Wednesday, June 29, 2005

Interesting conversation starting (I think) on Social Edge - Investors and Entrepreneurs Discuss Breakthroughs in Social Capital. This is a constant topic among social entrepreneurs.

I'll quote my first post:

The mismatch

I think Roger did a good job of tackling these issues. From my standpoint, the real one is the issue of sacrificing return. The people who are promoting social investment successfully have to promise returns to their investors. Either they fix the return and manage the risk to guarantee it, or they only invest in the cream (most lucrative) investments. I don't know how many times I've heard from investors that they want to invest socially, but at no sacrifice to return.

Unfortunately, there are far more needs out there that involve risk. The low-risk-fixed-return social enterprise and the high-risk-high-return social enterprise, represent a small slice of the social enterprise opportunities. And, we do have functioning capital markets that address the needs of this slice.

When social entrepreneurs say that we don't have a functioning capital market, they are talking about capital for the great majority of social enterprises. And, investors tend to steer the conversation right back to the low-risk-fixed-return or the high-risk-high-return enterprises. So, I see us talking past each other.

I run only technology social enterprises: I have better margins than most social enterprises. But, I am starting tech enterprises, so they are medium to high risk. And, if they had high returns, I know a lot of great venture capitalists who would invest. But, they aren't high return opportunities (usually because the market is limited in size), so we fall into this giant capital market gap everybody talks about.

Because our projects and most others are medium to high risk, it's also hard to get traditional foundations and donors to support these enterprises. So, you have to raise unrestricted money or find the narrow slice of donors and foundations who are comfortable with the risk, given the social return.

Tuesday, June 21, 2005

Last night I attended the premiere of The New Heroes, a PBS show on social entrepreneurs that airs in one week. The event was hosted in San Jose by the Community Foundation Silicon Valley.

Robert Redford, the host of the show, was there. He really gets social entrepreneurship, which is no surprise considering he founded Sundance. Jeff Skoll also spoke: the Skoll Foundation is the major backer of the New Heroes.

The show is really great: I saw one hour out of the four that will air during the next month. The three entrepreneurs featured were my buddies David Green of Project Impact and Martin Fisher of KickStart (formerly ApproTEC) as well as someone I was delighted to meet and have dinner with afterwards, Kailash Satyarthi. Kailash rescues people (mainly children) from slavery/debt bondage/trafficking, and is promoting the Rugmark label as an indicator of no child or debt bondage labor. Each one of these entrepreneurs does incredible things, and I could go on and on. But, it would be better if you TIVO'd these shows and watched them for yourselves.

Skoll is really investing in celebrating social entrepreneurship. A big message from the SEs featured last night is that we have to get the word out that this is viable option for career and life choices, so that more people become part of the New Heroes!

Sunday, June 05, 2005

The 2005 Winners of Stanford's Social E-Challenge competition were just posted. I enjoyed being a judge for the finals, and was impressed by the quality of the ventures that made it to the finals.

This quality is indicative of both the interest and sophistication of students in social entrepreneurship. It provides real hope about the future of our society, if our best and brightest put this kind of value in meeting the larger needs of humanity.

Thursday, June 02, 2005

I had lunch yesterday with Mitchell Baker, head of the Mozilla Foundation, the creators of the Firefox browser. We had a wide ranging conversation about the challenges of how to run nonprofit social enterprises, especially technology enterprises. I think that Firefox is a great example of responding to market failure. In this case, it was Microsoft's dominance with Internet Explorer that removed competition and innovation in the browser space. Mozilla has developed a community that has created real choices in this space, and millions upon millions of people are benefiting.

As usual, I came away with more ideas than I brought to the table! I think that she's accomplished some incredible things at Mozilla, and the Benetech team are big fans.