***Special archive -#236 Stacy Flynn, CEO of EVRNU

Speaker A: Nexus PMG welcomes you to the Bigger Than Us podcast, which we as energy geeks lovingly refer to as the btu. Bigger Than Us is a podcast that focuses on ideas that will shape the future of our planet and ultimately our existence. We will occasionally lean into energy topics because, after all, it's the key to our collective survival. But we'll also explore other ideas and topics and that we believe will have an impact that is bigger than us. And now onto today's show. Hello and welcome to the Bigger Than Us podcast. I'm your host, Raj Daniels, and today I'd like to welcome Stacy Flynn to the show. Stacy Flynn is CEO and founding partner of, of Evernu, a, ah, textile innovations company. An accomplished sustainable systems expert, Stacey is committed to developing innovative fiber technologies that reduce textile waste and preserve natural resources. Um, under Stacy's leadership, Evernew is working to solve the most pressing challenges facing the global textile and apparel industry. Stacy, how are you doing today?

Speaker B: I'm doing great, thanks, Raj.

Speaker A: Stacey, I am super excited to dig into this conversation. When we were speaking briefly on Offline, I mentioned that I've been in and around the textiles industry my entire life. My mother is a, uh, master seamstress, so it kind of runs in my DNA. So I'm very excited for what you're doing.

Speaker B: Thank you.

Speaker A: Before we kick into Evernue, I want to go all the way back because I think it kind of is a tell to your current endeavor. Tell me about being nine years old and selling brownies.

Speaker B: Oh my gosh. Wow, you really dug it. You really did your homework, didn't you? So I grew up in a small town. Well, uh, I, I grew up in Rochester, New York and it was a fairly small city, small town. Um, I had 40 family members within about a five mile radius. So big family. And, um, when I was younger, uh, we would go outside and play. It was really before televisions, before anything, uh, like that. So we had quite a few kids in our neighborhood and we were always looking for opportunities to uh, um, essentially put uh, on performances or have different kinds of events. And one of the things that, that uh, that I did when I was a kid was, you know, I would ride my bicycle around our neighborhood and see, you know, who in the area and ask them if they were going to be around in the afternoon and if they wanted brownies delivered. And I would take orders and then we'd go and cook them and drop them off. Um, it was, it was really funny. It was our way of making money to essentially put on Performances for our parents. Um, but my mom wasn't excited about me using the oven when she wasn't around.

Speaker C: And she was like, what is happening here? Why are you guys making all of these brownies?

Speaker B: And then she realized that was essentially extorting cash out of construction workers in our neighborhood.

Speaker C: So she shut us down.

Speaker B: And uh, then I went and talked to my aunt who lived around the corner and she um, she said we could use her kitchen because she didn't use it.

Speaker C: So we moved our operation to my aunt's house. And uh, then my mom found out

Speaker B: and shut us down permanently.

Speaker C: So. But we were always, we were always

Speaker B: looking for ways to uh, to have fun.

Speaker A: Well, having fun is one aspect, but how did it feel? I mean, I'm trying to put you back many years ago in those shoes of a nine year old, but how did it feel to actually make something, sell it and then obviously, you know, deliver value and then get paid for it?

Speaker B: Oh my gosh, I've always enjoyed that process. Uh, you know, I have another story. I used to work at a credit union in Rochester and my mom was head of human resources and they used to have a daffodil sale every year, year where they'd sell daffodils for like a quarter or 50 cents. We ran out of daffodils and my mom and uh, one of her friends ended up going and getting a cup of coffee and they came back and they realized they had more money in the till than they had, than they had inventory. And I said, oh yeah, I sold, I, I pre sold for next year.

Speaker C: And they were like, you sold products that brilliant don't even have. And I was like, yeah, it's, it's

Speaker A: working capital that, that is brilliant. And yeah, I really feel like that aspect of hustling and understanding the value and delivering value and you know, just. So I have three kids, three daughters and I talk about business, uh, incessantly. I mean, they're tired, they're rolling their eyes, we play silly games like, you know, if an item is 10% off, how much profit are you going to make? Et cetera, et cetera. But what I tell them is that look, whether you grow up and work for yourself or you work for somebody else, you're going to be in some aspect of business. And you know, having one in high school and two in middle school, they're not taught this, they're not taught the language of business and they're not taught viscerally how it feels or you know, if you end up in the Finance department. How does your job affect the rest of the company?

Speaker B: Yeah.

Speaker A: And so I'm trying to, you know, give them this language today. And again, a lot of eye rolling. A lot of, do we have to play this game? Do we have to play the supply chain game? I said, yes, we have to play supply chain game.

Speaker C: You know, I'd like to be in the supply chain game. That sounds fun.

Speaker A: So it's something. So my wife and I both have a consulting background, a business background, and when my oldest was three or four years old. It's very simple. You know, whatever you're eating today, let's track it back to the origin. So, you know, if it's a. You know, if you're eating on a plate, let's take it back to the clay in the ground. If you're eating broccoli or meat, let's take it back to the farmer. Let's see everyone that delivered value along the way and ultimately what we paid for it.

Speaker B: Yeah.

Speaker A: Very simple game. But fundamentally, it teaches them that, hey, this doesn't just show up on my plate. There's a lot of people involved in this entire process. So fast forward 20, 20 Covid hits. Supply chains are, you know, destroyed everywhere.

