The CEO that Realised the Immense Environmental Damage he Caused — Beyond Zero

[00:00:00] Speaker ?: *sad music* [00:00:30] Ray Anderson: By civilization's definition, I'm a captain of industry. The entrepreneur who founded a company that provides over 5,000 people with their jobs and supports their spouses and upwards of 12,000 children. In the eyes of many, a kind of modern-day hero. By my own definition, I am a plunderer of the earth and a legal thief. Someday people like me may be put in jail. [00:01:03] Speaker ?: *sad music* [00:01:16] Ray Anderson: A good place to start is on a day in June of 1969 when I saw for the first time and fell in love with an idea. The idea was carpet tiles, modular carpet. Here's the product. It was quite new in the United States in 1973. And here's the market, the office market. A burgeoning, white-collar workforce in an increasingly service-oriented economy was about to create unprecedented demands on corporate and institutional America. This new office demanded a new kind of carpet. Broad-loom carpet, wall-to-wall, no longer fill the bill. The new and better way was carpet tiles. Removable for easy access to in-floor electricals, easily replaceable when worn or damaged. You know, if you don't have a market, you have to conjure it up. We would ride through the streets of Houston and Chicago or any city in America, and I would ask him, "What's in that building? What's in that building?" Constantly driving over the point. It's all around us. It's all around us. You know, we just have to make the call. Make the call. Make the call. Make the call. You know, you can't get the order if you don't make the call. [00:02:29] Speaker 2: He wasn't Ray then. He was Mr. Anderson. He was always Mr. Anderson. He was all business, and he had high expectations. And if Mr. Anderson asks a question, you better have the answer, and it better be right. [00:02:44] Dan: I had two small kids. I was literally working 70 hours a week. Literally. And I said, "Ray, I'm working 70 hours a week. I need to hire some people." And he just looked at me and he said, "Dan, doesn't that go with the territory? Seven hour work weeks." [00:03:03] Ray Anderson: Here's 16 years of sales from a dead standing start in 1973 to Fortune 500 list in 1989. Interface Incorporated is the world's largest manufacturer and marketer of carpet tiles. Drawing together into one corporate entity the largest carpet tile companies in North America, Europe, Asia, and Australia. I remember like it was yesterday, a day in August 1974, when we had not one order on the books. That branded in my brain, for as long as I live, the veritable truth that you're always just one order away from being out of business. The next order is like the next heartbeat. [00:03:48] Speaker 4: Interface looks in the marketplace for high profile projects to really focus on and has great benefit to drive more sales. So there was one particular project in Southern California that had an environmental consultant, and he wasn't going to let his client buy products from us. Well, that message got all the way up through the sales chain, all the way to Ray Anderson. [00:04:18] Dan: And Ray walked in my office and said, Dan, what is this about the environment? He said, isn't complying with law what you do about the environment? I said, yeah, Ray, I think so. Makes sense to me. And he was really frustrated. And so he charged the task force to come up with what our interface should be on the environment. [00:04:39] Speaker 4: Well, I wasn't particularly enthusiastic about the subject myself. Didn't necessarily want to be on the task force, let alone leading it. So how am I going to get anybody to show up? Well, the hook was Ray. Ray was the legendary founder of the company figure. So I sent the invitation for Ray to come kick off that task force. And there was no response. And I just kept kind of prodding politely. And eventually he relented. [00:05:12] Ray Anderson: I had not a clue what to say. I was sweating. I could not get beyond we obey the law. We comply. I knew complying was not a vision. A book arrived on my desk. I started to thumb through the book. What I found was an indictment. I did not want to look. But I could not take my eyes off it either. [00:05:35] Speaker 5: We used to boast. Legitimately boast. That you could take the carpet tile product. You could stick it in a pile of compost. For one or two seasons. And take it out again. And nothing would have happened to it. That was a sales boast. [00:05:55] Ray Anderson: So I took Hawkins book home that night. My wife of ten years, Pat, could see I was upset. I went to bed still reading. Still confused. Still without a vision for that speech. [00:06:08] Speaker 2: I mean we had been specifically asked to bring certain information. And so I was scrambling around at my factory saying, what have I been doing here? What are we doing? We hadn't intentionally been doing anything. [00:06:21] Ray Anderson: And then about midnight, I found something I wasn't expecting. It was a vision that absolutely transcended compliance. It would be so much more than an answer to reassure our customers. It was a call to lead. Powerful enough to energize the corporation and would give me a new purpose in life. I got up from that bed to get a glass of water and stopped in front of a mirror. I looked at myself long and hard and I thought, why not? [00:06:53] Speaker 4: Well the meeting starts and then Ray comes in the room. Well he is only going to be there for a few minutes. Literally he has a car waiting outside the hotel. I get up and start the meeting and then essentially introduce Ray to share with us his environmental vision. Nobody had any idea what was about to happen. I certainly had no idea. I didn't even know if Ray had seen the agenda. [00:07:18] Ray Anderson: Every dairy farmer knows the term carrion capacity. Meaning sustainable population. As how many cows will this pasture support. St. Matthew Island in the Bering Sea was a deserted island until 1944 when 29 reindeer were imported. Scientists calculated that the island had a carrion capacity of about 2,000 with no natural control, no predators. By 1963 there were 6,000 reindeer. The scientists thought the calculations had not been correct. But the calculations had been correct. By 1966, in just three years, the population had dropped to 42. Not just the extra died, but the overshoot produced a catastrophic effect. The fact that St. Matthew Island exceeded its carrying capacity by 200% or 300% or even 400% for a while. Did not prevent the inevitable day of reckoning. We are exceeding the carrying capacity of the earth now. And will continue to do so at an increasing, accelerating rate until catastrophe strikes. [00:08:43] Speaker 2: What really struck me from it was his heartfelt sincerity. Ray really cared. And he wanted us to care. [00:08:59] Ray Anderson: Now we at Interface take oil and natural gas from the earth in the form of nylon, latex, energy. And we don't put it back. We make products that end up at the end of their useful lives in landfills. Our industrial waste is a pollutant. We must call it what it is. We waste all along the way. [00:09:23] Speaker 4: It was absolutely a stunning condemnation of Ray's heroic creation of Interface. As an example of what industry was doing that was going to destroy the planet. Not only for Ray's grandchildren and their grandchildren, but also eroding and destroying the economic capability and future of business itself. [00:09:54] Ray Anderson: Now, who