Conscious Company Magazine | Issue 7 May/June 2016 by Conscious Company

BEST VALUE: TOP 15 SUSTAINABLE MBA PROGRAMS

THE FUTURE OF BUSINESS AS USUAL

HOW TO ATTRACT & RETAIN NEXT-GEN TALENT

FIND JOY IN WORK BACK TO THE ROOTS CO-FOUNDERS NIKHIL ARORA & ALEX VELEZ

23 MILLENNIALS CHANGING THE FACE OF BUSINESS

FOOD | ENERGY | FINANCE | INNOVAT ION & DESIGN | LEADERS HIP

TABLE OF CONTENTS

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FINANCE

THE FUTURE IS NOW BY CATHERINE BELL

THE NEXT-GEN CAPITALISTS

TRENDS TRANSFORMING BUSINESS BY TRIPP BAIRD

SUCCESS IS A HOAX BY NATHAN HAVEY

THE 4 PILLARS OF SHARED LEADERSHIP BY LORI HANAU AND CLAIRE WHEELER

INNOVATION & DESIGN

TRUCKING REINVENTED

WOULD YOU SIGN A 20-YEAR EMPLOYMENT CONTRACT?

HOW NISOLO MERGES SUSTAINABILITY AND FASHION

WHAT IS DIVESTMENT?

DIVEST FROM THE PAST AND INVEST IN THE FUTURE BY KATHRYN HOFFMAN AND CORIE RADKA

THE END OF THE TASSELLOAFERED BROKER BY DALE WANNEN

ASPIRATION: DEMOCRATIZING ACCESS TO SUSTAINABLE INVESTING

PANEL DISCUSSION: THE WEALTH TRANSFER BY BIG PATH CAPITAL

*Cover Story

BUILDING THE BUSINESS FOOD

BACK TO THE ROOTS: THE PIXAR OF FOOD*

HOW LET UM EAT IS REVOLUTIONIZING LOCAL FOOD

INSIDE THE SWEETGREEN SALAD EMPIRE

SPOTLIGHT: HIGHER EDUCATION

STUDENT DEBT IS SWAMPING STARTUPS BY ASBC

THE STUDENT DEBT CRISIS

TOP 15 AFFORDABLE CONSCIOUS MBA PROGRAMS*

THE DOs AND DON’Ts OF ATTRACTING AND RETAINING MILLENNIAL TALENT*

BUILD A MULTIGENERATIONAL WORKPLACE BY GERRY VALENTINE

ENERGY

104

IMPACT BIOENERGY’S SOLUTION TO FOOD WASTE

WHAT’S IN YOUR TRAVEL BAG?

THE SOCIAL ENTERPRISE FUNDING MENU BY RYAN SHAENING POKRASSO

100

HOW TO BUILD TRUST THROUGH SOCIAL MEDIA BY JULIE URLAUB

102

MEDIA PICKS: BOOKS FOR NEW ENTREPRENEURS

107

SYLVATEX: A CHEMIST DISRUPTS THE ENERGY INDUSTRY

FROM THE EDITORS

May / June 2016 | Issue 7 The Conscious Company Magazine Team CO-FOUNDER AND COO Maren Keeley CO-FOUNDER AND EDITOR-IN-CHIEFTESS Meghan French Dunbar ART DIRECTOR Cia Lindgren CHIEF COMMUNITY OFFICER Kate Herrmann EDITORIAL DIRECTOR Rachel Zurer ADVERTISING MANAGERS Amber Lee Eckert Elena Nebreda COPY EDITORS Jack Mott Robin Dickerhoof Shane Gassaway Dennis Kambury DIGITAL CONSULTANT Lesley Barnes ASSOCIATE EDITOR Samantha Voncannon TRANSCRIPTIONIST Natasa Milosevic WEBSITE GURU Jay Mantri & Thrive Consulting Group ADVISORY BOARD Ashley Coale, Devon Bertram Emily Olson , Katie Dunn Nathan Havey , Scott Dunbar Wendi Burkhardt NEWSSTAND CONSULTANT Bill Golliher & Full Circle Strategies, LLC PRINTING Publication Printers

The term “Millennial” can be loaded, often shorthand for a sense of entitlement, insubordination, or laziness. As a team primarily comprised of Millennials ourselves, we have a different perspective, of course. However, we love the advice we heard this month from Back to the Roots co-founder Nikhil Arora (see page 56): “Speak as though you’re right; listen as though you’re wrong.” So, for this issue, we set out to see what this up-and-coming generation truly is all about, listening deeply to understand where our own and society’s assumptions about our generation may be wrong. We interviewed, profiled, and worked with nearly two dozen bright young professionals, each representing a different point of view. What we found were stories of young people taking over family businesses and infusing them with purpose. We found entrepreneurs risking it all to create values-driven ventures ranging from fashion lines to nanochemical technology companies. We found individuals trying to reinvent entire industries, including trucking, finance, bioenergy, and food. And we also discovered something deeper about this generation: It’s propelling a shift of our cultural narrative toward purpose. Millennials care deeply about the impact of their work. They are not satisfied with the status quo, they do not accept traditional leadership paradigms, and they prioritize meaningful experiences over material possessions. They have grown up with unprecedented access to information, and therefore demand greater transparency from brands. They will not be satisfied climbing the corporate ladder at the same company their entire careers, making as much money as possible with the hope of someday maybe giving back to charity upon retirement. They want purpose now. And, to boot, they now represent the majority of the American workforce and will be the largest, wealthiest generation in history. In short, they have the numbers, means, and drive to shift the fundamentals of how business is done. Let the pundits and the politicians toss around labels for this next generation and lament the inevitable changes the next decades will bring. In these pages you’ll find real stories of real Millennials making real change. We hope they inspire you and give you hope for the future of our economy — and our world. With respect and gratitude, Maren, Meghan, and the Conscious Company team Photo: Julie Harris Photography

COVER PHOTO: Jay Mantri CONTACT INFORMATION GENERAL INQUIRIES, SUBSCRIPTIONS, AND REPRINTS info@consciouscomag.com ADVERTISING advertise@consciouscomag.com PHONE 720.924.1091 www.consciouscompanymagazine.com facebook.com/ConsciousCoMag Follow us @ConsciousCoMag

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The

FUTURE is now

Three Characteristics of Younger Generations That Will Shape the Future of Business BY CATHERINE BELL

A Millennial is often defined as anyone born between the late 1970s and the mid-1990s. “Youth,” for the purposes of this article, is anyone between the ages of 12 and 18. These are important demographics to know about in business because we can look to them for trends to help us organize more awakened companies with more joy, excitement, and energy — and they are the people who hold the keys to our future productive society. I have had the benefit of working with Millennials, hiring them for large and entrepreneurial organizations, and of having two boys ages 10 and 12 (and observing their tribe). Here are three top trends among these younger generations that businesses should pay attention to:

1 THEY WANT DIRECT, UNFETTERED ACCESS Millennials and Youth typically do not have to physically search for data. I remember the pain of going to the public or university library for my research. They want access to data, and they want it now — and they have

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it. Watching my sons work on their science projects shows me this trend firsthand, and demonstrates how data are only a few keystrokes away. They also want to be able to tweet to their favorite brands and receive some type of response. They want to be seen, heard, and noticed; to know that they have a strong voice in shaping our world; and they want personal stories. On the other hand, we have a whole generation being provided with in-depth and intensive training in

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being distracted. Email, texts, and social media constantly distract most of us, and the general perception of immediacy on the Internet reinforces this distraction. This tendency underscores the importance of being intensively trained in presence practices.

Implications for the future

We will all have more direct access to and personal interactions with businesses, artists, and authors, and the importance of developing

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discernment and wisdom with respect to the Internet will increase; how do we know that what we find on the Internet is accurate? How will we in the future? Training in being mindful will become key to leading in a distracted world.

2 THEY WANT TO BE RESPECTED AND HEARD Millennials and Youth do not want lectures from people who have graduated from the school of hard knocks. They each believe their voice should be counted, and counted now. They do not turn to experts as readily; rather, they rely on themselves and their social networks, which are mostly online. They also want to be their own bosses and in charge of their own time. But it is vital that they listen and read with an open mind, allowing personal experience and research to guide them. To encourage and increase engagement, we need to create structures and freedoms for Millennials and Youth to see and be their best, most remarkable selves and also build strong relationships.

Implications for the future

This trend will have a large impact on traditional work structures, altering and increasing the scope and nature of vacation, working remotely, and collaboration. Entrepreneurial enterprises will become more common, as will workstations where people from different companies work together.

3 THEY GENUINELY CARE, AND WANT A DEEPER REASON FOR BEING INVOLVED IN AN ORGANIZATION Everyone in every organization must begin to operate from a place of knowing why they are there; knowing their purpose and believing in it relieves the disengagement issues people might otherwise have in their jobs. Millennials, especially, want to make a difference and are willing to do so. They want to be part of a company that has a strong vision and values; to perform stimulating and challenging work for an organization that has a meaningful impact on the world. Their desire to be part of something greater than themselves is even reflected in their consumer habits: they tend to shop online and buy things that matter to them and make a statement.

Implications for the future

There will be more B Corps, more emphasis on buying from conscious companies and on every organization being some form of social enterprise; more interdependence, less stuff, and more of what is really needed. International interdependence will become more important, along with leaders in business being clear about their company’s vision and values, thereby creating that deeper meaning in their existence.

This is a very hopeful time to be alive. Although Millennials and Youth are readily distracted (aren’t we all?), they want and need to be engaged in their organizations. It is up to leaders to create deep purpose in their organizations, be transparent, and provide instant access to company information if they are to capture the hearts and minds of the younger generations. We cannot forget that Millennials and Youth are all individuals, and we need to treat them as such. Perhaps this is the most important lesson of all. It is time we all see how remarkable we are, and let that shine through.

Catherine Bell is the author of the revolutionary new business book “The Awakened Company.” She founded BluEra, an executive search and team transformation company that was recently on the Profit 500 list and is a best workplace. She has worked around the globe from the UK to Cuba. She has an MBA from the Smith School of Business at Queen’s University, a Sociology degree from Western University, is certified in the Enneagram, is a yoga instructor, and is currently on the board of the Distress Centre.

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THE NEXT-GEN

CAPITALISTS

Over the last decade, Miki and Radha Agrawal have launched more ventures than most people do in a lifetime. The twin sisters have started everything from a gluten-free, farm-to-table pizza restaurant to an underwear line, all with purpose at the core of each venture. We spoke with these serial social entrepreneurs about diving in head-first, finding the right investors, and what the next generation is truly searching for. Photo: Masha Maltzava

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VENTURES TO DATE It’s one thing to have an idea; it’s another thing to take action on it. What gave you the courage to actually start your first ventures instead of just thinking about them? Radha Agrawal: I‘ve always said that I’m unemployable [laughter]. I’m joking, but I think it starts with questioning everything. Like Steve Jobs said so beautifully, “Everything around you that you call life was made up by people that were no smarter than you.” Once you understand that, the world becomes possible — anything becomes possible. When I learned that concept, that laws and rules are just made by people, it gave me the courage to be able to take action. I think also having the twin sister who’s always “yessing” your ideas and telling you how amazing your ideas are gives you a lot of courage as well. The first question I always ask myself is “What sucks in my world?” and then “Does it suck for a lot of people?” Then I ask, “Can I be passionate about this issue, cause, or community for a very long time?” Since birth, Miki and I have talked ad nauseam about, “What are the problems that exist in the world and how can we be agents for change?” Miki Agrawal: Necessity is the mother of invention, right? I would say necessity — personal necessity. I love pizza and I couldn’t eat pizza anymore because of recurring stomachaches, so I started a restaurant. What do you look for in your work? MA: I want to be a creative “one of one,” which means I don’t want to be one of many, I want to be one of one from a creative perspective. Concept-wise, we were the first farm-to-table, organic, gluten-free pizza concept in New York City, and I definitely loved that idea! I also look for creative artfulness. Business concepts have to be thoughtful, with design considered across every touch-point. RA: I’ve spent the last few years thinking about my “why.” I don’t know if you’ve ever done that, but I find that we don’t spend enough time digging into ourselves and ask[ing] “What is my why?” For me, my “why?” is belonging, and my “how?” is community, wellness, and fun. If I were to draw a Venn diagram, there’d be three circles: one circle would say community, one circle would say wellness, and one circle would say fun. At the center of those circles is me, but that kernel of me is the cognitive belonging. I have been obsessed with community for a very long time. My entire life, I have been organizing communities, whether it was my birthday party or going to the soup kitchens as a kid. And what is community? Community is belonging. I’ve really become obsessed

’06 ’10 ’11

Miki launches WILD, a New York-based, farm-to-table, gluten-free pizza eatery, with Radha as a partner and creative director Radha launches children’s nutrition education media company Super Sprowtz, reaching more than 1 million kids around the world Miki and Radha develop the concept for THINX period underwear, an absorbent, leak- and stain-proof, antimicrobial and moisture-wicking undergarment, with co-founder Antonia Dunbar

’13

Successful $65,000 Kickstarter campaign for THINX

’13

Miki writes her book “Do Cool Sh*t: Quit Your Day Job, Start Your Own Business, and Live Happily Ever After”

’13

Radha launches early-morning dance event series DAYBREAKER with co-founder Matthew Brimer

’15

Miki and Radha start DJing and launch DJ project Me2Me2

’16

Radha and Miki launch Mischief, a Millennial-oriented, community-building experience-design and video lab, with Whole Foods Market as the first client

’16

Miki launches Tushy, a bidet attachment that turns any toilet into a “tushy-cleaning personal hygiene wonderland”

’16

Radha begins writing “BELONG,” a book about building community and making friends in the digital age

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Photo: Bridget Collins

Miki’s Top 3 Lessons for Social Entrepreneurs 1 // Hire slow, fire fast. 2 // “Iteration is perfection.” It’s my favorite saying, which basically means that if you become stagnant, that is when you fail. You need to keep iterating and listening, iterating and listening. 3 // You are the average of the five closest friends you keep. That’s a really important one.

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with the concept of belonging, and I think that is really the lens through which I look at all my projects. DAYBREAKER, my urban morning dance experience, is very much about belonging: finding a place to go to dance your face off, to feel free, to feel totally expressed, and to feel safe in all these cities around the world where you often feel alone. DAYBREAKER fits perfectly in the world of wellness, because it is about dancing and sweating; community, because it brings people together; and fun, because it is a dance party. And the same is true with THINX, the underwear company that Miki and I started together. Miki is shepherding that forward as I build DAYBREAKER. THINX really started when Miki and I were commiserating how, as women, we don’t talk about menstruation and the embarrassing moments that happen. Menstruation is very much about wellness; it’s about hygiene, feminine hygiene. It is also about empowerment and about community. We are building a feminist community and empowering ourselves to have a voice. And it’s fun because it’s underwear, it’s fashion — the voice of the brand is fun. I am working on a new project right now. We are buying 100 acres of land in upstate New York where we are building tiny homes and really bringing the concept of community, wellness, and fun all together into a community land project. We are going to start in upstate New York and then New York City and then expand to San Francisco and California, and then hopefully all over the world. I am also writing a book about belonging, actually, called, “BELONG: Make Friends, Build Community, and Change the World.” I’ve bought every single book I could find on community-building and there isn’t really much out there. The ones that are out there are pretty hard to read — they’re

slogs, and they’re usually written a long time ago by old white men. There hasn’t really been a book about community-building and belonging through the lens of the digital age. The book is really helping me understand the context that I’ve been working on for the last decade of my career. I really believe that community comes first and the brand is second. Often people will build the brand first and then try to build a community around the brand, but unless you can build community around the brand, you will never build a brand that is meaningful. What advice do you have for other entrepreneurs who are seeking outside capital or are bringing in investors? RA: Early on, I was like, “Oh, my God! Someone wrote me a check for several million dollars — I’m going to take it!” not even realizing that I was signing my controlling interest of my company away, that I was basically signing my rights away and my freedom away. I took on some really oldschool, traditional investors who didn’t understand the concept of a social entrepreneur. We talk about conscious capitalism, and conscious capitalism requires someone who understands the need for both consciousness and capitalism. Some investors don’t understand that one has to be patient to see real change, because change doesn’t happen overnight. They need to understand that to really build the movement, to really change a multi-billion-person world, it’s necessary to move slowly, carefully, strategically, and thoughtfully. So I learned a major lesson when I took a lot of money from really traditional investors, but honestly, it wasn’t their fault, and it wasn’t my fault. I was just naive. I didn’t realize what I was doing, and they didn’t realize that they were investing in a company that was going to

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require more than two years to exit or more than two years to start turning a profit. It was a misalignment on both of our parts and I take responsibility, as well. MA: I’d say you have to be in a place where you are fully your authentic self. You should really feel confident in your idea, and you can’t just try to fake being confident. Also, hustle — you’ve just got to get out there and do it. It’s a numbers game at the end of the day. You have to make calls, you have to have your first meeting and screw up. Then you have your second and maybe your third meeting and you screw up. Then you finally figure out what not to say, you go to your fourth meeting, and you slowly go from there. What advice do you have for creating a board of directors, and what characteristics do you look for in board members?

MA: It’s important to have people that you really respect, and that will have mutual respect for one another. It’s not a popularity contest. You need people who can help you grow your business. RA: Yeah, to build the best board, you really want to find experts in the field that you want to build your idea around. Let’s take DAYBREAKER — it is around the event space, so I am going to want a top exec in the music industry, a top exec in the events industry, I want someone who is a community-builder, someone from the world of wellness, maybe someone who works in nutrition. This allows you to really see holistically how you are building your brand. I think your board should hold you accountable to think about building your brand and be the right leader through a number of different lenses. I always say, as someone who feels very strongly about my ideas, that

your board members should also be cheerleaders of yours who want the best for you. That way, when they do come at you with some advice or maybe give you constructive feedback or disagree with your ideas, you will listen to them because you know that inherently they are a cheerleader. I think often people think, “I want this person on my board because they are the most powerful CEO or the most powerful leader in the space of music or festivals or events,” but they might not necessarily know you, be an ally to you, or be your friend. You want to have a rapport with your board members, to know them as human beings and trust them to have your best interest at heart. What characteristics do you think are common denominators across the Millennial generation? What are they looking for out of work, and what engages them?

Radha’s Top 3 Lessons for Social Entrepreneurs 1 // Pick your partners wisely. I think so often as an entrepreneur, you get very excited about someone else being excited about your idea. Just because they are excited by the idea, that does not make them a great partner. A great partner is someone who’ll complement your skills. 2 // Pick the right investors. They also need to be aligned with the change you’re trying to make, and not just there to make the money. 3 // Pick a project that you can be really passionate about for a long time and where there aren’t other competitors. I think very often we are excited about an idea that exists in the world that you think you can maybe do better. There is room for that, but there are so many opportunities to build something new or improve upon something old. Find the white space — don’t just be a copycat. Photo: Alex Colby

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RA: I actually just started an agency under DAYBREAKER. We’re calling it Mischief, and it is a Millennial experience-design and community-building agency. The reason why I am starting this as a side project amongst all these different things I am working on is because I really believe Millennials have a very specific voice and they have a very specific attitude and specific interests. Millennials are idealists. Because information is at our fingertips, because we have the opportunity to start a business just by clicking a button on our computer, because we can design our own brand in Photoshop — because all sorts of tools are available to design things, to advertise, to buy ads on Facebook, to share with our friends — the barriers to entry to build a business are lower than ever. Because the possibilities are endless, Millennials are very idealistic. I think the other issue, though, is that because there is so much

opportunity and because you can go in any direction, Millennials are often searching. A huge part of my community, of my friends who are Millennials, in general are searching, which is why the world of freelance is also skyrocketing. These Millennials are dipping their toes in a lot of different things and trying to figure out, “What can I be passionate about for a long time? What can I dive fully into, head-first? I don’t want to commit to anything fully right now because I am still discovering myself, because there are so many opportunities available to me.” So there is a level of idealism and also a level of confusion, of “Who am I?” Also, religion is on a major decline. Millennials are no longer religious, but are spiritual. They are flocking to meditation, to yoga, to dance parties, to feminist communities like THINX. There is a very deep interest in spirituality and connection. While social media is taking over our world, I also believe

that there is a deeper interest in how we can connect as humans with all five senses. Experiences are the new luxury for Millennials. Gone are the days of big houses and Lamborghinis and Rolex watches — we don’t care about that stuff at all. We care about going to Tibet, going to early morning dance parties, going to music festivals — all of that is because Millennials are deeply interested in experiences and not at all as interested in possessions. The last thing is, our attention span is eight seconds or less, which is less than a goldfish. Which is a funny stat I love to say. I think because of the amount of inputs that we are getting every single day from social networks and a million other different inputs in our lives, we are lacking focus. I think that is a peril of being a Millennial. We have a hard time going really deep, and so those who succeed in the Millennial space are those who are willing and able to go deep.

DAYBREAKER morning dance parties are one of Radha’s successful ventures.

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Photo: Andrew Rauner

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Do you have any predictions about how the business world is going to evolve in the future? RA: No one wants to work in the office nine-to-five in a cubicle anymore — nobody. Nobody is interested in being locked up. Right now, I am working on the rooftop in my building. And my DAYBREAKER team, we now work on my rooftop or out of our community business centers because we don’t want to be relegated to an office every day. The future of business is going to be very much remote. I do believe, though, that the best businesses are the ones in which the teams are together every day, but I think that there is a level of autonomy and freedom that Millennials want. We are having to really think about how to relate to each other in this new digital age. How can we connect? How can we get team members who don’t live in New York to buy into our vision in the same passionate way that we do every day in the office? It’s tricky, but it’s exciting. I think the world of business is drastically changing in terms of the way people want to work. I also feel like there is a level of opportunity that women are seeing to be able to build businesses unlike ever before. Five hundred thousand businesses are being started every year by women, which is actually more than men now, so that is going to change the face of business, too, in my opinion. In fact, I know when there is more feminine energy in the world of business, we are going to see a lot more empathy, a lot more opportunity for different kinds of businesses to grow and thrive. As an aside, I’ve actually got a word for the men that we work with. The women are powerful, amazing women, and the men that we work with are what I call SNAGs, which stands for sensitive, new-age gentlemen. I think if you can fill your business with women and SNAGs, you’re golden! MA: I think the future of entrepreneurship is social entrepreneurship. I think all businesses will have to be

“

Experiences are the new luxury for Millennials. Gone are the days of big houses and Lamborghinis and Rolex watches — we don’t care about that stuff at all.

conscious businesses. I just joined the Conscious Capitalism board as one of 18 members. The whole idea is that business will elevate humanity — not philanthropy, not charity, not corporate social responsibility, but conscious business. I think businesses in the future won’t thrive unless they have a mission. What is giving you hope for the future? MA: Conscious Capitalism is what is giving me hope for the future. RA: I think the younger generation below us is growing up without sexism being part of their vocabulary. That’s what really gives me hope for the future. Every young man that I meet sees me as completely equal, whereas two or three years ago, and

I am not even joking about this, I would be sitting in a meeting and my investors would sit around the table with other male businessmen — around my company that I started and founded by myself — and they’d say, “Radha, you stay here. Boys, let’s go outside and talk business.” In front of me! These were men in their sixties who didn’t even realize what they were doing. When I confronted my investor, literally with tears of anger, he was like, “Oh my God! I didn’t even think about it.” He was oblivious to it. That is how ingrained it is in society: he didn’t even realize he was hurting my feelings and doing something wrong. But young men and young women don’t see each other that way anymore. There is this sense of, “I’m me, you’re you, we’re equals. That’s all there is to it.” That gives me a lot of hope.

