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Innovative Companies with Sustainable Business Models: Coreorient

Company profile

Name: Coreorient Oy / PiggyBaggy (beta)
Founded: 2011
Founders: Harri Paloheimo and Heikki Waris
Industry
: Multiple industries / ICT-enabled services
Main services: 
PiggyBaggy crowdsourced ride-sharing for goods; Smart service system development and consulting
Sustainability: PiggyBaggy lowers emissions and resource consumption by providing access to already existing mobility, similar to car sharing.

Company history and idea in brief

Have you ever needed a particular tool to do some really small task, such as drilling a hole in a wall or tightening a loose screw in a bike, but didn’t have that tool available? And then had to either spend a lot of money to buy that tool or a lot of time finding someone who could lend it to you? Or have you ever spent half a day trying to get some mundane task done, such as delivering a book to a library or returning a broken MP3 player back to store?

I’m sure you have. And I bet you have some tool that you’ve only used a few times in your life, such as a power drill, lying around in your basement.

What if instead of owning expensive equipment, you could rent or borrow the tool you need, or pay someone else in your neighborhood to drill the hole for you? And how about if you didn’t always have to go to the library to borrow books, but could instead pay someone else to deliver the book, or use a library access point near your house?

What if you could live in a world with less stuff to take care of, less hassle over mundane things, and more time to do the things you really care for?

Moreover, what if in this world you could get things done by using less resources, less or no gasoline, and less energy. You would pay for services, instead of goods, and would have access to functionality and results, instead of having ownership of the damned power drill. And even if you do want to own your power drill, the rest of it sounds pretty good, right?

A Finnish company called Coreorient, is trying to build that world.

Founded in 2011 by several ex-Nokia experts, Coreorient is a company that has been involved in developing services and technologies that help people get everyday things done more efficiently and by using less time.

The company’s flagship service, PiggyBaggy, is a crowdsourced ride-sharing service for goods. This is how PiggyBaggy works: let’s say you need to deliver a broken laptop to an electronics store for a fix-up. Instead of going yourself, you can use PiggyBaggy to get someone in the PiggyBaggy community to deliver the laptop for you in return for a small payment. For example, someone might be commuting past your house and the electronics store and could therefore take your laptop on her way to work, giving you more time to do other things.

PiggyBaggy transporter picking up groceries for a customer.

PiggyBaggy transporter picking up groceries for a customer.

I was able to get in touch with one of the founders of Coreorient and PiggyBaggy, Harri Paloheimo, who shared his thoughts about the company. According to Paloheimo, the idea for crowdsourcing goods-delivery came to him when he was returning a broken microwave back to store. As he didn’t own a car, the journey to return the microwave involved taking several buses and a train.

“When I spent half a day returning a broken microwave back to store, I remember thinking at one point that this doesn’t make any sense, and that there has to be a more efficient way to get this done.”

Paloheimo began tinkering with an idea of a crowdsourced ride-sharing service for goods and even tried to get Nokia to do a collaboration with several existing ride-sharing companies. In the end, however, Paloheimo didn’t get the required support from headquarters and finally he left Nokia in 2012 to lead Coreorient. The company had already been founded on paper in 2011 by his college, Heikki Waris. Although the men were taking a leap from a big corporation to run a small startup, being an entrepreneur felt oddly familiar to Paloheimo:

“I had been acting as an intrapreneur at Nokia for years before starting my own business. I had imagined that things would work in a more rational way outside big corporations, but I soon realized that the same pitching theater and power point circus that I was used to continued in the “real world”.”

Power points and pitching weren’t the only thing familiar to Paloheimo. He was also very used to facing failure:

“They say that you can’t have success before going bankrupt a few times. Well, I hadn’t gone bankrupt, but I had experienced some big failures in Nokia. For example, having to disband a team you’ve lead feels a lot like going bankrupt to me.”

After initial difficulties, PiggyBaggy began gaining momentum and today the service has over 1800 users and between 800-900 items delivered so far.

Value for whole society

Aside from PiggyBaggy, Coreorient is also constantly experimenting with new concept and service development and wants to take part in developing a Sharing Economy. However, Paloheimo makes it clear that the company wants to avoid becoming similar to Uber:

“We want to frame ourselves as a second wave Sharing Economy startup. The first wave consisted of companies like Uber, which maximized value solely for their end users. We, however, think about Sharing Economy and our business from a broader perspective. We want to maximize value for the whole society and all interest groups involved in our business, not just for ourselves or our customers.”

Paloheimo explicitly emphasizes that Coreorient wants to take part in developing business models and win-win-win structures that maximize value for both consumers, the company itself, and the society at large. As an example of this, Paloheimo talks about Coreorient’s collaboration with the city of Tampere:

“We have applied for funding from the European Social Fund to find ways to activate youngsters that are in danger of becoming marginalized. We are now trying to find ways to use crowdsourcing as a medium for involving young people in society and to help them find a job. Although we use crowdsourcing as our main tool, it doesn’t necessarily involve PiggyBaggy or ride-sharing”, says Paloheimo.

According to Paloheimo, Coreorient has been involved in many similar projects all around Finland. The different experiments have also enabled Coreorient to test different assumptions about the markets and their customers, which helps the company to refine its ideas and services. Armed with this experience, Coreorient is now looking outside Finland to Europe and beyond.

“The experiments we’ve conducted in Lahti, Jyväskylä, Helsinki, and Espoo for novel concepts regarding social impact and circular economy have confirmed us that our systems and main concepts work. However, now the time for experiments is over and we need to make decisions about where and with whom we want to go on with this. Finland is too small and slow for us, and we’re potentially looking to expand to Denmark, or maybe India.”

First groceries being delivered

First groceries being delivered

Paloheimo and Coreorient are not only looking to expand as a company, but to also change the Finnish operating environment. In Paloheimo’s view, this is exactly what differentiates Coreorient from the first wave sharing economy companies.

