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SmartEquip

smartequip.com

Stage

Acquired | Acquired

Total Raised

$35.55M

Valuation

$0000 

About SmartEquip

SmartEquip aims to provide an Internet-based "delivery engine" that transmits maintenance, repair, safety, warranty, training, and specifications data, without delays or searching, from an equipment manufacturer to the equipment distributor and its end-user. SmartEquip's Enterprise Edition aims to deliver information directly into a variety of existing fleet, rental, and service management solutions, in a way that is customized in real time to each user's needs and to the user's constantly changing equipment fleet.On September 27th, 2021, SmartEquip was acquired by Ritchie Bros. Auctioneers.

Headquarters Location

20 Glover Avenue 5th Floor

Norwalk, Connecticut, 06850,

United States

203-604-1322

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Expert Collections containing SmartEquip

Expert Collections are analyst-curated lists that highlight the companies you need to know in the most important technology spaces.

SmartEquip is included in 1 Expert Collection, including Construction Tech.

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Construction Tech

636 items

Companies using technology to improve processes in the construction industry.

Latest SmartEquip News

Innovator of the Year: How Ann Fandozzi is dragging Ritchie Bros. Auctioneers into the digital age

Nov 24, 2022

Innovator of the Year: How Ann Fandozzi is dragging Ritchie Bros. Auctioneers into the digital age Fandozzi had a hard time absorbing just how antiquated the heavy-equipment auction business was when she took over in 2020. But this fixer is intent on dragging it into the digital age Share In 2020, the year Ann Fandozzi became CEO of heavy-equipment auction house Ritchie Bros. Auctioneers Inc. , a pair of Stanford University academics won the Nobel Prize in Economics for their advancement of auction theory. Their work on U.S. government wireless spectrum auctions was a world apart from the 25-tonne excavators and $200,000 dump trucks the Burnaby, B.C.–based company specializes in. Even so, Fandozzi saw it as further confirmation that auctions are the most efficient type of marketplace in the world. Which is why it gnawed at her that in the US$300-billion-a-year global market for used equipment, auctions account for just 10% of transactions, while intermediaries and brokers—middlemen, in other words—capture a share that’s roughly four times larger. For a self-described “geeky engineer” with a deeply analytical mind, the puzzle of why a less efficient system was prevailing caused a “short circuit” in her brain. “It kept triggering me,” she says. “Every time I’d meet a customer, I’d ask them to tell me about the brokers.” As she came to learn, brokers are adept at exploiting mismatches between supply and demand in the industry, buying equipment when it’s available at low prices and reselling it months later to small and mid-size construction companies when needed for projects, since those companies typically don’t have the physical space to store unused equipment themselves. “Brokers have filled the space-time continuum,” she says. (Did we mention she’s an unabashed geek?) That revelation was just one of several that prompted Fandozzi’s push to transform the 60-year-old company from its auction-house roots into a comprehensive marketplace for the used-equipment sector, offering an array of analytics tools; services like parts, appraisals and financing; and new platforms for selling used machinery that go well beyond auctions. The goal: to capture a much larger slice of the giant used-equipment market than the roughly US$6 billion in transactions Ritchie Bros. will handle this year. “The easier we can make it for customers, the more transparency we can give them, the more inventory we can make available, then the more the market can run efficiently. And that feeds into growing our core transaction business,” she says. “A rising tide lifts all boats.” To get there, Fandozzi, 50, has embarked on a structural and cultural revamp of the company, instilling a test-and-learn mindset and putting analytics at the heart of decision making. “Analytics is a word that today is in our daily vocabulary with our customers in a way it wasn’t before,” says Rob Giroux, senior vice-president of sales for Canada, who has been with the company since 1997. “Numbers tell the truth. Ann has brought that to the forefront.” At the same time, she’s been building the foundations of the new Ritchie Bros. marketplace with some key acquisitions. In fact, on Nov. 7, the day this magazine went to press, the company announced a US$7.3-billion deal to buy IAA Inc. , a Chicago-based online auctioneer of damaged vehicles. (Ritchie Bros. shares initially fell 20% on the news.) And all of this has been undertaken against the backdrop of a pandemic, supply-chain disruptions in the heavy-equipment sector and now, it seems increasingly likely, a recession