Friday, December 31, 2010

Charity 2010

Last year I posted some details on our family's charitable giving to non-profits. So what's new for 2010? Where are we headed for 2011?

As some of my bleeps know, fortune smiled on me this past year, and I am now involved in making philanthropic decisions on amounts of money far in excess of my dreams. This work with the Bohemian Foundation, as part of an impact investing initiative, has been wonderful and we are off to a good start. I hope we will soon be sharing details of our first funding decisions. While I can't name names, I can say I am excited about how we are starting in this field... and the organizations with whom we are starting.

But back to our family decisions. For several years, we have reviewed our past gifts, and asked family members to identify both new charities, as well as those who may not make the cut in the coming year. As with prior years, we focus on 5 areas for our giving: Health, Income Generation, Environment, Education and our Local Community.

What's new this year?

1) One of the most provocative books I have read in recent years is Peter Singer's "The Life You Can Save." I think this is a great book to think through the "whys" and "hows" of being charitable. As part of this work, Peter has posted a pledge to answer the question: "Am I willing to do my part in eliminating extreme poverty?" He suggests levels of giving for Americans. This year, our family has used his target of 5% for our giving. Most, but not all, of our contributions are aimed at the addressing extreme poverty. Our other contributions go toward the environment and local organizations.

2) We have added some new organizations this year:
Akili Dada - we wanted to increase our giving to education, specifically focused on girls. Thanks to sister Sara Hall for recommending this organization.
Root Capital - an innovative organization which finances farmer cooperatives in poorer communities.
The Citizens Foundation - a Pakistani educational organization that also conducted relief operations following the floods. We try to support local aid organizations, and this is one that was a USA registered charity. Thanks to friend Asad for this recommendation.
IDE - Embarrassing. We have given to IDE for years. Last year, somehow, we forgot. I hope Paul and Al will forgive me. They do great work around the world on developing technologies that increase income for poor farmers, as well as building markets to distribute these technologies.
Pratham - providing education for poorer children in India. Recommended by Peter Singer and Rachel Glennerster for their excellent, measurable results.
National Foundation for Teaching Entrepreneurship - Great organization referred by my friend Mark Albion. Works on promoting entrepreneurship to high school students in disadvantaged US communities.
Food Democracy Now - trying to fix our broken food system. One of Mariah's suggestions.

3) We increased our level of giving to:
Doctors Without Borders - one of the best aid organizations for disasters... and 2010 had several new disasters (Haiti, Pakistan) as well as the ongoing disasters in conflict zones.
VisionSpring - a simple way to improve incomes of the poor- inexpensive reading glasses.
Central Asia Institute - Greg Mortenson's work on education in Pakistan and Afghanistan continues to impress us.
Vittana - an innovative approach to providing student loans for higher education in Latin America. Check it out and make a loan!

4) We did all our giving online this year. From the number of last minute appeals via email, facebook and twitter this must be the big trend for small donors (like us). But there is great variation in how well prepared various charities are to do this (umm... it is almost 2011... let's get on it, folks). Some still have a limited presence on social networking sites (umm... it is almost 2011... if you aren't on facebook and twitter yet... why not?). I thought Nature Conservancy had one of the best interfaces- a personalized link on an email, the ability to easily promote the organization on social networking sites, etc. I was also intrigued by the "Causes" approach on facebook- each step told me how much more the cause might be able to raise if I only shared on facebook or sent out emails to my friends. To me, it went too far, but I am an old gray beard. My guess is in another year or two I will be fully on board.

5) Here is how we allocated our giving this year. We increased our overall giving by 40% (not only was Peter's book provocative, it was EXPENSIVE):
Education: 37%
Local Community: 22%
Health: 19%
Income Generation: 19%
Environment: 12%

What's up for 2011?

In both my professional and family roles, I have been challenged to describe what impact might result from two competing donations/investments. What is the relative impact of a donation to Pratham, TCF or CAI? How do we answer the questions about who to add and who to drop from our giving? Or where to increase or decrease our giving? As the mutual fund ads say "Past results are no indicator of future performance." I will continue to watch GiveWell, J-PAL as well as GIIN/IRIS (for those that participate). At least with mutual funds, you know what past performance is. The charity field still works mostly off of anecdotes and hard-to-compare metrics. I am not sure there is much incentive to change, or at least to be the first to change. But we shall see.

I have also continued to learn in the past year how complex it is to be an effective donor. Part of this is research, part is monitoring, part is listening. I am sure I will learn much more in the coming years. And late in each year, I will try to share it with my bleeps.

Do good, and be great at it. See you next year!

Sunday, November 14, 2010

Rediscovering Search

Please check out the wonderful Slideshare "Creating Start Up Success" by Alex Osterwalder and Steve Blank which contains 5 rules for start up success. The basic concept is that no business plan survives the first contact with customers, and that entrepreneurs should spend a lot more time developing their customers and business model than a fancy business plan.

This is not a new idea, but it is contrary to the dominant logic of start ups (which the slideshare quickly covers).* Folks like Steve, Alex and Eric Ries are now presenting this concept in a compelling way, the "lean" start up, and it seems to be getting more traction every day.

I think part of the reason it is getting more traction is that it is getting more right every day. Changes are disrupting the way start ups are being started, operated and financed. Start ups, in general, are getting cheaper to start, at least in many industries. Technology, global talent, more distribution options help drive this. The balance of power between founders and funders is changing. If you don't have to raise millions of dollars and give up a chunk of your company, why would you? The last time the balance shifted (the internet craze), VC investors paid more to play. This time, they may not get to play.

Anyway, the reason for this post is not to regurgitate what Steve and Alex are doing, or speculate on the state of the VC industry, but instead point out that there is a common thread between the lean start up work and the work of William Easterly. In White Man's Burden, Easterly categorizes international development approaches as being either those of the planners or searchers. He is critical of the failure of the planners' approach, and hopeful that searchers will do a better job on reducing poverty, disease, illiteracy and other seemingly intractable challenges of the developing world. Both Easterly's critique of the World Bank, and Blank's critique of Motorola, show planners who fall in love with their theories can burn through a lot of other people's cash for far longer than they should. This isn't to say entrepreneurs shouldn't plan, just that their planning should be about how to search, not on polishing up a 40 page glossy business plan.

