075: How Bioplastics Can Change The World | Alex Blum

Well, the second one's a longer story, but bioplastics are plastics that are made out of biomaterials. We've got a bunch of different ones around today: PHA, PLA. They kind of differ on their method of manufacture and what they can be used for. For instance, PLA is used for cups, like your party cup with a little green band around it, that's probably PLA. That's usually made using processes like pyrolysis or hydrolysis, where you take your biomass, whatever that is, like vegetable waste, food waste, agricultural waste. All of those things can be put into basically a boiler that vaporizes them, and then you make a resin out of that vapor. So that's how typically bioplastics are made. Applied Bioplastics is a little different. We named the company before we knew what we were doing, so we called ourselves Applied Bioplastics. In reality, we should have been called Applied Bio Composites because we make composite materials. So it's a misnomer, but we had too much successful branding to change it.

Better Board is the original material that we started with. I acquired it from somebody essentially. This person figured out how to make woven agricultural waste into a building material. That sounds crazy, like using literal food waste and making a house out of it, but that's exactly what we've been doing. It's a really cool process. You use an exothermic reaction, which is a fancy way of saying it heats itself up chemically. You put in our proprietary binding chemical and your cellulose, and what you come up with is something that after that exothermic reaction is never going to change shape again. That's called a thermoset resin. It's very similar to fiberglass. In fact, fiberglass is the exact same concept: networked glass pieces overlaying each other for strength inside a thermoset resin. You may recognize this material from boat hulls, helmets, other things like that. Those are common fiberglass applications. We also make something called Bopi, which is a set of formulas. I want to make this accessible, but it's really complicated chemistry. Basically, what we're doing is using a similar bonding chemical that enables us to use agricultural waste as a co-feedstock. That word 'co-feedstock' means more than 10% on average. Most bio composites today are around 5% fiber fill. Fiber has been around a long time as an input for plastics, about 35 years, but it's not really useful for the main lines of business that humans use plastic for. Essentially, what it's used for is profile extrusion, like fence posts, housing siding, other things like that. The reason it works for that is that cellulose self-bonds; it bonds with itself. It's also a square molecule, which is why trees stand up, by the way. But essentially, when you have a nozzle that's this big because you're making a fence post, it doesn't matter if the cellulose clumps with itself because it's a big empty composite. But injection molding is how we make most things: car parts, toys, tools, technology. The headphones you're literally wearing right now are made using injection molding. The nozzles are this big. If the cellulose starts clumping, you're going to blow out the back of a quarter-million-dollar machine at best, probably a lot more expensive. So what we figured out how to do is make the cellulose not self-bond while it's in the injection molding machine and self-bond once it's into the mold. That, for the first time in history, creates a bio composite that is stronger than traditional plastics. And here's the real kicker: the agricultural waste is really cheap, like 10 to 20 cents a pound. Recycled plastics are 30 cents, virgin plastics 80 cents, bioplastics are $2 to $3 a pound. We're able to cut each of those prices in half and replace that with agricultural waste. So now, not only are we the first to have a stronger plastic while making a bio composite, it's also substantially cheaper than any oil-based plastic on earth. That is what makes our company unique: you can make and use this stuff in the standard machinery that everybody uses today, and it's cheaper and stronger.

