Ep002 Spaceship Podcast - Matt - Preview
[00:00:00] Matt: We don't live in a world right now where governments habitually make sensible, ambitious decisions about the public goods we need to create and then efficiently go about creating them. So, if we could pass those mandates to private companies who can do good while also doing well, if you can create a business model where doing the right thing is profitable, then you've won.
Clement: What does chocolate have to do with peacebuilding? Apparently, a lot. On today's show, we take a trip to Colombia in South America, where cacao is growing in the same places where they grow cocaine. In 2018, the demand for cocaine was higher than any other time in history- and the violence associated with this drug is hard to ignore. Colombian small farmers face the dilemma, either growing illicit crops to survive because they are more lucrative, or farming legal crops in poverty.
So many of these farmers [00:01:00] live below the poverty line.
That's where chocolate comes in. Today, we speak to Matt Whiteman, the co-founder of Choco4Peace, a social enterprise tackling this huge, systemic problem - one piece of chocolate at a time.
Laura: Matt has a long history in the international development space, from working to help finance sustainable agriculture to ethical approaches to international volunteer engagements. But over the last few years, Matt and his co-founder Sergio have been running Choco4Peace, connecting cocoa farmers in Colombia with global markets.
They're also leveraging blockchain technology so that all interactions are recorded in real time.
So, basically, a chocolate fan like me can trace the origins of the cacao in their chocolate bar back to the farms where it was produced. But it's not just about technology or delicious chocolate. (Yes, I'm already hungry.)
At its [00:02:00] core, Matt's mission is about looking at the crisis of peace in Colombia in a whole new way. So here's Matt.
So Matt, I'd love to start off by you just introducing to us what it is that you do in your own words. Um, and I consider you an impact entrepreneur, but. You know, how, how would you describe what it is that you do?
Matt: Great. Thank you, Laura. And thank you, Clement. So, I'm with a startup called Choco4Peace.
That's chocolate for peace. And the place I normally start these conversations is around the idea of dignity and it's something that I'd wager that most people listening to my voice kind of take for granted on a daily basis. The most undignified thing I can think of that I've ever done was like, forget my towel when I'm taking a shower and have to sort of scoot across my living room, but -
Laura: How undignified.
Matt: Nobody wants [00:03:00] to see that. So. But, our organization works with ex-cocaine producers and war victims in Colombia who have made the transition from cacao, which is the base ingredient in chocolate. And we support them with access to international markets and fair prices, technology and finance. So that's, that's what we do, but you know, it involves confronting that idea of, of dignity and the lack of dignity face to face because, you know, often the people we're working with, they are forced to engage in illegal activity - such as the production of cocaine - often for the same people that have murdered their families. And this is a decision that they have to make in order to survive. So we're engaged in that space and trying to lift farmers out of poverty, build peace in rural communities in Colombia. And, as I said, built lives with dignity.
Laura: Can you expand a bit further around this problem in Colombia? Um, can you tell us a bit more about... what do you [00:04:00] feel is like the central driver to this problem?
Matt: Sure. Yeah. And there's a bit of important historical context here. So, Colombia was at war... a civil war for 52 years, with a number of different armed groups.
The most notorious one that people would probably have heard of is the revolutionary armed forces of Columbia or the FARC. And there were a number of others, but, anyway, in 2016, the FARC signed a peace agreement with the government of Columbia. And that effort was awarded the Nobel peace prize, but that conflict killed about 220,000 people and displaced millions.
But we like to say peace doesn't come from signatures on a piece of paper in a capital city. It comes from... actions on the ground. And so, a lot of the things that were included in that peace building plan have not really trickled down to many areas of the country and conflict persists. I mean, obviously [00:05:00] conflict is a very, very complex thing, but during the conflict, many of these illegal armed groups would coerce farmers to produce coca, which is the base ingredient in cocaine.
And these groups would then tax the harvests and then funnel the proceeds into their violent campaigns. And so what we see is that the production and trafficking of cocaine has destabilized the entire American region. It's an incredibly violent endeavor. And you know, it's obviously been popularized in a lot of our media.
You think about the netflix show 'Narcos,' right? And last year there was a lot of media attention towards migrants that were coming from countries that were affected by the trade. You know, most of the migrants who were pushing North to the U.S. border to seek asylum were from Honduras and El Salvador, which are two of the first points of entry for Colombian cocaine before it travels north [00:06:00] over land through Mexico to the United States.
