Better Money Better World Podcast interviews Jessica Droste Yagan

Impact Engine's CEO Jessica Droste Yagan was recently interviewed on the Better Money Better World podcast by Impact Capital Managers.

She shared with host Daniel Pianko how leading sustainable sourcing strategies while working at McDonalds helped shape her investment philosophy: "Anything can be broken down into its component humans and component parts, and made better."

Plus, Jessica offers advice for next year's business school grads and anyone else who want to make a real impact.

Listen to the episode below, or on iTunes.

Workit Health: Why We Invested

By: Priya Parrish, Ander Iruretagoyena

There are an estimated 48M Americans that are addicts across Alcohol Use Disorder (“AUD”, 19M), Opioid Use Disorder (“OUD”, 3M), and Substance Abuse Disorder (“SUD”, 26M). This ongoing epidemic has caused drug overdose deaths to triple since 1990 with a 600% increase in opioid-related overdose deaths in the last decade alone. Today 1 in 4 deaths is attributable to these problems and it costs the U.S. economy over $600 billion every year. Perhaps most tragically, due to the high costs, social stigmas and embarrassment, only 4% or 2M of those suffering from an abuse disorder actually seek treatment. Typical options for treatment include traditional inpatient and outpatient treatments that are costly and inaccessible. On the other hand, most digital solutions lack the comprehensive treatment steps necessary to achieve results for patients.

Solution

Workit Health (“Workit”) offers an on-demand, end-to-end virtual solution for addiction treatment that includes all the key components of evidence-based care: intake / consultations, tele-counseling, tele-nursing, home drug testing, tele-group work, courses, prescriptions, and content. The company’s user-centric design and scalable technology successfully intervenes and changes members’ behaviors before a crisis results, while avoiding the high costs, stigmas and embarrassment that prevents patients from seeking treatment. Workit’s model has proven effective for patients with a 90% retention and adherence rate compared to a 39% industry average. The program is also accessible, with traditional inpatient and outpatient treatments costing ~7x and ~34x more than Workit.

Why We Invested

Workit’s industry leader status is driven by its intentionally accessible and evidence-based treatment that attracts commercial health plans and Medicare/Medicaid. The company’s retention & adherence rates and high customer satisfaction rates (68 NPS) are driving impressive growth in revenue per member, patient membership, and high LTV/CAC ratios. Workit is currently in 10 states and plans to use this capital raise to facilitate national expansion while remaining independent. In the 5+ years we have known Workit (IE Ventures I initially invested in Workit in 2016), this female-led executive team (Robin McIntosh & Lisa Mclaughlin) have more than proven themselves and brings prior entrepreneurial experience, expertise in healthcare, personal experiences with addiction and have successfully built the company with an impact-driven competitive moat. Since inception, their core focus has been on outcomes and to provide a user experience in-tune with patients’ needs.

Impact

With Workit, we believe that a platform that provides dynamic tailored content plus access to on demand coaching & medical care, will lead to a reduction in use of narcotics or alcohol for individuals who have addictive behaviors, leading to better health outcomes and a lower overall cost of healthcare. A 2019 longitudinal study showed that 67% of Workit patients reported reduction in usage and 87.6% an increased quality of life. Workit’s app is highly rated with a 4.7 rating with 500+ reviews and 9 out of every 10 customers would recommend Workit to a friend. As the company undergoes national expansion, we are excited that the company will have increased access to more real-time retention data and that retention is directly tied to revenues, marrying financial and impact returns.

Zero Waste Recycling: Why We Invested

By Chris Wu

Global waste generation is expected to increase 70 percent by 2050, faster than any other environmental pollutant, which is why UN Sustainable Development Goal 12 aims to substantially reduce waste generation through reduction, recycling and reuse. The International Solid Waste Association estimates that when all waste management actions are considered, the waste sector could cut up to 15% of GHG emissions globally. In response, companies like Samsung, Apple and Subaru are increasingly setting ambitious waste reduction and landfill diversion goals as part of their corporate sustainability plans. Enabling the circular economy by reusing and recycling as much material and waste as possible is an important component of implementing an effective corporate waste management plan, but it can be difficult and complex for companies to execute a holistic strategy given that waste is tied to virtually every aspect of a company’s operations. 

