June 23, 2009
- Visit the non-profits that The Humanity Campaign and iContact have provided funds to in order to see and document how they are using the funds and to learn about their operations and needs;
- Find additional qualified non-profits for The Humanity Campaign to invest in;
- Find companies with unique innovative appropriate technologies that address local social needs and for-profit companies with a social mission to invest in;
- Learn as much as we can about conflict resolution, IDP camps, food and water distribution, rural health care provision, and rural primary and secondary education; and
- Dance, dance, and dance some more like Matt from Where The Hell is Matt!
On our first day in Nairobi we’ll be meeting with Amon Anderson from the Acumen Fund and Mary Muhara from Africa Rising. Amon is a friend of mine from back when we went to UNC together and from when he was in charge of the entrepreneurship minor at UNC. Mary is the in-country local representative for Africa Rising who vets the non-profits that Africa Rising contributes to. Mary will be taking us to visit TULIP Nairobi a program supported by AR. TULIP “strives to deliver hope for girls subjected to poverty and its vices: teenage pregnancies, HIV/AIDS, drugs, crime, and prostitution.”
On day two in Nairobi we’ll be visiting with Carolina for Kibera. CFK works in Kibera, a slum in North Nairobi to “promote youth leadership and ethnic and gender cooperation in Kibera through sports, young women’s empowerment, and community development.” CFK was started in 2001 by a UNC students Kim Chapman and Rye Barcott. Rye has since completed five years of service as an officer in the Marines and completed a MBA/MPA joint degree from HBS and the Kennedy School of Government at Harvard, which is what I’d love to be doing in a few years. They operate a soccer league, medical clinic (Tabitha Clinic), and a reproductive health and women’s rights center (Binti Pamoja). I’m so excited to be seeing their operation first hand.
On day three, we’ll be flying from Nairobi’s Jomo Kenyatta Airport to Entebbe, Uganda. We’ll stay the night in Kampala with our friend Louis Ntale, the brother-in-law of Duke’s Christopher Kigongo, and then wake up early to catch the five or six hour Posta Uganda bus from Kampala to Gulu and traverse once again the adventurous roads of rural Uganda.
Upon arriving in Gulu we’ll be meeting up with Andrew Morgan of Invisible Children. Over the past year I have been studying the conflict between the LRA, led by Joseph Kony, and the Ugandan army known as the Ugandan People’s Defence Force and formerly known as the National Resistance Army.
Invisible Children (IC) is working to put an end to the conflict, which has died down considerably in Northern Uganda but spread to the Central African Republic and the Northeast Democratic Republic of Congo, near the Garamba Forest. IC also working to re-integrate and educate former LRA child soldiers in the surrounding region’s Internally Displaced Person’s camps and to lobby the U.S. government to put State Department resources into ending the conflict. I had the chance to spend a couple days with their CEO Ben Keesey and co-founder Bobby Bailey while at The Summit Series trip in Aspen in April. They’ve put out a series of very well done DVD documentaries explaining the conflict and highlighting the stories of particular child soldiers. I’m very excited to see the IC operation while in Gulu.
After a day with IC, we’ll be visiting the Concerned Parents Association, another organization supported by Africa Rising, which mobilises parents of abducted children toward the objectives of:
- Immediate and unconditional release of all abducted children
- Peaceful resolution of the conflicts
- Creation of an awareness of the plight of children in conflict
After three days in Gulu, we’ll head back down to Kampala on July 1st, visit with Opportunity International Kampala and then Jonathan Gozier of Appfrica, and stay the night again with Louis. On Thursday, July 2nd we’ll have one free day and either head to the Kampala Hospital, do a follow-up visit with the the Kyetume health clinic an hour away in Nkokonjeru, or head over to Jinja to see the source of the Nile.
On Friday we’ll head over to Mityana, Uganda to visit the Naama Millennium School and get an update on the scholarship program that iContact and The Humanity Campaign have funded that will be helping students at Naama attend secondary school. We’ll also be visiting a team from Duke and Nourish International. Naama serves 321 students, 113 of which have lost one or both parents. It was a true joy last year visiting Naama and seeing the school children dance!
