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CLUBZERØ's Safia Qureshi on how returnable packaging can scale
77 Plays1 year ago
Safia Qureshi, founder and CEO of CLUBZERØ, joins Karthik, Mike, and Anthony to discuss the pitfalls and opportunities for returnable packaging.
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Transcript
Introduction & Cybertruck Analogy
00:00:09
Speaker
Hello and welcome to Innovation Matters. It's the podcast brought to you by Lux Research that pokes holes in sustainable innovation the way that bird poop pokes holes in the sheet metal body of a cyber truck.
00:00:25
Speaker
Oh, man.
Cybertruck's Unique Material Challenges
00:00:27
Speaker
I have to say, I saw that I was like, this is the most Anthony Schiavo story ever. It's, you know, coatings and corrosion and Elon Musk is really extremely relevant to your interest. My two interests, Elon Musk failing and the development of better test methods for long-term corrosion protection are, yeah.
00:00:46
Speaker
Really uniting these these worlds of interest. It is funny though I mean like like so for the listener basically Tesla put out a bulletin that was like you need to clean like bird poop or anything else like off your Cybertruck as soon as possible because if you leave it on there it will basically like corrode directly through
00:01:08
Speaker
the sheet metal, because the Cybertruck is, of course, using basically bare sheet metal for its body, bare stainless steel, as I understand it, not even bare aluminum. You know, this is apparently so that you can stop bullets with it, question mark, or do any of these other features. Or a ball bean hammer. Also questionably. Or a ball bean hammer. Yeah.
00:01:32
Speaker
So yeah, they use cold rolled stainless steel. That's correct. Cold rolled stainless steel, which is sort of famously not that great a corrosion protection. It's stainless steel, not impervious to rust steel.
Design Boldness vs. Tradition in Cars
00:01:48
Speaker
I mean, it is kind of interesting because there's something about the Cybertruck, the idea of like, oh, what if we just threw out everything that we thought you knew about what a car should look like and kind of questioned everything. I think it's a Nissan commercial that they keep showing, whereas some actresses like automotive designers have the power to take this piece of clay and make a car that looks like anything. So why don't they?
00:02:13
Speaker
And then of course it's a commercial for a Nissan that like basically looks the same as most other cars do. And like the Tesla actually like took that seriously, which I sort of respect on some level. But this is one of the reasons why people usually don't do that because it's like, you know, there's all sorts of, you know,
00:02:30
Speaker
There's all sorts of manufacturing issues with the Cybertruck because people are used to making cars in a certain way and they have all of the equipment and everything down to a science for that. If you're going to change it all, it's going to be really hard. It's not just that people are used to making cars a certain way. The decisions that get made, all cars basically look the same now, which is this complaint
00:02:54
Speaker
about cars and I think that's true and like I definitely Respect the harkening back to the sort of previous era of automotive design when things actually look interesting and cool but like They don't just look that way because the industry is conservative and no one wants to take a risk Although that is true. They look that way because there's like engineering like value reasons for them to look that way Like they don't have hard
00:03:19
Speaker
aerodynamics, like they don't have hard edges because those are like more difficult to like manufacture with sheet metal. They don't use like bare stainless steel because when a bird poops on it, it rusts instantly. Like these are all things that, you know, like in the sixties, your car used to last like three, four years. Right. Um, like people forget this and like this is very early era of car manufacturing. It was like, they're almost like disposable objects, right?
Car Longevity Over the Decades
00:03:45
Speaker
Yeah. It was a lot better by the sixties, but yeah.
00:03:48
Speaker
I mean, I guess in the late 40s, early 50s, cars would last three to four years. But we've engineered these things to last 20 years now. That accumulation of decisions forces the cars to sort of look the same. If you're going to not have the cars look like that, you're going to have problems. It's just how it works. Could have put a clear coat on it though, I think. Not sure that... Could have put a clear coat on it.
00:04:11
Speaker
I'm sure, I'm sure, like the various auto sales folks at, you know, Sherwin Williams, 3M, the various chemical companies were all like getting alerts on their phones, being woken up at midnight with like a helicopter outside their door or whatever, you know, by their various CEOs. Like we need to get our comment on this immediately. I mean, when they launched the Cybertruck design, I think I was
00:04:41
Speaker
doing my bachelors at the time. And then we were all talking about this because we were just about to go to a fluid dynamics class. And we were like, can you please tell me how stacking up vertical plane surfaces together is going to be aerodynamically sound and have the least coefficient of drag even before the stainless steel part? I mean, it makes the Cybertruck look distinct because there is no other design that way. But I was like.
Aesthetic Debate on the Cybertruck
00:05:03
Speaker
It looks ugly, though. It doesn't look good. Beauty lies in the eyes of the beholder, right?
