Ron is the Co-Founder and CEO of Closed Loop Partners, an investment firm focused on the development of the circular economy via investments in sustainable consumer goods and packaging companies, innovative recycling technologies and advanced supply chains. Prior to Closed Loop Partners, Ron was the Deputy Commissioner of Sanitation, Recycling and Sustainability for New York City, as well as the Co-Founder and CEO of RecycleBank. Ron received an MBA from Columbia Business School, and has been an Adjunct Professor at his alma mater since 2010.
John Shegerian: Welcome to another edition of the Impact! podcast. I am so honored and excited today to have my good friend on Ron Gonen.
Ron Gonen: Hey, John glad to be here.
John: Ron before we even get talking about your fascinating journey in background. I just want for our listeners if this is your first exposure to Ron Gonen, Ron was kind enough to come on the Green is Good podcast in 2007 as my first guest and he was then the co-founder and the CEO of Recycle Bank and he went on to do many other great things. He is right now the CEO of Closed Loop Partners, which is a huge investment firm in the sustainability circular economy space. Ron share with our listeners a little bit of your journey of how you got involved with co-founding Recycle Bank. And then where that journey has led you all the way up to Closed Loop Partners?
Ron: Sure. John, I did not realize that I was your first guest of your podcast back in 2007. So you learn something new every day be funny to actually go back and listen to that podcast and hear the things that I said and maybe forecasted but that is a great thing to hear today that was the case that in terms of my journey, I have been interested in the intersection between sustainable business practices and maximizing returns actually since high school. I was very fortunate to get a job in high school working for a family kind of doing odds-and-ends, mowing the lawn, taking care of their kids, fixing stuff around the house, and the dad, Palma was one of the first green architects in America, and this was in the early 90s and so very early on I became very passionate about this space and then in my mid to late 20s when I was starting business school a friend of mine from high school approached me with a concept around, “Would it be possible to reward people for recycling?” And I thought it was a great idea and thought with my background in business, my background in software that I could build the technology, developed software, developed the business model that became Recycle Bank and a company that Patrick and I founded and grew.
John: From Recycle Bank as that became a huge success and got lots of coverage and touched so many cities across the United States and got people thinking more sustainably-minded and Closed Loop-minded, closed circular economy minded. Where did you evolve then in terms of your career? I know you started teaching at Columbia, your Alma mater and then you also took a huge position in New York City. Share with our listeners a little bit about that part of the journey.
Ron: Sure. I have had an interesting vantage point to see the growth of sustainability in the U.S. because when I was in high school and started talking about sustainability, my friends’ parents always seem to have this kind of response where they would say, “Well, you seem like such a bright kid, eventually you will let that kind of stuff go and get a real job.” And then when I got to business school in 2002 at Columbia, and I told people that are going to use my MBA to do something in the sustainability space. People sort of looked awry at me kind of curious as to why I would spend so much money to go to Columbia business school only to pursue a career without make no money. And so that was the perspective of the first part of the journey, but then kind of fast forward and I end up having a fair amount of success with my first company, Recycle Bank and Columbia ends up asking me to come back and launch a course on Social Entrepreneurship and teach the class. And then I get asked by Mayor Bloomberg to come in and be a Sanitation commissioner in his administration and help rebuild the largest sanitation department in the world. And then from that I ended up developing the concept for Closed Loop Partners, which is now an investment firm that I run, that is a decent size. So that is a little bit about the trajectory and having different perspectives on it.
John: Talk about though, has teaching though giving you a whole different perspective and then similarly instead of being an entrepreneur. Now you were teaching and then you were sitting on the municipal side, which is the other side of the coin of who you were negotiating with all those years of recycling. They talk a little bit about what you took away from both your teaching experience and how you have applied that at Closed Loop. Same goes for your government experience at the City of New York and how you have also used that in your applications.
Ron: Sure. Well, both were instrumental in a lot of the success I have had and I would encourage anybody that ever has a chance to teach, to go and try it but it is a challenging occupation. I have tremendous respect for teachers, and so make sure it is something that you are really passionate about and want to do but if it is something that you want to do, even if it is not for a career, it is just something that you want to try, I highly recommend it. And the same as for an experienced government and public service, it is very challenging. But if you have a passion for it, I definitely recommend trying it and some of the lessons that I learned in teaching were how to effectively communicate and make sure that you are connecting with your audience. Because I think a lot of the times if someone is asked to do public speaking, it is a one-off event, it is maybe ten minutes, twenty minutes, a half an hour and that is it. And people are going to clap for you no matter how well your talk went and then everybody goes. When you are in a position where you are teaching especially in a graduate school, you are dealing with people who are professionals, who have paid a lot of money for you to impart some skill set to them. And you are up there in front of them sometimes for an hour and a half, sometimes three hours at a time, and they are going to be back next week. And you really need to develop and elaborate a number of skills in order to I think do that really, really well.
