John Shaw is the founder and current General Manager of maxill inc. There are no “C” titles at maxill. John grew up as a kid around farming, dairy, retailing and packaged ice cream operations that his senior family members owned at that time. John accredits this environment of being around and selling packaged consumer goods ( ice cream and dairy products ) via the family’s own retailer network ( Shaw’s Dairy Stores ) since birth, as a natural path to an interest in packaged consumer goods, design, market pricing, satisfaction and supply chain.
VIDEO - DUwHF #1130 - John Shaw
AUDIO - DUwHF #1130 - John Shaw
People always need food and we sold food. John completed high school in 1981 with a Grade 12 and subsequent classes and programs at Hard Knocks University from which he has not yet received his “know it all diploma” despite it being almost 40 years later. John’s employment history is newspaper boy, truck driver, toothbrush sales person and then being his own guy. Being a newspaper boy taught the importance of customer service, cash flow, collections and being on time with no excuses. No matter the weather, the newspaper had better be there on time. John, the Sparta newspaper baron upsold his customers with Greeting cards, newspaper subscriptions. John in time was also able to create a newspaper monopoly in the village of 500 by delivering the morning Free Press and the afternoon Times Journal. John’s first sales position post family employment as a truck driver for the dairy business was a 1099 sales person for the M+C Schiffer Company of Germany selling toothbrushes. Mainly Private label toothbrushes for several retail chains in the early 1980’s. A sales and experience gained hold, the current day maxill inc. was established in 1987 on just 2 items. The 330 and 440 toothbrushes which are still a part of the product lineup today. Building and molding maxill to where it is today exposed John to dealing with near ( but not ) insolvency, penny stock promoters, banks, venture capitalists, angels, private equity, legals, patents, trademarks, employment, foreign ownership, exporting, importing, manufacturing and a list of business skills and acumen too many to list here. John’s full-time job is overseeing privately owned maxill which has revenue in the mid to high 8 digits, has over 150+ employees, operates directly in 3 countries and exports to dozens more. The dental industry, to which John sort of, by rear entrance accident method entered into, has been very good to John and seems impression proof. maxill experiences double digit annual growth and by far, the best is yet to come. John’s favorite lines about maxill and dental are; I have not worked a single day in over 30 years. It does well in good times and does even better during hard times.
Howard: Hey it's a huge honor to be podcasting today John Shaw who's the founder and current general manager of Maxill Inc. Obviously Maxill comes from maxilla like world of maxill of facial surgery. Jon grew up as a kid around farming dairy retailing packages ice-cream operations at a senior family members owned at the time. He credits the environment of being around and selling packaged consumer goods like ice cream and dairy products via the families owned retailer Network, Sean's dairy store since birth. As a natural path to an interested in, interest in packaged consumer goods, design, market pricing, satisfaction supply chain, people always need food and we sold food. John completed his high school in 1981 with a grade 12 and subsequent classes and programs at a Hard Knox University from which he has not yet received is know-it-all diploma despite it being almost 40 years later. John's employment history is newspaper boy, truck driver, toothbrush salesperson and then being his own guy. Being a newspaper boy taught the importance of customer service, cash flow, collections and being on time with no excuses. No matter the weather the newspaper had better be there on time. John the Spartan newspaper Baron up sold his customers with greeting cards and newspaper subscriptions. John in time was able to create a newspaper monopoly in the village of 500 by delivering the morning Free Press and afternoon times journal. John's first sales position post family employment as a truck driver for the dairy business was a 1099 salesperson for the MC shipper company of Germany selling toothbrushes, mainly private label toothbrushes for several retail chains in the early 80s. A sales and experience gained hold the current day Maxill Inc. was established in 87, that's the year I graduated middle school, on just two items the 330 and 440 toothbrushes which are still a big part of the product line of today. Building and molding Maxill awareness, exposed John to dealing with near but not yet insolvency, petty stock promoters, banks, venture capitalists, angels, private equity, legal patents, trademarks, employment foreign ownership, exporting, importing, manufacturing and list of business skills and acumen too many to list here. John's full-time job is overseeing privately-owned Maxill, which has revenue in the mid to high eight digits. Has over one hundred and fifty employees, operates directly in three countries and exports of dozens more. The dental industry to which John sorta by rear entrance accidental method entered into has been very good to John and seems impression proof. Maxill experiences double-digit animal growth and by far the best is yet to come. John the reason I called you to be on the show, you did not call me this isn't a commercial for some guy that makes toothbrushes trying to talk to him my homies a day when I was little my dad our favorite vacations were six flags over six flags that's in Texas, do they have those in Canada Six Flags?
John: Yep well we have Canada's Wonderland north of toronto but that's along those lines
Howard: Yeah and the Six Flags for the six sovereign state flags that flew over Texas and their time from Mexico to Spain to the Confederate South America and we would like to go to those amusement parks and then we would like and then we would go to a manufacturer, we watch Budweiser make beer in st. Louis or went to Detroit and watched our family station wagon being made and bought it off the end and he just loved making stuff and so I did that with my four boys when they were young. My boys have seen, I don't know probably 50 different dental companies where stuff comes in a one end like it an a-deck, we're on one end you just get a bunch of leather and plastic and metal beads and then a football field down the road a dental chair comes out and I always thought that you guys kind of understand the business of Dentistry better than a dentist. Dentist's are so busy learning how to do root canals fillings and crowns but they don't really get to see the macro and a guy like you sitting at 30,000 feet selling dental supplies from Hong Kong to Canada to the United States, you guys just really got the business the dentistry in your back pocket you agree or disagree?
John: I would agree with that on the aspect of manufacturing and distributing the product I think the dentists obviously are much more hands-on in how the products are properly applied to the dentist's. None of no manufacturer I think can get inside and be the wet finger dentist and do what the dentist can do but when it comes to the product sure we've got a pretty good scope on how it's made in the supply chain and the R&D; behind it so I guess our job in the industry is to get it to the doctor. I know myself a lot of the products that we sell I could not do what the dentist does with it but in terms of like Maxill and I'm sure the other companies on the supply side, you know we're very good at the R&D; the manufacturing and cost-effectively delivering it to the office.
Howard: So what does Maxill do? What is your revenue, I mean McDonald's makes a hamburger, fry and coke, what do you make and do?
John: Right well just as you touch with on our history I started out just selling product and did very well when the Deutschmark was like 15 cents but what Maxill has morphed into was and that actually came a lot from our early investors. I'll call it the warm angel round back in the early 90s, angels were a lot of dentists there was probably eight of them in the London Ontario area and you know we just sold toothbrushes and some floss at the time. So you know they put in a pile of dough then although you know dentists are pretty smarty guys a lot of them are entrepreneurs so they said you know John you should be selling this you should be looking at that you should be adding that. So the angel round of investors in Maxill lasted about seven years and we maybe went from about eight products up to about 70 products in that time. To get back to your question on what Maxill does is we're a manufacturer that actually tried to go the dealer road Howard and I remember trying to get the dealers interested in carrying my product and they didn't want to have anything to do with us, they were actually me I wasn't an us back then it was me. So I'm not a quitter and I know our products good and I know the price is good, I've got warm angel investors that are dentists you know. They were actually setting up some meetings with me. Well we all remember Health CO. okay before
Howard: That's what I love about this show because I'm 56 you're what 55?
