The following interview is a conversation we had with Josh Knauer, Co-Founder of Reseed, on our podcast Category Visionaries. You can view the full episode here: $5 Million Raised to Build the Future of Carbon Credits for Farmers
Josh Knauer
How are you doing?
Brett
I am excellent, and I’m super excited for our conversation.
Josh Knauer
I know we have a lot of.
Brett
Different things we’re going to be talking about today. Where I’d love to begin is take us back to 1996 when you founded your first tech company. What was going on?
Josh Knauer
Well, at the time, I was actually running a nonprofit organization called Enviroling that had taken much of the environmental movement online, created the first websites and email addresses and all that. This is back in the days where nobody knew what the web was, and Yahoo and excite search engines and things like that were reigning supreme. And basically I saw this crazy startup that was selling books online called Amazon, and it was billed at the time as the world’s largest bookstore. And a light bulb went on that, hey, I’m really passionate about social and environmental justice and issues. There’s a whole bunch of products that exist in the world that match people’s values, that shared values, similar to me.
Josh Knauer
And so I created an online marketplace called an e commerce site, as we old people called it back then, and took the natural products industry online and so literally built all of the shopping cart system and e commerce credit card transactions. We hacked absolutely everything to get it to work, and we ended up creating the largest online marketplace for the natural products industry. For the types of companies that you currently would see at Whole Foods and trader Joe’s and your local food go.
Brett
Up, natural products today are obviously everywhere. Like, my wife wouldn’t even remotely consider allowing anything that’s not natural inside of our household. But I have to imagine that wasn’t the case back in the mid nineties.
Josh Knauer
Jeff, it was very early, to say the least. I think actually we launched prior to even organic food standards being a thing here in the United States. So we had to build out a set of methodologies that would allow the community to actually define the values and standards that they cared about. And so we ended up building a data flow from where? We collected data from manufacturers and brought in things like material safety, data sheets, and all kinds of other data from all kinds of different sources, brought it all together, and allowed our customers to drive the values and the sort of standards that we would set for the manufacturers that we would bring on our website.
Josh Knauer
And the terms crowdsourcing didn’t even exist at the time, but crowdsourcing and allowing your customer base to be the crowd was beyond a new thing at the time. And were making it up as went, and we did what we felt seemed logical and what we would want if were creating the best store in the world to buy the things that we cared the most about.
Brett
What were you seeing in the world that what you see that this was going to be a market so far before everyone else? Because I feel like, and maybe I’m completely wrong here, but it seems like this really crossed into the mainstream, like, five years ago or maybe ten years ago. It seems like it’s somewhat recent, that this has become, like a mainstream thing, and it’s really taken over. How did you see this market before anyone else was even thinking about it?
Josh Knauer
Well, I’ve been deeply passionate about environmental issues and community based issues around social issues, one would call them, I guess. And this idea that I come across and learned a lot about early on called a triple bottom line business, where a business could actually benefit people, planet and profit all at the same time. And so I wanted to create a marketplace that reflected those values, that you could buy products that were fairly made, that factory workers and the people who made the products were fairly paid, that farmers where product was sourced from were also fairly compensated, and all of that could be tracked and traced. And we built the platform to make that happen, because no one at the time was doing it very effectively. And we ended up creating the largest online community. We were just over 100,000 customers.
Josh Knauer
We had absolutely no advertising budget for the entire length of the company. All of it was word of mouth. All of it was organizations and companies that shared our values, spreading the word about what were doing. And we built, really, an online movement for demanding access to information about products that people consume. And so I saw all these trends, and there was no guidebook for how to do it. And so we just went with what seemed natural. And a lot of it came out of my background in community organizing and environmental organizing that I did as a student from early elementary school. All the way through and after college, still do it today.
Brett
And then let’s skip to your next company. So, the next company you founded in 2008 and that also had an exit. Can you give us a high level overview of what that company did and some of the lessons that you learned from building and selling that company?
