Interview with Tatsuya Nakagawa of Castagra on the Change of People's Interest in Sustainability

Hello everyone. Welcome to this episode of Conscious Design. I'm your host, Ian Peterman, author of the Conscious Design book. And I'm really excited to have Tats, co-founder and CEO of Castagra here to talk about sustainability and what, what you guys are doing. Welcome to the show.

Sure, Ian. Thank you for having me.

Yeah, so first I'd love to dive a little bit back. You're, you're not new to launching products and working in this space, so I— if you could share a little bit of your, your background and how you came to being co-founder and getting Castagra off the ground.

Sure, absolutely. Um, I, I think, you know, launching products or doing things entrepreneurial, maybe more in the traditional sense, I kind of had that bug when I was pretty young. I remember when I was 10 years old, a friend of mine had a pear tree in the backyard. So I had this idea where, why don't we pick these pears off the ground? Because, you know, and go and sell them. And we found this bus stop that was right near a convenience store that wasn't selling fruit. We set up a table. We weren't that successful, except there was a guy that showed up with his girlfriend, and he looked at us and says, I love entrepreneurs, and pulled out a crisp $20 bill and gave it to us. And I was hooked. I was— the idea of just trying something and going out there and, and, you know, trying to make something work and the opportunity to to be rewarded for, you know, what was just kind of connecting the dots between ideas was really, really appealing to me. So that's the first time I remember that kind of that entrepreneurial or innovative bug sort of struck me.

Oh, that's awesome. That's awesome. You have me beat. I was 12 when I started making handmade cards to sell. We found a little store Through one of my parents' friends that was willing to like let us put up our cards. And so we did that. We did that for a while. It was okay. I wouldn't say it was a huge success, but it was fun. It was similar, like learning, oh, this is possible. I can go, I can go do something and some people might like it. And there's a reward there.

Absolutely. And, you know, I would, I would so, so say that there are many people that I talk to have similar stories when they're young, you know, because entrepreneurship or launching products or being in innovation or innovating, is it for everyone? Because, you know, as you know, there's a huge learning curve involved in this. So, but I do find the people that kind of gravitate towards it and kind of ride the ups and downs to it have some stories of their childhood that relate to wanting to go out there and And create value and spread ideas.

Yeah, that I think is a really good point. It's very— it's not for everyone, but it is, it is a fun— if it is for you, it's a, it's a fun ride. It's definitely a lot of, a lot of adventure to go through the process.

Absolutely. And when I was, um, going through university, I knew I wanted to take things in this direction. Like, I was doing all sorts of things where I thought were quite different and innovative. So I was running facilities and running conferences. I was doing all this stuff, but I felt something was missing. Like I just felt the full extent of like creativity and all these things were not being sort of expressed or explored. So I realized something that I needed help. Like I was reading books, I was doing all these things, but I needed help. And a friend of mine introduced me to a mentor who's, you know, to this day, you know, 23 years later, my business partner still is— his name is Peter Rosen. He invented the Windows Media Player, sold it to Bill Gates. He worked on the early 3D printing technology, and he worked on a patent for steel measuring that was later cited and partially inspired the MRI. And I figured the best way I could learn is to work for him for free and just learn. And we developed the relationship and we started to do many things together. And one of those things together was creating a marketing or a product launch R&D firm where we'd incubate ideas or help other companies or spin out our old ideas. But ultimately it led us to Castagra.

That's an awesome journey. That's, that's great to find a mentor that you're able to— 23 years is a long time of having, having that work partnership. So that, that's amazing that you're able to do that. And that's a huge progression, right? For, for 10-year-old you, right? Going, going and starting there. And then now you're partnered and you're helping spin off other things, which is a whole nother, right? There's like, I'm an entrepreneur. And then there's, I help other entrepreneurs spin off and develop. And that's a whole other realm of thinking, even of being that guide to, to that journey, which I'm sure you get, you get all kinds of experience and stories with, with those, which is, which is great though. It means you're able to help. The better you're able to say, oh yeah, we already did that. You need to do it this way. We've learned that mistake already.

