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With Eco-Friendly Building Supplies, Green Depot Thrives in the Construction Rebound


Engineers confirm the greenness of Sarah Beatty’s products

Photograph by Adam Golfer for Bloomberg Businessweek

Engineers confirm the greenness of Sarah Beatty’s products

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. Because her husband, Mark Buller, had decades of experience selling construction supplies, Beatty had wrongly assumed he’d be able to tell which ones were potentially 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 specializing 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 footprints and exposure to chemicals, says Beatty. Yet when people asked contractors 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 environmental benefits, she hired engineers to develop criteria to evaluate each product’s performance and assess its impact on health and the environment. Manufacturers received 10-page questionnaires asking them to detail the product’s composition, then her team checked ingredients against databases of chemicals known to be harmful. Today, items that make the cut are displayed in her 10 stores and on her website, with icons that measure their performance in categories such as energy efficiency, air quality, and conservation.

As a small company, Green Depot found getting manufacturers to cooperate “quite challenging,” says Monica Becker, a Massachusetts Institute of Technology-trained civil and environmental engineer who helped Beatty develop 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 country, including Amazon.com (AMZN), Goldman Sachs (GS), and Starbucks (SBUX). 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 focused on broadening Green Depot’s reach by acquiring competitors in Chicago and on the West Coast. That leaves her well positioned to profit from the incipient recovery, as well as growing interest in sustainable building. Freedonia, an industry researcher, estimates the U.S. market for green construction materials will grow 11 percent annually through 2017, reaching $86.6 billion.

“Sustainability has become a competitive measurement,” says Ron Jarvis, a Home Depot (HD) 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 business before long.”

Still, Jarvis dismisses niche players 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 competitive 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 companies 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 markets 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 regulation 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. manufacturers 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 compete in an international marketplace?”

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.

Nick-leiber_75x75
Leiber is Small Business editor for Businessweek.com, Entrepreneurs editor for Bloomberg.com, and covers small business for Bloomberg Businessweek.

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