“Even so called impact investors advised me two years ago to head out of Finland as, according to them, nothing truly innovative can succeed here due to tight regulation and small size of the market. I decided to address at least half of the problem and help change the operating environment. Since then we have conducted several projects with the ministry of transport and the public sector assisting in what I would call mindful deregulation.”

At the moment Coreorient is looking for partners and collaborators to make these changes happen, while also continuing to develop their core service concepts.

PiggyBaggy Business Model: Sharing Platform

Value proposition:  “Ride-sharing for goods. Convenient. Sustainable. Secure.”
Main customers: 1) People who need help in getting items delivered. 2) Businesses that need low-cost options for purchase delivery.
Revenue generation logic: Two options: 1) Subvention-based: online businesses will pay PiggyBaggy for using it in purchase delivery, 2) Transaction-based: end customers of second-hand online marketplaces will pay PiggyBaggy for using it in purchase delivery.

Below is Accenture’s framework of 5 different circular economy business models. Based on this framework, PiggyBaggy has a sharing platform business model. A sharing platform is either an online or physical platform that facilitates the sharing of resources and decreases the overcapacity of assets. In PiggyBaggy’s case, the excess capacity is people’s time and mobility. PiggyBaggy enables individuals and businesses to tap into the existing mobility  in order to get items delivered.

Accenture's (2014) 5 Business Models for a Circular Economy.

Accenture’s (2014) 5 Business Models for a Circular Economy.

PiggyBaggy is an excellent example of the power of IT and the internet to create new ways of organizing human action. What PiggyBaggy actually does is that it uses the internet to provide access for tapping into excess mobility and time – something that would have been near impossible to do 20 or 30 years ago. By creating the PiggyBaggy platform, Coreorient has essentially created a new marketplace where the supply and demand of mobility and time can meet.

For example, I might need a book delivered to the library, but I don’t have enough time or I’m otherwise unable to go to the library myself (lack of time and mobility). However, there are hundreds of people going past my house and the library every day, many of whom could pick up my book and return it without making a major detour (overcapacity of time and mobility). PiggyBaggy therefore creates a platform where the supply and demand of time and mobility can meet.

According to Harri Paloheimo, Coreorient has at least two potential business models for PiggyBaggy. One is based on a subvention model, where PiggyBaggy would essentially enable businesses that do home delivery to lower their costs by using the PiggyBaggy community to deliver customer purchases. Paloheimo elaborates:

“In EU and in Finland it costs approximately 15 euros to deliver a product to a customer. At the same time customers are on average only willing to pay 5 euros for the delivery. This means that businesses lose 10 euros on average per every packet delivered to consumers. Our idea is that we could lower these costs and get paid for doing so.”

The other option would be to use a transaction fee –based business model, where the customers would be individuals shopping at second-hand marketplaces. Usually in second-hand shops the end users arrange the delivery of items themselves, but by using PiggyBaggy they could use crowdsourcing to get their items delivered. PiggyBaggy would charge the transporter around 15-20 per cent of the fee he or she received from the customer.

In both business models PiggyBaggy lowers the costs of transportation while also reducing emissions and pollutions from cars by decreasing the overall number of car trips. Moreover, PiggyBaggy also provides people more time by helping delegate transportation of goods from busy people to individuals who are already on the road.

Smart container in action.

Smart container in action.

But PiggyBaggy is not the only service that Coreorient has been developing. The company has been experimenting on a concept called smart containers. A smart container is a ship container that is used as an access point for different services and resources. For example, the smart containers in Kalasatama, Helsinki have been equipped with library services, organic food services, recycling services and electric car charge points. Furthermore, the containers can be used as PiggyBaggy delivery points.

Smart container in action.

How are PiggyBaggy and the Smart Containers connected? Paloheimo shares a vision of a global network of community-run smart service points, connected by crowdsourced goods delivery. According to Paloheimo, this kind of network of services and crowdsourced transportation represents a viable alternative for today’s centralized mass manufacturing and transportation.

Thanks for reading! To find out more about sharing economy or circular economy, I suggest checking out the following resources:

  • Peers Inc, a book about platforms and the collaborative economy by the owner of Zipcar, Robin Chase. Check out her TED talk here.
  • What’s Mine is Yours, a book about the sharing economy by Rachel Botsman. Check out her TED talk here.
  • Ellen MacArthur Foundation website is an excellent source for information on circular economy.
  • Also take a look at European Commission circular economy strategy.

Innovative Companies with Sustainable Business Models: Pure Waste Textiles

Company profile

Name: Pure Waste Textiles
Founded: 2013
Founders: Hannes Bengs, Anders Bengs, Lauri Köngäs-Eskandari, Jukka Pesola and Maela Mandelli
Industry
: Sustainable fabrics and clothing
Main products: 
Recycled fabrics and clothes
Sustainability: Pure Waste Textiles provides recycled fabrics and clothes to consumers, other clothing labels and retailers.

Company history and idea in brief

One of the most important issues related to circular economy is making sure that we use existing resources as efficiently as possible. In fact, waste should be completely designed out from our products and production systems. This is where a company like Pure Waste Textiles can help.

Pure Waste Textiles is a clothing company that produces 100% recycled fabrics and clothes. This is how Pure Waste Textiles works: the company buys leftover materials and fabrics that would normally go to waste from textile manufacturers, sorts the waste by color, tears the fabric apart into raw cotton, spins the cotton into yarns and finally turn the yarns into usable textiles. The end product is a 100% recycled and high quality textile that would have normally been disposed as waste. Furthermore, because the company sorts the waste by color, no extra dyeing is required during the process.

The process Pure Waste Textiles uses to create its products. Photo from Pure Waste Textiles website.

The process Pure Waste Textiles uses to create its products. Photo from Pure Waste Textiles website.

