“We’ve set a goal of reducing or removing 500 million tons of CO2 every year, which would be 1% of the world’s emissions…” As climate technology becomes one of the world’s biggest opportunities, the ambition fueling a new wave of startups is stunning. This quote is from Taylor Francis, co-founder of Watershed, a fast-growing year-old corporate carbon management company in San Francisco. I spoke to him on a sunny winter day on the roof of the capacious new building Watershed had just moved into–big enough to hold three times the employees the year-old company already has. (Francis will speak at the Techonomy Climate conference on March 29 in Mountain View. And Watershed was selected last year as one of our “Techonomy 10” startups, whose business is good for the world.)
Emissions management is a hot field with quite a few players, but Watershed’s pedigree is unusual. Francis and two other veterans of Stripe, the digital payments giant, were inspired by that company’s efforts to remediate its own CO2 emissions. They left with blessings and backing from Stripe founders John and Patrick Collison. Then they raised money from both Kleiner Perkins and Sequoia Capital, and Kleiner’s John Doerr and Sequoia’s Michael Moritz both joined the board. It’s the first time they’ve served together since Google. Laurene Powell Jobs is another investor, and Al Gore just invested too. A $70 million dollar fundraising round in February valued this ambitious little company at $1 billion.
“The reason we’re in this is the global climate emergency,” says Francis, as light rakes across the rooftop and illuminates his young face (he’s 29). But he’s more pragmatist than dreamy idealist. “It’s a math problem, right? We emit 50 billion tons a year today, as a planet. We need to get that down by 7% per year in order to cut emissions in half by 2030, and to zero by 2050.” The Paris Climate Accords set a target of cutting global emissions in half by 2030–if we don’t, global temperatures will rise more than 1.5 degrees Celsius above the average level on Earth prior to the industrial revolution. Temperatures higher than that will cause catastrophic climatic and weather events. So far, the world is way behind on meeting those goals.
“If companies know where their carbon comes from, and know the carbon cost of their choices, we can help people to make better decisions,” Francis says, explaining how Watershed helps its growing list of customers. (They include Airbnb, Everlane, Imperfect Foods, MongoDB, Stripe, Twitter, Warby Parker, and Zendesk, among many others.) Watershed helps those customers, it says, “measure emissions, deploy clean power, fund cutting-edge carbon removal, collaborate with their vendors, and report on climate progress with the same rigor as their financials.”
“The other big idea is market aggregation,” Francis continues, talking quickly and with determination. “So much of how decarbonization is going to have to happen is corporate purchasers buying the right stuff–buying carbon removal, buying clean power, particularly in advance. But also it’s Sweetgreen buying low carbon cheese for their salads and companies buying low carbon cement for their new corporate headquarters, or electronics companies buying aluminum smelted using hydro power.” Watershed wants to “aggregate all this purchasing demand from companies and point those dollars towards the technologies that need support.”
Watershed plans to ultimately reach its goal of cutting 1% of the world’s CO2 by hosting companies on its software platform that represent, altogether, emissions of 5 gigatons annually. Then it believes it can help them cut those emissions by 10% each year, with its data- and research-centric approach. So far it’s not even 1% there, but in a year it has made surprising progress.
Long gone are the days when companies could just vaguely promise to buy carbon offsets by planting trees and put out an impressive PDF claiming they were headed towards carbon neutrality. It’s not that simple, but Watershed is undaunted by complexity. “We have a very broad effort to collect the world’s carbon data and put it in one place so companies can kind of plug into it,” Francis explains. For example, it dives deep gathering data on various companies in the supply chain. As additional customers join that use the same suppliers, the task of estimating the carbon impacts gets easier.
TaskUs, based near San Antonio, helps companies manage digital customer experience and assists with trust and safety issues, and has employees in centers in multiple countries. In early 2021 one of its big customers started making strong commitments about its own CO2 reduction efforts, and was inquiring about TaskUs’s emissions impact. Jon Wouters, the vice president for global facilities, growth, and sustainability, started researching how the company could better understand and manage its carbon footprint. In his research he learned that there was substantial overlap between Watershed’s customers and TaskUs’s. That helped confirm a decision to engage the startup, and they finalized a deal last September.
“We knew we had to gather a lot of data but didn’t know what, or how to do it,” says Wouters. “But on Watershed’s platform they make it easy for us to know which groups internally we needed to gather data from. The hardest part is things like travel and financials. But they can scrub our data and apply common emissions factors to specific activities.” Now, he says, TaskUs is getting educated on how to think about the differences between, for example, carbon offsets and carbon removal. (Helping fund and develop actual removal is a top Watershed priority.) “A lot of things we’re doing have an impact,” says Wouters. “But if I say I want to be net zero by 2030 I can see, using Watershed’s tools, how much that might cost, based on our actual data.”
The Al Gore investment was meaningful to Francis because it was Gore’s movie An Inconvenient Truth that caused him to develop his passion for climate action, way back when he was 14. He became one of the first 200 people trained to use the data to educate others. Now, with his co-founders and passionate workforce, he’s becoming part of the solution. “We started Watershed because we think companies are the way you get there,” he says—to meaningful emissions reduction. “Businesses make all the choices. If we can change those choices we can make a big dent in the problem.”