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  • Jeff. Thank you, Tina. Thank you. Hello, everyone. How are you doing?

  • Great. Awesome, awesome. I want to start with taking you back to my

  • senior year in high school a long time ago.

  • And I was playing in a football game.

  • It was the seventh game of my senior year.

  • We had lost every single game of my junior year.

  • We lost the first six games in my senior year.

  • And I was a very mediocre football player on a really lousy team.

  • And it was late in the game,

  • in this particular game I actually had a pretty good game.

  • I caught a touchdown pass and I'd caught a couple of other passes,

  • so I was having a pretty good game and we were actually within

  • kind of striking distance of potentially winning the game.

  • And as we were on the opponent's 10-yard line

  • and as the quarterback rolled out,

  • I was in the end zone and I happened to be open,

  • but the quarterback didn't see me.

  • And I had to split-second decide,

  • so I raised my hand and let the quarterback know that I was open

  • or should I - and thereby take the chance that he throws me the ball

  • and I drop the ball and become the goat or should I not

  • raise my hand and let the quarterback have his chances,

  • if he gets in the end zone. And my decision it felt like an eternity

  • in that split-second of my calculus.

  • And I ended up making a decision that's kind of haunted me,

  • but then formatively changed me for years.

  • I made the decision not to raise my hand.

  • And the quarterback didn't see me,

  • he ended up getting tackled and we ended up losing.

  • And I struggled with that so much afterwards because

  • what really was the reality of what it was,

  • I was more afraid of failing than I was afraid

  • of being mediocre at that time in my life.

  • I didn't have enough confidence in myself to really step

  • out there and appreciate what I really could do.

  • It was only later that I had learned that I had more fear about

  • being mediocre than I did about failing which is ultimately what

  • pushed me over the entrepreneurial cliff, if you will.

  • The second one that I want to mention is failing at

  • my - getting my lifeguard certificate when I was 16.

  • And I thought I studied, I thought I did the practical exams;

  • I thought I did all that, but I failed miserably on both.

  • I failed on the practical exam and I failed on the test.

  • And for years, again,

  • I agonized over how can I fail a lifeguarding test?

  • How could I do something to fail something like that?

  • But when I realized what it did for me it was one of

  • those formative moments that it taught me the rest

  • of my life that I better out-prepare everything.

  • So today, I'm not necessarily the sharpest

  • guy intellectually in the room,

  • but I will outwork anyone in the room.

  • And I learned that kind of a secret to a successful 40-hour work week

  • is to work 80 and that's just how I can - that's just how I can do it.

  • I also learned the value of networking.

  • I got a pretty good job out of graduate school because

  • I went to a pretty good graduate school.

  • I went to a pretty good graduate school because

  • I had a pretty good job before that.

  • I got a pretty good job before that because

  • I got a pretty good internship.

  • I got a pretty good internship because I was involved in

  • the accounting society at my school and I hosted different

  • firms to come into town to meet with the students.

  • And as they were coming in to meet with the students,

  • I realized that, hey, I can network with this people and I can

  • maybe do something good for myself.

  • And I did that and it kind of helped.

  • And the value of networking is just so important,

  • particularly at a younger age.

  • I will give you one other example of the value of networking.

  • How many of you've heard of the economist, Jeffrey Sachs?

  • So most people have heard of him.

  • You're far ahead of me, I didn't know who he was five years ago.

  • But as I started on my quest to learn about

  • poverty alleviation in extreme poverty,

  • I kept stumbling across his name when I was

  • Googling around and doing web surfing.

  • And one night I decided - one night I found his e-mail on one

  • of the blogs I was reading and I thought what the heck,

  • I'm going to e-mail this guy, who probably will never respond,

  • but I'm going to try.

  • So, I e-mailed him at 11 o'clock at night,

  • got back over the next morning at 7:00 a.m.,

  • there was an e-mail from Jeffrey Sachs and it said,

  • hey, Jeff, nice to meet you, if you can call me at 10:10,

  • call me and I'd love to talk with you.

  • So I decided between 7:00 and 10:00, I better research who he was,

  • and thankfully, I hadn't done it the night before

  • I probably never would've emailed him.

  • And I got on the phone with him at 10:10 that morning

  • and we had a nice 20-minute conversation.

  • He invited me to New York to meet with him and he said,

  • I'm sorry, Jeff, I got to go,

  • I've got the President of Malawi in my office.

  • And I thought, jeez, I really felt awestruck.

  • And my point is you may call it e-mail stalking,

  • but I do it all with time.

  • I do it with LinkedIn, I do it with e-mail,

  • I probably emailed 10 people a week that I don't know

  • and probably nine of them don't respond.

  • But the one that responds tends to sometimes open

  • a door and sometimes we don't want to do that,

  • but I would really encourage you to kind of push yourself

  • out of your comfort zone and try doing that kind of thing.

  • I wanted to give you a little bit of my experience.

  • I think its relevant and talking about commercial entrepreneurship

  • and social entrepreneurship and I spent four years in

  • public accounting at Ernst & Young,

  • where I really learned what a CPA really means.

  • It means cut, paste, and attach.

  • And that was about the extent of my - I knew

  • I didn't want to be an accountant forever,

  • but I felt like it was a great language of business to really learn.

  • And now I spent 12 years involved in a

  • middle market kind of no name company.

  • And sometimes I think we get our brains,

  • we want to go work for the big consulting firm,

  • or a big investment bank or the big brand or whatever and

  • in reality sometimes the middle market-type companies,

  • you can get really great experience just

  • by working in a middle market business.

  • This was about a $300 million or $400 million business and I was

  • able to move around or move - I think I moved 10 times in 10 years

  • and I was able to move around and get lots of different general management

  • experience and it was really a great experience for me.

  • But towards my - the end of my late 30s,

  • I began to really think I want to go off on my own and I want

  • to take that entrepreneurial plunge, I want to do that.

  • My wife, who is a Mediterranean, and first generation American,

  • has the risk tolerance of Richard Branson.

  • So she is always pushing, pushing, pushing, to kind of do that,

  • but I grew up kind of Midwestern-ish and I had a very risk averse,

  • somewhat risk averse profile. But I knew I kind of wanted to do that.

  • I knew I want to do that and I felt like I was standing on a high board

  • blindfolded wondering if there was water in the pool beneath me.

