TIVP081 (Video): Restoration Hardware (RH): Building a Luxury Empire From Scratch w/ Shawn O'Malley and Daniel Mahncke

Speaker A: Imagine a furniture company chartering luxury yachts in the Mediterranean, flying customers around on its own private jets, and breaking ground on fully furnished, ultra high end neighborhoods, all while we're sitting in the worst US housing market in maybe 30 years.

Speaker B: I would say on the surface that sounds completely unhinged. I mean, furniture stores don't usually survive housing crashes by buying airplanes, right?

Speaker A: But that's exactly what makes the story so interesting. Because once you peel back the layers, the CEO has a thesis that in his words, every act of creation is first an act of destruction. And he's deliberately tearing his own company down to build something none of his competitors can match.

Speaker C: You're listening to the Intrinsic Value Podcast by the Investors podcast network. Since 2014, with over 180 million downloads, we've learned directly from the world's best investors. Now we're applying those lessons to analyze businesses and investment opportunities every week, helping you uncover intrinsic value. This show is not investment advice. It's intended for informational and entertainment purposes only. All opinions expressed by hosts and guests are solely their own, and they may have investments in the securities discussed. And now, here are your hosts, Sean o' Malley and Daniel Munka.

Speaker B: Today we are covering a company a lot of folks in the US Might know quite well, and one I, as a German, have honestly only encountered through their gorgeous galleries in Europe. We are talking about rh. The company formerly known as Restoration Hardware Ticker is also rh. And the reason I think this episode is going to be so much fun is that we get to revisit a theme that we've already spent quite a lot of time on this year, which is true luxury. I mean, we covered LVMH a couple of months back with the whole Arnold empire of timeless brands. And we also did Ferrari a bit before that, where Shaun, you made the case for how scarcity and brand authority, and also pretty good engineering compounded earnings at nearly 20% a year for a decade. And I personally covered MS, arguably the most prestigious clothing brand in the world. And R.H. is the American attempt to play that same game. But instead of starting with Louis Vuitton or Christian Dior, the company's CEO, Gary Friedman, is starting with couches, dining tables, and trying to scale all the way up to private jets, luxury hotels, and fully furnished homes. So I would say there's a lot to unpack. But before we get into it, quick plug here. We will be hosting our second Intrinsic Value Conference event in Midtown Manhattan this September, and if you're interested in joining us and networking with other investors as well as meeting us, you should check out the intrinsic value conference.com to learn more. And I can already tell you it will be an even bigger conference than the one we had at Omaha just in May of this year. All right, John M. So you've been digging into RH for the last couple of weeks. So where do you want to start?

Speaker A: I think I want to start with pointing out to the audience how painful it was for Daniel to recognize, uh, pretty good engineering over at Ferrari, right? This is a subtle thing, but you can pick up on that German Italian engineering rivalry for, uh, automobiles. Anyways, though, after you've studied so many businesses, you start to feel like you've seen it all, and then it comes along. A company that still manages to flip the world upside down for you. And that's how I felt with rh. I think it'll come as a surprise to no one that I've never shopped at an RH store because, you know, I'm a stingy value investor. If I spent 10 grand on a couch, I would just be kicking myself for not putting that money into stocks instead. And so, you know, I thought, because I've been furnishing my house for the last few months, why not invest in the company behind my dream living room? And if I do fabulously well in an RH investment, well, then maybe that'll help me rationalize splurging on the furniture. So obviously I'm kidding a bit. But, you know, the setup is really interesting. And for starters, most investors will immediately screen out the company because it has a ton of debt, twice the market cap of the company's equity in debt. And yeah, uh, so, you know, management has supposedly a pretty credible plan to become debt free by 2029. So that's important to know for starters, and we'll get more into that. But I think that all makes the stock interesting because there is a good reason for it to be overlooked with the debt and therefore potentially misvalued by the market. And then I'd argue, rather than competing in a more commoditized industry, like just simply selling furniture, RH sells a lifestyle vision. And I know that sounds like consultant word salad, but really their business is more about selling design inspiration for luxury spaces to high net worth families and their designers. And so you come to an RH store with or scroll through their brochures or source books, as they call them, to see what your outdoor patio could look like where you can buy an entire set that's tastefully curated in one fell SWOOP rather than mixing and matching products across brands. And so this is a company whose median customer almost certainly has a multimillion dollar net worth and where the average order value is likely more than $1,000, but can easily scale to $50,000 or more if you're purchasing, you know, multi room installations. And the thing is, with their target demo of high net worth and ultra high net worth families worth more than $20 million, this is a group that owns nearly four homes on average and spends six and a half times more on furnishings than the average owner of one single family home.

Speaker B: I'm actually surprised that not once in the last couple of weeks I did get a message on slack with a new beautiful couch with 10,000 bucks that you sent me telling that you will get it for your house. So maybe that still comes in the next couple of weeks. But with the European luxury brands, I would say usually get these origin stories, right, that are tied to Napoleon or, I don't know, the King of England, something like that. But the point being, you have really centuries of prestige and association with nobility to help you justify selling, um, 20k purses. Right? But this is a company that was only founded in California in 1979, so they are very much in the process of still building their brand. And for them to have already built such a business with, I think it's about three and a half billion dollars in revenue, I think that's quite impressive.

Speaker A: Yeah, well, you know, when you can't say your brand served Napoleon, I guess it makes sense why they have to buy prestige with customers by offering incredible yachts like the RH3, which costs €150,000 to rent for a week in the busy season. But don't worry, fortunately that price comes down to the very modest rate of €130,000 per week in the off season.

Speaker B: That sounds a lot more realistic. Maybe we can use that to charter to the private island that you wanted to buy when we covered. Was it Costar Group? I think it was. So maybe the listeners get a sense of our spending habits here. Burnout. Uh, somehow I'm sure you're actually going to tell me that owning a $15 million yacht helps them sell sofas, dining tables, and maybe, uh, lighting fixtures and other pretty traditional retail stuff. Right? And to say nothing of the RH1 and the RH2 private jets, the incredible hotels they've opened that they call RH guest houses, and the restaurants that they run in historic buildings in places like Madrid and Brussels, or even the fully furnished luxury homes that they've built called rh, uh, residences. So it's quite an ecosystem of luxury, I would say.

