Entrepreneurs for Impact (EFI) Podcast: Transcripts
#208:
Natalia Dorfman, Co-founder and CEO of Kita — Carbon Insurance Specialist. Up to $250B Market in 2030. Performance and Counterparty Risk. Choose the Scarier Door.
Podcast Introduction
Chris Wedding:
My guest today is Natalia Dorfman, Co-founder and CEO of Kita. Kita is a carbon insurance specialist bridging the insurance and carbon markets. Their insurance products act as a stamp of confidence and safeguard against loss. Their claims can be paid in cash or in replacement carbon credits, providing flexibility for clients, individual risk appetites, and carbon strategies. In this episode you will learn four important takeaways and hopefully a bunch more. Number one, the relationship between billion dollar transactions and rigorous insurance products. Number two, the difference between counterparty, political, method, or standards, and natural catastrophe risks. And when Kita chooses to insure against each of those. Number three, the voluntary carbon market players that they rely upon to certify whether a carbon project has met its goals or whether an insurance event is triggered.
Number four, why she chose to do year long, this is my term, maternity sabbaticals, very important, after each of her children were born, and what this important family time also did for her thoughts about her work. All right, please give Kita and Natalia a shout out on LinkedIn, Slack or X by sharing this podcast with your people. All right, before we hop in, I've got a challenge and I guess an invitation for you all. First, the background. My goal is to empower 250,000 entrepreneurs, investors and university students to tackle climate change through startups, finance and personal growth. Is that enough? I don't know. It's a lot. Maybe it'll grow. Anyway, the podcast is one way to do that. To that end, the sector needs more inspiration, tools and tips from CEOs and investors in this space.
Conveniently, as you may guess, these folks are precisely my guest on this podcast. So here is the challenge. If you and five of your friends rate, review and follow this podcast on Apple and Spotify and share your efforts with me on LinkedIn or in response to my newsletter on Substack, I'll hop on Zoom and brainstorm a climate, tech, business or investment challenge or opportunity with you. Now, is that a reward? Is that punishment? I don't know. There it is. This is the best way for new folks to learn from the CEOs and investors on this podcast. If the process is unclear, as it was to me, in the show notes, you will find a link explaining how to do this. I read every single review. So please tell me and all of us which guest insights you like the most. Thanks so much.Hope you enjoy it.
Podcast Interview
Chris Wedding:
Natalia Dorfman, co-founder and CEO of Kita. Welcome to the podcast.
Natalia Dorfman:
Thank you for having me. I'm delighted to be here.
Chris Wedding:
Well, I know you didn't plan this, but the colors of blue on the two sides of your wall, they're not quite Duke blue, but they're getting there. They're getting there. Kind of a recollection of your bachelor's in environmental science many years ago. I'm sorry, a few years ago? However you want to phrase that.
Natalia Dorfman:
Getting to a couple decades.
Chris Wedding:
That's right, that's right. So we'll have to bring you back to campus at some point. Well, let's start with a stat that maybe some folks know but don't appreciate the magnitude. How big is the mandate, the need for carbon removal from the atmosphere by 2050?
Natalia Dorfman:
So by 2050, on a scientific basis, to mitigate the worst impacts of climate change, we as a society need to be removing around 5 to 15 gigatons of carbon dioxide from the atmosphere on annual basis. I think that is a kind of number that I, as well as I imagine anyone else, is very hard to put into any kind of visual in your head. And so I once was told this stat, so those gigatons, a gigaton is equivalent to 3,000 Empire State Buildings, which is enough to put one on each block of Manhattan and still have quite a few left over. So it's quite a lot. That said, there are things already in the world that humans do on a gigaton basis. So, for example, the oil and gas industry comes in at around 5 gigatons.
Natalia Dorfman:
The natural gas industry comes in around 3 gigatons. So it is a feasible thing for human ingenuity to create a industry that captures and or moves gigatons of things. But when you look at the timeframes in which those industries have started and scaled versus the timeframe we have with carbon removal, where it's just a couple of decades, that is where a very challenging situation comes in. And which is why so many people are working on this problem, Kita included.
Chris Wedding:
Well, I was gonna say it sounds good. It sounds terrible, but good for us working on the solution and all of our listeners. So in other words, all we have to do by 2050, in whatever 25 years, is create an industry from not quite scratch that is equal to or 2x the size of the oil and natural gas industries combined. Is that right?
Natalia Dorfman:
Yes, I think that's well put.
Chris Wedding:
Easy peasy, easy. Let's get to work. All right, so let's go directly to Kita. What is Kita?
Natalia Dorfman:
Kita is an insurance company, and a very specialist insurance company, in that we ensure the transactions that finance those projects that are doing that removing of carbon dioxide. So when we think of the problem from an insurance perspective, and I realize that most people probably don't think of that problem and immediately jump to insurance, but when you think about those billions of tons of carbon dioxide that need to be removed from the atmosphere, and you think about the length of time that these projects underpinning them need to scale up, you in essence, backtrack yourself to projects today, or at least this decade, needing billions, if not trillions of dollars of investment. And so when you look at where that type of investment comes from, it tends to come from institutional finance and structured transactions.
