Cash for trash: A web-based exchange for recycling demolition debris and industrial waste
This article first appeared in the St. Louis Beacon, April 19, 2012 - Looking out on a view of downtown from her comfortable office, Allison Carmen admits to being an ardent environmentalist. But when she talks to potential investors, the kind of sustainability the 28-year-old Oregon native mentions isn’t measured in acres of forest saved or tons of plastic recycled.
“It’s green in the way that it creates extra money for you,” she said with a smile.
Carmen hopes to start creating some of that extra green soon thanks to her new company, Material Mix, a web-based venture that provides an internet exchange platform for builders and manufacturers to swap demolition debris and industrial waste with recyclers for cash.
A building destruction might cost millions to remove and transport rubble. Much of the waste is actually valuable scrap that can be sold off, turning an expense-line item into a profit center. She hopes her enterprise can tap into the 176 million tons of waste U.S. manufacturers, industries ranging from food to furniture, now pay to dispose of every year. More than a third of that waste is recyclable.
According to its revenue projections, by pulling a portion of every sale, Material Mix could generate more than $2.25 million by its second year and almost $8.75 million by 2014. Its promotional literature cites a more than $13 billion potential market as proof the concept is a workable one.
Carmen developed the idea in San Diego, where strict state requirements mandate a heavy level of waste diversion to prevent land-filling reusables. She said that while facilitation systems were in place there, they were relatively haphazard.
“They try, but it’s all about execution,” she said. “If you have an exchange, but it’s in the back pages with just a bunch of blue hyperlinks and nobody knows where it’s at, it’s inefficiently run and operated so it doesn’t work.”
The business model she proposing isn’t unique. It’s somewhat common in certain parts of Europe but not in the United States. Carmen notes that only one Houston-based competitor is already on the map as a major player, so she feels the market is ripe.
“There really is a big opportunity in the U.S. in this industry,” she said. “You are probably going to see a lot more companies that are trying to monetize recycling.”
Others seem to agree. Carmen has been garnering quite a bit of attention lately as a finalist in the Billiken Angel Network competition. Over just the past couple of weeks, the SLU entrepreneurship grad has appeared at InvestMidwest, Capital Innovators and Innovate VMS.
She enjoys delivering the pitch, often comparing her enterprise, which was founded in early 2011 and is set to have its website beta go live this month, to a sort of Match.com for recyclables.
“Analogies help to get people on board with the industry. You say Match.com for recycling, people say, ‘Oh, yeah, I get that.’ But you also want to avoid always saying, we’re the Facebook of this or the Match.com of that because it gets kind of cliché.”
At least it’s better than the alternative.
“If I say it’s an industrial commodities exchange for reusable materials, people ask, ‘What are you talking about?’” she laughed.
But no matter how it is described, the profit potential is what investors really want to hear. For the new breed of 21st-century ecological entrepreneurs, the concept of sustainability is a business model, not just a philosophical outlook.
“For our demographic, who we are trying to communicate our service to, it’s not the bullet point that we lead with,” Carmen said of environmental concerns. “Being green is usually the last thing on the list. Manufacturers and builders are more focused on improving efficiency, making money and reducing their bottom line.”
But there are perks for the socially conscious. Material Mix plans to partner with a number of nonprofits and trade associations to allow sellers to donate a portion of their proceeds to such groups.
In some respects, good corporate citizenship increasingly may become the law of the land as diversion mandates are likely to creep inward from the coasts or perhaps emanate from the federal level.
In her office at the T-REx incubator on the 12th floor of the Railway Exchange Building, Carmen’s desk faces a whiteboard filled end to end with the names of potential clients. She said she has interest from a number of builders in the St. Louis area who have already incorporated green practices into their way of doing business.
In some industrial situations, such as in certain aspects of electronics recycling, customers may be required to know where materials go as they move downstream, she said.
“The benefit of starting this in the Midwest is that we have this manufacturing corridor here. In California, they already have the regulations in place so there’s not really the need,” said Carmen, who has an undergraduate degree in biology and environment policy. “People (in California) are already used to operating their business in an efficient way. They don’t usually have as much waste.”
Carmen said the key is the electronic interface. The idea may not be new, but the medium is innovative. She recalled a “manually” managed exchange in Illinois that ran for about a decade.
“They way that they operated was this poor woman in an office with an Excel spreadsheet and a telephone trying to make things happen,” she said. “I’m hoping that once we have this open exchange platform where anyone can use this at any time, that will really blow those growth rates out of the water.”
Growth for Material Mix will start with Missouri and Illinois. By 2013, the operation looks to expand to Pennsylvania, Ohio and five eastern seaboard states. The following year, she hopes to be nationwide.
Meanwhile, the model allows for more than just recyclables. Interesting architectural salvage pieces could be involved as well. A big company doing a demo and build wouldn’t normally take the trouble to find a buyer for such items, but Carmen’s website changes that.
“For a large organization, if they can’t send it back to their supplier — basically if it doesn’t have a barcode — they can only scrap it,” she said. “So using Material Mix would give them an opportunity to find a [buyer] for a spiral staircase or a really unique lighting fixture that would otherwise get trashed.”
Carmen said investors have been receptive to her idea. However, she thinks Material Mix will still need another round of cash gathering.
“Once you get the attention of one fundraising group, then others follow,” she said. “It’s just really hard to get that first investor.”