Speaker C: Yeah.

Speaker A: And, um, all three girls are like, they know exactly what's going on and why.

Speaker C: Yeah.

Speaker B: Wow. Incredible. That's incredible. I mean, you. I don't think people really appreciate how much energy, how many people go into, you know, producing the things that we, you know, take for granted. It's. My friend once told me it takes 70 days to grow a tomato and seven seconds to eat it.

Speaker A: It's amazing, right?

Speaker C: Uh. Uh-huh. Huh.

Speaker B: Yeah, it does. It gives you a whole new regard for the tomato.

Speaker A: The tomato and how. And how do you get it fresh and.

Speaker C: Yeah.

Speaker A: So there's a great entrepreneurial book I read. I think it's called the Fish that Swallowed the Whale, and it's all about the banana and fruit industry. How do we get. How do we get bananas that are grown in South America or Mexico to America? Fresh in the grocery store, they're loaded in the boat as what they call greens, and they go through a ripening process on the journey, and they have to hit the shelves perfectly as, you know, bananas go bad very quickly. So what does that timing look like?

Speaker B: Right. It's so interesting. And do you know, when I worked at Target, bananas were their number one, uh, highest volume item.

Speaker A: And you still buy a bunch for like, 60 cents or a dollar.

Speaker B: Yep.

Speaker A: And it comes in a boat from somewhere.

Speaker B: Yeah, exactly. It's unbelievable.

Speaker A: It really is. So I'm going to do a hard right turn because I want to dig into Evernue. Can you tell us your role and give us an overview of the company?

Speaker B: Sure, yeah. I'm CEO and co founder of Evernoo. Um, and I, uh, started the company with my business partner, Christopher Stanov, back in Gosh. We started. I started the research in 2011, and we started the company officially, gosh, in 2014 and got first funding in 2015. Um, but essentially what we. We are professional textile and apparel specialists. We've only done this, uh, our entire careers, uh, you know, making fabrics and garments. Um, and what, uh, we specialize in is essentially taking textile waste, old clothes, and we go through a process of breaking them down. Uh, our first technology breaks down cotton garment waste, and essentially we take it from a solid, we liquefy it, and we turn it back into a solid fiber form, and then we make textiles out of it that are recyclable into the same. Or, or, or into the. Back into the same process. Um, one of the nuances that's really important for us is to make sure we're setting our standards as high as possible based on today's technologies. So when we say that our products are recyclable, we mean that they're recyclable into same or better quality. And I think that's an important, uh, distinguisher, because in the future, what I hope happens is everything that we wear today essentially becomes supply for the future with no loss in value. Um, so that's the vision, that's the dream.

Speaker A: So just so the audience can perhaps wrap their brains around this, can you tell us the magnitude of the problem specifically around clothing and what we're dealing with today?

Speaker B: Yeah, uh, it's a massive global problem because right now the data says that we've got somewhere between 50 and 90 million metric tons of textile waste going into landfills or incineration every year.

Speaker A: Every year. Let me.

Speaker B: Every year, yearly, 90 million.

Speaker A: That's. I mean, I can't imagine. What does the scope of that look like from a, From a physical perspective?

Speaker B: It would be, uh, I did this calculation once just in the United States. It would be 40, uh, foot containers wrapping the earth 10 times.

Speaker A: That's quite a visual.

Speaker B: So, yeah, and it's just getting worse. It's. It's a colossal amount of waste. Eight percent of our U.S. landfills are our clothing at this point. And you can't say it's old clothing because a lot of the brands actually, uh, Intentionally design poor quality clothing so that it falls apart. So you have to dispose of it because that's their business model. Their business model is, I say cheap clothes are the most expensive clothes you can buy because you have to keep buying it over and over and over again because it's not built to last.

Speaker A: Well, I know we used to have this concept of planned obsolescence and electronics. Now it sounds like we have it in clothing.

Speaker B: Oh yeah, we've had this for a long time in clothing. I mean you, we pay uh, we pay less today than we did 20 years ago for our garments. And you know this, it's not like things have gone down in price over time. You know, it's just it, we really have uh, um, we've maximized this, what they call the fast fashion business model to, to the point where it's, it is tr. Truly a race to the bottom. And it is not, it can't sustain us into the future. And I think a lot of, a lot of brands, retailers and supply chain partners realize that we need a new model. The problem is, is we've got a two and a half trillion dollar global, uh, economy attached to it. So when you talk about changing a business, uh, model, you're often faced with a lot of resistance. So you've got to get, you've got to outsmart the model in order to show where the value is so that you can get people to take notice.

Speaker A: Well, it sounds like you have to outsmart the model, but also perhaps outsmart or change the mindset too.

Speaker B: Oh yeah, definitely. I mean people's willingness to buy is the link to earnings margin and cash flow. If people don't buy these technology, the fast, uh, fashion business model cannot stay in place. And I don't think consumers understand that. Their buying power is that link.

Speaker A: And I watched your TED Talk. You had a few interesting statistics in there. But I want to start with this one. Tell the listeners what the majority of fabrics are made out of.

