Episode 8 of the Blu Skye Podcast - Andy Ruben and the future of the sharing economy



(full transcript of Zach's interview with Andy Ruben)


ANDY: I think it is so easy. I live in San Francisco. It is so easy to live in San Francisco and assume that I am right in my views and that half the country is wrong. And I think that that is I think that is an easy way out and ultimately will be ineffective for the progress that we need to make right now.


ZACH: Welcome to the Blu Skye podcast. I'm Zach Winter. This week I spoke with Andy Ruben Andy has been a TED Speaker. He's been featured on NPR's ALL THINGS CONSIDERED. And in the New York Times. He has testified before the U.S. Senate and the House of Representatives as an expert in business and sustainability. So clearly this appearance on Blu Skye’s podcast is huge for him - joking - I was extremely lucky to get this opportunity to speak with him. Andy was the first Chief Sustainability Officer for Wal-Mart and he starts this interview with a story about his experiences there and how that led him to where he is now. He's currently co-founder at Yerdle company's mission it is to fundamentally change our relationship with material things. I hope you enjoy his words.


So I'm so glad to finally be talking to you. I've heard your name thrown around in my circles you know repeatedly ad nausea basically for years and years so I'm really...


ANDY: Likewise I’ve heard great things about you, and it's good to finally be connected.


ZACH: So I have all these questions for you but you know, I’m going to ask you a little bit about Yerdle and what's going on and stuff like that. And then I also want to just talk about what, what's happening (Trump) and what that effect may or may not have on the movement that we are both involved in and what we can do about it. And you know... that stuff.


ANDY: Awesome. I thought maybe you know I thought maybe I could share if it made sense and you'll be able to edit this right?


ZACH: So yeah, of course there's not going to be like just straight up.


ANDY: Good. My partner Adam makes me do everything in one take and it is tough. I love it though.




So I thought maybe I could share a story from an experience I had in Walmart. This is probably, boy, I don't know probably 10 years ago now and experience at Wal-Mart that really stuck with me around consumption and the amount of stuff in the world and where we're heading. So if I could maybe share that story it's actually a story about a store visit in Lamar Missouri and then we can go from there. Kind of leads into everything about Yerdle that leads into what I see as interesting about reuse and what's next. So let me let me share it fully and I will lean on you to edit away of course

ZACH: Yes. Say as many “likes” and “ums” as you want and I will cut em in (out).


ANDY: Awesome. So this was again it was about 10 years ago, it was back to school. I am sitting in the shotgun side of a car with a regional manager and we are we're going to spend a full day seeing stores, which you know is something that executives at Wal-Mart did, I would say, every other week. Spent the day in stores and the first store that we're going to see we're in a car we're driving into Lamar, Missouri. Lamar is a town of a few hundred people. And I'm basically clutching this cup of coffee and a shotgun side because his is ungodly early in the morning. We pull in the parking lot very traditional. We walk into the store and all store tours you end up seeing a dozen stores in a day. The first store is always the best store because nobody knows you're coming. So it's the only store that you really get a sense of what the customer sees. So very typically we walk in the store. They get on the intercom they page the store manager, the team, and we start this store tour around the perimeter of the store which is kind of the it's a daily practice that store managers will do just to to observe is everything well set up for the day. And we start in consumables which is very typical and consumables you look at things like in-stock. Right. It's apparent that over you know since the late 70s Wal-Mart and other retailers like Wal-Mart have gotten so good at replenishment. Right so you buy a thing a band deodorant and there's one right behind it on the shelf to make sure that they're never out of stock because being out of stock really costs sales. And it's one of the things that a lot of Wal-Mart to to be very effective against a competitor like Kmart is we got into the 80s because of the systems that have been built. We walked from there into action alley and we start, you know you look for the pricing in action alley, and what most retailers do is they want to start with a low price point and you slowly move up in price point so that customers don't get, don't get scared by high price points right. Kind of like you walk into the retail environment in a store and Lamar looked awesome right. The pricing was really well done. Skipping a few more stops we end up in the middle of the store which is the photo counter. It's that counter kind of dead center and in this store they've got things like. Now they've got iPhones. At the time, It's back to school and we're looking for graphic calculators and the store manager from, not the store manager the photo center manager is behind the desk and the regional manager I'm with says “how are graphic calculator sales?” And this is the part that I will always remember. Right, so what he was talking about is that every retailer in the world looks at comp sales (comparable sales). So they want to know how are sales this week compared to a year ago. Better this month compared to a year ago and we were asking about graphic operators and we're carrying with us what's called the Morning Report. It's this big thick binder of paper that's got every sales number for every department in the store and we're flipping through together to look for graphic calculators and we finally find graphic calculators and use uses kind of his sheet and he looks over he looks at the comp. And it was flat. In other words, the store in Lamar Missouri had sold no more graphic calculators that year. Then they had the year before. And why I remember it is it was just dead quiet. And I'm thinking to myself being on a store trip you know I'm kind of an I'm an up and comer I want to I want to do well in the company and I always thought about things like this and like what if I was. What if I was that department. You know the photo manager. How many calculators can you sell in Lamar, Missouri. When do you reach the point. Everybody has a graphic calculator and that seniors are just passing them on to juniors right that people are going to college and passing them down. And if I was set up with the challenge of increasing sales by 5 percent year of graphic calculators... How do you keep that going? And I remember, what sticks with me is I'm thinking “I don't know” but there comes a time when I don't know how you sell more of those calculators and then I walk away from that store visit and I thought about it over the course of the next several days and weeks and I kept thinking like it doesn't quite make sense yet this is just the way the world is. It's like one of those things that a lot of us see where when you think you see something really important but you look around and no one else seems to think there's anything there and kind of lull yourself back to “maybe we'll be fine like maybe this is just how it is.” And there are always more calculators to be sold. That's a story that really sticks with me in terms of the world that we've constructed around us has been this way for a relatively short period of time. But we all assume it's been like that forever. And there is a point that those things start to change.


