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Here’s the program.
Andrew: Hi, everyone. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart, a place you come to hear stories of successful business people who teach you with the hopes that what you’ve learned you’ll go out there, build a successful company yourself, and then come back and do what today’s guest is doing. Do an interview where you share what you’ve learned with others.
How do you bootstrap a $1 billion company in a down economy? Joining me is Vince Fuemmeler. He is the founder of Information, Management and Securities, a full service record management company. Vince welcome.
Vince: Thank you. Thank you for having me.
Andrew: How old’s the business?
Vince: Been at it three years now, three years.
Andrew: Three years. You really got into when the economy was taking a hit, huh?
Vince: Right. When it was taking a hit in the summer of ’07 and really didn’t even start actively selling until the first quarter of 2008. Right in the middle of it.
Andrew: You’re doing really well, you let me share your sales figures with people. How much outside funding did you take to build the business?
Vince: Actually, I was fortunate. For 15 years I was a business owner in another industry and sold out of that business. I had a little equity. I had a little bit of a cushion to work with, but to start out with I established a $250,000 line of credit so that’s where we got started.
Andrew: I see. A line of credit is what you used.
Vince: Right.
Andrew: OK. How much of it did you have to tap into?
Vince: All of it.
Andrew: All of it. OK.
Vince: All of it in the first year.
Andrew: All right. I understand business is better through examples, the customers interacting with them. Do you have an example of a customer you work with and how you’ve helped them out?
Vince: Yeah. As I was talking to you a little bit about starting a business in a bad economy is rough unless you have a good idea. I feel our business model is a good business model. It’s something that folks need. It’s something that they know they have to do. Records, file cabinets, and boxes that have accumulated over time and are not just going to go away. Something has to be done in the digital world to get us out of paper and into digital. I wasn’t selling snake oil to anybody, there was a need, a desire, and a huge market for it.
To answer your question one of the probably largest accounts that we have is the Missouri Department of Corrections. Like any other state department or state government, they’re just swimming in paper. They don’t know what to do years, and years, and years of collecting. Matter of fact, the Department of Corrections has literally had to move facilities locations at least three times because the weight load of their file cabinets exceeded the bearing load of the building they were in. If that gives you an idea. “We have to it move it because our file cabinets are too heavy.” You’ve got a major problem on your hands.
Andrew: What did you do for them? Digitize the whole thing and let them get rid of the paper?
Vince: Well, it’s a gradual conversion, doing some conversion for them, but then showing them how they can convert some themselves. Working with them to do a day 4 type of scanning, and then implementing a document management software that they can efficiently use. Once you scan it, you can quickly find, search, retrieve, integrate, e-form, workflow processing. We helped them with things that help streamline their business.
Andrew: You know, I’ve done that myself recently? Gone all digital. It’s such a relief not to have to carry boxes of paper around and also as you said, to have it accessible. To be able to say, “What did I say on my taxes four years ago?” and not to have to go dig in a box to find it, but just to do a search and boom, it’s right there and you know exactly what you have.
I want to find out how you got here. Find out a little bit about your past business. I’m also going to explore the line of credit. When I came right out of school, I got no outside funding, but I was able to get a little bit of credit from the bank, which was a huge help and I think I used every last dollar of it. I think we don’t talk enough about that as an option for entrepreneurs, because we say you either bootstrap with no money or you have to get venture capital, but we don’t talk about other alternatives, and I’d like to talk to you about how you did that.
Let’s go back in time and we’ll tell the story of how you got here. You said that you had a business before. Can you tell us a little bit about that before we go to IMS, your current company?
Vince: Yes sure. I had a business that I co-owned with a brother. It was a plastics business in the plastics industry. Primarily our main focus was the sleeves that go over the newspapers coast to coast. From the Washington Post to the Los Angeles Times to the Houston Chronicle. It’s one of those little products that somebody’s got to make that nobody really thinks about.
Andrew: What was that movie, Cocktails, with Tom Cruise, where they said somebody’s got to make the little things at the edge of the shoelaces and he’s making a killing?
Vince: That’s right.
Andrew: Someone actually has to manufacture the bags that the newspapers come in? The ones that keep the paper from getting wet in the rain?
Vince: You got it.
Andrew: So that’s a whole business?
Vince: It’s a huge business. Now the newspaper industry is dead and dying. The plastics is tied to petroleum, natural gas, so it’s a commodity driven business. The imports were starting to come in over the last 10 years. As a commodity, China, Singapore or The Philippines can make it cheaper. There were a lot of reasons for me to get out. I also wanted to try to do something else. As I investigated and looked into compliance, identity theft, HIPAA regulations, red flag laws within the banking industry, FERPA regulations within the educational fields, there was a need out there. Compliance issues aren’t going away. Identity thieves aren’t going to say “You know what, let’s don’t do that anymore.” It’s only going to get worse.