While Steve and Alex's advice is mostly aimed at mainstream entrepreneurship,** it's emphasis on searching is key to BOPreneurs as well. Many times, entrepreneurs tell me that they need money to get started on their wonderful, world changing ideas. But that usually isn't so. As Andy Hargadon is fond of saying, there are plenty of $5 and $50 experiments to test your business concept. Applying the lessons of the lean start up, and using the business model canvas, can help an entrepreneurial team map out their assumptions, try on different prototypes, and test those at low cost and with lower consequences. I can't see any reason to vary the approach for a BOP start up.*** If anything, it is more critical for a social entrepreneur. If a new web app fails, no one is going to go without food or water.

OK, gotta go. I am working with our GSSE students on just this topic tomorrow. We will discuss the Envirofit case, and the question of the day is: are start ups pretty when they are born? Usually not, in my experience. I sure wish we had some of these materials to guide us at Envirofit back in 2003-04. We certainly made a few mistakes, particularly in customer development. And we are still learning every day. One could even say "searching"....
*In his book, Four Steps to the Epiphany, Steve has a number of examples of the dominant model, which is product development focused- have a cool idea, get some people working on it, do some market research, write a business plan, raise money... and then see if any customers will buy it or if there is a scaleable business model. I might quibble and say this is more the dominant model of the Silicon Valley Venture world, and that many outside the valley have learned to bootstrap or at least finance without venture capital, which requires earlier contact with customers. But let's not get distracted with that here.
** Alex has a nice presentation on social entrepreneurship, and Steve and Alex blogged on one early stage BOPreneur, PeePoo. I expect we may see more in the future from them on this topic.
*** I do want to emphasize that when BOPreneurs "get out of the building" they must go all the way to their market. Sure Kiva was started at Stanford, but only after the co-founders spent time in Africa, and partnered with local micro-finance organizations. Similarly, Grameen Phone, profiled in Alex's book, was very much a Bangladeshi rooted venture. I am dubious of any venture that isn't rooted in the field, with some co-founders who know their way around on the ground. This raises some additional aspects of customer development that aren't touched on in Steve or Alex's books. Luckily, you can get started with Paul Polak's book and dive deeper with D-Lab, IDDS or GSSE programs.

Wednesday, November 10, 2010

My Bottom Line on Bottom Lines

I am fortunate, in that I know some wise, interesting people. And some even answer my phone calls. One of them is Jill Bamburg, who is one of the founders of Bainbridge Graduate Institute, and who has both a broad knowledge of sustainability and many deep, provocative ideas on what needs to happen to "Change Business for Good."

Jill talked to my class today about her book, "Getting to Scale," and shared some ideas on what she thought needed updating, and what was still very relevant. Good stuff. One of the things she mentioned was that she was thinking a lot about the usefulness of the "Triple Bottom Line." She thinks that People, Planet and Profit are all important aspects of a good business, but that sometimes it tugs entrepreneurs (and intrapreneurs) in multiple directions. It makes it hard to determine trade offs. What if, she asked, there was just one "P" of purpose,* and the other P's were viewed as constraints? Would that be a more useful model for designing a beneficial business model?

Well, it's hours later, and I am still thinking about that extra "P". I have used the triple bottom line for years as a way to initially analyze a business idea or design a business model, but it does lack the crispness of a single focusing factor. Recently, I have been questioning what seems to be the deep seeded need of homo economicus to have a "bottom line." I mean, I lived for several decades without knowing what a bottom line was, and am not sure I am better off now that I know about three of them.

And if focusing on the bottom line got the planet into this mess, is focusing on three of them going to get us out of it? Maybe. But is a periodic reckoning what business is about? Are bottom lines what drive the innovation we need? Do people get up in the morning inspired by bottom lines? To me, entrepreneurship is more about route finding and adaptation than score keeping.

Maybe it is my outdoor background, but I respect businesses that take the cleanest line.** It requires practice, it requires crux moves, it requires trusting partners, it requires adapting to changing conditions, it requires economy of movement and it requires persistence. Not sure it requires metrics, or lots of people watching or offering advice from below. But it does require focusing on the journey, not just the destination.

Once you have locked in on "why," "how" becomes very important. While the end often does not justify the means, the means almost always affect the end. If you "fudge" on your eco-friendly product or act inconsistently with your values, you get knocked off line, and end up at a very different place than you intended. The ability to recover, and stay on line, separates the best from the rest. This is not to say, however, that having a clean line avoids difficult, high risk or chaotic periods. But with proper focus and training, I think it improves the chances of avoiding the the most dangerous threats, and recovering from mishaps.

As you scope out your line, keep in mind who it is for. It must motivate your team, and it must resonate with your customers. Investors? Do you need them to make it happen? If so, be sure they understand and support your line.

While expeditions used to take dozens or even hundreds of people, and large business ventures (railroads, Ford, IBM) took thousands, much lighter venturing is possible now. In the mountains and in business, the size of the venture and scale of its impact are delinking. Some may even see an inverse relationship. So choosing the right partners and packing light are important. Lean is the watchword.

So my botton line? Focusing on a clean line helps entrepreneurs think about making both the journey and the destination worthwhile. It can be helpful to use those triple bottom lines to design and train for your clean line, but once you have that line, you may be able to lighten up by tossing out all those bottom lines, and instead focusing on how your venture is going to get to where it needs to go.*** Plain. Simple. And very hard to do.
* Jill does not claim "purpose" as her discovery. Peter Drucker, Jim Collins and Rick Warren have all tread the "purpose" path. And I hear it was the buzzword at the recent Net Impact conference.
**not even original.
*** might I suggest a BHAWG?
P.S. I also like her idea of design constraints, which are often great ways to enhance creative problem solving. Perhaps another blog topic.
P.P.S. I am also bothered by attempts to out "green" others. Adding new lines or new adjectives to the old lines. Blended bottom lines, integrated bottom lines, quadruple bottom lines... is this really helpful? Or are these merely attempts to sell consulting services or yet another book on the topic?

Monday, October 18, 2010

Green Rankings & Grade Inflation

Newsweek just released its green rankings for 2010 for the top 500 US based companies, as well as a global 100.

Dell placed first of the US based companies, and IBM topped the global rankings. Each received a 100. Maybe it's just me, but I think the esteemed panel was a pretty easy grader. And as an educator, I understand how pernicious easy grading can be. Grade inflation may make people feel good in the short term, but the lack of rigor impacts society in the long run. I hate to break it to you, but just as we don't all have above average students in our classrooms or above average drivers on our roads, we don't have above average sustainability efforts in our large corporations.

