Saturday, December 06, 2008

ONE idea for Obama

From the ONE.org website: "President-elect Obama will have historic opportunities to bring hope and dignity to millions currently suffering from poverty and preventable diseases, such as malaria and HIV/AIDS.We can make a difference by showing our support for an inaugural affirmation of Obama's pledge to fight poverty and preventable diseases worldwide, and for an FY2010 Presidential budget request that puts the U.S. on track to meet Obama's historic commitments to the world's poorest people." Sign the online petition here:http://www.one.org/inauguration/


Presidents from JFK to Reagan have realized that poverty alleviation can be part of US policy and that it can be an effective way to help others and make America stronger. Of course, there is that dicey issue of spending the money effectively. Not spending it so we can pat ourselves on the back, but to catalyze real change. Always a challenge for government, which is multiplied in the area of foreign aid.
An example of where this could work better is government funding of medical research. This has lead to new vaccines and learnings about disease. But diseases of the "rest of the world" tend not to get the same priority.
While NIH says these diseases are a "high priority," US spending "...in global health has fallen short. NIH’s AIDS research funding was cut by $19 million from 2005 to 2006, and it has remained stagnant since then. Last year, just 0.3 percent of the NIH budget was devoted to malaria, and just 0.5 percent to TB.6 By failing to adequately fund NIH, the President’s 2008 budget further threatens our efforts to address global health issues." Global Health Initiative Report 2007 - Families USA
Congress and President Obama could step up- funding the NIH to focus more programs on TB, malaria, etc. could pay benefits on many levels. And it may be time to reprioritize NIH research programs. What are the expected public health returns on more research in, say, diabetes or obesity, compared to malaria or water borne disease?

This will also be an area where more government collaboration could help with dissemination. I have been very impressed by the work Rotary International, UNICEF, WHO and Gates Foundation in the Polio Eradication program. The Dept of Health & Human Services has supported this effort with significant resources. Looking for other multilateral efforts to improve public health, with existing technology such as the polio vaccine, could leverage results. The President's Malaria Initiative could be extended. Mosquito bed nets or clean water initiatives might benefit greatly from innovative partnerships and new types of US government support.

Wednesday, November 26, 2008

Starting A Venture Gapital Fund

Yesterday, I had a fun meeting with Sloan Entrepreneurs for International Development. My host, Jenny Kwan, asked me to come up with a topic to brainstorm with this group. So we spent an hour discussing what it would take to start a venture fund for enterprises in the BOP. What would be the same? what would be different?

We currently have a bifurcated market. On the one hand, traditional venture capital funds (VCs) look for deals that have the potential to return 30%+ on multi-million dollar investments. On the other hand, foundations and groups like Ashoka "invest" in social entrepreneurs without an expectation of even a return of principal. Kiva provides a return of principal, as do the "social businesses" advocated by Muhammad Yunus. So the question was whether a fund would work to fill this "gap" for BOP businesses that can generate a positive return, but would not attract VC due to a number of factors (smaller deal size, unfamiliar markets, lower ROI).

Here are a few ideas we kicked around as "venture gapitalists":

Fund size: I poked at the idea of "go big or go home" with a $100 million+ fund, but the general sense of the group was that this would need to be a relatively small fund ($15-25 million).

Deal flow: Fund size was driven by concern about deal flow in this sector. There was a good discussion about whether the fund will pick sectors (such as Acumen Fund) or instead invest in emerging businesses (such as those assisted by Endeavor). One idea that emerged was that it might be possible to carve up the General Partners' carried interest to those that helped with deal flow. We also discussed that others were doing due diligence on BOP firms for awards, etc, and it might be possible to take advantage of this starting point to help with deal flow. Several people also were concerned about investing in social entrepreneurs- they wanted to invest in profit maximizing entrepreneurs who would be pursuing liquidity for investors.

Team: Unanimous sense that you would need to build a team with local connections in the countries and sectors. Some concern that there were not many "serial social entrepreneurs" that could be recruited. Interesting to see the MBA perspective that few would be willing to start with fund if they felt it would require long term sacrifice on compensation. Most seemed to think that, properly structured, the fund could be competitive on compensation.

Cost structure: Many were concerned with the additional cost of a global network. While salaries are lower in other parts of the world, opening offices, reviewing deals, sitting on portfolio company boards all raised concerns.

General Partner fees: With cost concerns, some students felt a higher management fee would be required. 3-5% was proposed, but the "investors" were skeptical.

Syndication: The lack of other funds was a concern, as there are few others (yet) to share risk, due diligence, etc.

Investment strategy: some concern about investing in subsequent rounds (we noted that funds that are too small get squeezed as winners emerge in a portfolio if they can't invest in subsequent rounds). The sense of the group was that early rounds would be several hundred thousand (NOTE: this 1/10 conventional VC) and perhaps a bit over $1 million total capital. So the portfolio would be 15-30 companies.

Instruments: we didn't get into this in the main discussion, but after class we had an interesting chat about "additional terms" in, for instance, a convertible debt instrument. What if, for instance, the interest rate (or conversion discount) varied based on achieving social/environmental goals. The idea was that some investors might be willing to trade down on valuation if social returns were ACTUALLY being generated (as opposed to merely promissed) by the entrepreneur.

In short, we didn't figure it out. My sense is a number of people have been thinking about this, but have yet to come up with a business model that "works" enough to attract the human capital to run it, the financial capital to fund it, and an efficient deal flow screening mechanism. Just a matter of time, I think, before a few more "testable" models will emerge.

Monday, November 24, 2008

DiaBlog: Net Impact

I wasn't able to attend much of Net Impact this year, but several students from Colorado State reported back that the event at Wharton was better than ever. Below are some comments from Joseph Darnell and Mitesh Gala about this year's annual conference:

Q: What were the most interesting sessions you attended for BOPreneurs?
Mitesh: "Definitely the one on Socially Responsible Investing - There were three venture firms, including Innosight Ventures, headed by Clayton Christensen. They have invested in a laundry kiosk business in Bangalore."
Joseph: The biomimicry workshop was by far the most interesting panel I attended. I also thought the 'Hype vs. Reality: Impact and Potential of Social Enterprises in International Development' was particularly enlightening, and very relevant for any aspiring BOPreneur." (For Matt Austin's blog on this panel, click here)

Q: What were the key points you remember from these sessions?
Mitesh: "There doesn't have to be a trade-off between social business vs. traditional business. Both businesses are run on or evaluated on their bottom lines by the investors. However, investors use a more advanced evaluation tool to measure social impact and its effect on the bottom line, for instance, using a 'balanced scorecard' tool."
Joseph: "Some of the other business strategy applications from the world of nature were nearly mind-blowing. I liked insights like “optimize rather than maximize”, “use free energy”, and “ focus on shape, rather than material”. There was also talk of building within “ecological building codes” as opposed to the manmade versions we’ve invented. I really liked the business applications; Industry Biomes, Ecosystem Succession (as related to market entry) and Market Dietary Strategy (organism doesn’t define it’s food, it’s food defines the organism)."

Q: How are current global financial worries impacting MBAs' interest in sustainability and, more specifically, BOP work?
Joseph: "I think the interest in sustainability as a value add is only being heightened by the financial crisis. I think that it’s a way for MBAs to make themselves more attractive to employers. As for the BOP, it seems that interest in 'emerging markets' hasn’t waned."
Mitesh: "The conference had more panels on social businesses compared to last year and so it is hard to relate current financial worries with MBA's interest. There is still a lot more interest in CSR and Green technology, than in BOP work."

Monday, November 17, 2008

Tim Keeps on Tickin...


Tim Bauer was selected today as a Rolex Awards for Enterprise Laureate. Tim is one of the founders of Envirofit and it is really cool to see him recognized for all his great work. Read and see more about Tim's work, as well as the other laureates, at the Rolex Awards website.
And while Ron, Nathan, Jaime, Harish, Alan, Roshan, Martha, Clark, David and many others may not get a gold chronograph, they too deserve to bask in the reflected glow of Tim's new timepiece.
OK, I am not going to blog about any more Envirofit awards for a while.

Thursday, November 13, 2008

Green and Nerdy

It's an underground engineer's hit- Weird Al's "White and Nerdy"... and now Envirofit has real cred as "green and nerdy"- a spot in Popular Science! Later this month, when I visit MIT for a few days, I can roll with the best of the book bangers. Heck, I might even be able to figure out why they number their buildings, instead of naming them.

It is interesting to see how media coverage builds around an idea from the inside. It is great to see the Envirofit team get recognition for all their hard work. But media coverage is kind of like money... when you could really use it, no one returns your calls. Then you get one or two people interested, and it builds. Jaime has been working hard to get the word out and we also got some help from the pros at Weber Shandwick.

