Scaling the Circular Economy

[00:00:02] Keith Zakheim:

Welcome to the Age of Adoption podcast. I am your host, Keith Zakheim. Today, as we do with every podcast, we're going to ask our guest one question and one question only. What is your Age of Climate adoption story? A little bit about the Age of Adoption: We live in an era where enterprises of every shape and size, regardless of industry, must rapidly transform to become more sustainable and climate sensitive. My day job is CEO of the marketing public relations firm Antenna Group. Our agency works exclusively with conscious brands. What is a conscious brand? It is a brand that is conscious of its responsibility to be on the right side of history. Like most businesses, our clients are experiencing a transition from an age of innovation, an era in which technologists, entrepreneurs and investors focused on innovating climate and sustainable solutions to this age of adoption which characterizes the world today. So, if you accept the Age of Adoption hypothesis, then there's really only one salient question to be asked: What is your Age of Adoption story?  

Ron Gonen's first lesson in sustainability came from an unexpected source: babysitting and then working odd jobs for a green architect named Paul Macht in 1980s Philadelphia, young Ron absorbed ideas about circular design that hadn't yet entered the mainstream. Then, as student government president in high school, a teacher whispered a challenge in his ear, replace all the single-use plastic in the cafeteria with silverware. That small campaign planted a seed that would grow into a career disrupting how America thinks about waste. The landfill industry, Ron argues, deserves a PR award of the century. They convinced an entire nation that recycling costs money, while garbage simply disappears, never mentioning that landfill disposal costs more per ton than recycling ever did. When Ron co-founded Recycle Bank in 2003 and later served in the Michael Bloomberg administration, he learned the hard truth. We have only 27 years of landfill capacity left in the median US facility, yet we throw away $6.5 billion worth of reusable materials every year. By 2014, when Ron launched Closed Loop Partners with backing from Walmart, Unilever, Coke, and Pepsi, the financial world kind of patted him on the head. Nice that you're so idealistic, they quipped, assuming global supply chains would only grow larger, more complex, and not easily fixed. Then came hurricanes, pandemics, and geopolitical chaos. Suddenly, Ron's vision didn't sound that idealistic after all. Today, on the Age of Adoption podcast, Ron explains why the circular economy has become one of the few bipartisan initiatives in Washington and how the climate movement's obstinance and inability to find common ground with adversaries backfired and why robotics and material science are finally making his vision scalable. Back with Ron. Faster than America unfortunately fills its last landfill.

[00:03:22] Keith Zakheim:

Ron, welcome to the Age of Adoption podcast.

[00:03:26] Ron Gonen:

Thank you. Glad to be here.

[00:03:28] Keith Zakheim:

Ron, it’s been a while that we've had somebody on the podcast where we're talking about the circular economy. We've had it before, but not for a while. And we've definitely never had anyone on the podcast that has a fund that's dedicated to circular economy and that perspective. I think most people who listen to this podcast understand what the circular economy is, of course, and understand why it's so critical to a future where we're more climate sensitive and sustainable. Sustainable probably being one of the keywords there. But again, we've never had the perspective that you can share from your purview. Looking at it from, you know, I guess macroeconomics, microeconomics at the company level. So really excited to get that from you. Before we get there, though, and that typically we cover in the Age of adoption question before we get there. Your, your background is super interesting. Now, the venture capital investor side is interesting, but you've also been kind of, I guess you've done public service serving in the Bloomberg administration. And I know that that particular administration, Michael Bloomberg himself, is incredibly committed to climate and sustainability. And I'm sure that that experience informs much of not just which companies you invest in, but your overall framework for what this all looks like in your worldview. So if you can take our listeners through that career arc through that journey, and if you don't mind kind of double clicking a little bit on the background you have in public service and of course, everything you're doing in the private sector.

