Startups for a Better World

More and more alumni entrepreneurs are launching ventures to serve the greater good.

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The number of Columbia Business School MBAs who want to use their degrees to address economic, social, and environmental challenges is on the rise. About 10 years ago, there were only five or six courses on social enterprise; today, there are more than 20 such electives, and they draw higher-than-average enrollments. More than a third of the student body now participates in extracurricular activities geared toward aspiring social entrepreneurs — up from 10 percent just a decade ago.

“It could be that the dot-com bust followed by the financial crisis has caused a rethinking of priorities and values,” says Ray Fisman, codirector of the School’s Social Enterprise Program. Other experts offer that global connectivity has made the world’s problems more visible. Whatever the reasons, many Columbia graduates are launching ventures — using nonprofit, for-profit, or hybrid business models — that address challenging social problems. “As humanity we are interconnected, and we stand up for the right thing. Businesses need to do that, too,” says Hardika Shah ’09, who tells her story here.

Power to the People

You could say the lightbulb went on over Shayne McQuade’s head during a motorcycle trip through South America and Indonesia in 2003–04. On his adventure, he saw Indonesian coastlines decimated by dynamite fishing and forests where “chainsaws [were] chopping down amazing trees,” he says. “I realized I felt passionate about environmental issues. The challenge was, what was I going to do about it? I had to find a way in.” McQuade ’94 remembers carrying around a portable solar cell phone charger, an unwieldy “big plastic thing” he rarely bothered to use. “I thought, somebody should design a bag with solar panels integrated, but I didn’t think it should be me.”

 

McQuade realized it was when he found himself sketching a prototype for such a bag and launching Voltaic Systems in 2005. “Solar power was interesting because of the environmental imperative that we switch to sustainable power sources,” McQuade says. With electricity production accounting for a third of global climate change emissions in the United States alone, shifting to renewable energy sources may be the only way to preserve the planet.

A backpack with solar panels sewn into the front pocket became the company’s signature product. Voltaic Systems now sells an array of bags — all with solar panels that can charge a smartphone, tablet, or laptop — as well as stand-alone solar panels, batteries, and lights. The bags, which are sold online and in some stores, are especially popular with outdoor enthusiasts as well as with Peace Corps volunteers and healthcare providers working in remote areas.

Now McQuade is turning his attention to bringing solar power to developing countries, where people rely heavily on cell phones but often must travel far and pay fees to charge them. “There are already millions of cell phones in the hands of individuals with no electricity in their homes,” McQuade says. According to the World Bank, more than
 1.2 billion people have no access to electricity.

“Small-scale solar charging offers one of the few economically viable alternatives to power phones, tablets, and lights.”

Increasingly, he says, smartphones and tablets will “open the world up” through access to the Internet — to education, banking, and other vital information. “It will create tremendous opportunity,” McQuade says.

“Electricity is a fundamental component of the technological revolution now under way in the developing world.”

Supplying solar equipment in developing countries where people currently rely heavily on kerosene for light also hearkens back to McQuade’s original environmental goal. “Ten kerosene lighters produce a ton of CO2 — collectively across more than one billion people, that’s a huge impact,” he says.

About half of the company’s sales come from its bags, with other profits from modular solar equipment — panels, batteries, and lights.

Voltaic Systems sells a light that, together with the solar panel and battery, costs under $100. That’s affordable by Western standards but prohibitive in the developing world, so McQuade is working on a prototype for a light that can be sold at an even lower price point, with the battery integrated into the light fixture.

Voltaic Systems also tries to be a good corporate citizen. For example, McQuade and his crew distributed solar lights in New York after Hurricane Sandy in 2012. The company also often does “buy one, give one” programs. Last
 year, Voltaic Systems gave away lights in Malawi and Peru. In the company’s headquarters, a single, space-efficient room in the hip DUMBO neighborhood of Brooklyn, the walls are decorated with poster-sized photographs of the residents of a remote Incan village installing a Voltaic solar-powered light in a hut, and a boy’s smiling face illuminated by a light bulb.

“As technology and power come together over the next decade, we want to contribute whatever we can to be a part of it,” McQuade says.

Selling Unused Stuff Online — for Charities

As New Yorkers and parents of three, Doug Krugman ’93 and Lynn Zises ’96 face a familiar quandary: too much stuff. The average
 US household has $7,000 of unused clothes, electronics, toys, furniture, and other goods, according to NPD Research. “We have so many unused things sitting around,” Zises says. “A dress with the tag still on it, a beautiful vase, a drawer full of old cell phones and cameras. We started thinking: how can we do something good with all this extra stuff?”

