Message at Jaycees Ten Outstanding Young Americans

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Tonight I’m in Orlando with Jess for the U.S. Junior Chamber (Jaycees) Ten Outstanding Young Americans (TOYA) Banquet. I was very proud to be one of the recipients, along with nine amazing individuals with whom I’m honored to be associated.

The speeches tonight that the winners gave were truly inspirational. I had the opportunity to give a four minute speech to the U.S Jaycees in the room and I wanted to post the text of the speech here.

TOYA Speech

Thank you for this award and honor. Thank you to my lovely girlfriend Jess for joining me tonight. Thank you to Peter Ansbacher and the NC Jaycees for nominating me.

What I love about Jaycees is that it is an international organization of young folks in our generation passionate about service who want to change the world.

When I came into this room tonight the second sentence of the Jaycees Creed on the back of the program caught my eye. It says “The brotherhood of man transcends the sovereignty of nations.” Grab your program and read it with me now. “The brotherhood of man transcends the sovereignty of nations.” This sentence spoke to my heart. It is with this inspiration that I speak tonight.

I am an entrepreneur and social entrepreneur. The phrase social entrepreneur may be new to some. To me, it is someone who rearranges resources to improve the world. In this sense, all of you are social entrepreneurs. My friends, there are some truly great leaders of our generation in this room tonight, not only the award winners but all of you as Jaycees. You may be one of these leaders. Tonight I’d like to speak directly to those in this room who are the leaders of our generation. I’d like to share a great challenge that our generation faces that is especially dear to my heart.

Let me start by sharing two facts that strike me. One from the World Bank and one from UNICEF.

First, 2.56 billion people, that’s 40% of humanity, people just like you and I, live on under $2 per day, PPP adjusted (1). That’s half a latte at Starbucks. Imagine living on $2 per day. Second, on average 24,956 children under five die each day in the developing world (2). This doesn’t have to happen. As we sit here at this wonderful banquet and nice hotel in Orlando, we must remember that so many do not have the opportunity we have been given.

We are all social entrepreneurs and we have the opportunity to reshape our world. For the first time in human history we have the resources and communication technology necessary to end extreme poverty and hunger in our lifetime. There is no way we will have true global security until all of us have access to education and opportunity, starting from the simple principle that all lives have equal value.

I look forward to spending the next five decades working with many of you to change the world. We are all social entrepreneurs. We are all leaders. So let’s use our leadership capacities to build something greater than ourselves.

This is our calling. This is our opportunity. It is our time. Thank you!

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Here are the bios for the winners from the Jaycees website:

Ryan Allis, 25, Chapel Hill, North Carolina. Ryan is co-founder and CEO of iContact, the leading provider of e-mail marketing tools for small to mid-sized businesses. He started iContact at the age of 18 and has built iContact into a company with more than 180 employees and 50,000 customers. An active board member of Nourish International and with his own non-profit foundation, The Humanity Campaign Inc., Ryan’s goal is to reduce poverty and hunger and increase access to education, healthcare, technology, and entrepreneurial opportunities worldwide.

Lt Colonel Steven Matthew Beasley, 37, Rapid City, South Dakota. Currently serving as Commander of the 34th Bomb Squadron and B-1 Instructor Pilot at Ellsworth Air Force Base, his military career has included designing training routes for stealth fighters in preparations for Operation Desert Strike to serving as a B-1 pilot over Afghanistan. His commitment to volunteerism at orphanages in Djibouti, Africa and through organizations such as Habitat for Humanity has inspired those around him.

Jacqueline Baly Chaumette, 40, Sugar Land, Texas. Councilmember for the city of Sugar Land and President and CEO of BalyProjects, LLC. Through her company, Chaumette is currently working on replacing aging local school district buses with clean-fuel buses. On City Council, she is the only woman, only black person, and youngest person on the city council, where she helps oversee the city’s policies and budget. Her work with the city of Sugar Land has involved planning Town Square, the city’s new downtown.

Lieutenant Colonel Troy Edward Dunn, 37, Washington, D.C. Currently, Dunn is the Commander, 11th Mission Support Squadron, Bolling Air Force Base, Washington D.C. where he has administrative command authority over 48,000 Airmen in 95 countries and 34 states, including 9,400 Airmen in the National Capital Region. As Air Staff Branch Chief and Air Force Crisis Action Team Leader, Dunn was the Air Force’s number-one authority on personnel readiness and deployments. Father of two autistic sons, Dunn has launched the Heart of Autism Project to provide a closer look into this national issue through a documentary, series of interviews with professional organizations, and personal accounts of families sharing their story.

