A Packaging Revolution: TIPA Is All In on Compostables

Paul Shapiro: [00:00:00] Daphna, welcome to the Business for Good podcast.

Daphna Nissenbaum: Hi Paul. Nice being here today.

Paul Shapiro: Oh, it's so nice to be with you. Thanks so much for joining us. I gotta tell you, Daphna, I have tried so many of these, like so-called degradable plastics and these compostable plates, and I've done these experiments with them where I'll rip them up and bury them in my backyard and then check 'em out a few months later and they're still there.

so some, something didn't work, but you claim that you have a way better, solution. For this problem, so what am I doing wrong or what are the companies from whom I've been purchasing these products doing wrong that should be rectified and that tipa is correcting?

you know, I dunno exactly what we purchased, but, what we do is we, develop packages that are fully compostable, not biodegradable, compostable, which means that the package will break down into small parts and those, then those small parts will be consumed by bacteria.[00:01:00]

Daphna Nissenbaum: And the bacterial will create a compost. And a compost. It's like a fertilizer. It's a new resource. now that happens usually in compost environment, compost system, and a compost system. It's like where, I mean, it's exactly where the, organic waste goes to. So if you put organic waste in a compost bin, it becomes a new resource.

And it's the same for our packages. Now, in order to to claim compostability, you have to go through, tests and get certificates that actually ensure. The materials are fully compostable and they can go into the organic, organic waste stream, the compost environment, and decompose exactly like any other organic

Paul Shapiro: material.

So, until this moment, Daff, I had thought that compostable and biodegradable meant the same thing. You just parsed to those two, though you say that they're, they're not the same. So you said compostable, it means that it's gonna break up into little pieces. So what is biodegradable then, if that's not what it means?

Daphna Nissenbaum: No, [00:02:00] bio ible means, look, bio ible. There is no clear declaration for bio ible. Everything in the world might be bio ible, maybe in a thousand of years. it'll biodegrade, right, it'll break down into small parts. Compostable means that the materials break down and then consume our bacteria, so nothing left behind, and all that happens within up to six months.

So, got it. It also, there's a timeframe, a process, and a timeframe and no residuals.

Paul Shapiro: Interesting. Okay. And so by compostable do you mean only compostable in an industrial composting facility, or even in my backyard? E even in your background Backyard. All right, cool. Compostable Well, All right. Well this is really exciting.

So I am really glad that we're talking because you know, a lot of the times, I talk with folks who have a cool idea. Maybe they've raised a million or $2 million, but you have raised really an enormous amount of money. I think about 130 million US dollars since you founded this company. [00:03:00] But you founded it quite some time ago, right?

Didn't you found it more than a decade ago, right. Right. Yeah. And, and so if you were at the beginning of your journey over a decade ago, before you had founded Tepa, would you think it's gonna take 130 million of investor capital to get to where we're going? Or would you have thought, I, I think we're gonna need that much money to make this work.

you know, there's there's good and bad in the factor that you don't really know what's gonna happen because, you know, maybe if you would know, you wouldn't start going in this direction because it's frightening and it's, there's so many challenges and it's not easy. And maybe we would need 200 million, I don't know, maybe 50.

Daphna Nissenbaum: I didn't know. I have to say, look, my background, I'm not, I'm not a material, I'm not chemist. I'm not, I don't have any materials background. I'm a software engineer. That's my profession. And, and, but when I started to go in this journey, and I really [00:04:00] believe that we can, we have to solve this major problem and that we can do it, I di I did.

I didn't really know how deep is, I didn't really know how big is the problem. I, I didn't really know, how complex is the packaging technology. I do know now. and, and I'm glad I didn't know. Because as I said in the beginning, if I knew, I don't know what would happen

Paul Shapiro: would've happened. Yeah.

Okay. So, you've raised about 130 million. You were a software engineer before. What led you to think that as a software engineer, you should be the one to try to re, to revolutionize the packaging industry? Were you persuaded that there was a problem that you needed to solve? Did you think, oh, there's this cool technology that you already were aware of?

Like, what was the genesis for you? Daphna thinking, I'm gonna start. Materials company that is gonna put plastic waste into the dust bin.

