E-Waste: ERI’s Chairman/CEO on Responsibly Recycling World’s Fastest Growing Solid Waste Stream


A 2020 Report from the UN predicts that by 2030, there will be 74.7 million tons of e-waste on planet Earth, nearly double 2014’s amount, yet people rarely think about the importance of proper electronic recycling. In this VX News interview with John Shegerian, the Chairman and CEO of ERI and the coauthor of ERI’s 2021 bookThe Insecurity of EverythingHow Hardware Data Security Is Becoming the Most Important Topic in the Worldshares the importance of the evolving global marketplace for E-Waste. Additionally, Shegerian highlights the value in local recycling, ESG investing, cybersecurity, and, as this E-Waste industry continues to exponentially grow, of accelerating the circular economy.

John, ERI has grown to be one of the largest electronics recycling-and-disposal providers in the world. Given your company’s business success, elaborate on ERI’s history, evolution, and standing as a global E-Waste market leader.

John Shegerian: When we started this company 20 years ago or so, e-waste was the fastest-growing solid waste stream in the world. Fast forward 20 years, and even though there's numerous responsible electronic waste recycling companies that have sprung up since then, the problem of e-waste has unfortunately far outpaced the volumes the industry has been able to handle so far. E-waste remains not only the fastest growing solid waste stream in the world, it's the fastest growing solid waste stream in the world by an order of magnitude of two to three times more than the second-fastest, which is plastic. (see  United Nations’ most recent assessment.).

Given that truth, why has waste expanded? It’s because electronics have become ubiquitous to all of our lives. We all have wearables like I've got on my wrist, and the Internet of Things such Alexa, Nest, etc. Cars have even become computers on wheels. White goods even now have hard drives and other data storing devices in them as well. When they come to their natural end of life, all these materials need to be handled very carefully for the environmental protection, cybersecurity hardware, and data protection sides of the story.

When done correctly and electronic waste is recycled appropriately and responsibly, it's a zero waste, zero landfill, and zero emissions business. This is very powerful and important, but it doesn't get a lot of media coverage or attention. What we're doing is curing a problem while not creating others.

So there’s an obvious environmental side. We never dreamed 20 years ago that we would also be in the middle of the cybersecurity story. We saw the rise of great and unicorn firms such as Palantir and LifeLock and others. Those are all on the software side of cybersecurity. No one was considering the hardware side. That's the space that we got into. Just like shredders shred data on paper, we shred data that's contained in hardware. That data, if exposed, can create catastrophic events for organizations, corporations, and homeowners. No one wants their personal information and assets to get into the hands of the wrong people.

So at ERI we focus on both environmental protection and hardware data protection. That's really what we strive to do every day.

You've often been quoted as focusing ERI on “people, planet, and privacy.” Unpack that paradigm for our readers.

First, as people, we don't want to cure one problem of electronic waste recycling, but then create others, like shipping items off across the world to be recycled. We don't want to create problems for our employees or for the communities that we do business in either, so we try to go to the highest standard and deploy proprietary technology, robots and AI technology to help protect the people that work for us, our customers and the general population, and the people in the community that host manufacturing or de-manufacturing facilities.

With regards to the planet, what we're doing is a great thing. Last month, we kept approximately 20 million pounds of electronic waste out of our landfills or from being shipped offshore. That is a big and impressive number, and we get excited about it, but unfortunately, it’s still not enough. We, as a society, and all the stakeholders in the ecosystem, need to do more. The original equipment manufacturers (OEMs), the government officials, the retailers, the recyclers, and the consumers at large all can do more. Everyone agrees that we want to breathe cleaner air, drink cleaner water, and leave the planet better than we found it. Environmental protection is very big, and e-waste is the fastest growing solid waste stream in the world. Creating a solution that helps fix and cure that problem is all about the planet.

