Yesterday I went to a startup hub – basically a building where budding entrepreneurs pay low rent to work and hang out – to watch about eight presentations by people looking for investment. Each entrepreneur had 6 minutes to make their pitch and a further 4 to answer questions, so it was a bit like Dragon’s Den only instead of multi-millionaire dragons they had a gaggle of students, professors, mates, and folk who came along for the free craft beer.
The first thing I noticed was out of the 70-odd people there, only two were in a suit and tie: me and one of my professors. The rest looked to have come from an office job where they don’t meet outsiders, or straight from the pub downstairs. Those pitching for investment – from between 100k-300k euros, so not trivial sums – dressed as though that’s where they were headed immediately afterwards. I watched a lot of episodes of Dragon’s Den, and one of the things which drove Peter Jones nuts was people wandering out in jeans and a t-shirt and asking him for a million quid. I raised this afterwards with a couple of people and was told young people just don’t dress up like that any more. Which I am sure is true, but do the young people get any investors to part with their cash? Last night they didn’t appear to have anyone reaching for their wallets, even to pay for drinks.
Their disheveled looks probably weren’t the main problem, though. That would be their general business sense and their ideas of how to make money. It took me two pitches to spot the problem. Climate change, environmentalism, and sustainability nowadays seemingly infests every area of business life, and nobody seems capable of shutting up about it. If someone is trying to sell you coffee, they speak for ten seconds about the quality of the coffee and for ten minutes on how much they care for the environment. Decades of incessant brainwashing has worked well, and environmentalism truly is the new religion. There are a couple of problems with this, however. Firstly, it assumes that their entire customer base consists of the western middle-classes who are rich and woke enough to run around fretting about a dolphin they saw on TV offshore Bora Bora with a biro stuck up its nostril. While the number of customers eagerly checking the fine print on the back of the packet to make sure there were no orangutans killed in the making of this particular batch of organic, freshly-squeezed kumquat juice is undoubtedly growing, most people still just want a cheap product that works and doesn’t contain arsenic. And there is a big difference between not wanting to turn pristine nature into Norilsk and worrying about whether a product’s carbon footprint is a little too large. Most customers are in the former category, whereas the latter are a wealthy niche.
Secondly, it assumes environmentalism is an end it itself, and not just another trade off between competing resources. Remember this post I wrote about reusable carrier bags, where I referenced a Danish study which showed they were worse for the environment that single-use bags? As I said at the time, very few people, particularly the dim middle classes who campaign for environmental legislation, understand that recycling is an industrial process like any other only with different inputs. So a lot of these business ideas I heard yesterday took an existing process:
Production – Use – Landfill or Incineration
and turned it into:
Production – Use – Recycle – Production
And assumed that simply because it’s being recycled it must by definition be good for the environment. But this is only true if the resources consumed during the recycling are less than those consumed making the stuff using fresh inputs, and that the pollution generated during recycling is less than using a landfill or an incinerator. Otherwise, by definition, they’re making things worse. Did I see any such calculation and comparison? Did I hell. No, the assumption was that recycling must always by definition be better for the environment.
Several of the business ideas involved a recycling process which involved driving around collecting tens of thousands of objects, transporting them back to what can only be described as a large industrial facility guzzling power, water, and other raw materials. The objects are then processed using chemicals and a sizeable amount of human capital, with each person having to somehow get to work everyday. Nobody seemed to have understood the impact this will have on the environmental calculation, let alone the economics of the whole thing. It was just presented as “Recycling! Sustainable! Yay!”
So what we were dealing with wasn’t businessmen but ideologues. It looked more like a hippy commune than a startup incubator. At half-time a chap came on stage and said the world is headed for catastrophe if we don’t stop using resources at the current rate, because we’ll simply run out. That basic economics would tell us otherwise went unmentioned, as did the old trope that the stone age didn’t end because we ran out of stone. He said their task was to persuade everyone “we need to change our lives and our behaviours”, which sounded a lot more like the basis of an evangelical religion than a business. Maybe that explains the frequent appeal for angel investors? He then said the plan was to approach big business and persuade them of this need to change, and to embrace environmentalism and sustainability. At this point I wondered where he’d been living the past fifteen years. Since I have been working, big business has fully embraced environmentalism and sustainability, that’s all they go on about. They have whole departments devoted to haranguing their employees to turn off the lights, reduce emissions, cut down on waste, and spend millions on PR showing everyone how green they are. What does this chap think he’s going to find in a major corporation, top-hatted men opening oil wells into rivers for just for fun?
And that’s the problem. These lot were supposed to be startups promoting new business ideas, but instead they were selling old political ideology. The product was environmentalism, their business just the vehicle it was riding on. It probably wouldn’t surprise you that I later learned this startup hub received a chunk of its funding from the government. In other words, it’s another lefty middle class racket. Did I mention my wallet stayed in my pocket all evening?