Why startups need to walk the talk on their impact work
Mike Halligan, the co-founder of Scratch, talks about the dramatic growth in the B Corp movement and the rise of impact investment funding.
There’s a real idealistic belief in young entrepreneurs. Driven by the dramatic growth of the B Corp movement and the rise of impact investment funding, every second pitch deck mentions environmental credentials and why that business is so much better for the world than those which came before it.
I love it, but I’m sceptical. To be in business, you gotta stay in business. And that means finding customers that are willing to pay for your impact work, or having a business with good enough margins which means you can do best by the world anyway.
When we started Scratch and joined 1% for the Planet (where members donate 1% of all revenue to climate action), we suspected we’d attract all of the eco-conscious dog lovers, but were prepared to do it regardless, even if no one cared about our impact. I can’t say that being impact-led made much difference to our business in those early days, but we slept better at night. It was important to us, given the amount of farming that goes into our food.
But that 1% of revenue really hurt when we were getting off the ground. As we grew we committed ourselves further, doubling donations to 2% of revenue and becoming certified as Australia’s first and only B-Corp pet food company.
We’ve gained plenty of conscious consumers along the way, but I doubt they’d come close to repaying the $500,000 in donations that we’ll tick over this quarter, or the effort we’ve put into hiring, materials and the many things that come with running an impact-led business. We simply haven’t gone far enough for the average person to care. We promote how healthy our food is far more prominently than the various ways that we give back.
If you’re going to build impact into your business, don’t get caught in the middle. There are thousands of middle-ground startups displaying an eco-badge, doing an obligatory social post on world environment day and running with that clean ‘millennial’ branding that signifies taste and social consciousness.
The more of these businesses that exist, the more that <insert giant polluter> promotes a tiny product line with less pollution, the more that our bins and waterways overflow, the more the typical consumer ignores it all. Only the remarkable stands out.
If you’re building impact into your business because it feels morally right to you, you have my respect and can ignore all of my other advice.
If you’re building impact into your business to find customers who care about that, go hard, or not at all. The surface-level stuff won’t get you anywhere with consumers or investors. So do the hard stuff. Go above and beyond. Make a business built on the back of your remarkable work. Like Zero Co, Who Gives a Crap, Great Wrap, and hopefully Scratch of course.
Mike Halligan is the co-founder of Scratch.