So, anyway, the reality now is that cacao, the base ingredient in chocolate is grown by approximately 65,000 families in Columbia. And the majority of those, about 90%, are small holders. So producing on three hectares of land or less, and most of those farmers, but 73% of small cacao farmers in Colombia live below the poverty line. And that means they earn $2 per day or less. And so the dilemma that these farmers now face is that they either have to continue to farm legal crops, like cacao in poverty, or they have to return to illegal activities like the production of cocaine, prostitution, or joining an illegal armed group in order to survive.
So that's what I mean when we talk about dignity, this is the central... It's a very complex problem, but that's the result.
Laura: So, I guess long story short, one of the big issues is the fact [00:07:00] that we're just not paying enough to harvest cacao. We're not paying enough for our chocolate, which is moving people to these last resorts, including cocaine.
Matt: Yeah. Cacao is traded as a commodity on the stock exchange. And so you have enormous companies... think about Nestle or Mars or Mondelez, you know, and they all obviously have a vested interest in keeping the price of their raw materials low, because how much does a Kit Kat bar costs at the corner store? It's like a dollar.
And there's not actually that much cacao in there. It's mostly sugar. It gets a little more complicated because the cacao that gets produced in Latin American countries, like Colombia is actually genetically different from the majority of cacao that gets produced in the world, which most of which comes from West Africa.
In Colombia, it's much more naturally floral and fruity and flavorful, and you don't have to add as much sugar and other crap in order to make it taste good. And so it tends [00:08:00] to get sold as something called Fino de Aroma cacao. It's higher quality. But most Colombian farmers don't have access to international markets, to the craft chocolate makers that understand the value of this product and are willing to pay for it.
The craft chocolate market is very, very small. It's about 5% of the total chocolate market around the world. And so. It's difficult for farmers to, as you say, command, the prices that they deserve, that their product is worth. So, you know, most farmers would make perhaps 90 cents for every kilogram of cacao that they sell.
Anyway, when you end up doing the math, this is the system that ends up keeping farmers in poverty.
Clement: Have you tried to solve this problem through charity and through other ways? And do you see any difference? In solving it through business instead of charity or government.
Matt: Yeah. Yeah. So my business partner, Sergio and I met [00:09:00] in another organization that was a not-for-profit organization and we were doing access to finance services for small holder farmers in sustainable agriculture and forestry in emerging economies. So it was a nonprofit model and it worked for a while. It was a wonderful organization that was doing really important work, but the nonprofit model is an inherently difficult model to sustain financially. So many of these organizations spend such a ridiculous percentage of their resources, just trying to get more resources that their ability to actually do the job efficiently is very low.
There tends to not be a great attention to financial sustainability, because nonprofits are not meant to, usually, create profit generating activities. They're doing other kinds of... they're creating public goods. Sometimes those things are divorced from that kind of financial sustainability component. I also come from a family of civil servants.
I was born and raised in Ottawa. Capital city here in Canada. And I have a lot [00:10:00] of really, really smart friends working as policy people in various ministries, and they've become very jaded, very fast because it often doesn't matter how smart they are or how intelligently they craft a policy recommendation for their minister.
If there are some other political motivation to the decision that gets made in the end, then it doesn't matter, you know, how many good policy memos you write. Often that kind of advice doesn't get taken. So, on the other hand, I had never really worked for a for-profit company, at least not as an adult.
For now, I believe that for profit companies can and should be engaged in the creation of public goods and they should be incentivized to do so. And also smartly regulated because private companies tend to be able to do that kind of thing more efficiently than governments can. But, we don't live in a world right now where governments habitually make sensible, ambitious decisions about the public goods we need to create, and then... effficiently go [00:11:00] about creating them. So, if we could pass those mandates to private companies who can do good while also doing well. If you can, if you can create a business model where doing the right thing is profitable. Then you've won.
Clement: Yeah. And I like the fact that you kind of replace a business with another business, but the two are farming - I liked the correlation between the solution and the problem.
I'm curious to ask you, what was the, the insights that directly led you and your cofounder to say, "we need to sell chocolate!"
Matt: Yeah. Yeah. Good question. So the problem that we're trying to solve has a name like in various turns, our company looks like a chocolate company. It looks like an international development company. It looks like a blockchain company.
But actually what we're trying to do is mitigate investment risk. So there's this thing called the small holder [00:12:00] agricultural financing gap. And... what this is, is there are approximately, I don't know, 450 million small holder farmers around the world.
Most of them lack access to finance. And I'm happy to go into more detail about why that is, but in aggregate, that gap in financing is equivalent to about a half a trillion dollars. And... these are the people that grow our food.
