Swarfcast

We originally published this episode in 2019. It was a better time in Israel’s history, before the country was savagely provoked to go to war to protect its existance. Israel is a country full of industry and world class innovative companies, such as the manufacturing company Ditron Precision. This interview contains insight on how Israel is so important to the world’s metal working industry as well as why the Jewish People need it as a Jewish Homeland. View the podcast our YouTube Channel. Listen on your favorite podcast app using pod.link, or:                                                                                                  View the podcast our YouTube Channel. Follow us on Social and never miss an update! Facebook: https://www.facebook.com/swarfcast Instagram: https://www.instagram.com/swarfcast/ LinkedIn: https://www.linkedin.com/company/todays-machining-world Twitter: https://twitter.com/tmwswarfblog ************* Link to Graff-Pinkert’s Acquisitions and Sales promotion! ************* For most people manufacturing and Israel are two topics that are not normally spoken about together. Patrice Zamor, the guest on today’s podcast, lives in both of these worlds. Patrice emigrated to Israel from France in the 1970s and has spent much of his career working for Ditron Precision, a multi-national automotive component supplier headquartered there. Takeaways from the interview: Patrice discussed Israel’s strength in high-tech fields as well as its significance in producing machined components for international markets. He gave his outlook on the current world automotive industry. He talked about Israeli culture and what inspired him to emigrate from France. Question: Is Israel a place you want to visit? Why?

Today I’m debuting a new episode series under the Swarfcast umbrella that I’m going to put out every so often. From April 19, 2018, until April, 19, 2019, I spent an entire year meeting at least one stranger every day and documented everyone I met. Some days I met 10 people, other days I was lucky to have a short conversation with one person. After a few months, I decided I would write about the experience and create mini podcast episodes about the people I met. And five years later, I’m FINALLY getting around to doing the podcast. I call it “The Meeting People Project.” I figure it’s as good a time as any. In 2023, soon to be 2024, we need more connection than ever in our society. Talking about it is a good first step. I’m not starting new podcast show from scratch—yet. I’m putting the episodes on Swarfcast. I’m going to talk about strangers I met through my work as a used machine tool dealer both in person and on the phone. If you’re nervous that you met me in 2018 or 2019, don’t worry, I won’t identify real names or specific companies when I talk about our conversations. Ok. Here comes the first one. View the podcast our YouTube Channel. Listen on your favorite podcast app using pod.link, or:                                                                                                  View the podcast our YouTube Channel. Follow us on Social and never miss an update! Facebook: https://www.facebook.com/swarfcast Instagram: https://www.instagram.com/swarfcast/ LinkedIn: https://www.linkedin.com/company/todays-machining-world Twitter: https://twitter.com/tmwswarfblog ************* Link to Graff-Pinkert’s Acquisitions and Sales promotion! ************* Steve, my Fellow Treasure Hunter, Nov. 12, 2018 Steve called from “Green Machine Tools” because he saw Graff-Pinkert’s wanted ad for a used Anca CNC Cutter/Grinder online. We had recently sold one to a company in South America, so I was looking for more machines like it from the late ‘90s or early 2000s. Steve was full of energy. He sounded young, but who knows how old people are over the phone. I guessed he was somewhere in his thirties. Steve started his company in 2010. He specializes in reselling surplus tooling from machining centers and other CNC machines. He said it’s the “leftover stuff” he scavenges that turns out to be worth good money. Often he comes across surplus machinery that people are trying to get rid of at the same time they’re shedding their unwanted tooling. He told me stories about some Okumas and Doosans he gleaned that brought him a good profit. Through the phone I could feel him beaming with enthusiasm. He really was into what he was doing. I asked him if he had seen the movie War Dogs. It’s a film staring Jonah Hill and Miles Teller. They play two young guys who fall into the business of selling surplus guns to the U.S. government. It’s a crazy and funny movie that eerily reminded me of the used machinery business, or “treasure hunting” as I like to call it. I told Steve his stories about finding valuable excess equipment reminded me of a great line in the film from Jonah Hill’s character, “Everyone’s fighting over the same pie and ignoring the crumbs. I live on crumbs. Like a rat.” Steve told me he loved the movie and he knew that line by heart! I get pumped talking to people like him. He’s a true “Treasure Hunter” like me. I often use that description for my occupation. It romanticizes the business I’m in, and it energizes me when I say it. “Living on crumbs” is a less romantic personification of what I do. The mental image of rat makes me cringe a bit, but when you’re quoting a ridiculous character from an entertaining film, it doesn’t sound so bad. It’s fun. It reminds me to not take myself too seriously. Steve sounded like he did well in his business and could be could be fun to work with. He said he was in his car every day driving around looking for tooling crumbs—not sitting in an office. It sounded like part him liked that life, while part of him knew that it wasn’t sustainable