Recycling innovation

Twas the night before Christmas, the stockings were hung by the chimney with care, and I’m thinking about… all the boxes and gift wrap that will need to be recycled tomorrow!

I recently saw some old friends from my EPA days, and it got me thinking about what has been one of the more innovative recycling-based business models that has emerged in recent years: RecycleBank, a recycling-based membership rewards program.

Under RecycleBank, homeowners put out their recycling in designated containers. The containers are then weighed, and the homeowner gets 2.5 “RecycleBank Points” for each pound of material recycled (max of 450 points per month). Thanks to an RFID tag on the container, the points are posted immediately to a homeowner’s online account, and the RecycleBank Points are then redeemable at over 1500 retailers, including Whole Foods, Kmart, and Rite-Aid.

In terms of business model, RecycleBank derives revenues from sponsorships and advertising on its website and containers. Wikipedia suggests that RecycleBank also draws a transaction fee based on the contract between the hauler and the municipality, while a Newsweek article indicates that RecycleBank derives monies from municipal savings from waste being diverted from the landfill to the material recycling facility. The latter seems like a risky proposition, since recycling usually costs more than landfilling in many parts of the country.

According to the RecycleBank website, over 1 million people in 20 states participate in RecycleBank.

Some of the more appealing aspects of the RecycleBank business model include:

1. Strong behavioral incentives. One of the greatest challenges in environmental issues is encouraging behavior modification. The use of a rewards program—a proven business model in other industries (e.g. airlines, hotels)—is a great way to drive environmentally-conscious behavior modification.
   
   
2. Low CapEx. RecycleBanks owns very little equipment of their own. No trucks or recycling machines. The main piece of technology is the RFID chip.
   
   
3. Great control point. As I tell many of my clients, always think about the control point that locks-in consumers and locks out competitors. RecycleBank, which operates through the municipal contract for recycling, is probably the best possible control point for recycling.
   

Current investors in RecycleBank include Kleiner Perkins, which provided $30 million in 2008, as well as Coca-Cola.

Happy holidays!

The End of Cash?

Last week, Twitter Chairman and Co-Founder Jack Dorsey was on CNBC describing his latest project: Square.

Basically, Square is device-enabled service that uses an electronic "square" that is plugged into the bottom of a iPhone, enabling payment transactions through a card swipe. The customer then signs his/her name with a finger and gets an email receipt. The business model involves receiving a percentage of all transactions, and Square, which is a Khosla Venture, has already signed up the major credit card companies.

Other interesting hooks include a point system, which allows cardholders to collect rewards points (just like credit cards), as well as the ability for retailers to identify repeat customers. And for those who are a little more socially-conscious, Square allows the cardholder to donate 1 penny of each transaction to the charity of his or her choice.

Like many other companies, Square is another example of the continued evolution of online services evolving into mobile services. Imagine Paypal...without a computer!

There are many arguments on both sides regarding the end of cash as we know it. Certainly, the aggregate value of transactions that involve cash has decreased with credit cards, debits cards, and online transfers. But some would argue that there is always a need for cash, esp. in emerging economies.

I would argue that all large scale transactions have already gone away from cash, and the only value of cash is for micro-payments (tips, taxis, parking meters). But even these types of transactions have become more electronic in recent years, and with technologies like Square, we may be seeing the end of cash, save for the many "underground economy" transactions.

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P.S. Sorry, that it's been a little while since I posted...it's just been a really busy month!