Lessons Learned from the Pop Bottle Business
By Tony Rustad
I was recently reminiscing with Bill Haug, a colleague at UBS Financial Services, about my first experiences with the market. At age 6, I began collecting pop bottles from along Highway 75 which ran through our little Northwest Minnesota town of Humboldt. My early experience collecting and selling pop bottles can best be described as a commodities business serves valuable lessons for anyone in the field of financial services. My most vivid childhood memories were the happy hours spent collecting and selling pop bottles at Mayme's General Store located on Highway 75 in the heart of Humboldt and at Elmer's Standard Station located several blocks to the north. I quickly learned that the pop bottle business was a diversified and complex venture, at least for a six year old. I learned to classify the bottles according to condition.
Mayme Jury's store represented the high end of the business because she was careful in not purchasing bottles that had any flaw. Mayme, who was a kind but practical business person, refused to purchase dirty or chipped bottles, for the full three cents deposit. Mayme formulated clear and understandable guidelines about the condition of the bottles and which brands she would accept. Mayme's method of redeeming bottles insured that she would be reimbursed for every bottle she purchased from the children of the village of Humboldt. Mayme's rule of reason had the virtue of being a bright-line rule easily understandable by every kid living in Humboldt in the 1950s and 1960s.
The bottles that Mayme refused could often be sold to Elmer Maxwell, whose business model was not based upon profit maximization. Elmer Maxwell, the gentle proprietor of the little Standard gas station on the North side of town would purchase pop bottles the pop bottles for two cents and seemed heedless to their condition. He purchased every bottle even if they appeared to be retrieved from a decade of lying in swamp water in a ditch. Elmer's humble gas station was formerly a tar-hut railroad car placed only about fifteen yards in front of his home on Highway 75 near the north side of Humboldt. Elmer's Standard Oil franchise did not have a bathroom, but if you asked he would let you use his outhouse. His station had so little clearance between the pump and his shack that a large car would refuel with great difficulty. Elmer kept his returnable bottles out in the open in haphazardly stacked wooden Coca-Cola crates on the south side of the station hut. Some of those bottles remained there for many years and were obviously never redeemed. I recognized these old bottles from their distinguishing flaws. I recognized a Nesbitt orange bottle by the chips of glass on the rim and a Canadian dry bottle by the cracks on its characteristic thick bottom side. Elmer's business model was built on good will rather than fastidiousness. Only rarely did Elmer discount the appropriate discount because the depreciated market value of a chipped bottle was lower than a clean and perfect bottle.
The bottle market then consisted of two principal buyers with different criteria for cleanliness and condition. My response to this bifurcated pop bottle market was to clean all of the bottles to the best of my ability for the return of earning three cents per bottle. From this early experience with pop bottles, I learned the value of economy and time management in cleaning them. My earliest memory was finding a full ditch with moving water where I can clean the bottles most efficiently. My methodology was to fill the bottle half full of ditch water and then insert my index finger into the opening until it almost formed a plug. When I shook the bottles, it often resulted in the tepid water spraying in my face and over my clothes. I viewed this as a cost of doing business. I attempted to reduce this problem by developing a better technique for cleaning the bottles. Eventually, I can upon the most efficient method which was to plant my thumb squarely over the lip of the bottle and then shake it with all my might. That generally loosed the particles of dirt and unidentified debris from the inside of the bottle. If I shook them enough, and the stains were not obvious, they might pass Mayme's merchantability test and be worth as much as three cents apiece at her grocery store. If the bottles did not clean up well, they went to the North market, Elmer's Station, for two cents. I learned to maximize my profits by understanding the differentiated buyer's market.
