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How Startups Can Lead the Charge Toward a Regenerative Economy with Julia Zhou

• Stun and Awe • Episode 40

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In this episode, I spoke with Julia Zhou, co-founder of Tidal Impact, and President of the Sigma Squared Society. Julia shared her journey from growing up in an entrepreneurial family to co-founding Tidal Impact with a focus on shifting businesses from merely reducing harm to creating a meaningful impact.

We explored how startups can play a pivotal role in building a regenerative economy and why they are uniquely positioned to adopt sustainable practices faster than larger corporations. Julia also explained the importance of redefining success beyond financial metrics, stressing the need to focus on the positive societal and environmental outcomes a company can achieve.

We discussed the work of the Sigma Square Society, a network fostering connections among young entrepreneurs, and how building emotional intelligence and personal awareness are crucial for driving systems change.

Julia emphasized the need for businesses to develop a theory of change to measure long-term impact and shared her thoughts on the evolving world of impact investing, where diverse funding models are necessary for different types of impact-driven companies.

We covered:

  • Tidal Impact’s mission: Helping businesses measure and manage ESG and create positive impact
  • Startups' role: How they can lead the charge in building a regenerative economy
  • Redefining success: Moving beyond financial metrics to focus on impact
  • The Sigma Square Society: Supporting young entrepreneurs and fostering systemic change
  • Theory of change: A framework for measuring long-term goals and impact
  • Impact investing: The need for diverse funding models to support various businesses
  • Personal stories: Julia’s journey and insights on aligning business goals with personal values
  • Lessons learned: Challenges in systems change, team building, and securing funding


Where to find Julia:
- LinkedIn: https://www.linkedin.com/in/julia-zhou-3a94a5b3/
- Website: Tidal Impact,  Sigma Squared Society

Where to find Michel:
- Newsletter: Stun and Awe
- LinkedIn: https://www.linkedin.com/in/micheljgagnon/
- Twitter: https://twitter.com/michelgagnon

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[00:00:00] Julia Zhou: We all can make a change, whether it is on an individual organizational or, or on a country level. And actually it does require all of that. and I would also say that no one can do it alone. So when we talk about creating systems change, we have to look at. All of the different actors and stakeholders that are involved and policy makers are definitely a really, really big part of that. but it's not just them. So I actually believe that it requires action from all of those different levels at the same time so that we can get to that level three.

[00:00:41] Michel: Hi everyone and welcome to Growth Leap. I'm your host, Michel Gagnon. We talked to pretty awesome business builders who are designing disruptive and meaningful companies. 




Introduction to Julia Zhou and Tidal Impact
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Hi, everyone. Today I have the opportunity to talk to Julia Zhou, Co-founder at Tidal Impact, an advisory specializing in ESG. Impact measurement and management. Julia is an impact entrepreneur, investor, and ecosystem builder who aims at creating a more regenerative and conscious economy. She is the new. New president of the Sigma square society, a global nonprofit network of a thousand plus of the world's most ambitious founders in their early twenties.. Julia is also responsible leader of the BMW foundation, advisor to plastic free.com and various other impact driven organizations. Today, we'll delve into practical ways to turn businesses into actors of change.

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[00:01:43] Michel Gagnon: Julia. Thank you. So much for joining us. How are you? 

[00:01:46] Julia Zhou: Thank you so much. I'm really happy to be here. And, I'm, feeling good. Thank 

you. 

[00:01:50] Michel Gagnon: Let's start at the beginning. 


Julia's Journey to Impact and Sustainability
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[00:01:51] Michel Gagnon: And I'd like you to share a little bit, the story behind what led you to impact and sustainability, and also would inspire you to, start your own business title impact.

[00:02:01] Julia Zhou: Yeah, absolutely. So I've always been an entrepreneur, actually, since I graduated from university, even during university, I got myself involved in building companies. And so for me, I think that dates back to actually my family and my father, who was an entrepreneur himself, who always said, if If you want to do something, just go for it.

