Ron is deep into entrepreneurship and sustainability. As an entrepreneur he’s contributed to making policy. Now he’s in investing. He started several ventures starting with recycling but then moving in to lots of different areas with transparency and trust and other parts of sustainable business. And he’s grown a lot. He’s been a founder and investor. He’s gotten in press coverage, he’s got awards, working with city governments. Again, I want to point out people taking on environmental challenges leads to leadership. As you’ll hear opportunities are only increasing. If you’ve been thinking about acting and starting an environmental project, now’s the time. I have to comment that we were very restricted on when we could make this recording. So the call is not that great. I hope you’ll listen through, especially toward the end. It gets very interesting. Sorry about the recording quality but let’s listen to Ron.
Joshua: Welcome to the Leadership and the Environment podcast. This is Joshua Spodek. I’m here with Ron Gonen. Ron, how are you?
Ron: I’m fine. Thank you.
Joshua: Ron and I, just before I started the recording, I mentioned that he and I met… You went to business school and graduateд just before I started. And even then this is almost 15 years ago, 12 – 13 years ago, and you were starting Recyclebank and you’re already doing environmental work and business and leadership and environmental stuff was already mixing together very well for you. I wonder if you could say… Just for people who don’t know who you are, could you share what you do now and maybe some of the key things that led you to that?
Ron: Sure. So today I run an investment firm called Closed Loop Partners that invest primarily in the circular economy. And what we mean by the circular economy is we look for technologies and business models that keep any product or package that is generally destined for landfill back into the recycling stream and eventually back into the supply chain so that it can be reused and remanufactured into new products. And so we focus on [unintelligible], paper, metal, glass, plastic, apparel, electronics and food waste. And we have two funds – a project finance fund called the Closed Loop Fund, a venture fund called [unintelligible] the ventures, and then we also have a center for circular economy that does research and development and convenience in the space.
Joshua: So I want to ask a few questions. Because I think a lot of people listening to this because the word “leadership” is in the title are interested in doing leadership type things and you’re a leader, you’re a co-founder, you’re a managing partner, you’ve been CEO. First of all, I think a lot of people think, “I want to get ahead of my career and if I try to do environmental stuff, it’s going to distract from my getting ahead.” but it doesn’t seem like it’s distracted you from me getting ahead. Is there a conflict between leadership and working on environmental things?
Ron: Absolutely not. It has provided me tremendous and professional opportunities to pursue things that stimulate me and motivate me. And it has also provided me the opportunity to do well financially.
Joshua: So how did you get started? Because Recyclebank is not a bank. And how did you get started with that?
Joshua: Yeah. How did that get started and was that your idea? Did you get it all started from the ground up?
Ron: Sure. So the first part of my career in my early mid-twenties I worked in management consulting at Accenture and Deloitte and got great background on software development and management. But I knew that my real passion was in social policy and the environment and trying to figure out ways to connect sustainable environmental practices to strong economic opportunities. And so I went back to business school and in my first year in business school a friend of mine from high school got together with me over dinner and said, “Hey, you know I had this idea if there is a way to [unintelligible] people for recycling you could significantly increase recycling rates in [unintelligible] to identify what someone has recycled and build a model around that.” I thought that was a great idea and so we partnered together and I developed the business model and software for what became Recyclebank which was a company that partnered with cities to manage their recycling program with a focus on using a technology business model that could record each household [unintelligible] recycled, how much they recycled and reward them for their participation. And what we expected would happen was recycling rates would go way up and we would be compensated by the money saved from diverting all of that material from landfill.
Joshua: And how did it work out? I mean were you able to do that?
Ron: It worked out well. While I was the CEO from 2003 to 2010 we grew the company from an idea to one that serviced over 50 municipalities across the U.S. The Wall Street Journal named us the number one venture backed clean tech company in the world for 2009 and 2010. And so we had a good amount of success during that run.
Joshua: First of all, congratulations. Sounds really great. I mean Wall Street Journal number one things. You also kind of described like the facts of it. I’m curious how… Was it fun? I mean was it a great time? Were you digging around a lot of garbage or was it in boardrooms?
Ron: Entrepreneurship is probably the most challenging thing in business and it’s even more challenging for a first-time entrepreneur. And so I had a lot of ups and downs and things I needed to learn along the way. But that it was an awesome opportunity for me to pursue my values in a professional sense and also to just learn a tremendous amount about how to start a business and manage people. So it wasn’t without its challenges or its difficult times but I look back on that period very, very fondly. It taught me a tremendous amount and gave me a lot of personal freedom financially.
