Unlisted: Andy Keller on Creating a Benefit Corporation- Video Transcript

To view the summarized version, go to https://ashleetate.com/howtostartabenefitcorporation/

Speaker 1:
Hi everyone. Thanks so much for watching to social life, the place to be for entrepreneurs with a purpose. Today I am talking with Andy Keller and he is the founder of Chico bags and Andy and I have done interviews on other shows. I love having you on and speaking with you about your purpose and your passion. And so we’re going to dive a little bit more into at Chico bags and what it’s all about and how you got started and all of that and what type of corporation you are. Cause it’s a little bit different than a nonprofit or a strict for-profit. So I’m really excited to just learn a little bit more about you and your organization and what you do. So can you give us a little brief overview of what a Chico bags is?

Speaker 2:
Sure. Um, well we have a mission. Our mission is to help humanity bag the single use habit. And when we say that we are talking about single use plastics, mainly the stuff that you use once and throw out, we’re helping humanity move away from that habit into by providing essentially reusable products that compete with that. And as far as, um, convenience. So I’ll just, the best example is the Chico bag original. This is the first product, um, that I came up with. It’s a reusable bag that you can keep in your pocket or you can clip it onto your key chain or your purse. Uh, the idea is is that most people forget their reasonable bags at home or in the car. And single use is just so convenient. So if he had a bag that you had with you at all times, you wouldn’t have to remember and then you can start using it. So that was the idea with Chico bag. This inside of this is a full sized shopping bag that holds,

Speaker 1:
because I have five of those, but I have 10 of these bags. I love them.

Speaker 2:
Awesome. Yeah, so it’s a full bag comes on out and you can stuff it back in. Um, you know, since I started Chico bag, yeah, we’ve come out with all kinds of solutions. Um, obviously shopping bags is a main source of, uh, plastic waste. So we have a, a whole line of alternatives to apply to shopping bags. Uh, we also have, um, what we call a snack time, which is a replacement for a zipper or excuse me, a little baggies that you use for lunch. Uh, we have travel zip, which is a replacement for the court size, a TSA, um, bags that you have to go through the airport with. Um, we also, we uh, took over a brand called to go where a couple of years ago. Um, and it’s a bamboo utensil set fork, knife, spoon and chop sticks. Yeah. So the idea here is all everything we come out with, um, the intention is to give people solutions so that they can say no to single use plastic wherever they are.

Speaker 1:
How often, you know, as often as they need to know. How did you come up with this mission? Like where does the passion come from the environment better kind of make that your purpose?

Speaker 2:
Well, it was a interesting confluence of events. I got laid off from a job and I had just purchased a house and it was super stressful. And so I ended up working on my house and trying to figure out like, what am I going to do? I have a mortgage, I don’t have the job. So I, um, I mean, long story short, I ended up at the landfill with a bunch of trash from my house and I threw it out. And then I looked and visually what I saw was what our town of about a hundred thousand people throw out in one day. And it was a mountain of trash. And what really stood out were all the plastic bags. You know, it was kinda like this. They were blowing around, there were bags everywhere. Um, and the landfill in my area, we have a ranch land around it with cows, pasturing and the bags that day were blowing out of the landfill into the adjacent ranch land where the cows were grazing. Wow. And I just said, it just occurred to me, I never thought I was a plastic bag user. I never thought about how many plastic bags I use, what they were made out of, and what happened to them at the end of their life. Um, and it just, I started thinking about it and I was like, Whoa, why am I using plastic bags? It seems silly. Um, when I look at how long I actually use them and then what happens to them at the end of their life? So

Speaker 1:
I already had like a skew towards being kind of environmentally conscious, or was this just from that just sparked directly from that?

