One Company’s Trash Is Another Company’s Green Gold Mine

Ruby Tuesday Pick of the Week: UsedCardboardBoxes.com
Why It’s a Gem: If at first you don’t succeed, try a leaner, greener business model.

When Marty Metro’s first business model to sell used cardboard boxes failed, it didn’t get him down. His passion for his idea kept him retinkering until he got it right. Today, UsedCardboardBoxes.com is a financial – and environmental – success story. (This interview has been edited for clarity and length.)

Lynda Resnick: In this week’s Ruby Tuesday, we’re speaking with Marty Metro, founder and CEO of UsedCardboardBoxes.com. For our readers, Marty, please describe your business model.

Marty Metro: We are a national technology company, and we sell quality used boxes for less than new. We buy them by the truckload and then turn around and sell them as an earth-friendly, low-cost alternative to buying a new box.

LR: I love it! Now, are you unique in this space?

MM: Yes and no. My unique selling proposition, I’d say, is that we’re cheaper and greener than the alternative, and we’re the only company in the country that can actually service every address in the United States.

LR: Great. Now, you started this in a different space, and it wasn’t so successful. Tell me how you changed your business model.

Marty Metro, Founder of UsedCardboardBoxes.com

MM: In 2002, I started the retail stores/chain called Boomerang Boxes. I had a very simple concept: buy used boxes when they moved in for 10 cents, and sell them to people who need to move out for a dollar. The reality is the retail store didn’t have the physical space to hold what we needed to sell to cover our overhead. Hindsight’s 20/20, but when your store is full of customers and everyone loves what you’re doing and you’re being written up in Entrepreneur magazine and ABC News is interviewing you, you just keep going. And we kept going… right into a hole.

LR: How did you get through that mentally? You felt like a failure, I guess.

MM: It was a failure. It took three years for me to hit rock bottom. I was $300,000 in personal debt. I had nothing on my resume for the last three years other than buying and selling cardboard boxes. Here I was with a master’s degree in business, ten years of enterprise technology consulting, and I’m $300,000 in debt and can’t even pay the debt interest.

LR: How did you recover from that?

MM: Well, I had a home, thank God, and I refinanced my home and got the immediate debt problem taken care of. I went back to the drawing board. I went out and sought out some help, raised some venture capital, and got some partners to help me. We built a business model. There’s a lot of little fragmented box companies and box brokers out there that buy and sell used boxes in industrial areas, but none of them have websites, none of them have 800 numbers, none of them have intelligent, sophisticated, articulate people on the telephone that can handle customer inquiries. We built the web aggregator for used boxes and turned around and partnered with all the existing box companies out there that could use additional revenue. We tested in 2006 in Los Angeles and it just worked. Now we’ve got nine distribution centers.

LR: During that three-year period that it took to rebuild your business, did you ever feel like giving up?

MM: Every day.

LR: What kept you going?

MM: I’m not sure. I’m not a religious person, but I do feel like I was put on this earth to make an impact, and every day that I came home from work and I haven’t gotten closer to making an impact, I want to stay later.

LR: Good for you! So, how is your business doing in this economic downturn?

MM: I am very pleased to say it’s going relatively well. Our numbers are going up on a daily basis, a weekly basis, and a monthly basis.

LR: What kind of delivery fee to you put on top of the price?

MM: Zero. We offer free shipping on every order, anywhere in the country. Everything we do is in a kit. The minimum is a dorm-room kit that costs $39, and that includes free delivery.

LR: You should charge for shipping, darling.

MM: We don’t want to penalize the customer just because of where they live, so it’s all built into the price. Our job is to build a distribution center so we can keep our shipping costs as low as possible. In our defense, we don’t ship anything that’s not profitable. We are able to reach any single customer anywhere in the United States profitably with free shipping.

Marty Metro appeared on ABC Eyewitness News to discuss his first venture, Boomerang Boxes.

LR: I recommend that you charge for shipping. When they scale up in their direct-response business, people do not understand how to allocate for overhead correctly. If you don’t have a seven- to ten-time mark-up on your product, you are not doing yourself a favor. On top of that, you should charge for shipping. People are used to paying shipping. Do an analysis. What kind of people are your customers?

