Scaling Your Company: A Live Look at Dakota Storage Buildings

Transcript

INTRO: Building a great company is a marathon not a sprint. Each week Krista Ankenman and the team at TANK New Media take on growth challenges, explore technology, and interview business leaders that are always upping their game. If you're ready to build scalable systems to drive your business forward, this podcast is for you.

KRISTA: All right. Welcome, everyone. Glad to have you guys today. Today we've got Lenny Stahl with us. He is the CEO of Dakota Storage Buildings. Welcome, Lenny.

LENNY: Thank you.

KRISTA: Yeah. Tell us a little bit about Dakota Storage.

LENNY: Dakota Storage Buildings. What we do is we manufacture backyard portable storage buildings. We go marketed directly to the public, the consumer. And the reason, there's two, there's two needs we supply in the marketplace. Safekeeping people's possessions and to help organize their lives. If we take all the requests and all the reason people call us the people the reason people walk into our door or the reason people submit a quote request online or order online is it boils down to two things. Their life is in chaos with stuff, you know, "stuff-initis" problems.

KRISTA: "Stuff-initis" I like that.

LENNY: The second is they need to save keep some possessions. We've see a lot of classic cars go in our products, to restore tractors, motorcycles. I remember many years ago there was this fellow here locally. I think he actually won, he was lottery, it was a part of a law lottery group that winning the lottery. And one of the things that he did is he bought a 14x26 and I believe I still remember the guy's name. And I drove around that neighborhood one time and I saw him there and I pulled in and it was unbelievable what that fellow did in this building. He had the floor, a checkered floor. He had a wet bar in there.

KRISTA: No way.

LENNY: And then he had this high high end car. I don't know what it was. It reminded me something like a Dodge Demon or some, I can't remember and I'm not much into vehicles, but I'm a telling you I have never seen such an immaculate car so the need for this guy was to safe keep a possession share. And when I sit back and think about all the people that they come, it's for two things: to reclaim their garage reclaim a room in their house, or to read to organize their lives or safe keep their possessions. That is why we do what we do. What we do is the result of the product is storage buildings, or garages, even chicken coops, dog kennels, so on and so forth.

KRISTA: So what's kind of some of the big differences between you and some of the other storage building providers around?

LENNY: I would say that's a good question. It's a fair question. When DIY is understood the what and the how work themselves out different. A lot of times you see companies make the mistake. They work backwards. They focus on the what, they focus on the process, but then the why is never understood. And when people understand their why, they're not just building a shed. They're providing a garage for this guy who just bought this high-end sports racing car. They are building a shed for somebody who just wants to reclaim the bedroom in their house which they use for a storage because there's a baby on the way. When the why is understood the what and the how, the process, it turns out different. That is one of the distinctions we make. The other thing that we do is we try to push high-end product. I am a consumer, you're a consumer. There is nothing more aggravating to me personally is when I buy a product and it fails in a short amount of time. So for an example the shingles that we put on our product, Northgate. So it's a product line that Certainty came out with four or five years ago it's a four bundled to a square. I don't want to bore you with all those details but it's an SBS modified rubber and it's a Class 4 Hail rating and in order to get a class 4 Hail rating they take the testings to take about a three inch stainless steel ball put it 17 feet in the air and drop it, and if that shingle cracks it does not pass for a class 4 Hail rating. The other thing that it does, it's the higher end you go the warranty claims on shingles blowing off in the dead of winter. Just our issues went away when it came to our shingles that that's one prime example. The other prime example is we push our forever frame door, which are completely composite frame. One of the biggest gripes that you will find and see is pre-hung doors are a sucker, they rot up 6 inches from the ground. We actually have a warranty issue right now, back when we did not push that high end of a product. It was more about let's get the lowest cost item in there at the lowest possible price out the door, that is consumed about the what, not the why. So when the why is understood you start thinking different about the products you put into your building. So that is one of the things I feel like we do try to differentiate. We don't want problems. We don't want you to have problems. We want you to be able to buy our product. And the only time we hear from you is "Job well done, thank you." That is what we love, and that's what we strive for. Fundamentally, if you have issues then we have issues. So it's our goal is to sell you a product.

KRISTA: That you're gonna love?

LENNY: You're gonna love, and like I keep telling my guys yesterday that we will never take humanity out of humanity. We still make mistakes. We still learn. It's a continuous improvement.

KRISTA: Yeah absolutely. Absolutely. I bet it's challenging to kind of balance out of the quality with kind of the margin in the business as well.

LENNY: And that is a good case in point. What we have found is the higher end we have gone. We've actually made a whole lot less money because of the product line that we bring in. Its customers don't perceive the value in it because you have so much competition, where there's a reason they're less money. And there is always this push to — to foot — to the race to the bottom.

KRISTA: Yeah.

LENNY: And you are right, from a margin standpoint, we have made less money now than we did in years past using more entry-level materials. But that's true. And in the meantime it has also helped us to identify who our potential customer is. We are not for everyone. Our goal still is to help people, how help as many people as safe keep their possession and still organize their lives. That is why we also came out with the utility line which is your more lower-end product line does not come with a warranty that the other standard line does, but it was if its price is all you're worried about by all means here is a product.

