Last Thursday night I went to hear three ‘rock stars of the new economy‘ speak about their businesses, which are all benefit corporations, a new corporate form which is changing the world. Benefit corporations are for-profit businesses which must make a positive impact on society and the environment (and in the USA are legally obliged to do so). The rock stars were speaking at UTS’s striking new Dr Chau Chak Wing Building designed by Frank Gehry (see below). They were Rob Michalak (Global Director of Social Mission for ice-cream giant Ben & Jerry’s), Helen Souness (Managing Director Australia & Asia of online craft and vintage marketplace Etsy) and James Chin Moody (CEO & founder of giving community TuShare and of Sendle, Australia’s first carbon-neutral parcel delivery service, who was formerly known as James Bradfield Moody, as featured on the ABC’s New Inventors.)
They were electrifying.
First up we were welcomed by Suzanne Benn, Professor of Sustainable Enterprise in the School of Management at the University of Technology (UTS) which hosted the evening. Introducing her subject and the big buzzword of the evening (and of our era) – sustainability – she said it’s a highly contextual thing. Sustainability relates to a discipline or an industry sector, a business context. In 1999 when she was first teaching at UTS, they realised they needed to do something about corporate sustainability and introduced the idea in their business classes. She said in those days students would stand up and walk out when they heard the word ‘environment’ in an economics class. But sustainability belongs in economics classes not only because there’s a moral imperative for it, but because there’s a business case for it.
You can’t survive in business unless you’re good at collaboration – and so UTS is launching (this week, so stay tuned) the Hub of Sustainable Enterprise. It will have two key areas of research:
1. The circular economy, which is about extending the life of resources material, energy and intellectual. About reusing.
2. The sharing economy, not just through organisations like AirBnB and Uber, but the general idea of sharing rather than owning. She said there’s a huge economy developing in this area.
Benn said the future of sustainability looks really interesting in all its multiple dimensions and interdisciplinarity. She quoted Paul Polman, the avant garde CEO of Unilever, who said that sustainability is pushing us to innovate. And the fact we have a ‘not very supportive government’ in Australia means we have to do more ourselves.
Alicia Darvall, executive director of B Lab Australia & New Zealand, then introduced the first speaker, Rob Michalak of Ben & Jerry’s. She said that the three rock stars would be speaking from the point of view of 2030 about why they had become benefit corporations and how this had contributed to the success of their enterprises.
Rob Michalak said that what Ben & Jerry’s did was include the people on the margins of the economy. The business started in 1978 in Burlington, Vermont, with two guys wanting to be part of the community. Ten years later, in 1988, they wrote their mission statement with a social purpose. Their mission has three parts – Product, Economic, Social – which are all of equal importance, hence their horizontal representation across the screens above. All parts must thrive equally.
In 2012 Ben & Jerry’s became a B Corp, which is a benefit corporation certified by B Lab, a non-profit organisation founded in Philadelphia in 2006 which pioneered the new legal corporate form. It was one of the first – and most high-profile – businesses to do so. Michalak said that a lot of B Corps didn’t tank during the global financial crisis because people stuck by them. He said they’ve tried to do the numbers on social purpose – to demonstrate quantitatively how a business’s social purpose favourably impacts the bottom line – and although they’re yet to prove the correlation, they know social purpose is valuable financially. Perhaps because their business is about ensuring that ‘all the stakeholders throughout the value chain prosper as we prosper’.
Helen Souness was up next. She said Etsy‘s mission is ‘to reimagine commerce in ways that build a more fulfilling and lasting world. We are building a human, authentic and community-centric global and local marketplace.’ Etsy now has over 20 million active buyers. Pointing to the image behind her – Mr Grit, the huge Etsy owl which sits in its DUMBO, Brooklyn, NYC, headquarters – she said ‘His collective unconscious is coming out of his head.’ For her this is emblematic of the creativity of Etsy, its work and the people who do it. Everyone is creative.
She said it was ‘really fun’ to think about the success of Etsy in terms of its B Corp nature from the point of view of 2030. She said she thinks in 2030 ‘we’ll see the economic impact of what we’re doing is extraordinary.’ At the moment, about a quarter of their people are making their entire income by making (clothes, jewellery, furniture, etc) or curating (vintage goods). Etsy has opened a global market for creators. To make a living as a creator requires courage, emotional support and practical help. Starting out in business is incredibly challenging, and Etsy provides the support and practical help. Etsy takes a cut of only 3.5% from its creators, which according to Souness is the lowest take in the market, so the ‘Etsy economy requires enormous help to make this possible’. Etsy is booming in developing and regional economies; today a third of Etsy Australia’s sales are regional. And over 90% of Etsy’s creators are women, and over 90% of them work from home.
Souness said that part of their social impact is ‘the way we operate as a community, we’re all about people (not about e-commerce)’. The business operates through teams, small, self-managing groups of Etsy sellers. Sometimes the groups are global on the making or business side – like the group interested in the trending fad for mid-century German ceramics – and sometimes local. It’s a collaborative model not a competitive model. One example of a successful local Etsy group is the Brisbane-based BrisStyle, which began with eight people in a coffee shop and has grown to a collective of over 350 members with an annual report and an office space (BrisStyle HQ) provided by the Brisbane council. There are 350,000 people collaborating around the world in this way.
Etsy has become an educator in selling online and craft entrepreneurship programs. For example, in manufacturing towns where the economy has slumped but there are still so many people with ‘making skills’, Etsy lobbies to make doing small and micro business less stressful in regulatory and other terms. (And in 2014 Etsy took the ‘maker movement‘ to Washington.)
