Climb By VSC: Episode 16

Vijay Chattha: Alright everybody, welcome to another episode of climb where we interview some of the most important company builders, building companies in Climate Technology and really get into the art and science of scaling companies in the space. So today I'm really excited. I met this company at a near future event put on by San Joaquin in Southern California was blown away with what they're doing so excited to have Areeb Malik, co founder of glacier on and we're going to learn about his mission to use robotics to fight climate change and extract value from the $123 billion dollar recyclable industry that fills our landfills and oceans. Another interesting thing about Areeb is that before founding co founding Glacier, he worked at a software engineer at Facebook, and he's going to talk about the complexities and recycling today, why it's an interesting space in robotics and this massive global waste management market which is valued at $989 billion so basically a trillion and growing 6%. So, welcome to the Climb podcast. How are you doing?

Areeb Malik: Thank you so much for having me. I'm doing pretty well. It's raining like crazy over here, but other than that, it's been a good start to the year and things are looking very promising for our company as we kind of have been in 2023.

VC: Let's start with glacier and what is glacier? How does it work? And then how did you start it?

AM: Yeah so glacier exists to solve the circular economy to solve this problem that we as a society have all of this stuff, and we're really good at consuming and producing stuff, but we don't have a solution for what to do with it when we're done. All these plastic bottles and cans and cardboard boxes. Nobody's really thinking about the end of life. All this adds up, causing really catastrophic effects on our ecosystems or our environments, and Glacier is here to work on that problem. And what we do specifically, I'll dive into the nuances of what recycling is and how it works. We build robots and AI technology that lives inside of the facilities that handle our recyclables. So where your stuff goes after you put it on the curb, that sorts apart and delivers analytics to improve the operations of these facilities and basically improve the economics of recycling so that we can actually have an economically driven solution to all of our stuff? That is what we do. I'll obviously tell you more about all of that. I think recycling is very much a black box to most people out there. But I think, you know, how did it get started? I used to be a software engineer at Facebook. I spent five years working there, and it's a great place, right? It's a great place to hone your skills and develop your engineering abilities. But I think a lot of people out there would resonate with this, there's these really obvious big problems that are facing our planet every day. And I did not feel like I was doing my part. I did not feel like I was using my skills. And what I've been given in terms of the privilege of being at a big tech company with a lot of smart engineers teaching me how to build and create things, I wasn't using that to actually solve the problems that needed solving and within climate change within climate that there are so many fascinating problems that need solving and so so many that are not getting the investments from the minds that can actually solve them that they need. That was my impetus. And so I went looking for the right opportunity within all of climate change and found this really fascinating world of recycling that really could use better technology and better technology solutions to drive it forwards and that was kind of the impetus they got either.

VC: Got it, and we will come back to that. But like, how does the actual technology work? From what I recall? There's also a bit of visual technology as well right to how it works, but if you could just paint a picture for us.

AM: Sure let me paint the picture of what a recycling facility is first. So you put yourself as a consumer out on the curb, a truck or we call on haulers comes and take them over to a place called a materials recovery facility or a Murf the merchant job is to sorts everything you put in your bin, this jumble of cardboard and other paper and plastic and cans and stuff that isn't recyclable, it's all valueless when it's jumbled together. But if you can actually sort of the plastic, paper, etc. You can actually take those commodities and do something with them. And so this job of sorting apart all of this recyclable stuff is really valuable but very difficult to do. If you go inside any of these facilities today, what you're gonna see are a lot of conveyor belts, a lot of chutes and a lot of people whose job it is to stand above conveyor belts and store your trash day in and day out. When I first saw this, it shocked me. I really thought that, you know, we as society had evolved past this and we had, you know, better technology, insights, places and people we're not powering the back end of this. I think of facilities where we produce cars and computers and phones and all these places are fully automated. You don't see a person in there besides technicians managing machines, and then you go into a space like this and you see people and you really just it just shocked me. And so the idea of what we build is basically robots to help that sorting work. That might not surprise you with a job like sorting trash inside a recycling facility. It's really hard to hire. It's really hard for these facilities to find people who actually want to do this job. I mean, it's really expensive. To pay people minimum wage isn't even going to cut it for that. And so what we do is we build the robots, computer vision, right? So they look down at a conveyor belt full of trash and recyclables, take a video stream and pass that video stream through an AI model that can determine Okay, that is an aluminum can that's a spell that's cardboard, that's a steel can whatever. Use that computer vision data, pass it to a robotic system, which can sort apart what needs to be sorted. So you can using a bunch of robots inside the facilities, grades, pure streams, you know plastic bottles, cardboard, steel cans, etc.

