This transcript was generated with the help of AI and may contain some errors.

TJ Matijevich [00:00:00]:
Some of our very best customers are the ones that when something goes catastrophically wrong, we jump in and do what’s right to fix the issue. We’re not going to let the customer sit there with a vehicle that’s just down while we point fingers to figure out who owns it.

John Gough [00:00:19]:
Whether you’re going to market through dealers, distributors, or some other partner channel, the mediated sale is complex. We call it B2B2X.

John Gough [00:00:27]:
But the leaders in the industry are the ones who are making it look simple. I’m John Gough.

Kyler Mason [00:00:32]:
And I’m Kyler Mason. And this is why you win. Presented by Element Three in today’s episode.

John Gough [00:00:38]:
We talked to TJ Matijevich, the Chief Revenue Officer for Model 1 commercial vehicles. We had a great conversation about entrepreneurial, strategic choices that Model 1 has been making over their history, some that worked and some that didn’t, and what they have learned from those experiences. We talked about the growth bets in upfitting and school buses, and what they see on the landscape and the horizon now, and their crucial role as a dealer in this environment that represents the voice of the customer and the role that they play that really nobody else in the environment can. We’ve been working with Model 1 for a long time now, and we’ve gotten to see some interesting chapters in this story, and it was great to talk to TJ about other things that have happened before and that he thinks are coming next. We hope you enjoy it. Well, TJ, we’re really glad to have you on today. Thanks for coming on. We appreciate it.

TJ Matijevich [00:01:24]:
Yeah, happy to be here.

John Gough [00:01:25]:
Yeah. So, just to get started and get everybody oriented to your, to your role and your organization, tell us a little bit about Model 1.

John Gough [00:01:33]:
And about what you do.

TJ Matijevich [00:01:35]:
Yeah. So, Model 1 commercial vehicles, formerly creative bus sales. We’re in the commercial vehicles distribution space, focusing on traditionally on passenger vehicles. So everything from small, low-floor minivans to transport the disabled all the way up through 40 foot inner city, heavy-duty buses. The rebrand kind of came as we started to broach into other segments. So most recently heading into the non-passenger space, dealing with commercial van upfitting and utility bodies on trucks and all that kind of good stuff, you.

John Gough [00:02:16]:
Guys have a really awesome growth story from very, I would say, humble beginnings up to the powerhouse that you guys are today. Can you give us the 92nd commercial from the beginning?

TJ Matijevich [00:02:31]:
Sure. I’ll try to keep it to 90 seconds. Started off as a small Southern California only dealership, and then have grown through a mixture of acquisitions and organic growth. Did an early acquisition to get into northern California, ran for some period of time as really just a California dealership, and then over time, kind of early 2010s, did a series of acquisitions, and then in the last, I’d say four or five years, kind of took out our last couple big competitors to give us a nationwide footprint. So now we’re 25 plus locations, really doing business in every state, boots on the ground in more or less every state. So nationwide coverage at this point?

John Gough [00:03:13]:
Yeah, I mean, just so impressive. And what was the timeline?

TJ Matijevich [00:03:16]:
The first acquisition, like I mentioned, in northern California was like 2001, but we didn’t really go on the full blown blitz until about 2010. That was when we did our first acquisition. And then in the course of 24 to 36 months, we did two or three more. So picked up some pieces in the Pacific Northwest, Arizona, New Mexico market, shortly thereafter opened up our first location in Texas. So that was organic growth. And then did an acquisition in Florida.

John Gough [00:03:46]:
Yeah. And your rebrand has happened really recently in the last couple of years. And so all that growth was coming sort of under the umbrella of creative bus sales, passenger vehicles. You mentioned a pretty wide range of scales of those vehicles, classes of vehicles, but your niche was pretty clean. I think, up until, really, we were.

TJ Matijevich [00:04:07]:
Very focused on really what we call, like the cutaway segment. So taking a Ford or a Chevy based cutaway chassis, and then our manufacturers build a bus body on the back in a number of different configurations. But, you know, that was the bread and butter, and probably 70% of the business we did were on those platforms. And then, like I mentioned, getting into some van derivatives and then also some bigger heavy duty airport and inner city transportation buses, but everything was passenger. This kind of recent divestiture into the non-passenger space has really only happened, like you mentioned, over the course of the last two to three years.

Kyler Mason [00:04:46]:
Has growth always been the directive or what triggered some of the decisions you’ve made over the timeline you were talking through?

