Talking Trash

 Waste Ventures was humbled to be selected to the Top 25 Concepts by the Echoing Green Foundation out of an incredible 1100 entries.  I would like to thank our supporters for their well wishes.  Unfortunately, it did not work out.  However, the process was extremely instructive - especially as we gear up for our next funding application:

The Myoo Challenge 

While I'm still awaiting official Echoing Green feedback, there are a few points of introspection that I would like to share with Social Edgers:

1) Have a focused message.  Our total time with judges was 90 minutes.  That is generally 88minutes and 30 seconds longer than a potential funder/ supporter will provide.  A good framework is to focus on three critical points to convey and support them with statistics and anecdotes. 

2) Be present in the moment.  Control for physical or mental distractions as much as possible.  In my case, I combined Echoing Green with a couple other trips that were both tiring and took mental space away from the task at hand.  While sometimes one cannot help circumstances, thinking through Point 1) above helps to focus one's presence.    

3) Simplify simplify simplify.   Waste Ventures is a complex concept - and while it has amazing scale potential by working with multiple waste picker organizations, it does not directly organize waste pickers.  Given the multiple players within our ecosystem, who does what can sometimes be confusing.  We are still honing our message and would love your feedback!  Check out our video of what Waste Ventures does as part of the Myoo Challenge.  

Ultimately, funding bodies have their mandates - sometimes an organization fits and sometimes it doesn't - in which case, don't take it personally or get disheartened.  Simply move on.  We found the Myoo Beat Waste Challenge which crowd sources the best social enterprises reducing garbage.  Watch the video, let me know what you think, and if you like it - please take a moment and vote for us.  

When A Conference Is Worth It...

A conference has to be pretty spectacular to justify the expense of going there on a start-up budget and the opportunity cost of getting things done on the ground.  With that in mind:

1. A Bad Conference Is When You Attend Plenaries and Watch Panels For Lack of Anything Better To Do.

2. A Decent Conference Is When You Skip The Plenaries and Panels in Favor of Networking - Saving Hours and Plane Rides to Meet People.

3. A Good Conference Is When Networking Is Blended Into the Programming Through Workshops and Small Group Discussions. 
 

The plenary is dead.  Long live the plenary.  I mean really?  Why would I fly hundreds or thousands of miles to see someone speak on a subject when I could youtube or google video them - most plenary speakers have the same canned schtick anyways and the content won't be drastically different.  (That having been said, I was fortunate there was a morning general session as the living legend Vijay Mahajan was moderating and gave a nod to Waste Ventures and solid waste management as an example of a burgeoning investment space at the Base of Pyramid - thanks VijayJi!).

The Power of A Network...

The Echoing Green Finals Weekend was amazing.  Kudos to the foundation for once again rounding together an amazing group of organizations!  It reinforces the power of a network - particularly of organizations in a similar stage of development.  We, 2010 finalists, didn't wait for Echoing Green - and already formed our own network where we trade questions and advice from legal help to accounting software.  I hope it endures even past the official selection.  We now are playing the waiting game for the announcement of fellows.  The odds are good (up to 16 out of 25) but that number is deceiving as all 25 are stellar entities!

Bottlenecked Recruiting...

Waste Ventures is seeking staff!  The good news is we have received a great deal of interest in the positions we have posted.  The bad news is I'm woefully behind in the interview process with travel and proposal work.  If you are a candidate (or prospective candidate), my deep apologies for not moving faster - this is my top priority now! 

Exciting Project Prospects

Watch the coming weeks for exciting announcements on our work - we have started gaining traction in some of our ground work and while I cannot announce anything publicly just yet - there are some exciting opportunities to build public-private partnerships that can act as a model for the industry... stay tuned!

 I was thrilled to be selected as a 2010 Echoing Green Finalist.  Echoing Green selects seed-stage social entrepreneurs and has an impressive success roster including Teach for America, City Year, Witness, and SKS Microfinance to name a few. 

I was fortunate enough to be selected as a finalist in 2006 as I was creating another venture, IDEAS, at the time.  With me in the finalist weekend were Matt Flannery of Kiva, Andrew Youn of One Acre Fund, Sasha Chanoff of Mapendo, Chris Bradford and Fred Swaniker from African Leadership Academy, Mark Hanis from Genocide Intervention Network, and Fellow Blogger Matthias Craig of Blue Energy.  It was one of the most eye-opening and inspiring weekends of my entire life!  Back then, I was finishing up grad school and, at the time anyway, social entrepreneurship was studied and put under an academic lens.  It wasn't good enough to work in a social entrepreneur organization, everyone wanted to BE a social entrepreneur (I guess an unquenchable passion for something could be defined later?)  Yet all of a sudden, in the finalist weekend, I met people who were DOING something and doing it extremely well!  I remember my jaw dropping when Matt asked what to do when one is flooded with too many donations as they were after a couple stories on national television.  I think it was then that I first understood the power of a peer network of fellow crazy people.  We even created a listserv of all the finalists and initially bounced ideas/ questions to the others getting their ideas off the ground. 

At the Schwab Foundation, I focused on selecting late-stage social entrepreneurs.  Most of the time, we had slim pickings as there aren't too many social entrepreneurs that have significantly scaled so our difficulty was trying to find those in remote areas that may have scaled but were outside the incestuous social entrepreneur circuit.  It gave me tremendous appreciation for how difficult it must be at the seed-level when everyone has big ideas and one has to choose a venture that has correctly read the market, has an innovative solution, and a great team that can execute - with little to no track record!  