We know that "the popular people" don't read Popular Science. But we are glad that a few more nerds now know about Envirofit. And maybe a few smart ones will want to come work for us. Probably the ones with a Weird Al Pandora channel on their iPhones.

Tuesday, November 04, 2008

Big Time(s) Squared

Ok, I know there is a lot going on today, but for a New Yorker like me, this was pretty cool "Big Apple" site to see!





"Envirofit Ramps Up Production of Clean Burning Cookstoves to Meet Demands"

Sunday, October 12, 2008

Good news

As I wrote in the earlier post today, there are lots of problems out there. But are there enough problems to get an "unrepentant optimist" down? Nope. There are some very cool things happening out in the world. Here are a few:

1) Today, China indicated that it was going to allow peasants to buy and sell land. The NY Times wrote a good piece on this yesterday. As Fareed Zakaria recently wrote, "if you want to free your country, first liberate its land." On NPR today, one commentator stated that this change was driven in part by China's concerns about flagging exports to the West during the financial crises. As my bleeps know, I am a big fan of Hernando DeSoto and ILD, who have pushed for private property rights for the poor for years. It is exciting to see progress on this front in a country the size of China.

2) In Business Week's "Green Design" issue, Humdinger Wind was highlighted. I have had the privilege of getting to know the founders of this exciting new company. Cool technology and a great vision for innovative approaches to underserved energy markets. A global, virtual Innovation Factory for this century. Thomas Friedman writes in "Hot, Flat and Crowded" that the cure for energy poverty is a village "ecosystem of energy plus education plus connectivity plus investment." Technologies, such as wind belts and small scale solar PV, when coupled with energy efficient devices, could drive dramatic change in the energy equation for the developing world.

3) Another company founded by young entrepreneurs, Husk Power, is also on its way. This UVA based start up has already installed two systems in rural India and hopes to get funding to keep growing. They have already hit the business plan competitions and raised $100k.

4) Envirofit is now selling thousands of improved cookstoves in India. Customer feedback has been strong, and we quickly sold out after launching a few months ago. I often suggest that start up teams figure out where they will sell their first, tenth, hundredth and thousandth product. This gets them to think about distribution early and often. Well, Envirofit has exceeded 10,000 stoves in just a few months, and hopes to have sold 25,000 by year end. We still have a long way to go, but we are making a meaningful difference for thousands of households. It is a testament to the team that they have been able to rapidly build a team in India, develop distribution networks, and design and manufacture a really "hot" product.

5) SoCap08 kicks off on Monday. I am really looking forward to it. Even with all the doom and gloom, they sold out an expanded conference focusing on bringing together "hundreds of leading social entrepreneurs and investors from around the world to accelerat[e] the flow of capital to good." I am looking forward to being on Tuesday's panel "Design for the Developing World" with Paul Polak, Tim Brown and Kristin Peterson. And on Friday, Mitesh, Joseph and I will be presenting a paper in Portland on a framework to integrate sustainable design approaches (cradle to cradle and biomimicry) into BOP product design. Hope to see you at these events.

How can you not be optimistic? You gotta problem or something?

What's your problem?

Growing up in NY, there was usually an edge when someone asked this question. "You gotta problem?" was another way to phrase it.

Problems certainly abound these days. Everyone seems to have them. And everyone is on edge. Funding opportunities for entrepreneurs (both the regular kind and the social kind) are bleak. The perfect storm seems to be bearing down on the non-profit sector as December approaches. Year end for charities is a lot like late June for firecracker stands. To put it mildly, they raise the majority of their funds in the last 2 months of the year.

Foundations, who often set their budgets according to a tax policy which mandates that they give away 5% of their asset values, will likely cut back. If a foundation's investment portfolio is down 40%, it may well reduce its funding levels by a similar percentage. Business Week (Oct 6) reported recently that "Foundations and charities brace for blowback from Wall Street's pain," with examples of problems at AIG linked Starr Foundation and T Boone Pickens.** Regular folk too, who give an average 2-5% of income*, are likely to cut back.

Meanwhile, in a tough economy, the need for help goes up. A perfect storm indeed. I won't be surprised if the giving that goes on will have a more "give local" flavor, too. Local food banks vs. food aid for Africa. Business Week also reported that the Red Cross has started to take out loans in order to provide services to hurricane victims. I wonder where they are finding banks willing to lend?

Plain old entrepreneurs are also facing challenges. VC's are having trouble closing new funds and beginning to pull back on new deals. According to a "leaked" source, funds like Sequoia are urging portfolio companies to focus on getting to cash flow positive (a far cry from the "just get revenues so we can flip you" model). Angels are likely to pull back too, in line with their statements from Merrill Lynch (or whoever owns them this week).

It would be easy to urge T. Boone, foundations and VCs to dig deep, and invest heavily in a down cycle like this. But it isn't my money, so I will resist the urge to tell others what to do. The more likely scenario is that funders, the fundees and those in need will all turn a hopeful eye to the government. But you can bet GW, Ben B. and Hank P. aren't arguing this weekend about whether your start up is too small to fail. You will need to bail your own boat. Bootstrapping is probably the best strategy for survival- figuring out how to get along based on cash flow from customers, existing funds and ingenuity.

Bootstrapping doesn't mean hunkering down. It means getting going. Making calls, taking the meetings, leaning down your burn rate. Figuring out how to survive even if you don't get any funding. Paying particular attention to your strongest people. When the going gets tough, they need to get going... and not out the door. Being clear about the challenges the organization faces, and getting people focused on survival of the tribe. Working on the stuff you can control- selling (and collecting), spending, motivating, and communicating. And remembering that big companies act weird in times like these, and this may create opportunities for you as they jettison business, assets and people.

The fun part of being an entrepreneur is building the company through the good times, and the tough part is surviving in the rough times. Good entrepreneurs do both. I have seen (and heard about) a lot of unusual things in the past few weeks. Fear has overtaken greed. This calls for different responses in a market that is "nasty, brutish" but not short.

So, "what's your problem?" is just the start. What you do about it is what counts. As Drucker said "it is not necessary for a business to grow bigger; but it is necessary that it constantly grow better." Good words to keep in mind, even in a downturn. Especially in a downturn.
____________________________
*a % of income is usually more than a % of assets (particularly if reduced by retirement assets) for many people. So you are probably more generous than T Boone, percentage wise.
** maybe this means he will need the money enough to come speak in Fort Collins on Oct 21

Wednesday, September 17, 2008

I Love Luci

Luci Storelli-Castro gave a wonderful talk at our Rotary Club luncheon today about her year in Ghana as an Ambassadorial Scholar. This was a special treat for me as I have known Luci for many years and I have watched her grow from a young girl to an impressive young woman. Her talk was touching, funny, inspiring and thoughtful.


Luci is a writer, change agent, and soccer player. While in Ghana, she not only studied business at the University in Accra, but also taught 50 first graders, helped four villages drill water wells, and started a soccer team in a Liberian refugee camp. As with many recent college graduates, she is currently "considering her future options." So bleeps, if you run a grad school, accept her... if you run an NGO, hire her... and if you need a writer, recruit her. You won't regret it!
B Good, B Local, B Corp
For those of you lucky enough to live in Fort Collins, please be sure to take in the Rocky Mountain Sustainable Living Fair this weekend. And as icing on the cake, please come see our Sustainable Enterprise Speaker Series on Tuesday Sept 23 at 4 pm featuring Jay and Andrew from B Lab in Clark A 103. Find out how their new ideas are helping leading "B Corp" companies become role models for sustainability. Link

Tuesday, September 16, 2008

Monday, September 08, 2008

BOPportunities Abound

Here are 3. Well, maybe two- Y combinator is definitely a long shot. But never say never!

1) Cornell is doing a BOP Narrative contest. Cash prizes for short essays on challenges of implementing innovation in BOP markets. October 5 deadline.

2) The process has started to apply for the Acumen Fund Fellows 2009-2010. This program has been a great experience for past fellows, giving them a year of working with Acumen portfolio companies. Some of their experiences are on the Acumen site. Applications are due October 17.

3) Paul Graham's Y Combinator is accepting applications for new ventures. October 17 deadline. It is also interesting to read how they run the application process.

For those in the SF area, the upcoming Social Capital Markets Conference on Oct 13-15th looks interesting. They have quite a few good panels lined up. For instance, I'd try to see the Monday afternoon sessions on "Democratic Capital" or "Serial Entrepreneurs" (of course they are at the same time) and on Tuesday I'd like to see "Capital Dating," "Design in the Developing World," and Rick Aubry's session on scaling. I will say, that after looking over the line-up, I felt it was a bit short on the entrepreneurial perspective. But I am guessing a lot of entrepreneurs will be in the audience and working the crowd.

