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Leading with Positive Intent with James Auerbach: Episode 50
169 Plays3 months ago
Kyle and Nate talked with James Auerbach, Chief Revenue Officer of Salem Sports Events, a seasoned professional in the event industry with more than 25 years of experience. James discusses the impact of private equity and what makes sales teams succeed or fail. He emphasizes the need for a positive company culture, the significance of aligning sales and operations, and the future hurdles the industry may encounter. James also talks about the new consumer landscape and the importance of maintaining the value of specialized products in the event rental market.
This episode is brought to you by Anchor Industries, learn more at www.anchorinc.com.
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Transcript
Introduction and Casual Catch-up
00:00:19
Speaker
We are back. Another week of Under the Vinyl brought to you by myself, Kyle, and my good friend, Nate. How you doing, Nate? Good, buddy. How are you? I'm good. I'm hanging in there. It's kind of nice weather right now New Jersey.
00:00:31
Speaker
How about you out there in Nashville? Where are you? Chattanooga, Tennessee? Chattanooga. Chattanooga. Define nice, though. Not freezing. So you take what you can get this time of year.
00:00:43
Speaker
Well, then we've swapped because it's officially 20 degrees here. But it's sunny outside. oh It's better than nothing. Could be 20 and raining.
Birthday Blues and Weather Woes
00:00:52
Speaker
Yeah. I mean, it did that all weekend. So my birthday, obviously, was a Friday that you forgot about. And ah Saturday, Friday...
00:01:01
Speaker
Sunday, it rained all weekend, so I didn't get to play golf one time, so i'm kind of sad, but ah hopefully we can get some good weather at some point. Hopefully you can. Well, before we get into our guest, Nate, let's hear from our sponsors real quick.
Sponsor Highlight: Anker Industries
00:01:15
Speaker
This episode of Under the Vinyl is brought to you by Anker Industries, a fifth generation, family owned, American manufacturer of tents and clear span structures. Anker has spent decades engineering products that last season after season, and they're more than just your supplier.
00:01:29
Speaker
They're a partner committed to helping grow your business. And right now, Anker's winner discount is live. Get 15% off frame, fabric, and accessories for your tents and clear spans now through January 26th. Make sure you let them know Kyle and Nate sent you.
00:01:43
Speaker
Contact your sales rep today. Call 800-544-4445 or visit anchorinc.com to learn more.
00:01:55
Speaker
All right, and we are back.
Guest Introduction: James
00:01:56
Speaker
Well, Nate, we actually tried to get this guest on way before and then things fell through the cracks, I think, on our end because we weren't managed by rental management back then. So I'm happy to have him on today.
00:02:10
Speaker
We have our good friend, James, on. James, how you doing? Very good. Thank you guys for having me. So I would have butchered your last name if I had tried to pronounce it. So that's why I didn't try, James. He can barely say my last name.
00:02:25
Speaker
Friend, that's easy. Kyle's friend.
James' Career Journey in Events
00:02:29
Speaker
So, James, for the listeners out there, let's give ah a brief intro to you, kind of your career path through the industry. You know, you've been in it a long time, had a bunch of different roles. So let's start way back in the beginning.
00:02:42
Speaker
Well, how far back do you want to start? i mean, there's a couple that are of note. Event industry and hospitality probably now 24, 25 years I've been able to play both sides of the field on the production side and also on the event rental side, which has been great. And now more on the custom kind of elevated hospitality side. So I've been able to see both different sides of the business, which is great. Probably my first real, you know, event industry experience with Showtime events where we had offices in multiple States and we were producing for customers all over the world, mostly North America. And that was full scale production. And then I left there and and went over to Classic Party Rentals, both on the way up and the way down with that fun one.
00:03:30
Speaker
And then after that, it's been a couple different stops. CE Rental, which a kind of a private equity stop for a while in there. and And now, of course, with Salem Sports. So I can start or talk about any one of those.
00:03:43
Speaker
What drew you into this industry way back 24 years ago? Well, coming out of college, I mean, i had a journalism degree with a history second degree. and And while I loved to write, there was really no jobs. And the one thing I could always do was sell and I loved connecting with people. And so early on, I got into the event, kind of producing events for a couple different businesses. And then I said, you know, maybe there's a career here.
00:04:08
Speaker
The main thing that i liked about it was even to this day, ah a couple decades later, every day is different. I just... couldn't imagine doing the same thing every day for decades at a time. i would have gone crazy. So it's just always different every day.
00:04:24
Speaker
What I think is really funny is the fact that you were at Rum Runners at one point. And that used to be my hangout back when I lived in Indiana. At one point, there was a Rum Runners there. So that takes you way back. Kalamazoo or South Bend?
00:04:37
Speaker
South Bend. I opened that store up and spent many, too many nights there. That was a very fun location. That is so funny. that The 100 Center there Yep, they were great owners. We had quite a run.
00:04:49
Speaker
That is such a full circle moment. um So jumping from Rum Runners to Showtime, a little bit different there where you had to run more production, it sounds like, and then you jumped straight into Classic. So all three of those are very different. so how did you get to how did you move from Rum Runners to Showtime and then move on to Classic?
00:05:10
Speaker
So when I was at Rum Runners, the same owner owned Showtime. So I worked for the Scaza Faves. Amazing family that's been in the industry for also about 30 years and they do an incredible job still. So I was one a part of their leadership team. So we had the Showtime side over here producing full-scale events in Michigan, North Carolina, Florida, and South Carolina. And then we had the Rum Runners chain, which at one time had seven, eight locations open. So we're kind of concurrently running those for about a decade. And it was just a wonderful, wonderful you know decade there producing events both locally and nationally. We owned and managed venues as well where we used our own equipment. And so that was kind of full-scale event production. But even on the Rumrunner side, which you went to, we were you know scheduling concerts every year, outdoor festivals.
00:05:58
Speaker
So was it was the same skills. When I left there, that run ended, they continued to grow. I got kind of recruited to go to to Classic, which, you know, was obviously going through some tremendous changes at the time. And they were trying to bring in some people to kind of help steady the ship, which I guess had v ah varying degrees of success, as everybody knows.
