#8 :: Every Business Is An Impact Business, with Andrew Vrbas - Pacha Soap Co.
While there is no perfection, leading consciously goes a long way towards making decisions that are beneficial to people, planet and profit. As Andrew Vrbas, CEO and co-founder of Pacha Soap Company shares, it’s the consideration of different perspectives that has helped him to connect dots and innovate. Their hygiene initiatives created positive impact right here in the United States during the pandemic as Pacha worked on both production and policy to ensure people had enough affordable hand sanitizer.
Pacha Soap Company: https://pachasoap.com/
Recorded on 11.20.20
TRANSCRIPT
[Music & Intro]
Laurie Pillow: You guys, welcome back to the 100 CEO Project podcast. Today we're talking with Andrew Vrbas. He's the co-founder and CEO of Pacha Soap Company. They create fun, all-natural, super colorful, scented bar soaps and hygiene products that are sold online and in stores nationwide. There's been a new development in 2020. And that includes hand sanitizer, but we're going to hold off on that story, because that's a really good one. For right now, just to give you a little bit of background on what motivates them, Pacha believes in what's called spreading goodness around the world. Since 2013, the company's donated more than 5 million bars of soap to Africa. Again, they support clean water initiatives and hygiene education. And a really cool thing that you're going to find out they do both domestically and globally, is that's investing in and supporting communities and people through skill development and entrepreneurial opportunities. I'm going to stop there, because the list could go on. So Andrew, thanks a bazillion for taking time out to talk to us today.
Andrew Vrbas: Thanks for having me, guys. Great to be on this podcast.
LP: So I’m going to start with getting a little bit of background from you. And then we're going to dive right into the insights that you'll share with us. Yeah?
AV: Great. Yeah. Well, a little bit of background on me. I'm from Kansas, originally. And I would say that I'm an accidental entrepreneur in that I've always been thinking of doing things differently, or trying things out, making things, whether it was just being a barista in my family making coffee drinks, or when I was six years old, I loved to paint rocks and give those to people. So I was always just doing things for fun. I had this vision for Pacha when I was 19, turning 20. And it was when I was a volunteer in Peru, I went to a liberal arts college here in Nebraska called Hastings College. And it was there that let me design my own program around getting Spanish credit. So I was a volunteer in Peru and was living and working with people there - really fell in love with the culture and the people and had a vision for what I referred to then as a social business to create small scale soap shops, in developing countries, to use local ingredients, make soap for students for hand washing and schools. And I needed a way to fund that. And so thus Pacha Soap was born. And I really loved the way that people were connected to the earth. And it got me into what natural products are like etc. So I kind of fell into it that way where I wasn't from a background necessarily business, but through my travels and learnings. And just honestly, through running into walls, I kind of learned about business and learned about entrepreneurship. And I had the support of my now wife who was my best friend at the time. And she was really the only one that would listen to me in depth about this idea or this dream. So, but it was really an organic thing that grew into something bigger than I intended.
3:46
LP: So that leads me to another question. And this comes from a chat that we had with you a few weeks ago. And when you were talking about business, you kind of blew our minds that day. You said that there's no such thing as a social or impact business, but rather that business by its nature of existing should serve people or the planet in some way. Is that fair? And if so, could you elaborate on?
