Transcription
What if I told you there was treasure in this trash? Well, as luck would have it, my friend Spencer started a trash business with almost no money that does $50,000 a month. And so, I bought the truck, started making payments on it, never took a dollar out of my pocket. How much revenue does this one truck generate? 9*800 would be your number. I still can't get over that WY Texas would be $10 million a year on the two trucks. $210,000 a month. That's gross 40% margin. It's one of the magic things about what you're doing is you're not only getting 100% financing for these trucks, but you're buying them for like 70% discount.
So, we've never had a customer cancelled. Oh my gosh. So, today we're going to break down how he finds customers, how he finds contracts with both neighborhoods and cities, and how he finances trucks like this for almost no money down. So, let's get going.
All right. So, you're a software guy. How do you go from software to trash?
I think trash is software, right? Subscription based.
I guess. So.
That's basically the thought process. So I have one or two s well technically two software companies and when this just popped up it felt like it landed in my lap. I think you would think the same thing. Neighborhood doesn't trash doesn't get picked up. There's 400 houses in here. You know the Chris Cornered brain goes hm 400 houses $35 to $60 a month.
$12,000 a month.
Yeah. It gets out of control quickly and you're like I wonder how hard it would be to get people to sign up. I don't think my bl brain ever flipped over to like, do I want to do this? It was more like, let's just see if it's possible first.
Well, how hard is it to just post something to Facebook?
Right? That's exactly right. So, I was like, how can I make this like a no-brainer, which stole that from Hermosi, which was like, all right, everyone, the common sentiment is everyone hates the existing trash company.
Why did they hate it?
So, it sold to private equity, expenses got cut. I'm assuming some drivers quit, but like the customer support was miserable. Um and so people just started quitting in droves and in our neighborhood um something happened where people just they didn't pick up the trash like a week or two and people were ir rate and so we.
That's all it took was a week or two.
Yeah. Yeah. I think it was more than that. So it was week or two didn't get picked up and then there were emails coming out that the billing was changing. People were getting double bill in the handoff from one company to the other. And then I think the nail in the coffin was they said, "We're not picking up anything outside of the bins." And depending on where you're at watching this video, you can see why that would be, right? You just don't want to have to get out, right? The effectiveness and the scalability of this truck in particular is being able to use that claw and tip it without having to get out.
Yeah.
And when you have to get out, it crushes you in this truck times two. Because in a normal truck, you toss it in the back, you keep moving. And this one you got to come up with creative ways to load it nine feet.
It could be the difference between servicing 400 homes in a day and 100.
Oh, that's it. You nailed it. So, basically with this truck, you can do 15 seconds a house. If you're doing a rear loader, it can get up to a minute.
And so, like if you just times that by drive time and then 400 houses, it gets out of control quickly. So, anyways, we got uh.
So, you go to Facebook?
Go to Facebook and I'm trying to put an offer up and the offer that I wanted to put up was supposed to be no-brainer. And I'm like, listen, they're going to service this neighborhood no matter what. So, the first part of my offer was like, hey, I'm gonna if I can get 200 customers to sign up, there's 400 people who live in here. I figured, hey, if I could get half of them, that would be huge.
Yeah.
If I get half of them, that'd be huge. And if you don't if we don't hit that number, 100% refund. There's no risk. Like, you either get your trash pickup or you get your money back.
And that's somewhat risky to you because if you refund everyone, Stripe or whoever will keep all the.
Refunds, but it's it's a small risk.
Yeah. It was a percentage risk basically. So now to counteract that, I'm glad you said that because that's something most people don't catch.
Yeah.
We put in Stripe, you can extend the escrow before the money gets transferred to you. So we extended it as far as it would go.
To mitigate that risk.
Mitigate it. So before they transfer it to your bank account, they uh ask you like how long do you want us, you know, you can have it same day or you can have it and you pay more money. Anyways, um so to mitigate the risk, we kept in an escrow as long as we could and we ended up getting I think in 15 days something like 150 people and then ended up getting like in the first year about 200.
Oh my gosh. So, you hit your goal.
Yep. So, we hit the goal. I didn't have to refund everyone. That was part of the offer. It was like, hey, if we don't hit the goal, I'll refund you all the money. No risk. And then if we do hit the goal, we're going to use the cash to go buy a trash trash truck. Now, we did ask for 3 months in advance.
Yeah. So. And so $105. So we we got basically 200 or 200 people to send us $105. Now that was over probably 45day period for the 200. We got the initial 150 in like 10 15 days.
So that's like 15,000 bucks.
Yeah. In like pre-sales.
15,000 in pre-sales. And if you really look at it, it's like five grand a month in reoccurring.
What's crazy is like you were like totally transparent with them. I've never owned a trash business. I don't have a trash business. I know that these guys suck. I could do it better. How hard could it be? Most people would be tempted to be like, "Listen, my brother has a trash business. You know, I know what I'm doing." But you were like, "Hey, all the cards on the table." But you made it risk- free for them. That's what offset the lack of experience, right?
I think deep down I've always wanted to do a pre-sale.
Yeah.
And so like this was like you always hear people talking about like Noah Kagan is a big one. I'm like, "Oh, do pre-sale." And I was like, "You know what? Let's try it." So I think the initial thing was like, "Can I make this work?"
But people don't do pre-sales for garbage businesses. Like that's what I love. I love taking like software concepts and putting it in a sweaty business, right? And so part of me wasn't even like thinking about the trash aspect at all. And then I was like, "Okay, let's do this." I think the first day it was like thousands of dollars and I started to my pants a little bit. And then at one point we had, like I said, 15 I think when we hit 150, which my goal was 200. I turned to my wife, I'm like, "Dude, we got $15,000 and we've got to decide." And this window, I think it was like 60-day window, it's going to get put into our bank account. Yeah. And then if that happens, the refund fees get hit because you're now you're doing a double trans% and they charge a fee, right? Unless you kept it in the escrow, right? So then you can send it out.
I didn't even know that. That's that's clutch.
Yeah. Um and so I was like, you know, what do we do? So then I started googling how to buy, you know, where to buy trash truck and all sorts of stuff. Yeah. But yeah, that's how we started.
