Yesterday I heard a talk from Hult Business School on Greenovations or examples of companies innovating to create a more sustainable world. It profiled various initiatives from the large to the small. It was an interesting talk with many good examples of businesses sustainably incorporating green agenda into their business models. One of the ones which most struck me was a company called BigBelly Solar – a company focused on using big data and machine to machine (M2M) communication to improve our waste management systems. It is a very innovative company which has been featured in the BBC and Forbes Magazine and won accolades such as the World Smart Cities award. Even cooler is when I found out its system has been launched in more than 30 cities worldwide including helping my hometown Philadelphia, PA to save more than $1 million annually and was recently launched in NYC in a big event hosted by Mayor Bloomberg. Read on to find out more.
WHAT IS THE BUSINESS ABOUT?
BigBelly Solar has created an intelligent waste and recycling collection system. Principally it is a manufacturer of solar-powered, networked trash and recycling compactors or waste bins. The recycling/waste bins are closed topped and outfitted with solar panels and wireless network hubs. These waste bins collect and compact trash using solar energy and communicate via a mobile application for smart phones with a network of trash collectors advising them when the bin is full and needs to be collected. It has real-time data on every waste and recycling bin in its system accessible from any smart phone device which has the software downloaded. It also performs historical trend analysis and optimization further assisting city governments to optimize their trash collection systems.
HOW DID IT START?
BigBelly Solar was founded in 2003 in Newton, Massachusetts by an MBA student at Babson College who was walking down the street in downtown Boston and noticed how every weekend the garbage cans were overflowing with trash. Another day he saw a dump trunk stop every hundred feet to pick up empty bins idling causing traffic and emitting unnecessary carbon emissions. It dawned on him why not create bins to compact the trash using solar energy – requiring fewer pickups and then network the bins to notify the garbage trucks when the bins were full and needed collection. With his background in electric-vehicle and solar industries building the idea was fairly simple. The harder part was selling it to investors and customers. It took many years before he had his first customers. Now the idea is wildly popular having been implemented in large urban centers such as Boston, Chicago, Philadelphia and New York.
WHAT IS THE SOCIAL NEED IT ADDRESSES?
There are two principal issues that the company is addressing within the large waste management problem facing society. Firstly it improves and reduces the logistical inefficiencies that many cities face with trash collection. It is estimated that before the system some 80% of trash bins are not full when collected. Second in doing this it reduces carbon emissions produced by the trucks and also be compacting the trash before it hits the landfills reduces the methane gas released into the air.
WHAT IS THE BUSINESS MODEL?
- Value Proposition – It is a strong win-win value proposition for cities. It both reduces the cost of trash collection by reducing the frequency of collections by compacting trash before arrival and only sending vehicles when bins need collection and helping to optimize collection routes but it also pollution created by the trash trucks and by overflowing trash bins.
- Customers/Channels – The customers are mainly city governments. But I could also imagine large companies or private trash collectors could also use the system to reduce cost. The channel to customers is through distributors.
- Revenue Streams – These presumably are licenses technologies and software. So the cities or clients pay to use the system which is then implemented by BigBelly and operated by a contracted third-party. I assume the contracts are based on a number of bins or number of users and are likely to be renegotiated every couple of years.
- Cost Structure – There are high fixed costs, including the manufacturing of the bins, the solar technology and network infrastructure and then putting them together. There is also the software development. There would also be high maintenance and support costs to ensure the systems stay functional. Otherwise there are low variable costs as little labor is needed once the system is sold.
- Key Partners/Resources/Activities – the solar and IT infrastructure companies, and the trash collection companies. However I am not sure how dependent the company is on these entities
WHAT ARE SOME CONCERNS I SEE WITH THE MODEL?
- Scratching the surface – While the company does help reduce government inefficiency in trash collection. How does it address the overall problem of excessive waste being produced. It seems like the more fundamental problem is the more than 250 million tons of waster produced in the US every year. Perhaps this will help further raise awareness but this is sort of like putting a band-aid on an open wound.
- Dependent on gov’t contracts – These are presumably sold as government contracts paid for by tax payers. Is it certain that taxpayers really want these systems and that they are delivering the results they promise? Also while they may have political favor now, will they always. Is there another way to use the technology to sell direct to customers? I am guessing this is just the tip of the iceberg in a revolution of the interaction between humans and physical world around them through mobile and other ICT technology.
- User friendliness – I read some blog posts of people complaining that they did not like the fact that the bis forced users to use often dirty handles to place their trash instead of the open systems most of us see these days. But this seems like a minor concern. Go wash your hands for goodness sake!
WHAT DO YOU THINK?