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HOW SHIFTING TRENDS ARE TRANSFORMING BUSINESS AS WE KNOW IT BY TRIPP BAIRD

I have watched my boys run roughshod around our home in San Francisco, their energy more than the walls can accommodate; I have followed them down the street to the park and playground, observing their simple enjoyment of each moment. They jump from jungle gyms and swings, unconscious of the possibility of skinning a knee or twisting an ankle. Sweatshirts are abandoned at the foot of the slide; balls and bicycles are casually forgotten where they lie. What a trail of chaos they leave! Yet somehow, “magically,” clean clothes arrive back in drawers and toys arrive back on shelves. Children have a limited understanding of the broader cultural and environmental systems of which we are all a part. They act without a thought of how their actions relate to the whole. Their blissful ignorance cannot and does not last, however. Awareness of the consequences of our actions increases slowly as we pass from childhood to adolescence and adulthood, and is ultimately something we come to own in the form of personal responsibility. Like children on a playground, we as a species have run roughshod on the planet, acting without awareness of the depth and breadth of our actions. Like toddlers leaving toys to be picked

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up by parents, we have used and wasted resources without care for the consequences; we have focused on our own needs and wants while ignoring our consumption’s impact. For some 200,000 years we have lived in a “childlike” state. We have lacked systemic awareness because our planet’s resources seemed abundant enough and because our communications and social connectivity were limited enough that knowledge of the true dynamics of the world’s systems was elusive or avoidable. At present, that state of childhood is rapidly ending. Human consciousness as a whole has begun to enter its adolescence.

THE BUSINESS IMPLICATIONS OF INCREASED CONNECTIVITY Until very recently our communications and social connections have been so local and limited as to prevent us from understanding the global consequences of our local actions. With the advent of unprecedented access to the Internet and the information it carries, the global consequences of our social, political, and environmental actions have become readily apparent and the consequences of our actions impossible to ignore.

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It has become impossible to ignore human rights violations, poverty, or environmental disasters across the world. The human population is exploding, and supplies of water, arable land, and other resources are increasingly stressed as a result. Climate change and its accompanying severe weather events will only make these stresses more acute in the decades to come. And climate will tie social and environmental issues together as infrastructure, energy regulation, agriculture, and resource scarcity — all of which climate significantly impacts — link to social issues like poverty, urban development, and inequality. Consciousness, in the sense of

awareness of and access to information, is emerging on a global scale, and with it, for the first time in history, the ability to harness global human resources and capital of all kinds: to create some semblance of shared purpose.

they see clearly the global nature of the problems we face, realize the consequences of complacency or inaction, and are demanding change. Millennials are three times more likely to seek employment based on a company’s position on social issues. Globally, Millennials represent more than half of those who report a company’s environmental or social impact affects their purchasing decisions. Social responsibility is also reflected in their investment decisions. Millennials are twice as likely as the general population to use their investment dollars to reflect their social conscience. And with an unprecedented wealth transfer expected over the next

MILLENNIALS: THE DRIVING FORCE OF CHANGE Millennials — now well-documented as being the largest generation in our country’s history — have grown up in a world where access to instant, global information is ubiquitous. This generation is the primary driver of an emerging transformation:

Projected Number of Connected Devices Per Person Worldwide

50 Billion

Increased connectivity is changing the nature of business. 25 Billion

12.5 Billion

6.3 Billion

6.8 Billion

7.2 Billion

7.6 Billion

500 Million

Connected Devices Per Person

0.8 2003

Source: Cisco IBSG

More connected devices than people

1.84

3.47

6.58

2010

2015

2020

World Population

Connected Devices

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30 years — experts anticipate Generation Xers and Millennials will inherit over $30 trillion [with some estimates ranging as high as $57 trillion] from Baby Boomers in that time — those dynamics will only accelerate. As 45 percent of Millennials say they want to use their wealth to help others, it seems apparent that impact investment will continue to experience strong growth. Polling data from the Harvard Business Review, Nielsen, Cone Communications, Deloitte, PwC, and others demonstrate that: • 67% of people would prefer to work for socially responsible companies. • 55% report a willingness to pay extra for products from companies committed to positive social or environmental impact; this has increased 10% in just the past three years. • 91% of people would switch brands to one associated with a good cause given comparable price and quality. • 90% of people would boycott a brand if it acted irresponsibly. The bottom line across all of these studies is that virtually limitless access to information increasingly gives us the freedom and ability to make purchasing choices that align with our personal values. This influence should be a preeminent concern for those fighting for talent and struggling to keep it. A recent Harvard Business Review study reported employees who derive meaning and significance from their work were 300 percent more likely to stay with their organizations, had 170 percent higher job satisfaction, and were 140 percent more engaged at work.

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And within private industry — especially where consumer purchasing power affects market share — the effects of these shifts are astounding. In the food industry, for example, we have over the past 50 years increasingly prized efficiency and centralization at the cost of sustainability and nutrition, and the country is now 70 percent overweight and 40 percent obese. Costly chronic disease (e.g., diabetes, the incidence of which has grown 400 percent as obesity rates have tripled) is crippling our healthcare system, costing us nearly $1.5 trillion a year. That creates an environment ripe for mission-driven, systemically aware disruption, which is already playing out in the market. Large incumbents find themselves sitting on outmoded portfolios losing share to smaller, nimbler platforms that have been built from the ground up around values that better reflect

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Increasingly, entrepreneurs and business executives are becoming aware that holistic, systems-based approaches create competitive advantages by helping them balance current actions against long-term outcomes. the new generation: clean and simple ingredient profiles, sustainable production, and better nutrition. General Mills, for instance, recently saw a shrinking top-line for the first time in its century-long history; organic food is growing at four to five times the rate of conventional in the US. In the past 15 years, as I have been investing in and advising growthstage businesses in the US, examples of emerging companies built around purpose and focused on multiple stakeholder value creation have increasingly become the rule, rather than the exception. These purpose-driven companies are only the crest of a wave that is coming whether the larger incumbents

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ride it or not. As more globally conscious and technologically adept consumers become increasingly savvy and well-informed, companies will have to do better to thrive in the competitive dynamics of the 21st century. This is not just a trend, but a major cultural shift. The increasing interconnectedness of our world has made us aware of the complexity of the systems in which we live and given rise to a feeling of increased responsibility. By understanding the shifts in thinking and decision-making that result, companies can prepare themselves for the coming golden age of more holistically aware, socially conscious, and environmentally responsible business.

THE SHIFT TO SYSTEMS THINKING: THE BUSINESS CASE “Systems thinking” asks us to re-evaluate problems more holistically, abandon myopic focus on individual components of ecosystems in isolation, and realize that these components must be thought of as part of a larger, often complex system. Most modern societies have been focused narrowly on the inputs and outputs of the industrial system, ignoring the larger global systems. In the process of making and consuming stuff, the industrial system also generates waste, which can damage or limit the ability of nature to replenish resources. The industrial system also sits within a larger social system of communities, families, and society at large. Just as overproduction and waste can damage natural systems, mismanaged production can also cause

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These purpose-driven companies are only the crest of a wave that is coming whether the larger incumbents ride it or not. As more globally conscious and technologically adept consumers become increasingly savvy and well-informed, companies will have to do better to thrive in the competitive dynamics of the 21st century.

anxiety, inequity, and stresses within our social systems, as welloutlined by the work of Peter Senge and numerous others. We are now confronted with a global mandate to change course and embrace a new way of thinking that balances the needs of the entire system. And that is what impact investing is also ultimately all about: how we can collectively reimagine every industry and every company to take a “systems-aware” approach to building businesses, and to operate in ways that do not fundamentally damage the overall system. This approach is finding its way into the boardroom more frequently. Unilever, the parent company of hundreds of brands, such as household staples Dove and Lipton tea, is one company publically committing to systems thinking. CEO Paul Polman recently stated, “Future leaders will be systems thinkers. It is inconceivable that anyone will successfully steer companies, or countries, through our volatile world without understanding the inter-dependencies between the systems on which we depend.” Polman is not running a charity; his philosophy is based on his belief that this is the best course for Unilever to take to ensure long-term competitive market advantage.

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Increasingly, entrepreneurs and business executives are becoming aware that holistic, systems-based approaches create competitive advantages by helping them balance current actions against long-term outcomes. In the process, they reduce risk, engender trust from their customers, attract and retain better talent, build stronger partnerships, and, ultimately, create more value. As far back as the late ’90s, James Heskett and a group of his colleagues wrote extensively about the “service-profit chain,” which established early evidence of the relationships between profitability and customer loyalty on the one hand, and employee satisfaction, retention, and productivity on the other — all laid on the

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Authentic, mission-driven cultures built around purposes beyond profit attract committed, values-aligned talent that is often willing to work for less in order to align their career with their values. foundation of culture and a greater sense of purpose: “Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees.” Heskett’s work has come to life before our eyes as shifts around connectivity and transparency and a Millennial generation that grew up in that environment have increasingly influenced the marketplace. Take some of the findings mentioned above into account with Heskett’s value chain, and powerful, data driven competitive advantages emerge.

Tripp Baird is, among other things, the founder and managing partner of The Builders Fund, a private equity platform whose purpose is to help solve social and environmental challenges through the profitable deployment of capital into more conscious businesses. He plans to be gratefully chasing his sons around playgrounds for as long as he is able. With thanks to Gary Rosenberg and Hippo Reads.

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Authentic, mission-driven cultures built around purposes beyond profit attract committed, values-aligned talent that is often willing to work for less in order to align their career with their values. Longer-tenured, more engaged employees create better partnerships, and employees with higher job satisfaction provide better customer service. Better customer service begets increased customer loyalty, which is a primary driver of growth. Similar links are apparent externally as values alignment is a primary catalyst to move customers up the so-called “engagement curve,” generating higher probabilities of repeat purchase, lower cost of customer acquisition, and higher net promoter scores. The simple fact is that purpose-driven companies — especially at the emerging growth stage of their evolution — are also winning in the marketplace.

EMERGING SOCIAL PARADIGM Social scientists talk a great deal about “dominant social paradigms” — the norms, beliefs, and values that comprise a culture’s worldview. Our dominant social paradigm has been shifting dramatically without most of us noticing. To compete in the new paradigm, individuals and companies need to embrace change and adapt quickly. The endemic challenges we face are scary and their solutions will be complex. As we approach humanity’s “end of innocence,” however, there is much cause to be hopeful. There is a systems-driven awakening emerging on a global scale. We are beginning to comprehend the world around us as a complex, regenerative, and dynamic system. As we continue down this path, the prospect of flourishing on this planet in its truest sense is becoming, for the first time, a real possibility.

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SUM+SUBSTANCE REFLECTIONS

SUCCESS IS A HOAX In the year and counting since we first launched the Sum and Substance storytelling series, co-founder Nathan Havey has found a new perspective on purpose and work. BY NATHAN HAVEY

Alan Watts, a philosopher who helped interpret Eastern religion for a Western audience in the 1950s and ’60s, offered Westerners a stinging challenge to our popular notion of success. He observed that we get caught up in misleading expectations about how to live. We are taught in childhood that we must do well in school to be successful when we are grown up. Fixation on success therefore begins in grade school, as you “succeed” by progressing from one grade to the next. This continues as you go on to high school, and then to college, and maybe even to grad school. And when you finally join the real world, eager for that success you have spent your whole life preparing for, you get a job and find that success still depends on hitting that next sales target, or getting that promotion. “And all the time this thing is coming. It’s coming, it’s coming, that great thing, the success you’re working for. Then when you wake up one day about 40 years old, you 22

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say ‘My God, I’ve arrived! I’m there!’ And you don’t feel very different from what you always felt. And there’s a slight letdown, because you feel there’s a hoax. And there was a hoax.” — Alan Watts Last October, Sum and Substance held an event in Boston, and while there, we toured the office of one of our storytellers, John Hilliard. Hilliard works at Next Jump, a company so committed to its employees that it hires them for life. On the reception desk sat a number of books, free for visitors to take. One of the books was Jim Loehr’s “The Only Way to Win,” which criticizes our notion of success in ways Watts might appreciate. Loehr has spent his career working with athletes and business executives at the top of their game, and he has observed, as Watts did, that even if you attain tremendous success by society’s standards — even if you are rich beyond reason, famous, and respected — you are left feeling hollow and unfulfilled. What is worse,

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you are likely to be trapped in a vicious cycle wherein you try to chase away unhappiness by ever striving to attain the next big goal, only to discover that you enjoy but a few moments of triumph before the unhappiness creeps in again, causing you to chase an even bigger goal, and so on. With each cycle, you actually begin to feel worse. You start to think something must really be wrong with you if you can have achieved so much and have all this wealth and fame and still be unhappy. Success is not only a hoax; it is a trap. Fortunately, Loehr thinks he has found a way out: “The massive body of research we now have in this area all points…to the same thing: meaning. ‘Our souls are not hungry for fame, comfort, wealth or power,’ writes author and rabbi Harold Kushner. ‘Our souls are hungry for meaning, for the sense that we have figured out how to live so that our lives matter.’”

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“If success is a hoax when measured by external achievement or results, we must instead focus on our own values and actions; we must focus on character.” by financial outcomes, managers should focus on the path employees take to achieve those outcomes. Ethical leadership should be granted preeminent status by corporate boards and all C-suite executives.” — Jim Loehr It has been widely reported that Millennials prioritize meaning more than other segments of the workforce do. So as Millennials rise through the ranks of every industry on earth, they would do well to make sure they have a personal scorecard they can be proud of — otherwise, they, too, may find that success is hoax. Photos: Sum+Substance

Next Jump team member John Hilliard tells his story at Sum+Substance Boston in 2015.

The real issue, Loehr suggests, is that all of society’s measures of success are extrinsic — your job title and net worth, the car you drive, the house you live in, etc. — but meaning is intrinsic. So what we must do is reject society’s scorecard for success and create our own. “The Only Way to Win” features a detailed guide for how to do this. The crux of the process Loehr suggests is this: if success is a hoax when measured by external achievement or results, we must instead focus on our own values and actions; we must focus on character. According to Loehr, there are two types of character strengths: performance, and moral. Performance character strengths include skills like perseverance,

focus, courage, and critical thinking; they are important in helping us achieve things. Moral character strengths include things like kindness, humility, compassion, and gratefulness; these are what give us meaning. A scorecard that will lead to happiness may include several performance character strengths, but the moral character strengths are the way out of society’s “success” trap. “I maintain that moral character strengths represent the fundamental core of what it means to be a fully functional, healthy human being. And if that’s so, business leaders should do everything they can to teach them. Rather than being obsessed

Nathan Havey and his team at Thrive Consulting Group partnered with CONSCIOUS COMPANY to create Sum and Substance. He hosted the 2015 tour of Sum and Substance and is proud to serve on the advisory board of CONSCIOUS COMPANY.

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HUMANITY FIRST HOW SHARED LEADERSHIP OFFERS A BETTER FRAMEWORK FOR CREATING CHANGE IN A NEW AGE By Lori Hanau and Claire Wheeler

W “Society sits now in a moment of tangible reorientation, shifting from the wisdom of the individual to the wisdom of the collective.”

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e were expecting between eight and 20 people for our workshop on Shared Leadership at The New School in New York one a rainy evening last October. Sixtyeight showed up. Initially, Arnhold Hall of the Parsons School of Design buzzed with typical pre-workshop uncertainty — that particular brand of palpable discomfort that a group of people feels before they stop seeing each other as strangers. We’d pitched the evening as a workshop on innovation in teamwork and design-thinking. The simple goal was for everyone to go away afterward the better for having been together. As practitioners and teachers of the Shared Leadership framework, our first task in the room was to model shifting from our assumed roles into our original roles. That meant consciously and publicly shifting out of the positional role of “person in charge” into the original role of human being, first and foremost. The shift happened as we asked everyone in the room to help rearrange the chairs from typical classroom-style rows into one large circle, making way for an experi-

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ence on equal ground. In that moment, there came a tangible feeling of relief and communion, everybody equally engaged in completing a simple task. When we sat down, everyone faced everyone else. There was no longer a presumed “leader” out in front. Instead, we were leading together from every chair. That simple moving of chairs was the first step in offering participants the direct experience of co-creating shared space to explore leadership. Making the choice to venture out of the all-too-familiar space of our assumed roles afforded us the chance to begin relationally, as equals. It interrupted the autopilot — that conditioned habit of assuming our positions before actually beginning together in our personhood. And rather than being owned and shaped by just the person in charge, the experience became stewarded by the whole. From here, the work could begin.

THE FOUR PILLARS OF SHARED LEADERSHIP What followed that night was a group introduction to the Four Pillars of the Shared Leadership framework: Humanity, Equality, Wholeness, and Collective Wisdom. These encompass our practice of bringing

LEADERSHIP

out the greatest capacity in everyone by empowering each individual to be responsible for and engaged in the success of the whole. Using The Four Pillars is about transcending the traditional model of work and leadership in order to begin from a place of shared humanity before stepping into roles and action. By practicing the Pillars consciously, we learn to co-create vibrant, human-centered environments where everyone is invited to show up fully as people, first and foremost, regardless of role, age, or expertise. The Four Pillars are the keys to unlocking the highest potential of a group’s collective genius and performance. They are:

1 HUMANITY We recognize each other and meet as equals in our humanity — what exists at the core of us, before relating through roles, status, and expertise.

When we are conscious about how we show up in a room, at work, or in life, we have the potential to step into our original knowledge. We remember our shared humanity, our original “role.” This has been overlooked, by and large, in the ways we’ve been conditioned to relate to each other. Reorienting and beginning with our shared humanity is essential for our collective thriving. This way of moving though the world provides an instantaneous infusion of higher purpose, flow, and authenticity, and we immediately elevate. Any space or group in which we gather is strengthened by the collective substance and capacity of our presence together. We rise to meet each other. At the workshop at Parsons, the group had a direct experience with having a right relationship to itself, creating a nurturing, more mature, and creative state of being. This was the case even while moving through discomfort. Picture any sports team or jazz ensemble in high flow — when we create this kind of space together, we become works of art, high-performance in action.

EQUALITY We relate as equal learning partners in full acknowledgement of what we can contribute and learn from each other.

3 WHOLENESS We are fully ourselves, wherever we are. We are also conscious of the concentric relationship and impact of self to group, group to goal or mission, mission to the world, and the human world to all of life.

COLLECTIVE WISDOM We know more together than any one of us does on his or her own. We cultivate the collective wisdom of the group by honoring our diversity, respecting and trusting the natural gifts and talents of each and every person.

WHY WE NEED A NEW LEADERSHIP MODEL

“Millennials find that the traditional work model that defines leadership as a position just does not work.”

As a group, Millennials represent a quarter of the entire US population, and make up more than a third of the US labor force. They are often defined as having their own unique brand of purpose-driven entrepreneurialism, notorious for rejecting traditional, top-down leadership styles and structures. They are simply not satisfied with the results of the current leadership paradigm, and neither are we. That is why we bring our work onto conscious campuses, as we did at Parsons. In attendance that night was Ritchard Swain, a Brooklyn-based artist and the founder of Bootleg Tapes, an independent record label [bootlegtapes.bandcamp.com]. Born in 1987, he also happens to be a Millennial. When he showed up at Parsons that night, Swain, like many of his contemporaries, was feeling

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altogether uneasy about the world and, more precisely, about his role in it. “I was in a place where I felt that society was forcing everyone to be in fear and not trust each other,” he explained. “We are heading into a place of forgetting how to care for one another. We are forgetting about respect, not just through the generations, but also through our everyday situations and interactions. I find that peculiar because we are so much more intelligent. We have more access to more information than ever before, and here we are, more divided than we have ever been.” Society sits now in a moment of tangible reorientation, shifting from the wisdom of the individual to the wisdom of the collective. As Millennials like Swain grow into their early thirties and start making significant strides in their work and lives, leadership easily becomes a conflicted concept. Also known as Generation We and the Global Generation, Millennials find that the traditional work model that defines leadership as a position just does not work. As Swain puts it, “Society has arrived at this place of every man for himself.” One key element of teaching the Shared Leadership framework at Parsons was to make space for every person to explore their own relationship with leadership, define their leadership mindset, and learn how to open towards a team- and mission-focused approach to leadership. After the workshop, we sat down with Swain to hear how he began to see the world differently in terms of the way he is approaching leadership in his own conscious company.

EQUALITY: GENERATIONS ON THE SAME TEAM “Shared Leadership is a framework for us to understand that we are generations on the same team. I totally felt that balance that night. That’s a place we can grow, if we could all lay down our swords, and fast. I felt a natural euphoria from it. I really felt the Golden Rule: respect for one another.

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It’s not just a poster on the wall in our second-grade classrooms. We are really working together. We are trying to figure this out together.”

WHOLENESS: BEING THE BEST WE CAN BE “You can get so deep about this theory of Shared Leadership. To me it is a term for a new age. You look at humanity and, over time, how things have to shift. I think of the more permanent things, the structures we have to break down, everything we have to rebuild for it to be possible to live in a different kind of society. The pinpoint of that, the constant reminder of love, is Shared Leadership. In Shared Leadership, there is no difference in class, like feeling you are any less important than anybody else. It is working towards being the best we can be. As boggling as life can be, we have scientific facts for what is under our feet and what consequences are held. For me, that is enough to find belief, passion, and consistency in a direction of being the type of person who is kind, self-sustainable, and happy. That’s a goal to get to.”

COLLECTIVE WISDOM: RESPECT ONE ANOTHER “I am practicing this now within my own community; Swim Team, a collective of DJs and producers I’m a part of, is all about Shared Leadership. I have started using it as a term, from the workshop. Any time we don’t see eye to eye or we get muddied together, we reference Shared Leadership as a way through. Shared Leadership feels like the most valid and sensible direction to stick to for a foundation. And it always leads us back to respect — respecting one another, and listening and growing and then sharing more. We could blow our hearts and minds open in a week if we had this new system of communicating. It’s so important for our time. This is a journey. This is standing on a different kind of enlightenment that has to happen.”

