What does it mean to work "in Product", let alone at a company working on climate change? What is the difference between Product and Engineering? And what the hell are they building in there anyways?!In this conversation, Nori cofounder Ross Kenyon is joined by Nori's Head of Product, Patrick Tsao, to discuss Patrick's role in scaling climate action. How much of this work is strategy, how much is building tools, and are we meant to be empirical or aprioristic "first principles" thinkers? What are the risks of each?Patrick emphasizes the struggle of understanding and meeting customers' goals in the constantly evolving #carbonmarket, and when and how to work on education beyond the norm.We aim to be doing more regular Product updates moving forward!
More from the show
Ad-free episodes and other benefits come with a paid subscription.
Carbon Removal Newsroom, the news show that ran alongside this one, is over. Its episodes are still up, on the feed Climate Workers Anonymous now uses.
Carbon Removal Memes is still going.
Resources
Patrick Tsao's LinkedIn profile
Full Transcript
Ross Kenyon: You’re listening to the Reversing Climate Change podcast by the team at Nori, the carbon removal marketplace. This is a show about the innovators and entrepreneurs developing solutions to climate change.
I was at an event not long ago and they did a fireside chat format, but they had clearly prepared a lot for it, and it almost felt like more of a — more stage managed than anything else. Because they presented it as though it was going to be candid, but it felt so programmed that it was much worse than if they had just presented the thing as a speaker with a slideshow presentation that they had clearly prepared very much in advance. So let’s just not do that.
Patrick Tsao: Yeah, I — we definitely didn’t do that. Because I don’t have a script.
Ross Kenyon: So yes, you’re — you’re listening right now to the chronically underprepared Patrick Tsao, Nori’s Head of Product. Just kidding. Yeah. Patrick, long time fan of the show, breaking his heart with his intro by publicly insulting him. Hi, Patrick.
Patrick Tsao: Thanks. Thanks for having me, Ross. This is one of my favorite podcasts.
Ross Kenyon: Yeah, yeah. No longer, though. You’re listening to the Reversing Climate Change podcast and, as you probably know, I’m one of the cofounders of Nori and I’m the director of creative and marketing here, and we want to do a product update. I think it’s been several years since we’ve done this. We’ve had a lot of things going on and we’re overdue. Patrick, you’ve never even been on. So when — how long have you been here?
Patrick Tsao: Coming up on a year and a half.
Ross Kenyon: Year and a half. So that’s a long time to go without a product update. So someone’s listening right now, maybe they don’t work at a tech company. They don’t really know what product means. It has a sort of — if you’re inside the industry, if you work at a tech company, you know what it means. But maybe if you’re outside, it’s just one of these fancy pants tech, pat-yourselves-on-the-back kind of department names. What do you mean? What does it mean to work in product?
Patrick Tsao: That’s — I mean, that’s a great question. I think we’re all — all of us working in product are constantly trying to answer that question as well. But it’s one of those jargony words that can mean as much as you want it to mean. But I think in the most kind of pure sense, at least how I think about it, is anything that could potentially impact customer experience could be counted as product.
Ross Kenyon: And is there anything outside of that, though? That’s the problem, right? And marketing often says the same thing.
Patrick Tsao: So, yeah. Everything is marketing and everything is product. Good luck. Yeah, but I mean, you know, I think every product leader starting at a new company should ask themselves the question: what is product, and why do I deserve to be here, and what is my job, and what value can I add? And I think in different companies, you know, the services are different, and so how product or software or whatever your scope is fits in can be a little bit different. And that’s kind of part of the challenge — the job is different everywhere.
Within Nori specifically, I think most of the job of product with regards to software today is to help us scale what we’re doing and make us more efficient and be that supporting platform for whatever we need to do to reverse climate change. And so at the moment, it’s things like, you know, importing data at scale and quantifying different farms and different fields based on crop event data. It’s creating a user experience for folks to keep track of what credits they have and what credits have been issued, and enforcing certain rules around when retirement happens and whether trading can occur, making sure that growers get paid. And so all the kind of foundational stuff that has to happen for any of this to work is supported by software, and that’s kind of what we’re here to do.
Ross Kenyon: I’ve heard you describe the product discipline as being tool makers.
Patrick Tsao: Yeah, tool makers for scaling.
Ross Kenyon: I’ve heard things similar to that. I’m wondering if maybe someone who’s listening can’t distinguish that from engineering. Are these synonyms? Is it different?
