Laundry 2.0

David and Cheryl Walstad have tackled more than the recession in running a commercial dry cleaning and coin laundry service.

The couple also recently confronted what's potentially an entrepreneur's worst nightmare: a crippling fire.

That happened in April at the coin operated Laundromat they own on Bee Ridge Road, about five miles south of downtown Sarasota. The fire, ruled an accidental electrical blaze, destroyed more than $350,000 in machines and equipment. Although insurance covered the financial loss, it was still a harrowing experience. The Walstads, in fact, worked 20 hours straight, out of a U-Haul trailer in a parking lot, to organize linens and materials that weren't destroyed for the commercial service. Says Dave Walstad: “We have a real sense of community there.”

The husband-wife business team also has a sense of purpose in reopening the facility. Dave Walstad says that should happen by November.

The Walstads' ambitions, however, go beyond merely rebuilding one store after a fire. They've also undertaken an audacious statewide creative disruption mission to change the way consumers do laundry and dry cleaning.

They aim to do that through Lakewood Ranch-based Linen Locker, which is what it sounds like: The company has high-tech, password-protected lockers in multiple locations, both private and public settings, where customers can drop off bags of dirty laundry, alterations, comforters or dry cleaning. A customer can place an order through a smartphone application. Linen Locker crews then pick up the clothes and bring the bags to the Lakewood Ranch facility, just east of Interstate 75 in Sarasota County. The linens are laundered or dry cleaned, put back in the bag and returned to the locker.

“This makes perfect sense,” says Walstad. “We feel like this is a can't-lose opportunity. We are pretty excited to be a part of this.”

A former executive who once oversaw a 1,000-employee division of ProBuild Holdings, a lumber and building material supply firm, Walstad certainly has lofty hopes for the concept. He projects Linen Locker can be a $25 million business with 75 to 100 employees when it's fully up and running in Florida's big three markets: Tampa, Miami and Orlando.

“The (Florida) demographics are a great opportunity,” says Walstad, a Madison, Wis., native. “Florida is really poised for a great comeback.”

The Linen Locker service is already operational in the Sarasota-Bradenton market, including a locker kiosk recently installed at Whitney Beach Plaza on Longboat Key. Future kiosks are planned for several offices buildings, such as Sarasota City Centre in downtown.

The Walstads bought the license and technology to the concept for Florida from San Francisco-based Laundry Locker, the firm that created the idea in 2005. The couple paid $50,000 for the license, and they've spent about $250,000 to prepare to launch the service in the Sarasota-Bradenton market. The Greater Sarasota Chamber of Commerce plans to award Linen Locker a Silver Certificate at an upcoming luncheon for investing $400,000 into the business in 2012 and 2013, according to a release.

The funds, says Walstad, come from savings, stock options and profits from an 80-unit rental condo property the couple owns in Baton Rouge, La. Walstad expects to invest another $2.5 million to $3 million to launch Linen Locker statewide. He will likely seek bank financing for that phase.

All told, it's a sizable investment for a concept that remains unproven in Florida.

The Walstads, though, believe the idea is too ingenious not to work. Plus, counterintuitive ventures are the couple's forte. “The only way I know how to go through a recession,” says Walstad, 51, “is to double down.”

California closet
Walstad read about Laundry Locker in Forbes magazine a few years ago. He was intrigued by it. And he was hooked when he met the founder of the company, Arik Levy, at a trade show in New Orleans earlier this year. Says Walstad: “We knew we had to partner with them and launch our platform in Florida.”  

The feeling was mutual. Laundry Locker executives say they only license the technology to people they believe will do well with the concept. It's not a franchise, and the company can be hyper-selective.

“We want to work with people who think the way we do,” says Laundry Locker Customer Operations Manager Cody Morrison. A San Francisco-based executive, Morison came to town in early October to help the Walstads set up the software. “We want to work with people who will disrupt this antiquated industry.”

The disruption stems from an idea hatched by Levy, who had been a vice president of operations for a consumer electronics company north of San Francisco. Levy, according to the company, has since run Laundry Locker with a straightforward mission: To change the way the world does laundry.

Laundry Locker now serves more than 800 buildings in San Francisco. The firm has also licensed the technology to entrepreneurs in New York City and Detroit, in addition to the Walstads.

The first disruptive alteration was to eliminate a problem the firm says plagues service industries like dry cleaning and laundry. That's inconvenient hours and inconvenient locations.

The next shift was to infuse the concept with technology. That includes features like Closet 2.0, what the company calls “advanced wardrobe management software.” It's a system where every dry cleaning item is photographed and cataloged, so customers can go online and see what's being cleaned and how it's being cleaned. Closet 2.0, part of the system the Walstads acquired, also uses bar codes and precision equipment to make sure all the items get returned to the customer.

The system heavily utilizes emails and texts for when orders have been processed and delivered back to a locker. “Apps and the mobile Web are changing the game in every industry, even dry cleaning,” says Cheryl Walstad, “and technology is a major component to Linen Locker's success strategy.”

'Break loose'
The strategy at All Star Laundry & Dry Cleaning, the Walstads' initial venture into the industry, founded in 2008, was to grow through providing high-end concierge service. That includes the commercial linen service where clients are local hotels, spas and athletic clubs. It also includes the Bee Ridge coin-operated Laundromat destroyed in the fire.

A constant challenge in the business, Dave Walstad has learned, is laundry can be a cost-heavy operation. A large industrial dryer the company has, for instance, costs $25,000. Energy costs are another a big expense.

The timing of opening All Star was also risky, in retrospect. “We launched our company in the face of the recession,” Walstad says. “Looking back it was kind of scary.”

And while he's excited about the Linen Locker possibilities, he nonetheless carries a dose of fear into that venture. There are a lot of potential pitfalls, he realizes, in trying something new on such a large scale.

Walstad's biggest up-at-night worry, actually, isn't so much one issue, but every issue. He constantly finds himself awake at 2 a.m., writing something down about something.

“It all stops with you,” says Walstad. “You get to celebrate the successes and victories when you're an entrepreneur, but when all hell breaks loose it's all on you.”

Louisiana Purchase
Dave Walstad sought a spot for his stock options in 2007, when he left his corporate job with ProBuild Holdings, a $3.6 billion Fidelity Capital subsidiary.

He chose real estate. Walstad and his wife, Cheryl Walstad, looked for multifamily complexes all over the country, from Alabama to Oklahoma. They found three viable options in Baton Rouge, La. The opportunity, says Walstad, was even better because in 2007 real estate investors could capitalize on a 50% post-Hurricane Katrina federal tax credit on certain building purchases in Louisiana.

The couple ultimately acquired Summer Grove Condominiums, an 80-unit rental complex in Baton Rouge, the Louisiana state capital. The complex is a mix of studio, one-bedroom and two-bedroom apartments that range in size from 500 square feet to 800 square feet.

The Walstads paid $4 million for the property, through a combination of the stock options and bank financing. The investment has been a success, and some of the profits, says Walstad, have gone toward Linen Locker, a new laundry delivery service that recently debuted in the Sarasota-Bradenton market.

The couple is involved in the daily operations of the complex. Dave Walstad travels to Baton Rouge at least six times a year, he says, and the Walstads are regularly involved in marketing and rental price adjustments. The couple is also considering adding 20 units to the complex and developing another project on empty adjacent lots. “It's done well for us,” says Walstad. “It has been a good investment.”

Linen Locker from Amanda Heisey on Vimeo.