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Making sustainable innovation work with Steve Weiss
112 Plays1 year ago
Anthony, Mike, and Karthik sound off on Lego's recent recycling flop, and then are joined by Steve Weiss, founder of Grey Heron and longtime innovation leader in the industrial biotech industry. They discuss the pitfalls and opportunities of sustainable innovation, where SPACs went wrong, and more.
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Transcript
Introduction to Innovation Matters Podcast
00:00:12
Speaker
Hello, and welcome to Innovation Matters. It's the Sustainable Innovation Podcast brought to you by Lux Research. I'm Anthony Schiavo, Senior Director at Lux, and I'm joined by my two hosts, Mike and Kartik. Mike, how are things in New York? Things are going great. It survived the UN last week, so it's all smooth sailing from here. And Kartik, how's Amsterdam?
00:00:37
Speaker
Yeah, Amsterdam is good. Back to its cloudy old self. So yeah, looking forward to the winter. The two months of good weather that Amsterdam gets is over. And it's back to suffering, which is good. It builds character, I think. So yeah, we had an interesting week. A lot of interesting news to come over.
Lego's Recycled PET Controversy
00:00:56
Speaker
The first story is one that provoked a lot of debate in the Lux Slack channel.
00:01:04
Speaker
Lego walked sort of announced that it was walking back this commitment to use recycled plastic and particularly they had developed this approach to take recycled PET and convert that into a Usable product for their bricks because their bricks are primarily made of ABS plastic, which is a higher performance plastic they said that um, you know, hey, this isn't gonna work. We're not gonna do this and
00:01:34
Speaker
I think there was a pretty sharp reaction in the news. They ended up posting, I saw some apology posts, definitely some notes app style apology posts from them where they were like, well, look guys, we're still really committed to sustainability. It's just that this one thing didn't work.
00:01:55
Speaker
I think partly, part of the reason for the backlash or maybe some of the commentary that surrounded this was that I think their initial explanation didn't make a lot of sense. They said, look, this PET thing will ultimately result in higher carbon emissions overall if we scale it up. And that's why we're not going to do it. If you take that on face to value, it makes sense. I mean, we've been talking about
00:02:25
Speaker
For example, plastic pyrolysis technologies that have a much higher carbon footprint. And we've been saying, oh, this is going to be a problem. People care about climate change. Climate change is probably a bigger issue than plastic waste. So that's going to be a big bottleneck. But the PET mechanical recycling approach that they were doing
00:02:51
Speaker
I mean, mechanical recycling baseline has a 50% reduced carbon emissions footprint from a primary material, especially a primary material like ABS. So they said, oh, we have to do this post-processing to make it work. And I guess maybe that's really energy intensive. But it doesn't really, I don't know. It's very strange. And Mike, go ahead. You have a lot of feelings on this.
00:03:18
Speaker
Yeah, I mean, it was a strange announcement. And specifically what they said, so there's, you know, for one to get the PET to perform to the level of ABS, they had to do a lot of modifications to it, they didn't say what, but a certain amount of additives, maybe compounding it with some other types of resins. That could definitely raise the carbon footprint, but not that much.
00:03:45
Speaker
They pointed to the need to do a lot of retooling, which also makes sense, right? You need to change out a lot of the different types of machines. You might need to configure the lines to do some of the extra compounding and processing. And that's certainly expensive. And in the short term, if you need to buy a bunch of big new machines, that could raise carbon emissions. But really only in the short term, if you think about the impact of the
00:04:13
Speaker
The production and installation of the machinery is, over time, not a really big part of the overall carbon emissions for most products.
