Security Confidential S9 E4 John Shegerian

Manoj Tandon: Hello everyone. This is Manoj Tandon, your host of Security Confidential. Welcome to another great episode. We have a fantastic guest for you today; he is John Shegerian. John’s got a great background. He’s the co-founder, chairman, and CEO of ERI. For those of you who don’t know, ERI is the largest fully integrated IT and electronics asset disposition provider and cybersecurity-focused hardware destruction company in the United States. Try saying that five times!

But in addition, when he has spare time, he’s writing books. He’s the co-author of the number-one best-selling book, The Insecurity of Everything: How Hardware Data Security is Becoming the Most Important Topic in the World. Then, with whatever little time is left, he is also the host of the Impact Podcast.

So, welcome to the show, John. Thank you for being here. It’s wonderful to have you.

John Shegerian: Manoj, it’s an absolute pleasure and honor to be here with you today.

Manoj Tandon: You know, there’s so many questions to get through, I hope we can get through them. But whenever we have someone that’s been as successful as you and has built success on their own as an entrepreneur, we’d love to get a little bit about your background. What was your origin as an entrepreneur? How did you get into this?

John Shegerian: Yeah, my dad and my grandfather were both Armenian immigrants. My grandfather was an Armenian immigrant who came to New York City and opened up one of the first oriental rug stores on Fifth Avenue in New York to basically sell Persian rugs.

My father then took my grandfather’s success and grew it by opening up a printing shop in New Jersey. So we were in the printing business and the rug business growing up. I got to see two great entrepreneurs at work who worked tirelessly to give their children and grandchildren better opportunities in terms of education, which is the classic immigrant story in this great country of ours.

It’s an immigration nation, as you and I both know, Manoj. I got the opportunity to go get a great education, but I realized that I really didn’t want to go the classic route. I wanted to follow my Armenian roots and become an entrepreneur.

My mom was a social worker, so you take social worker and entrepreneur together and you get social entrepreneur. Now, there were no social entrepreneur classes or classic learning when I was a kid—I’m 60 years old—so I had to go find my way and discover what that meant.

I did traditional stuff; I did real estate development. On one of my real estate developments in LA during what was then called the Rodney King riots—which are now—

Manoj Tandon: I remember that, right?

John Shegerian: Yeah. I got the opportunity after those riots, when the city was battling with each other ethnically and culturally, to meet a guy named Father Greg Boyle, and we started Homeboy Industries together.

Homeboy Industries became a great beacon of hope for urban renewal and jobs for young people that are impacted by gangs and other negative influences in society. It was at that moment I realized, “Aha! Social entrepreneur.” You could make a good profit but also make an impact and make a difference.

At that point, my wife and I took that experience and everything we went into after that had to make a profit but also had to make an impact to make the world a better place. That’s what we did with all subsequent businesses.

This is—maybe I’m not even sure what number startup this is now—but some of the more relevant startups along the way that I’m really proud of are financialaid.com, which I co-founded with my two partners, Mike and Matt O’Brien, in 1998. That sounds like 24 years ago, which sounds long ago, but that was the year Google started as well. We got very lucky with that and that became a big success.

Then that led to this, ERI. We started ERI in 2002. It was started by one of my co-founders. I met him in 2002 when he started it, while I still had financialaid.com. We became great friends going to sporting events and things of that such together.

Then when we sold financialaid.com, he said, “Can you come and bring some of that magic over to this company? Because we’re doing a lot of business and volume, but we need some help and we need to make a profit.” We turned it around, renamed the business, and brought it to Fresno, California from San Diego. And then off to the races we went from late 2004 and early 2005. We were off to the races here at ERI.

Manoj Tandon: You guys have been immensely successful, but would you say then this explains a lot of things? With mom being a social worker and dad being an entrepreneur, you are doing businesses that do good for others.

Is that the secret to success? When you start a business, should you look at doing good and providing something first and the money second? Or do you look at the money first and then doing good is a natural outcome? Which way does this work?

John Shegerian: That’s a great question, and let’s give it some context. When I started doing Homeboy Industries, which was started originally as Homeboy Tortillas and then morphed into Homeboy Industries, and then financialaid.com, we discussed openly the need to make an impact and give something back.