Patrick Tsao: Well, I think that engineering is a way to build product, and oftentimes if you have unique needs and you’re building your own software, then you obviously need engineers in house to do that. But you know, these days there are so many no-code tools available that one could actually prototype and build something productive without any engineers involved, and that’s entirely fine in some cases. And so I think product is supposed to be this more encompassing word of, like, what tools do we give ourselves to help us do what we need to do. And engineering is perhaps one way to go about getting our hands on those tools.
Ross Kenyon: That helps. So it seems like if I were in your shoes, I’d be looking ahead into generative AI and making sure there’s a role for me to be the best possible AI shepherd I can be, so that there’s a future where engineering is made redundant a little bit by AI, or at least for certain functions, that there’s still a product leadership that needs to be done by an actual human, namely yourself. Is that correct?
Patrick Tsao: That’s certainly a part of it, right? Like, you know, what I’ve been telling our team is that if we are supposed to be the team that is the most familiar with software and technology trends — just like how there are teams at Nori responsible for keeping track of policy developments or science within carbon — like, we are the ones who are supposed to keep pulse on software developments and innovation in that area. And so generative AI is obviously a really big trend. And so we’re thinking a lot about how to recommend Nori to incorporate generative AI into how we work, whether that’s just recommending different SaaS tools or doing lunch and learns or maybe even one day building something. We don’t know yet.
But you know, as an example, I polled the team the other day, and kind of what it came down to was that we can agree that on average each engineer is probably 20% more productive with the use of generative AI tools. And so I think that’s quite neat. You know, I don’t know that generative AI will fully replace an engineering team, or any team for that matter, fully. But I think the job of the people who are on that team is about to change quite drastically. I mean, if you think about 20% productivity gain across our team of five engineers, that would mean that we’ve already pretty much created a head count from our AI, right?
Like, if you add that together, we’re doing the work of six people with five. And you know, concepts like The Mythical Man-Month would say that more people doesn’t equal linearly more productivity. And so if you have fewer people doing the work of more people, that’s actually even more effective. And so one of the things I’m thinking about is, well, can we replicate that kind of productivity gain across the company? And you know, in a world where we’re short on cash and trying to preserve runway and we don’t want to hire too many people — well, if you can get 20 people to do the work of 24, that’s a fairly high ROI initiative potentially, right?
Ross Kenyon: You guys could also just switch to a four-day work week.
Patrick Tsao: Yeah, I’ll run that by Matt and see what he says.
Ross Kenyon: That’s pretty exciting. Does the scaling of that not work linearly because of the changeover costs of having additional headcount rather than fewer people doing that same amount of work? Because I feel like a lot of energy is lost from having to teach someone, okay, here’s where this is at, I need you to jump in here. I recently just started doing all the podcast stuff myself rather than outsourcing it to a functional specialist, because the mere act of explaining it, I felt like, wasted more time than we got benefit out of. Is that the same for —
Patrick Tsao: Yeah, I mean, exactly. You know, humans are not the best collaborators, as can be observed in nature. Like, if you look at how ants or bees work, that’s not how we work. We’re like creative people who ask questions and, you know, communicate — and or fail to communicate at times. So there’s a lot of friction that comes from more people working together. And so, yeah, you’re exactly right. It’s like, at what point is that overhead still ROI positive? So you know, you can’t just infinitely staff a project and have it take much less time. Sometimes it doesn’t work anymore at a certain point, so.
Ross Kenyon: Yeah, I’ve heard this aside as the nine women can’t make a baby in one month.
Patrick Tsao: Yeah, that’s a different type of constraint, but for sure, yeah.
Ross Kenyon: Yeah, there’s something about that where it just — it doesn’t work like maybe you would expect. And I’ve often had an experience too where adding more money or more human power into a system hasn’t led to a corresponding increase in outcome. Oftentimes it’s just been more management, more administration and confusion, and it would have been simpler to take a little bit more time. It looks like you can just buy your way or hire your way out of a problem. It turns out humans don’t always work that way.
Patrick Tsao: Yeah. And I mean, you know, even when we communicate with people, we have to distill it down. And there’s a certain amount of bandwidth that’s available. And there’s all this context in your head that may or may not be effectively communicated with that. And so if you didn’t have to hand that out to someone, or if there was a way to transfer your consciousness into theirs or something weird like that, we’d probably be a lot more productive. But for now, I think just minimizing friction — and sometimes that means keeping the team to a reasonable size — is actually a great way to maximize ROI.
Ross Kenyon: That understated importance of tacit knowledge is really key. I’ve always heard this said: if you had to teach someone how to ride a bicycle only using words — because the amount of motions your body must undertake to ride a bicycle successfully, there are sort of countless of them. Little micro adjustments of balance, how to feel it, how to know what to do. You really can’t just explain it. That knowledge lives in an unarticulated spot in your brain, essentially.