All right, Spencer. So, how do you go from 15,000 in pre-sales to actually fulfilling on this service?
Yeah, I think it started with like googling garbage trucks for sale.
Okay.
And then I ended up basically seeing like everything was so expensive and then I wanted to start asking people for help. So, I went on to Facebook Marketplace, typed in garbage truck. There was a bunch of garbage trucks on Facebook Marketplace and here's what I learned. Anyone who's selling a garbage truck owns a trash company. So, I end up having conversations with these guys who are selling garbage trucks.
And I start saying like, "Well, where do I buy these at?"
Yeah.
Where do you buy them at? And one of the guys goes, "Well, why don't you join the mom and pop trash group?" And I'm like, "Never heard of that. That didn't pop up in the search. What a weird name."
Yeah, that's for operators.
Yeah, for operators. And so, look, it So, I joined that. And he goes, "If I were you, I one of my recommendations would be to be to buy a side loader. You don't have to run two trucks or two employees. Side loaders will robot arm grabs it and tips it. And his words, not mine, were if you can buy a side loader that's under CDL, that's the holy grail truck."
CDL means you need a special license.
CDL means you special license and special license means you get paid more.
So holy grail truck is you only need one employee or no employees and you don't need a special license. You could be operating tomorrow, right? Okay. And so, coincidentally, one popped up on Facebook group by this guy in Tucson, Arizona, who I think bought later on, I learned, bought it at an auction house from the city. So, he was flipping it.
He didn't tell me that, but yeah, he was flipping it.
Okay.
So, anyways, I bought it sight unseen and he just sent me videos and we agreed to a price.
What was the price?
Uh, it was 35,000.
Okay.
Uh, and then ended up being 5,000 in shipping. We agreed to a price, I said, "This is going to be crazy." I was like, "But can I send you half now, half later, because I don't know anything. I don't know you. I didn't see the truck. Like, I don't know anything about this." He goes, "No problem." Which made me trust him more.
Yeah.
He goes, "I never done a deal like this." I'm like, "I've never bought a garbage truck." So, we're in this together. And so, anyways, we bought it. I sent him the wire. He sends me of a picture of it being loaded onto a uh shipping truck, logistics truck, and I had it shipped here. It was about 5 grand. We ran it for 40, and I 100% financed it. That's the fun part. So, from software, I opened an AMX. I'm like, let's get those points. Let's get those flights. And uh AMX sent me an email for like just being a good customer. And it said, hey, do you want $40,000 in personal loan? They like just send that email. I And I was getting it like every month. And I was like, I what am I going to do with this? And then the opportunity was there. So, I clicked accept thinking I was going to get a call from like uh you know, approval and you know, financials and all this stuff. The money just got put in my account.
Literally one click in like 3 hours I had 40 grand in my bank account and I was like I think it was actually 30 grand cuz I that was the price of the truck and then I ended up having to pay five for the shipping and so I bought it and the payment it was good terms of 7% and it's not tied to the equipment.
Yeah. So they can't take it.
Yeah. I can't take it. And so it's tied to me personally, which kind of sucks, but it's $700 a month payment. And since it's tied to me instead of the truck, it's like 6% interest. 7% interest. 7% interest 10 years. It's like the greatest loan ever.
So you make you one payment in a day's worth of work.
Yeah.
Less than a day.
Yeah. And so we were making five grand a month at the time doing one day a week, four days a month. And I'm like, $700? Like we can afford this. And so I bought the truck and started making payments on it. Never took a dollar out of my pocket. So when it rolls off the flatbed, like I mean, how do they get it here?
That's another story that we can go into. There's logistics companies that sell you the last mile.
Yeah.
So there was a guy in Tucson who was coming back to Dallas and had no route. They call it empty route.
Yeah. Yeah. Empty.
And I called a broker and the broker's like, I got three empty leg guys. Guy picks it up, takes it to like a, you know, trucky yard. I had to go meet him over in WY and we just drove it off the trailer, which is another problem. from the battery. They left the lights on from Tucson to here, so the battery was dead.
How did you learn how to operate this thing?
Well, it's 100 CDL truck. I mean, I didn't basically the guy gets here and I go, "Can you show me how to drive this?" He goes, "What do you mean?" I was like, "I've never drove anything like this." He goes, "What do you mean? You just bought a I was like, "I I peasant."
Yeah. I'm saying, idiot.
Can you show me how this works? And he showed me how to drive it in this trucker who delivered it here.
This guy who has no business showing you how to drive it. He's not obligated. paid just to deliver it is showing me how to drive it in the parking lot of the trucking center. And then I had I got it to my house, which was parked right there. I had to figure out how to work the arm because there's no guide to that. And the truck, by the way, is a 2006 with 200,000 mi. And so anyone who's in the trash industry is like, "Oh, I've never touched that. You're crazy." I'm like, "I don't know this stuff."
Yeah.
Like.
That can be a feature though. That can be not.
Like I don't know what you're talking about. like that's a high-risisk truck or that's a lot of miles or.
That's a good framework to touch on cuz if if you would have like done this market research which a lot of people do. They do that to feel good. Let's go talk to a few business owners. They would say, "Dude, get out. Get out of the business. It's hard. Your guys won't show up for work. Don't buy anything.
You're going to go through tires. That truck's going to break. You're going to be stranded.
I'm telling you, sometimes the people in the industry are the worst people to talk to. Ignorance can be bliss. Naity can be a superpower.
100%. Now, if you paid 35, what was it worth on day one?
Yeah. I think I could have sold it for like 60.
Wow.
And I I think he bought it for like 10 or 15 at the auction. It is an old truck.
Yeah.
But any under CDL truck that has an automated automatic arm, people kill for those.
And you're still running that.
It's still running. Yeah.
A year and a half later.
We passed it in the video in the video.
How many miles are on it today after 18 months?
215 probably. And it's uh you know, we keep up with the maintenance, do the oil changes. I think the engine's strong. I think the hydraulic the like trash compactor part will fail before the engine does.
All right. So, tell me about these bins. How'd you get your hands on these bins?