Speaker A: Well, I mean, isn't it obvious, you know, like of course, yachts help sell sofas and you know, the strategy is truly, uh, experiential, I would say. And that's why they're selling a lifestyle vision. RH wants you to be wowed by every touch point you have with their brand. And while some of these things seem like obscene uses of shareholders money, they do double as viral marketing. And the idea is that you experience one of their yachts or restaurants or galleries and you think, wow, I trust this brand to, I don't know, design my kitchen and maybe I'm going to spend $100,000 doing it.

Speaker B: I mean, it sounds a little absurd, but I can definitely appreciate the luxury marketing tactics, you know, can be a bit unconventional. I mean, usually you say luxury brands shouldn't market or sell at all, but then you could argue that that's not what IH is actually doing. I mean, a yacht like this is not actually aggressive selling, but more like yet another floating showroom. But before we get into the strategy further, I think we have to set the scene on maybe housing because in Europe the dynamics are a bit different, I think than in the us so people primarily spend on furnishing their home when they buy a new home. So there's a close correlation between the housing market activity and, and RNH's sales. And from what I understand, the environment in the US is pretty brutal from home buyers for housing adjacent businesses.

Speaker A: Brutal is, I think, the right way to put it. You know, just the headline numbers. Home prices are up 40 to 50% since the pandemic started and mortgage rates have been hanging above 7%. So the price of the asset and the cost to finance the asset are both blowing out at the same time compared to what it would have cost to purchase the same property just a few years ago. And so it's a double whammy to affordability, which is why you've seen the market just completely freeze up. And so for first time home buyers, the cost can just be obscene compared to renting. Right. You know, my mortgage for example, I think it's basically twice what our rent was. And so if you're an existing homeowner who bought a house in 2021 with a 2 1/2% interest rate, you sort of have these golden handcuffs. You know, your home is appreciated, which is great, and you have a killer interest rate. But if you want to move, you're going to lose that rate and probably have a dramatically higher payment for a property of maybe similar quality somewhere else. So, yeah, you know, the housing market isn't the most robust it's ever been at the moment, but management has been pretty transparent about this. Gary Friedman has basically said the quiet part out loud on earnings call, suggesting that they're hasn't been any meaningful sustained recovery in luxury home sales, and he's not expecting one until interest rates come down meaningfully and stay down. And so even worse though, is that you've got people like Jamie Dimon, the CEO of JP Morgan, issuing these public warnings that, uh, inflation is stickier than people think, which is basically code for, hey, don't bet on the Fed bailing out this market anytime soon by cutting interest rates.

Speaker B: I still remember how happy you were when you told me that. Thanks to Robinhood and you being a customer, your interest rate has been, I think, about 2 percentage points lower than the 7% you mentioned here. Right. So, uh, yeah, I got a good rate. Yeah. I think that, you know, listening to our episodes is not only good for investing advice, but also for personal finance, especially for Sean, who always knows all the tricks that you need. So, um, with this macro backdrop, Friedman, who again is the CEO of the company, is still deciding to even accelerate investment spending right now. Right. I mean, my gut instinct would obviously be to perhaps, uh, stop buying yachts and private jets and hisoka galleries. Although I gotta be fair here. From what you told me so far, it seems that RNH's customers are probably wealthy enough to not care about the macro cycles too much when they do decide to buy a new couch for $10,000.

Speaker A: Yeah, they probably aren't sensitive to buying a new house for $10,000. But the question is, do they need to buy a new couch at all? And if you're staying in the same house, you probably don't need to.

Speaker B: Right.

Speaker A: Uh, there's less often are you going to have a need for new furniture? Whereas every time you move, you want to restyle things, especially if you're on the wealthier side, you have more flexibility of, you know, you want to tailor the furniture you have exactly to the living space that you have. And so there is a very direct correlation between turnover in the housing market, especially at the higher end of the housing market, and sales for rh. And so in this situation where things are a little slower and the market is a little more frozen up, conventional wisdom would be to say that you hunker down, you cut SG&A, you cut overhead, you pause new Product launches, maybe you close some stores and. And you wait for the Fed to hopefully drop rates. And Friedman is essentially doing the opposite of all that. And, uh, his thesis for why is the part I really want, I think, listeners to lock into and decide for themselves how they feel about it. His view is that when a market freezes like this, your competition shrinks. They panic, they pull marketing dollars, they delay launches of new collections, they close locations. And it's true that a growing number of online D2C furniture brands have also simply ceased operations entirely in the last years. So Friedman's view is that the competition is evaporating while everyone else waits for the weather to change. And if you lean in and aggressively invest while everybody else retreats, the opportunity is there to capture more than just a few percentage points of market share. And that's why RH has increased its number of galleries from 24 just five years ago to 39 today, and grown its least square footage for selling purposes by a CAGR of nearly 8% at the same time. And that's also why, in this frozen market, they're able to grow revenues, I think, 8% year over year last year.

Speaker B: That's not bad. It actually reminds me of what we discussed in the LVMH episode about Bernard, uh, Arnault, where he was basically patient enough to acquire and then reinvest when others couldn't and didn't want to do it because of the economy. Although this also feels like a really significant expansion, I think he's taking more risk than most other CEOs, especially in this field that we looked at.

Speaker A: Yeah, I think that's 100% true. And honestly, there's this Picasso quote that Friedman likes to use, and it goes, every act of creation is first an act of destruction. And, you know, it's kind of profound. To me, it sounds exactly like something out of a Bernard Arnault interview. And except for Friedman is really taking this incredibly literally. He's calling what's happening right now the most prolific product transformation in the history of the industry, which is pretty wild language for a furniture company to use.

Speaker B: I don't want to say it, but I, uh, might be a bit too skeptical today. I can already tell you that he gives me somewhat of a bad vibe. I don't know him as well as you do, obviously, but just from what you tell me here, and, you know, a Picasso quote, plus, I would say a quite, uh, stark language about the change in the industry, I just get the impression that he's a pretty good storyteller. And also maybe pretty good at going against the grain. And more often than not, those people do turn out to be successful, as he clearly is, but they're also not really my type of CEO. So how about you try to make it a bit more comfortable for me here? So, you know, talk a bit about the background, who he is, how he thinks, and maybe you can also give us a background of the company. Where is it coming from? Right. We talked about it being established or founded in 1979. When did he take over and what did he do with it?