can do something about this? Well, business. Industry. That's who. This is the most powerful, pervasive institution in the world. And the one doing the most damage. Companies like ours. Yours and mine. People like us. Us. You and I. [00:10:14] Speaker 5: The next thing I remember and will never forget. He said, I've decided we're going to make this company a sustainable enterprise. And there was simply silence. And in my case, stoned silence. [00:10:33] Ray Anderson: How about this for a mission? To convert Interface into a restorative enterprise worldwide. [00:10:41] Speaker 2: And suddenly we were going to undertake a different type of business. [00:10:48] Ray Anderson: Once we're sustainable, we become restorative by helping others become sustainable. Putting back more than we ourselves take. And while I'm at it, how about this for a goal? To achieve sustainability by the year blank. You must fill in the year. [00:11:11] Speaker 4: Ray gave his speech and walked out. And the place fell apart. There were tears. There were arguments. There was massive defensiveness. This is just fantasy. This is nuts. This is not even possible. [00:11:30] Speaker 2: What is the market going to think about this? What are our customers going to think about this? [00:11:34] Speaker 5: We were given the opportunity to quietly, individually think about it. And I did. I then was able to mentally confront what I'd been involved with. And it wasn't pretty. [00:11:50] Speaker 2: At the end of the conference, they actually went around the room and asked people, "How are you feeling? What did you think?" [00:11:59] Speaker 5: The meeting didn't seem to be going anywhere at that point. I felt obliged to say something. [00:12:07] Speaker 4: So Scotty had been there forever. Forever in terms of interface. So he was very well respected. He was the first to talk. [00:12:16] Speaker 5: And I do recall standing up and saying that I had been guilty of making compromises. [00:12:24] Speaker 4: He essentially was saying that there are some things that we have to do in business that we know aren't quite right. But we just do them to help make money to provide for our own families. And that man, in pointing to the door that Ray walked out of, that man has just given me the opportunity to make up for all those compromises. [00:12:49] Speaker 5: Things couldn't go on the way they were. I had an opportunity to start to put things right. [00:12:59] Speaker 6: It was August in 1994. And I received a letter from Ray Anderson. And I'd never heard of him or the company. I was asked to come to a kind of a C-suite meeting in Santa Barbara. At that time, I have to say, I mean, Ray was the one who was the driver. And I felt that the rest of the people were saying, "Well, he's the boss," rather than having bought into it, so to speak. [00:13:24] Dan: I was probably the biggest skeptic in the whole thing. And I literally, we literally, some of the management teams that were running businesses, really thought this was the flavor of the month club. We just didn't think that it would stick. We really didn't. There's a conference every year. It's called the Southeast Conference, where all the companies from the Southeast come in. And our biggest shareholders were in this meeting. And our stock was under a little bit of pressure, because you'd just come through a downturn. And we weren't performing yet. Back then, you had a 35-millimeter slide tray, right, with 35 slides in it. And I was the CFO keeper of the slide tray. And I was going to give it to the AD guy, and he'd queue it up. And then Ray and I would go up to the front of the room, and Ray would present, and then I would do the numbers. And Ray wouldn't let me keep the slide tray and give it to the AD guy. He just said, "No, Dan, give it to me." So I was like, "Well, okay." So Ray walked up with the slide tray in his hands and set it down on the podium. And he said, "I'm not going to talk about my company and my financial results today. I'm going to talk about Mother Earth's in trouble." You could have heard a pin drop. People were looking at each other. I was looking at everybody. I'm like going, "Oh, where is Ray going with this?" Right? And he proceeded to tell the story about the reindeer and the overpopulation. They all died. And they're just like going. He didn't mention interface results once. Our stock dropped. My biggest shareholder sold. I had a call from an analyst the next day thinking that Ray was terminally ill, and he was trying to save the world before he died and so forth. And I just said, "No, he's fine. He's just on this journey about sustainability." I did say to Ray, "Ray, you quit talking to Wall Street. Let me talk to Wall Street." And my quote was, "You can go save the world." They think you're a tree hugger. They think you're a dreamer and you just don't need to play at Wall Street. Actually, when that happened, I knew Ray was not turning back. Right? I didn't know how we were going to do what he wanted us to do, but I knew he wasn't backing down. And that he had put a stake in the ground that day. [00:15:59] Ray Anderson: I challenged them to pick the year. Pick the year by which interface would achieve sustainability. Two days later, they told me that their target year would be the year 2000. I'll be 66 that year, and I hope to live to see it happen. I actually think they may be a little ambitious and it may take a good bit longer, but I still hope to live to see it. And we're trying to take it throughout our company of 5,000 associates. That is not easy. No one else, even at Interface, gets it just because I do. And for us to be successful, everyone has to get it. [00:16:58] Speaker 4: I get invited by the head of operations of the European business to come to England and let's talk about this sustainability stuff. We want to learn what's going on and we want to share what we're doing. So I show up to the mill, and there's no tables or anything. It was kind of weird. But there was this big horseshoe of seats, and there was one chair at the opening of the horseshoe. And I'm thinking that's, you know, their president or the business is going to come in and talk or something. So I go sit, you know, in the horseshoe somewhere. No, no, no, no, no, Jim, we'd like you to sit there. And I go, um... The head of manufacturing led the conversation. And his message was something like, "We've been hearing a lot of crazy things from Atlanta. We don't know really how to interpret them." But we wanted to share with you our thinking so you could take it back to Atlanta. First of all, philosophically, what you guys are talking about, there is really no role for business in this moral, ethical kind of thing. You know, our job is to make carpet, satisfy customers, send money back to Atlanta. And you know, we're in the carpet business. You know, you know how we make carpet. We don't need any spotlights. We stick our head up on this subject. We are going to get slapped. So not only philosophically this is a bad choice, but who are you Americans to talk to us about the environment? You really are the pigs of the planet. That was a difficult moment. [00:19:03] Speaker 2: Change is hard for everybody. You know, there's always institutional resistance. And at first, there was just a lot of, "Wah, what are y'all doing? Have y'all gone crazy?" [00:19:16] Dan: Well, first of all, your product is 90% oil-based, right? Stuff coming out of the ground. So how do you change that paradigm? Well, we're going to have recycled content. We're going