So, we had to get bins in like less than 30 days. And what's Dude, if you Google like buy trash cans, it doesn't like Home Depot pops up.
Yeah.
So, like it's really hard to find. They're called polycarts, Chris.
Okay.
Okay.
So, Facebook group will tell you kind of what to call them. did some Google searching and stumbled across a company called Cascade in Michigan that makes bins for everyone. Okay. And so we called them and I was like, I need it in less than 30 days. She said, not possible. Not for us. Maybe somebody else said, where can I get them? She goes, there's this company called BNG Sales in Grand Rapids that buys used trash bins as like liquidation. Like trash company sells. They don't want the branding anymore. And so they had an inventory of like I think 500 used bins and I bought 200 of them and I want to say they were it was all in for like 10 grand. I think it was 10 grand with the shipping and then during December like the 24th like the day before Christmas and like 2 days before there are 200 used trash bins in my driveway with a wall of trash bins and they were not clean. Like it was like they took them and some of them saw trash in them. They delivered them and they delivered them to my house and we unloaded them in my driveway.
And 200 trash bins is way more trash bins than you think it is. Like the whole driveway is full and most of the neighborhood was fine with it cuz they knew what I was doing from the Facebook. And then each day for like a week I would pull out like 20 of them and power wash them in the driveway. And something that I didn't calculate was like I had to rebrand them. So we ordered them. They didn't get here in time and I couldn't wait. So I put out bins with someone else's name on it.
From Tucson, Arizona.
And everyone who had signed up like knew what was happening. So they did not care at all.
Well, you built a community like.
Yeah. Yeah. They were part of they were invested in the story. Yeah. And uh so what I ended up doing was the stickers got here. I put them in the garbage truck and each day I would at once a week sticker the bins until we had them all stickered. Yeah. I think the whole all-in startup cost you're like, you know, finance a truck at 700 bucks. The bins were 10 grand. So, that was that was where I probably made a mistake. I probably could have financed the bins or took some of that cash.
Put them on a credit card.
Yeah. Put them on a credit card. I could have done that better.
Yeah.
Uh because what we ended up doing was like cleaning out the 15K or like 10,000 of the 15,000 quickly.
Yeah. But really, if you consider the $15,000 in pre-orders, you're you're like cash flow positive even after you buy the bins.
Correct. Yeah. Yeah. Correct. Oh my god.
And so we had some cash left over which covered the dump fees for the 3 months in the gas.
So arguably, if I'm trying to clickbait you, there was no cash out of pocket.
And then it just, you know, word of mouth grew from there. We rolled out a referral program. People were like invested in the story, which I think is like one of the harder things to keep going. So like, if I could have everyone in Texas sign up based on the story, I think we would landslide everyone. Now we've reached a point of scale where like they're like like oh I just saw a random bin on the side of the road to sign up and they have no clue who I am or who the story is or.
Just reach the story got you to that point.
Right and I I wish that like I did a better job or if there is a better way to like get people to sign up from the story.
Cuz I think people buy from people they like and if it's this or that the story might get people to sign up but here's what I'll also say no one is signing up for our trash service because they're like that's outside of the story they're like that's Spencer kid in those reviews. You know why they switch is because they get pissed at their vendor.
Yeah.
I can't win business just to win business.
Yeah. You have to mess up for me to win the business.
But luckily, a lot of people are messing up, right? People aren't just The big common misconception is like you could name this whatever and just be there when somebody messes up and you'll get the business.
Yeah. It's timing.
That's what I've learned. Yeah. Just have a couple reviews, have some neighborhood word of mouth. But the reviews and neighborhood word of mouth isn't enough to get somebody to switch. It's just not. And that that's something that you have to wait for them to mess up and then be there.
Yeah, these videos take a lot of time and cost a lot of money to film. So, if you want to say thanks, just hit subscribe, please. You might think you're subscribed to me, but about 2/3 of my viewers are not subscribed. Hit subscribe. It would mean the world. Thank you.
Okay, so pre-sales are cool. Getting all this money up front is cool. How do you sustain the business once you exhaust this neighborhood?
So, referrals is the first like key thing that we leaned on.
You ask for them.
Yeah. Yeah. and we rewarded them. Yeah. So, I would say like a secret, not not the actually maybe the secret is referrals because as we might have mentioned before, people won't just sign up because they like you. Yeah. So, if your neighbor tells you that your trash company is awesome and they start bragging on you like, "Oh, dude, they send me these jokes. They're really great company." That helps and somebody will switch for that. So, we created a referral system that gave someone a free month of trash every single time they refer a neighbor.
Okay? All they have to do is put their name in and we'll put a credit on their account. Yeah. And they So, we've had somebody refer up to 16 houses before and got a whole year's worth of trash, which is crazy. So, like that's the best, right? Cuz I don't have to pay for that.
I'm paying what 35 bucks, but then my margin is cooked into that. So, like, you know, it's it's the best way to get business.
Yeah. All right. So, Facebook ads.
So, Facebook ads basically, uh, I met a kid who was doing 50 grand a month power washing trash cans. Okay.
And he was like 26, 27. And I'm like.
Like one of those bin cleaning.
Yes. The can man. His name's Kade. And uh I called Kade and I'm like, "Dude, and I just wanted to talk to him because I saw his stickers were on my bins. Remember how they arrived dirty?" I put some of them out dirty. So people hired him to come clean them.
So now I'm seeing his stickers on my stuff.
Yeah.
So I call him and uh.
Just kid normal conversation and then you know start asking him about his business and stuff and he kind of leaks to me that he's doing really good. And I'm like what? How? Like this is such a commod like you could be defeated by a $50 power washer. Like.
And it's such a low ticket.
Yeah. And like I told you it's hard to get people to switch to my stuff. Imagine that.
And so anyways, he goes, "Facebook ads." And I'm like, "What do you mean Facebook ads?" He's like, "Dude," he's like, "We put out Facebook ads. People sign up and we've got it. The unic economics work."
Yeah.
And I'm like, "No, dude. I did Facebook ads. They don't work." Yeah. You know.
