Social enterprise applies established business practices to address poverty, hunger and human rights issues
It’s not often that a marketing management term paper leads to an expedition across Death Valley in the heat of summer. But this was my plan from the beginning. As the founder of Venture Expeditions, a nonprofit that utilizes business models and practices to address worldwide social issues, I leveraged the Death Valley trip to raise awareness and resources to fund 250,000 meals for Burmese refugees.
The driving principle behind social entrepreneurship is to use the power of business to profitably solve social and environmental issues. As the founder of Venture Expeditions Inc., I had a basic understanding of how social entrepreneurship could help solve some of these challenging issues. And as a graduate student at the University of St. Thomas I had a front row seat to the rising trend of social enterprise.
My first enterprise started as a late-night dorm conversation in 2002 with my friend and co-founder, Aaron Smith: “What if we bike across the country to raise money for humanitarian mission projects?”
That dream grew into a courageous first trip from Portland, Ore., to New York City that raised $17,000. Our efforts evolved into the creation of Venture Expeditions, an organization involving thousands of people across the country and hundreds of participants hiking mountains, cycling across continents and running across states, to raise funds and awareness for humanitarian projects. To date, more than $1 million has been raised to fund dozens of clean water projects in Africa, a children’s care center in Thailand, safe houses for victims of human trafficking in Asia and a Burmese refugee food program.
Early on, the growth of Venture Expeditions led me to seek an M.B.A degree. I heard Dean Christopher Puto give a lecture on how the “goal of any business is to create something of value that benefits individuals and society,” and “that profits will follow” this type of business. I remember thinking, “That’s it! Use the power of business as the solution to social issues.”
Transitioning from a nonprofit undergraduate degree to an M.B.A. program was a shock at first. I remember teaching myself calculus late at night on Wikipedia just to keep up in an economics class. Yet the M.B.A. program provided me with a new perspective, convincing me that having a social mission is the greatest way to quickly grow a profitable business or new product line with limited capital in today’s market. And along the way, I learned some key lessons about when to let social mission inform our business models and vice versa.
While I was already deeply involved with Venture Expeditions, several St. Thomas entrepreneurship professors also encouraged me to look for opportunities in a niche industry I was already familiar with. For me, that opportunity was volunteer travel. Growing up in a family that placed a heavy emphasis on world travel, I had already led 24 trips to 42 countries to participate in humanitarian missions. So, I turned a final marketing paper for Dr. Avinash Malshe into a business plan, raised capital from friends and family and launched Fly for Good, Inc., a for-profit travel company that offers humanitarian discounted airfare through 13 major airlines and discounted travel insurance through our International Volunteer Card brand.
By the time I graduated from the UST MBA program, Fly for Good had saved volunteers and nonprofits millions of dollars on airfare, allowing them to do more good with their organizations. And just as importantly, the company has grown to more than $6 million in sales, with high-profile clients such as Harvard University, Kiva.org, Invisible Children and the Peace Corps.
Where to Start?Launching Fly for Good was more challenging than I had planned. We had a unique value proposition and a compelling story, but like many new social enterprise start-ups, we were lacking credibility and could not gain traction.
I sought the counsel of my New Venture Strategy professor, Mark Deeds, who advised that, “In the beginning, you always buy your first customers and borrow your influence.”
Convinced of this simple strategy, I came back to our team and asked, “What can we give away?” They thought I’d lost it.
Our first step was to create a free space on our website for organizations to promote the good they are doing. Taking things a step further, we created a free web tool for nonprofit and volunteer organizations to market their programs and opportunities. We approached some of our high-profile potential clients and almost gave our product away. Then we asked them to let us advertise our partnership. As a result, sales increased and the media started paying attention. By simply putting the logos of reputable organizations on our website we tripled our sales conversion ratio.
For social entrepreneurship, it also is important to differentiate between corporate social responsibility and social enterprise. For instance, we started Fly for Good with the customary “a portion of proceeds go to …” endorsement. The statement is pretty customary for companies that emphasize corporate social responsibility. But we soon realized our branding position was not concrete or specific enough. How would our audience know that we were focused on social enterprise – creating direct opportunities to help others?
After I returned from a month-long trip to Burma where I witnessed the Burmese refugee crisis firsthand, I had the idea to tie “one meal for a refugee” to every product we sold. For us, this was the game changer. Growing a company can work in tandem with growing the good you do for others. Essentially, by buying a product the customer also can contribute to the social good.