Andrew: Vince, if you don’t mind, let’s just spend a little time on the plastics business. It’s one of those businesses that I don’t think about but you had a whole company around it. It was doing well and I feel like I’m not paying enough attention to companies outside of consumer tech. If you have a new iPhone app, and it’s doing great, I want to do an interview with you and if you have a website and you’re making a killing or you’re changing the way people interact with the web or changing the way that people interact with Twitter, I’m going to hear about you, because I’m going to read a lot of articles about you. But someone who does what you did, I’m not going to find out about any other way. If I’ve got you here, I’m going to spend, if you don’t mind, a few minutes talking about that business and learn as much as I can about it.
Vince: Sure.
Andrew: How long did you have the business?
Vince: The business has actually been an evolution. It started back in the 1930s with the stitch-and-sew operation of the canvas bags that the newspaper boys would put on their bicycles and ride around town. It started from that and then it evolved as newspapers in metropolitan areas got larger and larger, they started going to a morning paper instead of the afternoon, so the kids weren’t delivering the paper in the afternoon. Then they needed a vehicle, a means of distributing the paper for adult carriers who were driving cars. The adult carriers aren’t going to stop their cars and walk in the street and lay newspapers on your doorstep.
Andrew: I see. When the newspapers were laid on the doorstep, you didn’t have to worry about rain, because they were covered.
Vince: Right. So, from a speed standpoint, these adult carriers needed a way to throw the newspapers out their car windows and land in your driveway. If it’s raining, a rubber band won’t work. It was just a progression and involvement over time and by the time I left the company, we had 15 extrusion lines blowing film plastic to produce these bags. For the last couple of years, while I was there we made over 2 billion bags a year.
Andrew: Did you launch the business yourself?
Vince: No. It was in the early 1930’s a gentleman by the name of John Small.
Andrew: You bought it?
Vince: Yeah.
Andrew: I see.
Vince: Acquired the business over time.
Andrew: OK. I see. You buy it. Where do you buy it?
Vince: Well, the way that it went through is my brother and I work the deal with the previous owner and just got in. When we acquired the business, it had two extrusion lines. By the time we went through the progression and built that business up, it was a pretty large business, by the time I left.
Andrew: Did you find out about it through a broker or how, you see that for some reason didn’t recognize that there is a whole business in creates bags just for newspapers. How did you discover this?
Vince: Word of mouth.
Andrew: You just heard, hey someone’s got this business. Did you hear that the business was for sale?
Vince: No. No. Started working with my brother on it and started going to work.
Andrew: Oh, I see, you were working for them.
Vince: Right.
Andrew: So, you went to work there and you saw — how do you go from employee to buying the company with your brother?
Vince: Well, he was the president of the company and as I moved up through the ranks, we just went and made an offer.
Andrew: How do you grow a business like that considering that it’s been around for a long time before? There are only so many newspapers that are being put out there and I’m imagining newspaper companies don’t need, don’t shop around, actually you tell me, how do they, how do you grow a business like that?
Vince: Actually, diversification we began diversifying our product line from newspaper bags, although that was the majority, then we started getting into irrigation agricultural type of films. Ice bags, you go buy a bag of ice that’s in a plastic bag, same type of construction. Getting into the diversification of the product is what allowed it to continue to grow, but within the newspaper industry there was only us and one other major domestic supplier, then the imports started coming in. We had a pretty good lock on the market.
Andrew: What do you do when the imports start coming in? How do you deal with that?
Vince: You start lowering your price.
Andrew: I see and when you get into another business like the bags around ice, you’re taking business away from someone else. Is it just about price at that point?
Vince: We invest a lot in printing, in our printing capability to be able to do full color process printing on the plastic. Once you start adding more than two colors to a piece of plastic, you start eliminating competitors.
Andrew: I see because others just weren’t able to do it?
Vince: Right. That’s a capital investment. You’d be surprised the next time you go buy a bag of ice look at how many colors are printed on that bag. To you and I, we don’t care. We’re going to pick it up, drop it on the ground and put it our cooler, but from a marketing standpoint they care. They want their colors to be their company colors, just like I want mine to be green and black.
Andrew: So, if I don’t care I’m probably not going to be more likely to buy a certain kind of bag of ice or a certain brand over another. They’re just doing it because they’re proud of they’re brand and they want to plant their flag.
