[00:00:08] Barry O'Kane: Welcome back to HappyPorch Radio, the Circular Economy Technology Podcast where together with leading experts, thinkers, and doers, we explore the intersection of technology and the circular economy.

[00:00:18] Tandi Tuakli: My name is Tandi and I've been working in fashion and technology for nearly 20 years. I help brands create circular business models that get additional revenue from existing products while reducing their environmental impact.

[00:00:31] Barry O'Kane: And I am Barry, the founder of HappyPorch, where we provide software engineering expertise for a more circular economy.

[00:00:38] Tandi Tuakli: This episode, we are joined by Patrick Hypscher, circular business strategist, advisor and podcaster. 

Really interesting discussion. What did you take away from it, Barry?

[00:00:48] Barry O'Kane: Fascinating discussion, but the thing I would pick out is what's becoming a little bit of a recurring theme in this season is the need for learning and adaptability and flexibility, especially from the technology point of view, and especially in the early stages of verifying or validating a circular business.

Patrick talked very eloquently about the need for that and how his sort of approach is often to use existing tools and SaaS products rather than trying to build in-house initially and then focus on how flexible and integration points and ways those systems can work together. 

And then we also touched on an area which I'm really passionate about, which is the role of some of the no-code tools, and maybe some of the newer AI coding tools to facilitate that integration between tools and the flexibility that's needed. 

What about you?

[00:01:36] Tandi Tuakli: For me, I think one of the things that really I found quite interesting was when Patrick spoke about the proposition for customers and that remembering that product-as-a-service is a service and so you need to not only make sure that you have a strong proposition for your customers, but also that it's a good service that they want to use.

[00:01:58] Barry O'Kane: And so without any further ado, let's meet Patrick.

[00:02:01] Patrick Hypscher: My name is Patrick Hypscher. I'm a podcast host at Circularity.fm and a circular business strategist, helping companies to build up more circular business models.

[00:02:11] Barry O'Kane: Thank you so much and welcome to HappyPorch Radio.

[00:02:13] Patrick Hypscher: Thanks for inviting me.

[00:02:14] Barry O'Kane: It's always a pleasure to have another podcaster on but it's also a little bit of pressure on us ‘cause you know what we're doing.

[00:02:20] Patrick Hypscher: Yeah, likewise. So it's also the same the other way around.

[00:02:25] Barry O'Kane: So to start us off, I'm interested a little bit in what led you to the work you're doing and why circularity, and even why the podcast? What led up to all of that?

[00:02:34] Patrick Hypscher: Yeah. So I think it goes back to at least decisions in terms of  my university degree. So I have a business economics degree and a philosophy of the social sciences. So I'm interested in the economic side, but also from a holistic point of view. And the second thing is then a bit more the pragmatic entrepreneurial aspect.

So I founded my own software-as-a-service company more than 10 years ago already, in the HR transfer of learning space, and I built up a corporate startup. Yeah, I'm always inclined to get things going and implement them in an entrepreneurial and business sense. 

And yeah, the last aspect is as a human and citizen who's looking at the bare facts, I clearly see that the way our current economy runs, how we design our markets does not serve all the people and even harms certain people and even the preconditions of our own wealth and wellbeing.

[00:03:33] Tandi Tuakli:  Do you have any specific project or experience that maybe brought you to circularity, or do you think that it's something that you maybe always had in mind?

[00:03:44] Patrick Hypscher: I think there are two aspects here. Let's say the choice to study also philosophy and go down to philosophy of economics. So, how markets really work? And then also philosophy and morals. And a bit also even political economies. So why do markets exist, and I think this is the conceptual base, and already showed my interest in thinking about the economic setup and also regulation and so on. And specifically I was exposed to a circular economy when I joined Bosch Siemens Home Appliances about seven years ago as an entrepreneur in a digital business unit where our purpose was to build new international business models.

And at the beginning, I was in charge of back then pretty early and small project, Blue Movement, where we started to rent out home appliances in the Netherlands. And throughout then, this responsibility and the five years of leading the Blue Movement team, helping the Blue Movement team, I then of course delved deeper into the circular economy.

[00:04:50] Tandi Tuakli: And from that experience at BSH, what were some of the learnings that you got, since your background was you had your own startup and then going into a larger organization - What were some of the things you learned about introducing a product as-a-service in a such a big corporate environment?

[00:05:08] Patrick Hypscher: First of all, and this was also one of the main reasons to join BSH after I did my own startup independently. I think first of all, it's a privilege to work with globally well-known brands like Bosch, Siemens or luxury brands like Gaggenau. So they have a legacy that people have them top of mind.

