Monthly Archives: May 2012

From Forbes: What Exactly Is Social Entrepreneurship?

We’re talking about success and social value. Today many people lump this in a special category: social entrepreneurship. We’re not sure exactly what that is, so we’re interested in learning more. As it turns out, so were two Tuck class of 2013 students, Christopher Halstedt and Brad Callow. This past spring they did an independent study Senior Associate Dean Bob Hansen and Gregg on exactly this topic. They set out to see if they could understand what exactly is social entrepreneurship and how it creates social value. Here are some excerpts from what they found:
* * * * * *

We began this independent study with the mindset that we would target social entrepreneurs with for-profit practices (so-called Social Entrepreneurs). In exercise, this was much more difficult to achieve, as a lot of what nonprofits aim to accomplish comes solely from philanthropic influences. Of course we believe that successful nonprofits should think like for-profits and strategically position themselves for growth and scale; however, this mindset comes few and far between.

From our readings and anecdotal discussions, there were three key criteria we believe were essential. Though they were relatively simple, their respective impact on each nonprofit was and will continue to be significant:
• Is the idea worthwhile?
• Is it a good idea for the goal?
• Is there good execution and is it sustainable?

One learning experience from this independent study really revolved around the difficulty of measuring success in a nonprofit setting. We saw it time and time again, and the answer isn’t as simple as profitability, as each nonprofit has its own metrics for measurement of what makes for worthwhile outcomes. It was interesting to see that some nonprofits take a proactive approach in defining these measurements, while others had a tough time answering the basic question, what is your impact?

A clear plan for execution is an essential component of success. One nonprofit we interviewed lacked a simple business plan. They believed that if they had the social mission and supporters to fund that mission, then there was no need to strategically create a plan for the future. We found that those with business plans think strategically, and this is an imperative step to creating best-practices in a nonprofit setting. And of course, execution of the plan has to happen.

To really say there is success, we found it’s necessary to know if the idea can be sustainable. Will this nonprofit be in existence in 10, 20, 30 years? What about this idea makes it sustainable? Frankly in the end it really boiled down to whether the idea was being executed. Finally, we asked about social scalability. This became an important discussion point in our conversations: can this idea be implemented throughout the U.S., throughout the world? Has management considered such an idea and are they willing to expand, grow, or share this with other like-minded social entrepreneurs / philanthropists? Actually, they’re great questions to continue to ask in both the nonprofit and for-profit world.

There is a final lesson we learned in our work: keep it simple stupid! Overcomplicating an issue doesn’t do any good. Keep the strategy and metrics for success simple, and you can make better, sound decisions.

* * * * * *
Gregory J. Dees, teaches Social Entrepreneurship and Nonprofit Management at the Fuqua School of Business at Duke. He has this take on effectiveness of the social entrepreneur:

Any definition of social entrepreneurship should reflect the need for a substitute for the market discipline that works for business entrepreneurs. Social entrepreneurs play the role of change agents in the social sector by:
• Adopting a mission to create and sustain social value (not just private value),
• Recognizing and relentlessly pursuing new opportunities to serve that mission,
• Engaging in a process of continuous innovation, adaptation, and learning,
• Acting boldly without being limited by resources currently in hand, and,
• Exhibiting a heightened sense of accountability to the constituencies served and for the outcomes created.

Sound familiar? It’s essentially the same definition as our for-profit entrepreneur. This shouldn’t be surprising. Execution in pursuit of value creation should look the same no matter what the form. So what’s different? For social enterprises that have the twin goals of social outcomes and earning free cash flow from revenue, mission-related impact is the central criterion, but wealth creation isn’t ignored. “On the surface, many social enterprises look, feel, and even operate like traditional businesses. But looking me deeply, one discovers the defining characteristics of the social enterprise: mission is at the centre of business, with income generation playing an important supporting role.”

The concept of social entrepreneurship is centered not just on mission, but on entrepreneurship, making a social benefit-focused organization become more like a business. The idea is that nonprofits can benefit from the focus of for-profit businesses – customer focus, sound strategy, effective planning, efficient operations, financial discipline. Hopefully the social entrepreneur focuses as intently on excellence in all of these as any back-to-the-wall for-profit entrepreneur. For them, as perhaps it should be for all of us, success is social value.

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From YEC: 14 Ways to Keep Your Startups Costs Down

Q. What’s one tip you have for keeping startup costs under control in the early stage of a new company?

The following answers are provided by the Young Entrepreneur Council (YEC), an invite-only nonprofit organization comprised of the world’s most promising young entrepreneurs. The YEC promotes entrepreneurship as a solution to unemployment and underemployment and provides entrepreneurs with access to tools, mentorship, and resources that support each stage of their business’s development and growth.

