How to Build a First-Class Social Venture

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How to Build a First-Class Social Venture was presented at the 2014 Harvard Social Enterprise conference.

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How to Build a First-Class Social Venture

  1. 1. How to Build a First-Class Social Venture or High Impact Project Harvard Social Enterprise Conference March 29-30, 2014 Shana Dressler Social Innovators Collective @sic_org
  2. 2. PART 1: IDEA TO LAUNCH
  3. 3. New Beginnings: Exploring Uncharted Territory
  4. 4. Choose a Cause.   Arts Education Energy Environment Food Health Human Rights Media Politics Religion Women + Girls War + Peace  
  5. 5. I dream of a world that…
  6. 6. Define what success means to you.
  7. 7. 7   Phase 2: Educate Yourself About Your Area of Interest Discover your core values + beliefs.
  8. 8. 8   Phase 2: Educate Yourself About Your Area of Interest Educate yourself about your area of interest.
  9. 9. •  Figure out your mission and vision •  Look at your competition •  To avoid duplication you might need to adjust or change your mission and vision   9   Phase 4: The Work Mission, Vision and Competition http://nancyjohns.com/wp-content/uploads/2011/03/MAD2011010G0153.jpg Solidify your mission + vision.
  10. 10. 3/30/14   10   Choosing a Tax Status for Your Organization For-Profit Social Enterprise Non-Profit* Benefit Corpora- tion LC3 LLC Fiscal Sponsor 501C3 *If you choose to create a nonprofit, it is critical to understand that you aren’t merely running programs, you need to figure out how to run a business. Choose a name and a legal structure.
  11. 11. 11   Runa: Amazon Guayusa
  12. 12. 12   Global Language Project
  13. 13. •  Accountant •  Administrative assistant (significant time) •  Analytics and impact assessment expert •  Business development •  Community engagement coordinator •  Director of partnerships •  Event planner •  Graphic designer/art director •  Master fundraiser •  Photographer/videographer •  Publicist •  Sales person •  Social media expert •  Volunteer coordinator •  Web producer •  Webmaster To be a social entrepreneur or nonprofit founder you’ll need to possess many skills in order to get your venture off the ground. All The HatsYou’ll Have to Wear
  14. 14. What It’s Going To Take “Nobody likes to talk about failures, but I think (failure has) been an amazing teacher for me. I think a failure on my part is (that I assumed) that moving from concept to execution would move much smoother that it actually did. My expectations, as far as the timeline for the process, were way out of line with the reality. Running any business takes much more effort and much more time than you think. But if you are trying to run a business that is achieving social good…then you’re adding way more complexity and time into the process. I’ve learned a great deal of patience to temper my ambition.” KyleWestaway,Esq.Founding Partner of Westaway Law and Co-Founder of Biographe (Quote from General Assembly workshop “Corporate Structuring”)
  15. 15. Know Thyself
  16. 16. Embrace them.They will be your greatest teachers. “Many of life’s failures are people who did not realize how close they were to success when they gave up.” - Telegraph to Light Bulb,Thomas Edison Mistakes are Inevitable
  17. 17. PART 2: WHY SOCIAL VENTURES FAIL
  18. 18. WHY IS LAUNCHING,BUILDING AND SCALING A SOCIAL VENTURE EXHILARATING FOR SOME AND TERRIFYING FOR OTHERS?
  19. 19. THERE IS NO BULLETPROOF ROADMAP.
  20. 20. REALITY CHECK   - 565,000 startups are launched in the U.S. each month. That’s 6.78 million startups launched each year. How many of them succeed?   - 80% of entrepreneurs fail within the first 18 months. - 55% of businesses fail within the first five years.   - From FundingYour Startup Social Enterprise by Lauren Abele, which forms part of the Social Good Guides series.
  21. 21. WHY?  