I understand that the methodology means the "100" is relative to others in their industry, but it still carries a connotation of A+. And I don't think any of these companies deserve an A+. If you take a look at Dell or IBM sustainability reports, you will see that they realize they have significant impacts on our planet, and much to work on. The problem with grading relative to others is that you end up with a "queen of the pigs" syndrome. Too often it selects the outstanding example of mediocrity.

There is no doubt that Dell and IBM are leaders in our current economic system which has recently emphasized reducing impact on the environment and being more socially responsible. But these companies are in no sense regenerative. They are still working on reducing negative impacts on existing ecosystems and communities, not recreating systems that will have positive impacts.* Doing less evil, while laudatory, doesn't earn a 100 in my view.

Instead, I'd ask "would the world be better off if this company made and sold even more of their stuff?" This query goes more to the essence of the business. Its reason for being. Perhaps Dell and IBM really do create high net value across their product offerings of disposable computers and consulting services. But companies whose core essence is "doing good" should rank higher. Those that provide environmental benefits such as cleaner air, purer water, or healthier ecosytems, or provide societal benefits such as education, health services, or ecofriendly energy. Those who truly have cradle to cradle supply chains, where their "waste is food." These are the ones for which I can answer "Yes, if they were more successful, the world would be better off." To my mind, there are no A+ companies under my scheme either, but I think it is a more useful question than comparing relative "green-ness." I don't give an A+ for good answers to the wrong question.

Perhaps I am quibbling over the A+ issue, and instead the focus should be on the bottom of the class. Some of the food processing and utility companies there, such as Monsanto, ADM, Duke and Edison, continue to underwhelm. These seem to be the trouble makers every year. Maybe Obama should start a "No Company Left Behind" policy for these poor performers. Others might argue that they should be put on probation, or expelled. And what about Peabody Energy? It seems like they never even came to school. I wonder if they think their absence was excused?

I tried to go back and look online at the 2009 Newsweek rankings, but interestingly, they all now link to the 2010 rankings (I do see they have maintained ranking Wal-mart above Whole Foods, which created a lot of controversy last year). I think I have a hard copy at home, and will take a look. My guess is that a lot has changed... which makes one wonder how sustainable one's sustainability ranking really is. I wonder how last year's "top ranked" companies feel? Has their performance slipped, or did the grading system change?**

So, kudos to Newsweek for tackling what is a slippery problem. They worked with experts at TruCost, and had a strong panel of advisors. But grade inflation seems to be a problem that is being felt outside of our schools, and I think it may be even more dangerous here.

A planet is a terrible thing to waste.
* I realize that relative to current competitors, it might be more eco-positive to buy a Dell computer compared to a competitive product. But the business model is still based on obsolesence and me replacing my computer every 2-3 years, rather than providing me with eco-effective/efficient computing services.

** For a more sanguine (and detailed analysis), check out Joel Makower's blog on the rankings.

Saturday, October 02, 2010

Venture Gapitalist Guide for SOCAP10

In anticipation of SoCap, I thought I'd share my thoughts on several types of venture gapitalists, where they may be observed next week, and share a few concerns I have as this social capital ecosystem evolves. I am excited by the opportunities to be around so many leaders, but am also a bit anxious about the size of the crowd and the many great sessions which often overlap. So this post is also a way for me to organize my tour of the SOCAP zoo this week.*

The early days of the social capital ecosystem started with venture philanthropy in the 1990's, which grew from the intersection of philanthropy and venture capital, and resulted from some frustration as a new type of wealth began looking to make an impact in communities. Mario Morino was (and is) prominent in articulating the goals of this approach, as well as putting his money behind his words, mostly in domestic organizations. A more global approach began with the emergence of Ashoka, followed later by Endeavor, the Skoll Foundation, Dasra and Acumen Fund. And more recently, the regional impact investing funds in developing and emerging markets, such as Omidyar Network, Gray Ghost family of ventures and Aavishkaar.

I am still in the early days of understanding this ecosystem and how the pieces fit (or don't), but I do see some different niches. Of course, there also may be some invasive species as well as some shape-shifters which defy categorization (intentionally or not). BOPreneur Tevis Howard recently observed that his screen is Impact-First and Finance-First investors, and while this is a good first cut, I think a few more distinctions can be made.

Herewith, my early notes (to be supplemented with more detailed sketch books from SoCap?) on classification**, as well as suggestions for where these might best be viewed at Fort Mason:

1) Philanthropic source/philanthropic approach. The Gates Foundation is a good example of this approach. Innovative approaches to impact, but grant based with an occasional PRI. These will be best observed in the Tactical Philanthropy track, where they may feel some evolutionary pressure from moderator Sean Stannard-Stockton. My concern about this niche is that metrics are being emphasized at the expense of impact. This is not a chicken and egg problem; it is cart before horse. IMOSHO*** impact must drive metrics, not the reverse.

2) Philanthropic source/investment approaches. Acumen Fund is a leader here. Money is donated to Acumen, which then makes investments in social enterprises. I think they would belong in Tevis's Impact-first category. If successful, they recycle the capital into a new round of enterprises. Other innovative approaches in this group include Lemelson Foundation (working capital) and Microcredit Enterprises (guarantees). Concerns here? Scale, pressure from new species that promise some return of (or even "on") capital, and continued ability to invest in portfolio companies as their capital needs grow. How patient will their capital be? Will anyone copy their model in other markets (Acumen invests in India, Pakistan and Kenya)? Is imitation not the sincerest form of flattery (not to mention a viable competitive strategy) in the impact investing space? Time will tell, of course. But time's a wasting. These species seem the most ubiquitous at SoCap, and they may be viewed in almost any of the tracks as well as many of the keynotes. The astute observer may notice different behaviors in these tracks, as well as different displays for potential mating opportunities.

3) Investment source/investment approaches: as this video of Aaviskaar shows, these funds raise money from commercial sources and provide commercial returns and exits, but with returns below those expected of traditional venture capital firms. As Tevis observed, these can fall into Impact-first investors, or Finance-first investors. The recent fracas over the SKS IPO did an excellent job of highlighting the concerns for this genus. The balance of greed and altruism can be a difficult one, and changes in ownership or leadership could result in dramatic and erratic behavior changes in these species. The differences between these species, and perhaps, some ritualistic and competitive displays of dominance, will best be seen in the Impact Investing tracks.