Joshua: And if someone out there is listening and thinking, “I want to start something, maybe I want to follow in his footsteps…” From your read I guess now you have a more broad view being an investor… Are there more opportunities, less opportunities, the same, different compared to when you got started?
Ron: There’s probably more opportunities to when I got started because I think the investment community, the business community is much more aware of the opportunities to invest and profit in the recycling and circular economy space. People are becoming all aware that you can’t just continue to manufacture plastic and have it end up in landfills or rivers or oceans. That’s not economically sustainable, it’s not environmentally sustainable. So anybody who can figure out a way to manufacture using a different material, less material, systems to collect that material and get it back in supply chains. People across the business are starting to recognize that there’s significant opportunity to profit from figuring out solutions.
Joshua: I can’t help but notice the way that you’re speaking is different. When most people talk about, “Too much plastic, you can’t just let it go in the oceans.” and this describes me too is I think people are like, “Oh my God, this is so terrible.” and they get depressed or they get frustrated or they talk about how awful it is and you’re just saying kind of very matter of factly and very practical. And maybe you’re just being that way because it’s a podcast but maybe it’s just like, “Oh, there’s an opportunity. This is something I can do.” Do you hear the view that I am describing and if so, do you sometimes look at it that way or do you just look at it differently like, “Here’s an opportunity. Let’s do something.”
Ron: Well, it is terrible. And the fact that it is terrible means that there is an opportunity for anyone who can figure out how to make sure it stops being terrible i.e. who can figure out how to make sure that this material doesn’t continue to end up in rivers and lakes and oceans or in landfills. The current practice of doing that cost municipalities and businesses billions of dollars. It costs a lot of money and stick things in landfills and things end up in the ocean and hurts tourism industry, hurts the fishing industry, it hurts people’s health. So the current system today is horrible for the environment. It’s also horrible for the economy. It’s costing taxpayers and businesses a lot of money. So if someone can figure out an alternate way to produce packaging, make sure that packaging is collected and reused, they’re going to benefit from the flip side of that cost which is they’re going to take all that money that’s currently lost in the existing system and use it as a profit center to develop a new model.
Joshua: Are you mainly now looking for opportunities to invest in people who are doing stuff like that or are you… I mean I presume that’s the main thing you’re doing. Are you also, and correct me if I’m wrong, are you also trying to do things yourself to send messages upstream to people or is it mainly you’re waiting to hear from others?
Ron: Both. We are both looking to invest in innovative but we also incubate ideas within our firm, we do a lot of R&D and publish things and public speaking around the topic to try to make sure that people are clear about what the issues are and what the opportunities are.
Joshua: Is the public speaking…. Is your audience corporations, the public, TV, media? Is everyone?
Ron: All of the above. It’s important that all sectors of the economy recognize the financial waste, not just the physical waste but the financial waste in the current system and the economic opportunity in a reimagined system where we think about things from a circular perspective.
Joshua: Yeah. It’s really refreshing, I have to say, because I’m used to people being either optimistic or pessimistic and I feel like yours is optimistic, yes, but also practical and opportunistic and it’s kind of forward looking. You know what I feel like? I’m reading that you have this feeling of “I can do something. I’m making a difference.”
Ron: I definitely always gravitate towards “OK. This is the problem. How are we going to solve this?” as opposed to “Let’s spend a lot of time lamenting the problem and pointing fingers and complaining or making ourselves feel good because we recognize that it’s a problem.” and maybe that’s my entrepreneurial DNA but I will always gravitate towards “OK. What’s the solution and how do we build an economic model to get that implemented?”
Joshua: I’ve been describing the following phrase as almost the phrase of our era which is, “I want to do something but if I do but no one else does, then what I do won’t make a difference so I’m just going to keep doing what I used to do.” Do you also feel like that’s a really predominant view?
Ron: I think that a lot of people have that view but a lot of other people don’t have that view because there are a lot of people out there just doing their thing to make a difference and that, number one, adds up. Number two is I can tell you from my experience running New York City recycling programs under Bloomberg I was able to use the initiative of a lot of individuals or a lot of small groups when talking about wanting to do something citywide as examples of people are already doing it. It’s not that hard, so on and so forth and so it’s important that people continue to do things at an individual and community level.
