From Wrecks to Riches : ‘I Only Rent to Nice People,’ Says the Founder of Rent-A-Wreck. : A Portrait of an Uncommon Entrepreneur.

It’s 4 a.m. and he’s leaving for work. His uniform consists of faded jeans, sneakers with red socks, a black V-neck T-shirt, a Levi’s jacket, a black baseball cap. And the finishing touch: a pair of shades tinted the color of red wine. He owns two Cadillac limousines but prefers to drive to work in a 15-year-old Chevy pickup. Although he sits on the board of directors of the sixth-largest car rental company in the United States and owns about a fifth of its shares, he says he hates the “corporate mentality.” He despises people who are late, people who never pick up a check at lunch, people who don’t keep their word. Most of all, he won’t tolerate people who hassle.

Would you rent a used car from this man?

Thousands of people do. Lots more would, if only he’d let them. Despite his intensely entrepreneurial spirit, Dave Schwartz turns away almost as many new customers in a day as he accepts, and not because they lack the money. Besides millionaires, he has rejected celebrities--he once refused one of the leading comedians on “Saturday Night Live.” “I only rent to nice people,” he says.

Schwartz is the offbeat, enigmatic founder of Rent-A-Wreck, a small company that struck it big by renting used cars. His customers are people who want to save a buck (Rent-A-Wreck charges $21.95 a day for newer cars, half of what some rental car companies charge, and only $14.95 a day for older cars), who like the nostalgia of old cars or who, in Schwartz’s thinking, “are not hung up on the automobile as a status symbol.”

Status--or rather the lack thereof that his cars convey on their drivers--has made Schwartz rich (his Rent-A-Wreck of America shares alone are worth about $600,000) and his business famous. With the money he’s made renting secondhand cars he has built a mini-empire in real estate: houses, lots, commercial buildings, storage facilities. He appeared on the Phil Donahue show, and was written up in Time, The Wall Street Journal and The New York Times. A book on successful entrepreneurs contains an entire chapter about him.

Schwartz’s business philosophy is as unorthodox as his on-the-job attire. He espouses an amalgam of the Puritan work ethic, Japanese worship of quality and a value system embracing both capitalism and anti-materialism. In other words, he believes in working hard, giving the best service and making money but not flaunting it. In fact, nearly everything about Dave Schwartz belies the conventional notions of success.

His office on the lot at West Pico Boulevard and Centinela has the decor of an abandoned baggage car. Old tires and gas cans lie piled outside. Creaking steps, peeling paint, light peeping through holes in the floorboards of a makeshift porch--from the outside, it looks like a tar-paper shack.

Inside, more of the same--exposed rafters, metal file cabinets, jumbles of boxes stuffed with auto registrations, smog certificates and rental agreements. Schwartz’s office, which he shares with half a dozen employees, contains a huge black dreadnought of a desk with the message “Ron Sucks Tires” carved in its top. The only sign of modern office trapping is a copying machine beneath a Richard Nixon (“Would you buy a used car from this man?”) poster.

Schwartz shuns newness and technology. He’s into things that are practical, things that work . “Our dealer in Cherry Hill, New Jersey, went from being vice president of marketing at Hertz to an office with one black phone,” he says proudly.

He does make exceptions, of course: There’s the copying machine, he carries a beeper on his hip, and car telephones intrigue him. Aside from that, the automobile, which Schwartz claims he hates (“that’s why I rent them”), and the telephone are the only modern tools he depends on.

He is at his best while manipulating his gray, push-button speaker-phone in the predawn hours, trading calls with the East Coast. When he begins his morning calls, his office, with no insulation or heat, feels like the inside of a pup tent in the mountains. The first call is to a Mr. Grable in New York.

“Where is your office? When are you coming out? In mid-February?” Schwartz gives both the daily and weekly rates, new and used.

GRABLE: How used is used?

SCHWARTZ: An older car. It will look fair and run perfect.

GRABLE: What if I break down in the Imperial Valley?

SCHWARTZ: Where is the Imperial Valley?

GRABLE: (Pause.) Where is the Imperial Valley?

SCHWARTZ: Yeah, where is it? I never heard of it.