TJ Matijevich [00:04:54]:
Yeah, I’d love to say it was overly strategic, but some things just come at us, and I think we have a very entrepreneurial nature in the company that started with our founder, Tony, my father. When we see opportunities, we make a pretty quick assessment, and if we say we’re going to go, we go. I think that’s in the past that’s done us very well, and it’s helped us get to where we are today. But we got into 2008, 2000, 920, ten financial crisis, some of the competitors they were able to acquire. The banking situation wasn’t good. So floor plans were difficult. There’s a lot of pressure from banks, I think, that coincided with an industry that started at the same time. You had a number of owners that were just ready to be done anyway.

TJ Matijevich [00:05:43]:
And that financial pressure just accelerated that. For some of them, it was an opportunity for us. I can’t say, like I said, that it was entirely strategic, but some opportunities came, and they came quickly. Like I mentioned, in 24 to 36 months, I think we did three. So that was. It was an intense undertaking, but it was an opportunity we felt we kind of just had to seize.

Kyler Mason [00:06:04]:
So we are. We’re very, like, roadmap driven company. We try to be as strategic as we can. So you saying what you said about the growth, like, how do you act so quickly? Is it intuition? Is it just familiar with the market? Like, how do you get an opportunity and make a decision and then run after it in that way? It sounds foreign to me and our organization.

John Gough [00:06:25]:
Kyler’s really excited to hear the answer. Please teach me something.

TJ Matijevich [00:06:28]:
Can I be like you? Like we mentioned, it’s pretty niche, right? So most of the acquisitions, we knew the owners, we knew their business. We weren’t in those spaces. But we have a solid enough understanding of what the results should be. If we were successful, I’d say the more strategic part of it was we knew as an individual dealership in California, we would only have so much weight with our partners. And as we acquired more locations and represented more business for our manufacturers, our pull with our manufacturers would grow. And that definitely has come to fruition over time. You know, when you’re. You’re essentially their biggest customer.

TJ Matijevich [00:07:06]:
There’s obviously benefits that come with that. And we stock a ton of vehicles. So the other piece of it, and this was, again, a little bit more strategic as we looked at being in California and being tied to a singular economy as not a real positive thing. So we liked the idea of being in multiple different locations to kind of offset, you know, if there’s a California budgetary issue and that that market slowed down, we would be able to offset with sales in other states at that same time to kind of keep the overall balance a little bit more even accentuated during COVID for sure, is everybody knows that based on what state you’re in, regulations were vastly different. So we had states that were shut down and not doing anything. And then we had other states where a sales team was active, the associations were holding conferences and doing business as normal. Probably the most extreme example of kind of what we thought the balance would result in what kind of structure do.

John Gough [00:08:06]:
You all have to put into place to accommodate that variation across the country from state to state? We’ve talked to some people on the show about the move to electrification and how California and its regulations are driving so much of that, and we hear some more of that in the northeast, and then there are places that just have very little pressure in that way. I imagine that your sales team and you all as a dealership are caught in the middle of that. As a nationwide dealer, what levers are you pulling? What are you looking at?

TJ Matijevich [00:08:39]:
So structurally, we have the sales team set up to cover different segments of the business based on the customer type. I’ll take public sector or government business, for example. It’s kind of probably our most established sales channel, right? So we have a head on that department, then regional sales managers out in the field, and then individual salespeople working territories. And it’s very different what that looks like state by state, just depending on how the states operate. We have certain states where we’ll participate in a bid and it’s strictly low price. And when you win the low price bid, that’s kind of the end of it, and you become an order taker. We have a lot of states where, you know, they have what we call a menu bid, so getting on the bid is the first step, but the hard work starts with the boots on the ground, working with customers to secure orders after the fact. So very different structures based on who the customer segment is.

Kyler Mason [00:09:38]:
It’s kind of back to the growth trajectory you were talking about and like, fixated on the, on the bets you make and how quickly you make them.

TJ Matijevich [00:09:45]:
They’re not all right, by the way, there’s, this is what I was about to ask.

Kyler Mason [00:09:48]:
I was gonna say, can you tell me about one that, where shit hit the fan, something that comes to mind and maybe like, hey, what’d you learn about it? Um, I think that’d be really cool to hear.

TJ Matijevich [00:09:58]:
It’s probably 2018, something like that. 2017 decided that we would test the waters in the consumer market and went out and did an experiment of trying to be an RV dealer. You know, we had footprint, we had locations. We thought, hey, this makes sense. We can kind of leverage what we have in place. Ready. We were not ready for the consumer market and exactly what all that entailed and just the ups and down, its much more of a wheeling, dealing kind of environment as opposed to our traditional business-to-business segment, which is, I think, a little bit more steady and straightforward. So that was an interesting one.

