March 22, 2021 · 9 min read
TL;DR: We’re shutting down our self-service carbon accounting software Bloom before we properly launched.
Since Tomorrow was founded in 2016, the chatter around the need for organisations to act and take responsibility for their impact on climate change has grown steadily. Numerous surveys point towards the fact that employees, consumers, investors and governments now expect companies to raise up to the challenge. Yet, as we investigated our own carbon footprint, it was clear that doing so was easier said than done.
We strongly believe that information precedes action, and from discussions around us, it was clear that measuring a company’s carbon footprint was a major barrier for organisations to take meaningful action. If we could drastically reduce that barrier, it could potentially pave the way for making carbon information ubiquitous for all companies, and enable a new corporate movement for climate action.
Furthermore, we believed that we had a role to play. The combination of climate knowledge and technology, and our experience with building a carbon footprint tracker app for individuals, North, meant that we knew what to build to have a climate impact, and how to build it. This became Bloom.
We spent a large part of last year building Bloom, involving users in every step of the way. The vision for Bloom was to democratize corporate climate action, enabling as many companies as possible to reduce their carbon footprint. We realised the issue was that when companies wanted to take action, they relied on an archaic solution based on spreadsheets, or an imprecise solution based on surveys. There ought to be a better, more precise, and more automated solution! We therefore built Bloom to automatically collect data about an organisation’s activities (commute, business travels, catering, office supplies, electricity and heating, etc.) and based on that calculate the company’s carbon footprint. Bloom would then generate recommendations for setting reduction targets and initiatives. Lastly Bloom would then provide communication assets, which would help the company communicate in a truthful way without the risk of greenwashing . In order to increase adoption rate and maximise climate impact, Bloom should ideally come at a low price point, so price wouldn’t be a barrier for companies to get started. If we were to build a sustainable business around this with a low price point and all these capabilities, naturally the tool should be self-service as price would increase drastically if humans needed to be involved in the process. This meant that we intended Bloom to be a self-service SaaS.
As of today, Bloom integrates with hundreds of European banks, 3 bookkeeping softwares and all smart meters in France and Denmark. The continuous improvement in the product meant that we were able to calculate Tomorrow’s carbon footprint for the previous year in less than 30 minutes. We pride ourselves in having what we think are some of the best open-source emission factors for transactions and for transportation, and a relatively impressive open-source database of emission factors ranging from haddock (3.41kgCO2/kg) to a Macbook Pro (210kgCo2/unit).
You can watch a video about Bloom connecting to a bank and an example of doing carbon accounting here, and here is a video about Bloom connecting to a smart meter to get the carbon footprint of your electricity consumption here.
We opened Bloom to testers in the fall, and we gathered great feedback about what it could and could not be. At the same time, it was clear that it would not be possible to have enough revenue fast enough to cover the cost for a larger team, which we saw as necessary to build a product that lived up to our expectations. For financing Bloom, we started to look for investors.
While raising that investment round, we were challenged by prospective investors about the market viability of Bloom; investors are usually looking for revenues of about $100,000 a month 18 months after a seed fundraising. We strongly believe that revenue would be a good measure of climate impact as well, so their doubt encouraged us to dive deeper into the market opportunity.
After a couple of months of investigation, interviewing dozens of organisations, we feel confident in our decision not to continue our efforts on Bloom, as we don’t have a strong enough conviction that the product as we envisioned it can become a sustainable business and have a meaningful impact on climate change.
To our surprise and disappointment, the need in the market for a product like Bloom is not as we expected. We focused on small-and-medium enterprises. Our research tells us companies that were sincerely interested in doing climate action could not be satisfied with a self-service tool like Bloom and wanted more tailored support, as they wanted to be sure to do the right thing which meant looking deeper in their carbon footprint and getting recommendations more than a self-service software would be able to do for the foreseeable future. While we genuinely enjoyed working with these companies, their size rarely afforded them the budgets required for us to make a sustainable business out of this. Similarly, our lack of expertise in general sustainability consulting meant that we would probably fall short of their expectations and be far from our comfort zone. On the other hand, we also saw that organisations who did not have a genuine interest in reducing their carbon footprint (driven mostly by external pressure) were sufficiently happy with survey-based tools (often linked with carbon offsets) or free tools provided by governments to report on their energy levels and business travels. Indeed, we’ve come to believe that there’s currently not a fast-growing market for a self-service carbon accounting software.
Interestingly enough, there was a large wave of carbon accounting software companies 10 years ago - most of them shut down, pivoted to become energy management systems or were acquired and then shut down. Back then, the idea was very similar to what is currently pitched to investors and potential customers: an archaic market based on spreadsheets that is just waiting to be disrupted. We had hoped that today was different: that the digitalisation of companies’ bookkeeping, banking, energy management software, travel management, and the large citizen protests of 2018 and 2019 meant that a ripe market was just around the corner. What we found out was that most companies have not even made it to the spreadsheets yet: a clear example of that is that most companies that have publicly announced carbon neutrality objectives in 2030 have not yet measured their carbon footprint, and most carbon neutrality pledges are achievable using carbon offsets. The majority of carbon offsets purchased today cost between 20 per ton CO2, while keeping GHG emissions consistent with a 1.5–2°C pathway would require companies to have an internal carbon tax of around $100 per ton CO2 in 2020 according to United Nations Global Compact - letting people believe that offsets can be a satisfying solution to an organisation’s footprint reduces drastically the incentive to focus on real reductions, and thus the need for precise measurement to achieve these reductions. There is a chance that a software like Bloom could thrive in the future, particularly if governments or an alliance of large corporations start requiring proper reporting of an organisation’s entire value chain (scope 3 emissions). Even then, we’re uncertain whether such a change would happen faster than carbon pricing or faster than accountants rising to the occasion, each potentially undermining the need for an independent tool. We believe that there is in the short-term a largely untapped market for helping especially large organisations in their sustainability journey as consultants. A lot more companies that are big enough to be pressured by investors and governments are much earlier than we expected in their sustainability journey.
However, we also acknowledge that our assessment may be too conservative - there are now plenty of companies providing a tool similar to Bloom targeting a similar market to what we targeted; we cheer them on and hope to witness their success.
While learning that Bloom was not viable was a tough realisation for us, we’re happy to have made the call this early in the process. Indeed, if too few companies are interested in the product that we had envisioned, it would also have meant a limited impact on climate change, which is our raison d’être.
We really want to thank our early testers, our open-source community, the team, our existing investors, prospective investors and our many supporters for their patience and their trust. We want to give especially a huge shout out to the experts who helped us understand carbon accounting in depth, the experts who helped us develop the open-source carbon models, the amazing testers who gave us great feedback and helped us fix the many bugs, and the investors who kept us on our toes and helped us leave no stone unturned. The fact that the time for an automated self-service carbon accounting software isn’t now makes us worried given the urgency of the climate situation. We are especially worried that net zero claims turn to an offsetting race and distract companies from true reduction. This is why we urge policy makers to create the framework which demands proper disclosure of reduction efforts through granular and frequent measurements.
On our end, we’ll be doubling down on making our electricity data as ubiquitous as possible, to enable companies who already wish to be future-proof to take meaningful action on their electricity footprint.
As always, we do not want our work to go to waste, so we’re eager to share our learnings with anyone who may be interested. Don’t hesitate to reach out if you’re interested in more details!