After visiting Naama we’ll visit the Mityana Secondary School. One of my favorite memories from the visit last June was sitting in on an entrepreneurship class and seeing first hand the drive in the students to excel.
On our final day, Bob and I will head back to Kampala to fly to Nairobi and then back to RDU through Heathrow and JFK to be back in time for work on Monday morning July 6. Jess will continue on and head down to Karagwe, Tanzania to work with Juma Masisi at WOMEDA, a women’s rights organization.
I look forward to blogging about our experiences! Stay tuned.
June 23, 2009
I’m in Dedham, Massachusetts tonight (pronounced Dead-um I think) just southwest of Boston.
Tonight, I started Day One of the Class of 2011 EO/MIT Entrepreneurial Masters Program. The program is a four day a year/three year program open primarily to members of Entrepreneurs’ Organization who are founders or co-founders of companies doing at least $1M per year in sales. It is held here at the MIT Endicott House.
Tonight we started with introductions. So far, I’m impressed with the group. I’m particularly impressed with the international diversity of the attendees. Of our sixty four classmates, twenty eight are from outside the United States. We have classmates from 16 countries including the U.S., Canada, Germany, Hong Kong, the United Kingdom, Spain, South Africa, El Salvador, Nicaragua, Guatemala, India, the Netherlands, the Phillippines, Australia, Mexico, and Saudi Arabia.
Going into this evening’s introductory session, I knew only one other attendees, the 26 year-old brilliant phenom Sachin Duggal of Nivio. I met Sachin while in New Delhi in February and have to say he is on the list of the 10 Most Impressive People I’ve Met in the Last 12 Months.
During the introductions, I circled the names of a few folks to ensure I speak further with; Craig Fuller of Transcard, Chris Hanahan on Rotten Gorilla, Itu Kgaboesele of South Africa’s Sphere Holdings, David McMullen of RedPepper, Cam Mochan of The CRUX Company, Francisco Prado of El Salvidor’s d’Anconia Investments, Shashi Reddy of Case-mate, Susan Hrib of Signum Group, Sebastian Ross of Spain’s Grupo Intercom, and Martin Schuurman of the Netherland’s fastest growing company, Inkoopcollectief Yiggers.
I’m also glad to have learned that at least two of the attendees are iContact customers so far.
I’m looking forward to tomorrow. We’ll be hearing from Verne Harnish on the Rockefeller Habits, Patrick Thean on the One Page Strategic Plan, John DeHart on Nurses Next Door, and Geoff Smart on TopGrading.
I look forward to posting tomorrow night about what I learn!
June 23, 2009
I’m sitting in the corner of the Starbucks at the Southpoint Barnes and Noble in Durham. I’m reading The Dream by Gurbaksh Chalal (nickname ‘G’), a 26 year old internet entrepreneur from India and San Jose, California. G has a compelling writing style in the beginning, writing of the difficulties he encountered growing up as an Sikh Indian-immigrant. Here are my notes from the book.
G dropped out of high school at age 16 to start a performance-based advertising network called Value Click.
Growing Up a Sikh Immigrant Indian in San Jose
Some of the stories in the first part of the book that initially struck me were:
- His father and him day trading on margin in 1997 and doing equity research together. In October 1997 (right before the Asian Market Crisis) the market had a small dip and in fear of the market falling further and not being able to cover his margin sold at the very bottom, which caused his father shame and nearly to lose their new house.
- G being forced to remove his turban at knifepoint when playing basketball in the ‘hood’ of San Jose.
- G taking a public speaking class in high school and having to give a speech as a very traditional Sikh about the randomly assigned topic of Viagra.
Here’s how G. got started…
- Buying the HP.net and Dell.net domain names in 1997 and sending a letter to the companies offering to sell the names back to them for $10,000–and then receiving threatening cease and desist letters and giving the domains back for free.
- Starting to sell printers on eBay, then starting a performance-based advertising network Click Agents
- Setting us his very first deal in a very ‘Elliot Bisnow’ type of way–by getting one ad agency to commit one $30k insertion order (IO) at $1 CPC and only after having it, building his ‘consortium’ of web sites to traffic the ad at a 50/50 rev share, all along using the fake name Gary Singh.
