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Why Give? Because Your (College Nonprofit Entrepreneur) Friends Asked
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Independence is the Real Reason that Entrepreneurs Start Companies
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Distribution vs. Promotion and The Rise of the Email List
After SoCap09: The Five Issues Holding Social Entrepreneurship Back
Published September 04, 2009 @ 04:00PM PT
In the lead up to this year's Social Capital Markets conference, Matthew Bishop wrote that while the 2008 inaugural event was "long on optimism," it was also "rather short on coherence." My feeling after SoCap09 is that he was dead-on, and that the particular conversations sparked by the global financial downturn have highlighted how much the social enterprise field has matured over the last year. At the same time, there are some major outstanding issues that prevent the space from fully coming into it's own.
1. Metrics. The flip side of maturity is metrics. Something that's clear from this year's conversation is that for this sector to make the jump from a set of related, conversant, but ultimately disconnected organizations to a real functioning market, there need to be recognized (and utilized) tools that connect social performance benchmarks with financial performance. The Global Impact Investing Rating System (GIIRS) is one new platform and it will be interesting to see if and how it's adopted over the next year. Overall, metrics definitely made the mainstream at this year's event.
2. The Bottleneck of High-Risk Seed Capital. Another prominent feature of the event was the bottleneck of a particular type of investment - high financial risk for seed stage ventures, particularly for-profit ventures. While entrepreneurs are constantly complaining about a lack of capital, I think that this is one case where they're right on. For this field to grow, it needs recognized and regular sources of capital for extremely high risk early stage for-profit social ventures. It's far easier for innovators to build nonprofit groups where they can leverage their friends and family for donations, and because of this, there is a dramatic under maximization of the opportunities of the for-profit social venture approach.
3. The Bottleneck of Truly Disruptive Social Ventures. There are many great non- and for-profit actors doing vitally important work. There are far fewer organizations that are truly disrupting existing models and structures in a way that compels traditional actors to join the field. FrontlineSMS: Medic is disruptive - particularly their forthcoming field diagnostics tools which could fundamentally shift the medical diagnostics industry. BetterWorldBooks is shifting the way nonprofits and for-profits working towards similar goals work together, and provides a user experience compelling and coherent enough that it could eventually be a major player in the e-commerce space. Virgance is still young, but their swinging for the stands to build these sort of companies. By and large however, we need more truly disruptive models if we're going to cause a sea change. There is a generally held sentiment in the tech world that for a company to shift behavior, it needs to be not 20% but a full 2x better than competitors. That's even more true in the social sector.
4. Continued Incentives for Sort-Termism. I wrote earlier this week about how much of the crisis of modern capitalism is driven by the incentives to make money from short-term exploitation instead of long-term sustainability. This is an admittedly hairy issue and how we can shift these incentives remains an open and challenging questions. But while our economy remains structured to reward short-term exploitation and our values and societal conversation do not provide enough of a countervailing force against it, I think that we can only get so far.
5. Political Power. One of the interesting questions that came up at SoCap09 was whether the field of social enterprise had missed an opportunity to push it's agenda further at the time of crisis. In Alliance Magazine this month, Economist bureau chief and Philanthrocapitalism author Matthew Bishop wrote about how had been at surprised at the timidity of nonprofits pushing their agenda after the economic meltdown. Part of the reason is that if we're honest with ourselves, we have few (if any) champions with true, sustained political influence. Our economic institutions are not yet big enough to acquire political influence by proxy.
There are many wonderful brilliant advocates of our movement. And for the first time their is a White House office dedicated to our cause. These folks are doing the best they can, and we should all be behind their efforts. But by and large we don't have leaders with political capital to actually influence the larger conversation about rebuilding and restructuring our economy for the 21st century. I'm not sure who the best candidates for this might be, but I know we need these people. Al Gore, God bless him, is not enough.
(Photo: Bono and Al Gore at the World Economic Forum)
Social Media and the Shifting Power Dynamics of Philanthropy
Published August 06, 2009 @ 08:44AM PT
At the beginning of the month, the NonProfit Times released it's annual "Power and Influence Top 50" - a list of the 50 people driving and shaping the world of philanthropy and civil society. While the list is full of amazing people, there is one type of person conspicuously absent: bloggers.
The list is a virtual who's-who of philanthropy and nonprofit work. Some are honored for their attempts to better train the nonprofit industry, others are noted for the innovation which they've instilled in their foundations. The one major homage to technology comes in the recognition of Holly Ross, director of the awesome NTEN nonprofit technology conference.