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Lori Hanau is dedicated to supporting shifts in consciousness, communication, and community in the workplace through experiential learning. She founded Global Round Table Leadership, where she works co-creatively to coach, guide, facilitate and steward individuals and teams in opening to their innate brilliance, cultivating the soul of their organizations and their work. She is faculty and Co-Chair at Marlboro College Graduate and Professional Studies and on the board of Social Venture Network.

Claire Wheeler is a freelance consultant and co-conspirator for sole practitioners, community-based businesses, and nonprofits. As principal of Re:work, her passion is to translate the creative genius of people and organizations into systems and structures that make work make sense. She finds power in prose and splendor in spreadsheets.

CAN THIS 33-YEAR-OLD MAKE HER FAMILYâ&#x20AC;&#x2122;S $100 MILLION TRUCKING COMPANY SUSTAINABLE?

RFX GLOBAL COMPANIES AT A GLANCE Founded: 1952 Location: Boston, MA Team Members: 45 2015 Sales: $100 million+

Photo: Christian Kozowyk

INNOVATION & DESIGN

e have all heard the story before: a young heir to the family company takes the reins, determined to shake things up and do things differently, and causes predictably disastrous results. What if we told you the young heir in this story was a 30-something female yoga teacher and artist, and the company was a 65-yearold trucking company — what would you expect then? Confusion? Resistance? Some comedy, even? You would be right, but you might be surprised to hear that success, joy, groundbreaking innovation, and higher margins are also part of the narrative; at least for Caitlin Welby, president and CEO of RFX Global Companies, who took over her family’s business in 2015. Despite admitting to being “naively cute” when she took the reins, Welby and her team have reimagined the trucking industry from a conscious place. With two product lines focused on sustainability launching this year, the company is on track to begin transforming an old-school, typically carbon-intensive industry into one that can make a positive difference. We spoke with Welby and Chief Karmic Officer Matthew Cone about what it takes to champion positive change in an established company and industry.

Tell us a little about the history of RFX and your journey to becoming President and CEO. Caitlin Welby: RFX Global Companies was started in 1952 in South Boston by my grandfather, who ran it for a short while, and then my grandmother ran it as a refrigerated trucking company, first locally, and then it grew regionally for the next 20 years through the ’60s and ’70s. Then my father took it over and ran it for about 20 years. Not too long ago, I decided to take the reins. My dad passed away in 2000 and his number two person ran it for a while, and he’s currently the chairman and transitioning into retirement. It’s not exactly how I saw my life going. In fact, I adamantly believed that it was not where my life would go. A little background on me personally: I come from about 20 years of esoteric practices; I was into artistic studies and self inquiry; I went to art school after high school and did a lot of traveling, seeking, soul-searching, adventuring, and spiritual inquiry; I practiced and taught yoga; and consciousness studies have always been a big part of my experience. I was teaching yoga full-time and coaching

people — nutritional, leadership, and spiritual coaching — and I had this lightning-bolt moment that coincided with some other experiences in my life. I decided that it was time to be involved with the business and to use this platform to disseminate those values and opinions and perspectives on the universe that I’d been collecting for so long. I realized I had been denying this huge part of my lineage which was affording me the opportunity to be in this inquiry practice. It is really quite a blessing that I had the opportunity to really dive into these inquiries to the extent that I have in my life. What was the decision to jump in like for you? Was there fear involved, or were you just inspired to get into the trucking industry and shake it up? CW: I had gone through a lot of personal transformation and deep dives into what I want and who I am and what I think and feel about the world, and I’d already gone through so much processing around my father’s death and the cinematic narrative of his loss, which was attached

to the company, that I felt a lot more fear when I was resisting it. When I stopped resisting it, I really dove in so acutely and naively and with such passion and authenticity that I really knew nothing. It was like the tarot card of the fool, who is a happy-go-lucky person that steps off a cliff while looking into the sky, and that is sort of how it was in the beginning. I was like, “I’ve got this idea and I’m just going to do it; I’m going to teach yoga in the office and I’m going to feed all the employees organic food and I’ll just bring good vibrations to the office and we’ll shift consciousness. We’ll start where we are and use what we have and do what we can.” And I still believe all that, but I was just so cute when I came in — naively cute. When you took the reins, what were some of the changes that you started to make immediately? CW: When I came in, it was a 62-year-old company that had always been run like a mom-and-pop company. The first thing I did was start teaching yoga at lunchtime for 45 minutes and getting people to relax. I came in with the basics of what I

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THE NUTS AND BOLTS OF RFX EXISTING OFFERINGS Refrigerated Food Express

The actual trucking line that was founded in 1952. Operated with owner-operators throughout the country.

RFX Inc.

A brokerage-based agency that provides support services such as billing, collections, and financing to a network of agents, connecting the switchboard of commodities movement throughout the US.

TWO NEW OFFERINGS IN THE CREATION STAGE

Hither to Yonder

PermaTrucking

A new concept developed by Welby, Cone, and team, which they are calling “artisanal logistics.” RFX will be taking on the logistics department for small to midsize companies or midsize to large companies, looking to align systems for passionate providers of creation-to-consumption goods who are putting a lot of love and passion into their artistry and goods.

Another new concept developed by Welby, Cone, and team to bring the principles of permaculture (a system of agriculture or social design based on emulating or using aspects of the natural ecosystem) to trucking. Cone says, “Our goal is to be able to find those 200 or 300 free-spirited truckers that understand permaculture and be able to connect those truckers with shippers who care about the whole ecosystem of their products — those who care about making the best products from creation to consumption, with the best ingredients, with the best people working on them. Those types of producers care about the truck and the driver who bring the product from the factory to the store for sale.”

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know from an Ayurvedic perspective and a yoga perspective, which is get stress levels down, communication levels up, and to get some real food in the office. I also came in with my coaching practice to improve communication skills — just to remind people how we communicate with each other, what is appropriate, and even just to bring laughter to the office so that everybody wants to be there in the morning. I just wanted there to be

my commitment to diving in so naively and making mistakes and making a mess, but being willing to be there and clean it up every step of the way. That’s really helped me. To be honest, we’ll still meet challenges in my transition. I’ll turn 34 in a few months, and I’ll probably see the resistance for a little longer, and that’s OK. It’s really pretty natural, and if it wasn’t there, I’d be a little more worried.

for the organization’s mission, as opposed to involving ego and thinking that we know best what it needs. It’s important to be in a listening space to help get the organization to where it needs to go and to potentiate, rather than taking on the ego that it is us doing it all. CW: How we like to think about it — and we do think about it this way every day — is that we’ve got this 65-year-old organism that we’re

“What’s our purpose for existing as a company and how can we shift it forward? I keep asking myself those things every day and want to keep asking them for the next many years.”

more joy in the office, so that I could internally listen and really understand the state of the company. When you came on board, did you feel any resistance from any of your team members based on the fact that you were 32 years old? Or were you welcomed with open arms? CW: It was a little of column A and a little of column B! I was welcomed because I was quirky and different, and I wasn’t coming in with an iron sword; I was coming in with oatmeal and raisins [laughter]. But I still represented change. I was a lot younger than a lot of people and I didn’t have a business background. I actually think being a woman and a yogi and my age were less of a hindrance than my lack of business acumen. But some of the people in the office had been with the office so long they had seen me as a child, seen me when I was as tall as my dad’s knees. They had watched me grow up and go through my hilarious art school phase, and different-colored hair, and all sorts of experimentation. There was a natural resistance and a natural skepticism until they saw my commitment to being there, and

As someone who didn’t necessarily have much business acumen, as you say, what characteristics do you think helped you gain favor with your team members and be successful so far? CW: I would say audacity, passion, and the want to really be a force for conscious, positive change in the world. Being passionately committed to change helps me get through a lot. Also, my spiritual practice is really important, as well as having a deep amount of self-inquiry about, “Who am I? What do I want? What do I want to do? What do I want us to do? What’s our purpose for existing as a company and how can we shift it forward?” I keep asking myself those things every day and want to keep asking them for the next many years. What are your top pieces of advice for other mission-driven entrepreneurs? Matthew Cone: I would say meditate and listen. I really like the idea that ultimately the organization has a mind of its own and the leaders are there to listen to what the organization wants and open up the door

helping along here, that we’re helping transition to a new phase and into a new iteration. It’s really not us doing much, but it is us listening to what the organization, that organism, is ready for. We’ve watched it go from resistance to picking up speed to beginning to run again, and it really becomes this great image when we start thinking about it in that way. Do you have any practices within the company that you use to disseminate your culture to your team members? What are you doing to get everyone on board with the new vision you’re creating? CW: We have weekly management meetings; we start every meeting with gratitude circles and we meditate together. Once or twice a month we have a town hall with everyone where we bring in a bunch of organic food and let everyone’s voice be heard, because we are in transition — we’re in a leadership transition, a management transition, a location transition, we’re repositioning within the industry — all of these transitions all at once. Getting everyone’s voice heard helps, and getting everybody some organic food really helps, too!

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INNOVATION & DESIGN

“I feel like we’re right on the edge of something that is happening really soon, and being ahead of the curve is exciting because we can ride the wave instead of getting drowned by it.”

Paul Saginaw of Zingerman’s Deli told us that people usually have two reactions to change — they are either against it or they are really against it. For the people who have been at your company for 30 years and are used to the status quo, what tools have you employed to gain the momentum and critical mass you need to take the company in these new directions? CW: It’s really all about communication. We’re all just weirdos trying to keep our noses above water. We’re all just humans; we’re all going to do the human thing. Change is different; change is weird. I’m an anomaly because I happen to love change. I get really excited about change, but that’s not the norm. It’s important to get everybody to stay communicative because then it’s easy to tell when the energy drops. I try to really keep a finger on the pulse and let people be in their vulnerable state of change — let them feel it, but ask them to communicate about it. We have to call it out because it affects all of us. We’ve got to keep the communication alive and keep it going even if it’s uncomfortable. You stepped into your role with an art and yoga background and had studied lots of world traditions instead of having an MBA or a business background. Do you recommend that people stepping into leadership roles pursue some sort of business degree, or do you think your non-business education was advantageous for you? CW: I think it was advantageous for me because I knew I had a good head on my shoulders and that I could make conscious decisions, but I wasn’t mired down or afraid of some of the things that somebody with an MBA might be more challenged by when they just walk in thinking, “OK, this is how I lead organizational change; this is what I do to get the margins up.” But I came in, as I said, as a cute, 32

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naïve kid, and I think it served me really well. Now I’m really diving into business theory and progressive business practices and thinking about how I want to be doing what I’m doing for the next 40 years. What practices do you have in your life to help maintain your sanity while running an over-$100 million business as a 33-year-old? CW: I wake up very, very early in the morning and start with yoga and meditation. I really have to start the day before dawn and make space. I make sure to eat the best foods and try to be aligned with nature. I try to let in spaciousness. What benefits have you experienced as a result of shifting to these more conscious business practices? CW: A huge benefit that we’ve seen — in addition to the growth of the company in terms of profits and margins — is that our joy space and the joy space of the people we work with has really grown and has created opportunities to seed and nourish on all sorts of levels. How do you see the future? MC: I was in the banking software business prior to the Internet, and my colleagues and I sensed this amazing energy coming at us. We weren’t quite sure what it was, but it was ultimately called the Internet, and all of a sudden everything just blew up and started moving really fast. I feel that way right now with the notion of conscious capitalism and conscious companies. I feel like we’re right on the edge of something that is happening really soon, and being ahead of the curve is exciting because we can ride the wave instead of getting drowned by it.

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IN THE HEART OF NYC

INNOVATION & DESIGN

WOULD YOU SIGN A

20-YEAR EMPLOYMENT CONTRACT? IN 2008, ROB WALDRON WAS OFFERED HIS DREAM JOB AS CEO OF CURRICULUM ASSOCIATES, A 40-YEAR-OLD MASSACHUSETTS-BASED EDUCATION COMPANY THAT USES TECHNOLOGY TO HELP TEACHERS AND ADMINISTRATORS.

However, there was one catch: with a long-term vision in mind, founder Frank Ferguson insisted that Waldron sign a 20-year employment contract. Trusting Ferguson’s vision, Waldron agreed, and has since quintupled the company’s revenues and turned it into one of the fastest-growing K–12 education companies in the country. But in an era of brief attention spans, rapid career transitions, and emphasis on short-term profitability, can a long-term vision truly survive? Waldron explained to us how it not only can, but why it is also a key to his success. Waldron also shared his best practices for taking over leadership at a new company, creating a great work environment, and what’s next in the education industry.

Could you tell us about your unique employment contract? Rob Waldron: So, as we were changing the ownership structure to handle my transition, even though I had a five-year vest in my offer letter, he [Ferguson] told me that if I left any time voluntarily in the next 20, I would get nothing. That came as quite a shock; I thought he was completely insane. Then, over time, I talked to some friends and realized that this was my dream job, that we were really trying to change the world, and that I actually might be able to sign up for 20 years. With some slight modifications, I agreed to do that. I’m not an indentured servant or anything like that

Sign here: 34

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[laughter], but my ownership in the company is driven by these 20-year terms. It turns out that that’s been an enormous competitive advantage. I don’t have to answer to outsiders, and people know that we’re long-term oriented in a world of short-term profiteering. In our case, we don’t have to take outside money and we just march along with this long-term mindset. It allows us to attract a better group of people. It has allowed us to make bigger bets, have longer-term product development cycles than others can have, and, oddly enough, it’s led to higher short-term returns than the rest of the sector, even though we don’t care about short returns. I’ve learned from Frank that a 100 percent

INNOVATION & DESIGN

focus on the long term, in some odd way, has short-term results because it attracts better people. It focuses us more on quality, on service, and on our vision. Our margins are lower, being a “some-profit,” than they might be if we were trying to maximize them in the near-term, but we’re not trying to have higher profitability. We need to be somewhat profitable — that’s why I call it a “some-profit” — but it has led to higher market share, for sure. What sort of tools or initiatives have you used to help people become comfortable with the change that you brought as the new leader of the company? RW: When I come into any new company, I ask for written feedback. It can be anonymous or not. Then I ask people to tell me two or three things in the past that they’re most proud of or excited about and two or three things that they find frustrating. Then, going forward, what are the one or two things that they’re most excited about and the one or two things that they’re most worried about. I read every word of everybody’s comments and ask people to be as thorough as they can. I gather all of that, and there usually are themes that come out, especially about the things that are going well. And that is the part you have to pay attention to; the things that they hold most dear. I have found — and I’ve now done it three times — that there’s a fair amount of commonality, especially for the things that they are most concerned about. I always restate what they said back to them to make sure that I understand. Then the first changes that I make in the company are around those ideas, and I become their advocate for what changes they thought of, rather than coming in with my own ideas. I work really hard not to have my own ideas for at least six months. Just do what they think should have been done.

“A 100 percent focus on the long term, in some odd way, has short-term results because it attracts better people.” Curriculum Associates has been featured on many “Best Places to Work” lists. What do you believe you’re doing that is making it such a great place to work? RW: I think we’re driven by values, and the only thing I micromanage are those values, which are not subject to debate. We measure ourselves by what we do for the classrooms, for teachers, and for children, not by maximizing shareholder return. We value high-confidence, low-ego, so we hire people who have a lot of confidence but have low-ego needs so they tend to get along better. Another value is what’s called “say it like it is,” so everyone has permission, at any level, to test the thinking of any executive at any time — or anyone else. Another is that we’re trying to get to heaven, whether you believe in it or not. I’m not trying to set anyone’s religious preferences; I’m just saying that the purpose of what we’re doing here is for the good of others. Another way to say that is, every single action of everyone in the company should be able to be on the cover of the New York Times every day. Also, I’m the most obsessed person about recruiting that you’ve ever met in your life. Last year, we hired 200 full-time professionals, all in knowledge-based jobs. The reason that we were successful is that we hired for values first and skills second. We care more deeply that they have our values; if you can keep ahold of your values, you can ride through more bumps than people who can’t. I still personally interview everyone to be absolutely sure that everyone has those values.

It’s much easier to be an average manager and an outstanding recruiter than an outstanding manager and an average recruiter. Success in our company is driven by the choice of the people who join us. What are the most promising things that you’re seeing that are making you believe that the education industry is making some positive strides? RW: I’m super excited about what will happen within the next five to ten years, and am very bullish because teachers have been asked to do more and more — asked to do new standards; have a wider range of levels in their classrooms, from two or three grade levels behind to two or three grade levels ahead; have new regulations; and then they actually have more students than ever before. What technology is doing is creating productivity tools to make it easier for teachers so they have more information in the moment, so they can individualize their curriculum for a student, so they can save time on grading, on giving feedback to students right away. They can uncover skill gaps with an app that a human might not see right away. By making learners more engaged, teachers more productive, and learning more individualized, [students are] going to have more time on tasks in what we call their zone of proximal development — exactly what they need and when. Any time you bring productivity tools to sets of hardworking people, it makes their lives better. Teachers will have more energy for children, and children are more engaged in their lessons and spending more time on tasks.

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NISOLO

How Two Young Entrepreneurs Have Brought Sustainability Into the Fashion World AT A GLANCE Founded: 2011 Location: Nashville, TN Team Members: 20 in the US, 60 in Peru, and 10 in Kenya Founders: Patrick Woodyard (29) and Zoe Cleary (31) Structure: For-profit Traction: • Experienced consistent, 100+% year-over-year growth since inception • Supports the livelihoods of more than 300 individuals in the US, Peru, and Kenya • On average, employees throughout its supply chain have received a 161% increase in income since beginning to work with the brand, and receive a full range of benefits including paid time off, healthcare, access to the Nisolo savings & loans program, and weekly educational classes covering health, nutrition, English, and financial literacy Recognition: • Forbes 30 under 30 Social Entrepreneur 2016 awarded to co-founder Patrick Woodyard • Global Innovation Summit Ecosystem Award 2015 • SOCAP 2012 and 2014 Featured Social Entrepreneur awarded to co-founder Patrick Woodyard • NEXT Awards Top Social Enterprise & Sustainability Startup 2014 • Unreasonable Institute and Agora Partnerships fellows 2013 • Awarded a 2013 Siegel+Gale fellowship for their “unstoppable commitment to solving the world’s most complex social issues”

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In 2011, Patrick Woodyard took a development job in Trujillo, Peru, and stumbled across an entire community of remarkably talented shoemakers who were hand-producing gorgeous products. Despite the high quality of the shoes, the artisans had trouble accessing global markets. Additionally, the local market for the goods was essentially saturated, as the industry in northern Peru partially employed more than 100,000 people. Seeing the potential positive impact if he could simply connect the local shoemakers with a global market, Woodyard began envisioning a social enterprise that would revitalize the shoe industry in Trujillo and commit to improving the well-being of its producers. After he partnered with fashion industry expert Zoe Cleary, the pair founded one of the world’s first social impact fashion labels, Nisolo, in 2011; all before they each reached the age of 28. We spoke with Woodyard about his journey and lessons learned along the way.

Nisolo co-founders Zoe Cleary and Patrick Woodyard

“The social impact that we are creating gets me up and out of bed each morning.”

INNOVATION & DESIGN

It’s one thing to have a great idea; it’s another to take that idea and take action on it. What gave you the courage to dive into this and pursue it? Patrick Woodyard: A solid mix of passionate and practical decision-making. I was passionate to help the group of shoemakers I had met, and for them alone it was worth giving it a shot. On the practical side, I traded a goal of going to business school to get my MBA to start Nisolo instead. I knew from the beginning that the worst-case scenario in starting Nisolo would be that it would fail within the first year. But I also knew that if that happened, I would have learned more practical business acumen in that one year than in two years pursuing an MBA. What has been the largest challenge you have faced in scaling the business, and how are you working to address it? PW: Usually when I’ve been asked this question, people expect an answer

about balancing social impact with profitability or scale. However, we’ve created a team that is first and foremost here for the social impact we can create, and purposefully, we’ve baked our social impact into our business model. We don’t give a percentage of proceeds off the top or do a buy-one, give-one model; rather, the impact comes in the way our products are sourced, and is directed at producers themselves rather than solely altruistic consumers. This way, no matter how many products we develop and sell over time, our social impact will never be compromised. Just like many quickly growing startups, two of the greatest challenges we face include getting the right people in the right seat on the bus — to steal from Jim Collins — and learning to say no to noise and distraction and yes to what really moves the needle externally and internally within the organization. As cliché as it sounds, people are everything. The toughest hurdle I have faced thus far in Peru, Kenya, and on the US side of our business is getting the right people in the right seats on

the bus (and the wrong people off the bus). This is an evolving process, but it is one that deserves the attention it requires. The ways we have addressed this [are] strengthening our recruitment process, doing a ton of interpersonal assessments, and just being really honest and transparent with one another about what is working and what isn’t. What do you do to continue developing who you are as leaders? PW: One of our core values at Nisolo is “mejorarse siempre,” which is an abbreviated Spanish phrase that basically means to never stop doing what you can to improve. This is the type of mentality that is core to our DNA and must be core to the type of people that join our team. Our leadership team has a clear understanding and mutual sentiment that we are still in the first few baby steps of what we hope to accomplish. In order for us to transition into adolescence and on into adulthood as a brand, we have to continually remain humble

“One of the greatest lessons I’ve learned so far is how incredibly willing people are to help you out if you have an impact-focused business that they can get excited about.”

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INNOVATION & DESIGN

Woodyard’s Top 3 Pieces of Advice for Mission-driven Entrepreneurs

PRIORITIZE THE PRODUCT

Artisans hand make Nisolo shoes at its shoemaking factory in Trujillo, Peru

and do all that we can — from staying up-to-date with the best business books and articles to seeking mentors to maintaining a strong work/life balance — to develop our leadership skills. What is the top lesson or lessons that you have learned so far in running Nisolo? PW: What Jim Collins has to say about the flywheel is 100 percent correct. If you expect to arrive to that overnight success moment where you wake up and momentum is just taking off, you can go ahead and give up. The companies that that happens to are few and far between. You really have to maintain a 10,000-mile-march attitude and treat every day and every challenge as another push on the ole flywheel. Also, one of the greatest lessons I’ve learned so far is how incredibly willing people are to help you out if you have an impact-focused business that they can get excited about. The first thing I did in the ideation stage was create an extensive exec summary and send it out to around 100 peers, former professors, mentors, and friends and family to ask for advice. This helped shape the initial plan a fair amount, and from there the following three years has been an insane rush and hustle. I’ve

stayed hyper-focused on four things: learning from customers, selling as many shoes as possible to stay afloat, strengthening the efficiency and social impact of our supply chain, and surrounding myself with a team of incredibly talented, passionate, and humble individuals who are gung ho on taking Nisolo to the moon and having the greatest social impact possible along the way. What is giving you hope for the future? PW: Quite obviously, the social impact that we are creating gets me up and out of bed each morning. That being said, I am also deeply inspired when I am around people who are passionate about what they are doing and are willing to give a task, a project, or even a dream their all. The two places I regularly encounter this inspiration is from my team members at Nisolo as well as peers in our industry. I enjoy watching my team members work. And I enjoy keeping up with what is going on with the companies of friends within the social enterprise and fashion spaces, because nothing is more inspiring than seeing other entrepreneurs who face many of the same struggles and who identify with your lifestyle find success Photos: Nisolo in one way or another.

