Garr Punnett: Welcome to Selling Circular, the podcast dedicated to exploring the innovative minds and business models shaping our transition to a circular economy. I'm Garpunett, CEO of Loop Layer. Sabir Lakani won't be joining us for this introduction, but she will be joining us for the interview. But we'll cut right to it. In Oregon last year, almost nine in 10 bottles and cans with a deposit on them came back. You all know what that is. Maybe if you don't, you should look at the bottom of your bottle. Or bottom of your can and see those two-letter state abbreviations but in states without those deposit bills, about a quarter get recycled. So that's the difference between 90% and 25%. I'm recording this from Illinois, where one of those states that we don't have a bottle bill, and so we are constantly seeing a deposit bill. come online every other year, every two years, and get shut down for, well, as one might expect, lobbying reasons. So we are really interested in bottle bills, at selling circular and EPR legislation. And so we were really interested in is what is Oregon doing that the rest of us aren't? And if it works so well, why hasn't everyone else signed up? So two quick terms before we start. I've already mentioned a bottle bill. I've explained that it's that deposit return system. But the real technical part of it is the economic structure, where you're putting a refund on a bottle, and you actually then are essentially you're almost putting a bounty on it. So that every beverage container is worth something when it's empty and worth it to bring back to some type of location. And then explaining extended producer responsibility, EPR legislation. Which makes the brands, the producer that sell the packaging pay to collect and recycle it. So you could think of that as producer pays, basically. So instead of that being shifted towards municipal economics or taxpayers, that actually the producer is is paying some portion of that EPR to make that actual packaging return back to some type of system in which it can get recycled. So seven states have passed EPR laws so far. Oregon's went live last year. So the state with the oldest bottle bill in the country now actually runs both sides of the systems side by side. So they're running both a bottle bill and EPR legislation. And I had a chance this past weekend to, or this actually the last week, to go to a conference in which I got to hear a little bit more about. How frustrated some folks are with EPR legislation. And it basically comes down to the economics. It comes down to a shifting set of economics where it is moving from the municipal taxpayer to the upstream, maybe retailer. It might move to the manufacturer, the producer, but someone who's involved in making that piece of packaging with the good inside of it. It involves them paying a little bit more to make sure it goes somewhere correctly. as you might expect, and we get into it in this episode, that in that shifting of economics, it is reframing the economics. And that means someone who wasn't paying is likely now paying, which is going to cause that friction. And so today's guest has been both sides of that rule book and those shifting rules. Jules Bailey helped modernize Oregon's bottle bill as a state legislator. And then went back to run the system as a CEO of the Oregon Beverage Recycling Cooperative. That's kind of a rare view where most people who write those rules never actually have to live under them. So he he's got a very unique perspective. And we get into what happens when a recycling program works better than actually anyone planned. And why, when you're designing one beer bottle, because we talk about reuse. That can work within the whole state's brewery systems and how we can get that to actually be returned and reused, how that's actually apparently really hard. Who knew that that would be really, really hard? Basically, then we get into how a state like mine, Illinois, how do we even get started? Do we copy a playbook? How do we modify the playbook to work within our ecosystem? That's all in this conversation. So let's jump in with Jules Bailey. Jules, thanks for joining us. So what a cool set of experience you have. I really it's rare that we get a guest that is sort of a part of a startup y atmosphere, maybe even some corporate-ish atmosphere as well as then some legislative experience. it's kind of a nice blend. We're gonna have a lot of questions around how do you scale these systems? What does it take to be a part of all of those systems? My first one really can dive into I'm fascinated by essentially how do you how do you start a system that is essentially inherently grows on like is is beneficial at scale.
Jules Bailey: Yeah, it's a it's a great question. And first of all, thanks for thanks for having me. This is a r I've been really looking forward to this discussion. And you're right, I've had this sort of odd career where I'm a bit like Benjamin Button growing younger or going backwards in my career. I
Garr Punnett: Yeah.
Jules Bailey: I started out in policy in the legislature, I then
Garr Punnett: Yep.
Jules Bailey: went and and implemented that policy and ran the organization that does the state's bottle bill in Oregon. And so I went from like policy to large business and now I'm going into smaller business and now I'm in startup phase and and and consulting. So it's
Garr Punnett: Exactly.
Jules Bailey: sort of, you know, usually people go the other direction. But I teach their own, I guess. Yeah.
Garr Punnett: No, I like this. I like yeah, I like your direction though in this. That's a lot that's it's what it means is that you're very informed about how these smaller systems can actually benefit and grow.
Jules Bailey: Well, it's sort you it's something we used to say back at at OBRC and then at Clink is that, you know, we'd we'd stepped on all the rakes and the tall grass, right? Like it's some of these things aren't that complicated on their face, but when you start to get into them and this gets into your question, right, there's just all these different hidden things and you kinda have to bumble your way through them and go, that didn't work. I gotta go back and do this thing and you do that enough times and you start to realize what some of the pitfalls in these systems are. And a lot of them are Related to what you just said, which is scale, right? I think it's sometimes really hard to picture how these things operate at scale because little things make big differences at scale. And that was one of the big learning curves that I had moving from policy into implementation was at the policy level, you're sort of thinking about, okay, you know, we want people to do this, we're gonna set this incentive, and this happens. But then you have to set up a system that operates efficiently. Efficiently, and you know, in many ways, it's a penny's business, right? Fractions of a penny matter, and that translates into all different kinds of things. So every ever we we we would always say touches cost money, right? So every time you touch a material, that's a fraction of a penny. Every time you move it, the collection system. And then the same is true on the consumer side, right? So so recycling systems and and really any sort of do-gooder system in general really depends upon. Two things, right? You have incentive and you have convenience, right? You're going to give people an incentive to do something and you're going to make it convenient for them to access that incentive. But to do that, there are the little variations within it matter at scale on whether you're getting a lot of people to participate or whether you're getting nobody who wants to participate and everything in between.
Sabira: Can you give some examples that what I'm thinking is like, okay, so you're in this like such a unique position. I bet there's like five people in the world like this. I don't know that that's my guess. They see you like make the policy
Garr Punnett: Yeah.
Sabira: and then opt in to execute it, right? Like that's pretty cool. Like what did you think was going to happen that didn't happen? And like what what you had had the well intention and you thought that you were being thoughtful, that like didn't come to fruition when you got your your hands in the gloves.
Garr Punnett: I I like to think of this too, Jules, that I'm I'm sort of stuck on your rake analogy here or is like
Sabira: Yeah.
Garr Punnett: you thought you were gonna step on one and then you're like, I'm gonna avoid this here and then stepped on one, you're like, Okay, I gotta go this direction. Yeah. Yeah, yeah.
Jules Bailey: Yeah. I didn't see that one. I saw that one. Didn't see that one. There's like wong, you know, it just hits you right in the face. And
Sabira: Yeah.
Jules Bailey: you're like, well, okay, don't do that again. Yeah. that's a great question. There's so on sort of the positive side, and I this is a weird thing to talk about like positive rakes, but there are things that you find that you're like, I didn't I didn't think that was gonna work that way. So back in the in the legislature when we were debating adding different containers in and expanding the the number of product types that were in Oregon's deposit return system or our bottle bill. We thought there'd be a fairly long window for uptake of those things. We have to do a bunch of consumer education, people would have to figure it out, you know, all these different things. It turns out that since we had raised the incentive from five cents to ten cents, people figured it out pretty quick. And the velocity
Garr Punnett: Hmm.
Jules Bailey: at which that new material came in was pretty stunning. And so between the five to ten cent change, which had a huge, major impact on our operations, and then the expansion to all these different product categories that happened, both changes happened within about a a year of each other. It essentially meant that that plus the natural growth that we had in the system, we doubled the amount of volume that we were processing in the space of just a couple of years, right? We went from a billion containers a year to two billion containers a year. And that was a a stress on the system. We had to figure out how to do it. I used to describe my job as like: I feel like I'm in a boat, and every morning I wake up and there's water pouring into the boat, and it never stops, and I just have to start bailing that. water and most days I'm just baling water, right? If the boat doesn't sink, that's a good day. But then there are rare days where I can kind of look over the side and think about where the boat is, and on great days I can actually pick my eyes up and see where the boat's headed. But those are unfortunately sometimes few and far between. But to the so but on the other side, right? So we grew this program called the Green Bag Program. And it was a program that OBRC had licensed from Clink and that's sort of how I got ended up at Clink and sort of that trajectory over time. But When I joined OBRC, we had give or take 50,000 account holders. You had to sign up on paper, you had to go down to your local depot and go sign up. And it was sort of managed by the depot, and there wasn't really a customer service infrastructure. And so we started saying, okay, we've really got to modernize the system and make it digital and make it easier for people and start putting different places, drop bags around. And so we did that. We grew from 50,000 account holders when I started to a million account holders. Account holders when I left. And there's only like 1.5 million households in the state of Oregon. So that I mean that's pretty much saturation in the state. But with that scale comes all sorts of things that you just wouldn't think about, like you know, you're you've got y a product that previously was being compacted and transported and now it's kind of fluffy. And so you've got to deal with all these fluffy bags and how do you think about the transportation logistics of getting those around efficiently? You've got fluffy bags that are filling up places at retail stores and you've got to figure out, all right, how fast do you have to get those serviced? You know, are people going to steal them? What are the cheat mechanisms? You know, all those different things that you have to learn from. And it's one thing to say, okay, we want this convenient option at scale, but actually operating it at scale is something completely different. And if you're not careful, you can really blow up the entire system focusing on that. And so how do you grow from what was essentially previously a B2B, you know, business to business backhauling operation to pick up crushed empties to now really a B2C company where you're talking directly to consumers, where you're where you're na navigating the challenges that they're having with the system, that you're dealing with this thing where if a customer has a bad day on it, that's bad news for your for your company. And that was a real mind shift and logistical shift that we had to go through.