  • Knowing that I want to take that plunge,

  • but I just can't quite take that plunge because

  • I wasn't sure if there was water in the pool.

  • And then to make matters worse,

  • my mom piled on and she wanted me to do it.

  • And then when your mom wants you to do something,

  • you know maybe it's a bad idea, right?

  • Because I remember when I played high school football,

  • we lost a game 42 to nothing and I had

  • a horrible game and I came into the house,

  • and she said, well, I thought you played good, honey.

  • So, I just wasn't quite there,

  • but I was - one night I was channel surfing late and I came across

  • an interview and there was an interviewer who was going around,

  • he was interviewing about 10 people, senior citizens.

  • And he was asking them what did they wish

  • they've done differently in their careers?

  • Every single one of those people said they

  • wish they've taken more business risk.

  • They wish they had kind of put it out there a little bit further.

  • And the last thing you want to do is get

  • to that stage in your life and feel like,

  • jeez, if only I had kind of taken that shot.

  • I'd much rather take the shot and be able to look back and say,

  • hey, I took the shot, it didn't work, but I took the shot,

  • I gave it everything I got.

  • And I realized at that time that I had switched my paradigm from that

  • high school football example of being more afraid of failing.

  • Now I was more afraid of being mediocre than I was of failing.

  • So I worked out a deal with my employer to leave and I spent three

  • months basically working with them on a transition plan,

  • I was running a $200 million business and I worked out

  • a deal with them and I felt really good about that deal

  • I was - took a tremendous amount of integrity in doing that,

  • I would really encourage any of you

  • to the extent you leave somewhere,

  • you only have your good name in life to really

  • live as your legacy and it ended up as I left.

  • After I left, I wanted to go find a company to buy and build.

  • And there had been a company that we passed on in

  • the company that I was at just before I left.

  • And I was out looking for businesses and I remembered that company.

  • So I went back to the CEO of the company and I said,

  • hey, do you mind if I contact these guys?

  • We passed on them previously.

  • And I said, yeah, no problem,

  • it was a - it didn't make sense for us in that particular situation.

  • And that was the company I ended up buying.

  • So really not burning bridges, really doing things right,

  • it was really so important.

  • I want to give you a little bit of synopsis

  • on the six - I have done six deals,

  • commercial for profit traditional deals since I went off on my own.

  • And I want to talk a little bit about the things

  • that were common between the good ones and the

  • things that were common between the bad ones.

  • And I had of the six, four were good, two were really good.

  • Not quite as good as Instagram, but they were pretty good.

  • And two were horrific,

  • kind of cratered on the rocks and bad news story.

  • And a couple of the things that are important,

  • the two bad ones, the economic cycle and the timing of

  • the economic cycle were both right before a recession.

  • So I bought one right in 1999 and I bought one in 2006.

  • And it's really difficult and the type that

  • I would do which were leveraged acquisitions,

  • the type that I would do if the economy turns on you,

  • you don't have a lot of room to maneuver.

  • The second thing is gross margins.

  • If you've got a 30% gross margin,

  • you don't have a lot of room to kind of bob and

  • weave if all of a sudden you hit a pothole.

  • If you got a 60% or 70% gross margin,

  • you got a lot more room to make a mistake and kind of weather that.

  • You are also tying up a lot less cash and working

  • capital in receivables and in inventory.

  • I also learned - you want to share the upside with people,

  • but be really careful of the dilution.

  • It's really - I know two people that started businesses

  • and ended up selling them each for over $100 million

  • and they each ended up with only 5% of the company.

  • And you might say and you're right,

  • 5% of $100 million is a lot of money and it is,

  • but there is no reason that they shouldn't

  • had 30% or 40% of those companies.

  • And what tends to happen is if I'm starting a company and I want to have

  • Johnny come work with me because I know he has got some skill set,

  • it's really easy to say, hey, Johnny, come work with me,

  • I will give you 10% of the company.

  • And Johnny says, okay, I will come work with you, 10% of the company.

  • Well you kind of forget about that.

  • Well, Johnny doesn't forget about that, right?

  • Whereas you could say to Johnny, hey, Johnny, come work with me,

  • I'll let you to share in the upside with me,

  • I will give you some options, it will be great, you know,

  • we'll work at that way.

  • And Johnny will be thrilled generally, to come and work in that.

  • So be - I really strongly believe in sharing the upside

  • with those that perform and people that are with you.

  • But I also don't believe in just giving it away and it's really easy

  • particularly in start-ups to be very easy about giving it away.

  • I know people that have given it away actually and then

  • those people didn't even stay with the company.

  • So they left, but they still were - they still

  • were vested in the equity that they had.

  • Really understand your partners.

  • The two companies that did not work,

  • I knew in my gut, I just knew at the time I was buying them.

  • Deep down that these guys that I was buying their

  • businesses from weren't great characters.

  • They didn't have the integrity that I really needed to have.

  • And when you're buying a business or building a business,

  • integrity is just so important,

  • the integrity of the people that you're working

  • with and what you're seeing, what you're doing.

  • I also believe very strongly in breaking bread with your prospective

  • partner and taking your spouse or your partner,

  • your friend with you and actually meeting with their -

  • with them and their spouse or their partner.

  • There is a lot in a casual setting that can kind of come out and

  • you can interpret things and if you're a left brain person,

  • but your spouse is a right brain person,

  • you will see things very differently and I think it's

  • really important to be able to do that in order to really

  • understand the partners that you're working with.

  • Roundabout in my early 40s,

  • my wife and I began to think about transitioning from what was a more

  • of a concentration in kind of business success to more of life significance

  • and we felt like we've lived a significant life all along,

  • but we really wanted to move much more

  • of our concentration over to that.

  • So we began to kind of look around and I thought;

  • do I want to do another deal?

  • Do I want to - and at the end of the day what

  • are they going to put in my tombstone?

  • Are they going to say, he worked another deal,

  • he multiplied his money X, X, X a bit more. No hopefully, not.

  • Hopefully, they're going to say I was a good human being,

  • I was a good parent, I was a good spouse,

  • I made a difference in the life of another.

  • And we began to really think about,

  • you know, how do we create a business

  • where we can transition to that.

