Richard Schaps sold his outdoor-advertising company, Van Wagner, for $170 million. On Tuesday, he passed out millions of dollars to his people--and then started another outdoor-advertising company called Van Wagner.
As told to Stephanie Clifford
It makes sense that Richard Schaps's first job was as a New York City cabbie. The Brooklyn-born Schaps has the grand tales, Runyonesque patois, and rough accent that mark him as from the streets of New York (rather, "Nuh Yawhk"). Today, from Schaps's office high above those streets, he doesn't see the buildings and landmarks that make up his native city; he sees spaces for advertisements. In 1971 he quit driving a taxi and started running a billboard company, first called Ward and then Van Wagner. Since then he's lured advertisers back to a grimy Times Square and put up ads in locales from L.A. to London. He can even look to the sky and see his company's ads, in skywriting. Schaps, 59, actually sold Van Wagner in 1997, but he started another business the next day--also called Van Wagner. The second incarnation earned $250 million last year.
My family was a manufacturer of men's suits here in New York. My grandfather was an immigrant, a tailor, and opened a shop. I always thought I would go into that business, but I knew very early that it wasn't a great industry to be in. And I started driving a taxicab, looking for other opportunities, in 1970.
I had a third cousin who was 19 years older than me. He'd bought a small billboard company called Van Wagner five years earlier. So you go to the guy that owns the building, and you give him x amount of dollars for permission to put up a sign, and you charge y. I could do that, sounds like a good idea to me. So I borrowed $25,000 from my father and bought a business called Ward. I owned 50 percent; I gave my cousin and his brothers the other half of the business for free because they were going to teach me the business. I was so successful that in two or three years I ended up buying out the brothers, and we merged Ward and Van Wagner.
At first we had one billboard; everything else was a painted wall that I would get $60 a month for. Then I drove around a lot and found locations. I put up my first billboard on the Brooklyn-Battery Tunnel. In 1971, I was selling it for $2,500 a month. Now it makes maybe $25,000 a month. Great.
The trick in the outdoor advertising business is to find the zoning and regulations where you can build a sign. We found things like at Herald Square--that's where Macy's is, the Macy's Thanksgiving Day Parade, and so forth--there was a whole building in one zone where you couldn't put a sign up at all. But we found a corner that was in a different zone, put a sign up, and sold it for almost a million dollars a year.
In 1979, it was terrible in Times Square. There was a gentleman named Douglas Leigh--he made the Camel sign with the famous smoke rings--who had 14 signs in Times Square. By the late '70s, 12 of the 14 signs were vacant. He went to TDI, Gannett, ArtkraftStrauss, and nobody wanted to do it. I bought those 14 signs. The biggest user of outdoor advertising in America at that time was Philip Morris. They had the Marlboro Man all over the place. They said, "Are you crazy? We'd never buy in Times Square. It's got pimps and prostitutes." We said, "They don't smoke cigarettes?!" We could not get an American advertiser to buy Times Square.
I knew they were using neon signage all over Japan, and I went to companies there. In 1979, the average American had never heard of Toshiba (OTC:TOSBF), Aiwa, TDK (NYSE:TDK). Within three years they had. They were planting a flag, putting up a big neon sign in Times Square and saying, we're here, on U.S. soil. That's the way that outdoor advertising works. I'm not gonna tell you how soft Charmin is with outdoor advertising. It's brand building.
There were about 35 signs in Times Square in 1980. There are like 250 now. They're getting $2.5 million a year for a billboard. That's the most expensive real estate in the world. It's the world's largest living museum. It's the only place in the world you hear, "Honey, move over. I want to get the Coca-Cola (NYSE:KO)." They're taking pictures of advertising.
I sold that business 10 years ago, in 1997, to Outdoor Systems. I was very careful about my noncompete and made it site-specific, so I was able to build new, but what I sold them I couldn't go after for seven years. They never really expected me to be back in business. They figured, hey, give it to the guy, he'll go play golf. That was their mistake. They'd never seen me play golf.
I sold it for $170 million. I gave my top people millions of dollars. I even went back to people, secretaries, that had been with me for 15 or 20 years and retired, and gave them money. I didn't cure cancer--I mean, I put up billboards.
I had sold my business on, you know, Monday. Tuesday, I'm back in business with the name Van Wagner, the same address, the same telephone number. So people show up, and we don't have any billboards. We don't have anything to sell. In London I saw a space on Piccadilly Circus, and I said, "I'm gonna get that." The landlord said, "Who the hell is Van Wagner?" So I said, "Look, I'm gonna send over two roundtrip tickets on the Concorde. I want you to come to New York, and I want you to see what we've done in Times Square." They flew over, we walked to Times Square, and they said, okay, we'll take your half-million dollars a year. And we went out and sold the sign for a million three.
We recently bought an aerial advertising business. We have about 40 planes. The next biggest competitor probably has three. Our competitors are really Pete the pilot that's pulling a volleyball net with letters on it that say, "Margaritas: $2.99, Girls drink free." We installed GPS in all of them so we can prove to our advertisers where we're flying.
There will always be the fear of how ugly things will become. I got an ad on my coffee cup, I got an ad on the plastic bag that returns my dry cleaning, I got an ad on my Chinese food takeout container. That's pretty cute. But that's what it is, cute. Someone wanted to sell me a business with advertisements on the ski lift. I said no, I'm skiing, please. It doesn't belong there. There are certain places outdoor advertising doesn't belong.
We have all of our own crews. Our competitors hire an outside contractor. You would look at Van Wagner billboards and say, "Oh geez, these are beautiful." And you'd look at some of our competitors, and you'd see their shirttail hanging out. We display a beautiful piece of art, and we pay attention to the frame. Like when there's a safety rail at the bottom, when the lights come up, you've got this beautiful ad and there's a shadow. It would just kill me to see an ad that someone is paying $40,000 a month for and see shadows on it, so our safety rails are retractable.
When I sold the business and started again I said to people, "Let's make a billion-dollar business." "A billion-dollar what? Sales, marketing, capital?" I said, "A billion of anything, okay? Aim for a billion, and we'll worry about that next." Ten years ago I had no signs and now I'm up to 750 signs. We're doing hundreds of millions of dollars in sales when we started doing zero. The business is five times the size of the business we sold. My love is my business; building this is truly a love. Which is lucky for me; not a lot of people get the chance to do it twice.