Tommy Linstroth: Building a $ Multi-Million Co. in Eco-Construction – EP. 159

About This Episode:

Why should every building be green? Buildings, both commercial and residential, account for about 40% of annual CO2 emissions.

It’s an enormously wasteful industry ripe for innovation. But how do we bring about the new era of eco buildings?

My guest today is Tommy Linstroth, the CEO of Green Badger, an SaaS platform for automating sustainability.

They make it much much easier for construction professionals to build sustainably.

It’s a clever approach to an important sector we don’t often think about, oh, and these buildings can dramatically lower your monthly energy costs as well.

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10:12 – “Do you want to have an inefficient, unhealthy building? Is that where you want to live? Right? No, it doesn’t make any sense, right? Call it green, call it efficient, whatever you want. To me, a lot of it’s about the messaging. And I’m a firm believer in climate change. And, I’ve spent a lot of time on it. But if you don’t, I’m not going to change your mind. I mean, that’s the thing, right? It is politicized. You’re either one side or the other. So you can yell at me and I can yell at you or we can change the frame of it. And to me I did that a long time ago. And it was, I didn’t want to argue about it, but I could tell you that, ‘Look, do you want to have lower utility bills? Do you want to save money? Do you want to be in a high-performance healthy building or a low-performance unhealthy building? Do you want healthy air quality?’ When you frame it like that, I mean, I don’t care, all of those will result in lower greenhouse gas emissions, but it’s also going to give you these other things that you will appreciate and benefit. And who cares if I’m wrong and climate change isn’t an issue, but you still have a healthier building and are spending less, that’s still a good thing, right?”

12:10 – “The fundamental issue tends to be that the people who benefit, of the utility savings, are not the people who actually own that house or that building, right? So you’re asking a landlord to put a bunch of money in and see zero financial results. I’ll give you an example. One of my former employees, because we benchmark our environmental footprint and all that stuff. And so since it was work for home, we said, let’s look at our home energy use. And she had the smallest house. She was young, out of college. And compared to, I’ve got a family with kids. All our employees do, too and they’ve got bigger houses. And she by far – because she was renting this old house in Savannah, Georgia, that had no insulation and no air ceiling – had like triple to quadruple the energy bill that anybody else had, right? And it’s like, my God, I can make one new house and it can be totally off the grid. But if there’s 100 of these leaky old houses that are just sucking up resources, it’s like that is a problem you’ve got to address.”

14:27 – “We use LEED, which is an acronym, it is Leadership in Energy and Environmental Design. And it is a third-party certification from a group called the US Green Building Council. And so it allowed us as a developer to say, ‘Look, we’re not just telling you it’s green because we put in one good light bulb, we actually have a third-party verification,’ like J.D. Power for your car, right? You want to see that stamp that your car is safe and all this good stuff. LEED basically does that for a building so that we can communicate to the market that we actually did these practices. And so we use that as our benchmark.”

17:13 – “We built what is basically a TurboTax for LEED certification. It’s just one central platform that was a very acute headache that I had, that I was living in, and I wanted that headache to go away. And there was no Advil for it. And so I pivoted from consulting once I had the prototype and said, ‘Look, I’m on 20 projects a year, we could be on 2000 projects, 20,000 projects, let’s get this to the industry,’ because as mentioned, the contractor, the construction community, this is not optional at this point. If they get a project that has this, it’s in their document, it’s in their contract, they’ve got to do it. And they can either spend hundreds of hours tracking all this stuff in spreadsheets, or they can use a software solution to try and automate it. And so really that’s where we found our sweet spot of: this is a headache that a lot of people have.”

18:51 – “LEED is good because back when I was starting out, the only thing I ever thought about was energy efficiency. And that’s a huge component of this. But it makes you think of other things like how are you citing the building? Like where is it? Does it have access to transit? Does it have ability to infiltrate storm water on site or are you just schlepping it all off into the drain? So it really makes you look at site constraints. It makes you look at the water efficiency of the building. How much irrigation, if any, is required. Certainly the energy is a big component. Really where we live pretty heavily is the material selection and you’re putting a material in place that’s going to be there for 50 or 100 years. Are you picking the right one? Are you picking the one that’s not going to off-gas toxins into the employees for the next year? And then finally, the indoor air quality again – are you going to provide them with proper ventilation, especially coming out of COVID now, it’s a big thing of making sure these unventilated buildings can get fresh air in and disperse things.”

