31

When Kirsten Tobey and Kristin Richmond started working together at the Haas School of Business at the University of California at Berkeley (UC Berkeley), they had no idea their crusade against frozen chicken fingers would position them as leaders of a thriving business.

As co-founders of Revolution Foods, a private business that provides healthy, organic meals for Bay Area schools, Tobey and Richmond are addressing children’s health, sustainable agriculture and local economies under one business model.

“We saw a huge gap in what was being provided to kids in schools today,” Tobey says. Creating their business plan during school gave them a competitive advantage. “It gave us the time and resources to focus on building a company,” Tobey says. “We were able to spend a year and a half using every class we took to develop some element of the business.”

While taking a marketing class at Haas, Tobey and Richmond went to about 40 different schools to meet with teachers, kids and parents to determine the market demand for their services. “Kids were getting pizza that was burnt, chicken fingers that were frozen in the middle,” Tobey says. “Kids said, ‘We want more fruits and vegetables made by a person, not a machine.’”

An estimated 16 percent of children and adolescents ages six to 19 are overweight, according to a four-year National Health and Nutrition Examination Survey study ending in 2002. The alarming statistic represents a 45 percent increase over results from a similar study conducted just a decade earlier.

Setting out to curb the trend, Tobey and Richmond clinched a key partnership with Austin-based organic foods retailer Whole Foods Market Inc. (Nasdaq: WFMI). The retail giant offered Revolution Foods wholesale prices on organic produce and ingredients.

“It was an essential part of how we started,” Tobey says. “It provided us with credibility, and it also enabled us to accelerate our economics by allowing us to increase our purchasing power.”

After graduating in spring 2006, Tobey and Richmond hired executive chef and partner Amy Klein. By the fall, Revolution Foods employed two prep chefs and a delivery driver. In its second year of operation, the company has doubled its number of employees, secured its own kitchen, and tripled its number of customers.

Revolution Foods targets public schools in poorer neighborhoods, where access to healthy meals — let alone organic meals — is minimal. How, then, does it turn a profit?

“We have been incredibly careful about our cost controls, and through our partnership with Whole Foods we have been able to access great prices on raw ingredients,” Tobey says. “This is not the most profitable company in the world, but we are operating at a positive growth margin.”

The Haas School of Business ranks No. 11 on the Beyond Grey Pinstripes’ list of top sustainable MBA programs, in part because of its faculty’s engagement with sustainability research. A handful of Tobey’s and Richmond’s former professors at Haas have served as mentors, investors and advisers to Revolution Foods, including Will Rosenzweig, CEO of Brand New Brands and a Haas professor.

“People that believed in us, put their money where their mouth was and invested in us and really mentored us through the process,” Tobey says.

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For Eric Magnuson, a 2006 graduate of Bainbridge Graduate Institute (BGI), work meetings often feel like sessions with a marriage counselor. Magnuson is a founding member of Web Collective Inc., a new Seattle worker cooperative that provides Web-based services such as Web site and Intranet development and distance learning solutions for sustainable businesses, nonprofits and public organizations. “It’s like being in a marriage with seven people,” he says.

All owners have an equal share — and an equal voice — in the company. “Reaching consensus with seven people is the number one thing that challenges me every day,” Magnuson says. “Everyone having a say means you listen to everyone. But I have faith that when you follow that process with good intention, the outcome is always better.”

While the United States is home to about 47,000 consumer-owned cooperatives, including Fortune 500 companies such as Ace Hardware Corp. and Land O’Lakes Inc., worker-owned cooperatives are an anomaly (The Berkeley, Calif.-based Cheese Board Collective and Portland-based Citybikes Workers’ Cooperative are two better-known West Coast worker co-ops). Web Collective has found its niche by working with companies and organizations that are focused on improving environmental or social problems.

The company is booked solid through the third quarter of 2007, thanks to high-profile clients including Sustainable Seattle, Ecotrust, the Sightline Institute, Resource Ventures, Seattle Public Utilities, UrbanGreen and the Washington Department of Ecology. The Web-savvy company is so busy that it hasn’t even had a chance to build its own Web site.

