Inaugural Issue

Complimentary Copy

Social Enterprise. Ideas. People.

beyond
profit May/June 2009

Impact Investing
Bold Models to Drive Development at Scale

Shaping For-Profit Enterprises

Through Disruptive Innovation
Can We Teach
Social Entrepreneurship?
10 New Ideas that Could
Change the World

www.beyondprofitmag.com An Intellecap Publication

SOCIAL CAPITAL MEDIA PRESENTS | THE SECOND ANNUAL
SOCIAL CAPITAL MARKETS CONFERENCE

SOCAP09
Photo by Aaron Maret

SEPTEMBER 1ST | 2ND | 3RD | FORT MASON CENTER | SAN FRANCISCO | CALIFORNIA
THE WORLD HAS CHANGED: The economy, perceptions of risk (financial and profession), the definition of market rate and
the U.S. administration. SOCAP09 is about making sense of the times and celebrating the renewed will and determination
of the pioneers of social change.

Join us at SOCAP09 as we demonstrate how social capital is in the eye of weathering the economic storm. In times of
extreme scarcity arise intense creativity and impatience. Human capital takes on new importance as entrepreneurs and
funders learn how to do more with less. We will bring together a unique mix of the world’s top social innovators – investors,
donors, entrepreneurs, and thought-leaders... catalysts of change across the globe. Come to SOCAP09 to learn how to create
effective partnerships, learn from best practices and tap new assets.

WHAT TO EXPECT AT SOCAP09

SOCAP09 will have two days of deep content dives followed by a third day of participant led sessions.
Join us as we explore:
» The Obama Administration’s focus on social innovation and how to gain access to opportunities for partnership
» Social venture funds’ prominent role in the new economy
» Creating common ground and effective collaboration between the private sector and development agencies
» The social capital movement across the globe
» The “Green New Deal” – Opportunities for investing in green infrastructure and urban green job creation
» The rise and future effects of infrastructure groups and intermediaries to move organizations to scale
» Fair Trade’s growth and segue into the mainstream as a demonstration of consumer behavioral change
» Progressive media that moves people to action
» Mobile technology platforms worthy of investment
» Capital working together: Exploring effective partnerships & demonstrating examples of combining resources in scarcity

CONNECTION CONCIERGE PROGRAM

Launching in early summer, the connection concierge program will be a full content management system allowing SOCAP09
attendees to enter their information into the database and search by multiple criteria to connect with fellow attendees
before, during and after the conference.

At last fall’s sold-out SOCAP08, we convened more than 630 social investors, philanthropists, entrepreneurs and development
agencies from 6 continents and 26 countries. Now we’re back with SOCAP09 to take the next steps.
Photos by Jerry Michalski

FOR MORE INFORMATION AND TO REGISTER VISIT WWW.SOCIALCAPITALMARKETS.NET | SEE YOU AT SOCAP09
 Proudly presents the Inaugural Issue of Beyond Profit

e
ral Issu
Inaugu entary Copy
Complim

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ri se . Id

beyond
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profit May/Jun
e 2009 A global magazine that presents Ideas
and People from the Social Enterprise
ing
p a c t InveasttScale sector. Through Beyond Profit, Intellecap
Im lo pment
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odels
to Driv supports new approaches and models,
Bold M
and gives unique insights into a market
that has the potential to draw millions of
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people out of poverty.
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Intellecap is a globally recognized social investment advisory firm

that catalyzes the growth of for-profit social businesses and creates
an ecosystem that nurtures social entrepreneurship worldwide.

www.intellecap.net
 may/june 2009 CONTENTS
SECTIONS:
16
IMPACT
Radar 10
INVESTING
Outlook 12 Harnessing
Capital Markets
Upfront 13 to Drive
Development at
Companies Scale
14
Doing Good By Antony Bugg-
Levine
Deal Zone 15

10 Ways 24
22
INVESTMENT
Is Recession a Good
Time to Invest in Social
Enterprises?
By Linda Rottenberg

28
ENTREPRENEURSHIP
10 New Ideas that Could
Change the World

26 Sankalp entrepreneurs talk

about the evolution of their
businesses
INTERVIEW
Pamela Hartigan: A Good
Time to be Unreasonable
 beyond profit

38 SECTIONS:
INNOVATION
The Questions at the Media Hub 46
Bottom of the Pyramid
Guru 48
Real Challenges of
Global Intrapreneurs Club
By Chris White 50
Hopping

Juxtapose 51

Clean &
52
Green

43
TORCH BEARERS
Can You Teach Social
Entrepreneurship?
The Father of Social
Entrepreneurship as
an academic subject, Greg
Dees, explains

34
54
INNOVATION
Shaping For-Profit
Enterprises Through
REFLECTIONS
Disruptive Innovation
By Hari Nair How I Became A
Social Entrepreneur
By Seth McSwain
Cochran
JOIN US

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6 beyond profit may/june 2009


Cover Photograph
Leonardo Aguiar
Cover & Page Design
Chronosphere
Disclaimer
The views and opinions expressed
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its Staff, its Editor, or of Intellecap
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FROM THE EDITOR
Welcome to the inaugural issue of Beyond Profit!
Despite the fact that the world economy and its media hi-
erarchy seem to be crumbling, against all odds you hold
in your hands, dear reader, a new magazine, the start of a
new social business!
Why, you ask? Why start a new business—a new publi-
cation, no less—now? We believe that our world could
use more good news: Companies doing right. People
who put community above self. Investors that look
beyond a quick financial return. We believe that people
and businesses that are looking beyond profit—at their impact on society, and
their ability to change systems, processes and communities—are worth knowing
about.
I recently started reading a book called Deep Economy by Bill McKibben. In
it, McKibben, an environmentalist and writer, observes that “more” is no longer
synonymous with “better.” For way too long, he writes, we have assumed
that the growth of economies, and the pursuit of our own interests in a market
society would make us richer. But they haven’t. Instead, too many of us have
big houses, eat avocados out of season, and drive SUVs. Meanwhile our climate
deteriorates, the world’s bright young minds languish, and poverty rises.
Social enterprise was until recently thought of as passing trend, but now we
recognize that we need it, it is here to stay. To quote Jose Maria Figueres, the
former president of Costa Rica, whom I met at the Skoll Forum last month: “We
have been living on values based on the notion that ‘if you consume, you will be
happy, and the more you consume, the happier you’ll be.’ Development does not
mean getting six million people to consume as we do.”
Figueres is right. We can’t continue down this tired path. We must push ourselves
to find new models and methods—not to create More, but to live Better, both for
ourselves and for those around us. We are leaving old style “none for you, two
for me” thinking, and are entering a new zeitgeist that should spur us to change
how we live. But we can only do that if we change the way we think about how
we want to live. It’s time that we start thinking beyond profit—about harnessing
markets for large-scale sustainable change, and using business to shape lives in a
positive way, because philanthropy can’t do it alone.
You’ll find plenty of examples of beyond profit thinking within this issue: a
franchise that can turn low-income men and women into entrepreneurs, a book-
store in Cairo that is creating a culture of literacy, an Indian courier company that
employs the deaf.
We hope that through Beyond Profit, we will not only spread the good news, but
will also spur innovation. We hope to be a conduit, helping investors find grow-
ing businesses, enabling entrepreneurs to surmount their challenges, and inciting
you to start thinking beyond profit.
Enjoy the issue!
Lindsay Clinton
www.beyondprofitmag.com 7
THE TEAM
Lindsay Clinton, Managing Editor
Lindsay directs the strategy, content and brand development of Intellecap’s social
business publications. Lindsay was previously marketing and communications di-
rector for The White House Project, a NYC-based organisation focussed on pre-
paring and empowering women for political and cooperate leadership. She also
worked for two years at a leading international women’s magazine.

Aparajita Agrawal, Knowledge Advisory

Aparajita joined Intellecap in 2004 as one of the Intellecap’s first employees. To-
day she leads the Knowledge Advisory Team and spearheads strategic communica-
tion advisory and information management, including conceptualizing and manag-
ing Intellecap’s knowledge portals and sector-wide initiatives such as Srijan and
Sankalp.

Ranjit Koshi, Partnerships

Ranjit has helped develop Intellecap’s flagship publication Microfinance Insights,
focusing on content planning, editing, writing and design execution. Currently,
Ranjit works on building partnerships Microfinance Insights and Beyond Profit.

Vibha Mehta, Advertising

Vibha manages advertising outreach for Intellecap’s print and online publications.
Prior to joining Intellecap, Vibha worked at the Institute of Directors, New Delhi
as the Director-Outreach.

Asako Matsukawa, Research Why Beyond Profit?

Asako is a new member of Intellecap’s Knowledge Advisory team, working on
Microfinance Insights and Beyond Profit. Prior to joining Intellecap, she worked At a time when traditional businesses
for the knowledge management division in BASIX. Her research interest ranges and their leaders are failing, the world
from social impact, labor condition to gender equality. is seeking new models to bring inno-
vative solutions to solve issues related
Adrienne Villani, Content Development to poverty, the environment, education,
Adrienne recently joined Intellecap and works on branding and communications, and health.
as well as contributes ideas and content to Beyond Profit. Previously, she worked
in care and support roles for HIV+ children in Delhi. Social enterprises, businesses that have
a double or triple bottom line, change
Sujatha Muthayya, Content Development societies and systems, invent new ap-
As part of the Knowledge Advisory team, Sujatha Muthayya has helped create proaches, and create sustainable solu-
the Sankalp Social Enterprise and Investment Forum. Prior to joining Intellecap, tions that generate social development.
Sujatha has worked on law liberty livelihood policy initiatives with the Center for
Civil Society in New Delhi, taught political Science at Madras Christian College Beyond Profit, a new social enterprise
and most recently facilitated incubation at The Rural Technology and Business magazine, presents the stories, chal-
Incubator at the Indian Institute of Technology-Madras. lenges, viewpoints, and best practices
of social entrepreneurs, their enterpris-
Special thanks to Boris Mordkovich, and Rashmi Pillai for their contributions to es, and those that invest in them from
our pilot issue. around the world.

We cover the spectrum of social ven-

tures from not-for-profit to for-profit,
with emphasis on the latter. We offer
geographically diverse coverage, with
a focus on activities in emerging and
developing markets.

8 beyond profit may/june 2009

 CONTRIBUTORS

Meet a few of our writers and panelists in this issue.

Antony Bugg-Levine
A former communi-
cations director at the John Elkington
South African Human John Elkington is the
Rights Commission, Founding Partner &
Antony Bugg-Levine Director at Volans, a Hari Nair
now leads the Rock- global company that A Partner at Innosight
efeller Foundation’s works to scale innova- Harish Hande Ventures, Hari Nair
Initiative on Harness- Shari Berenbach tive solutions to finan- Dr. Hande is an engi- oversees the incuba-
ing the Power of Im- As CEO of Calvert cial, social and envi- neer and a renewable tion and early stage
pact Investing. Prior Foundation, Shari Ber- ronmental challenges. energy entrepreneur evolution of pro-poor
to joining the Foun- enbach has raised over Elkington is a world with extensive grass- micro-enterprises,
dation, he was Coun- US$170 million from authority on corporate roots experience in with a primary focus
try Director of Tech- investors to help un- responsibility and sus- meeting the energy on India and emerg-
noServe, Kenya where derserved communi- tainable development. requirements of rural ing markets. Since
he lead the design and ties around the world. BusinessWeek has de- households. He is the late 2006, Nair has
implementation of With over 25 years of scribed him as “a dean co-founder and MD worked on launching
business solutions to experience, Shari has of the corporate re- of SELCO-INDIA, a Innosight’s activi-
rural poverty. He is developed innovative sponsibility movement firm that has brought ties in India, working
also an adjunct profes- financial instruments for three decades.” In solar lighting systems with a strong network
sor at Columbia Busi- and partnerships criti- 2008, The Evening to over 95,000 house- of believers and prac-
ness School where he cal to helping people Standard named John holds in rural India. titioners of Disrup-
teaches ‘Business In- that traditional banks among the “1000 Most Hande was named tive Innovation (read
novations in Interna- fail to serve. Prior Influential People” in “Social Entrepreneur more on page 34).
tional Development.’ to joining Calvert London, describing of the Year 2007” by He currently drives
Learn more about Foundation, Shari led him as “a true green the Schwab Founda- Innosight’s socially-
Impact Investing from projects for the In- business guru,” and tion for Social Entre- focused efforts, and
his piece “Impact In- ternational Finance as “an evangelist for preneurship, and in continues to be recog-
vesting: Harnessing Corporation that chan- corporate social and 2008 was named by nized as an expert in
Capital Markets to neled more than $250 environmental respon- India Today, as one consumer modeling,
Drive Development at million to developing sibility long before it of the 50 pioneers of early stage incubation
Scale,” on page 16. countries. was fashionable.” change in India. and open innovation.

www.beyondprofitmag.com 9
RADAR
Bioenergy Holds the Promise
for Rural Development in
Developing Countries
April 8, 2009
A new report by United Nation’s
Food and Agriculture Organization
(FAO) and the Department for Inter-
national Development (DFID) that
examined projects in 12 countries
around the world suggests that bioen-
ergy production can be a major live-
lihood source for rural communities
in poor countries. Despite the bioen-
ergy debate being centered around
liquid fuels used for transport, about
80% of bioenergy production in-
volves the use of sources like wood,
for household cooking and heating in
the world’s poorest areas. The study
reveals that in the 15 start-up bioen-
ergy projects in 12 countries in Latin
America, Africa and Asia, the local
community benefited from improved
energy access both for domestic and
business use.
New Business Incubator for
Social Entrepreneurs by
GoodCompany Ventures
April 7, 2009
To support social entrepreneurs
with innovative solutions to social
problems and unmet social needs,
GoodCompany Ventures, a Philadel-
phia-based organization comprising
social finance investors and start-up
experts, launched a new business
incubator. The program is aimed at
providing these entrepreneurs with
mentoring and access to a network
of capital sources. A venture fair will
mark the end of the program where
enterprises will get an opportunity
to pitch their ideas to investors. The
2009 program, developed jointly by
Resources for Human Development,
Inc. (RHD), and Murex Investments,
will begin in June and will see a se-
lection of eight to twelve candidates.
Applications are being accepted until
May 15. Visit www.GoodCompany-
Ventures.org.
10 beyond profit may/june 2009
Latin American Social Entrepreneurs of the Year 2009
Awarded in Brazel
April 16, 2009
The Schwab Foundation announced the new selection of leading Latin Ameri-
can Social Entrepreneurs 2009 at the Opening Plenary of the World Economic
Forum on Latin America, in the presence of President Lula of Brazil and Presi-
dent Uribe of Colombia. One Brazilian, one Chilean and two Colombians were
recognized for their innovative models and path-breaking achievements in land
rights, education and rainforest conservation. The Schwab Foundation for So-
cial Entrepreneurship, an affiliate organization of the World Economic Forum,
conducts the search and selection of social entrepreneurs in Latin America, Af-
rica, the Middle East, India and South-East Asia. It selects 3-5 social entrepre-
neurs per year from each region. Selected social entrepreneurs are connected to
the world’s business, political and media leaders through the events and initia-
tives of the World Economic Forum.
School for Social Entrepreneurs in Australia
April 8, 2009
The first School for Social Entrepreneurs (SSE) was started in Auburn, Austral-
ia, to provide skills development opportunities for people who are developing
creative solutions to social problems. The School’s program, replicated from a
successful UK model, aims at identifying social entrepreneurs and supporting
them to establish sustainable enterprises. The inaugural program in Sydney will
support 18 local social entrepreneurs, transforming their ideas for social change
into reality. The program will be a mix of weekly group study sessions, one-
to-one tutorials, mentoring sessions, project visits and a three-day residential
school.
Monitor Group Releases Report: Emerging Markets, Emerging
Models
March 26, 2009
Monitor Group, a leading advisory and consulting firm, released “Emerging
Markets, Emerging Models,” a report analyzing the actual behaviors, econom-
ics, and business models of successful “market-based solutions”—financially-
sustainable enterprises that address challenges of global poverty. Monitor con-
ducted more than 35 field investigations, primarily in India, supplemented with
research covering 19 countries across the world, but focused the research on In-
dia, which offers an advanced laboratory of social enterprise approached. Con-
clusions were based on more than 600 in-person interviews with low-income
customers and small suppliers, and detailed interviews with – and research on
– over 270 social enterprises in India. Monitor Group will also be holding a two
day conference in Delhi, India May 18 - 19 to specifically discuss Indian-based
findings of the report. Those interested in attending will be able to register start-
ing on April 6 at www.mim.monitor.com.
Sonal Shah Heads Obama’s Office of Social Innovation
April 17, 2009
Sonal Shah, who formerly led Google Global Development Initiatives, the phil-
anthropic arm of Google.com, has been appointed head of the new Office of
Social Innovation and Civic Participation in the White House, according to In-
dia-West, an online news source. The White House had not officially confirmed
the news as this magazine went to print, nor had they updated their website to
describe exactly what the office will do.
 RADAR

