Tuomo Laine On Reimagining Capitalism Using The Principles Of Circular Economy

Tuomo Laine is the CEO and co-founder of Twice Commerce (formerly known as Rentle).

Twice is a fast growing commerce platform for the circular economy that has already empowered 30,000+ merchants to launch and scale profitable and sustainable circular businesses. Tuomo is passionate about using entrepreneurship for social and environmental change, as shown by his Unreasonable Fellowship.

Tuomo discusses how social enterprises can fuse financial objectives with environmental sustainability and his framework around ‘repurposing capitalism’ for the betterment of society in the future.

Highlights from the interview (listen to the podcast for full details)

[Sarah Ripper] - To start off, can you please share a bit about your background and what led to your work in circular economy?

[Tuomo Laine] - If we start with my educational background, I graduated with a Master of Science. I received my degree at Aalto University here in Helsinki, Finland, from a study program called Information Networks. The aim of this program is to educate engineers to understand technology, design, business and how to package all these skills into a role in wider society. We were trying to figure out how these industries affect the main aspects of society. From that, being interested in circular economy was a logical step, because circular economy touches upon each of those fields.

While I was studying these principles in University, the city where I live in Helsinki started to have a lot of city bike services. We were given access to this shared bike system and a lot of other things through the sharing economy. I fell in love with those systems as a user and then started to figure out how I could apply my studies to create more of these. With my co-founder, we created this power bank rental system, and then we were hooked.

As the founder of Twice Commerce, can you share more about its activities and impact?

To understand our impact, let's zoom out and look at the big picture. As humans, we're consuming resources faster than the Earth replenishes. To put it plainly (I think Bain Consultants concluded this) we're using 1.75 times the resources the Earth regenerates yearly. As a result, we have this massive hole we've been digging for too long, which is now affecting the climate and well-being humans everywhere. In the United States alone, there are $500 billion worth of unused goods sitting in people's homes, which is roughly $1,600 per person. They’re sitting there slowly turning into waste and then ending up in landfills or floating in the Pacific Ocean.

The real question for us is how do we keep the economy growing without constantly using new resources? We must remember when you buy something as a consumer, that supports someone else's income; which is a part of the equation we're trying to solve.

We directly address this problem by offering easy to use software which turns any item into a sales opportunity not just once, but multiple times. What we're doing is making it easier to sell and find used goods, refurbish items, and handle trade-ins, rentals, and subscriptions. This is whether you’re an individual budding entrepreneur or an existing business. Our goal is to take the difficulty out of greener business models and elevate the value of an item’s life with software. As a final note, we’re doing all this by acknowledging that selling something once is hard enough, so doing it a second time is even harder. With our platform, once you can manage to sell an item twice, you can sell it again and again. If we double the lifespan of every product by selling it twice, we're helping to solve that equation of consuming 1.75 times what the earth regenerates. It’s a simplistic way of looking at it; we’re selling stuff twice and dealing with at least one problem for the circular economy.

What infrastructure, partnerships or possibilities are you seeing for the meaningful upcycling and reimagining of waste?

There are two things which need to happen for the circular economy, material level innovation and business/consumption level innovation. We're focusing as a company on the consumption model; if we only manufacture stuff from recyclable material, is it enough of an impact if it still ends up floating in the Pacific Ocean? How do we get those goods back to the manufacturers? To your question, material level innovation is needed; there’s no business in renting white t-shirts or socks, but there is a business in taking back white t-shirts and turning them into fibre to manufacture new items.

The challenge here to my understanding is if you have a t-shirt which says it's 100% cotton, it usually isn't. Most likely it's 1-2% percent plastic due to the plastic in its thread or similar materials. That's something which legislation and digital product passports are trying to address, because we can’t trust what materials items are being made with. Furthermore, turning stuff back into its atoms depends on the fact it cannot have these extra materials in it. That's my understanding, which is why as a company we currently feel rentals and subscriptions will be the model for the long term (because it's more profitable for businesses). In the short term, it's more about resales and giving products a second life, because the material level innovation and regulations needed to support the reclaiming of fibres at scale is huge. You cannot squeeze that solution into a shorter time as easily as you can tackle the consumption issue.

What are the biggest challenges and opportunities you are seeing for the sharing economy and reimagining this model of capitalism?

