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Archive for the ‘Social Entrepreneurship’ Category

Branded Boda Idea

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Problem:  Imperfect information about boda drivers (motorcycle taxis) leads to unsafe free-for-all

  • Many bodas drive unsafely and without helmets
  • Many do not know their way around town
  • > 90% actually rent their motorcycle from a local owner and see their earnings impacted accordingly
  • The influx of many new bodas threatens to squeeze margins for the drivers
  • There are no branded fleets of boda drivers — its a wild west…

Solution: Leverage branding, scale and economic incentives to improve driver safety/earnings

Driver Safety:

  • Provide clearly branded well maintained bodas to drivers
  • Provide road/accident safety training to all drivers
  • Provide helmets and day-glow vests for driver/passenger
  • Require drivers to know the major districts, connecting roads, and typical tourist stops
  • Require drivers to speak basic English

Driver Earnings:

  • Revenues: Hopes that branding will cause drivers to stand out in the crowd, and get more fares.
  • Costs: Over time, the drivers will pay less to rent the bodas

Back of the Envelope:

  • There are over 200,000 boda drivers in Uganda
  • 1,000 drivers paying the market rent would be $1.7MM USD/year in revenues (2.8bn Ush)
  • As the bikes are paid off, the cost structure of the business will decrease, which we can pass on to the drivers in the form of lower rental costs.
  • Increased driver earnings will increase the quality of their lives.
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Written by thetyson

October 9, 2008 at 3:02 pm

Step #2: Choosing the method — Becoming a Social Entrepreneur

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This is the second part of a two part series entitled “Becoming a Social Entrepreneur”.  Be sure to Pick your Poverty Niche before reading this post.

Now, we much choose the most effective way to battle the problem(s) affecting your niche.  Then, we’ll find organizations and other vehicles that we can leverage to put our resources to work.  We will be using the entrepreneurial poor of Kampala and Gulu, Uganda as an example in this post because that’s my niche.

First things first; many people start their quest for solutions by attaching themselves to an organization without fully understanding the methods which the organization deploys.

For example, if we like an organization that helps the entrepreneurial poor in Uganda.  That’s great we know who they help, but, we may not know how do they help?

Do they:

  • give them money
  • give them supplies
  • give them vocational training

I strongly recommend remaining organization agnostic in the beginning of your quest for solutions to the problems facing your poverty niche.  Even if you have already chosen an organization you want to work with, I encourage you to step back and run through the rest of this exercise.

  • First, compile a list of organizations that currently do work with your poverty niche.  If the list is less than 10, then cheat a little and find organizations that work with other poverty niches that are similar to yours.  You can use Charity Navigator, Facebook Causes, Mix, Change.org, or Google Search to research organizations by niche.  This task should take a few hours, but should be pretty easy.
  • Next, visit read their Charity Navigator profiles or their websites to figure out what methods or activities they use.  This task could take a few hours and may be a little more difficult.
  • Next, educate yourself about the pros/cons of different methods deployed by a variety of organizations.  This task is a bit tougher.  You’ll want to look for trusted websites.  Academic papers or white papers from large organizations are good.  Try to steer clear of opinion forums…If you find a great comprehensive content source please post the link in the comments below.

In our example, we chose micro-finance as our preferred method for helping the entrepreneurial poor of Kampala and Gulu, Uganda.  Below is our short list of pros/cons.

Pros:

  • Micro-finance has been deployed across many cultures and countries since the 70s.
  • Very low default rate means the loaned money comes back to us and we can loan it out again.
  • Bottoms up distribution ensures more efficient resource allocation than top down government disbursements.
  • Micro-finance institutions (MFIs) are self-sufficient off the interest charged to borrowers.
  • The 2006 Nobel Peace Prize was awarded for work in this area – it has momentum.

Cons:

  • Claims that loans are used to supplement lifestyle, instead of growing business.
  • Claims that loans intended for women are taken by their husbands.
  • Claims of unfair interest rates charged to borrowers.
  • Claims of some MFIs stealing the money.

Once you know more about what is being done, what works, what doesn’t, what’s sustainable, what’s not, etc; then you will be ready to start looking for specific vehicles or organizations that might match the method you have determined to be the best.

That’s the subject of a future post.

Written by thetyson

March 5, 2008 at 11:11 am

My niche — Becoming a Social Entrepreneur

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My Niche

I will work with the entrepreneurial poor of Kampala and Gulu Uganda in ways that create sustainable returns whereby a portion of the value is realized immediately and the rest is played out in perpetuity.

Reasons:

  • Being an entrepreneur myself, I feel connected to them
  • Many Ugandans speak English, so communication isn’t as much of an issue
  • Despite some unrest in the north, Uganda has a gov’t/infrastructure that will support small business
  • Micro-finance institutions (banks for the poor) proliferate
  • I don’t want to help people break even; I want to help them break out, and these guys can do it!