Ron: And it is something that I worked really, really hard at and I ended up being able to use a lot of the communication and connection skills that I developed as a teacher in my business career. So that is from the teaching standpoint, from the government standpoint–
Ron: Again, a lot of great lessons, the one I really single out is building consensus.
Ron: When you are in government a lot of your success is about how you build consensus and figuring out how to effectively do that in my position in government. I think also with a great skill to learn when I went back into the private sector.
John: So interesting and what year did you join at the Bloomberg Administration? What year did you exit that Administration?
Ron: I joined in 2012 and left office when he got out of office. I was there for about the last three years of the administration.
John: So if I am not mistaken, but please correct me. When you were there under your tenure, it was launched the Composting-Recycling Program, the Closed Recycling Program and also the electronic waste recycling program. So it was very busy and productive three years that you were engaged and led how a huge leadership role in the Bloomberg Administration and into that credit goes to you and obviously to the great mayor and that is a lot of production in three short years in government. Is not that like a tight window in terms of under government perspective? Is not that very, very tight window to get all three of those launched and planned and launched?
Ron: It is but I had the advantage of working for, I think once in a generation type mayor and a staff that he had put together that was phenomenal.
Ron: And extremely supportive of what I was trying to do.
John: Got it.
Ron: So it is not something that I think, the accomplishments that we had in such a short period of time. The government is not something that you would ordinarily–
Ron: Replicate because there need to be a number of pieces in place for that to happen. Starting with the mayor we had and the staff that he put together that I was able to leverage and utilize. And in doing so, we were able to accomplish a lot in a small amount of time.
John: That is great. And for our listeners who just joined us, we have got Ron Gonen in today. He is a good friend of mine, almost 15 years of friend. He is the CEO of Closed Loop Partners and to learn more about Ron and his great work at Closed Loop Partners, you could go to www.closedlooppartners.com, Ron talk about what year did you start Closed Loop Partners?
John: 2014 and I remember visiting you in what was a very humble beginnings in your office when you first started. But I love that to me, I am such a junkie for the entrepreneurial spirit of America you so embody that spirit. So just coming to visit you in your office and the quarters were so tight, but that also makes it a lot more exciting. I mean, frankly speaking, it was just great to come up and see you in that new role of, as you started that, and talk about the evolution, talk about the last six years. I mean, you have grown massively. I have been up to your recent offices, your new offices, they are gorgeous and they are functional and they are just fabulous. And talk a little bit about the evolution though, in terms of people that you have brought on board with you and some of your amazing and wonderful portfolio companies that you have invested in. And why you chose those sectors and the entrepreneurs behind those great companies?
Ron: Sure from an evolution standpoint, one of the things that I count as some of the younger people in our firm on or when younger professionals ask me for advice is, I think the greatest way to measure your ability as a manager is if you can get people to join you. And one of the things that I feel very appreciative of is over my career. I have been able to build a network of really phenomenal people that join me when I asked them to join me in my next initiative. And so once I launch Close Loop Partners, I slowly started going to all of the different people in my network that I thought would be great parts of the firm and talk to them about what I was trying to accomplish and they join me along with also selecting some new people that I met along the way that I also wanted to bring on board. And the original vision of the firm was to become an investment firm that could invest anywhere along the growth trajectory of a solution. I did not want to be just one asset class that a venture fund that investments are going to come here and peak fund investments are going to comment. I wanted to be able to look at all the bottlenecks, identify solutions, and apply the appropriate form of capital. And so that is what we eventually evolved into and today we have about fifty portfolio companies that everything from companies we have invested a couple hundred thousand dollars into the companies that we have acquired for tens of millions of dollars.
John: Wow talk a little bit about some of them to give our listeners just a snapshot view of some of your great companies and why you chose those sectors.
Ron: Sure. So one of them is the company John, do you know well, AMP Robotics?
Ron: And this goes to the network that we have been able to build a few years ago of CEO of one of the top recycling companies in the country. Older gentleman called school, calls me up and says, “I just saw the most revolutionary technology that I have seen in forty years in the industry.” But I do not know what to do with it, I do not know how to help the entrepreneur but I am talented. This is something that you got to see and you guys are the ones to help this entrepreneur. And so, I flew out to Denver to meet Matanya Horowitz the CEO of AMP Robotics. And what I saw was the first robotics and artificial intelligence system for the recycling industry that could hyper sort, identify contamination, identify the quality of the bales. And it was early, it was just a prototype but it was revolutionary and he was obviously somebody who had the intellect and the drive to build it into a company. And so we became the seed investor in AMP Robotics which is now the leading Robotics and artificial intelligence company in the recycling industry.
