Interview report: Sustainable Entrepreneurship

INTERVIEW 1

Dídac Trubat Ponti
Design & Innovation
Smart | Dairy

Questions

• What type of enterprise is your company and what is the company's business?
• How did you search for funding of your projects? Are there any other ways of attaining the initial capital for a starting project?
• How would you define “sustainable entrepreneurship”?
• What are the main trends regarding “sustainability” in businesses?
• How is sustainability perceived within businesses?
• Do you consider branding your company as sustainable is attractive for customers?
• How do you think that the perception of sustainability will change in the future? How will it affect the businesses?

Smart  | Dairy

The start-up company Smart  | Dairy is based in the Netherlands, however it focuses on the emerging markets in developing countries, particularly Kenya, Nicaragua and India. The focus of the company is high quality milk, a product which is currently lacking in the markets; the current quality as well as quantity of the milk supply is low and the prices are very volatile. With its new business model Smart  | Dairy is  trying to bridge the gap by creating a whole system in this spotted niche market, while becoming a facilitator of this whole system and a connection between the farmers producing the milk and the customers buying the milk. In the process of doing so, new job positions in the areas are that way created. Currently the company is finding itself in a point of building first farms in Kenya, searching for new investors and establishing contacts in India and Nicaragua.

There are several steps in the process of starting this type of business in an emerging market, which Smart | Dairy follows:

• attaining initial capital from private investors
• establishing 50-50 joint venture between Smart | Dairy and local investor, knowledgeable about the local market (for example in case of Kenya, the partner is a regional government, county of Kakamega)
• presenting  an offer to the farmers in form of “franchise package” containing access to the technology, know-how and funding. This is done by signing a long-term contract with the farmers and offering them a loan payable back within 5-7 years, through which the farmers are able to establish and manage their farm. The starting expenses are fully covered by Smart | Dairy.
• offering extension services to farmers in form of extension management overlooking the farm, veterinarians, technology; all ensuring high quality final product and high yields
• buying the milk from the farmers and selling it to the customers

The sustainability within this company is visible in the way the business in the developing countries is established not in the terms of sustainable environment, but more in sustainable growth. They do not believe in creating a macro barns containing several thousands of cows, mostly because the management of such system would be immensely difficult. Thus by focusing on smaller local farmers, each with 25 cows, the whole system is much easier monitorable and manageable as well as the particular farmers are much more enhanced in the whole process as they feel like they are the actual owners of the business. However, such close circle system in reality does not really allow farmers to be flexible and work with their own ideas; the whole system is quite precisely predefined.

financing starting entrepreneurship

The private investors, investing in the innovative idea, are the key players in the whole system. These investors are engaged during the startup of the business and are convinced about the future potential profits within the business, thus becoming willing to invest the initial capital that is needed for starting the business. The investors are then paid back in forms of dividends if the business becomes profitable. In case of Smart | Dairy, the investment is seen as containing high risk thus expected to yield high profits and also the process of searching for investors is ongoing as the business is expected to grow also in other countries.

Other possibilities of gathering money for the start-up initiative could be through subsidies from certain governmental bodies or from non-governmental organisations. The way the business is financed at the beginning highly depends on the type of business and the potential market, expected profits and size of the company you try to create. Crowdfunding is another way of attaining the capital, which in practise has also been successful, mostly in cases which are “flashy” and easily marketable.

starting a company

The way the newly created company is established very much depends on the personalities of the people managing and establishing the company. However in general it could be stated that the phase of setting up a business requires a certain degree of flexibility, while adapting to the market and while searching for the gaps within the market.

sustainable entrepreneurship

The sustainability within the system is about encouraging potential entrepreneurs to go for the business by keeping a fertile soil for the entrepreneurship. This could be done by organising the necessary means for the business while facilitating the environment in which these new ideas could grow into the next stage of establishing businesses.

This environment is established already in the societal perception of the entrepreneurism. Moreover, knowledge needed regarding starting the business is needed to be acquired from universities or other knowledge institutions. Luckily, in contrast to other countries, the Netherlands in general is a liberal country supporting new initiatives and new ideas and proposing the possibility of starting their own business. Dutch people then are motivated and triggered to actually try to start the business and become entrepreneurs and by doing so the mutual learning process is accelerated.