longterm. As far as I can remember, Steve never produced the Anca Grinders that he called me about. But I was just happy to meet an interesting new person who I could relate to. He was someone who pumped me up about what I do for a living, which many of us need. We all have self-doubt sometimes. Steve and I talked two or three times afterward about various opportunities that never came to fruition, but I remember some interesting conversations. I recently went on his company’s website and it seemed pretty substantial. He has grown a lot since we last talked. It’s amazing how that conversation from five years ago comes back to me so vividly. I think that’s because Steve and I felt a connection to each other. We understood each other as members of the treasure hunting tribe. We related to each other as people who harness serendipity to make their living. At the time, I hadn’t learned about the methods you can use to create serendipity that I always love to talk about. But Steve was a serendipity natural. He traveled around sifting through crumbs. The modest tooling crumbs led him to the nice big crumbs in the form of valuable machine tools. A lot of people listening to this podcast have to deal with the fact that most of the world doesn’t understand what they do. The majority of people in the world don’t know what precision machining is. They don’t know what a machine tool is, let alone a screw machine. To really connect with each other, inside and outside of our tribe, we need to talk to each other on the phone and meet people in person, which a lot of people don’t feel like doing these days. It’s more intimate than leaving a comment on a social media post or messaging someone. Those can be good things too, but when you hear someone’s voice they’re more real and you can get to know them on a more intimate level. This is essential for creating bonds that most of us long for and serendipity. Question: What is the most valuable treasure you’ve ever discovered?

Have you considered whether your business is salable? My guest on today’s podcast says only a small fraction of companies have built an organization and leadership structure that makes them attractive to buyers. Damon Pistulka is founder of Exit Your Way, a firm that helps businesses sell their companies. What’s unique about Exit Your Way is that before it tries to sell a business, it helps the business’s owner increase their company’s value, often working with clients for three to five years. Then the company can net a much higher sale price and have a higher probability of actually completing a sale.  Trust me, that can often be a difficult thing to pull off.  Damon loves to work with manufacturing clients. He’s a mechanical engineer who grew manufacturing companies internally for decades View the podcast our YouTube Channel. Listen on your favorite podcast app using pod.link, or:                                                                                                  View the podcast our YouTube Channel. Follow us on Social and never miss an update! Facebook: https://www.facebook.com/swarfcast Instagram: https://www.instagram.com/swarfcast/ LinkedIn: https://www.linkedin.com/company/todays-machining-world Twitter: https://twitter.com/tmwswarfblog ************* Link to Graff-Pinkert’s Acquisitions and Sales promotion! ************* Interview Highlights   Noah: Give us a brief overview of your company, Exit Your Way. Damon: We help business owners grow their company’s value and prepare it for an eventual sale. My business partner and I have experience in mergers and acquisitions. We realized many small business owners struggle to sell because they haven’t built an organization and leadership structure that makes the business attractive to buyers. Noah: How did you get into this work? Damon: It was serendipitous how I got into this field. I studied mechanical engineering in college but didn’t have a clear career direction. I enjoyed an internship at a manufacturing plant, working with CNC machines and building prototype parts. That hands-on work and problem solving was so engaging. I was later recruited by an injection molding company that was expanding rapidly. They gave me tremendous opportunities to spearhead new initiatives as a young engineer. I went on to lead manufacturing plants, learning so much about operational excellence along the way. That eventually led me into private equity and investor-owned companies, where I specialized in business turnarounds. The expertise I built positioned me perfectly for the work I now do in M&A and exit planning. Noah: So you love the iron. You love the technical stuff, but you also like just the business aspects of it all. Which speaks to you more? Damon: The business speaks to me more, but the connection between the iron and the business is where I really geek out and have a lot of fun. Noah: Your company focuses quite a bit on manufacturing clients. What is it about that industry that you find so compelling? Damon: I get most excited about manufacturers that have an e-commerce component. You bring together data, systems, and physical production to create tremendous complexity. Optimizing all those variables is so engaging and challenging in the best ways. Whether B2B or B2C, I love it. Noah: So let’s get into the exit planning process. What’s typically the first step you take with a new client?  