From Law School to Garbage Trucks: How Alfonso Guerreri Built a $Millions Waste Empire | Ep 213 with Alfonso Guerreri Founder of RICI

0:00Hey, everyone. Welcome back to Founder Story. Today, we have Alfonzo Guerreri, founder and president of RICI Group. And Alfonso, you've had an amazing experience going from law school, which I think I wish I went to law school. I feel like every business owner could probably do better as a business owner if we went to law school. And I'd love to hear your thoughts on that soon. But scaling and growing your company now, you know, a rapidly growing Canadian firm, you have different industries and different companies within. And so let's just start off with how, why did you choose this specific industry or the first industry you were in and why at the time period that you did?

0:45Yeah, 100%. It's quite a wild ride. So I did law school in the UK. I studied at the University of Arboreture. After I went to law school, I worked at a firm in Toronto. I worked on their articling team and going through the legal licensing process. And I didn't love it. I kind of wanted to do something that I could get my hands dirty. and enjoy being on a team and working in an industry that I kind of loved. And I kind of learned while working at the law firm that I didn't really love doing that. And I kind of wanted to do something more hands on. I didn't want to do something that was an office job or work in the legal industry.

1:19I just didn't love it anymore. I fell out of love with it. So after working at the law firm, I decided to open, I went into the food business. So I opened a small food truck. and after a little while we figured out that that industry wasn't kind of the best for growth and there wasn't much opportunity to kind of scale that into a massive company which always was our end goal and you know we wanted to utilize that legal education so I kind of stepped back we ended up closing up the company and I worked at my family's business I worked in construction I worked for a roofing company and during my time there I was doing some part-time construction work I launched RICI.

1:56We were doing small general contracting projects and interior, residential, exterior stuff, small projects. I decided to go full time with RICI in November of 2023, 22, 23. So while I was running RICI, we started servicing larger clients, working in general contracting, using subtrades. As I kind of scaled to bigger projects and kind of more difficult projects that we didn't want our subs to do, we started hiring our own team and we built our operation. We built our back office. We set up an office and did all the things required to kind of scale the growth into what it is today. So we started with general contracting when we inevitably ended up doing exterior work.

2:40We started to get into a lot of property maintenance, snow plowing, exterior landscaping, hardscaping, interlock, asphalt, concrete, stuff like that on a very small scale. We were running all rental equipment. We didn't have it. We had one pickup truck. We had all, you know, a small crew of guys. I was working in the field at the time. As that scaled into bigger and bigger projects, we were spending more and more money on hauling and moving material, moving equipment, renting equipment. I mean, it wasn't working. It wasn't possible for us to really make money because, you know, we're spending thousands, tens of thousands of dollars a week on, you know, waste hauling and equipment rentals.

3:16We were really fortunate to work with a lot of really good haulers. They kind of helped us build up our business and work with us. But inevitably, we got to a point where we needed our own truck multiple times a day. So we were kind of back and forth with the idea. Do we buy a dump truck? You know, do we go buy another truck? So we ended up buying a large roll-off truck, a hook lift truck, where we were able to buy some bins and add another revenue stream to our business. That was in 2024. And we started servicing other clients. We were doing roll-off bins, servicing our own sites. A lot of our sites are demo sites, our construction sites, a lot of garbage, a lot of material.

3:54So one thing that allowed us to operate more profitably and be able to have the opportunity to have the funds readily available to scale was a huge challenge to us. And to be able to invest in ourselves while somewhat decreasing our cost because it's still very expensive to run equipment. We were able to run more efficiently and have our sites finishing at quicker deadlines, not depending on other trades, depending on our kind of internal team. And we really, really made the push to bring everything in-house. We now specialize in servicing property managers in the greater Toronto area and across Ontario.

4:26We work at shopping centers. We work for multifamily residential buildings, industrial plazas, commercial plazas, offices, the whole yard. And the main kind of proponents of our business are niched into servicing those property managers. We offer four line items to our business. We have waste management and recycling. So that's our roll-off truck, our front-end truck, which is the truck that hooks the bins up. We do rear load work. We have a portable toilet division with a small vac tank. We also offer asphalt paving, interior general construction still, and other services in the construction field that are specialized niches towards our clients in addition to our property maintenance and snow care.

5:03So you mentioned how you had the first failure was the food truck. And then that then led into the other things. I've had like five or six failed businesses and ideas myself. As we know, business is a high risk. So knowing that, you know, you didn't really enjoy law and then you went to a business that then failed and then you were, you know, then thinking about what do I do next? When you looked at the risk of then working for somebody versus then creating another company, did you have any doubt that, OK, maybe I should go back to maybe working in law or getting a corporate job versus starting another company?

