Tech-aided trash disposal just got messy
We’re playing a very long game. If it takes us 20 years to get there, so be it. Nate Morris, CEO of Rubicon Global
LAST month, an Atlanta-based company called Rubicon Global announced its entry into the rarefied “unicorn club” of startups worth more than US$ 1 billion.
Rubicon is not an obvious candidate-it’s in the gritty business of waste disposal. Then again, it’s not a typical garbage company. It has raised about US$ 200 million, and its investors include Leonardo DiCaprio and Salesforce.com Chief Executive Officer Marc Benioff.
Rubicon’s co-founder and CEO, 36-year- old Nate Morris, has referred to the company’s service, which connects independent trash haulers with businesses that need their dumpsters emptied, as the “Uber of Trash.”
Garbage, a US$ 60 billion industry, has traditionally been low-tech. According to Morris, the three companies that dominate-Waste Management, Republic Services, and Waste Connections US - have no interest in changing this because of their vested interest in the status quo. Morris has said that like Uber, Rubicon is building a tech platform that will break the stranglehold of the incumbents, save customers money and make it easier for drivers to make a living. And it’ll lead to more recycling.
The results, at least so far, have been disappointing, according to interviews with nearly 20 former employees-who requested anonymity because they had signed non- disclosure agreements or feared retributionas well as competitors, business partners and industry experts.
By their accounts, Rubicon has consistently overstated the impact its technology is having on its business, which more resembles a conventional waste brokerage than a sophisticated Silicon Valley start-up. Nearly a decade into its crusade to increase sustainability, Rubicon declines to release any statistics that would make it possible to compare its recycling rates to the broader industry, citing nondisclosure agreements with its customers.
Rubicon’s challenges follow a familiar path in Silicon Valley and the broader tech start-up world. Investors write large checks to impressive yet unproven entrepreneurs with seductive stories. But those founders often find it surprisingly complicated to apply high-tech solutions to oldfashioned problems.
Morris’ charms have masked the gap between Rubicon’s rhetoric and its reality, said many former employees. They describe him as a charismatic pitchman with a taste for his own Kool-Aid. Before launching Rubicon in 2008, Morris raised money for President George W. Bush and Kentucky’s junior Republican senator, Rand Paul. Investors and former employees said their attraction to Rubicon was largely based on faith in Morris. Two former employees said people around the office would joke that it was exciting to work for the future US president.
But the company Morris described publicly hasn’t always jibed with what Rubicon has said in private. In the summer of 2015, he gave numbers to Fortune that cited significantly higher rates of growth and the number of locations Rubicon was serving than did a presentation shown to investors at the same time. A Forbes article published earlier this year, based on an interview with Morris, reported that Rubicon had US$ 300 million in annual revenue, a number 60 times higher than the 2015 revenue number it gave to potential investors.
Bloomberg spoke with four current Rubicon executives, including Morris, though only Morris wanted to be quoted. In an interview in late September, Morris declined to comment on Rubicon’s finances, including to clarify statistics provided in previous press interviews. He dismissed criticism about the company’s progress on its technology and recycling rates. “We’re playing a very long game,” he said. “If it takes us 20 years to get there, so be it.”
Because Rubicon doesn’t own trucks, it relies on companies that do. In the past, this has meant working with the Big Three. One former employee said there have been times when as much as 35 per cent of Rubicon’s business was handled by haulers for Waste Management, Republic, and Waste Connections.
Jason Tipton, a former Rubicon customer, is the CEO of a food truck business in Washington, D.C. Tipton said his hauler stopped picking up the trash earlier this year because Rubicon hadn’t paid the hauler in six months.