Episode 45: Mark Simonsen - Rental Podcast Crossover

And at that point when you come into the program, you are then given the bylaws for the group that you're joining. So we'll take your profile, we'll present it to groups to look at. We'll also present profiles of groups to you as an individual. So we look for kind of a matchmaking there. You come to the group as a guest for the first meeting no matter what. There's always a chance that people are going to be easy to adopt someone. But we always say, well, you're a guest, so you get voted in. And at the end of the first meeting, when everybody leaves and goes back to their homes, we do a virtual vote and they get ordained as a new member. Interesting. It's almost like tinder for the equipment rental industry. Correct. Welcome to Peer Talk, a dialogue with business owners just like you. Peer Talk conversations run the gamut of business challenges facing owners today. The host of Peer Talk is Dan Crowley, founder and owner of Peer Executive Groups, which provides a safe space for owners to share their experience, grow their businesses, and learn from their peers. Welcome to another edition of Peer Talk. This is Dan Crowley. I have the unique pleasure of sitting down with Mark Simonson, who is the founder of Rental Journal and Rental Journal Podcast. You'll have an opportunity to hear a little bit about his origin story and how he got started in Australia and now serves a global community. And you'll also get a chance to hear about the origin story of Peer Executive Groups. It was a pleasure doing this podcast with Mark, and I would love for you to listen to it right here. I'm joined by Dan Crowley from Peer Executive Groups. Welcome on the podcast. Hey, thank you very much. Mark, I appreciate being here. So is this your first ARA show? Have you been here for a while? Oh my goodness. So my first ARA show was probably 2003. So I had essentially started to come in 2003 and have been at everyone ever since pretty much. Wow. So all of them. And so what's your experiences when you typically come to these conventions? So it's amazing. I mean, obviously I work with small business owners and they're rental operators. So it's just about meeting people as many as I can. I would say the last maybe six years we've been meeting with more vendors because of the vendor relationships element of our Peer Executive Groups. But for the most part, we're just meeting interesting people and sharing our story with them. Yeah, the networking aspect of the ARA show is so powerful because so many independents fly in to sort of figure out what the next round of equipment they want to buy, one of the innovation, connect with other independents and lots of stuff, learn some of the national companies potentially. What the American Rental Association brings to the table is amazing. They're able to network these individual owners and provide to them so much great education and development. And so a lot of that takes place at their ARA show. So that's kind of nice for people to come meet with the vendors, but also have the ability to kind of bring their key employees and have them get developed through some classes and things. Yeah, definitely. So maybe for the audience, so who is Dan Crowley and what is Peer Executive Groups? Interesting. So I will focus on myself as it relates to Peer Executive Groups. My background is varied, but I will say that I've always facilitated groups of business owners. So I began in car dealerships and collision repair centers where we had networks of independent business owners that would gather and learn from each other. And in 2001, I had a client who was an equipment rental operator in Allentown, PA, and he asked me to put a group together for his purpose of learning from peers. And so that's how we ended up attending. So 2001, we had our first meeting, which was 21, 22 years ago. That group is still in existence, surprisingly, shockingly, always a great thing, because we use them for referrals. But I would also say that we then came in 2003 and that allowed us to expand from there. We eventually partnered with the ARA, so now we are an ARA partner. They offer peer advisory groups on their website through their organization, and right now we are fulfilling that for them. Oh, very nice. And, sir, when you say a group, what does that mean? Good point. So a group is anything from 6 to 10 to 12 owners. They may choose to bring a spouse on. It's an in-person meeting that they'll have together. Usually there's two per year, one in the spring, one in the fall, or possibly winter and summer. But every six months they get together with these other individuals of like-sized companies from around the country. So the key being that you cannot be grouped in a group with someone from your own geographic territory. It's super confidential. They allow these owners to share best practices with each other, and they also benchmark their financials together. So it's been really useful, I think, for the business owners as they grow their business, and have helped to accelerate that. And of course, we're there with our own facilitators and moderators who help shepherd them along the way through the group. And I can imagine when you've got these groups or these different business owners, you can almost try and help those business owners stay accountable for their goals over a period of time as well. That's a great point. We do. We look for