Conflicted on Conferences

There are a lot of conferences. And more and more are in the fields of social entrepreneurship, clean technology and green business. Just this weekend, one could attend Poptech in Maine, Social Venture Network in La Jolla or the Energy Justice Program in Boulder. Is this a good thing? What is all this conferring doing to make the world a better place? Here are a few issues that concern me.

1. It's hard to keep up. In the room in Boulder are people who would also be good participants in Maine. Some of the conversations seem to be similar. And we could sure use Esther Duflo in our conversations on energy justice here (maybe next year?). Are we fracturing the chance to get things done by having concurrent conferences and lots of conferences?

2. Inclusion. Always an issue. But it makes me nervous to sit in a room with a lot of people from USA and Europe talking about solving problems in Africa, India, etc. I don't think this is immoral, but I do think it is ineffective if you want to look at action instead of conferring.

3. It is a lot of carbon. At Poptech today, Michael Pollan said that "a vegan in a Hummer has a lighter carbon footprint than a meat eater in a Prius."* But what about a vegan that jets around the globe going to conferences to tell people about carbon footprints? (And no, I didn't ride my bike down to Boulder today and I'm not a vegan.)

4. It is a lot of conferring. But not much doing. This is my biggest concern. Conferences seem to attract "idea people" who love to share ideas and network with each other. It is the nature of conferences is to encourage people to talk about BIG IDEAS. But BIG IDEAS are often HARD IDEAS and once everyone heads home, not much seems to happen. This is an intellectual waste, isn't it?

How could we redesign conferences to actually accomplish change? A few ideas...

1. The International Development Design Summit intentionally targets "prototypes, not papers." The Clinton Global Initiative assumes participants will make financial commitments to the programs it spotlights. As the CGI site states, "After attending thousands of meetings during his career in which urgent needs were discussed but no action was taken to solve them, President Clinton saw a need to establish a new kind of meeting with an emphasis on results." Perhaps our Energy Justice Conference could have faculty commit to add energy justice to at least one of their classes, and have students pledge to do one of their class projects on the topic. Organizers, ask yourself: "what could my conference DO? what happens after the final session?"

2. Maybe we should call them "creater-ences" or "do-ances" to emphasize creation and doing, instead of conferring. (I once visited a company that didn't have conference rooms, they had decision rooms. Cool culture.)

3. Change up the schedules. Too much old school, one-way lectures. These are not "conversations," no matter how often the organizers overuse the word. Social media may change this. As more people multi-task, perhaps the discussions will become more robust and more two-way. But instead of defaulting to the virtual world, how about having multiple types of sessions, not just lectures and panels.

4. Leg chains for keynote speakers. A lot of the "biggie" speakers are hit and run. Great message: fly in, fly through your powerpoints, meet with a few elites, fly out. Don't spend time with students, don't visit a few small companies. Very inspiring (NOT). Conference organizers, why not ask your speakers to commit to staying and engaging?

I blogged about this a few years ago, and still agree with myself on this topic.

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Addendum 10/30: Thanks for the helpful comments and emails. Here are a few nuggets of interest, or perhaps portents of change?

From Martin Montero (@montero), this link to Dan Palotta's HBR blog on a "Change the World" conference. On Guy Kawasaki's Alltop Good site, I discovered this open source conference for women entrepreneurs. And see Lars's comment regarding changes to Social Venture Network conference agenda.

*Evidently, Michael Pollan didn't do his calculations on vegans very accurately. Ooops. Careful Mr. Pollan- we expect you to research your tasty soundbites, so they don't leave us feeling queasy after we have consumed them.

Addendum 10/31: I will be at BYU's Conference on Economic Self Reliance this coming week (Nov 5-6). Will work on making sure there are some outputs for my session on "Building on BOPportunities: Strategies for Start-Ups."

A BIG Deal

In 2003, two guys (with whom I used to work) started a company. No big deal. Happens all the time.

At first, the company looked at using some new vaccine delivery technology. Both guys had other jobs. But they wanted to build a company together. They had a start on the WHO, but not really the WHAT yet.

