October 4, 2021

37 Min Read

[00:00:00] Liz Bothwell: Hi, everyone. Welcome to Waste360's NothingWasted! 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.


[00:00:26] Liz: Hi, everyone. Thank you for joining us today at WasteExpo Together Online. I'm Liz Bothwell from Waste360 and I'm honored to be hosting this session for you today. Without further ado, let's get started. I'm super excited to introduce our speaker for this session, Tom Szaky CEO of TerraCycle. Hi, Tom, and welcome.

[00:00:48] Tom Szaky: Hi. Thanks, Liz. A pleasure to be here.

[00:00:51] Liz:  I'm thrilled to talk with you. You were Waste360 40 Under 40 winner, and that's one of the many accolades you've acquired over the years. For everyone, can you just set the stage about TerraCycle and how it has evolved over the years?

[00:01:07] Tom: Yes, absolutely. We've been building TerraCycle now for 20 years. It's actually amazing to think back. It's been so long, but we've luckily enjoyed straight growth for all those years. Today we operate in 22 countries around the world nationally trying to help move from linear to circular systems. Pragmatically, that means we focus on how do we collect and recycle things that are not locally recyclable. How do we help integrate waste back into products, help producers help make their products from waste.

Most recently Loop, which is all about shifting from disposable to reusable platforms, already live in six countries. We even have things coming out like waste diagnostics on how do we analyze residual products that may be carried in waste streams, like fecal matter in the diaper or the mold and mildew on an air conditioner filter and so on. We're really trying to eliminate or elevate the idea of waste as much as possible.

[00:02:06] Liz: What an evolution.

[00:02:07] Tom: Absolutely. It's been a phenomenal journey. One of the most amazing things about garbage is everything becomes garbage one day. Think about the waste industry, it will literally own everything we possess one day. For how big of an idea that is, I think we're just scratching the surface of how we can innovate around the topic of waste.

[00:02:28] Liz: Absolutely. I think, Tom, one of the things I love about watching you and your progression over the years has been you've never lost your optimism. A lot of people do when they're in this system. I'm just curious how you stay optimistic. Really, what keeps you positive these days?

[00:02:47] Tom: Yes, it's a very fair question because we are living through environmental crisis after crisis and we're putting so much pressure on our planet. Who knows if we've already passed that point of no return. One of the things that makes me optimistic is that humanity is at its best when it's under pressure. The greatest innovations come out of great moments of struggle. What else would we spend our time doing other than fighting for things that help the world be better? All that gives me hope.

It also gives me hope that people are really waking up to this issue. You can measure in the general consumer sentiment that people really woke up to the garbage crisis at the end of 2017, early 2018. I was honestly worried COVID would have taken that away and maybe people would have stopped thinking about it, but they haven't. There's been room for both and people's concern around garbage has only gotten bigger and bigger. That means that there's going to be more appetite to change our perception and how we look at waste.

[00:03:56] Liz: Absolutely. I think you're right. I think the COVID reference is true. You've probably seen that and even more sentiment around it.

[00:04:06] Tom: Even for us, to give you a sense of what I was saying we've only ever grown, and that's true. But during COVID we more than doubled in size, if you look at employee count, if you look at revenue. I think a part of that is that COVID hasn't been great for the waste industry. It's not like we're making face masks, sanitizers, and takeaway food. Look at what's happened during COVID.

First, we are consuming way more disposable goods. We are eating our food and takeaway food packaging. We're buying all these PPE that we're throwing away. As people, more garbage is coming to us. In many cases, some recycling centers paused accepting recycling during chunks of COVID, so we also felt like there was less solutions available and that environmental movement kept focusing for people so the consumer sentiment has gone up. That has been one of the things that have catalyzed, this really exponential growth that we've seen during the past two years.

[00:05:07] Liz:  Absolutely. I know TerraCycle, you guys have always been innovative champions of recycling. You recycle all sorts of difficult materials, dirty diapers, cigarette butts, car seats, and other things. Now you've gotten into a more circular focus, like you said. Tell us about Loop and what your hopes and dreams are for that, and where it stands now versus where you hope it goes.