Kathryn Cunningham Hall, 23, Philadelphia, Pennsylvania. Founder of Power Up Gambia, an organization formed to provide the necessary funds to purchase a solar powered electrical system for Sulayman Junkung General Hospital (SJGH) in The Gambia, West Africa. Hall is now working on her second project, providing power to a sister clinic of SJGH. Power Up Gambia is dedicated to providing reliable electricity and water to healthcare facilities in The Gambia through solar energy to make primary and lifesaving healthcare available to Gambian citizens.

Cameron Johnson, 24, Roanoke, Virginia. Currently President and CEO of Cameron Johnson Inc., by the age of 21, Johnson had started 12 profitable Internet companies and had been the youngest American appointed to the board of a Tokyo-based company at the age of 15. Consultant to several Fortune 500 companies, Johnson is a frequent speaker and an author, and volunteers his time focusing on promoting financial literacy among young people in America.

Atif M. Moon, 24, Rancho Palos Verdes, California. Born with cancer that left him wheelchair bound, Moon is a nationally ranked Wheelchair Tennis player. He works for Bertech Industries, an Electronic Distribution company. Moon will be pursuing a Masters degree in Sport Management in Spring 2010. He has co-founded the Center for Global Understanding (CFGU), a non-advocacy, non-religious organization to encourage the Muslim American youth to participate in civic engagement and is a role model through his example of living a full life with a disability.

Gary C. Norman, 35, Baltimore, Maryland. Founding principle of Norman Access and Conflict Resolution Consultants Group, Norman provides a range of legal and non-legal services extending to pro bono and professional-related activities. Serving as Chair of the Animal Law Section of the Maryland State Bar Association, Norman is also leading the planning for the first-ever MSBA animal law symposium. He is immediate past president of the Maryland Area Guide Dog Users, Inc., and is a well-published author and noted speaker.

Michael Richard Simmel, 31, Allendale, New Jersey. A professional show basketball player with the Harlem Wizards Basketball team, Simmel is a featured performer and performs in front of millions of people all across North America. He is one of 3,000,000 Americans living with epilepsy and is also one of 2,500,000 affected with bipolar disorder. Constantly donating his time and talents encouraging and advocating for people, especially children, who have other disabilities in addition to epilepsy, Simmel has his own non-profit organization, The Bounce Out the Stigma Project, to help empower young people and educate the public.

Robert J. Witte, 41, Plano, Texas. Partner with the law firm Strasburger & Price, LLP, Witte combines his expertise in business litigation with his leadership in actively mentoring young lawyers. He is a noted author and speaker, and has led countless humanitarian efforts and record-setting philanthropic initiatives for organizations including the Dallas Summer Musicals, the Dallas Heart Ball, the Make-A-Wish Foundation of North Texas, and the Muscular Dystrophy Association.

Sources for statistics used:

1 – 2008 World Development Indicators: Poverty Data Supplement, World Bank

From p. 10: “…the number of people living on less than $2.00 a day has remained nearly constant at 2.5 billion. From Table 3: “People living on less than 2005 PPP $2.00 a day (millions), 2005 – 2.564?

2 – UNICEF State of the World’s Children, 2009

From p. 121, Statistical Tables, Table 1 Basic Indicators, Summary Indicators, Developing Countries “Annual Number of Under 5 Deaths (Thousands), 2007 – 9109? To arrive at 24,956 deaths of children under five per day I took 9,109,000 total deaths per year for children under 5 in developing countries and divided by 365.

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:

1.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.

2.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.

3.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.

4.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.

5.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.

Five Ways a For-Profit Entrepreneur Can Be a Social Entrepreneur

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 “a problem solver who takes action.” To me a social entrepreneur is “a problem solver who takes action.” 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:

1. 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.

2. 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.

3. 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.”

4. 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 percent of payroll if you are venture-backed and not yet profitable), 1 percent of employee time, 1 percent of product, and 1 percent of equity to contribute back to your local and global community.

Quick Case Study: At iContact, we have been contributing 1 percent 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 percent of employee time (up to 2.5 days of paid time-off per year to be spent on community service products), 1 percent of product (we are providing iContact free to any non-profit organizations in the Triangle), and 1 percent 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.

5. 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.

Networks springing up
There are networks springing up for socially responsible professionals such as the Social Venture Network and Net Impact.

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!

There are venture capital firms that now focus on investing in socially responsible companies. These include Good Capital and SJF Ventures.

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.