Solution

Zero Waste Recycling (“ZWR”) is an industrial services and recycling business offering outsourced waste stream management services to manufacturing operations in the Southeastern U.S. ZWR is a full-service, one-stop solution provider helping manufacturers recycle or divert up to 100% of their operational waste. They provide a variety of environmental services for their corporate clients including onsite waste collection and sorting, 24/7 waste transportation and hauling, and recycling of ferrous and non-ferrous metals, plastic, cardboard, and paper. While 75% of America’s waste stream is recyclable, companies also need solutions to help manage the remaining solid waste that is non-recyclable. ZWR offers their clients the ability to convert this waste into energy, which is considered a renewable energy source. ZWR also owns and operates their own solidification pits, which means they are able to accept non-hazardous liquid sludge waste from their clients and mix it with water and a binding agent to form hardened solid blocks. Once solidified, they can then be shipped offsite to waste-to-energy facilities. 

Why We Invested

ZWR has a proven leadership team made up of industry veterans who have successfully built and sold two recycling operations. They have demonstrated strong customer satisfaction and competitive differentiation, as demonstrated by their multi-year contracts with several blue-chip corporates. We are also excited about the multiple dimensions of impact that this investment offers. The company itself has a clear focus or mission on environmental sustainability and is riding strong industry tailwinds driven by the increase in zero waste corporate sustainability goals. There is also a compelling social impact for ZWR’s employees; our investment supports an employee ownership transaction via an Employee Stock Ownership Plan (“ESOP”). The transaction effectively transfers ownership to ALL employees of ZWR at no cost to employees. In addition to potential for wealth generation typically unattainable for most employees, ESOP companies have also shown evidence of greater job stability and worker productivity. If you’re interested in learning more about employee ownership as an emerging impact thesis, you can check out the article my colleague Priya Parrish recently wrote about closing the wealth gap with alternative ownership structures.   

Impact

Environmental Sustainability: ZWR helps manufacturing companies meet their landfill diversion goals and extend the useful life of materials in their waste stream. Almost all of ZWR’s clients have commitments related to sustainability and waste diversion. ZWR’s nested employee approach, where ZWR employees are embedded onsite daily at their client’s facilities, has a significant impact on their ability to achieve these outcomes more quickly and effectively. For example, ZWR has already helped one of their manufacturing clients recycle over 500 tons of waste, conserve over 350,000 kWh of energy, and divert over 2,000 cubic yards of waste from landfill. Their long-term partnerships and full-service capabilities can also support the adoption of more aggressive sustainability goals over time. By reducing the overall amount of waste that goes into landfills, they are reducing their client’s costs associated with waste disposal which offsets the additional expense of sending their non-recyclable waste to be recovered as energy (the next preferred solution in the EPA waste hierarchy after reduction, reuse, and recycling).

Economic Opportunity: Wealth inequality continues to grow in the US as economic gains accrue to the holders of capital rather than the labor providers. There has been renewed focus nationally on wages to address income inequality, however that does not address the “Wealth Gap” - 69% of Americans have less than $1,000 in savings. Employees that participate in an ESOP have been shown to have 92% higher median household net wealth and 2.5x greater retirement accounts than non-employee owners. Over 90% of ZWR’s employee base are individuals from underrepresented groups and come from low-to-moderate income (LMI) households. ZWR employees are ultimately expected to have an average ESOP account balance that is greater than 3x their annual salary, a clear indication that the ESOP structure can enable significant wealth accumulation for employees and allows them to share in the value creation of the company.

HourWork: Why We Invested

By Ander Iruretagoyena and Tasha Seitz

There are 80 million hourly workers in the US, representing 56.7% of the workforce, of which 15 million work in the restaurant industry. Despite these large numbers, SMBs and employers with shift workers are understaffed 50% of the time and they bear over $155B in costs of finding, retaining and training hourly workers. Besides these material costs, severe understaffing can lead to overworked employees, who tend to suffer from higher levels of stress, leading to decreased productivity, increased turnover, and higher incidences of workplace accidents. Workers themselves are struggling with a plethora of issues exacerbated by the COVID-19 pandemic including confusing job application processes and declines in job stability, safety and work satisfaction. 