  • And we started to study social enterprises

  • and social entrepreneurship,

  • which is what I really want to talk to you about today.

  • Can these products actually help save the world?

  • Can something as basic as a bottle of Newman's Own salad dressing

  • actually bring joy to a child with a life-threatening disease?

  • Can a bottle of water sold here in the United States actually

  • help bring clean water to someone in that developing world?

  • Can a pair of TOM shoes purchased at Nordstroms actually

  • put shoes on someone else's feet in South America?

  • And can something as basic as a ream of office paper,

  • not much more basic than that, right?

  • Can that actually provide a meal for a family of five for a week?

  • And the answer is, yes, they can.

  • And they're doing it through a really interesting

  • model called social entrepreneurship.

  • And I want to talk a little bit about what this model is.

  • There is tremendous overlap between commercial

  • entrepreneurship and social entrepreneurship.

  • They're very difficult to pull apart.

  • I do feel like that you can pull on a little

  • bit apart by the mission of the business.

  • Is the mission of the business to really fulfill our societal challenge

  • or societal solution or is the mission of the business to create value

  • and economic return and that kind of stuff for shareholders?

  • And just as I say that,

  • there was a bunch of counters that I would say against it.

  • But they're very similar in terms of the implementation of them and

  • I feel like oftentimes social entrepreneurs screw up because they

  • look at their business as nine parts cause, one part business.

  • When in fact in the beginning,

  • it's got to be nine parts business, one part cause.

  • Because if the business doesn't stay around long enough,

  • because it can't make it, we can't do anything about the cause,

  • so in the early days of a social entrepreneurship

  • or social enterprise,

  • there - it's all about making the business successful,

  • so that you can deliver whatever kind of give back model you've got.

  • But on the left we've got the traditional for-profit

  • businesses and they give back tremendous amounts.

  • I'm a large significant free market pro-capitalism believer,

  • and I believe these businesses give back tremendous amounts of money.

  • But in the end, ideally,

  • I mean, in the end legally they're really focused on

  • creating economic return for their shareholders.

  • And they can't be entirely focused on this other model.

  • On the right side, you've got the non-profits and to be honest,

  • they focus most of their time on fundraising.

  • And the other portion of their time, they spend on development.

  • So they don't really have the time to create true

  • businesses and oftentimes the NGOs aren't necessarily

  • the best business people in the world.

  • So in the middle here, in the bottom you've got this hybrid

  • model of social entrepreneurship, social enterprises.

  • And the beauty of this is, they can be anything,

  • they can be for-profit businesses that are

  • donating in our case 100% of its profit,

  • or they can be for-profit businesses that are donating 2% or they

  • can be donating a pair of shoes for every pair of shoes they sell.

  • They can be very different models,

  • there is no right or wrong in that, in my mind anyway.

  • On the other hand, you can have non-profits that actually create

  • sister companies and those sister companies are for-profit entities

  • that maybe were helping lower their admin rate,

  • so they can attract more dollars.

  • And I think it's a really exciting model because of that.

  • So, who are these change makers?

  • And we all know of the people,

  • like Gandhi and Mandela and Mother Teresa and

  • they truly are larger than life people.

  • But I believe that there is someone else in this room

  • and I believe it's you who also can be a social entrepreneur

  • and you can really focus on this type of business and

  • I think you can find tremendous happiness,

  • fulfillment and economic return by doing it.

  • So, I believe that ordinary people just like

  • you and I can do extraordinary things.

  • And you hear about the Mandelas and all those guys,

  • but they all started out as ordinary people.

  • They just kind of pushed one foot in front of

  • the other and they kind of jumped off that,

  • out of their comfort zone and made it happen.

  • And one of the things I think the more academic we get,

  • the more intellectual we get, the more education we get,

  • the more we learn all the reasons that businesses

  • fail and a lot of them do fail.

  • But in fact you got to take that step.

  • What we should do is twist that paradigm and say instead

  • of knowing all the reasons that they don't work, we should say, okay,

  • now I know all the reasons that businesses do fail,

  • let me use those to make sure that my business doesn't fail.

  • I think that's a twist that - I think we have to twist that paradigm.

  • I want to give you an example of two social entrepreneurs

  • that have done incredible things.

  • The first is a guy named Craig Kielburger.

  • Has anybody ever heard of Free The Children Organization?

  • Not many people, it's an organization that

  • Craig when he was 12 years old started.

  • Craig was 12-year-old kid living in Toronto.

  • He was reading the Sunday paper and he came across an

  • article of another 12 year old boy who was murdered

  • while protesting against child labor in Indonesia.

  • And he said mom, dad, I got to go protest on Iqbal's behalf.

  • And his parents said well, Craig kind of two problems.

  • One, we don't have any money and two you're only 12.

  • And he said well, I'm going to raise the money,

  • I'm going to find somebody to go with me,

  • I'm going to make it happen. And he did. He did bake sales.

  • He did all kind of stuff to raise the

  • money to be able to go to Indonesia.

  • He went over to Indonesia just so happened that

  • the Prime Minister of Canada happened to be there at the same time and

  • he heard about this 12-year-old Canadian that was there,

  • the two of them connected and the rest is kind of history.

  • That was 17 years ago.

  • Today, he runs an organization that educates 50,000 people

  • in the developing world every single day,

  • just because he took that small step out

  • of his comfort zone to make it happen.

  • The second is an individual named David Perez.

  • You won't have heard of him.

  • Now he is a friend of mine from San Diego.

  • And when Katrina occurred,

  • David said, he came to me a day or two into it and said,

  • Jeff, I'm really dissatisfied, change isn't happening fast enough.

  • We are not getting medical supplies to

  • the people that need it on the ground.

  • And I said okay, I don't really know what you're going to do,

  • he's a middle class guy living in San Diego and didn't really

  • have any money and but he said I'm going to figure it out.

  • And I said, all right and three days later he showed back up

  • at my doorstep and looked like he hadn't slept in three days.

  • And in fact he hadn't slept in three days and he said,

  • Jeff, I'm going in. And it sounded like a code word to me.

  • I really wasn't sure what going in meant, but he said I'm going in,

  • I'm going to make it happen.

  • So he took a couple of weeks off from his

  • work and he - by the time it was over,

  • he had been on the phone with Richard Branson,

  • he had been on the phone with Michael Dell,

  • he had been on the phone with senators and congressmen,

  • he had been on the phone with people on the ground.

