Archive for December, 2010

How Do We Ensure Someone’s Watching Our Back in Chicago?

December 30, 2010

We made it back to our home in Chicago this past Monday from a week in Ohio visiting my in-laws for Christmas. Our wonderful neighbor’s kids not only took care of my son’s fish Percy (thanks, Concetta and Chance!), they also collected our mail and newspapers while we were gone, since I wasn’t quite with-it enough to put them on hold before I left.

Coming back to all those newspapers at once was shocking. One week of the Chicago Tribune equals about 8 inches of dead trees, something I hadn’t realized until I saw them all, stacked up at once like that. And although those 8 inches includes some interesting stories, great recipes and entertaining Doonesbury strips, it is overwhelmingly stuff I don’t want or need to have in writing.

See, I get most of my news from NPR, or from  specialized news outlets like the Chronicle of Philanthropy or Philanthropy News Digest. By the time I read the paper, I’ve heard most of the “hard news” stories somewhere else.

Except that, once a month or so, there’s a story that isn’t anywhere else. It’s a piece of investigative journalism by the reporters at the Chicago Tribune. A sample of the past few years:

  • An expose of the “clout list” used by politicians to get well-connected but potentially unqualified students into the state’s premiere university.
  • Ongoing investigation and reporting on the administration of Rod Blagojevich that was interwoven with the federal investigation that led to the governor’s indictment at the end of 2008.
  • A call for greater oversight of nursing homes after uncovering the deaths of 13 children with disabilities in the care of homes who didn’t, in fact, care for them.

Dozens of Chicago Tribune investigations have resulted in public hearings, new oversight, reforms and even new laws. You can see a watchdog update from August on a bunch of Tribune investigations here.

Truth be told, I don’t read the full text of most of those stories. I read the first few paragraphs. I skim the follow-up articles, check out the graphs. But even if I don’t read them all the way through, I’m so glad they’re being written. I’m glad the Tribune is doing these investigations, and I feel like they’ve got the public interest in mind.

So here’s my conundrum: I want to support the important work of the journalists, the civic watchdogs at the Chicago Tribune, but the 8 inches of dead trees (much of it ads for new and used cars, and I’m not in the market for a car of any kind) is unconscionable for me. I honestly would like to cancel my subscription, except for the fact that those journalists need to get paid, and they need subscriptions to their newspaper to get paid.

A Failed Social Enterprise?

(As a side note, newspapers who rely on subscriptions might be one of the oldest and most important social enterprises around. They provide a critical community service and get paid by the members of the community who value that service. Not the most “cutting edge,” but clearly a social-purpose business whose struggles with sustainability have been well-documented in the last few years.)

What’s the Solution?

But I think members of the community still value this service, they just don’t value the paper it’s printed on. So how do we continue to support real, important, serious journalism but stop getting a few phonebooks worth of needlessly murdered trees every week? I certainly don’t want to put my paper carrier Sid out of a job, but I would love to get paperless journalism of the same caliber as the printed paper.

We need to find a way for real journalists (sorry, blogosphere, blogging and opinion is not the same as actual journalism) to be supported.

I’m struck by a few relevant sentiments:

  • In conversation regarding the limits of the markets to solve social problems, my former fellow Chicagoan Nathaniel Whittemore once used public radio as an example of something that should never move from a donation-based revenue model to an earned revenue strategy (such as from corporate ads) because  it would ruin their independence. Are newspapers so different?
  • Marketing guru Seth Godin once pointed out that newspapers act as if they are in the business of selling (dead) trees. But of course they aren’t, or shouldn’t be.

So what’s the solution? A major foundation who supports newspapers through large grants each year? Hardly, in some ways that is no different from a few big corporate sponsors as it potentially compromises newspapers’ journalistic independence. No, communities need to support newspapers because a diversified funding base is what ensures that the journalists don’t become too dependent on any single one of us for support that they can’t risk our anger or withdrawal.

Maybe the answer is an “online only” subscription. Maybe newspapers need to change their marketing message from “bringing you the news, weather and commentary” (which I can get elsewhere) to “the investigators who have your back and will pursue the public interest without regard to partisan politics.” Maybe newspapers should adopot the same donation model as public radio.

I brought this up to Colonel Tribune, the gentlemanly Twitter representative for the Chicago Tribune, who may or may not be the collective brain child of a group of (highly entertaining) lunatics over at the newspaper. His response, in the required 140 character limit imposed by the Tweity*:

“First, follow #TribNation http://bit.ly/gjjpSy and on [Facebook]: http://on.fb.me/aAsMa3. You’re still our people.”

