Turning Waste into a Resource and the Case for a Circular Economy - with gDiapers

[: 00:00:00

Jason:

()

There's something incredibly cool about promoting the idea that you can turn

waste into a resource. To have a product and a service where the waste gets

regenerated into something productive. I think that's really compelling to

average normal everyday con

sumers, not just the 5% who buy organic or the

3% who shop at whole foods. And there's obviously right now, and maybe it's

less so in the States, but elsewhere, the plastic waste thing is just a massive

issue.

()

My name's Jason Graham

-

Nye and I'm the co

-

f

ounder and CEO of

GDiapers.

[: 00:00:44

Lynz:

This is mission megaphone, a growth network Podcasts

production we're on a mission to be a megaphone for purpose driven

organizations that are changing the world.

[: 00:00:52

Jason:

GDiapers is an eco

-

friendly

baby diaper company that my

wife and I started 17 years ago. We are from Sydney, Australia, but we moved

to Portland, Oregon, raise capital and created a new category of baby diapers to

give parents an alternative away from disposable diapers that have a c

up of oil

in every one of them, and reusable diapers which can be good, but don't quite fit

with the lifestyles of lots of parents.

We've got the US business and Europe, but we also have a lot happening in the

South Pacific in the islands and up in Indones

ia, which is the epicenter of the

global plastic waste crisis and they need solutions quickly. So, we are not now

living in America but we lived there for 17 years. We moved home five years

ago to get our kids into school here, and we continue to work remo

tely. Which

at the time was for our board was like, I'm sorry, what, how could you do that?

How could you run a business from 10,000 miles away? And then lo and

behold, we have a pandemic and now we are so old school at this stuff.

We came into this as par

ents and we were kind of shocked that there was a cup

of oil in every disposable diaper. We found patents and an early version of a

product that we were interested in here in Australia. We use that product and

add a pair of pants and an insert that was hom

e compostable or commercially

compostable. We loved the product so much, we licensed the rights to the IP, to

the rest of the world outside of Australia and New Zealand. Which meant we

had to move overseas because the patent holder wanted to stay in Austra

lia. We

picked Portland, Oregon, because it was the green epicenter of the world. We

had a young family, we needed to raise them in a smaller city rather than say the

biggest cities.

So that hybrid diaper, the outer pant that was washable like a reusable d

iaper,

and then an insert that had the performance of disposable, was where we started.

And we worked with Bill McDonough at Cradle to Cradle. Cradle to Cradle was

a book that Bill McDonough wrote. And then he developed a product

certification, and we were

the first consumer package good in the world to get

Cradle to Cradle certification, which means that everything that goes into that

insert can be returned to earth in a neutral or beneficial way.

And Cradle to Cradle is the underpinnings of the circular e

conomy. So built a

business in the US, we grew, venture backed. Lots of ups and downs, which is

probably seven episodes worth of content. But at the end of the day what we

ic waste problem that back in: 2005

was nothi

ng.

And at the time our VP of marketing was like, don't talk about plastic waste.

utely right, plastic waste in: 2005

nothing. Now it's just massive. So working with the Australian IP holder,

developed a new produc

t with a Shasti that's entirely compostable. And now

we're really leaning into this notion of the circular economy.

Just to pause for a second, the linear economy, 200 years of linear economy.

You take from the ground, could be oil. You make a product, an

ything plastic,

and you put it back in landfill in a pretty short period of time. That's linear.

Circular draws from the inspiration of the natural world. We are the only

species on earth that create waste, and that's significant. You can see the impact

of

that. So you've got a plastic waste crisis on our hands. Now we're making

more plastic now than ever. COVID has exacerbated that. The hybrid diaper

was like a stepping stone. It's like a Prius, right? It's not the electric car. It's

close though.

And we

say that G cycle is the Tesla. I'm Elon Musk. No, I'm kidding. But that's

the thing. You've seen greenwashing in action. You've seen marketing, that's a

bit of a stretch. You've seen that consumers have to change behavior, change

their thinking and to buy

into all things sustainable.