Former workers represent an important opportunity to combat these challenges. More than 60% of hourly workers leave their jobs on good terms, 50% are interested in picking up shifts to earn supplemental income, and another 15% are interested in being rehired into full-time or part-time roles. Hiring former employees means workers can be productive on day one.

Solution

HourWork’s initial product is a network of hourly workers for the restaurant industry, allowing employers to reach and engage former employees and applicants to fill existing part-time and full-time roles as well as picking up shifts to generate supplemental income. Its SaaS workforce solution helps managers achieve their labor goals by reducing costs, improving compliance, and increasing engagement. 

In addition, HourWork plans to build out stackable certifications to enable workers to build their skills through on-the-job training and improve their earning potential. Furthermore, by granting workers the ability to provide reviews of their former workplaces, HourWork is creating an opportunity for owners and managers to improve work culture and environments. HourWork’s vision is the liquid universal workforce designed to save the American Dream for the 80 million shift-based workers in the US.

Why We Invested

Staffing challenges are a top priority for restaurant owners/operators, and a shortage of workers is leading restaurants and other small businesses to close or limit their capacity because they do not have enough employees to serve the resurging demand. Furthermore, although HourWork has achieved impressive initial traction within the QSR category , there is significant opportunity to expand beyond QSR to fast casual, food services, home health care, retail, and other industries that heavily rely on hourly workers. Once the company has built a critical mass of hourly workers, HourWork can start to expand its offerings to benefit workers, including stackable credentials and portable benefits. 

The founding team at HourWork has proven themselves to be learning oriented, mission driven, and committed to the well being of the hourly worker. They have surrounded themselves with a board of directors who shares in this mission and Rahkeem Morris’ (CEO & Co-Founder) impressive background and involvement in the board of trustees for a local community college lends credibility to his ability to continue building on the impact of this business. Rahkeem is also in a position to recommend policies as a member of the 17-person Massachusetts special commission to study the Future of Work ​​that was established as part of the 2020 economic development and jobs bill signed into law in January 2021.

Impact

We believe that HourWork has the ability to make a positive impact by empowering worker lives and helping redefine the future of work. In addition to creating more job stability and opportunities for supplemental income, HourWork plans to impact hourly workers along three other dimensions:

1. Universal stackable certificates: guide shift-based workers to greater economic opportunity through credentialing skills learned through on-the-job training and enabling a platform that allows workers to use those skills anywhere that will accept them. Certificates are stacked to unlock different income opportunities and eventually stack with certificates earned from accredited educational institutions.

2. Financial and portable benefits management: give workers a tool for personal financial management designed for the future of work, inclusive of a platform for portable benefits for workers that provides improved financial stability and outcomes.

3. Employment “passport” and matching: virtually eliminate all barriers to hire, enabling workers to instantly obtain additional income from “good jobs” enabled through a feedback mechanism to owners and managers on their workplace environment and culture. Instantaneous hiring and feedback are designed to fuel a virtuous cycle where employers drive improvements in their culture and practices.

Brightcore Energy: Why We Invested

By Chris Wu and Clara Purk

Emissions from residential and commercial buildings account for 29% of total US greenhouse gas emissions. Total energy consumption by this sector makes up 40% of total US energy consumption, with 60% of utility-scale electricity generation coming from fossil fuels. As a result, any successful climate mitigation strategy must focus on reducing emissions from the built environment. Energy efficiency programs and onsite renewable energy installations are some of the most cost-effective ways for buildings to cut emissions, as they also reduce energy costs for building owners. Many cities and states are committing to ambitious climate action plans, implementing stricter building energy efficiency and clean energy standards and offering incentive programs for energy efficiency and renewables, providing strong regulatory tailwinds for companies driving improved energy efficiency.

Solution

Brightcore Energy (“Brightcore”) is an “efficiency as a service” company providing project development, implementation and funding for a range of energy efficiency and renewable energy retrofits for commercial and institutional (“C&I”) customers. Its product offerings include LED lighting, solar PV, and geothermal, with targeted growth in battery storage, EV charging, and other renewable solutions. Brightcore's implementation services include project development, engineering and design, permitting, interconnection, procurement, installation, maintenance and service. In addition, the expansion of its sustainable financing capabilities enable Brightcore to act as a capital provider for customers and finance efficiency and clean energy projects at $0 upfront cost.

