How do you make a buck and save the earth? One Dumpster at a time.

By Donna Coco

Americans generated 250 million tons of trash in 2010, which doesn’t even touch the
7.6 billion tons of solid waste produced annually by U.S. industrial facilities. Waste
disposal presents a huge problem to society, and not just from a logistics point of
view. Disposing of solid waste creates greenhouse gas emissions, according to the
Environmental Protection Agency. As waste decomposes in landfills, it produces
methane; incinerating waste produces the by-product of carbon dioxide; and the
trucks that collect waste produce greenhouse gas emissions. The result of these
emissions notes the EPA, is a warmer global temperature that can lower crop yields,
increase rain and flooding, and enlarge the area affected by wildfires.

Buried in all that waste, though, lies opportunity, and leave it to entrepreneurs to dig
it out. These Babson alumni saw a need, and now they’re turning trash into green,
both for themselves and the planet.

Shane Eten, MBA’07, founded Feed Resource Recovery, which converts

supermarket waste into energy and fertilizer.
Photo: Laura Barisonzi

Turning Garbage into Gas

Like most people, Shane Eten, MBA’07, never thought much about waste. Then
while working for a candle company, he began researching biodegradable packaging
for an all-natural product line. But to create a truly sustainable product, he had to
figure out how to compost it properly. What he found started him thinking. At the
time, the composting industry wasn’t well-
developed, with a few farmers taking compost
almost as a side business. Most waste went to
landfills and incinerators, where it contributed to
global warming. Eten figured there must be a better
way.

What if companies could compost trash themselves,

wondered Eten. Research made him realize that
supermarkets, which pay to get rid of tons of waste
daily, would be a good target. Thus came the idea
for Feed Resource Recovery, a zero-emission
composting system that allows supermarkets to turn
their waste into energy and nutrient-rich fertilizer.

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Knowing he wanted to start a company, Eten came to Babson. “That’s what you’re
supposed to do, go to Babson to start a company, right?” he says. “Honestly, if I had
tried to start this on my own without all the professors and resources and
competitions, there’s no way it would’ve gotten off the ground.”

In between classes, Eten continued researching and modifying his idea. He also
competed in business plan competitions, and the winnings provided enough capital
to hire a small staff and start the company. “We did a lot of hands-on R&D. We
literally were at the back of grocery stores counting waste every day. We’re probably
the smartest in the world when it comes to supermarket food waste,” says Eten.
They tested different ways to ground and digest garbage as well, eventually devising
a proprietary process that uses existing industrial components. “It all worked, but it
took time, a dedicated team, a trustworthy angel investor, and forward-thinking
customers,” says Eten.

One of those forward-thinking customers was The Kroger Co., one of the largest
retailers in the U.S. Eten began working with Kroger in 2009 after President Len
Schlesinger introduced him to David Dillon, the company’s CEO. “Len had just
started as Babson’s new president, and he wanted to talk to entrepreneurs. I thought
he wouldn’t talk to me because I wasn’t a good student,” says Eten, “but he was
great and said he knew the CEO of Kroger. That was a very nice intro. I sent Dillon
an email. He said he liked the concept and gave us the thumbs up, then gave us the
names of some folks to talk to about getting the project rolling.”

Two-plus years of hard work ensued, but that connection resulted in Feed Resource
Recovery installing a system to service about 400 Ralphs supermarkets, which are
owned by Kroger, in Southern California. The system, up and running at one of
Ralphs’ warehouses just this fall, can handle about 100 tons of waste per day, which
includes any food, packaging and all that the supermarkets can’t sell or donate.
Ralphs already was recycling much of its food waste, but the remote location of the
composter meant significant costs. On average, companies pay $50 to $150 per ton
to send waste to landfills or composters, notes Eten. Instead, his system converts
compost into biogas, a renewable natural gas that can be used to fuel trucks and
generate electricity onsite. The system also creates organic fertilizer. “The same
farmers who drop off food at the warehouse can pick up the fertilizer,” says Eten. “It
closes the loop.”