5:45Yeah, and the trickiest part is everybody around you tells you to do the same thing. You have a law background. You can go work in the corporate field. Like, why are you kind of hustling it out through business? And the hardest part about closing the food business was we weren't even doing bad. It just there was no opportunity to scale. So that's kind of where we decided, like, let's just try again one more time. Kind of get plagued as, like, not the failure, but, you know, you have two goals and, like, you don't like both of them. And maybe, you know, you're the problem and it's tough to kind of, you know, your family and friends and people around you tell you just go back into law, go finish your licensing and go practice.

6:21But it's double ended, right? Well, it's impressive that you realize that you're going to stop and change. Many times what I see, people will continue in the business and they just keep going because they don't want to give it up and they don't want to start something new, which I think could be a huge detriment. experiment what was that turning point that happened that you said okay we need to shift out of this and shift into something else yeah because i always had an interest in construction it got to a point in the food business where we felt that okay we need to invest a million dollars let's say to kind of get this thing to the next level but with the revenue we were getting we would have had to take on massive debt more than what we would have been comfortable taking on and the the turning point was we're unsure if we could service this debt if we decided to do this scale you know very expensive right so that's why we kind of inevitably decided to shift away from that business and move to something that we felt more comfort in and a possibility to scale and grow with kind of less daily and operational small operational challenges so wouldn't and that's i mean debt could be like the greatest thing ever or it could be the worst thing ever right so when you when you look at the new company because i know you it sounds like you have heavy inventory or large inventory costs in terms of equipment.

7:41So how do you look at debt or purchasing of equipment or inventory now that your company has really scaled? Yeah, it's millions of dollars. It's so tricky kind of saying, I'm going to stay being this guy in a pickup truck servicing Interlock and making a good living. Your family's making money and it's hard to say, let's take that step. And ultimately it comes down to debt serviceability. When we feel comfortable carrying more debt And we feel like we're very fortunate to have recurring cash flow from our maintenance business to service that debt. So we felt comfortable taking the risks on buying equipment and investing the capital into ourselves.

8:18And the only reason why we felt comfortable doing that versus in the food business, which we're long out of, it's 100 % down to debt serviceability. And I don't even think risk to a point. I think the ability to service that with what you currently have without depending on that equipment, because, yeah, I think it's, you know, very wise to think that you can do very well and that you can get a lot of work. But if you're not sure what you have, you don't have 10, you haven't worn any tenders, you haven't worn any clients, you don't have the equipment yet. You have to be comfortable servicing that with the revenue that you have and that you know you're going to consistently have.

8:51And that was our understanding of when we were ready to take the next step and buy the next piece of equipment. I like your strategy around adding in additional revenue streams and creating, for example, like you said, you had to spend money on something. You might as well bring that in-house and create a new revenue stream from that. So how do you look at now in terms of when is it right to add in a new revenue stream? When is it right to add in a new business versus when is it right to hire vendors? Yeah, it's totally, you know, case dependent, right? Some of our stuff, we still to this day, we use subtrades every day.

9:29And, you know, it just doesn't make sense for us because mostly most of the times it comes down to what our clients need. So because we only service property managers, we're not going to invest in things that they don't need and that we don't think that we could upsell to the same client. That's ultimately our end goal is getting the most revenue out of the same clientele, right? Without over leveraging and risk and not offering way too many things that are way out of the sort of our service needs. And everybody at the end of our day, we kind of offer two services. We offer construction and we offer waste management to the same type of clientele.

9:59That is interesting that you've really honed in. You figured out who your ideal client is, almost essentially who the avatar is, or however you want to say it. I would imagine a lot of people struggle with this. And that's why they're trying to sell something to everyone, which we know is either impossible or very costly. how did you hone in and figure out that this is your most ideal client? Yeah, 100%. I learned very quickly from my father who ran a waste management business for 25 years that got acquired by waste management many, many years ago. He picked a clientele and he serviced them the best way possible.

10:36And he offered multiple services, kind of similar to what we do on a way bigger and different scale. But when we felt that we were getting paid every month And not that it's difficult to get paid from general contractors or from private owners or REITs and pension funds. They're not going to not pay you if you complete the services that you give to them, which is the biggest risk in our industry is not getting paid by the client because we carry so much of the front side load on the transaction between the two. Right. They give us the PO to do the work. We buy all the buy all the equipment. We buy all the material.

