Thursday, October 8, 2015

10:14 AM

Social entrepreneurship is changing the landscape of startup businesses. 

By Jim Ver Steeg

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Similar to how traditional entrepreneurs look to introduce new products and services to create and satisfy market demands, there is a rise of social entrepreneurs who look to solve some of the world’s most critical problems through a resourceful blend of innovation, imagination, and invention. But if new ideas alone solved the world’s problems, everyone would be doing it. More and more, an emerging generation of social entrepreneurs is learning that sustainable solutions often require strong financial returns built from the deliberately blurred line between commercial success and lasting social change.

Growing roots in Rochester

Teaching entrepreneurship is nothing new at the University of Rochester. According to Vice Provost for Entrepreneurship Duncan Moore, there have been courses taught on the subject since 1978. But, he says, the increased interest in social entrepreneurship is notable. “The students today are much like the students in the ’70s in terms of wanting to do social good,” he notes. “This is our fifth year in the Kauffman entrepreneurial program, which offers a tuition-free year for undergraduate students who want to pursue entrepreneurship. Right now we’re up to about 60 percent of students in the program who want to do something specifically in social entrepreneurship.”

The increasing interest among students who want to do well financially while doing good socially is what led Simon Business School to offer its first course in social entrepreneurship. To launch the spring course, Simon only needed to look as far as University of Rochester alum and entrepreneur-in-residence at the Ain Center for Entrepreneurship Michael Wohl ’89. An established entrepreneur and international social entrepreneur in his own right, Wohl says he turned to his own experience in creating sustainable businesses to help create the course curriculum. “I’m a market-efficient person, so that’s the way I approached this course,” Wohl says. “My background is in business, and I’ve always tried to create businesses with a heart, but they’re businesses—and sustainability is key. Being able to understand markets and create hybrid models that marry profit and market efficiency with social impact is vital.”

Michael Wohl
For Wohl, success in the classroom means combining Simon’s capacity for training some of the world’s best business minds with a passion for solving some of today’s most pressing problems through entrepreneurship and innovation. “The idea of being socially irresponsible and unaware, from both the humanitarian and environmental perspectives, is becoming anathema to many in the younger generations,” he says. “And what’s interesting about business students and the professionals they become is that they have a deep understanding of how to allocate and manage resources. That’s a tremendous benefit in social impact enterprise.”

Altruism evolves

Cesar Quijano ’15S (MBA) is a prime example of the newer model of altruism. Originally from Colombia, with a background in investment banking and merger and acquisition advising for midmarket companies, Quijano says he found tremendous satisfaction in the project work he did with Wohl’s social entrepreneurship class. “I’m a finance guy and I love investment banking; it’s a great career,” he says. “But the social entrepreneurship class is where I found a project that I was truly passionate about.”

Under the guidance of Wohl and other advisors, Quijano and his team worked with the Millennium Challenge Corporation (MCC), a US government entity created to invest in developing countries to improve their financial and economic realities.

“Our project was focused on the Northern Triangle of Central America: Guatemala, El Salvador, and Honduras,” Quijano says. “Many locals know there are entrepreneurial and economic opportunities but don’t have the knowledge or access to the tools necessary to start companies. They don’t know how to develop a business plan, get access to banks, or approach investors; they don’t know how to become bigger. So our project proposed a business accelerator that we hope better connects entrepreneurs from those countries with the resources that are available.”

One of Quijano’s classmates in Simon’s first social entrepreneurship class was Class of 2016 MBA candidate Mikayla Hart. In a separate project, Hart and Quijano teamed up with Class of 2016 MBA candidate Robert Kauffman to enter the Tibetan Innovation Challenge, a new intercollegiate social entrepreneurship business plan contest organized by the University of Rochester that aims, through self-sustaining and replicable business ideas, to improve the lives of Tibetans living in India. In the July finals, the team from Simon Business School placed third with their Tibetan Microfinance model, which could increase the Tibetans’ entrepreneurial potential by providing basic financial training and better access to capital.

Net Impact co-presidents Mikayla Hart
and Joseph Bell. 
For Hart, growing up in a place far from Simon did not deter her from coming to a business school where she knew she could make a difference. After earning her undergraduate degree from the University of Hawaii at Manoa, Hart went into corporate finance and began her career. It was her interest in consulting that brought her to Simon, but it was her passion for business with a social impact that prompted her to restart the School’s chapter of Net Impact with a few of her classmates. “Net Impact focuses on social impact and sustainability through business,” Hart says. “That’s something I’ve noticed a lot of people at Simon are very passionate about, and it seems to be a trend in most top business schools. I think that’s great.” Many of her classmates seem to agree. Net Impact is quickly becoming one of the largest and best-attended groups at Simon.

From a business model that helps deliver water purification devices to women and children, to durable and reliable housing for victims of natural disasters, Simon alumni are bringing sustainable solutions to help solve complex social problems.