Climate Entrepreneurs Key to Low Carbon Future African Entrepreneurs

March 30, 2009 Develop Effective
New research by World Wildlife Fund (WWF) shows that the use of some of
the innovative technologies available today can result in carbon emission cuts Solutions to the Problem
of hundreds of millions of tons. The two new reports by WWF, one focusing of Sanitation
on Swedish climate entrepreneurs and the other focusing on Indian companies March 26, 2009
“with solutions that the world needs,” draw on the 17 case studies from de- In Africa, about 62% people lack
veloped economies and emerging markets to highlight how the power of in- access to toilets and safe ways of
novation can counter the challenge of climate change. For example, new ways disposal of human waste. Three Af-
of bringing natural light into large buildings, developed eight years ago by a rican innovators have developed
Swedish construction consultant can save an estimated 220 million tons of CO2 sustainable, low cost solutions to this
equivalent in emissions per year. Find additional examples of innovating think- problem. South African entrepreneur
ing online at http://assets.wwfindia.org. Trevor Mulaudzi has started “The
Clean Shop,” to clean up filthy and
20 Global Entrepreneurs Selected for the Summer unusable facilities, and educate peo-
ple about the importance of keeping
“Incubator” Program at Santa Clara University
them clean. David Kuria of Kenya
April 7, 2009
founded Ecotact, that builds free-
The seventh annual Global Social Benefit Incubator (GSBI) program at Santa
standing bathroom facilities called
Clara University that received over 350 applications worked with Silicon Valley
“toilet malls.” Social entrepreneur
veteran financiers, marketers, and executives as well as Santa Clara University
Joseph Adelegan of Nigeria has de-
faculty to help promising but resource-starved entrepreneurs with key busi- vised a way to turn waste from a cat-
ness concepts, preparing a cohesive business plan, generating ideas for funding tle slaughterhouse into fuel, cleaning
sources and investors, and finding ways to increase their impact while maintain- up rivers and groundwater, reducing
ing positive cash flow. Members of this year’s class are working on businesses greenhouse gas emissions, and cre-
to improve the self-reliance of their countries’ poorest residents, focused in four ating sustainable jobs in the process.
broad areas: ICT; economic development; alternative energy; and health and These three leading social entrepre-
education. neurs and Ashoka fellows are now
working together, and with several
Supporting Investments in Small Businesses in Developing others in Africa, on similar innova-
Countries tive solutions.
March 26, 2009
A new economic development network comprising philanthropic organizations, HBS Selects its First Social
social venture funds, foundations, business assistance providers, and interna- Entrepreneurship Fellow
tional development firms to increase investment in small and growing businesses March 29, 2009
in the developing world has been launched. ANDE, part of the Aspen Institute in Harvard Business School announced
Washington D.C., has received financial support from the Bill & Melinda Gates the selection of its first-ever Social
Foundation, Citi Foundation, Google, The Lemelson Foundation, Omidyar Net- Entrepreneurship Fellow, Elizabeth
work, The Rockefeller Foundation, Shell Foundation, and Skoll Foundation. M. Scharpf. Scharpf’s idea, “Sus-
Thirty five organizations are part of this network, which marked a major step tainable Health Enterprises,” or SHE
forward in addressing the disparity between investment in small and growing will receive $25,000 to make low-
businesses compared to other business sectors in emerging markets. cost sanitary napkins from locally-
sourced materials for women in
Sundance Institute Announces Award Recipients for Social developing countries. The creation
Entrepreneurship-focused Documentaries of the Social Entrepreneurship Fel-
March 26, 2009 lowship, which will be given annu-
Sundance Institute and Skoll Foundation announced the final five grant recipi- ally to an HBS alum, is indicative of
ents of the Stories of Change: Social Entrepreneurship in Focus through Docu- a growing focus on social enterprise
mentary initiative, a three-year partnership designed to enable the creation of at the business school. Scharpf’s
new, feature-length independent documentary films that frame, examine and project was chosen because, in addi-
amplify social entrepreneurship. Stories of Change drew over 300 proposals for tion to addressing a specific social is-
innovative film projects. Ten films have been chosen, with the first films likely sue, it will create jobs in the affected
to be completed as early as 2010. community.

www.beyondprofitmag.com 11
OUTLOOK
ATTEND
SHINE09, The UnConference for
Social Entrepreneurs
May 15th, London, UK
Come together with social entrepre-
neurs, and discuss your ideas, net-
work, and debate the future of social
enterprise. The event is peer-created,
using a mix-and-match format, so
you get the best of everything.
www.amiando.com/shineuncon-
ference.html
Global Forum for Business as an
Agent of World Benefit
June 2nd-5th, Cleveland, OH, USA
Join 600 delegates as they discuss
how design thinking has the power
to accelerate business innovation
and transform challenges into oppor-
tunities for positive change.
www.globalforum2009.org
Second International Conference
on Energy and Sustainability
June 23rd–25th, Bologna, Italy
The two day event will discuss is-
sues related to sustainability in en-
ergy production, energy storage and
distribution and energy management
www.wessex.ac.uk
2009 World Water Week
August 16th–22nd, Stockholm,
Sweden
The Stockholm International Water
Institute-hosted event will focus on
the theme, “Responding to Global
Challenges: Accessing Water for the
Common Good.”
www.worldwaterweek.org
*SoCap 2009
September 1st-3rd, San Francisco,
CA, USA
Don’t miss the largest social enter-
prise event of the year. The 2009 So-
Cap conference will be bigger than
before, bringing together entrepre-
neurs, funders, NGOs, and govern-
ments to talk about the business of
doing good, and doing it well.
www.socialcapitalmarkets.net
* Indicates a Beyond Profit recommend-
ed event
12 beyond profit may/june 2009
FOLLOW
SocialEarth
A new blog and Twitter personality,
which sends out a daily email blast,
short and sweet, highlighting some-
thing new in the social enterprise
space. Follow at www.twitter.com/
socialearth
BE UNREASONABLE
The Unreasonable Institute has de-
veloped a summer fellowship for
young social entrepreneurs with
bold ideas from around the world.
Through an intensive application
process, young social entrepreneurs
apply to become Unreasonable Fel-
lows and attend Summer Institutes.
They are also looking for mentors in
the field of social entrepreneurship,
investment, business, poverty eradi-
cation, engineering, health, and the
civil sector. Application opens Oc-
tober 15, 2009
www.unreasonableinstitute.org
COMPETE
Cultivating Innovation: Solutions
for Rural Communities
Entry Deadline: May 13, 2009.
Prizes: Three top winners get $5,000
each
In partnership with the Bill & Melin-
da Gates Foundation, Ashoka’s
Changemakers is looking for innova-
tive solutions that span the entire ag-
ricultural value chain – from seeds to
sales. Three-quarters of the world’s
TRACK
The Social Enterprise 100 Index
It enables social businesses to moni-
tor their growth and social impact.
Launched in April in partnership
with the Royal Bank of Scotland
Community Bank and Social Enter-
prise Magazine in the UK, the RBS
SE 100 Index captures vital data
from key growth markets.
The index will publish the top five in
a new market each month and the top
100 at the end of the year.
www.se100.co.uk
poorest people—the 1 billion who
live on US$1 a day or less—rely
on agriculture to feed themselves
and their families, yet many can not
grow enough to sell or even eat. If
you’ve come up with strategies, tools
and opportunities for small farmers
to boost their productivity, increase
their incomes, and build better lives
for themselves and their families, en-
ter now!
www.changemakers.com/en-us/
agriculture
 UPFRONT
PRIME NUMBERS:
THE POWER OF SOCIAL MEDIA

is the total amount that has been raised through the causes appli-
$2.5 m cation on social networking site Facebook, by its 200,000,000
users.

is the average number of Twitter users per day, as of March 2009

631,737 (Source: BuzzGain)

of companies polled said that social media marketing is effective

in building their brand reputation. (Source: “Chart of the Week,”
92% MarketingSherpa 2009)

of would-be donors trust in social media and are willing to par-

ticipate in a discussion on philanthropy if the information is highly
81% credible and of strong quality. (Source: “Community Philanthropy
2.0 survey,” Mashable, the social media guide)

of companies plan to increase their social media marketing budgets

63%
in 2009 (Source:“The ROI on Social Media Marketing,” Aberdeen
Group, 2009)

BEYOND PROFIT CHALLENGE:

WHAT’S YOUR EQ*?
*(Environmental Quotient)
Credit: Les Chatfield

1. The EU emission norms (known as Euro I, II, III and so on) 4. True or False?
most notably do not impose mandatory emission standards of Wind turbines need winds of at least 40 kmph/25 mph
which major pollutant? for the use of the turbines to be cost effective.
5. According to the Kyoto Protocol, one unit of carbon
2. Where was the most recent Global Climate Change Sum-
credit measures up to...
mit held?
a. One metric ton of emitted carbon dioxide or other
a. Kyoto, Japan b. Bali, Indonesia
equivalent greenhouse gas
c. Stockholm, Sweden d. Beijing, China
b. Ten kilo ton of fossil fuel
3. What is Carrotmobbing? c. 2.36 tons of carbon emission per 1 million people of a
country’s population
For answers, turn to page 53

www.beyondprofitmag.com 13
 COMPANIES DOING GOOD
Tour d’Afrique: Going The Extra Mile
Since 2003, every January a group of intrepid men and women begin a life-chang-
ing journey as they pedal their way through an 12,000 kilometers, 4-month cycling
expedition/race through African. Considered to be the longest, most grueling bike
ride in the world, it is organized by Tour d’Afrique, a company that raises aware-
ness about cycling as an alternative means of transport. What better way to do it
than to have normal people–not trained athletes–complete these rides each year?

Tour d’Afrique runs several expeditions per year in Africa, South America and
Asia – each ranging from 10,000 to 13,000 kilometers. Although their headquar-
ters are in Canada, the organization aims to contribute to the people and the com-
munities of the areas that they pass through. Much of the staff is hired locally, the
organization works with a variety of local partners and suppliers, and every rider is
strongly encouraged to raise funds for a charity of choicen. To date, over $700,000
o !
t f o r tw has been raised by the riders and 700 bikes have been donated to health-care work-
uil ers and other deserving individuals in Africa.
cle b que
Bicity: Tour d’Afri
Cred
Ecotact: Meeting the Need
Helping people “do their business” is David Kuria’s business. In 2007, David
founded a venture called Ecotact – dedicated to bringing clean and well-main-
tained pay-per-use toilets to the urban population in Kenya, a region where over
50% of the people do not have access to sanitary toilets and the government hasn’t
invested in public facilities in decades.

David’s solution was to build “toilet malls” - quality public bathroom facilities that
are staffed and cleaned by local staff. In order to make them sustainable, clients
are charged a small fee, starting at US$0.05. However, the “toilet mall” also gener-
ates additional revenue, by offering side services, such as shoe shines, snacks, and
newspaper sales. Each of these complexes have the capacity to serve over 1,000
Toil
users per day. For many of them, it has been a much desired and appreciated serv- Cred et M
it: Wa all
dvoca , Ken
ice, as it provides them with a clean and private environment that they would not ter A
have had otherwise. tes ya

Rajlakshmi Cotton Mills: Investing in People

Growing cotton is, no doubt, hard work. The industry is competitive, the margins
are low, and often, companies wind up ignoring human issues in order to squeeze
out a bit of extra profit in production.

Rajlakshmi Cotton Mills believes in taking a different approach. As one of the top
organic cotton mills in India, they are setting the bar high to make sure that every-
one on the production chain is treated fairly. They have committed to purchasing
their cotton only from certified Fair Trade suppliers and were one of the first or-
ganizations to get a SA8000 certification - a global social accountability standard
for decent working conditions.

But they didn’t stop there. Investing in their staff was a part of their business, so
on they’ve provided primary and secondary education for their workers’ children, and
acti
a d e in n
a revolving loan scheme for workers. Moreover, they have given almost 10% of
i r t bert S. Donova
r their shares to the farmers with whom they do business.
a
F redit: R o
C

14 beyond profit may/june 2009

 DEAL ZONE
Voxtra: US$2m in International Development

$2m
Enterprises, India
April 2009: Voxtra, a social impact investor focused on empowering the disadvantaged and
strengthening livelihoods, will support IDEI with a US$2m grant over six years to develop a sup-
ply chain for low-cost treadle pumps and conduct marketing activities to raise awareness in the
remote and underdeveloped state of Assam in Northeastern India. The target of the program is to
sell 25,000 treadle pumps to smallholder farmers, enabling the farmer families to increase their
net annual cash income by US$400 on average. Voxtra gives grants, debt and equity. Their cur-
rent focus area is India, and sights are set on Southeast Asia and eastern and southern Africa.

www.ide-india.org | www.voxtra.org

Element Partners: Raise US$486m for Clean

$486m
Technology Fund, USA
March 2009: Element Partners, a private equity firm based in Pennsylvania and California and
focused on making clean technology investments, closes its Element Partners II LP (Element II)
fund. The initial target was to raise US$400m, however, the fund was oversubscribed and closed
at US$486m in committed capital. Element Partners currently has investments in 22 portfolio
companies, including alternative energy, water treatment, and bio fuels.

www.elementpartners.com

EESTech: US$60m deal with Aryan Clean Coal

$60m
Technologies, India
April 2009: Economically and Environmentally Sustainable Technologies (EESTech) and Aryan
Clean Coal Technologies have signed a joint venture agreement to install 10-mega watt Hybrid
Coal Gas Technology systems over a five year period. The deal, valued at more than US$60m,
will allow the energy generated by the system to be sold to the coal mining companies through
twenty-year power purchase contracts with any surplus amount being distributed to the national
grid. EESTech currently also has three environmentally sustainable technologies related to the
water, coal mining and energy industries.

www.eestechinc.com | www.sainikaryangroup.com

India Financial Inclusion Fund: Raises Additional

$20m
US$20m
April 2009: Mauritius-registered India Financial Inclusion Fund, an India-focused equity fund
that invests in microfinance institutions (MFIs), proves that microfinance is still a hot-bed for
investors in the current economic turmoil by raising US$20m in fresh capital. The US$58m fund
is advised by Hyderabad, India based Caspian Advisors Pvt Ltd., and is focused on investing in
high-growth MFIs and microfinance enablers. The Fund’s primary mode of operation is through
equity investments in companies that are directly or indirectly associated with the business of
bringing the poor within the formal financial system.

www.caspianadvisors.com/India Financial Inclusion Fund.html

www.beyondprofitmag.com 15
COVER STORY

Impact Investing:
Harnessing Capital Markets to
Drive Development at Scale
Impact investing is emerging at a time when financial markets
worldwide are in turmoil.

While industry participants can do little in the short term to

address the wealth destruction that is reducing available capital,
they can work strategically to position the industry to absorb
a greater share of investment capital when markets inevitably
thaw.

By Antony Bugg-Levine
 COVER STORY

In Hyderabad, India, a private school is expanding after receiving

a loan from the India School Finance Company. The Company,
capitalized by Gray Ghost, a US$200 million investment fund in the
United States, is demonstrating that educational opportunity can
be expanded through for-profit investment in schools that charge as
little as US$4 per month.

Around Virunga National Park in the Eastern Congo, farmers are

receiving premium prices selling vanilla and coffee to Gourmet
Gardens, a Ugandan exporter. Despite the political instability
that keeps mainstream lenders away, Gourmet Gardens secured
a working capital loan for these purchases from Root Capital,
a US-based non–profit that lends to farmers cooperatives and
agriculture aggregators around the world.

In Chicago, USA a business is providing new jobs with good benefits

to low-skilled workers after receiving a loan from ShoreBank, a
pioneering community bank. ShoreBank could give the loan because
major insurance companies and pension funds –including Prudential
and TIAA-CREF, two of America’s largest financial institutions – made
equity investments and targeted cash deposits to expand its lending
capacity.

A lthough they may not know it yet,

the students in Hyderabad, the
Congolese farmers and the business
owner in Chicago are all participants
in the rapidly emerging industry of im-
pact investing. Like the individual and
institutions who invested in the India
School Finance Company, Root Cap-
ital and Shorebank, impact investors
seek to make for-profit investments that
can also provide solutions to social and
environmental challenges.
These impact investors offer a bridge
between traditional philanthropy - that
can incubate innovation and mobilize
attention on exciting solutions - and the
private sector capital markets that ulti-
mately hold the wealth required to take
these solutions to a satisfactory scale.
When we consider the scope of the
world’s social and environmental chal-
lenges we see there is not enough chari-
table capital to meet them. We must
ask, “Where will we find the money to
complement charity and government to
bring solutions to scale?” The Rock-
efeller Foundation launched our Har-
nessing the Power of Impact Investing,
initiative in November 2008 because
we believe that impact investing has the
potential to be part of the answer.
However, as the recently published
report Investing for Social & Environ-
mental Impact by the Monitor Insti-
tute highlights, the ability of this new
industry to deliver on its potential is not
inevitable. Industry leaders will need
to work together to measure and ar-
ticulate the industry’s successes, build
infrastructure to increase its efficiency
and create products that respond to in-
vestors’ demand for transparency and
liquidity.
Why is impact investing
emerging now?
The seeds for the impact investing in-
dustry were sewn in the 1980s and
1990s with the socially responsible
investment and corporate responsibil-
ity movements. They challenged the
prevailing attitude that companies’
and investors’ only responsibility is to
maximize financial returns. At the same
time, as microfinance gained interna-
tional renown, and advocates of a com-
mercial approach gained visibility, the
idea that investment, rather than pure

www.beyondprofitmag.com 17
philanthropy, could generate develop-
ment outcomes became increasingly
widespread.
Inspired by these examples, entrepre-
neurs and managers in multi-national
corporations pioneered business models
beyond microfinance to provide basic
social services to poor people and ad-
dress environmental problems. Impact
investing is emerging as the investment
counter-party to these businesses.
It would be naïve to believe that the
wealth destruction and credit market
contractions of the past 18 months have
not shaken this new industry. Structural
changes that spurred its emergence,
however, remain in place to drive its
growth when the credit markets revive:
• Growing importance of private capi-
tal - Sources of capital for development
have shifted during the past decade
for many (but not all) poor countries.
Private sector capital flows, primarily
in the forms of foreign direct invest-
ment, mobilized domestic savings and
remittances, have replaced foreign aid
and private philanthropy as the primary
sources of capital for investment.
• Wealth concentration among the “in-
vestment-oriented” - Many individuals
and families acquired significant discre-
tionary capital in the past decade. This
capital has been concentrated among
precisely those people – entrepreneurs
and financiers – whose personal life
experiences primed them to see invest-
ment as a potent tool. They reject the
canard that presence of profit is evi-
18 beyond profit may/june 2009
dence of exploitation.
• Impatience with traditional approach-
es: After half a century of experiencing
remarkable success as well as failure,
traditional philanthropic options are un-
inspiring to some. This frustration can
be counter-productive when it dismisses
the experience and insights of develop-
ment professionals and the complexity
of the challenges they face. It, however,
creates an opening for social entrepre-
neurs who offer a compelling alterna-
tive to philanthropy.
These structural trends create fertile soil
wherein the impact investing industry is
germinating.
Harvesting the fruits of im-
pact investing
Despite, and sometimes because of, a
proliferation of activity, the impact in-
vesting industry is poised at a delicate
moment. Impact investors have already
made their mark in a few sub-sectors,
most notably US-low income hous-
ing, and, more recently, micro-finance
and green energy. Yet, impact investing
capital is not being brought to bear at
the requisite scale of hundreds of bil-
lions of dollars.
The industry remains beset by ineffi-
ciencies and distortions that currently
limit its impact even in areas where
impact investing should be viable (such
as healthcare delivery, slum upgrading,
agriculture development and educa-
tion). Our language, analytical tools,
capital markets and legal system – that
are still structured to support activity
on the binary of philanthropy or profit
maximization – do not fully support im-
pact investing.
In this context, impact investing can
be frustrating. But these frustrations
are not unique. They are the archetypal
challenges that confront pioneers in
new industries. Fortunately, investors’
frustrations are also entrepreneurs’ op-
portunities. Global innovations and
collaborations are now pointing to po-
tential solutions to these barriers to the
industry’s maturation:
Building platforms for collective ac-
tion - While various efforts, outlined
below, address specific barriers to effi-
cient investing, impact investors need a
broader understanding of the contours
and structures of this new industry to
enable them to work together. We need
to know how big this industry is, who
its participants are, who has capital,
who has deals and how to connect them
more efficiently.
In response to this need, the concept for
a Global Impact Investing Network is
gaining momentum around the world,
with hubs of activity coming together in
various countries (including a planned
launch in India in late April 2009). The
2008 launch of the Aspen Network of
Development Entrepreneurs also pro-
vides a promising platform for the sub-
strata of investors interested in support-
ing small and growing businesses in
emerging markets.