Vince: Right.
Andrew: I see OK is there are there any keys to success in that business? I remember Harvey Mackay, you remember from years ago, used to sell envelopes. He said, ‘An envelope’s and envelope and it has been for years. The reason I do better than others is because I’m really into relationships and so my people,’ and he talked about the process he had to build relationships. What about you and the bags.
Vince: Same way. When you’re younger you think, no, you can tell me about relationships all you want it’s really about price, but as you grow through it you realize it is relationships. It’s the ability to say, ‘Hey, look quit beating me up over $0.15/1,000, just give me the order, come on.’ You build that report, and you establish the trust, and you realize it’s not price.
Andrew: How many sales people did you have?
Vince: We had four outside sales reps and four inside sales.
Andrew: When you trained your sales people, because it is about relationships, how do you train them to do relationship building right?
Vince: Some of it’s just going out, working with them, getting them in front of the customers and learn by example. Certainly I didn’t do everything right. I didn’t do everything wrong, but really just training, getting out there and hitting the road, understanding the follow up, understanding the process, planning out when that next call’s going to be, planning when that next trip’s going to be, understanding what their budget process is, all of those kind of things just comes into play.
Andrew: How systemized was it?
Vince: It wasn’t.
Andrew: It wasn’t.
Vince: It really wasn’t.
Andrew: If you hired me, Vince, you wouldn’t say, Andrew, here is the document that you need to fill out… You wouldn’t say, any time we have a prospect, fill in this document, make sure to find the person’s wife’s name, his hobbies, his kids names so you can bring them up, none of that.
Vince: We did a little bit of that. Yeah. We had a profile sheet, exactly that. Are they married? Do they have kids? What’s their birthday, all those kinds of things? Yeah. We had a profile sheet on everyone.
Andrew: You know what? I don’t do enough of that.
Vince: I don’t do either.
Andrew: You don’t do it, but does it work, or did it used to work?
Vince: No, I still do it now. As a matter of fact, just two days ago, I had a reminder on my phone of one of my major client’s birthdays, and I sent him a quick text, just saying happy birthday. He came back and said thanks. The little things like that, they go a long way.
Andrew: And you would know your client’s wives’ names, husband’s names, you do.
Vince: Absolutely.
Andrew: When you pick up the phone, if I was one of your customers or potential customers, you’d say, “How is Olivia doing? You guys still running?”
Vince: Absolutely.
Andrew: “Are you guys enjoying D.C. or do you want to go back to Argentina”, that kind of thing? Interesting.
Vince: Right. Exactly. Yeah.
Andrew: Cool. You know what? This is the kind of stuff that I got into business for. I know this must sound to non-business people like the most uninteresting hour that we’ve got planned together, but for real business people I’m imagining, because I know for me, this is friggin’ fascinating. I love to understand the intricacies of how you even establish a relationship with someone. Do you keep track of their kids and wives’ names? How do you bring it up in conversation? I know that seems like minutiae, but I’m interested in stuff like that.
Vince: Well, as long as you’re not phony.
Andrew: As long as you’re not phony about it.
Vince: You can’t be faking it. You’ve really got to care. If you don’t care, then don’t say it.
Andrew: How do you care, considering that you’re…? I understand that a lot of entrepreneurs I talk to here, Vince, they are changing mobile space. They’re changing the web. They feel they’re revolutionaries. You’re in the back space. How do you feel in that space at that point like I really care, I really am passionate? How do you get that feeling?
Vince: Well, that’s why I left.
Andrew: I see.
Vince: Over the last five years it just wasn’t any fun anymore.
Andrew: And when you were in there, how did you make it fun? How did you make it meaningful?
Vince: Well, I think a lot of its entertainment, going out to dinner, playing golf, doing those extra things that… I got to a point with most clients that I very rarely went to their office. We just met somewhere, go played a round of golf. You talk about business. You have a drink or two. You go home, and it got a lot easier.
Andrew: I see. So, it’s the part of the relationship building. It’s kind of like hanging out with your friends, but you’re doing business with them, and that’s the part that’s fun.
Vince: And that’s what I’ve always told my sales guys that if you offer tickets to a game to one of your clients, you need to have a good enough relationship that they want to go with you, not say I’m going to take your two tickets and I’m going to bring a buddy of mine. You’ve got to have a good enough relationship that they’d like to spend three hours at a baseball game or whatever it is.
Andrew: Right. OK. I understand why you left the business. You decide you want to start something new. How long after you leave, do you start the next business?