And even trying to explain some of the basics of just how to post-produce a podcast and get it deployed successfully, it might seem like that’s one step. It turns out that’s 500 steps that it has taken years to build. And you don’t realize that until you’re trying to write the document for when you go on parental leave or something like that, and then realize, oh God, what am I saddling someone with?
Patrick Tsao: Yeah, yeah, that reminds me of — I recently read The Inner Game of Tennis. I’m a tennis guy, and kind of the same thing. It’s like you’re better off trying to do a motion by watching someone than to read a book about it.
Ross Kenyon: Yeah, that’s interesting. Yeah. Just because you need to experience it in a tactile way.
Patrick Tsao: Yeah. I mean, your body learns very differently than words. Words are like just a poor approximation of what your body is supposed to do. And so you’re probably better off just having your body try to replicate what you want it to do rather than force it to go through words.
Ross Kenyon: It’s like listening to music and trying to play it by ear versus trying to play it off of sheet music, right? It’s always just an approximation, what’s written down. So that’s fascinating, because — I mean, everything you just said about product has a sort of building orientation. But I also associate you with so much strategic work at Nori. Oftentimes if you or I are noodling on an idea about what Nori is, how we should be positioned, what everyone else is doing, how we might be different, often we’re chatting about that in the hall on a pretty regular basis. Does that fit into product work, or are you expecting someone else to just tell you what to build and to show up? Are you expected to bring that to the table?
Patrick Tsao: I think product leadership certainly requires strategy, right, because our goal is to kind of bridge the gap between a vision and what teams can execute against. And in some cases, depending on the org you belong to, product maybe even owns the vision. But I mean, if Nori’s vision is kind of large enough, you know, to not have any team own it — right, to reverse climate change, that’s a pretty big thing to have to do. And so there are many different ways that one might go about doing that.
And so I think it would be too passive for product in its definition to be limited to building. I think we have to also think about, all right, what is the problem we’re trying to solve and what are some ways that we can solve it. And given that, you know, we are also the subject matter expert of software, which is one of the highest leverage tools available to humanity today — like, we ought to try to be keeping an eye out for how one might apply software to solve some of the problems that we face in our mission, right? And so I think any highly functioning product organization isn’t just telling the rest of the business, our job is to build the tools, you tell us what to build. It should actually be trying to solve the problem together and understand the problem together with the rest of the org.
Ross Kenyon: How do you come at a problem like climate change from a product orientation? Which, given how expensive product is — does that question even make sense?
Patrick Tsao: I think it totally makes sense, and I think that’s the difficulty, right? I think if it was not hard, we’d be done already and we wouldn’t be here. And so I don’t know that anybody has the right answer to the question of how do you solve climate change. I think a bunch of us are trying, right, and doing our best. And despite our best efforts, you still see many nasty news articles, and carbon credits still don’t have exactly the best reputation. And so I think we’ve got a lot of work to do.
But I mean, I think that there are a lot of different ways to think about coming at this problem, right? I mean, one of the ways that I think about a lot is, you know, you read a lot and talk to a lot of people, and the more that you read and talk to people, the more data points you have. And at first those data points may not form a pattern, but at some point they start to, oftentimes. And even if a data point is outside of your industry, it could be inspiration at some point in the future.
I think another way to go about it is — like, I read the — not the recent Elon Musk book, but the one from years ago before.
Ross Kenyon: Oh, I think I’ve read that one too. Yeah, it’s probably like five years old.
Patrick Tsao: Yeah, yeah, like before all the recent crazy stuff. And in that book there was a pretty strong emphasis on, like, first principles thinking. And the example they used was how Elon went and looked at rockets, and they were costing NASA like orders of magnitude more than if you were to just take what goes into a rocket and add it up. And the question was why. And so that’s one of the ways that he then went about building rockets at SpaceX.
And so I think first principles is a pretty important thing — like, if you really boil down the problem you’re trying to solve to the core and the essence, and then just ignore the noise in industry for a second. I think that sometimes it’s a good way to start to understand some of the fundamental things that we’re really trying to do versus some of the things that we’re trying to do just because of, I don’t know, like we care how other people think about us, or we’re just trying to go with mainstream or something like that.
Ross Kenyon: That’s — I associate first principles thinking as being both a really powerful tool, but also it can be a dangerous one too. I associate — this is going to be peak Ross, I hope you’re ready.
Patrick Tsao: Bring it on.