to have bio-based products. You know, we don't make yarn, right? And so how are you going to change your supply base? Because they're going to have to spend money to get there. And then the energy is huge. Because it's all brown energy that's cheap. And so how do you get renewable energy? I mean, Ray didn't have a clue what the roadmap was on this. He just knew that something had to be done. [00:19:53] Speaker 4: He had the self-awareness to know he had to assemble the smartest people on the planet to help him figure that out. And that became what he started calling the eco dream team. [00:20:05] Speaker 6: It was as if there was an NFL and you were the first team and you got to choose everybody you wanted before anybody else chose the team. I mean, he pretty much got the cream of the crop. [00:20:20] Dan: You got to remember, 93 to 2000 was the best growth in the commercial office market, probably in history. So we were doing pretty well. So we actually could take some chances on investing in sustainability. People were feeling really good. The reason we had the guts to do the global sales meeting was our stock was at an all-time high. [00:20:44] Speaker 4: So I learned about this big meeting that was being planned for the Grand Waialia Resort and Spa in Maui. The world meeting started out as being just a big sales meeting, celebrating the 25th anniversary of the company. So Ray said, oh, we've got this new eco dream team. What a great opportunity to bring them together and have our first meeting. And our real purpose is what do we do with this? Maybe we can get a day of this four day sales meeting to talk about sustainability. [00:21:18] Speaker 7: And it was, you know, giants in sustainability. You know, Paul Hawken was there and Bill McDonough was there and John Picard was there. And we introduced the idea. [00:21:29] Speaker 4: We're going to be meeting at the Grand Waialia with this big party. We got all of these entertainers coming. And we want to take a part of that to talk to them about sustainability. Well, to a person, this group of advisors completely rejects the entire idea. Wait, you're going to take a thousand Interface people from around the world and you're going to fly them to Maui. And you're going to bring them together in one of the most abusive hotels that exists on the entire planet. [00:22:07] Speaker 7: It's in this big resort with fountains that run all night and multiple pools and, you know, air conditioning where there doesn't need to be air conditioning. So it like violated any possible idea of sustainability that you could imagine. Paul Hawken, who doesn't suffer fools, said, look, Ray, if you want my advice, just don't go. We've already booked the entire hotel. Ray was an emotional guy. His face turned beet red. When he got really stressed, he had a vein that would pop up in his forehead. And that thing was pumping. And he said, maybe you didn't hear me. He said, I have invested money, the company's money, which I am responsible for, to this venue. We are going to that venue. I need to make it an opportunity instead of a liability. [00:23:00] Speaker 4: You know, arguably one of the most challenging personalities on that entire team was the world-renowned architect, Bill McDonough. He was the one that essentially said, you know, actually, we have to realize that that place, as abusive and obnoxious as it is, is actually a reflection of who we are. Isn't it? So what about the opportunity of turning that most abusive example into a learning experience for what it could be? [00:23:38] Speaker 6: Will that turn the whole idea? And so we decided then to use that as an example of what you could do to create a meeting that, in fact, had a light footprint. We thought we could work with hotels since they had booked the whole hotel for almost a week to see what could be done. [00:24:00] Speaker 4: And essentially that process went directly to the Japanese owner of the hotel and basically asked him to completely take over the operations of one of the crown jewels of his investment. He had the audacity and the courage to just say yes and turn to his accountants and just said, do whatever they want to do, which freaked them out. [00:24:23] Speaker 7: We got into the bowels of the building. It was so big and so sophisticated. It was like Disney World under there. [00:24:30] Speaker 6: Underneath the hotel is an industrial factory. The amount of water and energy that was being consumed by this hotel to take care of its guests was extraordinary. And also what became obvious is how much waste was occurring in the hotel itself. In other words, they really didn't understand the basic fundamental techniques that existed at that time to reduce their waste, reduce their impact, and frankly, to save a heck of a lot of money. [00:25:08] Speaker 7: The first day we had this luau and we ate all this food and then we measured the food waste. [00:25:19] Speaker 6: This day we have eaten, we have drank, and we have been married. We want to continue to do that, of course, but I'd like to give you a little feedback so far. Saturday night we measured the food waste. We wasted 750 pounds of food. We wasted 1,383 calories per person. If we annualized that and globalized that figure, the food waste that we generated would feed 3.15 billion people. I know. We went over the numbers again and again and again. We continued to work with the hotel to try to change that figure. You can change it by simply trying to take what you need and no more, and if you need more, ask for more. [00:26:10] Ray Anderson: We are on our way. On our way to where? Well, I have this mental image of a mountain to climb. The name of the mountain is sustainability, and we are only on the lowest slopes of this mountain. But we know the way to the top. As we move in the direction of that peak, others will follow. They will follow not because they will feel altruistic or benevolent or philanthropic, but because we will be doing so well in a pure business sense by moving up that slope that they will want some of what we've got. [00:26:58] Speaker 7: Through urging every morning, we would say, you know, try doing this. If you open your sliding door, the air conditioning stays off. When you were in Maui, there really is no purpose. Leave your towels on the rack like you do at home. So we would urge them, you know, throughout the week to do certain things. Again, nothing that was so onerous that would compromise in any way their experience. And then at the end of the week, we expose all that to them. [00:27:21] Speaker 4: Good morning. We are saving about 1.8 tons per day of landfill material. For every room here, 15 pounds of stuff a day. Propane, our usage was 40%, saving $228,000. But what does that mean in terms of footprint? 