Monday, October 13, 2008

Value-added Junk Hauling?

Link of the day - The Paradox of Choice: Why More Is Less

VALUE-ADDED junk hauling may sound like a questionable product to sell: it assumes that people will pay hundreds of dollars to get rid of ratty sofas and assorted flotsam in professional and socially conscious ways.

Its biggest selling points are friendly employees who presumably look more respectable than the local odd jobber, and who will, unlike the far less expensive city garbage collector, climb into that nasty basement or garage to haul out your junk.

Yet to the bafflement of industry experts, quality junk-hauling sells.

Take Omar Soliman and Nick Friedman, the 26-year-old founders of College Hunks Hauling Junk, based in Tampa, Fla. The pair started the company in Washington five years ago and now employ 25 people there; they also have franchises in 15 metropolitan areas.

Sending out college students in golf shirts and khakis, College Hunks had $2.9 million in business last year. Mr. Soliman and Mr. Friedman said they expected sales of $4 million this year.

The company charges by the size of the cargo: for an eighth of a truck, a quarter and so on, up to $500 for a full load, or $99 for a single item. Extra charges apply for some concrete, dirt, construction materials and other loads. And they will not remove some materials at all, like combustibles and other hazardous waste. The haulers promise to recycle and donate what they can — and say that it’s to their advantage to eliminate as much as possible this way, because they pay by the pound for whatever they drop off at the dump.

More than half of College Hunks’ business comes from homeowners in upscale neighborhoods who discard many items that the company takes to Goodwill Industries instead of to the dump. While some charities offer pickup services, they may be selective in what they accept and may not clean out a space, Mr. Friedman said, adding, “Calling College Hunks gets the stuff out in one sweep.”

About 30 percent of the company’s revenue comes from businesses — property managers, for example, who hire the company to clear rental units.

College Hunks has sold 36 franchises since January 2007, each requiring a minimum investment of $75,600, which includes a $25,000 franchise fee, to get started. “In our minds, we want to have 80 to 125 franchise partners across the country,” said Mr. Soliman, the chief executive. “We think we can do that within three years.”

From the beginning, their business plan called for franchising, as the least expensive way to expand the company. By the summer of 2006, when 12-month revenues were up to about $500,000, Mr. Friedman and Mr. Soliman had enough cash from operations to spend around $250,000 for lawyers and consultants to roll out a franchise plan.

Among the expenses were setting up a call center that could take orders from around the country and software that would allow customers to search online for College Hunks by ZIP code.

They also hired George Palmer, 63, as director of franchise development. “I’ve been in franchising for more than 30 years; that’s longer than the College Hunks have been on the face of the earth,” Mr. Palmer said.

His job is to arrange support for the franchisees, including marketing materials designed for specific customers, like real estate agents, bankers or moving companies. He also hosts conference phone calls with franchisees, where tips are shared — on good insurance rates, for example.

If the College Hunks plan sounds familiar, that is probably because a company called 1-800-GOT-JUNK? has already done it. Based in Vancouver, British Columbia, 1-800-GOT-JUNK? sells the same services as College Hunks, and it has blanketed the United States and Canada with more than 300 franchises in the last nine years. It reported $121.37 million in revenue last year.

Mr. Friedman said College Hunks was already the largest junk-hauling business based in the United States, and that 1-800-GOT-JUNK? was the only competitor with more than a few trucks.

College Hunks — whose phone number is a similar 1-800-JUNK-USA (its Web site is — is undaunted by the competition. While Mr. Friedman said 1-800-GOT-JUNK? “is the McDonald’s of the junk-hauling business,” he said his company just wanted to be “the Burger King.”

Franchise consultants say there is nothing wrong with that strategy. They point out that Wendy’s did not enter the fast food market until about two decades after McDonald’s invented it.

College Hunks was conceived in the summer of 2003, when Mr. Friedman was a college intern at the International Monetary Fund in Washington and when Mr. Soliman started picking up junk for cash. The two, who have known each other since attending Sidwell Friends School in Washington, hauled junk together on weekends.