Ross Kenyon: I associate it with Edmund Burke’s criticism of the French Revolution, essentially of trying to redesign society based upon a few principles. And it doesn’t take that many extra steps before you end up at the guillotine and you’re trying to, I don’t know, uproot all of the messiness of life, all of the nuance, and just get to a couple aspects of égalité, fraternité. And if that’s all you have, you lose sort of the messiness of life that we operate within.
Nori also — Nori has always been a very first principles oriented company, and it’s one of the reasons why I would cringe to listen to earlier episodes of the show, especially that first year or two, because I doubt I knew hardly anything about carbon markets. Certainly not to be talking about them in public with a degree of familiarity, or that I know so much better. I feel like I know a lot better now, but I would also approach it with a lot more care.
Now, back when I was younger I had maybe more of a first principles approach, but that potentially led me into thinking that people who didn’t see it the same way were blind to the obvious problems here. But then they would say, like, oh, they’re the mature conservative ones who have been through all these cycles. They’ve been here since the CDM and Kyoto, and they know that this messiness that exists, exists for a reason. And how dare I come in here trying to cut it all down and start from scratch.
But maybe now — have I just become an incumbent? Basically is what I’m saying. Have I now become that annoying person who says, first principles, that’s a great idea in theory, but once you’re trying to build something, actually the details and the nuance matter a lot? Good luck making anything from that, Patrick. But there’s a lot of ways you can go.
Patrick Tsao: Well, I mean, I think you’re right. Like, the nuance does matter. But — and, you know, for the record, it’s not like you just do first principles and that is truth, right? I think it’s in the face of a bunch of ambiguity, and your point, it’s like, how do you even go about solving climate change? You know, we need all the tools we have available to even start to reason about some of these things. And that’s just one of them. I think you can do a similar exercise with different premises, and maybe the triangulation of all those things becomes truth at some point.
But I mean, like, as an example of how the recent products we’ve been working on apply to some of that first principles thinking — you know, if we overly simplify things and just think about for a second, like, why does anybody care about carbon credits? I think the most cynical would say, well, companies only care about it because at some point they’re going to be forced to care about it, right? Like, if we assume no company did this out of the goodness of their heart and just wanted to be compliant and wanted to do the financially best thing for themselves, then people care about carbon removal credits — the corporates care about carbon removal credits — to the extent that it helps them get out of net zero obligations, right?
And so with that as the premise, the first principle is that a carbon credit is only valuable, or as valuable, as its net-zero-ness, if that’s even a word, right? And so I think as a starting point, it’s pretty interesting, because nearly no carbon removal credits today in the market are net zero eligible, right? Either it’s a type of credit that is perhaps nature based and therefore deemed not permanent enough by a lot of experts because it doesn’t cycle the earth the same way as fossil fuels, or it’s one of those permanent credits that isn’t available. Right? I think — what did CDR.fyi say? It’s like 3% of credits that have been sold have actually been delivered, or something like that.
Yeah. And so I think that’s a pretty interesting premise. You know, even ignoring all the nuance, it’s like, well, if we agree that the primary utility of a carbon credit is its net-zero-ness, then how is it that there are like hundreds of millions of dollars changing hands in this market when 97% of the supply doesn’t actually meet its primary utility? [unclear] I think then the most interesting question is, how does the market deserve to exist, with hundreds of millions of dollars changing hands, getting all this news, when most of what’s changing hands doesn’t actually even satisfy what those credits were out to do, right?
Like, how many credits are going to be sold this year that can actually be claimed against net zero or carbon neutrality pledges this year? And I think that’s just very interesting.
Ross Kenyon: I think that’s a — it’s a very low percentage, like near zero, right? It’s dominated by biochar. I think they’re basically the only methodology that is able to deliver right now.
Patrick Tsao: Yeah.
Ross Kenyon: At least at the greater-than-100-year durability.
Patrick Tsao: Yeah. And then, so then if we applied that to Nori, it’s like — at least back when we were doing this thinking, that was what, like early 2023, nearly a year ago now, actually, before we had launched the Net-Zero Tonne — then it was like a bit of an interesting conundrum for Nori. It’s like, well, if none of Nori’s products satisfy the core value of a carbon credit, then what do we do, right? So what are we here to do? So that also begs some interesting questions, I think, internally to ask: if, okay, well, is it enough to work only in soil or not? And do we need to think about selling soil differently if we don’t want to imply that it’s net zero eligible? And what else can you do with soil as a type of carbon credit to help with that net-zero-ness, right?
