Strategies, Challenges, and Future Insights with Richard Mashburn-Part 1

Are you ready to uncover the complexities and opportunities of the shed industry? Tune into this enlightening episode of the Shed Geek Podcast where we sit down with Richard Mashburn, a formerly at RTO National, to discuss his bold leap into entrepreneurship with Banks Buildings. Richard shares his hands-on experience managing QuickBooks and engaging with customers on Meta Marketplace, along with his passion for mentoring young talent. This conversation offers a rich blend of personal anecdotes and professional insights, providing a comprehensive look at the daily grind of building a business from the ground up.

In this episode, we dive deep into the intricacies of credit card processing, software integration, and the unique nature of the shed industry, which offers low barriers to entry for aspiring entrepreneurs. Richard candidly discusses the evolving landscape, marked by increasing consolidation and rising costs, and emphasizes the need for adaptability and innovative strategies. We explore the post-COVID challenges in rent-to-own financing and consider potential solutions to sustain sales and production in a price-sensitive market, despite economic uncertainties.

Finally, Richard and I explore the future of the shed industry, examining the balance between pricing, inventory, and customer financing. We discuss the race to the bottom in dealer premiums and how to outmaneuver large-scale competitors like Home Depot and Lowe's. From strategic marketing approaches to the potential benefits of franchising, this episode is packed with actionable insights and forward-thinking strategies. Whether you're a seasoned industry player or a newcomer, this discussion offers valuable lessons on maintaining a competitive edge and building a successful business in the ever-evolving shed industry.

For more information or to know more about the Shed Geek Podcast visit us at our website.

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Transcript

SHED GEEK: 0:07

Okay, welcome back to another episode of the Shed Geek podcast with the motleyest crew that I could possibly put in one room here today. I can't imagine If you were to make your bets in Las Vegas. You would have lost today if you'd have put these four people in a room um, over the last 10 years. I don't know how this comes together, but it does, and it's beautiful. Second time, second time back on the show.

RICHARD MASHBURN: 0:38

Yeah, for me.

SHED GEEK: 0:39

Yeah, Richard Mashburn, and uh officially, yeah, officially. Uh, in a new adventure that we want to get into and talk about. But then the trusty co-host, your new Monday and Friday episodes. Uh, Shed Gal on Monday, Sambassador on Friday go check them out. Uh, probably by the time this comes out they'll be getting ready to launch. We'll see how that works, but welcome everybody to the shed geek podcast.

SUSAN FRAIR: 1:04

Yeah, glad to be here. Good to be here lots of fun.

SHED GEEK: 1:07

So, Richard, what is happening? Man, what's going on? We've been sitting here chatting and we probably got, uh, three podcasts worth of material that'll never air, um, but it's. It was beautiful conversation, uh, and we just want to jump right in. But before we do give me uh, give me give me a little bit of uh, before we go into the history lessons and all the rest of the stuff. What, what are you doing? What are you doing now? What's banks, buildings, what, what's life look like for Richard Mashburn now?

RICHARD MASHBURN: 1:36

so right now for me I'm four months into kind of my own venture. You know I was with RTO National for quite a while I've been gone right about a year now. You know wanted to just look at life a little differently, a different pace. You know had some opportunities that I thought I wanted to explore and I'm working through it. So right now Banks Buildings is a massive two shed lots, one in Anderson, South Carolina , and one in Martin, Georgia. Got a nice team of six working with me doing these things. But I partnered with George Burnett of East Carolina Outdoor Products. We had known each other from my time at RTO National and you know people picking my brain about opportunities and things.

RICHARD MASHBURN: 2:23

You know, after I left RTO National I took some time and just kind of explored where I wanted to be and pursued an acquisition really heavily. That just didn't come together. You know, last fall I would have swore I would have been knee deep in a new acquisition of a shed company and that didn't come together. So decided, hey, I need to do something. So we opened the lots and we're exploring other opportunities. You know, right now we're selling sheds and steel structures and trailers and greenhouses and I'm learning all the day-to-days. You know getting a real good education.

RICHARD MASHBURN: 2:57

You know I think a lot of people know me from my time at RTO National in this business. But you know I started out in automotive retail and you know had a lot of experience doing, you know, automobile sales, dealership, dealership groups, national account before I got into the lending side and on the banking. So it's really fun to go back to my roots and be day-to-day with customers and salespeople. And you know I've got a team member here that I just really enjoy working with. You know he's fresh out of Clemson and you know Sam and I were talking. You know getting that young guy you know and teaching him how to sell right out of the gate and giving him some skills and learning industry he never knew anything about. You know kind of refires, your passions and what you feel about it.

RICHARD MASHBURN: 3:36

But you know Banks Buildings I think will be a name that hopefully grows and is recognized. I mean I think we've got opportunities out there on how we explore and look at things. I've worked at scale nationally for so many years it's hard not to think a little bigger picture. But right now I'm struggling to get my hands around QuickBooks and Meta Marketplace and Google Marketplace and day-to-day sales and transportation and scheduling deliveries and pickups and the things that everybody on these calls going yeah, welcome to the show man. Um, but it's really fun and I'm wanting to do it all myself, at least for a while, so I'm really rooted in it. You know I get that question from time to time that people know me going have you learned anything? Are you different? And I was like well, absolutely, you know it. You know, the chief sales Marketing Officer of RTO National is a very different role than shed dealer.

SHED GEEK: 4:26

Right.

RICHARD MASHBURN: 4:27

While we're in the same industry and how you think about it and you have to dust your chops off of getting out there and meeting a customer. And I work my Saturdays and I do these things. And you know I'm answering marketplace ads at 10 o'clock at night and doing these things.