And if you are in the finance and or insurance industries, you will know that those types of structured transactions will almost always have an insurance element to them which will mitigate the risks for one, if not more of the players, such that they can deploy capital with more security that they won't lose it all. And so, and likewise, actually on the flip side, the underlying projects should generally speaking have insurance in place such that if they have something that goes wrong, they're better placed to fix that problem quickly and be able to get up and running. And so when we started looking at the carbon markets, the first thing that we saw was the lack of insurance in the space. It is a technical thing to insure. It is a fast moving market without what we would term historical claims data.
So you don't know how likely it is to have an insurance loss. And so thus it felt like a space for a specialist insurance company to start. Our goal is really helping our clients reduce risk in their transactions so that we can enable more finance to flow to scale high quality projects.
Chris Wedding:
Okay, so you know, one obvious takeaway from what you just said is with better insurance products around carbon removal, more, like larger dollar amounts, will flow and have to flow. And maybe said equally as important is almost the reverse. When billions of dollars flow in transactions, they always are surrounded by insurance products. Therefore we need them here as well.
Natalia Dorfman:
Yeah, it's a bit chicken and egg to be honest. Insurance isn't a magic bullet, but it's very hard to deploy that kind of capital without insurance being part of the transaction.
Chris Wedding:
Yeah, I've been a big fan of saying things about how sexy insurance is, despite the feeling that it is super boring. It is one of these amazing innovations. I think that obviously you know this in great detail. Some of our listeners may know this, and maybe you can fill in the blanks here, but I think in the solar space, in the commercial solar space, where it hasn't grown like residential and utility scale solar have grown over the years. And partly it's because it's difficult to underwrite the credit worthiness, the ability for these small businesses without a credit rating to pay over the 20, 30 year life of a system. And I think that's where what energetics or Energetic Insurance came in to say look, we got you, we'll figure that out to kind of remove this risk.
Maybe if you can add to that example or other examples that are not obviously what you do, but related to provide the case or more support for the case that you all have to exist for the CDR space.
Natalia Dorfman:
Sure. And actually Energetic is a great example of another type of, I suppose, climate necessity in terms of the renewables industry and there being a gap insurance coverage that was impeding financing. Again. Exactly. Energetic is ensuring the non payment, as far as I understand it, of these transactions where you are selling in essence renewable energy supply into the future and you might not get paid and thus you're protecting the financing of the solar renewables companies such that they can get a bank loan. And I guess in terms of what we do, I'll give a simple example. We work with a corporate who just understood the amount of unabated emissions it was going to have in the future, just based on the type of work it does, it will be impossible for this company to decarbonize completely.
So it knew it was going to have an excess supply of carbon dioxide it would be unable to abate and it decided it sought to invest in afforestation projects to mitigate that. And so they started investigating which types of projects they would want to engage in and they decided they would like to engage directly with the project so they can be as certain as possible that is having a positive impact. This meant they were going to prepay a project developer who's working in a developing country. And this made their in house risk finance, you know, management teams quite nervous because this isn't something they would normally do.
And so they engaged with us on the insurance side and they said, you know, this just isn't something we can do without insurance just on the basis of that level of risk is so outside the bounds of what we would normally do. And we would like that extra level of due diligence and safeguarding in case something goes wrong. Because at the end of the day they are looking to do something in a very sort of positive and structured way. And so they thought to invest in five projects. We thought one was actually a little bit too risky and so we told them that and they ended up investing in four of the projects with insurance and they've now come back to us for three more projects because they're looking to invest really over the years until about 2034.
And so, I mean that is a simplistic example, but I think it is indicative that there are certain companies in the world who really do wish to invest in this instance and nature based solutions. But it is just hard for them to get it past their in house risk and transaction committees without demonstrating that they've safeguarded it in the same way that they would safeguard transactions in other aspects of the business. Likewise, we do work with clients who are doing more structured transactions when they are larger sizes. So they will be setting up, you know, special purpose vehicles in order to raise the financings, in order to deploy.
And again, particularly when you get a bank looking to do a lending facility for their own capital relief purposes, they will need to ensure that transaction so that they can get that kind of capital relief that they would expect. So again, insurance is a needed part of that transaction in order to get those financial institutions to come in. And I think over time we'd expect this to become much more normalized. Right now it still is a relatively new insurance market, but we're starting to see deals written that they have insurance factored into the contracts as a mandatory part of that deal structure. That's something we would expect to see and I think will be a positive thing just to safeguard deals and enable, like I said before, larger capital flows.
Chris Wedding:
You know what's also interesting about the first example you gave of the corporate doing afforestation is not only did you provide insurance to the four projects, but your additional screening helped you decide not to make an investment at all in one of those projects.
Natalia Dorfman:
Yeah, and that's actually part of it. And I realized I should have actually said what we insure. I'll come back to that in a minute. But the insurance industry more widely is actually really interesting because everyone thinks about insurance as you know, people usually think about insurance like, oh, I have to insure my car like, or my house. And it's that horrible thing you have to buy each year. The end of the day insurance is usually there so that if something goes wrong, insurance enables you to have that payment to revolution. Likewise, insurance companies actually end up with so much data, based on that insurance policy, that they provide to you that we can also use that data to help identify the key things that tend to go wrong in projects and provide advice to people on risk mitigation.