TJ Matijevich [00:10:37]:
We did our typical approach. We went pretty heavy on the inventory, had good pricing, had some success for a while, but really just realized it wasn’t for us in terms of dealing with the consumer market. Two and a half to three-year experiment that, you know, I think we learned a lot, but we definitely learned we won’t be doing anything in the consumer space anytime.

Kyler Mason [00:10:57]:
You know what business you’re in. Did you make it to Covid with it or.

John Gough [00:11:00]:
No? We want to know the same thing.

TJ Matijevich [00:11:01]:
We were out before COVID. Oh, bummer.

Kyler Mason [00:11:05]:
Maybe that was a good thing.

John Gough [00:11:06]:
It was a good thing for sure.

TJ Matijevich [00:11:07]:
Well, yeah, it’s one of those, we look back and we say, okay, we were, you know, fire sailing some inventory pre Covid because we went heavy and we were, from a model year perspective, we were a little out of line for where we should have been. And we fire sold all the inventory right before COVID hit, which, looking back, we probably would have liked to have had some of that inventory. But, yeah, it is what it is at this point. We got out and got out unscathed, at least.

John Gough [00:11:36]:
It was such an interesting moment, though, because if you had done that test a year later or two years later, you could have had, ill call it a false positive, a very different set of data to be working against. And all of that industry, all the data points to that. Its normalized back now to 2019 levels, and you would now be in the tail end of that experiment and probably with a very similar result.

TJ Matijevich [00:12:02]:
Yeah, just a couple extra years under our belt, right? Yeah, I think thats how it would have gone.

Kyler Mason [00:12:08]:
A lot more inventory, more locations, all that.

TJ Matijevich [00:12:13]:
Yeah, I think we would have exactly had that false positive. We probably would have expanded and we probably would have had a lot more inventory.

Kyler Mason [00:12:20]:
So how’d you guys handle the bet culturally when you’re like, this didn’t work? Tell me about the morale around it. Was it easy? How did that work?

TJ Matijevich [00:12:30]:
You know, I feel like we kind of went through the point of analysis where we said, okay, this isn’t for us. We’re not going to buy any more inventory. I don’t think anybody was upset about it. I think we learned from it and we came out unscathed. I think there was portions of our employees in the company that were definitely disrupted by it that would have probably not. Probably would have rather not gone through the experiment. So apologies to that group. But beyond that, I don’t think there was any real negativity around the experiment.

TJ Matijevich [00:13:04]:
We sold out of the inventory. We came out just fine with it. But I think there was just probably some heartburn for some people that would have appreciated if we hadn’t done it. But I would say there wasn’t any real negativity. And I think we just learned that, hey, we make decisions, we move fast. Like we talked about, they’re not always going to be right. But as long as we don’t do something that’s too far out of whack, you know, we can. We can get out unscathed and move on to the next and learn from the mistake, for sure.

John Gough [00:13:29]:
And you guys are actively moving into other adjacent verticals and new segments and opportunities now, right, since you went down the rv path and came back upfitting and wrapping is new to the business from that time period, isn’t it?

TJ Matijevich [00:13:48]:
Yeah. No. Like we were saying earlier, these, these last couple years, kind of moving into this non-passenger space. So there’s the distribution aspect of, you know, just selling those products. But we are also moving into a more labor intensive role in those products. So we are finishing out the interiors of vans with racking and shelving and storage bins. On the utility body segment, we’re actually installing those utility body. So we’ll order a pickup truck with a cab or with a box, delete.

TJ Matijevich [00:14:20]:
And then install those utility bodies on the vehicles ourselves. So much more labor intensive, more of a manufacturing position than we’ve ever taken before. Where traditionally we’ve been very distribution centric. You know, we do make ready for the buses and vans, but we’re not getting into really heavy duty work there. And this segment is very different. So we’re doing much heavier duty work than we have in the past.

Kyler Mason [00:14:45]:
How have you overcome the talent mix problem? I would perceive that you would have. Getting into that space. It’s like, I assume that’s a whole new slew of talent that you need to bring on.

TJ Matijevich [00:14:59]:
It is. We have relationships on the customer side of the business through some of our past dealings. Some of the operators are the same as the passenger side of the business. There’s also a number of what they call fleet management companies that are in this segment that essentially do fleet management for the end users. And a lot of times that involves acquisition of the vehicles. We’ve been lucky enough to form some really solid relationships with those various fleet management companies. So working together with them to solve problems and kind of figure out where their pain points are has been an interesting experience, but specific to the employee base. And go back to your question.

