bizSanDiego the business of san diego county

Tales from the Green Side posted on November 20, 2007

Three inspiring stories about local companies that are going over the top with their environmental business approaches

By Brendi Rawlin and Jon Hindman
photos by Matthew McFarland

The name of the show had something to do with bull excrement—and surprisingly, it’s still on the air for its fifth season. Penn and Teller are probably full of what their Showtime program is appropriately named, and I was one of their victims on a solitary evening a couple years ago, thinking that I’d found some semi-interesting mindless dribble to entertain me. The subject of the show just happened to be recycling, and Penn and Teller—whether they were just trying to get a rise out of people, or whether they legitimately thought their quasi-journalism held any real weight with the American public—were attempting to portray that recycling was pointless. They carried on throughout the show that the recycling industry creates pollution and has to be subsidized by the government because it’s cost ineffective.

But even if there is the slightest bit of truth to what Penn and Teller preached that episode, there’s no refuting that there are many businesses in San Diego County that are doing more good than harm by adopting environmentally friendly practices that go way beyond the simple office-recycling program. At a time when “green” is a hot topic, especially throughout the highly progressive state of California, bizSanDiego has run across a few local companies that have built their businesses around environmental practices and, in turn, are growing and thriving. You can be sure there’s no bull excrement in these tales.

chapter one
The Turchin Files
The self-proclaimed “junkmaster” and CEO of El Cajon-based Green Earth Recycling has created a new model for the recycling business that’s sure to shake things up—he’s calling it “coffee shop-style recycling.”

Josh Turchin, a third-generation recycler, learned the trade from his father and grandfather who founded California Metals in El Cajon in 1978. When merely a toddler, Turchin was riding in the back of his dad’s truck through the scrap-metal yard. After growing up in the business, Turchin headed to St. Louis for college where he earned his bachelor’s degree in philosophy.

After a brief stint in the MBA program at San Diego State University, Turchin had to choose between a higher degree and a higher calling. In 2003, Turchin founded Green Earth Recycling, a spin-off of California Metals, as the answer to his self-imposed mandate to make recycling an integrated part of consumers’ daily lives.

By bringing recycling kiosks directly to the consumer via major retailers with a conscience, 31-year-old Turchin has found a way to simplify the recycling process, making it easy and rewarding for the Smiths and Joneses. With thousands of pounds of computers, cell phones and other electronic waste polluting landfills and leaching toxic metals into the soil, and with a new California law making it illegal to dump such materials, Green Earth’s kiosks are positioned to become the answer to the electronics disposal nightmare. Turchin calls it “the junkyard of the future.”

And while cellular phone recycling drop-boxes have become commonplace today, Turchin says his company has “cracked a much tougher nut” by fitting full-service collection for the entire range of electronic scrap items that include televisions, computers and other peripherals.

At a Circuit City-sponsored Green Earth event recently, more than 40,000 pounds of electronic equipment was collected. Compare this with the 80,000 pounds received each month at the El Cajon facility, and you see the value of the direct-to-consumer model. Those who brought in their old computers, cell phones and fax machines got more than just a warm and fuzzy feeling, they were also handed a $10 gift card to Circuit City just for doing the right thing.

“We’ve worked hard on the presentation of our model in order to make recycling much more accessible and user-friendly than e-recycling has been in the past,” says Turchin.

“The true testament to our success is that our host usually chooses to place our kiosk immediately next to the store entrance, to maximize association with us, instead of relegating recycling to the shadows of
industry like the rest of the commercial world.”

The visual appeal of the kiosks and the eye-catching “Be a part of the solution. Be good to your future” messaging on the exterior of the kiosks help explain Turchin’s success earning prime positioning directly in front of host stores.

With jazz music entertaining eardrums, colorful landscape photos decorating the walls, and a cloud-filled sky painted on the ceiling, the atmosphere in the kiosk is reminiscent of a coffeehouse, the genesis of the “coffee shop-style recycling” analogy. The built-in floor scales and computer equipment quickly catalog the weight of unwanted electronics and can even tell a consumer how much energy he or she helped conserve by removing pounds of toxic metals from the waste stream.

