Cash From Trash

By picking up what your garbage man won't, 1-800-Got-Junk? has become one of the fastest-growing franchises in America.

By Justin Martin

November 8, 2003

Check out this list: an eight-foot-long stuffed swordfish, 13 large porcelain Buddhas, two boxes of dried pig ears, a ship's compass, a Bill Clinton mask, and a prosthetic leg. No, this is not an inventory of Michael Jackson's most prized belongings. Rather, those are just a few of the many, many strange items that an innovative new company called 1-800-Got-Junk? has hauled away.

Got-Junk is the brainchild of Brian Scudamore, a 33-year-old Canadian business savant who failed to earn a high school diploma and then talked his way into college only to drop out. His Vancouver-based company is one of the fastest-growing franchisers in North America, with 74 territories at last count—most of them in the U.S. This year alone it has added 40. Got-Junk is profitable, says Scudamore, and will post $12.6 million in revenues systemwide in 2003. "I'm pretty geeked about it," says Jeff Lazar, 29, who just launched the new Detroit franchise. "This is like joining the McDonald's chain in 1955."

And even a little like Microsoft in 1975. Rarely does one encounter a business that's as much a blend of old economy and new economy as Got-Junk. The firm's core competency—hauling away old clothing and shabby furniture—is downright Dickensian. But Got-Junk is also relentlessly modern, relying heavily on infotech and exhibiting the kind of corporate-culture tics one tends to associate with bleeding-edge startups.

Scudamore—like the company he founded—is a curious hybrid. On the one hand, he is building his junk chain via the same homely but dependable business practices ("deliver excellent customer service") that put old-line giants such as Avon and Midas on the map. Those he mixes with techniques that can only be described as dot-com dippy. For example, Scudamore claims to possess preternaturally keen visualization skills, allowing him to see the future of his junk empire flicker before his eyes like a movie. "I think in pictures," he says. "It's a very strange thing."

Got-Junk has carved out a promising niche. Scudamore is aiming for the sweet spot that exists between trash cans and those big green bins dropped off by companies such as Waste Management. We're talking stuffed swordfish—or more commonly, something heavy and unwieldy like a dishwasher. Obviously, that's too big for a trash can. It's also too small to justify the hassle and expense of a bin. Or say someone has an entire basement piled high with musty paperbacks, eight-track tapes, and dead appliances. A Got-Junk team will clear the basement and even sweep up afterward. The company's trucks hold 15 cubic yards, equal to about half a bin, and the cost to fill a truck is around $400, including the fees for dropping the stuff at the dump, which vary from municipality to municipality. The company's average load is $238, meaning most jobs fill roughly half a truck. It also gets its share of small jobs: A dishwasher or similarly sized item would cost roughly $75.

While Got-Junk's niche is solid, it is also one that has already been visualized by thousands of independent operators. Open up the yellow pages in any city, and there are scores of ads of the man-with-truck-will-haul-junk variety. But Scudamore is working to build a professional chain that can dominate this vast and fragmented market. "We're stepping it up," says Scudamore. "Nobody has ever built a brand in this industry." The typical indie operator drives a beat-up pickup with a hand-painted sign and shows up late in a sweaty T-shirt. Got-Junk franchisees drive late-model Ford F-450s, Nissan UD 1400s, or Isuzu NPR trucks, always in blue and white. Scudamore quite deliberately settled on three models in case there were availability problems. The company's trucks all have identical dump boxes, manufactured to spec by Courtney Berg Industries of Alberta, Canada. Franchisees are required to wash the trucks once a day. Scudamore pulled the plug on a Calgary franchisee who drove a muddy truck with a peeling 1-800-got-junk? decal. "Do you ever see a dirty FedEx truck?" he asks, still visibly galled. "I mean, do you ever?"

The franchisees—in contrast to their indie competitors—also wear uniforms: navy slacks, royal-blue golf shirt with logo (tucked in), baseball cap, and belt and boots, which must match. Because the uniforms also must be clean at all times, many franchisees bring along extra ones in case they get dirty on a job.

A uniformed guy in a freshly scrubbed truck hauling junk—that's what customers see. But a high-tech backbone runs beneath the operation. Scudamore had the foresight to snap up a toll-free number (1-800-GOT-JUNK?) that has descriptive powers to rival 1-800-FLOWERS. Roughly 1,500 calls a day flow into a phone center in Vancouver. There service reps make use of a proprietary computer program called JunkNet, which the company spent $500,000 to develop.