Getting the business started has been a huge challenge, says Eten. “But when
you’re an entrepreneur and you start something, it’s all your fault, so you call it an
opportunity and not a challenge,” he jokes. The effort has its rewards, too. Eten looks
at his business as a way to improve the food industry model. “What’s great is there’s
never a day where I have to question if what I’m doing is right. I don’t think about it.
In terms of job satisfaction, check that box off.”

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BigBelly Solar, founded by Jim Poss, MBA’03, brings savings and efficiency to
waste collection.
Photo: Jose Mandojana

Squeezing Dollars out of Trash

Jim Poss, 36, is cleaning up by cleaning up. His $4 million company's flagship
product, a solar-powered trash compactor that holds around five times as much trash
as a traditional trash can, is catching on with municipalities looking to slash budgets.
(You can watch a video of the gizmo (www.bigbellysolar.com) in action here. So far,
Poss says he's sold over 2,000 of them in 30 states and 17 countries. The units,
which are manufactured in New England, aren't cheap: They cost $3,100 to $3,900
each or lease for $70 to $90 a month, depending on purchase volume. But Poss
says they typically pay for themselves within two to four years because fewer
collections are needed, reducing money spent on man hours, fuel, and garbage
trucks. Poss thinks the time is right to expand his 23-employee company, which has
secured $5 million in angel investment since it launched in 2003: "Our product fits
into the goals of the stimulus package and it makes government smaller," he says.

Walking on Charles Street in Boston, Jim Poss,

MBA’03, noticed how every weekend the
garbage cans were overflowing with trash. One
day, as he watched a dump truck stop every
100 feet to empty the bins, idling and spewing
black smoke as it started up again, an idea
struck him. Why not compact the trash in the
bin? Increased capacity would equal fewer
pickups and less garbage truck fumes.

With a background in the electric-vehicle and

solar-power industries, Poss immediately
convinced himself that a simple solar panel
could power a small motor operating the
compactor. He ran some numbers and
decided, “I can do this.” A little research
uncovered an industry that burns billions of
gallons of diesel fuel each year. “It didn’t take
much of a spreadsheet to figure out if you
displace collection a couple of times a week, this could work,” says Poss. Thus
began BigBelly Solar (originally Seahorse Power Co.), manufacturer of solar-
powered, networked trash and recycling compactors.

As a student at Babson, Poss actually had two other ideas for companies, one for an
offshore wind plant and the other for wave and geothermal energy. “Given my
stature at the time, I had no credible, viable plan to start a billion dollar company,”
says Poss. “But I was pretty sure I could make a solar-powered trash compactor for
10,000 bucks.”

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The first BigBelly cans were boxy, too big, and had some sharp corners. But Poss
was able to make 750 cans to test his theory without investing too much. He then
used feedback to improve the next model. “We had a better understanding of the
system and how far we could push it,” he says. “We sunk a couple million bucks into
the next generations.”

As Poss learned more about the industry, he discovered a bigger problem that he
hadn’t foreseen: Trucks running routes to cans that weren’t yet full. “About 20
percent of cans are full, but 80 percent aren’t,” says Poss. “You’re sending a truck
out there with a couple of guys, and it stops and starts, no matter what’s in that bin. It
costs money. If you do that five to seven days a week, the numbers add up real fast.”

To solve the problem, Poss’ team developed a network and online management
system that tells users when a can needs emptying. Compacting trash lowered
collections; picking up only when necessary brings that number down even further.
To round out its offerings, BigBelly added cans for recycling about four years ago
and, just recently, cans for composting. Sustainability carries over into the production
of BigBelly bins, as the cans are manufactured in the U.S. and their exteriors are
made from recycled U.S. steel and plastics.