A. Hire People With Scrappy Attitudes

Bring on employees that have a high risk tolerance and are committed to keeping down costs. You need people that are willing to take lower salaries because they see the upside of getting a lot of equity in the company. All employees also need to be resourceful in stretching available resources.

Ben Rubenstein, Yodle

A. Avoid Long-Term Commitments

Lisa Nicole BellFind monthly and short-term services to avoid getting into contracts and agreements that require capital you may not have. The more control you have over all your expenses, the better.

Lisa Nicole Bell, Inspired Life Media Group

A. Keep Legal Expenses In Check

New companies have many legal needs that may lead to large, unexpected legal bills. However, some attorneys offer flat project rates, which can allow for better budgeting on legal expenses. If an attorney will not provide a flat rate for the project, they might be willing to agree to a cap on the project, which also can help you prevent surprise legal bills.

Doug Bend, The Law Office of Doug Bend

A. Leave Room for Flex

Most startups only look at how much their variable costs affect profits, and many business owners forget to factor in all the little things that really add up and make their business lose money, such as office supplies, Internet fees, website maintenance, etc. If entrepreneurs set a flex budget for their miscellaneous costs, then they leave room for error, like running out of pens and notepads!

Danny Wong, Blank Label Group, Inc.

A. Find Income ASAP

Conventional wisdom is that if you’re building a great product, you can wait to eventually monetize. Don’t believe it. If you can get an income source in place — even if it’s only offering a service to set up your software for bigger customers — it’s infinitely easier to run your startup. That income source may be a limited-time offer, but if you can put something out there, do it now.

Thursday Bram, Hyper Modern Consulting

A. Think Like a Renaissance Man

vanessa-nornbergThink small and learn. We sent one person to a Photoshop class, and he came back and taught the team, which was far less expensive than sending everyone. When we had our first website built, we paid the web developers to teach us to code the simple things ourselves, and required the site architecture to be turned over to us when the build was complete — allowing our web expense to stop there.

Vanessa Nornberg, Metal Mafia

A. Work With Interns

Hiring interns creates a win-win situation. You get smart, capable people who are working for college credit, and they get great experience.

Elizabeth Saunders, Real Life E®

A. Our Money Is Your Money

When we dish out our company card, we tell our team to treat the money as if it were coming out of their own pockets. This makes them think twice about their purchases — conducting an extra round of price comparisons and eating out while traveling. When everyone treats the company money as their own, it really helps to rally the team to make more sales and appreciate the cash flow process.

Greg Rollett, The ProductPros

A. The Beauty of Bartering

What service/products do you have that you can trade with others? I have traded advertising, haircuts, and retail space for videos, PR releases, and food. If you really try and make an “inventory” of things you can trade, you can save a lot of money. You can barter through Craigslist, word of mouth, and community bulletin boards, and potentially meet new customers.

Nancy T. Nguyen, Sweet T

A. Negotiate Everything

At Sentry Centers, we have never signed a single contract without negotiating. The practice has become ingrained in our culture — now, nobody will ever walk a contract into my office without having hustled out every last penny. The result is 30 percent less costs across the board.

Christopher Kelly, Sentry Centers

A. Do Less Things Better

The less you do, the better you will be at doing it. If you don’t have the infrastructure to support a sales team or enough work for another employee, don’t hire them. The less obligations you have, the faster you can pursue new opportunities.

Lucas Sommer, Audimated

A. Simple — Sell More!

louis lautmanStop spending money on things and sell more. Go out and make presentations to people and get eyeballs in front of your offer. This may mean that you will face rejection, but once the register begins to ring, you can start to have things under control.

Louis Lautman, Young Entrepreneur Society

A. Count in Cases of Beer!

A case of beer costs around ten dollars. At Jimdo, discussing everything in this currency helped keep things on a tighter budget. Should we buy this, it would be forty cases of beer per month? Hell no! This currency helps keep things in perspective and forces you to think twice about your spending in an enjoyable way.

Christian Springub, Jimdo

A. Forget a Set Location

Instead of renting an office, try finding a coworking space or working out of a coffee shop. It’ll save you a huge amount of money.

Ben Lang, EpicLaunch

 

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From YEC: 10 Tricks for Startups Trying Out Marketing Stunts

What’s a fun paid marketing stunt that’s worth the cash for small-but-savvy startups that might not have huge budgets?