Pure Waste Textiles was founded after the owners of the Finnish ecological clothing label, Costo, began searching the markets for cotton that would be 100% recycled. A while back the Costo label was using surplus materials from other clothing manufacturers in its products, but in 2010 the company wanted to take things up a notch by creating a clothing line out of completely recycled fabrics. Using recycled fabrics would not only be a more ethical choice, but it would also make more business sense, as it would allow the company to provide a steadier stream of supply for its retailer clients. However, according to one of the founders, Hannes Bengs, the task of finding 100% recycled fabrics proved difficult:

“Back then we started thinking about using completely recycled textiles and so we began looking for fabrics that would be 100% recycled. To our surprise, we couldn’t find any suppliers for recycled fabrics. We then got excited and realized that we could start supplying recycled textiles ourselves.”

Carding machine. Photo from Pure Waste Textiles website.

Carding machine. Photo from Pure Waste Textiles website.

The company set to work straight away and began creating prototypes and test batches, which finally lead to the founding of Pure Waste Textiles in 2013. Potential suppliers were found from China and India, and after long negotiations the company was able to form partnerships with local manufacturers.

“We had Jukka Pesola working with us, who had 15 years of experience from doing trade in Asia. He knew about the local manufacturers, factories and recycling centers. The technology for producing recycled textiles was actually in place, it just hadn’t been used for creating 100% recycled fabrics before”, says Bengs.

Although the company had the benefit of using existing contacts, finding a partner wasn’t easy. The company needed to prove that producing completely recycled textiles would actually work. Bengs elaborates:

“The biggest challenge was that no one wanted to produce anything for us at the beginning. They were mostly afraid that using recycled fabrics would break their machines. After wrestling with this issue for some time, we were able to produce a few working test batches and then things finally took off.”

Some of the raw cotton waste Pure Waste uses.

Some of the raw cotton waste Pure Waste uses.

Pure Waste Textiles wants to create a positive change in clothing industry by making ecologically produced clothes and textiles more available. According to Bengs, the biggest sustainability issues in clothing industry are related to quality and time.

“If a company is selling a t-shirt with 5 or 10 euro price tag, it is cutting costs in either quality, materials or labor. It just isn’t possible to produce a quality shirt for 5 euros. Another major issue is the existence of fast fashion. Having a product go out of fashion in six months is simply not sustainable.”

The main problem behind both issues is that the externalities, such as carbon emissions, destruction of habitat, or social issues that are caused by cheap manufacturing are not paid by the companies themselves, but by local communities, national governments, or by future generations. If the full cost of producing a t-shirt or a pair of jeans was paid by the companies, we would most likely have very different clothes prices.

In the future Pure Waste Textiles wants to form partnerships with big clothing manufacturers and labels, where Pure Waste would provide the fabrics and the manufacturer would do the rest. The company’s vision is that when people think of recycled, high quality, and ethical clothing, they will think of Pure Waste Textiles, similar to how people think of Gore Tex when it comes to dry and water-proof clothes. Today Pure Waste Textiles already has competition in the recycled fabrics markets. For example, Eco-fi, a US company, sells polyester fiber made from post-consumer plastic bottles, while Brentano, also from the US, offers post-consumer recycled polyester fabrics.

Business Model: Recovery and Recycling

Value proposition: We make 100% recycled, premium quality, and sustainably produced yarns and fabrics.
Main customers: Clothing brands and manufacturers.
Revenue generation logic: The business model is based on selling fabrics and yarns to clothing manufacturers and brands. However, the company’s main cash flow still comes from selling t-shirts to companies and individual consumers.

Below is Accenture’s framework of 5 different circular economy business models. Based on this framework, Pure Waste Textiles has a Recovery and Recycling business model. According to Accenture (2014), the model enables companies to eliminate material leakage, and is good fit for companies or industries that produce large volumes of by-product. In this case, Pure Waste Textiles helps clothing manufacturers to eliminate waste from the clothing manufacturing process by turning by-product into usable fabrics.

Accenture's (2014) 5 Business Models for a Circular Economy.

Accenture’s (2014) 5 Business Models for a Circular Economy.

While the manufacturing processes and technologies used to create fabrics might be complex and sophisticated, the business model of Pure Waste Textiles is relatively simple. The company buys by-products from manufacturers, turns them into usable fabrics or clothes and sells them forward.

What’s particularly interesting about Pure Waste Textiles and its business model is the scale of the unused resources that the company is trying to tap into. According to Pure Waste Textiles, 10-15% of the produce from clothing manufacturing is usually wasted, which only a few companies have so far been able to take advantage of. If that 10-15% could be turned into profitable business, we could see a great rise in material use efficiency in the clothing industry.

Pure Waste yarns. Photo from Pure Waste Textiles website.

Pure Waste yarns. Photo from Pure Waste Textiles website.

Moreover, while reducing the waste and by-products from industrial processes is an important issue in and of itself, there are other even bigger opportunities for improvement to explore. What if we were able to recycle all clothes – not just the pre-consumer fabrics? What industries, what companies and how many circular economy jobs could we see emerge when we start exploring such opportunities? Pioneering companies like Pure Waste Textiles often pave the way to finding other places where innovative business models and technologies could be used to create circular economy businesses.

And most importantly, while advanced technologies will be needed in the future to create a circular economy, Pure Waste was able to rely on existing technologies in creating its circular business model. Sometimes it’s not better technology that we need, but better purposes for using our technologies.

References:

Accenture. (2014). Circular Advantage: Innovative Business Models and Technologies to Create Value in a World without Limits to Growth.

Innovative Companies with Sustainable Business Models: Kierrätysverkko Oy

Company profile

Name: Kierrätysverkko Oy
Founded: 2011
Founders: Harri Välimäki, Pasi Papunen, Heikki Laakso, Kompassi Oy, Pixoi Oy, Juha Saarinenen, Markus Rimon (rest of the current owners can be found here).
Industry
: Reuse ja recycling IT-services and business concepts
Main services: 
Kierrätyskeskus 2020 – modernization of recycling centres
Sustainability: Kierrätysverkko Oy is driving the transformation towards a circular economy by helping to modernize Finnish recycling centers.