I was touched by the sentiment (I’m proud to be your people! sniff sniff) and I’ll do both. But I wonder what’s the next step?

Is investigative journalism important to you? Do you get the newspaper? Do you get your news online? What would you be willing to support?

*”Twitter deity.” Too forced? Well, it’s almost midnight. Cut me some slack.

A Letter from Sid

December 22, 2010

Every year around the holidays I get a letter tucked into my newspaper from Sid, the guy who delivers the papers. This year’s letter is so full of heartfelt joy, I just had to share it with you, word for word as he typed it.

Enjoy, and Merry Christmas.

Season’s greetings:

Well, another year has passed. I hope it’s been great for you. For me, it’s been absolutely wonderful. I say that because even though I still face what sometimes seem like insurmountable obstacles, I’m a cancer survivor. Every day, every single moment is a gift I’m grateful for. Every day is another opportunity to learn, to laugh, to love, and to live.

Life can be so strange sometimes, so unpredictable. I just recently discovered that the doctor who treated me for my cancer, the man who saved my life, and gave me a second chance, now has inoperable cancer. He has no more than a few months, perhaps a few weeks to live. How ironic.

Cherish every moment you have. Embrace your loved ones as though you’re seeing them for the last time. It might be. Take a Viagra pill (take two if you need to), and make passionate love. Stand on the corner of the busiest street you can find, and laugh out loud. I mean LOUD, UNCONTROLLABLY, till everyone thinks you’re a nut. Lastly, thank God for this wonderful gift of life.

From the bottom of my heart, thanks for being a great customer. So help me, I mean it sincerely. Happy holidays, and best wishes.

Sid

Is Groupon the Most Successful Social Enterprise Ever?

December 15, 2010

My girlfriend Kim in Connecticut was unfamiliar with Groupon, a fact which left me practically speechless. Here in Chicago, Groupon is being hailed as the company that is “transforming the culture of Chicago,” providing the right environment to cultivate a new boom in start-ups by proving to entrepreneurs that you don’t have to leave Chicago to get funding and support, and proving to investors that you can find great ideas right here in Chicago. Think that’s too much hype? Maybe it’s not enough.

What is Groupon?

It’s a daily deal (not a lame “coupon thing,” geez Kim…) at half-price or better for some awesome thing to do in your city (yes I mean your city, whether that is  San Francisco, Seattle, one of three different neighborhoods in Los Angeles or Albuquerque or my hometown of Dayton, OH or dozens of other smaller cities). The deal only goes into effect if enough people buy it. The number of people who have to buy it is presumably set in cooperation with the company offering the deal, but I’ve never seen a deal NOT reach the minimum.

So consumers get something new at a great price, businesses get a shot at a new customer, and Groupon gets 10-50% of the revenue, depending on whether they promote it or just let people find you. If you are not already getting the daily deal via email, sign up here (seriously, do it here, because I get $10 for every person I referred who subsequently buys a Groupon).

And in case you, like Kim, are unfortunate enough to live someplace other than Chicago, I will also tell you now that Groupon apparently turned down a reported $6 billion offer from Google. That’s a pretty big deal, and signals that they think even bigger things are on the horizon. I believe it. Why? Because I not only buy Groupons, I proselytize about Groupon (see above) and I try to get my friends to buy Groupons with me so we can do things together. Sticky, loyal, repeat customers like me translate to huge revenues and an incredibly valuable business.

What Does Groupon Have to Do With Social Enterprise?

Social enterprise, by my definition, is something that harnesses the power of the markets to bring a new solution to a social problem. In other words, a revenue-generating business that makes the world better. You don’t have to be a for-profit business, as many non-profits have revenue-generating enterprises that support their social mission, but you do have to be making money to meet my definition. So how is Groupon a social enterprise? Well, they clearly have harnessed the power of the markets.

Groupon stats on 12.15.10

According to their web site, over 20,000,000 Groupons have been sold already, over $850,000,000 saved. If the amount saved is conservatively estimated to be 50% on each deal, then the amount saved is roughly equal to the amount spent. So if I’m thinking about this correctly that makes Groupon’s  cut in the range of $85-$450,000,000. Roughly speaking, of course.

And what about the social part? To demonstrate the power of Groupon, let me share with you a few of the Groupons I have purchased:

$40 for a year-long membership to a new museum which I otherwise wouldn't have visited



$30 to take the whole family to this amazing holiday event I would have otherwise dismissed as too expensive

And here are a few others I’ve seen go by but haven’t purchased:

That's 18,790 visits, many of which are likely new patrons

almost 3,000 potential new customers

That last deal, for Irv & Shelly’s Fresh Picks, is particularly interesting to me because they were one of three social enterprises selected to present at the first Chicago Social Venture Forum, organized by Foundation Source and the Chicago Booth School of Business. Here’s the description from Groupon:

“Fresh Picks works closely with local crop producers and purchasers, filling each of its delivery boxes with the highest-quality organic produce it can snatch from the harvest’s catwalks.”