[00:05:05] Ron Gonen:

Sure. So I had the good fortune of being exposed to the opportunities in the sustainability space very early, really before the term sustainability was commonplace. I grew up with a single mom in Philadelphia, 1980s, had to get a job for spending money. And as luck would have it, I got a job working for someone named Paul Mock and his family just kind of doing everything around the house that they needed, babysitting their kids, fixing stuff. And as luck would have it, Paul was one of the first green architects in the US and he would talk to me about these concepts that he was working on, and it intuitively made sense to me. And so that was my first exposure to the sustainability space. He actually gave me a book called Cradle to Cradle that had just come out in the late 80s, which was really the first book that talked about the material science behind the commodities and materials that we use and how to make sure that commodities and materials and products are continually recycled and reused. One other experience I had very early on is I had the good fortune of being elected president of student government in my high school. And I had a teacher come up to me and kind of whisper in my ear, you know, the first thing you should do is you see all this single use plastic in the cafeteria. You should replace that with silverware. And something just clicked for me. And I thought to myself, wow, that is an enormous waste. I'll make that my first campaign. And that was my first exposure to doing something in the sustainability space where I actually had to convince people to become more sustainable and conscious of the waste that's out there.

[00:06:50] Keith Zakheim:

It's funny, Ron. My mother is from the uk and when I was, we used to go and visit her family. Her father lived there and her brother lived there. And you talk about kind of using plastic cutlery versus metal cutlery. And I remember, like, probably 12, 13 years old, they came to us and she could not. My aunt could not get her head around how, like, we'd have a meal and throw away this plastic. She literally was like, wanted to take some. She'd go and wash it out of the garbage can. And you just realize at that point, I know Europe is unfortunately caught up to us a lot of this waste. But this is, you know, goes back 25, 30 years. And we were doing things that around the world, they couldn't get their head around.

[00:07:34] Ron Gonen:

Post World War II, going into 1950s. And this is really, if people remember the show Mad Men, the core storyline, the basis of that show is the creation of this consumer culture post World War II. If you look at marketing and advertising, Pre World War II, it was very much focused on recycling and reuse is a patriotic duty because the country actually needed these resources for the development of the economy or when World War II came along for the war effort. And most marketing around products was heavily focused on quality over quantity. This will last you forever. It is so well made. And there is a distinct delineation Pre World War II and post World War II and the growth of Madison Avenue, where messaging shifted from recycling and reuse as a patriotic duty to. Your patriotic duty is to actually consume as much as possible. Your status is going to be derived from how much stuff you have. And it wasn't so much quality over quantity anymore. It was actually quantity was a greater driver of status than quality.

[00:09:00] Keith Zakheim:

You're absolutely right. What's interesting is we may have come full circle a little bit, and I'd love to talk about it later because what you're talking about kind of is a culture of abundance, right? And abundance shows prosperity and strength. And in the Cold War, that's a, that was a big messaging point, right? Like, we have a lot, right? And now. And I love to talk about this later because I'm interrupting you, but there's. I know one of the ways the Democratic Party right now actually is trying to figure out and diagnose why they've been losing is this whole movement around abundance. I know it's a different movement, but like that. There's a book written by Ezra Klein and Derek Thompson about abundance. We talk about that later, but just jog my, my mind in terms of, like, how that is fascinating and maybe we've come a little bit full circle anyway.

[00:09:44] Ron Gonen:

Well, yeah, and let's return to that because I think it's important that we define what we mean by abundance, because abundance can mean different things to different people. Abundance to me means abundance of park space that I can take my family to. Abundance to me means being able to walk the streets and feel safe.

[00:10:06] Keith Zakheim:

Affordable housing. Housing. Abundance.

[00:10:08] Ron Gonen:

Yeah, that's abundance to me. To someone else, abundance may be. Wow, I'd love a boat twice the size of the boat I currently have. So I do think it's important to actually define what abundance means to different people or political organizations or groups. But, but coming out of college in the, in the mid late 90s, I. I went to work in, in management consulting at Accenture. Had a great training ground there in terms of business process management software, but knew that I had this passion for entrepreneurship and actually showing. And this really derives, I think, from my experience of working for, for Paul Macht in high school, this belief that the way you actually maximize returns is by operating in a ethical way with high integrity. And I had this belief while I was at Accenture. I wanted to figure out a way to go explore that and do that. So left Accenture for business school, went to Columbia Business School up here in New York and started my first company. I had a friend from high school who gave me a call and said, hey, I have this idea around a recycling company that could reward people. You know, do you think you could develop the Business model and the software and do you want to partner together on it? And so we co founded a company called Recycle bank and I ran that as the CEO from 2003 to 2010 and learned a tremendous amount about how to build a business, grow a business deal with venture capital and financing. I was in my late 20s and early 30s as a very young CEO and then from there had a modest exit and got the opportunity to join the Bloomberg administration. And that was a incredible opportunity and experience to work with really phenomenal people and a just incredibly managed administration. And then coming out of there started close with partners.