Damon: We have to start by honestly evaluating what their business is worth. Getting clear on the market value sets proper expectations around what they’ll net from a sale. It’s also critical they understand what funding level they need for their next chapter, whether retirement or a new venture. We work closely with their financial advisor to model different scenarios and ensure their business outcome aligns to their personal financial plan. Noah: Makes total sense, though I’m sure many business owners struggle to separate emotions from the valuation process. Damon: Without question. Ego gets in the way so often. They believe their business is worth far more because they’ve invested blood, sweat and tears into building it. But buyers assess value very differently, based on cash flows, profitability, industry benchmarks, etc. I always say – how often do you see someone pay double the value for a piece of equipment? The same applies to selling a business. Noah: Well said. If the business valuation is step one, what typically follows that in your working relationship?  Damon: The bulk of our work focuses on building an organization and leadership team that can thrive without the owner. Bringing on talent, clearly defining roles, implementing structures and processes that facilitate scaling. Empowering people to take on more responsibility. Doing that properly increases business value tremendously. It also makes the company far more attractive to buyers when the time comes to exit. Noah: That makes so much sense. And I imagine it leads to growth and innovation as well.  Damon: Without question! We’re not just cutting costs to boost profits. We’re positioning the company for rapid expansion by assembling a high-performing team. The business wins in so many ways through that process. Noah: As we wrap up, what final advice would you offer business owners considering an exit down the road? Damon: My biggest piece of advice – start the planning process very early, even if your exit is 5+ years away. These transitions take a long time to do properly. But by giving yourself plenty of runway, you can build an organization that delivers maximum value for your own financial security as well as your employees and community. Don’t let time slip away. Be intentional and proactive every step of the way. Noah: Thank you Damon. Where people can connect with you and follow your work? Damon: Thank you Noah! You can find me at ExitYourWay.us and my podcasts, Faces of Business, and On Air Manufacturing eCommerce Success Series. Note: This transcript excerpt is a condensed version of the interview, created with the assistance of AI. Various sentences and paragraphs have been combined or paraphrased to improve readability.

Last week, Lloyd Graff wrote a blog called “What Brings Me to Work,” which we think will speak to a lot of you out there, people who work in a family business, and people of retirement age who keep working—not because they have to, but because they get to.  Maybe you’ve read the blog already, but even if you have, we think you will enjoy hearing it in podcast form, being read by the man who wrote it. Listen on your favorite podcast app using pod.link, or:                                                                                                  View the podcast our YouTube Channel. Follow us on Social and never miss an update! Facebook: https://www.facebook.com/swarfcast Instagram: https://www.instagram.com/swarfcast/ Twitter: https://twitter.com/tmwswarfblog ************* Link to Graff-Pinkert’s Acquisitions and Sales promotion!   Why am I still working when most of my peers have retired or are counting the days until they can play golf or do needlepoint?  I’ve answered the question many times, but I usually doubt that people get it or even want to get it. I will try to do it again as honestly as I can, so even I can really “get it.” First, I need people in my life. I need connection and competition. Working connects me with people who like me, who respect me, and make me smile. Watching TV or sleeping or living in dread of getting sick and dying is what I would do if I retired.  If I could play tennis or golf or exercise that might be a substitute, but I cannot because seven retina surgeries rob me of my depth perception, arthritis in my knees and feet deprive me of motion, and strenuous exercise causes a form of migraine syndrome. I’m not into canasta or chess.  What I can do is connect with people, write stuff that some folks find worth reading, and do what I like to call “connecting the dots,” which means weaving ideas together to create  something new. Watching television, even baseball or basketball, cannot do that for me. “Connecting the dots,” the creative process, is second nature to me. If I could not do it almost every day, I fear I would have dementia within weeks. It may happen anyway, but I believe deeply that working, connecting the dots, and interacting with other people keeps me interesting, at least to myself, and hopefully my family. The other big thing about working is interacting with my son Noah. Noah listens to me, challenges me, argues, and loves me for the person I am. We sit across a big table, the same one I sat across with my father. I consider this interaction a fantastic gift that I somehow received. I know it is temporary and could quickly melt away, so I try to cherish it. I had it to some degree with my own father, but it was more argumentative and draining. What we did have was respect for each other and recognition of the other’s strengths. Noah probably derives more joy and energy than I did with my father. I am nicer than my dad with fewer demons and a happier relationship with my wife. I want to continue to work as long as I think I am pretty good at the creative part.  When deals are more elusive, as they are now, work is more difficult. But I still want to do it. I know the next good deal will be tomorrow. The next bad one too.  But every day brings new dots to connect, new folks to meet, and usually a chance to share thoughts with my son, Noah. I live in gratitude for that. Question: What brings you to work everyday?