4) Hybrid sources and approaches. Within the Gray Ghost family, one can observe several mutualistic species. Village Capital is based on philanthropic capital to crowd source seed investments in social enterprises, Grey Ghost Ventures invested $10 million in private funds into 8 ICT firms focused on "goods, services and financial access to low income populations," and ISFC provided loan capital to affordable private schools in India. You are most likely to spot these species in the New Money track, and I can guarantee a sighting of several at the Seed Investing session on Tuesday afternoon.

And don't worry, it is safe to get close to these venture gapital species, and even feed them. In most cases, they are quite friendly.****
* No disrespect intended. A zoo is a place where species are displayed out of their native environment, right? You just have to keep in mind that behavior is different in the zoo: polar bears are more dangerous in the wild, and monkeys throw a lot more poo when observed in confinement. Also, due to expense and distance, the full diversity of the social capital ecosystem won't be represented. Nonetheless, Socap is probably the best zoo of its type. I mean, I could have called it a circus. And I understand that I am part of this zoo, and will try to avoid poo-flinging at all costs.
**My classification is pretty basic. Source of funds and how those funds are then granted or invested in social enterprises. Apologies to both Darwin and Linnaeus.
***In My Oh So Humble Opinion ;-)
**** BOPreneurs are urged to approach them in an open and friendly way, and to avoid making the "ask" in the first 30 seconds of conversation. Too forceful a greeting has been known to provoke fight or flight responses.

Tuesday, September 21, 2010

Some Thoughts on Venture Gapital

My bleeps know I have been grappling with the idea of Venture Gapital for some time. Moving forward, in addition to covering BOPreneurs in this blog, I will also start to highlight Venture Gapitalists of note. In effect, to try to look at both sides of the table in this evolving dialog to build a healthier ecosystem of human, financial, social and natural capital. As always, bleeps, I'd appreciate your suggestions, nominations, props and criticisms. And I look forward to learning more at SoCap10 in a few weeks.

To kick it off, I'd encourage you to read Jonathan Lewis' remarks from last week, where he shares six operating principles for fighting poverty from a market perspective. More importantly for this post, he concisely unwraps some major differences between functioning financial markets and those in which the poor live. Venture gapitalists should ponder these before taking action.

In functioning markets, a distinction is made between public and private goods, between street cleaners and vacuum cleaners.

• Where the poor live, private investment is often the only investment. The market, quite literally, becomes the sole provider of the common good.

In functioning markets, survival of the economic fittest is a necessary consequence of progress. Some businesses succeed, some fail.

• Where the poor live, the only ethical economic policy is not creative destruction, but creative opportunity.

As we cannot bomb our way to peace and prosperity, we cannot finance our way to economic justice. In the end, the poor must have the power to speak up, speak out and speak for themselves.

No economic theory and no marketplace, whether functioning or failing, can change a basic truth. As individuals, we are each blessed, and burdened, with a moral compass. Free markets mean each one of us has the freedom to make ethical choices.

Is social entrepreneurship about creating a viable asset class to make money in developing markets or about building a social movement for economic justice? Are we advocates for the poor or advisers to the well-off? (emphasis added).

Jacqueline Novogratz, founder of Acumen Fund, was recently interviewed by David Bornstein of Dowser on "Investing to Change the World." Acumen sees a need for "patient capital" that is, I guess, a bit less relentless in seeking returns (their view/my view). I think she does a great job of outlining the challenge of venture gapital:
I said, 'You are very comfortable with charity, seeing a 100% loss, send the money out and you never see it again, and you justify the good it’s doing in the world even if your metrics are fuzzy. Or you’re comfortable seeing 20% returns on your investments with no social impact, and potentially some harm. But you are so uncomfortable in this middle section, where you might get the money back, might not, or you might lose 20%.’ And he said, ‘Yeah, because you’re playing the game of business but you’re not taking it seriously.’
And I said, ‘I never said we were playing the game of business. We’re playing the game of creating change and we are using business as a tool. We are incredibly serious about these businesses succeeding, but we never forget that these businesses are about tackling poverty.' (emphasis added)

Sunday, September 12, 2010

Empowerment or Autonomy?

I am reading Dan Pink's book "Drive." It discusses how people are motivated and inspired (or not) by what they do. While it doesn't explicitly address entrepreneurship, it does have some interesting applications to BOPreneurs.

Where this came home to me was when the author bashes "empowerment" as being an empty phrase, based on old methods of motivation having little to do with creativity or purpose. In my experience, "planners" seem to talk more of empowerment (as though power is a gift from the developed world to the BOP) while "searchers" look for local input and approaches. Instead of empowerment, Pink believes motivation comes from having "autonomy." This means work is more motivating if it is self-directed in terms of the four T's of "time, task, technique and team."

If you plan to use people to sell your product or provide your service to BOP markets, do you talk about empowering women or micro-entrepreneurs? Perhaps it is time to take breath and reexamine your assumptions. The next time you hear a proposal to empower some group or community, it may be useful to take the perspective of respecting their autonomy instead.

Tuesday, August 31, 2010

Ten Tips On Elevator Pitches

Two of my favorites, Chip & Dan Heath, just posted six great tips for Elevator Pitches [those brief, compelling and credible descriptions of your venture that will motivate your listener to (a) tell others that they think could be interested/helpful and (b) ask you to tell them more]. Here are their six:

1) Think short.
2) If your topic is complex, use "anchor and twist"
3) Don't wing it, script it.
4) "Why" before "what".
5) It is mandatory... to include a story. (this isn't exactly the way they phrased it, but this way rhymes)
6) Check out other pitches for inspiration.

To their list, I would add four more, to make it to that ever useful "10 tips":

7) Know what you want, and build in a soft "ask" to every pitch. This anchors the idea for your listener so they will think about who else they might want to tell about your idea. Whether you see yourself as a social entrepreneur or a "plain old" entreprenuer (irony intended), it is important to know what you want, and ask for it. Your ask is also a gift- you are providing the listener with an opportunity to get involved with something AWESOME... your venture. Don't make it a "guess what" gift. Be clear about the opportunity!

8) Tell "who"- people tend to overvalue the idea and undervalue the team. Don't. Ideas are a dime a dozen. Worthy ideas with strong teams are rare and valuable.

