0:00:025.1 West McDonald: Well, hi, everybody. West McDonald here. And I want to thank you for tuning in to another episode of TigerTube. And if you can’t see us, if you’re listening to us, that means you’re listening in on Tigerpaw Radio. So thank you very much. I’m very excited today. The guest that I have is someone that has been in the office equipment channel for more years than I can remember, and actually 50 plus years running the same company. So Chip Miceli, I want to thank you very much for joining us today.
0:00:54.6 Chip Miceli: Well, thank you. Thank you for having me.
0:00:55.6 West McDonald: Yeah. And maybe one of the first things that I’ll do, you know, we were talking about putting all your eggs in one basket. So maybe we’ll just start there. I really like that, you know, analogy, right? And in the office equipment channel, our basket was, I think, pretty full of printers and copiers. And we’re certainly seeing a lot of challenges with that right now. And I don’t think we have to remind people of that. I think anyone in the space knows how challenging it is. But you’re doing something different. You’re putting some of these eggs in different places. And that’s really where I wanted to start the conversation. I followed you a while ago. And while most people were kind of like, immediately going to managed IT, it seemed like every office equipment dealer that I spoke with was kind of moving in that direction. And that you were actually doing some stuff with display panel technology, right? And maybe we can talk a little bit about that. What was the impetus for looking in that direction? And what do you think the real value of diversifying, you know, in that way is?
0:01:53.5 Chip Miceli: Well, what we found through the pandemic, more and more people were doing Zoom meetings sort of like this. And if you were in the office, you needed some kind of technology where you can brainstorm more. So interactive boards became more popular. Now we’ve been selling those for years, but never looked in and we do a lot of payment programs. Everything we’ve ever done was payment. And every time we do a payment, we do add service into it. So we have a reoccurring revenue for that piece. But what we found is that now people were looking for bigger than a regular interactive board. Because the biggest ones are about 86 inches. And now people want 100 and some. So we found that we had to diversify a little bit. So we ended up making a deal with a local provider here in Illinois to sell their LED walls, which is for inside. They do a lot of outside, but they created about two or three years ago, they started making LED walls for inside, which is different than having them outdoors. And so it’s an easy concept. It’s stuff that we used to sell and you could sell it for cash.
0:03:01.0 Chip Miceli: We do sell 90% of them on a leased program with reoccurring revenue because they’re always going to need some kind of service. The computer that runs it or the little panel has to be replaced. Now we can teach them how to replace it, but most of the time they come back to us and say, we need you to replace a panel. We don’t want to break another one. So we found that the LED walls also with an interactive board tied into it, made it a big interactive wall. And it’s been very good for us. We’re selling at least two to three of these things a month, which have been very profitable because no one else is really doing it in our area. Now they all are jumped on the interactive board thing. And there’s a lot of companies out there today selling them. But we, because we bring, because of this LED, we’re selling scoreboards to schools, they’ll update their scoreboards because now they can advertise on them. They could run all kinds of information on them. So found opportunities because of it that we never thought we would be in.
0:04:02.4 West McDonald: Yeah. I remember it was actually a couple of months ago and you first got me excited about what you were doing and you said something at that time, which I haven’t forgotten, which was that one of the reasons to move into something like this is that it’s actually much more adjacent with what kind of our experience in the spaces than some other things. So if you look at a copier or printer, it’s a thing. And if you look at, like you said, an LED wall panel, it’s a thing that those panels need fixing or replacement that the computers that they’re running on sometimes need maintenance, kind of care and feeding. And the other important word is to be able to put those under a finance plan, right? To actually be able to do them that way. And that sounds very adjacent to the experience that we’ve had already in the channel. Do you think that’s fair? How do you feel about that?
0:04:54.6 Chip Miceli: I think it’s fair. I think there’s a lot of product coming into our channel now that we never thought we would have. That’s going to give us reoccurring revenue. Let’s face it, our industry, printers and copiers, or copiers and then printers, always been a reoccurring revenue. Whether we sold a copier for cash, we sold a maintenance contract with it. In the beginning of time, we sold a maintenance kit and that would cover you for your service, for your copier. Or we gave you the machine and it was always reoccurring revenue. We knew that once we put our product in your location, you were going to have to call us for something. The supplies, when we learned many, many years ago to put it on a program, include our service, increase it every year, it became our profit center. Service is really a copier’s profit center. What I’m looking for now is other profit centers. Because we know as the clicks continue to go down, we need other sources to bring service in and that happened. And we’re in it too. We’re in the IT space as well. That is one of our reoccurring revenues. But what we found is that customers today want to talk to you about the flashy new thing and that’s what an LED wall is.
