Content Warning: This post does not contain a discussion of options trading or musings about other random shit. It is about mobile home park management.
Does anyone remember Jack Welch?
Until shortly before 9/11, Jack Welch was the darling of the business community. He was Mark Zuckerberg, Sergei Brin, Sam Altman and Sam Bankman-Fried back when those guys were in diapers (or, in the case of SBF, open-backed onesies). From 1981 to 2001, Welch was the CEO of General Electric. When he took over, GE’s market cap was $12b; when he retired, it was $410b. He achieved this growth by cutting head count, cutting costs, financialization and a laser-like focus on short-term earnings. He instituted a yank-and-rank policy for managers, pursuant to which every employee was graded on a curve and the bottom ten percent eighty-sixed each year regardless of absolute performance. Unprofitable subsidiaries were axed. GE Capital, which had originally evolved as the financing arm of a manufacturer of consumer products, became big enough to wag the dog. In the late 90s and early 2000s, before Treasury, the courts and the OECD cracked down on corporate tax shelters, the best and the brightest of the tax bar, after they became bored with the bonuses they received for designing abusive tax products at Merrill Lynch and Goldman Sachs, went to GE Capital. Welch’s face was on the cover of Time Magazine. You could buy tee shirts with his face on them wearing a beret à la Che Guevara. When he was overheard asking for salt in a French restaurant, the market tanked.[1]
What a difference a couple of decades, a terrorist attack, and a financial crisis make.
In 2018, GE was removed from the Dow Jones Industrial Average. This was the culmination of a series of events that occurred after Welch left but that were caused by policies put in place during his tenure. GE Capital, which had taken big positions in credit derivatives that referenced sub-prime mortgages, got whacked in 2008. This forced Mr. Welch’s successor, Jeffrey Immelt, to sell of some divisions at fire-sale prices. Regulatory scrutiny showed that some of the earnings reports that Welch touted were backed by slick accounting. In an effort to cut debt and focus on core competencies, large portions of the company were spun off. Instead of being a big conglomerate synonymous with the business of America, it is now a bunch of smaller, better-focused companies that aim for reasonable growth and sustainable business practices.
On a personal level, Welch was not appealing. He epitomized the big Eighties extroverted jock. Under his administration, toxic masculinity was a fact of life. Women were welcome in the inner circle – so long as they put out and behaved like frat boys. Laddish behavior was HR policy, rather than an epiphenomenon.
And – he spoke with a Boston accent.
But – he wasn’t stupid. He had a good idea or two.
Neutron Jack once said that you could divide employees along two axes. Each axis represented a binary quality. These qualities were ‘competent’ or ‘incompetent’, and ‘drinks-the-Kool-Aid’ or ‘does-not-drink-the-Kool-Aid’ (Jack termed ‘drinks-the-Kool-Aid’ as ‘with the program’. Query whether Drinks-the-Kool-Aid could be a Native name, like Fools-Crow, or Shoots-Lone-Deer). If you construct the graph, you get four squares, which represent four categories of workers, i.e. competent people who drink the Kool-Aid, competent people who don’t drink the Kool-Aid, incompetent people who drink the Kool-Aid, and incompetent people who don’t drink the Kool-Aid. Incompetent non Kool-Aid drinkers don’t get in the door in the first place. Competent Kool-Aid drinkers go to the C-suite. Incompetent Kool-Aid drinkers are the lacrosse players and sorority girls who laugh at partners’ jokes, dance at holiday parties, organize trips to strip clubs, bring hummus to meetings, and work in middle management. Competent non Kool-Aid drinkers – Jack said – are the dangerous ones, because they gunk up management processes and poison morale.
When I worked in big firms and banks, I was a competent non Kool-Aid drinker. That’s why I own mobile home parks now.
(In The Sound Pattern of English , Chomsky and Halle did to phonology what Welch tried to do to human resources. Instead of a four-square graph, they constructed a set of binary features which was inclusive enough to describe any phoneme in any language. So instead of referring to, say, the phoneme /b/, you would refer to a ‘-vocalic, +bilabial, +voiced, +obstruent, -velar, -nasal… phoneme. Phonological rules were then written in terms of the binary features. For example, if you wanted to describe word-initial devoicing, you would use the formalism they developed in the book to describe the environment in which /b/ becomes [p], and you would say that the ‘+voiced’ feature becomes ‘-voiced’. The disaggregation of phonemes into binary features made it easier to group them into natural classes of sounds. Instead of referring to, say, the four phonemes /p/, /t/ /k/ and /q/, you could list the features that define voiceless stops, omitting only the features that indicate place of articulation. This allowed phonological rules to be written in an economical way that was neither over-inclusive nor under-inclusive.)[2] [3]
When you run a park, you deal with five groups of constituents, i.e. customers, employees, contractors, suppliers and the government. Customers are residents. Most of what I write concerns them. Dealing with employees and contractors is people management. The government operates the way a casino operates a poker room. Unlike in games like Blackjack or Craps, where players face off against the house, in a poker room, players face off against each other. In exchange for providing the venue and the dealer, the house takes a cut of each pot. That’s what the government does. In exchange for social services, national defense and the rule of law, the state or municipality charges a fee in the form of taxes.[4]
We are here to discuss the fifth bucket, i.e. suppliers.
