HEADQUARTERS: Richmond, VA
YEAR FOUNDED: 2015
2018 REVENUE: $25 million
For James McGoff, Charles Vincent, and Brian Powers, eliminating Styrofoam from shipping supply chains wasn't something they set out to do. It was just the cheapest thing around that needed fixing.
"When you're a student, you don't have a deep R&D budget," says 28-year-old McGoff, referring to the early days of TemperPack, which today makes styrofoam-free insulation that keeps products cold during shipping. (Think: a customizable cooler inside a packing box.) Packaging was "really cheap to rapidly prototype."
It's also a massive industry that had been stagnant for decades. Now, though, "with consumers becoming more considerate of sustainability and the environment, that's starting to change," says R.J. Hottovy, an e-commerce analyst at Morningstar, a financial services firm in Chicago with which Inc. shares an owner. Hottovy points out that the global packaging market, which research firm P&S Intelligence expects to reach $294.3 billion by 2023, is still anchored largely by styrofoam, thermal packaging made from polystyrene foam, which is not biodegradable. When it comes to startups entering the sector, he adds, "if you have both the technology and sustainability, that is a winning combination."
So far, it's working for four-year-old Richmond, Virginia-based TemperPack. With customers including meal-kit companies HelloFresh and Plated, as well as grocery heavyweights Boxed and Albertsons Companies, the company expects to double its revenue to around $50 million this year. It also boasts around $40 million in venture backing from Revolution Growth and SJF Ventures, among others.
"We think we have the opportunity to be the biggest sustainable packaging company in North America," Powers says. That's a far cry from where the TemperPack team started.
In 2014, while students in McGill University's materials-engineering program, McGoff and Vincent got permission to start TemperPack as an internship. Powers, who was childhood friends with McGoff, had just wrapped up an undergraduate finance degree at the University of Pennsylvania, so he moved to Montreal to help get the business off the ground. "We didn't have any money, but we had some ideas," says McGoff, who noted the company's official launch came in 2015. "We won $40,000 to $50,000 across different pitch competitions, and that gave us enough to build real prototypes."
The founders started with Owens Corning fiberglass insulation--that's the pink stuff that contractors use in people's homes. "We were cutting strips of fiberglass and sealing them inside plastic... It wasn't a true innovation," understates McGoff. But it was enough for the Berlin-based meal-kit powerhouse HelloFresh to offer them a $100,000 trial run in early 2015.
New York City's Plated eventually came on as a customer as well, urging TemperPack to adopt jute, a naturally compostable insulation material. Its "jutebox" is made of jute plant fiber salvaged from burlap sacks that are wrapped in barrier film made of recycled plastic or paper. "We grew the meal-kit side very quickly," says Powers, now 27. TemperPack opened a manufacturing facility in Richmond in the spring of 2015. "Food companies were desperate to not use plastic and styrofoam."
Next came pharmaceutical companies. In February of this year, Albertsons Companies, the Boise, Idaho-based grocery giant, commissioned TemperPack's newest packaging material for its specialty drug-delivery business. Called ClimaCell, it's a patent-pending, paper-based foam that's curbside-recyclable, according to Powers. That solves a big problem of conventional materials.
"The No. 1 thing that our patient population has been mentioning on surveys coming back to us, is they were really unhappy with the styrofoam containers that they couldn't easily dispose of," says Erin Shaal, the group director of specialty pharmacy at Albertsons.
Of course, TemperPack isn't the only company realizing this changing consumer dynamic. Hottovy points to a scrum of emerging packaging companies like Edison, New Jersey-based Cryopack and Chicago's Better Earth, which are similarly vying for an in with vendors.
Todd Klein, a partner at Revolution Growth, is confident that the market will favor changemakers, TemperPack included. "Layers of intermediaries are getting stripped away. Now you have a company like Albertsons interacting directly with consumers through the mail. That wasn't really the case before," he says. "Something being sustainable wasn't that important in the past."
All this has led to growing pains at TemperPack. "We've grown from three people to 300 in four years," Powers says. "There are a whole host of challenges that come from keeping everyone together and communicating and organizing that many people." And naturally, not everyone thinks they've succeeded. The company has several negative anonymous employee reviews--mostly citing poor management--on the job site Indeed.com.
The company is working on improving. In the past six months, TemperPack has filled several high-level positions including COO and general counsel, which will help address the company's human resources needs. And as it expands its second manufacturing facility in Las Vegas--due to be finished this summer--the company is bringing more of its contract personnel in-house. Currently, the company employs 110 full-time workers. It also hosts 200 contractors, who work exclusively on TemperPack but are employed by a staffing agency. "People want to know that they are part of the family," McGoff says.
It's also helpful to be seen as an employer that's doing something good for the planet--and killing off Styrofoam is part of that, says Powers, whose father worked as a policy analyst for the U.S. Environmental Protection Agency in the late 1970s and early '80s. "When you look at employees who join TemperPack, it's because of that mission.... It has become a guiding principal we live by."