Speaker A: So don't give up on me yet, Daniel, because there is a lot more to this pitch. It is a really good story. And so, you know, the backstory is really key to understanding why I, uh, don't think some of this spending is as reckless as it looks, or, you know, at least not as reckless as it first seems. And this is a company that has died and been reborn before, and more than once. And so if we rewind all the way to 1980, a man named Stephen Gordon is restoring an old Queen Anne Victorian house up in Eureka, which is a little coastal town in Northern California. And the problem is he can't find historically accurate hardware. And this would be, like, period correct fixtures and fittings for his house. And he's so annoyed by this gap in the market that he opens a store to sell exactly that. And so that is the literal origin of the name. Restoration Hardware. It was hardware for Restoration.

Speaker B: That makes a lot of sense. The name is actually completely literal, because the first time I heard about it, I would have thought of a lot of things, but not necessarily furniture. But this definitely makes a lot of sense now.

Speaker A: No, it's completely literal. And through the 90s, the business actually grew very fast. They started five stores in 94, then 10, then, then 20 and 41 by 1997. And, you know, selling this very specific blend of what I would call upscale, folksy Americana. And so the famous example is this Teddy chair, a replica of a leather chair that Theodore Roosevelt. Teddy Roosevelt used when he traveled by train. And so their whole pitch, and, you know, this is right out of their 1998 filing, was Products with, quote, a sense of history or authenticity that customers could connect to. And let me know if you recognize this strategy, because even back then, they staged the inventory like rooms in a real house, hoping that you would just buy the whole setup rather than decorate from scratch.

Speaker B: Well, Sean, I know you want me to be reminded of the more extravagant version of their showrooms today, but to be completely honest and it might be me as a European. The first thing I think about, if I think about fully furnished showrooms is, is actually ikea. So I don't know if that's what you wanted me to do, but of course I do get it. It's cool to see that the whole buy the entire furnished room idea was, you know, a part of the company's DNA from the beginning and is not only a thing of the past 10 years.

Speaker A: You're tough on me today. I'm really going to have to fight to make this pitch come through. You know, moving on with the story, uh, the company would really first need to nearly die before it could embrace what would become this billion dollar strategy of, uh, of selling the furnace room for them and doing so in a bit of a more premium way than ikea, which, uh, you know, no slight to ikea, but that's how they think about it. So Restoration Hardware originally IPO'd in 1998, but by 2001 it was basically on the edge of bankruptcy. And that is the moment Gary Friedman walks in. He takes the top job after getting passed over for the CEO role at Williams Sonoma, where he felt that he was being groomed for the job and was the heir apparent. And he was so upset that despite having a cushy job with millions in stock options still left to be paid out to him, he left Williams Sonoma and implicitly made a huge bet on this struggling business in Restoration Hardware.

Speaker B: So you basically arrived with a chip on his shoulder and he went to a company that's almost dead. And I'm going to keep, uh, on my ride today and have to keep teasing you about this, but it's quite an origin story for someone who's now buying yachts on the company dollars.

Speaker A: No, it's fair. It's fair. You know, people who know the company well though, will concede that RH is entire esthetic is really just Gary Friedman's personal taste made into a public company for better or worse, but mostly for the better, historically. And so he rebrands Restoration Hardware to rhyme. Pushes away from knickknacks and towards serious furniture and high end home goods and design. And you know, when people criticize the prices or the luxury ambitions that he brings to the brand, his answer is the following. Really cool. He says great brands don't chase customers, customers chase great brands.

Speaker B: That's actually pretty true. I mean, that's basically the luxury playbook, right, that I was also referring to earlier. And I think it's also a quote that could Definitely come from Steve Jobs. So, uh, I have nothing to say here that would go against him.

Speaker A: No, I think so, too. And it explains why when this guy says he's going to destroy his current product line to create the next one, I do take that seriously. Because he's the same guy who took a nearly bankrupt cabinet knob retailer and willed it into being something of a luxury house. And know they've undergone a nearly unrivaled degree of creative destruction. Emphasis there on creative. And the way he's executing it this time ties back to a retail concept called the thirds. And so the idea is, if you look at any mature retail assortment, whether you're selling dining tables, area rugs, or lighting, you can break the performance of every item down into a top third, a middle third, a. A bottom third. And so if you introduce any new products and it performs in the middle third of your existing assortment, well, your business is going to stay flat. You're just substituting one okay seller for another. If it performs in the bottom third, sales could actually drop because you've now cannibalized something better for a dud. So the only way to meaningfully grow a mature retail business is to consistently introduce newness that performs in the top third of the assessment. So really, the idea behind that framework is you have to swing for the fences. When you're a mature business like rh, there is no middle path, and nobody can accuse RH of not having swung for the fences. And, uh, you know, to find those top performers, you can't just design a few nice chairs and pray. You have to cast a massive net. Which is why they revamped their Source Books in 2024 with new areas of focus. These massive, beautifully photographed catalogs. Those are the source books. And, you know, the new focuses were RH Outdoor, RH Modern, RH Interior, and RH Contemporary, which are these just different types of designs and design source books that you can use based on the style of the space that you're working with. And so the combined sourcebook circulation, which is such an important part of their brand and sales strategy, and actually their number of customer contacts that essentially doubled from 2023 into 2024, which has allowed them to aggressively push physical inspiration into more homes than ever before. If you want to get a little profound about the mission of rh, if

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Speaker B: Well, he certainly has a vision and also, you got to say, I mean, he did all of that in the middle of housing fees. So you know, that's a massive marketing cost, of course, but you know, if it works out, it definitely shows that he has a vision. And at least you're not buying a mature company, right? You're buying a furniture market, which generally is not the most exciting business. But he has a vision that I believe if you want a growth company and also a company that is proven that it can get there even if times are tough, it does seem like a pretty good setup generally. I have to say though, once again, he is betting pretty heavily at the moment, which you know, we talked about earlier, and he's doing that in not the best market, generally pretty cyclical and we're in a downturn and also the company's highly levered right now, so there's not a ton of room for error here.

Speaker A: So we'll get to the leverage. And you're right that overhead costs as a percentage of sales, it's definitely up a bit over the last few years. And if you view their capex, these acquisitions of planes and yachts as partially a form of marketing expense, that's also elevated too. But the source books are not entirely marketing. They do double as sort of this giant data collection exercise because RH uses them along with its website to basically test what actually resonates with the consumer before they make the manufacturing commitments to produce different inventory at scale. And so one example Friedman has been giving is finding what they call the cloud sofa of wood furniture. So the cloud sofa is rh, is iconic, massively popular premium sofa. And it's, you can imagine it's white and it does sort of look like a cloud. And you know, rather than guess at what the wood furniture sales equivalent of a cloud sofa could be, they put a bunch of candidate designs into the Source Books, wait six to 12 weeks to read the data and customer reactions, and only then do they commit operationally to producing what's popular. And you know, when they find one of these hit products, they don't just order more of it, they really do dimensionalize it. And we can get into, uh, exactly what that means in a minute because it's actually one of the more elegant parts of the strategy. And it's where the line between RH as a furniture retailer and RH as an actual taste curator really starts to blur.