With financialaid.com, we democratized student lending. We did that service for free for parents and students out there. We took what was a very complicated and—as the students told us—what was also a very embarrassing process for them, and we put it online.

You think, “Wait a second, why didn’t Sallie Mae do this first?” Why did a lot of others? We just got lucky and got the right URL, put our heads down, hyper-focused, and it wasn’t really culturally cool to do good while you made money.

Money was—remember that was still the Gordon Gekko era of, “Greed is good.”

Manoj Tandon: Greed is good. Ivan Boesky, Gordon Gekko… the original Wall Street.

John Shegerian: Now, what I share with students or other young entrepreneurs, Manoj, is this: you’ve got to make a profit before you can make a difference. You have to have a sustainable business yourself before you go preach about ESG, sustainability, carbon neutrality, and making the world a better place.

Whatever making the world a better place is in your situation, you’ve got to be viable as a company. Then you could use that business as your platform to make the changes that you’re interested in effectuating. That’s how it really should work.

Manoj Tandon: That’s a brilliant answer, and I think there’s going to be a short excerpt on that. That’s wonderful.

Now, there are a lot of listeners who are much younger than you and I, John, who are starting off in cybersecurity or just beginning their journey in their careers and have thought about becoming an entrepreneur. Is there anything you would say to them based on your wealth of experience? What they should think about before they are ready to make the jump?

John Shegerian: Yeah, you’ve gotta do a real honest self-assessment. Even though it looks really fun when you watch the Zuckerbergs of the world, or the Gateses, or the Elon Musks or Bezoses, there’s something very alluring and sexy about being an entrepreneur.

Given you and I are serial entrepreneurs that have come back for the punishment time and time again, we know it is a wonderful way to live, but not everybody’s cut out for it, honestly. You have to really be honest with yourself. Is this something that you want?

When you study the great ones—folks who are great at anything they do, whether that’s the Jordans or the Bradys of the world, the GOATs, or the Martin Luther Kings and the Queen Elizabeths and the Winston Churchills—there’s no such thing as work-life balance.

Most people who have a nine-to-five job leave their job at their office when they go home. Folks like you and me, it becomes a blend, and life becomes blended with what you do. If you love it that much, it’s a joy and a pleasure to do it, but you have to be prepared for that blend and understanding that you’re not going to be leaving it behind at any office whatsoever. It will be with you 24/7/365. That’s the life of an entrepreneur.

Manoj Tandon: Yeah, and what you’re saying is absolutely true; it’s imposed upon you. There’s no way around it, actually. I can tell you that there’s not been a single day when I could predict what would happen on that day. It’s always been something new.

John Shegerian: And the nice thing about us, as we’ve evolved and started numerous businesses and gotten older and—hopefully—gotten a little wisdom and perspective, is that the one thing that does come with successful entrepreneurs that continue to make successful businesses and move on and do others is pattern recognition.

Pattern recognition is something that should come to us once we’ve put the ten thousand or twenty thousand hours in. That’s what we get with both age and experience and doing this and honing our craft over and over and over again.

Manoj Tandon: I gotta admit, I had never thought of it that way, so I learned something new today. Thanks for that insight there. That’s really good.

Getting to ERI, you guys are capable of—I think I read—a billion pounds of electronics recycling a year. That’s massive. A lot of that’s just the electronic waste side, but there’s also the data destruction aspect of your business. You guys were one of the first companies to achieve SOC 2 compliance on that.

John Shegerian: We’re the only recycler in the world—and this is still a shock to me to say this out loud and even for my own ears to hear it while I share it with you again, Manoj—we’re the only recycler of electronics and data destruction company in our industry that is SOC 2 compliant and certified.

Manoj Tandon: How does that work? There’s so much… I think there was an episode of Dirty Jobs on this topic, and so my knowledge about recycling is limited to that, I will freely admit. But what I understand is that when electronics are recycled—and we all know it—if we’re going to drop this iPhone off, there’s a huge amount of data on this.

John Shegerian: 100%.

Manoj Tandon: If we drop our cameras off, or a hard drive, or an SSD, or whatever it might be, what are you guys doing when those devices come across your recycling pallets?

John Shegerian: It’s a great question, and it depends on a couple of things. It depends on the client first of all. To give you a bit of a setup here: the City of LA and the City of New York. We have those contracts and we have about 122 cities across America between those two coasts, including your great city of Pittsburgh.