Through Groupon, this small but growing social enterprise that supports and promotes organic farming and seeks to provide healthy produce to Chicago’s urban food deserts, had the opportunity to get almost 3,000 people to try their service. If it’s good, those people become long-term customers.

Like any small business, social enterprises selling consumer goods and services can benefit from the foot traffic that Groupon provides.

Innovation in Friendraising

For nonprofits like art museums, planetariums, ballet companies, orchestras and other performers, Groupon may be more appropriately viewed as a “friendraising” vehicle, rather than a direct fundraising mechanism.  Nonprofits have (theoretically…hopefully?) set their ticket prices with some idea of what revenue they need to support their operations. But for many of these organizations, ticket revenue will never cover their costs, and they will always rely on charitable donations to make up the difference. So selling half-price tickets for seats that would otherwise have been empty (because, let’s face it, the ballet in Des Moines might not be sold out for every performance) is a better way to accomplish your mission than letting those full-price seats go empty.

So Groupon can help deliver “butts in seats” to charitable organizations like museums, architecture foundations, ballet companies, orchestras and the like. These kinds of organizations need to reach people, and the more people they reach the better they are generally considered to have fulfilled their mission. And they usually have excess capacity (that is, empty seats at performances they are giving anyway, or fewer people in the museum than would be allowed by the fire marshal). No excess capacity? No need for Groupon.

One of my favorite examples of creative friendraising through Groupon was a recent offer to “support the public school project of your choice with today’s deal, which lets you boost your charitable donation to DonorsChoose.org by 60% through generous funding by the Pershing Square Foundation.” (Kudos to Pershing Square Foundation for underwriting this innovative experiment to attract new donors to a well-regarded nonprofit).

By combining mainstream offers for sushi, fitness clubs, car services and other popular items with these social-benefit organizations like the Joffrey Ballet, Groupon has helped create a culture of folks for whom supporting nonprofits is just another cool thing to do in their town.

In all, Groupon has enormous influence to direct consumer power toward social enterprises, great nonprofits and small businesses of all kinds. Because of this power to amplify the work of so many other social-benefit organizations, I’d argue that Groupon itself is perhaps the largest, most successful social enterprise to date.

For the Haters

Let’s acknowledge early criticism that Groupon deals brought the wrong kind of customers, those that only wanted the deal and weren’t likely to convert. But let’s also acknowledge that Groupon has responded with a whole suite of merchant services that help small businesses structure their deal in a way that is most likely to be successful, handle the resulting traffic and even provide advice about how to convert Groupon users into long-term customers. I bet Oprah doesn’t offer that kind of support to companies she lists as her favorite things.

There is still a great deal of debate on whether Groupon is a good deal for the businesses. For example, Chicago’s Navy Pier is currently pointing fingers at Groupon for the fact that ticket sales for its Winter Wonderfest attraction are up 12% but revenue is down 8%. This shift resulted from a Groupon offering half price tickets ($9 each) which netted Navy Pier only $4.50 per ticket on 7,500 tickets sold through Groupon instead of the door price of $18 each.  In my view, if Navy Pier couldn’t have predicted this outcome based on some simple math (1/4th the revenue per ticket means we have to sell 4x as many tickets to net the same amount of revenue), they have no one but themselves to blame. It suggests that there are some businesses that are better suited to benefit from Groupon than others, and one-time events are not one of them.

In any case, small businesses with consistent, repeatable products to offer seem like a better fit. Get your Groupon discount the first time, but come back for the fantastic new place you just discovered, paying full retail price, of course.

 

Show Me the Money

December 8, 2010

One night last week, my husband read the book One Hen to our kids at bedtime. It’s a children’s book about a very grown-up topic: the power of banking. More specifically, the power of microfinance loans to provide opportunity for the poorest people in the world to build a business and improve their lives.

One Hen tells the story of a child in Ghana named Kojo whose community pools their money to allow each member in turn to buy something to improve their tiny businesses. The people use their purchase to increase their income and pay the funds back so the next person can borrow and the cycle continues. Kojo’s mother gets her turn with the funds, and in turn she lets him use enough to buy a hen.