Idea and company history in brief

Kierrätysverkko Oy’s mission is simple: Help society use its resources more efficiently. In order to fulfill its mission, Kierrätysverkko Oy has been involved in developing several services that are based on different circular economy business models. So far the company has launched MPankki, a resource sharing platform where companies can share excess supplies and materials, and Mahdoton, an online community for circular economy entrepreneurs and advocates.

Moreover, Kierrätysverkko Oy has recently developed a prototype of a modern recycling center, and in the future the company wants to no less than transform the Finnish recycling system. The name ‘Kierrätysverkko’ reflects the company’s mission: in English the name would mean Recycling Network.

According to the CEO and one of the founders of Kierrätysverkko Oy, Harri Välimäki, the idea for the company emerged around 5 years ago when he started wondering about why the supply and demand of recycled and reused materials were intersecting so poorly.

“According to studies, the Finnish people use eight billion euros a year on consumer goods, but we get bored with most of that stuff within six months. At the same time over half the population thinks that selling their stuff in second-hand shops, such as Tori.fi or Huuto.net takes too much time and effort. This means that over half of the stuff we buy ends up stashed away in our basements and storage rooms.”

Does your storage room look like this?

Does your basement look like this?

Although Välimäki has a background in IT and had little experience in environmental issues, the question got stuck in his mind and he decided that something needed to be done. Founding a company to tackle the issue appeared a viable option, but Välimäki also realized that he couldn’t start the venture on his own.

“With a long business background I knew right from the start that I shouldn’t do anything by myself. Therefore I started gathering a team of professional across different fields of knowledge, including IT, marketing, and business consulting.”

Välimäki also felt strongly that Kierrätysverkko needed to be founded on solid societal values and that the company would in fact be a social enterprise. This would mean that under Finnish law the company would be completely transparent about everything, including the ownership structure of the firm. Furthermore, the purpose of Kierrätysverkko Oy wouldn’t be to make profits for shareholders, but to maximize societal value.

While Kierrätysverkko was founded to fulfill a social mission, the company is not a non-profit-organization and therefore works like any other private enterprise. Välimäki also emphasizes that Kierrätysverkko is looking for scalable business solutions.

“The fact that we’re a social business doesn’t mean we’re just fooling around. What it means is that all of our business activities are based on solid values and principles. We take this very seriously and we intend to create solutions that are scalable.”

Kierrätysverkko Oy set out to solve the excess stuff issue by helping modernize the Finnish recycling system. The idea was to use digital services to make recycling centers more accessible and easier for the end-user. The modern recycling center would be connected online to other centers across the country, which would allow the end-users to browse used products also over the internet rather than being stuck with the local center’s inventory.

However, before setting out to transform the Finnish recycling center network, Kierrätysverkko had to first take a detour and develop two other services, MPankki and Mahdoton.

“We shared our idea about the modern recycling center with many potential end-users and found lots of support for the idea. However, we struggled to find interested recycling centers that would work with us. This came to us as a surprise, but that’s the nature of creating something new, there’s always resistance to change.”

After successfully launching MPankki and Mahdoton, the company was finally able to negotiate partnerships with Patina recycling center, the city of Lahti, and two waste management companies: Päijät-Hämeen Jätehuolto Oy and Lassila & Tikanoja Oyj. The partnerships also opened doors for funding from the Ministry of the Environment.

With the help of the new partnerships, Kierrätysverkko Oy began developing a working prototype of the modern recycling center in Patina, Lahti. The prototype, called Kierrätyskeskus 2020, was completed in the spring of 2015, and the company is now refining the model and using it as a reference for finding new partnerships with other municipalities and recycling centers.

Kierrätyskeskus 2020 (Recycling Center 2020) Business Model: Sharing platform

Value proposition: End users: One stop shopping for used goods and one stop recycling. Society: Putting human and physical resources into more efficient use.
Users: 1) Individuals who want to get rid of unwanted items. 2) Individuals interested in buying used goods.
Revenue generation logic: Kierrätysverkko Oy receives a provision on the goods sold at the recycling center.

Below is Accenture’s framework of 5 different circular economy business models. Based on this framework, KK2020 has a sharing platform business model. A sharing platform is either an online or physical platform that facilitates the sharing of resources and decreases the overcapacity of assets. In Kierrätyskeskus 2020’s case the recycling center helps individuals share their excess goods with other people.

Accenture's (2014) 5 Business Models for a Circular Economy.

Accenture’s (2014) 5 Business Models for a Circular Economy.

There are several interesting aspects about Kierrätyskeskus 2020 worth pointing outFirstly, in modern recycling there is a clear distinction between reuse and actual recycling. Reuse means that you’re using an existing product again for the same purpose it was made for, whereas recycling means that you’re taking the product apart for other purposes. According to Välimäki, there is a lot of embedded value in existing products, which is lost if the products are taken apart for recycling. Therefore, in the modern recycling center, products would be reused as often as possible, and recycling or incineration would only remain as a last resort for unwanted items.

Secondly, KK2020 uses a one-stop shop principlewhich hides the complexity of recycling behind a single service. According to Välimäki, the idea is that individuals will have one place for all reusable and recyclable goods, instead of having to make multiple stop.

“We want to create a one-stop shop, so that the end-user doesn’t have to think about where to take their used goods. Most consumers don’t know how to assess the potential value of their used belongings and it might even be difficult to know which items are actually reusable. In the modern recycling center you won’t have to know these things beforehand.”

How it looks inside KK2020.

How it looks inside KK2020.

