All posts by Kevin Owyang

I accept white privilege

The hidden danger of saying “I accept white privilege”

I was at Seattle Poetry Slam last night. A slam isn’t a poetry reading, it’s a live performance of spoken word combining the best of alliteration, syncopation, meter, and emotion to shed light on truths we know but don’t hear.

In “Death of the Central District”, Ela Barton spoke of how gentrification forced people out. She spoke of friends forced to move too far for them to be friends anymore. And she spoke of a posse of 15 white people in the street, streets that used to be places you wouldn’t allow your kids to go to after 6 PM, in skinny shorts running “like they run our streets.”

It seems white privilege is the latest hot topic every liberal proudly rushes to admit exists. But if white privilege exists, if institutionalized racism exists, that means people of color who you see, are resilient. Somehow they found a way to stick around despite every institution and economic force synchronizing to move them out of the way for centuries. They mastered living resilient lives. They stuck around and wove a path that let them rise to take the stage and be visible in organizations.

Today scientist tout resilience as the solution to our communities and the path forward for sustainable ecosystems. They study the numbers and statistics and draw inferences from plants, insects, and monkeys living in rain forests and other exotic places. And they gleaned insights from these special places where plants and tiny creatures wove a path to do amazing things.

It’d seem that building resilient communities, that can survive climate threats, will require leadership with experience beyond book learning from plants and animals thousands of miles away. It will require leaders who know how to live resilient lives.

And there in lies the danger, we don’t have a common lexicon for this.   And that’s why I help organize events like Resilience at the Crossroads of Race and Climate Justice featuring Jacqueline Patterson, NAACP National Director of Environmental and Climate Justice.

Her choice was make impact or be hurt. Why are you angry?

Somaly Mam said she was trafficked into a brothel as a young girl in Cambodia. Then she escaped, and helping others came to run a couple of organizations in Cambodia that battled forced prostitution. She wrote an autobiography, was feted at the State Department and Kennedy Center, and celebrated by journalists, including the New York Times

But then Newsweek, after previously celebrating Somaly Mam, suggested recently that her back story might have been faked. And a parallel accusation suggests Long Pross, a young woman who had worked with Somaly Mam, concocted her story about losing an eye to a violent brothel manager. Newsweek says she lost the eye naturally. Both Somaly Mam and Long Pross stick by their stories.

The sex trafficking situation improved in Cambodia over the years, and New York Times writer, Nicholas Kristof believes Somaly deserves some credit for that (along with State Department pressure and many other factors). But he notes that simply doing good work doesn’t give anyone the right to embellish their backstory.

And while Kristoff highlights that truth is paramount, it’s significant that 21 million people worldwide are subjected to forced labor, including forced prostitution, according to the International Labor Organization.

So while sorting out the facts will take time, he now has some regrets about writing about her and wonders if the same is true of The Washington Post, CNN, Time and other news organizations. Yet he aspires that people will be as diligent in covering the scandal that is human trafficking as they may be in following the scandal of false or embellished backstories.


Photo licensed under Creative Commons from Gideon Wright on flickr

The CEO who used soup to stave hunger for profit.

A corporation has a single core obligation: to make money. But some companies are signing a deal, promising to create not only profit but also a tangible benefit to society and the environment.

In the tiny town of Gilsum, N.H., you’ll find the headquarters of W.S. Badger Co. Inc. The company makes all-natural cosmetics marketed under the name Badger Balm.

“Early on, I started making soup on Friday. And I loved what happened to the company, seeing everybody sit down at the same time,” CEO Bill Whyte says. That sense of togetherness extends to the company’s 70 employees today and that seems to pay off for the business. Badger has doubled in five years, expanding its market to 26 countries, and they’re a good example of what’s called a benefit corporation. This is a type of company certified as being motivated by more than just the hunger for profit.

Think of it this way: USDA certifies organic foods, and Good Housekeeping puts its seal of approval on quality products, like washing machines and skillets. And since 2006, a nonprofit organization called B Lab has been certifying corporations it deems to be concerned about their communities and the environment.

In 27 states, legislatures have created a legal status for benefit corporations. The bill in New Hampshire originated with Badger.