Anyone starting a socially transparent brand must deliver in a profound way on [their] product offering. The greatest way a brand can impact the ethical fashion space is to prioritize the product just as much as [the] social impact. The space needs success stories, and it needs products that continually demonstrate to consumers that quality goods can be bought at affordable prices and produced and consumed responsibly as well.

FIND THE RIGHT PEOPLE

People are everything. Build a team and it will come.

TAKE ACTION AND BUCKLE UP

Nike might say “Just do it,” but Nisolo would say “Sure, do it, but buckle up, because it’s going to be a wild ride!”

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FINANCE

WHAT IS

Divestment is the opposite of investment; it means selling or reducing assets in a given entity in order to exert negative pressure on that entity, thus using the marketplace to promote certain behavior or improve certain policies. It’s most often done for ethical, political, social, or environmental reasons. Divestment has been effective as a tool because it stigmatizes the targeted industry, shifts capital away from the industry in question, and activates broad-based constituencies to take action on certain issues. Anti-Apartheid campaigns in the ’60s, ’70s, and ’80s notably used divestment, pressuring universities and other large entities to cease investing in companies that traded with or had operations in South Africa. Over the last decade, divestment has been gathering momentum as a tool to fight climate change, with thousands of individuals, companies, universities, and foundations banding together to divest assets from fossil fuel companies.

THE DIVEST-INVEST MOVEMENT Divest-Invest, a divestment movement that began in 2011 with a handful of US-based students and non-governmental organizations demanding that university endowments divest from fossil fuel companies, now has global reach. Oxford University named it the fastestgrowing divestment campaign in history,

representing more than $3.4 trillion in assets under management among more than 50,000 individuals and institutions committed to divesting from fossil fuel companies and instead investing in clean energy, agriculture, or sustainable and local businesses.

DIVEST-INVEST TIMELINE Divest-Invest launches with students on college campuses demanding that college endowments divest from energy sources that drive climate change

2011 42

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Divest-Invest Philanthropy launches with 17 foundations and $1.8 billion in assets under management

JANUARY 2014 |

CONSCIOUS COMPANY MAGAZINE

The Rockefeller Family Fund joins hundreds of others collectively representing more than $50 billion in assets under management at UN Climate Week in New York City to announce its plan to divest

SEPTEMBER 2014

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50,000

TRILLION

DIVEST-INVEST BY THE NUMBERS

$3.4

The amount of assets under management that has been committed to divest from fossil fuel companies as of December 2015

The number of individuals and institutions that have committed to divestment

120

Fossil-free portfolios have outperformed standard portfolios every year for the last five years

The number of philanthropies that have committed to divestment, totaling over $12 billion in assets as of December 2015

WHAT KIND OF INSTITUTIONS ARE DIVESTING? Faith-Based Groups - 27% Foundations - 25% Governmental Organizations - 13% Pension Funds - 13% Colleges, Universities and Schools - 12% NGOs - 6% For-Profit Corporations - 3% Health - 1% Chart created by 350.org

Norwayâ&#x20AC;&#x2122;s parliament announces its plans to divest coal investments from its $900 billion sovereign wealth fund

JUNE 2015

California Governor Jerry Brown announces that the two largest public pension funds in the US, CalPERS and CalSTRS, will divest from coal companies

OCTOBER 2015

At the UN Climate Change Conference in Paris, it is announced that more than $3.4 trillion in assets under management has been committed to the divestment movement

DECEMBER 2015 CONSCIOUS COMPANY MAGAZINE

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DIVEST FROM THE PAST, INVEST IN THE FUTURE THREE IMPACT CHANGES MILLENNIALS CAN MAKE WITH THEIR CAPITAL BY KATHRYN HOFFMAN AND CORIE RADKA

The real test for the Millennial generation will be how those with access to capital use it to transform the economy, and hopefully Earth’s climate. Twenty- and thirty-somethings of today face a different kind of global threat than those coming of age in the mid- to late 20th century did: unchecked climate change. Those who analyze the past and try to predict the future are starting to see that it is not escalating nuclear arms development but the continued production of fossil fuels that poses an existential threat to Earth’s inhabitants. Luckily, as a generation, Millennials have unprecedented access to resources and the potential to create real change. Some Millennials stand to inherit enormous amounts of capital over the next several decades (some estimate between $25–$30 trillion), re-emphasizing the question Barack Obama posed just a few years ago: how do we divest from what harms and invest in what helps? There is no silver bullet or moon shot to address the challenges of today, but there are some changes this next generation can make with their capital to transition the current emphasis on extractive systems into a more regenerative paradigm. If you or your home were on fire, you might just consider these basic steps:

STOP new investment in companies

and funds that are known to be associated with high levels of social and environmental risk. You can start by working with your financial advisor to freeze new investments in companies whose primary business models are rooted in the extraction, distribution, and processing of fossil fuels. An easy first move, albeit just one step, is freezing any new positions in the Carbon Underground 200;

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those identified as the top 200 publicly traded fossil fuel companies with the largest identified carbon reserves.

DROP existing positions you may have in companies and funds that rely primarily on resource extraction to generate outsized profit. This is a point in the divest-invest process where it is essential to do your research and find out where your capital is currently invested; how; and why. If your financial advisor does not understand climate or social risks, and cannot articulate a strategy for investing your capital beyond “generating optimum returns,” it is important to open up a dialogue and express your strong preference for finding returns that transcend quarterly balance sheets. Creating a system for what you will and will not hold is a process. It is important to beware of the classic “that’s not possible” or “you will lose money” responses from an intermediary. Unfortunately, the current system has not incentivized managers to be particularly innovative in balancing the need for returns with impact. If an advisor or intermediary cannot meet your demand for both impact and returns, it may be time to consider whether they are truly serving your needs and best interests, or are functioning as a bottleneck.

and the planet. Finding companies that align with B Corp principles is a great first step, as is doing your best to invest in products and services that are created locally and regionally in an effort to support the flow of capital back into the community.

Kathryn Hoffman is the co-founder of Resco, LLC, and member of the international DivestInvest steering committee. She holds more than a decade of experience building enterprises and projects focused on climate innovation, including her most recent role as a project director with Etho Capital, an investment advisory firm focused on delivering optimized sustainability products. In 2011, she spearheaded the California Divest-Invest Initiatives, which led the University of California system, CalPERS, and CalSTRS public funds to begin shifting from fossil fuels towards more sustainable investments.

ROLL out an investment strategy

that is aligned with your values and desired returns. Make sure to work with the right advisors to find investment opportunities that are diversified and rest on strong processes that consider environmental and social risks and opportunities. Outside of your investment portfolio, this also includes using your purchasing power as a consumer to support products and services that prioritize health and profit for people

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Corie Radka is the co-managing partner of Resco, LLC, and a development strategist with Etho Capital, where she focuses on scaling investment opportunities to address pressing environmental and social challenges. Corie received awards for her research on climate and local food systems from the University of California, Santa Barbara, and taught a course on community development at University of California, Berkeley.

FINANCE

THE END OF THE TASSELLOAFERED BROKER ENTER SUSTAINABLE INVESTING AND THE NEXT GREAT GENERATION By Dale Wannen

Having a conversation with my 19-year-old niece last week, I was struck by her statement that she does not understand why anyone would want to drive a car in this day and age, with entities like Lyft and Uber making it so easy to get around, plus the fact that traffic is “ridiculous.” This got me thinking about the shift in perspective that has taken place between older generations and that of my niece. She is not alone in her opinions; in the last few years, the number of cars purchased by people ages 18 to 34 fell almost 30 percent. Just as Ford and GM are scratching their heads over how to sell cars to this generation, the big banks and brokerage houses are wondering how they can “get in with the cool crowd.” But after witnessing the recent “too big to fail” economic calamity and the outrageous paychecks of bank execs, Millennial investors (18–32 years old) are simply not interested in working with the traditional big brokerage firms that their parents or grandparents have been using. Enter the world of impact and sustainable investing, which includes the divestment movement.

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LEONARDO AND DIVESTMENT Almost as popular as Justin Timberlake’s videos on YouTube, the divestment movement [see pages 42 and 43] is moving full steam ahead as more than $3 trillion has been committed to it. Just to put that into perspective, the size of the world’s stock markets is about $70 trillion, so a fairly quick 4-percent shift has occurred. According to the nonprofit 350.org and its project Go Fossil Free, more than 500 institutions, including many of the universities that Millennials attend or have attended, have committed to divesting from fossil fuel companies. The divestment movement is raising the eyebrows of many of the established brick-andmortar banks — and rightfully so, as the socially conscious Millennial generation will be inheriting more than $30 trillion from their Baby Boomer parents and grandparents over the next 45 years. So who is doing this divesting? Among others, the world’s biggest sovereign wealth fund, held by

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Norway, and two of the world’s biggest pension funds, in California. Hollywood is even getting in on the act, as actor Leonardo DiCaprio recently reported divesting his personal wealth and his charitable foundation’s funds from all fossil fuel companies. Star Natalie Portman also requested that her alma mater, Harvard University, divest from fossil fuels. The shift will continue as not only large institutions but also Millennials inherit assets. The current movement seems to be gaining momentum rapidly. One out of every eight dollars invested now follows a social or environmental mission. Millennials are driving the concept of dual investment objectives by seeking market returns that also help build a better world for future generations.

WHERE TO GO Many young investors really do not know where to start when researching sustainable investing. In recent years, many “robo-advisors” have launched and grown rapidly, but in terms of investing with a conscience, many of these firms fail. In fact, Millennials have access to enough information online to realize that these firms are simply in the business to gain revenue and market share, and not because they share their values. Young investors can start by taking a look at their mutual fund positions to get an idea of what fossil fuel or coal mining companies might be lurking there. The recently launched Fossil Free Funds (fossilfreefunds.org) makes it fairly simple to find out whether that Vanguard or Fidelity fund holds those evil firms. Mutual fund companies such as Parnassus and Ariel already do the screening for their clients, who gain peace of mind knowing that firms like these have been participating in sustainable investing since before it was popular with the big broker houses that are getting involved now. For many investors, of course, the task of setting up an asset allocation and rebalancing schedule is simply too daunting and time-consuming. They can hire an investment advisor who is fully aligned with integrating environmental, social, and governance criteria (ESG) with stocks, exchange-traded funds, and mutual fund positions, along with creating financial plans.

A NEW SUSTAINABLE INVESTMENT VEHICLE As ESG gains momentum and interest, there are many different vehicles for sustainable investment emerging that may interest new investors. My firm, Sustainvest Asset Management, recently launched the Sustainvest Fund, which integrates both the long and short approach to investing and ESG. This fund is unique in taking a step beyond the traditional exclusionary screens (oil/tobacco/ gambling) and inclusionary screens (strong waste management programs, energy efficiency) by also shorting firms that rank poorly or show a lack of commitment to ESG. The idea is to join with investors

“THIS IS THE FIRST GENERATION THAT WILL BE ABLE TO TILT THE ENTIRE INVESTMENT FIELD TOWARD SUSTAINABILITY. THEY WILL DO IT BY KEEPING THEIR HARD-EARNED DOLLARS AWAY FROM THE FIRMS THAT GOT THEIR PARENTS AND GRANDPARENTS INTO A FINANCIAL MESS.” whose values align in trying to capitalize on firms or industries that are clearly showing weak growth prospects that could potentially negatively affect the stock price. For example, if we truly feel that a particular company, like Coca-Cola, has poor long-term prospects, then the value of its stock may depreciate, and there is an opportunity to gain value by shorting a company. The long/short approach to investing is nothing new, but applying an ESG filter on top of this approach is unique and may align with investors’ moral and financial fortitude.

OUT WITH THE OLD, IN WITH THE NEW The big brokerage houses are struggling to appeal to Millennials, and only time will tell how members of this generation will react with their dollars. Transparency of information via social media and the plethora of online resources enable them to make their own decisions, and to find out which firms are authentically aligned with the mission of sustainability and which are simply getting into this segment because they need to. The cufflink- and tassel loafer-wearing brokers will quickly be pushed aside as the shift of assets from one generation to the next gets underway. This is the first generation that will be able to tilt the entire investment field toward sustainability. They will do it by keeping their hard-earned dollars away from the firms that got their parents and grandparents into a financial mess. Sustainable investing is another arrow in the quiver for young professionals looking to fully align their lives with their standards. $

Dale Wannen is president of Sustainvest Asset Management, an independent investment advisory firm based in Northern California that specializes in socially and environmentally responsible investing, helping clients meet their financial goals without having to sacrifice their morals. He can be reached at dale@ sustainvestmanagement.com. www.sustainvestmanagement.com

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DEMOCRATIZING ACCESS TO SUSTAINABLE INVESTING

ASPIRATION AT A GLANCE Founded: 2014 Location: Los Angeles, CA Team Members: 24 Structure: For-profit; B Corp Awards: • One of 50 “World’s Most Innovative Companies of 2016” according to Fast Company • One of the “100 Brilliant Companies” of 2015, according to Entrepreneur Magazine • “Best Checking Account” from the “Best Banks in America 2015–2016” awards by Money Magazine

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Aspiration CEO Andrei Cherny Photo: J. Emilio Flores

HOW ANDREI CHERNY AND HIS TEAM AT ASPIRATION ARE MAKING IMPACT INVESTING ACCESSIBLE TO MILLENNIALS AND THE MIDDLE CLASS

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Often, middle-class individuals and young people have trouble finding ways to invest according to their values. Either they do not have enough money to grab the attention of a traditional investment firm that could advise them in sustainability, or their mistrust of financial firms runs so deep that they do not even try. Recognizing these challenges, Aspiration CEO Andrei Cherny set out to create a new, purpose-driven financial firm with the mission of expanding economic opportunity for all. His model is simple, yet revolutionary for his field. Aspiration provides a sustainable investment fund, mutual fund, and high-yield checking account with low minimums — $500 for the investment and mutual funds and $10 for the checking account — and here’s the fun part: customers only pay Aspiration what they believe is fair. The model not only opens up opportunities for youth and the middle class to invest sustainably, but it is rebuilding trust in the financial industry. We spoke with Cherny about his innovative new business. Can you tell us about the conceptualization of this company? Where did the inspiration for it come from? Andrei Cherny: I’ve spent 20 years working on issues of fairness and opportunity in our financial system, whether in the Clinton White House or as a financial fraud prosecutor. In 2012, I was working as an advisor to companies including some of the big banks. What I saw was that you had these gigantic financial institutions whose customers just did not like them. They didn’t like doing business with them. They didn’t think they shared the same values or that these companies were going to have their backs. In talking about this with my friend Joe [Joseph] Sanberg, who became my co-founder at Aspiration, we felt that if you were serious about

closing the growing gap of wealth inequality, you had to create a financial firm that people actually liked — liked doing business [with], believed in, and trusted. That’s what we set out to do with Aspiration. Can you provide us with a highlevel overview of your business model? AC: Aspiration’s business model is what we call “Pay What Is Fair.” We trust our customers to decide what to pay us — even if it is zero. They set their fee when they first sign up and then can change it whenever they want and as often as they want. We feel that if we can’t prove to them that we are doing a good job, then we don’t deserve to be paid. When we began, people thought we were crazy. But we believed that if we wanted to ask our customers to trust us with their future, we needed to be able to trust them as well. And it has worked out better than we imagined. Over 90 percent of our investment clients choose to pay us, on a voluntary basis. That is extraordinary in this day and age when there is so much anger over financial fees. It shows that we are forging a very different kind of relationship with our Aspiration customers. They see we are on the same side of the table as they are. They know we’re not going to pull a fast one on them or act in a way that is contrary to our values because if we ever did, they could just choose to pay zero. Even beyond Aspiration or the financial industry, what we’ve shown is that the vast majority of people are honest and honorable. Instead of taking advantage of us, people have shown they are worthy of being trusted and feel they are part of a real movement where they won’t let each other down. It’s a pretty special feeling to know we’re part of that.

CHERNY’S TOP 3 PIECES OF ADVICE FOR MISSION-DRIVEN ENTREPRENEURS

1 Build purpose and impact into the DNA and business model of what you’re doing, instead of making it just something you bolt on top.

2 If people don’t tell you that your approach is crazy, then you’re probably not thinking big enough.

3 Keep moving forward every day, even the days that you feel like the ground is crumbling underneath you. Especially those days.

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Who is your typical customer? AC: Our customers range from 18 to 93 years old, and from people who don’t have two nickels to rub together to multimillionaires. But the average customers are in their thirties and have started to steadily build up some assets. What unites our customers is two things: first, a sense that the financial industry hasn’t been looking out for ordinary people or treating them fairly; and second, that they are conscious consumers. They see the link

business with and the products they buy. And so it is natural that they have little trust for the incumbents in a financial industry that is often antiquated and too often runs on a “greed is good” mentality. In fact, according to a recent poll, 71 percent of Millennials would rather go to the dentist than listen to what a financial firm is saying. One of our most popular products with Millennials has been the Aspiration Redwood Fund, which brings best-in-class sustainable investing to people at a $500

Aspiration, have [both] been doing great work in this area. But so much of this has only been accessible to the very wealthiest of investors. Today, 89 percent of sustainable investments are in the hands of institutional investors, money managers, and other investment institutions. Everyday investors have been on the outside looking in. The challenge now is to democratize access to these sustainable investing strategies. That’s part of what we’re doing at Aspiration.

“Today, 89 percent of sustainable investments are in the hands of institutional investors, money managers, and other investment institutions. Everyday investors have been on the outside looking in.” between their money and their morals, and they don’t see any reason why they have to choose between them. They drive carpool in a hybrid and recycle bottles and bags. They’re buying fair trade coffee and cage-free eggs, and from companies that have a larger charitable purpose. But they don’t understand why the financial sector does not live up to those same values. Why do you think Aspiration is appealing to Millennials? AC: Millennials are the generation most shaped by the 2008 financial collapse. They saw their parents hurting, or losing a home — or perhaps they had to move back in after college. They’re reared with technology and looking for something different in all aspects of their lives. And they have an expectation of a social conscience from the companies they do

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opening investment. It is not only fossil fuel- and firearm-free, but actually looks for companies whose practices when it comes to the environment and their employees makes them more likely to be profitable over time. This gives Millennials a chance to make a good investment at a low level in a product they can believe in and with a company that shares their values. What trends have you identified in the investment field? Do you anticipate big changes in the industry moving forward? AC: It’s clear that sustainable investing is booming. Between 2010 and 2014 alone, total funds in socially conscious investing strategies more than doubled from $3.7 trillion to $6.5 trillion, and they have continued to grow ever since. My former boss Al Gore’s Generation Investment Management, and UBS, a strategic partner of

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What gives you hope that your model will be successful? AC: What gives me hope is seeing that we’re restoring other people’s hope. Almost every day, we get calls or emails from people saying that they had not trusted anyone in a financial firm for a long time, but that we’ve changed that. It lifts us up, but also gives us a huge sense of responsibility. What we’re already seeing is people signing up for Aspiration accounts in huge numbers and choosing to pay us fairly. And most of the people who come to Aspiration have no other investment products. We’re successfully getting people off the financial sidelines and helping them build assets. If we can continue to grow and bring these services to more people, that gives me hope not only for Aspiration but for the challenges we’re facing in America. $

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PANEL DISCUSSION

THE WEALTH TRANSFER MEMBERS OF THE NEXT GENERATIONS SHARE THEIR THOUGHTS ON HOW TO INVEST WITH VALUES With estimates that as much as $57 trillion of wealth will be transferred to the next generations over the coming decades, many are anticipating that the impact investing field will explode as many younger people seek to invest according to their values. Many of these wealth-holders are already guiding investment decisions personally or for their family foundations, and wealth advisors are seeing a rise in demand for values-aligned investment opportunities. Big Path Capital sat down with members of Generation X and the Millennial generation to understand what challenges they are running into when it comes to impact investing, and what is driving their investment decisions.

What advice would you give to Millennials who are in a position of influence within their families or organizations around investment-making decisions for impact and return?

JASON INGLE, co-founder of Closed Loop Capital and Greener Partners Next Generation Family Investor

JI: Impact investing is like anything else that is new or a bit unknown in that it is important to get some “early wins” that will support this new idea and approach to investing to gain the trust of the older generation and family advisors. I would say start small; size investments cautiously. Stay liquid; avoid direct, early-stage investments that will be locked up and have a long lead time to generate positive results. Learn from others; invest through fund managers to gain sector-level knowledge on themes you are passionate about before doing direct investments. And collaborate with others; share your experiences and learn from peers and their experiences. Does the Millennial generation think about risk and reward differently in terms of impact investing? JI: I don’t necessarily see a different approach to risk and reward — the same level of due diligence and rigorous process to evaluate a potential investment should still be

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FINANCE What advice would you give to Millennials who are in a position of influence within their families or organizations around investment-making decisions for impact and return? LA: Start by learning the investment preferences of the organization. For example, is the portfolio allocated for current income or capital gains? Impact investments cut across many traditional asset types, so it is important to look for the investment characteristics that align with the existing investment strategy.

LUKE APICELLA, associate manager with Prudential Impact Investments Millennial Impact Investor

Does the Millennial generation think about risk and reward differently in terms of impact investing? LA: The proven business solutions of the past are being reconsidered under a more holistic approach. For example, creating housing with electricity is not enough anymore; Millennials want housing that is net-zero, resilient to storms, and integrated into diverse communities. Millennials are willing to take on these new development risks to have more sustainable solutions.

in place. It’s more the fact that there’s the mindset that we can target and align social and environmental returns just as we evaluate and monitor our ability to generate financial returns through investments. Maybe there’s a stronger expectation placed on reward in that you’re targeting these social and environmental returns on top of the traditional expectation of a financial return, but risk management seems the same as it’s always been. What challenges did you run into in directing assets toward impact investing? JI: For Closed Loop Capital, we have spent a lot of time considering the best way to measure and capture the metrics of our social and environmental impact. We’ve found that this can be a significant challenge to fit into one of the existing impact platforms available, especially when you are investing in

early-stage companies that, by nature, are still zigging and zagging to fine-tune their business strategy, so [having] a preset array of measurement screens is difficult. Another challenge we have had within our family, as in any extended family — there is a dynamic with impact investing that can look a little like philanthropy in that it’s not like evaluating traditional investments, where you are really just comparing financial performance against a benchmark. With impact investing, there is a passionate connection to the underlying investment, as you would see in philanthropy, where you’re committed to a certain thematic cause or geographic region. This is fine for an individual, but to get an entire family on the same page about what themes or geographic focuses to take on can be a challenging process. It is like asking everyone what they want for dinner — good luck!

