Name: CEO Initiative 2019: Rethinking Packaging with TerraCycle CEO
Uploaded: 2019-06-11
Duration: 15 min 6 s
Description: Tom Szaky, TerraCycle CEO, discusses a worldwide view of waste, recycling and how he began his business.

So Tom we have to update some of those numbers. Yeah. I think it's 44 million dollars in charity. That's absolutely right, we're just under 50 million donated with a quarter billion people running our programs from diaper recycling in Amsterdam to chewing gum in Mexico and so on. Chewing gum, cigarette butts, toothbrushes, everything you always thought you had to throw away. That's right. You can now recycle. So I want to start with recycling cuz this is, incredibly fascinating. When you look at the amount that is actually recycled, there is a fantastic piece in science advances. The journal that looked said that out of all the waste that we've created the plastic waste only 9 % Has been recycled I've seen figures as high as 14 % but that doesn't seem too successful. And in fact you are the king of recycling and you call it a failing business model. Absolutely. I think the 9 or 14 % is generous at that. The real issue is and I know we've read about this in many different papers that the recycling industry from a macroeconomic point of view is in collapse more or less and that's because of three major reasons. The obvious ones are low oil prices so it's hard to compete against Virgin plastics and virgin materials. The second is the end markets like China but now not just China but many other countries in the pack region and so on who's to import all the material have stopped for the right reasons mind you that's taken away 50 % of the demand market which is a horrendous thing. If you're a recycler anywhere from Japan to Europe to here. But the third is the most unintuitive which is the quality of the materials we put in the waste stream is becoming significantly lower. Recyclers make money on what's sort of like a profit per touch and packaging is becoming significantly lighter. So you have to collect now ten bottles for what used to take one bottle ten years ago. And it's becoming more complex which means you have to put more resource, more processing resource against Extracting that limited value. And basically, just less things, less things, less things are becoming recyclable, and that's in the middle of a garbage crisis, at the very same time. Yeah, and it's so light, the plastic, that it's actually flying off the conveyor belts, yeah. Absolutely, some bottles are becoming so light, they're now viewed as almost flexibles, which means they're not being recycled. All right. And it's so sensitive. What makes something recyclable is not about technical mousetraps, or the technical ability to do something. It's simply about economics. Garbage companies are were partly owned in Europe by Suez or here in Canada by Waste Connections, these large waste management companies and they're looking to mine your waste. So if they can make a profit, it's recyclable. If they can't make a profit, your waste will be not recyclable. It's that simple. So One sort of, to show you how thin that line is, a clear soda bottle like this, which is made from PET, is recycled in Europe in most cases. But if you add a little color to this, just make it green, which many bottles are, from sparkling water to carbonated soft drinks, that added pigment takes the value down just enough, to make it now not recyclable anymore. It's that thin, the line. So, this business model, essentially, has collapsed since you began your effort to recycle in 2001. And you've had this big, aha moment, which was that you were in Canada, and you You opened up the closet of a friend's home and you saw the pot plant that had been struggling forever and suddenly it was flourishing and you realized this was worm poop- That's right. That was doing this. And you thought this is how you started your entire- Yeah. Recycling business, taking compost and recycling it through worms. What's the ah- ha moment- Sure. That you've just had? Cuz it is radically different from- Yeah. It's very different than growing better pot, for sure. Now we know the pot smokers in the room. All joking. That's why I asked the question. That's right, we wanted to get everyone out. Just this past January at Davos, at the world economic forum, we announced a new platform in collaboration with most of the world's biggest producers, from European, [ UNKNOWN ], Coke, Pepsi, all the way to Shell, and And others, as well as major retailers from Catfo Tesco and so on, to try to think about how to solve waste at the root cause because recycling is a good solution to the symptom of waste, but it's not solving the root cause of waste. I mean academically If you look up the word recycling in any dictionary, the word waste must be present. So it's the best way of managing waste, but it's not solving waste. Mm- hm. And so we went on a journey, this is actually two years ago. This also spawned out of the world economic formal. We launched a big ocean plastic initiative in 2017, and we were starting to talk with producers about, how do we go a step deeper? And how do we solve waste at the root cause? And the landing Or the landing point we go to was that the root cause of waste is using something once. And so it's not plastic that's the big evil. We like to project everything that is anti- plastic. That's pretty evil though. Well no, no. But it also makes you live longer. It also is what you're sitting on. It's what you're standing on. It's what your driving in. I mean the world is a plastic world. Think the issue is if we took this carpet and threw it out after one use, Right? That would be pretty bad or the chair after you sat in at once, that would be pretty bad. This you're going to throw out after one