00:04:29
Speaker
that didn't really totally add up either. But it could be, you know, if they just said, well, we're looking at our carbon emissions, like in the year we do the plant change over like the three years or whatever, if you look at it over a short enough time period, then the effect of changing the equipment could get, you know, larger. Presumably, you're gonna do that as the equipment ages out anyway, right? Like, you're not going to just throw out all your old equipment. And I mean, partially just because of
00:04:57
Speaker
Supply supply issues you're not gonna get that much PT plastic like it just that that whole part of it Yeah, really struck me is very strange Yeah, and and so just wonder if that's like it It's just an excuse because it was really a cost issue or perhaps it was really a performance issue They couldn't actually get the PT the our pet I think Or they just sort of looked at and they realized like why are we
00:05:24
Speaker
doing this with PET. That's the thing that never made sense to me in the baseline. It's like, we're going to use PET bottles as our feedstock. It's like, PET bottles are already, A, I get that they're an available feedstock. It's out there. I'm sure that was the reason, but yeah. Yeah, but that's a stupid reason. I'm sorry. That's one of the only good feedstocks that you can use to make food grade PET with. And food grade PET is
00:05:50
Speaker
in such demand from a regulatory standpoint with the new laws being passed in Europe. And PET is not ABS. It never made sense to me to start with a product that... I know why there's not that much ABS out there on the market, but I get it. But it's like, just don't recycle. This is just not...
00:06:21
Speaker
This is just not the way to tackle the problem. Putting plastic bottles into your bricks is just a PR stunt. Sorry. The whole solution in the baseline was never made sense to me. Well, yeah. And it's also just from a sustainability standpoint that because you can recycle PET pretty effectively, it's much better to take that RPAT and put it into another bottle, which will then be recycled again, as opposed to putting it into a Lego brick. Doing a bunch of processing, yeah.
00:06:50
Speaker
Well, and then what happens, you know, that Lego bricks probably gonna end up in the, you know, garbage, albeit maybe, you know, 20 years from now when you're, you know, your mom throws out your old Lego sets after you've moved out of the house or whatever, but I still have my circular. All right, correct. Because the Lego enthusiasts in the podcast, what do you think about this one?
00:07:12
Speaker
I don't have much to add, to be honest, in terms of this, the only association I have at LEGO is two incredible skylines I have on my private desk, one of the Dubai and the other one of Paris. I didn't even know about, I didn't even think about the materials that were actually used in them, whether they're sustainable or not, whether they can be recycled or not, stuff like that. Maybe I'll have to rethink if I buy another LEGO skyline again. That is the other weird thing about this, not to like, you know, totally like,
00:07:42
Speaker
you know, dump on Lego, but Lego is a really durable product. Like a lot of people do keep their Legos where they get handed down and like Lego has made a lot of like positive PR like, oh, like all these Lego bricks that we made like 30 years ago, they still work. They don't fall apart. You know, they don't break that much. Like waste is just not that big of an issue for the Lego product overall. And so them being like, yeah, we're going to use a bunch of plastic bottles, which is like not our problem.
00:08:10
Speaker
We're going to do that and then we're going to put that in our product, which doesn't have a waste issue. It just never made sense. I think ultimately it's probably just like they look at the finances and they said, why are we doing this thing? I don't think customers really care about where their brick comes from as long as they have the brick. They're not going to use it for 10 days and then throw it like you said.
00:08:34
Speaker
Yeah, they need to get rid of those little plastic baggies that the parts come in. But those parts are really small. You could easily lose them, maybe some other sustainable packaging solution.
00:08:47
Speaker
that's what they need to be focused on. I'm sure there's people that are working on that. But like, come on. Well, that's the thing they said. You know, I don't want to be too much of a hater here either. I mean, sustainability efforts are, I mean, this maybe wasn't the best conceived one in the first place, but sustainability efforts are gonna, they're gonna fail sometimes. That's just,
00:09:08
Speaker
nature of any kind of innovation project. And they said in their in this sort of like apology note or that they they posted the day after a other notes app thing. This is a good a triple sustainability spending to 1.4 billion over over four years which is which is a lot of
00:09:28
Speaker
a lot of money. I'm not sure what all of that goes to. Maybe some of that's like solar PPAs or whatever for, you know, sourcing green electricity or something like that. But nonetheless, you know, it's not like they're, it's not like they're not making a sincere effort, I think, to be to be to try to be more sustainable. You're right. They just announced they're hiring a new chief sustainability officer also came out the same day was looking saw that in the newsroom. So maybe she can whip them into shape.