00:05:10
Speaker
No, it's not. I'm I'm once again issuing the correct opinion on something here, the thing I've been doing all week. And, you know, I'm not here to say in the cyber trucks. But it just doesn't it's not aesthetically congruent with any of its surroundings ever. So it just always looks like you're larping like unless you're like driving it through the desert, like you just and then it I would assume rusts immediately when you do that as well because of all like
00:05:39
Speaker
take it out to like the salt flats or whatever to see the top speed. And you just are literally driving back a big pile of iron, iron oxide. But yeah, I mean, it just never looks good because it's never like, like when you're driving it through the pickup line at like Chick-fil-A or whatever, you look like a dork, I'm sorry. But I mean, as an engineer, I would say it looks cool. You know, it looks fascinating. I mean, I'm intrigued as an engineer to know how they came up with that design and how they, you know, even arrived at the fact that that's going to have the least coefficient of drag, you know.
00:06:08
Speaker
Even before the stainless steel. I think as an engineer, it looks cool. Pretty much pretty much does design philosophy of the cybertruck for good or for ill. Yeah. I mean, I, it's, it's like a eight year old child's drawing a car brought to life. Yeah. Anyway, we're here to talk about the news and there's, although it seems hard to imagine more news than whatever's going on with Elon Musk, um, any given week.
Regulatory Hurdles in Cell-Based Meat
00:06:37
Speaker
So I think there's a couple of stories we wanted to flag up. Mike, I'll kick it over to you. You had mentioned wanting to highlight this story on meat and possibly cell free meat, or as you might call it, artificial meat. As you might be legally obligated to call it if you are in Arizona or Texas.
00:06:58
Speaker
Yeah, so this has been a big year for sell-based meat sort of on the regulatory front for approvals and things last year. And that was actually one of the predictions that we made for 2023. And I think overall, it was a good one. We were thinking about, as we saw in the US and other places, sell-based meat products actually getting regulatory approval to be manufactured and sold.
00:07:27
Speaker
But over the course of the year, there's also been a bit of a backlash to that also in where you've been having various jurisdictions passing laws either, I mean, in some cases, like in Italy, actually attempting to ban the sale, creation and sale of cell-based meat products, not for like, it's not healthy reasons, but like this is bad for our,
00:07:57
Speaker
You know, this is bad for our domestic farmers and meat industry. And similarly, so you've been seeing that most previously in like Texas and Florida and Nebraska, and then most recently last week in Arizona, these laws that are not banning cell-based meat, but requiring it basically to be labeled as artificial or cultivated or saying like, you can't actually use the word
00:08:27
Speaker
meat to describe it. And it does appear to be driven really by concern and backlash from the traditional animal-based meat product industry, a bit like we kind of saw a similar backlash against some alternative dairy in the form of the Senator from Wisconsin trying to pass a bill
00:08:53
Speaker
preventing people from calling almond milk milk, right? Because they wanted to protect the areas. What I think is interesting is this is not really an aberration from like
00:09:05
Speaker
regular process of figuring this stuff out. Like I was listening to this other podcast. I know it's true. I listen to podcasts other than Innovation Matters. Really great podcast called Maintenance Phase, which is about like health and then health policy and stuff like that. And they did a whole episode on the creation of the food pyramid and the various sort of flavors of the food pyramid. And like the whole process of creating the food pyramid was like extremely mediated by
00:09:32
Speaker
all these different lobbies, right? And like the meat lobby and the various like, you know, grain lobbies and all these different things. And it's like, you know, this whole set of public opinions or public policy on like, what do we call? What do we label? How do we sort of do this interaction of like the food and the labeling of it is all really heavily mediated by
00:09:59
Speaker
by these industry groups.
Influence of Industry on Food Labeling
00:10:01
Speaker
So it's not really surprising to see it in this way, but it's definitely funny to see it play out over something that's still so early stage. Yeah, it's definitely very preemptive. But yeah, that was one of what was interesting to me about it to me is that it's not just the regulatory approval, which I think had been one of the biggest regulatory concerns around these products is can you get approval to
00:10:27
Speaker
to act on them or to actually produce and sell them. That the existing industry hasn't necessarily and probably they've tried behind the scenes, perhaps to interfere with that process, but coming about it from the labeling and marketing and description of these type of products. Probably because I think that's probably a little bit easier to influence.
00:10:58
Speaker
you know, the Texas state legislature Arizona state legislature to pass one of these these kind of bills than it is to
00:11:05
Speaker
necessarily to influence the people at the FDA who are making those approval decisions. I find it extremely hilarious that they're fighting about cell-based meat versus real meat as a vegetarian, because it's still meat at the end of the day. I mean, so as a vegetarian, I think most people have the stance, right? Would you eat cell-based meat? Like if there was no animal killed in the making of this? I guess it depends on the reason for vegetarian, maybe. No, I don't know.