Thirdly, all recycling centers will be networked together to allow users to browse goods from other centers online. This creates larger economies of scale and helps users find a larger selection of recycled goods. However, in other aspects the centers would not be highly interdependent (i.e. they are loosely-coupled). This allows the recycling centers to operate independently and have their own unique brands while also being able to serve their customers better due to larger selection. Digitization serves a clear purpose.

“What’s really important about creating a network is making supply and demand intersect better. This requires the use of digital and online tools, but we also need to reshape all the processes inside the recycling center. We also need partnerships with waste management companies.”

Finally, the processes and IT systems that enable networking the centers together are relatively easy to operate, which makes it easier to train staff and to install necessary equipment. Scaling the system can therefore be done much faster.

According to Välimäki, Kierrätysverkko Oy is already negotiating new deals about Kierrätyskeskus 2020 with several municipalities. If Kierrätysverkko Oy is successful, all Finnish recycling centers will be using the same technology as the one in Patina. After Finland, Välimäki and Kierrätysverkko Oy plan to go out and sell the idea abroad.

“Our vision is that all Finnish recycling centers will be using this model. Individual centers would have strong local brands, but they would be networked together, which enables supply and demand to intersect better. After we get the Finnish system to work, we’re going go out and tackle the rest of the world.”

Thanks for reading! I appreciate all comments and would love to hear your opinion. Also, check out an introductory video about the modern recycling center below (in Finnish):

 

Creative Commons Recycle reduce reuse by Kevin Dooley is licensed under CC BY 2.0.

Creative Commons Project 365 #2: 020115 This Could Get Messy by Pete is licensed under CC BY 2.0.

 

Innovative Companies with Sustainable Business Models: Nurmi Clothing

Company profile

Name: Nurmi Clothing
Founded: 2010
Founders: Anniina Nurmi
Industry: Clothing
Main services: Sustainable clothing + a clothing rental service
Sustainability: Nurmi Clothing uses fabrics and production processes that are less harmful to the environment compared to most other clothing companies. Nurmi Clothing is also experimenting with a clothing rental service.

Idea and company history in brief

What would you do if realized that you’re studying a field that’s mostly dominated by unsustainable and unethical practices? Anniina Nurmi answered this question by founding her own company with the aim of helping transform the clothing industry. The result was Nurmi Clothing, a Finnish sustainable clothing company operating in Lahti, Finland.

I was able to get in touch with Nurmi, who shared her thoughts on Nurmi Clothing. According to Nurmi, the story of Nurmi Clothing began in 2006 when she was studying to become a fashion designer at the Lahti Institute of Design. Being a conscious consumer was important to Nurmi, and knowing that the fashion industry wasn’t the most sustainable industry out there, she began questioning her career choice:

“There was this deep inner conflict within me about becoming a fashion designer while knowing that the fashion industry is anything but sustainable.”

However, after reading the book Eternally yours, timely design about sustainable industrial design, Nurmi realized that the principles introduced in the book could also be applied to fashion design. Nurmi graduated in 2007 and started working for L-Fashion group as a clothing designer while continuing to search information about sustainable design from books and online.

“Back then there was not much literature about sustainable clothing design, so I had to gather bits of information from here and there. At the same time I was learning a lot about how a large clothing business operates, thanks to my position at L-Fashion Group. At around 2008 I started writing about my insights about sustainability in my blog.”

Nurmi also launched an online store in 2008, selling sustainable clothes made by other manufacturers. The idea for establishing her own label came to her a year later.

“I began thinking: I write about and sell ecological clothing made by other brands, but I am a fashion designer by profession. So why not establish my own brand? This was in 2009 and I finally started selling clothes under my own label in 2010, slowly adding new garments and growing my collection.”

Nurmi Clothing displayed.

Nurmi Clothing displayed.

As her collection grew, Nurmi was also able to see how sustainability practices have developed and improved over the years.

“In 2008 there were very few sustainable clothing labels in Finland and sustainable clothes were hardly ever discussed in popular media. Today things are much better, but there’s also a lot more greenwashing. The clothing industry is still a long ways to go from becoming truly sustainable, especially because clothing manufacturing is so complex.”

Nurmi makes sure that her clothes are as ecologically and ethically produced as possible in two main ways. Firstly, she uses materials that have less burden on the environment, including hemp, organic cotton, recycled fibers and upcycled deadstock fabrics. She also makes sure that the fabrics she uses are of high quality and the best fit for the purpose. Secondly, Nurmi chooses suppliers she knows thoroughly and who are willing to be transparent about their own supply chains. All Nurmi suppliers can be found here.

Nurmi

Furthermore, being less bad is not enough for Nurmi. She is also interested in finding circular economy practices for her business, and wants to transform the industry from a linear, take-make-waste model to a circular one. Nurmi is currently searching for ways to implement service design and reuse and remanufacturing principles in her business. One concrete result was the launch of the Nurmi clothing library last year.

Today Nurmi Clothing is still a small player in the markets, and Nurmi wants to grow the business in the future. By growing her business Nurmi believes she can have a positive impact on society.

Business model: Product service system (Nurmi Clothing Library)

Although most of Nurmi Clothing’s revenue still comes from traditional sale of products, Nurmi Clothing also has a clothing library that allows people to rent clothes instead of buying them. Based on the below framework from Accenture, Nurmi Clothing Library has a product service system business model. 

Accenture

Accenture’s 5 business models for circular economy. Source: Accenture, Circular Advantage.

A product service system essentially means that a product is used to provide a service, for example when renting a car. Car rentals provide access to the benefits of having a car at your use without the burden of owning one. A product service system can also be a mix of various products and services, but the focus is always in providing a stellar customer experience, not on the products themselves. When a product is used as a service, the idea is to provide access to the benefits of using the product while retaining the burden of owning the product within the company. This way of thinking, also known as service-dominant logic, shifts the focus from products to understanding and serving the underlying needs of the customer.

