. He grew through acquisition. Um he courted his sources of money. So he people bought into his investment thesis was rental. You didn't have to acquire the customer twice, you just have to take care of her or him. And he really uh built a reputation in Wall Street and had relatively an unlimited supply of capital, right? Um and would would roll these companies up. So, yes, started with waste. Most people know him through either waste or blockbuster video. Um pre-Nets.
SPEAKER_01:Yeah, Blockbuster was another one in a different direction, though. And let's stay with that one for a second, because I think I think these transitions are where we are today and that we need to consider. Well said. Yeah. Waste management pretty much was a roll-up, a consolidation. Um and in a in a very difficult union environment. Uh some of the union workers in that side are pretty tough dudes.
SPEAKER_00:Oh yeah.
SPEAKER_01:Blockbuster, I'm gonna say was the second or third step in transitioning the the quote entertainment business.
SPEAKER_00:Yeah.
SPEAKER_01:Um, you know, we started with videotapes and I've still got some of those time things. Then we went to DVDs and and that took us to the Walkman as an evolution. But Blockbuster and and I think Hosenga was smart enough to recognize that. And when you look at rental, that's a natural evolution over, isn't it?
SPEAKER_00:From Blockbuster for construction equipment rental, yeah.
SPEAKER_01:Yeah. So what did you do with him? With well, million.
SPEAKER_00:I talked my way into the company. I had interned because of him. Um, I had interviewed him when I was in college for a paper, and I went back the next summer, said I would love to be an intern. I should I went to Mr. Heisinger's house and interviewed him. And they, you know, it you only know this now as you get older. I wasn't name-dropping at the time, but somebody said, put me at the front of the pile because of that. And I interned. So I, as a fearless intern, I would walk into his office, I would participate in the MA meetings. When I say participate, I want to make it clear, sit in the back row and listen. Um and I just got sort of hooked on the pace that they moved at. So when I heard they were starting nations rent, which um the company ended up doing 50 acquisitions, I talked my way in and I worked for the chief operating officer, uh, amazing operator named Phil Petroselli. And I was the overflow for whatever the corporate vice presidents wouldn't do, right? So he would use me as sort of a catalyst for either unstructured problems or something that he couldn't get them to move quick enough on. Right. So I was this little kind of badger who would he would use as a tool to get his team to move faster. Um so I did everything from it was really when I say I went to business school as my college, working for Phil was my business school because I got to touch so many things that were blowing up with these acquisitions. One of them was um customer concentrations, uh, which you and I talk a fair amount about, Ron. 3% of blockbusters, or excuse me, Nation Trent's customers did 62% of its business. It was 15 people per store. The reason that was material is Nation Trent ultimately went into Chapter 11. Many people say why. And it was actually comorbidities. One of the comorbidities was it generally lost five of those 15 customers per store, meaning the acquisitions were no longer creative. And it it happened through uh changing, moving from local ownership, which treating those top 15, the 62 percent, the three doing 60 at two as VIPs, and you just changed some things. And they voted with their feet and left. Um from a corporate perspective, they were trying to normalize things so they could get scale off of um the acquisition, right? Fold it in. Everybody gets the same credit terms. Um nobody gets special treatment the way they would have in the past. You know, dot dot dot.
SPEAKER_01:So it's it's interesting. You you mentioned the operations VP. I'm I'm gonna say Hazenga was the promoter.
SPEAKER_00:Yeah.
SPEAKER_01:You know, we've we've talked about John Anderson when he was with PFW as one of the owners' job title is evangelist, and and that's what a what Husenga was in almost every job he did, and in particular in nations, but operationally he wasn't that strong. So the VP operations is is a guy who who is the glue that makes it work or doesn't.
SPEAKER_00:Yeah.
SPEAKER_01:And with that concentration of so few customers generating that much business, it's it's almost impossible to succeed. It's too easy to lose one, and and that's too damaging. It's almost like you need a a bypass every quarter.
SPEAKER_00:Yeah. Or um there was a great entrepreneur, uh, Don O'Neill, has unique, you've heard me speak about him. He's actually who's name built data is named after, which is um a rock in his bath yard, which is Peter built his house on a rock. It's a Bible verse. But they they had bought Don's company as the platform. He was very, very well respected in the industry. His son and he um and he just recently sold Rental One to Holt. But Don had passed a little over a year ago. But that Don they made Don president, and had they sort of uh anchored you know his his many, many, many, many good business principles in the business, it would have done fine. Um however, um uh Don I want to say left after about a year for a health reason. And his, you know, without the wise leader, experienced equipment operator at the top, the company really struggled to control the debate. And it had too many temptations. It would um move from general equipment rental into heavy, very heavy, like RTICs. And when those weren't performing, just disposed of them, right? And it so you had this just whipsawing effect that where you didn't have a strong, experienced um team, in my opinion. Um did the best they could, but it was too much to overcome. How God knows people have opinions in the equipment business.
SPEAKER_01:Yeah, how did so one of the executives from Nations, one of the owners, the shareholders of Nations got involved with smart equip very early.
SPEAKER_00:Yeah. Don was one of them. You you were frankly, I I shared this with you. There's so much I've I discover about you accidentally. You were there at day zero. Um, and so whoever came after you and Alex.
SPEAKER_01:Yeah, John Kaskey was there too, and there was a software guy from California, I can't remember his name now, but he was really good. And and um and then when did nations get involved with Sunbelt?
