Surveying a Career

As a successful entrepreneur, Norm Brodsky knows that opportunities exist everywhere, as long as one remains alert to the potential that presents itself. "My father used to say, ‘There’s a million dollars under your shoe, you just have to find it,’" Brodsky says. "I’ve interpreted that to mean that there are opportunities all over the place, you just have to keep your ears open."

Brodsky has heeded his father’s advice, keeping his ears open and investigating the opportunities that have presented themselves, sometimes quite by accident. Today, he is CEO and owner of Brooklyn-based CitiStorage, a document storage business that manages more than 3 million boxes, and U.S. Document Security, a mobile shredding operation that operates seven trucks and services more than 4,000 bins throughout New York City’s five boroughs as well as portions of Long Island and New Jersey. The two companies employ a total of roughly 400 people.

Throughout the course of his career, Brodsky has learned a lot about the document storage and destruction industries, but he’s also learned a lot about himself as a business owner. Now, as he considers the real possibility of selling CitiStorage and U.S. Document Security, he speaks frankly about his successes and missteps and the apprehensions he has about selling his businesses.

Brodsky began his professional career as a lawyer, but in the mid-1970s he realized that the job didn’t bring him the fulfillment he was looking for. "I woke up one morning and said to my wife, ‘This is not for me. I can’t do this for the rest of my life.’"

Brodsky left law with the intention of opening his own service business. But first he needed to gain experience and to narrow his focus, so he began applying for different entry-level service jobs. "I answered job applications and started at the bottom," he says. Eventually, Brodsky took a job at a delivery company in New York City. Within three years, he rose within the ranks of the company to the post of CEO. He left that company in 1979 to begin Perfect Courier, his own delivery service.

"I grew that to a $120 million business in seven years with locations in 17 cities," Brodsky says of Perfect Courier. "I thought I was a really, really smart guy. In the next seven months, I took that firm from $120 million to zero." He adds, "I guess I wasn’t that smart." Brodsky blames the collapse of Perfect Courier on his ego and a number of bad decisions, which, he adds, he was fortunate to learn from and avoid repeating.

In 1988, Brodsky took Perfect Courier into Chapter 11, emerging with a much smaller company.

However, a new opportunity was about to present itself to Brodsky, courtesy of a phone call from a customer inquiring as to whether the company could store 27 boxes of documents.

"We always taught our customer service reps that it takes two people to say no," he says, which means that a rep must check with a supervisor before telling a customer that the company can’t fulfill a request.

Intrigued by the idea, Brodsky flipped through the Yellow Pages and began making calls to companies who offered the service, getting quotes for a similar storage job. (to view a timeline of Brodsky's business(es) click on the following link -- Timeline)

What he found was that the box storage companies he called were charging $175 on average for a pickup that Perfect Courier would normally charge $75 for and that they couldn’t provide transportation for another three days, while Brodsky’s company would be available to pick up the boxes that day.

"I called our customer back and said, "Hi, this is Norm Brodsky from the box storage division of Perfect Courier,’" he says, and a new business was born.

Those initial 27 boxes the company began storing in the summer of 1990 have grown into 3.15 million boxes today. "We are the largest privately held, one-location company in the document storage business in the country today," Brodsky says. "We have an eight-acre compound that consists of 15 million cubic feet of storage space."

Nearly 10 years later, a suggestion courtesy of Jim Teske of O’Neil Software, a records center software provider, led Brodsky and his partners to enter the document destruction industry. "He came in here and he said to me, ‘I just saw the greatest business you should start,’" Brodsky says. "Sure enough, I did the same things, made some phone calls." Brodsky and his partners formed U.S. Document Security in the summer of 2000.

While the companies share office space and economies of scale in the accounting and customer service area, Brodsky says launching U.S. Document Security wasn’t as easy as he thought it would be. He says he thought having a presence in the document storage industry would help in establishing his shredding business, but he found that the opposite was actually true.

"We couldn’t convert our document storage customers to document shredding customers at first," Brodsky says. "We went after all sorts of new customers. In the end, we found that the document shredding customers were great leads for our box storage business."

Brodsky employs a similar growth strategy for CitiStorage and U.S. Document Security. "We will go after a whole industry and find out about that industry. We become experts in the industry itself," he says.

The companies brought in experts on HIPAA (Health Insurance Portability and Accountability Act) and FACTA (Fair and Accurate Credit Transactions Act) and other pertinent laws to educate the sales and operations staff on their intricacies. "When we went into a meeting with compliance officers, we spoke their language," Brodsky says. "We also brought in hospital personnel to teach us the language they used inside the hospital."

In addition to educating staff on the ins and outs of pertinent laws, Brodsky and his partners also have focused on adopting the latest technology. "We sit on the edge of technology, which means anything new, any new toy, we have it," he says. "If you want to compete with us in the industries that we are in, you have to do what we do. We spend a lot of money on infrastructure."

For instance, U.S. Document Security only charges customers for bins its staff empties. (If a bin is less than half full, it is not emptied.) To do so, the company bar codes and scans all of its bins, and the company’s drivers print and present receipts to customers at each service call. U.S. Document Security invests from $3,000 to $4,000 per driver in technology, including education, bar code scanners and printers, Brodsky says.