0:06:11.2 Chip Miceli: So it gets us more appointments. Now, once we get in there and if we don’t do an LED wall, we end up with other products. We end up with copiers, we end up with printers, we end up with office supplies or whatever else we’re selling. We end up with that business anyways because the door became open. And so for us, whether I sell an LED wall or not, it got me an audience with the owner of a company or the CEO of a company, which I can now, if I’m a good salesperson, elaborate on other products that we can help you with.
0:06:42.5 West McDonald: I love what you say about it really providing a gateway into the organization to be able to sell them other things, right? And certainly in our industry, whenever I talk to people about the difference, I guess, between the office equipment channel and then the managed IT channel because they’re coming together, is that I think we’ve always been really good at sales, right? That we don’t just say, well, they want that one thing, I’m going to shut up now. In the managed IT world, that’s often where they start and kind of where they finish, right? Whereas in our side of the channel, I think we’ve been much better about using those opportunities to get in, right? Now I think for a lot of dealers out there that might be on the fence about diversification, I wonder if you can offer any advice for them about maybe why they should really start thinking about it and maybe some ideas on how they can kind of put a yardstick out there for what they should do next.
0:07:38.8 Chip Miceli: Well, first of all, they have to look at what they could possibly be good at. And I think the first thing you need to do is make sure if you go into anything, you’re going to go in for reoccurring revenue, that you go with an organization that’s going to partner with you and help you along the way. And when we got into managed IT, there was really nobody out there that would help us with that. We had to shoot from the hip, which was very costly. Today, you have a lot of organizations now that will do your call center for you and you do the break fix, which you already have the technicians that most of them, if they’re on the younger side, can fix computers. And so if you can partner with some of the organizations out there like Great America has in their collaborantes, they can do the grunt work and then you go out and do the back end. So you have a great opportunity to get into managed services. If you’re going to get into LED walls, you need an organization. Now, there’s a lot of Chinese product coming into the United States right now for LED walls.
0:08:38.0 Chip Miceli: We just had a show a couple of weeks ago that we went to look at them. But as all I had offer you is the wall. Here’s the wall. They don’t offer you, how do I figure out how much it is? Should I charge? Where it’s at, the company we’re doing what they have a sales guy that comes out with us, looks at it, measures it up and it comes back and said, this is what the wall is going to cost from us. Then we have an organization that we bring out and they look at it to say, okay, this is what it’s going to cost for us to install it. And then we put the package together and we present the whole thing that we’re handling this like building a house. We’re the contractor for it. Now, because first of all, I didn’t want to have a group of guys that’s put video walls up two or three a month. It doesn’t pay. So we went with organizations like electrical companies in that that help us. I have one that helps us in Indiana and then I have one that helps us in Illinois.
0:09:38.2 Chip Miceli: So you need those partnerships for anything you want to go forward. Just like going into these charging stations for cars, that’s another shiny piece out there. I really think that’s a good reoccurring revenue for our industry. But the hardest part I’m finding is getting electrician or electrical company to partner what you do install it because you don’t want to do that. And here in Illinois, we have to have union in some places and non-union and other places. So the sellout you’d have to have the same type of idea. Here’s what the product costs. I’m going to know that, but here’s what it’s going to cost to install it. And then you put it together as a monthly package and people say, well, I can afford that now, $995 a month, or whatever it may be.
0:10:25.1 West McDonald: It’s interesting what you say about being like kind of a general contractor, right? And we all accept that when you’re looking at building a house or anything else that their expertise is really bringing the best of breed together to deliver the final solution. So I think that’s maybe an interesting difference between how we’ve typically done things in the past, right? Whereas we did try and have everything in house. And I think that as you start to offer more of these solutions, that this idea of partnership is really important. And you mentioned for the charging stations for cars and stuff. So Pulse Technologies is investing in that as well?
0:11:00.9 Chip Miceli: We’re looking into that right now. We’re talking to Josh over at ADIC, I believe is the name of his company. And we’re seeing if that can be a product that we can sell.
