Social Enterprises: The "Silver Bullet"?

As I mentioned in my previous post, I have been deciding what to share in my final post. Should I talk about culture in India? My personal adventures throughout this vast and diverse country? My life in the most cosmopolitan and populous city in India?

I could speak about my experiences but because I know I'm coming back soon (or at least to another emerging market), I've decided to share what I've learned from early-stage social entrepreneurs in India which  is far more interesting... well ,for me at least! So what have I learned?

Focus on doing one thing well: Early-stage entrepreneurs usually have limited resources to get their product or service to market and start gathering feedback and generating revenue.  Entrepreneurs have a choice: do many things poorly or focus on doing one thing (or a few things) well. From my conversations, the entrepreneurs that choose to focus on one thing tend to have a more coherent pitch, vision and plan of action to achieve the vision. As a MBA student, this lesson hits home even more. In business school, you are inundated with opportunities - professionally, socially, and academically. Would you rather attend that corporate presentation tonight, study for an upcoming exam, attend a social event for your favorite club, or go to a happy hour with your friends? Logistically, you can't do everything. Fortunately, what you decide underlies that which you value most thereby (hopefully) leading to a more defined focus.

Understand who your customers are and listen to them often: Rather than try to sell to everyone at once, entrepreneurs are more likely to succeed if they take the time to first understand who to sell to and work to meet their needs. Entrepreneurs that pay attention to their customers, peers, and even competitors have a much higher chance of survival. For example, during my conversation with Chachii, the co-founder had identified peers in India and abroad to better understand their models. With this analysis, the entrepreneur further differentiated her service while identifying potential exit opportunities. Another common thought among entrepreneurs is that "if you build it, they will come" which is especially prevalent for entrepreneurs with a technically superior product. Although your product or service may be the next best thing, the ultimate judge for any entrepreneur should be the market and their customers. Numerous cases, such as Betamax vs VHS or the more recent Blu-Ray vs HD DVD, demonstrate that business success hinges less on your amazing and technologically advanced product specifications than on your ability to listen to your customers and execute on your model.

Focus on business model first, social impact second: Without a viable business model, any social impact that a social entrepreneur generates is short-lived (note: my definition of a social enterprise is one that seeks financial and social/environmental returns.) Although understanding the context of the social or environmental issue that an entrepreneur is trying to address, the immediate questions that come to mind all relate to an entrepreneur's business model including:

"Have you identified a market with customers who have some willingness to pay?",

"How do you plan to offer your product or service cost-effectively to eventually generate profits?", and

"What or who stands in your way and how do you plan to address that?"

For social entrepreneurs, the last question is one of the toughest since achieving social impact usually involves changing behavior and these enterprises face the toughest competitor: the status quo with customers who are usually resistant to change regardless of how the product or service could "change their lives". For example, solar lamps and cookstoves provide a safer and cleaner alternative than kerosene as light or fuel for cooking, respectively. Plenty of entrepreneurs sell these but few have managed to convince potential customers to switch, differentiate themselves and achieve scale.

Play well with others: Besides overcoming the status quo, social entrepreneurs occupy a unique space as they usually try to offer something that the government has failed to do (or at least, do well), non-profit organizations provide free or at cost like water or food, incumbents "offer" usually in the form of exploitation, or any combination of the three. Social entrepreneurs need to understand if, when, and how to engage with these players to create a market with fewer distortions thereby leading to sustainable and long-term change. For example, NextDrop has worked with the local water utility from day one because without the utility's buy-in (agreement), NextDrop would not have been able to launch its SMS service.

A market-based approach is not the end all be all for poverty alleviation or any other socio-economic or environmental issue. Humanitarian aid to countries or regions in conflict or post-major natural disaster, for example, is the most feasible solution despite its shortcomings and criticism. At the same time, my experiences with social enterprises and non-profits have convinced me that social enterprises have the potential to address most socio-economic issues. They, however, need to closely collaborate with government and the social sector to adequately address the complex, inter-related nature of these issues. Market-based approaches and especially social enterprises are not the "silver bullet". But they should lead the way to achieve real and sustainable social change.

Collection of photos from Somaliland, North Somalia

The Jordanian Arab Spring

In July, I met with some members of Le Café Politique Amman, a group that started out as a small secret Facebook group that now flourished to include about 2000 Jordanians from all walks of life united by their belief in Jordan and progress. We met with Dr. Marwan Muasher, previously Jordan’s foreign minister who was also Jordan’s first Ambassador in Israel.  Dr. Muasher’s long political career aided by his time as vice president for studies at the Carnegie Endowment and his well-respected and approachable personality make him an especially valuable resource for many young Jordanians looking to become politically involved.

Dr. Marwan spoke candidly about the Kingdom’s tight decision-making circle, lack of pluralism in Jordanian politics, and most importantly lack of organization among the few budding political parties. This is a link to the meeting's video. 

I found most fascinating his remarks on how no government in the Arab world gave diversity any attention. While I know it is true, I find it rather ironic since the region has always been a diverse medley of religions and ethnicities – that alone is proof that many Arab governments do not represent the societies they govern. It seems that in modern times, many Arab governments sidelined political participation and social equality and really only focused on economic development. This entrenched the limited circles of executive power, intensified income inequality, and increased corruption, all of which are supported by the strong intelligence machine that continues to interfere in the daily life of citizens.