that will test the company’s reputation as a countercyclical haven in bad times. Ritchie Bros. has long been one of Canada’s quietest global corporate success stories. In the unglamorous world of second-hand tractors, bulldozers and cranes, it’s the largest auction company, operating 42 permanent auction sites in 12 countries, including the United States, the U.K., Germany, Japan and Australia, with 2,700 full-time employees worldwide. Its core business is simple: helping companies unload heavy equipment for the best price. When construction companies finish projects, they often dispose of machinery rather than hold onto it for the next project. In October, more than 2,000 pieces of equipment used to build the Muskrat Falls power station in Labrador were auctioned off in Truro, N.S. Similarly, rental firms with surplus equipment rely on the company’s auctions. Ritchie Bros.’s most high-profile annual auction, where more than US$200 million in equipment regularly changes hands, is in Orlando, on a 200-acre stretch southwest of the city, drawing thousands of buyers from around the world and featuring concerts and fireworks—a bit like Disney for the dirt-moving crowd. It’s a far cry from the company’s origins in the 1950s, when brothers Ken, Dave and John needed to come up with money for a loan payment on their family’s furniture store and auctioned off surplus furniture to raise cash. Toward the end of the last decade, the company had fallen out of favour with investors, who were growing impatient with the pace of change under former CEO Ravi Saligram. When Saligram announced his plan to leave in mid-2019 after five years, Ritchie Bros.’s shares were stuck at the same level as three years earlier. Saligram, in his own bid to modernize Ritchie Bros., had finalized a deal in 2017 to buy IronPlanet, an online-only equipment auctioneer, for US$760 million. The deal massively expanded Ritchie Bros.’s digital footprint, but internally the teams remained at odds, and integration efforts stalled. Enter Fandozzi. Born in the Soviet Union, in what is now Belarus, to an engineer father and classical pianist mother—”I had two worlds surrounding me,” she says, “but I only resided in one, much to my mother’s chagrin”—she grew up in the U.S. after the family immigrated there when she was a child. Having earned a bachelor and master’s degree in engineering, along with an MBA, she went on to work for several years at Ford Motor Co. and what was then DaimlerChrysler. Then, in 2012, TPG Inc., the private equity firm, hired Fandozzi to turn around vRide, a Michigan-based van-pooling business it had recently acquired. Four years later, with sales on the rise, TPG sold vRide, and Fandozzi was tapped by another private equity firm to fix one of its struggling portfolio companies, ABRA Auto Body & Glass. “I don’t get calls when things are going well,” she says. “My phone only rings when a company has stagnated or is down.” Less than three years later, in 2019, with the chain’s fortunes improving, ABRA’s investors sold the business. As Fandozzi speaks, she’s sitting in a sparse boardroom at the Ritchie Bros. office in Philadelphia, where she lives (her daughter is in her last year of high school). It’s a small brick-and-glass building tucked onto a leafy side street that’s used mostly for meetings, and the only identifiable sign this is a Ritchie Bros. office is a small decal on the front door. Fandozzi negotiated the same living arrangement with her previous two companies, and the same leased space served as the Philadelphia office for ABRA and vRide before this. It’s clear the back-to-back experiences with private equity left Fandozzi frustrated. In both cases, she believes the investors sold before her long-term growth plans could be fully realized. Which leads her to make a remarkable statement at a time when so many public-company CEOs complain about the short-termism of stock markets. “I vowed the next company would be public, so nobody could flip it out from under me,” she says. “I still hit the quarter every time, but I do it because you can’t set up the next decade of success if the next year isn’t working, and the next year won’t work if the next quarter doesn’t work. That’s my approach.” While she’d never heard of Ritchie Bros. before a recruiter reached out to her in mid-2019, she was immediately intrigued by the potential scale of the used-equipment market and the relatively small sliver the company controlled. Over the next six months, she listened to a decade of quarterly conference calls, scoured boardroom presentations and absorbed industry research to prepare before starting the new job in January 2020. What Fandozzi wasn’t prepared for was the extent to which the used-heavy-equipment industry lags the used-car industry in innovation. Today, a potential car buyer can easily find the value of a used vehicle online through Kelley Blue Book or check a vehicle’s maintenance history through a service like Carfax, both of which rely on the unique vehicle identification numbers