Speaker B: Yeah, the majority of fabrics are made out of polyester and cotton. So polyester comprises about 60% of our global market and cotton comprises of about 30% of our global market. So between cotton and poly, that's about 90%.

Speaker A: And for those that are unaware, what's the feedstock for polyester?

Speaker B: Uh, polyester is a byproduct of crude oil. So it comes from the earth's core. And uh, it's basically it was a waste product from the oil and gas industry. And uh, dupont was commissioned to take that waste and turn it into a uh, Commodity in mid mid 20th century.

Speaker A: And I'm double clicking on that for a moment because, you know, when we hear about oil and gas, most m people's minds or attention goes to vehicles or perhaps, you know, gas burning stoves, etc. Not realizing that so many of the byproducts from oil and gas are in their everyday lives and just some of the changes that might have to be made and some of the prices that might have to be paid if we technically eliminate fossil fuels.

Speaker B: Yeah, I think, you know, the, um, you know, polyester, uh, we also had a situation in 2011 where we had a flood in one part of the world and a drought in another part of the world and the cotton prices went from 85 cents a pound up to $2.40 a pound over pretty much overnight. But what was even more devastating was, uh, India and China both locked their markets, so they were protecting their domestic, uh, production, but they weren't exporting. So it gave us a taste of what that volatility, uh, what climate change can do to the volatility of cotton. And then polyester, because it's a byproduct of crude oil, it's plentiful, uh, polyester gained market share with that event. Um, in my opinion, polyester does not belong in garments that are wash and wear. Because when we wash our clothes, the microscopic lint gets into our waterways and it bioaccumulates in nature. Nature doesn't know how to break down a petroleum based polymer and nature does know how to break down cotton. It's cellulose is the most naturally abundant polymer on Earth. Um, but one of the things we're really looking at is, you know, how do we, how do we, uh, uh, make garments that are benign on the planet, knowing what they go through? And washing our clothing is a big one because you know that, that needs to happen. So that's something that we've taken very seriously in our technology.

Speaker A: So it sounds like washing the polyester garments potentially contributes to the microplastic problem we're experiencing now.

Speaker B: Yeah, it is, it's a huge, huge, uh, contributor because the way the yarns are spun, you know, they're, they create lint and that lint goes somewhere. And just imagine every house has a washer washing machine that it's got to go somewhere. So it usually, it goes into our waterways and it bioaccumulates. Nature doesn't know how to break down polyester. Um, so that, that is the problem. And then the fish eat it, then we eat the fish and then we're now digesting and ingesting the polyester. So, you know, it is, it is a big problem and it's not easy either because, you know, one of the things that, um, you know, the farther you go down and you start, you know, once you start looking at, like, how what is the lowest common denominator here, and you essentially bring it down to the microscopic level in our oceans and see that the plankton are eating it. If you disrupt the plankton now, you've got bigger ecosystem issues. So it's, it is, it is a layered issue. It's very complex. Um, what I always say, what I was taught by, uh, uh, by the founder of my graduate school is he used to always say, there is no away. There's only a changing shape of things. So I latched on to that as if it were gospel. And I was like, okay, I get it. So if we're gonna take. One of the first things we, uh, did was what would it, what would it be like if we took 100% responsibility for everything we put out into the world? And that's a standard that we've actually set years ago. And it's why we're so relentless on quality and performance, because we're taking full responsibility of our impact on our business as well as what happens after that product is sold.

Speaker A: I love that idea of there is no way. And it sounds like if we're not careful, we're going to become 60% polyester.

Speaker B: Yeah. Yeah, true.

Speaker A: Now let's go back again to the aha moment that you had and when you decided to tackle this problem.

Speaker B: Yeah, I had my aha moment in, um, China in 2010. I was, uh, I, I, I should back up and kind of tell you my trajectory here. I, I went to FIT in New York City. When I graduated from fit, I started working at dupont in New York, and I was the fabric sourcing and testing manager at D. Um, from there I moved to Target, and I was the first hire into Target's raw materials division. So really incredible global position. Um, and in 2007, I was actively looking for a job in the Seattle area because my brother and his family were there and they were starting a family and I wanted to get closer to my family, so I decided I wanted to live in Seattle. I ended up finding a job at Eddie Bauer, and I managed their denim development and spent, uh, a few years there. And then in 2010, I began working for a startup in Seattle that was making clothing out of recycled plastic waste pet. And it was just around the time when, you know, uh, recycling. Polyester had been around for a while, but what I was interested in was, you know, we were actually able to take polyester garment waste, break it down, turn it into new fabrics, and people didn't even know that it was made from garment waste. And we were using plastic water bottles as well as garment waste at the time. So I started to get really excited about this concept of shape shifting materials from one form to another and got really excited about that. So I was. The company that I worked for sent me to China to find sources of manufacturing. And I'd been to China many times before 2010, but I went into the subcontracted areas for the first time in my career. And I saw how we get to low price. I saw the corners that were cutting around the environment, particularly in the air quality and the water quality. And it was. I was there for a month. It was heartbreaking to see how my industry treats the environment and how people are living as a result of that treatment. So, uh, here I am in China, and I'm contemplating my career and all of the activities that I had participated in before this time. And all of the pride that I had for my. The scope and scale of the work I had done in the world didn't feel like pride anymore. Standing in that, it felt like I was. I was lying in a bed I made for myself, and I was. It was really, at that moment, that was my moment when I was like, okay, what are your options? And I'll never forget this one night, really late in a hotel room, I was probably burning like a path in their rug because I was pacing, like, what am I going to do? Like, are you going to switch industry? Are you going to move into another industry? Um, you know, are you going to pretend like you add value in other ways and turn a blind eye because the problem's too big and you're just one person. You're. You're one person. Can't alone, can't do anything. And the one. The only thing that I could do, uh, to satisfy myself was commit to taking it on. And I said, all right, I'm going to go back to graduate school. I'm going to study this problem, and I'm going to use the rest of what's left of my career to solve. Help solve this problem. And that's it. I'm not making any more garments that are not in alignment with my values. I choose.