Daphna Nissenbaum: I, I have to say I didn't go this way because what happened is, like a bit more than a decade ago, I had a discussion with one of my children [00:05:00] around, plastic bottles they used to take to school back then.

And where's the bottle? Why didn't you recycle it? Et cetera, et cetera. And then I heard all those kind of discussions around me and, and I knew that plastic is not going anywhere. I mean, every piece of plastic that we manufacture actually stays here and destroy. And it wasn't that, common back then to, to think.

About plastic. But I knew that, and I also investigated a little bit about plastic and understood it. It's, it's, it is a, it is a challenge. And I went out jogging and I tell, said to myself, okay, so what is, what is the right solution for packaging? What, what would be the most intuitive way to use packaging?

And the first thing that came to that came to my mind was an apple. Because when I ate an apple and I throw the residuals into the waste bin, it just disintegrates And byed breads by itself. Right. So someone who doesn't really understand in packaging and materials, I thought to myself, okay, this is the idea.

Let's create a compostable drinking pouch [00:06:00] for children to replace the plastic bottles and they will drink and drop, and that's it. And the idea was to emulate nature because nature also packed, nature packed, the oranges and nature packed the bananas and, and the, and the nuts, et cetera, et cetera. But nature.

Uses compostable packaging and the idea was to emulate. That started, we started working on, on the solution. I was, I was 100% sure that the materials are available in the market, and only when we started working on it, I understood that the materials are not available and we had to invent them, actually invent material and, and.

And, and that, that, that's, that's the journey that we went. But it didn't start with let's solve all the Christ. Let it started from the, the basic idea that says, let's emulate nature [00:07:00] because probably this is the most accurate, think a accurate way to to, to pack food.

Paul Shapiro: And, and what was the pitch? What was the pitch to investors, obviously you, were successful in, in persuading investors to pump money into your idea, to mimic nature, to create packaging that kids could use to, let's say drink water.

But what was the pitch that you're gonna, replace plastic water bottles? Or was it more grandiose than that?

Daphna Nissenbaum: So, at the beginning it was there, but when we, when I started working in this journey, I understood that the main program are, are not plastic bottles. The main problem is, All those flexible packaging that we use, all those soft, soft packages like snacks, granola bars, all those that actually, do not disintegrate, do, do not go anywhere and cannot be recycled.

So, first of all, I have to say that, It wasn't that easy to raise money. just, just to make sure that everybody understands raising money is not

Paul Shapiro: what was the problem? Like what, what was the barrier? Was it that people were [00:08:00] skeptical of the idea, they were skeptical of you personally because you were a software engineer and didn't have a material science background?

was it just the environment back in 2010 was different than it is today for venture capital? Like what was, what were the barriers for you to raising the capital?

Daphna Nissenbaum: All of the both, at the beginning. The plastic problem was it, wasn't that, I mean, not everybody understood that there is a problem with plastic.

I remember trying to raise money and people said, we dunno what you're talking about. Plastic is perfect. And then, when the crisis started, it actually started like seven years after. And the awareness of understanding that there is a problem. In 2017, when China decided to stop accepting plastic waste from all over the world, because until until then there was a common knowledge that every piece of plastic can be recycled, right?

I think the majority of the people maybe still think so. So, and, and 2017, China said, okay, stop guys. I'm not accepting anymore. Your, your waste. And the waste was actually coming from [00:09:00] Europe, from North America was. Packages were sh loaded on ships, and ships were shipped to China, and China accepted their, the waste and their waste that was shipped to China was marked as recycled.

So the recycling rate was perfect. And when China decided, stopped accepting the, their waste, organizations like the Organ Economic Forum and others. Conducted, research on recycling. Asked the question, when, when we say recycling, what do we really mean? And the findings were that less than 9% of the plastic that we use, it is actually recycled.

12% incinerated and almost 80%, 700% goes to landfill. And it doesn't work. The recycling doesn't work, and the majority of the packages can be recycled. Other bottles, the water bottles. But then all the packages that actually mix few materials together without, [00:10:00] with within one package cannot be recycled.

And so when I started raising money, that wasn't in the awareness. And in 2017 it started to be, still there was a question, why small startup can, you know, solve this problem? Indeed, I wasn't coming from, from, from the plastic industry or packaging industry, but I did have the vision and I did have the idea, and I did have the leadership, and I did have the enthusiasm to say, although or because I'm not coming from this industry.

