My TEDx Presentation – “Creating a Better World”

On December 10th, 2011 I gave a TEDx presentation in Raleigh on “Creating a Better World.” I just saw the video tonight for the first time. Take a look! What do you think about it? Check out the 5 Human KPIs and Our Parents’ Report Card within.�Here’s the video…

And here are the slides from the presentation:

TEDx Ryan Allis – Optimism for the Next 40 Years of Human History

Today’s Fuel Explosion in Nairobi

I’ve got a special place in my heart for East Africa, having visited there three times and with investments in Pengo Loans and Think Impact, both with operations in Kenya. After visiting the Kibera slum in Nairobi in 2009 to see the work of Carolina for Kibera, I feel especially for those who are living day-to-day in the slums of Nairobi and other parts of the developing world.

Today in a Nairobi slum called Sinai a fuel pipeline starting leaking. Immediately hundreds of people gathered around, grabbing every container they could to capture the fuel. Soon thereafter, the pipeline caught fire and exploded. At least 100 people immediately burned to death in the explosion and ensuing house fires in the densely concentrated slums. Another 120 went to the hospital with severe burns.

Below is a news video of the story from the local Kenyan NTV. Take a look at the living conditions of these communities. Often without electricity, running water, and sewage. Yes, it’s true that 39% of the world survive on less than $2 per day (a per capita income of $730 per year), and yet so few people are aware of this. For those of us in the United States living on an average of $130 per day (the U.S. per capital income as of 2011 is $47,240), this type of existence is surely hard to fathom.

And here is another video from NTV showing some of the burn videos in the hospital (warning: graphic):

Here’s the NY Times article.

Going to Egypt Tomorrow

Hello from Boston. I’m here today for year three of the EO/MIT Entrepreneurial Masters Program.

I am excited to be heading to Egypt tomorrow as part of a U.S. State Department and USAID funded program in alliance with the Egyptian and Danish governments. I’ll be headed there with American entrepreneurs Shama Kabani, Alexis Ohanian, and Scott Gerber of the Young Entrepreneurs Council.

We’ll be mentoring 48 young Egyptian tech entrepreneurs ages 18-30 in Cairo with the NextGen IT Entrepreneurs Bootcamp and judging a business plan competition. Four of the winners will be coming to the US in October to intern at iContact for three weeks. I’m passionate about using business, technology, and entrepreneurship as tools to make a positive impact in the world, so this will be a great opportunity to see Egypt and work with great tech entrepreneurs in an exciting part of the world.

This will be my fourth trip to Africa, but first in North Africa. In about 5% of my spare time, I invest in tech entrepreneurs in the US and Africa via the Humanity Fund, so when I was asked to go by Scott Gerber I knew it would be right up my alley.

Egypt is passing through a very significant time in it’s history and it will be fascinating to be there. Quoting one of the participants in the program, “Egypt holds an important place in human history as one of the birthplaces of commerce, and the knowledge and experience of Egyptian business people will lead to many exciting and valuable products, services, and innovations for years to come. This is a great time for Egypt to truly shine.”

Here’s some additional info on the program. More blogging to come as I’m there…

=================

NexGen IT Entrepreneurs Boot Camp
Background

The NexGen IT Entrepreneurs Boot Camp, is a collaborative effort by the Government of Denmark, the U.S. State Department’s Global Entrepreneurship Program, the United States Agency for International Development’s Egypt Competitiveness Project, and the Technology Innovation and Entrepreneurship Centre, affiliated with the Ministry of Communication and Information Technology. The NexGen IT Boot Camp is a series of training events that includes a Business Plan Awareness Class and an IT Master Class. The later will be taught by US and Danish Delegates in which prizes will be awarded to four winning teams. Two of the winning teams will travel to the US in October to intern at iContact, a very rapidly growing American tech company.

More on the US internship @ iContact

The US internship will be with iContact in October. iContact is based in Raleigh, NC and is working to make email marketing and social marketing easy so that small and midsized companies and causes can grow and succeed. Founded in 2003, iContact has more than 300 employees and more than 700,000 users of its leading email marketing software.

As a B Corporation, iContact utilizes the 4-1s Corporate Social Responsibility Model, donating 1% of payroll, 1% of employee time to community volunteering, 1% of equity, and 1% of product to its local and global community as part of its social mission. iContact works hard to maintain a fun, creative, energetic, challenging and caring company culture. The Triangle Business Journal has named iContact one of the best places to work. The company has been listed on Inc. 500 3 years in a row and its founders Ryan Allis and Aaron Houghton were selected by Inc. Magazine 30 under 30 in 2009.

Two of the winning winning teams, composed of two individuals, will win the opportunity to gain critical knowledge of how to grow a business during a three weeks internship at iContact in Raleigh North Carolina. The iContact internship will be an entrepreneurial rotation in which the interns will learn about the critical parts of the business including marketing/sales, IT, customer service and finance. The internship is paid for by USAID through the Egyptian Competitiveness Project (ECP).

