[00:01:07] Liz: Hi everyone, welcome to Waste360's Nothing Wasted Podcast. On every episode, we invite the most interesting people in waste recycling and organics to sit down with us and chat candidly about their thoughts, their work, this unique industry and so much more. Thanks for listening and enjoy this episode.
[00:01:34] Liz: Hi everyone, this is Liz Bothwell from Waste360 with Marty Metro, founder, and CEO of Used Cardboard Boxes. Welcome, Marty, and thanks for being on the show today.
[00:01:46] Marty Metro: Hey, Liz. Thanks for having me.
[00:01:48] Liz: Pleasure. I'm sure you've heard this before, but I feel like better to saying this but Marty Metro is a fun name to say. I'm sure your mom knew you were meant to do big things.
[00:01:59] Marty: I don't know, I think, unfortunately, my mother named me Martin, but when I was a child I didn't like Martin because I just thought I was more of a Marty Metro, and people ask me if I'm a DJ or a traffic reporter, and I always say, "No." And then sometimes because of my voice, people ask me if I'm a DJ without even knowing my name. I think I may have been in the wrong industry so if I do this all over again, I think it's going to be a DJ.
[00:02:30] Liz: [laughs] There you go, it's always good to have a back-up plan.
[00:02:33] Marty: Exactly.
[00:02:34] Liz: Marty, please tell us about your background and how you ended up as an eco-entrepreneur.
[00:02:39] Marty: Okay. Well, I'll try to make a very long, painful story shorter. I went to the University of Maryland for undergrad, studied psychology and realized that with an undergrad in psychology there was only so many different restaurants that you can wait tables at, so I went on to get my master's degree in business from the University of Arizona.
Right out of grad school, I got hired by, back then was the largest consulting, I guess, management technology consulting firm in the world, was Andersen Consulting which is now Accenture. I got right into technology, for about eight years was an SAP technology consultant, I learned everything there was to know about Enterprise Software and how it runs big companies. Until the dot-coms came and went and after the dot-coms crashed in around 2000, there was no budget, there were no budgets for big technology projects so I was unemployed in 2000.
I just bought a house and my wife and I were remodeling the house because we'd done well in business and rode the wave of the dot-coms. We were putting in all these expensive things, a big projection TV, a fancy kitchen and all these good things. When we were ready to move in the house, I went to U-Haul to buy boxes, we walked in and asked the guy behind the counter how many boxes we needed to move into our big new house.
He showed us these $4 moving boxes. My wife and I looked at each other and said, "You've got to be kidding me. We're not going to be buying $4 moving boxes just to pack up a house," drove behind a strip mall and picked up a bunch of boxes and that was that. After that process, I said, "If here I am, I have the ability to buy boxes, I'm driving a nice car, can't imagine how many people out there, across the country, don't have that ability and the people that do who would appreciate it."
We set out to build a marketplace for used boxes. That started in 2002 and knock on wood, 10 years later, 15 years later, we now work with many of the largest manufacturers and retailers in the country to do the same thing, but on a much larger scale. Back in 2002, we did it with people moving in and out of their houses, and now we do it with General Mills, it's one of our big clients, McCormick Spice is one of our big clients and Walmart is a big client. We're taking that same exact concept and expanded it, built the technology behind it to be able to expand it.
[00:05:40] Liz: That's great. I have to ask, Marty, I love that you embrace your failures almost like a badge of honor, and I agree that you can learn so much. [chuckles] You can learn so much from the bumps in the road. Can you share with our listeners some of the things that you learned along the way? Because you're very transparent about that and I think you will help a lot of people if you tell a little bit about your challenges, and how you overcame those.
[00:06:06] Marty: Well, I guess you noticed both my failures and my transparency, thank you for noticing that. You're right, I have nothing to hide and this was not an easy process. I guess the best way to describe it was, here I was a successful business executive and consultant, I had all the confidence in the world because I was implementing the most successful software, SAP, at some of the most successful companies in the country.
Then I set out my own, I said, "Well, if I'm doing this with a huge Fortune 500 company. It's got to be easy to run a small business," so I started a small business and I thought, "Well, what do small businesses do? They advertise and publicize." This was before social media. I went out there and I just advertised and publicized, did every interview, like this, that was possible and I got on ABC, NBC, CBS, and CNN, in an entrepreneurial magazine, Forbes magazine, and Inc magazine.