Bringing safe water to the world

In July of this year, Elizabeth Schirmer Shores ’11S (MBA) took a sabbatical from her role as vice president of sales at Sweetwater Energy to travel to all seven continents with her husband, Patrick Shores. It was more than an extended honeymoon for the newlyweds. The couple is working in earnest to further develop their business plan for Untapped Shores International, which aims to bring drinkable water and hydroponic farming technologies to some of Africa’s poorest countries. Shores says they originally learned the extent of the water crisis facing Africa while planning a safari trip to Kenya. “Every day, 800 million people in this world wonder if the next sip of water they drink is going to be the one that kills them,” she says. “We thought we would be remiss if we didn’t try to do some good while we were there. We just didn’t know how we could have a positive impact as casual travelers or how to have a sustainable impact on the community we visited long after we returned home.”

Watch the Elizabeth's video from Uganda:

As the couple planned their safari adventures, they also researched a number of technologies that had the potential to improve the lives of Kenyans facing the water crisis. “At our kitchen table we taught ourselves the technology we are helping deliver and implement today,” Shores says. “It’s a portable chlorine generator that is powered by the sun. It’s handheld, and can produce clean water for about 2,000 people a day.” Yet, according to Shores, while the technology exists, until now the cost of transporting the devices was prohibitive. “It’s hundreds if not thousands of dollars to ship these devices, even though they may be only a couple of pounds in weight,” she notes. “Then you have the issue that sometimes the device doesn’t even get into the hands of the people who need it most—either they may get stolen out of the parcels or held hostage for bribes in customs.”

Enter innovation and social entrepreneurship. “We brought a generator in our suitcase,” Shores says. “Now that is a crucial part of our social enterprise. We only deploy technology that can fit in a traveler’s suitcase. Our mission is to equip travelers with devices that are needed in a travel destination, connect them with women- and children-focused organizations, and then get them back to their vacation or business meetings. They leave, but the community they visited is forever changed.”

Even with her mission to bring clean water to women and children, Shores is the first to recognize that even the noblest goals need to incorporate sustainable solutions. “Sitting in my entrepreneurship classes at Simon, I learned that Entrepreneurship 101 means that you exist to create value in the world,” she says. “I always thought how wonderful it would be to create value with something that I’m passionate about. That’s what I feel we’re doing now. We are helping change lives by giving people the toolkits to become entrepreneurs by selling or trading clean water. To me, those are the best manifestations of people, planet, profits, and social entrepreneurship.”

Shores believes, however, it is more than her personal passion and business acumen that are making the social entrepreneurship model work. “I think that this is a trend that is just simply here to stay,” she says. “Whether it’s a Fortune 100 company that’s infusing philanthropy into its corporate culture, or one of the benefit corporations that are popping up that have equal obligations to save the planet and repay investors, there is a real appetite for that type of company.”

A different kind of model home

John Zima
John Zima ’13S (MBA) was working for The Boeing Company in Everett, Washington, when a friend and former colleague told him about Reaction Inc., an exciting new startup in Austin, Texas. Now the vice president of production engineering at Reaction, Zima and his team are helping design fast-deploying housing structures for people who have been displaced by natural disasters. “They’re very lightweight structures that are designed to stack like coffee cups on the back of a truck,” he says. “With a handling weight of just 350 pounds, you can fit 14 of them on the back of a standard flatbed and immediately cart them to a site where people have lost their homes or been displaced by a disaster.”

From his first contact with Reaction, Zima knew the fast-growing startup was a good match for his personal and professional drive. After graduating from Clarkson University with a degree in mechanical engineering, he worked for a few years as an engineer. Zima soon realized, however, that if he wanted a different career, he was going to need to understand more about business. “I got to the point where I needed exposure to a broader range of business disciplines,” he says. “That’s when I decided it was time to get my MBA and realized Simon was the right fit for me.”
Zima says he discovered his entrepreneurial inspiration while studying competitive and organizational strategy. “I remember in Professor Dennis Kessler’s class, we would talk about entrepreneurship and what it takes to build a business from the ground up,” he says. “I learned that it takes a lot of drive and the ability to wear a lot of different hats. That always sounded really interesting to me.”

At Reaction, Zima is learning firsthand what it takes to get a startup off the ground. “If you’re at a big company like Boeing, you get to take your two-week vacations and call in sick,” he says. “If something can’t wait till tomorrow, there are probably ten other John Zimas there who can fill your shoes. At a small startup, there’s nobody else. You’re it.” But, Zima says, the work makes it all worthwhile. “I think in the end, the main driver is that what we’re doing is going to make people’s lives better,” he notes. “We’re doing something that’s for the social good, but the business model also has elements that could revolutionize the hotel or travel industry. These structures could be used for everything from survival in the wake of a disaster to convenient accommodations at a car show or a major sporting event. It’s exciting to know that we can help drive change to something better and more advanced.”