AV: Yeah, great. It's, um, as I said, when I when I first had this idea for Pacha, a lot of people thought Why didn't you form a nonprofit? Why didn't you form a foundation to do this and the short of it is, I didn't want to raise money from people. Like I was a Boy Scout and we sold Boy Scout popcorn every year, but instead of selling Boy Scout popcorn every year, I just had a job working with my dad who was a bricklayer so I could pay my way to summer camp. I didn't like selling overpriced popcorn, or kind of like asking for money from people, I like to work and pay my own way. And so it was a little bit of that mentality where well, I want to have a business. And I figured, well, I need to learn how to make soap and learn about business in order to make this vision or dream come to reality. But, you know, in those early years, I read a lot about social business, and this idea of an impact business and what it means to have a business that was doing more than just making a profit. Um, and so even then, when I first started this, like in 2013, but even earlier, I had this idea in 2010. So in those years, I read a lot about this designation of a social business. And, of course, this was when a lot of people were considering it even earlier, and now in my, I guess, more mature view of business and more of a fuller scope. I don't view someone who has a welding shop in Nebraska, any less of a social business than Pacha soap company. Because social business means that you touch people, it's social, it involves people. Show me a business that doesn't involve people. And you know that right now we have a designation that social business is meaning, oh, it's pro people. And I think that is good. I don't think that's bad. But what I guess I would love to see is that people were to awaken from within and recognize that their business does touch people, and that their business is an impact business. Because every business has an impact, it's whether it's positive or negative, but the first, the first is just being aware of it. And being. And so we if we make a separate classification for what is a social business or an impact business, I think, to use the words of a writer that I really like Richard Rohr, we, other. We might divide, we might create a division that's unnecessary, rather, it’s like the approach of saying, you know, basically, you are an impact business, you are a social business. If you're in, if you're in business, if you own a business, doesn't really matter what it looks like, you're already in the impact business, you're already in the social business. And so understanding that then allows us to, to understand it, embrace that, that truth. And then develop a strategy to say, Okay, well, how do I want to be an impact business? Or how do I want to be a social business? First of all, what is that impact? And, and so I think, versus being more exclusionary, of putting it off on, you know, the 5% of businesses that deem themselves social, what about the other 95% of businesses that are out there, you can small businesses that, like use the welding shop example. They're, they're making making people's lives better every day, right? And they can have a positive impact on the planet, and on people. And it doesn't necessarily need to be as, as big or as grand, it’s something that is already there. For all of us. So, yeah, that's, um, that's come along a lot of years for me to get there. And, you know, business is there to serve people. So there's this idea, it's taken a while for me to figure out the why behind Pacha, why I formed the company. But as I reflected on it, it was the simple fact that when the inspiration hit, I was inspired by this idea that business can free people. That capitalism, business, trade, is a tool or a system to free people. And I think that was novel in my thinking, because I always viewed it as something there that we serve. But in reality, it is, if you take care of it, it's something that provides for you and nature gives us this example, over time of using an example of a tree, you know, if you take care of a tree, make sure it has everything it needs. And it'll provide fruit abundantly more than you can ever use or want. So I think that that simple understanding that it's something to take care of, but that it's there to serve people is a good thing.
9:15
Andrea Spirov: So when you started Pacha Soap Company, it feels like purpose was really in your DNA, and you really focus on your supply chain. And so I'm interested, because one of the first places that I advise people to go and look is in their supply chain for places that they can make a positive impact. So what does that look like in your day to day when you're, when you're working on your supply chain?
AV: Yeah, well, it's a big, it's a big area that I don't think a lot of people touch because it is kind of complex or hard to do. And typically, all operations of companies are engineered towards low cost. And, you know, not to say that that's bad or wrong. But if you look at, if you look at your supply chain, or your cost of goods, and you can figure out where you have the highest impact. It might be volume, it might be the dollars that you spend on something. But our journey has been one of you know, our travels with soap donations, soap shops, clean water programs have led us to parts of South America, have led us to parts of Africa. And in those communities we've seen and then through networking, we've seen, wow, there's an abundance of resources here that we could use in our own products. And we've all, you know, we've started our journey by just finding good certifications of products. Oh, this has Rainforest Alliance, this must be good. This has Fairtrade certification, this must be good. And so that's where we started in our supply chain of just trusting certifications. But as we've gotten deeper, we've started to see the need for Oh, here's like, let's take this example. Here is this company in Ghana, that produces smallholder palm that we could use in our in our soap, but they're undercapitalized. They don't have their required investment to to get certifications or to operation scale. And so it's become that sort of relationship in our in our supply chain, where we could say, hey, if we go direct to some of these farmers, and some of these partners, there is a cost savings and logistics by going direct. But there's also a premium that’s paid because you're going straight to the farm. And so you can pay more to that farmer doesn't have to go through as many hands to get to you.