An excerpt from p. 59:
“All the knew was that Gary Singh delivered, and that’s all they cared about. They had no idea they were dealing with a sixteen-year-old kid because I presented myself as a serious professional. Once again, perception is realty. That’s not a kid on the other end of the line. It’s a guy who delivered on his promises.”
On page 80, G tells a story I can relate to, his servers went down for a week due to a vengeful vendor. His story reminds me of the week in December 2003 our server went down due to hardware failure. An excerpt:
“We were offline for an entire week… A week without the Web. Well that was the lifeblood of my business, and that week almost put us under… Time in the Internet is measured in dog years .For that entire week, Click Agents had ceased to exist.”
Ideas Vs. Execution
Gurbaksh makes a good point about the value of ideas vs. execution on p. 100.
“If you have an idea for a company, that’s just the beginning–that’s your entry point. What really matters is execution. Don’t think about the millions you’re going to make, think instead about creating a company that will be worth millions… The difference is huge. Success is laregely about substance. If your company is about real, tangible assets, and you’re looking the the long term, you are going to be handsomely rewarded for it.”
Struggling With Bureaucracy at ValueClick
On page 117, G laments in an amusing paragraph, working for the slower, bigger, public ValueClick. VCLK had bought Click Agents in November 2000 for $40 million.
He notes, “…in this new environment, I couldn’t move forward without official approval. I had to sell an idea to one guy, then to a second guy, and then to two or three more guys after that, and they all seemed incapable of making a decision. I guess that’s what people mean when they talking about the bureaucracy. It’s a place where absolutely nothing gets done. And the larger the organization, the less one is able to accomplish…I couldn’t understand how corporations actually accomplished anything, since the bureaucracy seemed to be designed solely to steer you into one brick wall after another.”
Getting over The Fake Excitement of Materialism
Around page 136, G. begins to talk of all the Ferraris and Lambourghinis he purchased after selling his ValueClick shares. I was disappointed by the materialistic focus of this part of the book, but I could understand it in my own imperfection. I owned a 350z for two years when I was 21 to 23 before I sold it due to what it was doing to my personality.
On p 139, G writes, “I was breaking one of my own business rules. Need versus necessity. Did I really need that king of luxury.? No. Then again, maybe I’d earned it. So I Lived with it. After all, as they say, all work and no play makes G a dull boy.”
G was close to coming to the conclusion that the two luxurious $240,000 Lambourghini’s he bought was a little over the top but didn’t quite get there. I was disappointed in him at that point.
One of G’s ‘lessons’ later in the book that he shares is “Forget noble motivations.” On this, more than anything else, I disagreed with G.
After his three year non-compete agreement with ValueClick was up and after G sued ValueClick for securities fraud, he started BlueLithium in 2004 at the age of 22. He raised $11.5 million from 3i and Walden VC when the company was doing $200,000 per month in sales in February 2005. I’m not sure what G was thinking, but as part of this deal he agreed to a 5 person board, of which 3 were selected by the investors.
In my view, it is not in an entrepreneur’s best interest to let investors pick a majority of the board (and thus effectively control the entire company for a minority investment). It seems like G did not have a choice based on the amount of money raised and the stage but I would have thought he would have had more ability to set terms in the round having had a nice success previously. On p 186, G describes the difficulty he experienced with his Board believing in him when ValueClick sued BlueLithium claiming he had stolen trade secrets.
In the end, BlueLithium did well with its behavioral targeting ad technology that was able to show relevent ads to consumers based on their internet browsing history. They sold the company to Yahoo on September 4, 2007 for $300M when they were about the same size iContact is today. They had good timing and in retrospect sold at a good time, following the DoubleClick/Google, aQuantive/Microsoft, and 24/7 Real Media/WPP Group transactions.
The Secret Millionaire
In Chapter 6, G describes how he ended up being part of the current Fox show The Secret Millionaire. The premise of the show is that an American millionaire (in this case, G) lives in a distressed community for one week and talks to people and then decides at the end of the week how to allocate $100,000 to non-profit organizations in the area.