VC: Got it, and now let's about this because I mean, I totally agree with you that this is the moment in history when people with advanced technology experience scaling experience from big tech or startups should be jumping right? What else could you see happening around us to not convince you? Right? So, like, what was that leap specifically for you? I mean, I assume you got this feeling in your heart, you're seeing things, like how do you then make the leap? Like especially the waste management's not like that's a jacent to social network business. What was that like step by step? How did you sequence and then what was that timeline between when you knew you wanted to do it and you actually did it?

AM: Yeah so my timeline in like exact details was, I was at my maybe four year mark at Facebook and I knew I kind of always knew that I wanted to get out and go do something climate related. But at the four year mark, I said "I'm going to go and do this." So I had the conviction to make the step. What it was going to be, I had no idea. I spent actually eight months while working at Facebook, using my extra time after hours, finding out what that next step will be. Back in 2018 when I was leaving, I think the world of climate tech companies looked pretty different than it looks today. There were a couple out there, a couple of startups out there doing things but it was very sparse. And if you look into certain problems, right, you go to Project Drawdown which lists out the top ways that we can actually fight climate change, you go through those problems, like a lot of them did not have big names or even small name companies working on them. Versus today. I think if you do that, you'll start to find basically most areas in climate tech there are small companies, even medium sized companies working on those problems. So for me, I was looking around and I couldn't really find too many cool companies to join. And from my perspective, it made a lot more sense from a macro lens to bring impact by creating a company by creating a venture inside a space that was under invested in and pursuing that instead of joining entrepreneurs, the percentage of spaces that had investments was just too low. And so I thought the best way to go forward to this point is to found a company that will bring more people into this space. So knowing that I decided to look at the problems I actually want to solve? And then from here, I kind of have this checklist of three items. Number one was the climate impact. Obviously, I wanted to find a business model that's directly aligned with climate impact. And that's actually not necessarily so straightforward. I think a lot of companies do a lot of good things for their business models. So I think Patagonia is a great example of this. They do awesome things for the climate. But if somebody took over Patagonia and just wanted to make money, it would just turn into gas, right? There's nothing binding the business model for the climate. I want to find something where as the business makes more money, we generate more climate impact. That was number one. Number two is I wanted to find something that was AI based. I kind of view from a technological standpoint, AI is hitting this turning point where it's becoming more accessible to the generalist software engineer. What that meant was you're going to start to see new technologies appearing inside industries that otherwise wouldn't be invested in by companies like Google and Facebook. They're powered by AI. And so I want to be part of that wave. The number three was I wanted to go find a solution that didn't need to be sold. I wanted to go find a group of people who needed a problem solved and the solution just didn't exist yet. And so I used that to look at electrification, grid, electricity delivery, desalinization, all these sorts of all the while finding one or another reason it wasn't the right move for me. I stumbled into recycling, just on a whim as a place to investigate and very quickly found that it was exactly what I was looking for. It had this very obvious climate bind for business model, the better recycling goes, the better our sustainability as society is straightforward. The AI piece was pretty obvious as well, because AI was just getting good enough to have vision to distinguish a can from a bottle in real time at high speed. And then the need was so obvious. You got to talk to any of these facilities. They all desperately want better technology and robotics are exactly what they are looking for. So I found that that was again, you know, six or seven months after starting my quest and talking to you know, various industries, founded, it seemed like the right thing. And then a month later, I quit and started on this.

VC: What was the path on how you wanted to decide who you want to start this with? What was the fundraising path like there?

