As more and more social entrepreneurs launch new ventures to address social and environmental challenges, it has become increasingly important to understand the factors that have allowed a select few social start-ups to scale up rapidly.
While many social ventures have impressive ambitions and good business plans, the unfortunate truth is that the overwhelming majority do not become self-sustaining and never grow much beyond their original size.
What is it that distinguishes the few social enterprises that expand into large organizations and become financially self-sustaining?
To answer that question, we conducted systemic interviews with the leaders of eight highly successful social ventures that were either founded by alumni of Berkeley-Haas or were finalists in the annual Berkeley-Haas Global Social Venture Competition.
In these interviews, three driving factors stood out as critical to early success. The first two may not come as a surprise: raising sufficient financial capital and developing solid supply and distribution channels. The third element was more unexpected: media attention, which amplified the other two factors.
Although research into the scalability of social enterprises has increased in recent years, very little attention has gone to the role of media in the early expansion of SE’s. That role includes raising brand awareness, establishing an organization’s credibility, bringing visibility to specific social issues, and strengthening relationships with investors and mainstream corporate partners.
In the early years, most of the social entrepreneurs we interviewed said that becoming a “media darling” was key to reaching take-off velocity. And, if well timed, media attention crystalized commitments from funders and helped the SE’s build their supply chains. Equally important, however, many social entrepreneurs said that the media focus needed to shift to more of a back-burner effort as their organizations evolved and as they put a higher priority on executing their operational plans.
These sentiments were echoed by Ned Tozun, founder of d.light, and one of Forbes’ top 30 social entrepreneurs. “We got a ton of attention pretty early on,” he told us. “It was tremendously beneficial because it gave us a lot of credibility with distributors, with manufacturing partners, and to some degree with investors. But, at the end of the day, you have to build a solid organization that delivers stuff.”
Kiva, which today is a thriving microfinance non-profit, received a flood of early funders due to its exposure on national television, in part due to the Nobel Peace Prize being awarded to Muhammad Yunus, the microfinance pioneer who founded Grameen Bank. Kiva’s first wave of attention included coverage on PBS’s Frontline. The true break-though, however, came after being featured on the Oprah Winfrey Show. After that broadcast, traffic on Kiva’s website became so high that its servers crashed from the rush of people eager to make micro-loans to low-income people with business ambitions in developing nations.
As Kiva became more established, the role of media lessened in importance. The emphasis shifted to other barriers to scale, such as setting up reputable microfinance institutions to manage their funded entrepreneurs in distant parts of the globe. But without the early impact of media in establishing Kiva’s brand, it is not clear the organization would have become the most well-known U.S.-based microlending platform. Premal Shah and Matthew Flannery were named Fortune magazine’s “Top 40 under 40″ and were designated as Skoll Social Entrepreneurs in 2008.
It was a similar story with Back to the Roots (BTTR), founded by Haas undergraduates Nikhil Arora and Alejandro Velez. These entrepreneurs attribute much of their organization’s early growth to the extensive media coverage that it received from the Wall Street Journal and on television programs that ranged from The Martha Stewart Show and The Rachael Ray Show to NBC’s Today and the CBS Evening News.
In BTTR’s particular case, Alejandro Velez was even featured on the reality show, The Bachelorette. Media exposure was instrumental in BTTR’s ability to scale to its level today, with wide distribution of its mushroom in a box and its fish tank products through Whole Foods and Costco. The media attention allowed it to connect with millions of consumers almost overnight, something that would have otherwise been almost unthinkable, and it dramatically raised public awareness about the organization, its mission and its brand. These co-founders were also recognized by Business Week’s Top 25 Social Entrepreneurs and Inc. magazine’s 30 Under 30.
Paul Rice of Fair Trade USA shared that media coverage from national news organizations played a major role in developing the Fair Trade label as a brand. At the time of Fair Trade USA’s launch, there was quite a bit of media attention about the plight of coffee farmers, who were unable to earn a substance living because of the worldwide drop in wholesale coffee prices. Media outlets aggressively covered this issue, putting pressure on the larger coffee retailers to find a solution. With mainstream news organizations publicizing the need for change in the coffee supply chain, Rice’s Fair Trade USA offered a unique solution and became a natural part of the story.
Fair Trade USA soon became financially self-sustaining and expanded the Fair Trade certification program and label across a wide array of other products. Rice also revealed that media coverage provided important indirect benefits by generating favorable publicity for Fair Trade USA’s major organizational partners, such as Dunkin’ Donuts and Whole Foods, that sold Fair Trade Certified products.
“We quickly realized that if we could get ourselves into the press, we could also get our partners in the press… which is big time,” Rice told us. That favorable publicity increased the attraction for other corporations to partner with Fair Trade USA. Similarly, Fair Trade USA benefited from ongoing media campaigns by its larger partners. Keurig’s Green Mountain’s “Great Coffee, Good Vibes, Choose Fair Trade” campaign features the country singing star Kelly Clarkson. Rice himself was named Social Capitalist of the Year for four consecutive years by Fast Company, from 2005 to 2008, in addition to numerous other awards.
Media attention often creates the perception that start-up social enterprises are larger than they actually are. This provides them with enhanced credibility in the marketplace, with distribution partners and retailers as well as consumer and investors.
Although media attention may not seem like a driving factor to many social entrepreneurs, having a media plan and being media savvy have clearly been central to the early growth at many of the most successful social enterprises. In today’s heightened focus on social media, the amplification effects of public attention are more pronounced than ever.
Given that most social start-ups struggle with raising capital, attracting public attention to the mission of the organization can be pivotal to scaling up, allowing them to rise to a level that ensures enduring and far-reaching impact.