John: 55 yeah
Howard: and almost all of our listeners are 30 and under so I think the reason that shows the big smash hit is because they're in dental school that just come out. So they're all 30 under a quarter of are in dental school the rest are 30 and under. Leave your name or age in the comments after the YouTube video or email me Howard@dentaltown.com but they don't know what Health co. is, they're 30 years old, tell them what Health co. is.
John: Well health co was the biggest in Canada and I would equate them to, I'm not gonna promote my competitors shine but they were the biggest in Canada health co. dominated health co. as successful, health co. was everywhere and you can help me with this Howard because I was trying to get into these avenues and then one day they were gone. So maybe you can help me with, I just know health co. headquarters was in Montreal and I believe that's where Patterson because when Health Co went down that's when Paterson exploded and I don't think that Patterson was in Canada before health Co. Can you help me on what happened to health Co. I just knew I around, they were big.
Howard: I just knew, around they were based out of Texas and when I got out in 87 their Phoenix branch is what did my dental office I did a lease to own because my dad was hard school or he believed if he gave you money you'd do drugs and chase women so I was a self-made man at $87,000 in students loans. So I got into a dental office with no money down as I found my demographics with a Coldwell Banker Dave Cheatham and I picked Ahwatukee because it had the lowest ratio of dentists per people, only had a dentist for every 6000 and I went in to the landlord and he wanted at least 15 dollars a square foot for a three-year lease and I said no I'll go $20 a square foot for a five-year lease and that extra money you do my build-out and then I went to health co. and ordered all my equipment. I think it's about a hundred thousand dollars they said okay we need a hundred thousand I said well congratulations I don't have a dime, so I went a five-year lease to own so the so health co. gave me all that stuff, so I got into a dental office with no money down in 1987 and then I did that about four other times in Phoenix and sold it to other dentists I used to call it a turnkey operation, but health co. went under right when Pete Frechette was at Patterson and Pete Frechette initiated a rollup where he went and got a big line of money and then he started buying up all these like health co floundering and he started doing the roll up next thing you know Shine started doing it and then they say no Patterson had a quarter of the dental supply business and shine had a quarter of the dental supply business but you and I are so damn old that we still dealt with health co. So how many diabetes medications are you on?
John: Me, none, did health co actually file? I think they did actually go bankrupt here.
Howard: I thought they went bankrupt and Pete Frechette rolled them up into Patterson. That's sort of how I (inaudible 10:02)
John: Okay a lot of people especially in the United States and I spend half my time in Ohio they don't realize that target came up here this is getting off a dentistry but target actually filed for liquidation in Canada and they burned a lot of people for a lot, but let's go back...
Howard: Target expanded into Canada thinking this is just gonna be like another California you're the same size Canada in California both have the same number of people, same number of dentists, same GDP and they thought they were just gonna roll in there and it'd just be Canada laying sideways up to the north and it did not work out and they put up a hundred stores and closed them all down, but kudos to them for knowing that an asset is dying and destroying capital and to make a bold decision. In fact Warren Buffett always says that buying a stock is less disciplined behavior than knowing when to sell a stock. He thinks knowing when to sell a stock takes more intelligence than when to buy a stock, but anyways so all these lessons I want to come back to because you've seen the corporate change too that these guys these guys today, they see (inaudible 11:08)
John: I'll go back to your question on what is it that Maxill does, so we're starting out in early years you know again the dentists are just investors and it wasn't a lot. I think what was there seven or eight of them some of them put in 50 grand a couple of them put in 120 grand, so we may be raised up about 600 grand at the time and being on the dentist side of the business they're saying hey you should be doing business with ash temple you should be doing with business with health co and some of the others, so I tried my very best to do business with these guys they just didn't want to have anything to do with to do with me and I remember very vividly I did get an opportunity with a company called ash temple and again a lot of your younger viewers well who's ash temple they might remember that that was a precursor shine really got established in Canada by buying Ash Temple but nonetheless I remember they're located in the Don Mills area Toronto. I personally went down and they gave me the opportunity to go and sell with a salesperson. So I remember I spent two days with an Ash Temple rep, I sold about nine orders okay, I was selling toothbrushes for 32 cents apiece, then I think I was selling them to Ash Temple for 24 cent,s so that Ash Temple made their money the sales guy did nothing. I did all the selling that I did all the pitching and I did all the explaining and after my two days and the big smoke which we call Toronto it's John Shaw's time to go back to little st. Thomas and I remember being in my warehouse Howard, and I'm taping up these boxes and I'm appreciative the business I'm appreciative that Ash Temple gave me the opportunity but it was right then and there as I'm taping these boxes and the tape started going slower and slower as I started thinking more and more about I did this they did nothing what's wrong with this picture and it was from that day forward I didn't even bother to go the dealer route anymore and I even hear stories today about the dealer Street manufacturer. I started on a direct business model you know the dentists who were or the investors at the time, some of them said you're suicide you're not gonna last he didn't pull their money, they just said you know, when when my time it's a three-year term on my investment comes up I think I'll be gone. Most of the dentist said hey if you think that works go for it, you know they really didn't care because I'm the guy in the trenches. so ever since that time we've had and we did all the shows we have been directly engaged with the dentist. now we got rid of the dentist or they cashed out you know I think it was six or seven years later but Maxill ever since that time and with an experience in injection molding and my brother's the head chemist at the company. He came and joined me in 1998 we really took off because we are direct. We don't go through dealers, we've never gone through dealers and the business has just exploded. So you want to boil Maxill down right now, we're R&D; if you take a look at our products we've designed a lot of them. We make most of our own products ourselves in fact they fill disinfectants about a hundred feet from where you and I are talking today and we deliver that rate to the dental office is in a very slim down supply chain. Our prices are very good and our biggest problem right now is containing growth and we're very excited about the future. So that's where Maxill and that's how it essentially got started by trying to go the dealer route wasn't gonna work so rather than build a dealer rapport and then abandon it we just started on on the direct so that that's where Maxill is today.
Howard: Okay so you have a hundred and fifty employees
Howard: And what kind of revenue you got eight digits what does that mean?
John: That would be between 50 and 80 million
Howard: 50 and 80 million. I'm always getting dentists and hygienists emailing me saying I got an invention for a dental product, can they call you? Do you listen to them?