And the result of these farmers not having access to finances is that they can't improve their farming practices. They can't get access to the resources they need, they can't get training. The negative consequences are these farmers remain in poverty. It's very difficult to escape the poverty trap if you can't tech up. And so you end up with these undesirable social behaviors, but you also, if you're trying to farm crops without a sort of integrated agroforestry strategy that takes into account biodiversity and soil health and all that kind of thing, then.
[00:13:00] You know, you end up exhausting, your resources, your land productivity goes down. And a lot of what we see is that. You know, cacao trees age out, start to decrease in productivity after about 25 years. And so farmers will often abandon their farms, cut down a new swath of rainforest and start over again. So this kind of thing is, is one of the causes of deforestation that we're seeing in the Amazon.
So in this previous organization, we were trying to solve this, this small holder agricultural financing gap. And there are lots of different organizations that are trying to do this. And we had started with knowing, okay, well, in order to finance these farmers, you need to mitigate the risk to the investor.
And so how do you do that? And we had conducted a research project with a large number of different stakeholders from development finance institutions, small and medium enterprises themselves, second floor banks, academic institutions, NGOs, private companies, et cetera.
And what that research told us was that.... [00:14:00] obviously poverty is a very complex issue, but one of the main reasons that the small holder farmers remain in poverty is because they lack access to a variety of socioeconomic services. They need access to international markets. They need to be paid fair prices. They need technology, they need capacity building and other kinds of education, specifically technical assistance to improve the quality and quantity of their crops.
And they need access to finance. And they need access to good governance and policy frameworks. Then we said, okay, this seems to be what these farmers need in order to succeed. What is the best way to deliver all of those socioeconomic services in an integrated way? So we didn't, we didn't start by thinking about chocolate from the beginning, but my cofounder Sergio is Colombian and he grew up during a war.
So there was obviously a strong personal connection for him there. But, um, you [00:15:00] know, the Colombian government, as part of the peace building process created a crop substitution program to incentivize farmers, to transition away from the production of cocaine and towards the production of legal crops. One of the key crops that they identified in the peace building process was cacao and Colombia has outstanding quality in terms of cacao, but they're actually a net importer. So Colombia consumes more chocolate than it produces.
And so we saw an opportunity there. We know that the craft chocolate market is growing. It's grown consistently. Uh, and so we said, look, chocolate is sexier than onions. Why don't we explore a business opportunity here? And the solution that we came up with is obviously applicable beyond just cacao.
You know, you can use this for any commodity in any geography, but that's where we began.
Laura: This is so interesting and it sounds like there were so many different, I don't want to say iterations of solutioning, but as you were mapping out, [00:16:00] what are the needs and what are the specific things that these farmers are lacking in terms of access.
And I mean, you've had all of this experience before you even decided "chocolate is the way." Do you have any suggestions or, or do you have any feedback about that process for, let's say an entrepreneur who may be doing that for the first time and looking at a really complex problem and trying to identify what part of that problem, what part of that system they could leverage to have the most amount of impact as an entrepreneur through business and not necessarily having to rely, as you said, on policy and handouts and nonprofits.
Matt: That's a good question.
Laura: I know it's a big loaded one, but I figured, I figured why not go there?
Matt: Well, I can't take credit for the idea for the company. I was there to support Sergio with the research project that he was leading. And we were obviously all, as a team, thinking about this [00:17:00] access to finance problem. But, the core of the idea was not mine. I was brought on as a cofounder about six months into the process.
And my responsibility was to build partnerships internationally with an ecosystem of stakeholders that were going to enable us to get the job done. But going back to your question, when we were growing up, we were always sort of asked, what do you want to be when you grow up? And I remember reading a quotations from somebody whose name escapes me, but they said, that's the wrong question to ask the question we should be asking is what kind of problems do you want to solve?
And then if you think about it like a project manager, what's the problem that I want to solve? And, what are the things that are standing in the way of the world that I want to live in? And then you just work backwards from there. So if you think about a moonshot solution, what would it take? And allow yourself to dream a little bit.
What would it take for me to solve this massive problem? Okay, well obviously political will, that's a really tough one to solve, but it's not impossible if you find the [00:18:00] right people who hold the levers and make decisions, and you have an honest conversation about...and try and build consensus around the problem that exists in the solution.
You may not always agree on the solution. You may not have any ideas, but the solution, but if you can identify what the problem is, then together, you bring a bunch of brains together and you can workshop the problem and there's lots and lots of smart people out there that have been thinking about these kinds of things.
Maybe those kinds of people know what barriers stand in the way of the problem. And maybe the innovation that you can bring as an entrepreneur is to find some creative, new way of moving one of those barriers out of the way.
Laura: Hmm. I really like that idea. Cause you're right. You know, it's probable that you aren't the only person thinking about that problem or you're probably not the first person to take a crack at it.