Ross Kenyon: I wish there was a way to do this so much faster. What’s that company that doesn’t even make clothes until it gets enough purchases, and it does it, like, nearly instantaneously? God, you’re going to say it — I know the name of the company. You know what I’m talking about. It’s like they don’t, they don’t actually have inventory, they just sell, they sell designs, and if they get bought —
Patrick Tsao: Oh, I’ve heard of this.
Ross Kenyon: — and it gets retired very quickly too. So they basically create fashion just instantly off of what the trends are and innovate very, very quickly and retire things very quickly. Unfortunately, it creates a lot of fast fashion waste and those criticisms apply. But anything that you do at a company like Nori, because there’s a contractual basis for it, there’s many laws and regulations that one must be in compliance with, there’s marketing and messaging around it, there’s customer research, and then just the mechanics of delivering this thing, working with suppliers. Anything that you see any company do basically has taken at least several months to get shipped.
And who knows — is net zero even going to be the thing that people are going to care about a year from now? We got kind of lucky, and yes, turns out they do still care about it. But for how long, and how can you make it so that this innovation system goes much faster? So whenever — whatever supplants net zero, how do we stay ahead of that, essentially?
Patrick Tsao: Yeah, but regardless of what you call it, right? Like, the truth is that fossil fuel emissions get emitted and stay in the atmosphere for a very long time. And so, like, going back to first principles again, then it must be the case that if we were to define what is a negative emission, it should follow a similar trajectory that’s like nearly the exact opposite of a positive emission, right? Otherwise the math won’t work. And so if the definition of a carbon removal credit that is net zero eligible is that representation of a -1 in carbon accounting standards, regardless of whether that’s called net zero or something else — like, that concept must exist, right? Otherwise we’re not going to ever solve it.
And so then the question becomes, how do you then launch a product that is the -1? Like, you know, accepting that this is a bit of a moving target, but I think scientists actually have a fairly — somewhat, like, pretty consistent view, I would say, right, of what a -1 emission should look like out in nature. Like, what should it do to the earth? How we actually get there, I mean, that’s kind of more the MRV world.
Ross Kenyon: Yeah. There’s some open questions, I think, about how long it must remain sequestered for it to count as a true -1. Is it 100 years? Is it 1,000 years? Is it 10,000 years? How much reversal risk are we okay baking into a credit and calling it permanent or durable? There’s a difference between those things. So, but yeah, broadly, I think there’s more consensus probably than there’s been in the past.
Patrick Tsao: Yeah. And I think that’s what we talked about — why internally the idea of blending was interesting, right? As I think, even though it is still a moving target — and blending might be a key word that I shouldn’t use publicly without explaining. But yeah, I mean, I think that it’s a moving target, but I think it’s now defined enough where perhaps one could reason about different types of carbon credits and how one might go about stacking or building a portfolio out of them to make it approximately a negative emission, according to, you know, the idea that a positive emission, if you assume that it’s out in the world forever until you take it back in, then the negative emission ought to be one emission put away forever.
Ross Kenyon: Maybe we should introduce blending — reintroduce it. We’ve done shows on it previously. I’ll link in the show notes to Radhika and I talking about it. Patrick, why don’t you talk about what blending is and what the NZT is, and maybe we’ll get into some of these ideas.
Patrick Tsao: I’ll try. So let’s see. Blending first came about as an idea, actually, from one of the brainstorms that you ran, Ross. This is [unclear]?
Ross Kenyon: Yeah, yeah.
Patrick Tsao: So I think at the time we had recently launched an API so that people can come and use our supply, basically, to build on top of that and do something with it. And so there was this brainstorm that you ran where the company was invited to throw out crazy ideas of how one might go about using that. And one of the ideas that was pitched was kind of funnily called Noridactyl, because the idea was that you could accelerate the climate impact of these future ex ante credits — DAC being the obvious one to pick on — so that, you know, by first pairing it with one of our soil credits.
And it is a nice mix, because our soil credits are ex post, meaning that you’re paying for carbon that’s already been removed. And so it’s immediate impact, but it’s not as durable as some of these other methodologies. And so it’s kind of good at exactly the thing that these future credits are not good at. You know, a 2027 vintage year DAC credit might be highly durable and hopefully permanent, but it’s not available for another 5-10 years. And so, you know, a natural criticism of that would be, well, we spend money on that now to develop the tech, but we’re all kind of just waiting and hoping it comes to fruition.
And so, but what if you were to build a product that allowed anybody who was buying these future credits to also buy a soil credit from Nori, which essentially, quote unquote, upgrades that future DAC credit to be a present-day kind of impactful credit? And we call it Noridactyl because we put Nori and then DAC and then made it sound like a dinosaur. And that was fun.