[00:05:34] Tom: Yes, absolutely. Loop came out of-- Our first two divisions are all about recycling and recycled content. Those have grown quite well, continue to, but we asked ourselves the question, I think now four years ago, "How do we go further?" The answer we landed on was tackling this problem with disposability. Not necessarily single-use, but objects being intended for one lifecycle, even if it may have like a shampoo bottle, multiple uses in the bottle itself.

As we thought about tackling that, we felt like the answer was reuse, but we went on a big journey on why hasn't the reuse movement scaled. A big part of it that we noticed is convenience. We think convenience is the most important thing in reuse by far. Even in America, there are big reuse ecosystems that play now. Our propane tanks, they're reusable. Our beer kegs are reusable. By the way, who's buying those for sustainability? Probably not crossing anyone's mind when you're having a barbecue on the weekend.

But when they're both empty, you can't take the propane tank to a beer store and you can't take the beer kegs, say, to a Home Depot where you may have gotten the propane tank. That's very difficult if you're going to scale that to many products. Loop's goal, overall, is to be a platform for reuse where any brand can enter and create a reusable version of their product. Think like Tide laundry detergent [unintelligible 00:06:54] stainless steel, all the way to Häagen-Dazs ice cream.

Then retailers can make those available to their consumers. You can buy pre-filled product in the store and then drop it off at any participating store to get your refunds back. Then we effectively at Loop, beyond being the system stewards, are the waste management function of reuse. It's very normal. There's a bin you put your stuff into, but we're sorting it not by material type but down to the product level. Then instead of shredding and melting it, like recycling, we're cleaning it at a very high standard. So it's still that same waste management operation, but just slightly tweaked to facilitate the concept of reuse.

Really, even during the pandemic, which has been challenging for innovation. Innovations, I think, has been one of the unsung casualties of the pandemic, the platform has really grown beautifully. We deployed it to the world in January of 2019, took it live in testing platforms in France, and then followed by the US in May of 2019.

Today we have the world's biggest retailers in France, UK, Japan, Australia, Canada, US all going in-store on the platform. Either already have done so or will be by the end of this year.

[00:08:20] Liz: Tom, could you talk a little bit about the partners you have through Loop?

[00:08:25] Tom: Absolutely. The essence of Loop is all about multi-stakeholder collaborations. Because, really, what we do is we are the glue that gets all the actors together. Then our only operational function is literally the waste management function of reuse. What Loop really requires is having, most importantly, a lot of brands. We today have 160 of the world's biggest consumer product companies from Nestle to P&G and many others, so that's one major faction.

The second most important are the retailers. Today we have 15 of the world's biggest retailers, to Kroger's, Walgreens, and others. Beyond that, there's all these service providers. We have companies from UPS and FedEx on shipping all the way to DHL and especially Ecolab on helping to do the cleaning. They are the processing partners and we have a huge, great ecosystem of wonderful partners there. Then also packaging designers and packaging suppliers.

This is the ecosystem of vendors that have to come together to make this whole thing work, and we're just trying to get everyone excited enough to do that in unison. To give you an example, when Clorox created its disinfectant wipe in Loop, they partnered with Kohler who makes everything from faucets, but also reusable dispensers for your kitchen. Kohler, never producing packaging in their lives before, produce the packaging for Clorox wipes, which became, I think, the coolest wipe package that exists.

Then they were able to put it up in Ecolab, the company who came together with how do we clean that and really do that at the highest of standards. You can see it's all of these organizations that had to play together. I think the biggest challenge in Loop is getting all these actors to do this all in unison, according to a schedule. Because when a retailer like Kroger goes in-store, which they're doing just next month in September, they're going to need all the products to show up at the same time.

You need this to have this ecosystem of choices because that's what consumers want. The real work behind the scenes is facilitating these partnerships and getting everyone to act together. Then you layer on COVID creating a lot of supply chain constraints just makes it an extra tad more interesting.

[00:10:45] Liz: [laughs] I bet you've seen a lot this year.

[00:10:49] Tom: Yes, but it's good. It's put good pressure on our organization and they've thrived under it, our team. If we can do it with such constraints, I'm really excited to see what happens when the pandemic subsides and we no longer have these issues that everyone is grappling with.

[00:11:06] Liz: Absolutely. You yourself are a case study as how to bring these different stakeholders together to do this well. I think that's fantastic.

