How can entrepreneurship help heal the environment? My long-read Q&A with Nate Morris

Setting the proper policy conditions for a dynamic, innovative economy is important, but we also need people who actually start businesses, implement new technologies, and drive industries forward. Similarly, policymakers have a role in improving the environment, but innovators and entrepreneurs are also critical to this process. They have helped develop clean energy technology, and they also drive the waste-reducing process of dematerialization, in which consumers and producers are able to do more with less — thanks to the digitization of our economy. On my most recent podcast, I spoke with an entrepreneur and CEO whose company is dedicated to implementing this process in the waste management industry: Nate Morris.

Nate is the founder and CEO of Rubicon, a software company dedicated to modernizing the waste-management business. Nate has been featured on Fortune Magazine’s 40 Under 40 list and has been recognized as a Young Global Leader by the World Economic Forum.

What follows is a lightly edited transcript of our conversation, including brief portions that were cut from the original podcast. You can download the episode here, and don’t forget to subscribe to my podcast on Apple Podcasts or Stitcher. Tell your friends, leave a review.

Pethokoukis: Let me start with this: How hard is it to start a business in America today, especially if it’s one where you have very high aspirations? We can also talk about small businesses and family businesses — restaurants or dry cleaners, which are fantastic — but some people start a business because they want these things to be big and important. I think that’s probably why you started your business. How easy is it to do that? Or rather, how hard is it to do that?

Morris: It’s a fundamental question that a lot of individuals ask when they’re contemplating the idea of jumping in and starting a company. I tell people that the idea is usually the easy part. It’s the execution — getting going and really having the courage to put one foot in front of the other — that’s hard.

I often tell people that the hardest part about being an entrepreneur is the reputational risk. It’s not the time or the energy. It’s telling friends, family, colleagues, even your boss, folks at school, “Hey, I’m leaving,” or, “I’m going to go do something else. I’m starting out on my own.” For a lot of people, it makes them feel uncomfortable. “Well, maybe I should be doing that.” Or they ask, “How does he or she get to do that?” And so, I think the hardest challenge is the reputational aspect of starting a business. It’s very challenging, but very rewarding.

I think getting started today is all about asking the right questions. What problem are you solving? Because I believe that the bigger the problem you solve, the more the market rewards you. We were fortunate at Rubicon, about a decade ago, to stumble upon the waste management industry — which had not changed for thousands of years, arguably since ancient Rome. I often tell people, even Julius Caesar had oversight of his landfills, and the Romans recycled. We’re still landfilling at scale today in America and various parts of the world. Rubicon helps to solve a big challenge to get off of that landfill model. We were fortunate that we stumbled upon a very big challenge. Even if we were just a little bit right, we could make a really sizable impact, because not a lot has changed.

Via REUTERS/Rafael Marchante

I started with $10,000 on a credit card. I had student loan debt. My mom asked a lot of tough questions. “Why are you doing this now? Is this the industry that you wanted to do? You could have done a lot of different things. This is the toughest industry arguably in the world.” So it’s that reputational risk, I believe, that’s the toughest part.

What do you think drives entrepreneurs? Obviously they, and you, want to make money. And that’s fine, we’re capitalists here. But how much is your work also driven by wanting to build something that lasts?

That’s certainly at the forefront of what we do and how we started. Certainly, everybody wants to make money. There’s no question. That’s the fundamental crux of what America is all about — it’s a free market system. And at Rubicon, I think there’s nothing more American than when you can make money with garbage.

But we also saw an opportunity to reframe the environmental debate. I came from a place in Kentucky that had been under the microscope for the coal industry for a very long time. The climate change and the climate debate were largely associated with working people, like the people that I knew in my family with job loss. I thought that was crazy, and that we should be able to generate great environmental outcomes but lead with the market, not have the government pick winners and losers.

That’s what prompted me to say, “We could solve a big environmental challenge like waste.” Why is it that the waste industry hasn’t changed for thousands of years? Why is it that the government isn’t mandating more regulation or more insight around the way the waste industry’s working? I didn’t know the answer to that question. Still, I did see that the industry could improve, and that being a conscious business person and entrepreneur — and a socially conscious person — can have a big impact.

We could also get a generation of Americans to think differently about the environmental movement and to see that it doesn’t have to be the people in California and New York who have all the fun. It could be the business leaders of this country that help drive this change, not the people out of Washington. And so that, to me, was a rewarding aspect of this. Also, when I go home to Kentucky, it’s rewarding to be able to say to members of my family or to people that I know that work in factories or other tough, “You could be part of this environmental movement. You don’t have to have solar panels or drive a Prius to feel like you’re part of making a difference in the environment.”

When people think of the environment, I think a lot of their focus is on climate change. I’m not sure the waste generated by our society is something that we think a lot about. Maybe we drive by a landfill, or maybe we assume the waste gets taken to China or something like that. So what don’t people understand about that industry, how it works, and how you want to change it?