SPEAKER_00:Well, so Nations Rent went into chapter 11. I want to say the fall of 01. Brian Rich um came back in. He had sold his company, he and Bill Stewart were running the Northeast region. Um, Brian had partnered up with Bow Post, bought the debt distressed at a very advantageous price, and because the company was it was an operating entity, meaning it was a going concern. Um, it was very, very debt heavy. That so Bow Post and Brian bought the debt for pennies. I'm speaking just from what I've read and what little I've spoken to Brian about it, bought control of the debt, took control of the company, recapitalized it, stabilized it for about three years, and then so in just uh sold it to Sunbell. And they they really did maybe what should have been done at the beginning, which is a very stable um operating team. Don't change too much, right? Let let you know, grow into your new uh pair of shoes, so to speak, and operate a little bit conservatively as opposed to aggressively. Um there were many dynamic forces. Brad Jacobs, who turned out to be, I think, just a when I was a young man, he was somewhat vilified to me. Um or I was I was allowed to, you know, say, well, Heisinger competed with Jacobs in the waste business. And from from my uh building, people would say, well, he's a Wall Street guy. You know, he did come out of deep finance. And I would say from the work the circles I was in vastly underestimated, vastly underestimated. Um, he's probably one of the most capable operators. You know, you talk about operators that I'm aware of. But Nations Rent and United were in this horse race, and that caused overpaying for acquisitions. It caused the loss of discipline, passing on deals, right? Um so as Nations Rent was trying to, you know, that was a time where you could amortize goodwill. So you could overpay and stuff it into goodwill. Not a good practice, right? You're gonna pay for it someday, but you could uh put it into goodwill and term it out. Um but nations and and united at the time both were very, very aggressive financially, and that caused um both companies to be challenged. Uh United came out of it. Yeah, United, as you know, was going to be acquired by Cerberus, and then Cerberus pulled out, Jacobs came back in, and that that I want to say the stock was at six bucks a share. Um, I want to say pre-IPO. I could be wrong on my numbers. You know, now I don't even look anymore. It's north of it's in the 480s, maybe it's at 500. It's nuts what's been accomplished under Michael Nealand.
SPEAKER_01:But yeah, there, you know, you've I think you've heard me talk about three different kinds of workers. Um, one of the fellows that I'm associated with, his name is John Carlson, and he has a operates a business called reflective uh executive function. And it's it's a means to determine what kind of a a leader you are. And I I break it down into there are people that are doers, there are people that are implementers, and there's people that are innovators, inventors, innovators, creators. The innovators, creators are gonna be somewhere between two and a half and five percent of the overall quote leadership population. The implementers, I think, will be somewhere in the 10 to 15 percent, and the remainder are doers. You have to tell them what to do, and they're very good at executing. And you and I have talked about the difference between you know effectiveness and efficiency. Efficiency doing things well, effectiveness doing the right thing. Kaizen, the Japanese principle, is is focused on doing everything you do a little bit better every day. It's the efficiency piece, not necessarily the effective piece. And what you just described is everybody was going for efficiency, in that case, capital, instead of effective. Yeah. And I look at Sunbelt today, and and all of these guys have been at times clients of mine, so I I know more than I should, but not nearly enough. But one of the things that's interesting about Sunbelt is that, in my view, from the rental perspective, the thing that most people forget is the rental term. And Sunbelt has an average rental term of somewhere in the the form of eight to ten hours, meaning that their rental rates are at the maximum and their operating costs are at the minimum for the longest possible period. So, for example, take a lawnmower, you know, I can rent you a lawnmower, you'll give it back to me after you've cut your lawn. You don't need to spend your thousand bucks. So I can maybe do two a day, and I don't know what I want to rent that thing for, but let's say it's a if it's a thousand dollar uh lawnmower, I might be able to get 75 bucks for half a day. So I got 150 bucks a day, I get more than my money back in a week. So from that point on it's free and throw it away at the end of a month. Where when we started with the rental business in the equipment world, the construction equipment world specifically, we were using it as a vehicle to facilitate a sale, not as a profit center by itself. So it was started as a rental purchase office and coped, and then and Caterpillar started that because they had the deep deepest pockets in the market, and that was, I don't know, in the 80s maybe. Um and that hurt a lot of people. The rental business, the rent-to-rent business has hurt a lot of people too, because of the investment that's involved, and they don't really know how to manage that kind of inventory volatility. Sunbelt does, and they've got a hell of an advantage.
SPEAKER_00:They do.
SPEAKER_01:Yeah. So here comes built data. You're not in the roll-up anymore, you're not working with acquisitions, you're not in the pure rental. How did you get involved heavily with construction equipment after Husanga?
SPEAKER_00:Well, I one of the executives left um Nation and became uh the CEO of a new rental division for Volvo. And so I joined a and it was kind of cool. It was a startup, multi- you know, multi-billion dollar startup within Volvo construction equipment to uh formed to um for construction equipment rental called Volvo Rents. And it was kind of cool because it was a clean uh sheet of paper. And it was also many things they did right was segregated from the mothership, right? But had so it was somewhat well, protected in the sense that the OEM through their systems and processes, which could be very, very good, but incompatible with rental. So this business under Barry Network had the luxury of being segregated out. And we could focus on putting local owners. The investment thesis was putting local owners back in business. So P you mentioned John Caske, who sold his bit one of his business donations, right? Go find the John Cassis and put him back in business to go compete. Um and I'd say it largely was successful, in some cases not.
