The Exchanges

Q I wonder when you, I mean, what did you have to make? What did that truck have to sell per day for it to be worthwhile? What was your goal?

A In northern Kentucky, we have a 210 day season. I remember these numbers, and I was like, well, For inclement weather and blah, blah, blah, you got about a 180 days to sell. If you can make a thousand dollars a day, you make a 180,000 dollars. You've got food costs and labor costs and operational costs. You can make, you can net well over a 100,000 dollars. Even debt service meant to pay the truck off over a five year period of time. So I remember calling Ed and I said, Hey, I've done the math and, and I think I can get the truck up to about a 150,000 dollars a year. And he's like, no way. And I'm like, yeah, I, I think I can. He said, well, that's you.

AI assessment note: “If you can make a thousand dollars a day, you make a 180,000 dollars.”

Q with selling vacuum cleaners after college. I mean, you're, you're good at it, and, and you were making good money. Tell, tell me about what you would do, like, like, sell me a vacuum cleaner, right? I mean, let's say I'm in the market to buy one, right? And I, and I'm, I'm looking at this brand, and at that brand, and, uh, and then you come to my house.

A Oh, God, nobody's looking to buy a vacuum cleaner. I was just, that's, that's the whole thing. So you knock on the door. You've got an appointment, because Mary Smith has bought a rainbow, so she gives four of her unwilling friends names, and so you call their friends and say, hey, Um, uh, Judy, I was wondering if I could schedule a time to come in and show you and John the rainbow. I'll be quick about it. I'll do it fast. You guys get a, a little three day, two night vacation package, uh, timeshare presentation. We didn't say that part, but, uh, get a little three day, two night vacation. It pays for your hotel accommodations. So let's schedule a time. And she's like, my husband's never going to go for this. I know, but, but tell him I'm, I'm fun. It'll be a good time. I'm never going to pressure you guys. I just want to show it. Get the credit, and I'll be out of your hair. All right. Lord forbid the husband answers the door, because he's pissed at me immediately. And they all start announcing, we are not buying. And I'm laughing, having a good time. I come in and just, and I just try to disarm them a little bit. But guy, there's so many nuances of, of selling. And I'll, I'll give you some fun, fun things. If at some point you can figure out whether the guy's got a hobby or not. So let's just say, And I'm always looking in the cars in the garage when I come in and say, man, y…

AI assessment note: “nobody's looking to buy a vacuum cleaner. I was just, that's, that's the whole thing.”

Q the billboard truck idea is a great idea, right? Because it's, it is almost like, not quite, but almost like a passive income business, which is, you know, as you say, you, you find some people who want to pay for the billboard, and by the way, how much would it cost to place an ad on a billboard on the truck per week, or how did you price it?

A Yeah, you want to charge, because you've got to, inherently, you've got gasoline and labor, so you've got a couple hundred bucks a day. In expenses. So you're going to need to get 500 to 700 dollars a day, you know, for it to, to, to be profitable. So, so I started selling each individual side of the truck. The truck holds, looks like a big teepee or whatever, and it has two sides to it. So I started, what I would do is I went to the, all the casinos in Cincinnati, and I, because they were the biggest media buyers at the time. What happens in casinos when they come to towns, you know, after a while they stop buying all the ads. The revenues go down, and this thing kind of petered out, but then Kona had started up.

AI assessment note: “you're going to need to get 500 to 700 dollars a day”

Q And so when you started to drive around your neighborhood, you would just drive down streets, and then as you would see kids run out of their homes, you would just pull up on the sidewalk and stop?

A Yeah, it's, it's, it's, I took this fellow out by the name of David Jones, and we were, I was training him to be a driver. I think we had three or four trucks at the time, and we pulled into this cul-de-sac, and I said, David, here's the trick. We got to get those two kids right there off that porch. Drove around. I said, go real slow. I said, I said, ah, we're not getting them. I said, uh, let's stop and go out and clean the flavor wave. So we stopped the truck, and we, this is early on because not everyone knew the Kona truck, so I went out and So these kids come wandering down off their front porch, and they're like, hey, what do you got there? I said, oh, this is shaved ice truck, and da-da-da, and they come in, they, and then people start, because I'm stopped, music is playing, lights are flashing, here comes some people. And I've got a picture of this somewhere in my phone, because I remember getting back up on the hill and taking a little picture. It was about 60 people gathered around the truck with lawn chairs. I mean, it looked like something out of Norman Rockwell. They're skipping ropes, they're drawing Um, uh, hopscotch on the ground with chalk, and, and David remembers this, and I, I, I, he said, you remember the time we got stopped in that cul-de-sac, and it turned into a block party? And I was like, yeah.

