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The Rich Somers Report
How A Broke Janitor Built A $7M Empire Hauling Junk | Barry Hartman E530
00:48:28
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- [00:00]
A
Hey, guys. We are closing on our two most exciting boutique hotel opportunities yet. Catalina island and Bodega Bay, which will make a total of eight boutique hotels for summer's capital. For a last chance opportunity to participate with us before we close, go to summerscapital.com invest. Now let's jump into the show. All right, guys, today I got someone doing big things in the junk removal business. I got my man Barry Hartman in the building. Barry, welcome to the show.
- [00:26]
B
What's up, Rich? Thanks for having me, dude.
- [00:28]
A
I appreciate you coming on, my man. But, dude, thanks for watching. First things first, I gotta ask you, you went from a broke janitor to doing over $7 million a year. How did you do that?
- [00:38]
B
Yeah, so it started early. So I. I moved out at 17 years old. And I moved to Whistler because I wanted to become a professional snowboarder.
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A
Love Whistler.
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B
Whistler's beautiful. It's a great spot, especially if you're 17. Like, it's. It's kind of the spot to be. Only way to fund that was to be a janitor from 5pm to 3am and then you wake up at 6 or 7, you go snowboarding.
- [00:58]
A
Damn.
- [00:58]
B
And it's. It worked. You know, I. I got some sponsors. Coors Light, Smith Goggles, Neff Headwear. We were traveling around North America going to like, different competitions going on. Shoots down to like Argentina, Chile. Like, it was, it was awesome. But I realized around 21 years old that athletes, you're on a decline in your mid to late 20s. And I knew that if I wasn't like the elite snowboarder making millions of dollars, that it was only going to get worse. And so I actually had to pull out and I was kind of like back to ground zero. Then, like, I kind of lost my identity.
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A
And how old were you at this time?
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B
I was probably 22. And so I moved back into my parents house. I had a broken ankle, no money. Like literally $05 grand on my credit card, which is the amount the Visa gave me. And I just remember, like, looking in the mirror, like, what the. I got to. I got to do something. And so we got a pickup truck, started hauling junk. And that was over a decade ago.
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A
And so you, you picked up a pickup truck and you just thought, hey, I'm just going to start doing junk removal.
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B
Yeah.
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A
And how much would you make in a day doing that?
- [02:11]
B
You can, like now a truck can do on average $2,500 a day, 23 to 2500 at about 60% gross margin. So if you can deploy a fleet of trucks across different cities. Like you can really make it back then, I mean, we would get a job or two a day. But for me, every job, you know, when you're that broke was just like, I saw the bank finally rising and, you know, was janitor, but I was also delivering pizza in the evening. I was digging ditches. Like, I got a job, one of the dirtiest jobs in North America. Cleaning oil at the base of oil tankers, like out of the container departments. Like, it was just a mess. And. And so, yeah, this was like the clearest path that I could see. 1, 800 got junk was doing $150 million a year in revenue at the time. And so that was the company that I was kind of like, looking up to and modeling.
- [03:03]
A
And so fast forward to today doing seven north of $7 million a year. And we're going to dive into how you got there and all the details. But before we get there, what's your biggest takeaway? Looking back after going from broken to
- [03:18]
B
$7 million a year, man, if. If I could go back in time to 16, 17 years old, like, I would study business inside out. Everything from cash flow to marketing to sales to. To financial management. Like, all those little things. Like, I think people wait too long to think. Like, it's time to put the big boy hat on and learn these functions. But you can teach yourself that anytime. And so I would have just gotten started earlier.
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A
Mm, yeah. Yeah. Okay. So junk removal business. And what is the definition of junk removal anyways?
- [03:52]
B
Yeah, so it's. It's literally as simple as it. As it sounds, which is why I love it. It's so scalable. So essentially, clients have material in their house, apartments, hotels, whatever it may be, and they build up a pile of material. It's gotta go. We'll pick up anything from a couch to. We've done jobs over $150,000 because an entire hotel is going through a renovation and they need to kind of offload everything in it. Demo material, landscaping. Yeah, we. We take up a lot, like hallway, a lot of landscaping stuff. I mean, everything. We get a lot of stuff that's reusable. And so we're just launching a resale program right now. We just hired an executive from the Salvation army, and so they run one of the largest thrift store models in the world. And so he's going to help us build that out because a lot of this stuff is in good condition.
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A
People are just like, I don't want to deal with it.
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B
They just Want to deal with it. Like, you know, if you have an old couch, using that as an example, and you're going to go buy a new one, you just want it gone.
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A
I'm the same way. Like, you know, you think about buying stuff and then having to go through all the hoops to find a buyer on Craigslist and sell it. I'm like, I don't have the time for that. I'm the same way. I'm like, hey, I'll pay someone just to get rid of it.
- [05:02]
B
Yeah, 100%. And people don't want it hauled away and taken to the landfill. So we just try and find like a plan B for it. And it's pretty easy. I mean, the resale market for used stuff right now is cooking with gas globally. There's over a full garbage truck of used clothing going to the landfill every second. So that was from a Deloitte report. And so that's why you keep seeing these thrift stores popping up everywhere, is because people, they want access to clothing at like 20% of the retail value, and it's really in the same condition.
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A
What's the craziest thing you guys have had to pick up?
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B
Oh, man. I mean, the hoarding stuff is on a different planet. So we'll walk into, you know, a 5,000 square foot home and you open the front door and it's just garbage piling up.
