To Make 1-800-Got-Junk A Success, Its Founder Had To Rethink Everything (Including Himself)
This is my main man Tom,” says a smiling Brian Scudamore, gesturing behind him to one of his junk removal guys. “And my other main man.Tom,” he says, pointing to a second.
It’s the opening of a 1-800-Got-Junk? commercial that, since 2015, has racked up 7.7 million views on YouTube. This is how most people know Scudamore, founder of the wildly successful company: He’s been the face of a booming brand so straightforward that its name is literally its phone number, and his college-dropout story and PR savvy have earned him appearances on Oprah, Dr. Phil, Rachael Ray, Hoarders, Undercover Boss, and other national outlets.
Scudamore is a guy who likes to grow -- his business and his profile, each of which seems to fuel the other. He’s a clean-cut, friendly, smiling figure who puts himself in his commercials, and is quite the opposite of the person most customers expect to be at the top of an industry once associated with the Mafia. (Tony Soprano’s cover, after all, was “waste management consultant.”) Scudamore has pretty much nailed the part. With 250 franchise operators across the United States, nine in Canada, and six in Australia, and more than $300 million in system-wide sales, his Vancouver-based company once seemed unstoppable.
But then it was stopped. By its own success.
“We had nothing left to sell,” Scudamore says. “There was no more real estate.” In 2007, eight years after it began franchising, the company had run out of U.S. and Canadian territories to sell, and had determined that international expansion wasn’t a good option. This is, perhaps, the ultimate franchisor dilemma. Franchising is an industry driven by expansion -- opening new units, and bringing new owners into your system. So what happens when there’s nowhere else to expand?
The short version of Scudamore’s answer: Instead of expanding into new territories, he expanded into new businesses.
The longer, more interesting version: He learned to focus on people -- customers, employees, and, most of all, himself -- and figure out what they really needed. As a result, his company’s revenue has grown 20 percent annually for the past five years. But it’s no longer just about removing junk. It had to become about more.
The original idea came to Scudamore while waiting on his cheeseburger in a McDonald’s drive-through. It was 1989, and a rickety pickup truck with a plywood sign that said mark’s hauling rolled by. As an 18-year-old Vancouver native who struggled with ADHD and school, Scudamore thought, This is how I pay for college. So he bought a truck and started a company called Rubbish Boys. Scudamore’s plan was to finish college and climb the corporate ladder to become a high-profile executive. But it wasn’t long before he informed his father, a liver-transplant surgeon, that he was dropping his classes at the University of British Columbia to remove junk full-time.
“What funded my college education inspired me to drop out,” Scudamore says. “Three years in, I was learning more about business running one than studying it in school.”
Armed with a great idea and a talent for guerrilla marketing, he renamed the company 1-800-Got-Junk? in 1998 and used its giant hauling trucks as huge, mobile billboards, parking them in highly trafficked areas like shopping malls and intersections. (Customers also helped, letting Scudamore place got-junk? signs in their yards after a job.) His company grew quickly from there. He was always a fan of what Ray Kroc had built with McDonald’s -- creating partners who had skin in the game, versus simply hiring managers. He knew franchising would be in the cards for him, and he sold his first one in 1999. “It was all about building something bigger and better, together,” he says.
But as is the case with many entrepreneurs, Scudamore would turn out to have a great vision, a genius marketing acumen, a love of promotion … and not much in the way of operational or personnel management skills. This contrast would bedevil the company’s leadership for years.
1-800-Got-Junk?’s history is as twisty and bumpy as some of the junk its haulers pick up, but the most notable low points go like this.
In 1991, when the business hit $100,000 in revenue, Scudamore decided he didn’t like running the business alone. (“It gets lonely at the top,” he says.) He sold half of it to a partner but soon missed having sole control. “I realized it was my idea, my business, and having a partner just made things slow down,” Scudamore says. So in 1993, he bought out his partner.
In 1994, with sales at half a million, he decided that while his 11 employees were good at their physical tasks, they were not exactly the customer-service professionals that could help his business thrive. So he called them all into his office and fired them. “I had zero plan,” he says. Now it was just him and five trucks. He had to cancel jobs with customers, and begged others for extra days to start their jobs. It took him about six months to rebuild a team.
And for years, stretching from 2006 to 2011, he created a revolving door of COOs whom he clashed with. The first was his best friend, Cameron Herold. Together, Scudamore says, they made too many rash decisions -- like once quadrupling the company’s fleet of trucks, leading to financial losses. But when Scudamore fired Herold, franchisees were freaked out. “We were like, ‘Holy shit -- who’s going to drive leadership in the country?’ ” says Tom Rypma, who today owns 13 Got-Junk? units in the U.S. and Canada.
Scudamore tried to run the company himself after that, but crucial roles went unfilled and new sales initiatives didn’t roll out. “My franchise partners said, ‘Brian, you are failing. You cannot run the company,’ ” he says. So he hired a new COO, clashed with her, too, saw a $40 million decline in revenue, and fired her. By the end of 2009, more than a third of its 312 North American franchisees were struggling so much that their territories had to be sold off to healthier franchisees, and revenue plummeted by 25 percent. Franchisees pushed him to find a new COO, but he felt shell-shocked.