Nothing will stop us and nothing stopped us.

Paul Shapiro: And so what was it that was persuasive? Like you're saying in 2017, things changed when China decided to stop taking the world's plastic, but your company Tepa had already been around for seven years at that point. So obviously you had raised some capital by then.

Daphna Nissenbaum: Yeah, we raised capital. We invested the majority of the capital in developing the technology. We started [00:11:00] manufacturing high scale at around 2017. That's when we started manufacturing, our products, commercially.

Paul Shapiro: So there were seven years of r and d before you entered the market.

Daphna Nissenbaum: Years of r and d and years of, scaling up.

Yeah. Scaling up from, from lab to manufacturing.

Paul Shapiro: And so now you've been on the market for six years. You have products that are in lots of different categories, lots of different types of plastic alternatives. Mm-hmm. So before we talk about the scale one breadth that Tak currently has, what is it, what's the material made out of?

So you're, you're saying that it is compostable. What is it?

Daphna Nissenbaum: It's different. First of all, it's, we have to explain something about flexible packaging. So we do, we do. We do only flexible packaging. So we manufacture films, real films, and from those films, there are companies called Converters Convert the films into packaging.

Okay. the, in the innovation is in the films. [00:12:00] So we manufacture, we manufacture only flex, we walk, we invented Unflexible packaging, fully compostable. We don't, we don't do anything that is not fully compostable and, And in order to manufacture flexible packaging, the conventional plastic industry actually blends few materials together, and we do the same.

we blend compostable raw materials and, and the raw materials come from different resources. So part of it's bio-based, part of it is fossil derivative based, but all the materials that we use are fully compostable. In order as a, as we started this, the conversation I said in order to say, In order to claim that package is compostable, we need to have a certificate, so we use only compostable raw materials 100%, and therefore the package is compostable, fully compostable, and we do have all the needed certificates for them.

Paul Shapiro: So you're saying that it's a combination of bio-based ingredients and fossil based ingredients. Of course, the conventional [00:13:00] plastics are fossil based. Mm-hmm. if conventional plastics are not compostable or using different kinds of fossil ingredients Yes. Or is there something else? Like what? Cause I, I would've guessed that fossil based ingredients were not compostable.

But you're saying, obviously that's not inherently true. No. So what, what's the difference?

Daphna Nissenbaum: The difference is that, the conventional plastic industry uses com. Polymer conventional polymers. in the compostable polymers, those are chains of material and actually the connection between the chain are breaking down in humidity and heat, and then the monomers or, or the residuals in the, in the compost are consumed by bacteria, so there's no microplastic left.

And nothing actually left from the package. So the difference is the difference in the polymers. We don't use conventional poly polymers. We use only compostable polymers. Compostable polymers actually are,combined, combined few different raw materials in each polymer. And part [00:14:00] of the polymers are derived from, from, from fossil.

Paul Shapiro: Interesting. Okay. And so it took years of r and d to come up with this. I presume that you have patented, various processes for doing this, and I, I see you sha nodding your head. So yes, they are, patented. how widely in use are TPAs project projects right now? Like, if I'm in the United States, what are the products that I would purchase that would be made from your compostable packaging?

Daphna Nissenbaum: So I. This in the way the industry works is that there are, converters who converter packaging to, to, the, the films to packaging. So there are many converters, huge market, very diverse. One and different, different converters manufacture different packages. so it's not that you go and buy, buy a package off the shelf.

It doesn't work this way. But we work with brands and the brands consume. Consume the packages from converters whom we work with. [00:15:00] So it's kind of a triangle. we work with a fashion industry, north America. We work with,food industry. Fresh produce, for example, granola bars, grains, et cetera, et cetera.

Same in Europe, so relatively, we're new in North America. We started our operations a year ago. we have a presence in Europe, which is our main, was our main market until last year. and, and we have today, Sales in, in Australia, in Europe, and in North America.

Paul Shapiro: So, and so how, how, how many folks are working at the company now?

Around 60. So, yeah, 60 people. I know that you, recently completed an acquisition, right, of this, company called, bio Four Pack. So, you know, first of all, what did Bio Four Pack have that you were interested in, that you thought it was worth $8 million of your do, of your treasury in order to acquire their company?

