#124 ECGO: Turning Trash Into Treasure With AI

Paige: Pitch 2, day 3

If you know anything about recycling, it’s probably just a series of depressing statistics.

Only about 5% of plastic waste actually gets recycled.

25% of recycling has to get thrown away because it’s contaminated

And don’t forget the Great Pacific Garbage Patch, a 600,000 square mile ocean trash vortex that's larger than the state of Alaska!

What a mess. But this is The Pitch. So surely there’s a company here to help clean things up.

Enter, Ecgo. An app that’s using AI to get every student on every campus recycling. Properly. No greasy pizza boxes allowed.

But how much money can you really make from trash? Is this the solution investors have BIN waiting for, or will they pitch this business in Great Startup Garbage Patch? That one’s in the bay.

I’m Josh Muccio, welcome to The Pitch. Where real entrepreneurs pitch real investors for real money. 

Hi, I’m Erica Wenger, and I’m general partner of Park Rangers Capital

Hi I’m Elizabeth Yin, general partner at Hustle Fund

Hi, I’m Jillian Manus, managing partner of Structure Capital

Hi I’m Charles Hudson, managing partner, Precursor Ventures

Hi I’m Martin Tobias with Incisive Ventures

The Pitch for Ecgo is coming up AFTER THIS

And if you want to watch the video of this pitch, go to pitch.show/youtube. Episodes premiere on Wednesdays at 7pm eastern.

-

Jillian: I can play one song on the guitar and nothing -

Martin: Nothing else. Yeah yeah.

Nicole: Hi.

Erica: Hi. Nice to meet you.

Nicole: My name's Nicole.

Erica: Erica.

Martin: Hey Nicole. Martin.

Elizabeth: Elizabeth.

Erica: Cute blazer.

Charles: Charles. Nice to meet you.

Jillian: Love the pop of color. Jillian. Hi Nicole. 

Nicole: Okay. We've all been there. Standing at the recycling bin questioning, is this recyclable? And you're not alone. 96% of Americans are also confused on how to recycle. But this confusion is costing us. 219 million tons of recyclable waste enters our landfills every year, we spend over $200 billion just to send it there. My name is Nicole Toole. I'm the CEO and founder of ECGO, and I've worked over the last four years while attending undergrad researching student and consumer behaviors around recycling. ECGO is a mobile app that uses artificial intelligence to detect the recyclability of materials. You take a picture of anything, and ECGO gives you up to date and the most sustainable guidelines on how to dispose of your waste. And as you recycle, you earn points that are redeemable for discounts for products and services within your community. We have launched paid pilots at George State and the Georgia Institute of Technology, and in the last five months have helped students dispose over 50,000 items on our platform. And today I'm raising $750,000 to expand into universities, but we plan to go to municipalities as well as corporate offices. So I invite you to join us in that. Thank you. 

Elizabeth: Can we try like a quick test? Even let's just take this Starbucks coffee cup. I don't know if it's recyclable. There's the plastic top thing, yeah. Like what - would you app tell me this? 

Nicole: Definitely. 

Elizabeth: I took a picture and it is thinking about it. And it came up with plastic. Plastic take-out cup is what it says. 

Nicole: And so everything that's in green is recyclable, everything that's in red is unrecyclable. 

Elizabeth: Everything in green is recyclable?

Nicole: Correct. So that's - this is also based on Georgia Tech's recycling guidelines -

Jillian: Oh yeah. Okay.

Nicole: Cos those are our campuses that we're on. Um. And then it'll also show you which bin to place it in, as well as where you can take it to on campus.

Elizabeth: Well, it's amazing to me just how little I know about recycling, because it's saying that the plastic take-out cup is recyclable, but the paper cup is not.

Nicole: Yes. 

Jillian: Can you talk about the tech? 

