Episode Transcript
[00:00:06] Speaker A: Welcome to Apkudo's new podcast series about trends in the connected devices industry, where we'll be talking to players up and down the supply chain and feature topics ranging from testing, automation, reverse logistics, and circularity. Basically everything that happens during the lifecycle of a connected device. My name is Alison Mitchell and I'm the VP of Sustainability at Appcudo and the proud host of this new live podcast program covering industry trends, customer journeys, sustainability topics and more. Just wanna remind folks, if you haven't joined us in the past, if you have topics of interest or guests that you would like to hear from, email me at allison dot mitchellapcudo.com dot so just for some logistics, we will start by diving into the discussion with our guest speaker and then we'll answer questions during the Q and A at the end of the session. Today's guest is Tony Altman and he is the leader of circular innovation at Abcudo.
[00:01:01] Speaker B: Hi Allison, great to be with you and appreciate the opportunity to chat as we often do.
[00:01:07] Speaker A: Awesome. Well, for today's discussion we're going to focus on circularity and the critical role it plays in the connected devices industry, the impact that achieving circularity with connected devices has the potential to make, and what Apkudo is doing to advance circularity, both for our customers and for the broader industry. And as you can hear from Tony's title, he is the perfect guest to help us cover this topic. Tony and I have been working together since Apkudo acquired mobile resale earlier this year and it's been quite a pleasure working with him.
[00:01:36] Speaker B: Thanks a lot for having me again, and it's a real pleasure and we talk about these topics quite often and we're both very passionate about it. I appreciate your knowledge and the way you run this podcast. I think it's very exciting to have that as part of Yep, kudo experience. I come from the renewable energy field and cleantech. I've been involved in sustainability and sustainable consulting as well as impact metrics for a number of years and got involved, fortunately, with that Pluto several years ago with one of the investment groups that wanted to do due diligence and with Chad Gottesman, and was floored with how exciting it was to see a platform that is both really good from the bottom line of customers, from its technology and its efficiency, but also really impactful on the environment, a rarity out there in the companies I've seen over the years. So it was very exciting and was very happy to have a chance to continue on and you really hit up circular innovation infuse circularity throughout the company's growth and its efforts to expand, which are really going great.
[00:02:43] Speaker A: Well, that's great, Tony. I'm thrilled that you were a great resource for me coming into Appcodo. So I'm excited to talk about this topic with you, because, as you said, it is what we do every day. So I'm excited to kind of give our listeners a little window into the things that we focus on on a daily basis. And I think the best way to kick off today's topic is by diving into sustainability and circularity. Those are two words that get used quite a bit, sometimes interchangeably, but they don't necessarily mean the same thing. So can you kick this off by just sort of explaining the relationship between sustainability and circularity for folks?
[00:03:20] Speaker B: Sure. As we both know, there's a lot, there are a lot of buzzwords. It is a minefield when it comes to really breaking down things like impact. Sustainability, circularity, the simplest way to think about it is sustainability overall is much broader concept. It is really dealing with the idea that the systems, companies, organizations are building things that today that don't compromise future generations ability to essentially do the same thing. And so that is a very broad concept. Sustainability circularity is far more granular, far more direct. It has to do really with the efficiency with which we use resources and materials, keeping them in circulation, avoiding building new ones, because that requires us to mine resources and bring resources to the four, which, of course, is very often not sustainable by its very nature. To further that, it's worth noting, we come from this world for hundreds of years, probably, but at least 100 very strong ones, where linear economy was pretty much everything we do. Things were built to take from the ground, essentially make things. And then when you're done with them, you waste a. That was the norm, and is very much the norm in most parts of the world. But there is an upheaval going on, which is driven by a number of things we'll talk about, which really is making the economy, which is to say every product service that we have in some way circular, which is to say that by design, through production, through distribution and consumption and collection, our goal is not to send it to the landfill, not to do something with it, is going to require us to build a new one, but in fact, to reuse it, repurpose it, repair and keep it in circulation for a second life, a third life, and then ultimately its parts and pieces become new raw materials that can then build another product again. And that is the sort of the essence of the circular economy model compared to the linear one. So within the circular economy, theres sort of an apex predator. And that apex predator is the reuse. The idea that we can reuse things as long as possible. And that's what Apkudo is all about, getting things refurbished, repaired, reused and avoiding recycling, which is even though people think of recycling historically, certainly 50 years ago, recycling seemed like an environmentally wonderful thing to do. But in fact, it's actually at the bottom of this chart, and it's the bottom of this hierarchy. So it's all about reuse. And that's really a large part of what we are talking about when we say the circular economy.
