By Christine Bates – featured in the Jan. 2016 issue
Have you always been an entrepreneur?
I started off at an early age when I was six or seven, riding around with a livestock dealer, Ed Flood, buying and selling cattle. At age sixteen, I worked at Clove Valley Rod & Gun Club, the exclusive hunting preserve. I didn’t make much money, but I learned how to talk to very affluent, educated people, and how to be who you are around them. I still am in contact with a lot of them even today.
In eleventh grade, I dropped out of high school and started a nursery business. In hindsight this was both a terrible and great decision. I was a wild guy who played hard. Thank God I never did drugs. The first month the nursery business did $60,000 in revenues and I learned it was much more efficient to sell large caliper trees wholesale, than to sell potted plants retail. After less than a year, my backers bought me out for $25,000. They gave me cash in a paper bag and it seemed like a fortune to me at the time. I was sure someone was going to rob me.
After that, for two or three years I had a landscaping business with 14 employees catering to mostly estate clientele in Millbrook. I guess I was 18 or 19 then. Somehow I must have always had a knack for turning natural products into paychecks, because next I started buying timber – cutting down trees and sharing the profit with the landowner. Logging during that time was a pretty lucrative business if you were willing to put in the hard work and contend with the dangers that come with it. It gave me the opportunity to do some minor investing, so I started buying and selling houses by the time I was 21 or 22.
I hit the real estate cycle just at the right time. Plus it was a passion and talent of my wife’s, so we were in a position to flip some properties while the market was good. In turn, real estate investments gave me the money to start Stone Resource thirteen years ago. I know it was 2002, because my wife and I started the business the year our son was born.
Actually it was by accident. A couple of clients in Connecticut who had invested in real estate properties with us needed to move rocks off their property. I saw the glimmer of opportunity and started selling boulders for landscape appli cations. Then I went to a local supply yard where they wrote me a check for $50,000 to start buying stone for their business. At that time we were more of a harvest and deliver company, bringing the raw material straight to a header to be palletized and delivering straight to the wholesale and retail yards in the area. I bought our building from my father who had a welding business here in 2007 and dove headlong into the supply yard model at that point.
Could you describe your business?
75% of my business is selling reclaimed stone to install in new residences. The stone is used for sills, benches, paths, pool surrounds, patios, etc. Some of these homes belong to working class folks looking to revamp a backyard, and some are $60 million projects. As houses get smaller, the hardscaping on the outside of the home is growing more and more important.
We definitely have a supply of products that no one else has. We are a product-driven company. Our clients can be very high-end architects who design around our product to masons who use us because we make life easier for them by prefabricating the material before it hits the site. For example, one of our unique finds was 90 blue stone jail cell flooring squares, all cut to size and in whole piece form from Massachusetts. Right now I have stacks of 150 to 175 year old New York City sidewalks piled in a field waiting for the right customer.
The average price paid for one of our jobs is anywhere from $1,000 to $200,000, with a steady supply of larger jobs in the $700,000 to $1,000,000 range. And every day we have masons and contractors stopping by the yard to see what we’ve got to make a project a little more interesting.
Where does this stone come from?
It comes from all over the country. Slate sidewalks from upstate New York towns, old curbs, stones from mansions. I just bought 100,000 square feet of rectangular, granite slabs that came out of a 1930’s mall upstate. We are one of the largest buyers of reclaimed material in the entire Northeast.
What happened to your business during the recession?
The stone business was not so affected by the downturn, but, in 2007, my wife and I owned lots of non-income producing real estate. We downsized immediately and sold our million-dollar house in Sharon, got rid of the Lexus and regrouped.
At the height of the real estate market we had 35 full time employees, but now we have only six with 40 subcontractors. We make more money now because we’re more efficient. Having a hand in several pots all the time makes the success of one of your ventures contingent upon the success of the other. So we are always shifting gears to give ample attention to each thing we do. Out of necessity, we have become master multi-taskers.
Have you had mentors that helped you along the way?
We are lucky to live where we live. There are so many interesting, smart people here. For six or seven years, I would ride around with a man who was a former extremely successful commodities trader, investor, and art collector. On Saturdays we would ride around looking at real estate we might invest in together. I learned so much about business from him, although at the time it may not have felt like a business lesson, I learned a great deal nonetheless. Carmine Luppino, who runs the biggest, best, landscaping masonry business in Westchester, and probably on the entire East Coast, has been very important to me. I wanted his business and his big jobs in Westchester. For seven months, I called him six days a week. He said, “You’re too small, you won’t be able to keep up.” Twelve years ago he said, “You are persistent, arrogant and ignorant, and I’m going to give you a shot.” That first job we did four loads of stone a day to North Salem, six days a week with one truck. I won his respect and we have done business together consistently, and forged a great friendship. I’ve learned more from Carmine than probably any other craftsman I’ve encountered and I value his friendship and mentoring a lot.