Nicole: Yeah, so, Ryan Walden is my cofounder and CTO. And so he is a machine learning engineer with years experience building machine learning models. And so right now we're using OpenAI’s clip model, which creates a caption for every item that you take a picture of through the platform, and then it looks for that item in our database of materials. We actually started off as a hardware company. Our first iteration was a recycling machine that accepted plastic bottles and aluminum cans. So we built the machine, it was super beautiful, it was the sexiest machine I'd ever seen in my life. Like, so proud of it. and launched it February 2020. But no one could use it because everyone went home and never came back. So that was when I started reading the EPA sustainability report, and so they outlined that reducing recycling contamination was their number one objective to increase recycling in the United States. And how they recommended that we solve this problem was flyers and engaging social media campaigns. And so I was like, okay. Like, what else, there's no innovation here. And so that is what ultimately led to ECGO was like, okay, well I bet, if I could just take a picture of everything and it told me what to do, that would solve this problem. 

Erica: And you said Georgia State was a customer.

Nicole: Yes.

Erica: Can you walk me through just like who's paid what so far?

Nicole: Yeah. So Georgia State and the Georgia Institute of Technology are our first customers. So we started them off with a semester pilot that cost $5000, which, I know, like no one negotiated - yes, it was too low.

Erica: But if you got money from universities, like -

[crosstalk]

Erica: You get a gold star.

Nicole: That's true. 

Erica: You never hear that.

Nicole: That's true. And then it rolled over into a full year implementation. That was $20,000. And so that's what we are currently with both institutions on. But we actually are exploring a pilot with Cox Enterprises right now, so we're just about to get into that corporate space. 

Elizabeth: How - how many downloads have you gotten on these campuses? 

Nicole: Yeah, so right now, we have 1500 students on the platform who use it. We have a 33% monthly active user rate, and on average students recycle 35 items each month. And the fraud was like less than 1%. We had like 10 students who were ridiculous.

[laughter]

Nicole: Which was interesting. And then we also had a 12% reward redemption rate, which was much lower than what we expected. But still, the usage was incredibly high. The vast majority of our new users came from referrals. So the average user referred three of their friends on the platform. 

Elizabeth: Does a university benefit in any monetary way by recycling more?

Charles: Or is there a compliance -

[crosstalk]

Jillian: Is there a mandate that they have to -

Elizabeth: Is it just feel good? Or is - are there other things?

Nicole: Yes. So glad you asked that, universities actually pay contamination fees on their recycling bills. And so these are fees that they have to pay on top of what they already pay in recycling. So this can be anywhere between 75 to $150,000 a year, just on contamination.

Elizabeth: Oh wow.

Nicole: So in theory, if we can educate their students, increase volume, increase quality, we can lower those costs for them. But also increase revenue because they can sell these materials for higher prices on the market. 

Martin: When will you have enough data to be able to show the results? Because if you increase their recycling volumes but the contamination number stays up, you might actually worsen the problem.

Nicole: Right. So the thing about this solution is that we need high adoption in order to effectively say that we were able to reduce contamination, or if we saw any changes in the recycling stream overall. And so that's why in these next two years, we're focusing so much on adoption on the campus. 

Martin: It's gonna take two years?

Nicole: Or just the year. I'm just - I - cos right now -

Martin: And in that deal, who is responsible for marketing.

Nicole: What's great about the university is that we're able to market through all of their channels. So -

Martin: So you're doing the marketing and that has to come out of the 20,000 that you're getting in revenue?

Nicole: No. So they do focus on all of the communications on campus. The only thing that we have done is we've had tablings on the campus, where we've told students about ECGO and get them to download the application. Our user acquisition cost is only $1.50 because like we just put like we have cookies and whatever to get students to download the application. So the university will send emails, they'll put up flyers. They'll also put signage on like their TVs and all those things that we don't have to manage. And we really put the onus on the university to market that application.

Martin: I mean, I know you say that they're responsible for it, but I've seen these kind of things where, you know, you sign a demo deal and then nobody is really responsible for customer acquisition and then at the end of the LOI, everybody's like, this thing didn't work. 