[00:12:09] Keith Zakheim:

Was there anything in that experience, the Bloomberg administration, that things that you learned or maybe a point of emphasis or philosophy of government that you took with you or inspired you more to go and start that venture, start Closed Loop Partners?

[00:12:25] Ron Gonen:

Well, my first company sold to government, so I'd already gotten a good foundation in terms of how government works and government procurement works. But actually going to work within government really gave me a in depth understanding of how government procurement works. And that has been invaluable as an investor because I think a lot of investors and investment firms stumble between what looks really good in a presentation and a pro forma and is clearly a solution that people need and government should deploy. With the reality of the permitting process, the procurement process, the NIMBY process, and working within all of those processes enabled me to build an investment thesis around how to invest in projects and infrastructure and as well as you can forecast how long it's going to actually take to get built and what are all the different steps you need to take in order to make that happen?

[00:13:24] Keith Zakheim:

Yeah, no, it makes sense. And even, I mean, I guess related to that also is how to navigate government bureaucracy, which is totally different. So. All right, Ron, let's, let's proceed a bit. And you know, I want to get, I want to get to the age of adoption question, but before I get there, I want to frame this a little bit. And as you and I were talking about before the recording, your perspective on age of adoption is going to be so instructive and informative because you've been running a fund since 2014 and I'm sure the challenges that you had in 2014 are very, let's call them, you still have challenges, but very, very different to what they are today. Market receptivity, probably very different. Certainly awareness is different. So I just want to talk about both what, you know, the opportunity, but before that, in terms of what's driving maybe some of the need to Accelerate. Right. So there's 500 gigatons of materials was consumed globally in the last five years. And again, these are all research. So if I got it wrong, you can let me know. 70% more resources are used than the Earth can regenerate every year. Let that sink in. 70% more resources are used than the earth can regenerate. 6.5 billion worth of reusable material thrown away every year in the US and then only 27 years of capacity left for the median landfill in the U.S. staten island is getting stressed about that. That was a joke. And the opportunity is monumental. Right? So the circular economy can unlock $4.5 trillion in global economic growth by 2030. Recycled plastic market represents, I don't know, $75 billion economic opportunity. Global demand for high quality recycled content is through the roof. So again, there's this challenge, and that seems like an immediate one that needs to be addressed right away. But real economic opportunity in the short term, which I'm sure is really exciting. So as we get to the question, and again, the question is, what is Ron, your age of adoption story? Look forward to hearing about all of this.

[00:15:42] Ron Gonen:

The landfill industry and the extractive industries should win a priority of the century award. This is, I'm complimenting them now on their PR and marketing skills. Should win a PR of the century award. But for the latter part of the 20th century, going into the 21st century, convincing the populace that recycling costs money, it is the right thing to do, but it costs money and that your garbage just disappears. There's no actual cost to your garbage, it's just disappear. You put it out, the city takes it and it disappears. And they've done an amazing job of convincing the populace of that and convincing the mainstream press. So if you go back and you look at most of the stories written around waste and recycling in the Wall Street Journal, the New York Times, the Washington Post, they'll interview these companies and most of the conversation will be around recycling is the right thing to do, but you know, cost the city $70 a ton. The next question is never asked, which is if we don't recycle that paper, metal, glass and plastic, then how much does it cost us? And that answer is generally, well, it costs over $100 a ton to go to the landfill. And while there are tremendous benefits from an environmental perspective through recycling and reuse, I would want to focus the conversation around the pure economic advantage to taxpayers to recycling and reuse, which is you're avoiding the cost of landfill disposal and landfill space is disappearing. The supply and demand curve is getting completely out of whack. And therein lies the opportunity first and foremost with recycling reuses to avoid the landfill disposal fees. The next opportunity you have is if I asked 10 people to draw what a mine looks like to them. They're probably going to draw something similar which is a hole in the ground in some emerging market economy kind of environmental pollution. But that's where we go and we get the commodities that we need to manufacture. We have a different paradigm here. Close with partners. When we think of a mind, we think of an above ground mine. We think about all of the plastic which is petroleum that needs to be taken out of the ground. Or we think of aluminum which is ore that needs to go get mined. Or we think of glass as sand that needs to be mined and use a lot of energy to refine it. We think of mining as above ground mining where you take all of those products that are loaded with commodities and when someone is done using them, we mine them for domestic manufacturing.