GRABLE: You never heard of . . . ? Well, it’s easy to find. You drive out past Indio, Palm Springs, the Salton Sea--that way. It’s out past there.

SCHWARTZ: We have a location in Palm Springs. We can pick you up at the airport. There’s a $10 charge for that service.

GRABLE: What if I break down in the Imperial Valley?

SCHWARTZ: The last time we had a breakdown was in 1948.

Schwartz was selling used cars when he got the idea for his business, in 1970. A woman bought an old clunker from him and it promptly broke down. He towed her in. She said all she really needed was a car for a few months, and would he rent her one? At the end of three months he got the car back, along with $225.

“A light went on in my head,” he says.

Next came the oh-so-successful name. “One day an actor-producer friend of mine said, ‘Why don’t you call it Rent-A-Wreck?’ But I thought, Who in the world would ever rent a car from me if I put up a sign like that?

“Finally, I remember, it was a hot Friday afternoon. Things were going real slow. I was at a low point. The business wasn’t going anywhere. I called the sign painter and had him change the sign over the weekend. First thing Monday morning, CBS News called. They wanted a story. Right away, I knew I had something.”

In the early days, some of the cars lived up to their billing. On one occasion a stolen Rent-A-Wreck car was recovered by police. “The police report listed the car as wrecked,” Schwartz says. “We sent our tow truck over, and when the car came back, it was in the same condition as when we rented it.”

Today, the bulk of the rolling stock consists of clean, well-maintained, late-model cars that are anything but junkers. Most Rent-A-Wreck dealers, in fact, now offer new cars, too, to attract more business customers.

Schwartz’s first customer shows up around 7 a.m.--a young man just off a People Express flight from New York. In five minutes Schwartz has him in a smooth runner, a clean 1972 Olds Cutlass with only 28,000 miles. When his right-hand man arrives, Schwartz heads for breakfast at John O’Groat’s, where he wolfs a bowl of oatmeal, half a melon and a large glass of grapefruit juice. He’s back on the lot before the rest of the employees begin arriving at 8. But he doesn’t really hit his stride--”my rhythm,” as he puts it--until about mid-morning.

The deal about who gets in and who gets stiffed is simple. “Nice” customers--as defined by Schwartz, people who are friendly and easygoing--qualify. Customers who are not “nice”--i.e., those who nit-pick, are overly aggressive or who try to put one over on Schwartz--get the thumbs down.

One telephone caller, for instance, elicits an immediate eye-roll and a shrug.

“How are you, Peter?” Schwartz says.

He is quiet, listening to the answer.

“I’m afraid I can’t help you right now. All our cars are out for at least three days.”

Schwartz shrugs again.

“Tell you what, why don’t you try Enterprise? They’re cheaper than we are.”

More silence, then: “If I had a car, Peter, I’d give it to you free.”

He hangs up. “That guy’s a multimillionaire, but I just can’t rent to him. He’s a grinder. He’s not worth the hassle. So I let him down easy. If I rented a car to a guy like that, he’d neutralize my whole day.”

In Schwartz- spiel , someone who is not nice is a “grinder.” To separate the nice folks from the grinders over the telephone, Schwartz sizes them up by firing a battery of questions at them in a classic Jack Webb monotone:

“Dave Rent-A-Wreck.

“Do you own a car now?

“Are you over 25 years old?

“Do you have a major credit card? Valid driver’s license?

“Where are you now? At the airport?

“How long are you going to be out here? Where will you be staying?

“OK, I can get you a pink Mustang convertible with an

automatic top.”

Once described as a “Jewish Steve McQueen,” Schwartz stands not quite six feet tall. Slightly built and with an inchoate paunch, he looks good for his 50 years. He roams from office to lot and back, an incessant peripa tetic, checking cars, greeting customers and answering telephones. He is mostly bald, save for a few remnants of curly reddish hair poking above the horizons of his temples. His eyes may be baggy from too much work and too little sleep (“three hours a night is all I need”).

Business-wise, Schwartz says he hasn’t changed since he was a kid. “I was an entrepreneur when I was 10. Other kids had newspaper routes. I worked in a car wash. I’ve always gotten satisfaction from working hard.”

