Brian Scudamore, CEO, OE2 Brands
From Rubbish to Riches
Brian Scudamore is living the aspiring founder’s dream: He’s a self-made, serial entrepreneur, and he’s just getting started.
Beginning with a modest enterprise hauling junk around in his truck, Scudamore has since founded and built up four related businesses, all of them under his O2E Brands umbrella. Over the past 27 years, he’s developed them into a formidable fleet of businesses, collectively generating over a quarter of a billion dollars annually.
Scudamore’s early business experience came from working at his parents’ army surplus store over the summer during high school. It was here that he began to appreciate the independence and benefits of being your own boss, and he knew that was something he wanted in his own career. It was also around then that Scudamore got his first entrepreneurial spark, when one day that summer he filled his old, plywood-sided pick-up truck with junk that was unwanted for the family business.
That’s when it hit him—this was how he would pay for college, a dilemma that had been gnawing at him for a while. Scudamore decided that he was going to start a junk-hauling business. All he had to do was buy a truck and start taking junk away for others.
The concept for Scudamore’s first company was born, and one week later, he was in business.
He named his nascent company The Rubbish Boys, which would later take on the name 1-800-GOT-JUNK, and thus began a lifetime of what he describes as “pure entrepreneurial passion.”
“I’m one of those people who got his job by accident,” Scudamore says. But despite his offhand manner, he has an amazing story of carefully and meticulously managing growth for his family of brands.
The Long Haul to Success
Business didn’t exactly take off for The Rubbish Boys. In fact, it took eight years to reach $1 million in annual sales, a figure that 1-800-GOT-JUNK now hits on a single good day. “Overnight success takes a long time,” Scudamore says.
Its early shoestring marketing efforts were simply to park his truck in the most conspicuous, high-traffic areas possible. The truck was decorated with the 1-800-GOT-JUNK number, which people would, ideally, notice and call.
Assuming they do, in fact, got junk.
Or at least that was the plan.
Instead, Scudamore found that businesses did not simply flock to him and his clever toll-free number. He had to go out and create customers. Scudamore shifted strategies, driving around and searching for junk, and then pitching the owners his service of hauling it away.
From this experience, he learned to never wait around for the phone to ring—seek out your customers directly. These days, Scudamore advises business owners to find people who would naturally be interested in a service and then focus on those who might be influencers. Service businesses tend to grow quickly through word of mouth, referrals, and reputation.
Once the rubbish company got a little traction, the brand started receiving media attention, inviting Scudamore to give interviews and appear on talk shows. They had an interesting story, and all they had to do was tell it.
This basic marketing formula of referrals + reputation holds up today throughout Scudamore’s other brands. It’s the philosophy they use to hire new team members, and it’s the basis of their choice to use social media retargeting and mass emails for their digital marketing strategy.
Once the business found traction, Scudamore launched into franchising. This led him to incredible new heights.
How to Design a Company for Growth
Initially, Scudamore wasn’t sure that Rubbish Boys would evolve into a franchise model, but he had an affinity for that approach. The consistency and discipline that are so critical to franchises also happen to be excellent predictors of success for any business. He also admired Ray Croc and the amazing success he’d had with franchising
McDonald’s in such a disciplined way.
What developed from all of these insights was his “entry-preneur model.” After carefully selecting new partners through his relationships and referral model, they would get their start using his detailed recipe for a successful franchise. Then they could grow further by expanding into new areas or branching out into his other brands of home improvement services.
“What we can do for junk collection, we can do for moving or house painting,” he says. “The customer base is similar, the reputation extends across these services.”
He’s since supported a couple hundred franchises, all based on this step-by-step model. His partners’ growth has in turn supported Scudamore’s growth.
After about eight years of steady success operating in Canada, Scudamore began contemplating expansion into the US, namely the Seattle area. But the name Rubbish Boys was simply too British-sounding for a wider American audience.
Scudamore changed the name to 1-800-GOT-JUNK. Changing the name had large and foreseeable costs in terms of signage and marketing materials, but they were totally unprepared for the dramatic impact it had on their existing market.
Almost overnight, sales dropped by a half.
They tried everything to reverse the trend, including reverting back to the prior name. But they had to weather the storm of the negative impact the rebranding had.
The second major challenge to 1-800-GOT-JUNK emerged when Scudamore made the tactical decision to stray from his previously cautious employee selection style.