Speaker A: So much to dig into. So much to dig into there.

Speaker C: Yeah.

Speaker A: Start with, um, fit. What is fit and what led you there?

Speaker B: So, uh, FIT is the Fashion Institute of Technology, um, in New York City. And it was the only school that I applied to, the only school that I wanted to go to. Um, and, you know, I was not accepted at, uh, when I applied and, uh, due to academic standing in high school. So I, um. I actually was asked to give the commencement address at FIT a couple of years ago. And I told this story, but was.

Speaker C: I got on a bus.

Speaker B: I cried. So part of my personality. It's a trend. It's like I get upsetting news and I have to cry it out. And then once I'm done crying, I get angry.

Speaker C: So I got on a bus to New York City, and I asked to speak with the man who wrote the letter to me. And I got into his office and

Speaker B: I said, um, Mr. Weingartner, I received this letter from you in the mail, and I just wanted to let you know that I think you've made a mistake. And he looked at me and he said, Ms. Flynn, I've been doing this a long time, and if you have the audacity to come into my office to tell me that I've made a mistake, perhaps you're worth a second look. And I sat down and I told him what was not in my file and what I was going to do if he gave me a shot. And he did. He put me on academic probation. And, um, he said, I'm not your mother. I'm not your father. I don't care about you. If you don't cut it, you're out. And there are plenty of other kids that want this spot. So, you know, take your shot. And. But if you. If you don't make it, you don't make it. So I got into my. Got into class, and I was sitting in my dying and finishing class, and I was taking notes, paying attention. You know, I loved tech. I loved learning about textiles because I had. I had sewn. My stepmother taught me how to sew when I was 12. And the process of making fabric was just so. It satisfied the three parts of my brain. The chemistry, the art, and the business. So I was on fire in these classes. But when it came time to test, I would get like a 35 or 40 out of a hundred. Like, I'd bomb, bomb them. And I remember going up to Professor Barker in tears saying, you know, Weingartner is going to kick me out if my gpa, you know, slips. I. I gotta figure this out.

Speaker C: And he.

Speaker B: Barker was like, it doesn't make any sense. You know, you're paying attention. Come with me. Let me. Let me try something. So we went into the lab, and he gave me an undyed piece of fabric. And he said, I want you to dye this piece of fabric, this color blue. So I measured my color with the spectrophotometer, pulled my dye time, temperature, liquor ratio with my little Bunsen burner, and I got it almost a perfect match on my first shot. So then he tried. Okay. He's like, okay, let's try greens and browns. Those are a little more challenging. I've been within range on all color. He said, you are. You are a kinesthetic learner. I have to bring you into the lab first, show you how to do it, and then I will test you. And then I would get a hundred or one hundred ten, and I would

Speaker C: be like, that's it? That's all you got? Like, come on, test me.

Speaker B: But Barker taught me how I learned, and he worked with the faculty to have the faculty adjust their approach with me as well. So while people were studying or test, getting tested on weaving theory, I was in the basement taking apart the looms, getting them cleaned, and, uh, re. Re. Set up so that I understood how the loom actually operated. So, you know, that really paid off as well once I started working, because, you know, I had the mechanical aspects, uh, in my mind of what might be possible, um, which, you know, gave me a pretty competitive advantage when I started working. So it definitely paid off for me.

Speaker A: So I'm seeing a common thread here, you know, from selling the brownies to the daffodils future inventory to showing up in the professor or the academic, um, I guess acceptance. Professor's office. Is this something innate or do you think can be learned?

Speaker B: Well, you know, I. I think the first time I call it rejecting rejection. The first time I ever rejected rejection was when I went to fit and I stood up for myself. And that was, like, the bravest moment of my life up to that point. Um, it built a really strong muscle. Like, talk about, uh, you know, when she fast forward to today, where, you know, my day job is raising capital, so there's a lot of rejection involved with my day job. Um, you know, some things are worth fighting for. And I think I've adjusted my approach a little bit more around, um, and I've also, you know, gained some credibility as well, so. But the things I'm fighting for today are much bigger than me.

Speaker A: So my girls do taekwondo, and they have this concept. It's similar to this rejecting rejection. And it's the idea of what they call no change. And where that applies is that when they go for testing, if they don't pass the testing, the instructor emphasizes this point of, you didn't fail. You just have a no change scenario. And it sounds very similar to when you went and protested regarding your application that, you know, if he didn't say yes, you would also then have a no change scenario.

Speaker B: Yeah. Yep.