Finally, however, in 2011, Scudamore accepted that change was necessary. He made a list of things he was good at, and another of the things he wasn’t. He wrote a description of his ideal number two and shared it with peers outside the company. Two of them, independently, recommended the same man: Erik Church.
Church, who’d previously served as the Canada president for EF Education, a global educational tourism and language-training franchise, joined 1-800-Got-Junk? in late 2011, and the chemistry was instant. “He has no desire to do the press,” says Scudamore. “He has no desire to go out there and do the speaking circuit. He understands what his role is and where his gifts are.”
When Church arrived at Got-Junk? HQ, morale was low -- the economic challenges and Scudamore’s limitations were wearing the staff and franchisees down. Church started fixing things up, first by boosting communication. He and Scudamore created an open-floor office, clearing out cubicles and eschewing private setups that had walled off VPs from the other employees. They then spent time with franchisees at their stores, encouraging them to chase growth and break out of the hunker-down-and-survive mentality that had set in during the recession.
Church also reviewed the company’s financials to figure out how they could cut costs while acquiring customers. The answer: Double down on mass media, the thing that put Scudamore and his startup on the map in the first place. The company set aside $1 million to match franchisees’ own marketing investments in radio ads. (Last year, it spent close to $14 million on radio ads alone.) “Lots of people were thinking about cutting costs to be more profitable, rather than getting more customers to buy our services,” says Church. “I’m of the belief that if you’re not growing, you’re dying.” Same-store sales began turning around, and even with fewer locations, Scudamore says, the company was again operating at capacity.
But now Scudamore and Church had to face the next logical question. As their company was shored up, all its North American territories became serviced at full capacity by franchisees. How could the company grow now? It was time to get creative.
At first, Scudamore thought to expand the only way he knew how: geographically. He wanted to go global and had already launched locations in Australia. But the European market was tricky. Got-Junk? had tried to open a location in Birmingham, England, and it flopped -- the junk removal market was not as robust. Scudamore wasn’t entirely sure what to do next.
Church saw it differently. “Early on, my conversation with Brian was, we can either be a world-dominant player in junk removal,” he says, “or we can focus on the customer in North America and meet their needs in the home-service world.” In other words, they could launch new brands.
This made sense to Scudamore. “We were already in people’s homes hauling away their junk, making an ordinary business an exceptional customer experience,” he says. “Why not do that in other markets as well?” The opportunity was huge; the home-services market is now $600 billion.
Scudamore had also already made a small move into this space. In 2010, he acquired and began franchising a company called One Day Painting, after he’d hired it to paint his family’s five-bedroom house. At the time, he was just impressed with the operation; they’d flood a home with workers and ensure that all the necessary painting happened by day’s end. But now it seemed like the first piece in a bigger, more strategic operation. In 2012, Scudamore and Church began enacting their plan. They launched a moving company called You Move Me in late 2012. In 2013, they rebranded the painting business as wow 1 day painting (yes, in all caps, just like the official name of 1-800-got-junk?). And in 2015, they acquired Shack Shine, which power-washes windows and gutters. And they created a new parent company to house all these brands: O2E, which stands for Ordinary to Exceptional.
As O2E expanded, it pushed itself to think critically about how to distinguish its new brands. Because it’s offering “ordinary” services, there’s even more pressure to be innovative. With Wow 1 Day Painting, for example, the promise is in the name. Every room in the house, simultaneously, is assigned multiple painters in order to guarantee the customer an HGTV-level makeover by the time she gets home from work. The company also recently decreased the service window for 1-800-Got-Junk? work orders (for example, from two hours to 90 minutes) to cut down on wait time. “The consumer expectation is changing dramatically,” Church says. “We need to be able to meet their needs one step ahead of what they know they’re going to want.”
In doing this, O2E is following a well-worn business strategy. It’s not unusual for companies to launch sister brands; consider L Brands (owner of Victoria’s Secret and Bath & Body Works) or Old Navy, launched as a campier, everyman brand by Gap. The benefits are mostly obvious -- a parent company can capture more dollars by servicing different types of customers, increase its physical presence in an already saturated geographical area, and do it relatively cheaply by allowing the separate entities to share resources. All O2E brands, for example, share a call center and Salesforce software to help book service requests and dispatch workers to the job.
The playbook is replicated often in franchising, where brands are used to amplify each other. That’s why, say, Yum! Brands pairs up its Taco Bell and Pizza Hut operations in malls. “Once brands figure out how to franchise successfully, they often want to replicate that using the same infrastructure and marketing and press,” says Rick Grossmann, CEO of the consultancy Franchise Hub and author of Franchise Bible, who typically advises clients to wait until reaching between 50 to 100 units before launching a new concept. “All the good stuff they figure out for one franchise, they can get more bang for the buck by just starting another brand.”