What happens to those old computers is the true beauty of the business model. While the state pays around 20 cents per pound for recycled monitors and televisions, thanks to the 2005 California Electronic Waste Recovery and Recycling Act, some of the unwanted computers and cell phones are refurbished and sold in Mexico and overseas, where what is viewed as outdated in this country is in short supply and high demand.

While Green Earth itself has no employees or revenue of its own, parent company California Metals now has 50 employees, and Turchin reports its revenue has climbed steadily by 15 to 20% over the last few years. The real value of Green Earth from a business perspective, says Turchin, is the marketing vehicle it provides for its parent company. Because of its success, Turchin believes the Green Earth model will be emulated by regional recyclers across the country.

Turchin also points out that Green Earth recycles more than just electronics. Aluminum, plastics, glass and scrap metals are also collected, but for retailers such as Circuit City looking for ways to enhance their corporate responsibility and get some good PR while doing it, the electronics recycling kiosks are a perfect fit.

For Circuit City, the Green Earth events have been so successful, the company has signed on to host 20 additional events across Southern California from March through November.

Turchin is currently looking for other companies and groups to sponsor Green Earth kiosks, such as environmental clubs on college campuses. His plan is to share a percentage of the profits made during a campus Green Earth event with the clubs themselves.

If you ask Turchin whether he considers himself an environmentalist or just a savvy businessman, he’ll tell you it’s hard to know where one begins and the other ends.

“My business is passion-driven as an environmentalist, but the success of my business is maximized by the environmental need,” he says. “Consumers win. Retailers win. And Mother Earth wins.” Not bad for a philosophy major.

chapter two
eager beaver
If you grew up in the 1980s, or were anything but partially brain dead, you probably remember the Pop Rocks phenomenon. The candy—processed with carbon dioxide, causing it to jump on your tongue and tickle the roof of your mouth—has become a marketing tool for Hangers Cleaners’ owner Gordon Shaw, who years ago took a mammoth chance on a little-known expensive technology.

Shaw got his start in the cleaning business in 1978, a convert from a waterbed salesman. Back then, dry cleaners made a modest living, and Shaw remembers charging 59 cents per garment in what he refers to as “the low-price, high-volume days.”

From 1978 to 2000, he bought and sold six separate traditional dry-cleaning locations—“traditional” meaning that garments were cleaned using the chemical perchloroethylene, better known as perc.

In the mid 1990s, however, the writing on the wall began to appear as clear as ever that perc was causing harm to the environment and was also proving to cause cancer in humans. Shaw wanted nothing more to do with the destructive chemical and began looking for a solution.

“I was very active in going to trade shows,” says Shaw, 57. “I always like to get outside my business to see what’s going on. At one of the trade shows, there was a guy wearing a white lab coat with a little box—kind of a mad scientist-type scene—and I asked, ‘What’s this all about?’ And he said, ‘We’re developing a way to clean clothes in liquid carbon dioxide.’” Initially, Shaw had hesitations that carbon dioxide dry-cleaning machines wouldn’t work as efficiently as perc, but the technology developed over the years. Finally the technology began to come of age, and Shaw joined a revolution that was very much in its infant stages.

Deciding that selling his traditional dry-cleaning operations would be better than trying to convert them to accommodate the new CO2 machines, Shaw ditched the last one in 2000 and used the equity, along with a substantial small-business loan, to become a franchisee for Hangers.

The risk was two-fold. First, according to Shaw, there were fewer than 10 machines in the world utilizing the new CO2 technology. Second, the machines cost a whopping $100,000, about three times the cost of a perc machine. “I went forth with equal parts of excitement and anxiety,” Shaw says. “I was going way out on a limb. And everyone in the industry told me that I was going to fail miserably.”

His first Hangers franchise opened in Mission Valley in 2001, and the business definitely took a hit, with reported revenue of only about $213,000. Hardly disheartened, though, Shaw kept pressing on with a technology that would start getting noticed quickly with some early luck. Padres announcers Matt Vasgersian and Mark “Mud” Grant both became regular customers. Vasgersian, particularly, was so impressed with Hangers’ environmental passion that he suggested a trade deal between Hangers and the Padres team.