And they'd been told a little bit of a lie about how green certain things are. As a

manufacturer, what we're doing with G cycle is saying we will sell you diapers,

we will collect those diapers. That's on us. We brought it into

the world. We're

going to take it out of the world.

And then we compost it and then we sell a compost. So two lines of revenue.

We sell the diapers and make money. We sell the compost and make money. So

it's a different business model. And it's a multipla

yer game, which is a complete

anathema to business. Usual businesses is like make a product, sell it and forget

it. Make a product and then you don't have to collaborate. Whereas this is full

collaboration.

(Take a breath here. Then INSERT Nicks more act

ive beat as underscore, the

one used in the final Encourage Project version in captivate that starts at 8:44)

[: 00:05:12

Jason:

So an example here in Australia, we sell diapers to childcare

centers. A waste hauling company collects the diapers with the ch

ildcare centers

food waste and organic waste. The city of Hobart composts the diapers and the

compost is sold for $75 a cubic meter.

We don't capture the revenue in that second bit, but that's an all team effort. And

it means we're not all duplicating. We'

re not putting extra trucks on the road for

the collection. We're not establishing a new compost pile. Right now we're

working with how to get G cycle up in the US. And America is very difficult for

us because there are 30 diaper companies claiming compost

ability, and they're

simply not. How we're rising above that is to say, we offer the full service. We

will take it back. But it means we've had to rebuild after COVID.

We've had to pause our us business because of the supply chain issue. Because

in our ori

ginal product, we shared the same material as Face masks. So we've

had to pause the US but we are now building back better, in the spirit of your

current president.

The real trick with circular economy, and this is the big distinction, is it's not

scalabi

lity, it's replicability. And there's a fine distinction there because

investors in normal business people are like, you've got to scale.

You've got to scale yesterday. You've got to be massive. You've got to own the

market. And for us it's like, you've go

tta be place

-

based, you've gotta be

sensitive to local communities. And that means that the rollout is by definition

slower, but the impact is there. What we've learned over 200 years of the

industrial revolution is sort of centralized waste management ove

r there,

centralized food production over there, distribution with trucks and what have

you, is great for scaling, but it's a disaster environmentally.

So we are very much about distributed models. So having a small composting

set up in each community mak

es far more sense than a massive centrally located

composter that sort of replicates what a landfill is, it just doesn't work.

I think parents get it intuitively. Incredibly, I think regulators need to get it.

Jurisdictions need to get it. Because the bar

rier with this regulation place around

composting human waste is really interesting. Scientifically there's no problem

composting human waste. It's nothing. So it's an old cultural thing.

I think regulators they're just so fixed on old ways of thinking. An

d so

disruptors like Uber rolls into a marketplace, ignores laws, completely ignores

the law and completely disrupts the taxi industry. We choose not to do that.

We'd rather just work with jurisdictions and say, look in London they spend 15

million pounds

a year just on the diaper waste.

Can we sit with the London government and say, look, there's a better way here.

Relax the law on this composting thing and we'll share the revenue with you and

we can solve the problem. So I think when we talk to parents li

ke intuitively get

it, it's the regulators that are like, what? And this is exactly the core of circular

economy.

So much of circular economy, you've just got to rethink so many systems we've

set up and systems thinking is hard. We've had 200 years of the

industrial

revolution and people think the way it is is the way it will always be, but we just

cannot keep on this track because we are going to end up with a planet that's not

habitable.

And as one investor said years ago, oh God, you don't want to change

consumer

behavior. You never want to be in that business. Which is true, if you're a raw

investor, it's like don't change people's behavior. Just make this, make whatever

they're doing now, make it easier.

Amazon makes shopping easier. Uber makes taxis ea

sier. Don't change people's

behavior. Which is what we're trying to do, because if we don't, we're going to

have a serious habitability problem on our hands.

we did not come into this with any CPG experience. But we were in it with our

customers. I rememb

er on Christmas day, so we rented a house from Craigslist.