SHED GEEK: 4:42

Is this still available? Is this still available, Richard?

RICHARD MASHBURN: 4:46

Yeah, yeah, yeah.

RICHARD MASHBURN: 4:47

And I've learned autoresponder is a blessing. You know, it is a true blessing. No, it's just. Those are the things, but that's what we're working on. You know, George and I have some plans and some other things that we're working on and got some really great partners we've been working with, and you know both the hauling side and then the steel side, and you know different brands trying to do a diverse product offering. I like thinking of it as a retail. You know sheds are the core, yeah, but I think everybody's more than I'm. You know I'm sitting here with the Shed Gal and say I'm going.

Speaker 6: 5:18

You know it's not just sheds for any of us, I don't, you know, there's so many moving pieces to it and trying to figure out where you fit in and what you are.

RICHARD MASHBURN: 5:27

So that's the new adventure. That's the long answer, I guess, of the technical love it is. I'm a small two-location, four-month-old shed dealer that's getting their feet wet and really starting to form those boundaries and opportunities. And then the next piece is just what the next chapters look like.

SUSAN FRAIR: 5:47

I'm going to jump in here and ask you a question real quick, because you mentioned the QuickBooks. Tell us why, from your perspective, why is it important that you have boots on the ground? Because that's what I heard. I'm doing it. I'm doing it. It's not that you have to do it, you could hire someone. Why, just from your perspective, why is it important that you be boots on the ground and you do those things?

RICHARD MASHBURN: 6:07

George would tell you I'm cheap. I will not lie. If y'all had come here yesterday me and my brother were out cutting the grass. You know I cut the grass and clean the toilets and do all those things. And. I go back and I think it's relevant. I thought about the story. You know my first day at RTO National. You know, me and Phil had a meeting scheduled for 8 am.

Speaker 3: 6:29

I showed up at 7: 30 and Phil was carrying the garbage out.

RICHARD MASHBURN: 6:30

Sam knows this, you know, you know and that's probably one of the largest companies in this industry at a national scale and he'll still do it. If you're not willing to do it, it's hard to ever tell anybody.

RICHARD MASHBURN: 6:37

You want to do it yourself how you want to do it, and the other thing is is I will tell you very pointedly true, very pointedly and you, this is mine in your first time meeting, but I have great respect for your opinions on how you market. From my role, you know not that my opinion should carry any weight yet, but at the same time I have fired more marketing companies than most people have ever met and then to think I'm over here trying to get his marketing.

SUSAN FRAIR: 7:04

The reason for that and not just in RTO National.

Speaker 6: 7:10

When you go back to the automobile business and in the late 90s and early 2000s a Ford store here in Anderson.

RICHARD MASHBURN: 7:19

Our average budget was $150,000 a month in advertising. Wow, and I did most of my own creative in those days, you know, and worked with firms and things like that. But you know I worked with ADP. People think of ADP as payroll but they're actually huge in the auto space.

SUSAN FRAIR: 7:36

Well, they got huge into digital solutions.

RICHARD MASHBURN: 7:38

So I had the luxury of being one of the first person to ever sell a social media aggregator in the early 2000s, you know. So I got a crash course from people way smarter than me and how these things work. I've actually got to go to google's headquarters and meet people that you know. You know I met the internet geek for google that man's scary.

RICHARD MASHBURN: 7:55

Nice, he's scary that would be that would be a neat meet, you know, and this was years ago, but what I learned was you would hire these firms you know, and, and now it's common, but people would sell you in the early days. Well, I got you 150, 000 impressions. I did my job. An impression is nothing. Somebody saw something like a billboard riding down the road, you know, and if you didn't know how to do it, you didn't know if somebody was doing a good job or not

RICHARD MASHBURN: 10:03

Mr Geek, I'll call you that today, um hana, you and I talked last year come in my hiatus and people were asking me to do consulting work, and especially around acquisitions. So I was doing a lot of deep dives and valuations on companies. One of the startling things I found was the bookkeeping and accounting was atrocious in most of them and they had no real understanding of their own valuations and how to do it. And I'm going, but I can't be critical. I'm four months in and the biggest struggle is hours in the day but I have to discipline myself to go learn it before I go pay people to do it, especially around doing your taxes. You know your business and corporate taxes, your structure or your LLC or your partnership or you're filing as an S corp. These are higher level things beyond just necessarily building a shed, but they're what's becoming really important in the industry and how we go forward and how we think about it.

SUSAN FRAIR: 10:53

Agreed.

RICHARD MASHBURN: 10:54

And I have to do it myself at least once because I have to get the education of. You know what is SUDA South Carolina Unemployment Tax Website and how I form. You know I've got a sister that works in HR with a big firm, you know, and I was talking to the guys at Westwood, you know, ike, and they found a state-sponsored program that brought them a consultant and all these. And there's all these programs that we don't know about. You know, and you find them on the state websites because you were doing your own taxes Right on the state websites, because you were doing your own taxes Right, you know, because you were making your own payroll.

RICHARD MASHBURN: 11:24

You know what people earn and don't earn and what they make. Because you did payroll for a while before I handed over no-transcript, no-transcript for a while. But, um, yeah, I'm getting that, that education that you have to have as a small business owner. You know I don't mean this to come across the wrong way. I've worked for multiple Fortune 50s at the top of the game in several other industries, but I've never done QuickBooks. You know, I've never done it. It's humbling isn't it?

SUSAN FRAIR: 17:49

I absolutely love that. You know I like driving done QuickBooks. I've never done it. It's humbling, isn't it? I absolutely love that. I like driving the mule.