In the future, it would be cool to borrow from some of the other industry conferences (e.g., BIO) and provide a more formal setting for entrepreneurs to meet potential funders. It would be cool to have a random process too. If you come to a conference, you have to agree to meet with X number of people, some of whom want to meet with you, while some are random, serendipitous hook ups. (Hey- we are only talking swapping ideas.) Short 10 minute meetings. No up front expectations, other than you will each listen to what the other has to say, and see if you have any ideas to help each other out.

In the upcoming weeks, there will be a few interesting announcements on funding opportunities for BOP ventures. Good to see the growing interest and different approaches that are emerging. I'd love to say you will read about them here first, but my bleeps know this really isn't a blog for keeping up on current developments. Special operations, you know. Got to protect my sources.

Wednesday, September 03, 2008

Stumps & Seeds

One of my recent chores has been to dig up some stumps in the back of our yard. It has been hot, hard work. Kind of reminded me of some entrepreneurial endeavors.

1. It looked easier up front than it turned out to be.
2. Proper tools help. Maybe draft animals too (but I didn't have any).
3. There are many tangled roots below the surface.
4. It took much longer than expected.
5. Some people observed that it was "stupid" and that someone else could do it better than I.
6. In the end, it felt really good to finish the task.

So, why dig out stumps? Well, to ready ground to plant seeds. See, to get things to grow, you sometimes need to prepare things, make an area more fertile and receptive. Experts have told me that vegetables and berries won't grow very well among old stumps. I have a few ideas for planting seeds as well.

1. Choose varieties well suited to local conditions. Consult with experienced people/experts.
2. Diversity is good ... Monoculture isn't the name of the game.
3. Keep an eye out for weeds and pests that could weaken your garden/culture.
4. Don't overwater or overfertilize. You need deep roots and resiliance. Never know when you might get a dry spell.
5. Transplants are tough to establish and very tender at first. Often better to start things from seed and let them grow.
6. Overall, there is a natural level of growth. Mess with this, and you may kill it, or it may not bear fruit.
7. Sometimes it is fun to experiment with hybrids and cross fertilization. But it doesn't always work, and sometimes the offspring revert.
8. Critters often get the low hanging fruit. And birds the rest. But we keep trying because there is nothing quite like enjoying something you helped grow from the start.

Wednesday, August 13, 2008

Back to School

It is that time of year... students are coming back on campus, faculty are scrambling to finalize syllabi. Sustainable design, social entrepreneurship, and and international development are hot topics on campus. If you are a teacher planning coursework in these areas (or at their "intersection"), or if you are a student that wants to do a project in one of your classes, check out these resources:

1) Get the juices flowing. The Cooper Hewitt Museum had an exhibit "Design for the Other 90%" last year. Gives some nice examples of some of the designs in this show. There are also teacher lesson plans for K-12 on this site.

2) A few ideas to get started. Paul Polak founded International Development Enterprises and helped organize the Cooper Hewitt exhibit. He recently wrote an excellent book called "Out of Poverty" which discusses design approaches for the poor (particularly the rural farmers). On his website, he has posted some products that he thinks will have large markets. See his wishlist here.

3) Who is the customer? The Economic Lives of the Poor by Banerjee & Duflo (2006 MIT Poverty Action Lab) provides some background on how much money the poor have and how they spend it. It will break down some assumptions/ stereotypes and can be a great tool for class discussions.

4) Is there a need? The Next 4 Billion (2007) by World Resources Institute can help. The introductory chapter gives a good overview, and then the other chapters focus on the needs in specific areas (water, energy, health, etc.) Appendices contain country-by-country info. This can be a way to dig deeper into specific needs. Move from general "the world needs clean water" to "in BOPistan, they need a pump to access groundwater at 10 meters, and a filter system to eliminate dissolved solids."

5) Who else is working on this? Google away. Identify organizations working on related projects or in the region. Have students find out "what is working and what isn't" and profile the organizations.

6) What approach will work? Consider setting up student debate teams to get them thinking critically about these challenges. For international development, try Easterly vs. Sachs, or for climate change try Gore vs. Lomborg. Neither of these debates will happen in real life, so it is useful to have students roleplay and apply these perspectives to their projects.

7) Do no harm. While projects may be motivated by good intentions, unfortunately they don't always end well. "Parachutista" projects of quick, one-time visits may help students learn, but they contribute little or nothing to the community. To sensitize team members, read over the BOP Protocol and check out Tori Hogan's blog and documentary "Beyond Good Intentions." In addition, if the project involves designing a new product, please consider Cradle to Cradle and biomimicry principles. Challenge the team to create as much value with as little waste as possible.

You may also want to take a look at the current online discusion on "Design for Social Impact" led by Jocelyn Wyatt of IDEO.

Now I have to get back to scrambling to get ready for my classes...

Sunday, August 10, 2008

Be the change...

"You must be the change you wish to see in the world." One of Gandhi's most famous quotes, and one that ends up on t-shirts and bumperstickers. Perhaps some of the better known (and funded) social entrepreneurs would do well to keep this in mind. They don't seem to react very well when the prevailing wisdom of the field is questionned or criticized, based on at least three responses I've noticed in recent months.

1) Earlier this year, in "Just Another Emperor" Michael Edwards (of Ford Foundation) questioned whether "philanthrocapitalism" was the best solution to poverty and international development. The debate has ranged from escalating hostility (See Jim Fruchterman's recent posts and Edward's responses on the Benetech blog) to polite disagreement (WRI bloggers at NextBillion). Reminds me a bit of the response to the "Death of Environmentalism" a few years back, or how Bjorn Lomborg is treated as an environmental pariah for questioning whether climate change is the biggest challenge the world faces.

2) Recent studies have questionned the impact of "social marketing" and instead advocated a return to free distribution of bednets, medicines, etc. This also provoked a less than considered response by some social entrepreneurs. Apparently the approach of using validated research methods, such as the projects of the MIT Poverty Action Lab, is threatening to some in the social sector.

3) Professor Paul Light questioned whether social entrepreneurship should be defined more inclusively in a Stanford Social Innovation Review article last year. Bill Drayton of Ashoka and Sally Osberg of Skoll Foundation both asserted, based on anecdotal evidence, that it was dangerous to let too many people claim to be social entrepreneurs. John Elkington and Pamela Hartigan sound a similar theme in their book "The Power of Unreasonable People." Look for Paul to reengage on this topic in his upcoming book "The Search for Social Entrepreneurship."

I have personal anecdotes of less than civil behavior in the civil sector. I am a big believer in the power of entrepreneurship as one tool to tackle social and environmental challenges. But I am also a big believer in letting markets, including markets of ideas, operate freely. My concern is that momentum and talent are lost to the field when new ideas from new people are met with personal attacks and this sort of defensiveness. The needed innovations will come through hard work in the field, not the labeling and sorting of who is, and who isn't, a true social entrepreneur by those who apparently know the secret handshake.

A more interesting, but still spirited, debate on a closely related topic can be found at Creative Capitalism.

It would seem to me that of all fields, social entrepreneurship should be the one modeling how to engage in civil conversation and debate. There is lots of room for passionate diagreement, and I am, after all the one that posted the "no rules in a knife fight" clip. But I gotta say I am not too enthusiastic about the change these leading social entrepreneurs will bring about if this is the way they behave when confronted with criticism or new ideas. We need to respect the early leaders in this field, but not be dogmatic in applying their approaches to the many challenges we face. Hero worshippers rarely become heroes.

PG has done it again

On a completely different note, Paul Graham has once again hit the nail squarely with a great essay on Fundraising for start-ups. Great advice, and as is often the case, applicable beyond his IT domain.

Campaign for a Sustainable Planet

The Nature Conservancy has set a Big Hairy Audacious Goal with this new campaign: "protect at least 10% of each of the world's major habitat types-forests and grasslands, oceans, rivers and lakes and deserts and aridlands- by 2015." Sounds like a good way for the new CEO Mark Tercek (from Goldman Sachs) to rally the troops.

One Acre Fund

Kudos also to this organization, which continues to quietly make progress. When I first met Andrew, he struck me as a humble, smart, persistent guy. He talked about proving the model before scaling up. Click here to read their most recent report. Here is an excerpt: "One Acre Fund farmers increase their raw harvests by 3-4x on average, resulting in at least a doubling of their farm income. They not only feed their own families, they create surplus food for their communities. Our farmers, instead of relying on handouts, operate like business people, and earn their harvests for themselves." They are now going to scale up the organization and I wish them the best in their efforts to have 30,000 African farmers as customers in the next few years. Andrew and crew are being the change I'd like to see!