12 Life Lessons

Tonight I gave the graduation speech at the Leadership Triangle College Edition graduation that nineteen amazing local college students from Duke, UNC, NC State, NCCU, Shaw, Meredith, St. Augustine’s, and Peace college have participated in. In preparation for the speech I wrote down “12 Life Lessons” I’ve learned in the last ten years. I only mentioned a handful of them during the actual speech, but here are the prep notes…

1. Surround yourself with people you like and admire. You are who you surround yourself with. It pays to choose the people you surround yourself with carefully.
2. Put positive thoughts into your head. The internal message that you tell yourself over and over becomes reality. Thoughts become things. Don’t be insecure. Be confident. YOU ARE AMAZING! You are all here because you are brilliant. Life is a wonderful opportunity. Believe in your power to do good.
3. Laughter is the best medicine for stress. Laugh at yourself often. Find what is funny in whatever situation you’re in.
4. Take time to think about and write down your goals and frame them!!! Set bigger goals than you think are actually possible to achieve and try to hit about 50% of them. If you’re hitting more than 50% of your goals, they’re not ambitious enough!
5. Don’t worry about what other people think about you. Just be yourself.
6. Travel the world at every opportunity you get. Take an interest in what’s going on in the world. Know about the tremendous opportunities in Asia, Africa, Central America, and South America.
7. Build authentic relationships in which you give. Don’t build fake relationships.
8. To find a job, stop sending resumes out blindly! Just find 5 people who you want to be in 20 years who have accomplished what you want to accomplish and build an authentic relationship with them at least a year before you need a “job”. Start by offering to take them to coffee or lunch and keep asking 1x per month until they say yes .
9. Don’t take a normal job. Only take a job working with great people doing something you really enjoy doing.
10. Find something you’re passionate about that you love doing that you enter the “flow state” when you do it, then figure out how you can create value (and maybe make money) doing that!
11. Save and invest money whenever you can and never ever go into debt for something you don’t need. Make your money work for you.
12. Spend more hours reading than you do watching TV! Book recommendations: Think and Grow Rich, Rich Dad Poor Dad, and How to Win Friends and Influence People.

What do you think?? What key life lessons have you learned in the last ten years?

The Entrepreneurs I Met in Uganda and Kenya

(If you haven’t yet read my last post on investing in Africa you can read it here)

The Journey to East Africa

I left my parents’ home in Bradenton, Florida on Sunday afternoon and after a 30 hour journey through Tampa, snowy-D.C. and Istanbul, Turkey I arrived at 2:15am Tuesday at Entebbe International Airport in Uganda. I was so happy to be back in Africa for the third time.

I got through immigration and customs and by 3am came out of the arrivals area at Entebbe to meet Roey Rosenblith and Abu Musuzza, two solar lighting entrepreneurs in Uganda who run VillageEnergy. They very graciously picked me up at such an early hour in the morning.

Roey and Abu have been working for a year and a half now on bringing affordable solar lighting to the 80% of homes without electricity in Uganda. They began their sales back in September 2010 after a year of R&D and production and are now rapidly building out their distribution model for their $60 home solar lighting systems.

I had invested in VillageEnergy back in January 2010 through a personal investment fund the Humanity Fund. There was much to discuss!

We jumped in Abu’s Corolla at the airport carpark and began the hour drive back to their apartment in Kampala. On the way I got an update on Village Energy’s operations. We arrived a little after four back at their place. After a quick demonstration of the VillageEnergy solar lighting system and a heated cinnamon bun (definitely not the first thing I expected to eat in Uganda), I crawled under the malaria net and fell asleep by 5am. We had a busy day ahead!

Tuesday – Kampala, Uganda

I rose at 9am and after a shower and some fresh chapatti and Kenyan tea the three of us went to the Kabira Club for a buffet breakfast.

There at the Kabira Club I met with tech entrepreneurs in a series of meetings Roey had set up.

Here’s are the entrepreneurs I met with  in Uganda.

1. Roey Rosenblith and Abu Musuza from VillageEnergy
2. Charles from Wifi Cloud who is starting a wimax phone routers business in Kampala
3. Saidi Bakenya from One2Net is setting up a digital internet connection service over the TV spectrum
4. Peter Kimuli from Carnelian who is building a micro hydro power plan in west Uganda
5. Peter Benhur Nyeko from Benconolly Pess Ltd, who is in the bus and generator business
6. Charles Kalema, who run a garbage and disposal business with 24 employees
7. Dennis from Dmark Mobile, a mobile apps company with 23 employees
8. Revence Kalibwani, a mobile app developer

Around 4:30pm we went to the Village Energy sales center to meet with their employees Aggie, Alex, Alex, and Charles. We then went to dinner at a local hotel to get feedback from the team on how to improve Village Energy.

At eight we visited Olga, a VillageEnergy customer who lives in area without electricity and has 3 VE units installed.

We capped off the night with drinks at 9:30pm at Cayenne in Kampala with Roey and Abu and their friends Simon, Jennifer, and Dennis. Dennis runs Dmark Mobile, a mobile apps company with 23 employees.

Wedneday & Thursday – Nairobi, Kenya

On Wednesday I woke up at 8am. Roey, Abu, and I drove to Entebbe to have breakfast with Revence Kalibwani, a mobile app developer. Then we went to the airport and I was off to Nairobi on Air Uganda.

