Good morning, and welcome back to the Share Series, Monday Management Update. I'm Dan Aldridge, founder of the Share Series and Asbury & C oyne Advisors, and with me today is Conor Riffle, SVP of Rubicon Smart Cities. I'm gonna turn it over to Conor, and he's gonna get a little bit into exactly what Smart Cities is. So Conor, take it away.
Great. Thanks, Dan. Great to be with you. So for those who are new to Rubicon and new to our story, Rubicon is a technology company servicing the waste and recycling industry. We were founded in 2008, and we're a leading global provider of cloud-based waste and recycling solutions. We serve three key constituencies: waste generators, waste haulers, and waste processors. Our reach is significant, and if you can go to the first slide, in our portfolio of over 8,000 customers, we service more than 13 million individual locations around the U.S., and around the world. Working with Rubicon, whether you're a waste generator, a hauler, or a processor, delivers you cost savings, improved recycling rates, lower greenhouse gas emissions, and cleaner, more efficient cities. Today, I'm gonna focus on the hauler piece of our business.
If you are interested in learning more about the overall business, please tune in Friday. Our CEO, Phil Rodoni, will be speaking on the overall business from the New York Stock Exchange on Friday, so please tune in for that. Our hauler business is really exciting, and in fact, it's better described as a fleet business since we incorporate more than just waste haulers. We call the business Rubicon Smart City. First slide, please. Rubicon Smart City is a vertical SaaS business that helps cities and companies run heavy-duty fleet operations more efficiently, more effectively, and more sustainably. Our customers are waste collection, snow removal, and street sweeping operations, both public sector and private sector. Think of our software as an operating system for running these very complex, high-density fleet operations.
In the case of waste collection, for example, our software manages who you pick up, your customers, what you pick up, your services, trash, recycling, yard waste, et cetera, and when you pick it up, your schedule. It manages all the work orders, your dispatching of your routes, it tracks your route progress, vehicle location, it optimizes your routes, and it lets you bill your customers all in one platform. So our customers are running very complex, very expensive, heavy-duty fleet operations. Waste collection, for example, is the most expensive part of the entire waste value chain. Think about it, for a residential waste collection operation, you have to buy a very expensive truck. Each truck costs, each garbage truck costs about $300,000.
and then you have to staff it, and you have to drive it around to every single person's front door every week. So if you were the City of Houston, Texas, for example, one of our customers, you have a fleet of 400 of these heavy-duty vehicles that go out every single day, and the City of Houston is responsible for collecting trash and recycling and yard waste from more than 400,000 individual service locations, individual homes and businesses every week. Our software powers that entire operation and helps them run that operation more efficiently, and save money. Saving money, saving our customers money is something that we're really good at.
In one Midwest city, for example, one of our customers, we've been able to save the city more than $2 million a year on their day-to-day operations across waste, snow, and street sweeping. We've digitized their operations, we're streamlining their work orders, and we're optimizing their routes, all while improving their resident satisfaction scores. But Dan, that's not all. The garbage truck is actually the only vehicle in the city that goes up and down every single street in the city at least once a week. So what we do is we equip these vehicles with our technology, and our technology contains computer vision technology, and cameras.
So these cameras are able to detect, as the garbage truck is going up and down and doing its day-to-day business, it's able to detect urban infrastructure issues throughout their route as the garbage truck travels these streets. So our AI models detect things like potholes, illegal dumping, overflowing bins automatically as these trucks service their day-to-day operations. We also use computer vision to detect things like contamination in recycling containers, which is one of the most pressing issues facing the recycling industry in the country to date. Now, we've had a lot of success with this business. We started this business in 2017. We're now deployed in more than 100 cities across North America, including 8 of the top 20 cities in this country by population.
We power waste and recycling, snow, and street sweeping, sweeping operations in America's major cities. So, cities like City of Houston, Texas, Phoenix, Arizona, Miami, Florida, Denver, Colorado, Atlanta, Georgia, Washington, D.C., Baltimore, Maryland, Kansas City, Missouri, to name just a few, as well as many, many private sector companies. So Dan, I'll stop there. Hopefully, it gives you a good idea of the Rubicon Smart City business.
Yeah, definitely. Thanks for the overview, and obviously, you mentioned being in 100 cities, you know, eight out of the top 10, but it sounds like the market's really big. So just from a 10,000-foot level, right, what is the total addressable market? Where do you think you are right now, and where do you think it could go?
