Panel Discussion - How to Address 4 Weaknesses as a Business Owner

In a couple of hours, I will be sitting on a panel at the 2018 Electronics Reuse Conference. Topic - How to Address Weaknesses as a Business Owner - was the first to tempt me for 5 years.

Good Point Recycling opened in April 2001.  I bought a used truck with a $15k bathroom improvement budget, and didn't hire the first full time employee for 3 years. The first 3 years, I was mostly doing consulting gigs between truck runs. If your weakness is "talking too much", charge by the hour.

I used to speak at conferences pretty often 20 years ago, 15, 10 years ago. But one of the weaknesses I found that we all have is this - speaking to your peers, to other businesspeople, to competitors, etc, sucks. We are all weak when our audience consists of people who know or think they know as much as we do. If they agree, then they sat in a session to hear the obvious. If they disagree, "A man convinced against his will is of the same opinion still."  Generally, don't do it. I generally try to refer invitations to WR3A to Tech Sector people from Mexico, Ghana, Malaysia, etc, who really can tell an American audience something they don't know.

This topic, however, is about weaknesses. About addressing my own weaknesses. So I accepted. It should be an opportunity to self-deprecate and tell some funny stories about near-death experiences.
I'll start by acknowledging my survival. We will have a moment of silence for some late, great, fates.  In alphabetical order, here is a list of companies which I'm pretty sure were at one point part of the 10 largest electronics recyclers in the world (or claimed to so be).

Allied - 2006
DMC - 2006
HMR - 2006
Creative - 2014
CRTR - 2015
Eco International - 2013
EWSI / 2TRG / CLRR - 2016
Intercon Solutions - 2013
MPC - 2015
WeRecycle - 2015

Possessions and Politics: Sorry, But Someone Hates Us

Corporate Skullduggery and Competition in E-Waste

About 25 years ago, I was hanging out in the University of Arkansas (Fayetteville) student union cafeteria.  I'd returned from Peace Corps (training contractor in Cameroon), and was headed for an MBA program in Boston.   We had an impassioned conversation with hippy-ish friends about my plans to change the world, fight for the environment "from inside the system".  At least one of my pals was incredulous, said it would be impossible.

I'm still optimistic about my choice, even if most of my contributions are deflecting friendly fire from other environmentalists (ignorantly aimed at African, Latin American, and Asian "geeks of color").  But sometimes things get a little scary.

In the past 4 months:

1) Someone reported us anonymously to the state Fire Marshall for not having an inspected fire system.   Our QA/QC VP is an emergency medical EMT, and has it inspected religiously.  Shrugged it off, but when we asked the Fire Marshall to test our furnace for CO, he wrote the CO report as a "response to complaint" (evidently it counts as complaining on yourself in Vermont when you ask to borrow a CO monoxide meter).

2) Someone reported us to R2 Solutions something on ebay.

3) Someone listed our website as a blacklisted spam sender. - RESOLVED... This is Network Solutions own "report spam" tool, when you get spam in your Netsol mailserver box, do NOT use the Network Solutions own "report spam" button, because if you use the same server to forward your mail, your mailserver gets listed as a spam server.   Network Solutions, hello?? (JUMP TO BOTTOM if you are looking into this MXToolbox issue.)

4) Someone reported us to a major credit agency collector for non-payment of a bogus bill which had been paid (that competitor we know).

5) Someone reported us to the R2 inspector, saying that a maquiladora is export (we have letters stating it is NOT export, and the CRTs that fail testing and are shipped back to the USA are considered our property.  This is the equivalent of telling Sony or Panasonic that if they have new CRTs assembled in Mexico, and one of them fails or breaks, that Sony or Panasonic are "exporting for recycling" even though they bring the rejected tube back to the USA).

There's more, actually, that I can't disclose here.

There is one competitor we know for sure hired a corporate intelligence person, and when I contacted a New England private investigation service (largest) they were "conflicted out" (i.e. already hired by a competitor who listed us as a target).

The Economist: Follow the Fixers

From this week's The Economist:  Follow the Fixers

Who to partner with in Africa, if you are trying your hand at business development?

"AS GLOBAL investors salivate over Africa's economic growth, Ashish Thakkar, founder of the Mara Group, explains why success still hinges on local knowledge"

I repost this because it's very close to my takeaway, when I left Africa, thinking "I shall return".   The people who fix things, who tinker, who repair.  They tend not to be liars.  It's not the way a Fixer's brain is wired.

This interview by the Economist with African development expert Ashish Thakkar says much the same thing.

"What do you think is the single most important thing..." to help Africa?

