Podcast Summary: Making It with Jon Davids
Episode 196: "He Makes $19M a Day From Trash? Yes. Here's How."
Release Date: June 17, 2025

Introduction

In Episode 196 of "Making It with Jon Davids," host Jon Davids delves into the impressive success story of Ron Mittelstadt, the mastermind behind Waste Connections—a company that generates an astounding $19 million daily from the trash business. This episode unpacks Ron's journey from middle management in a large garbage company to leading one of the world's most profitable waste management firms. Through a detailed analysis, Jon provides actionable insights for entrepreneurs aiming to replicate such success.

The Genesis of an Idea (00:00 - 04:30)

Jon Davids introduces Ron Mittelstadt, highlighting his humble beginnings and the pivotal moment in 1996 when Ron recognized a significant market opportunity. Discontent with his role in a major garbage company, Ron observed that while large cities like New York and Chicago were saturated with waste management contracts, small towns remained underserved and dominated by fragmented, family-run businesses.

Notable Quote:
"If the big boys are obsessed with the big markets, there's probably an opportunity on the other side."
— Ron Mittelstadt (04:00)

This realization led Ron to conceptualize Waste Connections, aiming to consolidate and standardize the fragmented small-town waste management sector.

Building Waste Connections: The Roll-Up Strategy (04:31 - 15:00)

Ron’s strategy centered on a classic roll-up approach—a method where fragmented small businesses in the same industry are acquired and merged under a single, more efficient entity. His blueprint included:

1. Targeting Small Markets: Focusing on towns with populations under 10,000.
2. Acquiring Family-Run Businesses: Purchasing existing local trash companies to eliminate fragmentation.
3. Standardizing Operations: Implementing uniform systems, upgrading fleets, and integrating technology to enhance efficiency.

Jon details how Ron executed this plan by initially buying five small waste companies across Washington, Idaho, and California. By maintaining local staff while introducing standardized practices, Ron ensured smooth transitions and consistent service quality.

Notable Quote:
"It's like going from a single food truck to a fast food chain. It's a big difference."
— Jon Davids (12:15)

By the end of the first year, Waste Connections had achieved $17 million in sales with 21,000 customers, setting a strong foundation for rapid expansion.

The Roll-Up Playbook: Step-by-Step Analysis (15:01 - 25:30)

Jon breaks down the essential components of a successful roll-up strategy, paralleling Ron’s approach:

1. Identify Fragmentation: Finding industries with numerous small players and no dominant leader. Examples include nail salons, dental clinics, and funeral homes.
2. Standardize Operations: Harmonizing systems, equipment, and customer experiences to create efficiencies and scalability.
3. Layer on Leadership: Replacing original owners with professional managers to drive growth and implement standardized processes.
4. Fund Growth: Utilizing various funding sources—private capital, reinvested cash flow, private equity, or public offerings—to finance acquisitions and expansion.

Notable Quote:
"If you do it right, if you buy well, clean up operations, and grow with discipline, you build something where 1 plus 1 equals 3."
— Jon Davids (20:45)

Jon emphasizes that the synergy created through roll-ups not only scales the business but also significantly increases its valuation due to enhanced operational efficiencies and market dominance.

Revenue Streams: Turning Trash into Cash (25:31 - 35:00)

Waste Connections thrives on multiple robust revenue streams:

1. Recurring Revenue:

   • Residential and Commercial Contracts: These provide steady income with high retention rates and minimal churn.
   • Municipal Contracts: Multi-year agreements with cities add predictability and substantial cash flow.

2. Commoditizing Trash:

   • Reselling Recyclables: Materials like cardboard, aluminum, and plastics are sold in international markets, turning waste into a profitable commodity.
   • Organic Waste Conversion: Transforming food scraps into compost or energy, exemplified by innovative projects like poop-powered buses.

Notable Quote:
"Trash to cash."
— Jon Davids (30:10)

3. Landfill Ownership:
   • Tipping Fees: Charging fees for waste disposal provides a significant profit margin.
   • Monopolizing Landfill Access: Owning landfills ensures revenue even when competing companies collect waste, similar to an airline controlling an airport.

Notable Quote:
"Landfills are incredibly hard to build... every landfill that Waste Connections buys and owns becomes more valuable over time."
— Jon Davids (34:50)

Ownership of landfills acts as a durable competitive advantage, establishing a lasting moat around Waste Connections' business model.

Challenges and Realities: The Unsexy Side of the Business (35:01 - 45:00)

While the waste management business is highly profitable, Jon doesn't shy away from discussing its inherent challenges:

1. Labor Intensive:

   • Workforce Requirements: Drivers, mechanics, and safety managers are essential, with long hours and tough working conditions.
   • High Turnover: Recruiting and retaining skilled drivers is difficult, especially among younger demographics.

2. Operational Costs:

   • Fuel Expenses: Garbage trucks consume large amounts of fuel, making the business vulnerable to fuel price fluctuations.
   • Capital Expenditures (CapEx): High costs for trucks, landfills, and recycling facilities demand substantial ongoing investment.

3. Scalability Issues:

   • Physical Assets: Unlike digital businesses, growth requires significant investments in physical infrastructure and equipment.
   • Regulatory Hurdles: Building landfills involves navigating complex zoning laws and environmental regulations, often facing public opposition.

Notable Quote:
"This is boots on the ground. You need drivers, mechanics, safety managers, and every day you got people showing up at 5am to hop on a truck."
— Jon Davids (40:20)

Jon underscores that despite the substantial profits, the waste management sector demands relentless operational discipline and resilience.

Conclusion and Key Takeaways (45:01 - End)

Jon wraps up the episode by highlighting the dual nature of the waste management business: immense profitability rooted in a straightforward, recurring service, juxtaposed with significant operational challenges. Ron Mittelstadt’s success with Waste Connections exemplifies how strategic roll-ups, combined with operational excellence and diversification of revenue streams, can transform a traditionally "unsexy" industry into a billion-dollar enterprise.

Final Thoughts:
"The world is obsessed with digital scale, and sometimes the real money is just in the mud."
— Jon Davids (44:45)

For aspiring entrepreneurs, Ron’s journey illustrates the value of identifying fragmented markets, implementing standardized processes, and leveraging multiple revenue streams to build sustainable and scalable businesses.

Additional Resources

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This comprehensive summary encapsulates the essence of Episode 196, providing listeners and non-listeners alike with valuable insights into the mechanics of building a highly profitable business in an unexpected industry.