Magnuson says he spent a lot of time at Bainbridge Graduate Institute learning how businesses can work toward social and environmental change through the products or services they produce. A former Web designer for a publicly traded corporation, Magnuson was determined to eliminate hierarchy in his own business.

“When the wealth and ownership, as well as responsibility, are equitably distributed with the employees, you get a much more sustainable business and committed workforce,” Magnuson says. The leadership style and confidence he gained during business school is ideal for the worker cooperative business model, he says. “It’s a servant leadership style,” he says. “The type of leadership you need to succeed in a structure like this is one that accepts ambiguity. It’s leadership from underneath.”

The network he gained while attending BGI has also proven invaluable in terms of gaining clients, he says [see “Bainbridge bags more MBA students,” Sustainable Industries, July 2005].

All Web Collective members serve on the Seattle chapter of the Business Alliance for Local Living Economies, or BALLE, which has helped the company network with small businesses and nonprofits with missions similar to its own. While the U.S. Federation of Worker Cooperatives provides support for worker cooperatives, no similar organization exists locally, according to Magnuson.

“Since we started talking about it, a number of people have been talking about switching or forming their businesses as cooperatives,” Magnuson says. “One of our visions is to support the development of cooperatives. I hope that as technology providers, we can develop the tools and some of the leadership to make that happen.”

34 Charles Carroll
Dominican University of California’s Green MBA
Class of 2003
President, New Outlook Financial LLC
Portland

A former National Outdoor Leadership School instructor and river guide, Charles Carroll has years of experience managing risk. So when he entered Dominican University of California’s Green MBA program, he didn’t find it surprising when co-instructors and friends started relying on him for financial advice.

Whether helping explain the benefits of a Roth IRA or the ins and outs of socially responsible investing, Carroll says he is still making a living by building relationships with people and, most importantly, gaining their trust. Showing up to work in khakis and flip-flops, he says, “I still get to be an educator.”

Carroll is not targeting customers with multi-million-dollar accounts, but is rather working with individuals and small businesses that fall into the “middle market,” or those making $26,000 to $70,000 a year. Carroll charges a “fee-only,” or hourly rate, meaning he doesn’t charge a sales commission on any transaction he manages. “There is more transparency because you are stating outright your conflict of interest,” he explains.

He is a member of the Garrett Planning Network, an association of fee-only financial planners with more than 100 members, and a representative for First Affirmative Financial Network, a Colorado Springs, Colo.-based independent investment advisory firm registered with the U.S. Securities and Exchange Commission.

A member of the first Green MBA class at Dominican University of California, Carroll says the program taught him business management fundamentals such as how to write a business plan and how to think critically. But the program’s focus on sustainability is what helped steer him toward socially responsible investing, something he says many of his clients have never heard of. While he doesn’t push clients into investing in sustainable companies, he finds they often want to. “People that are green-minded tend to be open-minded,” he says. “They want their money to match their values.”

More than $2 trillion under professional management in the United States is linked to some kind of socially responsible investment strategy, a fourfold growth over the past decade, according to the 2003 “Nelson’s Directory of Investment Managers.” While growing, it still represents a boutique segment of the industry — one Carroll happily serves.

“It helps that I work in Portland, where sustainability is not a new word to people,” he says.

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Just a few years ago, tracking down a Fortune 500 company’s corporate social responsibility (CSR) report would have been a somewhat impossible mission. But as more and more consumers put the pressure on large corporations to maintain transparency, an increasing number of companies are scrambling to come up with a way to do so.

Enter Chad Upham, a 2007 graduate of Presidio School of Management and founder of Covive, a company that will research, write and design companies’ first CSR reports.

Nearly half of U.S. companies in the Standard & Poors (S&P) 100 Index are now disclosing information about their environmental, social and governance performance, according to a 2007 report commissioned by the Social Investment Research Analysts Network. More than a third of the companies say they have adopted the Global Reporting Initiative’s (GRI) Sustainability Reporting Guidelines. Perhaps even more interesting, the average number of pages for companies’ CSR reports rose by 45 percent between 2000 and 2002, according to a recent United Nations Environment Program study.

