By Boyd Cohen, Ph.D. CO2 IMPACT
I have been writing a weekly post in Triple Pundit since December 2010 about the topic of Climate Capitalism, my forthcoming book with Hunter Lovins (it is actually coming out on April 12th!). I have written about climate capitalists I met in Cancun, top climate strategy consultancies, and more controversial topics such as the failure of events like Earth Hour to actually move the needle and the need to possibly bury nuclear energy forever.
What I have spent less time writing about are my own experiences as a climate capitalist. I have started several ventures that failed such as a green hotel company called Natura, and a B2B portal for green building products called GreenBex (Green Building Exchange); others that are part of the living dead like a software company to help cities and companies transparently track their sustainability performance (Visible Strategies) and my last venture 3rdWhale, which built green mobile apps. I have had a hand in a few ongoing ventures including Recollective (green building consulting in Vancouver) and of course my current venture CO2 IMPACT.
Having also been a professor of sustainable entrepreneurship since 2001, I regularly get inquiries from current or former business students wanting to get advice about starting up a green venture. Since I have my share of battle wounds I usually have plenty to say about what not to do.
I thought it was time I shared some of these experiences in this weekly column to help other aspiring climate capitalists hopefully avoid some of the painful lessons I have had to learn. Some of these lessons are applicable to any entrepreneur and some are most relevant to sustainable entrepreneurs. These are not in any particular order by the way.
1.) Don’t count your money before it’s in the bank.
I can’t tell you how many times I thought revenue was literally coming next week and then it ends up delayed or not coming it all-this is true with investment and with revenue. As they say it usually takes twice as long as you think and costs twice as much $ too.
2.) Don’t get too caught up in business planning.
When you are first conceiving of a venture you are frequently doing things in the hypothetical world. With 3rdWhale we definitely misread the revenue potential for our location-based apps. With CO2 IMPACT, we changed our sector focus entirely from when we first started our company from small community projects to larger-scale coalmine and oil and gas emission reduction projects (see below why). My friend Michael Fern refers to my point here as “Emergent Strategy”.
3.) Choose your partners VERY wisely.
One would think I would have learned my lesson on this one as with many of my ventures I did not choose partners that were the right fit, or in some cases, were just terrible partners. In a few cases I chose them because they brought money to the table (not a good enough reason). In one case my partners and I had a similar vision but when it came down to execution, we were night and day. In another case, it was a “love at first sight” (no, not that kind of love). We met at a party and we had some very similar ideas and both wanted to build a scalable sustainable venture and within weeks I had invested money in the venture and had rolled up my sleeves with him. His prior partners had sued him for a range of reasons-what was I thinking? My last venture I think I finally figured it out as Ron Williams, an accomplished entrepreneur, joined me and although the outcome was not great, we had a great working relationship and did some cool things together. And finally I founded CO2 IMPACT with my spouse. That of course has its challenges but the good thing is you know what you are getting into and there are nice bonuses like the fact that you can sometimes travel together.
4.) Impact investors are not as different from venture capitalists as you might think.
I have done many pitches over the past several years to VCs in Silicon Valley including Benchmark and Draper Fisher Jurvetson as well as to impact investors like Good Capital and First Light Ventures. CO2 IMPACT was actually one of the first recipients of funding from the seed fund from First Light back in March 2010. While impact investors do differ from VCs in important ways such as their desire for their portfolio to really have measurable social and or environmental, for the most part they are also quite focused on financial performance and return on investment. Trying to lead with the change in the world you want to make, unless you are a non-profit, does not usually work with clients or with investors. Impact and mainstream investors expect to see for-profit ventures actually show a trajectory towards profit. Go figureJ
5.) Change the world, yes, but make sure you are realistic and focus on profits too.
We started CO2 IMPACT Social Carbon, Inc. with a focus on having a positive impact on small communities in Latin America, leveraging carbon finance. However, we learned some painful lessons about how hard and costly community projects are to execute in foreign countries. In the carbon world it is more time consuming to work with communities than with clients and yet the project sizes are usually much smaller, leading to a much lower return on investment. This might sound harsh, but a strict adherence to changing the world doesn’t always bring home the free-range bacon.
In 2009, I resigned from full time academics to focus full-time on my sustainable ventures (instead of part-time-actually this could be the 6th lesson-don’t try entrepreneurship part-time!) and writing Climate Capitalism. I do not regret this decision in the least bit despite the major roller coaster I have been through with my recent ventures, and the loss of financial security. As we demonstrate in Climate Capitalism there are billions to be made by entrepreneurs who seek to help make the transition to the low-carbon economy. Avoiding some of the pitfalls I have experience is a good way to start.
Boyd Cohen is the CEO of CO2 IMPACT, a carbon origination company based in Vancouver, Canada and Bogota, Colombia. Boyd is also the co-author of the forthcoming book, Climate Capitalism: Capitalism in the Age of Climate Change.
This series will use the hashtag #climatcaptlsm