Ross Kenyon: Yeah. Was it fun? For whom? Was it for me?
Patrick Tsao: It was, yeah, definitely, yeah. And so, you know, that was, like, for a while actually one of the sales pitches we experimented with. You know, it was, could one go out and work down the list of the CDR.fyi buyers and look at their vintage year and try to say, hey, why don’t you spend a little bit more money, and instead of having a 2027 vintage year, have a 2023 vintage year? Turns out that wasn’t exactly the right hypothesis, but that’s fine. It’s still a good idea.
And around this time we got very lucky and got invited to the beta program with Stripe for their Climate Orders product, which recently launched as well. And so that was good luck, because it enabled us to use our supply and build it on top of the Stripe Frontier supply, which tends to be the ex ante future durable stuff. And so what we could do is a simple integration and test the idea of blending, as previously talked about on the podcast, which is that we could stack — that would be the technical word of the industry — so stack two credits together, first by retiring a soil credit, which is again immediate, ex post, and then using software to then enforce that there’s an overlap between the expiration of that initial soil credit and the delivery year of that future durable credit, thereby creating a hybrid credit that is present-day net zero eligible.
And that was an interesting way for Nori to test not only blending as an idea, but whether immediacy and present-day eligibility would be a useful, you know, value add to the market. And that was great because it allowed us to try this without building our own methodology and finding our own suppliers and all of that, so accelerated our road map, I think, quite significantly. Do you agree? Do you agree with that?
Ross Kenyon: I definitely do. Onboarding new supply, especially a new genre of supply, is a huge task and requires public comment and a lot of stakeholder engagement and making sure that you’re doing things correctly in a way that’s publicly articulable and respectable. But Patrick, what you said is so complicated too. Can you explain it to me like I’m sitting in the kid’s seat in a shopping cart at the grocery store? If only there was some way to explain this that would make sense to me, a small child.
Patrick Tsao: Explain what — the idea of blending?
Ross Kenyon: I was just trying to set you up for the — for the grocery —
Patrick Tsao: Oh, you want me to talk about that? Come on, man. Oh man. Well, I mean, if we come back to that first principles idea, right? Which is like, you know, sometimes when we’re solution seeking and forming a hypothesis, it’s useful to take ourselves outside of our industry, because then a lot of the nuance and details that can be distracting at times starts to fall away. I think I spent like a week thinking about this, which is like, if we call ourselves a marketplace, and there’s all these people selling carbon credits and they call themselves a marketplace and they’re project developers — like, if we just take all those words away and use a different industry, how would my thinking on this change?
And so, being a foodie, I went down the path of food, right? And so it’s like, what is the primary utility of a meal? It’s to make us full and, like, give us maybe an enjoyable experience or whatever. And so there’s the question of, when you buy a carbon credit, what are you looking for? And if the primary value out of a carbon credit is its net-zero-ness, then — but then let’s say that, you know, the primary utility of a carbon credit is to fulfill net zero, and so therefore net-zero-ness in a credit is roughly the same as, like, a meal fulfilling your hunger.
And so then if you keep following that line of thought, it’s like, well, if somebody sells you a carbon credit called the Nori Regenerative Tonne, which is a soil credit and therefore is not necessarily, like, net zero appropriate, how would that fall into that line of thinking, right? And so what are, like, ingredients that go into a meal that don’t necessarily represent the entire meal? And so it’s like groceries, right? And then today, and furthermore, in the climate, kind of carbon world, and all these consultants that people hire to help them come up with, like, a carbon emissions management solution as a corporate — how do you go about managing that?
And so you can kind of think about, like, you know, if carbon credits are mostly not net zero eligible today and there’s, like, all this labor that goes into making them somewhat net zero eligible, or at least on the path toward net zero eligibility, then kind of the parallel is like, okay, a chef, you know, is responsible for cooking a meal out of groceries. And so therefore, like, a net zero eligible carbon credit would be a meal, and, you know, a Nori soil Regenerative Tonne credit might be one of those groceries. And so one might go about coming up with recipes that tell us, okay, given that you have a certain set of groceries, how could you turn those groceries into a meal?
And I think that was an interesting exercise, because it made me think that perhaps we’re thinking about this all wrong. Like, perhaps the future of the carbon market is not one where everybody’s going around buying groceries, but that everybody will be looking for meals — aka net zero eligible credits — in the future. And today, that’s just really hard to do. And so people spend a lot of money outsourcing and purchasing recipes and hiring people to execute on those recipes. And that’s why there’s the whole industry of people working on, like, carbon consulting services.