And I've heard that so many times. Oh, I tried Google ads. Doesn't work.
It doesn't work. I I spent money. And he goes, "You didn't set them up right." And I was like, "Okay, what what do I do? Teach me." Uh, and he goes, "All right." He goes, "It has to the algorithm has to learn who your ideal customer is. And most people never spend that number to teach the algorithm." And that sounds sounded crazy.
Too soon.
Sounded crazy to me. And you have to set it up right. He goes, "So, here's what I want you to do, Spencer." He's like, he gave me a guy on Fiverr that just was like responsible for installing the Google Pixel, which I'm a software guy. That should be easy. But part of it was having a success page. So we'd send them to Stripe to check out.
To track the conversion.
Right. Yeah.
Right. That's the big thing. So you send them to Stripe to check out.
It wasn't optimizing for conversions. Was optimizing for.
It was just spending my money. It gave me what I wanted. It gave me what I what I wanted. So he puts in a success page that tracks the conversion through Stripe. So they would leave our website, but when they get back, they hit the success page. It tells Facebook that they're doing a good job. Now it comes down to getting enough of those people in the system. So what we ended up.
Data point.
So yeah. So what Kade said was I need to spend $300 a day for like five days or a week.
And for a cheapo like me.
Dude. Yeah. Yeah. I'm like counting my my shillings.
I'm like I don't know if I can do this. So.
Cuz you're thinking I need to get 10 customers for that.
Yeah. But you're not you're not going to get that.
No, you're you're going to get your face kicked basically is what happened. And so that's kind of what happened. So, we started getting our face kicked in a little bit and I'm dying every day. It's like watching like a slot machine just take your money and I'm like going, "No."
Except there's no fun.
Right? There's no fun. Yeah. Yeah. Yeah. I wasn't getting free drinks. And so, anyways, finally we got a customer then got another customer and then we got it to the point where it got it dialed in where it was $100 a customer.
Yeah. They'd spend 105. So, in my head I'm like, I've man I figured it out. and you know they're going to stick around for years until they move. So 100 bucks to acquire a customer is good, right? I was like, I figured it out. But the truth is I didn't because I still got to buy the bins, right? There's a bunch of expenses on that. But in my head, I'm like, I spend 100, they spend 105. The paid ads have paid for themselves. And like you said, they don't turn. So like, I should keep I should put all my money to this. Since then, we've spent more and more and more and more money to the point now where uh we've gotten it on certain months down to like $35 to get a customer.
Now, let me ask you this. Like your biggest competition is customers moving away. Do you know yet how long a customer will stay with you?
No, because we we haven't had somebody cancel since we started. Now, we we're not that old, right? We're not even 2 years old yet. And I think.
That's silly. That's just silly.
I say that like we've had people move and cancel, but we leave the bins. We've never had somebody cancel because of our service. I like to say the people who left us, we fired.
Yeah.
Like it wasn't a good fit. You didn't like us. We didn't like you. we'll refund you all the cash. And so we've had I think that happen twice.
If you take everyone who's moved in a year and like divide and do all that, do you have any idea how long people are going to stay in their homes? Like what your churn will be based on people?
I I think I'll sell the company before they turn because when the bins are at the house, if they leave, we still keep that customer. Does that make sense?
Yeah. Yeah. Yeah.
So, like unless I just start really doing bad, which I don't plan on doing, I don't think there's a reason for somebody to switch cuz they're not going to start taking it to the dump themselves.
If the customer moves, there's a really good chance you're going to get the new.
The new resident as a customer, right? So, we close their account, but we keep the address open. So, then when you're like setting up a CRM, it's like, how do you do it on the address or the customer? Like, uh, we do it on the customer. But.
I think I read that people stay in their homes like four years on average. So, let's just say hypothetically if we're trying to calculate your monthly churn that you have 100 customers. It's static, right?
Yeah.
Every year you're going to lose 25 of them, right? Because you divide by four.
And then let's say you're able to keep half of those because you just you send a flyer or whatever and you you convert them. That would be like 12 and a half% churn per year or 1% per month, right?
I'm telling you. I think.
So. So, if you look like a software business, your churn is going to be 10 to 20%. This is like 1%.
Yeah. And I I would I would argue that if you leave the bin there, it's going to be even lower cuz then they're like, "Well, now I got to call you to come get it."
And now I got to call them to bring a new one.
Put your number on the sticker, sticker on the bin. They're going to call you.
Well, we don't. We make our own bins now. So, we manufacture it from scratch, have it hot stamped with our logo on it, and put it in that driveway. When they cancel, we don't come pick it up. We're like, "We'll leave that bin there."
Well, yeah. No, they'll What happens is the new person will move in and they'll just call. They're like, "Hey, here's our trash company." And now we're to the point where we're on the HOA. We're in the utility districts. The neighbors are telling you who to sign up for when you move in.
So, it's like a snowball effect because you're putting out little billboards in front of people's house every single day. It's one of like if you were just drive down a street, you don't really know who the roofer is. You don't really know who made the mailbox or mowed the lawn. Maybe the lawn guy will put like the, you know, spray sign on, but the trash is like very obviously branded.
True. So the the referral marketing, it's like sheep herd marketing almost where it's like, hey, two, three, five, 20, and it really kind of scales well. That's the best way because now we're not paying for those ads. So the bins probably are our best source, but they don't tell the story like your neighbor would or a Facebook ad would. An old wise men once said, "If you want to go fast, go alone. If you want to go far, go together." So if you want to build a business like this sweaty startup, internet, AI, it doesn't matter, check out tkowners.com. It's where me, people like Spencer and builders, entrepreneurs, entrepreneurs is where we hang out. We're building businesses. So, come check us out. You won't regret it. All right. So, if conservatively 1% or less of your customers leave every month, that means that the lifetime value of one of your customers is $3,500 and you're spending 30ish to get them if it's a referral or a hundredish to get them from Facebook ads.
That's crazy. Like, you're putting in a dollar and you're getting back a hundred.