Yeah. I think it's interesting because the last dozen or so years has been building out this manufacturing business that creates coatings for roofing and flooring and all that things. But I think when I had the company that was very, very much focused on launching products, and I was involved in the 100+ launches over there, man, in the beginning, I, you know, I had a mentor and I had lots of people around me that were really good. I was really, really bad at it. Like, I, you know, like, you know, just making all sorts of different mistakes. And as I got better at it, um, I think the thing to remember of, of experience and, you know, experts and whatnot is, um, you always need to keep testing things. I think the best experts in the world have a very, very good idea about certain things that have never worked or almost never worked, and they find a way to get to a workable solution or a possible workable solution quicker. But there's no person that you could go to definitively say, hey, this will work and this won't. And how I know this Is a lot of my reeducation, which is sort of sooner because every time you learn something it dates, was I spent a lot of time in the direct response world. And the direct response world, which is like the copywriting and, you know, the older version would be like the mail, sort of response offers in the mail and stuff, is the most ruthless form of marketing, which means that if you do something, you know right away if it works or not. So there's no like, that looks good, or this is great, or there's no explanation. If people don't respond to it and, and act on your offer or something, it was bad. So if you go to those experts that are the best in the world at those and figure out and ask them, okay, could you guarantee this is going to work? And they'll tell you, no, we can't guarantee, but we have this wealth of knowledge of things that never worked or almost never works. And they rule those things out and they run tests. They run tons of tests to figure out what's working best currently. And occasionally they'll run things that they don't think will work, but just out of curiosity, because no one knows what will work. And they'll discover currently what the best thing, uh, is. And then what they'll do is they'll keep running that offer and make money. And every once in a while, they'll introduce another candidate to compete against the best idea, and they'll run them side by side and stuff. And, and I think they're extremely good at running that process and being curious, testing their assumptions. But they're fast because certain things have never worked, or the mechanics just, you know, are such low probability. that you don't wanna start there and that's their skill. So.

Right. Well, I think that's a great kind of point to bring out with products, right? Is that even, 'cause I have this conversation with people when we're starting to work on projects is we can't guarantee anything really. There's very few guarantees as well. Will my idea become a really good— is this a really good idea? That's the first question. And will it be successful? Well, I could give you a magic 8-ball and we can see what that says. We can, but we can deduce, we can, you know, like what you're saying and go, okay, well, all of these things have failed for the last 40 years. These are not— these are unlikely to be successful, but it's also good to every now and then go back and check them and say— Well, it has been 40 years. Maybe we can do that now. Maybe we can. And that's, that's the innovation mindset and, you know, fail fast. And, and that kind of way of thinking is, is go, yeah, well, let's try it. Maybe mix in a couple that we know haven't worked before and let's see what, let's see what works and, and really figuring it out. Yeah. How, With your, with your current project, right? How did that come about as that kind of process? How did, how did you end up getting, getting to this one and going, this is the one, right? How did you know, you know, that you hit the jackpot, so to speak, and that this was really worth pursuing?

Sure, absolutely. So, um, with many innovations, um, Innovations come from intended sources, unintended sources. And so 30 years ago, roughly 30 years ago, the homes, the higher-end homes had curved walls, many of them. And one of the big problems with the curved walls was from carpentry, which, you know, the baseboards that had to go on these curved walls, and basically what they had to do is cut them up into Lego-sized pieces and then reassemble them and sort of hammer them into the wall and hope and pray it didn't look horrible. And Peter had a friend that was very close that was hounding him to try to solve this problem. So long story short, he was in the process of solving this problem, which he did. And that sort of turned into a venture that he sold to a Fortune 500 company. But he invented by accident a coating that had, you know, was sustainable, had great properties, had the right perm rating and the adhesion and stuff like that. And he, you know, being the engineer and inventor that he is, he wanted to sort of proof this out. And he sent this thing to contractors and he had some volume going, but, you know, he lost interest and he started to do, you know, other things. And there was some of a, a non-compete that may or may not apply. So he kind of just stayed away from it. And when I sort of developed the relationship, and when we were doing this company that was launching products, I started— once I got sort of out of my sort of head in terms of, this is kind of cool to bring ideas to the world, I started to really question the type of products I was getting behind. and pushing them. And it was just kind of a light bulb moment, which I knew he was working on this, worked on this project, and now had roughly 20 years of field history that occurred.