[00:06:00] Speaker A: Yeah, I think that that's kind of what makes me most excited about working at Apkudo is that we're focused on that highest order of sustainability, and particularly in circularity at reuse. So getting from the bottom to the top of this hierarchy sounds like some work. So why should our listeners or why should the broader industry be pursuing circularity specifically for connected devices?
[00:06:27] Speaker B: Well, that's a great question. And it really is driven by a number of push and pull factors. I call them one of the biggest overhanging factors, which is probably pushing us, which is the fact that there are 50 million tons a year right now of, we call it e waste, electronic waste, which is, say, connected devices for the most part today, that are filling up our landfills. And only relatively small percentage, maybe 17%, are getting recycled or landfilled in a proper way. The rest are essentially filling up our landfills with toxins. And that's a real problem. And that is only expected to double to as much as 100 million tons a year. So this is a big problem. So from the negative side, we're being pushed. But the good news is there is an entire ethos coming into play, which is people want refurbished devices. They want to have recycled content from an OEM's perspective, to secure their supply chain, to secure their rare earth minerals and other minerals that go into the complex building of the phones and tablets and laptops and all the electronics we have in our house today. So refurbishment is growing rapidly. It was refurbished phones, for example. It was almost 25% of sales in the prior year. People don't realize they're in the supply demand imbalance. The fact that there is a much higher demand for refurbished devices than new ones these days, and that is a big sea change. There's always going to be people who are looking for that brand new, shiny device, but there's an entire universe of folks who are in both developed world and in North America who are interested in a refurbished device. And so there's a huge push coming there. And the other push and pull parts of this are regulators, of course, are seeing this from an environmental perspective, saying, we're going to mandate, for example, in France, 20% recycled content in electronics. French government buys, a third of their devices are refurbished electronics. There are things like that happening all around the globe. And it's not just the recovery of the raw materials, but it's the lower production cost by the having these materials coming from existing devices. They don't have to go through the entire mining process for these minerals, for example, or the plastics. And I guess one of the other drivers is corporations and their ESG goals and UAn initiatives all are pushing corporations in this direction. And as you well know from the enterprise side, this is a big driver for what's coming next and in demand. But I guess the last one, just to finish this off, is really from the consumer side.
I call it the CPO effect. Certified pre owned. We think of that normally in the concept of our cars. Well, I'd love to have a certified pre owned car. That's great. It's coming to every device and everything you own. And all you have to do is look at Apple's growth in their refurbished device area and go to their website and see how many devices you can buy today versus just a couple of years ago. And what percentage of their sales, even though it's not a large percentage of their sales yet, it's growing rapidly. So Apple being a leader, Apple's. This is a bellwether that you'll see out there.
[00:09:49] Speaker A: Yeah. Another, I think, driver for that is that when the oems get involved in this certified pre owned, it keeps consumers in their ecosystem, using their software and their other products to support that device. So it comes into play in a variety of different revenue models for those oems. So I think that's kind of another benefit that folks might not think about if they're on the consumer side.
[00:10:17] Speaker B: The lights are going off in corporate America and around the world. I think in other parts of the world they've already gone off, but I call them sort of the eight drivers of what the light bulb is going off, going. We can actually make more money, be more profitably, be more successful by being circular than the opposite. When that light bulb goes off, the CFO, you can imagine, well, that's actually, why aren't we doing this? And so I think that's a really, that's why it's you know, I've been involved in emissions and renewables and areas that required a hard push from regulators, from incentives. This is really good for business and it's, and you know, kudo is the heart of that, but corporations are pulling that in, saying, wow, I could have, I could reduce my production times, I could produce my products more resilient, less warranty claims, less repairs. So its a very exciting time for corporate America to understand that education and other things are required, but its really good for business. And theyre starting to learn that.