9) Use questions as well as statements. This shifts your audience from questioning and challenging your idea to wanting to assist you. (Paul Graham gets credit for this framing idea)

10) No matter what your pitch is, "how" you deliver it is at least as important as what you deliver. Are you passionate? Formal or informal? Team based? Think through all the non-verbal aspects of your pitch. Videotape yourself. Seriously. You get one chance to make your best impression.

When Andy Hargadon and I do our session on pitching new ventures, we say: "if you can't say what you are doing in 150 characters or less, you don't know what you are doing." Provocative? Yes. But in our experience, the ability to describe the essence of a venture is indicative of a successful entrepreneur. This short statement can then be used as a framework around which to build the rest of your pitch.

Finally, remember a big part of the pitch is to provide for retelling. If you have ever done the class room exercise of whispering some words to the person next to you, who whispers to the person next to them, etc., you know how garbled a message can become through retelling. That is why being clear, concise and compelling is so important. You are not just creating an elevator pitch, you are designing an elevator pitch that will be retold. Test your early prototypes. How well is your message retold?

Friday, August 27, 2010

Big Shorts and big LIEs

The Big Short, by Michael Lewis, is a great story. But it is also awful. To hear about the arrogance and ignorance of those who profited from the subprime mortgage market is at first unsettling, then disgusting. Unfortunately, in my experience, Laziness, Ignorance and Ego are often at the root of many such stories. The next big short will probably be on the next big LIE.

The guys that shorted the subprime market- Eisman (and partners at FrontPoint), Burry, Lippman and the fellows at Cornwall Capital- are the heroes of Lewis's book. But that is because his yardstick is one of using maverick cleverness to make a lot of money. While their big sting targets were Goldman Sachs, AIGFP and other Wall St. firms, I don't feel any joy in their final win. Nor did they. Eisman compared it to being like Noah- he was on the ark, but not happy about the flood.

If I understand it, the protagonists were offended by the exploitation of the poor by the subprime market, and disliked the greedy traders on Wall St. They made a bundle (so did the greedy traders). But what have they done with their "winnings"? They aren't Robin Hoods, from what I can tell. While they lightened the bank accounts of some of the big firms, nothing they did helped rebuild the decimated neighborhoods that were hurt by the whole scam. As far as I can tell, they haven't given back any of the loot that represents what communities lost with the housing collapse, or families lost with the resulting recession. Probably "Hey, I pay my taxes" is sufficient for them.

In the introduction, Lewis bemoans how his first book, "Liar's Poker," had become a "how to" guide for college students wanting to get a job on Wall St., rather than the cautionary tale he had intended. Will the Big Short become a "how to" guide for those wanting to profit from the next big LIE? Eisman says it could be "for profit education." And I bet someone got rich selling BP short, too (and that trade may not be over). BP CEO Hayward certainly seemed to be leading the LIE lifestyle and building an organization based on LIE.

One interesting angle of the Big Short was the work these guys did to come up with ways to short the American housing market. It wasn't easy. If there are things you think are fundamentally intolerable or unsustainable in the current system, how would you short them? Don't like coal fired power plants and global warming? Do you go long on renewable energy investments, or short the coal companies and utilities? How would you short poverty in Sub-Saharan Africa (or if you are Bill Easterly, how do you short foreign aid in that region)?

It is an interesting perspective to consider, as one doesn't need to look far to see Lazy, Ignorant and Egotistical policies, people and organizations at work. These characteristics are often those underlying "conventional wisdom" and "business as usual." Perhaps the field of social entrepreneurship needs a few shorts, as well as "change makers," to really make a difference. As I have said before in this blog, entrepreneurship isn't always about playing nice.

If you do figure it out, I'd ask that you contribute some portion of your earnings to the social or environmental problem that motivated you in the first place.
If you'd like the short version of the story, here is an NPR's Fresh Air version.

Monday, July 26, 2010

Colorado's Super #Socent Summer

OK, you all know I am a big fan of Colorado. I love living here. But this week, I REALLY love living here.

Why? Because this place is going off. Since late May, the Unreasonable Institute has been down in Boulder, building social enterprises with the potential to impact 1 million people. An amazing group of people. On Saturday, they are doing their final pitches. Buy your tickets here.

And in early July, sixty plus innovative people from around the world came to CSU to be part of the fourth International Development Design Summit. They will be giving technology demos and updates on their projects this Wednesday in Lory Student Center Ballroom at 2 pm. Special guest evaluators include Marc Manera from Acumen Fund, Patrick Maloney from Lemelson Foundation, Phil Weilerstein from the National Collegiate Inventors and Innovators Alliance, and the inimitable Paul Polak of D-Rev and Windhorse.

If you are into social entrepreneurship and you are anywhere near Colorado, I'd encourage you to attend at least one of these events. Can you say "epicenter"? Seriously, this is a great way to acquaint yourself with this movement and some amazing people in the middle of it.

Friday, July 23, 2010

Porcupines. Troublemakers.

When Paul Polak goes to events, he often writes "Troublemaker" on his name badge.

But I think he is really a porcupine. Bursting bubbles of confusion wherever he turns. He calls it as he sees it, and doesn't sugar coat his advice. Check out his new blog. You may not always agree with him (I don't), but he will often change your point of view and get you to question a few more of your overly precious assumptions. While it doesn't always feel good to tangle with him, one does recover (although you may be tender for a few days).

Porcupines and troublemakers are a rare and important part of the social enterprise ecosystem (much more important than cheerleaders). We could use a few more, and should treasure the few we have.

If you haven't had the opportunity to meet Paul, read his book and subscribe to his blog. And maybe when you meet him, his badge will say "Porcupine."

Thursday, July 08, 2010

Start up

We launched v4.0 of IDDS yesterday. While the core offering features remain (Innovation through Diversity, Creative Capacity Building, Community Building and Innovating for Impact) we have added additional functionality- new faculty (Jill, Bryan, Andy), new participants and a stronger emphasis on dissemination.

Borrowing from Jim Collins, yesterday started with "First Who"... introductions of all the amazing people who have travelled thousands of miles to participate. Then "What"... quick descriptions of the projects and Amy discussing the history and philosophy of IDDS. From there, people started at Market Activity, where they needed to design, manufacture and market products for the IDDS community. There is even a form of local currency: "briquettes."

After lunch, Bryan Willson and Paul Polak presented case studies on approaches to disseminating products at scale, discussing Envirofit (cookstoves) and Windhorse (water), respectively.