... Sure. Well, it's a large market, so the waste, the waste market, for those who are unfamiliar, is a massive global market. It's about a $2 trillion market globally, with nearly $100 billion of that in the US alone. Just to give you a sense, the top 50 waste haulers in the US and Canada generated more than $50 billion in revenue last year. So it's a very large market. Now, it's also quite stable, since folks are generally generating trash regardless of the economic environment. It's non-cyclical, which is really important. It's also highly fragmented. So, for example, across the United States, there's more than 10,000 individual haulers.
In New York City alone, where we're based, more than 90 individual waste haulers are licensed to pick up commercial waste and recycling in the city. Each one of those haulers is a potential customer for us, and that's one of the reasons why we get so excited about the size of this market and what we can bring to it. The market has also been historically very slow to digitize. It's historically been an analog industry. It hasn't really changed much in the last 50 years. So because of all those things, it's a very large market, it's highly fragmented, it's slow to digitize, it's really a great industry for us to bring in our cloud-native SaaS offering to bring a reimagined 21st century customer experience to the industry, and that's what we're doing.
I'll also add in that our market share is strongest with municipalities. Now, you may ask, "Why government?" Well, the reason is that the municipal market, when it comes to waste and recycling, is very large and significant. There's more than 3,000 cities across this country with populations over 5,000 or more. The top 50 of those have about 70% of the population. So these cities have large fleets, and the opportunity for improving efficiency, driving cost savings, improving recycling rates is very significant. These cities are also large enterprises themselves, so we can build long-term, low-churn, recurring SaaS revenue with these customers.
I mentioned we've deployed our software in more than 100 cities across this country, including 8 of the top 20 by population, and we have 2 of the top 5 largest by population already as our customers. So it's a very significant market. It's also a growing market, especially when it comes to things like... I mean, we're generating more and more waste as a society every year, so that market continues to grow. But we're also seeing growth in other markets. So for example, we make snow removal technology as well, and we know it's going to snow more. There were twice as many snow events occurred in the second half of the 21st century as in the first half of the 20th century.
So we know that it will continue to snow more. These snow events will get heavier. They will get more frequent, and that's going to place a significant burden on our customers. We need to provide digital solutions to help them deal with those coming storms. So we're seeing a significant amount of demand from that side of the market. And we've had a lot of success there as well in the city of Kansas City, for example. The city was just awarded a national award for snow and ice control from the American Public Works Association, in part due to their work with us and with our technology.
So the market is quite extensive, and there's a big opportunity for us going forward.
So let's talk about growth a little bit, you know, being organic versus M&A, and really talk about with that, who are the competitors, right? Is there any player out there, right, that you could even buy to grow, or is it mainly organic? And not that there are too many questions at you at once, you know, but with that organic growth, if you take a city, you know, like a Kansas City or a Denver, right, that you're already in, right, how much share of wallet do you have, and is there room for you to expand with those existing customers that you already have?
Sure. So let's take the growth question first. Our growth for the Smart City business is organic. It's really been driven by strong product-market fit, by word of mouth from happy customers, as well as our innovative approach to procurement, including a number of great channel partnerships. So, we drive additional share of wallet through a number of means. First, customers expand our solid waste software to additional lines of service. So for example, they go from servicing residential to commercial, or commercial to bulk trash, or to recycling, and each time they do that, they add on more licenses of our software, so that's a big driver. Second, they add on new fleet types, like snow removal, or I mentioned, or street sweepers.
Third, they add on professional services from us. So for example, one of the most common ones that we sell is a fleet optimization service to help you make your routes across your whole city more efficient and right-sized. And fourth, they add on our AI camera solutions, like I mentioned, so that they can expand the capabilities of what their heavy-duty fleet vehicles can do. And then fifth, we have cross-sell opportunities with the Rubicon Connect side of our business, since municipalities are also significant waste generators. So that puts municipalities in the market for our hauler management software, which we're talking about, and as well as, for example, our commodity services. So there's a lot of potential ways that we drive additional upsales in these cities.
