Professional feedback for precarious entrepreneurs

[matthias]

I re-discovered authentic writing. So no, I’m not going to tell you a shiny social entrepreneur story here. Things are not looking particularly shiny. This is a “precarious social entrepreneur” story …

Well, at least I had a great time at Social Innovation Academy 2013 in Amsterdam. Because of somehow reaching semifinals in the European Social Innovation Competition 2013. (See below for some pictures.)

Now here’s what it is like to be a precarious social innovator. Working on your innovation needs investment and creativity, and both require a surplus of resources. While precarity is all about lacking that surplus: your “success” is little more than bare survival even when you try really hard. Precarity is also about uncertainty, while working on an innovation needs a constant supply of work to arrive anywhere. So I discovered that being a precarious social entrepreneur simply does not work out: it’s a long story of achieving nothing great. For me personally this means currently that I’d have to work on (1) a crowd investment campaign, (2) applications for other funds and support, incl. the above competition, (3) our core network barter algorithm and more, but instead could do barely more during the last months than keeping myself financially afloat, inspite of minimal running costs.

So, there’s really a place for funding citizen-driven innovation, as done through the European Social Innovation Competition. However, it’s done with far too low volume. 60k EUR in prize money for 605 entries? C’m on, srsly? And yes, I know there are more funds from other sources, but these are generally inaccessible to citizen entrepreneurs or anybody else not affiliated with an organization of the establishment. Let’s take it this way: if you only fund the establishment to do social innovation, you don’t let any new players enter this field, and inherently reproduce the division of society into “established” and “precarious” groups among social innovators themselves. One of the very things that social innovation wants to overcome.

And yes, I understand the argument that most of our social innovation ideas are not good enough yet to be funded. This is even true. However: the innovators themselves are there already, and that’s the main ingredient. They bring passion, creativity and the willingness to learn. And many citizen social entrepreneurs also identified a problem correctly, as they innovate to solve something that causes their own precarity or exclusion. So, investing some consulting here to help us refine and polish our ideas is something with really promising ROI opportunities (in social terms, of course). Put the other way round, many social innovations from citizens will not become solutions to their problems simply because nobody tells their innovators how to do that …

Social Innovation Academy in Amsterdam was a good first take on this, and I commend that the organizers realized how important it is to provide consulting expertise to citizen innovators. However, I also want to propose some changes, because this type of social innovator support was still clinging to establishment’s ways of doing stuff. And for that reason, it was inefficient. Only 30 out of 605 teams could receive some social innovation counselling, while the rest (as far as I know) got no feedback for their idea. And for the 30 of us, it was for a good part a “school type” experience, though the organizers from NESTA, Kennisland and European Commission tried hard to be personally accessible. Yet still, the program during these two days was either listening to presentations (interesting without a doubt, but there’s similar stuff on YouTube) or working with our peers (who lack the same crucial expertise). So what I enjoyed most was a small group session, each group with one of the instructors, where we could get deeper-going feedback on our ideas and their presentation. We need more of this!

So how about this alternative way to organize social innovation consulting: European Commission opening up a web space that offers a permanent consultation space for social innovation. Or if tied to a competition, for everybody who entered the competition, and as long as it runs. The same thing that frag-einen-anwalt.de is in Germany for (paid) legal advice, but here (cost-free) for social innovation and social entrepreneurship. Submit your idea, get detailed feedback. As easy as that. All ideas and answers would be public, and open content, in return for being cost-free. Even better, this Q&A space could be integrated where the buzz is, where grassroots social innovators already gather. (We could easily make room here on edgeryders.eu for that ) What I look for is not feedback for a ninety-second pitch or talking to a subject-matter expert in a five-minute coffee break, but for the very same expert to have 2-4 hours for my idea, to understand it, research a bit, then giving the feedback and allowing me to discuss potential improvements.

What the Social Innovation Academy taught me was the value of expertise: there’s a lot to learn from funders, innovation policy professionals and serial social entrepreneurs, a lot that you simply can’t learn from us peers who are still stumbling in the dark (or alternatively, are just not in the meritocratic position to talk somebody off a bad idea). Economy App itself was born when we got a one-page expert feedback from an (unsuccessful) submission of another idea to a German business idea competition. They basically told us, the compensation scheme in our proposed small business support network was too risky and legally too complex for contributors. In the following half an hour, we developed the way more ingenious network barter algorithm that is at the core of Economy App. But we could not have given that feedback to ourselves, we needed an expert.