The last year and a half, I’ve been a rookie family man. I’m trying to balance selling sexy-ugly iron, podcasting, and being a good dad and husband. I’m a distractible person with mild ADHD. I like to have fun, get out of the house, and I sometimes have trouble pulling myself away from the TV.  Four years ago, I read the book, The Art of Less Doing: One Entrepreneur’s Formula for a Beautiful Life, by Ari Meisel. The book had a significant impact on my life, particularly for how I do work. I’m far from having the majority of my life under control like Ari (seems to), but going back and reading my reflections back in 2019 shows me that I have improved my productivity a great deal.  I have new priorities. My time is more controlled. I have more efficient and disciplined routines. I feel more organized. Sometimes it’s important for me to revisit one of my old podcast interviews like this one to energize my brain. Hopefully this will give you a few important things to think about that will jumpstart your own productivity. The original blog is below. Scroll down to listen to the podcast with Ari Meisel. Listen on your favorite podcast app using pod.link, or:                                                                                                  View the podcast our YouTube Channel. Follow us on Social and never miss an update! Facebook: https://www.facebook.com/swarfcast Instagram: https://www.instagram.com/swarfcast/ Twitter: https://twitter.com/tmwswarfblog ************* Link to Graff-Pinkert’s Acquisitions and Sales promotion! Interview Highlights Like many people, I get overwhelmed at work. Sometimes I don’t get the work done I want to do, so I stay at the office an hour or two extra. By the time I get home I feel like I don’t have enough free time for relaxation and other activities. I have been repeatedly listening to a book called The Art of Less Doing, by Ari Meisel, today’s podcast interviewee, which has had a real positive effect on my life. Meisel, who calls himself an “overwhelmologist,” has a mission to cure the inefficiencies of folks like me so we can have more success professionally and have a lot more free time. He preaches that the secret to having the time to run a successful business and having free time to relax is to become “replaceable” through automation and outsourcing. He says that if a business cannot be run without you then you don’t own a business, you have the privilege of owning your own job. In the book and with his coaching firm, Less Doing, Meisel provides resources for people to automate processes and then outsource tasks when necessary by using a virtual assistant. He says the ideal is to automate a task before giving it to another human being to accomplish. Some automation methods can be simple, such as creating automatic bill payments, having supplies automatically queued to be sent at the same time once a month, or having email automatically sorted between junk and important contacts. Ari Meisel, author of The Art of Less Doing Meisel also believes in the merits of a virtual assistant. This was something I had not really considered before and felt a little embarrassed to try, but several months ago Graff-Pinkert hired a man in Albania to work for $10 per hour. He looks online for new contacts to add to our database and he advertises our machines on the Web. In addition to speaking Albanian he speaks English, Swedish, and Turkish, which may come in handy for Turkish customers in the near future. This has freed me up to talk to customers and focus on more complicated tasks. I admit that he sometimes does a more complete job than I would on certain tasks because my attention would have been diverted. Meisel says that the brain is not designed to multi-task, so this result makes sense. In addition to automation and outsourcing advice, Meisel prescribes a scientific approach to working efficiently based on brain research. He says it is important to find one’s personal peak time to work, which can vary significantly among people. Mine seems to be from about 9:00 a.m. to 11:30 a.m. He also believes that setting time limits makes a huge impact on productivity. Studies show that people often make work take the exact amount of time they are allotted, which is why many people, such as myself, work the most efficiently right before a deadline. Data also shows that the brain often works better in sprints, so rather than trudge through a to-do list, only stopping when one task is finished, it is best to work in 25 minute increments, taking five minute breaks in-between. The idea of working less hours and becoming replaceable can be difficult for people to swallow because doing more work makes us feel valuable in our workplaces and society, but Meisel teaches that once you learn to do less, you can accomplish so much more. Question: Could your company survive without you?