He stressed that in order to build democratic and sustainable institutions nations affected by the Arab Spring must end their ambiguity to commitment for pluralism. The revolutions are proof that the notion “bread before freedom” no longer holds true and that a serious reform process that does not foster political development alongside economic development is unsustainable.

The “Arab Spring” as a term insinuates a romantic and overtly optimistic notion that the revolutions will propel the states into democracy overnight. We must recognize that the wave of revolutions that hit the region did not come as a surprise (if anything they were well overdue), and that many generations will have to struggle and build before they can accomplish a truly democratic and inclusive state. This change is inevitable, but the timeline and the framework are still unknown. And the daunting question remains, what will it take? 

This is a link to the meeting's video. 

Best of Bhutan

This post is aptly called the Best of Bhutan. I've decided to include some photos that I had not previously been able to the blog. Each picture has a story which I'll briefly share.

Another Day Another Cow

Every single day, I walked to DHI and on my way I encountered a new cow on the way. This one is quite pleasant looking but occasionally I have to walk past enormous bulls. They were sure to leave cow pies on the road each day. I felt like I was walking through a minefield. 

"Tiger's Nest" from afar

View From "Tiger's Nest"

Tiger's Nest is a monastery over 10,000 ft elevation perched on a cliff. 

 

From there, the view of the Paro valley was amazing.

Just out of view to the left is Paro Airport. Planes are only able to fly there during the day because the mountains are difficult to navigate at night.  

 

This is the Supreme Court which was within walking distance of my apartment and DHI. It was here where I consulted with the Court Registrar and with a Supreme Court Justice regarding my research. These meetings were very informative and provided with much needed perspective on my assignment. 

View from my Front Yard

This photo was taken on my way to a banquet where DHI officials met with the officials of its subsidiary companies. The rapport between these companies is very interesting. In many ways DHI is a new-comer to the public sector in Bhutan since many of these subsidiary companies pre-existed before DHI was established. They were initially within the Ministry of Finance until they were transferred to DHI which manages them. 

Gho vs. T-shirt and Jeans

Every single day I worked with people who wore Ghos which are the traditional outfits which Bhutanese have been wearing for hundreds of years. I was tempted to purchase one but I managed to move around wearing western dress. 

Thank you everyone for reading my blogs! I can't wait to meet up with the rest of the WDI fellows back in Ann Arbor this fall.

Somaliland Diaspora investing in Somaliland health sector- interview

During my stay in Hargeisa it was difficult to ignore how many Somali expatriates are returning either for summer vacation or to open new businesses. I had the opportunity to sit down with expatriate entrepreneur, Mohamed Ibrahim. Mohamed is from Boston; he has multiple investments in Somaliland and in Boston. Mohamed and a group of investors from the diaspora opened a specialist health center for neurology diagnosis in Hargeisa beginning of this year. I had keen interest to know about this venture. I wanted to know why invest in unrecognized semi-conflict zone like Somaliland. How they are able to sustains their business, and overcome financial and other barriers.

Hargeisa Neurology Clinic works by recruiting specialized foreign doctors to work in Somaliland. Mohamed and his partners recruited two neurology specialists from Pakistan. Because there are not enough skilled doctors in the country, people are compelled to travel to neighboring countries for treatment. Somaliland has one of lowest ratio of doctors per capita (there is 1 doctor every 31,531). There are roughly 111 certified doctors in the whole country, according to 2011 estimate. Brining foreign doctors to work in Somaliland is a difficult task because of instability in the region and bad reputation of the country. Somaliland is unrecognized country situated in a conflict zone. However, unlike Somalia in the South, Somaliland enjoys stability and it has a functioning democracy. In addition, it is one of the poorest regions in the world. It is difficult to give incentives to doctors to live or work in this difficult place.

I was surprised to learn that doctors are coming here for financial reasons. Working in Hargeisa is more rewarding financially for doctors than working for example in Pakistan. Hargeisa Neurology Clinic covers travel expenses, housing, transportation, food and other personal expense for foreign doctors. Because of scarcity of specialists and well-trained doctors, people pay high fees for visiting and foreign doctors. Mohamed told me that his clinic has had patients from as far as Gal Mudug in central Somalia. Mohamed added, “there is money in Somaliland, don’t let the dusty roads fool you… People will spend money for quality care.” Normally charity organizations bring medical volunteers few times every year to do surgical treatment or provide unavailable treatment in the region for the masses. People would line up for days before the arrival of doctors and sometimes pay kickbacks to see visiting doctors. It became obvious there is a business opportunity to bring high-skilled doctors to work in developing countries like Somaliland.     

However, investing in healthcare is a tricky business. It is a costly operation that needs skilled labor, collaborative ecosystem, and high maintenance. In addition, the GDP per capita in Somalia is roughly $333 (2009 estimate, UN). The average person earns less than one dollar per day. It is extremely prohibitive for the majority of the population to seek treatment from quality clinic. Brining foreign doctors can make healthcare unaffordable for the majority of the population. A visit to a private doctor ranges between $3-$20. But it is a much-needed service. Mohamed told me that his clinic is charging below what most specialists are charging.

