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Rubicon Finds Treasure in Trash, Plans 300-Job Atlanta Expansion

An Atlanta technology firm backed by Hollywood A-lister Leonardo DiCaprio will create up to 300 jobs.

Rubicon Global, billed as the “Uber for recycling,” is also raising additional funding that could value the eight-year-old firm at about $1 billion, a source said. Rubicon confirmed the fundraising plans, but declined to comment on the investment size or rumored valuation.
Rubicon will relocate its headquarters from the central Perimeter to Atlanta Plaza, a 34-story Buckhead office tower.

Rubicon uses the Internet and mobile technology to disrupt and consolidate a fragmented industry that has been relatively untouched by technology. Just as car service Uber Technologies connects independent drivers with riders, Rubicon matches a network of 4,500 independent waste haulers and recyclers with business customers. Like Uber, Rubicon handles the customer acquisition and payment transactions, in return for a cut of revenues. The similarities go further: several former Uber execs are advisors to Rubicon.
For now, Rubicon’s software matches haulers to business customers, based on location and waste-type.

“Once we are able to achieve a higher level of customer density, then we will be able to allow for more…on-demand bidding,” said Brian Simms, Rubicon’s sales chief.
Rubicon claims its technology-centric and network model can deliver a 15 percent to 30 percent cost savings to businesses.

“We are creating a free market around what has historically been a price-controlled space,” Simms said.

The waste and recycling industry in the United States is dominated by Waste Management and Republic Services. The rest of the market is divided among thousands of mom-and-pop providers who own five or 10 trucks and service a 20 mile-to-30 mile radius. Rubicon is targeting that fragmented pool allowing them to more effectively compete for business.

“We use technology to democratize legacy contracts that have been in the hands of (Waste Management and Republic), in some cases for generations,” Rubicon CEO Nate Morris said. “We saw tremendous inefficiency in the current waste and recycling industry.”

Rubicon brings innovative efficiency to an antiquated and unsexy industry, said Jeffrey Leavitt, who leads the tech practice at DLA Piper’s Atlanta office.

“We’ve seen waves like this before, first with information security, then mobile, then location services, then cloud services, and now shared economy services,” Leavitt said. “There’s likely only room for a few names in each vertical, so it’s a major land grab for customers to get to the market-leading position.”

Launched in 2008, Rubicon has raised $96 million so far and may be on the road to an initial public stock offering.

“We’ve been building the business like a public business,” Morris said, declining to offer an IPO timeline. “We’ve attracted people that can be part of a multi-billion enterprise.”

The company has been attracting investors such as Salesforce CEO Marc Benioff, who has experience taking companies public.

“Getting Marc to invest was a game-changer for the company,” Morris said. “That’s when the Valley really began to take notice about what we’re doing.”

Other investors include KKR & Co. co-founder Henry Kravis; Uber co-founder Oscar Salazar; and billionaire Paul Tudor Jones. Institutional investors include Nima Capital and Goldman Sachs.

Morris was introduced to DiCaprio, a climate-change activist and recent Oscar winner, through mutual friends. DiCaprio “got enthusiastic about the environmental mission of the business,” Morris said. “He’s been a very vocal advocate for better environmental policies.”

Rubicon sells sustainability as a service. Rubicon said it is committed to diverting all the material it collects away from landfills by 2022, but declined to disclose what percent of total trash it collects currently winds up in landfills.

“Our incentives are not aligned to putting more trash in the landfill,” Simms said.

About 50 percent of all the garbage in the United State is food waste, which mostly ends up in landfills. Regulations are helping create entrepreneurial opportunities, such as composting and anaerobic digestion, that are alternatives to dumping food waste in landfills.

“We know we can solve for a minimum of 50 percent of the garbage that’s in the market today,” Morris said. “The question is, will it be cost-neutral, or better — and can it be an additional revenue stream? At Rubicon, we believe that’s possible.”

The cost per ton of putting waste into a landfill is higher than sending it to a recycler or a manufacturer who might use the waste as a raw material, said Keith Laabs, Rubicon’s chief of staff.

“Recycling turns into a circular economy, where you continue to use the materials over and over again,” Laabs said. “By not owning those assets, it allows us to promote that circular economy.”

Industry incumbents are taking notice of the economics of recycling. Waste Management has invested more than $1 billion in recycling infrastructure and more than $400 million in startup technologies.

“We continue to invest in new ways to recycle – and ways to recycle new things,” Waste Management spokeswoman Marla Prince said. “We are employing advanced technologies, expanding our single-stream recycling capacity and building our infrastructure to collect and process organic materials.”

Rubicon is targeting the $65 billion U.S. waste and recycling market. Globally, the company’s addressable market is worth about $900 billion.

“It’s a massive market…that has limited technology and misaligned incentives today,” Laabs said.

Scaling to capture more of that market is driving Rubicon’s Atlanta expansion. The majority of the new 300 jobs will be in sales as the company looks to expand beyond the local-and-small business market to the mid-sized business sector.

“Small to medium-sized businesses account for more than $35 billion of the total addressable market,” Laabs said. “We are really going to be focused on penetrating that space.”

Rubicon will also grow its software development unit.

“We’ve found a lot of success with attracting talent from the Valley to come to Atlanta,” Simms said. “We also found a lot of underutilized local talent coming from Georgia Tech and The University of Georgia.”