Speaker A: Now, this idea of digging in deep with yarns and fabrics and textiles and being a kinesthetic learner, how have you able to. How. How have you been able to leverage that into ever new.

Speaker B: Yeah, I think, you know, from the very beginning, um, you know, when I was in. I. I went to graduate school after I got home from China, and I started studying the problem. And it was in graduate school that I realized, you know, if 90% of our clothing is made from two fibers, polyester and cotton, both of those fibers require tremendous amounts of natural resources to make a simple cotton T shirt. One T shirt requires around 700 gallons of water. It's a lot. It's a colossal amount of natural resources. And then polyester coming from the earth, earth's core, there's just a tremendous amount of energy required to produce polyester. Both of these fibers right now, we then take them, we spin them into yarns, we knit them, we dye, finish, print, make garments, we send every human on the planet and worldwide we have everything ends up in a landfill or an incinerator. So I was studying this problem, and, and I was like, okay, if there's a way to take this waste, turn it back into fiber, that's the linchpin of impact for the entire system. If we can do that and prevent these garments from going into landfills or incineration, that is a massive amount of impact reduction. So that was originally what we had. Uh, that was our original design challenge. And when I brought the design challenge to other engineers I'd worked with in my career, um, everyone was, I can't. I've gotten laughed out of many universities. I've, you know, been told. I was told initially that if it could have been done, it would have been done. Don't even try. It's a technical impossibility because we would be breaking a cardinal rule. And one of the cardinal rules at the time was, you cannot use contaminated feedstock to create a, um, reliable material. And I kept saying, that rule no longer applies because of the today's invention. Now we can reliably clean waste to turn it into a material so that we can reliably turn it into another product. And that's really where, you know, I, I had to wait for Christo. Christo was working on a, on a big project. He was my mentor at Target. He was, he at the time was uh, working for another company and he was heads down on another project. But once I finally got a hold of Christo, I brought the idea to him and he's like, look, I have no idea whether this could be done or not. You know, we'd have to prototype it. So that's, that's when we, uh, took one of my old T shirts from college from fit. Um, you know those T shirts that you can't get rid of because they have so much embedded value in them

Speaker C: and you know, like, nobody's going to

Speaker B: wear my Strawberry Fields T shirt.

Speaker C: Uh, and nobody cares about it other than me.

Speaker B: That was our first prototype. We took it from a solid, we liquefied it, and then we converted it back into a solid with a syringe. So that was our first, uh, our first prototype. Solid, liquid solid. And I, um, was in graduate school when we did this, and I remember I was studying entrepreneurial ship in graduate school and the instructor for the class asked me, can you make a minimally viable product? And I was like, I don't know. So Christo and I talked and this was what I came up with. And I brought my samples and three beakers. Solid, liquid, solid. This is my idea. This is what I want to do do. And I'll never forget our. He's our first investor too. His face just lit up. He's like, unbelievable. What else can you do? And I was like, I don't know.

Speaker C: You tell me what you want me to do and I'll go do it. I have no idea. You, you tell me, you know, if you can give me like a, like

Speaker B: a range of what you would like

Speaker C: to see, I will work to, I will work to, uh, like really, uh,

Speaker B: bring you something that will, that will outperform. So that's what I did and that's how we got started.

Speaker A: Now let's go back to the topic of cost again. How does the cost of your finished product compare to what's currently available in the market?

Speaker B: Yeah, this is such a good question because we are in a moment, moment where the cost to nature is considered an externality in our, in the products that we purchase. And there's this, uh, um, there, uh, is this concept called tragedy of the commons. I don't know if you know about the tragedy of the very familiar. So, you know, this is really where, you know, where the rubber meets the road. Because society is responsible for paying this cost and the cost to society is getting out of control in the form of air, water, soil, trees and then our human health, our, our health in general can uh, be tracked back to the consumables and not taking full responsibility of the consumables in, in our lives. So you know, because no one company is responsible. No one is responsible. And this is why I feel like if we're going to create the company of the future, we have to take 100% responsibility for what we put out in the world. And then as we bring things into the world and we see the problems that emerge, we've got to be confident enough to hand tackle those head on and figure out ways to address them and uh, uh, solve for them. So when I look at costing of, of my product, I look at the cost of all impact system wide, um, and you know, this is, I also look at the impact after the product is sold, how do I get it back and do it again. So we're looking at a completely different way of thinking about cost. Um, but you know, if we had to uh, if we had to compare our product to what currently exists, uh, we've got what we call a good, better, best strategy where we can take uh, our waste content product and blend it with uh, a virgin material to get the cost down. Um, but the recyclability still must be maintained. Um, the hundred percent recycled content, fully recyclable, that's our most expensive uh, best offering today because it's made from 100% waste and it's recyclable into the same or better quality material in the future. So when it comes to pricing, we're trying to work with people to figure out how do we get into business to get started. Um, and brands and retailers, depending on, you know, who they are and what they really care about, um, we're starting at different points. But you know what I have noticed is some brands and retailers are taking sustainable innovation and inserting it into a flawed model which is kind of like the disposal model where they sell it and then their responsibility ends at point of sale. Um, it doesn't, that doesn't really work in a circular economy because the whole point of a circular economy is that you get the product back and if the product comes back then you've got to have an equitable distribution of value. So every player in that supply chain has to get value for participating. And the way that the model works right now is that just Simply isn't the case. There's very little value for um, the suppliers at the very front end of the supply chain.