SPEAKER_01:But so let me let me say that that addresses something that's near and dear to my heart. We cannot mix two operating business models unless there's unless there's consistency in how they operate. And selling a product and renting a product are the fundamental disagreements. You you cannot put those together. So in order for this to succeed, my view is dealers should never put their rental business into the same damn financial statement. It should be a separate financial statement, maybe maybe even separate facilities, separate leadership, separate goals, separate reporting everything. Am I right or wrong? Or where what do you think about that?
SPEAKER_00:I I you know I have been on the sidelines of that discussion, and I've mostly I'm gonna say I mostly agree. Um, I I'll say this, I agree, which is there all their systems and processes are set up very differently. And when I've seen it under one roof, by example, a large cat dealer, the it there seems to be the bigger revenue, um, right? Human beings, I mean, I hate to say it, but somebody at the top says, I'm responsible for this. And I've just seen rental get crowded out consistently when it's part of a dealership. I I I agree with you. I have heard some people say clearly, right, and on paper, they should work together, right? So I have heard some people say it can be done. Um, it seems to me you you can like everything in life, you can map out these systems and processes, you can make a very effective presentation, but it's almost in I haven't seen it work. I've seen it impossible. Um I've seen it not work when it is not truly a separate segregated entity. People would argue that, right? But I would argue that you know, some OEMs with sort of branded rental programs, I would argue they you know there's some questions in those numbers.
SPEAKER_01:Looking at different business units, you know, John Deere is a good example. They've got an ag business, agriculture business. That's where they started. Then they've got An industrial business that's only been around since about 1950. And then they've got the consumer products division. And they've they've kind of been silent on what they want to do with the rental quote business. And then let me introduce another little wrinkle to this whole thing. Dave Ritchie back in the 70s. Uh started an auction company. And I knew Dave before he got to who he was, and wonderful guy, but I've never met a man who had more energy than that guy. And I've got I've I've had over the years a lot of energy. But that sucker, I'd see him do a day's worth of work in Vancouver, British Columbia, get on a plane and arrive in London the next morning and go to work and come back that night. And I don't know how they and and Trump's another idiot that way. He doesn't seem to need a lot of sleep. I don't know how these guys do it. I I can do that well for a period, and then I do a face plant. I'm gone from the planet.
SPEAKER_00:Yeah, I'm with you.
SPEAKER_01:Yeah. You know, so and then Richie, the the piece that Richie brings that I think they finally figured out under Anna's leader leadership, Anne's leadership, was the OEM channel owns the first buyer. Dave in the auction business should own the second buyer. And that's a bit of a smack at the OEM dealer, too, because it means that the OEM dealer is not taking machines in trade to get to the next sale. They're letting the customer go to an auction because they're not giving the customer a high enough price. And that's one of the conundrums of life. That gets us back to you know, the customer's always right. And that gets us into what are the needs and wants of the customers, and they're different on a new sale, they're different on a used sale, they're different on an auction, they're different on a rental, they're different on a maintenance contract, and yet we try and you know put them all in a blender, grind it up, and say, okay, here's our business model. I don't believe that works. And I I've been wrong more often than I've been right in my life, but I can tell you there's as you've experienced, there's more failures putting them together than abject successes. Yeah. So if we if we then move, okay, so you you went to Volvo Rens, and that was a really good idea. Why didn't it work the way that you originally wanted it to work? Or do you think it did?
SPEAKER_00:Well, I think it was lumpy, right? So I'd say a third, uh, if there if there were a hundred franchise owners, that was right. Um that franchising was a is a very, very interesting way to do go to market. It this it taught me a lot because the fra you would think when somebody signs 300 pages of of documents that you can tell them what to do. Not really. Um you you actually you but it was really instructive, very formative for me. You probably know this intuitively through your success, but when you're in a corporate office, you've got to be very careful with people lying to you by omission. Because you carry this, you know, that this R of authority. No however how sweet and humble you are as a leader, people would begin to say that's headquarters, right? That's the you know, it's the you know, it's authority, right? It's where I'm gonna get my raise, my bonus, my special treatment, my promotion. Dot, dot, dot. Franchising flips that. Even the the owners in the field uh are your customers and you're and they're very, very vocal. And if you do not listen to them, they will not recommend you, they will sue you, they will form a union, right? Or do some form of collective bargaining, and you become very aware of that super quick. So it was very, very smart decision to franchise. And the company uh the franchising forces you to allocate capital properly. So we taking that learning from nations around about the 3% doing 62, 11% did 83. When franchise owners, by example, would contribute into a marketing fund or even paying their royalty fees. I'd say, you know, 80% of that capital was actually pushed back to them when it was done to it became a learning system. So capital was allocated back to them when they executed decisions that facilitated high margin business, high margin, high growth business. Those decisions were very good. Um, what didn't work well?
SPEAKER_01:Well, stay stay there for a second. Sure. High revenue, high growth. If you can't run a business in that environment, there's something wrong with you. You almost have to try to fail.
