The middle of the worst recession in the United States since the 1930s is probably not what most people would consider an ideal time to start an equipment rental business. But cousins Anthony and John Durante, and partner Chris Jones, didn't get where they are by following conventional wisdom. And it turned out that the middle of the recession — when equipment is available cheap and established companies are downsizing and struggling — is probably the perfect time.
If you're not from New York and you think you've heard of these guys, go back 10 years to RER's April 2000 issue or check RER's website at rermag.com/mag/equipment_kids_right/index.html. RER did a cover-story on a then-20-something group of energetic New York Italians who — if Martin Scorsese decided to make a movie about fast-moving young guys in the rental business — would be the leading actors. Ten years later at 36, Anthony and John are still the real deal, only with more maturity, experience and perspective.
The Durante cousins grew up in the business watching John's father John Sr. run Durante Equipment. Anthony's father Thomas started the business with his brother John in 1969 and after John bought out his shares a few years later, stayed in the business as a crane operator. Anthony and John, along with Anthony's brothers Steven and Tommy, grew up in the business, beginning to work there as teens and taking over management while in their early 20s. Later, after John Durante Sr. and his wife Marie sold to United Rentals in June 2000, Anthony and John worked for United for a while before moving on, while Steven worked within the industry until he started his own company Iron Age Tool this year. Tommy Durante Jr. works for one of the country's largest construction contractors.
After stints at United Rentals, during which Anthony and John did well with the national chain, the cousins felt their destiny lay in alternate ventures and they both went their own ways. Anthony started Gotham Equipment, a dealership and used equipment sales outfit, and John invested in real estate and later went to law school, eventually founding his own law firm.
But the rental bug had bitten deep and never went away.
Flash forward to 2009 and independently John and Anthony began thinking seriously about starting up an equipment rental company together again.
It wasn't the first time they had entertained the idea. They had talked about it in 2003, after Anthony started Gotham. But they didn't follow through.
“It wasn't meant to be,” says Anthony. “We wouldn't have had the location; we wouldn't have known what the hell we were doing. I had so much ego leaving United, I rushed back in, rather than just stepping back and saying, ‘What is the best thing for me to do with my business?’ And the same thing with John, we would have jumped in with so much ego.”
“We would have fallen on our faces,” says John.
In 2009 John was practicing law but longed for something more. Anthony was finding the recession ravaging the plans he had to grow Gotham Equipment. One day John was driving on the expressway towards the Whitestone Bridge and passed by what is now the headquarters of their business, and couldn't stop thinking about getting back. Independently, his cousin Anthony was thinking about enhancing his business with a move to the same location. When they discussed it, the location and business start up seemed to be a no brainer.
“It was ironic,” says John. “I was driving over the bridge and I see this property vacant and I kept thinking ‘Wow, what a great spot, what a great spot,’ and then Anthony called me up out of the blue.”
“I was thinking I can do more than what I was doing but I needed some money,” says Anthony. “John came and sat next to me for a couple of days and I was showing him what I did, and I had a respectable business. We were talking and talking and talking. And it went from theory to all of a sudden we're going to do this and two days later I was asking him ‘OK, are you going to be my partner? Is this for real?’ ”
It was June of last year. Anthony recalls: “John called me a couple of days later and he says ‘remember we talked in Connecticut in 2003?’ And he tells me it was six years later to the day when he asked if I wanted to do something together in the rental business.”
“I don't want to like you!”
So is that the whole story of the origins of Durante Rentals, born in September 2009? Not quite. There is another component to this triangle and his name — not a family member — is Chris Jones.
John got to know Jones in 2006 when the two of them were honored as being among the 40 top business people in Westchester County younger than 40 years old (Anthony won the same award this year). The two men hit it off, discovering their personal and business philosophies were strikingly complementary. Eventually they began talking about going into business together, a prospect that didn't scare Jones who had worked with about 30 start-up companies in varying capacities — helping them raise capital, developing business plans, consulting, even serving as part-time temporary chief financial officer. He had no experience in equipment rental, but was experienced in traveling the tumultuous roads necessary to start a company in the wild and competitive world of New York City business.