Secondarily, we represent the big OEMs: Samsung, LG, and every OEM you can think of. We work for them both in the United States and around the world. Then, when you think about the big retailers, we’re the group that created the take-back program in 2006 and 2007 with Best Buy and manage their take-back in their stores. Staples, Costco, Amazon, Target—the list goes on.

We’re seeing a varied amount of electronics, both big and small. So it depends on the generator of the old electronics. Some must destroy and some have contracts that say, “Hey, whatever can be fixed, retested, repackaged, and resold, do that,” because that’s a very legitimate and credible form of recycling, too.

Of course, those materials also have to go under the DoD seven-wipe system where you destroy all the data inside of them and make sure the data is gone. That’s a complicated and serious issue as well.

As part of the process, a couple of things happen. The materials come in, we see who they are from. If it’s refix and resell, then that’s what we do with those materials. That material is resold into both the domestic markets and secondary and tertiary markets around the world.

Most likely the materials come in and they’re under “must destroy.” We do the work for the Department of Homeland Security, the FBI, and many other three-letter agencies. They want “must destroy,” so that material comes in.

If there’s any glass involved, we pull the monitor or the glass out of it. The rest of it then goes into what we’ve designed and built proprietarily: the world’s largest electronic waste shredders. Those shredders shred these materials into what it becomes, and this is in order of volume: shredded steel, shredded plastic, shredded aluminum, copper, and then the precious metals: gold, silver, lead, palladium, etc.

All those materials—and here’s the great part of the story—all those materials get sold back to smelters and go back for beneficial reuse. This is a zero-landfill business. We just opened up our ninth facility in Goodyear, Arizona. We have nine facilities, 1,200 employees, and we’re processing millions of pounds of electronic waste every day. None of it’s going to a landfill, and that’s the exciting part of what we’re doing right now.

Manoj Tandon: Wow, that’s fantastic. Out of curiosity, in a billion pounds, how much gold, silver, and precious metal stuff comes out of it? That’s the curious side of me.

John Shegerian: Great question. I wish I was a mathematical genius and could do the math for you, but here’s the interesting part. We got in the business—well, my partner Aaron Blum started the business. I have four co-founders: my wife, Tammy Shegerian; Aaron Blum, who started the original company under a different name in 2002; and my partner from financialaid.com, Kevin Dillon, who grew up with Aaron. So that was the connection.

The four of us jump-started it in late ’04 and early ’05. Back then, electronics had a lot more precious metals in them than they do today. They still have a load of them in them, but interestingly enough, Manoj, copper is one of the commodities and material resources that’s in very short supply.

Why? With the electrification of the planet—EVs and other great technologies that the Elon Musks are coming out with and other great entrepreneurs—we need more copper than exists on the planet. Recycled copper is more valuable than ever before.

When you look at the statistics of the delta of volume pull on the demand from 2025 on, that delta is going to widen every year for the next 20 years after that. Recycled copper, recycled nickel, recycled cobalt—the stuff that we need for all these EV cars and all these new manufacturers—is tremendous.

The recycled material—which basically, when we got in the business, everyone said, “You don’t want to be on the commodity side”—now everyone’s real excited that we handle all these commodities. The other interesting thing is the OEMs also want to buy back these commodities from us because they want to make their new cell phones, which you just held up, and their new laptops and printers out of more recycled material.

Their constituents—the young people that are voting with their wallets and their pocketbooks—want to buy greener and more sustainable products.

Manoj Tandon: Absolutely. That genie is out of the bottle and it’s going to continue to grow. That’s a good thing for the planet. I 100% can’t argue with that one.

But looking at the growth of EVs, electric vehicles, do you see a recycling problem coming in the future with those? Because there’s a massive amount of lithium in those products, not to mention all the other things you mentioned.

John Shegerian: I got very lucky in life, Manoj. This goes back to your question a couple minutes ago about being an entrepreneur. As you and I both know, having done as many—you’re on your fifth startup, I’m similarly situated on my fifth or sixth startup—we are going to put the hard work in. We’re going to give our blood, sweat, and tears, our money, our time, and our resources.

But any entrepreneur that doesn’t give luck its fair due is just not being honest with themselves. I got very lucky numerous times along the way here at ERI.