Healthcare system in the country is in bad shape. People travel to neighboring countries to get treatment. The maternal mortality rate in Somaliland is one of the highest in the world; MMR was 1,013 per 100,000 in the year 2006. Treatable infectious disease like tuberculosis, measles, Malaria, diarrhea are wide spread in Somaliland. The public health service is limited in scope and coverage. Large aid organizations like UNICEF, WHO, FAO, WFP provides the Somaliland with funds and capacity to maintain basic infrastructure of prevalence diseases prevention, surveillance and food security. Similarly, the health private sector in Somaliland lacks adequate resources. There is an urgent need of investment in healthcare in Somaliland.

In this video, I interview Mohamed about his businesses and investment in Somaliland. We discuss what role the Somaliland diaspora can play in the development of the country, the role of technology in creating business opportunities, and difficulties that face investors and entrepreneurs. 

Do social impact metrics matter?

“Social ventures can use logic models to communicate their effectiveness to investors and funders, and to identify how to improve their impact, all without collecting a single measure.”
-MaRS white paper: Social Entrepreneurship (Social Impact Metrics), 2010

“Arguably the biggest obstacle to the creation of social capital markets is the lack of a common measure of how much good has been done: there is no agreed unit of social impact that mirrors profit in traditional capital markets.”
- The Economist, September 2009

Impact investing and social enterprise are the current darlings of the business world. Differentiated from Darwinian capitalism by their focus on making the world a better place while generating a financial return, these emerging industries have enormous potential to create dramatic change - if they can believably, quantitatively prove themselves.

But social impact metrics aren’t cut and dry like financial metrics. They’re messy. They’re difficult to define: how do you quantify increased quality of life? They’re difficult to collect: who do you talk to, what numbers do you need? And they’re difficult to interpret: do higher test scores really mean better schools? Do better schools lead to increased income, equality, and happiness? Are people telling you the truth, or telling you what they assume you want to hear? Social impact metrics require substantial investment of time, energy, and resources. But without them, how can you be sure you’re making a difference?

Completing summer internships with a social enterprise and an impact investor, Mary Fritz (Erb Institute for Global Sustainable Enterprise, MBA/MS ‘13) and Patrick Huang (Ross School of Business MBA ‘13) have experienced the complexity of this question firsthand. They discuss their thoughts in the conversation below.

Patrick: Could you briefly share what you're doing with Wello in India?

Mary: Wello addresses clean water access problems in rural areas by improving personal transportation methods through our innovative tool, the WaterWheel. We are structured as a hybrid social enterprise, comprised of a for-profit and non-profit arm. Most activities to this point have been conducted under the non-profit umbrella; my overarching goal is preparng Wello for capital investment to engage the for-profit side.This has involved creating a pricing structure, financial modeling and scenario planning, and developing our market entry strategy (including identifying robust, meaningful impact metrics and a means of collecting the necessary data). 

And what are you doing for Village Capital in India?

Patrick: My main mandate is on pipeline generation, i.e. identifying and shortlisting enterprises for two upcoming Village Capital programs in India. In brief, VilCap organizes 12-week business accelerator programs for early-stage social enterprises. VilCap’s main differentiator is our intensive peer-review approach in which the cohort not only provides honest feedback to each other but also decides which two receives pre-committed financing. In the past 3 years, we have organized 14 programs by partnering with organizations such as the Hub, Dasra Social Impact, and the Unreasonable Institute.

To start off, I wanted to quickly draw a contrast between traditional, commercial enterprises and “social enterprises.” Commercial start-ups collect standardized financial measures like revenue and costs to understand their own financial situation and success, to plan for the future, and to share with external users like investors. For-profit social enterprises do the same (by committing the time and resources), but they also grapple with the additional quantifying their social impact. Is that what a social start-up should focus on right away?

Mary: It’s tough for a start-up to devote the resources necessary to collect and interpret meaningful data around impact. You need people on the ground, in the field, to constantly monitor change, and you also need people to respond to those inputs from a strategic level. It’s been my experience that most investors would rather see those resources put toward building and scaling the core business. So it’s a matter of comparing the value of metrics with the value and opportunity costs of spending your resources there. What do you think, Patrick?

Patrick: I agree, especially for early-stage enterprises like the ones that I have spoken with. The main priority for entrepreneurs in the early stages should focus on defining a financially sustainable and viable business model. Without this, any social returns generated will be short-lived.

Since these enterprises are usually started by one or two founders with seed funding from friends and family, entrepreneurs need to allocate any capital and resources to the core business and operations. With this initial capital, entrepreneurs can develop a prototype or proof-of-concept and test this out through a small-scale trial run or pilot. Through this process, entrepreneurs start to define and refine their business model. All of these activities are critical for a business to build a business, social-oriented or otherwise.

Mary: Exactly. At Wello, we’re building our impact data collection into our business model pilot. People “get” our intended outcome, but the type of customers we hope to attract will need us to prove it. So essentially, the business model relies on accurate social impact data.

Patrick: I get that. Any true social entrepreneur (whether he or she self-identifies as one) will always remain cognizant of the enterprise’s social impact and ideally, that impact would be “baked into” the model itself. As another example, I’ve spoken to a couple of entrepreneurs that design and implement renewable-powered micro-grids that provide access to energy to households in remote, off-grid areas in India. These entrepreneurs have a business model that provides a key service (energy) to households and generates revenue for the enterprise while creating social impact through energy access. At the same time, these entrepreneurs track the number of households served as a necessary metric for both their operations and social impact.

Mary: So does tracking the number of households served equate to social impact?