0:11:10.5 West McDonald: Everything’s electrified now, right? So when I look in my garage, my lawnmower, my leaf blower, what else do I have now? A chainsaw, like everything is battery driven, right? And my wife and I are actually in the market for a new vehicle right now. And we’re actually holding off because we want to see what kind of electrified options come into the marketplace in the next couple of years, right? We don’t want a Tesla. I know that Ford has come up with the F-150. So maybe that’s a potential or we kind of like the style of the Bronco. So are they going to come up with a Bronco styling that’s going to be electrified in the next couple of years, right? And I’m certainly not a young person, but I got to think that young people must be really starting to look at it as options, right? So price of gas right now, I don’t know what it’s like where you are in Chicago Chip, but man, it was over $2 a liter when I checked here yesterday.
Chip Miceli: We’re over $5 a gallon right now. I believe we’ll be at six before the end of the year.
0:12:12.8 West McDonald: Like petroleum, I know this is a whole other interview, a whole other conversation, right? But the more that price parity between gasoline and electricity starts to come together, electricity is just so much simpler, right?
0:12:25.2 West McDonald: Like, you know.
Chip Miceli: And cleaner. What I always am looking for is where my reoccurring revenue. I built a company on reoccurring revenue. And so as I see one area, a road, I need another area to pick it up. And so that’s why we look at things. I had a conversation with someone a couple months ago about reoccurring revenue because I do own a supply company that sells office supplies in Indiana. And we’re probably the biggest office supply dealer in Northern Indiana. And he said, well, how do you think that’s reoccurring revenue? I said, because they buy it every month. Yeah. You know, we have contracts with people that every month they get a certain amount of paper or a certain amount of supplies that they use every month. I says, well, we have people that we don’t have a contract with, but they buy the same amount of product every month. I said, so that is reoccurring revenue. I learned through the pandemic, I had to make a deal with Lysol. They were making package of wipes and they were afraid to bring them into the United States unless they had commitments from dealers like us to sell so many of them.
0:13:34.8 Chip Miceli: So I had to commit to a couple thousand of these every month. Well, my purchasing team said I was nuts because I had to commit for 14 months and that I would have so much extra because as the pandemic winds down, people aren’t going to need this product anymore. So I went to my sales team and put a contract together and I says, here’s what you’re doing. I want a 12 month commitment. So every month and to be in the month, everybody’s going to get this box of wipes, a case of wipes. I think there was six in a case and we sold out. And so because of that, we did very well through the pandemic and months afterwards. So those are reoccurring revenues that people don’t really think about. Right now, if you had a deal with the organization that sells copy paper, like international paper, for an example, if you don’t have a relationship with them, you can’t start selling copy paper today because that is another product that is hard to get. I have a commitment from the organization that I get so many truckloads a month and then they want to say, well, we don’t want to send you one this month.
0:14:40.6 Chip Miceli: No, we have a deal. So go tell somebody else that we have a contract. So there’s a lot of reoccurring revenues out there that are weird. What, you know, they’re ones that keep money coming in.
0:14:54.9 West McDonald: You know, I think it’s the subscription everything world that we live in. Right. And I think if you put your mind to it, I think you can pretty much sell anything. Like you said, wipes, you know, under some kind of recurring revenue plan. Right. When I think of, I always use this example, but in the old days when Blockbuster was king, right. When you go rent your videos and your DVDs and when Netflix first came out, they didn’t have their plan perfect at the time. I don’t know if you remember that, but what they did was, you know, you would sign up for a package. You’d either have like three DVDs or five DVDs a month. Right. And they would, they would mail you these DVDs and you were always allowed to have five. So if you, you know, sent them three back, then you could get three new ones, you know, so it was a subscription plan, right? Like was that recurring revenue and Blockbuster thought they were crazy, you know, on that, on that model. And then look where the whole world has gone today for any kind of entertainment consumption. Right. I have subscriptions to Netflix, Disney plus, CBS, all access.
0:16:03.5 West McDonald: What other ones do I have? Crave TV. Yeah. I’m going to say in Canada, we have to buy that as a Crave TV. I don’t know why, but yeah, HBO max, right? So that almost anything, you know, can be, you know, sold on a recurring revenue model. Right. You mentioned one other thing there, which is really important is that even for you as a, as a business owner, having that contract for paper, for example, where you have that commitment is actually beneficial. Right. And I think in this economy, when things are, we were talking about, you know, my wife is a retailer earlier, right. That in this economy that there’s no guarantee that we’re going to get those things. Right. So when you have those contracts in place with people, at least, you know, that your piece of whatever you’re looking for is, is there right.