So why would a company want a new law? It’s extra work, and there are no tax breaks. Tim Frick from MightyBytes, a tech company in Chicago, says being a benefit corporation is “being part of a larger global movement of making sure that business is being used as a force for good and not for evil.”

Erik Trojian, the director of policy, says B Lab measures just about everything the company does: “Supply chain, their interaction with the community, [and] the environment.” But he adds it’s also a way to “bake your morals and your missions into the DNA of your company.”


Photo licensed under Creative Commons from Rian Castillo on flickr


They invested altruistically. And Surprise! They still made as much money.

Foundations are finding that impact investing is more than just a nice idea, it’s actually financially prudent. That’s based on hard data from a $10 million foundation who decided to make the move to 100% impact.

Over a seven-year period from 2006- 2012, KL Felicitas (KLF) Foundation moved to 85%+ of assets allocated to impact from 2%. And they still achieved index-competitive, risk-adjusted returns. Why did it work?

Positive impacts generated by an impact portfolio exist in several forms: in addition to producing positive social or environmental benefits, an impact investment strategy can result in advantages. One is impact alpha. That happens when market inefficiencies create opportunity to capitalize on long-term social and environmental trends.

Another is diversification. By investing to improve social and environmental conditions at local, regional and global levels, impact investments can position investors for less- correlated market exposures.

But is the market big enough? The company’s in KLF’s portfolio represent a whopping $37.2 billion in assets. And efforts to size the industry have resulted in estimates ranging from $400 billion to over $1 trillion.


Photo licensed under Creative Commons from darkday on flickr

You think charity is awesome. Here’s why he thinks that’s a problem.

Charly Kleissner believes impact investing is ready to move beyond version 1.0. How? By filling in where charity fails. And he thinks impact portfolios are poised to reach $6 billion in impact portfolios in the next 2-3 years.

Kleissner and his wife Lisa co-founded the KL Felicitas Foundation to support social entrepreneurs around the world and to redefine the purpose of investing by working directly with other like-minded investors.

“Lisa and I were some of the first to go to 100% impact investing across all asset classes – as opposed to carving out impact investing as a small and separate asset class, which is what most people do. And the key is that our investments have been competitive compared to industry standard benchmarks within those asset classes.”

At the same time, Kleissner believes in disrupting the status quo and the top-down global approach used at the largest NGOs. “Most big development and big philanthropy fails. I think the best approaches to solving social problems are ones that respect a region’s unique problems and identity and autonomy while intelligently incorporating global resources and technology.”

To that end, he highlights the importance of challenging long-held, personal beliefs. “Social transformation begins with personal transformation. Unless the CEOs of multinational companies change their own consciousness and awareness then we’re not going to get very far.” “It often means you need to step away a bit, including from your normal peer circles.”

For those who think that’s too risky and out-of-the box, he says. “As for the risk, you can turn the question around: what is the risk of not moving in this direction? We have to be thinking long term. And even the least socially concerned investor knows the benefits of hedging – for example toward clean energy – because at some point a collapse in the status quo is inevitable.”


Photo licensed under Creative Commons from Klearchos Kapoutsis on flickr

If you’re skeptical about measuring impact investing, you have this man to thank.

There is a great deal of debate on how to measure social impact.   More simply its difficult to assess social change. It takes money, time, and creativity.

Today there are over 150 different tools and resources for assessing impact. But the science of measuring impact dates back to 1957, when one man, Donald Campbell, published Factors Relevant to the Validity of Experiments in Social Settings. This book introduced concepts that are now critically important components of social science methodology.  Basically, if Campbell didn’t question whether social impact was valid, we might not have good measurement today.

Over fifty years later Tools and Resources for Assessing Social Impact (TRASI) counts over 150 approaches to measuring the impact of social programs and investments. TRASI is a project of the Foundation Center, developed in partnership with McKinsey & Co. and with input from experts in the field. The assessment approaches in TRASI were developed by a range of organizations, including social investors, foundations, NGOs, and microfinance institutions.

