Background of the Entrepreneur
Andy Keller is a fascinating personality, someone that has always been interested in inspiring and implementing change to make the world better. He is a mission-based entrepreneur whose interest in environmental protection started when he was only five years old. Keller remembers crying like a child because he was scared that no one on the planet would have any water because it would run out, not understanding how the water cycle works.
Today, his childhood fear is back because global industrialization is killing the planet more each year. Thus, Keller started his own business, ChicoBag, as a response to the horrific impact that single-use plastic products contributed to landfills, in addition to polluting waters and harming animals. Andy Keller studied at the California State University and in Archibishop Mitty High School.
Prior to starting ChicoBag, he worked as a sales representative at Virage, Inc., a software solutions company. Although he is based in California, Keller travels across the US not only to promote ChicoBag as a business but also to raise awareness of the population’s bad habits regarding plastic bags. It was a great opportunity to meet Keller when he was in New York for business, and he graciously agreed to answer my questions as an acquaintance of my family member.
Keller is calm in demeanor but eager to educate his listeners about the value of being a responsible citizen and giving back to the environment rather than taking resources from it. His reasoning is clear and direct, and he does not sugarcoat his opinions even as he challenges the actions of others. Keller is passionate not only about being an environmental entrepreneur and a successful business person but also about being an educator who is leaving his mark on society. The central issue to be explored in the present study is seizing a business opportunity through educating the public about the importance of environmental protection. Keller’s selflessness and moral stewardship sets him apart from many businesspeople and provides some ground for further exploration.
Facts About the Company: ChicoBag
ChicoBag is a company based in Chico, California, operating in the sustainable accessories industry. It was founded in 2004 in the local community of the city, exploiting the opportunity of replacing single-use plastic bags for reusable ones. Keller founded the company because he felt compelled to solve the problem of single-use bags polluting the land. He collected a team of dedicated environmentalists to create a Chico bag to “help humanity bag the single-use habit.”
In terms of structure, the company is a sole proprietorship, meaning that managerial control is assigned to the owner (“Choose your business structure,” n.d.). The competition on the market of reusable shopping bags is growing. ChicoBag competes against such companies as BAGGU, BeeGreen, Flip & Tumble 24/7, UNBEGUN, and others.
Now in its fifteenth year of operation, the company has experienced immense progress due to the growing popularity of reusable bags as the population has become more aware of the plastic bag problem. ChicoBag operates on the principle that the highest price is not the best price (Anderson, Wouters, & Van Rossum, 2010). Since the company’s start, ChicoBag has managed to eliminate the use of approximately 17 billion single-use plastic bags and is continuing its mission to reach the achievement of cutting out 34 billion single-use items by 2022.
Keller considers the company’s accomplishment as his main success in life. When pursuing the opportunity to establish ChicoBag, Keller assembled a team of dedicated environmentalists who shared the vision of the company; today, there are twenty-five people managing the company’s operations in the US. At the moment, ChicoBag’s annual sales amount to $120,000.
The key customer segment is the population of environmentally-conscious consumers interested in supporting a positive cause; casual users are also included in the profile. The ChicoBag website is the main distribution channel, with the core relationships being based on environmentalist values. Production costs are at the center of ChicoBag’s cost structure. Key resources include social media, distribution channels, production plants, and brand development. Activities are associated with marketing, logistics, and production. Main partners are Chinese manufacturing plants and companies that order ChicoBag products with their logos.
The company is unique in the sense that it seeks the support of the local community in gaining coverage and popularity. The firm focuses on customers and culture as two key drivers in shaping future development and sustainably producing reusable bags. In addition, ChicoBag is delving into forecasting to upgrade its strategies and find the sweet spot where it can operate on optimal terms (Schoemaker & Tetlock, 2016). Forecasting is not only necessary for the company to meet its 2022 goal of cutting the use of 34 billion single-use items but also for managing the uncertainty of the US market that is significantly limiting the success of entrepreneurs (Lerner & Sahlman, 2012).
