Professor of Management Tom Dean at CSU Business School writes about how ‘sustainable venturing’ is a new type of business creation pathway where sustainably-minded entrepreneurs seek to capitalize on market failures created by the environmental and climate impact of heavy industries. Could this new type of entrepreneur arise to capitalize on what Professor Sir David King has dubbed “the biggest opportunity of our age?”
Facebook, Amazon, Netflix, Google. Colossal corporates which have captured massive market share through timely execution and exceptional ingenuity. These companies have built recognizable brands that are so familiar to our everyday lives that it’s hard to imagine they were once nothing more than startups led by virtually unknown, but nevertheless ambitious entrepreneurs. Now with the promise of low cost super computing, advanced machine learning, AI and ever ‘smarter’ devices we may be witnessing the birth of another wave of high tech giants. It’s an exciting time to be working in tech and who knows where the next Google or Facebook may take us. But one thing is for certain — as the earth’s climate continues down its path toward dangerous destabilization, we know that no matter how many billions in annual revenues are generated by profit-seeking insurgents, the future is looking increasingly bleak for the 1 billion or so people living in parts of the globe that stand to be the most affected by climate change.
Just as Jeff Bezos and Mark Zuckerberg probably didn’t have climate change in mind when they built their businesses, it seems like a lot of entrepreneurs these days aren’t really thinking about climate change either. And why should they? Angel investors and VCs aren’t accounting for long-term socioeconomic and environmental impacts in their financial models. Forget the moral imperative to act on climate change. Predicting the future is hard enough without having to worry about the implications that supply chain disruption, food price volatility and ‘mega-catastrophes’ will have for growing businesses. VCs are also beholden to their investors who in turn, want to see big exits. Venturing requires a strong stomach, given the high failure rate of most startups. Why make things more complex and difficult than they already are, possibly adding layers of risk to already risky bets?
Surely Elon Musk had climate change in mind when he started Tesla and SolarCity (now, also Tesla). But both were bankrolled on the back of earlier successes with Zip2 and PayPal that weren’t really focused on climate. New Energy Finance’s exit to Bloomberg in 2009 was a promising example of a climate change-savvy startup that achieved modest success, as was Sun Edison and Solairedirect. Michael Liebreich, Jigar Shah and Jean-Pascal Pham-Ba have all gone on to be influential thought leaders in the global climate change conversation. But these examples, while inspiring, are not in the same league as the FANGs.
Of course money also flows to where tech already thrives, enabling some of the most sophisticated technologists from leading universities to earn high paying jobs with well resourced firms. Why would the most promising tech talent coming out of Stanford, Cambridge or MIT choose to work for Nest or BNEF when they can work for JP Morgan or Goldman Sachs and earn triple or quadruple the annual net salary? In the words of Jay-Z, “I can’t help the poor, if I’m one of them, so I got rich and gave back, to me that’s the win-win.”
Of course, this doesn’t bode well for humanity’s prospects for combatting climate change, which according to Rex Tillerson is first and foremost an “engineering problem.” If our best and brightest electrical and electronic engineers have gone to work on AI for hedge funds and investment banks, the chances of a Larry Page of cleantech emerging are few and far between. It’s up to the sustainable entrepreneurs who put climate change at the heart of everything they invent to design new, bold, high growth businesses that can compete for talent with the likes of Wall Street and Fleet Street.