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 BLOG >> September 2014

Starting a Startup [Entrepreneurship
Posted on September 26, 2014 @ 08:46:00 AM by Paul Meagher

I would like to draw your attention to a fairly important set of lectures that are being freely offered through Standford University. The lecture series is called "How to Start a Startup" and you should be able to find all the lectures, as they become available, on Youtube.

This lecture series gives you an inside view on how the most successful accelerator in the world, Y Combinator (YC), thinks and operates. YC mostly deals with software based tech startups so the lessons are particularly useful for that type of startup.

I am posting the first video lecture below, but encourage you to watch them all as they come out if you want some in-the-trenches insights, by a variety of lecturers from Y Combinator, into How to Start a Startup.

Break out the popcorn and enjoy.

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Learning From Weeds: Part 4 [Entrepreneurship
Posted on September 24, 2014 @ 01:39:00 PM by Paul Meagher

In today's contribution to my series on Learning from Weeds (see part 1, part 2, part 3), I want to discuss an invasive weed called Field Bindweed (Convolvulus arvensis L.) and some of its entrepreneurial qualities. Bindweed is a cosmopolitan plant, meaning it can be found abundantly in most areas of the world that are warm and temperate. It is a very difficult weed to get rid off and is the bane of many gardeners existence once it gets established. It can cause headaches for vegetable farmers if it gets established in vegetable fields as it competes for space, nutrients, sun, and water with the plants around it. It thrives in the disturbed soil of a vegetable growing patch.

Recently I noticed some bindweed in a row of potatoes I was digging out. I must have gotten it while it was young because I appear to have been able to pull the small root system it had out of the ground. Good thing, because if I didn't get it all, then the bindweed can grow back from the pieces of severed root left behind (i.e, pieces 2 inches or greater called rhizomes). Many gardeners can unwittingly propagate bindweed by doing an insufficient removal of the root system when they are weeding it out.

If bindweed was an entrepreneur that entrepreneur would be a very resilient entrepreneur. Just when you think the entrepreneur is down for the count, the bindweed entrepreneur splits apart and forms smaller companies to continue the legacy. If the bindweed entrepreneur loses a big deal (gets mostly weeded out) then it is capable of surviving as several smaller companies until one or more of those companies takes off again.

One lesson that bindweed teaches us is the power of resilience. The ability to take the hits and come back. Being competitive is important for starting, growing, and sustaining a business, but so is resilience - the ability to bounce back from a bad event. Bindweed has resilient and competitive properties that explain why it is such a successful weed.

The bindweed infographic below provides a few more details, including a visual, on field bindweed. You can also find an amusing gardening story on morning glory/bindweed here.

Addendum: As I researched bindweed more, I realized that the plant I dug up in my potato patch was not field bindweed, it was wild buckwheat (Polygonum convolvulus) instead - a plant that is often mistaken for bindweed because they are from the same Convulvus genus. It is not as serious an invasive threat as bindweed because it is more of an annual than a perennial. The seeds of wild buckwheat were apparently part of our bronze age diet when we were hunter-gatherers. You have to be careful, however, about eating seeds from other members of the Convulvus genus.

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Crushing Red Grapes [Farming
Posted on September 23, 2014 @ 08:42:00 AM by Paul Meagher

Busy the last couple of days harvesting some grapes I grew on a farm property we own. This is the first year of production. I transported the harvested grapes 140 miles (or 225 km) back to my suburban home and setup the crushing operation in my garage. In the video, I'm putting the red grapes into the crusher, my Italian friend Malcolm is guiding the grapes into the crusher, and my son Seamus makes a grape tasting appearance. Total end product is estimated to be around 4 glass carboys of wine (around 20 gallons). The grape vines should produce more grapes next year as they mature and I'll have more grape vines coming online next year. I'm happy that things are a small production this year as I'm still learning the ropes on the process of growing grapes and turning them into a decent wine.