“All of my biggest mistakes have been around people” he says. Scudamore almost lost the company in 2008, when he brought in the wrong president who, although an excellent candidate on paper, didn’t sync well with Scudamore. This created differences and tensions that, over time, became severe.
After that negative experience, Scudamore reverted to his referral- and reputation-based recruitment strategy.
The Scudamore Model, by the Numbers
How exactly do franchises work, and how has Scudamore reached such impressive figures using his model? For starters, his basic franchise fee can vary by location, but the most common cost to purchase a franchise is around $20,000.
Additionally, franchisees pay an 8 percent royalty. In exchange for this, partners get a proven and highly tested recipe for success, along with a complete marketing system and tools.
One key is that Scudamore is extremely picky when it comes to picking franchisees. He doesn’t give too large a territory to a beginner, as any failure is bad for the brand and its ability to draw new partners (remember the focus on reputation). He feels an obligation to his partner franchisees and is obsessive about selecting those who are good cultural fit, good brand ambassadors, and will succeed in their locations.
“It took 10 years of development and refinement for us to be franchise ready,” Scudamore says. “We have a proven recipe with all the pieces in place; It is 100 percent systematized. Our goal is to almost guarantee the success of our franchisee partner.
“We have taken the trouble to learn absolutely everything about this business: how to load the trucks, developing successful sales scripts, how to price during both busy and slow times of the year, and on and on. We deliver many person-years of experience to folks who will soon be like family. How could we do less?”
Brian Scudamore’s Lessons for Entrepreneurs
- Read The E-Myth Revisited, by Michael E. Gerber. It will tell you all you need to know about building systems, checklists, and processes. As a new entrepreneur without a lot of experience, this is crucial information
- Keep learning and adding to your operations manual. Scudamore promotes a “WF” culture, which stands for “Willing to Fail.” Take risks and learn from failures, and encourage the same from your partners.
- Hire carefully. Scudamore uses the beer and barbecue test. Ask whether you like the person enough to go have a beer with them, and how they would fit in with the group at a company barbecue.
The Future of OE2 Brands
Foundr asked Scudamore the ultimate question about his business: “Would you sell?”
Some time ago, Scudamore had turned down a $75 million offer. The company’s worth far more now, but he’d still say no even if somebody put a massive number on the table.
Over the past 27 years, Scudamore has had moments of boredom, panic, and even depression. But O2E Brands is his baby, and he’s put way too much time into it to be swayed by a price tag.
“Many entrepreneurs start with an exit plan, but that’s not me.”
He has plans to grow the business to include 10 globally admired brands and $1 billion in revenue by 2020.
Momentum is building, but there’s still a lot of work to do—and Scudamore is looking forward to it.
- How to get your first round of customers within your first day of business
- The secrets to building a successful international franchise
- What the franchise business model looks like and how you can make it work for you
- Why you need to always hire for culture and fit rather than skill
- Traps and pitfalls to look out for when running such a large international conglomerate
Full Transcript of Podcast with Brian Scudamore
Nathan: Hey, guys, welcome to another episode of the “Foundr” podcast. My name is Nathan Chan and I’m your host, coming to you live from hometown Melbourne, Australia. I’ve just come back from a big trip around the United States. Absolutely incredible. I try and do this at least once or twice a year just because it’s so game changing. I’m lucky enough to interview and catch up and hang out with some amazing entrepreneurs and founders and people doing next level things, and just really, really helps me level up. So that’s what’s happening in my world. Just getting over a bit of a jet lag at the moment. And yeah, just got a lot of plans and big things coming for 2016, a lot more products and a lot more exciting things in store.
So, let’s talk about today’s guest, Brian Scudamore. I think it’s “Scoo-damore,” “Scu-damore.” Pretty much he’s an absolute marketing machine, franchising machine, entrepreneurial weapon. His company, “1-800-JUNK,” his holding company does over, you know, $100 million plus in turnover. And what’s really, really amazing is he’s actually franchised a lot of these businesses out and he’s just building this franchising based empire. So if you’ve ever thought of franchising, if you have a local service based business, you’re gonna absolutely love this episode. And as always, our guests share a ton of gold. This is a really, really good one. We only give you the best stuff. All right, that’s it for me, guys. Now let’s jump into the show.
So the first question that I ask everyone that comes on is, how’d you get your job?