And then I'll also mention, Dan, that channel partnerships have been really key for us, and I'll mention one in particular that has helped us accelerate our growth, and that is our channel relationship with AWS, Amazon Web Services. Our solution, our technology solution runs on AWS, and via our go-to-market partnership with them, AWS's sales team actually sells our solutions into these enterprises. So all of AWS's customers, for example, need trash solutions, and we're happy to provide them. So this relationship serves really as a multiplier for our direct sales team and helps to drive that organic growth that we're talking about. And in fact, we just announced that we were selected as an AWS Partner of the Year, in part due to our year-on-year growth.
So that growth is very strong and organic.
So we got one coming in from the audience, very specific question, but you mentioned being in eight of the top 10. What are the two that you're not in, and are there any impediments to getting into those cities?
Sure. Actually, we've deployed in eight of the top 20. So the market is split halfway. Half of the cities in the country own and operate their own vehicles for waste collection, half of the country outsource to private sector players. So we're never gonna be probably in all top 20 with our waste collection technology. That said, I think the biggest opportunity for us going forward is just to continue to grow. So sometimes these cities can take a while to make a decision to replace their waste and recycling software or to actually go down the process of digitizing that department.
So our team works very closely with them, and we're in conversations with all of the largest cities to help make that transition.
Perfect. So backing up a little bit to the Smart City business itself and really looking at, you know, the margin profile, you mentioned it was a SaaS business. Can you explain a little bit more about that? You know, what does that mean? You know, what metrics do you guys look at in this business to track performance?
Sure. So we don't actually break out this particular business as its own category in our filings. And I think I anticipate that we will do that at some point soon, but for now, I can speak to the business generally, and that is that Rubicon Smart City is a high-margin, high-growth, Vertical SaaS business. And the indicators are in line with what you would expect from a typical business of that type. Our business is growing very quickly, doubling every year as we bring these digital solutions to, and our AI to the massive waste and recycling market. And one of the great things about our business is our phenomenal customer retention.
So our conversion rate from our pilots, our proof of concepts that we do with cities, is virtually 100%, and we've never lost a customer. So that's another one of the reasons why we're really excited about, for example, Dan, you know, increasing share of wallet in these, in these businesses and continuing to grow really fast in that segment of top 20 cities, because we have such strong product-market fit, we have such happy customers. And once we're in there, we've proven that we can be very sticky.
Perfect. And so, you know, you obviously mentioned the customer churn, you know, being obviously virtually 100%. You know, so you guys obviously do a great job, you know, on the retention side, talking with the customers. You know, can you talk a little bit about the AI piece? So you mentioned that. Go into detail on how that actually works and how that benefits the customer.
Sure. So AI is actually something that has been really a core part of our business from the beginning. You know, we saw this trend coming back in 2017. We were talking about AI with our customers, about how AI could help them. And so as a result, AI really runs through the vast majority of our products. I mean, we've actually been deploying AI in our Rubicon Smart City product and our fleet product now since 2018. And our specialty is computer vision. Our specialty is processing and analyzing images that come through from vehicle cameras, and then identifying the kind of the critical insights that we want to identify.
Historically, the market to date, if you wanted to do something like that, if you wanted to take images from your garbage trucks and analyze them for graffiti, or potholes, or broken curb cuts, you'd have to do that manually. You'd just have to sift through millions and millions of photos. Well, AI now, and the innovations that we've made, can help us automate that process. We can actually have the Computer Vision technology and our AI detect, analyze even these images and detect when there are instances of, for example, potholes, that the garbage truck picks up. And that makes it really attractive for municipalities, as well as for private haulers, because they can deploy these cameras on their vehicles, and it doesn't affect their day-to-day operations. The drivers drive their routes.
They focus on what they're responsible for focusing on, which is picking up the garbage, removing snow, sweeping the streets. But because the camera is doing the heavy lifting automatically with AI, they don't have to take their eyes off the road. They don't have to worry about doing anything additional in the trucks, and that makes it quite significant. The other reason that it's attractive is because these trucks travel up and down every single street. So you can get images from every single corner of your city, and that helps you stay on top of the services that you have to offer, and actually even get ahead of some of those services.
So we see a future, for example, where municipalities go from being reactive, i.e., someone calls up and says, "Hey, there's a pothole on my street," to a future where municipalities can be proactive, where they can actually proactively identify the pothole with the garbage truck, since it's going up and down that street every week anyway. They can detect it, and that can trigger automatically, via our system, a work order that flows through and gets completed. That pothole can get filled, and that issue can be resolved before the resident ever has to call in and make a complaint. So AI produces all these possibilities for us, and we already have it deployed and baked in to our product at scale.