The night before I harvested the grapes, I watched a Netflix documentary called A Year In Burgundy that filmed the vineyard and wine making operations of 5 farms in the Burgundy region of France. It was useful to see how they obtained, trained, and treated their harvesters (many of whom appear to be university students) when it came time to pick the grapes. There was also one quote that I found very interesting from an eccentric old woman who sells some of the most expensive wine from the region - she said "The yeast is the winemaker". She downplays the role of the winemaker per se, instead emphasizing the role of (wild?) yeast to turn her carefully nurtured grapes into a product with alcohol content so it can be called a wine. Because she loves her grape vines and their product so much, she does not want any other influences on her wine than the action of the yeast to convert it into wine. It may not that simple (does she add preservatives?), but it suggests an approach were you place less emphasis on additives and specialized techniques to achieve the perfect wine and just let the yeast do the winemaking and take what it delivers.

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Learning From Weeds: Part 3 [Entrepreneurship
Posted on September 17, 2014 @ 08:44:00 AM by Paul Meagher

In today's blog on Learning from Weeds (see part 1, part 2 for previous blogs on the topic) I want to discuss one major explanation for how weeds have spread and evolved over time and see if this explanation contains any ideas we might find useful as part of a business strategy.

One explanation for the existence and distribution of certain weeds around the world is that the plants were moved from an area of the world where they had lots of natural enemies to a new area of the world where those enemies didn't exist, thereby providing them with a competitive advantage over the native plants. We can call this the Exotic Invasion Hypothesis.

Many of the weed species we see in North America were transported from colonizers from England. The dandelion is one example, but there are many others. Some were planted because they thought the plants looked good or provided some medicinal, herbal, food, or other aspect. Others weeds came in the ballast of ships that discharged in harbours and washed ashore.

When I look at weeds this time of year in abandoned hayfields, the three dominant weeds are New York Aster, White Heath Aster and Goldenrod. I am struck both by how dominant their presence is in the hayfield but also how beatiful they look. They would look as great in a flowerbed as any plant you might buy in a store; indeed, I recently say a yard that had several native plant gardens that looked very nice. He threw in a couple of exotics to add more color and shape variety.

So what can we learn from how weeds spread that we might apply to starting, growing, and sustaining a business?

The spread of weeds suggests that a company might only be able to spread so far in its native territory owing to the strength of local competition. It might be able to grow further if it can find an environment where it has fewer local competitors. To grow in this manner you need to be able to do a competitive analysis of your local environment and then look at other environments to see if fewer of these competitive elements are present in the environment you want to expand into. Such an analysis works best if you are considering several potential locations to expand into because then you can pick the location that has the fewest competitive elements in it.

Hawaii has hardly any native vegetation left. It was an island cut off from the rest of the world and in that environment some slow growing non-aggressive plants were allowed to thrive. When foreigners started to travel more freely to Hawaii, the plants they took with them, either by intention or not, had little local competition for the resources the island provided. As a business, your situation is either like Hawaii pre-colonialization and there is room to expland locally by competing with slow growing non-aggessive local competition, or you are looking for a Hawaii-type business environment that it might be easier to expand into.

The Exotic Invasion Hypothesis is one of the more important explanations for how weeds startup, grow, and sustain themselves over time. There are other explanations that we might look into in another blog as they suggest other strategies and conceptualizations of weed/business dynamics.

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Learning From Weeds: Part 2 [Entrepreneurship
Posted on September 15, 2014 @ 08:41:00 AM by Paul Meagher

In my last blog on Learning From Weeds: Part 1, I announced my intention to explore whether the study of weeds might be useful in providing insights into how to start, grow, and sustain a business. I also began examining how we might go about defining what a weed is and suggested that any attempt at a scientific defination would have to take into account our own biases and interests in categorizing one type of vegations as good, and another type as bad, or a weed.

One appoach to defining what a weed is involves enumerating the properties that the "ideal" weed exhibits. The ideal weed is a super weed that has all of the invasive powers that a weed might possess. If an actual weed possessed all these powers, then that would be a very difficult weed to compete against or get rid off. So weeds can be judged as more or less weedy in proportion to how many of these weedy properties they possess.

So what are the properties of an "ideal" weed. This is the point at which I need to introduce another reference I am using to understand weed dynamics. One of the best academic treatments on weeds is The Ecology of Weeds and InvasivePlants (2007, 3rd Edition) by Steven Radosovish, Jodie Holt, and Claudio Ghersa.