Before the triumvirate could be completed, John had to bring Jones and Anthony together. And still the two cousins had differing views on a business model. Anthony had been working in equipment sales and thought of selling a lot of machines on the Internet, minimizing maintenance and rentals. John was more inclined to a full-service rental model.
“Then John kept saying ‘We have to go meet Chris,’ and I'm saying ‘Who's Chris?’” recalls Anthony. “Finally I meet this guy, and, remember, I started my company on my own and did all my own accounting and I'm thinking, ‘I don't need anybody else; we don't need anybody.’ I'm thinking, ‘I don't want to like you!’”
“That's the first thing he said to me,” Jones laughs. “I don't want to like you!”
“Then we sat down and I remember Chris said, ‘Everybody sells, and the one thing you don't do, you don't lie and you don't steal,’ ” Anthony says. “And it's like this guy's got my mantra right there, that's it, that's exactly my principles. I didn't even ask him anything else and John said ‘What do you think?’ I said I like the guy. There is something about him and he says what I believe.”
Inevitably they came together and started Durante Rentals in the middle of the recession, settling in at the small yard that you can't miss if you're driving on the expressway towards the Whitestone Bridge. The best advertising method you can have in the rental business is be right by the side of the highway where they can't pass by without seeing you. It's location, location, location and the Durantes hit a gold mine.
“I read a book about starting your own company and the first thing it said was ‘location, location, location,’ ” says Anthony, who is CEO, while John is president and Jones CFO. “And here we are with 220,000 people a day driving by. So we got the ‘location location location’ covered. The second thing the book said is if you're not willing to put everything on the line, you shouldn't be a business owner.”
The Durante cousins qualify again, putting everything they had into starting the business as did Jones. They set up a trailer to serve as an office in the 10,000-square-foot yard, utilizing the same trailer John Sr. worked out of at the old Durante Equipment, which he sold to the new company for $1. For the Durante cousins, it was doing what they had prepared to do their whole lives. For Jones, at 43 the elder statesman of the ownership group, it was going back to basics. He who once employed a fleet of accountants was now doing basic accounting in his own business, the former Manhattan executive working in a trailer in the Bronx wearing jeans and a polo shirt.
“It's very, very different,” Jones says. “I'm used to wearing a suit and tie every day. I had to go out and buy jeans; I hadn't even bought a pair of jeans in 10 years.”
Jones laughs as he points to his now well-worn jeans. “We're a balance, we all have our strengths and weaknesses, but we try to overlap and cover for each other and that's what makes this business work. We work 12-hour days, but we have a lot of fun and I've never laughed this much at work.”
Another quality that Anthony liked about Jones, and that attracted John as well, was his strong belief that any successful business has to be firmly grounded in customer service. That belief drove John Sr. and always stuck with the Durantes. Anthony recalls his own experience going to buy a car and coming to the dealership in work clothes and being made to wait too long while better-dressed clientele were taken care of quickly. Anthony took his business elsewhere, costing that dealership the sale; and the Durantes and Jones approach their customers with the thought in mind that if somebody walks in the trailer you drop whatever you are doing to take care of that customer immediately. They also believe quickness in getting to the jobsite is one of their major strengths, as is the fact that a customer can call up and talk to an owner immediately. They can make decisions, listen to a customer's complaint, resolve a billing question, and approve credit during a brief telephone conversation.
“As we started the business, I always thought that as we get bigger, I want a hotline so if there's a customer that's unhappy I want to know about it,” says Anthony. “I want it to be on my cell phone, or I want a call to my desk if we have a customer who feels he has an unresolved problem.”
Anthony also believes there are times when it's necessary to refund a customer's money such as the time he paid $6,000 to replace a customer's engine when his own mechanic had made a mistake causing engine failure. “How many people say ‘Oh, we can't give that back!’ once the money is in their pocket, they feel like it's automatically theirs,” Anthony says. “No, it's still negotiable. You're not actually giving back money; you're making the deal right. And that's important. To me, that's paramount. The customer wants integrity. My reputation has to stay around for the next 30 years.”