But there is something missing there. It's becoming increasingly clear that "nonprofit technology" is not an easily distinct category from "nonprofit work." Social media is young, yes, but it is already showing signs of the dramatic shifts it's creating in the way that average citizens interact with nonprofits.
First, it is changing fundraising. Where as fundraising used to be the solely about getting a big enough list of names that some would respond to your appeal, it's now increasingly about figuring out reasons and platforms for your core supporters to engage their friends and connections. This is what giving platforms like GlobalGiving are all about.
Second, it is changing the actual choices about how people engage with philanthropic endeavors. Sites like Kiva.org give people a fundamentally different option for their dollars, and it's an option that many find is more compelling, personal, and fun than what traditional groups offer.
Third, it is changing the nature of where important conversations are held. Whereas exclusive gatherings were once the only space to talk with though leaders and influential people, blogs have now become a convening point for ongoing conversations about the shifting approaches and priorities of philanthropy and social change more broadly.
Case in point. Sean Stannard-Stockton's Tactical Philanthropy, maybe the single must-read blog for the philanthropically minded, has recently been host to a wildly engaged and intense debate about high-performance vs. high-impact nonprofits. His original post making the distinction unleashed over thirty comments, and the five plus follow-on posts have produced dozens more. The important thing to note though is not just that there are a lot of comments, but that the comments are from leaders of major philanthropic organizations like Charity Navigator and even the author of a book that was questioned in one of the posts.
The point is that Sean has the distribution to unleash a conversation on his blog that previously never would have been held in that sort of public setting, and which frankly, Sean might not have been invited to be a part of. That's not a knock on Sean at all, but simply a recognition that it's no longer the presidents of foundations who get to convene conversations and have a say in how the field is changing.
The Future Of Capitalism Comes Down to Three Things
Published July 30, 2009 @ 09:42AM PT
Since the crisis hit, an incredible array of commentators have taken the chance to proclaim either the peril, the end, or the rebirth of capitalism. In the social entrepreneurship world, there is a huge push to proclaim a self-fulfilling prophecy of a capitalist rebirth that puts social and environmental value back into the heart of the equation.
Yesterday, frogdesign champion Tim Leberecht wrote a phenomenal overview of some of these pontifications, and the history major in me can't help trying to summarize. I think that what comes next will largely come down to the way we make decisions about our careers, the way we make decisions about what we consume, and what sense of obligation we have to people we will never meet.
Our decisions about careers strike at the heart about how we define meaning. Some people look for meaning in having a high powered job that constantly challenges them and provides them prestiege. Some people look for meaning through their ability to purchase things or experiences. Other people look for meaning in the balance between a job they enjoy and what happens outside the workplace. Some people look for meaning by taking on work that embodies their values and enables them to tackle social ills.
More and more, I see an instinct towards integration. People are looking for jobs that employ their skills, that challenge them, and in which their values are manifest day to day. If that's not particularly new, I think that the sense of the value of compensation might be shifting just slightly. People still want and are animated by money; people are still willing to sacrifice money to be a part of social justice causes. But on each side of the coin there is a tension at the extremes.
People who want to work for nonprofits are willing to take less money, but they're not willing to struggle for as long or as dramatically undermine their own needs. On the flip side, people recognize that professions like the law have huge financial rewards, but they're increasingly less willing to take on the burden of heart attacks, divorces, and estranged relationships with their children to move from mid six figures to high six figures. How this all plays out is yet to be seen, but I think there are major implications for how society and work are structured.
And that, of course, has implications for how we approach consumption. There is obviously more consciousness around from where the things we buy - be it food, cleaning products, or clothes - come from, and how they're made. Increasingly, there are "good" options for just about everything we can buy. Yet there are still major hurdles. Price is and remains a very serious differentiating factor. Convenience is just as big an issue. It's hard to buy the fair trade alternative if it doesn't exist right next to the normal coffee, and for many, time is money.
Consumption is more than just about specific products though. It's also about how we define happiness, success, and meaning, and if there are specific product questions, there are also the larger meta questions of the underpinnings and sustainability of consumer culture in general.
Finally, there is the question of our relationship with people and places we've never and maybe will never meet. The theme of this year's TEDGlobal was "The Substance of Things Not Seen." When I first heard the title, I thought about faith. But the more I considered it, the more I thought it meant a recognition of how unseen the trails of our impact on this world really are.