[00:11:16] Tom: Yes. By the way, for anyone who's trying to achieve this, really focus on empathize, deep understanding of what's in it for the stakeholder. It's not always the same thing that's in it for you. For consumers, for example. We thought consumers would be mostly into Loop because it's sustainable. It's reuse and it's great for the environment, but it turns out, in addition to sustainability, the other two factors that score equally are more beautiful, wonderful packaging that's maybe more functional, more luxurious, just more aesthetic.

I never thought that would be such a big deal. Then also many consumers prefer not having their products packaged in plastic and prefer glass or alloys for health purposes. They perceived better health there. I never thought either of those would factor and they factor equally importantly to reuse, so let's play into that. For brands, yes, they have a challenge with waste and they're worried about that, but being able to delight the consumer with more innovations is even more important, so let's play into that. It's very important to really understand what will make the stakeholder you're trying to engage with feel valued and be able to celebrate that internally versus just having them accomplish your goals.

[00:12:37] Liz: Absolutely. I think you hit the nail on the head there.

[00:12:39] Tom:  Absolutely.

[00:12:41] Liz: Tell me about Tupperware and Burger King. Those were two that I read about that you were working on packaging relationship with.

[00:12:49] Tom: Absolutely. Tupperware has been a wonderful partner. Everyone knows Tupperware, so I won't describe them, but they've never been a packaging supplier before. We are looking for wonderful companies who understand reusable construction, and Tupperware is by definition highly reusable. They've been able to figure that out with high-grade plastics, which have a lot of flexibility in molding them and creating them. They have great designers and understanding of how to really think about reusable.

Tupperware has become an official Loop partner and then we're able to recommend their services to companies like Burger King and others who may want to use them to develop reusable packaging components. Burger King, for example, is launching all over the world later this year, and early next with Loop, reusable soda packaging, reusable sandwich and hamburger packaging, which is going to be incredible. 'll think about all the waste in the fastfood and takeout space, and this is all now becoming fully reusable, and Tupperware is a cornerstone partner who's helping develop and produce some of that packaging.

[00:13:55] Liz: That's amazing. I can't wait to watch that.

[00:13:58] Tom: Yes, we're super excited for it. It is coming live, I think, in some cities late this year and then some other cities around the world early next. Hopefully, it'll be in a city where you can play with it. The fun part is you'll be able to buy your hopefully impossible Whopper and soda at a Burger King in the reusable package, and then maybe drop it off at a Walgreen's or drop it off at a Kroger or one of our other retail partners we'll be announcing soon.

[00:14:20] Liz: That's fantastic. Are you seeing an uptick in that? I know you mentioned that you felt that there was an uptick there in sentiment in wanting to recycle and do good. Do you see it with the CPG brands and other partners that you have?

[00:14:36] Tom: Absolutely. Because, in the end, the consumer product companies all know that there's an issue there, there's no question. That may not have been the case 20 years ago, but even 10 years ago that became pretty clear. Consumer product companies are really watching consumer sentiment. Everything drives from consumers sentiment and it's measurable. Consumers started really getting concerned about waste end of 2017, and it's only grown from there.

CPG companies, consumer product companies, started really leaning in with solutions. We also see lawmakers are passing more laws. We've now seen EPR come up in Maine, and I think other states are going to start passing state-by-state EPR. The real thing in the US, for example, would be one is national EPR come together. Because, can you imagine 50 different states with different EPR legislation? It's going to be incredibly difficult for brands to navigate if it's so regionalized. Hopefully, when a couple of states do it, it can ratchet up to federal EPR like, frankly, any other developed country at this point has and has had for a while.

I think that we're only going to see more and more of this. The question is an interesting one for the waste community. Most consumer product good companies have committed that their packaging will be recyclable, compostable and reusable, but the biggest focus there is recyclable by 2025. All over the world, these commitments have gone out. Walmart has committed, Nestle, P&G, and hundreds of other similar actors that made these important commitments. Though I think P&G is for 2030 that they've made that commitment. Nevertheless, there's a big difference between what is technically recyclable and what is practically recycled. Practical recyclability or practical compostability is entirely in the hands of the waste management industry, whether they choose to sort and process that certain material.