Yesterday and today In Nairobi I met with:

1. David Kuria from Iko Toilet, has 50 environmentally friendly pay toilets throughout Kenya. Has raised funds from the Acumen Fund and works with my friend Amon Anderson at Acumen.
2. Elizabeth Myyuiyi from EcoBank Kenya to discuss SME loans and credit. Secured loans are going here for 14% per year and group guaranteed microfinance loans are at 25-30%. (Though the annual inflation here is about 9% so the real interest rates on these loans are lower).
3. Gaita Waimuchii of NetBlue Africa, a web marketing agency, and AfricaPoint.com a 21 employee travel booking company in Nairobi
4. Ben Lyon and Dylan Higgins of KopoKopo, mobile money backend integrator, API connector between MFIs and multiple platform mobile money solutions. Ben is from FrontlineSMS and Dylan is from Savetogether.org. They’re received investment from FirstLight Ventures and Presumed Abundance to date.
5. Jessica Colaco from iHub Nairobi, tech incubator
6. Wiclif Otieno from Kito International, non-profit that employs street-youth in Kenya
7. Morgan Simon, founder of Toniic Impact Investors Network

During these discussions a number of other Kenyan and East African tech firms were mentioned that I’ll have to check out.

• Renewable Energy Ventures, providers of the Solatern and run by Joseph Nganga who is on the advisory board of Carolina for Kibera
• PesaPal.com – mobile money provider, run by Agosto Liko
• Squad Digital, Kenyan ad agency
• Craft Silicon, Kenyan financial software firm with 150 employees
• Kalahari.co.ke, the Kenyan Amazon
• Cellulant Kenya, mobile commerce company
• Virtual City – mobile applications provider
• E-Fulusi, mobile money integrator

I’ll be posting next a report and video from my time this afternoon at the iHub, the tech incubator and innovation hub here in Nairobi.

Asante Sana,
Ryan

Why Invest in Africa?

Jambo from Nairobi Kenya!

I’m so energized. I’ve been in East Africa for the past three days visiting tech entrepreneurs and tech investors.

While I spend about 95% of my working energy focusing on building iContact into a high-growth purpose-driven business, I like to take a couple weeks each year to travel and explore what’s going on with tech companies in other parts of the world.

This week I’m in Uganda and Kenya to find investment opportunities for the Humanity Fund, a personal investment fund I have for investing in African and American tech companies.

Why Invest in Africa?

There is so much economic opportunity in Africa, support for IT investment, and entrepreneurial energy. There’s an opportunity to make a lot of money investing in great companies while creating lots of jobs and doing a lot of good at the same time.

Africa is the least developed continent in the world. There are 1.03 billion people in Africa. Of this 1 billion (source) 65% of Africans live on under $2 per day (source) and 59% of African households do not have electricity (source),  and the number increases to 69% if you only look at Sub-Saharan Africa.

But Africa is no longer about famine, poverty, and war. That was the Africa of the 20th century. The 21st century Africa is about opportunity, technology, and entrepreneurship.

You may read about Sudan, Somalia, Zimbabwe, Eastern Congo, and the Ivory Coast in the New York Times and hear about these countries on the nightly news. But these are only five of the 54 countries in Africa.

The real, untold, narrative of Africa is what’s happening in the other 49 countries. Tremendous economic growth, investment, and rapidly rising living standards. What happened in South East Asia from 1950-2000 (rapid growth and poverty reduction) is now happening in Africa from 2000-2050. Most of the world just hasn’t realized it yet.

Why Invest in East Africa?

Here in East Africa (Kenya, Rwanda, Ethiopia, Uganda, and Tanzania) the GDP has grown at an average annual rate of 7.6% the last four years compared to just 0.5% for the USA. Africa will be the economic lion of the 21st century as McKinsey proclaimed in their July Report, “Lions on the Move: The Progress and Potential of African Economies.”

Take a look at these average annual GDP growth rates for 2006-2009 from the World Bank Development Indicators GDP database.

• Uganda: 8.75%
• Rwanda: 7.925%
• Kenya: 4.375%
• Ethiopia: 10.45%
• Tanzania: 6.675%
• USA: 0.5%

Uganda was the first country I came to in Africa back in 2008 and so I decided to start investing here in East Africa and expand later. I hope someday to run a fund making investments in high-growth socially responsible companies all over the developing world.

Investing As a Way of Making a Positive Impact

This is my third time in East Africa. When I came for the first time in 2008, I held the view that the way to best make positive change was to give money away to NGOs and non-profits.

I come now with the perspective that it takes all three sectors of society (government, non-profits, and for-profits) working effectively to create sustainable economic growth and that the private sector has a huge power to make positive change in the world.

The best way I believe I can contribute to positive change is to help high-growth companies that are creating jobs expand and create more jobs. At the end of the day, the cause of poverty is a lack of jobs and productive capital. Low education, low health care, and low nutrition are the symptoms of poverty, not the causes. If you increase someone’s income they can afford better education, health care, and food for their family.

So now, I believe the best way I can use my experience and resources to make an impact in reducing extreme poverty is to invest in high-growth companies that are creating jobs in developing world.

What I’m best at is figuring out how to grow technology and internet companies. Over the next two years I hope to invest in about ten more privately owned high growth African tech companies as part of dipping my feet into the water and beginning to create a model for eventually building a private equity fund some years down the road.

I hope to be able to eventually show that it is very possible to build a microequity investment firm that gets above market returns investing in high growth socially responsible companies in the developing world.

The field of impact investing is developing rapidly and I’m glad to slowly be learning about it. To learn more check out this Impact Investing Primer from the Rockefeller Foundation and this one from the Federal Reserve Bank of San Francisco.

Existing VC Funds in Africa

In my time here and in talking to people at the Skoll World Forum in April I’ve come across the following funds that are actively making venture capital investments in tech companies in Africa.