11 acres of trees taking carbon out of the air. Electricity, we're saving about 13,000 kilowatt hours a day. That means 35 acres of trees, potential saving of that is about $600,000. All total, just from the money side, if everyone has behaved and operated as we have through the year, the whole hotel could potentially save $860,000. Give yourselves a hand. [00:28:11] Speaker 7: And the room was just so taken by the impact that they had had on that hotel. And obviously, what they felt they could do when they left. [00:28:25] Speaker 8: Jerry Lovins said to me last night, John, I think that this gathering here could be the turning point in a world effort toward a sustainable future. And I believe that's true. [00:28:37] Speaker 6: The enthusiasm and the joy, frankly, was extraordinary because I feel like what had happened is the story, the storyline about the environment and the commitment to the environment that Ray and others and myself had experienced. And spoke about was also accompanied by song and music and dance and ceremony. [00:29:16] Speaker 8: Like wishes and dreams that will come true by and by. [00:29:21] Speaker 6: I just felt like this is a new type of meeting that no one had ever seen before as a corporate conference. [00:29:29] Dan: That meeting pretty much inspired 1,200 people to look, we're going to do this. The world needs this. [00:29:36] Speaker 8: Oh, we have come from everywhere. [00:29:40] Dan: And it was inspirational to me, who was the biggest skeptic in the room. And that sort of changed it for me was that meeting saying, all right, we need to do this. The world really is in trouble. [00:29:51] Speaker 8: Oh, what a world. [00:30:08] Speaker ?: Thank you. [00:30:10] Ray Anderson: The world is not an industrial company on Earth and I dare say not a company of any kind that is sustainable. When Earth runs out of exhaustible resources and ecosystems collapse, our descendants will be left whole in the empty bag. Dear people, can I call you dear people? If I may be so bold, fellow plunderers, we've done a lot of damage. [00:30:41] Speaker 9: There are really three sections with carpet tile. The soft part on the front of the carpet tile, that's made on kind of like a sewing machine with needles. There's a really stiff back and that makes it adhere to the floor. And then in between, there's a latex that actually bonds the two together. [00:31:12] Speaker 4: Those are all, you know, those technologies, those engineering kinds of things. But to affect those, we need to engage everybody in a new way of thinking about the world. [00:31:29] Speaker 6: And that involved actually teaching and engaging staff all over in the different factories. It was about internally changing the fabric and culture of the company. [00:31:46] Speaker 2: There were many quest teams across the entire business at every level. And originally they were designed to work on quality issues. But they became sustainability teams, really. Because they just educated everybody on what we were trying to do. And it made everybody stop and say, "What can I do in my job to contribute?" [00:32:10] Speaker 6: There was no greenwashing at all. It was actually hands-on, feet on the ground. Let's figure this out. And basically you can't manage something if you don't measure it. And so first began the measurement. [00:32:25] Speaker 9: The more I would read about embodied energy of materials, the amount of energy, electricity, transportation, all those things to make that one product. And nylon was at the bottom of the list of hundreds of materials. And that's what we were using. The worst thing was the scientists said, "You can't recycle it. It's impossible." So let's just use less of it. Let's start to minimize the amount of material that we would put in the product. So it was, you know, the best thing we could do. And we would start to measure it every year. [00:33:10] Speaker 5: We got a couple of wear warranties. The customer did not like the product on the floor. It was wearing badly. So I would take a sample back and send it off to the fiber manufacturer who would say, "Well, we've looked at it and there's hardly anywhere at all." So I'm saying, "Well, how did you come to that conclusion?" "Well, we looked it under a microscope. All the fiber is still there." I said, "Well, we don't give our customers microscopes. They just walk on the stuff." We made them more dense and found we could get better results with a denser product using less yarn. And so I was able to measure, after one year of progress, we'd already saved enough energy to power something like a hundred homes. And it was a stark realization that such an apparent small thing would represent that much energy. But not only that, we eliminated working plants. They just ceased to be a factory. [00:34:10] Speaker 2: So every project, you had to make sure that it didn't cost more money. It had to either be equal or save money. Better if it saved money, because then you had a little bit more impetus to get it to roll on through the process of change. [00:34:24] Dan: So Ray wanted to put a solar array up in L.A., and it was a huge investment. And I couldn't find the return anywhere in it. It had a 99-year payback or some insane thing. And he finally came to my office and said, "Are you going to sign that capital authorization?" I said, "No." I said, "Ray, there's no payback here. I can't find it." And he got real frustrated. And then he calmed down and he said, "Dan, have you ever thought about solar-made carpet?" I'm like, "No." [00:35:06] Ray Anderson: The investment in this is large. So it's not the kind of justification that an accountant might understand. But the fact that it produces solar-made carpet will be very attractive to our customers and will create sales. [00:35:21] Dan: And so I said, "Okay, that makes sense. We can actually get something out of it with a customer." So I signed it. And I'll be damned if when we got it up and running, the California government gave us an order that paid for the whole thing, because it was solar-made carpet. [00:35:36] Ray Anderson: This is a big step toward the top of that mountain we're climbing, the mountain called sustainability. I'm talking about it. You are doing it. [00:35:47] Speaker 10: I got a call from Paul Hawken, and he mentioned this carpet company that he was working with. And he said, "You need to come." And I was a biologist. I had been writing about, you know, biology-inspiring design, but I knew nothing about carpets. So I showed up at my first Eco Dream Team meeting. We're looking at reducing the amount of energy we use, reducing the amount of toxins we use, making elegant products and products that can be reincarnated into other products. Life has been doing that, in life-friendly ways, for 3.8 billion years. And, you know, it's time that we looked around at the genius that surrounds us. The question was, "How would nature make a carpet?" [00:36:46] Speaker 9: They said, "Go outside, look at nature, and what can you learn, and how would nature design a carpet tile?" We looked at stones and leaves and bark and all those things. You start to realize there is a difference between what nature does as far as color and design and what humans do. There is a difference. Nature is diverse. There is no solid color. It's kind of like organized chaos. [00:37:20] Speaker 10: But it was covered by all these overlapping leaves. And when you took one leaf away and you looked back down, you couldn't notice the difference. It's an ordered randomness. And the order comes from this palette of colors that all go really well together. Nobody complains that, you know, a forest floor is ugly, right? There's a harmony to it. [00:37:48] Speaker 9: So we came back and said, "Well, could we make five different carpets and mix them together and put them in a box?" Somebody in manufacturing said, "I think we could make it all together if we start to change the threads as they go across the machine," which was unheard of. So we ran the first production trial. We got the box, opened it, just threw them on the floor. They look unbelievable. And then suddenly you could randomly throw them around. Customers could actually install it because it was random and they would have less installation waste on a project. So all these