More Related Content
Viewers also liked
Viewers also liked (18)
Similar to Group1 SLE Feasibility - SmartBin
Similar to Group1 SLE Feasibility - SmartBin (20)
Recently uploaded
Recently uploaded (20)
Group1 SLE Feasibility - SmartBin
- 1. SMARTBIN sort & save GROUP 1: JEFF BRANZ, RAVISH MAJITHIA, CARLOS GARCIA CORRAL, JOAO PAULO PAIVA, KRISHNA VANSADIA, ELIZABETH HSU
- 2. WE HAVE A HUGE WASTE PROBLEM IN 2013, AMERICANS GENERATED 254 MILLION TONS OF TRASH WITH ONLY 87 MILLION TONS (34%) BEING RECYCLED – 167 MILLION TONS WASTED!
- 3. AND IT’S NOT DUE TO A LACK OF AWARENESS! PER A 2012 KELTON STUDY, AMERICANS “SAY THEY RECYCLE 75 PERCENT OR MORE OF THEIR RECYCLABLE ITEMS” BUT THE ACTUAL RECYCLING RATE IS MUCH LOWER, ONLY 34%. SO WHY IS THERE A GAP BETWEEN REALITY AND PERCEPTION?
- 4. THIS GAP STEMS FROM ONE MAIN ISSUE 1 HUMANS ARE REALLY BAD AT SORTING RECYCLABLES FROM TRASH!
- 5. JUST HOW BAD ARE WE AT SORTING? THE EPA ESTIMATES THAT 75% OF THE AMERICAN WASTE STREAM IS RECYCLABLE, BUT WE ONLY RECYCLE ABOUT 30% OF IT. 1 2 THE CONTAINER RECYCLING INSTITUTE (CRI) ESTIMATES THAT THE 36 BILLION ALUMINUM CANS LANDFILLED LAST YEAR 3 4 AMERICANS THROW AWAY ABOUT 28 BILLION BOTTLES AND JARS EVERY YEAR. IN 2009, AMERICANS THREW AWAY ALMOST 9 MILLION TONS OF GLASS. Source: U.S. Environmental Protection Agency. "10 FAST FACTS ON RECYCLING." Web Accessed April 25, 2015. Keep America Beautiful. "Recycling Facts & Statistics." Web Accessed April 25, 2015. Indiana University. "Waste & Recycling." Web Accessed April 25, 2015.
- 6. AND THERE’S A CITY THAT PROVED IT! GBB, AN INDEPENDENT CONSULTING FIRM CONDUCTED A STUDY IN THE CITY OF FORT WORTH, TEXAS TO MEASURE THE COMPOSITION OF WASTE BINS VERSUS RECYCLING BINS IN THE CITY. THE RESULTS WERE NOT GOOD: • 72% OF TOTAL MATERIAL WENT TO TRASH WITH ONLY 28% GOING TO RECYCLING • OF THAT 28%, 12% WERE NONRECYCLABLE MATERIALS • THE WASTE BIN CONTAINED A NUMBER OF RECYCLABLES, WITH OVER 50% OF THE TOTAL RECYCLABLES CATALOGED ENDING UP IN THE WASTE BIN. Source: Gershman, Brickner & Bratton, Inc. - Data from Waste Characterization Study. Performed for the City of Fort Worth, TX – April, 2014. Data released with permission from City of Fort Worth, TX
- 7. HOW CAN WE FIND A WAY TO MINIMIZE THE HUMAN INABILITY TO SORT RECYCLABLES?
- 10. WHAT IS SMARTBIN? USES EXISTING TECHNOLOGY TO AUTOMATICALLY SCAN AND IDENTIFY EACH ITEM THAT IS THROWN AWAY1 2 AFTER SCANNING/DETECTION, SMARTBIN AUTOMATICALLY SORTS THE ITEM INTO THE CORRECT BIN 3 USES EXISTING COMPACTING TECHNOLOGY TO COMPACT BOTH TRASH AND RECYCLING SMARTBIN IS A “SMART” TRASH CAN THAT AUTOMATICALLY SORTS TRASH FROM RECYCLABLES.
