An Interview with Industry Veteran David Horton
David Horton has spent his entire adult life in the commercial laundry business – selling equipment, brokering businesses and building stores – from California to the East Coast to the Central Plains, with stops in Texas, Chicago and China along the way. Today, Horton – a husband, father and grandfather to 21 – splits his time between a new payment system venture, a self-service laundry he owns in L.A., and traveling the world with his wife, Deechen.
Always seeking new opportunities to grow and never backing down from challenges, Horton’s has truly has been a life well lived – and with no signs of slowing down.
He recently shared his story, as well as his thoughts on the current self-service laundry business, with PlanetLaundry Editor Bob Nieman.
How and when did you get involved in the self-service laundry industry?
After graduating from the University of Minnesota, a friend who had moved to San Francisco convinced me to come out there with him. He said it was heaven compared to Minnesota. And, having lived through my share of tough Midwestern winters, I thought why not. I packed up my car and drove out there.
This was in the mid-1960s. And, at that time, many people were migrating to California from other parts of the country, so it was difficult to find work. However, I eventually landed a position with a large appliance wholesaler, which sold big-name brown goods, including Sony and Amana products. At that time, Speed Queen had just approached this company to become its domestic distributor on the West Coast; and, as an added bonus, Speed Queen asked them if they would be interested in being its commercial laundry equipment distributor as well.
The company’s owners realized that handling Speed Queen’s commercial accounts was much different from what they had been doing, which was selling wholesale to department stores. So, they set up a separate little side company that they called K&B Commercial – and I was hired to be the inside salesperson for that company.
It wasn’t too long before I decided I wanted to get out of that inside job and hit the streets. And that was my first experience in the industry – selling laundry equipment in San Francisco in the mid-’60s.
From that job, Speed Queen essentially hired me away from K&B to become a factory representative for them. I saw it as a good opportunity at that point in my career. My first tour of duty for Speed Queen was on the East Coast. I relocated to Pittsburgh, and covered New York, Pennsylvania and Ohio.
How was the transition to your new role?
During this period, I really began to learn the business. Most of the distributors I worked with were well-established businesses, which also carried drycleaning equipment.
After a couple of years, I felt I had learned all I could and wasn’t accomplishing much. I felt I was just a hand-holder at that point and began to look for a greater challenge. As a result, Speed Queen transferred me to the Midwest, where it had a few distributors that were floundering. The company wanted me to go out there and see if I could help.
I packed up and moved to St. Louis. Out there, my territory included Missouri, Iowa, Nebraska and southern Illinois.
This period was challenging because these distributors were just getting started in the business and struggling. It was a great experience for me to work with them. In fact, I had one distributor in Kansas City who was actually brilliant, and I learned a completely different set of skills from him, including my first experience with building spec stores.
After a couple of years, a few of my distributors tried to coax me into leaving Speed Queen to join their organizations. And, although I found the challenge interesting, I wasn’t all that kicked in with the idea of living in Des Moines, Iowa, or Lincoln, Nebraska. However, it did get me wondering if that shouldn’t be the direction I travel career-wise, as far as getting into the distribution side of the laundry business.
Then, as fate would have it, at an NALCC show – the precursor to today’s Clean Show – I met up with my former employers at K&B Commercial. They told me the wholesale appliance business was going through a change and that all of the strong product lines – like Amana and Sony – had gone factory-direct, leaving them with secondary lines. As a result, they were planning to close up shop.
However, they added that their small Speed Queen commercial laundry distributorship – K&B Commercial – was doing very well. They planned to sell it to one of their employees, and asked me if I would come back and join him. And that’s what I chose to do. It was now the late 1960s, and I was back in the laundry distributorship business in San Francisco; but this time as a 30 percent owner of the company.
At the same time, in southern California, there was a company called Wood-Wickham – and it was the Speed Queen distributor down there. The owners were two guys named Phil Wood and John Wickham. Basically, Wood was a route operator and Wickham was more of the distribution guy. And, like us in northern California, Wood-Wickham was doing a great good job for Speed Queen in southern California.
At K&B, to sell more equipment, we began building speculative laundries in the San Francisco area. Of course, the same thing was occurring simultaneously in southern California as well.
John Wickham had bought out his partner and joined forces with two other guys who had been in the laundry brokerage business – Mort Pollack and Bernie Steinberg.
Pollack and Steinberg had begun building new coin laundries, because there was a huge demand and a low turnover rate. In other words, there were a lot more people who wanted to own stores than there were stores to sell. So, they speculatively leased space in shopping centers, built the stores and offered them for sale.