SPEAKER_00:Yeah, you do. Yeah. Okay, so keep coming. So the so I want to establish it. The the 3% was 15 people per store. And when you break those numbers down, you know, people would often say to me, Well, we open a new store, people know what the Volvo car is, but they don't never heard of Volvo construction equipment and certainly never of Volvo rents. Well, franchise owners, you could get on the same page with them and say, well, let's make a list of 15 people we're looking to acquire, or 30 people we're looking to acquire. Let's round up to 100. Shit, if we can't do that, then we shouldn't even open the doors, right? And how do you do that? You go to the ABC, you go to the AGC, you go to NUCA, you find the good people in the market who are are relationship driven and have networks and doing high volume. That worked well. What didn't work well was in some cases there were financial owners that came as franchisees because of 10 to 1 debt equity. And now that now you could see how this works. Well, I'm just gonna hire somebody who knows. Um I'm gonna hire an operator. And so the top performing third were generally past franchise, excuse me, past owners who ran a business. Pete Post, uh, Chris Cole. I I uh could go, I think on and Chris Leatherwood, on and on and on, ex-United Reynolds people, X US Reynolds people, X blank. Um those folks tended to do very well. On the bottom performing would have been, or in the middle performing would have been people who saw this 10-to-one debt equity and said, shit, I can grow a big business and leverage this, you know, the heck out of it. And in some cases, they were able to hire an operator and do okay, in other cases, not. It was kind of a random outcome. In the bottom third were folks who may not have had operating experience when they worked for um a U.S. rentals, a RSC, a you know, Sunbelt, Ashted, etc. And they came in undercapitalized on the under the 10 to 1. They took advantage of the call the amount of money being that it was accessible to them, and they got behind and they got in trouble. So a third a third a third.
SPEAKER_01:Okay. So all along what we've been talking about is a supply chain that is dealing with a large amount of customers. And all along we're saying that the supply chain is selecting, segmenting the business based on sales volume. Did you ever see anybody get involved with the potential market rather than the actual market?
SPEAKER_00:Ex sh can you fill in that a little bit more?
SPEAKER_01:In the rental business, Volvo rents, they were rent renting Volvo machines.
SPEAKER_00:And general. And general equipment.
SPEAKER_01:And general equipment, I agree. But they weren't renting everything. So if I looked at everything, it let's just say Caterpillar Komatsu gear Volvo case. Leave the general to the aside for the second. The splits you talk about, the 63 or 60 to 5 or 88 to 11 or whatever, that's of the Volvo market, never of the potential market, isn't that true?
SPEAKER_00:That is true. Yeah. And you're you're you just cut right through it very wisely. Yes. And a lot of that, you know, was it called a constraint? Somewhat, of course, that was the strategic or the investment thesis for the parent, meaning Volva A B and Volva construction equipment, to go into the rental channel. They said, hey, we're producing this stuff. We want to find a home for it. Rental's growing, right? At the time, rental was 35% of all construction equipment demand. Today it's 50% and climbing. Um and so they said, we've got this compact equipment, another risk factor thrown in there. It they said, well, we'll use our rental channel and curate products into it. And so we have rental fleet out there. It it and it so it was a somewhat of a constraint because if you really go back to sort of a root cause, it Volvo, by example, produced a first generation Skid Steer. Guess what? It missed the mark. Um, you don't think about those things. What's that?
SPEAKER_01:You want to talk about that at all? Sure. Tell me. Why, why okay, so first of all, I think one of the biggest flaws that all of us are dealing with is that we are dealing with segments of the market, brand segments of the market, rather than the overall market. So that if I'm gonna look at the construction equipment machine market and say that that's a hundred percent of the universe, I'm I'm gonna say to you that Caterpillar and John Deere control between seventy and eighty percent of that market. And that Volvo Kamatsu in case fight for the remaining twenty to thirty. And out of those three, Komatsu seems to be the one that's been the one to survive best and have a bigger piece of that park puzzle almost everywhere. And in the United States, it cannot support three manufacturers, in my opinion. It can support only two. So if I look at any state in the country, two dealers will survive. So let's look at Texas. We've got Hulk Tractor, the founding family of Caterpillar Tractor Corporation. We've got RDOT out of North Dakota, owning the John Deere dealership, most of them. We've got Kirby Smith and Walkershaw Pierce owning the Komatsu dealers. Where the hell what the hell happened to Ronco? As the Volvo dealer. So I've got three dealer three businesses there, cat, komatsu, and deer. And I'm gonna submit to you there's no room for Ronco. There's no room for vocal. Am I wrong?
SPEAKER_00:I I can s I can't speak to the current state because I don't know it. I understand.
SPEAKER_01:No, but just just in you know, go go back, California. Well Chicago.
SPEAKER_00:I would say Volvo was on a very I was speaking to their very good guy named Gary Rowley. He was their uh former head of global marketing. Brilliant. He's actually helping me quite a bit with built data. And he was doing the brand position. Um and so I'm speaking before I joined Volvo Rents. The they had sort of re restored the brand, the brand being not the logo. It was more the promise being made to customers, and it it fit. And it so it was a very strong articulation of the the promise to customers is that Volvo cared more. It created some internal energy, it was very well done, right? You could argue that's probably the best place to succeed with a branding campaign, which is internally, generated a lot of internal pride. And they were able to strengthen and grow its dealer network and to increase share. Along the way, um you know, I I can't say I know what the catalyst was, but certainly the 08, 9, 10 financial crisis didn't help. Some people say they could have seen it coming. All the presidents' meet men couldn't, of course. But the the company also made some very aggressive acquisitions from Ingersoll Rand, the paving business, um, had done some new product introductions. And I assume post-financial crisis, Volvo Rentz, by example, they had to take back a lot of the paper that was issued to franchisees, and they begin to take a more conservative stance. Well, we know what happens then, right? Um may have been the right stance. So that would have now taken Volvo out of a rising, you know.
