The Rounds: Philadelphia, PA

GARY: Next on "Start Up," we head to Philadelphia, Pennsylvania, to meet up with Alex and BK, the founders of The Rounds, a company that refills your nonperishable pantry items and picks up your empty containers.

Kind of like the modern-day milkman, but for sustainable household staples.

All of this and more is next on "Start Up."

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♪ The first time you made a sale online was also the first time you heard of a town named... MAN: Dinosaur.

We just got an order from Dinosaur, Colorado.

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♪ My name is Gary Bredow.

I'm a documentary filmmaker and an entrepreneur.

As the country continues to recover, small business owners everywhere are doing all they can to keep their dream alive.

So we set out for our 10th consecutive season to talk with a wide range of diverse business owners to better understand how they've learned to adapt, innovate, and even completely reinvent themselves.

♪ This is "Start Up."

♪ Many years ago, before homes had reliable and affordable refrigeration, milk was delivered to houses daily.

Milkmen took churns on their rounds and filled the customers jugs by dipping a measure into the churn.

Of course, the need for milk delivery has decreased over the past half century, with deliveries reduced to one to two days per week or completely eliminated.

The convenience of running to the store for items versus refilling existing containers has led to an astronomical increase in waste, filling landfills to their breaking point and creating massive areas in the oceans, commonly referred to as a trash island.

Microplastics have been found on every corner of the earth and in the deepest parts of the ocean.

If we don't begin to reduce waste and reverse this process, the world will look very different for future generations.

Today I'm heading to Philadelphia, Pennsylvania, to meet up with Alex and BK, the founders of The Rounds.

From what I've heard, Alex and BK are bringing back that milkman mentality by using reusable containers to fill up consumers' nonperishable goods.

The Rounds have given "Start Up" the opportunity to break their story first, and I'm very excited to learn more about this game-changing concept.

I want to start by learning a little bit about you.

ALEX: I had a bit of a unique path.

My first job out of college, I worked at the CIA.

I was recruited to go to the CIA.

GARY: Wow.

That's not something we hear every day.

ALEX: Not, not, it was not in the cards, was not a part of the plan, but it... GARY: Yeah.

CIA.

ALEX: Still trying to figure out why, why they picked me.

Maybe at one point I'll know.

Um, so I did that for, for almost four years.

GARY: So you were an agent?

ALEX: I was an analyst.

GARY: What did you take from that?

What are you carrying from that in your life now?

ALEX: It really taught me the value of, of mission and being able to align a group of people around a common objective with that sense of mission.

And that's what a start-up is.

GARY: Yeah, I was going to say, that's business right there.

ALEX: So that was, that was a piece.

And then also on more technical skills as an analyst, learning to write and brief and communicate at a very, at a very high level, synthesizing a lot of information.

So it was truly an incredible experience.

GARY: Tell me about the aha moment when you first thought of The Rounds.

ALEX: I've lived in high-rise apartments in city centers without a car for now almost a decade.

Uh, and I love it.

It's a luxury to be able to live without a car because that means you're in a place where, you know, there are options, there's grocery stores.

But there were, there was a real pain point around the most basic boring products, like your hand soap, you know, your, your toilet paper.

The way that I was getting those products just didn't make sense.

So I lived in an apartment building with 500 units, and my hand soap ran out.

The way to solve that is, you know, I go online.

Once I find it, it comes in a box within a box the size of my kitchen table.

GARY: And more plastic.

ALEX: Identical bottle of hand soap.

The two are the same.

The only thing wrong with the first one is that it's empty, and I'm throwing it away.

I'm like, there's 500 people in this apartment building.

And from my apartment, I can see five other buildings that have 500 people.

We were all getting these basic, boring but essential products delivered to our doors in a box, one off, like individually delivered to each one of our doors.

And, and that just made no sense.

It was, like, there, there must be a better way, um, that we can avoid all of the packaging waste.

And honestly, the experience sucks.

It's not, it's not a good experience for the consumer to be managing hundreds of products in your home.

Like, you're keeping the inventory in your brain, There's a lot of other things you should be using your brain for, not, like, knowing do you have trash bags under the sink.

So, wanted to, you know, we set out to, to solve that, to say, "How can we build a distribution model that would allow us to cut packaging waste entirely?"

Had the classic, "How hard could this be?"

You know, this is the naive approach to starting a business.

GARY: Of course.

It's no big deal.

Yeah.

ALEX: How hard can it be?

GARY: We'll just do this.

ALEX: We can just do two-way logistics at scale.

GARY: Explain to people what zero waste or the closed loop is and means.