TJ Matijevich [00:15:38]:
We’ve been lucky enough to really hire some talented individuals out of this space. It’s a large industry. There’s significant number of vehicles that get sold every year in this space. So the supporting cast in terms of experienced employees, we’ve been able to pull in some really strong employees from other companies that have been in this space traditionally.

John Gough [00:16:00]:
When I think about the kind of growth that you’re describing, the four quadrant model that lives in my head is around new audience or existing audience, new product or existing product. And as you’re describing, this expansion from commercial vehicles, passenger vehicles, into this upfitting model, the question that I have for you is this is obviously a different kind of product segment. Were these municipalities or other groups that were asking you like, hey, we love working with you guys and we want you to. To sell us some different things, or was this just a new strategic opportunity that looked like new audience, new product, and we know we can win there?

TJ Matijevich [00:16:41]:
Yeah, we didn’t really get pulled into it by customers. It was more the latter. So, you know, new audience to a degree, but it was just something where we look, we were sitting back and going, okay, how do we, similar to the rv experience, you know, how do we leverage our footprint? How do we leverage our facilities and the boots on the ground? We did, like I said, have some connection to the customer base. We really got in, did some analysis. We talked to a lot of customers to just understand where they were having issues. And the thing that’s interesting about the space is you might have a fleet management company running the procurement, but the vehicle acquisition process as it sat previously involved a lot of touch points from a lot of different vendors. So you’d have somebody selling a chassis, somebody selling an upfit, potentially another group coming in and doing some work, whether that’s graphics or light bars or ladder racks. And these are three or four different vendors in the process, potentially where we looked at that and said, hey, I think we can take most of this under our roof and streamline the process.

TJ Matijevich [00:17:48]:
Less touch points from outside vendors, less time, because each time a different entity touches it, there’s a logistics component that goes into moving the vehicle. So that has to be, you know, that timeframe has to work with the person releasing the vehicle and the person receiving the vehicle. And then when you do that three or four times in the process, that’s not very streamlined. So we looked at this and said, you can pull a lot of this just into our wheelhouse and streamline the process for the customer.

Kyler Mason [00:18:15]:
So are you able to just gain advantage on pricing power and margin with streamlining all that against your competition?

TJ Matijevich [00:18:22]:
Yeah, to a degree similar to, like what we’re talking about on the bus side, obviously, the more volume that you do, the better pricing you’re going to get from your supplier base. And one thing that is interesting about this segment of business, there are some big companies that do the same thing that we do, but the market in a lot of cases is pretty fragment with a lot of just local vendors. So putting it together with our footprint, again, having locations in half the states in the country, there’s a real benefit to that. If we can pull in those local markets into each one of those facilities and pool that volume together, there will be strategic advantages to that for sure.

John Gough [00:19:02]:
What part of that is like, makes you want to put your face down on your desk?

TJ Matijevich [00:19:08]:
Well, I mean, there’s the logistics piece that we’re now taking internally. Right. There may be less vendors, but we’re still dealing with a lot of those movements. That’s a complex piece of the equation. I think the part that we’re working through right now that’s a little bit difficult is balancing our traditional business with this new business thats growing. So of our resources, both manpower and facility wise, how do we segment that? How much do we give to a new, growing business? Can we hold it on the side over here knowing that, hey, those orders are coming, we think most of them are coming. So theres definitely a balance of, hey, we have to maintain and continue to grow our traditional business, but we got to accommodate this new business coming in. So there’s work to be done there for sure.

Kyler Mason [00:19:57]:
You mentioned earlier you referred to partners. I was assuming you met manufacturers, is that right?

TJ Matijevich [00:20:04]:
Mostly, yeah.

Kyler Mason [00:20:05]:
Okay. Can you tell me about the difference in the help and support you expected from your partners from when you were, say, smaller 1015 years ago to where you are now? And help can be like marketing support, training support, all the options of what support might be. But like, is there, is there a way you can step back and kind of remember, man, I needed a, I needed a lot or something different when we were smaller than what I need now. Now that you have, you know, 25 locations and, you know, national reach.

TJ Matijevich [00:20:36]:
Yeah, I mean, we’ve definitely brought a lot of different resources in-house that we didn’t have then. Our industry is a little bit interesting in that, you know, I think people associate us with automotive, but our industry is much more based on RV and marine, that type of distribution channel. Our partners are focused on manufacturing. They don’t have a ton of outside resources. So that’s always kind of fallen on us in terms of marketing and sales. That’s why we exist. That’s our business. That’s something that we may not have had the size of the team that we have today, but we’ve always had to been focused on because resources weren’t there from a marketing and sales piece.