- 11. SMARTBIN ATTACKS THE PROBLEM AT THE SOURCE REMOVES HUMAN ERROR FROM SORTING BY SHIFTING THE ONUS OF SORTING TO AUTOMATIC TECHNOLOGY RIGHT AT THE SOURCE OF COLLECTION
- 12. AND EARLY FEEDBACK FROM INDUSTRY EXPERTS IS POSITIVE!
- 13. THERE WERE MANY OPTIONS FOR POTENTIAL CUSTOMERS FOR THE SMARTBIN INCLUDING CITIES, RESTAURANTS, RETAIL AND OTHERS, HOWEVER WE’VE DECIDED TO FOCUS ON ONE KEY CUSTOMER SEGMENT...
- 14. DATA* ON 50 SAMPLE UNIVERSITIES IN THE US, LOOKING AT THE FOLLOWING INFORMATION: AMOUNT OF TOTAL WASTE (IN TONS) AMOUNT DIVERTED TO RECYCLING (IN TONS) RECYCLING RATE STUDENT POPULATION UNIVERSITIES: SURPRISINGLY BAD AT RECYCLING 1 1 1 2 1 3 USING STATTOOLS, WE SEE THAT THE MEAN RECYCLING RATE FOR COLLEGE CAMPUSES IS ONLY 26.25%. 1 4 * Data collected from The Sustainability Tracking, Assessment & Rating System™(STARS) a program of AASHE (Association for the Advancement of Sustainability in Higher Education)
- 15. WE INVESTIGATED THESE SAMPLE STATISTICS FURTHER TO CONCLUDE: 95% CONFIDENT THE MEAN RECYCLING RATE OF COLLEGE CAMPUSES IS BETWEEN 22.9% AND 29.6% THE MEAN RECYCLING RATE OF COLLEGE CAMPUSES IS LOWER THAN THE NATIONAL RATE OF 34% UNIVERSITIES RECYCLE LESS THAN THE NATIONAL RATE 1 2 1 1 StatTools Report Analysis: Confidence Interval Performed By: Garcia Corral, Carlos Date: Friday, October 14, 2016 Updating: Live % recycled Conf. Intervals(One-Sample) DataSet #1 Sample Size 50 Sample Mean 0.2625 Sample Std Dev 0.1180 Confidence Level (Mean) 95.0% DegreesofFreedom 49 Lower Limit 0.2290 Upper Limit 0.2960 Confidence Level (Std Dev) 95.0% StatTools Report Analysis: Hypothesis Test Performed By: Garcia Corral, Carlos Date: Friday, October 14, 2016 Updating: Live % recycled HypothesisTest (One-Sample) DataSet #1 Sample Size 50 Sample Mean 0.2625 Sample Std Dev 0.1180 Hypothesized Mean 34 Alternative Hypothesis < 34 Standard Error ofMean 0.0167 DegreesofFreedom 49 t-Test Statistic -2021.8905 p-Value < 0.0001 Null Hypoth. at 10% Significance Reject Null Hypoth. at 5% Significance Reject Null Hypoth. at 1% Significance Reject
- 16. AND THE MARKET SIZE? Total # students in the US 17.47 million Avg Waste generated per student (tons/yr) 0.32 Estimated Total waste on US campuses (tons/yr) 5.5 million Size of Smart Bin (lb.) 830.00 Total smart bin needed ~40,500
- 17. BUT WHY WOULD A UNIVERSITY BUY A SMARTBIN? $ Saved per ton of material diverted 45 Campus Class Small Medium Large Student Population 5,000 10,000 50,000 Total waste generated (tons/yr) 1592 3185 15925 Recyling rate (%) 22 28 35 SB Diversion (tons/yr) 621 1146 5175 Revenue saved $ 27,948 $ 51,597 $ 232,903 # SB needed 12 23 116 Price 4000 4000 4000 Cost $ 48,000 $ 92,000 $ 464,000 Break Even in years 1.72 1.78 1.99
- 18. SO HOW WILL WE DELIVER THIS VALUE TO OUR CUSTOMERS?