My Approach

I split the poor into three (admittedly imperfect) groups so I could make sense of the situation.

  1. The ultra poor.  These people do not have enough to eat and they are not getting any help.
  2. The dependent poor.  These people work for someone else or are dependent on international aid of some kind.  They cannot subsist on their own and they often have one marketable skill or no skills at all.
  3. The entrepreneurial poor.  These people run their own businesses.  The break even, but are unable to  accumulate wealth on their own.

Then, I thought about the recurring incremental value of every additional dollar (at the margin).

  1. The ultra poor clearly need help.  A ton of money (not enough) is applied to this problem every year.  For example, the UN World Food Programme, alone, dispersed 4 million metric tons of food to 87.8 million people in 78 countries and spent $2.9 billion in 2006.  These people are far from self-sufficient and they will likely, continue requiring aid each year.  Sadly, the marginal dollar here has a long way to go before it begins throwing off recurring value.
  2. The dependent poor require new skills development and/or transportation to another local market where their existing skill can yield a higher return.  Or, they might just continue requiring aid each year.
  3. The entrepreneurial poor.  Many in this group could, with investment, expand their businesses, accumulate wealth, and become truly self-sufficient.  If self-sufficiency is achieved, then they will no longer require aid.

Now, what method will I use to efficiently deploy resources?

Written by thetyson

March 2, 2008 at 2:46 pm

Step #1: Picking your poverty niche — Becoming a Social Entrepreneur

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Poverty is a complex and stratified problem consisting of many inter-linked regional, environmental, cultural and political variables.  When I started digging into it, my small mind was quickly overwhelmed.

Its obvious that the “poverty market” must be narrowed, and just as a business evaluates a market segment before exploring product/market fit, so must a social entrepreneur or altruist evaluate the cycle of poverty and decide which niche to pursue.

Picking a Niche

Picking a niche is hard.  There are so many things you could do, the only thing that matters is that you pick something that you’re truly passionate about (also true in business).

You should narrow the market as much as possible, so use as many factors as possible.  See some examples below:

1.  A people with whom you identify

Can you think of a life experience that you, your friend(s) or you family member(s) may have had that would link you to another less fortunate group of people somewhere in the world?  For example, if you were adopted, you might identify with orphans who are less lucky than you.

If not, then skip to #2.

2.  A region that you feel moved to help

Is there a particular town or region that holds special significance to you?

If so, then research this area’s people and specific problems on Wikipedia, Google News, and the CIA Factbook.

If not, then read the world news at bbc.com/news, Google News or poverty blogs and cross reference countries or regions with the Wikipedia and the CIA Factbook to get more info on the area and its issues.

3.  An organization with a mission you really believe in

Do you, your friends or relatives belong or give money to an organization that helps people in poverty?

If so, find out who they help and where — and use those as your answers for #1 and #2 above.

If not, then you can find some organizations at Charity Navigator.

If you still haven’t found a group/region niche that you feel passionate about, then talk with your friends and get some ideas from them.  Or, if you are of means, travel to a couple impoverished areas near you or elsewhere in the world.

So what’s my niche?

Written by thetyson

March 1, 2008 at 12:26 pm

Good-deferral isn’t that great

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Like most people, I’ve always wanted to help people less fortunate than me…at some point in my life.

I met some legendary Silicon Valley investors while restarting a social networking startup in early 2005.  They invested in or built billion dollar companies, and now they hang out, make angel investments and give back to the community.  It’s the “standard” Silicon Valley model, and it sounds great.

I bought into it 100% with every ounce I had.  Work every minute of every day — okay.  Take up polyphasic sleeping to wring a few more hours out of the day — sure.  Drink the kool aid — yummy, tastes great!

There’s only one problem…most VC-backed startups don’t make it, and even good entrepreneurs strike out.  There are so many things that can go wrong.  So, what happens if you spend your whole life chasing big payouts that never materialize?  In the standard model, you never get to help people.  Life FAIL.

The issue lies in the separation of value creation from helping people.  In the standard model, you have to make a truck-load of cash in step 1 for the privilege of helping people in step 2.

What if you just merged the two?

What if you started a company that creates value by helping people.  That way, the number of people helped scales along with the company’s success.  Even if it eventually fails, at least it has helped some.

In this new model, ROI = monetary returns + people helped.  In two words its: social entrepreneurship.

So that’s the theme of my life right now.  Everything I do is to this end.

  • How can e-commerce help people in Africa?
  • Why learn to code (yikes!) instead of hiring an engineer right away?
  • Why bootstrap a startup when investors are throwing money at you?

Those are subjects of future posts…

Written by thetyson

February 1, 2008 at 8:22 am