From Process to Profit: Inside Earthshot Labs’ Two-Pronged Strategy for Technical Differentiation

From Process to Profit: Inside Earthshot Labs’ Two-Pronged Strategy for Technical Differentiation

Most climate tech companies rely on a single technical advantage. In a recent episode of Category Visionaries, Troy Carter revealed how Earthshot Labs built two distinct technical moats to solve one of the industry’s biggest challenges: accurately forecasting ecosystem development.

The Market Challenge

The carbon market faces deep skepticism around scientific standards. As Troy explains, “The carbon market has gone through a bit of a reckoning recently where there’s been a lot of press around the lack of rigor in scientific standards.” This credibility gap created an opportunity for technical innovation.

Building the First Moat: Data-Driven Analysis

Earthshot’s first technical approach builds on established methodologies. Troy outlines their process: “You use satellite imagery, you use ground truth data, people collect data, measurements by hand of trees, and then you do basically machine learning and statistics to project lines in the future.”

This data-driven foundation provides the baseline credibility needed to engage with institutional investors. But it’s their second technical moat that truly sets them apart.

The Second Moat: Process-Based Modeling

Troy describes their more sophisticated approach as “process-based modeling,” which creates “a mathematical model of the ecosystem itself, which is taking things like photosynthesis and evaporranspiration, and all the biochemical processes like enzymatic processes and nutrient exchange with the soil, and competition between different species.”

This approach runs on supercomputers, enabling unprecedented accuracy in ecosystem forecasting. It’s particularly valuable for “doing risk analysis, fire risk, and then also sort of, what is the effect of an intervention on the landscape.”

Monetizing Technical Innovation

Earthshot monetizes these capabilities in three ways:

1. Development services: “Getting paid for carbon development services, because it’s quite complicated for a project to go through the process”
2. Investment commissions: “Taking a commission on those investments”
3. Project shares: “Taking a credit share in those projects so that our incentives are aligned”

Real-World Application

Their Panama project demonstrates this dual approach in action. Troy describes it as “about a 10,000 hectare reforestation project… That was former cattle ranching land.” Their technical capabilities enable them to accurately forecast project outcomes, securing “upfront financing from different philanthropic organizations and corporations.”

Scaling Technical Advantages

Looking ahead, Earthshot aims to apply these capabilities globally. They’re working on “one to two dozen” similar projects, with some reaching implementation costs of “$26 million… over six years.” Their technical moats enable them to take on projects of increasing scale and complexity.

For B2B founders building technical differentiators, Earthshot’s approach offers several key lessons:

1. Start with established methodologies to build baseline credibility
2. Develop proprietary approaches that solve fundamental industry challenges
3. Create multiple technical moats that complement each other
4. Design revenue models that capture value from technical advantages
5. Demonstrate capabilities through flagship projects before scaling

By combining data-driven analysis with sophisticated process modeling, Earthshot has created technical barriers that help them achieve their ambitious goal: enabling “the planting of more than a billion trees, more than 50 million hectares under conservation, and more than 100 million tons of CO2 drawn down from the atmosphere” by 2030.

Their story shows how technical differentiation isn’t just about building better tools—it’s about creating entirely new approaches to solving industry challenges.