Brian: Yeah, it’s a great question. I think a little bit by accident. I knew I would be an entrepreneur. My grandparents started an army surplus store in San Francisco. I used to work there every summer, every Christmas vacation, and I knew I wanted to follow in their steps of entrepreneurship and run my own business. So, I was a student in college. I had applied to get into college. I didn’t have the money to pay for it. I was at a McDonald’s drive-thru, of all places, and I saw a beat up old pickup truck with plywood side panels built up in front of me. I looked at the truck filled with junk and I thought, “This is unbelievable. This is exactly what I should be doing, is buying a truck and haul junk,” and that was gonna be my ticket, my way to pay for college. And a week later, I had a business, hauling away junk, and that was the way into my job and a career path that’s been now 27 years of pure entrepreneurial passion.
Nathan: Yeah, wow. So, 1-800-GOT-JUNK, you guys have been around for 27 years.
Brian: It’s been 27 years. They say these overnight success stories sure take a long time. For us, it’s been 27 years of great growth, lots of ups and downs, lessons learned along the way, but we are a quarter of a billion dollar business with a goal of getting all of our brand so we have four different companies in the home services category under a banner brand called O2E Brands. That’s O for ordinary, 2, E, exceptional, from ordinary to exceptional. O2E Brands is our banner company that we believe we can take businesses like junk removal with 1-800-GOT-JUNK, fragment it in mom and pop space and make it exceptional through customer experience. And now we’re doing that in other categories like home painting, moving and so on.
Nathan: Yeah, wow. And so, that whole group does over $250 million a year.
Brian: Absolutely. Yeah, we’ll do a million dollars on our busiest of days, which is pretty incredible considering I remember the first eight years. It took me eight years to get to a million in sales for one year, and now it’s half a million in a day. So it’s pretty fun and exciting here.
Nathan: Yeah, wow. That’s crazy. And how big is your team, Brian? How big is the company? How many staff?
Brian: We have about 400 people between our head office in Vancouver and Toronto, and then thousands of people out hauling junk with 1-800-GOT-JUNK, or moving customers with our You Move Me brand. So, thousands of people. And it’s exciting because what we love most is we often get people who might work out in a truck for a period of time and learn the business and then go on to start their own franchise. We call them entrypreneurs , people that have found an entry point into the world of entrepreneurship, where we’re building something much bigger together versus any one of us building something alone.
Nathan: I see. So, take us back when you first started the company. Take us back to that moment. How did you get your first 10, 100 customers, then 1,000 customers?
Brian: So the very first starting point of my business was buying a pickup truck. We called the company The Rubbish Boys at the time. And I got out there and said, “Okay, how am I gonna find business?” Well, I emblazoned the side of the truck. I painted the side of the truck with the company phone number, which today, of course, is 1-800-GOT-JUNK. Back in the day, the early startup stages, it was 738-JUNK. And what I did is I said, “Okay, I’m gonna park that truck in visible, high-traffic intersections, the side of the road,” and people would see it and they’d call. And it’s still one of our biggest tactics today.
We have nearly 2,000 trucks throughout the O2E Brands family. People see our big billboards, remember the phone number or remember the company name, and they call us. The first week was me getting out there and knocking on doors. I saw someone had a pile of junk in their alley. I’d knock on their front door, introduce myself and offer to haul away their junk for a fee. That basic business model grew into this quarter of a billion dollar business. So it’s knocking on doors, driving sales, guerilla marketing, and then PR. PR has been a great tool for us. Anything from the “Wall Street Journal,” to the “Oprah Winfrey Show,” CNN, you name it. We’ve had some great press over the years by telling our story to the big media outlets.
Nathan: Yeah, okay. I see. And what advice would you have to our audience that are just getting started on finding their first customers? Is it just purely doing things that don’t scale?
Brian: I think the advice for getting the first round of customers is really getting out there and connecting with people. There’s so much talk these days of digital marketing but there’s nothing to compare or there’s no comparison with people getting out there, nose-to-nose and closing deals. Having a coffee with someone, knocking on the door, whatever it might be, and having a conversation about your service, your product, what it is you provide, and find people that are interested, and find people who are influencers, people that can talk about your product or service and spread the word. Because in a digital age with social media, things can spread even quicker. It means really finding those right people for those first few deals.