- 19. DELIVERING VALUE 1 SmartBin views the sorting and compaction market as being most efficient in high- traffic areas with high volumes of trash. We will start by targeting university campuses, selling/leasing directly to the university. SMART BIN UNIVERSITY CAMPUSES (KEY-CUSTOMERS) STUDENTS (USERS) 2 3 TRASH HAULERS 41 Having SmartBin trash cans around crowded areas on university’s campuses will significantly reduce multi-task staff’s responsibilities, reducing operating costs, save time, fuel and vehicle maintenance, reduce training costs and help on the recycling process 2 3 4 SmartBin will benefit the universities from extra fees/costs, and reduce as much as half of all landfill waste.
- 20. AND WHERE DO WE FIT IN THE RECYCLING INDUSTRY?
- 21. IS THIS AN ATTRACTIVE INDUSTRY? MOD MOD LOW HIGH HIGH
- 22. IS THERE A WHITE SPACE THAT WE CAN PLAY IN? Compaction No compaction SortingNo sorting TOMRA SMART BINBIG BELLY SIMPLE HUMAN Positioning Compaction No Compaction Sorting Smart Bin, TOMRA ENEVO One No Sorting Big Belly Simple Human ENEVO One
- 23. SO HOW WOULD WE GET THIS OFF THE GROUND?
- 24. AND OUR PROJECTED INCOME STATEMENT? 2017 2018 2019 Units 25 400 1,000 Avg. Price 4,000 4,000 4,000 Avg. COGS 2,000 2,000 2,000 Gross Revenue 50,000 800,000 2,000,000 Expenditure R&D Expenditure 50,000 500,000 600,000 Design 15,000 50,000 100,000 Sales & Marketing 10,000 100,000 300,000 General and Administration 120,000 200,000 400,000 Total Operating Expense 195,000 850,000 1,400,000 EBITDA -145,000 -50,000 600,000 Funding Needs (Equity/Debt) 170,000 450,000 500,000
- 25. AND WHAT DOES OUR VALUATION LOOK LIKE AFTER YEAR 3?
- 26. SO HOW WILL WE UTILIZE OUR DIVERSE STRENGTHS? KRISHNA VANSADIA (Strategy Department) Civil Engineering JEFFREY BRANZ (Marketing and Sales) Marketing and International Business CARLOS GARCIA (Logistic & Operations) Civil Engineering RAVISH MAJITHIA (Technology Department) Ph.D Materials Science JOAO PAULO PAIVA (Business Development) Management Marketing ELIZABETH HSU (Finance Department) Management Marketing
- 27. SO WHERE DO WE GO FROM HERE? STRENGTHS WEAKNESSES OPPORTUNITIES THREATS - TEAM CAPABILITIES - STRONG VALUE PROPOSITION - ACCESS TO TECHNOLOGY - INCREASING SUSTAINABILITY AWARENESS - GAP IN THE MARKET - ACCESS TO VCS - ACCESS TO BABSON RESOURCES - BIG BELLY & TOMRA COMPETITION - LONG-TERM THREAT TO RECYCLING INDUSTRY - COST OF TECHNOLOGY - SCALEABILITY
- 28. GO
- 29. APPENDIX
- 30. HOW WOULD WE IMPROVE SMARTBIN IN THE FUTURE? ONCE WE’RE UP AND RUNNING, WE’D BUILD ON THIS IDEA BY: • EXPANDING OUR CUSTOMER BASE OUTSIDE OF UNIVERSITIES AND SELL SMARTBINS TO CITIES, RESTAURANTS, RETAIL, AND OTHERS. • ADDING AN INCENTIVE PROGRAM – A SMARTBIN APP THAT A USER CAN SCAN WHEN THEY RECYCLE USING SMARTBIN AND EARN REWARDS POINTS FROM RETAIL PARTNERS (I.E. AIRLINES, STARBUCKS, ETC.)
