Recyclebank and Waste Management on Partnering with a Competitor

[Editor's note: This article previously incorrectly stated that the partnership included a $20 million investment from Waste Management. The actual amount was not disclosed.]

It's been a bit more than four months since Recyclebank announced that it had entered into a partnership with Waste Management. On Thursday, a small group of MBA students in the University of California Berkeley's Haas School of Business enjoyed a candid glimpse into the backstory on the deal, its potential and the possible hurdles that this partnership represents for both the startup and the waste industry behemoth.

Ian Yolles, Recyclebank's chief sustainability officer, and Joseph Vaillancourt, managing director of Waste Management's investment and strategic partnership division, where joined by Jennifer Walske, the director of social entrepreneurship at the school's Lester Center for Entrepreneurship, who led the discussion. The event was part of a speaker series hosted by the school's Center for Responsible Business.

This relationship is a major one for 8-year-old Recyclebank, which started in Philadelphia as a small pilot program to test whether consumers would recycle more refuse, and do so more frequently, if they were offered incentives. Through partnerships with municipalities, waste collection companies and consumer brands, Recyclebank now reaches 3 million households.

As Vaillancourt told the students, Waste Management didn't enter into the relationship lightly. Recyclebank was in many ways a direct competitor with Greenopolis, Waste Management's own recycling incentive program. Recyclebank has taken over the Greenopolis platform as part of the partnership deal.

"We're putting Recyclebank, a fairly small brand, right in front of our brand," said Vaillancourt, "so that's one concern." Another, he said, is whether Recyclebank can scale its current operation to serve Waste Management's residential and municipal customer base, which represents 18 million potential customers. Recyclebank is just starting to roll out its services to Waste Management's base.

Clearly, the positive potential outweighs the risk. For one thing, partnering with Recyclebank when it responds to requests for proposals from municipalities is a plus for Waste Management. "Fifty percent of all bids are now requiring an affinity program," said Vaillancourt.

When approaching new potential contracts, Waste Management now has that program built in, in the form of Recyclebank's incentive program, through which households earns points for coupons through recycling.

Also, the two companies have architected their partnership such that it can grow slowly and with benefit for both sides. "We essentially pay the costs for Recyclebank to roll out their program, and in return, for every customer that comes [into Recyclebank's system], Waste Management gets discounted equity in Recyclebank," said Vaillancourt.

Yolles describes the Waste Management as a game changer for Recyclebank. "There's no question that the strategic partnership was hugely catalytic for us," he says. "If not for this partnerships we'd be in very different place right now. At the moment there is nothing more important for us."

For more: See our interview with Recyclebank CEO Jonathan Hsu from 2011 here, and see Ian Yolles' presentation, Gaming the System of Green Marketing, here.

Recycling bins photo via Shutterstock.