  22. 22. 10 Common Reasons for Nonprofit Failure by Matthew Klein, ED of the Blue Ridge Foundation 1.  Not aware of landscape and can’t articulate differentiation 2.  Confuse encouraging words with willingness to fund 3.  Assume aligned funder guidelines will result in grant 4.  Founder wants to do the work, not fundraising for the work 5.  Data to demonstrate progress is not captured consistently 6.  Organization pursues activities in advance of funding 7.  Organization pursues activities only because of funding 8.  Activities cost more than funding provides 9.  Board does not contribute meaningfully to funding 10.  Organizational culture does not value measurable results
  23. 23. • Single Founder • Fights Between Founders • Obstinacy • Hiring Bad Programmers • Choosing the Wrong Platform • Launching Too Early • Spending Too Much • Raising Too Little Money • Raising Too Much Money • Not Wanting to GetYour Hands Dirty 10 Mistakes That Kill Startups by Paul Graham, co-founder of Y Combinator, an incubator for tech startups, named by Forbes as one of the world’s 7 most powerful entrepreneurs
  24. 24. 10 Mistakes That Kill Startups by Paul Graham • Single Founder • Fights Between Founders • Obstinacy • Hiring Bad Programmers • Choosing the Wrong Platform • Launching Too Early • Spending Too Much • Raising Too Little Money • Raising Too Much Money • Not Wanting to GetYour Hands Dirty
  25. 25. 10 Mistakes That Kill Startups by Paul Graham • Single Founder • Fights Between Founders • Obstinacy • Hiring Bad Programmers • Choosing the Wrong Platform • Launching Too Early • Spending Too Much • Raising Too Little Money • Raising Too Much Money • Not Wanting to GetYour Hands Dirty
  26. 26. 10 Mistakes That Kill Startups by Paul Graham • Single Founder • Fights Between Founders • Obstinacy • Hiring Bad Programmers • Choosing the Wrong Platform • Launching Too Early • Spending Too Much • Raising Too Little Money • Raising Too Much Money • Not Wanting to GetYour Hands Dirty
  27. 27. 10 Mistakes That Kill Startups by Paul Graham • Single Founder • Fights Between Founders • Obstinacy • Hiring Bad Programmers • Choosing the Wrong Platform • Launching Too Early • Spending Too Much • Raising Too Little Money • Raising Too Much Money • Not Wanting to GetYour Hands Dirty
  28. 28. 10 Mistakes That Kill Startups by Paul Graham • Single Founder • Fights Between Founders • Obstinacy • Hiring Bad Programmers • Choosing the Wrong Platform • Launching Too Early • Spending Too Much • Raising Too Little Money • Raising Too Much Money • Not Wanting to GetYour Hands Dirty
  29. 29. 10 Mistakes That Kill Startups by Paul Graham • Single Founder • Fights Between Founders • Obstinacy • Hiring Bad Programmers • Choosing the Wrong Platform • Launching Too Early • Spending Too Much • Raising Too Little Money • Raising Too Much Money • Not Wanting to GetYour Hands Dirty
  30. 30. 10 Mistakes That Kill Startups by Paul Graham • Single Founder • Fights Between Founders • Obstinacy • Hiring Bad Programmers • Choosing the Wrong Platform • Launching Too Early • Spending Too Much • Raising Too Little Money • Raising Too Much Money • Not Wanting to GetYour Hands Dirty
  31. 31. 10 Mistakes That Kill Startups by Paul Graham • Single Founder • Fights Between Founders • Obstinacy • Hiring Bad Programmers • Choosing the Wrong Platform • Launching Too Early • Spending Too Much • Raising Too Little Money • Raising Too Much Money • Not Wanting to GetYour Hands Dirty
  32. 32. 10 Mistakes That Kill Startups by Paul Graham • Single Founder • Fights Between Founders • Obstinacy • Hiring Bad Programmers • Choosing the Wrong Platform • Launching Too Early • Spending Too Much • Raising Too Little Money • Raising Too Much Money • Not Wanting to GetYour Hands Dirty
  33. 33. PART 3: HOW TO BUILD A FIRST- CLASS SOCIAL VENTURE OR HIGH IMPACT PROJECT
  34. 34. Q1: What is your big idea that’s going to change the world?
  35. 35. Q2: What are the keys steps needed to build any high impact project or social enterprise?
  36. 36. Q3: What makes a social venture“fund-worthy”?
  37. 37. Q4: What does it take to get funding and set yourself on a path to success?
  38. 38. Q5: Why should anyone give YOU the money to bring your idea to life?
  39. 39. Q6: What could go wrong if your social venture fails?
  40. 40. WHAT’SYOUR BIG IDEA? The one that is going to change the world?
  41. 41. MOTIVATIONS • What is driving you? • What are the rewards that you see ahead? For yourself? For people you aim to serve?
  42. 42. WHO ELSE IS WORKING ON THIS? Hopeful dreamers don’t stand a chance. Time to do some research.
  43. 43. LANDSCAPE ANALYSIS • What organizations are already in the space? • What work has already been done? • What have been the lessons learned? • What can you do that’s additive, not competitive? • What are the funding trends?
  44. 44. STRATEGY The word strategy originates from the battlefield, but we now use it in the context of social innovation. Defined as “a plan of action designed to achieve a goal,” strategy could be a plan for directing troops and military operations to win a war or for figuring out a way to make your social venture succeed. “Figuring things out as they come along” is a kind of strategy, but it is not often the most effective one.  From What’s Strategy Got To DoWith It? by Lee-Sean Huang, which forms part of the Social Good Guides series.