[00:11:17] Speaker A: Yeah. And I think that theres just greater awareness in this and the opportunity here and the demand coming from consumers, whether that be the individual consumer like you and I, or an enterprise consumer, or the individual employee using that device, or the enterprise buyer of devices for their employees. This idea of doing the right thing and saving money and being more responsible resonates at so many levels with all types of consumers. So I think it's all kind of coming together. And that's what you're seeing in terms of that increase in demand that you were talking about that's coming for the secondary market.
[00:12:00] Speaker B: Yeah. IBM did a study, I think was last year, maybe two years ago. And I think their statistic, which was sort of floored me, was that in their analysis, 77% of consumers would prefer to buy a product that is sustainable. What does that mean exactly over a product that was nothing? That attitude used to be an attitude you might see in the EU or other parts of the world, but this was a north american study, and I think that tells you where the puck is headed.
[00:12:28] Speaker A: Well, Tony, you and I are both big fans of circularity, obviously, and at Appcodo, we are focused on that circularity for connected devices. So what exactly is Apkuto's role in circularity for connected devices?
[00:12:42] Speaker B: As our sort of core tagline says, we are a circular industry platform. And as a circular industry platform, we are really out to tie the ends of our ecosystem together with data, with real time information that is hugely valuable to our customers. And we are changing the world through basically turning upside down these outdated processes and methods, working off of spreadsheets and all kinds of other antiquated technology and quite frankly, with huge amounts of labor that were extremely inefficient. So this decision support science, which is really what we're all about. And it involves AI, it involves deep databases that we've built that are some unique technology.
And software inside, under the hood is telling what you know, what do I do? Do I resell, recycle, repair, this device, what are you doing next? And that decision, done efficiently, means that more and more devices get reused, repaired and back into circulation. And so that is the essence of our sort of why we kudo is a needed platform for the circular device industry, and I think will be potentially a circular industry platform or beyond connected devices in the not too distant future, because we know how decisions works. And when you think about what's the other side of that, this whole reverse logistics process is, what do our potential customers want? Well, you think about what Dell and Apple are saying. The ecosystem is beginning to pull that through and say, we must have much more efficient reverse logistics processes and automate the entire supply chain up and down. And data has to get shared. We need to do this now. And so people like Apple saying not only are we going to be 100% carbon neutral, we're going to make a watch from 100% recycled materials. Well, just think about what a different way of looking at making that watch is going to be. Or Dell's moonshot saying, we're going to, for every ton of electronics we sell, we're going to take back a ton. Well, how do you do that? And so how do you do that part is the Apkudo circular platform. And that's why I think we play a unique role and it's why we are the circular energy platform.
[00:15:13] Speaker A: What these say to me is that that's really, it changes the way they're viewing the rest of the circular supply chain, what happens to these devices throughout that entire lifetime? And it's about the relationships, thinking about themselves as part of this ecosystem, and not just a player that's separated from everybody else that's involved here. So. Well, I know at the end of 2023, you were really instrumental in creating an impact report for Apkudo. And I'm just curious. This was, of course, prior to myself and the rest of the mobile resale team joining Apkudo. So I wasn't directly involved in that, but I'd love to hear from you what drove that and what's involved in that document that you created.
[00:16:03] Speaker B: Sure. So we built a very dynamic model, had to do it sort of from scratch. And part of it relates to the complexity with which this sort of impact reporting, the state of the union, for impact reporting, it is literally all over the place. It's very gray mark, it's very opaque. Talk to different companies in different countries, different schemes. There are protocols and frameworks that drive different results. And for the same company you might have, or the same type of company you have, three different results for companies in the same industry. This is a good slide to give folks on the podcast an idea of how complex and how many different protocols and guidelines you can try to meet. And this is not all of them by any means.