1. InReturn Capital
2. BusinessPartners Kenya
3. TBL Mirror Fund
4. eVA Fund
5. Flow Equity
6. FirstLight Ventures
7. Humanity Fund
8. Fanisi
9. Grassroots Business Fund (non-profit fund)
10. Acumen Fund (non-profit fund)
11. RootCapital (non-profit fund)

A more extensive list can be found on the African Venture Capital Association (AVCA) web site. Other resources include the VC4Africa and BiD Network

How You Can Invest in Africa

If you want to invest in private African companies, then you could contact the above VC funds and express interest in investing as a limited partner in their next fund. They will likely require you to be an accredited investor and be able to invest $100,000 and up. You can also find private companies yourself and invest in them directly or join an angel network that invests in African start-ups like Toniic.

If you want to dip your toes into the water of investing in African companies without putting tens or hundreds of thousands of dollars at risk, you can invest directly into publicly traded African companies. There are even Exchange Traded Funds (ETFs) that allow you to get index-fund like exposure to African markets. You can invest as little as $75 in these funds through your broker or your TD Ameritrade, E*Trade, or Scottrade account and participate in the growth of the African economy.

You may want to check out:

• AFK – The Market Vectors Africa Index ETF seeks to replicate the performance of the Dow Jones Africa Titans 50 Index. The fund represents a broad range of sectors and African countries, including exposure to some less traditional, frontier markets. Up 23% in 2010.
• GAF – SPDR S&P Emerging Middle East & Africa ETF. Seeks to closely match the returns and characteristics of the total return performance of the S&P/Citigroup BMI Middle East & Africa Index. Up 22% in 2010.
• EZA – South African ETF, up 29% in 2010.

You can also call your broker and ask them to invest directly in publicly listed firms on the Ugandan Securities Exchange or the Nairobi Stock Exchange.

For proper disclosure, as of this writing I do not own any of these ETFs but might in the future. I am definitely not a qualified securities advisor in any way and past performance is not necessarily indicative of future performance.

Thanks for reading. I hope you enjoyed this post! Please share and comment.

Next, I’ll be posting about the entrepreneurs I’ve met in my first three days here in Africa…

- Ryan, Nairobi, 30.12.10

You’re Invited: A Metropolitan Safari for Rwanda at iContact

The False Tradeoff Between Financial & Social Responsibility

There is a perception out there that there is a tradeoff between social responsibility and financial responsibility. You can’t do both, people say. You can’t have your cake and eat it too. Well, very fortunately the data just doesn’t support that perception.

Can you actually be more socially responsible and increase shareholder value at the same time?

The Only Social Responsibility of a Company Is To Increase Profits for Shareholders

In 1970, Chicago-school economist Milton Friedman proclaimed in an article for New York Times Magazine that a company’s only social responsibility is to increase profits for its shareholders. In the 1980s Ronald Reagan, Margaret Thatcher, George Bush, and the Ayn Rand star-pupil Alan Greenspan turned this credo into de facto policy gospel.

There is passionate and meaty debate whether externalizing environmental damage and exploiting a work force is okay if there is no law or regulation against it. There is another debate whether these practices actually maximize long-term profits or the present value of future cash flows.

For a moment, let’s take this 1970 proclamation at face value and assume that an executive’s responsibility is to increase returns for company shareholders. Let’s agree that executives and board members do have a fiduciary responsibility to seek to gain a return on the capital invested in their organization, particularly if they work for a publicly-owned company or a company that is not a wholly-owned private corporation.

So this begs the question, can you do both–increase social return and increase financial return?

Can You Be More Socially Responsible & Financially Responsible?

Raj Sisodia, David Wolfe, and Jag Sheth recently published “Firms of Endearment: How World-Class Companies Profit from Passion and Purpose.” In the book, they share the results of a study in which they looked at companies that were especially socially responsible–they call these firms “Firms of Endearment” or FoEs. They compared the shareholder returns of these socially responsible firms with the S&P 500. What they found was that the firms that were socially responsible outperformed the S&P 500 by 9x.

These Firms of Endearment grew shareholder value 1025% in the last ten years while the S&P 500 returned 122%. Even when you compare the Firms of Endearment vs. the blue chip success stories profiled in Jim Collins’ Good to Great, the Firms of Endearment win. The firms profiled in Good to Great returned 316% while the FoE’s returned 1025%.” Here’s the graph from their web site.

Financial Returns of Socially Responsible Firms Vs. S&P 500 and Good to Great

Now, by no means does this data prove conclusively that more socially responsible firms create higher shareholder returns. The data show only correlation, not causation. The reality could simply be that firms that happen to be socially responsible happen to be in more profitable industries and so they can afford to give more to the community and create better work environments. But nonetheless, the point is clear– investing in being a socially responsible company certainly does not by definition go against shareholder interests and in many cases enhances shareholder returns.

iContact Case Study

Earlier today, I published a case study of social responsibility at iContact. In it, I shared the why and the how behind our social and environmental efforts at iContact over the past year including examples of how iContact has reduced costs and increased employee engagement through our efforts. As I wrote in the case, the benefits to date from our social responsibility efforts included:

1. Vendor cost reductions of $40,000 driving estimated net savings of $19,000 per month.
2. Increased employee engagement and excitement to be working at our company (which we believe will lead to greater passion in people’s work, additional discretionary effort from team members, increased productivity, lower regret employee turnover, and an increased ability to attract the best and the brightest).
3. Increased customer acquisition and customer retention from customers who are coming to us and sticking with us because of our social responsibility programs.
4. Additional press coverage from Entrepreneur, INC, and the Raleigh News & Observer that is helping us recruit the best and brightest and gain additional customers and partners.