AI assessment note: “Yeah, it's, it's, it's, I took this fellow out by the name of David Jones”

Q when I talk to people who started out in sales, the thing that sales really helped them to learn was how to, how to move past no. Right? Like, for a lot of people, they hear no, and that's it. That's, that's the end of the road. Right? But, but then, if you can figure out how to hear no, and understand that that's just the beginning of the road,

A Well, it's all in how you interpret no. And, and the way I was always taught, or the way I believe, is the answer is no based on the information that I have right now. So the no is not going to change by you pressuring me. The no only changes if you give me more information. So, okay, why would you not purchase the, well, it's just too much. You can buy a 200 dollar vacuum cleaner at Walmart, or I can buy a 1500 dollar vacuum cleaner from you. Well, let's break that down. Let me go ahead and do a 15 year cost study. So these vacuum cleaners that you buy from Walmart are going to break down every three or four years. You've got to buy bags. You're not getting the job done. Or you can spend 1500. You've got a product that'll last 15 years, but most importantly, you're going to get the job done. So, let's make it to the point where it's just an obvious yes, and you'd feel almost stupid saying no before you get there.

AI assessment note: “the answer is no based on the information that I have right now”

Q So, alright, so you grow this, this regional office to quite a big business, and I guess what, around sort of the early 2000, you decide to To leave? To retire? I mean, was that, was that what happened?

A It was. I, I, uh, my dad had stepped down from the company. Um, I thought he was treated very poorly. Um, they rewrote the history of Rainbow. And my dad, who I feel like was responsible for a massive part of this growth, all the programs we're running, they were my dad's ideas. And he got like two paragraphs in the, uh, in the history of Rexair. And I was like, you know, I'm done. You know, I'll go do something else. Little did I know how much money I was making in comparison to the real world, but I did. I got very discouraged. I didn't like the new management coming in. I, you know, I got a couple other opportunities, and I just started slowly disassembling the organization. I would start selling the offices off to the managers, and, and it slowly just, you know, all went away.

AI assessment note: “It was. I, I, uh, my dad had stepped down from the company.”

Q As much as I prevent them from drinking all that soda. But you wanted a way for, I guess, for kids to what? To, to flavor it themselves.

A Well, if you start talking to kids about snow cones or even shaved ice in some way, either you go to a hut or you buy a pre-made product and there's, the complaints are there's never enough juice on it. Or it's not exactly the, Flavor combination that I wanted. Blah, blah, blah. These different things. And so the idea was, hey, can you get the economics right to where you can turn it over to the customer to put as much syrup on as they want? But here's the moment that I had it. So I'm talking to Ed, and he's got two sons that are hilarious, and they're, I think they were nine years old at the time, and I said, I said, hey boys, let me ask you a question. I said, a truck comes down the street. It's a shaved ice truck, snow cone truck, or whatever, and It pulls up, and they hand you a cup of fresh, unflavored snow, and you get to go to the side and put as much flavoring on as you want. What's your reaction to that? And they both, I mean, you're giving me the keys to the magical syrup. Um, yes, give me more of that. That was a moment that I thought, this has to happen. Um, so you got, you work on the economics. You figure out the flavoring and how you can dispense it in a way that it's not, Crippling financially where kids, you know, are putting, you know, sticking their mouths under the spout and pulling them on, so you gotta design the flavor wave to where the kid's head, an eig…

AI assessment note: “turn it over to the customer to put as much syrup on as they want”

Q specialized machines. It's like, um, it's almost like a vice, right, that, that you put a huge, like, round ice block in, and then it, it twirls around, like, to get that really nice shave. But, yeah. But I have to imagine you had to spend some time, like, learning about that whole thing, and like, what is it? Where do you get these machines? How do you Make it.

