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Economic Growth
Alums Explore Eco-Friendly Business Ventures
By Michele Chandler
In the not-too-distant future, Ade Dosunmu, MBA ’01 (pictured at left), hopes you will buy software that he is developing to monitor and reduce how much energy your building consumes. It isn’t easy to devise a system that will work in a wide array of homes and commercial spaces; Dosunmu reckons his New Jersey–based company, GreenPrimate, won’t have its product ready until later this year. But he sees mounting evidence that plenty of consumers are willing to pay for such an energy-saving service, something they would likely have ignored a decade ago.
Back in January, Dosunmu was one of 70 eco-minded Stanford grads who enrolled in a Lifelong Learning program, “Reduce Your Ecological Footprint.” Aimed at business people who want to find ways to adopt environmentally sustainable business practices, the three-day event was jointly sponsored by the Stanford Business School Alumni Association and the University’s Woods Institute for the Environment. It drew attendees from a wide range of businesses, some looking for ecologically friendly practices they could adopt to appease their conscience, others spying opportunity to make money in a rapidly emerging industry. But many alums at the conference seemed intent on accomplishing both goals.
Conference attendees—heavily MBAs and engineering grads—came from a variety of organizations, including nonprofits, municipal agencies, environmental groups, real estate companies, hospitality-related businesses, and venture capital firms. Several people, including Stephen Paradis, MBA ’91 (pictured at right), said they hoped to find strategies to implement within their own workplaces.
The chief operating officer at the nonprofit Appalachian Trail Conservancy in West Virginia, Paradis said he was looking for ideas to share with his group, which serves as caretaker for the scenic wilderness trail and its surrounding land. Those green strategies could include encouraging the thousands of park volunteers to carpool when coming to perform cleanup and maintenance work on the trail or using low-emission vehicles to haul supplies.
It is important, Paradis said, to “maintain the park in a way that is ecologically sustainable and that does not consume so many resources.” And, he added, “It’s worthwhile to have the opportunity to come and hear what’s going on in this field.”
Conference speakers, many of them Stanford professors, provided a wide range of information about the growing sustainability movement.
Stephen Schneider, one of the world’s leading climate experts and a professor in Stanford’s Department of Biology, told the group he supported incentives that would allow businesses “to do well by doing good.” Schneider is one of about 2,000 scientists and policy experts worldwide who made contributions to the United Nations’ Intergovernmental Panel on Climate Change, which shared the 2007 Nobel Peace Prize with former Vice President Al Gore.
Erica Plambeck, an associate professor of operations, information, and technology at the Business School who studies corporate supply chains, detailed her research on how retail giant Wal-Mart is working to develop steady sources of ecologically sustainable products while continuing to attract consumers, even though the environmentally superior items often cost more.
Biology Professor Gretchen Daily shared her findings about the sometimes unrealized economic value of ecosystems, including how biodiversity in Costa Rican rainforests can benefit nearby coffee farms by contributing to higher crop yields and improved sales. “One of the things you need is to be able to demonstrate the relevance of natural capital in real dollar terms,” Daily said.
Barton Thompson, professor of natural resources law, presented information on how to get consumers to use less of the most precious liquid on the globe—water. Gilbert Masters, professor emeritus of civil and environmental engineering, addressed emerging initiatives to reduce dependence on foreign oil (see page 4), while law Professor David Victor outlined ways China and India are mightily challenged to reduce their ecological impact amid explosive population growth in the two nations where people are striving for a vastly improved standard of living. And James Sweeney, professor of management science and engineering, spoke about America’s move toward wind and solar power to cut carbon dioxide emissions and reduce dependence on foreign countries for oil.
Finding new sources of energy, conserving resources, and reducing waste are subjects that find a broader audience than even a few years ago. For example, just over half (53 percent) of people responding to a 2007 Gallup Poll said they think the nation will face a critical energy shortage during the next five years. In addition, 6 of every 10 holiday shoppers surveyed last year said they were willing to pay more for environmentally friendly goods, according to a report by audit, tax, and advisory firm KPMG.
Investors are also hot on the trail of sustainable businesses. Last year, $2.19 billion, or 7.4 percent, of U.S. venture capital investments went to American firms developing technologies that are kind to the environment, conserve resources or energy, or reduce harmful waste, according to a recent report by PricewaterhouseCoopers and the National Venture Capital Association. Just three years ago, in 2005, venture capital firms made $497.2 million in green investments, just 2.1 percent of the total, according to the report.