You don't have to follow the traditional system. and so I think that's why I just went with it and when it comes to impact and sustainability, I think. Even at the beginning, when I built my first venture in the future of workspace, I didn't think of, I want to build an impact business, but it was always the case of, I want to make a difference. I want to do something that actually brings value to people. and so he did mention that I'm now the president of the Sigma squared society. So about seven years ago, when I got involved in help to build back then the Cairo society in Europe, it was always. The mission to bring together the most ambitious young entrepreneurs who are building solutions to tackle the world's biggest problems. And inevitably a lot of these were in areas like in climate and healthcare and education. And so I think from the early, from the beginning, when I got involved in entrepreneurship, I was constantly engaging and interacting with people who were building. Technology and solution to actually tackle real problems and not just sell you the next, whatever it is, skincare product or, thing on the market. and so it never really was a question. It was always a given. Okay. That's what I'm going to do. And then actually also through all of those community building efforts, like the Sigma squared society and some other things, I, Then got to, got to meet like minded people who cared about similar things.


Founding Tidal Impact
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[00:03:59] Julia Zhou: And so title impact was a, was a consequence of that. I actually met my co founders through the community indirectly. And what really excited me at the beginning about building this company was. First of all, we all talk about creating impact in the world, but what do we mean by that? Right. it's kind of become a buzzword.

And so how can we help organizations actually understand what their impact really means? And then secondly, how do we really support Companies financially in a way that is conducive to their creation of impact because we always say, right, we're going to invest in impact driven companies. But do we really prioritize that or do we just say it so that it sounds good, but actually. We just, we still want to make money. Right. And obviously there's nothing wrong with that, but it was kind of, the question that was challenging our traditional existing system that led me to be excited about building this company and helping to understand all of that in a better way.

[00:05:06] Michel Gagnon: le


Understanding Impact and Sustainability
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[00:05:06] Michel Gagnon: t's talk a little bit about title impact. I've. You know, given a quick intro, but it'd be interesting if you could share a bit, maybe the type of projects that you work on the type of customers, clients you you have. And also maybe what's your key angle or methodology?

[00:05:21] Julia Zhou: Sure. So in terms of clients, we really work with companies from small startups up until large corporations and financial institutions. And as you also mentioned in the introduction, we work on both. Is she an impact? I'm making a distinction here because I'd say that sustainability is a bit more obviously widespread.

Also, given all the regulation and compliance that we're facing and it's a good thing, but I'd say impact. If I were to describe the difference, ESG is about, minimizing harm. Impact is about creating positive difference in the world. so on top of that, really. And, what we've seen is that a lot of the companies that are interested in creating more impact are usually the startups, maybe some investors, foundations, these kinds of organizations.

So we would help them build frameworks that they can use to, you know, Understand what their impact is to measure their impact to quantify and then also to generate a report that communicates to their stakeholders. What that impact actually means. And then on the flip side, when it comes to sustainability, we would also help organizations navigate that landscape and to then similarly communicate their ESG efforts. to the world. and then in the past, we have also invested in a small, in a handful of startups because we saw so many solutions out there that we thought were so exciting and it was actually quite a, an interesting journey to also figure out, okay, what's the best way to, to support these companies and how do we actually see impact, right.

Versus, yeah, what society sees us. Is

impactful. 

[00:07:07] Michel Gagnon: Let's talk. Let's try to drill down a little bit. we. We talked about this, you and I before pressing the record button. 


The Role of Startups in a Regenerative Economy
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[00:07:17] Michel Gagnon: in practical terms, you know, when we talk about impact, like, and, and you talked about the, like the network that you have, like many people, I'm sure you've seen tons of, you know, impact startups, what is a good impact startup, like what role can a company play really in building that's a more regenerative economy and conscious economy?

[00:07:41] Julia Zhou: Yeah, I really like that question. And maybe, I can talk a little bit more about first the regenerative economy or what I mean by that. And then what the role of actors like startups would be. And so, I have found, especially in the last, I'd say, couple years that, what I'm trying to do more of is to actually move from our current, I shall say, extractive system to a system that is circular and that actually lives in harmony with nature. Because for me, we are nature, and I believe that a false Perspective that we currently hold is that we are separate from nature. Therefore we take from nature, right? but if we see us as part of nature, then we start to live in a more regenerative system. and I also believe that our current system is.as if we live in this zero, zero sum game, right? The winner takes it all. someone take takes something from someone or we have resources here and therefore someone else has less. And that is just, not the system that I believe is going to get us to the other side of solving our challenges. And so that really got me thinking about, okay, what can we do to move from. This current, let's say limited extractive system to a more regenerative system. There are a lot of great thought leaders and teachers who talk about this. One of my favorite is actually John Fullerton. He came up with the eight principles of a regenerative economy and you can look those up. And I think those are some amazing principles that every company should, should look at and should, operate from. And so, yeah, when it comes to. Startups, I think startups have a very, play a very important role when it comes to the disruption. So the innovation, the disruption, the technology that is going to disrupt the existing system to get us to the next system. There's actually a beautiful framework called the three horizon framework, which is, where the first horizon is the And then there's the current system. Let's call it the, what we just said, the limited extractive system. And then there's the horizon three, which is, let's call it the regenerative economy where we live in harmony with everything around us. And then there's the second horizon, which is the. And the second horizon is based on what's happening is going to bend towards one or the other. and so I believe startups and the innovation sit in the second horizon because they help us to navigate from horizon one to horizon three, hopefully. and we have. I believe, honestly, that we have all the brains and all the technology that it takes for us to get there, but there's more at stake, right?