positive things were coming from, "Let's just do it like nature." [00:38:43] Speaker 10: People loved this idea of being able to truly pull something up and put a new one down and not be able to see a sore thumb effect. It moved to 40% of their carpet tile line. Everybody in the carpet industry was doing broad loom cut into squares. Nobody had thought of, "What if every square was different?" [00:39:10] Speaker 9: And if we hadn't done that, carpet tile would never be as big as it is today. It was just an unbelievable moment. [00:39:19] Speaker ?: It actually became clear to me that what we really needed was a new CEO, someone to step into the role that I had had all through these years with new energy and vision. [00:39:28] Ray Anderson: And last fall, the search committee came to the conclusion that the very best candidate of all these external and internal candidates is Dan Hendricks. The highest point in the history of commercial market, which was October 2000, was the month I got announced as the new CEO of Interface. [00:40:09] Dan: And before I took over July 1st, 2001, our business had dropped 25%. Interface was really in trouble. We had $550 million in debt. We were violating bank covenants. Ray walked in my office the day I became a CEO. He said, "Dan, I actually thought I'd hand you a better company than I'm handing you right now." [00:40:36] Speaker 11: We're just bleeding to death. The $300 million market is now down to about $60 million. And we need to focus on the core and generate earnings in this company. [00:40:47] Dan: I mean, Interface really was in the forefront of sustainability, not just in our industry, but in the world. And they would have spit me out as CEO if I said, "Hey guys, we're not doing this." There's not one person on my management team that would have followed me. But the thing that we had to figure out was how are we going to make this work? How are we going to get there? You had no room for error. Cool Blue was the first real innovation on closed-loop recycling. And it was like a $10 million investment in that downturn I'm talking about. And David Hobbs said to me, because he knew I was going to say no, and he says, "If we don't do this, then we're not walking the talk and our people aren't going to come up with these innovation ideas and they're not going to follow us, Dan. This is a breakthrough technology that we need to do." And I was looking at our balance sheet and then I go, "All right, let's just roll the dice." [00:41:48] Ray Anderson: A 300 foot of slimy line snakes through the factory floor beginning with large bins labeled Cool Blue Food. We feed those bins with carpet backing scraps and other plastics that have been ground into fine particles. The conveyor belt passes through a huge oven and then a giant roller applies just the right amount of pressure to squash the warm soft crumbs into a continuous sheet of carpet tile backing. [00:42:15] Dan: It took us a long time to perfect Cool Blue, but our customers believed it. They go to the plant and they could see us recycling the backing. Unbelievable goodwill with our customers. And we're walking the talk with our people. The downturn probably helped us. We had to think smarter. We had to innovate. We came out with a lot of innovations that actually allowed us to take share and recover faster than anybody else. Ray left me alone. He was off giving a lot of talks. He just gave us the vision and the inspiration and we did it. [00:42:52] Ray Anderson: The old flawed view of reality holds to the belief that business exists to make a profit. When we are learning from our experience in this new paradigm that business makes a profit to exist. And it must exist surely for some higher purpose. What CEO do you know who really expects to stand before her or his maker someday and talk about shareholder value? Done right, the triple bottom line can come together to create a better way to bigger and more legitimate profits. [00:43:28] Dan: This is the mind shift that I had to take. You can engage your workforce so they're going to innovate and do things that we never even thought about doing. I mean, one thing people don't talk about is we get the best people in the industry because they want to work for Interface because of a higher purpose. [00:43:45] Speaker 12: It was hearing Ray Anderson tell his story that changed the trajectory of my career. I was sitting in an audience and he started to describe the purpose of this amazing company. And the first thing that hit me was, oh my God, someone from Interface called me two days ago to see if I wanted to join the company and I told them no. You know, what was I thinking? I promptly called this woman back, got into that interview process late and by some sort of luck, stars aligning, whatever, actually got the job at Interface. We take every single person in the company through three levels of sustainability training. It's just who we are. It's just what you're going to do. It doesn't matter where you are in the company. It doesn't matter what you do. You're going through that level of training because it gave people such confidence and just made them feel really connected to it. [00:44:45] Speaker 2: We started looking at, well, how are we installing it and what are the waste factors involved in installation? The glue, the buckets that the glue come in. And of course, always, if you're doing wall-to-wall installation, the trim waste. I thought nature must have a better glue than the glue we're using. So how does nature glue things together? [00:45:10] Speaker 10: Interface brought us in. There was a group sitting and talking about geckos and flies and reversible adhesion. What they found in that group was that nature doesn't glue things together in a few rare instances, but nature doesn't glue. The common design principle was that they used gravity to help push it down. It was gravity. And then at another table, they were looking at bird feathers. And if you look at a bird feather, and you take it apart and you have a magnifying glass, you'll realize that it has hooks and barbules all along each little mini strand and then along the major strand. And that's how a bird, when it ruffles its feathers, it zips it back together with its beak. Because the structure hooks back together naturally. So that group said, you know, what if, what if our carpet tiles attached to each other? What if they hooked end to end with each other and they start to think about how to do that? And the group that had been thinking about gravity stood up and said, wait a minute. If you hook all the carpet tiles to each other, gravity holds the whole thing down. [00:46:24] Speaker 2: And one thing led to another and eventually what we ended up developing were the tactiles, which are the small polyethylene squares of plastic that are inserted underneath the carpet tile that actually don't stick it to the floor at all. [00:46:38] Speaker 10: And if you put that at the corner of four carpet tiles, you're essentially holding those carpet tiles together. [00:46:47] Speaker 2: So we kind of just revolutionized the carpet tile installation and eliminated that glue and all the associated problems that come with glue, not to mention the indoor air quality issues associated with glue. [00:46:59] Speaker 10: Their goals, which were, you know, reduced waste, reduced toxicity, actually broke them out to a whole new market, which was the residential market. Because once you don't have to glue it down, you can sell people carpet squares to make dining