SPEAKER_01:I I hate to speak so broadly because I'd have not but but we're we're talking broadly. If we're going to be looking at transitions in supply chains, you've got to be thinking broadly, you've got to be thinking globally, you've got to be thinking potential. So, you know, I'll I'll move from geography, saying the two control and everybody else fights for survival. Now move to the to the product category and look at the low tobacco. I'm gonna call that the small end of the line. Who dominates the lower backo market in North America?
SPEAKER_00:You would know more than I would.
SPEAKER_01:John Deere. Case. So here comes Caterpillar. They say, Oh, well, we're gonna get into that small end of the line. Here comes Volvo, we're gonna get into the small end of the line. Volvo dropped out quicker than anybody. Who is the oldest? Which construction equipment company was created first on this planet? Volvo. Then Deer. It's remarkable. Why did Volvo have to sell the car business to China?
SPEAKER_00:I I wish I knew I don't.
SPEAKER_01:I I don't either. And and then now you've got again, we keep looking around the edges. Here comes Leviat. They don't have complete product line, they don't have the complete mix. That's a private company for goodness sake. A man and his sister own the damn place. Imagine their primary business is cranes, and in the construction equipment world, they don't have the full product line. They've got good tractors, but they don't have everything. So now let's look at built data and how you're positioning your data analytics to help with this hodgepodge that we just covered. The waste management to the blockbuster to the rental, etc. And let me just introduce two other wild cards that you and I have spoken about, but to get everybody on the same page. Sam Walton got a competitive advantage when he said to somebody who was going to sell to him, you will be my sole supplier, but I have two conditions. One, you will never ever run out of product, and two, I will pay you when my customer buys it from me when it hits the cash machine. So he had no inventory cost whatsoever. So he became the lowest cost provider. End of story, he took advantage with it and away he went. Then in the 90s, here comes Jeff Bezos. He looks at the bookstores, and every book he wanted to buy, they had to bring it in because he didn't have it. So he decided I can get into that game, and he didn't have any inventory, he didn't need to, because the bookstore he had to order from. So he went in with a lower cost again, no inventory, and he became a logistics champion. So we've got this evolution from trash to blockbuster to rental. We've got this evolution to low-cost supplier and logistics. Now, how does built data fit into all of that and help a dealer determine what the heck they should be doing today?
SPEAKER_00:Well, what got me into it is, and I I I I don't ever want to inflate what what I do. I believe if you can count to 10, then you can make different piles of what's in that 10. What I left the industry when I was 41, I'm now 56, and I was I I I used a lot of the 80-20 rule because that's what the data said, right? You put the data on the scale, 3% did 62, um, 8% did 11, uh, 11% did 83, right? And you it's it really what's interesting, Ron, you and I have talked about this before, but in the United States, 96 percent of the businesses in the entire country employ four percent of the people. That is small business. In construction, I have to do the math in my head, so bear with me. 83 percent of the companies have less than 10 employees, and they employ um uh 17 ish percent of the people. Okay.
SPEAKER_01:Let's stop, let's stop there. Where's your data source? Where do you get that kind of data?
SPEAKER_00:Uh, you can pull it. We we do it through a lot of our research, but you could arrive at these findings from the census, right?
SPEAKER_01:Or okay, perfect statistics. I just want you people to understand this data is commonly available to everybody.
SPEAKER_00:It's hiding in plain sight.
SPEAKER_01:Yep.
SPEAKER_00:So 17% of contractors uh account employ more than excuse me, 23% of contractors employ more than 10 people. And that group, that cohort, 10 plus companies up to infinity, employs 77% of the people. Okay. So you just overlay the two, right? I said 1183, and we're looking at 23 and 77. Forget about the 96 doing four. Um and so what you just have to realize that you can apply a sense of realism to your business and say, look at the companies that are more stable to grow and expand with, because in the equipment business, if especially rental, they're renting your capital, right? So why would they do it? They would do it because it's advantageous to them to use your capital, arguably at a higher theoretical interest rate, than it would be to buy it. So what got me into this business was I was working for a cat entity, uh, I'm gonna say a large dealer group, very, very nice owner of the company. And I saw um some very they had every person on the planet, every system on the planet, I'm gonna say every law of abundance, very generous group of people, um, provided all of the resources to their team. And I would argue they uh the uh they had the owner uh, I believe had the pro didn't have the profitability that he wanted, and said, uh, can you help doing some analysis? And the analysis is so simple, right? Take 10 piles, put them the best ones over here. It was looking at where they were getting their their own results, right? And then it the there again, it was about 20% of their clients did 80% of the revenue, but in marketing and somewhat in sales, 80% of their capital was allocated to the lowest value segments. So you tell me, right?
SPEAKER_01:I mean, it's a relatively But say say that say that again.
SPEAKER_00:80% of the capital was assigned to the 80% of customers or outcomes that generated 20% of the revenue and profitability. It was the exact opposite.
