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November 14, 2008

Do You Need to Be Rich to Be a Social Entrepreneur?

Catherine New
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“My dad gave me a lot of good advice when I was growing up, including the following pearl: ‘Net worth is usually more a function of how much one spends than of how much one makes,’” said Professor Ray Horton, director of the Social Enterprise Program, when considering the question of whether you need to be “rich” to launch a successful social enterprise. “You don’t need to be rich to be happy or, for that matter, to be a social entrepreneur. If there is one thing that social scientists have nailed down, it is that money (beyond some minimal standard) and happiness are not strongly correlated.“

The question also came up at the Social Enterprise Conference on October 24. While many business people who have experienced financial success often have a second act in socially oriented causes, social enterprise stands alone as a business model. The four panelists speaking at “The Frontlines of Social Entrepreneurship” event considered the question. Here are a few of their remarks:

“If you turn in your salary to work 18 hours to do good for no money, you better have made a ton of money [before]. But can you do good every day until then? Yeah, absolutely. Get rid of the fine print. Stop making stuff out of garbage. Everybody in this room can do good starting one minute from now. Make a good decision so that the social change starts as you think about the rest of your life. Then, if you make a lot of money, maybe you want to donate some number of years to some crazy thing, but until then just be a nice guy.” Rob Wunder, Co-Founder, Yummy Earth

“I think you can start a company that makes money and does good. I am not sure if a model of social enterprise that is solely about doing good and that is not designed to make any money is scalable. It’s hard. Random, bad things happen and all of sudden you don’t have the capacity to respond. The design of the company, from the ground up, should be [geared to] doing something that makes the world better while still making money.” John Katzman, Founder and CEO, The Princeton Review and 2tor.

“A lot of people in business school ask if they should go and get skills at some consulting firm or investment bank first. I feel that at the end of the day, what’s important is that we all take step closer to what we want to be doing. The secret is that it is much harder to find interesting work and a way to make a difference, and it takes time to get there. It’s not just in one day that you're going to find the answer of what your social enterprise is going to be. What’s important is to take a step towards that path. And in the years when you're just trying to make money or get skills, while those skills may help you, you should also be searching for ways to get you closer to what you want to be doing.” Jeremy Hockenstein, Founder and CEO, Digital Data Divide

“I think you need to pay yourself first and that's enough. You don’t need to make lots of money, and there’s no need for greed … You go do what feels good and take care of you and your family.” Danny Kennedy, Founder and President, Sungevity

Do you think you need to be “rich” to be a social entrepreneur? Please leave your comments.

Photo credit: Linus Bohman

Comments

by Elena Gerdjikova | November 14, 2008 at 6:57 PM

I believe that in order to be a social entrepreneur, one has to be content with his/ her life. Rich or not, as long as there is a sound idea, there are many ways to carry it out.

by David Erwin | November 16, 2008 at 3:30 PM

You can begin a career as a social entrepreneur without a penny to your name. There is a tremendous amount of money out there set aside to meet genuine needs. You can launch a career through recognizing needs, identifying the foundations that exist to work toward addressing those needs, helping organize people to properly utilize the funds and then write grants. There's no buy in price for helping money get where it needs to be and helping people use that money effectively.

by Elaine Lu | November 19, 2008 at 8:36 AM

Thanks for the sharing! It's an interesting discussion whether one need to be rich to be a social entrepreneur. I think anyone can start to do good things from today, but if one wants to build up an enterprise which is an organization aimed on adding social value, it seems he or she should finish some foundational work first which includes accumulating certain mount of capital or at least knowing where is the source. However, when he/she starts to prepare for the enterprise, can't we say this person is already a Social Entrepreneur?

by Judy | December 31, 2008 at 6:16 PM

One does not have to be rich to become a social entreprenuer. However, a successful social entreprenuer probably should carry good knowledge of the business world in order to run a smooth operations and make sound decisions for the company. Afterall, social enterprise is still a new concept to many. During funding and start-up process, the founder will face many quesitons and inquiries from potential investors and customers. Without sound foundation of business skills, it is hard for a newly mint social entreprenuer to convince people and the world of his visions.

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