John: Sure, absolutely, we get a lot of people that approach us all the time some of the items are good some of the items are crazy and you know we'll be very honest and this is a good idea or you know
Howard: They're always afraid that you're gonna see their idea and then never call them back and make it yourself and sell it
John: No, there's an easy way around that Howard, have them go to an attorney okay have them do up a non-disclosure agreement, we get them all the time in fact I won't even open an envelope unless I have a non-disclosure and you know as well as I do if you ever try to rip off anybody today you're gonna get sued and nobody needs that and I don't need the problem but anybody that has a good idea that genuinely believes it has good commercial ability. First of all look into a patent okay, I always encourage that but absolutely have a non-disclosure agreement that you provide to Maxill or anybody else have them sign off on it to protect yourself and I'll put myself in the shoes of some of your listeners that do have a good idea, if a company genuinely rips them off and it and you know they can track it through mail. Make sure when they mail something that they do the tracking number on it, make sure they keep all their emails. No one likes patent litigation I've been involved in a couple of them I've won them you know because I simply done nothing wrong I've never ripped off anybody's idea any listeners of year that have got a good idea they shouldn't be afraid of having to get ripped off because you know they can cover their tracks based on the advice I just give them and they'll be fine.
Howard: Okay now if you were on Shark Tank and my favorite shark is the bald beauty from Canada Mr. wonderful. Would Mr. wonderful want that dentist to, or hygienist to patent it and prototype it before they got a non-disclosure and showed it to you or if it's just a rough idea can they go to you with a non-disclosure even though they don't have the patent or a prototype?
John: Well actually that's a very good question, usually all this is coming from hygienists like you say dentists that are actually doing it. The advent today of 3d printing gives them the ability to probably try it and you know 3d printing now is so cheap Howard, they can actually build the product try it in their office. Like you know somebody approached me about a backflow valve that was back in the summer and we're still talking to him. There's a few of them on the market so I'm not telling you anything that's a big secret but they were they actually 3d printed, it failed, so they made some modifications and I expect probably next next month they're going to be successful in finally developing that product and I hope to do a deal with them. That's another topic of conversation about how big various products are in the market but that's a good example that they actually try it in the office. So I definitely recommend them do 3d printing and try it out.
Howard: I wanna go back to your business on the business model because you know dentist, I can't believe I'm still always pitch multi-level marketing tales from dentists you know because I have the big footprint. I got a lot of smaller so I think they'll hit the money wagon but the reason telemarketing doesn't work is because you have the product you know, the final customer well if you as you design, five Mittleman in the middle that are all taking a cut there's no way you can spiritually deliver a good that's faster, easier, higher quality, lower in price and more small and in dentistry most people a quarter buy from Patterson America quarter buy from shine a quarter buy from Benko and then a quarter buys from everybody else. What is their average markup? I mean don't the average dealers mark things up forty percent? I mean how can a dentist get the lowest bill buying indirect... isn't it structurally impossible and why does like Sirona and Iboclarin 3m not sell directly on Amazon and what is your view of the macroeconomics because we're the changing world I mean with Amazon.
Howard: So I threw twenty questions that you know, hopefully one of those is good enough to make you rant a little bit.
John: No I'll talk to you I love talking about this and keep them coming to me. Here's the whole thing that's going on because when I did my first Ontario Dental Association show back in 1988 was my for show, a lot of the guys I met at that show Believe It or Not from other competitors that are still around today, I still know today and I met them what is that almost 30 40 years ago they're trapped and a lot of the manufacturers have established themselves with dealers and I'm not saying that that's a bad business model but here's a big problem with it. Let's say you're doing let's say you're doing let's pick a number 25 million dollars a year and you're selling to shine, Patterson, Banco and all the other guys and you're out there you know that's a good number while these guys are making pretty good money. so for them to even think about going direct they, if they ever start down that path they're gonna burn all their bridges behind them and trust me when I tell you a few of those guys have come to me and they said you know what John you know I've known you a long time that's a smart business model you got you really hit it I can't do it I just it blow the company up it would trash our relationships but man I wish I wish we would have started about that in the beginning okay so that's one answer is just one of your questions here's another thing is you got to be very careful about which product and company models you take direct to market because if you don't have the breath and maybe I'm making a mistake and telling you all this cuz everyone's going hey that's a pretty good idea, if you don't have the product breath you're gonna starve. Now when I started you know what did I have I had like 8 or 12 products that I was able to take to market, most of them were toothbrushes and floss. The next big product that we took direct to market and I remember this and a lot of your listeners are gonna go say what's he talking about I remember when vinyl gloves first started coming out because of allergies and stuff. I remember when latex was a hundred percent of the market you remember that and then vinyl started coming on that took off like wildfire around here in like 1991, 93, vinyl gloves took right off. So vinyl gloves were our next thing because you know nitrile I think even it didn't come around to like 1996 it was thirty bucks a box but anybody that wants to do our business model you got to make sure you gotta have the product breath and I don't know how many millions of dollars we spent over the years trying to get even just a fraction of what we got now. so you got the problem of burning established relationships burning existing supply channels, do I have enough to go direct. Okay so here's another thing Maxill's a big orchestra and it's broken into a lot of different things we have people that work just in R&D; we have people that work just a manufacturing, we have people working just on procurement, we have people working just on purchasing. One of the biggest elements of Maxill is our sales organization okay, we've got over 60 sales people in Canada we've got let me just see now we added some we got seventeen sales people in the Ohio and Western PA which is our spanning out. So our sales organization is an entity on its own and it's probably the most important part of our organization. So when you put all these big things together it's a lot and trust me it's a lot to run a direct to dental business model because you're a handling at all. I guess we're doing very well at it because we started at it right from the grassroots and as you know the old saying was it's easier to bend the tree when it's young we just don't know life any different. We never had any dental dealer relationship so we just grow into it and this is our world, this is our space, we got people that run the various aspects of the business so it's just life normal to us. Could anybody else do it, it would be tough I know a lot of people want to try it but is anybody going to do it... I don't know. I just do not know
Howard: So you don't have that 40 percent markup by going through a middleman, a dealer. Do you think you're getting your products to the dentist and hygienist lower price then if they went through a middleman?
John: Oh yes right you asked me a question, I forgot okay I apologize, I think I looked at shines last quarterly report I think shines working on like a 53% gross. I can't imagine Patterson who tends to be higher priced in the market I think there probably work on an even a higher grading just pull up any of their public reports and I think their gross margin is very very healthy. I know Maxill's gross margin Ito is north of 50% but again we're a manufacturer and being the manufacturer and being flatlined we're able to easily like our everyday low pricing is like fifteen percent less than our competitors everyday low pricing and then we deal from there like we're hyper hyper aggressive in the marketplace, no one will beat us on comparable products and that comes from controlling it from A to Z.
Howard: Now your (inaudible 24:53)
John: Gross margin, we're north of 50 well north of 50. Patterson and shine again you check the reports I think they're well north of 80 and I think most dealers except maybe the smaller dealers that don't have the volume maybe they're 45 or 50 and they also got a discount but they're discounting on exactly the same stuff that shine, patterson and pearson and all those guys are selling so that's why I know some of the smaller dealers have a harder time.
