Design for Good | Olio Co-Founder Tessa Clarke on food waste, female founders, and measuring social impact

25:49and that driving true behavior change is many orders of magnitude more challenging. And what we're trying to do at Olio is all about behavior change. So we've had to do a PhD type approach to learning around behavior change, what is it and what are the levers and mechanics that work. I almost can't think of a test that we haven't run. We have run so many tests ranging from what happens if we give people a financial incentive for using Olio. Perhaps we give them discount vouchers. Perhaps we enter them into prize draws through to what happens if we appeal to their more community-oriented sense.

26:37Perhaps if we do a donation to charity on their behalf or perhaps if we plant trees on their behalf. What happens if we dial into their sense of status and give them badges and points and gamification? What happens if we give them their impact data? Does that motivate them? And then all the biases, right? We've sort of read up and studied a lot about all the different sorts of biases that people have. And we try and utilize those behavioral techniques that honestly, mostly have been harnessed by business, not for good effects. We're now trying to use them for a good positive effect. But I would say that kind of overall, where I net out on all this behavior change stuff is a really frustrating realization because it puts us in a bit of a catch 22 situation, which is that the single biggest determinant as to whether someone will change their behavior or not is if they believe that everyone else is doing it.

27:36So what we do throughout Olio is we try and provide as much social proof as possible to people to reassure them that lots of people around them are participating in Olio. So that will include examples of when you sign up and go through our user journey really early on in the signup flow. There's a map sort of showing you with pin dots, lots of other people who are near you and telling you the exact number of people who are near you. When you land on the landing screen, you can see items that are just gone to let you know that people have been on the app already and stuff has already happened. And yeah, we continue to kind of lean into that social element.

28:22Tessa Clarke:Love it. This is a brilliant example. And I love that you went into all sorts of research and exploration of gamification techniques or anything that could drive behavior change. What things didn't work? Can you give a couple of examples of where you had high hopes and it didn't work? I mean, most things don't work, right? But, you know, we had a challenge, say, I remember we ran an experiment where if you added X many, our challenge, by the way, has always been supply. There's no shorter people who want to pick up free food or household items from the app. So our challenge is always encouraging people to take 10 seconds to give something away instead of throw it away.

28:57And, you know, we ran experiments where if you added X many items, we would give you a five pounds Amazon voucher. That was just deeply challenging because there's always a bunch of bad actors who will then exploit that, for example, by putting up fake listings or poor quality listings or whatever, which then provide the bad user experience. So that would be one example of where things didn't work due to bad acting. Another example where I guess the results are less clear is around gamification. So we have badges in the app. We have points in the app. and we find that some people absolutely love that they love to gather the badges they love to gather the points I say they're roughly about 20 % of people and there's another 20 % of people who hate it they complain all the time they think it's childish and pathetic and oh no I should get rid of it and then there's the kind of 60 % in the middle who are a little bit like yeah you know kind of on balance it's okay some days it might motivate me some days it doesn't so but that's obviously kind of for our business.

30:01And that's another thing we've had to learn through this process. We might look at Duolingo and go, oh my goodness, streaks, we need to do streaks. But then you realize, well, streaks can work really well for learning where essentially there's an infinite amount of time that you can give, right? Essentially, you can give a maximum of 24 hours, right? Whereas with sharing surplus from your home, there's only so many things you can give away. And so that's another thing we've had to really learn is just because something work really well in another business does not mean to say it's going to work in your business.

30:30Tessa Clarke:Love those examples. And I feel like it's, again, such an interesting parallel with what you said earlier about employees and culture and doing good. At the end of the day, it all comes down to intrinsic motivation. So if people are motivated to do something good, that would be the strongest as motivated for them to do that. Again, how do you encourage people to have this motivation? That's a separate question, but any external motivation can always go wrong direction. Well, I think so intrinsic motivation is absolutely crucial. Another one of the key learnings that we've had on this journey is that the fastest way to kill intrinsic motivation is to layer an extrinsic motivation mechanic on top of it.