Speaker A: Before we continue, can you give an example? Because I love this idea of externalities and tragedy of the commons. Can you give an example of what that is?

Speaker C: Yeah.

Speaker B: So a great example is if, if it requires ah, a tremendous amount of water, um, or it is ah, um, or we've got water contamination in our dyeing and finishing. A really great example is when you see the rivers in China run red with the color of the season. That red dye that goes into the river, um, does contaminate the water. Society now has to pay for that contamination because they can't identify which company dumped it into the river.

Speaker A: And I'm going to add to your example to bring it perhaps even more current for people that are interested in or using any kind of cryptocurrency or artificial intelligence intelligence. The amount of local water resources required to cool the data centers that house the servers that perform the compute tasks are also an example of tragedy of the commons.

Speaker B: Yeah, it's an interesting thing like when you start and when you use system, uh, systems thinking as a, as a tool to evaluate. One of the first things we did when I went to graduate school, I got an MBA in sustainable systems. And we had to select a company that we thought was doing damage, unintentional damage, as a byproduct of their business. So I selected my company, very big company based in the US and we studied their business, analyzed how their business was actually uh, causing damage to the local communities. They would come in local mom and pop shops, go out of business. They pay their people so little, their people qualify for social services, which drains the municipal funds. So it's just, it's just a collateral uh, damage associated with that model. Then the second quarter we uh, designed out all of that collateral damage and in a way where it improved their sales performance, performance, improve their margin. And it was all theoretical, but it was really interesting when you ask the question, when you look at the business really objectively from a systems lens and you say, okay, if this is what's happening today, what are our options to improve this uh, without sacrificing on our sales? And that was a really interesting exercise. And we came up with many different ways in which they could collaborate with the community, um, uh, and design out those flaws in their business model and create a better business as a result. So that's why I've designed Evernu to be the way that it is because net byproduct should be a uh, net positive on natural resources and humanity in the end.

Speaker A: And with systems thinking. I'm familiar with the work of Donella Meadows also.

Speaker B: Yes, definitely.

Speaker A: Um, yeah, as, as you were talking about the clothing and getting it back. Are you familiar with this concept of epr, extended producer responsibility?

Speaker B: I am familiar with EPR legislation and

Speaker A: I know there's a handful of states, I think Oregon is one of the states that are participating or have passed something along the lines of epr. In a nutshell. My understanding of it is that a manufacturer is now responsible in certain areas for end of life of their products. It could be a bottle for example, a plastic bottle where the manufacturer is now responsible of how that bottle is essentially whether it ends up in landfill or recycled. Is that correct?

Speaker B: You know, I am not as familiar with the US EPR because we have not really, we don't have legislation as well fully formed as they do over in Europe.

Speaker A: Mhm.

Speaker B: So uh, the EPR laws have gone into effect in um, Holland is one of the first countries. And, and I, I also, I have a one track mind. I usually only study the textile and apparel industry.

Speaker C: So I just want to caveat that and say I know very little about the rest of the, of the world.

Speaker B: But what they're doing over in Holland is uh, it will be illegal by 2025 to send clothing to landfill or incineration. Um, and any company that's selling into Holland has to have a uh, a plan for how they're going to keep their clothing in circulation. So it's really interesting. And then they're uh, they've got varying uh, degrees of requirements and they said very clearly that they're going to be increasing the uh, requirements over time to essentially uh, incentivize the problem to be resolved. Uh, so it's, it's really interesting what's happening over in Europe. But you know there are laws that are going into effect there and you know, with this global supply chain, if you have to tailor to one country, that's a really, that's inefficient for a uh, garment maker. So garment makers are like okay, well if the Dutch are putting this law into effect, what might it look like for us to retool our operation to handle all of the other countries in Europe? Plus what are the requirements that are emerging in the United States? So it, we are at a really interesting moment, you know, uh, in time. Um, but you know, we'll see. I haven't seen, I've, I've seen you know, over the last 10 years. You know, I think that you know, in general, uh, we're watching, we're watching brands and retailers essentially take sustainable innovation and insert it into the existing model. We have not really seen the circular economy business model in its full force yet. But I do believe that that will be emerging and I do believe it will be an infinitely more powerful model uh, once it, once it is established and tested. So that's the work we're doing in 2024 with a handful of our, our key customers. We're testing, testing those what it would actually, what is actually required to set up a circular economy business model.

Speaker A: So let's dig into that a little bit in my love of supply chains. One of the things I was advising a delivery company about five years ago and one of the suggestions I gave them back then, it was 2017 or 18. I recommended they focus on reverse logistics in tier 2 cities. Essentially people returning goods to Amazon or Walmart that didn't have access to whatever the mailing facilities look like. So let's talk about reverse logistics the other way around, the circular, the other half of the circle if you will. How would you. What's the plan to get the garments back to you or another similar facility.