ALEX: So, it's really about keeping all of the assets within, within the same loop so that nothing is, is going to waste.

So it's the classic milkman model.

You have a, you have a glass bottle with fresh milk delivered to your door.

When you finish, you leave the empty outside your door.

We're able to pick up that empty bottle, you know, clean it, prep it, refill it, bring it back to, to the door.

So there's, there's just, we're cutting the waste.

Waste, by definition, is inefficiency.

GARY: And that milk bottle, it doesn't come in a plastic bag and then another box on top of it and another box-- things to throw away.

It's the same container being refilled with the thing you know you're going to use.

ALEX: Yeah.

From somebody local.

We are truly the friendly face you know by name.

We make, we're called The Rounds because we literally make the rounds in your neighborhood on the same day every week.

We come on an e-bike, we drop stuff off, we pick stuff up, and we keep you stocked with the essentials.

We say "the boring stuff," but in a loving way.

We love that we can take the, the boring products off your plate and that we can do it in an extremely sustainable way.

GARY: Take me back to the moment when you first heard about The Rounds.

BK: What really drew me to The Rounds was two things.

First piece was Alex.

The second piece to that was, I think, in current thinking, sustainability and convenience are two mutually exclusive concepts.

So how do we flip that around and.... GARY: Make it one.

BK: Yeah, and make a world where, you know what, sustainability, living a sustainable life doesn't have to be expensive, it doesn't have to be inconvenient.

We can make it part of your daily routine.

GARY: Built-in system.

BK: Exactly.

And kind of flipping that, flipping that mind on its head was a very interesting concept.

So that's why I wanted to dig in more and learn more and, you know, and wanted to, ultimately decided to become part of the team.

♪ ♪ GARY: Step one in actually turning this, this idea, thought, concept into what it is today.

What was the first step?

ALEX: Just talk to people.

Like, for six-plus months, there was no product, there was no business.

There was me-- GARY: Market research, essentially.

ALEX: And like having conversations like this in somebody's kitchen.

But it was like people's eyes would light up.

GARY: Yeah.

ALEX: They're like, "Wait.

I never have to buy toilet paper again?"

GARY: They were excited.

ALEX: Right.

And that was like, oh, okay.

Like I don't know the details, I don't know how we're gonna make this work, but there's definitely something here because you are excited about hand soap and trash bags.

GARY: Next up-- you're talking to people.

Then what?

ALEX: Okay, well, how will that work?

So it started with five members, literally just five people really running a pilot on let's see how this works, let's see the cadence, let's understand the schedule.

A dozen products, like way too small of an assortment.

The containers weren't right.

We were doing monthly refills.

Not the right cadence.

Needed like-- So a...like... From how we actually were doing the thing, nothing was, was working, nothing was optimized.

GARY: Yeah.

ALEX: But the main thing, the excitement, the stickiness, the people, the people saying, "Yeah, I want more of this.

Can we add more, more stuff?"

Um, that was, that was definitely there.

GARY: After you did your, your beta, uh, what was the next step?

ALEX: So brought on our, you know, the first, first employee, um, joined.

The two of us would, would run around Philadelphia getting... and I'm talking, like, one new member a week.

Like, this wasn't like a rocket ship.

It wasn't like, we weren't blowing the doors off of anything.

GARY: Yeah.

ALEX: But it was like, "Okay, we're growing more and more people.

It's still sticky.

Hey, that first member, they're still with us, and like they're getting more stuff."

Just very, very slow growth over many, many months.

GARY: What were some of your marketing methods in the beginning to get the word out?

ALEX: It was truly like hand to hand.

We would pop up in your lobby.

We would bring coffee and doughnuts in the morning during rush hour.

We'd be back in the afternoon with, you know, wine and cheese, whatever we could, we could do... GARY: Oh, my god.

ALEX: ...to just get five minutes with you to say, "Hey, we've partnered with your building.

It's, you know, it's a new amenity.

You know, this is, we're here to service you and all of your neighbors."

GARY: So, you were hitting apartment complexes.

ALEX: We started with apartment buildings.

GARY: Smart, smart.

Okay.

ALEX: And then-- But it was truly, let's just get face time.

GARY: Yeah.

ALEX: And nothing scalable about it.

But just the same idea of us refining the message and understanding what is the thing that makes people's eyes light up.

Um, but for a long time it was, it was, it was slow, slow and steady.

But then we, you know, we, we started to move more and more quickly, our growth in, in Philadelphia in our first market, and we were ready to launch our second market.

So then we went to Washington, DC.

