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A lot of people want to help make the world a better place, through volunteer work, service trips, or working with a non-profit. However, more and more social entrepreneurs are looking for ways to combine "doing good" with profit. Wishing you had the time and money to save the world? Follow the example of these 6 entrepreneurs, and take a few hours or a few weeks to give back free of charge -- who knows what will come of it?
At this point, TOMS Shoes isn't just a do-gooder company -- they're a brand with an incredibly strong identity tied to social good. However, back in 2006, Blake Mycoskie was still trying to figure out his own brand identity when he took a trip to Argentina. Having led four entrepreneurial start-ups at age 29, Blake had headed to Argentina to relax. However, when he ran into a volunteer at a shoe drive, he was struck with a way to combine the selling potential of the comfortable alpargata and the needs of impoverished Argentine children, with the buy-one-give-one philosophy that made TOMS famous. TOMS's straightforward way of thinking took off, selling 10,000 shoes in 2006, its first year of business. By 2010, TOMS had reached the 1,000,000 shoes donated mark, and is showing no sign of slowing down.
TOMS shoes isn't the only company profiting off of the "one for one" business model. Heather Hasson returned from an undergrad trip to Ho Chi Minh City helping Vietnamese children attend school with the seeds of what would become FIGS -- Fashion Inspired Global Sophistication, not the fruit -- planted in her mind. Traveling throughout Africa and meeting children who were unable to attend school because they lacked a school uniform allowed the idea to grow. Now, Hasson is the CEO and Creative Director of FIGS, and creator of the Threads for Threads Initiative. For every classy necktie FIGS sells, a child in Tanzania or Kenya gets a school uniform. The dual draw of helping kids and quality accessories have allowed FIGS to rise in prominence, getting attention and praise from Elle Canada, Ralph Lauren, and the Wall Street Journal.
For Alex Mittal, inspiration hit while doing the heavy lifting portion of giving back, building a water system in Honduras on an Engineers without Boarders trip in 2005. Here, Mittal saw an opportunity to make sure the developing world was able to access not only water, but clean water. Returning to school at University of Pennsylvania, Mittal and some friends developed the first-ever plastic water pipe that removed bacteria both on the pipe's inner surface and top. Soon after, they founded Innova Materials, a company that would evolve into Innova Dynamics, dedicated to providing sustainable technological solutions. Their range has only extended, as Innova Dynamics covers technology ranging from from a US army contract for advanced materials to fellow Penn alum's self-filtering water bottle.
Another Penn Engineers Without Boarders success story comes from Jay Parekh, who worked with fellow Penn student Aakash Mathur to found Hydros Bottles after his work with rural water projects. At around 4AM one night/early morning, Parekh's volunteer experience and Marthu's social enterprise knowledge collided with the panicked feeling of an upcoming deadline, to form the idea to sell a self-filtering water bottle. This bottle would not only be sustainable but also raise money for global water projects: the Hydros Bottle, a 16 oz. BPA free bottle with a built in filter. The Hydros Bottle has now developed into a win-win-win business situation: the buyer saves money from avoiding overpriced bottled water, the waste caused by empty plastic water bottles decreases, and clean water reaches the Cameroonian village of Gundom, all while Hydros Bottles makes a profit.
Kristin Groos Richmond and Kirsten Saenz Tobey both had plenty of experience in business and nonprofits prior to founding Revolution Foods in 2005. The for-profit organization drew not only from the business school classmates' entrepreneur know-how, but also Richmond's Vice Presidency at the education non-profit RISE and Tobey's work evaluating school feeding programs in Ghana. Revolution Foods aims to get kids healthy by offering schools and individuals the chance to purchase nutritious meals and health education.Today, Revolution Foods Inc. has dished up over 33 million healthy meals -- and made $50 million in revenue, reaching number 2 on the list of fastest growing inner city businesses.
Volunteering at a local community center didn't originally seem like a path for economic success for Notre Dame alumni Xavier Helgesen and Christopher "Kreese" Fuchs. However, the duo's found their idea to sell used and unwanted books online taking on a new life due to their experiences with the Robinson Community Learning Center. Since its beginnings as a single book drive in 2002, Better World Books has become a full fledged socially and environmentally responsible business that sells reused or recycled books, while donating money and books for non-profits. Their business model rests of the triple bottom line: profiting through promotion of social good, environmental sustainability, and economic success. With over 6 million books donated, 85 million reused or recycled and earning an annual revenue of over $55 million in 2011, Better World Books seems to be achieving all three.
In the past 5 years, important progress in podoconiosis research and control has been made. The global distribution of this ascending, geochemical lymphoedema has been updated, advances have been made in disease assessment and treatment, and advocacy has successfully brought podoconiosis to the global stage. We highlight some of this progress here, and announce the launch of a new international initiative.
Neil Blumenthal says he was working on his M.B.A. when he and three friends began chatting in the computer lab about the high prices of new glasses.
