Inspired with Alexa von Tobel
00:10:20 · Alexa von Tobel, Taylor Francis
[00:10:20] S2: Love that. [00:10:21] S0: I think the two ideas for us were, one, is we wanted to work together. And two, we wanted to work together on climate. And those two things were a lot more important than any notion of starting a company. We never had any discussion on, hey, we wanna start a startup. We wanna start a... No, we wanted to work together, and we wanted to work on climate. And the next idea was that 500 megaton goal. Let's work backwards from something that if it goes right, if everything goes right, it could add up to a magnitude of impact that matters. Actually, when we sat down in Christian's guest bedroom in fall of twenty nineteen, we spent two weeks workshopping a different idea every day for what's something we could work on that would add up to 500 megatons of climate impact. And we thought about hardcore science projects, carbon removal. We thought about political campaigns. What's an advocacy investment that we could make that could move the needle on policy? We thought about consumer ideas. Is there some sort of strava for climate that helps you make the right personal climate choices? One of the ideas we workshopped, we called at the time B2B decarbonization. That was the thing on the whiteboard. [00:11:38] S2: The big idea. The perfectly branded idea.
00:11:38 · Alexa von Tobel, Taylor Francis
[00:11:38] S2: The big idea. The perfectly branded idea. [00:11:41] S0: B2B Decarp. B2B Decarp was what the Notion doc said. There's a bit of a top down and a bottom up thought there. The top down thought was, it's hard to count to 500 megatons of climate impact. And the best way we could figure out how to count to that amount of impact was through companies. There are hundreds, thousands of companies that have carbon emissions in their supply chain, bigger than most countries. And we could imagine selling software to those companies, and we could imagine those companies making better decisions. It's like, wow, there's a real path to leverage here. But then the bottom up idea was that Christian had been a part of starting Stripe's climate program, and that was a volunteer nights and weekends effort to measure Stripe's emissions, figure out what to do about them, ultimately put a million dollars into carbon removal to offset the emissions of Stripe. That million dollars eventually, we left, much smarter people came in after us, grew to a billion dollars in the frontier market commitment. But through that experience, we thought, okay, the spreadsheets and offsets and consultants approach 2019 status quo is definitely not good enough to transform an economy. Let's build the tool we wish existed. And those two ideas together, day five of Watershed, B2BTCARB, that's all we've been doing ever since.
00:13:03 · Alexa von Tobel
[00:13:03] S2: I love it. Day five. Day five. I'm gonna get you a T shirt. It says day five. When we think a little bit about... And now I want you to educate everyone that's listening who is not as informed. If we start with the basics, you... Two thirds of the Fortune 500 companies have some sort of climate commitment. Right? So they said we gotta do something, But I I think most of them don't know where to start operationally, and you've got scope one, scope two, scope three. Just quickly give us a lay of the land, and let's pretend we're a big company, a Fortune 50 company trying to do right by climate, what happens?
00:13:40 · Taylor Francis
[00:13:40] S0: Yeah. So if you're a Fortune 50 company, you've got a complex set of operations, products, suppliers, transportation, customers. And as you said, there's a two thirds chance. You've set a commitment saying we want to reduce those emissions over time, in line with what the science tells us is required to solve the climate problem. So how do you go about doing that? First thing you've to do is figure out where are your emissions coming from. Indeed, space has this protocol to think that through. There's three categories. The One emissions from facilities you own. So your cars, your planes, if you operate a power plant, or a chemical plant, or a paper mill, gases that are being released directly into the atmosphere from your assets. Scope two is the emissions from the electricity consumption. It may be happening somewhere else. It may be happening at the power plant on the electricity grid, but it's from the electricity. You're turning the lights on. You're running your factory. And then scope three is everything else in your supply chain. So if you're making cars, it's the steel and the plastic and the leather that go into a car. If you're making software, it's the energy that runs the data center that trains the AI model that you're building your business around. If you're a food business, it's what's happening on the field. Is there deforestation or is there fertilizer? What's happening with your customers when they actually plug your device, your appliance, the wall? So those are the three categories. And our philosophy is you wanna measure quickly so you can figure out where your leverage is.
00:15:23 · Alexa von Tobel, Taylor Francis
[00:15:23] S2: Yep. [00:15:23] S0: And then focus all of your attention there. And that's different for every company, but ultimately our thesis is you wanna get as quickly as possible to thinking about what is the intervention in the world concretely, practically, tactically that you wanna have happen? If you're in the food business, it's probably less deforestation in your supply chain. If you're manufacturing consumer electronics, it's probably clean power at the manufacturer of your suppliers who are making semiconductors. It's generally not that complicated. So we try to make it easier for companies to figure out, okay, this is the thing that matters, and let's focus our effort there. [00:16:02] S2: Let's talk a little bit about where Watershed comes in and makes reporting, measuring easier. Give us a tangible example of kind of what that looks like. And and to just repeat it back, you've got scope one, two, and three, which effectively is all the ways that any company that is existing is impacting our lived environment and climate. Yep. Where does Watershed come in? [00:16:25] S0: Yeah. So think of Watershed as enterprise software and AI for sustainability data. [00:16:32] S2: Got it.
00:16:33 · Taylor Francis
[00:16:33] S0: So if you're a company, you've got Workday for bringing sense to your HR domain. You've got Salesforce for bringing sense to your go to market domain. You've got Watershed for bringing sense to your sustainability data. And we start by basically plugging into the systems of record of a company and ingesting data that may not be in any system of record. PDFs of utility bills and bills of materials that are not well standardized. Those come into Watershed. We built this data engine that is informed by the latest science about where do emissions come from? What is the emissions of a pound of beef from Brazil? How is that different than the emissions from a different product or input? And then we give companies this kind of BI dashboard for their sustainability data. Once you've got that, companies wanna do a couple things with it. The CFO raises their hand and says, We're going to use this to disclose and report. Five years ago, companies were reporting voluntarily. Today, Australia, Singapore, New Zealand, UK, EU, California, New York, Mexico, Brazil, dozens and dozens of countries and jurisdictions have this as a regulated disclosure alongside financial results, privacy, security, that sort of thing. So the CFO says, I love that this data is well governed. It's auditable. It's in a system of record, there's no fat fingered mistakes, it's gonna pass audit. It's gonna be the basis of how we communicate with investors and customers about this data. The procurement team says, We're gonna use this to buy greener materials for our products. The product design team says, We're gonna use this to make sure that when we're designing the next version of our shoe, we're thinking about where does the carbon come from and how can this be a low carbon product. And so it becomes this tool for decision making as companies realize generally that there's a lot they can do that actually improves the business and reduces carbon at the same time.