But then for Nori, maybe that’s some opportunity we could think about, which is, can we create a product that is the meal? And Nori’s value add is we go out and curate the groceries, find different suppliers, carbon [unclear] to partner with. We have our own in-house science team and they come up with the recipes and help all our customers turn that into meals. And so that became the premise of a lot of funny strategy discussions. I think you always giggle when I talk about this. I don’t know why, but I think you like it.
Ross Kenyon: I do like it. I just like setting you up, though, because once you have an idea like that, that metaphor is just too strong. And then, you know, if all you’ve got is a hammer, everything looks like a nail. If all you’ve got is this grocery thing and meal thing that you’re always bringing up. No, I think it’s — I think it’s a good way to understand it too.
And what are people trying to achieve when buying carbon credits? Because one of Nori’s faults — it’s both the thing that we’re really good at and also something that has occasionally been difficult to deal with — is that we’re often farther ahead of our customers in some ways, and trying to innovate and trying to keep abreast of what has maybe held carbon markets back and trying to innovate past that. And it would be really nice if we knew exactly what customer goals were and then could tailor portfolios to them.
I mean, people are doing that too. If you want to hire many of the intermediaries out there that are more like consultants, they will help you do that. They will build a portfolio for you. But there also should be a segment of the market that maybe doesn’t have enough money to be hiring out consultants, but they do have specific climate goals. And it’s not just, we want to buy offsets. That’s like saying, where do you want to eat? I don’t know, I want to eat food. You’re like, okay, but some specificity here.
What is your goal? To qualify for net zero? Are you trying to be officially net zero? Do you want to engage customers and give them a chance to participate too? What do they care about? Do they care about supporting farmers? Do they care that you’re supporting cutting-edge, weird, pre-MRV carbon removal? What are you trying to do here?
I don’t even know that many customers are even ready to have that conversation. Some of the things that I’ve heard back from non-bleeding-edge, non-carbon-removal industry gatherings is that the discourse is, like, far behind that. Not to be — that sounds kind of bad or pejorative or insulting, maybe, but I don’t know that everyone is ready to have that conversation, which is why many of the conversations just focus on, I’d like 100 offset credits, please.
Patrick Tsao: Yeah, I think you’re right. And I think that is part of the nuance that gets lost with that net-zero-ness as a premise, right? It’s like, if you talk to ESG professionals, their job is environmental, social, governance, poverty — it’s like all those things. And yeah, I mean, like, every UN SDG goal can be the job of one of those people. And so carbon is like one of those things. And so kind of the downside of, like, being overly fixated on net-zero-ness as a goal is that it’s just out of touch with reality. It’s like even the leaders in the space have net zero pledges for 2040, 2050. They have reduction goals in 2030.
And so, you know, when you apply that to the time scale of a startup, it’s like, well, we can’t just, like, hang out for another six years before people really start caring about net-zero-ness. And you’re right — like, a lot of the people who make decisions about ESG would say, you know, supporting healthy food and good land stewardship is more important to us than our net zero goal. And we have customers who say that. And so we do have to be careful when we talk about a meal. Like, maybe they just want dessert, maybe they don’t want a full meal, maybe they just want a snack. I don’t know. I don’t know how far to take this analogy.
But it is awfully presumptuous, right, as a premise, to then say all of Nori’s product strategy should be based on net-zero-ness. And it clearly shouldn’t be. It’s just one reference point in one thought exercise. And to the extent that we come up with useful tidbits or ideas along that line, great. But we’ve got to be careful too to not overly index on it.
Ross Kenyon: And even if we did find the customers that care about supporting food, the second question is, well, how much should I buy? And because everyone’s trained in terms of tonnes — I’m going to take a page from your book here — the North Star metric of tonnes has not served that goal very well. But they also don’t know how to think. They don’t have a replacement. It’s not like they say, oh well, everyone else is, you know, supporting 1,000 acres a year switching to regenerative practices, we want to go for 10,000 acres, because no one thinks in terms of acres. It’s hard to even know how much you should do.
And you don’t want to go to your CFO and say, I’d like an indeterminate amount of money for a nebulous goal. That’s going to get laughed out of the office right away, right? But like, we don’t have a better metric to give these people. Educating your customers too — it’s like teaching someone to play a board game. Isn’t that the worst feeling of all time? You just watch their eyes glaze over. They don’t want to learn. They’d rather just stop and quit and just have a beer and talk. But no, you’re going to learn how to play this. You’re going to learn how to play Axis and Allies tonight, damn it. It’s going to take us four hours and you’re going to love it.
