Various economists, sociologists, politicians, and pundits have often argued that the underlying principles of the free market economy(i.e. the pursuit of profit) and the ideals of charity (i.e. helping others without regard for one's own self-interest)are diametrically opposed to one another. On one pole you have the greedy, self-interested business tycoon, who buys and sells goods and services without regard for the human costs of such transactions. On the other pole you see the selfless idealist, who values collective good over that of the individual. These extreme stereotypes are both misleading and potentially irrelevant in the 21st Century due to the fact that a few creative thinkers have decided to think outside the box. In this post, I would like to highlight two of these social entrepreneurs with the hope that some readers within our small GRADD region in Western Kentucky will see that helping others is not an anathema to turning a profit.
Have you ever heard of Muhammad Yunus? Neither had I, but he is truly an amazing humanitarian and businessman. Yunus was trained as an economist at Vanderbilt University, and witnessed abject poverty in his home country of Bangladesh when that nation experienced a severe famine in 1974. During this time of economic and social hardship in Bangladesh, Yunus made a loan $27.00 U.S. Dollars to a group of 42 families so they could create and sell items without having to undertake stringent loan guidelines offered by traditional financial institutions. From this experience, and through his economics research, Yunus founded Grameen Bank to specialize in providing credit and banking services to the working poor. To most people, this would make zero sense. Hypothetically, the working poor do not have the resources nor the collateral to secure loan funds, so why take on the risk? Sounds crazy, right? Wrong. Today, Grameen Bank maintains 2,563 branches and services approximately 81,343 villages throughout Asia, the Americas, and Africa. Grameen has provided $8.86 billion (USD) in microloans, $7.86 billion (USD) of these monies have been fully repaid, and they have a recovery rate of 96.54%! Yunus was awarded the Nobel Peace Prize in 2006 and the Presidential Medal of Freedom in 2009.
Another great example of an innovative and dynamic social entrepreneur is Blake Mycoskie. Mycoskie is the "Chief Shoe Giver" of TOMS Shoes. The story about how he gained such a strange job title is a heartwarming one. In 2006, Mycoskie was a serial entrepreneur (he had started a laundry company, a billboard service, and drivers education website, all while in his 20s), and a former contestant on the reality show The Amazing Race. Following his stint in adventure-reality TV, he decided to return to Argentina for a vacation. He was expecting delicious red wine, excellent food, and was excited to learn the game of polo. However, Mycoskie noticed two things: 1) that the native-Argentinian shoe known as the alpargata was comfortable, versatile, and not available in the United States; and 2) that the majority of Argentinian children he encountered did not wear nor own a single pair of shoes. In poor nations, citizens do not maintain the luxury of automobiles or even bicycles and must rely on their own two feet as their singular mode of transportation. The lack of shoes within these regions perpetuate disease and infections that are otherwise preventable. Mycoskie's entrepreneurial mind went to work. Why not create a business model where for every pair of shoes you sell you then give a pair away to a child in need? He took $500 and created 250 shoe prototypes, and created TOMS:Shoes for Tommorrow. Previously, Mycoskie had anticipated that he would spend the first half of his life making as much money as possible and the second half giving that money away. By converging the concepts of a for-profit enterprise and acts of charitable giving into one cohesive and sustainable business model, Mycoskie has now distributed (as of April 2009) more than 140,000 pairs of shoes to children in Argentina, Ethiopia, South Africa and the United States. TOMS are sold online and in 500 stores nationwide. Mycoskie also encourages participation in the one-for-one movement by his customers by inviting interested individuals to join him on "Shoe Drops." The work of Blake, the TOMS Shoes Team, and the idea of the one-for-one model have been recognized by the Clinton Global Initiative, the U.S. Secretary of State, and numerous others. Mycoskie rightly states that "Business and matters of the heart do not have to be mutually exclusive. That one does not need to choose between passion and business, or the Peace Corps and corporate America, but a blend can exist, and when the model is sound, great things can happen."
As you can see, the perception of what is "acceptable" in the world of entrepreneurship is evolving and changing. Those who are revered in business--Jobs, Walton, Buffet, Ellison, Koch Winfrey, or Zuckerberg--created opportunities by defying convention. Perhaps social entrepreneurs will usher in the next epoch in global business? Could we be on the verge of an era in which profit and goodwill are not viewed as mutually exclusive? Please feel free to share your thoughts on these figures, their business models, and offer your own ideas about social entrepreneurship and what it means for all of us. We want the new incarnation of this blog to not only be about sharing news, events, and networking, but also to facilitate a discussion about the nature of entrepreneurial ideas and what these ideas means for GRADD, Kentucky, the United States, and the world. And, as always, thanks for reading.
