UC Berkeley-Haas 2018 Commencement Speech: "The New Rules of Business for More Conscious Capitalism"
Each year we call upon an alumna, or alumnus of, uncommon, distinction. To, address the graduating, class someone who embodies a commitment, to excellence and a distinguished, record of achievement, someone who personifies. Those, four. Defining. Leadership, principles, in true Berkeley Haas fashion, we questioned, the status, quo for your special, event today by bringing you not, one but, two commencement. Speakers it is, my pleasure to. Introduce, to, you Nikhil. Arora and, alejandro Villas be so9. Co-founders. And co-ceos. Of, back. To the roots an organic, food and gardening, company based, in Oakland. California at Haws we, affectionately. Call Nicky, and Alex, the, mushroom, boys because. Now. Don't misinterpret this, okay now because. Nine. Years, ago they decided to forego lucrative. Consulting. Jobs available to them after they learned in a Haas, that, gourmet mushrooms could. Be grown on recycled. Coffee. Grounds, they, launched, a kitchen. Experiment. In. Their, fraternity doing. Just that and it did work the experiment, has turned into a national brand with a line of products that help millions of families, reconnect. To where their food comes, from back. To the roots gardening. Kits are now integrated, into thousands, of classroom, curricula. And its breakfast, cereals, the first organic, cereal, ever offered, in US, public. Schools, it. Now helps feed more than a million kids in New York City each morning, in the process Nikhil and Alex, have created, many new jobs and communities. That, really needed them for all this they have been recognized, by Forbes and. Inc magazines, 30. Under 30, also, CNN's, 10 next, gen. Entrepreneurs. Also. President, Obama's, Champions. Of Change, also. Martha Stewart's american-made, winners, and, the. Awards go on and on please join me in a warm welcome for our now Alex Alex and our Nick yield. First. Off, thank. You man thank. You so much Dean Lyons, good. Morning, Berkeley. Good. Morning, Hoss. Yeah. This. Is it's, awesome, to be here this is such. An honor to be sharing this moment with all of you and all your families, as well. Now. We particularly. Particularly. Remember, this because the last few weeks of college while. Most of our friends were getting ready to go into banking, and consulting, Nick. Hill and I were going dumpster. Diving at, 6:00 a.m. for old coffee grounds, it, was interesting because then, we actually remember, so clearly we, were sitting right there and we. Heard Dean Lyons repeat, our commencement, speakers at the time the lesson was Zig. When other zag and. You. Know they were looking, back to we will. Never forget our graduation, ceremony when, our Chancellor at the main campus graduation, he, shares with a thousands, of graduates in attendance, we, were just starting to work on and he, advised he, said don't follow the herd like, all the Honan Alejandro, and Nick held he's like growing mushrooms on coffee grounds, and he, paused and. The. Whole Greek theater right here just starts busting, up laughing and, he tries to save himself he's like no no I'm serious to growing mushrooms on coffee grounds just more, laughter yeah, I mean who would have thought two guys growing mushrooms in college was to Berkeley. So. Dean, lines after nine years since graduation, we can vote say with a big smile and. Our fair share of entrepreneurial, scars to prove it we certainly feel like we have zigged and, it all started, for us right, here a house we, still remember it like it was yesterday man when we first heard this, idea and, Professor Alan Ross's class we heard that you could, we grow mushrooms on, coffee. Waste but, nobody had ever done it we. Thought it was the most random but also a pretty cool idea and actually Nick Hill and I didn't, know each other at the time but, we were the only two crazy, kids who went up to the professor and asked for more information, yeah and that. One sentence, in, Alan rouses glass was literally the start of this whole adventure for us of building back to the roots a company. In the mission to help every family and every kid across, America, experience, that magic, had grown food and knowing where it comes from and, I, have to share though too so I later learned that, this whole thing almost never happened, that boy alex is here was the last one in class that day and almost got the door shut on a professor of Oz is. Seconds. Away and, you know it was right there, after. Knowing each other for just a couple months. Sitting. In a 1992. Toyota. Camry on top of Piedmont's Jeep on top of house, then. We shook on it and went. All in together. So. That. That. Very same, day I, called. The investment, bank I was about to join and in, one phone call I gave, up my dream job that I had worked so hard for, a six-figure. IBanking job on Wall Street I gave, up my lease in Manhattan's Lower East Side and instead. I decided, to go all-in with Nick Hill who, had just himself given, up his consulting, offer and, moved.