assigned to each car. “We don’t even have a VIN system in this industry,” Fandozzi says. “I thought I was being punked when they told me there’s no universal system.” It was an early “aha” moment for the new CEO, and Fandozzi began to envision a seamless marketplace for used equipment modelled on the automotive sector, one she and Ritchie Bros.’s top executives would begin to hash out in the coming months. But before they could do that, COVID-19 would force a different kind of transformation on the company. It’s mid-September, and inside a vast hangar-like building on the Ritchie Bros. auction site in Bolton, Ont., on the outskirts of Toronto, the disembodied yet unmistakable rat-a-tat voice of an auctioneer rings out with updated bids on a Kenworth semi-trailer truck. As the auctioneer rapidly calls out new offers—that lively, rhythmic style of speaking is called “auction chant,” by the way—dollar figures on a large screen tick higher. Yet, aside from three people huddled in a corner, all 500 or so of the red fold-down chairs facing toward the rows of backhoes and trucks sit empty. Nearly all of the 7,900 registered bidders from 59 countries are submitting their bids online. Ritchie Bros. had made big inroads into online auctions even before the pandemic hit. Roughly 60% of bids for its physical auctions were coming through the internet. But auction days still buzzed with activity, with crowds gathering in person to place their bids. The pandemic immediately changed that. At the company’s Burnaby head office, the decision was made to send everyone home to protect the dozen or so employees who work in its online-auction “nerve centre.” With Ritchie Bros. about to switch entirely to online bidding, an outbreak would be devastating. That never happened, and by April the company held its first fully online auction of equipment in Houston. It soon became clear that whatever might be lost by not having a live auctioneer drum up bids from the crowd was more than made up for by gaining full visibility into who was bidding and for what—a powerful asset that allowed Ritchie Bros. to approach auction losers with other equipment they might be interested in. “As bad as COVID-19 was, it was a magical opportunity that forced us to pivot and clean the decks,” says Fandozzi. Despite the disruption from COVID, Fandozzi set about instilling a test-and-learn culture at Ritchie Bros. It’s an experimental approach to innovation in which new ideas and products are tried out on a small, controlled scale and the results measured to determine if the innovation should be adopted more widely. As she’d done at all the companies she’s run, she established monthly video town halls, using them to provide regular updates on initiatives underway across the company. Several have shown promising In Texas, for instance, the company has been running a pilot project for a new sales structure to attract more business from the so-called long tail of the industry—the small contractors and construction companies that own 80% of the heavy-equipment inventory out there. Likewise, in various countries Richie Bros. has set up dozens of small, local auction yards on leased land in underserviced areas so owners and consignors don’t have to take their equipment as far to sell. Both are a significant break from how the company has targeted new business for decades, and based on early results, each initiative is being expanded to other markets. Even the question of what the live component of an auction should look like is being tested. While few customers seem keen to return to in-person bidding, they do like the social aspect and the opportunity to meet with other contractors. To that end, the company is trying different types of customer-appreciation events. At the Bolton auction, for instance, hundreds turned out for a catered lunch of ribs and chicken, and to kick the tires and smell the hydraulic fluid—yes, some buyers do that—of the equipment on offer. “We’ve moved away from being a company where people would instinctively say, ‘But we’ve always done it this way,’” says Darren Watt, senior vice-president and general counsel and an 18-year veteran. “Some things will work, some won’t, and that’s alright.” Upon arriving at Ritchie Bros. in early 2020, Fandozzi wasted little time in assembling her new executive team, several of whom are fellow Americans she has worked with before. They include Ritchie Bros.’s first chief operating officer, Jim Kessler, and Baron Concors, chief information officer, both of whom reported to Fandozzi at ABRA. “The number of people that can be very successful in a given role is very small, but the number of people who, no matter what the industry or situation, find a way to succeed is even rarer,” she says. “When I see that in people, I never let them go.” The new team of Ritchie Bros. veterans and newcomers spent much of 2020 crafting their vision for a marketplace where customers could access analytics tools, in-house and third-party services, and more choices in how to sell