Nowadays the term “sustainability” is used within companies mostly as a way of promotion, “stamp” put on products to look better. Sustainability in itself is a hot topic, making the products look more desirable if labeled sustainable. Needed to say that such labeling and promoting the sustainable business is actually a way to move the transition forward through a snowballing effect - more people will know about it, leading to more demand, and more businesses will have to behave sustainably. Nowadays, sustainable products are usually more expensive than unsustainable ones. However, as the profit and return on investment still remain a key importance for any business, the only way to make sustainability truly embedded in the businesses is to make it profitable either by building up on the “hot topic” issue or by some huge technological innovations.

INTERVIEW 2

Ing. Esther Blom
lecturer Sustainable Entrepreneurship
TU Delft

Questions

Sustainable entrepreneurship

• How would you personally define “sustainable entrepreneurship”? When would you consider entrepreneurship NOT to be sustainable? Could you give an example?
• Can you think of any important boundary conditions for sustainable entrepreneurship?
• If any, what do you think are currently the most important obstacles/barriers for (existing or newly starting) entrepreneurs to become (more) sustainable?
• If any, what do you think are currently the most important obstacles/barriers for (existing or newly starting) entrepreneurs to become (more) sustainable?
• If sustainable entrepreneurship is considered to be a desired goal for the (near) future, what would in your opinion be a good drivers to achieve this?

Texel

• Texel is very focused on tourism and agriculture; do you think entrepreneurship in these sectors require specialized strategies as opposed to other sectors such as, for example, retail or services?
• What kindof role do you see for entrepreneurs when the goal for a specific community (in our case Texel, but in general) is to reach self-sufficiency within 50 years from now?

concept of sustainable entrepreneurship

Sustainable entrepreneurship is a phenomenon that could be seen as a business aiming for all three parts of the Profit-Planet-People pyramid. In other words it strives to fulfil its economic goals as well as have social and environmental impact through its business. However, this is only an “external” vision of being sustainable as an entrepreneur; an important aspect is also to sustain itself, because financial bankruptcy because the the environmental or social visions exceed the economic stability is still not sustainable, as much green as a company wants to be. Thus all the previously mentioned tips of the pyramid need to be kept in balance.

The boundaries of the sustainable entrepreneurship depend strongly on individual cases and context. In the opinion of of Mrs. Blom, the concept of 100% sustainability does not (yet) exists. Therefore, when defining the boundaries of sustainable entrepreneurship, one must think about to what extent non-sustainable factors are acceptable and whether the discussion is about new or already established businesses.

Turning into sustainability creates a lot of new windows of opportunities for startups, however there is of course the other side of the coin which is the side of the customer; is there actually a demand for the sustainable product? Sometimes it is hard to get the product accepted. In order to do so, the target group needs to be aware of the benefits of sustainability. However, customers will always have certain demands (functionality, aesthetics, etc.) which need to be fulfilled by the product he or she chooses. Offering a product that naturally attracts the customers is the best option. With this in mind, the sustainability aspect of a value proposition should never be the only “unique selling point”. Sustainable products should have more benefits compared to the non-sustainable products apart from being sustainable. Lastly, an important point is that bottom-up initiatives as for example “duurzaam inkopen” also push companies to fit within the previously described conditions of sustainable products.

Texel challenge

Every sector has its own challenges and opportunities, therefore there is no one-size-fits-all solution that may fit the different sectors simultaneously. Entrepreneurs can play a very important role in reaching self-sufficiency in Texel, because many new great technologies and ideas will have to be implemented on the way. Therefore entrepreneurs (existing and startups) deserve a prominent role in the system. Thinking about measures that stimulate the entrepreneurial system to become more sustainable is the key.

REFLECTION

As the concept of “sustainable entrepreneurship” is quite complex, we decided to focus our interview questions on the definition of this topic. Moreover, we were interested in different views on the concept, therefore we performed the interview on one hand with a professional from practice, working in a startup company that tries to strive for a self-sustainable business, and on the other hand with an expert from TU Delft, where the discussion led more to the definition of the various concepts on a theoretical level.

For the Texel research project of our group it became quite obvious that the future system and its pathways that we are to design will be a difficult task, since making the business sustainable hugely depends on the market of such business. Therefore, in general, it is very difficult to overarch all the different market sectors with one strategy. It is therefore evident that we will need to be open enough in our envisioned future, and the pathways towards that future, in order to grasp all the plans of the other research groups.

Sustainability in an entrepreneurial environment means a lot of things; from promotion through social responsibility to keeping the business running. As such, all these different viewpoints need to be addressed and thought through while discussing this question: how to run a sustainable business in Texel?