SPEAKER_01:Okay, so so now I'm gonna add another thing. So we went through waste management roll ups, went through blockbuster, changed. Changing technology. We went to rental a different market. And we we made the point that those two things cannot coexist well. Then we brought the low-cost supplier in of Sam Walton. Then we got the logistics guy in there of Jeff Bezos. And now what I'm going to suggest is you're challenging the fundamental truth that we've been dealing with for the last 70 years. The normal distribution is how we drive our business. Statistics are easy. There's an equal number of customers above the mean as there is below the mean. And it's not true. And your data is proving it. It's a poison model where 80% of the business is 20% of the customers. And now I want to say I need three businesses. I need a rental business because that's one cent of capital, and they're renting my money, even and they're going to pay a higher price because it's a short term. Another business that's looking after the guys that make all the money, the guys that give me all the business, and I want to make sure I don't lose anybody. And then I want somebody in the middle who's going to be finding me new business out of the people that I'm not. And that's the quote potential that I was talking about. The 80%, 20%, that's the people I already know when I do business with.
SPEAKER_00:Right.
SPEAKER_01:Right. But I don't have anybody in the middle who's going out saying, well, why the hell doesn't that guy buy parts from me? Or why doesn't he buy labor from me? Why is he, you know, why's why's he got a caterpillar machine or a fufu valve or whatever the hell it is? And I need people that are completely different personalities. I'm talking about the Fuller Brush salesman. I'm talking about the door-to-door encyclopedia guy. He's not afraid to hear somebody say no to him. You talk to salesmen, they're scared to they will not ask a question that they think the answer is no on. It's amazing. Do you think we're going to see that transition? And if we don't, what's the consequence?
SPEAKER_00:The transition to the middle, meaning the rising stars.
SPEAKER_01:Yeah.
SPEAKER_00:Well. I like all things, you you're going to know more than I do. I see the I mean you can just look at it kind of, I don't want to call it mathematically, but the Sunbelt and United are just and Herc combined. Are the combined are the Amazon effect. They are the giant sucking sound out of the industry. They they can they have huge revenue numbers, but they have huge cap packs and they have huge disposals. Each of those is disruptive in its own way, certainly to the OEMs and definitely to dealers.
SPEAKER_01:So there's the root of the problem, isn't it? We have oligarchs who are so large, they put the OEM and the distribution channel at risk. Both.
SPEAKER_00:Completely. Yeah. There's no question. And they allowed it.
SPEAKER_01:Well, I'm not so sure it wasn't deliberate.
SPEAKER_00:Ooh, that's interesting. I never thought about that.
SPEAKER_01:Well, you know, that's why I'm crazy. If you look around the world, Europe, how many major rental companies are in Europe? You name three in North America. And North America's got a completely different geography circumstance. Distance is our enemy here. In Europe, distance isn't the enemy at all. All of Europe fits in the province of Quebec. How many rental companies control Europe? Less than half a dozen. Go to Asia, go to Japan. Same things over there. Again, when distance is not your enemy, it's a really interesting game. You can do this in every damn industry, Nick. Look at car manufacturing. Who's the largest car manufacturer in the world today? Volkswagen. Who's second? Toyota. It used to be General Motors was the world, baby. And that's the trouble that we have in this transition. There's a lot of smart people in this country, and I'm not one of them. But I'd like to be an observer and I'd like to ask questions, and I'm having a hard time getting answers from a lot of people. A lot of people right now are confused like hell. They do not know what to do. Tariffs, interest rates, unemployment, finding quality people, employee retention, customer retention. It's a very troubling time right now. They're looking for somebody to take them to the promised land. There isn't anybody standing up saying, I know what to do.
SPEAKER_00:There's definitely two economies out there, there's no question. And if you said the what to do, all I can, you and I have talked about this before. All I can do is break it down into something I understand before I can choose. And we can I identify um, and you could do the math. If you if you're$100 million business, if 11 do 83, how am I gonna do 83% of it? Okay. Now I know it it's 11% of the customers. If I have a thousand customers, then I know it's gonna be 110. And you're gonna go have to go, you know, look at those row by row by row of those 110. Good news, you can, right? Um, you don't have 32,000 customers. You're now down to this 1100 group, and you have to plan your growth. And if you look at the you mentioned the metal segment, and we'll come back to that if you don't mind. If you go to the top end, the national accounts, the data centers and the energy is mopped up, right? Caterpillar's done a very, very good job of it. Uh, some of the major OEMs have done a good job with national accounts, but they don't do regional accounts, right? It's just inconvenient. It's a pain in the neck, right? I gotta go get Ron and Steve and Nick to agree as dealers to cooperate to serve the customer. Well, just do it. Otherwise, you're seeding the national account business. And I would think uh Caterpillar probably does one of the best jobs that I've seen. You would know more than I would. But those national accounts should by no means have been ceded to the large rental companies, in my opinion. It's it's it's a self-inflicted wound. It knowing that 50% of the construction economy is data centers and energy for the time being. So you must go after and be competitive in that segment. And that is through um national accounts. You have no choice.
SPEAKER_01:Let me let me flip it on you a little bit. Who controls the mining industry and are there any rental companies there?
SPEAKER_00:Don't ask me. You know more about that. Yeah, you know more about that.