Speaker B: Before we go there though, the thing I want you to understand a bit better is the pricing power underneath all of this. I mean, the thirds only work for your top third. Products actually carry premium margins. So it is on furniture chain. Doubling its catalog could just as well be doubling its losses. And we are talking about this company as true luxury. So I, uh, would also expect them to have quite high margins here.

Speaker A: That's true, yeah. And you know, going back to the story, if you fast forward from their near death experience in 2001 when Gary Friedman came in, by 2007, RH had gone private in a $267 million deal with a private equity company led by Catterton. And then it became public again in 2012, right as the country was really beginning to climb out of the great financial crisis. And at that time it listed on the New York Stock Exchange at an initial price of $24 a share. And so by late 2015, shares would quadruple and actually, you know, rip to over $105. And then in 2016, Friedman does something that looks at the time like a catastrophe. He rolls out a membership program where for 100 bucks a year, you could get 25% off merchandise, more off sale items, concierge services, and early access to clearance events that they would do. So the thinking was clearly to clone Costco or Amazon prime, but do it for luxury furniture. And, you know, he simultaneously started stripping discounts out of the business for everybody else, meaning you could only get a discount if you were a member.

Speaker B: Whenever we talk about these subscriptions, for example, Amazon, we always think about them as being these no brainers Right. Like spending five bucks a month for Amazon prime is an absolute no brainer. And to me it seems that $100 a year for a membership like this also is a no brainer. I would take a guess though and say that the actual customers of our age probably hated it. Right. I see why Membership programs with savings are great for high turnover businesses. But discounting is sort of anti ethical to the idea of luxury, right? I mean part of the sales prop is that true luxury products don't go on sale.

Speaker A: Yeah, you're right. And you know, I wouldn't say RH is close to being true luxury in the way that Hermes is true luxury. Right. But it was definitely premium for sure. And your instinct I think is sort of half right and half wrong. And you know, customers and investors were definitely confused at first and the stock tanked in response through 2016 into early 2017. But memberships are actually still an important part of the business today. And so it works well because there's this psychological effect where you've already spent your $200 a year and you know you don't want that money to go to waste. So you feel like you have to justify that and even if it doesn't make complete logical sense, you're still going to go and say, oh well, let me go spend more money so I can justify the $200 that I've already spent. And uh, it's actually a very effective strategy and so it's very good at driving customer loyalty in the vast majority of sales. Today, about 98% of their merchandise sales come from members. So even though memberships have gained traction, the market thought the idea looked like a huge self inflicted wound at first. But what's really interesting to me is that given that the stock is puking on itself, despite Friedman's conviction in the membership idea, he started aggressively buying back RH stock at ah, very depressed prices.

Speaker B: But if it's not true luxury, then why exactly do you spend money on huge yachts and private jets to charter for hundreds of thousands a week? I mean, if your customers care about discounts, I also have to believe that they are not the type of customers that would actually keep buying furniture in a recession or in a bad housing market. So I think I'm a bit confused of who exactly is the customer of our age. I gotta say. Apart from that, I still have some open questions and we'll probably get to all of them. But just regarding the buybacks that you just mentioned, we saw that again in 2022 and also in 2023 where you get these very lumpy buybacks. So the stock during that time was down by half of two thirds of its Covid peak and they dumped $2.2 billion into share buybacks. And just for perspective, the company currently has a market cap of about $2.8 billion. So that does look like pragmatic capital allocation. But at the same time, the stock is now down to new lows and they don't really appear to be buying back shares at all right now. And between these huge buybacks and the investments in growing the number of galleries and sourcebooks, I do see how the company has gotten into this position where they seem to have financially overextended themselves with debt and long term leases. Even if I think you said earlier, they believe they can be debt free within three to four years.

Speaker A: So we still have a lot to get to on the debt side of things. But the point I wanted to make is that when the market panics about a, uh, transition, Friedman's mindset has been to turn the company into a share cannibal. And in hindsight, 2016 was not a self inflicted wound at all. Right. In a way, it was the moment that RH stopped being a promotional retailer and truly became a brand in its own right. And killing other forms of discounts in favor of a consistent membership program helped enable them to pour more money into experiences like the barista bars and rooftop restaurants and aspirational galleries and the yachts. These things that make people want to hang out more around RH is fixtures. And now that defines what the brand is about. And so that elevation is what generated some of the pricing power that we'd seen flow straight into their gross margins and gross profit growth. Right. Gross profits are up by more than 9 percentage points, 900 basis points from 2016. And that's actually on a low comp. Right. This year gross margins are down a bit from past year. So anyways, the point being they have gained significant pricing power in the last

Speaker B: decade and that pricing power is the foundation behind the whole thirds idea, right?

Speaker A: Yeah, so you alluded to it earlier, but the focus on the top third makes the most sense only when your top third is genuinely premium. And the funny thing is, if you're looking for some non financial validation of this strategy, let's just look at who showed up on the shareholder register. In 2019, Berkshire Hathaway took a six and a half percent stake, becoming RH's fifth largest shareholder. And as you know, Buffett doesn't just buy any furniture retailers, he Buys brands with moats and pricing power.

Speaker B: Well, one of Buffett's best known investments actually has been into the Nebraska furniture mod. Right.

Speaker A: It's true, it's true. It's a special exception though. You know, for the sake of journalistic integrity, I should clarify that Buffett would go on to sell out by 2023, which I think had more to do probably with the outlook for housing generally than anything. Right. Interest rates were rising post Covid. And so anyways, Berkshire no longer owns the business. And with the stock trading at a fraction of its 2023 price, you could either say Buffett was right to have exited, or you might argue that the opportunity has only gotten more attractive as they've continued to invest heavily in grabbing market share while the stock has only gotten dramatically cheaper.

