In late August, brilliant minds and passionate hearts from around the globe gathered in Cebu, Philippines for the second annual “Geeks on a Beach” conference. engageSPARK founder and CEO, Ravi Agarwal, hosted a panel on social enterprises. Instead of the standard question-and-answer format, Ravi turned the panel into an “Agree or Disagree” game show. He posed controversial statements about #socent topics to four social enterprise frontliners, asked who among them agreed or disagreed, and asked them to explain why. Sometimes Ravi or the audience jumped in as well.
Check out their (paraphrased) answers, and let us know if you agree or disagree!
What is a social enterprise (#socent), anyway? Ravi knew that topic alone could take up the whole panel time, so he pragmatically gave a Wikipedia definition and moved on: A social enterprise is an organization that applies commercial strategies to maximize improvements in human and environmental well-being, rather than maximizing profits for external shareholders.
The Statements: Agree or Disagree?
- Founders with a non-profit background have an advantage over founders with a commercial background.
Badri’s perspective: A non-profit background gives one advantage: the understanding of customer needs. They’ve already built trust and connections with the communities of need.
Ibba’s perspective: I started out as an entrepreneur. And I started hanging out in some of these communities, learning about them, and thought: I can do something to help here. But I believe in a balance. About 50% of my team is involved in research and our office is right down the block from the Sari-Sari stores we serve.
Richard’s perspective: To have a cutthroat, go and get it attitude, there is something to be said for coming from a for-profit background. The tech community especially is very good at product market fit, no matter where their customer base is on the socioeconomic pyramid.
- Only the very rich can afford to give back. Only the very, very rich can afford to create a Tech-Enabled Social Enterprise.
Paul’s perspective: Only the very rich can afford to give back, but they don’t, especially in the Philippines.
Ibba’s perspective: In the Philippines, we’re so used to bad things, and when they happen, people do give. But I think for the average person it is impossible to create a social enterprise. I think you need access to capital and access to networks. And there are a lot of those things out there, but you need access.
Ravi’s perspective: When I was volunteering in Africa, I met a ton of local, social entrepreneurs. The ecosystem got started at first with the very wealthy and some foreigners, but after that initial investment, now there are a lot of social enterprises. And they’ve learned the skills needed, like how to raise capital. Most of their funding comes from donors.
- It is OK to generate significant profits from the poor.
Badri’s perspective: If you can, go ahead. Take a market based solution. But it’s very difficult. In most business models, it’s profits through the poor, not from the poor.
Ibba’s perspective: I think you have to think outside the box and take market forces into perspective. If you’re providing a good product at a fair value, that’s good. Taking advantage isn’t good.
Badri again: People would be surprised at how much the poor actually pay for what they get. Consider the cost of broadband width: people who can’t afford it often end up paying more. Interest rates are the same. The poor have higher interest rates.
Paul’s perspective: I’m excited about social enterprises that want to disrupt the businesses that make it expensive to be poor.
- Developers & other staff should take a pay cut to work at a social enterprise.
Paul’s perspective: No, they shouldn’t. You need top talent in order for you to build a world class, scalable organization. You’re going to need to pay for that.
From the audience, Oliver’s perspective: Yes, they should. These are asymmetric markets. It would be impossible for a social enterprise to pay someone who was working on Wall Street the same pay he was getting. You have to consider that there are decreasing marginal returns on happiness. I think a pay cut can make sense and still be able to attract the top talent out there.
Ibba’s perspective: We “should” get that fair market value, but we don’t! [Laughs.] It’s a startup. You work your butt off: long hours and little pay.
Richard’s perspective: One of the most important things we’ve found in our recruiting is that the answer to this question matters: “do you want to change the world?” Social enterprises offer a different value proposition to their team members.
From the audience, JP’s perspective: I think if you’re working for a social enterprise, you should be paid even more. If we’re saying start up rules apply, that means ten to twelve hour days, six or seven days a week. And in a typical startup, you own part of the company, so you’re working to build something with the potential to earn a lot of money. In the case of a social enterprise, you don’t have that potential payout at the end of the day, so you should be paid even more for those hard, long startup hours.
Four more controversial statements the panel didn’t have time to discuss.
- It is difficult for a tech entrepreneur to scale and succeed by catering only to the under-served.
- Investors should hold a social enterprise accountable for its impact, not just revenues & profits.
- Can social impact be measured monetarily?
- A Social Enterprise should not take funding from a traditional VC.
Finally, the panelists spoke on a topic close to the hearts of those of us living in the Philippines:
- What is needed to build the Philippines into a Global Hub for Tech-Enabled Social Enterprises?
So what do you think: agree or disagree? What are some other hot button questions in the social enterprise world right now?