There is a gap here, and there's a really exciting opportunity for which waste management companies will lean in to help solve the gap. Because there's a lot of opportunity and appetite to do so. This not just goes for recycling, but goes for composters. A lot of companies are moving to compostable packaging, but there's very little composting infrastructure and very few composters today, except compostable packaging. Another great gap to think about. Then, of course, there's the emergence of reuse. That, I think, will be the domain of innovators and startups as we're seeing already.

[00:16:58] Liz: That makes sense. You raise a good question and it is in our hands now. A lot of our listeners and watchers are in waste and recycling. Do you have any advice for them in how to tackle this before 2025 and 2030?

[00:17:14] Tom: Yes, absolutely. First and foremost, my message would be there's a great opportunity. There's an [unintelligible 00:17:22] to also innovate around the business model. If I look at a traditional waste management business model, you have the cost of acquiring the waste. You have potentially some tipping fee revenue, so some revenue on getting the waste. You have to haul it from the point source to wherever you are warehousing or sorting it. Then you have the cost of processing that waste, and then you compare those costs against what you can sell the material for if you're a recycler.

If it's landfilled, what's the cost of putting it into a landfill or incinerator? Those are relatively few variables. What is the inbound economics? What is the conversion economics and what is the outbound economics? We're talking three variables, that is really limited. One of the things we've learned at TerraCycle is many other variables to look at. Thinking about what's the value to a brand to see something recycled. What's the extra foot traffic to a store to become a recycling point? There's so many other variables, and the moment you tease out other variables, the equation on what becomes recyclable becomes significantly more interesting.

My recommendation to someone watching our conversation is to take a step back and see, are there other ways to innovate that more traditional business model that may be at play today? Think about other ways of that value around waste can be produced. I'll give you an example of an emerging division we have, just to show you how far this mental exercise can go. Out of Loop, we thought what could be the benefit of having a relationship with everyone's individual product, which you must have in a reuse ecosystem, because we have to get you your deposit back, so we know everything you've purchased.

There's a very interesting data there to understand your waste on a product level [unintelligible 00:19:13] consumer insights. That's obvious, but we went a little bit deeper, and we realized that certain waste streams carry diagnosable samples. For example, your air condition filter carries the mold and mildew in your air. Your water filter, the crowd in your water. Your motor Royal carries once it's out of your automobile the piston scrapings, because that's what it's lubricated, or say your child's diaper carries a fecal sample. We developed a new division in our diagnostic division. You'll see this actually go live next year with some of the world's biggest brands.

One example will be through a major diaper brand, you'll be able to send in a purchase a kit and send us one dirty diaper, but instead of going to a recycling as we do say with Pampers in a number of countries, or a reuse facility -actually launching diapers and Loop next month- it'll go to laboratory, which analyzes the microbiome in the fecal sample and sends you back a report on whether your child may be susceptible to allergies, whether they're having a good diet, whether they need probiotics and all sorts of other interesting information. There's so much to do, if you take a sort of a step back, and reevaluate that very traditional waste management business model.

[00:20:27] Liz: Definitely, and I think a lot of that's happening, whether you see it with some of the innovation or technology, AI robotics, and everything in between, but I think to your point until that material is seen as valuable, it's going to be a different lift, but I think there's a lot that can be done and is being done. I love your examples.

[00:20:50] Tom: Absolutely, and just remember value can be more than the physical polymer or alloy that an object is made from. That's the key twist that may be worth exploring.

[00:21:02] Liz: Definitely, you're so right there. I think a lot of companies, even in this space, are motivated by that with their sustainability and ESG goals as well.

[00:21:12] Tom: Absolutely. Couldn't agree with you more. It's a beautiful time. I know it's been tough, absolutely tough in the past few years, and low oil prices since 2015 are not helping the recycling community, but there's a lot of bright future ahead of us with where consumer sentiment is pushing these topics on a global basis. 

[00:21:31] Liz: Yes. You're so right. You talked a little bit about the diagnostics and some other things that you're working on. What do you see for the future of TerraCycle?

[00:21:41] Tom: Well, we're in a super exciting time. We're hitting some incredible growth. We'll be just under a hundred million in sales give or take this year. We're really growing beautifully, adding, as I mentioned during COVID doubled our whole staff council. We have lots of open jobs. If anyone's out there wanting to join our team all over the world, lots of openings, but what we're really thinking about now, because we're in this exciting position is what other ways can we innovate around waste, and developing new divisions like diagnostics, but we have lots of others that were cooking up.