So you have to also think of it almost like holistically in that sense.
Matt: Exactly. Yeah. Yeah.
Laura: So what makes you, I mean, not to put you on the spot, but you are on the spot in this very moment. What makes you think that [00:19:00] you could help solve this problem? You as Matt, you know, I love this idea of we should be asking what types of problems do we want to solve, or what types of challenges are we interested in?
Um, how does this relate back to your... call it a "North star" or your why in life?
Matt: Yeah. Uh, I, I don't think I can solve this problem. This is something that many, many smarter people than me have been banging their heads against a brick wall, trying to solve for more years than I've been a professional. But what I can do is I can use my emotional intelligence and my head, my heart, and my hands.
I can use those tools to bring together a bunch of people who are smarter than me, who are all walking in the same direction and just get them to talk to each other. And sometimes that means building consensus. Sometimes that means reducing competition and duplication of effort. Ultimately, as I say, you know, I spend a lot [00:20:00] of time in sort of idealistic daydreaming.
I spend a lot of time thinking about what the world might look like in a hundred years and beyond, and what might be possible for our species, and what we would need to do to get there together. And as I say, what is standing in our way? And, how can I leverage my knowledge and skills towards dismantling some of those obstacles.
One of the biggest existential threats, I think we face as a species, lies at the nexus between poverty, conflict and environmental destruction. And so, I do what I do with the aim of creating abundance and resilience in natural ecosystems and the communities that depend on them...so that we can just get that problem out of the way and figure out what it is that we're here to do as a species and just get on with it.
Laura: Just get on with it. I think that should be... that's probably gonna be the title for this episode. I love it.
Matt: You know, I feel like there's so much petty, [00:21:00] mortal bullshit that we waste our time with. And we have so many better things that we could be doing. And I'm just, I'm just impatient. Really. I'm bored of it. I would like to do something that is more interesting and more unified.
And I don't know, maybe that makes me sound like an idealistic hippy, but you know, fuck it. We're in a pandemic and I think it's time for bold thinking.
Laura: Well, it sounds like you can't do this type of work without. The bold thinking that you have. So, I think you are where you need to be, because you definitely picked a challenge that was not... I mean, when we talk about scale, when we talk about sustainability just in terms of the longevity of the solution that's needed, I mean, you're right at that nexus right there. So you've definitely picked the right type of problem.
Matt: Well, and one of the things that I maybe, I don't think that we talk about enough in entrepreneurship is the problem of facing one's own demons.
When I joined this organization, [00:22:00] I was just about at rock bottom. I was just about the most depressed I've ever been in my life. And I was, you know, I had, I had lost my job. I was spiraling. I had invested 10 years of my life, educating myself in a particular field and the first job I got in that field crashed and burned. In a spectacular way.
And I was left, reeling and saying, okay, well, what the hell have I done? What am I going to do next? I felt like I was stranded in the middle of the ocean without any land on the horizon, without any sense of what direction in which to go. I'm like, okay, well, if not international development, then what?
And Sergio called me up and invited me to go for a drink. And he was almost whispering because, you know, it was like this, this secret, you know, and he's like, look, I've been thinking about this [00:23:00] problem. And I want you to think about this with me. And it was like, you know, he jumped into the water next to me and he's like, I know where there's land. And I need you to trust me and it's going to be hard, but we're going to swim together.
I mean, I, I'm so grateful to Sergio for his leadership and his trust and tireless, fearless bravery, you know, but it's, it's really hard. Like one of my professors once said the most important revolution is the revolution inside and he called that an involution.
And it doesn't happen out in public. It's not something that happens on the stage. It comes from quiet reflection and, and it's a decision that you have to make kind of on your own. And it comes with a lot of fear and doubt. And, uh, you know, the number of times as an entrepreneur, that I've been... everybody has the... what do you [00:24:00] call it when you feel like a fraud, the -
Laura: Imposter syndrome.
Matt: Imposter syndrome. I mean, I feel that obviously very, very strongly, but the number of times I felt like quitting. Like if I was in charge, we would have... this would have ended a long time ago. So, I don't hear a lot of people talking about the personal struggles that they have to go through. The sacrifice that they have to make in order to, to build the world they want to live in.
Laura: That's such a good point. Thank you for bringing that up because I think we, we, we, as entrepreneurs Clement and I, feel that all the time, even with this Spaceship journey, it's, it's so meta to be doing this podcast to shed light on some of the mistakes and some of the learnings that we've made to try to bring, you know, other entrepreneurs along with us into this impact journey. But knowing that we haven't figured it out, you know, we don't have a silver bullet, you know? So it's so meta that we're even talking about this on this [00:25:00] podcast.