So we need more than just the startups. The startups also need an environment where they can flourish and where they can actually scale their innovation so that they can be adopted by the system. Yeah, at large.


Challenges and Opportunities in Systems Change
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[00:10:55] Michel: One of the big questions that I've, thought about, and read about was that, when we talk about change, you know, if you want to go to the horizon three, very frequently people will say as individuals, like, don't ask me. To change the world, right? The government, the big corporations have to do something about it.

And when you think about the business world in general, what we've seen in the past, I would say, or like the norm in general is that governments regulate and then business complies, right? how do we What's your take on this?

[00:11:30] Julia Zhou: I believe that first of all, we all can make a change, whether it is on an individual organizational or, or on a country level. And actually it does require all of that. and I would also say that no one can do it alone. So when we talk about creating systems change, we have to look at. All of the different actors and stakeholders that are involved and policy makers are definitely a really, really big part of that. but it's not just them. So I actually believe that it requires action from all of those different levels at the same time so that we can get to that level three. and. Interestingly. So when, within the Sigma squared society, we have a partnership with the Bertelsmann Stiftung, the Bertelsmann Foundation in Germany about, policy changes that need to happen to allow entrepreneurs to operate more efficiently or effectively. and if we look at the current ecosystem, there is just. There are just so many obstacles and hurdles, right. That prevent entrepreneurs from being able to do what they do, bureaucracy, right. And just very annoying things that, that, could be changed. I'd say quite easily. And so to also recognize the inter, Relation between these different players. So if I'm a founder and if I'm building a successful company in, let's say the climate tech space, then I'm also dependent on, changes on a policy level. Right. And so I need to interact with these, stakeholders. And I also need to interact with. The nonprofit organizations and with the individuals with the consumers, because everyone in the system has a role to play now, I would say that when it comes to large corporations, they definitely have a huge responsibility because they are also influencing consumer behavior.

And so, if we look at.let's say the plastic crisis, right? Like all the companies are selling plastic. So it's very hard for consumers to not use plastic. and so, yeah, that's why there's, there's change that needs to happen on both levels. There can be consumers demanding more plastic free options that does have an effect on then ultimately what the corporation is selling. But on the other hand, there needs to be regulation that also demands. From the top from these corporations that they will, that they're not allowed to produce, in a certain way. So it's like, bottom up and, top down, both in my opinion, need to happen. Yeah.

[00:14:15] Michel Gagnon: There's been a lot of hype over the past couple of years around building the next unicorn company. I think there's a, there's a ranking somewhere who counts like how many unicorns each country has, as if, it's the definition of success. which is still, an achievement if you're an entrepreneur, but there's a big focus on, you know, the typical metrics, user rate, growth rate, MRR, customer acquisition cost.

and I have the impression that, I mean, that's, you talked about influencing consumer behaviors. Well, this is how entrepreneurs today are a big chunk of them are, are raised in a way, right? That's the message to hear every single day. What, would you like a new entrepreneurs to consider when they're launching the business?

[00:15:03] Julia Zhou: I like that question a lot because I think all of what you just said is language that is part of call it this horizon one,system or economy, and I really believe that we need to shift to different language and different a different definition of success. So I would ask. Entrepreneurs, how they define success.