What challenges did you run into in directing assets toward impact investing? LA: Having a cohesive impact strategy is critical for finding support and resources. Develop a strategy that’s authentic to the history of the organization and what it wants to stand for in the future. The focus will increase the chances of impact. At Prudential, we focus our investments in three strategic areas of savings and protection, quality jobs, and urban transformation, as those ladder up to the overarching business strategy. Luke Apicella has over nine years of impact investing experience. As an associate with Prudential Financial in the Corporate Social Responsibility’s Impact Investments group, he is responsible for the origination and asset management activities to help grow the portfolio to $1 billion. He covers numerous relationships, industries, private asset types and impact objectives. Apicella has a degree in sustainability management from Columbia University (MS), finance from New York University (MBA) and entrepreneurship from Syracuse University (BS).

Jason commits equal focus to investing and philanthropy with the common goal of improving the food system and the health of people and planet. He is the co-founder of Closed Loop Capital, a venture capital platform investing in exceptional entrepreneurs leading ventures in agriculture technology and food system innovation. Jason also co-founded Greener Partners, a notfor-profit organization with a mission of connecting communities to healthy food, vibrant farms, and hands-on education experiences.

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STEPHANIE CORDES, vice chair of the Cordes Foundation, and ERIC STEPHENSON, portfolio director Next Generation High-net-worth Investors

What advice would you give to Millennials who are in a position of influence within their families or organizations around investment-making decisions for impact and return? SC: Inspire a collective vision with your family or organization that enables it to leave an enduring legacy of having made a difference in the world. Impact investing has the power to bring families closer together over shared values. Does the Millennial generation think about risk and reward differently in terms of impact investing? SC: The term “Millennial” cannot sum up an entire generation; rather, it represents a mindset affecting people of every age who are alive today — a mindset characterized by individuality, global connectedness, and purpose. As individuals, we seek to maximize our utility, which is a similar concept to happiness, and we invest in companies that seek to maximize profits in a way that benefits all stakeholders, not just shareholders. We invest in alignment with our values and seek returns that are commensurate to the risk we take on; however, this goes beyond liquidity, default, maturity risks, etcetera, and includes environ-

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mental and social costs and benefits of doing business in our global, interconnected world. What challenges did you run into in directing assets toward impact investing? ES: Historically, it was difficult to find investable opportunities across asset classes that were directly aligned with our impact profile and gave us the underlying portfolio diversification and exposures we were comfortable with. However, we have seen many more aligned products come to market over the last two years. Stephanie joined her family foundation as vice chair after transitioning out of a career in publishing at Self Magazine within the Condé Nast group. Currently, Stephanie advances the foundation’s initiatives that directly leverage capital to organizations that elevate the role of women and girls worldwide, with a particular focus on ethical fashion and sustainable supply chains. Eric Stephenson is the portfolio director at the Cordes Foundation, working to advance the foundation’s impact investing, philanthropic, and field-building work around women’s empowerment and poverty alleviation.

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Leveraging one of the largest networks of impact investors globally, Big Path Capital assists purpose-driven companies ensuring mission preservation across financial transactions including acquisitions, mergers, and capital raises. bigpathcapital.com. Securities offered through Intellivest Securities, Member FINRA, SIPC.

Organic Mushroom Farm and Organic Mushroom Mini Farm

2010

Water Garden

2012

Organic Stoneground Flakes (California Whole Wheat, Purple Corn, and Cocoa Clusters varieties)

2015

Organic Breakfast Toppers (blueberry, raisin, and date varieties)

2015

FOOD & AGRICULTURE

AT A GLANCE Founded: 2010 Location: Oakland, CA Team Members: 12 Structure: For-profit Founders: Nikhil Arora (29) and Alejandro Velez (28)

IS BACK TO THE ROOTS

THE PIXAR OF FOOD? TWO MILLENNIALS ON A MISSION TO MAKE FOOD PERSONAL AGAIN HAVE CREATED ONE OF THE MOST EXCITING FOOD COMPANIES IN THE COUNTRY

itting across a table from Nikhil Arora and Alejandro (Alex) Velez, their youthful exuberance permeating the space, it feels as though their success is inevitable. Yes, they both bring Berkeley educations and extensive business acumen to the table, but what sets the duo apart is their brotherly partnership (the two still carpool to work every morning) and the joy, enthusiasm, and passion they bring to everything they do. As a result, before the co-founders turn 30 they will have brought 17 products to market, closed millions in financing, and will be at the helm of one of the most exciting food companies in the country: Back to the Roots. We spent the day with Velez and Arora at their Oakland office to understand the secrets to their success, the lessons they’ve learned along the way, and what their mission of “making food personal again” will require.

Garden-in-aCan (organic basil, cilantro, sage, and dill varieties)

2015

Garden-in-a-Jar (organic basil and cilantro varieties)

2015

Organic SelfWatering Planter

Organic Stoneground Flakes (Biodynamic Cinnamon Clusters — the world’s first biodynamic breakfast cereal)

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Tell us the story of conceptualizing Back to the Roots. Nikhil Arora: We started off with zero background in anything to do with mushrooms, agriculture, or farming; we knew nothing about any of them. We were both undergrad students at UC Berkeley. I was studying business and poli-sci, and Alex was studying business. Going into our senior year, we both thought we knew that we were going into the corporate world. Alex had an offer to go into investment banking — he literally had signed the job offer, had an apartment set in New York, and thought he knew what he was doing. I thought I was going into consulting. Three months before graduation, we were sitting in this business ethics class about sustainability, and the professor mentioned that you can grow mushrooms on coffee grounds. His point was that people were cutting down trees to grow mushrooms when they could be grown on coffee grounds, but then he went on to other topics, and for some reason, out of the 150 people in that class, we were the two crazy kids who thought that was kind of cool. We both emailed the professor independently and he put us in touch since we were both excited about it.

Back to the Roots’ team members at the Oakland oﬃce

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We met up and just started kicking around ideas, putting down the finance books, checked out some mycology books, and started to YouTube how to grow mushrooms. It has become a big part of our brand that in this generation we can teach ourselves anything. There’s no excuse anymore not to figure something out — we always joke that we taught ourselves to grow mushrooms on YouTube. Eventually we decided: enough researching and reading, let’s just try it out, and we ended up planting these ten paint buckets of mushrooms in Alex’s fraternity kitchen. Then we went off on spring break. Alex got back to his fraternity and he gave me a call and he was screaming, “You’ve got to get up here!” When I arrived, nine of the ten buckets were completely contaminated with mold and were really nasty, but one of them had a beautiful crop of oyster mushrooms. We walked the bucket over to Chez Panisse, which is one of the nicest restaurants in Berkeley. The head chef, Alice Waters, happened to be there, and we said, “Hey, Alice, we grew mushrooms on coffee grounds.” She must have felt bad for us, but she had one of her chefs sauté them and he said they were delicious! That was our first moment of validation. Fast-forward

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a few weeks later, and we won a $5,000 grant in a social innovation competition. We said to each other, “Are we doing this, or what?” and decided to go for it. Forget banking, forget consulting, full-time mushroom farming it is! That’s how the company got started. How did your families feel about that at graduation? Were they supportive? Alejandro Velez: Friends were the ones that weren’t supportive. At the time, there was zero doubt in my mind that investment banking would be my future. A lot of my friends were also going into finance and going to New York to do it, and I was the guy that had pushed them to go this route. So when I said that I was not only doing something different, but that I was going to grow mushrooms instead, there was a lot of pushback from friends — really close ones, too. But our families were super supportive. What are the biggest lessons that you guys have learned so far since starting Back to the Roots? What has been the hardest part of transitioning from just the two of you to being a larger company?

FOOD & AGRICULTURE

AV: One of our lessons came from one of our mentors, Jon Weinberg, who also became an investor. At one point, he asked us, “What are your values?” And Nikhil launched into this whole thing about my finance background and how I would create a model to evaluate the value of our company. And he just stopped us and said, “No, not your value, your values. What do you

team and our warehouse team, that’s when it clicked. It’s so true that it’s all about the people, and we know that now. The other main lesson is to focus, which is still a challenge every day for me. I’ve heard that true focus is saying no to the things you really want to do. There are a million things you can do each day in a small company, and figuring

told us it was the most disgusting thing he’d ever seen! He told us to go back to our R&D team, which of course was just us, and figure it out. That was when we first started understanding the power of fun, functional design, and led us to where we are now. Now we want to be the Pixar of food, which means that a 4-year-old and a 40-year-old can both look at

“It has become a big part of our brand that in this generation we can teach ourselves anything.” stand for? What do you care about? Until you have that figured out, nothing else is going to matter.” So we did an exercise to develop our values; and to be honest, at the time we thought we were wasting our time. We thought, “Let’s just come up with an acronym and then figure out values based on the acronym.” But it was funny because the process ends up teaching you things you have no idea about. And now our values are some of the most important things to us. How does the team talk to one another? How do we evaluate if somebody should join the Back to the Roots family or not? It is all founded on our values. That’s what culture is all about: values. It all comes down to what happens without people watching. And when we recruit according to our values, a lot of things can be solved on their own. NA: We’ve always had an intrinsic bond and understanding of each other, so it was strange when someone told us to put our values down on paper. We were like, “Why? It’s just the two of us — we know what we’re doing.” But the moment we started hiring people and building out our regional sales

out the right ones to do is a tough challenge. What are your values? NA: Family. AV: Home. NA: Hustle. AV: Passion. Universal happiness. How did you guys go from growing mushrooms on coffee grounds to developing the first grow kits and then the Water Garden? NA: People were always asking to come visit our little mushroom farm that we had in a 500-squarefoot warehouse. We started doing tours with schools, kids, families; people just wanted to come see it, and some of them asked if they could take some fungus home and grow it themselves. So we realized there was more there than just what we were growing; people wanted to know how we were growing the mushrooms and do it themselves. Our first Mushroom Kit was just a big clear plastic bag that we slapped a FedEx sticker on. We were so proud of it and we showed it to one of our distributors like it was the next iPhone, and he

something and enjoy it equally but for different reasons. The important thing about the Mushroom Kits was not how many mushrooms people were getting from their crops, but that they connected people back to food. The why and the how were more important than the what. Just as we shifted the big mushroom farm down to a tabletop version, we decided to do the same thing with a hydroponics farm by creating the Water Garden. You guys continued to iterate from there; what is the process around new product development and how you guys know when an idea is good enough to pursue? NA: This last year was a massive, transformative year for us. Last year we had just two products, the Mushroom Kit and the Water Garden. Now we have 17 products, with all the different versions of everything. People always ask, “How do you get from Mushroom Kits to a cereal?” and for us it’s all just food. It’s just a matter of how you engage with it. Sometimes you want to grow it yourself with your family and kids, sometimes you’re

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running out the door and you just want something to do it for you, but we believe the underlying trust and transparency shouldn’t change. We started in the produce aisle, where you can have a really emotional connection to the food. Ten feet over in the grocery aisles, there are all these different ingredients, regulations, manufacturing principles, and lack of transparency involved. We’ve taken the design, packaging, and convenience of the grocery aisle and brought the trust and transparency of the produce aisle because you are growing it yourself. We’re the first company to connect these two, with the same underlying values, with ready-to-eat and ready-to-grow products through our mission to undo food and undo categories. AV: We’ve done it by bringing a brand to produce, and now we are bringing that same brand of integrity back to groceries. We think that is a huge opportunity.

Since you’ve recently closed an investment round, what advice do you have for others seeking to raise capital? AV: I will quote our board member and one of our bigger angel investors and mentors, John Foraker from Annie’s. Before the raise, he said, “Guys, prepare for this. This is going to be a contact sport.” We didn’t really understand what that meant until we started going through it. The support we’ve had has been humbling, and we’ve been so lucky, but investors push you on so many things — as they should. It makes you disciplined, because they ask and probe on all of the things that can put you out of business, but it’s like standing there naked for a few months and letting somebody take shots at you. It really is like a contact sport. NA: We are lucky to be doing this at a time when people have done this

before who have proven that you can embed a mission in your company and make money. We’re not the crazy ones anymore; this is now the cool thing to do and the right thing to do. And it’s all because folks have built the sustainability space over the last 25 years. Whole Foods was started by long-haired hippies that people made fun of at the time, and now it’s a well-known company on Wall Street. Everything we do today is built on that foundation, and it is our job, our responsibility, to carry that torch and run even faster and harder to build on that legacy. We feel honored to be surrounded by some of these pioneers, guys like John Foraker, Gary Hirshberg [chairman of Stonyfield Farm], and Kevin Cleary [CEO of Clif Bar]. You guys really seem to still enjoy each other’s company despite the stress of running a company. How do you guys maintain your friendship?

Photo: Back to the Roots

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NA: Before anything else, I think it comes down to values and respect. On the first day we met, two things were clear: we shared the same values in terms of family, and we were going to work our butts off. I really like the idea “speak like you’re right, listen like you’re wrong.” That can only happen when you have underlying shared values and respect. For me, when we disagree, I know he’s the smartest person I know so there must be something there that I’m missing. We have the same end goal and are coming from a place of alignment, so everything else is just figuring out the details. But like anything, we have to work at the relationship, and as the team grows and we get busier, we have to make sure we come together and communicate. That’s become more and more important as we continue to grow. Acknowledging that like any healthy family there’s always some degree of conflict, how do you guys approach managing conflict? NA: I think it comes down to communication. Just like we build our products around radical transparency, we instill transparency in our team. AV: We embraced early on design-based thinking. In our design brainstorm sessions, we implemented the idea that there are no bad ideas in the room — that you’re building on each other’s idea. Any idea goes, everything gets put into the pot, and nobody owns any ideas; they’re the team’s ideas. We’ve applied those principles across the board for how we have meetings and how we interact with each other. Good design is not just a core element to every one of our products, it’s also a core element of how we interact.

What advice do you guys have on boards? What do you look for in board members, and how do you structure board meetings? AV: We actually haven’t had an official board meeting yet, but we will soon. But we have had advisors and investors for a little while. I would say the most important thing that comes to mind is love — there has to be true love from at least the initial two board members. You want to have at least two key folks early on who are with you no matter what. Share what you’re doing, make them fall in love with what you care about, with your vision, with what you’re going to make happen, and then do it again and again. You have to build that trust and that relationship first, and then it slowly becomes something more. But it’s difficult. I can’t imagine immediately having a transactional board where you raise a lot of money and give someone a board seat, because you don’t know if that person is going to be there for you when the shit hits the fan. That’s why it is important to have those key players early on. How do you balance the amount of time and energy it takes to build a business with finding time to feed and nurture yourselves and stay inspired? NA: I think the word “balance” sets false expectations because it assumes there is a 50/50 split. But really it’s about work-life integration. Inspiration has to come from the work itself, and we have to take pleasure out of doing the work itself. We carpool to work together, every day since we started, and he picks me up at 6:45 in the morning and usually drops me off at 9:15. You can’t do that every single day, year after year, if you don’t find inspiration and pleasure in the work itself. I always go back to the mantra “happiness is doing what you love

Nikhil and Alejandro’s Top 3 Pieces of Advice For Entrepreneurs 1. Do Something Worth Working Your Ass Off For Start a business that addresses one of the five biggest challenges that humanity faces today: food, poverty, health, education, or energy. If you’re addressing one of those, then you’re at least doing something that will make your kids and your grandkids proud, even if you fail miserably. It used to be if you could solve a problem that consumers face, then you could start a company. But now it needs to be a bigger, societal problem. And if you start with that, you get a lot more support, and you can surround yourself with people and mentors who are thinking big.

2. Balance Vision With the Details This is actually based on a Will Smith quote — you don’t build a great wall overnight; you lay each brick as perfectly as you can and over time you’ll build a great wall. You have to have that big vision, but it can seem so lofty and far away. For us, solving world hunger sounds impossible, right? So we just said, “We’re going to make the best damn Mushroom Kit the world has ever seen!” It’s important to break things down and balance the big vision with the details.

3. Go All-In One of our mentors told us, “entrepreneurship is like jumping off a five-story building and building your wings on the way down.” Don’t be afraid to dive in head-first.

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“I think the fact that we can freely come to work and feel productive is one of the pleasures of life — to feel like we’re adding to society and doing it with a purpose.” with people you love.” I think it really boils down to that. As long as that’s true for us every day, we’ll keep on working together and having a blast. Outside of that, you need support. We’re both super close to our families, and that is really important to both of us. We also don’t have set vacation days for our team members. We want everyone to be here for the long run to help grow Back to the Roots, and we know that to do that you’ve got to be emotionally fulfilled, which means different things to different people at different stages of life. So folks can take all the time they need as long as they are responsible and give us a proper heads-up. Don’t take a two-month trip and tell us the day before, but if you’re here for ten years, everything is a blip over the long-term trajectory, and we want you to do what you need to do to feel personally fulfilled. AV: You also can’t take yourself too seriously. We always say, “When you walk through that door, you’re 13 years old.” It’s a paradox, because we want to take our job seriously, and a lot of our team come from incredible backgrounds and we expect and demand excellence. But it’s a better balance to have fun and not take yourself too seriously. NA: But there is no sugar-coating it: it’s a lot of work. AV: It is, but we don’t do well with people complaining. I mean, we get to wake up every morning and come to work without worrying about our personal security, which is a real issue in most of the world. I think the fact that we can freely come to work and feel productive is one of the pleasures of life — to feel like we’re adding to society 62

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and doing it with a purpose. But that’s one of the problems with Millennials, too; we’re always pursuing happiness all of the time. Let’s just work and appreciate work for work itself. Work is hard, but it’s also awesome because of that. What are your thoughts on food and technology in the modern food movement? NA: I think American culture is built on its history of Manifest Destiny, where progress is always better, new is always better, but with food, that creates risks. I think that’s why we are seeing two divergent paths in the food movement. We all agree that the food system is absolutely broken, but there are disagreements on how food and technology should come together. We’re seeing one path based on technology, which is trying to speed up food and invent new food — laboratory-based food. It has patented food based on technology, and there are hundreds of millions of dollars of tech money going into this. Companies like Beyond Meat, Impossible Foods, and Soylent are inventing new food. Intellectual property in this world is patented food. The flip side of this is to use technology for distribution, logistics, and transparency, but let’s take food back to how it used to be and use technology to help you understand where your food came from. It’s one of our mantras that food should be made in a kitchen, not in a lab. Where do you want to see Back to the Roots go in the next few years?

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NA: At this point, we feel lucky and blessed to have started out so young, and we’ve learned so much and are still learning. We feel like we’re just getting started — like we’ve just run a warm-up lap with our brand. We want to build this brand to be around for 100 years. When we look at what is success for us, I think we look at the next generation of kids that are growing Mushroom Kits and Gardens-in-aCan and are swapping their Kellogg’s and General Mills cereals for our stone-ground, three-ingredient cereal. We want kids to be curious about where food comes from, and when they grow up we want food to be personal again. We feel lucky to have raised capital from people who believe in the same long-term vision of making that shift in the food system. What is inspiring you guys right now and giving you hope for the future? AV: Being able to bring healthier food to schools. Change has to start in schools. The poorest kids in America right now are eating two out of their three meals at school. The rich kids get to have their lunch packed, but the other kids are being affected the most and getting the shittiest food. But now companies that are making food better, like Back to the Roots, are getting into schools and addressing this head-on. NA: I’m inspired by walking into our office every day and seeing our team. It’s not just us anymore, and seeing a group of people who have just as much confidence in what we’re trying to do is a really cool feeling and really motivates the two of us. It’s inspiring as hell to walk into this place every day. Photos: Jay Mantri

FOOD & AGRICULTURE

LET UM EAT

SIX MILLENNIALS WITH ONE MISSION: REVOLUTIONIZE LOCAL FOOD The LET um EAT crew outside the 1940s barn on their farm near Portland, OR. From left: Cory Melanson, Julia Niiro, Alex Holl, Leah Scafe, James Serlin, Karl Holl Photo: Rich Crowder

Despite the growth of the farm-to-table movement, those operating within it — from food producers to restaurants — often find themselves facing challenges stemming from a lack of connection. Frequently, farmers lack access to channels that would allow them to share knowledge and best practices with each other. Chefs and restaurant owners often struggle with finding the high-quality, locally sourced ingredients they are looking for, or face antiquated systems (for example, some farms still fax price lists to restaurants). At the heart of many of these issues are challenges with communication and connection. Recognizing this problem, a group of six Millennials banded together to do what this generation does best: use technology to simplify and connect. They created LET um EAT, an Oregon-based company that connects Seeders (food producers), Feeders (restaurants and retail locations), and Eaters (you know, people who like to eat) through its website and social network, and through in-person events in the community and on its farm. The company, which derives its name from the expression the group toasts with at its farmfresh meals after a long, hard day, is now on a mission to find out what will happen if it can successfully connect key players in “the food revolution.”

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FOOD & AGRICULTURE

AT A GLANCE THE ORIGIN STORY LET um EAT started when a group of people came together through happenstance: James Serlin, Cory Melanson, and Karl Holl were all chefs who left their fast-tracked careers to pursue their mutual dream of growing the food that they cooked; Leah Scafe was a former farm-to-table dinner director; Alex Holl, a recent college graduate from the East Coast; and Julia Niiro, a marketing director who left the corporate world. The three chefs, Serlin, Melanson, and K. Holl, had relocated to Oregon together in 2013 with dreams of opening a restaurant and growing much of the food for it themselves. They purchased a farm that they found on Craigslist — a “mountain of mud” that they quickly learned had been dubbed “Murder Mountain,” a name derived from the special fivepart Dateline NBC series about four unsolved homicides that had happened on the property in the ’90s. Despite the unexpected “character” of the land, the three men managed to turn it into a productive farm, and soon Alex Holl, Karl’s brother, moved there to help with operations. In early 2014 Scafe and Niiro, mutual friends of the farm’s owners, found themselves visiting Murder Mountain more and more frequently as they fell in love with the passion, dedication, and culture that had been created there. They also witnessed — and experienced firsthand — the challenges that those in the local food movement were up against and how hard the work was without a connection to a larger community. With this in mind, in May 2015 Niiro introduced an idea: “We were in Cory’s kitchen, and I just said, ‘What if we start a business? What if we could build the network that you guys need? What if we could farm, cook, and create a community of people like us? There is obviously a huge need for a tool and network

based on what we have been experiencing, but it will require all of us to do this.’ Without hesitation the boys said yes, and the next call was to Leah.” The group soon convinced Scafe to join them, and in May 2015, LET um EAT was born.