Matt: That's how we like it.
Clement: And I liked the fact that you trust Sergio and you say, you know, in a way he helped you kind of find your "why" in the business that you're running in the activity that you are doing and the impact you have today.
And how would you say how important is aligning your "why" with your business or your goal? Even if you maybe didn't decide to go that way, you kind of trusted a friend who brought you there. Now that you can look back, it would be amazing if you could share your opinion on how important is aligning your "why" with what you do?
Matt: Yeah, I mean, so I studied international development at graduate school and what I studied, it looks nothing... it looks very, very little like what I actually do today. So I, I was leading our research project or [00:26:00] co-leading a research project that was looking at the ethical implications of sending privileged white volunteers like myself.
My last name is literally white man. So there's plenty of reflection on that.
Laura: We won't hold it against you.
Matt: Well, you know, people, people live up to their names. I'm trying to, I'm trying to make the best of it here. So, what are the implications of sending young people like myself to marginalized communities abroad and offering their services as volunteers?
And the research that I did for my master's thesis was looking at that question, but from the perspective of the host organizations and communities that host those volunteers. Most of the research that had been done up until that point was from the perspective of the volunteers and the sending organization.
It's like, what do you perceive are the ethical implications of what you do? There was this entire half of the equation that was left out. So I did my field work in Western [00:27:00] Kenya, and anyway, I won't get, I won't go into too much of the detail, but my "why" was always around ethical, international engagement.
Right. And one of the maxims that was at the center of that research project was that even with the best of intentions, it's easy to do more harm than good.
And that causes a lot of anxiety for an over-thinker like myself, because you're, I'm constantly like, Oh, you know, what are the potential consequences of all of these decisions?
They're so difficult to forecast, but one of my thesis supervisors was in the medical field. And so he, he would always start with the Hippocratic oath, right? First, do no harm. Primum non nocere in Latin. But it's not enough to just do no harm, you actually at some point have to pick some ethical ground to stand on and then try and do some good.
So in terms of the work that I choose to do, [00:28:00] I guess that kind of principle sort of formed the foundation in a way. And it didn't really matter to me when I was looking specifically, at what kind of problem I wanted to solve. Cause there's so many different things that I could do, like, okay. One of my earlier attempts at entrepreneurship, that, that didn't go very well... was when I was in Kenya, I tried to start a company that was supporting youth who were living on the street, to have housing security, food security, and job security, because lots of the resources for street children and women tend to be for people that are under the age of 18. They're for children, right?
Because, you know, it's a quote unquote "sexy" development issue. And so if you have these 18 year olds who have aged out of these programs, that they don't support anybody over the age of 18, then you have an increased risk of recidivism of people going back [00:29:00] to either illegal behaviors or dangerous behaviors, addiction, prostitution, violence, et cetera.
So that was an issue that fell into my lap during the research that I was doing and it captivated me and I was like, Oh, okay, well maybe I can use my brain to help solve this problem. But it wasn't something that I was looking for. It sort of found me and that I guess has been the way that I've gone, you know. But the things that have found me are these things that seem to speak to something... crucial and perhaps broken about the human condition.
So, when Choco4Peace found me, I couldn't say no. Because it's the most interesting thing I've ever done.
Laura: There's so much about what you just said that we want to pick up on, including the idea of how do you make sure you mitigate the bad that potentially might come of you [00:30:00] having good intentions and wanting to do something good.
But before we jump into that, the concept of Ikigai which I'm, I'm sure Matt, you've probably stumbled upon this Japanese concept of aligning, you know, what is it that you you're good at? What is it that you love doing? What is it that the world needs and what you can get paid for? And kind of this intersection of all of those things.
And we talk about this a bit in the program and it's, it's so wonderful in terms of a concept and it's so hard. It's so darn hard to apply in real life. Like finding something at the intersection of all of those things. Do you have any words of wisdom when it comes to navigating or at least being able to figure out for yourself, what is it that you love and what is it that you're good at?
I mean, you mentioned, you know, your co founder, Sergio, like, he really needed someone to be able to put the right people in the room, have these difficult conversations, forge [00:31:00] these partnerships. That's your strong suit. That's something that you do well. I haven't known you for that long, but I can see it in the way that you are.
I just wonder, do you have any thoughts or words around trying to align those things?
Matt: Yeah, that's a hard question, Laura. Um, so I mean, doing something that you're good at and that you like to do. You know, some of these things are easy, but finding something that late capitalism finds valuable... that can sometimes be challenging.