That discussion eventually led to the creation of Warby Parker, an online eyewear retailer that sells glasses for $95. When it launched in 2010, Warby Parker -- named for characters in Jack Kerouac writings, Warby Pepper and Zagg Parker -- sold out of 15 styles in four weeks and accumulated a wait list of about 20,000 people, Mr. Blumenthal says.
Mr. Blumenthal, 31, declined to disclose sales or to specify the valuation of the start-up. Edited interview excerpts:
WSJ: How did Warby Parker get started?
Mr. Blumenthal: I met three amazing guys, Jeff, Andy and Dave. I found that we were complaining about glasses being ridiculously expensive. We asked, was there an opportunity to sell glasses online?
WSJ: How did you get the funds to first begin?
Mr. Blumenthal: We started the business with less than $150,000. We were able to sustain the business for quite a while. We had traction. So we weren't eager to run out and to raise money, because that's expensive.
We got a $50,000 line of credit from TD Bank. That was 100% secured by our own cash. So we were borrowing our own money. But then we realized: Business is taking off. We need some more cash in order to buy more glasses.
We went to 15 different banks trying to get a term loan. We kept getting told no, no, no. Finally, we were able to get a $200,000 loan from a regional bank. It was backed by the Small Business Administration.
That debt was somewhat helpful. But the company kept growing. We've done two equity raises to date.
WSJ: Why open a store now? [Warby Parker plans to open its first brick-and-mortar store in New York's Soho neighborhood.]
Mr. Blumenthal: We're a fashion brand first so [having a store] helps reinforce what we're trying to tell people about who we are. No other major fashion brand has launched online before. That's new to people.
So having bricks and mortar offers some gravitas for the brand. It's a very high foot traffic area in Soho so it will expose the brand to a lot more people.
WSJ: Do you need your glasses?
Mr. Blumenthal: No. I have good vision.
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Credit: By Vanessa O'Connell
When the four co-founders of Warby Parker were readying the launch two years ago of their internet-based eyewear venture, they channeled a who's who list of marketing role models: Apple as a master of design and function; Zappos for customer experience; Nike for building an enduring brand; and Method and Patagonia as trailblazers with clear "do good" missions.
The high aspirations appear to be working. The young company hit its first-year sales target in three weeks, sold out of its top 15 styles and had a wait list of 20,000 customers after a month in business.
The model is simple: Buy a pair of hipster-chic glasses at the flat price of $95 and the company will donate a pair to an organization that provides glasses to people in need. To date it's donated more than 100,000 pairs with no traditional advertising, though a heavy dose of PR and, increasingly, events are getting the word out.
The business plan is a familiar one to insurgent brands: Upend an established industry dominated by a few powerful players (in this case, Luxottica and Safilo) and wring out overhead costs by running it as a lean, largely web-based venture. While Warby Parker has opened showrooms by leasing space in existing retailers in cities such as Austin, San Francisco, Portland, New York, Los Angeles and Boston, most customers shop online, using a virtual try-on tool, or ordering as many as five sample pairs free to try on in the comfort of home.
Co-founder Neil Blumenthal, who oversees the creative processes and marketing, sees four keys to the success, starting with the fashion aspect and the price point. Warby Parker uses the same production lines as Luxottica, and in some cases, Mr. Blumenthal said, has innovated on existing methods, including creating some of its own materials. "It's not that people haven't sold inexpensive glasses, but nobody has provided the quality at the price," he said.
The other two factors are the customer experience-free shipping, free returns, hiring college graduates from great universities with "a mastery of the English language," Mr. Blumenthal said-and the social-mission aspect. Prior to running Warby Parker, Mr. Blumenthal ran VisionSpring, which is the recipient of Warby Parker's buy-one-give-one mission. "It's authentic," he said, of the connection. "It's not a cause-related marketing scheme that isn't core to our business from day one."
The company has taken on $13.5 million in venture funding and has had profitable months, but at the moment is more focused on expansion than driving margin.
20,000 CUSTOMERS ON A WAIT LIST AFTER A MONTH IN BUSINESS
$95 FLAT PRICE OF HIPSTER-CHIC GLASSES
Giving one product away for every one sold has its benefits, but some believe it ignores the deeper roots of poverty
The one-for-one social enterprise model has caught on in recent years for obvious reasons. Critics have long attacked traditional international aid with its donations to poorer countries as ineffective, condescending and creating a culture of dependence.
In an era where social media opens a window into regions away from our computers and smartphones, people want assurance that the money they choose to donate will be put to good use. The $10 text-to-Haiti model made mobile telephone customers feel helpful but there was little evidence of its effectiveness other than the line item on the monthly wireless bill.
Enter the one-for-one model, which has caught fire in recent years thanks to Toms Shoes of Santa Monica, California. Blake Mycoskie launched the company after a 2006 trip to Argentina, where he witnessed the hardships of children who grew up barefoot. He returned a year later with 10,000 pairs of new shoes for children, and a company, and movement, were born.
Since 2010 the company has given away more than 1m pairs of shoes in 40 countries. The premise is simple: customers buy a pair of shoes and a pair of shoes are then given to a child in need. Now the company has ventured into eyewear. For each pair of glasses purchased, someone else receives a pair of prescription glasses or medical care that improves his or her sight.