As an aside, relevant to the premise of The Secret Millioniare, last night at Crunkleton’s (bar in Chapel Hill), I had an in-depth passionate debate with my friend Jess last night about Easterly’s The White Man’s Burden and whether any benefactor or philanthropist, including myself, can legitimately and morally go into a distressed community for just one week and then appropriately contribute funds without knowing fully how they will be used and whether the impact will in fact be positive or sustainable.
I made the point to Jess (who spent 2 months in Uganda at the Sachs’ Millennium Village Project in Ruhiira last summer) that I had visited Uganda in July to see the impact of the small funds I’d already contributed and to see with my own eyes how the funds were being used and whether the organizations could efficiently and and positively utilize more in the future. I argued that some BHNs like education, healthcare, and clean water were simply fundamental to humanity and that the core issue with aid that Easterly described were mainly caused by bi-lateral government to government aid that was not reaching the people. Instead, providing aid directly to grassroots organizations run by locals in which you could see the impact yourself was qualitatively a better method. The show has gotten some criticism here and here and of course on ValleyWag multiple times, but I’ll hold my view until I can catch an episode.
G’s Entrepreneurship Lessons
Finally, G ends the book with 27 lessons on entrepreneurship. They are:
- Listen to your heart.
- Forget noble motivations (one I disagree with)
- Adjust your attitude
- Figure out what you’re good at
- Trust your gut
- Do your homework
- Be frugal
- But don’t be frugal with hiring
- Hire smart people
- Don’t expect perfection, but strive for it
- Learn to listen
- Own your mistakes
- Never compromise your morality
- Never lose sign of the competition
- Watch your back
- Don’t procastinate
- Don’t do anything by half-measures
- Be nice to people
- Negotiate from a position of strength
- Expect the unexpected
- Perception is reality
- Don’t get emotional
- Be fearless
- Pick your battles
- Grow a think skin
- Take chances
- When you commit, you really have to commit.
Overall, I would recommend the book as for me it was good to understand the process of professional and personal development of a similarly aged internet entrepreneur. It did not provide much how-to and was more biographical in nature.
I’m sure I’ll meet Gurbaksh soon enough at one of Elliot Bisnow’s get-togethers for young technology entrepreneurs sooner or later, and I look forward to the day. I could relate to much of the bananas G went through including being bullied when young for being different, sacrificing other opportunities to build a business, raising venture capital at 21, and finding flow every day by being immersed in a company.
June 19, 2009
As we sleep tonight in America, there is history afoot. Never before has the social web been used to such an extent within a country to attempt to remove a leader and coordinate a political revolution. Tomorrow, Saturday, will be an important day in the history of Iran.
For the sake of this post and citizen journalistic integrity, I’ll try to be as objective as I can here as few of us outside of Iran can know enough to truly know what is accurate. This noted, the consensus of the digerati has been made known and it is clear. In the world of Twitter, Facebook, Flickr, and YouTube–the crowdsourced view is behind the ‘Green Uprising.’
A tipping point may be reached after today’s day of prayer and Ayatollah Khameni’s speech which may only inflame protesters. The momentum behind a movement has begun and it won’t easily taper.
As I browse Twitter tonight, I see tweets like the following:
- ravenclawgirl RT from Iran: Many of my friends calling & say goodbye, as they feel in 2morrow’s demonstration they may get killed #iranelection
- Macagogo A small body of determined spirits fired by an unquenchable faith in their mission can alter the course of history. Gandhi..#Iranelection
- dijitalboy RT @chestkneeshawk: RT BBC adds 3 satellites to overcome signal jamming in Iran. Yay BBC! http://budurl.com/ea4f #Iranelection
- KDSarge All followers of #iranelection think and review before you act or retweet. Iran govt out in full force on Twitter now
- maryamwebster Until we are all heard, none of us are free. Pray for those who are silenced/killed in Iran. Violence isn’t answr. #pray #iranelection #gr88
I am seeing Facebook Statuses tonight like this one:
- Shervin Pishevar – please pray for Iran and the brave Iranian people. In 5 hours we meet our destiny. I will not be able to sleep.