There's also something I guess I’m really passionate and excited about which is hidden, can we bring transparency to where something comes from, and who harvested it. And the people behind it and the culture behind it. Plenty of consumers may not want to know every single detail, but allowing people transparency in the supply chains is, it's an, it's been a fascination of ours, because we've been so fascinated by traveling and seeing where ingredients come from. So it's been somewhat operationally and financially a good decision for us to explore our supply chain deeper. But in another sense, from a brand perspective, we've gotten so much value traveling and seeing where something comes from or, you know most people don't know these ingredients and, and the process and the types of farms they come from, or the fact that somebody has become proficient at climbing palm trees in Liberia, which I tried, it's way harder than it looks. I didn't even make it like six inches. But like, it's cool to see those types of things. And then I think you start to appreciate it better. Because for me a bar of soap is not just a bar of soap, because I know all the things behind and I wonder, I wonder how much more we'd start to value products if we knew what went in it. And it really goes across all industries. And you know, for our focus specifically, it's agricultural, because most of our ingredients are agricultural. And so just understanding how the systems work and what goes into it - it's been huge, but it's complex, too, because you can go to a one stop shop to get all your all your ingredients. So it's a continual progression, because you can't do everything right away. But for us, it's, it's been it's been a fun journey. It's just more Yeah, it is just that that it is a journey.
13:39
AS: Has that been challenging to scale at all?
AV: Yeah, I mean, you certainly have to pick which things you focus on. Because for certain things, supply chains are just supply chains. Like baking soda, there's not really much you can do to baking soda. I mean, maybe there is down the road, but there isn't as big of a variety. Whereas if you look at something like palm oil, it has a really bad reputation. for good reason. It's contributed to a lot of deforestation, especially in Indonesia, Malaysia, parts of Central America. But if you look at that supply chain, it also produces a lot of good quality oil in a very small amount of land. So it still as a crop makes a lot of sense. And there are people doing it right. And they, those people that are doing it right, the two farms that we’re sourcing from Liberia and Ghana, they are able to scale to our need. So I think, in that sense for that specific ingredient, it started off being something that I guess some people could say is complex. But if you demystify it, you can get really good quality, high impact supply chains, if you dig in, but it is complicated, especially the United States where most of the things that we source for our product don't come from the North American market and all. I had to go about it the complicated way, I guess, in some ways, because you know, I went to leaders in natural personal care brands and asked if we could use their supply chain. We didn’t want to, you know, reinvent the wheel. But most people keep their supply chains proprietary, and they don't want to share, which has puzzled me. We're actually in the process of building a business right now to unlock our supply chain to other vendors. We'd love to see other soap makers use our supply chain, because we've done the hard work. I mean, why not? Why not unlock really good quality impact supply chains? Yeah.
15:42
LP: So guys, I'm gonna pivot just a little bit. What is really cool about Pacha Soap Company, Andrew, is that you guys are not just for the goodness outside of the US, but also to the communities here at home. And you've done a big push to do so during 2020 by launching what you guys call the We Got This campaign. And if I think I read where you said, it's bringing a little ray of hope throughout this crisis here in the US. It specifically involves your move to start producing hand sanitizer, primarily in the beginning to serve the frontline workers. And it also involves a little bit of push or outspokenness, on your part, where you made an appeal to the governor of Nebraska, to help ease restrictions around the use of ethanol. So can you tell us a little bit about how that all went down?