But they were fortunate. One of them lived in a town where the Centers for Disease Control has laboratories. And where the land grant university has a number of scientists working on infectious diseases in the developing world. And a few non-profits that were working on products and services to improve public health in the developing world. And it probably didn't hurt that there were a few good local breweries to support "beer storming" ideas. An idea for a company began to evolve.

And these guys were knowledgeable. They knew about doing research. They knew about drug development. They had worked at top research universities and in the biotech and pharmaceutical industries. They had a lot of respect for what the drug companies did. But they also wondered about what the drug companies didn't do. One thing the drug companies didn't do was develop many drugs or vaccines for the billions of people in the developing world. Their business models didn't work for these markets. Their pipelines were focused on the diseases of the affluent- expensive medicines and treatments for chronic diseases. The developing world was a place for off-patent medicines or the occasional charitable venture, not a place to target R&D efforts.

So these guys thought about how they could build a company that created products for those billions of people. They studied the markets. They spoke with early leaders like One World Health. Could they do research on new vaccines? Instead of expensive treatments, could they develop affordable vaccines that would prevent disease. Could they develop products that would also work for the middle class in these countries? For travelers to these countries?

Well, from those ideas, they started building a company. Global from the start. To develop vaccines to fight infectious diseases. Top quality research, top quality manufacturing. Partnerships with clinics around the world. Picking diseases, such as dengue fever, which did not receive much attention from other companies, but had huge impacts on public health. A big idea, maybe. But still not a big deal.

At first, they got told they were well intentioned, but crazy. Why develop products for these less developed markets? Why develop vaccines, which don't have a continued revenue stream? Why move manufacturing outside Western countries? But they kept plugging away. And they began to win a few awards (Colorado's most promising biotech Business Plan in 2005). They raised some start up capital from friends (including me). They were awarded some grant funding from the NIH. With each step, they looked a bit less crazy. They added a few more smart, well-intentioned people to the team. A good idea, good people. But still not a big deal.

They knew that bringing a vaccine to market takes tens of millions of dollars. That was going to require venture capital, and venture capital requires competitive returns. In 2006, the company decided it was time to start raising money to start building the company. They pitched and pitched, making the case that these markets and diseases were attractive and that the company could profit from preventing these diseases. To put it diplomatically, they got a polite reception, but not an enthusiastic one. Professional investors asked some of the same tough questions about the markets and vaccine based business models.

Over time, the company stayed afloat, and the perceptions of this company, the attractiveness of its target markets and its business model, began to change. At several points, the situation looked dicey. But these guys, and their employees and partners, persevered. In 2008, they found a lead investor. Got a term sheet. But then the global financial crisis made it tough to fill out the group of investors. They survived and kept working. Which was a good thing, but not a big deal.

Finally, last week, more than three years after they started working on Series A and after over a hundred investor presentations, these guys, and their company Inviragen, closed the round. $15 million dollars. Enough to take the company through the early clinical trials of several vaccines. You can read more about the company at their website. And more about the Series A investment, and merger with Singapore based Singvax, in their press release.

So, why do I think this is a big deal? It's not because of the money (although that is certainly helpful). It is because of whose money it is. Sometimes you hear an entrepreneur say "all money's green; who cares who the investor is." Well, those entrepreneurs are wrong. It matters who your investors are. And Inviragen's investors are top notch biotech VC's. Experienced. Main stream. Connected to a network of people who know how to bring products to market. They found Inviragen to be a compelling investment.

This is one of the first of what I hope to be many deals where mainstream investors see the benefits of starting high tech ventures that serve global markets, including the poor. And I hope that it shows that the drive for attacking global public health challenges can be very profitable for investors. That the value they create can attract top private capital firms. In fact, I hope it shows that the financial returns required of this venture will drive the successful commercialization of several vaccines, saving thousands and thousands of lives. And yes, I think that is a BIG deal.

Congratulations to Dan Stinchcomb, Jorge Osario and the rest of the Inviragen team, and best of luck in continuing your worthy work.
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Note: I am not an unbiased source. I have known Dan and Jorge for years, and was an early investor in their company. I also served as a director of the company until recently.