RICHARD MASHBURN: 17:54

I like doing these things and I need to be able to do that before I can say I understand what it is and I understand what value is, because I've had plenty of people challenge me over the years. When I first got to RTO National and I was new to the industry and one of our great dealers at that company was like you know, Richard, I hear what you're saying, but you know, how do you know it would work in this industry? How do you know some of these marketing tactics and you know, why do you need to be able to sell to women?

RICHARD MASHBURN: 18:15

Why do you need to be able to sell to people under 40? Why do you need to be able to do these things? I'm going well, population, demographics and all that just say you have to to succeed. But beyond that thought that was a very valid point and I kind of tried to bring that when I came in here. But then also the consulting time, touching a lot of things and working with several software companies and several of the payments you know people asking and picking my brain, like credit card processing. You know y'all may not know at one time I worked for wells fargo's credit card processing division and did the rollout in the east when they acquired wachovia. So you know I've been to visa's headquarters and done these things and understand all that, and most people are paying way too much for their credit card processing.

RICHARD MASHBURN: 18:53

You know, and it's a phone call away from changing it. You know and how you do it. And that advantage that I have has to blend into the realization that, okay, all my knowledge of credit card processing doesn't change the fact that QuickBooks doesn't integrate with the processor I want to use. It'll save me a bunch of money, and neither does my DMS system or any of the others.

RICHARD MASHBURN: 19:13

All of a sudden my limitations come into. Don't get me started on software. That's a whole other call. You know, as a dealer I'm just mind numbed with how hard it is to run an organization with the hodgepodge of systems that are available today. But there is no good solution and there are plenty of great companies that do things really, really well. I'm not saying that. It's just not a cohesive way to come in and say I'm going to run it and do it.

SHED GEEK: 19:38

Do you remember, Sam, when we were kids, those cars that you grab and you pull them back?

SAM BYLER: 19:44

Just keep pulling them a little bit, and then they release.

SHED GEEK: 19:47

The car is Richard.

SAM BYLER: 19:50

We just got to pull back.

SHED GEEK: 19:51

We just got to pull back. Enough to sort of how do you?

SAM BYLER: 19:53

feel about software. Yeah.

SHED GEEK: 19:57

I was just thinking about this. I had this question.

SAM BYLER: 20:01

So I want to get back a little bit to what we were talking about before we went on air. We were talking about just the future of the whole shed industry in whole, and you said something about. This is still one of the greatest industries to, where you can take someone unemployed, somebody that's straight out of school, wherever, and you can give them equipment to go make a living. You can put them in an office to make a living or you can literally sit at home and sell steel and make a living.

RICHARD MASHBURN: 20:34

It's just such a unique I shouldn't say unique. You know, the Internet has brought opportunities in a lot of genres and venues but you know, to me the shed business was Americana at its best and worst in cases, you know.

SHED GEEK: 20:49

And you know I made the comment about.

RICHARD MASHBURN: 20:50

you know, the saddest thing and I used to say this publicly when I would speak with RTO National was, you know, when you see a town's shed dealer close, that's a town that just gave up hope because a shed represents so much to so many people it's an investment in themselves, their property, their value. They bought something of value they want to put in it. A steel building becomes the same way to a great degree when you get out of the agricultural applications and things and you kind of go. You know it's a luxury purchase because it's used out of disposable income. But it may not be a luxurious item but to them it protects houses or contains or is an envision of a dream.

RICHARD MASHBURN: 21:25

And you know you can take people still and go out and do that and car businesses become prohibitive. You can open a used car lot maybe, but you can't do new cars at any scale unless you're huge anymore. So many of the retail organizations that taught so many of us coming up, the mobile home industry or house building and things like that now all of a sudden it's all dominated by these huge organizations and the shed industry still had that ability to where, you know, a $400 or $500 a month, rent on a lot and some utilities and a decent consignment builder near you and a friendly guy.

RICHARD MASHBURN: 21:57

you're in business and you could make $100,000 that year if you're really hustled and working, you know, and that just isn't common in a lot of places anymore and it's getting harder and you're seeing that change that I find sad at times, even though I'm participating in it.

RICHARD MASHBURN: 22:16

It's that that condensation, collaboration as it comes together, the bigger getting bigger and the cost of entry is going up and it's harder for the small people to get in and it's you know, but it's still there. It still exists today. It hasn't gone completely away and if you're smart and you know how to do it and you've got that drive and willing to hustle, I mean it's one of those places you know and I've got a nephew that climbed to the top of, like, the restaurant industry and he now works with a charity and kind of that same idea. Like, for some of us, you know, when you get to the top you do a different thing. But if you just got in and were willing to work hard and continue to educate yourself and try to do better, you could do well and you could make a good living and you could do things differently and maybe one day be a big company.

RICHARD MASHBURN: 23:03

You know you might be the next old Hickory or Graceland or whatever if you get up there, and we've seen that happen in the last few years or whatever if you get up there, and we've seen that happen in the last few years.

RICHARD MASHBURN: 24:17

I remember what was it two, three shed shows ago. I was standing there and had a new analytics gentleman at RTO National with me and we were standing with one of the guys and he was raised, like you, amish, and he's been a knight. He asked this person that had no experience we're at the Shed Show and he goes what's changing? Richard and Bill talk about this change and he goes well, look around you and he goes. It's obvious to tell kind of some of the groups and how they dress and things like that. The Amish are easy to pick out. He said you can see the young guys coming up and things like that. And this gentleman was Mennonite and raised Amish and he goes. You know, I came from it and you know eighth grade education but I taught myself and I now use computers and you know Excel and run my business that way and he was working on software with us at the time and he was quick books but he was looking around and he goes.