Well, I get that question a lot. We've been around for five years. We were building refugee shelters with our Better Board bio composite for the first two years. Then I got a little curious because, like I said, I failed chemistry. I went to the University of Texas at Austin, which is like three blocks from me, which is why I'm pointing that direction. I graduated from there and lived down the street because I never grew up. Anyway, I went to the material science department there and talked to Dr. Chin. I said, 'I have this thing, it's really useful for this one thing. Could it be useful for other things?' He said, 'I don't know, let me refer you to someone.' So he referred me to Dr. Lawrence Deral, who is a Lifetime Achievement Award winner in bio composites. He told me, 'Look, Alex, what you have is useless other than what you're using it for.' I was like, 'Dang it, I was really hoping I could do more stuff with this.' He said, 'But if you were able to convert what you're doing with thermoset resins into something that would work with thermoplastics, you could make billions of dollars.' I was like, 'I like billions of dollars, let's try that.' So I hired a bunch of really smart turbo nerds and they did it. It took them like three years, but they did it. We started commercializing our products in August of last year. We closed our first license in mid-August of last year. Because as I mentioned, this works in any given machine that the plastic industry is using today. So why would I ever build a facility of my own? I would simply supply my bonding chemical to people who are already making plastic and let them use their, by the way, half a trillion dollars worth of infrastructure that already exists, turn that into my production infrastructure. So number one, that takes a while, convincing people to completely switch what material they're making. Number two, natural fiber composites have been tried before in the past and failed, and not only failed but catastrophically failed, like rotting a $10,000 injection molding mold, causing rust inside and making it useless. So these people have been burned before by bio composites. We now have a folder of letters of recommendation from previous injection molders and compounders who can attest that our stuff doesn't break their machines. We've been working on that. The next thing is there are downsides, real downsides to bio composites, primarily in the space of recycling. Bio composites are mixed materials, which makes them harder to recycle in non-specialized recycling facilities. But here's the dirty truth about plastics recycling: 95% of recyclable plastics go unrecycled. They go into the landfill, which is really frustrating for those of us who care about sustainability. We have this material that's perfect for most things. The invention of plastic changed humanity beyond a shadow of a doubt. It may be our most important invention so far. And what it's doing is not what it was built to do. This is one of the most durable materials on the planet. It should be recycled, it should be reused, and it's not. The reason it's not is because it's not economical. I live in Austin, a very progressive city that cares about recycling. I put numbers one through seven in a single bin. If you're a recycling expert, that should immediately set off alarm bells because what facility can recycle numbers one through seven? Zero. There are zero in the world that can do that. So what are they doing with all my plastic? I got curious, I visited. They bail it up and send it to the dump. They're only recycling paper. That's the reality. So what we said was, look, one day hopefully we'll get to better recycling techniques. One day hopefully we'll get to, I think what's needed is government subsidy. Think about this: when you need a service but it's not profitable to do that service, like delivering letters all over the country in a day or two, what do you do? Obviously a private enterprise can't do such a thing; they require profit. The government should be doing this. They do the same thing every day, they don't need to be creative, they don't need to make a profit, just recycle the plastic. It could even be a source of revenue for governments because companies buy that recycled plastic. But the reality is that today it's not economical to recycle plastic, so it is not recycled. Or it's not profitable to recycle plastic, so it's not recycled. So what we've done is we make our composites with the idea that they're going to end up in the landfill. So what's important to us is not recyclability but instead reduction of microplastics, because that's what happens to plastic when it goes to landfill: it breaks down into little tiny pieces and they go into your food, your blood, your brain, and it's all very scary. So we're not the perfect silver bullet to fix the plastic problem, but we are a stair step that's going to be needed for the next 20 or 30 years to transition us away from oil and to these other plastics. As I mentioned earlier, we're compatible not only with virgin resins but recycled resins and bio resins. That last one's the most important bit because as prices for that come down, they will never hit commodity prices of oil-based plastics, but what we can do is cut that expensive plastic in half, put in a bunch of agricultural waste, and all of a sudden we have a competitive bio composite, something that is 100% biomaterial that is meant to degrade eventually but has the durability to last until you put it in the landfill. The last bit I'll say on that is the more biomaterial that goes into your landfill, the more valuable your land is. The reason for that is we've already started methane capture on top of our landfills. When organic stuff rots, it emits methane. We can turn that methane into power. So the more biomaterial in the landfill, the more valuable it is.

Yeah, so it really depends on the use case. The more fiber you put in, the stiffer the plastic becomes. Typically you want soft plastic, like with your headphone cups and stuff like that. But at the same time, you don't really care about how stiff a car part is if it's only a structural piece, like the components on the inside of the door that help you roll up and down your windows. It doesn't matter if those are stiff. So for those applications, we can get up to 85% natural fiber. The lowest we go is about 20%. Our average use case is about 40 to 60%.

