Alex Kraft explains his business Heave

You picked up on it right away. Disruptors are very scary.

Yes, I agree. It's a new way of doing things in such a very mature industry.

Absolutely. I've learned to try to be not as threatening. So I use different words.

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Absolutely. So Heave is a heavy equipment marketplace. All we do is we connect buyers and renters of equipment with dealer salespeople. That is the simplest form. And so there's a few different ways to describe it. We're an aggregator website. But the value that we provide is I was an equipment salesperson for a while, and then I managed sales teams. And it just was kind of crazy to me still how the industry operates, where if I want to buy or rent equipment, I have to know who to call. If I want competitive quotes, I have to call five different salespeople. And I knew this from the dealership world where customers are typically chasing information. And it just was more difficult than it had to be. And so the way our platform works is very simple. A customer comes to heave. co and we post what customers want. I want to quote to rent a mini excavator. I would like to buy a compact track loader. between 1,000 and 2,000 hours. And then any salesperson who is a user of our platform, they set their territory themselves. And then they get a text alert when a customer wants to buy or rent something in their area. And they can quote the customer right there from their phone.

is. And also, I think it's just natural evolution where products become commoditized and people don't like to talk about it. And I understand why at a certain level, but if you listen to customers, how many times have we heard a customer say, Well, I mean, the excavator digs a hole. Like salespeople are not out there talking horsepower. They're not, hey, did you see the creep mode that we have on this machine? So it just, that's the way customers view a lot of machines. You know, it's funny. I did, I went online the other day and I typed in all the brand, like cat excavator fuel efficiency. Volvo, excavator fuel efficiency, John Deere. And everyone said, hey, we're the most fuel efficient by X percent. I mean, that's it's just the world we live in. And so products become commoditized. Part of it is from, you know, tier four and the government making more strict regulations on things. Naturally, products are going to get to the same kind of place. And so. That is what exists. And so why, and where you were alluding to, customers do more research online. And so why not provide a tool where it's easier for them to connect? Because I think we've all done it. If you go to dealer websites, it's not easy. There's not a, most dealers don't even show you on their website who their salespeople are. How you would get a hold of them. This is where their territory is. And so that's the gap that we see as a huge opportunity to help.

is. And so here's the most important part as to why we exist, is that what you just described is a great customer experience. And I don't believe, and I was guilty of this at Flagler. So I'm not talking from, oh, we used to do things better than our competitors at Flagler. I'm not saying. But I don't think dealers have asked those questions enough internally of, hey, how do we create a better customer experience? You can't say that, hey, we have a great customer experience because the customer has to call the number they see on our website. Like you just there's a reason why these companies in auto and different lending tree thumbtack. There's a reason why they're so successful is because they've created this frictionless, easy customer experience.

Yes, it's not having. Oh, you don't always have to get a human involved on menial tasks. Like that's really what contactless means. And that's like we've kind of talked about. A customer, what is a customer? In equipment, a customer, I run three and a half yard wheel. That's what I run. Like customers aren't really specking out machines. They run a three and a half yard loader with bucket and forks. They run a hundred thousand pound excavator with a four yard bucket. Customers aren't sitting there through a menu like, all right, I want to add this option and my boomstick configuration. Now, there might be some that do, but that's the 5%, the 2%. So why not focus on, hey, how do we make it easier for the 98 %? And that's what our platform does.

It is. And it's also like the. Not only are they risk averse, but I don't know, maybe this industry is a little different than others. There's just such a desire of, well, this is the way it's always been done. And there's no, and that's what I wrote about for your site. It's like, why not try different things? Like it was, it becomes so defeating when you're a younger person in the dealership world where. If you have an idea, it's, it's got, it's shot down for these five reasons. And then, and you're, you're always in those meetings like five years later and no one's done anything different because any idea is like, well, there's the four reasons why it doesn't work. And, but you, you never have an idea. You never have an understanding of what will and what won't work because you don't try it. It's crazy.