Wickham had become their equipment supplier for these laundries, and eventually the three men decided to team up and form PWS.
Both K&B and PWS were following the same business plan – to sell more washers and dryers by virtue of the fact that we were building new stores. We were constantly on the lookout for new locations, where we could sign a lease, put together a store and offer it for sale.
Bernie was the guy in charge of that on the PWS side, and he got very aggressive. He eventually decided that southern California wasn’t big enough; he was going to build stores in northern California. Basically, he “invaded” our territory.
Being just as aggressive, I knew I couldn’t let that happen. So, I got in my car, drove down to southern California and essentially did the same thing.
Finally, one day, Mort Pollack called up and said, “Hey, we have to talk. We’re going to kill each other if we don’t stop this. We ought to join forces.”
My partner at K&B was an older gentleman who wasn’t as aggressive as the PWS crew or me. So, rather than merge the two companies, he agreed to let PWS acquire K&B. And, in 1973, that’s what happened. I stayed on in northern California to run that now-PWS office for the next 20 years or so.
During that time, their major focus was the sale of businesses, whether it was existing laundries or new ones. We spent a lot of time looking for locations, as well as for stores that were available to be sold. During the ’70s and ’80s, PWS became one of the largest signers of leased commercial space in the state of California We were building stores at the rate of approximately 50 per year – with about one-third of them in northern California, which was my responsibility. Those were the heydays.
Interestingly, I built what was at that time the most expensive store PWS had ever built and sold. It was about $120,000, while most of the laundries being sold then were in the $60,000 to $80,000 range.
How would you best describe those “early days” of the industry?
During that time, the coin-operated laundry business was pretty much relegated to topload washers lined up along one wall and dryers on another wall.
The profile of the typical operator in those days was a working-class guy who wanted to make an investment. He wasn’t sophisticated enough to get into the stock market and was looking for something where he could work with his hands.
What are the biggest changes in the industry that you’ve noticed since first becoming involved in it?
As the industry grew, so did the competition – and the margins began to shrink. Once this happened, the owners started building the stores bigger and adding different and larger machines, rather than just toploaders and dryers.
When I first got started, Speed Queen made only toploaders, and they bought a product that was a 35-pound washer called a Big Boy. That was it. We offered a topload washer and the Big Boy.
Over the years, I think the sophistication of owners has changed as well. As stores became more expensive, the blue-collar working guy kind of got moved out; he just didn’t have enough cash to get into many of the locations. The investors buying the newer, bigger stores were more sophisticated businesspeople.
Another change, especially on the West Coast, was a move away from an investor mentality. People with money would buy stores, build up the gross to the point where they were worth more than what they paid for it and then sell it.
These types of investors didn’t make a full-time business of the laundry industry. It was a part-time business. In fact, we sold them as “the best part-time business.”
Over the years, you’ve worked in many segments of the laundry industry. What’s been the most enjoyable for you?
Of course, I really liked developing new stores. However, the other thing that was fun – and which I’m going to take some credit for having started – is the distributor trade show.
When I got into the business, the NALCC – which is now the CLA – used to host a trade show at Disneyland every year. All of the distributors would take a booth, and store owners would visit our booth, and then go to the next company and the next and so on. They would shop us all at once, which is great for them but bad for us.
So, I suggested putting on a show in our warehouse, where we could have the customers to ourselves. We started it in San Francisco, before PWS had acquired us.
We pushed all of our products to the edges of the wall. We pulled a boxcar bar up to the side of the warehouse. And we always had a theme – I remember building a volcano in the middle of the showroom and having a spaceship coming out of the ceiling. Nobody spends that kind of money of their shows anymore, but it was worth it in those days because we would get close to 1,000 people on a weekend. It was a lot of work, but a lot of fun. And a lot of equipment was sold.
After building and selling so many laundries, you’re now a store owner yourself. Can you talk about this relatively new venture?
My current store wasn’t my first. The first laundry with which I got involved in the ownership goes back to the pre-PWS days. It was in Carmel, Calif. We built the store and couldn’t sell it, so my partner and I ran it for a couple of years. It turned out to be an extremely successful store and was the only laundry in Carmel for a long time.
Our store now is an unusual one. It’s in the most unlikely location you’d ever want to see. In fact, it’s between West Hollywood and Beverly Hills. Demographically, it would be like building a laundromat along Chicago’s Magnificent Mile. It’s an upscale, gentrified area. The people who live around there are high-income, and probably in their 30s or 40s.