ZACH: It's a very striking story. You know I can see I can now see how that led you to all eventually years later right.


ANDY: Yes absolutely. So it. What I started to see several years later this is about five years ago now so 10 years ago. I had walked the aisles and had that graphic calculator experience. And about five years ago I left to start Yerdle and what I was seeing because Yerdle is a platform. Right? It's the objective the mission that we're on is that one out of four items a quarter of the items that we get. Don't need to come from a new supply chain. They can come from other customers. Right. So they come from people like us who are no longer using those graphic calculators. And what I was seeing at the time is I was seeing the beginning of Relayrides right which is now Turo. My friends you know we're starting AirBnB. You know I was watching Uber being started. And at that time when you talked about you know the biggest competitor to a Hilton hired or Marriott would be someone using your unused room. Five years ago that would have been a joke here and right now it is the single biggest thing going on in in the in lodging right is that basically utilization of these extra rooms that we have. And so it's you know I was seeing the emergence of this thing that's now called the sharing economy which is part of again another term the circular economy. And it struck me that was just like graphic calculators that the same way that we use a car more of its life because of services like Lyft right in Juno and Uber the same way that we use excess rooms more. We will also get more use out at the graphic calculators that today are sitting in drawers, just as our friends are buying new ones.


ZACH: It's kind of brilliant. It seems so simple but it also was not even a thing that anyone was thinking about before I get that time right.


ANDY: And to be honest the five years ago I expected this space of everyday things use this space of women's apparel and kids clothing and graphic calculators. I expected that to have the same trajectory as lodging or travel and ride sharing an Uber and it has not. So lodging and transportation have moved much farther much faster and the world of everyday things, the supply chain to things and are the kind of that billion items in the U.S. alone. That sit idle in our closets in garages. That space is not broken out. In other words, people in the Target boardroom are not talking about this as a major threat in the way that people in the Hilton, Hyatt, and Marriott boardrooms are talking about Airbnb. So I think that there I think that there are some additional elements of this space that make it different than those spaces. But because I know how much that mom in Lamar, how much it matters to her and Lamar Missouri to save a hundred dollars on a graphic calculator or for her son going back to school. I know that it will happen. I've seen it. I mean I've seen that over the last five years in this space. You know it's going to it's going to happen differently then, it's going to require different things to make that happen than the services that exist today. We're not there yet. But it will happen.


ZACH: What about... I think the thing that I think of when I think of the sharing economy is what gets written a lot about is the interplay of regulation and what... How do you see that interplay?