19:50 – “My first job out of college, the one I took before I pivoted, I was in a one-story cinderblock building, I shared an office, I had no windows, the acoustics were terrible. I was staring at a corkboard and my weird little iMac at the time, it was the colored iMacs is what we had with the mouse that didn’t have buttons and I was like, God, I dreaded coming to work, you know? And then you go somewhere where you’ve got windows and fresh air and you don’t hear everything. And when you look at one of the big things they talk about in green building, it’s productivity. And saving money on your electric bill is good, but your number one expense in a company is your people. And if they’re even a tiny bit more efficient at work, that return is humongous.”

24:38 – (Ross) “How can we better sell this to landlords who want to do the bare minimum and collect the maximum check from their renters when it comes to all of this stuff?”

(Tommy) “Well, one word that’s frequently used is regulations, right? So you see things like the city of New York and they imposed a cost on carbon emitted by a building. And so they said, ‘look, if you emit over this…’ and every building has to benchmark how much carbon they generate, and if it’s an excess, then they’re paying a tax and then they can figure out, is it cheaper for me to keep paying that or is it cheaper for me to go in and retrofit this building? So, just to say people are going to do it out of the good of their heart is probably unrealistic. And where you start to see a more profound impact, it’s the government stepping in, putting a regulation in place and saying, ‘This is important. We want to protect these people’s pocketbooks and you need to do these for your buildings if you want to be able to continue to operate here.’”

29:09 – “As a developer, if you’re not doing it now, you’re at a competitive disadvantage. The US General Services Administration, they’re the largest leaseholder of office space in the US and they require that any building they go into has to be LEED certified. And so if you’re not, they’re just not going to lease in your building, you’re not even up for consideration. And so is it worth the investment to make sure that you have that opportunity? And part of our argument or just rationale as we talk to people is your opportunity cost, right? It really doesn’t cost much more if anything to go this route. What is the downside of doing it, right? The downside of not doing it can be big. You could not sign a lease. You could miss out on potential clients. What’s going to happen if you do it and what possibly negative could happen, right? If you can do it for similar cost or at the same cost and you just got to restructure it a little bit, there’s just not an argument to say, ‘No, we shouldn’t do that. I don’t want to be able to lease to as many entities as possible, I want to restrict who my customer base is because I don’t want to do the certification.’ I mean to me that’s a business decision you can make. I mean, I wouldn’t make it, but risk avoidance.”

31:04 – [About working in Georgia] “Coming up through the development when I was working for developer, there was a lot more running our head into the wall. Like Savannah didn’t have recycling when I moved here. And it took a lot of people lobbying just to get a curbside recycling for our house. Just you threw everything away. It was terrible. And again, part of our argument was, what is just the perception when people come vacation here, are they going to look at you and see you throwing all this stuff away and be like, why would I come back to this city? Maybe. What’s the cost of getting this program going so people don’t or so that businesses don’t want to relocate here. So I think we definitely fought through some of that. I think we’ve seen a lot of positive growth in the last decade where the perception is – it’s not California, right? And it’s certainly not going to be, but it’s definitely better than it was. And there’s a lot of great initiatives going on at the municipal levels to drive sustainability. Even at the state level. They now have requirements of sustainability in all affordable housing.”

32:13 – “It’s really helped me figure out how important messaging is, right? And to not just stand on the mountaintop and yell because that’s what I believe, but be flexible, adapt to the market and the audience you have because you can get the same result, right? I don’t have to convince you that the sea level is rising. I just need to convince you that you like saving money on your utility bill and you don’t want to die of inhaling chemicals from paint. And if you can agree on those, we get to the same result, right?”