In terms of advice. Jeez. Uh-
Laura: If this is easier, have you been able to identify the moments where you feel like, you know, this concept of a, I think it's called, uh, "a shit sandwich." If I'm not, I'm not wrong where it's like, you're okay to put up with. Some level of quote, unquote "shit" to really be able to [00:32:00] do the thing that you love, or to really be able to have the impact that you want.
And I think this term was created to refer to either, you know, entrepreneurs who are okay with not making as much money at the beginning or are okay with relocating to a country that they might not necessarily want to live in, but to really have the impact that they wanted. And I guess I see that in my own life.
And I mean, Clement, you've had so many businesses as well. There's always a certain level of like, what are you willing to put up with? Yeah, I guess it's just in and around that thought.
Matt: Yeah. There's a lot of, a lot of rich stuff there. I mean, I, there was another line that I like and it goes follow those who seek the truth and run from those who claim to have found it.
And I think leadership is so important because you know, lots of people have many wide ranging interests. And I think, I think it's, let me start there. I think it's important to cultivate a lot of different interests [00:33:00] read a lot, learn as much as you can. I mean, I'm lucky that I got to do two interdisciplinary degrees, right?
My undergraduate degree was in human geography and then I, I did a graduate degree at the intersection between international development, ethics, anthropology, and population, public health and social work.
And so as a result, like I got to be exposed to many different fields of study and I read somewhere, maybe this is apocryphal, but that lots of successful entrepreneurs tend to be interdisciplinarians. And I hope I haven't just jinxed myself, but what I think that speaks to is just that you were talking about the nexus. If you can sit at the meeting place between a bunch of different fields of study, and then the sort of natural elements of synthesis will kind of bubble to the surface.
And if you've already been stewing in those juices for a long time, then maybe you have a sense of how various systems in those different fields work. Where does the money come from and where does it go? Who are the key players [00:34:00] in these fields? What are the problems that they're struggling with? What are their inefficiencies, what are their blind spots and biases?
So I don't know if there's any kind of magical recipe that I can recommend, but there is something to just, you know what I think it's just paying attention, going back to like, thinking about the world you want to live in. And then... Sergio said to me, the reason that he did this in the first place. It was because his father told him, if you don't like, the way something is done, then do it yourself. Which sounds, it sounds so simple, but maybe there's something to that and you might not always get it right the first time. You might fall down.
I definitely fell down really, really hard the first time I tried it, I was kind of reticent to try again, but. You know, I had a great leader and I'm surrounded, we're both surrounded by lots of other, really, really smart people in our field. So I dunno, I'm kind of all over the place here, but, um, Hope that was [00:35:00] useful.
Clement: Yeah, that was, and I want to maybe jump back on doing good starts with not doing any harm. That relates a lot with something that we cover in the course, which is the externalities of a business and an impact where by solving a problem - we solve one problem - we might create some tiny, small other problems on the side or not so tiny, as well.
So, how do you think about externalities when it comes to your business?
Matt: That's a question that haunts me regularly, Clement, so thanks for digging in deep on that one. No, um...
Clement: I would like to add that, no worries, you are not the only one. I think it's, uh, it kind of is the same for many entrpreneurs.
Matt: Yeah. And the potential consequences of not internalizing your negative externalities is much higher today than it would have been for somebody starting a company 50 years ago. I think we have a [00:36:00] citizenry that are more informed and, I hope, paying attention and people are getting really good at trying to hold other people accountable and follow the money.
And so, you know, the decisions that we make, I feel like we're in the process of inheriting this mangled economy from the previous generation and they inherited, you know, a different one from their ancestors. And so it's our responsibility now to take this and turn it into something functional, I suppose, that will serve the people who are here today and the people who might be here tomorrow.
So the foundation of our organization has, has been, I think, to try and internalize some of that negativity that gets created in traditional supply chains. So one example would be the concern that the use of blockchain technology uses a lot of energy to do the math that you need to do the cryptography.
And a lot of the computing power comes from parts of the [00:37:00] world where maybe the kinds of energy that you use are not very green. A lot of server farms are in China and China still runs on a lot of coal power. So by trying to create greater traceability in supply chains and trace impact to mitigate investment risks, perhaps I'm actually generating more carbon.
So, you know, it's important for us to measure that, to understand what are all of the effects positive or negative of all of our business activities and just be really honest about it. Like, you don't have to solve all the problems on day one, but you, well, I believe that you should be accountable for those.
And there are perhaps less ethical business leaders that don't care. So, in that circumstance, we're trying to offset that by collaborating with organizations that offer integrated agroforestry strategies that I was referring to earlier, that will plant a number of trees equivalent to, or greater than the volume of carbon that we would produce through [00:38:00] our business activities.