  • He ended up raising enough money to and getting in-kind

  • donations of people's airplanes to fly 72 727s into

  • New Orleans carrying medical supplies.

  • And he ended up taking up a full load of people out

  • to New Orleans to San Diego where he relocated them,

  • all because he had enough chutzpah.

  • He just kind of put it out there. He had a Rolodex;

  • he started calling people, he wasn't - he didn't get

  • "no" as a bad word to him. And I believe that if people like this and

  • just like you guys and just like me, we can all do this.

  • I think we are at the beginning of a really powerful

  • and really exciting way of a social entrepreneurship.

  • And unlike a lot of things that are on the horizon,

  • that are kind of looming in their - kind of they're not so good,

  • there are dark clouds on the horizon,

  • this is a really powerful positive thing.

  • And it's a powerful and positive thing because

  • you can really be part of this movement.

  • I think it's going to be moving for long period of

  • time and it has to do with five principal things.

  • The first is you guys, young people.

  • Young people today want to be part of something bigger

  • than themselves and they also want to make a buck.

  • And you can do both. You don't want to wait 30 years to do that

  • and you don't have to wait 30 years,

  • so you can kind of get right at it. The second thing is the Internet.

  • The Internet brings these global issues to our laptops 24/7.

  • They come at right hours, we can't turn them off.

  • Now you heard about - you've all heard of Kony 2012 pretty much,

  • the Invisible Children, I mean, that went viral - over

  • 80 million people watched that video in one week,

  • because of 17 to 29 year olds texting it,

  • facebooking it, tweeting it, kind of doing everything with it.

  • And these issues they're coming to us and now there is a vehicle

  • to communicate and to inform that didn't exist before.

  • The third thing is also the Internet.

  • The Internet makes all of us be academic researchers from our laptop.

  • There is no excuse whether it's a new business you're starting,

  • a non-profit or for-profit whatever it is,

  • there is no excuse for any of us not to be experts

  • before we put a business plan together,

  • before we talk to an investor, before we do anything like that,

  • because we can get right,

  • we can get incredible amounts of information

  • right from our couch with our laptop.

  • I'm looking at - I'm researching to bringing

  • a coffee product in from Haiti,

  • where we would bring it and help the local people there,

  • donate the profits back to Haiti.

  • And in the period of three days,

  • I was able to talk with USAID people,

  • I was able to get growing reports,

  • I was able to communicate in ways that I would

  • never been able to do, 20 years ago. The fourth thing is celebrities.

  • Celebrities are increasingly using their platforms to pontificate

  • for their causes and what's important to them.

  • And, when Bono gets up and talks about ending AIDS,

  • there are millions of people listen.

  • And millions of people listen not only with their hearts,

  • but they open their wallets and they listen that way too.

  • And finally, the fifth thing is my generation, the baby boomers.

  • As the baby boomers are retiring,

  • a lot of them are giving back significant

  • portions of their net worth.

  • You probably heard about what Warren Buffett and Bill Gates are

  • doing with challenging the billionaire families to give back

  • half of their net worth over the remainder of their lives.

  • I think there are up to 70 families that have agreed to do that.

  • And what's really amazing about that

  • is when that money comes back in,

  • that money just doesn't come in and say okay,

  • do what you want with that, guys.

  • Now these are people that created value, created businesses.

  • They want to hold people accountable.

  • They want - when we look at projects that we want to do,

  • I look at P&Ls of the projects.

  • I force them that - to go through that discipline that governments

  • just aren't really equipped to be able to do effectively.

  • So, I think this whole wave is a really powerful thing.

  • But you might ask, is it really important?

  • And I say, heck, yes, it's important.

  • And the reason it's important, isn't part of the graph.

  • If you look at this is a 30 year graph of - the pink line is the percentage

  • of foreign aid as a percent of gross national product of Africa.

  • And you can see it's rising,

  • rising, rising and then you can see per capita GDP dropping,

  • dropping, dropping and they're not only not correlated,

  • they are inversely correlated. And the point is governments;

  • it doesn't work when governments give money to other governments.

  • There's corruption, there is issues,

  • there are challenges to get in the way, it's got to be bottom up.

  • It's got to be a hand up versus a hand out.

  • And that's really our - that's really our model.

  • It's got to be people like you and I,

  • getting on our social media and really making it happen that way.

  • Five years ago I had the privilege to - I had that individual,

  • Craig Kielburger from Free The Children,

  • come to our home and he talked to us about poverty alleviation.

  • And, really our kids were - I have four kids in high school

  • and middle school and they were really taken by it.

  • And, after he talked at our house, my children came to me and said

  • "mom, dad, we're going to Africa this summer."

  • And, I said well, I don't know how

  • you're going to Africa this summer,

  • but if you're going - but - and my wife, who is a good Jewish mom, said

  • "if you're going, we're all going."

  • So, we all upped and went,

  • and we took 20 of us to Kenya and Ethiopia for a month,

  • and we actually built water systems - helped build water systems,

  • helped build schools and it became

  • really a transformative experience.

  • And, I wanted also my kids to understand the difference

  • in relative poverty and absolute poverty.

  • Relative poverty being I must be poor;

  • I can't afford the latest iPhone.

  • And, absolute poverty being I live on less than a dollar a day;

  • I walk 10k, sometimes twice a day; oftentimes I get polluted water.

  • We learned about the water crisis.

  • The water crisis is that 4,500 people die

  • every single day because of a lack of clean water,

  • something as basic as that.

  • And that's the size of one large public high school evaporating every

  • single day and 90% of those people are kids under the age of 5.

  • We learned that half the hospital beds in the developing world

  • are occupied with people with waterborne related diseases.

  • We learned about the poverty trap and the poverty trap

  • is that girls can't go to school in most areas because

  • they have to get the water every day for the family.

  • That's their job and because they get

  • the water every day for the family, they're not going to school,

  • they tend to get married and pregnant at 13 and 14 years old.

  • And, then their children are born in the same poverty

  • trap and this is a trap that they can't get out of.

  • And oftentimes poverty alleviation,

  • it's kind of like a ladder that's just one wrung out of

  • reach and all people need is just a little boost up to

  • grab that bottom rung to begin to climb their way out.