Upham and his classmates were introduced to CSR reporting in a Presidio accounting class. A former graphic designer, Upham says CSR reporting and brand development is where he can be most effective in creating social change. “The process of doing a sustainability report is a great first step in developing a corporate strategy,” he says. “It’s a great way to do a self assessment.”

Upham and Covive’s staff of freelance contractors — many of whom attended Presidio — follow the internationally recognized GRI guidelines. Set up in the middle of San Francisco’s Financial District, Upham is trying to land his first major clients. “They have to be ripe and ready to invest in the report and a few are really close,” he says. In his first few months of operation, Upham has focused on educating potential clients about CSR reporting, selling it as a way to stay competitive in today’s global marketplace.

He is not alone: 69 percent of investor relations officers say good social and environmental performance strongly influences a company’s brand and reputation, 46 percent say it increases a company’s economic performance, and 36 percent say it increases a company’s market value, according to “Mainstreaming Responsible Investment,” a World Economic Forum report.

As with many sustainable MBA programs, 70 percent of Presidio’s credit hour delivery is conducted onsite and through placements with local companies, and 30 percent is distance learning. With contractors in Houston, Los Angeles and other U.S. cities, Upham says his education prepared him for working in a virtual network. “A really helpful part of the curriculum was being on top of that new wave of collaboration and leadership.”

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While many of their former classmates at the Haas School of Business at UC Berkeley are pursuing careers in the booming solar industry, Josh Mooney and Zach Gentry are helping people zap surplus kilowatts. “The cheapest kilowatt hour is the one saved,” Mooney says. “In terms of strict economics, solar doesn’t even come close to energy efficiency.”

As co-founders of San Francisco-based Adura Technology, Mooney and Gentry are manufacturing and marketing a wireless lighting control system that they say can save organizations thousands of dollars a year in energy costs.

Adura installs a device the size of a small cell phone into existing light fixtures, which allows building operators to control it via a wireless mesh network. Unlike the Internet, which uses cables to transfer information, a wireless mesh network uses wireless transceivers to deliver information. Gentry and Mooney learned about the combined technology, which was developed by UC Berkeley research specialist and lecturer Charlie Huizenga, thanks to an article in a school publication. The two approached Huizenga and created a business plan that helped them win the 2005 California Cleantech Open.

Adura received $50,000 in cash, free rent on an office space in downtown San Francisco and $50,000 to $75,000 of services. “They call it a ‘startup in a box,’” Mooney says. “It’s not enough to take something from an idea to customer, but it’s a nice cushion.”

Mooney says the product is ideal for companies that cannot afford a costly retrofit that involves rewiring an entire floor or building. Using a mesh network further reduces costs because it is often cheaper than a wire-based communication structure such as the Internet.

Adura’s first client was UC Berkeley, and with 15 million square feet of facilities, the school is keeping Mooney and Gentry quite busy. The company’s retrofit of a floor in the school’s Moffitt Library resulted in a 33 percent reduction in electricity use, while a business office retrofit resulted in a 65 percent reduction.

“The payback on a project like this is nine months,” Mooney says. “So it’s a total no-brainer for an institution that looks kindly on a six-year payback.”

While Adura raised enough money through an initial friends and family funding round to maintain its current operations, the company is seeking venture capital to extend its reach, according to Mooney.

Like Tobey and Richmond of Revolution Foods, Mooney notes that many of his former professors provided — and continue to provide — endless support and mentorship. “The interest from the faculty to help you out — putting you in contact with their contacts — was really helpful,” Mooney says, adding that his exposure to the cleantech industry through UC Berkeley forums and clubs was also eye-opening.

“I was apprehensive about going back to business school because I would not consider myself the prototypical MBA person,” Mooney says. “Berkeley had the benefit of a lot of people being interested in the green arena and the environment.”