And that's a very personal reflection, right? Because I believe that a lot of entrepreneurs, if not most entrepreneurs become entrepreneurs, because they want to prove something to the world, they want to make a lot of money because they see a very successful Silicon Valley entrepreneur make billions of dollars after they exit and it's like, Oh, I want to be like that because that's my definition of But then if you were to ask. More why that is the case, then you would uncover a lot of beliefs right around. So why do I need that to deem myself as successful? Right? why does society say that that's what you need to do to be successful? And is that really successful? Or do we realize that when people reach that level of. Success currently defined as financial, accumulation of wealth. Then are people really happy, fulfilled and successful, right? And so I would challenge that belief and, encourage founders to. look into themselves and to ask themselves, why do they want to do this? am I building a company because I'm hoping that I'm going to exit this company and make a bunch of money? Or am I building this company because I am passionate about. something Protecting nature, protecting animals, whatever it is. And I care about it. And therefore I'm doing this. and then maybe a billion dollar company is a by product. I'm not actually saying that, making money is bad. I think that many times, take Whole Foods as an example, I actually just read. The biography of John Mackey, who is the founder of Whole Foods, and he's built an incredibly successful company, right? But it's built on values off, regeneration of harmony of, really, building something that actually creates net positive impact on society and the environment. And so. Yeah, I would really say challenging that belief system. And, there's, there's a new term coming up, right? The zebra. So going from building unicorn companies to zebra companies. and I think it's going to take some time to shift that, but I really believe that it's going to come from the internal reflection first, because otherwise we're going to be caught up in the system of. You need to prove something you need to do better. And then what, what happens when you have that billion dollar then? So what, right. and so, yeah, I think it's that first.

[00:17:53] Michel Gagnon: Can you just explain, Zebra companies to make sure everybody listening is knows what the term means.

[00:18:00] Julia Zhou: Yeah. Yeah. and so with the Zebra, it's. the notion of, you have both the financial, success, hopefully, but then at the same time that you have the, the environmental or social impact or whatever impact. That is not defined by,in a monetary way and that's going hand in hand. And I really believe that that can go hand in hand. It may not, be a hockey stick growth kind of situation where you're going to exit your company in four or five years. but, I really believe that in the long term financial sustainability is a byproduct of when we create something that really brings value to the world. And I think we're starting to see that in the world and we're starting to see examples.

I mean, Whole Foods is an older example, but even with some of the clean tech startups that are starting to boom right now, it, I really believe it's possible. But yeah, it's, it's that notion of seeing, seeing both.


The Sigma Square Society Summit
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[00:19:01] Michel Gagnon: You are the new president of,Sigma square society. And I think you have a big summit annual summit coming up in Valencia in the next couple of weeks. can you tell us a bit about the event, what happens there, who shows up just to get a sense of, what's going on? Of the, the atmosphere and what it's all about.

[00:19:20] Julia Zhou: absolutely. So every year we organize one global summit, we have regional events and a lot of other things happening, but this is really our main event where we bring together, many members of our community from all over the world. We have people from South America, from the U S from Africa, all coming together. And for us, it's a way to obviously bring communities together to build. Deeper relationships, and then to also inspire each other. So, alongside the members or the fellows of our own community, we would invite other interesting people, relevant people like. investors, serial entrepreneurs,just leaders in the space. But I would say in a very curated way. So what we always say is every single person that you meet at our summit is going to blow you away. Like they're every single person. And that's our mantra really. It's not a conference where you just buy a ticket and you bump into some random person. But every single person was. Chosen to go there.and I would say that the big difference to other conferences is also that we are not transactional. So it's not just, you go there and hopefully you can meet five people and then you maybe convert one of them into an investor or a client it's because they're genuinely interesting people. and so it's about meeting. Another person for who they are and not for what they do. Obviously it's a, again, a by product that something beautiful happens. but a lot of the times actually people say, Oh, I didn't even know that. This person was building X because I just really connected with them as a person.

But then what happens? You become friends, you trust each other, and you become partners in business as well. So we see both of them kind of interconnected. And there's actually, one question that has been consistent throughout the entire history of, of Kairos and Sigma, which is what if the most influential leaders were friends 20 years ago? So we are trying to create that environment where now we're getting all these people to meet. They become friends and what's going to happen in 20 years, right? Imagine all that impact that can be created by bringing together those smart people that are going to build products together that are going to invest in each other and support each other. And, and that's why I think it's, a really special event.

[00:21:50] Michel Gagnon: is it a conference for your members, let's say, or from what I read and what I explained at the beginning, it brings together thousands of, young leaders. is this like a, a pitch type of, of events or, where people come with startup ideas or, startups who are already up and running, or it's not.

necessarily just focus on startups.