AM: Yeah great question. So started off just as an idea, right? It was just my idea. I always knew I wanted to co found with somebody just hearing anecdotally. First time founding a company without a co-founder is really difficult, just because it's such an intense journey. And it's really beneficial to just have a partner there along with her. So I always knew I wanted to find a co-founder and I wanted to buy it was kind of complimentary to me on my skill sets. I was kind of a generalist software engineer, but I also have, you know, pretty strong PM type skills. And so I could have gone either way and found, you know, a strong technical co-founder or a strong business co-founder. So spend that time looking. I think my earliest days were to develop a prototype, develop proof that this product would actually solve the problem that gets sold, right? I didn't want to spend two years building a big industrial robot and then find out at the tail end, that nobody wants this thing and so a lot of my earliest days were just going and cold calling and talking to facilities trying to find the person who runs the MERF and have a conversation with them. I was going to facilities and they generally are open to chatting with people because they think it's a good public initiative to educate. So going to those facilities, talking to them, whatever it might have been having those conversations, learning what their pain points were, right? What is it about your sort of process today that is painful? What do you wish for change? Do you see the future as an understanding of what it is that they would pay for, what it is that they would want to see in their kind of facilities? And, you know, pitch them, okay, well, look, look, this is what I'm trying to build. I'm thinking about building a robotic sorter that does X, Y and Z. It would sit here and do this. What do you think? I think like my earliest three months at the company, I kept hearing the same, like really strong validation that if you build this robot you're talking about I would absolutely buy this. I absolutely need somebody like that because I cannot see what I'm doing today as a sustainable future for this industry. I got that feedback over and over and over again. And that was kind of the big start. In terms of how I started the company develops confidence that this was doing it. It was worth investing my time into my co-founder. I stumbled into it as a friend of a friend. She was also looking to get into wastes specifically, and had a very similar story to me except on the business side. She did time at Bain, and some time at Thumbtack, and product lead and was looking to get into climates. Same story I gave but a different angle. And then we stumbled into each other because of a friend of a friend. mutual connection. And I got started there. And it's an awesome thing that complementary skill sets. But mission alignments are very critical, we're both we both have the same kind of decision matrix for how to make hard decisions relative to the mission. That's been great to have and I think you asked about fundraising as well. So the first chunk of time I mean, you start a company you basically just don't pay yourself right you your most of your funding is by your salary is zero so you have almost no burn rate, which is great. And that gets you some way but a certain bit of time, and especially with something like building industrial robots, you need engineers, you need staff to actually make that happen. And that's when you actually need funding. So we started off with a round of friends and family. To get a little bit of gas in the engine. We moved to a pre seed round, pretty shortly thereafter that was pretty easy to get people on board. And because I think our mission really resonates. The opportunity is really obvious. And so it was relatively easy to get people fired up by the idea inspired by what we were intending to work towards and the problem we were working to solve and a lot of angel investors were really eager to help us out with that. And then from there, you know, build more progress in the company. Get the right people to stay as lean as possible. I think as long as you can show progress with a lean budget, I think that's really enticing for future investors as you grow

VC: Got it, and then in that process, how much have you raised so far? How many rounds are you in?

AM: We raised the friends and family of Preseed. The Seed we raised we're going down for our Series A right now. And so in total, we have raised just over 5 million to date. And that's gotten us to be a team of about 50 people. And now we're looking to really extend on that and kind of explode our commercial progress because we have, at this point, demonstrated the technical traction we get to and so now it's really that switching gears from technical development to commercial developments.

VC: Got it? Let's talk about the venture climate right now. So it seems like there's two things happening at once. There's tremendous recalculation of valuations but there's also an influx of venture capital and climate and there's an acceleration of climate issues in the world, right? In awareness and intent and government programs like IRA, so like, where does it Where do you where do you feel that all balancing out for you right now?

AM: You know, it's a good thing and a bad thing, but I think since we started the company, the focus on climate has been growing. And that's been really beneficial to our ability to fundraise, because there's just so much money that wants to get into climate tech startups. So that's been great. And I think it's been very easy like I said, to get people intrigued by the idea. On the flip side, yeah, like the valuations are coming down. And you just need to as a robotics company, specifically you need to do you need to prove out a lot more. With each step you take, and you had to two years ago, right and so, over the last I don't know, year or so, the amount of work required to raise a Series A, the distance you have to make from this foundation has just grown and so it's fine. Like it's just a matter of like when we raise, we raise, but it's definitely been a shift in what we were expecting, right? You're seeing valuations dropping expectations go up, which is expected in the market. And so as a company, right, you just have to make sure that you have the ability to get to that certain, you know, expectation that is being held with you with enough runway and fortunately something that we're very capable of doing. But it definitely just requires you to, you know, be nimble on your toes and be ready to adjust. Because, you know, a year ago we couldn't have seen this company.

VC: Yeah. And then like these MERFs, right? Is this an industry that's recession proof? I'm just saying from the buyer side, like, yeah, we make trash all the time, right? We're making trash in any economy. I know in some ways part of healthcare is recession proof. Could argue some part of gaming has actually sometimes gone up. Where is waste management in terms of recessions?

AM: Yeah, very recession proof, it's pretty much agnostic to recessions, because you as a consumer you consume about as much during a recession either way, right? Consumption is a factor of population. Not so much a factor of economic prosperity. And so you see, just as much waste, if you look at the numbers on the back, and it's, you couldn't even tell there was a recession, because it doesn't really it doesn't really matter, right. And so in terms of volume is handled throughput of facilities. They are recession proof. The one challenge, of course, is the labor because labor is just tough to kind of be a facility that's powered by labor. And so that's where they're kind of feeling they hit the recession, especially because a lot of people are just, you know, not getting into these kinds of jobs anymore. That's becoming a little more stark in the last couple of years. But in terms of the economics of recycling, yeah, it's not it's not going to be missed, because as you mentioned, people are always consuming in the same way health care is recession proof because people are always getting sick and needing help.