Howard: So what are competitive dental companies that sell direct, that don't go through there because the way I see the market I think about 75% of all the supplies are moving through middleman dealers and $0.25 going direct, I think of Maxill, ultra bent. Can you name others that sell direct?
John: I remember sun star used to sell direct, my tea leaves are telling me from the bushes a Sun star now is going through a lot of dealers. Colgate used to be directing a lot of stuff I know that they I think they might have an exclusive at shine now. See some people have abandoned it but again they have very limited scope in the market. ultra dent yes and...
Howard: What about direct overlay?
John: Its few Howard, its few, like I know there's that there's some glove companies but again their gloves only they're selling direct but when it comes to like the main freight and never expanding like I'd like to think Maxill the universe, we got a solid product pipe happening all the time. Again there's people dedicated to the company new like every quarter, new product every quarter. I don't think we have anybody right along our business line. Ultradent is a fantastic company and I know their margins because I just know are just astronomical they're phenomenal organization but I don't see them expanding a lot but you know so they specialize they're very good at what they do but you know Maxill's just expanding it out and I don't, I can't think of anybody that's a direct overlay of us.
Howard: Are you friends with (inaudible 26:53) Fisher of Untradent?
John: No I'm not
Howard: He's just amazing
John: How I know Ultradent is I believe they ended up there was a doctor in Toronto who came up with this clear matrix band back in the early 90s and he took it all over Bay Street trying to get financed and he actually did get financed by a guy at Lawrence and company and Jack Lawrence finances doctor and a bunch of stuff happened, I get you know I don't a bunch of stuff happened, it didn't quite make it actually it was a penny stock for a while here in Canada and I believe ultra dent ended up with that now is that product still on the market... it was quite a thing at the time but that's how I know about Untradent and obviously they're a pretty good player in this business so I touch on their website every so often but no I don't I don't know anybody in the brass there.
Howard: So your line is infection control, gloves, protection, x-ray, procedural, ultrasonic scalers, instruments, disposables, oral care, toothbrushes ,Ipana, practice, you know you have a lot of stuff. What are your, what is your or the 80/20 they usually say 20% of your products are 80% of your volume is that do you find that true?
John: Oh yeah absolutely maxill is well known for infection control, we've got a great line of products that we make entirely ourselves an infection control. Very price competitive big line of gloves which is the number one disposable spend as you know in a dental office and our line of disposable is as massive end-to-end and oral care. So I guess if you really want to boil it out the 80/20 rule is infection control, oral care, gloves and disposables and we sell a lot of the other stuff but those are the heart of the company for sure.
Howard: So is gloves the major the major bill and supplies?
John: From what I understand gloves are the number one spend in a throwaway disposable in an office. That's their number one thing, infection control it would be probably be number two but then where do you saw off infection control, you're gonna saw it off at wipes you're gonna saw it off the sanitize you're gonna saw it off in the sterilization, if you maybe if you rule all your sterilization and it might be close but gloves, gloves are definitely the big ticket in the dental office for sure.
Howard: So what do you think, you know you hear everything where dental Supplies should be between four and six percent, you know what do you think dental supply should be for a dental office and how do you think, for one of my homies listening right now and says you know I got a bunch of PPO's. I have a high volume low margin practice I'm on all these insurance plans, how could I lower my supply bill what would you tell them because they hear things like maybe I should join a buyer's group or you know you hear a lot of speakers, you know put together a buyer's group is that, what would you recommend it's somebody listening wants to lower their supplies?
John: What I'm what I'm gonna tell you is actually kind of comical because it comes in two sales and this is gonna exactly relate over to a dentist, as we're training sales people and a lot of them come from the dental industry, always ask for the order. So when they pitch in office you know don't forget to ask for the order. What amazes me and doctors try this and it's guaranteed to work just remember you heard it from John Shaw first. Ask for the discounts! I know that there's a lot of relationships out there where the doctors are the buddies they golf they may travel and there's nothing wrong with that. Maxill goes up against established relationships all the time and that you know we do have some barriers that's one but we sell against it very effective and very easily my advice Howard to your listeners is ask for the discount, just because you're buddy with sally-ann or on the sales rep you gotta ask you got a compare because how Maxill is entering the US market very effectively is as people say you know we've been dealing with Sally Anne or John forever we don't need a new supplier. You don't think we hear that every day, this is how we solve that and it's very effective and it works and it actually works more for the dental office than it does Maxill is listen, we understand that you have a relationship with Sally Anne and John. This is Maxill you know you never heard of Hyundai cars before you never heard a samsung, ok, you never heard of Toshiba before but now you do that's the same with Maxill. So we're very well known in Canada we're getting to be very well known in Indiana, Ohio and PA and we're gonna spiral out but this is what the doctors are gonna do is with that relationship just give us a little bit of business but very important for it is to leave our product in the hall because the next time Sally Anne and John are in for one of the big dealers are gonna go oh, what do these guys do in here, hey did you see this catalog take a look at. We encourage dentists to show our catalog to their relationship guy and say listen, I've known you for many years you're a beautiful person you're great you know how competitive it is out there. You know I need some savings, you got to come and match and I'll guarantee you Howard, I'll guarantee it just as sure as I'm sitting here they're gonna drop dollars for that doctor right then and there but the doctor has got to ask for it and they'll get it and there's no shame in asking for it. A guy named lenny one of the one angels, okay he's from Exeter okay and Lenny's retired now. I remember one of the investor meetings he was brought in to Maxill from another doctor and when he told me he goes you know what he says, I've used savings you know because he would always be asking for the savings and he was in very early in Maxill, so much product but he goes I appreciate the savings because he says I view savings like free procedures you know what what do you mean by free procedures and he goes he says John if I overspend two hundred three hundred dollars a day or whatever it doesn't matter fifty dollars a day if I overpay for basically the same product from one company versus another it's like doing a cleaning a day or his analogy was 300 so it was like doing over three free cleanings a day of what you got no money because cleanings I think at the time or 80 bucks so 300 bucks overspend that's almost four cleanings that he did for free and all he has to do was ask for the discount get your dentist to ask for the discount get a hold of a Maxill catalog or anybody you don't even need Maxill for it you know. We're a pioneer on it ask for the discount, you'll get the discount because this is a hyper-competitive business I know it's a hyper-competitive business I introduced through it through the backdoor and your doctors will get the savings and I'm not talking a little savings Howard. I'm talking a lot of these guys can save 10 20 25 grand depending how big of their factory they're running and this is money that goes right to their bottom line it can go to the health of the practice, it can go to staff bonuses. They can do a lot of money with a minimum of ten more like 20 or 25 grand would you not agree with that practice, it's bomb-proof because it works.