The store had been there for a long time, and it wasn’t very successful. We knew we had to do something different if we wanted to make it profitable. So, we created more of an upscale laundry. I believe we were the first in L.A. to offer free WiFi; we commissioned a major piece of artwork for the walls; and we made the restroom as nice as anything you would find in a fine restaurant. And it worked. People came.
When you chose to open this laundry, you went “against the grain” in many respects, not really following the textbook way of doing things, as far as site location and amenities. Did you ever feel that perhaps you over-invested in this project?
I’ve seen it happen before. You take a store that has a great location or at least the potential to be a great location, and then operate it properly.
One of the things we suffer from most in this industry is that many operators don’t really have a good feel for – or respect for – their clientele. And that shows. Of course, when you do the reverse, that comes through as well.
What is your day-to-day work routine like these days?
I’m in a completely different business now. And to fully explain what I’m doing now, I need to go back to the beginning, when I was working on the East Coast for Speed Queen.
Back then, one of my first assignments was to go to Philadelphia and work with a young distributor salesman who had just been hired and was new to the business. His name was Harvey Gitlin, who eventually became the founder of ESD.
Harvey and I have known each other for more than 40 years. I’ve seen him grow from a salesman into being an extremely successful manufacturer/entrepreneur.
In fact, in 1999, I decided to retire from PWS and went to work for Harvey, where I wound up living in China for a year. At the time, he wanted to expand his operation over there, but he needed to have someone there to oversee the operation. It was an exciting experience.
However, once that project was over, I ended up going back home to California and back to PWS as the sales manager in its southern California office for another 10 years.
But Harvey and I always maintained contact, and when I left PWS a second time, he confided that he always wanted a brick-and-mortar presence on the West Coast, to provide better service and support. Thus, two years ago, we set up a company, which is not owned by EDS but by me. We originally called it ESD West; however, to avoid confusion, that name has been changed to Value Electronic Repairs. And it’s dedicated to the service and support of ESD products on the West Coast.
That’s what I do during the day. I have a great technician who works with me to do repairs. I spend most of my time with Value Electronic Repairs, while my wife, Deechen, is a full-time bookkeeper and also is quite involved in operating the laundry. On Saturdays, we both spend all day at our laundromat.
What are some of the hot-button issues facing laundry owners today?
Out here, we’ve got a red-hot-button issue with water. The general public, as well as laundry owners, are in some denial as to the impact this is going to have if it continues. Everybody is kind of praying for El Nino to come and give us the floods it did years ago, but if it doesn’t, we’re in serious trouble. The whole state is in serious trouble, especially the laundry industry.
Taxes are always an issue. And the price of utilities sort of goes hand in hand with the legislative challenges. There are many communities where the laundry business is pretty much out of business – where the connection fees per machines are cost-prohibitive. And this could lead to the extinction of laundries in those areas. When you have no competition, things don’t grow. It’s competition that makes stores better.
Personally, one of your passions has been traveling. What have you learned from the other cultures you’ve experienced?
My wife and I try to make it to some place in the world for a couple of weeks every year. And, as you broaden your horizons, you tend to view what’s happening at home a little differently. Mainly, you realize that Americans are not as important as we think we are. You see that we’re not necessarily the leader in a lot of cases.
However, with regard to the laundry industry, we are the leader. In all of our travels to Asia, Europe and South America, we didn’t see anything close to what you see in this country – and a lot of that has to do with cultural obstacles.
Do you have a philosophy that guides your decisions in business… and in life?
Stay open-minded. I’ve never been afraid of change. I’m not rutted in tradition. I always think there might be a better way to do something.
What’s the biggest mistake you’ve made in this business?
When I was working in Pittsburgh, I became friends with a guy who was starting a route operation, working out of a garage and putting washers and dryers into apartment buildings. At the time, he asked me to join him. But it didn’t seem nearly as exciting as what I was doing, so I declined. Fast-forward 35 years, and he sold his route for about $100 million.
What keeps you and your wife so active in business?
What else would we do? When people retire, they tend to just sit there and find no purpose to continue living. Besides, we like to spend money and we’re still healthy, so why not keep working?
What’s the key to longevity in this industry?
Because the payoff period on laundries is relatively short, once owners get them paid for, some operators don’t reinvest. They just enjoy the fruits of their labor, and those stores tend to deteriorate. Next, the customers stop coming – and, before long, those owners sell off their businesses.
So, the key to longevity is to not get trapped in that cycle – to continue to reinvest in the store on a regular basis and to always look at it with a critical eye.