MM: Our biggest customer is an affluent mom.

LR: Look at the other sites she goes to, and you tell me one place she’s not paying for shipping.

MM: That’s an excellent point. I never thought of it that way.

LR: I was astounded to read that $120 billion worth of cardboard boxes are made each year.

MM: I don’t think most people understand what cardboard recycling really is here in the United States. When you buy a computer and you get a box and you put it in a blue bin outside your house, you’re not recycling; you’re exporting. All that’s happening is that a company like Waste Management will pick up your cardboard, bring it to a sorting facility, bail it, and ship it to China. And then China uses that scrap cardboard to make new boxes so they can send new stuff to us.

LR: Is your business done primarily on the web, or do you have a sales force?

MM: It’s all on the web right now. One of the challenges I have is we want to grow. Until last month, I had only three employees, and we have nine distribution centers, all outsourced.

LR: Is your biggest problem getting customers, or is your biggest problem getting boxes?

MM: We don’t have trouble getting boxes, and we never want to get the boxes before we get the customer.

LR: Right. First of all, let’s start with search engine optimization. It is the most effective thing you can do.

MM: Absolutely. We are the number-one site on Google for used boxes.

LR: Why are you just on “used boxes?” You should be on “boxes” period.

MM: It’s not my area of expertise at all.

LR: You should look into that. You have to look into keyword buys, that’s the investment you should make, if you’re looking for retail customers. What’s your dream client?

MM: The big retailers, the Wal-Marts, the Targets, the K-Marts. I just got invited to speak at Wal-Mart’s Green Expo. I’m speaking right after the Director of Sustainability from Dell Computers. It’ll be my biggest audience ever.

LR: Great! That’s your intro. Go meet with their purchasing people afterwards.

MM: Next to this interview, it’s the most exciting step of my career. You don’t know but you’re my hero, my mentor without knowing it.

LR: Well, I love your idea. And I’m going to turn it over to my people to see if there’s any way that we can become a customer.

MM: I would love that.

LR: This is just a thought: Why don’t you start with someone smaller, like Costco or Price Club, to see if it works, rather than go to your biggest potential customer at the beginning? I wouldn’t go to the largest prize to begin with, because if you fail there, it’ll hurt your reputation.

MM: I agree completely. And as an entrepreneur who’s failed, I have confidence issues. (laughs)

LR: That’s right. Let me ask you something else. What else can you recycle with the same people?

MM: We are chatting with a very prominent venture capital firm who has an investment in an enormous palette company. The reality is, palettes and boxes are like salt and pepper. So we’re talking with them and how we might be able to work together.

LR: As far as your consumer aspect, I will tell you what to do. Go to all the bloggers that are in the moving space. People are blogging about moving every day. You can find them on Technorati, you can find them on Google. You send them a brochure on what you’re doing or an online pitch, and you offer them a 10% discount if they advertise it on their blog. They love to put coupons on their blogs. Send them a free sample of the dorm moving kit. That’s how you build your business.

MM: I would love to hire three more employees. I would love to have that culture and the ideas and the energy and so forth in our office. We can’t afford to hire three more employees. So we say, “Let’s bring in a short-term contractor.” Right now, with the economy the way it is, you can get contractors very cheap, and they work very hard. The problem is, it doesn’t build a corporate culture.

LR: That’s okay. You have time to build your culture. You can’t afford to build your culture now. What you have to do is grow your business to the point where you can hire people. But you know how expensive it is with health insurance and everything else you have to do to have a full-time employee. With the great people that are on the streets right now looking for jobs, the greatest thing you can do for the economy is to hire part-time people. That is the gift that you’re giving back.

MM: That’s interesting. I always thought of it the other way.

LR: It’s a different world today, Marty. It’s not the world that it was before September. You are giving the greatest gift to give people extra work. And in time, some of those people will be so fabulous they will be your full-time employees. And if you’re looking for fuzzy feelings, make more friends. Hang out in bars at happy hour.

MM: You are phenomenal. This has been, honestly, the highlight of my life.

LR: I bet you say that to all the girls.