commitments to the group, to each other. So at the end of the meeting, we ask for three commitments that they may have identified over the course of a couple of days that will help them in their business, so that next time we get together, you can report on how you did on those commitments. And not everybody gets them every time. So we like to say, is it a red, yellow-green, green meaning that you achieved your commitment? So they present that to each other at the onset of the next meeting. And you focus on independence? Yes. Independence only, unfortunately, or fortunately, it allows for us to not have any competitive issues. I think when you try to go beyond that, we do have some large regional operations. And when they start to overlap into each other's regions, we may move you to another group. So that's part of the benefit of having many groups. And is it just in the U.S. at the moment? It is just in the U.S. in that we do not have a Canadian-based group or anywhere else globally. That being said, we do have members from Canada in the groups that are based out of the U.S. But we're more than willing to expand. I think one of the things we've noticed is there's nothing new under the sun. There's small business owners everywhere that could benefit from peer groups. And is it always in person or is it online? How does it work? So our current setup is you have two meetings in person, and then we do midpoint meetings at the three-month mark, which are more virtual. So those might be a little shorter meetings, like let's say 90 minutes to two hours. We'll have a set agenda for those virtual meetings. But it's kind of a status check on how you're doing on your commitments to each other. So what could you be interested in these groups? So I've always enjoyed small business coaching and consulting. My issue was that you can only do one at a time. So as I started to form these peer groups, I was realizing, wow, we're really having a touch with 8 to 10 owners at a time. And it was allowing us to get what we felt were useful tools out to the marketplace so that they could benefit from them and exponentially grow their business. And so about midway, maybe 10 years into it, we really started focusing on benchmarks. So we collect financials, we collect nonfinancial data, and then we're able to generate reports back to the groups that show their performance. And everybody wants to be in the top quartile of performance. So that's kind of made it competitively fun for everybody to participate. But I would say that probably the number one thing the customer would say is we love the relationships that we form, and we love the best practices that we are able to learn from and put into our own companies. So the moment that you start taking financials, obviously confidential information is very, very important. So how does it work? Let's say that I own an independent store, I've got maybe two locations based in California. What happens? So the way we onboard someone is you sign a nondisclosure, an NDA, and at that point when you come into the program, you are then given the bylaws for the group that you're joining. So we'll take your profile, we'll present it to groups to look at. We'll also present profiles of groups to you as an individual. So we look for kind of a matchmaking there. You come to the group as a guest for the first meeting no matter what. There's always a chance that people are going to be easy to adopt someone. But we always say, well, you're a guest, so you get voted in. And at the end of the first meeting, when everybody leaves and goes back to their homes, we do a virtual vote and they get ordained as a new member. Interesting. So that's almost like tinder for the equipment rental industry. Correct. Yes, and it's funny because our matchmaking is getting that sophisticated. We don't necessarily have pictures with your profile, but you certainly can tell a lot about a person from their profile. Wow. Okay. And so you mentioned that that first group still exists today. Yes. Wow. And so there must be really strong relationships then in that group. So it's interesting you say that. The answer is yes. And I will say that over the years, we've had things like one group member buying out another group member as they were preparing to exit, right? So if you think about it, everybody's at a different stage in business. We either have entrepreneurs in the group, or they're in growth mode, or they're mature, or they're ready for exit. So every person has kind of a label above their head as to what their position is. And then those that are exiting, they'll get all sorts of support from continuation succession plans to their children and their key employees, or they might convert to an ESOP, which in the United States is where the employees own the company. Or they might sell to a third party, and we have all sorts of mechanisms to help them do that. And so you mentioned reports. So after each meeting, is there like a report that happens? Yes. The report on the financials, the benchmarking report, can be as often as monthly. So we look at the rate of change inside of the industry. What is happening in terms of sales growth? We look at one month, three months, and 12 months. So it's a rolling study of their financials sales numbers, rental sales. And then we're able to get back and say, in this region of the country, the growth rate looks like this. In this region of the country, the