Grow our core divisions, but also really-- our dream one day is to become like the Google of garbage where we have all sorts of different ways that we're attacking the issue. Now is sort of a really wonderful time where we're able to have the resources to be able to put a lot of these innovations out there and see how they do. We're really focused on that quite a bit, both tangential innovations. Innovations of how do we recycle more? How do we use more recycled content? But also whole new concepts like diagnostics and others.

[00:22:39] Liz: Well, that's fantastic. Keep the innovation coming.

[00:22:42] Tom: Thank you.

[00:22:43] Liz: Where are you seeing the most success? Whether it's from a geographical perspective or the type of program or material, where are you getting the most buy-in at this point?

[00:22:54] Tom: It's a good question. First, to answer geographically, right now the nexus for us if we look at all the 21 countries we operate, I'm looking at Canada, US, Brazil, most of Western Europe, China, Korea, Japan, Australia, New Zealand, Thailand would be the sort of key markets for us. UK, France, and Europe is really exploding on these topics. They are by far top two regions. North America, doing really, really well. Then in Asia, Japan has been this just out of the ballpark success. Actually, if you watch the Tokyo Olympics and you saw the podiums, TerraCycle Japan built every one of the Olympic podiums from hard to recycle waste that was collected in local retailers.

You'll see us doing some of the other podiums coming up in the future games, but those would be some of the key regions where we see consumer sentiment, and that's a key driver for us. I keep coming back to consumer sentiment because that's what informs legislation. That informs whether brands and retailers are focused on these topics. Latin America has been a little bit of a challenge because there's so much turmoil in the region with politics and the currency crisis in various markets, but I do feel like all regions are rising.

A big area of growth in our core division, has been growing quite a bit, is this idea of how to recycle hard to recycle waste. People are really focused on it more, more, and more. The big bet, of course, in the past few years has been reuse for us and I do believe that that's going to be a 20-year journey, but it's one that we're really excited to invest very heavily into, because we feel like it will have an established future, sort of like the idea of organic. The question on reuse will be, is it going to be 10% of products? Or 30%? I don't know if it's going to be 90%, but more like the comparison in organic versus conventional farming, I think is how it will at least play out in the next 20 years.

[00:24:52] Liz: Okay. I'm sure you get pressured to recycle everything, and everyone's always asking you, have you touched textiles yet?

[00:25:01] Tom: We have, yes. For the past 10 years, maybe 15 years, we've been doing a lot in textiles around things like poly bags with Teva. We recently launched shoe recycling, which we're really excited about. We also developed and have brought out now a technology where we can recycle mixed clothing. What I mean by mixed clothing is a textile that is made from natural and synthetic materials together. Like a cotton nylon combo. Historically, we've been doing a lot of like natural textiles we could do well, polymer-based textiles we could do well, but we had a lot of struggle with the mix, which is actually the majority of textiles. We're now have had some breakthroughs in processing, where in the past year we've been able to bring out some programs that do allow us to take the mixed textiles and turn them into raw material for different applications.

[00:25:54] Liz: What are you using them for at this point?

[00:25:57] Tom: At the moment we're using them primarily in the installation space. In automotive, in different forms of installation. Our goal is to get it to where we can go textile to textile, but we're not quite there yet.

[00:26:11] Liz: That's amazing. I'd love to hear that. How about organics? Is that a place you're entering?

[00:26:17] Tom: Yes. We've been doing large volume of organics over a decade, but mostly when they are organics that are found in other waste streams. We're one of the worlds' larger coffee capsule recyclers, and there's a lot of organic tea, coffee, milk inside coffee capsules, so we've been doing a lot there, but now we have a new division work starting called TerraCycle Pickup that'll be live early next year and that's going to be bringing curbside pickup, that's why it's called pickup, to communities that don't have curbside recycling, and in the communities that there is curbside recycling offering incremental services, like compost pickup, textile pickup, toys, and all sorts of other things.

It's a way to either increase the range of what you're able to recycle from your home curbside or be able to even enable if you live in a community that doesn't have recycling access today, and there we see a very, very big role for traditional organics, like kitchen scraps and so on.

[00:27:16] Liz: Okay. Interesting. Is there anything you haven't been able to find another use for?