00:06:22
Speaker
Yeah, absolutely. Well, you know, what can you say about the classic times? You know, for the younger listeners, they might not know about the big behemoth of classic that once was. um You got anything to, you know, kind of give a brief history on that, kind of your roles, what what your job was in your classic times?
Financial Challenges and Growth
00:06:45
Speaker
Yeah, i mean, I'm happy to talk about it. And I have many times before, and I will i will tell anybody who asks this. I mean, they had a plan that might have executed executed and worked if the markets hadn't crashed.
00:06:58
Speaker
You know, 50,000 American companies went bankrupt in 2007 to 2008, and the private equity that owned Classic said, we're not going to do that. We're going to kick the can up the road, and instead of going bankrupt, we're just going to not spend money.
00:07:12
Speaker
Well, unfortunately, what that did was it allowed all the other in every market, all the other competitors to continue to grow while that company was stagnant and challenged. So my roles there, I was the director of sales for the East Coast. We had 10 stores over $100 million. dollars And then I was the regional vice president. And to the end, I was there all the way to the end where we did go through bankruptcy. Finally got bought by Apollo, which is one of the biggest companies.
00:07:37
Speaker
private equity firms in the world and we thought we had a real chance but the reality was too many years had passed, the equipment was old and tired and the investment was so huge to bring that chain up to compete that Apollo chose to sell off the locations.
00:07:52
Speaker
Now that was also an incredible education time for me because I went from being you know running really successful of different, we had stores that did 20 million, and we had stores that did a million, and then go through the whole private equity kind of cycle of showing businesses, selling businesses, moving them to a new owner. It was an interesting time. It was, for me, it truly was the best education i ever was able to go through.
00:08:18
Speaker
and And it kind of walked me into my next career as we exited all of the stores. I jumped over to then CE Rental, which is now Curated, which was owned by Dubin and Clark at the time. And and they had purchased a couple of those stores. So, and know, I'll say it again. The plan was sound that they were executing going from the West Coast to the East Coast. And the plan was to buy multiple locations in each market and create these big superpowers regionally like they done on the West Coast.
00:08:47
Speaker
But when the market crashed, that plan stopped and you ended up buying one in each market versus two or three. and And then you just had a four or five year period of of just no purchasing or really poor purchasing, which led to them just exiting. We were a blip to Apollo. They didn't you know they said, we're done with that.
00:09:06
Speaker
Yeah. So you think if someone tried to do that in today's market, do you think it would work? So I do think there's, I mean, look, we've seen it happen on the equipment side. I mean, United it exists, Sunbelt exists, and there would have to be a really well-funded and perfect timing from an economic standpoint company that could do it. So could you put stores from the East Coast to the West Coast and try to figure out how to, you know, have a ah ah real network of locations supporting each other? And where I really think the biggest advantage would be was from a staffing perspective so you can move people regionally, North and South in different seasons, East and West.
00:09:40
Speaker
I do think there's a chance for that, but I do think the world has shrunk. So back then, you know, there wasn't the Internet. There wasn't everybody could see everything. There was a different type of competition. So it would take somebody really well-funded and really well-positioned to kind of make that brand work coast to coast.
00:09:58
Speaker
Well, so before younger yeah before we jump to the next, your next part here onto your next endeavor, sticking on the PE backed organizations, what do you think have been the real pros and cons and how ownership kind of changed that day-to-day operation?
00:10:13
Speaker
Are you asking me? In general or one those things? Yeah, just in the ones that you've been in, but then also in general, because it feels like with the different places that you've been, have been a lot of the PE-backed places. So what can you kind of describe on those, the pros and the cons and things like that?
00:10:29
Speaker
So I know, I mean, I read all the forums and watch to all the blogs, and I know there's people that are – strongly for or against this. My opinion is this. There's certain opportunities where PE or sponsor backed or financial backing has a real place.
Private Equity in Business Expansion
00:10:46
Speaker
i mean, if you have a program that you're trying to expand or you feel there's real opportunity to expand into other marshals, into other markets, you know, the sometimes you don't have the funding or you don't have the backing to do that. And and and a sponsor backed
00:11:02
Speaker
PE firm or or sponsor can really give you that financial backing you need to make those moves quicker. Now, you ask, what's the positives about that?
00:11:13
Speaker
Obviously, you get more financing. Hopefully, you get more access to resources, whether it's financial or a bigger network, or maybe they own other businesses that can directly drive business.
00:11:23
Speaker
But that also comes with increased oversight. So now you go from an owner who you know ran the business for many years, either by their gut or through their own finances, to a financial partner that now has a real stake in the business and is probably going to demand an increased level of financial reporting. of oversight of management so the good is that you may have access to do more you may have a bigger scale you could grow quicker the challenges and I won't say the bad is that sometimes you're going to start spending more of your time reporting justifying talking about why you want to do things verse when you own it yourself you just go do it it's your money right wrong or other so the oversight changes is the biggest thing
00:12:08
Speaker
more sense. How do you think kind of the growth decision in making change when it must be data driven more than, you know, kind of on on what you want? So that is, i feel like the data driven part of that is huge now on the PE side and they they're going off of basic numbers, but not going necessarily what the market's driven off of. Is that right or no?
00:12:32
Speaker
So I think there's two different types of private equity or sponsor backed partners you'll find. There are clearly those that are financial backed, they're managing by spreadsheet and typically from afar. But there are an equal amount of private equity firms or again, you know, financial family sponsor backed that have operating partners like they have realized that you can't just buy the company. and manage it from afar with a bunch of accountants. They actually have true from the industry or business people managing their portfolio. In those cases, you see a lot more decisions made based on actual business acumen, true experience, and then you still have to justify why you're going to be spending their money, but it's going to come from a place of a decision that's made because you understand what's going on in the market or what you're trying to do versus just a Excel spreadsheet. So I would say to be fair, there's an equal amount of private equity firms that manage with, you know, middle business operating
Supporting the Industry During COVID
00:13:30
Speaker
partners.
00:13:31
Speaker
And then there are ones that are just more financially driven. Makes sense. So after your time at Curated, you kind of jumped over to the other side of our industry that not many people get to see.
00:13:46
Speaker
You want to talk about your time ah working for an association a little bit? So, you know, one of the things that I'll say, and I'll say it with all my heart is association safety.