So in fact, at least so far, we have been able to show both tangible and intangible benefits that connect the investment we are making in social responsibility with direct economic net benefits to our financial results and thus to the increase of shareholder value.

A False Tradeoff

While it would be nice to have even better data and employee surveys comparing before and after our work at iContact, there is substantial anecdotal evidence supporting a conclusion that in the case of iContact, increasing investment in social and environmental responsibility so far has increased profits, and will contribute very positively to increasing shareholder value in the many years to come.

So does increasing social and environmental responsibility always increase shareholder value? No, it does not. But in many cases it can and does and the Firms of Endearment study provides a fascinating basis for a likely connection between the most socially responsible firms and those who produce the highest return for shareholders. Investing in being a socially responsible company certainly does not by definition go against shareholder interests and in many cases enhances shareholder returns.

There does seem to be substantive and significant evidence showing there the tradeoff between social responsibility and financial responsibility is false and in fact social responsibility in many cases aligns with increasing financial profitability.

Comments/Thoughts?

Thanks for reading. I’d love to know your thoughts in the comments on social responsibility, effective CSR programs, whether being more socially responsible helps or hurts a business,  and whether your shopping decisions could be influenced by whether a company is responsible or not.

Maximizing Social Return from The Giving Pledge

I originally wrote this post for the Social Entrepreneurship Section of Change.org. You can find the original Change.org post here or read below.

A Vision in a Time of Peril

It’s hard to see the big picture in times of turmoil. Let’s go back to Wednesday, March 4, 2009. That day, Bill Gates and Warren Buffet, the richest individuals in America, wrote a letter to David Rockefeller, President of the Rockefeller Foundation. The letter suggested a gathering of their billionaire friends to discuss giving.

The letter was mailed in the backdrop of a tumultuous week. By that Friday March 6th, the Dow Jones Industrial Average reached its lowest point in twelve years, free falling 52.9% from two years before in the good ‘ole days of 2007 prosperity.

March 6th, 2009 brings back vivid memories. I was visiting the White House with a group of young entrepreneurs with The Summit Series. The White House Office of Public Engagement had put together the session to discuss their plans for the Economic Recovery Act. As Jason Furman, the Deputy Director of the National Economic Council, spoke to our group, the market was in freefall.

While the media was anointing The Great Recession and debating whether it would become a depression, Gates and Buffet had the fortune and foresight, to bring together their friends for dinner in New York to discuss how to give back.

The Launch of The Giving Pledge

Out of this meeting in New York came an initiative called The Giving Pledge, “an effort to invite the wealthiest individuals and families in America to commit to giving the majority of their wealth to philanthropy.”

So through The Giving Pledge Mr. Gates and Mr. Buffet are encouraging other billionaires to give at least 50% of their net worth away.

In fact, instead of the recommended 50%, Warren Buffett has pledged to contribute 99% of his net worth to charity within 10 years after his death, all to be used for immediate need and none for endowments. Laudable indeed. Buffet writes in his usual matter-of-fact style,

“The reaction of my family and me to our extraordinary good fortune is not guilt, but rather gratitude. Were we to use more than 1% of my claim checks on ourselves, neither our happiness nor our well-being would be enhanced. In contrast, that remaining 99% can have a huge effect on the health and welfare of others. That reality sets an obvious course for me and my family: Keep all we can conceivably need and distribute the rest to society, for its needs.”

How Much Money Are We Talking About?

Mr. Buffet will perhaps give around $50 billion to philanthropy by the time of his death. Through The Giving Pledge, he and Gates have the opportunity to leverage their influence and connections to multiply their giving many times over and set the example for other billionaires, who can no longer give away just 10% of what they have and feel good about themselves.

The total net worth of the Forbes 400 in 2009 was $1.27 Trillion. If Gates and Buffet convince 20% of these billionaires to give half of their net worth away, they’d be able to drive another $120B into philanthropy, doubling the amount of they themselves can personally give away.

So let’s say The Giving Pledge is successful and it generates another $120B in giving over the next twenty years, or about $6B per year for the next twenty years.

While an additional $6 billion per year can certainly make an impact, this amount pales in comparison to the $3.8 trillion proposed spending in the U.S. Federal Budget for 2011. It also pales in comparison to the $303B in total annual private giving by U.S. citizens.

The Goal: Sustainable Economic Prosperity

The two issues in our world today that are causing the greatest threat to a secure and stable human society with access to opportunity for all are extreme poverty and environmental sustainability. Most people don’t know that 39% of the human beings on this planet live on under $2 per day. If our goal is global stability, not to mention justice, this cannot be allowed in our world. And most of us by now get the global economic and natural disaster that will be caused if we keep increasing our annual consumption of goods without decreasing our carbon emissions.

As an entrepreneur and social entrepreneur, I believe that our mission, challenge, and opportunity as a generation is to create sustainable economic prosperity for all. We will never have a truly secure or stable world until we do. So how can this extra $6 billion per year be used to get the maximum return toward this goal of sustainable economic prosperity?

While humanitarian aid is absolutely necessary and moral, providing funds with this extra private capital for short-term gap filling needs caused by the symptoms of these issues won’t solve the issues themselves.

How Can This Money Make The Biggest Positive Impact?

So how can these funds best be used to generate the highest Social Return on Investment (SROI) and work toward sustainable economic prosperity for all?