And every founder who builds up a new company and a new brand from scratch knows how hard this is. This is awesome also, if you do have an impact, ambition it's great to build upon an existing global infrastructure in terms of sales and operations and that when you know that something works and has a potential it seems to be easier to scale that on a global level.

And the second one is also, it's awesome to work with the experts, so with product experts, logistics experts. So there's already so much expertise on all dimensions. Of course, it does come with downsides, so especially on the, let’s say market sites, access to markets. At some point you do run into channel conflicts or at least discussions about that. Because it depends on the offering. But you could argue that the offering we had, which is like using washing machines, dryers, fridges as-a-service, that this competes with the core business, which is selling. And you then have cannibalization discussions. However we solved that pretty quickly in a way that basically said if the market develops in that direction, let's rather be part of that, right? And if the market doesn't, then there is no threat to the core business. Either way the company is better off. 

Second, let's say disadvantage, is that it can be harder and it's most likely harder to add third party brands. So if you compare it to a startup like a marketplace that is independent and you say I want to do a subscription, yeah. In home appliance sector, you can basically pick the brands you want and that is not as easy for a corporate platform. 

And the last one is a bit more on the cultural side. Of course you're always the odd person or team in the room, because you're doing something differently and that either leads to enthusiasm by certain people and say “Yeah, we always said we should do that!” Or like skepticism and resistance to change. It depends of course, on the model and how much it goes against the common sense of the core culture and the individual people. But you need to explain the model to at least 50% of the organization and without telling them that the way they did it the last 20 years is wrong, which is not the case, but you need to be aware of that dimension.

[00:07:58] Barry O'Kane: In past episodes we talk a lot about the empathy in those kinds of situations, telling people or trying to preach or saying I'm now right and you're wrong, that's just never going to work. And so as well as the challenges explaining and presenting a business case, having empathy and people who are faced with change, I think is really important from what you're saying.

[00:08:15] Patrick Hypscher: Yeah, definitely. And what would help me is also showing examples from our industry and also beyond. When talking to people who've been skeptical about the models, of course we talk about car sharing, we talk about renting running shoes. And then you look into competitors where some of them all also had their pilots in the area.

And this is like a bit first of all opening up their minds and in a second step also the permission to speak and continue. Because then they see, okay, it's possible. It's not totally weird to do that and it makes sense to follow up on that direction.

[00:08:54] Tandi Tuakli: As you said you have some people who are really enthusiastic and then maybe some people who question it a little bit.

Do you think that there's any sort of key metrics that you could use that would help you sell the people who are a little bit less enthusiastic on the idea of like product as-a-service?

[00:09:14] Patrick Hypscher: It depends on the function of the people. If it was from someone from accounting and controlling the answer and the approach would probably be different. And from marketing. So we'd always try to link it back to their domain and what are the goals of the department?

And of course what's the personal interest? And it also depends on the stage of course, if you're super early stage and you're just trying it out then you have a different conversation.

But it's harder to have something against just trying it out assuming that you're not in a phase of strict cost cutting. But as soon as you have some traction, if you have hundreds or even hundreds of thousands or millions in terms of revenue, then of course you also need to provide a bit more and can provide a bit more data, what works, what doesn't work and so on. And how does it tie into the corporate strategy.

And this is, I think, key in any case. Especially when it goes beyond the initial pilot project that you need to link it back to corporate strategy and make it clear how it pays into the company goals.

[00:10:22] Barry O'Kane: So you mentioned data and the role of metrics and making the business case and all of what you mentioned there. From our point of view one of our real focuses with HappyPorch Radio is the role of technology.

So can you share a little bit about how you've seen technology play a role in the projects you mentioned and in circularity generally?

[00:10:40] Patrick Hypscher: So I think if we go back to the beginning of car sharing and consider car sharing as one example of a circular business model, you can argue that you can also argue against it, but ultimately it's about increasing the utilization rate of cars. Which is considered to be circular in some way.

And so if we look at car sharing, this only was possible on a large scale with the advent of smart phones and tracking capabilities of the cars. It would make sense to write a physical letter and express your interest and vent, car rental did exist but not on such a hyperlocal base. That then was possible with smartphones and also mobile units in the cars themselves. So I think this is a good example where technology really made it possible. 