00:11:35
Speaker
It's beyond that a little bit as well, because there are also religious reasons as to why I was raised vegetarian. But since my young age, I've never liked the smell of cooking meat. So that always plays a part, whether it's cell-based meat or otherwise, I think that smell is never going to change. It's still meat. Yeah, if they do it right, it'll smell like real meat. Of course. The better they do it, the less desirable it will be for you.
00:12:04
Speaker
Exactly. But I mean, at the end of the day, if it has similar characteristics to the meat, I mean, sure, you can call it imitation meat, but at the end, it's still meat. I really don't see the point in making that change. I think it's just down to the fact that the conventional industry is just conservative, similar to other industries, and they just don't want these things to change. They don't want to be priced out of the market.
00:12:27
Speaker
Yeah, it's interesting because, I mean, the traditional, I would say, sort of industrial players, right? The actual meat processing, packaging companies like the Tyson Foods and Cargill's and things of the world, they're all doing stuff in cell-based meat and plant-based meat and investing in this and experimenting in it and partnering with startups.
00:12:49
Speaker
Like there's a lot of that type of activity from those sort of industry players. I think this kind of backlash is driven much more by the farmers. If you're a Cargill and your business is in like packaging and selling chicken or whatever, then you can definitely pivot to sell-based meat if that becomes what's desirable for consumers. But if you're an actual chicken farmer or pork farmer,
00:13:17
Speaker
And that's a lot harder.
Resistance from Traditional Meat Industries
00:13:19
Speaker
So I think those are the people who are the stakeholders who are driving more of this resistance here. And I don't think it's ultimately probably going to be, I mean, it's sort of the least of the worries in a way for this space right now. There's still a lot of work to do in terms of making these
00:13:37
Speaker
these products successful and scalable and addressing the taste and texture and other issues to make them for the quality and experience and all of that. And of course getting the actual official regulatory approvals, like we said. So I don't know how consequential any of this is going to be for that, but I do wonder if
00:14:01
Speaker
you know, if it gets to the point where it could affect those bigger industrial players, like if farmers, you know, like if Tyson or whomever like doesn't want to tick off their suppliers, the farmers, then think that they're buying from that I think they're, you know, relationships with are pretty important.
00:14:23
Speaker
by, you know, making these venture investments and in cell base mean, I mean, it's kind of like the classic disruptive innovation story, right? There's always stakeholders within your when you're trying to do something different and disrupt potentially disruptive, there's always a lot of stakeholders within your organization or within your, you know, your network or your ecosystem or your supply chain that are that don't want you to do it and are coming up with reasons for you not to. So
00:14:50
Speaker
That might be the only effect I could see if it does, if the backlash gets strong enough, if it does prompt some of these, you know, these bigger players to pull back on it a bit. Do you see any maybe sort of threat from alternative proteins in terms of like plant-based meat, like vegan stuff? I've had friends ask me, okay, you've had vegan meatballs, how do they taste? And I'm like, they taste good, but I don't know if they're like tasting like actual meat, you know?
00:15:17
Speaker
Because you also eat meat. I'm curious to hear both your thoughts on if you have tried vegan meat versus cell-based meat and regular meat and do you find big differences in texture, taste? Yeah, I mean, I haven't tried cell-based meat. I haven't had the chance to do that. I don't think too many and I don't think too many people have at this point. But yeah, I mean, the plant-based products, the Beyond Meat and stuff like that, it's not bad. It definitely doesn't taste quite like a real
00:15:47
Speaker
a real burger or something like that, but I'll use it in chili and things like that. In that context, you don't notice the difference, so much. Yeah, I think it's really a textural thing. Yeah, some of these laws though, like the Texas one does apply to plant-based also and
00:16:13
Speaker
seeks to address the issue of unclear labeling on products that look or taste similar to traditional animal-prized animal-derived products, they say. So they're definitely going after the Beyond Meat and stuff as well.
00:16:26
Speaker
It's not just Texas going nuclear, um, in more ways. That's a little, that's a little professional podcasting transition for y'all.
The Advent of Nuclear Batteries
00:16:36
Speaker
Um, it's also, uh, China, right? We had a pretty interesting story card that you flagged up about a extremely questionable innovation from, from China. Talk to me. Yeah. So, uh, I think it's about two or three weeks ago where this, uh, Chinese company beat a world, uh,
00:16:55
Speaker
they have announced a nuclear battery. So for those who don't know what a nuclear battery is, it's just a battery that houses radioactive isotopes that are decaying. And when they're decaying, they release heat. And this heat, of course, can be converted to electricity, or you can use heat to heat and other applications. And so if you have these isotopes that are contained in a very strong protected enclosure, if you will,
00:17:24
Speaker
you basically let them run forever if they have a very high half-life. You have perpetual power of sorts because it's never going to decay if it has a very long half-life. And so they claim they have developed this very small nuclear battery that they want to target for charging cell phones and smart devices and other things. So right now, their device, I think, can charge
00:17:49
Speaker
at 3 volts and 33 milliamps. So it's like 100 milliwatts of power, something like that. Very, very low amount of power. They use nickel isotopes, strong shim isotopes and things like that, that decay to become non-radioactive elements like nickel. This specific isotope of nickel becomes copper, a non-radioactive copper and they store that copper inside. And so they claim they're gonna get their first one watt device by 2025 and they're gonna scale this up.