The day finished with some fun, one-minute infomercials from the teams on their Market Activity products. From World Cup attire to room accessories, there was a lot of creativity on both the ideas and their promotion.

Designing by Making... Learning by Doing

Buying... "That will be 5 briquettes" (Amy as shopkeeper; Daniel from Global Cycle Solutions as buyer)

Paul Polak discussing some of his 100 million potential customers for clean water...

Tuesday, June 29, 2010

Starting to Finish

Past IDDS'er Joe Agoada has been on the road in Africa, bringing the World Cup to school children in remote areas. The tour will end with the World Cup finals. Joe's recent update on Kampala 2 Capetown got me to thinking.

Often, we think of a start-up as a "built to last" organization- one that should endure and persist. But initiatives like Joe's are also instructive. Start ups can be events and tours (a series of events). They still have business models, just ones with a set finish line. The metaphors come from movies, sports, and "special forces" in the military. Perhaps more start ups should start this way- without the assumption of permanence. Ceasing to exist is often what happens to a start up, but it isn't something that is usually planned or discussed openly. A venture's planned obsolescence is rarely a section in a business plan.

Their are many implications for founders and funders. Less time spent planning and more time doing. The goal of finishing, not continuing. At the end, people are paid off and move on to the next venture. Instead of staying together and hoping that lightning will strike twice for the same team.

This doesn't mean that the venture can't shape shift and become more permanent. Successful events become fixtures- whether Burning Man, the World Cup or the Rolling Stones. But this could be an approach that is based on evolution instead of planning. Design focused on the organization, not the strategy. And it would be paradoxical if the behavior of "starting to finish" leads to behavior that is more likely to lead to survival: faster, leaner, more responsive start ups.

Sunday, June 13, 2010

With all thy getting, get references...

School, jobs, relationships, journeys... through life one accumulates many experiences. Surprisingly, however, few people pay much attention to externally validating these key experiences. Sure, you take a photo from that remote mountain peak or your visit to the Taj Mahal... but how can you let others know what you have done when you can't just take a picture? For many experiences, people don't take the picture when they are on the peak... they wait a while, and then try to recreate the moment by putting it on their resume. "See this picture from a magazine? I climbed this mountain." Wow.

Your resume should present your accomplishments. But how did you do it? For that, people (such as employers or investors) may want to find external perspectives. Say your resume claims you ran a successful product launch at your last company... have you won awards? If so, put them on the resume. If not, and you think this is important, you need a reference. Who can say: "Yup, she climbed it in tough conditions, had a great attitude, I'd love to climb with her again"?
The world works on references. Not just employment references... but the many discussions that go on about you. What do people say? What would you like them to say? What have you done to increase the chances of a good reference as you go through your life's journey? Who are the best people to validate what you have done? (perhaps you should make a list right now)
Most companies won't provide meaningful references now. The HR department will confirm dates of employment. What if it happened 5 years ago? Or if the company you worked for has gone out of business (do you imagine anyone at BP is looking for a job right now)? Have you kept up with co-workers? Former bosses? Perhaps you saved a copy of your 2005 performance review.
I send people the following memo when they ask for a formal reference. A number of them have said it was helpful. Disturbingly, a number have also said "no body ever told me how to do this."
To: People requesting references
From: Paul Hudnut

Asking for a reference is an art…you only want good references. So before approaching me (or other professors, bosses, co-workers, etc.) think about whether you think they can give you a good reference. Your goal should be to have each reference validate a piece of the picture that you have painted about your qualifications: education, work, character, accomplishments. Then think about what you want each of them to say about you…do they have a basis to be able to say that?
Overall, I am happy to give references if they are requested ahead of time and I am given background materials necessary to write or provide the reference. Last minute requests for written recommendations will be declined, and I will not provide a phone reference or a written reference if I am not provided the minimum requirements below.
1) Keep in mind that if you know what you want, it is easier to ask for it! Your target should be to tell me what you want, and then make sure you give me what I need to help you get what you want. Employers are trying to understand your competence and your character. You will strengthen your references by focusing on, and providing examples of, activities and experiences that demonstrate both.
2) When you request a reference it is helpful to ask for a detailed reference and to provide background information. For instance, telling me: "I am applying for a job with golf resort development and management companies as a marketing manager” is OK, but adding “Would you be willing to give me a good reference with respect to my performance in your class, my interest in the golf industry, my honesty on the course, and my habit of always buying a hamburger for my professor at the end of the round" is much better.
For most of my students, though, I can only write about the first item. I can't write about the others unless we have actually had a chance to sit down and talk about your interest in the golf industry, we have played golf (and you didn't take a Mulligan) and you bought me a hamburger. Golf is only an example, folks- it could be your interest in fashion design, green building, biotechnology, etc. In all, though, for me to comment on it, you need to have given me the material. LinkedIn and Facebook can be helpful ways to informally keep me up to date on your activities.
3) As a reference writer, I like to get help from YOU. It makes it much easier for me to write a reference if you tell me what you are trying to accomplish. At a minimum, include your resume with your request. Even better, attach a "draft" recommendation letter or outline covering the points you want me to cover. If it is a specific job, include the job posting.
4) If you don’t need a letter, but just want me to be available by phone, then please provide a resume, and an outline of the main points you would like me to cover in the call. Then let me know by email or voicemail when I should be expecting a call.
Good luck. I look forward to helping you find, or create, your next opportunity!

Saturday, June 05, 2010


A friend asked if I planned to make it to the LOHAS conference in Boulder this month. LOHAS is short hand for Lifestyles of Health and Sustainability, a key market segment for consumer brands. I checked the website, and learned that this is an opportunity to "successfully approach the LOHAS consumers with your products and services. Network with like-minded executives from all LOHAS market sectors."

But this email got me thinking about two other things going on in Colorado this summer. The International Development Design Summit (aka IDDS) and the Unreasonable Institute. These have a very different focus than LOHAS. You see, these are aimed at successfully developing ventures that serve the poor. They are largely social ventures, aimed at maximizing impact on a challenge faced by the those in what I call the LOPAS segment. Lifestyles of Poverty and Sickness.

Most companies are looking at the LOHAS market as early adopters for greener brands, organic foods, renewable energy. The purchasing power of this segment is estimated at close to $300 billion. They are seen as drivers of a more sustainable economy.