31:17So if people are doing something because they love it and it makes them feel good. If you then offer them something on top for doing that, often that makes it feel just a bit gross, a bit like you're now bribing me or you're now undermining the inherent value that was in that beautiful thing. So, and I think a lot of intrinsic motivation is driven by our cultural values as well. And that's another thing that we have learned as an organization is that we cannot overnight with close to zero marketing budget change the inherent cultural values of the country in which we operate and where our users are and so we have to recognize that and kind of work within that constraint and that's sort of part of the reason so for example that's why we've to really dial back on the climate stuff because that just doesn't work.

32:11Like right now, people aren't particularly intrinsically motivated for that, but they are for helping their community. Now, obviously things change, right? As we were speaking in the midst of just insane weather events. And the important thing that you have to remember as a business is to keep testing things. So something that didn't work last year doesn't mean to say it won't work this year or even next year. So we work really hard, even though we've scaled as an organization to keep that real startup mentality of just continually testing things.

32:44Tessa Clarke:Brilliant. And speaking of business and startup mentality, you decided to fundraise, which is, again, a decision that any company and any founder has to make, whether they want to bootstrap. And especially in Europe and the UK, I would say bootstrap businesses are more common than venture-funded businesses. You decided to fundraise. Why did you do that? And how was it? So we knew that we would have to fundraise because we knew we were building a marketplace model, a first of a kind marketplace model. And we quickly learned that it was not going to be immediately straightforward as to how we would monetize that.

33:21And we knew that we needed to get to scale in order to be able to monetize that because essentially we're facilitating people sharing lots of low value items. So we were always going to be kind of a high volume, low value type marketplace. and to get to scale, we would need to invest. So we knew from the day we decided to work on Olio that we would have to fundraise to finance our growth and traction. And then further on in our journey, we would monetize. And just actually quickly closing out the loop on the monetization piece, how we generate revenues now, in case it hasn't been clear enough in the conversation so far, is we charge businesses for the service we provide to redistribute their surplus food.

34:05So at the moment, businesses are paying waste contractors to take that food off to waste streams. And instead, they now pay us and we make sure that food is eaten by the local communities. That helps with employee retention and morale. It helps remove a massive brand reputational risk of throwing away perfectly good food at the back of your stores or often outside the front of your stores in those big clear bags during a cost of living crisis. And of course, it's very powerful for your ESG and sustainability requirements. And we charge on a sort of per location per year type model. So it's a recurring revenue subscription type model.

34:41So back to the fundraising, we have raised roughly$50 million worth of equity financing. And we've done that over five rounds. And the first couple of rounds, we were not revenue generating. So we were a female co-founded tech for good, first of a kind, community-based marketplace business, which is one of the most challenging forms of business with a highly perishable supply on it, food with no revenue model. So as I'm sure you can imagine, we did not have investors beating down our door. So it required enormous amounts of resilience to find those sort of needles in the haystack, what I refer to as conviction-based investors, who were really wowed by the size of the prize, the size of the opportunity.

35:34Globally, we waste a trillion dollars worth of perfectly good food every single year. And even in the UK, households alone waste 17 billion pounds sterling with a perfectly good food. So we're like, wow, if we can just capture a small percentage of that, this is really, really exciting. So we were able to attract investors who were really thinking about the long-term, the size of the prize. They were backing Sasha and myself as founders to unlock this opportunity. And I should say that our initial investors were almost all women and people of color. And that's subsequently not been at all surprising to me because they had a far better understanding, I guess, of the problem that we were trying to solve.

36:21They were naturally and intuitively very excited by the solution. But it meant that fundraising was really, really, really, really challenging for us because there aren't many female investors or investors of color. So, yeah, it's been a very, very, very difficult process indeed.

36:39Tessa Clarke:What did you learn, I suppose, from that experience? Apart from the fact that the world is a weird place to be a founder, what may be if you had to do it again? or because you had to do it multiple times, or if anyone will be fundraising now who is potentially a female founder or minority group founder, what would you recommend them to do? So the first thing I say is kind of learn the stats and it will depress you and it will make you angry, but it's really important that you're armed with that because then you know that essentially the game is rigged against you. You can remind yourself that this is not personal.