And it was like, okay, this is, this is a 90-minute train so we can still hop back and forth between the two markets, keeping things as close as possible.

But everything just doubled.

Double the team, double the complexity.

Um, and so that was, you know, the first, the next stage for the company is we were operating in those two markets.

And what we saw in DC was much faster growth with the benefit of all of the work we did in Philadelphia to really do those like one-off conversations, get to your point, get really at the, at the heart of the issues, and then started to see that pay off in our second market.

GARY: It's always such a challenge to introduce something new to the market, something--because you have to educate the market on this.

Did you foresee that as being like a major uphill battle, challenge, like... Or kind of take for granted that people would just know and come on board?

ALEX: I think we took, took it for granted.

Being naive is, is a helpful trait to get, to get started on a lot of these things.

But what we have found has been extremely encouraging, that there is, there is real demand for sustainable alternatives.

Green is no longer fringe.

There's this box guilt about like, "Eh, I feel a certain way about getting all of this stuff delivered in boxes within boxes and single-use plastic to my door."

GARY: Yep.

ALEX: And we're all open to that sustainable alternative.

But there's absolutely education because we're talking about buying, not shopping.

We're not on demand.

This isn't faster, faster, faster.

This is on a schedule.

You're gonna have a set refill day, same day every week.

And that's different than a lot of other models.

So there are components where we need to educate on how our service is different and explain the value to it.

GARY: You're right.

I feel there's a large but very slow shift happening in the mindset of people that they know that we're sort of in trouble.

ALEX: Yeah.

It's slow only because the alternatives are less convenient right now.

It's not create demand for sustainability.

It's remove the friction.

The demand is there, but there's just a ton of friction.

GARY: That needs to be the normalized system that's in place.

ALEX: For sure.

And then everybody, people will go.

People will absolutely choose it if you can remove that friction.

GARY: Tell us your name and when you first learned about The Rounds.

DELANEY: My name's Delaney.

I actually first learned about The Rounds last year.

Applied, actually, to work here by mistake.

spoke with AT, spoke with BK.

GARY: Yeah.

DELANEY: Um, learned about the story, learned about what they were wanting to do.

And I sold, sold everything, moved from Louisville, Kentucky, to Philadelphia to work with the team.

GARY: Oh, my God.

That's a bit of a testament to your belief in the company, right?

DELANEY: Yeah.

GARY: I'm curious about sort of the steps in the process of, you know, getting all of your materials and supplies.

Is everything kept like in a warehouse or something like that?

DELANEY: Yeah, so, we have a larger warehouse here in Philadelphia that holds like the bulk of the inventory.

And then from there, we'll take it to what we call neighborhood refillment centers, so NRCs.

They're a little smaller, and that's where all the packing happens.

that's where all the bikes get loaded up, and they'll dispatch from that location throughout the city.

On this trailer, we can fit probably 40 to 60 deliveries, so we'll go out and do that all day.

GARY: 40 to 60.

DELANEY: Yeah.

GARY: Man.

Would it be all right if I did a ride-along with you?

DELANEY: Of course.

Let's do it.

♪ GARY: I love riding bikes, so, of course, I had to go on a delivery and get the full experience of what it's like to work for The Rounds.

♪ We cruised around Philly and made our first stop at a long-time customer's house.

♪ ♪ ♪ What was your original thought when you heard about The Rounds and the whole concept of what they were doing?

NIC: I mean, I think about this all the time because of the packaging waste that comes from all the things that you have to buy, especially when you go even to some of the most conscious supermarkets.

GARY: It's crazy.

NIC: It's way too much.

And they have a great sustainability mission, but then as I started to learn about them as a company and just how great their customer service is, how consistent they are, how easy the platform is to use, I mean, that's the other things that really got me to want to use the platform.

GARY: Walk me through the full experience as a customer.

NIC: So when you first get on The Rounds, it's really fun 'cause they ask you a bunch of questions to really get your profile of what kind of shopper you are, and really kind of understand that about you.

And then once they kind of get that initial, suggest what they think you would need for the week, you can recorrect it.

And they have this great kind of "now, later, and future" way that you can get on the platform and pick the materials that you know you're gonna need, what your quantities are.

And then also, you start to get really used to the cycle, okay, every two weeks the way we're getting toilet paper, we're gonna get toilet paper.

How we get our trash bags...

So it's really fun to kind of unlock that, and they make it really easy on the platform.

GARY: I mean, the zero waste component of it alone is an amazing benefit.

But is there any cost savings in addition to that?

NIC: So what I love about The Rounds, too, they'll actually say, you know, "You're saving this much over if you bought this at a supermarket."