HOW IT WORKS Since that time, the group has been experimenting with business models and the best ways to bring the community together around food. They have created an online network that aggregates the Seeders, Feeders, and Eaters in the community; hosted live events through Takeover Dinners, which are meals prepared with the help of community members and hosted at local restaurants or event spaces that they “take over” for an evening; and found financing to purchase a new farm where they all live and work the land in Canby, Oregon, and have begun hosting community gatherings there. To explain the concept of the LET um EAT social network in action, Niiro offered this example: “A chef friend of ours recently relocated to Portland to open a new restaurant. One of his first needs was figuring out where to source ingredients. He was unfamiliar with the farming community here, so we helped him connect with the farmers and producers that we have relationships with. This is a challenge that we’ve heard of from more than one chef, whether they’re moving to a new city or just going somewhere new for an event: it’s hard to find those people to source local, quality ingredients from. With the LET um EAT social network, Feeders and Eaters will be able to search for Seeders in their region, message them, and create those relationships.” So far, the company has been self-sustained with the profits from the numerous initiatives. However, the founders are looking to take it

Founded: 2014 Location: Canby, OR Team Members: 6 Founders: Julia Niiro (29), Leah Scafe (32), James Serlin (30), Karl Holl (30), Alex Holl (25), Cory Melanson (32) Structure: For-profit, LLC Partnership Traction to date: • Network of more than 6,500 Seeders, Feeders, and Eaters across the country • 10 sold-out events in the Portland area • Mobile app launching summer 2016 • Accepted into ALPHA class of 2016 at Collision Web Summit

to the next level with a soon-to-bereleased app that will connect the farm-to-table community nationwide. Speaking to the economics behind the offering, Niiro said, “Maybe we are being naïve, but we have to believe in the idea that if you keep your head down, focus on listening to your community, and build a great brand that does the mission justice, then the money will come.” Time will tell how the small business grows, or if it will be able to continued on page 67

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FOOD & AGRICULTURE

LESSONS LEARNED SO FAR BY THE LET UM EAT CREW

1. STICK TO YOUR VISION

Leah Scafe and Julia Niiro

We’re fortunate to have a vast network, and have been talking to a lot of people about our idea and plans for the business, from experienced entrepreneurs and business owners to young farmers and chefs in the industry. Everyone has their opinions and feedback to offer, which is invaluable and very helpful. Believe us, we’ve pivoted on our ideas and approach a great number of times in the past two years. But before we react to what anyone says, we take the time to ask ourselves why we’re doing what we’re doing and what is the best way to accomplish that. It always comes back to the fundamentals and who we’re building LET um EAT for. We have to remind ourselves that ultimately, we’re the ones that know best for ourselves and for our business — otherwise someone else would be doing it.

2. GET OUT OF YOUR COMFORT ZONE We all came from worlds where we knew how to do what we did and were successful in our own space, but that is no longer the case. It is a daily lesson in humility, curiosity, patience, and taking the time to think things through.

3. IT’S OK TO HAVE FUN This is something we have to remind ourselves of all the time. When your life is your work, it is easy to feel this pressure to always be working, to the point where even taking a day off makes you feel guilty. Learning the value of working on your business instead of for it is tough, but critical. It is amazing what a few days in the woods fishing will do for you.

4. CHECK YOUR EGO One of the best and hardest things about our situation is learning to live and work together every day. We all have different schedules, habits, taste in music, and [are] a mix of thinkers and doers. This means a lot of learning to check your ego and learning about how to put each other in positions to succeed. I think of it less like altruism and more like daily “be a good person” training.

The crew grilling sausage and lamb they raised themselves.

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1. Photo: Rich Crowder 2. Photo: Patrick Dougherty 3. Photo: David Reamer

FOOD & AGRICULTURE A LET um EAT takeover dinner last summer at Vibrant Valley Farm

“Coming together over the fundamental issue of food will give our generation the opportunity to rise up and prove ourselves.”

Photo: Jason Lucey

make a dent in any of the myriad problems plaguing the food system. Niiro and team are clear on one thing, however: “Our generation has been described as an apathetic one, and part of that may be that we’re at a loss for how to navigate a world where the pace of progress makes it impossible to keep up. At this point, we are in many ways overconnected and overcommitted, but still incredibly disconnected and isolated. As a generation, we will have to figure out how to embrace what makes us great, which is our ability to easily connect and communicate through technology to solve for what we need: deeper connections to each other and the world around us. Coming together over the fundamental issue of food will give our generation the opportunity to rise up and prove ourselves.” CONSCIOUS COMPANY MAGAZINE

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FOOD & AGRICULTURE

SWEETGREEN

HOW THREE THIRTY-YEAR-OLDS ATTRACTED $95 MILLION TO GROW THEIR SALAD EMPIRE

he Sweetgreen story begins, as so many businesses do, with a handful of people who refused to settle for the status quo. In 2007, Georgetown University undergrads Nicolas Jammet, Jonathan Neman, and Nathaniel Ru found themselves frustrated by the scarcity of fast, healthy meal options. So they decided to solve the problem themselves by launching a farm-to-table, fast-casual salad restaurant. Now, after nearly nine years, the company has brought in over $95 million in venture funding, expanded to more than 40 locations, and employs over 1,700 people — all with a focus on culture and values at its core. We spoke with co-founder Jammet about what is behind the rise of the company, the future of business, and how to engage with younger generations as a brand.

AT A GLANCE Founded: 2007 Location: Los Angeles, CA (headquarters) Team Members: 1,700 Structure: For-profit

Founders: Nicolas Jammet (30), Jonathan Neman (30), and Nathaniel Ru (30)

Sweetgreen co-founders Nathaniel Ru (left), Jonathan Neman (center), and Nicolas Jammet (right)

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FOOD & AGRICULTURE

JAMMET’S TOP 3 PIECES OF ADVICE FOR MISSION-DRIVEN ENTREPRENEURS 1. Build a team that is entirely aligned on values 2. Always be curious Curiosity is a big part of our business. Always try to ask “why or why not?” Try to question the way things are, because we might have to do things differently sometimes and do things in a way that someone has never done them before. Curiosity fuels a lot of innovation. 3. Realize the value of humility We are a brand that is trying to build a different kind of food company. For us, that means a lot of learning and listening and trying to understand what we can do differently. What can we do that other food companies haven’t done or thought about? For us, there’s a lot of humility there. It means we’re going to make certain investments and make some great decisions. It also means we’re going to get some things wrong. We want to be a brand that is always evolving and adapting to what the community needs. We’re not trying to tell the world how to eat, or what they should or shouldn’t do. We’re here to build trust, learn, and try to have really valuable impact.

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What has been the most critical element of Sweetgreen’s success in scaling so far? Nicolas Jammet: The most critical element has truly been understanding the value of building an incredible team — trying to build a team of people who really believe in the mission and are really aligned in terms of values. Early on, the three of us realized that if we wanted to build a really sustainable business, we were going to have to build one of the best teams in the country, a team like we’ve never seen before, and, to be quite honest, hire people who are smarter than us. We really wanted to hire people who believe in this mission but bring different things to the table. Our focus on this team and our culture has really been a driving force in our success. What are the practices that you guys use to ensure that Sweetgreen is a great place to work and that your team is really walking the talk as well? NJ: First and foremost, everything is centered around our purpose and our values. We make sure that everyone who joins the team understands those values and makes decisions every day based on those values. We have these five core values [1) Win, win, win (company,

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customer, community), 2) Think sustainably, 3) Keep it real, 4) Add the sweet touch, and 5) Make an impact.] Values are everything. Second, communication is one of the most important parts of our business; understanding clear communication, setting expectations, and making sure that people understand what they need from each other and themselves and how to work incredibly with each other. Finally, we try to create a culture where people are learning, contributing, developing, and happy. We want folks to be really connected to the mission, and we want them to work hard. A lot of the work we have done on our culture has helped our people work with intention and live with intention. We focus on everything from the way people learn and develop to meditation, which is now a pretty big part of our culture. A bunch of folks from the company meditate, and we brought in a teacher to really help with that practice. It’s one small way that we do it, but we try to really make sure that we create an incredible workplace and culture for people to feel really valuable and like they’re doing work that matters. You guys don’t have any plans to franchise. Could you tell us about that decision and how your investors feel about it?

FOOD & AGRICULTURE

NJ: Yes, we don’t have any plans to franchise, and all of our stores are company-owned. We have spent a lot of time building this brand that really is about community, our network of farmers, and the supply chain, and we believe the best way for us to grow and scale this is to do it ourselves. It’s something we want to own and really control. When you think of franchising food, it’s really tough to scale true intimacy with the community and the kind of work we do around building relationships with our farmers. For us, those are the pillars of our business — it’s what our business is built on and we really believe that we want to maintain and build it ourselves.

What advice do you have for mission-aligned entrepreneurs in terms of raising capital and finding mission-aligned investors? NJ: It’s really an exciting place to be right now because there are so many more conscious investors out there that are investing in things that, ten years ago, never would have received attention. There’s so much investment in food, food tech, and just agriculture in general. The greater world, including investors, is starting to see the opportunity to really change the food system. You can create a real business that is profitable that is also creating incredible change. Also, just as it is incredibly important to really spend time

getting to know your team and to be aligned on values, it’s just as important to do that with your investors and shareholders to really make sure that you’re hopefully aligned on the vision, mission, and purpose of what you do. Make sure that the investors you interact with understand that you are on the same page. You guys are all Millennials. What do you think is important to this generation, and what do brands need to do in order to attract and engage with more Millennials? NJ: We live in this world where everyone is obsessed with talking about Millennials. I think it’s

Sweetgreen sources produce from local farmers and employs more than 1,700 people. CONSCIOUS COMPANY MAGAZINE

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“Our focus on this team and our culture has really been a driving force in our success.”

New York’s first Sweetgreen location

exciting because it’s not just what the Millennial generation is specifically; it’s the mindset that they’ve created that has really extended past the specific definition of who a Millennial is. Consumers today want to know more about the products and brands that they’re interacting with, and with that comes the need for transparency from brands. Consumers want to feel good about the choices that they’re making, and they can only do that if there is transparency. With that responsibility comes this reality that you can’t just talk the talk anymore. You have to walk the walk. That is incredible for brands and companies that are doing the right things; it’s a scary change for some companies that aren’t. This new mindset is really pushing companies to be more

transparent and take great action. It’s an exciting time, and I don’t think it’s a trend. And it’s not just this generation; all generations are going to require transparency from the brands and companies they interact with. It’s really changing the way companies are growing, building, and evolving. What is giving you hope for the future? NJ: From when we opened to today, people view the whole food space really differently. There’s a lot of opportunity there. There are a lot of people who understand the greater problem now more than they ever have. More and more, people want to work in food and become part of the solution. I think that’s very different

than it was eight years ago. I’ll give you an example: I was speaking at a class at Berkeley last week and they asked the 400 or 500 students in the room, “Who here wants to work in food?” Almost 50 percent of the people said yes. If you had asked that question a few years ago, that would not have been true. The transparency around the problems of what is actually going on in the food world has created more opportunities and a lot more engagement for people to become part of the solution. People are starting to realize how critical food is to everything we do. Food is health; food is everything. It’s really exciting to see this momentum shift, and not just this Millennial mindset — the whole world is starting to get excited about changing food. Photos: Sweetgreen

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SPOTLIGHT

TSUNAMI OF STUDENT DEBT

SWAMPS STARTUPS BY MAC CLEMMENS AND ZACH BERNSTEIN

“I probably couldn’t have started this business if I were graduating today. I’d have too much student debt hanging over my head.” // Nikhil Arora, co-founder of Back to the Roots

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For Back to the Roots owners Nikhil Arora and Alejandro Velez, starting their business in their last semester of college was a huge risk, but it is paying off — for them and their employees. It is a good thing they made the move when they did, according to Arora. “I probably couldn’t have started this business if I were graduating today. I’d have too much student debt hanging over my head.” He is undoubtedly right; student loan debt has more than quadrupled, from $260 billion to $1.2 trillion, in just the 10 years from 2004 to 2014. And the tsunami of debt is preventing businesses from getting started: the Kauffman Foundation found that startup activity right now remains below the average for the past 20 years, after taking a nosedive in 2010. In addition, the percentage of entrepreneurs who are between 20 and 34 years old has declined from 34.3 percent in 1996 to 24.7 percent today. For an economy like ours that depends so heavily on entrepreneurship, this

threatens disaster. “It makes more sense to start a company when you’re young,” Arora says, “because of the freedom you have. You have much less to lose and much less at stake. You often don’t have kids to take care of, no big expenses to pay off, and enough time left in your career to pivot if things don’t work out.” However, Arora says that rising student debt means that “kids with incredible, world-changing ideas face decades of loan payments that restrict their ability to chase their passions and dreams. They never get the chance to unlock their creative potential.” The same is true for young people who might join a startup as their first step toward entrepreneurship. “Student debt is probably the biggest deterrent to young employees joining a startup,” says Anshul Amar, co-founder of Unfold, Inc., a Los Angelesbased startup providing government affairs data services. “Understandably, huge debt loads drive them to work for the largest, most stable employer they can find.”

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But many entrepreneurs gain experience — and capital — by working for low pay at startups. As Amar explains, “Sixteen years ago, as a young college graduate, I joined a risky, early-stage startup that now employs over 4,000 people. With today’s high tuitions and debt loads, I doubt I could make the same decision.” I [Mac Clemmens] know this burden well. I started a business hoping it would pay for college. Rather than spin out cash, the growing business needed money to expand, and I found myself chasing student and personal loans to support the business while I finished school. Ultimately, a loan from the Small Business Administration helped set the business on firmer financial footing, and it is still growing today. To promote entrepreneurship and grow the economy, we need to reduce the crushing impact of student debt. Here are four elements critical to the solution:

ENCOURAGE STUDENTS TO PICK MAJORS WITH GOOD EARNINGS PROSPECTS

Not all majors are created equal; a political science major opens doors to fewer opportunities than an engineering degree. (Sadly, one of the authors of this piece speaks from experience.) This is why policymakers should provide economic incentives for students to major in the STEM fields — science, technology, engineering, and mathematics — which have too few skilled workers, and where graduates often earn more than double what students with other majors earn. Offering STEM students additional financial aid, or even a free fourth year of tuition, could help graduates start their careers with better-paying jobs. This would enable them to pay off their loans faster, putting them in a better position to become entrepreneurs.

RATE SCHOOLS BETTER, SO STUDENTS CAN MAKE BETTER CHOICES

The US Department of Education recently released a new college scorecard that enables prospective students to evaluate schools based on cost, graduation rate, and salary earned after attending. The idea is to help prospective students make more informed decisions about how much debt to take on, and what to expect from the job market after they graduate. The scorecard needs improvement; it does not include data like the employment rate of recent graduates, or information on the amount of financial aid offered by the school itself, such as how large grants may be or how those grants are awarded. Moreover, some of the information in the scorecard is incomplete, although that is more likely an issue with school reporting. Still, more transparency and clarity in this regard is crucial.

CHANGE THE WAY WE PAY FOR SCHOOL — AND SKIP THE DEBT

Even as a degree becomes more necessary for success — and as more students feel the need to go back and get a postgraduate degree on top of college — the cost and potential debt burden remain prohibitive for many in lower income brackets. One idea, pioneered by Make School and others, is to avoid tuition entirely. Instead, students pay 25 percent of their first two years’ salary after graduation, and any internship earnings while they are in the program. This gives educators a financial incentive to be effective, and enables students to quickly pay back what they owe on what amounts to a sliding scale.

INCREASE EDUCATION FUNDING

None of this will matter, though, if higher education costs do not go down or at least increase at a slower rate. Without that piece, fewer and fewer students will be able to pay their way without loans, and those who need loans will face ever-greater burdens. The main cause of rising tuition is a shift in state budgets. Many states have sharply cut the amount they spend on their state college and university systems. These cuts alone have led to tuition hikes that far exceed the rate of inflation. States must show leadership in reversing this trend. In the short term, providing funding for state colleges and universities hurts state budgets. In the long run, however, states that do not fund education will see their growth rates slow as their most talented youth go elsewhere. Student debt is not just a problem for students. It has the potential to create a long-term economic crisis by keeping new businesses and jobs from ever coming to pass. That’s a burden none of us can afford. Zach Bernstein is manager of research and social media at the American Sustainable Business Council. Mac Clemmens is CEO of Sacramento-based Digital Deployment and is a member of the American Sustainable Business Council. The American Sustainable Business Council advocates for policy change and informs business owners and the public about the need and opportunities for building a vibrant, sustainable economy. Through its national member network, it represents more than 200,000 businesses and more than 325,000 entrepreneurs, executives, managers, and investors from a wide range of industries. asbcouncil.org.

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SPOTLIGHT

In order to compete in today’s job market, it’s more necessary than ever to have a college degree. At the same time, with factors ranging from decreased state investment in higher education and rising tuition rates to wage stagnation and decreased availability of government grants, more and more people have to take on student loan debt in order to graduate. With millions of Americans saddled with student loan debt, many are concerned about the long-term implications for the economy on the whole.

40 MILLION+ The number of Americans who have at least one student loan

OUTSTANDING DEBT

$28,000–$33,000 The estimated average amount of student debt per borrower in the US as of November 2015

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$3,000

The estimated amount of student debt accrued every second

TICKTOCK

SPOTLIGHT

70% 93% 10%

The percentage of bachelorâ&#x20AC;&#x2122;s degree recipients who graduate with student debt

The percentage of all student loans that are made by the federal government

The estimated percentage of student loan balances that are 90 days delinquent

AS OF NOVEMBER 2015

$1.3 TRILLION The total outstanding student loan debt in the US

Outstanding student loan debt has nearly quadrupled since 2000

4.29â&#x20AC;&#x201C;6.94% The current range of interest rates for federal student loans (compared with a rate of 0.06% or lower on savings accounts at most banks)

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TOP 15 AFFORDABLE CONSCIOUS MBA PROGRAMS LEARN TO MAKE A DIFFERENCE — WITHOUT BREAKING THE BANK Master of Business Administration (MBA) programs traditionally churn out bottomline-oriented management types who go on to careers in consulting, private equity, and the like. But in the last decade or so, some business and management schools have shifted gears to create curricula with a focus on triple-bottom-line principles. The best of these programs give graduates a huge boost in finding and creating careers that emphasize social impact. But what program should an aspiring social entrepreneur choose? We love the “Business as UNusual” report on conscious graduate business programs that Net Impact has compiled every year from 2006 to 2014 (explore it for yourself at netimpact.org). Yet with nearly 100 schools, it’s still a daunting list — and the latest edition is two years old. Plus, as you just read on pages 76-77, we believe a business degree shouldn’t require you to mortgage your future to exorbitant student loans. So we’re inaugurating our own list of the best business school programs. Using Net Impact’s report as a baseline, we added our own filters to compile the top 15 impact-focused business programs in the U.S. today. Each of these options has a strong focus on social and environmental responsibility, and — just as important — each costs less than $110,000 for two years. Browse the list, get inspired, and find the right program for you. Because the future needs MBAs who care more about changing the world than about owning it.

SPOTLIGHT

UE BEST VAL

PINCHOT UNIVERSITY

// MBA in Sustainable Systems Bainbridge Island, WA

The original sustainable MBA program is still one of the best. We love that the whole school is devoted to sustainable business; that commitment shines through with Pinchot’s top ranks on all aspects of the curriculum, with a special emphasis on leadership and personal development. Tuition is relatively affordable, thanks in part to its low-residency option aimed at working adults.

Program structure In-person and online hybrid;

students and faculty meet nine times each year for four-day intensives

$58,200 (2 years)

pinchot.edu

PRESIDIO GRADUATE SCHOOL

// MBA in Sustainable Management San Francisco, CA

Another impact MBA pioneer fully devoted to graduate-level sustainability degrees, Presidio offers students experiential learning opportunities and a systems-focused approach in every course. With a close-knit alumni network in the heart of the tech sector, you don’t just get a degree — you join a community.

Program structure In-person and online hybrid; students and faculty meet 10 times each year for four-day intensives

$65,520 (2 years)

presidio.edu

KEY

Photo: Presidio

Social Impact Program Ranking

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Environmental Sustainability Program Ranking

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Social Entrepreneur Program Ranking

Full-Program Tuition

Website

SPOTLIGHT

Photo: Shoot a Moment

OUR METHODOLOGY We prioritized schools that were holistic in their educational approach, affordable, and topnotch (as rated by students in Net Impact’s latest surveys). To cull our final list of 15, we looked for schools with ALL of the following:

• A top-50 rank for all three programs (see below)

COLORADO STATE UNIVERSITY

// Global Social & Sustainable Enterprise MBA Fort Collins, CO

As the name suggests, this 16-month program housed in a large university features a strong focus on international business. The program includes a team-based, 8- to 12-week summer field intensive, often in developing countries (like Guatemala, pictured).

• Total tuition of $110,000 or less (2016 numbers) OUR FINAL RANKING IS BASED ON: AFFORDABILITY RANK

25%

Program structure Full-time for 16 months

$52,008

(assumes out-ofstate tuition)

biz.colostate.edu

25%

HULT INTERNATIONAL BUSINESS SCHOOL // MBA*

Boston, San Francisco, London, Dubai, and Shanghai

This truly global school offers its hands-on program at 5 different campuses worldwide (Boston, San Francisco, London, Dubai, and Shanghai). Students can complete the one-year intensive all at one campus, or choose to rotate to one or two others for twelve weeks toward the end of the program. Sustainability is one of six possible specializations MBA students can choose.

SOCIAL IMPACT PROGRAM RANK

ENVIRONMENTAL SUSTAINABILITY PROGRAM RANK

25% SOCIAL ENTREPRENEURSHIP PROGRAM RANK

25%

Program structure Full-time for 12 months

$41,300

(any home campus)

hult.edu

*Net Impact rankings are for the now-defunct Master of Social Entrepreneurship degree

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SPOTLIGHT

MARLBORO COLLEGE

// MBA in Managing for Sustainability Brattleboro, VT

This intimate program is all about sustainability. Housed in a small liberal arts college (300 undergraduates, 150 total graduate students), it offers a deep dive into sustainable ideas and practices via a two-year low-residency approach.

Program structure In-person and online hybrid; students and faculty meet 11 times each year for three-day intensives

$45,900 (2 years)

marlboro.edu/mba

Photo: Marlboro College

UNIVERSITY OF CALIFORNIA, SANTA BARBARA // Bren School of Environmental

Science and Management Master of Environmental Science and Management Santa Barbara, CA

This is the only program on our list that doesn’t confer an MBA; instead, the interdisciplinary MESM is a good option for students interested in more scientific and technical grounding. The core curriculum, including a year-long group capstone project, focuses on developing solutions to real-world problems.

Program structure Full-time for 2 years

$39,582

esm.ucsb.edu

(assumes in-state tuition for year 2)

MILLS COLLEGE

// Lorry I. Lokey Graduate School of Business MBA Oakland, CA

The whole business school at this former women’s college is devoted to diversity, sustainability, and social responsibility, with a big nod toward social justice. Bonus: all required business courses are offered in late afternoon or evening time slots at least once during each academic year to accommodate working professionals.