So if I think of where we were, selling in the early days of 1-800-GOT-JUNK when we first franchised, it was Paul Guy who went to run our Toronto operation. He used to run Vancouver for me. We toyed with the idea of him running the first franchise. Off he went, 3,500 miles across the country, started with that one truck, and he grew a business to a million in a year, in a full…his first full calendar year. And what he was doing, what he bought into was a model or a platform of something we had to grow along with him. And I remember what we were selling to him was an idea, a concept of building a business. And the relationship he and I had, it was that first sale, so to speak, of him buying the first franchise that then paved the way for many others who would follow in his footsteps. People who saw that he was successful, he did a million in revenue, he was really growing something. And today he’s doing $8 million in revenue, and we’ve got a lot of franchise partners over the years, a couple hundred of them follow in his footsteps and try and duplicate his success.
So what I love about franchising or what we’re calling the entrypreneurship model, is we get these awesome people who have never tried the world of entrypreneurship, or entrepreneurship. They get their entry point with us, they go build a business on our platform, and then when they’re successful like Paul Guy is, they start to start other cities with other brands. So Paul Guy has been successful in our You Move Me moving company business. He’s been successful in New York, Melbourne, Australia, Nashville, Tennessee. He’s got franchises all over the globe and he’s brought in partners, these entrypreneurs, people who have been out in the trucks or in his business, that want to grow something alongside him.
Nathan: I see. So, he was your first franchisee. Before we even get to that, I’m curious, you said the company wasn’t always called 1-800-GOT-JUNK. When did you change the name?
Brian: I changed the name about eight years into the business. Million in revenue, I realized I wanted to grow into the United States, south of our office, and realized that to build a business in that U.S. market, it would probably be wise to change the name from The Rubbish Boys, which is very much a British influence type word, to something that worked in Canada. But we realized that, in the United States, we needed to brand something a little catchier, a little more familiar to that audience, and we changed the name to 1-800-GOT-JUNK. And immediately people loved the name and remembered the phone number, and things started to spread.
Nathan: Yeah, gotcha. Was it a lot of work to change the name of your company further on down a track, eight years later?
Brian: Yeah, we had, I’m guessing, thinking back, maybe about eight trucks, so we had to rebrand the trucks from Rubbish Boys to 1-800-GOT-JUNK. We had to change all of our marketing material. So it was time consuming and costly, but what I didn’t realize at the time was the impact that it would have in a negative way before the positive impact kicked in. And what happened was, people…I would literally get friends and family saying, “Oh my gosh, there’s a competitor. They look just like you. They’re called 1-800-GOT-JUNK.” People didn’t realize the connection that we had just rebranded our name, and sales dropped in half. And it took a good 18 months to rebuild and get back to where we were because of the confusion we were creating.
Now, that was short-term pain, very painful pain for a long-term gain. And we made the right decision, but early on that was…it was a tough move for us to make. I mean, when you’re that size of a business and you cut your sales in half, a half a million dollar drop in revenue really hurts and can almost kill you.
Nathan: Yeah, so, how did you guys get through?
Brian: We just weathered the storm. We said, “Okay, we’re gonna make it through this,” and we didn’t give up. And we stayed consistent to what we believed was the right direction, and that was to rebrand to 1-800-GOT-JUNK. And we did everything. You know, we thought that 1-800 numbers weren’t very widely used and maybe that was the problem. We really sort of analyzed and thought, “You know, why isn’t this working, and what do we do to change it?” And at the end of the day, it was just time. You can’t speed up time. We just needed that time to heal the mistake, if you will, that we made, which would, again, prove to be the right decision going forward. It just took time for customers to latch on to the new brand and get rid of the confusion.
Nathan: Did you ever think of changing it back?
Brian: We did. And then it was thinking, “Well, are we gonna cause more confusion?” And if we did change back, would that prevent us from growing to the degree that we wanted to into the United States? Again, we would test the market in the U.S. during that 18 month period. We went down to Seattle with the 1-800-GOT-JUNK truck, where there wasn’t ever the Rubbish Boys and there wasn’t any confusion, and people loved the name. So we had to believe it was the right decision, but we did consider, “Maybe we should change back. What if we did change back?” that sort of thing.
Nathan: I see. Now, talk to me about this franchising piece. Did you realize that you were always going to franchise the brand out? Or was this something that kind of just happened as a natural progression?
