From Farm to Cap Table: The Carbon e-Mission

“Confessions of CEOs” is a series on how business owners are changing the service landscape. Today, we’re chatting with Paul Gambill, CEO of Nori, a blockchain that enables people to get paid for carbon dioxide removal. He shares his secrets on tackling climate change while receiving angel investment.

Paul Gambill, CEO of Nori, a financial blockchain that facilitates carbon emission removal. Beaze, a vendor procurement marketplace for financial blockchains.
Paul Gambill, CEO of Nori | Photo Credit: Nori

Why Nori?

While most solutions today focus on the reduction of carbon emissions, Nori focuses on its complete removal. There are too many greenhouse gases in the atmosphere; the world needs to remove over 1 trillion tonnes to get back to pre-industrial levels. Currently, though, it’s too expensive to remove them. People require compensation to run the type of projects that take out carbon emissions from the atmosphere. 

Nori helps fund these endeavors through its centralized marketplace and unlocks the source of carbon dioxide (CO2) removal, namely farmers. These heroes remove carbon, obtain verification through a third-party, then sell the interest in said removed carbon to buyers. Buyers cannot resell the carbon. We’ve developed a methodology that allows us to identify how much carbon is removed, allowing Nori users to observe their impact tangibly.

Back in 2015, I read an article about how climate scientists often suffer from depression because hardly anyone listens to them. I thought to myself that it’d be beneficial if someone addressed carbon removal. Within a year of starting a networking group on climate change, I had met key influencers in the field including Dr. Klaus Lackner (Director of the Center for Negative Carbon Emissions and a professor of sustainable engineering at Arizona State University) and Carbon180 (a non-profit that tackles climate change). I subsequently endeavored to find the perfect co-founders while exploring different business models and ideas on how to tackle emissions. 

Why is climate change necessary?

Climate change is real. It’s not getting better any time soon. Unfortunately, people aren’t sufficiently empowered to take action on the issue. We have to drive to get to work, fly to see our family, heat our homes, we have to use energy, and there’s no way around that. We are interested in finding ways to restore the climate in a fiscally responsible way. The key is that people require incentivization to act. The easiest way to view this is an arithmetic problem. We are putting too many greenhouse gasses into the atmosphere and not taking enough out. Carbon removal helps create the necessary balance to roll back the effects of climate change.

Nori offers an entirely different investment asset class for the carbon market that requires significant coordination from farmers to scientists and researchers.

Farms: The solution to eliminating carbon. Beaze, a vendor procurement marketplace for blockchains.
Farms: The solution to eliminating carbon | Photo Credit: Jake Gard

What’s wrong with the current emissions reductions system? How does Nori tackle these problems differently?

In carbon markets today, when a project issues carbon credits, they sell these credits to a broker who sells them to another broker who sells them to investors. That same ton of CO2 trades hands over and over again. That’s not a healthy life cycle. Once someone pays, it should disappear.

When a ton of carbon is sold through Nori, the CO2 is immediately retired. The carbon certificate doesn’t go to someone else; it ends right there. Trade helps build the capital around it, but we don’t want the carbon to be the traded asset. With us, the buyer pays for a ton of CO2 with the token; the token becomes the commodity, not the CO2. The token is just a medium of exchange, so we’re able to get the best of both the situations. 

How is Nori maintaining focus on climate change despite receiving external investment?

Nori is a 50-year mission company. We’ve only partnered with organizations that agree with that long-term vision. We can’t allow anything to cause us to deviate from that mission, whether it’s a potential acquisition or taking the company public. Our token incentivizes everyone,  from Nori founders to investors to farmers. By aligning everyone’s motivations and incentives, we maximize the odds of reducing carbon.

What is your #1 lesson learned so far as a startup?

Abstract complexity away. As entrepreneurs, we can’t expect everyone to spend as much time digging into details as much as the startup does. Customers just want things to be easier and solve a problem for them.

Who have been your biggest advocates/partners so far? 

Our three best partners so far have been COMET-Farm (a platform for quantifying soil carbon), Granular (management software farmers use to track their operating data), and Techstars’ sustainability accelerator. We use COMET to create the new, easy-to-use standard for soil carbon; we’ve been working hand in hand with them for two years. Granular was the first agriculture company to believe in us; we’ve collaborated closely with them on helping their farmers get enrolled in the market. Techstars is just such a wonderfully supportive network and program that I really can’t recommend enough to other startups.

How have you gained investors’ trust?

Our amazing team. Our co-founders are world-class, and it’s not easy to find such incredible leaders. Co-founders need to agree on some fundamental things; this includes motivations behind the company and finding a balance between the mission and the economics of staying profitable. Having a sizeable venture-backed company may require you to give up some control; starting a smaller business may allow you to maintain control with less profitability. I recommend the book The Founder’s Dilemmas by Noam Wasserman to better anticipate and avoid the typical startup pitfalls.

When all is said and done, what does Nori hope to achieve?

Restore Earth to pre-industrial carbon levels. A clean world is a happy one.

Nori is a preferred partner on Beaze.

Beauty is in the eye of the person who can buy it

“Confessions of CEOs” is a series on how business owners are changing the service landscape. Today, we’re chatting with Niccolò Filippo Veneri Savoia, CEO of Look Lateral, a financial blockchain ecosystem that authenticates, values, and acquires art in real-time. He shares his secrets on building wealth through art as an asset class, possibly even through COVID-19.