SPEAKER_01:Who controls the forest forestry industry and are there any rental companies in that? And the answer to both questions is no. In both of those cases, it's less than five OEMs and they control everything. This is a really difficult time. And you know, it's uh you you've heard me use this analogy or or idea before. I think we're gonna go back to small business. You're you're pointing that way. I think we're gonna go back to what the hardware store used to be. Where somebody goes into a hardware store, and if you got a question, they have the answer. If you're looking for something, they know exactly where it is. I'll such and such shelf so and so, they can take it right there and take it off. They can tell you how to use it, how to repair it, how to install it, all the rest, and they'll even come home with you after hours if you need to. I think that's where we're going. And that bonds loyalty, and that's what everybody wants. And I go back to the cheers. You know, everybody wants to go to a place where they know your name. And there's a guy by the name of Colin, somebody who was the best bartender in the world many years. He he ran the Hemingway Bar at the Riffs Carlton in Paris. He was British. Colin Fields, I think is his name. And he says, you know, you've got a good bar when your customers that they don't know your name and I don't know their name, but they know each other's names. Now they're going home to their home. It's like the old pub, Publicans, in Britain. We've consolidated to such a degree in Canada there's two caterpillar dealers today. There were 10 when I started. And you've heard my statistics. Every 20 years we lose 50% of the people in a supply chain. This is a difficult time. It's a good thing I'm poor. I've I wouldn't want to own a dealer right now. I wouldn't know what to do.
SPEAKER_00:Well, yeah, I guess if you if you nail it down, um many of these companies, I would just do a compare and contrast that I've seen. I've heard uh I've sort of specific knowledge of two large cat entities. One of them, um, they don't see these, I don't even know if it's second or third generation. I don't think they've ever met uh this individual because they're off uh it's passive income. That parking lot at 457, you would be run over um by the half the people that show up to work. Um at the other other enterprise, you would hear the voice of the customer to say, so-and-so, when he was alive, would have not tolerated this. Okay. So you I mentioned Jay Lucas the other day. Jay had a very good podcast recently. He by the way, I spoke to him. He you and two are talking or looking to get together.
SPEAKER_01:We have a podcast next week.
SPEAKER_00:Cool. Can't wait to listen to it. Um, two legends. So he was saying that there's an owner, one of his clients, who would literally drive to every store and um speak to team members, but the notion was that he was really looking for continuity and leadership. It's not that he was just speaking to the person uh who's the tip of the spear. He was looking to make sure that they were all taken care of, right? Servant-based leadership. Donald Neil did it very, very well. Um I think you're right, this kind of return to basics will work. Um I there's one of the OEMs where I have a ton of respect for one of the CEOs or presidents of North America. This person is definitely putting their heart into um making their dealer network successful. You have to sort of love and protect your dealers and get out there and shake hands and do one deal at a time. I wish I had a better answer. The only thing I would say is make sure you're shaking the right hands because your time is absolutely precious.
SPEAKER_01:Um it's really interesting. I sold encyclopedias is one of the many things that I've done in my life, and I learned very quickly to find out who's the buyer. Is it the husband or the wife? And if you go for the wrong one, you're not coming out of there with an order. It's impossible. But it's it's uh this is a really, I think you're a very important cog in this whole system right now. I think the approach that you're taking with data and and how you're presenting it, letting other people make decisions, but giving them data that they haven't seen before, uh, forcing them to think. Because this is what we need more than ever, any at any time that I'm aware of. We need people to be thinking very carefully about what they're doing. What can they do that they need to continue to do? And what do they need to do that they need to stop doing? And they need to stop doing stuff.
SPEAKER_00:Do you mind if I build on that? No, not at all. I know we're almost out of time, but you and I talked about two ledgers, right? You have two income you have an income statement and a balance sheet, and then this phantom income statement and balance sheet. I would map out, I would look at your customer concentrations. Let's call it where you are today. I would say, where do I want to go? And I would look at the capital that I'm allocating to that group on each piece of paper. And I would be absolutely you have no choice but to be ruthless and cut those things that are not serving you, whether it's enterprise licenses for CRM or other call it processes. At some places it's called continuous improvement. Um, I would be absolutely ruthless in turning around your business. And the good news is, if there's anything that, if there's good news, there is, is the AI, you can jump sort of the technology curve today. It is completely accessible to business owners and you can do it. However, you must establish a source of truth in the data. Um because you're making decisions, right? That's your compass. That's your map about what you're trying to accomplish. You must establish a source of truth. And what I find is a lot of people are called confused about their data. And you know, the fucking devil is very percept, you know, perceptive. There should be zero confusion. There should be zero confusion about uh the results that your own team has produced. None. So you can distill your data down to identify these customer concentrations, decide if that's who you want to be, embark in the small law of small numbers, ruthlessly cut the processes and expenses that aren't serving that other group, and look for um a small group of people that is not married to legacy decisions and could help you jump this tech curve. Yeah. And if you can't get your data because it's confusing, then somebody is lying. And that lie could be by omission or it could be overt, both are terrible.
SPEAKER_01:Yeah, and you know, I I I agree with you. Data's gonna take us there. You know what our biggest problem is the quality of the data sucks. It's terrible. So I gotta contend with that. Once I get past that, and I've got accuracy of data, and you know what you said the truth is you're gonna the decisions will be self-evident. Yeah, it really will be. Yeah. Here's here's a a machine model. Um 426, just to pull a number, any number, whatever the hell it is. And here's the parts and service consumption per operating hour, here's the life expectancy, here's the the value on trade-in at the end of that period of time. In other words, all of the data for life cycle management. And if I've got machine population, and if I don't, I don't know my business, but if I've got machine population of every brand in my territory, if you can't make decisions there, you don't deserve to be in the business. You know, I used to say in the old days, if you didn't know your machine population, you didn't know your business very well.
SPEAKER_00:Yeah.