Patrick: Not necessarily, although in the case of access to energy, I would argue that renewable energy has a strong correlation to positive social returns such as better health (by eliminating the use of kerosene) to increased income and better education (by providing light to shop owners to sell their wares and children to continue studying). However, these social returns are much more difficult to define, collect, track, and manage for an early-stage entrepreneur who is still struggling with keeping her business running while staying true to her initial mission for social change. I still maintain that entrepreneurs at the early stages have much higher priorities to focus on.

On the other hand, I would argue that tracking and managing social metrics is not only viable but necessary for growing social enterprises that have the resources and capital to scale, especially those that are financed by impact investors. These enterprises have already received financing from traditional commercial investors or impact investors and both the entrepreneurs and investors should support the allocation of resources to do so. Based on my conversations with people from Grassroots Business Fund and Acumen Fund, both impact investors that focus on supporting social enterprises in the growth stages, they have developed initial approaches to track the social impact of their invested enterprises but neither of them are perfect.

Mary: I worked with Acumen Fund for MAP. We were tasked with researching successful exits in some target sectors and evaluating potential pipeline deals. Trying to expand our limited selection of examples, we stretched our definition of social impact (e.g., does PayPal have a social impact because it gives people access to digital transactions without credit?). Because the social enterprise space is so young and holding times are lengthening, it was tough to find relevant example deals. But they pushed us hard to prove a legitimate social mission and impact. If Acumen Fund can’t collect metrics from its portfolio companies, how can it measure its own impact? Without metrics, how do you evaluate potential investments?

Patrick: I can relate to your and Acumen’s struggle with identifying “social enterprises”. Identifying a social enterprise requires a commitment to a market-based business model and social impact. During my internship, some questions that I may ask entrepreneurs include “Who are your target customers or Who do you serve?,” "What area(s) do you serve - urban, rural, something in between?,” "Who are your major clients to date (large corporations or individual households)?,” “Who do you employ [for enterprises that work in rural areas)?" Based on the answers to these questions, I can better determine whether an enterprise is socially oriented or not. In addition, as a SvF Fellow at Ross during my first year, I tackled these same issues as a member of the Health Investment Circle. There was an assumption that any enterprise in health would be socially-oriented. At a high level, this is probably true but the same type of questioning is still relevant. For example, if an enterprise targets wealthier customers or those with more means than other customers, that enterprise would probably not pass our social impact screen.

Mary: That’s largely what I’ve seen, and I wonder if Acumen Fund and Grassroots Business Fund are exceptions to the rule? Several investors I’ve spoken with this summer have explicitly told me that impact metrics aren’t necessary; they just want to see the financial return. Financial return is necessary to build a sustainable business (and thus maximize impact), but this approach bleeds pretty heavily into traditional VC.

The other problem with that more general approach is that it doesn’t force you to critically evaluate your true impact on the populations you aim to serve. Are you accomplishing your mission? Do your achievements reflect your intentions? Are there negative impacts to your activities? There’s a difference between a socially oriented organization and one that produces a true social return on investment.

From the entrepreneur’s perspective, there are also some pretty compelling reasons to collect metrics early on. As I mentioned, sometimes business depends on it. For example, Wello expects larger orders to come from institutional customers such as government, NGOs, and CSR departments at MNCs. These customers are all impact-focused, and to attract them, Wello will need to demonstrate quantitative proof of concept. We will have a much easier time appealing to a wider range of stakeholders when we can quantify our impact. And we want to ensure that we’re adhering to our mission and actually accomplishing what we’ve set out to do - before scaling.

Patrick, how credible do you think metrics can be? How much insight do investors have into the meaning behind the numbers? How do you ensure your cash is really making an impact?

Patrick: Credibility for social impact metrics is largely determined by how accurately we can quantify the impact at an absolute and relative level. The time when we can quantify social impact metrics at the same level as we do for financial metrics, however, is probably a ways off. For example, on education, how does selling books to children compare to building schools? On health, how does providing telemedicine services to remote, rural communities compare to building low-cost primary health clinics in low-income areas? If one is better than the other, how much better? Now, what if we were talking about a rural community in New York and a low-income area in the war-stricken Congo or vice versa? The answer to these questions are difficult as they tend to define the value on a person’s life. Despite the adage “a person’s life is priceless,” people are already quantifying life. If we don’t quantify a person’s life whether that person is a teenage girl in rural Afghanistan or a wealthy person in upstate New York, then someone else will do it and that number may ultimately be zero.

Mary: There has been some pretty public criticism of impact investing recently - complaints that SVC is ill-defined and has failed to distinguish itself from traditional VC, etc. Do you think social metrics could help legitimize the industry?

Patrick: Definitely. There are many critical next steps for the industry to take such as supporting enterprises to reach scale that would inevitably demonstrate a viable track record for the impact investing industry as a whole. Defining reliable and standardized impact metrics is another important first step to start an open and transparent discussion as to whether a commercial business model that seeks both financial and social returns is even viable in the first place.

Mary: I agree. People naturally want to believe in social enterprise and impact investing, especially as traditional business and hardcore capitalism are increasingly vilified. They're such nice stories - do good and make money. But meaningful metrics are the only way of solidifying that theoretical link between social and financial returns. And those metrics have to be standardized and applicable across social businesses, so collaboration is necessary. It will be really interesting to watch all of this unfold over the next few years.

Patrick: Do the needful, kindly revert.