ANDY: I think it's I think regulation has a huge role to play. We're in the timeliness of this right. We're in a, we're in the day after the election. So I think it's I think it's fair to say today that I feel less confident today relying on regulation to solve this than I did yesterday. It is that that I've always been but that might be today compared to yesterday but in the general arc of my short career my last 20 years is that the place that I play in is a pace of kind of corporations and business. And there's a unique role for corporations in business to play. While it doesn't address everything we still need regulation. I've been very focused for my career on it on the part of that kind of ecosystem that corporations can play in why I like about the world that I'm describing about everyday things is that it is a customer for the most part sustainability over the last 10 years. We've been talking about what I will call in an admirable way I will call eco-efficiency. Right. We have found ways behind the curtains of these companies like Marks and Spencer and Wal-Mart and Target and brands that we love. These companies have found ways to remove cost in with more efficient stores with more efficient trucking with better cutting of apparel. But essentially it is removing, It's basically creating efficiency in the production of these items. What is yet to happen and is the big opportunity I see looking forward, is not about how we make these products with less input. It's about how we get more out of the products that we've already made. So imagine two Patagonia jackets, both made as well as you could make a jacket, as fully considered as it could be, one of them gets worn by five people within an inch of its life. And one of them lives its entire life in a closet. Those two items have dramatically different footprints and we are just on the verge of having the technology and the tools to know the use of an item, and even more importantly as a brand to be able to affect that. And a final part of this getting back to the role of corporations when Patagonia is one of the many leaders that I that I expect to see here soon start to want all of their items back and start to make use of those items coming back. I would hate to compete with Patagonia because they're just going to be more competitive. And so, of the past 10 years of sustainability have in many ways been have affected the cost of items and the cost of business. They've been non-customer facing. Whereas when a brand like Patagonia is an example and a brand like Patagonia it can bring in a whole new set of customers because they want their items back because they're well made and they can now sell them for less money a second third and fourth time to a new customer that couldn't have afforded Patagonia before. That is a competitive business model. Now we’re customer facing. And now we're in the competitive dynamics that I've watched, we've all watched, Airbnb compete with an Uber and Lyft. That to me is not one that companies can sit out because they will sit out at their own peril. And I I look forward to that as a father.


ZACH It's a really interesting idea and one of the things that makes me think of is like how right? like what's the what's the actually the chain that gets Patagonia it's jackets back?


ANDY: Yeah. So this is this is where all the fun is. If anyone listening right now remembers e-commerce in the mid-90s right 1994, 1996. My experience in 1995 trying to buy something online is you’d accidentally hit that backspace button and all your information would go away. Right like there was there was so much work that took place in the late 90s in the early 2000s to get to the point that we're at now where a player like Amazon has created so much value in better serving customers that they are really just they are kind of they're working hard for it but they're mopping up the investments they made in the early 2000s. Right they're playing those out. So it's there's a lot of work to be done in that and there are a few players that are already taking big steps. So Green Eileen with Eileen Fischer is a good example where any day of the year you can bring back an Eileen Fisher garment any Eileen Fisher store and they will hand you a five dollar kind of Eileen Fisher gift card for that item. And then they will clean. They will inspect the item and then they will sell it. They will resell it they'll sell it a second or third or fourth time through their stores. Patagonia does the same thing in Portland. Right, so we're just seeing the beginning of brands starting to do this to figure out how to do this. I want to distinguish the two examples I just gave from the box in a store that you just bring back whatever you're done with. Dump it off. These are not brands that are just providing a way to recycle goods. These are brands that are producing items and creating economic models to bring their items back to be resold. It's almost like if you think of an iceberg. It's almost that when you think about the past 40 years, brands and retailers have only been utilizing their items in stores and warehouses. And if you think about after you sell a Patagonia item that item can go through five different - if it's a kid's jacket - there might be five different girls who get to wear that jacket that is everything below the surface of the iceberg. And as brands start to realize that they can they can keep track right of those items forever, right, as they change hands again and again and again as they can bring those items back into their stores by having someone pick them up return shipping whatever it is they bring the items back and sell them a second, third, fourth time that they were be more competitive in keeping track of their customers at finding new customers and understanding the use of their items.