Garr Punnett: What was that operationally like then? So you've essentially what does that mean for the corporate stakeholders involved in in in various aspects, as well as then the operating stakeholders involved in implementation of like the actual logistics, similar to like Clink or like some of the whoever else is sort of operating infrastructure? what's that like to sort of ramp that like is that all good news where everyone's like, hey, this is great? great traction is just good news and so therefore we can see these systems work at scale, or is there then friction that then comes through in those relationships, in how conversations take hold, how who gets paid and why, the gaming mechanisms into that too? I mean there's a lot in there that sort of happens so quickly. What is that t what is that toll on the like the the relationship infrastructure for getting the system going and scaling? Does that make sense?
Jules Bailey: It does, yeah. It's a it's a it's a complex web we weave, right?
Garr Punnett: Yeah.
Jules Bailey: And and you know, I I remember the day that I recognized that we had a big problem. And I was at a a Portland Timbers game, that's our MLS team in Portland, go Timbers, R C T I D. And
Garr Punnett: Mm.
Jules Bailey: you know, I'm in this crowded concourse in the old stadium that we have, you know, there with my family. And across this crowded concourse, one of the executives from one of our retail, major retail partners, sees me. And he just he turns and starts elbowing his way through the crowd over to me at this game and puts his finger right in my chest and says, I want my greenbag drop site at this location. When am I going to get it? And I said, you know, we're working on it, and that sort of thing. And I thought, this was right when we had started expanding greenback drop sites at retail locations. We only had a few out there. And I thought, uh-oh. We have a problem. We're gonna have way more demand from retailers for these sites than we have capacity to serve. We haven't figured out the logistics of this. We're now gonna have retailers in far-flung places in Oregon where we're gonna have to haul a bunch of fluffy material a long ways, and we're owned by distributors, right? And there's distributors and retailers have their own relationship in the background. So, how do I go to my distributor owners and say, Say, hey guys, we gotta invest in expanding this system and we're gonna have to do it quickly because otherwise the retailers are gonna come back to you and say, Hey distributors, why didn't you do this thing that helped us out at the retail side? And so there's a lot of different puts and takes. And we ended up figuring out some ways, both actually legislatively, we went back to the legislature and had some modifications in in the program. And also operationally that allowed us to better apportion costs and share costs in a way that made that expansion more feasible. We figured out some operational hubs, you know, little things like I'm just telling war stories now, but just for fun, we
Garr Punnett: Please.
Jules Bailey: had we had this one we had this a one retail site that was just getting hammered and we could not get trucks there fast enough, especially at rush hour, to keep those drop doors clear so that customers could get them in. And it was a huge pain for the retailer to constantly send people out. And we had a few of those sites just right around each other, and we realized that rather than than sending out a CDL truck driver to go do this over and over and over again. What we did instead was we put a a drop trailer, so essentially a a truck trailer right
Garr Punnett: just
Jules Bailey: there on site. And then we paid a group a a guy who was domiciled out there to just like run a route in his Honda Civic or whatever he had between those three sites and just keep the doors clear and throw the bags in the drop trailer. So then the CDL driver could come out and just hook up and pull the full trailer away and not have to spend time loading the trailer, right? So like
Garr Punnett: Right. So
Jules Bailey: that's just that's just, you know, basic operational things that we had to figure out, but we didn't know that at the time. And it's not sexy,
Sabira: No.
Jules Bailey: it's not fancy, it's not technological. It's just what you have to do to make these kinds of things work. And you have to have the incentives and the systems right to give people a reason to make those things work and to be able to internalize the costs and benefits of it at sort of the more macro level.
Garr Punnett: To that end, then really quick on a follow up. So on the retailer side of this, they're so enthusiastic about getting their a drop site because of the economics and foot traffic? Or like what's that why do they want it? Why did he want it so badly?
Jules Bailey: That particular retailer wanted it because it it allowed them to shift some of the ways that people were returning. They I think a lot of retailers would prefer not to have any involvement at all. But in Oregon it's required that that retailers have involvement. And
Sabira: Mm.
Jules Bailey: if they're going to have involvement, they would rather have it from customers who are dropping off sort of full bags and then going inside doing their shopping. that That's a model that they preferred rat as opposed to having to hand count things or do other things. and so that was a the challenge that he was trying to solve.
Garr Punnett: Got it. And then then one of those things that I was curious about, just f again, maybe for my own education in the audience, that classic hurdle of of mess, or like is that what that's putting items in a green bag and getting it sort of not as messy and it's sort of on an exterior facing unit or some sort of drop off, is that really what was the benefit where they got to go This is kind of a win for us. There's no there's no negative here in the same way that drop off has sort of historically been seen as potentially messy if people are bringing individual containers. Am I thinking of that correctly or or not correctly at all?
Jules Bailey: Yeah, i there's certainly a mess aspect to it. There's a maintenance aspect to it. It's
Garr Punnett: Right, yeah.
Jules Bailey: it's both The method of how it's being returned, and to be frank, it's also who's returning it. So you've got
Garr Punnett: Yeah.
Jules Bailey: usually with those programs, it's the people who purchased the beverages in the first place that are showing up to return it. And it's a lot of families and folks that do that. And then they're frequently returning because then they're gonna go inside and and shop. And in fact, in in Oregon, the retailers provide a 20% benefit on your on your cash out ticket if you spend it for in-store credit. So a lot of the cash out. Go into in-store purchases. That's just part of their marketing
Garr Punnett: Wow, yeah.
Jules Bailey: budget. That's not in legislation anywhere. That's just what the retailers do. So if you go inside and spend your
Garr Punnett: That just makes sense.
Jules Bailey: your credit there, here's 20%. You just, you know, you just turned your 10 cents into 12 cents per container. So so there is that kind of benefit as opposed to some of the other systems you tend to have. people who have gone through and and done collecting and gleaning and returned those. And you know, there's nothing wrong with that. That's still g they're getting dollars and they're they're recycling. That's great, but that's sometimes less compatible with a retail environment or a a retail parking lot.
Garr Punnett: Thank you.
Sabira: Can you talk a little bit more about the distributor ownership relationship? So this is we're talking like the the acronym OBRC is Oregon Beverage Recycling Cooperative. So it
Jules Bailey: Mm-hmm.
Sabira: is distributors of beverages that are owners of this state-based cooperative. How did that even is that that's part of the legislation?
Jules Bailey: Yeah, the it's allowed for within the legislation. It's not required within the legislation.
Sabira: no. Okay.
Jules Bailey: So the legisl Oregon had this had the nation's first bottle bill and actually the second bottle bill. in the world slightly after Vancouver, British Columbia, or a or just after British Columbia, not Vancouver in particular. And so the legislature didn't really know what it was doing at the time. And so it set up this super simple bottle bill, which is there's actually no deposit in the law at all. There's only a refund value. So it doesn't mandate a deposit. It just says if you bring a covered container back to a retail retailer, you are entitled to this refund value Distributors are responsible for picking up those containers, retailers are responsible for taking them back. Go forth private sector and figure out how to make that work, right? And that was essentially it. And then it's sort of that was the Big Bang. And then over time, like, you know, all the hot soup of molecules clumped into little clusters, and then planets formed and galaxies formed around that, right? And now it's sort of the system that it is today. And it evolved over 50 years into actually a very efficient system now where The distributors themselves self-organized after sort of this long period of like, you know, the Pepsi distributor would go out and pick up their containers, and the Coke distributor would go pick up theirs. And then they sort of looked at each other and they're like, This is stupid. What why don't I just pick up your
Garr Punnett: Why were you?
Jules Bailey: containers when I'm there on Thursday and you pick up mine when you're there? So they figured that out. And then they went to like regional hubs where they were bringing that back. And then all the regional hubs were like, Well, this is dumb. Why don't we just combine all these hubs into a big statewide system? And they went to the legislature. Can we do this in this big statewide system? And so they did it. And they took some of the pressure off the retail returns by establishing redemption centers for those high-volume returners and the retailers like that. And so you actually have this interesting situation in Oregon, at least, where the whole system is privately run. But you have a fairly strong relationship between environmental groups, retailers, distributors, and all the different actors saying. Saying, yeah, actually everybody's kind of getting what they want out of it. And so you've got this sort of broad brush coalition that supports it. So to your specific question about distributors, distributors own that entire system as a cooperative. And you can think of it sort of like wheat or dairy, right? Like a wheat cooperative
Garr Punnett: Mm.
Jules Bailey: takes in wheat from all these different farms and then turns it into flour or whatever and sells it on the open market at value added ways and redistributes that back to the the farms. Or, you know, we think in Oregon of the Tillamook Dairy Cooperative, right? Tillamook cheese is a is a cooperative network of a bunch of milk producers. They give it to Tillamook, Tillamook value adds it and then redistributes back out, right? we're s the OBRC system that we have in in Oregon is essentially the same thing. It's just that it's waste material that gets aggregated, value added, sold, and then back to the distributors. And the deposit return system is essentially the mechanism by which that material gets collected.
Garr Punnett: That organic evolution is so interesting and so applicable to so many other industries where I think we've seen I I think we're seeing it actually f with many other industries that are trying to set up sort of these almost rigid rules and boxes and and ultimately I think what you're gonna find is there is gonna be like this organic Combination that starts to happen. And I think that my next question was kind of around interoperability, and you kinda answered it, which is it it it almost by necessity had to start to sort of coalesce together into these systems where it made more natural economic sense more than anything. Reaction to that?
Jules Bailey: Yeah, I I I think you're you're putting your finger on something that's really important, and that is a principle that's easy to describe but harder to identify in principle of
Garr Punnett: Yeah.
Jules Bailey: what it is, which is how do you build flexibility into these s into these systems? And that's sort of the meta story. You know, we could talk about Oregon, and that's probably not applicable to a lot of your your your viewers and listeners. But I do think it provides an interesting reference point for how we think about these systems more generally, whether DRS or really any other circularity systems. And that is, I think there's this knee-jerk tendency within policymaking by people who are distrustful of actors within that system, probably for good reason, to say we have to over-mandate everything. We have to get all the rules exactly right, or people are going to not do what we want them to do. And it actually tends When you set the rules of the game and you you set the right incentives within it for people to maximize what they want to do and then let them figure it out. Because there's no way sort of ex ante on the front end, you can know all of these different things are gonna have
Garr Punnett: All of the yep.