With this one hen, Kojo sells enough eggs to pay his mother back and then buy more hens. He eventually pays for his own school fees, then builds a large and successful business. When he’s older, he goes to the city and asks for a loan from the bank to buy an entire farm. Of course, the first banker turns him down, because by traditional banking standards he doesn’t look very creditworthy. But when another banker hears how Kojo has grown his business from that first little hen, he decides to take a chance and Kojo gets his farm. Now he’s supplying not just eggs, but jobs and stability to his community. People that he pays in turn buy goods and services from other community members and so begins a virtuous cycle of economic prosperity for them all.

One Hen is the story of microfinance: How loans that are too small to be worth the time of a commercial bank can be the ones that have the greatest impact on increasing the wealth of poor communities. How people that aren’t “credit-worthy” by traditional standards can still be worthy borrowers. It is in many ways the story of Opportunity International, a pioneer in microfinance that has been championing this work for almost forty years, and which is the nonprofit partner of One Hen. (The real-life inspiration for Kojo sat on the board of Opportunity International for many years and continues to be engaged with the work today.)

Grown-ups talk about rates of return, recycling capital and other fancy terms. But kids relate to other kids, and they especially relate to narrative. So what better way to draw them into the power of microfinance than by telling the stories of other kids?

“Show Me the Money”

Now one woman who was inspired by the book One Hen is creating a documentary to do just that. Show Me the Money will follow kids in the United States, themselves budding entrepreneurs, as they earn money through lemonade stands, bake sales or other micro-businesses and lend it to an entrepreneur in another country.

Then the film will follow the borrower—perhaps a woman in China buying a donkey to transport her goods to market, or a seamstress in Peru who buys a sewing machine to be able to make larger and more expensive items for sale—to show the joys and struggles as they try to build their business.

What a fantastic way to show kids the power they have to positively impact someone else’s life! No lectures, no guilt trips, and no powerless recipients of their handouts. Just the excitement of earning their own money and then putting it to good use, helping another human being halfway around the world move beyond poverty to a life rich with possibility.

Behind the Scenes

Producer Kathleen Ermitage is passionately pursuing the vision for Show Me the Money. As her partner in crime, she has recruited Emmy and Grammy nominee John Scheinfeld, best known as the writer, director and producer of The US vs. John Lennon and the critically-acclaimed Who Is Harry Nilsson?

They have imagined an inspiring and engaging film that humanizes the concept of microfinance to empower young people and show them that they can make a huge difference in someone else’s life. Once young people get drawn in by the film, Kathleen and her team will provide educational resources to teach them financial skills so that they can earn, save, spend and give in their own lives.

Kathleen says, “We aim to celebrate the American spirit of entrepreneurialism and the great power of micro-finance. And we’ve got the perfect director for it—to bring just the right tone to the material. What a great ride! We’ve met fascinating young people. And we will respectfully give them room … watch them make decisions that are very important to them. We’ve already witnessed their wheels turning in terms of how they develop financial skills—and true business savvy. It is an education that occurs inside the classroom … and outside, too.”

Although he is best known for documentaries about the lives of well-known individuals, John Scheinfeld says, “Kathleen’s passion for this project was so infectious and the kids’ stories are so inspiring there was no question—I had to be involved in making this movie.”

Show Me the Money will make the festival circuit, followed by a theatrical run and DVD and TV, but Kathleen will also draw on her background in creating educational media to develop web sites, videos, social media outreach and other tools. Kathleen plans to work closely with financial institutions and individual advisors to distribute the educational content so that kids, once inspired, can have outlet and direction for their energy and enthusiasm.

Kathleen says, “We can generate a great deal of content with a wide range of curriculum applications. The great fun and challenge for us will be to take full advantage of all of the media, distribution channels. Content is flourishing—and we will wrestle it to the ground and into the right formats for our end-users. We’ll have curriculum content flowing concurrently with filming in some cases, nearly real-time.”

A portion of the proceeds will be donated to the film’s nonprofit partners, including One Hen, Inc., the nonprofit that converts Kojo’s story into interactive and classroom resources and Opportunity International,  a global microfinance agency that partners with One Hen. Investors will also have the opportunity to go along with the production to visit the entrepreneurs around the world.

Get Involved

If you are interested in getting involved with Show Me the Money, we’ll be sure to share details as they become available. Kathleen is in the process of pulling together the final financing for the film venture, which includes the educational products. If you are interested in this regard, please contact Kathleen directly at kathleen@steppingstonesmediaproductions.com.

In the meantime, this holiday season consider the gift of the book One Hen and a $10 or $25 Opportunity International gift card for a special young person in your life, maybe a niece or nephew or God child. Read them the story about Kojo and show them how they have the power to give the gift of opportunity to others by going online together to find and fund an entrepreneur through OptInNow.org


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