It’s not a new story these days – technology comes in and sends spasms of change through an industry that’s operated the same way for years.
Except in this case, the standard disruption story is different. It’s now how one smart company created by some relatively young entrepreneurs is transforming an industry that, essentially, hadn’t changed in a century and that no one thought would ever use technology.
RecycleSmart, a Vancouver-based company that has gone national in the past year, has been growing exponentially by using technology to disrupt the calcified industry of trash pickup and disposal.
The company was created as a part-time service in nearby Squamish, B.C. in 2008 by a husband-and-wife pair of consultants, Colin Bell and Jaclyn McPhadden. It picked up recyclable trash from businesses that operated in the mountain town famed for its skiing and other outdoor pursuits.
It moved into Vancouver and became a full-time business serving hotels after Bell, consulting at the venerable Hotel Vancouver, noticed how much waste was generated and rarely recycled. Subsequently, he discovered that the hotel had little insight into how much it actually paid for its waste pickup services – for example, fees never varied, despite fluctuating needs and service. Recycling was non-existent.
The system for business trash pickup is an old-fashioned, route-based business that uses a traditional business model
“The (commercial) industry hadn’t really changed in 100 years,” Bell says. “The system for business trash pickup is an old-fashioned, route-based business that is manually intensive and uses a traditional business model based on locked-in contracts. We provided consulting and established a niche when we told hotels that they could save costs and get better service under our system. And we trained their people how to do it.”
But the business was still operating in a small niche — until 2013, when Graeme Dobinson, an industry veteran who had recently sold his Calgary waste-hauling company, purchased half of RecycleSmart and became a partner.
“I met Colin at industry functions,” Dobinson says. “They were a small, local, home-grown business with a good idea — and with my experience we saw a good market (national chain stores and other large multi-location companies),” he recalls.
These companies often had similar needs and similar problems — they were often forced to deal with local waste collectors in multiple locations, which meant too many individual waste-hauling contracts and the headaches that came with managing them all.
Also, the nature of the industry’s pricing structure worked against them: As Dobinson describes it, the system encouraged haulers to pick up as little as possible because they were paid for scheduled pickup visits regardless of what they picked up or what was required, and charged bonuses for extra visits — or didn’t make them at all.
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The new team’s concept was to provide the companies with services, as needed, in multiple locations — all managed by RecycleSmart, via a monitoring device, for a regular fee. Because it would deal with companies with multiple locations, this would remove a large and costly management headache for the companies that signed up.
That led to the next challenge. At first, RecycleSmart installed cameras in bins that relayed information to the company’s Richmond headquarters. But they were often broken or covered so couldn’t always report accurately.
The company knew sensors that could communicate with head office would be more useful, and after scouring the world for such a device, found a Finnish company that could adapt some children’s toy sensors for their purposes. These sensors now manage some 8,000 bins in 2,000 locations from coast to coast.
Conversion from a simple local hauler of recyclable waste to technology company managing waste on a national scale has definitely paid off. RecycleSmart’s revenue has grown from $400,000 in 2012 to a projected $15 million to $20 million in 2017. It recently opened operations in Toronto, and is hiring more staff to supplement the 30 operating out of its Richmond headquarters.
“Data is everything now,” says Dobinson. “Technology has caused our growth to double in the last couple of years. We now have customers in every major city.”
Bell takes a consultant’s view. “It’s a beauty of a business,’ he says. “It’s asset light, debt free and we’re fulfilling a need. It’s a $3 billion market and we’re not even two per cent of it. We’re only at the beginning of the hockey stick.”
Read the original article here: https://business.financialpost.com/entrepreneur/0227-biz-tw-recycle