Jules Bailey: to happen and play out. And you can see an example of sort of this spectrum of of at least within the deposit return system world, you've got sort of Oregon on one end of a spectrum, which is sort of Super flexible and centralized. And then you've got like California on the other end of the spectrum, which is just completely regulated and CalRecycle controls every dial and all the different payments and all these things. And they have really struggled to provide access, to get their redemption rate up, to deal with fraud, all of those different things. But it's very hard to go from one system to the other. Like once you've sort of got it and the actors are working and they're all maximizing their own incentives, right? Everybody sort of looks at each other and says, man, this aggregate system isn't working. But everybody's maximizing their own individual interest within it. And so changing that then becomes incredibly difficult. and so I I used to get a lot of questions about, like, wow, Oregon's so successful. How can we just copy that and do that here? And and no, you you really can't for two reasons.
Garr Punnett: Yeah, you can't.
Jules Bailey: reasons. One, you can't just shift from a system that you have to a new system, both sort of politically and economically. It it it's a you know the gears don't fit together correctly. And also the organ system, as we said, evolved into sort of this this this thing over 50 years. And so the the animal that evolved is adapted to its own ecosystem, right? You can't just take that evolved animal out and put it in a completely different ecosystem and expect it to thrive. But the principle is still there, which is as you're designing these systems. make sure that you are allowing for innovation within those systems and getting all the puts and takes and levers and incentives right and then let them organically to some degree come together.
Sabira: It sounds like this like five cent to ten cent thing though in the point in as a point in the evolution really kind of like ratcheted up the success of the project.
Jules Bailey: Yeah, for sure. I mean there's definitely some aspects of it that are like pretty easy to measure and say you should do this. And in deposit return systems, I mean
Garr Punnett: Right.
Sabira: But how did how did you convince like like what happened? What was culturally or situationally going on that that was the thing that happened as
Jules Bailey: It was sort of this special moment in time where a bunch of different interests converged on the same thing. And so you had you had environmental groups that wanted to raise the redemption rate and raise the refund group ref refund value, excuse me. And then you had retailers that were feeling overburdened by take back requirements, and then you had distributors that wanted the ability to set up this co-op and these redemption centers. And so essentially the the whole Everybody came together in a series of work groups and over just a few sessions in the legislature Reach this agreement where everybody could sort of get what they wanted out of it. And that agreement was: okay, we're going to move to a redemption center-based system that's going to allow for more access. That's what the distributors and the retailers want. The distributors will get to form their own cooperative for more efficient access. And as a guarantee that they're not gonna continue to see redemption rates fall, which they were falling in Oregon. Again, if the redemption rate is below a certain threshold for three years in a row, then it will trigger an increase from five to ten cents. And so and then there was also product expansion to all those categories. So all that stuff got got put in at the same time. The redemption rate did not increase. And so thus it triggered the 10 cent change, and all of that happened. And so it was.
Garr Punnett: that's
Jules Bailey: Everybody kind of wanted something out of that system. And so then we crafted in the legislature a series of compromises around that.
Garr Punnett: I in all of these anecdotes and and war stories, which essentially is the best part about this podcast, as we all get to share, I I do want to throw a a thought out here where I was having a conversation with a a friend yesterday in which we were talking about like what does the word scale mean towards circular economy work when it's almost inherently regional, or i it can be sort of again, I I guess separated from other regions and not necessarily interoperable across states or across other systems. Not to say that's not possible in the future, but we were just challenging the word scale. And what scale means to linear systems, my hypothesis here, and I really liked where we sort of the word that was injected was is proliferation the scale that is equal and comparable in the circular system? Which is in that proliferation model, you're like, Letting it organically sort of take hold and you have to create the conditions of which you can start to get some some population growth around a concept, around a business model. and I just I w I would love a reaction either of you on like where that hits, because I think there's something about that organic nature that scale feeding seems so linear and programmatic, but proliferation sort of feeds into that organic nature.
Jules Bailey: I mean, I think especially in these circular systems, because your everyday person just doesn't s honestly spend a lot of time thinking. I mean, they're interested in this stuff, but they don't spend a ton of time thinking about it. Like
Garr Punnett: Thinking about it. Totally. Yeah.
Jules Bailey: that's reserved for a special class of nerds that are us and your listeners, to be honest.
Garr Punnett: Yep. Yep. Yep.
Jules Bailey: And and we are not normal humans and normal humans needs things that are that fit into their life and that catch their attention and make things super simple. And so we could spend a lot of time marketing to people or telling them to do the right thing and trying to go through that linear growth model. But if it but the best way to expand a system to scale is when somebody tells somebody else, hey, I did this thing and it's super cool, you should try this, right? And and so building in sort of that factor into scale and then allowing it to your point that organic expansion is is really important. And so You know, for I'll g I'll give you an example of where I think scale becomes challenging even under that principle, and then an example of of sort of how we're trying to work around that right now in this this startup that I'm working on. So I started a the refillable reusable bottle program in Oregon, and the only state to have a statewide refillable bottle program. And our distributor members at OBRC said, yes, we want to take this on and we're gonna invest in this, and this is a good thing for circularity. So we went through all this work. We designed this industry standard bottle that we maintained a float of, and we got participating breweries, and we designed the bottle in such a way that it could fit on a lot of existing lines, so breweries wouldn't have to redesign their lines for it. and the principles in the system were we need to make this as simple as possible, right? So that you return it the same way you return your one-way bottles through the deposit system, that you don't really have to think about it. And so the the idea was if you are the kind of person who cares about having something that's great for the environment and having a refillable bottle and that's gonna make you go purchase that, fantastic. We love that. And we're gonna have markings on it to do that for shelf differentiation in the marketplace and all that kind stuff. If you don't know that it's refillable, it doesn't matter. Just do this exact same thing that you were going to do anyway, and it's going to make it back into the system, right? We don't need
Garr Punnett: Mm.
Jules Bailey: you to learn anything different. And we got a lot of people really excited about that and telling people about it and ended up being great marketing for the participating breweries. But then we ran into the to your point, this barrier of well, if the bottle leaves the state, then what happens, right? And we and
Garr Punnett: Mm-hmm.
Jules Bailey: we got into state-based barriers and distribution networks and all of those different things and how do you get it back and how do you maintain a float. And so the program was important, but it never really scaled to your point, because of all the sort of artificial geographic and political and logistical barriers that we have set up, not all of which are government, some of which are our private sector too, but it just runs into into those barriers and you can't it doesn't it doesn't accelerate because there are those those operational drags on it. So how do you then design again systems that are sort of one level up that are things that everybody can get excited about, but that can be operational across borders and that different operational systems can plug into in the way that you see sort of one integrated system that builds a critical mass, but that is actually operationally different no matter where it
Garr Punnett: Mm.
Jules Bailey: is. And that's kind of some of the stuff that we've been working on. I've been working on recently.
Sabira: Can you talk about just like the process of designing? So like it sounds like the end result, like you you hit this like upper limit of the the natural private sector systems that would not support necessarily the return of this bottle. But I love the creative process of trying to design something that is usable by multiple breweries and A, can you talk about like what what was that bottle? It was a glass and like how did you design it? And then or is it aluminum? And and then also like how did you go through the process of kind of figuring out that this is like a interoperable interoperable design?
Jules Bailey: Yeah. So my very first day on the job at OBRC, literally first day, sit down at my computer, and I knew we wanted to do a refillable bottle system. And I just typed into Google refillable bottle system. And that's like that's literally where I started. and then just sort of went from there because and ended up, you know, going over to Germany and looking at their systems and you know, going up into Canada. But what we've quickly figured out was oof, if we gotta take back everybody's individual bottles and sort those out, that's gonna be a nightmare and that's gonna make a small program weigh down the larger program, right? When you're talking about two billion containers coming through, you can't have the tail wagging the dog, right? You you need it you can't have a hundred thousand containers or even two million containers affecting the economics of two billion containers that you're that you're processing. So what we needed was something that was that was easily recognizable, it was clearly different, and it was standardized, and that was also good for marketing to consumers because then you could easily say to a consumer, Hey, want to be part of this cool refillable bottle thing? Just look for this particular distinctive bottle and and and you're in. It was a glass bottle. We worked very closely with Owens, Illinois, that put a lot of time and effort into doing it. It was actually we got to go to the plant in Portland and see them getting. manufactured which was super cool. It was it was neat to see these big molten globs come down and then become your your bottle.
Garr Punnett: Yeah.
Jules Bailey: But designing it was actually really hard. Harder than you would expect because we sort of went out to a bunch of potential partners and said, okay, what are the fill on filling machines that you're using? And it turns out they're super sensitive even to just fractions of a millimeter
Garr Punnett: Mm.
Jules Bailey: on the diameter and on the height. So, okay, we wanna keep them essentially the same diameter and the same height. There is no industry standard long neck glass bottle, but there is sort of the one that's most often used. And so we use that as a pattern for the 12-ounce. And it's different on the East Coast than it is on the West Coast, and all these super complicated things. So we figured out sort of like what's sort of the modal bottle, right? The average and then design to that. But a refillable bottle is thicker, it's more robust, it's designed to go through a bunch of times. Okay, so if you keep the diameter exactly the same and you keep the height exactly the same, but you make the walls thicker, but you have to maintain the same interior volume. Hard. Like, turns out there are not
Garr Punnett: Mm-hmm.