I got into so many publications because back in 2002, 2003, 2004, it wasn't really the environmental movement quite yet, we were ahead of our time and lots of people love the story. While I was getting all this press [unintelligible 00:07:33] I was losing like $30,000 or $50,000 a month because I wasn't focused on the basic fundamentals of business, which is you have to buy something, add value and sell it from afar, or at the very least, do something and sell it for more value than sitting home and doing nothing.
I wasn't doing that, I was getting lots of PR, but I didn't have a business model that worked. I guess the best little examples for visualizing why the business probably didn't work, I advertised all over the country. I had a person in San Diego that had boxes they wanted it to sell, I had a person in New York that wanted to buy the boxes. You can't move a couple of boxes from San Diego to New York, especially used ones, and expect to make any money, you actually lose a lot of money.
We started advertising more, we said, "Well, we advertise more we'll get more people in New York and we'll get more people in San Diego." Then I got to the point where, "Okay, now I have a guy in San Diego that wants boxes and a guy in San Diego that needs boxes, but the guy who wants them, wants large boxes. The guy who needs them, need small boxes."
Even though we advertised, when we spent more and more money we got massive amounts of scale, we still didn't have a business model, we still couldn't sell boxes from one company, to one party to another. Then, Well, we spend more money, and we got people in San Diego that wanted large boxes and in San Diego that had large boxes, finally, we had this opportunity to make our marketplace works and make lots of money.
We lined yet another flaw in our model, which was the guys who had the boxes needed them until Thursday, the guy who wanted the boxes needs them on Tuesday. Now, even if we have the right commodities in the right place, it's also timing. All those flaws made for a very, very bad business model. In 2006, we recreated the business model that didn't rely on all those different things because we built facilities that would store boxes, and sell them when the people needed them. We also changed the model from getting boxes from consumers, which was a nightmare, to getting boxes from big, big factories which is a much smoother process. That was a long answer. [laughs]
[00:10:07] Liz: That makes sense. No, I think it's great because that's what happens. You think sometimes if you throw money at it and you bring the volume in, that you will overcome a lot of obstacles, but I think you know what happens to a lot of small businesses in this country.
[00:10:24] Marty: Yes, it's the most amazing feeling in the world to have a business model, or a unique idea and see yourself in lights. It's such a rewarding feeling to-- The idea that I was- my face, my business, my logo, and my Used Cardboard Boxes' truck was in Entrepreneur magazine, it was a two or three pages article in Entrepreneur magazine, it was the highlight of my life at the time and during that time, I lost $50,000 that year, was losing my investors' money, and the company was going under. It's very much a false sense of excitement when you don't have a business model to support that.
[00:11:08] Liz: It's great that you came back from that, and like you said, we'll talk more about the technology later. But now it really sounds like you've developed many large-scale reuse and resale programs for some of the largest companies in the country. Can you dig a little bit more into that and tell us what a program like that looks like? Because our listeners are very interested in recycling and the waste stream, so any insight you can give on what that looks like would be amazing.
[00:11:35] Marty: Sure. We have a client, he's the largest Spice manufacturer in the world, McCormick Spice, we do a lot of publicizing of this program, but here's a manufacturer, largest spice manufacturer in the world, they make both industrial and consumer packaging spices. But they don't make the bottles and the caps, they make billions and billions of dollars of spices and condiments, but they don't make plastic bottles, they don't make plastic caps.
Some of the companies, like the water bottle companies these days will actually blow mold their own plastic bottles on-site, but most traditional consumer products' companies are buying their packaging, their bottles, their caps, their lids, their tubs, their cups, things that they package their products in. If you have a multi-billion dollar company, like McCormick, you can imagine there is billions of dollars of plastic bottles coming in, and billions of dollars of those famous red McCormick Spice caps coming in, as well all the other little packaging that they use to sell and distribute their spices.
Well, how do billions of plastic bottles get to McCormick? Well, they get them in tractor-trailers, packaged in boxes and the same with the caps, believe it or not, not to geek out on packaging, but the bottles are not made by the same companies that makes the caps, because the bottles are blow-molded and the caps are extruded.