Vince: I started the next business almost four months.
Andrew: Four months. Why didn’t you take more time off for yourself?
Vince: I don’t know. I played plenty of golf in my time off.
Andrew: I see.
Vince: I’m not a very good sit around type of person. The idea was there. I did a lot of market search, did research on it and went to several different types of seminars and did a lot of studying.
Andrew: What kind of seminars? What kind of studying?
Vince: In addition to digital management and ECM software, we do document destruction, so confidential document shredding. People have been doing that for a long time. There are some seminars you can go see how to get into that business. So, did that. Did a couple of small little conferences, and it really just started evolving from there.
Andrew: Why did you just say, I’m going to start and I’ll figure it out. Why was learning the first part of your process of launching the business?
Vince: Well, I firmly believe if you don’t research the market you’re getting into, you may as well just throw your money out the window. You have to be prepared. If you play sports and you don’t practice before the game, do you think you’re going to go out there and knock it dead? You’re not going to. It just doesn’t work like that.
Andrew: What’s one thing you learned while you were going through the seminars and learning about the business that you were about to get into? What’s the one thing you learned that surprised you?
Vince: I think what surprised me, not so much in the document shredding or even the box storage services that we offer; what was surprising to me was how many businesses are dying to do what we sell. They need to get a handle on their records; they just don’t know where to start or how to start. Who to do we go to? That was kind of surprising to me.
There are companies out there that, after I put this company together and not to say that they followed my lead, I certainly know that they did not. But all of a sudden, I’ve put together a complete records management company with all the pieces you can imagine in paper and digital, now some of these companies that only used to shred paper, or only used to store boxes, realize that we can’t just expect this paper to sit here. We have to help our clients get into the digital world. You’re seeing more and more companies just like mine, that might have been just dealing in paper; now they know they have to offer digital.
Andrew: When they were offering just paper, what do you mean? What were they doing? They were filing paper away for their clients?
Vince: Off site record storage.
Andrew: I see. So that’s all it used to be.
Vince: Right, or drive around in a truck, pick up documents and take them to shred. It’s fairly simple. There is some routing and different logistics and things like that to be done, but to assume that people are just going to keep with their paper files for now and forever, that’s a bad assumption. I didn’t make that assumption.
Andrew: I see. Clearly that’s a big trend, that people are going to digital, especially now that it’s cheaper to go digital and that’s a reason why there’s a big opportunity here. The other reason why you saw an opportunity was regulation. You mentioned earlier that new regulation meant that more people were going to have to do document destruction and digitizing, is that what you saw?
Vince: Right. I think with Sarbanes-Oxley coming out with the whole debacle with Enron, with the identity theft going up. You see Lifelock. You see some of these other companies that are pitching “hey lock down your Social Security number,” things like that. It’s not just the government mandating regulations because there are a lot of government regulations out there that I don’t think we need. There are certain regulations that, from a consumer standpoint or even a business standpoint, like my personal health records, that’s a big deal. I can’t just have those thrown in the trash for somebody else to come pick up and grab it. We kept exploring and realizing it’s not going to go away; it’s only going to get more stringent.
Andrew: I’ve noticed that actually in past interviews, that regulation opens up opportunities for businesses. We tend to think of regulation as shutting down companies and only restricting what they can do and closing opportunities. Talk to me more about what happens to an industry on the opportunity side, when regulation comes in. How do things change?
Vince: I can give you an example. A year or so ago there was an article in a metropolitan paper of a doctor’s office being hit with a $250.000 fine, for simply taking his old patient record and putting them in the dumpster, with no shredding, no plan, and those were compromised.
Instead of spending $1000 a year to make sure that his records were shredded in a proper manner, recycled–we’re a green company–Bam! He got hit with a $250,000 fine. You can shred for a lot of years before you add up to $250,000.
Andrew: So not only does new regulation open up and create brand new customers, it also penalizes customers for not buying the solution. When we see regulation, we need to think: what are the business opportunities around it that we can take advantage of?
Vince: Right.
Andrew: OK, so you saw all that. You did your research. It was time for you to launch your business. What’s the first thing that you do?
Vince: Pray.
Andrew: By the way, all joking aside…prayer. How did that fit in? Talk to me about that, if you really did spend some time praying.
Vince: I did. I was born in a Catholic family. I went to a parochial school, so I had it ingrained in me from the get-go. It is important to me. My religion is important to me, but also having a good relationship with my spouse. We’ll be married for 19 years this year and for her to see how miserable I had become, that’s no fun. There was a lot of thought involved in it.