Nicole: So one of the things that we know is that the cost of the pilot was extremely low. And so right now, Georgia Tech, Georgia State have this waste goal by 2030. And there's no way for them to effectively track how they are reaching these goals today. So ECGO is the first application that they're actually able to see in real time what students are actually putting in recycling bins, so that they can effectively market back to the students. So I think that that is actually more so the value to the institution versus the rebate part, because now ECGO gives them a lens on, okay, it's Halloween and students just recycled candy wrappers. Let's do some effective marketing around why you can't dispose those materials. The insight part is really what's valuable to the institution, because right now they're really shooting in the dark how to better engage their constituents.

Jillian: Is there a penalty that - at the end? If they do not reach these goals? 

Nicole: So Georgia, no. We don't have any policy around this.

[laughter]

Jillian: Okay.

Nicole: So it's more so just from the top down, the pressure of, okay, the university wants to reach this goal, I have a job to do, how am I gonna get there. But I know from California, you guys do have -

Jillian: Steep penalties.

Nicole: - for that. So we are going to make our way here one way or another. 

Martin: Oh, don't make the rest of America California, please.

Alright, so the investors are starting to see dollar signs in trash…

But is this business ready to start turning that trash into treasure?

That’s coming up.

-

Welcome back. Nicole’s app, Ecgo, can help colleges save tens of thousands of dollars in contamination fees. But first, students have to actually use it. Here’s Erica.

Erica: I have a question around the social side of this. I was in a sorority, it was competitive with, you know, who was wearing the cute dresses, and who was getting good grades. And so I'm thinking about like the reward piece of this and like, especially in like the Greek system, like house versus house and student versus student, grade versus grade.

Elizabeth: House points.

Erica: House points. Because I think - yeah, when I think about like you know - and I mean colleges sometimes do like color wars and you know opening day, orientation, whatever. Has that been something that you've been getting interest about and have you tested that at all? 

Nicole: So we haven't tested it yet, but we have gotten considerable interest, particularly between Georgia Tech and Georgia State, because they're kind of like rivalries. So like, being able to know that Georgia Tech was recycling much more than Georgia State was a huge thing on their campus. But we are looking to do those dormitory against dormitory, class between class, friend group against friend group, even. So we're working this summer to really bolster those social components of the application.

Erica: I would look into a lot of like consumer behavior studies about, like, do people want money or do they want pride over their friends and their community. I think you'll find over and over again it's actually more about the ego.

Nicole: Yeah.

Erica: It's not about the money. The more you can play that up, even you just talking about Georgia Tech versus Georgia State, I actually think there's a lot of budget there too, because people all know what rivalry is like.

Nicole: Uh-huh.

Jillian: That's a great idea.

Nicole: That's very true.

Jillian: An Eco rivalry. 

Erica: How much are you raising? What is that - I don't know that you mentioned that yet 

Nicole: Yeah, so we're raising 750 - and we just started. So we're doing a safe and the cap is 5 million. So we're just starting with that.

Martin: And what goals do you hope to achieve in the next six to 12 months with that, and how long does it last?

Nicole: Yeah. So that lasts us 12 months. And so our goal is to launch more universities and corporate offices in the south east. So that is like our focus. And our goal is 20 institutions by the end of next year. 

Charles: We invested in a business that's kind of analogous called Goodr.

Nicole: Yes!

Charles: Yeah. On the food recovery side. And the one thing I learned is there is a lot more money in these corporations and for Goodr it's a mix of like feel good plus tax credit plus a bunch of other things. And I suspect universities have more money here than is obvious I just don't know how much more money there is here. So I really like this business. I don't think I can get there on the current round, just because I'm not - I think I have in my mind a sense of how big the university tickets would have to be and I'm not sure they're there yet. So I guess my one piece of advice would be I think you could dramatically upsize the impact that this has on campus by leaning into that student to student virality. Because that will get them recycling more things, which will make the universities say, wow, this is like a much bigger thing and then I think with that you could probably unlock much bigger contracts with them. 

Nicole: That's great feedback. Thank you. 

Erica: I too am out. I think the big things for me were willingness to pay of the colleges.