TJ Matijevich [00:21:22]:
But like I said again, that’s our business. Right. I think where we relied on them and where they gave us a ton of assistance is just understanding the products, why they were better, what they do differently versus the competition, and then us taking that information in conjunction with them and packaging it up in a manner that the customers can digest and getting that in front of the customers to help drive the products that we represent. But it’s unfortunately, our guys don’t have the Ford and Mercedes marketing departments that make life easy for their dealers.

Kyler Mason [00:21:56]:
I know it’s not like that close to Ford Ram or something, but are any of them getting there and providing more support than maybe in the past?

TJ Matijevich [00:22:04]:
Yeah, the biggest ones are. And I think that’s been something where we’ve been able to jointly push each other. As we take on more and see what’s successful, we bring that back to our partners and say, hey, these are things you should consider too. It helps us, it helps your other dealers, it helps build the brand across the country. So it’s been a good kind of information sharing. We’ve seen some of our bigger manufacturers invest in those resource where historically they didn’t have them.

Kyler Mason [00:22:34]:
Maybe help be like a Mythbuster. For me, I have just kind of like the commercial market like you’re describing. There’s not a ton of resources dedicated to marketing support, training and sales and stuff like that from the manufacturer. If some of the, let’s say, mid sized manufacturers made that a priority and allocated resources there were able to do that and still run a successful business and maintain margin and all that, and provide that sort of support to you, what would you be asking for? Or would you be like, I’ve got it figured out. This is a nuisance, leave me alone.

TJ Matijevich [00:23:07]:
I think I would say really selfishly leave us alone because we feel like that’s our role in the channel, right? Like that’s our job, that’s what we’re here for. If the manufacturer is doing that work for us, you know, that’s less for us to differentiate ourselves from the competition. So we feel like when we, when we bring those resources in house and we focus on that internally and we build that piece of our business, that’s something we’d like to keep to ourself. Again, somewhat selfish, but it’s why we’re in business. Right.

Kyler Mason [00:23:37]:
What would be like, do it for you? Like, what would that look like when you say that? What. What’s the picture in your head? I. Or maybe you’ve seen it.

TJ Matijevich [00:23:46]:
No, no, no. I guess be more specific. What do you mean, do it for you?

Kyler Mason [00:23:49]:
Well, that’s what you said. You’re like, if they come in and try to do it for us, you’re like, no, that’s our lane.

TJ Matijevich [00:23:54]:
Oh, yeah. I think if they’re trying to understand more deeply the markets and how we represent the product to customers, how we work with them, because the products are very different. There’s a lot of differentiation in the models and how they’re applicable to an individual customer. Some of that understanding of what drives a particular segment, what they’re looking for, how to sell it, and the craft of the sale, I guess, is part of the secret sauce that we wouldn’t want that shared across the board.

John Gough [00:24:26]:
I think that’s a great perspective about the value of the dealer. And this B2B2B or B2B2C model is you really are the voice of the customer to the OE in a lot of cases. And I think especially you guys, as you’ve grown, you sort of command that presence and you can exert influence in that way to these manufacturers, individual dealers. And certainly this is the case in a B2B2C model worlds that we look at in RV. The OE is skipping past the dealer in a lot of cases to get voice of customer research and understanding. They don’t spend a lot of time asking the dealers for their feedback and those kinds of things. Maybe they should. We actually kind of believe they should.

John Gough [00:25:13]:
But the dealer is present in the transaction, but not necessarily vital, except for, like, the money changing moment. I’m not referring to everybody, but this is more than one OE that I’m talking about. And I think that it’s really interesting that you have centralized your opinion. Not surprising that you guys are the voice of the customer. You understand their needs the best, you understand the options the best that are coming down from a variety of different manufacturers. And that you provide not only, like the interpersonal, like my salesperson knows all of these things, but you all, as a group and as a business, provide that value into the, into the entire ecosystem in a way that’s completely unique. Was that obvious to you all along, or have you, like, developed a different understanding of your role in that model?

TJ Matijevich [00:26:08]:
I think it was somewhat obvious all along. You know, we’ve tried to go deeper with that and, you know, create moats that give us that continued perspective and. And kind of cement our role. I’ll say the other part of it that’s interesting is being in so many different areas and representing so many different customers. We’re typically on the front lines of understanding when there’s a problem. So we may see an issue in one location, but then we see it in another and another and another, and we know, hey, this particular whatever is broken, and we typically know it before the manufacturers are broken, and then we are not only bringing the information to them, but we’re typically working with them from a technical aspect on how to solve it, because our technicians are the boots on the ground with the product, trying to get it back up and running for the customer.