00:13:57
Speaker
I mean, we all, I had friends that were drowning through, I exited with the the PE and curated in 19, coincidentally. It was the end of 19, my contract was up, there was new leadership coming in, we exited amicably, and I have nothing but positive stuff to say about the private equity who took care of me with the way our employment agreement was set up.
00:14:20
Speaker
And then, of course, COVID hit. And all of us know what happened in the event world. Many people were drowning. And listen, there was no market for an expensive executive level guy. The type of positions that I was looking at, right, wrong or other, I knew that that was.
00:14:35
Speaker
The association was something that I was really passionate about. i felt there was a lot of companies. Our industry needed help. There was very few. I mean, I love NACE. I love ILEA. I love WIPA. I love all those organizations. But nobody was speaking for the operators because those are social networking operations.
00:14:53
Speaker
The only one that really seemed to be making any effort at that time was ah ARA. And I got to call and I talked to Tony. And I was like, what are you guys doing? How can I help? And we ended up talking for like two, three hours. And he finally, he said, what are you doing?
00:15:06
Speaker
And it was it was just a perfect timing moment and to try to, I had a big Rolodex, i was I had a unique experience and I'd worked for private ownership and private equity and I could speak to kind of both of those members and it was a wonderful almost three years there. I mean the team is incredible as everybody knows, I mean their only job is to support the members.
00:15:30
Speaker
So when we're selling products or renting tents, their job is to literally figure out ways to support the members. So for those three years, we could be as you know we tried to be as loud as we could to support through COVID and then continue to support the industry after COVID. So it was wonderful. i mean, that's my experience will always be the same. Yeah. Well, you were great you had a great voice ah during your time there. You were very vocal and you definitely, from a rental operation standpoint, spoke to exactly what we needed. During your time there and you were fighting for everything that we needed so from my side I appreciated everything you did and everything that was kind of where I got to know you first via you know just the stuff you'd post online in the groups and things and then actually you came out to our place for an ARA event with Tony which was was great to meet you at that and then just seeing you at shows as well um But after that you ah you left ARA and now you're at Salem Yes
00:16:25
Speaker
Which I had never heard of until
Current Role at Salem Sports Events
00:16:27
Speaker
you went there. And now I kind of think the stuff they do is pretty cool. Well, I appreciate that. You know, it was it was ah an opportunity that was, you know, you we always talk about too good to be true. You know, it's it's just a company that has exploded over the last, you know, decade, been around for 40 years.
00:16:47
Speaker
Without question, the premier provider of kind of elevated hospitality or when you see the really cool, you know on-site sponsor activations and experiential marketing in cities or really neat, large-scale three-dimensional signage and branding, you're the company that creates all that. So if you go to PGA or PGA of America or F1 or kind of tennis, any of these elevated hospitality experiences where you go into a tent and all of a sudden it doesn't look like a tent, that's us. So the neat thing was all of a sudden now, I'm still working with all the ARA members.
00:17:20
Speaker
Because we are now chasing the tent people in and they chase us out. So the tents go up. and We come in and totally customize it and and bring that real wow factor to the, I mean, you know this, many of the events that you guys are putting tents up for, they're charging high dollar ticket prices.
00:17:36
Speaker
Well, to justify that, you really need to have an elevated experience. And that's where we come in with our and We have 120 people, and and most of them that make the magic are the skilled trades folk, our designers, our carpenters, our people in the metal shop, the paint shops, and, of course, our field op team and our project managers.
00:17:56
Speaker
I mean, they're the ones that make us look good. They do a pretty amazing job at whether it's the Ryder Cup or it's a a pop-up that we're doing for Tito's at you know a music festival. It's pretty amazing the work they do. ye What's your official title there?
00:18:11
Speaker
I'm our chief revenue officer. So kind of focus on the front of the house. So the marketing, the the business development, of course, and the sales. the design, the estimating, and then my partner, Anthony Bell, he runs the entire back of the house. But I'm sure if he was here, he would say the same thing. Our teams do the magic. They are spectacular. And I've never met people that work harder.
00:18:37
Speaker
um We never miss deadlines. We're always the first ones done. It's kind of, you know, our James, we can't miss deadlines in this industry. No, no, that that tournament is starting, whether we're done or not. and Exactly. We're always done.
00:18:51
Speaker
Well, it makes it makes sense that you're doing a lot of the front of the house and the marketing stuff because as much as i I haven't met you and shook your hand in person, I feel like I know you a lot from your LinkedIn profile just on the stuff that you post, and I enjoy seeing the stuff on that you guys post. and And that's what's helped me get to kind of know you and the company as well. So you're doing great there. So I feel like it's no secret that you kind of love sales, right?
00:19:14
Speaker
Well, I think i'm more I more like the relationship side. I mean, the selling side to me never was hard. Like I never felt like I was selling. And and like I think we're just talking. And and most of the time, when I don't care if we're meeting with the largest ad agency in New York City. At the end of the day, it's our job to make them look good to the end client, whether it's Coca-Cola or AWS. or you know So really, we're just having a relationship and we're agreeing on how we're going to make that happen.
00:19:39
Speaker
So I never really felt sales was selling. I just thought it was perfect. what we're doing right here. Relationship building. Yeah, relationship building at its finest. And do you feel like the social media aspect has helped a ton with that?
The Power of Social Media
00:19:51
Speaker
Especially just in in showing what you guys do and produce? So no question, we've been much more aggressive the last few years that we've been there and I've been kind of leading the front of house effort. But Mark, our marketing manager, does an amazing job of you know putting out there, you know in the beginning, you said it, Kyle.
00:20:10
Speaker
A lot of people didn't know who we were. and so we were around 40 leading the no question, leading the industry and a lot of people have been in our space but they didn't necessarily know who Salem Sports Events was. Well now we made it our mission for kind of the first couple of years, just tell people who we were.
00:20:25
Speaker
you know for me i The LinkedIn posting is fun because it gives me an outlet. But when we are looking for employees, I can now post and have a pretty large platform of people who see it in our industry. And it's helped us recruit.
00:20:40
Speaker
It's helped us push out new product offerings. So, again, consider it a conversation like this just with everybody.
