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A Billionaire Junk Man?

Brian Scudamore Story

http://www.1800gotjunk.com/

Making Great Money Reselling Old Mannequins

Lost Election Makes Man a Multimillionaire

IT was a misty Thursday in the suburbs of this sprawling city, and inside a recently vacated house, Austin Atkins and Stefan Meissner were up to their elbows in junk.

The detritus was the usual: ratty couches, empty paint cans, old mattresses. In a closet sat a dusty upright piano. Out back, in the weeds, lay a rusted hydraulic car jack.



Mr. Atkins, however, was undaunted. "Time to clean up," he said. Over the next 90 minutes, the cleanly uniformed duo grunted and grimaced as they carted every ounce of junk out to their flatbed truck. When they were finished, they toweled off, shook hands with the real estate broker who hired them, accepted payment and headed for the dump.

The routine was typical for this tag-team of Mr. Cleans, junk haulers from the local franchise of 1-800-GOT-JUNK?, a company based in Vancouver, British Columbia, that has jazzed up the traditionally impersonal act of carting away trash.

Since it was founded 17 years ago, the company has grown from a sole proprietorship in Vancouver to an international corporation that expects revenues of $120 million this year.

The secrets to this success are uniformed haulers, shiny Isuzu trucks and service with a smile. While most carting companies send scruffy men to retrieve refuse from the curb, 1-800-GOT-JUNK? sends haulers right into customers' homes, removing not only the trash but also clean up when they're done.

For Cameron Herold, the company's chief operating officer, the approach is nothing short of revolutionary. "We've done for garbage what Starbucks did for coffee," he said, noting that most of the company's franchises charge a flat $500 per truckload, which includes gas, labor and dump fees. (There are smaller fees for one-quarter and one-half of a truckload.) "We think of ourselves as the FedEx of junk."

But there's more to this story than a bold brand. As many small businesses are turning to angel investors or venture capitalists for help, 1-800-GOT-JUNK? has done it alone, bootstrapping the business exclusively on cash flow, and sharing 25 percent of profits with employees through a bonus program.

The company has also built itself around technology, centralizing call-center operations and dispatching new orders through a proprietary Web-based processing system that will soon use Global Positioning System data for better service.

"When a customer calls, we want to be able to get to their junk and remove it as quickly as possible," said Brian Scudamore, the company's founder and chief executive. "Once you've decided to get rid of this stuff, you really don't want it lying around."

Like many small businesses, 1-800-GOT-JUNK? was born on a whim and youthful enthusiasm.

Back in 1989, Mr. Scudamore was waiting for food in a McDonald's drive-through when he spotted a pickup truck with the words "Mark's Hauling" on the side.

"I looked at the truck and said, 'Now there's an idea,' " he remembered, noting that he was a freshman at the University of British Columbia at the time. "I needed a way to pay for college, and I thought hauling junk was a good choice."

Mr. Scudamore acted immediately, shelling out $700 for a 1976 Ford F-100 pickup, and distributing fliers to spread word that he was the new hauler in town.

Slowly, gigs trickled in. The first year, he earned $1,700; the next year, he broke into five digits. By 1993, the business was taking so much of his time that Mr. Scudamore dropped out of school altogether.

Later that year, he bought two new trucks, and pulled in $100,000. By 1995, the company earned $525,000. Business was booming, yet Mr. Scudamore began to grow wary of complacency.

He dealt with those anxieties by reinventing his company under a franchise strategy, beginning with a pilot in nearby Victoria. When that office teamed with headquarters to top $1 million in revenue in 1997, Mr. Scudamore realized he was on to something. In 1999, he sold another franchise, to an entrepreneur in Toronto.

"By relying on franchise owners to come in and share some of the risk, I realized I could expand the firm without having to turn to outside investors or other funding sources," Mr. Scudamore said. "To me, this was a solid plan for growth."

In 2000, the same year that Mr. Scudamore hired Mr. Herold, 1-800-GOT-JUNK? dipped into the United States. The first franchise sprouted in Portland, Ore.; shortly thereafter, some friends from Canada opened a franchise in San Francisco.

Since then, the company has grown like a pack rat's National Geographic collection, blossoming into 40 franchises by 2002 and 214 by 2005. Last month, 1-800-GOT-JUNK? opened its 242nd franchise, in Spokane, Wash. It recently opened a franchise in Sydney, Australia, and will open one in Birmingham, England, this summer.

Many of these franchise owners are thriving. Alan Remer, owner of the company's outpost in Philadelphia, paid $28,000 for his franchise in 2002. Last year, the enterprise earned $900,000, and he predicts it will earn $1.5 million this year.

"I honestly believe I have bought into McDonald's in the 1960's," said Mr. Remer, who retired as a Wall Street stockbroker after the terror attacks of Sept. 11, 2001. "People want their basements back, and we're the cheapest way to create space in a home."

The haulers, too, are sharing in the success. Each truck tandem receives credit for the money it brings in, and profit sharing is tied to a bonus program for the peak performers. Mr. Herold said that the company gave its top workers bonuses of 17.4 percent last year.