Speaker 2:
Uh, you know, I liked the outdoors, like camping and my, from a young age, I was always taught to leave things better than I found them. So we would always, you know, pick up the trash even if it wasn’t ours when we left a camp ground. And so that, that kind of ethic was inside of me. You know, I want to leave the world better than I found it. Um, so, and I knew that, you know, when I saw the plastic bags and I became aware of my own consumption, I was, I thought, well, I have a great opportunity right now to solve this problem, you know, for myself. Um, makeup. And really what it came down to was my own behavior. I knew I was gonna forget my reasonable bag at home or in the car. So instantly the embark, the, uh, I guess the business person in me and the creator was starting to think, well, what if I had a bag that I didn’t have to remember? And then that’s how I came up with the idea. And then that day I was like, okay, I can solve my unemployment problem too. And so I bought a sewing machine that day, bought some fabric, and I sat down and started making prototypes of Chico bags. And I, I brought, I have a, here’s some of the samples. So I started making with different fabrics and different, um, patterns. You know, what would end up becoming the first, uh, Chico bag.

Speaker 1:
Oh my gosh. So you started sewing these on your own. Okay.

Speaker 2:
Yeah. The prototypes. I’m, I’m not, I’m not really good at selling. Learned enough. Playing on my mom’s sewing machine. When I was little, I made Santa hats for stuffed animals and yeah. So yeah, I made a sample good enough that I can get the idea across to someone that knows how to sell. And after some time I was able to get a, my first production run done at a, at a, at a, at a factory.

Speaker 1:
What is that manufacturing process like? Because a lot of people have ideas and they may start the prototype. But how do you get from prototype to manufacturing? I know this wasn’t in our original. Um, how do you get from that?

Speaker 2:
I mean, really the, I think the short answer is you just take step by step and you know, a lot of people, um, get stuck in the step where they have an idea and then they want to get a pattern and they want to write a business plan and they want to get funding, you know, and they get kinda stuck in that thing. And you know, I ended up getting a patent, um, by working with the, um, small D business development center, which is a, there’s a lot of these throughout the country. They minus partnered with the local community college and uh, so I, I was able to get a patent in place while I was doing that. I was also, I Googled bags manufacturing and I S found people that it’s their business to basically make products for other people with ideas. You know, it’s called contract manufacturing and a lot of manufacturing happens this way where you have an idea, you give the design to a contract manufacturer, they make it for you so you don’t actually have to own the factory.

Speaker 1:
Well, you’re absolutely right. A lot of people get stuck right there at that, at that point. And I always just say, just go for it. Just like, just keep going. There are too many resources out there for people to not be able to move forward. So it’s really nice to hear you say that. You know what? Like you weren’t letting anything hold you back.

Speaker 2:
Yeah, I made, I made a lot of mistakes. You know, the, you know, this order, it all came wrapped in plastic bags and when I started selling them, uh, they had a 40% defect rate. Yeah. So people would open up the bag and then it would, it would rip right here and um, you know, so that was my, my first lesson in manufacturing, you know, about quality control and you know, and the, and the bag, this is the status quo of manufacturing. Most everything you buy in the world sometime came in a plastic bag. It doesn’t have to be that way, but that’s kind of the normal. So, you know, I was able to just take step by step and I learned how to do it. Right. Um, and you know, in that process, you know, I’ve been doing this about 14 years now it’s just every, every day I learn something new every day to do it better.

Speaker 1:
Do you feel like you’re starting phase, you know, okay. You’ve got your, like you got your, you started at and you got the manufacturing and you started doing selling it and all of that and getting into stores. What do you think that whole process, that period of time looked like? What was that like a year to five?

Speaker 2:
When did that? Um, from the idea to selling was I’d say six to nine months. I’m terrible with dates, but roughly that’s about what it took. And then I had a S I guess other jobs that I was doing to pay my bills. I wasn’t dependent on Chico bag to make money. Um, but my hope was that it would. Um, and as Chico bag started growing, I started quitting my other jobs. Right. You know, my, my, my, I was removing asbestos from, you know, basements and doing, yeah.

Speaker 1:
Well this takes over. Now that is so interesting because a lot of people are like, I’m going to, I’m just going to die, you know, head and I’m like, dive head first. But also, you know, keep your other step going so that you can support yourself to do what you want to do. Now I do have to ask you, so you had best, you were voted best for the world of environmental and for environmental impact. Five years running.