I’ll give you a couple of examples. In 2008-09, we built what was then—and still is—the world’s largest and most sophisticated electronic waste shredding machine. Because of that, a company named LS-Nikko, which is an offshoot of the LG family in South Korea, they own the second-largest copper and precious metal smelter in the world. They came knocking on our door and they wanted to make a strategic investment in us and take a board seat in our company.

They took a minority investment and then they get every month all of our shredded printed circuit boards which have low-grade copper in them and all the precious metals, including some of the other offshoot metals like lead and other things. They get to recycle all those materials and put them back into beneficial reuse and back into the circular economy. That’s great.

A year later, I got very lucky and was introduced to Klaus Kleinfeld, then the CEO of Alcoa, and he made a similar investment for similar reasons: he wanted the shredded aluminum.

Fast-forward about 10 years to about two and a half years ago, and I was introduced to JB Straubel. JB Straubel was the co-founder of Tesla. He and his late wife, Boryana, were very proud of working at Tesla and being the co-founder with Elon Musk, making the world a better place by creating these wonderful EV cars.

But what JB realized along the way is that these batteries were going to become a problem at some point. He branched off in 2018 and 2019. He stayed on as an advisor and a friend to Elon Musk and Tesla, which he had run for many years, and he opened up what is called Redwood Materials. They recycle the EV batteries from EV cars and also the lithium-ion batteries that come out of electronic gadgets.

Well, I went over and met with him a couple of years ago back in Carson City, Nevada, and then a week later he came over here to Fresno, California. He saw our technology, saw our methodology, and he did the same thing Alcoa and LS-Nikko did.

That’s where the luck really comes in, because to have the knowledge base and the visibility of the LG family, the Alcoa family, and now JB Straubel—who’s one of the most unique human beings on the planet of 8 billion people. He started one of maybe these eight or nine or ten trillion-dollar companies, Manoj—I lost count—he’s one of the only co-founders of those companies.

To have him on board for perspective, and he takes all of our lithium-ion batteries from small gadgets… he saw the future. He knew that his business wasn’t going to only be for lithium-ion batteries for EV cars, but also there’s a huge amount of consumer electronics around the world with lithium-ion batteries that he needs to recycle. He gets all those from us and we’re very proud of that partnership.

Luck plays a major role in all of this, and I’m a very lucky guy to have all those groups as our partners.

Manoj Tandon: I’m glad you said it, because it’s an indescribable fact; Lady Luck has to play her hand. In your case, not only are you lucky, but you had foresight. You guys have had the foresight of changing market conditions and have been able to adapt to them very rapidly. That has to be a good feeling, because not too many people pull that off.

John Shegerian: True. But like I say, it’s great, as you and I have learned, just to stay humble. As Mike Tyson says, “If you don’t stay humble, the world will find a way to humble you.”

Manoj Tandon: Absolutely right, a hundred thousand percent. You know what? The one lesson there is: the markets don’t care about your ego. The markets could give a heck about it; they will do what they want to do, and they have a way of humbling you if you have a way of challenging them.

John Shegerian: That’s true. To the end of the Redwood story, the great news is he takes the batteries—the lithium, the cobalt, the nickel, the copper, the black mass—all goes into new batteries and into new materials. He’s accomplished his goal. Now, Redwood Materials is the world’s largest lithium-ion battery recycler, and again, he’s in the same position we are: none of it goes to a landfill.

Manoj Tandon: That’s fantastic. It’s a great story. It’s not just the landfill, but you guys are actually… it’d be interesting to know about the amount of recycling you folks are doing. How does that impact the mining chain on these precious metals? Because there’s a lot of dubious people doing dubious things in that industry, right? You guys might be helping curtail a little bit of that. At least it’d be nice to think that.

John Shegerian: No, it’s true. For example, aluminum is the classic one, and I learned this from Alcoa. When you recycle aluminum, as opposed to mining it from traditional mining sources, it’s a 94% energy savings. The carbon offsets and energy savings when you recycle these materials as opposed to mining them the classic way is massively helpful to making the world a better place.

Manoj Tandon: That’s incredible. I didn’t know bauxite was that crazy to pull out of the ground.

John Shegerian: It is.

Manoj Tandon: Let’s switch back. Let’s jump back to cybersecurity here real quick. Talk a little bit about hardware hacking. How serious a problem is it, and give us your thoughts here.