On To his older brothers couch. So. Literally. Overnight. We. Went from full-time, students, and soon-to-be banker, and consultant, to. Full-time, waste collectors, and mushroom. Farmers, and. As. We now step back onto the same stage that we graduated, from we're, not gonna stand up here and give you life advice because, honestly we're still figuring all that out ourselves and, we're not gonna be up here telling you how to sell a business for millions of dollars because we're still deep in it I mean literally just last week we embraced our series be financing, and we still head down every, single morning Alex. Picks me about 6:45, a.m. we carpool to work together. But. Yeah. Through, through this journey, what. We have learned from a bucket of mushrooms, to building a national brand that's not touching millions of lives we've. Learned and experienced, firsthand, how. The conventional. Rules of business that have defined capitalism. For, hundreds, of years are being rewritten, as we, speak and the business. World you all are graduating, into is beginning to feel a lot different, than, that which our textbooks, taught us was business gospel, a new. Form of capitalism, is emerging, right now and. It's. Emerging, because, the traditional, rules of business rules. That all of us have read thousands, of times in textbooks and case studies, are being, broken as we speak, broken. Because, a status quo is no longer enough in business it, may have gotten us here but I ain't gonna get us there it's just not enough. So. Today we. Want to talk to you about five of those rules that are being broken, all. Right so rule number one of, conventional. Old-school, business to. Be successful in business you. Have to be an expert, in your field that's. Just not true we're. The generation right. That now is all the world's knowledge in our pocket, we're. The generation that can teach ourselves anything. At any time when, we taught ourselves how to cut mushrooms on YouTube, right, it's not it's, not about what you know it's about knowing what you don't know and finding the answers and it's, not just the information expertise, either it, applies to relationships too. You. Don't need a big rolodex, anymore be successful, in business for. Instance the first article, that was ever written about back to the roots was by the daily towel after. That article, came out we, googled. Every writer that had ever written about sustainability, and we just emailed, them the article, and we said hey we would love to share a story. Fast-forward. Six months and the BBC aired a five-minute spot globally, on the company and since, then we've. Had the tremendous honor of sharing the back to each story with President, Obama over a 90 minute meeting with him, Jim. Cramer's Mad Money and even. The front page of The Wall Street Journal, and Alex, don't forget about being on The Bachelorette. But. But. All of this happened, oh this happened, without. A press agency, and without. Years of contacts, we. Just had the internet and you. Don't need to be an expert or have deep industry, or relationships, to get into and succeed in a retail either our.
Biggest Partner today the Home Depot that's, selling millions of dollars of our indoor gardening kits now nationwide, start. Off with a cold email to a buyer who, he only had the first and last name for remember. We were guessing all the different variations first, name that last name first initial dot last name, one. Went through and that was literally the start, so. The new rule number, one is you don't need to be an expert to be successful. All the, world's experts, are in your pocket. The. Second, conventional. Old-school. Business, rule that you've probably heard is. That you need a lot of money to start something new and be successful in business not. True. The. Big Silicon, Valley funds aren't the only options, you have now to go for Capital anymore through. Kickstarter, and IndieGoGo, AngelList, circle up and I cos we've. Seen the decentralization. Of fundraising, and the ability to unlock capital, no matter where you live in the world, when. We're looking to launch our second, product the water garden, when you did a hundred thousand dollars for, the equipment we, were looking to create the first home aquaponic. System it's a self-cleaning, mini eco system that uses the fish, poop from the fish tank to go plants, above and, we decide to put this project up on Kickstarter. Alright, for 30 days hundred, thousand dollar goal and our. Community, came through he, raised two hundred forty eight thousand, eight hundred seventy three dollars in 30 days and then, an additional two hundred fifty thousand dollars on our website of pre-orders, so, at least half a million dollars, from. Our own community with. One prototype, and a two-minute, video, and. You fast forward and that community, momentum, from, Kickstarter, translated. To our first outside funding from a nonprofit in Oakland five hundred thousand dollar investment from, fund good jobs and then. Later twenty, million dollars now a venture, capital, from investment, funds and larger corporations, including, Scott's Miracle Grow and Campbell's so. The new rule number, four. I'll. Repeat it cuz I was real number two the new rule number two, you. Don't need, a lot of money to be successful, in business capitals, been decentralized. So. Rule number three of conventional. School business keep, a secret and keep. People out of your business right, there's, a lot of talk about the power of privacy. And secrecy in, business, alright the classic, coca-cola formula. But. The game's changed. Transparency. Is the new norm and you're gonna start seeing it in a bunch of new ways as, we. Built our, vision, of connecting families, and food to, food again and expand it from ready to grow indoor gardening kits to, ready to eat breakfast, cereals we. Asked ourselves how do we bring that same radical, transparency and connection, you get when you grow your own food to, packaged, ready-to-eat.
