The Green Scene

ENVIRONMENTALIST GOES COMMERCIAL

Josh Knauer made his name as an environmentalist when he was a freshman. He's still working the field.

By Niki Kapsambelis, Carnegie Mellon Magazine

Envy Josh Knauer. At the tender age of 27, he has achieved what most of us will only dream about forever: He is the CEO of his own company, a cutting-edge marriage of e-commerce and the warm and fuzzy world of environmental activism. He has the power to hire people he likes who share his ideals. He sells products that make the world a better place. He makes a difference in the lives of the underprivileged by employing them. He takes his dogs to work.

Hard to believe that this is the same man who describes himself as bad at math, graduating from Carnegie Mellon "by the hair of my chinny-chin-chin," a man who runs a business driven by computers but who really doesn't like working with them.

As the founder and head of GreenMarketplace.com, Knauer (HS'95) is a walking inspiration to anyone who ever toiled away in a cubicle and dreamed of something better. Before he had even graduated, he landed a job at an advertising agency in Pittsburgh, where he made "incredible money-more money than anyone, before even graduating college, should make. I was headed on a major career path." And then he walked away.

Knauer says he quickly grew tired of looking through the window beside his desk at the bigger picture outside and quit after just a few months to devote himself full time to EnviroLink, the nonprofit Web site he founded as a freshman at Carnegie Mellon.

"Everyone thought I was crazy," he laughs. "But I decided it just wasn't what I wanted. I've seen way too many people make this commitment to being miserable in their lives just so it could get better at some point. For most people I've seen, it really doesn't."

For the next few years, Knauer eked out a living with the help of foundation grants that kept EnviroLink going. He designed Web sites for nonprofit groups on the side.

"I always knew that something bigger would come, and EnviroLink was sort of a ground for me to develop my skills and develop what it was that I needed to do. I kept an eye out for some better opportunity to make a bigger difference," he said.

Help from a pioneer

Not that EnviroLink, which was founded at the dawn of the World Wide Web phenomenon, was just any random home page. It was one of the first Internet sites available to the public and is now one of the largest networks devoted to environmental causes, providing information to America Online, among other sources. Time magazine described it in 1999 as "the place to start on the Internet for all things ecological."

When EnviroLink was just a college student's hobby, Knauer got a leg up from Internet pioneer Tim Berners-Lee. The Oxford-trained inventor wrote a program called WorlDwidEweb in 1990 and is credited with establishing the first Web server. He talked online with Knauer and introduced him to the concept of global hypertext, which permits computer users wide access to separate documents and images on related topics.

Knauer remembers vividly the moment he saw a picture of a clear-cut forest Berners-Lee had set up next to a text description of what had destroyed it.

"At that point, I knew this Internet thing was huge," he says. "My first thought was that this was such a powerful tool."

Knauer bided his time until he was convinced that the hype surrounding e-commerce was legitimate, then used the money he earned designing Web sites to launch GreenMarketplace.com by the seat of his pants in March 1999.

His earliest investor was Seventh Generation, an established company based in Burlington, Vt., that manufactures environmentally safe household cleaners. Today, Knauer is up to about 500 products, ranging from Clear Conscience Contact Lens Saline Solution (the cruelty-free alternative) to seaweed soap, light bulbs that simulate natural sunlight, recycled chew toys for dogs, washable maxi-pads, and purses fashioned from license plates by Ava D. DeMarco, (A'83), founder of Little Earth Productions Inc. in Pittsburgh. He sells food, too-organic sesame bars, tabouli, even an organic version of canned spaghetti.

Jeffrey Phillips, Seventh Generation's executive vice president, said the company decided to partner with GreenMarketplace.com after selling off its catalog and determining that distributing products through its own Web site was not an option the company wanted to pursue.

"They've made a legitimate

effort. Their site is well-conceived," Phillips said of GreenMarket-place.com. "The business is growing steadily each month in terms of the retention of current customers."

Products plus education

Seventh Generation found Knauer's site attractive because it carries a healthy dose of information about each product.

"Our proposition is very education-intensive," says Phillips. Finding space for the company's information base fulfills that vision. The more people know about the product and its positive impact on the environment, the more likely they will be to buy it.

In nine months, Knauer went from being Green-Marketplace.com's sole, unpaid employee to the boss of 13 workers. The company is growing at a rate of about 15 percent a month, and he projects its income will grow to more than $12 million by 2002. He plans to expand to 30 or 35 employees by December, a rate that is typical, even slow, for an e-commerce startup, according to Troy Landers, senior manager for Emerald Solutions, a consulting firm in Portland, Ore.

Right now, many e-commerce companies are raising capital for the sole purpose of advertising, hoping to score the same blazing success that job-search site Monster.com got with an ad during the Super Bowl, Landers says.

For Knauer, the vision is different. Rather than becoming the online superstore of natural products, he expects instead to use his business to build a bigger Internet community of environmentally concerned customers who want to buy his products, which he hopes to ramp up to 2,000 by next year. Ultimately, he wants to become involved in all aspects of the product, from development to delivery-known in market parlance as a "vertical player."