I'm making my way slowly through this academic text. It is a slow process to read for awhile and then stop and think about how thes ideas might relate to starting, growing, and sustaining a business. Sometimes the connections are easy to come up with, sometimes it is frustrating and the connections seem a bit forced. Luckily, what I am learning about weeds from this book is very interesting and agronomically useful to know so that is helping to keep this project moving ahead.

I digress.

An important paper cited in this book is by H.G Baker who wrote an academic article in 1974 called "The evolution of weeds". Here he came up list called the Ideal Characteristics of Weeds. It is reproduced below:

  • Germination requirments fulfilled in many environments.
  • Discontinuous germination (internally controlled) and great longevity of seed.
  • Rapid growth through vegetative phase to flowering.
  • Continuous seed production for as long as growing conditions permit.
  • Self-compatibility but not complete autogamy or opomixis.
  • Cross-pollination, when it comes, by unspecialized visitors or wind.
  • Very high seed output in favorable environmental circumstances.
  • Production fo some seed in a wide range of environmental conditions; tolerance and plasticity.
  • Adaptations for short-distance dispersal and long-distance dispersal.
  • If perrenial, vigorous vegetative reproduction or regeneration from fragments.
  • If perrenial, brittleness, so as not to be drown from the ground easily.
  • Ability to complete interspecifically by special means (rosettes, choking growth, allelochemicals).

So the game here is to look for business analogues for each of the terms used here.

For example, "Germination requirements fullfilled in many environments" might mean that the establishment and growth of a business depends upon how many niches the business can sell their product or service into. If the product or service only has a small market that it can serve, then that business can only get so big. So when examining the growth potential of a business, you might judge that potential by how big a market the product or service and appeal to (germination requirements fullfilled in many environments). This may not be an earth shattering insight, but it might suggest that weeds and businesses are sufficiently similiar in their dynamics that one model system (Model 1 = Weeds) might be mapped onto another model system (Model 2 = Business). This facilitates inductive reasoning about the mapped to system (Model 2 = Business).

The second characteristic of an Ideal weed is "Discontinuous germination (internally controlled) and great longevity of seed". This refers to the concept of a "seed bank" that weeds produce around themselves and further afield by wind or pollination. The seedbank allows a field to be plowed year after year with no evidence of the weed, only to have it appear on the n+1 year when you did not plow. The seed lays dormant in the seedbank until conditions are right for it to emerge again. So what is the analogue of a seedbank in business? Perhaps it is the idea that, if you want to grow like a weed, you always have deals in the pipeline, some of which are for todays needs and requirements, and some of which are for the future growth of the company. These seeds of future growth might serve to sustain your business in the future, or, if you maintain a constant number of deals over time the future deals should overlap with current deals and lead to company growth during that time period when your future deals mature.

Would you agree that these weeds are starting to look pretty clever? It is not just a fluke that they appear on your lawn. Behind the curtain there are clever strategies and adaptations that are causing them to appear on your lawn. Likewise, to start, grow, and sustain a business we need to have some clever strategies and adaptations similiar to those that a weed posesses.

The third characteristic of an ideal weed is "Rapid growth, through vegetative phase to flowering". So a weed progresses through several stages as it emerges from the dirt as a small green plant to the stage when it is, say, 4 feet tall and putting out large clusters of seed and pollen bearing inflorescences (in late summer). The "vegetative" stage consists of the period when the green plant does not have colorful flowers on it. It can also include the stages when the flowers are developing but the seed is not mature so the full inflorescence is not in display. So a business that is experiencing rapid vegetative growth is experiencing rapid development prior to the point at which they announce their intentions to launch; in other words, they put on their full inflorescence display. If you don't have rapid development during this period you often fail because your burn rate can only sustain a short period of time. So, to achieve maximal growth potential you need to go from startup to finished product in a short period of time and then have a nice showy display that attracts alot of pollinators or interest more generally.

I could go down this list of ideal characteristics of weeds and make up more stories about how the strategies that weeds use might be interpreted in a business context, but this blog is too long already so I will leave that as an exercise for you to think about and for me to potentially address in a future blog.

In conclusion, weeds are complex and sophisticated in how they operate. If we show some respect for their complexity and sophistication then we might open ourselves up to learning from weeds. One concrete way to learn from weeds it to take the list of ideal weed characteristics provided and, once you understand how these claims work in the weed world, ask yourself how that understanding might translate into how to start, grow, or sustain a business. The ideal characteristics of weeds, though not referring to any specific weed, are neverthess useful when it comes to thinking about weed dynamics, and, by extension, how successful businesses might work.

