Social Enterprises - Legal Structures

My last social entrepreneurship class was GREAT! Greenblatt basically ran his Structure Lab (part of Criterion Ventures) seminar in class talking about the different legal structures and options social entrepreneurs have when they start their enterprises.

We talked about a number of very cool things, but I'm going to focus this post on the White Dog Cafe.

All entrepreneurs have to have an exit strategy. Even if your exit strategy is death you need to plan for it. We've all heard of the Ben&Jerry story where Unilever's hostile takeover left the owners unable to protect their social mission. How do you avoid that?

Well there aren't many options - but Judy Wicks, the owner of White Dog Cafe, has gifted us all with her brilliant solution. She basically incorporated 2 companies. The first owned all the intellectual property, logo, brand, trademark and the other the physical assets of the company - the kitchen, tables, inventory etc. When it came time to sell she wanted to make sure that the social mission of the White Dog remained in tact and wasn't abused by the new owners. So she basically held on to the brand and sold the rest of the company and the new owners could then license the White Dog Cafe brand from the entity she held. Of course this lowered the value of the company she sold, but she was able to ensure the mission wasn't diluted. If someone wanted to use the White Dog logo, they had to use sustainable produce and be involved in the community - all the values that Judy cherished.

It seems so simple to do, but until Judy no one had designed such a structure.

Now if Ben&Jerry would have kept control of the brand and logo but sold shares of the asset holding company instead they would never have been strong armed by Unilever. But they probably wouldn't have raised as much capital in their IPO either.

There's always trade-offs to be made.

Net Impact

Ok - I have been terrible about keeping this blog updated and I apologize (mainly to myself, because this blog is a way of helping me think about my experiences at Wagner). I would say I promise to do a better job, but with finals in a few weeks I'm not sure I'll be keeping that promise.

Went to the annual Net Impact conference 2 weekends back up in Cornell. The conference is huge - they had 2600 people this year and it was an incredible networking opportunity. Got to see some great people talk about the work and impact they are having and also got to see some not so great panels (don't get me started on Corporate Social Responsibility).

The first day I was a bit disoriented - running across Cornell's humongous campus from one panel to the next in the bitter cold. I didn't know what to expect and I was just a bit lost. So I'd say the first day was a bit of a dud. Even the panels seemed uninteresting.

But the second day was incredible. Attended a case presented by Sustainable Harvest. Very cool company, doing incredible things in the coffee supply chain space. If you're looking for an internship next summer in CA, then I look them up. The final presentation on Emerging Market Investing was probably the best panel of the weekend. We had Grassroots Business Fund, Soros Economic Development Fund and JP Morgan's social investment fund on the panel. Strong NYU contingent in the first 2 rows which was great as well :)

Got some great career advice - bulk up on my finance skills and consider a stint at management consulting as a stepping stone to the social venture capital space. Now I'm torn about what to do with my next summer. Decisions! Decisions! Decisions!

High level take aways -
* Don't run from panel to panel, even if you think you'll miss the next panel. Slow down, talk to people. Create relationships
* Definitely stay for the after parties. We social sector people know how to get our drink on
* Best part of the trip was developing bonds with my fellow NYU students. A weekend away with friends is great bonding

Intentions vs Outcomes?

Do intentions matter?

This was the question we were dealing with Corporate Social Responsibility in the context of social entrepreneurship.

A lot of companies out there really adopt CSR to green wash their brands. This sort of goes against the core ideals of social entrepreneurship - to have social missions at the core of the organizations mission. Examples of Chevron spending millions to advertise their 50000 donation to save some butterfly species exemplifies the greenwashing and spin in todays markets.

So is it social entrepreneurship if one's intentions and motivations are driven by social value?

I can see why you intentions are important. There's this thing with spin and being manipulated that makes you uncomfortable. And then to dilute the promise of social entrepreneurship along with it, just adds to the discomfort.

But how do you ever gauge someones intentions? Unless you're on a first name basis with someone then I don't see how you could know their intentions.

I think outcomes matter more than intentions. Call me results oriented, but if I can achieve my goal through CSR, then I have no issue with labeling it as social enterprise. Specially if this gives corporations motivation to contribute to the solution.