We landed in America. We were like who is Craig and what's this list? This was

a home office and my wife was on the phone with this customer, this young

mum. She was on the phone for about 45 minut

es and then that started planting

seeds around doing things differently. So if you're in a classic customer service

call center, your goal is to get the customer off the phone as fast as you bloody

well can.

And we took the different view and that was the

seeds of this gigantic

community of G moms and G dads. And I think the key to community is

authenticity and you just realize how low the bar is in terms of customer service

and trust when you go a little bit more than normal and suddenly you've got this

gr

oup. So moms, particularly in America are isolated. Like as foreign as living

in America, it struck us that you might have been born in Portland and school in

Portland, and then you go to college somewhere else, or your first jobs in

California, and then y

ou move and move and move.

Which is why when you've got Thanksgiving and Christmas, the travel back

home is massive. Which isn't the case in Australia, we stick to our little towns.

But what that means is when you become a parent, you're very isolated and you

don't have a community

around you potentially. Your parents might not be

around you. That, and a lack of maternity leave means you've got mums,

particularly in a conundrum. They have a child, they're loving it. And then about

three months in, they're kind of getting antsy for so

mething, but maybe not full

time. And so we just got hundreds and ultimately 7,000, mostly moms, not

being sexist, but mostly moms saying we want to volunteer for G. What can we

do?

So we had people writing blogs, they come to the trade shows with us, wit

h

their babies. Memorably, Whole Foods in Texas called to say, your product's

not moving off the shelf fast enough, we're going to discontinue you. So we sent

in 15 to 20 G moms in their local stores in Texas every week for a month. And

they took photos an

d checked the store sets, price checks, send it all to us. We

developed a whole analysis and walked into Texas Whole Foods buyer and said,

oh, we know the problem. We've taken a look and our number one selling item

is out of stock in all of these stores.

S

o that's why it's not moving, it's very hard to sell a product that you don't stock.

And the first question the buyer said was, wait how did you get this data? It's

like, oh, that's our customers. The G moms have been amazing.

And then I see if I got reall

y nervous and said we should pay them. My wife and

I went to the community, they said, do you want to get paid? And it was a 100%

no. They're like, no, we love doing this and I think the money would ruin it.

Which is a fascinating sociological, psychologic

al thing around money and

reward and effort. So we built all this Chatzky for them. We had coffee cups

made especially for them and we made stickers and all sorts of Chatzky because

then they're part of the team.

And it's interesting now we've got to kind

of rebuild post COVID. We're going

out to raise a little bit of capital and recap the company. And when we talk to

investors, it's interesting because they're at a point where if your use of

proceeds, if half of it is buying Facebook ads and Instagram ads,

they're just not

interested. Because it's just exhausting. And you know, what they're interested

in is true connection, real community and word of mouth is the gold standard,

right?

And this translates over into Europe and we've got a great group in Lond

on and

up in the Nordic countries. And then fascinatingly, we've got BST buy

-

sell

-

trade on Facebook. So we've got about 200,000 moms on Facebook, but then

we've got this buy, sell, trade run by customers for customers. So we haven't

been able to sell our p

roduct for 12 months and yet that buy, sell trade is

booming.

So the outer pants that are quite cute and fashionable, they're being sold and

bought and traded because after three years you don't need them anymore. And

so I'm fascinated by how community wor

ks. The power of community over

massive marketing budgets, like big brands can't buy that stuff.

Our kids are 19 and 16. We have G moms of our generation, so their kids are

also 19 and 16. They're still engaged with us. They're not customers, but they're

engaged. And when we're scrambling around during a pandemic, going oh my

God, we're going to have

to pause the business. How are we going to do that?

They're there. It's extraordinary the human contact, and again, this is not in the

original business plan. But pretty incredible because you see the real human

spirit.

The: 2008

merica. I think a hundred thousand baby

boutiques went out of business and that was a big channel for us. Babies R Us,

95% of all American mothers and fathers go to Babies R Us for their baby

shower. That business goes under. I mean, that was massive. And

so we've had

headwinds and then COVID was like, oh, this is quite a big headwind. So

you've got to really think on your feet. And so we are excited about getting back

into the US in a very different way.