Great question. Think about the garbage that you throw away every day. Typically, I know, on average, I throw eight to 10 pieces of trash away a day. Hopefully, I have opportunities to recycle some of those pieces of waste. The carbon emission that’s associated with waste is significant and actually mirrors that of some of the other categories in our economy that are incredibly impactful. But we know for a fact, regardless of the science of climate change, how long can you continue to bury garbage in the ground and not think that it doesn’t have a big impact on water quality or air quality? We know that everything we bury in the ground gets into the soil, which ultimately gets into our food, which gets into our bodies.

So common sense will show that burying garbage at scale doesn’t make a lot of sense. We say at Rubicon that waste is essentially a design flaw. If we’re producing a lot of waste, that means our manufacturing could be run better. That means that the products that we’re producing could improve in the way that they’re being manufactured and the materials that we’re using. That means that we need to have some behavior change, because there’s also an economic benefit to that as well, aside from the environmental implications.

But look, I was raised by a single mother and grandparents who came from the country, and they didn’t waste anything. Waste, to me, is very offensive in any of its forms, whether it be wasted tax dollars or wasted material. I just think, as a country and as a whole, we’ve gotten conditioned to believe that wasting things is okay. I think we can reframe this debate. If we waste less, we’re going to have better environmental outcomes. We’re going to save money, and we’re going to run better businesses as a whole.

Because waste definitely tells a story. If you look at anthropologists, when they study ancient civilization, they go to garbage to help uncover how that civilization was running the day to day of the township, or of the city, or of the municipality. Waste unveils clues about how you live and what you value. We need to do it right, and we need to minimize waste at all costs.

Via REUTERS

So how do you do that? And how can we do that better? What does your company do to make that happen?

It all gets down to it’s a business model question. We’re competing against very large incumbents. Our business — Rubicon, which I helped to found about a decade ago — started in Kentucky and started, as I mentioned, with a $10,000 line of credit. We set out to examine: What is wrong with the waste industry? Why are we producing so much waste? Why do we get paid to bury trash in the ground?

It all goes back to the incentives. If you look at the two big players — now the three big players — that are occupying our economy, they own the landfills. When they pick up your trash, they’re trying to put it into the landfill they own and then charge rent on that garbage every month.

It’s a pretty simple model.

Yeah. So oftentimes, people think of the trash company as a trucking company or a logistics company, but they’re actually in the real estate business. They get paid to bury garbage in the ground. I was young and naive enough to think, “Well, gee, I could change that. We could change that at Rubicon.” And we said, “It begins by being divorced of the assets, not having a dog in the fight” — meaning we’re not going to own trucks and we’re not going to own landfills, so we can be agnostic about the solutions that get created. This means that, instead of being relegated to landfills, we could actually partner with more recycling plants. We could actually control the volume in a local economy and be able to incentivize more recycling solutions to get built in that economy. That was really the first part.

The second part was is that we saw a big technology gap in the space. Believe it or not, most of the waste industry today is, at best, running on a DOS-based system. The big players are running archaic technology at best. They’re light-years behind the rest of the economy when it comes to data and products.

Think about how important measuring waste is for telling a story about the impact that you’re having, and also for monitoring the material that’s coming in and out of your business so you can make adjustments (back to our earlier point) because maybe you’re manufacturing is not as efficient as possible. So we set out to build a great platform for the industry that could really begin to collect metrics, so that waste could tell the story about how effectively a business is operating from a manufacturing perspective or about the way that the supply chain in that business is operating — in other words, the environmental impact of that business. Again, waste leaves clues, so that gives us the information we need to make adjustments up the supply chain to hopefully stop waste before it begins.

One other thing I’d say, Jim, is the importance of re-imagining what the consumer experience or operational experience is like. Waste today, at scale, operates very much like a utility. Like, “Hey, as long as it gets picked up, we don’t care who does it.” At Rubicon, we wanted to have ease-of-use at the top of our priority list — for our product to operate and function like any 21st-century product would, and for us to make it fun and engaging and a delight to deal with, as opposed to dealing with your cable company or dealing with some other experience that hasn’t been particularly great.

I mean, what does that look like for the consumer?

That means engaging in a technical platform, such as an iPhone experience, or any sort of smartphone. That’s also about getting the analytics at your fingertips. And it’s about having, in some cases, the concierge approach — to being able to detect the type of material that’s being produced on-site, so we can actually create more recycling experiences and really be an advocate for that client or customer, as opposed to just a service provider that says, “Hey, we’re just going to pick it up and move on.” It’s about really seeing the waste as a resource and having that experience reflect that.

I mean, this is a huge budget line for a lot of cities, right?

Absolutely. One of the things that we’ve focused on this year we released our first-ever ESG report. One thing that was very provocative, and has never been done before in an ESG report, was to actually release taxpayer savings. We wanted to make sure that the market saw that not only are we trying to have an impact, but we’re also trying to help the American taxpayer get relief through the solutions that we’re creating.

Via REUTERS

This is a data business in large part. How much of this data are you generating that cities didn’t have before? Or did cities have this data, but they just didn’t know what to do with it?