use. And that's the problem, right? So now why do we love disposability and not just by the way in consumer goods like look at all the disposable coffee cups we voted for right here when you had perfectly good ceramic mugs to choose from Right, I mean, just thank you for the prop, we prepped on this ahead of time. Yeah, that's great. But you know why we did that, and everyone here is enlightened to it, and yet 50 % of the audience voted for disposability? Yeah. It's becase it's so amazingly convenient and affordable. Right. And that has democratized products, people can access, say, shampoo and soap, be able to access it. But it's created this huge crisis And also, I'd argue the quality of products has gone down in the process. Things have become cheaper, and less investment per unit. So you say you wanted to solve for disposibilty. You wanted to give people the affordability and convenience That this offers or those coffee cups, [ COUGH ] but without the downside of that. Well, right, and what's the downside is a more expensive and even less convenience. So there's been many reuse models out there. Loop is not the first one. But every single one relied- Well, tell us what Loop is cuz I'm not sure everyone knows. Yeah, sure. So Loop is the platform Form you can learn more about in the US at loopstore. com or loop magazine [ UNKNOWN ] In France we're launching it about 10 countries over the next twelve months and it basically is an engine for producers to be able to create durable versions of their products, everything from you Tide and Cascade all the way to Haagen- Dazs and Tropicana, all these sort of consumer goods. Where instead of the consumer buying the product and owning the package. And I would argue to the gentleman who raised his coffee cup do you wanna own that cup when you're done drinking it. Right. You're gonna cherish it for many years. It's your property. Okay, there you go. But it's weird right, you own it, it's your property, and yet you don't want it. Isn't that a weird thing? And most of what we buy falls into that category. So by shifting the ownership back to the producer, some amazing things happen. And these were the a- ha moments that you were driving at is that then they become financially motivated to make the package as long lasting and durable as possible, not as cheap as possible because what's in the price of the content isn't the entire package. So you know in a coffee when you buy the entire Higher price of that cup is in the coffee. Where the entire price of the water is in this bottle. But if you borrow it it's just depreciation of the durable package. So now you're in a financial situation where you wanna make it as long lasting and durable. Now what's beautiful about that is Long lasting and durable doesn't just enable reuse, which is great for sustainability. But enables the most epic unparalleled design innovation that's ever been possible before. Right. [ COUGH ] The packages that these producers from the new Hagen Daas container all the way to the new Tide container and hundreds and hundreds of in between. Many are called in the best version of those packages ever invented and nothing even close. They are pretty sledge there is a clearer screen out that looks absolutely gorgeous, it's stainless steel, so now you've partnered with Nefli, Unilever, PNG, every major brand. The supermarkets that are part of this are [ UNKNOWN ] Yeah. Tesco in the UK, I mean this. These are all the big players. That's right. How did you convince them to change their business model? Because essentially what this is, is they now own the package. Yes, yes. And in fact, you're arguing that they They should treat this as a depreciable asset on their balance sheet, which is incredible. That's exactly right. And they've all made that shift. So today packaging is a cost of goods sold, right? And effectively a throwaway cost. So the goal is to reduce that cost, which makes things less recyclable and less exciting. In a durable, yes you have a bigger financial outlay at the front, but you're making an asset that depreciates over the total number of uses, not only to 0, but to the material value of that object. And the reason organizations have jumped on in a pace that I've never seen them. We were adding a big mega- brand every two days, a regional brand every 12 hours. We We just launched announced globalize the big Canadian retailer just a few days ago. And the reason is twofold. One is that the the current paradigm of consumer goods is a downward trend on margin and a downward trend on consumer delight. Everything will end up as a pouch one day, and how exciting is that? Right and you can't really differentiate either. As a producer you're differentiating on your two dimensional artwork, not on anything more than that. Here you can, the real major play was unlocking this fierce ability to innovate, where, like that Clorox container you described, keeps your wipes wet longer. You know the Haagendaas container does all sorts of amazing features never available before in a coded paper pack, which is what ice cream pints are today packaged in. So this monster opportunity for innovation. And by the way, foundationally solves waste and everyone's in a waste crisis. Greenpeace put out a list of the Top 10 contributors to the plastic crisis, nine of those are loop partners and the 10th one is in dialogue will get to 10 out of 10. So when you have your hugging does And you finish your Häagen- Dazs. What do you do with that container? Well, this is the key. I think, in any sustainability message is it has to be fiercely simple and as convenient or more than the current paradigm. If we're gonna ask to change, it's gonna be the more we change, the less success the system will have. And so we want you to echo the behavior of disposability. Because