Networking Strategy for Social Entrepreneurs

I was at Minority Development Workshop where Donna Nelson presented the results of her report "A National Analysis of Diversity in Science and Engineering Faculties at Research Universities". The data (US) is pretty grim: “Progress for female and minority faculty at research universities, produced from past attempted solutions combined, has been too slow. If significant progress is to be made within the next couple of decades, new and totally different approaches to solving problems facing women and minority faculty will be needed.” The report made a huge impact on me. Being a corporate type I always thought universities were more hospitable to qualified women (after all, in 1975 I knew a university professor who wore saris to work and one who took her baby to office). The report also finds that many qualified faculty women opt to drop out or settle for a lower position (very few deans for instance). After a while it is "just too much of an uphill grind", "not worth it" etc. I see this with social entrepreneurs too - it results from having inadequate informal support infrastructure. Support can come from Networking- There are two networking strategies :
1- "Blending In" is being like the majority; socializing in their playgrounds - it gives you access to influential colleagues, you understand the rules of the game - it often feels like hard work.
2-"Sticking Together" - stay close to family, race, community; gives you stress relief, builds social support and strengthens you- it can be a time sink
The key to successful networking is to explicitly adopt both strategies, to be aware of their powers and pitfalls and employ as needed in your situation. As I listened to Donna's talk I realised that in my corporate life - I followed the "blending in" strategy (no community) and now in my university life I follow the "sticking together" strategy (community of social entrepreneurs). I can see how I could have done better with a more explicit understanding of this system - I have always hated networking (time sink, too much work, no fun etc.) and now I understand why.
How do you network ?

Business Approach to Social Good - Rule #1: Don't Get Greedy

I have a good reason, for promoting NBC re-broadcast "Tech Awards for Global Uses of Technology to Benefit Humanity" Sunday, Dec. 28, at 9 pm PST. The show is also available online from the NBC web site billed as: "When technology is applied to philanthropy...Vision is turned into action....".
It so happened that I read an op-ed "The Sin in Doing Good Deeds" by Nicholas Kristof. It is the story of the failure of an event management company- unique in that the events raised money for charitable causes. The reason provided for its failure is about how the (stupid) world is against a business approach to philanthropy. It is a familiar tirade, a false argument, entirely unworthy of discussion. So I let it go. But then I read comments on the article and wondered how many potential social entrepreneurs would get discouraged by reading the story of Mr. Pallotta and his company? So I feel compelled to post this link to the tech laureates show - profitable businessmen doing social good. For one Mr Pallotta there are many more social entrepreneurs doing good and doing well. See for yourself.
The key to success in running a profitable business with a mission of doing social good is to not get too greedy - It sounds like that was the issue with Mr Pallotta - his argument being - "Greed is good - its Okay in regular business so its okay here too". First of all its not okay in regular business though they do get away with it (witness the mechanics of the current financial meltdown). Second - the money raised for social businesses often comes, at least initially, from charity sources -like people digging into savings- so moderation in business expense is key in keeping their loyalty. The parallel for regular business would be "delivering customer satisfaction" which obviously Mr Pallotta did not do. BUT - here is my issue - when his business failed - instead of being a good sport and fessing up, he becomes a cry-baby and writes a book about how business approach to "charity" does not work and then Kristof writes an op-ed, generalizing from this single data-point, instead of calling it something like "Pallotta Palaver" which would have been far more accurate.

Keeping your morale and sanity in tough times

Something that helps me weather challenging times, and is helping me right now is to focus on what I do have, rather than what is missing. My vehicle for this is a simple gratitude list. Try it for a week even. I simply list 10-25 things every night I am grateful for (big stuff like my good health, my son, the means to pay my bills this month usually appear on my list every night) but if you have a hard time coming up with other things it will force you to start looking for the good during your day, such as getting that parking spot in downtown San Francisco when I was running late, hearing back from a recruiter, or even how cozy my warm house feels right now in this frigid weather...I have also been looking for "bright lights" every day -- just observing people in the cars around me, or as I entered a crowded restaurant last week and I watched the (seemingly happy) Mom conversing with the two children sharing her table... Even just thinking about looking for bright lights seems to pick up my day, and I can almost feel those positive neural pathways burning in my brain...Wishing you all happy holidays,
-post from Janice Roberts

How to Raise Social Capital- The Must, Want Principle

It is no secret that the term "Social Capital" is an oxymoron; "Capital" is a pot of money I give that comes back to me as a larger pot of money and "Social" is the giant sucking sound of the pot of money I give that comes back as a demand for another even larger money pot. This is not bad news; its just really tough news. But there is also the good news - most investors are interested in a social return - they just don't know how that is possible. So here is the secret - make it clear and explicit how it will be possible. Capital is a Must (money makes the world go 'round), Social is a Want (what good is money if the world don't go 'round?). A social entrepreneur must make it clear from the outset how the must and the want will be satisfied and what compromises will be made in case of conflict between those two objectives.