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A
Damn.
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B
There's literally like walkways underneath that people have carved out so you can access your bed. And it's just garbage all over the house. And you just kind of crawl your way into this little zone in your bedroom and you go to sleep. So it's a, it's a disorder. And people really have. They're not. That's just what they know.
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A
Do these people have money?
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B
I mean, they've got a big house, so, you know, they've got, they've got some money.
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A
Yeah, they just, they just don't want to clean their house.
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B
They just don't want to deal with the stuff. They think you know what it is. They think everything's valuable. So it's not like, it's not like there's like food waste on the ground. So it's not really sort of. There's no mold or anything like that. They just. Every piece of paper, every newspaper, every magazine, every, you know, garbage, like a, a wrapper from McDonald's. They're like, they, they just can't throw things out. And so rather than, you know, recycling or using the garbage bin, it just goes on the Ground and eventually it just stacks and stacks and stacks. So those are some of the more extreme examples, you know. And then we'll get no dead bodies, though. I haven't. In our coaching program, some of our members have really dead bodies. Yeah, yeah. Digging it, like going through the house
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A
and an FBI investigation.
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B
Oh, yeah, yeah. We're. They're just, you know, you're kind of the first on scene for that.
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A
That's crazy.
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B
Yeah, yeah. So that stuff's pretty crazy. And then the more interesting stuff is like, you know, we'll service like NHL players. And you know one guy, Joe Sakic, he played for the Colorado or the Quebec North, I can't remember, he was back in the 90s. But he's a great player. And you know, he had all these like signed jerseys, like game worn jerseys, autographed. And he was just like, he knew what he was doing. But he's like to our, to our text on site, he's like, hey, do you guys want this? I don't think I need it anymore. And he just gave him all this good stuff. So you see a bit of everything. I mean, we found on one job site, we found 15,000 cash, 25,000 in uncashed checks, and a whole set of jewelry because our client's mom had Alzheimer's and she didn't know that that was in there. And so we go to our client after with a Ziploc bag when we present her with the final invoice and we're like, here you go, here's 35 that were $40,000.
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A
Damn.
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B
So there's good stories too. It's not all ugly.
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A
That is a good story. So you started your, your business from the ground up. What year is this?
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B
2011.
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A
2011. Okay. And for someone listening to this right now, they want to get into this, this industry, is it better for them to start it from the ground up? Or you say go out and buy an existing one.
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B
I like the start from the ground up for this industry.
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A
Why?
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B
Because there's something about. It's a very scrappy business, like no pun intended, in a sense that like you just got to go through. If it's your first business, you gotta go through the motions of understanding how Google Ads work, how SEO works, how hiring people works, like how training techs work. And you almost. I suggest people go through like all of the like general business requirements to build those skill sets, get that foundation business in first and then maybe start acquiring companies to add into your portfolio after that. But build the platform company now there's also other people that are, that have experience in other industries and they want to get into the junk removal industry. And some of the members in our coaching program are doing this. They have capital, they have experience, so they're, they, they buy an existing business, they already know how to run it.
- [09:21]
A
Yeah, that makes sense. Because if you never ran a business before, you're brand new, you can go buy an existing one that's, that's printing money and profitable, but you very well could run it to the ground.
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B
Yeah, 100%. And then you have nothing. Because enterprise value in home services usually happens later on.
- [09:37]
A
Yes.
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B
You know, if you're under 1,2 million in revenue, you're kind of dependent on the owner to operate things like the brand, the customer base, it's not really established yet, but when you get into that sort of 3, 5, 10 million mark, now you've got something and you also have the cash flow and capital to make those acquisitions. So you can really amplify things. And that's kind of our vision for the next steps is, is to take things to the next level.
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A
So someone getting in this industry, starting from the ground up, you did it. What's the best way to get customers?
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B
Great question. There's two sides. So there's residential and there's commercial. And residential is Google Ads. So people go to Google, they, they search. You know, there's a play for AI now with AI search obviously, but traditionally, you know, generally speaking, a buyer that's going on Google to look for junk removal or any home service business is ready to buy now. They're ready to order now and they probably don't care about the price, they just want it done on the commercial side. That's where we're dealing with like property managers, hotel groups, construction companies. It's the same service, it's just a different language. So we'll say junk removal to the homeowner, but we'll say live load construction waste to the construction company.
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A
Say that again.
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B
We live load their waste off site.
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A
Got it. Okay.
- [10:55]
B
Because they want us to just show up to the construction site and just load it all up and take it away. But the word junk to them, it doesn't really register because construction waste isn't junk. And so it's the same service, just a bit of a marketing play. So we do a ton of like business development outreach, AI automations for commercial and we're trying to really ramp that up to stack the recurring revenue.
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A
So with the commercial clients, are you running paid ads to those guys as well?
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B
Or no, we are. It's a little trickier to get the paid ads like so heavily targeted to commercial. I mean LinkedIn's a good play for that. But we'll make sure like our ad groups are broad enough so that we can target the homeowner, but then also include all the keywords that the commercial businesses are going to be plugging in as well. But I always say, you know, people say it's B2B. I think it's, it's always B2P. Like it's P2P. We're selling person to person. And while it may be one business is providing the service and the other business is paying for it, the decision maker is still a person at the end of the day. And so understanding that icp, like knowing the ins and outs of those people that are working for the businesses, then we can really start to tailor our digital marketing towards them.