Andrew: When you pray, what do you do? Do you say: God, I’m doing this for a good reason? Help me get there?” Or do you say: “God help me keep from hurting my family by losing a lot of money in this place? Be as open as you feel comfortable about how you do it. I haven’t talked about prayer much in these interviews.
Vince: I think more than anything, it wasn’t: God, please help me get rich. It wasn’t that. It was: “Am I doing the right thing? Am I going down the right road? Am I exploring the right opportunities? Hopefully you’ve got my back.” I think I kept getting reminded…you know, you’re not very happy. So many times you hear and read, don’t do something you don’t enjoy doing. Well, that’s easier said than done. There are a lot of people out there who are getting a paycheck and don’t really like what they’re doing but also don’t know what else they would do or don’t have the opportunity.
I was blessed in a situation that I had an opportunity to leave with some cash in my pocket.
Andrew: Why did you stay for five years? Could you have left earlier and had some cash in your pocket if you had done it earlier? Humanize the need to stay when things aren’t happy, because we tend to think that people who aren’t happy are just not ambitious enough to look for something better. But I am imagining there is much more humanity behind that decision.
Vince: There is. You’ve got a house payment. I’ve got a couple of kids. You start thinking about college. You start thinking about cars. You know all of those things where you ask does it outweigh the risk of going out there with no paycheck. Particularly starting a new company, and I’ve told several people this; it’s very easy to hear “Hey look, in a new company, you’re not going to make money for 3-5 years. It’s easy to hear that, but when you’re living in it, it’s a little scary. It drives you to succeed. I’m enjoying every day of what I’m doing, so it makes it easier.
Andrew: How long did it take you to become profitable with this business, with IMS?
Vince: This year we’ll turn a profit.
Andrew: So three years. Just like they say when say 3-5 years is what you are going to have to be prepared to go through without a salary or profits.
Vince: Right.
Andrew: OK, so you are saying you prayed, you talked to your wife. It was time then to take the first business step. What was that?
Vince: Looking for a location.
Andrew: OK.
Vince: Finding the building that met our needs. I think there was a little bit of spiritual intervention because right about the time I was looking, a building that was perfect for my needs came available. I looked at several other buildings, and yeah, I could have started at something and evolved into something else, but the building that I acquired was perfect. It was 20,000 square feet building and had a 30 foot peak, plenty of room to do the shredding, plenty of room to do the box storage segmented up so that I could still run my scanning and my service bureau in a good environment. It was the ideal building and it was only five year old. It is a mile and a half from where I live.
Andrew: You bought the building?
Vince: I purchased the building.
Andrew: Why did you decide to purchase the building instead of leasing it?
Vince: We did a lease-to-own, a 5-year lease-to-own.
Andrew: So that means you lease for five years and then you pay a little bit extra and you get to own it?
Vince: With the option to buy. But I went ahead last year and got out of the lease and purchased the building. Things were going well enough that I went ahead and broke that lease.
Andrew: I see. That’s the building that you’re in right now? That’s what we see over your shoulder? Congratulations.
Vince: Thank you.
Andrew: So, were you going to do all three right away? The storage of people’s paperwork, scan them so that they’re digital and also shred?
Vince: We started with the shredding and then thought, well, let’s do the box storage; those seemed to go hand in hand. Then, I started thinking, you know what? Box storage…people are going to go digital. We did the scanning, the service bureau, that opportunity. Once we started looking into the scanning piece, I started looking really hard for content management software providers. It’s one thing to scan a piece of paper and just throw it into your computer; it’s another thing to have it in an organizational type of system that you can search, retrieve, find things like that.
Now, it’s constantly evolving because I went from shredding, storage, scanning, content management software and now in addition to that, I have a full line of tablet PC’s and the tablet market is going to be huge. Apple’s done a wonderful thing for the consumers and brought up a tablet with the iPad market, but the enterprise, the business side they need it. They don’t want to go to iPads because let’s face it, in the business world whether you like it or not, Microsoft Windows PC environment dominates the business world and there’s really not a good application out there in the tablet market. So, we are now going to start representing tablets and six months from now I might be on with you again and it will be the next product line that we’re going to start selling.
Andrew: When you say you’re going to be selling the hardware, the tablets themselves with software on it that connects to the data that you’ve stored for them?
Vince: Right. The hardware plus forms processing so, any type of form that you fill out on a piece of paper, will have that software embedded in their, stylus driven or touch pad driven, where you can start filling out the forms, grab a signature, upload a photo if you need to, hit the submit button and it fires off a work flow to your document management platform.