John Gough [00:26:57]:
That’s a kind of fascinating moment. I had a family member who had bought an upfit sprinter van through one of these RV manufacturers, and they loved it and they loved driving it. And then one day, some alarm inside the coach started going off and they had to take it to the service dealer. And it was hours. It was more than a day of the dealer calling these different manufacturers and trying to figure out a who owned the fuse that was causing the alarm to go off inside the coach. Because part of the fuse box was dedicated to the OE and part to the outfitter. It was just gigantic mess. It was a huge pain in the butt.

John Gough [00:27:41]:
And none of the manuals answered the question in the way that you would have expected them to in a really clean, vertical manufacturing process that didn’t have all these players built into it. So I’m imagining that service layer at Model 1 has a similar moment on a semi regular basis, that they’re like, oh, man, what, Frankenstein every day situation is happening now?

TJ Matijevich [00:28:08]:
Every day. Yeah, no, it’s a big part of the value we bring is we try to eliminate that finger pointing in that back and forth. We want to be the front lines of diagnosing a problem because we know once we figure out what the problem is, we know who owns it, we know who to talk to about getting replacement parts or warranty reimbursement or whatever it may be, we believe we add a ton of value in that space because that’s where. And it seems like maybe you guys experience a little bit, it can be frustrating as a customer to take it where you think it should go to get fixed, and then that group doesn’t understand it. But it’s the nature of the beast. When you’re talking about, again, you know, a scenario where you’ve got some multiple touch points you might have, you know, the chassis OEM, you have a body OEM, you maybe have somebody that did some sort of modification after the fact. You know, another group that we. We have alternative fuels in our space, right? You know, there’s cng and propane conversions.

TJ Matijevich [00:29:08]:
There were some guys that tried doing the same thing on electric, and now you’re talking about a chassis, a body, and then a drive train modifier. Somebody’s got to play judge and jury, I guess, over all three to determine reality of where the problem is and how do we fix it. I think the consumer space has a little bit more flexibility, but most of our customers are not letting their vehicle sit down. There’s not an alternative option. They don’t have another one sitting that they can just pull out at any moment and throw into service when they sit, that costs them revenue generation in.

Kyler Mason [00:29:41]:
Most cases do when they have problems. Are you, like, facing the brunt of that? Like, where do they point the finger? The customer?

TJ Matijevich [00:29:51]:
I mean, they’re always coming to us. You know, we sold the vehicle, so in their mind, we own it. And I think in our mind we do too. You know, that’s, again, that’s where we bring value. It’s our responsibility. They come to us and, you know, it’s our job to solve the problem. And I’d say, you know, some of our very best customers are the ones that when I. Something goes catastrophically wrong, we jump in and do what’s right to fix the issue, whether that’s financially or getting loaner vehicles or whatever it may be.

TJ Matijevich [00:30:20]:
I’d say there’s a number of times when maybe there’s some uncertainty as to who owns the problem. Well, our go to move is we fix it and we sort out the financial piece of it. Later we’ll go chase reimbursement from the manufacturer, vendor, whoever it may be. But we’re not going to let the customer sit there with a vehicle that’s just down while we point fingers to figure out who owns it.

Kyler Mason [00:30:43]:
That mindset that you all have probably puts a lot of pressure for you guys to do a really good job in due diligence and establishing your manufacturing partners.

TJ Matijevich [00:30:54]:
Yeah, we have some new ones as we’ve delved into some of these new spaces, but our primary manufacturers, the relationships are decades and decades old.

John Gough [00:31:05]:
As you’re thinking about these evolving spaces, let’s talk about electrification, for example. One of the trends problems that we see in that space is new startups popping up, operating for a couple of years, and then failing as startups do and new industries do. That’s not unique to that space and certainly not necessarily a critique of those, of those organizations that are fighting through those problems. Someone like you has to stand in front of the customer, represent it. Yeah, you should buy this and then be willing to let your neck be wrong on the other end when it doesn’t work, what happens when you’ve sold something and the organization that manufacture it doesn’t exist anymore? What do you guys do?