In Nurmi Clothing Library’s case, the library’s customers pay for getting access to clothes instead of owning them. You can rent two clothes for two weeks at a time for a membership fee of 30 euros per month, which makes 7,5 euros per garment each month. It’s also possible to have a six-month membership for 120 euros, making each garment cost only 5 euros per month.

nurmi-clothing-library-infoboard2-revised

According to Nurmi, the library is still at an experimental phase, and she aims to develop and expand the concept in the future. Nurmi also believes that developing the rental collection into a major source of revenue requires changes in consumer behavior.

“For clothing rental to work we need to see a major shift in consumer behavior. Consumers are now used to buying clothes dirt cheap from a big retail outlet and then throwing them in the trash can once they’re bored with them. We at Nurmi Clothing want to create positive experiences about renting clothes and make it as easy and affordable as possible for customers.”

Nurmi Clothing Library is not alone in testing the clothing rental waters. Many new services are currently being introduced in the markets, including Rent the Runway for women’s dresses, The Mr. Collection for men’s clothes, The Ms. Collection for women’s clothes, and Bag Borrow or Steal for bags and accessories. Trying to find similar services in Finland is trickier, though. There are only a couple of clothing rentals in operation and they have difficult opening hours. Nevertheless, check out Luottovaate in Tampere, Vaatepuu in Järvenpää, and Vaaterekki in Riihimäki and Helsinki

Hopefully we will see more services like Nurmi Clothing Library in the future. If we want to close the loop for circular economy, we will need to change radically the way we buy and use stuff. Who knows, maybe we’ll see the Spotify of clothes in the near future?

Innovative Companies with Sustainable Business Models: Sharetribe Oy

Company profile

Name: Sharetribe Oy
Founded: 2011
Founders: Juho Makkonen, Antti Virolainen and Niklas Begley
Industry: Software
Main services: A platform for creating online marketplaces
Sustainability: Sharetribe contributes to the development of a sharing economy by helping its customers build peer-to-peer online marketplaces.

Idea and company history in brief

If you have always wanted to start your own online business, but have put it off because of lacking the technical skills required to build a website, then Sharetribe is for you! Sharetribe is an online platform that has streamlined the creation of peer-to-peer marketplaces. It allows anyone to build a customized website that can be used as a marketplace or as a platform for peer-to-peer sharing – no programming skills needed. In case you don’t know what an online peer-to-peer marketplace looks like, just take a look at Uber, Airbnb, TaskRabbit or Etzy and you’ll get the picture.

Sharetribe is simple to use and it only takes a few minutes to get your site running. You can then customize everything from the design and layout of the website to the transaction fees you collect. Because Sharetribe has made the technical side of developing a marketplace much easier, you can now focus on the business development side of things, such as building your customer base and marketing your website.

Sharetribe Oy was founded in 2011, but the company has been in development since 2008 when two of the three co-founders, Juho Makkonen (CEO) and Antti Virolainen (COO) were working on a research project in Aalto University. I was able to get in touch with Juho Makkonen, who kindly shared his thoughts on Sharetribe.

Juho Makkonen pitch

Juho Makkonen pitching Sharetribe at Peloton Summer Camp.

According to Makkonen, he and Virolainen were originally developing an online sharing platform for students in Aalto University as part of their diploma work. Students using the site were able to share and rent items such as power drills and course books. At first there were no business ambitions involved in the project, but after graduating in 2010 the two founders started to consider building a company around the idea.

“We saw business potential in the concept. At the same time we both wanted to find a job where we could have a positive impact on society. Around that time people started talking about sharing economy, and so we finally decided to start the company in 2011”, says Makkonen.

After pivoting once, Sharetribe found a working business model and won the Peloton Summer Camp competition in 2013. Today the company has over 300 customers, with the customer base having tripled in the past six months. Makkonen and his team have grand visions for the company:

“We want to do the same to online marketplaces what WordPress did to the publishing industry. WordPress opened up its code in 2003 and today one in four websites around the world is run on WordPress. What we want to do is make founding a marketplace so cheap and simple that anyone can do it”, says Makkonen.

The vision behind Sharetribe is highly connected with an ongoing shift in consumer values from ownership to access, also known as sharing economy. Put simply, sharing economy means that people are more willing to borrow, share and rent resources such as bags, books, toys or bikes, instead of owning them. By helping people create marketplaces more easily and cheaply, Sharetribe contributes to this development.

Quiver - an online surf board rental platform - is one of Sharetribe's customers.

Quiver – an online surf board rental platform – is one of Sharetribe’s customers.

It’s important to note that sharing economy doesn’t always mean shared profits. While companies like Airbnb, Uber and TaskRabbit have helped democratize commerce, these marketplaces are still owned by a selected few individuals. Makkonen wants to change this.

“I think having a too centralized ownership is a major problem in the markets. Companies like Uber and Airbnb are all venture capital backed big players who get all the real profits. What I want to see is more local players being able to develop their own marketplaces where the profits stay with the local owners.”

Combine Sharetribe with 3D printing, the maker movement and crowdfunding sites such as Indiegogo and Kickstarter, and perhaps we’ll soon see the rise of marketplaces where financial assets, production capital and distribution networks are in the hands of the many instead of the chosen few.

Business model: Sharing platform

Value proposition: We make it easy and affordable for sharing economy entrepreneurs around the world to create and run their own online marketplace.
Customers: Sharing economy and lifestyle entrepreneurs
Revenue generation logic:  Customers pay a monthly fee ranging between $39 – $299. Fee depends on the number of members participating in the marketplace.

Below is Accenture’s framework of 5 different circular economy business models. Based on this framework, Sharetribe has a sharing platform business model. A sharing platform is either an online or physical platform that facilitates the sharing of resources and decreases the overcapacity of assets. In Sharetribe’s case the company helps entrepreneurs develop online sharing platforms, i.e. peer-to-peer marketplaces.

Accenture

Accenture’s 5 business models for circular economy. Source: Accenture, Circular Advantage.