Niccolò Filippo Veneri Savoia, CEO of Look Lateral. Beaze, a vendor procurement marketplace.
Niccolò Filippo Veneri Savoia, CEO of Look Lateral. Photo Credit: Look Lateral

Why Look Lateral?

In 2012, I had wanted to replace the artwork in my kitchen, so I went online to see what I could find, and I found almost nothing. When I did, I couldn’t be sure I would be getting the real thing or a counterfeit. I spoke with 300 gallery owners, and only 50% of them had a website, never mind e-commerce. There was no easy way to purchase top-quality authenticated international art online. At the time, the renowned art critic, journalist and my mother, Mariagrazia Savoia, spearheaded Look Lateral as a magazine for art, design, and fashion. When I became CEO in 2013, I decided to push the company towards e-commerce in a way that guarantees art provenance, and this meant creating a hyper-curated marketplace for art leveraging blockchain. 

Art is not only one of the most critical aspects of each nation’s history; rather, it also represents an essential asset class. There are $1.75 trillion art assets; this market is likely to grow to $2.2 trillion within three years. However, the market size is only 60 billion, and the transactions always involve the same few people. There is a considerable gap between the art market and the rest of the world.

What are the barriers to the art market and how does Look Lateral overcome them? 

Currently, there are three: lack of transparency, illiquidity, and lack of accessibility. Look Lateral addresses these problems by creating an ecosystem that identifies, documents ownership, and creates a market share for every art piece in question.  Our system tackles these issues in four ways:

1) Item identification: Our proprietary adhesive label, which is easily and safely applied to the back of a work of art or directly onto its certificate of authenticity. It is reliable and thin; it can’t be transferred to a different work of art, and it can’t be replicated or cloned. Every tag is unique. It’s crazy that this doesn’t exist right now. 

2) Provenance (i.e. a well-documented record of ownership). We record important information and opinions of the artwork to our blockchain, and we have a reward mechanism to incentivize players to record these things. We record if the artworks are in museums, record exhibitions, experts, the conditions of artwork, and so on.

3) Price indexing: This minimizes pricing error. Our methodology creates the index to price the artwork based on transactional data.

4) Fractional Marketplace of Art (FIMART): Our marketplace supports the trading of art assets, whether it is a fraction of the artwork or financial derivatives or the whole piece. Only artworks that are tagged, have information on ownership in our databases, and are priced by us may be listed in our marketplace. A centralized trading platform like this increases the number of potential buyers and increases the liquidity of the art market.

How can people maintain their wealth through art as an asset class?

According to experts such as those from Le Commerce, art represents a stable investment asset that offers an average annual return of 4.6% even during times of instability such as during political unrest or viral crises. This is especially true if there were art derivatives, art indexes and art lending. 

If you look at Deloitte and other reports, 10% of art owners would need a loan using art as collateral. These art owners include the top 1000 museums in the world, the top 1000 galleries, foundations, institutions, corporations, governments, etc. These entities are stable and solvent. There is a potential market of at least $175 billion.

The time is now, and it’s even more compelling because of COVID-19 and the possible next crisis.  Many of those entities will need loans or monetization as soon as possible. And art is even more attractive during a financial and global crisis, as one of the best refuge and safe asset class.

How does art as an investment vehicle help further culture? 

It’s a more scalable way to support museums and galleries. Museums, as an example, are not allowed to sell more than 20% of a given art piece (else they lose their non-profit status and are then categorized as for-profit galleries. During times like coronavirus, many of these establishments could shut down permanently due to enforced government closures if they don’t find alternative ways to monetize their assets within a reasonable timeframe. It would be a real loss if people were no longer able to appreciate the masterpieces of artistic leadership and history.

What drove your passion for art culture?

My father and my mother have always tried to bring me to museums, exhibitions, and openings. Some fond memories as a child include “The Celeste Galleria”  in Palazzo Te, “Phillippe Parreno”  at Palais de Tokyo in Paris, and “Tino Siegel”  at the Guggenheim. As my mother was a journalist in fashion and design, I could always “breathe” culture in my everyday life since I was a kid. At that time, I didn’t understand how influential culture was. It was only in retrospect that I realized its significance. Something that has stuck with me throughout the years was “Know the history so you can understand the present and think about the future.”  

How have you built your team?

I started with people I knew, who were in turn, connected to the key industries I was seeking. Then, when I identified the skills that I needed, I tried to add some of the best people in the world for that skill. For example, we have Piers Armstrong, the VP of Marketing at Amazon as our business advisor. As our analytics and finance advisor, we have Antonio Mele, a Professor of Finance at the Swiss Finance Institute based in Lugano (USI), who also spent a decade as Professor of Finance at the London School of Economics and Political Science. 

Who’s been an integral part of growing the business?

We’re big fans of Certilogo (a leader in product authentication), or Artnet (a leader in art sales). We’re elated that they’re working on such an innovative project with us. We also have partners like Orrick, financial institutions and banks who back us with their reputation and stability.

What words of wisdom can you share?

The most important thing is to be resilient. Always find people that don’t believe in you or there will be problems on your journey. Make sure all the people around you will play their role but also advocate value. You will need to test and then stress test every single part of the business. You will need to have people verify the solution you have made. We overcame obstacles and prevailed, and to build something like the ecosystem we have, you need to develop a multilayer product. If you don’t have that, you won’t be able to execute a viable product.  

When all is said and done, what do you hope for Look Lateral to achieve?

We want LookLateral to be the financial on-ramp to art culture as a prominent asset class, whether it’s paintings, wristwatches or film.

Look Lateral is a preferred partner on Beaze.