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Learning From Weeds: Part 1 [Entrepreneurship
Posted on September 12, 2014 @ 09:36:00 AM by Paul Meagher

In a previous video blog series on the Joys of Hand Weeding (Part 1, Part 2, and Part 3) I enumerated the various joys that might be experienced while hand weeding. The video blog series arose because I had a 5 day hand weeding job to do in my startup vineyard and reflecting on the process made it more physically and intellectually enjoyable.

Since then I have become fascinated with learning more about weeds - their names, their life cycles, their reproductive strategies, their uses, and so on. I find myself more interested in what is growing in a ditch than in people's carefully manicured gardens and lawns; more interested in what grows wild along the fence lines, the river banks, the edges of hay fields, lawns, and gardens.

Lately I've been trying to make some of this observation, research, and thinking relevant to the concept of entrepreneurship and that will be the point of this series of blogs on learning from weeds.

Perhaps the most popular metaphor that is used for thinking about entrepreneurship is war. Many people use The Art of War as a bible for thinking about how entrepreneurs and startups should conduct themselves in the arena of business. No doubt there are many insights that can be learned by thinking about business in terms of a war metaphor, but it should be recognized that it is a metaphor and that there might be other metaphors that can offer us different insights into how to start, grow, and sustain a business.

I am generally of the view that "nature" is also a rich source of metaphors we might use to guide our thinking about how to design a business or a product and what strategies we might use to start, grow, and sustain a business. I am not the first to realize this. Indeed, the the field of biomimicry is premised on the idea that we can apply our learning about nature to the design of new and innovate products. The Wikipedia page on Biomimetics provides a sample of some new products that have been inspired by a careful study of nature:

  • Aircraft wing design and flight techniques inspired by birds and bats
  • Climbing robots, boots and tape mimicking geckos feet and their ability for adhesive reversal
  • Nanotechnology surfaces that recreate properties of shark skin
  • Treads on tires inspired by the toe pads of tree frogs
  • Self-sharpening teeth found on many animals, copied to make better cutting tools
  • Protein folding used to control material formation for self-assembled functional nanostructures
  • The light refracting properties of butterfly wings are harnessed to provide improved digital displays and everlasting colour
  • Better ceramics by copying the properties of seashells
  • Polar bear fur inspired thermal collectors and clothing
  • Mimicking the arrangement of leaves on a plant for better solar power collection
  • Studying the light refractive properties of the moth's eye to produce less reflective solar panels
  • Self-healing materials, polymers and composite materials capable of mending cracks

In Denton Ford's book, Darwinian Agriculture (2012), he asks the innocent question "Where does nature's wisdom lie?". So if we want to use nature to learn about, or provide some new insights into, entrepreneurship then what part of nature should we be looking at? Denton argues that evolution does not optimize at the ecosystem level but rather at the species level (nature "selects" at the species level) so the lessons are more likely to be found by studying individual species rather than complete ecologies. I confess to looking for possible business insights at the ecosystem level and probably will continue to do so, but agree that nature's wisdom might be located more at the species level, the level of particular types of animals and plants, like weeds.

So as entrepreneurs wanting to use nature to learn more about starting, growing, and sustaining a business, where does nature's wisdom lie? The answer that I aim to explore is that the study of weeds might provide some insights into how to start, grow, and sustain a business. I have performed some basic searching on the topic of "startups as weeds" and came up with very few results. The main result is Tim MacDougall's blog Startups ARE like weeds. Weeds are good. Here he cites a passage from The Lean Enterprise:

Fred Wilson, founder of Union Square Ventures, says he likes to invest in startups that ‘grow like weeds.’ Why? A weed doesn’t need carefully prepared soil, regular watering, or full sunlight. It busts open its seed, sends down roots, and pushes upward without the need for a controlled environment. Likewise, ventures built according to lean startup principles don’t require the certainty of ideal conditions to thrive. They thrive in conditions of extreme uncertainty – the very conditions that bring the highest returns on investment

I encourage you to read the full blog for a few other observations about how startups are like weeds.