  • And, while we were there my 14-year-old daughter,

  • Nina, at the time came to my wife and I and

  • she had a bit of an epiphany and she said,

  • "You know, dad, we really want to do something about this. We'd like

  • to start a business that can kind of help these people in some way."

  • And, we thought that was a really great idea and she got

  • together with our other kids and cousins that were with

  • us and they actually came up with the name Nika.

  • Nika means to give in Zulu.

  • And, before we launched it, we began to think - I began to think about

  • this quote that I really like a lot,

  • which is that destiny is not a matter of chance,

  • it's a matter of choice.

  • It's not a thing to be waited for, it's a thing to be achieved.

  • And, when destiny knocks on your door, you don't say

  • "hold on a second, I gotta comb my hair."

  • You don't - you grab it by the throat, you wrestle it to the ground,

  • you stomp all over it, you make it happen because you don't know

  • when it's going to come back again.

  • So, we - as we got back to the United States, we began to create Nika,

  • and Nika is a bottled water brand in the United States that donates

  • 100% of its profits to - back to the developing countries.

  • And, as we got into it, we picked water.

  • A lot of people go "oh,

  • why did you pick bottled water? Does the world

  • really need another bottled water company?"

  • And, as - we thought there was something very symbolic about providing

  • clean water or selling water in the United States and providing

  • clean water to others in the developing world.

  • But, people really struggle with the eco side of it.

  • So, we developed Nika with an eco policy that we believe

  • is best-in-place eco-wise for a plastic company.

  • We use recycled plastic to make the product and

  • we're certified carbon neutral with the product.

  • And, as we really got into this over the years,

  • what we realized is that it's only costing $20 to bring

  • clean water to someone for a lifetime, $20 bucks.

  • I spent $12 at Starbucks the other day.

  • I spent $35 at the movie theater the other day with my family.

  • Now, it's not made to make us feel guilty but that's made to

  • make us feel like we can make these tough societal solutions.

  • We can solve these issues without having to give up that other stuff.

  • And, we thought if we could be a $10 million revenue company,

  • which would mean we generate about $1 million after tax and profits,

  • we could bring clean water to 50,000 people a year.

  • And, by doing that that's kind of one thing and

  • that's one thing that we're motivated on,

  • but what I'm really motivated on is talking to people like yourself.

  • And, if a couple of you guys end up doing your own venture

  • that has some kind of giveback component to whatever it is.

  • And, then if TOMS Shoes is doing what it's doing and

  • Newman's Own is doing what it's doing and somebody else on the other

  • side of the world is doing what they're doing,

  • now all of a sudden you add all those up and you've

  • got a sea change of businesses that are,

  • in one way or another, giving back.

  • And, when those businesses give back, you can move mountains with it.

  • I have a short video that I'd like to show,

  • going through the water crisis,

  • but also as a startup entrepreneurial social venture,

  • it's important to really have some

  • sizzle when you're a small company,

  • you don't have a gazillion dollars to invest in it.

  • I wanted to chat briefly about another topic that's really near and

  • dear to my heart and I think it's something that's really evolving.

  • It's called conscious consumerism.

  • And, I think that there's four forces that are really

  • focused right now on making it so that we,

  • as consumers, can really choose the products we want to enjoy,

  • and by choosing the right products,

  • we can help in society's most challenging issues.

  • And, it has to do with four things.

  • The first is the concept of social enterprises.

  • You're staying it in universities all across the country,

  • course we're being taught now on social entrepreneurship.

  • You're seeing hybrid models where in the past people would

  • never invest money in a for-profit business that has

  • a giveback - a large giveback model/component to it.

  • You're seeing lots of industry framework beginning to be created.

  • And, on the right side, you've got the Internet.

  • One in nine people on the planet have Facebook

  • and it's a huge social media opportunity.

  • When there's 200 million tweets a day

  • and 500 million YouTube views a month,

  • you've got this ability just like in the Kony 2012

  • where things that go viral right away and very

  • quickly and at the bottom you've got money.

  • You've got the millennials that have $40 billion

  • in discretionary purchasing ability.

  • And, you've got moms that have become an incredible force,

  • not only in the mom blogging communities,

  • but also in the household and controlling

  • over 80% of the purchasing decisions.

  • And, what do millennials and moms have in common?

  • They really have in common that they're really

  • much more cause-oriented than 50-year-old men.

  • So, those people all of a sudden, they really want to support causes.

  • And, then on the left side, you've got the consumer.

  • For the consumer now,

  • over - last year 40% of consumers said that they actually bought

  • a product because of a cause related aspect to it.

  • That's double of what it was in 1993.

  • We also had 80% of consumers saying they want

  • businesses to be more cause-oriented.

  • We have over 80% of people saying they would actually buy

  • a more expensive product or actually try a new product,

  • which is even more challenging to get people to do,

  • if it was cause based. And, all these forces really give us

  • I think an obligation as consumers.

  • And, whatever we're buying, we should do a little homework on it.

  • We should make sure that it's supporting the right cause and by God,

  • if they say they're cause-oriented,

  • dig a little deep on it to make sure they're actually not charlatans

  • that are just saying it to be commercial about it.

  • Go on to their websites.

  • When you go on the Nika website and you drill

  • down on where we've donated our money,

  • I have contact information, I have emails, I have telephone numbers.

  • I encourage people to communicate to -

  • call these people and talk to them.

  • Oftentimes, I will drill down on somebody's

  • cause-based page and it will be a dead link,

  • and you know there's a problem when it's a dead link, right?

  • But, even beyond that, if you're buying something we,

  • as consumers, have the ability to control what we buy.

  • There is lots of good products out there.

  • Choose one that's got a good cause to it.

  • So, these giveback brands,

  • you've heard of some of these - I'm sure some of the littler companies

  • on the top and you're probably wondering why you've Kroger on there,

  • why you have Walmart on there?

  • And, the reality of it is Kroger - large grocery chain -

  • donates 12% of their pre-tax profits to charities.

  • Walmart, for all the crap that they get, they donate

  • $2.5 billion in product and cash each year.

  • So, it's not just happening with these

  • trendy entrepreneurial start-up brands;

  • it's also happening with these larger brands

  • that are really doing it in a meaningful way.