Jules Bailey: a lot of ways you can manipulate the bottle and keep those parameters true. And so that meant having to like blow out the neck a little bit to get it that way. And so we for we developed like 60 different iterations of that and then started showing it back to brewers. And it was fascinating because you don't really think about what the shape of the bottle tells you what's in the bottle. And people look at that and go, no, that's a that's a kombucha bottle. That's not a beer bottle, right? Or We had one that we ended up calling the Mrs. Butterworth's bottle because the head on it was a little bit round and everybody thought it looked like Mrs. Butter Butterworth's maple syrup. And so we went through all this stuff and I literally I had these like plastic molds of them and I would go down to these brewer conventions and I'd stand at the end of the buffet line and like have these things out and people would come through and be like, Which one do you like? And they'd say, This one, or you know, or whatever. And I'd just like literally like they'd be getting their chicken and you know, whatever, and saying, like, I like that one. Okay, great. You know, now And that super, you know, bootstrapped kind of thing. And we figured it out. We landed on this one bottle shape and got it done. And then I I'll never forget the day. I went down to my local Fred Meyer, which is our Kroger affiliate and at the at the store, and there it was on the shelf, ready for anybody to purchase. There's that bottle. And I went and I picked up a six-pack and I took it through the checkout line and the checkout person there. I'm like, hey, I designed this bottle. This you and she's like, sir, do you want paper plastic? And I was like, right, you don't care. All right, thank you. I'm I'm sorry.
Garr Punnett: Yeah, yeah, no, it's it's
Jules Bailey: I'm sorry. I will keep moving.
Garr Punnett: To that end on the enthusiasm of which you're bringing to that, and it's a part of a Kroger system.
Jules Bailey: Mm-hmm.
Garr Punnett: How does that trust start to translate then? When you get these now, we don't have unfortunately, and fortunately, to some degree, these national large brands own regional supermarkets or and have visibility into these types of programs, how does that start to translate to Other municipalities. Have you ever had those conversations where they go, this is interesting and this works and then what could happen next is it gets applied to another municipality. Is that ever been something that has been a part of what you all have seen in Oregon and could translate to others in such as like Illinois that struggles to figure out what it can be in terms of a bottle bill?
Jules Bailey: Yeah, I mean I think that the the again it sort of has to be done at a principles basis rather than a specific
Garr Punnett: Totally.
Jules Bailey: operational basis. One of the principles that we had was that we had to fit into existing distribution networks and retail networks. So we couldn't do something different. And
Garr Punnett: Right.
Jules Bailey: and that helped a lot. So for example, Y people breweries and and beverage manufacturers, they buy their product from regional bottle distributors. in our area,
Garr Punnett: Yeah.
Jules Bailey: it's it's typically an entity called Saxco, but there are others. And so we worked with Saxco,
Garr Punnett: Yes.
Jules Bailey: which is huge and and based in California. And we said, All right, what would it take for us to list this bottle as one of your SKUs that people can choose from so that we didn't have to deal with any of the, you know,
Garr Punnett: Mm-hmm.
Jules Bailey: do you want it neck down case? Do you want it palletized? Do you want it all that kind of stuff? So that whatever a brewery Was doing to order already, they could just go back to their distributor and say, we want this bottle instead of this bottle, and we want it configured this way, which is how we're set up, right? And so we went through the normal distribution channels. And then similarly, they could then distribute the package through their normal distribution channels to whatever stores they were working with already. And it didn't have to be different than that. And so fitting into that whole ecosystem was really, really important. And I think sometimes that gets lost because the perfect kind of becomes the enemy of the good to use that cliche. People want the system to behave a certain way for a certain outcome. And you sort of just have to get your foot in the door and say, nope, we're gonna just create something that can the water can flow through all the channels that it already flows through. We're gonna get this outcome at the end. And then over time we can then try to evolve those channels to be something that's more than what it is today.
Garr Punnett: I think that's just what the best part about this work is, is the complicated layers of ecosystems and operability necessary. And it just one after another, and you just kind of forget that. Where it's like we kind of take for granted sometimes, and we even from industry to industry, I'm super focused on this, and then take advantage of the fact that it's like, How did this bottle even get into my hand? and and what all the decisions that went into it. And I'm and still being relatively arbitrary on the size of the bottle that Sabira has in New Jersey versus the bottle that you have on the West Coast and all of the maybe historical decisions that went into that, that might be
Jules Bailey: Joe Light.
Garr Punnett: relevant or totally not relevant anymore. probably not relevant. Yeah, I mean it's like and
Jules Bailey: Probably not relevant. Yeah. There was some brewery that had some line in New Jersey somewhere that fit this one bottle and so thus it became the thing, right? But
Garr Punnett: Yeah.
Jules Bailey: to your point, right, like
Sabira: That's a lot.
Jules Bailey: It's i the those
Sabira: Yeah.
Jules Bailey: systems really do define what's in that space of possible. And you
Garr Punnett: Yes.
Jules Bailey: know, I I had a debate at one point with someone in another state that was working on refillable systems and was really excited about refill, which is great. You know, I've obviously have spent a lot of my my life working on that. but they were really focused on Refillable plastic containers, which can be done. And their point was well, Germany has refillable plastic water bottle containers, so we should just mandate that here. Well, but Germany has a crating system for both collection and distribution. When you buy a case, it comes in a rigid plastic case
Garr Punnett: Mm.
Jules Bailey: where you buy 12 of them at the time. You don't always have to do it that way, but that's the that's primarily how the refillable ones are distributed. Distributed, that that kick crating system protects those bottles from being crushed and deformed. And plastic crushes and deforms really easily. So, in a in an American system, it's very hard to return plastic in a way that keeps the integrity of the bottle to the back end. And you either have to wait have a way of restoring that integrity or protecting it in the first place, which is incredibly complicated. And their point was: well, why can't we just distribute the bottle the way that they do it in Germany? It's like because that has a
Garr Punnett: That's not how do it.
Jules Bailey: cascading effect across the entire retail system and distribution chains and like is it in theory possible? Sure, I guess anything's in theory possible.
Garr Punnett: Anything.
Jules Bailey: But I got news for you, the entire beverage distribution system of the United States and practically the world is not going to conform to what you want for your state that doesn't have a huge population. That's just the reality of the situation, right? And so you can you can set those mandates, but it's just not gonna work. And so that's where you have to take into account all of the different things in that hidden ecosystem that could go into being barriers or drivers.
Sabira: Can I just ask, I mean, this is like so Pepsi is here and in Germany, and Coca-Cola is here and in Germany, and they distribute
Jules Bailey: Yeah.
Sabira: the same product in different cultural systems.
Jules Bailey: Yep.
Sabira: How does that company figure out how to adapt to all the local nuances?
Garr Punnett: Or leading.
Sabira: Or leave
Jules Bailey: Yeah, or lead.
Sabira: or or leave. Leave. Yeah, well yeah, yeah,
Garr Punnett: Lead like or be a leader in deciding, but
Jules Bailey: You lead.
Sabira: yeah, yeah.
Jules Bailey: Yeah, I mean the beverage landscape is in I and I let me be clear. Working for beverage distributors, I got to see sort of like one side of the elephant, but it's
Garr Punnett: Yes.
Jules Bailey: an incredibly complicated system. And so, you know, in some sense, and I'm I'm sure the second I say this, somebody from Coke or Pepsi is gonna scream like he doesn't know what he's talking about, you know. So so let me just put that disc
Garr Punnett: Hit the comments, by all means.
Jules Bailey: Claimer on this, but but in general, you can think about they're really more sort of IP producers than they are beverage producers, right? So, like Coke has a special formula for a syrup or for a very a bunch of different syrups. And it it can either make that directly or it can license that syrup out and that formula out. That then that syrup then goes to regional bottlers who add their own local water and their own. It's it is I think sometimes people think of, there is a company called Coca-Cola that manufactures
Garr Punnett: I always forget that.
Jules Bailey: the drink that I have in my hand. And that's just not how it works. they
Sabira: Yeah. It's not I mean which goes to
Garr Punnett: Yeah, I always forget that.
Sabira: I think the reason I was even asking this question was like what is the opportunity like for somebody yeah to like create scale across countries and and be determining of like what is that one way and the reverse system. But I mean like this also speaks to why aren't they just selling the syrup? Like why do we gotta add the water? Like add your own water
Garr Punnett: Well and actually to that end. Yeah. To that end that's what
Jules Bailey: Totally. And that's what happens. Yeah.
Garr Punnett: that that's what they tried to do with what was the the soda stream. Like I mean that's a big push for
Sabira: Yeah, yeah, yeah, yeah, yeah.
Garr Punnett: them as like a direct to consumer effort to sell the the the IP directly and then you add your own water
Sabira: Yeah. Yeah, yeah, yeah.
Garr Punnett: and carbonation. Yeah.
Sabira: Yeah.
Jules Bailey: Yeah, it's like, you know, they selling cake mix, right? Like it's just not, you know, it's selling cakes and it's
Garr Punnett: Yeah, yeah.
Sabira: Yeah, exactly, exactly.
Jules Bailey: There's all sorts of different complexities within it, but but what you but what you by the time you hold a a coke in your hand or a Pepsi in your hand, it is actually an entire layer cake of companies that has been involved at many different steps of that, both product creation and distribution and packaging and all of those things. And that ecosystem is different, not only in different countries, but in different states and different regulations. and and that is very, very changing. challenging to navigate and and very difficult to understand for anybody who's not even in that industry. I mean I've worked adjacent to that industry and I
Sabira: Yeah.
Jules Bailey: only have sort of the barest understanding of the complexity of it.
Garr Punnett: But I kind
Sabira: Yeah.
Garr Punnett: of do forget that y I think in and this will be my opinion that someone else can comment and say how much I'm wrong, but that you were working with potentially the most powerful side of that equation. I kind of forget the power that the distributors, the bottlers that they have in this system, ev and they're still even just one part of all of the other s parts of the system that make this very complex and possible. ending question here. 'Cause I would love to know what are you up to then? you've been through all these systems.
Jules Bailey: What am what am I doing now?
Garr Punnett: Yeah, exactly. Like you've been through these systems, you've learned so much. I think where you are probably focusing your time right now is very important to probably some next solution that's coming coming online.