Creating credible standards for meas-
uring social impact - Commonly-un-
derstood terms reduce transaction costs
for mainstream investors. Our research
with wealth advisors and private client
bankers also indicates that the develop-
ment of a credible, independent rating
agency to measure the social impact of
investment will be crucial to unlock this
source of impact investing capital.
In light of this research, the recent
launch of a process to develop a Global
Impact Investment Ratings System and
Impact Ratings and Investment Stand-
ards is particularly exciting. By mobi-
lizing investors as well as activists, aca-
demics and entrepreneurs, this initiative
has the potential to break through the
historic logjam that has kept similar ef-
forts fragmented.
Developing capital markets - Interme-
diation, or the placement of money be-
tween investors and the businesses and
projects that can use it productively,
is generally sub-scale and inefficient.
Impact investors face high transaction
costs in sourcing deals, conducting
due diligence, closing and syndicating
investments. Investment funds, invest-
ment bankers and market platforms
have not yet achieved the scale and
visibility to provide viable conduits
for billions of dollars of latent impact
investment capital. The intermediation
challenge is, however, being met by in-
novators working across a spectrum of
segments and business models:
• Impact investment banking - In Lon-
don, Social Finance was launched in
2007 as an integrated investment bank
serving social sector clients in structur-
ing and placing impact investment capi-
tal. In San Francisco, Imprint Capital,
a buy-side impact investing advisory
boutique, was launched in 2007 and
is now serving a range of family of-
fices and private foundations to make
impact investments. A new division
of the South African Social Invest-
ment Exchange, SASIX Financial, is
providing similar services to corporate
and institutional investors and govern-
ment. Intellecap in India is expanding
its advisory services bouquet to include
a range of impact investment services.
They are working, in different ways, to
provide investors with more efficient
deal sharing capability, more attractive
investment structures and the liquidity
that many require.
• Wealth advising - Money mangers are
tapping client interest in impact invest-
ment to grow their customer base and
deepen client loyalties. In London, In-
vesting for Good assists wealth advi-
sors to identify and scrutinize impact
investments. Veris, a wealth advisor
in the US, is building a product suite
to offer clients impact investments
and screened fund options. Respon-
sAbility, an independent money man-
ager launched in Zurich, Switzerland in
2003, manages more than US$650 mil-
lion in impact investments. Developed
with the support of Credit Suisse, this
Geneva-based company offers a rare,
www.beyondprofitmag.com
Microfinance: Pole
Position or Sitting Duck?
As the impact investing industry
emerges, microfinance institutions
sit in a fascinating position.
They are well-placed to use the
skills, networks and business models
they developed serving microfinance
clients and investors to expand into
the broader impact investing mar-
ket. Some established microfinance
players are launching new impact
investing products such as Swiss-
based Blue Orchard, whose founder
created Bamboo Finance in 2007 to
invest in medium-scale enterprises
in poor countries. Others are diver-
sifying the offerings within exist-
ing microfinance vehicles, such as
ResponsAbility, which offers in-
vestors exposure to investments in
socially-oriented alternative media
and Unitus, whose second equity
fund includes an allocation to invest-
ments beyond microfinance. Grey
Ghost Capital has also broadened its
US$200 million investment funds
beyond microfinance.
Concurrently, the emergence of the
impact investing industry will break
the near monopoly that microfinance
has until recently enjoyed over inves-
tors interested in generating positive
financial returns while promoting
economic development in emerging
markets. As an indicator of this trend,
when JP Morgan Chase launched an
impact investing unit in 2007, it did
not launch a “Microfinance” unit (as
Citibank had done two years earlier)
but rather a “Social Sector Finance”
unit whose ultimate ambitions span a
broader range of impact investments.
Against this backdrop, microfinance
fund managers and advisors will face
unprecedented pressure to prove why
microfinance provides a more effec-
tive blend of financial return and so-
cial impact than, for example, invest-
ing in private schools, health clinics
or medium-scale enterprises.
19
COVER STORY
but exciting example of a mainstream
distribution channel being utilized for
impact investment.
• Fund management - Both, Root Capi-
tal, the US-non profit funds investing
in the Ugandan vanilla exporter, and
E+Co. another non-profit investment
fund that invests in energy services
companies in poor countries, have re-
cently launched ambitious scale-up
plans. So have Bridges Ventures in
London, the Acumen Fund that invests
in social enterprise in India, Kenya and
Pakistan, GroFin in Africa and Agora
Partners in Central America. Innova-
tors in established fund management
companies, such as the managers of
impact investing units in TIAA-CREF
and Prudential, are growing impact in-
vesting portfolios that total hundreds of
millions of dollars across asset classes.
• Retail client mobilization - Innovators
have developed mechanisms to make
impact investing accessible to retail
investors. The Calvert Community In-
vestment Note can be bought in the US
for US$1,000 minimum from brokers
($20 minimum when purchased online)
and offers up to a 3% coupon which is
relatively attractive in the current envi-
ronment. They are currently consider-
ing expanding this offering outside the
US.
Securing supportive policy reform -
Currently, for-profit businesses and in-
vestors who seek to create social value
are left to force-fit their aspirations,
20 beyond profit may/june 2009
often uncomfortably, into existing non-
profit or for-profit legal structures. Le-
gal innovation, however, is also gath-
ering steam. The 1995 Dutch reform
that provides personal capital gain tax
breaks to environmentally-beneficial
investments is serving as a model for
similar regulatory reform efforts. The
UK government created a new corpo-
rate form of for-benefit “Community
Investment Corporations” in 2005. In
France and South Africa, recent leg-
islation will compel investors to place
some of their capital in impact invest-
ments. The grassroots efforts to create
a B Corporation1 (a new classification
of company that uses the power of busi-
ness to solve social and environmental
problems) and L3C2 legal form in the
United States are similarly starting to
build momentum for a new regulatory
regime to meet the interest of impact
investors.
What is the economic down-
turn doing to the industry?
Like a butterfly emerging from its co-
coon into a hurricane, the impact in-
vesting industry is coalescing just as
international credit markets face great
turmoil. If I could predict with certain-
ty what effect market conditions will
have on this industry, I would be mak-
ing venture capital investments rather
than writing articles in social enterprise
magazines.
However, it does seem that, at least for
now, both triumphalism and despair are
overstated. The financial crisis seems to
have created a boon in terms of mak-
ing human resources available to the
impact investment industry. Around the
world, experienced finance profession-
als, recent business school graduates
and talented expatriates bear much low-
er opportunity costs to enter this indus-
try. In some cases, they are returning to
work in emerging markets of increasing
interest to impact investors.
While impact investors are not immune
to the challenges facing investors rais-
ing capital and syndicating deals in this
credit market, anecdotal evidence shows
that they remain committed to this new
1
www. Bcorporation.net
2
http://americansforcommunitydevelopment.org/

industry. Many of the impact invest-
ment asset management, advisory and
banking organizations have remained
solvent, and in many cases, grown dur-
ing a period that has seen mainstream
financial services firms brought to their
knees.
In the end, the interplay of income and
substitution effects will determine the
medium-term trajectory of the impact
investing industry. Industry participants
can do little in the short term to address
the wealth destruction that is reducing
available capital. We can, however,
work strategically to position the indus-
try to absorb a greater share of invest-
ment capital when markets inevitably
thaw.
What will it take?
The success of this new industry is not
certain. The danger remains that “im-
pact investing” will become a mere
marketing tool that investment promot-
ers use to raise funds without generating
substantial social and environmental
benefit. If leaders in the sub-sectors—
of microfinance, education finance,
healthcare finance etc. — do not realize
the value of coming together to build a
single industry infrastructure, they will
suffer from duplication and fragmenta-
tion.
Building a mature impact investing in-
dustry will also require brave self-ex-
amination by impact investors and the
businesses and funds into which they
invest. The impact investment indus-
try needs to be realistic about the kind
of returns it will offer and investment
products it will need to develop to be-
come a viable proposition for the in-
stitutional investors, who control most
of the world’s investable assets, but are
bound by rules that limit their freedom
to invest in unproven and sub-market
products. The industry also needs to be-
come more confident and honest about
explaining the need for subsidy in many
areas, through lower return and higher
risk tolerance.
The recently-released report of the
Monitor Inclusive Markets research
project in India provides a benchmark
for thorough analysis. The report is built
on the willingness of organizations and
companies such as Byrraju Foundation,
SKS and VisionSpring to expose their
business practices to public review. It
shows that impact investors will have to
accept that subsidies will be temporarily
necessary in some sub-sectors as social
enterprises test and refine applicable
business models, and permanently ap-
propriate in other sub-sectors where in-
www.beyondprofitmag.com
COVER STORY
vestment generates substantial positive
externalities that cannot be internalized
into a company’s profit.
Where does impact investing go from
here?
We know from the success of other in-
novations –such as the development of
the private equity industry in the last
50 years– that a small group of leaders
must work effectively to accelerate the
pace and manner in which an industry
matures. The impact investing industry
will reach its potential in the beginning
of this century if the innovation and
stamina of entrepreneurial risk-takers
can be coupled with industry-building
leadership.
The economic crisis has shaken confi-
dence in established investment ideolo-
gies and their mainstream proponents.
The emergence of the impact investing
industry provides a potentially compel-
ling alternative, by offering to imbue
investment with social purpose and,
ultimately, to increase the scope of so-
lutions to social problems that continue
to proliferate even as philanthropy re-
sources dwindle.
Antony Bugg-Levine is a Managing Director at
the Rockefeller Foundation in New York where
he leads the Harnessing the Power of Impact
Investing initiative. A native of South Africa,
he previously led the Kenya office of the NGO
TechnoServe and worked as a consultant with
McKinsey & Co. He is also currently an adjunct
associate professor at Columbia Business
School.
Disclosure: Rockefeller Foundation has current
investments in Acumen Capital Markets, Root
Capital and Calvert Foundation.
21
INVESTMENT

Is Recession a Good Time to Invest

in Social Enterprises?
By Linda Rottenberg, CEO and Co-Founder, Endeavor

Social entrepreneurs are problem-solv-
ers, not idealists. We’re driven by in-
novation, not by charity. And we don’t
believe in hand-outs. We use entre-
preneurial strategies to achieve social
change. Most notably, social entrepre-
neurs solve problems that governments
and the private sector fail to adequately
address.
In this current recession - in which
more questions than answers have
arisen about how to restart the global
economy - social entrepreneurs are the
voices of hope and the agents of change
that we need.
mentorship, networks, talent, leadership
skills, and inspiration. With Endeavor’s
support, these entrepreneurs scale their
businesses to create jobs, create wealth,
and build a prosperous future for their
economies.
One such entrepreneur is Shane Immel-
man from South Africa. Shane spotted
a problem: over 4.2 million students in
South Africa and 80 million across the
entire continent lack desks. To remedy
this, he designed a Lapdesk – an er-
gonomically-designed, portable desk
made from plastic which a student
could use both in the classroom and
at home. Confronted by the next chal-
lenge of then distributing these desks to
remote areas, Shane targeted corpora-
tions to brand the desks with their logos
and socially-responsible messaging. In
just five years, Shane has been able to
deliver nearly 500,000 desks and has
made a profit at the same time. Shane
has visions of taking his model from
18 African countries over the past two
years to be active in 60 countries glo-
bally within the next five years, includ-
ing Africa, Latin America, South Asia
and East Asia. In doing so, he is eradi-

Endeavor, the non-profit that I co-

founded in 1997 and which supports
the most promising-yet-undiscovered
High-Impact Entrepreneurs in emerging
economies, addresses a pressing chal-
lenge common to all emerging markets:
wealth is not meritocratically distrib-
uted. Entrepreneurs with the best ideas
face significant barriers to scale their
business: a lack of mentors, a lack of
trust, a lack of networks, a lack of good
management, and a lack of smart capi-
tal. Endeavor helps these entrepreneurs
break down these barriers by offering
the soft power of the private sector:
cating a problem that emerging markets
have not been able to tackle and giving
children the opportunity for a better
education and a better life.
Another example is Sameer Mehra, who
runs Suminter India Organics, a com-
pany that helps farmers in Maharashtra
and Gujarat convert small-scale farms
to international organic standards. Once
certified, Suminter India Organics buys
farmers’ produce at a premium, and
then exports the high-quality organic
foods and textiles to European and US
markets. In just five years, Sameer has
created 100 jobs locally and has helped
4,000 farmers. With Endeavor’s sup-
port, by the end of next year, Sameer
expects to have converted 7,500 farm-
ers to these standards, giving these
farmers an opportunity to compete in
the under-supplied US$45bn+ organic-
product industry.
Endeavor, Lapdesk, and Suminter India
Organics are all social enterprises that
came of age just before this global re-
cession. There are three fundamental
reasons that they will thrive in spite
of the recession: A-team talent, strong
business models, and smart risk-taking.
These are exactly the reasons that in-
vestors’ interest should be piqued.
Let’s start with strong business mod-
els. Social entrepreneurs have learned
important lessons from the private sec-
tor. When the movement began twenty
years ago, there were no hard metrics to
measure success, such as jobs created,
percentage of regions newly powered
with electricity, or students receiving
secondary education. Each social en-
terprise learned to develop empirical
metrics. For example, through rigorous
research on our portfolio, we know that
our 220 companies have created nearly
90,000 jobs and US$2.5bn in annual
revenue in 2007. We also track each
company’s growth to help determine
our own value-add.
Credible, results-oriented models have
attracted talent to the sector. More and
more professionals are sacrificing a little
bit in compensation to use their exper-
tise to help others thrive. Working at a
social enterprise provides “psychic eq-
uity” to employees, which, even if they
return to banking or consulting, they
will carry the experience with them.
Indeed, at present, Endeavor receives
approximately 50 resumes each week
from talented people who have fallen
victim to the economic crisis. This in-
flux of talent is exactly why now – amid
this recession - is the right time to in-
vest in social enterprises. For, as every
investor and every entrepreneur knows,
only companies with the right team and
the best talent receive capital.
The day that Lehman Brothers collapsed
marked the beginning of a new finan-
cial era. As banks struggle to support
established businesses with working
capital, while stock markets continue
to decline, and while consumption de-
creases, the private sector has become
risk-adverse and is failing to restart the
economy. Increased pressure has been
put on the government to restart the
economic engine. Government cannot
do this alone, nor – despite its best in-
tentions -can it act with the urgency that
this recession demands.
Everyday, the news features a litany of
social problems: climate change, ineffi-
cient health systems, and water scarcity
to name just a few. For most people,
these challenges are depressing. But for
www.beyondprofitmag.com
social entrepreneurs, these are the op-
portunities.
And that is also why social entrepre-
neurs – those innovators who have
fought for so long with so few resourc-
es to show that their ideas are effective
and scalable –should play an instru-
mental role in escaping this recession.
Social entrepreneurs align interests:
they are innovative, they can be profit-
able and they have the potential to have
a massive, transformative impact. If I
were an investor in this current climate
- where there is little low-hanging fruit,
let alone an IPO on the horizon - I’d
take the risk on social enterprise now
and help the world build a better future
for tomorrow.
Endeavor is a non-profit that identifies
and supports High-Impact Entrepre-
neurs in emerging markets. Endeavor
engages the private sector in mentoring
and advising these entrepreneurs and
catalyzes entrepreneurial cultures in de-
veloping economies. For more informa-
tion about Endeavor: www.endeavor.
org; for Lapdesk: www.lapdesk.co.za;
and for Suminter: www.suminterindi-
aorganics.com.
Linda Rottenberg is CEO and Co-
founder of Endeavor. Since 1997, Linda
has pioneered a new model for develop-
ment that engages the private sector in
mentoring and advising the most prom-
ising-yet-undiscovered entrepreneurs
as well as jumpstarts entrepreneurial
support networks in these economies.
Headquartered in New York, with es-
tablished operations in Argentina, Bra-
zil, Chile, Colombia, Mexico, Uruguay,
Turkey and South Africa, Endeavor is
currently launching its model in Egypt,
Jordan, and India.
23
INVESTMENT

What Are The Odds?

10 Ways To Get a VC’s Attention
Wesley Selke, Investment Manager at Good Capital, tells us how social entrepreneurs can attract VC
funding.

Remember your audience and be profession- Present a well thought out business model.

1 2
al. Even though we’re in the business of doing
good, we still want to invest in great businesses
with solid management teams. While most of
the entrepreneurs I’ve encountered have been
professional, some have overplayed the “good”
card. I once got an email that started off with,
“Please, please, please, please, please look at my
business plan…” Needless to say, I didn’t look
at the plan.
Some entrepreneurs have big ideas and auda-
cious goals but have difficulty translating these
into the nuts and bolts of generating revenue and
profits. The better developed a business model
is, proven through customer and revenue trac-
tion, the more compelling an opportunity will be
for funders. Also, don’t try to be everything to
everybody and get focused on your core offer-
ing.