These experts seem to hide in all kinds of think tanks and other established structures. It’s a question of accessibility that, when addressed, empowers the social innovator citizen more than a cash prize.

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Image credits: Photos were taken by Muryani Kasdani and kindly provided under CC-BY-SA 2.0 licence within a set of 40 images on flickr.com. The below images are this, this and this.

[alberto]

Pitches are sooo last century

Thanks for this thoughtful post, Matthias. I find it refreshing: in fact, in the past two years I have been getting rather tired of “speed dating” and “elevator pitches”. If you can explain an idea in one sentence… it is probably because I have heard it before. Some stuff is complex and irredicible, yet valuable and novel.

While we are at it, I am not so sure the “pitch” concept is all that relevant to social innovation. Do we really need to sell ideas on the fly? Is this what the world looks like: a solitary (and precarious) social entrepreneur polishing a pitch to perfection, then delivering it in 90 seconds, then moving on to execution and the star-struck funder writes the cheque? I should think there is merit in taking apart ideas publicly, turning them around, taking a step back…

I will do my best to get my fellow judges and our friends at NESTA, Kennisland and the Commission to read this post. But… how’s your project coming along?

[james]

Stop Pitching. Start Bootstrapping

Increasingly I am becoming fed up of the waste of time and energy involved in the social entrepreneur “pitching” model. Pitching, either to VCs or to investors, or to grant-makers, can dissipate valuable time and energy. Competitions, often led by public-sector organisations, are the same thing in disguise. These processes leave you out of control of the process, waiting, hoping, that someone else will give the green light to your idea.

Here’s a radical thought: give yourself the green light. Start. Now.

But of course - some social innovation ideas simply REQUIRE a significant capital investment to get started. The answer? Change your idea. This may mean a wholesale redesign - in the case, for example, of wanting to set up a community steelworks, unfortunately, you need a steelworks. These things are expensive, and they aren’t susceptible to cottage industry production. In that case, junk the idea and get another one. A community clothing bank, or even community steel recycling, may be much more feasible.

But it may just mean adjusting the idea - and thinking about development over time, rather than “full on, right from the start”. Even better, by thinking like this it enables the nascent idea to build capabilities and capacities, so as things get rolling, you actually know how to deliver at a level only just below the scale you’re asked to deliver at now.

Many social enterprise ideas ARE susceptible to bootstrapping. Is there a way that, on a small scale, your idea can generate a small income this week? Maybe just a handful of Euros? Okay, with that reinvested, can it generate a few more Euros next week? And the week after a few more? This is bootstrapping - pulling your idea up by its own bootstraps.

In a time of crisis, when risk-taking investment (either public or private) is virtually non-existent, or (possibly worse) comes with hampering strings attached, this is the only way. Crowdfunding, which in these cases is often simply “pre-ordering”, is a great way to unlock this. Some friends of ours raised £72000 IN THREE DAYS through Kickstarter - essentially what they did was to cut out the funder, cut out the VC, and head direct for their future customers.

We have to start looking for early income generation to move forward. And this, it seems to me, is what distinguishes social entrepreneurship from the old model of grant funding (and its bastard child: delivering public services outsourced to the voluntary sector).

So, what if your model is not designed to make income? In that case, it’s NOT A SOCIAL ENTERPRISE IDEA. It may be very laudable, and may well be very effective - but it’s not the same thing.

Summary: if we are going to pitch, then it should be pitching to customers - not pitching to third parties who have a strange (often exploitative) relationship with the value networks developed.

[alberto]

Rings so true

James, your mileage as a social entrepreneur and hacker is apparent in your comment. I am not as experienced as you are, but, for what it’s worth, it rings totally true to me. I have seen the best minds of my generation (well, the one after mine actually) waste their best energies crafting 90 seconds pitches and being led by the nose by funders and VCs – bold in their narrative, not as much when it’s time to write the cheque and move on.