A group of Stanford alumni who now work for Bay Area venture capital firms confirmed growing business interest in eco-friendly ventures. “When we first started investing in 2001, we saw about 20 business plans in clean tech. We’re now logging about 4,000,’’ said panelist Raj Atluru, MBA ’97, managing director of Draper Fisher Jurvetson. The Menlo Park venture capital firm is a top investor in emerging clean technology firms. Among DFJ’s many green investments: the Reva Electric Car Co. in India, the SolarCity solar installation service in Foster City, Calif., and Miartech, a company in China that developed technology to transmit data over power lines, enabling real-time meter reading and the ability to make the power distribution system more efficient.
All the attention that green technology is getting from investors is positive news to David Hoe, MBA ’87 and managing director of investment banking firm Aktis Capital Advisory in Hong Kong.
“Getting buy-in from corporations instead of just the Birkenstock-wearing community is significant and impressive, given the entrenched existing interests and lobby groups,’’ he said in an email following the conference. “Making money by greening is potentially huge. This could be epic on the scale of a new Manhattan Project,” he said, referring to the massive effort by experts in the 1940s to harness technology and develop the atom bomb.
Building homes and commercial structures that are more energy-efficient and made with materials that are either recycled or from eco-friendly sources is another sector Atluru expects to dramatically expand. “The building sector has seen absolutely zero innovation, and that’s going to change,” he said. “We are seeing a lot of companies in that category.”
The conference persuaded Janet Griggs, MBA ’73 and owner of Taste Catering in San Francisco, that private investment rather than government policy will be most effective in reducing ecological footprints. “As long as you have the capitalist system, you will have people interested in finding opportunities. That capitalist drive is one of the strongest and—as long as it is directed in a positive direction—we all benefit.”
Hearing the talks also handed Griggs knowledge of the industry so she can “talk the same language” as her business clients, many of them Bay Area venture capital firms.
For Stanford engineering alumna Janis Cenedella (pictured at left) , the conference offered information about new conservation-focused building technologies. The division manager for builder S.D. Deacon Corp. of California said many of her firm’s clients own shopping centers and are ready to expand and “hungry to find out what we can do.” While they are ready to go green, they’re not exactly sure what’s available or effective. “They look to institutions like Stanford to try the new things, so then a developer can say, ‘If it worked for them, then I can use it.’” Speaking of the University’s efforts to construct more energy-efficient buildings, she said, “I feel if Stanford’s made this commitment to green building, could they be on the cutting edge of the technology too? If you think about it, the semiconductor industry was born here. Why couldn’t the green revolution also be born here?”
Amy Dryden, owner of the AEC Reprographics printing company in Flagstaff, Ariz., also came away convinced that the green movement is finally taking hold. “I heard people say that clean technology is a real option and green technology is something we can actually invest in. I came home with a sense of optimism that people are starting to think outside the box, about other options, about doing things differently,” said Dryden, who majored in human biology at Stanford.
Dryden’s printing company offers eco-friendly products to architects, engineers, and building contractors. She said her shop uses only paper that comes from sustainable sources and handles only digital printing, which uses less harmful chemicals. The company also offers to print construction plans on a plastic-based paper substitute that’s waterproof, durable, washable, and recyclable.
Among the changes she learned about at the conference that would immediately cut energy use: replacing conventional light bulbs with compact fluorescent bulbs. “If everyone did that, it would have a huge impact, but still not enough.”
Plambeck’s presentation of a Wal-Mart case study was “really helpful,” Dryden said. “I had some very great discussions with folks out of the classroom. It caught us all by surprise, but got me thinking that if Wal-Mart can do this, certainly a little print shop in Arizona can make these choices.”
The diversity of attendees was one of the strengths of the conference, several said. “When you take yourself out of your own little circle, your mind has the ability to see other connections,” caterer Griggs said. “That helps me deal with our clients, who come from all different parts of life.”
Emily Ma, who holds a master’s degree in mechanical engineering from Stanford, also enjoyed the intimate setting and mix of participants. “I didn’t meet just designers and architects, but also museum curators and people in government,” said Ma, a project lead and design engineer at Palo Alto-based design and innovation consulting firm Ideo.
The biggest lesson Ma learned? “This is a complex problem, and it requires people to let down their guard and work together in a multidisciplinary way to solve these issues.”
Dosunmu, the New Jersey technology entrepreneur, also thought connecting to alums from different backgrounds was one of the conference’s most valuable aspects.
“The thing that actually made it nice was the lifelong learning concept, that you could get people from many different generations, in many different places in life, and those people could share ideas and perspectives,” he said, noting the stark contrast with typical MBA classes where students tend to be much closer in age and where they stand in their careers.
At the conference, “you had one guy who might have been 80, down to people who just finished their MBA. They brought different perspectives, and those perspectives were backed up by life experiences.”