KRISTA: Gotcha.

LENNY: I mean there are people that's all. That's all they need that's all they want. It satisfies their life and it fulfills our purpose.

KRISTA: Sure sure. So you kind of have sort of like two different buyers one that's really kind of worried about quality, really wanting to make sure it's something that's going to be around for a really long time and they really want kind of that high-end feel, and then maybe the other type of buyer who is really trying to just accomplish a goal and they're a little bit more focused on price?

LENNY: Correct. Yes that's right. That's it's pretty much what it boils down to yes.

KRISTA: Gotcha. So, kind of, tell me just a little bit about how you got into Dakota Storage Buildings. Have you always been in construction? Is this something you felt really passionate about?

LENNY: Actually not. I actually grew up on a Hutterite Colony. My first job I had at the age of 14 was working in a commercial feed manufacturing facility. And I had an interesting boss who, who drove a work ethic into me had the mentality of hurry up and wait and you were on a break for three minutes it's like hey isn't the 15 minutes up yet? Let's go let's go let's go let's go let's move. So I did that for four years and then for another year and a half I got transferred from that on that, that the place I grew up in had many different entities one of the entity was manufacturing commercial feed for horses and all the livestock out there. The second entity that had actually made geothermal heating and cooling systems and from there I started that, did that for a year and a half was kind of a line feeder. I was at the beginning of the line, pre-assemble the part, put components, and pushed it down. Did some welding and soldering and if you would understand the unique structure of what Hutterite Colonies are made up. There were some fundamental differences that arose in philosophical beliefs of sorts, which you couldn't walk side by side. And what ended up happening, I had a cousin who lived up here in this area who had also moved from the same place I moved from, and he was working for Ben at the time as the second employee and we moved up into the area two days later. It's like I need guys, I don't need them now and there were four of us it was me, it was my dad, James, Travis, and myself. And he, he just took a leap of faith. He felt like he should do that took a leap of faith, hired us. And it was the first time ever I found an individual who believed in me. I remember I was on the job two days. He had me scrape the yard, starting at the bottom, I started out I think it was six dollars an hour and started at the very bottom. I took a tractor didn't really know how to drive much of a tractor and took out a side of a building.

KRISTA: Whoops.

LENNY: It was totally wrecked. I was like my, knees was shaking my hands.

KRISTA: What a way to start.

LENNY: Yeah. My hands were trending I walked in. It's like my former job it was like you got such a tail end chewing that you don't know how to sit anymore. So I walked in, I was fearful. Two days into a job oh bummer, I'm a loser. I'm like, he walked in, I walked in and he smiled. "Good opportunity to learn how to fix the product now." It's all I ever heard.

KRISTA: Wow.

LENNY: He actually didn't fix it he had somebody else fix it. He didn't, he didn't show me how to fix it. So that very instant, somebody believed in me. Two days later, he actually hired me as his bookkeeper and then part-time working in the factory. And two days later, didn't know me from Adam's house cat. I mean come on. Took me up, put me access to all this banking here. Run this ship. I'm not good at books. I wasn't either so everything I know I self-taught. So the unbelievable amount of trust and belief he had in me it was like I'm in. This, this is, this is, going to work. And I just I... It was the first job I ever had that the ownership believed in me. Trusted me, and it was rough around the edges, crude. It was, it was an unbelievably hard challenge. I remember one time it was a year and a half into it, we were out of money. The winters are hard. We didn't have a line of credit.

KRISTA: Sure.

LENNY: And I remember, he said we're done, we didn't know where to go. And just that day the banker called and offered us a line of credit. He went totally out on a limb. He believed in us. And. And I told him you know what, if you need to lay us off that's fine. I'm not going anywhere. I'll work for free. Don't worry about it. I'll just, we're gonna make this thing work. And it's been ever since. One thing led to another. I couldn't handle it. But what that did in me, those earlier years, I'm still running.

KRISTA: Yeah.

LENNY: We're still starting out. We are still broke. We are still don't have any orders, and that is still driving me like crazy. I remember one time I was listening to a podcast by Dave Ramsey and one guy called in and said "When is enough enough I'm worth X amount of millions of dollars?" And so on and so forth. But then Dave said you know, I have a friend who literally grew up on a dirt floor and he's still running from that dirt floor. Yeah and he's worth millions and millions and millions of dollars more than me. And there's an aspect of me I'm still running from those early days.

KRISTA: Yeah.

LENNY: It's still driving me. Has my drive been filtered and channeled in a different way to where I live for the greater good of other people, set other people up for success. Yes. Yeah. And in that drive from years ago, I ran over a lot of people. You know Patrick Lencioni says you need to have people hungry, hungry and smart — hungry humble and smart. The only thing I had was hungry and there were dead bodies all around.

KRISTA: Yeah.

KRISTA: On our next episode, we'll learn more about Lenny's leadership style and how it's changed over the years and how that's shifted in his overall business. Thanks for listening. And don't forget to rate, review, and subscribe.