Josh Knauer
Yeah, that company. So I sold green Marketplace to a publicly traded company in 2002. And in 2003, I was looking around for my next thing and trying to solve problems. And one of the big areas of problems that I saw was that there was so much data in the world at that time, which is, of course, nothing compared to what we have now. And in that data, there’s a lot of noise, but there’s a lot of signal related to the things that I cared about, ecosystems and climate change and I, social impact and things like that were all buried in deep, and lots of disparate databases spread all over the place. And it just so happened that in Pittsburgh, where I lived, had gone as an undergrad, the Carnegie Mellon professor there now.
Josh Knauer
But I, at that time, discovered a research lab that was working on a DARPA funded project connecting attributes of data across thousands of data sets. And they were doing it to create total information awareness for battlefields. So it was all about streaming all the data from all the different sources and sensors and people and all the rest for a battlefield and used by the military. I saw that, and I was like, huh? That would be really interesting to do, but for the things I care about, which is not really the war machine side of things. And so I went to them and offered to help spin out a for profit company that would take that technology out into the public domain and public sector and built a company called Ryza r h I Z A.
Josh Knauer
We became an online platform for basically knitting together attributes of data across hundreds or thousands of different data sets so that you could actually find and search and visualize data across many different sources. So imagine pulling out a concept like a river ecosystem, for example, a watershed, it would be called, and then being able to pull out all of the other data that was known in the world about that watershed. So, pollutants that were dumped into it, that were tracked through the EPA, companies that operated their nonprofit organizations that worked there, conservation biology research that was done, water quality testing that was done. All of these things coming from different places, being able to knit it together and create tools that allowed mere mortals to use that data for more effective policymaking and for more effective planning.
Josh Knauer
And that work of RiSA actually has led to the current thing that im doing, which well get to, I’m sure. But basically, that company went through a whole bunch of ups and downs. Being in the public sector side of data, especially as we hit the recessions in 2006 to eight or nine or whatever the heck they were, caused us to have to refocus and to look more at a less public sector orientation. What other types of work could we be doing? And ended up pivoting and being really, it was more or less pivoting. It was pivoting as a result of being discovered by a large media company that saw what were doing and wanted to do it for their data that they cared about.
Josh Knauer
And since were about literally two weeks away from the company running out of business and laying everybody off, when they approached us, were like, of course, we can do that. By the way, you need to pay us quickly. And sort of bsed our way or finessed our way, I guess, is the way you would say it in the entrepreneurial world and into an incredibly $5 million a year contract with one of the largest media companies on the planet.
Josh Knauer
And we ended up building a system that all of their ad sales that they were doing, that 2000 ad salespeople out meeting with companies, were able to knit together all the data that they cared about from Nielsen looking at consumption of media, who consumers of companies were, individual profiles of data from lots of different types of sources, like who was buying what types of cars and things like that, knitting all of that data together, anonymizing it so that individuals identities were never revealed, and being able to build a model, huge model, that allowed for advertisers to be able to say, I want to reach people that are like this, that do that, and consume this type of media or whatever, to have these types of behaviors.
Josh Knauer
And we would be able to map that to where exactly in the media landscape you should be advertising. When it came to cable television, were able to say exactly what times of day, down to five minute segments that you should be advertising in to online social media, across all different types of media. So anyway, that was quite popular, as you might imagine, turned everything around, ended up raising a whole venture capital realm and growing that company. And were eventually acquired by Nielsen in 2017.
Brett
I feel like we could spend an entire podcast just talking about everything youve done with these exits, what youve done in the nonprofit world. But I want to make sure to give us a lot of time here. Time is possible to talk about Reseed, everything thats coming there at a high level. What does Reseed do so.