room rugs, to make area rugs, essentially. And when you say, well, yeah, the idea came from lizards and geckos and bird feathers. Well, it doesn't look anything like geckos. It doesn't look at, you know, but it's that concept. It's that abstracted design principle, hold it down with gravity and have all the pieces attached to each other. And the question once you see it is, why hasn't everybody done it that way? [00:47:43] Ray Anderson: Eleven years of this kind of new thinking and innovation combined with a determination to abandon the comfort of the status quo can produce unimagined results. Yet it does not come naturally. Breaking with we've always done it this way is hard. [00:48:02] Speaker 13: A colleague of mine in my doctoral program brought me this article about this man named Ray Anderson and this company named Interface. Is this the real deal? And if it is the real deal, how did you do it? How did Interface do this? Because if we can show that, then this can be a roadmap, if you will, for other business leaders. [00:48:25] Ray Anderson: I can report to you today that this company over the last 11 years has reduced its worldwide net greenhouse gas emissions by 56%. Two thirds of the reduction has come from efficiencies. The waste elimination effort has avoided costs totaling some $300 million over the 11 years, more than covering all the costs associated with R&D and process changes and capital investments made in pursuit of sustainability. At Interface, we call it mission zero. Zero footprint by 2020. This mission is a competitive advantage in an extremely competitive marketplace as proof its share price has moved from $2 to $15 in three years as it has worked out of the deepest recession in its industry's history. [00:49:15] Speaker 13: They were measuring it. They were measuring it. They were telling the world, this is what we're doing well, this is where we are, this is where we need to go. A lot of transparency, a lot of communications. And guess what? All of that led to innovation. The rest of the competitors were going, "Hey, we got to get on board." [00:49:32] Speaker 9: We were on a mission and we knew that we were on the forefront of it because we kept getting requests from all these big manufacturers, "Come tell us what you're doing." British Petroleum, Boeing aircraft, Walmart. I went to Nike to start them on their vision. I got a standing ovation. It was amazing. They invited me back the next week to do it to the rest of the company. And the whole story for me was how I was a designer just coping with this, taking small steps. You're not gonna lose your creativity if you start to go down this path. It will actually be the opposite. You'll come up with some things you would have never dreamt of. [00:50:26] Speaker 2: - So if you look at the carbon footprint of the overall carpet tile, about 60% of the carbon footprint resides in the yarn. And it's upstream from us. It's the impact of the manufacture of the yarn itself. [00:50:41] Speaker 9: - We looked at other fibers other than nylon. which was that one with the most embodied energy. [00:50:47] Dan: - We came out with PLA yarn, which is made out of corn. That was a huge investment and a big splash. It wasn't strong enough to hold up in a commercial space. It actually burned when you dragged your chair over it. So that one didn't work. [00:51:03] Speaker 9: And we had a couple of failures that we kept trying and we kept going back to nylon. [00:51:10] Speaker 2: - We ourselves did not really even believe that you were gonna get much recycled content in yarn. The process to make yarn is an extrusion process of really fine strands. Nylon's a really high performance polymer. The challenges of trying to add what might be seen as a contaminant, a recycled content to the yarn, it was a very difficult technical challenge. So we went to our suppliers and said, "Can you do this?" [00:51:35] Speaker 9: - There was one supplier who really came through. [00:51:37] Speaker 2: - It took years and years, but they turned out to be able to develop the 100% recycled content yard. [00:51:45] Speaker 9: - And now we see that same nylon that would be going into our carpet is going into Adidas' shoes, Levi's jeans, Stella McCartney is making fashion, Gucci is using the same fibers. [00:52:02] Speaker 12: - Now can we work with a supply chain to deliver recycled yarn in a way that also has a positive social and environmental benefit? And how that ended up manifesting itself was working with local communities in the Philippines and then Africa to harvest ghost fishing nets, to package them, clean them, send them to our yarn supplier, and then have that made into recycled yarn. - A ghost fishing net is a net that's just cut off and left to drift. So it's just kind of like a passive killing machine. And so finding a way to kind of utilize those materials in a way that takes them out of the marine environment and also gives local communities an economic benefit. And if we can do it on a small scale, we can have the ambition to do it on a big scale. Maybe that's how the whole supply chain could operate. [00:52:56] Dan: - You got permission to pursue and permission to fail, but you better learn from the failures and not do it again. [00:53:08] Speaker 2: - I was studying what shapes does nature use and what shape should a carpet tile be. And I landed on the hexagon because it's very prevalent in nature. You see it in honeycombs and lots of different applications. And then when we started trying to do installations with them, ah, there's no give in a hexagon pattern. Whereas in squares and rectangles, there's lots of give. Anyway, it was a disaster. And in the end, it actually caused a lot more production waste. [00:53:41] Dan: - You've got to look at it as an innovation journey. You've got to look at it is you're going to get goodwill in the marketplace with your customers and they're going to give you more business. So you're going to take more market share. And you're going to inspire a culture that really wants to do this. [00:54:04] Speaker 5: - So I got a job offer from the old company who probably had observed how successful the operation was here. and wanted some of the magic dust that we had. And I was offered a pretty darn nice job, which I was very interested in. So I went to see Ray and told him that I'd had a job offer and wanted to know what he thought about it. And his response was, "Scotty, you're going to have to make up your own mind, but I'd like you to know that I'm trying to build something special here. I'd like you to help me do it." I was going anywhere after that. You know, how could you possibly turn down an opportunity from a man like that asking you to help him build something? There's no way I was going anywhere. That was the feeling we all had. With Ray at the helm, all the world is fine with our company. [00:55:09] Speaker ?: Yeah, I can't remember the exact day, but I remember Joanne, his assistant. She told me that they had suspected [00:55:16] Speaker 13: that he had cancer. Hi, folks. Yeah, it's Ray with a very brief taped message in my best chemo voice. [00:55:25] Ray Anderson: It wasn't a surprise because I had seen Ray [00:55:40] Speaker 10: at the last meeting at the Innovation Summit. He was very thin at that time. He was very pale. I knew that it was bad. [00:55:53] Speaker 13: One of the things we did was we asked everybody to fill out a commitment card, like what they were personally going to do to, you know, contribute to the speed at which we had to get