How to Cash In on the Green Economy
How to Cash In on the Green Economy
Our guest today is Glenn Croston: He's a biologist and author of "75 Green Businesses You Can Start to Make Money and Make a Difference." In his book, Glenn looks at solving the world's environmental problems through the lens of entrepreneurship. The businesses run the spectrum: low-carbon groceries, environmental accounting, installing wind turbines, carbon offset investigator.
I caught up with Glenn to talk about the opportunities for a starting a green business. There are also inevitable challenges, such as marketing a green product or service to consumers who may be suffering from green fatigue.
Tilde Herrera: Glenn, you have a science background. How did you come to write this book and choose these businesses to highlight?
Glenn Croston: Well, as a biologist, I've been reading and I've been growing increasingly concerned about the impact of our business practices on the natural world. As a father, I'm pretty motivated to do something about it.
So I set out looking at all of the different problems out there, and instead of just focusing on the problems though, I tried to look for opportunities for entrepreneurs to provide solutions. That's pretty much how the whole book is structured.
We have a great need for clean water supplies and for water conservation in many parts of the world. So there's one chapter in the book all about the opportunities to provide improved supplies of water for using things like gray water supplies, for saving rainwater, for being a green plumber, or for doing water conservation landscaping, for example.
Another chapter's all about green building, so if our buildings are inefficient, if we have a problem with that then there are a lot of opportunities for solutions, as well for doing things like providing efficient lighting, for fixing our air ducts so they don't leak, and for exploring new building methods like green pre-fab houses.
So really for every problem, there's a variety of opportunities for businesses lurking inside of that problem and for entrepreneurs to build a business around it.
TH: So would you say that these businesses in your book are a combination of new businesses that have sprung up directly from addressing these problems, or are they just greened up, conventional businesses?
GC: I would say they're both. So some of the things in the book are pretty innovative and things that are just now happening or that were the trend that's heading in that direction.
Often it's the case as well that a green business is, in essence, a greener version of an existing business.
So an example of that would be green dry cleaning. Of course, we already have a great number of dry cleaners but green dry cleaning -- doing dry cleaning in a way without harmful solvents -- is a relatively new phenomenon that people are trying to move into. So there's a little bit of both in there.
TH: Can any business be a green business?
GC: I think so. It's a little bit hard to say exactly what is and isn't a green business. To me, people get caught up in these arguments about saying what is green and what isn't. I think you really can't just draw a line in the sand, and group all the businesses on one side as green and everybody on the other side as un-green.
I think it's a relative thing, and it depends on where your business is today compared to where it was before and where the rest of your industry is. If you're improving significantly and you have data to show how you're doing that -- to show the environmental benefits that you're producing -- then that's a positive step. I think that needs to be recognized.
Nobody's perfect yet, so even businesses like Interface or Stonyfield Farm who have been making a real great effort for many years now, they're not perfectly sustainable so really, nobody is. The important thing is just to be able to keep on improving and to show people how you're doing that.
TH: Glenn, what would you say are the common misconceptions or challenges that green entrepreneurs face?
GC: Well, I think there's plenty still. There are many misconceptions that people have. Lots of people still think that going green is hard, that it's inconvenient, that it's an expensive luxury. Really, many people still believe that you can't do the right thing and still make money.
I think the answer to that is that it's being done every day. More and more businesses out there are doing well and doing right at the same time.
So for example, there's this idea that green buildings are really very expensive and not affordable. But there's more and more data saying that they're not more expensive at all compared to regular buildings, and that people can actually save money by wasting less energy and increasing productivity.
So most business people are alike in the sense that they don't like wasting money and they want to save money if possible, so I guess in that sense, everybody's a little bit green.
So these perceptions are changing but it takes a little time for them to catch up to the changing reality out there. I guess that's one nice thing about the high profile of green business lately is it's helping to change the minds about some of these misconceptions.
Another challenge, I think, is the idea that green is a fad, it's a trend that's going to blow over and we'll all go back to business as usual. But the fundamental needs are so great. There are so many drivers supporting the ongoing growth of the field.
Another big challenge that green businesses are going to face is they have to not only think about what they're making, but how they're making it. They have to examine their own operations to green things throughout, so there are a lot of challenges but there are also many opportunities.
TH: Now can you think of any situations where branding yourself as green would actually limit your venture?
GC: Yeah, I think so. People are getting a little tired of hearing the word green tossed around so much. It's getting a little overused and losing some of its ability to communicate a clearer message, a clearer meaning. So there could be some negatives, which go along with the positives today.
One thing about calling yourself green is it can maybe limit you in some people's minds to a certain niche, a smaller market rather than opening up the broader market of people out there who aren't opposed to green things but don't necessarily think of themselves as being purely green -- the really mainstream market out there. So if you call yourselves green, it might make people think that the green is really the main benefit of your product, rather than just an additional quality on top of being a great product.