Josh Knauer
Reseed really is actually quite simple. There’s a hole in a very large market, and if you’re looking to start a company, that’s a really good way to do it. Find a problem that is very clear. Find a place where others aren’t that active in solving it, and try to solve it in a different way. So what we do is we help farmers earn more money so that they can stay on their land. And by staying on their land and earning more money and stabilizing their livelihoods, they are able to provide what are called ecosystem services for the world. And ecosystem services is a fancy way of saying non crop based services that a farm provides. If a farm is able to have lots of photosynthesis taking place on its land, that means that it’s helping to produce oxygen.
Josh Knauer
In the process of photosynthesis and producing oxygen, carbon dioxide is pulled down from the atmosphere, oxygen is released, and carbon goes into the plant material and down into the soil. That process is one that, if I said it a different way that we help farmers enter carbon credit trading markets, you might see that there is a huge opportunity when less than 1%, in fact, its 0.03% of carbon credits on the market today come from farming or agriculture in any form. And there are 600 million family farms in the world. Almost all of the two, just over 2 billion people who are involved in the economy of those family farms are living at or below the poverty level in the countries in which they live. Those same farms are the place where 80% of the world’s deforestation is taking place.
Josh Knauer
And you start to see a picture of being able to stabilize these farmers on their land by connecting them to basically harvesting the data from their land that they’re able to harvest and provide to us through an app that we provide to them, and turning that data into carbon credits and other products that corporations and governments and individuals need in order to achieve climate goals.
Brett
If only 1% of carbon credits come from farming, maybe it’s a dumb question, where’s the other 99% come from?
Josh Knauer
So it’s really interesting. There was just an article released today about this, and we saw this and have been talking about this for a long time. But actually, the majority of carbon credits currently in the marketplace actually come from fossil fuel based activities, which is totally counterintuitive and totally opposite of what you want to have. And so, literally, if fossil fuel companies are able to capture some of the emissions from their smokestacks, from generating energy, or from mining things or drilling for oil, they’re able to create carbon credits as a result of that. And many of the carbon credits that are on the planet today that are traded in larger volumes come from those types of activities. And so we believe, and what gets talked about a lot, that nature based carbon credits are the way to go.
Josh Knauer
But you have to have meaningful measurement and auditable, transparent and open protocols and standards for doing so. And we are literally the first company in the world to create a carbon credit measuring protocol for active agricultural land in very small places. So literally sub hectare family farms that are, as I mentioned, all the statistics before, the bulk of the types of agricultural activity happening on the planet are actually also located in areas that are usually the buffer zones around the Amazon rainforest and other very important ecosystems in the world that we need to protect. So stabilizing those farmers on their land causes co benefits to take place related to climate and carbon sequestration. Food security. Because 70% to 80% of the world’s food that we consume directly is grown on family farms around the world. Something that most of us don’t realize.
Josh Knauer
And many other issues, like, for example, helping to prevent refugee crises and stopping migration patterns. We are currently, and this is statistic that holds true across the planet in any area that you look, whether it’s in West Virginia, here in the United States, or in Kilombola areas of Brazil, in cacao, growing regions, in the DRC, in Africa. And keep going. We’re losing right now, five to 10% of farmers in any geography over a five to ten year period, depending on where you are. And so what that does is that creates crisis. Those farmers are not wealthy to begin with. That much of the time, their land is not even purchased from them. They abandon it because they’re forced to. They’re not able to make ends meet. They go to cities, they frequently don’t succeed there.
Josh Knauer
And then they go into migratory patterns around the world. And the UN estimates that sometime between 2030 and 2050, which is only a 20 year time frame in terms of the models that we see, we are going to see a billion people that are going to be climate refugees. Most of them will be from farming communities. Once that happens, I mean, it is an apocalyptic future that we do not want to see happen. So we have to prevent this, and we can prevent this and at the same time stabilize our climate, put photosynthesis to work in a meaningful way by building healthy soil bases. Soil is where all the action is. That’s where you want your storage to be of all that carbon that’ll come down through plant material.