00:20:52
Speaker
What separates a good salesperson from a great one? Is it just the ability to be able to make the relationship, do you think? Good versus great? Oh, no, like it's it's pretty clear what's good versus great. It's four things, and it's no gray area. There's four things that separate a pretty good one from a bad one. It's research, scheduling, presentation, and
Traits of Great Salespeople
00:21:11
Speaker
follow-up. And of those four things, it's scheduling.
00:21:15
Speaker
Because if you look at what is the difference between, if I could call, I can think of three or four salespeople I know right now who are way better than me. And if I pick up the phone right now and I call them and say, what are you doing two weeks from cert Thursday? They'll go, hold on a sec.
00:21:28
Speaker
They'll look at the thing and go, i got a client visit on this side of town. Because I'm over there, I'm going to go see these four prospects and these five customers. But that's it. you know That's just the way that they're built. They obsessively manage their time and they remove anything that's non-profitable.
00:21:44
Speaker
relationship building, and which ah ultimately equals revenue generating. And so those guys, and look think about the salespeople that aren't good. Think about the ones you know. Drama, time wasting, it's always somebody else's fault. They can't figure anything out. All they do is make your team, they create problems versus figuring it out and helping you. The difference is pretty clear when you start thinking about the you know the best versus the not as good.
00:22:13
Speaker
Do you think you can train someone to be great? So I think you can train them on what the skills are. You can't train them on the attitude and the the the personality. So no question, you could teach somebody these four things are what you need to focus on.
00:22:29
Speaker
But again, a lot of the salespeople that we know are remote or they spend a lot of time remote. I can't stop them from watching The Price Right all day. right So they need to get up each day get on there, have a plan. They're not waiting for the phone during. ring They have a plan, what they're doing today, who they're seeing today, who they're trying to reach today. And then they're not like sitting here going, well, uh-oh, that didn't work. What should I do?
00:22:52
Speaker
That's an attitude and a personality that you either have or you don't. But if you have it, yes, you can teach those individual steps. And if you can focus on the research part, the scheduling, the presentation, and then, so remember, we always talk, you're not hired to send quotes out.
00:23:08
Speaker
You don't hire a salesperson to send out quotes. You hire a salesperson to close the quotes. So you need to also have the follow-up parts. You just gotta teach the steps. And then my job is to remove roadblocks.
00:23:20
Speaker
They do all the hard work and sell. Our sales team's incredible. But my job is to be there to help them remove whatever is taking them away from focused on helping that customer get to the finish line.
00:23:31
Speaker
So you've been around the sales process in this industry a lot. I've heard it said that you could take someone one from the field and train them to be sales. Do you find that to be true? Because it's hard.
00:23:44
Speaker
This industry is hard to like hire someone from the outside and teach them to sell tents. I think, what are you trying to say, Kyle? What are you trying to say? Look, look where I came from. I came from the outside. It's possible. You just have to be willing to get put forth the effort and bring the people up and guide them and show them a pathway. I mean, did, did anybody ever, but does anybody, yeah.
00:24:04
Speaker
yeah what is life But that's I'm saying. mean If you hired someone just to be sales, it's hard to teach them all the nuances of the industry. away. Because they have to put their hands on it. It to the personality again, right?
00:24:15
Speaker
So if you're if you're in the field you've the right personality, you're going to be more dangerous as a salesperson because now you also have knowledge. So then it's my job to teach you to do less project management and more business development, right? That's my job as your sales leader.
00:24:30
Speaker
But if you don't have that personality, I can't teach that.
00:24:35
Speaker
Yeah, and I think it goes for – so you're talking about bringing people in, Kyle, that haven't put up tents before, and you know I think we all go through that every day. But the biggest thing I can say is you know just hiring people that I've hired is you have to get them to go put their hands on it no matter what and and physically see it, put their hands on it, know it. I mean, even if it's, you know, if we bring a woman in and she can't physically lift as much as the guy out there in the structure, at least get her out there seeing what they're doing to lift it up and and move those things along. um I just don't think that you can put a salesperson into this industry without physically going on site.
00:25:11
Speaker
and we And I think, li by the way, i think the same thing applies to the project managers of the field reps, right? We don't hire and just throw them out there. They've got to spend time in the field. They've see what we're doing. They've got to understand how long the days are and the labor and the heat or the rain. And you see again, it's either for you or it isn't you. So I'd say the personality discussion applies equally on both sides of the business. ye Different personality.
00:25:34
Speaker
Yeah. Yeah, that and project managers are even hard to hire. i mean, you could hire a project manager from one one business that's you know and bring them into this this side of the business and call him a project manager. and It's really not necessarily the same thing at all whatsoever.
00:25:49
Speaker
Well, the details are different and the safety is different. And so you if you can find the right person who is focused on the right things, then maybe you have a chance to run away them. But look, what you didn't ask about, Kyle, is the ah the unrealistic expectation of salespeople in our business. These are long sales. We're not selling boots or cars. Like, I truly believe I could go work tomorrow at the car dealership and sell today.
00:26:13
Speaker
Right? But you can't do that in our industry because the jobs are being planned further off and anything short-range time frame is baked. So in our industry, the biggest miss that I see is they don't give the salespeople long enough to develop. That doesn't mean you're going to give them a 10-year ramp.
00:26:29
Speaker
But like in our business, I mean, for the type of jobs that we're selling, like really large events, I mean, you're a year out. You're working for a year just building up that base, getting the opportunities, quoting them. You know we've been quoting FIFA and and World Cup and Masters things last year for this year. You know, that stuff takes a long ramp, and it's no different in the event rental world, which I did obviously for a decade.
00:26:54
Speaker
You're not selling that festival if it just happened this year. It's next year. You've got to work on it. It's taking you a while. Exactly. Well, by year two or three, you should be you should know the product that you're selling by by then at least, no matter what industry. So I feel like, yeah, you can give them about a year, but by year two or three at most, they better know everything.
00:27:13
Speaker
Well, you're going do, I mean, that's a math equation, right? You're paying them a salary. yes And then your ramp has to equal how your financials look, which we talk about a lot. So you have to, you know, understand that you're going to have some front loaded costs, but if you can ramp them up and they start producing, then it starts evening out.