34:22 – “I won’t proclaim to be the smartest person in the world, and I love copying other people’s good ideas. So what I love doing is sitting here where they might not have adopted things and going to New York and Portland and San Fran and some of these other areas and gleaning those good ideas and seeing has it worked? And where else has it worked? And is that something I can bring home with me. I do that for my product, I do that for me personally, for my own health and best practices. And even if you’re in an area that might be slightly resistant, you’re not on the bleeding edge of it if you can bring solutions that have been tried and true and maybe people just needed to have some light shed on it and they’ll realize, ‘Hey, that is something we could do that’s not too crazy.’ So again, yeah, I can see both sides of the argument, but I’ll say for a fact it has allowed me to learn great ideas that other people are doing around the country and see does that make sense for my home community?”

38:58 – “I’ve been fortunate, right? If you start your own company and it can support your mission and your life, you’re in a good spot. It can be difficult when you’ve got to go buy into somebody else’s mission and maybe put your personal beliefs on pause and maybe you go and you’re working in a 10,000 person organization and you have zero say or influence and that, I don’t know if I sold Green Badger or exited and I don’t know that I could go work in that environment again.”

40:43 – “Everybody’s got their own passion, right? So, it just takes that opportunity to find out. I will say that it can be tough if your passion takes you to, the only company that’s doing it is based out of Nova Scotia and you don’t want to go move to Nova Scotia. Like, what can you do? What can you do? So I would say I’d consider it personally a bit of a luxury, but I wouldn’t say it’s an anomaly and I wouldn’t say that there’s zero opportunity. I think a lot of people, you get stuck in your job, in your career and it’s always a challenge to change and pivot and go to a new position. And there’s perhaps lack of security and there’s a lot of unknown. And it’s safe to stay and do what you’ve always been doing. And that might prohibit some people from pursuing that.”

42:00 – “If my kid wants to go work a minimum wage job, they could go work at REI or Whole Foods or somewhere or they could go work at Exxon Mobil pumping gas, right? That’s a decision of what values do they support? And that’s an opportunity for a minimum wage kid…they can make that decision. So, I mean, maybe it’s not the same as somebody in a smaller company where we’re like extremely focused because obviously if you’re working at REI or Whole Foods bagging groceries, maybe you’re not having like the hands-on impact of saving the world, but you’re working on that mission and you’re contributing to that mission. And if that mission is aligned with your personal mission, yeah, you can make that choice.”

43:02 – (Ross) “Some people need a little nudge and they need an inspiration from a story like yours. That’s the premise of my show, is to try to say, ‘Hey, look, you can do this. And you don’t have to condemn yourself to a life of poverty. You can also make a business, you can succeed, you can be happy, you can thrive, and you can also solve these issues. I mean, that’s the fundamental premise that we’re trying to find here. And that’s what makes your story so interesting to me. I mean, that’s the exact lane that I care about. So can you take care of your life? And can you also do something to help this situation that we see but maybe not everybody sees?”

(Tommy) “Yeah and hopefully I mean if we can serve as inspiration for one person I consider this a win. It’d be really tough to think that I’m going to work for eight hours a day, five days a week and not have some semblance of having a personal connection to that mission. And I’m sure that is unfortunately the case for a number of people. But I would say, you should try and take that opportunity and find where you can get better alignment because it’ll make those eight hours a lot better for you coming in Monday through Friday.”

47:40 – (Ross) “Definitely the most powerful takeaway from our conversation for me personally is the concept of messaging. And I do intuitively believe that there is a way that these ideas can be packaged that will receive almost universal love, and there’s a way that will receive a lot of hate. And I think doing it in the right way is so important. And maybe what schooling taught you is, maybe it gave you some background onto this conversation or this ongoing debate or some history that gives you some context. Because I think if you go on your own without any context, you’ll figure these things out but it might be very slow and very hard fought. I’m figuring things out. I’ll post something about a certain topic about lab-grown meat and then I’ll get a boatload of hate because nobody wants to hear about that. Or I’ll have somebody who’s a vegan and we’ll also get a boatload of hate. So it’s just interesting which topics and messaging triggers people and which doesn’t and which stuff slides through and everybody loves.”

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