Nicole: Yeah.

Erica: I think - we know the 20k, we didn't negotiate, which is fine. No one negotiates the first deal. I think I'm not clear on like how much higher that could go. And the second thing, I think there's some really interesting like a B2B SAAS play with licensing data to like the Coca-Colas. Coca-Cola versus Sprite. You know, I hate to be so competitive, I feel like everything I'm saying is pitting rivalries.

[laughter]

Jillian: But you're right. 

Erica: But If you say, like, Coca Cola, actually more of our customers -

Martin: Recycle.

Erica: - are eco conscious, they recycle, they are young, they are cool, that versus Sprite versus whatever - that's brilliant. You can't pay for that 

Elizabeth: Sprite is owned by Coke.

Erica: Oh really? 

Erica: They all own each other these days. It's hard to keep them straight. 

Martin: I've been thinking about this problem for a while. I've invested in it twice. And I think we are at a time where we've got a convergence of technologies that could potentially create another wave of this kind of thing, because it's so easy, like, doing it on your phone. What I'm a little concerned - or actually a lot concerned about is that you don't have a clear quick go to market strategy. So if you had a B2B plan that was somehow sparked data collection with some free viral loop on campus that drove that other thing, that would be much more interesting to me at this stage. And based on that that's not what you're building now, I'm out. 

Nicole: Thank you so much. I appreciate that. 

Jillian: I'm out. It's just a little too early for me to understand the whole monetization piece of this. But I would like to stay in touch with you because I'd like to see how your - How are you going to drive the engagement of the whole university. 

Martin: Yep.

Nicole: Yeah. 

Elizabeth: Nicole, I really like what you're doing, and I'm very impressed by your sales to these two campuses and also this corporate. I think that's just honestly really hard to do and I think you should, you know, definitely pat yourself on the back, even though you may not have optimized it or tried to optimize it. The thing I'm trying to really grapple with is the customer acquisition. And there a couple of different customers. It's sort of this B2B2C model, which - it gets a little bit tricky around like how do you get to sort of the next layer of customer of the students. And I think people had some great ideas on how to get there, I just think it's going to be too pricey to try to - like, how do you go from 1500 to a whole campus without increasing that spend? I think I'm having a hard time in my mind kind of reconciling those numbers.

Nicole: Yeah.

Elizabeth: So I'm out.

Nicole: No worries. Thank you all so much. This was amazing.

[thank yous] 

Nicole: Would you guys be okay if I took a selfie?

[yes]

Nicole: I wanna commemorate this moment.

Charles: Josh might make you wait to post it. 

Nicole: Thank you all again.

Jillian: Thank you, Nicole.

Elizabeth: There is big money to unlock in there somewhere. It's just aligning it.

Erica: I think she just needs a little more time. Like I wanna - like after this, I'm like I wanna connect you with USC. That's some big money. Instead of going like Georgia, which is maybe not as progressive, maybe a little bit more a state school, let's go to USC, let's go somewhere where we've got a lot of donors.

Elizabeth: Big money. Lot of donors. 

Martin: I love that the idea of challenges.

Jillian: I do too.

Martin: And a lot of these - and if she had an app like - the RA could compete against another one, and you leaned into that sort of challenge thing, you'd get a bunch of people starting these things and then you'd get the campuses from the bottoms up. if she had a bottoms up strategy, she could also then go and get the money from the campus. Because you could go to USC and go, look, you know, there's already eight sororities that are competing against each other. Why don't you buy a site license because they're already doing it. 

Jillian: Georgia, for god's sake she did this in Georgia, which is mind blowing as it is.

Martin: Right.

Josh: Are you guys sure?

Jillian: Yeah.

Josh: Sure you don't wanna invest?

Jillian: No. Not now. 

Elizabeth: I do think there's something in here, but this is not the right model. 

Well, the investors didn’t want to get their hands dirty with this one. They’re like, go figure it out. Here’s some ideas, charge more money. Make recycling a competition. Come back to me next round.