growth rate looks like this. And you're able to compare, am I keeping up with the Joneses? Are my sales growing at the same rate or at a lesser rate? And then depending on the type of growth, if you are having accelerating growth, there might be eight to 10 things you can do to support that and make it keep happening. If you're having receding growth, which means you're still not below the zero line, but you're growing at a slower rate. We have a couple of bullet points that help you kind of address that. And then, of course, when you start into a recession, then we also have some help on management steps to help you. So we've developed those over time. They're adopted by the groups, and they kind of coach each other on it. Have you ever had a situation where someone within the group is interested in expanding into another state? So funny you should mention that. Happens all the time. What we're finding is that not only do they expand into other states, but they expand into their fellow members' markets, which can be trouble. So we have really strict rules around that, that there's disclosure to the House, and then the House, which is us, makes decisions around movement of members. But yeah, state lines have not limited anyone. In fact, the founder, the person who started this whole process, still a member today, he has actually just changed started ownership in a new state. Interesting. Wow. So you must have seen so many independents over your time then, and almost the variations of growth, acquisition, all that sort of stuff. It must have been an amazing journey to watch these businesses evolve. Yes. I mean, it's great. We have over 200 members, over 20 groups. And so over time, you're seeing everything you possibly can see. And generationally, it's great to see children follow their parents and become members. We have a lot of that happening right now. And so as an old man, I'm seeing all these younger groups pop up, and you got to keep up with them. The other thing is they start to trust their key employees to participate in groups. So we have leader groups, which are not owner groups. They are for people who are key individuals inside the business. We are now doing an HR group, which is strictly the directors of human resources. And we have a CFO group that's forming this year, and of course, summits that allow people to meet and gather and discuss. So it's all about sharing best practices as long as you're not in a position where you be colluding or being in a competitive situation. Yeah, well, I was at dinner last night, and I was talking to an independent operator based in Texas. And he was talking about how he only owns 15 machines, so he's very, very small at this point in time. And he was trying to figure out, like, what are the benchmarks that he needs to do to try and figure out the next growth and whatnot and expand the business. And he was saying that he didn't really have anyone to talk to. And I was like, well, by the way, I might know somebody. So I'll definitely connect him with you after the show. Because that's like the perfect person to fall in, because then he becomes a two-location store, and then he's mentoring the next person, and he's being mentored by the person that has five locations and whatnot. We had a woman stop by the booth today, and they had yet to have a sale. So they had yet to generate revenue, but yet they had a warehouse full of assets. She was ready to go. She was coming out of event planning and got into the event rental business. And she immediately came to our booth and signed up to be in a peer group. Okay. So that was kind of cool. How did she find out? Did she know about you guys? It's been helpful that the ARA has decided that we are a partner of theirs. So they have done a great job of promoting our services. And in fact, when she walked up to the booth, she said, I was told to come see you. So that's always a nice thing when people trust our resources that much, that they would make that kind of referral. So we appreciate that. Tell me a little bit more about the rental journal podcast. Obviously I listen, but I'm always curious about your origin story and what makes you tick. What are your plans for this? Because we're very excited about it in the United States. Obviously you get a ton of listeners from our country. So I'd love to know. Yeah. So basically, I worked in the equipment rental software space for just over 10 years, and I lived in Australia and the U.S. for a period of time and sort of learned both markets and was dealing with the enterprise, mid-market and independence as well, that the smaller and the scale. And that 10 years, 11 years went on and then COVID hit. And when COVID hit, everyone was locked down. I listened to a lot of podcasts. And so I reached out to a few of the organizations like associations and said, are you guys thinking about doing podcasts? And nobody was really putting their hand up. And so I was very nervous about starting a podcast because I was like, I'm not even sure how to start one. So I started a company called the Rental Journal, which was written interviews. And so I would send over certain questions and then I would rewrite them and type up answers and post it on a website just to share loanings for different business operators. And then one day I had a guest, which is episode number one, Paul Weaver from McInex. And he was more interested in telling me his story over Zoom