So this is something that Kita is now doing within the carbon markets for our clients. Before people invest in a project or before a project developer puts their project out to investors in a data room, we'll do a risk advisory sort of check of that project to identify any insurability red flags. And this is helpful for people to a identify things that could go wrong, to identify fixes to those things that could go wrong, and to demonstrate that additional level of due diligence. I think insurance companies are unique in the carbon markets in particular as well as other markets, but we very much have skin in the game. So it is not in our interest to ensure something we don't think is quality. We will only insure something that meets both our quality criteria as well as our risk criteria.
And then if we are wrong, so in essence, if there is an insurance claim, we don't just walk away like a consultant would, we actually are on the hook for an insurance claim. So it's very much an alignment of interest with our clients. And in terms of what we insure, again, we focus on enabling investment into projects, and so that steers us towards early stage projects. And so what we tend to in essence ensure is the performance risk. So if you invest in a project that is supposed to be capturing carbon over multiple years and delivering you to output, which is a verified carbon credit, we will ensure against the risk that you do not receive that verified carbon credit in the future.
And so in essence, we are covering a wide range of performance risks of the underlying project, from exposure to natural catastrophe, to political risks, to counterparty risks like fraud or negligence, as well as changes within the methodology and science that these projects are quantifying their carbon sequestration based off of. So it's a very comprehensive insurance policy that we have built with very much the aim of protecting that investment.
Chris Wedding:
Okay, how about the other kind of version of what you insure? You mentioned kind of the types of risks that you insure against. How about the types of projects? So you mentioned afforestation. What else is in that list of things that you have kind of confidence in right now?
Natalia Dorfman:
So it depends what type of insurance policy it is. So for something like our political risk insurance policy, which is based on ensuring either the asset owner, the project developer, or the investor, against the actions of the country in which the project is based. So for example, expropriation or export license cancellation or maybe war terror, we can do any type of carbon project for that. Likewise, we do a counterparty risk policy for really early stage projects to protect against abandonment and solvency. We can ensure any project for that. And then in the middle we have our sort of most detailed, what we call delivery risk insurance. And for that we do nature based projects, we do biochar, we do enhanced rock weathering, and we are working on things like direct air capture and bioenergy carbon capture and storage.
But this is a very highly technical insurance policy, and so we need to build a new risk model for each new type of carbon that we move into.
Chris Wedding:
And to what degree does your all's choice of what to insure relate to the existence of third party standards out there.
Natalia Dorfman:
When you say standards, you mean like a Verra or a gold standard?
Chris Wedding:
That's right, yeah.
Natalia Dorfman:
So we need any project that we insure to be under some form of verified third party standard in that, as with any insurance company, the insurance company itself isn't the sort of judge and jury of whether or not there's been a loss. And so we need somebody else to be doing the initial validation of the project to assess whether what has been projected is a valid assessment. And then at the point of, you know, sort of delivery of carbon credits, there are verification events. We need that verification again to be done by an unbiased third party, such that if there is a loss, it's not us who said there's a loss and it's not our client who said there's a loss because we both have a clear vested interest in a different outcome.
It is an unbiased third party who has come and presented us with a loss and that we can look at the evidence underpinning that loss and trust that third party report. And so if you have a project that isn't under a third party standard, then it is hard for us to get that unbiased third party report that would trigger us paying you an insurance claim. So that is, it is a quite core principle of insurance, full stop, but it's definitely a core principle of how our insurance policy works. So thus, if you're not under a carbon standard in today's carbon market, it's hard. I could see a future in which there are other trusted third party verifiers.
So it doesn't necessarily need to be a carbon standard forever and always, but there always will need to be a trusted third party verifier who has the expertise to assess whether or not there's been a loss.
Chris Wedding:
Okay, and maybe not to ask you to pick your favorite children, but maybe just give some other examples of who these third party verifiers, judges, if you will, will be or are for your projects.
Natalia Dorfman:
I mean, what they are right now is within the carbon standards, it's the verifying bodies. That is what it is. There's really nobody else. You could see a world in which it is maybe a. And we have had people come to us and ask this sort of a third party, maybe one of the big four accountants or something like that, some kind of widely trustworthy entity that again, has an unbiased view of the outcome of a project. But to date it has been only the verifying bodies as outlined under the carbon standards.
Chris Wedding:
And maybe for folks that are less familiar with carbon markets. Who are some other examples of those? You mentioned Verra as one. Who else comes to mind as a common standard or certifying body.
Natalia Dorfman:
The common ones, so Verra is by far the largest carbon standard in the market. You also have another large ones gold standard. You have the American Carbon Registry, you have Climate Action Reserve, you have and you have quite a few smaller ones that are coming up. From ERS to OX Carbon to the International Carbon Registry, there's quite a few isometric who have come up and they in essence develop methodologies that quantify for projects. If they follow this methodology, it will help them to quantify how much carbon their project would be able to store over what timeframes. They then will basically in essence set the rules for how those projects are monitored and report on and how sort of success points along their life.