They're different types of manufacturing, so you got tractor-trailers full of boxes full of bottles unloading every day, and you got tractor-trailers full of caps being unloaded every day. Same thing with labels, same thing with other products. What do most large manufacturers do when they unpack their supplies, their bottles, their caps, their lids, their tubs?
Well, not just dig on our industry, but the traditional waste industry has said, "Hey, just unload that stuff, throw it in a dumpster, throw it in the baler, throw it in the compact or just get rid of it and don't worry about. I'll take that stuff away." That's what our industry's been doing for many years, is make it easy on multi-billion dollar companies to get rid of their trash, and the multi-billion dollar companies are very happy because they get rid of it.
We came along, I said, "Wait a minute, not like you're a restaurant, not like you're a retail store where you get tons of different things, food, different products, and different items. You're unpacking the same exact thousand caps every day all day long, and yet you're only getting the recycling for cardboard." So we came along and put together a program to buy all of the bottles and cap boxes that come in.
We're able to pay significantly more than recycling rates, in many cases double, some cases above double the recycling rate, in some cases multiple times the recycling rate depending on the box. We take those back to our facility, so we drop trailers at all of our client facilities or we pick loads. Pick up all the unpacked boxes, and then we bring them back to our facility and do one of three things. We either, remember I told you back in 2002, that I walked out of U-Haul.
We either make moving kits for people, so we'll take 20 medium boxes, put a roll of tape, a marker, a box cutter and we actually make moving kits for people, that's number one. Number two, we sell tractor-trailer loads of boxes to big retailers, as big as Walmart, because they want low-cost boxes to distribute the products out to their stores.
When Walmart is delivering high volume products to a-- They're obviously based in Arkansas. They're delivering high volume products to a store in Arkansas, that tractor trailer's going to unload, turn around and go right back to the distribution center and pick up again, therefore it can bring back the empty boxes. But if it's going out to Bismarck, North Dakota, Walmart might not even use their own trailer, contract that out to a freight company.
If they're contracting out to a freight company, that trailer that is going out to Bismarck, North Dakota, it's not going to turn around and go back to Walmart, it might pick something up in Bismarck, and go somewhere else because that's how third-party trucking works, and therefore you can't return the boxes back to Walmart because the trailer is not going back to Wallmart.
In that case, companies like Walmart don't want to pay for a reusable box that they're never going to see again. We could provide low-cost, what we call, one-way boxes that you're never going to see again because they're cheaper than a brand-new box, you reduce the cost and then the store just recycles them locally, that's thing number two.
Thing number one, we make moving kits. Thing number two, we supply to big retailers, and then thing number three, we [unintelligible 00:17:05]. If a plastic bottle company paid a packaging engineer to design a box that is specifically designed for their plastic bottles to ship them, they put their name on the side, they put their SKU numbers on the side, and they put their labels, warnings and whatever on the side, to deliver their boxes. Where's the best place to reuse a box that was designed for bottles?
Well, right back at the company that bought the box in the first place. We create closed-loop, we create programs to return, in this case a box, a milk crate, but return the box right back to the original user to put more bottles in, to put more caps in, more packaging it, or whatever it is. Again, long answer, but the summary is, we buy boxes, we do three things, we either make moving kits, we sell them to large distributors that need low-cost boxes for one-way distribution, or we return the boxes back to the company that bought it in the first place, or designed them in the first place for their own products to go back in.
[00:18:18] Liz: Got you. Well, it sounds great and a great way to reuse all of those boxes in three very different ways, from the consumer to the big retail and back again. That's great, Marty.
[00:18:31] Marty: Exactly. It's not rocket science what we do, is just a lot of hard work and a lot of logistics.
[00:18:36] Liz: Right. Are you starting to see a genuine interest from the big retailers in reducing their impact on the environment?
[00:18:43] Marty: Yes, I see a genuine interest, but interest is almost a no-brainer, that's the easiest part. To all those entrepreneurs out there like me in 2002, be careful about getting excited that a big company shows interest. Interest does not pay the bills, effective logistics pays the bills. We have spent many, many, many hours, hours is an understatement, working with large companies that are interested, but the devil's in the details, the logistics.