and then me rewrite it. And 10 minutes into the Zoom call, I was like, wait a second. This is the podcast. Like I was recording a podcast. Oh, that's great. And so we recorded that first one. It was only 15 minutes long. It wasn't prepared very well. Like we were really winging it. Sure. It still came out okay. And then from that moment onwards, I was like, all right, I either continue doing this or I go back to the written format and I thought, you know, I don't want to go all in here and try and figure it out. So we're doing Zoom interviews for a period of time, wanted to increase the quality and try and reach more people. So we started doing in-person video podcasts. We've got the cameras now and now we're doing things overseas. So we've done podcasts in Australia. We've done podcasts in Europe and America, all over Australia really. And our reach is probably 40% is in the US now. Which is quite amazing. That's amazing. But as of today, 125 episodes we've put out. That's amazing. I find like it's so well-rounded. I did not contemplate that, you know, the industry had so many pieces to it and it's like almost like you've uncovered all of them. So if you go on your podcast, you can kind of see that you've got manufacturers in there. You've got distributors in there. You've got service and innovators, technology, and then of course you have rental operators too. So it's kind of like you're touching all the right bases for us. So that's probably why you've got so many listeners. Yeah. And I really try and make sure that we don't just do the podcast with business owners or executives. Like we'll do podcasts with service managers or fleet managers or branch managers or whatever it might be to get that different perspective and really try and find people that have gone through the journey of an experience of owning or working in a rental business to maybe becoming an owner of their own business because then they can actually talk about their experiences on how they grew their business. And I think those sorts of insights are really important, but also getting insights from technology companies and the OEMs and all sort of stuff to overlay with it as well. Yeah. I never thought about the personal journey element and that certainly if you're bringing in people who are non-owners, you're not just getting the entrepreneurial ownership view. You're seeing it from key employee perspective and that may have to do with what motivates them. Right? So that's great. So what's next for you? Where do you see the future of both rental industry and also your business because obviously you're well-positioned? Yeah. So the Rental Journal podcast has really become its own business and I've been doing it full time for over a year now. The business has been around for two years. I'm going to continue pushing content out as much as possible. We try and put content out every single week, which is challenging. Wow. That's a lot. When it's in person, that's quite challenging. So we've got a bit of a backlog that we work off, but interviewing 125 people over that period of time and then working in the equipment rental software space, it was pretty clear that there was a bit of a gap when it came to, I guess, a modern technology stack for a software business. And I guess the analogy that I've heard from several business owners is it's almost like moving the deck chairs around when you're changing software. I had someone on the podcast just yesterday that has implemented three different rental softwares over five years. My goodness. What an exhausting process that is. Different reasons. Functionality wasn't there. Outgrew it. Didn't have the right support structure in place, wasn't getting the service. Now not honoring what they're saying in terms of the technology roadmap and stuff like that. So I think a lot of the current providers in this space mean well, and they've got a lot of history over 25 years, but I think a lot of them were built on an older technology stack, and it's very hard for them to rewrite. So me having a technical background and having this massive network, I started reaching out to some of the guests on the podcast saying, "Hey, if I was to build my own rental software, what would you think?" And I was getting like lots of positive feedback saying the industry needs this, but it needs to be something global. It can't just be in Australia. So I reached out to various people within the industry and decided I needed a co-founder. I found somebody that was in the technology space that is very, very technical, that also has a brief amount of rental experience as well. And so we're building for a year. We're spending our own money just building software, taking my knowledge and whatnot. But the critical part to this was that we weren't building what we thought we needed to build. We went out and found pilot customers that were looking for new rental software and taking them on the journey of what we were building as well. So every single thing that we were building was coming from the rental industry, which is like the most important thing. You don't want someone in the technology space to build what they think they need. You want the rental market to actually say what the rental market needs right now. So we've been doing that for a year now. And that was really for us to test the waters to see how far we could get. And we were quite amazed on the progress that we're getting. And our