RICHARD MASHBURN: 25:02

This was post COVID and he's going. All of these guys just made $800,000, $1,000,000, some of them $5 million last year and they were just like me. They were hammer and nail guys and they have no idea what to do with that money and he goes. Now look closely, he goes. Most of us are used to seeing the Richard and Phil's that have been around for a while.

Speaker 6: 25:26

That might be a little different, but we're kind of used to seeing them and he goes, goes.

RICHARD MASHBURN: 25:29

But you see this guy and there was a guy in just a really high-end suit with a gold watch on, you know and you see another guy in another suit walking around. He goes. We've never seen these people before. There's so much money in this industry and in the last two years we've seen it.

RICHARD MASHBURN: 25:43

Private equity has entered the industry they're making large acquisitions they're combining even the biggest together very quickly and it's just fractions on a budget to a lot of them and that was his point was going. My greatest fear is I'm seeing you know, and this is a.

RICHARD MASHBURN: 25:58

Kentucky, Tennessee, Southern Ohio Valley company and he goes. You know I'm seeing what I came up with changing so rapidly, you know. And then the next year was the year the shed show introduced and a third of everybody was software and technology and automated assembly. And you're dropping 700 grand on an automated wall and flooring system. Your laborers are going out the door because you want 24 hour a day computerized building and that's the change. And it's like, how do we find that balance between hanging on to those of us that found such passion and being in our communities, grounded with the local people?

RICHARD MASHBURN: 26:37

and local employees and hiring that 21 year old, or giving them a start as a dealer or a hauler or however you want to do it, versus those dreams of a multi-state conglomeration. You know, it became almost and I shouldn't say this but I will it became a joke in my offices with my team of how many people would come and meet with us about investing in their opportunities and within 10 minutes in the room they were showing me a national expansion plan and they had three lots and a plant. And I'm going conceptually. Do you understand? You know you may have a pro forma that worked out on Excel, but the ability to roll anything out in 20 states, 30 states, 50 states, is really really hard and really really expensive and it's not going to be like 21, 22, 23 for long and it's not anymore.

SAM BYLER: 27:34

I was going to say that lasted about six months.

RICHARD MASHBURN: 27:37

You know, it's looking like what a lot of us were predicting in 18. You know and again I'm using data that comes from my old role and this is just historical, but I think, sam, you might agree, for those of us that were in there, there was a downturn already happening in 18. Oh yeah, and it was carrying into 19, and most of us were predicting a little bit of some serious hardship in 20 before COVID hit. Yeah.

RICHARD MASHBURN: 28:07

And it delayed it. Yeah, so you're not just bouncing back to the pre-COVID 17-18 norms, you're bouncing back to something that's looking different already and it could be more challenging and it's got different players in it.

SHED GEEK: 28:21

I was about to say, with the addition of new, new players, new companies coming to the table, because they saw the lucrativeness of what COVID was. But that was not real life, that was an anomaly.

RICHARD MASHBURN: 28:32

Well, that's why the valuations I'm talking about. You know, I spent six months not six months, probably four months looking at valuations and they're showing me 21, 22 numbers or late 20, and they're looking at portfolio performances on RTO portfolios. And I'm going whoa, whoa whoa.

Speaker 6: 28:48

That is not real Accurate and I'm going whoa, whoa whoa, that is not real.

RICHARD MASHBURN: 28:52

It was good at the time and it was great, but it's such an anomaly to probably what reality is going to settle in at. And then you've got 17, 18 when there's almost a zero cost of funds. Now you're talking about a performance that looks slightly worse than 17, 18 with a cost of funds. On most of these portfolios it's running between seven and 11%, no matter how big you are. That's a different math scheme. You know, I used to love people telling me oh, I got 30% yields on my RTO portfolio. No, you don't. You're not even close.

SHED GEEK: 29:24

Yeah, you think whenever people get into that I mean you're not that, your expertise is in RTO, but it's not not an RTO. You're also the chief marketing officer, so love having those conversations with you. Where is the state of RTO? We kind of talked a little bit early on about finance and credit sales and RTO, but it's. It's different I mean entering the market now than it was 10 years ago, 20 years ago but where does it go for the next five? Like what were the changes we're going to see?

RICHARD MASHBURN: 29:55

the crystal ball I think you see as a consumer, now you know and you know, you know your venture, things like that we talk about it and we go. You know, and you and I've had some great conversations. You know one there's something we'd never, or to my knowledge was not common like it is now, which is just the theft yeah, oh first, second, third payment, default missing building. Yeah, so the thing that always made sheds different was you could turn around and resell a three-year-old shed for 90 percent of what it sold for new well one.

RICHARD MASHBURN: 30:26

We saw the price peak, so you saw a contraction in price right now, which is not huge. It's some, but it's harder to maintain that. But then you've got where you used to experience the bulk of your losses in the first six months and the vast majority of your losses in the first 12. Well, when, in the first three, those aren't just losses and the depreciated value of an early repo. It's a building that no longer exists. So you have all the acquisition costs, all the attempted repo costs on a building that's just gone. So you take another big initial hit. You've got a very different looking portfolio than you did to have pre-COVID Two months down.

RICHARD MASHBURN: 31:00

36 months was common, now it's 60 months. One month down is common. It's probably the predominant. Well, that portfolio performs different. Your yields and benefits are way further deferred, but you're taking bigger losses up front. Well, now you throw in this weird mix of even if you're in single digits of theft. Those theft numbers delay your profit curve on this by months, if not years.