The questions I get most often are around strategies for raising social capital and in my informal survey of over a hundred social entrepreneurs, greater than 90% end up getting seed investment i.e. social capital, from a foundation or a philanthropic individual and hence incorporate as a non-profit venture. This is perfectly fine, as long as the entrepreneur exercises financial self-discipline, which is not the same as boot-strapping - it is about creating a revenue stream from the business. By definition, a foundation is not interested in a financial return so it confuses second round investors and can become a barrier when you need to raise serious money. Two rules of fund raising, made explicit from the beginning help overcome the "social capital" oxymoron:
Rule #: identify and recognise the Investor Types and their expectations
*Entrepreneurs: In-kind equity, equity
*Family and Friends: equity, debt, grants
*Individual Investors (angels or social investors): equity, grants, debt
*Foundations: Grants, Program Related Investments (PRI’s)
*Venture Funds: Equity
*Social Venture Capital: Equity, debt
*Banks: Debt, equity
*Corporations: Equity, debt
*Corporate Business Partners: Warrants, equity, debt
*Government: Grants
Rule #2: Identify business lifecycle, seek appropriate investment from appropriate investor
*Lifecycle Phase: Seed, Startup, Early expansion, Late Expansion
*Type of Investor: • Risk/return expectations • Exit strategies
*Type of Investment e.g. grant, debt, equity and so on
*Size of Investment e.g. grants are typically small and appropriate as seed and loans for expansion
The bonus rule of course is to ask for help in forms other than "money".

Dedicated to Unity and Peace

Signpost put up by the Indian army on the highest passes in the world.......

When trekking the Himalayas, one sees amazing sights - some are man-made - like this one.

CNN Heroes - Role Models and Media

Lately, I have been following any and all coverage of the Mumbai blasts on TV and that's how I stumbled onto CNN Heroes last night. I tend to avoid TV (I disagree with the notion that only bad news is media-worthy) because the odds for good use of my time are low. But I cannot deny the power of media - especially now when global is not global - it is local. My not watching TV does nothing for anyone but me. So, when I see a show celebrating the goodness in us, I am ecstatic. Criminals and terrorists are news; but so are people who spread peace and solace. CNN heroes provides for new role-models for a generation looking for something new. I hope we see more such shows.

Wall Street Woes- and what to do about it

I don't know about you but I am getting very tired of hearing about Wall Street woes; about executives who must sell their jets and how, somehow, that translates to average folks getting laid off. Its just fear tactics. The issue is Wall Street has only one metric - financial performance. So Wall Street is always overly emotional - down in the dumps or unnecessarily bullish, which leads to hyper-movements of capital. It is an overly constrained system. Wall Street has boxed itself into a single-bottom-line system and doesn't know how to get out. So folks, - if the system isn't working change the system - think out of the box.

Its time the financial wizards admitted they have no clue what to do and start learning from us research types. Wall Street has one metric - the bottom line - and the entire house of cards is built on that. In new product development, at a minimum we evaluate around three metrics - faster, better, cheaper - its the mantra that modulates expectations -maybe you hit one maybe you hit all three - at least there is room for experimentation and different vectors to push. If wall street followed an R&D model it would look for and formalize other metrics besides financial performance. That would allow social entrepreneurs to go mainstream instead of being boutique; get on Wall street and seek capital. allow diversification of capital instead of all based on profit. I don't know what the right answer is but here are some ideas:
- following the micro-finance model - rate a company on how many people are served (not just amount)
- Tax credits (like R&D credits) for companies that serve the BOP - after all they serve those whom the government serves
- IPO for social businesses except - instead of financial returns give voting rights on how to run the company
- New job creation - e.g green job creation gets points
When I first started at HP, we used to say - focus on the value you create not the stock price. If you create value stock price will follow - Value for us was high quality products and a satisfied employee base and a welcoming community wherever we operated. Yes - its time to get back to basics - its takes more than money to be a good capitalist.
I am glad the auto-industry is not getting a bailout; but I am not glad the Wall Street isn't thinking about more change itself.

Microfinance for Beggars?