Brian: I had always been a big fan and the reason why I’ve always liked franchising, is what Ray Kroc did to McDonald’s, I thought was incredible. Bought the business off the McDonald brothers and took a model and said, “Let’s cookie cutter this recipe so that other people can have the same success that the McDonald’s brothers did.” And I loved that whole sharing model of saying, “Let’s share in the success together. Let’s build something much bigger together, something bigger than we would ever build alone, and see where it goes.” And I loved his model and wanted to emulate it. And it’s certainly worked for us because we have so many entrypreneurs who have been very successful, who’ve made money, who’ve grown great teams. And we’ve also seen other people on their team grow into the world of entrepreneurship.
Nathan: I see. So, how do you work out the numbers? Can you talk us through the numbers of if you were a franchisee of one of your companies?
Brian: Yeah. So our franchise program with 1-800-GOT-JUNK has one example. It varies across WOW 1 DAY PAINTING, You Move Me, and Shack Shine. So, I’m gonna keep it simple. Our first brand, 1-800-GOT-JUNK, 8% is paid as a royalty. So that’s how our head office builds on the platform, puts systems and people in place to support our franchise owners, and that’s how we build and scale our business and make our profit, which of course you need profits to continue to thrive and even just survive. So, the royalty is a key in a franchise system, and people often say, “Well, you know, why should I give you a piece of the pie just because you’ve helped me start up?” Well, we’re providing a system and an opportunity to someone where they can start 1-800-GOT-JUNK or they can start Shack Shine, and they can build and grow something more quickly with a proven recipe and a proven model. And we get a small piece of that as people continue to grow over time.
But the one thing I love about our model of entrypreneurship, is unlike a typical franchise program where it’s very road systems, dry, boring, this is the way you do it, top-down direction, we collaborate with our partners, we work together to build something bigger together. We listen to our people, we innovate and take their ideas, and we’re constantly improving and bettering the entire system for everybody. And so, what that model does is, our partners, our owners have realized that the system wasn’t created just by us, it was actually created by the family of owners who were all a part of this. It’s almost a crowdsource model, if you will, of great people working together to build something bigger and better.
Nathan: I see. And how much does it cost to start up?
Brian: One pay is a franchise fee in each of our brands, depending on the size of the territory they buy. It generally is a $20,000 franchise fee. And if someone wants more territory, again, how big they anticipate growing, they might buy more territory. And so, it all depends on what someone’s dreams are, and then we look at it and say, “Hey, we’re not gonna sell too much territory to someone. Because if they are a needle in a haystack, so to speak, in their territory, it’s not gonna do anybody any good. We want people who not only have the aspirations to grow but have the working capital, the know-how, the drive, the ambition to make those things happen.”
Nathan: Gotcha. And for your first franchisee, what did you have to do to get that business ready? Do you always…from the first person, Paul Guy, for him, like, to find him, what’s the screening process, especially in the early days? Because you don’t just want anyone as a franchisee and walking them into your family, right?
Brian: Absolutely. So, unlike a real family, you know…we don’t get to pick our kids, and sometimes you sort of wish you could. But no, I’m just kidding. But with franchise partners, with entrypreneurs, we can pick. We can be so selective, and we realize that’s the most powerful thing we can do, not just for ourselves but for our partners, is to be really, really careful in who we bring into the organization. The more selective we are, the more often we get it right, the better for everybody that we’ve made the right decisions. You’re only as strong as your weakest owner, so you might as well be really careful bringing people in. It’s really hard. It’s not like an employee where you can just fire someone and say thanks and call it a day. It’s expensive, someone’s put in an investment. If they fail, we take that responsibility seriously for having been a part of choosing the wrong person, and we just don’t want to see that happen.
Nathan: I see. So, do you handle all their marketing?
Brian: We give them the systems and the tools, and then we teach them how to use them. So, what we’re doing is we’re saying, “Here’s the marketing material, here’s our radio, our TV ads, our digital.” And then we have a team that supports them to help make those programs a reality. But what we don’t do is, is do all the heavy lifting for them. We still want our franchise partners to make decisions as to where they’ll spend their budget, but with our help, guidance, and support.
Nathan: Gotcha, gotcha, gotcha. And how did you get…how long did it take, sorry, until you were franchise ready?
Brian: It took about 10 years, and it’s a long time. And when people come to me and say, “Hey, Brian, you know, I wanna franchise my business, I don’t know how,” the first question I ask them is how long have they been in business. Because a franchise is a proven recipe. Imagine Ray Kroc with McDonald’s, having franchised a restaurant where he didn’t have all the pieces in place and all the programs in place for other people to quickly springboard off of? So we say to people that wanna franchise their business, that come for advice, that, “If you haven’t figured out all the systems and processes, and you can’t almost guarantee that if someone follows the system they’re going to be successful, you’re putting your whole brand at grave risk.”
