With a model straight out of Uber’s playbook, Rubicon Global CEO Nate Morris is helping thousands of small garbage haulers compete with industry giants like Waste Management
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Like other entrepreneurs who head blockbuster tech startups, Nate Morris these days finds his social calendar sprinkled with glitz and glamour: Invitations from Leonardo DiCaprio to a premiere of The Revenant (he declined) and from billionaire Marc Benioff to a private dinner with Arianna Huffington and Billie Jean King (he accepted). But much of his business at Rubicon Global is a world away from Hollywood and Silicon Valley, in places like Jeffersonville, Indiana, a town of 45,000. On an unseasonably warm November day, he’s there meeting with local garbage boss Bob Lee, who has a plea for Morris: “We need your help.”
Lee has been in the garbage business since he snagged a gig hauling trash for the local unemployment office as a young army vet in 1971, and his company, Eco Tech Waste Logistics, based in Louisville, Kentucky, is the kind of mom-and-pop operation that has powered Rubicon’s ascent. With 96 employees and 69 haulers (trucks), Eco Tech is one of the area’s leaders. But like almost every other small hauler in the country, it faces a daily challenge from national players with resources that dwarf its own, and Rubicon’s tech offers a way to fight back.
Rubicon is the Uber of trash. Its software connects waste collectors (the guys with the trucks) with the waste creators (an office or business or perhaps even homes), then makes sure the pickup runs smoothly. For the haulers, Rubicon’s app helps detect when the collection happens without any input from or distractions for the driver. The dispatchers know where their trucks are and who’s working the most stops. The consumer gets a big-picture view that shows how much waste they’re sending to landfills versus recycling and how frequently they really need service, helping to cut costs. Rubicon charges both sides—the haulers and their customers—for access to its tech.
Eight years after Morris launched the company with childhood friend Marc Spiegel in Louisville, where they grew up, Rubicon works with 5,000 small hauling businesses and with big customers like 7-11 and Wegmans. It snagged its first municipal contract in October 2016 in Atlanta. Revenue has tripled to more than $200 million in the past year. Rubicon has lured top-tier investors such as Goldman Sachs and Wellington Management and is now poaching talent from Silicon Valley. And with a new partnership with Suez Environment, a $15 billion French multinational hungry to learn from Rubicon’s technical chops, Morris is gunning for a $60 billion-industry in the US that’s dominated by giants Waste Management (revenue: $13 billion) and Republic Services ($9 billion).
Suez is leading a new $50 million investment in Rubicon, bringing its valuation to $800 million. Already the owner of Waste Management’s former assets overseas, Suez plans to re-enter the US market by working with Rubicon, which will share its best tech practices and what Morris considers its most valuable asset: Its data. “The US model is old-fashioned,” says Jean-Marc Boursier, CEO of Suez’s Recycling & Waste Recovery, Europe, who has kept his company’s plans with Rubicon secret until now. “We hope it will astonish and surprise—then they will need to evolve and evolve very fast.” For Rubicon, the Suez deal opens a clear route to markets overseas over time. For now, its Morris’s ace up his sleeve to take more share from the incumbents. “That’s when it gets fun,” he says.
Rubicon has lured top-tier investors like Goldman Sachs and is now poaching talent from Silicon Valley
Morris, 36, was elected student-body president in fifth grade, and by high school he had met Bill Clinton and hosted a morning news telecast. As a scholarship student at George Washington University, he woke up early on weekends for internships and began moonlighting for the state GOP to help re-elect Senator Mitch McConnell.
Morris went off to China to teach business management and work for Kentucky’s cabinet for economic development before heading to Princeton for graduate school in public and international affairs. First-hand exposure to industrial sprawl in China had put sustainability on his mind, and with Spiegel, whose family had worked in the garbage hauling business for years, the two decided the industry was ripe for a tech-based disruptor. “They made all their money from landfills,” Morris says. “We could be the brain for the industry.”
To friends and family, the move was a shock. “I asked, ‘Do you understand who is in this business?’ And he said, ‘I don’t mind fighting’,” recalls Morris’s grandfather Lewis Sexton, a former president of the local union for the Ford plant in Louisville. The union liked Morris’s vision of empowering independent haulers, and when he proved he could save them 60 percent on their waste disposal, the union hall signed up as Rubicon’s second customer.
Getting investors proved harder. To do business in several states, including New York, Rubicon had to ask every investor to get fingerprinted. Eventually, QuarterMoore Capital’s Lane Moore, who had co-founded Bagster, a company he sold to Waste Management, agreed to invest and join the board—but only if Rubicon moved to Atlanta, where he worked.
The move attracted more high-profile supporters, and Rubicon’s next big break came when Morris befriended Uber founding CTO Oscar Salazar, who became an investor, board member and pipeline to tech talent. Salazar helped recruit Phil Rodoni, the software chief at Esurance, who led the team that built Rubicon’s Shake app, which measures proximity, speed and the shaking motion of an emptying trash bin to confirm service. That hands-free monitoring, which allows the driver to remain focussed on the street, helps to eliminate the top cause of fatal accidents involving garbage trucks. Such accidents led to 21 employee fatalities and several dozen civilian injuries last year, according to the Solid Waste Association of North America. Rodoni also helped develop a software management suite, Caesar (later renamed Augustus), to track volume and routes, and an ecommerce programme, Rubicon Pro, which offers customers a discount marketplace for supplies and loans.
Much of Rubicon’s model is straight from Uber’s playbook. It keeps risk and capital costs down because it doesn’t own trucks or disposal centres itself. Former Uber CFO Brent Callinicos, who also joined Rubicon’s board, says the company’s growth potential rests in its ability to empower its small-business base.
For all its success, Rubicon remains minuscule compared with its national rivals. Its deal with Atlanta was the company’s first with any city. By comparison, Waste Management works with 3,500 municipalities and Republic with 2,700. Meanwhile, Waste Management has invested $150 million in IT in the past year and has been outfitting 16,500 trucks with mobile devices. “I don’t want to be the guy on the sidelines when it comes to disruptive technology,” says James Fish Jr, who was appointed in November 2016 as Waste Management’s new CEO. “I want to be the disruptor.”
But Morris isn’t the only one who sees plenty of opportunity ahead. Analysts say incumbents are under pressure to cut costs and provide steady dividends, not seek Uber-like hypergrowth. Still, Waste Management and Republic combined are already worth nearly $50 billion. “Maybe it takes them 20 years, but if the other guys can get to $50 billion, I don’t see why Rubicon can’t either,” says Salesforce’s Marc Benioff, who invested in Rubicon after meeting Morris in 2014. Take that with a grain of salt—it’s Benioff, tech’s hyperbole king, speaking. But even at a small fraction of that, garbage could prove to be a mighty good business for Rubicon.
(This story appears in the 31 March, 2017 issue of Forbes India. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)