When green isn't green

Knauer believes his site differs from others on the Web because of its trustworthiness. He posts the principles to which manufacturers must adhere before he will distribute their products, including a commitment to fair labor practices. If he finds out that the item is not meeting those specifications, it is pulled, and he has an agreement with his suppliers that they will take back the unsold inventory. A recent example is a collection of six gardening products, some of them very good sellers, that he removed from his site last summer because a customer pointed out that they contained an ingredient that studies suggest would affect children's health.

"Our point of differentiation, what makes us different from any other e-commerce site, is our stringent, stringent guidelines," Knauer says. "Anyone else that's out there...is basically what I call Astroturf. There's no roots there. It may look green, it may feel a little green, but it's not. And as most football players will tell you, it's much nicer to play on real grass."

His favorite example of the widget that he just won't sell is a Zen alarm clock that is supposed to wake customers with a pleasant chime. "It's supposed to start off your day with a better Zen state," Knauer says. "It's made in China by people who certainly don't have a choice about the Zen state they wake up in. And it's sold by just about every natural products site on the Internet."

But not his. By Knauer's estimate, GreenMarketplace.com has turned down the alarm clock's manufacturer six different times.

"There's no redeeming value to that product. It sells really well on other people's sites, but we don't care," he shrugs.

Knauer's labor practices include giving an opportunity to the hard-to-employ. His orders are packed at a Pittsburgh warehouse by workers who have struggled with disabilities, welfare dependency, illiteracy and homelessness and who are in a job training program at Goodwill Industries, a nonprofit organization that helps people with problems reenter society. Some of the workers supervised Knauer, their CEO, while he helped pack orders at the Goodwill warehouse during the busy holiday season.

At GreenMarketplace.com's Pittsburgh headquarters, dogs freely roam the office-and children are welcome, too. Remembering his own cubicle days, Knauer has morphed into his vision of the ideal boss. When his graphic designer had a baby, he set up a nursery so she could bring the infant to work with her each day.

"I've had a lot of experience changing diapers," he says. "A lot of deals at that point were negotiated by me with a baby in my arms, talking on the phone."

The company has been working at an operating profit since November, Knauer says, meaning every sale now brings money through the door. By his most conservative estimate, Knauer plans to work at an actual profit by this summer or fall, even without additional investors. And he still has no shortage of people beating down the door to work for him, he says.

Consider this: a boss who offers a health plan that pays for membership at a gym, holistic medicine or a bicycle. Anything that's health-related can be covered by GreenMarketplace.com's cafeteria-style health plan, which offers a set monthly sum based on a percentage of the employee's salary. Employees can spend their health budget however they choose-on anyone they consider "family," even a pet. And while Knauer readily acknowledges that all of his employees could make more working elsewhere, he says, "I always chuckle when I hear other CEOs talk about how difficult it is to find someone to hire, because for me, it's easy.... The East Coast, and I think especially Pittsburgh, has a lot of trouble catching up to the more progressive edge of employment."

All employees, including Knauer, are trained in customer service-the area where, according to Landers, new e-commerce sites have the most opportunity to shine.

"That is going to be the differentiator for a good site versus a very good site," says Landers, who says current statistics show that about 25 percent of all Internet purchases go unfinished because customers exit out of frustration or confusion. Good customer service is the key to whittling down that percentage, he says.

As an example, Landers cites the Web site for clothing manufacturer Lands' End. A customer can call the company while still online, and the customer service representative can see the customer's Web session and talk to him about what he's doing. Ultimately, the next generation of technology will allow people to click on buttons that use a new kind of connection so customers can talk to the company over the computer as they would with a telephone, Landers says.

To Knauer, delivering a message of environmental camaraderie to his customers is paramount. All employees can talk about any product to people calling with questions.

"It is our primary goal in life to interact with our customers as much as possible," he says.

And while unfettered growth is the hallmark of many

e-commerce startups, Knauer appears to be more concerned that his own company meets his larger goal of making a difference in people's lives.

"At some point, I guess my larger goal in life is to put myself out of a job, not have to be an environmentalist anymore. I'd much rather be outside walking my dogs in the woods and experiencing the outdoors than sitting down behind a computer and saving it," he says. "We're not perfect by any means, but we really would like to be a model to show other businesses that you can do this, it can be profitable, and it can work out."

Niki Kapsambelis, an editor with the Associated Press in Pittsburgh, has worked with AP in Los Angeles and Concord, N.H., covering topics ranging from the O.J. Simpson trial to the Emmy Awards.

Green screen

GreenMarketplace.com developed guidelines that every product for sale on its site must adhere to. Customers are encouraged to e-mail or call the company's toll-free number (888-59-EARTH) if they believe a product is not up to snuff. All products:

• are made in ways that are not harmful to the environment;

• do not contain hazardous chemicals;

• are not tested on animals;

• do not contain ingredients obtained in a manner in which an animal is harmed or killed;

• are made by companies that respect their workers and pay fair wages;

• are fairly priced, in a manner that benefits both the consumer and the producer.

Source: GreenMarketplace.com.

URLs: <www.envirolink.org>; <www.greenmarketplace.com>