Josh Knauer
And I know a lot of people tend to focus on forests and trees, which are great things, and we like them, especially when it’s agroforestry and industries like coffee and cacao and fruits and vegetables and things like that. But soil, period, globally, is where we should be focusing our efforts, because it’s the most disrupted part of our natural carbon cycle, and it’s the place where we can have the most impact. And if the rest of society does its job and reduces the amount of emissions that are going into the atmosphere, farmers can help take care of the opposite side of the equation, which is pulling down the 150 to 200 years of CO2 that has been accumulating in our atmosphere because of the industrial revolution.
Josh Knauer
So it’s solving a specific part of the climate crisis, and it’s one that most people don’t focus on too much. We’re all very concerned, and we should be, about corporate emissions and fossil fuel based emissions. We absolutely need to reduce those radically, if not eliminate them. But even if we do, we have a very serious backlog, if you will, of carbon that is in the atmosphere that shouldn’t be there. And farmers have the ability to help bring it down fast. And that’s what we’re working towards.
Brett
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Brett
If we look at the carbon credits market, then you mentioned that 99%. Do you think it’s going to eventually be split into different markets, and nature based carbon credits are going to be one market, and then the emissions based carbon credits would be a different market. Do you think it’s going to?
Josh Knauer
Yeah. Well, look, if you’re trading in that world, if you’re deep in it’s already split out into, unfortunately, hundreds of different categories of things. It’s not just nature based versus mechanical carbon capture. For example, there are high quality, high integrity carbon credits, which are certainly considered amongst the highest of theres carbon credits or nature based credits. Theres all sorts of other ecosystem services that people are working and we support creating a market driven solutions for us, for example, increasing biodiversity. And that is something that has a huge benefit for the planet. We are advocates of watershed credits being created and once again they dont really exist. They barely exist as a tradable market. But if we can harness existing systems and capitalism and market driven economy is where were at right now.
Josh Knauer
And if we have only really ten years to turn around our current carbon and climate crisis, we have to use existing markets, existing tools, and what we need to do, and this is where the real bifurcation needs to take place. And what corporations are learning through really bad mistakes and blunders in the market is you need to have access to the data, you need to have auditability, you need to have verification, and you need to have transparency in the process. So starting, and I led a task force at the World Economic Forum on this, but basically starting now, and we started three years ago, what we need is open and transparent and auditable data being collected, and documenting what the climate actions are and justifying why it’s a credit.
Josh Knauer
And then we need corporations and governments and individuals to step forward and engage in the marketplace related to those. And when we have a healthy sort of bifurcation between honestly, the 99% of carbon credits on the market today that I think are kind of junk, those are legacy, that’s the past. The future is open, traceable, substantive, and has the ability to engender trust. So it’s actually focusing on the real climate actions that need to take place. It’s focusing on including people in the equation. So we have billions of people on the planet, let’s get everybody engaged in those markets. We all have the ability to join in, we all have the ability to play a part. Yes, fossil fuel companies have to reduce their emissions.
Josh Knauer
And I believe the statistic I saw today is that 75 companies account for something like some massive majority of carbon emissions that are happening on the planet. So that needs to be dealt with. But all of us need to pitch in and work on pulling down that legacy carbon from the atmosphere, because we could stop all emissions today and we would still have massive climate disruptions taking place for generations because of the carbon that’s in the atmosphere that has been cut off from natural systems that normally would regulate.
Brett
If we think about 2024, what are your big priorities? What are the top objectives? What are the big projects that you’re working on?
Josh Knauer
So we have been focused for the past few years on building up and proving the model, and we have done that. We now have, we’re well over 10,000 farmers that are participating and collecting data and helping our business partners in bringing those credits to market, we’re marketing actually a bunch of different data products from different farmers to markets. Think supply chain information, think the EU has a deforestation regulation that’s taking the world by storms, so to speak. And so we’re able to certify against that, as well as the carbon credits that we have on market right now. All of our work in 2024 now is about scale. This doesn’t have an impact that we all want to achieve unless we’re working with millions of farmers and thousands of companies.
