Identity theft spurs entrepreneur to create kiosk shredders

SEATTLE — Stephen Hershman was serving on the USS Kentucky submarine in 2003 when his identity was stolen, compromising his top-secret security clearance.

Forced out of his communications job, he spent several months straightening out his credit rating. His identity had been stolen by someone who took his utility bills from his trash, and used them to open a post office box.

That’s when Hershman thought of starting a service that provides customers access to an industrial-strength shredder that destroys documents on the spot. Hershman started a do-it-yourself shredding company, The Shred Stop.

“I was so fed up with it that I decided I had to find a better way of doing it,” Hershman said. “But I couldn’t find a way that I liked. I didn’t like the idea of dropping off my paper at a place with drop-off services like UPS. I really wanted to see it destroyed.”

Hershman was a systems-engineering major at the U.S. Naval Academy, so he was confident he could design a shredder’s hardware, but he needed someone to handle the software behind the machine. He proposed his idea to friend Keith Rettig, who studied software design at Old Dominion University in Virginia. Rettig was in.

In 2007, they launched The Shred Stop, which now has 17 kiosks in stores across the Pacific Northwest.

An estimated 8.6 million households in the United States had at least one victim of identity theft in 2010, according to results from the National Crime Victimization Survey, conducted by the federal Bureau of Justice Statistics.

Among those victimized, the crime stats indicate, less than 10 percent found their information had been stolen and used to open a new account, which is the type of identity theft that shredding personal documents can prevent. But those victims experienced major financial loss — nearly $13,200 on average.

Hershman burned through several home shredders before he started looking for a more efficient method. Hershman and Rettig’s original idea was a drive-through shredding service, but they struggled to find an appropriate location.

They came up with a kiosk the size of a vending machine with a simple, user-friendly design. Customers can swipe their credit cards, press the “begin” button and start shredding. The machine can shred 50 sheets of paper at a time. The cost is $2.50 per minute.

The shredded paper is compacted into a big block. At first, Hershman drove to each kiosk daily to dump out the shreds. After a few days he realized that wasn’t going to work. Now he and Rettig pay Iron Mountain, a national shredding company, to remove the waste and recycle it.

Hershman and Rettig take pride that their kiosks are manufactured and assembled in the United States.

“When we started this company we wanted to get as local as possible,” Hershman said.

He said the time customers save by using an industrial-strength shredder makes the service worthwhile.

“Your time is valuable,” Hershman said. “If you have a box of paper to shred, putting it through a home shredder is going to take two hours, and putting it through our kiosk is going to take five minutes.”

Hershman said he and Rettig are still spending a lot to manufacture the kiosks and drive awareness, so they haven’t started turning a profit yet or hiring any employees.

“With kiosk companies, you need a base of at least 100 kiosks before you can really show good profit,” Hershman said.

Although they are targeting small-business owners, Hershman said The Shred Stop was created for anyone who wants to safeguard against identity theft.

“Once you have a family and some assets, you realize you’re at a point in life where you have some things you need to protect,” Hershman said.