Property Room's PJ Bellomo on Police Auctions as a Business

Online auction site celebrated a nice milestone earlier this year when it landed the Chicago Police Department as a client. The CPD was a longtime holdout: It took seven years for the Maryland-based business to convince our boys in blue to hire them to run an auction for the law enforcement agency's forfeited, seized, found and surplus items. These items, according to Property Room "often end up collecting dust in the property rooms of law enforcement agencies and city municipalities."

As one of the oldest police forces in the nation, the CPD was understandably old-school in its approaches and are, of course, trained to be suspicious of folks offering to take away their valuables and sell them on its behalf. But still, somehow, after years of wearing them down, the CPD finally saw the light. To find out more about how this deal finally went down and more about Property Room, I gave President/CEO PJ Bellomo a call.

Can you give our readers a bit of background information on Property Room? How did it get started and what do you guys do?

PJ Bellomo: We like to say we sell stolen goods on the Internet. That's what we do. There's an age-old problem for law enforcement where as a result of cases that have been adjudicated they end up with evidence that for various reasons they can't return to the rightful owner. They might not be able to find the rightful owner, they might have seized it, it might have been stolen and then paid for by insurance company and the insurance companies don't want it back. There are various reasons that these law enforcement agencies end up with this. And so now the public, technically speaking, owns the goods and when the public owns the goods it needs to go up for public auction. The public auction for a police department is a money-losing affair from every angle you look at it. It's an auction format with very little turnout. Prices end up being really small. So, costs are high, revenues are low -- all to follow this mandate for a public auction.

Thirteen years ago, our founder Tom Lane, a former Long Beach, New York detective was a cop who became an entrepreneur. He left the force and founded one company, a furniture company, built it up, sold it, went into international franchising for a number of years. Sold some businesses there. And then came up with this idea. This is his fourth company and he built it up. He knew eBay was popular and various other auction sites were popular in 1999. He got the idea that he knew there was a source of goods in law enforcement. He asked me to help build this company. So he brought me in and within a year promoted me to the CEO position to take it to the next level.

What is the next level?

PJ Bellomo: The shortest answer to that is that he was growing and growing but constantly losing money. The company never had the type of funding, but there are a lot of e-commerce companies that were funded in such a way that the people, from the beginning, believed in scale and so they said, "We don't care whether you make money, we need to see the revenues grow." The investors in Property Room were different and Tommy was losing a little bit of money with this business from the time I walked in. They had never turned a profit. And so my job was to get the company profitable and self-funded. And we did that pretty quickly. That's where we are right now.

How did the partnership with the CPD come about? Did you approach them?

PJ Bellomo: We have a sales force who sells twice. First we try to sell ourselves to law-enforcement agencies to say stop doing it the old-fashioned way, come through us because we can save you money and make you money. Seven years we called on the Chicago Police Department. It took seven years to close that contract. It similarly took about seven years to close Las Vegas. It took about five years to close Atlanta. Four, five years to close New York. So these big departments, it takes a while to sell 'em. In seven years you see several chiefs of police and you make two or three trips a year and call 'em every other month and seven years you win a contact. [Laughs.] There's no magic to that. 

Why were they so reluctant?

PJ Bellomo: The inherent nature both of what we do and the way they're trained, it's just tough to nudge them. If you think of it in their terms, first of all, they're trained in this chain-of-custody approach to evidence. They know when something comes in one person signs off the transfers and when the other person signs it in they put it away. So when it comes to anything that's evidence they're just used to tracking it and keeping it under their control. We show up and say, "Hey, give us your diamonds and your Rolex watches and your laptop computers. Here's our value proposition: We're going to haul away your headaches and send back money." It's our pithy little line but it's true. It's literally what we do. But then there's something terrifying about it. "Wait a minute, we're law enforcement. We're supposed to be suspicious and watch things. That's our nature. And you're just gonna take this stuff away and we're supposed to be confident in that?" Now, we've built proprietary inventory tracking systems and we built a website they can log into. Be that as it may, we've gotten pretty good at overcoming objections from police departments and it's taken a while, but usually it's the rest of a city bureaucracy that's tough to get to change. Not the least of which is something simple like a purchasing department saying, "Okay, I need to put this out for auction. This is an interesting idea but I'm going to put it to bid and the only people who bid on it is Property Room because nobody else does what we do." Then they're like, "Well, wait a second. How do I do that?" When we win our clients, we don't lose them, because we do what we say: We haul away headaches and send back money. 

David Wolinsky is a freelance writer and a lifelong Chicagoan. In addition to currently serving as an interviewer-writer for Adult Swim, he's also a columnist for EGM. He was the Chicago city editor for The Onion A.V. Club where he provided in-depth daily coverage of this city's bustling arts/entertainment scene for half a decade. When not playing video games for work he's thinking of dashing out to Chicago Diner, Pizano's, or Yummy Yummy. His first career aspirations were to be a game-show host.

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