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21st Century Carbon Removal Business (part 2)

November 04, 2021

Picking up from part 1 (video here)...

In the last note, I talked about the business model for selling better, faster, or stronger products made of carbon dioxide.

But what if your product is not better/faster/stronger/cheaper? Well, then what you're selling is the value of removing carbon from the air.

You might call it something like "our customers buy from us because it feels good to buy green products", or "companies buy from us to support their marketing image". But whatever you call it, unless it's actually better/faster/stronger, your customers are paying you to remove carbon from the air.

Let's go back to that kind of 20th Century Business Model: a company makes a product, a customer buys it, and pays the company.

What happens when you start to integrate carbon removal credits into that model? If your biggest revenue comes from X buying a carbon credit from you, they're the customer. That means everything else becomes part of the product.

Here's an example: It's 2030 and you run a thriving biochar company. Your company makes biochar and farmers use it in their soil. All of your profit is coming from carbon credits.

Who is the customer in this situation...the farmer or the carbon market? What happens when a farmer throws away your biochar or burns your biochar? Do you refund the carbon credit?

This applies whether you're making biochar, cement, building materials, or any other carbon materials.

For startup founders in carbon removal I recommend modeling it each way, no hybrid models to start. What happens if your business has to be 100% carbon credit powered? What happens if your business is 100% carbon removal credit powered?

This brings us to the idea of a 21st century carbon removal business model. A company makes a carbon credit, selling that to the carbon market, and the carbon market pays the company. The process of making that carbon credit may involve farmers and building companies but more as suppliers than customers.

I'm curious to meet entrepreneurs working on businesses that treat the existence of a $1T carbon removal market as a given and work backwards.

These companies might start to do things that don't make sense in the 20th century model. Imagine a startup that pays farmers to take its biochar because they make so much money on carbon credits. Or a cement company that pays building companies to use its cement for the same reason.

If you think about the carbon market as the customer, that's the 21st century carbon removal business model.

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