I am starting to see Edgeryders itself as a potential social enterprise – you can be sure that I will keep your words in mind. And that we will be in touch, my friend.

[dottavi]

Scalability Vs Sustainability?

Long story short: agree. Don’t believe in hype, just go and do. Long version: there’s a debate in the startup scene, where the search for funds is a fundamental, often crucial option. Of course, considering the funding as the main goal is a total mistake - it’s only the beginning, a mean to an end. As somebody said: “Build a business, not a product”. But, at the same time, it’s often an important choice if you wanna have a broad scope and build for scalability - as opposite to “build for sustainability” that means go for the revenue in the short term. We at http://www.blomming.com are an example of this. We are a platform that helps people to create an e-commerce on their existing environments - blogs, websites, facebook pages. If you have a business, bring it online selling to your community. Are we in the Social Innovation space? Not exactly. We consider ourself a platform apt (also) for social innovation projects. But we’re a platform, so we had to put the basis for Scalability. We won’t be able to sustain ourselves for a long time.

So what? So, it really depends on the kind of business you’re in. Need huge numbers in order to make your plan work? Then you’ll need funding. Can you make few dollars from the first 1.000 customers? Then your model is proven and you can try to go for sustainability.

Two funny notes: Douglas Rushkoff (Cyberia, Program Or Be Programmed) made a fantastic speech a couple years ago againt scalability and in favour of sustainability (“scale what? scale this, mf!!!” :), here: http://www.infoservi.it/douglas-rushkoff-program-or-be-programmed-video/6611. And, actually, we bootstrapped too, at Blomming - even if we went for funding. Risky but, until now, rewarding

Best!

[sigaloff]

support for citizen social entrepreneurs

Hi Matthias,

A thought provoking blog. I agree with many of your arguments and definilty was the person doing its best to be accessible:-) However, within a tight framework, a even tighter budget we tried to set up the most effective learning experience for 30 social innovators. Now the question what social innovators really need to bring their project further is key. In hindsight it struck me that there were three things that many of the particpants lacked: the first was the abitily to clearly explain to others what they were busy with and how the ‘solution’ was a convincing answer to a ‘problem’ or an ambition (hence the pitching exercise- this was not as is suggested above to get finance- it was a way to hear each others stories and to practice telling your own story). The second thing was a lack of expertise on different topics an the third was a network, a community of support. In two days a start was made in adressing these three things. Your idea about a web based help desk sounds wonderful. This would indeed be a great next step. I will definitly pitch it:-)  And mind you… we are definitly talking about the establishment when we talk about the Euroepan Commission. This is why the European Commission rightly so is more and more interested to learn from people like yourself! Keep on blogging.

Greetings from Amsterdam,

Chris (from a think tank which is not so established but a social entreprise itself)

[matthias]

The emergenc(e|y) of the citizen innovator …

Chris, many thanks for your answer and for taking the time to share your conclusion of the workshop. (Also, feel very welcomed at Edgeryders! We’re a not-so-established think tank, too. In fact, we don’t even exist giggle … an inside joke here, ya know.) I completely agree with your evaluation of what we on the workshop were often lacking: communications, some crucial expertise, networks. Now the first (having a hard time to explain ones idea) is in my view just a symptom of the idea being not yet mature. Which is ok for young ideas, but also just the point where professional one-on-one consulting becomes very valuable, as I proposed above.

Also I’m thankful that you see potential in the social innovation web helpdesk idea. Thanks for the openness – if anything comes out of this proposal, I’d be eager to hear it Maybe the whole “citizen innovator” thing is just so different from how social innovation worked before that it just takes time to develop a mutual understanding? (… and yes, I myself learned a lot about the social innovation world when in Amsterdam).