Make sure you do your competitive research.

3
Many entrepreneurs think they’ve come up with
the “new, new thing” only to discover that so
have another 100 or so people in other parts of
the world. Do your research, know your com-
petitive advantage, and don’t just try to be the
next Facebook.

4
Keep the initial request for funding short and
Present a well-developed social mission that
sweet. Send a short 1-3 page executive sum-

5
relates to your business. If you’re in the book
mary to see if there’s interest before dumping a
business, it probably makes more sense for you
50+ page business plan. These rarely get read in
to support literacy rather than clean drinking wa-
their entirety.
ter initiatives. The more a social mission is built
into the business model, the more likely it is to
expand as the business grows and stand the test
of time and ownership. Identify quantifiable so-
cial metrics that you plan to track over time.

24 beyond profit may/june 2009

 INVESTMENT

6
Consider registering as a B Corporation. It’s
quickly becoming the gold standard for social
enterprise and differentiates companies truly
committed to social and environmental respon-

9
sibility from all the green marketing hype. This
is appealing to many funders in the space. (For
more information, visit www.bcorporation.net).
Be open to discussing a variety of different li-
If you’re invited into a VC’s office, don’t jot
down notes from their white board. That’s a
breach of confidentially and it’s just plain tacky.
This decreases the chances that you’ll get funded.
See point #1 about professionalism. (This actually
happened to me recently).

7
quidity options. Know that when you take on
growth capital from a venture fund, there will be
some sort of exit down the road whether it’s an
acquisition by a mission-aligned larger company,
initial public offering, or some other alternative.
Discuss ways in which an exit can be achieved
that sits well with the management team and pre-

10
serves the longevity of the company’s mission. Don’t get visibly angry if your funding re-
quest is turned down. Given the sheer volume
of funding requests received by most venture
funds, chances are you’re going to get turned
down. However, if you handle yourself well,

8
Don’t ask VCs to sign non-disclosure agree- you can maintain a relationship with the funder
ments. This just adds friction to the process and put yourself in a better position for referrals
and increases the chances that a funder will not or future funding requests if your business takes
review the investment opportunity. Funders see off.
a lot of competitive businesses and the unwrit-
ten rule is that they will keep your information
confidential.

About Good Capital

Who: Good Capital is a venture firm that invests in organizations that leverage the power of
the market to create positive social change.
What: Their fund specifically looks to invest in expansion stage companies that are addressing
social issues related to poverty alleviation, improving education, and access to healthcare, and
with a historical annual revenue of at least US$1m.
Focus: Typically, they invest in companies that have figured out a scalable business model that
can both be profitable and make a positive impact on large populations.
Past Investments: Better World Books, Adina for Life

www.beyondprofitmag.com 25
 A Good
Time to be
Unreasonable

Interview:
Pamela Hartigan, Director, Skoll Center for Social Entrepreneurship
Pamela Hartigan became the new director of the Skoll Center for Social
Entrepreneurship at the Oxford Said School of Business earlier this year. With
experience as the first Managing Director at the Schwab Foundation, and a Co-
Founder and Partner at Volans, she is an entrepreneur in her own right. Beyond
Profit editor, Lindsay Clinton, caught up with Mrs. Hartigan at the Skoll World
Forum on Social Entrepreneurship in Oxford on March 27.
Beyond Profit (BP): How do you define social entrepre-
neurship, and what makes a a social entrepreneur differ- BP: How do you differentiate between social entrepre-
ent from an entrepreneur? neurship—focusing on the person—and social enter-
Hartigan: Social entrepreneurship is entrepreneurship. It is prise—the business?
innovative, resourceful, and leverages new opportunities to Hartigan: Social entrepreneurs create social enterprises.
create new systems and products. It is about system change. But not every social enterprise is created by a social entrepre-
It is not about palliative, charitable solutions to poverty. It neur. There are many managers that set up a social enterprise
is actually about finding sustainable, innovative pathways to because the government has a need that it can’t respond to.
completely change the system. Social entrepreneurs are very So, they get some funding for a community-based organiza-
practical, innovative, and solutions-oriented. They want to tion to deliver those services—and they slap the name “social
completely change the situation for whatever condition is enterprise” on them, which is very confusing because there
spurring inequity. is nothing innovative or systems changing about them. So,
not every social enterprise is a socially entrepreneurial en-
The difference between social and business entrepreneurs is terprise.
that when business entrepreneurs set up their enterprise, they
have to focus on how to make a profit. Why? Because the BP: How does Corporate Social Responsibility (CSR) fit
assumption is that they have to pay back their investors and into all this?
begin to make profit. The social entrepreneur, in contrast, is Hartigan: CSR is very different. It’s an add-on. A company
actually setting out to correct market and government fail- decides, well, we have been maximizing profits, and our cli-
ures. And while it might be profitable, the bottom line is to ents are not happy with us. So, how do we actually address
not to make a profit, but to change the system. this by setting up a tangential initiative to our company, that

26 beyond profit may/june 2009


may not have anything to with the business? Basically, it’s
window dressing.
The good news is that companies are actually waking up to
the fact that it is actually extremely valuable to bring together
their core business with social and environmental goals, and
we’re seeing more of that.
BP: At the Skoll Forum, there has been a lot of discussion
about social business might change problems like eco-
nomic turmoil, climate change, and education. Why are
we gravitating towards social entrepreneurship now?
Hartigan: It’s complex. For the past five years, social en-
trepreneurship has been thought to be a passing fad. But, be-
cause of the economic meltdown, people are realizing that
the reason this is happening is because the way that we make
our money has been completely separated from what makes
us happy as people. And, social entrepreneurs married those
two things. Our society, or at least our financial community,
has completely dichotomized the way that we make our mon-
ey and the way that we impact society. Social entrepreneurs
are the harbingers of where we need to go because it brings
together these two things. I always used to say, “A social en-
trepreneur is what you get when you combine Richard Bran-
son with Mother Theresa.”
BP: Impact has become such a buzzword. How do we
measure it? Who is making the most? But, isn’t it enough
to know that I’m helping coffee farmers in Colombia or
kids in India. Why is knowing your impact important?
Hartigan: If you don’t know your impact, you can’t improve.
In essence, what you don’t measure hasn’t happened. If you
don’t know your impact, how do you know whether you’re
doing more damage than good? The age of unaccountability
and lack of transparency is over.
BP: What about scale? These days you can’t start and
run a business without explaining your plans to scale.
What’s wrong with “small is beautiful”?
Hartigan: There are thousands of small, beautiful business-
es, which is fantastic. There are many entrepreneurs who are
interested in and are focused on their local communities and
they are doing incredible things. But, at the Skoll Center, we
are very much focused on how-big-can-small-get. Because
the world has such huge problems that we really need to af-
fect them on a massive scale.
BP: Where to women fit in social entrepreneurship?
Hartigan: Women are entrepreneurial by nature. We have
to solve problems and develop creative solutions, but I think
that the difference is the following: I think that there are thou-
sands of women entrepreneurs, but women are much more
interested in the small, local business. As you go further up
the ladder of socially entrepreneurial initiatives, you’ll find
that most are [run by] men. They have women that work with
them and are probably running their operations for them, but
www.beyondprofitmag.com
INTERVIEW
visions of ‘huge’ and ‘scale’ seems to be certainly a gender
difference.
BP: A lot of social entrepreneurs don’t actually identify as
such. They think, “I work in health.” Why is that?
Hartigan: You’re absolutely right. Social entrepreneurs
don’t identify as such, and when people say that they are so-
cial entrepreneurs, I’m immediately suspect. Because, the
really great social entrepreneurs—the ones who have been
about it for years—simply don’t use the term. Many in fact
say, “I never knew what I was until someone said, ‘You’re a
social entrepreneur.’” Usually, these folks say, “I’m an en-
gineer and I came up with a way to save women billions of
hours…” But, just because someone doesn’t call themselves
a social entrepreneur doesn’t mean that they aren’t one.
BP: What advice would you give to someone who knows
that they want to be a social entrepreneur, but is not sure
what his/her big idea is?
Hartigan: Well, two things. One, it’s okay not to be an entre-
preneur. Unfortunately, with the glamorization of entrepre-
neurship, everyone thinks that they have to go out and create
the next big idea. I think that’s insane. I think that across the
board, entrepreneurs desperately need strong teams behind
them, and that’s where I see the business school coming in
because they teach accounting, finance—the fundamental
tools you need to grow solid organizations.
First of all, you don’t decide you want to be an entrepreneur.
You ARE an entrepreneur. It’s like, you can’t help being the
way you are. Because I tend to believe that people are born
with entrepreneurial traits—and they can be nurtured and
stimulated or stifled—which depends on the society in which
you were born and whether they nurture innovative thinking,
creativity, risk-taking, failure—all the things that are part of
being an entrepreneur.
BP: You’re the co-author of The Power of Unreasonable
People. What makes social entrepreneurs unreasonable?
Hartigan: They’re only unreasonable to people who think
that what they are doing is completely off the wall. George
Bernard Shaw said, “Reasonable people adapt themselves to
the world. Unreasonable people attempt to adapt the world
to themselves. All progress, therefore, depends on unreason-
able people.” You can look at our last couple of decades and
all the horrific situations we have had in terms of poverty,
climate change, energy depletion, deforestation—all of these
things are carried out by so-called reasonable people. And
nobody sets out to create any of these things. But, if your
one pursuit is short term profit, you’re going to be a lot less
concerned about all these other things. So, we have the situa-
tion that we have now. A few people have become extremely
wealthy, and a whole lot of others have not. And we have
organizations who are running around picking up the pieces
because of this greed and lack of long-term thinking. So, the
system isn’t working. We need unreasonable people.
27
ENTREPRENEURSHIP

10 New Ideas that Could

Change the World
The launch of the inaugural issue of Beyond Profit coincides with Sankalp,
South Asia’s largest Social Enterprise and Investment Forum. Below are the
stories of ten Sankalp Entrepreneurs. They were selected for their innovation,
tenacity, vibrancy, and most of all, their potential for impact. Adrienne Villani
and Sujatha Muthayya report.

The stories presented are not reflective of

28 beyond profit may/june 2009 the Sankalp awards process.

A New Slate: Beyond Reading, Writing, Arithmetic
Butterfly Fields, Sharat Chandra
Sankalp Category: Education for All
While children around the world have
had the privilege of conducting science
experiments, taking music lessons, and
dabbling in art classes as part of their
school curriculum for decades, the av-
erage Indian student has led a more aca-
demically-focused existence. In 2005,
Sharat Chandra decided to do some-
thing about this.
His organization, Butterfly Fields, now
tries to infuse creativity into the minds
of young students and make learn-
ing “easy, enriching, and enjoyable.”
Working with mainstream schools as a
form of enrichment program, its centers
provide children with opportunities for
hands-on learning, social interaction,
and real-life problem solving.
The learning center enables children to
explore and practice skills to their own
satisfaction. Teachers are encouraged to
In a Whirlpool of Innovation
Vortex, Vijay Babu
Sankalp Category: Highly Scalable Social Models
On November 23, 2008, a small queue
of people filed past an ATM in an in-
ternet kiosk, inserted their biometric
cards, got their thumbprints verified
and withdrew the National Rural Em-
ployment Guarantee Scheme (NREGS)
wages due to them. In this small way,
these villagers in Tamil Nadu, India
played an important role in the first de-
ployment of Vortex’s indigenous low-
cost ATM technology.
Vijay Babu, CEO of Vortex recalls,
“Earlier, the distribution of NREGS
wages was done manually and involved
delays. Now, our ATM solution has
been coupled with no-frills accounts for
all the NREGS beneficiaries in about 4
villages, and the government transfers
payments to the villagers’ individual
bank accounts.”
The journey started in 2004 when a few
ENTREPRENEURSHIP
focus their classes on conceptual learn-
ing and to make them more exciting
and motivating. Students are asked to
constantly question and challenge the
way things are around them. In just one
year, armed with a core team of five,
Butterfly Fields has created 25 innova-
tive curriculum advancements and 150
hands-on activities linked to this cur-
riculum.
Credit: Kshitiz Anand
The Butterfly Fields approach is a nisms, and the sharing of data by keep-
paradigm shift in ideas about learning ing it in the open domain to fuel further
in India. Chandra believes that very research.”
little has changed either in pedagogy,
methods of learning, or assessment in If the Butterfly Fields approach suc-
the last five decades and he looks to the ceeds Chandra believes that India will
telecom sector for inspiration: “What emerge as the largest pool of skilled
happened in the telecom sector in India and quality human resource for global
too has to happen in the education sec- markets. It is our hunch that we will see
tor – thoughtful deregulation, flow of Butterfly Fields as a significant contrib-
professional talent in the delivery, set- utor in grooming the newer generations
ting up of proper data collection mecha- to achieve this vision.
leading banks in India approached Pro-
fessor Jhunjhunwala of IIT-M to find a
way to reduce the total cost of owner-
ship for an ATM, especially for rural
areas. Their requirements were clear
- they wanted an ATM that could be
easily used by the average rural person,
could consume less power, could han-
dle the power loses of rural locations
and be able to dispense dirty notes.
tication unit which displaced the need
Armed with this product specification, for a PIN.
Mr. Kannan along with the TeNeT
Group of IIT-M set out to design a com- As simple as the Gramatellar looks, it
pletely indigenous low-cost ATM. Their has been a long journey for the product.
solution, called the Vortex Gramateller, Vortex started the R&D in 2004 and the
did not require air conditioning, con- first pilot ATM for a leading bank in In-
sumed less than 50 watts of power, had dia was installed in March 2008. In the
a built-in battery back-up for four hours last 6 months, they have shipped about
of operations, and could accept soiled 20 ATMs to about seven banks.
notes for dispensing. In the context of
rural India and high levels of illiteracy, Thanks to Vortex, the path to financial
they also integrated a biometric authen- inclusion is even clearer now.
www.beyondprofitmag.com 29
ENTREPRENEURSHIP
Live and Dye Naturally
Aura Herbal Textiles, Sonal and Arun Baid
Sankalp Category: Environment and Clean Energy

Indian prominence in herbal dyeing
goes back more than 4000 years. Histor-
ically, India was known as the “golden
sparrow” because of its pioneering role
in the use of indigo. People who wanted
indigo as their primary spoil repeatedly
attacked the subcontinent. But, Indian
prominence in herbal dying began to
decay in the 19th century when the
technique was lost due to the invasion
of cheaper and easy-to-use synthetic
dyes. Sonal and Arun Baid, with their
company Aura Herbal Textiles, hope to
return India to its previous position of
distinction in this field. “I can proudly
say, after studying different natural dye-
ing processes all over the world, that
India had the most intelligent process
and recipes for the herbal dyeing,” says
Arun Baid.
After successfully experimenting in
their kitchen nine years ago with the
ancient technique of herbal dying to see
if the process actually stained fabrics,
Sonal and Arun Baid started their own
company, which today, has 75 employ-
ees. Aura Herbal Wear produces herbal
textiles and dyes, helping to prevent
global warming and pollution related
to textiles. What also sets Aura apart
is their choice of medicinal herbs in eco-cycle in textiles – from organically
their process; amazingly, the medicinal growing the cotton and herbs to turning
qualities of the herbs are retained in the the cotton into fabric to dying it with
fabric. To a certain extent, Aura Herbal herbs. The waste generated then goes
Wear produces “clothes that heal.” back to the farms as manure to generate
the cotton and herbs again.”
The Baids see themselves as offering
As demand for “natural fibers” in-
customers the choice to use herbal dyed creases due to greater global awareness
textiles over chemically dyed ones. of the ecologically harmful effects of
Says Arun, “Environmentally-con- chemical dyes, so does the Baid’s busi-
scious individuals and institutions will ness. Arun Baid sees a future where
all benefit from our process, which is herbal dying will be the only option left
the only process that can create a total for processing textiles.

Shedding Light on Small Solutions for Big Changes

Small-Scale Sustainable Infrastructure Development Fund, Vipula Sharma
Sankalp Category: Environment and Clean Energy

In developing countries, the public sec-
tor is unable to provide necessary util-
ity services. Consequently, many poor
households and communities lack the
infrastructure necessary for poverty al-
leviation and to maintain good health.
Currently, it is estimated that two bil-
lion people in the developing world
live without access to clean water, reli-
able electricity, and effective sanitation.
This is where the Small-Scale Sustain-
able Infrastructure Development Fund
(S3IDF) steps in – providing utility
services through decentralized small-
scale mechanisms and at a cost that
people can afford.
ply chains and unconnected poor com-
munities, implementing financing op-
tions for residents and extending their
access to infrastructural know-how. “In
our model, the poor are multiple stake-
holders – as users, SME employees
and even owners – of these pro-poor,
environmentally-friendly, and finan-
cially sustainable enterprises,” says
Vipula Sharma, CFO and acting CEO
of S3IDF. “Enterprises mentored/incu- takes this well-known fact, and doubles
bated by S3IDF are financially viable its impact by serving income generating
and completely recover their capital end-users, such as shop keepers, grain
and operational costs while giving a millers, farmers, women’s groups, and
good return to the entrepreneur even af- other small enterprises in an innovative
ter including financing costs.” and entrepreneurial way.

Through its Social Merchant Bank
model, S3IDF provides the poor with
linkages to technology, financing, and
business know-how. S3IDF acts as an
interface between modern energy sup-
For S3IDF, the market is there: poor
people spend a high proportion of their
income on traditional and inefficient
energy services, such as firewood, can-
dles, batteries, and kerosene. S3IDF
According to S3DIF, small-scale solu-
tions are also much more viable because
the interventions required are localized
and decentralized in comparison to
large-scale ones.