Souness spoke about the connections that develop between people – makers and buyers – through Etsy, so you see meaning in what you’re buying. For example, she bought a pussy willow brooch and the woman who’d made it told her it was made from an actual pussy willow she’d found in an Oregon forest and turned into a wax model to make a mold to cast the brooch. Such connections make Etsy like an old-fashioned market. It’s about thinking locally and knowing the provenance of our stuff. Etsy also stays very close to what their staff are doing, for example, through Eatsy Food, which serves employees lunches twice a week, bringing them all together to eat and talk.
According to Souness, Etsy became a B Corp for all the above reasons (social mission etc) and also for transparency and accountability, for ‘the way it made us measure our environmental impact’, which is essential when you served around 40,000 meals in your office in 2014. She said in 2030 Etsy would look back and be incredibly grateful for that transparency and measurement brought by being a B Corp.
Etsy’s Australian headquarters are in Melbourne, where there are now 40 B Corps – versus Sydney’s 12. One dynamic and exciting B Corp pioneer driving the new business model from Sydney is James Chin Moody, whom Souness introduced by saying that he was ex CSIRO and ‘used his big brain to disrupt and reimagine how a sharing economy works’.
For me Moody was especially thrilling. Why? Because his business not only doesn’t create stuff. It is designed to reduce waste. Given that I don’t care for stuff beyond the essentials of life – and am obsessed with minimising garbage and appalled by the amount of needless stuff the global economy is programmed to generate (‘free’ foam reindeer antlers in shopping centres at Christmastime?!), this was pure music to my ears.
Moody, who trained as an electrical engineer, is concerned with the amount of waste we generate. He wants to reduce landfill. Speaking from 2030, he said the average Australian household threw away $1000 worth of food in 2015. And how efficient was a car in 2015? People from the audience guessed, starting from around 40% efficient. No. In 2015 a car is 1.5% efficient. Some 85% of the energy it uses turns to light and noise. Only about 10% of that energy actually moves the person.
When he was working at the CSIRO Moody learnt that resource efficiency regarding waste would be the big driver of the new economy. In 2015 he did the sums: people used to (in 2015) live with huge amounts of stuff in storage. A lot of stuff had inbuilt expiry dates because: people grew out of it; it was media used once only (here Moody gave storing a book as the example of media waste, which bookish types who read and reread might not consider so wasteful); people buy stuff like kitchenware and phones and store it in the attic when it’s no longer used; it goes out of fashion. But despite all this stored stuff, only 5% of 100 billion useless stored items ever made it into a second pair of hands. So they (Moody and his colleagues at TuShare, presumably) asked themselves a ‘great question’: why is it that 95% of stuff isn’t finding its way into a second pair of hands? Because it’s too hard. There’s too much friction in the system.
Moody looked into his bin. The bin cost $5. Most people thought it was a bin. But Moody et al realised it was $5 user interface to a billion dollar business. The reason these things weren’t being recycled is that it was too easy just to throw them into the bin. This insight led to TuShare.
They realised that the easiest way to recycle this stuff was not by selling, renting, bartering or trading it. The easiest way was by giving. Because you don’t negotiate with a bin, you just toss stuff into it (aka you give stuff to it). So he built a giving market, which in turn built ‘social capital’ – people feel good about giving, they feel generous and get satisfaction.
But this new giving marketplace had one big problem: it’s really hard to get stuff from one place to another. They needed to find a way to deliver door-to-door. And the transport system had to be online, tracked and affordable. They needed to work out how to shift stuff for less than $10. And then they found another huge pile of waste: empty trucks generated by ecommerce. The trucks that deliver the goods bought online had massive idle capacity on their return journeys. So Moody et al decided to fill that space. And they did. By using this space, in 2015 they could shift 10 kilos of stuff door to door anywhere in Australia’s major cities for $10 and anywhere in the country for $17. And so a second business – Sendle – grew out of the primary giving business, TuShare. Moody et al had created a sharing economy and a logistics economy. They now provide a logistics service for the circular economy.
And Moody realised something else while he was at CSIRO, which is why he made his businesses B Corporations: in the new economy business needs to have a purpose. And benefit corporations are designed for a clear purpose of one sort or another. (His purpose: to reduce landfill.) He found value was beginning to shift. Since the industrial revolution value had shifted from commodities (such a agricultural produce) to products (the mass production of the factory era) to services to experiences (the airlines were the first to realise the value of experiences). Value has continually recomposed itself. So what do experiences recompose themselves into? MEANING and PURPOSE. According to Moody, who explains this in detail in his 2010 book The Sixth Wave: How to succeed in a resource-limited world.
B Corps are driven by purpose and meaning. Moody realised that the more his businesses fulfilled their purpose – reducing landfill – the more value was captured and created. It was a virtuous cycle. Speaking from 2030 (when benefit corporations have become the norm), Moody said ‘Can you believe in 2015 they actually had things called propriety limited corporations?’
TuShare and Sendle became B Corporations because B Corps are about meaning and purpose.
And here the presentations ended.
This is the longest blog post I’ve ever written (and I like to keep them short), so I’ll also stop here. But after the presentations there was a fantastic and incredibly inspiring session of questions and answers, which I’ll save for another day. But to give you a taste of it, the three rock stars posed the following questions which the audience was asked to ponder in groups for ten minutes before the Q and A:
Rob: What can we do better together than we can do alone?
Helen: How is your business connecting to its community?
James: What is the true purpose of your business?
And after the whole event, we all stood round talking and eating Ben & Jerry’s choc fudge brownie ice-cream. The room was buzzing. (For some reason, perhaps because I’d become too absorbed in the talk, I forgot to take a photo of James Chin Moody while he spoke. He’s the guy beneath the yellow sign in the pic below.)
And here are more vistas from the Dr Chau Chak Wing Building last Thursday night.