Disclosure: I donate to Ashoka, One Acre Fund and The Nature Conservancy and think they do great work. I am also a fan of Benetech and Jim F's pioneering work there.

Monday, August 04, 2008

Biomimicry: Back to the Future for the BOP?

Last week I was invited to participate in a workshop by the The Biomimicry Institute (TBI) on education and biomimicry. The workshop was held on the shores of Montana's Flathead Lake and was a great chance to interact with educators and designers who are pioneers in this field. I was definitely the "newbie," having been asked to come give the group some background on designing products for the poor.

One of the big challenges is that as the poor move up the development ladder, the demand on the world's resouces increases... for all 6 billion people to live at U.S. standards, we would need several more Earths. Designing new planets seems to be a stretch, so it's probably better to figure out how to design products, organizations, industries and communities to be more sustainable. And biomimicry may be an important tool in doing this. As TBI points out "While humans have a long way to go towards living sustainably on this planet, millions of species – each with nearly 4 billion years of field testing – contain technological ideas to help us succeed in our all-important quest to become a sustainable species on a biodiverse planet."

Yes, Doc, "Design Inspired by Nature" has a definite Back to the Future feel to it! By looking back at how life has evolved over the millenia, we can gain insight into how we can make better, more sustainable products in the future.

Some highlights for me were hearing/seeing:

- Carl Hastrich talk about some of his students' projects at the Ontario College of Art and Design... including hockey gear inspired by a squirrel's seasonal coats (the summer fur is different than the winter). What do you expect from Canadian biomimetics, eh?

-Torrey McMillan show the project her students did in her elective science class for seniors at the White Mountain School in New Hampshire. As part of designing and building a living machine water filtration system, the students also needed to write a manual for science teachers who wanted to build one for their classes.

-Prasad Boradkar from ASU talk about his multidisciplinary Innovation Space program and the way he is planning to integrate biomimcry into this program.

-Tom McKeag and Margot Higgins discuss their upcoming graduate seminar at UC Berkeley "How Would Nature Do That?." If I were a Berkeley grad student (Luke O!) I would definitely check this one out.

As for my section of the program, TBI has identified the BOP as a strategic priority (along with Climate Change and Chemicals/toxics). Mitesh Gala and I have been doing some work on how biomimicry and "cradle to cradle" concepts might be used to improve BOP design, and I gave some background on BOP product design concepts. I told some stories from Enviofit, IDE and SELCO. I went through the evolution from the early models of large corporations' "repackaging for the poor" to IDE's "designing for extreme affordability." I shared my hope that we could come up with leapfrog designs for the poor, that allow them to bypass technologies that rely on existing infrastructure. For instance, many developing countries have better mobile telephony systems and leapfrogged over the copper wire systems. Perhaps it will be possible to leapfrog the electrical grid, or large scale water and sewage systems.

I also emphasized my belief that new design approaches must encompass not just the product, but also organizations, business ecosystem (industry and supply chain) and communities. I hope that some of the ideas helped the other participants expand their ideas on how to use their vast knowledge of design and nature to begin to look at applications for shelter, energy, and water treatment.

Kudos to Denise, Cindy and Sam for putting on a great workshop.

Tuesday, July 29, 2008

H&M: Design for the Poor

H&M is a global fashion brand, with 1600 stores around the world, known for "fashion and quality at the best price." Last week, IDDS had its version of H&M... Hande and Mufute, who came to talk about their work in technology dissemination for the poor in India and Africa. I have a few highlights from my notes below.

Harish Hande is founder and CEO of SELCO, and a widely acclaimed social entrepreneur for his work in bringing solar lights to poor people in India (see my post from Oct 10, 2006). He is also a provocative speaker! His only slide was a picture of rural India: in the foreground is a primative cow shed with one of SELCO's solar collectors on the roof; passing overhead is a government transmission line, connecting to a water pump that has an outdoor light that burns all day and night. This illustrates India's energy problems... and perhaps its solutions. The problems are access, intermittent supply (power outages in Bangalore have already started due to low monsoon rains this year) and waste. As Harish points out, this is supposed to be the IT capital of the world, and it doesn't have reliable electricity.

Harish has used these problems as opportunities, setting up a business that has wired over 100,000 poor households and small businesses over the past 15 years. Children are now graduating from high school who have only known solar electricity! In building SELCO's business, Harish stressed how important it was to come to the poor with a good product, but also "doorstep service" and "doorstep finance". His clients want to know who will install and service the system...and how they will afford it. He also discussed how their financing "piggybacks on the client's cash flow," not an arbitrary payment schedule.

Harish questionned the concept of "design for extreme affordability" that the IDDS participants had heard from Paul Polak, because it “challenges the intelligence of the poor people”. "When it comes to the poor, we always try to standardize it and take away a choice. You can standardize to a “want”, but when it is a “need” you need to customize it." He was also critical of the solar business in the developed world, pointing out that subsidies of solar panels in Germany and California have increased costs and hurt affordability for the poor. "How much help are hybrids and solar panels in California, if millions of people are still cutting down trees for firewood, and burning kerosene for light?" he asked. He also was critical of traditional aid-based international development community, pointing out that they take little risk, but are quick with suggestions for companies like his. "NGOs are always successful, only companies are failures." (I am definitely going to use this quote again!) [for video clip, click here]

Ruth Mufute has had many years of helping implement technologies in Africa, primarily in Zimbabwe and Zambia. She emphasized how technology can empower women and bring more income to communities and families. "Women bear the burden of rural economy," and technologies can make them more productive and reduce their drudgery. But an existing technology/machine is just the start. Ruth helps build the community/economic infrastructure as well. Businesses, bank accounts, cooperatives, etc. For instance, a Ram press can produce cooking oil, which is "gold" in many rural communities. It produced 4x more oil from sunflower seeds compared to traditional methods. At first, Africare gave away the machines, but they weren't used, and collected dust. Ruth convinced her bosses to let her sell the machines... and the results were "astounding." As she said, you must start businesses, not social clubs.

Ruth sees her organization as providing a fire, and allowing others to light their torches from their work. She estimates they have benefitted 20,000 rural households. Ruth also told an interesting story about how technology and culture interact, and how she, as a woman, has a deep respect for tradition. But when she started, women could not get loans. This had to change and other barriers to women are falling. But she emphasized that "nothing is taken from me" by respecting traditions and told how she moves to a very traditional role when she visits her family.

I do see Africare working in a hybrid space. They are donor supported, and choose their markets based on donor interest and support. This (perhaps unintentionally) limits the scale of their impact.

So that is IDDS's version of H&M. But instead of "fashion and quality at the best price," our H&M helped IDDS participants think about designing products which incorporate "function and quality at an affordable price" and to understand ways to disemminate technologies to achieve impact.

Sunday, July 27, 2008

Rusty, but Tan

So, I have been away for a while from the blog world, and am feeling a bit rusty. It has been over a month since my last blog post, and I can no longer blame the slow internet connections.

When I started teaching (my 5th anniversary of this career change is August 3), part of the reason I did it was to have "summers off." This was yet another example of my naivete regarding academia, since the first 4 summers were spent working. This year, I vowed it would be different, and was brave enough to tell my wife (a way of ensuring follow through). It is a sad fact, that the last time I had a summer off was when I was 13 (and then it was easier to get by without being paid). This is a summer to do things I think are important, but that I don't have to justify as being "job related" to any employer.

Most of July we spent in the Dominican Republic, in part to try to improve our Spanish and in part to get some together time on some wonderful beaches. I think I did OK on both: I have a "certificado" attesting to my participation at the Instituto Intercultural del Caribe in Sosua, and a pretty decent tan (to keep my Spanish going long after my tan fades, I plan to become a customer of Speakshop, a cool online fairtrade language service). It was also interesting to be a student again, and to have that crazy overload feeling of trying to put too much into your leaky bucket of a brain! However, I used a lot of the strategies my students have used with me, including asking questions I figured might lead to "war stories," proposing coffee breaks, and asking for review sessions.