Few companies are looking at the LOPAS market. This is too bad. China is a leading example of how a market can explode as hundreds of millions of people begin to move out of poverty. The media has recently started to talk about "reverse innovation" where products developed for India or Africa begin to show up in the US and Europe. So just how big a market is created for every 100 million people who move from making $1 per day to $4?

It's just math. The LOPAS market is bigger, growing faster and is less competitive than LOHAS. I didn't say it was easy. And it definitely takes a different approach. But it is worth doing something about if your company cares about sustainability. It makes little systemic sense to sell solar panels to LOHAS in Boulder, while LOPAS in Accra burn kerosene or charcoal. What company can serve both markets? What synergies might exist?

As you think where sustainable growth will come from, it would be wise to follow both the LOHAS and the LOPAS. And if you are in Colorado, you have a chance to find out about both this month. Perhaps you will figure out how to turn some LOPAS into LOHAS. That seems like a good challenge for marketers.

Friday, June 04, 2010

GSSE Program Update

Next Billion is doing a series on educational programs and resources for students interested in market based approaches to development. They were kind enough to ask me to provide some information about our program at Colorado State. Here is a link to that post.

Friday, May 07, 2010

Data Jedi in Training

Just signed up for Edward Tufte's class in Denver in June. And Asad is going to teach me how to use Hans Rosling's gapminder software this summer. Obi-Wan said "You must learn the ways of the Force." I am going to try.

Part of my self funded "Intersectional R&D" program.

Thursday, May 06, 2010

Logistics, Legacy & Large Numbers

I suggest to entrepreneurs that they use a simple matrix to think about scale. Basically, how will they make and market their first 1-10-100-1,000 ... 1 million products? Thinking about scaling up by log steps, basically.

Here is an example I used at IDDS last summer in Kumasi:

This gets people thinking about the next level of bringing a product to market. It is much easier to say "we will sell a million" than it is to plan how to do this.* And I am not sure it gets easier to move up a log as you get bigger. Apple sold 1 million iPads faster than it did iPhones. But will Apple find it easier to sell 10 million iPads than 1 million?

I know at Envirofit, it was hard to do each log step for our reduced emission cook stoves. We have now sold 100,000. But everyone is working just as hard (or harder) to figure out how to reach 1 million. And these aren't just iCandy for the masses. Every stove reduces pollution in a home and improves family health. Less smoke means less respiratory and vision problems (so I guess they are eyeCandy in a way).

Global markets represent very large numbers. Numbers that humans have a hard time comprehending. There is potential for much more rapid dissemination of products and services in emerging and developed markets. However, as one moves to the base of the pyramid, dissemination of ideas and products often still proceed at more "traditional" speeds. Even more successful social enterprise models, such as microfinance, have not seen broad market penetration. Cellphones and a few others are the notable exceptions.

Earlier in my career, I worked on a lot of deals. I found out that many entrepreneurs are motivated by a number. "I raised $x million." "I sold my company for $y million." I suspect that many social entrepreneurs are motived by some other number. "I saved x lives." "I moved y people out of poverty." Rare feats. But worthy goals. And worthy legacies if achieved.

Here are a few numbers that may help you think about log scales, your legacy and the logistics of serving large numbers.

- 10,000. Many products. Even maniacs. But not easy. Means you need to sell 27 a day for a year.

- 100,000. About how many Honda Civics were sold in US last year. It seems like a big number when you are selling stoves. But depressingly small compared to total market of 500 million households that cook with biomass. I can't do the math.

- 1,000,000. Number of iPads sold in April. Number of Toyota Priuses sold worldwide since launch: 1.6 million. Number of IDE treadle pumps sold in Bangladesh: 1.3 million.

- 10,000,000. How many miles George Clooney aspires to get in his latest movie. Nintendo has now sold 10 million Wii's. Grameen Bank has 8 million clients.

- 100,000,000. Annual number of beneficiaries of UN World Food Programme: 90 million. Number of polio vaccinations conducted by Rotary in India in 2009: 200 million. Number of iPods sold, so far: 220 million.

- 1,000,000,000. A billion. Worldwide there are an estimated 3 billion cell phone users. There are about 1 billion people living in extreme poverty. Nobel prize winner Norman Borlaug is widely credited with saving 1 billion lives through the "green revolution" in agriculture. To sell a billion products would mean 2.7 million units... every day... for a year.

My point? To achieve a legacy, you need to work on logistics. How will you serve your first customer? Your tenth? Your thousandth?**
* My bleeps know I occasionally express frustration with oft repeated mantra of the need for "scaling up." I understand the sentiment, but perhaps better appreciate the difficulty. I would observe that "scaling up" has very little to do with talking about it.
** I recently gave a talk at the Unreasonable Institute called "Crux" where I discussed that each point of log scale up may require crux moves (think dropping into a couloir, big wave or Class V rapid) for which an entrepreneur needs to train and practice (or hire people that can do it). It might be changing supply chain to go from 1,000 to 10,000 units, or it might be growing from 10 to 100 employees. Sure there is natural talent, but Chris Sharma didn't start out on 5.15 pitches. You need to think how you will obtain your goals in order to reach them. Hope is not a strategy. (Sorry POTUS)

Monday, May 03, 2010

A Bowl of Porridge in Rwanda

John Gasangwa is a student in Colorado State Univerity's GSSE program. Here is his talk to a local middle school, providing them more background for their study of Hotel Rwanda. Here is his talk about the genocide, suffering, and forgiveness.

"I am telling you my story, so that you may build on can build your character, you can build your community...and you can change the world."

[38 minutes]

Saturday, May 01, 2010

More IDDS 2010 Info

There are 67 days until the fourth annual International Development and Design Summit starts at Colorado State University. We have picked teams, accepted participants, and are spending a lot of time getting ready. It was exciting to see Amy Smith, who started IDDS and is our grand pooh bear, get recognized in the TIME 100 this week. But all of us are even more excited by the potential of the IDDS 50- the 50 participants from around the world who will be coming to CSU for the month of July.

For those of you who are DR100 fans, which is Paul Polak's idea of getting "Design for the Other 90%" courses and programs at 100 universities around the world, we are going to have some good news on that front soon too. I will keep you posted when I can say more. But tell your favorite design, engineering and business profs to block July 28-31... just in case something is going on then.