- [12:04]
A
Yeah, you mentioned that the pricing can be relatively inelastic because when people want junk removal, they go on Google, they're going to pay for the first one they see. So with the pricing strategy you go a little bit higher ticket or how do you price these folks out?
- [12:20]
B
Yeah, so that was one of the things that I wanted to overcome. So in our market, 1,800 got junk is now doing 850 million. So they're the highest price, they're the price leader. And then there's a whole bunch of independents in every market below them. 1, 800 got junk sets the price. They all do it by volume. And so what we wanted to do, we wanted to charge by weight because it was more accurate, it was non negotiable and it was more fair for the customer because they never overpay. But then they also never underpay and we eat the margin. So what we did is we built the first custom truck in the world that weighs the junk, weighs the junk. And so the entire back of the box of the truck is basically the equivalent to the scale that you stand on in your bathroom.
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A
Damn.
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B
So that set us off on a trajectory early on because people are like, what is this weight thing? Like I want to pay by weight, not just based on a volume estimate. And so that really helped us like lay the foundation as far as like a differentiator early on.
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A
Okay, okay. And so what's the typical cost per per pound?
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B
It's about 50 cents, give or take. The average job size in junk removal is about $550. It'll take you about two hours.
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A
Okay.
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B
Hour to two hours. That's for Residential. And the commercial, it's closer to about a thousand for us.
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A
Okay. And you guys go by kilos up there in Canada, or you guys go by the pounds.
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B
We're all over the place. We go by kilometers, not miles, but then we go by pounds, but not kilos.
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A
Okay, interesting.
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B
We. I think we just borrow whatever the.
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A
I didn't know that. That's crazy.
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B
Yeah.
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A
Okay. And so. So you get the residential side, you get the commercial side. Which side is the better return on your time?
- [13:56]
B
Commercial.
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A
Commercial.
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B
Why so? Because it's recurring revenue. So the way we look at it is one residential client can book maybe once or twice a year, or if they book once, they might book, you know, two years down the road. So there's a lot of repeat marketing, email, text, all that kind of stuff. But on the commercial side, if we get a large property management firm that has, say, a vice president of property management, and that splits down into. Into a director, two directors, and then five property managers, and each one have, you know, five to 10 buildings per. All of a sudden you got one company that can produce 5, 10, 15, $20,000 a month. Our biggest account's doing over a hundred thousand a month right now.
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A
Damn.
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B
And they just produce that much waste?
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A
Yeah. Wow, that's crazy. Do you guys do ongoing trash pickup as well?
- [14:47]
B
So that's valet trash in the buildings
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A
is for, like, apartment buildings.
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B
Yeah. It's big blowing up, especially in the U.S. really?
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A
There's big demand for that.
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B
Big demand. Yeah.
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A
So I got a couple apartment buildings that I have partners on out in North Carolina.
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B
Yeah.
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A
Between the two buildings, almost 300 units. And thinking of some ancillary revenue ideas. So that was one I was kind of thinking about that day. So there's actually demand for valet trash at apartment buildings.
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B
Yeah. And I don't know the exact numbers. I think it's around 15, $20 a door. And then the building owners will mark it up, obviously, to the tenants. Yeah, but it's a pretty straightforward business model.
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A
Valet trash.
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B
Valet trash.
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A
What percentage of residences at an apartment building are.
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B
Would use that, like, of the actual tenants? Yeah, I mean, like, you guys go
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A
service a building with 200 units. What percentage of those units do you actually sign up for this?
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B
That's a good question. I mean, it's not a service that we provide. I think some buildings might mandate it based on, you know, whatever the. Whatever the actual agreement is with each tenant. They might just say this is built into sort of the property fees or something like that, and they might just increase the Fees on a monthly basis and then other contracts. It might just be like, you know, it's a, it's a choice. But the company probably wants a certain amount of doors in order to justify sending the truck out every week. But it's, again, it's all about customer experience, which is something you know all too well if you can make your, you know, in our case, our customers, if, if you're a landlord with, with 150 units in your building, you just want them to really enjoy the experience of living in that building. And that's just one little thing at 15 bucks a month that can make their life.
- [16:31]
A
You just so much the trash out. And then they just. You guys do like. I know, I know you don't do it, but they'll come and do a couple days a week. Yeah, do a sweep.
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B
That's it. Put your, put your bag of garbage outside. I think the company is responsible to actually bring, you know, provide their own bins. You put the stuff in the bin, you put it outside your unit, then you don't have to worry about your garbage anymore.
- [16:51]
A
Easy. So talk about, you know, you mentioned commercial. You have residential side, but talk about some of the other streams of revenue within your company.
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B
Yeah, so, so there's three. So we've got. The commercial is a big one. Razzie we talked about. And then the upselling. And so we've got a newer division. Uh, we launched in the last few months. We've got it up to about 75,000amonth in revenue.
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A
Damn. Let's go.
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B
It's going. And I think this one might outperform junk removal long term.
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A
Wow.