Last week, I was at MIT for a few fun days at the International Development Design Summit. They were busy days, but saw some good ideas emerging on the student teams, and I hope the Venture Stories* and Venture 3 x 5** exercises help them think a bit about Designing for Dissemination. It was also great to have Rob Katz from Acumen Fund agree to a last minute visit and give a nice talk about what they look for when they invest (here is his blog on the trip). Best of all, however, was having a chance to dip into this swirling pool of wild ideas and smart, passionate people from around the world. To meet Kenny Mubuyaeta, from Disacare in Zambia, who has had some of our GSSE students working with him at his mobility facility for those disabled by accidents or disease. To see Zubaida Bai again, who I met last summer at IDDS and who will be starting with the next cohort of GSSE students in August, and hear her confidently introduce Ruth Mufute and Harish Hande in front of a large crowd. To meet participants like Mark Jeunnette, who is starting with IDE in Ethiopia soon, and hear his enthusiasm about what he is learning at IDDS. Kudos to the team and I'd encourage any BOPreneurs who are in the Boston area to go see the final presentations on August 6.
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*Recipe for Venture Stories: Who is your customer? What is your product? Why does it matter? Who's on your team? Tell a story about this, in less than 100 words. [thanks to Andy Hargadon for the idea behind this]

**Recipe for Venture 3 x 5: Based on your Venture Story, pick 3 things your team thinks it is important to accomplish. Figure out how you will measure each. Now set goals for each item for the next 5 years and put them in a 3x5 matrix. Pay attention to the discussion. Pay attention to how being specific starts making you think differently about design, manufacture, resources. expansion, etc. Have your team develop two 3 x 5's and discuss how each option may be a very different organization.

Friday, June 13, 2008

"Out of Poverty," uncut

Somehow, in my review of Paul Polak's book, a paragraph disappeared from what I thought was the final version, and what ended up in the Stanford Social Innovation Review. I still think it is important, and will share it with my bleeps:

"Though Polak addresses 'designing for the other 90 percent' in the book, he focuses on those living in extreme poverty (on less than $1 per day), 'the bottom 10 percent.' Entrepreneurs interested in developing products for those earning $2-5 per day may need to modify some of his design concepts. Trading off durability for affordability, or avoiding microcredit, may not be appropriate for entrepreneurs developing products for small businesses in urban markets. For example, Envirofit customers, who drive motorcycle taxis in Asia, prefer to purchase a more durable product, and microcredit loans facilitate the purchase. Entrepreneurs would be wise to focus on designing the most affordable solution for their target customer, taking into account manufacturing, transportation, and financing costs."

In other words, Paul's advice on design is good generic advice, but it is better for the specific market segment he knows- the $1/day farmer.

Note: My review of Polak's book is for subscibers only at ssireview.org, but has been posted over at Next Billion, so see it here if you aren't a subscriber. Or better yet, subscribe to the journal if you are interested in this field.

Thursday, June 05, 2008

It's All Good Tidbits

One of my favorite Gifford-isms is "It's all good work" which is intended to remind us that whether our work is protecting biodiversity in Cambodia or working on reducing the waste stream at Wal-mart, we should respect each other's work and not get competitive about who's work is better-more important-more meaningful.

My father had another one, from his school days: "Hands to work and hearts to God" which he usually used to inspire us to keep at it when the task was well beyond its originally announced timeline. (His sons were not always sure what the divine inspiration was for many of our chores and projects.) I inherited (or learned) this inability to properly forecast the effort required for a task... and it is probably an important "skill" for an entrepreneur. Drives my wife nuts, though.

Check out Guy Kawasaki's new service: AllTop. Simple interface, lots of diverse blogs for those interested in business, investments and "geekery." This is a sticky site, and you can spend a lot of time bouncing around to different blogs. Last week, a new category "Good" showed up, and this very blog made the cut. It is "Mostly blogs written by people who are trying to make the world a better place for the rest of us." Thanks, Guy, good work.

I am soon off for a workshop with Amy Smith. To see a recent interview with her, check out this New Yorker conference video. If you know Amy, you know that this type of interview is one of the hazzards of trying to get the word out on BOP work. Her interviewer had very little empathy (or manners) and looked puzzled as to how she could get by on $2/day and still be able to buy her black outfits on Mad Ave. Good thing Amy didn't tell the interviewer that her favorite song was "White and Nerdy" by Weird Al. She did fly the nerd flag proudly with her reference to efficiency gains of a corn hulling device to 5 decimal places. Good work, Amy.

Paul Polak also does good work, and has been very generous giving his time to our program at Colorado State. His book, "Out of Poverty" is well worth reading. If you would like to see my review, it just came out in Stanford Social Innovation Review (Summer 2008). His most recent initiative is D-Rev, a Design Revolution to get more people focused on innovations for the BOP.

In Vancouver last week, I got to spend some time with former BGI student Saul Brown, who has started an ethical and organic gift company. Check it out at www.itsaulgood.com.

If you are interested in seeing some of the GSSE field work, some of the teams are keeping blogs. Here is one on the small engine in Bangladesh and here is one on the Dhaka weaving co-op in Nepal. Good work GSSE'rs.

Monday, June 02, 2008

Radical, Transformative, Unreasonable, Extreme, Leap Frog, Super-Bad Social Entrepreneurship

Allen Hammond recently hosted a blog series on scaling BOP businesses on NextBillion. In it, he proposed that extra effort is needed to scale social enterprises. It is worth reading. Hammond admits that the “numbers haunt” him when it comes to scaling BOP enterprises. Participation by a few well-intentioned, experimental MNC’s, social entrepreneurs and investors is not going to be enough to change the world. Pace is a problem. What is needed, Hammond says, is strategies to transform entire sectors (health care, telecom, etc.).

Derek Newberry had asked me to join the other bloggers in commenting on this series of posts, but I was unable to do so at the requested time. He got some diverse input from others, and I will try not to repeat what they have already said. It is an important, perhaps watershed discussion. So here goes with three points that may be useful in thinking about this challenge of scalability.

First, scaling is being pushed by those who are impatient for results. Why aren’t these ventures scaling faster, having a greater impact on the world’s challenges? When I first started working in this field five years ago, I had very similar feelings. How could Fabio Rosa and Harish Hande come up with similar business models for solar power for poor households in Brazil and India but not combine them into a global company? Why the many different microfinance institutions working in various parts of the world... Grameen, Accion, FINCA? Why not closer collaboration between IDE and Kickstart on marketing treadle pumps around the world and driving down the cost of goods with higher volume? Were relatively small regional businesses the best social enterprise could offer? Is this a systemic problem, for which there is a systemic solution? Hammond thinks so.

I am skeptical. Moving up the chain, to target transforming entire sectors, just isn’t how innovation works. And there seems little about the BOP that would indicate that it would be more amenable to these approaches. Hammond is a market driven guy, but in this article he comes perilously close to sounding more like one of Easterly's “Planners” than a “Searcher.”

Unfortunately, innovation dissemination takes time. It is SO FRUSTRATING as an entrepreneur to be early… “why can’t people see how wonderful our solution is?” Hammond is wisely designing some of his new ventures with scale in mind, but he is competing with others who also wish to offer telecom services and clean water to these markets. It will be interesting to see if his “transformative” businesses scale faster, or whether they are just as much work as plain old business models.

My second, related point is that scaling varies with the technology. Most of the successful scalable models we have seen to date involve scaling up bytes, services or very fungible items (money). So microfinance and mobile phone service (at least in urban markets) have disseminated relatively quickly (although it probably didn't seem that way to the entrepreneurs). These technologies are driven by less friction for scaling… distribution costs are lower than for physical products and the incremental cost of adding additional users drops at a faster rate. As far as tangible products, it has been much harder (and taken much longer) to get diffusion of pumps, laptops, bed nets, or in Envirofit’s case, motorcycle retrofits. Transportation costs, parts and warranty services, user acceptance all take longer and slow the diffusion of these more tangible products. My guess is even with “new DNA,” Hammond’s transformative energy and water purification technologies will encounter similar obstacles.

How to deal with these obstacles? Well, as Hammond has done, it is important to build scalability into the business model. Even more important, however, may be to make sure you are truly building a business by chosing the right launch site. As I say to my students, you don’t get points for the degree of difficulty in designing an enterprise. This is not Olympic diving. So find the markets most likely to need your product that can pay for it. This really sticks in social entrepreneur's throats. They want to go help the poorest of the poor. The starving, sick children. But that doesn’t necessarily lead to scalable or sustainable ventures. I wish it did. Really.

Envirofit is an example of this. We started the two stroke retrofit business in the Philippines, not because we had brilliant market research, but because we were asked by an NGO and some government officials and we saw the horrible air pollution and its effects on public health. Opportunistic? Yes. Market driven? Nope. Has this hurt the scalability of our model. I think so; and we are trying to take a very different approach with our improved cook stoves business. Hammond’s Next Four Billion report provides a tremendous resource for potential entrepreneurs in identifying markets that are most amenable to entrepreneurial solutions. His tranformative sectors are those markets with high potential.