“I’d get mention at the end of games—Dry cleaning provided by Hangers Cleaners—and Matt and Mud would work something into the middle of the game sometimes. Like if a guy slid into second and got up and brushed his shirt off, they’d say, ‘Man, it looks like he needs to go to Hangers,’” chuckles Shaw, a huge baseball fan.

Shaw’s revenue has climbed every year: $487,000 in 2002, $706,000 in 2003, $918,000 in 2004, $1.1 million in 2005 and $1.6 million in 2006. And Shaw went from being the sole employee in the beginning to now overseeing a staff of 28. There were other factors for success, too. He says that the Hangers Cleaners parent company, which is no longer in the dry cleaning business, put a lot of money into developing the brand, one that is increasingly recognizable in San Diego. He’s also added more locations—downtown, Miramar and in the master-planned communities of Santa Luz and Torrey Hills—some of which he was able to land because he operates differently from all the other local cleaners. It has given him an edge up. It has also put him a step ahead.

In late January 2007, the California Air Resources Board adopted regulatory amendments that will protect the state’s air quality by gradually phasing out the use of perc in the dry cleaning business. By 2023, dry cleaners will be forced to replace perc machines with safer alternatives such as CO2.

When asked about the new regulations, Shaw is mostly satisfied. “Personally, I would have been better off if they didn’t ban perc. Now I’m going to have competition,” he jokes. But, he adds, “It kind of vindicates me and validates my decision. It feels good that what I was analyzing and deciding six, seven years ago turned out to be right.”

Looking back, Shaw admits that the decision to switch to the CO2 machines wasn’t based purely on altruism. But truth be told, he considers himself quite the environmentalist, and he had the forethought to realize that many San Diegans share his pro-environment views.

“I thought that presenting a product that was environmentally friendly was a natural for San Diego,” Shaw recalls. And, it would seem, his early inklings were spot on.

chapter three
cleaning up
For a middle-aged man at the helm of a clothing and yoga company named Beaver, environmentalism is pretty much mandatory, right?

No doubt, and Beaver Theodosakis, the CEO of Vista-based Prana clothing fits the mold perfectly, though his early career path may not have provided an accurate preview for where he’s at today.

“I had a background in the garment/clothing business in the 1980s,” says Theodosakis, who speaks with almost Zen-like ease and relaxation. “I started brands called Life’s A Beach and Bad Boy Club with a few friends of mine, and we were involved in the action sports market.”

Prior to that, his business partners were tree trimmers (not tree huggers), and he was a chef. So, not armed with prior garment industry experience, the going was somewhat rough.

“My partners and I got into the business, didn’t know much and made a bunch of mistakes. After six years we ended up selling the business to our licensee for basically nothing,” he continues, adding, “But we had a suitcase full of lessons learned.”

Theodosakis, a mountain climber and yogi (a person who practices yoga, for those not familiar with the term) took those lessons learned and applied them to another brainchild, one that would combine his clothing industry experience with the activities he was passionate about. This time, he took on a new partner—his wife, Pam—and set out with a different philosophy in tow. “I thought we could do something that could have a sustainable story—use materials and methods that were unconventional but appreciated by our conscious consumers,” says Theodosakis. “Both climbers and yogis are pretty tuned into the environment.”

So in 1993, the couple ventured forth with their garage startup. His wife, who serves as vice president and director of women’s designs, found the word prana—a 5,000-year-old Sanskrit word that means breath, spirit, energy and life—in a yoga book. The business, officially named Prana, was off and running, and 100% committed to adopting environmental practices.

“We made our own paper, which the hangtags were printed on. We’d gather up all the newspapers from the neighborhood and put them in our blender with water and pine tree scent. We’d grind up a pulp, pour it on a big cutting board, roll it out flat and dry it in the sun. Then we’d put water-based screen print on it and cut it with a pizza cutter.”