Amazing.

I said, yeah. So basically, I said, well, why don't we develop some more IP and relaunch this thing? And yeah, that's how we got to that.

Wow, that's, that's awesome. It's an accidental invention. It's great to come up with something like this. And so it sounds like really what you did is you took something that was working and then you improved it. And, you know, is— do you think part of the success now is that more people are aware? Like, it's something that people care more about? Is that kind of a— it was 20 years ahead of its time a little bit. Now it's, uh, it's so in front of people's minds now that now you're like, hey, we have this, we have a sustainable product. It's clicking a little bit more for people.

Yeah, I mean, for me, I always believe, you know, the, the direction of sustainability and products is the economics have to be in line. So with this product, yes, the economics are are in line. Of course, it's not the cheapest product, but the value proposition, the economics are aligned, and there's enough use cases and to be competitive and stuff like that. But I'll tell you, you know, if we launched this 20 years earlier, will we have been as successful? I'm not sure. But I'll tell you what we didn't have, or what we have that we wouldn't have had is when we sort of came up with this thing where we decided to relaunch Dragon's Den, which is the Canadian version of Shark Tank, which had the same host, Kevin O'Leary, Robert Herjavec. They just happened to be running a competition to find the best sustainable innovation in Canada. And so if you're curious, the episode is called the Greenvention episode. And this was, you know, not for equity. It was, you know, a company, um, uh, was launching a new product. They put $100 grand prize and sponsored the Dragon's Den, and they were looking for the best sustainable innovation in Canada. And out of, um, you know, 4,000 companies, we lobbied and we came in first.

That's awesome.

So we got $100 grand, no strings attached, and about 12 million views for free. And that's what helped our launch. So I guarantee you, we loved having that. I think 20 years earlier that that wouldn't happen.

So Yeah, that's a— getting, getting the views and getting noticed is really, really important. So that's, and that's really great that you guys were able to get that. That's a huge, that's a huge win for you guys. And I'm sure it was, like you said, it's definitely helped propel you guys and let people know there's even an option, right? And that's part of Half the battle is telling people that you even exist in the first place.

And I want to talk about some of the mistakes that we made that we learned, because I think one of the things that I overestimated is when you have a company before that launches products, and then you come out of the gate with, you know, millions of dollars of free PR. Honestly, I got a little overconfident. And, you know, the way that we I became overconfident is that we— I thought we could walk in and just take over the market. And early signs, we had a great team, we had a great talented person in sales, which, you know, still part of the team. And we started to make really good headway with very, very large companies. And, you know, we were winning projects and, you know, we looked awesome. And we said yes to everyone and we were in multiple different markets. And, you know, it's great to get out there with all this PR and hype. But you have to realize when big companies see what you're doing, and say they don't want you there, if you're not operationally sound, if you're not prepared to defend your position, you effectively can get pushed out. And I think that's something I really underestimated. I think we had a great sales and marketing approach. You know, we're very innovative and, you know, very fast in getting out of the gate because we spent a lot of time learning that process. But there's something about operational excellence or execution or the execution engine in your, your company that really needs to be in line. And it took us a while to really understand that. And And how that fits into the grand scheme of things.

Yeah, I agree that it's a huge— there's so much focus on the launch, right? Like you said, like, and that's what gets all the PR, right? You know, Shark Tank is— it's all about, well, let's launch and let's create. And there's not as much focus on, well, great, now you have a thing, you have to maintain it. You have to think about— there's a lot of, and it's a different mindset in how you're approaching it, because it's not— the freshness and the newness is starting to wear off, and now you have to keep moving forward and still make sense as, you know, a decision to be chosen over another thing. So that's a great point you bring up of that operational side.

Yeah, and there's 2 maturation points that need to occur. So organizational structure and, you know, One of the systems that we like, if you are more of an entrepreneurial organization, is the Entrepreneurial Operating System, which is EOS. It's a very lightweight system to help prioritize and manage that well. And then, you know, mainly because, I mean, obviously new product is new, exciting, but that wears, and then it starts to come into how easy are you to deal with. Right? So you're gonna have to make yourself much easier to deal with. Big companies are very, very good at that, right? Number of locations, apps, right?