30 beyond profit may/june 2009


Meeting a Quadruple Bottom Line
Adithya Medical Services, J. Karthikeyan
Sankalp Category: Healthcare Inclusion
Diagnostic x-ray generation systems
have not changed much since their dis-
covery by Wilhelm Conrad Roentgen
in 1895. The system involves capturing
high-energy penetrating x-ray beams
on a photographic film and processing
the film to get a negative of the patient.
Adithya Medical Systems is revolution-
izing this system.
Driven by the failing quality of x-ray
machines entering the Indian market,
Adithya created a solution. By directly
converting x-rays into digital images,
Adithya has eliminated costly x-ray
film. Using their patented technology,
they have reduced the cost of digital im-
aging 90%. Says Mr. Karthikeyan, one
of the founders of Adithya, “By break-
ing the price barrier, we are making this
high-end technology affordable to the
diagnostic center next door.”
Finding the Missing Link: Value for Producers and
Consumers
Industree Crafts, Neelam Chhiber
Sankalp Category: Agriculture and Rural Innovations
While globalization and international
trade have reduced barriers between
countries in the past quarter century,
domestically, in India, these barriers
still remain erect. India’s urban and ru-
ral markets are still poorly connected,
but Industree Crafts is playing its part
to reduce these barriers. Industree con-
nects two ends of the spectrum - the ru-
ral artisan and the urban market.
“Industree was set up as a result of our
realization that the craft sector in India
is badly organized. The quintessential
thing to be done to improve the lives
of the craftsmen, who are the most ex-
ploited lot in the whole value chain,
was to create a dedicated craft brand
for the products of rural artisans in the
most remote of Indian villages, and to
provide them training to improve the
marketability of their products,” says
Adithya currently targets government
hospitals, small hospitals, and stand-
alone diagnostic centers in semi-urban
and rural areas as potential consumers
of its product, where x-ray film often
runs out.
While medical technology compa-
nies have revolutionised the industry,
Adithya has taken this one-step further
by creating a quadruple bottom line
product.
Adithya delivers high quality health
care at low cost by working with re-
duced capital and operating costs. It
protects the environment by eliminating
liquid pollution, reducing radiation, and
saving energy – there are no consuma-
bles used compared to the film-based
x-rays and operators are less affected
by radiation. It has deskilled opera-
Neelam Chhiber, Industree’s Founder
and Director.
Sustainability is at the core of Indus-
tree’s mission and work. According to
Chhiber, the most important aspect of
Industree’s work is “empowering pri-
mary producers – providing them with
the necessary skills, institutionalizing
them, and helping them move up the
value chain.” At Industree, artisans own
equity in the production and the retail of
their products; there is no stronger way
to build self-esteem.
Industree works through a hybrid model
that includes a for-profit component, In-
dustree Crafts Private Limited (ICPL),
and a non-profit wing, Industree Crafts
Foundation (ICF).
Industree focuses both on domestic re-
www.beyondprofitmag.com
ENTREPRENEURSHIP
Credit: Peter Sheik
tions and made it possible to employ
unskilled youth – the product is highly
user friendly and can be operated even
by a 10th pass (high school) student,
opening up employment opportunities
in several rural and semi-urban areas.
And it has created a profitable and sal-
able product because it can be added to
existing x-ray generators. Additionally,
Karthikeyan says, “By going digital,
access to high quality diagnosis is made
possible. The images can be digitally
transmitted across the world for diag-
nosis by an expert radiologist.”
Credit: Srinivas Rao
tail and export markets in its quest for
expanding markets for sustainable pro-
duction. In 2007, though, it scaled up its
presence in Indian retail, as this market
is less prone to demand fluctuations,
easier to understand for the company,
less risky, and demands lower capital
investments.
Essential for long-term social change,
Industree is upholding its commitment
to remain a sustainable and fair trade
brand and continuously spreads aware-
ness on sustainable consumption.
31
ENTREPRENEURSHIP
Here, the Grass is Always Greener
Wonder Grass, Vaibhav Kaley
Sankalp Category: Highly Scalable Social Models
Habitat is an essential part of life. There
is a sense of security that arises when
people have a roof over their heads.
Not only does habitat provide shelter
from the elements, but also it contains
and nurtures relations, emotions, and
aspirations. Wonder Grass seeks to
meld these two important characteris-
tics of habitat by bringing bamboo and
bamboo-based building systems into
the mainstream construction industry
in India. Not only are Wonder Grass’s
“habitat solutions” affordable and beau-
tiful, but by working in bamboo, they
are sustainable and responsible.
“We started Wonder Grass to establish
bamboo as a material at par with every
other building material in the main-
stream construction industry,” says
Vaibhav Kaley, Director of Wonder
Grass. According to Kaley, a sustained
and entrepreneurial effort in bamboo-
based construction will continuously
reduce building costs by improving the
Weaving Rural Dreams
Rural Outsourced Production Enterprise (ROPE), Nedumbally Narayanan Sreejith
Sankalp Category: Agriculture and Rural Innovations
If you thought the great Indian out-
sourcing story ended with giants like
InfoSys, look again. In a small village
called Melakkal near the Indian town
of Madurai live two of the newest faces
of India’s outsourcing story. Murge-
san and Malarkodi, his wife, work with
women who weave rope from banana
fiber. Little do they know their product
feeds into IKEA’s supply chain. In fact,
they have never even heard of IKEA.
In 2006, while working with a rural
BPO based in Madras’ Indian Institute
of Technology’s (IIT-M) Rural Tech-
nology and Business Incubator (RTBI),
Nedumbally N. Sreejith’s dreampt up a
new outsourcing opportunity: leverag-
ing local resources, fine-tuning skills,
forming producer groups, and supplying
artisanal products to larger companies.
Sreejith approached RTBI with his idea,
32 beyond profit may/june 2009
efficiency of supply-delivery chains.
The housing shortfall in India today
stands at 22-25 million dwelling units.
On average, 250,000 housing units are
damaged every year due to natural disas-
ters. The demand for building-solutions
is rising exponentially in fast growing
urban centers as well as in remote, rural
areas. Bamboo, a resource with which
the Indian subcontinent is bestowed in
abundance and a resource that is spread
across the length and breadth of the economy benefits.
country, presents a regenerating and
sustainable alternative to address these This large demand for housing exists
burgeoning housing demands. both among the luxury segment and
among the common man. Hence, Won-
The spread and demand for bamboo- der Grass approaches this issue with a
housing prompts farmers to initiate two pronged strategy – designing and
bamboo plantations on their land, which building sustainable habitats for the
become a source of steady income for luxury segment in urban centers, a low
the family; the increase in bamboo plan- volume/high margin business, and de-
tations in the peripheries of villages has signing and building affordable dwell-
an indirect spin-off effect on the local ing units for rural households, a high
ecosystem; and bamboo brings carbon- volume/low margin business.
called Rural Outsourced Production
Enterprise (ROPE), which they later
funded. ROPE developed a model of
sub-contracting production needs of ur-
ban clients to village-based production
centers, and utilized technology for ef-
ficient production organization, execu-
tion, and delivery.
Courtesy of ikea.com
ROPE’s model is unique for several rea-
sons. They offer customized production
to suit clients’ needs. Their approach they plan to expand into cotton and silk
competes with modern manufacturers fabrics and apparel. Some of the prom-
on price and quality. The model is scal- inent names in their client list include
able as there is a large rural need, a vast IKEA, Industree Crafts, and CwithCo,
number of outsourced products, and the New York.
production centers require low capital
and overhead. Furthermore, the use of While Sreejith dreams of expanding
ICT enables efficient operations. into new markets, the dreams of Mu-
rugesan and the women of his group for
ROPE’s rural centers produce hand wo- access to better education, healthcare,
ven and knitted products, like mats, car- and increased incomes come closer to
pets, and window shades. In the future, reality.

Weathering Heights
Neurosynaptic Communication Private Limited,
Sameer Sawarkar and Rajeev Sharma
Sankalp Category: Healthcare Inclusion
Meet Neurosynaptic, makers of low-
cost, high-quality telemedicine and
weather monitoring kits. Founded in
2002 by Sameer Sawarkar and Rajeev
Sharma, Neurosynaptic Communica-
tion Private Limited (NCLP) brings
technological solutions to problems at
the bottom of the pyramid. Their out-
of-the-box thinking puts answers to
healthcare and agriculture in a box.
Sawarkar says, “We started with a ques-
tion – can telemedicine and remote di-
agnostics bridge the healthcare divide
for rural areas affordably?” NCLP de-
veloped the ReMeDi™ (Remote Medi-
cal Diagnostics) range of products and
comprehensive telemedicine solutions
in collaboration with the TeNeT group
of IIM-M to address this question. This
solution allows transmission of various
vital parameters about the patient to a
Cultivating the Joy of Learning
Joy of Learning, Prashant Joshi, Vivek Wagh, and others
Sankalp Category: Education for All
The stresses of education are hitting
children earlier and earlier. Test scores
determine their future, and the stress
of studying for and taking these exams
eats at parents, teachers, and students.
Prashant Joshi, Vivek Wagh, and oth-
ers founded Joy of Learning to combat
this academic stress and anxiety, com-
plimenting mainstream education and
attaching positive emotions to learning
activities.
Joy of Learning is a small organization
engaged in developing educational aids,
including books, cards, and other ma-
terials, especially for early childhood
education. It aims to develop prod-
ucts that enable education for children,
which is essentially stress-free and
enjoyable. According to Joshi, “Joy of
Learning helps children to develop their
academic skill-sets, with minimal effort
and without the drudgery of rote learn-
ENTREPRENEURSHIP
doctor for preliminary diagnosis. To ad-
dress the lack of availability of trained
medical professionals in the villages,
the solution has been developed such
that after a minimal amount of training,
even a high-school graduate can oper-
ate it.
The solution provides complete Elec-
tronic Medical Records, images, vari-
ous health parameters like ECG and backs for accurate weather monitoring
heart sounds, as well as audio-video in India,” Sameer says. NCLP has de-
conferencing at very low bandwidth, veloped Indradhanu Automatic Weather
making it an excellent platform for ru- Stations which measure various weather
ral and remote healthcare in villages. parameters like atmospheric pressure,
temperature, humidity, etc. and trans-
Taking on agriculture with the same in- mits them to a central server over the
novative thinking, NCPL has designed Internet or via a GSM connection.
and piloted automated weather monitor-
ing systems. “The high cost of weather Indradhanu has been certified by the
monitoring stations and the non-granu- Indian Meteorological Department for
larity of the data are the major draw- accuracy and other specifications.
ing.” Perhaps most importantly, Joy of
Learning provides a system that gives
commensurate impetus to the bright
students as well as the slow learners.
On Joy of Learning’s methodology,
Joshi notes, “We hear a song just once,
and if we like it, we remember it. This
happens because of intensity of involve-
ment and positive attitude. If an educa-
tionist is able to evoke similar interest
in learning, it too can become equally developing conceptual clarity.
effective.” Joy of Learning runs Activity Cent-
ers and conducts camps for children,
Up to now, Joy of Learning has con- where they improve their skill sets un-
centrated its efforts on mathemat- der trained supervision. While Joy of
ics, “the killer subject,” which brings Learning is still operating at a skeleton
about “math phobia.” Joy of Learning level, its books have been included in
attempts to combat this phobia by cre- the reading lists of four schools in Nag-
ating board games and card sets that pur for the 2008-2009 academic year.
enable children to play various games
that enhance mathematical thinking, In the future, Joshi hopes to find part-
improving efficiency in calculation, and ners to help him scale up operations.
www.beyondprofitmag.com 33
INNOVATION

Shaping For-Profit
Enterprises Through
Disruptive Innovation
In the last decade, the sheer size of the lower-income market has enticed
multi-national companies and investors to search for ways to reach this
customer base. While some have made successful forays into this market—for
example, microfinance or small unit products - there is a new set of emerging
enterprises being shaped through disruptive innovation. These innovative
products and services not only create consumption, but also create entirely
new markets. Hari Nair, partner at Innosight Ventures, explains his company’s
philosophy, and explains how innovations that are smaller, cheaper and
simpler than the market leaders can often reshape a market.

Disruptive innovations are all around us, either creating new
markets or challenging entrenched incumbent technologies
or products. Internet blogs for example have challenged
mainstream media like newspapers and magazines, while
Apple with its Ipod or Nintendo with its Wii game console
has engaged a large group of otherwise non-consumers into
purchasing music and video games. While disruptive inno-
vations are seen and used at all levels of the market spec-
trum, their focus around closely meeting consumer needs
via combinations of customized functionality, specifications,
and higher affordability, make it a valuable tool in creating
products and services that connect with the circumstances
of members of the lower-income population. Typically, with
less emphasis on technology and more concentration on situ-
ational applications, they help shape meaningful solutions
that offer convenience, affordability, access, and utility to
lower socioeconomic groups that current alternatives may
not provide.
In recent years, the lure to access the spending power of large
lower-income consumers has led large corporations and ven-
ture capital to chase many markets. We have seen companies
engineering low unit price products to encourage trial and
consumption, as well as the rush of social venture capital to
invest in the growing microfinance sector. While these inno-
vations have certainly grown the market, there is a new set of
emerging enterprises being shaped via disruptive innovation
and new business models. These innovations not only create
consumption, but also create entirely new markets.
Great Opportunities Are Shaped
History tells us that almost all great products and services be-
gin as something not so great. For example, the first personal
computer was sold in 1950 as a kit and did virtually nothing.
More recently, few would have thought that the web site cre-
ated in 1995 by Pierre Omidyar to sell Pez dispensers and
other collectibles would be one of the few remaining com-
panies that continue to set the benchmark for e-commerce.
Remarkable success often involves some measure of insight
and luck. But more importantly, notable business successes

34 beyond profit may/june 2009

 INNOVATION

are nearly always shaped by the skillful, patient and thought-
ful decision-making of uniquely capable managers.
The traditional venture capital approach emphasizes the
search for opportunities and relies on deep insights around
long-term trends. Firms usually have access or commission
consulting studies and market research. Investors construct
complex models and discounted cash flow sheets to identify
the best potential investments. Those predicted to have prom-
ise are funded with a clear and specific business plan in mind;
funds are then allocated (sometimes in massive quantities) to
achieve that pre-determined plan – with limited deviation al-
lowed from the original investment thesis.
In contrast, we believe that success is shaped rather than
predicted, so we shape our own outcomes through in-mar-
ket iteration of our business ideas. We aggressively, quickly
and cheaply push initial offerings into the market. We then
let customers determine success or failure. If they buy, we
quickly shift our focus to achieving profitability; if they
don’t buy, we figure out why and quickly and cheaply iter-
ate the offering until we find something that delights them.
refrigerators keep their drinks cool and preserve their leftover
food for a few days. We believe products that make it easier
for consumers to do something they are already trying to ac-
complish become what we call, “killer applications.”
Got Dirty Clothes?
Village Laundry Service (VLS) offers micro-franchises to
carefully selected and efficiently trained entrepreneurs. Op-
erating under the brand name Chamak (meaning “shine” in
Hindi) they offer washing, drying, and ironing to consumers
who lack clean, affordable, and accessible laundry service.
Chamak offers high-quality washing services to middle-in-
come families, students, and single workers in India at an af-
fordable price point. These customers typically have limited
access to efficient washing facilities.
VLS franchisees are enterprising low-income people who
have little education and opportunity to start their own busi-
ness. For a very low start-up fee (1-2% of regular franchise
Franchises like Village Laundry Service enable
low-income people to start their own businesses

Spotting Opportunities Others Cannot See

The principles of disruptive innovation, as defined by Har-
vard Business School professor Clayton Christensen (a
counselor and shareholder in Innosight Ventures), tell us that
most successful companies innovate faster than customers’
lives change. They ultimately end up producing products
that are too good, too expensive, and too inconvenient for
large segments of customers. In the process, they unwit-
tingly open the door to entrants that can offer simpler, more
convenient and lower-cost products and services to those
customers who have no need, or lack the means, to keep up
with the accelerated pace of innovative change.

Our venture portfolio is targeted towards creating new mar-

kets or reshaping existing markets by delivering relatively
simple, convenient, low cost innovations to a set of cus-
tomers who are ignored by industry leaders. To identify
customers who will welcome disruptive innovations, we
use a “jobs-to-be-done” approach. This theory holds that
products are successful when they connect with a circum-
stance: a job that customers find themselves needing to get
done. For example, we recently helped develop a low cost
appliance which will help rural consumers who don’t own
INNOVATION

fees), these entrepreneurs are carefully selected and trained

by the VLS Academy and provided specially engineered
single-machine laundry booths. These booths operate much
the same way a regular franchise does: the franchisee is re-
sponsible for the success of the business, has access to VLS-
branded and marketed products and supplies, and earns based
on performance. A VLS franchisee stands to minimally dou-
ble his previous earnings, increase his social status, and gain
valuable basic business knowledge.

The business model is driven by flexibility as the rollaway ki-

osk with self-contained water supply allows VLS to position
its kiosks in expected high demand locations and the flexibil-
ity to move to other corners if demand does not materialize
as quickly as expected. Meanwhile, the franchisee, previ-
ously an ironer, earning INR200 (US$4) per day dramatically
improves his income; VLS allows him to more than double
his income by expanding his “share of pocket” from existing
customers and attracting new ones.
C.K. Prahalad, renowned author of The Fortune at the Bot-
tom of the Pyramid: Eradicating Poverty through Profits,
wrote: “Large-scale and wide-spread entrepreneurship is at
the heart of the solution to poverty.” He suggests that in or-
der to succeed both monetarily and socially, companies need
to offer the enterprising poor empowerment, choice, and self-
esteem.
VLS provides incentives to all involved parties to perform,
and it is self propagating. Franchisees must perform (keep the
rig utilized with target volume of wash per day) in order to
make better livelihoods, so they will strive to thrive. They are
more likely to train themselves to excel in their craft, to care
enough to ensure quality, to work harder with longer hours,
and to grow their business. The most successful franchisee
will open additional booths, thus expanding and transform-
ing his/her family’s socio-economic status. VLS is incentiv-
ized to fuel this behavior as it creates natural reach and scale,
while building its brand and reach, while driving the business
to profitability.
Md. Shameem a Student at MS Ramiah College is a
Razor Rave customer.
US$250,000 or less to achieve initial revenues and US$1m
or less to achieve profitability.
We begin by assuming we’re partially right and partially
wrong in everything we do. We take an “emergent” approach
to building our ventures; that approach emphasizes retain-
ing flexibility and gathering feedback from the marketplace
as we figure out what’s right and what’s wrong about our
strategy. We continually structure “quick and dirty” tests to
help us obtain new, proprietary sources of information. And
we don’t keep the strategy static – we continually shape and
mold our businesses and strategy to meet the realities of the
marketplace. But we don’t hesitate to shut down things that
the market tells us very clearly simply won’t fly.
Importantly, our multi-geographic presence allows us to
achieve very low factor costs – most of our hardware and
software is developed through close third-party partnerships
in India and Singapore. We ensure we have different schools
of experiences within the team to help each venture iterate
through the uncertain early stages.