- 31. EVEN A SMALL INCENTIVE HAS AN AFFECT ON RECYCLING BEHAVIOR WE SAW THE RECYCLING RATE DOUBLE JUST BY OFFERING THE SMALLEST INCENTIVE (5 CENTS) TO CONSUMERS 50% 25%
- 32. VALUE CHAIN Firm Infrastructure: Organized with strong Technology/IT Department, Strategy, Business Development, Business analytics, Marketing and Operations. SUPPORT ACTIVITIES Inbound Logistics Warehouse imported technology and raw materials to manufacture the final product. Operations Operate in the 50 states in the US mainly in the university’s campuses. There are more than 4,000 universities which include private and public ones. Outbound Logistics Work with direct sales. There’s no intermediaries in product selling. Marketing / Sales Invest more in high- quality products and high level of customer services than aggressive marketing. However, marketing activities are carried by the company. Data Analytics Provide training and post-sales customer service HR Management: Employee incentive/benefits based on sales goals achievements, training programs and work environment to keep low turnover rate of employees. Technology Development: High investment In technology to improve work environment, product features, product cost reduction and product efficiency. Procurement: License external technologies and select the cheapest and best raw materials from manufacturing companies in the US. PRIMARY ACTIVITIES
- 33. SMARTBIN REVENUE MODEL: INPUTS Year 2 Price/bin 4,000 Gross Margin 0.4 Market Growth Rate 1.02 Market Size 41,310 Actual Market Share 2.50 Sales 103,275 Revenue 413,100,000 Profit 247,860,000 Hurdle rate 20 NPV 11,802,857.14 SB Smart Trash Can Objective: Determine the risk and returns of introducing smart trash cans
- 34. COST PROJECTIONS
Editor's Notes
- -The U.S. has a huge waste problem with 167 million tons of trash wasted each year and an EXTREMELY low recycling rate of only 34% -This problem will only get worse with the trend line showing that total MSW generation is continuing to climb YoY -And a huge percentage of the MSW that is generated are inherently recyclable materials – we have to do better!
- Everyone knows that we should be recycling, and surprisingly everyone THINKS that they recycle a lot… so why is the recycling rate still so low (34%)?
- This was our hypothesis based on some observations that we made – observing that people seemed to WANT to recycle, but ended up not knowing where to throw things and/or not having time to stop and think about what they were putting where.
- There are some pretty alarming facts as to how bad Americans are at sorting. #2 – These cans had a scrap value of more than $600 million #4 – That amount of glass could fill enough tractor trailers to stretch from NYC to LA and back!
- - Per an independent study in the city of Fort Worth, of the small percentage of material that gets recycled, 12% weren’t even recyclable materials. And of all the recyclable materials that are thrown away, over half of them get thrown into trash as opposed to recycling. Again, we have to do better!
- So we asked ourselves – how can we find a way to minimize the HUMAN inability to sort recyclables?
- And that’s where SmartBin comes in.
- I am going to show a video of how the Smartbin actually Works. As you can see the problem with trash cans nowadays is that people have to take the time to think and sort the trash in recyclables and non-recyclables Our solution is a Smartbin with only one hole. The Trash is scanned inside the Smart bin and if it's recyclable it will be automatically placed in the recycling bin and if it’s not recyclable it will automatically sort in the other recycling bin. This Smart bin will also have compaction technology to fit more trash.
- As I mentioned you in the video there are 3 takeaways about how the smartbin works The first one is Uses existing qr technology to automatically scan and identify each item that is thrown away The second one is After scanning/detection, smartbin automatically sorts the item into the correct bin The third one Uses existing compacting technology to compact both trash and recycling
- Going back to the problem, smartbin will remove human error from sorting the trash and therefore allow an automatic technology to sort the trash
- We got the chance to speak with several people and got opinions about our concept of Smart bin Dean Becker, Director Stakeholder operation at Preserve which is a recycling company. Told us that “Reducing contamination in recyclables is important so if you can use technology to separate our trash, that could be helpful. We also got the chance to communicate with Brian Goldberg, MIT Office of Sustainability and he said “ I think the concept makes sense. The Smart bin technology might be valuable in the case of determining if a wrapper can be recycled or must be put in trash.
- Linear Regression see for Recycle% Versus student population Data collected from STARS - a program of AASHE
- We assumed our bin is sized similar to Big Belly’s. # bins needed = (Waste generated per day)/Size of smart bin. Estimates for total # students were found from SU Dept of Education webpage. Avg. waste generated is estimated from STARS data shown in slide 14.