Daphna Nissenbaum: So, the, the, the Cellcom Compostable solutions assess sustainable solutions, [00:16:00] majority of their solutions. Is compostable. they have presence in a part of Europe where we don't have, which is each is the Benelux countries. they have vast knowledge in, in packaging solutions. They know how to take the materials and, address the market needs with our materials.

So it's a very, it's a brilliant team. It's a good company with a good, good, service and, and knowledge. In this, in our space, there have several complementary solutions to ours, like trays, for example, compostable trays, compos compostable nets, unique solutions. So altogether, it's actually synergy between our team and their team.

Paul Shapiro: Cool. If, if you could look back to Ana, let's say 13 years ago when you were starting this company and think, you know, I'm gonna be the c e O of a company with 60 employees. We're gonna be doing multimillion dollar acquisitions, we're gonna be selling products on [00:17:00] multiple continents, and we're gonna have raised well over a hundred million dollars.

Would you have thought 13 years ago that was a likely outcome for what you were doing? Or would you think that's beyond where your dreams were at the time?

if I go back 13 years ago, probably I wouldn't, I I didn't think that. so if you could

Paul Shapiro: Oh, go on, sorry.

Daphna Nissenbaum: And, but where I am today, I think we have to be much bigger than we are.

Paul Shapiro: Okay. very good perspective. So if you could go back 13 years and give yourself advice from the 2023 daphna to the 2010 daphna on, certain ways of thinking about the company or avoiding certain mistakes that maybe you ended up making, what would you have offered? What advice would you offer to your yourself 13 years ago if you had the knowledge that you have today?

Daphna Nissenbaum: Oh, it's a good question. I mean, there are mistakes and I don't, I think we cannot avoid mistakes, and sometimes I even think the mistakes are very important because we learn out from mistakes. [00:18:00] I would've said, be confident that you'll reach what you want to reach. Because there are times that you think, okay, I almost giving up, I'm about to give up.

And then you find energy or, support from, for yourself, you know, from places that you don't think you will get, support. But, you know, it's, it's, it's a journey. It's a long journey. Making a revolution. And that's what we are trying to, that's what we are working on. It's a revolution. It's changing materials of packaging.

It's, it's, you know, it's a huge revolution. Takes time, energy, patience, and and, And a lot of, a lot of believing of, you know, this is what we need to do now. Always believe in, in this is what I need to do. And I didn't agree to do anything else. Then going in the mind, just, just going in, just going in the way that, fulfilling our mission.[00:19:00]

I always believe in that, but sometimes it's, you know, The people, Indians will say, you won't be able to raise money. You won't get what you want. No one will walk with you. There's no need to your product. who would believe that the software engineer will bring a solution to packaging, et cetera, et cetera.

Daphna Nissenbaum: So,

Paul Shapiro: And you know, you're talking about not being able to raise capital. Obviously in the last 13 years you've been through times where it was difficult to raise capital to times where capital was more free flowing to now, where we are in the middle of 2023, where capital was harder to come by. How much, how many more rounds do you think that the company may need to complete before there is some type of exit for those early investors and for you and the employees, and to a point where the company may not need further injections of cash in order to be

Daphna Nissenbaum: sustainable?

look, you're looking to be a market leader and therefore we active, we are actually active in three territories, three [00:20:00] continents. So obviously we need, we need, we will need more money to grow. there's a, there's a lot in the innovation side to, to promote as well. but I think that the next one will be, either public or, or more, I would say either public acquisition or anything like that.

Paul Shapiro: I hope we will have, we won't have any more rounds. All right. You were saying though a lot of mistakes have been made at Dafna and that, you know, you learned from those mistakes. So let me just ask you, like if you are talking to somebody or if there's somebody who's listening to you right now who's really impressed by the success that you've had thus far.

not that the company has achieved all you want yet, but it's achieved quite a lot. More than most other startups ever will. So if you could offer some advice to them, whether it's in the form of resources that have been useful for you, like books or videos or anything else that was actually useful for you, or just advice that you would offer, what would you suggest to other would be entrepreneurs who want to, achieve [00:21:00] some type of a mission, like what you're seeking, whether in packaging revolution or otherwise that might be useful for them.