RICHARD MASHBURN: 31:23

And you then combine that with a leveraged portfolio. Most of the people I know borrowed money to do their rent tohome, so they have a cost of funds. It's not two, three and four. They've got a cost of funds that's seven, eight, nine, ten, eleven. It's got some variant to it. It might soften but it's probably not going to stagnate. But then you go okay, let's get out of the technicals of it and the depreciation losses.

RICHARD MASHBURN: 31:47

2018, the average shed's $3,600. The average shed right now is over $7,000. The average consumer's income hadn't doubled. When you're getting stimulus checks and other things and the economy's roaring and all that, it's all fine and good. But when you start seeing layoffs coming in the news and it's getting restriction and inflation, so then the question comes down to what we said earlier I believe in the Americana of the shed and it's getting restriction and inflation. So then the question comes down to what we said earlier. I believe in the Americana of the shed and it's the American dream, but it's a disposable income purchase, so people turn it up Now it's a disposable income purchase that is 100% more expensive than it was four years ago.

RICHARD MASHBURN: 32:22

Can the average consumer that then is going to have to finance it and make a payment afford the payment on the average building, or is the building going to either have to contract in size, contract in price, or are you going to have to get more creative in how you finance it, and I think that's going to be one of the solutions that ends up coming out of it is the pressure on the RTO industry to give way to traditional finance payments and simple interest. Not because it's not a good thing. This industry is funded off of the RTO business to a great degree and I think that's horribly important. And if it would get under dire duress if this theft thing goes completely crazy, like auto loans did, call it an 05.

Speaker 3: 32:58

You know 05, we were doing auto loans.

RICHARD MASHBURN: 33:00

And everybody goes. Well, richard, the financial crisis didn't happen until 08. No, no, no, go back and look If you really study the economics of it. I'm sitting in a company doing a billion dollars a month in automobile loans and all of a sudden, people with 740 credit scores started dropping SUVs at the dealerships and walking away because gas was $6 a gallon. You couldn't predict that portfolio and it hemorrhaged. What did they do? They just quit laying on the money. You just stop. I mean, I'm sitting here at the biggest auto lender in the country. Our average loss went from $8,000 a car at auction to 22 in four months. Wow, $22,000 a car. Now, I'm not being doomsday here, but you go if you see that type of behavior and you're hearing about portfolios in the rental business that's experiencing that kind of loss. Oh Lord, I just lost $500,000 worth of buildings against a $7 million portfolio. Well, you just lost half a year's worth of net revenue Well, you just lost half a year's worth of net revenue.

RICHARD MASHBURN: 34:57

So then you go okay, there's that piece of it and the performance and the debt of the people trying to do it, but then there's the consumer. As a dealer, or especially a manufacturer, my cash flow is dependent on the continual production of the buildings. My employees are dependent on that continual production to make their pay, so I have to find a way to sell more buildings in an economy that is price prohibitive to my average consumer. So I have to start thinking about what I'm going to do differently. That very well could be a massive expansion of simple interest loan financing even into a subprime credit arena. It could be just something like an aggregation tool on the finance side it could be auto-experienced.

RICHARD MASHBURN: 35:44

In that era there were balloon loans and things. There were these hybrid products that started spinning out in the states that didn't regulate them. So there's a way that goes out so that then could put pressure on the RTO business. From another angle but I think the biggest one, that may be the biggest hit is you're in an election year, which is unpredictable. You're seeing the economy and the consumer hold relatively strong, but they're feeling financial pressure. Your product prices are stagnating but they're not declining. But how many people have you all talked to that said they were up this March, over last March? Were they up over the last three marches? You know I can only think of a handful and those are doing things a little bit differently. But the vast majority I'm talking to are flat or down, and some are down substantially, but they're not just down, they're down with records. Amount of in-stock inventory.

SHED GEEK: 36:31

Well, really, what's holding them on is the increased pricing, because the units are down, pricing's up. So we built half the sheds made close to the same amount of money If up. So we built we built half the sheds made close to the same amount of money. If it wasn't for the price increase, we really wouldn't have what we have, and maybe they're relying on things like a rent on a little bit more. You're seeing some rent on customers you wouldn't normally see, necessarily. But finance, I mean, I'm constantly getting the questions about finance, finance, finance. Who's doing finance? Can we do something that's better for finance? Can we save them money? So we took the approach dealer premiums. I just haven't always been a fan, because I think what you're doing with a dealer premium is you're essentially cutting back your yield so that you can ultimately keep a customer. Because RTO is so competitive and because it's so competitive, they're either trying to buy the company or they're trying to incentivize the company parking lot.

SHED GEEK: 37:27

But is it when prices haven't changed on the rto rate, go ahead yeah, okay, you're good, you're good, you're good so so for for me and in my head, you know you can come in with five percent or three percent or two percent, but the next guy's going to give it come in at six and seven and eight, and it feels to me like a race to the bottom. That's why we did the marketing thing. We did the marketing thing because we were like, how can we offer something that's service based and not just monetarily based? How can we? Hey, well, we'll do your marketing for free, we get your rent on. Do your marketing for free, we get your rent on, do your marketing for free, we get your rent on. And next thing you know you were giving you value. That is 15%.

SHED GEEK: 38:09

You're maybe your sales go from 2.4 million to 4.6 million. Can you handle that with the right amount of sales? But they're still soaking up the sales in their area. So they're still, can you know, like taking these customers from the same pie. It's the same way as what we all do whenever we go out and rent-own and try to compete. You're getting it Pretty much everybody's doing rent-own now, but not everybody's doing marketing. So we were like, hey, there's exposure, so we can educate. So we spent a lot of time in the. I'm self-plugging here.