Mary: Great answer. I think we’re done here.

the Zagaya brand exercise

An exercise that I had a chance to be a part of early on during the summer was the Zagaya branding exercise. A brand consultant helped us think aloud, ask and answer some very important questions that would go a long way towards making Zagaya's mission and work more targeted and messaging more succinct and comprehensible. The broad framework used was based on a schematic from 'Designing brand identity' by Alina Wheeler:

What goes into a brand brief

A big part of the discussion revolved around what Zagaya did, and yet what was interesting was how much time was spent on what Zagaya did not do. This was very important as it impacted the message sent out both through our brand messaging channels and by everyone at Zagaya who were ambassadors of their work.

A challenge to the executive director at every stage was to continually keep track of all the changes in strategy and accordingly align the message sent out to all stakeholders, supporters and public in general. Having a chance to hear her thoughts and contribute towards possible ways to shape the communication strategy was a good learning experience for me. It helped us understand where Zagaya stood in contrast to competitors and what was the value proposition offered.

Development and Uncertainty

I am sitting on a hill in Al-Salt, a small city neighboring Amman, overlooking Jerusalem, Nablus, and Bethlehem. If I drive two hours North of here, I would be in Dara’a, a Syrian city where most of the violence has been taking place since the beginning of the Syrian conflict. If I make a similar trip East, I would find myself in Iraq. This makes me wonder, what is the shape of development in cities surrounded by such instability and unpredictability? More importantly, how do we create and prepare institutions that can manage such challenges?

Pointing at Jerusalem

Jordan’s fast population growth, water scarcity, and economic difficulties are further exacerbated by the conflicts that surround it. Jordan sees a constant influx of refugees from its neighboring countries like Iraq and Palestine, and in the past year Jordan received refugees from Syria and Libya. That along with internal political, economic, and social struggles there is a lot of pressure on NGO’s, private, and public institutions to overcome existing and potential challenges against development.

While the prospects seem gloomy, I think that the Jordanian population will manage to recover from such political and humanitarian crises like it did during the several regional wars the country was affected by, namely the Gulf War, the War on Iraq in 2003, as well as the different conflicts between Arab and Israeli armies since 1948. I find that here, the population’s resilience against political and economic shocks, and their willing humanitarian response is admirable. More importantly, I think that Jordan like most of the Middle East has long faced uncertain challenges, which makes such unpredictability a little familiar. I will be hoping for the best. 

Going to Church in Bhutan (Part 2)

Bhutanese Folk Dancing-I think I sat this dance out

In my last post, I introduced you to my church community. I mentioned that they are mostly of Nepali descent as opposed to the Bhutanese that make up the majority of the population. The community is very close knit and I was immediately invited to people’s homes for dinner. As I mentioned earlier, Nepali people usually speak Nepali as their native tongue and only a few are fluent in Dzongka. So just like me, they may have to speak in English with Dzongka speakers. I attended English services which were comprised of a mixture of South Indians, American expats and Nepalis. It was in this service, where I played keyboard with the worship team. That was an interesting experience because if I was not careful, I’d miss song transitions because everyone spoke Nepali around me. In fact, sometimes when I was still being careful I would still miss instructions on key changes or when the leader would change the order of songs. This past Sunday was my last at the church so I decided to introduce an American song that they never heard. It was well received!

One last note on Nepalis. Many of them have never been to Nepal and are actually not citizens of Nepal. Unfortunately, many of them are also not recognized as citizens of Bhutan therefore they are a people without a country. Both the Bhutanese and Nepalese government go back and forth arguing over what percentage of the Nepali refugees are actually Bhutanese citizens.

My wife and I with the Chairman of DHI

My supervisor is to my right

On the topic of DHI, I just came from a banquet last night where for the first time DHI employees dined with employees of DHI’s subsidiary companies. Enjoy the photos! 

Down and Dirty...Part 5 – Kingdom of Wonder! - Phnom Penh

Currently waiting on the plane for an hour and half delay out of Guangzhou airport back to Shanghai. China Eastern Airline is known for it's terrible delays...but they usually figure it out before they board everybody!

Coming back from a week and a half in Cambodia. It was really an amazing experience. The very first thing you notice upon arrival is the contradictory immigration laws. I bought my visa for $25 when I landed, and it took all of one minute for them to process it. You don't even fill out any form...just pass them your passport and the cash. Immediately you go through immigration, this being the first time I've ever had my fingerprints taken. It seems a little strange to let everybody in without question and then think that taking their fingerprint will make them behave themselves.

The director of the CWEF office in Phnom Penh picked me up at the airport when it landed at 1.30am, and I was very thankful for that. You're immediately bombarded by people yelling “Hello, lady! You want taxi!?” and young men trying to take your bag away from you. Even though it was clear that I had someone to pick me up two guys put my bag in the back of the car thinking I would give them money for it. Suckers.

I learned a lot from the director about Cambodian life. First off, women are the ones that inherit the family fortune, mainly because they are the ones that are expected to take care of the parents in their old age. It's the exact opposite in China. I also found it interesting that Cambodian men aren't the type to sit around to smoke and drink, like you find in a lot of poor and developing countries. The men are out working, as they are still expected to support their family even though they won't inherit anything. I also asked about the prevalence of violence against women, and it seems that's not such a big issue either in Cambodia. The biggest issue it seems facing the country is problem foreigners. Child and women trafficking is the one social ill that seems to be worse than other places.