What's stopping others from starting this business? Oh, nothing. I mean, we passed a guy at the landfill earlier today who was driving pulling a trailer full of trash. So, like that's the easiest way to start it. I mean, if you were really bootstrap this, I think the pre-sales thing I was lucky with. I don't think everyone can do that unless there's a perfect storm of like a business sells and the new buyer sucks.
Yeah.
Right. So, that that was a perfect storm and I'm lucky. I'll call I'll be the first one to call it out. I'm sure it'll be in the comments. But, if you wanted to start this on your own, you could definitely start it for like next to nothing, right? So, like you don't get the cash influx that I had because of the pre-sales. You could buy a trailer and start it there. Uh, there's a guy on Twitter that I follow right now. Um, which is funny cuz he's starting a trash company and he started with just bulk trash pickup like a truck and a trailer.
And he would then moved into dumpsters.
Like 1800 Got Junk type stuff.
Yep. 100%. Basically, he was just picking up people's crap on like Facebook. Like that's the lowest entry and you can start with a truck. Yep. Maybe not a cyber truck, you know? You can start with like a F-150, but like you can bill for that like 600 bucks, whatever, and that can be how you start. And then you get a trailer, and then that trailer can not only take stuff to the landfill, but it can pick up bags. That is the easiest and cheapest way to start. I think I don't know if I personally would have done that just because it it's a lot of work.
Yeah.
Uh this felt like I could cut the start line and do it without.
Yeah.
Uh but that's how I would do it. Yeah. I would start with bulk pickup. Facebook will pick up your trash. Then I would go to trailer. Then I'd go to trailer drop in. And then I would build. I think a big part that we talked about is like building a brand. If you can tell a story, this is where people get lost. You don't have to be a good storyteller. Just say like, "Hey, I'm going to start picking up trash and here's why I didn't like this. We're doing this, so I'm going to start picking up trash." And then you just keep doing that. And then what happens is this weird kind of snowball effect happens where you get branded bins. Now the bins are out. Now you've got 10 customers and you just say, "Hey, if you don't mind, can you refer your neighbors? I'll give you a free month of trash." And now you've got two snowballs rolling. And I personally think that that's a good way to go about it because if you were to exit, subscription businesses tend to sell more because instead of like running a plumbing company or HVAC company Y, I'm not knocking them. It's a little bit of a brand.
Only as good as your next deal.
Next month. Next month, you have to start over every single month.
Yeah. Where I might not grow as fast as them or have the ticket volume that they have. I would love a $15,000, you know, HBAC install. Uh, our stuff snowballs. Yeah.
So, if I they might win in the short term and if you don't save a bunch of that money and tell a good story and do branding and, you know, radio ads and everything. This I can not tell as good a story, but after 30 years, if you look at the two businesses, I bet you could be wrong. It's all based on the operator, but subscription businesses, much like software, sell it to multiple.
Back to the pre-sale thing, I feel like if someone's watching this and they wanted to do the pre-sale, they could proactively join 10 to 20 neighborhood Facebook groups in their local area and just watch. Just sit in the background and watch. Then you start, you go in and search for the term trash, pickup, garbage, are people already complaining? And just start planting seeds. And then one day, eventually a contract's going to come up for renewal. Something's going to happen. They're going to sell the private equity. You don't have to sit here and waiting, but you could like you could set all these hooks in the water on next door groups, Facebook groups.
Maybe I was subtly trying to convince people not to compete with me. I'm just kidding. No, you're you're 100% right. With the Facebook groups, you have huge distribution, right? So, like when you start, just you don't have to necessarily even wait. You could just say like, "Hey, I'm starting. Tell your story here. Tell your story there." I think some stuff that I would have done different like I I didn't put weight on Google reviews at all.
Yeah.
And LSA ads. That's something that I don't think enough people talk about. For the first year and a half of this business, we did not do a Google review. And that was a mistake because when Chad GPT came out, uh, what ended up happening in my opinion is Google started prioritizing local businesses.
And so I think Google reviews number one was something I would do different. And then the LSA ads, for those who don't know, LSA ad you only pay when you get the lead. Yeah. Versus like Google Paperclick where you pay to be top of the rankings. LSA you just pay for like when you get a customer.
Yeah.
And like I set that thing at like $50 a day. Yeah.
And just let it go. And so I think that's a that's probably one thing I would redo. When you first asked that question, I'm sitting there going like I think we bought the truck, right? It's still running today and in the route. I think we bought the bins the cheapest way. Maybe I would have financed them. I think if you have a subscriber base or you're building a subscriber base, have the customers pay for your what your needs.
Yeah.
Not you.
Yeah.
So, if even if it's a bad loan terms, if it fits inside of the business model, you could, you know, the accountant, you know, pencil pusher guy is going to tell you you're paying whatever interest rate and you can kind of look at and be like, am I though? Because the customer is paying for it. And so I think there's a world where it's like if you can keep the most amount of cash you can, eventually it'll be paid off.
Yeah.
And that way you can invest in marketing, get more customers to help pay it off faster.
Yeah.
I think any bulk purchase can, if it can be avoided, it should. Yeah.
It should be financed.
All right. So what could be a hangup in this whole business model is the fact that many people live in an HOA. The trash truck is ugly and big and unsightly smells.
Yeah. Where do you even keep it?
Yeah. So, we keep it at a RV storage facility, which is kind of funny because there's just a bunch of RVs and then a garbage truck. Yeah. And uh yeah, we couldn't we So, we tried parking it in front of the house. It was here for 4 days before we got a letter.
Okay.
And then it was like, "All right, let's get it out of here." So, we went and rented a RV storage facility down the road, which I think it's about 4 minutes door to door.
Wow. And what does it cost per month to keep it there?
So, um I think we're at like 200 bucks a month. Uh, and so.
That's like your fixed overhead, right? Like.
Right. And that's for two trucks. And.
200 bucks for two trucks.
Yeah. And then we have a another storage facility for the garbage bins, which I guess we're weird because we put the garbage bins in covered, you know, like an actual storage unit, like a 30ft storage unit.
Okay. But you don't have any other lot or building or warehouse.
Soon. I wish.
Just your house and 200 bucks a month. Okay. Now, uh I I kind of think that's one of the magic things about what you're doing is you're not only getting 100% financing for these trucks, but you're buying them for like 70% discounts.
Yeah. Yeah.
Can we go see the storage facility and then you can break down that secret sauce?
100%. You're going to love this place.
All right, let's check it out.
All right. So, you'll love this, Chris. Municipality truck Facebook marketplace group. There's trash truck groups.
Oh, sure.
A ton of them. There's like four or five of them. There's huge trash trucks under CDL trash trucks, four-wheel trash, you know, crazy trash truck groups.
And you're in all of them.
All of them, of course. And we totaled a garbage truck, which sucked. And I was looking for a new one.
Okay.
Um, but anyways, so I needed a truck immediately cuz our backup truck was running the daily routes, and we had outgrown it. So, in these uh Facebook groups, I'm just scouring looking for used trucks. I want something that can take a whole truck, a whole day's worth of trash instead of like half of the day.
M. Cuz if you have to go to the dump twice, it's an hour there, hour back, you're wasting 3 hours.
That's the name of the game is route density, right?
Route density. Route density. And then one trip to the dump is huge. So I was looking for something bigger. And I'm scrolling through Facebook and there's a guy in there saying I'm having a municipality auction and this is where the, you know, the Chris the Chris mindset starts going in Witchah Falls.
I know where that is. Right on the border.
Right on the b Witchah, Texas.
Uh in person live auction. That sounds like a value to me.
Oh my god, this was I tell you what, scrap together like 10 grand and go to an auction. It's going to be the greatest time of your life. So, we drive out there and it he puts the inventory online. He had two of these. So, this is a 2020 Mac diesel with this is called a Hy Durapac.
Okay.
And it had 50,000 miles.
How is that for like a trash truck? Is that high, low?
50,000 miles is nothing, dude. 50,000 mi is like a test drive in my book. Like.
Yeah, I mean, it's a it's it's got a Cummings diesel and it's set up to pull trash. Like, this thing should go for 300 400,000 miles. Love it.
And so, long story short, they had it posted. They had a 2019 and a 2020 and we're like, shoot, let's drive out there. I called a I didn't have the cash, which by the way is something I didn't know that you had to have cash and pay right then.
Wow. And so I called a credit card or a equipment financing group and they got me preapproved for 150 going out there which is way more than I was even. They should not have done that. It was probably predatory almost. Uh so we go out there and this was the last thing with the auction. We get to this truck and at this point this was the very last item in the auction. We're there for 4 hours now. We talked about just buying the uh Ford Explorers. They were stripped and we're like let's just race these home. Like this would be hilarious. Like you could just turn around and put it on Facebook Marketplace and make money immediately.
I mean they were going $1,500. Like these.
Ford Explorers.
Ford Explorer police. They pulled out like all of the police stuff and it's just like a torn down Ford Explorer with like.
I think they were all 2020 and above. So I'm sitting there and uh I'm like man I have no this thing could go for Facebook Marketplace exact truck is selling for 190. Yeah. So, I'm like, I don't want to pay that much. Uh, how much can I pay? Like, it's a whole game in my head. We got it for $60,000.
What was it worth?
Oh, yeah. It was worth $1 190.
Like, if I would have just taken it right there and put it on Facebook Marketplace, it would have been worth 190.
Oh my gosh. 130 grand profit. Look at Look at this. Yeah. Yeah. So, I'm sitting there. I haven't even pulled the tag off it yet. Like I had to write I had to scrub the stuff off the windows because they had like lot 207 price.
And these auctions happen all the time all over America. So this is the side hustle that you and I need to do immediately. Every municipality that services their own trash buys trash truck. Plano as an example. There's not many municipalities that do that, but there are some. I don't know if it's better or for worse. That's another story you can you could talk about. But what is happening is every five years they're auctioning the trucks off and they're getting a new and it's budget free for them, right? Because they're tax dollars. It's city-based stuff.
The the trick here, we need to get a couple people in Philippines and we need to call every municipality in Texas, probably not that many, and say, "Hey, where do you auction your trucks off at?" And that's it. And then we'll just have a, you know, buy a list. Here's the trucks at at this time and where. They would easily defulge that cuz they want more biders. They want more money. And then we can find where all the trucks are going and then maybe see if they're good or bad.
The bonus ones are the ones where it's in person only. Yeah. Cuz no one no one from Florida is fly I mean some people are if they want a deal. The pros are Yeah. are flying in and then getting them for cheap. And so the other thing is I only buy there's a truck company uh or a garbage company called Hyo. H E I L. And they have an office here in Dallas. And I only buy Hyo because I can make a phone call right now in 24 hours, have somebody out here fixing the truck. Mhm. And so they could I could buy these trucks and just have them repack them or I say repack, refurb them and then just pedal them. And I think you could make dumb money doing that. And this could be an eight figureure business if you just bought and sold dump trucks. Yeah. Yeah. Easy. Easy.
And then if you put the work behind it that no one else is doing, which is literally just call the municipalities, say, "When are your scheduled auctions for the year and what inventory are you getting rid of?" And they have they have to tell you that information. It's I don't know if they have to, but they want to because they want more biders. I think legally they have to publicize that. Yeah, probably. And so that would be a sweet business, I think. And you and if you really wanted to do it in like a per like a low-cost way. Yeah. You just list it do the listing inventory listing. You don't even buy them, right? And then you sell the list. Like, hey, here's the municipality auctions. Here are the trucks. And what I love about it is it's a high ticket item. Like, you could probably charge $1,000 for a list or if you did, you know, and then you could, for me, the reason I want to do it is then I can go and get these, get your own, get these cheap trucks, keep the best, and then keep the once I get one in the one in the rear, I can sell off whatever I like. I could go buy a smaller. I don't This is a little bit big for what we need.
Yeah. What is your payment on this? So, this is 1,700 a month. A month. What's your interest rate? Uh, it wasn't too bad. I think it's like maybe 8%. Okay. And you didn't have to put anything down. So, that's the thing. I've put nothing down on this. So, I could have literally flipped this and made a boatload of money cuz I financed it, right?