They split about $9,000 that summer. Then Mr. Soliman returned to the University of Miami and Mr. Friedman to Pomona College in California for their senior years, but their phones kept ringing for hauling jobs in Washington.

So Mr. Soliman drew up a business plan for College Hunks and entered it in the Leigh Rothschild Entrepreneurship Competition at his university. He took first place and won $10,000.

After graduating with a business degree, Mr. Soliman took a marketing job in Washington and used his prize money to restart the junk business on the side. Mr. Friedman helped, but he had an economics degree by then and a job at a consulting company.

“I created spreadsheets, economic research to help billion-dollar businesses make more billions,” he said. Six months later, he left to join Mr. Soliman and the junk business full time.

They recruited haulers from the University of Maryland, in nearby College Park, and area community colleges, paying them $11 an hour, with bonuses of $20 to $50 a shift if a customer called in and complimented their work.

The company’s name notwithstanding, the haulers don’t have to be hunky, Mr. Friedman said, but “clean-cut,” which he defines as well-groomed with no prominent piercings or tattoos. There is also at least one Hunkette, as they call a female hauler, and women also work in the corporate office.

Mr. Soliman and Mr. Friedman designed a logo with a cartoonish muscle man and invented a slogan: “Let tomorrow’s leaders haul your junk today!” They put out fliers and door hangers and handed out business cards.

Shortly before their 25th birthdays, they were ready to franchise, and they obtained a toll-free phone number with the word junk in it, paying a Michigan medical company $13,000 for 1-800-JUNK-USA. The number helped their marketing efforts immensely, they said.

“It was easy to remember and sounds like a national company,” Mr. Soliman said.

Big waste-collection companies might pose formidable competition if they pursued junk hauling, but they haven’t so far, and some of them openly disdain the idea of collecting junk from inside homes.

“I question the need and the appropriateness of companies like 1-800-GOT-JUNK?” said Robert Reed, a spokesman for Norcal Waste Systems, based in San Francisco. The company collects garbage for San Francisco and nearby cities, and it recycles about 60 percent of what it collects in its facilities, Mr. Reed said.

Most homeowners get free or inexpensive pickup of bulk items from the curb once or twice a year as part of their city garbage collection, Mr. Reed said. So why would people spend $400?

“Most people are able-bodied and can haul their own stuff,” he said. “You just get a dolly, which most people have in their garage, and pull it out to the curb.”

Those sentiments were echoed at the National Solid Wastes Management Association, a trade group whose members include large trash companies, and in Waste Age, a publication that covers the waste-hauling industry.

But at 1-800-GOT-JUNK?, Launi Skinner, the president and chief operating officer, said quality hauling services were needed because “everyone in our society has junk.”

And sometimes it takes a sense of humor to move it. Among the College Hunks is Kevin Burns, a 21-year-old student who is also a full-time employee.

Last month, Mr. Burns was working on a job at a small apartment in Tampa. Magazines, notebooks, plastic soda bottles, lamp parts, 1980s electronics and, inexplicably, feathers covered every surface.

While her 10-pound Chihuahua yapped furiously, the resident, Deirdre Blancett, asked the haulers to remove the sleeper sofa, the television, the computer desk — pretty much all of her furniture — and whatever was on it.

When the job was about half done, Ms. Blancett’s nephew, Brian Vans Evers, arrived. Noting the College Hunks sign on the truck, he spat tobacco juice and remarked that college students had time for junk hauling.

Mr. Burns introduced himself and finished filling the truck. Then he slapped a College Hunks magnet on the tailgate of Mr. Vans Evers’s pickup and said he hoped he could work for him again.

Mr. Vans Evers looked at the magnet, just above his “Yur Followeeng a Rednek” bumper sticker. The house his aunt is moving into has more junk than this apartment, he said, adding that “maybe we’ll give you a call.”

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