  • I wanted to leave you with some lessons learned and these

  • cut largely across all kinds of entrepreneurship,

  • whether it's social or commercial, whatever.

  • And, the first is begin with the end in mind.

  • How many of you have read the book The Seven Habits by Stephen Covey?

  • That's pretty good.

  • So, usually when I talk to the college students,

  • no one has ever heard of who Stephen Covey is.

  • So, I would really encourage you,

  • over the summer, pick up a copy of that book, read it.

  • It's a great easy read for all practical commonsense

  • but it puts it in a really great framework.

  • One of the concepts that he talks about

  • is begin with the end in mind.

  • Think about where you want to get to and then work backwards

  • to where you're now and then develop your plan.

  • And, any time I buy a business or build a business,

  • I write the selling memorandum,

  • while I'm doing the due diligence to buy it. Why do I do that?

  • Well, I do that because I want to see what holes I have

  • in this business that I have to fill over the next three

  • to five years while I'm building that company.

  • So, for example, if I write that plan and I notice that there is no intellectual

  • property and I want to create some sizzle when I sell it,

  • I know I've got to build in some intellectual

  • property into that business.

  • The second thing is be transparent with your donations.

  • I mentioned that earlier about just,

  • you got to be fully authentic and transparent with it.

  • The third thing is act boldly with your financial backing.

  • That's kind of like applying to Stanford.

  • You don't want to just give it your old high school

  • try and say ah just whatever - whatever, whatever.

  • You want to put your best foot forward, right?

  • Or you're not going to get in.

  • That doesn't mean don't tell the truth,

  • but that means just kind of put it out there.

  • People don't want to partner with somebody that

  • says that person is kind of a six out of ten.

  • People don't want to partner with people like that.

  • Find like-minded people.

  • This relates more to the giveback businesses.

  • In the traditional, commercial entrepreneurship,

  • you can create options, you can do that kind of stuff,

  • but if you're really a true giveback business,

  • you don't necessarily do that.

  • So what you have to do is make people want to run through

  • walls for you because they're inspired by the cause;

  • because they love what you're doing.

  • When we first started Nika,

  • I had a woman or someone come to me and say,

  • you know, that so and so on the Facebook has that they were

  • co-founder of Nika and they'd come a month or two later.

  • And this person was kind of upset about it and I said hey,

  • we just hit the lottery. That's great.

  • I want everyone to feel like they're a co-founder of

  • this because the more people that feel like this,

  • the more they're going to run through walls to help us

  • with our brand and to help us achieve our mission

  • which is to end the worldwide water crisis.

  • So you really want to make people feel like it's everyone's business.

  • The product has to be good and it has to be priced competitively.

  • I know that Whole Foods upper management, because I talk with them,

  • they love Nika but when you get down to the trenches,

  • if it doesn't have the inventory turns or it

  • doesn't have the profit margin for them,

  • those lower level people frankly their jobs are to

  • maximize asset efficiency and to maximize profit.

  • So they're going to ultimately not keep it on the shelf,

  • even if the CEO wants it. I mean he may override it for a little bit

  • but eventually it's not going to do that.

  • So the product has got to have a good value proposition.

  • I know a woman who has a maple syrup that it fits everything.

  • It's awesome, except it tastes horrible.

  • Well, how many times are you going to buy this maple syrup even

  • though it's got a great cause and it's really helping her cause,

  • you're not going to buy it that much.

  • It's got to have a good value proposition.

  • Outsource as much as you can. Keep your costs variable.

  • Human nature is, if I make it all myself,

  • I can make it for lower cost because I'm not paying

  • that profit margin to one of my suppliers.

  • Well, the reality of it is if you're just starting something,

  • first of all you can't afford all the capital equipment

  • or whatever you need to kind of get into that business,

  • but those people that are suppliers,

  • they're probably pretty darn good at it,

  • even though you're paying them a profit margin,

  • you're probably getting it even cheaper than

  • you could have - than doing it on your own.

  • And the other thing is,

  • as you start to get bigger and bigger customers,

  • as you're scaling your business and if you're doing it all yourself,

  • you really are not scalable if it's a product,

  • because they're not - you've to add more equipment,

  • you've to add more capacity,

  • but if you're outsourcing it these people often

  • to most of the time have the capacity.

  • So you can grow right with them,

  • and it's a big opportunity with your customers.

  • The eighth thing is learn on someone else's nickel.

  • This doesn't mean screw up on someone else's nickel but

  • if you've got the next Instagram, I mean go for it.

  • And I think that's awesome but in reality

  • it's great if you can kind of learn,

  • get your feet wet, make a lot of mistakes for a few

  • years or for some period of time to really learn what

  • you need to do when it's really on your own.

  • I make - I probably make 20 mistakes a day.

  • I probably made 50 mistakes a day when I was younger,

  • but my mistakes are less today than they were 25 years ago.

  • You're going to make mistakes,

  • that doesn't mean put your passion on hold,

  • but this - maybe it means just kind of percolate it for a while,

  • while you're doing some - while you're working and getting and earning

  • some money and creating some economics and that kind of thing.

  • The ninth thing is oftentimes people quit

  • when success is right around the corner.

  • And I tell people, look you know, unless it's systemically flawed,

  • and it's very difficult to tell, but unless it's systemically flawed,

  • keep pushing, keep persevering through it.

  • Maybe you should ask your - a mentor or ask a parent,

  • ask a business person,

  • ask a CEO of another company to kind of check and balance

  • you to make sure that it is - you're in the right track,

  • but kind of push through that threshold to persevere.

  • Find a partner or mentor who balances you.

  • We are all going to be good at one or two things,

  • but we're not going to be good at five or six things that

  • cut across all functional areas and most people tend to be

  • more left brained or right brained and I find it's really

  • important to partner with somebody that complements you.

  • And this doesn't mean they have to be an equal owner,

  • it doesn't mean they need to be an owner at all.

  • They could be a parent, they could be a professor,

  • they could be a friend, they can be a CEO of another company,

  • but partner with somebody else because

  • the minute you go to talk to investors,

  • they're going to start drilling you and if you're a sales and marketing

  • person and they start drilling you on cash flow and you go uh-huh,

  • I mean you're done. It's over with that particular investor.