Ron: Another company that catalytic that we were seed investor and it is a company called Home Biogas to the company based in Israel which has developed first household size anaerobic digester. So anaerobic digesters convert food waste into clean renewable energy, they are generally municipal sized facilities, so like coughing anywhere from twenty-five million to a hundred fifty million. Home Biogas has developed a way to miniaturize the technology where any home can put a digester in their backyard. Put all their food waste into it, convert it to gas that goes into their stove or their hot water system. So another example of a catalytic company that we backed and the third I would say is other side of just large companies. We also acquired Balcones Resources, which is the largest privately-held recycling company in Texas. They service the Austin and Dallas Market.
John: So you are into so many different segments of the circular economy, your fund I see you first of all, as one of the top tier leaders in the circular economy and sustainability movement for years to come Ron, you are very young. Obviously still, you have a young family, you are a young guy and where is this going? We are now taping this broadcast and it is airing and in a post-Covid time period when we are getting thankfully, hopefully on the other side of this pandemic tragedy that has hit everybody in the world. Where are the circular economy and the sustainability revolution going and how does your great fund continue to play, not only a relevant role but also role of innovation and funding pioneers?
Ron: I think one thing that we have been discussing for years that has now become apparent during this Covid crisis is that supply chains in the way things are manufactured.
Ron: Are highly inefficient, lack transparency, and have huge amounts of risk intertwined in the way they are currently structured. And I think the circular economy is primarily focused on eliminating that waste, making systems more transparent, and reducing that risk. And so I think coming out of this Covid crisis, you can see a much greater focus on transparency, efficiency, local manufacturing, I will give you one example of where it is, we are–
Ron: It really is a shocking awareness of the need for a circular economy. Traditionally, the way hospitals operated when it came to protective equipment is you would buy protective equipment, you would use once, you would throw it away, then you would buy some more. And the companies that make the protective equipment made a lot of money, the companies that hauled it off to landfill after is used one time made a lot of money. And then there is a crisis, where there is way more demand on a daily basis than there is possibly a supply. Even if the hospitals had unlimited amount of cash, they still could not buy enough protective equipment. And someone came along and said, “Wait a second, could not we just sanitized this protective equipment and just continually reuse it?” There by not having to worry about any supply issues, trying to find the money to buy them, so we have them as all these patients are coming in or worried about seeing them to landfill. And people look around and said, “Yes, like why are not we just sanitizing this protective equipment?” And I think you are going to see more and more examples of that of people looking around and saying, “This is completely wasteful and inefficient, why have we been operating under this the structure?”
John: That is so interesting. So everything you feel that they will be normally, when they call a post Covid time for all of us, this new normal. You feel that supply chains now will come under more scrutiny and they will be more innovation and potentially upheaval and recreation in the supply chain now than ever before.
Ron: Absolutely. I will say that we need to be mindful that there are some entrenched interests that will not want to see that happen. So I also do not want to create the perception that because it is obvious that this is the most–
Ron: Economical and sustainable way for us to all live as a society that everyone is going to be on board and it is not going to be that easy. Well, it should be that easy, it is not going to be–
Ron: Because there is definitely some entrenched interests that absolutely do not want to see that transition happen.
John: But speaking, putting back on your serial entrepreneur hat, which really you get to be just now you get to be the kingmaker now, but still you get to keep your serial entrepreneurship DNA fed that hunger still fed. You have been living comfortably and I say comfortably I mean as an entrepreneur, probably not financially, we are not talking about now. We are talking about just someone who can work within that space of pushing against legacy paradigms and pushing ahead for the greater good. You have been doing that since Recycle Bank day, so there is nothing new to pushing against legacy paradigms that we are not going to see now in a post Covid Society, true?
Ron: Absolutely. I mean, I am super excited for the world to come. I think that this has been a tragic but important wake-up call for all of us around how we are living.
John: Ron one of the fascinating parts of what you do now is you get to see, you have visibility not only the United States but as you pointed out one of your portfolio companies is from Israel. I know you have shown me other companies from different parts of the world, that you get visibility to some of the best and brightest concepts, innovations, and people that approach you for funding or partnerships, collaborations. Talk a little bit about your personal algorithm when you are sizing up opportunities that you are constantly being approached with at Closed Loop Partners. Is it about the business concept? Is it about the concept or businesses potential market size? Or is it more about the entrepreneur? What turns you on as an investor, as someone who is now sizing up these opportunities on a regular basis?
Ron: It is all of that combined in one and if any one piece is missing, it is hard for me to proceed because building a business is, John, it is the hardest thing to do in business. And a good idea is not sufficient, it takes a good idea, it takes an extraordinary entrepreneur, it takes timing, it takes a number of things. Like who would not want to take their idea and launch of the company and make a nice living, everybody would like to do that.