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B
And there's this whole model where used clothing has value. And so when. I don't know if it's as common, but you see those like bins all around the city where you can just throw your clothing in it. Usually it's in partnership with a not for profit. And so for us, we're just finding a not for profit that we like to work with that we actually believe in. And a certain percentage of the material sold goes back to them. And so for us, that's a local hospital. But there's a lot of value in used clothing, retail values, maybe five, six dollars a pound on average. But if it's vintage, it's per item and it really starts to go up. And so that's, that's a stream that we're, that we're really working on. And then the last couple of years, I've, I've got a great team there's over 50 employees now. And I've been really focusing on getting my time back. Cause I have a fundamental belief that if I'm working in the business, I'm cannibalizing the growth of someone in the company. And so I kept catching myself, you know, working in marketing, doing biz dev or something like that. And I started reversing that mindset to be like, no, I just need a system and we need to train them and then I get the time back. And so I started a business coaching platform with, with the newfound time. And so that one we launched 2024. We've got about 40 companies in it. We'll do just north of a million dollars in revenue this year. So it's a startup, but I love it. Like we're. My whole goal is to elevate the industry because not a lot of people know about junk removal. You know, plumbing, you know, electrical, you know, roofing, you know, H Vac. But junk removal is kind of still in its infancy as far as like a globally recognized trade, if you want to call that.
- [19:01]
A
Is it, Is there a potential. I'm just thinking two steps ahead here. Like, you know, you, you mentioned you got this community with 40 other junk removal companies and you're, you're consulting them. Is there a potential that you, you say, hey, we're going to, we're going to do this portfolio exit to private equity and whoever wants to participate can participate. And you guys get some crazy multiple for all these junk removal companies that you kind of build up.
- [19:27]
B
Yeah, yeah. The private equity knocks on our door every day because I think they see us as a platform company. We've got the systems, we've got the leadership, we got the differentiator. Like it's all there. Seven million is seven million. I mean, you know, there's lots of companies doing 50 to 100 million in home services. But our company is ripe for scale. And so that is an option that we're exploring as far as like the actual members in Bolt, there's people that have been open about a timeline on when they want to exit. And so if there's a scenario where we're the best fit for them and we can give them the best offer or multiple. I'm, I'm always just looking for win win situations. So, yeah, I mean, I'd throw my hat in if somebody wanted to exit, get, you know, cash out or stay on as a managing director for a couple years.
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A
What kind of multiple can you expect in this industry if you were to
- [20:16]
B
exit home services is once you get the ebitda north of 2 million, it, it starts to multiply. So under a million, you know, you're probably looking at that sort of 3, 4, 5x. If you get into the 2 to 10 million, you get into the 5, 6, 7, 8x. If you're north of 10 million in EBITDA, you start seeing some pretty significant multiples. So Tommy Mellow is a good buddy of mine that I met years ago, A1 garage doors. They're probably doing about 330 million in revenue and he cashed out on, on his, on 40. I can't remember if it's 49 or 51% but I believe it was around a 17x even a multiplier.
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A
And it's because 17x.
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B
Yeah, and it's because it's just so well run. It's not dependent on him. They're in multiple markets, they're buying different companies, they've got a great leadership team and the PE company that's involved knows that Tommy's going to stay in the business. Yeah, he's going to scale it.
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A
It's seen as low risk.
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B
It's low risk. Yeah.
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A
Yeah.
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B
And there's only so many entrepreneurs in home services that are actually wanting to take a company to north of $100 million.
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A
What kind of margins can one expect getting into this industry? So like you mentioned, you know, 7 million, but then there's another group out there doing 150 million, I believe you said, like what, what kind of margins, net margins can one expect?
- [21:44]
B
If you're new to the industry, you'll be surprised at how high the margin is, but it's because you haven't deployed a team yet. So you're scrapping and you're doing all the work, you're answering the phone, you're
- [21:56]
A
working in the mix.
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B
So I don't count that.
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A
Yeah.
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B
When you get into 2 to 5 million, the goal is always a baseline of 20%. If you've been in business long enough, you get into sort of the mid-20s. Some of the companies in Bolt are just, nor just south of 30%. And that in home services, particularly in junk removal, is, is pretty good. The average gross margin is about 60%. And so your goal is to operate your overhead on 40% or less. And then, you know, then you know, it's, it's not like a, a tech company or a coaching business or something like that where, you know, it might not be as scalable as far as like coaching, for example, like sometimes it's centered around the coach and it might not be as scalable to get it to say, yeah, key man risk. Exactly. But home services junk removal is different. And so as you get more revenue and you generate more gross profit, then the role of a financial controller becomes even more important. Because I know for me as an entrepreneur, I'm like, high risk, high reward, gamble, put everything back in. Whereas a controller is like, yes, let's execute on the vision, but let's make sure we're cash flowing the entire journey.
- [23:07]
A
Yeah, send some money aside. Yeah, yeah, that's really good. And what does lending look like? If you want to get in this industry and you know, buy a, a business? Obviously you got SBA seller financing, but outside of that, can you get financing from a lot of like local regional banks for this kind of thing?
- [23:28]
B
I mean, you name the big two, it's usually SBA or seller seller financing. And I would say probably 90% of the deals go through that. That being said, if you get approval from the SBA and you get an offer on the table, taking that offer to the bank that you're actively working with and seeing if they can outperform that offer, I like that strategy because the SBA is more likely to lend on higher risk. And so if you can secure bank financing or any type of private financing when you don't necessarily need it as much, I would maybe lock that in. But then go back to the SBA when you're sort of like deemed maybe higher risk again.
- [24:09]
A
Yeah, that's really good. What is the biggest mistake? Like, let's say someone's listening this right now and they're like, hey, Barry, I want to get into this industry. What's the biggest mistake that they need to look out for?