  • So, make sure you complement yourself with somebody

  • that really can pull that stuff out.

  • And the final thing is what I call the rule of two's and that's that

  • everything takes twice as long and costs twice as much money.

  • It's just human nature and that damn Excel.

  • Excel makes everything really easy because we can

  • make an Excel model like just really dynamite.

  • In reality it's a lot harder to hit those models.

  • And I find it just takes a lot longer than we think as human nature.

  • So, if you can, run your models out for an extra two years,

  • run your cash flows out for double your costs so that you

  • really know - last thing you want to do is run out of money.

  • And the last thing you want to do is run out of money when success

  • is right around the corner because you're going to go out and raise

  • money when you're out of money and talk about dilution,

  • you're going to get wiped out.

  • And then you're going to be really unhappy.

  • So, make sure you get enough capital upfront

  • so that you can kind of weather that storm.

  • So with that, I'll turn it over to some questions. Great.

  • Yeah. The video mentioned that Nika donates 100% of its profits

  • to those countries so I wanted to ask that how does it

  • work out for a social enterprise that wants to invest

  • in its own business to grow to a certain point,

  • is it like it grows to a certain point before we think

  • about that number or like how does that work out?

  • Your question is as you're figuring out

  • how much to donate of your profits,

  • I mean when do you figure that out;

  • in the beginning or as you get further into it?

  • Yeah, like do you get to a point when your size like - because

  • some social enterprise would want to invest in ongoing before

  • they decide that all of those profits should go.

  • Yes, it's really up to you.

  • I mean if you say you're donating a portion of your

  • profits upfront you've got to be really transparent

  • with it or people that look at you are going to say

  • "I'm not really sure that they're doing this for the right reasons."

  • So I think you've to do that.

  • I mean if your end goal is to give back,

  • but you really ultimately just really want to create economic

  • return I mean I'd focus on the economic return,

  • make the business successful.

  • And then over time, add back a component into the giving back because

  • if you muddy the water with investors it tends to - investors typically

  • either want to come in because it's a social venture,

  • they really want to support you with that,

  • or they want to come in because it's an economic

  • return model they were looking at.

  • And if you mix those in and you go to a traditional VC,

  • they're going to say,

  • well, I don't really - that's not what our investors -

  • our limited partners are all about.

  • So they're probably not going to be as interested.

  • So I guess my answer to that question would be if you were really

  • doing it ultimately that you want to give something back,

  • then I would start with probably not giving something back,

  • make it successful and then when it's successful you'll have a lot

  • more flexibility to be able to do what you want to do with it.

  • Yeah.

  • I'm a - originally a student from South Korea and I'm very interested

  • in going to North Korea and doing social entrepreneurship there.

  • And with the new leader coming in,

  • I heard, when or if ever North Korea

  • ever opens its doors to the world.

  • How do you suppose that when foreign social

  • entrepreneurs do go to North Korea,

  • how do they find like communist countries like North Korea where

  • military power is absolute and there is high government corruption

  • and how do you talk to VCs - into like getting seed funding?

  • So, the question is going from South Korea and doing some kind of social

  • venture in North Korea with a difficult government situation,

  • and I can only tell you,

  • this isn't really the answer you probably want to hear,

  • but I stay away from that kind of stuff.

  • We've done six projects and the one project that failed

  • was a project I did in Uganda and it was an orphanage

  • for child soldiers and we built a well for a Christian

  • organization and the government came in and took,

  • not only the well, but they took the

  • orphanage and they took the kids. It was horrific.

  • We - I try to work in agnostic countries where I don't run that risk.

  • I try to work in countries where governments aren't -

  • they actually like what we're doing because they don't

  • have the money or the funds to be able to do that.

  • So I don't really have a great answer for you other than

  • I kind of try to stay away from some of that stuff.

  • So - and I think VCs are going to be very,

  • very apprehensive about political risk.

  • Yeah. Good afternoon.

  • I am a student from India and I spent a couple of

  • summers ago interning in Gambia, doing field work.

  • And one of the really interesting debates that was going

  • on at the time was about the whole issue of aid.

  • When you're - as a social enterprise is it - I think important

  • to distinguish between philanthropy and actually say

  • empowering the people there to be able to generate their

  • own revenue and start their own business.

  • So what's your take on that?

  • So, the question is aid and philanthropy and how engaged are you in,

  • with those ... And actually making it a self-sustaining

  • thing rather than just pumping...

  • Rather than just giving money,

  • I mean, actually getting in from the ground up.

  • I think it's critical that you do grass roots ground up stuff.

  • Any water project that we do, we actually go turn on.

  • And I do that not so much because I am worried that they're fooling

  • around but - because I really know these executive directors of

  • these NGOs but I do it because I want to take people from the

  • United States to actually help turn them on because one,

  • they become transformed.

  • But I would strongly vote against just writing a check,

  • I mean, they need checks, they need that kind of stuff.

  • But oftentimes we write a check - particularly we write

  • a check and they're just from the United States NGO,

  • a lot of that might get covered in admin expenses of that NGO,

  • so I would really try to get engaged and not just give money to causes

  • but to kind of get involved at the ground - at a ground works levels.

  • I mean you have heard of Three Cups of Tea probably and you know

  • there are some issues with what happened in all that but though one

  • of the points I think is really great about Three Cups of Tea is

  • that as westerners we just want to go in and build the bridge,

  • we just want to go in and do that,

  • but in reality if we don't actually develop

  • relationships with the locals,

  • engage them in what we're doing, have them feel a part of it,

  • have them feel ownership, they may feel like we're just giving them

  • handouts and it's not so much a hand-up.

  • So, I really would encourage you to get engaged;

  • go there, touch and feel it and you'll be so

  • much more invigorated and they'll buy it.

  • Other question on the right back there. Yeah.

  • I first - I would like to commend you about

  • Nika and what you did for philanthropy.

  • My question to you is, when you first acquired your first company,

  • how did you acquire the funding for it?

  • Was it from investors or personal savings or family members?

  • That's a really good question.

  • So that first job that I mentioned that I went to after my cut,

  • paste and attach experience was a middle market company.

  • Part of the reason I chose that company was because they had just gone

  • through a private equity transaction so there was a lot of debt,

  • not a lot of equity going into it and part of me going there was -

  • they allowed me to invest whatever amounts I could put in,

  • which wasn't a lot, I didn't really have any money.