Daphna Nissenbaum: I think that the most, useful resource that I can recommend on is kind of, mentor, a mentor to work with someone who has already done that and can really, walk you through all the challenges. So I think there, there'll always be unique challenges and, and, and unique, mistakes that every, every, everyone will do.

But if you have a, a real person that can give you a good advice or can lead you through a process or can lead you through, you know, even, even small days in a day-to-day work, small, small things in a day-to-day work, I think it's priceless. And, for me, The people that surrounded me, I mean, the good team that I have internally and the good board and, and, and good people who supported me all, all the way.

I think this is the most [00:22:00] important thing. So find yourself a mentor and it can be a different mentor during different stages of the company. Doesn't mean the same person, but someone who's already gone through all those challenges of raising money or handling a board of, of getting so many nos from the market on, on, on raising money or on, you know, things that you wanna do.

people who don't believe with you to, who don't believe you would reach what you wanna do, what you wanna reach, but other people who support you. This is very important. I mean, don't be, don't be, a sole player that's, It's always a team. It's, internal team and an an external team.

Paul Shapiro: Mm-hmm. Sure.

So in addition to not being a sole player, then Dafna, you know, I look at, your history. This isn't your first time as a c e O of a company. You have been at the helm of other companies prior to Tepa. so I imagine that you have a number of ideas for other companies that you hope exist either in the materials space or sustainability [00:23:00] in general.

And so, needless to say, you're gonna be running Tepa for some time to come. Hopefully you'll have that i p o or acquisition that you were talking about. but I presume you're gonna be doing this for some time. So are there other ideas, Daphna, that you have for companies that you wish. Existed and maybe that somebody who's listening here might be wise to go out and start to try to solve some serious problem.

you know, I can speak about our space. So in our space, there's a major demand for,I think for, for,waste salt, waste management. sorting and, there are a few companies in our space to do kind of home composting, which is very easy and, and, and friendly. So, I think in that space as well.

Daphna Nissenbaum: So it's, it's more in the, at the end of use, what is the right way to, to, to tweet our waste. The end of the process. And this is, I think we, the world is really lacking for [00:24:00] technologies, at the

Paul Shapiro: end of the chain. Yeah. Yeah. One of the things that I, I think, speaking of end of chain that, I think the world really needs is of course some way to prevent putting more non-com compostable plastic into the world.

But there's already billions of tons of. Plastic in the environment. Right, right. And so the question is, can, what can we do to break it down? Like are there any inventions, either enzymatic processes or other types of fermentations that might be able to take the current plastic that's in the environment and break it down?

I know we know of certain microorganisms that do seem to be willing to consume various types of human made plastics. But I wonder what can be done, about all the plastics out that's out there. Cuz as you pointed out, virtually none of the plastic that gets created ever gets recycled and every piece of plastic that's ever been made is still here.

And so even if somehow magically we stopped making plastic today, we still would have to clean up the enormous amounts of plastic that we've already produced. And so I hope that, there will be some type of a commercialization of a technology that can do [00:25:00] something to degrade. into industrially, degrade the current plastics that we've put into the environment.

Daphna Nissenbaum: Yeah, I agree with you. Hopefully we can, hopefully we'll find a solution to all these plastics that was dumped someplace or just sits in, warehouses or, or, or landfills. yeah, but I, the solution for the long run is to prevent, to prevent from plastic entering the system. This is our God society.

That's what I believe in.

Paul Shapiro: Indeed. Yes. of course, we have to turn the faucet off before we start draining the tub, right? All right. Well, I appreciate what you're doing, Dafna. Congratulations on all of your success so far, and thank you. we'll be rooting for your success, continuing into the future, and we'll include in the show notes on Business for good podcast.com links to some of the products that are utilizing your.

Compostable packaging so people can see what are the cool companies that are ditching conventional [00:26:00] plastics in favor of TPAs solution here. So thanks again, Daphna and good luck. And I'll look forward to hopefully buying some grapes that come in a tepa packaging and I'm gonna put 'em in my backyard and I'll report back to you how long it takes for it to break down.

Okay?

Daphna Nissenbaum: Okay. Yeah, please do. Thank you very much. I really enjoyed it.

Thank

Paul Shapiro: you. Thank you.