Josh Knauer
And so we are in the process this year of radically scaling up the number of farmers that were working with, were launching in about twelve countries this year. And instead of being with tens of thousands of farmers, our goal within a year or two is to be working with tens of millions of farmers. So to do that, theres a lot of work to be done and were very busy building out everything that needs to happen, working with world governments and un bodies and all the rest, to have our carbon credits specifically and some of our other products recognized and validated as being ready for regulated carbon markets, which is a whole other world of volume that we can get to.
Josh Knauer
And our goal is nothing short of having the majority of carbon credits on the market come from agriculture, because that is actually the most possible effective thing that we can do in terms of removal of carbon from the atmosphere.
Brett
When you think ahead to that plan, what’s keeping you up at night, what’s.
Josh Knauer
Worrying you, or what do you think.
Brett
Are going to be the biggest challenges that you’re going to have to overcome?
Josh Knauer
So there’s a couple of areas. One of the biggest challenges is a basic, either disbelief in or a lack of acknowledgement of very basic scientific principles, and not by the typical characters, you might think, yeah, there’s the climate deniers and all those folks. I’m talking about the technology community, I’m talking about the funding, the investment world. When we’re looking at climate tech investments and we’re looking at some of the largest funds in the world that have been established to address climate change, they’re all looking for what I believe are like the most complicated possible solutions. How do we build mechanical, carbon capture plants that mimic photosynthesis, that take currently billions of dollars of investment to pull from the atmosphere their future goals? What probably a handful of farmers in Brazil can do in a year, right?
Josh Knauer
And trust me, it does not cost billions or even millions of dollars to get those farmers up and running and measuring and doing what they need to do. So what keeps me up at night is kind of the human nature that I see in the quote unquote innovation and tech world of looking for all kinds of complicated solutions, engineered solutions that defy the basic aspects of the way the planet works and the way that people work. We have literally billions of hands in farmers that can be put to use to solve this problem. They want to do it as extra income, wildly incentivized to actively participate in this market. And I just hope that they dont continue to get ignored and right now they are. Thats an opportunity for us as a company.
Josh Knauer
Its a serious problem for the rest of the planet and we need to make sure that were crossing over that gap and helping people understand that is in fact a major part of a solution to climate change.
Brett
Trey, as I mentioned there in the intro for Reseed, you’ve raised over 5 million, and I know you’ve raised many millions more for your other ventures.
Josh Knauer
Yeah.
Brett
What have you learned about fundraising throughout all of these different startups throughout this whole journey? What’s some of that advice that you have to share with other founders so that they can have a more effective and efficient fundraising approach?
Josh Knauer
Yeah, so I have been fairly successful in thumbing my nose at convention and I now teach this to students. But basically the idea is if youre doing what everybody else is doing, youre not doing it. And you have to find an innovative track or tact and set of tactics and strategy for how youre going to go about raising money. And basically, just to give you an idea, reseed, we decided that the venture capital will world, which we have a tech platform, we have all kinds of cool technology AI partnerships with large companies like Google and all kinds of cool things that make us very, should make us very fundable by the venture capital world. But as soon as I started talking to folks in that space, I realized a they’re not actually deploying capital, they’re talking about it, but they’re not doing it.
Josh Knauer
And that we are a mission driven company. We are highly focused on our farmers and climate action and profit all at the same time, which you can do. And we realized that targeting family offices and individual wealthy folks as investors was the right tactic for us to take for this company. So we raised all of our money to date from those sources and quite frankly, not clear whether we’ll need to raise any more money. We’re not sure if we’ll do a series a or not. That hasn’t been decided, but when we do, I’d be much more interested in pitching it to people and institutions that are going to be really passionate about what we’re doing versus kind of clueless. So that’s for reseed.