Program structure Full-time for 2 years

WHY BUSINESS SCHOOL? Our founders weigh in

MAY / JUNE 2016

CONSCIOUS COMPANY MAGAZINE

$65,340

mills.edu/mba

“The most important thing I learned wasn’t about spreadsheets or finance; it was leadership. The constructive feedback I received from my peers taught me humility, how to work on a team, and where my strengths and blind spots are. I couldn’t be where I am today without that community.” — Meghan French Dunbar, CONSCIOUS COMPANY co-founder and editor-in-chieftess; Presidio MBA ’12

SPOTLIGHT

CALIFORNIA COLLEGE OF THE ARTS // MBA in Design Strategy San Francisco An MBA from an art school? It makes sense when you think about the innovations required to rethink business as usual. But you don’t need an art background to thrive in this program; just an interest in using design techniques (such as user-centered research, prototyping, critique, and iteration) to make a business impact.

Program structure In-person and online hybrid;

students and faculty meet 10 times each year for four-day intensives

$94,680 (2 years)

BARD COLLEGE

// Bard MBA in Sustainability New York City and Annandale-on-Hudson, NY This liberal arts school’s New York-based MBA program has only been around since 2012, but already boasts an impressive faculty roster. The program integrates social and environmental themes in all classes, and students work in teams to complete an 8-month professional consultancy with local organizations.

students and faculty meet 10 times each year for four-day intensives

UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL

If you’re looking for the large community and deep pockets of a major research university, this longestablished program is for you. The enrichment concentration in Sustainable Enterprise includes 22 electives related to sustainability.

“I knew I wanted to change the world, and I saw business as the best pathway to make those changes. Of course there’s no substitute for life and on-the-job experience, but a big part of getting a degree is being able to tell the world you’re credentialled. Not everyone you meet in life will look at your resume to see that other experience.” — Maren Keeley, CONSCIOUS COMPANY co-founder and COO; Pinchot MBA ’15

Program structure In-person and online hybrid;

designmba.cca.edu

// Kenan-Flagler Business School MBA Chapel Hill, NC

$67,432

bard.edu/mba

(2 years)

Program structure Full-time for 2 years

$102,406

(assumes in-state tuition for year 2)

kenan-ﬂagler.unc.edu

“My MBA has given me not only a personal level of understanding about business and financial decisions, but confidence when presenting and making persuasive arguments to other companies and leaders. Speaking the language of business lends credibility when you’re explaining the value of doing things differently.” — Kate Herrmann, CONSCIOUS COMPANY Business Development Manager; Pinchot MBA ’15 CONSCIOUS COMPANY MAGAZINE

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SPOTLIGHT

ANTIOCH UNIVERSITY NEW ENGLAND // MBA in Sustainability Keene, NH

This small, intimate program is also the most affordable on our list. The interdisciplinary curriculum weaves impact and social responsibility throughout the hands-on work that includes case studies, field trips, research, and consulting projects.

Program structure In-person and online hybrid;

students and faculty meet 10 times each year for two-day intensives

Photo: Elena Zhukova

MIDDLEBURY INSTITUTE OF INTERNATIONAL STUDIES AT MONTEREY // Graduate School of International

Policy and Management Fisher MBA in Global Impact Management Monterey, CA

This program takes the “international” part of its name seriously: it’s the only MBA program we know that requires competency in a foreign language, and it attracts students from all over the world. Each student completes a real-world capstone project, and can choose from three tracks to focus on, including Social Enterprise and Finance.

Program structure Full-time for 20 months

(one-year option for those with relevant previous coursework or experience)

$ 84

$109,200

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miis.edu/mba

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antiochne.edu/ mba-sustainability

$34,548

UNIVERSITY OF SAN DIEGO // School of Business MBA San Diego, CA All MBA students in this 40-year-old program at a Catholic university are required to take Corporate Social Responsibility (CSR) coursework and engage in community service as part of their studies. Students average 15 days studying internationally during their time in the program.

Program structure Full-time for 22 months

$77,280

sandiego.edu/mba

SPOTLIGHT

PORTLAND STATE UNIVERSITY // School of Business Administration MBA Portland, OR

The vibrant city of Portland itself is part of the draw to this regionally renowned program. The schoolâ&#x20AC;&#x2122;s Center for Global Leadership in Sustainability and optional Social Innovation certificate combine with a program-wide core value of sustainability to offer a thorough immersion in forward-thinking business.

Program structure Full-time for 21 months

$55,848

(out-of-state)

pdx.edu/sba

UNIVERSITY OF COLORADO BOULDER // Leeds School of Business MBA Boulder, CO

Boulder is a hub for impact entrepreneurs, especially in the energy and natural foods sectors. The Leeds program draws strength from that community in its optional sustainability focus, and adds a world-class ethics in business component via the universityâ&#x20AC;&#x2122;s Center for Education on Social Responsibility.

Program structure Full-time or evenings-only for 2 years

$49,698

(assumes instate for year 2)

colorado.edu/ business

Patrick Campbell| | MAY University Colorado CONSCIOUSPhoto: COMPANY MAGAZINE / JUNEof2016 85

â&#x20AC;&#x153;

Millennials want fulfillment at work now, and are not willing to postpone meaning until later in life.

& OF ATTRACTING, HIRING, AND RETAINING MILLENNIALS NEW YORK-BASED REWORK has made it its mission to connect the world’s best talent to careers working on the world’s most pressing issues. It matches professionals directly to full-time job opportunities exclusively with organizations making social, environmental, and cultural progress. After working with more than 150 of the world’s most innovative nonprofits and socially responsible businesses, CEO Evan Walden shared his wisdom on the most critical trends, opportunities, and best practices when it comes to hiring the next generation.

BUILDING THE BUSINESS

TOP TRENDS IN MILLENNIAL EMPLOYMENT In one of the most-watched TED talks in history, Simon Sinek teaches us to “Start with Why.” This could not be more true when it comes to hiring and retaining Millennials. Millennials are purpose-driven, and tend to value career experiences over career safety. Organizations that are able to clearly articulate their purpose therefore have the opportunity to attract talent that they may never be able to afford on salary alone. The opportunity to make a real impact in the world is valued by Millennials as much as salary, benefits, and the prestige of an organization’s brand. A double or triple bottom line is not only good for business, but is virtually necessary to recruit and retain Millennial talent. Millennials will flock to companies that go beyond mere philanthropy or corporate responsibility. Employers therefore need to embed meaning into their work. ReWork CEO Evan Walden

COMMON ELEMENTS YOUNGER GENERATIONS LOOK FOR IN THEIR WORK Millennials have redefined what it means to build a meaningful career. We have identified four key areas that they prioritize most:

LEGACY

FREEDOM

What happens in the world as a result of my work? What is the mission of my organization? How am I serving a group or idea that is bigger than myself?

How is work integrated into my overall life? Is my salary meeting my basic needs? Do I have the ability to work remotely, or take vacation? Do I have good health insurance?

MASTERY

ALIGNMENT

What skills am I deepening? What are my opportunities for professional development? How fast is my pace of learning? How can I cultivate strong mentorship?

Do my values match those of my team? What are the working norms in my organization like? How is the culture defined, and does that match the way I want to work day-to-day?

MILLENNIALS ARE THE FIRST GENERATION OF DIGITAL NATIVES

MILLENNIAL TRENDS WORTH NOTING 90

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They grew up with technology, and are not only ﬂuent with new tech trends, but are always on. This makes it harder than ever to check out of work when not in the office.

BUILDING THE BUSINESS

Hiring managers can stay competitive during the recruiting process by having thoughtful answers to the questions at left, showcasing both the opportunity and their organization.

COMMON CHARACTERISTICS OF COMPANIES WITH HIGH RETENTION RATES When organizations ignore talent development, people leave. It is that simple. Companies that retain great people are doing some of the following things:

• Thinking of compensation as more than just the paycheck. Money is important, but salary is not a company’s only tool for attracting and retaining top talent. Remote work, unique benefits, flexible hours, and generous vacation can be just as important in keeping people happy over time. • Planning for employee turnover. The fact is, young people are going to leave your organization, and sometimes there is nothing you can do about it. The best way to address this is to plan for it by maintaining a strong talent pipeline — both internally, by identifying up-and-coming talent, and externally, by investing in your employer brand. Taking occasional coffee meetings, hosting events, and writing thought-leadership pieces are all great ways to stay top-of-mind with passive candidates.

• Being intentional about professional development and upward mobility. In a recent study from Bridgespan of more than 400 nonprofit C-suite executives, half of respondents cited a lack of professional development opportunities as a reason for leaving their jobs. Presenting clear opportunities for growth allows people to see a potential future with your organization, instead of looking elsewhere.

THE MOST IMPORTANT FACTORS IN ATTRACTING TALENT

• Living out company values. At Zappos, Tony Hsieh, a well-known culture guru, positions the Zappos company values not merely as material for a feel-good poster for the break room, but as a strategic decision-making framework. Their values are present from the beginning of their hiring process all the way through to the decisions they make as an executive team.

Recognize that “Employer Brand” is important, and that you are courting the best professionals as much as they are selling you. Time-consuming hoops in the application process and “gotcha” interview questions will not attract the best. Instead, design your application process for the ideal candidate. Speak with a human voice. Make it easy for them to signal interest. Be specific

INFORMATION OVERLOAD Millennials get much of their information from tribes and social connections. This relates to jobs in that the highest-caliber professionals spend a very short amount of time on the job market, making them difficult for employers to identify and attract.

PURPOSE IS BECOMING MORE MAINSTREAM The rise of social enterprises, innovative nonprofits, and conscious businesses means that workers are now able to get paid competitively to do good. This is a clear preference for Millennial job seekers, but also for Millennial entrepreneurs who will continue driving this trend forward.

about responsibilities and who the ideal candidate would be. Show how a rising star will grow and develop faster at your organization than anywhere else. Communicate your organization’s purpose and share your big wins transparently.

PRIMARY DIFFERENCES BETWEEN MILLENNIALS AND OTHER GENERATIONS IN THE WORKPLACE The Millennial generation is the first generation to break the traditional career arc of getting a job that pays well, building up retirement savings, and enjoying life as a retired person. There is no stable career ladder to cling to anymore. Millennials want fulfillment at work now, and are not willing to postpone meaning until later in life. While still young, Millennials want to test multiple careers in search of deeper meaning. The idea of a “career” is changing in other ways as well. Over time, we are seeing more entrepreneurship, freelancing, and small gigs, and less dedication to one institution for the length of one’s career. While changing careers multiple times in a decade may not build stability, it does build resilience, and in an ever-changing economy, that may prove to be more valuable than a corporate pension.

MILLENNIALS ARE NOT THE FUTURE, THEY ARE THE PRESENT Last year, Millennials surpassed Baby Boomers to become the largest living generation, estimated at 75.3 million Millennials versus 74.9 million Boomers.

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BUILDING THE BUSINESS

STEPS TO BUILDING A HIGH-PERFORMING MULTIGENERATIONAL BY GERRY VALENTINE WORKPLACE

“I want to stress the importance of being young and technical. Young people are just smarter. Why are most chess masters under 30?” — Mark Zuckerberg, co-founder, chairman, and CEO of Facebook, addressing a Y Combinator startup conference at Stanford University in 2007

This quote is just one of many that has fueled accusations of ageism and other forms of discrimination at high-tech companies. But Silicon Valley giants and young leaders are not the only ones who engage in age-related bias; I have heard many Baby Boomer leaders complain about “self-centered, irresponsible” Millennials who lack “work ethic.” These attitudes are disturbingly prevalent in many companies, and they are damaging. They expose businesses to the legal risks of age discrimination, and they cause companies to miss the important opportunities offered by age diversity. Let us take a look at a more conscious approach to leadership, and how building a high-performing multigenerational workplace is good business.

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THE CONSCIOUS BUSINESS CASE FOR AGE DIVERSITY

A DRAMATICALLY CHANGING WORKFORCE

For conscious leaders, the business case for age diversity is driven by two of the three “Ps” in our triple bottom line — profit and people — as well as by the need to adapt to the exigencies of a dramatically changing workforce. As with other types of diversity, age diversity improves innovation and problem-solving, and thus increases profits; I will say more about why below. From the “people” perspective, fostering age diversity helps our companies better reflect the communities we work in — communities that include people of many different ages — and thus makes our companies better citizens in those communities.

Today’s workforce includes three very different generations, and they are represented in almost equal proportions: 29 percent Baby Boomers (born 1946–1964), 34 percent Generation X (born 1965–1980), and 35 percent Millennials (born after 1980). That is because the number of working Millennials has increased significantly, while Baby Boomers are living longer than previous generations have and are delaying retirement. Nearly half of Boomers do not plan to retire until after age 66, and 10 percent say they will never retire. Each of these generations grew up in a vastly different time, and brings a different set of expectations, values, styles, and talents to an organization. This presents leaders with a unique set of challenges and, if leveraged properly, some important opportunities as well.

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BUILDING THE BUSINESS

DRIVE INNOVATION BY CHALLENGING ASSUMPTIONS AND BIASES

The first step in building a high-performing multigenerational workplace is challenging agerelated assumptions and biases. For example, the assumption that younger people are inherently “smarter” is not supported by data. In fact, some research suggests that some mental abilities peak in middle age. On average, people between age 40 and 64 are better in cognitive areas like inductive reasoning, identifying patterns, and making accurate judgments about the world around them. That is because our brains continue to grow and build new connections until late middle age. On the other hand, the average 25-year-old brain has higher processing speed and is better at learning new skills and memorizing. When leaders discard assumptions and biases, they get the innovation benefits of age diversity: combining younger employees (who typically learn and memorize faster) with older workers (who are typically better at cognitive reasoning and problem-solving) improves innovation.

ESTABLISH A CULTURE OF MUTUAL RESPECT

A fundamental part of building a high-performing multigenerational workplace is establishing a culture of mutual respect across the generations. It means demonstrating that everyone’s talents are valuable to the company, and not tolerating behavior that creates divisions between the generations. For example, I know one leader, a Baby Boomer, who has an interesting reply for complaints about “self-involved” Millennials. She talks about how Baby Boomers were dubbed the “me generation” in the 1970s for their indulgences like healthy diets, exercise, and belief in self-fulfillment. She explains how her decision to have a career rather than children was once viewed as a “narcissistic” choice for a woman, and how she identifies with Millennials’ plight. It makes an insightful statement that sets a clear standard for what she expects at her company. Other steps conscious leaders can take to establish an environment of mutual respect between the generations include deliberately hiring for age diversity (from Millennials to Baby Boomers), constructing work teams that include multiple ages, and actively acknowledging the unique contributions from employees of all generations.

PROVIDE A COMPELLING VISION AS A POINT OF ALIGNMENT

One key difference that is often cited about Millennials is that they want a sense of purpose and fulfillment out of work. Sometimes that is criticized as “wanting too much out of a job,” but it is actually a golden opportunity for savvy leaders. One of the key attributes of successful companies is having a sense of shared purpose or vision, so your Millennials are actually tipping you off about something you need to do anyway. Create a compelling vision, communicate it relentlessly, and use it as a way to align employees of all generations.

PROVIDE CHANCES TO LEARN THROUGH MENTORING AND REVERSE MENTORING

One thing that Millennials and Baby Boomers share is a desire for learning, but they often need to learn about different things. For example, a Baby Boomer might need to learn the latest social media trends, and a Millennial might need help on decision-making or communication. A good strategy can be to create mentoring and reverse mentoring relationships in the workplace so each party gets what they need from the other. I had firsthand experience with this a few years ago when a young woman I had mentored on career development reverse-mentored me on social media. We ultimately grew to be good friends and we still seek each other out for advice. ULTIMATELY, IT IS JUST GOOD LEADERSHIP Perhaps the most interesting thing about establishing a high-performing multigenerational workplace is that it is ultimately just an exercise in good leadership. Driving innovation, challenging assumptions and biases, setting standards of behavior, fostering mutual respect, establishing a compelling vision, and providing learning opportunities should be priorities for leaders in any high-performing company; managing multiple generations is simply a good reminder of that.

Gerry Valentine is the founder of Vision Executive Coaching. He helps build companies that work, and that work for all — supporting profit, people, and the planet. Gerry focuses on business strategy, innovation, and leadership. He has 30 years of experience with multiple Fortune 100 companies, an MBA from NYU, and a BS from Cornell University. Connect with Gerry on Twitter @gerryval or by email at gerry@VisionExecutiveCoaching.com.

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BUILDING THE BUSINESS

WHAT’S IN YOUR THE APPS, PRODUCTS, AND TOOLS SOCIAL ENTREPRENEURS 3 1

1. “My Bose noise-cancelling headphones, which have been life-changing for me. To take calls, to just travel with, to feel at peace, to meditate — they’ve been amazing for all these things. I also have these hilarious platform shoes that I bought to be the best travel

2. “A Livescribe pen and Moleskine notebook for digitally and aurally recorded handwritten notes; Spotify because good music is core to a good day; and a blindfold and earplugs because you have to get your rest, even in the noisiest of environments in the developing countries where

friends and companions for meetings. When I walk into

we often end up.”

a high-intensity business meeting wearing these 4-inch

// Patrick Woodyard, co-founder and CEO, Nisolo

platform gold sneakers, you just can’t help but laugh and smile. It just changes the entire conversation!” // Radha Agrawal, co-founder and co-CEO, DAYBREAKER; co-founder, THINX

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3. “Both the New York Times Now app and ATTN: app to stay on top of the news.” // Nicolas Jammet, co-founder, Sweetgreen

BUILDING THE BUSINESS

TRAVEL BAG? CAN’T LIVE WITHOUT WHEN THEY ARE ON THE ROAD

4. “Headspace [meditation app], for sure. Insight

5. “I travel everywhere with my iPhone, a notebook, a

Timer is another app that I use for meditation. I

pendulum, and essential oils. And a good scarf — you

obviously never leave home without my phone, my

never know when you’ll need to keep your neck warm!”

laptop, chargers, and my running shoes.” // Miki Agrawal, co-founder and CEO, THINX and Icon; founder, Tushy

// Caitlin Welby, president and CEO, RFX Global Companies

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BUILDING THE BUSINESS

SOCIAL ENTERPRISE FUNDING OPTIONS You’re a social entrepreneur because you want to make a positive impact in your community. But as in any other business, funding is a key challenge that you must address in order to successfully structure your venture and meet your goals. When considering the type and source of funding to pursue, several important factors will help you make the right decision.

BY RYAN SHAENING POKRASSO

MISSION ALIGNMENT

Consider whether the funding source is aligned with your vision for the venture. For example, if your primary goal is to have a measurable impact on society, and profits are not the be-all and end-all of your vision, then it’s important to ensure that investors agree with your goals. This is relevant for many types of investment, but is especially critical when you bring on investors in exchange for equity. If you are interested in creating a business that operates on more than one bottom line, you may want to explore impact investors who have priorities beyond profits alone.

THE EXPECTATIONS AND SOPHISTICATION OF THE FUNDER Investing in young and growing companies is a fundamentally risky endeavor. However, stories about ventures that explode and make people into millionaires abound, and these create excitement about opportunities to participate. But when you are deciding whether to accept money from someone, it’s important to ensure that they understand the fundamental risks associated with your venture. 96

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Therefore, you should only accept money from friends and family after very direct conversations indicating understanding about how things can end up. Do not make guarantees! Of course you want to assume things will turn out for the best, but with any friend or family member interested in investing, be sure to play out the scenario where things don’t go as planned.

DECISION-MAKING AND CONTROL

If you are worried about bringing on new people who will have a say in the venture — if you are worried about giving up any level of control — then it makes sense to avoid taking investments in exchange for equity in the company.

ONGOING OBLIGATIONS

In an ideal world, someone would give you a bunch of money for whatever purpose you wanted without any obligations in return. Unfortunately, this situation is rare. Funding tends to come with some level of ongoing obligation to the funder. For example, in the context of a debt arrangement, you are obligated to pay back the money borrowed along with accumulated interest. Similarly,

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with an equity investment you are obligated to provide a portion of your profits to the investor, and the investor may have the right to participate in company decision-making. It is important to understand such ongoing obligations and to consider whether you feel comfortable with them.

BENEFITS BEYOND THE CASH

In its most basic and limited sense, funding is about receiving money. However, while money is obviously important to pursuing the goals for your venture, you need not think of funding sources in such narrow terms. After all, many funding sources carry very significant additional benefits. For example, an investor might bring subject-matter or business expertise, or help forge connections to important strategic partners. Other funding sources allow you to test your market fit and gain a network of supporters. Funders are more than ATMs. They also have the potential to open doors that might otherwise remain closed. With these considerations in mind, let’s dive into the menu of funding options for your social venture.

BUILDING THE BUSINESS

CROWDFUNDING Crowdfunding, as it sounds, means obtaining money from a large number of people. It comes in several forms, including: 1) rewards-based crowdfunding, where each funder receives a good, service, or other perk in exchange for their money; 2) equity crowdfunding, where the funder gets a piece of the pie; 3) debt crowdfunding, where the funder receives a promise to be repaid with interest; and 4) donation-based crowdfunding, where the funder gives a gift to the venture, which can be tax deductible in the nonprofit context.

PROS

Beyond where the pros of debt and equity crowdfunding overlap with those of their traditional counterparts, a well-structured crowdfunding campaign can provide numerous benefits beyond raising money. Crowdfunding provides an opportunity to test the market for your venture, and test your messaging. A successful crowdfunding campaign will also create a network of support and raise the profile of the venture. Finally, crowdfunding can be an important bridge to raising additional investment by demonstrating “proof of concept” to other potential investors.

CONS

Overlooking again where the cons of debt and equity crowdfunding overlap with those of their traditional counterparts, it’s important to note that many crowdfunding campaigns have led to horrible PR for ventures that were unprepared to follow through on early success. For example, if you have thousands of people buy your product right away, but then you are unable to fulfill promised orders, the damage to your venture’s reputation significantly outweighs the benefits of a good start. Additionally, crowdfunding generally does not provide you with the opportunity to screen the individual personalities of investors, so it’s hard to know what the expectations of each might be — especially in the context of equity crowdfunding.

THE NEW EQUITY CROWDFUNDING RULES Until recently, equity crowdfunding efforts could only draw from a limited pool of investors who qualified as “accredited investors,” i.e., those with some deep pockets. Recently, however, the Securities and Exchange Commission approved rules allowing for equity crowdfunding from the general public as well. Some perceive this as a huge opportunity for funding social ventures, while others view it as a big risk, as opening the pool of potential investors also means managing expectations and legal formalities associated with having a lot more owners in the company (who may not be experienced investors, and may have difficult-to-meet expectations), and further, having a large number of people on the books as owners in the company could turn off larger investors. The new equity crowdfunding rules allow entrepreneurs to raise up to $1 million in any 12-month period, with, of course, some additional rules involving required disclosures and limits on the amount of investment from any given source. One advantage of equity crowdfunding is the ability to go beyond banks and traditional investors and appeal to those consumers and supporters who may be more aligned with your mission. However, before diving into equity crowdfunding it’s important to consider the impact of having hundreds (if not thousands) of owners in the company — after all, you are still giving up a piece of the pie, and you should consider how your plans will match the expectations of the crowd.