RICHARD MASHBURN: 38:37

Sorry, it's a creative solution to a problem. People are struggling with volume and you're exchanging that money. But there's an alternative to that and I do like that idea. You and I've talked about it, I think that's you know. Again, auto experience, some of that you know co-op advertising from the manufacturers and the more at financing you did with them, the more co-op money you'd get advertised. But then the alternative is true. You know, go out and talk to everybody today and go hey, what if, instead of paying you a premium, I gave you just a cheaper divisor for all of your deals?

SHED GEEK: 39:07

nobody's done that tried this, just so you know, tried this with a couple of different dealers didn't like it, they didn't understand it. We were actually seeing less yield. But we were trying to do it in a way, because I've asked multiple rto guys this even on the podcast, like what's your thoughts on this, and it's like no, you know pretty much everybody's like no, if we're gonna have to do that, we don't even really want to be in the business because we understand that's, you know that's what's lucrative, or whatever. I was like man, I'm, I'm willing to go there and try it. We tried it out with a few people, not only only did our bottom line go bad.

RICHARD MASHBURN: 39:39

Paying a bigger premium is the same thing, just applying it to a different line on the balance sheet. The opposite could be true. What if I allowed you to mark up, just like standard financing in every other industry? What if I allowed you to mark up your divisor and keep that money yourself? And you can just earn or not earn, based on what you want to. And again, dealer after dealer after dealer will. But for how long do you think? How long are you going to have less sales? You know, right now, the manufacturer makes more money on a big building, the salesperson makes more money on a big building, the hauler makes more money on a big building. But when the consumer says I just don't want the big building, yeah, then what? You can't continually go upstream. You can't continually say I sold half the number of units for the same dollars yeah, that's gonna run out.

SAM BYLER: 40:19

It's gonna run out. There's a delineating curve.

RICHARD MASHBURN: 40:22

When you look at that on an economic scale that says eventually it will hurt itself or, more importantly, someone with scale will come into the market and take it if all of a sudden, the big boxes you know, I used to say this all the time when I traveled my last role and everybody goes, well, who's your competitor? And they name the dealer up the street and they name the other dealer. It's not that Google, anything anywhere, and Home Depot, lowe's, everybody else shows it, it's the big box guys. Those are publicly traded companies, so look them up.

SHED GEEK: 40:56

I'm not going to put it on the podcast again, but.

RICHARD MASHBURN: 40:58

I did it last time. Those dollars are in the hundreds of millions of dollars in sheds a year, hundreds of millions. Those big box guys make up over half the industry, based on most estimates to the tune of billions. That's your competitor. What happens when one of them uses an automatic robotic assembly system with a national distribution chain that already exists and starts undercutting your price by 40%? And they have a credit card with 24 months for 0% that you can get yeah.

SHED GEEK: 41:28

And they've talked even about RTO programs inside of those organizations. They're doing it for washers and dryers, I mean yeah.

SAM BYLER: 41:37

Plus if you sign up for that credit card.

SUSAN FRAIR: 41:38

We didn't ask.

SAM BYLER: 41:39

If you sign up for that credit card, you can get the shed for 10% off, right? I mean, I mean you literally can.

RICHARD MASHBURN: 41:45

There's some things out there that could change. So again, the greater question is you know what do I see for RTO? You've got some at scale the fear factor. If you want to take the negative glass half empty side factor, if you want to take the negative glass half empty side You've got historically outside guideline performance and early loss, early repo with a more expensive, lower yielding design product 60 month, one month down. Sitting out there. You've got the introduction of massive theft, organized theft, hurting those yields as well, and you've got a consumer under pressure. So that's the intrinsics there. You've got a rising interest from very capable entities to introduce a competing product that could be substantially cheaper, that could benefit the selling organizations, and then you have an at scale rise of competition looking for a better and different way that could then bring pricing pressures on top of all of those things, and all three could happen simultaneously. That's, that's a recipe of an interesting future.

RICHARD MASHBURN: 43:53

Now I say all of that to go. I just threw my family fortune into it and got in the business myself.

SAM BYLER: 44:01

So I mean I'm not a doomsdayer. I was going to actually ask you that I'm like. You know it sounds like you're speaking doomsday, but I know you're not, because you just threw everything into it. It's one of those Because you believe.

RICHARD MASHBURN: 44:13

I think when you do it at scale, you do it at all for any length of time. You plan for the worst. You have to understand what can happen and then you hope and do your best to make it the best possible. I'm still an absolute believer in the industry. I'm a believer in the small person that can get into it, just like me. You know, late in life, early in life, whatever, and go make a dream come true, they can build wealth for their family and they can do things.

RICHARD MASHBURN: 44:39

And people ask me you know now why?

Speaker 3: 44:40

now you know you're the guy that sits out there and says all the things and I'm going do you buy at the top of the market?

RICHARD MASHBURN: 44:47

or do you buy at the bottom of the market? Do you enter it when it's really hard, you figure it out and you succeed, and then, when it gets easier, you're on top of the world.

Speaker 3: 44:56

There were a handful of people made their fortunes during covid because they were ready and most of them exited now because they're all getting older, like this group in the room, you know, and they're going, you know because it ain't going to get better than that.

RICHARD MASHBURN: 45:06

And they realized it because they did it 20 years ago, you know. But the new group that didn't get in it till 19 or 20 hasn't experienced it yet and they've got some knots.

RICHARD MASHBURN: 45:14

But there will be opportunities that this disruption I hate to use the buzzword- but the disruption of it because of all these changing economics at one time is going to produce opportunity. It is still to me sad and I sit at a location and I've got some really good competitors nearby. But I had a family member in town and they were curious about the industry and all that and there's six competing lots within five miles of me so I took them and we went to all six Mid-afternoon, post-lunch weekday good weather. What'd I see?