When it comes to privacy, no one wants their data in the hands of the cyber criminals. Much to the chagrin of our parents who taught us growing up that crime doesn't pay, in 2015 cyber criminals made off successfully with over $3 trillion of assets without being caught. Six years later in 2021, that number’s doubled to $6 trillion. Software companies have popped up, gone public, and done great things to help protect all of us against cyber criminals, but the misappropriation of your hardware, whether it's just because of benign neglect or laziness, is potentially catastrophic for anybody. You've got to take care of your old assets when they come to their end of life and make sure they get to a local, responsible recycler who is going to destroy the data that's contained there. That also goes for organizations big or small, corporations publicly traded or privately held. That is what we're trying to protect the planet from.

Rumor has it that you actually signed an ERI data protection agreement in an underground bunker in Europe with NATO. True story?

I never dreamed that when we started this company we would be doing data protection for all of the biggest brands on the planet. This also includes the Department of Justice, the Department of Homeland Security, and NATO as well as defense contractors such as Boeing and Raytheon. We did that deal about an hour and a half outside of London in a location that I couldn't even tell you because I didn't even know where I was anymore.

Again, we really feel good not only to protect the planet every day, but also to protect the country that we've been afforded to live in and also the NATO countries.

Given that you are now a global company, speak to ERI’s beginnings in Fresno. Share how ERI has grown and is now operationally organized.

We have about 1,000 employees across the globe from London to South Korea. Nationally, we have 12 buildings in eight states, and we service every zip code. We're about to announce the opening of our Arizona facility in November. Goodyear, Arizona has become a very big hotspot for reverse logistics in the United States and is the second hottest industrial market after Dallas, Texas, where we also have a location. We expect to further grow in Nevada, Georgia, and other locations around the world next year.

We're also very unique in terms of how we are set up. We didn't just raise capital, we raised strategic capital. The biggest investors in ERI are minority shareholders that sit on the board and include the LG family—the Koo Family—from South Korea, which owns the second largest copper and precious metal smelter in Seoul, South Korea. Alcoa is an investor and sits on our board. They also get all of our aluminum. JB Straubel, the co-founder of Tesla, who created Redwood Materials, which is now the world's largest lithium-ion battery recycling company out of Nevada, also sits on our board – and they partner with us to recycle lithium-ion batteries and solar panels.

 This downstream strategic investor effect creates a culture at ERI that both our employees and our clients love. It's a culture of radical transparency. Where your things go and how they get there is really critical in a world that's focused on ESG, circular economy, and transparency. Radical transparency should be the bar, and that's the culture that we aim for everyday at ERI.

What’s ERI’s POV on ESG investing, the need for a Circular Economy, and Sustainability?

From our point of view, the words ESG, circular economy, and even sustainability were rarely used terms until about 2005. The word sustainability sort of stuck for 10 years, but it only got us so far. Some organizations really lean into it if their culture was created around it, but others really didn't want to pay up for sustainable practices.

About a year and a half ago, Larry Fink put out an edict over at Blackrock, where he said if someone is going to be a portfolio company of Blackrock, the biggest investor on the planet, they're going to have to report their ESG numbers, otherwise they're not going to be a portfolio company. Then, other investment firms and institutions around the world got on board for ESG and the circular economy.

There's no doubt that our children’s and our grandchildren's generations are going to continue this generational shift from a linear to a circular economy. I don't care if there are climate deniers, we all know now the truth, and the science proves it; the anecdotal evidence proves it. The institutional investors are really now dictating just how fast this boom goes, and it's moving really fast.

What’s the proper role for government regulation of E-waste recycling?

In California, we were on the cutting edge and created that advanced recycling fee model. It's worked tremendously. Some OEMs had pushed back when that originally came out in 2003. Then, a manufacturer's responsibility model was created in about 22 or 23 other states. The unfortunate thing is here we are in 2022, and only 24 states have laws banning e-waste from landfills. It's sad to say, in 2022, only 11 states have bottle redemption bills. We've got to do more. No one's asking for perfect, but from a government and policy standpoint across the United States, we've got to do better.

How has China’s National Sword Policy made an impact on the internationalization of how the US addresses waste?