BOOTSTRAPPING Bootstrapping basically means paying for the setup costs of your venture out of your own pocket without outside financial assistance. This is usually how folks get started and can be a realistic longterm approach if you have low overhead and a solid revenue model. But if you are looking to scale quickly or you do not have a lot of cash to invest in your business, this is likely not the best approach.

PROS

You maintain all the control, you have no obligations to any outside parties, and you don’t have to worry about anyone’s expectations but your own.

CONS

There are limited opportunities for growth unless you have a revenue model that is built to scale on its own. And you may be missing out on opportunities for helpful outside input.

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BUILDING THE BUSINESS

DEBT Debt generally refers to an arrangement whereby you receive money that you are obliged to repay over time with interest; in other words, a loan. The investor’s economic opportunity comes from receiving interest rather than a percentage of profits. For the investor, then, debt is less risky but comes with lower potential economic return.

PROS

CONS

You receive money without giving up control of the enterprise. You have to pay the money back with interest. Moreover, if you cannot pay when it’s due, there are penalties; in the worst cases the lender can force your venture into bankruptcy. Additionally, if your venture does not have a significant credit history and/or assets to back the loan, then it is very likely that the loan will have to be personally guaranteed; in other words, your personal assets could be on the line if the business cannot pay back the loan.

EQUITY With an equity investment, you are providing a piece of the pie to the investor in exchange for money; e.g., stock in a corporation or membership interest in an LLC. Because they now own a piece of the company, the investor generally has the opportunity to participate in the decision-making of the venture. The investor’s economic opportunity comes from the ability to share in profits. Though risky, an equity investment comes with a higher potential return than a loan.

PROS

CONS

PROGRAM-RELATED INVESTMENTS If your venture seeks to solve significant societal issues, similar to the work of a nonprofit, then, first of all, thank you for being awesome! Additionally, you may be eligible for a specific type of investment known as a Program-Related Investment, or PRI. PRIs come from foundations that typically fund nonprofits, and they provide the opportunity to make a return while also meeting their 5 percent payout requirement. PRIs can be structured as either debt or equity. In order to qualify for the benefits of PRI treatment, an investment must satisfy a number of strict requirements: • The investment must be for the primary purpose of accomplishing the foundation’s exempt purpose, which might be educational, charitable, or otherwise; • Generating income cannot be a significant purpose of the PRI (meaning would an investor seeking only profit make the investment on similar terms?); and • The PRI cannot be used to influence legislation or political campaigns.

Funding is important. Securing money can be one of the more stressful aspects of being a business owner. But if you approach the process in a thoughtful manner, you might find that you are not only raising necessary money, but bringing on strategic partners and opening new doors to make your venture a success. The suggestions above provide a high-level overview of several common types of funding. And though we have focused on how to set up ventures as for-profit entities, many of these principles apply in a nonprofit context as well. Finally, please keep in mind that many funding options involve complex securities laws, and it is smart to work with an attorney who knows the area.

Generally, you do not have to pay back the investor, though they do get a share of your profits. You give up a certain amount of control and a percentage of the economic upside in the venture. To make a somewhat inflated generalization, equity investors often focus more on profits and economic growth than mission, so it’s critical that you and your investors are mission-aligned and have the same expectations for the direction of the venture. In fact, sharing control with an investor who aligns with your mission can be a pro.

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Ryan Shaening Pokrasso is an attorney who founded SPZ Legal, P.C in the San Francisco Bay Area to assist entrepreneurs using business as a tool for social change and environmental stewardship. Ryan advises for-profit and nonprofit businesses as general counsel on matters ranging from entity formation and financing to intellectual property.

BUILDING THE BUSINESS

HOW TO

BUILD TRUST AMONG YOUNGER GENERATIONS THROUGH SOCIAL MEDIA BY JULIE URLAUB

Millennials are making decisions based on corporate social responsibility (CSR). According to findings by Cone Communications:

87%

of Millennials purchase products with a social or environmental benefit, versus a US average of 83%

74%

82%

volunteer for a cause supported by a company they trust, versus a US average of 56%

tell friends and family about CSR efforts, versus a US average of 72%

voice opinions to a company about its CSR efforts, versus a US average of 60%

70%

Sounds great, right? Our youth are stepping up to be leaders in building a better world. But how do these trends apply to businesses? This data sheds light on two important questions that businesses often ask:

1 How do businesses reach Millennials?

2 What are the most effective ways to build trust with this generation in a way that engages them and activates their passions?

I have found social media and sustainable business practices to be the answer to both of those questions. When you consider that Millennials often use social media to amplify messages for impact, it makes sense to build trust and engage with them on the social channels. 100

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Cone Communications’ Millennial CSR Study notes that “although most Millennials turn to social channels to share and learn, there is also a portion that uses this medium as an avenue to participate in a direct dialogue with companies or contribute to CSR efforts.” The numbers speak for themselves:

38%

of Millennials share positive information about companies and issues they care about, versus a US average of 30%

use social media to learn more about specific companies and issues, versus a US average of 27%

26%

33%

share negative information about companies and issues they care about, versus a US average of 21%

directly communicate with companies around issues, versus a US average of 14%

17%

18%

contribute directly to a CSR effort led by a company, versus a US average of 12% With these compelling statistics, it is clear that social media are an ideal way to reach the Millennial generation. Which brings us to the third question:

3 How can businesses use CSR and sustainability efforts to engage with Millennials on social media? The first way to do this is by establishing social media proof of your responsible services and products. Social media can help build authenticity when product and service messages in the virtual world are, first and foremost, aligned with their messages and actions in the physical world. Your corporate communications

and marketing messages must compel stakeholders to support your brand with information that tells them who you are offline. For many, this manifests in product packaging and service disclosures. Furthermore, operational transparency is key to building trust among and engaging with Millennials. By operational transparency, I mean authenticity in communication and disclosure of business sustainability strategies, CSR and environmental performance results, and all the positive and negative consequences that go along with those. Millennials have to be able to relate your sustainable business programs to something they can understand. By revealing interesting sustainability details like key metrics, CSR challenges, and innovations, corporate messaging can emotionally appeal to them in ways that personalize your corporate sustainability plan. Being transparent about sustainable practices on social media is all about presenting honest assessments of sustainable business practices in ways that are meaningful and relevant to your stakeholders. Traditional communications channels will not cut it with this audience. The Cone Communications study mentions that although Millennials still look to product packaging as a valuable resource for CSR information, they are more likely to use social media than the average American and less likely to see traditional advertising as an effective form of communication. Millennials also want to be entertained and engaged with CSR content — this group prioritizes videos, infographics, and games when learning about company CSR commitments. All in all, social media and business sustainability programs together constitute a valuable business opportunity for gaining the trust of Millennials. Use it to increase awareness of your business’ social ethics, environmental performance, and philanthropic deeds. Keep Millennials informed using openness and transparency as keys to establishing trusting relationships. Finally, let all of your stakeholders — customers, suppliers, and investors, as well as Millennials — know they are dealing with a company that acts responsibly. Julie Urlaub is founder and managing partner of Taiga Company. With 15 years of business development, marketing, and communications expertise in the energy, medical, and information technology industries, Julie now consults and advises clients on purpose-driven communications in the social space. Julie leverages a bachelor’s in political science from Indiana University of Pennsylvania and IT studies from Southern Methodist University to meet the social, technological, and environmental business objectives of Taiga’s clients. Visit taigacompany.com or connect on Twitter @TaigaCompany. CONSCIOUS COMPANY MAGAZINE

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BUILDING THE BUSINESS

MEDIA PICKS

3 GREAT BOOKS

FOR NEW SOCIAL ENTREPRENEURS THE STARTUP PLAYBOOK: SECRETS OF THE FASTEST-GROWING STARTUPS FROM THEIR FOUNDING ENTREPRENEURS BY DAVID S. KIDDER

Entrepreneurs looking for aggregated best practices from many of the top business leaders and entrepreneurs in the world should look no further than “The Startup Playbook.” The book is chockfull of practical insights on everything from hiring and deploying capital to competition and culture, all in a readily digestible and highly engaging format. It is a great go-to manual for businesspeople at any stage.

THE E MYTH REVISITED: WHY MOST SMALL BUSINESSES DON’T WORK AND WHAT TO DO ABOUT IT BY MICHAEL E. GERBER

The vast majority of new business ventures in the United States fail; this book argues that it is because many entrepreneurs are unconscious of the “E myth.” According to the myth, if you are good at making pies (for example) and you like doing it, you might think it’s a good idea to start a pie business. However, there is a huge difference between what it takes to make a good pie and what it takes to build a successful pie business. This book will help clarify your thinking and get you focused on what really counts when it comes to making your business achieve success.

THE AWAKENED COMPANY BY CATHERINE R. BELL

For those interested in more than profit (aren’t we all?), this book is an excellent primer on conscious business. With an emphasis on the requisite personal growth and development that defines a conscious business leader, this book outlines how you can build a company that is as deeply fulfilling personally as it is impactful for the world and profitable for shareholders. Where the previous two book recommendations are essential for the nuts and bolts of building a business, this one helps you see the forest beyond the trees and ensure the company you are building is something everyone can be proud of. 102

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ENERGY

IMPACT BIOENERGY CREATING A HYPERLOCAL SOLUTION TO FOOD WASTE

AT A GLANCE Founded: 2013 Location: Seattle, WA Team Members: 6 Structure: For-profit (lean and ﬂat) Systems deployed: 4 (1 in Surrey, B.C., and 3 in Seattle) Recognition: • 2015 Organics Innovation Award (Washington Organic Recycling Council) • 2015 Global Top 30 Later Stage Awards (Global Cleantech Cluster Association) • 2015 Top 5 edg3 FUND finalist (Kitsap Bank) • 2015 Alaska Airlines Environmental Innovation Challenge finalist

Schools, campuses, food and beverage producers, and food banks all produce thousands of pounds of food waste each year, and typically have to pay to have the waste hauled to a central location such as a landfill. In landfills, organic matter breaks down and produces methane, a potent greenhouse gas that, if captured, can be a valuable source of energy. Enter Impact Bioenergy: the company’s small anaerobic digester systems, or microdigesters, convert food waste and other organic matter like paper and yard clippings into fertilizer and energy in the form of electricity, heat, and even transportation fuels. As the company’s 33-yearold co-founder Srirup Kumar explained to CONSCIOUS COMPANY, Americans typically “waste roughly one-third of our food, while one in six families in America lacks a secure supply of healthy food. By

transforming food waste to a food resource, we can do better than this while doing right for our environment.” Using the company’s microdigester, 10 pounds of food waste can be converted to between one and two kilowatt-hours of electricity and a gallon of liquid fertilizer. By diverting waste, avoiding transportation emissions from hauling waste, generating renewable energy, and returning nutrients to the soil, these on-site and portable systems provide a truly holistic solution to the food waste problem and help close the loop for the local food movement. Impact Bioenergy is also democratizing food waste processing through a service it calls Community Supported Biocycling, or CSB, which is inspired by the cooperative model. By selling the three separate value-streams created by its microdigesters — food waste processing, renewable

34.7

The Anatomy of America’s Garbage Waste by weight in 2012

28.9 24.4

Millions of tons

13.4 8.4

6.2 Source: Environmental Protection Agency

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Metal

Paper

Plastic

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energy, and soil fertilizer — to community stakeholders, Impact Bioenergy can provide a hyperlocal solution to the food waste problem. Its first CSB demonstration project launched in April of 2015 in partnership with Fremont Brewing Company and Seattle Urban Farm Company. Looking to the future of the waste-to-energy field, Kumar said he believes that the waste processing industry will transform from a resource-intensive business to a restorative one. “Food waste will become a commodity, like oil,” said Kumar.

“One ton of food waste actually has about the same energy content as a barrel of oil, along with plenty of water, nutrients, and organic matter that can be recovered for hyperlocal food systems.” Kumar also sees the waste sector becoming decentralized, the same way that computer processing became decentralized as people and businesses transitioned from large mainframes to personal computers and smartphones. “The waste-to-energy industry will undergo decentralization because there are simply too many externalities that

have resulted from the centralized solutions of the 20th century, such as landfilling. The capacity to upcycle food waste will be distributed hyperlocally in the 21st century.” And as for the up-and-coming generation and how they may adopt solutions like Impact Bioenergy’s, Kumar said, “We [Millennials] have hyperlocal values and we like to internalize externalities. Wasting resources is becoming unthinkable to younger generations, and they are ready to mobilize for people, planet, profit, and progress.” Photo: Impact Bioenergy

Food In

Liquids In

HORSE

Energy Out

Fertilizer Out

*Highs-solids Organic-waste Recycling System with Electrical Output

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SYLVATEX VIRGINIA KLAUSMEIER IS ON A MISSION TO USE NANOCHEMISTRY TO DISRUPT THE ENERGY INDUSTRY

or many years, Dr. William Klausmeier used chemistry to AT A GLANCE evaluate and innovate lessharmful energy sources, making Founded: 2011 significant findings along the way. Tragically, in 2008, his untimely death Location: Headquarters San cut his career short before many of his Francisco, CA; Labs Berkeley, CA most important discoveries could be Team Members: 10 commercialized. His daughter Virginia, also a chemist, had assisted him with Structure: For-profit much of his research and was plagued by questions about her late father’s work: what if he had discovered a game-changing technology? What if this technology could make a significant dent in climate emissions? And what if the only reason this technology never made an impact was because no one attempted to commercialize it? With these questions at heart, at age 28 Virginia quit her corporate career to bring her and her father’s new technology to the masses, and in 2011, Sylvatex was born. At its core, Sylvatex is a green nanochemistry company. It uses the very simple technology of nanobubbles — very, very small bubbles — to change the interface of water and oil to solve big energy-industry problems. The primary application of this technology to date has been as a fuel additive for petroleum diesel, biodiesel, and renewable diesel. When added to these fuels, the additive reduces emissions without affecting vehicle performance and reduces the carbon content of fuels. Carbon-intense industries, such as trucking, purchase these fuel additives for their ﬂeets to comply with EPA mandates. Using the fuel additives also creates a carbon offset that can be sold on the carbon market created under California’s Cap-and-Trade Program. In 2017, the company will produce the least carbonintensive diesel fuel produced in California, and it already has multiple other applications for this technology in the works. We spoke with Klausmeier about the current state of the biofuels market and what prompted her to take the leap to continue her father’s legacy. CONSCIOUS COMPANY MAGAZINE

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ENERGY

Could you tell us about the genesis of the concept, and also the business? Virginia Klausmeier: My late father spent about 10 years tinkering in the lab to explore different ways that he could blend renewable components into diesel fuel. He was trying to change the physical interface of the oil and water components so that he could put more water-based components into diesel fuel to reduce emissions. He did that for a number of years, and at a certain point in my career, I wanted to help him get to the next level with what he was doing. Luckily, I had been part of a leadership program where I met a recently retired state senator in California, and he wanted to help me to help my father. Through that, we were able to bring together a lot of the moving pieces, from our IP [intellectual property] lawyer to an emissions expert. We were able to get some early financing to work on the actual concept in the engine and test out different prototypes. We saw that we could, in fact, blend renewable components that are low-cost and readily available into a diesel fuel at a pretty high proportion — anywhere from 5 to 40 percent — and reduce emissions substantially. Unfortunately, the pivotal piece for me was that my father passed away from cancer abruptly. The folks who had been working with us who wanted to keep this idea alive and had been self-incubating it with us said, “If you lead, we will follow you; we will support you.”

{

VK: One of the things that I asked myself was, “If I was on my deathbed, knowing that my father had been so phenomenal, and literally a genius in the chemistry and bioeconomy worlds, would I always wonder if this technology that we created could be a game changer in the world for reducing carbon emissions and I just didn’t

“I realized that I needed to align my everyday movement, everything that I put my energy into, toward creating more impact.”

So after a couple of years of trying to bring together all the pieces, I finally jumped ship and shifted gears in my personal career, quit my job, and went full-time in 2011. Our first application started from the roots of the company, which was creating cleaner-burning diesel fuels. Now we’ve evolved to having the lowest carbon intense diesel fuel product that will be produced in California, which will be on the California market likely at the beginning of 2017. Could you talk a little bit about that moment in 2011 when you decided to jump ship and do this full-time? It’s one thing to think about things; it’s another to take action. What did that decision look like for you and why did you make it?

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Virginia Klausmeier

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{

try to commercialize it?” That was something that kind of haunted me. It made me realize, after some time, that I had to at least try and give it my best go because it literally could change the amount of carbon that we, the human population, release into the atmosphere. That was a little heavy, but I think that definitely weighed on me when making the decision. I also just realized that I had a lot more to offer than I was doing in a more formal fashion at a big company. I realized that I was served more by having a human impact and a positive impact. I had found myself in my position [at the large company] doing a lot of humanitarian work even though it was not part of my formal role, but I found myself working so that I could do that humanitarian work. I realized that I needed to align my

ENERGY

a product into a larger-scale market. The main incentive for end-users is reducing carbon intensity to maximize the value of the carbon credits. In terms of commercializing this [technology], we are partnering with existing bio-refineries and will produce our products at their facilities. So that means that the cost of production is really low because we are already using the current infrastructure and distribution system. And then, because we are using such low-carbon inputs, we are going to be able to get another revenue stream — not only selling our products into the fuels market for the price of wholesale diesel, but we’ll also capitalize off of the carbon credits that are part of AB 32 [the California Global Warming Solutions Act of 2006] and the federal credits as well. We are targeting folks who have fleets that need to reduce emissions. So this is a way for them to potentially reduce emissions to meet their growing mandates, and they could extend the lifetime of their fleet another five or ten years, which means a lot of monetary value for them.

everyday movement, everything that I put my energy into, toward creating more impact. So I quit my job May 31st, 2011, and then, that following Monday, June 2nd, I pitched at a Silicon Valley pitch event and won the whole thing [laughter]. That was kind of a big wake-up call because I was so green going into that, but it at least made me feel that I had made the right choice. I knew that I had a lot of opportunity to learn and grow and do something impactful. With this technology, who is your primary customer and what is the economic incentive for people to use your technology? VK: One of the applications that we’re most developed in is fuel, but we do have other applications that are in the earlier stages of development. For example, processing for lithium-ion batteries — cleaning up that production process with integration of technology. For the purposes of simplifying though, I am going to focus on the fuel applications, since we are the furthest along with that in terms of getting

What has been the biggest challenge for you so far? VK: The biggest challenge has been staying very focused at solving one of the largest problems in the world, which is playing [out] in the liquid fuels space. There are a lot of companies that were trying to develop low-carbon, fuel-based products, and when the price of fuel dropped so significantly you saw a major shift in the industry. For us — my team, our investors, our advisors — we were pretty focused on wanting to develop a product in whatever market that we could, but that [would still be] viable in the worst-market-case scenarios. It would have been a little bit easier to say, “Okay, let’s just shift gears and figure out what type of products or applications will be easier to get into market right now and hit higher price points.” But we took that energy and said, “Hey, we are still solving the same problem. The problem still exists: we need low-carbon fuels in the marketplace.” And to give you an example of how important low-carbon fuels

HOW IT WORKS

+ Renewable Inputs

D Diesel

Cleaner Burning Fuel

Reduced Carbon Emissions

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are for overall carbon reduction, recently there was a report looking at where the low-carbon came from to meet the mandates in California, and about 89 percent of that carbon reduction came from low-carbon fuels. So even in a very progressive state that is focused on electrification and integrating different technologies and energy efficiency, low-carbon fuels make a huge difference in the overall carbon outlet. What advice do you have for other young entrepreneurs who are embarking on a capital raise? VK: It is very important for entrepreneurs to kind of own their business before they go out and try to sell it. I tried to finance myself for a year before we really went out and asked people for funding. That was a valuable exercise because it taught me to be pretty nimble and cash-light, and also made sure that we had high stakes in the game. I would recommend to anyone who is going to be starting a company, expect that you are not going to have money to play with for a bit of the time, and develop a way to avoid needing the funding immediately. You need to stay in your innovative, creative space before you start to go out to the marketplace and look for capital. What is giving you hope for the future? VK: What is giving me hope is that some major political leaders and industry leaders are recognizing that we need to start valuing environmental effects that we have due to normal, everyday business — and you are starting to see that happen more and more. And that companies and technologies are advancing to really start making a big impact. We are just on our first or second wave of innovation, and we are going to start seeing really impactful opportunities that are going to land and make a global difference. I believe there are going to be a lot of success stories that are going to come from companies that have a conscious way of thinking about their carbon environment. Those are going to be the companies that will start winning in the public marketplace, and that is really what the everyday person will start to want more of, and value more — products that are actually thinking about doing things right from the beginning. This is an amazing time to be in the green economy and the bio-based economy. I think that we are going to start seeing policy shifts and different things that are going to be more globally focused, which is going to drive huge market opportunities. Photo: Sylvatex

KLAUSMEIER’S TOP 3 PIECES OF ADVICE FOR YOUNG ENTREPRENEURS

DEVELOP A HIT LIST OF MENTORS THAT YOU WANT TO BE IN YOUR NETWORK

Identify folks in your industry who have done what is considered to be the gold standard, or developed business models that you think are really innovative and effective, and put them on your list of folks who you want to meet in one way or another. Ultimately, develop a strong Rolodex of advisors who are going to be instrumental to the various stages of development in your company.

IT’S GOING TO BE LONGER AND HARDER THAN YOU ANTICIPATE

Set appropriate expectations. Recently, there has been a huge amount of emphasis on all sorts of startups that are successful and stories of how you can make so much money so quickly, and I think that is kind of dangerous. Even though it looks like there is this pretty quick track, in reality it takes a few years and significant time to really develop a good application, product/market fit, and a business model that is sustainable and scalable. When people think about startups, they sometimes can be a little delusional [laughter].

TAKE CARE OF YOURSELF

Realize that you are quickly going to lose a lot of your time that you didn’t even know you once had. I think it is really easy to potentially burn out from that. In the first year, you kind of think that it’s a sprint, and you are running at this sprint pace where in actuality it’s a marathon. It’s really important to mentally prepare for it. Try to maintain that focus on your personal growth and well-being, because as a leader and a founder, that is going to trickle into every different level of your company as you start to grow and expand, and you will need that bandwidth. One thing that has really landed with me is that most young companies and startups fail because the founder just didn’t have the bandwidth to continue. Before they have a chance to succeed, they give up because they burn out.

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parting thought...

“This world demands the qualities of youth: not a time of life but a state of mind, a temper of the will, a quality of imagination, a predominance of courage over timidity, of the appetite for adventure over the love of ease.” — Robert Kennedy Photo: Stephen Smith iamstephensmith.com // @iamstephensmith Artwork: Ashley Pastore// |instagram.com/iamstephensmith ashleypastore.com