Food As well and. Doing. This we. Decided really, push the boundaries and actually, tell our consumers, on every, single box of cereal not, just exactly what farmer ingredients, came from but, also the exact recipe of, how we make it and. Right. Around the time we were launching our cereals at Whole Foods Market. The. Board of directors of General Mills the largest, cereal company in the world invited. Us to meet. We'll. Never forget when, in the meeting the chief marketing officer of Mill advised us to take our serial recipe, off the box she. Said with my 30 years of business experience I never would have thought it's be a good idea to share your IP with the world, in. Just, a few months later after that meeting our. Cereals, displaced. Kellogg's, to, launch into the New York City public school system the largest, district in the country helping. Feed 1.1. Million kids, every, single day. And. Becoming. Becoming. The first organic, cereal in history, ever offered, in u.s. public schools and those. Cereal, cups well. They still have the recipe on them and the. Best part about transparency. Though, is, that the old school businesses, they can't hide behind, multi-million. Dollar flashy. Marketing, campaigns, that. Clever Super, Bowl ad just isn't enough anymore if, your product is a one-star, review in Amazon we're not buying it and so. The new rule number three is that power in business, comes not from secrecy. But. From radical transparency. The. Fourth. The. Fourth conventional. Business rule that, we've all, heard is about, that zero-sum. Game that, for me to win you. Have to lose, not. True. For. Small businesses, to win big, businesses, don't have to lose we. All can work together to accelerate impact, for. Example Campbell's. And Scott's Miracle Grow both, multi-billion. Multinationals. Have, invested, millions of dollars into back to the roots, they're. Helping us scale revenue, and reduce costs by leveraging their sales marketing. And supply chain expertise. We're. Helping them rethink, innovation. And push, for a faster, speed to shelf strategy, and. Suppliers. And buyers don't, have to always extract. Value from each other either to win, we. Were getting started we, sourced our coffee grounds from Pete's coffee adding. So much value to them by taking care of their heavy and just messy. Waste, that. We eventually replace, waste management, and in. Return we, got paid to, source our biggest, raw material. So. We provided them. More efficient waste service and in, turn we. Were able to make a profit on our, own cost of goods and thanks. To that allowed us to bootstrap. The company for many years so, the new rule number four it's. Not I win you lose. It's. Win-win-win. And. Rule. And. Rule. Number five. The. Last but probably most impactful. Conventional. Business rule that, we've all heard is that a business, should maximize, shareholder value, at, all costs. Not. True. Right. The conventional, business rule is that the sole reason the business exists is to maximize, shareholder value. Right and there's a few lucky ones that make it they, create a CSR, team that didn't picks a non profit once a year to write a check to write, but, today we've seen that there are so many ways to create profitable, triple, bottom line businesses, that also integrate, the community the, team the environment, into its everyday, stakeholders. Like. Patagonia. With their supply chain method. With their sustainable, sourcing, and packaging, and TOMS shoes with their one for one model and in. Fact we, were so inspired by the Tom's model, that, we end up creating a similar growing give one campaign where for every photo someone, shares of what they've grown with one of our indoor gardening kits we donate, one to a classroom of their choice and, by. Integrating, that program in every unit we sell our, own community, has now helped tens of thousands, of kids across the country grow, their own food and, the. More people share the. More brand awareness grows, is, this incredible, beautiful cycle, and by, the way it's okay to take inspiration from others in fact. Blake the, founder of Tom's so. Appreciated. Seeing. His idea transfer, into indoor gardening kits and food that. We became his very first angel, investment, after Tom's. The. New rule number five. What's. The best way to maximize your own value give value. Because. The more you give the more, you get.
And. Listen. While we've stumbled, through. All these lessons one, mushroom, kit one, cereal, box at a time. We. Hope they help open your eyes to, the massive, transformation. Of business that's happening right now right, under, our feet. New. Rules are, being written as we speak, creating, space for a new form of capitalism. Conscious. Capitalism, Kappa, limbs of capitalism. That aims not just. To make money but, to elevate, humanity, through business and back. To the roots is just one example of it it's, happening all around us right to massive, multinationals. Danone. And Unilever have, announced their goals to become benefit, corporations, or be Corpse directly. Embedding, the business impact, on multiple. Stakeholders beyond. Just investor, returns into. Their metrics for success and, Larry. Fink the CEO of the world's largest investment. Firm Blackrock. With, six point three trillion, dollars, of assets, under management just. Wrote a letter to CEOs demanding, that all companies both public and private serve. A greater public social purpose. So. How cool is it that. Hundred. The hundreds of years since, 1776. When Adam Smith wrote wealth of nations and kick-started, modern capitalism, as we know it that, you. All get, to graduate, from the best university. And the. Best Business, School in the world at this time a time. When all the conventional, rules our business are being ripped up to, create space for a new form of capitalism, a form, of capitalism, that doesn't, separate doing good and doing well. How. Awesome. And. What. And, what. Responsibilities. Too, because. We also carry with us all as golden. Bears the. Legacy, of this incredible. University and the social activists, who have graced these halls and walk. The streets of Berkeley for decades the. Movements, that were incubated right, here free. Speech. Anti-war. Gay, rights women's. Rights farm. Workers rights.
So. If you get ready to enter the business world. Realize. That. The old rules, have been ripped up and the. World is looking to you to, help write the new ones. New. Rules, for. A more inclusive a more, sustainable, a more transparent and, a, more conscious capitalism, and, you. Don't have to do something crazy like going, mushrooms, on coffee grounds, to help build this new form of capitalism but. You do have the responsibility to carry, this flag forward, into, wherever you go after graduation. Be. The one who makes that big Bank judge themselves not just by returns generated but, by carbon sequestered, be, that one who inspires that big consulting company to push their clients, to, adopt better business practices. So. Hass graduates. The. Next chapter of capitalism. Is in our generations. Hands it is ours to write, so. Let's make it a good story that future graduates, will be proud of us for. Gratulations, go. Bears complete. History, thank, you.