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Two Steps Forward

Why UL bought GoodGuide

When I heard that UL Environment, a division of a venerable testing and certification company, had purchased GoodGuide, a Berkeley-based online product rating service, I was at first taken aback. UL is a century-old, conservative, nonprofit institution — practically a regulatory body, given the weight its certifications have in the marketplace and in building and safety codes. GoodGuide is a feisty, unprofitable, venture-backed startup with the audacious mission to, as its co-founder put it, “transform consumption and production and how people see and interact with products.”

Can this marriage possibly work?

I think it can. The union of ULE and GoodGuide holds the potential to shift buying habits — if not by individual consumers, then by large business and institutional buyers, which can inure to consumers. It also ratchets up the pressure on companies to disclose ever more details about their products, policies, and operations.

But getting from here to transformation won’t be quick, or easy.

I first met GoodGuide’s co-founder and front man Dara O’Rourke, an associate professor of environmental and labor policy at UC Berkeley, in 2006, when his vision for GoodGuide was just taking shape. Inspired by questions he had about the ingredients of a sunscreen he was applying to his young daughter’s face, he mocked up an app for his mobile phone that enabled consumers to get instant information about products as they traversed supermarket aisles. This wasn’t the first time I’d seen some scheme to empower consumers in this way, though none had caught on. When O’Rourke and I met to discuss his vision, I expressed skepticism that it would work, his impressive app, and rap, notwithstanding.

Since that initial conversation, O’Rourke has endeavored to prove me wrong. He built a team, raised money from three venture capital firms, and launched GoodGuide, building out ratings for hundreds of thousands of products, launching web and mobile apps, and attracting a sizeable audience and an enviable amount of media attention. He’s become a regular on the conference circuit, from the Wall Street Journal’s ECO:nomics to the World Economic Forum in Davos.

ULE, for its part, was formed out of Underwriters Laboratories, a 118-year-old organization formed by the insurance industry to test and certify products. UL in many circles is synonymous with the word “safety.” The UL logo appears on billions of products and devices, many of them hidden behind the walls and ceilings of buildings, or deep inside cars, computers, and other gizmos.

UL's environment division was launched in 2009 with the not-so-modest goal of taming the environmental ratings marketplace, bringing order to the chaotic world of hundreds of eco-labels and thousands of marketing claims attached to countless products. (GreenBiz Group has a partnership with ULE related to a company-level certification scheme, wholly unrelated to GoodGuide.)

Over the past few years, ULE has been on a buying spree, acquiring the indoor air-quality certifier GreenGuard, the green marketing consultancy Terrachoice, and the German air-quality firm eco-ISTITUT, among others. Each of these has beefed up ULE’s offerings in the marketplace. And now, GoodGuide.

Where does this latest acquisition fit? If you visited, you’d come away believing that this was yet another do-good green products site for consumers, with no discernible business model. But behind the scenes is a pretty interesting strategy for creating products and services for business and institutional customers.

GoodGuide’s platform is a massive database culled from hundreds of sources — company websites, government data, NGO data, commercial databases, and more. The data is structured in a way that allows a variety of add-on applications to be layered on. There’s the consumer piece, of course, which includes mobile apps and a toolbar plug-in for web browsers, so you can see the GoodGuide ratings while shopping online. GoodGuide allows consumers to screen products based on one’s personal interests or concerns — organics, ingredient safety, energy-efficiency, animal welfare, climate change, etc., or any combination thereof. Users can easily dial these filters up and down to affect product choices.

A similar system can serve businesses and institutional buyers, such as government agencies, universities and hospitals. For example, O’Rourke explained to me recently, “We can flow data out to someone’s procurement software or to a closed web app for an institutional purchaser. We can create, essentially, white-label versions of a product-screening system very easily that would allow a city to say, ‘Here’s our 20 criteria. Screen the world of products for these,’ and a hospital to say, ‘Here’s our 30 criteria,’ and a university to say, ‘Here’s our 50 criteria.’”

GoodGuide is developing these and other B-to-B services. For example, its ratings originally were originally built on data from third-party sources. Now, says O’Rourke, companies are able to add data directly into GoodGuide’s systems. “A company can come and say, ‘We want our products in your system,’ or ‘We want the rating of our product,’ or ‘We want to see how our products compare to our competitor’s products.’”

"UL has this great tradition of firms disclosing directly to them, providing them information on product attributes and supply chains that is not public,” says O’Rourke. “We’re very excited about the potential of complementing and, over time, transitioning to manufactured-disclosed data or retailer-disclosed data.”

Will the UL affiliation get some of the world’s biggest companies to pony up detailed information about their products and processes to GoodGuide? The affiliation could certainly help, though large companies have been historically reluctant to disclose all to third-parties, wary of confidentiality issues and skeptical that there’s much marketing advantage to come from it all.

Suffice to say, there’s gold in all that data for GoodGuide. Data businesses have become valuable commodities, as demand for consumer and business information has grown alongside the analytics to crunch numbers and stream them out to a variety of applications and devices. In the green marketplace, there’s never been a robust, comprehensive, and science-based aggregation of product data across multiple categories. GoodGuide’s reach — 600,000 to 700,000 monthly unique web viewers and one million mobile app downloads, according to O’Rourke — is modest by mass-marketing standards, but a pretty good starting point.

Another question is the ability of ULE — which, to date, has not had any significant consumer outreach — to flex its marketing muscle. It would certainly be a new direction for the company, which historically has had a pretty button-down communications style. I asked Lisa Meier, vice president and general manager at ULE, whose role centers on integrating the company’s myriad acquisitions, how this might work. “The touch point they have to the consumer has a pretty significant value proposition,” she said. “But how we leverage that and leverage our position with our customers today is something we still need to identify.” That doesn’t yet sound like a receipe for success.

I’m also a little wary that ULE might find some conflicts with GoodGuide — for example, selling certification and claims-verification services to companies irked at their poor GoodGuide ratings. Will a company’s low ratings be a door opener for ULE, or will it become a barrier to such business?

Clearly, ULE sees more doors opening than closing. “We’re working to get input from our biggest customers, as well as understand some of the patterns by which the Good Guide consumer looks and sorts through information,” says Meier. “And from that we believe that there’s a very complementary outcome that will lead to a much more robust and much more comprehensive site to be able to provide all of our customers, including B-to-B and B-to-C.”

Perhaps the biggest prize ULE will claim through its ownership of GoodGuide are the insights the latter will provide into consumer purchasing habits. O’Rourke told me his company has aggregated data that is “better than any survey instrument that you’ve ever critiqued on consumer statements about their attitudes or their preferences around green or healthy products. We have actual data on purchase decisions, going all the way through a purchase on Amazon, the price of the product, what else they’ve looked at, what they were trading off, and will they really pay 50 cents more for a product that has a higher health rating or climate rating.” A suite of analytics tools is on their way, he says.

That alone could be powerful stuff — a key reason why ULE wanted GoodGuide in the first place.

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