Entrepreneurs find cash in trash

Some entrepreneurs across the country are building businesses based on the belief that garbage -- once destined to rot in a landfill -- can be repurposed into profitable products.
Americans produced about 250 million tons of trash in 2010, recycling and composting about 34 percent of that total, according to the U.S. Environmental Protection Agency. Now, thanks in part to a sour economy and growing environmental awareness, a few businesses are looking for ways to turn more of the trash destined for landfills into viable products.
For Dan Blake, a former Brigham Young University student and now CEO and co-founder of the startup EcoScraps, the idea for a business came when he couldn't finish his French toast at an all-you-can-eat buffet. He says he realized how much food is wasted at a single restaurant -- and how much it costs for garbage haulers to truck away the scraps. The EPA estimates that 33 million tons of food was trashed in 2010. Because food is among the heaviest waste -- and garbage tipping fees are based on weight -- it's costly to toss old edibles.
Coming from an entrepreneurial family, Blake sensed an opportunity. "A business that doesn't have to buy materials should, in theory, have really good margins," he said. Blake started dumpster diving, collecting food to compost in his apartment's parking lot. A university lab did soil analysis to find the best combination of nutrients for fruitful compost. It wasn't long before Blake and his partners dropped out of school to pursue EcoScraps full time.
Launched in 2010, the business turned profitable a few months ago and now sells its compost and potting soil in Utah, Colorado, Arizona and New Mexico. EcoScraps has 25 employees and declined to disclose revenues. Blake attributes some success to EcoScraps' money-saving model. Food waste, often from grocery stores and farms, is hauled to the company's compost facilities for a discounted tipping fee. The savings is passed to consumers, who can typically buy EcoScraps products for less than other organic compost and soil. But just as with traditional trash hauling companies, transportation costs are high.
"Transportation is a killer," says Blake. "We spend a ton of our time figuring out how to cut down on those costs."
In the nonprofit sector, an Orlando startup is reusing discarded hotel waste. Clean the World partners with major hotel chains like Walt Disney Hotels and Starwood, and they recently secured a partnership with InterContinental Hotels Group, to collect thousands of bars of used soap every day. Gathered by housekeepers and shipped to collection centers, soap is sterilized, melted and reshaped into a new bar.
Founders Shawn Seipler and Paul Till say the inspiration for Clean the World struck in a Minneapolis hotel room. Curious about the fate of his half-used soap, Seipler called the front desk, and was told it was thrown away. "There's this huge amount of trash," Seipler said. "What could we do with it?" After ruling out the idea of selling recycled soap, they settled on a nonprofit model with a dual mission: divert waste from landfills and improve health conditions globally by distributing soap to those in need.
Clean the World charges hotels a monthly fee of 65 cents per room. As part of the deal, hotels receive communication materials touting their participation in the program. Since its inception in 2009, the nonprofit says it has distributed more than 10 million bars of soap to 45 countries -- and diverted more than a million pounds of landfill waste.
Houston-based RecycleMatch is also building a business from trash. The company is testing software that lets businesses run public or private online auctions in an effort to make the most money for their manufacturing byproducts. Two businesses, Shaw Industries and Progressive Waste Services, are kicking off the pilot program, said RecycleMatch founder Brooke Farrell. With the software, she said, "they can manage all the byproducts in one platform with tons of flexibility."
A former consultant at trash-hauling giant Waste Management, Farrell was inspired to start RecycleMatch when she noticed small companies repurposing manufacturing materials. She loved the idea, but wanted to see it scale up. "Instead of saying, ‘I'm going to create bathmats out of football parts,'" Farrell said, "I wanted to find a technology that could help people achieve scale faster."
During the last few years, Farrell said, companies have come to better understand the potential for their manufacturing waste to be repurposed into an ongoing revenue stream. "They see waste material as an opportunity instead of a cost," she said.