00:18:19
Speaker
And they're going to first target, of course, the consumer market where they want to charge portable devices. I don't know what to say about this, man. Like so many of the problems with nuclear are problems of perception, right? And the perception angle of I'm going to put a little nuclear battery in my cell phone or whatever is like, it's tough. You know, it's tough.
00:18:47
Speaker
especially just like someone will drive a nail through it. Like, you know, someone is going to put like, this is just like how there are so many stories like the Guyana incident, you know.
00:19:01
Speaker
You can take a lot of precautions with these things and still end up, if you have nuclear material, radioactive material that is out in the world, not in a nuclear power plant or under pretty tight controls, it ends up getting spread around. It just seems like not worth the risk. What's the upside here exactly? Your iPhone doesn't have to get recharged? Am I too much of a skeptic? What's up?
00:19:31
Speaker
apart from the perceptual issues, I'm just not sure the value proposition makes, I mean, I think there is a nuclear battery is an interesting technology and there are use cases for it, but the use case for a battery that can go 50 years without having to be recharged is not your cell phone for a wide, even apart from the nuclear stuff, for a wide variety of reasons, right? I mean, one, your cell phone doesn't allow the rest of the cell phone in the last 50 years.
00:19:58
Speaker
Anyway, and, you know, you can charge the cell and it's not that hard to do, you know, something that can go longer between charges is obviously better. But like, you know, most people at a minimum can easily charge their cell phones at night when they're sleeping or whatever anyway. So a battery that I think is going to be a lot more expensive upfront than traditional
00:20:23
Speaker
lithium ion for the sake of not having to be recharged. It just doesn't make a lot of sense for a cell phone. And I imagine that's probably not what they're going for, not really the market they're going for anyway. That's just a little bit like, oh, this could power a cell phone for 50 years. It's more a bit of marketing to get attention for it. I mean, the applications that this sort of thing is relevant for are
00:20:49
Speaker
you know, space and other remote locations where you might need to put sensors or transmitters and whatnot that would need power for a long period of time and aren't easy to recharge or medical implants, medical devices, though you're obviously going to get into the, you know, but if this goes into a pacemaker, right, you're going to have some of those perceptual concerns about
00:21:14
Speaker
about nuclear, but but probably like, you don't have to worry about people driving a nail through it, or something like that. Or if somebody the nail gets driven through it, you've got you've got problems with a few isotopes. Yeah, do also, you know, maybe simmer the fears Anthony has over punctures.
Safety Concerns with Nuclear Technology
00:21:31
Speaker
And I don't know if this is a callback, but it's apparently bulletproof. Oh, similar to the Cybertruck. But can it withstand bird poop?
00:21:41
Speaker
Oh, that's do not. Do not put this in your cybertruck. Do not recharge your cybertruck with a better battery. That's the official iteration.
Safiya Qureshi & Club Zero's Mission
00:22:06
Speaker
All right, we are very glad to now have our guest here, Safiya Qureshi, who is the founder and CEO of Club Zero, which is, well, maybe Safiya, I'll go ahead and let you tell us about it, what Club Zero does and kind of how you got into this, what was the backstory, what led you to get started in this area.
00:22:31
Speaker
Thanks, Mike. So I should start by saying I'm not a technologist. I'm a designer and architect by background in training. So my life really started on the side of designing for large buildings, schools, really exciting large spaces with complex things that went inside them.
00:22:54
Speaker
I started to get an itch for doing something that was bigger, that would create more environmental impact for a larger community of people than just those folks who might be using a library that I designed or something.
00:23:09
Speaker
I started to look at the plastics crisis and I thought, wow, there must be a better way to consume. I mean, why are we using things for 20 seconds in some instances? And is this purely happening because designers have failed us somewhere along the way? Is this purely happening because someone
00:23:34
Speaker
decided that this was the way and no one's challenged them. And could we develop a system whereby instead of designing things for single use, we had better reusable, durable products that we actually returned that could be serviced. And I was focusing really on the food and beverage takeaway space. This is in 2015, by the way, I should say. It's a long time ago when I came up with this idea.
00:24:02
Speaker
And of course, conceptually, when you come up with an idea, you can do two things. You can either develop them into a nice, funny design and interactive way to test it at small scale and put it in front of a few people and keep it as a project, which is what we did initially. Or you can think about it in a more systematic way and say,
00:24:27
Speaker
Who could I take this into the real world and could I engineer a way where this becomes a new norm? Which is an incredibly challenging area and it's very terrifying and I thought let's go down that route. Let's try that.
