Egypt & Entrepreneurship:Tectonic Demonstration Effects

This past week I was fortunate enough to meet with some leaders in the field of innovative philanthropy and impact investing. So thanks first to my guides at Mercy Corps, Lemelson Foundation, Draper Richards Kaplan Foundation, Imprint Capital and Omidyar Network.

One term I heard quite a bit was "demonstration effect." For our meetings, this meant examples of investments that provide impact and return on capital. Or enterprises that serve poor customers fairly and make a fair profit they can share with their owners and employees. Each of these could start self-reinforcing trends, attracting more human and financial capital to mission based companies.

More generally, demonstration effect recognizes the power of examples over ideas. Hearing about an idea that has never happened is very different than seeing something unexpected happen. Real examples open people up to new possibilities, and shift their frame of reference. The unlikely becomes more likely, and the world is never the same for that person. As these events are shared, they ripple to companies, communities and societies. There is no going back.

This morning, the AP is reporting that China is blocking #egypt on their twitter like services. The street demonstrations in Egypt were in part a result of the demonstration effect of similar protests in Tunisia. Could it be that China is worried that it is next? That the democratizing force of social media will drive a different type of domino effect? Tunisia ->Egypt->China? And imposing internet darkness may backfire on these governments.

These are tectonic political shifts. The longer the built up energy is surpressed the more impressive is its release- in building continents, the result can be earthquakes and in building nations, the result can be revolutions. The Latin root of this word is "to build," and tectonic means "building through structural deformation." In other words, creative destruction (right Mr. Schumpeter?) Continents, countries, and industries are built on ruptures, shifts, shaking and destruction. I wait, hopeful that Egypt (and any other countries that follow) don't add violence to the list. Iran's brutal repression is still a fresh gash on this hope for a better world.

In a more personal light, I spoke to one of my African students earlier this week. She told me that she had never thought of herself as an entrepreneur but that my class had shown her a) examples of others who had decided to make a difference through entrepreneurship, and more importantly, b) given her personal experiences that had shown her that she could be an entrepreneur. She made some tough decisions at some cost and difficulty and now has embarked on a new venture. Another dandelion starts to bud through the soil and sunlight provided by demonstration effect.

Throughout history, the power of seeing something work opens our eyes to new possibilities. Whether it is a "demo" of a new product, the self realization of one's potential, or the possibility of over- throwing an autocrat, the demonstration effect has vast potential for rapid replication. This can be both scary and exhilarating. These are common emotions to unreasonable people- revolutionaries, activists, entrepreneurs, hackers and (ad)venturers. Emotions that I imagine were felt in Boston in 1773 and are being felt in Cairo today.

Entrepreneurial By Nature

My longtime bleeps may think this post will once again refer to the debate on whether entrepreneurs are born or made. But- surprise- that topic has almost nothing to do with this post.

No, this post has to do with Colorado. What some refer to dismissively as one of "the flyover" states. But they are wrong. That is old school thinking.

In December, a small group met to talk about how to promote Colorado's entrepreneurial and innovative culture. As is often the case with a small group, someone said something, and someone else built on it, and all of a sudden, we had a pretty cool mantra. "Colorado... Entrepreneurial by Nature."

For those entrepreneurs who are digging out of the most recent blizzard on the Right Coast, or stuck in traffic on the Left Coast, maybe it is time to come to Colorado. Not to ski, but to create. I live not too far away from a city named after the man who exclaimed over a century ago: "Go West young man, and grow up with the country." Well, old Horace had a point, I think.

A personal story. During law school, I interviewed with a prestigous old Boston law firm. At one point, they asked me where my parents went to college and what they did. I doubt they know how that ticked me off. At that point, mentally, I turned on my heel and walked out the door on the East. In the West, we don't care where your parents (or you) went to school. We don't care much about what you wear or drive (though you get points for riding your bike or horse). Mostly, we care that whatever you do, you do well. It isn't about your daddy, it is about you. If you can hang with us, in business or out on the trails, you are welcome to come along.

Now, if this were an official campaign, this is where I'd break out lots of numbers to convince you that moving here is a no-brainer. But it isn't an official campaign, so let me just tell you about my day. While all days are unique, this day is fairly typical for me, and offers some flavor of why I am always happy to come home to Colorado.

I flew in from SF late last night. When I woke up, I thought I might head up to the mountains to ski later today- it has been a great snow year (in the mountains) and there is nothing like a bluebird day on the slopes. But I've been away a lot, and the forecast was for a nice few days on the Front Range. Very nice. Sunny and 60's. In January. So I decided to stay in town. Since it was early, I connected with a few people in India (12.5 hours), catching them before their weekends started. Then exchanged emails with a few folks in the east, and a phone call with a microfinance friend in Boston who called me "old school" for picking up the phone to chat. Then a bit of time reading and preparing for next week's class.

OK, no biggie so far. I could have done this most anywhere with an internet connection. But it was a bit past noon, and had warmed up nicely outside. So I jumped on my mountain bike* and took a ride up through the foothills and along the reservoir. The sky was blue, and the trails were tacky. It was so warm I was tempted to swim in the lake until I remembered that it was January and the water was probably freezing.

After the ride, I "had" to swing by New Belgium** to drop some papers off... and fill up a growler. They suggested Trip #7, a recently released Black IPA. I caught up with a few folks, met intern Drew of the new Lips of Faith Drew's Beer, then heard briefly about brewmaster Peter's recent trip to another brewery where he had seen some exciting stuff. Then, I was off to chat with a friend about some challenges and upcoming changes as his company begins to market in Africa. And we did put a dent in that tasty Trip #7.

The point is not that I get to do interesting stuff. It is possible to do interesting stuff with interesting people almost anywhere. This makes the "where" of innovation both less important (got internet?) and much more important (do I live in a place that makes me feel alive/joyous/energized?). While you can tap into big parts of the global innovation community from a lot of places, there are far fewer that offer the range of opportunities that Colorado has. It is a place to be entrepreneurial...artistic...musical...athletic... by nature***. Maybe it is just me, but I think the combination of good work, good biking, good weather (and good beer) is pretty special. At least for me, I can't imagine better growing conditions for new ideas and ventures.****

If you want to come check it out, might I suggest TEDxMileHigh on April 7. They plan to highlight some of the entrepreneurial gems of the state. Then you can spend a few days to investigate Denver, Golden, Boulder and Fort Collins. And then go take a few days to ski, or go mt biking in the desert.

Entrepreneurial by nature... sounds pretty good, doesn't it? Maybe we will see you around.
_____________
Just a few examples:
* A Yeti. From Golden, Colorado.
** One of our wonderful Fort Collins breweries.
*** For music: Aspen Music Festival, Telluride Bluegrass, Red Rocks, New West Festival
**** Supporting Data Point: Recently opened Innosphere for start ups is already full.

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!