“Profit with purpose” – Annalea Krebs has garnered a lot of success by embracing these three little words.
With this motto, it’s probably no surprise that the volunteer turned serial entrepreneur, who sold her first company by the age of 30, does things a little differently. Her business model is based more on its mission than on its profit potential.
“When I was in my teenage years, I was a dreamer,” Krebs said. “I wanted to make a difference in the world; I wanted to have a meaningful life. When I was a youth, that meant volunteering.”
With dreams of effecting social change, Krebs thought volunteering and the non-profit sector were the most natural fit for her.
As a teenager, she became heavily involved in the non-profit world and even held a position on a board of directors.
But as she gained experience as a volunteer, she noticed that the non-profit sector faced barriers, particularly when it came to securing capital.
The unpredictability of non-profit funding made it difficult to run daily operations. That left little time for her to focus on her overarching goals.
The constraints convinced Krebs to pursue her goals in the private sector instead.
Krebs decided to study commerce at Royal Roads University in Victoria, with a focus on green and social business.
During her studies, she was able to interview and network with entrepreneurs and CEOs involved with social enterprises and environmentally friendly business initiatives.
Krebs was captivated by the idea of developing a profitable business model that prioritizes its social mission.
“What I’m passionate about is proving that you can run a profitable business, a growing business, a scalable business, while also having a mission,” she said. “That is certainly more difficult in the for-profit space.”
Krebs would learn that, as in the non-profit sector, running a commercial business had its challenges.
“It’s kind of like the flip side of the volunteer industry. Capital was no longer an issue but now I was being put in a position in the traditional business world, always being told that I needed to prioritize profits above all, when really the reason I came into business was to make an impact.”
In her experience as a consumer, Krebs found that price was often one of the barriers that dissuaded her from buying environmentally friendly, socially responsible products she wanted.
And for manufacturers of those products, higher production costs prevented them from achieving the success and scale they desired. Krebs knew there was an appetite for green products, but consumers and businesses didn’t necessarily want to pay a premium for them.
So: if a product’s price is preventing it from being a success, why not introduce it to potential consumers at a lower price?
Krebs figured that she could increase the popularity and market penetration of green products by taking advantage of the collective power of numerous green businesses.
In 2010, when she was 25, Krebs started her first business, EthicalDeal. The company was often referred to as the “green Groupon.” Its mission was to take “green” into the mainstream by providing deals that would make them more accessible to consumers.
It worked.
By the time Krebs sold her business to the now-defunct nCrowd in 2015, it was the largest green daily deal site in North America. EthicalDeal offered natural and green products from socially responsible companies at 50% off in limited trial offers.
By creating her own marketplace, offering goods and services from a wide variety of suppliers at prices competitive with its non-green counterparts, Krebs improved the feasibility of the entire green industry.
But she found that higher prices weren’t the only reason the industry was struggling.
“The green movement really, really starts with education,” she said. “If you’re educated, you’re going to make better choices. It’s really hard to be educated and not make better choices.”
Krebs felt so strongly about the importance of education to her business success that she created an online publication to promote the green economy.
In 2010, EthicalDeal’s website had more than 500 articles on topics ranging from the 10 best vegan recipes to ways consumers can make more socially responsible buying decisions.
Krebs said EthicalDeal’s success not only demonstrated that there is a broad market for green products, but also showed that there is a competitive advantage to offering them.
She pointed to the actions of large, established retail players like General Mills (NYSE:GIS) and Unilever (NYSE:UL) acquiring organic brands in response to the market demand that Krebs’ companies help to create.
She said retail giants are creating organic, fair-trade versions of their mainstream products because they are responding to the market.
“It’s not because they’re ethically driven; it’s because they’re profit-driven. They see that the market wants this, and they’re responding to it.”
A better education
By the mid-2000s, EthicalDeal had reached a size where it would have been difficult for Krebs to continue to expand the business by herself. She had also learned all she could from the company and felt it was time to take the next step in her career by starting a new venture.
While Krebs had used her website to educate customers and promote products, she thought there might be a better way for consumers to learn than simply reading articles.
“Ultimately, the best way to educate someone about your product is for them to try it – try before you buy.”
That is the idea behind her current venture, Social Nature.
Krebs had had trouble persuading some companies to offer their products at a 50% discount through EthicalDeal. Producers were concerned about undercutting their other retailers and disrupting their distribution process.
However, Krebs had a creative solution to the problem. What if instead of selling the product at a discounted price, they offered it for free? Shoppers looking for fair-trade organic products could try them at Social Nature. If they liked them, they could go to a bricks-and-mortar store to continue to buy the products. This way, instead of competing with a brand’s traditional retailers, it was marketing the product and supporting them.
Social Nature is a culmination of Krebs’ experience and a hallmark of her growth as an entrepreneur. By implementing strategies she learned from the successes and difficulties she faced during her time as a volunteer and entrepreneur, she continues to focus on her goal of “profit with purpose.”
Her mission is to have a billion consumers try natural products through Social Nature and to devlop a million-person customer base.
“I feel like I finally got it right this time,” she said. “This is such an exciting, scalable way to drive impact.”