[00:22:13] Julia Zhou: this year, we're going to invite about, we're going to have about 400. Well, we always try to keep it relatively intimate so that people actually get to meet and, I'd say probably about 300 are our own fellows and all the fellows are existing founders. So actually, to be able to join the community, they have to be nominated by an existing member, so they can't just apply. then they apply and there are certain criteria we look at. So both from a business perspective, traction, impact, but also from a values perspective. So are they, as people aligned with the values that we have, and then they would go through three interviews. With directors inside of the community. And if they pass those steps, then they become, fellows. And so 300 of those will be at our summit. And then the other 100 are, investors from our network, who obviously would, be very interested in getting to know our founders and also other stakeholders, partners, organizations, and, yeah, just people who, would both. Contribute value and also get a lot of value from interacting with our community.

[00:23:25] Michel Gagnon: I think you have a super interesting vantage point in a way as an ecosystem builder, but also, just managing this huge endeavor. Let's call it organization. 


Innovative Startups and Breakthrough Technologies
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[00:23:35] Michel Gagnon: Can you share a bit, with us, like the type of startups that you're. Seeing, maybe a bit more, or maybe you, you've identified interesting patterns that we should know about.

[00:23:47] Julia Zhou: You mean specifically in the Sigma community or in

general? 

[00:23:51] Michel Gagnon: Yeah, I think, maybe within the Sigma community, but given your, vantage point, I think you probably have a very interesting, point of view on, on what's going on.

[00:23:59] Julia Zhou: Yeah.I'd say with Sigma, it's, I like to call a lot of the fellows, the crazy ones who, you know, start building a moonshot company when they're 17 or 18. And you have to be a certain type of person to do that and to quit school. And so I'd say you have a lot of those individuals within Sigma. we have many examples, but one is a girl, who started her startup in her early twenties is building the world's first, long haul hydrogen aircraft in France, and, they actually piloted, I think a few months ago. And, that's. Obviously a crazy endeavor. And to even do that as a female founder in your early twenties is quite impressive. and then we also have, for example, the founder of go student, which is the most valuable ed tech startup in Europe. and all sorts of people building crazy stuff. And, I think because the reason. Or because I'm exposed to all of these innovations and these people building these, these things, it gives me a lot of hope and optimism that, you know, anyone can make a change. And, especially, you know, Again, coming back to the,the policy, the bureaucracy part, if even a young kid at age 14, 15 is able to go through all of these obstacles and actually build a company that creates value, then anyone can do it, honestly. and so I think it's, it's quite an inspiration for everyone to see, what these young people can do. And I'd say more generally speaking, also beyond. the Sigma squared society, I'm, I get very excited by breakthrough technologies and innovations that really are not just creating marginal impact, but that can really disrupt industries, particularly, I find the material space, the circular economy space, very interesting.

Right. And so, the plastic crisis is something that I think is Is a big challenge that we face, right? The pollution of the oceans. And so, I get excited by companies that can develop alternative. Materials to, to those, polluters and that actually can do it at scale. I think it is currently still a challenge to do that at scale, but I'm hopeful that we can get there. And so, yeah, there's just, a lot of, a lot out there or those, you know, I'm sure you've heard of that, but enzymes that can break down plastic and all of these crazy things. and so that's what I said at the beginning, right? We have the intelligence, we have the brains, we have everything. Technically. To tackle our problems, but we need to, to look at it from a systemic perspective to see, okay, we have the technology and innovation, but what else needs to happen so all of that can actually flourish, be devolved and, and, adopted at scale,

[00:26:57] Michel Gagnon: When you look at the, your fellows, for instance, what kind of skills or competencies, the, they're lacking at the moment, obviously maybe there's a bit of experience given their, their young age, but is there anything else that, you feel needs to be reinforced, like to make them successful entrepreneurs and, you know, and actors.

[00:27:19] Julia Zhou: I'd say actually the fact that we're very, very strict with our criteria. I would actually say we do attract very competent entrepreneurs. I would even argue some more competent than, people, twice as old as them. but obviously I think a big part again, goes back to the personal journey of, awareness about one's own intentions and, or emotional maturity. I believe that a lot of times comes with. Age, and we may have a lot of intelligence and a lot of skills and a lot of perseverance and resilience. but, Then to understand on a deeper level, why we do what we do and if that intention can sustain us over the long run as well. I hope that made sense. But, cause cause I wouldn't actually say that on a practical level or on a technical level, there is anything lacking.