Speaker B: I guess it kind of depends on how you frame it. I actually got to say that if I would see Buffett or let's say Berkshire by now getting back into a business like this, it would probably help me getting more comfortable with this CEO. Although obviously you should always, you know, have your own opinion on people and not just follow some super investors. But at least the fact that he invested in it gives me some pause and thinking, well, maybe I do misjudge the people or the management team of this company. And so going back to the restaurants that you mentioned, I would love to hear more color about how these factor into the strategy because I think you told me they are more important than I actually would have thought.

Speaker A: They're sort of absurd in a good way.

Speaker D: Right.

Speaker A: The restaurants are seamlessly integrated into the galleries, which is, you know, another word for stores that's RH is parlance. And on average, the operating income that these restaurants throw off covers about 65% of the entire galleries rent. And so in some of these standout locations, the math is even crazier. At RH Newport beach, the restaurant alone is a 20 million plus operation and it's expected to generate enough cash flow in its second full year to potentially cover the rent for the entire 90,000 square foot gallery that they sell furniture from.

Speaker B: Those are actually insane stats. You know, I think if you would have told me a couple of years ago about a business model and you said that they would now put restaurants or bars into those places, I wouldn't have thought that would work out. What would actually be interesting to know is the data of how much more money people spend on average if they go to those restaurants regularly, let's say, you know, once a month. So that would be pretty interesting. But I Also can imagine that this is data that the company is most likely not going to give you. But you know, for the unit economics and um, especially the unit economics of those galleries, that's a pretty, pretty remarkable thing to see.

Speaker A: That's right. And you know, the galleries with their ornate beauty drive way more foot traffic than old school furniture stores. And the ones with restaurants on top drive dramatically more than that. And the margins do follow. And, you know, notice the through line all the way back to Stephen Gordon and his staging rooms in 1980. Right. The entire model is still about walking into a fully furnished scene, falling in love with the whole room and buying the whole room. It's evolved a lot along the way.

Speaker D: Right.

Speaker A: They've just wrapped m it all in marble and, and rooftop restaurants and started charging luxury prices for it. But that same idea remains. And for anyone who already forgot, Stephen Gordon is the founder of rh. And I think it's easy to forget that because the story has been so much about Gary Friedman.

Speaker B: And that kind of brings us back to today's question, which is about the yachts, the jets, the guest houses, the residences. Do you think, or would you consider that to be sort of the same instinct of Stevens taken to its, um, logical extreme? Or would you say that's mostly Friedman having his own idea of what the branch look and also feel like?

Speaker A: I think it's a billion dollar question. And to be fair to the skeptics, the, uh, ambitions here aren't actually new. Right. They have been telegraphed for a few years, going back to 2020 and 2021. Freeman was already saying out loud that he thought Two thirds to three quarters of RH's business could eventually be outside of the United States, putting it in the same conversation as an LVMH and an Hermes. And he's also openly said his real model isn't just the European luxury houses, it's Apple. So, you know, what he admires about Apple is the ecosystem. You get someone inside your world of products and services and then the loyalty compounds. Right? I know I'm trapped very deep in the Apple ecosystem as I use my Mac and my iPhone and my Apple watch. And so, you know, he said pretty flat out that he wants that kind of brand loyalty for RH products in people's homes.

Speaker B: Now, I'm honestly questioning myself here and why I'm so skeptical today. I'm kind of sorry for it, but I kind of feel like he wants everything, but you can always have everything. So on the one hand, he wants to be true luxury on the other hand, he also wants to be Apple, and then everybody sees his brand basically as Apple. I would also say, you know, there's obviously a difference in the products. Apple just has because the products that it sells, a significantly better chance to become this brand where people go to every single time. And I think that's just different for furniture in general. But I got to say that I do really like the idea of having an ecosystem around the brand. And after seeing the success with the cafes and bars and restaurants that they do have, it seems that that is working quite well. And maybe the hospitality angle could be something like that, too. So is that a new idea? Is it an old idea? And how is it playing out?

Speaker A: RH's very first hospitality experience goes back to RH Chicago years ago, when they put a restaurant inside a gallery, and then it changed the trajectory of the whole brand, honestly, by 2021, they were building a guest house, which, again, is just a fancy RH term for hotels in New York City. And then they would put $105 million into a real estate project in Aspen alongside a gallery, a guest house, a spa, restaurants, and these homes all under one roof. And so today's RH Residences and RH guest houses are not a wild pivot, even if they have fancy names. You know, they're basically this Aspen blueprint, but just scaled up, I guess.

Speaker B: There are two questions that jump out to me here. So the first one would be is whether a brand that's known for furniture generally becomes credible as an architecture or interior design or landscape firm. Um, and even our hotelier and also a real estate developer. I mean, one thing, for example, that we do see with these two luxury brands is not only history, but most of them focus on one specific thing, then get incredibly good at it. Then over time, they expand into other things. We see that with almost all of the luxury brands that come out of Europe. And technically, you could say this is the beginning of such a story. You could also say that he tries very hard to be exactly that, and he's not really getting there. I mean, those are all completely different businesses, and each of them need enormous attention and capital. And I don't know. Friedman is a man not necessarily defined by circle of competence. I would say

Speaker A: that's a really good way to put it in. I mean, for as painstakingly as they've worked to redefine their brand, people have wondered for years whether a furniture company can pull off being taken seriously as a broader design authority, not just a design retailer. And now one of the things arguing for their growing clout in the design world is that when they pivoted to memberships in 2016, one perk that they've successfully offered is a free RH designer who helps you set up the home. And so it very much seems to make the customer relationship stickier and gets them coming back. And then it turns a single couch purchase into a whole home project as you work with your RH designer.

Speaker B: And there's a second risk that is almost the opposite problem, which would be that RIH becomes almost a victim of its own success. So when you put up blockbuster numbers, you know, those numbers sort of become the benchmark for your business and you almost measured against them forever. So the bar just keeps rising. So you said that they made almost 700 million in net income in 2022. And if you compare the 125 million in the last year to that, it looks obviously far less impressive. We talked about this, uh, a couple of weeks ago when we talked about Auto1 and I basically talked about Auto1 and its competitor Mobile, which is a way higher margin business and way more asset light. And we kind of talked about, well, will they be able to get into their business? And the difficult thing is if you have a great business and the benchmark is set quite high, investors don't want to see you spend a lot of money and bring margins down. And here you kind of have the opposite. Where in the past your results have been fantastic and now they're going down because you invest. People just generally don't like to see that.

