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00:00He went from $0 to a laundromat that does $3 million in revenue in one year.
00:05Yep, he did. So I gave him $100K to grow a laundry empire, or I guess a laundry
00:10mat rocket ship. Introducing, drumroll please, the Fold Laundry. They're
00:15projected to bring in a cool $3 million and on their path to what Mark, CEO,
00:20says will be $50 million. We're gonna break down their business so you can see
00:23how they did it and how we can too. Who knew? Fold and close. That's stuff your
00:29mom didn't want you to leave on the ground. It's pretty profitable. So
00:33profitable. In fact, check it out. They got like 10 vans over here, all to deliver
00:36this laundry that they're thrown around inside of these washing machines at the
00:40Fold. Today we're gonna talk about money.
00:50Kind of wild when you think about it. Like you used to have an actually cool job, right?
00:54You used to do like kayaks and fishing gear. What the happened? What made you want to
00:58own a laundromat? We thought folding dirty laundry would be more fun. I don't think
01:02that's true. We were young professionals. The service didn't exist and this was
01:05around the same time that Uber was coming out, all these delivered to you services
01:11and that didn't exist for laundry. It was really novel at the time. Yeah. And we were
01:16kind of one of the first movers in the industry and now it's proven to be this
01:19established for every stream for laundromat.
01:21Let's break this down a little bit. How many pounds of laundry do you guys do? It's like an elephant. How many pounds of
01:41this elephant? Yeah, we do six to ten thousand pounds at night. All of these are
01:46running, basically. What's the percentage you guys use every night? At night we use
01:51100% of the machines. The machines are spending 24 seconds. And how many of these
01:55bad boys do you guys have? We have about 164 machines total. What are four of these cost you?
02:01They're expensive. That's a used car right there and they're getting more expensive. Oh, it is. So an average washer will cost between three and ten thousand dollars. Three and ten thousand dollars. But I
02:11guess the cool part is that you can finance them, right? You can finance them. They last ten to fifteen years. Yeah. Unless you beat the hell out of them like us. Ours are probably going to last closer to eight to ten. Okay. Eight to ten years. Three to ten K. So it's like a Honda. There's laundromat
02:27lenders that will go up to ten. But yeah, traditional SBA works. And you can you can finance it well over five years. So these are clean or dirty? These are clean. These are clean. All right. Should we see what's in here? Yeah, let's pull some laundry. We've got a lot to do. Okay. Pull some laundry.
02:41Yeah. There's so many things people don't like about laundromats, right? It's like, you know, they break all the time. They're too expensive right now. So let's break into some objections. Let's start with first. Doesn't everybody have these bachelors at home? Why does anybody need these? People come to laundromat to either get it done for them or to use the high capacity machines.
03:11These are really well cared for. It's big, bright, clean and safe are the four key words. That's laundromat marketing. And do you think that market's going away of people coming into the laundromat to do it themselves?
03:23I think if you looked at it as a whole, it might be shrinking. But what's growing faster than the self-service is shrinking is the full service. So when I see laundromats 10 years from now, it's not the car wash comparison.
03:37Like it's not the car wash at the gas station that's all grungy that you run it through yourself. It's the Mr. Car Wash where there's 60 employees in uniform doing it for you.
03:46Yeah. So I think laundromats are growing bigger and they're trending towards more full service.
03:50Mr. Car Wash went public to the tune of, I don't even remember, was it a couple billion?
03:55I don't know. It was massive and they're popping up everywhere.
03:57It was massive. Yeah, we'll put the numbers up here. This is a business that multiple private equity firms have owned.
04:01All of these private equity firms independently made money on both the sale of it and then some sort of dividend or distribution.
04:08And they took this old car wash model that used to be the way to like these nice ones where, as you mentioned, shirts are tucked in, whole everything staffed, same experience every single time, almost like a franchise or a McDonald's or whatever.
04:21And you guys think that something similar is going to happen with laundromats.
04:25Boring business, layer on technology, layer on full service. It's exactly the Mr. Car Wash.
04:30Yeah.
04:38Mark, you're going to make me do all this folding by myself. This is how CEOs work, huh? Not something I thought I'd be doing as a private equity investor.
04:46But you know what? When all the other investors say that they don't do value add, I just want to know, are they helping you fold underwear?
04:54Because I think the answer is no. Here we go full service. This is actually full service.
05:00And do you get really particular? Like, like how?
05:09Of course.
05:09We do. What's the process?
05:11We do full SOP on how to fold everything.
05:13Really?
05:13So part of your training, it's actually a digital SOP. So we send you the chapter before the first day of class and you have to learn how to fold it before you do.
05:20No way. So am I failing?
05:21Every pair of underwear, every bra, every towel has an exact way.
05:24Same way? Okay, wait, we should probably go see how the clothes are doing it, right?
05:27Okay, and how is the process? How does this work?