GARY: Oh, that's awesome.

NIC: And because you might think to yourself, "I'm buying one roll of toilet paper.

Is this actually a good deal?"

But they show you what the savings are, which I think is really cool.

GARY: The economic, the environmental advantages... Why wouldn't someone sign up?

NIC: I don't have an answer to that.

I think everybody should.

GARY: Is this a logistics company, a delivery company, a tech company?

What is this?

ALEX: We are solving a big problem, and it's complex.

There's a lot of different, there's a lot of moving pieces.

We are building technology, we're building a prediction engine to make sure we can get better and better at knowing when you're gonna run out before you run out.

Um, but at the end of the day, for us it's about the circular economy.

It's about creating that closed loop.

And our innovation is in being the first two-way last-mile logistics network.

GARY: Did you have to go out and raise funds?

ALEX: We did.

We went out to present, uh, our plan.

This is the business that we want to build.

We see a really big opportunity in creating that two-way last-mile logistics network.

It's gonna require technology.

We can't self-fund that.

Starting with really small checks, like very, very small checks that help, you know, "Okay, we can build this one web page."

And then from there, you know, checks getting bigger, business continuing to grow, us being able to better articulate, present the business case with more data to make sure that we can continue to get the investment we need to build the business.

GARY: Tell me all the markets that you're currently in right now.

ALEX: So we are in Philadelphia, DC, Miami, and Atlanta.

And our goal, our mission is to make everyday sustainable choices effortless.

That's, that's the mission.

We want to do that everywhere.

We are only getting started.

We are only, we've only scratched the surface in our existing markets and we want to go to every market in the U.S. And that just means we get really good at playbooks and can rinse and repeat over and over.

GARY: Do you have any competition right now?

ALEX: Anybody that sells consumer products is a competitor.

So you think about it, there's a ton of competition because you can buy your toothpaste, you can buy your, your olive oil in a bunch of places.

But our model is very unique.

We are the only ones that are doing the two-way logistics, so being able to do the closed loop.

And then we also have something that is very, very, a very cool part of our model is our local partners.

So because we are hyper local, because we are a scheduled delivery model, we can work really well with, with local partners.

Local coffee, local bakery, just the neighborhood favorites, you can get them through The Rounds.

That's not something you can get at the big box, at the, you know, e-commerce retailers, that we actually can curate our assortment to include and to celebrate the neighborhood favorites.

Like on your block, what is the, what is your favorite bagel place, what is your favorite coffee spot?

GARY: Oh, that's amazing.

ALEX: And we can bring that to you.

GARY: Talk to me about some of your local vendors that are involved in the program.

BK: One of the local partners that we work with is called Bean2Bean based in Philadelphia.

One of the very unique part of this partnership is that we're doing a zero waste from Bean2Bean, the vendor, all the way to our members.

So we get our beans from Bean2Bean in a reusable jug, right?

They come pick up the empties, they refill it, and bring it back to us, right?

And we do the same for our members.

I think these are the types of partnerships that we want to continue to expand with our local partners.

Now, how do we become a zero waste service for a lot of these local vendors, who, you know, want to do more of sustainable efforts but is looking for ways to partner in that area?

And I think we can be a very interesting and exciting solution for a lot of local vendors.

GARY: Talk about The Rounds.

What was your initial gut reaction when you heard the pitch?

JONATHAN: At its core it sounded simple enough to work.

GARY: Yeah.

JONATHAN: So I think it's simplicity of just delivering everyday items fast to people was just a good idea.

GARY: What about the sustainability aspect of it?

JONATHAN: I mean, I think for us personally, it's huge.

And my belief is like, it starts a lot with corporations.

It's hard for an individual to make such a drastic change in the way the world works or how much is being thrown away.

But for a corporation like The Rounds to come up and kind of say, "Well, this is the only way we do things."

And for us, because they're growing so much in the Philadelphia region and because they are putting so much time and energy into top customer service, bringing in new items, they've grown to be one of our larger customers.

So it helps our whole company become more sustainable that a solid chunk of our coffee now is going to them without ever touching a bag or ever having a label on it.

You know, it saves a lot.

GARY: What do you love most about what you're doing right now with The Rounds?

BK: The learning opportunity and the impact that we get to have.

I have an 11-month-old baby now.

She's a reminder that what we're building is for, not just for me, but for the generation of my daughter and the next generation, right?

GARY: Yeah.

BK: There's a very long lasting impact that we're pursuing, and if we build this business and if we get to make the impacts that we hope to have, you know, I also find real excitement in knowing that it will be a very long-term impact of this business.

