Based in Denmark, Erdem Ovacik is known as a pioneer for mobile-app-based bike-sharing and advocacy on mobility related topics. But he’s also deeply engaged in creating possibilities for entrepreneurs to contribute to real change.
As the founder of Spintop Ventures’ portfolio company Donkey Republic Erdem Ovacik has been a part of the Spintop family for years. He’s an inspiration with his passion for improving society and he shares Spintop’s mission to drive the transformation for a long term sustainable society. Enabling better structures for change making is something that has been with him from the start.
– We won’t be able to sustain this life that we live today. The pressure to act is going to increase. I’m optimistic that, as a result, we will soon be willing to and interested in bigger radical, transformative changes. I’ve always been quite keen on talking about measuring how we benefit society. Bike share is for example, a business with strong positive impacts to society. We were creating at least twice the value for society, compared to our customer earnings. So it’s a really strong impact company case, but we don’t get paid for the impact by society. What I’m advocating for right now is that we need to create a system where money represents more than consumer value. A system where companies contributing to social goods get paid, and detracting goods end up paying for the damage, says Erdem Ovacik.
An desire to work more hands on
Erdem Ovacik grew up in Turkey and made his way to Denmark more than ten years ago after Master’s studies at Berkeley, CA. His first job in Denmark was business development for a fintech company, but he quickly moved on to start his first business.
– I wanted to live in Northern Europe, in a country with good welfare and in line with my values. After a couple of years working with product development for a fintech company I started my first company, a direct democracy platform with the objective to get people to solve challenges with policy proposals online. And still, I’m a big believer that we need better democratic institutions. In 2010, when we started, it was really hard to bring to people why we needed that, the problems that we have were not at all that obvious back then, says Erdem Ovacik.
The desire to work more hands-on made Erdem Ovacik develop the idea that became Donkey Republic, the first bike share in the world where one can rent a bike on an app.
– I love bikes and I already knew I really enjoy working with technology. And the idea was to create much more convenient and affordable bike share, compared to what existed. We were the first bike share in the world where you could rent and unlock a bike on an app. We had to convince our first venture capital investors that there was going to be a market for bike sharing in cities that was worth putting money into, says Erdem Ovacik.
“We need to include planetary and social values”
The model for an Impact Exchange Markets that Erdem Ovacik is creating would make it possible for impact companies to measure their effects legitimately and create real financial incentives.
– We need a system where money represents more than consumer value, we need to include planetary and social values. And then turn that into a monetary value, with rules and frameworks established by public authorities. You can for example compare different types of transportation, like a taxi ride or riding a bike. Look at some key public goods that are affected by these transports. Bikes don’t add to congestion, they take very little public space and have very low emissions and they also bring a lot of value in terms of health by people being active. But with taxi rides there’s a lot of congestion effects, cars take up a lot of public space and have high emissions. And both the driver and the customer aren’t active. Cars create bigger problems for society, says Erdem Ovacik.
Ovacik suggests that each company’s impact is measured by impact validators that will produce a monthly report, which in turn is reflected in their P&L as line items of Social Impacts and Environmental Impact.
“The understanding and leadership of public authorities is key”
Today, if a city buys some windmills, that is an investment amortized over 20 years. If instead they spend money on changing citizens’ habits around physical activity, getting them to be active daily the city accounts such investment as an annual expense, not acknowledging the long term value. Yet such investment has a huge return, and could be achieved with initiatives as simple as a (free to ride) bike share.
– Imagine an Impact Market in a given city, where there is a price for effects such as traffic congestion, mental health, air quality and other public goods similar to CO2 emissions. Now that would completely change the way business works, we would get them to pivot business models away from pure consumerism to create real value for society. Changes in stocks of public goods – whether they are physical such as clean air or not-physical such as feeling of safety – will open up a completely new way of understanding the value of public goods, and new ways of working with the private sector using market thinking, says Erdem Ovacik.
Implementing an Impact Market would result in cities flowing the stock of intangible value in their financial books, just like companies do when they claim value for their brand or intellectual properties.
– Once politicians agree on which metrics they want to prioritize, then they can make investments into public goods that get reflected in their balance sheet. And companies doing good would be paid by society and that would make it possible for them to scale big time, thus creating greater impact, says Erdem Ovacik.
The idea behind impact exchange markets is to start it in one city with a couple of metrics, but to scale to many cities and all kinds of metrics. And finally setting a mandate for all companies to become a part of the scheme.
– Companies with negative externalities would have to pay for these. To reconnect to my example with transportation, this would make it a bad business to drive around taxis. They would have to mark up their prices, because they have all these negative externalities, says Erdem Ovacik.