00:24:40
Speaker
And unbeknown to me, of course, that entailed a complete restructure of the way that I process things and understood things coming from an entrepreneur family. I'd never really set up my own business before, per se, besides the design studio, which is a service business, and it's quite predictable and how it works.
00:25:01
Speaker
And going from thinking like an architect and running essentially a service to thinking like an entrepreneur and building a returnable packaging company, which is what Club Zero is, that now services food delivery platforms like Just Eat, has worked and built consortium brands with Starbucks and McDonald's and launched here in the UK and the US.
Scaling Challenges in Reusable Packaging
00:25:25
Speaker
that has operated with contract catering companies and launched into university campuses like UCL, Stanford University, and large office sites such as Visa and Cushman and Wakefield, et cetera. So the transition from being an architect to an entrepreneur has been really quite interesting. And building a returnable packaging company, which is what we're now doing, has been very, very fascinating for me on all levels.
00:25:56
Speaker
So for a respectable package, it's an area, as I've mentioned to you, that we've had some interest in and been following at Lux. And it's an idea that's been around a bit, and some companies even have reusability targets and things. But in your view, what are the real impediments that need to be tackled for it to effectively scale? And what are you targeting at Club Zero to try to make that happen?
00:26:23
Speaker
Yeah, so the main impediments for reusable packaging today is to ensure that we are essentially working with customers that enable true scale. So low margin, high volume business is what we need across our customer base.
00:26:39
Speaker
The primary thing that we want to try and avoid is too much distribution and too many endpoints that we have to service with a volume that is clearly not a return on investment, right? So from a distribution perspective, let's see. We're looking at it from a city scale. So London is
00:26:58
Speaker
full of education sites, office sites, sports venues, retail outlets, restaurants, then there's also delivery that's happening across the board. So there's folks that are going into these retail outlets and whatnot. Now, if we are to secure high volumes, then you want to find where the largest volumes of those exist. And typically, they're going to be in concentrated areas. So you have
00:27:25
Speaker
pockets of the city which have large urban buildings offices that are going to be consuming large volumes which are easily serviceable because they are high rise dense environments and those are those are great because from a standpoint of operational aspect you're delivering and picking up from those large
00:27:48
Speaker
high-level high-rise buildings and so our target is typically that kind of concentration versus lots of small retailers that might be geographically dispersed across a larger area which have small walk-in customers that come in and out. So from a service angle what we look at is what are the cost implications and then what are the revenue implications and we
00:28:15
Speaker
kind of divert our strategy for growth around that. So we look at offices, we look at education sites. Sporting venues are great because they congregate very large volumes of people in one place, and they're very easily managed. And then retail works better where it is delivery that might be going directly to corporate offices, for example, versus delivery to end.
00:28:40
Speaker
You know, consumers, which will be in small volumes and that doesn't justify it. Certainly it doesn't cover the cost for collection. So, so strategically we are B2B providers naturally. We sell
00:28:54
Speaker
into those segments as described. Sofia, I guess I'm curious why delivery at all because we've talked to some other players in this space and they're starting with food service in the restaurant context specifically.
Logistics of Returnable Packaging
00:29:11
Speaker
It seems like to me delivery is a big, big jump up in difficulty from that. Absolutely. Why tackle that? I mean, why tackle that at all, right?
00:29:23
Speaker
Why tackle that at all? I mean, from an operational perspective, it's a crazy concept. I mean, we know that just food delivery platforms, most of them have not reached profitability, and they're in their maybe 15th year of maturity at this point. So I think Q4 reports from Justine is that, oh, we finally reached profitability.
00:29:43
Speaker
So that's a very long time to take to reach profitability. So we know that just on servicing food delivery isn't making money. Then you add the complexity of returnable packaging on top of that. And that's reverse logistics. You've got to go and collect that as well. So it's not even one way of delivering, it's collecting.
00:30:04
Speaker
It's incredibly complex. It's just that the market is huge. And so what is driving the excitement is more coming from opportunistic investors or VCs who are looking at that thinking, oh, this could be an incredible opportunity. Why have you not tackled this?
00:30:24
Speaker
And the learning behind that from our perspective is, well, yeah, it's a great opportunity if someone's willing to pay for the collection piece because you can streamline the delivery piece, work with a delivery platform, do the integrations, track the packaging against a customer, and you can get the packaging there, but the customer is not willing for someone to collect it. And they're also really not willing to take that piece of packaging anywhere because you're asking them to do a bit of work.