Many times there would be, a fellow who was co founding with. an older, co founder who may be experienced in the industry. And so they always find ways to make things work. so I hope that makes sense.

[00:28:33] Michel Gagnon: I was listening to Matthew Desmond, who I think wrote a book called poverty by America, and he was a bit saying what you are saying, which is like we have everything to like at the moment to kind of fix a lot of the problems. And obviously his book is focused more on on on poverty.what do you think is missing?

Because earlier you were talking about, you know, all the stakeholders of the actors have to come together. Come together to make it happen. When you look at where we are today, maybe horizon one, what is missing for us to be able to make the jump to the next step?

[00:29:10] Julia Zhou: I'd say it's awareness. and, I gave a speech, a few months ago where I, created a visual. so I'll just try to describe it, but think of a concert concentric circle where in the middle you have our own level of awareness. And then the circle around it would be the design of her system. So if I'm someone who is As an example, doing things because I'm doing it for egoistical reason or egotistical reasons, I want to make them a lot of money. And then the system that I design or the system that society designs is going to be based on that as well. And then the circle outside of that would be the. Actual, solving of the problems that we have with the means of technology and innovation. But I actually don't believe that technology is the answer. I believe it's a means to an end. We can see right with AI, you can use it for good, you can use it for bad. It just depends on how you use it. But ultimately I believe we have to shift our level of awareness that includes emotional maturity, reflection, right? Being in connection with ourselves and nature to then design better systems around us and systems, all sorts of systems, right? we have the agricultural system, the food system, the energy system, all of those. can be, will be designed in a better way if we approach it from a higher level of consciousness. And then, therefore, the consequence is that we develop the necessary, solutions. And measures to tackle these problems. That's my opinion.


Measuring Impact and Theory of Change
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[00:30:57] Michel Gagnon: You, have mentioned that with title impact, you help companies with their, you know, measuring a bit their impact and. And, planning for the future. I've kind of started a little bit, my career, a few years ago in, in that space in a way, although it was a bit of a coincidence and I worked a lot on reporting for the TGSI, the Agile Sustainability Index, the Carbon Disclosure Project back in the days, and even defining a human rights policy for, a fortune 500 company.

But today I still feel that sometimes companies are using this to stall, right? Because everybody's saying, well, we need to establish a baseline and a benchmark, then, you measure, you can improve what you measure. And then if you want to basically measure things in a multinational.

it can be pretty intense, right? It's kind of a multi year type of project. 

[00:31:51] Julia Zhou: Yeah. 

[00:31:52] Michel Gagnon: I like, how do you think about this? And, you know, do you see maybe, do you think that there's a, maybe a better way to move forward?

[00:32:00] Julia Zhou: I, I, I agree with you. I think that, there is, I think the answer lies somewhere in the middle, right? Because obviously companies that. I think data, helps to drive decision making. So there's a saying, right? What we can't, what we don't measure, we can't manage. I do believe in that. And so I think, being able to look at the data and to see what the data means is very valuable to drive decision and to see for an organization, where's the organization actually creating impact and where should they invest more resources to do so. but I also agree that. One can get very lost in the detail and trying to do things perfect. And the answer is there's no perfect, right? Especially when it comes to impact that inherently cannot be completely objectively valued, right? It's always subjective. And so I think the reason why we measure impact is to, to be able to operate in, in a system that uses these. Numbers as a language. and it's all just a language. I think if we were to live in horizon three, or even beyond that, then we wouldn't even have to ask ourselves whether what value certain activities have, because we realize we are nature and we don't have to justify what the value of nature is in order to see it. To make sure that nature is fine. and so I think it really is just a matter of how do we work in this existing system, to still move things, to, to progress, while speaking the language that the traditional system speaks, and also in a way. That doesn't overcomplicate things. And I think there are ways, like we often speak to startups, right?

It's like an early stage startup. There's no point. For them to spend a lot of resources and time in the early stages to set up a system because they have more important work to do. Right. But they can start somewhere. Right. They can create a very simple theory of change. They can identify a few metrics and then they at least got something.

And the same you can extrapolate obviously to a larger organization. so, yeah, I think the answer is

somewhere in the 

middle. 