[00:27:22] Tom: Yes, sure. The biggest preventer from us being able to recycle something it's usually legislative prevention. If the law says you can't process that certain way, should we see that come up a bit more in the hazardous waste stream categories? We have a hazardous waste division, and there, we of course, always have to comply with the law, and in some cases, the law may ask us to dispose of the object through waste to energy versus recycle it, but that's more getting in hospital waste that may have touched a contaminant of some kind, or we do a lot in light blister pack recycling, but it depends on what type of pharmaceutical was in the blister pack on or what outfit it may have to go to, or even things like plastic gloves, what it touched will have an effect on where that can go.

It's very, very rare that something is technically not recyclable. There are some challenges. Sandpaper, sandpaper is a uniquely hard one because it literally will grind the grinding machine, so it's very difficult to remove the components of sandpaper. That's the one that's still been stumping our team, but it is more rare than not. The key question is not whether something can be recycled, is what is the cost of doing so. We specialize in those waste streams where it costs more to collect and process something and the results are worth. That's why we need folks to pay for it.

What we're always thinking about is how do we keep lowering those costs so that more folks can have access to recycling things and make the services more democratic? Because honestly, right now, recycling is a luxury. If you zoom out worldwide, rich countries have advanced recycling like Germany, and poor countries may not even have good waste management, let alone recycling.

[00:29:04] Liz: Right, absolutely. I know that you've talked about the recycling rate being sort of a starter for you where going into that community, your tracking might actually follow that because you need people to be willing to do it.

[00:29:20] Tom: Absolutely. Yes. I think you need first availability. Then you need excitement and interest and people doing it, and both those things have to really go hand in hand. It's good indicator of what the appetite of a country is, is what is their average recycling wait for things that are available to recycle. That's a benchmark that we aim towards. We have been able to get some of our programs as big as collecting 30 or 40% of an entire category so they can get relatively large, but usually there's an upper threshold.

This is why we created Loop because we felt like recycling it's a bandaid, really, to the issue, and I say this as a recycling company, and that we have to go deeper. Actually, you asked textiles, we are launching textiles in Loop early next year, where it's going to be starting with a major British retailer on baby cloth. Basically, the simple idea is when you buy your baby clothing through Loop at this retailer, you'll pay a deposit on the item and then you'll pay a cost to use it. Then when you put that garment back in one of our Loop ends, we will review it, clean it, repair it, and then it's sold again, back in the aisle. Not looking like vintage clothing, looking like a normal rack and everything normalized, but we'll even see textiles going into reuse because that then elevates them how do we recycle it.

[00:30:44] Liz: Absolutely. You being in Trenton, and I know you're in other states countries, you must have really good relationships with your haulers there and your facilities.

[00:30:54] Tom: Yes, absolutely. We do less so sort of local hauling partnerships. We have really good strategic partnerships on a national level with waste management companies, like Waste Connections, took a 20% interest in our Canadian company, or Veolia owns a 30% interest in our European division, or it [unintelligible 00:31:12] I think that's a 10% interest in our Japanese division. These players really then allow us to leverage preexisting infrastructure in a really exciting way.

Now that's to say we also work with local partners as well, but unlike normal waste management companies, we try to use a third-party system as much as we can because a lot of them exist them. We set up the supply chain, so we really rely on finding processors, upgrading them. Finding transportation and sorting partners, maybe upgrading them so that they can handle the specificity of what we're out there working on.

[00:31:48] Liz: It makes sense. That's great to hear. Tom, is there anything else you want to share?

[00:31:53] Tom: Well, it was wonderful. Thank you so much, Liz, for the conversation, and thank you everyone who's listening. I think it's a really exciting time, and I think waste has such a huge opportunity to innovate. I just encourage everyone out there to look positively to the future and think about all the ways that we can change the paradigms around the way we look at the topic of garbage.

[00:32:18] Liz: Love that. I think our watchers will love that too. I mean, what came out of COVID too for this industry was the essential worker, was praised for once.

[00:32:28] Tom: Yes, finally, right? The unsung heroes.

[00:32:32] Liz: Absolutely. Now we're heading into some great questions. Thank you so much to all of you who have submitted. Tom, are you ready for some good ones?

[00:32:40] Tom: Let's do it.

[00:32:41] Liz: All right. Okay. "Can you share any other partnerships that have forged products into the Loop ecosystem?"