While not a veteran of the rental business, Jones brought some modern business ideas to Durante Rentals. For example, Jones was contacted by a former collections manager who had worked at Sunbelt Rentals. Her husband had transferred to New York and she was looking to work in rentals. “I set her up to work from home and she does collections a few hours a day and that follow-up has really helped our collections efforts,” he says.
The idea of having a part-timer working remotely was something John admits he never would have allowed in the past. “Never in my wildest dreams,” says John. “But Chris said, ‘I can make it work,’ so I said ‘Go for it.’ It's amazing, you think you know everything!” While the concept was unusual in the traditional hands-on rental business, in Jones' experience, where many of his clients and the accountants he employed worked remotely, it could work. The combination of business models has helped Durante Rentals click.
The Durante business philosophy itself is somewhat of a hybrid, combining aspects of the original Durante Equipment, along with ideas learned at United Rentals and some of the equipment sales concepts from Anthony's Gotham Equipment, as well as the positive influence of another competitor, Robert Linekin of Arpielle Equipment. And Jones considers the result amazing.
“This business has been the fastest to a million dollars in revenue of all the businesses I've been with,” Jones says. “We beat the next best by about a month and a half. That company did executive recruiting for Fortune 500 companies, so their average customer paid them $100,000 to $150,000 versus our average customer, which pays $600. So it's a very different business model, but after a few months, we had to open another customer drawer.” Having just completed a year in business, Durante Rentals has more than 800 customers already, and employs 13 people.
“With start-ups, mostly you spend the first six months just trying to build a customer base,” says Jones. “We were able to hit the ground running. Still you have your challenges as you grow a company especially when banks won't give you credit, even though we all ran successful businesses. Still this is a good time to start a company. Prices are reasonable. But in an asset-heavy business, it's very difficult to get financing. The banks are really tight on their lending; they have so much bad debt on their books.”
“I own a property, and don't have any mortgage on it, and I want to put up that property for the bank, plus the equipment that they're getting UCCs on, so they are almost 200-percent collateralized,” says John. “And we still can't get money. It's amazing how bad things are out there.”
Another development that Jones would never have dreamed possible was opening a second location seven months after opening their doors. The Durantes found a perfect spot in Mount Vernon, N.Y., near a well-trafficked intersection with several contractor supply-related businesses. The yard is larger and the building has 1,500 square feet of office space, so that eventually the second location will serve as the company's office. The Durantes promoted Mike Sanderleaf from within to serve as branch manager.
The Durantes have already zeroed in on a third location, just lacking an infusion of capital to expand further. The Durantes' business model calls for a chain of small branches, as many as 12 to 15, all around the New York metropolitan area. The idea contrasts with the original Durante Equipment, which had one of the largest single facilities in the United States rather than a chain. “We think of it as a mom-and-pop store chain for contractors,” says John.
Each customer is a bonus
Did the Durantes start the business by going to the old company's clientele first? Not one.
“Not before we opened,” says John. “When we planned this for two, three months before opening, we started planning the numbers and we kept repeating, ‘These are the numbers if not one customer came back to us.’ We said from day one, we're going to pretend that not one old customer comes back; we're not going to bank on them. So if each customer comes in the door is a bonus, what would we do if we had nobody? And one by one they came back.”
Anthony says the Durantes have been picking up a couple of old accounts a week and a lot have come because they drove by it on the approach to the toll plaza by the Whitestone Bridge where three highways come together to cross the bridge. The advantage is evident in that Durante is averaging five new customers per day over the past three months.
The Durantes knew from the beginning that their location would be their biggest advantage.
“I would pay what we're paying in rent just to put a sign on this property,” says John. “So basically we got a free building and a free yard along with that.”
“I live 10 miles away, and I walked in to my dry cleaners one day, and the guy goes, ‘Oh you do construction equipment? Is that you over by Whitestone Bridge?’ ” says Anthony. “That's when I knew how good a place this is, when people who have nothing to do with this business say ‘Is that your place?’ It lets you know, the name is out.”