Today’s guest on the show is Paul Huber, CEO of COMEX, in Monroe Connecticut. Paul is a machinery dealer specializing in cam Swiss automatics. That’s cam Swiss, not CNC. I’m talking about Bechlers, Stroms and Escomatics, not Citizens. Paul is 84, but proudly says feels like he is 60 as he raises his 17-year-old son. He has been working on screw machines for over 67 years, starting as an apprentice in Switzerland. Early in his career, Paul worked as a technician for European screw machine builders. Later, he ran his own production shop in the US. Then he became a machinery dealer and sold some of the very first CNC Swiss machines. For decades, he has rebuilt and sold cam automatic screw machines, specializing in Swiss-type. Paul learned business skills watching his dad wheel and deal as a dairy farmer in Basil, Switzerland. He managed a Jazz group as a teenager.  He is a skilled engineer, an astute entrepreneur, a natural at stumbling on serendipity and hell of a story teller. He also loves to speak his mind, which you will see when we discuss the skills gap problem in the United States. So sit back and enjoy our conversation recounting Paul’s life’s journey. You’re going to learn some screw machining history, you’ll laugh, and I think you will get some inspiration for your own journey. I’ve given you some good highlights from the podcast below, but you really need to listen to get the full story! Listen on your favorite podcast app using pod.link, or:                                                                                                  View the podcast our YouTube Channel. Follow us on Social and never miss an update! Facebook: https://www.facebook.com/swarfcast Instagram: https://www.instagram.com/swarfcast/ Twitter: https://twitter.com/tmwswarfblog ************* Link to Graff-Pinkert’s Acquisitions and Sales promotion!   Interview Highlights Paul’s Introduction to Screw Machines Noah Graff: How did your career in machining start? Paul Huber: We were seven kids. My dad insisted that each one of us learn a trade as an apprentice. I was in the music business as a manager. I sometimes made more money than my dad, but he still insisted that I take an apprenticeship. At age 17, I started my apprenticeship. Setup, maintenance and everything else related to Swiss screw machining. I was very lucky because the company which hired me as an apprentice needed somebody in the tool room, so my first six months were actually working in the tool room. Graff: How did you feel about it? Did you like it? Huber: Well, that’s the thing. I took that position only because I had my dad behind me ready to kick me in the behind. So I made the decision. Okay, there’s a job like just any other job I’m going to find. And within six months, I was hooked and it became a real challenge.   History of Swiss Machining Huber: I failed French in school. So I said, maybe I should go to work in the French part of Switzerland. At least I’ll learn French. I went to Bechler. Graff: Bechler was not bought yet by Tornos at that time? Which Swiss Brand was the first? Huber: Tornos (was first). Bechler, Peterman, and Tornos, all started in Moutier, Switzerland. (Tornos bought Bechler in the ‘70s and bought Peterman before that.) Tornos never had the intention to continue the business of Peterman or Bechler. Tornos was really specialized for the watchmaking business. They really were looking to build smaller machines and higher precision. Bechler was more for all around. For example, the shaft in your blender. The drive shaft in your blender is made on Swiss.   The Skills Gap in the United States Graff: So, what’s next for Paul? Huber: Quite frankly, I wish I could say I want to get into education. But I gave up hope. Mainly because we do not have the material to make skilled people. We have lost the ability to educate our young people in the United States. We are now in a situation where the majority of engineers are either foreign born and American educated or educated around the world–Japan, Europe, and they come here. Can you imagine if the manufacturing industry would be like Gene Haas, spending millions of dollars every year for the education of their future users, on workers, on programmers? Can you imagine if all manufacturing firms in the US did that where we would be today? Graff: Thank you so much, Paul. Huber: I’m very happy you gave me the opportunity to speak my mind. I get on some people’s nerves, but I talk fast! Learn more about COMEX.

In college, one of my favorite elective classes was bowling—I took it twice. Maybe you poo poo the idea of taking bowling at an expensive institution like the University of Wisconsin, but that was the class where I learned about the powerful science of “pin action.” To the bowling novices out there, do you ever wonder why the good bowlers throw those huge curve balls down the lane, rather than just throwing it straight down the middle? Pin action. When the ball comes in with that sidespin from the perfect angle into the pocket you get the best potential for the most pins to knock each other down. One pin hits the other, and they hopefully all go down in a strike.  