My first full day in the country I went to Choeung Ek, or the Killing Fields. This was one of the sites of the Cambodian holocaust under Pol Pot during the Khmer Rouge in the 1970s. I didn't take any photos of the place out of respect for the dead, but I can tell you that the place is haunting. It was so strange to me to be on such a beautiful piece of land and to know what had happened there. Cambodians that were 'Western' were murdered and buried in mass graves. Basically anyone that knew a foreigner, had an education, or wasn't Khmer enough was put on the list -- this included children, because the Khmer Rouge wanted to avoid the children growing up and avenging their parents' deaths. There are so many graves that the workers just gave up on uncovering all of them. On our walk through, I actually saw some clothing and bones coming out of the ground from graves yet unearthed. Apparently that happens a lot during the rainy season...Just take a second to think about how you would react to that. If you want to know more, do a Google Image search.

Despite the somberness of the place, I actually really enjoyed seeing it. If I can use that word...Either way it helped me to understand the Khmer culture as the week progressed.

Under the reign of Pol Pot, almost ¼ of the population of Cambodia was killed (around 2 million out of 8 million). Because of that, there are very few elders in the country. Some of the village elders that CWEF work with are only 35 years old. So it was especially sad when a 90 year old man two doors down from the office passed away while I was there. The funeral was very much an experience, with the monks in orange robes and everyone else strictly in black and white. The songs and chanting over the megaphone lasted for three full days, and I'll tell you it made teaching a database class rather difficult. Here's a short video to give you an idea of how loudly I had to talk.

Thankfully my experience teaching in China in the past, with construction happening above and below you at all times, prepared me well for projecting my voice.

Seeing so very many foreigners around, I asked what was bringing them all there. Apparently, they ALL work for NGOs. While it's great that there are so many people working to help Cambodia pull itself back together after the Khmer Rouge, you can imagine what a mess it is. A lot of NGO projects create dependency, few of the organizations work together, and some people couple aid work with mission work, which can get messy if not done right.

The staff and volunteers of CWEF were amazingly hospitable. The retired volunteers from the States took me out to dinner and we got to see traditional Khmer dancing.

After four days of interviews and training, I took a long weekend to go up to Siem Reap and meet a fellow traveler friend. More on visiting the ancient temples of Angkor in the next post!

Wrapping Up

I’ve officially finished my internship and am headed back to the US today. Looking back, it’s been a great three months and I’ve learned a lot. I’ve gotten more experience with startup social enterprises and insight into impact, angel, and venture capital investing, development agencies, and a little bit of development consulting. I’ve managed to narrow my career focus a bit, and built up my qualifications to pursue it. I’ve gotten a strong understanding of entrepreneurship and social entrepreneurship in Indonesia, which I can hopefully leverage in the future. I’ve gotten to work with a few startups that have both clear social/environmental impact and a strong business proposition and (hopefully at least) helped them expand that impact.

I’ve met a lot of great people doing interesting things, had a lot of great food, and have explored a bit of Indonesia. All in all, a solid summer.

Borobodur Temple

Camping in the Thousand Islands

Cliff in Bali

Seminyak, Bali

Hiking through tea plantations in Puncak

Building the Entrepreneurial Ecosystem Part 2: Angel Investing

A major piece of the entrepreneurial ecosystem that has yet to be fully developed here in Indonesia is access to early stage funding. There is a gap between the funding provided by friends and family and the much larger investments most venture capitalists are looking for that causes issues for a number of entrepreneurs. Some VCs have been moving to earlier stage investments, but this comes with its own set of issues. Accordingly, one of GEPI’s biggest initiatives during my time here has been launching Indonesia’s first open angel investor network and two angel funds.

We had a big launch event in mid-July with 30-40 affluent prospective angels to teach them about angel investing, valuation, and structuring/negotiating a deal. Partially supported by the US State Department, we brought in two prominent angel investors from the US to hold a full-day workshop. It was an amazing learning experience and a great opportunity to see business tycoons go through a negotiation simulation similar to the ones in our MO class – I definitely still have a ways to go.

Panelists at the workshop

Pak Ciputra, the godfather of
entrepreneurship in Indonesia

I’ve also had the unique opportunity to structure two angel funds – one focused specifically on female entrepreneurs, and another more general one. Having no background in investing, it was really interesting to understand how an investment fund works, and then adapt that knowledge to an Indonesian context.

These angel investors are interested in all businesses, not just social enterprises. That being said, a number of the businesses in our pipeline that we’re preparing to pitch to our investors are social enterprises that have positive impact, but also compelling business propositions. I’ve prepared a workshop on presenting to investors,

Presenting to a group of entrepreneurs

 and spent my last day at GEPI working with 14 entrepreneurs on their investment pitches. The remaining challenge though for both investors and entrepreneurs is a lack of exit options. In the US, there is a robust IPO market and a lot of acquisition activity that lets investors earn multiples of what they invested to cover other startups that fail. However, here in Indonesia, an IPO is not a viable exit option and the lack of data on acquisition terms makes it difficult to determine whether it’s actually profitable to do angel investment. As such, entrepreneurs crutch together alternative investment terms that likely aren’t in the best interest of the business or investor (i.e. a 3-year profit sharing period with the full investment paid back at the end, almost like an income-based loan). I believe once this hurdle is overcome, the entrepreneurship scene here will grow even faster than it already is.

Goodbye Africa, for now...

I absolutely will miss Africa and the people I met along the way.