Speaker 2:
Yeah.

Speaker 1:
Do you get in a word like that?

Speaker 2:
Well, that, that awards given out, um, by B Corp, which, um, if you’re not aware, um, there’s a movement right now, um, in the world that corporations are becoming benefit corporations and there’s over, it’s growing. So, uh, last time I checked, it was over 3000 B Corp’s in the world and of those 3000 B Corp, so top 10% of those are given the award of best for, uh, in any particular category. So Chico back got an award for, um, being in top 10% of the best for the world and environmental standards.

Speaker 1:
That is really incredible, Andy. Well,

Speaker 2:
yeah, I mean we’re, we’re proud and we want to maintain our, um, our standing, so we’re always having to improve because the bar keeps getting raised higher and higher. Um, you know, and so it’s, it’s, it feels good to still be on the list. That means we’re continuing to improve.

Speaker 1:
What made you choose to go that route rather than a nonprofit or a pure for-profit? And did you ever start on either one of those ends and then transition?

Speaker 2:
That’d be fine. Yeah, I, I’ve always thought of Chico bag in some ways as a, you know, as a nonprofit because we have a mission. Um, but you know, the traditional corporation structure, um, is really broken. Uh, it basically, there’s a, an obligation for a corporation to enhance shareholder value. And that’s really the only goal of a corporation. And that’s a fundamental problem because it doesn’t allow a corporation to do anything else. Um, and typically, uh, it incentivizes to, to do bad things, um, such as externalized costs. And what w externalizing costs means like, well, I’m not gonna really pay for the impact of my product. I’m going to let taxpayers pay for that, or future generations, or, you know, or some people that are underrepresented, you know, I’ll let them, you know, we’re not getting charged for that. When you harvest wood illegally out of some, you know, country that doesn’t have a, a strong government, um, and it’s, you know, and no one’s calling you on it, that’s an externalized costs.

Speaker 2:
Um, so what a benefit corporation is, is basically it balances that out. You put a social benefit and a mission into your corporate charter. And so your obligation is not just to your shareholders, it’s also to your social mission. And the reason why that’s important is because, um, a corporation doesn’t have, it has an obligation to those things. Now legally, um, as, whereas before, if you’re a corporation and you have investors, uh, and you do something that’s not best for the shareholders and, but that’s for the environment, they can Sue you and say you’re not doing, um, what you’re supposed to be doing as a corporation. But when you’re a benefit corporation, you can say, no, actually we are because this is part of our mission and our purpose and it’s embedded in it. So that, so if you have investors or if you’re a public company, um, that’s where it really plays in. Or if your company is sold to another entity, um, your values go with it. As, as a corporate entity,

Speaker 1:
what made you choose not to go the nonprofit route? Did that have too much red tape for you? Like for what you were trying to do or you wanted to build a for profit company that, that really could do this social impact as well cause you had a little bit more leeway and you can, you know, do a little bit more with that.

Speaker 2:
Yeah, I think there’s a lot of rules around having a nonprofit and selling product and what that means and I, I’m not an expert in it. Um, and I, I fundamentally felt that business businesses should do good. Um, so I, I went down the business route instead of the nonprofit route. Um, you know, and, and when B Corp came around, I was delighted because that’s how we’ve been operating. And it helps validate and give meaning to what we’re doing. Uh, in a way that is hard to communicate to people because a lot of people will shop based on price at the store and whatever’s the cheapest, that’s where they put their money, which essentially is a vote for what you want in the world every time you spend a dollar. Um, and so it’s very difficult to have a benefit or a social benefit company that cause it, that has price points to it. When you’re, when you’re not externalizing costs, the costs are embedded in the price of the product and you’re paying for that at the, at the cash register. Um, and trying to communicate that is difficult.

Speaker 1:
The premium is the impact you’re making. So when you purchase that product, you know that you’re, you’re getting rid of those externalized costs and that is difficult to explain to people. What do you see as the package? They don’t really know much about it. And then what have you been able to kind of bypass that in some of your packaging?

