Experts Only Podcast #109: with Christian Møller-Holst, Expert in Net Zero Travel

Listen now:

Transcript

Jon Powers:

Welcome back to Experts Only. I’m your host Jon Powers. I’m the co-founder of CleanCapital and served as President Obama’s Chief Sustainability Officer.

Jon Powers:

On this podcast we explore solutions to climate change by talking to industry leaders about the intersection of energy, innovation, and finance. You can get more episodes at cleancapital.com.

Jon Powers:

Welcome back to Experts Only. I’m your host Jon Powers. Today we will look at the new frontier in sustainable travel, and we’re talking to Christian Møller-Holst who is the CEO and founder of Goodwings.

Jon Powers:

Goodwings is a company enabling net zero travel for mid to small businesses. A really interesting business model to help companies, actually like CleanCapital and many of you out there book and manage a net zero travel strategy in a really simple way.

Jon Powers:

So you can go to goodwings.com to learn more. And as always, you can get more episodes at cleancapital.com. Hope you enjoy the conversation. Christian, thanks so much for joining us at Experts Only.

Christian Møller-Holst:

Thanks for having me, Jon.

Jon Powers:

Absolutely. I think you’re probably one of my first international guests, so I’m excited to have you.

Christian Møller-Holst:

Oh, really?

Jon Powers:

Yeah, absolutely. Have you on from Copenhagen as we were talking offline, you guys have a really sustainable and beautiful city over there, and you’re really doing some interesting work.

Jon Powers:

Give a little bit of your background. You grew up there, you went into the Danish army. And like where sort of in this life experience did you first start to get interested in the issues of climate?

Christian Møller-Holst:

To be honest, it’s something that I actually often think about. Where does this profound interest and motivation come from? I think at the age of four, we started to spend a lot of time in a family cabin in the woods, on the northern part of Zealand, surrounded by trees. And when you grew up, you appreciate nature. And then I remember in high school there was these initiatives around save the rainforest. You probably remember as well.

Jon Powers:

Right.

Christian Møller-Holst:

You could buy certificates, and you had them in your school hanging on the wall. And it was something that you couldn’t really relate to, but you could sense that it was a good thing to protect what we are part of, nature, the planet.

Christian Møller-Holst:

Fast forward to, as you mentioned, I was fortunate to be in the Danish army for three years as an reserve officer. And after that, I knew that I was going to study business. And by coincidence, I ended up on the philosophy and business mix.

Christian Møller-Holst:

So my bachelors was part philosophy part business, and this was in 2000, so like 22 years ago. So pre sustainability, pre impact, pre regenerative capitalism, all the things that we are now hearing, we were contemplating about at the time.

Christian Møller-Holst:

We were having one class about Aristotle, or luck, or the great philosophers of our time, and then we were studying microeconomics. And we were the hippies of that time. We were the ones that were challenging the business theories that were just being laid out in front of us. Hey, this is how you should operate. This is how business works.

Christian Møller-Holst:

And I remember that we were at that time challenging the shareholder perspective, why not stakeholder over shareholder only? So that was really my entry into this. And then I graduated and immediately after I started my first company which was in health, and that’s another story.

Jon Powers:

Yeah. It’s interesting to me because you are sort of a, for a lack of better term a serial entrepreneur, you’ve started things, you’ve grown them and now you’ve made your way into helping to solve the climate crisis.

Jon Powers:

For folks that are not as familiar with the impact that travel can have in terms of our greenhouse gas emissions and CO2 output, why did you see that as a window of opportunity, and how big is that problem?

Christian Møller-Holst:

It’s difficult to talk about right now because we’ve had this global lockdown for two years-

Jon Powers:

That’s true.

Christian Møller-Holst:

… but now we can see travelers returning full force. So-

Jon Powers:

Can you pause there for a second. I remember in middle of the pandemic, the picture started coming out from Delhi, or the Taj Mahal, they would show pre pandemic. It’s mind boggling how CO2s come back.