A 100%. The, the, if I would have had to rely on, I think it's a swan that, that does the big, uh, block of vice that, like you're saying, a vice that forces it into an open razor blade that spins on an axis and, and shaves it off. It produces a very fluffy product. Um, I don't think I would have pursued all the way through because the, the speed of service is slow. The danger that the, um, Skill that you have to have. You can't just let an eighteen-year-old go in there with a spinning razor blade. I mean, you're going to have to train this person to be able to do that, and I didn't want that. I don't want to have something so proprietary that we just can't duplicate it on a large scale. So I found an ice shaving machine. It produced very acceptable, not snow cone, very acceptable shaved ice on a very quick Time frame. You know, in a couple seconds, you have a cup full of pretty fluffy snow.

AI assessment note: “I think it's a swan that, that does the big, uh, block of vice”

Q All right, Tony, what are you, Tony, you're looking at this with me. You, you successfully launched two franchise models with, with coffee and shave ice. Um, what are your thoughts on that?

A Um, you know, you got to ask yourself, Dylan, and listen, let me say this. You're merchandising the idea. I'm looking at your website, whoever's doing your merchandising, and I'm assuming it's you and your scientist wife, but, but you are, it is look, it looks fabulous. It really does look fabulous. I have to ask myself first. So, so here was a question I asked myself when I'm driving around the first trucker in the neighborhoods and I was doing well and I was like, is this all me? Because I'm from Northern Kentucky, and I'm, I mean, I've been there for 20 years, and I'm calling the school teachers, and I'm, I'm just busting into everywhere, but I thought, how much am I a part of this success, and can the success be garnered by someone who's, you know, not from small town Illinois? And you're going to find out a lot when you open up 40 miles away, and I would definitely hire somebody from that small town, probably a school teacher that's beloved, and put her in that store, and

AI assessment note: “can the success be garnered by someone who's, you know, not from small town”

Q And so, really, I mean, the business model is In your view, like, it works because they're incentivized to work hard, they're loyal to the brand, and you guys are doing well enough?

A Yeah, we're doing well enough. But let me turn the tables on it. I was talking to an executive at a big franchise system, and you know, they've got probably 20 franchisees that pretty much run the company. You know, whatever those people say goes, because they're the ones generating a lion's share of the profits for the company, and I don't have anybody doing that. So if a franchisee gets out of line, and I say out of line, just against the code, I don't need them. Right. It's not like, you know, someone's going to threaten, hey, I'm going to get out of the business, and I'm like, all right, go ahead. So there is that double side to that, where I don't get too needy to a franchisee that's pumping in hundreds of thousands of dollars of revenue to the company.

AI assessment note: “Yeah, we're doing well enough. But let me turn the tables on it.”

Q put the flavors on, whatever you want to put on, which is, as you say, I mean, presumably before you, you had the prototype, you had to ask yourself, is this a good idea? Is, is this going to get out of hand? Is this, is this going to break? I mean, would it be better to just have like, Bottles, like ketchup bottles of, of syrup. I don't know.

A Oh, yeah, and the variations are legendary. The very first flavor wave would fold out from the truck. Ok, so you picture this thing folding out from the truck, and it's made out of aluminum. So, in essence, Guy, there was a two-foot aluminum-edged sickle, as I like to say, driving through neighborhoods. What could possibly go wrong with that? Then with the next generation, we had a handle where you could close it from the inside, but no one closed it, so then it would drain into the, uh, and all the flavors, the excess flavors would drain, and well, you know, variation, variation, variation, until let's work on embedding this into the truck. Um, I hate to say stuff like that, because then people realize how maybe unintelligent I am.

AI assessment note: “The very first flavor wave would fold out from the truck.”

Q I mean, you're the guy that, that, that figured out you can make money selling shave ice and, and the margins on that must be pretty good, right? Cause it's ice and syrup and, you know, and there's gasoline and stuff obviously, but, but man, candy.

A And man, I, I just hope it's not, I had a buddy that opened up a bar and his first three months, he was doing numbers that you couldn't even get your mind around. And, and I had another friend that said, yeah, those are your honeymoon numbers. Let's, let's see if he's got what it takes to keep that going. And, and, Lo and behold, he didn't. I mean, because there's a lot of places out there. There's a lot of competition for your dollars when it comes to stuff like that. So, but maybe not in a small town. So maybe that's, he's tapped into something there and there's not competition for your, I know, I know we sell a lot of Kona franchises in small rural America and my franchisees have said to me, you know, you go to a small town and you're like Santa Claus coming to town. You know, people just, yeah. Lose their mind because they don't have all the options, so maybe he's, he's really tapping into something there. I'm, I'm hopeful.

AI assessment note: “I just hope it's not, I had a buddy that opened up a bar”