You can't, I'll use Walmart as an example, you can't call Walmart and say, "Hey, Walmart, I have an entire truckload of boxes for you." It's not worth their time to even do the paperwork unless you have hundreds of thousands of recurring boxes, it's not worth Walmart's time and effort to change their-- They've got to change the software, they've got to change their SKUs, they've got to change their quality control. They have a lot of changes they have to make.
In order to get a large company to make a change, you really have to have an enormous-- You have to really work through the logistics. If there're an enormous supply of boxes and you have to deliver, you can't say, "Hey, I'm going to deliver a truckload of boxes today." Then when they call next week and say, "Yes, I need another load." You say, "Yes, sorry. I don't have any." That's the end of the relationship there if you're dealing with a big, big company.
That's why our business seems very simple, "Oh my God. How easy, I buy used boxes from one coming and give it to another company." It's really not, it's a massive amount of aggregation, quality control, sorting, transportation and planning up the logistics to get the right boxes to the right company, or else these big companies just say to you, "Screw you. I'm not going to-- I can just call International Paper and a box is delivered tomorrow or even today." It's not worth the time, and the risk to do something unless we're going to deliver. Yes, they are interested, but it's a lot, a lot of logistics and work. Some companies we worked for years before we actually launch a program.
[00:21:07] Liz: I bet. Tell us a little bit about that back-end technology, and what role it plays in the business model, because it must be a pretty hefty role.
[00:21:16] Marty: Yes, it is everything because people sometimes ask me about inventing the used box market please, I didn't invent the used box marketplace at all. When I started this company in 2002, I started buying and selling boxes, I realized, "Wow, there are lots of companies that buy and sell boxes." In almost any major industrial city, whether it be Los Angeles, Chicago, Atlanta, Dallas, there are probably more than one used box company.
Usually a mom-and-pop type company, it's usually a single location. They usually have a couple of their own trucks, they drive around their city and have their customers that they service where they pick up boxes, bring it back to the warehouse and then deliver. Usually on a smaller scale with pallets, a couple of pallets, a truckload, that sort of thing.
What we realized is there really wasn't anybody going between the cities. There wasn't an opportunity to find boxes in Atlanta and move them to New Orleans because there was a company in Atlanta, a company in New Orleans. Well, my background in technology and enterprise resource planning software, specifically eight years of SAP. We started to use my background in technology and the Venture Capital that funded us.
One of the principal consultants in the VC firm is a computer scientist, and we sat down to [inaudible 00:22:52] we could make basically a portal for companies that want to sell their boxes and a portal for companies that want to buy boxes, and then we could start to develop the relational databases and the internal matching to match them. Because, as you can imagine, Liz, if you said to a typical piece of software, "Do you have any 20.5 x 18 1/4 x 13 7/8 boxes?" The answer is probably no, however, there's got to be a hundred thousand different variations that are within an inch that would work exactly for what you need.
It becomes a concept of-- It's like go fish, "You have any sevens? No. Okay, well, do you have any fives? Yes." Well, actually I have hundreds of thousands of boxes in between those two things, that if we just understood what you're using the boxes for and how you're using them, I could provide you with a lot more options. What we did is build our software to track, not just all the boxes, but how the boxes are used and what a substitute for a 12 x 12 x 12 could be. It could be an 11 x 11 x 13, or whatever it is. Our software became a marketplace, a matchmaker of boxes that people didn't even think they could use and that really opened up the doors.
We've been building our software since 2006 and now when some of these huge, huge companies need boxes, they go to our portal and they can do searches to see what's available, how much it costs, how much cost to get delivered to them and vice versa. Our big suppliers, like the Mccormick Spices, the General Mills, they can look at our software and see historic reports, which is now in the waste management and waste reduction, they can see how many boxes they've sold, what they've sold them for, the weight of those boxes, what those boxes would have cost to get with us in a recycling program or even a landfill program. It's very powerful to be able to have all that data at your fingertips as well.
[00:25:17] Liz: Absolutely. Wow, your technology background really helped there.
[00:25:21] Marty: Yes, it was everything because I definitely saw how my former clients when I was a consultant use data to move product, and then now boxes are my product, so I use the same technology principles from SAP in a relational database, CRM, the whole order to cash cycle. But now, instead of a product, it's boxes. On our supplier side, it's their waste stream that we're managing. On the purchasing or the customer side, it's a product that we're providing, so it actually gets complicated, it's not a secret, but that's really the secret of your success is, we are a waste management company, and a waste reduction company to major manufacturers, and we're a low-cost packaging company to major distributors, all managed in our software.