TJ Matijevich [00:31:53]:
I mean, essentially we’re left holding the bag, right? Like I said, they bought the vehicle from us. We represented that it was something that could sustain. I’d say, luckily for us, we made a decision with electrification early on that we were only going to represent OEM because there were a lot of the third parties and there still are some in the space that’s just unknown what reality is and longevity of those companies. So we made a decision early on that we weren’t going to do anything other than OEM because we wanted financial backing from legitimate entities that we know would be there in five or ten years and be able to support the lifetime of the vehicles. There was a company, gosh, it’s been more than ten years ago that was out, and they were doing hybrid electric systems and they had a quick splash and sold some vehicles, a couple of which we sold, and then they were gone and there was no support, there were no parts, there’s no software, there’s nothing. We ended up, I think it was only a couple of vehicles, but we ended up having to buy them back and just eat the entirety of the systems. And those aren’t cheap systems. Right.

TJ Matijevich [00:33:03]:
So I think that was a good experience for us to learn from that. Hey, we’re not going to go down this path again because when you’re talking about something as complex as an electric drive train system, you can’t take that somewhere else and get it fixed. You know, if the guy who built it and designed it and programmed it isn’t there, there’s not an alternative to get that fixed.

Kyler Mason [00:33:25]:
You probably earn some lifelong customers after that, even though it sucked.

TJ Matijevich [00:33:29]:
Yeah, yeah. No doubt.

John Gough [00:33:31]:
Expensive customer acquisition.

TJ Matijevich [00:33:35]:
Exactly.

Kyler Mason [00:33:37]:
Do not recommend.

TJ Matijevich [00:33:39]:
Yeah, exactly.

John Gough [00:33:40]:
I want to know. I want to know what’s on the horizon. Yeah.

Kyler Mason [00:33:43]:
What bets are you making?

John Gough [00:33:44]:
What are you excited about?

TJ Matijevich [00:33:46]:
Continuing down this non-passenger path is our big bet for the, you know, the current timeframe. We’re, we’re digging deeper into that portion of it. Like I mentioned earlier, that’s the labor intensive manufacturing side. So we’ve got a number of new facilities that we’ve brought up or in the process of bringing up. So we, we took over a facility in South Carolina that’s 70,000 sqft that we just started operating about a month ago, more or less solely dedicated to this business and doing the upfits out of that facility. We’re in at some temporary facilities in a, in a new project in Oklahoma that we’ve started, but we have 60 acres there that we’re going to go through a development project and onboard a new facility there, both for the traditional bus business, but also with a large component to service the commercial upfitting industry. So, and she runs some temporary buildings there, but looking to really expand our footprint there. And we’ll continue to roll out additional upfitting practices at our existing facilities.

TJ Matijevich [00:34:49]:
We’re doing it at a handful of them today, but I’d say, I think by the time we get to the end of next year, we’ll have, outside of the big facilities, which we kind of have our big four that are scattered across the country, I’d say we’ll probably have four or five other facilities that we’re doing this in local markets as well.

Kyler Mason [00:35:05]:
Wow, sounds like this is where you expect your next big phase of growth to come from.

TJ Matijevich [00:35:11]:
Yeah, absolutely. I mean, we changed our name for it. Yeah, we’re aware. Yeah. The other piece is we’ve pushed a little bit harder into the school bus side of the business. So we had pocketed sales of school bus in certain territories, but that’s a push for us to expand that. We’ve got a partner on, on the electric school bus front that we’re working with in a number of states and then new partners on the type A school bus. So there’ll be a push from us into that segment as well.

John Gough [00:35:40]:
We haven’t talked a lot about that. Why, if you’re able to share, whats the impetus for that one?

TJ Matijevich [00:35:47]:
Theres been some consolidation on the manufacturing side that has landed us with some manufacturers that were favorable. With that, we think we can service some more states. And then really the advent of electric in the space, its been successful in school bus. Theres three major oems that represent school bus across the country and have for a number of years. Theres some new players coming in with electric products that are in need of distribution and were sitting there with the locations and the footprint that we have. And we think we can play a role for some of those newer manufacturers in the locations that we have available.

John Gough [00:36:27]:
I think the upfitting question is really interesting in light of your decision early on to be just passenger vehicles for so long, is there a segment that you’re seeing in this higher labor intense market, in the upfitting market that you’re like, yeah, we were this, but now we’re going here and we still have a particular niche, or has it really broadened a lot to anybody who needs that level of service?

TJ Matijevich [00:36:55]:
Yeah, there’s definitely segments within it. I mean, the thing that’s interesting about the non-passenger piece is the market’s exponentially bigger than what we’re used to dealing with. So we definitely are looking at a more segmented approach to it. Our thought isn’t to go compete for the highest volume customers, because typically those are the most difficult customers. They’re the most demanding and usually demand the best pricing. So it’s a difficult customer to serve if that’s your only customer. So we’re looking at a little bit more blended approach. We’re looking to serve a segment of the market that we feel we can bring a lot of value to because it’s just so big to shotgun and try to cover all segments just, yeah, I don’t think that would be the right approach.