I would break it down to three things, supply, demand, and job creation. Supply is the first hurdle; in many areas (for example smart phones), the demand for second-hand goods is raising ahead of what's available in the supply. This search is driven by a mix of wanting to protect the environment but also the simple benefit of people wanting to save money, especially in the current economic situation. The challenge is supply, it's the $500 billion worth of goods sitting in people's homes which should be flowing back to manufacturers or new owners instead of more being manufactured.

If we talk about demand, I think that's the bright spot; more people are choosing sustainable options and they are ready to spend money on them. The trend is growing, especially for younger generations as they gain more purchasing power and prioritise greener choices. That's the positive driver, and a big opportunity not so often talked about is the creation of jobs. There are many new regulations across the globe, but specifically in the European Union for example, because of digital product passports and right to repair laws, a boom in repair and remanufacturing jobs are being forecasted. As you start to get these items back to manufacturers for refurbishing or repair, these needs provide crucial opportunities for individuals facing barriers to employment.

The impact can be significant on a GDP level and resolve a lot of economic problems. If we look at supply, demand, and job creation, those are extremely capitalistic themes, so the next question is how does this connect to reimagining capitalism?

It just means evolving the principles of capitalism to match today's needs. By embracing circularity and sustainability, we're not discarding capitalism, we're enhancing it. If we enhance the lifetime of every good, we then enable someone to sell it twice.

That second sale doesn't have manufacturing costs associated with it, which to me sounds like larger gross margins. This sounds like an extremely business driven goal, so we're creating more jobs and profits.

What do you believe the framework for repurposing capitalism should look like and are there opportunities to disrupt the model?

Through the Unreasonable Fellowship, I discovered the tagline the group uses is more about understanding we have these challenges (like climate change) and the majority of people want to solve those problems. The challenge is we're not improving quickly enough, so then we're trying to squeeze the change of 12 years into 4 or 20 years into 10. Repurposing capitalism is about us saying let's take this vehicle (let's call it a Ferrari), and consciously select to drive it for the purpose of solving the world’s hardest problems instead of thinking about it as the problem itself. How do we utilise the same mechanisms which are extremely good at driving progress to solve hard problems? One investor we have put it quite nicely by saying it's taking the discussion from value alignment to incentive alignment. With capitalism, if you show me the incentives, I can show you action.

If we are capable of incentivising the engine of capitalism, then we will see more action and solve these existential problems quicker. It’s easy to lose time in discussions where two sides are debating about values rather than figuring out the best tools for building a better future.

What inspiring projects or initiatives have you come across creating a positive social change?

There’s one I like to mention, because it’s a good example of how you can scale something to be bigger. It's a company called Swappie, a forerunner in iPhone refurbishment and reuse. Why I like to talk about them as a company is they are doing this at a large scale. They have figured out the supply side, so there's a lot of learnings you can gain from them. If you talk with the majority of refurbishment or circular economy driven retailers, you will hear that supply is an extremely wicked problem to solve. Swappie has been able to solve that by incentivising individuals, businesses, and the larger ecosystem to get those phones flowing back to them. That's the real learning from that company.

Another business which is a little bit younger is a start-up called Faircado. It's the start-up which won the Slush Pitching Competition this year, a large start-up event organised in Finland annually. Faircado makes it extremely easy to find second-hand alternative for anything you're browsing in an online store. They are an important project which helps to not only build awareness of second-hand alternatives, but also when you're about to purchase a virgin good, they showcase items from various marketplaces to make it easier for you to select an item in its second life cycle. Finally, I'm extremely excited by AI assistance and its role in the circular economy. When done right, it cuts through the complexity of resales or second-hand refurbishing. Every item is unique and collectible, that's why thrift shopping is so enjoyable. You're finding these unique products, but that's also what makes purchasing goods complex and hard to scale. AI assistants are promising, they can turn a burdensome job of finding items and figuring out their price point into something automatic. I'm extremely positive about generative AI when it comes to its role in pushing the circular economy forward faster.

To finish off, what books or resources would you recommend to our listeners?

Most of your listeners are likely educated on circular economy, so I'm going to throw in something to trigger new thinking. For any entrepreneurial minds, I want to recommend a podcast called Acquired. It is this business start-up venture podcast diving extremely deep into category defining companies such as Walmart and Amazon. It's always interesting to think about the stories behind those companies, because circular economy or sustainable commerce needs those category defining companies. Learning from those stories and figuring out how we can build similar companies in this space is important. When it comes to the circular economy, we're part of the Ellen MacArthur Foundation, which is an excellent resource for anyone wanting to dive deeper. They are at the top in producing quality resources when it comes to the circular economy.