And so within the voluntary carbon market, at least right now, the carbon standards are broadly speaking those who are setting these frameworks that the projects work within.
Chris Wedding:
So let's just pretend you can see the future for a second. Natalia. I think present day I feel like there's lots of confusion even for folks like me who live, you know, in it, but not all in just carbon, the carbon kind of offset world that are confused by all these bodies, how they're similar or different, flash forward five or ten years, does the voluntary carbon market look similar with so many plausible standards and certifying bodies? Or is there, you know, almost like, I mean consolidation of sorts, just become a switch more towards kind of government control mandated bodies versus a voluntary carbon market? That was like a thousand questions in one, just pick whatever you like there Natalia.
Natalia Dorfman:
So my guess is that the, I mean there's, so there's a few questions like you said, but I guess on one hand I think the voluntary market, such as it is, will increasingly converge with some form of compliance market, whether that is a sort of government UN body like the Article 6 type markets or more of a emission trading systems, for example in the UK or the EU. So I think that will happen and that will have impact upon the methodologies used. And then secondly, just generally, I think there will have to be consolidation among the carbon standards and I think that will widely be helpful and hopefully via that consolidation as and when it occurs, so the positive points from the different standards, we'll be able to come into a more centralized form.
I don't think we'll end up with like one standard to rule them all. But I think particularly if carbon credits become over time more of a regulated asset class, then they will start to follow the norms of regulated asset classes. And I think you would probably end up more with sort of a core set of methodologies that are audited and have appropriate governance mechanisms. You will end up with entities that are approved and licensed to hold pools of carbon credits. And right now, these things are all sort of combined within carbon standards. So I think there might need at some point to be a splitting out into the sort of core skill sets that people seek to have and to continue to take ownership of, that is my guess. I think that is what is logical.
Whether or not that happens and in what timeframes it happens would to be determined.
Chris Wedding:
If only logic always prevailed.
Natalia Dorfman:
Exactly.
Chris Wedding:
Yeah. How about, you describe the types of projects, types of risks. How about the types of countries? How active are you in three countries versus 10 versus 1? Which continent? You're in London, you're in the States. Where are you all active?
Natalia Dorfman:
So we are active all over the place, which is good. So insurance, again, you have two tiers of where we are allowed to be active. One is our client. So when you're an insurance company, you have a lot of regulations as to who is allowed to buy an insurance policy from us. So we can sell insurance to companies in the U.S. UK, Canada, Singapore, Switzerland and Europe. And we're looking to expand that, for example, to Australia, et cetera. That is different than where the underlying project can be. So the underlying carbon project can be anywhere. So our clients will often be a multinational company that will be buying carbon from one of their entities.
So let's say I am buying carbon from my EU entity, but the project I might be buying carbon from could be in Ghana, it could be in Colombia, it could be Indonesia. You know, it could be anywhere. And so the underlying projects that we are involved in are all over the world. The only countries we don't work with are countries that have sanctions or otherwise, like extremely high levels of risk. So, for example, if there is a live war going on in that country, then we would not insure that project. But we will look at projects all over the place. We get a lot of projects, as you would imagine, in Colombia and Brazil, you know, was sort of hotspots for carbon.
Chris Wedding:
Makes sense. I think that most listeners will have seen or heard about headlines where a carbon offset project didn't work out as planned. Negative headlines, right, which are, I mean, look, maybe the reason, if not a huge part of the reason for the carbon, the voluntary carbon market shrinking dramatically in the last whatever, couple years, maybe just without being, without us being, kind of negative nancy here, what are a couple of examples of planned carbon offset projects that seem to be trustworthy, et cetera, at the inception didn't work out. Why didn't they work out? And maybe kind of fact from fiction if there is that. And then how your old solution could have prevented the negative headline and look cascade of negative impacts beyond just that project for broader, the broader carbon markets.
Natalia Dorfman:
Yeah, of course. So one, I guess one high level point, you said the negative nancy, I am of the view there is no market in the world or no industry in the world that doesn't have bad actors. There's always going to be people who are looking to take advantage and do something wrong. You only need to look at the banking industry to see examples of that, within a large industry that continues to operate because it has appropriate rules and regulations and ramifications in place for people who misbehave, broadly speaking, these things are found and addressed. So I think within the carbon markets or the voluntary carbon markets, you do have bad actors.
I think one of the challenges is we haven't really had in place the abilities to identify and remedy those instances and put in place the appropriate penalties for people who act that way. I think that is coming though. But I guess in terms of what we have seen and what has been reported on in the press, probably the most common is what we would term counterparty risk. And so the underlying people who are working on the project over time starting to act in a way that intentionally or at least allegedly intentionally reports more carbon credits than they know they were going to have.