Why We Invested

Since it began operating in 2016, Brightcore has built a strong reputation for delivering efficiency projects with over 150+ projects completed and 76,100 metric tons of GHG avoided. The company’s leadership team has a proven track record of executing in this market, with co-CEOs Rob Krugel and Konstantin Braun having worked together for 20+ years running a C&I solar PV developer and working in structured finance. We believe Brightcore’s strategic positioning in the Northeast will enable it to take advantage of the growing market for efficiency and renewable energy projects in key states. For example, New York City’s Local Law 97 sets increasingly stringent limits on carbon emissions for approximately 50,000 buildings in order to meet NYC's required 40% citywide emissions reductions by 2030 (from a 2005 baseline). New York state’s RPS (Renewable Portfolio Standard) requires that 100% of the energy that utilities sell must come from renewable resources by 2040 and New Jersey must reach 50% by 2030. Similarly, RPS policy goals have been set in many states throughout the country, including MA, PA, CT, CO, and CA. Brightcore’s sustainable financing strategy, enabled by this funding led by SER Capital Partners, will further its competitive advantage in this increasingly crowded market.

Impact

We believe that Brightcore has the ability to make a positive impact on climate change and the environment by improving energy efficiency and reducing fossil fuel consumption within the built environment. LED lighting projects reduce electricity usage by about 60-70% while also addressing waste, as the lifespan of an LED light is 50-100x that of an incandescent bulb. Solar PV reduces the reliance on fossil fuels and offsets the emissions required to create and install a project within a year of operation, on average. Continued expansion of geothermal energy will replace old boilers that burn fuel oil or gas with a clean, renewable energy source by drawing heat from below ground. Installing more battery storage systems will help make the energy grid more resilient by shifting load to off-peak hours and displacing dirty gas and oil-fired peaker plants, enabling further reduction in GHG emissions within the built environment, helping cities meet their sustainability goals.

Traxen: Why We Invested

By Elizabeth Coston McCluskey and Tasha Seitz

More than 70% of goods shipped in the US are transported via truck, representing 11.84 billion tons. Long haul trucking is a massive source of fuel consumption: the International Council on Clean Transportation estimates that tractor trucks represent 71% of all fuel consumed by heavy-duty vehicles. Fuel also represents a significant portion of the operating cost for trucking and logistics, at 24%, second only to labor costs. As engines and aerodynamics have become more fuel efficient over time, driver behavior has become a more significant factor determining fuel consumption. A study conducted by the American Trucking Associations’ (ATA) Technology and Maintenance Council found a 35% difference between most efficient and least efficient drivers based on speed, acceleration, braking and route selection. 

Solution

Traxen provides a cloud-connected intelligent cruise control system that assists drivers to reduce fuel consumption during highway driving while improving safety & drivability. Using sensors that can be retrofitted onto existing trucks combined with data on weather conditions, high definition maps, estimates of internal loads, and projected traffic, Traxen can manage a truck’s speed from end to end to optimize for safety and fuel efficiency. 

Why We Invested

The founding team and board at Traxen is steeped in the industry and the problem they are addressing, with backgrounds in autonomous driving, electrification and connected vehicles. The team’s vision is to enable a pathway for trucking and logistics companies to realize the benefits of autonomous vehicles as technology and policy evolves. While it is early, there are strong indications regarding the effectiveness of the technology: a third party study verified by the North American Council for Freight Efficiency (NACFE) showed an average 7% improvement in fuel efficiency in a side-by-side comparison for trucks carrying identical loads along a typical long haul route. 

Impact

There is potential for compelling environmental impact given that long haul trucking is such a significant means of freight transportation and consumer of fossil fuels, and long haul is likely to be the last segment in trucking to adopt electric vehicles given challenges related to charging infrastructure and range. A conservative, “back of the envelope” analysis suggests that a 5% improvement in fuel efficiency would translate to reducing greenhouse gas emissions by 25 million metric tons/year in the US, or the equivalent of taking more than 5 million cars off the road.