Exiting the field

When Kerry Getter co-founded Balcones Resources Inc. in Austin, Texas, in 1994 with his wife, Becky, he knew he wanted to do things differently than what had been the norm at the public company where he worked previously.

“Our vision was to start a company where we could hire the folks we wanted to hire, work with the people we wanted to work with, have the customer base that we wanted to have and if there was somebody that we didn’t want to do business with, we didn’t have to,” he says. “And that was really one of the driving forces: creating an atmosphere where we wanted to go to work every day.”

And that’s what Getter has done until recently, having retired from Balcones Resources after Closed Loop Partners increased its 80 percent ownership stake in the company to 100 percent in mid-2022. New York-based Closed Loop initially acquired the majority stake in Balcones in the fall of 2019 through its private equity fund, the Closed Loop Leadership Fund.

“I had no aspirations to sell the company 20, 30, 40 years down the road,” he says. “My sole financial goal was to provide jobs ... do something positive for the environment and maybe one day by doing good we could make some money.”

In the following interview, which has been edited for clarity and brevity, Getter shares his perspectives on the evolution of the recycling industry and his advice to those new to the industry.

Recycling Today (RT): It sounds like you feel you were successful in achieving that mission of creating the type of company where you would want to work?

Kerry Getter (KG): Absolutely. I feel like we became a very prominent player, particularly in our region, and we developed a bit of a national reputation. We’re very pleased with that. For the most part, we’ve been viewed as a positive force in the industry [and] I’m very thankful for that. We’ve got around 300 employees in five locations around the country, and it’s been very gratifying.

RT: You’ve said you prefer employees to feel like they work with the company rather than for it. What does that mean in terms of how things work at Balcones?

KG: That is important to us. I try not to characterize folks within the company as working for us; they work with us. I feel like this is an overused description, but I really feel like this is a team atmosphere. That’s what we tried to create.

We have people playing different positions, and for the good part of the company’s history, I’ve been the quarterback. But everybody on the team has got an important job. Whether they’re the right guard, the [wide receiver or] the running back, they’ve all got a role to play, and, for things to work properly and to win the game, everybody has to do their part.

So, again, that’s why I say nobody really works for us. They work with us. And we have a number of folks who go down the field hand in hand, and we identify the mission and try to execute on it.

RT: You’ve talked in the past about prioritizing innovation. What are some of the innovations that you’re most proud of and why?

KG: We’ve been in an industry that has not been particularly innovative and one where there has not been a lot of diversity. And what we have tried to do over the years is create a situation where we were able to differentiate ourselves from our competitors. Innovation is one of the things that has been very important to us. We feel like we’ve tried to hire folks, particularly in our management areas, who are going to execute on our vision to really support an innovative and new way of thinking in our industry.

We have five stones in our [company]: They are employees, customers, the environment, share and wow. The “wow” stone is really what we’re talking about here with respect to innovation.

We try to do things differently in as many aspects of our industry as possible, and I think that’s important on the marketing side of things to demonstrate to outsiders that you don’t look like the company down the street; you don’t behave like the company down the street. We value innovation because it’s an opportunity to differentiate ourselves from many of our competitors. Now, that was particularly easy to do 30 years ago. I will say the industry as a whole today is much more innovative than we have been historically, so, kudos to everyone there. But I think a lot of that is due to the fact that waste streams are becoming more diverse. Opportunities to recycle are more diverse. Labor is so expensive, there’s just a lot more emphasis on technology now, as it should be, and we have been thrilled to be a part of that and want to show that off to people.

One of the things that I enjoyed doing was giving tours of our facility in Austin, particularly when it was new some 10 years ago, and it was Star Wars-type technology then. The optical sorting business was not widely adopted at that time, and we were pretty early adopters of that and use it extensively now, and I think there’s room for that to grow. But it really created a wow factor, not to mention the fact that it reduces your operating costs and enhances the quality of your end product in a way that is just much more difficult to do with older, traditional methods of sorting.