So for example, you might look at the modeling of your project against the methodology and realize that based on that modeling or based on the results of the sort of you have modeled and now you are actually seeing the outcomes come in that you're receiving a lot fewer carbon credits than you expected and that your project is no longer economically viable. The right thing to do is to say, as hard as it might be, this project is no longer economically viable and to take the repercussions of that, whatever it might be. The wrong thing of course to do is to inflate the figures such that your project appears to have more carbon credits than it actually does and to continue operating the project. And I think there have been some things like that have taken place in the market.
I think one of the challenges within these carbon projects is the length of time. And so in terms of how insurance can help, one, of course we will help you to do additional due diligence at the outset of the project, like I said earlier, we have no interest insuring a bad project. We don't want to pay an insurance claim. So we will not insure a project that we don't think is a high quality project. So at least that's another level of eyes on your project. That said, we will inherently also make mistakes. So thus, then the second thing is, so at the outset you make a decision. These projects take a long time. So even if at the outset maybe everything was okay, the way that teams operate on the ground over multi years could change.
Maybe the management team changes, maybe people's behavior changes that could lead you to a loss. And thus again the insurance, at the end of the day is there such that if you do have a loss, you would receive hopefully a claim payment that enables you to make good on whatever that loss was. For example, to receive additional money to buy more carbon credits or maybe to receive replacement carbon credits to make good your net zero claim. And I think it also actually gives you a positive message externally to say we made a decision with the information we had at a point in time because we wanted to do a positive thing and or achieve our stated climate targets. So we made a decision at a point in time, we recognized the risk, so we put in place measures to mitigate that risk.
And when that risk manifested itself in this, you know, today's instance, we have in fact an insurance policy that has enabled us to make good. And you could outline exactly how that has taken place and what you have done with your insurance claim payment. And I think to some extent that is sort of all you can do in a world in which you are working with long term projects that might not work. And so that is, I think in my mind how if I were on the buying side or the investing side, how I would use the insurance policy.
Chris Wedding:
Got it. Now, you know, here we are almost to the point of the podcast where we stop talking about the business and switch the personal. But I'm actually thinking of a really silly question perhaps, which is, you know, you're offering an insurance product here, but in that example, the make whole, I mean, is this a cash payment, or is, hey, we got your good quality carbon offsets over here and that's the make hole. Because what you're ensuring is the delivered well, the receipt of carbon offsets, not necessarily cash. Like what do you, how are you making them whole? Which is, I feel silly asking, but.
Natalia Dorfman:
No, no, it's not a silly question. That's a very common question and a good question. So we can do either you can either pay out in cash or you can pay out in replacement credits. When you look at the replacement credits, it's like what you said. It's the sort of, what are people buying insurance for? And let's say if I was buying a phone, I could get an insurance policy that says if I lose my phone, I'm not going to get money back, but actually they'll just give me another phone because the insurance company recognizes I don't actually need the cash, I just need a phone because I need to function. And so the insurance can do the same if we have a client where what they are buying insurance for is because I need carbon credits.
And if I lose carbon credits, I don't want cash, I want credits. We can pay them out of claim and replacement credits. Likewise, we will have our more sort of financial institution type clients who are very experienced with sourcing carbon credits. And what they are doing is looking to, in essence, the ability to sort of leverage their investment. So If I invest 10 million in a carbon project and I don't insure it, I in essence need to hold back a pool, maybe not 10 million, but maybe, you know, 7 million to make good the loss in case there is a loss. If I insure it, then I can in essence pass that, you know, 10 million risk to my insurance company. That frees up a 7 million or so for me to invest in another project.
And some of our clients want cash for insurance claims, some of them want carbon for insurance claims. And just like any other industry, it's trying to understand why your client is buying what you're selling. I think there's a saying insurance that no one really buys an insurance policy. Like, no one wakes up today and thinks, gosh, I'd really love to buy some insurance today. You really only buy insurance either if it's mandated, like by a regulatory requirement or a sort of de facto business requirement, or if it's providing you some other benefit. And so it's about identifying what is the benefit people are buying and then how does the insurance in essence enable that benefit to them. And so for carbon, I would say that is a challenge.
And it's sort of a space that we're constantly trying to reevaluate in terms of why our clients engage with us. But that cash versus carbon insurance claim payment is a key question we always ask people when we speak to them.
Chris Wedding:
Interesting. Okay. So if what you would provide them would be other carbon credits, that feels like it's tricky too because it's not like cash and that's not fungible. Right. They're not, they're not all equally the same. This is probably a whole separate podcast, but in whatever like short version you can give, how do you make sure that it's like for like in terms of both value and price? Let's say.
Natalia Dorfman:
So the short answer to that is in today's carbon market is a conversation with the client in terms of what is like for like. So we would work with them to determine what are their mandatory criteria of a replacement carbon credit and then what are comparison criteria. So for example, it might be a mandatory criteria, must be, it must be a removal of X durability. Right. But a replacement criteria could be. I would love it to be in Brazil but you know, I'm open to the remainder of South America if we must. It could be, you know, ex other country. So we'd work with them on those sort of required and replacement criteria for the over the required and comparison criteria. And then in terms of the value of loss, again, another core principle of insurance is that it works to a limit.