While I think these are some interesting observations, the blog uses a fairly superficial understanding of weeds to generate some insights into entrepreneurship. If we really want to use weeds as a starting point for where nature's wisdom lies vis a vis startups, then I think we should get into the nuts and bolts of how weeds actually work to see if there is more insight to be had by having a more sophisticated knowledge of what a weed is and how it works.

Towards that end I have done a literature search on some of the best books that examine weeds in more detail. I'll be sharing some of these references and ideas with you in the coming blogs. I'll finish this blog by citing one of the books that I'm currently reading called, appropriately enough, Weeds (2010), by Richard Mabey.

The very concept of what a weed is is deeply problematic. It is probably impossible to define what they are using a botanical or ecological definition. We might have more success if we look at a behavioral quality that they have in common:

Weeds thrive in the company of humans. They aren't parasites, because they can exist without us, but we are their natural ecological partners, the species alongside which they do best. They relish the things we do to the soil: clearing forests, digging, farming, dumping nutrient-rich rubbish. They flourish in arable fields, battlefields, parking lots, herbaceous borders. They exploit our transport systems, our cooking adventures, our obsession with packaging. Above all they use us when we stir the world up, disrupt its settled patterns. (Weeds, p. 12)

So just as Pogo famously said "We have met the enemy and he is us", we can also say "We have met the weed and he is us". The existence and concept of a weed does not exist without us. To drive this point home, here is one more delightful passage from Maybe's book:

The development of cultivation was perhaps the single most crucial event in forming our modern notions of nature. From that point on the natural world could be divided into two conceptually different camps: those organisms contained, managed and bred for the benefit of humans, and those which are 'wild', continuing to live in their own territories on, more or less, their own terms. Weeds occur when this tidy compartmentalization breaks down. The wild gatecrashes our civilized domains, and the domesticated escapes and runs riot. Weeds vividly demonstrate that natural life - the course of evolution itself - refuses to be constrained by our cultural concepts. In so doing they make us look closely at the very idea of a divided creation. (Weeds, p. 21)

So where does nature's wisdom lie for the entrepreneur? If the answer is "weeds" then the "divided creation" that is assumed in the question needs to be examined. The wisdom of weeds is a story that is as much about us as it is about nature per se. That weeds thrive in the company of humans is perhaps more reason to regard them as capable of telling us something useful about starting, growing, and sustaining a business.

Until next week, have fun observing and pondering what entrepreneurial wisdom lies in weeds around you.

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Wicked vs Tame Problems [Future
Posted on September 10, 2014 @ 08:44:00 AM by Paul Meagher

Lately I've been encountering the term Wicked Problems more often (most recent being a lecture on Excess Nitrogen). "Wicked" problems are contrasted with "Tame" problems that we can solve with engineering-type approaches. The reason the distinction may be important is because we might be easily mislead to believe that a "wicked problem" can be solved with a relatively simple engineering type solution. For example, that we can solve climate change if each of us plants 10 trees, or if we tax carbon, or if we radically improve the efficiency of transportation, buildings, and appliances. If we believe this it might be because we don't distinguish between problems that are "wicked" versus those that are "tame".

One way in which wicked problems differ from tame problems is that wicked problems have no final solution; instead, we can do things that improve, mitigate, or worsen the situation but never ultimately solve the problem. We will not solve the problem of healthcare, for example, once and for all with some clever solution devised by a group of engineers working at an advanced research lab. That is not to say we can't improve or mitigate issues associated with healthcare, but if someone is supposedly offering "the solution" then that is extremely unlikely.

One reason it is extremely unlikely is because "wicked problems" are characterized by the fact that they are difficult to define/formulate and part of that difficulty arises because there are many different stakeholders involved who have different views on what the problem is. The problem of healthcare, for example, is viewed differently by the public, by nurses, by doctors, by administrators, by government, by insurance companies and so on. These "stakeholders" have legitimate concerns that they all feel need to be addressed by the healthcare system so defining what the problem even is in the first place is very challenging. Again, we can come together to improve or mitigate problems of healthcare but we shouldn't expect to solve "the problem of healthcare" with one masterstroke.