AV: Yeah it was a really fun story. So our local hospital here in Hastings reached out to ask if we’d produce hand sanitizer for them. And we said sure, we'll figure it out. And so they had a little bit of alcohol that they were able to source but indicated that there is a shortage of alcohol for hand sanitizer production This is early on in COVID. When, you know, nobody knew what was gonna happen, but they didn't know they're going to need a lot of this disinfectant. So so we produced a little bit for them. And then that begged the question for me of like, what do you mean we’ve got a shortage of alcohol? There are many ethanol plants that produce high grade alcohol from corn. And so, it was an interesting, you know, I think it was on a Friday and they reached out by Saturday afternoon, you know, the governor of Nebraska is so so kind and so motivated to just move this along. And a group of people in Nebraska had already been thinking about it. So we were just one of those one of those voices and one of those people to stumble along and try to figure out okay, well how do we unlock this, this alcohol from from ethanol to go into hand sanitizer. And you know, it's been it's been really cool. Not a lot of people may recognize but it was because of that legislation from the FDA temporary guidance that there was able to be an abundance of alcohol, of hand sanitizer in the market. That was at a high quality so they released temporary guidelines and the governor of Nebraska and state of Nebraska ethanol board - they all rallied to work with the FDA to make this happen. And it was just neat. Even the AP reporter that wrote an article in New York Times reached out and got our perspective. And it was cool to see how quickly people could rally to make this happen. It amounted in a large supply being available and most of it. All of it from the United States was was really good quality. And even some plants like the one that we have here in Hastings, made alcohol as a result of this at the highest quality, at USP grade. So they were able to open up into into a whole new market of high grade alcohol that can be used for this application. So it was neat to see how you know, something like a supply chain shortage of alcohol. It showed first of all shows how dependent we were on on supply chains that were existing. But it was also neat to see how quickly American ingenuity can kick in to get into the supply chain like this and produce an amount that was that made it affordable for everyone to be able to buy hand sanitizer. And because this was at the time when people were selling it on Amazon for like hundreds of dollars, and there's tons of price gouging going on. And so it was neat to unlock that for everyone. And we have like you said, we made sanitizer early on, in a way like something like 20,000 bottles to frontline workers and to people here in Hastings, and we use it as a fundraiser for for the local community. And then we ended up getting into it in a commercial standpoint in selling to places all over the United States, like Costco and Whole Foods market. And so yeah, it was we don't get to do that supply chain quickness, I guess in the United States, but it was neat to see it.
AS: You have a real theme of generosity that's running through that I'm noticing in all the things that you're sharing. And so I'm interested in what kind of advice do you have for companies that want to be more socially impactful, or even established ones who feel like it's, it's harder for the larger ones to pivot because they're, they've got things set up, you know, maybe they haven't left themselves enough enough margin to explore that. What advice do you have for companies who want to use their business for good?
20:48
AV: Yeah. Well we’ve taken...it’s probably my family background, the family that I came from that orients me more towards a philanthropic approach. But as I have matured, I don’t even know if that’s the right way to do it. Doing well so you can do good. I think what I’d encourage most people to look at is just understand your supply chain or your business really well. So just say you were sourcing something that was truly causing deforestation of the Amazon. Like it was just no-joke happening, right? If you know it, if you're conscious, then you can make a decision. But I think the biggest thing is just not knowing. And it’s not even really to pass judgment. Because there are some things that are just really damaging. Like if you cut down the rainforest, you don’t get that back. Even just reducing plastic. Our company is looking to reduce the amount of plastic packaging that we have out there. If you’re conscious of it then you can make decisions like shifting more towards aluminum that’s recyclable. But I would say the advice I have is just to be conscious.
The other advice I have is that you’re never going to be perfect at anything. There’s always continual improvement. Even the companies that do things really well, they typically have areas they can improve. So no one has arrived yet. You’re always in that process and we are too. You never want to be the company that says, we have it figured out. We are excited by some things and we want to continue to figure it out but you have to strike a balance between people, profit and the planet. You have to find that synergy. I believe that you can do something that’s good all the way around - it’s just way more difficult. It’s so much easier to pick one or the other. And in business, if you ignore profit, if you ignore the ability to make money, your business just doesn’t serve anyone. So you have to consider that. The real trick is just considering that while you consider people and planet. So I don’t know if I have advice about how we figured it out because we’re constantly in that battle of figuring it out. But consciousness is the first step, I’d say.
23:34
LP: Is there something in particular, Andrew, that you want to share that’s really top of mind for you? If so, have at it. Let us know and then we always have a finishing question.