But ideas… they’re not money. How can Nicole give the investors what they want, while also staying true to what she knows is best for the business?

A few months after that pitch, I checked in with Nicole to see how things were going.

Josh: How was your experience pitching on our show? 

Nicole: I would say exhilarating. Like I remember walking in and just like, like I'm smiling right now and just being just overjoyed that I made it in the room. I wasn't stressed at all. To me, I see pitching as just an opportunity to share my company's story. 

Josh: mhm

Nicole: And that really does take the pressure off. 

Josh: You’re like, I’m just gonna share my story, I’m not expecting money. Is that the mindset?

Nicole: To be honest yes. So like of course I went in definitely wanting to get something because the company would do well if we got some money from that. But with opportunities like this, that’s kind of the mindspace that I take it in.

Josh: Ok. After the show. This happened back in June. What did you do? 

Nicole: During the summer I was heads down doing sales. And so we spoke to 37 universities over the summer.

Josh: Oh my gosh 

Nicole: So in November, we're about to launch 14 universities for an America Recycles Day challenge. America Recycles Day is on November 15th, 

Josh: mhm 

Nicole: and from November 6th to the 17th, 14 universities right now will be on the Ecgo platform competing against one another. Getting to use the full experience of Ecgo. 

Josh: So you're doing the viral challenge? 

Nicole: We're doing the viral challenge, which Erica mentioned, or I think she encouraged us to do. So yeah, that's, we're doing it. 

Josh: What’s that gonna look like? 

Nicole: So all the students on the campus will be able to use Ecgo, during those two weeks. we'll show, like, how each university is ranking against one another. And so that's really what we're doing to boost that competitive spirit. And we think that's going to be game changing and getting them to convert to full paid clients. So we haven’t converted any yet, but we’re hoping that when they use it, we’ll be able to secure them in.

Josh: Very cool. So you were trying to raise 750,000 on our show. were you able to raise any of that amount? 

Nicole: No. So I completely stopped fundraising over the summer. Um. And so now I'm diving back in to raise the round.

Josh: You said you say diving back in with like a bit of trepidation, like how do you feel about fundraising again?

Nicole: It's just, I would much rather sell contracts and universities. I think any entrepreneur and founder would agree, but I think where my like hesitancy comes is we get a lot of feedback from investors and 

Josh: the dreaded feedback

Nicole: right, the feedback. And it's like, thank you

Josh: they want to be helpful. but it’s just really not

Nicole: And it’s like, Thank you. Exactly. And sometimes you're like, well, have you thought about this? And I'm like, yeah, like write a check and I'll do it. But like until then, like we are, we're not doing that. that's my only like, ugh, about going back in, but I'm optimistic 

Josh: Yeah. What is it about the feedback that’s so hard? Is it just feedback period that’s hard regardless? Or is there something specific about investor feedback that’s particularly hard to take?

Nicole: I think more so because they, some, don’t understand your industry. So what they’re saying, like even with saying like, you should increase your contract size. They don’t understand what’s going on in the industry and how it’s a growing market. So like there's things that have to happen before we can do that.

Josh: mhm

Nicole: If it’s coming from someone who understands your market, definitely like take that. 

Josh: Right

Nicole: But I have been very intentional about like, okay, is that really helpful? Is that some advice that we should really take? And just being very strict about like, okay, like, thank you. And no. 

Josh: And I'm thinking now, like with my experience with investors, they're even more eager to give you advice if you're younger. 

Nicole: Mmm yeah.

Josh: So as someone fresh out of school, I bet you're getting it even more. 

Nicole: I wouldn't be surprised.

Josh: Yeah 

Nicole: Which is kind of funny. So I never really see like biases. My parents raised me to truly think that I could solve anything and do anything. If I wanted to, or if I had, if I was willing to like figure it out. 

Josh: Yeah those are some good parents. 

Nicole: They're awesome. And so like. I didn't realize that people, like, see my age or, like, questioned, like, what I really know until, like, fundraising. And so, like, that has kind of been, like, a shock, I guess? 

