1.  Agenda –Sexual harassment laws –Social entrepreneurship –Strive video and discussion –Global SE Business Plan Competition

2. Social entrepreneurship  Addressing market failure in social issues Ethics Regulation Law Social ventures Overall social welfare Market-created social welfare

3. “Entrepreneurship” New product/service New method New market New form of organization Risk Combination of resources/resourcefulness (“reach exceeds grasp”) Value creation Entreprendre: v. To undertake; to begin, start (upon), embark upon, set about

4. Social Entrepreneur Agents of change:  Not to be confused with for-profit firms trying to be socially responsible. E. g. Body Shop  Mission to create/sustain social value  New opportunities for pursuit of mission  Innovation, adaptation, and learning  Not limited by resources currently in hand  Accountability to constituencies and outcomes created

5. Social entrepreneurship – why it’s such a big deal  Markets for ideas not necessarily efficient –The case of health insurance coverage 45 million Americans (15% of the population) lack insurance coverage Why is this an untapped market? –The shortage of education and healthcare workers  The search for meaning in work –Senior executives dropping out of the rat race to focus on intrinsically rewarding experiences

6. Social entrepreneurship – why it’s such a big deal  Trends in spending and budgets by the traditional actor: government –Downward pressure on tax rates and the prevalence of tax shelters –Pressures on entitlement spending Social security and Medicare –Other diversions, for instance, defense and homeland security expenditure  Increasing income inequality –Shift to a winner-take-most society

7. Social entrepreneurship – why it’s such a big deal  The paradox of corporate philanthropy –Businessmen are penny-pinchers in their corporate avatars, but can be pretty generous in private life Gates Foundation –Tax breaks Philanthropy is costless when tax-deductible! –Corporate social responsibility Individual philanthropy sidesteps the controversies surrounding corporate philanthropy

8. Social entrepreneurship – why it’s such a big deal  Microfinance –The most challenging of social ventures –One-third of the world’s population lives on a dollar a day –Microfinance involves providing small loans/investment to the world’s poorest; venture capital for those with zero collateral –e.g. Grameen Bank

9. Social entrepreneurship – why it’s such a big deal  Governmental efforts to solve social deficiencies is unlikely to be effective (primary education in the US, for instance) or popular (healthcare). Markets fail when the profit motive is not satisfied.  Hence, social entrepreneurs play a very critical role as a bridge between imperfect markets and controversial government intervention.

10. Important themes  Markets –Competitors –Customers  People/team  Social networks  Timing

11. Strive facts Founded 1984 by Sam Hartwell Three tenets: –Employment is the best solution for the urban poor –“Soft skills” –Confront “baggage” Placement rate: 80% average wage Retention after two years: 75%-80% Cost per placement: $1500

12. Social v. business entrepreneur:  Mission/strategy  Constituents  Competitors  Value creation –B.E.: Customers, investors –S.E.: Donors, subsidies, volunteers, consumers –B.E.: “Market discipline” –S.E.: Imperfect market, imperfect information

13. Discussion 1. What are the distinct challenges faced by Strive compared with for-profit ventures? 2. What criteria would you use to measure Strive’s performance?

14.  Impact  Cost effectiveness  Organizational  Inform public  Accountability “Measurable social impact”

15. Measuring Performance Goals Objectives Mission Objectives: Process, outcome

16. How well is Strive doing?  Goals and objectives  Replication and scaling  Social indicators  Numerical targets

17. How to be a good S. E. Markets within values Mission, not dollars Long term gains, not short-term Profit is desirable, though not essential

18. Consider:  Capital formation and revenue generation  Dead-ended client –Alliances with educational institutions for upgrading skills  Alliances with other S.Es for geographical replication –Strive Seattle is an alliance with Goodwill Room for improvement?