[00:32:51] Tom: Yes, absolutely. Loop as a platform is all about products entering and the retailers making those available. Where we really started is what is the biggest issue in waste, it's what you would call the FMCG or fast-moving consumer goods.

Think packaged beverage, packaged foods, home care, personal care. There, at this point, most of the major producers over 170 big conglomerates have joined up on everything from Tide to [unintelligible 00:33:17] as you've seen.

Then the question is, well, what's the next one? The next one for us that we identified as the next big waste issue is quick serve restaurants or QSR, with McDonald's, Burger King, [unintelligible 00:33:27] and others. What we're now pushing the innovation is actually on Monday, this Monday, we launched the first usable diaper platform with Proctor and Gamble who makes Pampers in Loop, and early next year, we're going to be launching clothing. We're also experimenting to see how wide can reuse go and where's the relevance noting reuse is not a silver bullet, but we haven't really explored really the width of how far it can go. It's been a big part of a building volume, and now also thinking about what type of width we can create.

[00:34:02] Liz: Got you. The diaper thing just astounds me, by the way.

[00:34:06] Tom: Yes. If anyone wants to see it, that would be at Loopbycharliebanana.com. Charlie Banana is a brand that Proctor and Gamble acquired. It's right now available in Northeast only as a test, but it will be the first national reusable diaper service as it scales out.

[00:34:23] Liz: Okay, we'll be interested to watch it scale. "Diagnostics are wild, but really smart angle. I'd imagine this model will expand the reuse efforts and increase the value".

[00:34:36] Tom: Yes, absolutely. Diagnostics came out, our mission is to eliminate the idea of waste, and I think if we double click on that, you either solve for waste, like delete waste, sort of that what reuse does, or elevate waste. Diagnostics is a big part of elevating waste. Now, Diagnostics can be run on disposable products on reusable products, but it basically has the thesis that there's a lot more value in the things we throw out and they can do a lot more.

To give you an example, my wife is not a fan of needless. Absolutely hates them. For her, if her physician says, "Go get a blood sample", she has to book an appointment. She has to travel to the lab. She has to then sit down and bare with a needle, which she really doesn't enjoy. That's a whole amount of process, hassle, and unpleasant. Compare to that to, if we were to launch diagnostics for say tampons or pads, she could take a used tampon brought into a shipping device, and be done, and have the same output be created on a type of waste that we think is very disposable and highly polluted.

[00:35:37] Liz: "How about for hard to recycle plastic wrappers, and bags, and things that you guys accept? Are they downcycled rather than recycled? Or are consumers aware of that difference?"

[00:35:49] Tom: I'm actually so glad you asked this question because I actually really appreciate the way it was framed. Recycling can either be linear, where I call it aluminum can to aluminum can. Recycling can be downcycling. Please, the way the question was asked it was, "Is that downcycling or recycling?" Downcycling is a form of recycling. In fact, the most common form of recycling.

You have downcycling where a bottle may go to a batch, or a flexible wrap may go to a frisbee, or some other object that we perceive as at a lower value, and in fact, the vast majority of recycling is what one would call downcycling. Think paper. Paper, as you recycle it, gets shorter fiber lengths. We go from bright white to newspaper, to corrugate, to toilet paper. That's all technically one step down because the fiber links are becoming shorter.

Upcycling, which would be the inverse of downcycling, is where the material gets better, and it just doesn't exist. It's completely academic. I've never seen it in practice. Really, in recycling, it's always some form of down, the question is how long can you maintain it, and to make the steps as little as possible or to elongate the steps. If you're going to recycle into a disposable good, you want to take the least amount of steps downward. Or recycle into a durable good. You can take a bigger step downward, but make sure the length of that product is long. It's about honoring the materials or the molecules in the use.

The only place upcycling may come is in chemical recycling, where we can move from say a color PET to a clear PET, that would be the example of upcycling. There are examples where that exists, but if you look at municipal recycling, the vast, vast majority will be mechanical, which will be in what I already described.

[00:37:45] Liz: Got you. Thank you for that. I know we talked a lot about consumer sentiment, and this person is asking, "It really helps push forward, but really what was your biggest barrier when you first started?"