37:15This is the system that we're operating within right now. And then you can get smart about, right, given that that is the state of affairs, how am I going to work around this to make myself successful? And if we just take the high-level stats on gender, female co-founded businesses get just 2 % of all VC investment. Both us, data point is the same in the UK, Europe, I think even globally. And that figure has not budged in over a decade. So female co-founded businesses get 2 % of equity funding. male co-founded businesses get 85 % of the funding and then mixed teams get the delta. So once you understand those stats, then the core things I'd recommend in terms of mitigation strategies are recognize both the conscious and unconscious biases that exist against you.

38:08So if you're a female founder, they are broadly that you are probably not that ambitious and you're probably not that commercial. So you need to work really hard across every dimension of your communications to reinforce that you are ambitious and you are commercial. So that needs to be reflected in your deck, perhaps the order of your deck. It needs to be reflected in your tone, your manner, your clothing, like absolutely everything needs to work really, really hard to reinforce that you are ambitious and you are commercial. Pretty early on, I realized Lots of people kept on referring to Olio as our project and you girls.

38:45And it was very clear that people were not taking us particularly seriously. And so to address that, I made the first, rather than leaving the kind of about us or the team till the very end of the deck, which is more commonplace, I brought right up to the front a slide which just had mine and Sasha's sort of credentials with visible logos, those visible stamps of approval. It's like, we are ex-Stanford MBAs. We are McKinsey. We're Boston Consulting Group. We're JP Morgan. So that it could frame up the conversation that people would then listen carefully and properly to what we subsequently went on to say.

39:23Another thing that I would encourage everyone to do is to listen to the TED Talk by Dana Kenzie, who is a university professor who did some research into why it is that female founders receive less financing. And what she discovered was that essentially female founders and male founders have a very, very, very different fundraising experience. Specifically, the female founders are asked what is referred to as prevention-based questions. That's all about the downside, like what happens if it all goes wrong? What happens if Facebook or Google come and compete against you? Whereas male founders are asked what she referred to as promotion-based questions, which is how fast can this grow?

40:01How big can this be? What other product lines could you spin off from this? What would you do if I gave you an extra million dollars? and the, I can definitely attest by the way, to the fact that fundraising as a female founder is just a litany of prevention-based questions. But what Dana recommends is that you answer those prevention-based questions with a promotion-based response. So you kind of flip that around and move it into that growth type answer. So they're just a few of the tips that I would pass on.

40:31Tessa Clarke:These are fantastic tips. And I have high hopes that the world is changing and there are inspiring people like you who show that it's possible for female founders to grow incredible businesses. So I hope this change will be faster than it has been happening for the past years. And we'll get there. You and me both. Well, it was actually very, I don't know, frustrating to hear when on one of the interviews or podcasts, you mentioned that when you studied at Stanford doing MBA, you actually, after that, you felt like you can't be an entrepreneur because everyone around you didn't look like you. And that for me is so heartbreaking to hear that someone could go and literally learn the business and after that feel like they're not equipped to do the job.

41:21Tessa Clarke:Obviously, because I work in education and Futureland Academy is very much led through the lens of empowering people to actually create incredible companies or grow companies. And you've been teaching in our executive program where you've met an incredible diverse group of people coming from all backgrounds, countries and just variety of characters and people who are in the room kind of proves that it's possible. But it does break my heart hearing that it wasn't your experience. Me too. Now, admittedly, this was 20 years ago when I did my MBA at Stanford and I was in my late 20s. So I was definitely far less confident, I guess, than I am today.

42:02But equally, you know, institution back then certainly did nothing to reach out to the more diverse students in the cohort, make sure that they felt invited and welcomed. So it breaks my heart too. I am just obsessed with the world of entrepreneurships and startups. And I listen to any podcast I can about that all day long. And I can look back and think, I can't believe I lived in the heart of Silicon Valley at Stanford University for two years. And at no point in time, did it feel relevant or appropriate for me to be sort of selecting the entrepreneurship classes and benefiting from that. So yeah, it is a shame.

42:52But for me, the main takeaway is that reminder that you can't be what you can't see.

42:57Tessa Clarke:Yes, and that's why I believe in alumni of our executive program to become those leaders who will inspire the next generation of creative design leaders, founders to do incredible things and watching them grow and scale their companies gives me that hope that they will become those examples. It unfortunately does take time. It's not an overnight thing where suddenly all CEOs and all leaders in the world will look as diverse as our countries and our societies. But one day, one day, we will all together move in that direction. Let's talk about another depressing topic. Why not? About Earth Overshoot Day, which is, I learned this term from you.