Much of the work in this area calls for the dissemination of leap frog, innovative technologies. This seems to be the basis of Hammond's clean water venture, and the WiFi Mesh demo in Viet Nam. Some words of caution from Peter Drucker seem in order. “Knowledge-based innovations differ from all others in the time they take, in their casualty rates, and in their predictability, as well as in the challenges they pose to entrepreneurs. Like most superstars, they can be temperamental, capricious, and hard to direct. They have, for instance, the longest lead time of all innovations.” This is a deep chasm we are trying to cross. Perhaps bringing radical new technologies to these underserved markets is what is needed to transform the sector; perhaps it is adding too many "degree of difficulty" points to the entry.

Many of the calls for scalability involve “replication.” They are borrowing a term from biotechnology, where once you have identified a protein of interest, you insert DNA into another organism and “voila” you get buckets of it. Unfortunately, communities and cultures don’t really behave much like yeast, e. coli or Chinese hamsters (biotech's expression systems of choice). They are much more diverse and competitive. One popular idea is “microfranchising” which trains microentrepreneurs to run standardized small enterprises around the world. BYU’s Center for Economic Self Reliance is a leader in this area, and Opportunity International is starting work in this area as well. To date, these have been very simple businesses, such as collecting hair for wigs; or service based, primarily around health care (the pharmacy models in Hammond’s article or Scojo's eyeglasses). Leapfrog technologies have been rare (although Grameen Phone helped with rural mobile penetration for a while).

My last point goes to the title of this post. The theme of most that is written on social entrepreneurs these days is the heroic nature of their toils. Writers focus on “radical approaches,” “catalytic disruptive technologies” and the “power of unreasonable people.” It is inspiring, no doubt. But is it true? The Hero Factor is based on an anecdotal methodology. Look for success and work backward. Not so useful for working forward. Just go find those “one in a million” changemakers and help them out. The not so subtle message to those interested in this work? Don’t bother if you aren’t a hero. Go get a job at a bank instead. But what if it is the work that makes the person special, rather than the person that makes the work special?

I recently asked a class of MBA students if they would rather be "entrepreneurs" or "social entrepreneurs." 47 out of 50 chose social entrepreneur. Either I have a very talented class (I do) or these are at odds with the "one in a million" nature of entrepreneurship. Perhaps I should teach them not to try?

We seem to be borrowing the concept of mythic entrepreneurs from the mainstream, despite the data that reveals their rarity in the field (see Shane, Illusions of Entrepreneurship 2008). That we borrow these myths when we are moving to less developed economies perhaps says more about the impatience of the foundations and academics than it does about the nature of entrepreneurs. Entrepreneurship, at least when it comes to economic development, seems to have more to do with the number of people engaged in the journey than the speed of their trip.

In the end, I am a skeptic about wide scale implementation of leap frog, transformative, radical solutions across BOP markets. I expect they will happen, occasionally (as they already have with Grameen Bank, Aravind Eye Hospital, and treadle pumps). And be celebrated broadly, as they should be. Perhaps it will be Hammond, or Paul Polak or Envirofit. But aspiring social entrepreneurs, would do well to remember the words of Peter Drucker: “Effective innovations start small. They are not grandiose. ... In innovation, as in any other endeavor, there is talent, there is ingenuity, and there is knowledge. But when all is said and done, what innovation requires is hard, focused, purposeful work.” The tranformative entrepreneur may have a grand dream in their head, but every morning they put on their underwear one leg at a time (sorry, I don't know a more cross cultural analogy). We still haven't found Clark Kent's phone booth.

I hope that Hammond’s innovations do transform sectors and rapidly change the lives of the poor. I hope they attract new investors to the sector that make attractive returns. I hope that he has figured out a systemic fix to a systemic problem. But if not, I wish that his ventures, customers and investors benefit from patience, flexibility, humility, resilience and persistence as they work through the many execution problems these markets present to innovators and entrepreneurs.

Sunday, May 25, 2008

The Tangled Web

There is an excellent and disturbing special report in the June 2008 Fast Company on China in Africa. Analogizing to the attack of an intestinal parasite on its host, Richard Behar looks at the impact of the globalized web of commerce between the U.S., China and Africa.

Behar examines China's acquisition of natural resources in Africa, timber in Mozambique, mining in Zambia and the Congo, and oil in Equitorial Guinea. In all, the pattern of exploitation is similar- massive low cost extraction, infrastructure rich deals with the (often corrupt) governments, and little regard for the workers or environment. Competing with the distracted U.S. and the hamstrung Euros, China has become the partner of choice for Africa. While we look at Africa as a charity case, they look at it as a naive business partner with needed resources. As one source states: "China is very clear about what it wants from Africa. Africa has no idea what it wants from China."

China's trade with Africa is now over $73 billion, an increase of 30 fold in less than a decade. It's investment is at $2 billion and growing rapidly (though still smaller than US). As the article points out, this investment comes with fewer rules than western aid... no calls for better governance, human rights or environmental stewardship. Although there are often political deals and requirements to use Chinese firms for services.

What is China's end game? According to the article, "whether or not the world's key resources are running out, China is behaving as if they are." Economic growth is vital to avoiding political unrest at home, and the manufacturing economy requires a steady supply of natural resources as well as demand from Western markets. Behar speculates that China's end game is to "opt out of the international commodity markets" by going to the source and locking up long term rights to resources. Africa is "now the scene of one of the most bare-knuckled resource grabs the world has ever seen."

The Nature Conservancy has pointed out that there is a poverty-conservation equation, which can lead to either negative or positive reinforcing resource spirals. In the negative version, poor people exploit a natural resource, which diminishes the value of the resource, which makes them poorer. This article points out a number of examples of where this is happening at a large scale in Africa. Five out of every 10 tropical trees traded globally are bound for China, with estimates that most of these are harvested illegally. In Mozambique, it is estimated that Chinese interests control 90% of the available timber. Luckily, there is one poor (easily bribed) enforcement agent for every 125,000 acres of forest!

It is enough to make you sick. But then, Behar throws in our own complicity in this tangled web. Who is China's biggest customer for furniture and flooring? You guessed it, the U.S. And the US and Europe have little to crow about when it comes to development of Africa. Centuries of European colonization, followed by decades of ineffectual aid (well, it was ineffectual in decreasing poverty and disease or developing their economies, but it was "effectual" in propping up despots).

As Behar concludes, the China-Africa-US relationship is like a complicated host-parasite relationship. "We buy China's junk, they buy our bonds, our real estate, even our corporations; they expand into Africa with our money, enabling them to grow and sell us more junk." He is not hopeful that we will "outthink the global consumption death spiral we have all set in motion."

This article was a tough read for an unrepentant optimist, I'm afraid. The history of resource rich countries is not a reassuring story for Africa; it is the Singapores, not the Congos, that build stronger economies by investing in building human capital, instead of extracting natural capital. The global supply chain is a complicated global web, and sometimes consumers would rather not know the truth behind what they are buying. Has China replaced Wal-mart as the new evil empire at the center of this global web? The group that has ruthlessly and relentlessly pursued low cost sources, so we can buy more stuff, cheaper? And that we can then blame when we find out that they exceeded our expectations. Or have we met the enemy spider, and he is us?

Wednesday, May 21, 2008

Get some TED for your Head

So the TED folks have been posting a lot more of their talks recently, which is cool for those of us who aren't cool enough to actually go to TED. I was thinking of posting my top ten favorite TED talks, but then I thought that I would try to do some intersectional combinations. Where the whole is greater than the parts... synergistic neurological stimulation... pairing red wine with fish. Whatever. Watch them together and it will be better.

So here goes:

Design 2.0: Bill McDonough, Amy Smith and Janine Benyus

Some BIG questions, two BIG brains, one BIG ego and almost a small synthetic life form: Stephen Hawking and Craig Venter

Two very different ways to present your ideas: Bill Strickland and Hans Rosling

How do you want to spend $50 Billion? Bjorn Lomborg, Andrew Mwenda and George Ayittey.

And a bonus entertainment clip, the Raspyni Brothers (don't stop with the bean bags)!

Enjoy!

Thursday, May 08, 2008

Sticky Dandelions

I have a dream (yes, middle aged white guys can have dreams too). My dream is that students in CSU's Global Social & Sustainable Enterprise program will become changemakers. People who change the world. All of 'em. Year after year. Around the globe.

The image for my dream is that we are blowing on a dandelion. Each year ~25 students will take off, starting new enterprises, or taking on important projects at leading organizations. Like dandelions, these will take root and spread. Their work will empower and inspire others, becoming seeds for other entrepreneurial ventures.