00:09:59
Speaker
while we're on the subject of being haters. We can be haters to a different company. And that is not actually GE, but GE subcontracted.
GE's Wind Turbine Blade Recycling Challenge
00:10:12
Speaker
There's a sort of brewing story where GE subcontracted with a company to recycle its wind turbine blades. If you don't know, wind turbine blades are really, really big and they're really, really bulky, very challenging to recycle because of their shape.
00:10:28
Speaker
but also they're typically made of pretty complex composite glass fiber epoxy reinforced material. There's no real commercial process today that enables us to be recycled. Some people have made some claims, companies like Arkema, for example, are moving forward with new resins to put into the blades, but we're just now at the point of putting so-called recyclable content or recyclable resins into the blades. So those blades are not gonna come off the market, you know,
00:10:57
Speaker
for 15 years at least. So we're talking about blades that were made with very unrecyclable materials. GE subcontracted this company. They said, hey, recycle these blades for us. The company was like, yeah, no problem. And then apparently, just dump them in this small town in the Midwest. And it's been this brewing story. And now GE is suing this company. So Karthik, I'm curious. You're the one who really brought this story to us. And what caught your eye here? What stands out to you?
00:11:27
Speaker
I think, so maybe to give some context to our listeners as well as to what actually happened. So Global Fiberglass Solutions, that's the company GE is suing. So GE operates wind farms, onshore wind farms in Iowa and Texas. They have about 5,000 wind farms in which that are about to reach their end of life. So they want to take these blades and they sell it to GFS and GFS would then recycle them for
00:11:58
Speaker
you know, getting pellets or maybe fine powder that can be used as filler or for different applications. It turns out they were just stockpiling them in a warehouse in different parts of the country, not just in just some random town in the Midwest. It was just everywhere. And there's I think about $19 million in damages or something like that is what GE is suing them for. What really caught my eye was because we usually follow recycling innovations.
00:12:26
Speaker
This is one of the issues that we have also seen in apparel and shoe recycling, where if I'm not wrong, Adidas and Nike or one of them had an issue with shoes being stockpiled that was supposed to be recycled.
00:12:39
Speaker
I'm not sure about that. There was a DAO, DAO Singapore had an issue where they subcontracted it out to a local waste management company to recycle the shoes and they ended up just selling the shoes on or dumping them in another country. So that's definitely. Yeah. So that's one of the things that actually caught my eye was they didn't maybe do a proper vetting process to see how they recycle, who the end customers are. Do they even have maybe supply or purchase agreements in place?
00:13:08
Speaker
for selling recycled material. It's quite a bad sign that a GE didn't do its due diligence on this.
00:13:19
Speaker
Oh, maybe GFS was so good that they ended up fooling GE so well. Allegedly. I don't know what happened. Allegedly. I just want to say allegedly so that we don't get sued here. They're monitoring. The Revation Botters matters podcast very closely, I'm sure. Yeah, I know. 10 episodes in and we get shut down by a lawsuit.
00:13:41
Speaker
Yeah, I mean, I think it's ultimately what it comes down to is it's really difficult to outsource this type of sustainability work. And you're just going to take a risk on a subcontractor that's probably going to come back and bite you.
00:13:55
Speaker
If not immediately, then at some point you're going to get a story like this, and you're either going to have to sue, and that's expensive, or you're going to have to do the Lego Notes Apopology thing, and that's a pain. Ultimately, companies are going to have to bring all this in-house if they really want, especially the hard stuff, the complex stuff to be recycled, shoes, apparel, wind turbines, like you said.