He admits that it was a lot of work at a time when profit wasn’t exactly rolling through the garage door. The company really treaded water for the first five years, but during that period he kept the faith that good business practices would eventually pay off.

While Theodosakis won’t share revenue, he does say Prana has doubled its revenue every couple years since those initial “grit and determination” years. He estimates that the company will ship around two million garments this year, compared to half that amount a couple years ago.

Nothing pleases him and his wife more than being able to expand the company’s positive impact on the environment, and recent success has made it all the more possible.

Take 2000, when Prana got a big boost to its environmental practices when a scenario occurred that would be unheard of in some industries. One of its biggest competitors, Patagonia, a privately held active sports apparel company out of Ventura, hosted a seminar on organic cotton, presenting the possibilities and sharing its resources. Theodosakis immediately chomped at the bit to follow in Patagonia’s footsteps. In no time, with the help of Patagonia’s resources, Prana made the switch from regular cotton to the organic variety.

“We saw the effects that growing conventional cotton had on the planet and the water systems,” says the 48-year-old, who is always up on recent environmental trends. “They say growing the cotton necessary for one pair of jeans takes about one pound of pesticides. That ends up in the soil and poisons the farmers and pickers and even the cottonseed oil that’s in popcorn and other foods. Organic cotton is grown in a way that eliminates using pesticides.” Sure, it’s more expensive, but remember Theodosakis’ motto: environment first, profit second.

“We invested in organic cotton, saying that we’d swallow the difference in margin, because we feel it’s important for our brand.”

Never completely satisfied, Prana made another move that Theodosakis hoped would make some companies “green” with envy, when it adopted its wind-power initiative two years ago. Prana now buys renewable energy credits to offset the electricity generation used in the Prana offices, employees’ homes and even about 400 of its dealers’ operations. Buying these renewable energy credits finances the increased costs of wind-energy production to make it just as financially viable as coal-based energy production. In the last year alone, the company tripled its wind-power generation and boasts that its local manufacturing plant is now completely green-powered.

As its sustainable impact continues to grow, Prana—which, no surprise, has an in-house recycling program for glass, plastic, cardboard and paper—is in the process of launching a hybrid vehicle program. If a company employee purchases a hybrid vehicle, Prana plans to pay $100 a month toward his or her car payment. The company also ceaselessly looks to support events and foundations that have to do with environmental causes or keeping climbing areas or hiking trails open.

“Prana is not saving the world by our efforts,” says a very modest and grounded Theodosakis, yet it’s clear that his company is setting a good example and helping inspire change.

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Extra Energy Saving Tips From SDG&E

Expanding renewable energy to meet future needs

Solar, wind, geothermal and other types of renewable energy are playing an increasing role in SDG&E’s efforts to meet regional demand for reliable electricity.

Today, the company provides five times more renewable energy than we did just five years ago. And, by 2010, it plans to supply at least 20% of customers’ energy needs from clean, renewable sources. Renewable energy is a key part of the company’s long-term energy resource plan, along with energy-efficiency programs and the infrastructure needed to produce and reliably deliver more energy to the region.

Renewable energy comes from sources such as sunlight, wind, subterranean heat, water, vegetation and landfill gas. It is sometimes called “green” energy since it is more environmentally sustainable than energy derived from fossil fuels. SDG&E’s renewable energy commitments include contracts for:

• 300 megawatts (MW) of solar energy from a major new solar facility planned for the Imperial Valley (a megawatt is enough electricity to supply approximately 650 homes) with one additional 300 MW option and other possible expansions that could make it the largest solar energy facility in the world.

• Over 350MW of wind energy from new and existing facilities around Tehachapi, east San Diego County and Palm Springs.

• 69 MW from biomass (agricultural and forestry residue) facilities.

• 38 MW from existing and proposed biogas (landfill and sewage) facilities.

• 25 MW from a geothermal project to be located in the Imperial Valley.

The Sunrise Powerlink, a proposed electric transmission line linking our region with the renewables-rich Imperial Valley, is key to achieving SDG&E’s 20% renewable energy goal. For more information about SDG&E’s commitment to providing safe, reliable energy, visit www.sdge.com/future.