On today’s show I’m talk about utilizing the science of pin action in your business. It’s constantly present all around us, and if you’re conscious of it, it can be a very powerful tool to reach your goals. Listen on your favorite podcast app using pod.link, or:                                                                                                  View the podcast our YouTube Channel. Follow us on Social and never miss an update! Facebook: https://www.facebook.com/swarfcast Instagram: https://www.instagram.com/swarfcast/ Twitter: https://twitter.com/tmwswarfblog ************* Link to Graff-Pinkert’s Acquisitions and Sales promotion! Lately, Graff-Pinkert’s used machinery business and our budding M&A business are generating some real pin action. Our podcast and blog are getting pin action too. In fact, all four entities are generating pin action off one another. We closed a deal last week, selling a small CNC Swiss shop in Arizona. Some of you may remember the ads we sent about it on our email blasts.  I have to say that closing that deal was extra sweet because the seller of the company told me that he asked Graff-Pinkert to represent him because he heard our ad on this podcast  It was serendipity, and it was also pin action. The podcast pin hit the company-for-sale pin in just the right way, and it produced a successful deal. This week, we were contacted by a company we had never heard of that was interested in the Arizona Swiss shop that I just talked about. They were tipped off to the opportunity by one of Graff-Pinkert’s oldest customers who wasn’t interested in the company for sale but who had seen the ad for the shop in one of our email blasts.  The caller told me he wanted to buy a shop in Arizona or Oregon. So I called an old customer who came to mind in one those locations. What do you know, they said they might be interested in selling. More pin action. Last week, I went to the Precision Machined Products Association’s annual meeting on beautiful Amelia Island, Florida. The lovely weather, the gorgeous beaches, the interesting speakers, they were all good. But I wasn’t there for that. I went there to make connections—find new pins and then knock them down.  I’ve found at these conferences one of the most important times to network is during the breakfast buffets. It’s the only time during the day when everyone is together and it’s possible to sit next to whoever you want. After breakfast, everybody separates, and good conversations are harder to come by. Sunday was my last day at the conference. And unfortunately, I got to breakfast late, with only 15 minutes left. But 15 minutes was all I needed for some beautiful pin action. Right now, Graff-Pinkert is working on selling small Swiss company right across the boarder. We told one conference attendee about the company the night before, but he wasn’t really interested.  But that morning, as a courtesy, he introduced me to the owner of a machining company located one hour from the one we’re selling. The guy had been sitting at the table right next to mine! We had a nice conversation. He told me he knew the company well and that it had some valuable customers. But for him, it wasn’t a good fit. Then, he pointed to a guy at another table and suggested I talk to him. This guy I actually knew quite well. He told us to call him this week about the opportunity. I don’t know what’s going to happen with the last guy, but that PMPA conference was a perfect bowling lane, all waxed up, with a whole bunch of pins. One customer led to another and then another. Dots connected. One pin hit the next pin, which hit the next pin. You might be thinking, I know this concept already.  Get a good network, advertise. Go to conferences and meet people in person. Make LinkedIn posts. Get interviewed on a podcast. Maybe you see pin action happening around you all the time. But to make the pin action occur often, it helps to be mindful while it’s happening. That will make you do the right things to create it repeatedly. Which brings me to the other kind of pin action. There’s a pin action that is going on your mind, and that is probably the most important kind. When you have your mojo you get pin action. You ever notice that when you’re selling something, if you have success with one customer it leads to you having success with someone else? The customers feel your confidence. They feel your positive energy. They feel your non-neediness. I found this was true when I was single and introducing myself to women. When I was having success, it seemed easy talking to most people. One success brought on another success. Pin action. But then in everything—business, sports, relationships—suddenly you can hit a dry spell. Negative pin action happens. One bad thing causes more bad things. Sure, there are external factors you have no control of, but there are things you can to change the momentum. So how do you get back from the wrong pin action to the right pin action? It’s hard for me like everyone. I don’t have all the answers. But my suggestion is to continue throwing the ball down the lane. If you know you’re doing it right, there’s a good chance a new streak will start.  If that doesn’t work, alter your approach. Go Brooklyn style. Go George Constanza—do the exact opposite of what you were doing before. Come up with a totally new introduction when you talk to people.  Or, go to a different bowling alley with different pins. They might be even better than the ones you were trying to knock over before. If you really need an internal jumpstart, perhaps you hire someone to coach you or work along side you as a team. I’ve done that. Perhaps new pin action can be generated between the two of you.  So the next time you’re trying to build something—professionally or personally—think about how you can generate pin action, both in your external environment and in your head. And when you notice it happening, be mindful as you watch the pins fall, so you can do it again. Questions: Where do you see pin action in your business? What’s the greatest game you’ve ever bowled?

