2 – Social Entrepreneurship

2 – Social Entrepreneurship

Social Entrepreneurship

A social entrepreneur is someone who sees a social problem that needs to be addressed and uses entrepreneurial principles to organize, create, and manage a venture that results in social change. While some entrepreneurs do this by creating a nonprofit business, an increasing number of social entrepreneurs are building successful for-profit companies in the private sector.

But don’t be fooled by social entrepreneurs – while they are passionate about their missions – they are also passionate about building strong and sustainable businesses and as you’ll hear, the rules for building a business don’t change just because you add a social cause to the goals of your business plan.

Transcript

Dearnley: The only thing that will sustain a consumer in the purchase of a product is the sense that it brings value to their lives…

Goldman: Values cost money but values are worth money too.

Szaky: Sustainability and profit go hand-in-hand because you can’t be sustainable without profit.

Kristen: Welcome to “Sound Advice” – the brief audio download that brings the best of eClips to you. I’m Kirsten Barker.

Today’s topic is “You Can’t Do Good Unless You’re Doing Well”.

A social entrepreneur is someone who sees a social problem that needs to be addressed and uses entrepreneurial principles to organize, create, and manage a venture that results in social change. While some entrepreneurs do this by creating a nonprofit business, an increasing number of social entrepreneurs are building successful for-profit companies in the private sector.

But don’t be fooled by social entrepreneurs – while they are passionate about their missions – they are also passionate about building strong and sustainable businesses and as you’ll hear, the rules for building a business don’t change just because you add a social cause to the goals of your business plan.

First, we’ll hear from Chris Dearnley, co-founder of Pura Vida Coffee. Pura Vida Coffee is based in Costa Rica and has grown to become one of the largest sellers of Fair Trade, organic coffee in the U.S. Company profits are used to provide direct help to at-risk children and families living in coffee-growing countries. While the mission of Pura Vida is “to harness the power of business to create good and serve the poor”, Dearnley states that you can’t just sell a message – you need to have a quality product.

Dearnley: Whenever you are in this space of what we call social entrepreneurship, the value of your social impact, it will never sustain a mediocre product. So your product always must stand as a quality product that people would purchase and desire just for the product alone. Now the social cause or the social impact or the descriptor that may wrap around that product may at times get somebody to try it but it is never strong enough to make somebody sustain it. The only thing that will sustain a consumer in the purchase of a product is the sense that it brings value to their lives, so that what they’re receiving compared to what they’re paying seems of value to them and so you … one of our values as a company as we want to have excellence in coffee and by having excellence in coffee we gain attention. We gain people’s respect; we gain their acknowledgment, that’s a good product. Well I really love your coffee. We continue to grow year over year in terms of customers and sales and just explosive growth in some areas because people love our coffee. They think it’s great and they love to drink it and in fact they love it better than other coffees that are out there that claim to be very, very good and so it’s that platform off of which we are able now to tell a story. We are able to now tell a message but if we don’t have that platform of a quality product then it implodes on itself.

Kristen: Chris goes on to say that both the message and the product have to be compelling – in other words, you can’t have only one and be a success…

Dearnley: You need to have the clarity of what is compelling. What is it that is compelling about what you’re going to be doing, and if the thing that’s most compelling to you is the value then you have to have a… you have to be competitive with your product. I mean you can’t have… you can have the most compelling thing in the world but if it is not competitive in terms of what is actually being offered, it is just not going to last.

Kristen: Moving from coffee to tea, next up are some comments from Seth Goldman, President and CEO of Honest Tea – a beverage company that seeks to create healthy and honest relationships with its suppliers, customers and the environment. Seth tells us that while sticking to core values can result in higher costs – the social message has to make sense to the consumer…

Goldman: Values cost money but values are worth money too. So we think that we are adding value as we do it and we think people are paying for that value. It has to be locked in, it has to be natural and intrinsic to what you are doing. So I do not think consumer … I think consumers are willing to pay for values that make sense. So organics is one way you are absolutely able to make the case for and consumers, I think buy into. I think fair trade when it can be done in a way that is economically efficient is also one.

Kristen: Of course, Seth goes on to say that at the end of the day, one needs to evaluate costs and still make good business decisions –

Goldman: We have a few fair trade offerings. I think we are up to now four or five of our lines fair trade and we did a review on what did it cost to make our entire line fair trade and we analyzed that and it was pretty significant cost and one person in our organization said, well we need to be doing the right thing and by that she was implying that we needed to make everything fair trade. So was that the right thing for us to make our company so economically inefficient that we go out of business? Because then we do not do anybody any good. We certainly do not do the growers any good. We do not do our customers any good who need the product and we obviously do not do ourselves any good.

Kristen: Tom Szaky is the co-founder and CEO of TerraCycle, which manufactures organic fertilizer made from and packaged in waste. Tom reiterates some of Seth’s comments, but goes even further to say that being more socially responsible can actually increase profitability.

Szaky: Profit is our biggest focus by far. But sustainability and profit go hand-in-hand because you can’t be sustainable without profit. That is really the ultimate sustainability function, is how much money you make. However, what we discovered is that you can do a better job and make more money by doing it in a sustainable way. That’s the craziest irony is that the more eco-friendly, the more socially responsible we are, almost the more profitable we become.

Kristen: Finally, we’ll close with comments from Bena Burda, founder and owner of Clean Clothes, Inc. and Maggie’s Organics, companies that make apparel from organic fibers. She states that business and commerce are the drivers of change and that we simply need to be open to new possibilities related to how we do business…

Burda: The sky is the limit, Business absolutely is a change agent. If we all sit around and wait for our governments or societies to change, we are gonna be really old and have a lot of grey hair before that happens. I think commerce is superexciting. You know, it’s trade, that whole thing of trade, give me this and I’ll give you that, it’s just got so many possibilities, and you know I came into this from a different avenue than most and I know one of the questions you had thought about asking was what got you to change into an environmentally responsible entrepreneur or social entrepreneur like what changed you from being just a business person, that’s how I read it, to a responsible business person, but I came at this saying what do you mean it’s organic cotton, oh it’s this commodity, oh it can save all these acres of land, what can I do with it, you know, what can I take, I’m taking this raw fiber, this white fluffy stuff that has leaves on it and field trash on and I gotta make something out of it so I can show people that they can change the way the earth is, so that’s just one example, I think, of how diverse, how many possibilities there are, I mean business is this amazing vehicle, it’s just, it’s a really exciting arena to play in. So I encourage more players to come on board.

Kristen: Thanks for listening to this segment. If you are interested in hearing more from our featured speakers or want to explore more clips on the topic of social entrepreneurship, please check our website at eclips.cornell.edu.

That’s E-C-L-I-P-S. cornell.edu.

And remember, if it is a business topic of interest, eClips will bring you “Sound Advice”…


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