Poss cites Philadelphia as a city that realizes more than $900,000 annually in
savings since switching to the BigBelly system. Part of that comes from recycling
efforts: By diverting about 23.5 tons of materials from landfills each month, the city is
not only helping the environment but also saving about $2,600 a month. Word has
spread and BigBelly works with hundreds of municipalities, colleges, and
universities. “People talk about making a difference in the world, and in the grand
scheme of things, what we’re doing is small compared to some problems. But to
change something from being tremendously inefficient and wasteful to a lot better
feels really good,” says Poss. “I love touring through cities and finding the BigBelly.”

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Charlie Bogoian ’08 (left) and Phil Tepfer ’08 use recycled materials to create
clothing for their company, Kenai Sports.
Photo: Tom Kates

Sailing through Landfills

Helping the environment was not on the minds of
Phil Tepfer ’08 and Charlie Bogoian ’08 when they
came up with the idea for SailProud, a business
focused on sailing apparel. They were seniors,
hanging out in their room in McCullough Hall, and
simply wanted to start a company, having been
inspired by the entrepreneurial atmosphere at
Babson. Both were avid sailors and, knowing the
market, saw a need for clothes that would transition
from the boat to the street.

But it wasn’t long before they realized that to survive and thrive, the company would
need a stronger identity. “We talked with some of our professor advisers, who told us
to dream big,” says Tepfer. “What can you do that no one else is doing?” Tossing
around ideas, the two thought about what would resonate with people and
themselves. “I grew up in West Haven, Conn., which is right on the ocean,” says
Tepfer. “West Haven has a beautiful coastline, but it’s also plagued by litter and
pollution.”

They decided to adopt a sustainable business model and researched the idea of
making their clothes from recycled materials. “It turns out the upholstery industry has
been using fabrics that contain recyclables for about 30 years,” says Tepfer. If a
couch can be made from recycled materials, why not a T-shirt, figured the two.

The team found a manufacturer in Fall River, Mass., that produced fabric from a
50/50 polyester/cotton blend, with the polyester coming from recycled materials.
Partnering with a local manufacturer also played well into their sustainable model.
“We gave them all our money and had them make us 100 T-shirts,” says Tepfer.

The strategy worked for about a year, but then the company stalled. Their line was
too limited. “Everyone wanted something slightly different,” says Tepfer. “Unless we
had a portfolio of options to offer, people weren’t interested.”

The two decided to broaden their client base and focus on performance gear for
athletes and active lifestyles, changing their name to LiveProud. They also spent the
better part of a year developing 30 fabrics, all made from 100 percent recycled
materials. Along with No. 2 through No. 7 recyclables, they began incorporating
organic compounds such as bamboo, wood chips, coconut shells, and soy into their
fabrics. “We’ve always been interested in sustainability,” says Tepfer, “but when I
took my first tour of a landfill, I thought, wow, this needs to change.”

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To source materials, they work with several landfills that sort garbage onsite. Sorted
materials go into what Tepfer describes as “a giant blender,” which creates flakes.
These flakes are sent to another contractor, which melts them to get rid of
imperfections and then spins the substance into long, thin fibers. The fibers are
delivered to mills to produce fabrics and garments.

With production handled, the two did some market research on the name of the
company and found LiveProud wasn’t working well. The company now is called
Kenai Sports, named after a small town in Alaska that Tepfer says is a model of
sustainability.

All their decisions seem to be paying off, as Kenai Sports is doing well. Babson’s
athletics department has been a big customer, and so have other colleges and
universities. The company recently signed contracts with Massachusetts and
Connecticut to supply their state and local police with garments. And since the
company’s inception, Tepfer proudly declares they have recycled more than eight
football fields of trash from landfills. “No one argues that pollution is a problem,” he
says. “There’s only so much space for landfills. It’s going to get to a point where we
have to do something.”

QUESTIONS

1. What are the key entrepreneurial characteristics of the key personalities in the
3 cases?

2. What stimulated their ideas?

3. What process converted ideas into innovation?

4. Why did they succeed?

5. After reading these mini-cases how have you changed your perspective /
opinion on social entrepreneurship?

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