April 15 — April 21, 2013 | businessweek.com

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Enterprise

▶▶A seller of verified green building supplies prospers from the construction rebound

▶▶“It was quite brave and maybe a little naive of Sarah to go down this path, but she was so committed”

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Focus On

Sarah Beatty was pregnant with her first child when she learned toxic mold might be spreading beneath the floorboards of her newly renovated Manhattan apartment. Although the scare turned out to be a false alarm, the former MTV marketing executive became concerned about health risks posed by materials in her home. Be-cause her husband, Mark Buller, had de-cades of experience selling construction supplies, Beatty had wrongly assumed he’d be able to tell which ones were po-tentially harmful. “We truly didn’t know what was in a lot of stuff, and we didn’t know how to find out,” says Buller, who co-founded national distributor Marjam Supply with his brother in 1979.

Beatty, now 47, saw an opportunity her husband had missed: a chain special-izing in green construction materials, from nontoxic paint to formaldehyde-free insulation. “An Inconvenient Truth was out. There was all this excitement in the air” about reducing carbon foot-prints and exposure to chemicals, says Beatty. Yet when people asked contrac-tors to build them a green home, she says, they didn’t know what to use or where to get it. “The distribution part of the supply chain wasn’t there,” she says.

Renting space near her husband’s business in Brooklyn, N.Y., Beatty launched Green Depot in 2005. To avoid stocking so-called greenwashed products with unproven environ-mental benefits, she hired engi-

Stocking the Shelves With a Green Solution

Engineers confirm the greenness of Beatty’s products

EnterpriseFocus On

neers to develop criteria to evaluate each product’s performance and assess its impact on health and the environ-ment. Manufacturers received 10-page questionnaires asking them to detail the product’s composition, then her team checked ingredients against databas-es of chemicals known to be harmful. Today, items that make the cut are dis-played in her 10 stores and on her web-site, with icons that measure their per-formance in categories such as energy efficiency, air quality, and conservation.

As a small company, Green Depot found getting manufacturers to coop-erate “quite challenging,” says Monica Becker, a Massachusetts Institute of Technology-trained civil and environ-mental engineer who helped Beatty de-velop the criteria. “It was quite brave and maybe a little naive of Sarah to go down this path, but she was so committed.”

That commitment helped Green Depot win business from contractors working at Harvard University, Beatty’s alma mater, and at the U.S. Capitol. Her early strategy of contracting with Buller’s business to do deliveries allowed Green Depot to supply products to thousands of residential job sites and hundreds of commercial projects across the coun-try, including Amazon.com, Goldman Sachs, and Starbucks. Beatty expects more than $12 million in revenue this year for the 29-employee company, up from $9.75 million in 2012.

During the housing bust, Beatty fo-cused on broadening Green Depot’s reach by acquiring competitors in Chi-cago and on the West Coast. That leaves her well positioned to profit from the in-cipient recovery, as well as growing inter-est in sustainable building. Freedonia, an industry researcher, estimates the U.S. market for green construction materi-als will grow 11 percent annually through 2017, reaching $86.6 billion.

“Sustainability has become a com-petitive measurement,” says Ron Jarvis, a Home Depot vice president in charge of environmental innovation. “If you’re the producer of the purple widget that pollutes the most and uses the most energy, your competitor will use that against you, and you’ll be out of busi-ness before long.”

Still, Jarvis dismisses niche play-ers such as Green Depot: “If you go into any of the boutique shops or the green shops and look at the products they have and compare them to the Home Depot products, we have the same products, and in most cases a better product, and in almost every case at a better price.” Beatty says Green Depot’s prices are com-petitive with bigger retailers, its staffers’ product knowledge is “superior,” and her stock is “largely different from the mass lines” of eco-products in big-box stores.

Major retailers have been “putting their toes in this stuff” for years, says Scot Horst, a senior vice president at the

U.S. Green Building Council, but they have yet to “really commit in a big way.” Beatty says “large multinational com-panies have an immense responsibility and a great opportunity to lead the way. And then you have small companies like mine that also have a great opportunity to drive that message home in local mar-kets and spur innovation.”

To create an “even playing field” for green construction, Beatty has testified at New York State Assembly hearings in support of safer chemicals and met with congressmen. “Chemicals regula-tion in the U.S. is woefully underserving the safety of the American public,” she says. David Levine, co-founder and chief executive officer of the advocacy group American Sustainable Business Council, says Beatty, who is a member, is voicing a message not often heard in the U.S.: that “good regulation is actually good for business; it drives business innovation, the opportunity to create new products.”

Beatty acknowledges that tougher rules might burden U.S. manufactur-ers in the short term, but says there’s a payoff for those who can adapt. “Aren’t we supposed to be in a global economy? Wouldn’t we want to create brands in the U.S. that we know are ready to com-pete in an international marketplace?” ——Nick Leiber

The bottom line A former TV executive is going after the U.S. market for green building supplies, which is expected to reach $86.6 billion by 2017.

April 15 — April 21, 2013Bloomberg Businessweek

Posted from Bloomberg Businessweek, April 15-21, 2013, copyright by Bloomberg L.P. with all rights reserved. This reprint implies no endorsement, either tacit or expressed, of any company, product, service or investment opportunity.

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