Iwa Pawlak, co-founder of Smart Forest tells us about investing in forests.
First of all, how are you and your family doing in these COVID-19 times?
Iwa Pawlak: We are fine, thank you for asking.
Tell us about you, your career, and how you founded Smart Forest.
Iwa Pawlak: I am COO and co-founder of Smart Forest company. Before starting this startup, I was working for a couple of years in the sphere of marketing and B2B sales. I also had my own business – a company specialized in importing and distributing organic cosmetics for B2B and B2C clients. Alex and I founded Smart Forest, whose experience in the stock exchange, IT, and forestry helped in shaping our offer. The initial concept was to plant rare sorts of precious trees for timber as an additional retirement plan for us. But later, we came across the tokenization and decided to join these two things as well as to share it with other people.
How does Smart Forest innovate?
Iwa Pawlak: We are creating a new model of relations between the parties, just like Airbnb, eBay, or Uber. In our case, it is a platform wherefrom one side are tree planters, from the other small and middle investors who would like to buy a tree. Our role is to be a trusted provider between them. Innovative is also a product, as we are giving a possibility to invest in forest plantation starting from 30 euro, by selling singular trees which decreases the level of entry from couple thousands to just a few. In the nearest future, we also aim to open a secondary market, where investors who will decide to exit before the tree is being harvested will have such an opportunity.
How the coronavirus pandemic affects your business, and how are you coping?
Iwa Pawlak: Startup promotion and networking is a great vast of ours, as founders, work. Before, we were spending days in planes, trains, and cars on the way to the next event or training program. Now we can connect in seconds with someone on the other side of the globe and participate in any event with a couple of clicks. Obviously, it also has some disadvantages. Online conferences remind me to eat fast-food. You can break your fast quickly, but your body won’t get the needed nutrition in the long term.
The other thing is that travel restrictions complicated our business in terms of auditing the plantations and starting new collaborations with planters. But there are also bright sides.
With implementing lockdown, the world somehow frosts for a while. In chemistry exists a term of “absolute zero,” where all the particles stop moving. It was like 0 K. (-273C) temperature would happen to all of us, and we stopped to run our daily lives. Such a moment of suspension brought a space to unload the brain from the daily tasks and to think about something more – future, wealth, family, etc. Also, the vision of the impending crisis urged people to look for a way to save what they already have and to earn in a sustainable way. By sustainability, we mean without harm to the environment and other people. And obviously, investing in trees meet this demand.
Did you have to make difficult choices, and what are the lessons learned?
Iwa Pawlak: In autumn, we were asked to go to the US and start the company there. We were promised an initial investment under conditions that we as founders would move to New York and headquarter would be in the US. For us, this would bring from one side new opportunities from the other new troubles, as we just started to cooperate with different European parties. After writing down all pluses and minuses, we decided against going. The lesson we learned – to eat an elephant by pieces. First, we to take a piece of the local market and just then expand.
What specific tools, software, and management skills are you using to navigate this crisis?
Iwa Pawlak: First of all, Smart Forest was created as a response to the upcoming economic crisis. Trees are unique assets as they can overgrow any difficult market situation, and their value can’t go to zero. A couple of years ago, I was living on a big yacht. There we had frequent training with a captain on how to behave in case of fire. Having a fire on the boat is one of the worst things that can happen, especially in an open sea. Therefore, there were a couple of fire protection levels that decreased the chances of inflammation to just a per mile. Nevertheless, we were practicing the worst scenario, again and again, until everyone knew their role and talking fire under control was taking seconds. This story shows that the best strategy towards crises is to predict them before and create a plan of action. Obviously, we can’t foresee some situations, but this is just a small percent of problems that could happen to the founders. Most of them are well known but ignored.
Who are your competitors? And how do you plan to stay in the game?
Iwa Pawlak: We are in a very privileged situation if we talk about the direct competitor. The market for investment trees can be called a blue ocean. Our main challenge is not how to compete but how to extend this market and increase its potential. A slightly different situation is with indirect, so sustainable investments in general. But also here our attitude is more to cooperate than to compete.
Your final thoughts?
Iwa Pawlak: When we talk about buying investment trees, it is something more similar to creating a five-star hotel for a plant. Such a tree, from a very small size, is very well maintained. Obviously, it grows faster and gives this care back. According to the historical records, such trees can bring 8% of return per year or more. Also, using timber from fast-growing plantation saves the natural forests with their unique ecosystems. If any of the readers would like to learn more about us, we recommend following our social media channels like LinkedIn, Facebook, and youtube.