[00:18:48] Keith Zakheim:

It's interesting just real quick, you're hearing a lot about that when it comes to rare earth elements now.That's become huge. You still don't hear it though about. You're right. I mean all the other treasures that are buried there that we need as for inputs and manufacturing or what have you.

[00:19:17] Ron Gonen:

Yeah. Electronics has a huge amount of rare earth metals and minerals in them. And from a policy and a national security standpoint we should be saying all electronics must be traced and be circular and can't go into a landfill. And a lot of states actually have electronic landfill bans mostly because the electronics also have mercury in them. And you don't want mercury in your landfills. But nevertheless it doesn't get enforced. But we think of this as above ground mining that can drive a lot of manufacturing built on top of a huge economic saver which is avoid the cost of landfill disposal.

[00:19:49] Keith Zakheim:

Fantastic. And the other opportunities that you're seeing when. So ultimately when you're looking at portfolio companies. Right. What are, what, what is. What does today look like in the age of adoption in terms of opportunity that maybe you wouldn't have seen, let's say prior to 2020 or thought was of value prior to 2020?

[00:20:11] Ron Gonen:

Well, I would say the three main things that we're seeing is. Let's start with something that you brought up which is when we got started in 2014, what the perception reaction to us was in the financial world regarding the circular economy. So our original group of LPs was the world's largest retailers and consumer goods companies. So we were founded with capital from Walmart, Unilever, Coke, Pepsi, P&G, Colgate, Palmolive, so on and so forth. They had a clear recognition that global supply chains had become way too complex, way too costly and way too risky in that if you pulled the string, that is, there was a hurricane, a tornado, a flood, political unrest, pandemic, they had very little visibility as executives into what happens if that factory goes offline. And nobody was being public about it because they were afraid of, of, of the risk of people realizing. So closed Loop Partners and our focus on investing in circular economy was really founded in partnership with those major retailers and consumer goods companies who I had a previous relationship with from my first company and working in government. And the concept of the fund came together with them. The reaction in 2014 from the Financial community was nice, that you're so idealistic and it seems like you've done well enough in your career that you have lots of options, but you've decided to dedicate yourself to this. It'd be nice if we had more people out there in the world that thought like this. But we don't see global supply chains evolving into anything other than just getting larger and more global. And that was the discussion in 2014. Now fast forward to 2025. If anybody walked into a investor meeting and said, I got an idea for this product that's going to be based on a large global complex supply chain, the response would probably be, have you been asleep for five years? Did you just wake up and where have you been? So that's been one dramatic change. Related to that is the change in the political attitude. Meaning when we got founded, the default was always oh, this is progressive, this is liberal, so on and so forth. What's evolved over the last decade is now you have this group on the more conservative side that views this as local manufacturing, American built. And we now sit at this sweet spot of being right at the center and one of the few bipartisan initiatives that's getting support. So there's a Republican congressman in Pennsylvania, Congressman Fitzpatrick, and a congressman in Long Island, Congressman Suozzi, that have introduced a bipartisan bill that would create a tax credit for circular economy infrastructure. So that's been one big change. It's just the perception of the opportunity regarding the circular economy. And then the two other major opportunities we see today very quickly is robotics and AI in terms of its ability to Help us with sortation and tracking and so on and so forth. And that's been a huge initiative. And the other is around material science. And so when we got started in focusing on the circular economy is really about plastic, you have to extract oil, aluminum, or metals, you have to extract or glass, you need all this sand and then energy to produce glass. There's been this movement in the material science base that's developed over the last decade to say, well, maybe we can create these things in the lab or alternative materials in a lab, and we don't need to worry about, you know, the mining or the circular piece of those types of commodities. And so those are the three things that I think have evolved the most in the last decade.