Christian Møller-Holst:

And like the fish return in the canals in Venice.

Jon Powers:

Yeah. Right.

Christian Møller-Holst:

I mean, obviously travel is a big emitter, and aviation alone is around two, 3%. Travel as such. Travel and tourism is eight, 9%. So to answer your original question-

Jon Powers:

That includes business travel when you say that?

Christian Møller-Holst:

Yeah, it does. I mean, when I started Goodwings six, seven years ago, I knew nothing about travel. And to be honest, still to this day I know very little. But I’m surrounded by good people who know a hell of a lot more.

Jon Powers:

Right. Christian, I run a finance company. I know nothing about finance.

Christian Møller-Holst:

No.

Jon Powers:

I’m just kidding.

Christian Møller-Holst:

And that’s often how the best innovations come to life, right?

Jon Powers:

True.

Christian Møller-Holst:

So I think at the time and still today, none of the big guys in travel are really showing much climate leadership. So what really drove me and drives me today, is to challenge the status quo. So we started to look into it back then in 2015, and the answer I got every time I talked to an executive from a online travel platform, a travel company, travel management, they all set the same thing consistently. Well, the clients don’t want to pay for it.

Jon Powers:

The demand’s not there.

Christian Møller-Holst:

The demand is not there. And two, we simply don’t have the margins. And as a result, we just continue doing business as usual. And I simply could not live with that fact. So we started to look into how travel worked and especially online travel platforms. And to my big surprise, I found an industry that spends 75% of it’s revenue on advertising. 60 some billion dollar revenue, out of which 45 is being allocated into the same commercials on Google, Facebook network. And you see them as well, Jon.

Jon Powers:

Absolutely.

Christian Møller-Holst:

Everyone sees them. Hotels.com, booking.com. Creating absolutely zero value to you the traveler, to people or planet. So we thought, what if we could introduce a business model or actually redesign the business model around online travel, and find ways of growing a brand, acquiring clients without spending that much money? So that’s really what we do.

Christian Møller-Holst:

So Goodwings is in essence, we’ve turned a very transactional revenue where you make money from, you drive traffic to your website, you convert it into a booking, you get some revenue, and then you spend three quarters on more advertising. And as such there’s nothing-

Jon Powers:

It’s a pyramid scheme. I’m just kidding.

Christian Møller-Holst:

I mean, I’m not religious about advertising. Don’t get me wrong, but it’s just at a time where we have a lot of technologies in front of us, we know what to do but we lack finance. Why don’t we take this money and use it on something that creates value? So that’s what we do.

Christian Møller-Holst:

So basically Goodwings is a platform like any other online hotel platform, but the difference is you pay a small subscription as a business or as an individual, and that’s our main source of income. And that allows us to take the booking revenue, which is like eight to 10% of the hotel price on any given hotel platform, by the way. And we don’t spend it very much in advertising, just a tiny bit. Most of that money is fully allocated to remove your remissions.

Christian Møller-Holst:

Because the guy I met six years ago was right, you don’t want to pay extra. You didn’t spend two, three hours to find that plane ticket, hotel room as cheap as possible, and then on the checkout say, “Sure, I want to pay $80 to net zero my flight to Copenhagen.” Right?

Jon Powers:

Yeah. So when I’m booking on Goodwings, I’m actually booking a hotel, but then you are taking the rest of my travel itinerary and offsetting, or trying to offset that travel itinerary.

Christian Møller-Holst:

Yeah. So we’ve basically created this travel emissions calculator which is built into the platform. So once you subscribe you get access to the platform. We have more than a million hotels. We have comparable rates with any other major hotel platform. So you find the hotel in Copenhagen if you come to visit us, but you can’t complete your booking without telling us how do you get to the hotel.

Christian Møller-Holst:

So there’s like a widget, you click your way through. It takes literally three seconds, and we will know how much CO2 comes from your train to the airport, your flight to New York, and from New York to Copenhagen, your taxi from Copenhagen airport to your hotel and everything in return. So that’s your total travel footprint, transfers, hotel, flight. You will be emitting on such a trip around three tons, removing three tons through one of these verified reforestation projects is around $20 per ton. So that’s $60. We are in a position. We are in a position where our business model allows us to actually pay that on your behalf.