The following answers are provided by the Young Entrepreneur Council (YEC), an invite-only nonprofit organization comprised of the world’s most promising young entrepreneurs. The YEC recently published #FixYoungAmerica: How to Rebuild Our Economy and Put Young Americans Back to Work (for Good), a book of 30+ proven solutions to help end youth unemployment.

A: Fiverr It for Five Bucks!
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While we haven’t had the most success with this, it was worth testing anyways — on Fiverr, you can hire anyone around the world to do almost anything you need for $5 a job. It’s fun, and while it might not help you gain thousands of new sales, you might be surprised with how you, your employees and your community appreciate the fun little things you try out from time to time.
Danny Wong, Blank Label Group, Inc.

A: Go to College
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Stunt marketing at the city-level can get pricey, due to required permissions, permits, insurance and other costs. For a budget-conscious startup, consider doing a stunt campaign at a local college or university instead. The costs will be lower — helpful for a startup — while the impact can still be comparable. Invite local reporters to maximize your PR coverage after the event.
Doreen Bloch, Poshly Inc.

A: Publish Your Own Industry Rankings
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Think about your target customer base and what sort of rankings they’re interested in. Go beyond a list that your own company would be on — you don’t want to create anything that looks like an ego boost. Go out and find the best of the best. Make a big deal — give out awards, hold a ceremony and everything else you can think of. Send out press releases, get bloggers involved and think big.
Thursday Bram, Hyper Modern Consulting

A: Articles Spread Like Wildfire
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Consistent quality marketing will build a following and get attention for your startup. I’ve seen a lot of benefit getting startup leaders to contribute to fun online sites. These articles rapidly go viral!
John Hall, Digital Talent Agents

A: Video Is the Way to Go
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Hire someone to create an informative and entertaining video about your company, and have it shared through the social networks. You can involve bloggers or online celebrities who have ties to your niche or industry to build in some fun buzz. Think Old Spice, but with a lower budget and more of a grassroots feel.
Nathalie Lussier, Nathalie Lussier Media

A: Show Up for Breakfast
2012-05-12-NancyNguyen.png
There are many chamber, club, and community breakfast meetings you can “sponsor” by offering to provide the food in exchange to pitch your company. You can also attach your card to a unique gift for the attendees. For example, we attach our business cards to tea bags to promote Sweet T Salon, and people usually visit our website and store.
Nancy T. Nguyen, Sweet T

A: Run a Twitter Contest
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Using a tool like OneKontest or Tweet My Contest is fairly simple, and a prize can be anything from a $20 gift card to Amazon to an iPad. Contests can help you gain followers and drive traffic to your website or blog, all while getting people to interact with your brand in one way or another.
Heather Huhman, Come Recommended

A: Buying Social Media Followers
2012-05-12-LucasSommer.jpg
Buying social media connections is definitely a “stunt” but it can build some instant credibility in customers minds. I don’t recommend it for every brand, but it’s cheap and instant.
Lucas Sommer, Audimated

A: Meet People’s Needs
2012-05-12-LaurenPerkins.jpg
At SXSW this year, GroupMe had a food stand where they were giving out free food to people who downloaded the app. It was creative and met the need of the hungry people!
Lauren Perkins, Perks Consulting

A: Beware of Marketing Stunts!
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Getting attention is cheap, but being remembered for the right reason is priceless. Sure, if you organize a flash mob of gorilla suits at Grand Central Station, you’ll turn a few heads, but unless you run a zoo, the cheap tactic won’t get you remembered for the right reasons. Make sure any stunt or marketing tactic is in alignment with your company’s positioning strategy.
David Gardner, ColorJar

 

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From Forbes: 7 Business Mistakes Serial Entrepreneurs Never Make (Twice)

“Learn from the mistakes of others. You can’t live long enough to make them all yourself.” Eleanor Roosevelt – US Diplomat & Wife of President Franklin Roosevelt

As an entrepreneur, I helped create companies which achieved two IPOs and two trade sales totaling $385 million. During those same 15-years, I made innumerable mistakes.

Entrepreneurship is best learned experientially, both directly and through the experiences of others. Hopefully this article and the accompanying six-minute video will help you avoid learning these mission-critical lessons the hard way.

1. Attempt To License An Idea

Rationale: My idea is so mind-blowingly fantastic, I can sit back and collect licensing fees while someone else does all the work required to turn my idea into a successful business.

Fallacy: Ideas are worthless, while skillful execution is priceless. Value is created through diligent hard work. Commercializing an idea involves defining and validating an economically viable value proposition. Once you prove that a substantial number of people are willing to pay more for your solution than it costs you to provide it, you can then consider licensing your underlying technology.