ZACH: It's super interesting. And one of the first things I thought of when I woke up this morning on this November 9th the day after Election Day was the vows that president-elect Trump has made to disband the EPA and basically undo all of regulation. Do you think that in a climate where there's less regulation disincentivizes companies to make the sort of changes that you're talking about.


ANDY: You know the changes that I'm talking about have a market incentive that once one company does it, once one company in your industry does this and starts to make real economic gains for their shareholders by doing this, right by keeping track of all items in perpetuity that you make. You will be less competitive if you don't do it. So regardless of regulation right, regulation would certainly raise the playing field as a playing field. Without regulation. You know I think the choices are basically either A in your industry like apparel or outdoor goods you just hope that no one does it. Option B is that you start exploring this space of re-commerce because odds are someone's going to do it and if you actually believe that's going to happen you want to be exploring the space you want to be understanding if you're happy or not when this future happens. And so, I think that regardless of regulation I'm talking about a competitive dynamic that that doesn't require regulation. That being said there is quite a bit of state regulation regardless of national politics. State regulation, there was and I'm no expert in policy here but there are there is a bill in California about requiring companies to have basically it take ownership of their items. Post-sale. There is some national legislation that doesn't look like it will fare as well in the next four years but looking at the, I believe it's a $3 billion bill that the taxpayers hold for fashion alone for our landfills. Right so we every year as a nation spend three billion dollars of taxpayer money on burying clothes that corporations sell and the customers that we choose not to want. And so there is definitely the likelihood that government regardless of where it is will look at those companies and say companies are making plenty of money. We need money. Let's have the companies pay for things that we have to pay for based on their actions. I would hope that that regulation gets done in a way that drives innovation so that that regulation happens where if you if you're able to take back your items for example like Eileen Fisher that you would not be subjected to that additional tax that would be ideal. I don't think we can rely though on regulation happening nor it being written in a way to really drive innovation. And that's where I come back to markets. Let's go after both.  They're not mutually exclusive.


ZACH: Totally. Do you see it as possible or likely that we'll be able to decouple sustainability and the green economy from politics.


ANDY: No no. By anything that is anything that is big enough to make a difference in this world we will come up against the way we operate as a society. And the existing systems in place and that's where for the early companies that had shared rides and ridesharing and you know I mean initially it... you know insurance became an issue. Now we will deal with the gig economy in what portability of benefits right, in a career track looks like there are a host of regulations based on the, you know, regulations tend to be designed for a system that existed in the past and the systems that we're talking about the changes that we're talking about are big enough that they will challenge the models that we regulated for 10 20 30 sometimes more years ago. And so I don't think that it is possible for any of these shared-economy spaces to smoothly sail through this and be big enough to be interesting without pushing up against regulation designed for an older model.


ZACH: What are you what do you see the sharing-economy. I mean you can speak to this in any way you want but I'm curious about where you see the future as in your world.


ANDY: Yes I'm going to focus on this. I'm going to focus on the everyday things the things around us right recommit us of. Kids Clothing and women's fashion and graphic calculators. How I see that playing out is that, I mean it's it's happening now. Anyone who thinks this is a thing of the future e-commerce selling an item more than once is growing five and a half times faster in the fashion industry than e-commerce and e-commerce in fashion is growing incredibly quickly. Right. So e-commerce of clothing is growing gangbusters and recolors is growing five and a half times faster. So it is happening now and the change that I'm seeing is that there's always been a niche group of us right, in society, be it the U.S. or elsewhere that relies on thrifting, right, in and buying things that are that have been pre-loved to pre-worn. What's happening with technology in mobile is that experience to find that item we are looking for is getting easier and easier and as we keep making it easier we will get to the point that you can find the same graphic calculator. You know that's been used by a student for a year or that is new off a factory line the new off the factory line will look the exact same as the one from last year although it will be $150 and the one that was used for a year would be $50. And the only question is from a retail perspective. Are retailers going to be customer-centric enough to be a player in helping customers get that value. Are brands who make those calculators can be involved in that system, but it's not a question in my mind of if that happens we will do that because it is just it's just better. It's better in every which way. Because it's it's better from, as  as one of my mentors talks about, Paul Hawken. It's better according to physics. From just basic physics. And so in that way we will all find a way to do that. And it's happening now the question what has not happened at this point. Is that the companies that we do business with today the companies that we depend on the Wal-Marts the targets the Amazons the Patagonias just starting. Those companies have yet to truly get into this space and really serve this need in a  serious way. But I know from the from the space that I'm in that they are right now. And if you're in a company that is not I think there's a cautionary tale that can be looked at e-commerce.