Speaker A: That's right. And you know, you can see the tension in um, the financials, which is where I want to take a snacks because under all this beautiful brand storytelling does sit, uh, what is generally a very aggressive balance sheet. And so there's a substantial debt load that we've alluded to and something of a maturity wall and also a deleveraging plan that depends on a lot of things going. Right. And so looking at the company's debt picture, they have two and a half billion dollars of term loans due late in 2028. And again, remember, that's about what the entire company is worth.

Speaker B: Right.

Speaker A: And then they also have a 600 million asset backed credit line where they're borrowing against their real estate assets and that expires in 2030. And so the good thing is that both of RH's term loans require very small fixed quarterly principal payments of just a few million dollars relative to the total size of the debt. But that's how you get to what's called a maturity wall, when the bulk of this debt comes due and most likely needs to be rolled over, which just means refinance, meaning you need to get a new loan to pay off the old loan and you just kind of pushing the can down the road. And should there be some sort of liquidity crisis in 2028, some sort of financial crisis, banking scare. If RH doesn't roll that debt over sooner or be able to pay it off entirely, which would be very challenging, they could be in some trouble because they certainly don't have the cash on hand at the moment, nor the cash flow to tackle that debt. And because of that, uh, let's call it a challenge, the $2.2 billion of stock repurchases across 2022 and 2023, it does make their use of cash in the recent past even more aggressive. And so effectively those buybacks in hindsight, were debt financed. And when you're also sitting on one and a half billion dollars of leases, which are effectively a form of debt you've agreed to commit to because you're making set payments going into the future on a recurring basis, I would argue that's debt. It just only makes the picture messier. And so this added leverage, plus three years of flat revenue and weaker operating margins and declining gross margins from tariffs and other things, you know, that has all negatively impacted the company's credit profile as a borrower. And so we actually saw some very meaningful credit downgrades that happened in 2025 for RH, which is not a good sign for equity investors. And fortunately that is now starting to stabilize. But again, that does them m really no favors because with a lower credit rating, if they do go to rollover their debt wall, which I presume they'll need to, they'll have to do so at a higher rate than they otherwise would have, which just increases the cost of debt. So that's more interest payments are going to reduce net income in the future.

Speaker B: I feel like the debt question is probably the most important thing in today's thesis. So I would like to take the chance and actually talk about accounting here a bit, which I know isn't the sexiest topic, but I think understanding, especially lease accounting can be important for this case and actually for all of the retail businesses that we ever looked at. And given RH's leverage profile, I think it's especially important here. And when we are accounting for leases as a form of debt, as you have basically suggested a minute ago, how does that actually happen and why do we do that? And also, what does the change for us as potential investors in this case?

Speaker A: Gosh, I'm getting flashbacks to studying for six months for the CFA exam. You know, it turns out some of that stuff like lease accounting is, uh, sometimes useful. And there are two types of lease classification. So there's operating leases in finance leases. And you might be thinking, look, a lease is a lease, but it is not actually as redundant as it sounds. There's some sort of logic to it, right? With operating leases, the idea is that you are renting an otherwise viable asset, whereas with a, uh, finance lease, you're effectively getting someone to lease you a property for, you know, to use accounting parlance, the majority of that assets useful life is in which case what you're doing is you're buying something, you're not leasing it, which is why some leases get classified as finance leases. And so it would be sort of like, um, maybe to make a parallel, if you customize a car that has your name branded in big cursive letters on the side with bright pink seats, and then you leased it for a decade, given that no one else is going to want the car afterward, it has effectively no remaining useful life by the time you're done. There's no residual value or very little. So in the truest sense, did you really lease it, or did you finance a car purchase without explicitly getting a loan? That's sort of the point of the logic here. And so, on the other hand, if you lease store space in a popular shopping mall for five years, well, that space can be easily repurposed afterwards. And in that case, then you truly just rented it, right? You rented an apartment for the year, and then afterwards, you know, it's passed on to the next person. And so that's an operating lease. You didn't really, you know, it's not something that resembles debt quite in the same way. And so again, that's the logic of it. And so it's, it's generally important to account for leases in a company's debt picture. And I think this just adds an extra wrinkle to how you think about it because of the way that accounting for operating leases and finance leases can actually have different effects on the income statement.

Speaker B: I don't know about you, but if you give me a good price for a Porsche with pink seats and a company slogan on its doors, I still take it. I mean, put a nice little black wrap on it and it's as good as new. And I'm also rocking it with pink seats. So it's not a problem for me. But jokes, uh, aside, I mean, which one of those two types of releases is our age? And I would just take a guess and say they probably personalize or customize quite a lot of the spaces they are in. Does that affect to any extent how we should account for that?

Speaker A: Yeah, so they have a decent split between operating and finance leases, but a bit more toward finance leases. And, um, the reason this matters is because as we know, they lease a lot of physical assets like galleries and showrooms and restaurants. And many of the galleries they use, some of them can be classified as regular operating leases. But some of the more highly customized properties that they've constructed that really serve no other purpose outside of their role in RH's ecosystem. Well then there's more of a case that those are finance leases.

Speaker B: Without getting lost in the weeds at a high level. Why does the distinction between operating and finance leases actually matter for us? I mean, you mentioned there's an impact on the income statement, right?

Speaker A: Yeah. So if we can do a 30 second deep dive here into some accounting. So in both cases, something known as a right of use asset is created on the balance sheet, reflecting the value that you get from making use of the leases. And then a matching lease liability is also created and amortized over time. That's just accounting 101. But on the income statement for an operating lease, RH records a straight line lease expense and its operating expenses. But for a finance lease, they break out that cost into two parts. And so the cost is separated into the depreciation of the right of use asset and an, uh, interest expense based on the imputed interest rate on the lease. Right. If you treat all the lease payments as a form of debt and calculate the present value, the implied interest rate on that debt, that is the imputed interest costs. And so anyway, this interest component then gets accounted for below operating income on the income statement, which means that operating income could be somewhat inflated in a way or look better than maybe reality would show. Uh, especially if RH or any company were more aggressive about how they categorize finance leases. And that's just something I think to keep in mind as you dig through the numbers. And that's not to say that they are being aggressive, but really just the whole classification process involves judgment. And so as a savvy stock investor, I think you should understand the assumptions that go into these accounting differences and recognize the way it impacts the cash flow statement, the balance sheet and operating income versus net income. And so I honestly would recommend Just treating all lease obligations as finance leases, I think that's way simpler. Accountants may disagree with me, but that's way more of an accounting tangent that I wanted to go down. So I apologize to the audience, but hopefully that is helpful for some people out there that really enjoy lease accounting.