3 Billion Served?

When I was a kid, the McDonald's signs kept me updated on how many billions had been served. The year I was born (1958), in it's 10th year of business, it hit 100 million. When I turned 5, McDonalds hit 1 billion. About the time I reached 6 feet, it reached 10 billion burgers. By 1984, when I graduated from law school, McD's reached 50 billion. A few years later it stopped counting.

What does this have to do with BOPreneurs? Well, this simple metric illustrates a great example of scaling up an international business. Jim Collin's writes about the flywheel effect of gradual, increasing momentum in a business. For McDonalds, part of this came from potent branding and marketing to a newly mobile population. But the other part came from a solid franchise model. This let them experience logarithmic growth without exploding, and allowed them to leverage other people's human and financial capital.

Yesterday, Jason Fairbourne of BYU's Economic Self Reliance Center, visited CSU to talk about his work in applying franchise principles to BOP markets. Fairbourne persuasively made the case that this is a promising approach for both large companies and growing ventures. Borrowing from his research on companies such as VisionSpring and Fan Milk, as well as his own work with a new start up in Ghana, Fairbourne proposes a straightforward framework for "micro-franchising."

1. Find a Successful BOP Business. He didn't say this was easy, and it takes getting out into the field. You won't find these at conferences or in a library. On the other hand, since many of the businesses in BOP are hawkers, you might be successful by looking at "businesses that aren't hawkers." Or not exactly hawkers. It takes a little observation to see that Fan Milk is not just hawkers selling yogurt or ice cream in Ghana, but a sophisticated, profitable organization with low turnover of its bicycle based franchisees. If you are a BOPreneur, microfranchising is not your strategy, but it is a tactic you can use once you have proven your business model.

2. Systematize it. What is the venture's business model? What are leverage points that come with growth? Look at issues of branding, supply chain logistics, territory, contracts and operations manual. The idea is to remove the "creative burden" required for a new entrepreneurial venture, and move to a system which a manger can operate. By doing this, the franchisor reduces risks and enhances income generation for the franchisee. Note that Fairbourne isn't advocating for the demise of entrepreneurship in the BOP. But he is suggesting that those BOPreneurs wishing to "scale up" would be better off to rely on training microenterprise managers, rather than hoping to find an army of micro-entrepreneurs (which he has found to be in short supply).

3. Replicate it. Once the supply chain has been figured out, the manuals written, the managers trained and the business proven regionally, it is easier to replicate the concept into other territories and markets. This is where McDonalds excelled. Not all McDonalds were the same, but they were very similiar around the world. Local modifications may be neccessary as a venture enters new markets, but they should be kept to a minimum to enhance rapid growth. CSU students quizzed Fairbourne on how to decide where to start, and he suggested they pick regions with more stable governments and growing economies.

Fairbourne emphasised two big advantages he sees for this approach. First, it reduces the risk of failure for the business operator. Done properly, incentives for success and penalties for failure are better shared under Fairbourne's approach. Secondly, it connects informal operators to formal supply chains. In doing so, it has macroeconomic effects as these businesses become formalized and grow (not surprisingly, Fairbourne has discussed his approach with Hernando DeSoto's ILD as a way to promote development).

If you are interested in finding out more about micro-franchising, take a look at Fairbourne's book, the Microfranchise Toolkit, and David Stoker's blog. And certainly attend the conference he is hosting in early November (as a special BOP bonus, I'll be there too).

I was impressed with Fairbourne's talk, and the potential microfranchising offers for certain types of consumer focused businesses in the BOP. There is a lot of cheap talk on scaling up BOP ventures, but precious few examples of BOPreneurs that can claim "millions served" (IDE, Aravind, Grameen). The world could use a few "billions served" social enterprises, and if history is a guide, franchising might be a good way to get there.

Definitions and Metrics (yawn)

SoCap09 had many sessions, blogs and tweets on metrics and ratings. And the "social entrepreneurship" field seems to have a fascination with definitions. Dare I say it is a morbid one? (I do.)