AV: I’m a young entrepreneur, a young CEO. The thing that I would always encourage us to do as people that I’ve learned in my short 30 years is to get different perspectives and consider them. Whether they are people living or not, whether it’s through writing...but considering perspectives that are a little bit different than ours. Other ways of being. I think it’s really valuable. Really it’s just diversity of thought. It’s important. Because if we can have diversity of thought yet think independently, I think that’s where the magic is. As I started off in this podcast by saying not ‘othering’ people...making profit’s not bad. Taking care of people is not bad. Taking care of the environment is not bad. And so you tend to find people in silos. And I think to the degree that we can work together and consider different perspectives, and not get too entrenched. And also to not always think so linearly. Sometimes it’s good to see things as circular. And to consider things in a more holistic stance. That’s what I try to do a lot. And of course sometimes the answer is more immediate, like Oh no, we should stop paying for premium cable at our company because that’s not good for profit. Well, people like watching TV. Nah, they’ll do without. There’s some of those things that are really easy. I think just wrestling with the challenge is really helpful. That we can be contemplative. And when we’re contemplative we’re at least making decisions consciously and to just follow in the path of like, here is what success looks like. It looks like making millions of dollars and then retiring on a beach. Well it could mean that. I’m not saying it’s not. But what if it meant something a little different? It’s just for us to really consider and engage in conversations, especially when things are a little more polarized. That’s what I recommend that we all try to do.
26:08
LP: One quick question right there. You’ve accomplished a ton already. And especially for being just 30 years old. What’s the best advice you’ve ever received?
AV: A mentor of mine just said two days ago that no one at the end of their life ever wishes they worked more. And I’m a father and a husband. I have a two and a half year old and another one expected in May and I think the best advice he gave me is that that is the most precious and to make sure that it’s not sacrificed because we can accomplish a lot but sometimes that ambition can get in the way of what really matters. So I would say if we do really well for the world and then your employees and your profit and all these things, but your own home or your own friendships or relationships are falling apart then there’s something that’s not quite working. And it’s hard for someone like me who’s really driven to always remember it but it’s really good advice and something that grounds me.
27:31
AS: So on that family note do you have any advice for working with your spouse? You all seem to be doing a very good job of it.
AV: So we started working together and about four years into the business decided that it was better for our relationship if one of us was in the business and the other one of us was on the outside to really give life support when it was needed. So that’s how we really work well together now, is, I’m in the business every day, and I’m able to go to her with things that I’m struggling with, wrestling with, and really get a different perspective. That works really well for us. The advice I’d give to entrepreneurs is, if there’s something you’re really really good at, but most of it that you’re not...and your strength really comes from connecting dots - it’s better to not be a player on the chess board, it’s better to manage the chess board. And finding people who are really good in certain positions is really helpful for you to take a step back and to let people do their jobs but still connect those dots to help make moves when you need to. The only reason why I’m able to think like I am is because I have really good people. People who are far smarter than me in their different capacities.
LP: Andrew Vrbas of Pacha Soap Company, thanks so much for taking time to talk with us today. Those who are listening, I want you to know that we barely scratched the surface. There’s a bunch more to find out. Both insights into entrepreneurship, how to do good through business, as well as the specific products that Pacha Soap Company offers. So Andrew, how can they find you?
AV: You can check out our website www.pachasoap.com, and of course we’re active on all the social media channels and our team does an amazing job connecting with people. That’s really the best place to find us.
LP: Thank you.
AV: Thanks guys.
LP: Hey, guys, we hope you've enjoyed today's episode. And if you did, please share it with your friends and colleagues who also have to navigate this leadership stuff. As you can see, this project is about to be a mini masterclass in every episode. Best part. It's free. So if you like it, please do us a favor and take a screenshot, share it on social with the hashtag #100CEO. That way we can say thanks and share it in our stories. And finally, if you've got some insights you'd like to share and you're a CEO, we'd love to hear from you. You can find us at 100CEOProject.com, or on LinkedIn at the 100 CEO Project. Until next time, keep leading by example.
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Hosted by: Laurie Pillow, Andrea Spirov
Writing and research: Laurie Pillow, Andrea Spirov
Edited by: Laurie Pillow
Produced by: Laurie Pillow, Andrea Spirov