The journey was somewhat of an emotional rollercoaster full of laughter, tears, frustration, anxiety, and pure satisfaction. From my first few nights in Ghana when I had a huge cultural shock and wondered how I would get through the next 9 weeks, to my excitement of traveling to another country in Africa, to the healthcare product demonstrations that I gave to thrilled and extremely thankful obstetricians and midwives, to some lonely nights in my hotel room with weak Internet and limited TV, to the huge smiles and waves from the little children in the villages that were so excited to see an obruni (Ghana)/ mzungu (Uganda) – both mean white person, to the beauty and awe of the Ugandan and Ghanaian countrysides and their wildlife … I experienced a lot!

I am so thankful and blessed to have been given this opportunity. This experience has impacted my life forever.

I think this journey has been much like a marathon (I’m a marathon runner back in the states). There is a lot of preparation and excitement leading up to the big endeavor, spending months thinking about the best course of action. After the marathon/journey starts, there is an initial shock of, “Wow, I’m really doing this!” After the miles/weeks go on, you start to fall into a rhythm. You enjoy some miles, and others are pure mind over matter to get through. As you finish the last mile, though, you start to look back on the full race and feel so proud of your accomplishment, through the ups and downs. When looking back, you think, “Of course I would do that again!”

At times, this marathon was tough for me with my husband thousands of miles and many time zone hours away. However, I’m a better, stronger person because of this experience and I’m so grateful for the opportunity to (hopefully) have made an impact in the lives of African mothers.

See you all back in Ann Arbor very soon!!

Going to Church in Bhutan (Part 1)

I've had the pleasure these few months of attending one of the few churches in Thimphu. I’ll speak about this experience later on in the post but before I think I might need to lay a foundation of religion in Bhutan.

As you may know, Bhutan is a heavily Buddhist nation and even has the designation as being the last Himalayan Buddhist Kingdom (after Nepal’s king was forced to abdicate). What this means is that although there is  officially freedom to practice other faiths aside from Buddhism, there is a real push by the government to perpetuate Buddhism in all the facets of everyday.

Similar to how the King of England was the head of the Church of England, the Druk Gyalpo (Dragon King) constitutionally acts as the dual head of state and religion in Bhutan. That means that the King could not lightly decide not to practice Buddhism or convert as both would have serious repercussions in Bhutan.

Punakha Dzong- Administrative office/ temple/ court house

The government financially supports the monastic body which regularly meets and performs rituals throughout the many fortresses (known as dzongs) around the country. As in yesteryear,  these dzongs served partially as temples, storehouses for taxes in kind (people used to give part of their crop as taxes), court houses and administrative offices. Dzongs are a representation of the dualism between the government and Buddhism. On Dzongs and on other government building are pictures of the Buddha, prayer wheels, lotus flowers, or sacred scriptures.

So where do Christians fit in this context. Well amongst all the visible Buddhist symbols and faith there is a relatively small and vibrant community of Christians in Thimphu who are largely Nepali in ethnicity. I guess I have to explain who Nepali people are. Nepalis are the largest minority and they originate from Nepal. Nepali people speak….Nepali and often do not speak Dzongkha, the national language of Bhutan. As a result they need to speak to other Bhutanese with the Dzongkha they know or even communicate in English. Nepali people are largely Hindu and they look more like they are from northern Indian then do the Bhutanese. I heard one explanation for why the churches in Thimphu are largely Nepali. As I mentioned earlier, Buddhism is really intertwined in the cultural fabric of Bhutan. Many people view leaving the faith of Buddhism as turning your back on your cultural heritage and as a result people who are even remotely curious about Christianity are often discouraged to explore. Nepali people in Bhutan don’t have the same connection to Buddhism as they are predominately Hindu so that might explain why it is slightly more acceptable for them to convert.

I'm in the middle playing the keyboard during worship ministry practice.

A Valley in Punakha District

In attending the church, getting to know the pastor, and breaking bread with them I’ve learned a little bit about how it is being a Christian in Bhutan. Anecdotally, several people who had prominent posts in the government have either been demoted or lost their jobs because of what they attribute to be religious persecution. Also there have been incidents when the government would send people into the congregation to report on what was being said. That would never present a problem in the church I attend because we always pray for the royal family and the country. =) 

In my next post I’ll explain more about the church community, their worship team, and English language classes. I’ll also take a detour and talk more about my project with DHI. 

Exporting Culture: How Online Learning is Creating Jobs in Somaliland

One of the teachers at Ali Suufi Home Academy in Hargeisa teaching Quran.

In recent years online education has gained popularity and allowed millions of people to gain access to quality education who otherwise would not have easy access. Khan Academy and Coursera are prominent examples of online portals. Khan Academy has helped me get through my dull statistics course. In Somaliland there is brewing new trend in online learning. Somaliland companies are popping out of the dusty roads of Hargeisa to offer online courses in native Somali language and Islamic courses to the large Somali diaspora communities in Europe, North America and Australia. These companies are using basic technologies like Skype, screen-sharing software to interact with students. There are about twenty of these types of schools in Hargeisa. Their main clients are Somali diaspora, especially women and second-generation children, who their parents want to keep them informed about their culture and religion. Most Somali children don’t travel to Somalia for security reasons. I had the opportunity to meet Sheikh Abdirahman, the founder and manager of Ali Suufi Home Academy, which is based in Hargeisa, Somaliland.

