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In Focus: Recycling Pays Off for an Entrepreneur

Written by Diana Ransom, SmallBiz
Published: March 10, 2010

AS RECYCLING TRASH becomes an increasingly unwieldy task for municipalities, some local governments are turning to outside contractors to manage their landfill.

In New York, one beneficiary of the trend is entrepreneur Ron Gonen, co-founder and CEO of RecycleBank. Since launching in 2005, RecycleBank has won new contracts from cities by helping divert local waste from landfills. How does it work? When residents sign up for RecyleBank, they earn points depending on how much they recycle. Those points then can be redeemed for consumer goods for sale through the RecycleBank website. The company also provides similar rewards to consumers who reuse goods through a program it developed with eBay. To date, Gonen has signed up two million customers in the U.S. and the U.K.; he is aiming for another three million by the end of this year.

Gonen hopes sales in 2010 will approach $20 million; he expects to turn his first profit by 2011. SmartMoney asked Gonen about the ups and downs at his five-year-old company. Here are his condensed answers.

Where did you get the idea for RecycleBank?

I worked at consulting firm Deloitte & Touche designing and building software applications for a couple of years. However, I always had an interest in social policy and the environment. So, I went off to Columbia Business School to see what I could come up with. After hashing the idea out with a friend, I pitched the business to Columbia, which ended up giving us roughly $100,000 in seed funding in 2004. By the next year, we launched a pilot program in Philadelphia – and from there, we started getting offers from different cities. We’ve also attracted $71.4 million in venture funding from Kleiner Perkins Caufield & Byers, Sigma Partners, RRE Ventures and Coca-Cola (KO), among others.

RecycleBank was selected by the United Nations Environment Program as a “Champions of the Earth” company last year. Could you comment on that?

Of course, the electric car, solar and wind energy generators are all incredibly important. However, it’s my belief that we need to focus on what we can do today. By helping cities promote recycling and giving consumers an incentive for doing so, we’ve helped divert hundreds of thousands of tons of trash from landfills to recycle streams. We’ve also been able to demonstrate that the environmental movement can be applied to everyday people in mainstream USA. We’re going into suburban and urban neighborhoods and urging them to make an environmental impact.

Is it difficult to run RecyleBank as a business even as it also has a social mission?

RecyleBank is a for-profit venture -- that is, we get paid to help cities divert waste from landfills and through marketing opportunities at RecycleBank’s online shopping portal where recyclers can redeem their points for products. But we’re also helping promote socially responsible ideals. Having a double bottom line is of course difficult, but so is building a company from scratch. It takes a lot of dedication and hard work.

What are the most troubling policy changes you’ve witnessed?

I would say that broadly, we’re spending too much time and too much money focusing on initiatives that may or may not have an impact until 2020 or 2050. I think that there are a number of things we can do to have an immediate and major impact now. Instead of making policies that only seem to help future technologies, I would like to see politicians focus on what to do in the next four years and be able to measure their impact.

What kinds of short-term initiatives would you focus on?

Cities waste hundreds of millions of dollars every year disposing of waste in landfills. I think if we can focus on the usage of waste, we could dramatically improve the environment and stop wasting money. I would improve public transportation, as it would help create jobs and improve peoples’ standards of living. I’d also look into helping people better insulate their homes. That would have a massive impact on our energy usage, as well as the country’s overall standard living. Finally, I would increase green spaces in cities -- giving people a better means for appreciating the environment. They’d also be less compelled to sit at home, which could improve people’s health.

What is your best advice for future social entrepreneurs?

Put a great team of people around you. Look for those who have a lot of energy and experience and be prepared to learn a lot. Also, if you make a mistake, learn from it and keep pushing forward and don’t look back.

You can also view this article here.

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Recyclebank At A Glance

Headquarters
New York

Offices
New York, Philadelphia and Houston

CEO
Javier Flaim

Founded
2004

Investors
The Coca-Cola Company, Craton Equity Partners, Generation Investment Management, Kleiner Perkins Caufield & Byers, Paul Capital Investments, Physic Ventures, RRE Ventures LLC, Sigma Partners, Waste Management Inc., and Westly Group

Members
4 Million+

Communities
300+ in all 50 states

Reward Partners
4,000+

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