Why CNaught is Building a Different Kind of Offset Marketplace
At CNaught, we're building the easiest place for companies and other parties to access carbon offsets and begin to take climate action. But why are we building CNaught the way we are? And why do we think that is the right way to make effective carbon offsets more accessible to more companies? The answer comes not from the climate world but from the world of online marketplaces more generally, where our cofounders Mark, Dan, and Steve have decades of experience from online marketplaces like Rev, Uber, and Thumbtack thinking about how to build in the best way to serve customers. That is our northstar–we want to make it as easy as possible for our users to drive real climate impact.
What is an online marketplace?
An online marketplace like CNaught functions by using software to bring together disparate buyers and sellers who often may have struggled to find each other without the marketplace. The sellers may be offering goods, services, or both; the buyers may be businesses or individuals. Marketplaces can be simple, like Craigslist, or among the most sophisticated businesses in the world, like Uber or Amazon. But they all operate by matching buyers and sellers.
How does the marketplace match buyers and sellers?
The core function of a marketplace is to match buyers and sellers, so how they conduct this matching is critical. For a marketplace to succeed, it must consistently drive matches that benefit both buyer and seller. Nearly a decade ago, Josh Breinlinger, now of Turtle Ventures, wrote a blog post that continues to be helpful in categorizing the different matching mechanisms that support different kinds of marketplaces. It all comes down to who chooses to make a match:
- Double Opt-In: This is the simplest version of a marketplace to build because it only requires buyers and sellers to be able to find each other and interact. The marketplace does not need to do any curation, the buyers and sellers are responsible for all matching, and the marketplace is not typically viewed as responsible for the success of the match. Craigslist is a good example of a double opt-in marketplace: a seller can post an item for sale, and a buyer can search listings of items for sale; if they connect and agree on a price, they can transact.
- Buyer Chooses: In this model, the buyer is asked to peruse a set of options and make a choice. This model makes the most sense when the supply is differentiated enough for the buyer to care about which supplier they buy from and when the buyer has enough information to know how to make the right choice. The marketplace may have to impose some minimum quality bar for supply in this kind of marketplace, but there can still be a substantial “buyer-beware” component of making the right choice. Airbnb Instant Book is a good example of this kind of marketplace: the buyer cares about the specific home they will stay in and they know what they want, so they want to choose.
- Marketplace Chooses: In this model, the marketplace chooses which buyers and seller are matched. The key feature of a marketplace-chooses model is that the buyer does not care about who the seller is and/or does not have adequate information to intelligibly choose the right seller for their need. Instead, the marketplace is responsible for ensuring that the seller is able to meet the buyer’s needs. Uber and Lyft are examples of this kind or marketplace: a rider typically does not care about the specific driver or type of vehicle nor does the rider know which vehicle might be fastest to arrive; the rider only seeks reliable, available, and safe transportation. Notably, in a marketplace chooses model, the buyer holds the marketplace responsible for performance.
Choosing a marketplace model for carbon offsets
Existing marketplaces for carbon offsets are buyer-choose, with a buying experience that feels a lot like Airbnb. Buyers scroll a list of projects, compare them across various axes, and choose which projects to support. The marketplaces see their role as empowering buyer choice because they believe that their buyers both care which projects they are supporting and can intelligibly choose between them. There is good reason for making an offset marketplace buyer-choose: as we have previously discussed, carbon offsets are not all created equal. While all offsets nominally represent a ton of carbon, they can vary widely on both effectiveness and price. In a buyer-choose marketplace, the marketplace does not need to grapple with the “right” way to address that variation, they only need to make information available to their customers so that their customers can choose what is right for them.
At CNaught, we are building something fundamentally different–a marketplace-choose model for carbon offsets. Here’s why. Rather than starting with the existing supply of offsets, we started by asking existing buyers of carbon offsets what they think and what they want. While they all were seeking projects that were effective in driving climate impact, they generally didn’t know how to choose projects that maximize that goal. Instead, they chose projects in highly idiosyncratic ways: some always chose the most affordable projects to save money; some always chose the most expensive projects to avoid being accused of greenwashing; others chose projects that met some non-climate-related goal like impact on a community near company headquarters; still others simply admitted that no one really knew what they were doing; a final group hesitated to use offsets at all.
The consistency in this feedback was clear: buyers all want to drive climate impact with their offset purchases, but many or even most do not know how to do so. There is only one kind of marketplace that makes sense when buyers do not know how to choose what to buy: a marketplace-choose model. And that is what we are building at CNaught. We go deep on which carbon offsets maximize climate impact for your dollars so that you don’t have to, and we make it easy to use them right away. In many ways this is harder than the buyer-choose model because we are responsible for choosing effective projects at a reasonable price. But we believe that we have to build this way to meet customer need, unlock adoption, and drive climate impact.
Picking effective carbon offsets for you is just one way that CNaught is the easiest way to take climate action. Here are a few more ways we make carbon offsets easy:
- We charge a flat rate per ton of carbon. No need to muddle through inefficient and opaque markets with prices that fluctuate by the day;
- We charge based on usage. No subscriptions or additional fees;
- We meet you where you are; order through our dashboard or integrate with our easy-to-use API. integrate with your tech through a simple self-serve API. No sales necessary.