Nathan: I see. So, it took you 10 years to come up with a working, like, getting the business 100% systematized and just working like a well oiled machine?
Brian: Yeah, it was me understanding my business, working day in, day out, year in, year out in the trucks, understanding all the nuances of the entire business. And then once I was really able to go, “Okay, here’s how you do everything, how you load the truck, how you price jobs, how you script the sales center process, how we market the business when things are busy, when they’re slow.” Every little thing had to be whittled down to a one-page manual of “Here’s how you grow a great brand.” When we figured that out, then we were able to bring in other people to follow our recipe.
Nathan: I see. And what recommendations do you have and what would you say to our audience of aspiring novice stage entrepreneurs that don’t know much about systems and also probably don’t enjoy creating them?
Brian: Right. Well, you know, I was inspired by a book called, “The E Myth,” by Michael Gerber. And “The E Myth” taught me how to systematize my business. And the book says, “Build your business out like a franchise, even if you don’t anticipate that you will franchise your business, because franchise businesses succeed at a higher rate than non-franchise businesses because of systems, checklists and processes of having a very specific way to do something, guaranteeing success.” So, while I didn’t have an absolute clear picture in my mind that I was going to franchise the business as my model – it was an aspiration – once I read “The E Myth,” I was pretty convinced that my business started to look, feel, and act like a franchise, and that became the method of growth we selected.
So while entrepreneurs don’t necessarily love to systematize, they know their business best, they know what works, they know what doesn’t work, they’ve got a clear grasp on their gut. And what I recommend people do is, if you’ve got a great idea that you know what works and what doesn’t, get someone to interview you on your business, and get someone else to document those systems and processes so that you can really go out and sell your idea and bring in others. It’s basically what we did. I didn’t document every system myself. I had some people draw the ideas out of my brain and write things down onto paper. I would have some editorial oversight on them and we really got some good level of systematization into an operations manual, and it’s been very successful.
Nathan: I see. And are there any tools in particular that you would recommend?
Brian: So I’d read “The E Myth” as one tool. The second thing I would do is hire someone who can come in and interview and document all the things that are in your brain. In terms of software and technology, there must be organizational software out there that can facilitate people making manuals. I don’t know of any off the top of my head. You know, the business has grown to a level that we’ve got a team in place doing these things. But it’s important stuff. Every business has best practices, and they’ve got to get them out of the entrepreneur’s head and get them into the hands of the people on the teams who are executing on the front lines, making the business consistently successful.
Nathan: Yeah, I see. Look, there are a couple of tools. There’s one called Process Street, or SweetProcess. There are a couple that come to mind that I know of that are quite good.
Nathan: But yeah, for me, in our business, I find we do have a lot of processes. You know, to create the magazine, we’ve got that down to 21 steps a magazine issue. But, I don’t know, I still just don’t feel like our business is like a well oiled machine.
Brian: Yeah, it’s a journey. I think that one thing that’s important with systematizing a business is to know that what got McDonald’s to where they are today was definitely a journey, an evolution of constant refinement. So, the processes that exist, some of them took years and years to get them to where they are. If I think of McDonald’s, the whole question of, “Would you like fries with that?” that was something that someone smart came up with. What if we asked this question each and every time? And it’s become a part of the way they do things. There’s systems behind hiring the right people, training the right people, and then measuring and monitoring that they are asking those “Would you like fries with that?” type questions. So, systems take time. And even just coming up with a one-page best practice of a certain system. So, let’s call it “How do we hire people?” Put it in one page, and then over and share it and train people on it. But over time, improve that process. What are the tips and tricks and hacks on how to make it better? And know that there’s always a starting point to creating a great system, and over time, let them evolve and get better.
Be willing to make some mistakes. We have a culture here at O2E Brands that we call a WTF culture, which stands for “Willing To Fail.” We want people to be willing to fail, to make mistakes, to take risks, and then most importantly, of course, learn from those mistakes so that they can continually make things better.
Nathan: Fantastic. I’d like to switch gears, Brian, and ask you a question. You know, you said that you’ve been working on O2E Brands for 27 years.
Nathan: Did you ever consider selling the company, have offers? Have you ever got bored? One of my mentors says to me that, “One day you will sell the company. Don’t think you won’t. And you will get bored.” And he sold one of his last companies for $50 million. So I’m really curious around that.