Howard: Well it's so tough because you know we're trying to coach dentists, we're trying to make them you know happier easier all that and it seems like the ex you know you're hardwired it is a species to get along with your tribe and then if you got a really good salesmen and you got a really extrovert staff and they're good-looking and they're bringing in doughnuts and they're saying oh my god did you watch the playoffs yesterday, can you believe the Chicago Cubs missed that field goal and then you're not discussing the price. So now you got all this dopamine about this friendly relationship and you don't realize that the closer they get to you the higher we're gonna see the price. You see it all over, like if you have a really good serious say a guy that cleans that does your yard and he does it every Monday and then there's a customer it only gets her yard done every two or three months and he needs your time on Monday and he's like oh "I've been doing Howard yard for ten years, I can screw Howard and go do this other yard" so the more friendly they are with you that the the margin goes higher and higher and higher and what I noticed and I don't know if you noticed this but it's the introvert dentists hygienists assistant that's asking, that's not doing all the friendly fuzzy stuff and looking at the catalogue and looking at the prices and you'll see them every month. You know it would be like 4% supplies maybe four and a half a high will be 5 but it's very study in the fours low fives and then you get the extrovert emotional touchy feeling and you can see their supplies go from 4 percent to 8 percent in alternating months like dude your supply costs is variating a hundred percent and all you tell me is that you love your rep and you go golfing with him, he was your godchild. I'm like okay but you're buying that relationship. There was a lawsuit a while back and it's hard to get any information but there was a I'm here in Arizona and...
John: Price fixing
Howard: Yes and there was a company
John: that's price fixing
Howard: Yeah, well talk about that and because, what was your understanding of all that?
John: Well, I know some of the CEOs at one of the the big three that was involved in that and nice guy, I get together and have coffee with him not gonna talk about it. Basically what that was and I even find it hard to believe Howard because competition in this business is so tough. I can't even fit you myself I don't care if I'm running a billion or a two billion dollar company I really can't picture myself as the head of a company having a lakeside meeting or top of a 50-story building meeting with my competition to establish pricing. first of all I wouldn't trust them second of all if it ever got out it would destroy the faith that any customers would have in you. You don't know if this is being recorded and it's going to be put on social media or put out there. It is a crime. I'm shocked that it even got there and again you and I are both having a hard time and finally think about it because I think well I know they settled I said, "what was going on?"It's settled on, it's over, it's done. They shut it down, there's no way their was ever gonna be a trial on that. Their's no way that was ever gonna see the light of day but I find that hard to believe that that even happened because I just wouldn't trust anybody and I wouldn't...
Howard: Do you think it did happen?
John: Obviously their was some genesis of it for it to get there. You know you just don't like...
Howard: Didn't they settle for like eighty million dollars
John: It was a lot yeah so (inaudible 37:46)
Howard: I mean you wouldn't pay someone eighty million dollars if you were zippidy-doo-da.I mean it's like what these people have these settlements with people and it's like Oh ten million dollars but we agreed there was no law broken it's like well then why did you get ten million dollars.
John: Well if I was served today by somebody just coming in to reception right now with a price collusion lawsuit and we're demanding a hundred million dollars really, game on. I know I'm innocent let's go okay, there's no settlement on Maxill, but going back to the established relationships is you can ask for those discounts don't forget these are billion-dollar companies, these are very large companies that at the end of the day they don't want margin down but it's a very price competitive business and they will give it. now any doctor out there I don't know I'm kind of happy with my rep here's another thing that I'll share with you and you already know this and probably a lot of your listeners do well, is dental corporations coming in we deal with a lot I'm in Canada we're getting a lot of interest in the United States why is that because it's price. So any standalone office out there are one or two doors as we call it if they're not being price aggressive on their supplies and keeping their supply costs down as this corporate dentistry gets going more and more it's going to be like the Walmart and trust me listeners and Howard when I tell you, if you're not interested in your supply cost that's all these guys are interested in because they're about driving every nickel a cost out of the business as they possibly can. Okay and they're buying their supplies probably from the same guys that you are and Maxill and the those guys are giving them the pricing and why are they giving them the pricing because they're demanding the pricing. So maybe some dentists are gonna say well you know they're big corporation, they're not going to give me that, no they're probably not gonna give you that but they're gonna give you something and like I mentioned earlier 10 20 grand and savings back that's entirely realistic if you ask for it. The doctor that's very busy and it's a very stressful occupation as you know he may be uncomfortable maybe just having that doesn't have the time but I know some a lot of practicing doctors they make it a part of their daily thing is to keep those costs in line or they've got a girl they've got a girl that there are guys that they sit there and they pay you know 15 14 16 bucks an hour and their job is to save money and I know around the St. Thomas London area is and also down around Youngstown in Warren, Ohio a few of the doctors have gone in together to pay for this girl. So there's definitely the savings if you ask and get a hold of a competitor's catalogue, maxvill catalogs. Hey just meet just meet and again 10 20 grand right on their bottom line.
Howard: Okay you keep saying catalog, so what percent of your sales comes from a dental office, a hygienist who has a physical catalogue versus they're doing it all online at Maxill.com maxilla or oral and maxillofacial surgery.
John: We get probably 10% that it's growing 10% of what we call trip over traffic, so it's just people that their price shopping and they land on Maxill.com, we rank very high on Google. So I would say it's about 10% of our online sales is from trip over traffic. The big bulk of it is once we have that discussion that shows or in office because we pay a salesperson commission on an account whether or not the office buys it online believe it or not Saturday is one of the biggest times for our website to be clicking the orders off because people got time to do it so I would say 80,90 percent is from people once they hear Maxill mehta salesperson you know buy into their religion and then the online is just a big thing of convenience so you know they go in they reorder what they've ordered and it's very convenient for them and it shows up the next day.
Howard: and who are you fulfilling it through? Is that UPS, US post office...
John: Oh it all depends, so its UPS or FedEx Ground or USP. I'd say most of our packages go by FedEx and UPS in the United States. Here we got in Canada we got so many more competition believe it or not Canada with 10% of the population and twice the landmass, our courier prices are about 1/3 of the United States it's incredible how UPS and FedEx have just done the monopoly on that.
Howard: Is Canada really twice the landmass of the United States and in Hawaii?
John: Maybe not maybe but ok I exaggerated, maybe what 1 point 2 or 3%and then 120%
Howard: The neatest thing I love about Canada is it's really like five or six different countries under one deal. I mean you can't you can't compare a French Quebec to Toronto and you can't compare Toronto to Vancouver and you can't compare any of that to the fishing towns up in Nova Scotia. I mean it really is a lot of different amazing countries just flying under one flag. I want to go back to the online, do you think Patterson, shine and Benko. What's gonna be the Amazon threat, you know because some of these big companies, like a big company could just say okay we're gonna put everything on Amazon tomorrow. I mean do you think Amazon's a threat or not really?
John: I was at the Greater New York dental meeting it was in November of 2017 and I believe it was just before that Amazon announced in dental and didn't shine didn't all the guys stock take a big hit?
John: and I Amazon had, go ahead...
Howard: Yeah you're right it did, it was a, whenever Amazon looks at a company that company's sector and Wall Street will drop five, eight, ten percent just because but Amazon had a booth at the Greater New York which is actually Thanksgiving two years in a row, I think three years for us so they're obviously looking at dental. What do you think they're seeing and what do you think they're gonna do?