John Shegerian: Okay, when I started… here’s how this whole thing goes if you really want to know how the evolution happened. Again, Lady Luck had her hand on me in 2017. Let me get there first.

Manoj Tandon: Put a phone call into her for me; I could use a little bit of her help.

John Shegerian: Just tell me what you need; I can whisper to her. I have a direct line now. At 60, she gave me the direct line; she didn’t let me have a direct line at 30, though. She let me make every mistake on the planet at 30.

In 2011 and ’12, we started realizing at ERI, “Wait a second, we’ve seen the advent of Palantir, we’ve seen the advent of LifeLock down in Arizona, and this whole personal security thing becoming big.”

We started seeing all these shredding trucks all around the United States; they became ubiquitous to cities and they’re shredding data on paper. So we started saying, “How about data on hardware?”

Manoj, nobody, but NOBODY—not a potential client, not a current client, not anybody in the media—nobody wanted to hear that story. Nobody cared one little bit about what we were saying. They said, “Oh, that has nothing to do with data security. Makes no sense whatsoever.”

Until I was in a conference in New York City. It was a cybersecurity conference and I was on a panel. The gentleman who hosted the panel, who was the moderator, was a man named Robert Hackett. Robert Hackett is the lead writer for cybersecurity for Fortune Magazine.

After we finished making our remarks, there were three of us on the panel. He said, “Can I have your business card?” I said, “Sure. Why?” He goes, “I’d like to talk to my editors about your comments today.”

True to his word, about a week later he called me up. He said, “We are in shock here at Fortune. We’ve only covered—” this is 2017—”we’ve only covered the software side of cybersecurity, and we’ve never covered the hardware side, which we realize now through your eyes and your comments last week is a very legitimate potential source of hardware hacking.”

He says, “Can we do a story on what you do with ERI?” I said, “Of course.” He was a lovely human being; he wrote a one-page story in Fortune Magazine. Jamie Dimon was on the cover, I remember very well. The name of the story was “Dead But Not Forgotten.”

The last sentence of the story is all that’s important to your listeners. The last sentence of his article said this: “It turns out that electronic waste is not only an environmental hazard, but a cybersecurity one as well.”

Manoj, Lady Luck took her lightning bolt and struck it on us again. All of a sudden, we took that article and we took it to every potential client, every existing client, and everybody else in the media and said, “You see? We weren’t lying. We weren’t kidding. We weren’t just making stuff up.” People started listening because Robert Hackett said it so. That’s how it went.

Manoj Tandon: Wow, man. I gotta tell you, you and Lady Luck have quite a relationship there. But at the same time, a lot of what we’re trying to do at Dark Rhino… really, when you were telling this, I was thinking: when people think of cybersecurity, they’re really just thinking software. They’re really thinking technology.

We’re the first company out there that’s saying it’s not just technology; it’s process, it’s people. But let’s also combine it with the insurance side of things and make it a holistic solution. It’s not one thing; there is no one silver bullet.

In our industry—at least in cybersecurity in general—they’re always just looking for silver bullets; they’re looking for technology. Technology needs enablement, enablement requires process, and process requires people. If that chain is not functional, I don’t care what gadget you buy. No gadget works 100% of the time. So you’ve got to back up your risk somehow, and that’s where insurance comes into play.

But insurance companies don’t know how to manage that risk because cyber is something that’s kind of alien to them. That’s what we’re combining. It’s a lot like the LifeLock model of yesteryear. When you mentioned that, I had a big smile on my face. I was like, “Well, that’s brilliant.”

John Shegerian: I think it’s brilliant, frankly speaking. I’ve seen that as a massive opportunity for years. I think you’re right on something, right on time. I think companies that take care and use appropriate services—both on the software side, which I know very little about, but on the hardware side, like a company like ERI—they should be getting insurance discounts in the cyber world as opposed to other people who are just going through the world and not even paying attention to their risk.

Manoj Tandon: You’re spot on, but I can tell you, you could probably convince a major insurance carrier to listen to you on that topic. A little company like us hasn’t been so lucky with that effort.

That brings up a point. When individuals look at all the electronics that permeate our lives… when someone is thinking about throwing that out in the trash or recycling it, what is your guidance to them on things they should be doing before they even unplug that machine from the outlet or the charger?