Mm-hmm.

Um, training on customer service. They're so good on that. And they'll start chipping away at your position. So, um, you know, obviously that's gotta factor into your equation. And the second side is understanding, um, you know, a technology advantage is a temporary advantage. Any technology advantage is temporary. So which means you, you, you have to have a way of coming up with the next iteration, whether it's an incremental improvement or a disruptive one. So you need an innovation engine in your company, which, you know, you know, I heard from Ben, Ben Sow. But Also, what you have to do is take that technology advantage and convert it into a brand advantage. And that's a tough thing for people to understand because brand is quite a nebulous concept for people. And to really understand what is brand, you know, how it shows up in your day-to-day and how much clarity you have over That is hard. And I've been working to try to understand that better for 23 years. And I think honestly, I'm probably the slowest person in the world to understand this. And it's probably because I don't pay a lot for brands. Like, you know, maybe someone that'll spend, you know, you know, $20,000 on a bag would, would understand it better, but I've always kind of like resisted that. But There was a wonderful lady named Lynn Powers, who's the former CEO of J. Walter Thompson, who put me onto a book called— based on archetypes. I think it's called Heroes and Outlaws. And it really simplifies the brand-forming process to a bunch of archetypes that you would fit into. And it really helps clarify. So anyone that wants to kind of take that next step, I highly recommend that book to, to really simplify brand understanding.

Yeah, I can, I can definitely second everything you just said. The brand, the brand is, and I feel like part of it is, you know, you come up with a new technology and everyone's really focused on it, right? It's the cool new technology. This is what it can do. And there's a lot of focus on it. And having worked with a lot of inventors, it's also your baby like that, that technology you've put so much time and effort. It really becomes a kid on some level of—

Oh my goodness.

Your investment in it. And so it's hard to envision that that isn't going to be the thing that just keeps on going and that you have to switch over, like you said, to the brand value. Like, what, what is the brand? Because that technology, maybe you do have a patent on it, but that's only 20, maybe more with a little extension. There's, there's a definite lifespan. of any technology, and then it's obsolete. Someone's gonna come by, and in this day and age, they're not gonna wait 20 years to invent a better, a better thing to go do what you're doing. They're gonna wait, you know, 18 months, 2 years maybe. So that innovation needs to happen. But also, I think it's a really great point that the brand, right, transitioning to that brand maturity of You're working with us because of our brand. This is the brand value that we have. And yeah, that, that switch point is, I would say, a rough, can be a rough, rough, rough process because it's a whole different way of thinking about it too. It's, it's, you can't just lead with my tech is better because maybe it is, maybe it won't be in a few months, you know, you never know what new, new company is going to start up and you're gonna be the slow big company all of a sudden that is getting pushed out by a new tech.

Absolutely, and you said something really cool there, like inventors love their baby and stuff. And I remember when we were launching products, we would get so frustrated because people would overestimate what they had, or at least create a bit of distance. So we coined a term or came up with a term called inventoritis for people that just couldn't let go. And we wrote a book about it. And it was fun. We went and analyzed all of Edison's patents for commercial relevance and Tesla's patents. And we found that Tesla had about a 1 in 4 commercial relevance success rate. And Edison had about 99 point, I don't know, whatever, 6% relevance. And that roughly, I mean, the 1 in 4 for Tesla is roughly the success rate for large corporations at this point. So it's kind of cool to see that. And then when we looked at inventors, we kind of theorized that if they have no connections, never done this before, they're mortgaging their house, that they're kind of looking at 1 in 1,000 on some of these things. So The more pieces that you can have, you know, whether it's hiring an expert like yourself or, you know, educating yourself, you can get closer to the 1 in 4, which is still a risk. But just understanding those variables clearly is important. Of course, it does help if you have something you can test cheaply.