When I started running parks, I realized that every supplier of goods supplies two things, i.e., a good and a service. On its face Amazon sells things, but in fact it sells low prices, an easy computer interface, and fast delivery. Walmart sells smiling old people who greet you, free wifi and a space where many people feel comfortable, as well as cheap shit from China. A local hardware store sells a familiar face, chitchat about the local school district and personalized advice about how to replace a sink drain, as well as vegetable seeds, snow shovels, and plumbing fixtures. Barnes & Noble sells a place to take your kids when they are driving you crazy, as well as books.
Not every seller of services also sells a good. A gastroenterologist, for example, does not sell goods. But every seller of goods also sells a service.
You can divide suppliers into a four-square grid similar to the grid that Jack Welch devised for employees. Some sellers supply superior goods; others supply shitty goods. Some supply excellent services; others supply shitty services. If you plot the two axes against each other, you can construct four categories similar to the four categories into which Mr. Welch sorted humanity.
Here are a few suppliers that I use in my business divided into the Welch four-bucket paradigm. I supply this list for the same reason why people write Google reviews, i.e. to recommend good suppliers, to warn fellow park owners away from bad suppliers, and to give some tips for working with suppliers who are good at some things but bad at others. The goal is not to burn bridges. Every supplier on this list adds net value.
There is no section for ‘shitty product, shitty service’. I do not patronize those suppliers. Readers are encouraged to do likewise.
Readers are encouraged to send in information about supplies that they use in their manufactured housing business that I have not discussed here.
EXCELLENT PRODUCT, EXCELLENT SERVICE
- Management Software – Rent Manager. Rent Manager’s product, i.e. a property management software suite, is as good as they get. The basic version provides accounting software that can be accessible to managers and owners. The medium-grade version provides a tenant web access portal, an app that tenants can use to access their account, direct deposit, cash payment at Walmart and other locations nationwide, and an API tie-in with several other software products commonly used by park owners. The gold-level version, which I do not use, allows for, among other things, text blasts. I understand that Rent Manager was started by a guy whose father owned mobile home parks. The kid went to college, studied computer science, moved back to Ohio, and moved the family business online. This means that the product is not a procrustean bed. It was designed from the ground up with the manufactured housing business in mind. Bugs are bugs, not features, and there are no clumsy work-arounds for things that worked well for used car salesmen when they tested it on that market segment in the beta version. Rent Manager also provides IT support for its product. Their operators are responsive, helpful, and knowledgeable. The service that they provide is included in the software subscription. I will never understand how to use every feature of the product – it is way too big for that, and it is always growing – but I can always pick up the phone and call someone who can explain it to me. Wait times are not long, and customers don’t need to speak Tagalog or Hindi to communicate.[5]
- Leak Detection Equipment – Eastcom Associates Eastcom Associates sells water line location and leak detection equipment. They sell pretty much everything on the market – and they support what they sell with superior service. They provide purchasing guidance for people new to the business, they train customers, and they back their equipment with a warranty.
EXCELLENT PRODUCT, SHITTY SERVICE
- Water Metering – Metron Farnier Metron Farnier sells remote-read water meters and monitoring services. Their product is exceptional. Readings are fed into a web-based interface that can be read from anywhere. The product is most powerful if a customer installs a master meter, which records total water entering the park, as well as individual meters at each home. The difference between water used, i.e. water at the master meter, and water consumed, i.e., aggregate individual water usage, can be represented on a chart that is generated by a few clicks. This allows park owners to spot underground leaks before there is any surface manifestation thereof. It has saved my butt many times. Unfortunately, Metron suffers from organizational weakness. It is leanly staffed and run like a start up. They have trouble hiring good people – and it shows. Water monitoring is a huge organizational challenge. You need to keep track of tens of thousands of individual meters spread among hundreds or thousands of customers. They struggle to get their hands around these challenges. Sometimes, they ask the customer to perform their own processes. Sometimes, they blame the customer for their mistakes. These are cardinal sins for customer-facing businesses. They have a great product. With luck, they will improve their organization.
