Michael Stausholm, founder of Sprout World, reveals the story behind the world’s first sustainable pencil
Michael Stausholm took that simplest of products – the pencil – and made it a symbol of sustainability championed by the likes of Michelle Obama and Richard Branson. Ahead of his session at CA Summit 2022, he tells Behiye Hassan how Sprout World became one of Europe’s most innovative companies
How to build sustainability into your company culture in a way that doesn’t feel overbearing or make colleagues switch off? This is the dilemma facing many business leaders tasked with bringing their organisations up to date for the age of climate crisis. One can produce any number of equality, sustainability and governance reports, but there’s always the fear that many team members won’t read beyond the executive summary, if that.
In 2013, one such business leader was Danish entrepreneur Michael Stausholm, then with the consultancy MSI. He needed to help businesses think about sustainability in a meaningful way. “Back then, all the companies that I was dealing with were trying to talk about it but were struggling to put it into words. It was still all a bit fluffy,” he recalls.
Then he stumbled across a product on Kickstarter that had been created by a group of students at Massachusetts Institute of Technology (MIT). “It was a sprout pencil,” says Stausholm. “I just thought it was a fantastic way of explaining and illustrating what sustainability is all about. And I liked the idea of something as old school as a pencil that you could plant after use. It is a pencil with a capsule at the end where you would normally have the eraser, and inside that capsule you have seeds.
“You use a pencil, which is made from biodegradable graphite, to write with. But instead of throwing it away, you simply plant it in a pot. The first time you water it, the capsule will dissolve. From there you will just have to take care of it like any normal plant – water it, expose it to light and so on – and eventually those seeds will sprout up.
“We see it as so much more than a product. We call it a ‘green messenger’ because most of our trade has been B2B. Many of our customers get messages or logos engraved and printed on the pencils or packaging. That way they can build a story around what they are doing on sustainability.
“It’s also about inspiring other people to look at products and think, ‘Okay, if you can take a pencil, and you can plant it instead of throwing it out, what other products can you reuse in different ways?’ Because the biggest challenge we face today is not how we produce our products – it’s how we dispose of them.”
To date, around 50 million sprout pencils – each with a seed that can grow into a herb, a flower or a vegetable – have been sold worldwide in less than a decade.
“Parents are purchasing pencils online, too, to give to their kids – first for writing and colouring of course, but also to teach them about the importance of sustainability,” says Stausholm. “Sprout pencils are a very popular gift because it also says a lot about you, that you are concerned about sustainability, right?”
After seeing the sprout pencil on Kickstarter, Stausholm did a deal with the MIT students to sell and distribute the product in Europe. And so Sprout World was launched. Six months into his new venture, however, he was beginning to wonder if he’d made a costly mistake.
“I was extremely busy and extremely stressed,” he says. “I wasn’t making much money – having come from a job where I was making a lot of money! I asked a very good friend what he thought I should do. And he said ‘I think you should get a real job. You should get a job where you make money again, and you can provide for your family…’ and so on.
“I had to think about that for a few days. But then I thought, I believe in this, I want to do this, and I can do this. A year or two later that friend invested a large sum of money in Sprout World – more than he would have had to pay when we had that talk. We’ve had a lot of fun talking about that!
“But ultimately it comes down to believing in yourself and knowing that you’re doing the right thing.”
The turning point for Stausholm and his plantable pencil came when it began to enjoy a run of positive media coverage in Europe. And, as the orders started to roll in, he did another deal with the students to buy the patent.
“I self-funded the company,” he says. “But now I had a patented product that suddenly got a lot of exposure. And customers could only buy it from me. That’s the beauty of working in a ‘blue ocean’ as opposed to a ‘red ocean’ with lots of competition.”
Such was the demand for the sprout pencil that he didn’t have to deal with the growing pains that other start-ups face when trying to scale up. “What I did was request pre-payments from customers to help finance Sprout World,” he says. “When you start a business, especially a product-oriented business, one of the biggest challenges you face is to constantly finance the production and the purchase. Because customers will often require 30, 60 or even 90 days’ credit. But I managed to build a business based on pre-payments, which creates positive cashflow.”
In 2018, Michelle Obama used the product to help promote the publication of her best-selling book Becoming – the sort of marketing that money can’t buy. Sir Richard Branson began giving them out as gifts to his guests on Necker Island. Two years ago, Sprout World placed second in Fast Company’s Most Innovative Companies in Europe list. Stausholm is now branching out into other areas, including cosmetics, having also produced the world’s first plantable eyeliners and browliners.
Inevitably, though, as any patent holder will know, when a product is successful it spawns copycats – and they can often be found on ecommerce giants such as Amazon or Alibaba. So Sprout World is using AI software that scans listings worldwide for any products that match their own. When one is located, a “cease and desist” notice is despatched – something Stausholm says has been hugely effective. This not only makes the business money by eliminating pirate competitors, but also saves a small fortune in man hours.
Last year he told BusinessCloud website: “It has saved us at least tens of thousands of euros each month, and much more when you include missing orders due to companies purchasing fake pencils without knowing it.”
But to make Sprout World a truly sustainable business, Stausholm is combining nature with technology. “When we produce this sprout pencil, we cut down one average-sized tree. And of course, we replant immediately because it’s sustainably harvested. But from that one tree, we can make 175,000 sprout pencils. And that alone makes our business, by definition, carbon neutral, possibly even carbon positive.
“Last year, we purchased land in Poland to plant 12,000 trees. And that’s just the beginning. Our value chain is in Poland – that is where our wood comes from to make our pencils. So it made total sense to us to purchase land and plant our own trees there, not necessarily to make more pencils, but simply to give back to the land.”
Plenty of businesses will claim to be fully sustainable, but a detailed examination of the supply chain will often tell a different story. Sprout World, on the other hand, opted to put all its information on blockchain, as a means of authenticating and verifying every part of the business.
“On blockchain you can document your whole value chain,” he says. “In our case, you will be able to see where the seeds come from, and you will be able to see where the wood for your pencil comes from.”
Stausholm sees blockchain as an important step towards eliminating greenwashing. “Just imagine that you are down in the supermarket, you want to purchase something, but you’re not sure whether it’s made responsibly. If you can just take a photo of the QR code, and you can right away see where that product is produced, that makes for a very, very transparent business,” he says.
The company employs 35 staff across its HQ in Copenhagen and another office in Boston, with a workforce that is 80% female. “Sustainability is very much about feelings. It’s about how you feel about yourself when you purchase and use sustainable products, right? And maybe that just appeals more to female employees than to young guys who want to work in tech and code and so on,” he says.
Stausholm is passionate about his cause, his product and his company – which is now a certified B Corp – and is keen to share his experience of leading a sustainable business. Accordingly, he is one of the guest speakers at next month’s CA Summit 2022. “I’m very much looking forward to talking about that journey,” he says. “And hopefully I can inspire any CAs to think differently about their products and services, about how they can do things sustainably but also in a way that still makes good business sense.”