So, you know, that's just a simple example, but one of the bigger, more nebulous questions that I come to with this project is like, okay, well, let's say that we are as successful as our wildest dreams and we end up diminishing the problem of illegal coca production in Columbia. Well, obviously there are interests there that are beyond our control.
And would that mean that we would be pushing cocaine production to another country that is in a similar sort of dire situation. So, like, Peru or Venezuela, look at Venezuela. There are. Well, 1.4? 1.5 million Venezuelan refugees in Colombia right now. So it's a very, very vulnerable place and vulnerable people are much easier to take advantage of.
So yeah, that kind of thing worries me as well. Like okay if we're solving the problem here in Colombia, then are we just pushing it into somebody [00:39:00] else's backyard?
Laura: I was going to say, it's almost like you can go on and on. You can go on and on for days, if you wanted to.
Matt: Yeah, I feel that, and I don't know what the answer to that is.
It's like, maybe it's like, okay, well let's just solve this thing one thing at a time, but that's not good enough to me. I think what we're trying to demonstrate and blockchain is a contentious subject and people either love it or they hate it, or they've never heard of it. I do think that the value as a supply chain traceability tool has been demonstrated.
We're trying to make advancements and use this as a way of better tracing socioeconomic and environmental impact. And so what I had said earlier was eventually you can use the kind of model that we're using to overhaul agricultural systems in different commodities and in any country, hypothetically.
So. If it works in Colombia, it would probably also work in, in Ecuador. And in fact, there are other [00:40:00] businesses, uh, that are running in parallel to us that are already doing that in coffee and cow and other commodities. And in other countries,
Clement: Yeah. And that's really interesting because you said that the problem that you solve in Columbia might push part of the problem or might create externalities in some neighbor countries or some other population within the same country.
And also the fact that you can replicate this model of trustability and all this. How do you envision your impact to be also deployed to more of those commodities and more of those countries or neighbor countries. Have you thought of the way you could engage or create more impact? Not really by scaling your business, but maybe by enhancing the ecosystem around it?
Matt: Well, I think it's important to note that we're not actually the blockchain technology specialists. We're [00:41:00] using third party organizations that have far more expertise in the use of blockchain as a traceability solution in the agricultural sector than we do. Our job is to, as I alluded to before, to try and clarify the problem, promote a solution, and bring together the stakeholders that can get the job done.
So, one of the great things about blockchain technology is that it's open source. So, anybody can use this technology to do what we're doing. I encourage people to investigate that if you're listening from another country that is facing potentially similar problems and want to explore how that might be able to support what you do then it's not something that our company can or wants to do all by itself. You know, we need, we need an army.
I was talking to another colleague before, and she said, "it [00:42:00] sounds like you guys are trying to boil the ocean" and maybe that's true in Colombia.
But as you say, the problem is bigger than just cacao in Columbia. So, what I can do is I can just promote my partner organizations that do this because they have these solutions that they have implemented in lots of places around the world. And it works.
I think it's also important to make conscious, responsible purchasing decisions with the food that we put in our bodies, because most of us don't understand what certifications on our products even mean, right? How many people listening to this have a concrete sense of what fair trade certification actually means? One of the things that fair trade is struggling with is that that certification tends to only increase the farmer's income by an average of 10%. Which if you're making $2 a day or less, means nothing.
[00:43:00] So what kind of good are we actually doing? By seeking these kinds of certifications. What better solutions could we envision?
Laura: No, it is. It brings up such a great, uh, I mean, this, I feel like we need to do a whole other podcast just on certifications and maybe the dark side of certifications or, I mean, it's not all, I don't want to paint it all black, but it's definitely shades of gray. Because as you said, you know, in practice, there's such a dissonance between what sounds really great on paper.
Matt: Yeah. Another of our, of our colleagues said that he referred to these kinds of certifications as socially acceptable economic imperialism and that poor farmers are paying global North companies for the privilege of adhering to our social values, which when you say it like that sounds...kind of ridiculous.
Laura: It does. It does. It sounds like why, why would we, have you ever come up with this idea in the first place? I mean, things like fair trade, so [00:44:00] many people don't realize that it's something that a company needs to pay for for that certification. It's not just something they receive. And just so many companies, especially small scale can't afford to buy into something like a fair trade certification.
So I want to,
I want to just quickly talk about competition because you alluded to... so when you're talking about, you know, the fact that you're not a blockchain company, you're collaborating, you have partners, you, you don't do things alone. You're able to have the impact that you have because you're seeing the entire system and you're trying to figure out who can we partner with to bring about this type of change.