So you are insured up to a limit, a pre stated limit. We don't give you a sort of, we don't take sort of unlimited market price risk and so you are insured up to let's say 10 million. And we would translate that 10 million into replacement carbon credits. And it would be our job to go out and make sure we have the ability to source the equivalent number of carbon credits for your 10 million. But it still would come back to some form of financial loss as stated in your insurance contract, just forms into credits.
Chris Wedding:
So I run the risk of just blowing all of our time on business and not covering the personal. But, but I can't help it. So in that example, if it's up to 10 million bucks, let's say the price per ton happened to be lower for like you know, credits. I mean there are scenarios where you actually deliver more carbon offset than they thought they were going to get. Is that possible too?
Natalia Dorfman:
Yeah, that's possible. Or more likely is that, and this would be stated in our, we have an explainer if anyone listening wants this. We have an explainer of how this works. Let's say you have a hundred carbon credits, right? And we give you 100 carbon credits and it costs less than the limit of your, of the less than the amount of claim that you should have been paid. We would basically give you 100 credits plus the remaining cash. We can't keep your money like, if you have a insurance claim worth $200 and we can get you 100 carbon credits for $100, we don't just get to keep your other hundred. We still have to give that back to you. And so you just get credits plus cash. Yeah.
Chris Wedding:
I mean, look, I'm not going to lie. The entrepreneur in me was, like, already doing an Excel spreadsheet, thinking, wait a second, wait a minute. You name that system too hot darn.
Natalia Dorfman:
That is not allowed under insurance regulations.
Chris Wedding:
Of course. Of course. Okay, let's now officially switch. All right, so the personal part of the podcast, Natalia, the first one is let's say that you go back hanging out with your younger self, you know, fresh out of Duke undergrad. What are a couple of pieces of advice you might give her about building a career of fill in the blank, impact, meaning balance, et cetera.
Natalia Dorfman:
I think, and actually, I was just speaking to a woman on our team about this last week because were doing our end of year reviews. I don't know if I would give myself this advice because I think I followed this advice. I think it's good advice is not to get distracted by money and titles, but to pursue what interests you. And if you pursue what interests you, then you will be fine. And I think I spent most of my career now that I know what other people made, like, I could have made a lot more money, but I always did things that I thought was interesting. And I actually, another thing is never say no to an opportunity. So sometimes I got an opportunity, for example, to move to Belgium, and my company gave me three weeks.
And realistically, I could have said, gosh, I don't know if I can do it in three weeks. Right. I just rented a new apartment. I had to get my visa. Like, it was. The whole thing was a faft, but you just have to say yes. So I think if you do what interests you and you let, what am I interested in, guide your career choices, then you will do well because you'll want to work hard because you're doing interesting things, and that is more motivating than money and title. I think if you don't say no to opportunities like, so you get these kind of like sliding door opportunities, right? I think everyone has them. You're like, you could make one choice or this choice, and you know your life is going to go in different ways.
I think it's important at least sometimes to take the door that's more scary and see where you go, because you can always go back to the safer option. And then I suppose, I guess the final thing would just be, I guess it's the kind of like, give yourself a break sometimes in that, like, your whole life doesn't have to be a kind of, if you are highly motivated individual let's say. Your whole life doesn't have to be like, gung gunk, go, go, go, I'm working so hard. You can take breaks. So I think I've been very lucky to live in the UK while I've had children. And so I took off a year for each of my maternity leaves. It's very hard to look after young children.
I'd probably rather be working, but it was a good mental break that actually was reinforced that I like working. And so when I went back to work after my first daughter, I was actually really motivated because I was like, I never actually realized how much I like working. And so now it's not just that I'm working because people work and that's what you do. I'm working because I really want to. And so that's where am I going to really focus my efforts. So I suppose those would be, I don't know. Again, I don't know if I'd give that advice to myself because I think I, I followed that advice maybe instinctively, but it would be, do what you're interested in and you'll be fine.
Occasionally take the kind of risky option and you're sliding doors and then give yourself a mental break every once in a while. Like, you don't. You can sort of take a couple years treading water. It's not going to kill you.
Chris Wedding:
Those are great. I think the one about never say no to an opportunity I was giving, well, I was doing maybe a Q and A on career stuff with some Duke undergrads last week and I said, you know, raise your hand a lot for stuff. They're like possibilities at your job, which I think relates to your never say, never say no, but take breaks. I think people's, some people's heads just exploded when you said you took a year off for each of your children for maternity to leave. What an interesting, like dual benefit, right? I mean, it's not quite a sabbatical because it isn't like you could just do whatever research or project you're after because your project is your child. I guess that's maybe as good as. Anyway, that's inspiring. I think as well. The choose the scarier door counterintuitive.
But I think, you know, what's the saying that most of our growth lies at the kind of edge of our fears, let's say. So if you want to grow, you know.
Natalia Dorfman:
Exactly. I think there's also the. I don't remember who the quote. I think there's a good quote on this somewhere. But it's the like a good opportunity is one that you're not quite ready for, right? When someone says, oh, do you want a promotion or do you want to do this new job? And you look at, you think, gosh, that's easy. You know, I can do that no problem. It's probably not actually really a great opportunity for you. It's probably just going to keep you on a plateau. Like any good opportunity is one where you look at, you think, I know how to do maybe I don't know, 50% of that, but like, does, you know, I think I can do it.