43:41Tessa Clarke:So can you tell a bit more about what is the Earth Overshoot Day? I can. And by the way, I think there is quite a neat segue from talking about the lack of diverse leadership into the concept of Earth Overshoot Day, because I personally believe that the reason why we've got this Earth Overshoot Day problem that we have is because we haven't had diversity in positions of power. So what is Earth Overshoot Day? It is the day in the year in which humanity has used all the resources that the Earth can replenish in a year. and back in the early 70s earth overshoot day was the end of the year so what that means is that humanity used in a year what the earth could replenish in a year we were broadly living in equilibrium with the planet and i have actually just realized that as i look down to find out what the date is today today is earth overshoot day so the 30th of july for the world and what that means is that every single thing that every single one of us, 8 billion people consume after today is going to be net net depleted to the planet.

44:48And clearly it does not take a rocket scientist to figure out that by very definition, that is not sustainable. It's worth also coupling that with the fact that collectively as a species, we've set GDP growth as our North Star metric, and we're all working our socks off to grow GDP growth by 3 % per year. If we grow the GDP, the global GDP by 3 % a year, then basically after 24 years, the economy has doubled. And then 24 years after that, it doubles again. And then 24 years after that, it doubles again. And yet we are already living in enormous ecological overshoot. So whether we like it or not, we're all in collective denial right now.

45:30Our current model of business and operations, which is based on infinite growth on a finite planet is no longer fit for purpose. It is going to have to be fundamentally rethought. And the business leaders who figure that out preemptively and start to really kind of proactively rethink what does it mean to run a successful business in a world in which we are collectively living within planetary boundaries, then I think you very quickly move away from this very disposable, single-use, wasteful model of business to one which is much more about circularity, reuse different business models, whether it be rental rather than buying, for example, sharing rather than individual ownership.

46:15So spinning this into a positive thing, what an exciting time to be in business and to be a business leader because you've got an opportunity to play a really pioneering role in helping lead that transition, which we have to do.

46:28Tessa Clarke:I 100 % agree with you that it is a massive problem, but it is also a massive opportunity because as we discussed earlier, actually changing the world for the better and doing something good can be an incredibly profitable and thriving business. And I think this is exactly what gives me hope looking at the new generation, as you said, Gen Z, but also in general, new generation of founders and leaders, no matter of their age, they are starting companies thinking more about not just how much money we can make, but actually, what do I want to leave behind? Like, why do all of this? They think sort of to that point, actually, how we measure success for businesses, I believe is going to change because we've recently been through a process of working with a third-party consultant and a publicly available methodology to measure the value of the social impact that Olio is having.

47:22And last year, we generated 385 million pounds worth of social impact. And over our lifetime, we've generated 1.1 billion pounds worth of social impact. And that social impact is coming from the mental health benefits that people are deriving from the fact that they are accessing free food, which is helping to feed them, alleviate family budgets. People are getting a positive mental health benefit from connecting with their community, reducing loneliness and isolation, building friendships. They're getting positive benefits from the volunteering experience and the purpose and satisfaction that gives people.

47:58And then also they've got the physical health benefits of walking and cycling to kind of do their pickups. Now, that social impact value that we are delivering is many, many, many, many, many times more than our revenues. And the number of people that we employ to deliver that is actually just 40 people. And so I think we need to have a much more sort of holistic way of thinking about business success. And to date, we tend to focus on how many people do you employ, how much revenues do you generate, and how much profit you generate. And I would argue that we also need to be all measuring the social impact of our businesses and the environmental impact of our businesses and looking at that in the realm rather than just zoning in on a few small metrics.

48:45Tessa Clarke:Hanuf Senegri, and you mentioned Eric Ries earlier with his lovely book, Lean Startup, and he just released another book called Incorruptible, which exactly talks about how there were historically businesses that figure out how not to prioritize shareholder value as the top metric. It is a metric. It's not the metric. And definitely we should understand and actually build it in as businesses from the beginning, from day one, what are we measuring as success and what our investors and shareholders will agree is a success of a business. And definitely social value should be there. and other things that in general help us as a society, help us as a planet, help us as a community of people.