SUSAN FRAIR: 45:53

Well, you might have seen no signage on their lot, or perhaps someone wasn't there or they had no clue what they were doing, just speculating. Two of the six had somebody there. Okay, yeah.

RICHARD MASHBURN: 46:04

Because you know I got a family member going, you've lost your mind. You know you stepped down from a great job with a great salary and all this responsibility and things that went with it and you know the pinnacle of an industry and a career again and those kind of things and I'm going.

SUSAN FRAIR: 46:17

You know, okay, great, and they go things and I'm going, you know okay, great, and they're going. Why would you?

RICHARD MASHBURN: 46:20

do this and I'm going because this is an opportunity.

SUSAN FRAIR: 46:22

Absolutely, I'm in full agreement. I mean, you all know me, I am in absolute full agreement, you know, and you can take a niche piece of it or you can take a big piece of it, you know.

RICHARD MASHBURN: 46:29

It's just however you want to do it, you know, and how you want to throw at it. But I think the opportunity is still there and I think as it gets harder, my opportunity gets larger again.

RICHARD MASHBURN: 46:38

I'm not wishing ill will on anybody. I'm just going and I'm willing to sit here and go. I hope everybody prepares because I believe the industry is important to the communities that they serve, the people they employ, the cultural values that they instill in the. You know this is. You know there's bad players in every market and everything. But as a great industry coming out of auto, I would tell people and they would ask me what do you find most different and shocking? I said just the general honesty and good nature of most people in the industry.

RICHARD MASHBURN: 47:07

I said you know the car business would have eaten most of these numbers alive years ago you know, out of their just trust that the dealer's going to do the right thing. You know, when the economy gets hard and it gets hyper competitive, then all of a sudden the teeth come out, the fangs come out, the claws come out and people start. You know survival of the fittest and I think there'll be some people pay a price for that. But if you're smart, you know, you're up front about what you do, you do good business. Then it creates an opportunity again.

SHED GEEK: 47:31

You don't buy at the top of the market well and you can't talk your way up the mountain. You got to walk it. So, like if you're sitting back talking about your success and what you can do, there's opportunity out there in the shed world to go and take a lion's share in regional territories. That doesn't mean that you hope that someone fails, but I'm a capitalist at heart, so I believe that you know you work hard, you earn your reward. It's really simple. You don't just talk your way up the mountain. You're both actually going to have to go do the work and if somebody's coming in and they're exploring actually going to have to go do the work. And if somebody is coming in and they're, they're exploring, they're educating themselves, they're they're trying to learn more about how to be successful. You can't blame those people for success and there are. I've experienced what I would say and this probably get some emails, all right, but there's gatekeepers, that you know. I want it where I've got it and I want it to stay here and I don't really want challenged and unfortunately that's not the American way. You know, like somebody says well, what if I start a shed lot and you got a shed lot next to me? Hope you do. Well. What if I start a podcast. Hope you do well.

SHED GEEK: 48:31

I don't own anything, except for the way that I respond to anything that happens. That's the only thing I own. So I wish you well. But guess what? Competition makes me sharper. Collaboration is a good thing, of course it can. It can when it works for everybody. But competition can be good too, because it it it challenges me to not be a gatekeeper myself, because I don't live in this echo chamber you know of like it should be this way. It's always this way and nobody gets to change it. Man, I support everybody, but you gotta the work. Faith without works is dead. You know what I mean. You're going to have to, like, do the work. If you want to do a podcast, then go do one and do it well. And you know what I mean. Like, if you want us to do a shed lot, go do one and do it well. You want to do what Sam does? You want to do what the shed gal does?

RICHARD MASHBURN: 49:16

Well, now for the rest of the dream, because you set me up now. So if I were to do my plug and you and I talked about this last fall when you were going, what do you want to do? I see a vision that if banks can build a platform, there is an opportunity when the pressure really comes. I know some great people that are on the verge, these young guys that are gals that have come up and have done well but they haven't gotten the opportunity and they can't find the financing anymore. Yeah, and going, if they had the right partner opportunity of somebody that had the capital opportunities, had the ability to go, hey, think about your taxes this way, think about your corporate structure this way, think about your economics this way and about your corporate structure this way, think about your economics this way and we'll provide those pieces to you. You can be a part of this, but still have your own. I think there is a collaborative deal Now, make no mistake, you have to take your part.

RICHARD MASHBURN: 50:18

I think so far, in most of the instances I've seen, it's been an all or nothing.

RICHARD MASHBURN: 50:23

Either I own you outright, have control of you, or you don't exist and you have to do it on your own.

RICHARD MASHBURN: 50:30

And for years there were talks about, you know, and the ABG kind of started out that way, a collaborative thing where even competing entities came together to share ideas and stuff like that. But there's also a platform that just says what if I am a shed company and a steel company and a trailer company and all these things and I've got a marketing and I'm going and I see a great guy that's been the GM of a plant and the plant owner wants to retire and get out and they've got no heir that's in line for it and go, but they don't have the resources to do it. But they've basically been running it day to day for years and go. Well, what if I help you? What if I give you 50% of the company? I fund it, I give you access to the resources and some knowledge you may not have in a few areas and then once you succeed and I get bigger and succeed and have more scale myself and then I do it again, and I do it again.

RICHARD MASHBURN: 51:18

It's not people where you're going.