Proximity to the city was also a factor in the growth of CitiStorage. With the company, Brodsky sought to combine the technological prowess of Iron Mountain with the agility of a city-based moving and storage company. CitiStorage began by targeting law firms that required quick retrieval and delivery of documents.

Brodsky doesn’t hesitate when it comes to sharing the strategies he has employed in growing CitiStorage and U.S. Document Security. "If you think about it, and I think about it, every good idea I’ve ever gotten, I’ve taken from somebody else and embellished on it and made it better," he says. "So, I’m not an innovator. I just see ideas that are really good and take them and build on them." He adds, "If you develop a good reputation among your employees, customers and competitors, that’s what lasts and what continues building the business."

Some of the ideas Brodsky has borrowed include sending handwritten thank-you notes to new customers (an idea he got from a suit salesman) and escorting all visitors to the companies’ offices to their cars (borrowed from Jordan’s King Hussein, who hosted Brodsky at his palace).

While Brodsky is willing to go the distance when it comes to customer service, in the increasingly competitive document destruction and storage industries, he says he does not feel obligated to take all of the business that comes to him. "You have to say no to certain customers," he says. "You have to do business to turn a profit. People who are really good customers understand that."

Brodsky has refused to lower his pricing to land a customer. "I don’t consider certain competitors as competitors," he says. "Let’s say a local guy goes and buys a shredding truck and works with his son or daughter. He doesn’t have an office or much overhead. He is very happy making a daily or weekly wage. He bids 5 or 7 cents a pound."

He continues, "That is not our business. We will never go after that business." Brodsky adds, "You cannot be all things to all people. You cannot compete against everyone and you have to say no sometimes to people."

The competitive business environment also brings a fair amount of merger and acquisition activity. Brodsky and his partners are currently pondering an offer to sell all three of their companies to a prospective buyer, a possibility that Brodsky says he has "very mixed emotions" about.

"Today, a lot of people go into business with the idea of selling them to start with; I guess it’s called an exit strategy," he says. "I really never had that strategy to begin with. It was just a way of making a living."

While Brodsky has declined earlier offers to buy the businesses, he is wrestling with the idea of selling now. And it’s easy to see why the companies would be prime acquisition targets: CitiStorage has nearly all of its customers on contracts, and 80 percent of U.S. Document Security’s customers are on contract.

Of the current offer, Brodsky says, "We are in talks with a company that just started acquiring companies about two or three years ago. They have to attract a larger company to put them on the board and give them credibility."

While Brodsky and his partners are considering the offer, he says, "I find it very emotional to even think about selling the company. One of the reasons is that I built this company from scratch, and it’s my baby."

However, he also recognizes that an offer like this may not present itself again. "Buying and selling goes in cycles. This is the second cycle for the archive business. The first one started with Recall and Iron Mountain four or five years ago and it culminated with the Iron Mountain’s merger with Pierce Leahy Archives in 2000," he says. "That cycle calmed down and now it’s starting all over again."

He continues, "Right now, interest rates are low, lots of money is flowing throughout the system and there are competitive buyers. That is a pretty peak time to sell, not necessarily for me, but in general." He adds, "So, if I was to sell and I wasn’t to take this opportunity [at this] moment in time, who knows when the next opportunity might come?"

In reflecting on his last 20-odd years as an entrepreneur, Brodsky says there are few things he would do differently, even when it comes to the bankruptcy of Perfect Courier, saying that the experience taught him a number of valuable lessons.

"One of the lessons that I learned from it is that I’m not invincible."

The experience also gave him an appreciation for advice. "I seek outside advice and I listen to other people, which I never did in the past."

In his years as an entrepreneur, Brodsky says he’s learned the importance of limiting his investments. "What I’ll do is I’ll put in $200,000 into a business and I’ll keep a reserve of 25 percent, which is $50,000. Once I reach that maximum, I won’t put in another penny," he says.

"You are not successful at everything you do. You have to draw the line, and it’s hard to do. Nobody likes to admit they are wrong or they have made a mistake," he says. "What usually happens is that you keep pouring good money after bad in doing that. That is really a valuable lesson that I learned and, thank God, I learned it early on."

Brodsky says that his only regret is that he didn’t find the archive and document destruction industries a few years earlier. "They are two of the best types of businesses that you can go into from a strict service business sense," he says. Brodsky predicts that the growth of the document destruction business, in particular, is going to be "tremendous" in the years to come. "We are just at the beginning of it."

His advice to would-be entrepreneurs: "Start as soon as possible."

As for Brodsky, he hasn’t allowed himself to think of a future that doesn’t include CitiStorage and U.S. Document Security. "I haven’t thought about that because it’s too premature," he says. However, entrepreneurs rarely go quietly into retirement, and Brodsky doesn’t sound as if he has plans to do so. In addition to a book deal with the Penguin Group for a manuscript that is due in July of 2007 (see sidebar on p. 17), he also plans to continue his public speaking career.

"Maybe I’ll find a new business," Brodsky muses. "I like starting new businesses."