The informative Green Brief is coming out nightly from an Afghan man named NiteOwl, sourced entirely from Tweets from inside Iran. There are instructions on “Anonymous Iran” on how to surf in Iran using proxies so one can access the social web. There is a tremendous set of Flickr photos of the protests on the Fhashemi Flickr account. There are 180 posters from protesters shown at Design for Iran.
Here are some videos seemingly showing violent oppression of the protests:
There are so many ethical issues here that we must tread carefully on. We must be careful in the West to so naturally and quickly support this uprising simply because we tend to lean toward the beliefs and views of the more moderate candidate Mousavi. Here is a good article supporting Ahmadinejad’s win. There are folks on the Ahmadinejad/Khameni side who are claiming that the support for the “American led coup in Iran” is causing unneccessary blodshed. Here is an example:
- @JimJones45 – 99% of tweets are from US backing a BLOODY revolution. People are dying. STOP destabilizing the Iranian state! #IranElection
This noted, others on Twitter seem to suggest these twitter accounts, most of which have no history before yesterday, are agents of the Iranian government.
To me, this doesn’t seem to be a Western-led coup. The pictures and videos of the hundreds of thousands of people in the street lay doubt to this claim.
Tomorrow, people will gather again in Valiasr Square for another peaceful march toward the IRIB building which controls all the media and which spreads filthy lies. The day before Yesterday, Ahmadinejad had hold his victory ceremony. Government buses had transported all his supporters from nearby cities. There was full coverage of that ceremony where fruit juice and cake was plenty. A maximum of 100,000 had gathered to hear his speech. These included all the militia and the soldiers and all supporters he could gather by the use of free TV publicity. Today, at least 2 million came only relying on word of mouth while reformists have no newspaper, no radio, no TV. All their internet sites are filtered as well as social networks such as facebook. Text messaging and mobile communication was also cut off during the demonstration. Since yesterday, the Iranian TV was announcing that there is no license for any gathering and riot police will severely punish anybody who may demonstrates. Ahmadinejad called the opposition as a bunch of insignificant dirt who try to make the taste of victory bitter to the nation. He also called the western leaders as a bunch of “filthy homosexuals”. All these disgusting remarks was today answered by that largest demonstration ever. Older people compared the demonstration of today with the Ashura Demonstration of 1979 which marks the downfall of the Shah regime and even said that it outnumbered that event. The militia burnt a house themselves to find the excuse to commit violence. People neutralized their tactic to a large degree by their solidarity, their wisdom and their denial to enage in any violent act. I feel sad for the loss of those young girls and boys. It is said that they also killed 3 students last night in their attack at Tehran University residence halls. I heard that a number of professors of Sharif University and AmirKabir University (Tehran Polytechnic) have resigned. Democracy is a long way ahead. I may not be alive to see that day. With eyes full of tear in these early hours of Tuesday 16th June 2009, I glorify the courage and bravery of those martyrs and I hope that their blood will make every one of us more committed to freedom, to democracy and to human rights. Viva Freedom, Viva Democracy, Viva Iran
On balance, to me the evidence seems to show that a reasonable person could come to the conclusion that this election may have been rigged. To avoid a revolution and further bloodshed, a new fair election must be held.
In an age of instant communication you cannot deceive your population for long. If you throw an election, it will get out. In an age of transparency, the days of leaders who don’t serve their people are numbered.
If you’re on Twitter, you can connect with me via @ryanallis.
The revolution will be Tweeted.
P.S. – Here is an interesting article on how protests were organized before the days of social media.
June 1, 2009
Can a for-profit entrepreneur be a social entrepreneur? Can the Executive Director of a non-profit be an entrepreneur? Yes and yes!
At the Entrepreneur & Social Entrepreneur Meetup on Tuesday I was having a great discussion with a new friend named Phil. Phil asked me a question I’ve heard often recently, “Can I still be a social entrepreneur if I run a for-profit business and not a non-profit?”