11:08We do all the hauling and everything kind of gets brought to the site, you know, before you even see money. All right. So you need to make sure that that client is going to pay you. And for us, we felt that not that there's any issue with contractors and we work with still with contractors, but they're not our core clientele. We felt that working with REITs and Pentecost, not only do they have access to the best buildings, the most budgets, they're spending the money on these additional needs that kind of single owners don't really care to, not that they don't care, but if the funding is not needed to be spent, private owners aren't going to spend it.

11:37So, you know, with capital budgets and maintenance budgets from property managers, it's important to kind of focus in on that niche because we know that they're going to be spending the money and they're investing in their buildings. Whereas private owners and small managers and contractors and biggest stuff, it's different, right? You're not working for the wealthiest of the wealthy or you're working for private owners and it's their money means a lot more to them than not that it doesn't mean it to the property. But you know what I mean? On the grand scale of the transaction, right? Yes, I totally.

12:07there's this like meme or saying it's like, you know, if the client who spends$500 ,000 or$50 ,000, I'll take the client who spends$50 ,000 and they will many times complain less about something than a$500 client. Their money means different when they spend money. I'm curious about sales. When it comes to sales and you're obviously selling, you know, larger ticket services, what do you find, whether it's you, your sales leadership, or your sales team? Is there some process or something that you found has really worked in terms of selling these larger B2B deals? It starts on servicing the client very well on services that you make zero money on.

12:54And not that we don't get revenue, but very low revenue items. There's a big process of being approved with these asset management firms, I'll call them. property managers, REITs, venture funds, whatever, just to be eligible to work for them. There's high barriers to entry. You need a big insurance policy. You need, you know, back office. You need to have the abilities to kind of work on this scale of working for these big companies. So just to get that set up and just to kind of work with them doing anything is a fantastic opportunity. It's how we start. Most of our clients started with snow and small interlock maintenance and landscaping and clean outs of units and stuff that not nobody wants to do, but it's not the glamour stuff and it's not great, but it allows us to service the client phenomenally, give them a phenomenal report, do all the things that we would be doing on these big, large scale projects that we inevitably grew to.

13:44But it started with a small transaction. And that's, I'm sure how most of the people in our industry grow. It's tricky to convince somebody to give you a half a million dollar parking lot paving job, but there's not that much risk for the property manager to pay you$700 to go clean out a unit. If you don't do it right, they'll just call somebody else. But by doing that right, that goes into something else and goes into a back to base demo that goes into building out a unit that goes into doing a patio slab or like there's all kinds of things that it grows through. Right. And then hopefully you get the opportunity to one day bid on bigger stuff.

14:18But our sales process. Yeah. Go ahead. So I think we have a bit of a gap in time. No, no, that was great. I remember my first company was a very, very small commercial cleanup company very very small and we we got a phone number and we got a call from Kohl's department stores to come and clean because it was the same phone number as the previous cleaning company total fluke and we had no idea what the heck to do so we just looked in the phone book at that time and called other cleaning people and outsource made like no money on the deal and eventually we closed the business, but it was a very interesting learning experience.

14:59So when you look back and you meet somebody who says, Alfonso, I'm also a law student. I'm a college student. And I'm realizing I don't think I even want to do what I'm going to school for. What kind of advice would you give to them if they say, I want to be an entrepreneur as well? Yeah, it's hard. I relate to that so well. I got a degree in something that I still use every day. hey, we do our own analysis and we like to hopefully write our own deals one day. It's hard because you do something for so many years, you get this education, you spend so much money on it. It's hard to think that you're not going to practice that thing.

15:35When you realize you need to hire, it's usually already too late. I've been there wasting weeks waiting for decent candidates. If I had used Indeed, I could have hired way faster. So when it comes to hiring, Indeed is all you need. Stop struggling to get your job post seen at other job sites. Indeed Sponsored Jobs help you stand out and hire fast. With Sponsored Jobs your post jumps to the top of the page for your relevant candidates so you can reach the people you want faster and it makes a huge difference. According to Indeed data Sponsored Jobs posted directly on Indeed have 45 % more applications than non-sponsored jobs.