Jules Bailey: Well, that's very generous of you. I am trying to take the learning that's come from that and apply it. So I mentioned at sort of the the the top of the show that good circular systems are incentive plus convenience. And now I'm working with a great team of folks and we are taking that principle, again, staying at the principles level and what's interoperable across borders and states to say, well, let's go beyond beverage containers and let's look at some of the EPR systems. Let's Look at even non-EPR states and think about what is the value that's in your recycling stream that you're recycling already or that's in your home and you're not recycling, and pay you for the value that's in your recycling stream. And because there is value in it. There's not only value in the material, there's value in avoiding EPR fines and meeting rates and dates. And you've got all of these companies that now have to show either by law or just Because consumers demand it, responsible and use of their packaging types. They've got a great way to invest in improving the efficiency of how that is collected at the material recovery facility with capital investments, but that's like controlling the main stem of the river. They don't have any control over the watershed of how things come into the river in the first place. That's you, that's in your household. And so what we're working on is a system that gives people a reason to actually get their film and flex separated and recycled, to get their their. rigid HTTP containers recycled and to do that in a way that's fun, that's gamified, that works across multiple different systems, and that provides incentives for people to do that so that they tell their neighbor, hey, I just did this thing and it was super cool and it was easy to do and I just put it outside and I got all, you know, I got some really cool rewards for it. And and so that's that's the fun I'm getting to have right now.
Garr Punnett: I I love that concept mostly 'cause it also is tapping into the untapped relationship that that we don't have with consumers. When you can educate and you can communicate and you've got their attention, that in self is then very valuable to other potential downstream opportunities. to use that watershed I guess analogy. but I think that's a really cool element to this of of how do you get in that household and communicate to that consumer.
Jules Bailey: That's right. People want to do the right thing, but they're also busy. So how do you give them a little bit of a nudge to do it, make it fun, and give them a reward for doing the right thing? And if we can do that, there's a lot of water that's going to come in through that watershed and a lot of companies that are going to benefit in the long run from actually being able to meet both their regulatory or their ESG or their marketing goals that they put out there.
Sabira: Thanks for joining us, Jules.
Garr Punnett: Yeah, thank you, Jules.
Jules Bailey: Thanks for the wonderful conversation.
Garr Punnett: What a
Jules Bailey: I appreciate it.
Garr Punnett: So fun. Thank you.
Sabira: It was fun.
Jules Bailey: Yeah, it's a it's a great question. And first of all, thanks for thanks for having me. This is a r I've been really looking forward to this discussion. And you're right, I've had this sort of odd career where I'm a bit like Benjamin Button growing younger or going backwards in my career. I
Garr Punnett: Yeah.
Jules Bailey: I started out in policy in the legislature, I then
Garr Punnett: Yep.
Jules Bailey: went and and implemented that policy and ran the organization that does the state's bottle bill in Oregon. And so I went from like policy to large business and now I'm going into smaller business and now I'm in startup phase and and and consulting. So it's
Garr Punnett: Exactly.
Jules Bailey: sort of, you know, usually people go the other direction. But I teach their own, I guess. Yeah.
Garr Punnett: No, I like this. I like yeah, I like your direction though in this. That's a lot that's it's what it means is that you're very informed about how these smaller systems can actually benefit and grow.
Jules Bailey: Well, it's sort you it's something we used to say back at at OBRC and then at Clink is that, you know, we'd we'd stepped on all the rakes and the tall grass, right? Like it's some of these things aren't that complicated on their face, but when you start to get into them and this gets into your question, right, there's just all these different hidden things and you kinda have to bumble your way through them and go, that didn't work. I gotta go back and do this thing and you do that enough times and you start to realize what some of the pitfalls in these systems are. And a lot of them are Related to what you just said, which is scale, right? I think it's sometimes really hard to picture how these things operate at scale because little things make big differences at scale. And that was one of the big learning curves that I had moving from policy into implementation was at the policy level, you're sort of thinking about, okay, you know, we want people to do this, we're gonna set this incentive, and this happens. But then you have to set up a system that operates efficiently. Efficiently, and you know, in many ways, it's a penny's business, right? Fractions of a penny matter, and that translates into all different kinds of things. So every ever we we we would always say touches cost money, right? So every time you touch a material, that's a fraction of a penny. Every time you move it, the collection system. And then the same is true on the consumer side, right? So so recycling systems and and really any sort of do-gooder system in general really depends upon. Two things, right? You have incentive and you have convenience, right? You're going to give people an incentive to do something and you're going to make it convenient for them to access that incentive. But to do that, there are the little variations within it matter at scale on whether you're getting a lot of people to participate or whether you're getting nobody who wants to participate and everything in between.
Sabira: Can you give some examples that what I'm thinking is like, okay, so you're in this like such a unique position. I bet there's like five people in the world like this. I don't know that that's my guess. They see you like make the policy
Garr Punnett: Yeah.
Sabira: and then opt in to execute it, right? Like that's pretty cool. Like what did you think was going to happen that didn't happen? And like what what you had had the well intention and you thought that you were being thoughtful, that like didn't come to fruition when you got your your hands in the gloves.
Garr Punnett: I I like to think of this too, Jules, that I'm I'm sort of stuck on your rake analogy here or is like
Sabira: Yeah.
Garr Punnett: you thought you were gonna step on one and then you're like, I'm gonna avoid this here and then stepped on one, you're like, Okay, I gotta go this direction. Yeah. Yeah, yeah.
Jules Bailey: Yeah. I didn't see that one. I saw that one. Didn't see that one. There's like wong, you know, it just hits you right in the face. And
Sabira: Yeah.
Jules Bailey: you're like, well, okay, don't do that again. Yeah. that's a great question. There's so on sort of the positive side, and I this is a weird thing to talk about like positive rakes, but there are things that you find that you're like, I didn't I didn't think that was gonna work that way. So back in the in the legislature when we were debating adding different containers in and expanding the the number of product types that were in Oregon's deposit return system or our bottle bill. We thought there'd be a fairly long window for uptake of those things. We have to do a bunch of consumer education, people would have to figure it out, you know, all these different things. It turns out that since we had raised the incentive from five cents to ten cents, people figured it out pretty quick. And the velocity
Garr Punnett: Hmm.
Jules Bailey: at which that new material came in was pretty stunning. And so between the five to ten cent change, which had a huge, major impact on our operations, and then the expansion to all these different product categories that happened, both changes happened within about a a year of each other. It essentially meant that that plus the natural growth that we had in the system, we doubled the amount of volume that we were processing in the space of just a couple of years, right? We went from a billion containers a year to two billion containers a year. And that was a a stress on the system. We had to figure out how to do it. I used to describe my job as like: I feel like I'm in a boat, and every morning I wake up and there's water pouring into the boat, and it never stops, and I just have to start bailing that. water and most days I'm just baling water, right? If the boat doesn't sink, that's a good day. But then there are rare days where I can kind of look over the side and think about where the boat is, and on great days I can actually pick my eyes up and see where the boat's headed. But those are unfortunately sometimes few and far between. But to the so but on the other side, right? So we grew this program called the Green Bag Program. And it was a program that OBRC had licensed from Clink and that's sort of how I got ended up at Clink and sort of that trajectory over time. But When I joined OBRC, we had give or take 50,000 account holders. You had to sign up on paper, you had to go down to your local depot and go sign up. And it was sort of managed by the depot, and there wasn't really a customer service infrastructure. And so we started saying, okay, we've really got to modernize the system and make it digital and make it easier for people and start putting different places, drop bags around. And so we did that. We grew from 50,000 account holders when I started to a million account holders. Account holders when I left. And there's only like 1.5 million households in the state of Oregon. So that I mean that's pretty much saturation in the state. But with that scale comes all sorts of things that you just wouldn't think about, like you know, you're you've got y a product that previously was being compacted and transported and now it's kind of fluffy. And so you've got to deal with all these fluffy bags and how do you think about the transportation logistics of getting those around efficiently? You've got fluffy bags that are filling up places at retail stores and you've got to figure out, all right, how fast do you have to get those serviced? You know, are people going to steal them? What are the cheat mechanisms? You know, all those different things that you have to learn from. And it's one thing to say, okay, we want this convenient option at scale, but actually operating it at scale is something completely different. And if you're not careful, you can really blow up the entire system focusing on that. And so how do you grow from what was essentially previously a B2B, you know, business to business backhauling operation to pick up crushed empties to now really a B2C company where you're talking directly to consumers, where you're where you're na navigating the challenges that they're having with the system, that you're dealing with this thing where if a customer has a bad day on it, that's bad news for your for your company. And that was a real mind shift and logistical shift that we had to go through.
Garr Punnett: What was that operationally like then? So you've essentially what does that mean for the corporate stakeholders involved in in in various aspects, as well as then the operating stakeholders involved in implementation of like the actual logistics, similar to like Clink or like some of the whoever else is sort of operating infrastructure? what's that like to sort of ramp that like is that all good news where everyone's like, hey, this is great? great traction is just good news and so therefore we can see these systems work at scale, or is there then friction that then comes through in those relationships, in how conversations take hold, how who gets paid and why, the gaming mechanisms into that too? I mean there's a lot in there that sort of happens so quickly. What is that t what is that toll on the like the the relationship infrastructure for getting the system going and scaling? Does that make sense?
Jules Bailey: It does, yeah. It's a it's a it's a complex web we weave, right?
Garr Punnett: Yeah.
Jules Bailey: And and you know, I I remember the day that I recognized that we had a big problem. And I was at a a Portland Timbers game, that's our MLS team in Portland, go Timbers, R C T I D. And
Garr Punnett: Mm.
Jules Bailey: you know, I'm in this crowded concourse in the old stadium that we have, you know, there with my family. And across this crowded concourse, one of the executives from one of our retail, major retail partners, sees me. And he just he turns and starts elbowing his way through the crowd over to me at this game and puts his finger right in my chest and says, I want my greenbag drop site at this location. When am I going to get it? And I said, you know, we're working on it, and that sort of thing. And I thought, this was right when we had started expanding greenback drop sites at retail locations. We only had a few out there. And I thought, uh-oh. We have a problem. We're gonna have way more demand from retailers for these sites than we have capacity to serve. We haven't figured out the logistics of this. We're now gonna have retailers in far-flung places in Oregon where we're gonna have to haul a bunch of fluffy material a long ways, and we're owned by distributors, right? And there's distributors and retailers have their own relationship in the background. So, how do I go to my distributor owners and say, Say, hey guys, we gotta invest in expanding this system and we're gonna have to do it quickly because otherwise the retailers are gonna come back to you and say, Hey distributors, why didn't you do this thing that helped us out at the retail side? And so there's a lot of different puts and takes. And we ended up figuring out some ways, both actually legislatively, we went back to the legislature and had some modifications in in the program. And also operationally that allowed us to better apportion costs and share costs in a way that made that expansion more feasible. We figured out some operational hubs, you know, little things like I'm just telling war stories now, but just for fun, we
Garr Punnett: Please.