I should try to make that point clearer, about what I see is different with “citizen innovators”: In the European Social Innovation Competition, more than half of the entries (314 of 605) came from the so-called PIGS states [see]. Which proposes, as is also my impression, that social innovation currently is a kind of emergency self-help of citizens. We’re replacing services no longer provided by failing states (forgive the harsh expression, but “austerity” is just an euphemism to me …). The citizen social entrepreneur is quite a desperate person who has no time to lose. Because their society starts to fall apart, and often enough also their own life, so making a business out of all that seems like an ingenious last-resort measure … . This is why I propose that this group needs some hands-on, detailed social innovation consulting to make proper business ideas out of their ideas. Taking all the time and effort to learn more generic techniques and background knowledge for social innovation has its own merit in academia (may I use Social Safari as an example), but it’s not the most efficient use of expert time when dealing with citizen entrepreneurs. We’re on the craftsman level of social innovation instead, and better engage in learning by doing with some expert advice now and then. (And when it’s time to study the background of something, the Internet provides usually enough for us, for cheap.)

What I’d be interested to know: Is there any shift in what a typical social innovator / social entrepreneur is like, from before-crisis compared to now? My statements above are obviously based on little data and a subjective impression from within my small area, so it would be interesting to get a subjective impression and maybe some more data from somebody who’s working in the field way longer

[nadia]

Out of curiosity, what was the Budget for the project?

Hi Chris,

welcome to th Edgeryders family

Im curious, do you have the data on the entire budget for this competition, which organisations were involved in designing and implementing this competition, what they contributed and how the budget was allocated between them? And how much actually ended up being allocated to the participants like Matthias?

I think it would be helpful to have an idea of the logical architecture of these competitions and how priorities are set, no?

[sigaloff]

re:

Nice to be here! No I do not. It were different tenders to different organisations (that of course does not help). I do know that for all involved (design, markteing, the support, the judging, location etc) the budget is very tight. I defiilty do not feel money is being spent easily - on the contrary. This of course does imply that another set up /design could have been better. However, I do feel all involved are open for learning and improvement.

Greetings,

Chris

[alberto]

Learning is part of the process

Absolutely, Chris. In fact, at the London meeting of the judges, we were explicitly asked for recommendations on how to improve the process. This is why I reached out to you guys: Matthias provided, IMHO, feedback that is very useful to share with all the parties involved. I commend you for engaging him.

[nadia]

My startup has 30 days to live

I just came across this post which immediately reminded me of the bootstrapping vs playing the VC game discussion we have got going here. It’s also relevant to a proposal I am preparing for LOTE regarding incubators, accelerators and competitions:

“The day we set foot into the doors of the accelerator, we had a business that DHH would be proud of. Bootstrapped, lean and already providing (in a small way at least) for the needs of my family and that of my co-founder. Over the next 3 months, our initial desire to not raise a seed round was dismissed and we were thoroughly convinced that we had to continue on the VC rocket-ship in order to matter to anyone. My reluctance to do this was met by scoffs and dismissals from many others in the accelerator cohort (most of which have since gone on to fail hard) as well as by the mentors and investors who had offered their time, network and resources to help us succeed. This is where we made the first in a series of many mistakes” http://mystartuphas30daystolive.tumblr.com/

[james]

All part of the “Get Rich Quick” Hype?

Have you pondered how the enterprise accelerator model itself interacts with venture capital? I fear that some advisors may be motivated by their own business interests, rather than the good sense of visions of incremental growth. Accelerators can be tricky, in that many claim a percentage of venture capital invested - without taking on genuine open-ended risk associated with the future of a business. When you raise venture capital investment, they take a percentage and they won’t ever be giving that back. They can win, but they can’t lose. Is it any wonder that accelerators sometimes seek new, creative reasons for you to raise more early investment?

[alberto]

Yes!

Absolutely, James. And more: as Nassim Taleb explained to us with great eloquence, finance makes the most money in the highest variance contexts. VC wants you to win very big or fail, it’s not interested in you making a comfortable living while doing meaningful work. Consequently (and rationally), they prefer for 9 investments to fail and for the 10th to return 2000% (overall return: 20%) than for 10 investments out of 10 to succeed with a 15% return rate (overall return: 15%). This why they love scalability and “winner-takes-it-all” markets on the web.

It is a myth that the interests of VCs and those of entrepreneurs align. It does not pay to lovingly groom a new idea and watch it blossom into a company. What it does pay is squeeze it into a 90 seconds pitch, then see if the next round of investment comes along. If it does, get out; if not, ditch it. They want 9/10ths of you to fail… hardly your best friends, at least in a stochastic sense.