[00:24:16] Keith Zakheim:

Great, Ron. I'll close with this, and it'll kind of be discussion point or maybe a question, but really more of a discussion point. And that is. So I'm in public relations and marketing and comms. Right. So ultimately, what we do for a living is storytelling and the political headwinds. At the end of the day, it forced everybody that's in climate and sustainability to have to tell a story a little bit differently. And for us, and you mentioned this, but the way I characterize storytelling around climate and sustainability up until five, six years ago was a little bit of fear. So existential crisis scare people into doing things, and then virtue, it's the right thing to do. And in the environment we are today, it's really switched from fear and virtue to economics and strength. I think what the Trump administration talks about is everything that we have to do in the economy has to be making America stronger. And the beauty of climate sustainability, if the story's told right, is we do that, we contribute significantly to energy abundance, we contribute significantly to resilience in recycling, national security, and geopolitics. There's a lot there. But it becomes a storytelling exercise in some ways. And I'm curious from your perspective, because you've been telling the story since 2014. Are you seeing those same things again? Our client portfolio, we see that shift in a lot of our businesses. Love to hear your perspective on that.

[00:25:45] Ron Gonen:

The climate community, which encompasses a lot, should have been doing that a decade ago. I think the climate community needs to be very introspective during this time. And while I think Trump is taking the country down the wrong direction with this focus on drilling and defunding solar and wind, and that's really unfortunate, and we can have 100% of our attention focused on him and the things he's doing, I think That's a mistake. I think this is an opportunity for us to be introspective about how did we get here, that the majority of Americans seem susceptible to a message that climate is costly and it takes jobs and so on and so forth. And part of that introspection is we needed to be better storytellers about the economic opportunity, number one. Number two is the climate community need to become way more inclusive. It had become extremely exclusive. And what I mean by that is if there was a climate conference, it was probably going to be in the Bay Area or in LA or in New York, maybe something in Miami. And they were a lot of fun to go to. I used to walk into these things and look around, be like, that's where there's seem to be any recycling or compost going on here. And this is, you know, a climate event. But more to the point, the introspection should be those events should have been in Louisville, Kentucky. Right. They should have been in Houston, Texas. They should have been in Iowa, so that the people there looked at the burgeoning climate community and said, oh, we love those guys. They got 2,500 people that descend on Louisville every year. Hotel rooms, restaurants. They put on a huge job fair for all of the high school kids and the college kids. We love the climate movement. It's great. And so when that senator from Kentucky or that congressman from Kentucky wants to go down the line of like, like they hear from their constituent go, no, no, no, no, no. Like these, these events keep getting bigger. And I think the climate community really missed the mark on becoming way too exclusive as opposed to being much more inclusive. And that's, I think, a big next step for the climate community is being way more inclusive.

[00:28:39] Keith Zakheim:

Yeah, I love that. And I get to have the last word. That's the nice thing about being the host. I add one more thing. I think a misstep from our, from the climate community was it bec. And this is part of being exclusive versus inclusive. But it was incredibly focused on being pure and purists as opposed to being incrementalists and revolutions. The ones that are successful progressive movements always are incremental. If you become purist and too extreme, you get the reaction which I think we're dealing with right now. But anyway, Ron, thank you so much for spending this time with us. You know, I could go on and on with you, I'm sure for a couple of hours and maybe we'll have a chance to do that over a cup of coffee. But with the attention span most people have nowadays, We've gotten up to 25 minutes, so we're risking if we get any further down the road. Ron, thanks so much for coming on the Age of Adoption Podcast and look forward to being in touch soon.

[00:29:00] Ron Gonen:

Glad to be with you today.

[00:29:02] Keith Zakheim:

The Age of Adoption podcast features CEOs, investors, entrepreneurs and policymakers sharing their climate and sustainability business transformation stories. Episodes can be found on your favorite podcast apps, including iTunes and Spotify. The Age of Adoption Podcast is brought to you by Antenna Group. Antenna is the home of conscious brands. We partner with companies that don't wait for change to happen. These brands shape the future, are awake and already moving, unsure if you are a conscious brand or even if you are one, whether you are positioned as one, Please visit our website at www.antennagroup.com and take the Conscious Compass Assessment, a groundbreaking tool that enables enterprises to assess their brand against the eight traits of brand consciousness. At Antenna, we partner with companies big and small, from growth stage to Fortune 100, to tell their climate and sustainability stories. So once again, if you're interested in joining the conscious brand movement and learning more about Antenna Group, please check out our website at www.antennagroup.com. ping us on LinkedIn and make sure to visit the Conscious Compass.

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