 

The answer came in the form of WebThriftStore, the
 site Krugman and Zises launched in 2012 that offers an easy way for people to get rid of unused things — and raise money for causes they care about. While traditional thrift stores support just one organization, WebThriftStore allows donors to channel the proceeds of each sale to a charity of their choice. “The majority of charities don’t want your stuff — they want cash,” Zises says.

“We’re enabling people to consider a whole new source of revenue for charity.”

The process is simple, especially with WebThriftStore’s app, ThriftSnap, which lets donors select a charity and post photos of unused items with their phones. When
 an item is purchased 
on WebThriftStore, the donor uses a prepaid USPS mailing label provided by WebThriftStore to deliver the item (or gives the buyer the option to pick it up in person), the charity gets the money, and the donor receives a donation acknowledgment letter for tax purposes. (Charities pay WebThriftStore a fee to handle sales logistics, including shipping and insurance costs.)

Using social media, marketing materials, and donation drives, WebThriftStore helps participating charities spread the word that there is a way to give back without giving cash; as Zises says, “Not everyone has cash, but everyone has stuff.” Supporters are jumping at the opportunity: sales and donations grew more than 200 percent in 2013. Over the past year, WebThriftStore’s nonprofit partners have grown from eight to more than 30 and include the ASPCA, the Children’s Brain Tumor Foundation, and the American Red Cross. “One of the great things about our model is that charities don’t feel threatened by it,” says Zises. “WebThriftStore supplements their regular fundraising.”

The site recently sold a car for New York Cares and raised more than $15,000 for the nonprofit. WebThriftStore’s model has proven particularly effective for smaller charities: Colonel Potter Cairn Rescue, for example, a rescue organization for cairn terriers, received more than $36,000 from the sale of more than 1,200 items. “We’ve found that some of the smallest organizations generate outsized performance, and the money they’ve raised through WebThriftStore has a meaningful impact on their bottom line,” Krugman says.

The entrepreneurial couple met before business school and previously worked side by side on another startup. Zises also spent time on Capitol Hill and Wall Street, while Krugman, upon graduation with his MBA, jumped straight into tech entrepreneurship, starting a company that made multimedia products. They share an ambitious vision for their latest venture. “We want to make donating goods online a significant way for nonprofits to fundraise — and for people to make a big impact for causes they care about,” Zises says.

Krugman sees great potential in using the same technology and infrastructure that make it so easy to shop online to redistribute billions of dollars worth of unused items. “The emotional payback from doing something good — for a nonprofit, for others, and for the environment — blows away the experience of trying to sell on eBay, Amazon, or Craigslist,” he says. “We want to tap into people’s motivation to do good by providing the opportunity to shift form being an online shopper to an online giver.”

A Safe Birth for Every Mom-to-Be

When you visit Kangu.org, the nonprofit started by Casey Santiago ’06, you may click on a profile of Rupa, in Nepal, who says her “biggest wish for her child is that he or she grow up to be well educated.” Or you might read about Albina, a primary school teacher in Uganda, who lives an hour and a half away from a hospital. The cost for Rupa to have a safe pregnancy and birth is $349; for Albina it’s $276.

 

They are two of the hundreds of “mamas,” as Kangu calls them, who benefit form this organization, which lets donors contribute toward the cost of healthcare for pregnant women in developing countries. The site features photos and profiles of the women, and donors can choose a recipient and send as little as $10 toward her care. Donors are also given the option to make an additional contribution to support Kangu, which almost 80 percent of givers do, says Santiago.

Santiago, who concurrently earned a degree from Columbia’s School of International and Public Affairs, says the seeds for Kangu were planted early in her career. After graduating from Wellesley College, Santiago worked for the consulting firm Deloitte and was 
sent to Africa to work on healthcare projects.

“When I was there, I saw hospitals and nonprofits doing incredible work,” she says, “but they sorely lacked access to capital.”

After finishing business school, she moved to California to work for the San Francisco–based nonprofit Kiva, one of the first and most visible peer-to-peer micro-lending sites. “I saw the potential of technology to create community and raise funds for people overseas,” she says.

The idea for Kangu came together after Santiago had her first baby in 2009 (with Jason Santiago ’06). “Once I was pregnant myself,” Santiago says, “I couldn’t shake the fact that if I had been born somewhere else, I might have had as little as a 1 in 39 chance of surviving my pregnancy.” What particularly haunted her, she adds, was how easily such tragedy can be averted. “Ninety percent of [maternal mortality] can be prevented if you have a clean place to deliver and a trained professional.” After her second child was born, in 2011, Santiago realized it was time to be a “mom-preneur.” With help from former Columbia Business School classmates Tricia Morente ’06 and Maya van Horn ’06, she launched Kangu in early 2013.