I had How would they feel if you did that? Do they want you to pay it off early or do they want you to just keep a financer? No. These equip So, these equipment financers, like they don't want you to pay it off early.
How much does it take for the average Joe to get approved by one of these equipment financing companies? Do you need good credit? How much do they pull or are they just going to they're just using that as collateral and they're going to yank it back if you stop making payments? It's that so they're going to yank it back. It depends. I would say it's impossible to get approved, but then I'd also say it's easy. So, we haven't been in business for 2 years yet. Yeah, they always want to see that. And we haven't. So, they don't see that. And here's the kicker. It is September when this is being recorded. I still have a couple more days to file last year's taxes, right? Yeah. So, I technically don't even have taxes for the first year like papered up. Yeah. So, they couldn't really look at that and be like, "All right, we can finance this guy." So, so they want a pulse. They want a pulse. Exactly. And it's a little It's a little sharky. Like, I would say be careful cuz I talked to like four other people. They were really sharky. It was like It wasn't even a loan. It was like if you let's say I had the cash to pay it off, I had to pay the whole thing with the interest. So like I'm like that's not a loan. Like if I can't pay it off early, like this is just now if the business supports it and you're a risk taker, fine. Yeah. Um but this one doesn't. This loan doesn't have that. And so they were obviously pumped to see me get a $200,000 truck for 60,000. So if they have to take it back, they'll probably make money more money taking it back than than me paying it off.
If your payment is 1,700 a month, let's say this had 100% route density. This truck was full, busy, as busy as it can be. How much revenue does this one truck generate? Could it? Oh, Chris, you're not allowed to hit me with that. So, like I think it holds about 400 houses. Okay. Before going to the dump. And if you had like insane route density, you could do 800 or more, maybe even. Yeah. Well, think about like just go stop, go stop, go stop, go stop. So, total hypothetical. I'm not saying this is realistic. Yeah. Let's say two trips to the dump. 800 trips 800 houses in a day. Let's say for some weird reason you're doing 30 days a month, right? Yeah. If you broke it down per week, it's like $9 a house per week, right? Okay. So 9 * 800 would be your number. So 7,200 a day. Yeah. Let's say 7,000 a day times 30,000. That's 200 times 30 days. $210,000 a month in like max potential revenue if you're running and gunning. Yeah. Yeah. Yeah. Like I'm not saying you would do this. No. Yeah, I would do it if I could. I mean, it's a sales, right? But in that case, it would be like your payment on this would be less than 1% of your revenue on this. Yeah. I mean, it would be less than one week, right? So, you just said 7,200 a day times 30 days, but the payment is 1750. So, it covers itself in a day, right? Yeah. And if you ran it 5 days a week, it covers itself in 3 hours. Yeah. Yeah. Yeah.
And so I called the city of WY, which if you're watching this, I want to win your business. We're here in WY, service the people. Um, your tax dollars are Yeah. Heck yeah. Uh, and so I talked to the previous city manager or mayor. He's a customer. And I was like, what would it cost like what would it take for me to do WY? And he goes, the current vendor who we do not speak their name, does it with two trucks 5 days a week, which I thought it would have been way more than that. And there's 60,000 people in WY. Yeah. Let's call that 20,000 homes. Yeah. 20,000 homes. Two trucks. Yeah. Two trucks. But they're running five. They might run seven days a week. I sometimes see them on According to the numbers we just broke down. Like that's totally doable. Well, so here's the thing. You win one of these city contracts and this goes from like a fun YouTube, you know, side hustle to like the city of McKenna I think was $20,000 or $20 million a year. It was like aund I think it was 150,000 houses. Yeah. And I buy the bins from the same company. She's like, "Yeah, uh, we can't get you bins this week because we're doing the city or this month or three months cuz we're doing the city of McKenna and that's an order of 300,000." So, City of Mckenni just ordered 300,000. If you got the whole city of Wy 20,000 homes, 40 bucks, we're talking 800,000 a month. Yeah. Yeah. 20,000 times $40. It scales well if you can the density, right? If you get into these cities. So, like we have we've got one city contract right now that's like a micro city and so we're trying to like just get build a good reputation there. Yeah. And then but the thing is like again the city of Wy can't have an outage, right? So like it would be a risk for them to do business with us. Like I can't like not pick up trash one day. So like we got to get a little bit more scale. Yeah. Maybe more trucks, more employees. Um like I said, we haven't even been in business for 2 years. So I don't even know if they would like open our application. And here's how this works. There's like three companies that can bid it, right? So there's like Republic and Plano. There's Waste Connections and McKenna. Um, there's CWD and like Irving, but CWD has been winning everything. So, the CWD guy is my north star and that's why I won't say anything bad about him because there's rumors, not rumors, Jo, let's call them jokes going around in the trash industry. It's very incestuous. And when you talk to these guys, the CWD guy started in I think like 1980 and he's just been he only services Dallas. And from what I hear, he's got just 200 million in just trucks alone. He has his own recycling facility and he wins every city contract. The joke that I was kind of alluding to is he's like a secret billionaire. Yeah. Because he's privately held. No one knows who if if he has any investors. He started truck and trailer. Just did time. Yeah. You know, put 40 years in and you'll be a billionaire, right? Just obviously got to there's a lot of that happens between now and then. He's driving from I think like Irving to Nevada like service them and then drive having his guys drive back. Yeah. Like he hasn't opened other lots or anything like so CWD guy is probably the good north star cuz you can become a billionaire just doing the trash in Dallas.
All right. So let's break down the numbers of this business. This is your second year you're wrapping up. What did you do in revenue and profit your first year? Oh, you hit me with the profit. Uh revenue I know we were in the 300 ballpark. 300,000ish which was Yeah. arr so I could subscribers which is great because that mean recurring revenue right which means that money without churn would fall over to this month or this year um I don't think we made really any profit because we were buying bins and buying the trucks I think the other thing was I stopped operating in the business and started operating on the business look at that you started hiring people yeah hired that's the word see how I buzzworded that on you man I've been brainwashed um yeah so we hired a driver I think if I would have stayed in the truck, I probably could have made 50, 60, 70 grand. Yeah. But it would have taken away from what I was already doing. So instead, we basically hired a driver. Kind of set that salary right at that point.