00:27:29
Speaker
Yeah. How have you seen the sales kind of change post COVID meaning the world, i feel like has gotten much faster. Everyone wants answers now. And I think the sales process probably has changed a little bit.
00:27:43
Speaker
um But just to build off of that as well, not just on how your sales have gone in general, it's just a matter of your product is very unique. And I feel like the things that you're building is very unique. So coming out of COVID, it was it still something that was ramped up really high?
00:27:58
Speaker
So I can speak to both, you know, because the association when we came out of COVID. I mean, listen, On the event rental side is the greatest reset ever for all the negatives, for all the it absolutely hurt a lot of businesses. I know some 10 companies did great because they were lucky enough to get all the testing centers. But the best thing that came out of COVID is that we reset the industry. So all things that we were absolutely doing wrong.
00:28:21
Speaker
You know, not charging real real line item labor, not charging week of fees, not doing damage waiver on everything, not charging late night appropriate fees or last minute. All that became the norm overnight because the hourly went up so much higher. So if you aren't weren't doing that right away, you were way behind the eight ball. And if you look at the people that did great 21, 22, 23, they were ahead of the curve adding those fees and you know credit card fees, everything you could do that we didn't do previously. So for and I'm part of the problem, I don't want to doubt with this. For 10 years, i ran the industry pre COVID, where we got away with $12 an hour labor. And I had friends that said you guys are going to get killed. We're already spending 1819. You guys are giving away free they call you week of you're not charging them you call an HVAC company.
00:29:09
Speaker
They'll charge you 500 bucks to come this week for emergency service. We were decades behind having those fees as standard and now they're standard, thank goodness. So that allows you now to not be forced to take every job at a low margin. You can do less work better, safer and make a higher margin because you have real fees to cover your business.
00:29:29
Speaker
So this is no different and in my in my new company. covidvin what did we learn during COVID? You know, used to think we were creative and we were designers and then I realized as I got to the bigger companies really we're just trucking companies, right? Well, what do we learn during COVID? We're not trucking company, we're gathering company, right? So there's no gathering. It doesn't matter how many trucks you have. It doesn't matter how creative you are.
00:29:52
Speaker
So as we got out of COVID, the same thing happened for Salem. There was clearly a slower period because gathering stopped Luckily for us, a lot of our events are outdoors, so some of them did happen.
00:30:03
Speaker
But the ramp up was incredibly quick. Once it came back, all the big events came back for us. And so they're all out. Many of them are outdoor events, open air. So very quickly, we were able to ramp back up again, at least on the elevated hospitality side.
00:30:19
Speaker
A lot of the experiential marketing events and on-site events. Sponsor activations also came back because they're kind of outdoor events that move around the country. So that was wonderful to see. And I think it coincided with the event rental because, again, we're working with the event rental companies in every city every week for the stuff that we don't offer. We don't rent chairs. We don't rent tents. You know, we don't have flooring and staging. We work with the companies that provide that locally and nationally.
00:30:49
Speaker
The fees are the big thing in our industry, and I don't feel like that's preached enough.
Incorporating Fees for Profitability
00:30:52
Speaker
I think a lot of people talk about it and wish that they could charge these fees on these late these later or after hours or you know rush fees and everything else as a whole.
00:31:01
Speaker
i mean, I'm all for it. I am 100% for it. But trying to convince some of these people to charge these fees, they're so scared to do it. Nobody will do it. And and I understand you know it's going to put you at risk of maybe losing a job. But at the end of the day, is the job worth it then?
00:31:14
Speaker
So respectfully, I say to those people, because I was at ARA, they're doing it everywhere. Your competitor's doing it. So you are choosing to make less money and be the lowest priced option. And and and lastly, i was we always say the same thing.
00:31:29
Speaker
Why are you doing the work and not making any money? Why would you take the job and not make any money? Take the jobs that will pay the fee or don't do them. I'm convinced the people need the cash flow. That's the only thing I can convince myself of at this point. That's not cash flow, though. They don't have any cash. They're out of cash. Their expenses exceed the the limited amount of money they're making.
00:31:48
Speaker
So, here you know, when you if when you talk to people that that don't do those fees, you can show them three people in their market. Then you just go, okay, just coming under them if you don't want to be. but But you're they're actually hurting the market, okay? So they're lowering The market, if everybody had those fees, that becomes standard, like in HVAC or in furniture rental.
00:32:10
Speaker
Those fees are not waived. You can't operate without them. It's simple as my mind. 90% of the time, people hide them. They might not call them the same thing, but they're there. They should be there. why would Look, yeah we used to... So when I started 20-plus years ago, the cost of a tent...
00:32:31
Speaker
included, you know, that was the deal, it included labor. Well, the cost of the tent went down down, down, down, and the cost of labor went up, up, up, up. The cost of trucking went up, up, up. So be right before COVID, we were at the lowest, i mean, we were basically many companies working for free.
00:32:49
Speaker
It's too much effort, too long days to work for free, too much chance for injury. So COVID, to get back to your question, helped us reset that. And many companies are operating at a much higher, you know, bottom line, either net income or EBITDA level. And if they're not, you have to relook at your entire model because you're missing the boat.
00:33:07
Speaker
Yeah. Do you think the sales process has changed just in dealing with young the next generation of people coming in? The consumer is a lot different now. So... it's It's amazing to me that there are still companies that open the door each day and they sit there and they hope the phone will ring.
00:33:23
Speaker
So they open the thing and they've got a showroom, they've got salespeople sitting there and they just wait for the phone to ring. So you're basically, you're you're the gap. So the mall opens up, the app opens up and they hope people come in to buy their clothing.
00:33:35
Speaker
well What's happened now with our world and with almost any sales world is because of the internet, because of social media, everybody already knows everything about you. So you have to be forward facing to your customer.
00:33:47
Speaker
You can't wait for the phone to ring like you could do years ago because you were the only game in town or it was very limited and they would come in and see your showroom. Half the companies don't have showrooms anymore. They've got Instagram pages.
00:33:58
Speaker
in the choy But that's the point. So you have to be making and if you're behind this, you are way behind right now. You have to be forward facing, talking to your customers, going to see them. That may not be outside sales. Maybe you can't afford it or you don't have a sales leader who can manage it. But your inside team needs to be outbound calling, whether it's your current customers, whether it's prospects, because if not, you're go just going to sit there twiddling your thumbs waiting for the phone to ring and hope that Your customer doesn't get called by your competitor who does a better job and takes them.