The funds Kangu raises go to well-vetted healthcare partners, such as a clinic run by midwives, who ensure women receive the services. Kangu takes a cut of each donation to cover operating costs and also receives donations and grants from individuals, companies, and foundations. To date, the site has funded more than 350 safe births. While Kangu covers prenatal care, delivery, and postpartum care for mothers, plus neonatal care — including six months of immunizations — for babies, Santiago hopes one day to provide healthcare for the latter well into childhood.

Santiago credits her business school experience with introducing her to a vibrant group of people who, like her, were passionate about addressing challenges in developing countries through innovative approaches. “The focus
 of the MBA classes was really on building something that is resilient and grows and has impact,” she says. Santiago served as president of the International Development Club and credits Sandra Navalli, senior director
 of the Social Enterprise Program, with guiding her and her cohort on “how to take what you’re learning in business school and apply it to nontraditional sectors.”

Santiago chose the name Kangu in part to evoke the image of “a kangaroo with a baby in its pouch, when it’s safe and healthy.” Kangu is currently working in Nepal and Uganda, but Santiago’s vision involves expanding into dozens more countries. “We’re a small organization with a big dream, which is that every pregnant woman has a safe birth,” she says.

An Entrepreneurial Path for India’s Have-Nots

In 2003, Hardika Shah ’09 was working for the consulting firm Accenture when she was sent to Hyderabad, India. It was her first time returning to her native country in more than 10 years, and she was shocked by how much had changed. “What I saw was this huge divide, where the challenges for those without education, skills, and jobs were increasing,” she says. “While the ‘India, Inc.’ growth story was getting worldwide attention, the gap was widening between the haves and have-nots.”

 

Now Shah is seeking to bridge that gap with Kinara Capital, the lending firm she launched in Bangalore in 2011. It lends money to small businesses with revenues less than $200,000, catering to entrepreneurs whose endeavors are too large to receive microfinance loans but too small and risky to receive funding from traditional banks — what is often referred to as the “missing middle.” To Shah, the impact of lending money to these businesses is clear: it translates directly into jobs.

“Most of the jobs we create are at the base of the pyramid — unskilled jobs for first-time job seekers — and that’s critical for a country with 500 million people who live below the poverty line,” she says. Even the entrepreneurs who are providing the jobs are often struggling themselves. “Most of our entrepreneurs have not even completed high school,” Shah says.

The idea for Kinara Capital came to Shah on a trip she took to India to “decompress” after earning her MBA. Through her course-work at Columbia Business School and as a mentor in Santa Clara University’s Global Social Benefit Incubator when she was living in California, Shah had heard again and again from Indian entrepreneurs that limited access to capital was the biggest roadblock to success. She couldn’t understand it.

“Microfinance was the buzz word in India,” she recalls. “I’m thinking, ‘Microfinance is growing. Why are these entrepreneurs struggling for capital?’” She spent three months talking to bankers and entrepreneurs about the issue. “I learned that microfinance does not scale to the next level,” she says. “The average microfinance loan in India is less than $200. But small businesses need 10 to 20 times more than that.”

So Shah raised more than $100,000 in seed funding from her Columbia Business School classmates and moved to Bangalore to start Kinara Capital. In Hindi, kinara means “shore,” as in the stretch of land along the ocean; Shah chose the name because she thinks of her firm as “shoring up” small businesses.

The firm lends $2,000 to $20,000 to businesses operated by first-generation entrepreneurs who don’t have collateral in the form of land or property. To mitigate risk, Kinara runs psychological profiles of potential customers to evaluate their willingness and ability to pay and does most of its lending as supply-chain financing. This could involve collecting payments directly from a business’s clients or making buy-back arrangements for equipment manufacturers. For instance, instead of lending directly to an individual franchise owner of a business that installs solar panels on homeowners’ roofs, Kinara will transfer the loan to the franchisor in the form of credit for equipment.

Kinara’s borrowers range from small manufacturers and farmers to artisan groups. Since its launch, the firm had funded more than 400 businesses that together have created more than a thousand new jobs, of which almost one-third went to first-time job seekers — and nearly 20 percent to women. Every job, adds Shah, potentially impacts several more lives. “In India, the average person supports four or five people,” she says.

Shah also points out that 40 percent of India’s GDP depends on small businesses, making them a critical link in the economy. “If you think about those left behind by the education system — how do they get ahead? How do they get a piece of this economic gold story that is ‘India, Inc.’? We have to create a financially inclusive environment where their businesses can grow — their trajectory has got to be entrepreneurial.”