What does this have to do with stickiness? Well, as my regular bleeps know, I am a big fan of Made to Stick. I first wrote about this fascinating book in my February 2007 post "Stickiness, Serendipity and Dissonance." Since then I have referred to it often, and have now used it in several of my graduate courses. It is a student favorite. To quote from my "SSD" post:

"The premise is that there are some things you can do to make your ideas more likely to stick...think of the power! If only 1,000 people buy this book and make their ideas stick, instead of having said ideas slip into oblivion, it will have made a big impact. And if the cover fools a million people into buying this book…well, you get the idea! The world could be a very different place indeed."

Well, way more than a thousand people bought Made to Stick. Over 160,000 copies have been sold in the past year. It's on the Business Week best seller list. So their message is spreading and sticking. The reason it is popular with students is that it helps them design their ideas. Pretty much everyone has a great idea from time to time. But many of these ideas never go anywhere. They either get stuck inside (due to being busy, lacking confidence or lacking resources) or they get stuck in the network. Kind of like a dropped call. They just don't catch on. Designing an idea using the Made to Stick SUCCES approach can help you get your message out on the network, and help it become "sticky" or even "magnetic" (what it needs to become to start an enterprise).

To (finally) get to the point of this post, Dan Heath, one of the authors of the book, visited Fort Collins this past week. He started off the session talking about our GSSE program, which he had heard about from one of our students. Very cool. He did a nice job of summarizing the book, demonstrating "how to" give a compelling presentation (almost all pictures, few words/slide), and having the audience try a few exercises. How to make CFL bulbs stickier? "It's like a Prius for your house."

Anyway, after the talk, I spoke to Dan briefly, and asked him to sign my well thumbed copy of the book. I asked him to put in the message below. He asked what it meant, and I told him I'd blog about it. Thanks, Dan, and now I hope you understand.

Tuesday, April 29, 2008

Reducing the Carbon Footprint of Beer

Take a look at "Drink Beer, Save the World" and the YouTube clip.

Very innovative idea from the Carrot Mob. A reverse boycott for an environmental cause. I like it.

Thursday, April 24, 2008

Pitching Your Numbers

Presenting financials by Powerpoint is difficult. It is a great example of where the "Curse of Knowledge" can hurt you. You know the numbers, so you flash them up on the screen and move on to the next slide. The problem is that your audience isn't as familiar with your business and financials, and you have just lost them. That's not good.

Here are a few ideas that I think will help:

1) Think "essence". What is the headline for each slide? Does it convey that you are building value with your venture? Consider a "text box" at bottom that also gives a key point ("we break even after 14 months of operations" or "revenues from carbon offsets and our organic twill caps will exceed the federal budget deficit in 2 years").

2) What are the KEY numbers that demonstrate how your business is sustainable (in a Triple Bottom Line kind of way) and the scale it achieves? Can you show these over the relevant projection period (usually 3-5 years). Think 3x5. Three rows x five years. Or 5 rows x 3 years.

3) Pick a period that shows your business becoming at least a teen, or maybe a grown up. Projections that show losses for a number of years, followed by one year of marginal profitability get an "L" for "Loser". Investors aren't interested in just seeing your "baby pictures" for the business. What does your venture do when it's a grown up? (For those of you who are parents, you know now why no one believes an entrepreneur's story, since we have no idea what our child will be when they grow up, or our business. But we know our dreams, and those may indicate what type of parent/founder we will be.)

4) DON'T put up a slide with a lot of numbers unless you plan to talk about all (or at least most) of them. If you don't plan to talk about a number (or at least that series of numbers), why is it there?

5) Graphs help, but again, you need to talk about them, and tell the audience what the essence is.

Following Kawasaki's 10/20/30 rule, and his Art of the Start recommendations for the 10 slides for a pitch, you really should be able to cover the financial aspects of your business in 2 slides. More detailed discussions of financial projections will occur at a later date, IF you connect with your potential investor with the initial pitch.

Monday, April 21, 2008

Educational Arson

In January, I blogged about the need for "Disruptive Education." Many who believe that the current economic system is unsustainable think that the fixes will come from governments or big multinational companies. Not me. I am rooting for the entrepreneurs. And I think that the change to new technologies may be more rapid and disruptive than many expect. Many of our current large institutions are dinosaurs, built on a petro-economy. They may be replaced, not rebuilt. We are going to need a generation of new entrepreneurs. Revolutionaries with business models.

What is the role of a teacher in "disruptive education"? Well, I have started to introduce myself as an Educational Arsonist. Now, before you report me to the university's Board of Governors, let me explain what I mean. And provide some examples.

A little background on my educational pyromania. One of my alltime favorite quotes, from Jack London, is "I would rather be ashes than dust! ...The function of man is to live not to exist. I shall not waste my days trying to prolong them. I shall use my time." The reference to ashes is that they are the byproduct of fire, combustion, and explosions, while dust is the byproduct of slow decay.

Keats wrote: “Education is not filling a bucket, but lighting a fire.” When I began teaching 5 years ago, this quote inspired me, and it still does. My best teachers lit me up. The worst poured water on my fire. This quote made me realize that my role was to be an educational arsonist, not a member of the faculty bucket brigade. Particularly when teaching budding entrepreneurs, who are so often told that their idea won't work, that they are too young, and that they should take a less risky path.

So, here are some stories.

DC is a business student who took a class from me two years ago. After spending some time abroad, she is back at CSU and asked me to supervise some research on how to use enterprise based models to improve secondary education for girls in the developing world. It is great to see the spark in her eyes as she talks about various initiatives around the world, what's working, what isn't and trying to figure out why. She has also plugged into a powerful group of women from leading NGOs and companies that want to help her out. Next fall, she will start with the Peace Corps. Over the summer, she has been offered a research job to continue work in the area. I look forward to the many worthy things this young lady lights up with her enthusiasm and passion.

I have already posted on Phones4Loans, but this group is blowing me away. This project is a wildfire of enthusiasm. Take a look at the rapidly evolving website. Tyler has put together a great intro video, the team has drop off locations all around town.... We have students from across campus working together. Talking to local businesses about e-waste and microfinance. Doing interviews. Setting up websites and supply chains. What a combustible mix.

Lastly, our GSSE students are getting ready to head off for the field project part of the program in May. We have teams going to Peru, Mexico, Nepal, Ethiopia, Zambia, Cambodia, India and Bangladesh. Working on energy saving technologies, protecting biodiversity, affordable green housing, and helping establish new markets. Take a look, if you can stand the heat.

This is why I teach. I hope it doesn't get me fired.

Friday, April 18, 2008

Pump It Up!

Good posts recently on Next Billion and Guy Kawasaki blogs on water. I'd encourage you to hit the links in both posts.

Guy's post highlights See-Saw and Merry-go-Round pumps. These get a lot of attention from the donor community and cause some grumbling from water veterans. The grumbling is about the high cost compared to treadle pumps, for instance. Do you want one Merry Go Round pump or xxx treadle pumps? They are for different applications- irrigation vs. drinking wells. The issue of cost is significant, as well as the fact that these play-pumps, by their nature, are mostly driven by charity, rather than commerce (which is a whole 'nother discussion, right?).

To me, there is something very intriguing about replacing drudgery with play as a design goal. Who will figure out how to reduce the price on making play a productive source of energy? How do we combine Paul Polak's "extreme affordability" with "playfulness"? One of our GSSE teams is working with Paul on a low cost microengine for pumping... treadle pumps often take several hours per day to operate, in hot, humid climates. More efficient than water buckets hauled from the river, but still drudgery.

Sprig Toys, a recently funded start up in Fort Collins, may be one of the players.* They have been working with Freeplay to develop battery free toys. These guys do so much more, and helped us a lot with the design of the new Envirofit cookstove. Without giving away any company secrets, I'd suggest you keep an eye on this creative group.

The other exciting thing I've recently heard about with water is Paul Polak's D-Rev project to do low cost water purification kiosks. I can't find much webinfo on this, so to hear about it you have to go to one of Paul's book pitches. Check here for an event in your area.
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* These guys are awesome on so many levels. They are the first start up I know to get significant VC funding with a comic book business plan! And they took our Envirofit birthday party up a notch, both in fashion and intensity.

Tuesday, April 15, 2008

Phones4Loans Update

Lots of progress. If you have a cell phone you want to recycle in Northern Colorado, please check out the website at http://www.phones4loans.org/ This is a great chance to properly dispose of your phone, help the student team, and provide loans to microentrepreneurs through Kiva.

If you like your phone, and don't want to get rid of it, or, you want to help out but aren't lucky enough to live here, you can still donate $$!

It's so simple. So do it. And tell your friends. And join our facebook group.