Ron: If it would be easy, everybody would be doing it, the challenge is the hardest thing to do in business. And so it is actually for me to move forward with an investment, all of that needs to be true. So that is why we make so few investments, it is hard to find scenarios where all that strength and we have looked at in our Venture fund. We have broken probably two thousand businesses and have made eighteen investments.
John: Wow. In terms of appetite to continue, to grow your great fund and your important fund which I just think what you are doing is just so important and so great together. What is the appetite from your financial investors, the huge corporations that just love what you are doing and have back you? Can you share some of the great names that have historically back to you and talk a little bit about the future in a post Covid world, do they see it the way you do, the way I do in terms of the Paradigm getting re-figured for the better? How is that looking too, in terms of your ongoing and future investor pipeline?
Ron: Mm-hmm. So one of the things that makes us unique is we manage money for the world’s largest retailers of consumer goods companies in terms of how they invest in the circular economy. So we have Walmart, Amazon, Starbucks its retailers. We have–
John: Five largest beverage companies including Coke and Pepsi. We have consumer goods companies like P&G and Unilever. So good news is they are investing in the space. They are very aware of it. They are very focused on being part of that tradition. At the same time their executives also deal with the reality of quarterly reports. And so whenever talking about large corporate, there is and I think ever as simple as saying this is the straight line that they are pursuing. It is oftentimes more nuanced than that, but as a group, they all recognize that this transition is happening and then if done right it is a huge opportunity for them.
John: Right, right, right, right. And do you feel that once we get beyond this tragedy and this period in history that potentially, that investment flow. I mean you already have some of the greatest and most iconic brands in the world, but there is always more.
John: Do you feel that that will accelerate, that further accelerate because many of them will also see that opportunity that we both see as well?
Ron: I hope so.
John: Yes. For our listeners out there Ron that want to make an impact. I mean you are like I said, you are the reason that I rename the show because you get to seed and work with and collaborate and nurture right now only fifty portfolio brands probably when I have you back on the show, and two years from now, a year from now, will be a hundred portfolio brands you get to make impacts that are just worldwide and so important. And for our listeners out there, Matanya Horowitz was introduced to me by Ron, I do not know maybe five years ago or so and we were one of the first adopters of AMP Robotics in our facilities. Ron knows and when Ron send somebody over it is just typically an incredible experience and AMP has been just really crucial in the evolution of our company and our business. You are making an impact every day, not only on just what you do, and how you live and how you carry yourself but the company you now have created with Closed Loop and all the portfolio companies, impact companies that you are investing in and collaborating with. For the young people out there that want to create the next AMP Robotics or the next startup that is going to make an impact, make a difference; make the world a better place. How do they go about approaching you or other funds like yours with the best shot of getting funded? What are you looking for in a pure start-up, Ron?
Ron: I am looking for that startup to identify the pain point that they are solving and when I say the pain point, there is a difference between a vitamin and an aspirin. A vitamin is something that somebody usually takes because they feel like it will make them feel better.
Ron: And sometimes it is true like they actually need that vitamin or make them feel better. Sometimes it is something that they just believe that it will make them feel better. Aspirin is something that you take because you got a toothache and you need that aspirin now or you struggle to function or to compete.
Ron: And that is what we are looking for and so as an entrepreneur I would really focus on what is the pain that my idea is sobbing for somebody and why would they treat it as an aspirin and not a vitamin, meaning they pay immediately forth.
John: So let us reverse the question. You are a young 24 Ron Gonen and money is not the issue. You have plenty of backers and you are trying to say solve one of the biggest pain points in the world right now. What would be that pain point that you see as one of the greatest opportunities that exist today, coming from your young eyes and that a company that you would start knowing that the backing is there for you?
Ron: It is a great question. I would focus on how to help communities become more independent. How can they grow their own food, produce their own energy, manage their own sanitation, all of those local distributed technology, whether they be solar or wind or modular recycling systems, vertical farming. How can we, as a local community becomes resilient and self-sufficient that thing is not smiles that can help at that level I got to find a lot of interest.
John: That is awesome. Ron we are at the end here any final thoughts before we say goodbye for this episode and of course, I will always have your back on to talk about more of your great companies that you are involved with and investing in and just then some more wisdom because you see more and know more about the circular economy and sustainability than any one person I really know any final thoughts before we say goodbye for today?
Ron: No, I am glad to hear you are doing well during this time. I am glad to see the podcast is still continuing on.
John: Well, but you were my first guest and we are going to keep having you back on a couple of points here for any of our listeners who want to find Ron and learn more about his great work at Closed Loop Partners, please go to www.closedlooppartners.com. Ron as I said, you were my first guest, you are the reason why I change the name from Green is Good, which things have gone much wider now in terms of making impact. And you make an impact more than almost anyone human being that I know. I am very grateful for our friendship and thank you for spending your precious time today on the Impact podcast. Continue to do your great work and continue to make the world a better place.
Ron: Thank you, John.