49:30Tessa Clarke:I think it is so important to do, but also I feel like more and more people realizing it, especially in the world where technology is developing very fast. I think people are going back to big questions about what are we here for and what can we do. So I feel like it's probably one of the best times to start purpose-driven businesses and really embed those values and societal benefits as part of your business model. Yeah. Right now, it is very clear that every business is going to have to transition by definition. And I think if you're going now, you're not the early adopters, right? The kind of super early adopters have already been before you.

50:17There are now lots and lots of examples of businesses that have got profit with purpose baked into them. But momentum is really starting to build up. And it's always great that you don't want to be a late adopter when this sort of transition is taking place. That's for sure.

50:34Tessa Clarke:Well, another interesting decision that you might tell as part of growing your business is when you started focusing on B2B. And I feel like it's something that a lot of founders don't see as an obvious potential opportunity. And can you tell a bit more about how did you realize that potentially that could be a way for you to grow further? And what were the decision making process there? Yeah. So we made that pivot out of necessity and also experience. so I mentioned that our early adopters didn't have any surplus food therefore they had nothing to share and the businesses were too busy that didn't have time to use olio and so we solved that problem by launching the food waste heroes program so getting the volunteers to collect and redistribute the surplus food from the businesses and we so we did that to solve our supply problem we also at the same time realize that actually the amount it would cost us to sign up household by household by household by household, and the amount of surplus that one single household generates is absolutely tiny in comparison to, you know, there's 28 million households.

51:45Well, there's only about 10 ,000 supermarket locations. So if we can sign up a share of those supermarket locations, we can actually get a high volume of supply onto our supply constrained marketplace, much more cost effectively. In fact, heck, they're going to pay us to do this. And that will enable us to get that flywheel going and scale very quickly. And also, when we roll out with a business, we roll out across hundreds or even thousands of locations, which within a matter of months, takes Olio into hundreds, if not thousands of local communities. And that's obviously, as I said, how we have been able to monetize.

52:24And there are absolutely kind of pros and cons, right? in that if you're doing consumer-facing stuff, you can move much more quickly. You're doing it under your own steam. Perhaps it's more intuitive. Downside of the B2B is the long sales cycles. Really, that's an absolute killer for a startup. And you've just got a whole other party that you have to take into consideration with all of your execution, your decision-making. But I, over the past decade, plus that I have been working on Olio, I've spoken to hundreds of startup founders. And I would say, and this is a finger in the air, but it feels to me like about 90 % of them have ended up, the ones that started off with a consumer facing proposition, I'd say roughly 80 to 90 % of them have ended up pivoting to a B2B proposition or a B2B2C.

53:16And that's precisely for the reasons that we did, which is around your ability to monetize is just a lot easier when you are delivering value to a corporate, which is used to paying for value versus individual consumers who are much less used to paying for value. And I think that's a difficult journey for many founders to go on because a lot of founders are excited and inspired by building something that feels very intuitive to them, feels intuitive to their friends and family. That's their sort of comfortable, happy place. But I really encourage mission-driven founders in particular to get onto that B2B model or B2B to C model as quickly as possible.

54:08Because I don't think we've got the time for all these tiny startups to figure out how to grow and scale and displace the incumbents in the timeframes that we have to solve the problems that need solving. And actually, the most effective ways to have impact at scale is to take the innovation and the creativity and the problem solving that the startups bring to the table and to partner with the corporates who have the scale and the distribution. And that, I think, nine times out of 10 is how impact at scale is unlocked. And certainly for us at Olio, that has been the case. You know, there's been nothing we have been able to do on the consumer-facing proposition that's come even close to the growth unlock we have received when we sign up a Tesco or Sainsbury's or an Iceland or Compass Catering or whoever it might be.

55:03Tessa Clarke:I can still relate to what you're saying. Even with our journey as Future Lenten Academy, we've always been known as a B2C company. We have lots of incredible clients, but actually what many people don't know, we have a massive part, which is very much B2B, where we do custom tailored learning solutions. And I agree, like, like seeing the scale when you suddenly deliver a program across continent for international organization that has offices literally in like 100 different cities, and seeing how something that you create can impact so many people versus trying to do it one by one, kind of gives you a different level of motivation.

