Purpose vs. Profit Driven Venture Creation

I like it. And it is not just the alliteration. I like it because "Purpose" and "Profit" don't sound mutually exclusive whereas "Social" and "Profit" do. When it comes to championing a business approach (vs. philanthropy) to address social issues like job creation, access to education, health care and even climate change, there is no elevator pitch. Most of us in this field talk about "sustainable business" or just stick with social entrepreneurship or social business (substitute venture, capital, purpose, impact...as fits) because that is what works in search engines. Historically we are conditioned to think of a business as for profit and philanthropy (or government action) as being for social impact. But we know that the strictly for-profit venture is just as unsustainable long term as is pure charity for social impact - hence the need for a mixed model - where we need profit AND we need social impact. I was reminded of this with a recent email from Jerri Chou, who I met at the "Outstanding 50 Asian Americans in Business" awards.
Jerri writes "I run a company called All Day Buffet which launches purpose driven ventures, one of which being The Feast Social Innovation Conference. I was really quite excited for your award last night -- for you personally and the social innovation world in general. Much of our work is galvanizing the community and movement on this (east) coast (despite old school philanthropy and investment) so seeing recognition for your work was a pleasant surprise.
Our next venture is also based in education and democratizing creativity and innovation skills through distance learning, (which I noticed you've done some work in) so would love to get your thoughts in case you're interested. Regardless, congratulations again and hope to stay in contact"
What I found intriguing about Jerri's work is that her company is trying to change the whole thinking around sustainable business creation not just through launching ventures but also holding events to create mind share and leadership in this area. Coming up is- The Feast: Social Innovation Conference, New York // October 1-2, 2009
http://www.thefeastconference.com

Entrepreneurship and Kal Penn

Pop culture and Politics - that's what I thought "An Evening with Kal Penn" event was about. Hosted by Sanskriti at Stanford University the blurb said: "Kal Penn looks at the intrinsically political nature of pop culture. He also gives us a glimpse into the darker side of the entertainment industry, full of prejudices and comically misguided casting agents ("Where's your turban?"). One of the few Indian-American actors -- so far -- to break into Hollywood, he looks at how pop culture can reinforce, but also challenge and overturn, racial stereotypes." In actuality there was less about politics than there was about entrepreneurship. In person he turned out to be charming and while there was humor, there was no negative energy. And I think that is a key to his ability to break barriers. For example when asked repeatedly about his opinions on Slumdog Millionaire he laughed and said "why? like I can't have an opinion on Milk?" All in all, he was candid and open with the audience and his top three entrepreneurial skills, that came through in several of his stories were:
Passion - It was clear that Penn was passionate about his acting career but at the same time understood the barriers he faced and was willing to tackle them.
Flexibility - Penn took on some roles because "he needed the job". They allowed him to continue working even if not perfect roles
Communication (Ability to Dialog) - when he got some unfavorable comments (a letter about his role in Harold and Kumar) he wrote back positioning the film from the characters' perspective explaining how that forces us to see beyond the ethnicity of the two characters.

Entrepreneurship and Improv: Two Peas in a Pod

Entrepreneurship is a contact sport and social entrepreneurship is extreme contact sport. The keyword here is contact - its as much about the other as it is about you. Different, for example, from heli-skiing where it is all about you. So last week, when I saw two amazing Improv plays (not stand-up comedy), I remembered that Improv training is great entrepreneurial skills training. Its the way to maneuver the "contact" aspect of the sport. You learn to "act" on your feet while gauging the audience; you learn to create laughter out of adversity to build camaraderie and most important you learn not to take yourself too seriously -for entrepreneurs are sustained by passion and social entrepreneurs by extreme passion (that burdens them with an un-endearing righteousness). Two snippets from the Improvised Shakespeare Company production I saw provide illustrations. At the start of the production the group leader asked for a play title - the answer from the audience was "King Lear Goes to Jail". In laying the foundation for the story, there was wordplay around "retire" - as in retire from job or retire for the night. The audience laughed so the players built on the theme to the point of introducing a new character called Webster (as in dictionary) and Webster was a huge hit. Another obvious aspect of Improv is that players switch roles frequently - in this case each player had multiple roles which were conveyed by getting into character with diction, body language, gestures- convincingly enough that the audience couldn't caricature the player into any one human trait (clever, conniving, fool etc).