Yesterday at SCU's event "Transformative Changes Through Science and Technology: The Role for Social Benefit Entrepreneurs" honoring the 2008 Tech Laureates I heard something new. It has made me change my mind. (In the interest of full disclosure, I hereby state that not much changes my mind these days).
Here is the story: I am just back in the US after six weeks in India. A common sight in India is women and children at stop lights- begging. There used to be a time when I would give some change but I have stopped doing it now; doesn't giving them money encourage them? Not much has changed over the years except now they often carry tissue boxes, balloons, magazines, hats, toys etc. to sell. Where did they get the money to buy the stuff? Some tiny children offer entertainment in the from of headstands or juggling or something. "The goods must be stolen; they are just an excuse for begging - whatever" I think. I look away. I can do nothing about this. I feel rotten for a while till I get over it.
Yesterday, I heard Mohammed Yunus talk about Grameen's new program in Dhaka, Bangladesh - "loans to beggars". He thought - why not do something for the beggar? and that's how the program started. They find a beggar and ask one question - at what time in your life did you become a beggar? And then they gave him/her an idea - continue begging, but why not carry some small article to sell- give their "customer" a choice - so as to speak - buy or give charity. If the beggar agreed, they gave an interest free loan with no time set for repayment. Whenever they are read to repay, they can come back to repay. That he said was key. Enablement- a person who tries cannot fail. In fact, they said - take your time to repay. To keep their own costs low, Grameen provides no other service, just trusting the person to come back. Loan amount is $15 flat. So far there is $100K in the program and 11,000 people are not begging anymore. Most others are only part-time beggars and some are successful entrepreneurs.
So next time I am stopped at a light in New Delhi - I will roll down my car window. I may not be in a position to start a loan program but I can buy a box of tissues. Who knows? It might make a difference. Why had I never thought about this before? Why did I assume the goods were stolen? The kids wanted to trick me?
Why? Becuse I still have a lot to learn.

Social Capital is Good Economics: Invest in Technology for the Next Billion

This Sunday, reading the Times of India article - What MFIs can teach Wall Street by Swaminathan Aiyer (of Swaminomics fame) made my day! He writes "Big financial institutions of all sorts are in dire straits across the globe. But one category remains unaffected — micro-finance. Even as the global financial system freezes and giants like Lehman Brothers collapse, microfinance institutions (MFIs) are expanding unfazed. Famous financiers face defaults big enough to wipe them out, but MFIs report virtually zero default. This is extraordinary. Big financiers lend against collateral, a back-up if their borrower defaults. But MFIs lend with no collateral at all. Big financiers lend to the most creditworthy corporations. MFIs lend to poor women whom nobody in history considered creditworthy before. Yet, the secured loans to big corporations are bombing, while unsecured loans to poor women are being repaid in full."
And may I add that stimulating the BOP markets besides being a safe bet is also profitable - a double bottom line - social as well as economic good.
I want to build on this article to make two points not made by Mr Aiyar:
1. Portfolio diversification - In my view social capital is a good way of diversifying your investment portfolio and I think there IS a silver lining to this meltdown - I hope investors will go back to thinking about value creation in more than pure dollar terms.
2. Capital Gap - Currently there is a gap in the range covered by MFIs (loans must be under Rs 35,000 or so) and traditional business lending (loan must be above Rs 10 lakhs or so). Entrepreneurs that start technology based social businesses need loans in this range and they have nowhere to go. This is actually the sweet spot for social capital - it is a new area - call it "investing in technology for the next billion". There is great economic potential in this space- like the VCs who invested in technology startups in silicon Valley. It is the same story -except since the new market it is not in the traditional VC backyard, they are not jumping in. Somebody else needs to step in and I am hoping it will be the future leaders - Social Capitalists.
One can see that some new gen leaders who are now big boys (e.g. Google Foudation) are stepping into this space but it is not enough - traditional thinking needs to change too.
From my perspective, the meltdown is a wake up call for change and I hope Mr Aiyar's article is just the start of this new thinking.

TATA Nano, Singur and Social Entrepreneurship

TATA having to pull out of Singur actually has a plus side to it.
It so happens that when TATA fist announced the Nano car (Rs. 1 lakh), I was in India and I authored my most popular (to date) blog page called TATA Nano- Is It Social Entrepreneurship? And now I am in India again when TATA is announcing its pullout from West Bengal (Singur). TATA will relocate its Nano factory to another state in India.
The media is abuzz and Gurcharan Das (an author I admire immensely) has written an article in Times of India called "When Everyone Lost". My view is different. I think this is a battle lost that will win a war. From an economics perspective, yes - everyone lost. But if you think of Nano as a social enterprise, much social value has been created.

The Singur pullout proves my point - that social entrepreneurship - defined as social as well as economic impact - is really difficult. The big win here is that this factory relocation, has engendered an open conversation: who has the best interests of the people at heart? There is data available (increase in number of savings accounts, people trained for new jobs ..) that in one year the Nano plant has already had positive economic impact on life in Singur. As other states line up to offer the best deal to TATA, hopefully the destitute landowners of Singur (ultimately they must benefit) will start thinking for themselves rather than listening to vested political interests and that is a social change that cannot be undone.
So, I hope that TATA will still get the Nano out on schedule and this relocation, while admittedly an economic bump in the road, will prove to be of immeasurable social value in educating India about creating social impact through business methods - the "double bottom line". Next time the people in Singur get a deal like the Nano, they will think twice before agitating. In fact, Ratan Tata was most impressive (I saw this on TV) when he calmly mentioned that West Bengal will be considered for the second Nano plant. West Bengal's short term economic loss is immediate benefit for some other state (evidenced by the offers).
Now that is thinking long term, thinking social entrepreneurship.