For almost every new iPhone, Galaxy, or Droid Razr sold, an older phone is retired. Altogether, Americans retire an estimated 130 million phones each year, and only one in ten is re-used. ERecycling Corps is working to change those statistics, and has just raised $35 million dollars from venture capital firm Kleiner Perkins Caufield & Byers for global expanion.
“People abandon their device long before it is functionally obsolete, but when it is perceptually obsolete,” says David Edmondson, the former RadioShack CEO who co-founded eRecycling. Edmondson recognized the value in abandoned phones when he was running EasySale, an eBay startup he co-founded after leaving RadioShack. “We saw wireless stuff selling for more than the customers paid for them,” he remembers. Edmondson realized that since carriers subsidize mobile phone prices, their after market value can actually surpass their initial sales price. He called his old friend Ron LeMay, co-founder of OpenAir Equity Partners, who happened to be the first employee and CEO of Sprint PCS. Now LeMay is chairman of eRecycling, and Sprint Nextel is one of the company’s key partners. Verizon Wireless is the other major carrier working with eRecycling.
ERecycling works closely with carriers to capture used phones at the time the customer walks into a retail store to buy a new phone. The company provides retailers with software that can give a salesperson an instant price quote for a used phone when a few simple pieces of data are entered, like the phone’s model and whether or not it can be turned on. Edmondson says that about half the customers at participating retailers get an offer for their used phones, and about half of those take the offer. So far eRecycling has accepted 2.5 million used phones.
So what happens to those phones? First, they are cleared of all data. Then, they are shipped to a facility in Bloomington, Ind., where eRecycling employs about 300 people through a third-party contractor. After analysis and repair, the phone can take one of four paths: it can be resold to the carrier to be given to customers who file insurance claims for lost or broken phones; it can be sold to the original equipment manufacturer for use in warranty programs; it can be sold to a carrier in a developing country; or its parts can be recycled as a last resort.
Sales to carriers in developing countries is the most exciting part of the business for Edmondson, who holds a degree in theology as well as a degree from the Advanced Management Program at Harvard Business School. Edmondson believes that in addition to reducing e-waste, eRecycling is helping many people who would not otherwise have access to the opportunities mobile devices can provide, including education and mobile banking. Many years ago Edmondson worked with Nicholas Negroponte, the director of the MIT Media Lab who founded the One Laptop per Child non-profit. Now, says Edmondson, “smartphones are becoming the laptops of the future,” and eRecycling is helping to put this technology into the hands of people around the world who might not otherwise have access to it.
Of course eRecycling is not the only company to recognize the value in used handsets. PCS Wireless also buys phones that are surrendered to carriers, and online resellers like Gazelle.com buy them directly from consumers. But eRecycling says its strategy of empowering retailers to make offers directly to customers is an advantage. The company is profitable, and plans to use the $35 million from KPCB to expand into Europe and to “evangelize” in the United States about the benefits of phone recycling.