Our decisions fundamentally impact these people - whether it's factory workers in China or our very own great-grandchildren - but it's hard to keep them in mind when were bullied by the pressure of the day to day. How we - as individuals and as societies - find ways to define and understand our sense of obligation to those unseen. This, more than anything else, I think, will determine what the next stage of capitalism looks like.
A Renaissance For Boomer Entrepreneurs
Published July 29, 2009 @ 04:39PM PT
From the Baltimore Sun, Felton Barner, who started ReIMAGE gallery in Savage Mill in retirement.
A story published today in the Baltimore Sun suggests that entrepreneurial activity is highest and most concentrated among Baby Boomers 55-64 years old, and lowest among 20-34 year olds.
"[The Ewing Marion Kauffman Foundation study] predicts the United States may be on the verge of an entrepreneurial boom because of a growing aging population. For the past decade, the 55-64 age group has been the most entrepreneurial. The youngest age bracket - 20 to 34 years old - has been the least active in creating new ventures, according to the study.
"I'm pleased to see that I'm not alone in looking out there and realizing the Elvis Costello [lyrics], 'Don't bury me 'cause I'm not dead yet,' " Van Buren said. "I've got a lot of life to live and a lot of living to offer, and I've got a lot of things to offer. The idea that I would go away quietly is ridiculous."
This may seem like a bit of a suprise, as for many the dot com era and rise of the internet has changed the perception of entrepreneurs to young, tech savvy coding geeks. But it seems to me to make total sense.
The Baby Boomers are one of the best trained generations in history. They have build up decades of experience with professional skills. And although the changes are still accelerating, they have also seen a shift in long-term employment and have seen a shift a way from a career defined by a single job or employer. Finally, advances in health have made retirement come younger and more and more, Boomers feel full of energy and ready to start "encore careers" pursuing their passions.
This has implications for social change work specifically and the economy as a whole. From the standpoint of social change, groups like the Taproot Foundation and Civic Ventures are finding new and creative ways to enable this incredibly well trained and highly skilled generation to contribute their talents to existing enterprises or start new social ventures.
But in some ways, I think the implications for the economy as a whole are even higher. You have more and more folks who want to contribute value to society by building businesses around their passions, whether it's photography, antique restoration, or something else entirely. And those 20-something tech entrepreneurs have given them the new connective tissue necessary to connect with people willing to pay for whatever it is they're providing, even from thousands of miles away.
I truly think that we may be poised for a small business renaissance where the entrepreneurial instinct is applied to what are sometimes referred to as "lifestyle" business. I think that while the later part of the 20th century did it's best to reinforce the notion that bigger is always better, the early part of the 21st century will be characterized by a much more deliberate conversation about what it means to lead a life of meaning. "Lifestyle businesses" which allow people to make a living sharing their passions - whether it's early or later in life - might be an essential part of that shift.
Lifestyle Businesses: The Wave of the Web Future?
Published July 10, 2009 @ 02:13PM PT
My parents both graduated from the Rochester Institute of Technology in programs that combined artistry with technical ability. My mother majored in Textile Design, while my father studied biomedical photography.
While life took their careers in different paths, they've retained not only those specific skills, but the broader passions that surrounds them. My mother's gift is transforming spaces to make them feel intensely welcoming. Our seasonal displays are legend among friends and family. My father takes his photos and turns them into greeting cards, invitations and more. Together, they buy broken down antique furniture and retrofit them into beautiful, funky collector's pieces.
I've been pushing them for a couple years now to just formalize this and start a business. My mom can take on clients - stores or residences - to create particular themed displays or decorations. My dad can create cards and other items for gatherings. And together they can create marquee pieces.
They're interested, but there are so many stumbling blocks to the process. Learning how to legally organize a business, thinking about marketing, figuring out how to price a product, actually handling the financial transactions, etc.
It seems to me that we're moving into a period where people are very seriously re-evaluating happiness and success. This reevaluation is pushing people to try to find careers that intersect with their values; it's changing the way that some structure what sacrifices they are and are not willing to make; and it's making people re-think "retirement."
I think that a product of all of this is going to be more and more talented people thinking about how the things they like doing or making but have maybe always considered a hobby could become a business. For some it simply won't be viable, but for many others, I think there is an incredible opportunity.
I wonder how the emergence of the internet will impact this process. Online marketplaces like eBay have made it far easier for people to become self-employed. Services like PayPal take care of specific pieces of the small business process. I'm sure there are small business consulting and information collectives that I don't know about that exist to help guide people like my parents through the process of building a new business.