Joshua: What was it like in government working on these things? And is the New York City government…. I don’t know if you’re in touch with them today. Has it changed much under the new administration? Not new but the newer.
Ron: It was a great experience working in the Bloomberg administration mostly because I was given a canvas to pay what the optimal waste management system should be in New York City and it was a great experience. We weren’t successful in everything we tried to do but we were successful on a lot of what we wanted to put in place and the current sanitation commissioner – commissioner Garcia, she’d done a phenomenal job of continuing the programs we put in place and launching some of her own initiatives. And so it’s a great experience to have that kind of massive impact.
Joshua: And I always feel like bureaucracies take a long time to get going and then once they get going, then they’re moving in the direction they keep doing it. By the time you were there was it already moving or is it still changing direction? Or they are more nimble than I think?
Ron: That was brought into to get the aircraft carrier turned around and headed in a different direction. And that has its challenges but once you get Miss Patty’s largest New York City the focus on the right things like organics collection it doesn’t just have an impact locally in New York City, it also has an impact nationally because this is the biggest market for waste and recycling by sheer virtue of the number of people that live here, the number of visitors, the number of businesses that operate here and you end up having local impact on the city living while you are in New York City but you also have national and global impact because people see that, “Hey, if they can make it work in New York City, obviously, we can make it work here.”
Joshua: I’m really curious about your… I’m really glad to hear this kind of insight view. And on your own personal level since before business school you said… I take it working at Deloitte and consulting there’s probably regular business as usual business and now your exposure in so many different areas and for so long at different levels. Is there passion behind the environment? I mean is it just that you’re making good money or is it also something… Is there a special appeal to it for you?
Ron: Yeah. I’ve always had a passion for the environment and how nature works and that’s always been to me the most efficient way for things to operate is how they operate in the natural world. And I also had the benefit in high school working for one of the first [unintelligible] architects in the early 90s where I was able to learn about a lot of these practices early on, see them put into practice but also see somebody who was able to make a successful career for himself by focusing in this area way before it became a hot area. And I’ve never subscribed to be, “If you’re going to do good, if you’re going to focus on the environment, it’s going to cost money or you won’t be successful.” I think that that is a totally erroneous economic analysis and the data does not back it up. The data backs up if your company focuses on transparency and sustainable business practices, you will be more successful.
Here’s an example. If you were given an opportunity to invest in Patagonia early on and they got started, would you do that? Every investor would say, “Absolutely. It’s been phenomenally successful.” Well, that’s the leading company in the apparel industry folks time sustainability and transparency. Probably right after Patagonia would be you know Eileen Fisher in terms of sustainability and transparency also a wildly successful company. If we look at the food space, well Whole Foods was really the first supermarket chain to come to market with organic food, transparency in their supply chain. Incredibly successful financially. If we look at different food brands, it could be Tom’s of Maine, it could be Ben & Jerry’s, it could be Happy Baby. There’s a long, long list of companies that have been very, very successful financially. In fact, more successful than anybody else in their category who’ve made environmental sustainability transparency core to their business. So if I just look at the economic data, I’m drawn to these company these that have been more successful anywhere else in their industry and had one common theme which is they focused on their environmental practices, they focused on transparency and they focused on sustainability.
Joshua: It sounds like this is really… I feel like I’ve tapped into something like something that very strongly motivates you. I mean it’s a mix. I heard at the beginning you were saying the environment is something you’ve always cared about. Your career began or before your career… I figured when you said you worked with the architect. Was that in college?
Ron: In high school.
Joshua: In high school. So this is really deep into you. And I couldn’t help but sense that when you said you never bought into the idea that if doing things environmentally or transparently that that would distract or detract from your business. I felt like there was… And you felt strongly about it.
Ron: [unintelligible] that argument to have the stench of somebody is trying to pull a fast one like, “Let me keep dumping in the river and extract profits until someone eventually catches me.” OK, so you’re making money now because no one’s caught on or you’ve given money to a politician. But eventually it’s going to catch up with you and you’re going to be penalized and your shareholders are going to lose money and that’s what we see over and over and over again in the history of businesses. The companies that are transparent, the companies that think about the materials that they’re using, the relationships to their local communities do well over the long term. The ones that don’t – don’t succeed.