55:42Tessa Clarke:But as you said, I think as a founder, it's also a weird conundrum in your head where you're kind of so driven by individual stories, by meeting every single person, by knowing this connection between you and the customer and B2C in general, as the space can be more creative and more visible, it's very difficult to make that switch. What did you change in a way that you had to describe, Olio, or how you talk about what you do to make sure that you are appealing to businesses? Because again, your proposition almost needs to change when you switch from being B2C and again, being more exciting, maybe community driven and kind of all of these things that individuals care about versus businesses that have different motivations, different metrics and different reasons to collaborate.

56:30It's really sort of straightforward with businesses. You just need to be laser focused on being very clear and using their language and their terminology to describe their problem or problems that you're solving. And it's also worth recognizing. So Olia, we redistribute surplus food from grocery retailers, from school canteens, from TV and film production shoots. And even across those three client segments, you have to use, we have the same service broadly, but we have to use very, very different language to recognize the specific nuanced angles to the problems that those particular organizations experience all their concerns.

57:12So some organizations, if I take schools, for example, there's far more challenge around access, like how do the volunteers get in and how do we make sure that all happens safely and smoothly? Whereas for the grocery retailers, that's not a problem at all. They are used to members of the public showing up at their locations all day long. So yeah, I just think it's just been laser focused on really understanding what problem that you solve, problem problems you solve and talking about them very, very clearly and succinctly. So far too many founders make the mistake of just banging on about their solution and no one cares about your solution.

57:50All they care about is I've got a problem. Can you help me fix it?

57:55Tessa Clarke:This is so such an important reminder and you're right. Sometimes we forget that organizations, they also almost like humans that have a problem that need to have a solution. And again, you need to communicate in a way that they really can connect to what you're saying and not starting with that. Tessa, I wish we had another few hours to go into all sorts of depths of your journey, because I think your story is so inspiring. And as I mentioned, it's not just inspiring for the actual work that you do, the fact that, again, you're solving a massive problem that, again, affects climate change. It helps people connect.

58:30Tessa Clarke:It obviously tackles the food waste, but also you managed to grow it as a company, which is a separate incredible achievement on its own. But connecting business and purpose is something that's unfortunately very rare, but also very inspiring to see in a person and also how open and generous you are with the learnings from your journey and your vision for what's next. It's incredible. So thank you so much for joining us and for sharing your passion. I hope there are many listeners who've been inspired by what you're doing to either start their companies or actually pivot their companies to more purpose-driven businesses or actually inspire organizations they're part of to actually understand how they can create a positive impact on the world and the planet, on a society through the work that they do.

59:18Tessa Clarke:So thank you so much. Thank you. Any last words, anything else you want to share with the community? No, I think that's all good. Any action you want from people who everyone should download, obviously, Olio app and try using it. Yeah, I guess my main calls to action, if you like, would always be to download the Olio app and then declutter your home. So just remember that you can use Olio for books, toiletries, cosmetics, clothes, toys, and of course, your surplus food before you go away on holiday or go away for the weekend or if you've overcated. And then in a business capacity, I would encourage any business that has surplus food that is being generated at a local level, whether that be at a store or an office canteen, corporate events, to reach out to us and see how we can help redistribute that surplus food to the local community.

1:00:16Brilliant.

1:00:17Tessa Clarke:Well, I hope more businesses will connect, collaborate, and we all together will try to make this world a little bit better. Tessa, we have one last question that we ask all the guests who join us in a podcast that is very relevant to what you've been already sharing. If you could change one thing in the world, what would it be? I would move us away from using GDP as our collective North Star metric towards a more holistic suite of metrics that were really focused on delivering well-being for people and planets that would transform our system overnight. It would be incredibly profound. I 100 % agree.

1:00:58Tessa Clarke:And I think this is definitely something doable. And we should all try to go in this direction and make this change happen. Thank you so much, Tessa, for sharing your knowledge and wisdom and inspiration with our community. And thanks, everyone, for tuning in. If you find this conversation interesting, insightful, provocative, please share your insights. We love when you share anything that helps you personally start thinking differently. So please tag Future London Academy so we know what resonated with you. So we can invite more incredible guests like Tess to share their stories and learn from their incredible journeys that they've been on.

1:01:36Tessa Clarke:Thanks again. And until next time. Bye.