What do you pay your drivers? So we pay um 25 right now uh for our main driver who drives a big truck. And instead of being hourly, he's salary. So fixed cost. Boom. Boom. Boom. 50 grand. Yeah. Yep. 50. Little probably more after like bonuses and tips and stuff like that, which tip your trash driver. I think more people need to do that. And then we hired another one part-time. Um, and I think he's at 17 or 18. Okay. Uh, an hour. And so those are your only two employees. Only two employees. And my whole like take on the business is like reinvest everything.
If for some reason you wanted to milk all the profit out of this and do it all yourself. Could you hop on a truck and do all the customers you have today? No. By myself? Yeah. If I did like 14 hour days, probably. Yeah. It's too many customers. And then the bigger truck that we were in today isn't suited for like some back roads. Okay. So we have a smaller truck basically right now that runs strictly like the difficult houses and then the bigger truck does the the main bowl the density houses. So like if I did it I would either have to hop in and out of a truck or I would have to go to the dump a bunch of times like if I had the littleer truck. Yeah. Um because it would fill up. So it's like, you know, we've kind of figured it out uh on that sense, but I don't think I I think it would be a 14 16 hour day. Yeah. So we get started at 5:30 every day.
Okay. What's like the most revenue you've done in the shortest amount of time? Like when you really fill up your routes, Monday to Wednesday or whatever, how much revenue do you do? A Wednesday is good for us because there's 400 houses on a Wednesday. But when you talk about revenue, it's subscription, right? And then it's build three month increments. Yeah. So I could hit you with a crazy number. Well, just hit me with good, bad, like realistic, right? So, like a crazy number is like when those first 200 houses signed up, right? So, that's 20 grand basically getting dropped. And now we've been doing this for over a year, so it's more than 20 grand. So, like if I'm doing let's say 40 grand a month and then that 20 grand hits, there's there could be a 60 $70,000 month, but then I got to milk that for three months, right? So, like you can really do good and then you got but you got to manage the money. Yeah. I would say like a Wednesday is Wednesday is how we started. Wednesday is still the best because we picked up this neighborhood in a in a neighboring neighborhood right next to us. And that truck holds up to 400 houses. Right now we'll do 350 probably in that ballpark um with one trip to the dump. And so my driver today you it would make you smile. Basically he can do I've had him do 400 houses in like 4 hours and then he'll go to the dump and be done in a 5 hour day. That comes with like a lot of practice and doing it every day and optimizing the route. But yeah, he can he can do 400 houses. I would say he could probably do 400 houses in 4 hours.
So that's like if it's 9 bucks per pickup, right? That's 3,600 bucks in 4 hours of order. $900 an hour. Back to route density. Like you could like if you were doing 40 hours a week of just picking up trash, that'd be like a,000 bucks an hour in pickups. Yeah. Yeah. That's incredible. The density is everything. I didn't know that when we started, but then when you do a neighborhood like this, so like we can do some surrounding neighborhoods. We can do three cities in a day and that's not like a brag. That's like you're driving too much. Like I would rather have a neighborhood with 400 houses.
What do your insurance costs run? Insurance costs vary. So like right now I think we're at like $1,600, like $800 a truck. Is that like liability insurance or just insurance on the truck? That's a good question. So we have general liability insurance of like a million dollar and I think that was $1,200 for the year. Oh wow. It wasn't wasn't nothing. So the real insurance costs are just on the trucks. If he hits something, if someone hits him, we've got to cover their accident. We've got to cover our accident. And you know, insurance goes through the roof when you're operating heavy machinery.
So you got one truck that's 700 a month in payments, one, 1700. Right. So you're looking at 2,400 and then you got 1,600 per month per truck for insurance. Yep. So 5,600 a month just in your trucks and insurance. Then you got gas. Yeah. So, we're spending about depending let's let's call it 200 bucks a day in gas per truck or total. Per uh total. What is that per month? Cuz like how many days are you driving? Uh we're driving five days a week. Okay. So 20 days times 200. So 10,000 a month in gas. Yep. Plus 5600. So 60 call it 16 grand. And then you got your monthly storage 200 bucks. So and then you got your salary. So 50 $50 to $60,000 a month in revenue and about $30,000 in costs including your salaries. Yeah. Yeah. That's good. That's 40% margins. Yeah. It's I would say there's other stuff that's not being calculated. We got a tire replace today. We get a tire replace every two weeks. Yeah. Oil changes, repairs and maintenance. Obviously these bins will eat your life away. Uh because they're about $50 to buy. Pick them up, take them to storage unit. the storage unit where we store the bins at is 400 bucks a month. Okay. And then uh we got to deliver them where we pay for that and we pay the drivers and then obviously the marketing costs on Facebook and that can vary from $30 a customer to you know $100 a customer. So we're spend a couple thousand on that and then uh Google pay-per-click. So it slowly it adds up and then little things that you'll get nickeled and dimed with like we I say nickeled and dimed with. We have a work phone in the truck with a GPS tracker on that that tells them the routes and where to go. And then I went ahead and installed they're called SAM SAH. It's a GPS tracker in the truck and that'll give me the OBT2 sensors. So like if there's like high temperature engine light comes on or stuff like that. And then we have forward facing dash cams that record uh for like a month storage. Yeah. In case something happens. Yeah, there's a lot. I would say there's a little bit of nickel and dime stuff that kind of adds up with time.
Yeah. So, if someone's watching this and they're excited, they want to try this, where can they go to learn more, to get help from you, etc. If somebody wanted to reach out, they could go to aka Spencerscott.com. And the reason I'd have them go there instead of Lonear Trash is cuz you're going to fall into my ad strategy. Yeah. And I don't want to waste money on people who just want to see ads. Too bad cuz they might want to buy a t-shirt. They might. You could buy a t-shirt. Yeah. shop. Lonear shop and we have a bunch of fun merch.
Okay. Well, thanks Spencer. Yeah, definitely. Nice to say see you neighbor. Yep.