Speaker B: I'm, um, certainly there are people listening to us who actually do enjoy that, so I think was pretty, pretty helpful. And I guess this, just to kind of get back to the topic matters for our age in regards to their debt obligations and also their ability to pay them back. Right?

Speaker A: Yeah. So it's a prelude to discussing the reality that RH is expected to increasingly use sale leasebacks as a way to raise cash to pay off this term loan debt that we keep coming back to that's coming due in 2028. And so in other words, they will sell real estate that they've developed and own and then lease back the same property from some sort of outside investor. So operationally nothing is changing. Right. They're still operating out of the same galleries, but they freed up a bunch of cash that they can use to pay off their term debt while effectively taking on more lease leverage. And much of this, I'm guessing, will be classified as finance leases, but that's entirely speculation.

Speaker B: So when our age says they're going to repay all of their debt by 2029, what that really means is they're going to take on more lease liabilities, which aren't technically debt, but still very much show as long term liabilities on the balance sheet.

Speaker A: I think that's right. I think that's right. And so Friedman has also stated that the company is exiting the peak of its investment cycle. So that does help reduce the need for fresh financing going forward. But yeah, it is mainly going to come from selling off real estate, which they're expecting to do to the tune of 200 to 250 million dollars per year. So that will help raise some cash, um, on the balance sheet. And you know, again, as part of its real estate transformation, RH is shifting away from a traditional retail leasing approach toward a development model where RH buys and develops real estate for its new design galleries, either directly or through joint ventures with third party developers. And, and then once construction is complete, RH's ultimate objective is to execute a sale leaseback transaction. Whereas we said they sell the property to an investor and agree to lease it back from that investor for a set period of time. And to execute all of this, RH actually brought back David Stanchak as chief real estate and transformation officer recently. And David is for context, the previous mastermind of RHS sale leaseback strategy. So they're getting the gang back together again to uh, do some financial engineering here.

Speaker B: I don't know if I like that and maybe that's part of the reason why I'm so skeptical today because we talked about this before and to me it just not seems like the best way to actually get rid of your debt. I think partly selling assets feels a bit different than actually generating enough quality cash flow so you can truly say they earned being debt free and that just me. I mean if you know all of these investments, they are actually paying off and you can see how they at least believe it will all work out for them, then you know that will be a good investment. I mean you could see sales rebound while the debt gets paid down with real estate sales. And realistically I think they will still have some more debt to all over, but they may actually thread the needle of having done accretive debt finance buybacks, reinvested massively into taking market share, doing a slowdown for the industry, and then done some clever financial, let's call it maneuvering that doesn't truly eliminate the debt, but certainly reduces the risk to shareholders and then clean things up. So I guess if I have to summarize anything, that's how I would summarize the bull case. Right?

Speaker A: Well, with your skepticism today, I appreciate you being able to uh, make the arguments for the bull case. And yeah, I mean management believes the company can hit five and a half billion dollars in revenue by 2030, which would be something like a two thirds increase. And some of the estimates I've seen on Wall street aren't as optimistic, but they still model a jump in sales to $5 billion or more. And you know, if you're Talking about a 10% net income margin on $5 billion in sales, that would be $500 million in revenue. And I don't think we need to get deep into the valuation weeds here. But you know, if you put a 10x multiple on $500 million in revenue, that is a $5 billion valuation which would be a, ah, double from current prices.

Speaker B: I think there's no doubt that at uh, the current valuation, if they could get back to the amount of money they've made in the past, this could easily be a good investment. I think the question is, do you think this is a business that can achieve luxury industry margins even if sales bounce? Because an 11% operating margins is where we currently are. And for a self Described luxury brand. That's not actually a luxury number if you ask me. And you know, I look at the past, they've earned more money in the past, but I just don't see how you can just normalize earnings as with, you know, some of the other value plays that we have had on the show.

Speaker A: No, it's not a luxury margin. You know, LVMH would faint I think if they uh, they saw this. But the costs from scaling operations and from tariffs to is definitely weighing down margins. And if tariffs roll off in 2028 while the business reaps the benefits of these investments, you could definitely see operating margins start to rise back maybe towards as high as 20%. And for context, they peaked at 24% a few years ago. So again, this would mostly be the bull case. Debt reduction after massive buybacks previously, while operating margins normalize and sales take a real step forward after being flat for a couple of years following the COVID era bonanza where you then did have a huge jump in sales that I think pulled forward a lot of the business. And the question is, where does the company go from now? And I would probably say like a mid teens operating profit margin is realistic. And then that's how I get to say, you know, approximately maybe you get like a 10% net income margin on $5 billion in sales. And then that's how you get to this idea that the company, it could be worth $5 billion. And then it's just a question of the multiple you use, right? If you use a 20 times multiple, then it could be a four bagger. But there is a question of whether this company deserves that kind of multiple. For context, it currently trades at about 23 times earnings. So the market is paying a meaningful premium for a business that is highly levered and would otherwise look like it could be in trouble.

Speaker B: I think it's always difficult to look at multiples whenever you have these depressed times in earnings. I think that's similar to when we looked at Nike back a year ago where it was basically still trading at a P of 30. But obviously part of the thesis has been that the earnings will recover over time. There's one topic that actually also comes up with Nike all the time. But you also bring up today which is tariffs. And it's kind of surprising to me because mostly when you talk about a luxury brand, they manufacture their things locally, which for this brand would obviously mean in the ass. For many other luxury brands it means in Europe. But it seems like they are quite exposed to tariffs. So why exactly. Is that. And how exposed are they?

Speaker A: More than you'd want to be. Right. They did smartly move some of their sourcing out of China, but a lot of it went to Vietnam. And Vietnam got hit with tariffs too, so they definitely did not fully escape it. And they've talked about doing some stuff like trying to produce a majority of their upholstered furniture in the US And a chunk in Italy, but then also it's probably more expensive to do so in those places. So, you know, you know, I'm sure they'll continue to try and mitigate tariff costs or hope it just goes away with the next administration, but there's really been no way for them to completely escape the effects of it.