Today, Ashoka x-posted Adrienne Villani's blog on the question: "can you be a social entrepreneur if you aren't the head honcho?" Why do we care so much who gets to wear this coveted badge? Does it actually make a difference where it counts- solving the issues of poverty, environment and health in the BOP? I'm skeptical.

So, why do I think this fascination with definitions and metrics is "morbid"? Because this field is full of people who like to watch, comment and tweet. Social entrepreneurship, and for that matter, plain old entrepreneurship (irony intended) are not spectator sports. This well meaning crew (I am giving them the benefit of the doubt) of spectators is, at best, a distraction. More likely, it is a negative effect, in that it is making entrepreneurs spend time on spreadsheets, conference calls, conferences and reports, instead of getting stuff done. And if the spectators spent their conference fees on ventures, I'd bet the world would be better off. Take the money to attend the next "unconference," and start a fund which actually has to make decisions and investments. Not just discuss stuff.

Will ratings and metrics help? Well, reports from both Skoll Foundation and the Center for Effective Philanthropy help illustrate the quandry. Because these entrepreneurs build value that cannot be measured with financial tools alone, investors/donors have resorted to a plethora of self-set goals. Perhaps workable for measuring effectiveness of an individual venture, but hard to compare across a portfolio. Unlike those VC's (which most of our spectators seem to envy) who supposedly have terrific, easy to use metrics (e.g., 10x or 30+% IRR). So our spectators get all a-"twitter" on how the field needs transformational radical new metrics. Then they fall all over each other with competing methods. So now the new venture looking for funding now has to run spreadsheets using IRIS, GIIRS, SROI, and WTF.* That is sure to add value, right?

Can standardized, improved metrics help bring new capital to the field and fertilze more and better ventures? That is the underlying assumption. But as I have written before,** I suspect this capital shortage in this field is only the market being relentless. It isn't a financial capital shortage if the market is not providing funding to those ventures that don't deserve it (and I have had my fair share of these). It may be a human capital shortage. Does financial capital drive more human capital into a new field, or does experience point to the converse being true? My opinion is that finance follows after the innovators; the trail needs to be pretty packed before those carrying money bags come along. And the early innovators aren't motivated by money, or swish conferences. They are motivated to fix what sucks.

Two years ago I challenged this sector to "give me a specific example of a good team with a good idea that didn't get funding." Maybe I don't get around enough, but no one has given me that example. Sure not every venture gets what it tries to raise, but the good ones are still going. Yes, the market is a nasty and brutish place, compared to the loving embrace of a feel-good conference. Progress can seem slow to the spectators, but on the field, the entrepreneurs are working hard, learning and doing. Often without standardized metrics and rigorous evaluation techniques. But making progress on addressing what sucks. Doing something about it.

Don't get me wrong. I think there are definitely some unserved needs for financing these new ventures. New instruments and new incentives could be very useful. But enough on definitions and metrics. Time for less talk and more action- if you have a theory on metrics, go raise a fund (e.g, Acumen) and make some real investments. A few decent sized seed and A rounds have happened.*** A few more are in the works. All good stuff. But I think that there is too much academic/consulting/foundation DNA in the room. Not listening enough to the entrepreneurs and experienced investors. Having investable deals will drive investment in worthy ventures, not better definitions or metrics.
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*OK, I admit it, I made the last one up.
** See here and here, if you are so inclined.
*** d.light and Vidagas come to mind.

IDDS-y Bitsy

A few random quotes and descriptions from the last few days in Kumasi.

Bob Nanes (IDE Ghana): "You don't sell people a product, you sell them a dream. You may be making a chlorine water purifier, but you are selling them the vision of healthy children."

At the KNUST university books store, there was a pile of World Bank books on African development for sale for 200 cedis. That is about $142. I guess they want to sell a lot of them. The store also had one copy of Good to Great, for 25 cedis. That title seemed to be harder to keep in stock. Hmmm.