A new type of company intended to put social goals ahead of making profits is taking root around the country, as more states adopt laws to bridge the divide between nonprofits and businesses.
California is the latest state to adopt a statute permitting what is called flexible-purpose corporations, new companies that are part social benefit and part low-profit entities. The companies are now allowed under laws in more than a dozen states and two Indian tribes.
October 12, 2011
States like New York and Massachusetts are weighing comparable legislation — sometimes also known as low-profit limited liability or benefit corporations — and efforts are afoot to get federal legislation passed that would lower hurdles to the creation of such companies, including a quiet push to get preferential tax treatment for them.
Many of the companies adopting the new structures provide services to nonprofits or are food purveyors that, for example, might employ the disabled. Perhaps the best known isMOO Milk, a group of small Maine dairy farmers who incorporated in Vermont as a low-profit limited liability company, or L3C.
Unlike a straight nonprofit group, these businesses can tap into conventional capital markets as well as philanthropy.
And unlike a for-profit corporation, the structure allows investors to emphasize the social mission over making money, and to be supported by money from foundations.
“Directors of many companies want to do the right thing, but they’re so busy looking at how not to get sued for failing to maximize profits that they don’t think more aspirationally about creating a great company that helps the planet and people and also makes money,” said R. Todd Johnson, a lawyer who is among the leaders of the movement to get states to create new legal structures.
Not surprisingly, the trend concerns some executives in charge of charities, who fear increased competition for philanthropic dollars fueled by the enthusiasm for the new formats among foundations, many of which have been lobbying hard for new laws to foster this type of business.
Many corporate lawyers and regulators also are wary. The California Department of Corporation and the business law section of the corporations committee of the state bar association opposed the law, as have similar organizations in other states. They argue that the new structure holds an inherent conflict of interest and that it will lower standards of fiduciary duty.
One such company, ardentCause, was about to become a traditional limited liability company, or L.L.C., when Michigan began allowing businesses to incorporate as L3C’s.
The company, founded by three veterans of the automotive industry, develops database software to help nonprofits manage and share information. “It was perfect for us because we believe businesses and nonprofits alike should run sustainably and profitably, but the main motive for us was the mission,” Rosemary Bayer, ardentCause’s chief executive, said of the L3C structure.
Its first product was introduced last fall with support from the First Step Fund, a pool of venture capital drawn from Detroit foundations as part of a broader effort to reinvigorate the city’s economy. Ms. Baer said ardentCause was currently negotiating with another foundation for investment.
Critics like Mr. Callison wonder why a new category of businesses is necessary at all, given that foundations can make investments in standard forms of business. A foundation may, for example, offer a business a loan at a below-market interest rate to spur it to build a factory in an economically blighted neighborhood.
“Do you need it? No, not necessarily,” Mr. Baltzell said. “The argument for it is probably that when push comes to shove over certain issues, if a social mission was baked into the bylaws, it would be legitimate for a board to allow, in certain cases, that mission to trump shareholder value.”
But charities seeking ways to reduce their reliance on donated dollars are increasingly developing programs that could be mistaken for businesses, and for them, such a structure solves a number of headaches. It gives them access to the capital markets, allows them to pay higher compensation levels and provides potential exit strategies, all unavailable to nonprofits.
“It expands the tool kit social enterprises can use to scale and increase the good they do,” said Matt Bannick, managing partner of the Omidyar Network, the organization managing the eBay founder Pierre Omidyar’s commercial and nonprofit investments, which pushed for the new California law.
One of the nonprofits it has supported, Global Integrity, is likely to spin off a project called Foglamp, which it started, into a flexible-purpose company. Foglamp has a worldwide network of 1,200 people that provide research, for example, on a country’s political stability. Hedge funds, institutional investors and global companies pay market rates for the information.
Nathaniel Heller, Global Integrity’s managing director, said that on at least two occasions recently, it had to turn away venture capitalists wanting to invest in Foglamp. “As a nonprofit, we have no equity to offer them,” Mr. Heller said.
That means, he said, that Foglamp can only grow “arithmetically, not geometrically.” He added, “As a nonprofit, we don’t have extra cash sitting around that would allow us to hire five more employees for Foglamp.”
If we want to be socially conscious consumers it’s important to understand the impact of Tom’s and similar products. We can learn from Tom’s marketing success, but to alleviate poverty in the long-term we need to promote sustainable programs the support local economic development.
Warby Parker, another for-profit enterprise that donates its product in developing countries, is getting a lot of attention for the innovative way that it sells eyewear to the consumer and sends glasses around the world to people who can’t afford them—earning them the B Corp status. Like Tom’s, they are popular among the fashion-conscious and have a hugely successful marketing campaign.
(1) identifying astable but inherently unjust equilibrium that causes the exclusion,marginalization, or suffering of a segment of humanity that lacks the financialmeans or political clout to achieve any transformative benefit on its own;
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