Congratulations to the other finalists and I am looking forward to forming new bonds - all over again!

Looking at the program of the Skoll World Forum 2010, I am immediately struck by two observations versus past years:

1. There are a lot more cross-sectoral participants this year  A couple years ago, I remember counting the number of Fortune 500 corporate participants at the Skoll Forum and coming up with two!  This year, the theme 'Catalysing Collaboration' is seeen in its diversity of participants from Marks & Spencer to the US Department of State.  Its great to see the thawing of the social entrepreneurship incestuous bubble that has defined much of the movement.   

2. There are a lot more interactive sessions to foster dialogue  

There is no denying the awesome ability of the Forum to attract everyone in social entrepreneurship to one location and make meetings A LOT easier than flying around the globe.  Unfortunately, before this meant choosing between attending a panel session or conducting meetings.  The connect & collaborate sessions seem to merge the two in a way that is inclusive of other participants!    

These changes bare the imprint of the new Skoll Centre director Pamela Hartigan.  Pamela (full disclosure: my former boss at the Schwab Foundation and current board member) is one of the most down-to-Earth people one will ever meet yet has the gravitas and charisma to evangelize social innovation to heads of states and CEOs - as she did at the World Economic Forum!  The Skoll World Forum definitely benefits from her work in building cross-sector collaboration at the World Economic Forum and Volans.  (Our last Schwab Social Entrepreneur Summit in the outskirts of Zurich was a series of meticulously crafted small group discussions over three days bringing together similar people across sectors on geography, content, and collaboration methods.  Most Schwab Entrepreneurs rated it better than Davos!)   

Three sessions I'm keeping an eye on:

1) Next Generation Social Media for Greater Programmatic Impact  If there is one thing I've learned putting together WEF sessions, it is that a great moderator is critical to a great session.  Jim is one of the best I've seen and one we used MANY times for World Economic Forum/ Schwab events.  Social media is constantly changing and merits regular conversation with practitioners at the forefront versus some of the other social entrepreneurship discussions (really, I could care less if someone wants to define social entrepreneurship different than me).    

2) Climate Change, Societal Demand, and Food Security: Social Entrepreneurs at the Intersection  Again, this session benefits from another fantastic moderator - John Elkington.  The topic is also one of the most critical of our time.  Country agricultural systems and policies are perhaps the most critical towards climate change, water security, and ultimately societal stability!   

3) Aid Agencies and Social Entrepreneurs: Natural Allies, New Bridges  I am in awe of this session!  At the Schwab Summit a couple years back, we tried to get together a session on regional multilateral bank collaboration with social entrepreneurs but couldn't get anyone interested on the multilateral side even with the weight of the World Economic Forum!  I'm curious  as to the dynamic of the session - I find most multilateral and bilateral types uninspiring and not innovative - especially in juxtaposition with a passionate social entrepreneur.  However, GTZ and DFID are some of the more progressive bilateral agencies I've seen!    

Kudos to the Skoll World Forum for building the flagship global event in social entrepreneurship!

Big tech changes for Waste Ventures!

First, we changed our name from WasteBank to Waste Ventures to pre-empt stringent regulation against having 'Bank' in the title.  Second, we've entered the 2010s and are now on twitter: @wasteventures - please follow us (big announcement soon!) and recommend other twitterer-er...ers that we should follow!

Picking up where the prior blog 'Setting the Organizational Free' left off, I wanted to share some of my learnings and hear your thoughts:

1) There is a huge gap in seed-stage social debt/ equity investors

As we look towards funding our initial compost plant, we find a lot of enthusiastic investors who are more willing to come in once we have an initial pilot.  Expansion-stage social businesses have a plethora of investors to choose from but we only see the visionary First Light Ventures at the seed-stage level.  (We recently decided to conduct the initial pilot out of the nonprofit entity as we also require a demonstration site for government officials as well and wanted to create a sustainable source of revenue for the non-profit.)     

How do we attract more seed-stage funders into the social investing arena?

2) Those who build non-existent capital markets that serve the poor (like the Base of Pyramid) should not skew the financial value towards themselves

This is particular true of hybrid not-for-profit and for-profit entities like Waste Ventures.  Don't get me wrong - I'm not against creating financial value for the entrepreneur or his/ her investors.  But there are a couple things to keep in mind:

a) if your objective is to build the market (like the BoP garbage sector), you want to reduce as many barriers as possible and attract as many players as possible to trailblaze.  When Waste Ventures eventually creates a for-profit entity to lead by example, its advantage will come from being one of the first-movers and the subsequent experience curve - not any undue benefit.

b) Directly channeling financial value derived from nonprofit activity towards your for-profit entity (rather than building broader commercial market sustainability) would likely not qualify for tax-exempt status nor grants from non-profit funders.  For more reading on the gray area, I would highly recommend the excellent article "Effective Social Enterprise - A Menu of Legal Structures" by Robert Wexler of the law firm Adler & Colvin. 

How does one balance creating a market with creating a business attractive to investors?

3) Independent entities assist in capturing maximum social, environmental, and financial value

To drive points 1. & 2., it helps to create two completely independent entities - for-profit and not-for-profit.  This allows the nonprofit to pursue the best possible venue to build social and environmental value without feeling pressure to steer business to the for-profit.  In Waste Ventures case, the nonprofit is focused on disseminating the knowledge on building high-performing waste picker corporatons as widely as possible rather than locking away the knowledge in the for-profit entity.  Likewise, the for-profit can build the commercial market unfettered, remain competitive, and eventually interface with commercial capital.  