In my view, the answer is a resounding yes.
What is an Entrepreneur & What is a Social Entrepreneur?
To me an entrepreneur is “someone who rearranges resources to create value.” To me a social entrepreneur is “someone who rearranges resources to create value.” There is no difference. The line is wonderfully blurry. Let me explain.
An entrepreneur is someone who rearranges the resources of land, labor, capital, and entrepreneurial ability to create a product or service that provides value to others. Whether the entrepreneur is doing this within a for-profit corporation, in which the net profits are either reinvested in the corporation or distributed to the shareholders or a non-profit corporation in which the profits are fully reinvested into the corporation, he or she remains an entrepreneur.
Non-profit founders and directors have customers and products too. Traditionally the customers of a non-profit are its donors and grant makers and the product is the social value it produces. If the product is not valued, customers (donors) will stop giving and leave.
Today, the black and white world of non-profits and for-profits is graying. If you want to change the world for the better, it is an open question as to whether you can make a bigger impact in a for-profit or a not-for-profit company.
Profit’s Correlation With Social Value Provided
As long as the for-profit entrepreneur a) competes within the laws of a competitive market system b) does not create short-term profit for the company by externalizing the costs of the off-balance sheet destruction of the environment and c) does not exploit its labor force, the only way for the entrepreneur to make a profit is by creating value for others.
The more the ethical entrepreneur helps others, the more profit he or she will make. Profit for an ethical entrepreneur who has not exploited the environment or labor force to gain that profit is not an ugly sign of exploitation but rather a laudable sign of value created. The successful and profitable entrepreneur has rearranged resources in such a manner that the value of the output created exceeds the sum value of the inputs.
For the ethical for-profit entrepreneur, as products are produced that help others, social value is created. The very act of building your business creates jobs, provides product and services that others value, and enables you to give back to your local and global community.
Your for-profit business can often be more sustainable than a non-profit business as you are not reliant on grants and donations to grow. While you have a disadvantage of not being able to receive tax-deductible donations, you have the big advantage in the labor market of being able to offer a wonderful thing called stock options to employees, which enables you to attract top talent and enable all to participate in the value-creation.
One of the most important things you can do as a for-profit entrepreneur to enable you to make a social impact is to be profitable. As Joel Makower argues in his book Beyond the Bottom Line, “One
of the most socially responsible things most companies can do is to be profitable.” Without profits one cannot pay taxes, provide jobs that pay well, give back to a community, or invest in innovation.
Five Ways a For-Profit Entrepreneur Can be a Social Entrepreneur
So for a for-profit entrepreneur, if you really want to be a ’social entrepreneur’ here are some suggestions:
- Give all your employees stock options. Requiring a team member to be there a minimum amount of time (like 6 months) before they earn the options is okay. Vest the options over a few year period (3 or 4) to help with retention.
- Treat your employees well. Show that you care about them. Offer health insurance and good working conditions. While you have to manage to results and that requires being a professional firm that tracks performance, you can do many little things that create a good work environment and culture that actually help the firm reduce costs, retain great people, and attract a better team.
- Ensure your net impact on the environment is at least neutral, if not positive. Don’t externalize the cost of environmental damage. In other words, don’t profit off of destroying the environment, even if it may still be legal to do so. Take into account the full cost of any environmental degradation or destruction in the production of your products and services. Look up the supply line and ensure your suppliers also neutralize their impact on the environment. –> Quick Case Study: Last Month, Walmart introduced a Sustainability Product Index that asks each of its suppliers fifteen questions on energy, climate, resource use, and labor practices. It has asked its suppliers to respond by October 2009. It is using this data to understand the practices of its upstream supplier network (of over 100,000 suppliers) and provide a Sustainability Index for each of its suppliers. Walmart is also creating a “consortium of universities that will collaborate with suppliers, retailers, NGOs and government to develop a global database of information on the lifecycle of products – from raw materials to disposal.”