John Shegerian: My guidance to all of your listeners: we’re now going into 2023, and there’s nobody that I know, Manoj, that doesn’t want their children, their grandchildren, their family members, or their friends to breathe cleaner air or drink cleaner water and just make the world a better, cleaner, and nicer place.

No matter what political affiliation or ideologies that people possess or are accustomed to, we all really believe in a cleaner environment. So the first thing I have to say is: electronics are becoming a bigger problem.

I’ll just set this up for you. When we got in the business, electronic waste was the fastest-growing solid waste stream in the world. Now, 17, 18, 19 years later—whatever you want to call it—here’s the sad statistic: it’s now not only the fastest-growing solid waste stream in the world, it’s the fastest-growing solid waste stream by an order of magnitude of two to four times the second fastest-growing solid waste stream, which is single-use post-consumer plastic.

That’s really sad. Why did that happen? We have the proliferation and ubiquity of electronics. On my hand, I’m wearing my Oura Ring. My Oura Ring is electronic waste when it reaches end-of-life. My Garmin watch, right? The cell phone that you held up earlier, our EV cars, Alexa, Nest—everything that we use now, Ring… it’s all electronics.

Oh, now my Alexa’s even talking to me. There she is. “Alexa, chill out!” She’s speaking up. You couldn’t have timed that any better!

Seriously, the ubiquity of electronics. Here’s the deal: the sad statistics for your listeners to hear is this: according to the United Nations, only approximately 17% of all electronics being used in the world are being responsibly destroyed and recycled. The delta of opportunity for all of us to do better—all of us as stakeholders in the environment and in data protection—is massive.

Don’t throw it in the trash, because you just don’t know nowadays who is going to be rummaging through any trash bin whatsoever. The goal is to get your old electronics to a responsible recycler.

Now, ERI has lots of great competition, lots of responsible recyclers out there that do the right thing. But unfortunately, there are more bad actors than good actors. You have to really do your homework and make sure you use a good recycler.

If you’re not going to use a good recycler directly, make sure the city or municipality that you live in, or the retailer that you’re dropping off with, actually uses a recycler that adheres to the best practices of data destruction and environmental protection.

Manoj Tandon: I would imagine that, minimally, they should at least do some hygiene on the products—wipe them before you drop them, even at a responsible recycler.

John Shegerian: 100%. As much as they can do, get rid of the old data as much as possible. Some people are geeks and know how to read the manuals or go online and know how to do the wipes and do it themselves.

Some people go the old-school way and take a hammer to it, or they drive a stake through it; I’ve seen all sorts of ways. It doesn’t matter, but as much as you can, wipe the data and then get it to a responsible recycler.

Manoj Tandon: Correct. “Fred Flintstone”—that conjures up an image of a guy with a drill going through it. Is it possible that even if someone has done the Fred Flintstone technique, that data is recoverable?

John Shegerian: Unfortunately, we get to do data for three-letter agencies and also DHS and other folks like that. Yes, almost everything—when you get the best hackers working on anything… these folks are sheer brilliant and they could recover almost anything in time.

Manoj Tandon: Yeah.

John Shegerian: Now, if it’s shredded, no; that’s kind of hard. Honestly, here’s a funny story. There are many clients of ours—financial institutions, healthcare, and many others—that have come to us and say, “Here’s what you’re going to do, John. You’re going to do the seven-wipe DoD standard first, and then it’s going into the world’s largest shredder.”

Then, directly from our shredder—what they love about us is directly from our shredder they know it goes directly to our smelter partner. The beauty of our company is we don’t have any brokers in between. Our stuff goes directly from our facilities right to our smelter partners.

To the big financial institutions, the DHS, the FBI, and other healthcare agencies, this has become an issue of paramount importance to everybody now.

Manoj Tandon: You’re able to guarantee then that data is gone; it’s history.

John Shegerian: It’s history. And we didn’t talk about it, but one thing to bring up, Manoj, is this issue called GDPR. May of ’18 came to the EU. GDPR put in all the standards when it comes to privacy and the ability for governments to go after institutions, both public and private, that are mishandling their clients’ or constituents’ data.

