There's a goldmine in your backyard--more specifically, in your garbage.
Believe it or not, waste management is a $1.4 trillion industry globally. U.S. waste management companies account for nearly $100 billion in annual revenue.
Even in your garbage, the cream rises to the top. Two firms dominate the industry--Waste Management and Republic Services--while just eight companies account for about 50 percent of the industry's annual revenue in the U.S. However, this concentration at the top doesn't tell the whole story. Most of that $100 billion in U.S. waste management revenue comes from waste collection, which accounts for about 55 percent of the total. Waste disposal, treatment and recycling make up the remaining 45 percent.
The larger companies are typically vertically integrated throughout all of these activities, while the smaller providers focus on one part of the process. However, since waste collection is a location-based industry, it naturally lends itself supporting to local business, especially in larger cities and urban areas. As a result, you see a proliferation of some 20,000 companies that make up the remaining 50% of the waste collection industry. The other 50% belonging to the large national corporations.These smaller companies often can't service larger chain stores like 7-11 or Home Depot because these business require partners who provide services nationally. There is heavy consolidation that favors the largest companies at the expense of businesses and local waste collectors.
This fragmentation and latent supply presents a huge opportunity for a platform business.
If a platform were to come in and consolidate these smaller players into one marketplace, it would be able to provide both more efficient and lower-priced services than the national waste collection service providers do. This would benefit both national businesses, who would save money, as well as local waste collectors, who would now have access to much larger clients within their area.
In fact, this shift has already started to happen. One waste collection platform, Rubicon Global, already has started to build a marketplace connecting businesses with local waste collectors. The Atlanta-based company raised $50 million in venture funding to scale itself into the "Uber of garbage." It's currently beta testing its mobile app with residential customers.
In the cities where Rubicon has opened its marketplace, it has created competition among local players that drives down costs for customers while providing new sources of revenue for these local companies. Now thousands of local contractors are able to bid on portions of national contracts. Rubicon takes a cut of the money it helps its customers save from reducing their waste collection bills.
The marketplace approach also helps reduce waste and increase recycling.
Vertically integrated garbage collectors who also own the landfills have little incentive to recycle. They get paid by businesses to babysit that garbage, so why would they kill the goose that laid the golden egg?
In a platform model, the guys hauling the trash aren't also getting paid to mind it when they're done. Rubicon Global gets paid when they achieve waste management cost savings for their clients and from reselling recyclable material. This approach aligns incentives to reduce the waste that sits in landfills and to find more opportunities to recycle. Rubicon collects data from garbage haulers to catalog all of the waste. Then it uses this data to find recycling opportunities where it can resell materials that would otherwise go to waste. The more Rubicon can recycle, the more it earns. It's a rare case where both environmental and business incentives align.
While Rubicon is one of the first large waste-collection marketplaces to find success, the race to become the Uber of trash is far from over. Rubicon is still tiny compared to the largest incumbents. With $100 billion on the table just in the U.S. and tens of thousands of local collectors available, the platform and marketplace opportunity is still wide open. One man's trash is another man's treasure, or so the saying goes. But in the case of the waste management industry, it's the literal truth. Soon enough, the next gold rush may be happening at a landfill near you.