Andrew: You started out in the paper business and here you are now in the digital space.
Vince: Right.
Andrew: I’ve got a note here to come back and ask you about the line of credit. Is that one of the first steps that you took before you got the office space?
Vince: Yeah. They always say you better have a good attorney, a good accountant and a good banker. I’m blessed that I’ve got a good relationship with all three. I went to my banker first and said, here’s what I’m doing — and I had a good enough relationship and he is the president of the local bank here, I wasn’t working with a clerk, but over time I had a good relationship. He knew where I was going in the plastics business. I kept him abreast of everything when I was getting out, knew what was going on. I got to say, one piece of advice that I would say for any person who wanted to start a business, you really need to have that relationship with those three main people and don’t wait until you’re ready to start something because you’re just another guy off the street. That’s the way that worked.
Andrew: When I got my line of credit, this is right out of school, I needed some money to launch my business, I couldn’t get investors, I was in a text space so I didn’t have any assets. I went in to see my banker and what she did for me was, it was all forms based, it was only $50,000, but $50,000 was huge for me at the time. She should me exactly how to fill out the form in a way that would get the yes. She got paid to get me a yes, but she also took the time to understand what I needed and to help me work it out. Anyway, it was mostly, at that point, getting a yes meant, giving the right answers to form questions. For you, what did it mean? To get a yes, how do you reassure your banker friend that you should get the money and that you’re a good bet?
Vince: Well, it was, again it was that relationship that I had with him for several years.
Andrew: Did you have to show him models of where your revenues were going to come from, where you found customers and so on?
Vince: Oh, yeah.
Andrew: What was the basic model as you expected it to be?
Vince: Well, it’s interesting. The basic model, as I assumed how many customers that we would pick up in the first year on the shred business, how much revenue that would generate, and then the residual of the monthly box storage, things like that I really didn’t play much into the digital because that hadn’t evolved into my brain yet to go there. What was ironic is the numbers that I showed over a two and three year period, I’ve exceeded them, but not because of anything that I started with. The shred and the box storage that’s going to be a 20 year growth type of thing for me, but the numbers it was ironic, almost to a tee of what I said they were going to be after year two, but it had nothing to do with the shredding and the box.
Andrew: You did hit your numbers because of the new business. I see.
Vince: Yeah, because of the digital piece.
Andrew: Where did you think your customers were going to come from?
Vince: Well, you mean geographically?
Andrew: Oh, no. How are you going to find customers? Brand new business, no history, how do you get customers?
Vince: Well, going through various organizations, first of all. Getting in line with all of the Chambers, the Chambers of Commerce’s and all of the places in my market. Getting to know who the other players were in the market. Knowing what I was up against. Then understanding which vertical markets I knew I wanted to specialize in and really in the documents world, there are very few businesses that don’t have file cabinets or don’t have records. Whether you are a law office or a hospital or a college or a government entity or a title company, everybody’s got paperwork. So I had to focus in on the verticals that I wanted to attack first and so that’s what I did.
Andrew: We suddenly have an echo. I’m just going to keep on talking so Skype can deal with the echo and cancel it out. Hopefully, it can. It seems so-so. Thankfully the echo isn’t on your side so I’ll try to do a little less talking because it’s only coming from me. Where did your first customers come from in the end?
Vince: My hometown.
Andrew: And how did you find the first one?
Vince: I know I sound like a [??] but again it goes back to the relationships. Even though when I was in the plastics business in my town here, we did no local business whatsoever. I still got on the board of the YMCA and chaired the board. I got on the board of the Chamber of Commerce and chaired that board. I got involved with the [??] school here in town and got involved in my community because you never know when you’ll need a favor. I got involved in the local rotary club, networking, things like that.
Even though my business beforehand didn’t rely on it, it made it really easy in starting this business to go to folks and go, “Look, this is what I am going to be doing, I’d love to have you sign on”. And really, the business model, once I have explained it, I haven’t had one person yet still to date to say that “Ah, that’s a dumb idea. That’s never going to work.” Everybody said, “That’s a great idea! How did you come up with this idea? Sign me up!”. I’ve had several people that say, “Hey, I want to be customer number 1.” And that makes you feel good, when they’re ready to do business and they know that you’re not just trying to sell them something that has been sold to them many, many times.
Andrew: I see. Did you have these conversations before you launched the business? To know that people think that it is a good idea and they’d want the service when they launched it?
Vince: No.
Andrew: You didn’t? You just knew this was out there?
Vince: I just knew it was out there.
Andrew: OK. When you sell shredding, do you do it on a continuous basis? In other words, a firm keeps creating new documents and needs the shredding to happen monthly. Is that what you did?
Vince: Yup.
Andrew: You did. How did you make that decision to go after repeat business instead of looking for big bulk shredding opportunities?
Vince: Again, it was from joining trade organizations like NAID – National Association of Information Destruction, and PRISM, which is a records management organization, and AIIM, which is a digital platform. Understanding and getting involved in those trade organizations was a huge help and I gained a lot of that knowledge in the plastics business because I was on the other side of those exhibitor booths. I was the vendor in these trade organizations. What really was that I started networking with other folks who have been doing this a lot.
Andrew: You and I talked a little bit before the interview, Vince, and I said, “The guy doesn’t know me but we’ve got an interesting conversation going, an interesting rapport.” You seem good with people. Where did that come from?
Vince: I don’t know. Ever since growing up, my parents have always said, “You’ve got one of the gifts that you can sell ice to Eskimos. I’m just very comfortable. I’m very honest. I make no bones about the reason that I’m in business is to make money. I’m not out there to screw anyone but I’m also a capitalist. If I have an opportunity, then that’s why I live in this country. So, I’m very comfortable just sitting down and talking to people. You know the old adage of: we all get up and put our pants on one leg at a time kind of thing. So, I’m just very comfortable talking to people.
Andrew: We talked so far about success, success, success, success. And you’re here because you’ve got an exceptional story. But along the way there must have been a couple set backs. Tell me about one. What’s the biggest one at this company, at IMS?
Vince: I’ve made a couple of bad hires. One of the things that are critical is surrounding yourself with a core team of folks that you can trust. And I always tell them, “You’ve got to buy into this concept. If you’re not going to buy into this concept, and you just want a job, then I don’t want you. You need to believe in this.” You know a couple of bad hires, and nothing that has really burned me. I just wasted time and wasted money, and that’s just a little frustrating. You know the thing that bothered me the most, and still does, to this day, is when you’re the guy, every decision could be wrong or right. You hope that you play the percentages and you do a lot more right decisions than you do wrong, but every decision you make really isn’t a decision. It’s a risk. It’s either a good or bad risk. You’ve got to live with it; you’ve got to roll with it.
Andrew: You ask potential hires to buy in, or you insist that they buy in. What is it that they are buying into? What’s the idea and philosophy that you want them to buy into?
Vince: That this is a business that has a huge growth potential. When you look at the curve of the business model and you think, “Do I want to be on the left side of that curve or do I want to be on the right side?” You certainly don’t want to be on the right side in an aging, mature type of business. I came from one. I know what that’s like. I’ve seen it. And I tell them that we are very far on the left side of this business curve. We have a huge opportunity in front of us. Not to pat myself on the back, but I think they see the energy in me talking about it, getting so excited about it. I’m not just making it up, they see that I’m being sincere about it.
Andrew: So, someone who just wants a job, I understand how they’re going to approach it. Someone who thinks that this has huge growth potential, how are they going to approach the position differently? What’s their approach?
Vince: Well, I think what they see…their approach down the road is…Everyone wants to make more money. Honestly, I want people who want to make more money because that drives them to succeed. As long as they do it in the right way and as long as I’m around here they’re going to be doing it in the right way. Quite often if I get approached by one of my sales guys or someone in the office, that in a little bit of a gray area, if somebody may have been overpaid or did something, I’ll look right at them and go, “What’s the right thing to do?” And then the conversation is over. People know the difference between right or wrong. It’s not very complicated.
But for the folks that buy in, I think they see the opportunity to say, “Hey, I think I can be a leader in this company. I want to be at the ground floor when this thing breaks out 20 years from now, or whatever it is. I’d like to make more money. I’d like to have more responsibility.” And I’ve had some compliments on our design, on our logo. Several people have asked if it was a franchise. That tells me something there, that I’ve done something right in just the philosophy, the color scheme of the logo, the tagline of “Your paper trail ends here.” All those things that come into play, that helps build your business.
Andrew: The half million that you got in a lot of credit, where did the majority of it go?
Vince: Actually it was 250.
Andrew: Oh, a quarter million.
Vince: Capital purchases. We are not just buying $500 scanners to do document conversion. We’ve got to buy the operation site, the shredding equipment, the trucks…
Andrew: What does a scanner go for?
Vince: If you get a pretty good scanner, you can drop anywhere between 18 to 35 thousand dollars on it. You can get some big boys that are 70-80 thousand dollars that are just knocking it out of the park, but in a start up company, you can’t spend $70,000. That’s three people. You can’t do that.
Andrew: That’s what it would cost you for 3 people? $70,000?
Vince: I’m just estimating.
Andrew: Because that’s the base salary plus commission? Are we talking about sales people?
Vince: No, I’m just talking about it as far as an administrative type of person.
Andrew: So you’re not throwing out exact numbers, but you’re giving me a sense of what the balance is? Out of curiosity, how does a machine work? If I have a file cabinet, or if I take one drawer from a file cabinet, I’ll have a lot of paper in it, and it will all be in folders. How do you guys take all the paper in the folders and get it in a scanner?
Vince: It’s a process. We bring in a crew to prep the documents. They are taking the staples out, taping down the edges, making photocopies of things that might be a small print. So they prep the file, put in barcode separator sheets, so they have a large stack of papers with barcode separators, and those go into the high speed scanners. They run through the scans. Once the scans are done, then you have to do some indexing based on your search criteria…first name, last name, whatever it is…do that indexing, then do some Q A, and then you do a migration of the data. So it really, truly is an assembly line. And it has to be run that way. Because if the prep department takes too long to run, to get through and prep documents then the scan department is behind. If the scan department is behind it runs through; it’s a process.
Andrew: I didn’t realize it was so manual.
Vince: Well the prepping is the biggest piece.
Andrew: Yeah?
Vince: Once you get past the prepping, then the scanning and the indexing and the keystrokes you start to automate that.
Andrew: All right. Any final piece of advice for other entrepreneurs?
Vince: If you’ve got a great idea, like I told you before we started talking. If you have a great idea, it doesn’t matter what the economy is doing. If you have a great idea and you believe in it and you think it’s going to go, take a chance regardless of the economy.
Andrew: Have you been hurt at all by the economy? I kept meaning to come back and ask you about that. Actually we’ve benefited from it. Because well, in my business we are allowing companies to do more with less. So instead of having three running around filing, unfiling, putting things back, making photocopies, now I’ve got one person with the click of a mouse who can find anything you want. So I don’t lead with that, saying that ‘hey I’m out there killing people’s jobs’ that’s not what I’m trying to do. But what I’m saying is once you’ve trimmed your staff down that workload is not going to go away. You just have to get better at how you handle that workload and that’s where I come into play.
Vince: Oh, you mean if companies have fewer people then that is the big opportunity for you, because you are going to take data processing out of the company, so they no longer have to do as much data processing, they don’t have to go and search.
Andrew: Or legwork, or going to a storage unit to find a file or any of that. So, there are opportunities. You could see opportunities wherever it might be.
But it’s money up front for then. I mean, companies do have to invest a little bit in the upfront setup.
Vince: It is. But as long as you can show the return on investment and we’ve had studies where some of our large clients that show return on investment in six months, nine months, twelve months. It’s not a five year ROI. It’s a one year ROI and that’s pretty easy to justify.
Andrew: All right. Well before I say thank you, let me tell the audience that in addition to these interviews I have been doing courses with entrepreneurs. If you are a Mixergy Premium Member you get every one of the courses. You just go to Mixergy.com/premium. If you have heard about sales in this interview, and you want to find out about sales, we’ve got a great course on closing sales. You will learn all about the relationship building and how to take that relationship and either say: “hey there’s no sale here” and walk away quickly before you waste both your time, or how to close it if it is a good opportunity. Just go to Mixergy.com/premium. It’s already part of you plan. Tons of interviews and courses there.
If you’re not yet, I hope you become a premium member and join us at Mixergy.com/premium to find the courses.
Vince, the reason I wanted to take extra time and thank you is this: a lot of people who come and do interviews here tell me before the interview starts, they want to do it for biz dat. They know that there are other entrepreneurs here who potentially will buy their company down the road. They do it because they want to raise money at some point. They are all in the same little ecosystem and so they want to speak to each other through these interviews. For you, there is not nearly as much benefit. You’re doing this, as we talked before the interview, because you want to help out other entrepreneurs. You’re not doing this because tomorrow you want to sell to a Google competitor or to Google themselves. You’re doing this because you say: “I’m an entrepreneur; if anyone benefits from this, then I’ll be happy. If I do some business as a result of it, great, but I want to help out other entrepreneurs.”
Andrew: I know you really have, and I appreciate you taking the time to do this.
Vince: Well, I appreciate the opportunity to talk with you; it’s been fun.
Andrew: Oh, thank you. And thank you all for watching. One more thing Vince, what is your website?
Vince: imssecure.com.
Andrew: All right. We’ll send people there. imssecure.com. Thank you all for watching.