  45. 45. PROTOTYPING What’s your minimum viable product? “A MVP has just those features that allow [a] product to be deployed, and no more…..It is a strategy targeted at avoiding building products that customers do not want.”
  46. 46. h,p://www.businessmodelgenera>on.com/  
  47. 47. BUSINESS PLANS A good business plan will address all the critical aspects of what it’s going to take to create your social venture. Do you know how to write one?
  48. 48. BUSINESS PLANS Subjects to cover: • Business model • Competition • Executive summary • Financials + financial summary • Management team • Market + consumer analysis • Marketing strategy • Nature of the product(s)/service(s) • Operations • Sales and business development strategies • Social mission + impact measurement • Social Return on Investment
  49. 49. BUSINESS PLANNING • What is the approach you plan to take to build your social venture? • Have you considered multiple options? • How do you know which direction to go in before investing significant time and money?
  50. 50. BUSINESS PLANNING Do you know: • How to choose the right legal structure • How to choose the right social good business model • How to choose the right revenue model • How to generate revenue + fundraise • How to put operations in place
  51. 51. TEAM BUILDING • As far as managing a project or building a team goes, what are the key talents and strengths you possess? Weaknesses? • Who do you need on your team to complement what you bring to the table?
  52. 52. STORYTELLING • How do you plan to attract supporters, future staff volunteers, and investors? • We believe you need to deliver a compelling story. • You need to master “the elevator pitch” and learn what you need to do to “wow” an audience with presentations you will deliver.
  53. 53. CUSTOMERS + DONORS • How to find them • How to keep them
  54. 54. SMALL BUSINESS SKILLS On a scale of 1 – 10 (1 being the lowest) where you would rate your expertise in the following areas? Use “zero” where you have no knowledge. • Analytics + SEO • Accounting • Branding + identity • Business development • Building a website • Business plans + planning • Creating a strong pitch • Design • Funding/fundraising • How to use storytelling to win over supporters and donors • Impact assessment • Marketing – traditional + digital • Operations • Publicity • Social Media • Strategy • Technology
  55. 55. PART 4: SEQUENCING
  56. 56. WHAT DID I GOOGLE?  
  57. 57. WHERE DO I BEGIN?  
  58. 58. PART 5: LET’S TALK ABOUT MONEY
  59. 59. WHAT DOES IT MEAN TO BE“FUND-WORTHY”?
  60. 60. Lauren Abele, former COO of Pipeline Fellowship and author of the Social Good Guide FundingYour Startup Social Enterprise says: It depends on the funder. • They have the right team (most important). • They have a specific pain point/problem that they are trying to solve. • They are the right people to solve it. • They have a revenue model that makes sense given their assumptions. • They understand their competition. • Their business can scale. • They have the ability to articulate clearly what they are doing and engage others in their venture.  
  61. 61. Mischa Byruck, author of the Social Good Guide Business Plans and Planning for Nonprofits and Social Enterprises, says: To be “fund-worthy” a changemaker needs: • An understandable and compelling theory of change • A bold vision for impact and scalability • A strong team with the appropriate experience, charisma, intelligence, skills and vision • Proof of concept – evidence of demand, a unique or innovative product or service, and some sort of efficiency • More than anything else, investors and grantmakers want to see that thought has been put into the organization • No one likes to fund hazy or unfinished ideas.
  62. 62. WHERE TO FIND FUNDING
  63. 63. YMVS. OPM  
  64. 64. YOUR MONEY 57% of startups are funded by personal savings and credit.
  65. 65. OTHER PEOPLE’S MONEY -  38% of startups receive friends + family financing - .91% of start-ups get funded by angel investors - .05% of startups are funded by VCs
  66. 66. Nonprofit Funding Possibilities
  67. 67. • Personal income • Personal savings • Personal debt – NOT RECOMMENDED (i.e. credit cards - Visa 12.65% American Express 15.24%) • Friends and family • Accelerator, incubator and fellowship money • Crowdfunding • Events • Online fundraising through a 3rd party online platform • Online fundraising through your organization’s website • Patient capital • Sale of a product • Tax deductible donations passed through a fiscal sponsor • Tax deductible donations [you need to be a 501(c)(3)] • Venture philanthropy Nonprofit Funding Possibilities
  68. 68. For-Profit Funding Possibilities
  69. 69. Social Enterprise Seed Capital • Personal income • Personal savings • Personal debt – NOT RECOMMENDED (i.e. credit cards - Visa 12.65% American Express 15.24%) • Friends and family – donation • Friends and family – equity investment • Accelerator, incubator and fellowship money • Crowdfunding • Investment crowdfunding • Loans from personal contacts • Loans from bank • Prize money from competitions • Revenue from sale of a product or service
  70. 70. Why should anyone give YOU the money to bring your idea to life?