In addition to location recognition, it didn't hurt the Durantes to have a well-known family name. A number of manufacturers, such as the Atlas Copco Group of Companies including Dynapac and Chicago Pneumatic, as well as Koshin Pumps, Solar Technologies, Stone Construction Equipment, IHI Compact Excavator, Bosch, Stihl and E-Z Lift Conveyor (Multilift) extended credit to help the fledgling company get its fleet on the ground.
“Pat De Vitto, of Cardinal Sales [based in Brooklyn], went to bat for us with everybody and got us credit, more credit than we should have had as a startup,” says John. “Mitch Garfinkel of Viking Reps, based in Newark, N.J., as well. They know me based on mine and my dad's history, and they've known Anthony for years, so we were really lucky.”
The Durantes' growth has happened so fast it makes Jones nervous.
“We were down at the ARA show, and I was the only CFO walking around saying ‘please don't give us credit, don't give us credit’ because they were buying everything, and my stomach was in knots,” he laughs. “I was turning green every time, like, oh my God, what are these guys buying? They did give us good terms, but six months comes pretty fast and 90 days sounds forever when you're buying it. But that's the way the entrepreneurial world goes. It's rough and tumble, you've got to be able to handle it.”
With Durante's roadside attraction being its top marketing method, the company has yet to employ an outside sales person, although they employ a telephone marketer, Robert DiDonato, who primarily spends his time doing telephone cold calling to familiarize potential customers with the name. The company has also utilized Internet marketing methods, including used equipment sales on eBay, which Anthony specializes in.
“The other thing we can't stress enough is the relationships Anthony has built with our competitors,” says Jones. “We do business with all our competitors. If we have a customer who comes to us and we don't have the piece of equipment, our relationship is strong enough that we can go to other vendors and re-rent from them or directly recommend them. So that helps us too, we're not turning away customers, we're ready to leverage our competitors' inventories and we'll do the same thing for them. So as tough a market as it is and as competitive as we all are just as individuals, we still see there's a big enough pot out there for everyone.”
The Durantes specialize in general construction rental, small scissors and booms going up to 60 feet. “Dirt, concrete, asphalt,” says Anthony. “In all aspects; no interior equipment. You need a driveway or excavation, or anything done on the house outside, no problem. If you get on the inside, no. Highways, high rise, transit and rail, bridges, small sidewalk guys, patio guys, then you go into stadium work. Not really industrial, any side of dirt, concrete, asphalt, and we're now moving into the lift aspect, you're bringing in anything from art galleries to electricians.”
The Durantes started with a trailer and whatever pieces of used equipment they could get their hands on. The growth has been fast and strong during a time when the industry was diminishing by 30 percent or more. As the company completes a year and looks for funding to propel its growth, there is little doubt Durante Rentals is a company to watch as the rental industry tries to recover from the most virulent recession in anyone's memory.
Anthony uses a baseball analogy as he recalls his rental career starting in 1999 when he sold a lot of generators in advance of the Y2K scare and the company's rentals doubled. “For me, I had 48 homers, 150 RBIs, a .330 average, 20 steals, Triple Crown all the way, you couldn't get a more perfect year for somebody. And then United came in and I was playing for the Yankees, 35 HR, .300, 110 RBIs, you don't have to lead the team, you're on the Yankees. And then when I went to Gotham, and it was like an expansion team, you're on Tampa Bay, 20 HR, 80 RBIs, .290, and every time it seemed like we took two steps forward, something hurt me, or I didn't have the right mix and I get sent three steps back. And I remember every year thinking, ‘This is the year, this is the year’ and after a while, I think, ‘maybe I'm just a 20 HR, 80 RBI guy; maybe that's all I am.’
“But when we put this thing together, every day I feel like I'm 40 Hrs, 120 RBIs, and hitting .330 again.”
Anthony Durante may not win the Triple Crown this year, but there's a good chance Durante Rentals will win the Rookie of the Year award and stay in the major leagues for a long time.