In Australia, The city of Hobart, they certify the

compost to a standard and it's a

very high quality standard. And that's $75 a cubic meter. I mean, you're

monetizing waste, think about that. You have to pay to landfill stuff and it

causes CO2 issues here. You're actually making money from waste. In the

S

outh Pacific islands, it's a different setup. We work with the communities, the

communities do the selling, they do the collecting and the communities do the

composting and they use the compost because they were agrarian in their

culture.

In Lombok in Indo

nesia, which is our biggest neighbor up north of us.

Indonesia has more babies than America. Gigantic country, but across 5,000

islands. So they don't have any waste infrastructure, very little landfill. And

28% of their Marine waste is diapers.

So they ha

ve a waste crisis on their hands. In Lombok, they get $400 per cubic

meter for the compost. So the economics are quite interesting. Now the

challenge we have in the developed world, whether it's US or Europe is waste

regulations right now say that you can'

t compost human waste. So that's a

barrier, but we're working through those barriers with pilots.

So in Oregon, we're working in Corvallis, down south near the Oregon State

University. And we are developing a pilot to demonstrate that it's safe. One of

the

things we're looking at is can we develop a compost to a specific market? So

an example is could we create a compost that's particularly designed for the

wine industry.

And so we have forward contracts where the wine industry is buying our

compost before

you even make it, that's a pretty clever business. And so we're

thinking about that and it ties into the SDGs. It ties into the kinds of issues we're

facing globally. Soil health is huge and we've lost like 55, 60% of our top soil.

So the need for good qua

lity compost is right there.

The other strategy in the US is to focus on families that compost. It's a really

noisy space in the US with babies and diapers. As I said, 30 competitors out

there, they're buying Instagram ads, they're buying Facebook ads, th

ey're headed

up by celebrities. Like it's busy and noisy, and parents are exhausted.

So our strategy and moving back into the States is actually to focus on the 16%

of Americans who compost. You can meet a whole bunch of composters online

for a very low co

st. And if you're really committed to that lifestyle and you have

children, you end up with this real conundrum. Like I'm a committed compost,

but what do I do about the 5,000 diapers I need? Literally 5,000 diapers per

child. How am I going to deal with t

hat?

Over 17 years, you know, we started with whole foods market and then target

and Walmart. And then suddenly there's a thing called Amazon arrived. And

Amazon in our category just stole the show and it's given us pause for thinking

about how do we bui

ld back better? And our sense is relying on massive,

massive customers can be really terrifying from a cashflow standpoint. A vision

of building that better is very much hyper targeted, hyper community

-

based. It's

not going to scale overnight, but we're go

ing to build a lot of community and

good repeat business. So that's our strategy to move back into the US.

We did very much start with the why mind that sort of Simon Sinek idea of

what's our, why? Like, it was a huge step for my wife and I to leave Aust

ralia.

We have no consumer packaged goods experience. We had a two year old and

we're pregnant.

What was our why and what were we doing? And I think the why was massive,

which it's gotta be massive to keep you going. It just can't be good enough to

say our

why is lots of market share or, our why is lots of gross margin. Like it's

you going. We've survived the: 2008

survived our biggest customer Babies R Us going bankrupt. We survived an

action from the FTC, we've sur

vived so many things. So the why is massive. So

we talk about this compelling vision of the future, what does the world look like

when we're done? This notion of a circular economy is honestly the only way

out of here. And we don't need one more scientist

to tell us that it's not looking

good.

We've got a move into action. So how the world looks is a transition. And

transitions are never smooth and easy and not across the board. But the

beginning of the transition to a circular economy. So in our space, th

at means

how can we move consumers to a place where the idea of a delivery collection

thing is just a normal part of life? It's a new social norm.

151 and my generation are very much addicted to low cost high convenience,

which is why Amazon is just a bea

st. And is really suited to my generation.