Joshua: You’re describing on the business side. Do you also see that on the personal side too? Because you’re saying for people to get away with things and I also feel like it’s like enabling them to not really think about stuff so they can choose comfort and convenience.
Rob: Yeah. What I think one of the challenges of the modern economy is that we don’t see where our goods come from. And that creates a challenge when it comes to making sure that things are done properly because if most people saw that their shirt was made using child labor or their shirt was made using dyes that then went into a river that polluted that river and killed fish and hurt local communities, that they wouldn’t buy that shirt. And the way market economies and trading economies developed, the economies used to be much smaller much more localized so you knew who you were buying from, where it was coming from and your decision making process was involving many different data points. Do I trust this person that’s selling it to me? Where’s this material coming from? Is it quality material? So on and so forth. But as economies become globalized we have less transparency into where things are coming from and so yeah, companies can kind of law people into thinking like, “Hey, I just buy this and use it and I’m just going to make the assumption that nobody got hurt in the process.”
But what we find is that when companies step up and offer consumers more transparency consumers gravitate towards that company. They gravitate towards that company because they say, “Well, if this company is willing to be transparent about their practices and this company is not, what are they hiding from me? Maybe the product isn’t as good. Maybe there’s some chemicals being used. Maybe someone was hurt in the process. I don’t know. They’re not willing to share it with me. This other company is.” We see that over and over and over again that when companies are willing to be more transparent and consumers gravitate towards them.
Joshua: First of all, I’m glad you explained that because when you said transparency before I heard it but I didn’t really pursue that too much and now I see how important transparency is. I feel like it ties in with authenticity and genuineness and really not pulling a fast one over your consumers. I guess that’s something you probably look for in the companies you invest in.
Ron: Absolutely. And that’s actually what the stock market is all about. The stock market is built upon an expectation of transparency. You give your quarterly earnings, you give your annual report and if you’re not honest with your investors, your stock prices is going to get hurt. There is an expectation in market economies of transparency – that’s what’s going to draw capital in. People are not going to invest in companies that are not providing them proper information. And that’s where I think companies that are willing to be transparent or are willing to disclose the types of materials that they’re using, the types of the labor practices, are going to succeed in the long term not because the investor or the consumer necessarily shares those values or cares deeply about those issues but because the investor and the consumer feel more confident in investing in that company or buying that product knowing that they can trust where the materials came from, how it was made, so on and so forth.
Joshua: All right. So when you talk about transparency I feel like it’s integrity and things that are really major leadership issues. I think that if you develop as a leader, it’s going to help you make the environment part of how you do business and if you make the environment part of how you do business, it’s going to develop you as a leader. Is that right? Because I feel like if you don’t care about the stuff, it’s very easy… I think you describe it as covering up and it’s not very integrated and I feel like these things really gather well at a very deep level, leadership and the environment that is.
Ron: Yeah. Well, the leadership part starts with you as a person, then you and your family, then you and the place where you work, you and the elected officials that you vote for. There are a number of different areas where you should expect yourself to take a leadership role around these things that are going to be important for the environment, they’re going to be important for your local community, they are going to be important for your [unintelligible], they’re going to be important for your pocketbook.
Joshua: We talked about this before…. When you and I were talking before the recording began you said that you personally live consistently with how you do things in business. On a personal level can you share…. It’s up to you, but do you mind sharing some of the things how this has worked in your personal life?
Ron: Sure. As I got more and more engaged in the recycling and in circular economy space I started thinking a lot about how do I live my life and what kind of waste do I produce. And so I worked very hard to make sure that I reduce any waste that I have so I’d make sure that I recycle all of my paper, metal, glass and plastic. I try not to buy anything that’s not recyclable. I make sure that all of my food waste gets composted. I donate or recycle any of my used clothing and apparel. I recycle all of my electronics and so that’s one of the ways that I try to make sure that I live my values. I think if I were to challenge myself to do more, it would probably be in the office building that we’re in, in the other office buildings that I visit probably trying to push the commercial sector to just, “Hey, you can do better. Hey, you can do better.”
Joshua: And I’m reading that doing these things on a personal level is consistent with how you described it on a business level that I’m hearing like, “Ooh, you know I got to recycle.” Is it enjoyment? Is it satisfaction?
Ron: It is just a better way to live. This is the way I would sum it up.