05:31The process is that we always have to see the clothes look better to make the clothes easier for the moms.
05:39I mean, no.
05:40She was basically saying that the process is all about showing the same love that you would for your own clothes.
05:46So that the moms can come and take care of their kids and show them some love.
05:50So at your house, is it this clean?
05:52Uh, I try.
05:54It is not this clean at my house.
05:57These ladies over here who are all folding as we're talking, um, like they probably know the people that they're folding laundry on better than anything else.
06:07Like, this is an important number for you guys. This is super important.
06:10Number of sex toys you've found in laundry overall.
06:14If, uh, Vegas had a line on it over under 20, I'd take the over.
06:18Yeah, you learn a lot about, you learn a lot about people, uh, folding their laundry.
06:23We've seen it all. You know, we've seen, we see the stains on the sheets. We see the holes in the underwear. We see everything you accidentally leave in your pockets and we have to take out.
06:32Um, so luckily standard operating procedures for all of it, but yeah, you definitely learn a lot about people doing the dirty work.
06:37That's hysterical. So I guess you get clean clothes and maybe clean sex toys on accident.
06:42Yeah.
06:43Full service is what we're delivering here.
06:44Yeah, the future of laundromats.
06:46Ha ha ha ha.
06:48Laundromat, folks, it probably looks like, uh, for you it probably looks like nothing.
06:52This is what laundromat owners love. Massive exhaust pipes, good construction, and space. So every, every square foot in here is usable for us. This is an on-deck circle for our production line is that warehousers move it from point A to point B and this is point C. So every square foot's your life.
07:11So most people buy their from Costco, right?
07:14Right.
07:14And you guys, what do you do? How does this work?
07:17This is we buy in bulk. We've got wholesale suppliers. We pump our own gallons.
07:22So even, you know, top tier laundromat owners doing pickup and delivery will still go, hey, that disgusting Procter and Gamble markup.
07:29If you're looking at cost centers for a laundromat or wash and full service, soap and labor are big.
07:34So we were able to get in wholesale, uh, with a soap distributor and pump our own soap. You want to pump some soap?
07:42Yeah, I want to pump some soap.
07:44When you start your shift, pump your gallon, and this is how you escape the 600%
07:52markup, the Procter and Gamble license.
07:55600%? Look at this. Dirty businesses.
07:59All right, Samuel, we have to be done. There's no world in which I can pump any more of this.
08:07Last drop. I'm an investor here. We can't be wasting soap.
08:10Woo! It's pretty good.
08:12So a typical laundromat owner spends a bulk of their time just moving quarters to and from machines and
08:20taking cash to the bank. Right.
08:22It would save you a ton of time if you put a card system in. 90% of our laundromat transactions are
08:28through credit card. A customer comes in, they will swipe their credit card to add balance,
08:32and they'll get an internal economy laundry card, which they can use to start all the machines.
08:36Do you have to empty this every day? Uh, our managers empty it every second or third day.
08:41Every second or third day. Yeah, to move it to the safe, just to be safe.
08:43Okay. Okay, how do we get it out so we don't break it?
08:46So we're going to press this yellow button. Uh-huh.
08:48We're going to pull the canister out.
08:49Woo! Look at this. And then we just take it out like this?
08:54Exactly. Okay. This is... Oh no! No!
08:59So now we're going into the delivery side of the house, which is basically where you do the most
09:23stops. And that's how you get to that fancy three million dollars in revenue number this year.
09:28All right. So we come into this warehouse. I like it.
09:32About space. About space. How many laundromats have this much space?
09:35So this is like full of what?
09:37Lags and clean laundry. That's going to get delivered today.
09:40That's pretty heavy. It is. Okay.
09:42So we have flat rate prices. Okay.
09:44This is $50 in the warehouse. 50 bucks. 50 bucks. All right.
09:53So you basically get it delivered in through the front door and then you put it into...
10:02How the does it go? Yeah, exactly. You tell me the process.
10:04Dirty laundry comes in, clean laundry goes out. So we've got different racking locations.
10:08Yeah. Um, so basically this is all so a driver doesn't have to run around and look for Sally
10:13J's order. Right.
10:14It's all warehoused through our software to exactly the pick location that they need to go to.
10:18So delivery driver comes in, grabs the bags, 50 bags each.
10:22About 250 stops a day. Yeah. So, uh, seven to 10 drivers, seven to 10 vans.
10:27We're all over town, 40 miles in every direction.
10:29It's the nice thing about the delivery component is that most laundromats are constrained by a
10:34three to five mile radius for all their customers. And we're going out to every neighborhood and we
10:38can go grab customers in higher socioeconomic neighborhoods and bring them back to us.
10:43You're really supply chain minded, which is one of the things I think is so cool
10:46is basically you guys think about laundromats like people think about an Amazon warehouse.
10:52Yeah.
10:52You know, from point A to point B, there are people that have only one job, which is wild.