How do you know what to charge for your product? How do you negotiate with customers and leave the least money on the table? And not just for one transaction but for the long run? On today’s episode, Part II of our interview with Jay Jacobs, we discuss strategies that you can use the next time you ask yourself, “What should I charge for my manufactured parts?” Jay’s former company, RAPID Manufacturing, grew at an average rate of 32% annually from 2010 to 2017, and one of the key reasons for the growth were his strategies to price parts. Jay also co-founded Paperless Parts, a sophisticated software platform that assists manufacturing companies in quoting and pricing jobs, so he knows the pricing game in manufacturing. If you haven’t read/listened to Part I of this interview I suggest you check that out first. *************** Listen on your favorite podcast app using pod.link, or:                                                                                                    View the podcast our YouTube Channel. Follow us on Social and never miss an update! Facebook: https://www.facebook.com/swarfcast Instagram: https://www.instagram.com/swarfcast/ Twitter: https://twitter.com/tmwswarfblog ************* Link to Graff-Pinkert’s ad for Graff-Pinkert’s Acquisitions and Sales promotion! ************* Interview Highlights  Noah Graff: How do you decide how to price a part? Jay Jacobs: I like to say the right price is the price someone will pay for your parts. And as the volumes go up, the competition goes up. I dislike competition. One of the reasons I started rapid was because there was no competition for prototype sheet metal parts in the beginning. But whether you have competition or not, I have a theory I call the Pricing Triangle. I’ll try to describe it visually.  Think of an (x- and y-axis), and on the vertical line is the price, and on the horizontal line is the RFQs or the parts that can be made. You have a triangle. Think of the letter “A” in that range in the middle of the triangle. That range is your capacity. So at a certain price, it will touch the two sides of the triangle. That’s sort of perfect. You are using all of your capacity.  If you price the parts too high, then you’re going up on the vertical axis and you’re not going to get enough orders to meet your capacity. You’ve got excess capacity. If you price too low, there’s a gap between that horizontal line on the “A” and the sides. You don’t have enough capacity to meet the orders that come in. So let’s say you want to raise prices. You have to create more demand to meet your necessity. So you put a lot of effort into sales and marketing, and that’s my forte. And in manufacturing, it’s actually a lot easier than a lot of other industries because many shops don’t have salespeople, or they don’t spend a lot of money on marketing. Noah Graff: How easy it for a supplier to ask its customer for a price increase based on higher material costs? Jay Jacobs: The shop will get burned once before they make sure that’s a clause in the contract, particularly for long term agreements. And the OEMs will not necessarily like it because they want predictable costs. However, you need your shop to be in business to survive. Noah Graff: Give me some examples of how you calculated prices of various parts at RAPID Manufacturing. Jay Jacobs: We had different shop rates for different complexity parts. We had what we called simple, medium, and high complexity, and we had different hourly rates. These hourly rates aren’t real rates. These are approximations. For simple parts, we were roughly $200 an hour. For medium complexity parts, we were $300 an hour. High complexity parts, things that require certain machines, certain people in the shop, essentially that could blow up your shop, we were up over $800. Noah Graff: Do a lot of shops underprice their parts? Jay Jacobs: I think a lot of shops are afraid to raise their prices.  I think you need to be really fluid (when pricing) because prices go down when there is less demand. Buyers are going to be pitting you against the other shops, and you may you may get less money.  However, there’s a lot of hesitation of shops (to raise prices) when there is a lot of demand. Noah Graff: You are in a mastermind group with the famous negotiator, Chris Voss. How are you applying those negotiation techniques in your work? Jay Jacobs: Using Chris’s techniques makes the other person feel better about the negotiation. And if someone feels better about negotiating with you, then they are more likely to interact with you in the future. There’s so much power in that, whether in business or personally. I think it makes you a better communicator. Noah Graff: Do you have any other advice for manufacturers who are pricing their parts? Jay Jacobs: I love pricing. Pricing fascinates me. I really encourage someone who has the power to change prices, controls pricing—probably a shop owner—to do some experiments. Maybe don’t change your pricing wholesale. Maybe a new customer comes in and you raise your shop rate 25%. Try some stuff, see what happens. If you want to fuel the growth of your company it starts by raising prices. Don’t be afraid to make little experiments. Although, if you are selling used machinery, you should definitely be as thin as possible so that these shop owners can bring more equipment in. Obviously, I’m saying that in jest. Jay Jacobs is the host of the Job Shop Show podcast. Check out Paperless Parts.

As Graff-Pinkert has gotten more into consulting machining businesses who want to sell their companies, we are constantly learning new things about what determines the value of machining firms.  