Another icon that has been a mentor to me is architect Allan Shope. He was hugely important to me, too, because he is so well respected in his field. He’s knowledgeable on so many subjects and, of course, has been a leader in sustainable architecture, which utilizes reclaimed materials. For example, he showed me how to tell if stones are really old. There’s actually a lot of fraudulent reclaimed rock around. I would say Allan is a teacher by nature, and I am lucky to have won his respect. With that comes a great relationship where you learn something new with every conversation. Plus he’s just a super cool, quirky, awesome guy.
Was it difficult starting your business?
For a person who grew up here and was raised here, it was hard to become successful. I came from nothing. For the first few years my wife and I lived in a third floor apartment in Amenia and ate Ramen noodles. In a small town everyone knows everyone and no one necessarily wants to see anyone do well. There’s a saying: “They want to see you do well, but not better than them.” I have found that to be a matter of truth. Given the climate of growth, or lack thereof, in this area, I fought to take my company south to Westchester where there’s no BS, where people mind their own business, and there’s no bickering. All that’s important is that you do what you say you’re going to do. I think I have established a pretty strong foothold in a fairly competitive field. I’m a little fish in a big sea, but definitely holding my own.
Do you have advice for others starting a business?
I had great advice from a timber buyer early in my career and I pass it along to others. Three things: 1. Do what you say you are going to do. 2. You’re only as good as your partner. 3. If you sell $9 worth of product, $3 should be your cost, $1.50 will go to taxes, $1.50 for your family, and the last $3 goes back into your business.
Recently a young guy asked me about going out on his own. He was making $900 a week working for a plumbing and heating company. I convinced him to start his own business. Now in less than five months he’s making $6,000 a week and he thanks me regularly for giving him that little kick to get going. But, ironically, I think he always had it in him, he just didn’t know it. From someone who has spent their entire adulthood as a business owner, it’s just second nature to encourage people to work for themselves.
Work ethic is extremely important. I’m out of bed by 4am every day. How many of my competitors get up that early? And I set yearly goals. This year it’s to buy and add one more new house to our real estate holdings. Get one more thing done every day, don’t leave it for tomorrow. Do it today. I work a 110-hour week, including weekends.
And karma is important. Every December we give all of our rental tenants a month of reduced rent so they can buy Christmas presents. We have great tenants and treat them kindly.
What’s the hardest part of your business?
Collecting money from a job can be hard. During the recession in 2008 to 2012 we lost over two million dollars to contractors who went out of business. Everything else about my business I love.
Who’s your main competitor?
Our main competition is stone from China that is quarried, not reclaimed. They can sell stone for $18 a square foot, and reclaimed materials in general can be twice as much. But Chinese stones don’t have history. We find that dealing with our competitors usually yields a better business environment for everyone. If we don’t have it, we will send a customer to our competitor and vice versa. The big suppliers buy from us, and we use their services, as well. It makes more sense for us all to cooperate when we can so everyone gets a little piece of the pie.
Can you think of any mistakes you’ve made?
A mistake would be not getting bigger … but not really. You can’t live to work and still have a family. Family is very important to me. My wife and I have been a couple since we were 16. She’s the smart, educated one. We make decisions together. And we have two kids. Every summer we take them and some of their friends out West to herd cattle on a ranch in Montana. It’s important for kids to see the world. If my business were bigger I wouldn’t have time for family. So growing the business when I’ve had the chance might have made me better off in some ways, but then again your kids are only little once.
Are you teaching your children about business?
I think they are naturally learning because it’s always in our conversations. Since they were born, they’ve been hanging around the business, running equipment, and watching. Now our 13-year-old wants to start a business, so we said show us a five-year plan and we’ll invest. He is developing a white tail deer preserve on our farm with a resident herd and is getting ready to allow hunters. Why not? He’s found his passion and has the work ethic of any adult man I know, so he absolutely should give it a go. My daughter is very intellectual. She’s more investment-savvy and made a few thousand dollars this year taking birthday money and investing in show cattle. She’s ten, but if the writing on the wall is clear, she will be a “work smart, not hard” girl which is fine by me, too.
What do you think is happening in the economy right now?
‘m not sure. I’m beginning to feel some bumps. Oil prices at $2 aren’t a good sign. This fall, I sold my Angus cattle because I could see that prices were coming down. But what happens in the economy doesn’t really affect many of my clients. Overall, I think we are coming into a new place with the economy, but I don’t feel like it’s still very stable quite yet. But I’m no economist.
Do you have a plan for the future?
My elbow is starting to hurt, and my shoulder and knees. My wife and I have decided to retire in ten years and we have a written plan to get there. Once the kids are off to college or wherever they may go, I think we will shift gears and try a new adventure.