We had to make some decisions initially, and fortunately, one of our early investors loves that kudo because of the impact and the financial side of it, and had done a lot of work themselves. And we basically asked us for some rudimentary work in 2022, which we realized that as we start to talk to customers and start to talk to other stakeholders, that we want to have to build something that was more robust. So initially it was really just about carbon and using rudimentary calculations based upon electronics that are available from the EPA, but they are not as on target and as granular as necessary, and certainly not what's happening in other parts of the world, particularly the EU. So we built our own proprietary model with that in mind. We basically created a database of all the products, and we're talking about 14 million devices flowing through our system last year. Our systems and the building that database of devices, right down to the IMEI number in a phone, to serial numbers, is very complex. And so that took some time, and we had to add to that what our published OEM environmental data, which was great. So we were very fortunate that about 80% of what we processed in 23 represented publishable known environmental products and reporting from oems. So that was really great. And we were able to plug that into our model. But we also brought in some important international recognized environmental lifecycle inputs that are being recognized on electronics that are comparable to what we're doing. And we were able then to expand that, to add both e waste and water metrics to our carbon metrics. So we really brought it down at a much more granular level, made it much more dynamic. We were able to produce it monthly with reporting internally from our systems. And the goal is to have calculators at the customer level, as you and I have talked about a number of times, to really make this really sing for customers in different parts of the globe and for different applications, because the environmental impact does vary region to region, industry to industry. And so there's a lot of work to be done to get that to be truly tuned right to the future. But in 2023, as I mentioned, we processed 14 million devices plus, at sort of the refurbished value of those, it's over $3 billion, by the way, about 90% of our devices end up refurbished other parts of the world in older devices that could be only 50%, but for us it's been above 90%, which I think is very exciting. And what does that mean in terms of practical things? Well, in practical environmental terms, the one that everyone looks at is of course, how many metric tons of CO2 emissions did I avoid? And we were approaching 900,000 to 855,000, which is the equivalent, taking 108,000 us homes essentially off the grid for a year. And so again, how do you. It's important to try to put these things in practical terms, and as you and I know, that's not an easy feature. In addition, there were, you know, our, you know, our refurbished phones reduced water consumption by over 30 billion gallons, the equivalent of 400,000 plus homes for a year. And we basically kept about 5400 tons of e waste out of landfills. So these are the result of, you know, an effective platform, circular platform, done right. And we're very fortunate to be able to bring this out and begin to show what we do.
[00:20:48] Speaker A: I think it's really helpful for people to understand the collective impact of the platform amongst all of the different customers that we serve. What are some challenges to achieving circularity across the entire industry? As you mentioned, there's many players in this connected devices industry throughout its lifecycle. Why aren't we there yet?
[00:21:10] Speaker B: I guess great question and it's evolving quickly, but there's always two steps forward, one step back. And what we see, what I've seen is the challenges are really the status quo of linear supply chains. Let's be honest, they're not going to go away overnight. I think companies and municipalities and governments and people have to start to have new skill sets and mindsets. I can return this device, I will get a new refurbished device.
Not only is it okay, it's great and I'll save money and boy, it's good for the environment. I think the other challenges have to do with reverse supply chain. We're used to sending things down the supply chain. We're not as used to setting things back up the supply chain. So a sophisticated supply chain is harder on reverse side. But I think one of the biggest barriers probably inter enterprise sharing and the true transparency that that implies among industry players, even if a data is anonymized, what we found is that different industry players are husband their own data. And so that is a problem that I think will be a challenge. I guess the last one is really traceability because you have manufacturers across the globe, they use different methodologies to identify their devices and there is no common, common standard of serial numbers, for example, so that you can truly identify what that device was, where it originated, what its origin story was, if you will, and how it was made. So if you can't trace it when it's hard to trace through countries and through different regions, you're going to have problems with figuring out what to do with it.
[00:22:57] Speaker A: And Tony, I'm just very excited about getting the opportunity to work with you as we work together to sort of help Appcudo advance things for circularity, not only for our customers, but really for the entire industry. And as you laid out, there's quite a few challenges ahead. What are you most excited about, or what inspires you the most about what's on the horizon for circularity and for Apkudo?