Just for fun or just for work, this summer, do something for yourself: sign up for an Improv class and watch your entrepreneurial skills improve. That's because we learn by doing and Improv theatre provides a "safe" place to do.

Top 3 Entrepreneur Strengths that Become Weaknesses for Scaling

From Idea to IPO- that was the entrepreneurship mantra of the last decade. Get in quick and get out even quicker - with a pile of money - to invest in your next big idea. Scaling comes after IPO, sometimes with new leadership. This business path isn't applicable to social entrepreneurship where the mission is sustainable growth with no clear exit strategy (at least at the start). So one would think that current Wall Street woes would help the cause of the social entrepreneur - maybe divert some capital into long term investments like infrastructure, education, health-care, poverty alleviation - the things that worry the social entrepreneur. While capital is certainly an issue, it is not just about capital. The impact metric of social entrepreneurship is scale. You educate 100 kids, you educate a 100 kids. You educate 1,000,000 kids you change the world. That is the "impact metric". Scale is the equivalent of the IPO for social businesses. But entrepreneurial characteristics, the very ones that allow a company to form (for profit or not-for-profit) may become barriers to scaling or taking the company to the next level. With the fall in the number of recent IPOs there is a timely bit of advice in HBR from Anthony Tjan "Why Do Most Entrepreneurs Fail to Scale?" that I think is especially relevant for social entrepreneurs. The top three double-edged traits to watch for are:
1. Persistence. Willingness to persevere despite obstacles has created many great innovations and is often the foundation for successful start-ups. However, persistence can easily turn to stubbornness. Stick with your ideas when you know you are right and have supporting evidence. Be willing to abandon your position when signs show you need help or redirection.
2. Control. Early phases of company growth require the founder be involved in all operations. But as the company scales, that maniacal attention to detail can be counterproductive. Recognize the importance of delegation and let go when it's time.
3. Loyalty. Close ties inevitably form when people work together day in and out, and loyal relationships can yield great results. However, you need to know when loyalty is clouding your judgment in assessing capabilities and skill gaps.

To this list I would add collaboration - the equivalent of "mergers and acquisitions"- a common growth strategy to take a company to the next level. What do you think? Will the economic downturn be a blessing in the long run? Will social entrepreneurship no longer need the social and just become entrepreneurship?

Technology Solution for Hunger: Akshaya Patra

Studies report more undernourished children in India than in Sub-Saharan Africa. "Give me fish and you feed me for a day; teach me how to fish and you feed me for life" is the mantra for education providers and in recent years, Internet and computer technologies have done much to improve education across the world. But how well do I learn if my stomach is empty? As in the US, the Indian government provides funds for school lunches but unlike the US, those funds are inadequate as well as ineffective. Technology has no immediate answer for hunger; or so I thought till I heard about Akshay Patra and their school lunch program. The Akshaya Patra Foundation has applied technology for efficient meal production by automating large scale kitchens and their meal delivery system involves innovative logistics using custom designed vehicles to transport food from the kitchens to schools according to a strict schedule with optimal storage and minimal spillage. Hence, they have quickly scaled to feeding over one million children every day from a start of 1500 in just a few years. This technology (kitchen video at http://www.youtube.com/watch?v=CQYc8WH9Srs) has resulted in improved attendance and education according to an AC Nielsen survey. What distinguishes Akshaya Patra from other midday meal programs is that the entire food production and delivery system is intelligently designed and engineered to maximize operational and cost efficiency, while adhering to international standards of hygiene and quality. This makes the government funds they get for raw food-grains go much further and cuts out the middle man. Obama has recognised their unique approach: "Your example of using advanced technologies in central kitchens to reach children in 5,700 schools is an imaginative approach that has the potential to serve as a model for other countries." Additionally, they have been able to extend their approach to rural areas where transportation is more expensive and infrastructure minimal, by using smaller kitchens thus providing employment to women who cook meals. Catch the people of Akshaya Patra at Tiecon 2009 in San Jose and be part of the solution.