RT: You also mentioned in the past that Balcones has been willing to abandon what doesn’t work. Do you have some examples of initiatives that you tried and just didn’t work and what you learned from them over the years?

KG: I’ve learned that it if you are Switzerland in our business and you are neutral to the greatest extent possible, it pays benefits because the hauling companies need a place to bring their material. Consequently, we’re involved in the hauling side of the business on a very limited scale, mostly for commercial relationships, but none on the residential side. That was a lesson that was hard to really learn and accept.

We cut our teeth in this industry by providing a service to commercial printers, and the internet, as you know, has really put a dent in that form of media. It has caused a complete shift in how we did business, particularly in Dallas. We probably hung on to that core belief that we were going to focus on commercial printers [a little too long]. It remains a focus today, but I would say that 10 or 15 years ago, it was almost a 100 percent focal point in a couple of our markets. I think the biggest thing probably is that in a couple of those cases, we didn’t react soon enough, so we held on to old beliefs.

RT: What are some of the areas where you feel that Balcones has excelled over the decades?

KG: Well, over the years, I think we’ve been able to excel at what I think is the most important part of our industry, and that is personal relationships with people we do business with … [and] the relationships we’ve developed with our employees. Again, we are responsible for around 300 families—that’s a big responsibility and we take that very seriously.

RT: How would you describe Balcones’ approach to business?

KG: I can speak to the 28 or 29 years that I was here and was the quarterback.

Again, it really was about developing personal relationships, and it was absolutely imperative that we make them look good. If we’re dealing with someone at a particular office building and a particular relationship with a hauler, we want to make those people be successful. I think that’s perhaps a little different approach than some people may take.

We certainly had to draw lines in the sand with respect to financial aspects of our business, but one of our five stones is “share.” At the end of the day, we’re still in largely a commodity-driven business, and the prices will fluctuate up and down. Our best customers were those who would accept it and didn’t expect us to take 100 percent of the risk related to the commodity side of things and, absolutely, we refuse to do that. I think that’s a testament to our longevity. But once you explain to folks that you need to share in that risk, you need to cover your operating costs, most people are sensitive to those things. We had a lot of success growing our business by just laying that out on the table for people and just telling them, “We need to make $10 here, and we need to make $10, $12 there, and these are the reasons, and, by the way, insurance for our company went up half a million dollars last year and we’ve got to cover that somehow, just like you have to cover it in your business.”

I feel like we had a lot of success operating on a very transparent basis.

RT: More recently, some MRF operators have added a processing fee where before maybe they relied more on commodity sales for revenue. Has it always been Balcones Resources’ position that you needed to be paid for the service you’re providing?

KG: That’s a good question. In any pricing scenario that we outlined with a municipality, we were always conscious of our processing costs. I hate to use the word “never,” but we never based our profitability solely on the value of a particular commodity and we didn’t base a relationship on that. That is, in my view, a recipe for disgruntled customers.

We’ve never had to modify an agreement, a contract, or cancel one because we couldn’t live up to it for whatever reason, and I’m talking about during the Green Fence era when things collapsed. We always had paragraphs in our contracts that were not in the fine print, by the way, advising people of what could happen. Certainly, we were caused to change pricing, but we had a mechanism built into every one of our agreements that allowed that to occur, and people understood that.

I think that if you’re close to your customers, if you do a good job of explaining that to folks on the front end, then you’re less likely to rub people the wrong way or create ill will and I think we were pretty successful in doing that. So, if I had to do it all over again, I would do the same thing and, quite frankly, I’m surprised that more folks hadn’t done that in the past.

In many cases, our best customer was someone who had done business elsewhere and had contracts canceled or had prices changed without warning. Honestly, that wasn’t very difficult to compete against, but it’s the way we went about our business. It was probably a slower way to make money, but I really believe it’s more gratifying.

RT: What are some of the more meaningful changes that you’ve seen occur in the recycling industry since you founded Balcones Resources?