The funds of these Giving Billionaires can either be given to address immediate need or invested to change much bigger systemic issues that are at the root cause of so much human suffering. While I do not know which will generate the highest return, I believe that by investing in changing global public policy (in a few select areas mentioned below) to reduce the incentive structures that are at the root cause of much suffering, lack of access to opportunity, and environmental damage these new Billionaire Givers will generate the highest SROI.

In order for this relatively small amount of additional capital to have the biggest positive impact, it must be leveraged. Philanthropic money can be leveraged by investing it in changing how other, larger, capital flows occur within our global system.

To effect real long term global change this $120B should be directed to:

1) Change U.S. domestic policy so we stop spending on the very expenditures that block access of the poorest countries to the market and creates need for more humanitarian aid and philanthropic giving in the first place (e.g. farm subsidies, trade tariffs, some military spending);

2) Influence a change in International Financial Reporting Standards and laws of nation-states so that companies can no longer off-balance sheet their negative environmental externalities;

3) As Nathaniel Whittemore has recommended, invest in social entrepreneurs who can leverage these dollars and markets (the largest capital flow of them all) to create sustainable change with dignity; and

4) Launch a campaign to encourage not just billionaires, but millionaires, to make a giving pledge and generate many trillions of additional dollars to invest in one through three.

Leverage Point 1: Invest in Domestic Policy Changes to Gain Social Return

Imagine the social good that could come from a concerted effort focused on lobbying to reduce the gargantuan $721B per year U.S. military budget (which as of 2008 was 48% of the world total military spending and larger than the next 45 countries combined) by 25% so that we could increase the salaries of every teacher in America by more than 50%.

There are 6.2 million elementary and secondary school teachers in the U.S. according to the U.S. Census Bureau’s 2000 Census. The average U.S. teacher salary was $51,009 according to American Federation of Teachers Survey and Analysis of Teacher Salary Trends 2007. So in total, the U.S. spends around $316 billion per year on teacher salaries. Hence a $180 billion re-allocation from defense to education would enable us to pay teachers 57% more.

Having this type of dollars and cents carrot might just enable Chancellors to negotiate out the single requirement of Teacher Unions that is the most damaging to our children’s education–the inability to fire a teacher who is not performing due to the tenure system, allowing the best teachers to be paid well above $80,000 per year.

Take a look at the below graph showing the allocation of 2009 U.S. Federal Taxes and you’ll see where our priorities seem to lie as a nation (of course noting that most funds for education come from State Taxes). A few billion dollars per year spent on influencing our Government to re-allocate this pie a bit more toward butter and a little less toward guns might just provide a huge return.

Source: Friends Committee on National Legislation Budget Chart for FY 2009

Leverage Point 2: Invest in Global Policy Changes to Gain Social Return

If these giving billionaires that join The Giving Pledge really wanted to get a large social return they would allocate dollars to change the public policies that drive the economic incentive structures that are the source causes of many of the issues.

One of the biggest problems in the world today is of course environmental sustainability. Six billion dollars per year, if the funds were focused, might just be enough to lobby the largest world governments to make a change to their accounting principles.

If companies across the world were required by law (that was enforced) to pay for the replacement of any environmental resource that they utilize such that each company had a net neutral impact on the environment, we’d remove much of the incentive structure that causes investors to seek out companies with the highest returns, which often are companies that unethically but legally have off-balance sheet environmental externalities that are simply passed on to all human beings.

Any philanthropist who can begin to create a tipping point for governments to stop accepting off-balance sheet negative environmental externalities that are not reported in GAAP or IFRS statements would enable the return on their investment to be leveraged many times over.

Change the economic incentive structure and you’ve changed the flow of trillions of dollars of private capital that billions of dollars of philanthropic capital simply cannot compete with.

Leverage Point 3: Create an Investment Fund for Triple-Bottom Line Entrepreneurs

As Nathaniel Whittemore suggested two weeks ago, some of the funds from The Giving Pledge should be directed to a Social Private Equity Fund. Nathaniel writes,

“What I can imagine is an institutional actor whose specialty is helping great social businesses with good revenues get even bigger while retaining their social and environmental missions. These types of firms would bring companies into their portfolio by acquiring some of the stock that had previously been held by investors and founders, in that way providing that liquidity that is missing from the current social finance system without compromising the social mission. This would create more incentives for early stage social investors, and provide social entrepreneurs more plausible returns that could increase the variety of the people thinking about social businesses.”

I agree with Nathaniel that late-stage capital for socially responsible businesses would be a help to provide liquidity, and thus returns, to the early stage investment funds already investing in triple-bottom line entrepreneurial companies.

I would add however, that any company that gets to $30M or $40M in EBITDA positive revenues, regardless of whether it has a core social mission or not, will be able to raise private equity and provide liquidity to shareholders. I don’t think the gap in the market is lack of funding for profitable at-scale social ventures.

The gap in the market is lack of funding and assistance for small-scale socially-responsible businesses that have the desire and dream to grow their impact and their revenues but don’t know how–both in the developed world and the developing world.

The biggest market gap I see is investment dollars in for-profit businesses in the developing world, where “microequity” investments of $5,000 to $50,000 along with some guidance and incubation can generate huge returns for a local entrepreneur who requires capital greater than a microfinance organization can provide but isn’t able to take on the $50,000 to $300,000 that organizations like Acumen Fund are able to invest.

And so, to maximize both financial return and social return for the Billionaire Givers, I would recommend not just a late-stage PE firm for social ventures, but also expanding capital investments in existing or new growth stage funds for socially responsible companies, particularly those in the developing world.