GDPR then came to America. Of course, as Washington goes, Washington just kept fumbling the ball and creating all sorts of different bills that never got passed. So the states started saying, “We’re not going to wait for you, Washington, to get your act together; we’re going to pass our own versions of GDPR.”

So far, about nine states have passed their own version of GDPR. According to cybersecurity experts that are much smarter than I am, every state in this nation will have their own version of GDPR by the end of 2025.

Manoj Tandon: Wow. It’s just a matter of time before it becomes ubiquitous across the planet. I don’t see that stopping, and I don’t think it should be. I know that GDPR is causing a lot of heartburn in the tech industry to a lot of players, especially those who are making money off of data analytics.

But at the same time, it also allows you to anonymize the data and still use it, while protecting people’s privacy.

Is there anything you can’t recycle in the hardware world?

John Shegerian: People ask me that a lot, and reporters call me a lot. They say, “We spoke to this recycler in the UK and they said you can’t recycle little AirPods.”

Manoj, everything’s recyclable. Now, let me clarify: some things are more difficult than others. AirPods—those little buds made by all different manufacturers—they have lithium-ion batteries in them, so they need to be recycled responsibly.

But they take more manpower to be able to delicately take that plastic off and recover the batteries so the batteries can go to Redwood Materials and JB Straubel’s place. You just can’t do that willy-nilly; you can’t hit it with a hammer, because that could set off the battery itself and create a situation where the battery will be more explosive.

So, yes, everything can be recycled; some things are easier than others.

Manoj Tandon: That sounds like it’s very labor-intensive to actually recycle some of these. You’ve got to pull these things apart.

John Shegerian: Yeah, that’s why people say, “When can everything else be automated? John, when can you fully automate ERI?” The answer is never.

People say, “But why?” And here’s why: you go to CES, and at CES approximately 22,000 new SKUs a year come out. That’s besides the new SKUs that come out every year from Samsung with their own announcement, Apple with their own announcement, and other great OEMs.

The innovation that has made the electronics industry so much fun and so interesting, and made the world a better place and kept us more connected than ever before… the downside is we can’t innovate fast enough to keep up with the OEMs to automate everything.

Now, we’ve automated a lot. We have robotics, we have AI, we have the world’s largest shredders in our facilities, and we’re continuing to automate a lot of processes, but we will never be able to automate to 100% no employees.

We have about 1,200 employees right now. We used to have about 1,500. We’re down to about 1,200 and our volumes are increasing month over month, year over year. So we are automating and using AI and robotics, but you’re always going to need a very good and healthy labor force to continue to clean up this very big issue of electronic waste.

Manoj Tandon: I also think then that perhaps your message should be heard by the OEMs themselves and they should design for sustainability. At end of life, why is it impossible for the consumer to pull that battery separately?

Just like we separate glass from aluminum from paper in our household recycling. Why can’t that concept be carried forward? But I’m a dumb guy.

John Shegerian: No, you’re not dumb; you’re on something very big. For the OEMs, when we first got in this business, that wasn’t part of their business model.

Now, most of the big OEMs send their engineers here to ERI—to one of our numerous facilities—and they want to really see how the recycling happens. They want to see the sticking points so they can make these products two things: more recyclable when they come to end-of-life, but they also want to understand how much of our materials they can buy back—the shredded plastic, the shredded steel, the shredded copper, etc.—to put back into new electronics.

They’re very interested in this because their constituents say you have to be.

Manoj Tandon: Do you have any resources on your website or places where you can point people so they can learn a little bit more about how end-of-life devices store data or some of these things?

John Shegerian: Well, my website is full of information on that, but here’s a little bit of a holiday offer I’m going to make for you. Here’s my book, The Insecurity of Everything.

Any of your listeners that want a free copy of this book—which covers a lot that we discussed today and goes more in depth on devices, where they’re stored, how to properly get rid of them, and the different types of certifications that responsible recyclers need to have, such as NAID, National Association of Information Destruction.

It was created for the paper-shredding industry but was recreated over the last seven years to include hardware and electronics. All that information is in this book.

I will mail a softcopy paperback to every one of your listeners that wants it for free if they give you their name and address and ask for their own free copy.

Manoj Tandon: You know what? We will make sure that our producer gets that out post-haste. We’ll get it out on all our social media and let people know. That is a very generous offer, John.