[00:34:15] Michel Gagnon: Great.

I want to talk to, talk about what you just mentioned. Theory of change is something I've discussed with Nadim Shouker, on, another episode of a while back. Can you explain a little bit, like if, if this is, you know, I have my startup and I want to. I have an impact, like, how do I actually do this in, in real life?

[00:34:34] Julia Zhou: sure. so I'd say the purpose of having a theory of change is to understand what is required to get to the long term impact.so it's kind of like understanding what's my North star, say, I want to significantly reduce, GHG emissions, just as a very easy example, or I want to improve the food system. and so how do I do that? Right. And I backtrack and say, all right, what are my inputs? What are my activities? and therefore what will be the measurable outputs? Based on that and then the outcomes, right? so to have a system that allows my company to know if I'm on the right track to achieving that impact and whether the things, the initiatives, anything I do today actually likely is going to get me there. I think on a very high level, that's, That's the reason why I think it's valuable. And, yeah,

[00:35:40] Michel Gagnon: I had a discussion a while back with, somebody that I will not, name, an amazing guy. very experienced, understands, extremely well, sustainability, the, the impact investor world as well. And, I, I think he. He was a bit, I don't want to say cynical, but, yeah, maybe slightly sarcastic, you know, when he talked about, impact investment, can you tell us a bit about, you know, what you know about this, this world?

and also, you know, maybe what are the, the, the positive developments and potentially, pitfalls, you know, in, in, in impact investing.

[00:36:20] Julia Zhou: yeah, sure. I understand. I think a lot of people are cynical. sometimes I'm cynical myself because, it goes back to, what we talked about at the beginning. what, what is the purpose of impact investing, right? It is in the ideal case to create net positive impact, but it's In a specific field, yada, yada.

but then when we look at the way, the let's call, let's say the venture capital system in that case is working, it's still, the system is focused on maximizing profitability. Right. And so even if we say we are, trying to maximize impact. The way that the system is designed is to gear towards a profit maximization. Now, it doesn't mean that there's a, it's, it doesn't make sense. I do believe that there's an important role and that when it comes to the venture capital system or yeah, just, BC in general, there are startups that. Fit very well into that space. and those are the companies that, are usually the ones that are, growing faster hypergrowth companies that, have the ability to also meet the financial criterias of a VC.but then it's still a niche, right? And so, I think that's why. People tend to criticize a little bit is because even when you, you talk about impact investing, it is a very specific type of company that would qualify for that kind of investing, investing. and then you have other types of companies, I'd say, like, maybe, other types of SMEs that do create positive impact, but just not at the scale that would qualify them to be a VC case.

Now, those. then would get funding through individuals, through family offices, through perhaps foundations. and that's also obviously impact investing, but I'd say conventionally, it's what we, when we think about, VC and then VC. So, okay, we. Look at it from a similar lens, but we also look at impact. And, again, I think there are, mechanisms more and more mechanisms to keep investors account accountable to the impact, like tying their carried interest to certain impacts. targets. now that still needs to play out as well. We need to see how well that actually works out. but I think it's still has a place, but we need more than that, which is why I'm very interested in the notions of blended capital or poly capital, right?

So, different types of capital, not just VC, but you have, debt, you have. Right. The philanthropic capital that can play a huge role. And so how can we tap into those different types of capital to fund the solutions that all are driving positive change, but in different ways, right? One might be the one that does. Grow a lot and scale a lot, but the other one might just be a little smaller and that's also fine.

[00:39:22] Michel Gagnon: On this, if let's say I have my startup and I want to be able to measure my impact. I mean, when you look at, GHG or carbon, it's, you know, one of the things that has now has a price on, right? So it might be easier to, to measure your impact. But when you start thinking about education for, you know, the global South or, our jobs or, you know, anything else, or, I don't know, take, Responsible consumption, the, these type of of of things.

Like do you have any advice for people to get started and, and start measuring their impact in a, in a, an effective, let's say a way and, and make sure that it, it's meaningful at the end.