TJ Matijevich [00:37:38]:
So we’ve really gone through and kind of dissected different layers, and I think we understand where we fit. And that’s pretty specific.

John Gough [00:37:46]:
I think that speaks to your entrepreneurial incremental bets that you’ve made over time and keeping it tight and making it make sense is that’s a compelling argument. In that same vein, I’m wondering, the stories you’ve told us over the last 30 minutes or so have been great and entertaining and also very sort of, like, educational. Like you’ve learned something, you made a bad choice, and then you were able to go back and make a good choice. If you had a time machine and you could go back and tell your past self, do or don’t, these particular things, let’s say 15 years ago, 2010, would you go? And if you went, what would you say?

TJ Matijevich [00:38:30]:
I don’t know that I would change a whole lot just because I think even where there have been failures or missteps, they were learning experiences. And especially for me, being on the front half of my career, I like having those mishaps and mistakes and learning from them, because I think it only makes me stronger and better. As we go into the second half of the career, you know, kind of drive the growth forward. You have to have mistakes. You gotta learn from them. It’s part of business. You’re never gonna be perfect. So I think an important part of how you handle yourself is handling those mistakes and moving forward from them and learning.

Kyler Mason [00:39:09]:
What do you say you want to personally have accomplished in the next 15, 10 years?

TJ Matijevich [00:39:17]:
Million dollar question right there.

Kyler Mason [00:39:19]:
I know. I don’t know my answer.

John Gough [00:39:20]:
Yeah, don’t turn that one around.

TJ Matijevich [00:39:23]:
Yeah. I mean, you know, for me, I can’t really separate personal from the company because it’s something I’ve been a part of for so long. So personally, my growth is tied to the company and where we go. I think success in this commercial segment’s a huge, huge piece of it. You know, we’ve probably doubled the number of employees we’ve had in the, in the last two to three years. So seeing that growth and just realizing what we can become outside of this mom and pop smaller dealership that we once were, that’s what excites me, seeing it grow, seeing the number of employees watching our office in Indianapolis get expanded three times in the process of, over the span of two years because we couldn’t apparently figure out how much space we needed at the location. It’s a pain because you’re changing locations, but it’s awesome to see that it’s because we’re growing so much and we’re achieving what we’re intending to.

Kyler Mason [00:40:17]:
So, yeah, you’re creating a lot of jobs. You’re like, the stakes are so much higher, the complexity of decisions. I imagine the trajectory of that for you over the past few years has been just up and to the right.

TJ Matijevich [00:40:31]:
Yeah, absolutely. You know, like I mentioned, we’ve been very lucky and fortunate that we’ve been able to bring on some, some high level talent from the commercial side of the business. And also just, I think as a result of us growing and being a bigger organization, we’ve brought in a number of employees over the last few years at a very, very high level that we’re excited to have on the team. And as you grow, you got to delegate things down and you have to trust people. So being able to bring in high level people that we can trust is a big part of the equation. And it’s been successful so far. It’s a big deal.

Kyler Mason [00:41:03]:
Bring us home, John.

John Gough [00:41:06]:
TJ, this has been awesome. I feel like I’ve learned a bunch. I feel like I knew about Model 1 before, but I feel like I’ve had the curtain pulled back a little bit for me on some of these decisions that have been made over time. And I think the story, as compelling as it was to me before, is even more exciting. I think the bets are going to pay off.

TJ Matijevich [00:41:26]:
Yeah, well, I’m glad, because it’s not always regarded as the sexiest business selling commercial vehicles. Glad we could entertain you. There we go.

John Gough [00:41:37]:
Same. We’re in the world with you. We got to get our jolly somewhere else, usually.

TJ Matijevich [00:41:43]:
Yeah.

Kyler Mason [00:41:45]:
This is great, man. Thanks a ton.

TJ Matijevich [00:41:47]:
Yeah. Appreciate it, guys.

John Gough [00:41:49]:
Why You Win is presented by Element Three, a marketing firm focused on modernizing go-to market strategies for manufacturers that sell through complex distribution channels. We help leaders solve problems across demand generation, sales channel support, and brand development.

John Gough [00:42:06]:
If you’d like more from myself or John, connect with us on LinkedIn. And for more from Element Three, visit Element Three. That’s elementthree.com.