That's a, that's a really interesting research on patents and commerce like that? Because that's the other conversation, and that's where a lot of inventors that I talk to, there's a little breakdown of, well, yes, you built a prototype in your garage, but there's a difference between you made it work and commercializing that idea. And now you want to not only have somebody else use it, but you want to have it manufactured in thousands at a time. That's a whole different mindset too. And that's, yeah, there's, that's another kind of breakdown point where it's a, it's a shift. It's a shift in thinking about how, how that product even exists, you know, what, what that product really even looks like in the world. So that's a really great point on commercializing it, right? You can invent something, but can you, can you use it, right? Can, can, can you really use it? And are there enough people who want to use it or need it? To make it really, you know, make sense.

Yeah, and that's the tough thing, right? Because that's a big ask, right? Someone that's building something for the first time, could you visualize 20 steps into the process to kind of roughly calculate what the probabilities are of doing it, right? I mean, certain items are just absolutely— or certain technologies are absolutely kind of not possible with certain types of past the market. And you see those structures, let's say in biotech, where a lot of the fundings go through universities because, you know, they just can't take the commercial risk. I know another person that helps companies launch products, and they specifically focus on innovation contests, you know, to get their first $25K to $100K. They have a list of all these places that you can go for money, and they funnel clients through there to manage the risk. It's a tough proposition, right?

Yeah, it's, it is not— there's a formula to it, but it still doesn't give you a guarantee. It's never— there's no such thing as a guaranteed home run with the product. It just— until you— sometimes you have to build it. You have to build, build that MVP, test it out, and, and be willing to put some money in and And also, for all the inventors who love their inventions, sometimes you have to call it quits and move on to the next one. And that's the other— I've worked on projects where it's been, we don't think we can do this. Like, this is not— this is a high— our risk went up since we started on the project based on what we're seeing. And, you know, not everyone wants to stop. So sometimes it's also that, All right, let's shift. We gotta, we gotta switch over to something else here because this is not feasible. Maybe not right now and maybe later, but if it's not right now, then that risk, these are the 1 in 4, it drops to like the 1 in 100 and then goes down from there.

Yeah, I think one of the interesting things, um, about the, the process, um, is this, um, I, you know, you know, when I do things, typically when I was knee-deep in this launching things, I'd run a series of tests. And then, you know, small tests, hypotheticals, to try to figure out if, you know, if you didn't start early in on the insight stuff, is this, you know, certain verticals, right? And the whole idea being if you find a vertical or area where you can make some early traction, I mean, they call it the bowling pin strategy, right? you segment off the market into smaller chunks, and then you hit the head pin. Could be a geographic focus, it could be an industry segment, and then it knocks over the other ones. And I would always come off to an area where it's like 2 or 3 of them would look good, right? And I was never quite sure what to do, and I'd have to make a call. And I had the chance to talk to Geoffrey Moore, who wrote Crossing the Chasm, because he's worked on thousands of these launches. And I said, Jeffrey, how do you navigate that? And he goes, he looks at me and he goes, at some point you gotta roll the dice. So here's the great Jeffrey Moore, right? He works on Microsoft and Autodesk and Salesforce on strategy. And he says, you just, at some point, you still have to roll the dice. And that was really nice to hear him say that.

So yeah, yeah, it's not There is no level of expertise that makes you all of a sudden be able to see into the future. I feel, I feel like that's what that question really is, is, well, can you tell me my fortune? Well, I can estimate it, but that's, that's as far as we can go. Yeah, you gotta, gotta live life a little bit longer, then I'll tell you.

Also, another exercise I like is, you know how some people are very secretive about their patents? Some of them has related to compliance, right? Patentability, uh, sometimes not. Maybe it's proprietary. So I usually like to ask, okay, so if everyone found out about what you were doing and you went to the market with no competitive advantage, how, you know, how would you build this business and what would you do, right? And, and what would— what resources would you have towards that? And, and, and I would sort of sit back and sort of watch them sort of piece together their case. Because I think, you know, the problem is the overreliance on the product will sell itself. Well, let's say it's great, but let's say everyone ganged up on you and prevented you from doing it. How would you respond? What is your resources? What is your tactic? How would you think through that? And the depth in which they think through that, because there's no right or wrong answer upfront, is— gives me a very good indication if they're ready to do this or not. Hmm.