[00:23:24] Speaker B: I'm equally excited and passionate about working with you because you really have great knowledge and depth, too, and it's a real pleasure. But I think the things, I guess I break that sort of question to two parts. One is, from a industry wide standpoint where I sit, a common set of standards and metrics that for what is impact, for example, for connected devices or other types of what constitutes useful information, that is common and standard, that is a new effort. And I know one of our investors has an effort to bring this to the table. It may take a year or two to do, but when that happens, and if we can help make that happen, and we'd like to, I think both of us probably want to be a part of making that happen, you can really move the needle because why? You can move the needle because there's trust. So right now, many companies avoid getting in the middle of this because it's so opaque that they almost feel like they're going to be dishonest in their reporting. So they don't know what to do, so they just do nothing. And so if there is trust in the commonality, instead of this whole table of 100 different standards that you could go after, if there's a standard that is accepted, for example, for cell phones or for a particular area, then everyone works towards that. That would be a huge change. So I'm excited to see that that takes off and they'll make the ecosystem grow very rapidly. I think on the Apkudo side, I think there are some really exciting things that we have to do, not the least of which is get the critical customer feedback on the applications that will really resonate for customers in circularity, we have to find out their different needs and different, you know, we have multiple types of customers. You obviously on the enterprise, enterprise side, but there's oems, there's resellers, you know, there's third party logistics companies, there's insurance companies. They all have slightly different takes on what is important to them from a circular perspective. And in circularity, OEM is a little easier, because, you know, a lot of things we've talked about, about oems, but the others have different needs. So I think building that out with the team and the team at Epcot is going to be very exciting this year and into next, and completing third party verified tools that are globally accepted and are dynamic and sort of, as we call, customer calculators that really can get exactly what customers are looking for. I think, again, the customer focus, and I think, last but not least, is a waste, which we are working on right now to develop, or I should say, monetize carbon. Whether that's carbon trading at some point, or monetizing carbon in different ways and financial structures, I think, is a huge opportunity, because kudo is right there with the value information, understands the value of the devices that it touches, and is in a unique position to. To manage that monetization.
[00:26:22] Speaker A: Well. Very exciting things ahead, and it's a lot of fun. One of my favorite things to do is bring people together who aren't coordinating or communicating previously, and facilitate that. And that's, I think, one of the most exciting things about the work we get to do together is bring folks together and to have a collective conversation so that everybody's goals can be met. And this is exactly what we're doing. We have a question here that says, what role does technology play in enabling circularity in the connected devices industry?
[00:26:56] Speaker B: It gets back to what Aputu does as a circular industry platform. So, technology and automation and AI, ultimately, which is getting involved in every part of what Apto does today, is essential for that reverse logistics process to work. So just picture that robotics and software and process and processing, from literally the time a product is made, it comes out back gate of a plant, so to speak, to a retailer through its use, life gets returned to the store, gets returned and gets processed to be refurbished and resold. That entire cycle can be tracked and automated and is on the appcodo platform. And so that that fosters confidence in the consumer, that what they're getting at the other end in the OEM, or the carrier, for example, can know with confidence that that's the device I sold, that's the device I'm going to repair and refurbish. And that's what's going to get sold. It's a quality device. The confidence, it's like without Carfax, we weren't always sure what we were getting with Carfax. Everyone thinks they've got, at least by VIN number, a car. What they think they're getting that doesn't exist today. And we're going in a big way and we're going to, I think the data that we produce will really make that much more possible. So automation and data is really and useful data that is proven is really important.
[00:28:32] Speaker A: Thank you, Tony. This has been really great. I've really enjoyed the opportunity to discuss this topic with you. You're a wealth of knowledge on this and I love that you bring a complementary perspective to this as we work towards not only making circularity more achievable for our customers through the Appcodo platform, but really to transform this entire industry. And as you said, you know, make it not just a good option, but the better option for consumers to choose a reuse device. Thank you so much for joining us and I'm certain we'll have you on in the future. We'll take some deeper dives, especially as we start making some progress on some of these things we've been working on. We get additional information along what we've been doing. We'll come here to share.
[00:29:20] Speaker B: That sounds great and I really appreciate the chance to chat as always.
[00:29:25] Speaker A: Well, thank you again for everyone to tuning in to today's podcast session and always look forward to your feedback or if you have ideas for future topics or guests that we should have on the podcast. So remember to email me at Alison Dot mitchellpcudo.com with any feedback or suggestions. Thanks again and hopefully everyone has a great day.
[00:29:49] Speaker B: Thanks Allison.