Answer:  People who make improvements.   Follow people who fix things.

Saving the Recycling Business, 2009 (continued)

How I Saved My Company in 2009-10: Yearbook 2

I described yesterday the precipice I found myself on in January 2009.   I'd just purchased 50,000 s.f. of overhead.   The renter who paid (the other) half of the mortgage had gone out of business.

Learning to enjoy the desert

Scrap prices from almost everything we tore down, except for chips and boards, were at pre World War I lows.  I had a business consultant tell me to liquidate everything and try to rent the building, and a couple of VC (vulture capital) deals come circling around.  A competitor started offering all my VT and NH clients 1 cent per pound recycling on CRT televisions, something unheard of, supposedly financed by an international company overseas - but mysteriously carpet-bombed at all our New England clients - no similar interest by the Asian company in Arizona (where we also did business), and as mysteriously, the Asian company disqualified it if it was collected in Good Point trucks and delivered to the same place...

And this sounds like a joke, but some people out there know the guy - a scrap dealer from outside the state started calling my cell phone and saying the F word and saying I was screwed and he'd locked  up ALL my accounts, and I was going to regret not having sold to him.  I'd hang up and he'd be the next call, 30 seconds later.   (I think he must have had a brain aneurysm, it wasn't normal, even for scrap dealers.)

All I had going for me was Chicas Bravas - the NPR discovered our fair trade recycling banquet in Sonora Mexico.  And our long-running partnership with the SKD (contract manufacturer) in SE Asia was still alive.  And both had CRT glass cullet end markets for free nearby.   We were hitting 22% reuse then, which was not as high as off-lease computer dealers, but it was 90% of our income in January 2009.  We just had to believe in it and make sure our clients could believe in us.

Facts and Strategy in Recycling Business: Part II

In part 1, we focused on common experiences in curbside recycling of newspapers, plastic jugs, glass bottles, and metals from households.   In each case, labor or machinery is used to separate the mass of materials into commodities, graded to different quality for different end market tolerances.  The commodities are collected, transported and sold around the world.

2.  Differences between E-Scrap recycling and household curbside recycling.

2.1  Labor:   If all the printers, computers, televisions, cell phones etc. came to a Materials Recovery Facility or MRF with the pieces disassembled, you could really run it down the same recycling sorting line that manages the bottles, cans and paper from households.  This highlights the first key difference.  A television weighs about 100 pounds.   It's different than 100 pounds of cereal boxes, magazines, wine bottles, detergent bottles, and olive cans.  Those can be separated by 4 people, spread out on a Mayfran belt.  The TV has to sit in front of one person, who must remove up to 50 metal screws.  Even the raw materials are different - the circuit board is a composite of several different metals and fiberglass, much more complex than a TetraPak composite drink box.  And the glass has steel mask, phosphorous powders, and even lead (pb) vitrified (melted and mixed with) the silica in the glass itself.

The process of putting one TV in front of one person (capable of maneuvering 100 pounds) and disassembling it into 100 pounds of screws, copper, plastic, aluminum, glass, etc. is much slower and much more difficult.   This is the first difference.

2.2  Reuse Sales:   The second is that there's little possibility, effectually zero, that the 100 pounds of commingled curbside material can be reused, fixed, or resold at any value.  But in a wealthy country, people are anxious to buy the newest, flattest appliance.  Putting the old unit into a spare bedroom used to be the way we justified the replacement cost, but that's long exhausted its potential.  It's cheaper now to pay $10 to recycle a TV than to run a $25 classified add to sell the TV for $10.

2.3  Regulation:  While both curbside recycling and electronics recycling beat the pants off of raw material mining when it comes to risks, both have NIMBY forces against them.  The neighbors in the forests complain less.   Since property value drives environmental regulatory enforcement, and recycling tends to be close to people (generators), recycling of either type is more regulated.

But the recycling of electronics, or "e-waste", is far more regulated.

And it occurs to me that I've written about that so much that I'll just end this.  I have more interesting things to say about slums in Ireland.

Facts And Strategy in Recycling Business: Part 1

Time to share some experiences about the export market and used electronics.  I've now spent more than a decade building the Fair Trade Recycling aspect of the business, and growing my companies (American Retroworks, Retroworks de Mexico, and Good Point Recycling) to be healthy and fully functional.  There is not as much strategy and trade secret to the business.

Commodity value of fiber = ?

In this Part I, we can see how electronics recycling is basically just like curbside recycling.  There are three key differences which we will explore in Part II.   Part I starts with simple and factual observations about the recycling business, and then wades into how government can or should involve itself in regulating that "waste" or "raw materials" business.