Abdirahman is a busy businessman who is always online using his mobile phones. Using two fancy iPhones, he swaps international calls using Skype, Google voice talking to customers in more than 23 countries. The Academy’s main clients are Somali diaspora members, especially women and second-generation children who live in non-Muslim countries in North America and Europe. Coming to Hargeisa in Northern Somalia, I was amazed at the level of entrepreneurship and innovation in businesses. Listening to international news, one does not expect to see local people using modern technology and innovative business models in a country like Somalia. Schools like the Home Academy is exporting culture and knowledge in a new fashion. Unlike Somalia, commerce is booming in Somaliland. Twenty years of stability are finally bearing fruit in the streets of Hargeisa. Somaliland is a self-declared republic in North Western Somalia with no international recognition as a state. Somaliland has been a beacon of hope comparing to the rest of the country. The region has had a relative stability and functioning democracy for the last twenty years.

Sheikh Abdirahman formed the academy three years ago. The school started with one desktop machine and one couple from Norway for the first five months. Currently enrolled students are in the hundreds and span across four continents. Abdirahman employs about nine full-time teachers that specialized in different fields like teaching the holy Quran, Islamic science courses, English, Somali and math. But the majority of the students study the Quran. A small minority of students takes lessons in English, math, and Somali language. The school mainly uses Skype, screen-sharing software, and digital textbooks. All sessions between students and teachers are private, one teacher per on a student. Teachers usually assign homework on every session that involves learning how to read new chapters of the Quran.

I interviewed two students of the Academy. One parent from Norway told me that he “prefers the online school because it is one-on-one. It brings the whole family together. My wife, two kids, and I study together with one teacher. Children learn more that way. We are able to keep track if my kids are learning or not, because we are studying with them. The Quran session has become a meeting time for my family, and we enjoy it very much and especially during the month of Ramadan.” Sheikh Abdirahman underlined this observation also. He said, “We observed that children who study in a group with their parents or with siblings perform much better than the ones who take our courses alone. Also, this applies in both directions. Because of the low literacy level of parents in our society, we see children helping their parents in learning and studying. This has motivated parents to spend more energy on studying because they have help around them more often and their kids are their classmates.”

I asked another student from England about what are the advantages of the Academy of Ali Suufi over traditional schools. Luul Ahmed, a mother of three children told me that she prefers online education because it is far more affordable and safer for her kids in Birmingham in England. She added, “sometimes it is not 100% safe to let my kids go out after school to study the Quran. The Academy is a convenient service comparing to other schools in Birmingham. I don’t stress about the whereabouts of my children.”

Abdirahman said that the idea to open an online school in Hargeisa came after exposure to online education through Indian Universities where his friends were enrolled in distance learning in information technology courses. Abdirahman soon realized a business opportunity. Somali large diaspora mainly lives in non-Muslim countries, where there is a need to conserve culture and religion. Abdirahman found a way to help the Somali diaspora to preserve traditional early childhood education, which consists of teaching Quran and Islamic courses. This business model has been extremely beneficial for the students and profitable for the owners and faculty. The encouraging feature about these companies that the size of the market is relatively large and the initial investment is low. Abdirahman started with one couple and a single desktop machine, but with aggressive online advertisement and excellent reputation, Ali Suufi Academy is a profitable business with strong customer base.       

Online school and other business based in developing countries offer the opportunity to lift thousands out of poverty and offer inexpensive products for students in more developed countries. There are Islamic schools in England and Norway, but the Ali Suufi Home academy in Hargeisa and similar schools are able to provide competitive products and establish a niche customers in European and American markets. Technology allows innovation and reduces barriers for people in less developed countries.  

What intrigued me about sheikh Abdirahman and his school is the audacity and creativity to start a business like an online education school from nothing and without a blueprint in Somaliland. There were not many online schools in places like Somalia, where most people live on less two dollars a day. Relatedly, the academy employs the latest software and distant learning methods. What has facilitated and encouraged an experiment like this one. Is it because of absence of taxes in Somaliland and cheap labor? Or is it lack of regulation and presence of advance telecommunication sector? It is quite an audacious experiment that should be praised and encouraged. Additionally, the Academy is creating jobs for college graduates in Hargeisa. Currently, Abdirahman is employing nine full-time teachers, who get paid above the average salary in Somaliland. People are forced to innovate in lack of development aid and strong central government. The private sector in Somaliland is vibrant comparing to neighboring countries. Somaliland has one of the lowest taxes in the region. But that is due to a weak central government and incapacity to enforcing tax laws. Here are some factors I think allowed private business to thrive in Somaliland:

1.     Lack of regulations for most industries.

2.     Lack of enforceable and sound tax system.

3.     Cheap labor.

4.     Lack of ineffective and corrupting international aid. The local market still provides most of service in Somaliland.

5.     Diaspora investment in Somaliland. 40-60% of foreign capital are in the form of remittance or funds to start small and medium size businesses.

6.     Cheap communication technology. 

Somali communities are recent immigrants that left Somalia because of ongoing civil war and instability in their homeland. The World Bank estimates about one million Somalis living outside their country. That is roughly 14% of the population. The Somali Diaspora is the major investor in the country and provided 80% of the start-up capital for small and medium enterprises (SMEs) according to reports by UN development project. Online education for the diaspora is another form of Diaspora financial contribution to the Somali economy. 

Here is a short video about the academy: