The fascinating thing about some entrepreneurs is their ability to mine business opportunities from seemingly innocuous phenomena. I am referring to Washington’s abundance of four-unit residential buildings, which I have never given a second thought.
Barney Shapiro, a former landlord and former District parole official, has built a thriving trash hauling and recycling enterprise around such properties.
His estimates that 15 percent of his $5 million business relies on four-unit dwellings. The rest is larger apartment buildings, restaurants and office buildings. Some customers are in Montgomery and Prince George’s counties.
“I have hundreds and hundreds of four-unit buildings,” said Shapiro, 62, who is founder and chief executive of Tenleytown Trash. “I make my living on these. I love a four-unit building.”
The District picks up trash for residential buildings up to three units. Anything four units or more must pay a hauler to remove the trash.
Tenleytown’s business is pretty simple. Its 16 trucks, known as “packers,” pick up trash and take it to a transfer station, where Tenleytown pays the station owner a fee to take the trash off its hands.
The fee is called “tipping” because the packers “tip” the back of the truck to make the refuse tumble out.
Shapiro is a District native and proud Woodrow Wilson High School graduate whose explanation of his business included a primer on the history of Washington’s postwar development.
“Right after World War II, there was a huge influx of people into the District. [Four-unit buildings] were designed to be an easy build that could solve a housing crisis,” Shapiro said.
Tenleytown Trash charges $135 per month to pick up the trash twice a week (and another pickup for recycling) at four-unit buildings. His customers are all over the District, but many are clustered in Shaw, Logan Circle, Dupont Circle, Adams Morgan and the central city. The concentration helps create efficiencies, such as shorter drive times between jobs. That allows him to save on labor, fuel, and wear and tear on trucks.
“I have an economy of scale. I can take on 10 buildings on a block. Glover Park is all four-unit buildings. I do 189 houses in Spring Valley. That is one customer to me. ”
The result gives Tenleytown a profit margin higher than the 4 to 7 percent industry standard, Shapiro said.
On $5 million in revenue, I estimate Shapiro is probably netting somewhere north of $500,000 in profit. He didn’t disagree.
Shapiro’s major costs include $1.7 million for labor, $775,000 in tipping fees, $300,000 for insurance (including workers’ compensation, liability and vehicle), about $200,000 for fuel, and $200,000 to $250,000 for vehicle repairs.
He buys a couple of trash trucks every year at about $150,000 per clip, but they are mostly financed. A typical truck might last seven to 10 years. He also owns some pickup trucks and a container truck, bringing his fleet to 24. They run seven days a week, 365 days a year.
To save money, Tenleytown Trash contracts with mechanics two weeks a month to work on the trucks. Everything is stored in a 57,000-square-foot lot and building just inside the city limits near the Takoma Metro station.
His employees earn $11 an hour and get one week of paid vacation and one week of sick leave. (Note: Remember to tip your trash haulers when the holiday season arrives.)
The most significant variable is fuel cost. If diesel goes up, not only does his direct fuel expense go up but the tipping fees go up as well. That’s because the transfer station is using fuel to take the trash to its ultimate destination, which is either a landfill many miles away or a plant that turns the waste into energy.
“It is a simple business,” Shapiro said. “I pick up your trash, you pay me. As long as my pricing structure allows for a profit, that profit goes on and on and on. Our waste stream is never-ending. A lot of hedge funds look at it as a bond. They always know they are going to make a little bit of money.”
Sounds more like a utility stock to me.
Shapiro didn’t start off in the trash business. His father was a pharmacist and owned Friendship Pharmacy at Wisconsin Avenue and Ingomar Street NW. It was an old-fashioned drugstore with a lunch counter and soda fountain until it went bankrupt in 1970, a victim of the big drug discounters.
Young Shapiro studied dramatic literature at Syracuse University and wanted to be a playwright after graduation. Instead, he went to work in the D.C. government for 11 years, finishing up as executive director of the city’s Board of Parole.
He then became a small builder and developer in the District, amassing a share of several hundred rental units, many in low-
income neighborhoods. For a time, his stake was lucrative enough that he could think about retiring in his late 30s or early 40s.
But he lost everything during the city’s crack epidemic in the mid-1990s.
“You couldn’t collect money from crack dealers,” he said. “I had a building in Southeast and crack dealers paid tenants to use their apartments. The good tenants would then leave. The building spirals down. I lost it all. I was around 42.”
He used the last sales of his properties to pay for his son’s Cornell University education and then figured out his next act.
It was 1997, he was in his mid-40s, and he had one pickup truck to his name. He thought about what he valued as a landlord.
“My story is I always paid my plumber, and I always paid my trashman,” he said. “Plumbing is the most frustrating business on the planet. So I go into the trash business. I started with a used pickup truck.”
He turned to his local network of friends, relatives and business people, asking whether they would give him their trash business. The promise was better service at the same price.
“I got them to switch to me,” he said. “We all knew each other. Someone I knew for 20, 30 years and knows I am now broke, I said, ‘Let me do this, you have nothing to lose.’ ”
He picked the name Tenleytown Trash to give it a hometown feel. The alliteration was his wife’s idea.
He slowly built the business to where it is today. After what happened to him in the landlord business, he doesn’t take his current success for granted. He works nearly every day of the year, including Christmas, when he gets behind the wheel of one of his packers.
Shapiro said he spends his money captaining his 38-foot trawler, exploring restaurants and sipping expensive bourbon at his two-bedroom apartment in Woodley Park.
No, the apartment is not in a four-unit dwelling. It is in a 167-unit building, which is not served by Tenleytown Trash. Not yet, anyway.