Um, and it is a different perspective than a traditional... You know, the traditional way of thinking about business or entrepreneurship. And so what does competition even look like in the social impact space that you're in?
Matt: Um, well, and I should preface this by saying that I [00:45:00] don't have an MBA, so, uh,
Laura: neither do I.
Matt: Well, just, you know, in terms of my business savvy, perhaps I'm out to lunch. So there is always that possibility.
Laura: Let me, let me put it to you this way. So I feel I've had the feedback before, you know, being with a group of impact entrepreneurs and people going well, I don't necessarily want to create another... you know...maybe someone would say, "I don't want to create another chocolate company because there's just so much chocolate out there. We have, we have so much access to chocolate. And so the competition is just way too big."
Maybe that, that makes it not worth doing or not worth exploring. You know, I don't necessarily have an answer to it, but I've always felt like there's something unsettling about that thought because the more ethical chocolate there is available, the more awareness there is about what isn't, and isn't that better for the entire system in and of itself? So it's almost like I have this, it's making me rethink this idea of competition.
[00:46:00] Matt: Yeah. You know, we, we never set out on this journey with the intention of reinventing the wheel. Um, we know that there are lots of other people that are smarter and much further along on their business journeys than we are.
And so if we can learn from them, stand on the shoulder of giants, as it were, then I'm happy to do that. Right. I'm sorry. I keep quoting other people, but, and I forget which American president said this (Harry S. Truman) , but the line is you'll get a lot more done. If you don't care who gets the credit. And... that can be kind of annoying if you're trying to pay your bills, but maybe this just comes from when I was a kid, I always hated competitive sports.
I always much preferred the collaborative ones. It's kind of funny. The only board games I really like are those ones where it's everybody against the game. So I, yeah, I much preferred to try and find opportunities to, to work together. Not everybody shares that sentiment and I applaud those who have found [00:47:00] solutions that do create, you know, public goods and are ambitious enough to, to try and replicate what they do elsewhere.
We certainly have... so I call them partners, collaborators, competitors that are doing something similar to us in a, in another country. But if they can end up solving the problem that I'm trying to solve in my field, then.
You know, part of me thinks, great. It might eat into our profits. But part of that also is just about the ability to be agile and to, to find other opportunities. So maybe competition can promote creativity and you say, okay, well, this might not be an option for us any longer, but. Maybe we can do this other thing that this company hasn't thought of, or, you know, we have a very different brand story than some of the other blockchain food companies. We're the only one, as far as I know, that focuses the peace building component.
So, there's lots of room for people to play together. [00:48:00] And part of my job is to go out and meet all of these people and say, look, what can we do together? What kind of common ground do we have?
Laura: I love that. As we close off, is there a way for us or anyone listening to help support - well, not just your business, the cause that you're, you're advocating for, that you, you, you care so much about and that you're pushing through Choco4Peace as your partners call it, whatever you want to call it, supporters. What are the one or two things that anyone can do to kind of help move that forward?
Matt: Yeah, I mean, I wish I could easily say, go to our website and buy our chocolate, but we are not that far along with our eCommerce platform, unfortunately. So if you wanted to get in touch with me and you wanted some chocolate, that's something we can sort out.
Obviously global supply chains are in a bit of a mess right now. So we're in a bit of a holding pattern. Colombia has gone into a second round of lockdown. So that's affecting things, but with the good [00:49:00] faith that we will escape this eventually, um, and we get to build a new normal, we will have a new batch of chocolates whenever we need it.
So, you know, you can put your money where your mouth is and give our chocolate a try. I don't want to just Hawk our products. We always say this isn't about selling chocolate. This isn't about candy. This is a movement, right? The chocolate industry is busted. None of the top 10 largest chocolate making companies in the world can guarantee you that their supply chains are free of child slavery.
So let that sink in. When you choose the chocolate bar, you don't have to choose ours, but pay attention to what's on the label. Does the label tell you where the beans come from? Not where the chocolate was made. Cause it's probably made in Belgium or wherever else it is, but where did the beans come from?
So the more information you can get from a label, the more transparency and the more ethical you can assume that our product is. So that's what I would [00:50:00] say -- pay attention to the food that you eat and the labels and understand what those mean.
Laura: I will never think of chocolate the same again. Thank you so much.
Clement: Thank you so much, Matt
Matt: Thank you, Laura, Thank you, Clement.
Clement: Thank you for listening to this episode of The Spaceship Podcast, all part of our wider impact entrepreneurship program. Now, if you are curious to learn more, or you're thinking about solving big problems through business. Be sure to check out thespaceship.org. Thank you and see you next time on the show.