Speaker 2:
Yeah, so the, the, the nice thing is, is, you know, the B Corp has a, has a little logo. Let’s see if I have it on here. That helps identify the product. So if you could see there’s a little B, right?

Speaker 1:
Yeah.

Speaker 2:
And so if you look for that little B logo, you know that it, the company is a benefit corporation and that they’re certified and you can actually look up, uh, all the details about the company at the B Corp website as far as how they rank and all the different categories of, um, of social benefit.

Speaker 1:
No. Was it difficult, but it sounds like you started out as a for profit. Was it difficult to switch over to the benefit corporation or was it pretty seamless?

Speaker 2:
I mean, most States I would say about half the States recognize B Corp as a legal entity. And so, um, in California, um, you just file as a B Corp and it’s basically an in addition to your standard corporate.

Speaker 1:
Yeah. Okay.

Speaker 2:
And if you’re a sole proprietorship, you could also be a B Corp, but you don’t have to be a corporation, uh, as a legal entity. You could be a sole proprietorship and be a B Corp as well. It’s a little bit complicated because there’s the legal entity. And then there is the certification, which is two separate things. And I tend to talk about, um, a I intermingle them.

Speaker 1:
So tell us a little bit about your, um, your paying it forward initiative and how you give back and the community pulse a little bit about that. Cause this is really just part of who your, your organization is. I love it.

Speaker 2:
Well, yeah, what we do is we don’t want any of our products to end up in the landfill at the end of their life. Um, we don’t want it to be part of that. Um, so we have a take back program so that when people are done with their products, uh, they can send them back to us. Uh, and then we will repurpose them into something useful. We started with that. And what it’s morphed into is now what we take any bags that anybody wants to send us regardless if we’ve made them or not. And so people all over the country are sending us boxes of reusable bags. Most of them are actually perfectly good bags. And so what we do is we, uh, work with, uh, food banks and other organizations that need bags and send it to them. And then they get these bags out to populations that wouldn’t normally have the extra income to be spending on reusable bags.

Speaker 1:
Oh my gosh. You’re like the epitome of what I think all businesses could be doing. Seriously. I’m curious because it’s all going full circle. Yeah, yeah. You’re, you’re reusing what we already have and then finding a way to repurpose them for people who actually, like you said, might not be able to afford it. And I think that’s the only way we can really start movements is when we’re trying to help people who can’t necessarily, or who wouldn’t even know right now about why this is so important. You know, all they all, all a lot of people know is that, you know, now we have to pay 10 cents per bag.

Speaker 2:
Why?

Speaker 1:
Right. And your story is,

Speaker 2:
I mean, the fundamental reason behind all of this is that, you know, the world works. Um, you know, the, the natural world works in a circle. You know, we’re really falls from a tree. It becomes compost, you know, so that a flower can grow. It’s all circular. Business traditionally is linear, where you take resources, you create a product, goes to the landfill so that that system is fundamentally destroying the earth, uh, or destroying life on earth, let’s say, cause um, and so essentially when a business goes into a circular model, it’s more in line with nature. So that’s what we’re trying to do with our take back program. And ultimately you might hear buzzwords like a extended producer responsibility. Um, that term pretty much covers this concept of circularity, you know, that, you know, there isn’t linear, it’s circular and circularity is a buzz word right now. Extended producer responsibility. All these ideas touch on that topic of, of getting business in line with nature so that we stop trashing our planet.

Speaker 1:
I wanted to know a little bit more about like what you do, the, how people can also support your mission and puff or helping our environment as well.

Speaker 2:
Yeah. So yeah. Uh, where do you start? So, I mean a lot of ’em I mean the first thing is just being aware, you know, so get educated on like what is the problem with single use plastic, um, helping, you know, so there is consumer responsibility. You can do things in your own household and within your family and tell your friends you know, how to reduce their impact. But ultimately there is a structural issue in our society around plastics. It’s not just a consumer problem, it’s not that people are littering and not recycling and enough that that certainly is part of the solution. And that’s certainly what’s been promoted over the last 30 years. But it’s not the total solution there. There’s another level where the playing field that we’re playing on is broken. I talked about how it’s linear and needs to be circular.

