What You Can Learn From the Rise of Sustainability-Focused Entrepreneurship

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Just a decade after the ‘Cleantech Crash,’ a daring group is challenging the status quo.

January
5, 2020

6 min read

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A few months ago, I was standing outside a Demo Day event in the heart of Silicon Valley. With the temperature approaching 90 degrees, I was beginning to feel the heat, and I wasn’t the only one sweating; with various entrepreneurs running from investor to investor, you could feel a palpable nervous energy in the air.And yet, something struck me as different. Nearly every entrepreneur was discretely focused on building an outwardly sustainable enterprise. From alternatives to plastic packaging to next-generation milk replacements, this crop of entrepreneurs placed sustainability benefits front and center as a product attribute. Additionally, they were looking for investors that shared their vision of a more equitable and sustainable world.This is somewhat surprising, especially when you consider how significantly Silicon Valley took a hit on green enterprises and cleantech just over a decade ago. From 2007 to 2008, venture capitalists poured more than $6 billion into cleantech enterprises, on top of the Federal government’s investment of $40-plus billion in tax breaks and subsidies. One firm alone, Khosla Ventures, recorded in excess of $1 Billion of related investments. Related: It’s Official: Customers Prefer Sustainable Companies.We all know what happened next: The market crashed. Appropriately, this scared off many venture investors for close to a decade from outwardly “green” or sustainability-focused enterprises. Yet now, as the climate crisis becomes more acute, consumer attitudes towards sustainable businesses are fundamentally shifting and compelling businesses to take action. Earlier this year, The Walt Disney Company banned plastic straws from all its theme parks, and just recently, Marriott announced they were phasing out single-use plastics from all of their owned and franchised hotel properties.This is big. And as a new crop of entrepreneurs rapidly start businesses with sustainability as a foundational tenet, there is much we can learn. Chief amongst these is creating a product that consumers will not just like, but love. By focusing on product first and foremost, entrepreneurs will be able to convince consumers of an attendant sustainability-value proposition. Second, entrepreneurs should partner with sustainability-focused organizations that provide crucial third-party credibility.Create a Product People LoveGrowing up, I used to go to a local burger restaurant just outside of Toronto. While I would order the cheeseburger, my friend, who is now an environmental conservationist, would order the veggie burger. “I’m not a vegetarian, but I feel like I am doing better for the planet because meat production is so resource intensive,” he said.“Do you actually like that burger?” I responded.“Hell no!” he answered honestly. “But I make sacrifices for what I care about and think others will do the same.”Unfortunately, he was wrong. For the majority of consumers, giving up established behaviors, benefits and luxuries in the name of sustainability is very hard as we focus on maximizing consumption. Behavioral change, especially in relation to a preventative benefits, is often vexing and slow-going. This may be why products that previously emphasized sustainability, to the sacrifice of their core value offering, faced significant growth challenges.And yet, over the past few years, entrepreneurs have turned a significant corner. New products have entered the market that at least meet, and in some instances exceed, the standards of traditional and less-sustainable incumbents. Front-and-center examples of this include meat-replacement products like Beyond Meat and Impossible Foods, while lesser known examples like Perennial intend to provide a replacement for dairy products aimed at seniors. Entrepreneurs are even turning to packaging innovation. For example, Ever & Ever, a new water product from Vita Coco, is made from an aluminum can that is infinitely recyclable. This can go a long way toward putting a dent in the waste from single-use plastic bottles, one million of which are sold every second around the world.Partner with Sustainability LeadersA few years ago, I got into a heated discussion with a friend of mine about a certain airline’s claims of sustainability and waste diversion. While the airline claimed that more than 20 percent of their “waste” was being diverted, there was no specificity in the type of waste. Was it catering waste? Was is terminal waste? With no substantiation and data, we could not come to any agreement.Consumers are smart. They are now expecting data behind any sustainability claims. They won’t settle for vague claims anymore. The easiest thing for entrepreneurs to do is partner with leading organizations, nonprofits and advocacy groups to substantiate the environmental and sustainability benefits of their product. It is not enough to just claim that you are sustainable, you have to prove it and make a commitment to doing so over the lifecycle of your company. This could involve significant supply chain audits, certifications and other mechanisms by which entrepreneurs can prove the conscious nature of their organization.There are numerous organizations to partner with, depending on sector or focus. If you are focused on general sustainability, you can work with CurrentState and conduct an audit. If you are working with advocacy organizations, 350.org is a good place to start. A good example of a co-op program is sustainable-fish certification from the Monterrey Bay Aquarium.On the marketing side, you can work with organizations like The Lonely Whale Foundation, whose Museum of Plastic provides sustainable organizations the opportunity to drive valuable earned media while consciously raising awareness of the challenges of single-use plastics.Related: Don’t Forget to Embrace Sustainability The Medium Is the MessageSustainability-focused enterprises are having a comeback as entrepreneurs and investors pour resources into the space. There is much we can learn from these trailblazers. First, you can focus on building a core product that users love. Second and significantly, to substantiate any claims of sustainability, you need to partner with leading organizations in the space. But there is no doubt that the opportunity to thrive economically and conscientiously is riper than ever before.

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