Brian: Yeah, I got an offer for $75 million, and I said no. And today, would it be worth more than that? Absolutely. But if somebody came to me with a ridiculous amount of money, I mean, if someone said, “Here’s a billion dollars cash in front of you,” I don’t even know what that would look like, I would still say no because my passion is in building a team of people, a family of brands, and constantly seeing new possibilities that prevent us from getting bored. If I was bored with 1-800-GOT-JUNK, which I wasn’t, I was able to still start WOW 1 DAY PAINTING, and You Move Me, and Shack Shine. And the family just gets bigger and better. And I’ve had moments of boredom. Of course, I’m human. I’ve had times that have been difficult and frustrating, where I almost lost my company, almost went bankrupt. Had some depression, wanted to quit, all those things that entrepreneurs go through.
But for me, the motivation behind building something is continuing to build something awesome with really incredible people. And so somebody gives me a billion dollars, what am I gonna do? Go start something from scratch again? I’ve invested 27 years, more than half my life so far, into this baby. You know, I don’t want to sell my baby. Again, it’s like real kids. I mean, on days you feel like selling one or two of them. But really, if you put so much into something, you want to watch it grow and evolve and continue to get better, and that’s my motivation. I get that there’s entrepreneurs out there that have an exit plan from the beginning and want to get rich and want to have all this wealth. That’s not me. I’m not about demonstrating any form of wealth. To me, I’m about demonstrating that we’ve got incredible people with and behind everything we do.
Nathan: You know, you’ve been an entrepreneur for as long as I’ve been alive almost. I’m 29. I’m curious around what’s been some of your biggest lessons. You said you almost went bankrupt. What are some key lessons and some key things that you live and breathe by, especially when you’re starting these other brands and you would see some common thing, you’d see the same things, you’ve got that experience?
Brian: Yeah, my biggest learnings ever, my biggest mistakes that I’ve made, which I’m very proud of because they got me to where I am today, are all around people. So, every mistake, every time I’ve trusted my gut but gone against it, has been a people decision which has caused major issues. So when I say I almost bankrupted the company, 2008, the financial meltdown, the world’s all going to hell in a handbasket, and I almost lost the company and almost lost my leadership position within the company because we were running out of cash, we made some poor decisions. But it all centered around the fact that I brought the wrong leader into my business as my president, as my partner. I brought someone on board who had a different vision of where the company would be going. And rather than work in unison and march in lockstep, we were going in slightly different directions. And every day that passed, that direction became further and further apart from each other.
So, I learned from a good mentor and friend of mine who sadly is not with us any longer but was the founder of Shred-it. A wonderful company, over a billion in revenue, and I remember the days when I would call Greg Brophy and say, “What’s the one thing I gotta know?” And Greg said to me, he said, “Don’t ever, ever, ever compromise on the people you bring into your organization.” And that message rings loud and clear in my head constantly, that you can’t be too careful when bringing people on board. And it isn’t just about yourself. It’s not just a selfish decision. It’s also about making sure that it’s the right fit when you bring someone in the company for them and their future. If something fails and someone doesn’t work out in the business, that’s not just hard for you, it’s hard for them. So, we take it really seriously.
Nathan: Yeah, love that. And, you know, what advice would you give to people when they are hiring and looking to bring people into their team? What do you go through?
Brian: Yeah, we have something we call the beer and BBQ test. I wrote an article about it in “Forbes.” And what the beer and BBQ test is, we first ask ourselves, whenever we interview someone, could we see ourselves having a beer with that person? Do we like them? Are they likable? Are they interesting people with a passion for something in life? It doesn’t have to be a passion for junk removal, but a passion for something? Is there some connection there where you feel like, “You know what, it’s a good person. I would enjoy working with this person”?
Then we put them onto the hypothetical BBQ test. How would they be at a company BBQ? How would they be in a group? Are they social? Are they liked by the rest of the team? Do they have something, a gift to bring to the team that everyone would benefit from, they’ve got a special talent, whatever that might be? So, the beer and BBQ test. We all too often, I think, as entrepreneurs, as leaders and managers, bring people into our business that we think, “This person’s smart. They’ve got the skill.” Great, that’s important. You’re hiring a CFO, you need someone smart. But I don’t care if you’re hiring a CFO and they’ve got all the skill in the world, if they don’t have the cultural fit with your culture and organization, you’re in trouble. And so, we’re very careful to ensure that someone is first hired on attitude and then trained on skill.