John: I don't know how they're doing we have not had anybody shop us against Amazon so you know we have a price line here thing at Maxil,l so if as a sales rep or a customer needs a temporary price match or whatever they call in the priceline they get an answer like that. We don't hear of Amazon and let's be clear about what Amazon's all about. Amazon is very very efficient at supply chain, they have relationships with the post office FedEx and UPS like nobody other. I can't think of one person in the world or organization in the world that has lower shipping costs, can receive product, stock product, fulfill product and get it out the door probably better than Amazon. Why haven't we heard more about them in dentistry, because supply chain and logistics is a slice of this overall thing and part of that overall thing is relationships part of that overall thing is education, a big part of it is new innovation. Amazon can't get their hands on every product so I know that a lot of manufacturers won't put stuff on Amazon but we're sitting here January 14th you know 2019 we don't know what the future is. I do know the future is going to be much more to a more efficient supply chain definitely, is it gonna be Amazon there was rumors and I know you heard about that they were gonna be buying Patterson what happened with that I don't know would you hear about that?
Howard: Your dentistry is so funny in the 31 years I've been out there and it's got more rumors than any high school lunchroom. I mean there's just so many rumors I just think it's amusing. Another thing these young kids don't, the advantage of me being 55 and you listening at age 25 it's the fact that we're smart cuz we've seen these rodeos before, like see they see these that Aspen Dental and Heartland dental and they think it's gonna take it over they don't realize that guys as old as you and me, we saw this whole chain start a long time ago. You're up in Canada they had Triodent, I'm down here they had orthodontic centers of America and they all went bust and now today you see all these big capitalizations but you notice that they can't do an IPO on Nasdaq. I mean snapchat can, like that's a serious thing that society needs, I mean snapchat is ridiculous. I watched one of my cousin's on it the other day well yes sunday watching the football playoffs with my mom and four of my sister's and it's like how could ridiculous snapchat go public but not all these DSO's. So first of all my distinct question is, what happened to Triodent? Weren't they going to take over all of dentistry in Canada and where are they today?
John: Well you remember Triodent and Dr. Howard rocket, I'm shocked your knowledge depth is pretty deep. Yes he got his start in Wool co. stores and Towers they were - they're gone now but he started setting up those things he took off like wildfire and I think they just overextended themselves because opening a dental office like all of your listeners know, opening the dental off was putting the equipment in that's one thing, staffing it's another, customer service and quality of work as two more. To there's multi facets to this and wasn't their, just trying to think in New York dental world systems there was a doctor in Oakville and I remember when Triodent, I think they came in just after Triodent started down, I don't know much about him but there was another chain but they never really got a foothold here and then actually there was one in London called Dynasty Dental and I think they got up to about 16 and then they folded. What's the story on that dental world, I really don't know that much about them...
Howard: Well you know the reason I never did it is because, yeah it's good to have good demographics, it's great to have a good location, it's great to have good marketing, it's most important to build a team and that starts with the dentist because the whole dental industry doesn't start until I'm a dentist and I tell you, you have a cavity and you believe me and you let me touch you and perform surgery on you in a dental operatory and I never saw anything scalable about that and what I've seen in the last 30 years that all the dentists who have enough skill sets to pull it off. Maybe it's between them and their spouse, maybe the spouse is gonna do the business and they're gonna do the dentistry or they get a good Batman and Robin, Mickey and Mallory relationship and they build a good team. If that dentist is really hits off well in communication treatment, plan presentation. You know those guys won't be your employee, and they're not gonna be your associate. So it's kind of like these big differences we're all for the leftover dentists who didn't really have what it took or the drive or ambition or whatever and then you can find that with the employee turnover rate where dentists in private practice or in publicly or DSO's that I mean, they can't keep a dentist for more than a year or two. So in it when I write when I'm lecturing the dentist that owns the practice is sitting in the front row taking notes while his associates over there on snapchat and so I just don't see how this works. I know there's a lot of money behind it and I know a lot of people are making a lot of money but it seem to be a I don't know. I mean why did Orthodontic Centers of America fail? I'm still trying to get the founder of that one to come on the show. I don't know, if you're listening come tell me tell, tell us what you learned from that. I mean he was the only one that made it on the New York stock exchange. The only one ever of all time is just Orthodontics Centers of America.
John: Well back when I had to replace the warm angels I actually had to go down to bay stream, Axle was actually a public company through the 90s, so I actually had to go down and present myself and go around. I was always trying to fundraise and you know that's I could spend five hours talking about that, talking about dentistry in the public markers, public markets. There was a very famous Bay Street firm and it's etched in my mind, it's called Gordon Capital and I met a guy at BMO Capital earlier that morning, I can't remember his name but it was right across the street in first Canadian place. He said he's not gonna do a deal with me just because it didn't fit his parameters but he was gonna set me up with a guy over Gordon Capital over in the TD Center and so he gave me a phone number as he just wrote it out on a piece of paper and Gordon Capital, for the viewers that don't know it, is they did the first bot deal I think in North America. I think it was with a bank CIBC I believe, but anyhow the bot deal in an IPO or not an IPO but in an issuance they actually bought it and then sold it and prior to that stocks were what was on a best effort basis back to the main heart of the thing. I remember going over to the TD Center at 5 o'clock going up it was a it was a ghost town. I remember there was a huge exercise room, I go in and I sit down and they said oh are you Mr. Shaw, yes well Mr. Konnagar will be with you in just a second and I got thinking for a second cuz this guys names like in The Globe and Mail every other day Konnagar, Konnagar. Like is this the boss so I went in there and here's like Jimmy Konnagar and look this guy's like a billionaire. I talked to him for like a half hour he looks at his watch says ok you gotta go and I said, "can I get any funding?" He goes you know what John, he says I really liked you, he says and I think this applies a dentistry Howard, this is why I'm discussing it. Maxill and dentistry are what and Jimmy Konnagar himself told me there a second and third base hit all the time. I said well that's awesome and he goes no we look for homeruns but if I can hit the ball and get on second and third base every time isn't that good, "no Johnny you got to understand how this game works". We look for homeruns, we'll put up with seven failures for that one home run because there's a lot of guys like you that can do two and three and all that was like almost 35 years ago but I still remember that so much. Yeah, going back to yeah just touching back on Triodent and you know my memories stretch up we're going way back and I'm very impressed that you knew about it. Those guys were opening stores and then putting people in it and this ties into what we talked about on sundry costs because when those guys were opening up a new store and then staff and I'm the dental corpse now at least they are in Canada, I believe they are in the states too and you can correct me when I'm done, is there buying out offices and because you know they don't have to do with payroll, they don't have to do a tax, they don't' have to deal with accounting. So there's a lot of good things that can come from joining the largest, a larger organization and I still think they can retain their wet finger for a 2 or 3 years, they put it in associate we all know that student debt is massive with dentist today. So a lot of these big dental corp so they'll put in a student to learn from them, so they're sort of keeping that synergy as it goes along and they're just not collapsing out, maybe that's why they're a little bit more successful today. Which is what we talked about earlier, about you know the doctors are afraid to ask for the saving on their sundries, well these guys that are being successful, they are sticking around and they are paying their bills because we do a lot of business with them and they owe us a lot of money at any one time. It does look like they got some staying power and again they are stripping down their sundry costs and that should be a warning to everybody else that isn't they should get very busy at saving.