John Shegerian: At the point that you and I are at in our careers, it’s great to be able to have the luxury to help educate folks on what we’re doing and why we’re doing it, so they can make better and more informed decisions.

Manoj Tandon: I’m hoping you’re going to have a lot of takers. Is there a charity they can donate to that would get them a signed copy? I gotta ask the question.

John Shegerian: If any of your listeners want a signed copy, I’m happy to sign for them and we’ll mail them directly to their home or their office. Signed copies—no problem whatsoever. No charity or donations necessary.

I want to make this a full-on offer for all your great listeners, because what you’re doing is such an important service and your podcast is doing such important work that the mainstream media doesn’t cover. That’s why I’m honored to be here and honored to help spread the education.

Manoj Tandon: Tell us about the book a little bit. Let’s get into The Insecurity of Everything. What else is in there?

John Shegerian: It basically explains the different certifications out there and how bad things happen to people who mean well but are unknowing.

For instance, there are so many occasions—and some of these examples are given in the book—where someone will call us from a three-letter agency in Washington, D.C., or some other federal agency and say, “Hey, we need to get a bid on cleaning out this warehouse in Virginia or in Maryland.”

We’ll give them a bid and the bid will be X amount of dollars for millions—or sometimes hundreds of thousands—of pounds of government electronic waste. We won’t hear back from them and we’ll call them back a month or two later to see what they did with this stuff.

They’ll say, “Oh well, we took your price to our boss, and our boss said no, use the other vendor—the guy who said he’d come pick up those materials for free.”

Manoj, here’s the great lesson: time and time again we’ve learned there’s no such thing as receiving it for free. You can’t go to your doctor for free, your lawyer for free, your accountant for free, or your investment banker for free. There’s no such thing as free recycling for responsible recycling and data destruction.

So what happens to those materials? Then people come back to us and ask us to help trace them. There’s all sorts of issues. The FBI has come to us and asked us to help track these materials.

What happens is those folks who pick it up for free typically put it in a container and sell it to the highest bidder. Twenty years ago, the highest bidder typically was in Asia and wanted to get the copper, gold, and silver out of the materials.

Now, the highest bidder on many occasions—especially for containers coming from the East Coast—is in the Middle East. They want to pull the hard drives, destroy the carcasses by throwing them in oceans or deserts or burning them, and they want to try to reverse-engineer either corporate or government secrets by pulling the hard drives. They buy these things by the container off the shores of the United States of America.

That’s what’s in this book: these tales of disaster that can happen by benign neglect of well-meaning bureaucrats or other nice people trying to save a dime, but who could create a catastrophe because they’re trying to save a couple dollars.

Manoj Tandon: That’s the story of cybersecurity in a nutshell. I think there’s so many… I have my own that I’ve seen many times. In yesteryear, when we all used to travel so much prior to COVID, I rented cars from our favorite rental car agencies and, how many times, the entire address book is on that vehicle.

John Shegerian: I never would have guessed when I got in this industry that those companies would be my clients. For the reasons you just said, they’re all becoming our clients—not all of them yet, but one by one for the exact reason you said, because cars now are just a risk factor.

Most people get in the car and they’re rushing to their first appointment when they get to a new city. They’re pressing all the “accept” buttons and not even realizing what they’re pressing. As you said, everything on their lap or in their laptop is just downloaded into the car. Nine out of ten times they’re not hitting the “delete all” or reformat button when they return the vehicle. You’re 100% right. This is what’s going on.

Manoj Tandon: John, we did not get through everything, but we’re at the top of the hour here. I do want to give you a chance. Is there anything you want to plug? Any appearances that you’re going to be doing or upcoming?

John Shegerian: The real thing is I just wanted to say I’m happy to give a free, signed copy to any of your listeners or viewers who would like to read more about this topic.

If you want to learn more about good environmental practices and data destruction practices, you can go to our website, www.eridirect.com. If you want to contact me, I’m on LinkedIn and of course my email address is on our website. I’m very reachable.

It’s been an honor to be here today with you.

Manoj Tandon: It’s been an honor to have you, John. Thank you so much for taking the time and bringing great insights to this topic that’s not discussed much. I gotta say, I learned a heck of a lot.

It’s been fantastic. You’re always welcome back, so let us know if you’ve got anything new. We’ll be happy to help get your knowledge spread out there.

John Shegerian: I’ll be back.