  71. 71. HOW DOES S/HE DO IT?   • Full Time Job (own $) • Part Time Job (own $) • Savings (own $) • Partner • Passive income from investments • Family money • Illicit Activities* * Synonyms: illegal, unlawful, wrongful, unauthorized, forbidden, illegitimate
  72. 72. YOUR FINANCIAL RUNWAY PERSONAL EXPENSES Rent Utilities Clothes Entertainment Exercise Food Health Insurance Personal care Weekends away/vacations Personal Expenses Total _______________ Transportation Car Taxis Subway Transport Total BUSINESS EXPENSES Business lunches/dinners Cell Phone Computer Conferences Domain registration DSL Legal Memberships/associations Office Space Office Supplies Website Website hosting Business Expenses Total GRAND TOTAL = _______
  73. 73. 2009 STARTUP COSTS
  74. 74. (AvailableCash)−(OnetimeExpenses) (MonthlyIncome)−(MonthlyExpenses) Mastering the Crystal Ball Below you see what may look like just a math equation, but it is much more than that.With it you can see into your venture’s future, find where you might run into danger, and change course before you run into trouble. X = months left “Feeding The Beast” by Andrew Greenblatt, Associate Professor at NYU + CEO of Vendorboon
  75. 75. 6 = months before you run out of money $20,000 - $5,000 = $15,000 $3,500 - $1,000 = $2,500 (AvailableCash)−(OnetimeExpenses) (MonthlyIncome)−(MonthlyExpenses) “Feeding The Beast”
  76. 76. Are you going to make it? Do you need to change something? Should you?   Cut your monthly expenses?   Get a part-time job?   Raise money?   Find another way to get revenue flowing?   Piggyback on something already built? . “Feeding The Beast”
  77. 77. PART 5: WHAT COULD POSSIBLY GO WRONG?
  78. 78. A LOT!
  79. 79. 2003 2007 2011 DESPITE GOOD INTENTIONS Dean Karlan + Jacob Appel William Easterly Thomas Dichter
  80. 80. If things don’t go as planned and I have to “cease and desist” I will feel….
  81. 81. ✓  Humiliated ✓ A reluctant inductee into my own hall of shame I never knew existed
  82. 82. [ ? ]   If I fail…. The impact on the people my entire project or venture was designed to serve, support, and help will be….
  83. 83. PART 6: ACTION PLAN
  84. 84. STARTUP CHECKLIST ✓ Pick a cause that you are passionate about ✓ Know why you are doing what you are doing ✓ Identify your real and perceived obstacles ✓ Figure out what success looks like ✓ Create a solid plan before you jump in ✓ Craft a solid mission and vision statement ✓ Consult an attorney and an accountant ✓ Do your research ✓ Create a prototype and get immediate feedback ✓ Network your pants off ✓ Avoid unnecessary mistakes by reaching out to people who have traveled down the startup road ✓ Seek out mentors ✓ Make a list of the skills and tools you do and don’t have ✓ Educate yourself of what you need to know, but you don’t ✓ Build a team, you can’t do this by yourself! ✓ Figure out how much money this is going to take ✓ Save up ✓ Consider everything that could go wrong ✓ Draw on both your and your heart, they are a winning combination
  85. 85. INSPIRATION "If a person has had the sense of the call – the feeling that there's an adventure for him – and if he doesn't follow that, but remains in the society because it's safe and secure, then life dries up, and then he comes to that condition in the late middle age: he's gotten to the top of the ladder and found that it's against the wrong wall. If you have the guts to follow the risk, however, life opens, opens, opens up all along the line. I'm not superstitious, but I do believe in spiritual magic, you might say. I feel that if one follows what I call one's bliss – that thing that really gets you deep in the gut and that you feel is your life – doors will open up.They do! They have in my life and they have in many lives that I know of." - Joseph Campbell "Until one is committed, there is hesitancy, the chance to draw back, always ineffectiveness. Concerning all acts of initiative (and creation), there is one elemental truth, the ignorance of which kills countless ideas and splendid plans – that the moment one definitely commits oneself, then providence moves all. All sorts of things occur to help one that would never otherwise have occurred. A whole stream of events issues from the decision, raising in one's favor all manner of unforeseen incidents and meetings and material assistance which no man could have dreamed would have come his way.Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it. Begin it now." - Goethe
  86. 86. WWW.SOCIALGOODGUIDES.COM
  87. 87. http://www.youtube.com/watch?v=5jx0ZjAXWwQ
  88. 88. Thank you! Shana Dressler shana@socialinnovatorscollective.org @sic_org • @socgoodguides www.socialgoodguides.com

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