Howard: Yeah they're getting good locations they got good marketing, they got their better systems of insurance, aging, overhead, they got the business of Dentistry back down and then how they're gonna stay in business, they're gonna pay these associate dentists just enough money to make them kill all their dreams and you know, so that you know they get comfortable they get a spouse, they get a kid and then he starts telling his wife you know I think I'm gonna quit my hundred and fifty thousand dollar your job and gonna start from scratch and then he starts getting pushed back like no, no, no, keep the job and let's buy a new SUV. Yeah, but no matter how big something gets like Orthodontic Centers of America was started by a board-certified orthodontist Gasper Lazzara, he got up to 43 states Puerto Rico Japan and Mexico. They're managing 537 offices they were on the New York Stock Exchange and I think it went under for the same reasons that they're not gonna work again and that is, if you want a company with a million employees you better start at war, like get a bunch a 18 year old soldiers or Walmart, a bunch of young low educated people that will take orders but once you become a doctor of Dental Surgery, a lawyer, a physician, it's like herding cats. It's a very hard HR. I look at why all these associates leave the dentists are working for whether it's a DSO or a private practice and they're so complex of the Homo Sapien that they just really don't like to be managed I think it's just the condition of the human. When you're looking at...
John: Or their entrepreneurs...
Howard: yeah, when you're looking at what I'm looking at macroeconomics of Dentistry I see and as people get, as countries get richer they like luxury items. That's why they're all into clean air and clean water and they want to clean up the oceans, well you don't do that when you're a third-world poor country or your countries trying to focus on getting rid of you know some Nazi Germany or something like that. So now people are getting rich and I see a huge increase from here to Cambodia, people wanting their teeth straighter. I see Invisalign taking off all over, I see Smiles Direct Club lowering the price of ortho from 6500 to 2500. I bet that's gonna be a big deal. Everybody wants to keep their teeth longer, everybody wants whiter. If you're at you're at 55 years old if some kid just graduated and they just graduated dental school and she's like 300 to 400 thousand dollars in debt she said to you John do you think I made a good decision becoming a dentist or do you think I screwed up and shouldn't have spent eight years and three hundred and fifty thousand dollars and gone into dentistry. What would you tell that young 25 year old woman dentist?
John: Depending on what you do with yourself going forward it can be a very lucrative investment. Some of the, some of the grads end up going working for the Dental Corp so like the DSOs. Some of them the smart ones will try to find a good practice, join an entrepreneurial dentist so it's got a good thing going we call them factories. I can think of a lot of them and they work themselves in there with a bio degree and of course you know you got to prove yourself that you're actually gonna be good with the staff and that you know you can manage it but I don't think anybody that's really passionate about dentists should regret going through dental school. there's gonna be a need for them now there's going to be jobs for them. It depends on which path they want to take in the industry and you know they've got to make some smart decisions but in terms of that investment in your degree and in your profession I would say they made the right things
Howard: How many dental offices are buying are you working with, like legged 20 18 how many dental offices did you have sales with?
John: About thirteen thousand seven hundred.
Howard: Okay so this little girls working in one dental office, you see the macro thirteen thousand offices covering many countries for several decades. What are the key low-hanging fruit? Why are some doing better, is it demographics, is that buying a high-technology CAD cams and CBC T's. What do you think makes some of these dental offices net three or four times more money than the other ones?
John: I think a lot of it is the personality and the motivation of the staff in fact I know that's a big thing. The offices are clean, they're well bright, the staff is you know I think most of the salaries are by and large pretty much the same. So it comes down to the work environment you got to have I know of dentists have told themselves they got to keep drama out of the office. They'll fire people if they start drama and investing in the technology, keeping up on the infection control because if an office is lacking an infection control believe it or not it's a big demoralize er for staff and you know that's a big wheelhouse for us is infection control. if an office tries to skimp on it they'll skip on it because they're told to but it's not very good for the staff, they want an office because it is actually a healthcare facility. so it's it's how the office is run if you skimp on this or you skimp on that that does affect staff you may not see it but staff does talk. Why are they successful... they're doing local internet ads, they're involved in the community sponsor the ball team but another thing is what are they doing for their own web sites, web sites are big now and what are they doing for promotions. Most offices hand away a toothbrush they hand away floss a hand away a loot bag with some other stuff. we do a whole section on office marketing and you know your advice my advice to all your listeners and you probably did that back when you were young, is whatever your handing out, get your name printed on it because it's gonna go on the fridge, it's gonna go in the car, it's gonna be in the bedroom, it's gonna be in the bathroom and you know they're gonna see Dr. Howard all the time and you know friends move to town, we're looking for a dentist called Dr. Howard call this guy. So office marketing is something that dentists really got to focus a lot. so there's a few things all the way from how staff is treated how the office is run and it comes down to office marking why and I know some office's, they do nice office marketing and they buy a lot so obviously they got a huge patient load.
Howard: You know it's funny because I'm sorry to keep bringing up football but I'm addicted to football, even though your greatest Canadian athlete of all time lives in Phoenix, Wayne Gretzky. Is he your favorite athlete of all time?
John: No I used to follow hockey a lot but I thought it was Mario Lemieux, I thought he was a better all-around player wasn't he but wait Wayne Gretzky's is an institution in Canada, I'm gonna get shot if I say anything negative against Wayne Gretzky.
Howard: You know the bottom line is that when what I see success I I don't know what to tell the doctor because like the playoffs were this weekend and all four home teams won and now it's the Rams, the Saint,s the Patriots and the Chiefs. What do they all have, there's seven and a half billion people on earth and there's probably only a dozen guys that can play quarterback at that level and the coaches. It's so dentist centric, I mean if you have if you're that quarterback for the Rams the Saints the Patriots the Chiefs, if you're that dentist you can defy demographics. You can go to any city you will build a team. When people, when I walk into a dental office within 30 seconds you can just smell if it's a million-dollar practice with high margins or if it's not. I mean you sense at the instant you walk in there and if you can build that a fun team, I mean and it takes a long time because I want to remind everybody of my mistakes. Me and my dental office 31 years old but if you look at all my management team they're all twenty years old. So it was ten years of trying this zig this way and now what have we learned, we learned to higher slowly and fire quickly. I mean you either know that quarterback could never be Drew Brees, you know it could never be Peyton Manning you you know that this quarterback isn't gonna take you that level and then you leave him on the team for five or ten years because you don't have the coaching ability to say look man we threw the ball to this guy twice and it bounced off his hands and if he would have caught both of those passes we would have won the game. So we are losing the game because we keep this dental assistant, we're keeping this hygienist and a lot of times that mistake person is actually the dentist. My gosh I can't believe we went over an hour, I could talk to you all day. So how do my homies find out if you can save them money? They go to www.maxill.com
John: www.maxill.com or 1(800)-268-8633
Howard: They're listening on their iPod remember 855-4Maxill, think of oral maxillofacial surgeon or just email them firstname.lastname@example.org. I want to actually, could I keep you for overtime for just a minute...
