Sustainable entrepreneurship offers a new paradigm for the future, writes Phillip Bruner
Professor of Management Tom Dean at Colorado State University Business School writes about how ‘sustainable venturing’ is a new type of business creation pathway where sustainably-minded entrepreneurs seek to capitalise on market failures created by the environmental and climate impact of heavy industries.
Facebook, Amazon, Netflix and Google are colossal corporates which have captured massive market share through timely execution and exceptional ingenuity. These companies have built recognisable 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.
Climate change opportunity?
But one thing is for certain – as the earth’s climate continues down its path toward dangerous destabilisation, 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 one 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 necessarily accounting for long-term socioeconomic and environmental impacts into their financial models.
Forget the moral imperative to act on climate change. Predicting the future is already 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?
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 on 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 their successes, while inspiring, are not in the same league as the FANGs.
Channeling entrepreneurship into climate change
Of course, money also flows to where innovation thrives, enabling some of the most sophisticated technologists from leading universities 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, that’s the win-win.”
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 Wall Street and Fleet Street.