Bob Nanes: "Don't reinvent channels. There are hundreds of companies marketing to the BOP: soap, cigarettes, beer, buckets and batteries. NGOs always want to start a new channel, and it is usually a big mistake. Better to piggyback on what is there."

A student asked Bob what IDE's most successful product was. I figured he would say the treadle pump. But he said the "off season tomato green house" had the biggest return for family weatlh creation. Bob also mentionned that IDE had trained thousands of agricultural machinery technicians to service the treadle pump, and these technicians were often effective marketers for IDE products.

Amy Smith: "In design, there are no solutions, only trade offs."

Ben Linder: "If you don't want people to hold your prototype like a gun, make sure it doesn't look like a gun." [discussing prototyping progression for a demining clipper in Angola]

Amy: "how do you incorporate failure into the success of your design? how will your design fail? how will it fail first? what is the best failure mode? the worst?" [she described redesigning a plow so that when it hit a big rock, instead of bending the blade, a bolt broke. bolts are easier and cheaper to replace than blades.]

Last image: I got to attend my third IDDS International Potluck Dinner last night. Bigger and better than ever in Ghana. Participants grouped by country and then tried to show why their food is the world's best. And we all got a taste. The party lasted long into the pleasant evening. (Sule and I brought Enviro-banku... the world's first banku cooked on an Envirofit cook stove).

Design Reviews IDDS

Yesterday IDDS held design reviews on the 12 projects. These were held at ITTU, in the Suame area (an area with many small industrial workshops). Due to the format, I could not attend all the reviews.

I watched two teams who are working on chlorine purification approaches. It surprises me that chlorine is inexpensive and effective, yet not widely used to purify water. Why is this? Are more complicated technologies needed? The first team is looking to make a low cost chlorine manufacturing device. Using salt water and electricity to produce chlorine. The team was trying to figure out a way to do this without using expensive high power batteries. The second team was planning to use commercially available chlorine, but was working on a reliable way to dose water in smaller communities. They were also looking at business models- water committees, cooperatives or entrepreneurs- to distribute the device.

The other two reviews I watched were working on small scale energy. The first was looking for an alternative to batteries for LED lights. They had examined hand cranks, bicycles and salt water batteries (I had not heard of these before). They were also intrigued by a light we had seen in the villages that used an old music CD as a reflector and provided decent room lighting with 1w LED bulbs. The second team was working on a way of keeping produce from spoiling between the fields and the market. The cost of transport is not just the time and vehicle, but also the loss of up to 30% of a shipment before it is sold. This team has been looking at several alternatives to "pot in pot evaporation" which works well in dryer climates but not humid climates (West Africa). Their current design uses insulation, a small fan and inexpensive webbing materials.

The teams got good feedback from reviewers, a mix of development folks, business people, Suame artisans and engineers. Today is a rare "day off" and tomorrow will be back to work with prototyping and some "Build It" sessions (participants showing others how to make stuff).

BOP Bits: IDDS 2009

From Kumasi, Ghana, a quick report on IDDS'09:

This past weekend, the 12 project teams left on their second trip to rural villages to continue their design projects. The projects generally clump into 3 areas: agriculture (better threshing for groundnuts, or removing debris from rice), energy (storage, food storage, small scale energy generation) and water/sanitation (kid friendly latrine, small scale chlorine production). Interviewing potential customers, meeting with village chiefs, weighing babies. Dawn until dark, these were long, hot, hard days, but much was learned by all, and relationships bloomed.

I was impressed by how these participants really are working on co-design: what is the problem? what do you do now?, would this work? why or why not? what would be a good way to do this in your village/on your farm? can you think about ways you could pay for this? It is a team effort with the villagers. My impression was that, at least in the villages I visited, this was not the way they were used to interacting with visitors. Villagers were excited (but also surprised) to see the teams return, and are working on things to get ready for the next visit at the end of next week.

This week has been a combination of class work on thinking about entrepreneurial business models to disseminate the products, as well as preparing for design reviews tomorrow. The tools are out, and the participants are making prototypes and concept drawings. The halls at the hostel are humming and hammering!