TH: You were just describing this green fatigue. What advice can you offer entrepreneurs in terms of marketing their products or services?
GC: Well, one of the strategies I've heard people say is that it can be really helpful to back up your words with some meaningful facts and figures about the environmental benefits that you're developing and creating with the greening of your business. Don't just say you're green but show it and back it up with some measurable results.
I think it can also help to work with your clients, with their customers, to educate them about what you're doing, to really reach out to the consumer, to the community.
I think another way to fight it is to not stay in one place, to keep on improving what you're doing, your product, your services, and how they're greener. So with Toyota, they've got the Prius, but they can't just keep building the same Prius forever. They've got to keep on working for the next generation, the plug-in hybrids coming down the road.
I think another way to fight it is to talk about the benefits to the consumers, not just being green, but what does it mean to them and to really drive it home to people that if it's a great product and it's a green one, too, then everybody's going pay attention.
TH: Marketing yourself as a green business or choosing to focus on solving some sort of environmental problem -- how does that impact your access to capital?
GC: Well, I think it really helps that green businesses have a real advantage in some ways in raising money today.
People are attracted to investing in green businesses for a few reasons. One is because they're displaying rapid growth, and looking forward, they have enormous potential for future growth still ahead.
People, investors look at green businesses and they see that there are an array in many different fields, an array of government mandates and regulations supporting that growth with things like renewable energy. (They see) that the risk is really reduced for investors because they can see that there are some influences and some support there for the long term for businesses to go in the green direction.
I think another important reason that people are excited about investing in green businesses is because they just plain want to do the right thing. I think there's a very human element out there that drives people to support green business.
For example, I was recently talking with Chris Larsen, one of the co-founders of the person-to-person lending marketplace Prosper. Within their lending marketplace, they've done some studies and some surveys, and they found that lenders are definitely attracted to green projects and businesses for these sorts of reasons. Where a bank maybe won't even consider whether you're green or not if you're asking for a business loan, but in a person-to-person lending marketplace like Prosper, borrowers were actively trying to engage lenders to tell their story, to let them know what they're doing in a green direction and to be more successful in attracting capital that way.
TH: So knowing what you know now, having researched this book, and from talking to all of these various business owners, what advice would you give to would-be entrepreneurs? What are the things that they need to know?
GC: Well, I think one of the most important things we need to think about is it's not just going on outside in the rest of the world. What's going on inside of them? What's unique about their own personal experiences and skills and interests that they have going for them that they can use as one of their assets and to get going? Really, those are going to be some of their most important assets.
I get people calling me all the time or asking me, "Glenn, what can I do? What business is best for me?" It's hard for me to say what business is for them, and I think a lot of it has to come from within them. So it's important to do a little soul searching, see what they really care about, what they're passionate about and what fits them best as a great starting point.
I think another important thing to know for them is once they've done that, that people often doubt: "Well, maybe that's not really for me. I'm not a great environmentalist." But really, I think there are opportunities there for almost anyone and people from a wide range of backgrounds: for plumbers, teachers, lawyers, doctors, bankers, artists, salespeople. Really, there's something there for almost anyone to join in with the green business revolution.
I think it's also important to have a great idea. It's also important for people to think through some of the steps ahead. Yes, these are green businesses but they still have to think of and consider all the same steps that any other business does.
They are going to have to find a way to produce their product, they're going to have to raise capital and they're going to have to market it so having the idea alone isn't going to be enough. They're going to have to plan through and go through all the same steps that any other business will. There may be some uniquely green angles to it, which helps, but they're still going to have to think about those things.
TH: Now tell me about this website that you started to help budding entrepreneurs.
GC: Well, along with the book, I'm developing a support resource for green entrepreneurs, which is called Starting Up Green. It's at startingupgreen.com. The idea is that once people get started, they're going to need a lot of help along the way. The good news is that one of the great things about green businesses is that there are so many people who believe so passionately in the field that they're willing to help others who are also trying to head in that direction. There are a lot of green leaders who have been down this path before. They know what works and what doesn't work, and they're willing to share that with other young entrepreneurs, green entrepreneurs who are also getting started. So there's a wealth of help available.
At Starting Up Green, the idea is that the site will help them with insights, success stories, tips and with access to experts in various fields like green finance, marketing, HR, legal and all the really unique things which go along with green work in these areas.
TH: You sound so passionate about all of this.
GC: Well yeah, thanks. To me, it's somewhat personal because I'm a father, and I've got two girls. So the future, what's going to happen in 2030 and 2050 is not just an abstract idea. It's something that really matters to me deeply and I think matters to a lot of people.
There are a lot of people out there who are really committed to making a difference. That's one of the really great things about green business in general.
TH: Thank you so much for joining me today, Glenn.
GC: Thank you. It's been my pleasure.
Tilde Herrera is associate editor at GreenBiz.com.