What are the methods by which independent entities can be tied together towards the greatest social, environmental, and economic value?

In Waste Ventures case, we are creating separate entities but because the for-profit's business model is to aggregate carbon credits and biofertilizer markets, it makes it a natural partner to the not-for-profit entity's work with the waste picker corporation.  Likewise, the for-profit entity is naturally attracted to the waste picker organizations assisted by the not-for-profit as they have been geared towards market-entry.   

I will be blogging regularly during the Skoll World Forum time period so check back regularly this week!  

We started work on the ground advising a Schwab Entrepreneur Arbind Singh and the waste picker corporation his organization formed: Nidan Swachdhara Private Limited (NSPL) owned and operated by waste pickers.  Their competition is stiff with a few major national players in the solid waste management sector that are known for playing hardball along the lines of the status quo.  However, NSPL has already achieved a lot as they have successfully attained two formal municipal tenders.  Perhaps I have a soft spot for the underdog but I feel they have enormous potential and the differentiating factor of achieving a superior financial bottom line through the employment of an environmental and social mission.  As this is not a pure-profit business but one tied in with municipal services, there is a strong argument to be made for public interest (in addition to being able to under-bid on the tenders with a model that will generate revenue through recyclables, carbon credits, and composting).

However, the real ‘enemy’ is often the municipal contract for waste collection.  For example, in the Patna contract, there is no language encouraging recycling or composting  - quite the contrary, the contract goes out of its way to ensure there is no removal of recyclables or organic waste occurs and insist that all waste go to the dumpsite.  This is incentivized by paying the contractor on the amount of waste collected.  It is believed that the municipality in fact has a plan to recycle and compost eventually on the landfill and have people reverse bid on how much they will pay to carry out processing.  Processing is much more difficult once the waste is already mixed – particularly as the contractor often compact the waste which makes it all but useless. 

Such contracts have a devastating impact on both the environment and the livelihoods of the waste pickers.  The prevention of taking the recyclable bottles decreases the meager earnings of the waste picker by 33% to $1.50 a day.  80% of the waste that could have ended up as rich biofertilizer or recycled plastic or paper is buried in a rising landfill (not to mention the law goes against Indian federal garbage law!)  This is indicative of solid waste contracts across India – as the same municipal waste contract template unfortunately seems to have been adopted by many Indian municipalities. 

To counteract this, we are now creating plans to work with a municipality within Bihar that has the foresight to encourage composting and recycling.  We can build a small three ton compost plant according to the tried-and-true composting design of Waste Concern and demonstrate the tremendous benefit of the composting facility to government officials and the corresponding financial benefit for investors.   

 This really should not be as difficult as it is but unfortunately because of antiquated laws in most countries that arbitrarily delineate what is a ‘charity’ and what is a business, the evolving field of social entrepreneurs must jump through hoops.  The United States is particularly egregious (how is a health care provider labeled a nonprofit while a business trying to implement solar panels for the poor would have trouble getting any breaks?)  Geoff Davis, an advisor to WasteBank, mentioned the United Kingdom and the Netherlands are some of the most progressive in their classification laws.  What I am concerned with is the aggregation of social investors and grant makers in the United States combined with draconian US laws for foreign grantmaking in social organizations makes it difficult to contemplate setting up anywhere else.  Anyone else have any thoughts on this or go through the same thing?

WasteBank will create a for-profit and a nonprofit entity.  The focus of the nonprofit entity will be to build the solid waste management sector and assist it in becoming commercially viable through technical assistance to waste picker organizations, transforming the nonprofits to for-profit corporations owned by and employing waste pickers, and finally disseminating knowledge like the WasteBank triple bottom line blueprint.  The for-profit entity assists organizations connect to capital and provides access to biofertilizer markets to monetize the outputs of the waste picker corporations. 

We went through a lot of thought as to how to connect the organizations and Harish Hande, a WasteBank advisor, had the brilliantly counter-intuitive idea to make them independent.  Each organization is dedicated to the same mission of commercializing the waste management sector to draw much more capital in and thereby scale its impact through investment in people, processes, and technology.  WasteBank NGO will naturally look to WasteBank LLC as a partner that brings investment capital and market access to biofertilizer and carbon credits.  However, WasteBank NGO should be free to assist any organization or build the field in the way it best sees fit even if it is not lock-step with the LLC.  Similarly, WasteBank LLC, which may subsidize the NGO at the beginning, naturally will find a partner with the 501c3, in getting organizations to the point where they can access markets.  However, it too, may source deals from other places and/or partner with other technical assistance organizations – particularly as WasteBank as a whole builds the field and hopefully encourages other players to enter.

Next week we talk about structure and funding...

This past week, I attended the Inaugaral Khemka Forum on Social Entrepreneurship.  The Forum was one of the best Indian conferences I have attended!  I was involved with a panel on scaling social entrepreneurs.  I was in good company with Matt Nash, Madhukar Shukla, Arbind Singh, and Harish Hande.  I was taking an in-depth look at scaling the BoP renewable energy sector (following a similar train of thought on an earlier blog).