10:57One of the jobs may be pushing this like I am into Samuel. Samuel, watch out.
11:02And pushing this into the warehouse full of bags. And then it might be, what else?
11:08What are the other ones that they do over there?
11:09This is a warehouse. This is logistics business.
11:11Yeah.
11:12So it's all assembly line based. We have inbound loader loads dirty laundry into washing machines.
11:17Outbound loader loads clean laundry into dryers from the washing machine and the folders fold.
11:23And we've got positions for warehousing too that are just moving bags to where they need to be in the
11:27warehouse.
11:27Everybody has a job and one job only and it's assembly line. We run 22 hours a day.
11:32That's wild. 22 hours a day.
11:35Yeah.
11:35Super cool, isn't it? You thought laundromat owners weren't that smart.
11:39Yeah.
11:40That's amazing.
11:40Passive income, right? Super passive.
11:42Yeah.
11:45This will kind of be like in the future, your thesis is that as common as it is to get pizza
11:50delivered, it'll be like, have somebody else do your laundry.
11:53Absolutely.
11:54Yeah. I can totally see that because my husband and I would actually say today,
11:57we did laundry last night and we were like, time to do laundry, 45 minutes to an hour.
12:02Time to fold laundry, four to six business days.
12:04Yeah.
12:05Like located on my bed or in the closet or wherever.
12:08Yep.
12:08And so, yeah, it's kind of embarrassing.
12:10And there's only two of us.
12:11I couldn't imagine with kids and like little monsters running around getting dirty all the time.
12:15Right.
12:15That makes perfect sense to me.
12:16It doesn't need to be a permanent lifestyle change.
12:18Most of our customers use it as a get out of jail free card, not a weekly subscription.
12:23Interesting.
12:24So life comes up, you're traveling, kids are busy, you fell behind.
12:28It's a get out of jail free card as a one-time service.
12:31Yeah.
12:31It doesn't have to be mixed.
12:32It's never going to replace your washer and dryer.
12:34Yeah.
12:34But it's like ordering pizza.
12:36Yeah.
12:37It's when you don't want to cook,
12:38you have an easy get out of jail free card to take care of the chore for you.
12:41I love that.
12:44Mario, you told me that you had a ridiculous story about something you picked up yesterday.
12:48What was the deal?
12:49We pick up trash bags full of clothes with their first-time customers.
12:54When we got to the location, the gentleman left a trash bag plus an extra trash bag and we brought
13:01one of the bags back in with dirty diapers.
13:04Oh, no.
13:05Crazy story like that.
13:05Did you have to wash them?
13:06No.
13:07No, no, no.
13:08Actually, we got-
13:08The boss didn't make you wash them?
13:10We got back to the shop and everyone was laughing.
13:12Yeah.
13:13What'd you do before this?
13:14Um, so I sold cars for about 12, 14 years.
13:18Wow.
13:19Um, and then I got into the delivery business just because I kind of wanted time to myself
13:25and I was tired of chasing the sale.
13:27I came across the fold.
13:29One of the owners that I met, I could just relate with him.
13:32You know, they come from a sport background.
13:35And then the way they're building the business, I was intrigued by it.
13:39So at that point, I committed to them.
13:41Yeah, it's nice to meet you.
13:42Yeah, likewise.
13:43Likewise.
13:44Uh-huh.
13:44I'm going to work.
13:46We're rolling.
13:48I think it's about time to deliver some laundry.
13:50What do you guys think?
13:51Let's, uh, let's go show up at somebody's house in Austin and, uh, yeah, give them some
13:57laundry bags.
13:58Now, I'm not going to actually drive it because I think that part's kind of illegal,
14:01but I am going to get in and then our main man Mario's actually going to drive me there.
14:05You guys ready?
14:08Bye, guys.
14:13Delivery, special delivery, the fold.
14:17It's cold with you.
14:18Yeah.
14:19Logo's out.
14:20Logo's out.
14:20Logo's out.
14:23Okay.
14:24Excuse me.
14:25Pardon me.
14:25Delivery.
14:26Coming through.
14:27Place is on the floor.
14:28Place is on the floor.
14:28Yeah.
14:31Take a picture.
14:32It's delivered.
14:38You're good to go.
14:39That's a wrap.
14:41Undermats, baby.
14:42All right.
14:43Until next time.
14:48Do you know why I invest in small businesses?
14:51Well, look what's happening here.
14:53In this world, there's no politics, no tech workers complaining about how their sleeping pod
14:58isn't warm enough, no crying circles.
15:01These are normal, everyday humans just like you and me.
15:04And I want to see them win.
15:07I want our operator to have a better life.
15:10The people needing to use this place to do it safely and with a little love thrown in.
15:15If it's true that small businesses are the lifeblood of this country of ours,
15:20if we buy them and invest in them and support them, it's just one less Walmart on the street.
15:27And that is a story I can get behind.
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