Fairphone’s CEO Eva Gouwens On Her Mission Of Profitable Sustainability
This week, during Mobile World Congress, the annual global tradeshow on everything mobile, Fairphone was commended in the Global Mobile (GLOMO) Awards Most Disruptive Device Innovation category for its latest device: the Fairphone 4. The judging panel of tech journalists and industry analysts wanted to commend Fairphone “for its real and verifiable consideration of the environment and its sustainable approach to all aspects of its products. They are at the forefront of a trend that we are seeing spread rapidly through the industry.”
I met with Gouwens over video call to discuss the company’s journey and what the future holds. She became CEO in 2018, a year after joining Fairphone. Her background is not rooted in technology but rather a “mission company,” a business built to have a positive impact while being for profit. Between 2012 and 2017, she ran a small chocolate company that aimed to eliminate slavery in the cocoa business. Over that time, Gouwens learned about running a mission-driven company and, even more importantly, how to scale it.
“Most consumers understand the concept of recycling. After all, we all have a phone or two in a drawer somewhere that we no longer use,” Gouwens tells me. “What is not clear,” she adds, “is why having those phones in our drawers is a huge waste.” For most consumers, being in a drawer and not in a landfill is a good thing. The big difference between food and tech is the complexity of the products. “It takes about seven ingredients to make chocolate and over 400 to make a phone. That’s a challenge right there,” says Gouwens. If we add the need for scale and the fast replacement pace, it is easy to see how for a newcomer into the smartphone business, one of the most competitive segments in the consumer electronic space, it would be tough to be profitable, sustainable and fair.
How Fairphone ended up in the smartphone category is an interesting story in and by itself. Fairphone started as an awareness campaign around conflict minerals. When the company wanted to move from awareness to impact, they found the smartphone to be the one electronic device so personal to people they would take an interest in the whole sustainability story. But, of course, as we know, this love consumers have for their smartphone makes it also the most challenging device to manufacture without the latest and greatest design or technologies buyers want.
Fairphone is not the first company to bring a modular design to market. Israeli company Modu launched the first modular phone in 2007. The design that was the lightest phone in the world at the time was supposed to slot into casings that turned the phone into other kinds of devices like a handheld gaming device. LG was the last phone company to attempt a modular design with the G5 model in 2016. The key difference between Fairphone and those that came before is that the goal is not differentiation or lowering CO2 emission. The goal is to have an impact on the environment by extending the life of the phone. The other big difference, of course, is that sustainability is the most important “feature” of their phones.
“We learned a lot from those companies who came before us, but we also learned a lot from our previous phone models,” shares Gouwens. Over time scalability, reliability of both materials and software, as well as the overall quality of the phone, grow in importance. This required Gouwens to find a balance between the initial talent committed to the cause but with less specific knowledge of technology and consumer electronics with those specialists who did have the right knowledge and learned more about sustainability and the Faiphone’s mission.
Making a sustainable phone is incredibly hard, but Fairphone is here to change the rules of the game so they can have a bigger impact. “If you really want it, it can be done. And we have proven that it can be done profitably. After all, there is no long-term sustainability without a sustainable business,” says Gouwens proudly.
The good thing is that more brands are starting to care about sustainability, some because they want to do the right thing, some because government and investors are putting more pressure on companies to be sustainable and most because of all the above.
Because of its origins, Fairphone knows the world of minerals extraction very well and has learned a lot from those practices. Their process starts with an investigation into the conditions of the material they are looking at, from consumer recycled plastic to gold. They begin with determining whether what needs to be addressed is an environmental issue and/or a social one such as child labor or safety conditions. The second stage is innovating within the company on solutions that address the malpractices found. This step is often taken in collaboration with NGOs and miners or suppliers. And lastly, they figure out whom they can partner with to help that supplier accelerate change by increasing volume and, therefore, revenue for the supplier. This is a very different approach from most brands, who would investigate a supplier, find what needs fixing, and leave it to return only when the job is done. Doing so puts a lot more pressure on the supplier who is already struggling. Instead, Fairphone identifies the issues, helps resolve them and guarantees an income by being a customer and often paying a premium so the supplier can do what needs to be done faster. For instance, with miners, to eliminate child labor, Fairphone, among other things, pays a premium so that the money can be used to send kids to school. They invest with the suppliers themselves in different materials to increase yields and ensure production is less polluted.
Longer-term, Gouwens says that it is Fairphone’s ambition also to make the chipset modular as that would extend the phone’s lifetime even more. Fairphone would love to work on this with a partner like Qualcomm, its current chip supplier. “It is all a fine line we need to walk between what is technically possible and what is financially viable,” says Gouwens. For example, making the bottom part of the phone a module that can be replaced so that the speakers and the mic can be upgraded is technically possible. Yet, for $80, not many consumers would entertain the idea of doing such a thing. For Gouwens, it is clear that the next step for Fairphone is to move into adjacent product categories so that the company can limit risks and leverage shared supply chains to maximize impact.
Towards the end of my conversation with Gouwens, I point out that even if she might not see Fairphone as a traditional consumer electronic company, she is today the only woman CEO of a smartphone company. “Am I really?” She asks with a smile, adding, “I like it! And it makes me proud that the company has a 50/50 gender split with some brilliant women both on the software and engineering teams. I hope that my being in this position might help and inspire other women to believe it can be done. But of course, I also feel the responsibility now of achieving our goal of great positive impact.”