ZACH: When I saw that Facebook was announcing their marketplace the first company I thought of was was Yerdle. Can you talk about the effect that Facebook's new marketplace platform has on Yerdle.


ANDY: Yeah I mean first of all let me just mention as someone who's not connected directly to Facebook the fact that they launched this marketplace and it is the center button in the Facebook mobile app. They took they took messenger out of that position and put marketplace in that position. I applaud them and I am so excited by what they just did. They've got a platform with 1.8 billion people and the excitement that I have around that. I mean for Yerdle, we're a million plus members. If I'm making a bet on this space happening I'm going to bet with 1.8 billion over a million. And so I think the excitement that I had around that around that launch was tremendous. There's a lot of work to do. There's a lot of learning for them to get this right. But that's exciting. From a Yerdle perspective, we've recently announced for the last four years we've been focused on a peer to peer platform. Right so making it easy for people to post a graphic calculator and find a graphic calculator. We have recently announced that based on our mission of 1 out of four items coming from someone else we are handing we have already done it now we've handed that platform back to our most active members. And we are now as the year old team focused on working with the brands that are interested the sustainability-minded brands who are interested in re-commerce. So we have now shifted our attention toward focusing on those brands and making them successful in re-commerce based on the belief that to make this thing big it's going to happen from the brands that really get behind it and do this as a business. And so the Facebook move relative to Yerdle is less of a direct issue because of the move we've made to go away from the peer to peer platform over to the B2B space with brands.


ZACH: And what does that look like for you. Like what is what is the platform then look like with the marketplace in the hands of the users and you guys focus on brands how does that mean that we're going to start seen Yerdle coordinated trades on Facebook between brands and people. What does that actually look like?


ANDY: No they're two very two very separate businesses. So the the only connection in there is what we have historically spent time on and where we're heading now. But our members have taken the Yerdle platform and they've actually elected to run that on a Facebook marketplace. So they've taken the platform it is completely a member run. They're doing that on Facebook. They've decided that Yerdle has no role in that. We are focused on working with brands that want to build this under their own brand name.


ZACH: Oh I see, I see. I got it. So for example then it would be you know, it would be Patagonia on the Patagonia Website having a relisted store of the re-commerce items.


ANDY: Yeah that's exactly right. So that is the model that the excitement that I have looking at this world and seeing where things are going is brands themselves building this into their existing business model. And as they do that other brands will either go out of business or figure it out themselves. It's the leverage that I see to drive this and accelerate the progress of it. And we are taking a learnings, Yerdle we are all taking the learnings from our past four years operating a peer to peer platform and bringing those to like-minded companies that want to be doing this.


ZACH: It's nice. I love the vision.




ANDY: It's been a beautiful experience for the last four years and as we have already been for several months now on this path of working directly with brands. What is so exciting about this space is that the role that these brands can play when I say brands I'm talking about people who produce items as well as retailers who sell items. These people have existing relationships with a huge customer base and they have the ability to make this so much easier for customers which is the biggest friction point. When I look at everyday things the biggest thing standing in our way right now. I will get the graphic calculator from someone else used when it's as easy as going to Amazon when it becomes as easy to get the graphic calculator were used. I will get it used. And we are working on making that happen.


ZACH: I operate under the assumption that most the people that listen to this podcast are either passionate about sustainability or working on sustainable issues or you know younger generations that are that are new to the game. What what is your advice to those people as a seasoned expert?


ANDY: You know for a number of years so I was fortunate enough to be at the right point at the right time to be the first leader in kind of initiating with Blu Skye, Wal-Mart's efforts. Alright so I was the inside person at Wal-Mart and in a relatively short period of time I became more enamored with actually being myself and giving advice to people to go directly into the business line as opposed to a standalone sustainability function. So I think what's I think what sustainability provides is it provides a lens in my view to see a much longer time horizon and a much greater system effect. And when you can understand what those dynamics look like for the area that you're work in inside a main line business with the leverage you can end up with much smarter for the world for society as well as economically much smarter plan and smarter opportunities right near-term opportunities can provide very quick wins longer range innovations and ultimately you know a few game changers that just change the way we do things. So my advice for people is to leverage the lens in the learning of sustainability that time horizon the system effects. But I would advise I do advise people to spend their time then in the mainline business because that's where that's where the dollars are. It's where the influence in the scale exists.