We've recently expanded our software to handle more than boxes, it now handles all waste that we do, cardboard, plastic, metal, organic food waste, pallets, barrels, drums, scrap cardboard, you name it. All in the new software, is called WATER, and WATER stands for Waste Analytics and Tracking for Environmental Reporting. It was just an extension of our box software, and now it runs entire waste reduction programs.
[00:27:02] Liz: Amazing. I was going to ask if you found applications elsewhere and obviously you have and have exploited that, it's great timing.
[00:27:12] Marty: Well, yes, used cardboard boxes, we call it ourselves UCB, used cardboard boxes that been around for about 13 years, but about three years ago some of our major clients were so impressed with the reporting that we provide with the boxes, they would say, "You give us an online portal that tells us every single box. You differentiate the 24 x 12 x 12 from the 24 x 12 x 10, you tell us what they weigh, you tell us what they're worth, you tell us how many we've sold to you, you've told us the historic value of that box, you've given us specs on what we need to do to that box to maintain its value, how we can't rip it open, we have to use a razor blade. You tell us all these things, yet, and you're paying us every month for all these boxes. Way more than recycling rate." However, our recycler or our waste hauler drops an open-top dumpster and tells us, "Throw everything else in here and we'll charge you a couple of hundred bucks every time we pick it up," and at first we said, "Well, yes, that's a wasting issue for you," they make it convenient to get rid your waste.
Some of our bigger clients said, "You got to help us. If you know so much about how to do the logistics and how to--" Not even repurposed, but just simply, "Put our boxes somewhere else and make them valuable, you've got to help us with our cardboard, you've got to help us with our plastic, and bottles or caps," and so forth.
We took the UCB software that was just focused on boxes and it's a lot more than just creating new [unintelligible 00:28:58] items, but we expanded it to handle any waste commodity and now we call it UCB Zero Waste. Used cardboard boxes is the box business, UCB Zero Waste is the waste management and waste reduction business. But all coming from the same core software.
[00:29:17] Liz: Amazing, that's awesome. Speaking of good timing, I know you've been in business a while, but it just seems the perfect positive storm is happening now for your business in terms of the interest in being environmentally conscious and reusing and recycling items. Not to mention the explosion of online shopping being at an all-time high. And the China ban that happened a couple of years ago, how has that affected your business? Or it has it?
[00:29:47] Marty: It has, it's huge. I know I'm very talkative, but there's many years of background. We used to go out and tell companies we are an eco-friendly box company and yes, I got a lot of press and a lot of PR for being an eco-friendly box company back in 2002. But as I said, not only we aren't making any money, we lost a lot of money and what we learned was you call a Fortune 500 company, you tell them you're eco-friendly, and you can tell them all about being eco-friendly, they'll listen, they absolutely want to listen. There's some sustainability people, PR people, and marketing people, they'll absolutely want to listen to how their company can be more sustainable, more eco-friendly.
Very different from talking to a plant manager and implementing a logistics program where you have tractor-trailers being stored on-site and has to be pulled into a dock door to be loaded by a forklift. Very different. When we would tell companies, "We want to talk to you about being eco-friendly and our eco-friendly box program," they'd listen, but fast forward two years not a single transaction. When we started telling companies, "Hey, you buy $3 million worth of boxes, I think I can save you about 25% of that," now they not just listen, they start placing orders, and they'll make room for that dock door, they'll make room for that tractor-trailer at their dock and so forth.
We went from preaching the Eco-gospel and getting nowhere, other than a lot of people listening, to preaching the financial gospel, which was, "We can save you money or even make you money," then we started doing serious business and our business started to explode. Well, now, to your point with the China band and with just the all-around environmental movement, the all-around financial constraints of business these days, companies are listening even more, but we also have to be very careful.
These huge Fortune 500 publicly traded companies, I want to be careful about saying this about any of my clients, but companies don't have consciences, people do, and often people don't make decisions at companies, committees do, so you have to be very careful to not-- Even today with the China ban, and even today with the environmental movement, even today with these huge companies that are Gung-ho environment, you have to be careful, do not forget about the financial part of it.