- See Appendix (Slide 34) for detailed calculations. Currently, Rates for hauling recyclables are ~45/ton lower than that of trash. This number varies by region and as per market conditions.
- SmartBin works to provide customers cost reduction, technology and high-quality customer service. For that, we consistently Invest in Data Analytics so we can provide on-target values to our customers. That’s how we identified that the best go-to market strategy would be to go after the high traffics areas with high volumes of trash in university campuses. With that in mind, we aim to reduce time and operation costs and help them recycle better. That, as a consequence, will not only benefit the universities but also reduce as much as half of all landfill waste.
- Bargaining Power of Buyers (Moderate) Mainly because commercial and business customers give enough attention into waste management issues, however we still have to persuade them to invest in new and more efficient solutions. Threat of Substitute Products or Services (High) Mainly because there are many existing substitutes and customers have easy access to them. Threat of New Entrants (Mod) Because the market requires capital investment, however the technology already exists. Bargaining Power of Suppliers (High) We have few suppliers of technology and, for that, switching from one to another might have high costs. Rivalry Among Existing Competitors (Low) Because there are few players focused on compaction and practically none focused on sorting trash from recyclables.
- As you can see, we plan to work in a blue ocean where we barely have direct competitors. Big Belly would be the company that gets closer to the value we propose to deliver to our customers, however, they still miss the feature to automatically sort the trash from recyclables.
- And that’s how we pretend to work for the following year to get the project off the ground. Invest 150 days on developing the first prototype, 120 days iterating and testing it with the marketing, and finally 180 days manufacturing and putting into market.
- 1st year : Manufacture only in the 2nd half of the year 1 and so manufacture only 25 units but in 2nd and 3rd year we plan to scale our operations and target more small sized colleges and hence, increased sales and R&D expenditure. We are aiming at 50% gross margin as our closest competitor “Big Belly” has been able to achieve around 35-40% . Finally, we aim at hiring a freelance product designer for year 1 but hire full time in the start of 2nd year.
- finally we aim at being able to capture roughly about 2.5% of the total market and wanted to find our valuation at the end of year 3, hence we ran simulation. In our deterministic table we assumed a beta general right skewed distribution as we think we will be able to achieve 2.5% market share but at the same time conservatively we will remain closer to 2-2.5%. We also assumed a uniform distribution for the gross margin anywhere between 0.4 - 0.6. We assumed a discrete distribution for Market Growth Rate 2% at 50% probability, 4% at 30% probability and 6% at 20% probability.
- We have a highly diverse and experienced team. Other than our MBA experience, each member’s background fits into a functional category key to our business. There are two people in our team that are considering careers in sustainability. One is currently working on a sustainable venture himself. We believe that by utilizing and effectively managing our collective skills, abilities and expertise, we can create a strong synergy to propel this business to success.
- Our team capabilities are definitely a strength for the company. We also have a strong value proposition that focuses on creating value through automatically sorting, but also maintaining the compaction element. Access to technology is also a strength because most of the technology we are using, such as scanning/detection and compaction are not new, so we do not need to expend efforts on additional R&D. We also because that increasing sustainability awareness is a strength as most people are not aware of the complexity in waste management. Our company’s main weakness would be the cost of technology as we are reliant on suppliers to provide the existing technology. Scalability could also be an issue. As a start-up, we have limited resources which makes it hard to compete with current industry players. We have identified a gap in the market and catered our business to delivering value with a specific solution. Being at Babson also grants us access to VCs and resources within the community. Competitors would be a huge threat – particularly Big Belly & TOMRA whose products are very similar to ours. TOMRA has already done sorting and compaction in the past. If they decide to add a sorting feature, it would be easy to squeeze us out of the market. Also, there is a long-term threat to the recycling industry. Although it is increasingly relevant, it could slow down which would cause the whole industry to take a hit.
- We believe we have a strong value proposition that will save our customer’s a significant amount of money in a short amount of time. Based on our data analysis and income statement projections, we will be cash flow positive by Year 3. We truly believe that our SmartBin is capable of bringing significant value to our customers and end-users. We also believe that it will make a difference for the environment.