Jon Powers:

Yeah. So that $60 goes, like right now it goes where? How are you guys offsetting?

Christian Møller-Holst:

Well, offsetting really covers two things. 80, 90% of offsetting credits are what you can call avoidances. So basically a climate credit associated with a windmill project, or a solar project, or a methane gas project and tons of other projects avoiding CO2 to be emitted.

Christian Møller-Holst:

So these projects are in most cases super good, very important. However, the need for adding this extra revenue stream from climate credits from those types of projects were more important 10 years ago. Because in most parts of the world, it was still cheaper to build new black energy sources.

Jon Powers:

Yeah.

Christian Møller-Holst:

Yeah, exactly. So if we were to incentivize the transition from black to green, we needed to add another revenue source. So today the situation is somewhat different because the efficiency and the cost from green energy is decreasing significantly. So what is very much needed today is massive investments in projects that are drawing down carbon from the atmosphere. These projects are super expensive. You have tech projects like direct air capture, sucking CO2 out of the atmosphere. They are still enormously expensive, around 900 to a thousand dollars per ton, which is more or less impossible for anyone to pay.

Jon Powers:

Right.

Christian Møller-Holst:

And then you have, which is also encouraged by the UN and the Oxford principles for net zero alignment. You have the nature based reforestation project. So basically planting trees, but verifying that it takes place. And the verification part is what makes these projects so darn expensive.

Jon Powers:

And regionally, where is that taking place? Are you guys working in the Amazon? Are you working in Copenhagen? Who’s your partner on that side of the transaction?

Christian Møller-Holst:

Currently we’re removing carbon from a project in Uruguay, a small country between Brazil and Argentina. 21,000 hectares of grass land is being turned into forest. And this project alone is intended or targeted at removing 10 million tons of CO2 in this lifetime. And it’s I believe 30 year lifetime.

Christian Møller-Holst:

I mean, there are more than 1600 projects, and we are now building our removal pipeline because as we can see businesses really picking up for us, and more and more businesses are signing up on our platform every day to be able to travel net zero easy, we are securing a pipeline. So we have access to removal.

Jon Powers:

I think capital is a pipeline of solar projects that we’re acquiring. You’re looking at a pipeline of projects that you can invest in-

Christian Møller-Holst:

Sure. That’s right.

Jon Powers:

… that are having that offset. Interesting. And then how do you identify… I’m going to get back to the demand side and the private sector side of the bookings. But how do you align and sort of find those partners in Uruguay or whatever, is there a mothership group you’re working with, or do you have to find individual projects that you’re backing?

Christian Møller-Holst:

We do everything. I personally have a pretty big network of people working in this space who are coming to me and us with opportunities for projects. We also work with agents who source these for us. But to a large extent, we try to cut out the middleman. We basically want to have as much money going directly to the project owners as possible.

Jon Powers:

Right. Interesting. And geographically, again, are you seeing a lot in South America, in Southeast Asia, like where are you seeing a lot of these projects coming?

Christian Møller-Holst:

South America, Africa and Asia is where a lot of these projects are taking place. And that is to a large extent because there are a lot of demands or requirements associated with these verified projects. Not only permanence is the carbon going to be stored in this forest for 50, a hundred years ahead of us, but also additionality.

Christian Møller-Holst:

So basically meaning, would this project have come to life if it wasn’t for this revenue source from the carbon credit? So a project in Denmark would probably have a tough time getting verified. Because you would say, “Well, you can afford.” And you would probably be doing it anyway, finding this forest.

Jon Powers:

Yeah. And then talk about that verification so that you’re providing to the customer that’s using your platform a sort of a net zero label. What is that verification process so that whether it be at CleanCapital, or at Microsoft, or whoever’s using the platform, I don’t know if Microsoft’s using, whoever’s using the platform can use it within their own reporting?