00:34:31
Speaker
Yep. Well, this goes maybe two or three weeks ago. You had the ah great LinkedIn post that I shared with my team about how once a quarter you wanted your team to reach out to all their customers.
00:34:43
Speaker
Yeah, hello calls are the best. I mean, literally no agenda. Every single customer, you call and you just say hello, and they will literally go, why are you calling? And go, because you're one of our valued customers. It matter what the size is, the pitch is the same.
00:34:55
Speaker
We just want to say hello. We know your event's coming up. And when we did that, we found at least some of the previous businesses, truly 60%, 70% of the time, they would bring up business. They were like that. and And if we would just send the team out in the slow season, you have nothing. Just go out. We'll pay for your mileage.
00:35:13
Speaker
Go. You're to go to the east side. You're going the west side. and You've got these 20 people. Just walk in and say hi They're going be like, what are you doing here? Well, was across the street visiting somebody else. I want to come in and say hello.
Building Client Relationships
00:35:23
Speaker
How's everything going? How was your Christmas? Whatever the story is, it's a hello interaction.
00:35:27
Speaker
And they go, I'm so happy you're here. Can I talk to you about this? Boom. and and but But that's just normal engagement in a world now that's gotten so impersonal.
00:35:39
Speaker
And you don't need to talk to anybody. So again, I really and strongly believe if you're just waiting and hoping those pretty pictures online are going to draw people in, a better competitor is going to take your customer.
00:35:51
Speaker
Going back to your personal point there, I think Yeah, just engaging with them as a whole, even knowing who they are and and their families. And social media helps out a ton of, you know, seeing pictures and stuff of their families and their kids and getting to know them that way.
00:36:05
Speaker
But I would say... 80% of the phone calls that I got this year when my people found out that my wife was diagnosed with cancer if were from vendors or people that were in the industry that were customers. And it was, it was amazing how personal it was. And still today, you know, she's not having back in March and now we're in December and she's cancer free. And, and I had last week a customer called me a client and just said, Hey, I'm just calling to see how you're doing. And how's your family? And we talked for about 30 minutes and she just called to chat and, It's crazy that how it just caught me way off guard because this world is not personable at all anymore. And people can't hold conversations or don't want to call.
00:36:46
Speaker
They want to text or they want to email. And I understand there's a time and place for email, but just picking up the phone and talking with somebody like that, it feels so much more personable or stopping by. I get it. No, I mean, and you that's an incredible and real world example of what I was trying to, you know, type. And Kyle, but so here's the deal. The hello calls or any of things we're talking about only work if you, the boss, are a million percent behind Because if you don't say we're doing hello calls that and you put it in your calendar every quarter, it will die. It's got to start way at the top and it's got to work its way all the way down. I mean, look, the other thing you asked about, what's the difference? I've got part of my team members who only talk to people on LinkedIn Messenger.
00:37:25
Speaker
And they're like, is that okay? I'm like, I don't care how they want to communicate. If they won't pick up the phone and they won't answer a text and they're never available to go see them and they want to talk there, talk there all day.
00:37:36
Speaker
But there are lots of companies that are still like, no, no, no. You know, I'm like, put in the CRM, you talk to them on LinkedIn, copy the message. I don't care. That's how they want to talk. If you're not really flexible and willing to do some people want to text and they don't want to talk there, I guarantee you that your competitor will take that customer because they will communicate with them the way they prefer.
00:37:56
Speaker
You have to meet them where they want to be met is what I've realized now. That's the difference in the world. well Before they had to come to the showroom or you had to go to them. That day is long over. I'd like to meet somewhere after work for a beer, but that's just me.
00:38:12
Speaker
That's the best way. Yeah. That's the preferred method of sales in today's world. So James, you've you've helped three companies grow now, separate companies. What do do you think the common keys to success have been?
00:38:25
Speaker
Of people. I mean, it starts with, it's not me. it's It's not the leadership. It's the people that we hire. It's we've been, I've been incredibly lucky to be in multiple companies and surrounded by way smarter, way more excited, even more energy than I think I bring people.
00:38:44
Speaker
That's got to be hard to find, James. Those people, bud but I mean, it's amazing. I go to work everywhere. When I go to the office of Winston-Salem, it's the most fun because it's just everyone's having fun and they're happy and they're they're all like kind of working towards the same goal. But that is unified. Everywhere I've been where there's been success, it is 100% it's building that team and it it always comes down to people. And I really believe that we're We get sidetracked as as, it's not just in our world, in a lot of different, have friends that run a lot of different sales organizations, is that the leaders don't know how to lead so you are an individual performer, you got promoted, you've never led a group before, and you were great at yourself,
00:39:24
Speaker
Now, of a sudden, you don't understand why your team won't get better because you don't know how to support them. So when you can find ways to train your leaders up to support the next level down and then that next level down supports the next level down, that's where I'm at today at Salem. it's It's so much fun to watch because everyone's you know just trying to support the next level down. And that's been consistent at those companies you're talking about.
00:39:49
Speaker
The team is so strong. Sure, do we occasionally have somebody that goes off the map, whatever? you can't change your people, you change your people. You don't sacrifice the rest of the team for one bad apple. And I've just been lucky to be with some great teams.
00:40:04
Speaker
Do you have any advice on aligning sales operations and leadership? Because sometimes people deny this, but you know sometimes there's the sales operations disconnect in this industry a lot.
00:40:17
Speaker
Yeah, I mean, i I will tell you this, and some of the and my current teammates, and and Anthony, who I mentioned earlier, we kind of live by a couple core rules. There's no sales without ops, and there's no ops without sales.
00:40:31
Speaker
I mean, that's it. It's that simple, right? Sales, in theory, could overwhelm and outsell ops immediately. But then we all lose our jobs because we lose our customers.
00:40:42
Speaker
So the way you align them is you get everybody understanding that, the the sales will fail without ops. So you've got to really integrate them. And we do sales op meetings with both groups together. All of our jobs are, are even when I was doing event rental, we with this is the way we looked at it, right? There's no sales on ops. There's no ops without sales. So I want the sales team to think that ops is part of the process. want the ops team to think. So I would always put the onus on the sales team.
