Homeboy Industries looks to create jobs and profits with recycling venture

Workers dismantle old electronic equipment at Isidore Electronics Recycling, which Homeboy Industries has acquired and will rename Homeboy Recycling.

Feb. 13, 2017 8 AM PT

Homeboy Industries is already a salsa maker, cake baker and cafe operator. Now the Los Angeles institution, which helps the formerly incarcerated find jobs, is adding a new label to its expanding empire: recycler.

The nonprofit announced Monday that it had acquired Isidore Electronics Recycling, a downtown Los Angeles company that collects, sorts, shreds and resells gadgets including laptops and phones. The recycling center will be rebranded Homeboy Recycling Powered by Isidore (named after Saint St. Isidore, the ancient Spanish scholar considered the patron saint of computers and the Internet).

The deal, which closed in November, was financed entirely by donations. Homeboy did not disclose the sale price. It will be operated as a separate legal entity, so it will not affect Homeboy’s nonprofit tax status.

This move marks the first time that Homeboy has ventured into the for-profit realm, said Thomas Vozzo, chief executive of Homeboy Industries.

Vozzo said that is not the case with Homeboy’s other eight ventures, including its cafes in downtown L.A. and Los Angeles International Airport, its silkscreen and embroidery business and its catering services. Those businesses, which lose money, are staffed by people going through Homeboy’s 18-month training program (which also includes counseling, tattoo removal and other services). Homeboy also raises money through donations and grants.

“We carry two to three times as much labor as a for-profit business would,” Vozzo said. “Our vision going forward is, we want to have a few businesses out there that are not a training program, but run as a regular for-profit business.”

That will provide more permanent positions for men and women who have graduated beyond temporary jobs. It meshes with the philosophy of Kabira Stokes, who founded the recycling center in 2011 with an eye toward providing jobs for those with criminal records.

Stokes said she saw a niche in the recycling industry to process the vast — and growing — amounts of electronic waste. As a former senior field deputy for Eric Garcetti when he was president of the L.A. City Council, Stokes said she was fascinated by the problem of how to help former gang members find a life after prison.

“Folks are ready to work, but there are so many companies that won’t employ someone with a criminal record,” she said. “There is a bottleneck.”

Isidore occupies a cavernous warehouse in downtown Los Angeles. Here, 15 employees — including nine who were formerly incarcerated — go through the labor-intensive process of taking apart, refurbishing and shredding electronics that it picks up from clients, including banks, hospitals and thrift stores.

In one locked section of the warehouse, stacks of laptops are secured behind a metal gate. That’s where hard drives are wiped to erase personal information. Sometimes the computers can be fixed up and resold; other times customers request a purge of hard drives and then for the gadgets to be shredded for extra security, said Chris Zwicke, chief operating officer at Isidore (the company refrains from hiring people, he added, who have a record of identity theft or fraud).

Zwicke said that by weight, only about 10% of gadgets are in a condition to be fixed up and resold through outlets such as EBay (the warehouse even has a photo booth on-site to take attractive pictures). Some gadgets, such as vintage audio equipment and old-school Nintendo gaming consoles, can fetch a high price.

The vast majority of items are taken apart and sold to processing companies that extract the raw materials. Processors, for example, contain gold (depending on the kind, these can be sold for up to $100 a pound, Zwicke said).

The center has provided jobs to people such as Cesar Pineda, who said he struggled to find work after serving time for armed robbery and kidnapping. The 33-year-old has been working at Isidore for two years, mostly in data destruction and resale.

Pineda said he feels fortunate to have landed here. “It was really hard to look for a job,” he said. “Employers don’t want those with criminal records.”

With a workforce largely made up of former inmates, Stokes said the business has quickly grown. From 2013 to 2016, the company saw sales climb 62% on an annualized basis, she said. As Isidore has grown, Stokes said she has wanted to hire a sales team and buy more trucks to haul electronics for their clients. About a year ago, she began talking to Homeboy about a possible acquisition.

“There is that point where you need capital to keep up with growth,” she said. “It hadn’t occurred to me that a nonprofit would be interested in this for-profit piece of the employment spectrum.”

Vozzo, the Homeboy Industries CEO, said he hopes that buying the recycling center will enable Homeboy to help more people. The organization has an annual budget of about $18 million (that includes revenue from its businesses and donations), up from $12 million four years ago.

Every week, about 400 take advantage of services such as tattoo removal. Per year, about 10,000 people come through the door. At any one time, Homeboy has about 250 trainees on its payroll.

“There’s twice and three times as much demand out there,” he said. “We have the know-how, we just don’t have the finances.”

In the next year, the goal is to grow sales at the recycling facility by 40%. Vozzo said he would also like to expand into other businesses that are not food-related, all employing those with criminal records.

“I point to Homegirl Cafe, which is Zagat rated,” he said. “It shows you can run a successful business with a population that is often forgotten.”

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