We hear endless talk about smart entrepreneurs in established innovation hubs like Silicon Valley and New York City, but some of the juiciest business solutions are cropping up in elsewhere U.S.A.—places in Middle America like…Kentucky. Join us for our All America series and meet powerfully inventive entrepreneurs across the country. First up: Entrepreneur and Kentucky native Nate Morris, whose company Rubicon is reinventing one of the world’s most lucrative industries—waste management.
Konstanze Frischen, North American Director of Ashoka, sat down recently with Morris at the newly created Center for Social Enterprise in the University of Kentucky’s Gatton College of Business and Economics to hear more about his journey and learn why his state and region are fertile ground for entrepreneurs tackling big, global challenges.
Konstanze Frischen: Nate, you’ve started a business that is often characterized as the “Uber for trash”—a technology company that completely disrupts the waste management industry. You founded Rubicon in Kentucky, and it is headquartered in Atlanta. Why not New York or San Francisco?
In the tech world, there’s a myth that an idea must come from San Francisco or New York to be good. I believe Kentuckians and entrepreneurs in Middle America have some of the best ideas in the world. I never thought that I would be in the waste and recycling industry, but it came about through seeing a problem and a solution that I would have missed entirely had I been in Silicon Valley or New York. Had I been anywhere else, Rubicon wouldn’t have been possible.
Konstanze Frischen: And what is Kentucky-specific about your business idea?
Waste is close to home—everyone has trash. It’s a main street issue that hits Middle America. Landfills are typically built around people who are economically depressed, people of color or people who have been displaced in their communities. This is an example of social injustice—there just aren’t a lot of landfills around rich people. I have seen communities that are completely ransacked by landfills. I saw waste as an issue we could tackle through market forces—and help to create more opportunity for small businesses.
Frischen: What did you see that no one else was seeing?
Morris: The thing that people don’t know about the trash business is that the big waste companies make all their money by taking your trash to the landfill that they own. They may seem like transportation or trucking companies but they’re actually in the real estate business. They’re putting your trash into their real estate asset and charging you a monthly rental fee. A handful of companies own billions and billions of dollars of these assets and they have no financial incentive to recycle. When you’ve invested in these assets, you have to use them to make a profit. We looked at this and said, “We can use technology to build a network of independent haulers around the country, provide service, but not be dependent on a landfill to derive a majority of our revenue.” This frees us to find things like anaerobic digestion, increased recycling, single-stream cycling, composting, all of these alternatives to landfills that are better for the environment and that can save the customer money.
Frischen: Waste management companies are powerful—you must have quite a few enemies.
Morris: Yes (laugh). This is arguably the toughest industry in the world. For thousands of years, it has been riddled with organized crime, monopolist business practices and skullduggery. Today, only a couple of landfill companies have the majority of the American market. We saw an opportunity to break these monopolistic practices through technology while becoming an advocate for customers and the environment. Rubicon is about the opportunity to democratize the waste industry and give independent haulers the tools and the opportunity to get into the value chain.
Frischen: So you tackle an environmental problem by creating market incentives?
Morris: Yes, and the market is ultimately the more powerful lever. Because there is a market opportunity, it is reconditioning the way business leaders think about the environmental movement. Traditionally, business has associated better environmental practices with loss, but that’s not always true. We’re using the free market to solve one of the world’s oldest problems while saving customers money and even creating new revenue
Frischen: Rubicon is the first company you started. How did your family and friends react when they heard you were going from the White House, where you worked while in college, into the trash business?
Morris: My mom started crying (laughs). The beginning was rough. I started Rubicon with about $10,000 on a credit card. I had student loans. I eBayed just about everything I had. A Michael Jackson t-shirt that I got at a concert when I was in the second or third grade sold for $900. That paid for the legal work for incorporating Rubicon and enabled us to build our first service and client contracts. I mean, I sold everything I had to start the business. If people tell you that lack of capital is the issue, they’re not passionate enough because there’s capital everywhere. Money is not the issue. It’s passion, vision, drive, determination. It’s all those things, and capital is the byproduct of having the right mindset and addressing the right issue and challenges. By the way—in the beginning, we got more investment from Kentucky than New York or San Francisco.
Morris: Yes. Bill Gatton—who has given so graciously to transform the college we are sitting in today—believed in me and was one of our first investors. Other Kentuckians like Chris Sullivan, founder of Outback Steakhouse, and Brad Kelley, owner of Calumet Farm and Lonely Planet have also invested and played a huge role in our success.
Frischen: Who were your entrepreneurial role models when you were growing up?
Morris: First of all, my mom. She was a single mom and worked two jobs. She used to tell me the story of Colonel Sanders when I was a kid. He didn’t start Kentucky Fried Chicken until he was in his 60s, and he had failed at just about everything until that point in his life. And when he got the idea for KFC, he just went out on the road and started franchising chicken places and became a global icon. And my mom would tell me, “Never give up. Never quit,” and give me that story of Colonel Sanders about all the trials and tribulations he had as an entrepreneur. My mom made me believe anything is possible. And I believe people are hungry for opportunities. Now I’m helping to build the Center for Social Enterprise at the Gatton School as a great way for Kentucky to fight poverty, empower people and attract talent from outside the state. There are opportunities out there, opportunities for all Kentuckians, and I’m confident we can use business to solve the country’s biggest problems.
Frischen: Do you mind if people call you the garbage man?
Morris: No, I like it! Two things: First, waste is universal and a clue to who we are. We all throw things away. One of the first things anthropologists study about an ancient civilization is its trash. We often challenge our customers and everyone who works at Rubicon to ask themselves these questions: “How do you want to be remembered? What is your legacy?” Second, we think waste is a design flaw. Thanks to technology, soon we will have real-time information about what’s coming out the end of your supply chain, what’s in our trucks, and we’re going to be able to prevent waste before it begins. Ultimately waste will be one of our greatest resources—to power our homes and businesses—and will be one of the greatest moneymaking opportunities for America.