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Founders find reward program rewarding

Written by Mariana Silva, Waste & Recycling News
Published: June 21, 2010

Two years were plenty of time to get Patrick FitzGerald and Ron Gonen where nobody had ever been. In their mid-20s, with no time to waste, they followed trash and recycling trucks, hung out at recycling process facilities, pitched their business to possible partners and walked up and down streets asking people whether they would recycle for money.

Somewhere between dinner together in September 2002, when they first talked about the company´s concept, and September 2004, after tests and research, they created RecycleBank, and they got exactly what they envisioned: rewards for households to put their recyclables in a blue bin and profit out of trash.

"It was impossible for me to say whether or not it was going to be successful," said Gonen, co-founder and CEO of RecycleBank. "I just knew this was something I was going to give everything I had to try to make successful."

In May 2004, a phone call from Columbia University allowed Gonen, then a MBA student at Columbia University, and FitzGerald, a law student at Fordham University, to walk further.

"In 2002, most people assumed that all environmental ideas had to be nonprofit oriented," co-founder FitzGerald said. "I recall that when discussing the idea with most people, they were visibly surprised at the for-profit twist of RecycleBank."

Through the Eugene Lang Entrepreneurial Initiative Fund at Columbia University, which provides student businesses with early stage investments, Gonen and FitzGerald received $100,000, which paid for marketing research, some equipment and four developers to finish the software code for the rewards program.

"To date we have raised millions of dollars," Gonen said. "But we needed that first $100,000 to get started."

Despite the feeling of victory, Gonen and FitzGerald didn´t have much time to commemorate. And in September 2004, RecycleBank was ready to start.

"Every day is the best day and the worst day," said FitzGerald about the everyday victories and the uncertainty of success when creating a business.

FitzGerald and Gonen say research and constructive criticism from entrepreneurs and experts on software, technology, rewards and loyalty programs at Columbia University, and field tests and surveys that asked citizens whether they would be more likely to recycle if they were rewarded for it, were essential for to start their business.

"I spent the next years in Columbia basically pitching the business," Gonen said. "For an entrepreneur that was a unique and valuable opportunity because I got to, over the course of that next year, take what I built and perfect it.

"If you have the humility to sit through that, and the ability to recognize how important constructive criticism is, you are going to build a much stronger business," he said.

After signing with Coca-Cola, its first business partner, in 2004, Starbucks Coffee, Acme Supermarkets and more than 50 other companies joined the rewards program.

"We believed in the RecycleBank recycling incentive-based concept since its inception, which is why we invested in the program early on," said Scott Vitters, director of sustainable packaging for Coca-Cola. "We wanted to be able to thank our consumers not only for enjoying our products, but also for being responsible and recycling."

Gonen said many people believed it was going to be too difficult to get haulers and municipalities to do what the entrepreneurs had it mind for RecycleBank. But they did it. In 2007, Wilmington, Del., was the first municipality to join RecycleBank. And it wouldn´t take long until more cities and businesses realized having people recycling for rewards was a good idea.

RecycleBank, which doesn´t own recycling equipment or trucks, connects haulers and municipalities increasing recycling rates and decreasing landfill expenses. By adapting their trucks, haulers can weight the amount deposited in the bins and convert it into points.

For every pound recycled, households receive 2.5 RecycleBank points that can be later redeemed for coupons, gift cards of local and national retailers, or point donations to local schools involved with environmental projects. Households who like the idea but don´t live in communities that are members of the program can go online and sign up to get rewarded for their green choices.

The company covers its operative expenses from taking a portion of what haulers receive from the municipalities for collecting the recyclable material and profits from selling sponsorship and advertising from their business partners, who offer rewards to those who recycle.

FitzGerald, who left RecycleBank in 2007 to invest in other startup companies and is now CEO of Nanny Caddy, said he will never forget the first of all companies he helped to build.

"I´m very proud [of RecycleBank]. It´s my first baby," FitzGerald said. "I helped starting other businesses, but RecycleBank is my first, so I have a special place for it. I´m proud of how far it has come."

Today, with more than one million people enrolled in the rewards program, RecycleBank has more than 1,500 business partners, is in 26 states and 300 municipalities, and is expanding to England.

"I felt I had the opportunity to make a significant difference in the way people live their lives and view their interaction and relationship with the environment," Gonen said. "I felt it [was] very rare for an opportunity like that comes along."

You can also view the story 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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