00:41:09
Speaker
If we screw up in the field, it's your fault. You didn't give them the right information. Okay, not talking about it' something breaking in the truck or a team going slow. I'm talking about if they called and said, we don't know where to put this tent or the customer's not here or I got the wrong phone number, the sales team is equally responsible for that. So it's a partnership, but that has to be from the top every day.
00:41:31
Speaker
And vice versa, right? The ops team should be excited to get the right, oh, my goodness, you gave me a Google Earth and a map and you drew it out. you gave me the measurements. I love working with Kyle, right? And now you've got this beautiful relationship where you're just selling and it's fun.
00:41:46
Speaker
But that starts from the top. It's an unwavering kind of environment that you have to create. So your ecosystem is so, you know, meshed together or else it's sales versus ops. And that's not the way to run it.
00:42:02
Speaker
It's culture. It's all about the culture. Yeah.
00:42:07
Speaker
What do you see as the biggest hurdles in the industry for the next 5, 10, 15 years? Hurdles as far as continuing to grow? That just are just general issues that the issue gonna the industry is going to face.
00:42:24
Speaker
Well, I mean... I think some of the hurdles are still staffing, right? You know, the the world changed. And when I was in ARA, we talked a lot about this. You know, we used to staff up hundreds of people going to the busy season and then let them go, you know, or or seasonally, you know, they were seasonal employees. But if you think about it now, so as we've been sitting here right now, four Amazon drivers have driven by my house.
00:42:48
Speaker
So pre-COVID, now you have Amazon, Instacart, DoorDash. Of course, you've got, you know, everybody else doing it. All those drivers were our pool previously.
00:43:00
Speaker
So we lost so many in all those warehouses that didn't exist for. So staffing will continue to be the number one challenge by far. Because if you can't find, whether it's drivers or warehouse staff or salespeople or whatever, you've got a challenge, right You can only scale to the your staffing level.
00:43:18
Speaker
You can buy as much equipment as you want the event or if you have no one to deliver it. Right. And so remember, capacity is four things. You ask what the biggest challenge is. Capacity is availability of equipment, availability of trucks, availability of people, and then location of vet.
00:43:32
Speaker
So you send your team three hours away and that's six hours either way. Could you have done more work locally? So capacity has changed. Well, those are your challenges, right?
00:43:43
Speaker
so how are you going to if you don't have the staff? The second biggest challenge, I think, is availability has changed. So before now, everyone goes to China now. Let's be honest. Even small rental companies are going directly to China to get equipment. There's companies helping them do that or they're going over there and they're doing to their self.
00:44:00
Speaker
So what my fear is, and I hope doesn't happen, is that drives prices down. So they're getting the equipment cheaper so they think they can offer it at a lower price than their competitors because they're still making their margin.
00:44:13
Speaker
That's backwards to me. The companies that have gotten beyond billion-dollar companies get it cheaper and still charge a premium price. We as an industry have to not do what we did to Chavaris. Okay? I started Chavaris for $17 chair.
00:44:30
Speaker
Yeah. Now, three bucks in Miami or or or five dollars in Orlando or Vegas. But we did that. Let's be clear. We collectively allowed that to happen by commodity by taking a specialty product and making it a commodity.
00:44:47
Speaker
And now you can get that same chair even cheaper. So what would stop them from dropping it even lower? That's our job to to make sure that doesn't happen. Okay, market by market, location by location, we can't cheapen the product because remember, what we offer is incredibly unique.
00:45:05
Speaker
Okay, you cannot, most homeowners cannot do what we do. They can't go out and find a 40 by 60 tent, floored. They can get a few of the rental equipment pieces. They can't get 50 tables, 50 linens, process them. they just but Most people can't do it.
00:45:21
Speaker
We can't cheapen the product. We're a specialty product provider, and it's got to stay that way, in my opinion. Yeah. Do you think there's any impact of the consolidation that's been happening on the industry?
00:45:37
Speaker
Well, I mean, again, so you're talking, we're back to the whole private equity discussion. But it's even happening on private, it's happening on the private side too. I mean, companies, the age of ownership is getting older now, and a lot of guys are looking for their exit strategy.
00:45:54
Speaker
So... The consolidation is happening more and more every single day. it seems like once a week now we're finding about someone else now has sold. But how does that – just so let me let me put it back to you. Okay, so they sold.
00:46:06
Speaker
There's still a rental company in that market.
00:46:10
Speaker
I think it's just a matter of what the ownership is doing or who who is in ownership or taking over at that time. And then what is the what does it look like for the person that's taking the ownership of that company? Is it somebody within and moving somebody up and how those people move up and the changes? And I think the biggest hurdle is there's not people at the bottom to move up right now because that generation right now at the bottom is is non-existent. And it's not because they're not there. it's There's people there. They just don't have the drive or the give a damn to want to to move up and drive themselves to it. And they're comfortable. Either they're comfortable or they just don't want to work.
00:46:45
Speaker
Well, you're talking about what's happening in the equipment side where you've got the big chains versus the independents. And there's less and less independents. And then what's happened in the event rental world is there were always sons or daughters who took over the business. Now the sons and daughters want to be TikTok stars or social media, right? They don't necessarily want to work 14-hour days dropping linens, carrying chairs on you know on their back or whatever. i don't want to work as hard as my dad had to is what most of them say or my mom.
00:47:10
Speaker
Yeah. Right. So to answer your question, i I don't know if it's going to hurt the industry. It'll change the industry. OK, it becomes more of an employer because you still need a rental company in that market.
00:47:21
Speaker
And so instead of having an individual owner, which is a little different field, the culture might change to more of a corporate. But I'll say this. can tell you about a lot. of chain locations that still run with the same field locally because leadership is that good.
00:47:38
Speaker
So that's the X factor is he you either are going to run it like a McDonald's. I take that back. My friend owns all the McDonald's here in Raleigh. They're fun stores because their leaders are good leaders, right? So you're to have to set the tone if you're there in a leadership position. You just won't be in an ownership position.
