Mike Newman, CEO, Returnity Innovations
Returnity’s mission is to replace single-use packaging for shipping and delivery with something that is reusable, sustainable, and better for both companies and consumers. They do that by developing custom packaging products for each client that are guaranteed to be used at least forty times each. This will ultimately help to eliminate the need for the billions of cardboard boxes and plastic poly mailers in use today.
Returnity’s customers include well-known brands such as thredUP, Generation Tux, BOXED, REBAG, and many others. They’re also working with several prominent brands in apparel, furniture, and even wine to develop large-scale regional packaging solutions.
Returnity segments reusable packaging needs into three primary groups:
- Planned aggregation: Business to business services and facilities can often easily aggregate empty packaging and return it in one bulk shipment. The ability to return many empty packages at one time lowers the cost of return logistics enough to make it financially beneficial. Other examples include companies such as Happy Returns which establish “return bars” that accept in-person returns of merchandise for ecommerce companies that don’t have brick and mortar stores. Happy Returns locations then consolidate the returned items and send them to the original retailer for processing in reusable packaging which is then consolidated and returned to the Happy Returns locations in bulk. The B2B nature of the transaction and the low logistics costs make this an ideal use case for reusable packaging.
- Planned returns: Rental businesses such as Generation Tux or Rent the Runway send products to customers that are expected to be shipped back to the company. This is another ideal use case for reusable packaging.
- Unplanned returns: Apparel and other retail consumer businesses send products to customers that they don’t want to be returned, but oftentimes have a high natural return rate. This is one of the hardest business cases for reusable packaging as it’s difficult to determine which shipments will be sent back to the company, and which will be one-way.
Shipping is a major expense for many companies, and packaging is often a critical part of brand engagement with customers. Returnity’s primary focus with each client is to develop custom solutions that support a company’s specific packaging goals be they customer engagement, cost, sustainability, efficiency, safety, or all of the above.
What are some of the things you’ve learned as the company has grown?
Our original vision for the company was to develop reusable packaging for direct deliveries to consumers and to partner with companies such as UPS to aggregate the packaging for returns. What we found was that other models such as B2B shipments or specialty item delivery such as furniture make much more sense from a logistics standpoint. Disposable cardboard and plastic are fairly expensive and if you can deliver heavy, bulky items in specialty reusable packaging like ours, you can actually make the delivery experience safer and more efficient for your employees and customers.
We’re continuing to find new places to use our products all the time. Every time I think we’ve discovered all the possible applications I get a call from someone who ships something like kayaks and wants a new way of securing them on racks for shipping to wholesalers because the costs of plastic and cardboard are too high. I never would have thought of that! The world of packaging is incredibly broad once you start to allow yourself to see shipping and delivery in a different way.
We also learned to begin by ensuring that each project provides costs savings or is at least cost competitive so the CFO can approve on day one. After that’s been established, we can work on making sure the brand manager, sustainability lead, and COO are excited too. We know we can create a more premium customer experience and we know our products are better for the planet over time, so as long as we establish the financial components of a project up front, the rest follows naturally.
We’ve also gotten very good at understanding a client’s packaging goals and moving them efficiently through prototyping, trials, and scaling with limited financial commitments. That makes it easy for us to adapt our products to ensure they work well for the client and their customers and makes our products incredibly sticky. We’ve already had many of our earliest customers reorder for the second and third time as they grow or increase their usage of our products. It’s incredibly validating to have so many customers coming back for more, it tells us that what we’ve developed for them is really succeeding out in the field.
What do you actually do all day?
As part of a small startup, I do some of everything every day, and you never know what that day will be like. One of the most important skills a CEO can have is the ability to do triage on an almost hourly basis so you can tackle the day’s needs be it fundraising, operations, recruiting, sales, or marketing. I’m constantly jumping from one topic to the next. Sometimes I’m working on areas that I’m not an expert in, which means I’ve got to balance how much time to spend learning enough to effectively navigate a challenge with all the other priorities and constraints I have.
For example, until recently I didn’t know much about how to import goods from overseas or how to navigate the multiple shipping services available and tariff codes out there. I’ve been spending more and more time on that as we have grown and I’ve got to decide when it’s time to pay someone who is an expert in this area and balance that with how much time I have and what we want to spend on that expertise. It costs time and money to get smart on things, and you have to be able to judge how much of each is good enough.
What are some of the key skills for success in this role?
You have to have selective amnesia to work in an early stage startup. By that I mean things will go wrong all the time, and failure will always be just around the corner. You have to be able to forget that you’re risking so much and power through the surprises or the stress will get to you.
What is your favorite part of your job?
It’s definitely working with our clients and partners who are all essentially intrapreneurs. Everyone we work with is someone whose job allows them to focus on investigating new things. It’s really great to be a part of helping a new client get a project off the ground, brainstorming with potential collaborators, and working with people who truly get how hard it is to try new things but do it anyway. A big part of my day is talking with innovative, smart people who are trying to tackle big hard problems and it’s really fun.