Joshua: I would say it’s about living by your values and value means better. I mean everyone has their…
Ron: I think it is about living… I think it’s important for people to live their values absolutely. It keeps you more spiritual, more wholesome, you have more credibility with your family and your friends. Absolutely. But it’s also just my outlook on life of this is just a better way to live. I love being in nature and seeing trees and seeing the ocean and hiking mountains. I love that. And I want to be part of that and contribute to that, not detriment to that and someone who extracts from that without giving thanks or being aware of it. It’s just how I decided to live my life and find a lot of fulfillment in that. And people may look at that as wavy gravy or [unintelligible] do that but you know I’ve also had a fair amount of business success doing that. So I’m content with that path that I’ve chosen and I’ve chosen that path after observing other people that have chosen that path and done well for themselves. And I owe them a debt of gratitude and I hope I can serve as an example to others who can do the same.
Joshua: I’m really glad we got to this point because as much as valuable as the business part was I think the personal part is really valuable. I think a lot of people don’t anticipate that doing something that’s so personal and not necessarily driven like obviously toward the bottom line actually is rewarding and fun. Well, I don’t know. For me rewarding, fun, delicious, things like that.
So let’s see. I want to see if doing what you’ve done so far has brought you all this joy and satisfaction and reward, I wonder if you would consider doing something new because that’s what I’m doing on this podcasts and we can edit this out if it doesn’t click. But what I ask people to do is is to, given what they value, to see if there’s something new that they’re not already doing. And you know one thing I always point out to people – it doesn’t have to change the whole world and solve all the world’s problems overnight but it does have to be something that changes something. And that you do not getting other people to do it because too many people are already telling other people what to do. I mean environment could mean pollution as we’ve been talking about and recycling stuff but there’s lots of other ways that we interact with the environment. Is there anything that… Sometimes people have had something on their mind that’s like, “You know I haven’t been doing that.”
Ron: Yeah. I think. My goal I’d set for myself is to try to make sure that more of the buildings that I do business in are recycling. I think that’s still a challenge where I can speak up when I go to a meeting or in my own place of work to make sure that the building just doesn’t have signage and recycle bins but to really make sure that everything is being done properly in that building and place of work.
Joshua: If you do that, would you be up for sharing how it went?
Ron: Sure. I might need a little bit of time but yeah, absolutely.
Joshua: OK. Because a lot of times I ask people if we can check in later but I know with you we’ve been scheduling through someone so I guess I’d contact that person to schedule something. The reason I’m asking is that I hope the people who are listening, who are considering doing something themselves can hear it’s possible that afterward you’ll find out, “I tried. It was horrible and nothing worked.” But I want people to hear that because I don’t want people to have some green washed Disney version of how things work. But if it went well, then they can also hear… Because I know for me my co-op board is really difficult to deal with. And I’ve gone to them a couple of times and things haven’t worked out. And so I’d love to hear how your experience goes because maybe I can learn something from it, for example.
Ron: Sure, yeah. I just need some time but I’d be glad to come back and let you know how things went.
Joshua: OK. Cool. I appreciate that and hopefully the listeners will too. And to wrap up. Is there anything I didn’t think to ask that is worth bringing up?
Ron: No. I think this has been great.
Joshua: OK. Then I look forward to talking to you again soon. Good luck with talking to people in the buildings you’re talking about. In my experience of dealing with New York City building people is difficult but you’ve maybe…
Ron: It is. It is but you know rather than looking at the challenges as frustration I look at the challenge a journey and it doesn’t make it any easier. But creating that type of framework makes the process more enjoyable.
Joshua: You know when I interviewed Frances Hesselbein a little while ago I interviewed her, and I don’t know if you know her, but I interviewed her in her office. I talked to her about challenges and she’d crossed off challenged and wrote “opportunities”. And I was like, “Ah, she caught me on that one.” I got to switch to using opportunity which is what it sounds like you’re describing.
Ron: Yeah, sounds good.
Joshua: Alright. Thank you. And I’ll talk to you again soon.
Folks, there’s opportunity out there – cold hard business success. It emerges from transparency which creates trust and also joy and liberation from feeling guilty and he’s speaking from experience. He’s putting his money where his mouth is. If you’re here for leadership or entrepreneurial success, I recommend following in his footsteps. Also, if you’re looking for another role model, I recommend listening to Sandy Reisky’s episode which is Episode 22.
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