Christian Møller-Holst:

So basically what we do is, a company signs up and our sweet spot or ideal customer profile is a small mid-size company. And that’s primarily because the very large companies, enterprise level companies typically have their own projects or need more advanced travel management solutions. Right. So the companies that we attract to a large extent are, I would say between 50 and 300 employees. Basically the majority of companies.

Jon Powers:

Yeah. They don’t have the resources to build their own shops.

Christian Møller-Holst:

Exactly. And neither do they have the resources to do the CO2 calculation, because calculating your travel emissions is a bugger. How do you do it? Well, you basically print out all your expense reports, all your booking receipts, and then someone goes through and tries to count, “Oh, I can see Jon flew from the US to Copenhagen, how much CO2 did that emit?” So we solve the problem around CO2 calculation, which, and I think we’ll get back to this, is going to be a big issue in the US, with US sec now-

Jon Powers:

Yeah. I’m going to commit to that. Yeah.

Christian Møller-Holst:

But yeah. So the travel emission calculation is a value creator. Secondly, there’s a real good business case to use us to pay for the removal. We have companies paying us maybe $2,000 a year for their subscription, but getting worth of 10,000, $20,000 removal credits that they would have had to pay themselves.

Christian Møller-Holst:

And ultimately we do two things. After we’ve calculated your footprint to be 500 tons for your business travel, we then take the commission from your hotel bookings, we then purchase the removal of 500 tons of CO2. So you reach net zero. But we register the removal in your name.

Christian Møller-Holst:

So for me as a climate entrepreneur, whatever label you want to give me, this is really important because trust and transparency is what is going to fuel this industry, this new transition.

Jon Powers:

Yeah, I agree.

Christian Møller-Holst:

So this is a really cool feature that we register the removal in the name of our client. So they can take ownership. And we provide them with an annual net zero travel certificate that they could use.

Jon Powers:

No. I found that really interesting. I was looking at the different subscription levels, and not only that, but as a company that is closing on a 50 people, having the capability to actually build out our mechanisms to manage our scope one and two and three it’s impossible, right? You have to basically subcontract that out and find someone to do it.

Jon Powers:

The demand for that is booming. As you said, we just had our SCC rules put out just this week around ESG. It’s going to be really exciting here in the states to see some of the stuff moving forward. So the demand for what you’re doing is skyrocketing. The inability for these smaller firms to actually execute on that is going to be really challenging, right?

Christian Møller-Holst:

It is.

Jon Powers:

So, do you guys see yourself moving beyond just hotel bookings into booking fights and other things, or just taking that hotel booking as the base and managing the rest of the itinerary carbon offset? TBD.

Christian Møller-Holst:

Yeah. TBD. Obviously, we want to help our clients as much as we can. And if that includes helping them with the booking of their train ticket or flight, we are going to do it. However, most of our clients actually today tell us that they love the fact that they have freedom to book the flight directly with the airline or through their preferred platform or whatever. So it’s not a huge demand.

Jon Powers:

That’s interesting.

Christian Møller-Holst:

The reason we would do it, is because we would be able to have even more accurate travel mission measurements, because we would be able to go on aircraft level.

Jon Powers:

Right.

Christian Møller-Holst:

What kind of vessel is taking you to Copenhagen, and how full was it? Was it half empty or was it completely full? So on the emission measurement side, it would be able to add value.

Jon Powers:

There’s two things I’m going to get into next. How much of your customer base is personal versus business? Because I know there’s options.

Christian Møller-Holst:

98% is business.

Jon Powers:

Oh wow. That’s exciting.

Christian Møller-Holst:

Yeah. And I think it could change if we chose to invest more time in building a leisure customer base, but we solve a-

Jon Powers:

It’s a different market though.

Christian Møller-Holst:

It’s a different market. Definitely.

Jon Powers:

Yeah. It’s different to book a hotel in the southern part of France and booking a hotel in Paris for a business trip.