up this mountain. And he filled out one, and he says, "I'm going to beat cancer so I can be there to see when we're at the top of the mountain." [00:56:11] Ray Anderson: Maybe I should take a minute and bring you up to date on me so you know firsthand. The best indicator of how I'm doing is a CT scan that I get every three months. The last two have been, frankly, heading in the wrong direction. When my blood counts are good, I feel good, and I have gained weight throughout the whole chemotherapy, which is ridiculous. That's the story of what's the bottom line for me. I wish I knew. Life is replete with uncertainties. This, I do know, when the year 2020 gets here, it will not mark the end of time. 2020 will mark a way station on the journey to fulfilling our company's ultimate purpose. So I say to you, dream big, work hard, keep hustling, do good, not just no harm, and have fun along the way. I will be with you every step of the way, in body, and then in spirit. God bless you. [00:57:39] Speaker 14: I think I thought, okay, he'll beat this. He's got this, you know, he's strong enough. [00:57:48] Ray Anderson: But of course, that's not what happened. [00:57:59] Dan: We've come to pay our respects. We've come to grieve our loss. I thought about the idea of coming here to say goodbye, and there's where I pause. I know I'm not ready to say goodbye to Ray, and I don't really think I ever will be. Ray has entrusted us to fulfill his legacy, to take Interface to the top of Mount Sustainability. And with Ray's spirit to guide us, it's up to us to make the rest of the climb. Thank you, Ray, for all you did for us, and for showing us the way. Ray, we love you. [00:58:57] Speaker 2: I was really concerned when Ray passed away about the mission, and if we would stay on course or not. [00:59:12] Speaker 7: You look at each other, and, you know, what are we going to do? [00:59:27] Speaker 6: Well, I think all of us, after Ray's passing, were in mourning. So there was a period of loss, sense of loss, and we didn't know, the Dream Team, what would come of our relationship. [00:59:57] Speaker 10: I was worried at that point, that somebody could come in and say, 2020, almost got there. We can rest on our laurels. Let's just focus on the business basics. Let's become every other company. But with this amazing, legendary past. [01:00:20] Dan: So I'd been running the company 17 years, and I just knew we needed a management change at the top. And then I met Jay Gold. Within two hours, I said he's the guy in my head. He's a very purpose-driven CEO. His whole life as a manager has been purpose-driven. [01:00:40] Speaker 15: So Ray died in 2011, and the company just flatlined after that. No revenue growth, no earnings growth. So my job, when I came in, was to really get the company back on track financially. [01:00:53] Speaker 2: Jay coming into the business was even more of a concern to me than when Ray passed away, because he came from big consumer brands, Coca-Cola, and Rubbermaid, and American Standard. Most companies, sustainability is in the marketing function. It's stories you tell, not stuff you do. So I was pretty sure Jay was gonna come in and see sustainability as just a marketing function. So I was worried that we were gonna falter. [01:01:24] Speaker 15: Now, I'm quite positive that the employees of Interface were not very excited when Dan hired me because I have no sustainability credentials. And so I simply asked our experts to define a very clear path forward. And so really, by the late fall of 2015, we had a pretty clear pathway to deliver on mission zero. [01:01:49] Speaker 12: I think he came in thinking, this is an amazing brand. This company has this great legacy of sustainability. I'm coming in at a really good time when we're gonna hit all the targets and declare success. And I think he was sort of surprised for us to be like, oh, no, now we have to go further. If we were a business who said, wow, in 1994, we felt compelled to do something. How do we feel right now? I mean, we feel like it's a much more urgent situation. Zero is not enough anymore. We have to up the ante and we need to set a bigger, more ambitious goal. What we kept hearing from our employees was we need to really address these larger sustainability issues. We need to be talking about global warming. [01:02:42] Speaker 15: I didn't accept that at its face value because, you know, perhaps I watched too much Fox News. I don't know. I was probably still a climate change skeptic. [01:02:53] Speaker 12: I would say to my husband, I'm going to kill this guy. I'm fighting for the soul of this company. I am willing to get fired to be that person because here's the deal. I know the guy who started the business. I know the guy who started the business. I know who we are. [01:03:17] Speaker 6: Well, we got an invitation to have the Dream Team meet again with the incoming CEO, Jay Gould. And we had already heard that basically he didn't really want to meet with us, that we were greenies and he didn't need any greenies to run the industrial company. [01:03:43] Speaker 12: there was not trust going into the meeting, like, a huge amount of skepticism and a lot of stress associated with what will the next mission be and how ambitious will it be. [01:03:57] Speaker 10: Whether Jay was going to be there or not, evidently, it was a bit of a question still. [01:04:03] Speaker 12: The night before, we weren't even sure the meeting was going to happen. [01:04:13] Speaker 6: And so on the first day, there was, I forget, maybe 16 people, four of whom were on the Dream Team. [01:04:21] Speaker 15: Frankly, I was just looking for a high five, a pat on the back, a way to go, Jay, because I felt confident we were going to deliver on Ray's commitments. And instead, I got a very stern lecture, particularly from Paul, who said, Jay, Interface is the type of company that takes on the world's greatest challenges. And while I'm pleased that you're delivering on having no negative impact, you have to move to positive impact. Naturally, I said, Paul, I mean, what would you expect of us? We're a very small company. And he said, global warming. [01:05:02] Speaker 6: What we are heading towards in terms of the climate is a point of no return, where the warming increased to such an extent that the Earth starts to heat itself without our help. What we have been told is that we have 10 years in which to reduce our total greenhouse emissions by 50%. That would be 1% a month every month for 10 years. It's not going to happen. So what do we have to do? Everything we can do in terms of avoiding more emissions. But in addition to that, increase and accelerate the rate in which carbon is cycled back to the Earth. It's always cycling back. 100 gigatons per year is cycling back into the land. It's not carbon. It's not even CO2, it's life. Because it feeds forests, because it feeds organisms, because it goes into the soil where it creates life. We actually get in alignment with that life and accelerate the rate at which life itself can bring back the carbon which we have emitted over the past 200 years. [01:06:20] Speaker 10: Life creates conditions conducive to life. If we learn how to help the helpers, we as human beings can have a positive impact and actually enhance the place we live. And could we make our aspirational goal, our moonshot, be that we were going to actually reverse global warming? Realizing we are in the stretch in which we have to make a decision of whether we're going to be in a climate that's fit for life