2. Secure Your Intellectual Property Too Early

Rationale: My idea is so mind-blowingly fantastic that I must immediately spend some of my precious capital to protect it.

Fallacy: Startup ventures tend to evolve, especially after you begin speaking with pesky customers and demanding partners. Thus, only spend significant time, effort and money protecting your intellectual property when it is clear what you should protect.

3. Perform China Syndrome Market Analysis

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From YEC: 5 Tips to Stop Failing at Social Media Marketing

Over 800 million people in the world are on Facebook, including over 180 million Americans, or 1 in 2 adults. Twitter just topped 300 million accounts. Small business owners in droves are trying to capitalize on the trends, but few are reaping the benefits. For most local business owners, the temptation is to use social networks to promote their businesses and to broadcast their messages.

But if you take off your marketing cap and put on your customer cap, you’ll realize that consumers are already pummeled by marketing and advertising messages all day long. The secret to social media for small business owners is being human – being the sort of person at a cocktail party who listens attentively, tells great stories, shows interest in others and is authentic and honest.  In other words, the secret is to simply be likeable – and that means creating value for others.

Here are 5 specific tips for small business owners to enjoy more success at social media:

  1. Listen before you talk. Before your first tweet, search Twitter for people talking about your business, and for people talking about your competitors. Search using words that your prospective customers would say. For example, if you’re an accountant, use Twitter to search for people tweeting the words “need an accountant” in your town. You’ll be surprised how many people are already looking for you.
  2. Don’t tell your customers to like you and follow you; tell them why and how. Everywhere you turn, you see “Like us on Facebook” and “Follow us on Twitter.” Huh? Why? How? Give your customers a reason to connect with you on social networks (what’s in it for them?) and then make it easy. Note the difference between these two calls to action: “Like my book’s page on Facebook” and “Get answers to all your social media questions at http://Facebook.com/LikeableBook.
  3. Ask questions. Wondering why nobody’s responding to your posts on Facebook? It’s probably because you’re not asking questions. Social media is about engagement and having a conversation, not about promoting. If a pizza place posts on Facebook, “”Come on by, 2 pizzas for just $12,” nobody will comment, and nobody will show up. If that pizza place posts, “What’s your favorite topping?” people will comment online — and then be more likely to show up.
  4. Share pictures and videos. People love photos. The biggest reason Facebook has gone from zero to 800 million users in seven years is photos. Photos and videos tell stories about you in ways that text alone cannot. You don’t need a production budget, either. Use your smartphone to take pictures and short videos of customers, staff, and cool things at your business, and then upload them directly to Facebook and Twitter. A picture really is worth a thousand words.
  5. Spend at least 30 minutes a day on social media. If you bought a newspaper ad or radio ad, you wouldn’t spend five minutes on it or relegate it to interns. Plus, there’s a lot to learn, and every week, new tools and opportunities across social networks emerge. Spend real time each day reading and learning, listening and responding, and truly joining the conversation. The more time you put in to social media, the more benefits your business will receive.

Above all else, keep that customer cap on, and follow the golden rule: Would you yourself click the “Like” button, the Follow button, or retweet button if you saw your own business on Facebook and Twitter? Would YOU want to be friends with your business at a cocktail party?

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From Forbes: Is Your Startup Relevant Enough to be Great?

Some investors seem to focus wholly on the strengths of your management team, or your sustainable competitive advantage, and in reality these are the core attributes for every funding equation. While these may be necessary for funding, they may not be sufficient to make your startup the great success embodied in your vision.

I have always struggled to communicate the multiple other relevant priorities, and the other intangibles required for a great execution. I found many of these in a new book, “Great From the Start,” by John B. Montgomery, which does a great job of laying out specifics, but also starts with a good summary of the intangibles, summarized as the five rules of relevancy, by Mark Zawacki:

  1. A startup needs to be relevant and stay relevant. Relevancy for an early-stage company is the discovery and understanding of the real addressable market for a product or service. This is not the total opportunity out there, and not the total target market, but the subset of customers who have and will spend the money you need to cure their pain.
  2. A startup needs to find a voice relevant to its ecosystem. These days, you have to foster a community of support for your business. That means educating targeted supporters is key, even before you start to sell. Selling too early triggers customer defenses and drives them away. Everyone hates being sold to; we all prefer to buy.
  3. A startup must gain traction. This is not just sales traction, but a proper balance between resources, product, and customers. It means building a viable and desirable product before selling, assembling the right team with funding, and recruiting and educating enthusiastic customers who will be your best advocates.
  4. A startup must form partnerships and alliances within its ecosystem. Today’s ultracompetitive global environment demands that you make alliances early. Startups often pay lip service to strategic partnerships, but they schedule these efforts far down the road. The right partnership strategy can make a company relevant.
  5. A startup must maintain a laser focus. Too many early-stage companies are so desperate for customers that they operate in a frantic and random sales mode. They sell into multiple verticals, or pursue multiple revenue streams, such that they can’t develop a repeatable, scalable sales process, and don’t do anything well.