- Mobile Home Parts – Stylecrest Mobile home parts are a commodity business. To succeed, suppliers need to compete on price and product range. Stylecrest has the best selection and the best prices of any supplier. They deliver orders over $350 for free. They have the most stuff, at the cheapest prices. In this regard, they are the market leaders. I hesitate to call Stylecrest’s sales department ‘shitty’. It tends more towards ‘meh’, or ‘meh, plus’. Although a list of products is online, to order, you need to call the company. Once you do that, the operators can give you a price, and they can also provide guidance regarding purchasing choices. There is a process for ordering online, but it is so user-unfriendly that I gave up on it. They should fix that. Calling in is a waste of time. Lack of up-front pricing transparency creates delays. It is 2023, for feck’s sake. Update your process. Ecommerce websites are an off-the rack product. Set up an easy-to-use storefront on your website. Make your website look like Amazon. Stop using a pony and cart and buy a car. Your customers will thank you for it. Once you place your order with Stylecrest, the sales department transfers you to the credit department. The credit department takes your payment method. The credit department is run by a bunch of knuckle-dragging, mouth-breathing, finger-counting, gibbering eeedjits. They are not good at what they do. They are not meh. They suck. Automation would cut out the eeedjits. Automate!
SHITTY PRODUCT – EXCELLENT SERVICE
- Mobile Homes – TRU by Clayton TRU homes are cheap. A three BR 2 BA 14×66 TRU singlewide costs $34,000 before shipping, setup and tax. That is peanuts. TRU homes are also cheaply made. They have thin walls and flimsy appliances. When I visit my park in northern New York, I stay in an empty TRU home. When I sit on the toilet, I am scared that I will knock it over if I stand up too quickly. The exterior wall feels like I could put my fist through it. I don’t do burpees or squat-jumps inside because I don’t want to do a Rumpelstiltskin. I am not sure whether this makes TRU homes a bad product. It makes them a cheaply-made product. If you buy a cheaply-made product for a cheap price, you get what you bargained for. That’s not ‘bad’ in the strictest sense of the word. It is fair. But regardless of whether they are good products or bad products, they are not well-made. When I bought the TRU homes currently in my parks, I was impressed at how well the purchase and delivery process was handled. A driver named Beavis (his good friend, Butthead, I understand, also drives for Clayton) arrived on the wrong day, knocked over a lamppost, damaged the home and left the home half on and half off the pad. However, that was one incompetent driver. The other drivers were prompt, courteous and professional. The sales manager and the accounting people were polite, competent and responsive. They are a well-run organization.
Imagine a company that had Metron’s product and Clayton’s management. They would take over the world – and make it a better place.
One of the under-appreciated poetic geniuses of the late twentieth century was Warren Zevon. He’s best known for the tunes Lawyers, Guns and Money and Werewolves of London, but he wrote quite a few other songs, many of which are brilliant. His voice is wry, knowing and, often, spit-your-coke-out hilarious:
I can saw a woman in two
But you won’t want to look in the box when I do
I can make love disappear
For my next trick I’ll need a volunteer
I can pull a rabbit out of a hat
I can pull it out but I can’t put it back
I can make love disappear
For my next trick I’ll need a volunteer
The trick is not to saw a woman in two. Any idiot with a chain saw can do that. The trick is to make sure that she is in one piece when the show is over. Some suppliers understand that. Many don’t.
[1] Although this anecdote is well sourced, it could be apocryphal. Jack could not speak French.
[2] When I studied linguistics, first year phonology was all based on SPE formalism. When I tried to learn Sanskrit after my first year in grad school, I thought, ‘Paanini plagiarized the laws of Sandhi from Chomsky and Halle’. I also thought that Shakespeare was full of cliches. I was a dumbass.
[3] People say that the past is a foreign country. For me, the hamlet of lingustica is inhabited by a bunch of people who spend their days constructing dead-end theories about how English sentences are formed. If you wander into the town, you find that they are friendly at first and flattered by your attention, but if you try to buy real estate or suggest that theories about language should account for grammatical case or the meaning of words, they become nasty and jealous of their turf.
[4] Another metaphor for the role the state plays in business might be that of the love hotel. In some Asian countries, where privacy is scarce, young people go to hotels that charge by the hour to do the sex. These hotels are called ‘love hotels’. The government does not engage in the sexual act itself. Instead, it provides a clean, private place where people can get together. In exchange for the service it provides, the hotel charges a fee. This was the prevailing view among economists until Milton Friedman and his colleagues in the Chicago School of economics postulated that, in fact, the government did the screwing.
[5] The only weak point in Rent Manager’s customer service is that they will not speak directly with residents who have problems with their tenant web access accounts. Problems of this type have to be resolved by managers or owners. Although this is inconvenient, it is understandable. No reasonable IT desk could handle the call volume that would result if every non-computer literate old lady in every park owned by every Rent Manager customer could call in.
WELL!!! HAVE A VERY MERRY CHRISTMAS AND A HAPPY NEW YEAR ANYWAY.