the most convenient thing to do with the crap in your home is to throw it unsorted uncleaned into a pot into a pile. That the negative of doing that is where it ends up. The action of doing that is not bad per se the fact that it ends up in a landfill is the problem or an incinerator if you're in Europe or other markets. So there you look to you throw them all dirty, no sorting nothing into a bin And that bin ends up with us as a reuse center, where we sort it, clean it, provide it back to all the primary manufacturers. So, you collected UPS. You have a loop back. It's very cool, you throw it in. UPS picks it up. You don't even think about it. It kind of conjures up ideas of the old milk man. It totally does. I want to ask who remembers that here. I am curious to see if anyone had a milk man growing up. There we go. That's actaully a pretty fair number. I had one. And here's the point, it worked. Yeah. It's just a reboot of an old idea. Now here's the interesting part, the next you ask about ahas, right? The first aha was unlocking design. The next one, which we're really just opening up the sort of the box on is with reuse you have a direct relationship with the consumer's actual use product, which is really profound. So that becomes as simple as in any shopping environment, you know what your consumer bought. But in an environment like this I also know what you returned, and the difference between the two is what's in your home. Sets up like an interesting function, for example, that will be live later this year is you'll be able to opt to get an alert ten days before anything in your home expires so that your You're alerted to say hey that pasta sauce is gonna go bad maybe you should have some pasta today instead of throwing it out in two weeks ->> Do I want Nestle to know how much Ben and Jerry's ice cream I made. Well Unilever would know how much Ben and Jerry's you're eating but [ LAUGH ] No, but all joking aside, it's about what you can enable for yourself. So, the most profound version of this is that there are certain waste trains that carry diagnosable samples on them. Now, think how bug 23 & Me, and [ UNKNOWN ] and other companies have gotten You use motor oil carries your engine scrapings, your cat litter carries your cat's urine sample. Your child's diaper carries your child's fecal matter. All of those can be diagnosed when they come in if I know it's yours, and then give back to you really interesting. So this is It's an odd transition. I want to get from fecal matter to the capitalist society. But we- Is it odd or maybe not, right, yeah. Well no because we've had this long conversation about the challenges of capitalism and how in crisis it is or whether it is in crisis or not. Your stories, you actually, your family was in Hungary. Yeah. You fled Hungary after the Chernobyl accident, Any of you who have seen the Chernobyl miniseries can understand why. You traveled in Europe before you ended up in Canada. When you got to the United States you talked about this as being this sort of bastion of big ideas. Where anything is possible. And then you built a business basically in the most unusual business model ever. With this worm poop. Yes. As your famously known, you know you've discovered the bounty of the way our system works. How would you see it now. You started a business in 2001. That is the system in crisis? For me I was born in communism and landed in capitalism and I think there is verues of both by the way. Both sides like to vilify the other but there are virtues of both. To me what really Attracting me to business. I think business is the most powerful tool for change bar none. It's been more powerful than politics, than disease, than war. It, imagine as a global CEO, many of you in the room you can snap your finger and how many lives do you change the next hour you know, Versus process and so on that has to take place. What, that to me was really exciting. What was less exciting, remember this so clearly first year at Princeton, Econ 101, the professor gets up this is the very first class and asked what's the purpose of business? And the answer that she was looking for was profit to shareholders and I profits critically important. Don't get me wrong. I'm a die hard capitalist. I think it's important. But is that the point? And I think if we make that the point, then it's going to veer us in very difficult directions. And if you think about you know, when was America at its height because it isn't at its height anymore. It was in the 1950s 1960s where the tax rates just kept going up and you had Phenomenally powerful middle class because the middle class who buys everything. And if I look at it now, it sort of feels to me like what our history books say Russia was like 30 years before that when the Tsars lived there before the revolution where the power balance went so desperate. And man I mean everyone here has got all the guns, it's got all at some point it's going to tip over. And I think it's really important that we think about how to. Bring up the middle class and not have a class of elite and the class of extreme poverty, because that's also gonna make the economy work way better. And I think there's a lot of rules, rules for making sure we're protected. And there's some level of regulation within this amazing motive. You get to create what you want. I mean, in other countries, you can't just have a dream work hard and be successful. That's a uniquely American idea. Well on that, thank you very much, Tom Szaky. Fantastic conversation. Thank you. It was wonderful. [ APPLAUSE ]

CEO Initiative 2019: Rethinking Packaging with TerraCycle CEO 

Rethinking Packaging with TerraCycle CEO 

Tech

Tom Szaky,  TerraCycle CEO, discusses a worldwide view of waste, recycling and how he began his business. 