Meanwhile, each O2E brand also gets to leverage the thing that arguably first launched 1-800-Got-Junk? into the stratosphere: the promotional power of Brian Scudamore. Got-Junk?’s franchising website now contains a video of Scudamore in a taxi in New York, talking about what happens when potential franchisees check out the brand. “They’re leaving disappointed, because they see that we’re effectively sold out in North America,” he tells the camera. “What they don’t realize is we have three other opportunities!”
Today, the three new brands have sold a combined 110 franchise units and account for a healthy $60 million of O2E’s combined $309 million revenue. Got-Junk? still dominates -- but the finances are shifting every day.
There’s a potential downside to this sort of expansion: It adds to a company’s competition. When Scudamore was just running a junk business, the marketplace was simple. Now he’s more broadly in the home-services business, which is so rich that giants like Amazon and ANGI Homeservices (the recent amalgamation of Angie’s List and HomeAdvisor) are sniffing around. Amazon bolstered its Home & Business Services program, coming straight for Scudamore’s lunch by offering window cleaning, furniture, appliance moving -- and junk removal. While these companies mostly take advantage of the gig economy by connecting users with local contractors and professionals, this fall Amazon planted an official flag in Scudamore’s backyard by acquiring small mom-and-pop firms to add to its own workforce.
“I’m not worried at all, because a lot of these digital companies, whether it’s Amazon or ANGI’s, they don’t go that last mile,” says Scudamore. He points to O2E’s internal dispatching system. “They don’t do that job of showing up at someone’s front door, being friendly and uniformed, having great people on site. That’s not their core. That’s our core.”
That may be, but Scudamore is also leaving himself somewhat blind to the power of digital. None of the O2E brands have consumer-facing apps, which, say analysts, is going to become a marketing issue as more millennials begin to own homes. “There is a gap that needs to be bridged in terms of how [home-service companies] have found their customers in the past, and how they should be trying to find younger and newer customers,” says Abbe Will, an associate project director and research associate with Harvard University’s Remodeling Futures Program at the Joint Center for Housing Studies. “[Consumers] probably aren’t going to rely on traditional methods as much.”
Scudamore isn’t totally digitally blind, though. In 2017, he bought Delete, a young Silicon Valley startup that allows users to text photos of their detritus to a specified number to have the stuff trashed. As part of a pilot program, O2E has expanded the texting feature from three cities to eight, including Seattle, San Francisco, and Kansas City. It will likely roll out the service to 12 more cities by the end of 2019, Scudamore says. “Again, this is where Erik comes in,” he says. Back with Scudamore’s first COO -- that is, the best friend he had to fire -- he just went whole hog into any idea. Now, he says, the strategy is “let’s trickle it out, get some learnings, and trickle it out some more.”
As O2E grows, it must contend with some other marketplace shifts as well. Among the biggest is a diminished labor pool. About two million construction professionals and physical laborers left the industry amid the housing crash, and according to data firm BuildZoom, the number of construction workers age 25 years or younger declined 40 percent from 2007 through 2016. “Moving forward, that’s going to be a problem for the market,” says Will.
Scudamore acknowledges the portent. “We’re running out of people,” he says. The good news is, because of the aging boomer population -- as well as an aging housing stock, ripe for repairs and service projects -- the immediate market that lies before O2E is more than healthy. The Remodeling Futures Program’s index of home-improvement spending projected a growth rate of 7.7 percent for 2018, a decade high, and expects it to stay there into 2019.
With plenty of work but a short supply of help, reinforcing loyalty among O2E franchisees and employees has become that much more important. “We invest big in finding people, but there’s an even bigger investment in keeping people,” says Scudamore. “Once we’ve got them, we want to keep them forever.”
To do that, the company launched a leadership-development curriculum in 2017. Employees and franchisees receive on-site training at least three times a year, with classes on subjects like financial literacy, public speaking, and hiring other top-level employees. “A lot of franchisees are scared of hiring that next person, because they don’t know how to manage them,” says Rypma, the Got-Junk? franchisee. “That was a missing component in the past. So they’ve just elevated the skill set among everybody in the organization over the past four or five years.”
Justin Miller, a 36-year-old Wow 1 Day Painting owner (and former molecular biologist) based in Detroit, says the training helps him justify the 6 percent royalty rate he pays O2E. He’ll bring in $1.3 million this year, so 6 percent is no small change. “I find myself growing exponentially as a leader and an entrepreneur,” says Miller, who’s also played a crucial part in internal pilot programs at the company. “They recognize that they’re the guys in Vancouver, and not the guys walking into the customer’s house.”
Scudamore sees this as the way forward -- investing in people, then trusting them to carry out his vision. Getting there was obviously a tough journey. “You need to let go,” he says, reflecting on the company’s earlier tumult. “[Entrepreneurs] have to let go of the things they’re not great at. I thought I was a good operator, until I kept hearing that I wasn’t.”
And as for what’s next? Scudamore has a vision of running 10 brands -- but first, he’ll have to whittle them down from what he says is “a list of a million ideas.”
“What I can tell you is that it will be home services,” he says, “and it will be in an ordinary space that we can make exceptional through customer experience.”