00:14:21
Speaker
Yeah, I mean, bring it in-house or just be a lot more actively involved in the collaboration, right? You can't just kind of cut somebody a check and ship the turbine blades off to them and say, you know, we're sort of all good here. I mean, if it's an established process or something like that, if you're doing that with PET bottles, then, you know, in a pretty established recycling process industry, that's one thing. But yeah, for something like wind turbine blades, you'll have to be a lot more involved.
00:14:56
Speaker
They need to source the recycled carbon or glass fiber composite material from GE because that's already a performance material. I bet you could hit your performance targets with that composite material for sure. This is clearly two great tastes that taste great together here in terms of these two sustainability issues.
00:15:18
Speaker
But I do think it's easy to do.
00:15:24
Speaker
We're going to get our top people on it. Looking forward to my fiberglass Legas. That will be great. Yeah, that's great. Absolutely. Looking forward to it. Getting a bunch of post-industrial, like, chemical residue, catalyst residue in my fiberglass toys, like putting this out.
Steve Weiss on Industrial Biotech
00:15:46
Speaker
Okay, we're back and we are delighted to be joined by Steve Weiss. Steve is the co-founder of Grey Heron, which is a management and strategic consulting firm. But he's really, I would say he's a coach. He has been involved in almost every sort of important industrial biotech startup in the US over the last two decades. And I know that at Lux, whenever we talk about industrial biotech and we have a particularly challenging question,
00:16:16
Speaker
The conversation always comes back to, or maybe just ends with someone saying, okay, we need to talk to Steve. We need to get Steve on the line. So he's really the, I don't know, a sage, and he's here to share some of his wisdom with us today. So we're super excited to have him on. Steve, how are you doing? I'm doing really well, especially after that introduction. I know. I feel I need to reach out here more often to get energized like that.
00:16:41
Speaker
I'm trying to pitch other guests to come on, so we got to do a good job of making it sound like a good time. But Steve, I guess I'm curious if just to start, if you could get a little on your background, tell our audience a little bit about you, as well as talk a little bit about industrial biotech and what it is, because it's kind of this nebulous
00:17:05
Speaker
concept, right? It's everything from beer to pharmaceuticals, depending on how far you define it. So I'm curious for your perspective on that, that sort of broad question of just what is this thing called industrial biotech? Oh, sure. If I understood the first part of your question, though, a little bit in terms of me and where I'm coming from. So to the surprise of many, I actually started off very deep technical.
00:17:32
Speaker
I got my first soldering iron from my grandfather at the age of five. He was a watchmaker and a big influence on me, just in terms of building things. It was fun, it was interesting. And I ended up going to MIT, bachelor's and master's in computer science. Four years of research work at IBM and HP's computer research labs could have gone that path, found it really interesting.
00:17:59
Speaker
But I wanted to do something a little more hands-on, and so I moved into product development. I was fortunate to be involved in really kind of a breakthrough product in the early 80s, HP's touchscreen PC, and was part of a team developing a sexy use of touch for that system. And I have a working HP 150
00:18:21
Speaker
40 years old in the next room. Love it. I can point people to a YouTube video of HP's first ever TV commercials. But doing something kind of fun like that got me exposure to customers and major accounts and sales and marketing. And I said, wow, this is kind of cool.
00:18:42
Speaker
So I moved into marketing, biz dev and general management, initially at HP, then the succession of startups and clean companies that I went on up through and beyond IPO. Um, and I enjoy doing all those things and getting the operating experience and having P and L's. Uh, but it's now 30 years ago myself and someone I met at HP, my, uh, co-founder of Grey Heron, Chris Kocher, we formed our,
00:19:11
Speaker
boutique consultancy. We've worked with well over 100 companies over the years and we're really focused on issues of business strategy, business model, fundraising, partnerships, differentiation and messaging. And so the real thread I would pull out of that
00:19:30
Speaker
is despite my love or maybe because of my love of technology, I've probably worked with our clients over the years to bend over backwards to try to make it all explainable and relevant.