16:10One thing I love about Indeed it makes hiring fast because it puts you right in front of the right people without wasting time. Plus there are no monthly subscriptions, no long-term contracts. You only pay for results. And while I've been talking, 23 hires were made on Indeed worldwide. There's no need to wait any longer. Speed up your hiring right now with Indeed. And listeners of this show will get a$75 sponsored job credit to get your jobs more visibility at Indeed.com slash founders story. Just go to Indeed.com slash founders story right now and support our show by saying you heard about indeed on this podcast indeed.com slash founders story terms and conditions apply hiring indeed is all you need i think inevitably you just have to do what makes you happy and that you think obviously it's bad to think make money but inevitably the end goal is to do the thing that's going to make you the most successful in whatever capacity that that is whether it's you know, personal success or wealth or it's tricky, but it's inevitably a decision that has to be made by yourself and you can't let people swear to you one way or another.

17:18Hey, if you can be happy and make a lot of money and be successful and be satisfied, that seems like a, you know, win-win right there. So as, as you've grown and skilled, what do you find, whether it's work or life, what makes you the most happy? As a deep, that's a loaded question. I wasn't expecting that. It's hard. It's, it's happy is kind of a tricky question, right? because inevitably we want to be happy at the stage that we're at and our growth and our capacity, but inevitably we're always aiming for higher goals and it's hard to be comfortable in the kind of shoes that you're currently in.

17:49And you always see yourself at a way bigger scale, servicing way bigger clients on a way bigger reach of our ass. But I'm very happy with what we're doing and we're very happy with the stage that we're currently at and we hope to continue growing in the same trajectory that we're currently in. Maybe I should use the word content than happy, but yes. Yes, I totally agree. So if you had a crystal ball and you said in five years, this is where I want to be, where would you want to be in five years? Yeah, 100%. We want to continue servicing our same for the clients, service them in the same way that we are on a bigger scale.

18:19We hope to inevitably go this to a national kind of program to service our clients who are national vendors across Canada. And inevitably, hopefully, end up moving south and into bigger and better projects. A lot of people are talking about the quote-unquote boring business. It seems like this is what people want to get into. They want to get into home service or certain types of industries that are not going to be disrupted by technology. How do you see this playing out with the fact that obviously AI, we already know, is already disrupting or about to disrupt many things, but I don't know about how will this industry be disrupted, if it will at all?

19:00almost we're almost in the sad way to kind of say this the ones that are hoping to rush that transition into bringing your technology and analyzing ai and using it to service our clients better our goal is to bring as much technology and which is why we invest in the most modern and advanced equipment you know our pavers are built with kind of the max capacity that they could have to be eligible to service our clients in the way that they are we you know we maximize our reporting. We have all AI cameras built into all of our trucks to help us with surveillance and not only just safety, but we have the ability, especially on our snow routes and on our construction services route, to actually go into our trucks.

19:38And we have an AI camera built in the truck that not only maps productivity and safety, but we have a live feed to be able to see our frontline workers without having to kind of be there every second. So even if we have four jobs, five jobs going across the city, across two different companies, we have the opportunity to see that live through this technology and through AI. I don't think it's a thing that's going to hit our front. It could one day, I'm sure it will, but I think the boring business was definitely the model. It's very different than our first business, which was not a boring business.

20:10You know, everybody wants to be in the food business. It's fun and exciting. And that's what we kind of boiled it down to was, what are we going to do in a business service space that's going to allow us to maximize revenue and have the opportunity to grow? it's not from a fun business unfortunately like it's it's it's dirty it's rough it's it's uh kind of gross business right garbages and poo is not fun to move around paving is not fun like working it's not it's fun in in its own way but it's a very tough thing from people at the outside to say well why would you want to do this you work in a nice office in the city you drive a nice car why would you want to go backwards and it's not backwards it's back to service and it's it's having the ability to scale a business that we know and that we understand and in the best way possible.

20:53Reminds me of that show Dirty Jobs. Yeah, I really liked watching that show. It was very interesting. But Alfonso, yeah, I mean, it seems like, you know, you were ahead of the game. You foresaw this industry, this business. I mean, everyone who I know that does food is pretty miserable. It's very small margins and they work 24-7 and, you know, the next restaurant comes in and they're completely gone. So it seems like you're in a much more stable industry that you have a lot of previous experience and knowledge. But if people would again touch with you, they're super inspired and they want to know more information or maybe they want to, you know, they need your services.

21:34How can they do so? Absolutely. You can visit us on our website, RICICON.com, or you can add me on LinkedIn, shoot me a message, and we'd be happy to chat with anybody interested, especially even legal students that are looking for some guidance. Amazing. There you go. You're going to help a lot of legal students get into a service industry outside of law. They find very interesting. But Alfonso Guerrero, this has been great. Thank you so much for joining us today on Founder's Story.