If you go to examples like Blue Movement or products more let's say traditional product-as-a-service where you have a physical asset that stays for a bit longer with the customer, the technology helps to first of all track the location of the asset, track the status and condition of the asset. Which especially gets relevant when you have scenarios of repair or if you need to take it back for whatever reason and you wanna make decisions about, okay, which logistics shall it go to? Is it something we can immediately rent out to someone else? Is this something that just needs an easy refurbishment? Does it need to be repaired? What kind of spare parts do we need? And so on and so forth. So there, technology helps to reduce transaction costs. And for some aspects like condition monitoring, it does enable certain decisions you would not be able to take without technology there.

[00:12:35]Barry O'Kane: Yeah, I like those two examples. There's something I talk about often is the term enablers used very broadly. And I think there's an interesting subcategory of that, thinking about enabler of scale or efficiency versus enabling of something that just isn't possible otherwise. And I think those two examples nicely exemplify that.

In your experience, are we at the point where rolling out a circular project or a pilot, there's tech stack things that exist off the shelf versus everybody inventing or creating the process themselves?

[00:13:04] Patrick Hypscher: I do think by now there are, for most of the cases already all the software items you need to get started. A typical challenge you will run into especially in the first years is iteration and flexibility of the software because at the end it's about exploring a new field and you don't know what kind of proposition will work in the market.

And you need to tweak your offering, tweak processes, tweak, be it like contract durations, does it run on a fixed monthly amount? Are there any consumption based elements in the pricing? And so on and so forth. So you might wanna experiment with customer facing propositions and you need your software to reflect that.

And sometimes that can be a limitation if the software you're using doesn’t provide that. But technically everything is there to start a proposition like tomorrow. And I do think, though that again, it depends a bit on the context. Last year I ran a podcast series with 16 interviews on product-as-a-service with B2B, B2C examples, funding process aspects. One of the examples that stood out is cooling-as-a-service and we got an example from Kaer in Singapore. They've walked us through their model. So the starting point there is that there are big malls in Southeast Asia office buildings, university buildings, even manufacturing buildings, and operating the air conditioning there at its optimum is impossible for most of the facility teams because they're not experts in these kind of systems and they need to watch other aspects of the building as well. 

And what cooling-as-a-service does is they take away that pain both on the asset side but also on the service and maintenance side. And they equip all the assets with IoT devices and remotely operate this air-con setup.

And there you have technology as an enabler that first of all enables this remote control and in a second step, also based on then the sheer amount of data and algorithm, finds an optimum. And this is something coming back to your initial question. This is something you certainly can't buy off the shelf.

So there, let's say the subscription and contract management aspect, this is a minor administrative thing like the core intelligence is the remote operations of the assets by the service provider. And this is specific to that case.

[00:15:44] Barry O'Kane: One of the things that stood out for me when Kaer talk about their transition from a linear to that is they moved from caring about the machinery to really caring about the users in the building. So interested in temperature change across time and people's attitudes to temperature, which is only possible if there's the real data and the measurement. So there's a real kind of, not just practical business change, but a whole almost rethinking about who the user is, who the customer is.

[00:16:08] Patrick Hypscher: Absolutely and there was another example along these lines with Trumpf, so they have a metal cut machine. And they used to just sell it to their customers who then cut metal sheets and now with the as-a-service models. So basically, they even went further and say it's a Pay-per-Part model. They have a remote control center and they only require the customers to provide the input material to the machine. Basically load it and then, of course upload the CAD files. How do you want to have this metal sheet cut and then take out the result. 

And that changed the whole, let's say, perception of the customer - The process and even also what you as a customer always want to have. The Trumpf team as the provider thought completely new about the appliance itself or the product itself, and ran into some weird behavior of their own product, which they wouldn't have found out if they were not responsible for the operations of this product.

[00:17:10] Tandi Tuakli: Yeah, it sounds like from what you've just said, in terms there's a very strong proposition in terms of B2B because you maybe have very expensive equipment. It's complex and maybe people don't have the infrastructure internally to be able to manage all of those things. And I'm wondering if you think that there's maybe a stronger business proposition for that in terms of B2B versus people who are maybe more customer facing, like for example renting baby products and things like that. 

Do you think that there is an easier maybe behavioral change that happens when you have all these costs involved and it's within a business versus an individual customer?

[00:17:51] Patrick Hypscher: Yes and no. Let me start on the no because I think what we frequently overlook is that there's so many product-as-a-service already out there. So who of us owns a plane? It doesn't make sense for most people to own a plane. It's super costly, it's high maintenance, utilization rate is super low. What do you do? You buy a ticket. The same for a train, almost no one owns a train for the same reasons. Think about all the infrastructure you need and everything that needs to come into place to have a train arriving and leaving on time. Most of the cases it works even but not always, yeah, but anyway so the point here is we are already, also on the B2C consumer side, pretty familiar with using products-as-a-service. And in these examples it's mostly let's say pay-per-instance, pay-per-use in that sense. But they're also monthly subscriptions for frequent travelers or so. 

