1-on-1 With SmartBins Founder David Conway

David Conway is founder of SmartBins, a tech-enabled bulk-food dispenser.

Jon Springer: Welcome to the Breakroom, David. SmartBins aims to reinvent bulk food departments at U.S. food stores behind technology, but there’s an environmental aspect to it as well. Can you explain?

David Conway: The origin of SmartBins goes back to my time in the Deployable Operations Group of the U.S. Coast Guard. In 2012, was deployed to Guantanamo Bay with PSU 311, and I remember standing watch and seeing tons of trash floating around my boat. I decided I was going to have to do something about it.

SmartBins is centered around the premise that sustainability is a business advantage. By reducing inefficiencies in the food system, we are cutting waste that not only affects the planet, but also retailers' bottom line. Speaking to the environmental aspect, the food system contributes to 37% of greenhouse gas emissions, and three-fourths of household waste is food packaging. With prepackaged products, we are shipping half-empty boxes around the world and paying employees to inventory, stock, rotate and face every product in a store. We can meaningfully increase supply chain and operational efficiencies while cutting packaging waste at its source.

How would you assess the appetite among grocery manufacturers—and shoppers—to make and buy other products this way?

We designed the S1 Dispenser to support a wide range of product, because we are not replacing the bulk food aisle, we are reinventing the center store. We developed new valve designs and agitation methods that allow for a variety of product to flow. We don't like to define ourselves as innovating bulk food, but rather rethinking how products are moved and sold at a fundamental level. We are creating a new sales channel and technology that enables “packaging at purchase.”

This operational process improvement is comparable to Ikea popularizing flatpack, which streamlined supply chains and made them the giant they are today. We can do the same thing Ikea did with furniture but to the products we buy every single day. We believe packaging at purchase holds the potential to be the most meaningful innovation in food retail since the barcode was adopted in the 1970s.

I don’t want to give away too much, but what I can say is there are few ways online fulfillment pencils out. In an industry that skims by on 1%-4% net profit margin, the cost of last-mile delivery requires us to take a fresh look at how and where we package. SmartBins is not just about traditional brick-and-mortar stores, that's just one stepping stone to radically change how products are moved. SmartBins will enable profitable brick-and-mortar and online fulfillment.

SmartBins is a simple and obvious solution to the way we move products every day. Sometimes the simplest solutions are right in front of us. ... Did you know we sent men to the moon before we figured out how to put wheels on luggage or the barcode on products?

You’ve spoken about how your dispensers also reduce shrink. How so?

Shrink encompasses expired product, theft, damaged product, and we address all these points. SmartBins allows for retailers to automate discount cycles based on product shelf life to push expiring product out the door. We can also reduce theft by positively identifying the amount of product that left the dispenser. Self-labeling and taring containers that introduce theft and shrink can be virtually eliminated!

How will these bins change the customer experience? Do we need to get used to taking along containers as well as bags to grocery stores?

Far too often, grocery store aisles contain a dizzying array of disappointing products encapsulated in multiple layers of plastic. SmartBins gets you the products you want without the wasteful packaging.

Our dispensers allow for both single-use bags provided at dispensers and shoppers bringing their own containers. We don’t want to force a single customer experience or require shoppers to bring containers. Simply put, we are packaging agnostic.

Where can we find these units today—and what needs to be done on your part before we see more of them?

We are currently piloting the S1 Dispenser at Black Point Market near my house in Santa Cruz, Calif. Black Point Market is a small community shop that is making meaningful steps to reduce their environmental impact. They’ve been super supportive of us. …

What needs to be done to see more SmartBins S1 Dispensers? We need to build and deliver more units to all our existing partners. Our current objective is to meet outstanding customer demand before we open up to new accounts.

Lightning Round

Coolest place to shop for food in Capitola, Calif.?

The Food Bin and Herb Room.

You’re a former U.S. Coast Guard serviceman. What was your favorite port?

I spent nearly a year in Guantanamo Bay. I really valued that time; it was structured and simple.

Best marathon time?

4:19. I know it doesn't sound too fast, but considering it was over 100 degrees and a lot of hill climbs, it put me in the winning position...

A’s, Giants or other? 

I’m not a big sports guy, I can’t sit still long enough to make it through an entire sports game! However, I surf several days a week!

Fill in the blanks: I thought the hardest part of this gig would be selling our products to grocers, but it’s turning out to be finding enough time to surf.