Correct. A hundred percent. We hired somebody as like a process improvement person my last couple of years. And that's what we sought out to do. Because, and I think, you know, dealers are unique. It's a unique structure and it's a unique business. And I think one thing that you can say that applies everywhere is that they're understaffed. And I think part of the challenge for dealers of improvement is that, like I used to go into work with an agenda. I'm going to get this done today. And then immediately there's eight problems. And everyone says it in the deal, right? The phrase is, well, I'm a firefighter. I'm always putting out fires. And I think that is true. But that's also why I think technology can play such a critical part is that. it will allow people to, you're understaffed. So technology naturally allows you to do more with less, number one. And if you put it in place in different menial areas, you can have your employees focus on more greater ideas that impact customers. I do, the other thing that I've learned too with starting a company that I think applies to dealers is that, And you, what's the best way to put it? It's okay to do, to try an idea on a small scale, right? And I think that naturally, if somebody has an idea, they're like, okay, let's say I have eight branches for the dealership. Well, this is a good idea. Let's apply it immediately to all eight. And I think, and that's something that I've learned, like I said, with starting a new company is start small. Start with just 10 customers. If you have an idea for better service, take 10 customers who will work with you and just try that idea on 10 customers or try that idea at one branch and see how it goes. And then you can tweak things. And it's more of that learning mode as opposed to, hey, if we do... try this new idea. Let's do it on a grand scale. And then if it fails, people are like, well, see, it didn't work. Well, not necessarily. It becomes really hard to manage at a very, very large amount. Yeah.

Yes.

No, we don't. And it's all very reactive. Right. And it's and that's that's what we're trying to change where I was at is that, hey. you have the responsibility. You have the authority. Make a decision. Now, if something goes wrong, we can always talk about after the fact, well, why did you make the decision? And maybe we analyze that part. But yes, there's, you know, the most, what you're saying too is true. The most productive times of your day are first thing in the morning and end of day. People aren't there. But it's... it's creating that culture of it's okay to make mistakes, but let's not try to repeat them. And I don't have to chime in on everything, you know, and that I learned that lesson too, is you just have to create an environment where more people are contributing, feel like they can make decisions. Not every decision has to be correct. Otherwise then it becomes paralysis. Yeah, absolutely.

We ask a few questions of the customer when they come to our site and they're intuitive. So I'll give you a example of the flow. All right. I want to buy. So everything kind of starts with a model because that's how customers view it. I run Cat 299s. So a customer comes to Heave. I am looking for a Cat 299 size machine. Pick it. Okay. Do you want to buy it or rent it? And so we have two different paths. I want to buy. Okay, great. Would you like a cab or a can? Cab. Okay, great. Since you wanted to buy it, what attachments would you like? I want a bucket of forks. Great. Now, what hour range are you interested in? I want something new, less than a thousand hours, between one and two, two to four,4,000 plus. They pick whichever hour range they'd like. Where are you located? I need delivery in Orlando. Done. Then it gets posted. So if you're a user of our system, yes, you get an alert, text and email with the customer's name and then a summary. They want a 3000 plus operating capacity machine. We don't say the customer chose a CAT 299 because like I said, our value is giving customers choice. So we just say to the community, hey, they want a 3000 plus operating capacity machine. Anyone like you right now today, you don't have an account on heat. You can go to our site, you click on opportunities and all of those customer postings are right there for you. And you can just click quote if you're interested. You view the criteria and you put your machine. I have a Bobcat T770. It's located in Tampa, Florida. My price is $65,000. Submit. And it goes right back to the customer on their side of the platform. They get an alert. They can view three quotes side by side. And then here's a kicker, customer experience. They knew who the customer is. They see the name, but they don't have their contact information. We allow the customer to dictate who they want to release their information to. And this was a conscious decision on my part. I had gone to Truecar prior and put in a request for a Chevy Tahoe or whatever it is. The only thing I didn't like about Truecar was the second I pressed submit, I had probably 18 dealers that called me in the next 24 hours. And so that shaped my experience. So the customer has the quotes and then they can view it and then they have a button on their site. It says contact sales rep. They can contact as many as they'd like. If they have six quotes, they can hit contact to every one of them. If they do that, the salesperson gets a text back saying, Ron Slee is interested in your Bobcat T770 quote. His email address is this and his phone number is this. And then you can communicate. But the customer controls the communication.