Blue Ocean DifferentiatorsAnother professor, Dr. John McVea, introduced me to the concept of a blue ocean strategy, where one finds a differentiator that is so significant that you are not competing head-to-head with existing companies. Social enterprises often, by nature, employ blue ocean strategies by finding ways to turn a standard product into a social endeavor. Some examples include TOMS Shoes (with every pair of shoes purchased, TOMS will give a new pair to a child in need), Warby Parker Glasses (partners with VisionSpring to train low-income women to sell affordable glasses in their communities) and Project 7 Coffee (partners with nonprofits to provide financial support and raise awareness about global issues). Our blue ocean strategy was travel insurance.
We created the International Volunteer Card, which combines discounts and travel insurance for volunteer travelers. We continued our formula of donating a meal for each product sold, “bought” our first customers by giving away hundreds of cards, “borrowed” our influence and hired interns who utilized social media to spread our compelling, socially missioned brand story. The product has grown 100 percent each year for the last two years.
The Value of Mission CapitalHaving a social mission actually becomes organizational capital; an intangible asset we’ve started calling Mission Capital. We’ve seen it benefit our organization in three primary arenas: talent recruitment, passionate customers who share our brand story and media attention.
I remember one of my early hires saying that she had an offer for more money at a bank, but chose to work for Fly for Good because of its mission. “Meaning” becomes its own currency to motivate employees to work harder, longer and with more creativity and passion.
Having a social mission with tangible good attached to your products also creates a powerful brand story many consultants say is paramount in today’s environment. The tangibility of having a social mission can give your employees extra incentive, but customers, too, can become vested in your success. If they believe passionately in what you are doing they may blog or tweet something about your shared efforts or recommend you to other people. We’ve even had several Venture Expedition’s participants get tattoos of our logo on their bodies.
When a for-profit ties a social good to every purchase, or when a nonprofit employs the power of business to create a sustainable model for good, it can create an invaluable public relations buzz. For instance, Venture Expeditions became the inspiration for a memoir by author Don Miller, who cycled from San Diego to Myrtle Beach. His memoir then made the New York Times Non-Fiction Best Seller list.
We also organized a bike ride from Mobile, Ala., to Buffalo, N.Y., a route that retraced the historic Underground Railroad. The ride raised more than $50,000 to fight human trafficking and modern-day slavery, and the tour alone received more than 11 million media impressions.
Envisioning a Future for GoodVenture Expeditions has been informed by many of the core business concepts I learned at St. Thomas. We filter all of our programs through business models so that every initiative is profitable and scalable. Our cycling, hiking and running tours charge administrative fees that would cover operating costs, but we realized that they were not exponentially scalable, so we started creating online tools for individuals to do their own run, bike or hike for a humanitarian cause, and to utilize social media to promote their events to friends and colleagues. This way, thousands of people can do what we do without a significant increase in fixed costs to the nonprofit.
I often tell people I clearly could not have helped launch and grow Fly for Good or Venture Expeditions without St. Thomas. I took entrepreneurship and nonprofit development classes that provided the knowledge and material I needed to grow the businesses. I once joked that getting a paper graded was like getting free consulting. The faculty would meet me outside of class to talk about issues. My classmates were always giving advice based upon their experiences. Some even networked me with their companies. And recently, I called a former professor to talk over a strategic issue. St. Thomas was the perfect environment to grow a company.
Looking ahead, I feel our companies are just scratching the surface of the possibilities of social enterprise. We are in the middle of launching a student travel insurance card that combines discounts with travel insurance and gets clean water to an African for every card sold. We also are working on a nutritional supplement that would keep an impoverished family nourished for every bottle of supplements sold in the United States. Eventually we want to create a social enterprise accelerator program to encourage young, promising social entrepreneurs. The passion was always there because of my faith and upbringing, but St. Thomas provided the tools and environment to make it happen.
CodaAt the end of summer 2011, I again found myself in Death Valley – hiking more than 20 miles per day – to raise resources for and awareness of Burmese refugees. The event helped us raise money for Venture Projects and tell the brand story of Fly for Good in a tangible way. It’s this kind of blurring of the lines of business and social mission that is helping us grow. I’m convinced of this, but probablycan’t give my statistics teacher an r-squared correlation… yet.
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Contact: Email: email@example.com Online Twitter: @ryanskoog Fly for Good: www.flyforgood.com Venture Expeditions: www.ventureexpeditions.org Volunteer card: www.volunteercard.com Student travel insurance card: www.stucard.com
Web Exclusives Read The New York Times article featuring Fly for Good: http://intransit.blogs.nytimes.com/2011/07/20/qa-learn-spanish-and-do-some-good