|Keller, as Bag Monster. The costume is created
from 500 plastic bags, the approximate
number used per American each year.
Andy Keller was an unemployed business school graduate when he spent a day landscaping his back yard. As a result, he needed to make a trip to the local landfill. What he saw changed the course of his life – the landfill was overflowing with plastic bags. With a little research, Keller learned the U.S. uses enough plastic shopping bags annually to circle the globe 776 times, if tied together.
He bought a second-hand sewing machine and went to work, creating a reusable shopping bag that stores compactly in its own pocket. The bag gained popularity, and Keller’s small business, ChicoBag, is now the industry leader in compact reusable bags.
With his unemployment problem solved, Keller set out to tackle a bigger challenge: ridding the planet of one-use plastic bags. He’s made a few enemies along the way, which Keller explained at a recent panel as part of the Inc. 500/5000 conference. Here’s his story:
The Bag Monster
“We want to help humanity kick the single-use bag habit,” says Keller. “And we decided early on to be aggressive about it.” To get the message out, Keller invented the Bag Monster – a costume created from 500 plastic bags, the number each American uses annually. The Bag Monster is a walking, talking reminder of the waste single-use bags create. Keller wears the Bag Monster costume himself, at conferences like the Inc. 500/5000, and also at community events. It never fails to start a conversation. It also attracts attention.
Eventually, plastic bag manufacturers started to take notice: ChicoBag and its competitors were cutting into the manufacturers’ profit share. They decided to sue.
“We found out we were being sued when my administrative assistant began getting cold calls from attorneys who wanted to represent us,” says Keller.
Essentially, the plastic bag manufacturers were issuing what is known as a “slap suit,” a suit brought in hopes of burying the defendant in a costly legal battle that will lead them to make significant or crippling changes to their strategy. The plaintiffs claimed ChicoBag’s website used statistics that were false and misleading. They asked for the statistics to be removed, and to be replaced with “pro-plastic bag” language.
Though growing, ChicoBag’s finances were modest. They couldn’t compete with a coalition of manufacturers; it might have made strategic sense to back down and avoid costly litigation. But Keller felt their anti-plastic bag approach was core to their company’s mission. He decided to take on the plastic bag manufacturers.
Keller hired an attorney, but also began to rally his resources. Over Chico’s short history, they’d established friendly relationships with environmental non-profits and other charities to whom they’d made donations. Over 25,000 people signed a petition in favor of ChicoBag. Scientists from the environmental non-profits worked to verify the statistics used on ChicoBag’s website. People started sending checks, unsolicited, to help with the litigation costs. Employees began to rally around the mission.
“My lawyer told me the worst thing that’s ever happened to me might turn out to be the best thing,” says Keller. “After all, our mission is to kick the single use bag habit. If the biggest manufacturers are suing us, doesn’t that mean we’re doing it?”
While the public’s opinion was supportive of Keller and ChicoBag, the challenges were growing. The company’s insurance company sued to be relieved from coverage. Overwhelmed with the task of managing a law suit, Keller hired a general manager and delegated day to day responsibility to the manager. With his hands off the wheel, Keller almost missed seeing a cash flow problem. In the end he had to take money from his personal savings to pay bills. As a result, Keller has two pieces of advice for other CEOs: no matter how busy you get, don’t delegate management of your profit and loss lines. And always check your insurance company’s lawsuit track record.
A Modest Victory
With a legal bill of $400,000, ChicoBag came to the mediation table to face their opponent. Of the three companies who filed the suit, only one remained. The other two had dropped the suit because of the public outcry.
After considering the costs, Keller decided to settle the lawsuit, but not before he won a significant victory. As part of the settlement, the plastic bag manufacturer had to put a warning message on their bags, notifying users to tie each bag in a knot before disposal to prevent wind-blown litter , a major threat to wild-life both on land and in the ocean. Agreements like this are uncommon in such lawsuits – it represents a victory for ChicoBag. Chico also added a statement to their website, and removed some statistics that had been retracted by their original source.
“It infuriates me that my insurance company gave them money,” says Keller. “But we achieved something. Just days after the settlement they took down their website that was littered with false statistics.”
“The publicity we got raised the profile of our company and our cause,” he adds. Coverage in CNN, Forbes, Inc., Wall Street Journal, and Rolling Stone made the public aware of ChicoBag and their mission.
Profit is part of his plan, says Keller, but “the DNA of our company is to leave the world a better place.”
U.S. International Trade Commission. Polyethylene Retail Carrier Bags from Indonesia, Taiwan, and Vietman. Publication 4080. May 2009, pg. IV-7.