That's a great— yeah, that's a great question. I usually ask questions like, well, how much money are you willing to use to defend this after you launch? Like, are you prepared to get an attorney to defend your patent? Because it's great to have one, but really it's just a piece of paper that says you can take someone to court over it. So are you invested enough to go fight for and defend it? After halfway through development? Are you like, what's your commitment on that level? And that's where some people go, I'm not really willing to do that. Like, well, not guaranteeing that you're gonna have to, but that could be a scenario. You gotta think about all kind of all those different scenarios and make sure you are willing to, like you said, think through the process and even Decide, are you willing to, are you willing to do the solutions they might come up with?

Sure. I'll give you a few, uh, you know, short-form things that I use to check. These are not absolutes. Is, um, I'll look at, um, the, uh, technical development costs, and then I would look at, um, how much money they have overall. So the ratio that I'm looking for is at least for every dollar that they spend on technical development over the life cycle of it, do they have $9 to market? it or try to get it out there. Not that they have to spend all of it at once, but they have $9. So that's one. The other one is the Garbowsky ratio, which evolved over the years. So they say the technical— sorry, they call it marketing, which is the upfront research before they do the technical development. They want it to be 2.5 times for every dollar of technical on the front end. A little bit more applicable to bigger companies, but that's another ratio that is useful as well.

Yeah, I think that's a great point too, is that everybody's focused on, well, the technical, right? How much is it going to cost to make it? And not always thinking about how much time and money it's going to take to go sell it so that you can get back your investment, which is in some cases very significant, right? It's a lot of work to put a physical physical product together. And so yeah, it's a— that's a great question too. Do you have that marketing budget to go make back the money we just spent in developing it? Well, that's awesome. That's awesome. So really, what do you guys— you have your product out and with CastAgrat, Are you looking at— you said you added some IPs. Are you looking at expanding it? Are you looking to grow it and then have other ideas you want to spin off and out? Kind of what's your— what are you looking forward with?

Sure, absolutely. I mean, we, we are always trying to improve our ability to bring new products into the market. We're always trying to improve our convenience to the customer. You know, Peter, come up with ideas, right? So I just have to— my goal is how do I make sure that, you know, the connection between ideas and path to market is efficient and the back and forth is good, right? I think one of the things that I learned is, you know, organizations that can hold competing beliefs together in one place are very, very good. Like innovations, like, you know, because there's all sorts of things that required out of an organization to be good at innovating. And there's all sorts of other views that are required to operate well. And on the surface, they seem to contradict each other. One is more like a controlling one. One is more of a free-flowing. How do you make them coexist? I mean, from a personal development point of view, it'd be like, You know, I need to constantly improve, but I need to be grateful for what I have, and I need to like myself for who I am. Well, how do you hold those 2 together, right? I mean, they're both good. How do you kind of navigate those 2, right? So I think it's just understanding how to navigate competing things and not be okay is, I think, the strength of any organization that's That's going to succeed.

Yeah, I think that's a really good point. There's— it's a— it's always a blend. There's no— you can't just isolate, right, one, one or the other. It's success. I think people are getting this more. It takes combining different things together and not, you know, removing the silos. The siloed way of thinking is not benefiting anybody at all. Everything's a lot more interconnected than we, you know, maybe prefer to believe, but, but it is, and we're here. So it's definitely a— definitely time to combine things and be okay with, like what you're saying, kind of multiple views. They both can coexist at the same time, and they can both be true. And the result is you're going to have something better for it. So yeah, that's great. That's great. Well, I really appreciate your time. This has been great chatting about all this innovation, what you guys are doing. It's always, always good to see and hear about new products that are out there in the world that are eco-friendly, especially if they're happy accidents. That's even, that's even better to find those where not even intentional, but It's so easy. You can just accidentally do it. So, you know, I really appreciate your time being here chatting with us. And for anybody that wants to reach out, connect, work with you guys, what's the best way to get ahold of you?

Sure. I mean, find me on LinkedIn. I'm pretty active there. You know, any sort of open, non-pitchy requests to connect, I'm happy to Uh, you know, uh, accept. And, um, our company is Castagra. If you want to check out what we're doing, uh, feel free to do that. Perfect.

I'll make sure those links are in the description when this goes live. And yeah, thank you so much for your time. I, I really appreciate you being able to join us.

Thanks for the opportunity, Ian.