- [24:19]
B
They think it's easy. They think it's easy. They see junk removal. It, it seems brainless people have junk, send a truck, haul it, go away, done. So the actual production side of it is less complex than say like plumbing, electrical, roofing, all that kind of stuff. But as a result of that, it's incredibly competitive. There's almost no barriers to entry. You need a 2001 F150 with some sidewalls of plywood and you're in business. And so people don't put enough time and energy into building a good team, building good systems, buying back your time so you can focus on revenue producing activities. And just the whole, all of the business fundamentals that are applicable to any industry, they think they can bypass that.
- [25:07]
A
What, what is the first hire that one should make as they start to Scale.
- [25:12]
B
First of all, get off the trucks. That's why I tell anyone in any trade is you gotta get off the trucks. Second thing is inbound calls are big right now, which I want to talk to you about our AI system that we're using to manage inbound calls. But getting off the trucks and then getting off the phones, those are the big two because those can eat up 40 hours in a week like that. Getting that time back allows you to focus on becoming an expert in marketing and sales. That's where I put all my time. Until you grow the revenue high enough that you can hire people for marketing and sales. Now you got to focus on becoming a good leader.
- [25:47]
A
Now isn't. Isn't part of sales done with the, the calls on the phone?
- [25:51]
B
It is. Yeah. Yeah. So inbound calls is a big thing for, for our industry. People want the junk removed. They could book online. Like you could book a flight online. They can do that on our website. But for whatever reason, people just like picking up the phone and speaking to the company. And so that's, that's a big thing for us. It's just always making sure we've got a speed to lead target of less than three minutes if we miss a call. Because after three minutes that the, the close rate goes from like 60%, like down.
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A
They're calling the next guy on the list instantly. Yeah, that makes a lot of sense.
- [26:22]
B
And what's helped with that is AI. And so we've built a custom AI agent with the help of another company. It's called Vivian. She answers the phone if we miss it or if it's after hours because we don't staff 24,7 in sales. And it's pretty good. It's about a 50% close rate. She does a good job. We get some funny conversations with it,
- [26:43]
A
but we built it, so it's pretty good. 50.
- [26:46]
B
It's pretty good.
- [26:47]
A
And, and, and how does she sound? Because I'm building out a. A sales team for the hotel side. And we had, up until this point, we've had VAs that are overseas and they, they served its, its purpose to get us from, you know, point A to point B. Now to get to the next level, I'm like, I want to dial this in. So I looked at going AI. We spoke with a lot of different groups and a lot of the demos that we got were not what I wanted. And this didn't quite sound as good as what I wanted. So we're going with really good English speakers that have a sales background that can Answer these phones because every, every, every single reservation is an opportunity to upsell a different package and bring in more revenue. But at the time, and this is probably two months ago, we didn't see an AI voice coner. That was exactly what I wanted. How is Vivian?
- [27:39]
B
I think the main thing is when Vivian ANSWERS. Thanks for calling 505JUNK. This is Vivian, your AI agent. How can I help you? I think when people try and pretend it's like on Instagram, when people pretend that it's their voice and it sounds tinny. Like how all, you know, you know, all AI videos are real sound. Right now you're trying to game the customer and they get pissed off when you're upfront about it and you're like, you've reached us after hours. But I can book you online, I can schedule you, I can cancel your work order, I can give you a quote, I can do anything you want. Then they kind of warm up to the idea a little bit more. But until we're in a world where you can literally mimic it perfectly, I don't know when that's coming. Probably a year or two out.
- [28:24]
A
Yeah, it's probably only a year out.
- [28:26]
B
It's probably going to be pretty cool.
- [28:28]
A
Crazy.
- [28:28]
B
Yeah.
- [28:29]
A
Because once that happens, I mean, watch out for the sale. It's going to change sales forever. Once you have like, you can, you can literally create an AI agent to mimic yourself in your own voice.
- [28:40]
B
That's going to be scary, particularly for inbound. And so for our team, just because they're the ones pro helping program it, they're coaching it, training it. I'm, I just tell them you're not training yourself out of a job. You're just going to move to outbound sales, which is higher commission or account management to the commercial stuff.
- [28:58]
A
Yeah. So highest and best use for someone that's, you know, starting from the ground up, that's going to be sales and marketing. And then what's the next level after that?
- [29:08]
B
Once you've replaced yourself in sales and marketing.
- [29:10]
A
Yeah. Then what's the highest and best use?
- [29:13]
B
Vision. So assuming you take on the role of CEO as the of the company. Vision, culture and leadership, particularly leadership to your next in line. So your head of sales, your head of marketing, your head of finance, your head of operations, making sure that you're developing them as leaders. Because leaders create leaders at the end of the day. And if you have 30, 40, 50, a hundred, 200 employees, not possible to create 200 leaders from one person. And so those are the three that I like to focus on is keeping an eye on culture. I spend a lot of time thinking into the future and then developing the leadership group is, is a core focus of mine.
- [29:52]
A
So we know in any business having the right KPIs and the right bonus structures for team members is in creating alignment of interest for them to win. When you win is is very key. And so I'm a big fan of compensation based on performance and identifying the right KPIs that we can track weekly to hold people accountable. Right. People write seats. What are those KPIs in your business?