pilot customers were providing amazing feedback on what we're doing. And they were basically begging us to try and get live as fast as possible. But we can't go live with just me and my co-founder. We really need to have some serious financial backing. So we went back to our podcast listeners again and found some serious rental operators that are interested in investing. And we brought in six investors, five of which are rental associated, some of which are exited already in one technology. So we've brought in a large amount of money to back us as an investment. And that's going to then lay the path for the next six to 12 months for us to actually bring the next generation of equipment rental software that's going to be 100% cloud-based. Things like mobile applications and things like that will just be standard, inbuilt reporting or whatnot. And most importantly, it's very easy to implement. It's one of the big challenges that I have with the current market is that you have to talk to a salesperson. You have to go through the demo process. You have to agree to a large contract. You have to pay for an implementation process. You have to commit to a contract for your support and maintenance and whatnot. You have to pay for modifications. If you look at any other cloud software in any other industry, you go to the website, you sign up, you do a subscription, and you have the option to implement yourself or someone else can do it. And you can sort of partner with them. So one of the major goals that we have is that we want to make it that independence in particular have the opportunity to actually use our software without even talking to us if you want to. And that all comes down to building software that is very, very simple to build, but has the ability to be configurable to run multi-locations and all that sort of stuff. And the way that I've really thought about it is we want to empower independent operators to compete with the national organizations without spending the millions of dollars in budget that they spend at the moment. Because when you look at, like when I look at, like even at the ARA show, United Rentals was here talking about the technology roadmap and what they're doing, and that's amazing. Like they're sharing insights and providing it, but that doesn't help the independence very much. Sure. Because they've got millions and millions of dollars that they're pouring. They've got probably over 20 people that work in their IT department. So all that innovation that they're talking about sounds amazing, but it doesn't actually, it's almost like a pipe dream for these smaller independents. And so we want to give back to those independents and provide them a platform that's going to be robust enough to run their business, but then not give them the price tag of spending like a large percentage of their profits to try and just to compete with the larger guys. Wow. Excellent. That sounds great. And I'm sure you're looking at everything. We're finding in our network, the businesses that are growing exponentially in the peer group network are starting to change their view of their organization from order takers to sales organizations. So that being said, are you guys considering that into your software? Is there going to be a CRM element to it and turning it around? You're going to process still the rental process, but you're still going to be looking at maybe more robust systems on the front end. Yeah. So we like to divvied up into what we call four pillars. And so it's sales, rental, service, and parts. Oh, nice. So being able to track customers and sites and contacts, have history against them, but have a tightly integrated customer module that can then do sales orders or rental quotes or service quotes or whatever it is that the person needs to do, and then have those different pillars. So when you're managing your work orders or you're creating your sales order for your parts or you're allocating parts to a work order, rental contracts, quotes, all that. Like I've got over a decade of building rental software through one of the big organizations and I understand how these companies work. So it's taking that decade of knowledge with my rental experience and building this into the actual software itself and making sure that this is a global system. It isn't just going to have an Australian accent. This is not going to be an Australian software system. This is going to be something that will be pushed around the world and making sure-- That is my next question. Yeah. Making sure that-- and that's one of the key things. One of our investors is from America wanting to make sure that we aren't putting ourselves in a box and making sure that this is actually a global layout that we're pushing forward. And we've seen that. We've seen software developed from Australia that's being used in the United States in the automotive side. We've seen it with regard to a lot of management systems, management consulting systems that come across from Australia. So by all means, if it's globally focused, then that's a good thing for you guys. What about on the back end? Are you going to be looking at reporting and business intelligence? Yeah. Yeah. I don't want to get too technical. OK. Sorry. No. So this is a great area. So just for the listeners, I want to try and explain why they're faced with challenges with some of their current providers. That sounds good. So let's just break