What I found most fascinating was a workshop on getting investment-ready for social entrepreneurs run by Elevar Equity.  It was in the top sessions on social investment I have attended and went well beyond the standard platitudes.  What shocked me though was to find that most social investors use almost the same term sheets used by their colleagues in the pure-profit space.  Is this just a lack of originality in a space still trying to define itself?  Or do the Venture Capitalist gods have it right - even for direct application across sectors?  I’m a bit torn on the issue.  On one hand, if commercial VCs had it right, then why is there a market gap in social investment?  On the other hand, VC principles do work across sectors – from semiconductors to retail. 

Fundamentally, a commercial term sheet will be more appropriate in transitioning a social venture towards a commercial rate of return.  However, in building a non-existent or nascent market for a social good or service, there is still room for improvement.  For example, one term that would be beneficial to both parties is to value the social capital that is built by the social entrepreneur.  I use social capital as the trust and relationship built between a social entrepreneur and the audience of his intervention.  Companies are now realizing the enormous value of the network that a social entrepreneur creates among his or her constituency.  Just look at the power of the distribution network of a microfinance institution (and how many companies would love to work with SKS’ client list.)  Similarly, there is a critical mass of constituents after which a social entrepreneur’s intervention grows at a much faster rate (for their intervention and synergistic cross-effects with other interventions).  Furthermore, defining good metrics and valuation around the social capital of a social entrepreneur can also help grant-based social entrepreneurs leverage their assets in addition to helping social entrepreneurs to accelerate and deepen their ability to establish social capital.  The three key metrics of WasteBank's due diligence on potential adoptees are market size, the organization's social capital with the wastepicker community, and relationship with the government (see below).  

Many social investors will occupy board seats on their investments – which is touted as a good thing as it also ensures the investor must fulfill fiduciary duties to the investee company.  Do the investors also include a responsibility towards the social or environmental mission? 

Are there incentivizing terms that can be put in for shifting government policy and/or regulation?  Social investor money can legally go a lot further towards this end (and arguably benefits more) than grant money.  For example, in the US venture capital industry itself, the Small Business Investment Act of 1958 and ERISA in 1974 had a tremendous effect in ramping up the VC industry.  WasteBank works with the adopting venture to shift municipal policy towards more stringent green standards of processing waste - which also decreases their qualifying competition for government contracts.      

I am not convinced standard ‘this is mine’ Intellectual Property rights do social ventures a favor either.  At the beginning of a sector when an entrepreneur is trail-blazing, the more players that are there building the path, the better in enlarging the market and creating a snowball effect (going back to the reaching critical mass with social capital concept).  Furthermore, this can directly interfere with the social mission of spreading an intervention as widely as possible.  This is why, for example, WasteBank operates an open source SWM model rather than franchise system.  We meet our social mission of spreading sound triple bottom line garbage management processes.  At the same time, building the market increases our pipeline of potential adopters and brings them farther along the transition before we intervene.     

Perhaps the largest area of difference is in exits.  I’m not convinced most social ventures could survive going public with stringent fiduciary requirements that may hamper or destroy social or environmental objectives.  Are their favorable constituent buy-in terms that could be implemented that both create an exit while also further empowering the venture’s clients?  This is also why WasteBank tries to work with garbage entrepreneurs that incorporate a commercial structure that makes their wastepickers shareholders.  The model becomes cashflow positive fairly quickly and it isn’t long before the wastepickers can buy back WasteBank’s stake – and guarantee the social and environmental benefits continue.)        

I'm reminded of Aesop's Fable about 'The Man and the Lion' - the predominant use of commercial terms in the social investment space is not indicative of the template's superiority - simply the background of social investors.  

 The India Economic Summit was full of its usual energy.  As former head of the Schwab Foundation South Asia portfolio, I was happy to see old colleagues at the World Economic Forum and the foundation.  I was also extremely happy to see the Social Entrepreneur of the Year award go to four amazing social entrepreneurs from three pioneering organizations: The Raos from RIVER, Rajendra Joshi of Saath, and Brij Kothari of Planet Read.  I was fortunate to meet all four social entrepreneurs as finalists in the prior three years (2006 – 2008). 

RIVER is the best kept secret in the education sector.  I was convinced of a commercial solution to developing world education until I saw RIVER, a grant-based intervention that successfully works with government schooling at scale using the ‘School in a Box’ learning ladder methodology. 

Planet Read works on building literacy as it is not a binary skill but rather one that requires practice.  The program’s brilliance lies in its simplicity – same language subtitling and India’s national TV station as a distribution channel through its hugely popular music video programs which shows the words at the same time they are being sung. 

Last but not least, Saath develops livelihoods for the marginalized in Ahmedabad through a not-for-profit that has spun a synergistic web of interventions like job training, electricity, housing, and day care that help the impoverished quickly get on their feet.  Organizations like Saath are pioneering the futureof nonprofits – building a network of social interventions that reinforce commercial spin-offs dealing with housing, insurance, financing, livelihoods, and so on.  Indeed companies are already drooling over these linkages realizing the immense market power of the Base of Pyramid.   However, the core non-profit organization helps to ensure the marginalized benefit from the commercial activity rather than preyed upon by it.  WasteBank takes its cue from these organizations as it seeks to build out the commercial market for garbage management in developing cities while still maintaining a triple bottom line.  

Congratultaions to all three entrepreneurs!            