Josh: Yeah

Nicole: Because I don't know why you wouldn't believe what I'm saying or, like, you wouldn't think it's possible. 

Josh: mhm

Nicole: and there's been also, I think, some hesitation when it comes to my age, but I'm like, we know what we're talking about, and we are going to see it come to fruition one way or another, and because of the work that we're putting in, we're seeing the results that we want to see. So, now it's just kind of like, okay, can we connect that to some funding?

Josh: You've been running this startup for a few years now. You started it while you were in school. But it's been one full year since you graduated. Has running a startup full time been what you expected?

Nicole: It's a lot harder than I expected, to be honest with you. Um, so much harder than I - 

Josh: Wait really? Everybody talks about how hard it is to start a startup, you didn't believe them?

Nicole: I was like, Oh yeah, it's hard. It's not that hard. Like it can't be that hard. But like now I'm like, Oh my gosh, like we got payroll at the end of the month. Like this is serious business. I think my biggest learning coming out in a year now has just been like have high expectations always and set goals for yourself. But also give space for you to learn, because I was really hard on myself, because I expected things to be a skyrocket of success in a year. 

Josh: Have you learned more in the last year than you have in four years of school?

Nicole: Oh yeah. 100%. like I was afraid of sales even like last year. because I was nervous about being rejected. One thing that I've done a lot of work on is sales and obviously investor stuff and you get rejected all the time. And you have to learn how to pitch and you've got to learn how to handle, objections to stuff. And I honestly think like now I'm like, I'm like a bullet. you're not going to break me or like, I'm going to, I'm going to. I'm going to sell you on this regardless. Um, definitely have learned a lot in this last year. 

Josh: So maybe not the rocket growth you're expecting on the company, but, uh, you're on the learning rocket ship.

Nicole: Yes, indeed. And so now it's like when we get that hockey stick growth, I'm prepared for it. Our team is prepared for it because we've learned so much in this last year. So now we know what it takes to be successful. 

I’m not sure anyone can be truly prepared for what comes with scaling a business. Because as anyone who’s done it will tell you, it’s an entirely new set of challenges.

But I’m super bullish on Nicole. Based on all she’s been able to accomplish in such a short period of time with so little resources: Nicole is a founder to watch. 

Next week on The Pitch… get in losers, we’re going shopping

Kristine: So I put 250,000 of my own money into the company to get it to our first 10,000 users. Our 40,000 users have have organically saved over 1 million products to the platform

Jillian: doesn't Pinterest do this? 

Kristine: If I could've used Pinterest, I wouldn't be here today. 

We’ll see you next week in the pitch room.

Applications for the next season are closing soon! We’re gonna be in Miami in January where 18 startups will pitch the investors on our show. It’s super easy to apply, just answer a couple questions and upload your pitch deck or deal memo. Just go to pitch.show/apply. If you’ve been waiting, it’s NOW OR NEVER. See you in Miami in January.

-

This episode was made by me, Josh Muccio, Lisa Muccio, Kerrianne Thomas, Anna Ladd, and Enoch Kim with casting help from Peter Liu

Music in today’s show is from Boxwood Orchestra, Our Many Stars, Astronaut Club, Plastic Planet, Memory Palace, Breakmaster Cylinder, and The Muse Maker 

Thank you so much for listening to the show. If you’re enjoying the podcast, we’ve set up a special URL to make it super easy to share it with a friend. It’s pitch.show/text. Try it out! pitch.show/text

And if you want to listen to The Pitch ad free, subscribe to Pitch+. You’ll also get occasional bonus content. Plus, it’s a really good way to support the show. Just go to pitch.show/plus to learn more.

The Pitch is made in partnership with the Vox Media Podcast Network.

-

The Pitch, Inc. and their respective employees and affiliates do not provide investment advice or make investment recommendations. The information provided on this show should not be used as the basis for making investment decisions. Listeners should conduct their own research and consult with their own investment advisors before making any investment decisions.