it down simply. There's three layers to technology. There's a database, which is where you store all your information. And then you've got the front end, which is where you click buttons to actually do things. Most of the technology stacks at the moment from the current providers on what we call two-tier architecture. And what that means is the database is a big spider web of functionality. And if you change something on the right side of the software, it breaks on the left side of the software. So there's a lot of maintenance to actually get things changed. And what that means is that when you ask for new functionality, two things happen. It's complicated, so it's expensive, and it takes a long time to deliver. I can almost guarantee there's someone listening to this podcast that understands and feels that pain. But they ask for something, and it takes six months to receive that change to an update or whatever it is. And they receive it, and it's broken. And they've already paid $20,000 or whatever it is for that change as well. So modern technology stacks have what they call three-tier architecture. So you've got a database, which is everything, and they have this middle layer, which is called an API or a web service, which is where you can connect the dots from the spider web to the front end. Got it. OK. Which means that it's much easier to build functionality out as you need to, and it's very modular. What that means is the functionality that we build on the front end can be built in literally days at speed. The data that we have, we can build out reports very, very easily because it's modular, and it's not divided up into that big spider web, per se. So we've been very focused on figuring out how we are going to design the system to make it easy to implement, low cost, robust functionality, and high touch support so we can actually work through with the people that are in there. And the reason why I want to do this is working in this industry for such a long time, even though it's only 12 or 13 years now, I've seen businesses try and scale, and they can't because they don't have the right technology in place. And I truly want to make a difference and give back to the industry that gave me a career. Without the industry, I wouldn't be here right now, working here. And so this isn't just a place of me trying to build something and flip it. This is me actually wanting to make a difference. Wow, that's excellent. And if you talk to-- In fashion. Yeah, exactly. And if you talk to any one of our pilot customers or anyone that has worked with me will understand that I live through this process. The fact that I travel overseas to do this video podcast is a testament to itself. Sure. It's amazing. Well, I mean, we can see it. I mean, obviously, in the United States, we're committed to the podcast, and we're seeing where you're going with things. So we believe in the vision. It's going to be fun to see you develop this. Yeah. So look, we're probably aiming to start releasing functionality third quarter this year, maybe fourth quarter. But we are taking on some pilot customers along that way. This will be a separate business to the Rental Journal podcast. I don't want to dilute things. I want to keep that podcast. I've got a team that manages that and keep that pushing and not have any, I guess, influence over the podcast for the software as well. I don't want people to see that it's almost like-- Makes sense. Yeah. So interview, businesses, software, technology, OEMs, all that sort of stuff. And the new business is going to be called Latna Software. Latna. Got it. OK. That was going to be my third question. So I appreciate that. That's excellent. And so we'd love to have you visit one of our peer group conferences. So we do a thing called Meeting of the Minds. Usually it's every two years because every other year we do event rental and then general tools. So I'd love to see you come out and maybe present to our customers at the network at the meeting. It would be great. Yeah. I think so. The reason why people that we speak to about our software is obviously we're building the next generation. But we can talk to their pain points. It's almost like they think that we've been sitting in their office. Yeah. Nice. Because I've experienced it through the podcast for the last two years of people. Almost venting, saying, I wish we had this. This is the challenge we have. And then I've experienced actually working in that area to see how things are built. So I'm really, really excited to try and build that next generation and build our team over the next couple of years to really become a global business. And my goal in two years is to actually live in America and grow that out as well. Awesome. Well, the peer group network is looking forward to watching you over the next one year, three or five year. And by all means, feel free to get more integrated with our group of individuals as we continue to expand. That'd be great. Yeah. Awesome. Well, look, thank you very much for coming to the podcast and sharing stories back and forwards. Yeah. And look forward to catching up hopefully in the U.S. sometime soon. Excellent. Thanks for being here. Thanks a lot, Mark. I appreciate the time. You've been listening to Peer Talk from Peer Executive Groups, produced and directed by No Crowley and hosted by Dan Crowley. Subscribe to this podcast for notifications of future episodes of Peer Talk.