Speaker 2:
A lot of this can be changed at a policy level. So when you see a bag band go in place in your community, that’s a policy change, which is helping drive the behavior and what we’re trying to accomplish essentially with getting more in line with nature. You know, so people can get involved in that process for sure. Um, by you suggesting a local ban on problem products that are creating issues in our environment, such as single use plastic, um, polystyrene, which is, you know, very problematic in the environment, in the environment. So styrofoam containers and things like that. Yeah. Polystyrene and styrofoam. Yeah. So when you get a clamshell of your food and it comes in styrofoam, that’s a very, what’s that?

Speaker 1:
They come out with something to fix that?

Speaker 2:
Well, you know, the, the, the easiest answer is theirs. Other solutions that are a lot less harmful to the environment that are already out there, you know, like a plate, uh, that for example,

Speaker 1:
they’re taking it to go and if it’s in your car,

Speaker 2:
well, you know, a paper wrap is also a good solution. Um,

Speaker 1:
awesome. Is that they’d put in there sometimes. I know San Francisco tends to use a lot of that,

Speaker 2:
you know, California just passed a law where, um, to make it easier for people to bring their own containers into a takeout restaurants. Oh wow. Yeah. Because there’s been a lot of pushback when you bring your own container, they don’t want to touch it. They’re scared, you know? So California has passed a law to clarify the rules on how to keep people safe. But at the same time, you use a reusable containers, like if you want your hamburger in your own container, how do they do that to California? Made a rule that helps clarify how to do that. So

Speaker 1:
amazing. And do you write any of these rules on your website or anything? Do you have any of this stuff as it comes in?

Speaker 2:
Um, you know, most of it’s just in the newsfeed. If you Google plastic single use plastic, uh, yeah, you can, huh? Yeah, I, yeah, I don’t try to track it cause it’s, it’s really, it’s a huge movement across the United States, across the world. Right now I’m dealing with this and there’s, um, it’s pretty exciting because, you know, the world’s waking up to the issue of plastic pollution. They’re finding plastic, um, in all areas of the ocean, even in the North pole, even in the South pole and all lakes, all waterways, they’re finding it in animals are finding it in us. I saw a report that each of us eats about a credit card’s worth of plastic a year. It’s in our water, you know, so yeah. So this is the issue that once plastic is created, it never goes away. And that’s a problem because it’s not circular. So it’s trying to solve this problem is I think next to climate change, probably our most pressing environmental challenge. And if we can face this and, and solve it together, um, and there’s lots of opportunity to do that, uh, we’re going to be a much better place.

Speaker 1:
Well, I love what you’re saying. I love everything that you’re doing. I love your purpose and your passion for it all. Um, and if any of you are interested in finding anything out about Chico bag, all you have to do really is type in Chico bag, truly. And I, it’s Tico back.com and, and I got that right. Right, right.

Speaker 2:
Yeah. And we have another site called to go where.com. It’s T O dash geo ware w a R e.com. Okay. And that was also the little, that was the, that’s the utensil set. Yep. And all the baggies and all that that go with it, right? Yeah. The, the, the bags are with Chico bag to go where as you tensile sets and the little lunch pails that you can bring, um, your lunch in.

Speaker 1:
Okay. Okay. So if you want to do your part in um, helping the environment and supporting Andy and his advocacy, cause I love what you guys are doing and I just kind of joining in on this movement. It really is very simple by just having an ABAG added onto your purse. I have them all the time, I love them. And then I don’t forget my bags. Um, so anyway, I’m so happy you’re here and go check him out@chicobagsdotcomandtogowhere.com and if you wanted to learn a little bit more about benefit corporation, this is, this is the guy, he has done it. You are really setting a great example. So thank you all so much for watching. I’ll see you next week. Bye.

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