The second area of leverage I see within the world of private capital markets, is to invest in putting pressure on publicly-traded companies to implement strong CSR programs and actually live up to them. A few billion dollars spent buying mass media advertising to publicly encourage (read:shame) large MNCs so they live up to global CSR standards would be dollars well spent for social return.

Leverage Point 4: Invest in The Giving Pledge for Millionaires

While I applaud Gates and Buffet’s effort on The Giving Pledge, in order to enable this pledge to truly make a substantial impact, part of the funds should be directed to extend the effort beyond billionaires and create a new social norm where it is simply expected that anyone who makes way more than they need will contribute half of their net worth by the time they die to making the world a better place.

For the millionaires out there, it will just screw up your kids if you leave too much money to them. So why not ensure your legacy by committing now, publicly, to giving at least 50% away?

There are 10 million millionaires in the world, with a total net worth of $39 trillion according to the 2010 Merrill Lynch and Cap Gemini World Wealth Report. The average millionaire has $3.9 million.

Excluding the $1.3 trillion of the Forbes 400 from this $39 trillion, there is $37.7 trillion in assets among millionaires globally. What if there were a Millionaire Pledge?

If through a directed effort we can get 20% of global millionaires to commit to give half of their wealth, instead of an extra $120B for philanthropy, we’d have an extra $3.8 trillion. If we invest much of this $3.8 trillion in the three key leverage areas to fundamentally change our global economic and public policy system and use the rest to invest in filling short-term societal needs we can make a truly meaningful impact in the world.

Every multi-millionaire should commit to giving at least 90% of their wealth away by the time of their death. I made a commitment to do this in 2008 (in my book Zero to One Million) and will uphold this commitment. You can’t take money with you.

So who will take up this charge? And what do you think about these four areas of recommended investment?

Dr. Gerry Bell on Leadership, Listening, Happiness and Peak Performance

Session 1, Dr. Gerry Bell
EO/MIT Entrepreneurial Masters Program
Year Two, June 17, 2010

I’m in Boston for a few days attending year two of the EO/MIT Entrepreneur Masters Program. Our first presenter this morning is Dr. Gerry Bell of my hometown Chapel Hill, NC from the Bell Leadership Institute. Here are the notes from the session.

The 6 Laws of listening:

1. You can’t listen and work at the same time.
2. You can’t listen and think at the same time.
3. There is no such thing as multitasking.
4. Everyone knows exactly when you stopped listening.
5. You can’t fake listening. You can’t pretend to listen. You can’t fool people.
6. People only tell you the truth when they think you’re capable of hearing it.

You can’t afford to live your life on the surface. Listen and you will go deeper.

When you’re listening, ask questions to clarify what people are saying and elicit additional information.

If you find you’re uninterested and eyes are glazing over, ask a clarifying question.

A good tool to get people to open up a bit is to say, “Can you tell me more about that?”

There’s a thousand pieces to the puzzle of most meaningful conversations. A lot of times the real meaning to why someone is saying what they are to you cannot be determined in level I.

Class comment: Active listening is foreplay for a woman.

Playback what people are saying to you when talking about deep or important issues.

Never say, “well I disagree with you.”It just throws down the gauntlet and won’t lead to positive results. (’Yes and’ them instead of ‘No, but’ them)

Listening is the essential skill to build an understanding of people.

You can learn to listen better.

Living With Authenticity

There is no other way to live than living with authenticity.

You live longer when you’re authentic and you’re profoundly happier.

We experience stress when we behave differently than we are.

People say “I’m going to start being myself when this happens.” Don’t miss life while you’re living it.

As yourself if you’re going to listen to this person, or not. Make a black or white decision. Don’t half listen. Either 100% listen or delay the conversation.

Say, “I’d love to see you, I’ve got a deadline. Let’s discuss this at XX time.” Be pleasant, look at them, smile, and move on and then come back to it when you can focus.

Whenever you go to talk to someone, ask them if this is a good time.

Live authentic, open, and clear.

Emails/texts should only be used for surface level communications (level 1). The more personal it is, the more important it is to talk in person or at least by phone.

You have to guard your time as much as your money.

Skills Needed to Make Money

• Technical Skills/Specialty Skills
• Commitment: Ability to commit yourself with deep 100% focus on what you’re doing
• Interpersonal & Leadership Skills

Commitment is built by loving the work you do and being able to enter flow. The worst thing that could happen to you is to wake up and not love going to work. Make sure you’re doing things you love to do for your profession. Make sure you wake up and are so excited you can’t stand it.

Your personality dictates how you lead. You better be great in people skills to build a successful organization. Invest in yourself to build yourself. The smartest decision in someone’s life is to build themselves. Work on your people skills before you have kids as your kids will inherit your personality weaknesses. Your childrens life will be better if you invest in yourself. Your business will do better if people like you. People do business with people they like.

Warren Buffet has made $50B and his conclusion was ‘invest in yourself.’ He said ‘take communication courses.’

The best leaders are outstanding with people. The worst leaders are not good with people.

Living a Great Life

Boredom will make you crazy. You should never never never never retire. If you retire to go play you are likely to have the most unhappy period of your life. A lot of people sell their business to recover their happiness. Don’t do that, change your business. To have a great life you have to be exhilarated about getting up.

You have to create your life so every day you wake up you love life. Don’t ‘make a lot of money so that you can have your life back later.’ You can actually make more money by focusing on doing what you love to do, because you’ll be passionate about it.

