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Business Observer Thursday, Sep. 9, 2021 2 weeks ago

Waste not, want not

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Shawn Handrahan’s journey to running a Tampa apartment concierge services firm ValetLiving was anything but linear.
by: Louis Llovio Commercial Real Estate Editor

Shawn Handrahan was an executive in the multifamily division for a Home Depot subsidiary when he first heard of a Tampa company called Valet Waste.

This was in the late 2000s. The company had found a niche as a service provider to apartment complexes, picking up residents’ garbage and disposing of it. Home Depot, considering getting into the services business, looked at Valet Waste as a possible acquisition.

But Handrahan, now 59, wanted nothing to do with the company. “I realized very quickly that that wasn’t a business that would fit the (Home Depot) brand for a number of reasons,” he says now.

The problem, as he saw it, was it was a typical entrepreneurial business that went as far as it could and its workforce consisted of independent contractors, which one day could run afoul of federal tax regulations. “We were going to have to blow this business up…and we just chose not to do that.”

So he and Home Depot moved on.

What Handrahan couldn’t have fathomed was that this, his decision to turn the company away, was not the end of the story. Instead the journey that would take him from reluctant suitor to the president and CEO of the company he spurned was just beginning. Along the way Handrahan was able to utilize some of his key business leadership concepts to help guide the company, including the proper labor model, hyper-focusing on goals and knowing, and sticking to, a clearly defined mission. 

More is better

Valet Waste, now called Valet Living, was founded in 1995 in Tampa. The company’s original mission was to offer valet trash service to apartment complexes for a fee. 

The idea behind it was that apartment complexes could use the service as a selling point to potential tenants and to make sure waste was being properly handled.

"Define who you are, be true to those goals and engage the heart when you speak.” Shawn Handrahan, president and CEO of Valet Living.

But there’s a white board Handrahan keeps in his office that he used when, after his Home Depot days, the possibility of running Valet Waste came up.

Written on that board, in the top spot is a simple reminder that’s served as a mission statement of sorts: We are not a trash company.

“And we’re not. And we never were by the way, which was the genesis behind the rebranding,” Handrahan says.

He says the company, while it did pick up trash, was an amenities company that had — mistakenly — branded itself as a waste company.

What he wanted was to expand the concept and begin offering other concierge services apartment dwellers needed without knowing they needed them.

“We need to begin thinking of the myriad of amenity opportunities we can provide and lay them all out,” Handrahan says his thought process was at the time. “Whether it's package delivery, pet walking, home cleaning, dry cleaning, laundry, grocery shopping. You name it.”

And that’s what the company offers today.

The company offers its Valet Living Home services to apartment building owners that allow their residents to access what they need through an app. It services 1.7 million apartment units in 46 states. Company officials decline to disclose annual revenue data or sales figures. 

What Handrahan saw early on is residents with access to the extra services are happier, and that creates better results for property owners and managers. That sentiment is backed up by the National Apartment Association.

According to the Virginia-based trade group, offering what it calls lifestyle services helps leasing officers win over potential tenants at higher rates and lead to better retention.

Apartment dwellers, the association says, are busy socially and at work and the services “offer residents a complete living experience and more reason to stay at your community.”

On its website, it says residents who take on at least two lifestyle services have a renewal rate of 81.4% and that about 90% of those who take on more than 20 renew.

“At apartment communities without lifestyle services, residents renew just 53% of the time,” the association says.

Making sure residents are happy and have the amenities they want and need is even more crucial as a greater number of people across all ages and income levels turn to apartment living, writes economist Jeanette Rice, head of multifamily research for the commercial real estate firm CBRE, in a report titled Innovation Watch: Amenities for the 2020s. 

She quotes a Harvard University study that found the number of renters earning more than $100,000 per year grew by 5% in 2017.

That growth comes with an increased demand in the number and types of amenities that these "renters by choice" expect when looking at a property to move into. That means owners of apartment complexes need to think beyond the traditional pools and club houses and create space for the arts and learning, community space to encourage social connections and co-working space.