- [30:17]
B
So in sales that's a great. I love this topic. It's such a complicated topic. In sales it's total revenue sold in a month. They get a cut on that. So commission and it's the sales conversion rate on new deals repeat skews it because we have such a high number of repeat business. So on new deals we track the sales conversion rate. In operations it's their gross profit margin and the revenue produced. Because the last thing we want is sales and marketing be crushing it. Lead flow's coming in and we got a big bottleneck in production. In finance it's cash and profit. What else do we got? Marketing cost per lead customer acquisition cost and cost per lead customer acquisition cost, average job size and then the total gross profit return on marketing investment. The GP Romy, that's a big one for us. When we allocate a dollar into Google Ads, our target is 3x gross profit which doesn't sound like a ton, but if you're going to go play roulette and you put a dollar on black and every time it's spat out three, you're going to play that game as.
- [31:22]
A
But also those, those guys that you get $3 on a front end. But now if they come back three months later and again six months later and nine months later, that's where you make your money.
- [31:31]
B
Totally. Yeah. Yeah. Lifetime value. It really allows for like a bigger spend.
- [31:36]
A
Yeah, that's really big right there. And I'm curious because obviously driving Google Reviews has gotta be huge. What kind of review campaigns do you guys put out? Like what's the key for you guys and what strategies do you implement to drive 5 star Google reviews?
- [31:52]
B
Yeah, so we run everything through high level and so once they go through our field service management software, they automatically get looped into high level and they get multiple touch points. Basically once the job is done to ask for the five star review and you can kind of filter it by saying, you know, how is your Experience great or bad. If it was bad, they get a personal touch point. If it was great, it leads them to drive a review. And so we also bonus our texts on reviews, particularly if they get named in it. And so yeah, that's kind of a big thing for us. I think any service business. Google reviews is a key driver, especially with AI search. Like it's only going to be able to pull from so much your website, other websites that are talking about you and ultimately your reviews.
- [32:40]
A
Yeah, no, that's really big. That's really big. I, we do a, a Google review kind of campaign with our entire portfolio. But when a guest, you know, comes and stays, we'll do like a midst day heat check and we'll ask them, the concierge, we'll ask them hey, like how's your stay been? And if it's a 4 or 5, we'll ask them to basically copy and paste that review into our Google link. And then anyone that drops, they'll be entered to win a free two night stay at any one of our hotels that we give away once a month. So that's one of them. But a lot of it's just tweaking that CTA, you know, so we're always split, testing different CTAs and we'll track every trailing seven days in here in the office, each of the hotels, how many Google reviews we got and then how many we got relative to the number of guests that stayed in the trailing seven days. So we'll track that percentage.
- [33:32]
B
That's a good KPI.
- [33:33]
A
It is very good, yeah.
- [33:34]
B
Total reviews divided by the number of guests or in our case the number of clients that actively use us in a year.
- [33:39]
A
Yeah, and then I'll bonus my team members out that are involved in that funnel. I'll, I'll bonus them out based on review average across our portfolio and another bonus based on the percentage of guests that leave a review. Our Target is, is 10%. So for every hundred guests that stay, 10 Google reviews. And that's, that's really good. You know, we had 11,500 guests stay at our portfolio last month. And so you know, you think about 10% of that, that's a big number. Right. And so that's, that's our, that's our, that's our threshold is 10%. But it's a great KPI to track.
- [34:17]
B
Yeah. I have a question for you. How important are reviews in your industry? Because when I'm looking at hotels across the world, whenever we're staying in different places, that's Kind of my number one decision maker. And then you filter it out for whatever you need.
- [34:32]
A
It's everything. Review reviews is, is everything. Yeah, it's, it's the number one thing obviously. Photos, reviews, reputation. And we like to go into markets that are very supply constraints. And so the more supply constrained a market, let's say you go into an area where a lot of people travel to, it's on the water, it's not too far outside of a major msa, but you're one of only four or five hotels and there's no big branded hotels, then all the little things matter a little bit less. Because when someone goes to search for a hotel in that market, you're no matter what, you're going to be on page one.
- [35:09]
B
Yeah.
- [35:09]
A
You see what I'm saying?
- [35:10]
B
Yeah.
- [35:10]
A
But if you're in a major market like San Diego, where there's, you know, tens of thousands of hotels, the where you rank on those platforms is going to be pretty really key, significant. Yeah. But yeah, man, the KPIs is big. And the one thing I've learned is you have to bonus out team members for the right KPIs and give them create some sort of alignment of interest. And I think if you can do that and you have the right people in the right seats, that's where the magic happens.
- [35:41]
B
Totally. Yeah. And there's, there, I think there's two sides to reward behavior. There's one is performance, so KPIs and the other one is your values. So if you have like a clearly defined set of core values that you actually believe in, not just because some business coach in 2018 said write these out. I think rewarding people even either just by saying like, hey, I really appreciated it when you did that because that's our core value and you did exactly that, that really starts to instill the behavior both on the performance level, but then also on the customer experience side of things as well. And I find if we just reinforce that all day coupled with like really good training. I mean we've had. This is junk removal. We've had people in our company that have been with us for over 10 years and they went from making like 20 bucks an hour. Our first employee was 12. Now he's a partner in the company. He's making six figures VP of sales and operations. You can really like groom these people and train and develop them and help them grow just by being a really good mentor for them.