I also wonder though how this might impact the entrepreneurial ambitions of my generation. Being surrounded by folks in the web startup world, the emphasis is still swing for the fences. With no IPO's happening, the exit tends to be seen as being bought by a Google sized company, but the emphasis is still on big money and movement.
This might always be the case. It might be a factor of wanting the freedom to do lots of different things over the course of a life. It might be that web developers love solving problems and want to keep trying new things.
But I wonder if we will see a shift to people building strong, successful, thriving companies that are designed to be a home for creativity and ideas for longer than the 6 months it takes to convince someone to buy it?
From Philanthropy to Business: Shifting Priorities at the Clinton Global Initiative
Published June 25, 2009 @ 11:47AM PT
I think there is a lot of power behind the Clinton Global Initiative. Not so much in just the brand, but in the idea that a commitment made publicly, with a group of others making similar commitments, might be more likely to come to fruition and certainly has a more resonant power.
At the same time though, I've never been a fan of the way they (or other foundations for that matter) clearly demarcate vertical program areas like "global health," and "poverty alleviation." I understand why this particular "specialist" heuristic of philanthropy evolved, but I think it often rubs up against reality in which different problem sub-categories run up against and in fact contribute to one another. My interest in collaboration and horizontal partnerships is largely about structuring approaches to problem solving that get away from the vertical specialist intervention.
I'm really excited to see a slight shift in the approach that CGI will take this year. According to a Reuters article published just a few days ago, there is going to be a broader emphasis this year on how companies can integrate social and environmental impact to improve the bottom line:
"We recognized that the CGI (Clinton Global Initiative) of old was no longer going to be a feasible model to move forward on," said Edward Hughes, CGI's deputy director and director of program for the fifth annual summit this September.
"(Companies) couldn't simply treat us as a place where their foundation would come and write checks to NGOs (nongovernmental organizations), but rather for them to remain engaged, (CGI) had to deliver value to their core bottom line, to their business operations," he said. "We needed to justify this as being a real value-return exercise."
Perhaps even more exciting for me is the new way they're describing their focus areas:
This year, the Clinton Global Initiative will concentrate on four new areas -- harnessing innovation for development, strengthening infrastructure, developing human capital and financing an equitable future.
This seems like an example of what I was writing about in the context of Rwanda yesterday. We have to think systematically and make investments in the infrastructure for good to thrive. I'll be excitedly watching to see whether this year's CGI can help push that conversation.
The Democratization of End User Innovation
Published June 05, 2009 @ 06:49AM PT
Venture Capitalist Fred Wilson wrote an awesome post this morning called "Open Platforms and Innovation," in which he discusses Time magazine's cover story this week about Twitter.
The major take away from the article, in Fred's mind, is a shift in thinking about innovation. While evidence of innovation (or innovation capacity) is usually measured in patents and PhD's, there seems to be a disconnect between those numbers and the sort of consumer innovation that is becoming so seamlessly integrated with the modern internet.
Technology has reached a point where anyone can get involved with innovation. Patents and degrees matter a lot less. Imagining something and then coding it up is what its all about these days.
We are engaged in what Eric von Hippel calls "end user innovation" and it is a fundamental shift in the way society innovates. The Twitter founders are a perfect example. They built a simple tool to share short messages and it has become something entirely different.
Now clearly Fred is focused on the consumer internet, but there is evidence of this thesis all around. My friend Alex at NetSquared posted an awesome interview with Appfrica Founder Jon Gosier. Talking about the genesis for the idea:
So at Barcamp Kampala (or Campala as we called it), about 80 to 100 hungry software developers showed up. They had never done anything like it before. They were mostly students but there were also CEOs, administrators, and leaders from the industry (like Joseph Mucheru from Google East Africa). Unlike most events here, everyone was an equal, it didn't matter if you were a student or millionaire, everyone had equal control. That seemd to really resonate. One of the things the crowd kept mentioning was that there was a lack of mentors and access to capital for software developers. I decided to start Appfrica Labs out of those discussions.
Appfrica just saw the first investment in one of it's developer's companies, Status.ug.
The fascinating thing is that while the tech world has some unique circumstances, it's impact is enabling the democratization of innovation elsewhere, as well. For example, the rural clinics who are beginning to use FrontlineSMS:Medic aren't necessarily hacking the software, but they are building use cases that can be shared across their network and diffuse innovative practical applications.
This is extremely powerful stuff.