And it goes on. 

You could even argue like visiting a restaurant or maybe a bit easier visiting a hotel. If you want to go to the Highlands in Scotland and enjoy the nature up there, there's no need to buy a hotel or your own house. So you rent for a limited point of time. The privilege to use that asset over there. And this is a pretty common way of consumption. And of course now with the technology and technological innovation overall on the one hand and also with growing awareness for excess consumption you want to try out putting these kind of product-as-a-service systems into new fields, both in B2B and B2C. And you're absolutely right that in B2B some prerequisites are a bit more hopeful, in the sense that the assets are more expensive, they are more service heavy. And there is also maybe a bit more sour view on the possession of such a product whereas in a B2C sector it's more the opposite. 

But yeah, as you mentioned, like the kids' bicycle are a good example where it still makes sense. It doesn't make sense in like, product-as-a-service in every case, it's not a silver bullet, but it can help to serve the customer and sometimes even consume less resources.

[00:20:07] Tandi Tuakli: And to your earlier point, with for example, things like planes, then utilization becomes really important because unlike B2B, you're trying to convince many more customers to use your product in order for you to make it worth your while for example, to run a flight or to rent things out.

So in those cases where I guess you're trying to reach more customers, would you say that maybe then, I guess the technology becomes maybe more important in terms of making sure that you're getting that utilization out of the product in order to make that profit?

[00:20:43] Patrick Hypscher: Here again, yes and no. Starting on the no: so trains did exist and work even before the smartphone got invented. And there were, let's say, other forms of coordination and allocation. But yes, technology does help us to identify demand and identify also under utilized assets and try to match them.

It still might not always work but that's one of the benefits.

[00:21:11] Tandi Tuakli: So ultimately maybe the business proposition is the main part, and then the technology is maybe what's gonna help you scale it up or optimize the utilization.

[00:21:22] Patrick Hypscher: Yes, absolutely. And however as we already discussed for certain business propositions, you do need the technology, it's a necessary condition. Otherwise, yeah, if you wanna use a car sharing service and you're not able to find a free car 'cause the tracking is not working then it's a precondition to have the proposition working.

[00:21:44]  Barry O'Kane: I wanted to link that back to something you said before as well, about the flexibility, especially in early stage exploration of a new model or a new approach and needing your tech stack to be flexible enough to enable you to explore and experiment and learn and iterate. And I think that that's obviously true in any space where you're doing anything especially new, but almost everything in circularity is new, in the sense of new to many existing businesses or the existing economic structure. So I think it's even more true for circularity exploration or projects. So linking that back and then often what I find myself talking about as somebody who builds and provides the technology is that it's almost not the most important thing, which is a weird thing for me to say.

But that all the other things need to be aligned and the technology needs to be aligned with providing those, rather than getting caught up in Hey, the technology's an end in itself. 

So I'm wondering if you have any thoughts around that, and especially for folks who are at the relatively early stage of exploring circularity and thinking about, “What do I need in terms of tech and supply and partners?” and so on. And how do they prioritize that, especially if you're unfamiliar with technology, how do you prioritize that decision making to still be able to move forward with the circular and tech goals that you have?

[00:22:57] Patrick Hypscher:  So, absolutely valid point. What I try to do, and some of our team members hated me for that, is we tried to follow more or less software-as-a-service only approach, that we don't build up our own software. And instead just put together existing software. And when selecting these kind of SaaS offerings, always look for the API functionality, the compatibility with other tools, possibly of course existing integrations to payment providers, to tracking systems.

And so with that, we do have the possibility to try out other analytics tools, basically just other tools that are not locked in. It wasn't possible to keep up that ambition when we reach the point of how to manage assets, but this was also like five years ago, times changed, so there are systems out there that help you with that. 

But coming back to your point, when you start with the new offering, I think it's helpful to use existing software and when you select them, look first for maximum flexibility of the software itself, especially when it comes to everything proposition related. And of course also operations related. And in the next step check for compatibility and integration with as many other platforms and software as possible because that gives you just more options later on to iterate faster.