1.0  Similarities between E-Scrap and Consumer Recyclables:  

Like curbside recycling, the revenue comes from different grades of raw material which must be separated, graded, and cleaned to replace virgin raw material from feldspar mining (glass), smelting (metals), forestry (fibers), and refining (polymers).  Each of these products can be sold, at some stage, for cash, but they have drastically different values, grading, and transport requirements.

1.1  Commodity Value:  Glass is a bane for both curbside and e-scrap recycling, in that it's heavy, easily contaminated, distances to furnaces are enormous, virgin production is fairly simple and raw material - igneous, metamorphic, and sedimentary rocks all have abundant silica for feldspar mining.  Metals are easy to manage (magnets and eddy currents) and easy to sell, and the pollution from metal mining and smelting is colliding worldwide with growing population.  More people, with more money, want more things made of metal, and no one wants the smelters to impact their property values through pollution.  Even in China and India, the incomes and expectations have grown to where people are less and less tolerant of a lead-zinc smelter which spills noxious toxins into the rivers and water supplies.   Fiber is much more or a part of the curbside business, but the difference isn't as great as you'd assume when you look at the declining tonnage of newspapers and the huge volume of wood from console televisions, speakers and stereos which our plants manage.

1.2  Labor:  If all of the materials in a computer, tablet, TV or printer were pre-disassembled, you could run them down the exact same Mayfran sorting belt that you run curbside recyclables through.  Magnets and eddy currents can grab the steel and aluminum, blowers could separate the lighter plastics, shaker trays could get the small light pieces into a different direction than the big pieces.  But in every Materials Recycling Facility (or Material Recovery Facility*), labor is high.  You need humans to pick out and grade different raw materials.   You can add two people and further grade (glossy magazines from newspaper, for example) or one person and send the bales to a paper mill with easier tolerances.   But each laborer adds value.  The problem is when the value added by labor (e.g. sorting plastics by resin, paper by ink and clay content, green from clear and brown glass) produces less than minimum wage.   If you pay a woman $8 per hour to separate two tons of material and only make an additional $5 on the sorted material, you cannot afford her.  This labor-to-value dynamic is just as important in E-Scrap recycling as it is in collection.

1.3  Collection:  The distance between residents in a city and a countryside is a part of the cost of both recycling and waste collection.  The economics and competition between waste and recycling collide.   Since you cannot affordably recycle road kill, dirty sponges, spoiled food, wet tissue, many high heeled shoes and chicken skin (sorry Zero Wasters), you are committed to running the Waste truck.  If you don't, ask Naples Italy and Seattle Washington (recent Waste Management strike) what happens to property values and pest control.  The recycling truck is therefore an "also ran", and has to collect material valuable enough to offset the convenience of running a single waste truck to a single landfill or incinerator.

Fortunately, despite know-it-alls like Penn and Teller saying otherwise, this works for a couple of reasons.  First, like a subway, you don't have to prove that the subway is faster than the cars on the commute.  Going to work by car may be faster, but if you eliminate the subway the people are all in cars and it's no longer faster.  Similarly, if you try shutting down recycling, you find that avoided disposal costs are more than the per ton at the landfill.  When you add the "value added" from income of sale of the commodities, you find a lot of multipliers and higher employment - not just at the sorting line but at the paper mills and refiners as well.

1.4   Markets:   There are "niches" in collection besides rural (high mileage costs) and urban.   Some recovered materials - especially glass (and especially especially CRT glass) have a small number of buyers around the world and face huge transport costs after collection.  This transport cost affects labor - you may decide to pay someone to sort plastic by color because the transport distance to a mixed-color market is higher.

1.5  Government involvement:  Both electronics recycling and curbside recycling involve government, through procurement law (government contracting), labor law, environmental law, transport law, etc.  Every time there is a real problem with waste management - a recycling fire, an abandoned speculatively accumulated pile, a fraud, illegal dumping, alleged malfeasance (usually a claim by a competitor with a different or better process) - we pay for a regulator to enforce rules and public contracts.   Recycling businesses must know the laws (ignorance is no excuse), but also anticipate how regulators are interpreting the laws.

Recycling Slag: True Environmental Law

Slag is a partially vitreous by-product of smelting ore to separate the metal fraction from the unwanted fraction. It can usually be considered to be a mixture of metal oxides and silicon dioxide. However, slags can contain metal sulfides (see also matte) and metal atoms in the elemental form. While slags are generally used as a waste removal mechanism in metal smelting, they can also serve other purposes, such as assisting in the temperature control of the smelting; and also minimizing any re-oxidation of the final liquid metal product before the molten metal is removed from the furnace and used to make solid metal. [wikipedia 2012.02.28]

This definition of slag is similar to CRT cullet from recycling operations.  There's a big difference, however, in how the two are regulated.  Where you would like to think that regulation promotes recycling over mining of virgin mountains, the opposite is true.