Dr. Bell studies peak performance in a complex life. It is possible and is looking at examples of how to do it to stay at prime.

Don’t overwork as then you’ll burn out and want to quit.

Peak Performance

When were you most engaged? What caused this?

When were you least engaged? What caused this?

You cannot produce better than when you are in prime. Performance comes on a bell curve. You are best at 100mph, not 200mph.

You have a significant increase of illness when you work too hard. Hiatal hernia, heart disease. You have significant increase of destroying your relationships with spouse, kids, parents. You become flat and you dislike what you do. You’re unhappy. The happiest time is when you’re at prime. You can’t have more fun and have a greater impact on humanity when you’re at prime.

If you’re going 115mph you become grumpy, irritable, impatient, and don’t sleep well. You die early.

It’s hard to contribute to humankind if you’re dead.

If you love it, working long hours is not bad. If you don’t love it and your strained, it is bad.

Don’t work like a dog until you’re 50 and then wake up and have no health, no spouse, no family.

Every day you wake up your goal should be to have the best day you’ve ever lived.

Do great work every day.

We’re in the 21st century of understanding science and in the 1st century of understanding people. The secret to make the world a better place is to have great leaders who build businesses who provide jobs who are worthy of human life and someone can go home and buy food for their children, and have shelter, and educate them.

When you go through the slums of Sao Paolo or Somalia, the only solution will be if people who are entrepreneurs build businesses so people can have jobs.

Great leaders build great companies. Average leaders build average companies. Poor leaders destroy companies.

The 7 Causes of Happiness or Unhappiness

1. Yourself
   Do you like yourself or not? You have to like yourself to be happy. If you don’t like yourself, money is irrelevant. Invest in yourself and helping your children become effective, achieving, happy people.
2. Loving Relationships
   You don’t have to be married, but you have to have the ability to love. If you can’t love you’re missing one of the joys of life. This is a genetic need of human species.
3. Health
   The biggest single mistake people make is to throw away their health and abuse themselves. Be as good at mastering your health as your business. You can’t make the world a better place if you’re not here. The average human body is designed to live to 100. 70% of life expectancy is lifestyle, not genetics. Do you love being alive? If you do, you should set a goal to be alive as long as you can. Don’t throw away your health and then at 60 try to start over. Set a goal to live to 100. Do you want to see your grandkids? We are thoroughbreds in the Kentucky Derby and we need to train to be able to perform.
4. Work
   Can be the greatest joy or greatest pain. Make sure you’re working on what you love doing.
5. Money
   It’s not how much you have, it’s how you see it. Do not make your childrens’ lives easy with your money. Rather teach them skills to solve their own problems. Make sure your child has a job by age 11. Work ethic is ingrained by age 12. We got to be successful because we learned to work early.
6. Spirituality and Community
   Feeling of giving back and contributing to the world. When you leave the world leaving it better off than when you.
7. Fun
   You should have as much fun as humanly possible without destroying your work, family, marriage. You normally drink as much as you don’t like yourself. Drinking dulls your senses.

Develop Your Six Core Compentencies on Being a Great Leader

1. The Entrepreneur
   Initiator, developer, seeks and finds opportunities, seeks success and achievements, positive can-do attitude, high goal setter
2. The Competitor
   Assertive, honest, faces problems squarely, raises the bar, rises to the challenge, makes the tough decisions well
3. The Producer
   Focus on getting things done, organized, takes leadership, does it now and gets it done, a finisher, streamlines work, maintains focus and priorities, highly disciplined
4. The Stabilizer
   Recovers quickly from mistakes and failures, has confidence, cool under pressure, calm, balances priorities and time, paces self, careful
5. The Team Builder
   Good listener, giving, supportive, builds teamwork, gives love and affective easily, mixes easily with others
6. The Creator
   Innovative, flexible, fun, good sense of humor, strategic thinker, adapts easily to change

Manage Around and Reduce Your Six Extreme Personality Pattens

1. The Performer
   Overly ambitious, takes too many risks, prpmises more than can delivery, manipulates people for own success, over extends self and others
2. The Attacker
   Too critical, fault finding, disrespectful, too aggressive, argumentative, rude and abrupt, destroys teams, destroys relationships, makes people afraid of you
3. The Commander
   Domineering, rigid, controlling, inflexible, overly analytical, micromanager
4. The Avoider
   Too cautious, avoids risks, does not take initiative, is afraid to fail, too detail oriented
5. The Pleaser
   Too nice, allows others to take advantage, smooths over conflicts, backs down from competition, too agreeable, won’t fire anyone
6. The Drifter
   Disorganized, messy, impulsive, starts things and doesn’t finish, short attention span. If this is you, build your ‘Producer’

Make your goal to be every person you see, when you’re done seeing them, they feel better. Be open and caring toward people. Everyone you see and talk to wants to be talked to. Don’t be cold, critical, or hostile.

===========

Presenter Bio:
Dr. Gerald D. Bell, founder and CEO of Bell Leadership Institute, is a leading consultant to major business organizations throughout the world. He is also an award-winning professor, rated by Forbes Magazine as a “Don’t Miss,” at the Kenan-Flagler Business School at the University of North Carolina-Chapel Hill. Dr. Bell’s cross-industry experience and in-depth expertise have earned him a reputation as one of the most sought-after keynote speakers and effective resources on leadership in the United States and abroad. [Full Bio]

Next Page »