00:30:53
Speaker
So you kind of come into this. But of course, you know, I mean, you could say the same thing as why is there why was there excitement for five minute deliveries, seven minute deliveries, 15 minute deliveries? You know, ultimately, these are business models that on the surface of it sound exciting, show immense opportunity. But the reality on the ground is you just can't make the economics work. So, you know, they have been in many investor calls where they're like, you know, if you could prove
00:31:23
Speaker
that you could crack this, I would give you 20 million. And you're just like, I will not be alive as a business in either of those environments where I took your 20 million because I know it wouldn't work. And it won't work economically.
00:31:47
Speaker
And also this entire idea of me setting this company up isn't to fulfill or answer on whether it will or won't work. It's to make it work. And if I'm genuinely asking myself to do this every day and day out, I'm not going to knowingly do something that I know doesn't work. It's irrational, right? So of course, these are never the words that actually leave my, that escape my mouth when I'm having these conversations.
00:32:13
Speaker
just like, you know, sure, okay, let's get back to you. So those are the conversations. So why are they really excited about delivery? Well, I would say that most reuse founders know that this isn't the way that it would scale. There are certain arguments to play that it's a good way to build a brand, it's a good way to build visibility to get your product into multiple restaurants because consumers will see it and know it.
00:32:42
Speaker
We've been there, done that, we've launched in King's Cross, you might've seen from some press stuff on our website with Just Eat and a bunch of retail outlets. And I say King's Cross because it was in partnership with Argent who owned King's Cross. So we married up lots of public and private sector council, et cetera. And what we realized is that ultimately the people who drive it are gonna be the actual hosts, the restaurants themselves. And if your product is not going through that location, that volume,
00:33:13
Speaker
Ultimately, it's not actually building the brand. It's just another name that you add to your website or another name that you add to your app that, ah, this person isn't this, this, this restaurant is another end point where you can grab our product. Um, and then because it's so low volume.
00:33:29
Speaker
the engagement isn't there. So when a customer does walk in, you really gotta like shake them their memory core and say, hey, do you offer Cladzure? And for a minute, they'll be like, who, what, how? Oh yeah, we do. Yeah, would you like that? Let me, you know, let me go dust it off from wherever it is.
00:33:45
Speaker
And this isn't just club zeroes reality. This is a reality across the board. So if you look at Starbucks data for the really spread program that they have established across in the US, they've got 1.2% uptake. And this is what I mean. That is low uptake. We get 1% uptake and we have customers, you know, say to us,
00:34:06
Speaker
Why is it so low? And I'm just like, hey, listen, are you still providing them an option for disposable packaging? Well, there's your answer. I mean, why are you asking me? Why is it so low? It's dead easy to use disposable packaging. I don't have to do anything. I just walk out with this thing and I chuck it away. That sounds a lot easier than either downloading an app or paying a deposit and returning it back to a cafe.
00:34:34
Speaker
I do empathize with users too, by the way. I do have this ability to put myself in their shoes. And I'm just like, this is a bit ridiculous. Of course, there's 1%. Those are probably, I don't know, the sustainability zero waste enthusiasts who are really excited about it. And maybe you could
00:34:52
Speaker
you know, we budget that up to two or 3% if you have very, very motivated front of house baristas and other service employees, but really, it's not going to move.
Retail Partnerships in Brand Building
00:35:05
Speaker
And so I think a lot of founders do the retail play because it just looks good. It feels like you're making progress, but it's not a real metric because the volumes are not
00:35:17
Speaker
Even within the corporate or event, sporting arenas and things, setting that you're doing, there's got to be some consumer behavior change involved, right? How do you think about motivating that and getting those rowdy football fans to put their cups back in the bin or whatever? I mean, it's easier because when you come into a contained environment, you feel like there's certain rules.
00:35:44
Speaker
um that are at play versus when you're just walking down the high street and you're grabbing something right like um so so we did we rolled out at Wimbledon games last summer with um
00:35:57
Speaker
collaboration with Barclays sponsor and what's super fun is that in that environment they've got lots of activation so they've got of course all the cafes with reusable packaging for beverages and they've got 60 outlets by the way so it's quite a large operation. On top of that you've got then the
00:36:22
Speaker
audio that is, you know, explaining to people constantly there, you know, speakers that are saying, Hey, please return your
00:36:32
Speaker
returnable cup to this point or that point, so it can be collected. There are multiple points that are activating this sort of behavior. And it's easy because it contains space and people understand what they have to do. So in many ways, it's a controlled environment. And when people are told to, I don't know, enter, grab something, they just follow the rules a lot easily than they do when they're on a high stream. So to start to question everything, why am I doing this, what for, et cetera.
00:37:01
Speaker
The other aspect to think about as well is that when you are at a sporting event, you're really going there to enjoy the game. You're not really thinking about sustainability per se, you're really there for one key thing and it's to observe, watch a game or a gig or whatever. So again, the interaction needs to be super easy and fast.