0:16:49.8 Chip Miceli: Yeah. Well, when you sign a contract, you hope that they’re going to have it. Now, if they told me they closed the factory for six months, I would have to sit there and suffer like everybody else. But when it opens back up, you expect them to keep their contract. One of the things that bugged me about our industry is that we treat some of our vendors like sec, like jerks. Yeah. Lack of a better word. Now, everything I look at as a partnership, whether you’re my leasing company, it’s got to be a partnership. You have to make money. I have to make money. I get that, you know, you know, with copiers, my vendor for copiers, they have to make money. I get it. When, when Sharp came to me many months ago and we had a meeting cause I’m on their advisory board and, and, and Mike said, I’m going to have to raise our prices and we’re going to raise it this percentage. And I said to him, is that enough? He said, what do you mean? I says, I don’t want you to come back to me in three months or six months and raise it again.
0:17:48.1 Chip Miceli: See, I also sell office furniture. And in the last six months, I’ve had eight raises. Well, and they come in with a 4%, a 6%. Two weeks later, a 6%. We just had another increase the other day because steel continues to escalate in price. So if there’s any steel in the partitions, which they all have steel in them, the price continues to go up. So I told him that if you’re going to raise the price, raise it one time for the year, don’t come back to us every other month because it’s a lot of work for our industry to deal with that. We have to go in and update our, you know, update our ERPs or our ERPs or even our CRMs, you have to go and update all that. We don’t want to do it every month. Give us one increase and be done with it. I said, don’t come back and tell. And he said, no, our increase will be good for a year. That’s what I’m working on, but I don’t see where he’s going to be able to do that right now. I think he’s going to have to increase it again because I see gas, as you just said, is that is up there with the factory being closed for six weeks, that’s going to cost more.
0:18:54.6 Chip Miceli: Everything’s costing more money. It’s just like, I don’t know what people are thinking here in the United States. We don’t believe we’re having inflation. We have inflation. We just are putting up with it.
0:19:05.9 West McDonald: Yeah. And I think it’s important what you say about making sure that whatever price increases that they do, that it’s enough. And, and clearly that’s a business owner thinking, right? It’s like, look, don’t keep coming back to me and nickel and diming me, you know, just get it out of the way upfront because not just for administration, but then you have to go to your customers as well with those increases, right? And you don’t want to be doing that every, you know, six weeks.
0:19:29.3 Chip Miceli: Yeah. We do that in office supplies. We have, we used to sell a copy paper for $30 a carton. We’re up to 55. Wow. And that’s less than a year increases years ago. It used to be like 25 cents. Now it’s a buck. It’s two bucks. It’s, it’s not, it’s not. And it, and it happens almost it’s been happening every month. We just had another $2 increase let this beginning of this month. So that kind of stuff, I would rather them come and say, no, my people that work for me, I said, well, paper is going to be at $50 a case by the middle of the year. And I told them that last year, cause I saw it escalating and they said, no, it’s never going to be $50. And now it’s $55. And I would imagine it’s going to be $60 by the end of the year because that uses a lot of petroleum to make paper. Not only did they have to make the trees in the pulp, but then they got to bleach it to make it white. I probably would be less expensive if we had, if we kept it brown.
0:20:34.8 Chip Miceli: There is some paper coming out of Brazil that is made out of sugar cane that is brown. And they’re trying to see if that would be a pliable product here in the United States.
0:20:43.6 West McDonald: Yeah. I think for information sharing, right. Like why does it have to be white? I mean, I know that obviously with, with color and stuff, that’s for presentations that you’d want to, you know, a better, better mix. But I think that the environmental equation, especially when it’s married to you know, cost savings as well, I think, you know, that’s, what’s really going to drive it. Right. And I think petroleum, like you said, it’s in everything right. And at over $5 a gallon, when you’re burning that stuff, it’s like, it’s like burning money because that petroleum makes goods as well. Right. Like there’s two ways to use it. One is to burn it and the other is to make things. And I got to start thinking that the making things is certainly going to start picking up steam with all these shortages.
0:21:28.1 Chip Miceli: Yeah. You got to figure everything we, especially in our industry, even toner is made it with petroleum. And so that the toner has to go up in price, you know, unless they’re, unless the, the vendor is going to cut his percentage of GP in it. It’s going to have to escalate. I haven’t seen a lot of it as of late, but I would believe we’re going to see it down the road. Yeah, we are in interesting times and it’s going to be, unfortunately, you know, I’m a pro dealer advocate. I’d like dealers to be around for a long, long time because years ago we saw these big companies buy us all out. And, but back then we were younger and we could start over again in five years if we wanted to. And a lot of people did that, but now we’re all getting older and we’re not going to start over if we sell out. So, you know, and I’m afraid that our dealer channel is going to disappear if we don’t have kids that are kind of coming into business or are younger people that are going to take this over. Cause I think it’s a fun business.