RICHARD MASHBURN: 51:19

I'm going to take your company, I'm going to do these things because that's what you've seen in the past they go in and loan money and then they end up taking them over and then they don't own anything. It's more about how do you then establish people and give them an opportunity and give them a window. It became popular in the car business for a while and even the manufacturers started go in. Ford offered me a package when I was a young man and said okay, I'll buy the dealership, I'll put you in, you can draw a salary and, as you're profitable, a percent or the majority of your profits will go towards your buyout of our initial investment and in 10, 12 years you own the dealership outright. Now you're branded to them forever.

SUSAN FRAIR: 51:58

Right.

RICHARD MASHBURN: 51:59

Yeah, but you own it and it's your empire to make and run, but you work through and you got all the advantages of their programs. There is an opportunity, I think, in this industry. That was the answer you and I, sam, didn't get to when we were talking sidebar this morning. Where do you see it going and how do you protect it? You protect it by building a safe harbor, somewhere that gives people a voluntary, not an involuntary way to reach out before it's a disaster.

SHED GEEK: 54:06

We kind of addressed Aaron Weaver, the conversation I had with him off air. We talked about it. I'm almost hesitant to talk about it on air, not because someone will go do it More power to them if they go do it but we sort of discussed this and I might have shared some of this with you at one point. Talking about, you know, for the smaller mom and pop that are struggling with things like marketing and branding and things like that, because if you go down and ask like the waitress this morning, hey, where would I get a shed? You know, most of the time she's not going to be able to name banks or five other competitors so they're not going to know branding.

SHED GEEK: 54:42

And we thought about franchising the shed geek name in such a way and gosh, I wonder if I'm going to cut this out of here or not but uh, franchising it in such a way that you know like you, you pay a franchising fee, you get your marketing, but maybe you don't name yourself. You know bubba's storage, right, maybe you just fall under the shed geek and then you can do all the SEO, you can do all the marketing around that, and then you can soak up a region, but then you just pay. I don't even know. You'd be the first guy I'd talk to on consultation.

RICHARD MASHBURN: 55:11

I think you can do a brand. You know the argument always was. You know, tough shed may be the only one that had a true value to their brand, Cause you and I did talk about that and it was like unfortunately, when I would ask to come in and talk to people, one of the first painful things I would tell them is their brand has no value. Yeah.

RICHARD MASHBURN: 55:24

When you're selling a shed company right now you can't tell me, like in the carbon industry the term is blue sky. Well, my brand's worth X over the net inherent value of my assets and profitability in my operation. That's just not particularly true at any scale in this industry. You can have a long-term company that's been profitable, but that's a multiple of its profits. It's not an inherent additional value. Because you're Coke versus Pepsi, you know you're Bank of America versus Wells Fargo.

RICHARD MASHBURN: 55:48

You know there's a book Jim Collins wrote called Good to Great that goes through these A-B comparison of all these companies. That way In the shed industry there just really isn't that. You know. Even at Home Depot I don't know how many people realize that's a toughshed building versus toughsheds on retail organizations. You know, and that's a big company, you know national base footprint, all that. So you kind of go is that the best avenue or is it better to have an avenue to resources, education and knowledge? You know, and I know there's been other people that feel the way I do. I mean there's other organizations out there attempting to build a platform that says, while I'm going to grow my own entity, I'll do it without being parasitic on the places I go and what I do, I try to. You know Sun Tzu, the art of war you know to conquer without destroying. Yeah, you know if you destroy where you go.

RICHARD MASHBURN: 56:42

There is nothing for you to run there's nothing for you to do. There's nothing for you to feed on. There's nothing for you to go. You know, the mongols salted the earth when they passed it because they knew they were never coming back burn the ships yep, you know, and they kind of went that way.

RICHARD MASHBURN: 56:57

I think there's been, as the industry, that quick opportunity to make these huge financial gains. There's been, as the industry, that quick opportunity to make these huge financial gains. There's been kind of that methodology, it's all or nothing. And I think you very quickly have to get back to a stage that says there's a more holistic approach to making it healthy and organic. And we hear it a lot in the collaboration but we don't hear it in the true. You know, again, I can share all the knowledge, but the reality is, until you do it, that's where I'm a little hesitant.

RICHARD MASHBURN: 57:24

You know, I don't give a lot of details of what I'm doing because I'm not quite ready yet, I don't have the resources lined up and I'm still struggling with QuickBooks, for goodness sake. But you know, and that's the software conversation and all those things but you kind of go, but no, you get to a point that you go. How do I then actually apply this? And you know, last fall I was looking at a possibility of, you know, six acquisitions that could have been made back-to-back-to-back, that would have scaled seven, eight states, and all of them voluntary, you know, with all of them having operators on the ground that were not a part of ownership, that were willing to stay on board, and if you were to gift them a piece of ownership, how loyal would they be. You know, and I know Sam, you know Mike and Arlen well. You know they did that with their team and made them all employees.

RICHARD MASHBURN: 58:16

And you know I ran into their lead driver, you know, at the show, and he was Richard. I own a piece of the company. Yes, I ran into their lead driver, you know at the show, and he was Richard. I own a piece of the company. Yes, you know, it's like the Green Bay Packers fans. You know they got to buy the team.

RICHARD MASHBURN: 58:26

The Cheeseheads are just, you know, for a tiny metro market. They're a dominant force because they believe in something and they owned a piece of it. And I think there's instead of going in and seeing how much of it you can take, going into it and figuring out how much of it you could give to the right people is a different philosophy that could possibly be the winning strategy. Susan Shedgall and Sam Basseter just entered the chat.

SHED GEEK: 58:52

Thank you for listening to part one of a two-part conversation with none other than Richard Mashburn. Please tune in next Wednesday for part two. Thank you.