It's really good that China put out that Sword Policy because it forced the United States to face the facts. We had no business dumping our trash onto China or any other nation. Real responsible recycling is done within a 3 to 500 mile radius of the generation of those materials. There's no reason to destroy the carbon footprint of the planet by shipping our trash abroad for other people to deal with.

That actually spurred a huge round of investments by big waste companies. They've done tremendous jobs tripling down on their investments, keeping these materials domestic, and creating responsible recycling opportunities. It goes down to smaller industries like ours, food recycling, clothes recycling, and other materials too. That's going to benefit us, not only now, but in the years and generations to come. We're going to handle this process domestically. That's also a paradigm for other countries to do the same.

John, you have spoken about ERI moving over the years from a commodity-based company to a service-based model. What do you mean?

Back in 2014, about 52 percent of our revenue was derived from commodity sales. That's a very tricky tightrope to walk across. When commodities go upside down and the world turns against you on a commodity basis, you fall off the tightrope. We didn't want to do that anymore.

We made a cultural decision to raise our prices on our e-waste solutions to where we can survive, even if commodities stay low. We lost about 20 percent of our clients when we did that. After the first 12 months, most of those clients came back, and we gained a whole bunch of other clients that are willing to pay up for responsible recycling that's done in a sustainable way.

The other good news is that we now are not worried about commodities. Our commodity exposure now is below 20 percent, and it's going to remain that low for the foreseeable future. You can't get away from commodities because we do sell all the steel, plastic, copper, gold, and more that comes out of electronics, but you can manage your risk. Managing the risk means under 20 percent exposure.

Each time you  are interviewed by VXNews you share a new innovation that ERI is adopting or partnering with others on. What's now on the cutting edge of your industry’s practices?

There are a couple of things in our immediate future. One, I want to bring on a strategic investor that really is leaning into Circular Economy and ESG behavior, like an OEM. There are 80 OEMs that we service, and they're excited to buy back our plastic and metals to put back into their electronics. They can talk to their constituents and clients about making greener cell phones, tablets, and other great electronics out of more recycled materials. OEMs are very excited about this, and we want them to invest and partner with us directly to be part of this whole ecosystem. We're excited about upstream investors in the OEM space, and we hope to complete that in the next six to eight months.

Secondarily, A.I. and other great ocular technologies are speeding up much faster than Moore's law ever dictated. We're involved with some of the front end robotic A.I. companies. We're going to be deploying more A.I., robotics, and technology in our facilities over the next two years than we've ever deployed before. That's also going to help us keep up with the demand out there for recycling electronics and manage our ability to be more immune to pandemics and other crises that can come up.

Lastly, there’s no record that you went to either the Harvard or Yale Business School, or that you ever interned with an OEM CEO. How then did you learn about the E-waste industry; and, how do you now keep learning?

There was no e-waste industry when we got in this industry. My two partners, Kevin Dillon and Aaron Blum, my wife Tammy, and I created this from scratch. We made our share of mistakes and had our share of near-death experiences along the way.

The key is we always strive to be better. We always strive to create a culture of openness and flexibility. We have a very low turnover on our employee base, and that creates a team that becomes unbeatable. Our executive team members have been here an average of over 14 and a half years. When you get into a battle, you can just look forward. If you know who’s on your left or right and that they have been there for years, you're able to face any challenges.

During the pandemic, because we had that break, I decided it was time to double down on my education. I had always dreamed of Harvard Business School. I realized I wanted to learn more about hardware data destruction and cybersecurity, so I enrolled at MIT and Harvard. They had very specific courses on the topic during the pandemic and I learned a tremendous amount from both.

 I’m constantly learning and staying curious. Being an infinite learner is really the true path to any success. The whole key is just never quitting when you go down to the canvas, because hitting the canvas becomes a regular deal when you're creating a brand new industry.



“When electronic waste (e-waste) is recycled appropriately and responsibly, it's a zero waste, zero landfill, and zero emissions business.” -John Shegerian, ERI