Jules Bailey: had we had this one we had this a one retail site that was just getting hammered and we could not get trucks there fast enough, especially at rush hour, to keep those drop doors clear so that customers could get them in. And it was a huge pain for the retailer to constantly send people out. And we had a few of those sites just right around each other, and we realized that rather than than sending out a CDL truck driver to go do this over and over and over again. What we did instead was we put a a drop trailer, so essentially a a truck trailer right
Garr Punnett: just
Jules Bailey: there on site. And then we paid a group a a guy who was domiciled out there to just like run a route in his Honda Civic or whatever he had between those three sites and just keep the doors clear and throw the bags in the drop trailer. So then the CDL driver could come out and just hook up and pull the full trailer away and not have to spend time loading the trailer, right? So like
Garr Punnett: Right. So
Jules Bailey: that's just that's just, you know, basic operational things that we had to figure out, but we didn't know that at the time. And it's not sexy,
Sabira: No.
Jules Bailey: it's not fancy, it's not technological. It's just what you have to do to make these kinds of things work. And you have to have the incentives and the systems right to give people a reason to make those things work and to be able to internalize the costs and benefits of it at sort of the more macro level.
Garr Punnett: To that end, then really quick on a follow up. So on the retailer side of this, they're so enthusiastic about getting their a drop site because of the economics and foot traffic? Or like what's that why do they want it? Why did he want it so badly?
Jules Bailey: That particular retailer wanted it because it it allowed them to shift some of the ways that people were returning. They I think a lot of retailers would prefer not to have any involvement at all. But in Oregon it's required that that retailers have involvement. And
Sabira: Mm.
Jules Bailey: if they're going to have involvement, they would rather have it from customers who are dropping off sort of full bags and then going inside doing their shopping. that That's a model that they preferred rat as opposed to having to hand count things or do other things. and so that was a the challenge that he was trying to solve.
Garr Punnett: Got it. And then then one of those things that I was curious about, just f again, maybe for my own education in the audience, that classic hurdle of of mess, or like is that what that's putting items in a green bag and getting it sort of not as messy and it's sort of on an exterior facing unit or some sort of drop off, is that really what was the benefit where they got to go This is kind of a win for us. There's no there's no negative here in the same way that drop off has sort of historically been seen as potentially messy if people are bringing individual containers. Am I thinking of that correctly or or not correctly at all?
Jules Bailey: Yeah, i there's certainly a mess aspect to it. There's a maintenance aspect to it. It's
Garr Punnett: Right, yeah.
Jules Bailey: it's both The method of how it's being returned, and to be frank, it's also who's returning it. So you've got
Garr Punnett: Yeah.
Jules Bailey: usually with those programs, it's the people who purchased the beverages in the first place that are showing up to return it. And it's a lot of families and folks that do that. And then they're frequently returning because then they're gonna go inside and and shop. And in fact, in in Oregon, the retailers provide a 20% benefit on your on your cash out ticket if you spend it for in-store credit. So a lot of the cash out. Go into in-store purchases. That's just part of their marketing
Garr Punnett: Wow, yeah.
Jules Bailey: budget. That's not in legislation anywhere. That's just what the retailers do. So if you go inside and spend your
Garr Punnett: That just makes sense.
Jules Bailey: your credit there, here's 20%. You just, you know, you just turned your 10 cents into 12 cents per container. So so there is that kind of benefit as opposed to some of the other systems you tend to have. people who have gone through and and done collecting and gleaning and returned those. And you know, there's nothing wrong with that. That's still g they're getting dollars and they're they're recycling. That's great, but that's sometimes less compatible with a retail environment or a a retail parking lot.
Garr Punnett: Thank you.
Sabira: Can you talk a little bit more about the distributor ownership relationship? So this is we're talking like the the acronym OBRC is Oregon Beverage Recycling Cooperative. So it
Jules Bailey: Mm-hmm.
Sabira: is distributors of beverages that are owners of this state-based cooperative. How did that even is that that's part of the legislation?
Jules Bailey: Yeah, the it's allowed for within the legislation. It's not required within the legislation.
Sabira: no. Okay.
Jules Bailey: So the legisl Oregon had this had the nation's first bottle bill and actually the second bottle bill. in the world slightly after Vancouver, British Columbia, or a or just after British Columbia, not Vancouver in particular. And so the legislature didn't really know what it was doing at the time. And so it set up this super simple bottle bill, which is there's actually no deposit in the law at all. There's only a refund value. So it doesn't mandate a deposit. It just says if you bring a covered container back to a retail retailer, you are entitled to this refund value Distributors are responsible for picking up those containers, retailers are responsible for taking them back. Go forth private sector and figure out how to make that work, right? And that was essentially it. And then it's sort of that was the Big Bang. And then over time, like, you know, all the hot soup of molecules clumped into little clusters, and then planets formed and galaxies formed around that, right? And now it's sort of the system that it is today. And it evolved over 50 years into actually a very efficient system now where The distributors themselves self-organized after sort of this long period of like, you know, the Pepsi distributor would go out and pick up their containers, and the Coke distributor would go pick up theirs. And then they sort of looked at each other and they're like, This is stupid. What why don't I just pick up your
Garr Punnett: Why were you?
Jules Bailey: containers when I'm there on Thursday and you pick up mine when you're there? So they figured that out. And then they went to like regional hubs where they were bringing that back. And then all the regional hubs were like, Well, this is dumb. Why don't we just combine all these hubs into a big statewide system? And they went to the legislature. Can we do this in this big statewide system? And so they did it. And they took some of the pressure off the retail returns by establishing redemption centers for those high-volume returners and the retailers like that. And so you actually have this interesting situation in Oregon, at least, where the whole system is privately run. But you have a fairly strong relationship between environmental groups, retailers, distributors, and all the different actors saying. Saying, yeah, actually everybody's kind of getting what they want out of it. And so you've got this sort of broad brush coalition that supports it. So to your specific question about distributors, distributors own that entire system as a cooperative. And you can think of it sort of like wheat or dairy, right? Like a wheat cooperative
Garr Punnett: Mm.
Jules Bailey: takes in wheat from all these different farms and then turns it into flour or whatever and sells it on the open market at value added ways and redistributes that back to the the farms. Or, you know, we think in Oregon of the Tillamook Dairy Cooperative, right? Tillamook cheese is a is a cooperative network of a bunch of milk producers. They give it to Tillamook, Tillamook value adds it and then redistributes back out, right? we're s the OBRC system that we have in in Oregon is essentially the same thing. It's just that it's waste material that gets aggregated, value added, sold, and then back to the distributors. And the deposit return system is essentially the mechanism by which that material gets collected.
Garr Punnett: That organic evolution is so interesting and so applicable to so many other industries where I think we've seen I I think we're seeing it actually f with many other industries that are trying to set up sort of these almost rigid rules and boxes and and ultimately I think what you're gonna find is there is gonna be like this organic Combination that starts to happen. And I think that my next question was kind of around interoperability, and you kinda answered it, which is it it it almost by necessity had to start to sort of coalesce together into these systems where it made more natural economic sense more than anything. Reaction to that?
Jules Bailey: Yeah, I I I think you're you're putting your finger on something that's really important, and that is a principle that's easy to describe but harder to identify in principle of
Garr Punnett: Yeah.
Jules Bailey: what it is, which is how do you build flexibility into these s into these systems? And that's sort of the meta story. You know, we could talk about Oregon, and that's probably not applicable to a lot of your your your viewers and listeners. But I do think it provides an interesting reference point for how we think about these systems more generally, whether DRS or really any other circularity systems. And that is, I think there's this knee-jerk tendency within policymaking by people who are distrustful of actors within that system, probably for good reason, to say we have to over-mandate everything. We have to get all the rules exactly right, or people are going to not do what we want them to do. And it actually tends When you set the rules of the game and you you set the right incentives within it for people to maximize what they want to do and then let them figure it out. Because there's no way sort of ex ante on the front end, you can know all of these different things are gonna have
Garr Punnett: All of the yep.
Jules Bailey: to happen and play out. And you can see an example of sort of this spectrum of of at least within the deposit return system world, you've got sort of Oregon on one end of a spectrum, which is sort of Super flexible and centralized. And then you've got like California on the other end of the spectrum, which is just completely regulated and CalRecycle controls every dial and all the different payments and all these things. And they have really struggled to provide access, to get their redemption rate up, to deal with fraud, all of those different things. But it's very hard to go from one system to the other. Like once you've sort of got it and the actors are working and they're all maximizing their own incentives, right? Everybody sort of looks at each other and says, man, this aggregate system isn't working. But everybody's maximizing their own individual interest within it. And so changing that then becomes incredibly difficult. and so I I used to get a lot of questions about, like, wow, Oregon's so successful. How can we just copy that and do that here? And and no, you you really can't for two reasons.
Garr Punnett: Yeah, you can't.
Jules Bailey: reasons. One, you can't just shift from a system that you have to a new system, both sort of politically and economically. It it it's a you know the gears don't fit together correctly. And also the organ system, as we said, evolved into sort of this this this thing over 50 years. And so the the animal that evolved is adapted to its own ecosystem, right? You can't just take that evolved animal out and put it in a completely different ecosystem and expect it to thrive. But the principle is still there, which is as you're designing these systems. make sure that you are allowing for innovation within those systems and getting all the puts and takes and levers and incentives right and then let them organically to some degree come together.
Sabira: It sounds like this like five cent to ten cent thing though in the point in as a point in the evolution really kind of like ratcheted up the success of the project.
Jules Bailey: Yeah, for sure. I mean there's definitely some aspects of it that are like pretty easy to measure and say you should do this. And in deposit return systems, I mean
Garr Punnett: Right.