How to Market a Movement - 7 lessons

Let's face it. Social entrepreneurship requires marketing just like any other new idea. And suffering as it does from being neither charity nor business, its business model ires investors and philanthropists alike. But when the Internet started, there was no clear business model either, so I remain undaunted. What makes people flock to new ideas? I think its all in the buzz, the art of creating a movement that people want to be a part of. So I went to hear the buzz-meister Geno Church (of WOMMIE, EFFIE and ADDY awards fame) of Brains on Fire (brainsonfire.com) at the NewComm Forum 2009. His specialty is creating a Word of Mouth (WOM) movement using "brand ambassadors". His brand ambassadors are not highly paid celebrities, but unknown people who are not paid. They build a movement because they want to, and so it grows. His 7 key factors are:
1. WOM marketing is built on passion - find people to be brand ambassadors who are passionate about the cause
2. Have inspirational leadership
3. Empower people with knowledge - provide hard data to ambassadors for their use
4. Encourage ownership
5. Make advocates/members feel like rock-stars
6. Create supportive communities that live on-line and off-line - bring people together 5x a yr
7. Move the Media - practice random acts of advocacy
Rage Against the Haze (South Carolina's youth led anti-tobacco movement) started with just $800K in funding which was used to train the ambassadors - called viralmentalists. The movement consisted of kids talking to other kids about smoking as a choice. In the end he says, the power lies in supporting a cause, enabling an experience and telling a story. Now if we can translate the lessons to creating a buzz around the field of social entrepreneurship!

India’s First Social Enterprise and Investment Forum: Sankalp 2009

Change doesn't just happen - It needs faith and cheerleaders. And I should add Sankalp -Determination.
And institutional change requires changemakers to gather and become catalysts for action. So I am excited about Sankalp 2009 - India’s first Social Enterprise and Investment Forum with the primary goal of bringing together various stakeholders sharing a common conviction that capital should be invested to create multiple bottom-line returns (financial, social and environmental) and not exclusively financial (profit-maximizing) or social (philanthropic) returns. Set against the background in India, where 924.1 million Indians (nearly 95% of India’s population) have incomes below USD 3000 per annum in local purchasing power, and 78% of this from rural India, India has been able to clock growth rates between 6.5% and 7% despite the slowdown. India presents us with questions of development coupled with the unlimited potential of an emerging market. The event is designed to recognise and award truly impactful enterprises and catalyze investments in sectors such as agriculture and rural innovations, affordable education, healthcare inclusion, environment and clean energy, and highly scalable social models. Sankalp 2009 featured Naina Lal Kidawai, CEO of HSBC India, Vijay Mahajan, CEO of Basix, Anthony Bugg Levine of Rockefeller Foundation, Gurcharan Das (former MD P&G), Sarath Naru of Venture East, and Vineet Rai, founder Aavishkar.
Sankalp Forum is the brainchild of Intellecap – a pioneer in the multiple bottom line investment industry. The key partners for the inaugural 2009 event include Rockefeller Foundation from the US, Rianta Capital from UK, National Bank for Rural and Agriculture Development (NABARD) and Rural Innovations Network (RIN). Sankalp Forum (held in Mumbai, April 28th) details at http://www.sankalpforum.com/ .
I have been spending 4 months out of 12 in India for the past 24 months, doing seminars, giving talks, attending conferences and writing (triple bottom line investing article in ISB Insight, Hyderabad) to create mindshare and thought leadership in the area of business creation for social impact so Sankalp 2009 marks a major milestone in my journey. I will be keeping you posted on the actions resulting from Sankalp.

A different kind of story - win big, think small

Have you noticed how the stock market never goes up or down? It soars or plummets. Somehow hyperbole hustles us to the same stories over and over. So whenever I see mainstream news with a story truly different I feel the need to applaud. Such is the case with CBS news story on micro-lending. Bigger is not always better. Think micro-loans. And how they are giving good returns when banks are loaded with "toxic assets" of large loans. The CBS story, on location in Peru, is one of the best explanations of micro-loans (features MicroPlace, Ashwini Narayanan) and truly inspiring. Another big player in this space is Kiva and there is a nice blog with details about the two. But here's the main point: Micro-finance isn't so much about the fact that the loan amount is small - its about the fact that loans are being made to people who the banks have declared "not creditworthy". It means loans are made to people normal banks don't give loans to. Banks, using metrics based on collateral (i.e. how much they already own), decided that these people could not pay back their loans. In other words, you have to be rich already to get a loan. Now isn't that backwards? This is the Big Idea; The Big Win of micro-lending phenomenon. Micro-loans and the fact that they get almost 99 percent payback prove that establishment thinking is wrong; can be wrong. So it is really unfortunate that micro-finance still remains in the "boutique" category (yes- just calculate the percentage of money in micro-loans versus total lending) and seems a long way from becoming mainstream. There are entrepreneurial efforts (e.g. UnitedProsperity) to make lending to the poor more viable by raising money for guarantees and this is change in the making.