It's not really a road trip. It's thinking about it like a horse race and all of the horses are me. If you look at the dates on the experience, you're looking at a lot of them run into each other. So I'll explain the story. I'm going to start when I was 27. I'll just give the quick background from before that. I'm from Houston originally. Went to a great prep school called St. John's Episcopal. Was a bad kid, ended up getting sent to military school when I was 13 in Missouri. I came back and went to the University of Texas at Austin. Dropped out in 2009 right in the middle of the recession, great financial move. Was briefly homeless for a while and then kind of got myself back on track. Did my basics at the community college locally and then rematriculated into the University of Texas for graduation. Immediately, I ran for politics. Literally before I graduated college, I ran for City Council in Austin. The reason I wanted to do that was, and I'm going to try to make this a really short story because it's boring, essentially there was a dangerous intersection near my house, or near my apartment, and nobody would do anything about it. I went to the city council, got 4,000 signatures, and they wouldn't do anything about it. So I was like, 'You know what? If you're not going to do your job, I'm going to do it for you.' So I ran for office. Lost horribly, just absolutely got smashed. It was bad. But in doing so, I got to meet all of the people who would eventually be in power, and I was able to get in front of them with this like, 'Hey, there's this really dangerous intersection.' After two years of working on this, I'm in a meeting with them, the city planner goes, 'Hey Alex, that intersection is 200 yards outside of the City of Austin. We can't do anything about it. Are you kidding me?' Sorry, you may have to edit that. No, no, that's fine. Anyways, I had to take it to the state legislature and get them to officially move the borders of Austin by 250 yards. But after three and a half years of work, there's a freaking stoplight there. I didn't even live in the area anymore. I lived in a completely different part of town. But when my former neighbors reached out to me and were like, 'I haven't heard a tire screech in months, thank you,' I was like, 'Altruism feels really good. I can be selfish and do altruism.' I mean, not by definition, but I see where you're going. Honestly, this is part of Alex's philosophy: I think all altruism is inherently selfish. You do it because it makes you feel good, and there's nothing wrong with that. I believe in the idea of Ubuntu as explained by Archbishop Desmond Tutu: the way I treat myself is the way I treat others, and vice versa. So if you are serving yourself by doing altruistic things for others, there's nothing wrong with that, nothing contradictory about that. But I decided I really like doing that. But I was just a salesman, I was a tech guy. I was working at Amazon, Oracle, WP Engine was a great startup, and then ThousandEyes was my last startup. They were acquired by Cisco two or three years ago, which I was not around for, but got a little cash bump, that was nice. Anyways, long story short, when I was at ThousandEyes in 2017, I closed Visa on a massive implementation of network monitoring. I didn't even start that deal, but the person who did got fired, I got put in their seat and I finished it. I finished it big, and I got a half a million dollar paycheck at 27 with no debt. I said to myself, 'Man, how often does an opportunity like this come around for a young guy who's passionate about making a difference to have suddenly half a million of unattached cash in his bank account?' So at that point, I said, 'Look, I'm making a lot of money at my job, I've got a decent salary, I'm doing great in commissions. I'm going to donate all half million to charity.' So I did. I started looking for ways to do that. The first thing I did was make an anonymous donation to a food kitchen nearby that kept me alive while I was homeless 10 years prior. The next thing was I talked to my good friend TJ Ferazzi, who I went to the University of Texas with. He said, 'Look, if you're looking to do humanitarian work, I'm from Bangladesh. People over there really need help. In fact, 2 million refugees just crossed the border into my country. You want to go do something about that?' I said, 'Hell yeah, man.' So we booked a flight to Bangladesh together and flew over there in early 2017 and walked into the Rohingya genocide as it was beginning. We were the first Americans with boots on the ground there. We beat Angelina Jolie by 9 months. That's how you know you're early, beating Angelina Jolie. But the thing I noticed when we went over there is I started looking on the internet and I was just like, 'Why is nobody covering this? Why are there no news articles?' If you look at the internet archive, the articles about the Rohingya kind of start in late 2018. The genocide had been going on for 18 months at that point. A million people were dead, and yet no coverage. What's up with that? I don't want to be all like 'white people are bad,' but they're brown people with the wrong religion on the wrong side of the world. Nobody gives a crap right here. I said, 'Well, that's messed up. Maybe we can do something about that.' I'm ethnically Jewish, I don't know if you can tell from the giant nose and the curly hair, but I am ethnically and philosophically Jewish. The world promised us in 1945 'never again,' and they failed us on many, many occasions. This was the first time I had any opportunity to