Speaker B: Great question. We work with uh, um, what are called garment recyclers. These are companies that uh, basically pick up clothing. So when we donate our clothes to Goodwill, Salvation army, they try to sell whatever they can and whatever they can't sell they put bail up and those, those garments get picked up by, by what are called garment recyclers. Garment recyclers open up the bales, they sort separate and grade them by men's, women's and kids, T shirts, jeans, et cetera. And so those are the folks that we with to get our garment um, they work with on the pre consumer side. So they pick up from garment from brands and retailers, distribution centers. If they can't sell product and they need to dispose of it, they uh, will call a garment recycler. And sometimes cut waste is picked up by garment recyclers. And then garment recyclers also pick up the post consumer waste which is the product to the Goodwills and Salvation Armies. Looks like that.

Speaker A: Where do you get your feedstock from?

Speaker B: Yeah, yeah, yeah. The uh, um, the supply chain is incredibly complex in the apparel industry. And you know one of the things that we have been contemplating is you know you can start at any point in the system. Where we've started is we've uh, uh, taken garment waste uh, for Our first technology, we essentially liquefy it and turn it into what looks like a thick paper pulp. And then that pulp gets pressed and dried and sent to fiber producers around to essentially turn it into recycled lyocell for us. And that recycled lyocell is the fiber. Um, and then that fiber is spun into yarn and then knits and woven make fabrics out of it. So we've been working over the last 10 years to perfect that process. And because our team has so much experience in fabric and garment making, we have, uh, uh, done a, a good job of getting the products to be same or quality than conventional materials. So when people feel our fabrics, they are absolutely, by the fact that they were once made, that they're made waste, and that they are recyclable into same or better quality. So that's really, you know, I think in the, in this industry, sustainable materials have often asked designers to give up the way products look, feel, or perform in some way in exchange for that impact reduction. And Christo and I knew really early, um, that that that's not how you, how you getting designers excited. Where you get, when you get designers excited is by giving them something that they've m. They haven't gotten gotten from their channel materials. So that's, uh. Christo has four golden rules. And his golden rules are price has to be same or better. After all externalities are factored in at scale, uh, performance has to be, uh, same or better. Um, at, uh, at the product creation phase, um, everything has to be inserted into the existing capex as much as possible. Slight retrofits might be okay, but pretty much we've got to start with what we've got. And then the fourth rule is everything has to be recycled back in on itself as much as possible to manage our internal waste. So those are the four rules that, uh, we abide by in our, in our, uh, uh, company.

Speaker A: It's interesting because you just gave another insight into what the supply chain looks like. I met a very wealthy gentleman last year who is a garment recycler, and he does this picking and sorting and he sends a lot of bailed garments down to Mexico for resale.

Speaker B: Yes. Yeah. There's, uh, you know, a lot of the resale trade routes. It's interesting when you start following where the garments go around the world. They go to different markets, um, they go to Chile, they go to Africa, um, and those markets, uh, sell whatever they can and then whatever they can't sell. This is where it becomes a real problem because you can see the the garment waste on the beaches, you can see it just in the streets. We don't design garments to burned essentially in like open air burning environment. So if you're going to incinerate clothing it's got to be done way. Um, but in some of these countries the garments are either just getting left there or they get, basically they pour gasoline on and they burn them which just continuate the problem because that atmosphere atmospheric fly contaminates the water in the air. And it's just, it's, it's not good. But you know, how do you it just turning off the trade doesn't solve the problem either because um, people do rely on that trade for work. So it is a layered problem in the future. What would be great is if we had a new cycle or ever new recycling facility over in those countries to contribute to the economic development.

Speaker A: You know, from the garment perspective. I remember it might have changed today, but 20 or 30 years ago I learned that for a large sporting event, call it a Super bowl, they print T shirts and clothing for both teams, assuming who's going to win. And the ones that win obviously get the shirts and the hats and the rest of the gear. And the ones that don't win often end up up overseas. You know, usually people in countries in Africa wearing a T shirt, um, that the super bowl loser assumed, you know, that that team won.

Speaker B: Yes. Yes.

Speaker C: Yep. Yeah.

Speaker B: I mean and even bigger than that, 20 to 30% of garments do not ever sell. Another flaw in the business model. Um, brands and retailers don't know whether they're going to have uh, wild success or an epic failure on lands and they have to buy regardless. So 20 to 30% of that product doesn't sell. And in order for them to write off the cost, they have to show affidavit of destruction for those goods. It's a Gap account. So they basically call a recycler to come pick up the garment waste. They come with a big like cintas or one of those organizations come with a shredder. The garments go into the shredder and then of destruction to off the cost. And the reason that they do that is because they can't sell below cost or they really mess with their for the following year. Another, you know, another flaw. And that's why you know, when you start looking at all of these flaws like I know it sounds simple but you know, we sit down with these brands and we say look, just specify the use of one new thing, keep everything as is and we will show you the Power of the new model.

Speaker A: So where are you on your journey from a facility standpoint?

