RecycleMatch trades the garbage heap for the cloud

The Gunther Report

RecycleMatch trades the garbage heap for the cloud

Have I got a deal for you!

For sale cheap -- actually, free -- are 500 VHS tapes on cutting and layering men’s hair, “Classic Men’s Hair Cutting Series #1 Tapering and Layering,” wrapped in clear plastic with a box case.

Or perhaps you’re in the market for shredded wood waste from construction and demolition sites. Bring your checkbook and a big truck: 500 tons a month of wood waste sells for $15 per ton.

Big crowd coming for dinner? Maybe you can use 1,400 pounds a month of waste cooking oil, with a few scraps of French fries and won-tons mixed in, priced to go at $0.005 per pound.

These were among the offerings this week on RecycleMatch, a Houston-based startup that has built an online marketplace designed to connect buyers and sellers of waste. The company's promise is "Delivering the Future of Zero Waste." It’s a great concept, another step toward -- not just reducing waste -- but eliminating the very idea of waste.

When I first heard of about RecycleMatch, I thought the idea of building what I think of as an eBay for garbage had a lot of  potential. So did Brooke Farrell, who started the company at the end of 2009 with her brother-in-law, Chad Farrell.

Turns out we were both wrong.

So, as I learned this week when I talked with Brooke, RecycleMatch is more or less trashing its original business model. It’s turning away from its online marketplace and turning into an enterprise software company, aimed at big customers who want to reduce their waste -- and realize the value hidden in it. The company’s purpose remains the same, Brooke told me, but the business model is new.

“The companies that had the best materials and the most materials really weren’t comfortable with the old model,” Brooke said.

Before starting RecycleMatch, Brooke, who is 42, spent a decade as a marketing consultant to Waste Management, helping the Houston-based garbage giant develop campaigns around its environmental strategy. There, she could see the waste business changing. Instead of throwing garbage into landfills, companies -- including Waste Management -- wanted to extract value from the materials they no longer needed.

Because there isn’t a lot of transparency in the industry -- who, for example, knows what 1400 pounds of spent cooking oil is worth? -- and because new technologies are being developed to make better use of waste, Brooke figured that an online marketplace would serve sellers of waste, who would then pay commissions to RecycleMatch. After all, waste generators had always paid something to haul away their trash.

But big companies didn’t want to pay commissions, she said, and they were wary of a public marketplace. “They wanted to know exactly who was bidding,” she explained. "They didn’t want some fly-by-night guy with a pickup truck to come by and pick up their waste.” Corporations wanted control, even over their garbage. (Companies want to control everything, I’ve learned as a business reporter.)

The RecycleMatch software, which will reside in the cloud and be sold as a service, gives sellers of waste that control. They will be able to maximize the sale price of their waste, either by working with their own buyers or through a larger network made available by RecycleMatch. They’ll accelerate their zero-waste efforts and automate their reporting, Brooke says.

So far, RecycleMatch has two big pilot customers for its offering. Shaw Floors, the world’s largest carpet maker, will use the software to help it drive down its landfill costs. [For more about Shaw, see my blog post, "Shaw Floors' wall-to-wall (and cradle-to-cradle) success story" aka "This carpet has moral fiber."] So will Progressive Waste, a Canadian trash hauler and recycling firm.

The companies that best fit the subscription model are those that manage large volumes of diverse types of materials -- a rule of thumb would be organizations that deal with about $1 million of materials annually, at least, Brooke said. “The high-quality, ongoing streams of materials these companies generate mean that they uniquely hold the key to establishing a viable, liquid market,” she said. Eventually, the firm hopes to serve smaller companies, too.

As for the online marketplace, Brooke said the company hasn’t decided yet whether to keep it (because it can generate leads for the software business) or take it down because it’s a distraction. I hope it lives on. Someone, somewhere is going to want that cooking oil. The hair-cutting videotapes, I’m not so sure.

[Author's note: Next week at FORTUNE’s Brainstorm Green conference, I’ll be moderating a panel called The End of Garbage. I’ll be joined by Brooke Farrell; Vance Bell, the CEO of Shaw Floors; Steve Davies, Director, Marketing and Public Affairs, NatureWorks LLC; David Edmondson, Chief Executive Officer, eRecyclingCorps; and Vikki Spruill, President and CEO, Ocean Conservancy. Much of the conference (but not that conversation, unfortunately) will be shown online, and you can register here].

Photo of garbage dump on green meadow by Dudarev Mikhail via Shutterstock.