Turning Waste Streams into Revenue Streams: How a Local Startup is Reducing Waste in Austin

Smarter Sorting is an Austin-based startup that repurposes selected materials from the waste stream through buyer identification and machine-made sorting. They save municipalities, including the City of Austin, money by offering them a lower cost service than the incineration fees they typically incur for removing hazardous waste products.  SmartAustin loves the combination of business model innovation, public-private partnership, and environmental benefit that Smarter Sorting’s approach represents. We are delighted to be partnering with Austin’s technology marketing consultancy, JDI, to develop an upcoming case study about Smarter Sorting. In the meantime, we worked with CEO Chris Ripley ("CR") to produce the sneak peak interview, below:

 
 

 

SA: How did you end up in Austin?

CR: Honestly? I threw a dart at the map and decided to move here. I had a number of other options.  But it seemed like the coolest place that I hadn’t lived. At the time, I was working on manufacturing chemicals and adhesives. We had revenue and employees, and we moved here to create a central base for the business.

SA: But that was before you started Smarter Sorting, which is in the resource recovery space. What’s the connection, and how did you make the change?

CR: So, I had 15 years of experience in paints, adhesives, sealants. But also in programming. I’ve done a bunch of different things! I had recently moved to Austin, and it was the wee hours of 2010. I was at Walmart and I ran into an official from Austin Resource Recovery (“ARR”). She was wearing a shirt that said, “I MAKE PAINT,” and so I made a beeline up to her. I tapped her on the shoulder and asked her about it. She explained that Austin Resource Recovery re-blends paint that has been thrown out and re-sells it.  We actually went straight from the Walmart to the ARR site to check it out!

They had developed a process for recycling paint without any knowledge of how paint is actually made. They had jerry-rigged a whole system together: They had attached paddles to drills to mix the paint and didn’t understand that there was industrial equipment that could do this, and in a higher quality, faster way. They had come up with ideas on their own, in a vacuum.  That was super-cool, but I really wanted to help them out. I did this first project pro bono.

One day, I was at ARR, and I noticed two $80/gallon containers of solvent, just sitting around. We had been working there all day and the containers looked abandoned, so I went to grab them. They went crazy! They said, “That’s hazardous waste!” So they were confounded because I was touching this hazardous waste and I was confounded because they considered this standard solvent to be hazardous waste!

After we worked through that, they said, “We actually already have a contract with someone for that.” That made more sense. I asked, “How much did they pay you?” They looked at me like I was crazy: “We have to pay $3-$4 to have that processed.” “What do you mean, ‘processed?’” I asked. “They are going to burn it,” they said.

That’s when I lifted my eyes and saw the forest. There were tons of resources that were all going to be lit on fire.  We like saying nicer words: ‘incinerated’, ‘turned into energy.’

I spent a few months looking into it and figured out that the best use of this specialty solvent was to clean printing presses. I found a buyer and took the material off of ARR’s hands for less than they were paying the incinerator folks.

SA: So, you were clearly leveraging some industry expertise that you already had. What were some of the growth areas you had to contend with as you stood up your new business?

CR: Well, I didn’t understand the intersection of politics and bureaucracy and law. I had to learn that. Each one of those took me quite some time to grasp.

We had to develop a bunch of new technical capabilities, too. We now have the first identification and canonicalization engine for consumer chemicals. Identification is about telling what something is. Canonicalization is about sorting the data into appropriate categories and then, ultimately, associating it with the relevant marketing ‘catalog data’ that helps commercial entities locate stuff that they need.  At ARR, about 120 million different materials could pass through our sensor system. No data base has all of these elements and their data sorting options are very limited. Our system of sensors finds data facets about an item and first associates with Material Safety Data Sheets, which are PDFs, and then makes those machine-readable. After all of the data we need is associated, we overlay Texas rules for distribution and sales and so on.

Most of this information is publicly available, just in several different places.  So blending all of that was the other major growth area for us.

SA: OK, now’s the time where you tell us how the solution works, technically, and how you actually get these resources to market.

CR: So, the software sits on AWS.  A piece of hardware sits at ARR. The hardware is, by the way, designed and built in Austin. We use machine vision, through a 2.5 megapixel German camera, plus a scale, plus a bar code reader, to collect the data facets. We use machine learning and natural language processing to inform our parsing of the unstructured data in the various text documents we need to associate the resources to. There’s a touchscreen attached to the hardware, which allows for manual inputs from the operator. That’s the current state.

For sales, we’ve developed an ecosystem of purchasers and we actually don’t take items out of the stream until we have the buyer locked in. A lot of this is really low hanging fruit, though.  Bleach is an easy one, for instance. There’s a bunch of it, and a lot of buyers who are happy with ‘good-enough’ bleach. We actually believe that we can address 30% of the waste that Austin does not yet recycle.

SA: This is all very creative and technical. I’m still putting together how you were able to come out of paints, a more traditional field, and see this unusual opportunity.

CR: I’ve been doing software since college. The actual manufacturing of paints was wholly non-software related. But it provided lots of margin. And I used my software background to develop very detailed marketing analytics programs that led to that company’s success.

My basic commitment is that I bring software to places that don’t have it. To, maybe, industries that don’t even have computers yet, but are sorely in need of it. That’s how I developed the first vertically-integrated painting company in existence. We manufactured paint, sold warranties, sold the paint, and then applied it. We used a Google Adwords competitor at the dawn of click marketing. And we did over $75 million in revenue. Software helped knit together our whole operation.

SA: How have you found working with the City of Austin?

CR: I found a way to work with them because I have a relationship that will give them some real value.  And they are reaping the reward of our investor risk capital. Of course, their risk tolerance is low. ARR is really helpful but they don’t have the data on hand that, say, a New York City has. It’s very hard, still, to find out basic info. “How much is Austin receiving for the batteries it recycles?” Really hard to figure out. Well, we did a lot of work to analyze that question, and it turns out that they get about 20 cents on the dollar for batteries, but in a highly variable way. They didn’t even know.

There’s such a huge opportunity to make this information clearer and to create markets that support resource recovery. The awesome thing about Austin is that they clearly get this idea, and are open to new ideas. But experiments do cost money. And, when you go to a department that has budget constraints, you are asking them to spend money that they don’t have. They want a proven process that has been shown to work everywhere if they are going to spend. So, they are structurally and systematically excluded from taking risk.

SA: Tell us a bit about your growth trajectory.

CR: Austin is our first customer. Our next big opportunity is in graded fertilizer, and is outside of Austin. We’ve also closed a deal with the largest publicly traded companies in our space. We’ve received seed funding from a fund with a venture fund attached, and they’re pretty excited about what we’re doing. I’ve just returned from a crazy trip: Austin to Grand Junction, Colorado to Salt Lake to Portland to San Francisco to Denver to Chicago. Then, New York, Toronto, New York (again), Connecticut, and Toronto, again.  It was equal parts sales and fundraising. But all parts trash!