 A year ago, Mumbai suffered one of the worst atrocities in the city’s history when terrorists took various places in the city for 40 hours.  I was in New York City during 9/11.  The 17 minutes of chaos when the two planes hit the towers was gripping and terrifying.  I cannot imagine 40 hours… 

Mumbai has been my second home (not sure anymore where my first is…) since I first visited seven years ago.  As an Indian-American born in the US, my image of India had been shaped by 20 years of visiting my ancestral home in rural Haryana and my father’s grumblings as a proud Indian disappointed to see his country festering under corrupt politicians.  My introduction to Mumbai was the first time I saw India as what it could be… a place of democratic freedom, bursting capitalism, and frontier attitude.  From then on I was mesmerized by this screaming city which has twice the population density of New York City – the majority of its inhabitants living in slums and spent a lot of time personally and professionally in the metropolis.  I had been in Mumbai during two prior calamities.  In 2005, massive rains flooded the city (in the same time period as Hurricane Katrina).  Within two days, the city was back to its normal bustle as if nothing had happened.  In 2006, terrorists struck at its train stations.  Literally, within 4 hours of the attack, Mumbai had rebuilt the train tracks and started commuter services again.  As impressed as I was then, I was even more proud of my adopted home last November 26^th when its people, a polyglot of various states and religions, stood as one in defiance of the terrorist attacks. 

No doubt Mumbai has its problems with a non-existent mass transit system, unpotable water, the largest contiguous ghetto in Asia, and a plethora of sophist politicians.  At times, like my father, I find myself frustrated by that which I love and want to see prosper – however, its Mumbai’s resilience that reminds me the city has been through worse and its people continue to shine.  I salute you.      

 My experience this summer was eye-opening for me. After completing my first year at Harvard Business School, I joined Parag this summer to help him form Waste Bank. My role sent me to Dhaka to work with Waste Bank, a Bangladeshi firm that collects food waste, turns it into organic fertilizer, and sells it to farmers, earning carbon credits in the process. It was an eye-opening experience, and one that produced countless lessons for me. But reflecting back, the biggest lessons are ones that apply as much for social enterprises as they do for any start-up.

Be flexible. In the business world, over 90% of successful new businesses end up pursuing a strategy other than the one they originally planned. I believe the same is true for social enterprises. For instance, Waste Concern initially collected its food waste by sending employees door-to-door on modified rickshaws. That was 15 years ago, when they operated a tiny neighborhood compost plant and were still experimenting with their model. Since then, they’ve tried installing small compost bins directly in neighborhoods, right outside people’s homes. Now, they source their food waste from large, centralized vegetable markets. Undoubtedly, they will change their model again. But at the end of the day, successful entrepreneurs are those who continue to adapt their models, and that’s as true for Silicon Valley start-ups as it is for social enterprises in developing countries.

Local context is key. Perhaps this is obvious, but just like politics, all business is local. What works in one market might require a complete makeover for another. Waste Concern proved this point when it piloted its first large-scale plant. Waste Concern based its design on its Dutch partner’s existing European plants. It quickly learned, however, that monsoon rains in Bangladesh require a roofing area that isn’t required in the Netherlands. Similarly, any composting plant requires the cooperation of local municipal government, which normally is responsible for all household waste collection. A governmental relationship in Dhaka is very different from one in New Delhi or Lusaka. So, as important as it is to develop social innovations that scale, it’s equally important to understand the local context and adjust accordingly.

Have confidence in your vision. You’ll need it. More often than not, social enterprises are based on paradigm-shifting idea, whether it’s selling solar lanterns to rural villagers or convincing Western investors that microloans to the rural poor really can be profitable. Whatever it is, you’ll need to get someone to change his behavior in a big way, and that’s hard. Add to that the inefficiencies of developing markets and the traditional difficulties any start-up and you can expect to run into plenty of roadblocks along the way.

The biggest ingredient to success, from what I can tell, is the strength of the founder’s vision, and their ability to keep projecting that vision as each obstacle emerges. Waste Concern started composting in 1995. Since then it has needed over 50 different government permits, including one that delayed its plant opening by almost a year. It was the tenacity of its founders, and the strength of their vision, that has enabled Waste Concern to survive these challenges, and convince others to join the cause along the way.

All told, my experience in Dhaka was a great one, and the lessons I gained are ones I never could have found in cases or textbooks. I saw what it takes to implement a new idea.

 Once you are near an offer, be sure you speak to plenty of individuals that work (or have worked) at the organization about work culture, your supervisor, and so on.  It sounds fairly basic but you would be surprised how many people don’t take the time and end up with a surprise when they start. 

Long Term Positions

If you are working with a US non-profit, you can look at its financials as part of its publicly filed 990 tax form on Guidestar.  Not only can you gauge financial health of the organization but you can also see the the top five salaries in the organization.  This helps to get a sense of salary levels if not for the organization then at least in the sector.

Short Term Positions

Make sure the organization has a vested interest in your work and values your output.  This could be compensation or in-kind contribution.  Also, be clear to define position objectives.  What are you contributing towards – a new product line?  Change in organizational strategy?  Scaling?  This conversation can be meshed in with your personal objectives.  Be as tangible as possible – whether it is to work on a particular expertise (like business planning, financial modeling, etc.), work with a particular group (donors, constituents, partners) or another desire.  Also, be sure you are clear with your logistics before you start your project (how many weeks/months you will be there, taking time off, etc.)         

