The education of my son Noah in the used machinery business has been progressing for nine months. This is a report from his boss, which is complicated because he is also his father. Next week you’ll hear from Noah about his view of the process.
To an outsider, buying and selling used machinery may seem simple: buy low, sell high. The reality is that it is one of the most demanding intellectual challenges I have ever encountered. Valuing dirty, broken, flawed, obsolete iron and convincing a potential buyer they are getting fair value is so difficult. The iron is generally an illiquid asset. Noah’s job is to liquefy the illiquid, but to do that he has had to learn why people still buy screw machines that most people, even those in the trade, think are weighty anchors.
He has educated himself by talking to people in the field at meetings, one on ones in their factories, watching videos, and especially by listening to Rex Magagnotti, Graff-Pinkert’s go-to guy on screw machinology. Rex has even taught him how to measure the slop on an Acme end tool slide with a dial indicator, a skill that my brother Jim and I never learned. He’s picked up the lingo, if not the context of machining terms. He has the knowing smile even if he’s bluffing a bit, and he’s been very willing to ask the vital dumb question.
There’s no such thing as mastery in this business. The secret is refining your guesses. Noah is constantly probing me, Rex and my brother Jim on values. He asks why a machine is worth X or Y and we say, “because that’s what we think it’s worth.” And then he says “why” again and the concentric circles of guessing provokes yet another annoying “why.” The repetitive “why” imparts rigor into our discussions, but eventually it becomes vexing and then infuriating. When there is no “right” answer, punting often becomes the answer and the indecision becomes a de facto decision. I think that for young people a “no decision” is hard to accept. Often I recommend to defer until more information filters in. Procrastination on a decision, if it is made with intent to eventually decide a tough question rather than just duck, can be positive.
This is the Jerry Reinsdorf approach. Reinsdorf is the principal owner of the Chicago White Sox and Chicago Bulls. He told me that the secret of his success was procrastination, which he defined as waiting long enough to allow proper decisions to become clear.
One lesson I’ve been trying to teach Noah, and relearn myself, is to “know enough to know what you don’t know.” In business we need to avoid the dummies who don’t know what they don’t know – or to take advantage of their hubris.
My brother Jim and I constantly debate the virtues of playing for the long ball or settling for singles. Noah listens to the arguments and tests me on my positions. When I’m not swinging for the fences I tell him the importance of consistent cash flow. When I move towards Jim’s “always make a deal” posture, as I often do, Noah winces. I know how easy it is for deals to fall apart so I often urge him to make the deal when it is within reach.
I find that the sheer quantity of detail, which fills in the texture of a deal can be confusing, even overwhelming for Noah. The business demands a huge cumulative memory for detail to go with an array of relationships to call upon. He cannot manufacture these elements. They come from observations, immersion, and hard work. I want him to achieve mastery in a year when it has taken me 40 to learn so little myself. But Noah made a sale today, of a 1” Wickman screw machine, mostly by himself. It’s coming together. I’m grateful.
Question: How long did it take before you thought you knew what you were doing in your job?