  • But I went to a bank - it was at a time when banks

  • would be willing to lend - and I borrowed $100,000.

  • I was able to take that $100,000,

  • dumped it all into the business and over that

  • 12 year period that company did pretty well,

  • and it generated enough seed capital for me to go off on my

  • own and put that money to work alongside other partners.

  • And then I worked with banks and private equity

  • firms to come in and take a portion of that business

  • and I put my own capital in to help do that.

  • So I kind of have a small worry models like Nika's

  • is that it almost seems too good to be true,

  • like your distributors like Wal-Mart and retailers who will

  • be profiting off these higher margins, like you said.

  • You're benefiting these organizations that you're supporting

  • and then also as an organization you're also profiting.

  • Do you think there's any unforeseen,

  • I don't know, problems of some sort that may arise because of this?

  • So the question is the type of model that we're doing,

  • is it authentic, are people perceiving it,

  • are we going to have an issue down the road.

  • Even though Nika donates all of its profits,

  • we're selling to retailers that certainly aren't doing that as well.

  • I mean I think it all comes back to authenticity and transparency

  • and if we're really authentic and transparent about it,

  • yeah I mean some people are going to not believe it,

  • but I don't really care.

  • I mean you know because at the end of the day if I am doing good

  • in my heart and I am creating value and I am doing what I am saying

  • I am doing so that I am not being a charlatan and saying it.

  • There are going to be some people that actually don't believe

  • me and there's lots of people that don't believe that -

  • "that's too good to be true,

  • you can't be donating 100% of your profits."

  • I'd say okay, well if you don't want to,

  • that's fine, that's your model.

  • There are - there's a new development,

  • what's called a certified B-corporation, that's kind of evolving,

  • it's kind of the equivalent of the fair trade for the coffee,

  • the coffee importation and it's - there's only about

  • 500 companies that are a part of it yet. We're not.

  • I probably will become part of it because I think it will

  • enhance our credibility but basically what it is,

  • is you're very transparent about what you're doing

  • and they come in and they audit that transparency.

  • So there's another kind of check and balance if you will with it.

  • So, I think you're going to see a shakeout over

  • time and you do hear about people that start businesses -

  • I mean the breast cancer pink ribbon.

  • I mean there are hundreds and hundreds and hundreds I don't know

  • how many companies that are not doing the right thing by it.

  • I mean they say they're donating $20 of every purchase but if

  • you read the really fine print they have a cap at $20,000

  • or something and yet they are marketing it that way,

  • so I think in the end this will shakeout because you are seeing

  • a movement to it but it's going to have to have more,

  • not regulation, but more kind of boundaries to help it shakeout.

  • Hi, sir, you mentioned to be persistent and never give up,

  • but when do you know to give up?

  • So the question is when do you know to give up

  • and not continue to be persistent,

  • not continue to throw good money after bad or your time.

  • It's so hard.

  • I mean that's why I think it's important to have a mentor,

  • okay, it doesn't have to be a partner but have a

  • mentor that can check and balance you and that somebody

  • that can really test your strategic plan, test where you're at,

  • test - do a SWAT analysis with you and you can present

  • your SWAT analysis to them in terms of what you're looking

  • at and they can say I think you got a hole here,

  • I don't agree with you here,

  • I think you're unrealistically optimistic here,

  • I think it's going to cost you more money to do

  • your marketing campaign here than you think.

  • And at the end of the day I mean I look at things like data points.

  • So I'll ask 25 people, you know, their opinion on what I am doing.

  • And I kind of put those, some people think, well what are you doing,

  • I mean it's not like a democracy; it's your business, Jeff.

  • And it's not a democracy but I want to put all those data points

  • up on the wall and then how I see that, I draw my line.

  • And I draw my line at that data points based on what

  • I am hearing and based on what I am interpreting.

  • So I would encourage you to do that.

  • I do think most people quit as a generalization too early,

  • just as a generalization but that's purely a generalization,

  • I think sometimes success is kind of right around

  • the corner and you just got to persevere with it.

  • Just a follow-up on her question,

  • I was wondering how you can make a social

  • impact sustainable and to make it grow.

  • Because I understand you just can't go into an area and - you

  • build something there right and you're hoping that it would -

  • you could leave it and it could grow and grow exponentially

  • and that impact could also travel to other areas.

  • But you would, it would be better if it would

  • not be you anymore who's doing that,

  • it would be the community itself that you empowered.

  • And I was wondering if you're also a part of not just building

  • the infrastructure for the water but also empowering the people

  • themselves to look after themselves and to start thinking

  • about ideas on how to improve their own lives?

  • Right, so the question is I mean how do

  • you ensure that you got sustainability,

  • you know, in a particular project once you start it.

  • First of all, we work with NGOs we don't - Nika

  • doesn't actually build the wells themselves,

  • we donate to specific wells and specific projects that we

  • do and we work with a handful of NGOs that we've vetted.

  • And the NGOs that we work with have a holistic

  • approach to poverty alleviation,

  • so they are focused on water, they're focused on healthcare,

  • they're focused on education and they're focused on microfinance because

  • if you fix the body but you don't fix the water supply the body is

  • not going to stay fixed and you really have to - what I do,

  • you have to holistically solve it.

  • And they also are very focused on community,

  • engagement community involvement and

  • really engaging those communities.

  • I would not encourage anyone just to write a check for

  • a single project out there and expect it to stay.

  • Most in time you find what I find in the developing

  • world is that projects are left half finished.

  • And the countryside is littered by wells that were started

  • but because they didn't have that community engagement,

  • they didn't have that community involvement or they ran out of

  • funds or they didn't have that holistic bottom up approach,

  • it wasn't sustainable. So I really think it's important to

  • make it as sustainable as you can, as holistic as you can.

  • Please join me in thanking Jeff Church

  • for this incredibly inspiring talk. Thank you.

Jeff. Thank you, Tina. Thank you. Hello, everyone. How are you doing?

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A2 初級

ジェフ・チャーチ社会起業の波【まるごとトーク (Jeff Church: The Wave of Social Entrepreneurship [Entire Talk])

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    Maggy に公開 2021 年 01 月 14 日
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