[00:24:27] Barry O'Kane: And I think from my own experience, I would add on top of that being able to use some of the newer no code tools or even some of the AI tools, which allow you to do some of those integration between things. And the speed of change there is a kind of advantage because it's not a case of choose the exact tools that we're gonna be using for the next 10 years, but what allows us to really validate the problem that we're trying to work on right now.

[00:24:48] Patrick Hypscher: Absolutely. Fully double down on that. 

[00:24:50] Barry O'Kane: So I wanted to just quickly look back, you mentioned the series of your podcast Circular.fm where you did 16 episodes about PaaS. Maybe this is a tough question when there were so many great conversations there, but what would be a couple of the really strong or clear takeaways that you would reflect on from that season?

[00:25:09] Patrick Hypscher: Indeed a tough question. I do think, first of all, no matter if it's B2B or B2C, it's in almost all cases about change. And this is of course also true for all new companies and propositions. So when you enter a market with a PaaS solution, it’s most likely in a setting where people are used to traditional buying and owning of a product. It's about educating them, first of all, that this option exists - that you as a provider exist - and highlighting the benefits. Of course, the more you need to argue and convince, the more it is an indicator that your commercial proposition is not as strong as you want it to be.

But still, you need to educate customers about it. And also, especially if you start in an existing organization, you need to educate your stakeholders and colleagues about that one. So this is a task you need to be prepared for.

And the second one I think is, kind of the service aspect that stands out. It's in your face, it's in the name, it's product-as-a-service. And the stronger the service aspect, the more likely you'll be successful with your product-as-a-service proposition. So we already talked about the cooling-as-a-service as a great example.

But also the HP Instant Ink with more than 11 million customers back then worldwide. So this is a clear indication that it seems to solve a customer problem, that you provide cartridges so to say, on demand. Whenever you're about to run out of ink. It solves a customer problem and it takes the pain away of monitoring the status of your ink cartridge and ordering that.

So this service seems to be pretty appreciated, and even also one other example more, let's say from the B2B field: The Hilti Power Tools subscription which has existed for decades already. It got started before smartphones existed and also circularity was an issue, basically because customers need pretty high quality equipment but not every day throughout the year. They need it for a certain time, but when construction companies need this kind of equipment, they need it like now or at least tomorrow. So you do want to have a service guarantee there.

It always comes down to solving a customer problem. And in PaaS, I mentioned this is almost always connected to the service aspect or as we discussed before, the under utilization of assets which can be recovered through product-as-a-service.

[00:27:56] Barry O'Kane: Amazing. And I'm sure there's so much more. 

We'll make sure that in the show notes we link to Circularity.fm 'cause you've got that awesome series, and I know you're working on a really fascinating one about VC funding for circularity at the moment. 

So just finally, for those listening who want to learn a little bit more about the work that you do and opportunities to get involved, if you can share a little bit about that, but also how they get in touch?

[00:28:18] Patrick Hypscher: Yeah, sure. As I said, check out the Circularity.fm Podcast. If you're interested in circularity, we'll also cover product-as-a-service once in a while from a circular angle. And, what I also learned as let's say a practitioner, is that it's really valuable to talk to other practitioners and ideally on a podcast.

But for obvious reasons not everything can be shared on a podcast, especially if it's about internal details. So I do run a product-as-a-service roundtable for PaaS professionals two, three times a year. And if you want to exchange your challenges and experiences with other practitioners that's a great format to do so and get some new inspiration.

[00:29:02]  Barry O'Kane: Awesome. Thank you. And we'll make sure we link to that and have ways to find everything on the show notes on HappyPorch Radio as I mentioned.

I would love to keep going 'cause there's so much more I'd love to explore with you, Patrick, maybe we'll have to do it again sometime but thanks so much for joining us this time.

[00:29:15] Patrick Hypscher: Thank you for having me.

[00:29:16] Tandi Tuakli: Thanks.

[00:29:19] Barry O’Kane:  Thanks for listening.

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Thank you.

[00:29:30]  Outro: This podcast is brought to you by happyporch.com. 

Whether you need bespoke software development, fractional CTO support, or just expert advice, HappyPorch is here to support your circular economy initiatives. If you're driving innovation and circularity, we'd love to chat. 

Your hosts were Barry O’Kane and Tandi Tuakli. Barry is a software engineer, leader, and entrepreneur with over 20 years experience. He founded HappyPorch to help you create web and software solutions that support the shift to regenerative circular economy. Tandi is a circular expert with over 15 years working in the fashion industry. She's passionate about collaborating with brands to create circular programs that reduce waste, drive revenue, and strengthen customer loyalty.