As a teen-ager, he tried to sell a batch of imported fishing rods to Sears. “They were unbreakable rods made out of some kind of indestructible plastic. I paid $1.25 per rod. I told the Sears guy, ‘Go ahead, bend it.’ He did. He bent it back like a horseshoe until it broke. They offered me 90 cents apiece for them.”

He never worked a regular job while he was attending UCLA. Instead, he bought cars from his friends and sold them for a profit, making $300 to $400 per month. He left college to go into business for himself. “I borrowed some money from my mother to start a used-car lot. I did everything wrong. After a year I was $75,000 in debt.”

Once Schwartz needed a loan. Thinking it was the way such things were done, he put on a suit and tie and went to the bank. They turned him down. “I was nervous. I wasn’t fluid. So I went to another bank. But that time I went like this,” he says, holding his V-neck shirt and grinning at his jeans and sneakers. He got the loan.

His car-rental business prospered, largely by attracting a regular coterie of show business types--actors, producers, film makers and network kingpins. His customers have included Richard Gere, Dan Aykroyd and Ali MacGraw, to name only a few. His fleet of 40-plus convertible Mustangs, said to be the largest collection anywhere, starred with Warren Beatty in “Shampoo.”

Schwartz’s skills at casting and matchmaking are legend. He talked Henry Fonda, who occasionally rented a pickup from Rent-A-Wreck, into a rare appearance in a TV series. In another case, Schwartz got a film director to listen to several messages a customer had left on his answering machine. The director liked the voice. The actress, Brooke Adams, got the starring role opposite Sam Shepard in “Days of Heaven.” Actress Rachel Ward met actor and husband-to-be Brian Brown on the lot.

His lot, in fact, is such a popular gathering place that it has been called a salon for show business people. Schwartz likes to think of it as a sort of Ellis Island of Los Angeles. “This is the first place people come when they get in the city,” says Schwartz, who met his wife, June, by renting her a car. “They call here from the airport and we pick them up in one of our limousines. For some people, I’m the first person they meet in L.A.”

Schwartz’s big break came in 1977 when he teamed with Geoffrey Nathanson, a Palm Springs cable-TV entrepreneur. The two put up $2,500 apiece to start franchising the Rent-A-Wreck formula. Schwartz contributed the name, the idea and his on-the-lot experience; Nathanson, who became president and chief executive officer, sold the franchises. (He recently announced plans to retire, to pursue other entrepreneurial interests.) Today Rent-A-Wreck of America, which went public last year, licenses more than 300 franchises, with almost 10,000 cars on the road and revenues of more than $40 million.

Somewhat nonplussed by it all, Schwartz continues to labor 14 hours a day at the original Rent-A-Wreck, which he operates himself, separately from the franchises. Clearly, what drives him is something other than money. “He works, but not because he has to,” says Howard Kirmsse, the former Hertz executive who now operates a 110-car Rent-A-Wreck in New Jersey. “He’s there every morning renting cars because he likes it. It’s his baby. He may be behind the scenes as far as the (national) corporation goes, but he is the one who makes it go. Dave Schwartz is the Colonel Sanders of the used rent-a-car world.”

Schwartz lives on the action. “I’m addicted to it. I like the everyday rhythm of the lot, the people, the deals. Buying and selling cars. Renting cars. It’s good because it keeps you sharp. You’re always making decisions. No one thing becomes too important. You can’t take any of it too seriously.

“What’s money, anyway? Or houses, or property? You can’t take any of it with you. We’re all going to be dead one day. I don’t take any of it seriously. It’s all a game.”

Before a late lunch at Duke’s Tropicana, he stops to look at a house for sale. The property, near the Beverly Center, is a badly run-down rental unit for which the owner is asking $160,000. Schwartz tells the agent he’ll call. What he doesn’t tell her is that he already owns a house a couple of doors down on the same street. The thought of having a second property nearby excites him. “That land will triple in value in five years,” he says. “Ten at the outside. The whole street will be commercial before long.” Later he makes an offer of $145,000.

Back at the lot, Schwartz takes a few calls, then darts out the door after two men driving off in a Capri they’ve rented for a month. He shouts. They stop in the alley; he catches up. When he returns, he’s not even out of breath. “I had to tell them to bring the car in once a week to have it checked out and washed free. See what I mean? Without me around here, those little things wouldn’t get done.”