KG: I think the whole evolutionary process has been interesting to watch. I’ve been around [the industry] for about 40 years, and I know that there are a lot of folks who’ve been around much longer and have seen more change over the years, but it’s been slower. I think the evolution of our industry now has maybe picked up some velocity that didn’t exist 20 or 30 or 40 years ago. We’re all becoming more sophisticated in what we do, and if we’re not, we should be.

I think the people who embrace that change and view it as an opportunity as opposed to a threat will prevail, and it will pay off for them in a big way.

RT: When you were considering recovering a new material at one of your MRFs, did you approach it from an end market-first perspective?

KG: I think we looked at it from really from two angles: One, what’s the cost of recovery? And, two, is there a realistic end market to be able to sell this material day in and day out, regardless of market conditions? Because the worst thing you can do is start accepting the material and then get 90 days down the road and say, “Oh, well, I was just kidding. We really can’t take that any longer. Mr. City Official, would you turn that off at the curb, please, and tell your 250,000 households that we’re not taking that anymore.” That is really, really bad stuff. Our industry is littered with examples like that.

The cost to recover is important. Understanding your operating costs is vitally important and understanding whether or not there’s a viable end market, regardless of market conditions, day in and day out. You better have all that stuff lined up before you collect the first item, and I think a lot of people get that out of sync. We absolutely refused to go down that road.

RT: How has the evolution of processing equipment affected how the company approaches recycling?

KG: That’s been huge. The manufacturers of much of this equipment are to be applauded.

A lot of folks try to be the low-cost producer in their industry. We also want to be the high-quality producer. And I think technology has helped that immensely.

I still think that optical sorting and optical recognition has been the biggest contributor to advancing our industry. Some of the screening technology has been huge. It has reduced cost. It has enhanced throughput within a facility, and really, in many ways, revolutionized our industry. And I can’t wait to see what happens next.

It’s much easier to create a financial argument for some of this equipment—and, by the way, it’s not inexpensive. But when you are able to mitigate your labor costs and create a quality end product and enhance your throughput, it really does move the financial needle for you.

RT: What mark do you hope you personally have left on the industry?

KG: I hope that people recognize that we showed up every day, we created a system that works for all of our constituents, regardless of market conditions, and we truly cared about what we did, how we did it and who we did business with.

Certainly, over the years, we’ve not made everyone happy. But we’ve tried to be prudent in what we’ve done so that we could live another day to recycle. Those are the things that I hope we would be recognized for.

RT: What about the industry will you miss the most?

KG: It’s the personal relationships I miss. Honestly, I miss being in the foxhole with the other troops; I miss not being on the battlefield; I miss not being out on the football field calling plays.

I don’t really miss the volatility of the markets, and we’re not in a good one right now. But that’s part of the game and, honestly, that volatility creates opportunity.

RT: What advice do you have for those who are new to the recycling industry and to MRF operations?

KG: There are a lot of folks who sit around their kitchen tables thinking, “Oh, wouldn’t it be great to get in the recycling business.” Well, it’s a very capital-intensive business and it’s hard to perform on a small scale. So, you’ve got to think big, and thinking big costs a lot of money, and you have to create economies of scale. You have to know where your material’s coming from every day. You have to know where it’s going, you have to know what your processing costs are and you better have someone [or] a group of people within your company who can interact with your customers and your end users. I think that’s been our formula and I think that’s vitally important for longevity in the business.

Also, the administrative side of business seldom, if ever, gets discussed, and I think it’s absolutely vital to be able to have a system in place to create accurate and timely financial data for your own benefit as well as your lenders’, because if you’re not able to do that and you’re not able to support it, you’re not going to be able to borrow money, which you need to expand and do the things you do. That financial credibility … should not go overlooked.

I think it’s vital to have good industry-related software and to find people who take that part of your business seriously.

Kerry Getter co-founded Balcones Resources, Austin, Texas, in 1994 and served as CEO for nearly 30 years.