Companies are paying to be sustainable, they're not paying to recycle, you've got to make money for them in order for them to make a change, and that's what really they focus on, they focus on the money. If they want to then publicize it, if they want to then put it in their marketing, their PR and their branding, that's fantastic, but we lead with finance, we lead with cost savings, we lead with actually making money, and that's probably the biggest stuff. We see so much noise in the marketplace, "We can help you be more eco-friendly, this is a more sustainable solution," and then when you peel back the onion and dig in, it may be, companies aren't implementing because companies do things to make money, companies don't do things just to feel good.
[00:33:46] Liz: No. I think you nailed that Marty. You nailed it because you have to do good, but it has to make sense for your bottom line in your business. That intersection has to happen for it to be sustainable, because you might have pie-in-the-sky ideas and you might want to do the right thing, but if it's not sustainable in the financial world, then it's not going to help anyone. You definitely nailed it.
[00:34:14] Marty: Right. When I used to do a lot of public speaking, and I still do quite a bit, but when I was doing it a lot, I had a talk called, "Is sustainability sustainable?" That was the whole concept. Well, it's not if you don't make money doing it because then it's just a PR play, a fad, a trend or whatever you want to call it. Sustainability is only sustainable, meaning the first time you use the word is an eco definition, the second time you use the word is the financial definition, is sustainability sustainable? It can be, but you have to have a financial model behind it.
[00:34:51] Liz: Absolutely. Speaking of the doing good part, Marty, I see on your site that you've saved more than 3.5 million trees and that's such a nice concrete stat for people to understand the value of reuse in general, but in addition to not cutting down trees since you're reusing the boxes, are you still donating some proceeds to different charities that plant more trees?
[00:35:20] Marty: [coughs] Excuse me. We used to when we first started out, we first started with TreePeople, Andy Lipkis in Los Angeles, is a phenomenal tree advocate and plants gazillions of trees. But I'll be honest with you, as we started out in the PR world, we said we donate a portion of our proceeds to plant trees and we spent a lot of time dealing with the PR and the publicity of planting trees, and we also took our hard-earned profits and planted trees. As we got bigger, we started to realize, "Holy crap, if we stop with the PR, stop meddling in other people's business, the planting of the trees and so forth, and just focus on our business model we're actually going to make much, much, much more impact than ever."
Not that I don't trust the nonprofit's and so forth, but when you donate $100 to a non-profit who then has a bunch of kids out planting trees, that's great, it's a great educational thing, but once you get to a business where we're actually making a massive impact on landfill diversion, that $100 is much more effective in our own business model, so that's why we converted from, "Hey, we're going to spend our hundreds of dollars locally." Not to mention once we start donating money locally to Los Angeles, we have offices in Baltimore, Maryland, Milwaukee, Wisconsin, one outside of St. Louis, once we start donating in Los Angeles, then all the local churches, charities, Boy Scouts and so forth started reaching out to us.
We felt horrible because we can't donate to everybody, and that was a change in our mindset to say, "Are we in the donation business or are we in the money-making business that has a huge environmental impact?" Now we're very confident that our efforts and our money are most effective using UCB's business model. That's why we track it online and put it on the web because, I'm challenging myself, I think the stat is roughly 17 trees for every ton of cardboard diverted, it is 17 trees that don't need to be cut down. We track our tonnage, we convert it to trees and we keep that tree counter going. Then our WATER software, Waste Analytics and Tracking for Environmental Reporting, when any of our clients use WATER there's a tree counter for them as well so they get their own personal tree counter for their program.
[00:38:20] Liz: That's great.
[00:38:21] Marty: The one on our site is the aggregate.
[00:38:23] Liz: Got you, okay. That's fantastic. Now, I know we spent some time talking about small businesses and I think there's a lot to learn there because a lot of our listeners are small to mid-sized haulers or environmental services companies, and I know one of the big challenges it's, it's really hard to focus on the big picture when you have to run your day-to-day operations, right? You've learned a lot over the years, how do you manage it all? Have you hired well? Any wise tips for those listeners?