- [36:44]
A
Yes, that's really good. I'm curious, is there any other forms of ancillary revenue that, that is possible in your industry. You mentioned the reselling of used clothing. But is there any like upsells that these customers you know, would be interested in? Like let's just say for example, you know, the moving industry, there's a lot of upsells baked in there, right? Boxing and packaging and done for you and this and that. But is there anything like that, that, that can be implemented in, in your industry?
- [37:15]
B
I mean, you nailed it. It's moving. So a lot of the big franchise systems, like college honks hauling junk. They're about 150 locations. 1, 800 got junk. They have a sister brand for the moving company and it's across. It's, it's vertically integrated. And so they can just, you know, send leads back and forth. And that's something, you know, just to be completely honest with you, that we're building out in our vision right now is like do you expand locally through multiple services or do we just copy paste what we're exceptional at in multiple markets? And that's one thing I want to get really clear on for the next five years at our company. Because that decision carries a lot of weight. Whether you add on additional services, continue to service the same icp, or do we just copy paste this thing across the nation?
- [38:04]
A
Yeah, that makes a lot of sense. That makes a lot of sense. What about, what about like trash bags or like some sort of packaging?
- [38:12]
B
Yeah, it's. I've seen one. I think it was waste management. They made a bagster.
- [38:17]
A
Do they?
- [38:18]
B
And essentially what they did was you. Well, you could buy the bagster from Home Depot or wherever you fill it up and then they had a truck that would show up with like a hook lift on it and then they would just pick up the bag and drive it away. I don't. It's a. It was a good idea. I don't think it was. It was enough of a differentiator between dropping a bin on site and having a company like ours come and pick it up. So they pushed it for a bit. It's waste management. You know, they've got billions of dollars so they, they grew it, but I think they cut that service back ultimately. You know, I don't know where the future of this business is going to be, but I do know two things. One is Elon Musk is making robots and two is cars can self drive. And so that goes back to that same thing. Like if that is a potential direction of where some home services are going, you better have a plan B for your current team. Because when I hear companies like Monday.com laying off something like 600 employees yesterday, like that's a pretty heavy thing to do. And if you're in the service business, which is entirely a people business, like I really want to think through like plan B for our team as like robotics, automations and AI start to really.
- [39:32]
A
The robot thing's coming, dude.
- [39:34]
B
Oh it is.
- [39:35]
A
We used to use Monday. My, one of my good friends is founder of ClickUp, which is their, their biggest competitor. But he's a badass too by the way. He lives in here in San Diego. 37 years old, manages a team of 2, 500 employees. He just turned down a 6 billion dollar offer from Intuit. And he's, he's, he's, his goal is to take it to 20 million, I'm sorry, 20 billion valuation and then exit. But only, only 37 years old. He's the most successful dude I know personally. And he's only 37 years old.
- [40:07]
B
Unreal.
- [40:07]
A
Insane.
- [40:08]
B
Real. Yeah.
- [40:09]
A
Yeah. But so anyways, the future is, is potentially robots. How many years out do you think that that really is? I mean I'm seeing robots around San Diego. So what, what, what do you, I mean are we talking two or three years out?
- [40:21]
B
I mean that's a phone call to Elon. But they're building cars.
- [40:25]
A
Yeah.
- [40:25]
B
So you know, they're, they're good for warehousing, they're good for just basic movements. But when, what I've been hearing, I've been listening to a lot of must talk on this is that they can't get the fingers right. And the fingers have so much, it's so much of what we do. They have the brain, they have the AI, they have the visual, they have the general mechanics of the legs and the arms. But the fingers are what drive everything. And there's so much going on in our hands. You know, if we're thinking about like moving things or you know, drawing or painting or cleaning or cooking, like these are all hand based things. And so mowing the lawn, sure you don't really need anything to do with that. They already have robotic lawnmowers. But when you get into actual movements that require specific hand movements, I think that's where the delay is going to be. And I don't have an answer for that.
- [41:22]
A
Yeah, no, that makes a lot of sense. That makes a lot of sense. I, I could see that being, I mean they, they got the, the drive, the, the driverless cars, the, the way os, but even those, I mean I, I've, I'VE been in one just to see what it's like, but it's kind of like a little bit shoddy to me. And I've seen them tested in San Diego, but I don't think it's like legal yet.
- [41:43]
B
I wonder in 20 years if, if our kids are gonna be like, what do you mean you used to drive a car?
- [41:49]
A
Yeah.
- [41:49]
B
What do you. And you drove it drunk. Like, you know what I mean? Like all this drinking and driving and stuff like that. Like, I wonder if driving will be a lost skill. There's so many people that love driving and so you know, you know there's going to be companies lobbying against it like Ferrari and Lamborghini. Like you buy those cars because you want to, you want to drive them.
- [42:09]
A
Yeah. And even, even there's something to be said about, you know, having a, a black SUV pick a, pick you up with a professional driver. If you're going out on a date night or you're, you're, you're getting picked up to go to a business meeting or whatever. It's, you know, it's, it's a certain class that comes with it and a certain quality service. I would rather do that than, than
- [42:28]
B
jump into a wayo 100%.
- [42:29]
A
You know what I mean?
- [42:30]
B
Yeah. I've been hiring a driver more recently. It's phenomenal. He shows up to my house.
- [42:34]
A
Yeah.
- [42:35]
B
Gets in my car and drives. So like you said, for date nights, it's great. I mean the other day this was wild. The Tesla was driving itself and I was sitting in the back and I had my iPhone tethered to drive the laptop. And then.