But just like accounting, measuring social impact is subject to abuse by those who would manipulate the rules for individual gain. What’s more important, reports McKinsey, is a process built upon 10 core beliefs designed to be self reinforcing. And they’ve designed a toolkit to help impact investors and social investors make sure they can trust the process, even though managers will always look for ways to cheat.


Photo licensed under Creative Commons from walkadog on flickr


Facing flaccid innovation, they discovered this “doctor’s” antidote leads to never-ending drive.

A health care provider succeeds when other’s couldn’t, doing the impossible. Located in Nepal, where average income is US$150 and the average patient walks 2.5 hours to receive care, Possible discovered the solution wasn’t money alone. The secret was inspiring the community in an unrelenting pursuit of remarkable results.

“It’s critical that you draw a line in the sand and express who you are and who you aren’t with complete transparency. Otherwise, you’re going to end up with a deluded set of partners or employees who waste your time.” So they created a Culture Code. And it’s been so successful that NGOs, donors, and corporations are learning it. For them culture is strategy.

Their unrelenting focus on relationship, with culture at the center, leads to different twists on common principles, like innovation and design. “We tend to underestimate users’ appreciation for great design — whether it’s visual, product or interaction design,” Arnoldy says. “What we’ve seen consistently, whether people are rich or poor, no matter where they are from, they have an ingrained sense of what makes a good product.”

So their mantra is “design for dignity”. And that’s led to their success at outstanding innovation.


Photo licensed under Creative Commons from walkadog on flickr

This Master of the Universe traded power for Impact Investing. And then it saved his ass.

Ron Cordes used to manage big money, about $9 billion for AssetMark. He sold that business and now big money managers turn to him for advice on impact investing. And there’s a good reason, impact investing might possibly have been the diversification strategy that saved his butt.

In 2008, his foundation had 20 percent of its portfolio in microfinance and other impact-driven debt and equity vehicles. And while mainstream investments in global banks with heavy mortgage investments took a big hit, small borrowers paid off their loans, 100 percent plus accrued interest.

That was his wake-up call, ‘Here’s a totally uncorrelated asset class that in the worst financial crisis in my lifetime was the only thing I had invested in that was immune to the crisis.’”

Today, around 40% of the Cordes Foundation’s approx. $11 million in assets is in impact investments, names like MicroVest Holdings, Bridge International Academies, and Sarona Asset Management.

And what about returns? On the equity side, he’s expecting returns of 10-12 percent. “But I frankly think I’m going to be pleasantly surprised on the upside,” he says.


Photo licensed under Creative Commons from jdhancock on flickr

Investors worry impact funds will waver. So this is how they keep them honest.

Impact funds strive for both good return and high impact.  But how do you know a fund is doing a good job?

Social Performance Based Success Fees are a twist on carried interest. Typically, once a fund achieves its pre-determined hurdle rate, the fund manager receives a portion of the profits over that goal, usually around 20%. This is called carried interest.

But at Vox Capital, “If we do not reach the minimum expected social impact level, our team is entitled to only half of the carry. At the same time, if the financial return is below its target, we are not entitled to any success fee, regardless of our social impact results.”  Vox measure Impact using Global Impact Investing Ratings System (GIIRS)

Insitor Management, is also held accountable. But instead of measuring impact over the entire portfolio, they have different thresholds for each investment.

These are some of the findings of a report summarizing 30+ interviews on measuring impact, from big impact investors like Calvert Foundation and Acumen Fund, to small organizations with less than 15 employees.


Photo licensed under Creative Commons from uwdigicollec on flickr

These companies mesmerized VCs into feeding the hungry. Here’s what they did.

What’s the best way to reduce hunger in India?  A survey of 50 companies backed by 10 impact focused venture investors, ranging from small to $250 million, reveals 5 important themes for companies helping farmers, food distributors, and others in the agricultural industry.

Download all the details.

These themes are, 1) improving productivity of inputs, like seeds, tools, and irrigation equipment, 2) improving IT to report on weather, market conditions, and crop conditions, 3) improved processing that allows farmers to upgrade their products and get paid better, 4) cloud-based supply chain management tools that help farmers and NGOs more easily access better markets and 5) end-to-end integration.


Photo licensed under Creative Commons from vinothchandar on flickr