00:37:20
Speaker
The collection of the cups, typically we advise a deposit model in those contexts. We would never say go down with an app because we know that that would hold up a queue and it just doesn't work. So the model changes and shifts based on where you are in those four key segments I described at events. It's deposit in universities because you're a repeat customer. It's tech, it's app, and it sits in your wallet. In fact, you don't have to use the app.
00:37:46
Speaker
So I think in some contexts, it works much better than in others just because we are socially mobilized to behave in a certain way. For me, one thing that stood out from the conversation we have had so far was the talk about collection. And that's one thing I wanted to ask you, right? So at least with packages with like, you know, normal delivery parcel, if you will,
00:38:12
Speaker
At least in India, I noticed that if I order something from Amazon, for example, and I don't like the product, I can just put it back in the same box and a guy can come and collect it the next day. But in the Netherlands, it's so different because if I want to return something, then I have to go to a collection point and I have to have my own package and I have to tape it again and I need to
00:38:31
Speaker
you know, stick another barcode on it and take it. And that's where I think the convenience aspect comes in, as you mentioned, right? Convenience is going to be a big part. And that's why people choose the disposable packaging because it's convenient to throw something than to go through this process. How are you seeing restaurants or, you know, businesses like Just Eat get on board with the idea of having to go and collect a reusable package from a consumer to make it more convenient for the consumer? Or do you see
00:39:00
Speaker
the trend going towards consumers having to do all the work, as is the case right now? Well, I mean, it's on two levels.
Corporate Role in Reusable Packaging Logistics
00:39:08
Speaker
So the Just Eat partnership is really delivering to corporate clients. So I should add that we have 30 restaurants that service customers, orders, and these are coming from corporate offices.
00:39:24
Speaker
They're not end consumer homes, for example. So it is the B2B side of the Just Eat model. It's not the B2C side. And in that way, what's super easy, we've done a bunch of integration. So it's easy to track against the ID of whoever is ordering, and it's bulk. So it's anywhere between 20 to 600 items of food. So hence, items of packaging. So our order would be the equivalent.
00:39:51
Speaker
Um, we organize a collection. So it's part of the SLA that once a packaging is used on the same day, we organize collection. So between four and six, just to give you an idea. Um, and that way the packaging isn't sitting around, they, they finish, they wrap up, they put them back into, um, one of our carriers and we collect from the loading bay. That's done.
00:40:13
Speaker
So it's quite a nice, clean system for corporate offices because they are looking for a zero-way solution that's, again, super easy and fast and convenient. And part of that is that the packaging doesn't stick around and use up space or get in the way.
00:40:29
Speaker
it's just in and out and so they are willing to cover for the collection fee as an add-on so part of how they will perceive the zero waste offer is I order as always and I will on top I will I will be happy to cover the cost of the collection collection fee is less than 20 pounds
00:40:52
Speaker
So typically, that's acceptable to a corporate. Now, if we were to translate that into a B2C environment, that would look very different. Also, it would be very complex for us to coordinate, because instead of maybe 100 or so endpoints, you end up with 1,000 endpoints you have to collect from. And that's just a whole ballgame that we wouldn't necessarily want to get into. Then you'd have to set up a logistics company just to do that. And that then moves us out of our core area, which is we're a returnable packaging company.
00:41:22
Speaker
And we want to try and just stick to the packaging piece and manage the collections in a slightly more consolidated way. So I have a sort of question on this. You know, one of the big challenges with reusable packaging is loss, right? If you are trying to have a sustainable benefit, you need to keep that packaging in service for a long time. Because if you're losing one package every time you do a delivery, you know, you're going to end up being worse for the environment ultimately than
00:41:52
Speaker
than your single-use packaging. So two questions on this front. One, an office is still a pretty uncontrolled environment relative to the footprint of a restaurant. So how are you thinking about loss from a user experience perspective? And then also from a design perspective, I feel like this is really important, like the packaging itself
00:42:16
Speaker
You know, if you have like a clam shell that breaks, it can only clip together so many times right before it cracks, the plastic cracks. Like there's so many ways, and we've kind of touched on this in some of our previous interviews. There's like a million ways for packaging to fail as it's being reused. So I guess I'm curious, you know, your background as an architect and your sort of design perspective, I'm sure you must have some thoughts on, you know, how are you designing this packaging to make sure it's lasting as long as possible?
00:42:46
Speaker
and also making sure that people are...
00:42:49
Speaker
treating it the right way. Totally. And this is the easy bit. The logistics and all of that bit is a hard bit. This is the easy bit for us because of the DNA of the team, right? So everything that we design, we design in-house. So we're not purchasing third-party products, which a lot of other reuse companies do. They sort of find suppliers and they'll purchase it. And typically, those products are not really returnable packaging. They are reusable packaging.
00:43:17
Speaker
You're wondering, okay, Saffir, you're being really specific here. A reusable packaging item is something that you own, that you keep, that is domestically designed. Returnable packaging is something that you don't own that is massively stackable, that optimizes its performance next to disposable packaging. It's lightweight. It clicks up to the performance levels that you need.
