Scott Cannon’s office was full of balloons and a big poster-size card last week in honor of his 47th birthday. The chief executive of Irvine-based BigRentz Inc. has a lot more to celebrate than merely another candle.
The company Cannon runs, which began in 2012 and he joined in 2017, will grow to as much as $36 million in sales this year.
After a couple of pending acquisitions that could be finalized and announced in the coming weeks, its annual sales are expected to double to $80 million.
Cannon has an audacious goal to grow sales to $500 million by 2030—possibly even a billion dollars with the right acquisitions.
“I think we’re going to be really big,” Cannon said in his Irvine office next to the Costa Mesa (55) Freeway and under the flight path to John Wayne Airport.
“We have something unique and different that no one else in tech has. We’re really bullish on the future of the company.”
Later this year, it’s planning to be listed on the Nasdaq’s capital markets or an over-the-counter exchange. While Cannon declined to discuss a valuation, the Business Journal estimates the company’s value at more than four times sales, or around $150 million.
The relatively high valuation factors in BigRentz’s positioning as a tech firm rather than a provider of heavy equipment, a boast that is backed up by one key metric: each of its 75 employees is generating almost half a million dollars in annual revenue.
Need a Forklift?
The company calls itself the nation’s biggest online marketplace for contractors to rent construction equipment, similar to how Expedia sells airplane tickets.
BigRentz rents anything from boom lifts (starting at $227 a day) to bulldozers (starting at $599 a day) to an 18-ton carry deck crane (price quote available).
It also provides market data to suppliers, who previously often used word of mouth to determine local needs.
“We simplify it so customers can have a one-stop shop that does everything,” Cannon said.
The company doesn’t own the equipment itself; rather it has a network of 2,500 suppliers, which is an increase from 1,700 a year ago.
The suppliers control almost 9,000 yards full of equipment in 2,000 cities. The company estimated it will provide about 35,000 new rentals this year, up 17% from 30,000 a year ago.
“At its core, BigRentz is akin to being the Google of heavy equipment rental in that it’s a one-stop shop where anybody, anywhere in the U.S. can find the machine they need and rent it,” an article in Equipment World said last year.
“Actually, it’s a bit more convenient than Google. There’s no phone numbers to deal with, no locations to track down. BigRentz does all of the calling and procuring for you.”
KushCo Ties
BigRentz was started by Dallas Imbimbo and Nick Kovacevich, both of whom in 2010 founded Garden Grove’s KushCo Holdings Inc. (OTC: KSHB), which has a $353 million market cap, the highest valuation of any cannabis-related company in Orange County.
While Kovacevich ran KushCo, Imbimbo was the CEO of BigRentz. After fast-pace growth in its first few years, BigRentz ran into problems. In 2017, they brought in Cannon as president and he became CEO a few months later.
Imbimbo and Kovacevich remain on the company’s board; Dallas’ wife, Neda Imbimbo, is chief financial officer.
Cannon previously took over a troubled transportation and logistics provider called MNX Inc., where he eventually tripled the revenue. Cannon, who had a sizeable “sweat equity stake,” sold the company in 2012 to private equity firm the Riverside Company.
Due to a noncompete clause and a health issue (see related story, this page), he took a three-year break. Then Imbimbo came calling.
“He sold me on the business and got me to come out of retirement,” Cannon said.
The Moat
Silicon Valley has tried to enter this market with companies such as Getable. However, the heavily fragmented industry is “tech adverse,” Cannon said.
The top 10 rental companies represent about 40% of the market with thousands of mom and pop rental sites, he said.
“It’s a difficult prospect to gather this entire network and put it together, which is why it’s never been done before us,” Cannon said. “We’re basically the sales and marketing arm of small rental companies. We bring opportunities to them that they otherwise couldn’t get.” BigRentz probably covers about 60% to 70% of the U.S. market. It’s planning joint ventures in Japan and Australia, as well as expanding into Canada.
“What we’re doing here is resonating around the world. We’re looking at 20 startups that look like us,” he said.
‘Little Bit of Art’
The company’s website, which has six full-time software engineers writing code, has sophisticated pricing data that enables prices to change in response to demand. The company can track details like conversion rates and the growth rate of bookings.
During a tour of BigRentz’s office last week, large monitors hanging on walls give real-time information.
“For example, that screen tells you there are 42 people on the website, where they are located, what section of the website they are looking at and we track them to the checkout cart,” Cannon said. “We go back later to see what they liked and didn’t like and make modifications to the website.”
“It’s more science and a little bit of art.”
About 95% of the transactions are done without staff help. If a customer has questions, BigRentz’ call center is available from 5 a.m. to 5 p.m. weekdays with extra off-hours support for larger clients.
The office has a tech-like kitchen that provides Ping-Pong tables, sofas and beer kegs on certain days. It also has Nerf gun competitions.
“We do a lot of fun activities,” Cannon said. “We like to keep everyone engaged in the building to be more productive and work harder.” The company has been recognized in 2015 and 2019 by the Business Journal as one of the Best Places to Work and was a Business Journal Civic 50 honoree last year.
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The company is breakeven now and once it reaches its expansion potential, its profit margin should top 10%, Cannon said.
The company has about 170 shareholders, including Cannon. He’s had plenty of prior experience with private equity and he’s aiming to have the shareholders keep as much as they can, referring to dilution that can occur with too many outside investors.
Private equity firms often come knocking, none of which owns more than 25% of the company, he said. Its investor relations page lists one private equity investor as St. Cloud Capital LLC, a Los Angeles-based private investment firm that provides growth capital to the lower middle market throughout the U.S.
Still, some dilution will occur as it’s in the process of raising capital in a private placement and issuing shares that will allow it to fund acquisitions that could be announced soon.
“Things are really happening—next year will be very successful.”