do something about it. So I went over there and I realized that the thing these people needed was attention. With absolutely zero experience in film, I hired a film crew and we shot a documentary in the world's largest refugee camp in 3 weeks. I executive produced it, wrote it, narrated it. I thought it was going to be awful, and it won a bunch of major awards. It's now on Amazon Prime and Apple TV. More importantly, we were able to share our evidence with the International Criminal Court at The Hague, which they used to hold the leaders of Myanmar accountable. We were also able to share the evidence with Senator John McCain, who wrote the Burma Human Rights and Freedom Act, which is currently the law of the land. You cannot do business in Myanmar as an American corporation. So we had some impact. It was very gratifying. And the $33.25 I make every month off the streaming is also great. Anyways, so yeah, that's how I ended up in Bangladesh. I also put some money into some pet causes. I am working on a gun law here in Texas. I watched 'The Social Dilemma' with Joe Toscano, a great terrifying documentary. One of my superpowers is networking, so I asked a friend who asked a friend who asked a friend, and I got to Joe. Together we wrote a bill that would make the internet algorithm, or the social media algorithm, illegal. We call it the Icarus Project because I think the social media companies have flown a little too close to the sun with experimenting on Americans and stuff like that. So anyways, that is how I ended up in Bangladesh, that's how I ended up doing a lot of charity stuff. I also think that as a well-educated, white-presenting, straight-presenting person, even though I'm none of those things, I have a responsibility because of the way I look and the resources I have to help other people with my privilege. I am omnisexual, I like everybody. If you're cute, you're cute, doesn't matter what's going on under the pants or whatever. But that has never inconvenienced me because I'm a big muscly butch dude with a beard. Nobody ever suspects, right? With gorgeous locks, by the way. Oh, thank you. But yeah, so I think number one, it feels good to do good, and number two, I feel like I owe it to people. I've had a fairly comfortable life, I've failed upward many times, and I really think that those of us who've experienced that ought to give back. Anyways, we made the movie. We got some of our drones shot down while we were making the movie because we got a little bit too much in the Burmese military's business while they were doing their illegal business. At the end of the day, I was trying to raise money for the film. I was at a dinner with a bunch of wealthy Bangladeshis, and somebody else was trying to raise money from them at that dinner. His name was Dr. Mubarak Amed Khan. Khan was the inventor of the housing composite. He was the chief nuclear engineer for Bangladesh, set up their first nuclear reactor, and retired 25 years ago and got a stipend from the government to research whatever he felt like. What he felt like doing was this plant called jute. That's by the way where the 'Juten' name comes from. The reason jute is in India and Bangladesh is because the British Empire brought it there. It makes great sackcloth, sailcloth, and rope, everything you need to resupply your ships on the far side of the world. When they decolonized in 1951, jute became a massive cash crop and commodity for India and Bangladesh. It was used for rope, carpet backing, all kinds of things. But only 20 years later, nylon got invented, and nylon is literally better at all of those jobs and cheaper than jute. So it absolutely demolished this market. So what Dr. Khan, as a patriot in Bangladesh, was trying to do was make this fiber useful again. What he made was what he calls Jen and we call Better Board. I met him 25, no, 20 years after he had invented it. 5 years has passed since then. I said, 'This is amazing. It's obviously fully mature, it works, it's cheap, you can make it easily. Why isn't it everywhere?' Like you asked, why isn't it everywhere? He says to me, 'Well, I'm a chemist, not a businessman.' I said, 'Well, funny thing about that, I'm a businessman, not a chemist. Why don't we put two and two together?' Took about 6 months, but I convinced him to sell the patent. We immediately started looking to build structures with this. The very obvious thing to do was to build refugee houses for the people that I had visited. The reason that was obvious was because they were living in, ironically, nylon shipping bags turned into tents. Wow. I'm just like, 'You guys are sitting here on top of this bounty and you're not using it. And worst of all, all the refugees are on the coast. This is plastic nylon stuff. When it rips and tears, they just toss it, ends up in the ocean, kills fish. It's terrible.' So we're able to give them dignified shelter that's more like a house than a tent. It's more like a shack than a house, but still it's got a roof, it's got a locking door, and it's sealed other than for ventilation. As a result of those things, and I promise I'll shut up in just a sec, as a result of those things, we did a 2-year study on our sub-camp in this world's largest refugee camp that ended about a year ago. We found that we reduced rape by 100% over 2 years and infectious disease by 80%. The first one's really easy: cloth bags you tear them, you're in. With my composite, you need an axe and half an hour. The other thing is the bottom of it is sealed, so water can't get in, bugs can't get in, disease can't get in.