Reaction's Exo housing units are designed to provide shelter
after disasters. Each unit sleeps up to four individuals.
Zima also points out, however, that in order to do that the business model must be as sound and well
engineered as the structures they are creating. “Some of what I’m doing now makes me think of Professor Gregg Jarrell’s Cases in Finance course,” he says. “A big part of understanding where we are as a company and my ability to guide my team comes from understanding a broader business picture. It’s about seeing all of the mechanisms involved in what you’re doing versus just understanding one function or area. The perspective I got from Simon helps me see how Reaction functions and behaves as a business and gives me a clearer picture about what’s involved in a lot of key decisions, including those about what risk we’re going to bear and what risk we’re going to avoid or get rid of as we move from prototype to production.”

For Reaction, as with most social entrepreneurial enterprises, before you can make a difference, you need to make a sustainable plan, Zima observes. “If we’re not being profitable in the way that we need to be, we’re going to run into trouble—especially, once we scale,” he says. “We are always keeping our eye on the cost, and that’s a big part of determining the strategy of the engineering team. In a lot of cases, if something is too high in cost, you have to figure out how to get that cost down without compromising the safety or design.”

A spirit that starts in the classroom

“At the end of the day, my own success has relied on the intersections of sustainable business models that impact the world in positive ways,” says Michael Wohl. It is in that spirit that he approached teaching Simon’s first social entrepreneurship class. “Entrepreneurship is often about looking at economic ecosystems,” Wohl says. “Then it’s a matter of coming up with solutions for a service or product that didn’t exist before; then it’s about innovation. Social entrepreneurship is essentially the same thing, but it also includes a triple bottom line, which means that three essential components are met: social impact, environmental impact, and profitability.”

It’s attention to the triple bottom line that appeals to Mikayla Hart. “I think having a social entrepreneurship course at Simon shows that this is a real business trend,” she says. “Schools are becoming more aware that students care about social impact and sustainability through business.”
Her classmate in the social entrepreneurship class, Cesar Quijano, agrees. “I think this was the best way to finish my MBA,” he says. “It was surprising to me how many people are thinking about social entrepreneurship and how much work they were willing to put into the class.” The same, he says, applies to the Net Impact club. “The Net Impact organization is really helpful for career and networking opportunities,” he notes. “It helps connect people and show them that there are so many ways to help others, while doing quite well for yourself. I think it’s refreshing to have these kinds of initiatives in school.”

But Wohl says student passion is not always enough and there are challenges when trying to teach social entrepreneurship. “You have to embrace disruption,” he says. “I’m a scientist by training, but entrepreneurship lends itself to art as well. It’s the art of finding the positive impact of disruption and using innovation to find more efficient and lasting solutions to problems. That’s what many MBAs and business students are looking to do. The passion I saw from the students in class was almost overwhelming. Their desire to enter into the social impact and entrepreneurship realm was truly palpable. I really enjoyed watching that develop.”

According to Vice Provost Duncan Moore, the same passion can be found in schools across the University of Rochester. “It’s a very different era than it was even five years ago,” he says. “I think over the last decade we have broadened the definition of entrepreneurship at the University, even to the point that our mission statement includes generating and transforming ideas into enterprises that create social or economic value.” Moore says he also sees exciting opportunities with the newly named Ain Center for Entrepreneurship, made possible by a gift from University of Rochester Board of Trustees member, and longtime Simon Business School supporter, Mark Ain ’67S (MBA). “We’re going to be doing a lot more in the community,” Moore says. “Mark is very keen on connecting our students to the community through internships, including those in the not-for-profit sector. We’ll see that continue to play an important part.”

Moore also notes that a broadened understanding of entrepreneurship will also play a strategic role in the University’s continued growth in the local community. “I think when you get the deans, the provost, and the president saying this is important to the largest employer in Rochester, people start to recognize that social and traditional entrepreneurship will be part of the equation we use to make sure Rochester thrives going forward,” he says.

Elizabeth Schirmer Shores and her husband Patrick (left)
demonstrate their water purification system.
For Wohl and his students, it’s about understanding an emerging reality in global business. “A tremendous amount of work is being done in corporate social responsibility,” he says. “It might be from a public relations perspective or from a sincere interest to have a positive impact, but in any event, businesses have become increasingly prominent actors on the social stage.”

For Elizabeth Shores and other startup social entrepreneurs who want to create lasting social change, it is profit with a purpose. “There’s an important distinction between charity and social entrepreneurship,” she says. “Charity implies a one-way transaction. The model we’re using breeds accountability and data-driven results for creating and sustaining new entrepreneurs in developing countries.” Shores and her husband have seen it firsthand. “We have one person in Uganda who has built an entire water kiosk business from our system,” she notes. “He recently sent us a one-hundred-dollar bill with a note that he would like to purchase more units. We were thrilled because it means the model is working. He saw value in the product and purchased more—to help his communities and grow his own sustainable income. That kind of result is incredibly rewarding.”


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