Christian Møller-Holst:

Yeah, exactly.

Jon Powers:

So we talked earlier about US versus Europe. You mentioned offline, it’s sort of 30% US-based, 70% Europe. And we’ve talked a lot about the show, about how the European market has moved ahead of us in terms of this, but that there is I think a quick scaling beginning to happen here in the US. If you’re looking back in five years now, how do you see that balance? And then outside of those two geographies, are you seeing any growth in places like Asia? They may not have the metrics in place yet, but once the SCC puts these in place, a lot of companies are going to be forced into it.

Christian Møller-Holst:

Yeah. I think there are three drivers for demand. Regulation, obviously. I mean, the US is now spearheading this. Italy-

Jon Powers:

Finally.

Christian Møller-Holst:

Yeah. Finally. Italy also took some strong moves recently and wrote into their constitution that companies must protect people and planet.

Christian Møller-Holst:

Portugal, I believe also has initiatives on demands for business reporting on this. So there’s definitely regulation has a big role to play. Supply chain too. A lot of the larger companies in Denmark for instance, have had to do ESG reporting for quite some time. And that has trickle down into the smaller medium size companies. The supply chain effect is global.

Christian Møller-Holst:

And then thirdly I would say, and this is not to be underestimated. The personal motivation from business leaders, the next generation of business leaders see business not as the end, but as a means to an end. And see that businesses must take on a greater responsibility. So a lot of our clients they also sign up because they feel morally obliged.

Jon Powers:

Right. Interesting.

Christian Møller-Holst:

I’m sorry.

Jon Powers:

No, go ahead.

Christian Møller-Holst:

This is also something that I see in the US market. Because I mean, the US market is so big. There’s actually a lot going on climate and impact in places like Texas that I wouldn’t have expected, but actually a lot of cool things are coming out of Austin, for instance. California has been doing this for decades. So it used to be a coastal phenomena, at least from my point of view, and now it’s starting to happen all over the US. But still there are pockets in the US that are as behind as some European countries.

Jon Powers:

For sure. But the demand’s moving and I think companies also recognize that their employees are demanding this within their own structure. Especially now they’re starting to pick the business travel back up. So one final question, what’s been harder healthcare or climate from a startup perspective?

Christian Møller-Holst:

I would say equally is hard, and I’ll tell you why.

Jon Powers:

Yeah, I’m interested in that.

Christian Møller-Holst:

I started my first company, Healthy Company it was called, in 2006. We had two fantastic years and then came the financial crisis in 08, which was like a lesson. And I really had to mobilize my education in the will of force and just grinding on. And we ended up successfully exiting that in 2011, which was like a huge accomplishment. And then we started Goodwings and then came COVID.

Jon Powers:

Right. Don’t start any more companies.

Christian Møller-Holst:

Exactly.

Jon Powers:

You’re causing global trends.

Christian Møller-Holst:

Exactly. So I would say equally hard. But I think what is enormously rewarding with Goodwings is that it resonates so well with our clients. Literally, we have like a 30% win chance from a demo. I mean, the companies that meet us, that go to our website and books a demo, why would they not do it? It’s super affordable, and it solves like a list of problems.

Jon Powers:

Absolutely. Well, to do that, go to goodwings.com, right?

Christian Møller-Holst:

Yeah. Goodwings.com.

Jon Powers:

I know you guys have a moonshot goal of turning a billion trips net zero in 10 years. Let’s hope you get there. And hopefully CleanCapital and others can be part of that. Christian, thank you so much for joining us at CleanCapital.

Christian Møller-Holst:

Thank you for having me. I greatly appreciate it.

Jon Powers:

Absolutely. And thanks to your team, specifically Josephine for her patience and getting this booked, and our producer Colleen A. Young as always for putting these episodes together. You can learn more at goodwings.com and you can get more episodes of Experts Only at cleancapital.com. Thanks so much again, and I hope to continue the conversation.

Christian Møller-Holst:

Thank you. Same.