But it's not just about space. Rice writes that personal services like those offered by companies like Valet Living are every bit as important. Grocery, ride sharing and food deliveries are particularly popular — and in demand — with apartment dwellers.  

"In today’s world of rapid change, it can be challenging to know which amenities are a flash trend — in today and out tomorrow — and which provide true value, both for residents as well as investors," Rice writes.

"With new generations entering the market and increased levels of entrepreneurship and telecommuting, amenities need to be flexible to adapt to changing interests and needs. Which amenities bring the most value to residents and investors? Which will enhance the quality of life of the residents and minimize turnover?"

 

Change the model

Handrahan says proof that diversifying the number of services offered is a key to a company’s success is right before everyone’s eyes. He points to companies offering single services, like Uber, and says “not a single one has made a penny.” 

The problem as he sees it is that these companies cast a wide net but because they lack labor utilization, they can’t properly serve the demand.

That was his issues with Valet Living, then Valet Waste, in the beginning and one of the main reasons he turned down the opportunity to buy the company while with Home Depot. And when he did take over, tackling that problem was one of the main objectives early on.

One issue was the company was using independent contractors rather than salaried workers. This, he says, created a contingent tax liability that could one day burn the company and created a workforce of people who didn’t actually work for the company.

Handrahan knew going in that changing the model was going to be tough. To preempt the coming upheaval, he sent letters to every apartment complex the company worked for to inform management of the change and to let them know service was going to be bad “not for 30 days, not for 60 days, not for 90 days. Maybe for six months.”

“But trust me,” he wrote, “we’ll better tomorrow than we are today.”

They only lost four clients during the transition and today the company employs 8,300 people nationwide — 1,300 in Florida.

As for the future, Handrahan says growth will come by offering even more services to apartment building owners. The company has recently begun to offer owners a service where it takes over the work that needs to be done when one tenant moves out and the unit needs to be prepared for rental, freeing up the maintenance crews to deal with requests and the leasing office. This, he says, keeps existing residents happy and increases retention.

“I’ve always kind of lived by (the motto) of, you define yourself or others will do it for you,” he says. “If others do, you’re not going to like the result. So, define who you are, be true to those goals and engage the heart when you speak.”

How did he get here

Which gets us back to the beginning.

It’s 2012 and a couple of years after walking away from a chance to buy Valet Waste for Home Depot, Handrahan has accepted a job running the multifamily division of another major company. He is about to leave the Atlanta retailer when one day the phone rings. A New York private equity firm is on the line.

The firm, the caller says, has a couple of portfolio businesses in the multifamily industry it wants to discuss with him. Would he be willing to fly up to talk?

Handrahan accepts and spends the day in a Manhattan boardroom talking to executives about his ideas and philosophies about business.

At about 4:30 p.m., with a car to the airport due in a half hour, he finally asks his hosts the name of the company they want him for. Well, an executive says, we’re interested in you for Valet Waste.

He remembers telling them, “You could have told me that over the phone and I could have saved you a lot of money. Trust me, you don’t want me to run Valet Waste.”

They ask why and he proceeds to lay out all the reasons he wants nothing to do with this Tampa company.

“There was no way I’m interested in that,” he says. “I left and I was pretty aggravated.”

When his flight landed in Atlanta a couple of hours later, there was a voicemail from the private equity firm asking that he call back. The executives wanted to talk to him some more about the company.

He responded in no uncertain terms. “Look,” he remembers saying. “You don’t want me and I’m not sure I want you.”

But those who succeed in private equity don’t become successful by taking no for an answer, and Handrahan may be forceful but he’s no dummy. They felt he was the man for the job and asked him to come back to New York and “they said 'we’ll pay you for your time.'”

“I said, 'when do you want me there?'”

There was a plane ticket waiting with his name on it. He flew back to New York, spent the night and met back up with the firm’s executives the following day.

Late the following afternoon Handrahan called his wife and announced: “Guess what, honey. We’re in the trash business.”

Her response? “You don’t even take the trash out at home.”

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