00:47:56
Speaker
That's the difference. Now, what I do think is going happen, though, Kyle, on your consolidating question, is I think you're going to see regional cleaning centers. I think you're going to see regional processing centers. I think you're going to see much more hub-and-spoke model, where you'll see a really large warehouse and then showrooms. So the investment will change. You know, in the old school, we'd open up a warehouse. with a showroom and trucks and all that. Well, do you really need to do that anymore? Can you have 100,000 50,000 square foot warehouse and then 60 miles each way you put a showroom? And there are already companies doing that really successfully. We sat and spoke with John Bibbo about it, and that's exactly kind of his model up north.
00:48:34
Speaker
Yeah. So but he's on the cutting edge. Look at him. Well, but but I would argue that you people should be watching that and mimicking that. If you're going to open up another location, are you dropping millions to open up a giant showroom? I mean, a giant warehouse? or are you potentially going to look for a 1,200-square-foot showroom with a 1,200-square-foot drop thing that can be funded out of the main thing? Your investment's lower. Your staffing is lower. But if you can still generate million dollars in that market and fund it,
00:49:02
Speaker
I mean, your your operating costs just dropped because of the better model. Exactly. Oh, yeah. what ah what What do you think leaders can do to build the better cultures for these people, to bring these younger people in, to bring them up? I know you've hit on culture a lot early in this, but now that we've hit the point of where the that generation is kind of non-existent, do you think it's a culture thing or do you think it's just a mindset? What what do you think they need?
00:49:30
Speaker
So I don't think you can pretend it doesn't exist like some people do. There's no question there's a different type of person that you're interviewing than, say, we did before. They may expect more. They've been brought up differently. My son has never not had a cell phone. He's never gone into a bank. He's know what mean? These are all, he's a digital. So you have to Wrote check.
00:49:52
Speaker
Right. Well, he doesn't know how to sign his name. They don't teach him script. Right. But but that's OK if you who understand that. And then you need to make sure. Remember, it's your job. It's my job to build the environment that the current employees want to work in. It's not the other way around. And a lot of people think it's the other way around. OK, then you have no employees.
00:50:13
Speaker
Right. So you've got to create the environment where the right people that you need to even operate and keep growing and build want to come there. So I use i use my company all the time whenever i i'm asked to speak.
00:50:25
Speaker
We have owners that are so generous, so involved, and it's not an act. You know, Jeff and Kim truly and honestly. care about the employees.
00:50:36
Speaker
And you can't be a leader and work for them if you don't feel the same way. You will not make it. So if you're not if you're owned by if you're it's a manager, let's say there is no owners like I'm so lucky to have, you need to be that same person now you're at the top, hiring people that have the same opinion down the line. And I'll say this until you die, leadership sets the tone.
00:50:59
Speaker
They just do. And if you're, if so Kyle, if you're, you know, those guys suck, they don't want to work, whatever. All right, you're going short staffed forever. Yeah. It's not always the employee's fault.
00:51:12
Speaker
You know, the it's from the top down. They're watching you every step of the way. And they're watching you and they're watching your social media. They never used to see all that stuff. They know everything about you. They see it. That's the world we live in.
00:51:25
Speaker
Yeah, exactly. And do you think that's the best advice for people coming into the industry or do you think that's the best advice for people currently in the industry in that age group? I think it's a partnership. I think both. I think people that are currently in it. And look, at the end of the day, if you're coming into the industry, we are not an easy industry, right? We're a harder than, mean, you can go work at Sheetz or Bucky's and make 19 bucks an hour. Mm-hmm.
00:51:50
Speaker
but But, right. Our career trajectory could be a lot higher. That's what I was going to say. You have opportunity that's very different for than being you know cashier or stocking forever. There's absolutely nothing wrong with that. It's just a different, I wouldn't want to do the same thing every day.
00:52:06
Speaker
And not just within one organization, because looking at your resume and where you've come from and what you've done to get where you're at and walk through the different steps, I think it's not just a point of a career with one company. okay You go to a Buc-ee's or a Sheets or whatever that is, that's that's all fine and dandy. You're going to make the money, but you're stuck in one spot for the rest of your life in one area. right Now, could you transfer to another store? Sure. But...
00:52:28
Speaker
this this This career path right here gives you the ability to say, if you know if I want to move up and I want to make myself better in this industry, there is you can go to a manufacturer, you can go to ARA, you can go work for another rental company, but you can always do different things to help progress your career. And I feel like that that also sets us apart from just the normal day-to-day of never knowing what you're going to do and the kind of very unusual things we do, but just the different career paths you can take within this industry as a whole.
00:52:56
Speaker
You can work for a caterer, a hotel. I mean, we have so many parallel connected opportunities. The skills. I have a perfect example of that. And you guys tomorrow it could go work at any of the our customers, right? but and And that's the selling point that I think we need to be able to get better at explaining to the new you know the new employees coming in, do you want to do the same thing forever? You know they don't want to do that.
00:53:21
Speaker
You know they don't want it. Do you want to be in really cool environments where you can you know Instagram and FaceTime? So we embraced it. Four years ago, that was new to Salem. I got there and said, we're going to embrace it. And we're still embracing it, right? We're still getting better at it.
00:53:35
Speaker
But it again, I still believe we set the tone, so we have to be behind that and excited about it. Yeah. Yeah. All right, James, final thoughts on leadership, sales, long-term success. Any closing notes for everyone?
00:53:50
Speaker
No, just that I think that you should leave with positive intent. I always say that. i mean, at the end of the day, know, we're, we're keeping a lot of people eating right if if you get If you're lucky, and I'm super lucky to get into a role where you have a lot of people who either report to you or you manage, I mean, if you can lead you can choose to lead with a positive intent.
00:54:12
Speaker
You don't have to be a ah jerk every day. You just don't need to. you know It should be 90% removing roadblocks, mentoring, training, really helping people, and a small percentage is punitive. That should be the mindset, and I think that's how we continue to grow.
00:54:30
Speaker
yeah And folks, if you don't are not connected with James on LinkedIn, I highly suggest it. absolutely There's always some good, he's always putting out good posts. I really do enjoy reading them when they come out.
00:54:41
Speaker
And that's been another episode of Under the Vinyl, a rental management media podcast. Thank you guys so much. Good job, Kyle.