Do you want to co-found a startup?
The mission: to accelerate the transition to a zero-waste world through a circular, ethical and sustainable economy.
Yesterday I met a member of a Brazilian start-up who wants to commercialize a German anaerobic digestion technology. These machines (of different sizes) transform organic residues into two products: methane gas and liquid biological fertilizer.
I’ve been looking for something similar for months. Until yesterday, to make the best use of urban organic residues, I decided to rent a small place to create compost. With the discovery of this technology (which, unlike many others already on the market for years, allows the construction of micro plants and not just large industrial ones), I got an idea.
In many cities (and rural areas) of the world, there is no methane gas network. This means that most of the houses have gas cylinders. Even in Sao Paulo in Brazil, only some areas are served by the gas network. So I thought that, with a view to a circular economy, our customers, to whom we provide the household waste collection service, can purchase other products and services from us. One of these could be represented precisely by the gas cylinders coming from domestic organic residues. Another product they could buy is the liquid fertilizer for house plants, the other product of the anaerobic process of biological digestion of the machine I was telling you.
The other products that we could deliver to them when we collect the household residues are organic fruits and vegetables that we initially take from local producers. We could later (even partially) produce ourselves in urban and semi-urban gardens.
As for logistics, some former informal waste collectors (there are millions of them in the world) could take care of it. To them, we would give fixed salaries to get out of actual precarious work conditions. This is one of the company’s social aspects that I have in mind: creating regular jobs for often marginalized people in society.
Initially, we could use a standard product collection and delivery system (fixed weekly collection and delivery appointments). Later, however, I would like to develop an uber-like technology, to respond quickly to customer requests for waste collection and product delivery.
This technology would also allow us to offer customers another service: collecting and transporting bulky waste. In many cities in the South of the world, those informal waste collectors who have a cart get 60–70% of their income selling the recyclable waste and the remainder from the occasional transport of bulky waste or for small removals. They like this service because they earn as much as in two or three days of work with just one transport of a few hours. At the moment, they get these jobs of transporting bulky waste (leading to a municipal storage center) or small removals, occasionally, when someone stops them on the street and asks for this service. Even for customers, it’s not the best: they have to go out on the road and find one of them, talk and bargain. Sometimes they’ve saved a phone number, but they take much time to get along with the waste picker. The service that we could offer, on the other hand, simplifies everything: when one of our customers needs to transport something, he/she goes to the app and make the request. I also thought of an algorithm that establishes the best price based on what the waste pickers autonomously propose. That could be an extra income source (beyond the fixed salary), from which we take a percentage.
Lugg, a US start-up, does a similar service. According to Crunchbase, they got 3.9 M of investments. It is not bad, but considering that they were born seven years ago and have seen their social network pages, it does not seem that they have taken off. The US market in which they operate is full of pick-ups, and therefore all those who own one do not need this service, as well as many of those who have a relative or a friend who owns one.
As for the means of transport, in the beginning, for the garbage collection service only, we could use the collection carts we hire. Later, however, when we see that the service works, we could buy new ones. As we introduce the delivery of products to customers, one question is how to ensure that a single vehicle can transport both products on delivery and those on collection.
I want to prepare a landing page (do you know what it means?) to validate an MVP (minimum viable product) for possible Brazilian early adopters. I have yet to start designing it. I want to test whether people are willing to pay for a separate waste collection service, including organic residues. Currently, only 17% of Brazilians are served by the public recycling service. Among the 15 people I interviewed, found on the Instagram page menos1lixo (Lixo in Portuguese means garbage), many of them told me that they would like to have a compost bin in the house but do not have space (or the roommates do not want). I want to show the landing page to them and see how many respond. I am thinking of the call to action:
- Leave the email if interested.
- Book when the service is ready.
- Do a kind of crowdfunding in which they can undertake to pay for the service (at least for a few months) if a minimum number of people of an area of a city joins the project.
This business model, to make sense, must have a minimum number of early adopters who live within a maximum radius of a few kilometers. If this happens, then by word of mouth, others should be added.
The business model, if validated, would allow us to write a business plan with quantified traction already present and then be able to find public funding and private investors. Furthermore, once tested on the market with the funds received, the model can be easily replicated in other cities of the same country first and then abroad. This allows us to scale. The speed of the “climb” depends on the capital we have and the speed with which we open new cities and nations.
The world waste market is enormous: currently worth more than 2,000 billion US dollars with a growth of 5.5% from 2020 to 2027. To that must be added the sales of other products:
- Organic fruits and vegetables.
- Methane gas cylinders and fertilizer from organic waste.
- Bulky waste transport.
- Other eco-friendly zero-waste products.
Although it may be economically sustainable from the early years, this business model could also guarantee us to make local exits. In practice, in my prediction, local governments that do not yet offer a separate collection service (or those that do not provide any public collection and waste management service) will do so in the future. We could sell them a business unit (the one that operates in that city) or become a partner a bit like most municipal companies in Italy.
A possible pivot of all this (which was the idea I had at the beginning of 2020 and which I talked about in the article you find here) is to create an app for informal waste collectors similar to uber. For them, it would be interesting to have it if, in the meantime, we make agreements with some large condominiums in which we carry out an educational path so that people learn how to do the domestic separation of waste. In this way, they would have already separated waste, saving time and increasing income. Although at the beginning I thought about making agreements with some stores that buy recyclable products, asking them to give us a percentage of the value of the same brought by our partner collectors, now I think the best strategy is another: provide the possibility to use the app for free to the collectors and, after a few years, when they see that the method works, ask them to pay a monthly subscription to be able to use it.
Currently, I am working on the project with Matheus, my co-founder, and CMO. We are looking for two people to complete the team: a software engineer (to become our CTO) and a logistics/operations expert (our future COO). With them, we want to go on from here. This person must share vision, mission, and corporate values.
- Minimization of the environmental impact.
- Ethics towards stakeholders, employees, and collaborators.
- Job creation (minimizing the loss of jobs due to technology).
- Mutual trust.
If you are passionate about the mission of accelerating the transition to a world without waste through a circular, ethical and sustainable economy and you would like to found a start-up, comment on this article or write to me!
Andrea M. Lehner