JunkNet makes it possible for a Vancouver service rep to book a job anywhere a franchise exists by simply entering a customer's zip code and asking a few questions. To view a given day's slate of jobs, franchisees simply open up JunkNet. If a new job comes in during the workday, the program automatically sends an alert (all the franchisees have web-enabled cellphones). Because JunkNet can crunch a slew of variables, it is also a formidable administrative tool. For example, a franchisee can use it to calculate revenues per month, the size of the average haul, or which neighborhoods are producing the most jobs. The company relies on fairly tech-savvy waste haulers. Some have outfitted their trucks with GPS devices—to figure out the most efficient route on a job—while others make use of online navigation sites such as MapQuest.

As for types of junk the company takes—it's pretty much anything but hazardous materials. While the company picks up the occasional prosthetic, the typical job is more prosaic: hauling away an old ottoman, say. Along with private residences, Got-Junk serves restaurants and other commercial establishments. That has resulted in jobs such as the removal of 18,000 cans of overripe sardines. Interestingly, one of the most popular items to get deep-sixed is exercise equipment. "People use it for a few months and then start hanging laundry on it," says Mark Rubin, 32, who runs the Washington, D.C., franchise. "They're feeling guilty and just want it gone."

There's also a green element to Got-Junk's business, though more by happenstance than by design. Dropping items at a recycling center tends to be free, while city dumps charge a fee. Sometimes recycling centers will even pay for certain items, such as scrap metal. Thus, franchisees have an incentive to make environmentally friendly choices—it brings down their operating costs. According to Scudamore, 40% of the stuff Got-Junk collects winds up getting recycled. Then there's the odd piece of trash that turns out to be treasure. Those are viewed as spot bonuses. One franchisee was asked to dispose of some antique rifles and wound up selling them on eBay for $120 each.

Although Got-Junk is enjoying its strongest growth today, Scudamore founded the company in 1989. He remembers his eureka moment very clearly. It was three days before his 19th birthday, and he was sitting at a McDonald's drive-thru awaiting a cheeseburger. Ahead of him was a beat-up old pickup truck, piled high with tires and twisted bicycle frames. The hand-painted sign read mark's hauling. Just like that, one of Scudamore's vivid movies started to play in his brainpan. He didn't envision a chain—not just then—but instead pictured himself hauling junk to help pay his way through the University of British Columbia.

The very next day Scudamore spent $700 for a dilapidated pickup truck. In a time-tested gambit to make his business appear larger than it actually was, he named it the Rubbish Boys, even though there was only one rubbish boy. At first this was merely a summer job, netting him $1,700 in 1989. But soon he began taking more and more jobs during the school year. When his pager kept going off continually and disturbing his classmates (this was before vibrate mode), he knew it was time to drop out of college. "I was learning more about business running one than studying the subject," says Scudamore.

He tossed the name Rubbish Boys in 1998. It was a Briticism that might limit his future growth, he felt, plus he was starting to hire women. Now 38 of Got-Junk's 480 employees are women. These days Got-Junk's headquarters are in an industrial space—raw brick, exposed pipes—down by the Vancouver waterfront. No one has an office; everyone works out of cubes with low pony walls; Scudamore's dog, Grizzly, ambles about; and periodically people glide by on Razor scooters. It gives one the unmistakable impression of having wandered into the offices of a tech startup, not a junk hauler. As it happens, the space's former tenant was a dot-com that went bankrupt. Got-Junk snapped up the defunct company's office furniture for 10 cents on the dollar. It has been supplemented with various mismatched and overstuffed pieces salvaged during jobs.

One of the most conspicuous features of Got-Junk's offices—the first thing one sees upon entering—is the "Vision Wall." It contains the fruits of Scudamore's brainstorms. According to the wall, Got-Junk will have 250 franchises and $100 million in systemwide revenues by the end of 2006. "Can you imagine?" implores a legend on the wall.

Cameron Herold, 38, is Got-Junk's second lieutenant (VP for operations is his official title), and he is a buddy of Scudamore's going way back. He completely buys into his boss's vision. But he also feels too earthbound and left-brained to make forays into the future. To compensate, Herold often pours a little rosemary oil onto a hot plate. Inhaling the vapors, he says, frees his mind so that he can more vividly and convincingly envision Got-Junk in the years ahead.