I would say there aren't as many on the customer side. There have been some significant changes on the supplier, the dealer side. So one thing I would say that I didn't have an appreciation for before I started the company is really the science behind user experience. And what I mean by that is like we subscribe to a technology company called Hotjar. And what's really cool about Hotjar is that I watch screen recordings of visitors to our website every day. And so the significant changes that we would make over time where I would watch customers come to Heave and then answer the questions. And I would see customers leave our site without completing a request. And so we got to see over time, we changed the order of the questions. We threw out some questions and then more customers were completing the experience. So I would say that we changed and we're still, I still watch those recordings. The changes on the supplies, the salesperson side, we added territory about 120 days ago. I didn't realize how big of a deal that would be. And that might sound kind of foolish having dealer experience. But I honestly, I thought we were being coy when in the beginning where we were posting everything. And then we had salesmen who weren't really active on our site. And I would talk to him. Why? Well, you know, I got to filter through all these deals in Texas before I got to the one that I could quote. And I was like, but you're a used equipment manager. Like, don't you sell stuff in Texas? Well, but I primarily sell in these two states. OK, so just I heard that enough and I saw people not really using the system as much. So I was like, you know what? Why fight the tide? Add territory. And so we added territory. So when you create an account, if you're a salesperson, you're immediately prompted. Enter your counties and or states. And then it's locked in. We also give salespeople the ability to further set settings. So you can say, I only want to see rentals. I only want to see purchases. I only want to see these products. Like I only want to see compact or only want to see heavy. It's completely customizable to the user. So I would say. That, you know, the addition of customers being able to text message through our platform we added. So communication tools were big ads for us. There's a there's a ton that you just learn. Time to quote is an important metric. You know, we've seen that the quicker that a customer gets quotes from salespeople. the more likely is the deal to get done. You know, if a customer puts in a request and maybe three days later gets a quote, it's not as impactful.

Honestly, it's awareness because, and this is a, I like this question. So I'll give you a full answer. So awareness is number one. I'll say it makes sense to people. Right. No, that's a huge feather in our cap. Now, a big unlock for me, and you kind of, you said you were sold and you wanted to close right away. That was a mistake that I made in the early days of Heave. And it clicked for me about six months ago, is understanding who our ideal user was for a dealer. I had way too many conversations with 15,20-year veterans. of, hey, you should use Heave. It's going to help you sell more, blah, blah, blah. Well, I did 15 million last year. I don't need that. Oh, no, no. And I'm trying to convince him. And I'm like, you know what? That's not the smartest thing to do. He did sell 15 million last year and he doesn't. Yes. Do I believe that our platform has value for that person? Yes. But some people are just not willing. And so I then... came to the realization of how many salespeople there are out there and how many are under the age of 30,35 years old. And the benefit is that when they start at whatever dealership, whatever rental house they started at, when you're, if you're 26 years old and they say, Hey, here's the job, you're going to get in your car and you're going to drive to that job site. And you're going to try to talk to somebody. And then when you're done with that, you're going to drive and find the next job site, try to talk to somebody. And that's and I'm like, those are the people that I need to talk to. Because when they find out that Heave exists, they're like, yeah, that makes a lot of sense. Because I've spent 12 months in this industry and I maybe see two people a day. This doesn't make a lot of sense.

Yes. I do think that I like talking about customer experience. And I think this industry has suffered from a lack of transparency and pricing for a long time. There's a few different avenues to go down with that. You can go to dealer websites and even like machinery trader and you see pricing that is advertised. And to me, it's nonsensical because I've been in the industry. I know what our competitors sold machines for. And I see online listings with crazy numbers because this industry has always operated from a place of fear of talking about real transactional pricing and that hurts customers. Because you could have uneducated buyers, really, that are out looking at stuff online. So what if they don't sell for that? But that's the starting point for negotiation. And so a platform like ours really helps because the pricing that's quoted is a private price. If you quote through our system, you can't see your competition's pricing. But customers are getting a real price. And that's a major difference. And I also think in terms of customer experience, buyer behavior has changed. Like I don't know many customers who enjoy the negotiating anymore. It's a waste of time. And it's this psychological battle where it's like, oh, wait, if you just came down 8% because we sat like, what if I didn't ask? What if I didn't press you? And so I think those are things that are at play in this industry. as what we're helping with, what we can help solve, because it's not value-add. It's not beneficial.