Sabira: But how did how did you convince like like what happened? What was culturally or situationally going on that that was the thing that happened as
Jules Bailey: It was sort of this special moment in time where a bunch of different interests converged on the same thing. And so you had you had environmental groups that wanted to raise the redemption rate and raise the refund group ref refund value, excuse me. And then you had retailers that were feeling overburdened by take back requirements, and then you had distributors that wanted the ability to set up this co-op and these redemption centers. And so essentially the the whole Everybody came together in a series of work groups and over just a few sessions in the legislature Reach this agreement where everybody could sort of get what they wanted out of it. And that agreement was: okay, we're going to move to a redemption center-based system that's going to allow for more access. That's what the distributors and the retailers want. The distributors will get to form their own cooperative for more efficient access. And as a guarantee that they're not gonna continue to see redemption rates fall, which they were falling in Oregon. Again, if the redemption rate is below a certain threshold for three years in a row, then it will trigger an increase from five to ten cents. And so and then there was also product expansion to all those categories. So all that stuff got got put in at the same time. The redemption rate did not increase. And so thus it triggered the 10 cent change, and all of that happened. And so it was.
Garr Punnett: that's
Jules Bailey: Everybody kind of wanted something out of that system. And so then we crafted in the legislature a series of compromises around that.
Garr Punnett: I in all of these anecdotes and and war stories, which essentially is the best part about this podcast, as we all get to share, I I do want to throw a a thought out here where I was having a conversation with a a friend yesterday in which we were talking about like what does the word scale mean towards circular economy work when it's almost inherently regional, or i it can be sort of again, I I guess separated from other regions and not necessarily interoperable across states or across other systems. Not to say that's not possible in the future, but we were just challenging the word scale. And what scale means to linear systems, my hypothesis here, and I really liked where we sort of the word that was injected was is proliferation the scale that is equal and comparable in the circular system? Which is in that proliferation model, you're like, Letting it organically sort of take hold and you have to create the conditions of which you can start to get some some population growth around a concept, around a business model. and I just I w I would love a reaction either of you on like where that hits, because I think there's something about that organic nature that scale feeding seems so linear and programmatic, but proliferation sort of feeds into that organic nature.
Jules Bailey: I mean, I think especially in these circular systems, because your everyday person just doesn't s honestly spend a lot of time thinking. I mean, they're interested in this stuff, but they don't spend a ton of time thinking about it. Like
Garr Punnett: Thinking about it. Totally. Yeah.
Jules Bailey: that's reserved for a special class of nerds that are us and your listeners, to be honest.
Garr Punnett: Yep. Yep. Yep.
Jules Bailey: And and we are not normal humans and normal humans needs things that are that fit into their life and that catch their attention and make things super simple. And so we could spend a lot of time marketing to people or telling them to do the right thing and trying to go through that linear growth model. But if it but the best way to expand a system to scale is when somebody tells somebody else, hey, I did this thing and it's super cool, you should try this, right? And and so building in sort of that factor into scale and then allowing it to your point that organic expansion is is really important. And so You know, for I'll g I'll give you an example of where I think scale becomes challenging even under that principle, and then an example of of sort of how we're trying to work around that right now in this this startup that I'm working on. So I started a the refillable reusable bottle program in Oregon, and the only state to have a statewide refillable bottle program. And our distributor members at OBRC said, yes, we want to take this on and we're gonna invest in this, and this is a good thing for circularity. So we went through all this work. We designed this industry standard bottle that we maintained a float of, and we got participating breweries, and we designed the bottle in such a way that it could fit on a lot of existing lines, so breweries wouldn't have to redesign their lines for it. and the principles in the system were we need to make this as simple as possible, right? So that you return it the same way you return your one-way bottles through the deposit system, that you don't really have to think about it. And so the the idea was if you are the kind of person who cares about having something that's great for the environment and having a refillable bottle and that's gonna make you go purchase that, fantastic. We love that. And we're gonna have markings on it to do that for shelf differentiation in the marketplace and all that kind stuff. If you don't know that it's refillable, it doesn't matter. Just do this exact same thing that you were going to do anyway, and it's going to make it back into the system, right? We don't need
Garr Punnett: Mm.
Jules Bailey: you to learn anything different. And we got a lot of people really excited about that and telling people about it and ended up being great marketing for the participating breweries. But then we ran into the to your point, this barrier of well, if the bottle leaves the state, then what happens, right? And we and
Garr Punnett: Mm-hmm.
Jules Bailey: we got into state-based barriers and distribution networks and all of those different things and how do you get it back and how do you maintain a float. And so the program was important, but it never really scaled to your point, because of all the sort of artificial geographic and political and logistical barriers that we have set up, not all of which are government, some of which are our private sector too, but it just runs into into those barriers and you can't it doesn't it doesn't accelerate because there are those those operational drags on it. So how do you then design again systems that are sort of one level up that are things that everybody can get excited about, but that can be operational across borders and that different operational systems can plug into in the way that you see sort of one integrated system that builds a critical mass, but that is actually operationally different no matter where it
Garr Punnett: Mm.
Jules Bailey: is. And that's kind of some of the stuff that we've been working on. I've been working on recently.
Sabira: Can you talk about just like the process of designing? So like it sounds like the end result, like you you hit this like upper limit of the the natural private sector systems that would not support necessarily the return of this bottle. But I love the creative process of trying to design something that is usable by multiple breweries and A, can you talk about like what what was that bottle? It was a glass and like how did you design it? And then or is it aluminum? And and then also like how did you go through the process of kind of figuring out that this is like a interoperable interoperable design?
Jules Bailey: Yeah. So my very first day on the job at OBRC, literally first day, sit down at my computer, and I knew we wanted to do a refillable bottle system. And I just typed into Google refillable bottle system. And that's like that's literally where I started. and then just sort of went from there because and ended up, you know, going over to Germany and looking at their systems and you know, going up into Canada. But what we've quickly figured out was oof, if we gotta take back everybody's individual bottles and sort those out, that's gonna be a nightmare and that's gonna make a small program weigh down the larger program, right? When you're talking about two billion containers coming through, you can't have the tail wagging the dog, right? You you need it you can't have a hundred thousand containers or even two million containers affecting the economics of two billion containers that you're that you're processing. So what we needed was something that was that was easily recognizable, it was clearly different, and it was standardized, and that was also good for marketing to consumers because then you could easily say to a consumer, Hey, want to be part of this cool refillable bottle thing? Just look for this particular distinctive bottle and and and you're in. It was a glass bottle. We worked very closely with Owens, Illinois, that put a lot of time and effort into doing it. It was actually we got to go to the plant in Portland and see them getting. manufactured which was super cool. It was it was neat to see these big molten globs come down and then become your your bottle.
Garr Punnett: Yeah.
Jules Bailey: But designing it was actually really hard. Harder than you would expect because we sort of went out to a bunch of potential partners and said, okay, what are the fill on filling machines that you're using? And it turns out they're super sensitive even to just fractions of a millimeter
Garr Punnett: Mm.
Jules Bailey: on the diameter and on the height. So, okay, we wanna keep them essentially the same diameter and the same height. There is no industry standard long neck glass bottle, but there is sort of the one that's most often used. And so we use that as a pattern for the 12-ounce. And it's different on the East Coast than it is on the West Coast, and all these super complicated things. So we figured out sort of like what's sort of the modal bottle, right? The average and then design to that. But a refillable bottle is thicker, it's more robust, it's designed to go through a bunch of times. Okay, so if you keep the diameter exactly the same and you keep the height exactly the same, but you make the walls thicker, but you have to maintain the same interior volume. Hard. Like, turns out there are not
Garr Punnett: Mm-hmm.
Jules Bailey: a lot of ways you can manipulate the bottle and keep those parameters true. And so that meant having to like blow out the neck a little bit to get it that way. And so we for we developed like 60 different iterations of that and then started showing it back to brewers. And it was fascinating because you don't really think about what the shape of the bottle tells you what's in the bottle. And people look at that and go, no, that's a that's a kombucha bottle. That's not a beer bottle, right? Or We had one that we ended up calling the Mrs. Butterworth's bottle because the head on it was a little bit round and everybody thought it looked like Mrs. Butter Butterworth's maple syrup. And so we went through all this stuff and I literally I had these like plastic molds of them and I would go down to these brewer conventions and I'd stand at the end of the buffet line and like have these things out and people would come through and be like, Which one do you like? And they'd say, This one, or you know, or whatever. And I'd just like literally like they'd be getting their chicken and you know, whatever, and saying, like, I like that one. Okay, great. You know, now And that super, you know, bootstrapped kind of thing. And we figured it out. We landed on this one bottle shape and got it done. And then I I'll never forget the day. I went down to my local Fred Meyer, which is our Kroger affiliate and at the at the store, and there it was on the shelf, ready for anybody to purchase. There's that bottle. And I went and I picked up a six-pack and I took it through the checkout line and the checkout person there. I'm like, hey, I designed this bottle. This you and she's like, sir, do you want paper plastic? And I was like, right, you don't care. All right, thank you. I'm I'm sorry.
Garr Punnett: Yeah, yeah, no, it's it's
Jules Bailey: I'm sorry. I will keep moving.
Garr Punnett: To that end on the enthusiasm of which you're bringing to that, and it's a part of a Kroger system.
Jules Bailey: Mm-hmm.
Garr Punnett: How does that trust start to translate then? When you get these now, we don't have unfortunately, and fortunately, to some degree, these national large brands own regional supermarkets or and have visibility into these types of programs, how does that start to translate to Other municipalities. Have you ever had those conversations where they go, this is interesting and this works and then what could happen next is it gets applied to another municipality. Is that ever been something that has been a part of what you all have seen in Oregon and could translate to others in such as like Illinois that struggles to figure out what it can be in terms of a bottle bill?
Jules Bailey: Yeah, I mean I think that the the again it sort of has to be done at a principles basis rather than a specific
Garr Punnett: Totally.
Jules Bailey: operational basis. One of the principles that we had was that we had to fit into existing distribution networks and retail networks. So we couldn't do something different. And
Garr Punnett: Right.
