If you’re a nerd ball like me, you spend way too much time thinking about things like those great big garbage dumpsters at apartment complexes. Maybe soon, geniuses in government will mandate that diesel garbage trucks get 10% cleaner emissions in service to climate change. In the meantime, entrepreneurs are at work.
To understand how entrepreneurs are going to impact the future of garbage, we first must answer an important question: What’s the largest item by volume in those garbage dumpsters? Is it food waste? Disposable diapers? Beer can pull-tabs?
OK, you have to be an old guy like me to even remember beer can pull tabs!
No, the largest item by volume in any of these containers isn’t any of the above. It is air. And therein lies the opportunity.
Merely throwing stuff in the trash is old school. In the future, you will deposit your trash in the solar powered compactor/shredder attached to the dumpster. After the compactor/shredder does its thing, the refuse is distributed evenly throughout the container. As the container gets increasing full, this internet connected smart receptacle will begin communicating with the waste disposal contractor. The contractor will know when the receptacle is nearly full or completely full. This is vital.
Today, with conventional dumb equipment, waste disposal salespeople love to sell their landlord-customers plenty of additional capacity. The revenue stream will be measured by the size of the container and the frequency of pickup, regardless of how full, or how empty, the container may be.
Apartment managers are complicit in this over capacity scheme. Capacity needs can fluctuate with time. Christmas brings greater disposal needs as does the summer when more tenants are moving in and out. Apartment managers don’t like an overflowing dumpster and the resulting mess. So they are inclined to call for a bigger container for use all year when peak capacity occurs only infrequently.
But smart containers only get emptied when they are full. Overflow is avoided. Employing the shredding and monitoring mechanisms above could reduce the frequency of pickups by up to 75%. That means that expensive capital outlays for garbage trucks are reduced by 75%. The number of trips to collect garbage are reduced by 75%. Diesel fuel consumption is cut by 75% and the climate is the better for it.
But what about garbage truck driver employment? Does that go down 75% too? More likely, it goes down 100% when the trucks are autonomously driven.
The waste hauling contractor that is first to adopt these new technologies gains a cost advantage in the marketplace. This contractor will enjoy higher profit margins and increasing market share. But only for a while.
In time, other waste hauling contractors will either adopt this new technology or go out of business. Then a price war will break out. Prices for trash hauling service will fall until profit margins for trash haulers return to about what they were in the days of the old dumb containers.
That’s when landlords like me experience a windfall. Waste hauling costs go down and rents remain the same. I wish you could see me snickering and rubbing my hands together like Charles Montgomery Burns from the Simpsons. Excellent!
But alas, this windfall is also fleeting. Because the rental market is also competitive, over time, rents either decline or increase more slowly. Margins for landlords return to where they were before the smart containers were adopted.
Who then is the final beneficiary? The tenant living in those apartments. Never mind about the waste hauling company that pioneered this new technology at considerable risk. Never mind the landlord that had the vision to be an early adopter of this new technology. The final beneficiary is always the end consumer, who often had nothing to do with any of it.
This is why our standard of living continues to increase almost as if by magic. For the final consumer, it is unseen. It is without risk and without effort.
For the lucky entrepreneur who solves these kinds of problems, an economic windfall awaits, even if it is temporary. This windfall is concentrated in those few lucky creators wise enough to bring exciting new ideas to market. These inventors and their newfound wealth are often quite visible.
Nearly invisible is the increment in wealth gain that happens to every consumer enjoying the new technology. But cumulatively, the wealth gain experienced by all consumers benefiting from the new technology far surpasses the wealth concentrated in the inventors. Never mind that politicians will seek to divide us by insinuating that the concentration of wealth in these creative contributors is somehow unfair. Politicians will want to punish these contributors with high taxes and onerous regulations.
Often, there are unintended additional benefits. A few years ago, cities were concerned about the accumulation of waste. There didn’t seem to be a remedy and the problem was only getting worse.
The waste accumulating? Horse manure. The problem was solved by Henry Ford and the automobile.
The problems that vex us today are unlikely to be solved by politicians or bureaucrats. They are more likely to be solved by tinkerers and dreamers in pursuit of an opportunity. And you and I will be the better for it.
One More Step Toward a Brighter Garbage Future.
One final thought before we leave this illustrious topic. We should never allow the same business that owns the landfills own the garbage trucks. This kind of vertical integration is the current status quo.
If you own the landfill, you can increase the tipping charge to any other garbage collection contractor until that contractor is pushed out of business. Then this contractor is forced to sell out to the vertically integrated waste hauler. As the vertically integrated waste hauler eliminates the competition, prices rise and service quality deteriorates.
This is not theoretical. One of the vertically integrated waste hauling (VIWH) contractors where I live has high prices, ridiculous fines and terrible service. It is so bad that this company has been in the news. Municipalities using this VIWH for single-family waste removal have fined the company or turned to other vendors.
To avoid these bullies, landfills should be regulated like a public utility. Tipping fees should be the same for any garbage hauler seeking to use the landfill. The landfill operator cannot also be in the waste hauling business. The result will be a plethora of small business garbage truck operators seeking to win business from beleaguered landlords like me sick of their treatment at the hands of these VIWH thugs. And happiness shall be known throughout the land.
Before we go too far savaging this VIWH, we should remember the Goodwill Paradox (which I explain more fully in by upcoming book How to go to the Super Bowl for Free and Other Lessons from a Lifetime in Business). The people working in this VIWH are goodwill people. I know some of them. Perhaps leadership at this company is to be commended. They have been able to achieve a monopoly and corresponding monopoly profits. I have seen reports in the financial press holding out this VIWH company as a Wall Street darling.
But whatever success leadership at this company has achieved, it has come at the expense of their employees and customers. Customers are mad and employees are getting an ear full. In the end, monopoly power is not good for anyone.