Speaker B: Yeah, I mean, that's the case for many, many brands. So I wouldn't say that's, you know, specific to R and H, although I would say that probably going from Vietnam for manufacturing to, let's say the US Or Italy doesn't necessarily help the margins. Even if you don't necessarily have to pay the same amount in tariffs, I would just assume that manufacturing in those countries would be way more expensive than it is in China or Vietnam. But how about we bring it all together here? Because I'm honestly still not sure where you're going to land with this one. I'm not sure where I land on this one. So do you mostly see it as a big opportunity with big risks, or do you just see a big risk and you don't necessarily think that it's highly likely this will be a fallback at any time?

Speaker A: I've gone back and forth on this one, but ultimately I do see it as a no moat business. And yet I would also say even if a watered down version of Friedman's vision for the next few years comes to fruition and the stock is almost certainly undervalued. And so to me, it's just a matter of how much conviction you have in Friedman's plan. And that's where I start to trip up. And 18 months from now, if you told me that RH stock had more than doubled, I would absolutely not be surprised. And with our luck, it, uh, probably will. But we know from Buffett that the first rule of investing is not to lose money. And I don't think we can confidently say that there's no risk of losing money here, that we have a substantial margin of safety. There's a lot of things outside of their control. Right. If macro factors take a turn for the worse, we talked about like maybe a banking crisis, not to say there is about to be one. But we know that historically these happen every few years, and in that case, they would be quite vulnerable to this debt wall that they have in 2028. And so I think I'm close here. Uh, I could almost get really excited about this one, but I'm just not totally sold that their bets are going to pay off. And for example, you know, Friedman had really big ambitions for RH Residences with the homes they built in Aspen, but the plans have pretty much been very dramatically dialed back in the last year or so around RH Residences. So it's not like Friedman is infallible, even if he does embody a pretty impressive degree of boldness and belief in himself. But to me, that also raises another question of key man risk.

Speaker D: Right.

Speaker A: Friedman is not exactly a young guy, and I think the stock at more than 20 times earnings could get a heck of a lot cheaper if the market has to price in Friedman's retirement in the coming years. And, you know, this is a business that almost just doesn't make sense without Friedman. So then what's the terminal value of the company without Friedman involved? Um, I don't know. You know, people like to debate whether Berkshire makes sense without Warren Buffett, and there's something to be said for that, but still, the underlying businesses are all viable. If you have a company here that is really completely dependent on the aesthetic vision of, uh, one man. Yeah. What is the company worth when he's gone? To me, that is a real concern. And I don't know if he leaves in a year from now, five years from now, 10 years from now, or what, but we know he won't be around forever. So I'm getting enough yellow flags that tell me that this investment would be vulnerable to a number of very tangible risks.

Speaker B: Well, he would probably say that every act of creation is first an act of destruction when he leaves.

Speaker A: Yeah. Destroying shareholders, uh, faith in the company. Right. I mean, he hasn't been afraid to break things. He has ripped up margins and levered the balance sheet and made some exotic investments along the way. So it really is a very, very interesting story, but one that I'm happy to watch from the sidelines.

Speaker B: Yeah. I mean, look, throughout the entire episode, I might have seemed a bit more skeptical than I've actually been. I mean, I could also compare this case to wix, for example. I mean, WIX is a company where I feel like if it works out and it still exists in five years time and base 44, which is a huge part of the Thesis for everyone who didn't listen to the episode is still existing and thriving. The company could easily be a 3 or 4x, but you could also make the argument that it doesn't exist anymore. Nobody needs it in two or three years time. So we know that people will still need furniture in two or three years time. But we don't necessarily know if R and H is still existing if you look at the debt they have compared to the market cap right now. And that's why I really don't know what to think of this one either. I mean, you have a CEO here who turned this little furniture store into a multi billion dollar business. So I mean, honestly, who am I to question his decisions? And at the same time, if I think about putting my money to work, I also have to trust the people at the wheel, right? And to be completely honest, from what you told me today, I don't really know what I would be buying. I mean, am I buying a top tier luxury brand? Am I buying a restaurant chain? Or am I buying a founder's vision for what could be a global hotel brand? So, you know, I sometimes joke with you that we are value investors and we are, uh, value investors because we lack the vision or the risk appetite to act like someone, like Friedman and completely destroy something to build something new. And I admire that. But I also wouldn't want to be invested in it. And it always sounds like a cop out to say, you know, I could see this double when things play out, but it's not for me. But like an insurance, it's sort of like an insurance so that when it's actually doubling, nobody can tell us that we were wrong. And when it goes bankrupt, we also seem smart because, well, we did invest into the company, right? But honestly, that is to some extent the game of investing. Like, we deal with uncertainties and we have to figure out whether they fit our risk appetite and also what chances of success we actually believe this business or this company has.

Speaker A: I really wanted to hit a home run on this one so I could go out and buy that $10,000 couch. Daniel.

Speaker B: Well, maybe that's. You know, I joke with you that whenever you buy something on Lululemon, it's like an extra 2% on the next quarter's earnings report. So maybe you should start doing the same for On H,

Speaker A: for the audience. I, I took a picture of my, uh, most recent Lululemon haul and Daniel sent me a message back, you know, plus 2% for North American sales.

Speaker B: Okay, I think that's, uh, that's a perfect place to leave it. And if you want to keep going deeper on names like this, the bull and the bear cases, for example, all of that you can do in our intrinsic value mastermind community, where almost all the time we keep talking about the companies that we cover show with the members in the community. Actually, I also believe that today's pitch has been the recommendation of a member we talked to in Omaha. And of course, we will link to our community, the network, also the free newsletter that we have in the show notes. And Sean, as always, was a blast joining you and hearing this pitch, even though I might have been a bit skeptical from the beginning. But that's not because of your pitch, I can assure you.

Speaker A: Uh, I'm glad to hear it. Well, you know, let me leave the audience with a quote. Bernard Arnault, the patriarch of luxury giant lvmh, says money is just a consequence. I always say to my team, don't worry too much about profitability. If you do your job well, the profitability will come. And, uh, yeah, Friedman has very much, for better or worse, been channeling his innard Bernard Arnault, it seems. And so with that, we'll see you all again next time.

Speaker D: Just a quick note before you go. This episode would not be possible if it weren't for our friends at Fiskel AI. It's our complete stock research terminal that Daniel and I use on every single episode and with every company we dig into, pooling 20 years worth of financials, digging into segment data, grabbing quotes from the latest earnings calls, and making use of real time institutional grade data all in one place. And if you want to try it yourself, well, head to Fiskel AI TIVP. That'll include two weeks of Fiskel Pro for free and 15% off if you

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