Kevin Sutton: Turning Waste Into Profit

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>> Vince: Hi, welcome to Dog and Pony. I'm Vince Thompson. The dumping of industrial waste into oceans was actually legal until the early 1970s, and unfortunately it still occurs illegally today. Kevin Sutton, regional general manager of Terra Renewal took his home based business of turning waste into useable product, and he grew it into a twenty four million dollar company. So Kevin, you've got this business that saves the planet, and it makes money. How great is that?

>> Kevin: I don't know if it saves the planet, but it certainly helps.

>> Vince: Well tell us how it all works.

>> Kevin: I decided to form this company, look at certain products that were being discharged, or put into the landfill, and see if there was any value to them as far as fertilizers, agricultural use, or other uses other than filling up the landfills, or eventually making their way into the ocean.

>> Vince: What kind of stuff comes down the pipe that has value?

>> Kevin: Drinking water residuals. When our drinking water, from the Colorado River, or northern California, they have to treat it in certain ways. And they end up with a lot of sediments and silk that have to get screened out before it gets to the faucet. And what we do is take that material, we can blend it into a certain mix, take it into agricultural use. Or we actually work with various landfills where they use it to cover their trash at the end of the day, rather than using virgin soils to cover the trash that take up the air space in the landfill.

>> Vince: And how do you make money?

>> Kevin: We charge them to pick up the waste, we look at how far it's gonna cost us to haul it, process it, put it on the farmer's field, or into the landfill, and we put our profit on top of that.

>> Vince: So you start out you're one guy, you see a problem, you're trying to solve it. But these are big companies, this is government. How do you navigate that as one guy?

>> Kevin: Well you rely on a lot of subcontractors to start off with until you can build a base. You run at smaller margins, and then as you build and you buy your own equipment and your own people, you increase your profit margins. Government's very free, freedom of information act. You can look at contracts, look at pricing. It's not as intimidating. The tough part about it, a lot of government is low bid, so you got to watch your costs, and you have to be on the ball.

>> Vince: What was the hardest part about building the business?

>> Kevin: Probably the hardest part was just dealing with the cash flow, and trying not to give up a part of the business. And I'm happy I did that. For the first few years I only took out what I needed to live on, rather than giving up equity. The fact that I didn't give up that equity was real beneficial. So I would say the cash flow and the growth, handling the growth. We grew very rapidly. You can have a healthy company, and if you can't manage that, you still can have problems, or even go under. Another challenge was I had probably 40 to 50% of my business with one customer. And that went away one Tuesday morning coming into the office. So I had to almost start over again in a little bit of a different angle on the business. And I decided I need to do what my customer did and control the contracts. So I kind of had to reinvent myself at that point, which was about seven years ago. And that actual adversity helped the company become stronger and grow to where it is today.

>> Vince: What happens when you sell a business? In this case you've stayed on, tell us about that.

>> Kevin: We sold the business. They didn't have anything west of Texas. We have a lot of contracts, very long term relationships, and they were I think savvy enough to know that, to let me go, or replace me they would lose a lot of that contacts that were built over the years. I was happy on the front end, but to keep me there there's a two year earn out. I have the same responsibilities. And I could leave tomorrow, or I could work towards that earn out. And I've chosen to stay. I want them to be successful. They paid pretty good dollars, and I would not like to see it fall apart.

>> Vince: What are you most proud of?

>> Kevin: A lot of my employees, a lot of my subcontractors I've seen over the years, their lives improve. You know, I see them pull up in new SUV's, they bought homes you know, before the market slowed down a bit. They've got families, I've seen their kids grow up. So I like that aspect of it, that other people, I would hope to think enjoyed the success working for me for that many years, and hopefully in the future with this new company.

>> Vince: What are the things you like about a green business?

>> Kevin: All said and done, I like the fact that it is helping the environment, and there's some reward in that. One of the negative things, usually you're solving somebody's problem that's a headache for them. So if the client's, it's a pain, it's money they don't like to spend. That's the negative part. But on the other hand you're rewarded that you are doing something good.

>> Vince: As a country, how are we doing? Are we doing a good job cleaning up?

>> Kevin: Up until I was probably twenty or twenty one, I never saw a dolphin in the bay, and I fished and dove it all the time. Even our air. I remember when the Olympics came here. Our air was horrible. We used to, I grew up in the coast, we used to have to go in the classrooms when your lungs would hurt. That's how it was. We haven't had those red alerts in a while, so we are improving. And I think worldwide we're somewhat of the leader in that. I mean the lobster population, the halibut out there, they've really improved. The white sea bass are coming back through programs of growing eggs. And that wouldn't be successful unless the bay was clean, and it is a lot cleaner than when I was a kid. And we can't lose focus on continuing to make it cleaner, but we do have to realize we've had successes.

>> Vince: Kevin Sutton, founder of Fleet Industries, now part of Terra. Thank you so much for being here. As always, if you have questions, comments, or ideas for guests, please feel free to email us. You can do so at info@dogandpony.com. I'm Vince Thompson, thanks for watching.

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