To make some progress on wicked problems requires that we first recognize the problem as being of the "wicked" type because this will setup the proper set of expectations on what can be done and on how the problem solving process should proceed. To address a "wicked" problem you can't just use engineering type approaches, you have to use approaches that are more attuned to addressing these types of problems. These approaches, however, are not fully worked out and that is why the whole idea of "wicked problems" is becoming more of a topic of exploration and research in universities, the military, governments, international organizations and non-governmental organizations.

What can be said so far is that the discipline that spawned the concept of wicked problems, namely systems thinking, is very relevant because it has tools and ideas that it has evolved to help deal with complex systems problems. Engineering type problem solving is also important because design is critical and engineers of various sorts are tasked with designing solutions for complex problems. There is also the need for people who can coordinate the different stakeholders, make sure their voices are all heard, create an atmosphere of mutual respect and consensus building on approaches that might help improve the situation or mitigate problems but not ultimately solve the overall problem. Internet-related technologies to help do this are an active area of research and development right now and may help change our coping strategies from being more authoritarian to collaborative in nature.

It has been claimed that we are entering into an age where the number of wicked problems we have to deal with are increasing significantly for a variety of reasons. It has also been claimed that we do not just have an increasing number of "wicked" problems to deal with but also an increasing number of "super wicked" problems that are global in scope. In the face of these problems we might feel like all is lost and we need to start prepping for the doomsday scenario. Perhaps, but another response is to recognize that we can't solve these problems with the enginering type approaches, to be aware that others recognize this as well and are starting to find new ways to coordinate and think about these wicked problems, to recognize that while we will likely not solve these problems now or ever (i.e., there is no "stopping rule" as they say), that there are "good" and "bad" things we can be doing that can improve or worsen these wicked problems.

So my take home message here is to become attuned to the systems thinking distinction between wicked problems and tame problems and not to think that all problems are of the tame type. There is growing recognition that most of our major societal problems are of the wicked type and that we are using the wrong approaches and interventions to address them. Trying to figure out what the best approaches and interventions are for wicked problems is where we are at now. Those engaged in Social Entrepreneurship are for the most part addressing wicked problems so should be aware of the distinction and some of the newer approaches that are being developed and innovated to address wicked problems.

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Green Bonds are Taking Off [Finance
Posted on September 4, 2014 @ 10:31:00 AM by Paul Meagher

Green Bonds are ways for Governments, Municipalities, Financial Institutions, and Corporations to raise money to support a broad range of green initiatives from erecting wind turbines, to reclaiming brownfield sites, to addressing issues related to climate change, etc... The promise of Green Bonds, like any bond, is that you will get an assured return on your investment after a certain term by providing debt capital to these organizations.

The issuance of Green Bonds has been growing rapidly over the last few years with many financial institutions and corporations getting into the game at a rapid rate. The climatebonds.net website keeps a tally of how many green bonds have been issued to date and this year is set to break new records again for the amount of green bonds issued - going from approximately $11 Billion last year to an estimated $40 Billion this year.

Table showing Green Bond issuance by month

One reason why Green Bonds are taking off is because, according to this economist article, "55% of pension-fund assets are exposed to climate risks (including heavier regulation of dirty industries); buying green bonds helps offset such risks". So pension funds want to buy into Green Bonds to hedge against climate risks that other companies in their portfolio might be subject to.

Another reason would include the fact that "US Green Bonds" as issued by the US Treasury are tax-exempt investments to incentivize investors to buy into them.

Another reason is that corporations see them as a useful way to raise money for certain types of projects. Because green bonds are growing in popularity it is getting easier to raise capital quickly by issuing "Green Bonds" for their green projects.

Finally, many of the projects that these green bonds are being used to finance are simply good investments. Many green energy projects, for example, have relatively low risk with stable long terms returns so why not invest in them.

The story on what green bonds are and how they work is just beginning. Many see a bright future for Green Bonds in helping solve a host of environmental problems. As with anything with the label "Green" attached to it, one must be skeptical of how "green" the projects are that are being funded via "Green Bonds". There is some work to standardize the criteria used for a bond to qualify as "green" but I doubt that everyone will buy into one published set of standards. It is nevertheless worth keeping an eye on how the whole area of Green Bonds evolves in the near term as more governments, large financial organizations, and large corporations throw their hat into the ring by releasing more Green Bonds. It should mean more money to finance green projects in the near term if the rate of release and subscription to these bonds stays at its present level of growth.

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