or not. It was a lot. And we're very passionate. [01:07:01] Speaker 6: Our feeling amongst each other after the day wrapped up is that we were screwed. Like, all this work, all these years, all this effort, and... there was no more bread on that hook. [01:07:25] Speaker 10: We all went home and slept on it. [01:07:37] Speaker 6: The next morning, Jay comes in. I don't know how Lady stayed up. Maybe a little bit worse for wear. [01:07:44] Speaker 10: Jay came back in the room. He had heard from us and he had taken it in. And he said, I'm ready to reverse global warming. I want a climate fit for life. [01:08:02] Speaker 6: The new goal would be to basically reverse global warming. And we're going, "What?" And so he's like, "What?" [01:08:14] Speaker 15: I had never been forced to look at the science and the reality of climate change. And so, Janine, in particular, took me on a journey to understand the science and therefore build an optimistic spirit that we could do something about it. Humans messed up the environment by accident. Imagine what happens when we fix the environment with intent. And we were just shocked. [01:08:45] Speaker 6: I mean... and... moved. I don't think we fully understood that that could happen from what we experienced with Jay the day before. He got it. [01:09:04] Speaker 10: Positive energy came up in that room. Interfaces back. We're taking our cues from native ecosystems and we're going to create a world that is generous and we're going to reverse climate change. [01:09:21] Speaker 15: Global climate change is the issue of our time. The world is at a crisis and now... now is the time for us to act. But where do we start? Carbon is not the enemy. We... we are made of carbon. our carpet is made of carbon the earth is made of carbon regrettably man has put carbon where it shouldn't be in the atmosphere and now now is the time to bring carbon home doing no harm is simply not enough now is the time to move to positive impact to bring carbon home together [01:10:28] Speaker 12: i mean it was an incredibly proud moment for me to see him standing up there and i know for everyone in the company to to have him embrace it [01:10:41] Speaker 6: and so once again what you have is a company leading the way [01:10:57] Speaker 15: so in the summer of 2016 we launched climate take back one year later the r d team came up with a prototype at the time but it was the first ever carbon negative carpet tile it actually sequesters more carbon than if we hadn't made the product at all so by the summer of 2020 we will be making and selling carbon negative carpet tile all around the world [01:11:33] Speaker 10: so as part of climate take back the idea is that we're going to increase our impact because the impact could be positive and so we started this program called factory as a forest what we say is that the factory and its site should perform like the forest that would be there if we weren't there so we go and we find a reference habitat we figure out what are the benefits coming per acre how much water is being purified that's how much water needs to be purified at the plant how much air is being cleaned how much cooling how much soil is being built how much habitat is being supported how many organisms are being supported you have a metric that says we're going to get closer and closer to the way this forest functions the goal is to be functionally indistinguishable from the forest next door that's the journey that they're on now [01:12:35] Speaker 2: i used to come to work every day trying to find a way to you know develop a product and change it so that it would cost less or perform better and that's okay but wow to be able to come to work every day and instead of trying to make more money for the company i'm trying to make a difference in the world i'm actually trying to save the world you know that's so inspirational there are many moments [01:13:02] Speaker 7: where i felt oh my god we're doing something really big and many times it was just in front of customers people would hug me there are people that would cry honestly when you just tell them what [01:13:15] Speaker 12: what you were doing allowing people to pursue their livelihood in a way that connects to a larger purpose is really appealing to people across all cultures if we can all get up and go to work in this company whether we're in thailand or australia or northern ireland or atlanta and say you know i do this for the paycheck for sure but i'm also contributing to something bigger that's what it [01:13:48] Speaker 16: comes down to you know it's great to make money and it's you know that's a good thing but in the end sustainability gives you something to believe in more so than just profit [01:14:12] Speaker 17: that i'm not just making carpet which isn't the be all and end all for me i'm making carpet for a company that has a conscience about what their impact is going to be in 100 years time [01:14:27] Dan: it just makes total business sense i don't know how companies are going to survive in the next 20 years but they're not on this journey because people want to know what you're doing for society and the environment it's not about making a dollar it's about all three [01:14:50] Speaker 12: so i'm really proud to share with you how far we've come over the last 25 years we've reduced our factory water use 88 since 1996 we've reduced our waste to landfill 91 all of our factory locations today now use 100 renewable electricity and here's the big number our favorite number we've reduced the greenhouse gas emissions of our business a whopping 96 percent i think we can say that we delivered on our original mission to transform interface but i think we've actually gone even further than that i think we've gone beyond zero and started to go to positive our ripple effect has gone far beyond us to fuel so many other missions and i think this is what ray i think that's what ray would have been so proud to have seen not just a transformed interface but the transformation that we have had on the rest of the world you have had on the rest of the world and i think we can say with humility that we delivered on our mission inspired by ray with ray and now for ray and for us and for tomorrow's child [01:16:55] Ray Anderson: without a name without a name without a name and unseen face and knowing not you're a time or place tomorrow's child though yet unborn i met you first last tuesday morning a wise friend introduced us to and through his shining point of view i saw a day that you would see a day for you but not for me knowing me knowing you has changed my thinking for i never had an evening that perhaps the things i do might someday somehow threaten you tomorrow's child my daughter's son i'm afraid i've just begun to think of you and of your good though always having known i should begin i will to weigh the cost of what i squander what is lost if ever i forget that you will someday come and live here too [01:18:04] Speaker 13: where interface didn't have a map we do now if it has been done it can be done and so now the challenge for leaders is not can we do it the question is are you willing to do it [01:18:22] Ray Anderson: reinventing civilization is a tall order so is starting the second industrial revolution paul hawkins says only business and industry are strong enough to lead we agree why not us why not you and us it's the greatest play to win game of all time thank you [01:19:08] Speaker ?: so so so so so so you so you Thank you. Thank you. Thank you. Thank you. Thank you.