- [42:50]
A
This is your, this is your Tesla?
- [42:52]
B
Yeah.
- [42:52]
A
Damn. You're sitting in the back seat.
- [42:54]
B
Well, no, the, there was, the driver was there.
- [42:55]
A
Okay, okay.
- [42:56]
B
But it was, it was doing it. You have to sit in the driver's seat. But. And then I've got Claude cowork connecting through high level building like funnels and building out all this automation. It's just like this is today. Self driving vehicles, unlimited access to Internet, artificial intelligence, doing all the digital tasks while sitting in the back of a car. I don't know where this is going to be in five years.
- [43:20]
A
Yeah, that's the game though, man. I, I'll take SUVs like all over. Even if it's going to the other side of downtown. It's a 10 minute ride just to get my haircut, but it's like I get 10, 10 minutes back of my time and that's way more valuable than the cost to Get a black suv. Or even if I'm going, I've done it. Even driving, like, an hour, hour and a half north. I'm like, I got. I got two cars. But I'm like, you know what? Like, it's. I will make a lot more money if I have a driver and I can sit on the back on my phone for an hour.
- [43:50]
B
100%, you know, 100.
- [43:52]
A
So you start thinking about the opportunity costs.
- [43:54]
B
Anytime I'm driving, I keep thinking to myself, like, what am I doing? It's like when I tidy up my house, I'm like, we have a cleaner. Like, buying back your time. This is something I learned a lot from Dan Martell, and I've been working with him for a couple years now.
- [44:08]
A
Love Dan.
- [44:09]
B
He's amazing. He doesn't mess around with that, like, what he wrote about. He's like, that. That wasn't just a title of a book. Like, it's. It. It is. The most important asset that we have is our time and what we do with our time once we get it. That's where you can really move rocks uphill and make serious differences, is when you actually fight to get your time back and then redeploy it in the best way possible.
- [44:37]
A
That's really good. That's really good. So I want to move to the next segment of the show, man. Where I guess every guest the same set of five questions. And so to start, what is the biggest money obstacle you've ever overcome?
- [44:48]
B
Biggest money obstacle I ever overcome. Overcame was I had no money in my bank account. I had maxed out my credit card, and I ran out of gas, and I pulled over to the side of the road with tears dripping down my eyes, and I called my dad to come pick me up and so I could tow my truck to the gas station. Everyone has a different rock bottom. For some people, it's jail. For some people, it's a breakup. For me, having zero resources like that was my rock bottom. And overcoming that through business and entrepreneurship. That's been one of the most rewarding things and continues to be a drive today so that I can make sure that never happens again for me, my family, or anyone else that's in my network.
- [45:34]
A
What are your top three favorite books of all time?
- [45:37]
B
Buy back your time. Dan Martel. Who? Not how. Dan Sullivan.
- [45:40]
A
Great one.
- [45:41]
B
And I'm gonna go with never split the difference. I think negotiating is one of the most underrated skills in business. It's good for relationships. It's good for sales. It's good for Hiring it's good for banks. It's, it's good for everything.
- [45:56]
A
That's a good one. What is your favorite quote of all time?
- [45:59]
B
It's a Richard Branson quote and it's something along the lines of train your team so well that they could work anywhere but treat them so well that they choose to stay. And I'm a big believer in developing people. And so when I read that for the first time, I was like, I went on this Richard Branson journey after that and I just love everything about that guy.
- [46:21]
A
If you could go back and tell your 25 year old self one piece of advice, what would it be?
- [46:26]
B
Learn cash flow. I don't think I really learned cash flow until my late 20s. And I think they should be teaching that when you're 14, 15, 16 years old in high school, understanding what a balance sheet is, understanding what an income statement is, understanding why it's important to have good debt to equity ratio. I mean, there's companies that come into bolt right now and they don't know what debt to equity ratio is and they think the banks are the bad guys. I'm like, you just need to put yourself in the bank's shoes and give them what they need to see. They don't want to see it, they need to see it. And if you can understand all the metrics that the bank needs and work to build them up in a way that is going to look good on paper, you're, you're golden.
- [47:06]
A
Your, your lenders are often your biggest partners.
- [47:08]
B
100%.
- [47:09]
A
They should be treated as partners.
- [47:10]
B
100%.
- [47:11]
A
Why is the junk removal business of the best opportunities in 2026, you don't
- [47:17]
B
need anything to start so you can do what we did, which was have no money, no capital and you could just go get a pickup truck. We found a trailer on the side of the road an hour away from my house and we left the Ford dealership and we went straight to our first job and it was 500 bucks, then 500 bucks, then 500 bucks. So that's the first reason is anyone can get started. The second reason is because it is scalable and it's a business that'll never go away. How we run the business that's going to continue to change forever. Technology, innovation, artificial intelligence. But one thing that isn't ever going to go away, it's garbage.
- [47:56]
A
That's really good, Barry. I appreciate you coming on, man. So much game, so much value. Where can the folks get in touch with you if they want to learn more about everything you're doing the junk removal business and even joining your community.
- [48:07]
B
Absolutely. Yeah. Instagram, Arman. We're posting every day about not just how to build a great business, but actually enjoy the lifestyle that you want to live as well.
- [48:16]
A
Okay, there it is. He is. Barry Hartman. I'm Rich Summers, listeners, thanks for tuning in. We'll see you guys on the next one. Peace.