Entrepreneur attributes success to lean and green model
(Deborah Cohen covers small business for Reuters.com. She can be reached at firstname.lastname@example.org)
CHICAGO (Reuters.com) - Eric Hudson has always loved the outdoors. But the older he got, the more concerned the Massachusetts native became about environmental erosion caused by the careless use of natural resources such as the petroleum-based materials that go into plastic containers, the bulk of which wind up in landfills.
So, after a career as a financial analyst and management consultant, Hudson decided to do something about it. In 1996 he started Recycline, a company with a simple goal: take recycled plastics from used toys, food containers and the like and turn them into artfully designed utilitarian products such as toothbrushes and razors that cost no more than comparable items with less altruistic roots.
"You do not have to pay a premium to get these products - that's been our discipline since day one," says Hudson, 46, during a recent phone interview. "We want to make an exceptionally functional product, a beautiful product and as environmentally friendly as possible."
Today the company's Preserve brand, which also includes colanders, mixing bowls and tableware, is carried in well-known retailers such as Whole Foods Market, Trader Joe's, Target, Kroger and Longs. Recycline has also made headway into Canada and the U.K. and Hudson is talking to European Union retailers about additional distribution overseas.
At a time when many small manufacturers are buckling under the weight of rising costs and slowing consumer demand, Recycline, which also sells its products directly online, is on track to post $4.7 million in 2008 sales, up 25 percent from last year.
In fact, its sales have steadily risen since the company's founding; Recycline turned a profit in 2006 and 2007 but made a decision this year to invest heavily in marketing and new product design. It has some 25 to 30 new items in the works, including entries into categories such as garden and office.
One reason Recycline may be weathering the downturn is because its affordable products allow the growing ranks of environmentally conscious consumers to fulfill their desire to go green without breaking the bank.
"It's not buying a solar panel, it's not buying a Prius," says Hudson. "It's a great gateway product for people to say, ‘I'm making a difference."
He also attributes the company's ongoing success to its lean operating model. A staff of just 16 people - including four executives - run sales, marketing, environmental and strategic development functions in house. Recycline relies on outsourcing for design and manufacturing.
Hudson has largely relied on bootstrapped efforts to build his company, raising just $2 million in angel investor funding over the course its near 13-year history. However, he says Recycline has lately captured the attention of several venture capital funds, despite a fall off in private equity investing.
Among the toughest hurdles was finding the right materials. Hudson enlisted help from the University of Massachusetts-Lowell, known for its plastics engineering department, from the start. Recycline now relies on a steady supply of No. 5 plastic, a material commonly used in disposable food containers such as yogurt cups and margarine tubs, but not widely collected in municipal recycling programs.
"He's a pioneer in the field, no question about it," says Prof. Robert Malloy, chairman of the department and a consultant to the company. "I think you'll see more companies forming that will be doing this. It's very much a change of the culture."
The company's supply chain is built around partnerships with companies such as Stonyfield Farm, the Londonderry, New Hampshire-based organic yogurt maker whose recycled cups are collected after use and sent to Recycline to be slivered into plastic chips, melted down and reformulated into the colorful Preserve products.
It provided a market for our plastics - up until that time, it was not something that was easily found," says Nancy Hirshberg, Stonyfield's vice president of natural resources. "It's really been a win-win."
Retailers, too, benefit from the buzz. Whole Foods, the Austin, Texas-based natural foods grocery chain, now carries the Preserve line in all of its U.S. regions. Next month, the retailer is making it easier for consumers to recycle No. 5 plastics needed by Recycline through the addition of in-store collection bins.
"I think they have a unique offering," says Doug Wallace, a Santa Cruz, California-based buyer for Whole Foods. "You think about plastics - they get a bad wrap a lot of time. Anything you can do to green them up, that's what people are looking for."
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