equipment, such as direct listings rather than auctions. Several parts have already fallen into place. It launched a self-serve listing service last year—like classified ads, but for cranes—and introduced a free inventory management system that large and small equipment owners can use to track the usage, condition and value of their equipment. Other elements of the marketplace are coming through acquisitions. In October 2020, the company bought Beverly Hills–based Rouse Services, a dominant firm in the data-intelligence sector for equipment markets. Through its relationships with equipment-rental companies, it regularly ingests more than US$100 billion in fleet-value data, rental revenue rates and equipment-sales data directly from rental companies, info its clients use to manage their fleets more efficiently. Ritchie Bros. moved its own data scientists to the new subsidiary, and while Fandozzi says Rouse will continue with its “day job” of serving the equipment-rental market, she sees the company’s valuation tools becoming the Kelley Blue Book of bulldozers and tractors. At the end of 2021, Ritchie Bros. acquired SmartEquip, a Connecticut company that connects equipment owners with manufacturers and dealers, enabling them to dramatically cut down on the time it takes to order replacement parts. As Fandozzi sees it, SmartEquip will allow Ritchie Bros. to offer a parts replacement service to equipment buyers at the time of checkout—what she calls a “Would you like fries with that?” strategy. Not all Fandozzi’s acquisition attempts have worked out. Last year, Ritchie Bros. agreed to buy U.K.-based Euro Auctions, one of Europe’s largest heavy-equipment auction houses, for more than US$1 billion. However, resistance from competition regulators in the U.K. prompted Fandozzi to abandon the deal earlier this year. Fandozzi knows Ritchie Bros. faces hurdles in building a seamless, one-stop marketplace. Externally, the heavy-equipment industry tends to be slow to evolve, though she believes the prospect of a recession is already prompting change. “What a recession buys you is time and people’s openness to do things differently, because they’re ultrasensitive to how they can save money and make more money,” she says. The internal hurdles are perhaps more pronounced. Over the decades, Ritchie Bros. has accumulated a lot of tech debt—different technologies piled on through acquisitions and projects that were never fully integrated. Fandozzi says the company began a process in 2021 of “unravelling the spaghetti,” but she admits she “underestimated the level of spaghettiness” in its systems. So in February, Ritchie Bros. signed a two-year contract with Thoughtworks, a global consultancy that has worked with companies like automotive auctioneer Manheim Auctions and equipment manufacturer Caterpillar, to fast-track the development of its new digital platform. In the meantime, Ritchie Bros. has started to see results from its efforts. Revenue in the first six months of the year climbed nearly 21%, to US$878.5 million, from the same period in 2021. And after stagnating for several years, Ritchie Bros.’s share price is up 60% since Fandozzi took over, compared to a 13% return for the S&P/TSX Composite Index. That said, the company’s shares have largely moved sideways over the past year, a sign that investors may be taking a wait-and-see approach to how the company executes on its plans, says Bryan Fast, an analyst with Raymond James who has a “market perform” rating on the stock based on its valuation. “The strategy definitely makes sense, and they have the moat and brand recognition to capture a greater piece of the pie, but implementing these kinds of digital transformations are always difficult,” Fast says. “These things tend to end up being more costly than originally planned.” Fandozzi has gotten used to facing questions about elevated costs on quarterly conference calls. And her response is always the same: The investments Ritchie Bros. is making are prudent but necessary. “We have completely turned the corner on the growth trajectory for the company, but the investments are growing at a faster pace than the top-line growth because those are investments we’re doing for the next decade,” she says. “If all you’re interested in is saving $1 million this quarter, this isn’t the company for you, or I’m not the CEO for you.” Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today . Your Globe

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SmartEquip Frequently Asked Questions (FAQ)

  • Where is SmartEquip's headquarters?

    SmartEquip's headquarters is located at 20 Glover Avenue, Norwalk.

  • What is SmartEquip's latest funding round?

    SmartEquip's latest funding round is Acquired.

  • How much did SmartEquip raise?

    SmartEquip raised a total of $35.55M.

  • Who are the investors of SmartEquip?

    Investors of SmartEquip include Ritchie Bros. Auctioneers, Paycheck Protection Program and Connecticut Innovations.

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