Smaller rewards are offered as well, like items that seem too good to wind up in a dump or a recycling center. At the house that Mr. Atkins and Mr. Meissner were cleaning out in San Jose, the spoils included a BMX bike.

Mr. Scudamore expects 1-800-GOT-JUNK? to become a $1 billion company by 2012. To help achieve that, the company will invest millions in JunkNet, its centralized Web-based system that is used to dispatch orders from Vancouver to franchise owners. Currently, franchise owners must call to keep up with truck locations. But by September, Mr. Scudamore says, the company will begin using G.P.S. in many trucks, enabling dispatchers to send new orders right to the trucks based on where they are.

"The new technology won't only make us more responsive to our customers, but it also will make scheduling easier for our franchise partners," he said. "When's the last time you heard a junk company say something like that?"

Thinking Small Can Make You Rich

Mike Cayelli Story

http://cuff-daddy.com/

Learn How To Make $2,000 in One Single Day

Think small. That was the basic starting point for Mike Cayelli when he decided to open an online retail business two years ago. With a tiny house, little capital to invest, and only "spare time" to devote to the project, Cayelli knew his big dream had to stay manageable. The Washington (D.C.) entrepreneur still hasn't quit his day job, but he's projecting $500,000 in sales this year for his company, Cuff Daddy.



You have a full-time job. Why start your own company?

About two years ago, I was working for [a hardware chain] as a manager in the regional professional contractor division. I still work there, in fact. But there was some reorganization going on, and I became concerned about my future. So I wanted to hedge my bets by starting my own company.

How did you settle on becoming an online retailer?

I wanted to emulate my cousin, who's been enormously successful selling mobile phone accessories online. He imports products from Asia and realizes a substantial profit margin. I also wanted to do something purely on the Internet so I could keep working at my "real job" and develop the company in my spare time.

Your major concern was finding a niche product that was physically small. Why?

Well, we had a small house that I planned to use as headquarters. So I needed inventory that I could store in a footlocker, have my wife ship out of a home office, and haul around in a car instead of a truck or trailer. As for shipping, about 90% of our orders can be mailed first-class with two stamps in a .13-cent padded envelope.

How did you settle on cuff links?

It was not easy. I spent several months looking at things like buttons, watchbands, shoe laces, and collar stays. Every time I thought of a small, niche product I'd write it down on a scrap of paper and shove it into my pocket to research later.

I wanted a product that could produce high sales volume and a high profit margin. I didn't want something that sold one unit per week. So when I got an interesting idea, I would search for it on eBay and run it through a research tool called Andale. For $7.95 a month, you subscribe to this Web site and you can get diagnostic information about any product's online sales volume and average selling price.

One morning about 6 a.m., I stumbled onto some cuff links for sale on eBay and noticed there was tremendous action on that listing. I ran upstairs and woke up my wife and told her I'd found the right product.

Once you zeroed in on a product, you had to find suppliers. What was that process like?

Again, I went to the Internet. I found two great places that help you source products overseas. One is Global Sources, and the other is called Alibaba.

I looked through thousands of vendors that are listed on these sites, found products I was interested in, e-mailed the manufacturers, and got them to send me samples. I never even had to pick up the phone.

When I put the first samples up for sale at eBay and they sold extremely quickly, I knew I was onto something. We wound up with six regular vendors based in China, Hong Kong, and India that provide us with a product line that we buy for between $1 and $6 a pair and sell for $15 to $55 a pair.

How much money did it take to start the company?

We started very small with a $500 investment, though it felt like a lot because I was worried about losing my job, and my wife was home taking care of our two little boys. We used that money to buy 100 pairs of cuff links. The minute I felt comfortable that they'd all sell, and we could reinvest the money we made, we doubled that order. Sales were quick right from the start, so we started adding more products pretty fast.

What about the cost of establishing a Web site or online store?

We didn't do that right away. For the first nine month, we sold strictly through a store we set up on eBay. We wanted to have minimal startup costs, and we only had five products. With that small a product line, if you open a Web site you're going to look like a joke.

By the time we were selling about 50 items, we figured we were ready to establish our own Web site. We outsourced the development to a friend who charged us $500. We host it on Yahoo!Stores because they have virtually no down time, it's easy to use, and they offer good metrics, so I can analyze things like who is buying our products and who are our repeat customers. I can also see how well things like coupon promotions work.

What's been the toughest part for you?

The marketing is really hard, and I still haven't gotten good at it. I could have a cure for cancer, and nobody would know about it because it's very, very difficult to get the word out. We've paid people to do search engine optimization for us, but it hasn't really helped.

We got completely burned once by a salesman who took us for $1,000 for a marketing product that was useless. We are doing some pay-per-click campaigns with Google and Yahoo! now that seem to be working a bit better, and we're also going to start an e-mail marketing campaign, so we'll see how that goes. But overall, I was surprised by how much the barriers for starting a company have come down. I was lucky that my cousin shared his recipe for success with me, and now I'm trying to do the same thing. I'm mentoring a guy I work with who's also starting a company thinking small: He's selling fishing lures.