Speaker B: Oh, uh, such a good question. We are, you know, we're, we're entrepreneurs, we're hustling, uh, in spite of the risk. So uh, you know, we have a facility, we have a lease, uh, in, uh, in South Carolina. Um, we have equipment on premises, engineering is completed, we are ready to start construction and we are stalled, uh, looking for capital. So that's really the reality of, of where we are right now. Uh, the market has changed a lot with the bank failures earlier this year in the U.S. um, and we are confident that we're going to get this done. I think, you know, the one good thing about our company and the team we've got is we hustle and if the bar gets raised, we're like, okay, how high? What do we need to do now? What do we need to do? And just keep pushing. So our current investors have been incredible, um, helping us kind of, uh, you know, keep things moving forward. And we're out there in the field just demonstrating traction, um, as much as we can. But you know, the real challenge that we face right now is we're a pre revenue company. So you know, in, you learn about the Valley of Death when you study entrepreneurial ship, um, and you have to go through the Valley of Death in order to get to the other side. We are in the Valley of Death. We can see revenue. We even have half a billion dollars in commitments at this point because of the quality of our product and the performance of the product. Um, funding is still challenging. So we uh, I really hope to overcome that in the coming weeks. So we're close to building this facility, getting the first garment recycling facility in the US Set up. And this will be the first of many around the world. Um, it's our, the next big hurdle. We've got to get out. It's like, you know, I feel like where we are on that, like we're on, we're climbing the mountain. We're almost at the peak. Um, you know, and you know, it's like the most treacherous part of the journey right now. But that, that's, that's where we are.

Speaker A: Well, I feel like your team should get these T shirts made saying rejecting rejection.

Speaker C: That's right. That's right.

Speaker A: So on your overnight 10 year journey almost, I think, uh, 20, 24 will be a 10 year journey. What, what's the most valuable lesson you've learned about yourself?

Speaker B: Oh my gosh. Uh, you know, I think the most valuable lesson that I have learned about myself is how important it is to hold fast on integrity. And I think there are many times along the journey we could have made different decisions to get to a short sighted but we have really tested ourselves and said, you know, no, this is going to help but it's going to really pay off long run if we stay true to why we're doing this. Um, that resolve and staying true to that level of integrity is, is, has been really an incredible learning experience because it, I mean every day um, you've got ups and downs in a business and keeping things level, um, and getting up or why you're doing this is just, it's, it's been really, really fulfilling. Ring. I'm also really excited, excited to get this company onto solid A uh, solid found, move on to next. But creating things that don't exist in the world is not, it's not easy and it's not for everyone.

Speaker A: Speaking of the integrity piece, I, I've heard it said, easy now, hard later. Hard now, easy later.

Speaker B: Yeah, yeah. And I, I really. Here's what I hope. I hope that when, you know, in a hundred years when people are looking back on 2020-2021-2022-2020, they ask us, what did you. I want to say I fought like hell myself to set you for the best possible future I could.

Speaker A: I love that. And it leads me to my next question. It's 2033. So let's jump ahead 10 years. For now, let's say Fast Company 4, Forbes or the Wall Street Journal were to write a brief headline or paragraph regarding ever new. What would you like it to read?

Speaker B: Uh, it's an epic success that garment recycling is now uh, a worldwide standard. It's the way we do things.

Speaker A: I like that. It's the standard. It's the way we do things. So last question and let's put this specifically. You know, you've been on this long, wide ranging entrepreneurship, entrepreneur, entrepreneurial journey. If you could share some advice, words of wisdom or recommendations specifically for entrepreneurs or perhaps thinking about uh, getting on the journey, participating or on the journey, what would you say to them? Let's go back to the commencement speech perhaps you gave at fit.

Speaker C: Yes. So two things.

Speaker B: The first thing that I always say is, uh, you know, the last chapter in all entrepreneurial books basically say don't do it.

Speaker C: But you get so excited and you like, oh. You're like oh my gosh, this is going to be amazing. And then you get to the last chapter, reality check.

Speaker B: Like, uh, you really do need I would say that entrepreneurial ship is not for everyone and for the. For those who know, it's for them, uh, who are going to do it anyway. I would say do not ever forget that no one can see what you see. And I will tell you, like, if I listen to the people who told me that my. That things were impossible, if I had listened to them, if I had believed them, I wouldn't. We wouldn't be where we are today. They couldn't see what we were doing. They couldn't see why we were. And if people don't know, uh, why you're doing something and they can't see what you see, then you owe it to yourself to explore that and to your satisfaction. The other thing that I would say, too, to an entrepreneur is it's okay if you, uh, if you. If you want to try something else or do something else, there's no shame saying, we tried and we're pivoting, we're going another route. Um, you know, and I think that that's, you know, we. We think that, you know, our. The work we do is so permanent, and it's just we've got to keep making the best choices in the moment that we can and never forget that people can't see.

Speaker A: Hmm. M. It reminds me of that quote. I don't know who said it, but vision is the art of seeing what's invisible to others.

Speaker B: That's right. That's so true. That's so true.

Speaker A: Stacy, I sincerely appreciate your time today. It's been a fantastic conversation. I wish you all the best with evernew and look forward to catching up with you again soon.

Speaker B: Thank you, Raj. I really appreciate it. It was a lot of fun.

Speaker A: Thank you. Thank you for listening. If you like our show, please give us a rating and review on itunes. And you can show your support by sharing our show with a friend. Or reach out to us on social media, where you'll find us under our Nexus PMG handle. If there's a subject or topic you'd like to hear about, send me an email, btuxuspmg.com or contact me via our website, Nexus. And while you're there, you can sign up for our monthly newsletter where we share what we're reading and thinking about in the cleantech green tech sectors. Bigger than us is a Nexus PMG production.