‘Doing well by doing good’
A new generation of businesses focuses on community benefits.
In 2002, Matt Bauer’s telecommunications career was at a crossroads. In the wake of Enron’s collapse and more than a trillion dollars in global write-offs, the industry was slogging through what Bauer calls its “darkest period.” He’d had enough and faced a choice: leave the field or change it.
That’s how Reston-based BetterWorld Telecom LLC was born. “If this industry was focused on solving global problems, they could” create a better world, says Bauer, the company’s co-founder and president. “We’re trying to take our entire industry in a new direction.”
But Bauer doesn’t see himself as an activist. “I’m a social entrepreneur,” says Bauer. “We’re mainstream. Business first.”
Just not business as usual. Today, a new generation of social entrepreneurs is spreading a “doing well by doing good” business model into varied Virginia industries, from IT and telecommunications to retail.
Moving beyond traditional corporate giving, social entrepreneurs incorporate community benefits into their definition of success. This model balances profit motives with social and environmental benefits, often referred to as the “triple bottom line.” Yet this is no sacrifice. For these entrepreneurs, doing the right thing has proven a major selling point.
“There is a need and a desire to work with companies that are focused on people, planet and profits,” explains BetterWorld’s chairman and telecom veteran James Kenefick.
BetterWorld’s revenue grew 13 percent during the past three years, topping $2.4 million while and attracting clients like clothing manufacturer Patagonia. The company is committed to being “carbon neutral” (it offsets pollution through certified reforestation projects). BetterWorld also gives 3 percent of its profit to social programs and allows every employee to volunteer one paid-week per year at a local charity. Kenefick and Bauer don’t think the company achieved its growth despite these commitments. They see them as keys to their success.
“I don’t really think we would have made it if we were only about money,” says Bauer. “Our customers are drawn to us because we have a credible mission.”
Kathryn Wiley echoes that sentiment. “I credit all my new business — my brand recognition — to the one-for-one model,” says the owner of Richmond-based Rockin’ Baby.
Before buying the manufacturer of high-end baby slings in 2010, Wiley had been a customer, carrying her own babies in slings to keep them safe and close while leaving her hands free. And for years she’d been stopped by women asking for the brand name. “They were gorgeous,” says Wiley. “Beautiful textiles.” So Wiley saw no need to change the product; just the purpose.
Inspired by Tom’s Shoes’ successful one-for-one donation model, Wiley rebranded the company: For every sling Rockin’ Baby sells, it donates one to a mother in Haiti.
“In the poorer parts of the country, the infant mortality rate is 50 percent,” Wiley explains. “Mothers wake up every day to walk up to two miles to get water. You can’t carry your baby in your arms for two miles.” So they’re left with family, where instead of breast milk they get formula, often made with cholera-infected water. “It’s a tragic cycle,” says Wiley, with a simple fix. “That’s the Rockin’ Baby story.”
It’s a story that has won the company A-list clients (actress Angelina Jolie and singer Gwen Stefani, etc.), national press (Us Weekly magazine recently named Rockin’ Baby slings a “Top Celebrity Pick”) and new accounts (retail giant Nordstrom just signed up). Since rebranding with the one-for-one model, Rockin’ Baby has given away thousands of free slings and boosted sales 200 percent.
University of Virginia alumnus and successful IT consultant Michael Pirron thinks we’ve seen only the tip of this pay-it-forward trend. In 2006, he launched Impact Makers, a Richmond-based, for-profit consulting firm, run by a volunteer board. Impact Makers provides local nonprofits with a set revenue each year, regardless of the company’s profit.
“Our clients hire us because of our capabilities and price,” stresses Pirron. But the company’s giving-back model helps get meetings with curious CEOs, and all things being equal, serves as a tie breaker. The added value of its mission helped Impact Makers grow a stunning 1,030 percent over the past three years, earning the company a spot on Inc. magazine list of the nation’s fastest growing companies.
Given the growing examples of success, Pirron thinks more businesses will choose this path. In 2011 he helped push through legislation in Virginia to create “benefit corporations.” The law lets a company state in its articles of incorporation that its purpose includes creating a general public benefit. Although a benefit corporation still would be expected to earn a financial return for shareholders, profit would not be the overriding concern.
“Social enterprising is moving forward,” Pirron says.
The potential of this trend is limitless, agrees Bauer. “I believe in business, as a lever for creating change,” he says.