VC: So there's really a labor supply issue in this space.

AM: Absolutely. Yeah, that's been the biggest driver of adoption of our technology is the fact that not only is this technology better, but frankly, like you as a facility just don't have the people you need to run your facility because you just can't hire them. One of the big players in the space they report that 40% of their workers quit on day one. Well, yeah, it's just that messy of a job. It is one of the most dangerous jobs in our industry, because you're sticking your limbs into moving streams if you don't know what's on and so the injury rate is really high. It's really hard to hire people for and so yeah, it's really tough to find people who do this job and who stick around. And if you can incentivize them, you have to incentivize them with a hefty cash sum over minimum wage. And so yeah, labor is a very much very much an issue in this space.

VC: Got it. So are there any insights about the recycling industry that would shock non industry participants?

AM: Yeah, I mean, it depends how you look at it, right? I think a lot of people look at recycling and they say, "This thing doesn't work." If you've been following the recycling news, you're seeing stories of your recyclables being dumped into the same bin, the same truck as your trash. They're just being sent to landfills because nobody's buying them. And that is all unfortunately true. But I think the reality is that it's a necessary system we need to fix, right? There is no other solution to what we do with all of our stuff than recycling? Right? You can landfill it. That's good. That's bad. You can burn it. That's terrible. and ship it off to some other country for them to landfill it also bad right? So there's, you're going to have this consumption pattern. The reality is you need recycling to work. So the good news and maybe the other shocking thing is like yes, recycling absolutely can work. It just hasn't been invested. In just the last 30-40 years, it has received the attention it needs. And we're kind of seeing that pain point in these stories. Right. Your recyclables are being sent to the landfill nobody's buying it. It's been under invested and if we can give it the proper attention, we can actually turn it into a space that delivers joy and people feel good about recycling, where they might be today.

VC: Yep, got it. And that is what it is like so this is again, learning for founders. You're selling to MERFs right. Are they the government or the government? Is it funded by the government? Of the customer profiling?

AM: Most of them are actually private companies which is great for our ability to sell. They are oftentimes in contractual obligation with governments in terms of what type of tonnage they process etc. But the people we actually sell to are our private customers which made it somewhat easier for us to work there. There are a couple that are municipal and when you're working with municipal buyers, just be ready to expect time on for good just takes as long as a lot more process you have to push through. And everything just kind of moves more slowly, which is tricky for a startup who wants to develop a swath of early customers really. If you're relying on municipalities to do that, you have to be ready for a very long time for your first customer. And when you get in there, it's great because once you're in a municipality, you're really in it. So it's pros and cons, but I think it's good to be ready for that long lead time.

VC: So what is the time for that? For a lead?

AM: It depends on what we're selling. In this industry, probably six to nine months from first contact purchase.

VC: Okay, got it. I guess another question about this is like in that first process from leaving Facebook to where you are now, looking back, are we telling another founder here's this is one thing I got right about what how I scale this thing, and this is one thing I got wrong and just learn from me don't make my mistake. What would those be?

AM: The one thing I got right was making sure I found the product market fit before I built the product. I did a ton of research, my co founder and I both did a ton of research before we'd ever really built a full scale prototype with all of the people we'd be selling to. It's an industry that is easier for people to come in and disrupt and add new technology and so getting their intent on purchasing was easy enough and super valuable. And so when we actually you know, several years later started being able to produce this thing. We had the demand there for us. People already want our stuff, we have been improving ourselves as a company. What I got wrong was high and I really, really wish we had hired more people sooner. It takes so much especially in hardware, especially in robotics, it takes so much to build this thing. So much more than I'm used to at Facebook for everything software and have, you know, billions of dollars of infrastructure underneath my feet to build on top of. I really wish I had hired more people sooner because the impact is there. And every minute every day we're not actually scaling our company is just a waste of time,m where the environmental impact is getting worse and we're unable to actually change this industry sooner.

VC: Yep, makes sense. And then in terms of how this scales, is this a regional scale that you have approached? Is it a national? Is it international? Like at the seed stage also, right? Like it's, if you have finite resources, what's the best strategy?