The money I earned from pop bottle collecting was usually invested in another market, baseball and football cards. Even as a child I sought "diversification and balance" in my collection keeping players from every team. I enjoyed organizing according to position and appearance and reading and memorizing the statistics. When I was not spending time sorting and playing with the cards, I carried them in my back pocket tied by a rubber band with cover cards and team cards on the outside edges. I learned how to protect my favorite cards (this was the day before cards had value) by holding them out of any floor games. I learned that the cards that slid along the floor better lost their edge after being used several times. I wanted my favorites like Willie Mays, Mickey Mantle, Roger Maris and Hank Aaron to hit the homer, but eventually the harder push would wear out the card and make them less desirable as a trading commodity. For that reason, I benched my favorites and played cards which I did not like very much such as Marv and Faye Thornberry. Willie, Roger, Harmon, Hank and the Mick were used as pinch hitters at appropriate times in the game, but it was Marv and Faye Thornberry that saw the floor action. Later in life I observed that my habit of saving the stars for special occasions was a technique used by major league managers to get the most out of aging stars. The aging stars did not play every day and sometimes only were put in the lineup in the hopes that their special magic would ignite a rally.
Each year in those halcyon days, fall would arrive and the World Series would be settled. Yes, it was usually the Yankees and not my Dodgers who prevailed. After each baseball season, my brother Mike, Jeff and Brian Lofberg, Jay Hoglin, David Boatz, Keith Finney, and other Humboldt friends would put away our baseball cards and began trading, collecting, and playing with our football card collections. We designed and played football slide games with the fall icons, learning how to push the best players through the line for a long run and claimed the great sweeps were impressive touchdown. Jeff presented the most memorable play-by-play, describing the impressive qualities of each player in the most realistic sports terminology like radio announcers he listened to so often. Jeff later became a sports announcer. Like the baseball cards, the best football players often became worn out prematurely because of hard use with our floor games. We often traded to get a back-up card of our favorites. Players like Jim Brown, Jim Taylor, and Paul Hornung were among my favorites. I still have a few of the old classics and the collection grew enormously in the 90's when it became the "family hobby." Today I still own an almost perfect card of Paul Horning of the Green Bay Packers, my favorite football player before our Minnesota Vikings entered the league in the early sixties. I am aware that the card is worth about twenty-five dollars in many card-trading and selling markets. Being the conservative investor that I am, I am going to continue to hold the card until the Pack is back on top. I expect that the Hornung and Taylor cards will rebound in price, which is based upon past empirical research.
As I look back on my pop bottle and card trading days,
I realize how I debited I am to the lessons I learned about the operation
of the market. My present profession requires personal qualities such as
negotiation, sales, and discretion. The lessons I learned from Mayme and
Elmer were to be honest, have clear guidelines and refrain from taking advantage
of those with less knowledge or experience. I carried over these experiences
to my card trading experiences. I remember asking younger kids like Keith
Finney or Guy Getschell whether the deal was good for them as well. In
every trade, I always asked if they were certain that they wanted to trade
a given card or cards for the one I wanted. My professional reputation
as a card trader was at stake. In a small town or in a large city, your
professional reputation is your stock in trade. The most important lesson
I learned was about the morality of the marketplace. Six principles were
learned from the pop bottle business and trading in baseball and football
cards: (1). Work hard to get ahead and don't be afraid to get dirty once
in a while. (2). Save and invest, do not consume all that you earn and
you will get ahead. (3). Develop a keen eye for the best players and trade
old stars for the rookies that appear to be doing well. (4). Too much greed
is not good for business; (5). Be broadly diversified and balanced. Just
as you should not have baseball or football preferences for too many teams,
chose selective sectors of the market based upon research and (6). Just
as you should never discard a baseball or football card of a legend, don't
give up on the market. Never give up, stay in the market, and be cautious
about throwing in the towel during market corrections. Eventually the
market will always be higher. just like the value of Mickey Mantle's rookie
card. The early lessons I learned from collecting pop bottles along the
roadsides near Humboldt and investing in sports cards are striking similarity
to advice I give to clients at UBS where I work as a financial advisor in
Grand Forks, North Dakota. .