GARY: You know, for somebody who's starting a new business, what's the best advice you could give to them?

Things to avoid, watch out for?

BK: You know, being very much of an operational role, I can get very much, I can get bogged down with details.

What if this goes wrong?

What if this goes wrong?

What if that doesn't work?

Right?

And there's a lot of like, there's many reasons why this should have worked and it should work, right?

But it's really about taking a leap of faith.

And you know what?

Why don't we put this out in the world and see how the world reacts?

If the world reacts, then we take the next step, right?

GARY: Yeah.

Slow growth.

BK: Right, exactly.

If the world doesn't react, we pivot.

The best you can do is just put it out and see how people react, and you, you know, you go with the flow.

GARY: What's the biggest challenge from the beginning of starting The Rounds to today that you've had to overcome?

ALEX: The company changes completely every six months.

It's a different company because we've just grown that much, there's that many more people.

Like, it is a completely different company.

So what worked, from little things like how information is shared, meetings, like, all hands, like the things, the rituals that we have as part of the team, those things change literally every six months.

GARY: Wow.

ALEX: And I think one of the hardest things is just keeping up with that.

And that means that all of our jobs change.

My job changes every six months.

It's a new job, and you...

It takes me about six months to get to learn the first one.

GARY: And then you've got to change it.

ALEX: Yeah, just when I'm like, "Okay, I think I have some of these things figured out," changing, it's a whole nother thing.

GARY: People that want to be the change that they want to see, can one person make a difference, make an impact?

ALEX: 100%.

We are a hyper local business.

We get to see a lot of neighborhood businesses, hyper, hyper local businesses, a lot of people doing incredible things.

Absolutely, one person can make a big difference.

And, and even, you know, companies like The Rounds and others, just switching your buying behavior, getting your stuff from a company like us, getting your stuff more locally.

Local by definition is more sustainable.

GARY: Sure.

Doesn't travel so far, yeah.

ALEX: Exactly.

And so, like, some of those very, might seem like small changes can have a big impact.

And I think over time, the good compounds, and that's the most important part, is just one day at a time.

GARY: The Rounds may appear to be a start-up company, but it's so much more than that.

As we stood on the sidewalk talking after the shoot, a random stranger drove by and yelled, "The Rounds!

I love you guys!

Total game changer!"

That actually happened.

And in all my years of hosting this show, that was definitely a first.

There's this energy, a significant and palpable buzz around this business that you can feel.

They're going places, and people know it.

Because The Rounds, it just makes sense.

If you're using these products anyway, with no increase to your budget, and you don't have to throw away piles and piles of packaging each week, which will inevitably have an impact on the environment without any conscious effort, then why wouldn't you use them?

They've created a way for everyone, and I mean literally everyone, to live a more sustainable lifestyle without even thinking about it.

It's brilliant.

And I'm not claiming that on-demand dish soap is going to save the planet, but it's a pretty good start.

I have a special place in my heart for all of the businesses that we feature on "Start Up," but every now and again we come across the business that you know is chasing something much bigger than themselves, and The Rounds are definitely one of those businesses.

For more information, visit our website and search episodes for The Rounds.

♪ Next time on Start Up, we head to West Baltimore, Maryland, to meet up with Don Trunk, a music producer dedicated to giving artists a space to be themselves and create music in a safe and comfortable environment.

♪ Be sure to join us next time on "Start Up."

Would you like to learn more about the show or maybe nominate a business?

Visit our website at startup-usa.com and connect with us on social media.

♪ ♪ We got a long road ahead of us ♪ ♪ A long road ahead of us ♪ ♪ A long road ahead of us before we pay our dues ♪ ♪ We got a long road ahead of us ♪ ♪ A long road ahead of us ♪ ♪ A long road ahead of us before we pay our dues ♪ [beep] WOMAN: Like no, no, no.

Don't touch it.

GARY: Oh, for you?

Yeah, okay.

MAN: Oh, that's cheating!

GARY: Piggybacking off my bull.

[woman laughing] ANNOUNCER: The first time you made a sale online was also the first time you heard of a town named... MAN: Dinosaur.

We just got an order from Dinosaur, Colorado.

MAN: No way!

ANNOUNCER: Build a website to help reach more customers.

WOMAN: Wait, wait, wait, wait!

One more.

ANNOUNCER: GoDaddy.

Tools and support for small business firsts.

Spectrum Business recognizes the importance of small businesses to local communities, so we're investing $21 million to help small businesses access funding to help them grow.

Spectrum Business.

More than an internet, phone, and TV provider.

♪