Mining and smelting has defended the practice of piling up used slag from foundries in massive piles all over the Western USA, Canada and Mexico.    It was debated whether these piles had to be disposed, in landfills, or whether they were really doing no harm in the desert and (as the capitalist model goes), that smelters would come back for it to mine it again when:

A) the veins of lead in mountains (second to silica, the most abundant element in slag) became more expensive to mine, and the slag would become more attractive, and/or

B) technology which already worked in the lab would be economical enough to turn the slag into a commodity.

The mines get bigger and bigger and the slag piles got bigger and bigger.    How does the regulation of recycled "slag", or by-product, compare?

War of Images: 3 Views of Hong Kong Waste, Recycling

World electronics recycling policy has been boiled down to characterization of trade between "wealthy" OECD nations and "poor" non-OECD nations.

Photos, film, and images describe people living in a geography which is too distant for the viewers to visit.

Below the photos and the break are two videos, two stories of what scrap exported to Hong Kong are all about.   One is the description from BAN.  The other is the biography of an American scrap recycling trader, describing what life is like in Hong Kong.

First, photos of SWANA style landfills in the "new territories".







Videos below

EWaste Entrepreneur Mad Man Meets Primitive Wire-Burning Robots

i for one welcome primitive robot recycling overlords

Here is an excellent article on OpenForum.com on the Five Essential Characteristics of the Entrepreneural Mind.

1.  Creativity
2.  Suspicion of Predictors
3.  Comfort with Uncertainty
4.  Openness to Experimentation
5.  Functional Humility

Some of these come more naturally to me than others.   But the article helps explain our success with Fair Trade Recycling [FTR].

Making connections is how I bind my Creativity to the rudder of reality.   Seeing people (Geeks of Color) for what they can do rather than for what they cannot do is the Key to numbers #2,- 3, -4.   Number 5 is the most challenging.  For humility... how long will this FTR opportunity last before there's more "new escrap" coming out of China than we can supply from here... and how long will personal computers even be "a thing??

The "Essential Characteristics" is a good paradigm.  This is about creatively solving an "e-waste" problem through more and better trade, seeing a market opportunity, connecting solutions (quality, accountability) with the "ewaste" events in developing world, and having fun.   The other suggested viewing for this post is the Mad Men Series episode "The Fog".  The opportunities, predictors, uncertainty, and experimentation were all around fifty years ago... except the "emerging market" wasn't overseas.  It was women and minorities, markets ignored and impugned right here in our own country, back in 1962.

Suspicion of Predictors:  Look at how self-assigned Watchdogs have characterized the six billion people in converging markets.   They have successfully gotten the Mainstream Press to buy into their Predictor - sell a device to an African or Chinese and beware the "toxic consequences".

Look at how the non-OECD "Geeks" are depicted.  Now remember past marketing campaigns, which tried to marginalize other groups, like women (50% of the world).  Imagine running a "femine trade" marketing campaign in the 1950s.   As an entrepreneur, you might get beat up. But when previously excluded women become accepted decision makers in the market - as Africans and Chinese are bound to be - money which competitors spent on denigrating campaigns will become a liability.  By being open to partnerships with "excluded class" members, you may get an inside track.

Ratio of OECD to non-OECD

Comfort with Uncertainty, Openness to Experimentation:   You must experiment with these markets - sell to them - in order to get admitted into their factories where you can know them, and then you reduce Uncertainty load by load, trade by trade.  How can an entrepreneur stay comfortable going against the "E-Steward" current, ignoring dire predictors of primitive, wire burning, incapable buyers?



The "excluded market" of non-OECD is huge.  Big, like "women" in the 1960s.  The better-off half of non-OECD, about 3 billion people, is getting online at 10 times the rate of growth of OECD nations... but they earn $3,500 per year, one tenth of OECD per capita income.  Like women who were getting increasing purchasing influence in the 1950s, but were yet to be treated as equals, its a market opportunity in the rough.   It seems crazy and rebellious (to your clients, lenders and sponors) to treat Geeks of Color as equals.  But FTR won't have these sneering Madison Avenue Mad Men Ads to be ashamed of  as this market opens up with blistering, lightning speed.  Douala Cameroun became high speed bandwidth this month.   Open the bottle, the genie is knocking...