I think it's that kind of believing in yourself and just sort of taking the lead and then what's the worst that can happen, right, is you fail and you go and do something else. Like, at the end of the day, it's not the worst that can happen. And that's quite core to entrepreneurship. I don't think anyone even probably entrepreneurs who've done it a thousand times before, you probably never start a company and you think, I know exactly how to do this. I feel completely comfortable, easy breezy, I'm just going to do it, sell it, be done. You must always feel like, I don't really know what I'm getting myself into, but I'm just going to sort of set my strategy for the far enough, but near enough to sort of execute and just do it right.
And it's scary, but if you don't do it, you never know.
Chris Wedding:
True. It's also true that without, I think, you know, naivete, most entrepreneurs would never to start. But I remember my first startup, we had just unbelievable confidence this was gonna work out until we realized, oh, wait, we don't know what, there's like a thousand mistakes we're making. Okay, one last thing. You know, you mentioned you could have made different choices to make more money. I agree with that. Not about you, but about me. But I think, you know, the flip side is like, yes, but in that alternative universe, you know, would I have some sort of, you know, substance abuse issue or shattered relationships or, you know, like, you're doing shit that you don't really enjoy just for the title and money,
I mean, look, money and title are great for sure, but anyway, it isn't like those things and nothing else is at risk, if you will.
Natalia Dorfman:
Yeah. I'm gonna think of it as like. Because nothing. There's nothing wrong with wanting to make money. I think it's more. I just realized it's not my driver. And I think what I've realized with Kita is actually probably I think if I'd gone into a career solely for making money, I actually don't think I would have done that well, cause I probably would have gotten bored. And once you're, or not bored or maybe just if that was it, then I don't think that would have been enough and I wouldn't have performed that well. And thus the goal of making money probably would have still plateaued at something quite frustrating, versus doing something that's interesting I think will end up enabling you to make the level of money that you want to make for your lifestyle that you like to have. Right.
If you still do want to have a lot of money and you seek what's interesting to you could probably steer yourself towards more industries over time that sort of make more money. But I wouldn't have gotten here if I had only pursued financial compensation because I think I clearly would not have started my own company. I would have just stayed in the industry I was in. I would have almost certainly made more money over the last few years. That's all. I suppose it's just, I just think over time, whatever you would judge yourself as success, I think you're more likely to achieve that level of success if you pursue what is interesting and what motivates you rather than just pursuing that sort of number on your salary.
Okay. Especially for like in your 20s, it's like learn, grow and then you will figure out the monetary side later.
Chris Wedding:
Yep. Let's go number two. Tell us two or three habits that keep you healthy, sane and focused building a company.
Natalia Dorfman:
Well, so I have young kids, so my habits, well to be fair, my habits are predate them but have been reinforced by them. So my habits are based on being able to perform at a high level every day but not burn out. So I broadly speaking wake up at around 5:30 and I wait, work till around they wake up. If I'm going into the office versus I'm staying home, my day is a little bit different, but broadly wake up at 5:30, work until they wake up, have a little bit of kid time, then I work the day, have a bit of kid time in the evening, then I work until 8:30 max, nine at night. I've noted over time that if I work later than that on a daily basis, I don't sleep well, so I sort of stop working.
I have like 45 minutes to start to decompress and I go to sleep. And I do this well five days a week. Certainly I still wake up at the 5:30 on the weekend. So I will always work some on the weekends and again try and carve it out when they're not around. They don't, you know, they sort of are at an event or something like that. So basically it's that kind of like sleeping, waking schedule is something I just do. And it means that I can take the afternoon off to go to their Christmas performance, but I can still get my work done. So that like just consistency of routine I think means that I can keep working at a high level but not burnout. Second, I always do 30 minutes of exercise five days a week.
Again, in terms of like finding the time. If I do more than 30 minutes or more than five days a week, I start to feel like I don't have the time. But 30 minutes of exercise five days a week, I can always find the time. And that keeps me sane. And then I think again, like there's an aspect of keeping a aspect of just relativity on it, which kids are helpful to do. Just to sometimes say I'm not working for the next, you know, two hours because I'm putting my kids to bed and getting dinner and it is not the end of the world. So I think it's keeping a relative priority basis on your life. Even though that is hard to do, but trying to do it. The main things that I do are that waking sleeping schedule and the exercising.
I have very consistent on those two things.
Chris Wedding:
Well, and it sounds like almost because you squeeze in a little work in the morning and a little work at night, you kind of have the freedom in a sense to take time out, you know, whatever late afternoon to do the, you know, friend, community thing, family thing if you need to.
Natalia Dorfman:
Right, Yeah, I don't do that every day, but it's like when you need to, it's nice to not have to ask a boss, can I take off two hours this afternoon to go to the Nativity, which is I have coming up next week. It's just, I can just do it. But likewise, I can't not work those two hours. So it's a question of when do you get those two hours back. So to be honest, my schedule now is not that different. In my schedule before starting a company, I've been pretty consistent since having kids in terms of how I work.