Value of Being Parsimonious Razor Rave: Grooming on the Go

We use a distinctive and systematic process for making good
things happen with very little money. Conventional wis-
dom says that it takes millions of dollars to produce compel-
ling prototypes and initial revenues, but all of our ventures
are structured to achieve success with modest investment:
Single serve products (sachets) have found success in India
as its population desires quality brand names but is unable
or unwilling to pay for regular bulk packages. At any given
neighborhood mom-and-pop store, known locally as a kirana,
hundreds of brightly-colored single-use packets of detergent,

36 beyond profit may/june 2009


Most successful companies in-
novate faster than customers’
lives change. They ultimately
end up producing products that
are too good, too expensive,
and too inconvenient for large
segments of customers.
shampoo and lotions hang from hooks.
Razor Rave’s micro-franchise booths provide single serving
premium shaves, facials, face-powdering, cologne sprays,
and other male beauty services. Delivering instant, conven-
ient, and affordable feel-good boosts for young men on the
go, Razor Rave targets a growing market of image-conscious
professionals and students. Previously, these young men were
unable to consume these products and services due to high
prices, substandard quality, or lack of knowledge.
Barbers form Razor Rave’s main entrepreneur franchisee
base. The barber entrepreneurs that take up Razor Rave fran-
chises have previously worked for a fixed salary, though the
value they create far outweighs what they are paid. The fran-
chise allows them not only to earn based on their output, but
also to provide customers a more holistic experience with the
use of a wider range of male beauty products and services.
A Replicable Model for Success
Our repeatable process emphasizes modest investments that
grow with market-based proof. We form perspectives on
possible opportunities through observation and discussion;
our local team explores dozens of ideas every year, before
eventually assembling about 10 business plans and taking 5-
7 new ideas to market for initial testing; ventures are refined
and iterated with the help of targeted field experiments (learn-
ing pilots) with “foothold” customers (intital consumers for
the product or service) with key unmet jobs-to-be-done. As
we see confirmation of widespread market demand, we focus
on quickly achieving breakeven profitability and locking-in
www.beyondprofitmag.com
INNOVATION
forms of long-term advantage.
We do well by doing good. The discarded customers we
embrace include the socially disadvantaged, so our business
model naturally leads to social good, allowing us to link fi-
nancial and social investors in new and unique ways for
mutual benefit. Financial investors benefit from our social
motives through cheaper access to capital, receptive foothold
customers and new segments, general goodwill generated
and knowing their money is earning “double-bottom line” re-
turns. Social investors benefit from the financial disciplines
that both make ventures economically sustainable and create
access to massive pools of talent and capital
Our current portfolio includes five ventures with revenues
and seven others that have passed through initial marketplace
testing; we have several other business plans ready to enter
the initial testing phase.
Through 2015, we expect to launch 30-35 new ventures and
produce at least half of them that have significant value to po-
tential buyers. We have also set a goal of impacting 100,000
under-privileged lives by creating a significant transforma-
tion in their household income levels.
Hari Nair is a Partner at Innosight Ventures, a venture capi-
tal firm inspired by the theories of Disruptive Innovation of
Professor Clayton Christensen of Harvard Business School.
Innosight Ventures has offices in Singapore, Mumbai, and
Baltimore. Hari’s primary focus is on India and emerging
markets.
37
 Credit: Lyn Gately
? The Questions at the Bottom
of the Pyramid

Real Challenges of Global Intrapreneurs

Andrew squints at the silhouettes of the shacks ahead. The harsh heat of the day has
subsided, leaving behind an escort of mosquitoes. A small smile spreads across his lips. He
caught sight of what he had been looking for. Community meetings, convened in a circle
on the clay floor of Anu’s home in this slum in the center of Mumbai, were something he
looked forward to. This encounter would be, to say the least, a little different from his last
meeting.

Just 24 hours earlier, Andrew had been at JFK airport in New York. His head was still
spinning from that afternoon’s adrenaline and Diet Coke-fueled meeting with his company’s
management team. It had begun as expected, with the usual mix of PowerPoints, P&Ls and
projections, ROIs and risk assessments. As the conversation progressed, the sentiments of
his colleagues morphed from idealism and optimism to skepticism and criticism. The tone
then swung to confusion and condescension.

“What on earth are we doing trying to build a business in a slum?” they demanded.

38 beyond profit may/june 2009


In-tra-pre-neur [in-truh-pruh-nur]
noun: a person in the pursuit of new solu-
tions for the BoP on behalf of a company;
modern day Indiana Jones: part academic,
part businessman, part action hero; just as,
if not more, comfortable sitting in mud hut,
as talking business in a three piece suit
The Quest for the Fortune
Creating a sustainable and truly global economy is a noble
aspiration. Many corporations, entrepreneurs, governments,
academics and non-profits are pursuing this goal. Progress
looks like a dark desert at night with a thousand fires burning.
Some fires are burning brighter than others, but they have
not yet fused together to form a torch that can change the
world. Although all the stakeholders are doing their part, in
this article, I will focus on those fires being lit by large cor-
porations.
In 2002, The Fortune at the Bottom of the Pyramid ushered in
a new level of consciousness in international business strat-
egy. Although the idea of simultaneously making a profit and
making a difference was already well established, the anecdo-
tal case by C.K. Prahalad and Stuart Hart that the four billion
people each living on less than US$4 a day (the bottom of the
economic pyramid or simply “BoP”) held the potential for
immense profit captured popular imagination. Multi-national
companies (MNCs) around the world launched initiatives to
adapt and market their products and services to the world’s
poor. Seven years after the publication of the original article,
while the luster of The Fortune at the Bottom of the Pyramid
remains bright for many, those charged with accessing this
opportunity for their company and the poor communities in
which they work, are still in search of an effective map to the
treasure; many obstacles threaten to derail their progress. We
interviewed these “global intrapreneurs”—those that walk
the middle ground between creating social good and doing
it on behalf of a mainstream business—and spoke to leading
scholars and thought leaders to get a snapshot of the quest for
The Fortune.
What does this fortune look like? The recent Next Four Bil-
lion report (www.wri.org/thenext4billion) estimates the pur-
chasing power of the BoP at US$5 trillion a year. But the
real value goes beyond mere profit for large corporations. For
example, Procter & Gamble’s Pur water purification product
has saved thousands of lives over the last nine years. Sev-
eral companies are testing the Cornell University-led “BoP
Protocol,” a market-creation approach which emphasizes the
importance of MNCs “becoming indigenous,” seeding an en-
vironment conducive for community wealth creation through
entrepreneurship rather than just selling their products. Oth-
ers, such as Nestle, provide microfinance for individuals to
www.beyondprofitmag.com
INNOVATION
buy a cart and offer a selection of products fortified to address
local dietary shortcomings, for door-to-door sales and distri-
bution. In doing so, they have essentially created thousands
of poverty-alleviating micro-franchises in rural communities
in Brazil and Cote d’Ivoire. The real fortune being sought is
the simultaneous accomplishment of a trifecta of goals -cor-
porate profit, relevant and sustainable social impact and local
poverty alleviation.
The Questions at the Bottom of the Pyramid
To find out more about the roadblocks facing global intrap-
reneurs, we tracked some down in airports, in implementa-
tion sites, and in their offices. We wanted to find out what is
working, and what isn’t. What are the challenges involved
in reaching BoP customers? How are these challenges being
addressed?
I. Securing Internal Support: How can companies gather
data affordably in order to make a compelling business case
and develop accurate projections?
If a company wished to launch a cleaning product in San
Francisco, much of the necessary data would be readily
available to analyze the business case. If the available data
were inadequate, marketing research firms would be fall-
ing over themselves to secure a contract to fill the gap with
focus groups and presentations. However, to gather equally
relevant data from the different realities of the residents of
Dharavi, the largest slum in Asia, is a different proposition,
requiring different methods.
Executives have expectations about what information they
will be given to make business decisions. According to Jus-
tin deKoszmovszky, Strategic Sustainability Manager of S.C.
Johnson, publicly available data is often too high level to be
useful. For a social intrapreneur, though, budgets often do not
allow the pursuit of additional information. This lack of data
limits the ability to make the case for further funding; it is a
vicious cycle.
Even where adequate external data has been secured, for
some BoP social intrapreneurs it is unclear where the goal
is. CJ Fonzi, who led the field team on an innovative DuPont
BoP initiative in 2008, notes the challenge in measuring prof-
itability for BoP projects in their early stages. “Do you cal-
culate the financial bottom-line with US-based management
support or without?” pondered Fonzi. “For many initiatives,
profitability with all costs considered will not be achieved
until large scale distribution has been coordinated and/or the
product team has been localized.” Until that stage, the dif-
ference in corporate cost structure of England versus Ivory
Coast is just too big a hurdle to overcome.
II. Testing on a Budget: How can we run pilot programs at an
affordable cost with low-margin business models?
39
INNOVATION
Clearly, four billion people spread over more than a hundred
countries do not have identical needs or buying habits. Tak-
ing time to understand the local environment and co-create or
customize products, services, business models and business
processes is essential. Yet, how does a company do this on a
tight budget? As Nestle seeks to grow its excellent door-to-
door distribution network beyond 9,000 women in two coun-
tries, and S. C. Johnson takes its community cleaning pro-
grams beyond Kenya and into new markets, how can budgets
be kept as lean as possible?
To some extent, some of us in the emerging BoP Industry
may be guilty of a similar kind of impatience that we see in
corporate culture itself. Erik Simanis reminded us that it took
Muhammad Yunus seven years of trial, error and refinement
on a small scale before it was deemed ready to accelerate the
growth of the much-celebrated Grameen microcredit model.
Once proof of concept is achieved, it is much easier to secure
the necessary resources for expansion. In addition, there are
opportunities for implementation partnerships to be formed
to localize cost structures while benefiting from a greater un-
derstanding of local realities.
III. Patience: How can we balance corporate pressures for
profitability with commitments for impact in the community?
The budget squeezes inspired by the international financial
crisis have driven the questions at the bottom of the pyramid
toward the top of the CFO’s agenda. Yet, success in engag-
ing these new markets requires patience. The pioneering na-
ture of the work means that estimating timelines can be very
challenging. This ambiguity – and the lack of understand-
ing within the mainstream business community- makes BoP
business lines easy targets for corporate strategy divisions
looking to cut costs.
The market of the poorest people in the world remains rela-
tively untapped. Even in India’s microcredit success story,
access extends to just 10% of the 700 million eligible bor-
rowers. Within this number, the poorest 5% are considered
“Ultra Poor,” falling outside the scope even of microfinance.
Achieving scale in a meaningful way in markets of this size
and complexity will necessitate the patience for innovation to
blossom in products, services, business models and business
processes – patience that is hard to find in the current tight
budgetary environment.
The lack of patience may stem from an inappropriate para-
digm, suggested Cornell University Professor Stuart Hart,
whose research and work with Prahalad inspired The Fortune
of the Bottom of Pyramid. “Companies pour millions of dol-
lars into technological R&D every year and offer the sup-
portive environment needed to make breakthroughs,” Hart
says. “But this understanding of the patience required seldom
extends to innovating new business models and processes.”
40 beyond profit may/june 2009
In fact, the mismatch between the patience required to pull
off this kind of transformational market building and the fast,
results-driven culture of large corporations was possibly the
largest overarching theme running through our interviews.
There is another side to the story, however. It is true that some
initiatives are losing the corporate battle and being canceled
before reaching fruition. Yet, the biggest microfinance insti-
tutions report that they continue to be approached with part-
nership offers by several large companies each week, clearly
lured by the seemingly ready-made demand-aggregation net-
work of millions of potential customers. Therefore, while it
would seem that individual programs are threatened, in prin-
ciple at least, the quest for the Holy Grail at the bottom of the
pyramid remains appealing.
IV. The challenge of growth: How can we scale while adapt-
ing the product composition and its delivery mechanisms to
the needs of each local community?
Ted London, Director of the BoP Initiative at The Univer-
sity of Michigan’s William Davidson Institute and faculty
member at the university’s Ross School of Business, named
‘achieving scale’ as a top challenge facing the BoP field to-
day. Tatiana Thieme, a BoP Business Anthropology consult-
ant and Cambridge University PhD student studying this area,
highlighted an important open question: “Just because prod-
ucts and services have been developed for a particular market
and successfully piloted does not mean that it will translate
equally well to another market where the infrastructure, com-
munity structures and local dynamics are different.”
Examples of projects that have achieved profitability through
scale are sadly few and far between. Professor Paul Hudnut
of Colorado State University and Bainbridge Graduate Insti-
tute articulates the “4 Cs of BoP Scaled Products: Cigarettes,
Coca Cola, Condoms and Cell phones.” So, can scale consist-
ently be achieved with products that create relevant social
impact? A good place to start is in integrating appropriate
impact assessment methods from Day One. As Ted London,
whose new Impact Assessment framework will be published
in the May 2009 edition of the Harvard Business Review,
correctly noted, scaling without having a good estimation of
the effect of your actions is both, irresponsible and counter-
productive.
Hart suggests that, to some extent, swifter scaling is a ques-
tion of timing. For situations where the market has been seed-
ed and there is general acceptance of the product, more rapid
growth through access points such as microfinance institu-
tions or internet kiosks may be possible. In these situations, a
new question arises: who can be an appropriate partner?
For Procter & Gamble, a social marketing model in partner-
ship with local NGOs such as health clinics or schools has

proven most effective until now. In addition, there are doz-
ens of candidates among the ranks of microfinance institu-
tions in many larger countries. But all of them are not equally
equipped in terms of market reach, organizational culture,
process and capacity to help reach potential clients quickly
and effectively.
There are, however, no short cuts to the bottom of the pyra-
mid. The identification and structuring of the right partner-
ship or technological platform at the right time has the po-
tential to accelerate the rate of return of simultaneous profit,
local wealth generation and social impact. Until then, it will
be more of the same - visiting communities, village-to-vil-
lage, to assess their needs and buying patterns. Indeed, sev-
eral companies and thought leaders we spoke with empha-
sized the importance of adapting product composition, size
and cost structures to the needs of the local markets and the
value that it brings to these communities. Our pioneers will
be learning, innovating and customizing while continuing to
make the business case to their corporate bosses.
Looking Forward
In the final analysis, significant challenges clearly remain in
a field that is still only starting to gain definition and order.
Thousands of little fires are lit and continue to burn even in
these times of economic difficulty. But building business
models and processes to achieve simultaneous profit, social
impact and poverty alleviation on a large scale will require
skill, innovation and patience from pioneering global intrap-
raneurs and companies. For example, Procter & Gamble’s
PUR clean water initiative was struggling to find its way after
four years as a for-profit venture, its track record character-
ized by relatively low penetration and large losses. A change
of business structure to be non-profit opened gateways to
additional funding streams and its reach grew dramatically.
Five years later, Dr. Greg Allgood, Director of the Clean Wa-
ter initiative at P&G, informed us that their progress has been
such that if the company made a slight adjustment to the price
point now, it could be a profitable business line. Procter &
Gamble, however, is very clear that the total benefits of the
program—employee motivation, stakeholder relationships
and as a means to learn about BoP distribution strategies—
far outweigh any profit that would be generated. Clearly, in-
cubation takes time and dilemmas remain in identifying the
most appropriate business models for each particular prod-
uct, service and market.
Possibly the greatest hope for the future, therefore, may not
lie with isolated initiatives. The best equipped may be corpo-
rations that embody a higher form of corporate responsibil-
ity. Unsurprisingly, those who have seemingly made the most
progress in answering the questions at the bottom of the pyra-
mid are those who have been trying for the longest time. They
are also the companies that have most integrated business at
the BoP into the heart of their companies and the mainstream
www.beyondprofitmag.com
INNOVATION
Successful Partnerships at the BoP
British Petroleum India Energy Ltd. Partners with Swayam
Shikshan Prayog (SSP)
British Petroleum (BP) realized that solving the energy prob-
lem of rural India can be a profitable business proposition. It
partnered with Bangalore-based Indian Institute of Science
to develop a low-cost, smokeless cooking stove that runs
on pellets made from agricultural waste. The stove, called
Oorja, meaning ‘energy’ costs INR 675 and provides a low-
cost, clean, fuel-efficient and safe solution to the energy
needs of rural Indian kitchens. Oorja is sold through selected
SSP clients (Jyotis) who first purchase the stove and pellets
in bulk and retail it from their homes to the community.
The BP pilot at SSP began in August 2006 and 15,000 stoves
were sold by the end of the year, with a turnover of INR8m
(US$160,000).
Danone Poland
Three years ago Danone Poland – established in 1992, part
of Groupe Danone, a leader in the global food industry – de-
veloped a breakfast product that has high nutritional value
for children and is affordable for low-income consumers. A
milk porridge product based on semolina and milk, Milk Start
is enriched with vitamins and minerals. The project team
established partnerships with a state child health and nutri-
tion organization, Poland’s largest manufacturer of instant
products and the country’s largest food retailer. The partners
committed to offering the lowest price possible with the
highest nutritional quality. The collaboration brought many
innovations, including economical packaging for single-
serve sachets to drive down production costs and increase
accessibility. Milk Start was launched in September 2006 and
reached sales of more than 1.5 million sachets by the end of
2006, including about 33,000 households with children under
the age of 15.
of their corporate strategies and philosophies, not as a side
program or one-off initiative. Erik Simanis notes the vary-
ing importance of business-level, country-level and corporate
level internal support on different kinds of BoP projects and
their stages of implementation. Further, these projects need
to be sustained and nurtured throughout their lifecycle. It is
this degree of commitment that creates the environment and
culture necessary to incubate patiently.
To a great extent, financially sustainable and integrated BoP
business lines are the pinnacle of truly sustainable and stra-
tegic Corporate Social Responsibility. Answering the ques-
tions at the bottom of the pyramid may be the key to usher-
ing in a new era of capitalism which generates profit, offers
wealth-creation opportunities for the poor, spreads products
to reduce sickness and spreads education around the world
– welcoming billions of people to participate in a more inclu-
sive, sustainable global economy. The thousands of little fires
lit by corporations, entrepreneurs, academics, governments
and non-profits may yet become an blaze that will change
the world.
Chris White is a business strategy consultant with Intelle-
cap. For follow up questions, please contact Devyani.Para-
meshwar@intellecap.net.
41
PHOTO JOURNAL | William’s Windmill

William Kamkwamba built his first

windmill when he was 14. Here he is,
pictured on the top of his windmill, do-
ing some maintenance work near his
home. William’s windmill is a part of
the AfriGadget project which explores
solutions to everyday problems that Af-
ricans face through indigenous knowl-
edge and out of the box innovations.