Nathan: I see. And how do you find…like, what are some great ways, do you think, to find great talent? Because that sometimes can be very difficult.
Brian: Yeah. When someone’s getting started, the first few employees are so incredibly key in being extra careful there because the best way to find people is the people you have. Our best franchise partners or owners have come from owners in the system who have said, “Here’s someone that you need to talk to. Here’s someone that needs to learn about this business.” Our best employees or people internally, same thing. They go home and they talk to their friends and their family, and hopefully, they say amazing things that then feed other people to our head office. So the best source of new recruits is referrals. And the better the company you run and the better you treat your people, the happier they will be and the more likely they are to refer you as a business proposition.
Nathan: I see. Well, look, Brian, we have to work towards wrapping up, but I have to ask you, you know, when you said that you almost lost the company and, you know, it came back to a people decision – you didn’t choose the right person – how come you did choose that person? You didn’t follow your gut, or they looked really good on paper?
Brian: They looked awesome on paper. You know, nice enough person. Don’t get me wrong. Professional, well experienced. They were president of a Fortune 500 company prior to my company. But what I didn’t do is I didn’t do enough due diligence. I didn’t go have enough beers and BBQs with the person to say, “Hey, we really are gonna work joined at the hip here. And are we going to be a great team together the two of us?” This person’s gone on to be successful elsewhere, but we weren’t successful as a team. We weren’t the yin and yang, the right fit for each other. So it was very difficult. But what I could have done differently and learned from this was don’t just be impressed by a résumé or a pedigree. Really make sure you’ve got someone who’s the right fit for you, for your leadership and for your company. And I didn’t do that.
Nathan: I see. And how did you recover from what happened during the subprime crisis when everybody was struggling?
Brian: Yeah, we had to layoff a lot of people, 52 people in one year. Revenue dropped by $40 million. We had to hunker down and really, really carefully look at the cash we had, how we were gonna spend it, what our strategy would be to turn things around, and it was painful. It was an incredibly painful time. I try not to think too much back to those days because it hurt. But it did teach us some serious lessons about how to build a business, how to build a team of people, and how to do things right. And so, we don’t want to grow a business beyond $250 million and get to that billion dollar mark if it doesn’t mean we’re not still having fun, we don’t still have a team of people that we care about and care about us. So it’s just…it’s knowing what matters and then staying focused on the core principles that allow you to get there.
Nathan: I see. And how do you build a billion dollar company? How do you plan to go from $250 million a year to a billion dollars?
Brian: Some of it is adding new brands, but the majority of it is taking the existing brands we have and building upon our success. So really taking the different brands, let’s say Shack Shine, for example, and adding new franchise partners to that system. Or 1-800-GOT-JUNK, taking our $250 million-plus and really doubling and tripling the revenue based on organic growth with the partners we already have.
Nathan: I see. And I’m also…just last question. I’m sure you must forecast when do you anticipate that you’ll hit that goal.
Brian: So, end of 2020, a billion in revenue, 10 brands globally admired. So, a lot of work to do. Not a ton of time to get there, but we do believe that the momentum continues to build. And that flywheel momentum is spinning in our favor right now, so we’re working hard to continue in that direction.
Nathan: Yeah, fantastic. Well, look, Brian, last question. Where’s the best place people can find you?
Brian: Best place that people can learn more about any of our thought leadership, or things that we…the learning we’ve had, the mistakes we’ve made, the brands we’re building, o2ebrands.com. Links to all our social media, LinkedIn and so on. But really, it’s o2ebrands.com. That stands for Ordinary to Exceptional. So, o2ebrands.com, and if I can ever help any of your listeners in any way, they can connect on LinkedIn and send me a note.
Nathan: Fantastic. Well, look, thank you so much for your time, Brian. I really, really appreciate it. This was a fantastic interview. And I wish you all the best.
Brian: Fantastic, Nathan. You’re doing great work with Foundr. I think you’re doing some awesome things. I’ve been a big fan, so thank you for including me in your podcast.
Key Resources From Our Interview With Brian Scudamore
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- Connect with Brian Scudamore on Linkedin
- Like Brian Scudamore’s Facebook Page
- Learn more about 1-800-GOT-JUNK, You Move Me, Shack Shine, WOW 1 Day Painting