0:22:29.7 Chip Miceli: I mean, if it wasn’t for this industry, I probably would, I’ve seen probably been all around the world. And I’ve seen so many things that I’ve never had to, never would have had if I became just a businessman of a smaller type business.
0:22:46.2 West McDonald: Yeah. The office equipment channel for me has been the same experience. And it’s funny Chip because when I’m speaking with people that aren’t in the space, you know, and they say, what do you do for a living? And I talk about the office equipment channel, their eyes kind of glaze over cause they don’t know what that means. Right. It’s like printers and copiers. Geez, that sounds so boring. And I’m like, no, it’s like, it’s so the opposite. I’m glad that, you know, people sometimes don’t see that because then it means that, you know, obviously less competition, maybe it’s like, there isn’t enough. But I also tell people, you know, to your point that this is a very respectful industry as well. Right. So the, like you said, the more pro dealers that there are, the better, right. Keeping the channel, you know, healthy. I think that we’re in a, in a, in a much more respectful channel than some of the other ones that I’ve, that I’ve witnessed. Right. So you’re diversifying, you know, as you go to other conferences, my wife has a, what do you call it? Like a business improvement association that she belongs to as a retailer and man, it can get mean sometimes.
0:23:46.8 West McDonald: Right. But anything I’ve done with the BTA, I guess, which would be a similar kind of thing, right. The business technology association or the MPSA, we have competitors that are working on chairs together that are helping in communities together. Right. And yeah, we just don’t see that in a lot of other channels. So I, I think you’re right for anyone out there watching, you know, young people that are looking to get into a cool space, it is diversifying and is a ton of fun. So yeah, I really appreciate you bringing that up, Chip.
0:24:17.0 Chip Miceli: Yeah. And you’ll learn something new every day. I mean, and, and I think that’s, what’s cool about it. I, you know, I’m a sort of like a technology junkie. So I like to see what the new next shiny thing’s going to be. And if I can provide it to my clients that’s what I want to do.
0:24:35.7 West McDonald: And you know, for anyone that’s watching today, to be aware of that, that we’ve got to be constantly looking for whatever that next, you know, technology tip is, right.
Chip Miceli: If you weren’t a visionary before you’re in trouble, you have to be one today. You have to see what the future is going to bring to make you successful.
West McDonald: Yes. And I think especially with the rate of change that’s, that’s happening in the world, right. And you’ve been in the space for over 50 years. You’ve seen a lot of different things and, and you’re flexing and changing your business. It’s, it’s incredible to watch that, right. Because you’ve seen it all. And yet you continue to move forward and to diversify and, and challenge the business, right.
Chip Miceli: Just in the charging stations, you know, our local government of the state of Illinois is paying people to put these in like solar panels, anything that is, you know, new technology that’s going to help the environment is probably products we should look at because that’s where the world is going. The younger generation wants a cleaner, safer world, and they’re not going to have it with pollution running the way it is today.
0:25:39.6 Chip Miceli: So you’re going to see things like electric cars and solar panels and all that kind of stuff more popular than they have been in the past.
0:25:48.6 West McDonald: I love it. And certainly, as you mentioned, for the next generation, I think it’s pretty exciting to be able to, you know, be part of that, that change, and especially when it just makes good business sense as well, right. So do the right thing. Make some money while we’re at it, how on earth do you lose? Well, Chip, I cannot thank you enough for taking the time to do the interview with us today. And for everyone out there, I know that I will be in Chicago at the next BTA meeting. Chip, maybe we’ll see you there in June and hopefully we’ll see you there.
0:26:22.2 Chip Miceli: I will be there. I’m speaking. I have a presentation on how to find and retain employees.
West McDonald: Oh, well, that’s great.
0:26:31.5 West McDonald: So everyone watching, make sure that you look for Chip speaking on that because he’s got a lot of folks that have worked for them over the years and a lot of experience there. So I’m definitely going to sign up for that myself. And for everyone else that is tuned in today, either watching us on TigerTube or listening to us on Tigerpaw Radio, thank you very much. We gear this learning towards helping you to run a better business and to make more money. And until next time, keep learning.
Chip Miceli: See you all. Thank you.