At the Track Every Day

By Lloyd Graff

Trading in used machinery is sophisticated gambling. Some people find it strange that I am utterly indifferent about sports gambling.  It has no allure for me. I once lost $25 playing 21 at a casino in Vegas and felt stupid – not for losing, but just for walking into the smoke-filled room.  Yeah, it was a long time ago.

And now, after such a long, long time in the screw machine trading and refurbishing business, we have the exhilarating and scary opportunity to reinvent a new business by finding a new cohort of machines to gamble on.  I’m finding it exciting, even enthralling at times, and pretty damn scary, too.

A very smart guy once told me that “if you don’t feel ‘it’ in the pit of your stomach, you aren’t bidding enough to get a deal.”  He was right, but that doesn’t mean fear guarantees your success. It only guarantees doubt and restless sleep.

In our machinery business, we are confronted with the wrenching reality that our traditional customers are not very interested in buying what we’ve always sold.  It’s a bit like a car dealer specializing in sedans and convertibles in a pickup truck and SUV world. Not much action. The obvious path is to switch to pickups and SUVs, but the downside is that almost everybody else has done the same thing.  For a used machinery dealer, the analog is to jump into the used Haas lathe and vertical machining center market. But that is awfully boring and terribly competitive. There is an auction every Tuesday and Thursday with Haases in it. The only sleepers are in sofa beds.

Our strategy has been to go to Outer Mongolia searching for bargains and hauling them back to civilization.  My son Noah likes to travel to Outer and Inner Mongolia so he wants to try this approach.

I also want to search for the guavas and jackfruit in the produce department, the exotics that only the people with weird tastes dare to inhabit?  This is a long jaunt from the Acmes and New Britains of my youth that we once sold by the truckload.

Our real niche seems to be in the European descendants of the Acmes and New Britains, the CNC multi-spindles like Index and Schutte that are so darn complicated and daunting that they confuse even people who have grown up with their simpler, now often discarded, cousins.

When you place bets on machinery you don’t know like family, you are going to lose some of the time.  Try to tell your banker, “Well, I bought that washer, that robot, that Hydromat thing, to experiment.”  They may get the intellectual gambit, but they get rather annoyed about losses. They think you are always supposed to win in business.  This is when resilience and being part of a team that understands the value of defeat as an educational tool, one that realizes that business is a continuum, are so vital.  To succeed in the long game of business you have to build in defeat cushions. If you are going to gamble you are going to lose. If losing is “unacceptable,” which seems to be the position of football coaches like Urban Meyer and Jim Harbaugh, you are going to end up desperately needing a shrink or a sabbatical.

I hate losing or being wrong, but I also love the action of being in business and trying really hard to win every day, knowing that setbacks are inevitable, and dealing with change is maddening.  

I think about the option of leaving the game.  Noah often asks me, “Dad, was it always this hard?”

Honestly, I can’t even remember, Noah.  Let’s just get it on.

Question: Do you view business as gambling?

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8 thoughts on “At the Track Every Day

  1. AvatarJeff

    I think business is like gambling – discipline with your odds and risks for success point to the best players. The outliers usually lose in the long run – not enough risk or too much risk will likely turn the tide to a loser. Those who take too much risk may win big but usually lose it right back and those who do not want any risk never get to play at all. Gambling with unprepared or scared money never works well.

     
  2. AvatarRobert Ducanis

    Well, I guess the only sure things are death, taxes, and the sun rising in the east & setting in the west. I guess everything else is a crap shoot…love, investments, choice of restaurant etc., etc.

    Regarding machinery, things are changing ever faster with today’s technology. Making the commitment to purchase a 2nd hand piece of equipment at auction probably has more challenges today as technology improvements have decreased the time gap before a piece of machinery is no longer competitive. A 1960s Acme and a 1970s Acme were not much different. A 2000 Swiss CNC lathe versus a 2010 Swiss CNC lathe are significantly different in capabilities and ease of use.

    An analogy I would use is the time I saw a beautiful mule deer in Montana jump a railing from a riverbank into a roadway in front of a pick-up truck. The deer was hit and its leg was snapped in two and it limped to the embankment of the road to eventually die. (I hope somebody in following traffic with a firearm put it out of its misery). I found the incident really sad. It got me wondering about technology. The deer could not adapt fast enough due to the invention of a fast automobile. One hundred plus years ago, the deer could have avoided a horse & buggy without a problem. Adapt or die?? Yeah, I guess so in business, but I thought it was a sad outcome for the deer.

     
  3. AvatarVictor

    I don’t think gambling and being in business are at all alike, though both have an element of risk.

    In business the goal is to serve the customer efficiently, with appropriate profit for the business.

    Gambling is trying to get something for nothing.

     
  4. AvatarRandy Lusk

    We have a much different perspective on gambling. I am not trying to get something for nothing, I am trying to see if I can “beat the odds”. Now I spent 2 grand a three days in Vegas this past weekend and did not “beat them”. But I know the odds exactly on the crap table and I place bets accordingly to minimize those odds that are always in the house’s favor. But for me it is a relaxing challenge. I like the banter of the dealers I enjoy the high energy when a table begins to turn in our favor. Fortunately for me, my sister in law came back ahead as did my mother-in-law and I deposited for the light bill at the Venetian.

    In business, my odds are taken sometimes with knowledge that a new pieces of equipment for which I do not have the work or customer base will allow me to open some new doors and allow me to optimize some prior marginal jobs in new ways. Sometimes it works out well like our adventure into CNC Swiss, but that was a quarter of a million dollar gamble. In neither case did I want something for nothing, but I did way the potential and decided it was worth the “sleepless nights”. I must admit I have many more sleepless nights over the Swiss and Nakamura investments over the last few years than I ever had after a trip to Vegas.

    See you at the Bellagio at the Annual Meeting in October. I’ll be the one taking full odds on the 4 & 10.

     
  5. Lloyd GraffLloyd Graff

    To Victor,

    The fact that we are taking risk in business does not preclude adding value. By our making a market on used machine tools we make them available to other companies that hopefully value them higher than we do. This is what makes a market. It keeps the machines accessible to companies like yours, Victor.

     
  6. AvatarNoah Graff

    You know dad, Jackfruit is supposed to taste like meat. I don’t think it’s kept in the produce section.

    So what machine would be the equivalent to a Jackfruit?

     

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