Patrick Tsao: I wonder about that. I was talking to one of our customers, OnePak. Sean is the sustainability head’s name — I don’t know if you’ve talked to him, Ross. So they work on circular economy, and so they run, like, recycling programs for companies. And their North Star metric is carbon, yes, but how much landfill, how much landfill did they avoid, right?
And so, like — wait, so, you know, I feel like that’s actually a really good example. It’s like the agreed-upon behaviour that we want is less trash in landfill. And the way they’re going about it is making sure things that we throw away become, you know, part of the raw materials for new things to get made.
And so, like, if you were to, like, shoehorn carbon accounting into that impact assessment, you would, like, I don’t know, take all the trash that was not in landfill and try to calculate, like, I don’t know, how much it emits as it decomposes, or how much was emitted from it being manufactured in the first place, or something weird like that. Like, you can certainly take that and back it into a carbon accounting appropriate metric, and it’ll be like six levels away from, like, you know, the fact that it’s just trash not being trash. And fine, to the extent that we need, like, at the UN level, to reconcile that in a single place so that we can report impact kind of in aggregate, that’s fine.
But it would be a shame if folks like them stopped doing their work just because the world didn’t think their effect on carbon emissions was sufficient, right? Like, avoided landfill is in itself a good thing. And I think that regenerative ag is a similar thing, because there’s so many other benefits that, like, perhaps carbon is just, like, 20% of the impact of regen ag.
Like, we met somebody who does agroforestry, and that’s how they felt about it — it’s like, this is honestly just the most obvious way of monetizing agroforestry adoption. Like, all scientists would agree that it’s such a small part of the benefit of doing it. I just think that we overly fixate on the weight of the carbon specifically as a proxy for impact in our industry.
Ross Kenyon: I don’t know that I’ve encountered that many people who disagree, except especially in the early days of Nori too. We used to always talk about how one of the main problems with carbon markets is that we should be obsessively focused on getting PPM back to pre-industrial levels, but people were getting distracted with co-benefits, and what does this do for all these other causes simultaneously. And really, we should just be hammering on — the main variable that we’re isolating for is PPM. Anything else is bonus, but don’t get distracted by this.
But this is another case for Nori’s living in the future too, because people don’t want this PPM credit against the earth’s carbon budget. They want a story to tell. And that carbon story is pretty bad as far as stories go. I made a 0.000 — how many zeros? — 1 negative PPM. It’s not that good of a story, you know? Clean cookstoves, pretty good story, you know.
Patrick Tsao: Man, yeah, cookstoves is an interesting one too. It’s like it resulted in behavior change and people cooked more and stuff. But is that a bad thing? Like, I get that maybe the carbon impact wasn’t what people wanted, but, like, is that a good reason to not have anybody have access to cleaner cookstoves?
Ross Kenyon: I mean, I had just assumed in the telling of that that that was potentially a fine thing to care about. But yeah, I think the story of that is complicated. A lot of these projects are too — the, oh, we give away nets for malaria and then the fishermen use them and now there’s microplastics in the ocean. Oh great. Cool.
Patrick Tsao: Yeah, I mean, it’s, you know, analysis paralysis. It’s like all these solutions — if you get deep enough in the weeds, you can make the argument that it’s bad.
Ross Kenyon: It’s like, I gave you my EV rant, right, Patrick? Should I rant about EVs on this podcast?
Patrick Tsao: I can duplicate it for you, mostly because I have to run in just a minute. But you love your EV so much that you want to drive it more, and therefore you cursed yourself by loving your EV. Is that right?
Ross Kenyon: Yeah. I mean, if I cause more traffic, then should that take away from, like, the carbon emissions that I’ve helped reduce by not driving an ICE car? I don’t know. That’s — and is it possible that EVs drive themselves and end up actually net emitting more carbon? I don’t know.
Patrick Tsao: Somebody should run the numbers on that. I don’t know.
Ross Kenyon: Yeah, the LCA people are a very special type of nerd, and I’m sure they’d be happy to oblige you on this. But those sorts of questions are never ending. Well, thanks, Patrick, for being here. We’ll just do it again. We need to do more regular product updates. I think people who work in product but maybe haven’t broken into climate tech would love to hear more about your experience, and there’s just a lot to talk about from a product point of view slash your personal point of view. I’m not sure how much of that is fair to attribute to product versus you in particular. But thanks.
Patrick Tsao: Thanks for having us — for having me.
Ross Kenyon: Thank you so much for listening. If you could please subscribe and give us a great rating and review on Apple Podcasts or a rating on Spotify, that’d be much appreciated. It helps us get our content out to more people. You can sign up for our newsletter at nori.com, follow us on social media, and we will catch you next time.