ZACH: And my last question for you is something that Blu Skye uses a lot in our work and I'm sure you've heard the question before but what should I have asked you about that I haven't?


ANDY: It's what we haven't talked about that continues to strike me is the need for real leadership. And when I say leadership I'm not talking about the president of the US or a CEO of a company I'm talking about leadership from inside organizations in any role of an organization truly talking about leadership I'm talking about people who are willing to do the really hard work who are willing to, seems relevant to the last 24 hours, who are willing to to miss right to to not succeed in what they were going for. But to really go for something because of their values and because of what they believe. I have more and more admiration for this quote from Theodore Roosevelt's quote about it's a little bit gender biased but man in the arena right his is credit goes no credit doesn't go to the critics who sit on the sidelines. Credit goes to  the man, the person in the arena. And when I look out and I see leaders he them CEOs of companies like you know Rose to CEO of Patagonia, or honestly Eileen Fisher, when I see leaders who are being bold in taking bold direction in terms of the future without that drives me, and I think there's a real vacuum of that type of leadership out there and anybody can exhibit that type of leadership. And part of that leadership is listening, right, as well as having that vision. And bringing people along with you. And the day after the election that we just had I think that is more needed than ever. And I think it fits just not for the societal and political state. I think it fits for in my estimation how much we've worked on these issues from sustainability and how much less progress we've made over the last 10 years compared to what I would have hoped.


ZACH: It's a very thoughtful answer. And I'm also... I'm optimistic. I think that seeing Donald Trump get elected as president is one of the best motivators for liberal thinkers and movers that I could possibly imagine you know just my Facebook feed is full of people committing themselves on the record to becoming activists for the first time in their life and I just think it's really interesting and it's kind of heartwarming.


ANDY: Yeah that the quick comment I would make about that I would offer for anyone for anyone listening is… I think it's really important right now to it so much. I think it is so easy. I lived in San Francisco. It is so easy to live in San Francisco and assume that I am right in my views and in that half the country is wrong. And I think that that is I think that is an easy way out and ultimately will be ineffective for the progress that we need to make right now. And so I would encourage anybody who truly cares about the progress right now to spend more reflective time thinking about how split divided this country is and that says something that we need a lot more time in understanding where people are right now. And that is just it is way too easy and I would not consider leadership to simply sit in San Francisco and say we get it and other people don't. It's just naive.


ZACH: It's super true. I think you're 100 percent right. We should maybe all move for a month...


ANDY: I couldn't I mean I so appreciate the 10 years that I spent in Arkansas. I don't know if everyone should move or not. I just think that listening, listening is really important right now and it's it's so much easier for me to say than it is for me or anyone else to do. I just think it is more important today than it's been it's been in some time anywhere in the world.



ZACH: Yeah. I agree. Well, Andy I can't tell you how fun it's been talking to you. I really appreciated the things you said and that you were willing to take the time to do this. It means a lot to me.


ANDY: Likewise. It's a great conversation. Anyone listening right now makes me hopeful right that people, people care enough to have this conversation they care about what this world is that we will leave for our children and the role that we play to leave this place better than we found it.


ZACH: Perfect. Alright, man. well have a good day. I hope that San Francisco doesn't wrap you in its bubble too much.


ANDY: It's a bubble I really appreciate today. it feels very comfortable, it feels very united. Very good. It's good to talk to you. Yeah thanks. We'll talk soon.

ZACH: All right perfect. OK. You too.

ANDY: Bye bye.

ZACH: So before I go I just wanted to leave a little note for the listeners. I know I've been jumping back and forth to students who are looking for jobs at Blu Skye, and people that I consider to be leaders in sustainability, and I'm going to keep doing that. That is unless you tell me that it gets too confusing. So please send me feedback about how the show is going whether you are enjoying it, what you like the most, or which you don't like. I really want to hear from you. Thanks for listening to the Blu Skye podcast. If you enjoyed this or any episode, please leave a review wherever you are listening. See you next time.


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