Published on: August 21, 2019
Content Guy’s Note: Just this week, the Business Roundtable released a statement in which its members - CEOs from virtually every major US corporation - argued that shareholder returns cannot and should not be the only metric for a company’s success, and that businesses have broader societal, cultural, environmental and political responsibilities that must come into play. In other words, values can and should mean as much as value. … which has been a premise that we’ve subscribed to for a long time here on MNB.
The timing was ironic, since I was looking forward this week to introducing you to Jennifer Johnson, the CEO of Trestle, a Portland, Oregon-based company, with whom I had a fascinating conversation several weeks ago. Jennifer wowed me with her vision of a company that can make it easier for consumers to buy from companies who operate with our most important ethical values, and can help companies establish their bona fides when it comes to values and matters of conscience - all of which I think will be increasingly important to the construction of sustainable business models going forward.
In other words, she was playing my song … and I’m happy to provide her with a forum here on MNB in which she can talk about Trestle, her startup business.
KC: Let’s start by putting Trestle into context - your basic premise seems to be based on a belief that a large percentage of the consuming public is interested in values in addition to value, and that some percentage of brands believe that it serves their best interests - from both business and altruistic perspectives - to invest in appropriate values-oriented initiatives. Fair? And how did your due diligence quantify and qualify these interests?
Jennifer Johnson: This is a great starting point - speaking to the current landscape of how consumers are making decisions or want to be able to make decisions and how brands are conducting their businesses around that. I’ll break it down by what we know about consumers and brands.
Consumers. There is a growing market of concerned consumers who are beginning to ask questions about where/how and by whom/what their products are made. The first industry to really experience this questioning was the food industry over the last couple decades. Consumers developed a new curiosity about what’s going into their bodies, how it’s impacting their health and their children’s health, and desiring clarity within the supply chain. As a response, we’ve seen movement towards food labeling that includes ingredient information, certification information, and indicators of where the product was produced. Beauty/Skincare and apparel are also beginning to experience that same curious and concerned consumer.
Three quarters of consumers (not just millennials) say they would actually spend more money on ethically and sustainably produced goods and believe companies should be taking actions to improve the environment. Fortunately for us, there has been extensive research around this movement towards preferring products that we as consumers can feel ethically connected to.
But we didn’t just leave it at that. We conducted our own research as well including behavioral studies in addition to surveys to get a better idea about how consumers would actually behave when faced with the concepts of value and values (as you put it) in decision-making. Our results showed that people SAY they prioritize properties such as price, shipping, return policy, and reviews. However, in the behavioral studies, we found that the majority of people were willing to spend between 10-15% more on a values*-aligned product, were willing to wait longer for it to arrive, but they were not willing to pay for shipping. We found this humorous and are keenly aware of the large market force that has taught us that we “no longer pay for shipping.”
Brands. To start, there are, of course, companies that are maintaining the status quo - that is, singularly focused on using their business as a vehicle for driving value for shareholders.
But more and more we’re seeing companies respond to consumer/media demands by making operational changes that align with ethical preferences. And we’re seeing several trends here:
• Legacy brands are genuinely or pretending to make changes. (We’ll come back to this.)
• Disruptor brands are being started by Founding teams who are passionate about using business as a means to address social issues.
• There’s indication that brands are very slowly moving towards becoming more transparent.
• Greenwashing is a huge problem. In essence, it is a marketing tactic used by companies to make a consumer believe they are more environmentally-friendly than they actually are. A simple Google image search gives plenty of examples. As companies are learning that consumers care more and more about how their products are made, they’re attempting to market to them ethical practices - and sometimes honestly and sometimes deceivingly so. The unfortunate result of this is a consumer lack of trust, particularly when ethically-derived claims are made.
Now, as we have studied the disruptor brands - the newer emerging businesses that build their business models around their DNA of addressing a social/environmental issue, we have consistently seen that while some brands speak boldly about their ethical practices (e.g. Solo Eyewear, Patagonia, Tonle), some brands are less inclined to market or communicate about those practices (examples: Warby Parker, Fully, Black Diamond).
Brands we have spent time understanding have expressed frustrations around: not being able to communicate the ethical practices they do due to distrust in the consumer mindset, claims made by competitors that do not accurately represent their actual practices, and a genuine uncertainty about how to connect with the values of consumers.
They don’t have a perfect solution. But, they certainly do wish they could use their real ethical-based practices to connect better with consumers.
KC: As easily as you can - since I’m not all that smart - can you describe the technology that you are employing in developing the Trestle network?
JJ: The myTrestle Button is an add on for your Chrome Browser (and soon be available for Firefox and Opera). With it installed, when you land on the website of a company that we have analyzed, it will pop up a notification showing you how compatible a company is for you and the values you’d be supporting if you buy from them. It also works when you land on a company’s product on Amazon and other marketplaces.
Because we believe that everyone has a unique value profile - meaning we all have different definitions of what is ethical and most important to us, the compatibility score is personalized to each person. As you add the myTrestle Button, you’ll tell it what values are most important to you, and from them on, the myTrestle Score you’ll see is according to your personalized preferences. A myTrestle score that you see for a company may be different than the score a friend sees when looking at the same company.
KC: What are the basic issues that you are evaluating in terms of social responsibility and values? How are you doing and certifying the research? Are there additional categories that you’d like to include as times goes on? (Like women-owned and operated businesses, for example?)