On the ground

One of the best parts of any experience is working with a social entrepreneur.  Hope for good mentorship but keep in mind many social entrepreneurs can seem like ghosts around the organization!  When you need to get time, often after-hours (and even weekends) work better.  Many people fail to take into account when the social entrepreneur is gone - right when they need a critical input!  Make sure you workplan accordingly!

When you exit the organization, pass your deliverables on to (and if necessary, train) the appropriate person so they may utilize your work.  It is also a good idea to summarize your achievements during your time at the organization to make it easy for your supervisor to write you a recommendation.    

That’s it for the “So You Want to Work In Social Entrepreneurship” series.  Thank you for reading!  Feel free to add your own thoughts/ suggestions or ask questions!  

 The key thing to remember about informational interviewing is it is not asking for a job.  The interviewee is not clueless and realizes you are looking for an opportunity.  If s/he has something available and believes you may fit the bill, they will tell you.  The purpose is to inform the person about you and your search so they may provide information and suggest other individuals with whom to speak.  To facilitate this, here are some tips:

-          At the end of a conversation, ask for additional people to chat with and an introduction.  If you can receive even 2 – 3 additional names, you are well on your way to continually growing and honing your network

-          Summarize conversations and things promised on the other side.  Send a thank you email.  Write a couple intro sentences about yourself to make it as easy as possible for the other person to remember what you are looking for and also make introductions.  Send friendly reminders if need be but don’t be overbearing.

-          Try to talk to five people a day.  This may seem like a lot but you will find the list of contacts grows with each additional interview

-          Repeat – over and over until you come across the same names.  It’s not as big of a world as you may think and pretty soon, contacts become redundant which is a good sign you may be coming to the end of networking in the field

 PART II: The Five Most Important Questions to Answer

After you’ve given thought to what you want out of your next opportunity, it is time to articulate it.  This exercise is particularly useful for those who want to dip their toe in the social entrepreneurship pool with a short term opportunity – particularly internationally.  However, even in long-term searching, it’s worth defining the boundaries of your search. 

1.       What geography?

If it’s a short term opportunity, is there a particular geography you are looking for?  (Considerations are language, visas, type of work, etc.)  Do you have Spanish fluency to work in Latin America?  Are La Paz or Hyderabad on your radar if you are interested in MFIs?

For long term consideration, where are you willing to relocate?  Major hubs of social entrepreneurship in the United States for example center in San Francisco, New York, Boston, and to a certain extent Washington DC and now New Orleans.

2.       What sector?

While some organizations are holistic in their approach, hone in on what sector gets you excited.  Health, education, livelihood, solid waste management, energy, etc?  Take a look at some of the sites mentioned in the prior blog post and read about social entrepreneurs in particular sectors to get a sense of fit.  Hone to a level that will jog someone’s memory for opportunities but not so specific there is only one esoteric organization that fits the bill. 

3.       How long?

If you are looking for a short term opportunity, try to commit to at least eight weeks.  Most organizations don’t have the resources to ramp up someone for a shorter duration.  Three to six months is ideal both in terms of a person’s learning curve and to gauge an opportunity as well as have a tangible impact.   The longer your time there, the more remuneration negotiation power you have and the more likely you will have a dedicated project.

4.       What would you do and what do you have to offer?  SPELL IT OUT

Think about the question in various aspects:

• a)      Content knowledge – e.g. engineer joining a clean energy start up
• b)      Skill knowledge – management consultant providing strategic business planning to a social venture
• c)       Geographical knowledge – Brazilian professional assisting an organization in setting up a Brazilian office

Succinctly name prior employers and work results.

5.       What is your expectation for remuneration?

It is possible to work in the social entrepreneur sector without huge financial sacrifice or lifestyle change!  Consider your personal financial needs – it may be easier for someone straight out of undergraduate or about to retire than someone just starting a family.  How does this influence the type of positions/ sectors you approach? 

If you are looking at a short term position, your need for remuneration is inversely proportional to the number of opportunities you will have.  Are you trying to make money?  Need to at least be cost neutral?  Levers beyond financial remuneration include room, board, travel, and insurance.  (Organization may have more flexibility with these resources.)  At the minimum, I recommend you ask the venture to put something forward as a gesture that they are truly vested in your services.       

Once you have these five questions figured out, write down the answers into a tightly woven paragraph that you can send as an introduction.  Memorize this as your elevator pitch as well when you speak to people for informational interviews!

For example:

 I am looking for a permanent opportunity to work in waste developing a triple bottom line.  I have no strong geographical preference beyond developing countries though I could contribute more in a South Asia context given my cultural familiarity and Hindi fluency.  I would like to create new products and/or strategic business plans.  Prior, I worked with MNCs on BoP stragegies at the World Economic Forum and raised $2 million in expansion capital through business planning independently and as a consultant at Bridgespan.          

Hone/ adjust the paragraph as you further develop your thoughts and according to the audience.

Next week – Informationally networking!

I. Soul Searching/ Setting expectations

Why the Change?

Before jumping headlong into your search for a position in the development sector, it’s wise to do a personal audit of why you are leaving your current job and what you are looking for.  Common reasons often include finding meaning in one’s work, desire for increased responsibility, passionate co-workers, and so on.  Articulating the reason(s) will help in secondary considerations as well.  For example, if you get frustrated with bureaucracy, you may want to steer towards a start up social entrepreneur rather than the World Bank.

While dissatisfaction with your current position may be the impetus for the transition, there should be pull factors that attract you to a position.  This will help ensure a good fit.

How can I get involved?

Once you have done a bit of soul searching, determine your approach to the sector.  Do you want to dip your toe in first with a short-term experience (most organizations require a minimum of eight weeks) before committing to a career change?  If you are looking for a more meaningful professional experience, could you perhaps keep your day job and contribute your professional skills in a volunteer/ board member capacity (lawyers – your skills are much sought in this capacity – present company included!)  The volunteer approach may also apply to those who are passionate about a particular issue and would like to get involved. 

What is out there?

Before rushing off to start your own organization and/or going to the organization that pumps the most into marketing, do a little homework to see what others are doing.  If you are on this site, you probably are familiar with the various social entrepreneur networks but they merit repeating.  (In order from launch stage social entrepreneurs to late-stage “mezzanine” social entrepreneurs), check out Echoing Green, Draper Richards, Ashoka, Skoll Foundation, Schwab Foundation for vetted social innovators.  If you would like to work with social businesses, check out the portfolios of Omidyar Network and the Acumen Fund.  The Social Entrepreneur API will make this process even easier. 

In the next installment, I’ll talk about how to take this initial search and transform it into your ‘elevator pitch’ to friends and informational interviewees.

One topic we discussed is the predilection for pure-profit venture capitalists to invest in products rather than services.  It seems venture capitalists are far more likely to back a software company than a consulting firm.  The best explanation thus far (and feel free to weigh in), is that venture capitalists are predominantly looking for high leverage uses of their capital to bring in a 5x to 20x multiple.  Thus, they would much rather spend it in product development than professional service staff which rarely will achieve a significant multiple on investment.  Related, it’s hard to broadly replicate talented staff versus a product with the right distribution or franchise system. 

How does this translate in the social investment field?  While barefoot products are part of the equation, more often than not, the doorstep services can make or break a BoP product.  Indeed, half of the innovation lies in creating sustainable methods of reaching clientele – with microloans or cheap glasses.  Let’s take the world of BoP solar lighting.  While solar light producers like Cosmos Ignite and D.Light create solar products, Harish has taken the view that there are enough individuals out there making the technology (and that production is commoditized by China, Inc.).  Instead, he is focused on bringing the product to the BoP through professional installation/ service and enabling local financing.   From what I have seen, the ability to scale lies in the favor of the product companies.  However, Selco’s model provides a high quality experience for the end-user.  In addition, while most off-the-shelf solar products are cheaper than a Selco system at initial purchase, over time, Selco systems last longer and are price-competitive.  As a former foundation professional, one of the selling points for me was the ability to springboard from the high quality customer relationship and access to local finance to other service sectors – adding both financial and social value. 

Through trial and error, Selco has carefully chosen patient capital investors and foundations to allow Selco to establish a solid organization capable of long-term impact.  However, could Harish attract more commercially minded social investors or is his capital pool limited?  On the other hand, does the push for market share and product launch of more traditional VCs jeopardize both the social value and market position of product companies at the BoP?  From a prior experience, Harish warns of the lack of quality control in zeal to push out products.  At the Base of Pyramid, it only takes one faulty product to irreversibly damage the reputation of a product as customers demand durability.  However, one can appreciate the pressure on the entrepreneur.  As soon as the money is dispersed, the IRR clock starts ticking! 

Next week, I will start “So You Want to Get into Social Entrepreneurship” – a four part blog on transitioning to the social entrepreneur sector from another job.  The insights are gathered from my own transition and conversations with more than 50 professionals and leaders in international development/ social entrepreneurship – so tell your I-banker friends thinking of making the switch.   

This week’s blog is slightly delayed as I try to get through a cancelled United Airlines flight.  [Side note: For air warriors out there – don’t forget Rule 240 (which major US airlines conveniently forget to mention) which gives you the right to be booked on another flight should your flight be delayed for more than two hours.  (Unfortunately for me, United Airlines doesn't seem to be following its own Contract of Carriage.)]

This week’s topic is the Base of Pyramid with a slight twist – the BoP in California.  California is the largest state in the US with 50 million people and the seventh largest economy in the world.  It also has one of the most dysfunctional political systems in the world.  California recently faced a budget crisis which threatened to shut down state government.  The state shored up its budget but in the process has imposed extremely regressive measures that disproportionately tax the poor.  The agreement created drastic cuts to public services and increased pricing of public options in lieu of imposing new income taxes.  This presents a regressive tax that disproportionately affects the poor compared to the rich. 

For example, below I have included a bundle of common goods that have increased including a public transit monthly pass, utilities, and food expenditure.  As you can see, the effect on the individuals is dramatically different despite having the same bundle of goods. 

For the individual supporting a family on $35,000, these price hikes represent a 2.3% 'tax' on expenditure compared to only an 0.5% increase for a family with an income of $150,000.  The lower income individual is affected 4x as much!  Furthermore, a cut in government services/ increase in government service prices disproportionately affects the BoP as they are far more likely to use public schools, public transit, health clinics, and so on.  Limited service and increased pricing for the impoverished is a well-trodden theme at the Base of Pyramid whether it be water, financing, or housing.  As we see, such issues even affect the richest country in the world (on par considering the United States has one of the highest GINI coefficients among developed countries.)

The primary difference between the BoP in California (and the US) and those in developing countries are the poor in developing countries compose important voting blocks with high turnout.  Where are the poor in California to advocate against the current discriminatory effects? 