Change doesn't just happen - It needs faith and cheerleaders - and -yes mainstream media can do a lot by uncovering stories like this one. Cheers for CBS.

Digital Media and Learning Awards -- 19 projects share $12M

Nineteen projects from around the world were awarded funding today to explore digital media’s ability to help people learn. Administered by HASTAC, winners include a radically affordable $12 TV-computer, a video blogging site for young women in Mumbai, India, and a cutting-edge mobile phone application that lets children conduct digital wildlife spotting and share that information with friends. All projects are fantastic - one of my favorites because it has technology, global scope, climate, and engages children is : DigitalOcean -engages middle and high school students in 200 classrooms around the world in monitoring, analyzing, and sharing information about the declining global fish population that, in its implications for humans and the ecosystem, dwarfs other food issues in our time. DigitalOcean uses multi-disciplinary teams of students, scientists, and new media experts, partnering with Google Ocean, NASA GLOBE, and ePals, to engage the next generation of consumers in a global dialogue on the interrelationships among local human customs, regulatory laws, fishing practices, wildlife management, and the future of the sea. In the young innovators section my favorite (since I worked with ACCI to promote science education) Cellcraft: Addressing a decreasing interest and proficiency in the biological sciences among American teenagers, Cellcraft seeks to engage kids in ways that make biological principles personally meaningful and relevant. Built on the powerful Maxis Spore strategy game engine, Cellcraft will put middle and high school students in control of a cell, tasked with the job of coordinating all of the organelles in order to process food, create new parts, fight off viruses, and grow. During game play, students learn valuable biological information, while also developing organizational, planning, coordination, delegation, and logistical skills. This annual competition- $2 million- is funded by the John D. and Catherine T. MacArthur Foundation and is a good one to track for inspiration.

Mainstreaming Electric Vehicles- from Tesla to Reva

One sure sign that a particular innovation is approaching mainstream consciousness is a burgeoning of obscure acronyms in that technology, and by that yardstick, electric vehicles are about about to leap onto the great American Highway. Do you know what REEV is? A Chevy Volt is one. Who would have thought! Chevrolet? EV being an electric vehicle, REEV is a Range Extended EV (when there is a gas engine also that kicks in), HEV is Hybrid EV and PHEV is a Plug-in HEV and so on - all modifications to address the main issue with electric cars - what is know in the industry as "Range Anxiety" - which is the nervousness people have about running out of charge on the highway. Tesla - is all EV, and so one of the world’s most closely watched start ups, and having the most brand recognition of any “green” or alternative-energy company- even though the Indian company's Reva EV (typical daily distance requirements being smaller in India) has been shipping for a while. So last Thursday I went to to the Stanford Law and Technology Association (SLATA) seminar with Craig Harding, General Consul, discussing the regulatory environment relating to the sale of electric cars, the batteries that power the cars, and current state and potential developments in the electric car industry. I learned about how laws obsolete as fast as technology- e.g. Tesla body designers found they could significantly extend the range of the car by replacing the side-view mirrors with digital cameras in the back - but they found they cant eliminate the mirrors because of how the car-safety laws are written- and it will take a few years of work to get the guidelines rewritten - who had heard of cameras when the car manufacturing laws got written? The biggest issue for Tesla is safety (batteries get hot and explode). The Tesla all electric vehicle has 7,800 small batteries- there are no large batteries for safety reasons. Their solution to safety and range anxiety is to lash all of these together and never let the temperature vary by more than a few degrees across the entire set. That's $25,000 of battery cost. Batteries are pretty simple in principle with just three parts - Anode/Cathode/Electrolyte and they have three main issues when it comes to passenger cars- Materials/Costs/Safety. Hence the Tesla innovation is a big deal. And yes, Craig said there is an agreement with recyclers to process spent batteries (expected life 5-7 years at this time). They say that in two years, by the time a more affordable roadster comes to market, there will be plenty of competition in the XX-EV space. I think that's good news. Though Craig was a bit down that day - saying orders are slow right now and he had to let his administrative assistant go as part of the cost cutting measure. But he is not getting much sympathy from me. The Tesla sedan, standard price tag at $60K has 165 mile range and the premium version with 300 mile range is $80K. The Reva car is expensive (for India) to buy but pays the extra off in just a few years.