- Have a formal corporate social responsibility policy. A particular CSR structure I’m fond of is called the 4-1s program, in which you set aside 1% of company profit (or 1% of payroll if you are venture-backed and not yet profitable), 1% of employee time, 1% of product, and 1% of equity to contribute back to your local and global community. –> Quick Case Study: At iContact, we have been contributing 1% of payroll since 2007. In 2008 we contributed $55,000 to 37 different non-profit organizations. In 2009 we’ll reach $100,000. We are now expanding our CSR program based on the 4-1s model to include 1% of employee time (up to 2.5 days of paid time-off per year to be spent on community service products), 1% of product (we are providing iContact free to any non-profit organizations in the Triangle), and 1% of equity. Don’t wait until you’re 60 and wealthy to give back. Start from day one and create an integrated giving model. You can read about iContact’s Corporate Social Responsibility Program here.
- As you succeed personally, give back. A great differentiator for the for-profit entrepreneur is that you and those working with you can become wealthy through the appreciation of the value of your stock ownership as you scale your ability to help others. If you’re fortunate enough to have a liquidity event (go public or get acquired) use your personal resources to invest in other entrepreneurs and social entrepreneurs who are changing the world for the better, contribute personally to the organizations (and candidates) that you feel are making the biggest positive impact for humanity, and vote with your dollars as a consumer and doing your best to purchase from companies who have a similar view about corporate social and environmental responsibility.
There is a movement of socially responsible companies that is defining our generation. These socially-responsible for-profits, sometimes informally called B Corporations instead of C or S corporations, can make a huge positive impact on the world, up and down supply chains.
Companies like Vestergaard Frandsen, Salesforce.com, Danone, Stonyfield Farms, and Whole Foods are leading the way in this integrated social business model. They are doing well not in spite of their social mission, but often partially because of it.
There is a new genre of books focused on how to use business to change the world. There are many, but my favorites are The Business of Changing the World, Creating a World Without Poverty: How Social Business Can Transform Our Lives, The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World, and The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits.
There are now publications that focus on the socially responsible business owner, including Stanford Social Innovation Review and Good Magazine (founded by the son of INC. Magazine). There is even a newswire just for social responsible news called CSRWire. There is even a stock index called the KLD400 for socially responsible companies!
What Ben & Jerry’s and The Body Shop started is becoming wonderfully mainstream and necessary as a new generation that connects and collaborates globally like none before it becomes corporate leaders.
While I am generally a fiscal moderate who believes in the ideology of individual freedom and liberty, Milton’s Friedman’s 1970 assertion that ‘the business of business is just business’ was wrong. As Peter Drucker argued in 1942 in The Future of Industrial Man, companies must have a social dimension as well as an economic purpose.
Five Ways a Non-Profit Director Can Be An Entrepreneur
As a Non-Profit Director, you are an entrepreneur as well. You have a product and a customer, and you are working to rearrange limited resources to create value.
For the non-profit entrepreneur, today earned income models are becoming the norm rather than the exception. While 501(c)(3) non-profits have a benefit of being able to receive tax deductible contributions, these contributions are often unpredictable and at times can influence a non-profit to go in an undesired direction.
The age of non-profits being able to rely solely on donors and grants is over. For a non-profit entrepreneur, an earned income model exists when the non-profit company sells a product or service to others and gains net income on that sale which is reinvested in growing the non-profit in a sustainable manner. The line between non-profit entrepreneurs and for-profit entrepreneurs is indeed getting gray.
While you are required to reinvest practically all your net income back into the organization, you have a great advantage. As a registered 501(c)(3) you can accept tax-deductible monetary contributions from individuals and corporations. You can apply for and receive grants from foundations. You can also receive in-kind donations from local companies or receive discounts or pro-bono work from service providers.