[00:38:58] Marty: It is a balance. The first thing I'll tell you, is if it was easy we'd all be doing it, right? If it was easy there'd be no such thing as employees, everyone would run their own business. It's very hard, it's definitely the hardest thing I've ever done in my life and I've done it. I think there's a lot of people that have failed in business, I think I'm one of the few people that failed in business and instead of either going back to work or trying a different business, I tried the same exact business again.
I failed at the box reused business, lost everything I own and more, I went into hundreds of thousands of dollars of debt, and then I tried the same exact thing again, the used box business. Nothing with the second time has worked, so it's not easy, it is a balance between the big picture and the small picture. I guess the big warning I can tell anybody is, it doesn't matter how big your goals are, it doesn't matter how big your vision is, it doesn't matter how many trees, how much money you donate, or how many trees you're going to plant, how great you are to your employee, your free lunch on Fridays and how we have a football machine in our lunchroom. All that stuff doesn't matter if you can't pay your rent your first month, or your second month, or your third month.
This is where I get back to that, "Is sustainability sustainable?" It can be if there's a business model behind it. Unless you actually have a way where every single month you are generating more than your spending, then you don't have a sustainable business model. I've been advisor to many, many small businesses and so many of them come to me and say, "I got this model, this is what's going to happen, five years from now we're going to do millions and millions of dollars in revenue," and I say, "Okay, that's great, it's a great business. But what does the first year looks like?" And they say, "Well, the first year is that we're going to lose a lot of money the first year, but we'll make it up."
I say, "Okay, but that's not the worst work either, you can plan to lose money up front, but you can't be losing money on your gross margin, right?" You can lose money on your net, meaning if you're buying something for 5$ and you're selling it for $10, you're making 5$. If you only do it a couple of times your first year, your infrastructure is going to cost more than that, you're going to lose money. But if you're buying something for 5$ and selling it for 4$, hoping that once you do it a million times that'll change, that's the false business model, it won't change.
Your actual transaction has to work, it won't change later just because you do more of it, you don't make up for profit in volume, you have to have a profitable transaction first. I think that was the big success differentiator between my first company and the second company, with the second company we actually know how to make money, we know how to buy cardboard on the recycling market index and sell it on the packaging index, and we know the differential and we know how to make money. We know how many times we have to do that in order to cover our infrastructure costs. I think most entrepreneurs and, with all due respect to eco-entrepreneurs, even worse, most entrepreneurs don't understand that, most eco-entrepreneurs have never even thought about that. That's what's so important.
I actually just gave a talk in Bethesda, Maryland, two months ago, and the title of that talk was, "Why green businesses fail, but businesses that go green thrive?" Again, it's a play on words. If you identify green before business, it's likely that your priorities are misguided. If you identify business first and make it green, then you've got a sustainable foundation to do great things with. That's my biggest advice, it's not, "Don't be a green business, be a business that's green."
[00:43:31] Liz: I think that's great advice. Marty, where else can listeners hear from you and your company?
[00:43:37] Marty: Call me. [laughs] We've learned that PR doesn't pay the bills, we worked very hard to build a great national company and we do know how to make money, we are very profitable, we are growing very fast, but we still don't do a whole lot of publicity and PR, we are very targeted. Here's a perfect example, we do a huge program at General Mills, we've been very successful with General Mills, they're one of the largest, if not the largest, cereal manufacturer, so when we had such experience and expertise in the commodities coming out of a cereal plant, we approached Kellogg's and said, "Hey, we know cereal, we know cereal waste streams, we could probably help you," and that's how we started working with Kellogg's.
We're not into broadcasting a wide net and hoping any company will call us, we're into replicating our business model the way we know it works, so we're really not out there much.
[00:44:48] Liz: Well, I just want to thank you. It has been so refreshing to hear your candid thoughts and how you've crystallized your vision for your company and expanded, it's been so insightful, thank you for sharing.
[00:45:02] Marty: Well, that makes me very, very happy because it's not always fun digging through dumpsters, making payroll every month and hiring people. I think we've got about 100 associates now across the country and growing, and it's really nice to stop for a few minutes, talk to somebody on the outside, tell the story and be recognized, so thank you.
[00:45:24] Liz: All right, thanks, Marty.
[00:45:25] Marty: Thank you, thank you, thank you. Bye.
[00:45:25] Liz: Okay, bye-bye.