Of course, relevancy doesn’t work if you don’t have a winning business model. In the traditional business environment, this means the priority is an adequate return for your stakeholders, but today it also means your company should provide a material positive impact on society and the environment.

Great companies recognize that there are now multiple interdependent stakeholders, including customers, business partners, and social groups, who need to be part of your equation since they can drive or limit your success, in addition to management and stockholders.

In other words, your startup needs to be a “conscious” entity, constantly aware of the complex eco-system around it, and the factors driving change and evolution. This requires conscious leaders who are passionately committed to personal and professional growth, as well as the greater good of society. These leaders then cultivate the consciousness of their team members.

In reality, your people are the consciousness and relevance of your startup, and your customers judge your startup as they would judge a person. No relevant company can afford to focus on short-term wins over the long-term effects of its behavior on other stakeholders. How much time and how many measures has your startup applied regularly to the relevance issues above?

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From Forbes: Why Entrepreneurs Will Save The World

We aren’t engaging in hyperbole, with that headline. An entrepreneurial mindset  is a wonderful tool to use to try to solve what seem to be unsolvable problems—everything from the health care crisis to social ills.

Many policy makers and experts believe that effective large scale change needs to be driven from the top down and must be rooted in deep planning (“Big problems require big solutions.”)  And yet experience shows that is probably not the case.  These huge problems involve so many fundamental constituencies that trying to organize them to move forward together collapses under the weight of political ideology, infighting and competing personal agendas.

If we look at three of the grand problems of our time—health care, energy and education—all of them have fundamentally resisted top down intervention and all of them now are starting to yield to local or community-based, bottom up experimentation. Yes, we have large numbers of people who are thinking deeply about these issues. We don’t want to stop that but we need to understand that that deep thought needs to get merged with evidence. i.e. smart action that generates the evidence for the learning that helps us figure out where to go.

Massive change can evolve from the bottom up. The “Arab Spring” we saw in the Middle East in early 2011 is one of the more powerful indication of the ability of people to self-organize entrepreneurially to obtain what they want.

One major advantage of taking small, start steps is that it helps to over-come what we have come to think of as “the tyranny of the optimal right answer.”

We desperately want certain things to be better and we turn to the planners, policy-makers and experts to help us. The problem is, of course, these experts don’t agree. While some tell you something can be done, others say “It can’t be done.” (Or “it will have horrific side effects”; or “someone else has tried something similar and it did not work,” or….)

The problem here is not that the future is unpredictable. Each side is near-certain about their prediction. It’s just that these predictions utterly contradict each other. One expert is certain about something and another is certain about exactly the opposite. The result is an image of the future that is potentially predictable to some degree, but effectively unknowable because of the lack of any common ground. And an impasse. So nothing happens.

The way to break this in action is with small, smart steps that are limited by Acceptable Loss. You don’t know what is going to happen and the only way you’re going to find out what is going to happen is take a step, and see where you are and figure out what the next step is.

This argues for taking a number of new, small, smart steps—a pilot project here; a different way of doing things over there—to see what happens. Positive outcomes can be built upon the experiments that show promise.

In a world where nobody really knows you want to generate as many solutions as possible. Taking such smart steps is an essential key to making the impossible possible.  Smart action in the face of the unknown is better than arrested progress due to more debate. 

Everybody who is intellectually oriented will say “Oh no, when you are facing complicated situations it better to think it through because until you understand it you’re likely to take a disastrous step.” But small steps are not disastrous, even if they are wrong. Big, high impact ideas have their place. But there is no evidence that it is only through big ideas that we resolve the issues.

One quick example to make the point. In 1972, Jimmy Carter called for wholesale changes in the behavior of Americans to fundamentally reduce our dependence on foreign oil. Mileage requirements for cars went up dramatically and certain conservation efforts became mandatory. Today, our dependence our foreign oil is higher than it was then.

Yet, at the same time we have seen that the steps of both individuals and organizations have taken on their own, in their communities or with their employers reduce their carbon footprint have defused and spread on a large scale. These smart actions show much more promise for being able to address these issues than our ability to be able to move big policy initiatives through government.

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