At the end of the day, just because you cannot distribute net income to your shareholders doesn’t mean you aren’t an entrepreneur. Here are some ways you can be entrepreneurial as a non-profit founder or director:
- Create an earned-income model. Find a product or service you can sell to others. Just because you have to reinvest your profits, doesn’t mean you can’t make a profit. You don’t have to give away everything. The more value you create, the more you will can earn and the more you’ll be able scale your organization to serve its mission. –> Quick Case Study: As an example, a non-profit I’m the Board Chair of this year, Nourish International, has an earned-income model. Nourish teaches college students to run entrepreneurial ventures on its campuses. These ventures range from ‘Hunger Lunches’ with corn bread and beans to poker tournaments to selling medical scrubs. Nourish then takes the net profit from the students’ ventures and funds a portion of administrative overhead at the national office and contributes to community-based non-profit organizations in the developing world that work to reduce extreme poverty and hunger. This past summer Nourish sent 58 of its students to nine projects in developing countries. Nourish’s model is growing and it now chapters on 29 college campuses.
- Have an entrepreneurial mindset. Just because you have donors doesn’t mean you don’t have to have a sense of urgency and work quickly and efficiently to produce results and compete. The market for non-profit donations is competitive and contributions will go to those that are well-run and maximize positive human impact with minimum dollars (or at least maximize human impact in the fields that those with resources most care about, a substantive difference). While there seems to be a somewhat unfortunate reality that some well-established non-profits with celebrity representation or large budgets can often get the bulk of available contributions and crowd out perhaps more deserving smaller NPOs, many of these established non-profits were start-ups once as well and only came to be influential by being efficient, achieving their mission, and attracting larger and larger contributions and grants.
- Hire people who are smart, ambitious and driven. Don’t settle for poor-performers. As a Non-Profit Director you have the ability to attract talented, caring staff members that are willing to work hard for less than market pay. Use this to your advantage. There are driven, smart, ambitious, educated, and talented individuals in the work force that want to work for a non-profit. Too often I have seen non-profit entrepreneurs settling for lower quality team members and not managing their performance. Hire A players who are passionate about what you are driving to achieve and empower them to be entrepreneurial, take risk, and grow the organization.
- If You Aren’t Maximizing Social Value, Consider Merging. One of the issues in the non-profit world is that it is rather challenging for one non-profit to merge with or be acquired by another non-profit. This creates the reality that there are often dozens if not hundreds of small non-profits inefficiently and disparately going after the same cause. Industry consolidation and M&A in the business world happens naturally as controlling shares can be purchased in private or public markets. For a non-profit this is not possible so it is up to the humility of the founder to consider whether a merger could create a better social outcome. Allowing for the benefit of competition and time it takes to start-up, test your model, and make it scale–consider shutting down or merging your organization with a more efficient or larger organization if you feel like your organization isn’t best using resources to create positive social value. Non-profit mergers can allow the combined entity to share resources, reduce overhead costs, and go after bigger grants while achieving the shared mission.
- Run your non-profit like a business, because it is. Non-profit organizations sometimes use their non-profit status as an excuse not to seek to be efficient, employ staff performance management systems, or make the tough decisions for-profit businesses have to make to survive and thrive. Being a non-profit does not mean you should not seek to earn profit. It simply means you must reinvest this profit. The more profit your organization can make the faster it can scale and grow and achieve its mission (of course don’t make a profit in a manner that goes against your values and mission!). After all, your non-profit corporation is a business, just one that has committed to reinvest its profits every year back into the business and not distribute them.
What type of organization should I work for to make the greatest positive impact?
Often the best answer to the question “what type of organization should I work for to make the greatest positive impact” is a gray hybrid to the old-school black and white. The answer is often a for-profit business that is socially responsible and integrates the concepts of social business into its organization, or an entrepreneurial non-profit organization that is run like a business, efficiently and with a sense of urgency.
And finally, today the boring and bureaucratic public sector is slowly but surely changing as it is again becoming cool for smart driven people to work in government. The bureaucracy that is Washington D.C. can only change if it is infused with entrepreneurial, efficient management that has a sense of urgency and passionately cares about making a positive difference.
Comments & Thoughts?
I’d love your comments on this post! Particularly if you have any examples of companies that truly integrate social responsibility into what they do, interesting models of corporate social responsibility, or examples of non-profits that are run like an entrepreneurial businesses. Also, I’d love any thoughts on the graying of the for-profit and non-profit sector and any thoughts on infusing entrepreneurial principles and efficient management into government. Thanks for reading! – Ryan