Jules Bailey: and that helped a lot. So for example, Y people breweries and and beverage manufacturers, they buy their product from regional bottle distributors. in our area,
Garr Punnett: Yeah.
Jules Bailey: it's it's typically an entity called Saxco, but there are others. And so we worked with Saxco,
Garr Punnett: Yes.
Jules Bailey: which is huge and and based in California. And we said, All right, what would it take for us to list this bottle as one of your SKUs that people can choose from so that we didn't have to deal with any of the, you know,
Garr Punnett: Mm-hmm.
Jules Bailey: do you want it neck down case? Do you want it palletized? Do you want it all that kind of stuff? So that whatever a brewery Was doing to order already, they could just go back to their distributor and say, we want this bottle instead of this bottle, and we want it configured this way, which is how we're set up, right? And so we went through the normal distribution channels. And then similarly, they could then distribute the package through their normal distribution channels to whatever stores they were working with already. And it didn't have to be different than that. And so fitting into that whole ecosystem was really, really important. And I think sometimes that gets lost because the perfect kind of becomes the enemy of the good to use that cliche. People want the system to behave a certain way for a certain outcome. And you sort of just have to get your foot in the door and say, nope, we're gonna just create something that can the water can flow through all the channels that it already flows through. We're gonna get this outcome at the end. And then over time we can then try to evolve those channels to be something that's more than what it is today.
Garr Punnett: I think that's just what the best part about this work is, is the complicated layers of ecosystems and operability necessary. And it just one after another, and you just kind of forget that. Where it's like we kind of take for granted sometimes, and we even from industry to industry, I'm super focused on this, and then take advantage of the fact that it's like, How did this bottle even get into my hand? and and what all the decisions that went into it. And I'm and still being relatively arbitrary on the size of the bottle that Sabira has in New Jersey versus the bottle that you have on the West Coast and all of the maybe historical decisions that went into that, that might be
Jules Bailey: Joe Light.
Garr Punnett: relevant or totally not relevant anymore. probably not relevant. Yeah, I mean it's like and
Jules Bailey: Probably not relevant. Yeah. There was some brewery that had some line in New Jersey somewhere that fit this one bottle and so thus it became the thing, right? But
Garr Punnett: Yeah.
Jules Bailey: to your point, right, like
Sabira: That's a lot.
Jules Bailey: It's i the those
Sabira: Yeah.
Jules Bailey: systems really do define what's in that space of possible. And you
Garr Punnett: Yes.
Jules Bailey: know, I I had a debate at one point with someone in another state that was working on refillable systems and was really excited about refill, which is great. You know, I've obviously have spent a lot of my my life working on that. but they were really focused on Refillable plastic containers, which can be done. And their point was well, Germany has refillable plastic water bottle containers, so we should just mandate that here. Well, but Germany has a crating system for both collection and distribution. When you buy a case, it comes in a rigid plastic case
Garr Punnett: Mm.
Jules Bailey: where you buy 12 of them at the time. You don't always have to do it that way, but that's the that's primarily how the refillable ones are distributed. Distributed, that that kick crating system protects those bottles from being crushed and deformed. And plastic crushes and deforms really easily. So, in a in an American system, it's very hard to return plastic in a way that keeps the integrity of the bottle to the back end. And you either have to wait have a way of restoring that integrity or protecting it in the first place, which is incredibly complicated. And their point was: well, why can't we just distribute the bottle the way that they do it in Germany? It's like because that has a
Garr Punnett: That's not how do it.
Jules Bailey: cascading effect across the entire retail system and distribution chains and like is it in theory possible? Sure, I guess anything's in theory possible.
Garr Punnett: Anything.
Jules Bailey: But I got news for you, the entire beverage distribution system of the United States and practically the world is not going to conform to what you want for your state that doesn't have a huge population. That's just the reality of the situation, right? And so you can you can set those mandates, but it's just not gonna work. And so that's where you have to take into account all of the different things in that hidden ecosystem that could go into being barriers or drivers.
Sabira: Can I just ask, I mean, this is like so Pepsi is here and in Germany, and Coca-Cola is here and in Germany, and they distribute
Jules Bailey: Yeah.
Sabira: the same product in different cultural systems.
Jules Bailey: Yep.
Sabira: How does that company figure out how to adapt to all the local nuances?
Garr Punnett: Or leading.
Sabira: Or leave
Jules Bailey: Yeah, or lead.
Sabira: or or leave. Leave. Yeah, well yeah, yeah,
Garr Punnett: Lead like or be a leader in deciding, but
Jules Bailey: You lead.
Sabira: yeah, yeah.
Jules Bailey: Yeah, I mean the beverage landscape is in I and I let me be clear. Working for beverage distributors, I got to see sort of like one side of the elephant, but it's
Garr Punnett: Yes.
Jules Bailey: an incredibly complicated system. And so, you know, in some sense, and I'm I'm sure the second I say this, somebody from Coke or Pepsi is gonna scream like he doesn't know what he's talking about, you know. So so let me just put that disc
Garr Punnett: Hit the comments, by all means.
Jules Bailey: Claimer on this, but but in general, you can think about they're really more sort of IP producers than they are beverage producers, right? So, like Coke has a special formula for a syrup or for a very a bunch of different syrups. And it it can either make that directly or it can license that syrup out and that formula out. That then that syrup then goes to regional bottlers who add their own local water and their own. It's it is I think sometimes people think of, there is a company called Coca-Cola that manufactures
Garr Punnett: I always forget that.
Jules Bailey: the drink that I have in my hand. And that's just not how it works. they
Sabira: Yeah. It's not I mean which goes to
Garr Punnett: Yeah, I always forget that.
Sabira: I think the reason I was even asking this question was like what is the opportunity like for somebody yeah to like create scale across countries and and be determining of like what is that one way and the reverse system. But I mean like this also speaks to why aren't they just selling the syrup? Like why do we gotta add the water? Like add your own water
Garr Punnett: Well and actually to that end. Yeah. To that end that's what
Jules Bailey: Totally. And that's what happens. Yeah.
Garr Punnett: that that's what they tried to do with what was the the soda stream. Like I mean that's a big push for
Sabira: Yeah, yeah, yeah, yeah, yeah.
Garr Punnett: them as like a direct to consumer effort to sell the the the IP directly and then you add your own water
Sabira: Yeah. Yeah, yeah, yeah.
Garr Punnett: and carbonation. Yeah.
Sabira: Yeah.
Jules Bailey: Yeah, it's like, you know, they selling cake mix, right? Like it's just not, you know, it's selling cakes and it's
Garr Punnett: Yeah, yeah.
Sabira: Yeah, exactly, exactly.
Jules Bailey: There's all sorts of different complexities within it, but but what you but what you by the time you hold a a coke in your hand or a Pepsi in your hand, it is actually an entire layer cake of companies that has been involved at many different steps of that, both product creation and distribution and packaging and all of those things. And that ecosystem is different, not only in different countries, but in different states and different regulations. and and that is very, very changing. challenging to navigate and and very difficult to understand for anybody who's not even in that industry. I mean I've worked adjacent to that industry and I
Sabira: Yeah.
Jules Bailey: only have sort of the barest understanding of the complexity of it.
Garr Punnett: But I kind
Sabira: Yeah.
Garr Punnett: of do forget that y I think in and this will be my opinion that someone else can comment and say how much I'm wrong, but that you were working with potentially the most powerful side of that equation. I kind of forget the power that the distributors, the bottlers that they have in this system, ev and they're still even just one part of all of the other s parts of the system that make this very complex and possible. ending question here. 'Cause I would love to know what are you up to then? you've been through all these systems.
Jules Bailey: What am what am I doing now?
Garr Punnett: Yeah, exactly. Like you've been through these systems, you've learned so much. I think where you are probably focusing your time right now is very important to probably some next solution that's coming coming online.
Jules Bailey: Well, that's very generous of you. I am trying to take the learning that's come from that and apply it. So I mentioned at sort of the the the top of the show that good circular systems are incentive plus convenience. And now I'm working with a great team of folks and we are taking that principle, again, staying at the principles level and what's interoperable across borders and states to say, well, let's go beyond beverage containers and let's look at some of the EPR systems. Let's Look at even non-EPR states and think about what is the value that's in your recycling stream that you're recycling already or that's in your home and you're not recycling, and pay you for the value that's in your recycling stream. And because there is value in it. There's not only value in the material, there's value in avoiding EPR fines and meeting rates and dates. And you've got all of these companies that now have to show either by law or just Because consumers demand it, responsible and use of their packaging types. They've got a great way to invest in improving the efficiency of how that is collected at the material recovery facility with capital investments, but that's like controlling the main stem of the river. They don't have any control over the watershed of how things come into the river in the first place. That's you, that's in your household. And so what we're working on is a system that gives people a reason to actually get their film and flex separated and recycled, to get their their. rigid HTTP containers recycled and to do that in a way that's fun, that's gamified, that works across multiple different systems, and that provides incentives for people to do that so that they tell their neighbor, hey, I just did this thing and it was super cool and it was easy to do and I just put it outside and I got all, you know, I got some really cool rewards for it. And and so that's that's the fun I'm getting to have right now.
Garr Punnett: I I love that concept mostly 'cause it also is tapping into the untapped relationship that that we don't have with consumers. When you can educate and you can communicate and you've got their attention, that in self is then very valuable to other potential downstream opportunities. to use that watershed I guess analogy. but I think that's a really cool element to this of of how do you get in that household and communicate to that consumer.
Jules Bailey: That's right. People want to do the right thing, but they're also busy. So how do you give them a little bit of a nudge to do it, make it fun, and give them a reward for doing the right thing? And if we can do that, there's a lot of water that's going to come in through that watershed and a lot of companies that are going to benefit in the long run from actually being able to meet both their regulatory or their ESG or their marketing goals that they put out there.
Sabira: Thanks for joining us, Jules.
Garr Punnett: Yeah, thank you, Jules.
Jules Bailey: Thanks for the wonderful conversation.
Garr Punnett: What a
Jules Bailey: I appreciate it.
Garr Punnett: So fun. Thank you.
Sabira: It was fun.