A Big Week for Envirofit

Newsweek's Green Issue: Check out #8 of Ten Fixes for the Planet

Discover Magazine: May issue. "Two Strokes and You're Out!"

It is fun to see others get excited about what we are trying to do. Right now, the team is keeping their heads down, and getting stuff done. Stove sales are starting in India, and we soon hope to have carbon financing in place for the motorcycle retrofits, which will help reduce the cost to Filipino taxi drivers. We now have over 3 million km of usage on the retrofits in the field, and they are holding up well, and delivering better than expected fuel savings.

Saturday, March 29, 2008

The Happy State of World Progress

Don't worry, be happy. Simple advice, and an annoying song (Bobby McFerrin, what were you thinking?). But not the type of advice one associates with economists, especially these days.

A growing number of economists, and even the Economist itself, are starting to feel that GDP just isn't up to the task of determining how we are doing. Since "what gets measured, gets managed" it is important to measure the right things about our world. Like happiness and health, in addition to income.*

WorldWatch's 2008 State of the World Report conains a nice summary of the field. In "A New Bottom Line for Progress," John Talberth outlines the approaches to improving and expanding both macroeconomic and microeconomic measurements of progress. The big problem is that "GDP gives no indication of sustainability because it fails to account for the depletion of either human or natural capital." Talberth provides some useful examples, including a disturbing graph showing the escalating GDP in Sudan during the Darfur genocide and in Sri Lanka after the tsunami. These disasters are simply not captured by the GDP accounting system.

While rising GDP is correlated to genuine progress in the early stages of development, Talberth proposes that there is a threshold effect, beyond which social and environmental costs offset the benefits of economic growth. He cites work in China showing that their recent economic growth may have been entirely offset by these costs in some provinces. Yup, it appears that those dang "off balance sheet items" weren't just a problem for Enron, but are a growing problem for our global eco(nomic)system. And we all own stock in the Gaia 401(k).

Talberth also provides a summary of new ways to measure progress for enterprises, covering certification, waste streams, eco-efficiency, and both work place and community well being. For entrepreneurs, his table of microeconomic indicators would be a good checklist for building a green business. And for companies starting to develop and implement sustainable business strategies, this report would be an excellent place to begin.


*Amartya Sen's book "Development as Freedom" is my personal favorite on this topic.

Wednesday, March 26, 2008

Welcome to the Big Blog Leagues

I take my blog screening duties seriously. Before I add any blog to my "Interesting Ideas" list, I read it. Fairly frequently. I ponder it's fit. It's intellectual contribution to the field. Whether the blogger has ever bought me a beer. Whether it is worth reading in ADDITION to my blog and the effort expended by clicking on the link. So, after much careful consideration, I have added a few:

1) Rob Katz has moved to Acumen Fund in NYC. A worthy group. By adding Rob, they have finally made it to the Big Blog Leagues.

2) Patagonia's "Cleanest Line" blog. After a lot of pondering on my part. There are some great posts, but some are underwhelming. Perhaps now that they have made it to the big leagues, Yvonne and crew will step it up a notch (but don't hire Rob). Being an Abbey fan, I loved "Get Some Ed in Your Head." And I still have a Patagonia fleece jacket that is older than any of my kids. That's sustainable. Their blog is not as good as their clothing, but it has potential.

3) In an act of pure nepotism, I have added KLD's blog. I mean it is a good blog on socially responsible investing, but it is a crowded field. However... they recently hired one of my favorite children. One of the independent ones. One who no longer requires financial support from her old man. Smart firm. As with Patagonia, they are on probation. But they appear to be worthy.

One I haven't added: "What Sucks? The All Purpose Guide to Everything Disappointing and Sucky." Too bad it is a comedian and his rants about celebrities. Instead of an inspiring site like this one. Maybe we could partner up?

And, if you haven't checked out the new New Belgium website, try it. Clever and Creative. I feel lucky to work with this crew (and to drink their brew). But it's not a blog.

My most loyal readers (that's you Mom) may notice I finally upgraded to the new version of Blogger. So my picture is bigger. And the wrinkles of wisdom are more noticeable. That isn't why I changed. I changed because I thought it would be easier to do an iGoogle gadget, which would make it convenient to find out when I occasionally post. No clicking. No wasted calories. No waiting near the digital mailbox. Alas, I have yet to figure out how to do this. Which sucks.

Monday, March 24, 2008

Phones4Loans and New HEROes?

Students in my Social Entrepreneurship class are working on a very cool project, Phones 4 Loans. Last year, I gave students the option of doing an impactful project in lieu of a final exam. They got student pledges to reduce CO2 emissions by over a million pounds. In just a few weeks. I was impressed. This year, we got started on the class project earlier in the semester.



Just like Butch Cassidy's knife fight*, there are few rules for an entrepreneurship project. The idea was to figure out a way to get money (by cleaning up some "bad") and then use it in a worthwhile way (doing some good). Oh, and since it was a business school course, it had to be an enterprise, not just a project. Not necessarily a company, but something that could grow past the end of the course.

The students were a bit worried about the pledges from last year. Would people really do what they said? These students wanted real impact they could see and measure. We discussed business models for H.E.R.O.s, those Human and Environmentally Regenerative Organizations that do good by cleaning up bad, so that no matter how much they grow, the earth is better off. We brainstormed, we intersectionalized, we did mock projects redesigning i-Products for Steve Jobs (I still don't think they believe that he calls me all the time right before class).

Then they saw Chris Jordan's artwork of the 426,000 cell phones discarded everyday. It hit a nerve.

"Let's collect and recycle cell phones."
"I think you can get money for some of them."
"Let's use the money to help do good."
"Hey, let's do Kiva loans, that way the money keeps rolling over and helping people."

Thus was Phones4Loans born. As with many start-ups, this one was formed by combining existing puzzle pieces. The Medici Effect and all. Companies like Collective Good have been set up to raise money for many organizations. But they are not yet linked with Kiva.

I will keep you bleeps posted. If you have an old cell phone in Fort Collins, look for our collection boxes around CSU campus and at local merchants. If you are outside Fort Collins, start a group doing the same thing. This is open innovation... the more the better. We are happy to share what we are doing. You can be a HERO too! Like Butch?
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*OK, this is still one of my favorite scenes ever. And it helped me figure out how to embed a YouTube video in my blog. Listen to Butch. He is an entrepreneur. He has built a team. To make profits. He has been busy, and gone a lot. He is in a changing industry ("things are different now, you gotta plan more"). Looking to make a profit if things go against him. And a healthy disrespect for rules. Butch is the man.

Sunday, March 23, 2008

The Matrix

When you are a business professor, you are supposed to use a 2x2 matrix to explain your ideas. This past week I was in Dallas at the NCIIA March Madness for the Mind, a conference of collegiate entrepreneurs and engineers. Several asked me for feedback about choosing a business model for their ventures. So here is a matrix that may help entrepreneurs designing a new venture: (i) select a business model, based on the income level of their market and whether the problem is a chronic one or an emergency/crisis; or (ii) select a potential partner if they are working on a solution that goes across quadrant boundaries (particularly vertically). It should be read in conjunction with my Hand-Up and Handout post of March 15 to make much (any?) sense.

With this matrix, I am focusing on business models, not legal structures. For example, if a new venture's primary mission is to provide emergency medical aid for poor people, a donor based charity model may work best. It might also suggest that this entrepreneur could partner with ventures in the other quadrants if they occasionally need to provide emergency medical aid in wealthier markets. As discussed in the other post, it may take several of these approaches to best deal with a problem in a region that contains multiple market needs. Entrepreneurs should keep in mind that the BOP is a "big picture" concept and should avoid the trap of describing countries (India, Brazil) as BOP markets. Most of these countries contain many market segments, often within the same city block. It may make sense to partner (or have a different business model) just to serve that city block, as well as the many customers with that need in that region.

This matrix implies that Millennium Villages Project might be better organized as a hybrid social enterprise, in that the challenges it is addressing are chronic in nature. While the combination of challenges (hunger, AIDS, etc.) may contribute to a feeling of "crisis," the underlying problems are primarily chronic ones of agricultural practice and markets, which may be exacerbated by a crisis such as drought. The matrix would suggest that if MVP is in the botton left, but has occasions to deal with crisis isssues, it could move vertically up to the upper left quadrant for a partner.
This matrix also implies that organizations such as IDE, Selco and PSI may be more successful, in the long run, addressing chronic issues confronting the poor than those organizations that haven't fit their business model to the quadrant.
Is this a helpful way to think about business models for these markets? Can you think of examples of diagonal movements for partnerships? Who will still be serving the poor in rural Africa in 10 years- PSI, MVP or some partnership between the two?