Together, the two old pals have done a number of visualization sessions, with Herold organically altered and Scudamore using his God-given talent. During one such session they drew up Got-Junk's future org chart, circa 2006. It contains positions that don't even currently exist at the company: director of training, compliance manager, director of strategic alliances. Periodically members of Got-Junk's executive team wander through the offices of Genome Sciences Centre, the tenant occupying the space above them. Their purpose: to visualize a future when Got-Junk has expanded sufficiently that it can annex Genome Science's 10,000 square feet. "I'm already up there," says Herold.

Aspiring junk barons on visualization jags, some under the influence of rosemary oil—it's an amusing image. But it's also worth noting that visualization techniques are used to good effect by everyone from Olympic athletes to people battling serious illnesses. So why not trash kings? Scudamore claims he wrote on the Vision Wall in 1998 that he would be in North America's top 30 metro areas by the end of 2003. He is in 28 now and needs to collect only Pittsburgh and Milwaukee by year-end to make good on his vision. He also says he predicted in 2000 that he would be a guest on Oprah. That happened on April 29 this year. He has since upped the ante, visualizing appearances on Letterman and Leno by 2006. "It may sound weird," says Scudamore, "but this is a way to kind of picture and speak things into existence."

Got-Junk's sense of manifest destiny has proved an invaluable recruitment device. In fact, Scudamore says he doesn't hire from his competitors, the vast pool of small-fry indie operators. Someone who drives a filthy truck and is chronically late is exactly the kind of person he is trying to avoid. Rather, the franchisees are a surprisingly professional lot whose only common attributes are their general business experience and drive. There's a former submarine engineer, a onetime golf-course manager, and more than a few dot-com refugees.

Tom Rypma, 33, owns the San Francisco franchise, which is the most successful in the U.S. and is on track to post $1.2 million in revenues this year. In a former life, Rypma was a business manager for Invacare, a maker of wheelchairs and special beds for people who require home medical care. "I don't think that anyone dreams of being in the junk-removal business," says Rypma. "My parents were like, 'After all that education, you're doing what?' But I'd been looking for an opportunity, and I was really drawn to the company. I feel like I'm in on the ground floor of something that can really grow."

At this point, there appears to be scant tension in relations between Vancouver headquarters (known as the "Junktion") and franchisees. Lawsuits are a good gauge of trouble, and we didn't turn up any. Franchisees pay a startup fee of $18,000, plus $9,000 for each new 250,000-person block they add to their territory. The trucks with custom dump boxes cost $45,000 and can be leased. Got-Junk collects a royalty of 8% of revenues. There is also a 7% cooperative fee for maintaining the call center.

The franchisees are encouraged to take initiative and be creative. In Baltimore one offered to haul away free anything damaged by Hurricane Isabel. Some franchisees partake in "waves" in which they stand on busy traffic islands, donning blue clown wigs, waving to passing motorists, and passing out lollipops ("junk food").

For franchisees with multiple trucks, meanwhile, there are "junk motorcades." The Toronto franchise has 12 trucks, which sometimes travel in a row down Yonge Street, through the heart of the city. That gets noticed and proves to be a good way to drum up new business.

A franchisee should be able to clear about 20% of revenues in salary. That formula has yet to produce any Got-Junk millionaires, but it does provide a pretty nice living, especially for the three territories (Vancouver, Toronto, and San Francisco) that each earn more than $1 million in annual revenues. And it's worth noting that brushes with the Mafia have not proved to be an occupational hazard for Got-Junkers, at least not so far. True, there's a substantial goodfella presence in waste disposal. But the Mafia also tends to enter segments of the business that offer a degree of anonymity, such as stealing copper wire from construction sites and selling it for scrap. A customer-intensive business like Got-Junk is simply not a good fit.

The plan for Got-Junk going forward: growth and more growth. There are no reliable numbers on the potential size of Got-Junk's market. But according to Scudamore, in a metro area where his company might have five trucks, his competitors are likely to have about 95. From this he extrapolates that he has penetrated about 5% of the large metro markets. He has not even entered many second-tier markets, such as Charlotte or Las Vegas. The field is wide open.

Yet more than anything, Scudamore pines for a worthy competitor. That may sound strange, but he appears to be in earnest. A strong competitor, he feels, would help professionalize the industry. It would also set up a clash of rival brands that would help raise awareness that this particular niche exists."Where would McDonald's be without Burger King?" he asks."When people ask me about competition, I say, 'Bring it on!' I'll make sure we're always on top. But our growth would be amazing if we could find someone to give us a run."

Here's a suggestion: How about firing up the rosemary and simply visualizing a competitor?