Sharetribe is an interesting case because the company has the potential for building a highly scalable business model. According to Makkonen, the team is working hard to develop the core service as solid as possible, with the aim that customers can get excellent service without having to ever contact customer support. To make this happen the team is also planning on expanding the company’s blog so that customers can find as much content and support as they need.

“We want to find more scalable ways of communicating with our customers. Our marketing strategy is based on providing content and information about the same problems our core service aims to solve. We have also had some discussions with potential partners about providing business coaching to our customers”, says Makkonen.

Furthermore, Makkonen shares a vision of a complete partner ecosystem.

“We have been thinking about developing an ecosystem of services, where our partners could build on the platform we have developed. We could have our own app store similar to Shopify.”

As with any startup, it’s too soon to tell whether Sharetribe will scale up to become a key player in the markets. However, having a scalable and automated core service that can be customized with partner applications sounds like high profit potential. Combine that with some effective content marketing and you might have a real thing of beauty in your hands.

In the end though, having a startup is not all about making a lot of money or even saving the world for Makkonen. Sharetribe team – founders included – works no more than 40 horus a week, and everyone takes normal annual vacations.

“Me and Antti have put a lot of thought into why we’re doing this thing. One important reason was contributing to society, but we also wanted to have a balanced life with the freedom to live the way we find best. I think working around the clock and sacrificing your friends and family defeats the purpose of working in your own company.”

I think that’s an idea definitely worth sharing. Thanks for reading, the next one up is Nurmi Clothing!

Creative Commons Sharetribe by Demoshelsinki is licensed under CC BY-NC-SA 2.0.

Innovative Companies with Sustainable Business Models: Venuu Oy

Company profile

Name: Venuu Oy
Founded: 2013
Founders: Jasu Koponen, Jerome Saarinen, Emil Sågfors
Industry: Online portals
Main services: Search engine for finding venues
Sustainability: Venuu.fi enables event organizers to find and rent unused spaces in cities. By doing so Venuu Oy improves the use of already existing resources, which is an important part of the development towards a circular economy.

Idea and company history in brief

If you have always wanted to arrange a party in an oil silo, now’s your chance! Venuu.fi is a Finnish online service that makes it easy for event organizers to find venues and to rent spaces that would be difficult or impossible to find for outside users. Using the service is free for people trying to find a venue, while venue providers pay either a monthly subscription or a commission fee. The available spaces range from unused oil silos to empty office buildings, and from private saunas to coast guard patrol boats. This allows people to arrange events in some really wacky places! For example, check out this location.

I recently got a chance to interview one of the founders and the CEO of Venuu, Jasu Koponen. According to Koponen, the idea for Venuu emerged back in 2012, when he and Jerome Saarinen were arranging the Aalto Lunch Beat discos.

“I have always been interested in buildings and spaces. I saw some really inspiring spaces being used in events in Berlin, and I wanted to do something similar in Finland. Many of our ideas had to be canceled, however, because we couldn’t find any suitable venues”, says Koponen. Because finding venues for the Aalto Lunch Beat was very difficult and time-consuming, Koponen and Saarinen eventually got an idea of a website similar to Airbnb, but for event locations.

summer-of-startups-winner

Venuu winning the Summer of Startups in 2013

“There is a lot of information about potential venues online, but it’s all scattered up and hard to find. Furthermore, there are no good pictures about the venues, especially when comparing to Airbnb. We wondered why no one has already founded this kind of service and we eventually decided to do it ourselves”, Koponen says.

After winning the Aalto University Summer of Startups competition in 2013, the founders launched Venuu.fi in October same year. Today there are over 1300 spaces available for rent in Venuu.fi in Helsinki and Turku, Finland.

Koponen and his team have grand visions for Venuu. Aside from Airbnb, Koponen compares Venuu to Amazon.com and wants Venuu to become the marketplace for event organizers. In the future customers would also be able to have other necessary arrangements done via Venuu.fi. For example, if you’re planning a wedding, you’d be able to hire a wedding band, a dj and florists, find accommodations for guests and arrange catering through Venuu.fi.

Venuu Oy team in Oil Silo 469 in Helsinki, Laajasalo.

Currently there doesn’t seem to be much competition in Finland for Venuu. Search results for renting venues in Finland bring up sites like Saunatilat.fi, Kokouspaikat.com, and GoExperience.fi. However, these websites mostly just list existing service providers, while Venuu.fi allows anyone with a suitable event location to sign their space up for rent. International competitors include a US-based eVenues Inc and a UK-based Hire Space Ltd.

Business model: Sharing platform

Value proposition: End users: Find new and exciting venues quickly and without a hassle. Venue providers: By using Venuu you will reduce your risk and bring in more customers.
Customers: Venue providers and event organizers
Revenue generation logic: Venue providers pay a commission for each time a venue is rented via Venuu.fi.

Below is Accenture’s framework of 5 different circular economy business models. Based on this framework, Venuu has a sharing platform business model. A sharing platform is either an online or physical platform that facilitates the sharing of resources and decreases the overcapacity of assets. In Venuu’s case the company has developed an online sharing platform where individuals and companies can put up their vacant spaces for rent as event venues.

Accenture

Accenture’s 5 business models for circular economy. Source: Circular Advantage.

What makes Venuu.fi different from other sites that list out venue locations is the fact that Venuu allows individuals and companies that are not in the venue business to rent out their spaces for extra income. This is also highly important from a sustainability point of view: By putting existing buildings, boats, and other spaces to new use, the company increases the efficiency of these spaces and decreases the need to construct new buildings.

Companies such as Venuu.fi, Airbnb, BlaBlaCar and Uber have all found new uses for already existing assets, which decreases the need to create new ones. Unbuilt office spaces, hotels and cars save up resources, energy and carbon emissions. And although being less bad is not enough to create a sustainable economy, it is a good start! At the same time these services create new sources of revenue for both individuals and companies.