Chris Wedding:
Well, and as entrepreneurs, when we ask the quote unquote boss, we can be a worse boss perhaps than that boss as well.
Natalia Dorfman:
No, that's true. And again, it comes down to like, what are you trying to achieve out of this? So like again, monetary compensation isn't why I started my own company. I wanted to do something good. So we will judge ourselves by the impact Kita had. But I also remember thinking I didn't want to kamikaze my family and like never see my kids again. And so we have tried to build a business where you can work hard and still have a family life. Like it's not easy to do, but myself and my two co-founders do it. And we would hope that as our team members start to have their own children, if they choose to, that will set a good example for them to be able to do that.
Chris Wedding:
Yeah, excellent. Let's go to the last one. Any recommendations for books, podcast, tools, quotes, et cetera that listeners can pick up and learn from?
Natalia Dorfman:
I sort of have a book, I will give it some sort of, I have some edits to it, but it's The Magic Power of Thinking Big. So my uncle gave this book to me like probably when I graduated from Duke, to be honest. And he wrote a note in it saying that it had shaped his thinking and he thought had informed his success. And I didn't read it for like 18 years, just. I just forgot about it. And then I read it and actually it is good things to remember. It is truly, I mean, the summary of it. There is magic power in thinking big. And it's just basically there's no point in setting yourself little goals if you wish to do something like do it big. If you're going to believe in yourself, like wholeheartedly believe in yourself.
Doing things in little incremental half measures is only going to lead to failure. And you just need to trust yourself and commit and go big. And if you do really believe in your ability to succeed, then you will probably fall somewhere. Even if you don't hit it, you're probably going to fall somewhere that's a pretty happy place. And so I've given this to people within our team at our off site last year just in terms of the ability to think within themselves. You should have that power to think big in everything that you do, but including at work. My note in it is the original version of that book is very male heavy. So every example is a man which kills me. So when I gave it to the people on her team, I actually edited it.
The other thing is actually similar to this. is the Matilda, the musicals, this movie. And I don't know if any one of your listeners have ever. If they have kids, they've probably seen it. But there's a song in it where she sings about, basically, her parents are mistreating her, and she says, don't let a little thing like little stop you. And I thought that with Kita, because when you're starting an insurance company, it's quite hard to be a little insurance company. A lot of insurance is built on scale, the ability to build a portfolio and have a large capacity and what you're able to insure. But if you let a little thing like little stop you, then you never get going. And so, again, I think there's that say it's very similar, it's like the flip side of a magic power and thinking big.
But you will always start little, right? Like, whether you start little because you just graduated from school and you have no experience, or you start little because you're starting a company and you have nothing but a dream and a PowerPoint, you always start little, but every company in the world has started little. And if you let that stop you, then you just will say little. You'll never go. So if you work consciously to say, okay, we're little today, but we have this magic power of thinking big, like what we're going to do and how we're going to achieve it, and we're not going to let any of these little roadblocks get in our way, then I think you really can achieve, anyone can achieve quite a lot. I think we put a lot of mental barriers in our own way.
And so that would be my two pieces of advice and a book and a movie to watch.
Chris Wedding:
It's a great. It's a great one, two combo. I think out of 200 and whatever, nine episodes of the podcast, no one's ever recommended a quote from a children's movie. So thank you for that. That's great. Yet when you reference the magic modes of magic power of thinking big, I knew what your notes were going to because when I read it, I was like, wow, this is like, all about the man being the thank you, big type and the wife being the supporter. It was written decades ago.
Natalia Dorfman:
It was written a long time ago. You would see my little version. It was literally cross out man, woman, just. I was like. At least half the time I have to like.
Chris Wedding:
Yes, yeah, I was a big fan of the book years ago. We've given it to our oldest who's in college. He's not read it yet. Hopefully it happens before 18 years from now. He has, he has read Deep Work which I recommended, which he actually fully absorbed and integrated into his full being. So I think it's a batting average. Right? How many, what percentage of the books does your child pick up you want to Anyway. Hey Natalia, I've been intrigued since I first learned about your all's business model. I became more intrigued after we started Terrasat in the carbon removal market and then to hear of, you know, Duke overlap. Anyway, glad we could tell your story to a much larger audience and we're all rooting for your all's success.
Natalia Dorfman:
Great. Well, thank you very much for having me on the podcast. It was a pleasure.
Chris Wedding:
Okay, thanks for listening. And if you're not sick of hanging out with me just yet, then please join over 20,000 entrepreneurs, investors and innovators who get our 3 minute newsletter about changing the world through startups, finance, humor and wisdom. Or at least four attempts at the last two. You can subscribe on substack or at our website, entrepreneursforimpact.com. You can also come check me out on LinkedIn where I share 5 or 10 posts each week with commentary on climate tech startups, impact investing, better habits, and perhaps too many references to lessons from Buddhism that may apply to our work here tackling climate change. Okay, that's all y'all make it a great week because it's usually a choice. And P.S. If you're curious, that is not my kids favorite thing I say to them most mornings before going to school, but it's still true. All right, take care.