That's true. I started all of this before I found out about my disease. I wanted to make an impact, help other people, and eventually make a decent amount of money from selling the corporate side of the company and retire to build more housing. Not everything is cupcakes and roses. I didn't last long at Thousand Eyes after the giant check because they were trying to get acquired and I was the most expensive employee. They fired me at the beginning of the fiscal year. I was moonlighting doing Applied Bioplastics with my co-founder Colin, who I found on Craigslist as a roommate after my divorce. I feel a responsibility to give back because I've gotten so lucky. I can barely afford the house behind me; I have about $500 in my bank account and haven't paid myself in eight months. We've been struggling to raise a seed round, but we finally broke through today with a potential $3 million check. I have psoriatic arthritis, which I got at 30. I've had both hips replaced and need a knee replacement. I was in a wheelchair for most of last year. My doctor gave me an option: 30 more years in the chair or 15-20 years with aggressive treatment that will destroy my liver and kidneys. I chose the short life of glory because I have charities and a business to run. I won't get married again or have children because it's unfair. I have no intention of retiring; I'll do this until I die. That focus makes me more powerful, not less.

Bioplastics are going to continue to get cheaper and more popular. It's up to major companies to make the change. Millennials and Gen Z care about this and are willing to pay a premium. Prepare to use PLA, PHAs, and biocomposites. I'd love to see us become the center of gravity for bioplastics. Most bioplastics companies make three mistakes: first, they assume customers will pay a premium for a commodity – that's wrong. Start in performance plastics. Second, they use non-standard equipment. The plastic industry has already spent $500 billion on standard equipment; they won't buy new machines. Third, they build their own facility. If you're a chemist, you're not good at running a factory. We go cheaper, use standard equipment, and never open our own facility. We make polypropylene and fiberglass and want to expand to nylon, ABS, and others. We won't go public because of fiduciary responsibility – we have a housing division that breaks even intentionally, and we don't make trash or weapons for moral reasons. We recently closed a $2 billion grant that will build micro facilities in communities, creating 1 million permanent jobs and housing for 700 million people over 20 years.

I like to talk about the efficiency of a relaxed employee. Most people think you need to micromanage or have KPIs. I don't believe in any of that. We have zero voluntary turnover in five and a half years. We cap executive compensation at $285,000 a year with no bonuses unless they are equal for every employee. We treat employees as individuals – we ask how much money they need to live comfortably and build a promotion plan around that. We don't do hours; get your project done by the deadline. No work on weekends, when sick, or when family is sick. We offer family health insurance in India and Bangladesh and are extending it to grandparents. This philosophy comes from Desmond Tutu's Ubuntu – the way I treat myself is the way I treat others. I have a tattoo of it on my chest.

Find me on LinkedIn and shoot me a message. Visit appliedbioplastics.com and follow my personal story at consequential.doco. Consequential is the holding company for all my businesses and charities. I don't like to talk about my charities because of the concept of Mitzvah – the best good deed is the one you tell no one about. But I appreciate the opportunity to share.

Really appreciate you guys. Thank you.