You could say being an entrepreneur was almost destiny for Thibaud Hug de Larauze, who grew up in a family of them. His father, grandfather and two brothers are all entrepreneurs, so talk about building a business was ordinary dinner conversation. What’s not so ordinary is that Hug de Lauraze heads France’s most valuable startup – a company formed in 2014 and now worth more than $5.7 billion, based on a recent funding round of $510 million. Overall, the company, Back Market has attracted more than $1b in VC investment.
Another unique aspect of this business is its deep-rooted passion to make a difference, specifically to tackle the growing environment damage caused by the manufacture, sale and disposal of the devices we’ve all grown to rely on and replace too often. As the CEO and co-founder, Hug de Lauraze runs a global marketplace that provides consumers access to high-quality, professionally refurbished electronics – everything from iPhones to laptops to appliances – to break the traditional linear supply chain and reduce the negative environmental impact of tech consumption.
Electronics play an essential role in our lives today bringing new conveniences and capabilities but at a high cost. As we grow increasingly dependent on tech it is becoming more expensive, and therefore less accessible. What’s more, the environmental toll of creating new tech is escalating at an increasing rate daily. From the natural resources and energy consumed in creating them to how often upgrades come out and how quickly and irresponsibly we disregard our devices, the current electronic consumption habits are not sustainable.
Hug de Lauraze and Back Market have capatalized on the growing consumer awareness of the environmental implications of e-waste. Hug de Larauze told me that five years ago, only 3% of consumer purchases on Back Market were for ecological reasons, but that number has now jumped to over 25%. This tracks to the company’s growth over the last few years as it went from 1.5 million customers in July 2019 to five million in 2021 and now exceeds six million.
“I think, especially over the past two years with the pandemic, people realize that we need to do better for the planet and behave more responsibly in the way we live and consume,” Hug de Lauraze said.
Back Market’s goal is to make refurbished electronics the first choice for tech purchases, recognizing the huge opportunity around refurbished electronics both as a driver for reducing e-waste (and everything that comes along with it: carbon emissions, pollution, depletion of water and raw materials) and making tech more accessible.
As part of my research on purpose-driven business, I recently talked with Hug de Lauraze to better understand why he co-founded the company, the company’s unique vision and what they have in store for 2022. Below is a lightly edited version of our discussion over email.
Christopher Marquis: Could you tell me more about how you came up with the idea of Back Market?
Thibaud Hug de Larauze: The idea for Back Market was born back in 2014 when I was working at a company that helped brands distribute their products on different marketplaces. One day I visited an electronics refurbisher and was surprised and impressed at the quality and care that went into renewing the devices. What struck me most was the level of expertise and knowledge, which was not highlighted at all. I knew the toll manufacturing and improperly discarding electronics takes on the environment. When I saw the quality of the refurbished electronics I immediately recognized the opportunity (and urgent need) to make these types of devices more accessible. I quickly realized that a market existed: traditional e-commerce sites mainly sell new products, while the second-hand market operates on platforms where it is impossible for the buyer to check the quality of his/her future smartphone or computer. I partnered up with my first-co-founder who also worked at the same company with me. We both saw the strong need to create a direct-to-consumer channel that provided access to high-quality refurbished products. We also realized that breaking deeply ingrained consumption habits would require a massive branding effort which is why we partnered with our third co-founder who brings creative genius to the team. Together the three of us co-founded Back Market with the goal of making buying renewed devices just as good – if not better than – buying new. We do this to provide value to consumers but also because of the importance of keeping electronics in circulation longer to break the linear cycle of electronics purchasing and create more circularity in electronics.
Marquis: Back Market recently closed $510 million in funding bringing the company’s valuation to $5.7 billion and becoming France’s most valuable startup. However, I understand you believe these numbers do not tell the whole story, could you elaborate on that?
Hug de Larauze: Funding is essential to achieving our mission and we are incredibly grateful and lucky to have investors that believe in us and our mission. Beyond the funding, though, the real numbers that we care most about are the growing number of our employees (we are at 650 Back Makersnow) and our expanding customer base (just more than 6 million worldwide). We cannot realize our vision without our team who has been able to diligently drive forward Back Market’s mission of making circular tech mainstream – even through the pandemic. And, the number of people buying from our platform and choosing refurbished in general is growing and that is the true sign that we are making progress and moving towards a more circular consumption pattern. Without our employees and customers, we would have no impact on the world. Our funding is an enabler of our impact and boosting our global presence in the world and growing our customer base is what will determine how much of an impact we make.
Marquis: Can you give us a sense of the scale of the e-waste crisis?
Hug de Larauze: The e-waste crisis is alarming for a number of reasons – both because it is the fastest growing form of waste in the world and because it is one of the most toxic forms of waste. The World Economic Forum reports that 50 million tons of e-waste is produced every year (approximately 14 pounds for every person on the planet), polluting drinking water and harming ecosystems around the world. Adding to this crisis is the fact that only about 20% of e-waste is recycled properly. The true scale of global e-waste defies comparison, the weight is more than all the commercial aircraft ever produced. This would be equivalent to 125,000 jumbo jets which would take London’s Heathrow Airport up to six months to clear from its runways. And, unfortunately the story only gets worse. In terms of carbon emissions 90% of the Co2 produced in electronics’ lifetime is made in its original manufacturing.
Marquis: Do you see consumer sentiment changing around buying refurbished items, or being more motivated by sustainability issues?
Hug de Larauze: Yes, that’s the good news. We see a real turnaround of consumer sentiment on buying refurbished both through the traction on our platform and from the studies we’ve conducted. In a market study we did last year when we asked customers if they were buying refurbished devices for environmental reasons 25% responded yes. This is up from 16 % in our poll in 2019 and 3% in 2015/2016.
Marquis: Has Back Market considered becoming a certified B-Corp. If so, what would this milestone mean for your company (e.g. what benefit may it bring?) and perhaps the entire consumer electronics industry if achieved?
Hug de Larauze: Yes we are currently working to become a B Corp company. This is a very important process for us. Internally first, because answering the B Corp questionnaire helps us to find out how to have an even better impact on the society and the planet. And of course externally, this would be monumental for a company that sells electronics. Big tech companies are not generally seen as sustainable companies because of the linear business models they run on, which is one reason why we are obsessed with building a circular business model. Circularity can be achieved, and Back Market will lead that change.
Marquis: You often talk about reshaping our buying habits, could you explain how you plan to do so? E.g. by making habits more circular?
Hug de Larauze: Education is a key component to helping change buying habits but providing a compelling alternative to buying new is absolutely essential. To do this we are addressing the trust gap between used and new. By focusing on quality and minimizing risks for consumers we are rebranding what it means to buy renewed. We like to say we give consumers no factual reason to buy new. We try to educate consumers on the impact their purchasing choice has and offer access to an alternative that is just as good if not better than buying new. We are focusing on empowering consumers with knowledge and reminding them of their purchasing power.