Wednesday, I flew home after visiting a client we are helping sell its Swiss machining operation. On the plane, I thought back to a favorite episode of Swarfcast in which we interviewed John Habe IV, who has grown his machining company Metalseal significantly by way of acquisition the past few years. In the interview, John discusses the difficulty in buying companies, which often have emotionally attached owners. It’s often the only time the seller will sell a company. It’s been their life’s work–their purpose. It can be hard to come to terms with a dollar value on your life’s work. John talks about how the type of equipment in a machining company affects its value. He says that while you might expect a shop with modern CNC equipment to fetch the most money, sometimes a shop with older cam multi-spindles, which don’t have to be constantly replaced at large expense, can actually be quite attractive for a sophisticated buyer if it’s a profitable operation. We also discussed how a machining company’s cashflow, often called EBITDA in the acquisitions business, can help determine a shop’s buy price. John points out that it’s important to look beyond just numbers. He wants to know how consistent the cash flow has been year over year, if the company is diversified, if it is in cyclical sectors like automotive or firearms. He looks at a company’s management style. Is the owner constantly involved in the day to day or are they delegating responsibilities to upper management who would remain at the company after a sale. I won’t give away the whole thing away. Have a listen! Question: If you had the money and ambition to buy a business, what would be your dream acquisition? *************** Link to Graff-Pinkert’s ad for Graff-Pinkert’s Acquisitions and Sales promotion! Listen on your favorite podcast app using podlink, or:                                                                                                    View the podcast our YouTube Channel. Follow us on Social and never miss an update! Facebook: https://www.facebook.com/swarfcast Instagram: https://www.instagram.com/swarfcast/ Twitter: https://twitter.com/tmwswarfblog ************* CLICK HERE to listen to PART 1: Ep. 41 – John Habe IV on Growing a Machining Business through Acquisitions CLICK HERE to listen to PART 2: Ep. 42 – John Habe IV on Valuing a Machining Business  

Imagine a sheet metal prototype shop that was so fast and reliable it never turned down a job if it were physically possible to complete and the customers were willing to pay the price.  My guest today, Jay Jacobs, built his former company RAPID from a team of five to over 300. Before being acquired by a publicly traded company for a price he couldn’t refuse, RAPID was manufacturing over 30,000 unique part numbers annually, 24-7-365 days a year. Then Jay co-founded Paperless Parts, a cloud based estimating and quoting software platform. On today’s show, Jay is going to tell us how he scaled his company and how a job shop can make bold delivery promises like Domino’s Pizza.  Disclaimer, I didn’t say the parts tasted good. Jay also hosts an excellent podcast called the Job Shop Show *************** Link to Graff-Pinkert’s ad for Graff-Pinkert’s Acquisitions and Sales promotion! Listen on your favorite podcast app using pod.link, or:                                                                                                    View the podcast our YouTube Channel. Follow us on Social and never miss an update! Facebook: https://www.facebook.com/swarfcast Instagram: https://www.instagram.com/swarfcast/ Twitter: https://twitter.com/tmwswarfblog *************   Disrupting the Sheet Metal Prototyping Industry Jay Jacobs got a degree as a mechanical engineer but never practiced. He did sales and marketing in OEM manufacturing. Then he worked for a prototype shop 1989 where he bought one of the first ever 3D printers on the market. When he later worked as a manufacturer’s rep, he realized the prototypes with the longest lead times were sheet metal parts. He scraped together most of the money he had and bought a five-man sheet metal prototyping shop doing $150,000 in revenue. His company, RAPID Manufacturing, disrupted the sheet metal prototyping industry by promising quotes to customers within 24 hours and delivering parts in one to two weeks.  Jay says before RAPID, sheet metal prototype companies asked customers to them send part prints, however his company required customers to send in 3D CAD data. This sped up the company’s lead times because it cut the engineering process before production. Another difference from other sheet metal prototype shops of the time was that RAPID welcomed customers to request one-offs, while other shops discouraged such requests. They made customers wait several weeks to get around to making their low volume parts, which they deemed less profitable.  Jay took says he adopted the methodology of a 3D printing service that customers want quantities of one, they want them fast, and price often isn’t an issue.   Scaling RAPID Manufacturing Jay says that for a long time he had trouble delegating the business’s day to day tasks such as quoting jobs. He felt like his quotes were “perfect,” anticipating everything the customers could think of. But the company’s volume of orders kept increasing, sometimes 50% per year. So in order to scale the business and still fulfill his 24 hour quote guarantee, he had to allow himself to let go of some hands-on tasks and trust that his employees could do the job well enough. By delegating, he was able to focus on company culture. He used his time training employees and spent one on one time with them. His mission was to create a company where employees were not afraid to make mistakes when they were trying out innovative ideas.  RAPID grew at an average rate of 32% from 2010 to 2017 annually. Jay made a lot of personal sacrifices to scale the company. He says in retrospect he would have been good with 30% growth if it meant spending more time with his family. But at the time, he was so passionate about growing his company and disrupting an industry that it consumed a significant amount of his attention. He says he struggled with how he allocated his time. Sometimes he felt like if he wasn’t working, he was “cheating on the company.” But he is grateful that he sometimes was able to get himself out of the shop to be with his family. In 2017, Protolabs, one of RAPID’s customers asked to buy the company. Jay asked for an absurd amount of money, 10-12 times EBITDA, and Protolabs agreed. Normally companies sell for between 3-5 times EBITDA. Negotiations were complicated in the deal concerning the proprietary technology that Jay wanted to incorporate for his new company, Paperless Parts, which he co-founded with four partners. The company provides a cloud-based software platform for streamlining parts quoting. As much as Jay loved running RAPID, he says that selling the company enabled him to help create Paperless Parts in a way that had a much larger impact on American manufacturers. He says if he were still running RAPID, Paperless Parts would have been more self-serving. Stay tuned for Part II of the Interview, in which Jay discusses more about Paperless Parts and gives advice on pricing jobs.