AM: Yeah, I mean, when you're dealing with hardware, right, when you need to actually go and install the thing and service the thing, it definitely pays to have that stuff close to home. If you're dealing with a prototype that you are developing, you're dealing with beta machines that you know are going to be breaking and you know, you're gonna need to repair and add updates. So having to fly across the country for each little visit is definitely painful. And so keeping sales close to home in the beginning, was definitely an educational choice in terms of our expansion strategy, as we grow in our machines getting more stable than we have the ability to send these things according to the country, and as our commercial progress is more stable, then we have the ability to start expanding to international deals. So that's kind of the somewhat expected progress chart we're following: start regional, then go domestic, once our domestic is good, we can start talking internationally.

VC: Are you seeing any political differences in states around recycling? Has it become political?

AM: Another one of the great things about it is it's super non political, people who are in the industry, I have met my fair share of liberals and conservatives running these facilities. Because for them, they're just trying to make a buck, right? They have all of this weight and it's just this financial thing. And so the politics are fortunately not imbued in this space. People who we sell to, their political leanings are all over the place. They are mostly interested in the business economics of what we're selling. And so that is, it's kind of nice. It's like one of those few spaces where even if you're a climate denier, you're like, "Yeah, I can see the benefit of, you know, better recycling. It's a good moneymaker. Like it makes sense." So it's fortunately very apolitical, and that's definitely a benefit to us in terms of our selling, as well as getting investments.

VC: Awesome, great. And then just thinking again, back to that kind of going back and forth between the business and entrepreneurial journey, where you are now, what was sort of the best advice given to you in terms of being an entrepreneur?

AM: I think the best advice I received is how important it is to lean on your network and lean on your community. For growing in those early days. I was a web developer, I liked building API's and UIs and I jumped down, I built full scale industrial robots. There's no way I'm doing that without finding the right people and really just humbly getting their advice. I think that the advice I was given is to lean on your community, find the people who know better and just and just go ask them how they would do it and then do it for them. I did that maybe 10 or 20 times in the first year or two of the business solving all sorts of technical challenges that I had no experience with and that got me really far.

VC: Awesome. And as you're as you're growing now, right? What does the evolution of the team look like now? So you know, you've gotten to this point you have 15 people, is it you want people that have more like sort of robotics experience, people that have already done something and waste management like, is it still more of like, like, raw intelligence over domain expertise, like just curious how you think about your needs?

AM: Yeah, I think coming into the waste industry as this Silicon Valley company, we present this lens of being able to innovate in a way that's unencumbered by previous experience, right? So we get to come at this problem from a really innovative and novel lens. I think that that shows in the design, the approach we've taken is something that nobody's really ever seen in space before. And once you get that setup, you have the innovative lens. From there, it kind of switches over to execution. It's important to have that domain expertise, right? It's important to have people who understand how the industry works, how robotics work, to scale it. Some of the questions we haven't solved yet are like how do you have 100 machines out there and maintain all of them at once? Right, that's something we're somebody with that experience is really valuable. Versus at the beginning of the company. It wasn't really necessary, who we really wanted was generalists, critical creative thinkers, and the domain expertise didn't really matter.

VC: Yeah, that makes total sense. And how about the sort of the labor market now that sort of the market shift? Are you finding it easier to attract talent? Is it still hard or just to find?

AM: There are a lot of people who are trying to get into climate tech. There's a lot of cool kinds of channels for helping people find them. Those channels are growing month over month. And so that's awesome. There's a lot of people who are just intrigued by what we're building because it is a climate company. We also do robotics and AI. It's kind of this awesome trifecta for engineers and technicians who want to work on something in space. On the flip side, when you're building what we are building there are a lot of very specific needs people like electrical engineers who have industrial experience, you're already carving very small targets with that need. If I was just looking for, like software engineers who know how to build UIs and databases, I think I would have plenty of options to pick from but when you're building something like this, which in climate, by the way, unfortunately, most things need hardware, right? You need electricity and all this stuff. You tend to need candidate profiles that there are just not many of. But I think that's starting to shift as well because I think people are seeing the need for these expertises as our society focuses more on clients.

VC: Make sense. Well, Areeb this is awesome. Last question here. Sort of what's sort of the one thing that maybe bothers you or you see out there that you know, you want more of the world to be thinking about or shifting their perception.

AM: I mean, look, I left Facebook to work on this and I'm definitely part of the problem because I spent five years working on it at Facebook, but there are just too many people today who are working on these things that just don't matter relative to how much change they think it makes. And I desperately want everybody to quit their jobs and start working on Climate today because we're running out of time and we really could use the help.

VC: That's phenomenal. So much. Really enjoyed having you on today. For everyone listening, go check out Glacier, check out what Areeb is building. It's incredible. And we wish you all the best in the journey moving forward and thank you for your time today.

AM: Absolutely. Thank you for having me. I love what you guys are working on.