00:43:40
Speaker
It can be washed and redistributed very easily across the supply chain through large commercial systems, et cetera, et cetera. It doesn't trap water. I could go on and on. The list of requirements is very different from a specification perspective for returnable packaging versus reusable.
00:43:59
Speaker
So a lot of other design, sorry, we use companies are not designing it in house, they're purchasing it. We had, you know, when we had an initial look at this, we thought, okay, right, so we've got to first build a brief. What is a brief for our packaging? Okay, this is a brief. Our brief for our products is design things that people will like and return versus love and keep.
00:44:20
Speaker
And the reason how we came up or the reasoning behind that brief was we almost have to build the standards and create products that are ubiquitous and every day. So that they're so boring and mundane to look at, but they are nice. But they're not things that you want to steal and show to your friends, right? So think of products and services that are shared, i.e. shared bikes.
00:44:43
Speaker
They get you from A to B. They're very clunky. They're not very easy to drive, but they just about work. They don't have great turning circles. They can break eventually, but you're not going to steal one, put it in your garage and invite your friend to look at it, right? That's not what it's for.
00:45:04
Speaker
So designing things that you like versus things that you won't keep is really important. And that's our design philosophy. So once we establish that,
00:45:18
Speaker
We then also had to establish what are the durability requirements of this? How thick should it be, considering that we will lose anywhere, we know this, we lose anywhere between 2% to 5% of this over its life cycle. And if we were to lose those amounts, we should really design it for the minimum. Now, our products are designed for 250 uses.
00:45:46
Speaker
and they are good for 250 minimum uses. So the click fit, everything that you are describing in terms of from a manufacturing standard is already set up and we stress test our product over its use cycles and the factory does all the durability testing before it says, yeah, this is good to go now for mass production. So from our standpoint, we don't deliver anything that can't be up to 250 uses minimum.
00:46:14
Speaker
Um, and then we released this product into the world. As a avid user of the, uh, city bike bike share in New York, I can confirm I've never had the desire to steal one of those bikes. Exactly. Right. Like.
00:46:28
Speaker
But they do the job. And designing things that you like versus love and keep is really important. And so from a designer perspective, it's really hard to do that because your first thing is to make it really beautiful. That's the first thing you want to do. You want to make it really exciting, really beautiful. So we kind of try to never quite get there.
00:46:56
Speaker
We'll get there. Try and take it a notch down. That's the design grief and then we have to stick by that grief and stay true to it. Maybe just one last question about what you see as, or do you plan on or push for or look for?
00:47:15
Speaker
Policy drivers in this in this space for encouraging kind of reuse of reusable plastic You see that as being one of the one of the sort of tailwinds or drivers for this business. Absolutely listen Policies we know are I mean I've been in this too long. I feel like I'm zeitgeist because 2015
00:47:35
Speaker
You know, when we when I first came up with this and pitched it to the great London authority to where we are now, where returnable packaging has become mandated and there's certain targets at, you know, packaging and packaging waste resolution level. This is European Commission.
00:47:51
Speaker
Now they are in policy. So, so, you know, this is this is a massive, massive development transformation. If you say to me, would you would you bank on policy? The answer is no, you never should, because it can be a revolving door. They can take something away after issuing it. We've seen many cities do this. Amsterdam, a number of other jurisdictions where, you know, reuse companies pegged themselves to policy change and were like, this is it. Went into those markets and then six months later,
00:48:20
Speaker
the policy changed. So the straight up answer is never ever depend on policies alone. Yes, they are a massive tailwind. It's great to have them in your favor only if they are actually implemented and adhered and only if they are specific fines that are imposed on those that do not adhere.
00:48:42
Speaker
because then you start to see real change. But we know that businesses just do not move out of the goodness of their heart because they simply don't want to increase costs. And so the way that we do it is how do you show savings? How do you provide enough evidence for a brand to understand that they're saving on waste? They are
00:49:08
Speaker
by switching to returnable packaging, et cetera, et cetera. So there in the bottom line is the real magic. And of course, policy, once implemented, just forces their hand a bit more. So it's a value add, but it shouldn't be something that you hang your code on, certainly.
00:49:28
Speaker
All right. Well, it's been a great conversation. I really enjoyed getting the chance to pick your brain about this and we'll definitely be continuing to follow the space and follow Club Zero's progress and hopefully have a chance to connect again. But thanks very much for joining us today and we appreciate the time. Love it. Nice to see you guys.
00:49:50
Speaker
Innovation Matters is a production of Lux Research, the leading sustainable innovation research and advisory firm. You can follow this podcast on Apple Music, Spotify, or wherever you get your podcasts. If you want more, check out www.luxresearchinc.com slash blog for all of the latest news, opinions, and articles.