JJ: Fortunately for us, there are organizations whose sole purpose is to evaluate the claims and operations of a company - watchdog organizations, certification boards, auditing boards. We aggregate that data, along with reports and policies provided by the company, to prove a full picture about how a company operates.
Right now, we have data available on how companies operate across the following values - environment, fair labor, locally made, social impact, cruelty free, natural, and transparency.
We chose these values specifically to start out because, for the most part, they are the ones that both consumers and brands are talking about. They’re the hot topics right now. However, we recognize that it doesn’t cover the breadth nor the depth of how humans think and operate. We intend to address both over time, according to what the market demands. We anticipate adding additional values people care about as well as further define and the ones we already quantify.
We are currently collecting data on factors such as women-owned business (shows up in Social Impact), diversity, treatment/benefits of workers, and will be deploying that in more depth as we continue to add features to our tools.
KC: Explain your business model - you are developing a for-profit business here. How do you make money?
JJ: Yes, we are a for-profit business! A driving factor for our hypothesis is that for-profit companies can have a solid bottom line, change systems, address social issues, and operate with transparency and a higher set of ethics. So we intend to operate exactly the same.
As of today, we are providing free tools and are not yet collecting revenue. We are hyper-focused on first creating a product that provides consumers exceptional value in an effort to find a solid product/market fit and grow our user-base.
The key challenge to monetizing this kind of information is being able to provide value to brands, yet keep the data pure, transparent, accurate, fresh, and unadulterated. We plan on creating a subscription style membership where interested parties like brands, institutions, researchers, and individuals can have access to additional reports and features. As well as a membership option for brands who will be able to link their individual SKUs to their brand’s data. Ultimately, we anticipate this to be a marketing platform for brands who are operating with higher ethical standards so that they can use their values as a competitive advantage and find consumers interested in not only finding great products, but also who would rather support brands who are doing more.
KC: When a business works with you, how do you avoid being co-opted and putting out information that may not be accurate? And how do you persuade people that you the requisite levels of third-party objectivity? (I know you are working hard not to assign labels like “good” and “bad,” but it does seem to me that there are implications of judgements being made here.)
JJ: As we stated earlier, greenwashing is a serious problem as it confuses consumers and misrepresents operations. One of the benefits we see Trestle providing is combating greenwashing by providing source documentation that demonstrates claims. Primarily we use reports and documents provided by third-party validators/auditors that are not incentivized to misrepresent brand operations.
However, where there is not sufficient information provided by third-party, we include claims made by a company that are relevant and specific such that, if proven false, would breach misleading advertising laws. We always source back to the document/claim made so consumers have a direct pathway to see where we got information with absolute transparency. Because we are not an auditing board, we only collect information that is made public. For example, if a brand e-mails us and shares insider information about policies or practices that are not made public, we do not include them until they are made public. Transparency to consumers is key.
Because we haven’t determined an ethical standard that we weigh companies against but instead determine a compatibility score between a company and a consumer, we do not have inherent incentive to increase ratings for brands. If anything, we create incentive for brands to be more transparent so that their practices mean more and weigh better for consumers.
KC: Why are you choosing the apparel business as your first point of entry? At one point do you think that you’ll be looking into the food business?
JJ: Apparel is one of the industries we are launching with.
We actually started by analyzing 50 companies from the outdoor industry. We started here because there are industry leaders in sustainability, labor practices, and social impact AND consumers who are concerned with outdoor activities, particularly those we know in the Pacific Northwest, highly value these practices - especially environmental sustainability- as consumers. It seemed like a natural fit.
However, as of January this year, we began analyzing companies people care about most. So for the past 8 months, we have been analyzing based on request or suggestion. In fact, one of the major features of both our technologies is the ability for people to request analysis of a brand they’re curious about.
So the makeup of our analysis has followed market trends and demands and we will continue to operate that way.
The industries of food and skincare - that is anything that goes in/on the body where ingredients are huge factors for consumers, which require a high degree of scientific knowledge as it relates to reactions/health are massive beasts of their own. There is a lot of work being done in standardizing data in company operations (e.g. environmental impact, treatment of humans, etc) and this is where we’re really focusing the majority of our efforts. As industries standardize certifications such as organic or ingredient lists and effects of those ingredients, we will be able to move into them.
KC: You’ve just launched. What’s your ramp-up timeline?
JJ: We HAVE launched. And we couldn’t be more impressed with the market response. Over the next 6 months, our major focus will be on…
• Tweaking and adding features to the myTrestle Button to provide more value to consumers that’s meaningful in their decision-making around what brands they want to support with their dollars.
• Sharpening our analysis and quantification process by engaging Subject Matter Experts in the value areas we collect.
• Adding more companies to our database (many are self-selecting in).
• Connecting with Influencers, Bloggers, Podcasters, Authors, and Media to share the story of Trestle and the myTrestle Button.
This is just the beginning and we have a lot more story to write.
Another note from the Content Guy: If one accepts the premise that socially conscious, values-oriented, purpose-driven companies will have a differential advantage in the marketplace with a percentage of customers, then the notion of a website that can evaluate claims and create a level of transparency about them seems like it is a natural. We talk a lot here about what retail will look like tomorrow, and this is certainly one vision.
To learn more about Trestle, click here. Play with it. And you can reach Jennifer Johnson to provide feedback or ask questions at email@example.com .
- KC's View: