A Startup Just Got $30 Million to Shake Up the Garbage Industry

                                                                                      BY ISSIE LAPOWSKY

 

Millions of businesses are paying billions of dollars in rent on their garbage. They don’t think of it that way, of course, just as the fees they pay trash haulers to pick up their junk. But a significant portion of that money covers the cost of the landfill space itself. And what is a landfill if not a stinky, seething plot of real estate with garbage as the primary tenant?

It’s wasteful, sure. But what’s worse is the fact that this lucrative little arrangement gives the trash haulers who own those landfills very little incentive to recycle when those garbage heaps are practically minting money.

Nate Morris, CEO and co-founder of Rubicon Global, says his company is trying a different approach. It doesn’t own any landfills, or garbage trucks for that matter. Instead, its sole purpose is to help businesses cut their garbage costs and maximize the amount of waste being diverted from landfills. This strategy has earned Rubicon large contracts across the country with the likes of 7-Eleven and Wegman’s, but the company’s national footprint is set to double in the coming months. Today, Rubicon announced it has raised $30 million, which it will use to scale operations across the country and invest in new recycling technology research.

This vote of confidence from investors — including the likes of SalesForce founder and CEO Marc Benioff — is all the more noteworthy, considering what Rubicon is up against. Our nation’s trash is controlled by two multibillion dollar businesses, Waste Management and Republic Services. By any measure at all, Rubicon is tiny in comparison. But it’s gaining ground with businesses by appealing not only to their sense of environmental ethics, but to their bank accounts.

Less Waste, More Money

Founded by Morris and Lane Moore in 2008, Rubicon has created a virtual marketplace where thousands of small, local haulers can bid on portions of huge national contracts. This fosters competition between haulers, driving down the price of service. Rubicon also monitors the ebb and flow of their waste stream to cut down on unnecessary pickups. When Rubicon saves customers money, it takes a cut of those savings. Then, it catalogs the waste and scours its extensive database of recycling opportunities to find ways to resell the often valuable materials that get locked up in that waste. Again, the more Rubicon can sell off, the more it gets paid.

“The disruption of our model really exists around our revenue structure,” Morris says. “We’re making sure all the incentives align for the first time in the waste industry.” In other words, unlike traditional haulers, Rubicon is most successful when it keeps trash out of landfills, not in it.

According to Eric Orts, a professor at the Wharton School of Business and faculty director of the Initiative for Global Environmental Leadership, it’s this realignment that will be crucial to influencing change. “You have an expanding population on the planet using more and more stuff. At some point you can’t follow the old model anymore,” he says. “It’s about how we redefine the whole process so you don’t want to do that anymore.”

Rubicon, which is a member of the Initiative’s corporate advisory board, does just that, Orts says. “It’s a no-brainer, if it costs less to reduce your waste. That’s a business case,” he says.

Garbage R&D

The success of Rubicon’s system depends on a software platform developed by the company. Nicknamed Caesar, the platform is the hub that makes sense of all the data on haulers, clients, and recycling possibilities. When new clients come online, Rubicon analyzes the waste stream—which involves a combination of dumpster diving and sensors—and catalogs it in Caesar. The system then automatically surfaces a list of ways that waste can be recycled in a given geographic region. The more waste in the system, the better Caesar gets at making those connections. Caesar is also where haulers bid on contracts and where clients can monitor their waste data. It’s the data, Morris says, that may be the most valuable resource of all.

“We believe the data we have today will ultimately help us communicate back to customers how to make better choices related to their supply chain,” he says.

Meanwhile, Morris says a large portion of the money it just raised will fund the company’s Rubicon X division, the research and development lab where the company tests new recycling technology. The goal is not just to find the recycling opportunities that exist today, but to create the ones that don’t. Already, Rubicon X is testing things like dumpster mounted cameras that enable the company to monitor the waste stream virtually and sensors that let them know when trash has been picked up.

“This is where we’re going to begin experimenting with new and alternative technologies that many other businesses have shied away from, because of their reliance on landfills,” Morris says. “We’ll experiment with how we can make waste obsolete.”

In many ways, Rubicon is the prototypical tech startup of its time. Like Uber and Airbnb before it, it’s taken technology to a decidedly low-tech industry, with the full-throated belief that the efficiency that technology offers has the power to topple even the most monolithic incumbents. But businesses are more intransigent than consumers, and Orts says it may take years, and if not decades, to change the status quo in the industry. “You don’t get to change the world overnight,” he says. “But you do what you can, and companies will grow up over time if they’ve got good ideas that people will pay for.”

source: wired.com