[00:40:00] Julia Zhou: Yep. I'd say, so one having an understanding of that, of their theory of change is a good start. And then also, I really like the five dimensions of impact originally created by the IMP. Now I think it's called impact frontiers. so it's a model where. You have, well, five dimensions. so it's, for example, asking about, who are the beneficiaries of, your, activities or what is the type of impact that you're creating and how much, right?

if you put a number to it, how, how much is going to happen or what are the risks associated and, these kinds of things. And so it gives you a bit of a. a direction as to, first of all, what questions you can ask yourself to determine, all right, what's the impact I want to create, and then also what the metrics might look like. and so, yeah, I think if you just look at five dimensions of impact, you will find quite a bit of information. And, that's also how we actually help companies build their frameworks. we often use the, five dimensions to, create that framework. 

[00:41:07] Michel Gagnon: take too much of your time, but I, I have a couple of questions left. O


Final Thoughts and Advice for Entrepreneurs
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[00:41:11] Michel Gagnon: ne of the things, one of the things I'd like to ask is, if you look forward, like what do you see as some of the biggest opportunities for impact driven innovation? The next, I don't know, five to 10 years. Like where would you like to see potentially more focus and investment?

[00:41:31] Julia Zhou: first of all, I would say thatthere are so many areas that need work. So similarly to how we have the SDGs, all of the SDGs are actually interconnected. So health is connected to climate change, is connected to education. And so I'd say I wouldn't necessarily say one is so much more important than the other, because they're all interconnected. I would say from a personal perspective, obviously in the, ingiven that I've been more active in the sustainability climate space, I think the topic around biodiversity and circular economy, I find, very relevant. because. yeah, recently I, I spoke about biodiversity and how actually when we look at who really is protecting our biodiversity, it's the indigenous peoples in the world and how have they been able to protect 80 percent of biodiversity, right? They don't really have access to the latest technology and innovation. And so I, I would actually love to see a greater connection between practices, that have been working for thousands of years, wisdom from communities like these, but connected with technology, that can be leveraged to further protect, our biodiversity and to actually increase biodiversity, hopefully.

Mm hmm.

[00:42:55] Michel Gagnon: have you seen anything, more related to social issues? you know, obviously we need to save our planet, but, there are massive problems that we are, dealing with at the moment. And that maybe is, I mean, they are.they're not helping us, you know, keep our focus. If you just take,the, the, the, the migration migration flows that we're saying, you know, on a global scale, it's, it's, it's immense.

Is there anything that you've seen where, you know, that might be interesting?

[00:43:23] Julia Zhou: I can't, speak to a very specific solution, but I do agree that it also is very important. I would say most of the, organizations that I come across in the social impact space are more on the nonprofit side, or for example, there are actually a lot of, Mental health focused startups, which are on the, you know, for profit side, which, are doing amazing work. And so, yeah, I think, I think maybe that's, that's also actually a struggle, right? Cause a lot of the impact startups that are getting funding are the environmental startups, but the social impact startups are struggling a little more because they, obviously don't. Always fit into that, mold when we think about startups and, successful startups. I'd have to honestly think about it, but I've, I've, I've seen great initiatives for sure. and I, I think when it comes to, for example, migration, it's really, I would say personally speaking more of a,a policy, kind of, political. Thing that needs to happen and, yeah, activism around it that also needs to

happen. 

[00:44:37] Michel Gagnon: Fair enough. Maybe there's just one last question for you. if, for our audience or the entrepreneurs who will, you know, we'd like to integrate impact a bit more into their, their business, their organizations. Do you have like one piece of advice that you've found yourself, sharing quite, quite often?

[00:44:54] Julia Zhou: yeah, I'd actually, say, ask yourself the question, why are you doing what you do? Or why are you really doing what you do? Because if you get to the depth of that question, then you will actually understand what really drives you to do the thing that you do to build the company. And, I think a lot of questions will be answered through that.

I know it's a little bit more high level. I could give you a lot of practical tips on frameworks to use and things that you can do, you'll find all of these, but I think it's really about asking yourself that question.

[00:45:33] Michel Gagnon: Thank you so much, Julia. I really appreciate it. Thanks for your time. Where's the best place for our audience to connect with you?

[00:45:39] Julia Zhou: LinkedIn, I think is great. You can find me on LinkedIn and,

add me and message me. 

[00:45:44] Michel Gagnon: Perfect. Thanks and good luck with the, the submit.

[00:45:47] Julia Zhou: Thank you.

[00:45:47] Michel: Thanks again for listening, I hope you enjoyed the show. Make sure you subscribe to the podcast. And as usual you can find the show notes at stunandawecom. 




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