[00:37:59] Tom: My biggest barrier. God, it's a good question. Beyond all the normal entrepreneurial barriers, raising capital, understanding how to manage, knowing what a PNL is, all those sorts of things. I say all of that was there. The biggest unlock I had, and maybe we could call this a barrier, was as a mission-driven business we would go to companies and start with, "You should recycle this because you have a problem", or, "You should lean into this issue because you have a problem".

I think a lot of social businesses do that, and it worked, but it was a limiting factor. When we instead reframe the same approach to say, "Here's how you can win by doing this great purposeful thing", then people really turned on much more. That was a huge learning for us, that I would encourage anyone who's thinking about purposeful or social business to really think about. Not about the problem and making a client feel guilty about the problem and then funding your cause, but about seeing how they can win by leaning in on that particular.

[00:39:01] Liz: That's great advice. I know Jasmine from Gooder earlier said the same thing. She said she used to roll into these meetings with heat pounding her chest, "Here's our purpose", but really, they need to know what's in it for them and really share the business aspect of that. Thank you, [inaudible 00:39:18]. "Which Zero Waste Box is the best seller? Why do you think people choose to purchase it from you over mainstream stores?" That's a good question

[00:39:30] Tom:  Well, Zero Waste Boxes are not available in mainstream stores, this is something that's very unique to us. The idea of a Zero Waste Box is simple. If you go to our website, you can type in a waste trail. Let's say you want to recycle-- I'll make it up, cosmetics. You type that in. First, there'll be a bunch of free programs that pop up that are sponsored by brands who want to lean in and create solutions that each of these programs have different characteristics. Some are bigger, some are smaller, some may have different promotional characteristics, and so on, but what unifies them as they are funded by a manufacturer or a retailer.

Sometimes those programs may be full, or maybe it's not the characteristic you want. Then we offer paid solutions where the consumer or whoever buys the Zero Waste Box pays for. Basically, the price is equal to whatever cost to ship the material, process it, minus whatever we can sell the results for them. That's the Zero Waste Box offer. Those come from envelope size all the way to full truckload, depending on the type of organization you want.

Now, to answer the question, the most popular for consumers I'd say it's the plastic packaging, is a very popular one. Coffee capsules are very popular, and my belief in why they're popular is because these are the type of waste streams that bother us more. There's something really interesting with the emotion around waste. People take the plastic straw, people got really upset about the plastic straw. It even got banned in cities like Seattle. When you really zoom out from a waste management point of view, is the plastic straw the biggest offender? Not even close, but we have an emotional connection to it. I think that's really important to empathize with, is that folks view different waste differently based on the emotional connection. Not just its objective role in, let's say, the whole universe of waste.

[00:41:17] Liz: Absolutely. This is a good one to end on. What item has been the most challenging for TerraCycle to find reuse or recycling for?

[00:41:26] Tom: Well, technically the areas that are always the most challenging, it's not going to be the sexiest answer, is where there's regulatory issues around that particular item being either reused or recycled. We're doing a lot in universal waste and hazardous waste streams. Sometimes the preexisting rules make tremendous sense, but sometimes they're strangely technical and don't really make so much sense. A waste stream can be completely different characteristics from a regulatory point of view, and can be recycled if it's a generated in a home environment, but the identical waste stream generated an institutional environment may be not possible to recycle from a regulatory point of view.

That's been an area we've been doing a lot of work, and then from a technical point of view, I'll tell you one that our scientists are really struggling with as we speak is we have a lot of demand to recycle sandpaper, and we don't have a solution to figure it out because, how do you separate layers when the object is an abrasive and will hurt machinery, and so on that is [unintelligible 00:42:29] with that taking it apart.

[00:42:32] Liz: Well, absolutely. That is our last question. We don't have time for any more, but Tom, I just want to thank you so much for sharing all of your wisdom today about recycling and your journey at TerraCycle.

[00:42:43] Tom: Well, it's entirely my pleasure, and thank you Liz for your questions, and thank you everyone who attended today.

[00:42:49] Liz: Last but not least, save the date for WasteExpo 2022. Back in Vegas. May 9th through the 12th. Thanks, everyone. Thank you for listening. It would mean the world if you would take a moment to rate or review this podcast, and if you share it with us on one of our social networks, we are giving out some fun, Nothing Wasted Podcast swag. Just tag us, and see what you get. Thanks so much.


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