Lots of people have been asking me about what IDDS is, so here is some more information about IDDS- I have included links to the teams' websites where possible. If it reads a little like a press release, what can I say? Oh, and I will use twitter to update with #idds10. So now, when someone asks about IDDS, I can just say: "IDDS? Just check my blog and add #idds10 in twitter app." Or not.

"Imagine a team of top engineers, doctors and scientists working on a breast milk filter to prevent the transmission of HIV from mothers to babies. Now imagine that two African women, who work with HIV patients daily in community health centers and schools, join the team. For over 3 weeks, they learn together, work together, eat together, and live together. Now imagine a community of 10 such teams recruited from around the world, working with experienced faculty, practitioners, and mentors, each tackling an important problem facing the world’s poor. Each team designing a solution involving a scalable technology and a sustainable enterprise. This is the vision for this year’s International Development Design Summit."

The International Development Design Summit (IDDS) is an annual, multi-week, intense hands-on design experience that brings together people from all over the world and all walks of life to work on projects to improve the lives of people living in poverty. We held the first summit at MIT in the summer of 2007, as well as the second in 2008. The following year, Kwame Nkrumah University of Science and Technology hosted the summit in Ghana, where we were able to practice co-creation and work in villages in the surrounding area. For this year’s event, the focus has shifted from the creation of technologies to their dissemination. Co-sponsors MIT, Franklin W. Olin College, and Cooper Perkins will be joined by the 2010 host institution, Colorado State University, in developing and implementing the curriculum.

In addition to the dissemination focus of the 2010 program, a group of prior participants and faculty will work to envision future directions for IDDS while learning first-hand about the organization, culture and operation of the summit. This effort will allow the program to respond to growing demand, reach more participants more efficiently, and build relationships with other universities.

Over the past 3 years, we have grown the IDDS community to a substantial size with more than 150 participants from dozens of countries, inspired numerous participants through design, and developed many promising prototypes and projects. In 2010, we are emphasizing the creation of ventures and the production and distribution of products. Innovations to improve the lives of people living in poverty often require new business models, whether for profit or non-profit, in addition to new technology to be successful. The following projects will be hosted at this summit to develop sustainable enterprise models and plans for product production and launch:

AYZH (India): an IDDS spin-off that disseminates appropriate technologies, including a home water filtration unit and a birthing kit for mid-wives, to improve the lives of women in India.

Fuel from the Fields (Haiti/Rwanda): a project that creates micro-enterprises that produce clean-burning cooking fuel from agricultural waste materials.

Lo Chlorine (India/East Africa): an IDDS project for producing chlorine and dispensing it accurately to provide safe drinking water.

Solar Innovations Organization (Brazil): a project founded by an IDDS organizer to use solar technology to improve the lives of the urban poor.

Running Water (Kenya): an enterprise committed to using sustainable business models to bring clean water solutions to communities in Kenya.

Just Milk (Africa): an IDDS project that seeks to reduce the transmission of HIV/AIDS from breastfeeding mothers to their children.

SEED (Bangladesh/India): a venture that will provide affordable irrigation products for small plot farmers in Bangladesh and India.

ABARI (Nepal): a project for a low-cost treatment of bamboo to improve its performance as a construction material.

Sollys Lighting (India/Ghana): a collaborative effort of former IDDS participants from India and Ghana to provide low-cost solar lighting to rural communities.

Hippo Roller (South Africa/Ghana): a water-carrying device to reduce the work-load required to fetch water.

Each of these projects has had some success already, and IDDS 2010 will work to help them move forward and scale up. The distinguishing feature of IDDS will remain the same as in previous summits: diverse, multi-disciplinary teams will work on projects under the mentorship of international leaders in both technology and business development. In addition to internationally regarded faculty, a number of practitioners including designers, engineers, investors, and executives from design firms, development organizations, and start up ventures will be participating. The tradition of holding community events will also continue to more broadly inform others of the role innovation can play in addressing global poverty."

Wednesday, April 21, 2010

Do Stories Matter Anymore?

I just added links to both the Microfinance Open Book blog by David Roodman and the Innovations for Poverty Action blog (look to the right for my list of suggested blogs). Others more expert than I have weighed in on the debate of the true impact of microfinance on the poor (which I believe is a healthy one). And these two blogs are a great way to understand the debate. I'd start here.

For BOPreneurs, this debate is a useful illustration of how investor/donor requests for assessment of outcomes can impact an industry, and organizations within that industry. And it is ironic/paradoxical in its implications for stories. For many years, people in international development have recognized the power of telling stories. More broadly, entrepreneurs are encouraged to tell stories about how they, and their companies, will change the world. I encourage entrepreneurs in this blog, and in my classes, to use stories. But these inspirational stories that attract resources to your cause are also "anecdotal evidence" in the world of research. And they are suspect. The very act of telling stories is one of selection, and often, embellishment.

Microfinance organizations, and more broadly, social enterprises, need to realize that while stories inspire, they are not an end, but a means. What matters is what you do, not what you say (although I hope the two are closely related!) How do you measure the performance of your organization? I encourage entrepreneurs to pick 3 measurements ("metrics") and set goals for each over a 5 year period. This "3x5" becomes a map for your journey, as well as a way for you to track progress. Then measure and track how you do.*

At Envirofit, we have witnessed how a retrofit for a motorcycle taxi can significantly increase a driver's income and help build his family a new house, or send his children to school. But we have also struggled with resistance to stubbornly high costs and reliable parts supply. While the stories are important examples of what we can do, in the end, our success rests on our ability to sell more retrofits and more cook stoves. While the stories may engage people to support our work, they communicate our direction, but they don't measure our progress.

You need both. Good stories and good performance. And if someone criticizes your performance, or points out that stories are not the same as your performance, a good BOPreneur will take heed of Macbeth's** warning:

... Out, out, brief candle!
Life's but a walking shadow, a poor player
That struts and frets his hour upon the stage
And then is heard no more: it is a tale
Told by an idiot, full of sound and fury,
Signifying nothing.

So don't be an idiot when it comes to the life of your organization. You are trying to do something of significance. Not just tell stories. Find a good story to tell, and then get back to work on making something people want and an organization that can deliver that to a meaningful number of people who need it.
* I think some microfinance organizations do this quite well. But others could do this better. And no, I am not going to name names. A perusal of websites will be illuminating, I think.
** I am not trying to be ironic by using a quote from one of Western culture's great stories in this post.