So one from the audience, looking at the products, you know, under Smart City, if you want to say it's an umbrella, you know, is it one size kind of fits all? Is it custom? Can customers and cities choose between different, you know, services underneath the umbrella? How does that look from, like, an onboarding perspective?
Sure. Our solution is designed to be configurable. Each municipality runs its operations, its heavy-duty fleet operations, in a certain way. There's a lot of commonality, but there's a few key differences, and so we've designed our solution to be configurable. We come in, our launch team comes into a city, or to a private hauler, and we say, "How are you running your operations?" And then with a few toggles, we can configure our software to meet the demands, and the particular way that operation is running. That's a really important component. The other important component of our software is that we are a software-first approach. The way that the current state-of-the-art in this industry is to load up trucks with a bunch of hardware.
So they, folks, might wire up the truck with cameras. They might wire up the truck with RFID readers. They might add all this additional hardware to vehicles in order to collect data. We actually do all of that with software. So our approach is to deploy software first, and in fact, we do most of that just with an iPhone, and that means that we can launch faster, we can fix problems faster. If we have issues in the field, we can push updates to those devices, and we can do things like confirm service without having to wire up your vehicle with a bunch of hardware. This leads to faster deployment.
We were able to launch, for example, the city of Atlanta, a very large operation, over a hundred vehicles. We were able to launch them just in 23 days, because our software is so easy to configure and to deploy. So onboarding is a real strength for us, and it's a strength for us because we're a software-first shop.
Okay, so another one actually related to software. So we talked about M&A a little bit on, you know, the growth being organic, but I think you guys have done some acquisitions in the past right around technology, you know, stuff like that. Can you talk about what you've done there?
Sure. So one of the biggest challenges in the heavy-duty vehicle industry is what we call high-density routing, and that is that routing for these heavy-duty vehicles is mathematically different than routing that you might find from Google Maps or Apple Maps. We do high-density routing, where the route might be 2,000 pickups in on one route, or you might need to route a snow removal vehicle through 800 street segments on one route. So the challenge is mathematically very complex. In 2021, we acquired one of the leading companies in this space, experts in high-density routing. It's a company called CIVIX, based in Germany. And so the CIVIX technology is now baked into our into our solution, and our customers are deploying Rubicon Smart City in their fleets. Our...
The routing queries that they're sending are all being underpinned by that high-density routing algorithm that CIVIX developed. We've added on to it, and we've enhanced it, and we now have one of the best routing solutions for these types of very challenging routing problems that that's out there on the market today. So we have done some strategic acquisitions to really help build out that product and make sure that that product is the best possible solution for our top-tier customers.
So one more before we get to the bottom of the hour, and I turn it back over to you for closing comments. But for the investors, you know, who are watching today, you know, what should they expect in 2024 from Smart Cities? You know, what should they look to for, for signs of progress for the business?
Well, I think our goal is to continue to grow as quickly as possible, to crack even more of those top cities. We are anticipating a significant amount of growth with our private hauler segment as well. We have... We've got a number of really interesting deployments with private sector haulers. That's a very big market, and we anticipate, you know, some significant growth in that area as well. So I'd say look for more growth, and then look for more products from us. We will continue to have success with our snow removal work, as well as our street sweeping work. About 70% of the country receives snow these days.
So, if your city doesn't have a solution for some of these snowstorms that are coming, call us. Then street sweeping is another really interesting area. Most cities are required to sweep the streets, and there haven't been a lot of really good digital solutions for that, and we make what I think is the best one. Then we'll continue to build out our routing product. I mentioned just how challenging routing is. It's a doozy. These are, you know, very big cities. These are very complex routes. These are very challenging routing problems. But we've got a really strong core solution that I think you'll see us continuing to enhance and also be able to deploy as a standalone product.
So there's lots of really exciting things coming from this, this business, Dan. I've never been more excited as I am. I have worked here since 2017, and I've never been more excited about the possibilities for this business than I am right now.
Awesome. Well, thank you very much for the time, Conor. It was a great overview, and as Conor mentioned, Phil Rodoni, the CEO, will be presenting on Friday, so tune back in to the Share Series. Thank you, everybody, for participating today. We've got a short break, and then next up at one is Energy Vault. Thank you very much, and have a good rest of your day. Bye.