In a time where environmental regulations are increasingly becoming looser, entrepreneur Mark Cleveland believes that one of the biggest contributors to climate change — carbon emissions released by cars — can be solved through market forces.
Cleveland’s background is in commercial transportation management, a field where companies spend millions of dollars to make sure that they optimize their operations. The goal, Cleveland says, is always minimum ‘deadhead’ (empty) miles.
“Everything is optimizable based on rules and data,” he says. “In consumer congestion, there’s no organizing principle, there’s no set of rules, and therefore we have free-for-all in Americans metro centers.”
“We’re trying to use behavioral economics to drive a plan.” To do so, Cleveland co-founded Nashville startup Hytch.
His free mobile platform, Hytch Rewards, lets users track their responsible transit, whether carpooling, using a ride share service, or using public transit. Hytch riders accumulate “Trees” as they use the app, which represent a certain amount of carbon credits from the Carbon Credit Capital organization. The app displays the amount of carbon offsets you’ve earned.
The app is currently available across the country, allowing users anywhere to earn trees. It’s also inherently viral, as a user must connect with another in order to use rewards. If the ride sharer’s peers don’t have the app, they are sent a text to download automatically.
Since launch in January, the app has about 7,800 downloads across iOS and Android, and crossed the three million tracked mile-mark at the end of July.
But Cleveland has taken the concept far beyond a simple sustainability marketing play. Now, users in specific markets can also earn cash rewards for their better transportation decisions when tracked through Hytch.
The rewards come from sponsor partners, the likes of Nissan, Goodwill Industries, Lipscomb University, Sprint, Reliant Bank, and more. For now, most partners are sponsoring riders in the Nashville area, Hytch’s home base, though Cleveland says they’re talking to organizations in several West Coast metro regions.
So, why would a company want to give people cash rewards for ride sharing? Cleveland says some are using it as an employee engagement tool, to connect their employees with the company’s broader sustainability goals.
City governments and organizations that benefit from less congestion also want to encourage carpooling. For example, the Nashville Predators sponsor rewards for Hytch users that split ride, therefore freeing up more parking space.
“So the system is basically a living reflection of what a community values in terms of decongestion,” explains Cleveland.
Hytch makes money off those transactions as well, by taking a fee from the sponsor funds they distribute to users. The sponsors only pay when users complete the actions they are encouraging.
And this July, the startup claimed 700 CO2KNs tokens, a blockchain-based rewards engine that can be used to mine a carbon neutral digital currency called C4Coin. The platform will soon be able to offer users the option to earn cryptocurrency on a carbon-negative blockchain.
The startup, now six full-time employees, was initially self-funded by Cleveland and his co-founder, Robert Hartline. They have since taken funding from XMi Growth and InCrowd Capital and a number of angel investors, including celebrated “eco-explorer” David de Rothschild.
They also were the first recipient of a $150K investment from Launch Tennessee’s Impact Fund.
“Launch Tennessee is doing brave and important things for the entrepreneurial ecosystem,” Cleveland says. “I can think of nothing I’d rather see than for our company to be crazy-successful and for them to get an incredible return on their investment and turn around and invest more in entrepreneurship and Tennessee.”
Cleveland is seeking a Series A capital raise to expand faster and wider, noting the massive market and potential of the product.
“Just in the case of Nashville, there’s 350,000 cars that drive in every morning. 98 percent of them are one person in a car,” he shares.
“So, there’s a million empty seats driving to Nashville every day. We don’t have a transit problem, we have a motivation issue.”
“We want to put the right nudge at the right time for the right mobility decision.”