John: No, absolutely
Howard: Okay, you make toothbrushes and floss and all that stuff. In the news yesterday Oral-B glide floss tied to potentially toxic PFA, as chemical studies suggest. Do you think and then I tweeted that out and Oral-B yes and by the way thanks to the 25,000 homies you follow me on Twitter. I tweeted that out Oral-B glide floss tied to potentially toxic PFA s chemicals and Oral-B replied to my tweet, "Hi @howardfarran, we have confirmed that none of the substances and the report is used in our dental floss. The safety of our consumers who use our products is our top priority flossing subjective to exhaustive state tests and we support the safety of all our products. Regards" Why did that make the USA today if they didn't have a leg to stand on?
John: I don't know, I know that a lot of the slippery floss is PTFE I haven't got into the I heard about this on Friday I didn't get into the chemistry on it about the Teflon but you know how news organizations are, they'll just grab something as long as they have a credible source they'll put it out there they don't care whether it damages anything or not. I think Oral-B has great products, you know is it true or is a fact. What's Oral-B gonna say, nothing or are they gonna say something I think Oral-B has to say something right.
Howard: and then my last question, you went through all these private angels investors and you learned that whole rodeo. Do you think eventually all these DSOs in America, like KKR just bought up Heartland dental they also own Web MD., Aspen. Do you think these guys are eventually gonna be a publicly traded stock or do you see them following the first round like with Orthodontics of America, where they'll just get banned big expand and then fall from within?
John: Well they're gonna do one or two things they're either gonna be successful they're not gonna be successful. I know private equity companies and we're approached by private equity companies all the time, they've got one of a few different strategies going. They want to buy you and roll you up okay and put you with a whole bunch of other things and the other thing is or they want to take you public. I don't know if a lot of people want to be taken public now or are they gonna turn them into something like a REIT they're gonna turn them into you know a type of trust where once they get it to a certain size and they cap it off and then they just pay out the cash flow as dividends. Who knows what these guys are up to but if they do run them right they will be successful. How they handed the cash and the end the payout for the initial investors I really don't know. What's your opinion on it?
Howard: Well again you said it best roll-up and just in case that whooshed over some of the young millennials heads. Roll out is when you build a McDonald's prototype and then you stamp out the exact same restaurant all across United States. Warren Buffett owns Dairy Queen, every Dairy Queen is about the same. Verses a roll up, where you just start buying up all these dental offices and they're on different software and there are different systems and different staffs and some dentists want to use them $150,000 CAD cam and some want to use an impression. So I don't know, just because you have roll-ups what roll ups to me are good for is liquidity in the marketplace you have a bunch of dental offices that are worth two, three, four, five million dollars. No kid can come out of school and buy it and a big company can come in and roll up all these different assets. They can trim costs, they can do your marketing better, they can do the business better but they're still going to have the employee turnover issue and the product at the end of the day is always gonna be the dentist. I mean I walk into your operatory I have to believe you that I really need a cavity or a filling or a root canal or that I can't I need to do this and then I can allow you to lean me back and touch me and give me a shot and do it it's such a complex behavior I don't see how you stamp this out on some Henry Ford assembly line and everybody goes to mcdentals for their dental offices, I just don't believe that for a second. I've never seen evidence of that for 56 years.
John: Yeah there's definitely going to be a market for the independent dental office I see successful offices all the time and like you were talking about it comes down to the dentist and I can think of three dentist that literally walk into their office or you meet them somewhere and they come into presence, they've got that attitude, they got that stature, they've got that confidence and they run very successful teams and you know that can come with some coaching but at the end of the day whether you're Howard or John or any dentist you got a want to do it and the person you're gonna have to rely on most is gonna be yourself.
Howard: Exactly and you know the bottom line is you know can can you get yourself to be a Drew Brees and Aaron Rodgers, a Matt Ryan with the Falcons you know Ben Rothschild. Can you can you get yourself to do that and can you get yourself to that by going to you know panky and spear and Ross Nash and my favorite is John Coyce, I love that guy. Ross Nash on the East Coast I mean you know can you be, can you get yourself to that level. Can you be the next Drew Brees from New Orleans. Last and final question, last one double triple overtime with you, a lot of these young dentists say you know I got $350,000 in student loans, do I need to buy a hundred and fifty thousand dollar CAD cam or a hundred and thirty thousand dollar laser or a hundred thousand dollar CBCT. Do you see a correlation, I mean these kids can come out of dental school buy three pieces of equipment a CBCT a laser and a CAD cam and they just doubled their student loan debt and a lot of them feel like in order for them to be Batman and Robin they need all this equipment. Do you believe in all that equipment for return on investment or you see it as high cost?
John: I know I see them buying it, I see them doing it, I see the bank's leading the the dentist's into it. They get they get like 1 million minimum they get 1.5 million 100% financings and if I was a dentist that had an office that was doing the numbers I would absolutely buy it because they you got the latest technology and make you know your staff is impressed that you're keeping up with the time. This is if you're doing the numbers but if you're not doing the numbers it's definitely going to be a problem, but you get to write it all up and you know one of the biggest complaints I used to hear from dentists then and today is the amount of taxes they pay. Both if you're doing the numbers and you want the latest in technologies and you can shelter that you know tax I would definitely go for it if you're not doing the numbers be very cautious and any of that grayscale in between there for sure.
Howard: All right, well it was just an honor for you to sit with me, you're a busy man and you could have spent that last hour in so many more productive ways and to come on my show and talk to my homies today. Thank you John Shaw of www.Maxill.com Thank you so much for coming on the show today and educating all my homies.
John: Howard thanks very much, I look forward to it again and we'll be seeing you around. You're gonna be at the dental podcast summit?
Howard: I don't know, know one's invited me, who's having that, who's that show? Is it someone told me it's in Scottsdale is that Allen Miller?
John: I just heard about it the other day and is down in Arizona, I know the big auction right now is down in Arizona and I know I wonder if it's connected and I'm gonna be talking with Howard. I just wondered if you're gonna be there, I think your names on it when I was on the website.
Howard: Oh you know what here's a problem I have, I've lectured a thousand times in 50 countries, I never look at my speaking schedule because then I go to the airport and I think I've got it right. Now all I know is tomorrow night I lecture in Scottsdale. If you start telling me that next Saturday I lecture somewhere else you know then I'm lost, you know I my mind is too old and ancient, but yeah what it's down come by we'll have lunch get a beer or have fun .
John: Alright, it's awesome Howard I really appreciate it.