It is worth noting that Venuu also helps bring people together. When I asked about Venuu’s societal mission, Koponen paused for a moment and then gave the following answer:

“Often the best memories people have revolve around different life events. Whether it’s your wedding day, or that party where you found your life partner, or that one time at Slush when you finally found an investor for your venture, it’s these moments that we often come back to in our memories. If Venuu can help people come together and enjoy life more often instead of staring at their smart phones, I think we have done our job well.”

 Thanks for reading! Next one in the series will be Sharetribe.

Innovative Companies with Sustainable Business Models: RePack

Company profile

Name: RePack / Peruste Oy
Founded: 2011
Founders: Juha Mäkelä, Jonne Hellgren and Petri Piirainen
Value proposition: Trashless life
Industry: Packaging materials
Main products: Reusable delivery packages
Sustainability: Repack produces and leases reusable packaging for companies.

Idea and company history in brief

Repack is a Finnish packaging materials manufacturing company that wants to reduce the amount of trash by introducing an alternative to disposable packaging materials: reusable delivery packages. Furthermore, Repack has developed a truly interesting business model. The company doesn’t sell the delivery packages it produces, but rents them out for companies. By renting reusable packages instead of selling disposable ones, the company makes sure that the packages come back and remain in use. In this way Repack also contributes to the development of a circular economy.

The idea behind RePack is simple. Let’s say you’re buying a new pair of jeans online. Upon purchasing you are presented two options for delivery: regular packaging or Repack. Depending on the store, you will have to pay between 0-5 euros extra for using Repack packaging. By choosing Repack, the jeans you bought will then be delivered in a reusable package that you can send back via mail (no stamps needed). After sending the package back you will receive a ten euro coupon for the online store where you bought the jeans.

Repack_Happy_Customer_Anna_pieni

The idea for Repack emerged in 2010 when the three founders of Repack, Juha Mäkelä, Jonne Hellgren and Petri Piirainen, were working on a product development project with Finland’s post office. The trio had already founded one company before, Peruste Oy, which works in sustainable product design. One of the founders, Juha Mäkelä, initially came up with the idea and after a year of consideration the three men decided to take action and begun doing market research by contacting online retailers.

Repack Team consisting of Jonne Helgren, Petri Piirainen and Juha Mäkelä

Repack Team consisting of Jonne Helgren, Petri Piirainen and Juha Mäkelä

According to Jonne Hellgren, these initial contacts were made in a true lean fashion, without having a single product or even a prototype to show to their prospective clients. However, there was enough demand for the idea and Repack was finally founded in 2011. Today Repack has a growing customer base of various Finnish retailers, including Globe Hope, Varusteleka, Isku and Martela.  According to Hellgren, the company is also planning its expansion to international markets.

Business model: Product service system

Value proposition: Trashless life
Customers: Online stores and retailers mainly in consumer goods business
Revenue generation logic: Retailers pay for using Repack’s packages on a pay-per-use basis

Below is Accenture’s framework of 5 different circular economy business models. Based on this framework, Repack has a product as a service business model. By transforming a product that was previously disposable into a service, the company has developed a product service system.

Accenture

Accenture’s 5 business models for circular economy. Source: Circular Advantage.

A product service system essentially means that a product is used to provide a service, for example when renting a car. Car rentals provide access to the benefits of having a car at your use without the burden of owning one. A product service system can also be a mix of various products and services, but the focus is always in providing a stellar customer experience, not on the products themselves. When a product is used as a service, the idea is to provide access to the benefits of using the product while retaining the burden of owning the product within the company. This way of thinking, also known as service-dominant logic, shifts the focus from products to understanding and serving the underlying needs of the customer.

In Repack’s case this means that the company’s customers don’t actually buy its delivery packages, but instead pay for the benefits of using them. The underlying need is to have goods packaged in a way that they can be delivered to the end user in a reliable and cost-efficient manner. Repack serves this need by providing access to reusable packaging while also relieving its customers from the trash that comes with disposable packaging.

Repack’s company customers pay for each time they use a Repack delivery package. According to Jonne Hellgren, retailers using Repack packages then decide whether they make the end user pay for using Repack. In most cases the end user pays around 1-5 euros, but receives a discount coupon she can use in the retailer’s online store.

It’s also interesting to note how Repack resembles Ecovative with its quest for reducing the amount of package material trash. While Repack has solved the trash issue by developing reusable delivery packaging, Ecovative has approached the problem by producing and selling biodegradable packaging materials. The two companies therefore represent the two opposite flows of nutrients in the circular economy model, one biological and the other technical.

3 Interesting Picks on Circular Economy

Below are some interesting picks on Circular Economy I wanted to share with you.

Unfamiliar with circular economy? Check out an introduction to the concept!

Company pick: Rype Office

Rype Office is a UK-based company that sells and leases office furniture. What makes Rype Office different is that they offer a buy-back guarantee for their furniture, which makes it easy for companies to recycle Rype Office products. The company also contributes to circular economy by leasing office furniture, which allows companies to easily increase or decrease the amount of furniture.

 

Book pick:  A New Dynamic – Effective Business in a Circular Economy

The concept of circular economy emerged from the work of different experts working independently on similar ideas. A New Dynamic is an inspiring book that brings these different ideas together in one place, making it an essential read for anyone interested in circular economy.

 

Article pick: What Will Come First: The Sharing Or Circular Economy?

The article pick of the week was written by Andrew Cave, a business journalist and a contributing writer at Forbes. In the article Cave discusses and makes comparisons between two similar (yet different) concepts: the sharing economy and the circular economy.

 

I would love to hear some of your picks! If you have books, articles or inspiring organizations in mind, go ahead and share them in the comments section.

Creative Commons Seedlings in Peet Pots by Jackal of All Trades is licenced under CC BY-NC 2.0.