WasteBank started this summer by conducting an audit of current solid waste management practices to optimize a model that could deliver superior financial, environmental, and social returns.  The design of the summer was very open as to not rule out possibilities and particularly to be as collaborative as possible with Ciudad Saludable and Waste Concern in the study.      

 Going from consulting to private companies to working at the Bridgespan Group, the greatest difference was the need to be collaborative rather than authoritative.  Whereas recommendations to a private sector client were authoritative, deliverables to nonprofit clients were collaborative and ensured a sense of client ownership.  I tried the same approach this summer with partners – to only a moderate level of success.  I failed to realize the collabor-motion paradox in creating a venture: Ensure collaboration (and the time such collaboration takes) while keeping momentum towards forward motion.  I am not saying collaboration and forward motion are zero-sum.  Collaboration simply takes time to do right and funders, partners, staff, and constituents are impatient for results.  For WasteBank, partners wanted a clear sense of what role they would play in the organization while I was trying to brainstorm the entire organization.  We are now approaching the point of definition where partner roles are defined and the organization can push forward.     

There are a couple practical tips to ensure collaboration and forward motion:

1.       A mentor gave me outstanding advice: Accomplish one key task in setting up the venture each week – whether it is completing the business plan, creating a partnership, writing a proposal to a funder, and so on.

2.       Ensure complete transparency of action.  This ensures that partners understand one’s actions, even if a decision does not involve the partner.  Projecting action also helps partners provide feedback should they have any.  Even in a ‘down’ time with little external activity, it is still important to let partners what internal cogs are turning.        

When we talk about commercialization, we refer to the idea of bringing the profit margin in Base of Pyramid solid waste management to a point where the sector can attract commercial investment institutions like the (formerly?) bulge bracket Investment Banks, private equity firms, etc. and the enormous capital that they represent.  I believe that social entrepreneur sectors that successfully do good at no cost to doing well have a superior investment advantage.   I recently spoke to a large Private Equity firm that was specifically interested in social entrepreneurs as its pension fund clients were very interested in seeking investments that add social or environmental value. 

However, commercialization of a social entrepreneur sector in itself is not enough.  If markets were perfect, microfinance would reach the 1 billion people that can use it rather than the 100 million it currently affects.  Indeed, at the Base of Pyramid, the markets are far from perfect as documented by the various reports from WRI and Monitor Inclusive Markets.  As much as most free-market capitalists would love to, the hand of government cannot be wiped away on what are often basic services that fall in the purview of government services or positive human rights (e.g. water, education, healthcare, etc.)  I remember putting on a Base of Pyramid workshop for Indian CEOs at the World Economic Forum where we asked them to put together BoP businesses with social entrepreneurs.  The moderator then asked what role government should play in the endeavors.  The crowd unanimously agreed, “NONE!”  However, just ask the most commercial of Indian microfinanciers about draconian laws that have hampered the spread of savings accounts among borrowers and one gets a sense of the importance of government engagement.  I am not advocating for a government implementation role – merely one of engagement to create a policy ecosystem that enables the market-based spread of a sector like waste management. 

Thus, an important part of Waste Bank comprises setting the appropriate global and local agenda to spread solid waste management – from promoting bio-fertilizer to ensuring local transparency to pitching in efforts to continue the Clean Development Mechanism past 2012. 

Is it a problem that some of this may run into the realm of advocacy?  Not at all.          

… a team of people that turn vision into reality.

As part of the first phase, we did a ‘Best Practice’ audit of BoP solid waste management.  This forms the ‘template’ to be adapted by other solid waste management entrepreneurs and provides participating entrepreneurs (Waste Concern and Ciudad Saludable) customized implications for their work.  In addition, we took a hard look at other solid waste management efforts worldwide from Ahmedabad to Zambia. 

Who is ‘We’?  Summer associates were hired to work closely with each social entrepreneur on the ground.  Shreyans, a Wharton MBA student  and entrepreneur extraordinaire, is working with Ciudad Saludable in Lima, Peru to analyze informal sector collection and recycling.  Chris, currently at Harvard Business School, is working with Waste Concern in Dhaka, Bangladesh to optimize the compost/ carbon trading value chain.  A former Bain consultant, Chris possesses an uncanny ability to distill complex issues into simple solutions.  Last but not least, Steven, an undergraduate at NYU Stern.  Steven is like Winston ‘The’ Wolf in Pulp Fiction: if a task needs extra attention, we send in the Steven.  In addition, we have adopted (or more aptly pirated) Javier, who manages Ciudad Saludable’s international operation and is currently at Wharton.  Javier enthusiastically offered his knowledge and assistance with the project – and we were happy to impose! 

There are definite advantages and challenges from such a spread-out team.  Key learnings?

• While posting staff in remote locations can tackle ground analysis, this should ideally be done once:

o   critical relationships are established on-the-ground

o   staff have the proper tools and share a common vision to comfortably work remotely

• Communication is key – particularly across Geneva, San Francisco, Lima, and Dhaka.  Tools like Skype and Gmail Chat have proven critical for us to be in touch (and cheaply!)  Unfortunately, not much can be done about call timings.  Someone always ends up with a late night!    

• The more social entrepreneurs in different locations, the more buffer time must be built in to a project leveraging their time.  Remember, they have 100 other things on their plate and coordination is a bit like herding cats.    

Our tasks this summer are indeed ambitious and daunting.  The summer associates have done a great job stepping up and have left their indelible print on the initiative.