In discussing ChicoBag, Keller was also inquired about the fears and regrets he had. It was surprising to hear that he had none. He said, “I am not a person that regrets doing something. I regret not doing it.” There is an inherent optimism in Keller’s psyche that places him apart from other business owners who are focused only on success and profit. When asked to elaborate on his idea of fears and regrets, Keller was eager to explain that all the bad things that happened: the lack of money, the struggle to promote the message of sustainability, the opposition from the public made him pursue his goal with greater power.
Keller feared being misunderstood and made a fool of it. He mentioned that when speaking at Ted, dressed as a trash monster, he was very afraid that the public would see him as a clown and not a true businessperson. However, he did not regret making a fool of himself – the Ted talk turned out to be a success, which led to ChicoBag gaining momentum and getting a new inflow of customers and supporters.
When speaking about ChicoBag’s entrepreneurial strategy, Keller was unable to explain which of the existing approaches was implemented in the case of his company. He said, “I just wanted to add value to the society, not really thinking which strategy would boost my business the most. I guess it was a combination of aspects from each strategy.” Upon looking at existing entrepreneurial strategies (architectural, value chain, disruption, and intellectual property), doubts easily arise as to whether any of them fit ChicoBag (Gans, Scott, & Stern, 2018).
Pursuing the Opportunity
In his conception of ChicoBag as a startup, Andy Keller did not want rivalry against competitors to undermine the message of its brand. He viewed rivalry as destructive in many ways and said that the competition of companies on the basis of price was especially limiting because it might overshadow most of the efforts businesses make to capture the audience (Porter, 2008). An important takeaway from the interview with Keller relates to the entrepreneur’s approach to creating a unique brand ecosystem, which predominantly aligns with Isenberg’s (2010) breakdown of nine prescriptions.
The most valuable aspects of ChicoBag as an entrepreneurship endeavor include the shaping of the ecosystem around local conditions, engaging the private sector from the beginning, and helping customers grow organically. Keller believed that ChicoBag was a real opportunity to pursue because of the gap in the market as well as the increasing public awareness of environmental pollution. In many ways, Keller was an underdog in business, showing courage by taking a risk and driven by the desire to make a significant change from single-use to reusable bags (Crainer, 2011). Nevertheless, an orientation toward bringing value has been the most distinct aspect of ChicoBag as a startup in the past and as a developed business today. Keller identified an unmet need for customers to replace single-use plastic bags with reusable bags that will serve them for years (Eisenmann, 2014).
Relationships, roles, and rewards comprised three key components (Three Rs) in ensuring the success of the organization (Wasserman, 2012). In the beginning, Keller had a vision for his future company but did not have a plan; he engaged the local community first in spreading his ideas because local groups tend to support sustainability efforts more quickly. Word-of-mouth power helped the company to obtain coverage and develop a core audience without a need for complex marketing campaigns (Kaikati & Kaikati, 2004).
Therefore, people with different perspectives on the world helped Keller evaluate the opportunity that he was pursuing. He found the right team in his local area and could not have been happier with it – the people with whom he works are his friends and supporters of the environmentalist movement. ChicoBag needed to recruit people that shared the same values as Andy Keller because the startup was based on ideology rather than profit in the beginning, which meant that only dedicated people could offer the power the company needed.
In terms of resources, Keller had to find manufacturing facilities to produce his bags, and in the end, partnered with Chinese factories. Also, he had to rent an office in Chico, CA, from where the company would operate, which was expensive but manageable. Keller studied the market to reveal that not much was done addressing the issue of pollution by single-use bags. He understood that marketing skills were a priority, which is why he focused the majority of his efforts on them. In addition, he wanted to avoid using investors, which is why a crowdfunding campaign was created to collect funds.
One of the main barriers that Keller faced as an entrepreneur was sustaining the growth of his company by way of interesting the public in what he does (Harvard Business Review, 2008). Thus, Keller employed a range of marketing and communication strategies to ensure that his company initially reached and now maintains the level he originally envisioned and continues to pursue. Similar to the operations of many small businesses operating predominantly in their local communities, Keller’s startup began without any investors, a key choice that shaped the future of ChicoBag.