SPEAKER_01:I mean, that's it's a self-evident truth today, but if you go around to deal, go to a hundred dealers and and sit down and talk about machine population. I used to do traveling with salesmen to find out, people would ask me to evaluate the salesman. And I'd go out with a customer list and I'd start Monday, and maybe I'd be with the guy for a week. That's wonderful. He he had everything set up that he was going to call George and Henry and Frank and Mary and all the rest. And I'm sitting in the car with him. I'd let the dad go for a day, day and a half, and everything's good. You know, it's wonderful. Say it looks like Georgette over there, she's within a couple of minutes here. Let's go see her. Oh no, no, let's go see her, let's drop in. Salesman had never seen her. He didn't have beer on Monday night after a Sunday football game or whatever.
SPEAKER_00:That was your Lou Gerstner story.
SPEAKER_01:Of course, of course, and and by the a really sad thing, Lou Holtz has just gone into um hospice care. I didn't know that. No, and and he's he's another one that was just absolutely, you know.
SPEAKER_00:He's special, there's no question.
SPEAKER_01:Big big time, big time. Very special. There's all of these people. We need to find them, we need to learn from them, we need to listen to them, pay attention to them. And I I think you're one of those guys. We got to start. You're maybe not coming up with conclusions yet, but you're you're still a few months behind me.
SPEAKER_00:Well, I feel blessed to know you, and through the grace of God, I do know you because I didn't earn a relationship with you. And you know, I'm I'm at your service. I think if if you cut the path and you know, people like Steve Clegg, John Anderson, Tammy Richards, dot dot dot are we want to help people. Like if you if you strip all this aside, I don't know, what it what is all this about? And I would say this industry has allowed itself, broadly speaking, to have inferior margins. It's in there it's you know, layers of frickin' confusion have entered that the industry can work together to restore margins. This doesn't have to be a zero-sum game. There's incredible value that's created by the construction equipment industry, and it doesn't get its fair share of returns. That's not right. Now you could say, why is that? I, in my small world, there is a uh some of the public data that is available is gross, grotesquely wrong. And if decisions are being made off it, like every good lie, it's a kernel that grows and it's a it's a drop of poison, right? May not kill you. It's just gonna make you sick, though. And you may not realize it at first. But there are layers of brain damage that make me um want to the good news is relatively easy to solve. Let me skip to the end. This country and this industry has boundless capacity for renewal, however, it needs to establish a sort of a baseline of truth and build from there. Good news is you can jump the tech curve now.
SPEAKER_01:Yeah, you couldn't do that before. That's for sure. And and you already acknowledged in there that the data that we're getting is is flawed. But it's it's it's gonna be really interesting because we will we will come out of it. I won't see it because I'm too old, but the you know, our children and our grandchildren, and and we've talked about all kinds of things economically off the on the side of the table, but um we're we're in interesting times, and Caterpillar just announced the biggest quarter in the history of the company.
SPEAKER_00:Tell me more about that, because you you know more about that than I do.
SPEAKER_01:Well, just think about that for a second. The last quarter the last quarter of 2025 was the largest quarter in the history of the company. Well, if you have to uninflate it to get down to, and if that's truly uninflated, then tell me why that's true. We've seen such a consolidation of business before World War II there were 15 people making manufacturing tractors, they all went in at about the same sales volume. World War II's over catapult is 20% higher than everybody else. Why? They got the undercarriage contract for tanks. Somebody had the foresight to say we're gonna need to have people know how to do those things when we come out of the other end. And you go back, and a lot of these things end up being luck. And I I come back and say you gotta be good to be lucky. That's a quote from Johnny Bauer, a goaltender for the Toronto Maple League 100 years ago, who was a hell of a guy, um, as a goaltender. I don't imagine I'd wanted to spend much time with him, but that's a different subject. It's it's you you gotta you gotta understand your business, you gotta make love your customers, find out what their need and want, and if they ask for something, just say yes. Don't even think about it. And you know, I I do that to people, they ask me a question, they ask me, you know, can you do this for me? I just say yes. It confuses the hell of them, you know. And so all of this stuff, I you know, we've wandered around. I I don't know that we've given anybody listening to this many answers, but I sure as hell no, we've covered a lot of options. And if they're not thinking about those options, they better start. And those options are not easy choices, they're not easy decisions, but don't forget the decision to exit a business is just as important as the business decision to enter a business. You got anything you want to close this thing up with? Because I think people are going to get tired of us.
SPEAKER_00:Sure. I I mean, uh first of all, I I always learned from you, and it's really cool. Because I get to speak to you twice in two days. And the the notes that I take off to the side, you can't see. But so thank you for that. I would say go to Ron as a source of truth. Um I would say make your ledger of those hundred customers that you want. You know, I mentioned Phil Petraselli and Brad Jacobs and different entrepreneurs. Phil has succeeded time and time and time again through a very defined strategy saying these are the top 200 companies that we're targeting. They may have many children. And mathematically, you can back into how to solve this. So you have sort of an ethos that you as a as a leader can push down to the tip of the spear. Probably the most important person in the enterprise is that person you mentioned, shaking hands with the customer, whether it's a salesperson or product support. This can be solved. There are many, many customers who are dissatisfied out there. Um this is not a feta complete. You have to just do what you did. Target the right doors when you're selling encyclopedias and ask for the right person.
SPEAKER_01:Thank you, Nick. I I um this has been wonderful. Thanks for your time. Vice versus everybody listening, thanks for your attention. If you're still here, I love you. And I look forward to having you with another candy conversation in the near future. In Hawaii. In Hawaii. Aloha and Mahalo.