The propellers are made of plastic pipes

supported by sticks so that they should
not bend when the wind is strong, and
placed almost vertical to the direction
the wind is coming, unlike most wind-
mills where the propellers directly turn
the spindle connected to the turbines.
William added three pulleys to his ma-
chine to increase speed and generate
more energy. The last pulley of the
three is connected to a bicycle wheel.
When this wheel turns, it turns a gen-
erator which produces electricity.

William was a TED fellow in 2007. Read

his blog for inspiring stories about mak-
ing things work in rural Africa. http://
williamkamkwamba.typepad.com/wil-
liamkamkwamba/

Want to know more about AfriGadget?

Visit: www.afrigadget.com
 Photo: Tony Fischer, Carpe Diem Photography
Can We Teach
Social Entrepreneurship?

Greg Dees, co-founder of the Center for the Advancement of Social Enterprise
(CASE) at Duke University’s Fuqua School of Business has been called the
“Father of Social Entrepreneurship as an academic subject.” Indeed, he has
been observing, studying or working with the field for nearly 30 years, longer
than many budding social entrepreneurs have been alive. Beyond Profit’s
Managing Editor Lindsay Clinton talked with Professor Dees recently about
using academia to develop the talents of social entrepreneurs, US President
Barack Obama’s role in advancing social innovation, and how developing
countries can build a supportive ecosystem for social enterprise.

www.beyondprofitmag.com 43
TORCH BEARERS
Beyond Profit (BP): As the so-called
“Father of Social Entrepreneurship
as an academic subject” you advance
entrepreneurship through formal re-
search and study. How important is
the relationship of academia to devel-
oping social entrepreneurship?
Dr. Greg Dees: Academics contrib-
ute to the field in at least three ways.
Through research, something that can
be done in partnership with practition-
ers, we can develop knowledge in a
more extensive way than is possible
for individual practitioners. We’re able
to study large numbers of cases in dif-
ferent settings, find the patterns, draw
out the lessons, frame them, and share
them. When we do this well, the find-
ings are useful for social entrepreneurs,
investors, and policy makers.
Through education, we open up new
possibilities, particularly for young peo-
ple. When I was in school in the ’70s,
people were doing social entrepreneuri-
ally things, but there was no concept or
term for it, and no courses on it. Now
students see it as an option, because we
have the concept.
The third thing that academia does is to
validate this concept more broadly in
the eyes of society. Once something is
accepted as a subject for academic re-
search, you start to see it more in the
media, and policy makers take it more
seriously. For example, centers on so-
cial entrepreneurship at major universi-
ties such as Duke, Oxford, and Harvard
signal the importance of this concept
and the practices associated with it.
BP: A quote from you on SocialEdge,
the Skoll Foundation’s blog, reads,
“Progress in the social sphere de-
pends on a process of innovation and
experimentation…an active, messy,
highly decentralized learning proc-
ess.” Can you teach something as
messy as entrepreneurship?
44 beyond profit may/june 2009
Dees: Even a messy process works bet-
ter when the participants are knowl-
edgeable. Nobody is born knowing
different financial strategies for support-
ing a social venture, the key challenges
of scaling a social venture, or what has
worked to improve early childhood edu-
cation in developing countries. Social
entrepreneurs are more likely to be effec-
tive when armed with be best knowledge
that can be gained from prior messy ex-
periments. That’s a large part of what we
do when we teach.
We’re not “teaching” them to have the
personal characteristics required to be a
successful social entrepreneur any more
than a music teacher teaches the personal
characteristics to be a gifted musician.
However, good teachers do more than
“teach.” They also coax, encourage,
inspire, reward, and model the kinds of
characteristics associated with success.
Though we don’t teach courage, for in-
stance, we can inspire potential social en-
trepreneurs to act with courage by expos-
ing them to people like themselves who
have started social ventures. A teacher
can draw out the potential of a student to
be a social entrepreneur and most human
beings have that potential if they want to
exercise it.
BP: In India, there is a perception that
there isn’t a supportive framework for
social entrepreneurs. The government
doesn’t provide much support and
many of the available networks are not
necessarily providing the appropriate
tools. What does a supportive social
entrepreneurial ecosystem look like?
Dees: In the business world, rather elab-
orate structures have been developed to
support entrepreneurs and their ventures.
There are funding options, consulting
firms, business publications, and net-
working organizations, etc. We don’t
have nearly as much of that for social en-
trepreneurs, even in the U.S.
A supportive infrastructure includes fi-
nancial, human, intellectual, social, and
political capital. Basically, we need insti-
tutions to match social entrepreneurs with
appropriate kinds of funding; institutions
that attract and develop the talent that so-
cial entrepreneurs need to do their work
well; organizations that will develop and
share the knowledge that is necessary for
entrepreneurs to be effective; and mecha-
nisms that allow social entrepreneurs to
connect with people who are relevant to
their success.
A supportive environment doesn’t mean
that you walk in a door and someone
hands you money. It means you have
an opportunity to access the capital you
need—but on a competitive basis. Ease
of access is important, but so is rigor and
discipline.
Beyond capital infrastructure, we need
public policy officials who will be crea-
tive and thoughtful about creating the
right environment, including appropri-
ate legal forms of organization, tax laws,
and regulations. A simple example of
where policy can make a huge differ-
ence was Grameen in Bangladesh being
permitted to operate as a bank and take
savings deposits. This required public
policy action and it has been essential
to creating the kind of funding structure
that has enabled Grameen be complete-
ly independent from outside funding for
the last decade. MFIs without the abil-
ity to take savings deposits have had a
much tougher time achieving financial
independence.
And there are a number of other im-
portant supportive factors: media that
understands and covers social entre-
preneurship, corporations receptive to
partnering with social entrepreneurs,
and a culture that encourages private
initiative to solve social problems.
BP: The UK has the Third Sector

Cabinet Sector office, which supports
development of social enterprise in
the UK. What has President Obama
proposed to do in the US in order to
support social enterprise?
Dees: There is strong reason to believe
that President Obama will create a
White House office on Social Innova-
tion or something along these lines very
soon, if not by the time this interview is
in print. I would not be surprised to see
the Obama administration propose a so-
cial innovation fund that might require
matching funds from the private sector.
Several conversations are underway
about how such a fund should function
and who should control it.
BP: Speaking of the Obama White
House…they are pretty busy at the
moment juggling the needs of ail-
ing banks and insurance companies.
What effect do you think the current
economic crisis will have on social en-
terprise?
Dees: It is having a ripple effect in econ-
omies around the world, and is putting
stress on people, businesses, and gov-
ernments everywhere. As a result, there is
speculation that a much larger number of
people will fall into poverty in developing
and developed countries. This increased
need will create pressure for more innova-
tive solutions and more resilient business
models for addressing social problems.
Everyone is going to be looking for more
ways to leverage their limited resources,
talent and skills, and one way to do that
is to partner with social entrepreneurs.
Governments are going to be strapped
for cash and will look to social entre-
preneurs to deliver social value, and
businesses are going to be looking for
new sources of revenue, including in
base of the pyramid markets.
Of course, organizations that are heav-
ily dependent on major foundation
funding are going to struggle, as en-
dowments shrink. Many in the founda-
tion world say the worst is yet to come.
If tight money forces people to be more
disciplined, it is not completely a bad
thing. It will heighten performance as-
sessment and evaluation.
BP: Where do you think the sector
will be in ten years?
Dees: Ten years go pretty quickly. I
have friends who are impatient for rapid
change. The current crisis might work
to accelerate the change, but changing
the basic paradigm for solving social
problems will take time. In ten years, I
do think we are going to see much more
of a common understanding and knowl-
edge of the role social entrepreneurs
can play in creating a healthy vibrant
society. Leaders are going to recognize
that social entrepreneurs can serve as
a powerful learning laboratory for so-
ciety in terms of how we might solve
problems, and we’ll see them get more
recognition.
That’s going to play out in the way that
governments relate to social entrepre-
neurs. We’re going to see experimen-
tations with “government by network,”
or decentralized governance, which is
an attempt to serve public objectives
through a variety of institutional struc-
tures, including social entrepreneurs.
We are also going to see businesses ex-
periment with social entrepreneurship.
Of course some of these experiments
will fail, but some are likely to change
the way businesses operate.
I would like to believe that we’ll also see
a breakdown in the old way of thinking
that organizes institutions around legal
frameworks. It used to be that the social
sector was synonymous with nonprofit
organizations. I hope we can move past
the old simple categorization of three
sectors—business, government or non-
profit—and just talk about organiza-
tions in terms of what they are trying to
accomplish. The problem is that people
www.beyondprofitmag.com
TORCH BEARERS
associate “social” with “nonprofit,” and
nonprofits with charity and that’s not
really the image we want to convey.
I agree with Muhammad Yunus, in his
book Banker to the Poor, that charity
doesn’t usually solve the underlying
problem. And while we may need it
from time to time, we also sustainable
solutions. I hope that people will start
to think about social entrepreneurship
as a problem solving mechanism, not
just some variation on charity.
BP: Yunus has become an icon not
only for microfinance, but also for so-
cial entrepreneurship. Are there any
other people that you think should be
up there with him, as a mentor?
Dees: There are so many amazing so-
cial entrepreneurs that it is hard to sin-
gle anyone out for all-star status. Of
course, Bill Drayton has long been a
mentor to many of us in the field and
a social entrepreneur in his own right.
Fazle Abed, if you want to take another
Bangladeshi, has done phenomenal
work. Abed’s organization, BRAC,
doesn’t get the kind of recognition that
Grameen gets, but it does phenomenal
work, and has a long track record of
entrepreneurial ventures. In the U.S.,
Wendy Kopp, founder of Teach for
America, is often cited as a stellar so-
cial entrepreneur. However, I think it
is a mistake to simply make heroes of
the visible successes in this field. Many
grassroots social entrepreneurs are do-
ing amazing work. And social entrepre-
neurship is essentially a team sport. We
need heroes, but most of the heroes I
know would be the first to tell you that
they do not do it on their own.
45
MEDIA HUB

SCREENSHOTS
See what social entrepreneurs are up to around the world
through five documentary films. Asako Matsukawa reports.

Combating Land Flight in Morocco featuring Rachida

Izelfanance
Global 3000, Deutsche Welle, 2009

This short documentary produced by a German television company, Deutsche Welle,

tells the story of Rachida Izelfanance, a young Moroccan woman who was born and
raised in France. She has now set out to work towards the development of her moth-
erland, Morocco. She buys cactus fruit from the farmers and sells its extracted oil to
the European cosmetic market where the oil is in high demand. Her quiet, yet con-
vincing narrative comes across in the slow, steady development of the plot, which
lets you steep in her determination. Rachida’s sturdy principles, based on the protec-
tion of the natural ecosystem and self-sustainable community development, underlie
her business practices. Her efforts are slowly bearing fruit: today more women in
Morocco have stable jobs and are able to keep their children in school.
Photo by Allie Caulfield
Watch it: www.beyondprofitmag.com/links/film1

The Healthcare Franchise

NOW, PBS, 2007

The first part of the film exposes the horrible reality of the health care system in ru-
ral Kenya, where the majority of the general public does not have access to quality
medicines, causing millions of preventable deaths in the country. A group of American
consultants who specialize in business franchising is ready to tackle this problem. Cre-
ating a franchise network for the healthcare system may sound unrealistic, however,
the principles of franchising—namely the standardization of quality, consistency and
scale—have proven to be a possible solution to bolstering Kenya’s foundering health
care system. The question is, “Can American corporate values in franchising align
with the humanitarian spirit of local practitioners?
Photo by Paul Evans
Watch it: www.beyondprofitmag.com/links/film2

46 beyond profit may/june 2009

 MEDIA HUB

India – Design Like You Give A Damn

Frontline World, PBS, 2008

The power of design for comfort, practicality and aesthetics can make
incredible contributions to community development in the developing
world. In fact, those who live in developing countries who are closely
tied to community life are more vulnerable to natural calamities, as well
as effects of environmental degradation. As a result, they need well-de-
signed architecture more than most. This story is about architects who
unleash their untapped creativity for poor communities, pursuing per-
sonal meaning and satisfaction in their profession. The drawings and
prototypes of innovative architectural designs will leave the viewer
thinking entrepreneurial thoughts: “How can I use my skills for social
good?”

Watch it: www.beyondprofitmag.com/links/film3

The Play Pump: Turning Water into Child’s Play

Frontline World, PBS, 2005

Trevor Field, a retired advertising executive, has embarked on a new adventure that
has brought about colorful smiles to millions of children and adults in South Africa.
Having seen a number of African women burning up their time just fetching water
everyday, and innumerable deaths caused by a lack of access to clean drinking water,
his “Play Pump Water Project” invented a children’s merry-go-round which pumps
up underground drinking water as kids spin. The fusion of his corporate expertise
and his passion to create a bright future for these African children demonstrates the
essence of social entrepreneurship. It’s all very inspiring even if you already know
about the concept of play pumps.

Watch it: www.beyondprofitmag.com/links/film4

Running the Sahara

Director: James Moll, LivePlanet and Allentown Production, 2008

One morning a few hours before sunrise in a coastal town in Senegal, three profes-
sional runners set out for an unprecedented journey which resulted in extremely rig-
orous but life-changing 111 days. The chronicle of this quest, narrated by Academy
award actor, Matt Damon, takes you through the ups and downs, fatigue, solitude,
joy and unique rewards that three sturdy men encounter during the run. Born out
of this project is an interesting initiative called H2O Africa Foundation. One of it’s
goals is to build wells for drinking water along the route they ran. Entrepreneurial
spirit is the backbone of this synergy which is driving the partnership between an
expedition, a feature film and an integrated charitable trust.

Watch it: DVD available for purchase at www.runningthesahara.com/

www.beyondprofitmag.com 47
GURU
What I Didn’t Know Then…
Stories of lessons learned from entrepreneurs around the world.
I didn’t know…what an Entrepreneur is (or that I became one!)
- Nadia Wassef,
Co-Founder,
Diwan
Bookstores
Seven years ago, my sister and I teamed
up with two friends to open a book-
store—a place that applauded and en-
couraged the production and consump-
- Sam Hutchinson and Josh Adler,
Founders, Prefix Technologies,
a software solution for magazine
publishers
I didn’t know…the legal ecosystem
- Kavikrut, Founder, Mobile Medics
Healthcare; now Business Manager,
Piramal eSwasthya, a rural healthcare
project
48 beyond profit may/june 2009
tion of culture. Buying a book became
a quality retail experience - a revolution
in Cairo, Egypt.
The first month we opened, I hoped that
we wouldn’t close immediately. After
the first year, I aspired to break even.
Five years later my appetite had scaled.
Today, I realize that I am an Entrepre-
neur. Now, more than wanting to share
reading with others, I am driven by the
thrill of creating a need in a market, fill-
ing that need, and as a result—altering
We didn’t know…how to focus and or value guidance
Our key lessons have been around fo-
cus and guidance. Focus on your own
ideas and goals within an industry that
you’re passionate about. We began by
responding only to customer demand
with our specialized services which
derailed our in-house product develop-
ment. It is an easy trap to fall into as the
money early on is very good. However,
you will eventually need to invest in
your own products and core strengths to
build a truly unique and profitable busi-
I faced many hurdles on the way to
launching my rural healthcare venture,
Mobile Medics. Although the company
was born out of an international award
winning business plan, we became
aware of a legal complexity only during
on the ground execution. The problem:
Indian laws prohibited us from selling
drugs off a Mobile Medical Van. Only
after months of researching hundred
pages of laws, analyzing various medi-
cal supply chains, and talking to legal
experts, we solved this problem by
designing an innovative drug delivery
model that was both legally and finan-
people’s lifestyles. We are opening our
seventh outlet and we currently employ
205 people. In two years I want to em-
ploy 400 people and have a total of 22
outlets. It isn’t a culture of “more” that
captivates me; it is the way that a good
business can change the people around
it. Our passion for what we do enables
us to be creative and sustain the pres-
sures of being women entrepreneurs in
a developing country. Being an entre-
preneur is about deciding to change the
world around you.
ness. We are now highly focused, but
wish we’d done it sooner.
More recently we’ve discovered that
you don’t need to do this alone, which
is the way most entrepreneurs choose
to operate. There are support networks
and organizations especially for entre-
preneurs all over the world. Seek them
out! The benefits we’ve seen since using
them cannot be measured for our growth
as individuals and for the business.
cially accountable. Overcoming this
challenge boosted the team’s confidence
but the launch of the pilot was delayed
by three months. This meant more time
and money, two of the most important
factors that startups depend on.
We passed the business plan through fil-
ters of profitability, operational feasibil-
ity and market acceptance, but not legal
viability. Entrepreneurs should not only
design financial models, operational
processes and market strategy but also
thoroughly understand the legal envi-
ronment that they are stepping into.
 GURU

Sounding Board
As a young social entrepreneur I am
Shari Berenbach is the CEO of Calvert
constantly struggling with the issue of Foundation where she has raised over $170
branding. We are an innovative courier million from investors to help underserved
service that employs low-income deaf communities around the world.

adults in Mumbai. As soon as corporate

clients hear that we employ the deaf only,
the first thing that comes to their minds is
that we are a non-profit. We aren’t--we John Elkington is a Founding Partner and
Director of Volans. In 2004, BusinessWeek
are a for-profit business. Eventually, we described him as “a dean of the corporate
will be a hybrid, and will have a for-profit responsibility movement for three
arm, as well as a foundation that will work decades.”

on issues for the deaf--but even then, they

will be separate. How can I send a clear
message to prospective clients that we
Dr. Harish Hande is the founder and
are a professional, efficient player in the managing director of SELCO-India, which
courier business? provides sustainable energy solutions and
services to under-served households and
- Dhruv Lakra, Founder/CEO, Mirakle businesses.
Couriers Skoll Scholar, 2008
Shari suggests
It is important to help people to get past their prejudices and biases that people who are hearing impaired are unable to excel
in other arenas, or that non-profits cannot be counted on to provide reliable professional services. Please consider, however,
that organizations of all sizes (both for-profit and non-profit) struggle with branding! My advice would be to concentrate on a
simple, compelling message. Since you are advocating for the deaf, perhaps a fun way to spread the word about your organiza-
tion would be to use the hand signal for “we deliver” along with the words, and post this around the city.

