They're making money off that old Mac

February 28, 2020

The torrent of new iPads, iPhones and MacBook Pros coming from Apple every couple of years spurs a rush to upgrade by the technology company’s customers. But what about the old equipment being replaced?

That’s a question that has preoccupied Scott Pauga for the past five years. He has built an up-and-coming recycler of tech devices called Second Life Mac, based in Skokie, on the notion that most Apple products have plenty of life left by the time their original owners are ready to trade up. Second Life Mac has come to occupy a profitable niche in buying old products, particularly iPads and MacBooks, as they are cashiered by public and private schools ready to move on to a fresh generation.

What Second Life has found is that a MacBook Pro after as long as five or six years is likely to retain one-third of its original value when resold on various markets ranging from Craigslist and eBay to Amazon. It’s a slippery process—wait too long, and the Apple value can sink closer to zero. Try to recycle a Microsoft-based product the same age from Hewlett-Packard, and you’re probably out of luck. HP’s stuff carries cheaper upfront costs, yet rarely holds value for long.

“We’ve made a business out of gaining knowledge of the secondary market,” says Pauga, CEO. “We try to make school districts understand that a Chromebook may cost $200 new versus $300 for a MacBook, but in three years the Chrome product will be worth zero and the Apple will still be worth $150. We can take advantage of that.”

Pauga, 31, grew up in Willowbrook and prepped at Hinsdale Central before starring in the high jump at Clemson University (his best leap was 6 feet, 9 inches) and studying business management (he left a few credits short of graduation). At age 23 he devised an online training program in vertical jumping for athletes before taking up a friend’s offer in late 2014 to invest in nearly two dozen Mac computers built in 2008 ready for the trash heap. Pauga advertised them individually online and within a few days, working out of his apartment, had resold all of them at a tidy profit.

In its first year, 2015, Second Life Mac grossed $2 million in sales, rising to $10 million in its second year when Pauga, who owns 100 percent of the firm, started hiring staff. Today there are 55 employees, some of them former Apple salespeople, and Crain’s estimates revenue is well north of $25 million. The firm hopes to reach 1,000 school districts around the U.S. this year.

Second Life concentrates solely on the education market, which has become remarkably diligent in replacing aging devices, though it may branch out to corporate clients later this year, according to Pauga. Clients include Barrington School District 220, which has 9,100 students and 12,000 devices spread among a dozen schools. The district has spent the past year replacing its entire inventory, disposing of most of it through Second Life. “The iPad is our go-to device for all students now,” says Russell Vander Mey, Barrington’s director of technology services. “We’re finding that iPads that cost $300 or so have a residual value today of $60 to $90. That’s a big bonus for us—we take that money and use it to help finance our upgrade to the new generation of iPads.”

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