Watching gen X, gen Z, there was something about them inately that they get

this more than we do. So watching people go to the cafe with their own cups for

example, in some geographies is getting quite normal. Now

that's a very

inconvenient thing to do. You've got to remember to do it. You take it there, you

take it back. You've got to wash it. Repeat. Like that's three extra steps, which is

a complete anathema to me, like that's way too inconvenient. So I think

ge

nerationally getting to that point of more circularity is, we've got some

tailwinds.

For us, what the world looks like is transitioned to something much more

circular and getting these social norms established so that it's just normal to

behave in this way

, to consume products this way. You've seen it with some

things where there's refillable stations and less packaging, and that's the

beginning and that's exciting. That's the legacy we'd like to leave. And it's a

long journey and it's really difficult. I'm

in the second year of a PhD in the

circular economy, focused sociologically on why is it the consumers are

somewhat of the barrier here? In the academic literature, there's a lot around

circular economy business models, like product service systems.

You k

now, we offer a product and a service. Is a lot around how do you use

resources more efficiently, take back programs.

The consumer is somewhat understudied and misunderstood in a way. I mean,

one of the big issues is big brands. So in our category, Procte

r and Gamble is

the biggest. Pampers brand is $10 billion brand, they spend $8 billion a year on

marketing. $8 billion in marketing can establish and make a social norm fixed

forever, and multi

-

generationally. So this category of disposable diapers started

in: 1960

reusable diaper category is kind of been decimated.

So the focus on the consumer, around the transition to the circular economy is a

big focus of ours. 16 nations in the Pa

cific islands they're gonna be the first

environmental refugees in the world. So, the residents of Vanuatu, they've all

got their New Zealand citizenships and they're ready to step off their own land

and leave. It's just shocking in my mind. But you've got

the Cook islands, 40%

of their waste is diapers. Like it's stunning. And so that's what gets us out of bed

every morning.

Our goal is to get G Cycle up and running in the US. So we're not sitting here

going, we're going to raise $10 million and launch in

Walmart tomorrow. It's

like, we just want to get a pilot going. Ideally it would be around Corvallis.

Oregon State University's there. They've got a huge faculty around soil health,

and we just want to get a little bit of capital in to do a pilot in that

locality.

We've got a great partner there that has a reusable diaper service. That would be

a huge win for us. We can really set up a pilot in any community that is

interested because that's not like the problems unique to one particular area. The

problem

is everywhere. We would love to engage with listeners who might be

living in a community who'd be interested in hosting a pilot, but we'd also be

interested to hear from folks who are interested in funding such a pilot. It's sort

of 2

-

$300,000 to get a pi

lot up and going best. Bet is come on to gdiapers.com,

send us an email and we'd love to have a chat. We could talk diapers up until the

cows come home.

We've got in parallel really fascinating politics in Indonesia at the epicenter of

the plastic waste cr

isis. So a big focus is reconnecting with our community in

the US and just figuring out how do we get back to selling diapers, building

community and getting plastic waste out of an environment.

One fascinating thing I found is an investment world in VC l

and, in companies,

it's just growth for growth's sake. And the number one goal is grow, grow,

grow. And if you think about biomimicry, this area of study how can we mimic

nature to create more sustainability?

Nothing in the natural world grows the way we expect companies to grow,

except weeds in a garden that then take over the garden and destroy it. Or in

human health cancer. It's a very odd thing that we are so obsessed with growth.

And yet we don't step back

and say, what does that growth do for us as human

beings for our soul? Like, We don't examine that and I think it's worthy

examination.

[: 00:22:48

Lynz:

You've been listening to Mission Megaphone, a Growth

Network Podcasts production. Follow this podca

st for more incredible stories

from purpose driven organizations and individuals you'll want to meet. To learn

more about this show or GDiapers, please check out our show notes.

I'm Lynz Floren. Our producers are Sari Weinerman and Jeffrey Morris.

Producti

on manager is Maura Murphy Bourasse. Original music by Nicholas

Fournier. Promotional support from Marsha Ord. Website by Nick Brodniki.

Thanks for listening. Until we meet again, keep searching for inspiration and

when you find it, make sure to pass it on