Birding the Future Blog

Paying royalties to the planet

On October 26, 2011, in Uncategorized, by Phil Mitchell
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Any company that puts for the planet in its logo had better explain what that means. Here’s Larkwire’s story.

When I started Larkwire, my goal was to use the engine of business to fund biodiversity conservation (ie., halting extinctions). It was (and is) my dream to build a business that can grow significantly and fund a lot of conservation.

But the deeper I got into it, the more I realized that the question of how to structure such a company is not trivial.

Initially, I wanted to donate ALL profits to conservation. I even got kicked out of a program for startups for insisting on this. I mean, why wouldn’t we donate it all? It’s not like we won’t have salaries, benefits, even bonuses—but the mission is to fund conservation.

People said, “Why not use an existing model, such as 1% for the Planet?”

It’s true that Yvon Chouinard and Patagonia are an inspiration, and I love 1% for the Planet (which encourages business to donate 1% of revenues). But 1% just didn’t seem like enough for us. After all, we’re not just a company that wants to give something back, it is our core mission to raise funds for conservation.

But then the reality of starting a business set in. If you give away all your profit, how do you grow your business? Investors expect returns, top employees expect shares, the business itself needs fuel to grow and that fuel is profit.

So then I said, we will donate all profits not needed to grow the company. But I never liked the sound of that. It’s utterly vague and open to fakery. We dream of being a model that others can follow.

Not only that, the more that I talked to advisors, investors and other entrepreneurs about this idea, the more I came to dislike the very concept of donating our profits. It sounds like something only a very idealistic or very rich person would do. (And that’s not a knock against the great companies that do it.)

We don’t see ourselves as idealists, we see ourselves as realists. The reality is that unless business starts to pay its fair share of support to the planet, then all the benefits (clean air, clean water, climate stability, biodiversity, etc.) that these businesses receive for free and take for granted will continue their current decline.

That’s not smart or good for business. Refusing to pay for benefits received will make us all poorer. What we’re doing is not a charitable donation, it’s paying royalties because royalties are due.

That feels right. But how much should the royalty be? Clearly, it has to be managed depending on the industry and the particulars of the business. In a business with tight margins, it would have to be low. For Patagonia, 1% is the right number. We think that for us a 10% royalty is a reasonable place to start. That’s 10% of revenues, not of profit. It’s my long-term goal to push that number as high as I can, but I’m starting there because I’d much rather raise it later than lower it.

Honestly, we have just barely launched, so what do I know? It’s our goal to contribute more. If we need to contribute less in order to stay solvent, we’ll do that. What we promise is to be transparent about it.

For Larkwire, that’s what it means to be for the planet.

3 Responses to Paying royalties to the planet

  1. [...] on how to identify birds we can see, it helps users become better listeners. Larkwire also gives 10 percent of its revenues to benefit conservation [...]

  2. [...] on how to identify birds we can see, it helps users become better listeners. Larkwire also gives 10 percent of its revenues to benefit conservation [...]

  3. [...] on how to identify birds we can see, it helps users become better listeners. Larkwire also gives 10 percent of its revenues to benefit conservation [...]

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