What is the hardest part of your job?
The hardest part of working in a startup is not being stubborn. When you’re putting so much energy into an idea, it can be hard to let go. It could be a bad strategy, a project that has gone awry, or even an entire business. Your passion and ideas have driven you to that point and you need to let your sense of responsibility to the others you’ve brought along like coworkers, investors, or other stakeholders take over and give you strength to say when it’s enough and time to move on. I really hate losing and I have to be constantly checking myself to make sure I’m holding on to the good ideas and letting go of the bad ones.
One of the harder challenges we’ve faced as a company is that the disposable packaging we collectively use has been the standard for decades. It’s been largely dismissed as an area for innovation as everyone knows how difficult it would be to change the system. We’ve been trying to uncover and understand the structural implications of the change we’re trying to make as early as possible. For example, most purchasing departments have monthly expense budgets for cardboard boxes, so if you ask them to make an investment of $1M to purchase reusable assets that will save them $100,000 a month it’s great from an ROI perspective, but you’re asking them to capitalize something they typically expense, and that can sometimes be really hard to do.
What is your proudest professional achievement?
I’m incredibly proud of what we accomplished at ReCellular. It started out as almost an afterthought about what to do with used cell phones when they first became popular. By the time I left we were processing half a million used phones a month that were otherwise going into drawers or landfills.
I got to tackle issues such as how to create value from used phones through reuse or environmentally sensitive recycling and how to create a system that incentivizes and enables consumers to return used goods in a cost-effective way. It felt a lot like the Wild West but being able to confront those issues and scale it the way we did was exciting.
What are the game changers in your world?
In the near term, it would be incredibly helpful if carriers such as UPS, FedEx, and USPS would embrace the idea that packaging that isn’t cardboard or a poly mailer can still be easy to process. For example, one of those carriers has a standard rider in their sales contract that says any package that isn’t cardboard is subject to a special handling fee. In a way that makes sense, you don’t want someone just putting a shipping label on a tire and sending it that way, but it also means that some of our customers couldn’t use our products without paying extra handling fees. That doesn’t make sense, but these carriers are so big and organizationally complex it has been difficult to get these policies changed at a global level.
In the longer term, we need to make some big changes to our shipping infrastructure. The overwhelming majority of packaging is designed for one-way transport. If you can’t aggregate packaging for reuse in a cost effective and consumer friendly manner, you won’t be able to move the needle overall. We’ll never get there as a society until we change the infrastructure.
What was your path to this role?
I have focused on sustainability and the environment since day one of my career. I earned my degree in Environmental Policy at the University of Michigan. From there I moved to Washington DC and interned for a congressman, and then worked for the Sierra Club focusing on advocacy and electoral politics. I had big plans in 2000 to either work for the Gore White House or go back to get my MBA and learn how to better work with the corporations that we were constantly battling on Capitol Hill. Unfortunately, Gore lost the election so I went back to the University of Michigan which was luckily one of the best places to be as they already had a real focus on the integration of sustainability and business.
I thought I’d take my new skills to work in a large company, but I decided to join ReCellular which was a more entrepreneurial opportunity that gave me great training and experience with creating new solutions and thinking from a systems perspective.
What’s your advice to someone interested in a role like this?
If you are thinking of starting a company, it’s really easy to tell yourself “I’ll only do this for X amount of time” but in practice it usually doesn’t work that way because companies always take longer to build and develop than you thought. Once you set yourself down a path you end up wanting to continue down that path as you’re meeting great people, learning things, and seeing opportunities. You need to have an honest talk with yourself and your loved ones about that path – it’s bumpy and unpredictable and risky and you can’t control when it will smooth out. You need to think about where you will be in 4-5 years, not just one year. You can’t JUST give it one year and move on; whatever is in you that makes you start it will make you keep going, so you have to commit and understand the implications.
What are your favorite resources?
Between building a startup and raising two kids I don’t have a lot of time to read. I try to read more broadly and consume news that will inspire me such as the New York Times and Washington Post.
The Reusable Packaging Association is focused on product packaging and I’ve been working on helping them expand into a broader based view of packaging to include shipping.
Here in New York City there’s a great and fast-growing meetup around supply chain. I’m also working with someone to start a new organization focused on bringing together different stakeholders that are the backbone of the apparel world to support brands that need help with circular packaging and logistics.
Uncrate.com is a great website to learn about new products.
Who (or what) is your sustainability hero?
My dad, Chuck Newman, has been a model for me as an entrepreneur who has been passionate about social justice and change but has always been humble. He doesn’t make it about the individual or personal accolades, it’s about the work and doing the right thing. I really admire the fact that my dad is always focusing his personal and professional energies towards a group or purpose instead of his personal brand.