Like Hamdi Ulukaya (2013), who saw a significant gap in the market for high-quality yogurt, Keller also perceived that not enough was being done to solve the problem of plastic bag pollution. Another challenge was associated with the lack of public awareness – people were buying single-use plastic bags without realizing the damage they did to the planet.
The local community of Chico, California, welcomed the efforts of the company, and in four years, it became profitable. Thus, it took around four years for ChicoBag to grow as a business and become truly successful. Keller learned about the importance of combining education with sales in order to keep customers interested. Thus, the brand’s website always shares valuable information about sustainability without insisting that people buy brand-specific reusable bags (Mullins & Komisar, 2010).
However, when customers learn about the adverse impact of plastic bags on the environment, they buy the reusable bags willingly and share it online (Giamanco & Gregoire, 2012). In addition, Keller learned that success came with time when it comes to such businesses as ChicoBag because communicating the message of environmental sustainability was complex in a variety of aspects.
Some Important Questions
As ChicoBag is a sustainable company, it was surprising to learn that they work with Chinese manufacturers, which may be seen as a controversial decision. Andy Keller was asked the following question: “How do you justify working with Chinese supplies given the unethical practices for which the country is known?” Indeed, the company is open about manufacturing in China despite being an environmentally sustainable brand.
Keller revealed that in the manufacturing arm of ChicoBag, the principle of social responsibility was the key driver. While most of the company’s products are made in China, ChicoBag cooperates with trusted partners that do their business ethically and show responsibility to workers and clients. Keller said, “We hope to make the growing community of customers and stakeholders confidence that we are managing the environmental and social problems linked to the manufacturing of all products we sell.” This shows that the company is seeking to sustain its culture and battle the odds in order to be successful (Gulati & DeSantola, 2016).
Another important question was related to how Keller made his company appealing to customers. To the question “how did your target your audience?” Keller answered the following: “We are trying to be sincere about what we do.” Through marketing and customer loyalty operations, the company openly communicates the message behind the business and encourages clients to provide feedback and share their experience on the journey to low waste online (Gilbert & Eyring, 2010). Profitability is attained through a combination of revenue drivers and a reasonable cost structure that makes it easier for customers to decide on making a purchase (Murdoch & Morris, 2006).
Reasonable prices set on the reusable bags also create an image of sincerity for customers, as mentioned by Keller. He said that when customers saw relatively low prices, they were not afraid of making a purchase and trying something new, especially given the positive message spread by his company to the masses. In addition, Keller was asked about his future plans for ChicoBag: “where do you expect to lead ChicoBag in the next several years?” Keller mentioned that he was planning to collaborate with grocery stores to produce a unique range of environmentally sustainable reusable bags to bring them to the masses.
Recommendations for Newcomers
In the last section of our interview, it was interesting to discuss the recommendations that Keller has for those trying to start up a company. He was passionate in his answer, saying that a person should care about the message and the value behind his or her business instead of the potential revenue it may bring in the future. As an environmentalist, Keller does not support the short-term “money-grabbing” strategies that companies may implement to gain recognition in the industry.
He proposes to start in a local community that will be the most likely to support a small company, communicate the intentions of the business, and determine whether the community has a positive response to the company. Fostering a good connection with people surrounding a business is necessary to identify venture opportunities at the idea stage when the entrepreneur is not yet sure how to implement the concept in life (Hornblower & Rohan, 2008).
Keller refers to himself as a global entrepreneur who tries to think across borders and envisions what the future will be like as his business changes (Isenberg, 2008). This idea is inspirational because the modern market has become too focused on generating a profit without thinking about the future. In the long run, Keller said, the true impact will come from those organizations that analyze existing issues and create solutions for them. The positive message that ChicoBag is communicating to customers has the potential to exert a long-term impact not only on the environment but on the perceptions of people regarding sustainable practices that can improve the world in which we all live. Overall, the interview with Andy Keller was a unique opportunity to learn about how a small business can change a big world.
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