June 24th, 2022

 

Dear Investors, 

 

We‘re writing a letter to you to celebrate our 1-year milestone, and to invite you into our perspective, our trials, asks, and our strategy. 

One full, operational year of building a desirable service that’s been designed specifically to increase diversion of organic material from landfill, and scale the adoption of source-separated food waste. One full year of imagining new ways to process organics, and researching new forms of valuable amendment to enable small farmers to operate regeneratively. One full year of proving that you can start a brand new waste company with a grandiose vision.

 

THE TROJAN HORSE OF WASTE

 

Our strategy as Co-CEOs has been, from the start, to build a regenerative business. A company that produces value for its consumers, and for the overarching system in which it sits. Not only do we believe that transformative change to the way environmental resources are used is possible, but as supporters, we are now all actively shepherding that circular change. 

 

We are building this change at Hodge with four steps: 

 

1. Seek out end-users, and invite their perspective into the process of creating value

2. Take operational initiative to claim untapped market of this current waste “liability” 

3. Explore all avenues of organics processing to build multi-method system

4. Take advantage of secured supply to monetize multiple products 

 

We do this by being a Trojan Horse. We’re pioneering some radical operational logistics at core with a beautiful, clean, consumer brand in the world. Our job is not to sell regenerative values, but to actually build the trajectory towards that future with our strategy. 

 

On the surface, we understand a sleek, well-designed service that prioritizes users will sell. With the primary metric to increase adoption rates of source-separation, we acknowledge the value of a brand in today’s commercial markets, and the power of the consumer.  At core, our business is complex: it involves regulation around collection, material handling, facility systems with machinery, a world of “delightful” smells, high-value liquids, and the logistics of moving metric tons of treasure daily. 

 

We’re cloaked as a modern startup that’s bringing forth the potential of a sustainable, inclusive business. Although we move fast, are extremely lean, and iterate quickly, our vision is not frantic. We know now, after one year of pilot service and ground-level testing, that we provide a fundamentally good service in an economically stable industry (waste management), with high-potential material on our hands. Although a large bite to chew as a young, small startup––both collection and processing––it is our strategy for tipping the scale towards systemic change that will land us, with patience, in a fortuitous position holding stable both stream of supply, and monetized value of products produced. 

 

As founders, this journey has challenged our approach to the core. Do we sacrifice part of our vision for simplicity? Do we change our story, and our metrics, to satisfy a traditional entrepreneurial market trajectory? 

 

Our long-game strategy through this short-term complexity remains clear: be persistent with operating our business despite uncertainty, involve users and user feedback, continue incrementally iterative trials, and monitor signals of change. Our momentum is maintained by open-minds, tenacity, large doses of positive customer feedback, and a superb base of supporters like you. 

 

WHERE WE ARE TODAY

 

Our Customers are ingredient-forward restaurants that, simply put, don’t want food to be thrown away. We have a 92% retention rate for last 7+ months (1 loss), can onboard a restaurant that’s never source-separated in under 15 minutes, and we bring in ~$3.9k revenue monthly from 12 restaurants. We launched our pilot with 75+ on our waitlist, and this grows daily.

 

It’s beautiful to be in a position where we have routine, persistent inbound requests for the service that we provide, from both our target segment and other residential and commercial stakeholders. We receive excellent feedback from customers, and we’ve worked hard for this  ever-growing waitlist seeking our service. 

 

Our Regulatory Position as a certified hauler is currently navigating large-scale corporate contracts fielding potential value. On the proximate horizon is New York City’s commercial waste zoning implementation, where commercial haulers are required to apply to service a zone ($10M contract with the city), with 20 zones available. The proposal requires these small, medium, and large-scale waste collection companies to provide service for trash, recycling, and source-separated organics—requiring an organics standard from hauling companies that currently they can’t meet. The proposal is also intended to produce greater transparency on their pricing, lower truck mileage, reduce emissions, and improve education + outreach. 

 

For Hodge, our unique value proposition to haulers is clear: we are the only company dedicated to scaling organics collection. This places us fielding potential partnerships with these companies as their subcontractor, covering a future large majority of their potential organics-recycling service. We are now in a position where we have a secure base to grow and expand our collections service, with a guaranteed market afforded by zone upon partnerships. The question for us, is how much these contracts shape our valuation, who will win the awards, and how strategize contract length. 

 

Our Fundraising plan is this: create a secure base from friends, family and close angel investors to maintain our value-creation approach, raising a priced round from whom, and when, the terms are opportune. We raised a successful $190k in December and January in our early F&F round, which has gotten us from 3 customers to 12, city-licensed, a new facility in Brooklyn, our first 2 employees, a grinder to speed up processing, a van, and a fully operational Beta company.  

 

We’ve are now extending these pre-seed terms on a SAFE, continued to be limited to people we know and cherish. Forty Greek soldiers were said to have been inside the Trojan horse, breaching the city walls before conquering Troy. How much do you believe in this battle? 

 

We’ve gained enormous knowledge around how these hauling partnerships can and will likely shake out, and seek further pre-seed funding to secure our next-stage stability through the DSNY’s award of these zones. Additional funding of $450k at these ground-level terms equips us with operational runway through March, a small advance to produce and test our first-version fertilizer product, finalize our facility processing capacity, hire on 2 employees, transition to a (needed!) cloud database with a more automated supply chain, and secure our facility + land permits. 

 

THE FUTURE AWAITS

 

Our Next Year should see potential growth beyond our first facility, an increase by 190% aiming for ~200-250 customers, and the introduction of our second revenue source. Our summer will be spent continuing the iterative operational growth by securing a shredder, and ensuring that the extremely complex regulatory requirements are met for the warehouse, and for the farms.

 

We are thrilled to be where we are, and mindful of the ever-delicate balance of enduring vision with momentary fuel. We are growing our business in a sustainable way, attracting good employees, and solid inbound inquiries. 

 

As a shareholder, we’re glad you’re on our team. If you would like to increase your contribution on these ground-level terms and solidify our vehicle for positive-change, we’re delighted to afford that opportunity, and to accept your further support. If you have introductions to family offices, or angel investors you admire, trust and think would align, please let us know!

 

A joyful summer to you all, and thank you for your support. 

 

With tenacity, 

 

Daisy Conroy & Rose Pember

Co-CEOs, Co-Founders

Hodge, Inc. 

51 Union St. 

Brooklyn, NY 11231