Josh Knauer
But in the past with Risa, my last company, even green Marketplace, my first company, went out and raised money in very different ways. We were kind of weird in how we appeared on the marketplace, I would say, but standing out and walking to the beat of a different drum, if you will. I keep throwing out metaphors here. Hopefully one of them will. Amy. But basically that is actually what helped us and helped me in all those instances raise money from the right type of investors. So the other part of the equation is usually the script that everybody follows is try to look like everyone else, have your business plan, look like everybody elses, go to all the pitch competitions and all that stuff, and do it the same way everybody else does. I have both at receipt and certainly did this with Risa.
Josh Knauer
I actually looked at the investment process and the idea of recruiting investors as an interview process where were interviewing them. And of course, well answer questions and of course, well due diligence and all the normal things youre supposed to do. But quite frankly, if youre not a match for the values and the mission of the companies that im starting, im really not interested in having your money because anyone can write a check and the same anyones, if they dont actually believe in your mission, they will end up screwing it up. They will end up screwing you in some way or generally just causing problems. And that is a lesson ive learned the hard way and have adapted most of my fundraising practices around. And so its great. Its about relationship. Its about connecting with individuals and people and institutions around values and shared goals.
Josh Knauer
And having those conversations makes you just wildly different than most of your peers that are out there. And the types of funders and the type of money that’s going to help you grow your business, really help you grow your business, is the kind that’s respond positively to that, whatever that means in your industry. So that’s what I’ve learned and that’s what I do. And I try to help as many other entrepreneurs as I can that are doing impact based for people on the planet succeed in that effort, because we need to do this. We need to come together. And if we’re going to solve the real world, the real problems of the world while making money, we need to be doing it much more effectively.
Brett
Final question for you. Lets zoom out three to five years into the future. Whats the big picture vision here?
Josh Knauer
The big picture vision is that there are entire investment finance strategies that are profiting pretty wildly from green bonds to other types of funds, to community loan funds and community investment funds that are all based on valuing ecosystem services for what they are and recognizing the dire importance what could happen if farmers and farms are lost. It gets really bad really fast and there are market driven solutions that can be profitable. We are working right now with financing vehicles, as I mentioned, green bonds and other types of asset based funds that are basically starting to use our carbon credits as the base asset of their funds and are projecting they project. We dont create these things, they just are using our carbon credits as the assets that they are to see twelve to 15% to 20% annual returns for their investors.
Josh Knauer
If we can prove that, model out and grow it over the next three to five years, I really believe that one of the most stable investment assets to invest in it wont be real estate, it wont be cryptocurrency or any of the other things that are out there. Its going to be ecosystem services. And the reason is because you’re investing in the thing that’s going to save your life. And that’s a pretty strong argument.
Brett
Yeah, it’s a strong argument to invest.
Josh Knauer
Exactly. And you can profit from it while doing it. That’s a pretty goal. You don’t die, anybody. Win win. Yeah, exactly. Amazing.
Brett
Well, I’m certainly rooting for you. I’m a huge fan of what you guys are doing. I look forward to keeping up with you. We are up on time, so we’re going to have to wrap here before we do. If there’s any founders that are listening in and they also want to follow along with their journey, where should they go?
Josh Knauer
So check out our website, reseed Farm. Feel free to look me up on LinkedIn if you’re a founder and you need some help. I try. I can’t respond to everybody, especially if you’re working in the social environmental impact spaces. Reach out to me on LinkedIn and I’d be happy to connect.
Brett
Your website makes more sense now, by the way. And when I was preparing for this interview, I was like, what does this website mean? But it’s now or never. Now it makes sense.
Josh Knauer
That’s right. Yeah. So my personal website is now or never. And it’s been my rallying cry for a long time. And it just so happens it’s a great pun with my last name, so I love wordplay.
Brett
Josh, thanks so much for taking the time. Really appreciate it.
Josh Knauer
Thank you.
Brett
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