When you have a strong, easy-to-understand message, it will be easier for current and potential customers to understand and
remember what you do – and hopefully recommend you!

John suggests
Branding is about building a powerful set of expectations in your customer’s head – expectations that persuade those consid-
ering whether or not to buy your product or service and then delivering–in every sense. The fact that you are only employ-
ing deaf people, while it may be highly commendable, is not a commercial strength. It is a distraction from the business the
customer wants to do with you. Very few customers will be willing to think in terms of a double bottom line, let alone a triple
bottom line. They want to get things from A to B. If I were in your shoes, I would bend over backwards to persuade current
and potential customers that I could meet their needs in something like the following sequence.

We’re Fast. We collect and deliver where and when you want. We’re reliable. We run rings around the competition in terms
of meeting the needs of our most demanding customers. We’re secure. We are the first choice for clients who want sensitive
information protected throughout the collection and delivery cycle. We’re cost-effective. We know you have other choices, so
we provide you with a service that puts a smile on your accountant’s face. Oh, and then there’s another part of the story. Our
values. We keep it quiet, but we are a globally recognized for-profit, social enterprise that employs highly skilled deaf people
to help customers meet all the above objectives, every time.

Harish suggests
Concentrate on the business aspects such as delivery, punctuality reliability and the edges you have over other traditional
courier services. Do not emphasize the fact you are employing deaf people - you are not asking for sympathy - you are trying
to compete and convey that you are better than others. You need not push for people to think you are a for-profit or non-profit
- your work and the results should destroy that myth sometime later. But, have patience on that. I still get asked the question
after 15 years.

www.beyondprofitmag.com 49
CLUB HOPPING

Social Entrepreneurship at
Universities
Whether thinking about starting an enterprise or wanting to be a changemaker, students
are coming together to discuss pressing social problems and arrive at new solutions.

Abhiyan
Where: Indian Institute of Management-Lucknow, India
Contact us: misterjain@gmail.com

At the crossroads: Abhiyan was started in 1999 to connect entrepreneurs, venture capitalists, academicians
and professionals.
Organized efforts: We organize events, talks and competitions to enhance student-entrepreneur interactions.
We have “Drona - The Gurukul,” an advisory board for virtual incubation and mentoring, and publish a quar-
terly newsletter “Enterpre.”
Initiating interactions: We are associated with the Indus Entrepreneurs (TiE), National Entrepreneurship
Network (NEN), Global Entrepreneurship Network (GEN), National Innovation Foundation (NIF), India.
StudentBusinesses.com, Seedfund, Indian Angel Network, Barings Private Equity, techTribe, Nucleus, Indi-
aCo, Band of Angels, Capital 18, and e-cells and incubation cells of premier business schools and engineering
colleges in India.
What’s cool: Nirvaan is our annual national level event where start-ups and MBA and engineering students
get an opportunity to procure VC & angel funding and mentorship. We also organize “Whackopreneur”, a
creative idea contest; interactive talks & workshops.

Social Entrepreneurship Club

Where: Foster School of Business, University of Washington Chapter, USA
Contact us: sammierayner@gmail.com

From 0 to 50: A social entrepreneurship course in the MBA program in the fall of 2008 brought together the
eight of us who wanted to do something in social entrepreneurship and later we expanded to fifty members.
We attract all kinds: We have students from International Studies, Biology, Art and Political Science as
members.
Partnering beyond campus: Our partners are Washington CASH (Community Alliance for Self-Help), Sea-
Mo (Seattle Microfinance network), Kiva Club (on campus), Water1st, Krochet Kids International, TOM’s
Shoes, Village Volunteers, Mary Gates Foundation, and Global Business Center (on campus).
Special engagements: We organized a speaker event with Kiva’s CEO and Founder, Matt Flannery on 5th
March, in partnership with SeaMo. We will continue to assist CASH with their outreach strategy and will
build on Lumana Credit, an offshoot of the micro-credit program we established in Ghana.

Social Entrepreneurship Club (NSEC)

Where: NUST SEECS (School of Electrical Engineering and Computer Science), Pakistan
Contact us: shamila.keyani@seecs.edu.pk

Integrate to ideate: NSEC is a platform where students identify social problems and together they find
innovative and sustainable ways to solve them.
Socially responsible and relevant: We are working with UM-Healthcare Trust on a “tele-healthcare”
project and with Brightspyre (Pakistan’s online job portal) to arrange seminars, career counseling ses-
sions and startup coffee insider sessions. STEP (Special Talent Exchange Program) and NSEC are work-
ing on conducting seminars and skill training session on people with disabilities. We also collect waste
paper from university and get it recycled in a paper recycling plant, DIU.
Health..for us and for the environment: We are organizing a medical camp as part of the tele-health-
care project, lady health workers’ training program, seminars to raise awareness of physical disabilities
and social and environmental issues.

50 beyond profit may/june 2009


A Roof Over Their Heads
T he poor and underprivileged exist in varying degrees of relativity in every society, be it in the developed or developing
world. With global dialogue, constructive solutions are created to combat this societal inequality in all cultures and
nations. Juxtapose takes two social initiatives, one in a developed country and one in a developing country, and highlights the
commonalities and cohesion among them.
Brad Pitt and Make it Right: Providing
Hurricane Katrina Victims with Homes
In August 2005, Hurricane Katrina devastated the city of New
Orleans and the lives of millions of Americans in the process.
It was the greatest natural disaster in US history, causing an
estimated US$81.2bn in damages and much more in human
suffering.
When actor Brad Pitt visited the Lower Ninth Ward of New
Orleans for the first time after the storm, he was shocked by
what he saw: the remnants of people’s lives strewn across
the streets and an entire neighborhood torn apart and turned
upside down. The Lower Ninth Ward is one of the richest cul-
tural communities in America and was, until Hurricane Kat-
rina, a crossroads of families, music, and social interaction.
Brad Pitt and Make It Right have sought to build something
better than what existed before. Pitt understood instinctively
that a New Orleans rebuilt without the Lower Ninth Ward
would never be whole. With an emphasis on high quality de-
sign, while preserving the spirit of the community’s culture,
Make It Right is currently building a neighborhood of sus-
tainable and safe homes.
The project, launched in 2007, is building 150 state-of-the-
art, energy-efficient residences. Solar panels adorn the roofs
of the new houses. Concrete columns hoist some of the
homes off the ground, to provide some degree of protection
from flooding. At least 91 of the proposed 150 homes have
already been sponsored, and the first family moved into their
eco-friendly Make It Right home in December 2008.
More information can be found at www.makeitrightnola.org.
www.beyondprofitmag.com
JUXTAPOSE
Monitor Group: Low Income Housing
Solutions for Urban India
One of India’s biggest challenges lies in its social inequities.
In no other field is this disproportionate divide more visible
than in access to affordable housing in urban India.
In urban India, an estimated 21 million people struggle to find
adequate housing facilities. With 80% of urban households
earning less than INR12,000 (US$240) a month, a majority
of city residents cannot afford to own their own home. Lack
of government spending, inadequate or inaccessible financ-
ing options, and a limited supply of low-cost housing have
resulted in many low-income households living in abysmal,
often inhuman, conditions.
But, according to the Monitor Group, there is a way out. Mar-
ket-based solutions offer a way to empower and enable low-
income households realize their dream of owning a home.
Over the course of its research, Monitor interviewed over
1,000 potential customers, 50 developers, 20 financial insti-
tutions, 10 microfinance and specialized lending organiza-
tions, and conducted an investigation of property prices in
urban areas. Even with current land prices and construction
rates, Monitor has found it possible to build housing that low
and middle-income urban customers can afford, given access
to credit, and that developers are willing to build.
Specific details on the models and more information on Mon-
itor Group can be found at www.monitor.com.
51
CLEAN AND GREEN

Green with Envy

A Look at 3 New Models for Creating a Cleaner Planet

Husk Power Systems, Charlottesville, VA, USA

www.huskpowersystems.com

Husk Power Systems (HPS) provides low-cost power on a pay-per-use basis that enables
farmers to reduce irrigation costs by 45%, entrepreneurs to create businesses and increase
profit margins, and households to dramatically reduce energy costs. The power behind this
is the proprietary technology developed by HPS, which converts rice husk into energy. The
technology, capable of producing between 35 to 100 kW of power, is currently being used
by around 3000 villagers in India. Moreover the service increases productivity in villages as
fuel doesn’t have to be procured on foot. Finally, HPS systems eliminate over 190 tons of
CO2 emissions annually per village by replacing kerosene, diesel, and methane output with
renewable sources.

Credit: Lana Cease

SaafWater, Karachi, Pakistan

www.saafwater.com

SaafWater is leading the way in clean, efficient and safe water purification so-
lutions for rural areas. Using a network of SaafWater ladies who go door-to-
door in their neighborhood, SaafWater distributes a simple Daily Capsule – a
chlorine solution that can treat one family’s daily supply of drinking water. The
ladies are individual, independent franchisees who buy the product at wholesale
prices and sell them at a mark-up. The only requirement to be a SaafWater lady
is basic numeracy and literacy, and a willingness to learn. The Karachi-based
organization provides its franchisees with full training, a uniform and SaafWa-
ter Daily Capsules at a highly subsidized rate.

Credit: Klearchos Kapoutsis

EcoPeace/Friends of the Earth Middle East,

Tel Aviv, Israel
www.foeme.org

EcoPeace/Friends of the Earth Middle East is a environment or-

ganization that brings together Jordanian, Palestinian and Israeli
environmentalists with the objective of promoting a joint effort
to protect the region’s environmental heritage, and to foster con-
ditions for sustainable development that will create conditions
for lasting peace. Some of their current projects include charting
out a plan for sustainable development of the Dead Sea region,
the revival of the Lower Jordan and other solar energy and cli-
mate change initiatives in the West Bank. EcoPeace/Friends of
Credit: smile4camera
Peace Middle East recently received a US$750,000 award from
the Skoll Foundation to expand its activities in the region, and is a member of Friends of Earth International, the largest
grassroots environment organization.

52 beyond profit may/june 2009

 QUIZ

What’s your EQ?

Answers to the Beyond Profit Challenge (page 13)

1. Carbon dioxide (CO2). Most governments have begun to set norms for emission
particularly for gases such as as CO (carbon monoxide), HC (hydrocarbons) and N2O
(nitrous oxide). Euro norms refer to the permissible emission levels from both petrol
and diesel vehicles, which have been implemented in Europe. The Euro norms require
manufacturers to reduce the existing polluting Emission Levels in a more efficient
manner by making certain technical changes in their vehicles.

Credit: Tim Frumbert

2. Bali, Indonesia. The Bali Summit was organized by the Government of Indonesia,
and was notable for the “Bali Roadmap,” including the “Bali Action Plan” which
charts the course for a new negotiating process designed to tackle climate change,
technology transfer and reducing emissions from deforestation.

Credit: Sean McGrath

3. Carrotmobbing is a method of activism that leverages consumer power

to make the most socially-responsible business practices also the most
profitable choices. In other words, businesses are induced (the Carrot) to
make positive changes – like installing solar panels on their premises or re-
ducing their waste output - in order to get rewarded by hordes of customers
(the Mob) who descend on the business to spend money there.
View www.carrotmob.org and their fun video to understand the concept.
Credit: John-Morgan

4. False. Wind turbines need only 20 kmph/12.5 mph to be cost-effective. However most
wind energy is found at high altitudes where continuous wind speeds of at least 160 kmph
(100 mph) are common.

Credit: Alan Cleaver

5. One metric ton of emitted carbon dioxide or other equivalent greenhouse gas. Sig-
natories to the Protocol agreed to fix quotas on the maximum amount of greenhouse
gases developing and developed countries can emit. Each government in turn is al-
lowed to set quotas on the emission allowed by a certain business or organization.
The trading of surplus credit is generally called carbon trading.

Credit: William Marnoch

www.beyondprofitmag.com 53
REFLECTIONS
No is not an Option
How I Became a Social Entrepreneur
“To be honest, I think $25,000 is an arrogant goal,” a poten-
tial donor told me with a furrowed brow. I respected this man
and his judgment, but in my mind the words “arrogant” and
“goal” had no place together, especially when describing my
fundraiser.
“Audacious maybe. Perhaps unrealistic or even crazy,” I rea-
soned, “but can an objective actually be arrogant?” I paused.
“Think of it like this: worst case, I fall short and help more
kids than I would have otherwise; best case, I blow past this
modest target.” Not amused, the man shook his head and
walked away.
I later convinced this same man to contribute nearly US$1,000
to my fundraising trek up Mt. Kilimanjaro in Tanzania.
‘Summit for Smiles’ attracted donors from 28 other countries
who together gave a total of US$40,000 to fund cleft palate
corrective surgeries for 155 children.
Getting there is Half the Fun
There are plenty of stories about incredible people who have
selflessly addressed noble causes. I am not one of those peo-
ple. I do this work because it makes me feel better than al-
most anything else. I want to dispel the notion that you have
to be some sort of superhero to do social good. My move
into social enterprise started from the farthest extreme of the
social spectrum: corporate restructuring. I am certainly no
saint. I used to tear businesses apart before I started helping
put lives back together.
My experience is evidence that anywhere is a great starting
point: origin is less relevant than destination. I agree with
Ralph Waldo Emerson, who said that the voyage of the best
ship is a zigzag line of a hundred tacks. When I started I
had no idea what I wanted to do, so I read, asked questions,
54 beyond profit may/june 2009
listened to podcasts. I positioned myself to pounce on any
opportunity that might wander within striking distance.
Striking Opportunity
“I would love to take on that challenge,” I proclaimed. “Oh,
and sorry for eavesdropping.” I had walked by the open door
of our European HR director, who was telling the director of
our corporate foundation that he didn’t have time to set up a
chapter of the foundation in Berlin. My interjection startled
them. The HR Director was surprised, but he quickly real-
ized that I could clear this project from his roster. His skepti-
cism vanished. “Excellent,” he said, relieved. “You will do
a great job!”
Let me be very clear: I had no idea what I was doing. De-
spite politics and skepticism, I built a team that could help
me reach our goal of giving away US$50,000. Though none
of us had experience in corporate social responsibility, we
collaborated brilliantly. The corporate foundation had been
unable to expand internationally and I took up the challenge
to change that by leaning on my friends around the company
to implement the well-documented structure we developed in
Berlin. With persuasion and lots of late nights, teams formed
in the Czech Republic, India, and Australia. These groups
have pumped nearly US$1m into local communities since in-
ception. Nothing magical here, just well timed eavesdropping
and good people working hard.
Taking the Leap
These experiments with social change inspired me to find my
own path to making change. I began searching for a worthy
cause when a friend sent me an article about obstetric fistula.
Initially moved, my research revealed an environment where
my skill set could help. With no medical background and
only a three week trip to Africa, I quit a promising career
to start OperationOF, a social enterprise focused on obstetric
fistula, a maternal health issue called affecting women in re-
mote African villages. Totally nuts. I figured I would jump
off the cliff and learn out how to fly on the way down.
While I definitely could have been better prepared, I only
know how because of my startup experience. If had to do it
all again, I would start earlier.
My advice to anyone interested in becoming a social entre-
preneur is as follows: Believe in the improbable. You can do
it. Be ready for your break. Enthusiasm prevails. You are
only as good as the people who help you. Start now.
Seth McSwain Cochran is the founder and executive director
of OperationOF. He welcomes your questions and comments
at seth@operationof.org
 PHOTO JOURNAL | Living Water

Every year, the number of deaths from

water related diseases is larger than
those from wars and natural disasters.
A lack of access to clean drinking wa-
ter is a silent crisis experienced by the
poor, and tolerated by those who hold
the resources, technology and the po-
litical power to put an end to it.

Water is the source of life with security,

stability and dignity. The cost estimate
to provide access to safe drinking water
and sanitation to the world poor varies
from US$9 billion to US$30 billion. It is
not very difficult for the several billion
dollars to be misused. What is really
lacking is competent, consistent and
responsible implementation.

To learn more about Living Water Inter-

national’s initiatives, visit http://www.
water.cc/
Photo by Living Water International
 Social Enterprise & Investment Forum
28 April 2009

Sankalp brings together social businesses and stakeholders

sharing a common conviction that capital should be invested to
create multiple bottom-line returns. The annual
Sankalp Awards are also announced at this forum

A Must Attend for Enterprises & Investors

Multi-sectoral
Showcasing representation
hundreds of • Rural Innovations
social • Healthcare Inclusion
businesses in • Education for All
action • Clean Energy
• and more…

100+ regional
and international Stellar panelists
investors , and wide array
business of relevant
incubators, sessions to
policy makers & choose from
corporates

Organizer Sankalp 2009 Lead Partner Sankalp 2009 Associate Partners

Details on Sankalp 2010 will be announced in August 2009

www.SankalpForum.com