It’s a little bit of both. In some cases, they don’t have any, and they’re really starting from scratch. Waste is one of the most overlooked categories, if not the most overlooked category, in any operating business. Again, as long as it’s getting picked up and taken away, no one asks any questions. What we find in cities is an opportunity to score tremendous points and really put cities on a path to being smart and resilient. Our products that we’re able to install at the city level immediately start with cost savings to the taxpayer through better routing, better efficiency, and more driver engagement. Safety is the cornerstone of the product as well, making sure that the drivers are safe and that the constituents of the various cities or towns are being watched over as well from that safety.

Also, the trash truck goes to every home and every business, which is an opportunity to collect data about road conditions, weather, even things like graffiti — things that are happening inside the city that the garbage truck can detect while it’s driving. Jim, I don’t know if you’ve ever driven a Tesla, but when that Tesla starts running, it’s often also getting data points around the car. We’ve been able to, in some cases, do the same thing with the garbage truck and collect data around it. After all, it has such a great purview of so many of the cities’ roads, because it goes so many different places. The amount of data that we collect around a city to really inform its mayor city supervisor about how to improve their city from an infrastructure perspective or even a crime perspective is really fantastic. It’s staggering the information that we’re able to get.

Do we not send a bunch of waste to China anymore? It seems like we used to, but do we not do that anymore?

For many years, since China entered the WTO in the late nineties, China has been the world’s landfill. That was part of the deal: Developed countries from around the world use China to send a lot of “recyclables” there. Recently, China said, “Enough. We’re not taking any more.” This has exposed the lack of infrastructure that we have today in the United States to manage our garbage.

What many see as a crisis, we see as an opportunity at Rubicon. We have the data to inform the kind of solutions that need to be manufactured and built here in this country, to be able to process and recycle, and create circular solutions for our waste that were just being landfilled in China. And we think that this is not only a jobs opportunity as these recycling plants get built, but also a resiliency issue for our cities. This is something that the next generation will look at when they’re considering moving. Whether it be Lexington, Kentucky, or Atlanta, Georgia, or Austin, Texas, the city’s resiliency profile and the way that they’re managing their environmental footprint is going to be critical to attracting new citizens. We believe, in this crisis, there is a tremendous opportunity to reshape and remake the American waste system and move it off the landfill model at scale.

Is it easy to build? Is it easy to open a new landfill? Is that happening? Are there still new landfills opening, or are we using the existing ones? How does that work?

There’s certainly a finite amount of time that’s left for the landfills that exist here in the United States. I would be hard-pressed to think that anyone would invest in a landfill in today’s world, given what we know about the harm that’s being caused by them and the environmental implications. We know it’s not the future. Certainly, we landfill waste today. We have to. The infrastructure does not exist to be able to move everything to a recycling plant. We have to use the assets that are available today in the country, but certainly, we know that that’s not the future.

What we say is, “Let’s invest in those recycling plants. Let’s invest in anaerobic digestion for food waste. Let’s attract those investors to come here to the United States, so we can move off this model at scale.” Our landfill capacity is running out around the country, so we’ve got to move quickly. I think that this is a bipartisan issue that’s market-led, where we can get an environmental win as a country and, for once in a long time, really bring a lot of people together on an issue that’s been so divisive.

People tend to associate environmentalists with the left, but it seems weird that the environment is such a politically divisive issue. What are your thoughts on that?

It’s a very interesting question. I scratch my head because I believe the Republican Party, for instance, had some of the early movers on the environmental movement, from Teddy Roosevelt to Richard Nixon, and even to Ronald Reagan and George Bush in the eighties. Republicans are related to some of the Clean Air Act and acid rain legislation that we saw. Teddy Roosevelt has been a personal hero of mine since I was a kid. I’ve always loved the environment and never thought that politics had anything to do with it. It’s the right thing to do.

Via Twenty20

We also see a generational shift, where this is not a passive issue for millennials and below. If you don’t have an environmental message as a company, I believe you’re going to be left behind. And I think that brands, businesses, and governments recognize this. I think as the two-party system continues to move forward in our country, I think both parties have to think about how they’re going to be relevant on this issue.

I believe the fundamentals of sustainability have to start with economics as well. Because it’s all well and good that we have the right intentions, but if we can’t have the ability to pay for these initiatives and make them make sense for business, they’re not going to be viable for anyone in the long term and we’re not going to be able to pay for these things.

I think business has to lead the way. We’ve certainly tried to do our part, here at Rubicon, to show that business can be a leader on the environment and that the private sector can step up. Just because you’re in business doesn’t mean you can’t make big moves and have a big impact on the way people look at this issue.

You can be a good capitalist and also a good environmentalist at the same time.

That’s exactly right. Absolutely.

My guest today has been Nate Morris. Nate, thanks for coming on the podcast.

Thank you so much, Jim. It’s been a pleasure.

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Source: aei.org

How can entrepreneurship help heal the environment? My long-read Q&A with Nate Morris